The Commonwealth Bank of Australia (ASX: CBA) share price had a very difficult 2026 financial year, significantly underperforming the S&P/ASX 200 Index (ASX: XJO).
During FY26, the CBA share price dropped 10.9%, while the ASX 200 climbed by 2.8%. In other words, the ASX bank share underperformed the index by 13.7%.
Why did the CBA share price underperform?
One of the main reasons why CBA underperformed was because the BHP Group Ltd (ASX: BHP) share price performed so well, which had a very positive impact on the ASX 200. BHP rose by more than 50% over FY26.
Most businesses are affected the most by their latest update – May was seemingly the cause of the major decline of the e bank
In May, there were a couple of painful pieces of news for the CBA share price.
Shareholders had to contend with both the Australian federal budget and the quarterly update.
Prior to the budget, investor loans made up a significant part of CBA’s home loan demand. Therefore, shifts in the demand for loans as a result of adjustments to negative gearing and capital gains tax could hurt CBA’s loan demand for the foreseeable future.
Secondly, the Commonwealth Bank quarterly update for the three months to 31 March 2026 had a couple of negative numbers. Its cash net profit after tax (NPAT) was around $2.7 billion, representing a decline of 1% compared to the first half of FY26.
A significant element of the bank’s profit challenge was the $316 million loan impairment expense, which was due to heightened geopolitical and macroeconomic uncertainty. CBA said its underlying portfolio credit quality remained “sound”.
Is this a good time to invest in Commonwealth Bank shares?
The bank is certainly cheaper than it was a year ago, but the growth outlook is now considerably weaker too. The CBA share price was expensive before and it still looks expensive today.
With limited growth and a modest dividend yield it’s not one of the ASX dividend shares I’d look to buy today.
