The Commonwealth Bank of Australia (ASX: CBA) share price has seen a large decline of 11% since early August. Is it a buy?
Commonwealth Bank is one of the leading banks on the ASX. It offers a variety of services including home loans, credit cards, personal loans, business loans, savings accounts, transaction accounts, share brokerage and more.
Let’s remind ourselves what the market reacted to in August and then think about whether it’s a buy.
Solid FY26 result
The FY26 headline numbers were impressive, in my opinion, but there were also a couple of warning signs.
CBA did report that statutory net profit increased 8% to $10.9 billion and cash net profit went up 7% to $11 billion.
The core driver of the result was the operating income increase of 6.2% to $30.2 billion, which was primarily down to strong volume growth with a broadly stable underlying lending profit margin.
Home lending and household deposits both grew at the same speed as the overall banking system. Business lending grew by 1.3x the banking system and business deposits grew by 1.2x.
However, operating expenses grew by 5.6% to $13.6 billion, with the two key drivers being inflation and investment in technology.
It should also be noted that the ASX bank share’s net profit only grew by 2% in the second half of FY26 compared to the first half. Slowing growth is not an exciting prospect.
Is the CBA share price a buy in September?
The business is facing a more challenging operating environment for now. Credit demand for home loans has declined following the announced tax changes in the Australian federal budget.
As we saw in FY26, credit growth was the key factor in driving earnings higher, so slower growth could be a headwind for profit growth.
The higher interest rate environment could also be a negative if it leads to worsening loan arrears and contributes to slower credit demand. There has been a recent uptick in home loan arrears, so that’s also something to keep an eye on.
I think Commonwealth Bank is an impressive bank, with solid margins and less reliance on mortgage brokers than other Aussie banks. CBA is worthy of trading at a higher valuation than peers. However, it doesn’t look great value at 24x FY26’s earnings.
I’d say there are better opportunities out there among ASX dividend shares.
