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Highlights
CBA saw several ups and down during FY22.
CommBank’s shares ended the financial year 2022 down 9.5%.
The benchmark ASX 200 index ASX 200 fell 10.2% in FY22.
Commonwealth Bank of Australia (ASX:CBA) or CommBank is one of the most tracked banking shares on the ASX. The oldest Australian bank saw several ups and down during FY22 dur to different event including Reserve Bank of Australia’s (RBA) surprisingly aggressive rate hikes, which were beyond market’s expectations.
CommBank’s shares ended the financial year 2022 down 9.5%, nearly resembling the losses reported by the ASX 200 during the fiscal year under review. The benchmark ASX 200 index fell 10.2% in FY22.
CBA shares took a sharp plunge in June
Talking of the last month of the fiscal, the ASX-listed bank’s share price ended 30 June 2022 at AU$90.38, down from AU$99.87 on 30 June 2021. Interestingly, the stock of CommBank had entered June in the green and plunged 13.4% in the last month of FY22.
Commonwealth Bank of Australia’s shares traded on a muted note in FY22 despite strong half year and quarterly results, along with multi-billion dollar share buybacks.
The main reason why June turned up as a horrifying experience for CommBank shares was the massive interest rate increases both from the US Federal Reserve and RBA. In fact, all big Australian banks came under fire from investors in the early part of June.
Meanwhile, earlier this week, RBA hiked official cash rate for a third straight month to 1.35%. The Australian central bank also indicated towards more tightening in its bid to curb inflation. While it may mean that banks would be able to hike their net interest margins, aggressive hikes could also exert pressure on new loans. It may also lead to a rise in bad debts, weighing the share price of the banks.
CBA’s earnings
CommBank reported a 23% on-year rise in its cash net profit after tax (PAT), which reached AU$4.75 billion, in its half year results announced in February 2022. The bank also increased its fully franked dividend by 17% to AU$1.75 per share. Additionally, CommBank announced an AU$2 billion on market share buyback.
In its third quarter financial results released in May 2022, CommBank posted quarterly cash profits of AU$2.4 billion.
Meanwhile, CommSec, a subsidiary of the Commonwealth Bank, has forecasted the Australian share market to grow at a modest pace over 2022.
“The Aussie sharemarket is tipped to fall by 7-9 per cent in 2022; lift 7-9 per cent over 2022/2023; and rise 5-8 per cent over calendar 2023,” according to the latest report by CommSec.
