CBA Posts Record $10.25b Profit as Shares Slide on ‘Priced for Perfection’ Concerns

Australia’s largest bank, the Commonwealth Bank (CBA), has reported a record cash profit of $10.25 billion, but its share price tumbled as investors questioned whether the stock’s lofty valuation could be sustained.

The nation’s biggest lender recorded a 7% rise in statutory net profit to $10.13 billion for the past financial year, while cash profit, the bank’s preferred measure, climbed 4% to its highest level on record. Shareholders will receive a final dividend of $2.60 per share, bringing the full-year payout to $4.85, also a record and up 4% from last year.

CBA’s net interest margin edged up 0.09 percentage points to 2.08%, supported by a 5.3% increase in lending volumes, particularly in business and institutional loans. Income from markets trading also rose, benefiting from heightened market volatility.

Despite the strong results, CBA shares fell 4.4% to $170.91 by midday Wednesday, wiping billions off its market value and dragging the ASX 200 lower. The stock remains nearly 30% higher than a year ago but is down from a peak of $192 in June.

Analysts say the bank’s premium valuation left little room for upside. “The underlying business has been operating soundly, but the shares remain very expensive and are priced for perfection,” said Michael Haynes of Atlas Funds Management.

UBS analysts cautioned that the market may be disappointed by the lack of acceleration in CBA’s key retail segment, while IG’s Tony Sycamore described the result as “when a $10 billion profit just doesn’t cut it anymore.”

Sycamore noted that recent declines in bank shares have coincided with a rotation of investor interest towards mining stocks, which currently offer more attractive valuations.