First mover: CBA share price rises amid interest rate changes

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.

The Commonwealth Bank of Australia (ASX: CBA) share price is lifting today amid news it will raise home loan and savings rates.

The major bank’s share price is currently trading at $101.52, a 1.05% jump. For perspective, the the S&P/ASX 200 Index (ASX: XJO) is up 0.18% so far today.

Meanwhile, other AXS bank shares are also trading in the green at the time of writing. National Australia Bank (ASX: NAB) shares are 0.41% higher, Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are climbing 0.24%, while the Westpac Banking Corporation (ASX: WBC) share price is up 0.74%.

Let’s take a look at what is going on at Australia’s largest bank.

CBA lifts interest rates

CBA has become the first major bank to lift interest rates in response to the Reserve Bank of Australia’s announcement earlier this week.

The RBA lifted Australia’s official interest rate by 0.5% to 1.85% on Tuesday.

In a statement today, CBA advised home loan variable interest rates will lift by 0.5% per annum. NetBank saver variable interest rates will also rise by 0.5%.

Commenting on the news, retail banking group executive Angus Sullivan said:

We have been helping customers understand the changing rate environment and consider what it means for them, and we will continue to be there for them.

However, CBA will also offer a four-year owner-occupier principal and interest fixed home loan rate of 4.99%. This is 1.6% less than the bank’s current fixed package rate, Sullivan highlighted.

Meanwhile, Morgan Stanley analyst Richard Wiles is predicting higher rates and a bigger yield curve will boost CBA’s net interest income by $250 million in the second half of 2022. And he predicts this trend to continue in 2023. In comments cited by the Australian Financial Review, he said:

More importantly, we expect a larger benefit in the first half of 2023, as the full period impact of rate hikes and deposit pricing power easily offsets mortgage competition.

Share price snapshot

The CBA share price has fallen 0.83% in the past year, while it has lifted 0.38% year to date.

For perspective, the ASX 200 benchmark has lost nearly 7% in the past year.

CBA has a market capitalisation of more than $172 billion based on the current share price.

The post First mover: CBA share price rises amid interest rate changes appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of July 7 2022

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];[property] = defaultValue;

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);

More reading

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s