The CBA share price has been making big news this week. What can ASX 200 investors expect next?

The Commonwealth Bank of Australia (ASX: CBA) share price is down 1.11% in afternoon trade.

CBA shares closed yesterday at $100.85 and are currently trading for $99.73.

While the S&P/ASX 200 Index (ASX: XJO) is also in the red, down 0.79%, CBA is the only one of the big four banks losing ground at the time of writing.

CommBank was all over the news this week as the big bank reported its results for the 2022 financial year (FY22) on Wednesday morning.

What results did CommBank report?

The CBA share price closed 0.3% lower on Wednesday, despite reporting some strong figures for FY22.

On the plus side was an 11% increase in cash earnings, which hit $9.60 billion for the 12 months. Net profit after tax (NPAT) of $10.77 billion increased 6% year-on-year. And the big bank didn’t disappoint on dividends, declaring a fully franked final dividend of $2.10 per share.

On the negative side, a likely reason for the CBA share price being lower was a 0.18% year on year decrease in the bank’s net interest margin (NIM) to 1.9%. That was largely due to lower home loan margins and increased funding costs.

What can ASX investors expect next for the CBA share price?

So, that’s the year gone by.

As for what ASX investors can expect next, Russel Chesler, head of investments and capital markets at VanEck, said declining dwelling prices are likely to impact the CBA share price.

Chesler noted the big bank is the most exposed of any of its peers to an Aussie property slowdown.

According to Chesler (quoted by The Australian):

CBA continues to trade at a premium to the other big banks and is arguably overvalued. We do not believe that the trading premium is sustainable in the long term and at some point CBA will be re-rated…

Those households that are not so strong are going to be the ones that come under pressure with such a rapid increase in interest rates and inflation. Ultimately this will have an effect on mortgage loan serviceability and loan default rates. We do not believe these risks are fully factored into the CBA share price…

We expect the level of non-performing home loans to rise with the slowdown in the property market given the relatively large size of mortgages in Australia.

UBS has also scaled back its forecasts for the CBA share price and the bank’s earnings per share (EPS) outlook.

According to analyst John Storey (courtesy of the Australian Financial Review), EPS estimates were reduced to $5.61 from the previous $5.79 “driven by costs,” despite “higher net interest margin and volume assumptions”.

UBS, which has a neutral rating on CBA, reported a new 12-month target for the CBA share price of $101, down from $105.

CBA share price snapshot

Despite coming under some selling pressure this week, the CBA share price has still handily outperformed the ASX 200 in 2022.

Year-to-date, CBA shares are down 2.6% compared to a 7.2% loss posted by the benchmark index.

The post The CBA share price has been making big news this week. What can ASX 200 investors expect next? appeared first on The Motley Fool Australia.

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More reading

• How big is the CBA dividend yield right now?
• What does CommBank’s latest update mean for NAB shares?
• Is the CBA share price a buy after the bank’s FY22 results?
• Does this signify more bad news for ASX BNPL shares like Zip?
• The CBA share price looks downright expensive

Motley Fool contributor Bernd Struben 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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