Why did the CBA share price jump to a 52-week high in November?

In morning trade, the Commonwealth Bank of Australia (ASX: CBA) share price is down slightly at $107.53.

Despite this, the banking giant’s shares are on course for a positive monthly gain of approximately 3%.

In fact, things have been so positive this month, the CBA share price managed to hit a 52-week high of $109.20 at one point.

Why did the CBA share price hit a 52-week high in November?

Investors were bidding the CBA share price higher in November thanks largely to the release of a solid first quarter update in the middle of the month.

For the three months ended 30 September, Australia’s largest bank reported a 2% increase in cash earnings over the second half average of FY 2022 to $2.5 billion. This was driven by a 9% lift in operating income, which was offset partially by a 4.5% increase in expenses due largely to wage inflation.

The bank’s solid operating income growth was underpinned by higher margins and volume growth, which offset a reduction in non-interest income. The former reflects household deposit growth of 8.6%, home lending growth of 6.3%, and business lending growth of 12.6%.

And while the banking giant surprisingly decided not to reveal what its net interest margin (NIM) was during the period, Goldman Sachs estimates that it came in at between 2.05% to 2.10%.

This was a big positive given that the broker was forecasting a first half NIM around 10 basis points lower than this. Especially given how interest rate hikes are likely to support a further increase in its NIM during the second quarter.

Goldman commented:

CBA did not provide a NIM for the quarter; however, we note that net interest income was very strong at +16% vs 2H22 average and was run rating 5.5% above our 1H23E forecasts. Based on current GSe balance sheet forecasts, and the fact liquids seem to have grown stronger than loans in the quarter, we estimate a 1Q23 NIM of between 2.05% to 2.10% (which is >10bp higher than our current 1H23E), with its trajectory into 2Q likely still higher.

All in all, a positive month for the bank and its shareholders will no doubt be hoping for more of the same from the CBA share price in December.

The post Why did the CBA share price jump to a 52-week high in November? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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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