What happened with the CBA share price in the 2022 financial year? 

The Commonwealth Bank of Australia (ASX: CBA) share price closed the 2022 financial year down 9.5%, almost identical to the losses posted by the benchmark S&P/ASX 200 Index (ASX: XJO) in FY22.

On 30 June 2021, CommBank was trading for $99.87. Last week, on 30 June 2022, the CBA share price closed at $90.38.

Share buybacks and strong financials

The CBA share price closed the financial year lower despite some strong financials reported by the bank.

In its half year results, reported in February, the bank revealed a 23% year-on-year increase in its cash net profit after tax, which reached $4.75 billion. CommBank also upped its fully franked dividend by 17% to $1.75 per share. And, to sweeten the pot, it announced another $2 billion on market share buyback, following on its earlier $6 billion off-market buyback. 

The big bank’s third quarter results, reported in May, were also strong, beating consensus expectations. Among the highlights lifting the CBA share price on the day, the bank reported quarterly cash profits of $2.4 billion, in line with its strong half year figures.

Following the quarterly release, CommBank’s CEO, Matt Comyn said, “Continued growth in household deposits, home loans, business lending and business deposits was a feature of the quarter. The Group maintained strong balance sheet settings and paid $3 billion in half-year dividends to shareholders.” 

While that was true for the quarter gone, it’s the home loan outlook that may have put the CBA share price under pressure over the last month of 2022.

What pressured the CBA share price in June?

Heading into June, CBA shares were still in the green for FY22. 

But over the last month of the financial year, shares tumbled a painful 13.4%. 

Shares in Australia’s biggest bank, and indeed all the big banks, came under selling pressure following outsized rate hikes from the US Federal Reserve and the Reserve Bank of Australia. With more rate hikes slated in the months ahead. 

While gradually moving rates higher can be good for banks as they’re able to increase their net interest margins, rapid rates can see new loan issues shrink and bad debts rise. 

Of particular concern for the CBA share price is the potential of a sharply weaker housing market impacting its lucrative mortgage lending sector. 

The post What happened with the CBA share price in the 2022 financial year?  appeared first on The Motley Fool Australia.

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More reading

• What’s going on with ASX 200 bank shares on Tuesday?
• CBA share price slips as analyst warns of $2 billion Klarna scratch
• How did the Vanguard Australian Shares Index ETF perform in June?
• Why ASX 200 value shares are surviving the sell-off better than growth shares
• June was a terrible month for ASX 200 bank shares. Here’s why

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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