CBA share price hits new record high again on Tuesday

The Commonwealth Bank of Australia (ASX: CBA) share price is going from strength to strength.

CommBank shares closed yesterday trading for $109.76 and are currently changing hands for $110.32.

As you can see in the chart below, that puts the CBA share price up 0.5% as we head into the lunch hour, setting another new record high.

What’s driving the CBA share price gains?

There’s been no price-sensitive news out from the big four bank since early December.

So, why is the CBA share price up 9% in 2023 and notching new all-time highs today?

Well first, like the other banks, CBA has benefited from the series of interest rate hikes over the past half year. By increasing the rates that it charges on loans faster than lifting the rates it offers on deposits, CommBank has been able to increase its net interest margins.

Now, higher rates from the RBA could backfire and work against CommBank, should the central bank hike too aggressively. That’s because the RBA could tip Australia into recession and see a spike of bad debts and lower volumes of new home loans.

But the CBA share price gains appear to indicate investors are confident that we’re approaching an end to the rate hike cycle and that the RBA can engineer the so-called ‘soft landing’.

Income investors may also be snapping up CBA shares based on the outlook for the bank’s 100% franked dividends.

Morgan Stanley expects CommBank to boost its full-year dividends to $4.50 per share. That would be an increase of 17% from the $3.85 per share the bank paid out over the past 12 months.

At the current CBA share price, that forecast dividend works out to a yield of 4.1%.

CommBank is scheduled to release its next quarterly financial update on 15 February.

The post CBA share price hits new record high again on Tuesday appeared first on The Motley Fool Australia.

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More reading

• Why did the CBA share price just hit a new 52-week high?
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• Does the Vanguard Australian Shares ETF’s unique structure deliver better returns than the ASX 200?
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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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