Citi believes that by launching the new BNPL product, the bank has sought to defend its share of millennials, challenge a disrupter in Afterpay ((APT)) and raised a conundrum for the RBA, who have thus far left BNPL largely unregulated.
The broker believes the decline of credit card profitability is overstated (though real) in the context of other banking products and more attributable to the rise of debit, not BNPL. The price target for Commonwealth Bank of $82.50 and Neutral rating are unchanged.
Sector: Banks.
Target price is $82.50.Current Price is $86.00. Difference: ($3.50) – (brackets indicate current price is over target). If CBA meets the Citi target it will return approximately -4% (excluding dividends, fees and charges – negative figures indicate an expected loss).
