Despite an improved outlook for interest rates, Macquarie expects continuing mortgage competition and expenses to limit near-term upside for CommBank, anticipating the bank will be unable to outperform peers on revenue growth in coming years.
The bank disclosed pre-provision profit of $3,288m in the typically weaker third quarter, in line with Macquarie’s expectations, benefiting from unwinding leave provisions.
While the broker expects CommBank to start benefiting from rate rises in the coming quarter, it also anticipates slowing balance sheet growth and weaker markets will offset, while costs will increase.
Macquarie finds the bank’s current valuation premium excessive, and retained the Underperform rating and target price of $90.00.
Sector: Banks.
Target price is $90.00.Current Price is $102.15. Difference: ($12.15) – (brackets indicate current price is over target). If CBA meets the Macquarie target it will return approximately -13% (excluding dividends, fees and charges – negative figures indicate an expected loss).
