Commonwealth Bank of Australia Ltd [ASX:CBA] dropped 2.3% this morning to a low of $82.94 per share.
What happened to CBA?
CBA was the last of the Big Four banks to release results for the third quarter. The bank reported unaudited cash earnings of $2.4 billion for the quarter. Unaudited statutory net profit totalled $2.6 billion.
More or less, CBA’s results were in line with expectations, according to the Australian Financial Review:
‘The result was augmented by above system growth in household deposits and business lending while the bank pulled back from home lending. The bank grew its home lending book over the period by 7 per cent compared with system growth of 7.8 per cent.
‘Market watchers however are likely to zero in on the deterioration in the net interest margin — the difference between the price it pays for funds and what it can lend it for — which fell slightly over the period and was sheeted the back to the competitive environment.’
What now for the CBA Share Price?
The immediate selloff in CBA shouldn’t overly worry shareholders. The bank is not marred by the quality of their loans. Loan impairment expenses, which are loans that might not be fully repaid, declined from 17 basis points in the first half of FY17 to 11 basis points.
Wealth management assets under administration and funds under administration rose by 7% and 6% respectively. CBA said it was thanks to the stronger performance in financial markets and investor confidence.
Regards,
Härje Ronngard,
Junior Analyst, Money Morning
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