The Commonwealth Bank of Australia (ASX: CBA), the nation’s most valuable publicly listed company, has continued its remarkable performance streak, hitting another all-time high this morning. Despite various financial challenges, the ASX financial stock Commonwealth Bank of Australia (ASX: CBA) has shown resilience, reaching a new peak of $138.24 earlier today before settling at $137.33 in afternoon trade. This performance contrasts with the S&P/ASX 200 Index (ASX: XJO), which is up 0.46% on the day.
Financial Implications of Upcoming Results As CBA prepares to release its full-year results, the company has disclosed several financial impacts from the past year. Notably, CBA anticipates an after-tax, non-cash loss of $298 million related to its divestment from PT Bank Commonwealth (PTBC), one of Indonesia's largest banks. This loss encompasses:
- An impairment of $133 million on net assets following a revaluation in the first half of the year.
- A $100 million loss associated with the asset sale in the second half.
- Separation costs totaling $65 million.
CBA finalized the sale of its 99% stake in PTBC on May 2, and since then, the share price has risen by 19%. The loss from this divestment will be recorded under continuing operations but is expected to have a 'neutral' impact on the group’s common equity tier 1 ratio, a measure of capital adequacy.
In addition, the bank will account for $89 million in provisions for costs related to the transition of Bankwest to a digital bank and the rebranding of its business banking segment to CBA. This provision will be excluded from the FY24 underlying operating costs.
Impact on the CBA Share Price Despite these costs, CBA's financial health remains robust. For FY23, the bank reported a net profit after tax (NPAT) of $10.2 billion. Projections for FY24 estimate a slight decrease in profits to around $9.98 billion, reflecting a 2.2% decline year over year. The anticipated financial impacts of $387 million are expected to represent approximately 3.9% of the forecasted earnings.
The premium attached to CBA’s share price continues to be a point of interest, with shares currently trading at a price-to-earnings (P/E) ratio of nearly 24 times, significantly higher than the global banking industry average. Investors will be watching closely to see if they maintain confidence in the bank’s valuation despite the financial adjustments and challenges faced.