Commonwealth Bank of Australia chief executive Matt Comyn will announce its full-year earnings on Wednesday, with analysts expecting a record full-year cash profit of $10.87 billion, after the bank made $5.4 billion in the first half.
Its results come after federal government changes to negative gearing and capital gains tax concessions for property in the May budget, which led to some of the biggest monthly house price declines since 2022.
Westpac disclosed on Monday that its mortgage applications had fallen 20 per cent since then, while NAB indicated on July 31 that its home loan applications were down 15 per cent in the June quarter.
IG market analyst Tony Sycamore said CBA had the largest investor loan book of the major banks, so its guidance on future investor demand would be closely watched.
Investors will also be watching CBA's loan impairment charges after the bank booked a $316 million expense in the March quarter, up from $223 million year-on-year.
That included a $200 million precautionary top-up to reflect global supply chain disruptions linked to the US-Israeli war with Iran.
But homebuyers did get some relief on Tuesday when the Reserve Bank of Australia left rates on hold for a second straight meeting.
However, economists deemed it a "hawkish hold" because the central bank expressed a bias toward future rate hikes.
"Australian mortgage holders have had an interest rate reprieve but are not out of the woods just yet," Betashares chief economist David Bassanese said.
Anything CBA says about its loan margins and credit quality would likely offer more flavour about the finances of Australian consumers than retail sales updates, said Josh Gilbert, lead analyst at APAC for eToro.
If the result missed expectations, it could weigh on the bourse's main S&P/ASX200 index, he added.
CBA shares were trading at just under $174 on Tuesday afternoon, down 2.5 per cent from Monday but up 8.1 per cent since the start of the year.
That still gives CBA a trailing price-to-earnings ratio of 28.7, a valuation usually seen in fast-growing tech companies rather than mature businesses.
A price-to-earnings ratio measures a company's share price to its earnings per share and shows how much investors are willing to pay for each dollar of a company's profits.
By that metric - which implies investors are paying almost $29 for each dollar of earnings - CBA is likely the most expensive bank stock in the developed world, experts have said.
US banking giants like Bank of America and Morgan Stanley trade at price-to-earnings ratios of around half that.
"Investors are paying record prices before they've seen the profits, and any wobble on margins or dividends will be punished quickly at these levels," Mr Gilbert said of CBA.
9°C