Booming Commonwealth Bank close to shares record

CBA’s share price is inching closer to its all-time high as it rides the housing boom and enjoys a scandal-free stretch through the economic recovery.

CBA is close to topping its all-time share price high, as it rides the economic recovery and property market boom. Picture: NCA NewsWire / Daniel Pockett

CBA’s share price is inching closer to its all-time high as the nation’s largest lender rides the housing boom and enjoys a scandal-free stretch through the economic recovery.

After crumbling below $60 through the March 2020 crash, CBA’s share price has been quietly tipping higher for the past year and is now within reach of the $95.92 all-time high it reached in early 2015.

It comes as the lender prepares to hand down its third quarter trading update on Wednesday, a week after its peers faced the market with their half-year numbers.

CBA’s shares have surged 56 per cent in the past year amid an improving economy and property market boom.

While the housing market briefly dipped mid-2020, it steadily recovered through the second half of the year and has been smashing records in recent months. Experts, including economists at CBA, are tipping double digit gains this year.

With the largest exposure to the housing market, CBA is reaping the benefits. The bank’s boss Matt Comyn last month argued against any measures to curb the property boom, saying the current boom was much lower risk than previous cycles.

The lender is also pushing hard into rival National Australia Bank’s territory, luring more business customers as it looks to unseat its peer as the nation’s top business bank.

As part of its assault, CBA has been working to double the number of business bankers in its branches, while also simplifying credit processes.

Last Tuesday, it announced it had acquired health technology provider Whitecoat, a medical booking and payments app, taking another big step into NAB’s domain.

CBA’s share price jumped 5 per cent last week to hit $93.92, higher than the $91 it was trading at before COVID hit.

As competition in the sector heats up, the banks have been beneficiaries of the rotation from growth to value stocks that kicked off in November.

But while CBA flirts with topping its share price record, its three peers are still well off their all-time highs.

Still, the sector as a whole is better placed than it was a year ago. As the economy marches on, the market is expecting interest rate rises sooner rather than later, despite the RBA’s insistence that it will not be lifting the official cash rate before 2024 at the earliest.

CommSec senior economist Ryan Felsman said the banks were all in a “pretty good position” right now.

“We’ve seen bond yields and market rates lifting a little bit, and that’s helpful for banks. It helps the net interest margin and profit margins,” he said.

“We’ve also got the surging property market at the moment, with record-high prices and record lending at the same time. There’s expectations that earnings will be strong on the back of all that.”

Unlike peer Westpac, CBA has also been relatively free of major scandals in recent years, putting the Austrac debacle behind it in 2018 and making amends following the financial services royal commission.

As the economic recovery gathers pace, investors will be watching closely for any commentary on the property market and earnings backdrop at the lender’s quarterly update this week.