Commonwealth Bank on the way to $8.4 billion profit

Commonwealth Bank (ASX: CBA) could be set to deliver an annual profit of around $8.4 billion when it reports next August, based on its first-quarter results released earlier this week.

The bank announced a profit of $2.1 billion for the September quarter on Wednesday – a massive 14% higher than what it achieved in the prior corresponding period. Analysts believe that this performance could be maintained for the remainder of the year. UBS analyst Jonathon Mott raised his forecast from $8.1 billion to $8.4 billion whilst Deutsche Bank analyst James Freeman increased his by 3% to $8.3 billion.

Investors have embraced the result, pushing the bank’s shares to a record high of $79.32 yesterday whilst its main competitors, Westpac (ASX: WBC), NAB (ASX: NAB) and ANZ (ASX: ANZ) each fell as the latter two traded ex-dividend.

However, investors shouldn’t go crazy buying shares in the bank. As is currently the case with each of the banks, most of the good news is already priced into the value of shares and it is difficult to see how the incredible performances can be maintained in the long-term. As such, it may be appropriate for investors to look elsewhere for stocks to add to their portfolio.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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