Will Commonwealth Bank split its shares?

With Commonwealth Bank’s (ASX: CBA) shares currently sitting at around $79 each, the bank’s CEO Ian Narev has stated that a share split is worth considering down the track, although there are no imminent plans to do so.

With roughly 800,000 shareholders, Narev admitted that the bank is conscious that many of the mum and dad shareholders find the $79 figure to be quite large.

Speaking at the bank’s annual general meeting in Adelaide on Friday, Narev said “As you know, on things like share splits there are all sorts of considerations… We understand the sentiment behind it and we’ll listen.”

Just like the bank’s primary competitors, namely Westpac (ASX: WBC), ANZ (ASX: ANZ) and NAB (ASX: NAB), Commonwealth shares have delivered shareholders with outstanding returns since the beginning of the year. The shares climbed from around $60 at the beginning of calendar year 2013 and closed at $79.10 on Friday.

Other Australian companies that have also split shares in recent years include iron ore miner Fortescue Metals Group (ASX: FMG) and blood-products group CSL (ASX: CSL).

Foolish takeaway

Should the bank decide to split its shares, investors should not be fooled into thinking the shares are cheaper as the market capitalisation would remain the same. At today’s values, each of the banks remain overpriced and stand little chance of delivering market-beating returns in the long run. As such, investors should look elsewhere for investment ideas.

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

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