Commonwealth Bank of Australia (ASX: CBA) shares are once again trading below $80 a piece after having dropped 74c or 0.9% in early trading. The bank managed to hit an all-time high of $81.29 a share on Thursday, after recently reporting a record third-quarter cash profit of $2.2 billion.
Although Commonwealth Bank represents one of Australia’s strongest and most well-run corporations, investors are now wondering whether there is actually value to be realised from buying its shares.
The bank is on track to record an annual cash profit in excess of $8.5 billion, but those earnings are likely to come under pressure in the near-future, making its P/E ratio of 15.4 times excessive. Interest rates will inevitably rise which will result in higher bad debt charges, while stricter capital requirements will also see a reduction in return on equity (ROE).
Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ) are also hovering around all-time highs, while National Australia Bank Ltd (ASX: NAB) remains far below its pre-GFC highs.
Looking for high-yield?
Another reason investors appear to be moving away from Commonwealth Bank is its diminishing yield. It now offers a fully franked dividend yield of just 4.7% – the lowest offered by any of the major banks.