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What to expect when Commonwealth Bank of Australia (ASX:CBA) releases its results

On Wednesday all eyes will be on banking giant Commonwealth Bank of Australia (ASX: CBA) when it releases its results for FY 2018.

What is the market expecting?

According to the Bloomberg consensus estimate, the market will be looking for a net profit after tax of $9,680 million and a final dividend of approximately $2.25 per share on Wednesday.

One broker that disagrees with the consensus estimate in respect to its dividend is Goldman Sachs. It has forecast a $2.30 per share final dividend, lifting its full-year dividend to $4.30 per share.

Goldman has also predicted a cash profit before non-recurring items of $9,089 million, which will be a decline of approximately 5.9% on the prior corresponding period.

This softer result is expected to be caused by a 4-basis point decline in its net interest margin compared to the previous half.

Goldman believes this will be driven largely by customers switching from interest only to principal and interest home loans.

In addition to this, the broker’s research suggests that Commonwealth Bank may have grown its total Australian loans at just 0.5x the system average during the six months. It will will be looking for commentary on this front and whether management expects the trend to reverse in FY 2019.

What else should you look out for?

Goldman Sachs will also be looking out for further colour on recent regulatory developments and its asset divestments.

The market will no doubt be interested to know what it plans to do with the funds raised from the divestments of its BoComm Life, Australian and New Zealand life insurance business, and the planned demerger of its wealth management and broking businesses.

Should you invest?

While I think that Commonwealth Bank’s shares are attractive at these levels, I wouldn’t be a buyer of its shares so close to its earnings release. Instead, I would wait to see what it reports on Wednesday before making a move.

In the meantime, I think the shares of Australia and New Zealand Banking Group (ASX: ANZ) and Westpac Banking Corp (ASX: WBC) are worth looking closely at.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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