The Commonwealth Bank of Australia Ltd (ASX: CBA) share price closed the week 0.39% higher on Friday after providing an update on its Aussie life insurance business.
So, while the CBA share price has rebounded in 2019, is it the best Big Four banking stock available on the ASX in August?
What was in the life insurance update?
CBA reported that it has entered into further agreements to progress the planned divestment of its CommInsure Life business to AIA Group Ltd.
According to the release, the revised transaction path involves a joint co-operation agreement, reinsurance agreements, parntership milestone payments and a statutory asset transfer.
CBA said it expects to receive aggregate proceeds of $2.375 billion, a reduction of $150 million from the original sale prices, with $750 million of this to be received by the end of 1H 2020.
Is the CBA share price cheap at $77.40?
The entire Financials sector was hit hard in 2018 by the Financial Services Royal Commission, with somewhat of a mixed bag of performances so far this year.
However, amongst its Big Four peers, the CBA share price has seen the least capital gains in percentage terms so far this year.
The CBA share price is up 9.06% so far this year while National Australia Bank Ltd (ASX: NAB) leads the pack with 15.70%, closely following by the gains from Westpac Banking Corp (ASX: WBC) with 13.60%.
However, CBA's performance prior to the start of August was the strongest by quite some margin before it reported its full-year earnings to the market.
CBA reported a 4.7% year-on-year decrease in profit to $8.5 billion as CEO Matt Comyn warned that further interest rate cuts could put pressure on the bank's profitability.
While this has seen the CBA share price fall 5.95% lower in August, I don't see why this should squeeze CBA's profits any more than its Big Four banking peers.
Is CBA a better buy than its peers?
The CBA share price closed the week at $77.40 per share, some way short of its $83.99 52-week high set less than a month ago.
CBA has traditionally reported before its Big Four banking peers with ANZ, NAB and Westpac set to release their respective results in late October or early November.
On a relative value basis, the CBA share price is trading on an earnings multiple of 16.5x, which is higher than that of ANZ (11.4x), NAB (13.2x) and Westpac (12.1x).
On the income side, CBA currently yields 5.57% compared to the other three banks which all offer investors more than 6% as at the end of the week.
Foolish takeaway
All-in-all, the CBA share price does appear to be relatively expensive compared to its Big Four banking peers.
However, given the other three banks are yet to report, I suspect we might see a reversal of this following full-year results as we see how lower rates have impacted the net interest margins of the other three.
While I won't be purchasing CBA shares just yet, I think a further fall towards the $75 mark could represent a buying opportunity in the last quarter of 2019.
