The Commonwealth Bank of Australia (ASX: CBA) share price has dropped another 5.2% today to under $70.
The last time it was this low was a year ago during the depths of the worry about the financial services royal commission and falling house prices. It has fallen 21% since 21 February 2020.
CBA isn't the only major bank suffering a bruising. Today alone we've seen:
The Westpac Banking Corp (ASX: WBC) share price decline by 7.2%.
The National Australia Bank Ltd (ASX: NAB) share price decline by 8%.
The Australia and New Zealand Banking Group (ASX: ANZ) share price decline by 8.5%.
Ouch. It's been the most painful day for ASX shares since the GFC.
Investors now seem really worried about an Australian and global recession. The last time the ASX 200 was this low was during the selloff at the end of 2018. Volatility has certainly picked up over the past 15 months.
Will bank customers' cashflow be hurt so much that they can't pay their loans?
Will major bank bad debts suddenly spike after years of low levels of poor performing loans (thanks to lower interest rates)?
Is Australia's high level of household indebtedness about to bite?
Hopefully the answer to all those questions is no, but the fear is there.
To me, banks have always been the type of business that grow slowly and have the potential to really plummet if actual trouble hits, like we saw during the GFC with northern hemisphere banks.
But don't forget, Aussie banks are stronger and more profitable than most other banks around the world. I'm glad that APRA has been working with the banks to increase their capital levels so that they can survive even the most difficult of downturns.
Foolish takeaway
CBA now has a trailing grossed-up dividend yield of 8.9%. However, I wouldn't want to bet the house (or even a room) on the CBA annual dividend being $4.31 over the next 12 months. It wouldn't be my pick for safe dividends over the next two years.
