Is the Commonwealth Bank of Australia (ASX: CBA) share price a buy?
The major ASX bank's share price has performed better than its peers so far during this crisis.
Since 21 February 2020, the CBA share price is down 17.5%, the National Australia Bank Ltd (ASX: NAB) share price is down 23%, the Australia and New Zealand Banking Group (ASX: ANZ) share price is down 22.5% and the Westpac Banking Corp (ASX: WBC) share price is down 20.5%.
CBA has always been seen as the highest-quality of the big four ASX banks and this reputation seems to be cushioning its fall.
One of the main benefits of CBA is that it isn't as exposed to the problems that businesses are facing with lack of cashflow. Individuals could face cashflow issues too, hopefully Aussie businesses keep people employed and keep paying them with a bit of help from the Australian government.
It's this type of situation that APRA has been planning for with its requirement that major bank CET1 ratios have to be above 10.5% so that they can get through this period but also keep lending.
CBA also doesn't have a potentially large fine hanging over it like Westpac and NAB do, though it's possible something else could pop up.
The coronavirus is causing large volatility on the share market, but house prices keep rising. This is good news for banks like CBA because it reduces the risk of bad debts and it means that the size of each loan for new buyers is still rising.
Foolish takeaway
CBA is trading at 14x FY22's estimated earnings – I think this is how far we need to look ahead to see a normal financial result again. It has a trailing grossed-up dividend yield of 8.4%, though I wouldn't bet the house on this dividend being the same over the next 12 months. Despite the fall, I think there are better value shares during this coronavirus selloff.
