The Commonwealth Bank of Australia (ASX: CBA) share price is on fire today. CBA shares are currently up 0.72% today, mostly in line with the S&P/ASX 200 Index (ASX: XJO) which is up 0.85%. But it’s not CBA’s rise today that makes it notable, it’s what it has risen to. CBA shares are up to $96.67 a share on the back of this rise, after soaring as high as $97.38 this morning. And that, friends, is the highest level Commonwealth Bank has traded at in history. Not just post-COVID, but ever. The company has a market capitalisation of $171.47 billion at this price.
It’s actually quite a momentous occasion. CBA is the largest share on the ASX 200, and the Australian share market by extension. This makes it the largest public company in Australia. And CBA’s previous highs had stood for a long time. It was back in March 2015 that CBA first hit $95.92 a share, a level that would be unseen again for 6 years…. until this week. Even before the pandemic struck, CBA had only managed to climb to just under $89 a share.
What is pushing CBA shares to all-time highs?
So what has pushed CBA over the edge? Well, the catalyst appears to have been the ASX bank’s third-quarter update, which was released to the markets earlier this week. In this update, CBA reported a cash profit after tax of $2.4 billion for the 3 months to 31 March 2021. That was a 24% increase over the quarterly average over the first half of FY 2021. CBA also reported that its cash reserves were strong, and well within regulatory requirements. As such, CBA also flagged that it’s considering further “capital management”. This could come in the form of higher dividends down the road, or perhaps share buybacks.
Commonwealth Bank shares could have also been influenced by the 3 other major banks all reporting half-yearly earnings over the past couple of weeks. All 3 of the other banks delivered large increases in profits, as well as major increases to their dividends from 2020 levels (not a hard ask, to be fair). Another factor that is likely feeding into this performance is the overall health of the Australian economy. Recent unemployment figures have pointed to a storm recovery in place. Additionally, the Federal government has promised to focus on bringing the unemployment rate down to 4.5% in the budget which was delivered this week. As a bank, CBA is leveraged to the overall health of the economy. So all of these developments are good news for CBA by extension.
The CBA share price is now up more than 15% year to date, and 64% over the past 12 months. On the current share price, Commonwealth Bank of Australia is trading on a price-to-earnings (P/E) ratio of 21.5 and a trailing dividend yield of 2.57%.