May was a breakthrough month for the CBA (ASX:CBA) share price

Three decades in the making, the Commonwealth Bank of Australia share price closed above $100 for the first time in May

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The Commonwealth Bank of Australia (ASX: CBA) share price made history in May, closing above $100 for the first time on record. Here’s a wrap on the month that was for Australia’s largest bank.

The CBA share price tips higher on third-quarter results

CommBank’s third-quarter results showed that its earnings recovery was gathering pace, with cash net profit after tax sitting at $2.4 billion. To add some perspective, its third quarter net profit slumped to $1.3 billion amidst the COVID-19 induced year of 2020, $1.70 billion in 2019 and $2.35 billion in 2018.

The bank also posted a decline in loan impairment expenses, with a majority of customers transitioning from its COVID-19 temporary loan repayment deferral program.

The price action for CommBank shares on 13 May, the day of its third-quarter results being released, was rather interesting. Its shares opened 0.76% lower to just under $94. Its shares progressively pushed higher throughout the day, before closing 1.06% higher at $95.58.

Economic tailwinds for CBA shares?

Australia’s domestic economic recovery could be tracking ahead of schedule according to the RBA’s May monetary policy meeting.

The minutes observed that:

The Australian economy was transitioning from recovery to expansion earlier and with more momentum than previously anticipated.

This translated into an upgrade in near-term GDP forecasts:

In response to the stronger starting point and improved outlook further out, the forecast for GDP under the baseline scenario had been revised upwards. GDP growth of 4¾ per cent was expected over 2021 and 3½ per cent over 2022. If realised, this would leave the level of GDP a little below that forecast before the pandemic, mostly owing to lower population growth.

Above $100 for the first time

On 28 May, the CBA share price closed above $100 for the first time, at $100.56. This also helped the S&P/ASX 200 Index (ASX: XJO) set a new all-time record high of 7,179.5.

CommBank shares have climbed an extraordinary 11.2% in May, which is impressive given the bank’s sheer size and the typical slow moving nature of banks.

Beyond the face value of the CBA share price, it is positive to see the broader Australian economy recovering at a rate exceeding the RBA’s expectations.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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