What happened with the CBA (ASX:CBA) share price this week?

Higher dividends, share buybacks or both? Let’s take a look

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Commonwealth Bank of Australia (ASX: CBA) shares have been in the red all day. The CBA share price is down 0.6% in the final hour of trading, at $101.21 per share.

That’s 1.3% lower than last Friday when the CBA share price closed at a new record high of $102.52.

Finance levels rising, share buyback expectations

With interest rates still near all-time lows and the Australian economy picking up speed, the bank reported a 21% leap in equipment and machinery financing in May year-on-year.

According to CBA executive general manager, business lending, Clare Morgan:

The construction industry in particular, has benefited from multiple government stimulus packages, including record investments in public infrastructure projects and the Homebuilder grant. We’re also seeing strong demand for vehicle financing and machinery, particularly in the food manufacturing and agriculture sectors.

The CBA share price may also be in for a lift if WAM Leaders Ltd (ASX: WLE) portfolio manager Matthew Haupt has it right on expectations for share buybacks.

Haupt is bullish overall on the big banks. He believes they’ll start returning a trove of excess capital to investors in the next 3-6 months.

On CBA shares specifically, he expects we’ll see an off-market share buyback with “a large franking component… National Australia Bank, I think, will do smaller, bite-sized buybacks over the next few years.”

How did the CBA share price move this week?

With no rally in the final moments today, the CBA share price has closed lower on 4 of the 5 trading days this week. Thursday, 10 June, was the only day the bank’s shares gained, closing the day up 0.76%.

Still, the CBA share price is only a touch off its all-time highs. It remains up more than 50% over the past 12 months, far outpacing the 23% gains posted by the S&P/ASX 200 Index (ASX: XJO) over that same time.

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Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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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