Own CBA (ASX:CBA) shares? Here’s what to look for during reporting season

Here’s what to look for when CBA releases its full year results…

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The Commonwealth Bank of Australia (ASX: CBA) share price has been a very positive performer in 2021.

Since the start of the year, CBA shares have risen a sizeable 18%.

So, with its full year results just around the corner, expectations certainly are high for a strong report next month.

What to expect from CBA during reporting season

Investors have been bidding CBA shares higher this year in anticipation of a strong result next month. But just how strong is it expected to be?

According to a recent note out of Bell Potter, its analysts are forecasting a cash net profit after tax of $8.51 billion for the 12 months ending 30 June. This represents a 16.5% increase from a cash net profit after tax of $7.3 billion a year earlier.

Bell Potter also notes that this will mean its second half cash net profit has grown 19% over the first half of FY 2021.

The broker commented: “Our cash NPAT estimates on a continuing basis are increased by up to 20% mainly due to changes in loan impairment expenses (and with this decreasing to 6% in the following year). While we were caught off-guard by the speed of recovery in mainstream banking, we still expect operating income and operating expense growth to result in a 2-3% “Jaws” in the long term.”

The CBA dividend

Also giving CBA shares a boost this year has been optimism over its dividend. Especially given its improved performance and APRA removing dividend restrictions.

The note reveals that Bell Potter expects the CBA dividend to come in at a fully franked $3.34 per share in FY 2021. This comprises a final dividend of $1.84 cents per share and its interim dividend of $1.50 per share.

Based on where CBA shares are currently trading, this will mean a fully franked 3.35% dividend yield.

Are CBA shares in the buy zone?

Bell Potter currently has a hold rating and CBA share price target of $105.00.

Its analysts explained: “The price target is increased by $15.00 to $105.00 as such. CBA’s better dividend prospects in the medium term (yield reaching back to around 4.0% by 2023) and solid recovery in consumer, business and institutional banking may be intact but we have decided to lower the rating from Buy to Hold in the meantime.”

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Motley Fool contributor James Mickleboro 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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