In just under a month, all eyes will be on the Commonwealth Bank of Australia (ASX: CBA) share price when it hands in its first quarter update.
Ahead of the release, I thought I would look to see what the market is expecting from Australia's largest bank.
What is expected from CBA in the first quarter?
According to a note out of Bell Potter, its team are expecting a decent first quarter result next month.
The broker has pencilled in a first quarter cash net profit after tax of $2.36 billion and a statutory net profit after tax of $2.51 billion. The latter will be a 1% decline on the quarterly average during the second half of FY 2021.
Bell Potter explained: "Net interest income is expected to be up by around 3%. This is based on higher overall banking volumes (back to the traditional business of mainly mortgage and retail consumer loans) that more than offset a fall in NIM of around 3bp (to 2.01%). The main drivers are thus home loans [+4% for Retail Banking Services (RBS), +3% for Business Bank/Institutional Banking and Markets (BB/IBM)] and other loans (+4% for RBS although BB/IBM was negative)."
"On the other hand, the NIM fall is expected to be around 3bp RBS and 7bp for BB/IBM – contributing to a fall in NIM overall but wholly acceptable," it added.
All in all, Bell Potter expects this to ultimately put CBA on a path to deliver a full year cash profit of $9,485 million next year (up 9.6%), allowing it to declare a 406 cents per share fully franked dividend in FY 2022 (up 16%).
Is the CBA share price good value?
Bell Potter remains bullish on the CBA share price and has retained its buy rating and $118.00 price target.
Based on the current CBA share price of $103.87, this suggests potential upside of 13.5% before dividends and ~17.5% including them.
