What to expect from the CBA (ASX:CBA) Q1 result

CBA’s Q1 results are coming soon. Here’s what to expect…

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Image Source: Commonwealth Bank

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.

Should you invest $1,000 in CBA right now?

Before you consider CBA, you'll want to hear this.

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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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