The Commonwealth Bank of Australia (ASX: CBA) share price was on form in 2021 despite an end of year blip.
Over the 12 months, the banking giant’s shares rose by a sizeable 23%.
Why did the CBA share price charge higher in 2021?
Investors were buying CBA and other bank shares last year after they returned to form in FY 2021 following a difficult time a year earlier because of the pandemic.
For example, for the 12 months ended 30 June, Australia’s largest bank revealed a 19.8% increase in cash earnings to $8,653 million. This was notably better than the analyst consensus estimate of $8,464 million.
This strong result was driven by growth across business lending, home lending, and household deposits. CBA revealed that business lending grew over 3x system, home lending was 1.2x system, and household deposits grew 1.2x system.
In addition, the bank finished the period with a very strong balance sheet and capital position. This allowed CBA to declare a fully franked final dividend of $2.00 per share, bringing its full year dividend to $3.50 per share. This was a 17% increase year on year.
But it got better for shareholders. In addition to the final dividend, the bank announced a $6 billion off-market share buyback. Once again, this was also ahead of the market’s expectations.
Commonwealth Bank’s Chief Executive Officer, Matt Comyn, commented at the time: “Strategic divestments have generated $6.2 billion in excess capital since 2018. Today we have announced an off-market buy-back of up to $6 billion of CBA shares as the most efficient and appropriate way to commence the return of surplus capital, as shareholders will benefit from a lower share count that will support return on equity and dividends per share.”
What’s next in 2022?
Opinion remains divided on the CBA share price at the current level.
Time will tell which broker makes the right call on the CBA share price.