The Commonwealth Bank of Australia (ASX: CBA) share price is up 1.2% in morning trade. That's twice the 0.6% gain posted by the S&P/ASX 200 Index (ASX: XJO) at this same time.
CBA shares closed yesterday at $97.31 and are currently trading for $98.61.
That's the early day price action. Now here's why CBA's boss is bullish on the year ahead.
Image source: Getty Images
Enormous surplus savings in the Aussie economy
If you own CBA shares, you're probably familiar with the bank's CEO, Matt Comyn.
Speaking on Tuesday at The Australian Financial Review Business Summit, Comyn said, "We're very optimistic about everything that we're seeing in the underlying data and looking ahead."
Comyn noted that Russia's invasion of Ukraine adds "a pool of uncertainty geopolitically", while the severe flooding on the east coast "is going to have an economic impact".
However, he said that following a "sharp contraction in operating performance across lots of sectors of the economy" in January, by the end of the month things began to "pick up right across the economy. And that's held through."
According to Comyn (quoted by the AFR):
We're very positive about everything that we're seeing in the economy. Obviously, unemployment is phenomenally strong and low. We've got enormous surplus savings in the economy. We think consumer and business confidence continues to come back. It's going to be a couple of years of quite a strong tailwind. I think it's a great set of economic conditions. It's a great region to be in, Australia.
CBA estimates that the Aussie economy has grown more than 4% in the past 12 months. And the bank expects similar growth over the next 12 months.
Atop that, "We're forecasting unemployment to get to 3.8% later this year," Comyn said. "That's going to be the lowest in 50 years – on the back of unprecedented monetary and fiscal support. I think we should feel pretty confident about the outlook."
As for the businesses that have suffered through 2 years of pandemic restrictions, Comyn added:
It's an opportunistic time, I think, for many businesses, having gotten through a period of extreme difficulty over the last couple of years of enormous uncertainty, and having demonstrated a lot of resilience and adaptability.
How have CBA shares been performing?
Over the past 12 months, CBA shares have gained 13.8%, outpacing the 5.8% gains posted by the ASX 200 in that same period.
Year-to-date the CBA share price is down 3.8%.
