The Commonwealth Bank of Australia (ASX: CBA) share price could get a boost over the long term from ongoing growth in its business banking division.
There are many banks in Australia. Some are huge like CBA, National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), and Australia and New Zealand Banking Group Ltd (ASX: ANZ).
Whereas others are a bit smaller, but still pretty big, like Bank of Queensland Limited (ASX: BOQ), Bendigo and Adelaide Bank Ltd (ASX: BEN), and MyState Limited (ASX: MYS).
Just how big are the biggest banks? According to the ASX:
CBA has a market capitalisation of around $160 billion.
NAB has a market capitalisation of $92.75 billion.
Westpac has a market capitalisation of $73 billion.
ANZ has a market capitalisation of $66.6 billion.
As you can see, CBA is by far the biggest bank and it has plans to become even bigger.
Focused on business banking growth
In its FY22 result, CBA reported that it achieved home lending growth of 7.4% and 13.2% growth in household deposits.
But, in percentage terms, the business segment of its operations grew even quicker. Business lending rose by 13.6% (or $15.4 billion in dollar terms) and business deposits increased by 15.1% (or $23.9 billion).
In its annual report, CBA said that its goal is to build Australia's leading business bank. It's focused on continuing to differentiate its transaction and merchant banking propositions, and digitising its business banking experience.
It wants to be the main bank of choice for business customers by partnering with them, proactively meeting more of their needs, and delivering a superior customer experience.
New leadership team member
CBA announced earlier this week the appointment of independent non-executive director Lyn Cobley, starting 1 October 2022.
Cobley has more than 30 years of experience in financial services. Notably, she's the former CEO of Westpac's institutional banking business and chair of Westpac's Asia advisory board, as well as group treasurer of CBA.
CBA Chair Paul O'Malley said:
On behalf of the board, I am delighted to announce Lyn's appointment, and to welcome her breadth of financial services experience in her role as a non-executive director of CBA.
What to make of this
CBA is already growing at a good pace in its business banking, but Cobley may be able to provide some valuable expertise for the board and the business. Business banking growth could also be good for the CBA share price.
Motley Fool Australia chief investment officer Scott Phillips spoke on Nine's Late News on Tuesday night about this appointment. He said:
This is fascinating…because CBA's done a really good job over the past year or two of really diving deeply into the business market.
It's always been the king of the kids when it comes to the mortgage market, the property market, but business lending and business relationships in general are more the remit of NAB and Westpac in-particular. Institutional banking is a really important part of the Commonwealth Bank growth strategy and this does bolster their activities and their expertise in this area.
CBA share price snapshot
Over the last month, CBA shares have dropped by 8%.
