Commonwealth Bank of Australia (ASX: CBA) shares were in focus last week when the banking giant released its third quarter update.
In case you missed the announcement, let's have a quick look at what the company reported.
For the three months ended 31 March, CBA posted a 1% decline in operating income.
Management advised that this reflects one less day in the quarter and slightly lower net interest margins due largely to continued competitive pressures and customers switching to higher yielding deposits.
So, with CBA's expenses increasing 2% due to higher amortisation and staff costs, Australia's largest bank reported an unaudited statutory net profit after tax of $2.4 billion. This represents a 3% decline on the first half average and 5% on the prior corresponding period.
And although the bank reported rising arrears across home loans, credit cards, and personal loans, its balance sheet remained strong. CBA finished the period with a healthy customer deposit funding ratio of 75%, an LCR of 138%, and an NSFR of 120%.
But what about the CBA dividend? Has this results release had an impact on what the market is expecting from the bank in FY 2024 and beyond?
Let's now take a look at what analysts are forecasting for the coming years.
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CBA dividend forecast
According to a note out of Goldman Sachs, its analysts have increased their earnings estimates slightly for the next few years to reflect lower bad and doubtful debts. However, there are no changes to the broker's dividend estimates.
The note reveals that Goldman continues to expect CBA to pay a $4.55 per share fully franked dividend in FY 2024. Based on the current CBA share price of $117.54, this will mean a 3.9% dividend yield for investors.
Goldman expects the bank to maintain its dividend at $4.55 per share in FY 2025 despite predicting a year on year decline in earnings. This will mean another 3.9% dividend yield for investors to look forward to that year.
Moving onto FY 2026, the broker expects the bank to make it three in a row and pay another $4.55 per share fully franked dividend. This of course means yet another 3.9% dividend yield based on its current share price.
Are CBA shares in the buy zone?
Goldman thinks investors should keep their powder dry and wait for a sizeable pullback before investing in the banking giant.
In response to the third quarter update, the broker reiterated its sell rating with an improved price target of $82.61.
