Next week will be a big one for Commonwealth Bank of Australia (ASX: CBA) shares and shareholders.
That's because Australia's largest bank will be releasing its FY 2024 results on 14 August.
But what is the market expecting from the banking giant? Let's have a look and see what Goldman Sachs is forecasting the bank to report.
CBA FY 2024 results preview
Goldman Sachs is expecting the bank to post a decline in earnings for FY 2024.
It is forecasting cash earnings from continuing operation to fall 3.5% over the prior corresponding period to $9,716 million. This is a touch short of the consensus estimate of $9,783 million.
The broker expects this to lead to the big four bank paying a fully franked final dividend of $2.40 per share. This is in line with the consensus estimate and will be flat on the prior corresponding period.
What else should you look out for?
A key focus for investors, and something that could have a big impact on CBA's shares, is the bank's net interest margin (NIM).
Goldman believes there are signs that NIM pressure is easing. So, investors may want to look out for any commentary on its margin outlook. It said:
There are signs that the pressure on NIMs that we have seen in recent halves reduced somewhat in 2H24. While the sector is now past the peak of fixed rate mortgages rolling-off into variable, our analysis on industry product pricing suggests that the current new variable rate mortgage spread is 169/15 bp higher than the new fixed rate spread written two-/three-years ago, implying that two- and three-year fixed rate loans rolling into variable rate loans should have been accretive to NIMs in the half. Furthermore, while the gap between front- and back-book variable rate mortgage spreads was still a drag on NIMs in 2H24 (-10 bp average gap over the half), this is well below the average gap from 1H24 (19 bp) and FY23 (46 bp).
The broker is forecasting a second half NIM of 1.96% (down 3 basis points half on half) and a full year NIM of 1.97% (down from 2.07% in FY 2023).
Volumes will be another area of focus. Goldman notes that CBA has been underperforming its peers in Australian lending and is keen to hear how management will address this. It said:
In the six months to Jun-24 (2H24), APRA data showed that CBA's total Australian lending growth was slightly lower than that of system, at about 0.9x, and we note this consisted of housing lending at 1.0x system and non-housing lending at 0.9x system. […] We will be interested to i) hear how CBA will position themselves as we head towards the rate cutting cycle and what the volume strategy is going forwards, and ii) how the competitive landscape in business lending is developing.
Should you buy CBA shares?
Goldman continues to believe that CBA's shares are overvalued at current levels and isn't recommending them as a buy.
The broker currently has a sell rating and $91.75 price target on them. This implies potential downside of 28% from current levels.
