Owners of Commonwealth Bank of Australia (ASX: CBA) shares may have seen the results from the other big four ASX bank shares of Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and ANZ Group Holdings Ltd (ASX: ANZ).
CBA is not the same bank as its competitors – it's seen as the highest-quality of the ASX bank shares. But, it is exposed to the same industry dynamics and tailwinds. For example, an increase in national credit demand should be helpful for all of the banks. Changes in household personal finances nationally can also affect all the banks.
It will release its full-year result for the 12 months to 30 June 2025 in August. But before that, the bank is scheduled to release its FY25 third quarter update on 14 May 2025. The latest quarter is normally the most important to investors because it's the most up-to-date view on the business. For CBA, the annual result is made up of four quarters, so the third quarter will play an important part in its FY25 annual result. We've already heard about the first two quarters in the CBA half-year result.
Let's have a look at what is expected of CBA in FY25 and then we'll look at what we've recently learned.
CBA FY25 projections
Broker UBS has made a number of projections about what CBA may be able to achieve in FY25.
UBS is forecasting that CBA could generate revenue of $28.2 billion in the 2025 financial year. This could help the bank generate pre-tax profit of $14.8 billion in the 12 months to 30 June 2025.
The broker forecast that CBA could make $10.28 billion of net profit after tax (NPAT) in FY25. This could translate into earnings per share (EPS) of $6.14, translating into a forward price/earnings (P/E) ratio of 27x.
UBS is also projecting CBA could achieve a return of equity (ROE) of 13.8%, which demonstrates how much profit the business has made compared to how much shareholder money is retained within the business. For a bank, that's a strong number.
When the broker saw the CBA FY25 half-year result, it said the bank is benefiting from a better-than-expected net interest margin (NIM) and ongoing lower expected credit losses. Its loan volume growth was also "strong".
What can Commonwealth Bank investors expect?
Time will tell how May and June go for CBA. There were a couple of key insights from the other banks that I will highlight.
Firstly, Westpac reported that its loan arrears significantly reduced. That is a really good sign because it suggests the risk of a painful amount of loans going bad is reducing. However, that's not guaranteed because NAB did report a small increase of previous arrears. I'm not going to specifically expect a certain level of arrears improvement with CBA, but the signs are positive.
Secondly, there could be robust credit/loan growth in 2025, according to Westpac's economists. 2025 could see housing credit growth of 5.3% and business credit growth of 6.4%.
Thirdly, the dividends from the banks remain strong, and I think CBA's ability to grow profit could help fund a higher dividend.
Finally, there was nothing I saw from the other major banks' reports that suggested CBA's household and business credit growth has been stifled in the last few months.
