Commonwealth Bank of Australia (ASX: CBA) shares have pulled back from their highs, but they still trade at a sizeable premium to the other major banks.
At around $163.56 at the time of writing, CBA shares are above their 52-week low of $146.97 but still well below their 52-week high of $192.
That creates an interesting setup. The banking sector is dealing with a difficult backdrop, including higher interest rates and proposed changes to negative gearing weighing on the housing market. But I think there are still good reasons to buy CBA shares today.
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Quality counts in a tougher banking market
The first reason is quality. When conditions become more uncertain, I think investors have a strong reason to focus on the highest-quality bank in the sector. CBA has long held a powerful position in Australian banking, helped by its huge customer base, strong deposit franchise, digital strength, and trusted brand.
Those advantages can be especially useful when the operating environment is harder.
Higher interest rates can put pressure on borrowers. Housing market sentiment can shift. Competition for deposits and mortgages can affect margins. Credit quality also needs watching when households and businesses are under pressure.
In that environment, I think CBA's scale and customer relationships matter.
The bank has a broad presence across home lending, deposits, business banking, payments, cards, apps, and everyday financial services. It is deeply embedded in the financial lives of many Australians, and that gives it a level of resilience that is hard to replicate.
CBA shares are rarely cheap. But I think the premium reflects a business that investors trust to navigate more difficult periods better than most.
The dividend still has appeal
The second reason is income. CBA shares may not offer the highest dividend yield among the major banks, but the dividend still looks attractive, particularly because it is expected to be fully franked.
According to CommSec, consensus estimates point to dividends per share of $5.10 in FY26 and $5.15 in FY27.
Based on the current share price of around $163.56, that implies forward dividend yields of approximately 3.1% in both years.
For investors who can use franking credits, the grossed-up income picture could look more appealing.
I also think investors should consider the total return potential. A bank share does not need to have the highest yield on the ASX to be worthwhile. If CBA can keep paying reliable dividends while also delivering capital growth over time, the overall return can still be attractive.
That combination is why I think CBA remains such a popular long-term holding.
Earnings support the premium
The third reason is the earnings base. CommSec consensus estimates suggest CBA could generate earnings per share of $6.54 in FY26 and $6.72 in FY27.
At the current share price, that puts the bank on a price-to-earnings (P/E) ratio of about 25 times FY26 earnings and 24 times FY27 earnings.
That is a premium multiple for a bank. But CBA is also the bank with the strongest market reputation, and I think investors have historically been willing to pay more for its quality, consistency, and digital leadership.
The key question is whether CBA can keep justifying that premium.
I think it can. The bank's technology investment, customer engagement, balance sheet strength, and ability to generate substantial profits all support the case. It may not deliver explosive growth, but it does not need to. A high-quality bank with strong dividends, disciplined lending, and a trusted position in the economy can still create value for shareholders over time.
Foolish Takeaway
CBA shares are not priced like a bargain-bank stock, and that is unlikely to surprise anyone who follows the sector.
But I do not think the investment case rests on the bank suddenly becoming cheap. It rests on the strength of the franchise, the role CBA plays in Australian financial life, and the likelihood that patient investors can still be rewarded through a mix of earnings, dividends, and time.
The sector faces uncertainty, especially around borrowers, housing sentiment, and competition. Even so, for long-term investors looking for exposure to Australian banking, I think CBA remains a share worth considering.
