Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) are two of Australia's largest and most established banks.
Both have enormous customer bases, strong market positions, and a history of rewarding shareholders with dividends.
But when it comes to choosing between them, I think there is an important distinction between paying a lower price and getting better value.
So, which bank would I buy today?
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The CBA share price
The CBA share price is currently trading around $166.97.
At that price, investors are paying approximately 25 times expected FY27 consensus earnings, which is a substantial premium to Westpac's multiple of around 18 times.
However, I believe there are good reasons why investors are willing to pay more for CBA's earnings.
One is the strength of its customer relationships.
CBA's FY26 annual report revealed that it had approximately 12.3 million retail transaction accounts and another 1.4 million business transaction accounts at the end of June.
Its CommBank app also had more than 9.6 million active users, generating over 14 million logins each day.
I think these figures demonstrate just how deeply embedded CBA is in Australians' everyday financial lives.
This creates opportunities to build relationships with customers and offer additional financial products, from home loans to insurance and investment services.
It also supports a substantial deposit base, providing the bank with an important source of funding.
And the benefits are showing up in its financial performance. In FY26, CBA increased its cash profit by 7% to almost $11 billion, delivering a return on equity of 14%.
I think that's an impressive result for a business of its size, particularly given the competitive nature of Australian banking.
The Westpac share price
As mentioned above, the Westpac share price of around $37.13 puts the bank on a considerably lower earnings multiple than CBA.
However, I think there are good reasons for this valuation gap.
Westpac's FY26 results, released to the ASX on Monday, revealed encouraging developments but also areas where the bank still has work to do.
On the positive side, business lending increased by 12%, while institutional lending grew by 18%, suggesting that its efforts to strengthen these operations are delivering results.
Westpac is also investing heavily in technology and improving its operating efficiency, which could support profitability over the coming years.
However, its underlying net profit was broadly flat at $7 billion in FY26, while its return on equity was 9.6%, compared with CBA's 14%.
As a result, I think Westpac has more work to do to generate stronger returns from its operations.
That doesn't mean it cannot improve, and successful execution of its transformation strategy could deliver better earnings growth.
But I have greater confidence in CBA's ability to consistently deliver strong results.
And while Westpac offers higher forecast dividend yields of 4.3% and 4.2% for FY27 and FY28, compared to CBA's 3.1% and 3.2%, according to CommSec, I believe the latter is more dependable.
Foolish takeaway
Westpac certainly offers a lower earnings multiple and a higher dividend yield, and I think its profitability could improve as its transformation progresses.
But CBA remains my preferred bank for the long term.
Its enormous customer base, strong financial performance, and ability to generate attractive returns on equity give me confidence in its future.
I would be comfortable paying a premium for that quality and holding its shares for many years.
