Commonwealth Bank Share Price up on Rare Good Day for Banks

At time of writing, Commonwealth Bank of Australia [ASX:CBA] is up 1%, trading at $66.49.

This marks a modest reversal on what has become a worrying downward trend line for the stock for the past year.

It was also a good day for the three other major banks, Westpac Banking Group [ASX:WBC] up .7%,  National Australia Bank [ASX:NAB] up .6% and ANZ Banking Group [ASX:ANZ] up .8%.

Take a look at how the Big Four have performed over the past year:The big four banks 12 month performance on graph trading view

Source: tradingview.com

CBA might not be the only stock set for major falls this year — check out our free Aussie Recession Survival Guide here.

Have the Big Four banks turned a corner?

We are now almost into the 11th month of the royal commission and profits have been tipped to slide further.

Combined 2018 profits for the Big Four are forecasted to be 7% lower this year compared to last.

This is in part a reflection of the impact of royal commission, but there is another factor involved — namely wholesale funding cost pressures.

In essence, money is becoming more expensive and harder to come by for the major banks.

As a result, these softer earnings may continue for a while yet — especially if a serious credit crunch comes to pass.

Will there be further hits to bank share prices?

The big four banks have set aside hundreds of millions of dollars to clean up the mess they have made.

However, the major domestic risk is the falling housing market.

As quoted by the ABC, UBS senior bank analyst Jonathon Mott notes,

The risk of the current “credit squeeze” turning into a “credit crunch” is real and is rising, with the housing market now falling sharply.’

It seems like the likelihood of an Australian financial  could be growing.

Could this kind of fall be around the corner?

Only time will tell.

Ryan Clarkson-Ledward,
For Markets & Money

PS: Don’t wait for a major correction to hit before you react, learn how to protect your portfolio with our free report on how to protect your wealth in a recession. You can access this free report here.


Ryan Clarkson-Ledward is a junior analyst for Markets & Money. Ryan has degrees in both communication and international business. His priority is bringing you the latest price updates on stocks through ASX updates, as well as supporting Sam Volkering with background research. As part of the team at Markets & Money his aim is to provide unbiased and relevant news for readers. Ryan’s work with Sam is designed to provide research that complements Sam’s analysis for small-cap and technology stocks. Together, their objective is to break through all the jargon and give you the hard facts to inform your investment decision-making. Ryan writes for:


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