$154.30. That was the closing bell for the Commonwealth Bank of Australia share price asx on Friday. For anyone who bought in years ago, seeing CBA trade at these levels—even after a messy 16% slide from its mid-2025 peak of $192—feels like a victory lap. But honestly, if you’re looking to jump in right now, the vibe in the market is "proceed with extreme caution."
It's a weird time for Aussie banks. On one hand, you've got the biggest, baddest financial fortress in the country. CBA has more than 15 million customers. They own roughly 25% of the credit card market. They are, for all intents and purposes, the Australian economy in stock form. But the math is starting to look a bit... spicy.
The Valuation Trap?
Most analysts are currently looking at CBA and scratching their heads. The bank is trading at a price-to-earnings (P/E) ratio of roughly 25x. To put that in perspective, its peers like NAB or Westpac usually trade much lower. Basically, you’re paying a 45% premium just to say you own the "Gold Standard" of the Big Four.
Why is everyone so worried?
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Well, look at the targets. Goldman Sachs and UBS have been waving red flags for months. We’re talking about sell ratings with price targets ranging from $125 down to a staggering $96.07 from the team at Morgans. That’s a massive gap between where the stock is sitting and where the "experts" think it should be.
What's driving the jitters?
- The Yield Problem: CBA’s dividend yield is hovering around 3.17%. While a $4.85 total dividend for FY25 sounds okay, it’s not exactly lighting the world on fire when you can get decent returns from "safer" term deposits.
- Sticky Inflation: The RBA is still breathing down everyone’s neck. With the cash rate sitting at 3.60% and rumors of a February 2026 hike, the "rate cut" fantasy that drove shares up in 2024 has officially evaporated.
- Competition: The "deposit moat" is leaking. Smaller players and digital banks are getting aggressive, and CBA is having to work a lot harder (and spend more) to keep its mortgage customers from jumping ship.
What Most People Get Wrong About CBA
There is this myth that CBA is "too big to fail" or that the share price will just keep marching up forever because Australians love property. While it's true that CBA's mortgage book is legendary, the growth isn't what it used to be.
Cash NPAT (Net Profit After Tax) for the 2025 full year was about $10.2 billion. That’s a monster number, sure. But it was essentially flat compared to previous periods. When a company stops growing but its share price stays high, you get what we call "valuation detachment." Essentially, the stock price is acting like a growth tech company while the actual business is acting like a steady, mature utility.
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The 2026 Outlook: A Second Year of Underperformance?
Morgan Stanley recently flagged that 2026 might be another year where CBA lags behind its rivals. While ANZ and Westpac are playing the "turnaround" game—which investors love because there's room for improvement—CBA is already at the top of the mountain. There’s nowhere to go but down or sideways.
We also have to talk about the "flow of funds" effect. For a long time, big international index funds just automatically bought CBA because it was a massive part of the ASX 200. That "forced" buying helped keep the price inflated. Analysts now think that trend has finally run its course.
Key Dates to Watch
- January 28, 2026: December quarter CPI release. If inflation is high, expect the bank to take a hit as rate hike fears grow.
- February 3, 2026: The next RBA board meeting. A 25-basis point hike is currently a "maybe" (about a 25% chance according to the futures market).
- February 10, 2026: CBA’s own half-year results. This is the big one. We'll see if those profit margins are actually holding up or if the "mortgage wars" are eating them alive.
- February 18, 2026: Ex-dividend date for the estimated $2.25 interim payout.
Is there any good news?
It’s not all doom and gloom. CBA is incredibly well-capitalized. Their Common Equity Tier 1 (CET1) ratio is 12.3%, which is way above what the regulators require. They’ve also been buying back their own shares—about $300 million of a planned $1 billion buy-back was done by mid-last year. This helps prop up the earnings per share even if the total profit isn't surging.
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Also, they are dumping money into AI and fraud prevention ($900 million last year alone). In a world where scams are everywhere, being the "safest" bank actually matters to customers.
How to Handle Your CBA Shares Right Now
If you’ve got a massive capital gain sitting there, it might be time to stop being greedy. The commonwealth bank of australia share price asx has had an incredible run, but the technicals are looking shaky. The stock is currently trading below its long-term moving averages, which is usually a sign that the momentum has shifted to the downside.
Actionable Insights:
- Don't FOMO: If you aren't in yet, wait for the February reporting season. Buying at $154 when brokers are screaming $125 is a bold move.
- Watch the RBA: Bank stocks live and die by interest rate expectations. If the RBA stays "hawkish," the pressure on CBA's valuation will continue.
- Check your Diversification: If CBA is more than 10-15% of your portfolio, you're essentially betting your future on the Australian mortgage market.
- Use the DRP: If you're a long-term "set and forget" investor, make sure your Dividend Reinvestment Plan is active to benefit from the power of compounding during these volatile dips.
The "Goldilocks" period for Aussie banks is over. We’re moving into a phase where quality matters, but price matters more. CBA is definitely quality—it's just a question of whether you're willing to pay a luxury price for a house that might need a few repairs in the coming year.
Keep an eye on that February 10th report. It’ll tell us everything we need to know about whether this $154 level is a floor or a ceiling.