ASX-listed Commonwealth Bank of Australia (AU:CBA) posted a net profit after tax (NPAT) of AU$2.5 billion for Q1 FY25, unchanged from the same period last year. Nonetheless, NPAT increased 5% compared to the average of the second half of FY24. The bank attributed the results to ongoing cost-of-living pressures that are affecting economic growth. Following the update, CBA shares were down 0.89% as of writing.
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Meanwhile, CBA’s competitor ANZ Group Holding Limited (AU:ANZ) reported an 8% year-over-year decline in its FY24 cash profits last week due to a competitive mortgage market and higher loan repayment delays.
CommBank Releases Q1 FY25 Trading Update
In Q1, CommBank’s operating income increased 3.5% compared to the average of the last two quarters, while showing a 2% year-over-year growth. This was driven by higher net interest income, an increase in core lending and deposit volumes, and timely dividend inflows from minority investments.
This increase was partially offset by a 3% rise in operating expenses due to wage inflation, increased investment spending, and an additional day in the quarter.
On a positive note, the bank highlighted the growth of its Business Bank franchise, which gained from the addition of 29,000 business transaction accounts, bringing the total to over 1.27 million. Moreover, Business lending also saw diversified growth across sectors.
Similarly, last week, National Australia Bank (AU:NAB) reported an 8% growth in business lending within its Business & Private Banking segment amidst overall mixed FY24 results.
Is CommBank a Good Stock to Buy?
Post results, analysts at UBS and Citi maintained their Sell ratings on CBA stock, predicting more downside. That said, UBS analyst John Storey praised the results and highlighted strong franchise momentum within its consumer and business banking divisions.
Overall, CBA stock has received a Strong Sell rating on TipRanks based on 10 Sells and one Hold recommendation. The CBA share price target is AU$102.08, which is 31.4% lower than the current share price.
