Morgans believes stimulus initiatives announced by APRA (Australian Prudential Regulatory Authority), for an additional capital add-on of $500m for operational risk, to be applied until the banks have completed their planned remediation, will de-risk the earnings outlook for the sector.
Morgans considers the initiatives are positive for the outlook for system credit growth and asset quality. The broker expects the major banks to become more attractive to investors from a yield perspective as government bond yields fall.
Hold rating maintained. Target is steady at $74.
Target price is $74.00.Current Price is $81.65. Difference: ($7.65) – (brackets indicate current price is over target). If CBA meets the Morgans target it will return approximately -10% (excluding dividends, fees and charges – negative figures indicate an expected loss).