FY19 net profit was -2% below Morgans’ forecasts. The broker considers the result bodes well for the outlook for major bank earnings in terms of home lending and residential mortgage asset quality.
The broker continues to believe the current multiples are stretched and Commonwealth Bank remains the least preferred major bank.
Morgans assumes the sale of CommInsure Life will be completed by the end of the first half of FY20. Hold rating maintained. Target is steady at $74.
Target price is $74.00.Current Price is $77.65. Difference: ($3.65) – (brackets indicate current price is over target). If CBA meets the Morgans target it will return approximately -5% (excluding dividends, fees and charges – negative figures indicate an expected loss).