Credit Suisse downgrades earnings estimates on the back of the reduction in official cash rates but also taking note of an increase in bad debt provisions derived from economic stress.
Bad debt provision estimates are increased for FY20 and FY21 because of the economic impact likely from coronavirus, with regard to small businesses linked to the supply chain in the tourism and education sectors.
Rating is upgraded to Neutral from Underperform, given the bank’s capital strength. Target is reduced to $77.00 from $77.60.
Target price is $77.00.Current Price is $75.17. Difference: $1.83 – (brackets indicate current price is over target). If CBA meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges – negative figures indicate an expected loss).