Commonwealth Bank of Australia (CBA) faces a potential 26% decline in its share price over the next year, according to consensus price targets compiled by Bloomberg. This projected drop is the steepest among members of the MSCI World Bank Index, signaling the weakest return potential among global banking stocks. Analysts attribute this anticipated downturn to long-standing valuation concerns and increasing competitive pressures within the Australian banking sector.
Bloomberg Intelligence’s senior industry analyst, Matt Ingram, noted that CBA is vying for the title of the world’s most expensive developed market bank, reaching levels historically unsustainable. While CBA’s improving profit outlook for 2025 may have contributed to its recent re-rating, Ingram suggests this contrasts with growing headwinds induced by interest rate movements from 2026 onwards. Currently, CBA’s stock trades at 25 times forward earnings, nearly double the multiple of JPMorgan Chase & Co., highlighting its premium valuation compared to global peers. Despite driving gains on Australia’s S&P/ASX 200 Index last year and achieving record highs, the bank’s valuation has remained a persistent concern for analysts, even without widespread ‘buy’ ratings from brokers.
