Commonwealth Bank (CBA) shares experienced a significant drop following concerns raised by UBS analyst John Storey regarding the bank’s retail performance. At 10.55am AEST, CBA shares were down 4.7 per cent to $170.44 after the UBS assessment was released. Commonwealth Bank is one of Australia’s largest financial institutions, providing a range of banking and financial services to individuals and businesses. It operates through various divisions, including retail banking, business banking, and wealth management.
Storey noted that while CBA’s FY25 result was broadly in line with expectations with a solid profit before provisions of $15.5 billion and a 2 per cent increase in total income, the retail banking division displayed signs of weakness. Specifically, retail earnings decreased by 1 per cent compared to the prior half. This decline was attributed to increased credit loss rates and a 2 per cent decrease in net interest income from home loans, despite growth in proprietary customer channels.
The analyst highlighted that the market may react negatively to the provided guidance for FY26 and the absence of indications of acceleration in the crucial retail segment. “We think the market might be disappointed around guidance for FY26 and the lack of signs of acceleration in the key retail segment,” said Storey.
UBS has maintained a “sell” rating on CBA shares, setting a price target of $120. The market’s reaction reflects investor apprehension regarding the sustainability of CBA’s earnings, particularly within its retail operations.
