- Company Overview: Commonwealth Bank of Australia (CBA) is the largest banking group in Australia, with a market capitalisation of AUD287 billion as of 20 July 2026. The bank maintains a dominant franchise in retail banking, supported by leading market positions in residential mortgages and household deposits.
- Stable Operating Income: Operating income remained flat in 3Q26 (March 2026), with lending and deposit volume growth offsetting the impact of two fewer trading days, while net interest margin remained broadly stable.
- Resilient Asset Quality: Corporate Troublesome and Non-Performing Exposures (TNPE) ratio increased slightly to 0.94% in 3Q26 from 0.90% in 1HFY26, primarily due to single-name exposures.
- Prudent Provisioning: CBA increased its collective provision by an additional AUD200 million in 3Q26, bringing the total collective provision to AUD6.5 billion, reflecting a prudent approach to maintaining strong balance sheet buffers amid macroeconomic uncertainty.
- Capital Remains Robust: CBA reported a Common Equity Tier 1 (CET1) ratio of 11.6%, well above APRA's minimum regulatory requirement of 10.25%. Capital generated from earnings (+51bps) was partially offset by higher risk-weighted assets (-34bps), other items (-10bps), and the 1H26 dividend (-76bps).
- Robust Liquidity Position: CBA reported a Liquidity Coverage Ratio (LCR) of 133% and a Net Stable Funding Ratio (NSFR) of 116%, both comfortably above the regulatory minimum of 100%.
- Well-Diversified Long-Term Funding: Long-term wholesale funding accounted for 68% of total wholesale funding, with a weighted average portfolio tenor of 5.2 years. The funding maturity profile remains well diversified with no significant concentration in any single period, reducing refinancing risk.
- Stable Funding Profile: Funding remained supported by a strong deposit base, which accounted for 79% of total funding. Household deposits increased by AUD38 billion over the year to March 2026, while short-term wholesale funding remained well below historical levels.
- Overall: CBA continues to demonstrate a resilient credit profile, supported by stable earnings, sound asset quality, prudent provisioning, robust capital and liquidity, and a conservative funding structure.
- Recommendation: Investors may consider holding CBA's AUD and USD senior unsecured and Tier 2 bonds, which offer attractive yields of approximately 5.1%–6.2%.
- For more insights, please refer to our previous update article: Credit Update: Commonwealth Bank of Australia –High-Quality Defensive Credit with Pickup (4.7%–6.2%) | Bondsupermart
Table 1: CBA’s Senior Unsecured Bond
|
Bond name |
Year to Maturity |
Yield to Maturity |
Min / Sub investment amount |
Credit Rating (Fitch) |
|
1.46 |
5.1% |
AUD 200,000/10,000 |
AA- |
|
|
4.47 |
5.2% |
AUD 10,000/10,000 |
AA |
|
|
9.21 |
5.7% |
AUD 10,000/10,000 |
N.R. |
|
|
Source: Bondsupermart, iFAST Compilations. Data as of 27 July 2026. |
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Table 2: CBA’s Tier 2 Bond
|
Bond name |
Year to Call/Maturity |
Yield to Call/Maturity |
Min / Sub investment amount |
Credit Rating (Fitch) |
|
3.13/ 8.13 |
5.1%/5.7% |
USD 200,000/1.000 |
A |
|
|
1.28/ 6.29 |
5.5%/6.8% |
AUD 200,000/ 1,000 |
A |
|
|
4.13/9.13 |
5.8%/6.0% |
AUD 10,000/10,000 |
A |
|
|
8.34/ 13.34 |
6.2%/6.2% |
AUD 200,000/10,000 |
A |
|
|
Source: Bondsupermart, iFAST Compilations. Data as of 27 July 2026. |
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For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report holds a NIL position in the abovementioned securities.
