CBA Shares Fall 9.93% in August as Valuation Reset Overshadows Record Profit

The S&P/ASX 200 Index dropped 3% to a 10-week low. NextDC (ASX: NXT) fell 6.22% to $12.06, with a buy rating from Shaw and Partners citing strong demand for data centers. South32 (ASX: S32) declined 3.82% to $5.02, with a hold rating from RaaS Group due to commodity price outlooks. CBA (ASX: CBA) fell 3.88% to $154.19, with a sell rating from Shaw and Partners citing high valuations and modest earnings growth.

Fitch revised the outlook on New Zealand's big four banks (ANZ NZ, BNZ, Westpac NZ, ASB) to positive, citing expected Reserve Bank capital rules that will allow issuance of loss-absorbing capacity (LAC) instruments to Australian parents. This is expected to bolster the banks' positions within their parent groups. ASB's AA- rating is higher due to its parent, Commonwealth Bank of Australia's, AA rating. The Reserve Bank plans to consult on LAC requirements next year, with implementation from late

Commonwealth Bank (CBA), Colonial First State, and Avanteos settled a $249m class action over alleged low interest rates on investments from 2008-2021. The settlement, pending court approval, may benefit over 500,000 Australians. The companies deny wrongdoing and had budgeted for the payout.

The S&P/ASX 200 fell 0.78% to 9,056.2, driven by CBA's forecast of a November rate hike due to high inflation and Qantas' profit decline on rising fuel costs. CBA expects the RBA to raise rates once more this year, while Qantas reported a $330 million drop in profit before tax, with revenue up 3.4% to $47.27 billion. The ASX 200 remains below its February 2026 high of 9,198.6.

Commonwealth Bank of Australia (ASX:CBA) reported FY2026 results with net interest income of A$25,586M and net income of A$10,866M. The bank declared a higher fully franked final dividend. Despite strong 5-year returns, its share price has declined recently. Analysts' consensus price target is A$125.21, suggesting overvaluation, but opinions vary widely.

Commonwealth Bank of Australia (ASX:CBA) shares fell 5.5% since August 14, closing at A$157.99 on August 21. The A$2.70 ex-dividend adjustment accounts for 29% of the decline. Analysts' average price target is A$125.21, 20.8% below the closing price. CBA's market cap dropped A$15.3 billion last week, with adjusted losses around A$10.8 billion. The bank reported a record profit of A$10.98 billion for fiscal 2026, but faces challenges in mortgage demand and valuation.