Commonwealth Bank of Australia: HY 2026 Earnings Forecast
The Commonwealth Bank of Australia (CBA) is preparing to release its earnings report for the half-year ending December 31, 2025, on February 11, 2026. This upcoming announcement occurs against a backdrop of resilient banking fundamentals but increasing financial pressures. Analysts are particularly focused on the expected effects of rising interest rates, with the market currently pricing in around 40 basis points of increases by the Reserve Bank of Australia (RBA) this year.
CBA’s FY 2025 Performance Overview
In mid-August 2025, CBA reported strong results for fiscal year 2025 (FY 2025). Key highlights from this annual report include:
- Net Profit After Tax (NPAT): Increased by 4% to A$10.25 billion, supported by lending growth in both home and business sectors.
- Net Interest Margin (NIM): Held steady at 2.08%, an increase of 9 basis points.
- Loan Impairment Expenses: Decreased by 9% to A$726 million, indicating stable credit conditions.
- Operating Income: Rose by 5% to A$28.47 billion, while overall expenses grew by 6% due to inflation and technology investments.
- Dividends: Shareholders received a full-year dividend of A$4.85 per share, an increase of 4% from the previous year.
- Share Buyback Extension: CBA announced an extension of its A$1 billion share buyback program.
Despite these favorable figures, the market’s reaction was negative. On August 13, 2025, CBA shares fell by 5.41%, closing at A$169.12. Investors expressed concerns over the bank’s high valuation, trading at approximately 30 times forward earnings—significantly above its peers.
Market Reaction and Future Outlook
CBA’s cautious outlook for FY 2026 contributed to the stock’s decline. Investors noted several concerns, including:
- Margin compression due to intensified competition for deposits.
- Increased operating costs impacting profitability.
- Weak performance in retail banking earnings.
Following the first quarter trading update on November 11, 2025, CBA shares dropped an additional 6.59%, ending at A$163.40. The update revealed unaudited cash NPAT of approximately A$2.6 billion, a year-on-year rise of 2%. Despite the strong retail deposit growth and lending expansion, the earnings slightly missed analyst expectations by around 2% due to unexpected costs such as a NZ$136 million class action settlement.
Overall, while CBA’s FY 2025 results showcased resilience, the bank faces significant challenges in aligning investor expectations for FY 2026 amidst rising costs and competitive pressures.
