The Commonwealth Bank of Australia (ASX: CBA) share price has been on a tear over the past three months, doubling the return of the S&P/ASX 200 (INDEX: ^AXJO) (ASX: XJO).
Can you bank on Commbank shares in 2017?
What's more, over the past decade Commbank shares have even doubled the return of their closest rival, Westpac Banking Corp (ASX: WBC). And as we look forward into 2017, judging by the chart above, it appears set to be more of the same from Australia's largest company.
Commbank controls the lion's share of Australia's $1.5 trillion mortgage market, with around 25% share, and 24% of the credit card market. That bodes well for the bank should the economy continue to exhibit strength over the year ahead.
Moreover, with significant investments in technology the bank has multiple ways to lower its cost base while maintaining its market share and profits. And higher deposit rates, which provide cheaper funding for its lending than alternative markets, means it is also the best placed to wade through an economic shock or setback, in my opinion.
Buy, Hold or Sell
I'm not a buyer of Commbank shares at today's prices (around $84). Its shares would have to drop below $75 for my eyes to start lighting up.
However, I think there are many reasons why the bank has performed well in recent years and why the market continues to pay a premium for its shares. If I held shares from a lower price, I'd be willing to bank on my Commbank shares in 2017.
