Here's why the CBA share price had such a good run in December

Christmas keeps on giving for CBA…

| More on:
a nerdish looking man with a lovely big smile adjusts his bow tie and raises his eyebrows behind his thick glasses, as he wears a heavy knitted Christmas sweater in traditional Christmas colours of green and red.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Commonwealth Bank of Australia (ASX: CBA) share price has kicked off 2022 in a positive way so far this Tuesday. At the time of writing, CBA shares are up a pleasing 1.42% at $102.43 each.

This latest surge is redolent of the strong month Commonwealth Bank has just enjoyed. Over December, this ASX banking giant rose from $93.18 a share all the way to the flat $101 it closed at on New Year's Eve. That's a very healthy gain of 8.4% for the month, and cemented a robust 23% gain for CBA shares over 2021, not including dividend returns.

So how did CBA, the ASX's largest bank share, manage such a pleasing December?

Well, it was a month that brought no real major developments from CBA. The bank bumped up its fixed lending rates for housing loans during the month. As we reported at the time, CommBank increased its owner-occupier fixed rate by 0.05% during December to 2.54%.

It beefed up longer-term rates even more, raising its 3-year fixed rate by 0.15% to 3.14%. Its 4-year rate also got a hike, rising by 0.25% to 3.34%.

Now, higher rates obviously mean more cash flow for CBA, but this could be counterbalanced by higher wholesale funding costs across the banking sector. Even so, it seems investors were pleased (or, at the very least, didn't care).

Brokers try to ruin CBA's Christmas

CBA also had to weather some negative broker notes over December. As my Fool colleague James reported late last month, brokers at Macquarie slapped an 'underperform' rating on CBA shares, with a 12-month share price target of $86. Macquarie sees aggressive competition for the home loan market weighing on CBA's margins. But Macquarie wasn't the only broker grinching the CBA's Christmas celebrations.

We also covered fellow broker Morgans' 'reduce' rating on Commonwealth Bank. It sees CBA shares falling to $73 over the next year or so, and estimates that the share price premium CBA enjoys against the other ASX banks won't last.

But investors shrugged off these concerns over December, and shot CBA shares higher. Perhaps this was just a result of overall market sentiment, seeing as the S&P/ASX 200 Index (ASX: XJO) basked in a monthly gain of 2.6% over December. Whatever the reason, CBA has certainly delivered some Christmas cheer to its shareholders.

At the current Commonwealth Bank of Australia share price, CBA shares offer a dividend yield of 3.42%.

Should you invest $1,000 in Commonwealth Bank Of Australia right now?

Before you buy Commonwealth Bank Of Australia shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Commonwealth Bank Of Australia wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 7 February 2025

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Bank Shares

Bank building with the word bank in gold.
Earnings Results

4 ASX 200 bank shares with earnings updates next week

Three of Australia's 'Big Four' banks plus a regional bank will report to the market next week.

Read more »

Animation of a man measuring a percentage sign, symbolising rising interest rates.
Bank Shares

Here's what Westpac says the RBA will do with interest rates next week

Is relief coming at last for borrowers? Here's what the bank is predicting.

Read more »

A woman wearing the black and yellow corporate colours of a leading bank gazes out the window in thought as she holds a tablet in her hands.
Bank Shares

Where could the CBA share price go in the next 12 months — see the latest forecasts

Where will CBA shares go next?

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Bank Shares

CBA share price sinks despite big government news

CBA announced a new government partnership on Friday.

Read more »

A woman wearing a yellow and white striped top and headphones plays excitedly with her phone.
Bank Shares

$167: Have CBA shares become a 'meme stock'?

CBA shares have hit yet another new record high this Thursday.

Read more »

a young boy dressed in a business suit and wearing thick black glasses peers straight ahead while sitting at a heavy wooden desk with an old-fashioned calculator and adding machine while holding a pen over a large ledger book.
Bank Shares

Own ANZ shares? Here's what to watch in next week's report

What will be included in next week's quarterly update?

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Earnings Results

CBA shares drop despite strong first-half profit result and dividend boost

Investors appear to have been wanting an even stronger result from Australia's largest bank.

Read more »

A man looking at his laptop and thinking.
Bank Shares

Own NAB shares? What to watch in next week's trading update

Owners of this bank’s shares should keep an eye on this upcoming report. 

Read more »