The Commonwealth Bank of Australia (ASX: CBA) share price is in focus as it enters the final month of the 2022 financial year.
CBA is the biggest bank in Australia. It's one of the big four ASX bank shares along with National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), and Australia and New Zealand Banking Group Ltd (ASX: ANZ).
No one can truly know what's going to happen to any share price this week or even this month.
However, brokers have their opinions on the current situation with the bank and the wider banking sector. They have also given their rating on whether they think the business is a buy, hold, or sell.
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Latest views on the CBA share price
The broker Citi has very recently released its analysts' thoughts on the bank.
Citi currently rates Commonwealth Bank as a sell, even though it's optimistic about the banking sector. The price target on the bank is $90.75. That implies a possible decline of about 15% over the next year.
The broker is expecting that CBA's profit margins could benefit from the rising interest rate environment.
Ord Minnett is a little more positive on the big four ASX bank. The broker rates CBA shares as a hold, with a price target of $93, implying a smaller decline than Citi. While Ord Minnett notes that CBA's operating costs could rise due to inflation and a more normal level of bad debts, the broker thinks the CBA net interest margin (NIM) could improve from here. CBA could also be the biggest beneficiary of increasing interest rates.
Expectations on CBA dividends
Citi is expecting CBA to pay a growing dividend in the next couple of financial years. At the current CBA share price, Citi expects the bank to pay a grossed-up dividend yield of 5.1% in FY22 and 6.1% in FY23.
Ord Minnett isn't expecting as much of a dividend from CBA in FY22 and FY23. It's tipping a grossed-up dividend yield of 5.1% in FY22 and 5.4% in FY23.
CBA share price valuation
According to Citi's numbers, CBA is now valued at 20x FY22 estimated earnings.
On Ord Minnett's profit projections, the CBA share price is also valued at 20x FY22 estimated earnings, though Ord Minnett's earnings estimate is slightly lower.
Latest operating performance
CBA reported that in the three months to 31 March 2022, it generated $2.4 billion of cash net profit after tax (NPAT).
It said that it experienced 3% volume growth and higher non-interest income. This helped to offset continued margin pressure from elevated swap rates, mix effects, and competition.
CBA said that credit provisions reflected "continued sound portfolio credit quality and a cautious approach to managing portfolio risks".
CBA share price snapshot
Over the past six months, the CBA share price has risen by 9.4%. At the timing of writing, CBA shares are swapping hands for $104.93, down 1.7% for the day so far.
