CBA share price falls despite APRA update

CBA was given some good news from APRA this morning…

| More on:
A woman wearing yellow smiles and drinks coffee while on laptop.

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

Key points

  • CBA is now out of APRA's bad books
  • APRA has removed a $500 million capital add-on
  • CBA expects this to boost its CET1 ratio by 15 basis points

The Commonwealth Bank of Australia (ASX: CBA) share price is falling with the market on Friday.

In morning trade, the banking giant's shares are down 1% to $92.27.

What's going on with the CBA share price?

Investors have been selling the bank's shares today despite a positive announcement out of Australian Prudential Regulation Authority (APRA).

According to the release, APRA has removed the remaining $500 million capital add-on applied to CBA to address previous weaknesses in its governance, accountability, and risk culture frameworks and practices.

The regulator initially imposed the $1 billion capital add-on on the bank in May 2018 in response to the final report of the Prudential Inquiry into the Commonwealth Bank of Australia.

APRA notes that the inquiry concluded that "CBA's continued financial success dulled the senses of the institution." This was particularly in relation to the management of non-financial risks. As a result, an extensive remediation plan was established to address the identified shortcomings.

The good news is that APRA has been satisfied with the remediation program and notes that CBA has addressed all recommendations. This follows validation work undertaken by APRA to ensure all remediations were sustainable and well-embedded.

CBA response

CBA has responded to the news. It highlights that the removal of the remaining operational risk capital overlay of $500 million will represent an increase in its Common Equity Tier 1 capital of 15 basis points.

CBA's CEO, Matt Comyn, commented:

We are committed to ensuring the improvements we've made to our governance, culture and risk management practices are continuously improved and sustained.

Motley Fool contributor James Mickleboro 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Bank Shares

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Dividend Investing

Are CBA shares still a good buy today for passive income?

Looking to earn passive income from ASX dividend stocks? Here’s my take on CBA shares.

Read more »

Shocked office worker staring at computer screen with colleagues working in the background.
Bank Shares

The ASX bank share beating CBA in 2025

Many investors might not realise this smaller bank stock is leading the pack this year. 

Read more »

man thinking about whether to invest in bitcoin
Bank Shares

Here's what needs to happen for the CBA share price to try and reach $200

What could drive the CBA share price higher?

Read more »

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Bank Shares

Why now could be an opportune time to sell CBA shares

A leading expert offers his verdict on the outlook for CBA shares.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Bank Shares

The Westpac share price is a buy – UBS

The broker is optimistic on Westpac shares.

Read more »

Bank building with the word bank on it.
Bank Shares

The biggest buyers and sellers of ASX 200 bank stocks revealed

Macquarie breaks down who’s been buying and who’s been selling the ASX 200 bank stocks.

Read more »

A young woman sits with her hand to her chin staring off to the side thinking about her investments.
Resources Shares

Should I switch my ASX 200 banking stocks for ASX 200 miners before earnings season?

The ASX 200 Index is dominated by Australia's bank and materials/mining sectors, which together account for around half of the…

Read more »

A man sits in contemplation on his sofa looking at his phone as though he has just heard some serious or interesting news.
Bank Shares

Here's when Westpac says the RBA will now cut interest rates

The RBA surprised everyone by keeping rates on hold last week. So, when will the next cut happen?

Read more »