Commonwealth Bank of Australia (ASX: CBA) shares will be on watch next month when the banking giant releases its full-year results.
Ahead of the release, let's see what the market is expecting Australia's largest bank to report.
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What is expected from CBA's FY 2023 results?
According to a note out of Goldman Sachs, its analysts expect the bank to deliver second-half earnings a touch higher than consensus estimates.
The broker has pencilled in cash earnings from continuing operations (before one-offs) of $5,025 million. This will be a 3.6% increase on the prior corresponding period.
As a comparison, the analyst consensus estimate is for second-half cash earnings of $5,014 million.
Goldman's estimate implies FY 2023 cash earnings of $10,178 million.
Dividends
The broker also believes that CBA will pay a larger final dividend than the market is expecting. It is predicting a fully franked final dividend of $2.40 per share. This would mean an increase of 14% year over year.
The market isn't as positive, with the consensus estimate suggesting that a $2.24 per share fully franked final dividend will be paid.
For the full year, Goldman's estimate implies a fully franked $4.50 per share dividend in FY 2023.
What else?
Margins are likely to be a talking point for investors and could have a big impact on how CBA shares perform on results day.
Goldman is expecting CBA's second-half net interest margin (NIM) to soften by 8 basis points half on half to 2.02%.
This will take its NIM to 2.06% for FY 2023, which is a touch lower than the consensus estimate of 2.07%.
Commenting on margins, Goldman said:
Our product pricing tracker for Jul-23 highlights that against some easing of mortgage competition, deposit competition has accelerated, with term deposit rate increases outpacing RBA cash rate rises. We will be keen to see the extent to which this market dynamic has impacted CBA's NIM so far, and how much could flow through to 1H24E. Furthermore, we note that this will have a direct read through for the September year-end banks, which will experience a fuller period of impact from these deposit spread headwinds.
Are CBA shares a buy?
The note reveals that Goldman Sachs continues to see CBA shares as overvalued.
It has a sell rating and a $83.42 price target on its shares. This implies a potential downside of 20% from current levels.
The broker does "not believe its fundamentals justify the 43% 12-mo fwd PER premium it is currently trading on versus peers, compared to the 21% historical 15-year average."
