Australia’s largest bank has been under pressure on valuation grounds over the last year, but since its on-the-surface solid FY26 result, covered here, this once bastion of safety has significantly underperformed the market.
CBA has underperformed its peers by ~10% over the past four weeks, with the FY26 result crystallising concerns around the housing slowdown and the earnings outlook. Mortgage applications have reportedly fallen 15% since the May federal budget, while renewed competition for loans and deposits threatens further margin pressure. Adding to the uncertainty, AUSTRAC scrutiny of mortgage fraud and APRA’s new review of lending standards have increased the regulatory overhang, with CBA particularly exposed given its position as Australia’s largest home lender.
There’s nothing wrong with CBA; it’s just big in the wrong place at the wrong time.
- We wouldn’t be surprised to see CBA test $140, one of the reasons we are happily underweight the sector.
MM is neutral towards CBA around $156
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