Morning Report Thursday 11th February 2016
Yesterday CBA reported its profit for the half year with no surprises and the market simply loved it with the stock rallying $1.33 to $74.20, on a day when the ASX200 fell over 1% and the banking sector fell 2.3%. The quality of CBA as a business is clear when we compare its relative performance since the highs of last March where CBA has corrected 23% compared to the sectors fall of ~30%.
CBA's profit rose 4% to $4.8bn and they announced an unchanged dividend of $1.98. Importantly paying out a dividend which only utilises 70.8% of profits compared to CBA's payout range of 70-80% as the bank continues to strengthen its balance sheet. The performance of Australia's largest company over recent years has left egg on the face of many an analyst who have announced the bank is too expensive and have recommended switching to one of its peers. Market Matters believes this is a great time to "KISS (keep it simple stupid)", CBA is the best quality Australian Bank and should be the first choice bank in an Australian portfolio.
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