CBA | Sydney Financial
 

CBA: Positive News

The Commonwealth Bank’s demerger of its wealth management and mortgage-broking businesses should be a positive for the embattled lender and allow it to focus on its core business, says Morningstar senior analyst David Ellis.

Ellis believes the new CBA will be “a simpler and slightly smaller business” after the demerger. While this is still subject to final board, shareholder and regulatory approval, no difficulties are anticipated.

“If successful, the demerger will enable refreshed Commonwealth Bank senior management to focus on the more profitable core banking businesses in Australia and New Zealand,” says Ellis, adding that it is too early to gauge how it could affect group earnings, returns on equity, capital, dividends and our $83 fair value estimate.

CBA chief executive, Matt Comyn, on Monday indicated the creation of a separate business – owned by CBA shareholders rather than the bank itself – was driven at least in part by a desire to cut exposure to areas that drew criticism during the royal commission.

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