What Happened to the CBA Share Price?
The Commonwealth Bank of Australia [ASX:CBA] offers retail banking services in Australia, New Zealand and some in the Asia Pacific region. It has smaller financial and investment operations in the United Kingdom and the US. CBA also own BankWest.
Why Did This Happen to Commonwealth Shares?
In May, the customer satisfaction ratings started to slide as the media revealed financial advice from Financial Wisdom (owned by CBA) planning service was possibly fraudulent. The advice given was often more about cross-selling products than sound investment advice for some clients.
To curb dodgy financial information, the bank has set new standards. Current planners will have until the end of 2017 to bring themselves up to speed on the new requirements.
Clearly this hasn’t rattled the market at all, as the stock closed higher by 0.77%.
What Now for Commonwealth Bank?
Yesterday The Age revealed CBA was at risk of losing their overall customer satisfaction ‘Number 1’ rating. The bank’s rating now sits at 81.1%, a tiny 0.1% ahead of rival Westpac [ASX:WBC].
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Not surprisingly, CBA’s management team closely watch the Roy Morgan satisfaction numbers, because their bonuses are tied to them.
The share price for CBA has traded above $70 per share for all of 2014. However, its PE ratio of 14.4 times earnings doesn’t suggest it’s overpriced.
Currently, the bank’s dividend yield is around 5.50%. This is roughly the same as the other three major banks in Australia.
However, it’s also currently Australia’s most expensive banking stock at $78. Don’t rush into buying this stock. It regularly dips down, which means you may get it at a lower price down the track.
Shae Smith+
Editor, Money Weekend
The post Why did the Commonwealth Bank Share Price Rise Today? appeared first on Stock Market News, Finance and Investments | Money Morning Australia.
