Buy Hold Sell: The ASX's top management teams

We are a sell for CBA.

Well-run company and famously one of the most expensive banks in the world, I think as Barry and Joey said.

But more than just a valuation issue, we think when you look at the competition, there's a lot more pressure in mortgages and in deposits.

And those are the two key franchises for CBA.

So in deposits, if you look back at, say, 2019, Macquarie Group were about sort of 9% the size of CBA's mortgage book.

They're getting closer to touching 30% of CBA's mortgage book.

That's a lot more competition.

At the same time, you've got mortgage brokers now accounting for 80% of new mortgage applications and was more at 60% in 2019.

And if you think of what mortgage brokers do, they basically help you get the best deal.

And so that will drive more price competition.

So whether you've got more competition from Macquarie or more brokers driving more competition, that's going to be squeezing the profitability of the mortgage book for CBA.

Similarly with deposits, Macquarie was about less than 5% of the deposit base for CBA back in 2019.

It's getting on sort of 25% the size of CBA's deposit.

And they've just announced more of a push into turn deposits in that product as well.

And so that increase in competition means that CBA will be under pressure for two of the main franchises.

When you look at other options, you know, we look at NatWest Group in the UK.

They have a higher ROE than CBA.

They're growing their loan book faster.

And rather than trading on 23 times P, they traded more like nine times PE.

So a huge gap in valuation for a company that's just as well, if not a stronger franchise than CBA.

Sure, and I think Joe said there, competition may be the big challenge.

In terms of management, I think Metcom has been there, what, almost a decade, 2018, something like that.

It still is the bank to beat in Australia.

You buy, hope, sell on Commonwealth Bank.

Yeah, I'm going to say hold.

We are a sell for CBA.

Well-run company and famously one of the most expensive banks in the world, I think as Barry and Joey said.

But more than just a valuation issue, we think when you look at the competition, there's a lot more pressure in mortgages and in deposits.

And those are the two key franchises for CBA.

So in deposits, if you look back at, say, 2019, Macquarie Group were about sort of 9% the size of CBA's mortgage book.

They're getting closer to touching 30% of CBA's mortgage book.

That's a lot more competition.

At the same time, you've got mortgage brokers now accounting for 80% of new mortgage applications and was more at 60% in 2019.

And if you think of what mortgage brokers do, they basically help you get the best deal.

And so that will drive more price competition.

So whether you've got more competition from Macquarie or more brokers driving more competition, that's going to be squeezing the profitability of the mortgage book for CBA.

Similarly with deposits, Macquarie was about less than 5% of the deposit base for CBA back in 2019.

It's getting on sort of 25% the size of CBA's deposit.

And they've just announced more of a push into turn deposits in that product as well.

And so that increase in competition means that CBA will be under pressure for two of the main franchises.

When you look at other options, you know, we look at NatWest Group in the UK.

They have a higher ROE than CBA.

They're growing their loan book faster.

And rather than trading on 23 times P, they traded more like nine times PE.

So a huge gap in valuation for a company that's just as well, if not a stronger franchise than CBA.

Sure, and I think Joe said there, competition may be the big challenge.

In terms of management, I think Metcom has been there, what, almost a decade, 2018, something like that.

It still is the bank to beat in Australia.

You buy, hope, sell on Commonwealth Bank.

Yeah, I'm going to say hold.