4 quick ways to assess the CBA share price

Core Viewpoint - Commonwealth Bank of Australia (CBA) is Australia's largest bank with significant market shares in mortgages, credit cards, and personal loans, making it a key player in the Australian financial ecosystem [1]. Group 1: Financial Performance - CBA's net interest margin (NIM) is 1.99%, which is higher than the ASX banking sector average of 1.78%, indicating better profitability from lending activities [5]. - The bank earned 85% of its total income from lending last year, highlighting the importance of lending in its revenue generation [6]. - CBA's return on equity (ROE) stands at 13.1%, surpassing the sector average of 9.35%, which reflects strong profitability relative to shareholder equity [7]. Group 2: Balance Sheet Strength - CBA has a common equity tier one (CET1) ratio of 12.3%, which is above the sector average, indicating a robust capital buffer to protect against financial instability [8]. Group 3: Valuation Insights - Using a dividend discount model (DDM), the estimated average valuation of CBA shares is $98.33, with an adjusted valuation based on expected future dividends rising to $100.66 [11]. - The fair value estimate, considering gross dividend payments including franking credits, is $143.80, suggesting that the current share price of $169.97 may appear expensive [12].