CBA are Australia's biggest bank. And, they're a bit of a share market darling.
Background: CBA are Australia's biggest bank. And, they're a bit of a share market darling. Since March 2020 (when most stocks hit the floor) CBA have been on the up.
What happened: Earlier this month, CBA shares hit an all-time-high of $110. And, they released a wave of new features and apps like Cheddar, Little Birdie and StepPay. All of which point to future success.
What else: But CBA's first-quarter earnings report revealed its net interest margin fell from 2.04% to a level that's rumoured to be under 2% (they're vague on the deets). As a result, their shares sank around 8%.
💡The net interest margin is the main measure of profitability for a bank. It's the difference between the interest paid...and the interest received.
💡 If CBA gives a savers a 1% interest per annum...and they receive 3% interest per annum from a customer with a mortgage, the net interest margin is 2%.
💡 Competition between the banks is fierce right now, which is putting a lot of pressure on CBA's net interest margin...hence the bad news.
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