Question 1

How has Commonwealth Bank of Australia performed compared to the broader Australian stock market?

Accepted Answer

With dividends included, CBA stock has returned about 40% over the last five years, much outperforming the 35% return of the S&P/ASX 200 index.

Question 2

What is the Commonwealth Bank of Australia's dividend policy?

Accepted Answer

Commonwealth Bank of Australia has regularly paid shareholders dividends for quite some time. The bank aims to distribute 70-80% of its net cash profit after taxes as dividends, with both interim and final dividends paid annually.

Question 3

How has the Commonwealth Bank of Australia responded to the challenges of digital disruption?

Accepted Answer

Commonwealth Bank of Australia has invested heavily in digital innovation to boost productivity and improve customer experience. The bank has collaborated with fintech firms to improve its digital capabilities and has created many digital banking systems, including NetBank and the CommBank app.

Question 4

What are the key regulatory risks faced by the Commonwealth Bank of Australia?

Accepted Answer

ASIC and APRA oversee and regulate the Commonwealth Bank of Australia, among other Australian banks. Shifts in lending criteria, consumer protection legislation, and capital and liquidity needs are among the most significant regulatory concerns.

Question 5

How does the Commonwealth Bank of Australia manage its exposure to the Australian housing market?

Accepted Answer

Commonwealth Bank of Australia carefully monitors its loan portfolio and employs several risk management strategies to reduce the likelihood of suffering losses due to the property market. These measures include comprehensive credit evaluations, conservative loan-to-valuation ratios, and stress tests on the portfolio under various economic scenarios.

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