Commonwealth Bank of Australia – Resilient Credit Fundamentals with Bond Yields of 5.1%–6.2%

Commonwealth Bank of Australia’s resilient earnings, strong capital and liquidity, and stable funding profile support attractive bond yields of 5.1%–6.2%.

iFAST Research Team
iFAST Research Team30 Jul 2026 62 Views
Commonwealth Bank of Australia – Resilient Credit Fundamentals with Bond Yields of 5.1%–6.2%

  • Company Overview: Commonwealth Bank of Australia (CBA) is the largest banking group in Australia, with a market capitalisation of AUD287 billion as of 20 July 2026. The bank maintains a dominant franchise in retail banking, supported by leading market positions in residential mortgages and household deposits.
  • Stable Operating Income: Operating income remained flat in 3Q26 (March 2026), with lending and deposit volume growth offsetting the impact of two fewer trading days, while net interest margin remained broadly stable.
  • Resilient Asset Quality: Corporate Troublesome and Non-Performing Exposures (TNPE) ratio increased slightly to 0.94% in 3Q26 from 0.90% in 1HFY26, primarily due to single-name exposures.
  • Prudent Provisioning: CBA increased its collective provision by an additional AUD200 million in 3Q26, bringing the total collective provision to AUD6.5 billion, reflecting a prudent approach to maintaining strong balance sheet buffers amid macroeconomic uncertainty.
  • Capital Remains Robust: CBA reported a Common Equity Tier 1 (CET1) ratio of 11.6%, well above APRA's minimum regulatory requirement of 10.25%. Capital generated from earnings (+51bps) was partially offset by higher risk-weighted assets (-34bps), other items (-10bps), and the 1H26 dividend (-76bps).
  • Robust Liquidity Position: CBA reported a Liquidity Coverage Ratio (LCR) of 133% and a Net Stable Funding Ratio (NSFR) of 116%, both comfortably above the regulatory minimum of 100%.
  • Well-Diversified Long-Term Funding: Long-term wholesale funding accounted for 68% of total wholesale funding, with a weighted average portfolio tenor of 5.2 years. The funding maturity profile remains well diversified with no significant concentration in any single period, reducing refinancing risk.
  • Stable Funding Profile: Funding remained supported by a strong deposit base, which accounted for 79% of total funding. Household deposits increased by AUD38 billion over the year to March 2026, while short-term wholesale funding remained well below historical levels.
  • Overall: CBA continues to demonstrate a resilient credit profile, supported by stable earnings, sound asset quality, prudent provisioning, robust capital and liquidity, and a conservative funding structure.
  • Recommendation: Investors may consider holding CBA's AUD and USD senior unsecured and Tier 2 bonds, which offer attractive yields of approximately 5.1%–6.2%.

Table 1: CBA’s Senior Unsecured Bond

Bond name

Year to Maturity

Yield to Maturity

Min / Sub investment amount

Credit Rating

(Fitch)

CBAAU 5.000% 13Jan2028 Corp (AUD)

1.46

5.1%

AUD 200,000/10,000

AA-

CBAAU 5.030% 15Jan2031 Corp (AUD)

4.47

5.2%

AUD 10,000/10,000

AA

CBAAU 5.180% 09Oct2035 Corp (AUD)

9.21

5.7%

AUD 10,000/10,000

N.R.

Source: Bondsupermart, iFAST Compilations. Data as of 27 July 2026.

Table 2: CBA’s Tier 2 Bond

Bond name

Year to Call/Maturity

Yield to Call/Maturity

Min / Sub investment amount

Credit Rating

(Fitch)

CBAAU 3.610% 12Sep2034 Corp (USD)

3.13/ 8.13

5.1%/5.7%

USD 200,000/1.000

A

CBAAU 6.860% 09Nov2032 Corp (AUD)

1.28/ 6.29

5.5%/6.8%

AUD 200,000/ 1,000

A

CBAAU 5.252% 12Sep2035 Corp (AUD)

4.13/9.13

5.8%/6.0%

AUD 10,000/10,000

A

CBAAU 6.152% 27Nov2039 Corp (AUD) 

8.34/ 13.34

6.2%/6.2%

AUD 200,000/10,000

A

Source: Bondsupermart, iFAST Compilations. Data as of 27 July 2026.


Disclosure: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds a position in  ORCL 5.875% 26Sep2045 Corp (USD). The analyst who produced this report holds a NIL position in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity. 

All materials and contents found in this site are strictly for general circulation and informational purposes only and should not be considered as an offer, or solicitation, to deal in any of the funds or products found/identified in this site. While iFAST Financial Pte Ltd ("IFPL") has tried to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies and typographical errors. Any opinion or estimate contained in this report is made on a general basis and neither IFPL nor any of its servants or agents have given any consideration to nor have they or any of them made any investigation of the investment objective, financial situation or particular need of any user or reader, any specific person or group of persons. You should consider carefully if the products you are going to purchase are suitable for your investment objective, investment experience, risk tolerance and other personal circumstances. If you are uncertain about the suitability of the investment product, please seek advice from a financial adviser, before making a decision to purchase the investment product. Past performance is not indicative of future performance. The value of the investment products and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice. In respect of any matters arising from, or in connection with the said research analyses or research reports, recipients of the report are to contact IFPL at 10 Collyer Quay, #26-01 Ocean Financial Centre Building, Singapore 049315, or by telephone at +65 6557 2853. Where the report contains research analyses or research reports from a foreign research house and if the recipient of such research analyses or research reports is not an accredited investor, expert investor, institutional investor or an ex-accredited investor, IFPL accepts legal responsibility for the contents of such analyses or reports to such persons only to the extent as required by law. Please note that only certain security(ies) herein are available to all investors, while the rest are only available for certain persons to invest in, such as Accredited Investors (as defined in the Securities and Futures Act) or one who invests at least S$200,000 (or its equivalent currency) per transaction. To qualify as an Accredited Investor, one needs to submit a declaration form and certain relevant supporting documents, according to iFAST’s prevailing policies and procedures.

Please read our full disclaimers on the website at ( https://fsm.global/sg/policies/328125/investment-account-terms-&-conditions).

iFAST Financial Pte Ltd (IFPL) (registered address: 10 Collyer Quay #26-01 Ocean Financial Centre Singapore 049315, Telephone: 6557 2000) holds the Financial Advisers Licence issued by the Monetary Authority of Singapore ('MAS') to conduct regulated activities of advising on securities, marketing of collective investment schemes and arranging of any contract of insurance in respect of life policies, other than a contract of reinsurance and the Capital Markets Services Licence issued by the MAS to conduct regulated activities of dealing in securities and providing custodial services for securities. While IFPL has made every effort to ensure the independence of the report's contents, IFPL's nature of business is such that IFPL and its connected and associated entities together with their respective directors, officers and staff may be involved in providing dealing or investment-related services in the abovementioned securities, and have taken or may take positions in the securities mentioned in this report, and may also act as the principal for any buy or sell trades.