CBA reported 1Q17 earnings of $2.4 billion, which was largely in line with market expectations. On pre-provision basis the result was marginally below consensus.
CBA’s result was supported by an improvement trading income and lower impairment expense. Revenue growth trends continued to slow with growth falling from 5% in FY16 to 3% in FY17.
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FY17 outlook is for EPS of $5.40 and DPS of $4.20 placing the stock on a forward yield of 5.8%
CBA remains in a structural downtrend and like all bank holdings should be complemented with covered call options to enhance the risk reward scenario. Additionally, investors need to be cautious about being overweight banks as other more attractive opportunities exist within the group of ASX top 50 stocks. These companies also offer high yield plus franking credits supported by solid EPS growth.
