The Commonwealth Bank of Australia [ASX:CBA] share price has pushed upwards again today, following a rally on the ASX.
Shares in CBA and the broader ASX have moved higher for a fourth consecutive day.
In a rally that’s predominantly led by the emerging tech giants, with CBA and Westpac Banking Corporation [ASX:WBC] shares the only of the Big Four to make significant gains.
At time of writing, CBA is .72% or 51 cents higher to trade at $71.61 cents per share.
What looms ahead of CBA on the way to Aussie economic recovery?
It was this time last month we last took a look at the CBA share price.
Though, it feels like not much has changed since then, other than we now have a clearer picture on what a recession might look like.
This time last month the ASX 200 was just pushing the 6,000-point level and the CBA share price flirted with the $70-plus mark.
Today feels a little like Groundhog Day.
But maybe there’s a little less optimism this time.
CBA Chief Economist Stephen Halmarick has warned that monetary stimulus measures may be running out of steam.
Talking to the AFR, Mr Halmarick explains that consumers are still wary to take out their wallets even though spending has improved.
‘In terms of spending on credit and debit cards, up to the week ending June 26, total spending was 4% higher than it was the same time last year.
‘This is a big recovery given that at the low point — in the week to April 10 — spending had dropped 20 per cent from the same week in 2019.’
But Mr Halmarick warns that this momentum is slowing.
Which is not good for the banks.
The Reserve Bank on Tuesday showed that personal borrowing was down 10.2% in May, compared with a year earlier.
Meaning consumers still seem cautious to take on new debt.
This is despite more and more goods and services providers gradually opening back up.
Small and medium business share a similar sentiment, where borrowing has been flat.
Only 10–15% of small businesses that opted to take a loan repayment holiday have decided they’re now able to resume their payments.
But we won’t know the full impact of these more pessimistic sentiments until reporting season rolls around later in the year.
Profits under fire
With both personal and business loan activity depressed, we could see a significant hit to CBA’s full-year profits.
That’s not the least of its woes either.
The profits of the Big Four banks are coming under increasing pressure from Aussie fintechs.
There’s one Aussie fintech in particular out to steal CBA’s credit card profits.
Read about it here and the other Aussies companies making a move on the banks’ profits.
Regards,
Lachlann Tierney,
For Money Morning
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