Commonwealth Bank of Australia

The Piotroski F-Score is built for industrial firms — gross margin, the current ratio and asset turnover are meaningless for a bank whose balance sheet is itself a book of financial assets. In its place we use a nine-point, CAMELS-inspired check spanning capital, asset quality and earnings/funding.

It deliberately captures asset quality (credit risk) — historically the dominant driver of bank failure and otherwise absent from the five scoring pillars. An 8/9 result places Commonwealth Bank in the "Strong soundness" band: capital, liquidity, asset quality and returns are all robust, and the bank clears its cost of equity with room to spare. The only failed criterion is the loan-to-deposit ratio above 100% — structurally normal for an Australian major that supplements its (large, 79%) deposit base with wholesale funding. Watch item: a A$200m forward-provision top-up in 3Q26 signals the bank is fortifying against a less certain credit cycle even as the headline charge stays low.

Measures how fast the bank's income and balance sheet are expanding — operating income, customer deposits and gross loans, year-on-year. Commonwealth Bank scores at the ceiling: operating income grew ≈6.6%, household deposits rose ≈A$38b (1.1× system), and lending grew above system in both home loans (+7%) and business (+12%, ≈1.3× system). Every growth metric clears its green threshold.

Captures how efficiently the bank turns its franchise into profit — return on equity, the cost-to-income ratio, and net interest margin. This is Commonwealth Bank's standout pillar and the best of the majors: ROE of 13.8% (vs WBC 10.0%), a sector-leading underlying cost-to-income ratio of 44.7%, and a net interest margin of 2.04% that holds the 2.00% line despite mortgage competition. Each metric sits just inside its green band, so each is capped at 100.

The regulator-facing safety metrics — CET1 capital, the Liquidity Coverage Ratio and the Net Stable Funding Ratio. Commonwealth Bank is fortress-like: CET1 of 11.6% at 31 Mar 2026 (12.3% before the interim-dividend payment), LCR 133% with ≈A$48b of excess liquid assets, and NSFR 116% — all three above their green thresholds. Total Capital sits at 20.0%.

The income case — cash yield plus the franking credits that matter so much to Australian residents and SMSFs. This is the franchise's weak point as an income holding: the cash yield is only ≈3.06%, grossing up to ≈4.37% fully franked — the lowest of the major banks and below the diagnostic's green and amber thresholds. The dividend itself is well-covered (payout ≈74% of cash NPAT) and was lifted 10c to A$2.35 interim; the low yield is a price problem, not a payout problem.

Whether the shares are cheap or expensive — price against book value, tangible book, earnings, deposits and a dividend-discount model. Commonwealth Bank is the most expensive major bank in the world: 3.51× book, 3.93× tangible book and ≈25.6× cash earnings — all in the red band, roughly double the peer median. Only the price-to-deposits multiple offers any relief. The Gordon-growth DDM implies an intrinsic value near A$83, less than half the market price, which is why this pillar is the binding constraint on the score.

A separate nine-point health check covering capital, asset quality and earnings/funding — the bank-specific replacement for the Piotroski F-Score. It is shown alongside the composite, not blended into it, and it surfaces credit-risk signals the five pillars do not. Commonwealth Bank fails only the loan-to-deposit test, which is structurally normal for an Australian major.

Normalisation. Higher-better: score = clamp((v − red_floor)/(green_ceiling − red_floor),0,1)×100. Lower-better: score = clamp((red_ceiling − v)/(red_ceiling − green_floor),0,1)×100. Band metrics (loan growth, payout): full score inside the green band, declining to the red boundaries. DDM: clamp((upside + 0.30)/0.60,0,1)×100. All five pillars are weighted equally at 20%.

Growth (100.0). G1 Op-income +6.6% → 100 (clears the 6% green ceiling). G2 Deposits +7% → 100. G3 Loans +7%, inside the 4–9% green band → 100. Home lending grew ≈1.0–1.1× system and business lending ≈1.2–1.3× system; both below the 1.5× over-extension trigger, so no asset-quality flag is raised despite the above-system business growth.

Profitability (100.0). P1 ROE 13.8% → 100 (above the 13% green ceiling). P2 underlying CTI 44.7% → 100 (below the 45% green floor; headline CTI including notables 45.9% would score 91.0). P3 NIM 2.04% → 100 (above the 2.00% green ceiling). Reported on a cash / ex-notables basis; 1H26 statutory NPAT A$5.412b vs cash A$5.445b — an unusually tight cash-to-statutory gap reflecting clean earnings quality.

Capital & Liquidity (100.0). C1 CET1 11.6% → 100 (major-bank thresholds: red 10.25 / green 11.5; note CET1 was 12.3% at 31 Dec 2025 pre-dividend, falling −76bps on the interim distribution). C2 LCR 133% → 100. C3 NSFR 116% → 100. Total Capital 20.0% and a ≈A$2.8b forward-provision buffer (coverage 1.57% of CRWA) reinforce the fortress reading.

Dividends (1.4). Cash yield = A$4.95 ÷ A$162.02 = 3.06% → 2.8 (barely inside the 3–5% amber band). Gross (franked) yield = 3.06% × (1 + 1.00 × 0.30/0.70) = 4.37% → 0 (below the 4.5% red ceiling). This is the structurally weakest pillar and the defining feature of CBA as an income proposition: the lowest yield of the Big Four by a wide margin, a direct arithmetic consequence of the premium price rather than any dividend weakness — the interim was in fact lifted 10c to A$2.35 at a sustainable ~74% payout.

Valuation (8.1). P/B 3.51× → 0; P/TBV 3.93× → 0; P/E(cash) 25.6× → 0 — all three multiples sit far beyond their red ceilings. V4 (structural): P/D 0.279× → 80.7 and P/A 0.192× → 0 (avg 40.3). DDM (V5 = 0): r = rf + β·ERP = 4.75% + 0.85×5.75% = 9.64%; g = ROE×(1−payout) = 13.8%×0.25 = 3.45%; D₁ = 4.95×(1+g) = A$5.12; V = D₁/(r−g) = 5.12/0.0619 = A$82.8; upside = (82.8−162.02)/162.02 = −48.9% → 0. Sensitivity: a ±50bps move in g shifts intrinsic value to roughly A$90.5 / A$76.2; even on the most generous reasonable assumptions the DDM cannot reconcile to the A$162 price. The model directionally confirms extreme over-valuation rather than precise fair value.

Composite. 0.20×(100.0 + 100.0 + 100.0 + 1.4 + 8.1) = 20.00 + 20.00 + 20.00 + 0.28 + 1.61 = 61.9 → MODERATE. No pillar excluded; no weight redistribution required. The result is structurally identical to Westpac's 61.1 but inverted in composition: WBC scored moderately across all five pillars, whereas CBA pairs three perfect operating pillars with two near-zero price-driven pillars.

Peer set. Australian major banks — WBC, NAB, ANZ. CET1 median ≈12.3%; ROE median ≈10.0% (CBA 13.8 leads decisively); P/B median ≈1.67× (CBA 3.51 is more than double); P/TBV median ≈1.95× (CBA 3.93); P/E median ≈16.5× (CBA 25.6); gross yield median ≈5–6% (CBA 4.37 trails). A generic GICS-sector median is inappropriate for banks because business mix changes benchmark values.

Cash vs statutory. ROE, EPS and CTI scored on a cash / ex-notables basis per Australian broker convention; statutory disclosed alongside (1H26 statutory NPAT A$5.412b vs cash A$5.445b). 3σ outlier capping: no metric required capping in this report.

Commonwealth Bank reports on a June fiscal year. The 1H26 result (half to 31 Dec 2025) was released 11 February 2026 and supplies the income-statement, margin, return and dividend metrics. The 3Q26 trading update (13 May 2026) supplies the most current capital and liquidity position (CET1 11.6%, LCR 133%, NSFR 116% as at 31 Mar 2026) — banks disclose these only at half-year, third-quarter and full-year, so these are legitimately the freshest figures available and are not stale. Balance-sheet per-share items (book value, tangible book, deposits, assets) are taken from the 31 Dec 2025 balance sheet. Market price, bond yield, dividend and analyst-consensus data are current to late June 2026. The FY26 full-year result is due ~12 August 2026.