Commonwealth Bank of Australia (ASX:CBA) Share Price in December 2025: Is the Market Re‑rating a Quality Giant or Pricing in Trouble for 2026?

Updated 4 December 2025

Commonwealth Bank of Australia (ASX:CBA) has gone from market darling to market headache in just a few months.

As of early afternoon on 4 December 2025, CBA shares were trading around A$152–153, after closing at A$152.05 on 3 December. ^[1] That leaves Australia’s biggest bank roughly 20% below its late‑June record high near A$192, and down about 13% over the past month as investors reassess what they are willing to pay for the stock. ^[2]

Yet the business itself is still printing record profits, paying record dividends and ramping up its bet on artificial intelligence. So why is the market suddenly so grumpy?

CBA share price today: from euphoric highs to a controlled comedown

Over the past year, CBA has done a full lap of the valuation circuit:

Peak: In late June 2025, the stock hit an all‑time high around A$192, cementing its status as one of the most richly valued banks in the world. ^[3]
Now: Around A$152–153 on 4 December 2025, the stock is a little over 20% below that peak, but still well above pre‑COVID levels. ^[4]
Near‑term trend: Market data show a one‑month price fall of roughly 13%, as the stock slid from the mid‑A$170s into the low‑A$150s through November and early December. ^[5]

Recent daily closes underline how trading has stabilised in a new, lower range:

28 November: A$152.51
1 December: A$151.64
2 December: A$152.24 ^[6]

So this isn’t a collapse; it’s a classic de‑rating – the earnings story is intact, but investors are no longer willing to pay nosebleed multiples for it.

What triggered the November sell‑off? The Q1 2026 update that spooked the market

The immediate catalyst for the November slump was CBA’s Q1 FY26 trading update on 11 November.

Headline numbers looked fine…

CBA reported:

Cash profit of about A$2.6 billion for the quarter, up around 2% on the prior corresponding period. ^[7]
Home and business lending continued to grow, with deposit inflows remaining strong. ^[8]
Asset quality stayed benign, with arrears and loan losses still low by historical standards. ^[9]

On paper, that is not the stuff of panic.

…but margins and costs told a tougher story

The problem lay in the details:

Management flagged pressure on the net interest margin (NIM), citing the impact of lower interest rates, strong competition for mortgages and deposits, and balance‑sheet mix effects (more low‑yielding liquid assets and repo activity). ^[10]
Operating expenses continued to rise faster than revenue, driven by wages, regulatory spend and big increases in technology and AI investment. ^[11]

Commentary from market strategists captured the mood: the profit line was in line with expectations, but the direction of travel for margins and costs raised doubts about how long CBA can keep growing earnings at the pace implied by its valuation. ^[12]

The market’s verdict: harsh

The reaction was swift:

On the day of the update, CBA shares fell around 6–6.5%, wiping more than A$18 billion from its market capitalisation and dragging the ASX 200 lower. ^[13]

When a stock is priced for perfection, “good but not spectacular” suddenly isn’t good enough.

Fundamentals still look strong: record profit, record dividend

Underneath the recent share‑price drama, CBA’s FY25 results (year to 30 June 2025) were objectively impressive.

Earnings and profitability

According to the bank’s full‑year profit announcement and subsequent coverage:

Cash net profit after tax: A$10.25–10.3 billion, up about 4% year‑on‑year – a record. ^[14]
Statutory NPAT: Around A$10.1 billion, up 7–8%. ^[15]
Earnings per share (cash): About A$6.13 (613 cents). ^[16]
Return on equity: Roughly 13.5%, comfortably above most global peers. ^[17]
Net interest margin:2.08%, about 9 basis points higher than the prior year. ^[18]

Loan growth has also been robust:

Home‑loan book up about 6% to ~A$600 billion.
Business lending up around 11–12% to roughly A$160 billion, meaning CBA is gaining share in both retail and business banking. ^[19]

Dividend and capital

On the shareholder‑reward side:

Full‑year dividend:485 cents per share, fully franked – CBA’s highest ever, and 20 cents higher than FY24. ^[20]
Split: 225c interim + 260c final, with the final dividend paid around late September 2025. ^[21]
At a share price around A$152, that implies a trailing dividend yield of roughly 3.2%, before the benefit of franking credits. ^[22]

The payout ratio on a cash basis sits around 79%, which is high but consistent with the bank’s long‑term strategy of returning surplus capital while still keeping buffers above minimum regulatory levels. ^[23]

CET1 capital ratios and liquidity metrics remain well above regulatory minima, with CBA funding a large portion of its balance sheet from relatively sticky household deposits. ^[24]

Bottom line: operationally, CBA still looks like the strongest of Australia’s major banks – which is exactly why it has been able to trade at such a big premium.

Valuation crunch: why so many analysts are now negative on CBA

The core of the current debate isn’t whether CBA is a high‑quality franchise. It’s how much you should pay for that quality.

Current multiples

Latest valuation snapshots from independent data providers show:

Price/earnings (trailing): Around 25x, using a share price just above A$152 and trailing EPS of A$6.12. ^[25]
Price/book: Roughly 3.2x as of December 2025. ^[26]

By comparison, many global banks trade on mid‑teens P/E ratios and price/book multiples closer to 1–1.5x.

Broker commentary around the FY25 result was blunt:

Macquarie described CBA as “very expensive”, highlighting a forward FY26 P/E around 28–29x and price/book near 3.8x for a ~13.5% ROE, and maintained an Underperform rating with a A$105 price target. ^[27]

Montgomery Investment Management likewise pointed out that CBA was trading at about 4x book and almost 28.5x forward earnings when it released FY25 results – more than three standard deviations above its own long‑run averages. ^[28]

Analyst ratings and price targets

Consensus data from several platforms underline how crowded the bearish camp has become:

Investing.com reports an average 12‑month target around A$121–124, with estimates clustered between roughly A$96 and A$146, and an overall rating that tilts towards “Strong Sell”. ^[29]
TipRanks data for the past three months show 0 Buy, 5 Hold and 21 Sell ratings, with an average target near A$123.15. ^[30]

Individual broker calls include:

UBS: Sell, target A$125. ^[31]
Morgans: Reduce/Sell with a notably bearish target around A$96. ^[32]
Macquarie: Underperform, target A$105, as noted above. ^[33]

Put simply, the analyst community broadly agrees that CBA is a top‑tier bank trading at a top‑of‑the‑universe multiple – and that combination no longer feels comfortable in a world where investors are rediscovering the concept of “value”.

Macro and regulation: supportive tailwinds, fresh headwinds

CBA’s outlook is tightly bound to Australia’s macro story and the changing rules of the mortgage game.

Rates, growth and the housing market

CBA’s own economics team expects global growth to pick up modestly in 2026, but stay below its pre‑COVID trend, with Australia delivering only slightly better than “muddle‑through” expansion. ^[34]

The Reserve Bank of Australia has already pivoted from aggressive hikes to a more neutral stance, and market pricing implies the possibility of rate cuts in 2026 if inflation continues to moderate and the labour market softens. ^[35]

For banks like CBA:

Lower rates support borrowers and reduce bad‑debt risk, which is good.
But they also squeeze net interest margins, especially when competition for deposits is fierce – which is exactly the pressure that showed up in the Q1 update. ^[36]

On housing, CBA CEO Matt Comyn has publicly warned that home‑loan demand is “too high” and contributing to rising property prices, even as regulators and politicians fret about affordability. ^[37]

New APRA debt‑to‑income caps

In late November, the Australian Prudential Regulation Authority (APRA) announced its first debt‑to‑income (DTI) limits on mortgages, effective 1 February 2026:

Banks will be allowed to issue no more than 20% of new home loans (owner‑occupier and investor) with a DTI of six times income or higher. ^[38]

At first glance, this doesn’t sound dramatic – currently, only around 5–6% of new loans sit above that threshold. ^[39]

Credit‑rating agency Fitch has described the move as pre‑emptive, aimed at preventing a build‑up of risk rather than slamming the brakes on lending, and expects only a modest near‑term impact on the banks’ overall credit growth. ^[40]

For CBA, the implications are nuanced:

The bank’s dominant mortgage share means it will have to be especially careful not to hit the cap too quickly. ^[41]
The rule underscores the political and regulatory sensitivity around housing – and makes it a bit harder for any major bank to chase growth simply by stretching affordability for heavily indebted borrowers. ^[42]

Macro‑wise, the story is: steady but unspectacular growth, structurally expensive housing, high household debt and regulators getting twitchier. All of that caps how aggressively CBA can grow riskier lending without raising eyebrows in Canberra and at APRA.

AI and technology: long‑term upside, short‑term cost pain

While the market fixates on margins and valuations, CBA management is busy trying to turn the bank into a data‑driven, AI‑heavy fintech in a big‑bank body.

Key AI and tech developments over the last 18 months include:

AI Factory with AWS: CBA has built a large‑scale “AI Factory” in collaboration with Amazon Web Services to accelerate the development and deployment of generative AI models across the bank. ^[43]
Strategic partnership with OpenAI: In August 2025, the bank announced a multi‑year partnership with OpenAI to bring advanced generative‑AI tools to staff and customers, with a focus on fraud detection, personalised services and productivity tools. ^[44]
New Chief AI Officer: On 26 November 2025, CBA named Ranil Boteju (poached from Lloyds in the UK) as its first Chief AI Officer, to lead these initiatives from early 2026. ^[45]

Management has also flagged:

An increase of around A$300 million in annual technology investment, lifting total tech spend to roughly A$2.3 billion a year. ^[46]
A push to embed AI in everything from scam detection to call‑centre automation and credit analytics. ^[47]

In the short term, this pushes up the cost‑to‑income ratio (already around 46% on recent numbers) and eats into profit growth. ^[48]

In the long term, if it works, it could:

Lower operating costs via automation.
Improve risk management and lower credit losses.
Deepen customer engagement with more personalised services. ^[49]

The market’s current wobble essentially reflects a trust issue: investors love the idea of AI‑enabled super‑efficiency, but they’re no longer willing to pay 28–30x earnings today on the promise that those efficiency gains will materialise flawlessly tomorrow.

CBA share price forecasts for 2026 and beyond

Forecasts come in several flavours: broker fundamentals, quant models and pure technicals. They do not agree with one another – which is exactly what makes a market.

1. Broker and consensus targets: still well below today’s price

As noted earlier, traditional analyst research is broadly sceptical:

Average 12‑month target: Around A$121–124, versus a current price in the low A$150s. ^[50]
Bearish cases: UBS at A$125, Morgans closer to A$96, Macquarie at A$105, all with negative or underweight recommendations. ^[51]

On those numbers, the consensus view is that CBA could still fall 15–30% from current levels if its valuation multiple contracts towards something more “normal” for a large bank.

2. Statistical and quant models: more optimistic, but volatile

A different set of numbers comes from TradersUnion, which runs statistical models on CBA’s price history:

For 2026, they project the share price could fluctuate between about A$143 and A$175, with an average around A$158.7 by year‑end – slightly above where the stock trades today. ^[52]
Longer‑term projections have average prices around A$185 in 2030 and well above A$300 by 2035, assuming earnings and dividends continue compounding. ^[53]

These models are basically fancy extrapolations: they assume that, over long periods, earnings and dividends grow enough to carry the price higher, even if there are big swings along the way.

3. Short‑term technical views

Short‑term technical services such as StockInvest and others referenced in recent coverage paint a picture of:

A stock in a short‑term downtrend, but with falling trading volumes that may indicate selling pressure is easing around the A$150 support zone. TS2 Tech

Think of it as the market catching its breath after the November sell‑off, waiting for the next macro shock or bank‑specific catalyst.

So what is the market really debating on CBA?

Strip away the noise and the question around Commonwealth Bank’s share price in December 2025 is quite simple:

Can an ultra‑high‑quality bank keep justifying an ultra‑high valuation in a flatter earnings environment – while regulators clamp down and the credit cycle ages?

The bullish case leans on:

A dominant franchise in Australian retail and business banking, with strong brand and huge deposit funding. ^[54]
Record profits, resilient asset quality and a fortress‑like capital position. ^[55]
Consistent, fully franked dividends, plus the optionality from AI and technology investments that could drive another leg of efficiency gains later in the decade. ^[56]

The bearish case focuses on:

A still‑lofty P/E around 25x and P/B above 3x – a big premium to both domestic and global peers. ^[57]
Margin pressure from lower rates, deposit competition and regulatory constraints. ^[58]
Rising costs from technology, AI and compliance just as revenue growth slows. ^[59]
The possibility that, after a decade‑plus of good credit conditions, loan losses eventually “normalise” upwards from today’s unusually low base. ^[60]

Right now, the market seems to be saying:

CBA the business still deserves respect.
CBA the stock probably needed to come back to earth.

Whether today’s ~A$152 is the new fair value, a way‑station on the way down towards analysts’ A$120ish targets, or an attractive entry point before the next phase of AI‑powered efficiency, will depend on:

How quickly margins stabilise.
How gentle or rough the next phase of the credit cycle is.
Whether CBA’s heavy technology and AI spend actually delivers the step‑change in productivity that management is betting on.

For now, one thing is clear: quality is not in doubt; the price very much is.

And in markets, that’s where things get interesting.

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