Sydney, March 14, 2026, 08:37 AEDT
Commonwealth Bank of Australia finished Friday’s session up 1.26% at A$173.76, shares shifting between A$171.99 and A$174.90, with investors snapping up the country’s top lender before the Reserve Bank of Australia’s meeting next week. The S&P/ASX 200 benchmark slipped 0.1% to 8,617.10.
This shift is significant: traders have moved quickly to adjust their outlook on the RBA. According to a Reuters poll released Friday, 23 out of 30 economists now see the cash rate jumping by 25 basis points to 4.10% on March 17. Back in February, the consensus had rates holding at 3.85%.
Belinda Allen, Commonwealth Bank’s head of Australian economics, says the “balance of probabilities has shifted”—she’s now looking for rate hikes in both March and May. “Higher rates can support bank earnings through wider net interest margins, but only if households keep borrowing and arrears remain contained,” Global X ETFs senior product and investment strategist Marc Jocum noted. Net interest margin, the difference between what banks make from lending and pay out on deposits, comes into focus here. Reuters
The rest of the sector caught a bid as well. Financials tacked on 1% Friday, with Westpac, National Australia Bank and ANZ all advancing alongside CBA. The four big banks each finished between 0.5% and 1.5% higher, even as miners dropped 2.1%.
CBA heads into the rate call riding a wave of earnings. The bank last month posted a record first-half cash net profit after tax of A$5.45 billion, topping analyst forecasts. Home lending was up 3.7%, business lending advanced 6%, and household deposits increased 7.5%.
Chief Executive Matt Comyn pointed to an increase in household consumption, “including across discretionary categories.” For Michael Haynes, investment analyst at Atlas Funds Management, the standout was business bank growth and how the bank handled its mortgage business. Reuters stock data puts CBA shares up 20.7% over the past year. Reuters
The rally’s coming at a cost. On average, 14 analysts tracked by Investing.com see a 12-month price target of A$127.44, which sits about 27% under where shares finished on Friday. That gap points to ongoing valuation risk, despite rate forecasts tilting toward the banks lately.
That sets up a straightforward risk: margins benefit from higher rates only so long as borrowers keep up their spending and defaults don’t spike. But Reuters notes that if energy prices keep climbing, inflation could accelerate—while at the same time, growth and consumer demand might suffer.
Tuesday brings the RBA decision, the next event traders are watching. Earlier this week, Reuters noted that markets recalibrated, now reflecting a 75% probability of a March hike as the Middle East turmoil drove oil higher and stoked fresh inflation fears. That backdrop leaves bank shares facing a new hurdle after their strong Friday.
