Analysts question bullish CBA claims

Commonwealth Bank's earnings forecasts have drawn doubts from some analysts in the wake of its $2.7 billion profit announcement. Some have downgraded their recommendations on CBA and questioned whether the bank can deliver on earnings. They have also queried whether CBA can maintain its dividend payout ratio which stands at 89.1 per cent of underlying earnings. According to Macquarie Equities' earnings forecasts for 2005, CBA's dividend yield is 6.28, compared with 6.37 per cent for NAB shareholders and just under 6 per cent for ANZ and Westpac. But concerns are surfacing on earnings, with CBA's results highlighting pressure on profit margins for loans. There was a 14 basis point fall in group net interest margin to 2.53 per cent, but Macquarie noted that CBA's Australian margins fell by much more: 33 basis points over the year. This compares with NAB (29), ANZ (23) and Westpac (11).