Should you buy CBA shares in 2026?

In this the third full trading week of the new year, let’s look into our crystal ball and look at where CBA shares in 2026 will go. From mid-June 2023 to mid-June 2025, shares in Australia’s largest bank more than doubled.

Now the movement is not a spectacular fact in itself, but the fact it occured while so many analysts kept asserting the bank was overvalued but retail investors kept buying. Probably the the closest Australia has got to having a saga as happened with GME. At its peak, the bank was labelled ‘the most expensive bank in the world’ by virtue of it being 30x forward P/E.

But since then, shares have fallen 20% from their all time high, wiping out over A$40bn in shareholder value and leaving the company at risk of losing its position as the top ASX stock to BHP. 2025 was the first in 6 years that the total return (i.e. share price accumulation and dividends combined) trailed the ASX 200.

And no it is not the market – the ASX 200 is 3.7% higher than it closed on June 25 last year. Nor is it a sell off of bank stocks – all the other Big 4 are up in that time with the ‘next worst’ being NAB which is only up 6%.

One has to look at CBA itself to see the cause.

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CBA: The good, the bad and the ugly

CBA still is Australia’s largest bank and it has a long way to fall before there is a chance of it being dislodged. Indeed its mortgage book is over $600bn, its profit is over $10bn and this performance has still been strong in the last 12 months. However, its peers have been closing the gap. And there is the question of how far the bank can go. But more on its peers shortly.

Beyond mere speculation things could go wrong just because things are unlikely to get better, there have been signs that CBA may be losing ground in the mortgage market or just be about to. One of the key reasons CBA is so profitable from lending is because it originates the majority of its loans in-house (i.e. without brokers). The bank’s own estimates suggest broker-originated loans are 20-30% less profitable than those secured through its own channel.

A number of departure over the summer (specifically 20 lenders in December alone, some to become mortgage brokers and others to rival banks) has raised eyebrows as to the reality of its ambitions to maintain a high market share. One particular executive departed after over 30 years’ service.

Speaking of departures, CBA rolled-out an AI chatbot tool in the bank’s call centres with the intent to making 45 jobs redundant. But this sparked a backlash and this had to be abandoned. This may not have been a big deal to investors in its own right, but depicts that even giants like CBA are no immune from slip ups.

Another factor that has impacted shares is also the bank’s share buybacks. One of the key reasons why share buybacks are done is because they prop up the share price. But did you know the current program began 2 and a half years ago in mid-2023? As shares get more expensive, the costs of buying back shares increase and so it can only do that for so long. Of course, there are other ways to splash cash other than buying back your own shares.

Rivals are a threat

The biggest threat to CBA may not actually be its Big 4 peers right now but Macquarie which now has 6.6% of the market – still a small share, but one that has grown from 4.6% in mid-2022. Looking over a shorter time-frame, CBA’s home loan book in November grew 0.76% while Macquarie grew 2.32%.

But its Big 4 peers are a concern. Don’t take our word for it – in its November update, CEO Matt Comyn (who recently got a 3 year contract extension to 2028) all but accused rivals of copying his strategies,’ It felt like ‘replicated CBA” in some of the strategies and results’.

All 3 of the other Big 4 have appointed new CEOs in the last 18 months and all are putting their marks on the banks they run, Anthony Miller for Westpac, Nunos Matos for ANZ and Andrew Irvine for NAB. Now, none of them have been immune from missteps, but you can’t say they are ‘doing nothing’.

ANZ is targeting its cost to income ratio to be similar to CBA by 2028 and has undertaken initiatives including job cuts of 3,500, rolling out ANZ Plus and integrating Suncorp’s retail operations. Westpac’s initiatives have included brand rationalisation and a pursuit to grow the proportion of mortgages on its book generated in-house (i.e. without brokers). And NAB has initiatives too including through AI platforms to help bankers and continued growth in business lending. 

So, CBA shares in 2026: Where to?

It is anyone’s guess, but here is ours…it won’t be back to the highs of last year. Will it fall? Analysts reckon so, given their mean target price is $122.12 – more than 20% down. True, they were deniers when shares just went up and up and up for 2 years.

But it is hard to see catalysts that would propel growth back to levels over $180 per share. Earnings growth? Perhaps, but analyst estimates have already priced in modest growth (i.e. $6.13 EPS for FY26 vs $5.92 in FY25). And while its P/E is off all time highs, it is still 24.5x and its PEG is 6.2x.

So even though we could be wrong, we would feel a lot safer to suggest CBA shares will underperform in 2026 than if we said shares would outperform.