Commonwealth Bank of Australia (ASX: CBA): Legal Uncertainty Resolved and Fund Raise Explained

CBA is a fundamentally strong stock with sustainable growth. The recent development will help the company to focus on core business supported by fundraising.

Commonwealth Bank of Australia (ASX: CBA) 

One of the leading banks listed in ASX with a market capitalisation of $267.27B and a current fully franked dividend yield of 3.22%.

Legal settlement

CBA announced on 26 August 2026, that they have agreed for an agreement to settle a class action which involves Colonial First State Investments Limited (CFSIL), Avanteos Investments Limited (AIL) and CBA. It was filed on behalf of class members by Slater and Gordon on 2018.

The class action is related to certain cash and deposit options issued by CBA which was offered through Colonial First State superannuation and wrap products in the period between November 2008 to September 2021. CBA, CFSIL and AIL has denied all allegations and make no admission of liability or wrongdoing.

If the Federal Court of Australia approves the settlement sum of $249M, eligible class members may be entitled to receive a share of the settlement sum after accounting for any deductions which may be approved by the court, such as legal fees charged by the applicants' lawyers and any amount to be paid to the funder of the class action. As the settlement remains subject to documentation and Federal Court of Australia approval, it is not appropriate to comment further.

Fund raise via subordinated note issue

CBA announced on 21 August 2026 that they issued subordinated notes of GBP 650M maturing on 21 August 2036 under their US$70B Euro Medium Term Note Program. The note bears an initial interest rate of 5.597% per annum payable semi-annually in arrears for the period from the issue date up to the optimal redemption. The subordinated notes have a first margin of 1.2% p.a.

The subordinated notes have a key feature to potentially exchange the notes into a fully paid ordinary share of CBA in case any non-viability trigger event occurs. CBA mentioned that they will not have any material impact on its financial performance and any conversion into ordinary shares would occur only in special circumstances.

FY26 full-year results

CBA had announced 12 August 2026, its FY26 results for the period ended on June 2026. The operating income increased by 6.2% YoY to $30.2B, cash NPAT increased by 7.1% YoY, and statutory NPAT is up by 8% to $10.9B. The net interest margin remains flat at 2.05%, and the deposit funding ratio reached 79%, up 1% compared to June 2025.

CBA has a strong customer base, with 1 in 3 Australians having a retail account at CBA and 1 in 4 Australian businesses having an account, highlighting stronger and deeper customer relationships. Home lending increased by 1x compared to the system, with retail accounts reaching 655k, and business lending grew by 1.3x compared to the system, with business accounts reaching 90k. CBA has a strong balance sheet with CET level 2 reaching 12%, higher than the ARPA minimum of 10.25%.

Outlook

CBA enters FY27 with lending customer relationships, a broader franchise and a strong balance sheet. CBA’s priority lies in deepening customer relationships, maintaining discipline in their volume and margin choices, improving productivity and delivering benefits from its investment.

(Source: Company Announcements)