CommBank just had its worst day ever on the stock market

On Wednesday, CommBank recorded its biggest one-day fall on the Australian stock exchange since listing 34 years ago.

Shares in the bank plunged 10.43%, wiping roughly $25 billion from its stock market value.

The broader Australian sharemarket also fell for a fourth straight day.

Here’s what happened.

Share prices

A share is a small piece of ownership in a company.

Here’s how it typically works: When investors believe a company will perform well, they buy shares, pushing the price higher. When confidence falls, investors sell, causing the share price to drop.

CommBank (CBA) is Australia’s biggest bank and the second-largest company on the Australian Securities Exchange (ASX).

Its share price impacts not just its shareholders, but also superannuation funds and the broader stock market.

Share drop

The share price drop was driven by two major factors:

1. CBA reported a quarterly profit result that was lower than anticipated.
2. The Federal Budget included measures that could hit the bank’s biggest business areas.

Profit result

On Wednesday, CBA reported a $2.7 billion profit for the March quarter – up 4% on a year ago, but below analysts’ expectations.

The bank said more customers were falling behind on personal loan repayments, weighing on the result.

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The proportion of customers more than 90 days behind on personal loans rose to 1.71% – the highest rate recorded since pre-pandemic levels.

CBA’s CEO Matt Comyn said: “Many Australian households and businesses are navigating cost-of-living pressures from higher energy prices and interest rates.”

The bank set aside an extra $200 million as a buffer, anticipating that more customers could struggle to repay their loans.

CBA is still making billions in profit, but the latest market update showed growth is slowing, and for investors, the announcement of the safety net came as a warning sign.

Budget

The night before CBA’s results, Treasurer Jim Chalmers handed down a Federal Budget that included major changes to property investment tax rules.

From 1 July 2027, negative gearing for residential properties will be limited to new builds.

Negative gearing happens when a landlord spends more on an investment property than they earn in rent, allowing them to claim the loss as a tax deduction. It has long been considered one of the biggest tax perks for property investors.

Under the new rules (which still need to be legislated) that benefit will no longer apply to established properties purchased after 12 May 2026.

The Budget also changed capital gains tax rules, reducing the discount property investors receive when selling an asset.

CBA holds more investment property loans than any other bank in Australia, leaving it particularly exposed to any slowdown in investor activity.

Impact

In a trading update, Comyn acknowledged that conflict in the Middle East was “disrupting critical supply chains and contributing to global uncertainty.”

The fall in CBA’s market value was reflected across the industry, with Westpac, NAB, and ANZ shares also falling between 1.5% and 3% on Wednesday.

The broader ASX 200 closed down 0.5%, marking its fourth straight day of losses.