CBA Drops as Card-Fee Changes Prompt Rewards Profitability Scrutiny

The Commonwealth Bank of Australia (ASX:CBA) saw its stock price decline by 0.7% to A$156.88 after announcing changes to its card-fee structure, which is set to impact rewards profitability. The Reserve Bank of Australia expects the credit card reforms implemented in October to reduce issuer interchange revenue by A$660 million each year.

The bank's loyalty program, Yello, will now cover nine million customers across various banking products, including home loans and insurance. Customers can earn points on a range of services, not just card spending. This move could make it more expensive for clients to exit the bank if they want to keep their rewards.

The stock is trading 9.8% lower than its August 11 close, with analysts projecting a further 20.2% fall to reach their average price target of A$125.21. The decline has not closed the gap between CBA's valuation and broker targets. The bank continues to face downward pressure after the announcement, which may be attributed to its solid earnings in FY26, where cash profit increased by 7.1% to A$10.98 billion.