Commonwealth Bank 5.4B Profit|Cuts 276 Local Jobs, Ships Work to India

The Bank Every Super Fund Owns Is Quietly Moving Its Workforce Offshore

Commonwealth Bank of Australia posted a record first-half net profit of $5.367 billion — and then announced it would cut 276 more domestic jobs.

That combination is not unusual for a large Australian bank. What makes this week different is the allegation sitting underneath it.

The Finance Sector Union says CBA has been advertising more than 37 equivalent roles in India within the same month it announced the local redundancies. The union's national secretary, Julia Angrisano, called it "fake redundancies" — offshoring for profit while telling Australian workers their roles no longer exist.

CBA's spokesperson denied the claim directly, saying the India roles are "separate and unrelated to the proposed changes in Australia."

Two named parties, the same facts, opposite conclusions — and millions of Australians caught in the middle who never chose to own this stock.

Because CBA is not a stock most of its holders actively picked. It sits inside almost every superannuation fund and ASX 200 tracking ETF in the country. Australians own it through their retirement savings without ever placing a trade.

The question that matters for those holders is not whether CBA's profit is impressive. The question is whether the model producing that profit is sustainable — or whether the offshoring strategy is a short-term cost lever that introduces regulatory and brand risk the market has not yet priced.

India Headcount Doubled — and the Numbers Tell a Different Story Than Management

CBA's India subsidiary has grown from roughly 3,000 staff in 2022 to around 7,000 by mid-2025. That is not a support office. That is a parallel workforce built at a fraction of Australian labour costs, over three years, while domestic headcount held steady at around 37,000.

The timing of this week's announcement is what sharpens the contradiction. CBA informed staff of 176 technology and engineering cuts at the start of the new financial year — and separately flagged around 100 more in operations, business banking, and retail banking teams. Those two tranches together represent the largest single-week domestic workforce reduction the bank has flagged in recent memory.

Yet the roles being advertised in India include software engineering, data engineering, and security engineering — the same categories being cut in Australia.

The assumption the bank's argument requires is that the India roles are genuinely new work, not replacement work. That assumption is doing a great deal of load-bearing without evidence in the public domain.

This is the buried tension that makes the week's news more than a routine cost story. CBA's first-half cash earnings rose 5% to $5.367 billion. If job-cut savings are the primary earnings driver rather than revenue growth or margin expansion, then the cost lever has a ceiling — the point at which domestic workforce reductions create compliance risk, customer service degradation, or regulatory intervention.

The Finance Sector Union's allegation, if sustained by regulators, adds a second layer: that the redundancies may not be genuine, which carries legal exposure under Australian labour law beyond the reputational dimension.

14 of 16 Analysts Say Sell — Yet the Stock Keeps Getting Bought

The analyst read on CBA is unusually unified for a mega-cap. Fourteen of sixteen analysts have a sell or strong sell rating. The average twelve-month price target sits at $126.36 — implying a further 23% downside from the $166 level it was trading at this week. One extreme view prices a potential decline to $90.

Yet the stock does not behave like one with 14 sellers. CBA has held a significant valuation premium to its big four peers for years, and it moves in a range that defies the analyst consensus because the sellers cannot easily act.

Super fund mandates and passive ETF structures mean a large portion of CBA's register is owned by investors who do not make stock-specific decisions. They do not sell CBA because they rate it a sell. They own it because they own the index. That structural bid is what has kept the stock from correcting to the level the analysts are pricing.

The gap between $166 and the $126 target is not a mystery. It is the premium that passive inflows charge for a name that cannot be avoided in a broad Australian portfolio.

However, that premium has already compressed. CBA traded at $191.40 at its record closing high in June — it is now 13% below that peak. The question for holders is whether the compression has run its course, or whether the offshoring controversy adds a new risk layer that the passive bid cannot absorb.

The Discriminator: When Does an Offshoring Story Become a Valuation Event?

The offshoring allegation alone does not move CBA's share price materially. What converts it into a valuation event is if a regulator confirms the redundancies are not genuine — or if the full-year result, expected in August, shows that net interest margin has continued to compress while domestic cost savings are the only profit lever.

CBA's net interest margin had already flagged as weaker in its Q1 FY26 result — that release triggered the bank's worst sell-off in four years. The market did not punish it for cutting jobs. It punished it for showing that the business model was narrowing.

If the FY26 full-year result in August delivers the same pattern — margin compression, earnings held up only by cost reduction — then the $126 analyst target becomes the base case for active holders, while passive holders absorb the drawdown without a choice.

The counter-case is specific: if CBA demonstrates that its India investment is generating new revenue-enabling capability — new products, expanded digital services, genuine IP — rather than a pure labour arbitrage, the offshoring story changes character. That evidence would need to appear in the August result to shift the dominant read.

For holders: the FY26 full-year margin print is the single variable that decides whether this is a cost-discipline story or a business-model contraction story. A margin stabilisation or expansion signals entry into a re-rating path. A further compression confirms the trap.

For those watching from outside: the FSU allegation is a secondary signal. If Fair Work proceedings are initiated before August, it introduces a compliance risk premium that active buyers have not priced in the current $166 level.