CBA shares trade at whopper 21 times forward EPS
Firsthalf cash profit expected to fall 3.7
Mortgage, deposit wars hit margins

SYDNEY, Feb 12 Reuters Australia39;s largest bank, Commonwealth Bank, is expected to report a small drop in firsthalf profit this week, but that hasn39;t deterred investors from pouring into its shares and turning it into one of the world39;s most expensive banks.

The stock has jumped more than 20 since November, outperforming a 12 rise in the wider market, with the help of investors fleeing China39;s battered markets and those switching to equities on expectations of interest rate cuts.

As the market39;s secondlargest stock, it is benefiting from an outsized share of the money pouring into Australian equities from home and abroad, say analysts and investors.

As a result, Commonwealth Bank is now trading just off its alltime high, valuing it at 21 times forward earnings per share, or nearly double Wall Street giant JPMorgan39;s earnings multiple and more than triple HSBC39;s.

Its market capitalisation is now roughly double its nearest rival, National Australia Bank.

For investors fleeing China39;s stuttering market amid a prolonged property crisis and looking for safe, liquid places to put their money, Australian banks, and in particular CBA as the largest and most well known, are an easy pick, said Matthew Haupt, a portfolio manager at Wilson Asset Management.

Australian banks have been massive beneficiaries of the pull back from…