Shares of National Australia Bank Limited (AU:NAB) touched a nine-year high of AU$34.10 this morning on reporting solid cash earnings for the first quarter of Fiscal 2024. NAB recorded cash earnings of AU$1.80 billion for the three months ending December 31, 2023. Australia’s second-largest banker also said that it is optimistic about the future, given the country’s resilient economy.
NAB’s Key Metrics in Q1 FY24
NAB’s cash earnings for the quarter saw a 16.9% year-over-year decline owing to higher deposit costs, expense pressure, and competitive lending. These cost pressures also impacted the business lender’s margins.
NAB was able to keep its Group Common Equity Tier 1 ratio above its target range at 12% for the quarter. Excluding Markets & Treasury (M&T) income, NAB’s revenue remained flat, and net interest margin (NIM) fell marginally compared to the H2 FY23 quarterly averages.
Looking ahead, for Fiscal 2024, NAB continues to aim for productivity savings of AU$400 million as well as lower expense growth compared to Fiscal 2023. The bank is also looking forward to the new incoming CEO, Andrew Irvine, effective April 2024.
Is NAB a Good Share to Buy?
Commenting on the results, Jefferies analyst Matthew Wilson noted that NAB’s short-term earnings growth is hampered by higher competition, rate hikes, and a sluggish macro environment. Being Australia’s leading business lender, NAB’s credit quality reflects the economic condition of Australia and New Zealand.
On TipRanks, NAB stock has a Hold consensus rating based on three Buys, two Holds, and three Sell ratings. The National Australia Bank Limited share price target of AU$29.70 implies 11.7% downside potential from current levels. Notably, all these ratings were given before the trading update and are subject to change.
