Below, I’ve listed seven reasons why I wouldn’t buy National Australia Bank Ltd. (ASX: NAB) shares, right now.

But before we get into that, please note these two things:

  1. This is my opinion only and, frankly, I could be wrong – NAB shares could soar from here
  2. I don’t hold bank shares in my portfolio. Your personal situation – and shareholding – may require a different course of action to mine.

7 reasons why I wouldn’t buy National Australia Bank Ltd. shares

  1. The economy is transitioning.

While this risk is not unique to NAB, economic theory suggests bank profits are not only related to growth in the economy but also highly leveraged to it. That means, if the economy enters a rough patch, NAB’s share price risk may be asymmetric.

  1. Mining investment is slowing.

The mining boom is over. Indeed, capital has already been pulled from Australia at a rapid clip. It’s evident from the stalled projects and a falling Australian dollar. I believe a slowing mining sector could have a direct and indirect impact on NAB shares, over time.

  1. Regulations and capital raisings are going to hurt.

The banking regulator (APRA) is beefing up its oversight of Australia’s big banks – and rightly so. While NAB’s current capital levels appear robust, if APRA continues its tougher stance on bank regulation, NAB’s returns (on a per share basis) may not track along as well as previously anticipated.

  1. Bad debts are low.

Bank shares are cyclical. Therefore, the best time to buy them will be when bad debt charges are high, dividends are all but non-existent and uncertainty is forcing share prices lower. That’s easier said than done, of course. But you needn’t be an analyst to identify the trend emerging here:

Data provided by S&P Global Market Intelligence

Data provided by S&P Global Market Intelligence

As can be seen, bad debt charges are falling. Indeed, during the most recent quarter, charges for bad debts fell 52% to $84 million according to the bank’s ASX filing on 16 February 2016. Bad debt charges are deducted directly from profit on the income statement, so they can have the effect of boosting profits to record highs.

  1. Profit margins are being squeezed.

Traditional banking is becoming less profitable for Australia’s major banks. Since the GFC, the big banks have reported falling net interest margins and slower growth in net interest income. Together with technological disruption, traditional bricks-and-mortar banks will be forced to adapt their once very lucrative lending practices.

  1. Are NAB shares cheap?

I’ve devoted many hours and days to studying bank shares like NAB, Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group (ASX: ANZ) and Westpac Banking Corp (ASX: WBC). However, I still find each of them intensely difficult to value. Their balance sheets are too complex to give me a healthy level of conviction in my valuation. Therefore, if I were prepared to build a holding in one of them, I’d be taking a leap of faith on valuation. That wouldn’t be very comfortable.

  1. Better alternatives

The ASX is filled with more than 2,000 companies. So while some may argue it’s worth going through the rigmarole of trying to value NAB shares, my time may be better spent elsewhere. Moreover, with NAB accounting for more than 5% of the entire S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) the chance of it becoming meaningfully undervalued is small.

Bonus: I wouldn't buy NAB shares because...

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Motley Fool writer/analyst Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes -- and encourages -- your feedback on Google+, LinkedIn or you can follow him on Twitter @ASXinvest.

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.