Watch out below! The National Australia Bank Ltd. (ASX: NAB) share price has now crumbled 32% in just 12 months.

Source: Google Finance

Source: Google Finance

The National Australia Bank Ltd share price has, like that of its peers Australia and New Zealand Banking Group (ASX: ANZ) and Westpac Banking Corp (ASX: WBC), spiralled out of favour in recent times as headwinds came to the fore.

A volatile Chinese share market kicked things off in early 2015, sending jitters throughout Australia’s big bank shareholding community. The potential implications of an economic slowdown then put further pressure on ailing commodity prices like iron ore, copper and coal.

Coinciding with the economic concerns were steps taken by APRA, the banking regulator, to bolster the financial system. Forcing NAB, Westpac, ANZ, Commonwealth Bank of Australia (ASX: CBA) and Macquarie Group Ltd (ASX: MQG) to up their risk-weightings on mortgages and hold more capital in reserve culminated with NAB undertaking a record-breaking $5.5 billion capital raising.

The divestment of Clydesdale and Yorkshire Banking Group (ASX: CYB), NAB’s UK subsidiary, also took a chunk out of the bank’s share price.

Finally, ANZ’s recent ‘credit update’ provided the latest nerve-wracking moment for NAB shareholders – who sold its share price down almost 8% in 10 days.

Time to sell?

It’s anyone’s guess which way the NAB share price will head from here. However, one thing is certain: the market thinks NAB is worth less today than one year ago. Arguably, we’re yet to see those concerns reflected in profits.

However, given the share market is forward looking, investors considering buying or selling NAB shares today must carefully consider the risks. Then, ask yourself if the risk-adjusted return is favourable. In my opinion, like always, it’s vital you’re not overexposed to both the property and banking sector at this time.

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Motley Fool Contributor 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.

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.