MENU

National Australia Bank Ltd (ASX: NAB) shares tipped to fall

The National Australia Bank Ltd (ASX: NAB) share price followed the market lower on Thursday and ended the day down 0.6% at $27.81.

Unfortunately for shareholders, one leading broker believes that this could be the start of further declines and has tipped its shares to sink lower.

What has the broker said?

According to a note out of Credit Suisse, its analysts have retained their underperform rating and $25.50 price target on the banking giant’s shares ahead of its trading update release later this month.

The broker’s price target implies potential downside of over 8% from the current National Australia Bank share price.

Credit Suisse has held firm with its bearish stance due to its expectations that the bank will report a third quarter cash profit of $1.6 billion. This will be 2.5% lower than the average quarterly result during the first two quarters

The broker believes this soft result will be driven by weaker margins, increased costs, and flat revenue.

In addition to this, the broker suspects that National Australia Bank will report a decline in its CET1 ratio. Credit Suisse’s analysts have forecast a CET1 ratio decline from 10.2% to 10% due to the payment of its interim dividend.

Should you sell your shares?

While I do think that Credit Suisse makes some fair points, I wouldn’t be a seller of its shares if I owned them. After all, they are trading on lower than average multiples at present and offer shareholders a generous fully franked dividend. I think this makes it worth sticking with the bank.

However, I do see more value for non-shareholders in the shares of Australia and New Zealand Banking Group (ASX: ANZ) and Westpac Banking Corp (ASX: WBC) right now. Which could make them worth a look if you don’t already have exposure to the banking sector.

DON'T MISS! The #1 dividend pick to grow your wealth over the new financial year is revealed for FREE here!

Financial year 2018 is here and The Motley Fool’s dividend detective Andrew Page has revealed his must buy dividend share to grow your wealth in 2018.

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of National Australia Bank Limited. 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 Scott Phillips.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now