MENU

National Australia Bank Ltd (ASX:NAB) holds interest rates

National Australia Bank Ltd (ASX: NAB) has taken the interesting move of not increasing its interest rate whilst its peers of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ) all decided to.

NAB decided to hold its standard variable rate for home loans at 5.24%. It decided to stay put with the interest rate to rebuild the trust of customers. This decision is on the back of ASIC deciding to sue NAB for the fees for no service scandal.

The bank’s net interest margin (NIM) has been hurt in recent months with wholesale interest rates rising in the US. Smaller banks have been raising rates to combat the increasing costs and most of the big banks have decided to increase too.

However, NAB CEO Andrew Thorburn did say that NAB will continue to regularly review its rates and assess whether current market conditions. He said “By focusing more on our customers, we build trust and advocacy, and this creates a more sustainable business.”

According to NAB, a customer with a $500,000 home loan would have paid an extra $47 each month, or $564 per year, on their repayments based on an owner occupier, principal and interest loan over a 30-year term.

This seems like an honourable move by NAB. The big banks make billions of profit each year, it isn’t a very competitive environment if when their costs go up they can all increase their rates with no detrimental effect because customers don’t have a choice, or there are large moving costs.

However, if I were a NAB shareholder I’d be a little annoyed it didn’t follow its peers, even if the increase was smaller than the other bank increases.

Foolish takeaway

NAB is currently trading at under 12x FY19’s estimated earnings with a grossed-up dividend yield of 10.2%. Whilst it is better value than before the Royal Commission I will personally be avoiding the big banks unless there is ‘blood on the streets’. I think there are better growth options out there.

Instead, I’d rather invest in these top blue chip shares for my portfolio, which have better short-term and long-term prospects.

3 Top Shares To Buy In September

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!