The National Australia Bank Ltd (ASX: NAB) share price could be cheap according to analysts at Goldman Sachs who earlier this month slapped a buy rating on the Melbourne-headquartered lender.
The NAB share price is actually down around 24% from $33.74 to $25.04 over the past 5 years excluding the impact of dividends that have remained flat at $1.98 per share over the past three fiscal years to take the total return marginally positive over the period.
However, Goldmans has a $30.95 12-month price target on NAB shares with its optimism based on NAB's successful costs savings program, a smooth leadership transition, and flat revenues over the short term.
NAB is also reportedly targeting a cost-to-income ratio of 35% by 2021 that goes to show its excellent profitability as a lender.
The strong profit margins are also shared by Australia's other big banks such as ANZ Bank (ASX: ANZ) or CBA (ASX: CBA) thanks to their stranglehold on the most profitable parts of the Australian lending market.
