The National Australia Bank Ltd (ASX: NAB) share price climbed 0.57% yesterday despite an article in the Australian Financial Review (AFR) reporting that NAB has lost the support of the country's largest mortgage broking group.
What has happened to NAB's mortgage broking business?
According to the AFR, brokers working for Australian Finance Group (AFG) claim that NAB's 12 – 16 basis point (bps) variable interest rate hike in January has been a key cause behind a significant drop in the number of loans being referred to the group.
NAB has previously resisted raising rates as it said it was listening to customers in the wake of the Royal Commission and rewarding loyalty while its Big Four bank peers all raised rates.
However, this looks to have been more of a PR stunt to hold out and attract extra business as the bank eventually caved and raised rates to protect its net interest margin (NIM) and reduce the effect of rising interbank swap rates (BBSW) on profitability.
AFG said that NAB has lost market share across many key mortgage areas in the last 12 months including fixed interest, investor, homeowner and refinancing as its market share among borrowers seeking to refinance has more than halved to less than 4%.
However, the article reported that NAB disputed these concerns and has "strongly improved" customer retention to be the best-performing Big Four in home loan market share growth in the last 12 months.
Is NAB the best ASX bank share to buy in 2019?
The NAB share price has climbed 5.08% so far this year as the Big Four bank share prices have rebounded from the horror run they saw in 2018 amidst the Financial Services Royal Commission.
Australia and New Zealand Banking Group Ltd (ASX: ANZ), Commonwealth Bank of Australia Ltd (ASX: CBA) and Westpac Banking Corp (ASX: WBC) have seen their share prices rise 10.02%, 1.72%, and 6.45%, respectively.
However, NAB also offers its investors the highest dividend yield amongst not only its Big Four peers but also the S&P/ASX200 Index (ASX: XJO) at 8.0% per annum.
While I do have concerns that NAB might have to trim back its dividends if it can't improve its Common Equity Tier 1 (CET1) capital ratio before 1 January 2020, it does appear to be good value on a relative value basis.
Trading at 12x earnings, I think NAB could easily see further growth as it recovers from the 19% loss experienced in 2018.
For those who want to find the next hot growth company, this top-rated stock could boost portfolio gains as it continues to soar in a $22 billion industry.
