Why the NAB (ASX:NAB) share price remained flat in June

This large cap ASX share made two important announcements in June…

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The National Australia Bank Ltd. (ASX: NAB) share price held relatively steady in June, despite the ASX continuing to rise.

The Australian banking giant provided the market with two important updates during the month, which impacted the NAB share price.

We take a look at the announcement and how the company’s shares reacted.

What happened to NAB in June?

Early in the month, the Australian Transaction Reports and Analysis Centre (AUSTRAC) had serious concerns about NAB’s financial crime compliance. The government agency revealed the bank may be breaching Anti-Money Laundering and Counter-Terrorism Financing rules.

As a result, AUSTRAC’s enforcement team initiated a formal investigation into the alleged matter. While no civil penalty proceedings have been taken to date, the review is ongoing.

The news shook investors when released, leading the NAB share price to fall more than 3% on the day.

Almost a week and a half later, the company provided an update in regards to the Bank Bill Swap Rate (BBSW) class action complaint. Although the claims were dismissed against NAB on jurisdictional grounds in February 2020, the bank agreed to a settlement.

No financial details were given and the deal is confidential, but the bank appeared happy to put the lawsuit behind.

Despite the positive news, NAB shares also fell around 0.50% when the announcement was made.

How is the NAB share price valued?

A recent broker note came two days after NAB’s release on the AUSTRAC matter.

Australia’s largest investment house, Morgans cut its 12-month price target for NAB by 5.2% to $27.50. The firm downgraded the bank from “add” to “hold” based on the continuing AUSTRAC investigation.

In addition, Standard & Poor revised its long-term credit rating outlook for NAB. Pleasingly, it issued a “Stable” rating from “Negative” in line with the quicker than expected economic recovery.

About the NAB share price

Over the past 12 months, NAB shares have gained more than 40% reflecting positive investor sentiment. The company’s share price reached a 52-week low of $16.56 in September last year before rebounding higher.

On valuation grounds, NAB presides a market capitalisation of roughly $86.4 billion, with close to 3.3 billion shares on issue.

At the time of writing, NAB shares are up 0.27% to $26.29.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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