The National Australia Bank Ltd (ASX: NAB) share price is edging higher on Thursday following the release of its third quarter update.
At the time of writing, the banking giant's shares are up slightly to $27.24.
This means the NAB share price is now up almost 19% in 2021.
How did NAB perform in the third quarter?
During the third quarter, NAB reported an unaudited statutory net profit of $1.65 billion and unaudited cash earnings of $1.70 billion.
This was broadly in line with the average quarterly profit and cash earnings that it achieved during the first half of FY 2021.
What was the reaction the update?
The team at Goldman Sachs were pleased with NAB's quarterly performance. It notes that the bank is trading ahead of its second half expectations.
Goldman said: "NAB has released its 3Q21 trading update, with unaudited cash earnings from continuing operations of A$1.70 bn, up 1% on the previous period average, run-rating 11% ahead of what is implied by our current 2H21E forecasts."
"The better than expected performance is more than driven by BDDs [bad and doubtful debts] that are run-rating much lower than our current 2H21E forecasts."
"While headline PPOP [pre-provisioning operating profit] trends appear soft, this is largely on account of weak Markets and Treasury revenues (similar to CBA's result yesterday), with core trends broadly consistent with our current forecasts, highlighting that the core bank at NAB is again growing."
The broker also notes that NAB's CET1 ratio of 12.6% is running ahead of its forecasts as well.
Is the NAB share price in the buy zone?
According to the note, Goldman Sachs has a conviction buy rating and $30.34 price target on its shares.
Based on the current NAB share price, this implies potential upside of 11% over the next 12 months before dividends. This stretches to approximately 16% including dividends.
