The National Australia Bank Ltd (ASX: NAB) share price has been a strong performer over the last six months.
Since this time in February, the banking giant's shares have risen 10%.
This means the NAB share price is now up 20% since the start of the year.
Why is the NAB share price up 10% in six months?
There have been a few catalysts for the strong gain by the NAB share price over the last six months.
One of those has been its much-improved performance in FY 2021. This led to the bank reporting a strong half year result and then an equally strong third quarter update earlier this month.
In respect to the latter, for the three months ended 30 June, NAB revealed an unaudited statutory net profit of $1.65 billion and unaudited cash earnings of $1.70 billion.
Although this was modestly ahead of the average quarterly profit and cash earnings that it achieved during the first half of the financial year, it exceeded the market's expectations.
In response to the release, Goldman Sachs revealed that NAB was trading well-ahead of its second half estimates.
It commented: "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."
What else?
Also giving the NAB share price a boost was news that it has agreed to acquire Citigroup's Australian consumer business.
The proposed acquisition includes a home lending portfolio, unsecured lending business, retail deposits business, and private wealth management business. It will add deposits of $9 billion and lending assets of approximately $12.2 billion. The latter comprises residential mortgages of approximately $7.9 billion and unsecured lending of approximately $4.3 billion.
Goldman was also pleased with this and sees the acquisition as a good way to deploy its excess capital.
The broker explained: "We see strategic merit in the transaction, which would contribute to an improvement in the returns drag NAB has suffered vs. peers from being underweight Consumer Banking and having a Consumer Bank that relatively under-earns, given a lower exposure to unsecured lending. We calculate that the transaction would result in a c. 1.5% better EPS outcome than if the equivalent capital was bought back on-market."
Is it too late to invest?
As you might have guessed from Goldman Sachs' positive comments, it still sees value in the NAB share price.
Goldman recently retained its conviction buy rating and lifted its price target to $30.62. Based on the current NAB share price of $27.64, this implies potential upside of ~11% over the next 12 months before dividends. Including dividends, the potential return stretches to approximately 16%.
This could mean NAB's share price gains are still not over in 2021.
