Despite the National Australia Bank Ltd (ASX: NAB) share price succumbing to the "September effect", the big four banking constituent experienced a relatively strong quarter.
Kicking off the new financial year, the first quarter saw the bank's share price climb 6.14%.
Meanwhile, the other big four contenders struggled to keep up with the NAB share price during that time. For comparison, Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Grp Ltd (ASX: ANZ), and Westpac Banking Corp (ASX: WBC) added 4.47%, 0.4%, and 0.74% respectively.
Following the strong quarterly performance, NAB shares are now back above their November to February pre-pandemic levels.
Let's take a look at what had investors so optimistic during the last quarter.
What's going on with the NAB share price?
NAB's first quarter of the new financial year (July to September) swung into action with its hefty $2.5 billion share buyback. This capital return was announced at the end of July as part of its effort to stay in its Common Equity Tier 1 (CET1) target range of 10.75% to 11.25%.
Commenting on the buyback at the time, NAB group chief executive officer Ross McEwan said:
Our support for customers and colleagues continues through ongoing lockdowns and as the COVID-19 situation evolves. At the same time, NAB's strong financial performance, combined with the divestment of MLC Wealth, has created an opportunity for NAB to reduce our surplus capital while retaining a strong balance sheet during these uncertain times.
Thereafter, the NAB share price rose an impressive 11.3% from 30 July before reaching its peak on 6 September. However, the bank made another notable announcement in between these two points in time.
On 9 August, the third-largest Aussie bank revealed an agreement to acquire Citigroup's Australian consumer business. This entails NAB paying a $250 million premium to the business's net assets to acquire the Aussie segment of the American investment bank. NAB plans to use the acquired business to deliver on its strategic growth ambition for its personal banking business.
Quarterly update
Another catalyst during the period involved the release of NAB's quarterly update. The update highlighted an unaudited statutory net profit of $1.65 billion. Meanwhile, cash earnings growth was up 10.3% compared to the prior corresponding period. These positive results were driven by better credit conditions, reducing the level of impairments.
Evidently, investors were pleased with this update as the NAB share price climbed higher for weeks following its release.
Unfortunately, with the weight of the September effect, shares in the bank dragged lower in the last month. Although, shares have rebounded to some extent so far in October. As a result, the NAB share price is fetching $27.70 apiece at the time of writing.
Based on the current price, NAB commands a market capitalisation of $91 billion.
