The National Australia Bank Ltd (ASX: NAB) share price was out of form on Thursday.
This was despite the banking giant announcing that the ACCC has given the green light to its $1.2 billion acquisition of Citi's Australian consumer business.
The NAB share price ended the day 0.5% lower at $28.32.
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Is the NAB share price in the buy zone?
The team at Bell Potter appeared pleased to see the ACCC give its approval to the acquisition.
In response to the news, the broker has reiterated its buy rating and $32.00 price target on the bank's shares. Based on the current NAB share price, this implies potential upside of 13% over the next 12 months.
And if you include the $1.33 per share fully franked dividend the broker is forecasting in FY 2022, this potential return stretches to almost 18%.
What did the broker say?
Bell Potter notes that the ACCC isn't concerned with NAB's plan to acquire Citi's consumer business.
It commented: "The ACCC will not oppose NAB's buy of the Citi consumer business as the transaction should not lessen competition. This is even after the fact NAB and Citi overlap in retail banking products and services including home loans, transactions/savings, wealth management, personal and credit cards."
Though, the broker highlights that this isn't the end of the approval process. The acquisition now rests with regulatory approvals from the Commonwealth Treasury and APRA. But if all goes to plan, completion is scheduled for first half of calendar year 2022.
Why does Bell Potter like NAB?
The team at Bell Potter is positive on NAB for a number of reasons. These include its agribusiness and commercial banking capabilities, high quality mortgage loan book, and cost and growth discipline.
Overall, it believes this leaves the bank well-placed to increase its return on equity (ROE) over the coming years.
Its analysts commented: "The bank is now focused on the lower risk, capital efficient Australian and New Zealand retail, business and corporate banking market space. Our investment strategy is predicated upon NAB improving its NIM (through repricing and pricing discipline), maintaining tight cost management and lifting its overall ROE to levels that are closer to those of its major bank peers."
