The National Australia Bank Ltd. (ASX: NAB) share price shot the lights out last year, cementing one of its best performances since 2013.
Shares in the big four banking constituent surged 27.6% to $28.84 by the end of 2021. For comparison, the S&P/ASX 200 Index (ASX: XJO) gained 13%. Based on this information, shareholders of the 40-year-old enjoyed a substantial outperformance of the benchmark even before dividends.
So, what transpired in 2021 to give NAB shares an extra boost above the rest?
Earnings rebound puts NAB share price back on the menu
NAB shares bounced back strongly early into last year as economies kicked back into action. The National Australia Bank wasn't alone in witnessing this economic trend, other major banks also caught the wave of economic improvement.
The first quarter of FY21 provided the initial indication of better times for the NAB share price. In its release, NAB posted a $1.7 billion unaudited statutory net profit. Additionally, credit impairment charges fell 98% compared to the second half of FY20. This removed a large, lingering, and gloomy cloud over the major bank — helping improve sentiment towards NAB shares.
Yet, the rebound in earnings did not end with the first quarter. Instead, each of the succeeding quarters in 2021 resulted in NAB's 12-month trailing earnings rising. By the time the 2021 full-year results came around in November, NAB was back to pre-pandemic revenue and profits.
In specific terms, the second-largest major bank reported cash earnings of $6,558 million in FY21. Impressively, this represented a 76.8% increase on the previous year.
Banking on a bigger future
Last year also involved a couple of notable acquisitions for ASX-listed NAB. In January, the NAB share price was in focus after the bank announced its agreement to acquire Australian neobank 86 400. The move is in line with the bank's mission to develop a leading digital bank.
The 86 400 acquisition received approvals from the courts and regulatory bodies in May. From there, the scheme became effective from 12 May 2021, with implementation on 19 May. For reference, NAB paid $220 million for the digital banking land grab.
Backing this up was another acquisition announced in August last year. This time it was the Australian consumer business of Citigroup. The deal valued at $1.2 billion sent the NAB share price higher upon release to the share market.
