Is the NAB share price a buy amid this volatility?

Brokers are somewhat mixed on the business.

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Key points

  • NAB recently announced its FY22 half-year result
  • The bank reported cash earnings growth
  • Brokers have mixed opinions on whether the bank is a buy

The ASX share market is seeing a lot of volatility right now. Could the National Australia Bank Ltd (ASX: NAB) share price be an opportunity?

On Friday, the S&P/ASX 200 Index (ASX: XJO) suffered one of its worst days in the last two years.

NAB shares fell on Friday as well. But, at the time of writing, the bank has gone up around 7.5% since the start of the year.

Last week, NAB reported its FY22 half-year result, and it managed to achieve growth. Before getting to the broker ratings on the bank, let’s look at how the bank performed.

Earnings wrap

NAB reported a statutory net profit after tax (NPAT) of $3.55 billion. The cash earnings rose 4.1% to $3.48 billion. Revenue rose by 4.6%, benefitting from “pricing discipline and strong growth in lending and deposits which were up 10% and 12% respectively” compared to the prior corresponding period.

The bank has been investing to deliver productivity benefits. It said that it has reset its FY22 cost growth target to approximately 2% to 3% to ensure it drives shareholder returns while balancing cost disciplines and growth opportunities. Indeed, the NAB share price is up 18% since this time last year.

NAB said that net interest margin (NIM) declined 11 basis points to 1.63%. However, excluding the impact from markets and treasury, and higher holdings of liquid assets, the NIM declined by 3 basis points. NAB said this reflected competitive pressures and “mix issues” in housing lending, partly offset by lower deposit and funding costs.

The bank’s credit impact charge was $2 million. However, NAB did say that it’s seeing improved asset quality across Australian lending exposures and low specific charges. The ratio of loans that are more than 90 days past due fell 48 basis points to 0.75%.

NAB’s board decided to declare an interim fully-franked dividend of 73 cents per share, up from 60 cents per share. At the current NAB share price, its current grossed-up dividend yield is 6.1%.

Regarding its outlook, the bank said:

We are optimistic about the future and well-positioned for an evolving environment in FY22 and FY23. Disciplined execution of our strategy and investing to deliver better customer and colleague outcomes remain our key focus to allow us to drive sustainable growth across our business and improved returns for shareholders.

Is the NAB share price a buy?

Brokers are somewhat mixed on the business.

Ord Minnett currently rates NAB shares as a buy, with a price target of $34.50. The broker thought the result was good.

Morgan Stanley is currently ‘equal-weight’ on the big four ASX banks, with a price target of $31.80.

Credit Suisse is neutral on the NAB, with a price target of $32.40. While NAB should be a beneficiary of interest rates increasing, the broker noted that NAB is expecting to report growth in expenses.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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