The S&P/ASX 200 Index (ASX: XJO) is on fire on Friday, and the National Australia Bank Ltd (ASX: NAB) share price is no exception.
Despite inflation data from the United States coming in above expectations last night, investors are loading up today. This follows a similar reaction in the US share market overnight, with the Nasdaq Composite Index (NASDAQ: .IXIC) grinding 2.2% above its previous closing point
In afternoon trading, shares in one of Australia's largest banks are humming along. At present, the NAB share price is firming up by 1.8% to $31.15 apiece.
The positive move is somewhat perplexing. Let's delve into why might NAB shares — and other ASX 200 banks — be responding swimmingly to the latest economic data.
Image source: Getty Images
What's the silver lining for the NAB share price?
For households, the latest US inflation data is not a pleasing sight by any measure. The stubbornness of living costs means more interest rate hikes are likely on the agenda of central banks. However, for banks, it could mean a further thickening of the bottom line.
Earlier in the week, the Bank of Queensland Limited (ASX: BOQ) surprised the market with a solid full-year result for FY22. Most notably, the bank's exiting net interest margin (NIM) was 1.81%, tracking above its second-half average of 1.75%.
Many of us have seen this firsthand, unfortunately. Upon the Reserve Bank of Australia (RBA) announcing a cash rate increase, banks have been quick to action increases to loans, but slow to pass on higher rates to savers — the latter normally being only partially increased.
Hence, with the latest US data suggesting more rate hikes to come, Aussie investors could be anticipating improved margins across all ASX 200 bank shares, including NAB. Whether that actually plays out also depends on default rates and the level of competition between lenders.
Another feather in this ASX 200 bank's cap
In other news, NAB has announced the launch of a new payment technology of its own today dubbed NAB Easy Tap.
According to the press release, the Australian first for a major bank will allow small businesses to accept contactless payments from customers via an eligible android mobile phone or tablet.
The capability comes after Apple Inc (NASDAQ: AAPL) announced its own 'Apple Tap to Pay' earlier in the year, as payment processing becomes more mobile-centric.
Furthermore, NAB's offering will remove the need for a small business to buy or rent a separate payment terminal.
The NAB share price is up more than 6% so far this year, while the broader benchmark has endured a near 11% blow.
