If you're looking for banking sector exposure in FY 2024, then National Australia Bank Ltd (ASX: NAB) shares could be worth considering.
That's the view of analysts at Goldman Sachs, which remain very positive on the bank.
So, why might NAB shares be a good option in the new financial year? Let's find out.
Why buy NAB shares?
According to a recent note out of the investment bank, its analysts have a buy rating and a $30.69 price target on the company's shares.
Based on the current NAB share price of $25.75, this implies a potential upside of 19% for investors over the next 12 months.
And with Goldman expecting annual dividend yields greater than 6% through to at least FY 2025, the total potential 12-month return on offer stretches beyond 25%.
Three reasons to buy
Goldman has named a number of reasons why it is bullish. Three of these reasons are as follows:
Our Buy rating on NAB is predicated on: i) we see volume momentum over the next 12 months as favouring commercial volumes over housing volumes, and we believe NAB provides the best exposure to this thematic.
The broker also highlights that NAB has invested heavily in productivity in recent years. It feels this leaves it well-placed to benefit, especially in the current inflationary environment. Goldman adds:
NAB has delivered the highest levels of productivity over the last three years and its investments continue to yield benefits (A$400 mn expected in FY23E), which we think leaves it well positioned for an environment of elevated inflationary pressure.
Another reason to be positive is the potential for capital returns thanks to its strong capital position. It adds:
NAB's strong capital surplus position (A$3.1 bn of surplus capital above the top-end of its target CET1 range of 11.0-11.5%) allows flexibility for further buy-backs.
All in all, NAB shares look like an interesting option for FY 2024.
