National Australia Bank Ltd (ASX: NAB) shares are bouncing around on Thursday morning.
In early trade, the banking giant's shares were down 1.5% to $28.72.
They have now recovered and are trading a fraction higher at the time of writing.
What's going on with NAB shares?
Investors were hitting the sell button in early trade after the bank's FY 2023 results fell a touch short of expectations.
As we covered here, NAB reported a 12.9% increase in net operating income to $20,654 million and an 8.8% lift in cash earnings to $7,731 million.
This growth was driven largely by its business and institutional banking operations, which offset an earnings decline from its Australian personal banking division.
This ultimately allowed the NAB board to declare a final fully franked dividend of 84 cents per share, which brought its full-year dividend to 167 cents per share.
Broker reaction
Goldman Sachs has responded to the result and notes that NAB has recorded a "slight earnings miss" with today's release. It said:
NAB reported FY23 cash earnings (company basis) from continued operations of A$7,731 mn, which was up 9% on pcp and 2%/1% below GSe/Visible Alpha Consensus Data (VAe), driven by lower-than-expected non-interest income, such that FY23 PPOP was 3%/2% below GSe/VAe, while the loan impairment charge was 10% below GSe/VAe.
NAB's 2H23 CET1 ratio of 12.22% was broadly flat hoh and 5 bp better than GSe. NAB reiterated it is targeting a CET1 ratio of 11.0-11.5%, and will continue to target a payout ratio of 65-75%. NAB's final 2023 dividend of 84¢ was above our 83¢ forecast and represented a 2H payout ratio of 72% (GSe 68%), and there will be no DRP discount, and the DRP will be neutralised via an on-market purchase of shares.
At present, Goldman has a buy rating and a $30.73 price target on NAB's shares. However, this may change once it has updated its financial model in the coming days.
