National Australia Bank Ltd (ASX: NAB) shares are under the spotlight after announcing a new CEO. Ross McEwan led an impressive turnaround of the ASX bank share and now he's passing on the job to somebody else after a long career in financial and insurance services.
The NAB board of directors has decided on Andrew Irvine as the group CEO and managing director of the bank. He has been the group executive of business and private banking since 2020 and will take on the role starting 2 April 2024.
Why was Irvine chosen as the new NAB CEO?
The NAB chair Philip Chronican said Irvine has "key strengths" supporting the appointment, including "passion for customer service, success leading Australia's largest business bank franchise, people leadership, risk management and international experience."
Chronican also said Irvine's expertise in digitisation, transformation and modernisation has created "significant benefits" for how the bank operates.
Before joining NAB, Irvine was head of Canadian business banking at the Bank of Montreal, one of the largest and oldest banks in Canada.
Can the ASX bank share keep performing?
In my own eyes, Ross McEwan was the leading bank CEO in the industry and helped pick up the performance of NAB (shares).
However, that doesn't necessarily mean that NAB isn't going to do as well. Irvine was hired under McEwan and hopefully learned a lot from him. The business banking side of NAB has done very well, and Irvine's leadership has been an important part of that.
Barrenjoey banking analyst Jonathan Mott said the choice was a "solid" move. Mott said in a note, according to reporting by The Australian:
Having been Group Executive Business and Private Banking since 2020, Andrew Irvine is well respected by the market. We view this as a solid appointment and there is no change to our investment thesis.
Ross McEwan has been well liked by the market, widely tributed for simplifying the business, 'getting the basics right', managing costs and building a strong balance sheet. We believe an internal candidate with international experience, hired by Ross McEwan, will be viewed well by the market.
We see NAB as relatively well positioned within the sector given the positive medium-term outlook for business banking. With the risk of a harder landing having reduced, the likelihood of losses within its SME book has decreased.
Citi analyst Brendan Sproules doesn't think it will be easy for Irvine because of how high the bar is after McEwan's leadership. Sproules said:
We think that the appointment of Andrew Irvine, current Group Executive Business and Private Banking, will be well received by the market.
While that is positive, it doesn't escape the fact that Ross potentially had the strongest support out of any bank CEOs from the investor base.
Given NAB has achieved a strong re-rating in recent years from its strong execution and transparency, the bar has been set very high for Mr Irvine.
Coupled with conducive conditions in business banking, this allowed for a solid re-rating versus peers ANZ Group Holdings Ltd (ASX: ANZ) and Westpac Banking Corp (ASX: WBC).
Going forward, Mr Irvine comes in to the top role with the bar set very high and a much tougher environment for business banking, with slowing system growth.
Is the NAB share price a buy?
The broker Citi has a sell rating on NAB shares, with a price target of $25.79, which implies a possible fall of around 20% in the next year.
I personally wouldn't call it a sell, but the loss of McEwan is a blow for NAB. Also, after a 14% rise since the start of December 2023, I wouldn't call the share price cheap either. I want to hear from Irvine about his vision and ideas for NAB before calling it a strong buy, though I'd still prefer it to other ASX bank shares, for now at least.
