The National Australia Bank Ltd (ASX: NAB) share price advanced 1.15% in early trading on Tuesday to reach a nine-year high of $37.68 apiece.
Several other ASX 200 bank shares are also resetting price records today. Meantime, the S&P/ASX 200 Index (ASX: XJO) is down 0.14% to 8,006.7 points at the time of writing.
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Why did the NAB share price just touch a 9-year high?
The ASX S&P/ASX 200 Financials Index (ASX: XFJ) is one of the strongest performers today, up 0.39% behind the S&P/ASX 200 Communication Index (ASX: XTJ) at 0.44%.
There is no price-sensitive news from NAB to explain its share price rise today. The Big Four bank has only released a daily update on its share buyback program
The bank advised the on-market purchase of 507,590 NAB shares yesterday. This is part of a larger program that commenced in August 2023, through which the bank has bought back almost 52 million shares.
The buyback program is due to end on 1 May 2025.
As the chart below shows, all ASX 200 bank shares, bar Bank of Queensland Ltd (ASX: BOQ), have been on a sustained run since November 2023, when speculation of interest rate cuts began.
Last Friday, Australia's biggest bank, Commonwealth Bank of Australia (ASX: CBA), overtook mining behemoth BHP Group Ltd (ASX: BHP) to become the biggest ASX 200 company by market capitalisation.
Despite the NAB share price trading at elevated levels, several executives have added to their personal holdings in recent months.
Non-executive director Sarah Carolyn Kay was the most recent purchaser among NAB board members.
Kay bought 2,000 NAB shares on-market on 3 July for an implied average share price of $35.44.
Can the exuberance over ASX 200 bank shares last?
There are some mixed views on this. UBS reckons ASX 200 bank shares 'don't appear overly expensive' compared to global peers, whereas Goldman Sachs views them as the most expensive in the world.
Goldman Sachs said ASX 200 bank shares valuations are "skewed to the downside" from here. The broker says there is an expanding valuations discrepancy despite weaker relative profitability.
Philip King, CIO at Regal Funds Management, says Aussie banks are being "attacked from all angles" by competitors such as buy now, pay later operators, non-bank lenders, and private credit.
Martin Conlon from Schroders says the banks' profits will be "flat at best" unless they can reduce costs.
What's ahead for the NAB share price in FY25?
While UBS expects NAB to grow its profits in FY24 and FY25, the broker has a sell rating on the shares. The NAB share price is now trading well beyond the broker's 12-month price target of $30.
Goldman Sachs has a neutral rating on NAB with a 12-month share price target of $34.04.
Earlier this month, NAB paid an interim dividend of 84 cents per share to shareholders.
My colleague Tristan recently reported on the FY25 outlook for NAB.
