The National Australia Bank Ltd (ASX: NAB) share price was in fine form in 2024.
During the course of the year, the banking giant's shares absolutely thumped the market with a gain that was more than double the one recorded by the ASX 200 index.
NAB's shares rose 20.8% over the 12 months compared to a 7.7% gain by the benchmark index.
But the returns didn't stop there. NAB also rewarded its shareholders with two dividends during the period.
The bank paid out a fully franked interim dividend of 84 cents per share in July and then a fully franked final dividend of 85 cents per share in December.
This equates to a 5.5% dividend yield based on where the NAB share price closed 2023, which boosts the total return to 26.3%. This is once again, more than double the total return of 11.2% achieved by the ASX 200 index in 2024.
This means that a $20,000 investment in NAB's shares at the end of 2023 would have turned into just over $25,000 12 months later. This is despite almost all major brokers being bearish on the NAB share price a year ago.
Why did the NAB share price outperform?
Investors were buying NAB and the rest of the big four banks in 2024 after they delivered better than feared results during earnings season.
For FY 2024, NAB posted a 2% decline in revenue and an 8.1% fall in cash earnings to $7.1 billion. Management advised that this mainly reflects lower net interest margins (NIM) and lower Markets & Treasury (M&T) income, partially offset by volume growth and higher fee income.
But with bad debts remaining relatively subdued, investors were relieved that high interest rates didn't cause as much damage as many feared. Combined with a thriving housing market, the big four banks were seen as a great place to be last year.
What's next?
Most brokers believe the NAB share price is overvalued at current levels. However, one broker still sees value in the bank's shares.
A recent note out of Morgan Stanley reveals that its analysts have an overweight rating and $38.40 price target on them. This compares to its current share price of $37.47.
The broker believes that a soft economic landing in Australia should give NAB with plenty of room for meaningful collective provision release in the near term.
