National Australia Bank Ltd (ASX: NAB) shares were in the spotlight after the company reported its results for the six months ended 31 March 2025. Experts at Macquarie have reviewed the numbers and decided what they view the ASX bank share as worth.
As the chart above shows, the NAB share price has suffered plenty of volatility this year, but in the past month it has gone up more than 10%.
After seeing the FY25 half-year result, Macquarie said NAB has shown "early signs" of progress on key priorities, delivering "stronger deposit growth and stabilising proprietary mortgages."
Let's remind ourselves of some of the key numbers from NAB's results.
HY25 earnings recap
During the half-year period, NAB reported that HY25 cash earnings of $3.58 billion grew 0.8% compared to the second half of FY24. It also generated $3.4 billion of statutory net profit.
Overall revenue increased by 1.7% but fell by 1.1%, excluding higher markets and treasury revenue. A lower margin was partially offset by volume growth.
The underlying net interest margin (NIM), which is the lending margin on its loans (which includes the revenue and costs of the loan), fell 3 basis points (0.03%) because of deposit impacts, higher wholesale funding costs, and lending competition.
Expenses increased by 1.4%, largely due to higher staffing and financial crime-related costs and increased technology spending. Productivity benefits partially offset cost growth.
Compared to the second half of FY24, the HY25 impairment charge reduced by close to 5% to $348 million.
The NAB board decided to increase the dividend by 1 cent per share to 85 cents per share.
Macquarie's view on NAB shares
Macquarie noted that NAB's headline profit beat expectations. The investment bank believes the ongoing deterioration in credit quality metrics, which remain worse than peers, is "likely to continue to weigh on market sentiment".
The investment bank said that with competition stepping up in business banking, margins are likely to remain under pressure. Despite that, Macquarie is forecasting better margin trends for NAB in FY26 and FY27 because of its better relative balance sheet position regarding margin impact from lower interest rates.
Macquarie also said the weaker credit quality trends "remain a concern" and are "worse than peers", but the rate of problem loan growth has slowed. The banking analysts believe NAB's loan losses will not be materially worse than its peers and that problematic loan exposures will eventually be "cured".
The broker also said that NAB's dividend payout ratio is too high, so it's expecting a dividend cut in FY27.
Macquarie has NAB shares as its preferred exposure in the sector, and it has a neutral rating on the ASX bank share. It's trading at 16x FY26's estimated earnings, according to the investment bank.
Macquarie has a price target of $35 on the ASX bank share, implying a slight fall over the next year from today's level.
