National Australia Bank Ltd (ASX: NAB) shares have been in focus this month after the ASX bank share reported its FY25 half-year result. After the bank reported, analysts factored in those developments and updated their forecasts.
In the FY25 half-year result, NAB revealed that it generated cash earnings of $3.58 billion, representing a 1% increase over year. Statutory net profit was $3.4 billion.
The bank provided a number of interesting insights within its update to the market, including commentary on competition and its profit margins.
Let's take a look at what UBS thought of the result and what the broker is expecting of the bank.
FY25
UBS said the FY25 half-year result was "good" and "allayed some of the fears around recent management changes, lost market share in business lending and the fallout from a soft Q1 2025 update." That sounds like good news for NAB shareholders, in UBS' view.
The underlying result benefited from a strong markets and treasury performance and a $81 million credit impairment charge in the second quarter of 2025.
UBS reduced its cash earnings estimate for NAB by 1.1% for FY25 and cut it by 0.8% in FY26. That's because the net interest margin (NIM) – how much profit it makes on lending – forecast was reduced with the prospect of cash interest rate cuts (which may reduce bank profitability).
A softer NIM is forecast to be offset by assumed lower credit (loan) losses for the bank.
The broker described NAB as a leader in the small and medium business lending market. But, UBS thinks competitors appear "more committed than in previous cycles to staying the course in business banking, especially with growth and profits in the broader sector difficult to come by and retail at or below cost of capital."
UBS is forecasting the NAB's statutory profit could rise slightly in FY25 to $6.95 billion and cash earnings could slightly increase to $7.15 billion.
FY26
In the 2026 financial year, NAB is expected by UBS to generate a similar level of profit.
The broker is forecasting that in FY26, the bank could generate $7.08 billion of profit, which would be slightly higher than the statutory net profit of FY25 and slightly lower than the cash earnings of FY25. That's not positive or negative for NAB shares.
FY27
The 2027 financial year could see stronger profit growth for the bank, according to UBS.
For FY27, the broker is projecting that NAB could increase its net profit by a further 3.1% to $7.3 billion.
FY28
In FY28, it could get even better for owners of NAB share, with a further profit increase.
UBS is projecting that NAB's net profit could grow another 4.6% to $7.64 billion.
FY29
The final year of this series of projections could be the best of all for NAB.
UBS is forecasting that NAB's net profit could rise by 2.8% to $7.85 billion. That would represent a close to 10% rise of cash net profit between FY25 to FY29.
While profit may rise in the next few years, it's not expected to climb at a strong rate.
