National Australia Bank Ltd (ASX: NAB) shares are charging higher again today.
Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed up 2.7% at $40.23 apiece on Monday following the release NAB's third-quarter trading update, covering the three months to 30 June (Q3 FY 2025).
In early afternoon trade on Tuesday, shares are swapping hands for $40.80 apiece, up 1.4%.
For some context, the ASX 200 is down 0.6% at this same time.
This now sees NAB shares up 10.5% over the past year. And that's not including the $1.70 in fully franked dividends the bank paid out over the 12 months. At the current share price, NAB trades on a fully franked 4.2% trailing dividend yield.
Which brings us back to our headline question.
Is the big four bank a good buy following on yesterday's earnings results?
What did NAB report on Monday?
NAB shares caught tailwinds yesterday after the bank reported unaudited cash earnings for of $1.77 billion in the June quarter, in line with Q3 FY 2024.
Unaudited statutory net profit of $1.66 billion was down 3% on the average achieved in the first half of FY 2025. But NAB reported 2% underlying profit growth relative to H1.
And NAB's net interest margin (NIM) increased by 4 basis points relative to the first half.
On the negative side of the ledger, the bank reported a quarterly credit impairment charge of $254 million. And looking to the full FY 2025 year, NAB said it expects operating expenses to increase by around 4.5% year-on-year.
Should you buy NAB shares today?
Following on the results the analysts at Macquarie Group Ltd (ASX: MQG) ran their slide rule back over NAB shares.
"NAB delivered a solid 3Q25 update with a ~4bps NIM uplift, supported by replicating portfolio tailwinds and stable lending/deposit trends," the broker noted.
However, Macquarie flagged concerns about the uptick in non-performing loans (NPLs).
"Credit quality continues to lag peers with NPLs increasing; however, NAB called out some early signs of stabilisation," the analysts said.
And Macquarie cautioned passive income investors to brace for lower dividends ahead from NAB shares.
"NAB's capital position was slightly below our expectations, strengthening our conviction about the dividend cut, which we anticipate in 1H27," the broker said.
Connecting the dots, Macquarie concluded:
NAB's trading update [Monday] was positive. While we still see headwinds on broader sector competition and further impacts from rate cuts, trading at a ~6% discount to WBC and ~13% premium to ANZ, we believe relative valuation is appropriate, and the stock remains our preferred pick.
Macquarie maintained its neutral rating on NAB, raising its price target by 1.4% to $35.50. That's some 13% below levels at time of writing.
NAB shares will again be in sharp focus on 6 November when the bank reports on its second half (H2 FY 2025) results.
Stay tuned!
