The ASX bank share National Australia Bank Ltd (ASX: NAB) has already made solid gains for investors in 2025 to date, climbing by approximately 14%, as the NAB share price chart below shows.
Investing $5,000 at the start of the year in NAB shares would now be worth approximately $5,700, plus the interim dividend payment.
However, we don't have a time machine to go back and invest. What could happen if we invested $5,000 today? Let's take a look at some predictions about NAB shares.
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'Solid' performance by the bank
When the bank released its quarterly update, UBS highlighted in a note that revenue increased 3% compared to the HY25 quarterly average, with the net interest margin (NIM) – a profitability measure for the bank's lending – rising by 8 basis points (0.08%).
Operating costs increased by 3% compared to the quarterly average of HY25, primarily because of increased staff costs and technology spending.
The broker also highlighted that NAB's credit impairment charge was $254 million in the third quarter, compared to $81 million in the second quarter of FY25. UBS noted these charges related to business lending in Australia and New Zealand.
The cash earnings of $1.8 billion were down 1.8% on the quarterly average. Earnings are a key driver for the NAB share price.
UBS said the revenue and volume growth trends were "solid" in its view, but offset by higher-than-expected cost guidance and bad debts.
Loan volume growth of 5% year over year was stronger than the 4% growth analysts were expecting. But, FY25 operating expenses are now expected to be 4.5% higher than FY24, whereas the previous guidance suggested growth of less than 4.5%. This increase reflects $130 million of costs related to payroll and remediation issues.
Credit charges are/were expected to be an annualised 12 basis points (0.12%) in the second half of FY25, but the $254 million translates to 13 basis points (0.13%), annualised. However, UBS highlighted that NAB has significant provisions for its loan portfolio.
Potential return of $5,000 in NAB shares
UBS currently has a price target of $37.50 on the ASX bank share, implying a possible decline of 12% over the next 12 months, at the time of writing. That means investors could see a decline in the capital value of approximately $600. In other words, a $5,000 investment in NAB shares may only be worth $4,400 in a year from now.
While the broker is forecasting a dividend yield (excluding franking credits) of approximately 4% for the next 12 months, that's still implying wealth destruction by investing at the current valuation.
Therefore, it could be better to look at other ASX shares for potential returns.
