The National Australia Bank Ltd (ASX: NAB) share price has delivered pleasing returns for shareholders of the ASX bank share. It's up more than 17% this year, outperforming the 10.6% return of the S&P/ASX 200 Index (ASX: XJO).
Banking is a very competitive industry, with names like Macquarie Group Ltd (ASX: MQG), Commonwealth Bank of Australia (ASX: CBA), ANZ Group Holdings Ltd (ASX: ANZ), and Westpac Banking Corp (ASX: WBC) all wanting to grow their market share.
Banks need to balance profitability with market share, which can be a challenge. The latest update from NAB did not exactly highlight significant growth.
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Flat earnings
Profit generation is a key input for the NAB share price. NAB reported that in the third quarter of FY25, it generated $1.77 billion of cash earnings, which was down 1% on the quarterly average of the first half of FY25 and was flat compared to the third quarter of FY24. Pleasingly, the net interest margin (NIM) improved by eight basis points (0.08%) thanks to higher earnings from replicating portfolios.
Its credit impairment charge (CIC) for the quarter rose to $254 million, and its non-performing exposure to its gross loan and acceptances (GLA) increased to 1.54%. That was up from 1.49% at March 2025 and up from 1.31% in June 2024.
NAB also reported that its total GLA increased to $773.2 billion as of June 2025, up 2% from March 2025 and up 5% year over year. Over the quarter, both its housing and business loans rose by 2%, to $435.2 billion and $323.9 billion, respectively.
NAB said that its underlying profit grew by 2% compared to the quarterly average of the first half.
Let's take a look at what analysts think the NAB share price is worth, with the above growth metrics in mind.
Views on the NAB share price
The broker wrote after seeing those numbers:
Solid revenue and volume growth trends in our view, offset by higher-than-expected cost guidance and bad debts. Q325 bolstered by stronger-than-anticipated revenue trends, and volume growth that exceeded expectations at 5% YoY, compared to the 4% consensus for FY25E.
However, these positive factors were somewhat countered by higher-than-expected cost growth, leading to an updated full-year cost guidance of approximately 4.5%, rather than below 4.5%.
UBS has a price target of $37.50, implying a possible decline of around 15% from where it is today. The broker highlights that NAB is trading at a higher price to book value and price-to-earnings (P/E) ratio than it has historically.
According to a collation of investment views by analysts on NAB shares, the average target price suggests a possible decline of more than 14% over the next year.
It seems better to look at other ASX shares with greater growth potential.
