Owners of National Australia Bank Ltd (ASX: NAB) shares recently saw their bank report the FY25 result. Earnings didn't quite go in the right direction.
NAB reported that cash earnings declined by 0.2% to $7.09 billion, despite gross loans and advances (GLA) climbing by 5.9%.
Expenses climbed 4.6%, faster than revenue growth, which included $130 million related to the payroll review and remediation charges.
Excluding payroll review and remediation charges, expenses increased by 3.2%, reflecting higher personnel and technology-related costs, partially offset by productivity benefits. The bank said that underlying net profit rose 1.3% in FY25.
In terms of the credit impairment, it said that the charge was $833 million in FY25, compared to $728 million in FY24. However, the overall percentage of non-performing loans increased again to 1.55%, up from 1.39% in FY24 and 1.13% in FY23.
After seeing those numbers, let's check out what experts think could happen with earnings in the coming years,
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FY26
UBS decided to decrease its earnings per share (EPS) forecasts by between 3% and 4.8% over the financial years of FY26, FY27, and FY28 due to costs and credit charges. Earnings are usually a key driver of the NAB share price.
The broker gave the following commentary on the outlook for the largest business lender:
The investment case for NAB is straightforward, as the bank is not pursuing a significant or costly transformation plan or self-improvement initiatives (unlike peers such as Westpac Banking Corp (ASX: WBC) and ANZ Group Holdings Ltd (ASX: ANZ) ). NAB benefits from stability in senior leadership and a consistent strategy.
However, its recent performance falls short of expectations. Returns in 2H 25 have declined to their lowest levels since COVID, at 63bps on AA. If NAB continues to deliver similar results, shareholder pressure is likely to increase. To drive earnings growth, the bank must focus on rebuilding capital buffers, maintaining cost discipline, and executing targeted lending growth initiatives.
Putting all of that together, UBS is currently forecasting that NAB could achieve a net profit of $7.05 billion in FY26, which would be virtually flat compared to FY25.
FY27
The broker UBS thinks the bottom line of the ASX bank share could improve by around $200 million in the 2027 financial year.
UBS projects a net profit of $7.2 billion in FY27.
FY28
The net profit could improve again in FY28 if the broker's projections prove accurate.
UBS predict that NAB's net profit could climb to $7.6 billion in the 2028 financial year.
FY29
Currently, the projection from UBS experts suggests that NAB's profit could increase by around $600 million to $8.2 billion in FY29.
FY30
The final financial year of these forecasts could be the best of all for owners of NAB shares.
UBS predicts that the ASX bank share could generate $8.7 billion of net profit in the 2030 financial year. That would imply a potential 23.8% increase in profit between FY26 and FY30.
In my view, that'd be a useful tailwind for the NAB share price, though that's not a huge rise over five years.
Other ASX shares may be capable of stronger returns.
