The National Australia Bank Ltd (ASX: NAB) share price return has been pleasing over the last year, rising by 11%. Add in dividends as well, that's a solid return. It'll be interesting to see how the ASX bank share performs in the coming year and beyond.
The ASX banking sector is a very competitive space because so many institutions are focused on protecting and increasing their market share. This can be a challenge for lenders wanting to maintain or increase the net interest margin (NIM).
The NIM tells investors about how much profit a bank is making on its lending, which includes the loan rate and the cost of funding those loans (including term deposits and savings accounts).
Image source: Getty Images
Expert views on the ASX bank share
The bank has a few different goals and broker UBS has provided some commentary on the business.
One goal is to grow its business bank, which is a key earnings generator for the bank. UBS noted that NAB delivered strong momentum over the past 12 months, growing at around 1.3x the overall loan system, gaining around 40 basis points (0.40%) of lending market share.
However, as competition intensifies, UBS believes management will need to focus on defending the bank's NIM, which declined by around 5 basis points in FY25.
Another goal of NAB's is to drive deposit growth. NAB lost around 10 basis points (0.10%) of market share in 2025, highlighting an area for improvement, especially considering the deposit impact on the NIM.
The third goal for NAB is strengthening its proprietary (own channel) home lending. In the second half of FY25, 41% of new home loans were originated through proprietary channels, below its peer average of 46%.
UBS suggested that proprietary lending could benefit significantly from AI, enabling bankers to deliver faster, more personalised service compared to broker channels.
Is the NAB share price a buy?
Broker UBS has a neutral rating on the NAB shares, with a price target of $42.50. That suggests the bank may not see any gains over the next 12 months.
UBS said that the ASX bank share is trading at 19x FY26's estimated earnings, which is more expensive than it usually is.
The broker projects that it could generate $7.2 billion of net profit in the 2026 financial year and that the bank's earnings could rise in FY27, FY28, FY29 and FY30. Therefore, the rest of the decade could be positive for the ASX bank share.
