National Bank’s quarterly update highlighted some positive themes, the broker notes, continuing on from Commonwealth Bank’s ((CBA)) result earlier in the week. Net interest margin increased slightly on mortgage repricing, although the broker sees offsetting actions required ahead to counter a lower cash rate. Asset quality is sound and capital has increased.
The issue for the broker is expense growth, as the bank invests in new technology. NAB needs to catch up relative to peers. No new customer remediation charges were revealed, but an Austrac-related penalty remains a risk. Hold retained, target rises to $27.50 from $26.00.
Target price is $27.50.Current Price is $27.14. Difference: $0.36 – (brackets indicate current price is over target). If NAB meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges – negative figures indicate an expected loss).