The first quarter pre-provision profits were in line with expectations. Cash net profit was ahead, given lower credit impairment charges.
National Australia Bank has recorded its lowest credit impairment charge since it began reporting quarterly earnings in 2008, UBS notes.
This reflects a benign quarter and no changes to the overlays taken in FY20. The CET1 ratio of 11.7% was also ahead of expectations and derived benefit from FX translation and marking to market on the liquids book.
UBS upgrades FY21 and FY22 estimates by 7% and 3%, respectively. Buy retained. Target rises to $27 and $25.
Sector: Banks.
Target price is $27.00.Current Price is $25.56. Difference: $1.44 – (brackets indicate current price is over target). If NAB meets the UBS target it will return approximately 5% (excluding dividends, fees and charges – negative figures indicate an expected loss).
