Why today’s NAB (ASX:NAB) share price gains could be just the beginning

It hasn’t been a great year for the NAB share price or shareholders in Australia’s big four banks. But that could be about to change.
The post Why today’s NAB (ASX:NAB) share price gains could be just the beginning appeared first on Motley Fool Australia. –

nab share price represented by red piggy bank

The National Australia Bank Ltd. (ASX: NAB) share price is gaining strongly today. At the time of writing, the NAB share price is up 4.08% in early afternoon trading.

That will come as welcome news to shareholders, who witnessed the sharpest selloff in NAB shares ever following the outbreak of the global pandemic.

From 21 February through to 23 March, the NAB share price cratered by 49%. Although it’s since gained 30% from that low, the National Australia Bank share price is still down nearly 34% from the 21 February high water mark and down around 26% year to date.

Even following on those losses, NAB is still a dominant player in Australia’s banking sector. With a market capitalisation of $57.5 billion, it’s solidly within the S&P/ASX 200 Index (ASX: XJO).

For comparison, the ASX 200, also gaining today, is down 11.44% in 2020.

What does NAB do?

The National Australia Bank is a multinational financial services group that provides an integrated range of banking and financial services. Founded in 1982, NAB is one of the ‘big four’ Australian banks, not only in terms of market cap but also its earnings and customer base.

The majority of NAB’s financial service businesses operate in Australia and New Zealand. The bank’s other businesses are located in Asia, the United Kingdom and the United States.

What next for the NAB share price?

After a rough year, things are looking brighter for the NAB share price.

The first good news arrived on 25 September, when Treasurer Josh Frydenberg announced the government’s plans to abolish the responsible lending rules, which were put into place following the global financial crisis. This should enable NAB to issue more loans at a faster pace.

But more good news for the NAB share price likely lies ahead tomorrow. That’s when the government will officially unveil the full details of its new budget.

The JobKeeper and JobSeeker programs are likely to be extended, putting more money in household and business pockets. That should help reduce the number of non-performing loans and increase the number of people taking out new loans. Though NAB just announced it is hiring 500 new banking support staff to assist businesses during these difficult times.

All eyes will also be on the government’s HomeBuilder program and the first home loan deposit policy. Any extensions or increases here should also offer a solid tailwind for the NAB share price.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why today’s NAB (ASX:NAB) share price gains could be just the beginning appeared first on Motley Fool Australia.

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