Shares in the Big 4 bank are up by more than 60% over 12 months.
The post The NAB (ASX:NAB) share price has hit a 52-week high. Here’s why. appeared first on The Motley Fool Australia. –
The 澳大利亚国家银行 (ASX: NAB) share price has hit a new 12-month record.
At the time of writing, shares in the Big 4 bank are trading for $28.42 – up 0.28%. However, they hit $28.48 shortly after the open today — a new 52-week high. For context, the S&P/ASX 200 Index (ASX: XJO) is down 0.74%.
Let’s take a closer look at what’s been driving the NAB share price higher over the past year.
NAB’s new 52-week record
In August, NAB released its third-quarter trading results. In it, the bank revealed an unaudited statutory net profit of $1.65 billion and unaudited cash earnings of $1.70 billion. This was broadly in line with the average quarterly profit and cash earnings that it achieved during the first half of FY21.
Brokers at Goldman Sachs are very positive about the company. These analysts believe the NAB share price should get to $30.62, and they are expecting dividend yields of 4.5%-5.3% over the next 3 financial years.
NAB shares have recovered strongly since the COVID-19 market crash in March 2020. At one point, the shares closed at a measly $13.88. Its current share price is more than double that low point.
As Motley Fool has previously reported, NAB’s financial performance has significantly improved over that time. Loan deferrals are down, and economic optimism is up.
The NAB share price was seen as a buy earlier this year, partly due to post-lockdown expectations.
What else is affecting the NAB share price?
NAB announced a $2.5 billion share buyback in July.
Commenting on the capital return at the time, NAB’s CEO Ross McEwan said:
Our support for customers and colleagues continues through ongoing lockdowns and as the COVID19 situation evolves. At the same time, NAB’s strong financial performance, combined with the divestment of MLC Wealth, has created an opportunity for NAB to reduce our surplus capital while retaining a strong balance sheet during these uncertain times.
As McEwan mentioned, NAB sold MLC Wealth to IOOF Holdings Limited (ASX: IFL). This deal was completed in May of this year. McEwan said the bank disinvested from MLC because it delivered “simpler, more streamlined products and processes for our customers and colleagues”.
Finally, NAB announced the purchase of Citigroup Inc’s (NYSE: C) Australian consumer business for $1.2 billion. As part of the deal, NAB acquired Citi’s home lending portfolio, unsecured lending business, retail deposits business, and private wealth management business.
The NAB share price rose on the news. As well, analysts at Goldman Sachs said the purchase had “strategic merit” for NAB. The broker said the deal would aid NAB’s consumer banking and credit cards business in particular.
NAB share price snapshot
Over the past 12 months, the NAB share price has increased 61%. That’s more than 2.5x faster than the ASX 200. Year-to-date, NAB shares have appreciated 23.8% while the ASX 200 increased 11.7%.
National Australia Bank has a market capitalisation of approximately $93.5 billion.
Should you invest $1,000 in NAB right now?
Before you consider NAB, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and NAB wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.