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Why has the NAB share price jumped today?

Posted: 10 February 2022 2:35 pm
News
CBA-shares-10Feb_1800x1000_Finder

Shares in the Big Four bank have risen nearly 12% in the last 12 months.

Shares in National Australia Bank (ASX: NAB) are among the most traded shares on the ASX, with the stock climbing nearly 4% higher to $29.52 at the time of writing.

It has also helped the other banking shares maintain their upward momentum, with Commonwealth Bank (ASX: CBA), ANZ (ASX: ANZ) and Westpac (ASX: WBC) all trading higher.

What is boosting the NAB stock price?

NAB became the last of the Big Four banks to report its earnings update on Thursday.

Australia's second-biggest lender posted a better-than-expected 9.1% rise in first-quarter cash profit to $1.8 billion, helped by growth in the home and business lending market, where it took share from other banks.

Revenue increased 8% reflecting higher volumes across housing and business lending, and a recovery in the Markets & Treasury (M&T) income. NAB said it expanded its mortgage portfolio by 2.6% and saw a 3.4% rise in business lending.

Australian banks have been under pressure amid a low rate environment, with competition rising in the home loan market as customers increasingly switch to fixed rate home loans. In recent days, each of NAB's 3 major rivals have outlined pressure on margins.

Like its peers, NAB also suffered margin pressure, although to a lesser extent. The net interest margin declined 5 basis points to 1.64%, including a modest negative impact from treasury and markets and the cost of a deeper pool of liquid assets.

Optimistic outlook

CEO Ross McEwan shrugged off the challenges caused by disruptions to supply chains and labour markets due to the recent spread of Omicron.

"We remain optimistic about the outlook for Australia and New Zealand and are well positioned to continue to grow with a strong balance sheet and disciplined execution of a clear strategy," he said in a statement to the ASX.

NAB said it continued to target broadly flat expenses in 2022, despite emerging inflationary pressures. Expenses increased 2%, mainly reflecting higher salaries, leave costs and investment to support growth.

The group's common equity tier 1 capital ratio was lower at 12.4% at December-end, due to the impact from dividend payments and a continuing share buyback, but is still well above the banking regulator's 10.5% "unquestionably strong" threshold.

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Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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