Yesterday, National Australia bank Ltd. (ASX:NAB) reported a drop in quarterly profit of about 1%.
Upon release of the news, the NAB share price fell marginally lower then shot 2.3% higher.
Mind you, yesterday's results announcement was all of two pages long. If you reacted to that news it is almost like a mechanic doing a road safety check without even looking under the hood.
Nonetheless, the market clearly thinks it is now worth asking…
Is it time to buy National Australia Bank Ltd. shares?
NAB is a leading Australian business bank and a key holder of market share in the $400 billion per year mortgage market. It recently divested its poorly performing U.K. bank, Clydesdale Bank PLC (ASX: CYB); its American agribusiness bank, Great Western Bancorp; and most of its insurance business.
Having its fingers in many rotten pies hurt NAB during the GFC. As a result of the financial chaos in the U.K, for example, it had billions (with a 'b') in bad debts. It eventually settled them. But not only did it cost millions it weighed on NAB's share price like an anchor.
While shares of Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) rallied higher, NAB was facing lawsuits and regulatory headaches. And fair enough, too! The allegations of misconduct were nothing to brush over.
However, under the watchful gaze of current CEO Andrew Thorburn, the titanic bank that is NAB appears set for some smoother sailing.
As noted above, the bank has dropped its non-core assets, and it can now focus on its business banking and retail bank assets in Australia and New Zealand.
Buy, Hold or Sell
Ultimately, it all comes down to price versus value. And at today's prices I think NAB shares are a little too expensive to justify an investment. Though it has a great dividend yield, I'd prefer a slightly lower price before buying it.
