Later this week the National Australia Bank Ltd (ASX: NAB) share price is likely to be on the move when the banking giant releases its highly-anticipated half year results.
Ahead of Thursday's release, I thought I would take a quick look at what the market was expecting from the bank.
What is the market expecting from NAB?
First and foremost, following its recent remediation cost update, most brokers agree that NAB will be forced to cut its interim dividend in order to meet APRA's unquestionably strong CET1 ratio benchmark by the end the year.
A cut from 99 cents per share to 90 cents per share has been pencilled in by analysts at Ord Minnett, Credit Suisse, and UBS.
Analysts at Goldman Sachs expect the bank to go one cent further and reduce its interim dividend to 89 cents per share. By doing so, the broker believes NAB will reach APRA's CET1 ratio target of 10.5% by the end of September.
Goldman has also forecast cash earnings growth (excluding one-offs) of 9.1% on the prior corresponding period to $3,009 million. This growth is largely expected to be driven by an 11.9% reduction in operating expenses to $4,178 million.
Analysts at the investment bank have also forecast a 64 basis point increase in NAB's return on equity to 12%, a 5 basis point decline in its net interest margin to 1.82%, a small increase in its bad and doubtful debts to gross loans ratio to 15 basis points, and a 6.5% lift in cash earnings per share to 108.9 cents.
Should you invest?
Whilst I think NAB would be a great option for investors that have limited exposure to the banking sector along with Australia and New Zealand Banking Group (ASX: ANZ), I feel it would be best to wait for the release of this half year result before making a move.
Once released, if the bank's half year result meets the market expectations then I would be a buyer of its shares.
