The National Australia Bank Ltd (ASX: NAB) share price is on form again on Wednesday.
In afternoon trade, the banking giant's shares are up over 1% to $27.30.
This means the NAB share price is now trading within a whisker of its 52-week high of $27.84.
Image source: Getty Images
Why is the NAB share price pushing higher?
Today's gain by the NAB share price appears to have been driven by the release of a strong full year result by rival Commonwealth Bank of Australia (ASX: CBA) this morning, which has given investor sentiment in the banking sector a boost.
In case you missed it, Australia's largest bank reported cash earnings growth of 19.8% to $8,653 million. This was stronger than expected, with the analyst consensus estimate at $8,464 million.
Also catching the eye of investors was Commonwealth Bank's decision to return $6 billion to shareholders via a share buyback. This was significantly higher than what the market was expecting.
What else has been driving its shares higher?
Also giving the NAB share price a boost this week was an announcement on Monday.
That announcement reveals that the bank has signed an agreement to purchase Citigroup's Australian consumer business.
The proposed acquisition includes a home lending portfolio, unsecured lending business, retail deposits business, and private wealth management business. The deal will add deposits of $9 billion and lending assets of approximately $12.2 billion. The latter comprises residential mortgages of approximately $7.9 billion and unsecured lending of approximately $4.3 billion.
Goldman Sachs was positive on the deal. In response, the broker held firm with its conviction buy rating and $30.34 price target on its shares. Based on the current NAB share price, this implies potential upside of 9% before dividends.
Goldman said: "We see strategic merit in the transaction, which would contribute to an improvement in the returns drag NAB has suffered vs. peers from being underweight Consumer Banking and having a Consumer Bank that relatively under-earns, given a lower exposure to unsecured lending. We calculate that the transaction would result in a c. 1.5% better EPS outcome than if the equivalent capital was bought back on-market."
