Is the NAB (ASX:NAB) share price in the buy zone after its Q3 update?

Are this banking giant's shares in the buy zone?

| More on:
two women looking intently at computer screen

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The National Australia Bank Ltd (ASX: NAB) share price is edging higher on Thursday following the release of its third quarter update.

At the time of writing, the banking giant's shares are up slightly to $27.24.

This means the NAB share price is now up almost 19% in 2021.

How did NAB perform in the third quarter?

During the third quarter, NAB reported 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 FY 2021.

What was the reaction the update?

The team at Goldman Sachs were pleased with NAB's quarterly performance. It notes that the bank is trading ahead of its second half expectations.

Goldman said: "NAB has released its 3Q21 trading update, with unaudited cash earnings from continuing operations of A$1.70 bn, up 1% on the previous period average, run-rating 11% ahead of what is implied by our current 2H21E forecasts."

"The better than expected performance is more than driven by BDDs [bad and doubtful debts] that are run-rating much lower than our current 2H21E forecasts."

"While headline PPOP [pre-provisioning operating profit] trends appear soft, this is largely on account of weak Markets and Treasury revenues (similar to CBA's result yesterday), with core trends broadly consistent with our current forecasts, highlighting that the core bank at NAB is again growing."

The broker also notes that NAB's CET1 ratio of 12.6% is running ahead of its forecasts as well.

Is the NAB share price in the buy zone?

According to the note, Goldman Sachs has a conviction buy rating and $30.34 price target on its shares.

Based on the current NAB share price, this implies potential upside of 11% over the next 12 months before dividends. This stretches to approximately 16% including dividends.

Motley Fool contributor James Mickleboro 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.

More on Bank Shares

Shocked office worker staring at computer screen with colleagues working in the background.
Bank Shares

The ASX bank share beating CBA in 2025

Many investors might not realise this smaller bank stock is leading the pack this year. 

Read more »

man thinking about whether to invest in bitcoin
Bank Shares

Here's what needs to happen for the CBA share price to try and reach $200

What could drive the CBA share price higher?

Read more »

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Bank Shares

Why now could be an opportune time to sell CBA shares

A leading expert offers his verdict on the outlook for CBA shares.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Bank Shares

The Westpac share price is a buy – UBS

The broker is optimistic on Westpac shares.

Read more »

Bank building with the word bank on it.
Bank Shares

The biggest buyers and sellers of ASX 200 bank stocks revealed

Macquarie breaks down who’s been buying and who’s been selling the ASX 200 bank stocks.

Read more »

A young woman sits with her hand to her chin staring off to the side thinking about her investments.
Resources Shares

Should I switch my ASX 200 banking stocks for ASX 200 miners before earnings season?

The ASX 200 Index is dominated by Australia's bank and materials/mining sectors, which together account for around half of the…

Read more »

A man sits in contemplation on his sofa looking at his phone as though he has just heard some serious or interesting news.
Bank Shares

Here's when Westpac says the RBA will now cut interest rates

The RBA surprised everyone by keeping rates on hold last week. So, when will the next cut happen?

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Bank Shares

This is the ASX bank stock with the largest dividend yield right now

Looking to ASX bank stocks for dividend income right now?

Read more »