The National Australia Bank Ltd (ASX: NAB) share price is ratcheting up in 2022 and is now 13.5% higher since trading resumed in January.
It continues to surge in April and rests near 52-week highs at its closing price of $32.74 on Tuesday.
What tailwinds are behind the NAB share price?
There have been a number of catalysts that appear to have helped the banking and financial sector in Australia this year.
The S&P/ASX 200 Financials Index (ASX: XFJ) has thrust hard off a low in early March. It has since gained 11% after trading as much as 14% higher in that time. It's now up over 3% this year to date.
JP Morgan analysts are tipping NAB to outpace other banks in revenue growth and profitability this coming year, backed by "sound cost control".
Despite some possible headwinds to cost targets, the broker sees "NAB's pre-provision profit growth outstripping peers" in both FY22 and FY23.
Further, experts are almost certain the Reserve Bank of Australia (RBA) is set to hike base rates this year, slightly ahead of its previously outlined forecasts.
Until this point, the RBA has been reluctant to raise interest rates. However, soaring inflation, rising food costs, and a tumultuous property market have forced the RBA's hand, experts say.
Meanwhile, the Australian Financial Review's survey of 36 economists revealed the RBA is tipped to lift rates three times by the end of 2022 — if the economists are correct.
The question is what this will mean for Australian banks like NAB, taking into account the heavy competition in an already saturated mortgage market. The other consideration is what it means for homeowners paying a mortgage.
According to analysts at UBS, Aussie mortgage holders appear to be well equipped to absorb any shock from a shift in interest rates.
In a note to clients, UBS analyst John Storey cited results of a recent Australian Mortgage Survey the investment bank conducted. Findings indicate that around half of respondents were at least three months ahead in their monthly mortgage payments.
That's a positive sign for the sector, Storey says, as the macroeconomic climate begins to shift.
A total of 65% of analysts covering NAB rate it as a buy right now, according to Bloomberg data. The consensus price target is $32.50, meaning the stock is fairly valued using this metric.
