The S&P/ASX 200 Index (ASX: XJO) finished the month in the green, but National Australia Bank Ltd (ASX: NAB) outperformed the index.
NAB shares have climbed more than 4.04% since market close on 31 March, closing on the last trading day in April at $28.84 apiece. For perspective, the S&P/ASX 200 (ASX: XJO) gained 1.83% over the same time frame.
So why did the NAB share price return more to investors than the ASX 200 in April?
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What happened?
Looking at NAB's performance against the other big four banks, it's outperformed some but not all of them.
ANZ Group Holdings Ltd (ASX: ANZ) shares have risen more than 6% since 31 March while the Westpac Banking Corporation (ASX: WBC) share price gained nearly 4%. However, Commonwealth Bank of Australia (ASX: CBA) shares have only climbed 1%.
Big four bank NAB has not released any price-sensitive news to the market in the last month.
As well, ASX 200 bank shares appeared to have been resilient amid bank turmoil in the United States and Europe.
In April, Morgan Stanley analysts revealed Australian banks have "plenty of capital" amid global banking jitters.
Head of research at Morgan Stanley Richard Wiles said:
The major Australian banks learned the lessons of the 2008 global financial crisis and have significantly strengthened their liquidity, funding and capital.
Federal treasurer Jim Charmers also gave Australia's banks a plug during April, saying, "Australian banks are well-capitalised, well-regulated and well-placed to deal with this new source of volatility in the global economy."
National Australia Bank is set to deliver its half-year financial results to the market on Thursday this week.
Looking ahead, Goldman Sachs analysts are optimistic NAB can keep going higher. The broker has a "buy" rating on the company's shares with a $35.42 price target.
This implies an upside of nearly 23% based on NAB's last closing price of $28.84.
On the flip side, however, Morgans analysts have recently slashed the price target on NAB to $28.78. This is 0.2% lower than NAB's latest closing price.
Commenting on NAB, the team at Morgans said:
Recent slowing of loan growth. Leading SME [small to medium enterprise] relationship banking franchise. Increased simplification and improving digitisation in personal banking.
Meaningful improvement in ROE that is in excess of cost of equity. Attractive yield and buyback. Cautious re step-up in costs and weaker valuation support.
On another note, the Reserve Bank of Australia is due to meet tomorrow to deliver its verdict on the official cash interest rate.
ASX 200 banks tend to raise their rates in response to any official rate hike from the central bank. However, City Index senior market analyst Matt Simpson believes the RBA is on track to keep the official cash rate on hold.
Simpson said, "I suspect the RBA will be content in keeping rates on hold", especially as "inflation expectations remain well anchored". He added:
However, that is not to say the RBA have reached their terminal rate in the cycle, as disinflation needs to keep up the pact to justify a pause in the coming months.
Share price snapshot
The NAB share price has shed 11.6% over the last 12 months.
The bank has a market capitalisation of about $90.52 billion based on the last closing price.
