The NAB share price fared remarkably well in August. Here's why

The NAB share price bucked the wider selling trend in August.

| More on:
A business woman flexes her muscles overlooking a city scape below.

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 handily outperformed the benchmark in August.

On 31 July, shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed trading for $28.42 apiece. On 31 August, shares closed the day at $28.96.

That put the NAB share price up 1.9% for the month.

Created with Highcharts 11.4.3National Australia Bank PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

Now, that's a solid performance over any given month.

But it's remarkably good, considering the ASX 200 fell 1.4% in August.

And with the other big four banks finishing the month in the red, the S&P/ASX 200 Financials Index (ASX: XFJ) declined even further, dropping 1.7% in August.

What helped the NAB share price outperform?

The biggest factor that looks to have buoyed the NAB share price over the month just past was the release of the company's third-quarter results on 15 August and a separate announcement of a major planned share buyback.

Among the highlights of the quarterly update, the bank reported a statutory net profit of $1.75 billion. And cash earnings were up 5.8% year on year to $1.9 billion.

On the negative side of the ledger, NAB's net interest margin (NIM) dropped 0.05% to 1.72%.

However, investors sent the NAB share price up 1.3% on the day, likely enticed by management's announced plans to buy back some $1.5 billion of shares on-market.

That plan was driven by the strength of the ASX 200 bank's CET1 ratio, which compares a bank's capital against its assets.

NAB reported a CET1 ratio of 11.9% for the quarter, significantly above its target range of 11.0% to 11.5%.

In general, when a listed company buys back a sizeable amount of its shares on-market, it tends to support the share price in the months ahead.

Commenting on the buyback that offered some tailwinds for the NAB share price, CEO Ross McEwan said, "This decision is consistent with our focus on maintaining a strong balance sheet through the cycle, while progressively reducing our share count over time."

Motley Fool contributor Bernd Struben 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 Scott Phillips.

More on Bank Shares

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.
Dividend Investing

Are CBA shares still a good buy today for passive income?

Looking to earn passive income from ASX dividend stocks? Here’s my take on CBA shares.

Read more »

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 »