NAB Shares Fall as Analyst Flags Business Banking Risk on August 13

National Australia Bank (NAB) received a sell recommendation from Bell Potter Securities analyst Christopher Watt on Tuesday, citing excessive exposure to business lending as a key risk. NAB shares trade at A$41.06, having recovered 15.1% from their June 11 low of A$35.68, but the analyst warns investors should consider taking profits. The bank’s business and private banking lending balances grew 4% in the June quarter, yet home lending applications fell 9%, signalling weakening consumer demand.

Why the analyst is calling time on NAB

Christopher Watt from Bell Potter Securities flagged NAB’s vulnerability to a slowing business economy. The bank has above-average exposure to business banking compared to competitors, making it more susceptible to downturn risk. Watt noted that while the bank shows resilient volume growth, investors may want to consider taking a profit given current valuations.

NAB’s mixed half-year results and dividend yield

NAB reported half-year results on 4 May with cash earnings of A$3.59 billion, up 2.3% year-on-year, and underlying profit up 6.4%. The bank paid an 85 cents per share fully franked interim dividend on 6 May. At the current share price of A$41.06, NAB offers a trailing dividend yield of 4.12% based on A$1.70 in fully-franked annual dividends. The bank also increased collective provisions by A$300 million, signalling caution on credit quality.

Share price recovery masks valuation concerns

NAB shares fell 27.3% from their 25 February record high of A$49.10 to A$35.68 by 11 June, but have since recovered to A$41.06. The stock trades at a price-to-earnings ratio of 18.35 and carries a Meyka grade of B-, reflecting neutral sentiment. Analysts and investors question whether earnings can justify premium share prices amid interest rate movements and inflation concerns. Year-to-date, NAB is down 3.3% despite outperforming Commonwealth Bank over the past 12 months.

What Meyka data shows about NAB’s fundamentals

Meyka rates NAB at B- with a neutral recommendation, reflecting mixed signals across key metrics. The bank’s return on equity stands at 9.88%, while its debt-to-equity ratio is elevated at 3.14. Meyka’s 12-month price forecast of A$45.47 implies modest upside from current levels, but the ROA score of 2 (Sell) and PE score of 2 (Sell) highlight valuation and profitability concerns. The stock’s RSI of 52.76 suggests neither overbought nor oversold conditions.

Final Thoughts

NAB’s sell rating from Bell Potter reflects real economic headwinds for business lenders, not temporary market noise. With Meyka grading the stock B- and forecasting A$45.47 in 12 months, the risk-reward appears balanced at best for new buyers.

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The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.