Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.

NAB share price: what 3 top brokers think after $1B cost blowout

A number of Australia’s top brokers today revealed their current thoughts on NAB’s prospects after the bank reported a sizable set of customer remediation and software capitalisation costs.

NAB share price in focus Source: Bloomberg

With the National Australia Bank (ASX: NAB) yesterday revealing post-tax costs of A$1.2 billion related to customer remediation (A$832 million) and software capitalisation changes (A$348 million), some of Australia’s top brokers have today weighed in on how such costs may impact the outlook for the bank.

Commenting on these costs, NAB's current CEO, Philip Chronican, noted that the bank:

'Is moving forward with rigour and discipline to make things right for customers,' with Mr Chronican continuing that 'we understand that shareholders will be rightly disappointed. However, we also recognise the need to prioritise dealing with these past issues and fixing them for customers.'

Mind you, even though some brokers retained a positive outlook following this news, the NAB share price still fell around 3.20% today – as the market digested unrelated concerns about a potential recession.

The RBA’s decision to cut interest rates to a record low of 0.75% also may have contributed to concerns over bank profitability in general, with the ANZ share price and the CBA share price also falling during today's session.

NAB share price: Citibank retains a buy rating

Though Citibank analysts noted that they were disappointed by yesterday’s announcement, they pointed out that these costs will ultimately not have an impact on NAB’s primary business operations.

Positively at least, the bank itself reported that it:

'Has in place provisions for the estimated costs and customer payments relating to all known material customer-related remediation matters based on information available.'

In saying this, NAB additionally pointed out that, 'until all customer payments have been completed, the final cost of such remediation matters remains uncertain.'

Ultimately, in response to these new charges, Citi revised NAB's FY19 EPS down by 13.3%, maintained their ‘buy' recommendation and noted a price target of A$30.50 per share on the bank.

JP Morgan also remains positive

Like Citibank, JP Morgan has remained optimistic over NAB’s prospects, revising their price target slightly down to A$29.50 from A$29.60 and reiterating their ‘overweight’ rating on the bank.

Even still, the investment bank noted that customer remediation costs of A$832 million came well ahead of their own estimates, which previously pegged such costs at A$350 million.

Ultimately, both JP Morgan and Citibank believe NAB’s commercially-focused banking operations rank as a key positive. This is in contrast to the likes of CBA, which place a heavy emphasis on retail banking.

Morgan Stanley rates NAB ‘underweight’

Though the investment banks discussed above have remained relatively positive on the National Australia Bank (ASX: NAB), Morgan Stanley appears decisively less son.

In the wake of this news, Morgan Stanley revised down NAB’s second-half 2019e cash profits by 24%, flagged the bank’s tight capital position, and reported a price target of A$26.00 per share and an ‘underweight’ rating.

Broker sentiment aside, year-to-date the NAB share price has been a solid performer, rising 18.7%, even when you factor in the last two days of losses.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

Act on share opportunities today

Go long or short on thousands of international stocks with CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.