CBA and NAB shares: Are diverging fates in store?
National Australia Bank shares deserve a rosy outlook, but its peer, top lender Commonwealth Bank, may underperform, analysts believe.
- Commonwealth Bank of Australia (ASX: CBA) share price gains 1.1%
- On average, research teams expect CBA shares to drop to A$89.38
- National Australia Bank (ASX: NAB) stock rises to A$27.63
- JPMorgan says NAB is outperforming its peers on growth
- Keen on trading CBA and NAB shares? Open an account with us today to start trading the stock.
CBA and NAB stock prices: What’s the latest?
Shares of Australia’s largest retail bank Commonwealth Bank of Australia (CBA) climbed 1.1% to trade at A$105.75 as at 12:28 AEST on Tuesday in Sydney.
Meanwhile, National Australia Bank (NAB) was trading 0.2% higher to reach A$27.63.
On Monday, top lender CBA had led the gains among heavyweight financial stocks, which in turn boosted Australia shares to a more than one-week high.
Sentiment among research teams was largely negative on shares of Sydney-based CBA, but mostly positive on Melbourne-based NAB, according to Bloomberg data. The two are among the country’s Big Four banks.
Analysts pessimistic on CBA’s prospects
As of Monday, CBA attracted nine ‘sell’ calls, three ‘buy’ and three ‘hold’ recommendations from analysts. Their target prices averaged A$89.38.
Over the next few years, meaningful pressure on mortgage margins will affect CBA and Westpac Banking Corporation more significantly than other major lenders, said JPMorgan analysts.
CBA is now ranked last within JPMorgan’s coverage of banking stocks, due to its stretched valuation, the research team said.
For FY2022, the lender gave only qualitative guidance, with four of the five drivers expected to be negative, and the tone of the margin outlook discussion was downbeat.
CBA mocks Apple’s ‘pro-competition’ claim
Commonwealth Bank of Australia last Thursday accused Apple Inc of uncompetitive behaviour over the control of payments on the latter’s phones, Reuters reported.
Of all the in-person payments that CBA processes, about a third are done on Apple’s phones.
The bank’s CEO Matt Comyn told a regular parliamentary committee that the ‘claim that Apple is pro-competition, I think, is a fair statement, as long as one accepts that competition is welcome as long as no one can compete with Apple’.
He also suggested lawmakers increase scrutiny of technology giants, as payments through digital wallets developed by Apple and Alphabet’s Google made up 45% of physical consumer payments.
National Australia Bank gains market share
As for NAB, eight analysts suggested ‘buy’, six said to ‘hold’, and none had ‘sell’ ratings, Bloomberg data showed. Their average target price was A$29.06.
Macquarie gave an ‘outperform’ call alongside a target of A$29, while Credit Suisse downgraded the stock to ‘neutral’ and eyed A$28.50.
JPMorgan upgraded NAB to ‘overweight’, saying the lender is ‘outperforming peers on growth’ and ‘well positioned to drive top-line growth’. It named NAB as its top stock pick among major Australian banks.
NAB has long offered more stable margin trends than its peers, given its smaller mortgage headwinds and a positive outlook for small and medium enterprises, JPMorgan analysts highlighted.
This is ‘bolstered by ongoing market share gains in mortgages and business lending’, they added.
Thinking of trading CBA or NAB shares?
Take your position on CBA, NAB and over 13,000 Australian and international shares via CFDs and trade it all seamlessly from one account.
Learn more about share CFDs or shares trading with us, or open an account to get started today.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.