How has the NAB share price performed this year?

Summary

  • The NAB share price has shot up over 21.7%, so far this year.
  • NAB’s sale of MLC Wealth business to IOOF Holdings has helped improve investors’ sentiments.
  • NAB’s rival Westpac Banking Corporation has delivered a healthy YTD return of 42.1%.

The year 2021 has been a great one for most of the Australian shares. The benchmark index ASX 200 itself has trended continuously upwards throughout the year so far and is currently trading at an all-time high level of 7,405.9.

How has the NAB share price performed?

In the year 2020, National Australia Bank Limited’s (ASX:NAB) share price clocked a return of negative 9.2%, which included the March meltdown and the dramatic rise that followed. In 2021, we have almost come half-way through and the NAB share price is already up over 21.7%, trading at AU$26.9 (as of 12:30 PM AEST, 16 June 2021).

Image Source:  © Embe2006 | Megapixl.com

During the continuous uptrend in 2021, the NAB share price provided numerous dips as an opportunity for investors to accumulate, which seems to have been well capitalised so far. Despite a one-sided rallyl, the stock seems to be losing momentum now. The stock has essentially gone nowhere from 9 March 2021 and since then has been more or less moving in a range.

Affirming the momentum loss, the momentum indicator RSI is also showing a bearish reversal divergence on the charts, which strengthens the view of a probable reversal. However, one thing is to be noted that the NAB share price is in a strong uptrend where these divergences could easily fail, and the stock may continue its upswing.

Relative performance with other benchmark indices

Looking at the NAB share price in isolation does not reveal the whole picture. To measure the share performance, it is always better to compare it with the benchmark indices to gauge the relative performance.

Image Source: Refinitiv, Analysis: Team Kalkine

Comparing the NAB share price (the purple line in the above graph) with the Australian benchmark index, the ASX 200 (the yellow line in the above graph) shows that the NAB share price has clearly outperformed the broader market by a decent margin. The above chart also shows that the NAB share price has been a relative outperformer since the beginning of the year, clocking almost 8% higher return than the ASX 200.  

Comparative performance with the financial sector

Image Source: Refinitiv, Analysis: Team Kalkine

Having compared NAB’s performance to that of the broader market, we also need to stack it up against the financial sector. Comparing a stock with its sector helps in gauging its outperformance/underperformance with respect to its peers.

As can be seen from the above chart, the NAB share price (Purple) has almost closely followed the ASX 200 Financials (Blue) since the beginning of the year. In fact, when compared with the financial sector, there has been a slight underperformance by the NAB share price, by almost a percent.

Read More: NAB (ASX:NAB) to sell BNZ Life to Partners Life for $290 million

How NAB stacks up against its peers

Image Source: Refinitiv, Analysis: Team Kalkine

After gauging the NAB share price against the financial sector’s performance, we now compare NAB with 5 major peers. The above chart gives us a glimpse of which of the arch-rivals have performed the best, the worst and everyone in between.

The best performer has been Westpac Banking Corporation (ASX:WBC) (Blue), delivering a healthy 42.1% return, beating the sectoral return as well. For the second and third spots, there has been a minor difference of almost 2% between Australia and New Zealand Banking Group Limited (ASX:ANZ) (Green) and Commonwealth Bank of Australia (ASX:CBA) (Purple). The former is perched at the second place, having delivered 31.7% while the latter comes at the 3rd spot with 29.5% return.

National Australia Bank (Yellow) has delivered 21.4% return and is ranked fourth while Macquarie Group Limited (ASX:MQG) (Orange) is the worst performer with 14.8% return. The above chart also shows that all major financial institutions have delivered a positive return, depicting a strong trend in the financials in 2021.

Read More: Business confidence improves in January, conditions worsen: NAB survey

Fundamental triggers for the NAB share price

In May 2021, the bank announced that it had completed the sale of the MLC Wealth business to IOOF Holdings Limited. The sale price of $1,440 million comprises $1,240 million in cash proceeds from IOOF and $200 million in the form of a 5-year structured subordinated note issued by IOOF. This successful exit of MLC Wealth simplifies its portfolio and allows the bank to focus on its core businesses.

In 1H FY21 earnings report, the lender clocked a statutory net profit of $3.2 billion with cash ROE of 11.1%. The result reflects the improving condition with cash earnings 35.1% higher than 1H FY20, driven by significantly better credit impairment outcomes.

Read More: NAB Shares Under the Spotlight Post Q1FY21 Update

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