NAB receives four broker downgrades

Thu 10 Nov 22, 2:01pm (AEST)
Climbing down
Source: Unsplash

Key Points

  • NAB's share price has been trending lower since delivering its full year FY22 result
  • Citi suspects fear of slowdown may now be uppermost in investor's minds
  • Macquarie sees limited scope for further re-rating for both the sector and NAB

After shedding around -1.5% yesterday, following the release of its mixed full year FY22 result, National Australia Bank (ASX: NAB) was down another -1.86% in early afternoon trade – now down around -5% for the week – after receiving four (including Citi and Macquarie) broker downgrades this morning.

Macquarie sees limited upside for re-rating

While Macquarie acknowledges that a good FY22 result was underpinned by solid performances in the Business Bank and NZ franchise, the broker notes Interest rate leverage – which started to surface in the second half – fell short of expectations and was below that delivered by peers.

Having concluded that there’s limited upside risk to FY23 earnings and likely downside risk to consensus in FY24, Macquarie sees limited scope for further re-rating for both the sector and NAB.

The broker is forecasting a full year EPS of 235.00 cents.

Citi sees sharp slowdown

While Citi agrees that business lending has been a key point of difference for NAB versus its peers, the broker also believes the macro picture suggests a sharp slowdown. 

Despite FY22 cash earnings of $7,104m being in line with Citi’s and consensus forecasts, and 2H22 net interest margin (NIM) of 1.67% also in line, the broker suspects fear of slowdown may now be uppermost in investor's minds.

The broker also concludes that material cost revisions by the market are unlikely, with consensus already factoring in around -5% cost worsening in FY23.

Goldman Sachs' sees buying opp

Meantime, Goldman Sachs sees recent price weakness as a potential buying opportunity.

The broker retains a Buy rating, increases the price target to $35.41 from $34.81 and expects NAB to deliver a dividend of $1.73 per share in FY23, which equates to a fully franked dividend yield of 5.6%.

By comparison, Citi and Macquarie are forecasting a FY23 dividend of $1.85 and $1.62 respectively.

Having has boosted earnings estimates to reflect higher than expected margins, Goldman Sachs' FY23, FY24 and FY25 cash earning per share (EPS) are up 8.6%, 1.5% and -0.2% respectively.

The broker also believes NAB’s recent cost management initiatives leave the bank well positioned for an environment of elevated inflationary pressure.



Target price


Cut to Neutral from Outperform


Evans & Partners

Cut to Neutral



Cut to Neutral from Buy



Cut to Underperform


NAB's share price is down around -5% over one week.


Written By

Mark Story


Mark is an investigative financial journalist and editor who started his career working for Marathon Oil in London. He has a degree in politics/economics and a diploma in journalism. Mark has worked on 70-plus newspapers and financial publications across Australia, NZ, the US, and Asia including: The Australian Financial Review, Money Magazine, Australian Property Investor and Finance Asia. Mark is passionate about improving the financial literacy of all Australians through the highest quality content. 

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