National Australia Bank Growth Pivot

Goldman Sachs maintains a Sell rating on National Australia Bank (NAB), citing concerns that its shift toward a high-beta growth strategy leaves it vulnerable to an economic slowdown. High operational costs and rising credit risk, paired with a slowing revenue environment, lead the bank to cut earnings forecasts.

Key Takeaways

• 1.NAB has transitioned from a defensive bank into a higher-beta growth stock, which creates significant vulnerability as the economic environment cools.
• 2.Operational costs are outpacing inflation and asset quality is deteriorating, with provision charges climbing significantly relative to peers.

Table of Contents

• Earnings changes
• Will NAB's growth pivot become its disadvantage?
• NAB has emerged as the ‘go-to’ Major Bank for above-system revenue growth
• The pivot to broader-based revenue growth has accelerated real costs, whilst fading productivity benefits
• The post-COVID lending growth was facilitated by a wider risk appetite, which is now evident in the current cost of risk
• Earnings Changes
• National Australia Bank Investment Thesis
• National Australia Bank Price Target, Risks, and Methodology
• Disclosure Appendix

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