Is the National Australia Bank Ltd (ASX: NAB) share price a buy?
NAB is one of the four largest financial institutions in Australia in terms of market capitalisation, earnings and customers. However, in 2018, it was Australia’s largest lender to businesses and has operations in wealth management and residential lending.
Are Things Looking Up For The NAB Share Price?
NAB was in a pretty bad spot several months ago after the Royal Commission singled out the NAB CEO and Chairman as not displaying the right attitude and not doing the right thing to fix the problems.
However, NAB now seems on a better path with Philip Chronican set to take over the Chairman position and he’s currently the interim CEO until a new one is chosen.
But whilst all the banks like Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and Commonwealth Bank of Australia (ASX: CBA) seemed to be heading downwards, things now seem a bit more positive this week.
This week APRA said that it was considering reducing its interest rate buffer. Before, banks judged borrowers’ capacity on an interest rate of 7% (or 7.25%), but the suggestion that banks just judge them on the ability to repay with an interest rate 2.5% higher than the current repayments.
On top of that, the Reserve Bank of Australia (RBA) has signalled it may decrease interest rates next month, which is hoped to give the economy a boost. I do wonder whether the banks would actually pass on that rate cut to borrowers. I imagine that savers will be punished though.
The combined effect of the above two factors could be enough to halt the fall of Australian house prices.
Is NAB A Buy?
Assuming NAB pays another 83 cents per share dividend in six months like it did in the first half, it offers a fully franked dividend yield of 6.3%. I don’t think owning the banks is the best choice for my portfolio for growth or income.
One of the reliable ASX shares in the free report below is much more attractive for me.
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