National Australia Bank’s third-quarter cash net profit was slightly better than expected due to higher trading income. Revenue grew by 10% on account of recovery in markets and treasury income, reports UBS.
The bank is finding it increasingly challenging to keep its FY20 expenses flat and expects covid-19 related costs to continue into FY21. Credit impairment charges were slightly higher than expected and will likely increase in the fourth quarter, expects the broker.
The bank’s decision to remain focused on its balance sheet rather than near term earnings is considered prudent given the current environment.
UBS maintains its Buy rating with a target price of $20.50.
Sector: Banks.
Target price is $20.50.Current Price is $17.77. Difference: $2.73 – (brackets indicate current price is over target). If NAB meets the UBS target it will return approximately 13% (excluding dividends, fees and charges – negative figures indicate an expected loss).
