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View the full Nov 10, 2026 version

Price: $13.77
Discount category: Far above intrinsic value
Intrinsic value source: AI estimate
Next earnings: 2027-05-05
Next earnings is estimate: No
Company name: National Australia Bank
Sector: Banks
About: National Australia Bank (NAB) is one of the four major banks in Australia. It has four divisions: Business and Private Banking, Personal Banking, Corporate and Institutional Banking, and New Zealand Banking. Business banking is its largest business: Business and Private Banking gave A$3,685 million of the A$7,090 million of cash earnings without large notable items in fiscal 2026. At September 30, 2026, gross loans and advances were A$822.4 billion, customer deposits were A$692.6 billion and total assets were A$1,145.9 billion. NAB had 43,271 full-time equivalent employees. Its fiscal year ends on September 30. Its shares trade on the Australian Securities Exchange, and its ADSs trade over the counter in the United States. Andrew Irvine is its chief executive officer.
Thesis: NAB trades at a premium to the AI estimate because investors pay for its strong position in business banking in Australia, a high dividend and a solid capital base. In fiscal 2026, Australian business lending rose 9.8%, deposits rose 5.2% and NAB paid dividends of 170 cents per share. But earnings stopped growing: cash earnings without large notable items were A$7,090 million, flat against fiscal 2025, because credit impairment charges rose to A$1,547 million from A$833 million. For the premium to be earned, three things must be true. Credit losses must stay under control while the Reserve Bank of Australia keeps its cash rate at 4.85% and house prices fall; NAB's own economists expect unemployment to rise to about 5.5% by early 2028. Costs must grow less than 3% in fiscal 2027, before the A$300 million restructuring charge, as NAB plans. The CET1 ratio must stay above the target of 11.25% while the dividend stays at 85 cents for each half year. The first-quarter trading update, expected in February 2027, and the half-year results on May 5, 2027 are the next tests. If impairments keep rising or margins fall, the stock can fall toward the AI estimate.
Valuation: The intrinsic value for National Australia Bank is an AI estimate from November 10, 2026. It is not an analyst's value. An AI research agent calculated it from NAB's results and the depositary's filing. The method is a multiple of cash earnings per share for the year to September 30, 2027. The 2026 full year results summary and the management discussion and analysis (November 5, 2026) give cash earnings of A$6,141 million, or A$7,090 million without the large notable item, and diluted cash EPS without that item of 228.5 cents. They give 3,111,240 thousand ordinary shares outside treasury at September 30, 2026, a CET1 ratio of 11.87%, a cash return on equity of 11.4% without the large notable item, net tangible assets of A$18.69 per share and dividends of 170 cents per share for fiscal 2026. The investor presentation of the same day gives a A$300 million restructuring charge in the first quarter of fiscal 2027 and expected underlying cost growth of less than 3% in fiscal 2027. Cash EPS already includes interest costs and credit losses, so the estimate makes no debt adjustment. The ADS ratio is an assumption. The Form F-6 of the depositary of December 18, 2013 gave one ordinary share per ADS. But ADS prices and Australian prices from 2021 to November 2026 agree with one half of a share per ADS, for example $13.71 per ADS and A$40.00 per share on November 6, 2026 at 0.6931 U.S. dollars per Australian dollar. The estimate uses one half of a share per ADS. It uses an exchange rate of 0.6869 U.S. dollars per Australian dollar, the market rate on November 9, 2026, as an assumption. The EPS and the multiples in each case are assumptions. The low case assumes cash EPS of 215 cents for fiscal 2027, because credit losses rise and the restructuring charge counts, at 13 times. It gives A$27.95 per share and $9.60 per ADS. The base case assumes 232 cents, a small rise after the charge, at 15.5 times. It gives A$35.96 per share and $12.35 per ADS. The high case assumes 245 cents, with lower credit losses and more business lending, at 17.5 times. It gives A$42.88 per share and $14.73 per ADS. The estimate assumes weights of 25%, 50% and 25%. The weighted intrinsic value is A$35.69 per share and $12.26 per ADS. The value moves with the Australian dollar. Efficient scale and switching costs are the main sources of the advantage. NAB is one of four major banks in Australia, and business customers keep their transaction accounts, loans and payments at one bank for many years. NAB ranked first of the major banks in Net Promoter Score for medium and large businesses in the year to September 2026. But competition for home loans and deposits is strong, and the cash return on equity without the large notable item was only 11.4% in fiscal 2026. The estimate expects the advantage to last 10 years or more, but not 20 years. As of 2026-11-10.
Risks: The Reserve Bank of Australia raised its cash rate by 125 basis points from February 2026, to 4.85%, and house prices are falling. Arrears on home loans rose, and impaired business loans rose in fiscal 2026. More credit losses can cut earnings and the dividend. Banks compete hard for home loans and deposits. NAB said that lending competition took away part of its margin gains in fiscal 2026, and its home loan applications fell 15% in the third quarter of fiscal 2026. The cash dividend payout ratio was 85.1% in fiscal 2026. NAB used discounted dividend reinvestment plans to add capital in 2026, which issued about 49 million new shares, and it can need more of them if losses rise. NAB plans a A$300 million restructuring and a large technology program. If the program costs more or saves less than planned, costs can grow faster than the plan of less than 3% for fiscal 2027. The ADS price is in U.S. dollars, but NAB reports in Australian dollars. A weaker Australian dollar lowers the dollar value of each ADS and of its dividends.
Balance sheet: NAB is a bank, so its balance sheet is mostly loans and deposits, and not corporate debt. At September 30, 2026, total assets were A$1,145.9 billion, loans and advances were A$816.7 billion and deposits and other borrowings were A$786.0 billion. Bonds, notes and subordinated debt were A$168.6 billion, and commercial paper was A$29.9 billion. Total equity was A$63.3 billion. The CET1 ratio was 11.87%, against a target of more than 11.25%, and the total capital ratio was 20.26%. The liquidity coverage ratio averaged 135% in the last quarter, and the net stable funding ratio was 116%. Collective provisions were 1.40% of credit risk-weighted assets. The discounted dividend reinvestment plan for the final dividend is expected to raise about A$0.9 billion and to lift the CET1 ratio by about 20 basis points. There were 3,111,240 thousand ordinary shares outside treasury at September 30, 2026. As of 2026-09-30.
Checkpoints: Nov 5, 2026: Fiscal 2026 results and final dividend. Passed. Watch: Cash earnings without large notable items near fiscal 2025, a CET1 ratio above 11.25% and a kept dividend pass; a dividend cut fails. Outcome: Cash earnings without the large notable item were flat at A$7,090 million, the CET1 ratio was 11.87% and the final dividend stayed at 85 cents, but credit impairment charges rose to A$1,547 million. Feb 2027 (estimate): First-quarter fiscal 2027 trading update. Pending. Watch: Stable credit impairment charges and costs on track for growth of less than 3% pass; a sharp rise in impaired assets fails. May 5, 2027: First-half fiscal 2027 results. Pending. Watch: Higher cash earnings before the restructuring charge, a CET1 ratio above 11.25% and an interim dividend of 85 cents or more pass; higher losses or a dividend cut fail.
Recent events: 2026-11-05: NAB reported fiscal 2026 results. Cash earnings fell 13.4% to A$6,141 million. Without the large notable item, cash earnings were A$7,090 million, flat against fiscal 2025. Statutory net profit was A$6,143 million. Credit impairment charges rose to A$1,547 million from A$833 million, and they include a A$403 million increase in forward-looking provisions. The net interest margin rose 6 basis points to 1.80%, and the CET1 ratio was 11.87%. The final dividend is 85 cents per share, fully franked, payable on December 15, 2026, and the dividend reinvestment plan has a 1.5% discount. 2026-10-20: NAB announced a restructuring charge of A$300 million. It will record the charge in cash earnings for the first quarter of fiscal 2027, and it expects the charge to lower the CET1 ratio by about 5 basis points. 2026-08-17: NAB gave its third-quarter trading update. Unaudited cash earnings were A$1.83 billion, 2% above the quarterly average of the first half without the large notable item. The CET1 ratio was 11.93%. Home loan applications fell 15% from the second quarter, and watch loans rose. 2026-05-04: NAB reported first-half fiscal 2026 results. Cash earnings were A$2,639 million, or A$3,588 million without the large notable item. The large notable item was a charge of A$1,347 million before tax, or A$949 million after tax, for faster amortization of software after a change in its software accounting policy. The interim dividend was 85 cents per share. The dividend reinvestment plan had a 1.5% discount and a partial underwrite, and together they raised about A$1.8 billion of capital. 2026-02-18: NAB gave its first-quarter trading update. Cash earnings were 15% higher than the quarterly average of the second half of fiscal 2025, and underlying profit rose 12%. NAB also completed the move of Citi consumer customers onto its own systems.