Morgan Stanley reports National Australia Bank improved momentum in retail and business banking in the third quarter. The bank has grown its annualised rate from -1% in FY20 to 2% in the first half of FY21 and now 10% in the third quarter of FY21.
The broker notes National Australia Bank is in a strong capital position, and expects the bank to undertake around $7bn in buybacks over the next three years. This implies a further $4.5bn in buybacks in FY23 and FY24 following the already announced $2.5bn buyback.
While the company's dividend is reporting recovery, the broker notes there is modest revenue growth outlook and limited potential for near-term positive surprise on costs.
The Equal-Weight rating is retained and the target price increases to $27.90 from $27.20. Industry view: In-Line.
Target price is $27.90.Current Price is $27.27. Difference: $0.63 - (brackets indicate current price is over target). If NAB meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).
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