Bank Results Season: NAB's Miss Sharpens Managers' Caution on the Majors
NAB missed consensus by 5% on bad debts, Westpac's margins slipped and Macquarie leaned on commodities. Fund managers say the growth outlook for the banks has weakened.
13 Nov 2026 · 6 min read
In short
Pendal Group said National Australia Bank's 2H26 result missed consensus by 5% because of bad debts, and Plato Investment Management said provisions came in $200 million above market expectations.
WaveStone Capital trimmed NAB in October 2026 and Ten Cap trimmed it in September, while L1 Capital and Regal Funds Management hold short positions in Commonwealth Bank.
Managers are more positive on Macquarie and ANZ: Plato likes both after their November results, and Ten Cap said Macquarie is how it prefers to own financials while staying underweight the banks.
Credit stress shows up first at NAB
The first week of November gave fund managers the bank results they had been waiting for, and the result that set the tone was National Australia Bank. Pendal Group, in its November 2026 newsletter, said NAB reported a weak second half, “missing consensus by 5% due to bad debts.” Pendal said “stress is appearing in customer cash flows, with a jump in watchlist loans prompting NAB to lift collective provisions,” and that cost growth will rise from a 4% to 5% run rate to 6% in FY27.
Pendal's sharpest point was about what NAB's numbers might mean for the other banks. “It is difficult to know whether NAB’s credit quality concerns are company specific or an early warning sign for the broader sector,” it wrote, adding that NAB “could continue to struggle, with the weakest provision and capital ratios in the sector.”
It is difficult to know whether NAB’s credit quality concerns are company specific or an early warning sign for the broader sector.
— Pendal Group, Newsletter, November 2026
Plato Investment Management reached a similar view in a presentation on 12 November. It described NAB's result as flat once one-off expenses were removed, “okay, but disappointing versus what the market expected.” Plato said provisioning was “$200 million higher than the market expected, given NAB's greater exposure to the Victorian economy and small businesses,” and called cost guidance of 5% to 6% growth “really disappointing.” It also flagged the dividend: “if they don't improve their profit, dividends could be under pressure going forward.”
Two managers trimmed before the result
Some managers had already reduced their NAB holdings. WaveStone Capital, in an October 2026 article, said it trimmed the bank “because the outlook for future earnings growth is appearing increasingly challenged,” pointing to “the pressure that the RBA’s ongoing inflation fight places on those customers” and the bank's exposure to small and medium businesses. WaveStone stressed that “this was a reduction, not an exit,” describing it as a more cautious view of the operating environment rather than the end of the investment case.
Ten Cap trimmed NAB in September, partly to fund a larger position in Macquarie Group. In its September 2026 monthly report, Ten Cap said “bank valuations still leave little room for error, and the reporting season will turn the focus to slowing loan growth, competition and weakening credit signals.” It noted that the banks delivered almost the whole index return in July and gave much of it back in September, and that while credit quality remained sound, the sector “trades well above historical multiples with limited earnings growth to support it.”
Back in October, before the result, Pendal had described NAB's plan to cut 2,500 roles through a $300 million restructuring charge as “likely required to moderate costs, which have been growing at 4-5% per annum for the past five years.”
Westpac: solid result, margin questions
Westpac drew a more mixed reading. Pendal called its 2H26 result solid and in line with consensus, noting that “capital remains sector leading” and that bad debts were in line with expectations. But Pendal said margins “remained a source of relative weakness versus peers,” and that “there remains some risk to margin and bad debts as WBC continues with its growth agenda.”
Plato was less generous, calling it “probably a slightly disappointing result from Westpac.” Plato pointed to a 1% fall in profit to $6.8 billion, a flat dividend and high costs, and noted the bank's own forecast for house prices to fall 11%. Plato's conclusion applied to the sector as a whole: “With house prices falling and cost of living pressures, we don't expect large growth in bank profits going forward.”
With house prices falling and cost of living pressures, we don't expect large growth in bank profits going forward.
— Plato Investment Management, Presentation, November 2026
Auscap Asset Management made a longer-term point in a September 2026 presentation. It said Westpac has had “negative earnings growth for more than the last decade,” yet the share price has outperformed its earnings over the past three or four years, which Auscap described as “entirely multiple expansion.” It added that this comes as Westpac faces, “for the first time in decades,” a “serious competitor taking share hand over fist in the form of Macquarie.”
PM Capital took a different route into the same bank. In its quarterly report published in November, the manager said it increased its holdings of Westpac bonds in its Enhanced Yield Fund at yields of around 6% to 6.5%, choosing issuers “that we believe can sustain their earnings through a more strained economic environment.”
Commonwealth Bank and the short sellers
Commonwealth Bank has drawn the most pointed positioning. L1 Capital, in its September 2026 quarterly report, holds a short position and said that while CBA's FY26 headline earnings were slightly ahead of expectations, “the beat was largely driven by lower impairment charges.” L1 said falling mortgage applications, competition and cost growth “pointed to a material slowdown in earnings growth, prompting investors to reassess a valuation of approximately 23x forward earnings.”
Regal Funds Management is also short CBA, according to a September 2026 article, citing an expected profit decline of about 6%, slowing credit growth, falling property prices and “broader concern about stress building in consumer/property credit.” Regal said the stock could reach $100.
Plato returned to the theme in an October 2026 article, noting that CBA returned 9.2% in 2025 against 41.9% for global banks, and that mortgage applications have fallen around 15% since the budget. Plato said “the growth outlook for the stocks anchoring most Australian income portfolios has deteriorated.” Equity Trustees Asset Management holds CBA underweight, describing it as a quality franchise facing lower lending growth, intense competition and elevated technology spending.
Not every manager is stepping back. Flagship Investments added CBA back to its portfolio in the September quarter, saying its competitive position and focus on technology make it “an attractive long-term investment.” Contact Asset Management continues to hold the major banks in BKI as “a foundation of fully franked income,” while acknowledging that “bank valuations appear full against a challenging macro backdrop.”
Where managers are leaning instead
Macquarie Group and ANZ came out of the season with more support. Plato said Macquarie's profit was up 50%, driven by its commodities business, with the banking division now holding 7.6% market share, and said “Macquarie is a stock we like.” Pendal said Macquarie's result beat consensus by 6%, “entirely due to tax,” and that “the real test will be 2H27 onwards when MacCap’s asset sales are guided to ramp up.”
Ten Cap had positioned for this in September, calling Macquarie its largest addition ahead of the result and saying “it is how we prefer to own Financials while staying underweight the banks.” Paradice Investment Management and Quest Asset Partners both trimmed Macquarie after strong performance, though Quest said it remained a key overweight.
It is how we prefer to own Financials while staying underweight the banks.
— Ten Cap, Monthly Report, September 2026
On ANZ, Plato pointed to a 7% reduction in costs that lifted profit 10%, while warning that non-performing exposures rose 9% over the half. Plato called it “a decent result” and said “ANZ is a stock we like.” Quest Asset Partners and Allan Gray both trimmed ANZ after its run, with Quest saying the new chief executive is “progressing well towards ANZ’s rehabilitation.”
What managers are watching next
The question managers are asking is whether NAB's provisions are a one-off or the start of a sector trend. Pendal, Plato and WaveStone all point to small business and consumer stress as the signal to watch, while L1 and Regal see slowing earnings growth sitting uneasily with current valuations. For Macquarie, Pendal's test is whether Macquarie Capital's asset sales arrive from the second half of FY27.
Questions
Why did NAB's November 2026 result disappoint fund managers?
Pendal Group said NAB's 2H26 result missed consensus by 5% because of bad debts, with a jump in watchlist loans forcing higher collective provisions, and Plato Investment Management said provisions were $200 million above market expectations and cost guidance of 5% to 6% growth was disappointing.
Which fund managers are short Commonwealth Bank?
L1 Capital and Regal Funds Management both reported short positions in Commonwealth Bank in September 2026, citing slowing earnings growth, falling mortgage applications and competition against a valuation L1 put at about 23 times forward earnings.
Which bank stocks do fund managers prefer after the November 2026 results?
Plato Investment Management said it likes Macquarie Group and ANZ after their November 2026 results, and Ten Cap said Macquarie is how it prefers to own financials while staying underweight the major banks.
20 managers, 43 comments, with each manager's latest recorded position.
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