Fund Manager Summary on National Australia Bank Ltd (ASX:NAB)
In February 2026, Pengana Capital commented that National Australia Bank Ltd (ASX:NAB) was a key positive contributor as net interest margins held up better than expected, credit growth remained solid and competitive intensity eased, leading them to trim their holding as valuations rose. Across fund managers the consensus on NAB is cautiously constructive: several managers initiated or added to positions in 2025 (Endeavor, Clime) citing attractive valuation after market weakness, top-line and loan growth, and a strategic focus on SME and direct lending channels, while others (Pendal, Endeavor in September) highlighted improving margin trends and potential benefits from the government First Home Buyer guarantee that can lower risk-weighted assets and improve ROE; managers also pointed to stabilisation in funding costs, profitable growth from direct lending, and modest underlying NIM movements (Clime noted a 1 bp decline in 1H25, Yarra noted a 4 bps underlying rise in a later quarter) as supporting earnings resilience. Key risks flagged include pressure on NIM from lower policy rates, renewed competition in mortgages and business lending, execution risk in business banking, elevated valuations prompting portfolio trims, and the sector’s generally low-growth outlook; actionable considerations are to monitor NIM and deposit repricing trends, funding stability and capital efficiency improvements from government schemes, direct lending and SME strategy execution, New Zealand exposure, and relative valuation versus peers to guide active allocation decisions.
Commentary From The Managers
There are 10 insights from 5 fund managers regarding their investment in National Australia Bank Ltd (ASX:NAB) available on Thesis Tracker.
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Updates are made available to members within 12 hours of being released. The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Pengana Capital
28 Feb 2026
$47.62
Summary
- Pengana Capital believes NAB is a dependable earnings franchise; reduced their position because banks are becoming expensive again despite recent outperformance.
- Performance: NAB was a key positive contributor, rising more than 10% over the period.
- Net interest margins: Margins have held up much better than expected, supporting profitability.
- Credit growth: Loan growth has been healthy, reinforcing earnings stability.
- Competitive intensity: Competition has eased again, helping preserve margins.
- Earnings outlook: Earnings are very dependable but not growing particularly fast.
- Portfolio action: Given stretched valuations, Pengana trimmed its holding in NAB to manage exposure.
Yarra Capital Management
30 Sept 2025
$44.15
Summary
- Yarra Capital Management continues to hold an underweight position in National Australia Bank (NAB).
- NAB outperformed following its third-quarter update.
- Net interest margin (NIM) increased by 4 bps on an underlying basis.
- This increase was driven by factors such as deposit repricing, unsecured lending, and New Zealand home loans.
- Competitive pressures in mortgage and business sectors, along with cash rates and deposit mix, were more than offset.
- Yarra Capital Management believes that the elevated valuations of Australian banks are not justified.
- The outlook for growth and returns in the sector remains low.
Pendal Group
30 Sept 2025
$44.15
Summary
- Pendal Group maintains an overweight position in National Australia Bank (NAB).
- NAB's shares increased by 3.2% following a positive quarterly update in August.
- The bank has outperformed its peers in the banking sector.
- NAB is experiencing better margin trends compared to other banks.
- Despite not adjusting deposit pricing, NAB has successfully calmed market fears regarding its business banking division.
Endeavor Asset Management
30 Sept 2025
$44.15
Summary
- Endeavor Asset Management updates its investment thesis on National Australia Bank Ltd (ASX:NAB).
- The Australian government's First Home Buyer scheme has been brought forward, which is expected to positively impact NAB and Macquarie (MQG).
- The scheme supports loans at up to 95% LVR with a government guarantee on the portion above 80%.
- This structure allows lenders to earn interest on the full loan while assuming risk similar to an 80% LVR exposure.
- The guaranteed portion is backed by the AAA rated Commonwealth, leading to lower risk weighted assets.
- This reduction in risk weighted assets frees regulatory capital and enhances efficiency metrics such as ROE.
Clime Investment Management
31 July 2025
$38.91
Summary
- Clime Investment Management has decided to moderate their holding in NAB.
- The decision is influenced by renewed concerns for earnings delivery in the coming 12 months.
- Lower policy interest rates are expected to pressure net interest margin (NIM) performance.
- NAB's performance detracted during July, despite a strong overall performance for the banking sector.
- Investors shifted focus to alternative opportunities in sectors like Healthcare, utilizing gains from the banking sector.
Clime Investment Management
31 May 2025
$37.74
Summary
- Clime Investment Management has initiated a position in NAB following a review of the recent 1H25 result after previously exiting the holding in late 2024.
- The recent results indicate NAB's efforts to stabilize funding costs and generate profitable growth through its direct lending channel.
- Investor response has been positive as NAB's results exceeded expectations, with underlying NIM down by only 1bp (in line) and lower costs.
- The market division's performance contributed to the positive results, indicating a solid underlying performance.
- Individual bank valuations are currently diverse, presenting opportunities for active management.
- Clime Investment Management sees potential for strong absolute and relative performance driven by sector-leading dividend growth and a stabilizing funding model.
Endeavor Asset Management
31 Mar 2025
$34.02
Summary
- Endeavor Asset Management took the opportunity with market declines to start a new position in National Australia Bank (NAB).
- The fund manager believes the company's valuation has come back to reasonable levels.
- There is potential for top line growth revenue and loans growth.
- The increasing focus on the SME sector is expected to enable outperformance going forward.
Clime Investment Management
31 Oct 2024
$38.80
Summary
- NAB exposure has been reduced, with share price running 3.9% for the month ahead of the result.
- Despite its ongoing buybacks, NAB maintains a high valuation, slightly declining ROE and net interest margin, and a relatively low dividend yield within the sector.
- Overall, Clime Investment Management sees better opportunities in other banks, as the benefits of NAB's strength in business banking are largely reflected in its share price.
Clime Investment Management
30 June 2024
$36.07
Summary
- NAB has outperformed the market and its share price has risen strongly alongside the banking sector.
- The announced buy-back earlier this year has contributed to momentum in June, reflecting NAB's confidence in achieving desired ROE and improving EPS in the coming half-year.
- NAB's share price rallied significantly following the announcement of a $1.5 billion buy-back.
- NAB may experience NIM pressure as their term funding facility matures on June 30, 2024, and due to ongoing deposit competition in the business segment.
- Recent APRA data indicates weaker growth from NAB compared to competitors, raising concerns about justifying its current valuation premium.
- Clime Investment Management believes the ongoing buy-back, while potentially beneficial short-term, is not the optimal use of capital from an ROE perspective.
- As a result, Clime Investment Management is moving underweight NAB relative to the market.
Clime Investment Management
31 Jan 2024
$32.60
Summary
- NAB had an incredible run over the December quarter and into January with market sentiment improving overall for the local economy.
- Historically, NAB has slightly underperformed in capital management and dividend growth compared to other major banks.
- NAB's current valuation is becoming harder to justify with the stock trading above multiple metrics.
- These metrics include price to earnings, price to book, and dividend yield versus its peers (excluding CBA).
- Clime Investment Management continues to hold its position based on these insights.
The completeness, accuracy or current status of the investments referenced are not guaranteed.
Frequently Asked Questions
Who is investing in National Australia Bank Ltd (ASX:NAB)?
Fund managers including Endeavor Asset Management, Clime Investment Management, Pendal Group, Yarra Capital Management and Pengana Capital have invested in National Australia Bank Ltd (ASX:NAB).
Why do fund managers invest in National Australia Bank Ltd?
Fund managers invest in National Australia Bank (NAB) due to its improving growth prospects and stable funding model, especially in the SME sector. NAB's recent financial reports indicate solid revenue growth and effective management of funding costs, which have contributed to positive market reactions. Additionally, the bank's strong dividend growth potential is attractive to investors. However, some concerns exist about future earnings amid competitive pressures and changing interest rates, leading to a cautious outlook.
What happened to National Australia Bank Ltd (ASX:NAB)?
Fund managers are investing in National Australia Bank Ltd (NAB) due to its strong performance compared to peers, highlighted by a well-received quarterly update and improving margin trends. The introduction of the Australian government’s First Home Buyer scheme is expected to enhance NAB's loan portfolio, given the reduced risk through government-backed guarantees on high loan-to-value ratio loans. This positioning may lead to better returns on equity and improved regulatory capital efficiency. Despite some concerns about elevated valuations in the sector, NAB's current strategies and market positioning make it an attractive investment option.
What is the short interest in National Australia Bank Ltd (ASX:NAB)?
The short interest in National Australia Bank Ltd (ASX:NAB) is 0.68% which makes it the 244th most shorted stock on the ASX. Of the 3.1B shares that National Australia Bank Ltd has on issue, 20.8M have been sold short.
What does National Australia Bank Ltd (ASX:NAB) do?
National Australia Bank Ltd. engages in the provision of banking and financial services. Its services include banking, credit and access card facilities, leasing, housing and general finance, international banking, investment banking, wealth management, funds management and custodian, trustee and nominee services. It operates through the following segments: Business and Private Banking, Personal Banking, Corporate and Institutional Banking, New Zealand Banking, and Corporate Functions and Others. The Business and Private Banking segment focuses on priority small and medium (SME) customers. The Personal Banking segment provides banking products and services to customers. The Corporate and Institutional Banking segment includes client coverage, corporate finance, markets, asset servicing, transactional banking and enterprise payments. The New Zealand Banking segment focuses on banking and financial services across customer segments in New Zealand. The Corporate Functions and Other segment covers ubank and enabling units. The company was founded on October 4, 1858 and is headquartered in Melbourne, Australia.