Value Investor: NAB turns a corner

Its performance lags behind its competitors, but high credit growth in domestic business banking will ensure a positive outlook for NAB in the coming year.

National Australia Bank is a chronic underperformer and this continued in its recent earnings result. Profitability over the past five years as measured by our return on equity metric was at an average of 17.5 per cent, whereas Commonwealth Bank, Westpac and ANZ have averaged 27.0, 22.3 and 20.4 per cent respectively.

In fiscal 2014, statutory profit slipped 3 per cent to $5.29bn. While in line with pre-announcement details, key metrics were poor, particularly the declines in return on equity, return on assets and net interest margin and cost efficiency.

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