Briefly-
- CBA wants to enhance its presence within the banking business.
- That sees NAB shares in the spotlight as it concentrates on lending.
- Meanwhile, there might be adequate room for NAB and CBA growth.
Commonwealth Bank of Australia released its yearly earnings this month. However, what does that mean for NAB (National Australia Bank Ltd) shares? Investors might think the leading four ASX banks, NAB, CBA, Westpac Banking Corp, and Australia & New Zealand Banking Group, are similar. They are somewhat similar, with lending as the crucial profit driver. But, they somewhat differ.
Borrowers that need a mortgage should choose one bank. A market share by one bank could mean a loss for another. Moreover, why would CBA’s result affect NAB shares? Market players should beware that the CBA’s current growth is in a single sector, which NAB dominates.
CBA’s Growth Impacting NAB Shares
NAB establishes itself as a business bank. Meanwhile, CBA concentrates on household lending. The financial year 2022 indicated that CBA is flourishing within the business sector. The leading bank announced that its lending business noted a 13.6% (+$15.4 billion) growth. That represented a 1.3X growth rate for the entire system.
Meanwhile, business deposits increased quicker, soaring 15.1% ($23.9 billion). That represented a 1.4X growth rate for the total banking system. Also, CBA confirmed increased business lending margins over the financial year 2022.
CBA confirmed focusing on differentiating its merchant banking and transaction transactions, plus digitizing the banking experience. It aims to be the leading business bank in Australia. Also, CBA confirmed its goal to lead how businesses in Australia pay and receive payments.
The Impact on NAB Shares
Only time will tell. Meanwhile, CBA’s initiative doesn’t specifically target NAB. The market has more lenders than NAB and CBA. Moreover, there could be enough industry for NAB and CBA to flourish. NAB’s 2022 half-year earnings surged from September 2021’s $220.8 billion to March 2022 at $237.1 billion.
Also, the firm’s Q3 report highlighted more lending growth. Meanwhile, NABS’s quarterly update saw cash earnings increase by 6% Y/Y. That represented a 10% uptick in earnings before tax & credit impairment charges.
