Views Expressed Disclaimer:

You are reading a free article with opinions that may differ from the recommendation given by Kalkine in its paid research reports. Become a Kalkine member today to get access to our research reports, in-depth technical and fundamental research. 

Highlights

  • NAB shares jumped 4.15% on 18 February 2026, extending one-year gains to 19.51%
  • Jefferies maintains Buy rating with AUD 50.64 target price
  • Company’s cash earnings rose 15% versus the 2H25 quarterly average.
  • Underlying profit increased 12% compared with 2H25 quarterly average
  • Revenue advanced 6%, while expenses remained broadly flat.
  • Australian business lending grew 2%, with deposit balances up 3%.

National Australia Bank Ltd (ASX:NAB) shares gained 4.15% to AUD 47.22 during the afternoon session on 18 February 2026, following the release of its Q1 2026 trading update for the period ended December 2025. The stock is now up 19.51% over the past year.

Additionally, Jefferies holds a Buy rating on the bank with a target price of AUD 50.64, keeping broker sentiment constructive.

Profit Momentum and Revenue Growth in 1Q26

NAB reported cash earnings in 1Q26 at AUD 2.02 billion, which is 15% higher than the 2H25 quarterly average and 16% higher than 1Q25, supported by a 12% increase in underlying profit over the same comparison period and lower credit impairment charges.

Revenue in 1Q26 increased 6% relative to the 2H25 quarterly average. Excluding Markets & Treasury income, revenue rose 4%, reflecting volume growth, higher fees and commissions, and reduced customer-related remediation costs.

Net interest margin (NIM) edged up 2 basis points to 1.80% in 1Q26 compared with the 2H25 quarterly average, while expenses were broadly unchanged as productivity gains and lower restructuring costs offset higher technology and personnel spending.

Statutory net profit rose 32% at AUD 2.2 billion compared with the 2H25 quarterly average, reinforcing the earnings uplift delivered in the opening quarter of FY26.

Lending and Deposit Growth Across Core Divisions

The bank reported continued momentum in lending volumes during 1Q26. Australian business lending increased 2% over the quarter, including 3% growth within Business & Private Banking. Australian home lending grew at 1.1 times system growth excluding Advantedge run-off, while proprietary channel drawdowns improved from 41% in 2H25 to 46% in 1Q26.

Deposit balances across Business & Private Banking and Personal Banking increased 3% in 1Q26, with transaction account balances rising 6% excluding offsets. Total gross loans and acceptances increased 1% from September 2025 to December 2025, while total customer deposits also rose 1% over the same period.

Asset Quality and Balance Sheet Settings

Asset quality indicators improved in 1Q26, with the ratio of non-performing exposures to gross loans and acceptances declining by 8 basis points from September 2025 to 1.47% in December 2025, supported by stronger outcomes in business lending and Australian mortgages. The credit impairment charge was AUD 170 million in 1Q26.

On capital, the Group CET1 ratio stood at 11.48% at December 2025, compared with 11.70% at September 2025, reflecting dividend payments and risk-weighted asset growth. Over the four months to January 2026, NAB raised AUD 15.8 billion in term wholesale funding and maintained a leverage ratio of 4.9%.

Strategic Execution and Productivity Focus

Management highlighted progress across strategic priorities in 1Q26, including business banking expansion, deposit growth and strengthening proprietary home lending channels. NAB continues to target productivity savings of more than AUD 450 million in FY26 and expects operating expense growth in FY26 to remain below FY25 growth of 4.6%.

Broker View Remains Constructive on NAB

Jefferies continues to hold a Buy rating on National Australia Bank Ltd (ASX:NAB), with a target price of AUD 50.64, reflecting a positive stance on the bank’s positioning within the Australian banking sector. As NAB progresses through FY26, the combination of earnings momentum, stable net interest margins and disciplined cost execution keeps the stock in focus from a valuation and outlook perspective.

With shares already up 19.51% over the past year and gaining 4.15% to AUD 47.22 on 18 February 2026, market participants are likely to weigh ongoing operational delivery alongside broker expectations. The sustainability of earnings growth, balance sheet resilience and capital management settings through FY26 are expected to remain central themes shaping investor sentiment.

Frequently Asked Questions (FAQs)

  1. Why did NAB shares rise on 18 February 2026?

NAB shares rose 4.15% to AUD 47.22 after the bank reported 1Q26 cash earnings that were 15% higher than the 2H25 quarterly average, alongside 12% underlying profit growth and improved asset quality metrics.

  1. How did NAB perform in 1Q26 compared with 2H25?

In 1Q26, revenue increased 6% compared with the 2H25 quarterly average, net interest margin rose 2 basis points to 1.80%, underlying profit grew 12%, and statutory net profit increased 32%.

  1. What is the current broker view on NAB?

Jefferies has assigned NAB a Buy rating with a target price of AUD 50.64.