The National Australia Bank Ltd. (ASX: NAB) share price had a pretty flat day today. NAB shares have risen 0.03% at the time of writing to $27.24 a share. But zooming out, and the picture looks a whole lot rosier. NAB shares are now up 3.77% over the past month, 18.7% year to date, and 65% over the past 12 months. At the present levels, NAB shares are actually sitting at a new 52-week high. Well, almost. The actual 52-week high was hit yesterday when NBA topped out at $27.30. But at $27.24 today, we can safely say the company is still at its high point for the year.
At this level, NAB is essentially sitting at the same level it was back in February 2020, just before the pandemic struck. That’s a pretty remarkable turnaround if we stop and think about it. In saying that however, we are still nowhere near NAB’s all-time high. NAB was even trading close to $30 a share in the latter half of 2019. And going all the way back to 2015, that’s when we saw this ASX bank at around $37 a share. But NAB’s all-time high? For that fabled event, we have to backtrack all the way to 2007 – just before the onset of the global financial crisis. Back then, NAB shares were seeing highs of $42 a share. That’s still a long way off of where we are today.
But that’s enough history. So why are NAB shares back at their pre-COVID levels today?
Why is the NAB share price at a 52-week high?
Well, it probably comes down to economic growth. NAB, as a bank, is highly tied to the performance of the overall economy. And the economy is doing well, much better than we all thought was possible in fact. Just today, the Reserve Bank of Australia (RBA) held its monthly meeting for May. It revealed that it has upgraded its growth forecasts for the Australian economy, and is now predicting growth of 4.75% this year. That’s ‘gangbusters’ kind of growth, although slightly tempered by the fact that the economy went backwards hard last year.
Also helping is the booming property market. Housing has also been going gangbusters. And higher house prices usually translate into more borrowing, as property investors take advantage of higher leverage opportunities. Especially if you throw in an interest rate that’s pretty much zero (well, 0.1%). More borrowing is of course, great for NAB.
And now we have a recipe for an ASX bank hitting a new 52-week high. At the current NAB share price, the bank has a market capitalisation of $89.9 billion, a price-to-earnings (P/E) ratio of 15.11 and a trailing dividend yield of 2.2%.
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More reading
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- What to expect from the NAB (ASX:NAB) half year result
- Why ASX bank shares may be facing a big sell-off in the next few weeks
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- What could APRA’s climate guidance mean for ASX bank shares?
Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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