Ever reducing margins... Reduced margins but increased volume of loans would limit this issue, we have a growing population. Low margins wont mean a thing if you have a significant uplift in volume of loans.
A cash rate going to zero if not negative... Lower interest rate can effectively mean that people borrow more because they can afford a lower repayment per month. ie instead of borrowing 300k they can now borrow 500k at the same repayment rate. An considering money grows on trees at the moment, I dont think banks will have an issue lending it, especially after a very rigorous review of what the money is to be used for (thank the GFC for that).
Increasing competition from neo banks, online only and peer to peer
Most banks funnel work down to lower tier banks or other services providers. Your boss doesnt clean toilets does he? Id assume he funnels that down to an apprentice or low skilled and low paid worker. Works the same in the finance sector, most banks outside of the big four are owned by them in some way or other.
Comparative to the rest of the world - reliant heavily on residential mortgages NAB is strong in business/commercial loans not so much residential, could impact other banks but less likely to be an issue for NAB. Even if we have a heavy hand in the residential loan market, if there is money to be made, whats the issue? We are one of the safest countries in the world and this is evident in recent times. We have near to no earthquakes, dont have vast populations of people living on fault lines, have no active volcanoes, have limited cyclone and hurricane issues and COVID isnt as bad here. Id say having homes as assets in Australia is probably a safe haven considering other parts of the world. Biggest issue is probably fires, get some insurance and hopefully government learned after the last year.
Managerial and employee systems akin to the 60s If its not broke, dont fix it?
Inability to ever put any of their earnings to work - in order to grow their business. Their only ideas about earnings consist of returning it to dividend hungry investors Money is only 1 component that grows a business, an just cause you spend it in your business doesnt mean its a given it will increase your business. Business growth is driven by far more than that: Products on offer, Customer base increase and retention, new products on offer just to name a few. Banks are banks, there is only so much they can offer before they are moving into different industry. Are you expecting NAB to perhaps move into coffee making? Or perhaps NAB furniture instead of IKEA? Stick to what you are good at.
There is nothing wrong with getting a cash return on your investment and its more than a lot of other companies offer there shareholders. A lot of penny stocks offer a liquidators statement stating there shares are worthless.
NAB Price at posting:
$23.39 Sentiment: Buy Disclosure: Held
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