Citi assesses in-line FY21 cash earnings and feels National Australia Bank has established the best core earnings outlook across the sector. The target price rises to $29.50 from $26.75.

In a post-FY21 results review for the overall sector, Citi expects rising US10-year yields to provide strong relative support for the Bank sector versus the broader market. The multi-year contraction in core earnings (ex-notables) is expected to abate, and the broker forecasts 2% growth in FY22.

More negatively, strong mortgage competition and stubborn cost growth are causing a lack of near-term earnings leverage to a steepening yield curve, explains Citi. Of the big four, National Australia Bank ranks second and attracts a Neutral rating.

Sector: Banks.

Target price is $29.50.Current Price is $29.79. Difference: ($0.29) - (brackets indicate current price is over target). If NAB meets the Citi target it will return approximately -1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

© 2021 Acquisdata Pty Ltd., source FN Arena