Sydney, March 25, 2026, 08:38 AEDT
Shares of National Australia Bank dropped 4.45% to A$42.75 on Tuesday, deepening its sharp March slide. That leaves the major Australian lender 10.7% lower for the month, Investing.com data show. 1
Why does that matter? Investors are probing just how stretched valuations have gotten for Australia’s big four banks as clouds gather over the macro outlook. This week, NAB economists trimmed their forecasts for Australian growth and held on to their prediction of a 25-basis-point hike from the Reserve Bank of Australia in May. A basis point equals one-hundredth of a percent. 2
Selling pressure spread across the sector, though NAB bore the brunt. ASX figures put turnover in NAB shares at A$293.3 million on Tuesday. Commonwealth Bank shed 1.8%, Westpac slipped 1.56%, and ANZ managed a 0.5% gain. 3
Brokers dialed back their outlooks as well. On Tuesday, Morgan Stanley downgraded NAB to Underweight from Equal-weight, slicing the price target to A$39.80. JPMorgan, shifting to Neutral from Overweight, also pared its target, now sitting at A$46.10. 4
NAB economists took a cautious line, with chief economist Sally Auld describing the outlook as entering “a more treacherous phase” as the Middle East conflict heads into its fourth week. She flagged that “price rises are already starting to impact the final price structure” of goods and services. The bank has also trimmed its global growth forecasts for 2026 and 2027. 5
That’s a tough mix with the central bank staying hawkish. On March 17, the RBA lifted the cash rate to 4.10% after a narrow 5-4 vote. Governor Michele Bullock, speaking earlier this month, called every meeting “live” and flagged that the board would consider whether it needed “to move more quickly” if it saw inflation expectations starting to shift. 6
Conditions at NAB haven’t exactly been soft. Back in February, Australia’s leading business lender reported first-quarter cash earnings of A$2.02 billion—a 16% jump on the prior year—as business banking volumes climbed 7% and housing lending increased 5%. The net interest margin ticked up to 1.80%. Chief Executive Andrew Irvine called NAB “well placed” for “sustainable growth” at the time. Citi analysts, though, described the numbers as “a very strong headline beat”, while flagging the common equity tier 1 ratio—the core capital buffer—as “the clear negative”. 7
Shares could easily take their cue from oil prices rather than headlines out of the banks themselves. Should Middle East worries subside and fuel prices fall, that might take some of the heat off inflation and shift rate bets lower. But if the opposite plays out, the pain could worsen. Reuters said Tuesday hundreds of Australian petrol stations have run short on fuel, and so far this month foreign investors have yanked a net $50.45 billion from Asian equities as oil shocks and yield jitters ripple through markets. 8
