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Why did the NAB share price go backwards in May?

NAB shares hit the brakes last month.

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Aaron Teboneras
Aaron Teboneras has been a Motley Fool contributor since early August 2020. After graduating from RMIT University with a Business degree, Aaron spent most of his years either travelling or working in various industries. Aaron’s most notable appointments include National Australia Bank, and Computershare where he discovered his passion for the Australian sharemarket. Outside of researching and writing for Motley Fool, Aaron enjoys trekking on adventures across the world and learning new life skills.
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Key points
  • NAB shares fell 3% last month after the company released its half-yearly results to the ASX 
  • Market volatility throughout the month also impacted the bank's shares 
  • Nonetheless, management is forecasting a healthy economic outlook for the remainder of the year 

The National Australia Bank Ltd. (ASX: NAB) share price failed to continue its upwards trajectory in May.

The banking giant's shares dropped around 3% last month following the company's half year results amidst the market volatility.

In contrast, the S&P/ASX 200 Index (ASX: XJO) also ended May in the red, shedding 2.88% over the same time frame.

And NAB wasn't the only ASX 200 financial share to suffer, with Australia and New Zealand Banking Group Ltd (ASX: ANZ) sinking 7.5% in May.

Let's take a look at what might have weighed on NAB shares recently.

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price

Image source: Getty Images

What happened to NAB in May?

The NAB share price finished lower than it started last month, dragged down by weakened investor sentiment.

Regardless of the company registering a mostly positive set of numbers in its half yearly scorecard, the market expected a slightly better result.

The bank achieved cash earnings from continuing operations of $3,480 million, reflecting a 4.1% increase over the prior corresponding period. However, Goldman Sachs had estimated NAB to report cash earnings from continuing operations of $3,545 million in H1 FY22.

This led investors to backtrack on NAB shares by 0.59% to $32.25 following the company's release. Another 1.95% loss also came the day after.

Looking ahead, management noted that recent data showed the ongoing strength in the Australian economy.

Consumption has rebounded strongly from lockdowns and is expected to remain robust supported by accumulated household savings. This, combined with a healthy outlook for business investment leads to a forecasted GDP growth of 3.4% over 2022 and 2.1% over 2023.

NAB share price summary

Despite heading south last month, the NAB share price has actually risen by 9% in 2022.

Its shares reached a 52-week high of $33.75 in April, before being sold off in the run up to its interim results.

It's worth noting that even at today's prices, the company's shares are trading are pre-COVID-19 levels.

NAB commands a market capitalisation of roughly $100.34 billion, making it the fourth largest company on the ASX.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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 Scott Phillips.

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