FTSE 100 bank NatWest is expected to release full-year earnings on Feb.14. Here’s what Morningstar expects.
NatWest NWG is poised for a strong fourth quarter, supported by a robust structural hedge driving net interest income.
While UK banks are projected to see improved net interest margins through 2025, investors must weigh these positives against concerns like weaker economic growth and potential stagflation.
Competition in the UK banking sector remains fierce—Santander UK reported mid-single-digit declines in loan and deposit volumes—but NatWest’s strong franchise may have enabled it to capture market share.
Morningstar Metrics for NatWest
NatWest Business Strategy and Outlook
Once the biggest bank in the world, NatWest Group is now a much smaller and mostly U.K.-focused bank with a good retail and commercial banking franchise. The bank also stands on a more solid footing than it has ever had during the last decade. The largest litigation and conduct issues—such as the residential mortgage-backed securities case in the U.S. and the redress for mis-sold payment protection insurance, which had been significant headwinds to performance over the recent past—have come to a close.
NatWest has benefited from the rising interest rate environment. While mortgage margins remain under pressure due to the competitive nature of the UK mortgage market, higher deposit spreads have been a boon for NatWest. However, greater competition on deposits and a shift from current accounts into savings should offset some of the gains NatWest booked over the last two years.
With the base rate likely to be cut further in 2025, pressure on the net interest margin could intensify despite the hedging portfolio still forming a tailwind. All that said, we anticipate margins to remain well above levels seen during the close to zero percentage point base rate years of the recent past.
NatWest Stock Price Versus Morningstar Fair Value Estimate
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk
