Natwest share price rockets to 10-year high
The Natwest share price hit its highest level since February 2015 in early deals this morning as investors backed the bank for growth in 2025.
The UK bank’s stock price is already up 95 per cent over the last year, making it one of the best performing stocks on the FTSE 100, and it shows no signs of stopping.
In a research note last month, RBC analyst Benjamin Toms said the bank was showing “attractive net interest income (NII) momentum” going into 2025.
NII reflects the difference between what banks pay on deposits and earn from loans and other assets. Higher rates tend to boost interest income, as it means banks can charge more for lending.
“The domestic banks have large structural hedges, and based on current rate expectations, we think the hedge roll benefit will more than offset the impact of rate cuts,” said Bank of America analysts.
“Additional upside may come from higher loan growth, particularly in commercial, given the government’s growth agenda. “
“Natwest should be best-placed to take advantage of any UK growth” of any UK banks, they added, estimating a four per cent growth in the bank’s loans every year.
The analysts highlighted the FTSE 100 bank’s gearing to UK growth, particularly in the corporate and commercial market given its position as the largest commercial bank in Britain.
Last summer, Natwest also bought up Sainsbury’s Bank and the residential mortgage portfolio of Metro Bank, giving it even more market share in the space.
RBC’s Toms also noted that Natwest was exceptional for having no exposure to the motor finance cases plaguing many banks, with a host of lenders facing massive fines for failing to disclose commission rates to customers.
The Bank of America analysts gave Natwest a price target of 500p, compared to its current price of 415p.