British lender NatWest Group PLC (LSE:NWG)’s third-quarter earnings were “a major disappointment”, according to Citi, which in a scathing research note announced major cuts to its earnings and price targets.
NatWest suffered from tighter margin spreads and customers migrated to higher interest-bearing savings accounts, the FTSE 100 bank stated last Friday, causing a more than 10% share price nosedive.
Citi analysts expect “meaningfully lower” net interest margins on the horizon, and have consequently slashed their profit-before-tax guidance by 5% for full-year 2023 and by up to 19% between 2024 and 2026.
Citi’s forecasts are now 13% below the wider market consensus for 2024 and 20% below market consensus for 2025.
Analysts have also stripped the likelihood of share buybacks from their investment thesis, resulting in a 19-32% cut to earnings-per-share estimates between 2024 and 2026.
“We would much prefer to own Lloyds here,” said Citi analysts after slashing their price target from 385p to 255p.
NatWest, however, still remains a 'buy' stock, with a publication price of 182.35p.