NatWest Group PLC (LSE:NWG) shares rose 4.5% in early trading after the bank raised its annual forecast, reflecting strong performance in the UK banking sector.
The boost follows a 26% increase in third-quarter profit, attributed to expanded lending and stable margins despite lower central bank rates. NatWest reported a pretax profit of £1.7 billion for July-September, surpassing both last year’s £1.3 billion and analyst expectations of £1.5 billion.
The bank also raised its target return on tangible equity to above 15% for 2024, up from 14%. NatWest’s results outpaced rival Lloyds’ quarterly earnings, while Barclays saw strong results earlier due to its investment banking success.
"Overall, these results should be taken well by the market," said Shore Capital, which repeated its 'hold' recommendation.
NatWest's return on equity (ROTE) was 18.3% in the third quarter and averaged 17% over the first nine months of the year, showing solid performance that makes the updated target look conservative, said Peel Hunt, which says 'buy' up to 410p.
With stock currently valued at 1.15 times the net asset value per share (now 316p, up 12p from last quarter), there is room for the share price to grow further, it added.
The stock advanced 16.2p to 378p.