NatWest Group PLC (LSE:NWG) reports its fourth-quarter and final results on Friday 14 but will this message be one that investors love on a day of amatory missives and red roses?
Just over a week before the envelope is licked and sealed on the numbers, shares in the lender were at their highest level in almost a decade and a half, having more than doubled over the past 12 months.
In 2025 so far it has benefitted from the tailwind of positive sentiment towards UK stocks and by its third quarter results beating expectations back in October.
Despite data and many newspaper headlines painting a worrying picture about the UK economy, meaning that the absence of bad loans last year is at risk of reversing if conditions do worsen as feared.
While the Bank of England cut rates today, in the medium term the base rate is expected to stay above 4% for most of this year, which is good news for lenders' net income margins.
Also, NatWest is a "big beneficiary of its large structural hedge," says Susannah Streeter, head of money and markets at Hargreaves Lansdown.
"Banking books have inherent interest rate risk, and like an insurance policy, the hedge is designed to reduce this and smooth out net interest income.
"The way the hedge has been designed means it’s going to be rolling onto better rates in the coming years from some of the lowest rates in the sector, it’ll be another sector tailwind to enjoy."
With the UK government's stake in NatWest falling below 8% last week, JP Morgan said “the next act” for the bank will see net interest income growth of 6%-plus each year through to 2027, while its limited exposure to motor finance and potential for M&A are also seen as setting it apart.
Shareholders will also be rewarded with an ordinary dividend payout policy rising to 50% from 2026, believes JP Morgan, offering a cash yield of 8% a year and a total yield of around 11%on average through to 2027.
As for the full-year results, the US bank expects all eyes to be on 2025 guidance, where it forecasts medium-term stated return on tangible equity (ROTE) targets as likely to be upgraded to 16% from the current 'more than 13%' target.