NatWest Group PLC (LSE:NWG) shares rose 2% on Friday, topping the FTSE 100 leader board after the bank upgraded its full-year profit guidance and lifted its interim dividend.
Much of the good news had already been factored in, with the stock up 27% year-to-date.
NatWest reported a 28% rise in first-half attributable profit to £2.5 billion, as growth in lending, deposits and customer numbers all contributed to a stronger performance.
The interim dividend was raised 58% to 9.5p per share, and a new £750 million share buyback was announced.
Shore Capital noted that second-quarter profits beat expectations on income, costs and impairments, prompting NatWest to raise its income guidance for the year to over £16 billion and its return on tangible equity target to above 16.5%.
However, it also observed that consensus forecasts had already anticipated these upgrades, suggesting limited room for further positive surprises.
Second-quarter pre-tax profit was 8% ahead of consensus, while earnings per share and return on tangible equity also exceeded expectations.
The group’s cost-to-income ratio improved and its common equity tier 1 capital ratio stood at 13.6%, in line with targets.
ShoreCap maintained its 'hold' rating on NatWest shares, reflecting solid financial performance but cautioning that higher returns may eventually face headwinds from greater competition or changes in taxation.
Despite this, the broker acknowledged that the high street lender is currently trading well and delivering strong returns to shareholders, supported by a focus on efficiency and ongoing investment in technology.