NatWest got the latest bank reporting season off to a strong start last week and City analysts have maintained their bullish outlooks.
Berenberg believes the bank’s earnings outlook is bright, with any disappointment on the cost front offset by the improved revenue guidance.
“Consensus expectations of the bank’s revenue growth are too low ... and NatWest remains undervalued,” it said in a note.
NatWest swings into profit and announces £750mln share buyback
The broker expects NatWest to distribute £3.6bn of capital during its current financial year, including £2.5bn in share buybacks, which represents more than a 13% effective total yield.
'Buy' is its investment view with a 300p share price target.
Credit Suisse added that NatWest’s shift in the cost guidance for 2022-23 was quite meaningful but likely to be seen as a one-time reset.
The broker suggests it implied roughly a flat outcome compared to previous guidance of a 4% per annum reduction.
Because of that, the broker has trimmed its price target to 300p, but still sees good returns ahead and has kept an outperform rating.
UBS also kept its rating unchanged at Buy along with its 290p price target, with the broker expecting the bank can distribute an amount equal to 20% of its market cap this year if it so chooses.