Credit Suisse has upgraded its NatWest guidance following what the Switzerland-based financial institution considered a strong third-quarter earnings call from the bank.
Pre-provision profits came in 7% ahead of expectations, profit before tax was 3% ahead, and year-end revenues and net interest margins were upgraded.
Accordingly, Credit Suisse increased adjusted earnings per share for 2022-24 by 4-7%, with target price improved from 350p to 370p.
Costs are expected to increase from the proof flat guidance, so 4% year-on-year cost growth has been factored into the assumptions.
“Our estimates factor an increase in the Bank of England (BoE) rate to 3.5%, on deposit betas of 55%, for the November and December hikes which may yet prove to be on the modest side,” said Omar Keenan, co-head of Equity Research.
Credit Suisse maintains an ‘outperform’ view, though risk factors include lower-than-expected BoE rates and a worse UK macroeconomic outlook.