Key Morningstar Metrics for NatWest
- Fair Value Estimate: GBX 480
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: Medium
What We Thought of NatWest’s Earnings
NatWest Group NWG reported second-quarter operating profits of GBP 1,773 million, 8% ahead of consensus estimates collected by the bank. Income generation was good as the structural hedge continued to support net interest income, while operating expenses growth was in line with guidance.
Why it matters: Income guidance and the return on tangible equity guidance for 2025 were lifted to above GBP 16 billion and above 16.5%, respectively.
- The structural hedge is supporting net interest income as the loan portfolio rolls onto higher swap rates. This effect should remain in place despite our expectations of two more base rate cuts this year.
- Operating costs of GBP 3,900 million for the first half are well on track to meet the GBP 8.1 billion full-year guidance, even including integration costs for the Sainsbury’s bank operation in the second half.
The bottom line: We maintain our GBX 480 per-share fair value estimate and no moat rating.
- New guidance is in line with our modeled assumptions for a return on tangible equity of 17.2% and income generation of GBP 16 billion. As a result, we’re not changing our fair value estimate.
