Analysts at Berenberg slightly raised their target price on retail bank Natwest from 240.0p to 250.0p on Monday, stating while the group was “fine today” it would be “better tomorrow”.
Berenberg said the “materiality and persistence” of Natwest’s net interest income prospects dwarfed “more modest and short-term weakness” in its non-interest income.
The German bank highlighted that it felt this strength was “underappreciated”, leading it to place its full-year 2023 net interest income expectations 5% ahead of consensus estimates.
“This strength is supported by the bank’s progress towards reducing costs and its strong capital returns of circa 11% per annum (which, at the margins, have become even stronger),” said the analysts.
Berenberg, which also reiterated its ‘buy’ rating on the stock, added that with Natwest trading at 0.8x its tangible book value for a full-year 2023 estimated return on tangible equity of 10%, the stock was presently undervalued.
