Analysts at Berenberg raised their target price on NatWest from 250.0p to 300.0p on Tuesday, stating the firm would likely be the “greatest near-term beneficiary” of rising UK interest rates among domestic banks.
Berenberg said recent UK interest rate expectations had led it to increase net interest income expectations for NatWest, despite its previous NII expectations already being 5% above consensus at the time.
The German bank stated its NII expectations were now roughly 4% above consensus.
“NatWest offers more than just interest-rate gearing,” said Berenberg, which reiterated its ‘buy’ rating on the stock.
“In particular, we believe that the bank will achieve attractive and disciplined mortgage growth alongside cost reductions and an annual capital return of 11%.”
The analysts added that with the stock trading on 0.9x tangible book value for a full-year 2023 return on tangible equity of 11.5%, they think that NatWest remains undervalued.
