Shares of NatWest Group PLC (LSE:NWG) gained 4.6% on Monday after UBS increased its earnings projections for the UK lender, citing robust fourth-quarter performance and stronger capital generation.
The Swiss bank reiterated its “buy” recommendation and kept its 780 pence price target unchanged, implying potential total returns of around 40%. UBS raised its diluted earnings per share estimates by 5% for 2026, 4% for 2027, and 3% for 2028.
UBS said NatWest’s fourth-quarter pre-tax profit — excluding notable items and litigation costs — came in 7% ahead of market consensus. Net interest income surpassed expectations by 3%, while operating expenses matched forecasts. Loan impairments were 30% better than anticipated, totaling 13 basis points of loans.
The broker pointed to “strong” operating momentum, noting expansion in both lending and deposits, as well as an 8 basis point rise in net interest margin compared with the market’s expectation of just a 2 basis point increase.
NatWest’s common equity tier 1 (CET1) ratio stood at 14.0%, 30 basis points above consensus estimates. That figure reflects the £750 million share buyback announced in connection with the Evelyn Partners transaction.
Looking ahead, UBS said the bank’s 2026 guidance is broadly in line with current market forecasts, while its newly introduced 2028 targets indicate potential upside of 2–3% relative to consensus and appear achievable.
Those medium-term goals include a return on tangible equity above 18%, compound annual growth in customer assets and liabilities of more than 4%, a cost-to-income ratio below 45%, and an intention to operate with a CET1 ratio of approximately 13.0%.
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