Fitch upgrades NatWest subsidiaries to AA with stable outlook maintained (NWG)

NWG NatWest Group (LSE:NWG) said Fitch Ratings has upgraded the long-term Issuer Default Ratings of several of its principal banking subsidiaries, including National Westminster Bank, The Royal Bank of Scotland and a number of NatWest Markets entities, to AA from AA-. The changes follow updates to Fitch’s bank rating methodology. The agency also raised the long-term senior unsecured debt ratings for the same subsidiaries to AA while keeping the outlook at Stable, highlighting improved credit strength across NatWest’s core operating businesses and potentially supporting future funding flexibility and investor confidence.

The upgrades apply to both domestic operating banks and international subsidiaries, including NatWest Bank Europe and NatWest Markets N.V., bringing their ratings into alignment at a higher investment-grade tier. Although Fitch reiterated that credit ratings are not intended as investment advice, the improved assessments indicate stronger perceived resilience across NatWest’s major franchises. The development could enhance the banking group’s standing within wholesale funding markets and strengthen its competitive position relative to other large European financial institutions.

The company’s outlook is driven mainly by mixed fundamentals: strong profitability and improving leverage are offset by highly inconsistent (and most recently negative) operating/free cash flow. Technical indicators further weigh on the score due to weak momentum and trading below key moving averages. These risks are partially balanced by attractive valuation (low P/E, high dividend yield) and a generally positive earnings call with raised income guidance and strong capital generation.

More about NatWest Group

NatWest Group is a major UK-based banking and financial services organisation operating through brands including National Westminster Bank, The Royal Bank of Scotland and NatWest Markets. The group provides retail and commercial banking, corporate and investment banking, and wealth management services across the UK and selected international markets.