NatWest

NWG

Market cap $63.3B

UBS, the Swiss investment bank, has maintained buy ratings on its key UK domestic bank picks after April Bank of England lending data showed robust loan growth alongside signs of intensifying deposit competition from major high street rivals. Total UK lending rose 4.6% year on year in April, unchanged from the six-month average, with corporate lending the standout performer at 8.6% growth, followed by consumer credit at 5.6% and mortgages at 3.2%.

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Many of Europe's largest banks raised loan loss provisions for risks related to the war in the Middle East during the first quarter, citing uncertainty over the impact and duration of the conflict. While the direct impact of the war on European banks has been limited so far, lenders set aside additional reserves mainly due to updated macroeconomic scenarios and weightings.

Fitch Ratings has upgraded NatWest Group PLC (LSE:NWG) across a number of key ratings across the lender's subsidiaries after the agency updated its bank rating criteria. The ratings agency raised the long-term issuer default ratings to ‘AA' from ‘AA-' of National Westminster Bank Plc, The Royal Bank of Scotland plc, NatWest Bank Europe GmbH, NatWest Markets Plc, NatWest Markets NV and The Royal Bank of Scotland International Ltd.

Base case now assumes banking surcharge will rise from 3% to 5%. JP Morgan has warned that UK banks are likely to be caught in the crossfire of Labour's evolving domestic political landscape, with the broker now assuming as its base case that the banking surcharge will rise from 3% to 5%.

The FTSE 100 Index retreated for the fourth consecutive day, reaching its lowest level since March 30th. It has dropped by over 6.30% from its highest point this year as geopolitical risks jumped.

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NatWest Group PLC (LSE:NWG) left analysts broadly split after first-quarter results that missed expectations but did little to dent confidence in the wider outlook. Deutsche Bank described the update as a “small miss”, pointing to weaker non-interest income, particularly in markets and debt capital markets, with total income excluding notable items around 2% below consensus.

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Despite booking higher provisions, British bank NatWest Group still managed to post solid double-digit earnings growth last quarter. A more downbeat assessment of key U.K. macro indicators drove a 50% year-on-year rise in credit charges, though actual impairments remain modest. NWG's revenue continues to grow strongly thanks to the ongoing repricing of its deposit hedge.