NatWest Group (NWG) AI Stock Analysis

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NatWest Group

(NYSE:NWG)

77Outperform

NatWest Group's stock is supported by a solid financial foundation with strong equity and improving cash flow. The technical indicators show an upward trend, although some caution is warranted due to the low stochastic value. Valuation metrics suggest the stock is attractively priced with a compelling dividend yield. Overall, the stock presents a favorable investment opportunity, provided the company continues to manage its profitability and cash flow effectively.

NatWest Group (NWG) vs. S&P 500 (SPY)

Market Cap

$45.53B

Dividend Yield4.61%

Average Volume (3M)5.89M

Price to Earnings (P/E)8.5

Beta (1Y)1.20

Revenue Growth18.85%

EPS Growth14.85%

CountryUS

Employees61,651

SectorFinancial

Sector Strength81

IndustryBanks - Diversified

Share Statistics

EPS (TTM)0.38

Shares Outstanding4,039,019,800

10 Day Avg. Volume5,819,053

30 Day Avg. Volume5,892,367

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)2.73

Price to Cash Flow (P/CF)-1.50

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusModerate Buy

Number of Analyst Covering1

NatWest Group Business Overview & Revenue Model

Company DescriptionNatWest Group (NWG) is a major British banking and financial services institution headquartered in Edinburgh, Scotland. It operates through various segments, including Retail Banking, Commercial Banking, Private Banking, and RBS International. The group provides a wide range of services, such as personal and business banking, insurance, wealth management, and investment services. NatWest Group serves over 19 million customers and is a significant player in the UK banking sector, offering a comprehensive suite of financial products to individuals, businesses, and institutions.

How the Company Makes MoneyNatWest Group generates revenue through a diversified range of financial products and services. The primary sources of income include interest income from loans and mortgages, fees from banking services such as account maintenance and transaction processing, and commissions from investment and insurance products. The retail banking segment offers personal loans, mortgages, credit cards, and savings accounts to individual customers. Commercial banking caters to small, medium, and large enterprises with services like business loans, asset financing, and cash management. Additionally, Private Banking provides wealth management and investment advisory services to high-net-worth individuals. The group also earns from its treasury operations and asset management activities. Strategic partnerships and collaborations with fintech companies and other financial institutions further enhance NatWest's service offerings and revenue potential.

NatWest Group Financial Statement Overview

Summary

NatWest Group maintains a healthy financial profile with strong equity and improving cash flow. Despite some volatility in profitability and cash flow management, the company's consistent revenue and equity growth provide a solid foundation for future operations. Continued focus on maintaining profitability and stable cash flow will be crucial for long-term success.

Income Statement

Positive

NatWest Group's income statement reveals moderate financial health with a solid gross profit margin, but the net profit margin has shown fluctuations due to varying net income over the years. The revenue growth rate is relatively stable, indicating consistent business operations. However, the absence of recent EBIT and EBITDA data limits a comprehensive profitability assessment.

Balance Sheet

Positive

The balance sheet demonstrates strong equity with a favorable equity ratio and zero total debt in the latest period, reducing financial risk. The return on equity is robust, indicating effective use of equity in generating profits. The consistent increase in stockholders' equity highlights a stable financial position, but the high total liabilities warrant attention.

Cash Flow

Positive

Cash flow analysis shows improvements, with positive free cash flow in the latest year after previous deficits, indicating better cash management. The operating cash flow to net income ratio suggests that cash earnings are catching up with accounting earnings, yet historical fluctuations in cash flows present potential volatility concerns.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
21.27B	14.65B	14.78B	13.16B	10.51B	10.80B
	Gross Profit
24.88B	14.65B	25.47B	13.16B	10.51B	10.80B
	EBIT
2.98B	0.00	7.12B	7.66B	4.26B	-289.00M
	EBITDA
1.40B	0.00	7.12B	6.00B	4.55B	-1.00M
	Net Income Common Stockholders
4.36B	4.80B	4.39B	3.59B	3.27B	-434.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
57.01B	93.05B	104.52B	145.06B	177.76B	124.49B
	Total Assets
1.45T	707.99B	692.67B	720.05B	781.99B	799.49B
	Total Debt
245.43B	0.00	127.26B	6.26B	8.43B	9.96B
	Net Debt
188.41B	-93.05B	-104.52B	-138.57B	-169.33B	-114.53B
	Total Liabilities
1.38T	668.61B	655.49B	683.56B	8.43B	9.96B
	Stockholders Equity
75.13B	39.35B	37.16B	36.49B	41.80B	43.86B
Cash Flow		Free Cash Flow
930.00M	694.00M	-14.92B	-44.24B	52.79B	28.72B
	Operating Cash Flow
930.00M	1.77B	-13.37B	-43.60B	53.69B	29.09B
	Investing Cash Flow
0.00	-12.70B	-14.69B	19.06B	3.06B	7.55B
	Financing Cash Flow
0.00	-1.89B	-15.67B	-10.65B	-2.60B	90.00M

NatWest Group Technical Analysis

Technical Analysis Sentiment

Positive

Last Price12.28

Price Trends

50DMA

11.47

Positive

100DMA

10.70

Positive

200DMA

9.75

Positive

Market Momentum

MACD

0.04

Negative

RSI

58.94

Neutral

STOCH

83.04

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NWG, the sentiment is Positive. The current price of 12.28 is above the 20-day moving average (MA) of 11.77, above the 50-day MA of 11.47, and above the 200-day MA of 9.75, indicating a bullish trend. The MACD of 0.04 indicates Negative momentum. The RSI at 58.94 is Neutral, neither overbought nor oversold. The STOCH value of 83.04 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NWG.

NatWest Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HSBC	81 Outperform	$171.96B	7.99	13.74%	6.43%	6.79%	8.57%
BCS	81 Outperform	$48.30B	7.57	9.14%	2.99%	8.58%	35.39%
BBVA	78 Outperform	$75.88B	7.31	18.77%	4.49%	30.24%	28.90%
NWG	77 Outperform	$45.53B	8.49	13.34%	4.61%	18.85%	14.85%
SAN	76 Outperform	$96.22B	7.71	13.16%	2.29%	6.56%	19.02%
ING	75 Outperform	$55.88B	8.51	12.75%	5.56%	4.07%	9.97%
Sector *	63 Neutral	$12.75B	9.36	8.64%	84.32%	13.82%	-3.89%

* Financial Sector Average

Performance Comparison

NWG

NatWest Group

12.28

5.83

90.39%

BBVA

Banco Bilbao

13.40

3.46

34.81%

BCS

Barclays

14.71

5.97

68.31%

HSBC

HSBC Holdings

52.19

15.86

43.66%

ING

ING Groep

18.54

3.97

27.25%

SAN

Banco Santander SA

6.75

2.32

52.37%

NatWest Group Earnings Call Summary

Earnings Call Date: Feb 14, 2025 | % Change Since: 14.34% | Next Earnings Date: May 2, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong performance with upgraded guidance, significant lending growth, and sustainable funding achievements. However, concerns about impairment charges and expected lower income in Q4 present challenges.

Highlights

Upgraded Full Year Income and Returns Guidance

NatWest Group upgraded its full year income and returns guidance, reflecting progress in strategic priorities and support to customers.

Broad-Based Customer Lending Growth

Customer lending grew by GBP 8.1 billion to GBP 367 billion, with notable contributions from corporate and commercial mid-market customers.

Climate and Sustainable Funding Achievements

GBP 23.5 billion of climate and sustainable funding provided, bringing the total to GBP 85.4 billion since July 2021.

Increased Share in Credit Cards

Credit card market share increased from 8.5% to 9.3%.

Strong Capital Generation and Earnings

Generated 197 basis points of capital in the first 9 months, with a CET1 ratio of 13.9% and earnings per share up 12% year-on-year.

Increased Assets Under Management

Private Bank assets under management increased by GBP 5.7 billion to GBP 46.5 billion, including GBP 2.2 billion of net new inflows.

Improved Return on Tangible Equity

Return on tangible equity was 18.3% in the third quarter.

Lowlights

Impairment Charges

An impairment charge of GBP 245 million or 25 basis points of loans was recorded in the third quarter.

Income Guidance for Q4

Income for Q4 is expected to be lower than Q3 due to seasonality and expected base rate cuts.

Higher Operating Expenses Expected

Operating expenses for Q4 are expected to be higher than the previous year due to severance, property costs, and bank levy charges.

Company Guidance

During the NatWest Group Q3 2024 earnings call, the management upgraded their full-year guidance for income and returns, reflecting strong financial performance across various metrics. Over the first nine months, the group achieved customer lending growth of GBP 8.1 billion, bringing the total to GBP 367 billion, and contributed GBP 23.5 billion in climate and sustainable funding. Mortgage volumes improved, with the acquisition of a GBP 2.3 billion portfolio from Metro Bank. The bank's credit card market share increased from 8.5% to 9.3%, and customer deposits grew by GBP 8.3 billion to GBP 427 billion. Private Bank assets under management rose by GBP 5.7 billion to GBP 46.5 billion. For the period, NatWest generated an income of GBP 10.8 billion, with operating profit reaching GBP 4.7 billion and attributable profit amounting to GBP 3.3 billion. The return on tangible equity stood at 17%, and earnings per share increased by 12% to 38p. The CET1 ratio was 13.9%, supported by 197 basis points of capital generation. The bank anticipates full-year income of around GBP 14.4 billion and a return on tangible equity greater than 15%.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.