NatWest Group (NWG) AI Stock Analysis

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NatWest Group

(NYSE:NWG)

Select Model

Neutral 58 (OpenAI - 5.2)

Rating:58Neutral

Price Target:

$16.00

▼(-2.32% Downside)

Action:DowngradedDate:02/18/26

The score is driven primarily by mid-range financial performance—good profitability and an improving balance sheet, but weighed down by volatile revenue and inconsistent cash flow. Technicals are weak with bearish trend signals despite oversold readings. Valuation is a clear positive with a low P/E and supported dividend yield, while the earnings call was constructive on returns and capital generation but highlighted meaningful macro, regulatory, and acquisition execution risks.

Positive Factors

Capital Generation & CET1

Consistent capital generation and a 14% CET1 ratio provide a durable buffer versus regulatory shocks and support strategic options. Strong capital accrual improves resilience to credit stress, funds M&A or buybacks and helps absorb Basel 3.1 RWA impacts without immediate equity raises.

Large Retail Franchise & Deposits

A >20m customer base and net additions enhance deposit stability and cross-sell potential, underpinning low-cost funding and recurring fee opportunities. Scale in retail banking supports diversified, durable revenue streams and competitive advantage versus smaller domestic players.

Wealth/AUMA Scale & Strategic M&A

Scaling Private Banking and Wealth via Evelyn materially diversifies revenue away from interest margins into higher-margin, fee-based income. Structural AUMA growth and expected synergies expand recurring fee pools and reduce sensitivity to net interest income cycles over the medium term.

Negative Factors

Weak/Cyclic Cash Generation

Repeated negative operating and free cash flow in multiple years shows earnings are not consistently converting to cash, weakening funding flexibility. That raises dependence on wholesale funding, constrains organic capital deployment and increases vulnerability to market funding stress.

Regulatory RWA Headwinds

Material RWA inflation from Basel 3.1/CRD IV increases capital demand and compresses return on tangible equity unless offset by balance sheet actions. Higher RWAs limit lending capacity or require higher equity, complicating delivery of RoTE and CET1 targets without business reallocation.

Acquisition Day-One CET1 Impact & Execution Risk

The Evelyn purchase creates an immediate ~130bp CET1 hit from intangibles, reducing capital headroom and raising near-term dilution risk. Integration, adviser retention and client attrition could delay or reduce anticipated fee and cost synergies, stressing medium-term RoTE targets if execution falters.

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

Market Cap

$60.89B

Dividend Yield3.67%

Average Volume (3M)4.23M

Price to Earnings (P/E)4.5

Beta (1Y)1.07

Revenue Growth7.43%

EPS Growth30.31%

CountryUS

Employees59,400

SectorFinancial

Sector Strength70

IndustryBanks - Diversified

Share Statistics

EPS (TTM)0.47

Shares Outstanding3,985,772,500

10 Day Avg. Volume4,386,997

30 Day Avg. Volume4,229,172

Financial Highlights & Ratios

PEG Ratio0.16

Price to Book (P/B)0.61

Price to Sales (P/S)0.89

P/FCF Ratio4.52

Enterprise Value/Market Cap0.54

Enterprise Value/Revenue1.11

Enterprise Value/Gross Profit1.98

Enterprise Value/Ebitda3.70

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

EPS Forecast (FY)1.93

Revenue Forecast (FY)$24.14B

NatWest Group Business Overview & Revenue Model

Company DescriptionNatWest Group plc, together with its subsidiaries, provides banking and financial products and services to personal, commercial, corporate, and institutional customers in the United Kingdom and internationally. It operates through Retail Banking, Commercial Banking, Private Banking, RBS International, and NatWest Markets segments. The Retail Banking segment offers a range of banking products and related financial services, such as current accounts, mortgages, personal unsecured lending, and personal deposits, as well as mobile and online banking services. The Commercial Banking segment offers banking and financing solutions to start-up, SME, commercial, corporate, and institutional customers. The Private Banking segment provides private banking and wealth management products for high-net-worth individuals and their business interests. The RBS International segment offers banking various products and services to institutional customers. It also operates in wholesale branches and fund depositary service businesses. The NatWest Markets segment provides services to corporate and institutional customers for the management of financial risks for achieving short-term and long-term sustainable financial goals. NatWest Group plc operates approximately 800 branches and 16,000 physical points of presence. The company was formerly known as The Royal Bank of Scotland Group plc and changed its name to NatWest Group plc in July 2020. NatWest Group plc was founded in 1727 and is headquartered in Edinburgh, the United Kingdom.

How the Company Makes MoneyNatWest Group makes money mainly by intermediating deposits and lending, charging for banking services, and earning fees from related financial products. Key revenue streams include: (1) Net interest income: the spread between interest earned on assets (e.g., residential mortgages, unsecured personal lending, credit cards, overdrafts, and commercial loans) and interest paid on liabilities (primarily customer deposits and wholesale funding). Changes in the Bank of England base rate, deposit pricing competition, loan mix (mortgages vs. higher-yielding unsecured/SME lending), and credit demand materially affect this spread-driven income. (2) Fee and commission income: fees from account services, payments and cash management (transaction banking), card-related fees, merchant acquiring/payment processing (where applicable), arrangement and commitment fees on corporate and commercial lending facilities, and other service charges. Wealth and insurance-related distribution can also generate recurring fees and commissions. (3) Trading and other income: income from providing markets-related services to customers (e.g., foreign exchange, interest-rate risk management, and other hedging products) and, to the extent disclosed by the group, related trading/valuation results. (4) Other operating income: may include items such as gains/losses on disposals, rental/other ancillary income, and other non-interest revenues as reported in financial statements. Profitability is significantly influenced by credit impairment charges (loan losses), operating costs, regulatory capital and liquidity requirements, and macroeconomic conditions (e.g., unemployment, house prices, and business insolvencies). Partnerships can contribute through distribution of insurance/wealth products (where NatWest earns commissions/fees rather than underwriting all risk itself), but specific partnership terms and their financial contribution are not consistently disclosed in detail at a public, segment-by-segment level; therefore, those specifics are null.

NatWest Group Key Performance Indicators (KPIs)

Any

Total Income by Segment

Total Income by Segment
Details the total income generated by each segment, offering a clear view of which parts of the business are contributing most to overall revenue.

Chart InsightsNatWest Group's Commercial & Institutional segment is driving income growth, with a strong upward trend since 2022. Despite a dip in Retail Banking income in 2024, the overall outlook is positive, bolstered by the recent acquisition of Sainsbury's Bank, which adds significant customer accounts and lending capacity. The earnings call highlights robust financial performance and updated guidance, projecting income at the upper end of expectations. However, potential regulatory impacts and economic uncertainties could pose risks to sustained growth.

Data provided by:

The Fly

NatWest Group Earnings Call Summary

Earnings Call Date:Feb 13, 2026

(Q4-2025)

% Change Since: |

Next Earnings Date:May 01, 2026

Earnings Call Sentiment Positive

The call presented a strong operating performance in 2025 with double‑digit income growth, robust lending and AUMA expansion, meaningful cost savings and high capital generation. Management set ambitious 2028 targets (RoTE >18%, CAL growth >4% p.a., cost/income <45%, CET1 ~13%) and articulated strategic rationale for the Evelyn Partners acquisition to accelerate wealth capabilities. Key risks highlighted include near‑term rate cut headwinds, regulatory RWA increases (Basel 3.1/CRD IV), integration and day‑one CET1 impact from the Evelyn deal, and sensitivity of future hedge income to reinvestment rates. On balance the positives (growth, profitability, capital generation, efficiency gains and strategic scale in wealth) outweigh the manageable and disclosed risks, though outcomes remain sensitive to macro, regulatory and execution dynamics.

Q4-2025 Updates

Positive Updates

Strong top-line and profitability

Income (excluding notable items) grew 12% to GBP 16.4bn, operating profit was GBP 7.7bn and profit attributable to ordinary shareholders was GBP 5.5bn. Return on tangible equity was 19.2% and EPS rose 27% to 68p.

Material balance sheet growth

Gross lending increased 5.6% to GBP 392.7bn, deposits rose 2.4% to GBP 442bn, and customer assets and liabilities (CAL) expanded (customer assets and liabilities grew 10% in Private Banking and 4% in Retail). Loan growth included GBP 14bn (10%) in Commercial & Institutional.

Wealth and AUMA momentum

Assets under management and administration increased 20% to GBP 58.5bn with net flows up 44% (GBP 4.6bn). Fee income from AUMA grew 11% to GBP 300m and Private Banking net new flows/engagement improved materially.

Improved efficiency and cost control

Gross cost savings of around GBP 600m (~7% of 2024 cost base) were delivered. Costs grew modestly (other operating expenses ~1.4% higher) and the group cost income ratio reduced by 4.8 percentage points to 48.6% (Retail C/I down from 50% to 45%; C&I down from 52% to 49%; PBWM down 10 ppts to 64%).

Strong capital generation and CET1

Generated 252 bps of capital in 2025, ending the year with a CET1 ratio of 14% (40 bps up year-on-year). Capital generation guidance for 2026 is ~200 bps before distributions.

Low impairment and disciplined risk profile

Net loan impairment charge was GBP 671m (16 bps of loans), ECL coverage 83 bps, Stage 3 loans 1.1% (down on prior year). Management expects loan impairment rate to be below 25 bps in 2026.

Customer franchise and new customers

Added 1 million new customers in 2025; now serving >20 million customers. Retail customer base grew >5%, and 50,000 new Private Banking/Wealth customers invested for the first time in 2025.

Strategic acquisition to scale Wealth

Announced acquisition of Evelyn Partners: adds GBP 69bn of AUMA, scales Private Banking & Wealth to ~20% of group CAL, increases fee income ~20% on Day 1, expected >GBP 700m incremental income and ~GBP 100m cost synergies, and management expects RoTE accretion and EBITDA of ~GBP 400m by year 3.

Technology, AI and simplification progress

Decommissioned ~200 business apps, migrated 1m Sainsbury's customers, created GBP 100m of investment capacity, launched generative AI enhancements (Cora resolved queries +20 ppts), set up an AI research office and increased developer productivity (deployment frequency >4x since 2021).

Negative Updates

Rate and hedging uncertainties

Management expects Bank Rate cuts in 2026 (terminal ~3.25% end-2026) which are modeled to be a GBP ~500m drag on income in 2026; hedge assumptions and reinvestment yields drive material earnings sensitivity (management expects hedge income to increase ~GBP 1.5bn in 2026 vs 2025 but this depends on reinvestment yields and notional growth).

RWA and regulatory headwinds (Basel 3.1 / CRD IV)

Basel 3.1 implementation (Jan 2027) is expected to increase RWAs by around GBP 10bn. CRD IV model inflation added GBP 7.3bn of RWAs (GBP 4.8bn in Q4) and operational RWA increased GBP 3.8bn (including GBP 1.6bn in Q4). These regulatory changes increase capital demand and complexity.

Acquisition day-one CET1 impact and execution risk

Evelyn Partners acquisition has an estimated day‑one CET1 impact due to intangibles (~130 bps) and raises execution and attrition risk (management confident on integration but acknowledged market concerns and the need to retain advisers and client flows).

Margins & non‑interest income seasonality/pressure

Non-interest income was broadly flat (full year +1.3%) and down 3.7% in Q4 driven by C&I seasonality. Management highlighted mortgage margin pressure and competitive pricing in savings which are headwinds for NII outside hedge tailwinds.

Cost pressures ahead despite savings

Other operating expenses expected around GBP 8.2bn in 2026 with staff costs, supplier inflation and transformation spend noted as drivers. One‑time integration costs of GBP 96m were recorded in 2025 and acquisition/integration will add near-term costs (~GBP 150m to achieve Evelyn synergies).

Income guidance excludes Evelyn and uncertain drivers

2026 guidance (income excl. notable items GBP 17.2–17.6bn) excludes Evelyn Partners and is sensitive to customer activity, rate cuts, RWA management costs and reinvestment yields; management flagged items that could reduce near-term RoTE versus 2025 (growth in average tangible equity, Basel impacts and rate dynamics).

Market & sector headwinds for certain industries

Management noted continued challenges for sectors such as retail and hospitality, plus competitive dynamics in deposit/savings products and evolving technology/market entrants that could pressure spreads and deposit behavior over time.

Company Guidance

The management guided that, excluding Evelyn Partners, 2026 income (ex-notables) is expected to be GBP 17.2–17.6bn with other operating expenses around GBP 8.2bn, a loan impairment rate below 25bps and capital generation of ~200bps before distributions (2026 guidance excludes the Jan‑1‑2027 Basel 3.1 ~GBP 10bn RWA impact); they expect RoTE >17% in 2026 and reiterated a CET1 operating target of around 13%. Longer‑term 2028 targets include CAL growth >4% p.a. (2025–28), a cost/income ratio <45%, >200bps capital generation before distributions while operating at ~13% CET1, and RoTE >18% with a c.50% dividend payout ratio (with scope for buybacks). Management also expects strong hedge tailwinds (2026 hedge income ~GBP 1.5bn higher than 2025, 2027 ~GBP 1bn higher than 2026, targeting total hedge income ~GBP 7.2bn by 2027), product/equity hedge yield rising (c.2.4% in 2025 to ~3.1% in 2026) and hedge notional increasing (c.£198bn → ~£200bn), ECL provisioning of c.£3.6bn with coverage ~83bps, and a through‑the‑cycle cost‑of‑risk framework of 20–30bps.

NatWest Group Financial Statement Overview

Summary

Profitability and earnings power have been solid in 2021–2023 and improved again in 2025, and leverage is improving modestly. However, financial quality is capped by a sharp 2025 revenue decline versus 2024 and inconsistent cash generation, with negative operating and free cash flow in multiple years (2022, 2023, 2025), reducing flexibility and increasing funding reliance.

Income Statement

Neutral

Profitability has been solid in most years, with net profit margins strong in 2021–2023 and improving again in 2025 (notably higher margins than 2024). However, results are volatile: 2020 was loss-making, and 2025 shows a very large revenue decline versus 2024, which raises questions around revenue stability and year-to-year comparability. Overall, earnings power looks good, but the revenue trajectory is uneven.

Balance Sheet

Positive

Leverage remains meaningful but manageable for a diversified bank, with debt-to-equity improving in 2025 versus 2023–2024 and equity building over time. Total assets have been broadly stable, suggesting balance sheet scale is steady. The main weakness is consistently elevated leverage (debt exceeding equity), which can amplify downside risk if profitability weakens.

Cash Flow

Negative

Cash generation is the key weak spot: operating cash flow and free cash flow are negative in multiple years (2022, 2023, and 2025), with only 2020–2021 showing strong positive cash flow. 2024 is modestly positive but small relative to net income, indicating earnings have not consistently translated into cash. This level of cash flow volatility reduces financial flexibility and increases reliance on funding markets.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	29.48B	28.57B	24.76B	16.15B	12.04B
Gross Profit	16.61B	14.65B	14.78B	13.35B	10.34B
EBITDA	8.86B	7.25B	7.11B	5.96B	4.77B
Net Income	5.83B	4.80B	4.64B	3.59B	3.27B
Balance Sheet
Total Assets	714.55B	707.99B	692.67B	720.05B	781.99B
Cash, Cash Equivalents and Short-Term Investments	98.23B	106.93B	116.47B	154.98B	261.23B
Total Debt	71.83B	65.92B	60.07B	55.32B	58.33B
Total Liabilities	671.94B	668.61B	655.49B	683.56B	740.19B
Stockholders Equity	42.60B	39.35B	37.16B	36.49B	41.80B
Cash Flow
Free Cash Flow	5.79B	694.00M	-18.99B	-44.24B	52.79B
Operating Cash Flow	7.07B	1.77B	-17.44B	-43.60B	53.69B
Investing Cash Flow	-13.77B	-12.70B	-14.69B	19.06B	3.06B
Financing Cash Flow	-3.49B	-1.89B	-6.30B	-10.65B	-2.60B

NatWest Group Technical Analysis

Technical Analysis Sentiment

Negative

Last Price16.38

Price Trends

50DMA

17.01

Negative

100DMA

16.65

Negative

200DMA

15.35

Positive

Market Momentum

MACD

-0.48

Positive

RSI

40.75

Neutral

STOCH

28.28

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NWG, the sentiment is Negative. The current price of 16.38 is above the 20-day moving average (MA) of 16.15, below the 50-day MA of 17.01, and above the 200-day MA of 15.35, indicating a neutral trend. The MACD of -0.48 indicates Positive momentum. The RSI at 40.75 is Neutral, neither overbought nor oversold. The STOCH value of 28.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NWG.

NatWest Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (68)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BBVA	72 Outperform	$118.45B	11.69	18.53%	3.27%	7.52%	10.40%
SAN	72 Outperform	$160.35B	10.97	13.89%	1.85%	-15.34%	16.71%
HSBC	71 Outperform	$273.30B	12.28	11.88%	4.14%	-9.54%	-22.46%
ING	71 Outperform	$73.43B	11.24	12.46%	4.14%	2.20%	-0.17%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
BCS	60 Neutral	$71.07B	9.29	9.41%	1.71%	17.50%	49.25%
NWG	58 Neutral	$60.89B	4.48	14.33%	3.67%	7.43%	30.31%

* Financial Sector Average

Performance Comparison

NWG

NatWest Group

15.53

3.51

29.16%

BBVA

Banco Bilbao

20.88

6.73

47.52%

BCS

Barclays

21.14

5.39

34.25%

HSBC

HSBC Holdings

80.90

25.13

45.07%

ING

ING Groep

26.07

6.70

34.57%

SAN

Banco Santander SA

11.00

4.01

57.46%

NatWest Group Corporate Events

NatWest Group Updates Total Voting Rights as of 31 December 2025

Dec 31, 2025

On 31 December 2025, NatWest Group plc reported its total voting rights and issued share capital in line with UK Disclosure Guidance and Transparency Rules. As at that date, the bank had 8,006,684,747 ordinary shares in issue (excluding 221,209,481 held in treasury), each carrying four votes, resulting in 32,026,738,988 exercisable voting rights from ordinary shares, plus a small number of 11% and 5.5% cumulative preference shares bringing total voting rights to 32,028,671,548 across 8,228,377,368 issued shares. The disclosure, filed with the US SEC on Form 6-K, provides investors with an updated denominator for calculating notifiable holdings in NatWest, underlining the group’s ongoing compliance with transparency requirements and giving shareholders clarity on the impact of treasury stock and preference share structure on their voting power.