Core Viewpoint - The article compares NatWest Group (NWG) and Banco Itau (ITUB) to determine which stock is more attractive for value investors [1] Valuation Metrics - Both NWG and ITUB currently have a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions and improving earnings outlooks [3] - NWG has a forward P/E ratio of 8.87, while ITUB has a forward P/E of 9.34, suggesting NWG is relatively cheaper [5] - NWG's PEG ratio is 0.73, compared to ITUB's PEG ratio of 1.05, indicating NWG may offer better value considering expected earnings growth [5] - NWG has a P/B ratio of 1.11, while ITUB's P/B ratio is 1.98, further supporting NWG's position as the more undervalued stock [6] - Based on these valuation metrics, NWG holds a Value grade of A, while ITUB has a Value grade of D, indicating NWG is the superior value option [6]

Core Viewpoint - The article emphasizes the importance of value investing and highlights NatWest Group (NWG) as a strong stock opportunity based on its valuation metrics and earnings outlook [2][4][7]. Group 1: Value Investing Trends - Value investing is a preferred strategy for identifying strong stocks across various market conditions, relying on traditional analysis of key valuation metrics [2]. - The Zacks Rank system, which focuses on earnings estimates and revisions, is used to identify winning stocks, complemented by the Style Scores system for specific traits [3]. Group 2: NatWest Group (NWG) Valuation Metrics - NatWest Group has a Zacks Rank of 2 (Buy) and an A grade for Value, indicating it is a high-quality value stock [4]. - The Forward P/E ratio of NWG is 7.89, significantly lower than the industry average of 10.24, with historical values ranging from 6.88 to 9.78 [4]. - NWG's P/B ratio is 1, compared to the industry's average of 2.23, with its P/B fluctuating between 0.73 and 1.11 over the past year [5]. - The P/S ratio for NWG is 1.61, which is also lower than the industry's average of 1.75, indicating a favorable valuation [6]. - Overall, these metrics suggest that NWG is likely undervalued, making it an attractive investment opportunity [7].

Core Insights - The article emphasizes the importance of combining top-down macro analysis with bottom-up stock selection to identify mispriced investment opportunities in the market [1]. Group 1: Investment Strategy - The company employs a multi-asset strategy and equity portfolio management approach, focusing on earnings, technological disruption, policy shifts, and capital flows [1]. - The analysis aims to deliver high-conviction ideas and contrarian views, providing deep breakdowns of both growth and value stocks [1]. Group 2: Market Positioning - The company utilizes real-time positioning tools, including Bloomberg and various models and data, to enhance investment decisions [1]. - The focus is on identifying potential investment opportunities before the market recognizes them, highlighting a proactive investment approach [1].

Financial Performance - NatWest Group reported a net interest income of £9,388 million for the nine months ended September 2025, a 13.0% increase from £8,307 million in the same period of 2024[17]. - Total income for Q3 2025 was £4,332 million, reflecting an 8.2% increase compared to £4,005 million in Q2 2025[17]. - The company expects income excluding notable items to reach around £16.3 billion for 2025, with a RoTE of greater than 18.0%[15]. - NatWest Group achieved a profit for the period of £4,356 million, a 25.1% increase compared to £3,483 million in the same period of 2024[19]. - Total income for the nine months ended 30 September 2025 reached £12,317 million, compared to £10,878 million in 2024, reflecting a year-over-year increase of 13.2%[51]. - Operating profit before impairment losses for the nine months ended 30 September 2025 was £6,303 million, up from £4,996 million in 2024, indicating a growth of 26.2%[51]. - Profit attributable to ordinary shareholders for the nine months ended September 30, 2025, was £4,086 million, up from £3,271 million in the same period of 2024, reflecting a growth of 24.9%[182]. - Total comprehensive income for the period was £5,021 million, compared to £3,834 million in the same period last year, marking a growth of 30.9%[125]. Capital and Ratios - The Common Equity Tier 1 (CET1) ratio improved to 14.2%, up approximately 60 basis points from Q4 2024 and Q2 2025[14]. - The CET1 ratio stood at 14.2%, exceeding the top end of the target range, supported by RWA management actions of £2.2 billion in Q3 2025[24]. - The CET1 ratio increased to 14.2%, up 60 basis points from 13.6% in 2024, driven by a £1.8 billion increase in CET1 capital[91]. - The return on equity for the nine months ended 30 September 2025 was 19.5%, compared to 17.0% in the same period of 2024[51]. - The cost:income ratio (excluding litigation and conduct) improved to 47.8% for the nine months ended 30 September 2025, down from 52.8% in 2024[51]. - The average Liquidity Coverage Ratio (LCR) was 148%, indicating robust liquidity levels, with £51.6 billion headroom above the 100% minimum requirement[36]. Loans and Deposits - Customer net loans increased by £4.4 billion in Q3 2025, demonstrating strong demand and effective capital deployment[18]. - Net loans to customers (amortised cost) rose to £216.0 billion, with a £4.4 billion increase in Q3 2025 excluding central items[30]. - Customer deposits (excluding central items) decreased by £1.1 billion to £434.7 billion, primarily due to a reduction in savings balances[30]. - Customer deposits as of 30 September 2025 totaled £435.5 billion, a slight decrease of £0.2 billion from £431.1 billion in 2024[53]. - Net loans to customers increased by £3.8 billion in Q3 2025, driven by reverse repo activity in Treasury, bringing the total to £415.3 billion[53]. Impairment and Credit Quality - The net impairment charge was £153 million, or 15 basis points of gross customer loans, reflecting improved credit performance[29]. - Impairment losses for the nine months ended 30 September 2025 were £535 million, compared to £293 million in 2024, reflecting an increase in provisions[51]. - The loan impairment rate was reported at 19 basis points, indicating a stable credit risk environment[60]. - The underlying default rates and total number of defaults remained subdued, indicating stable portfolio performance despite economic challenges[73]. Business Segments Performance - Retail Banking achieved an operating profit of £850 million in Q3 2025, with a return on equity of 26.4%[33]. - Total income for Private Banking & Wealth Management was £284 million in Q3 2025, up 12.3% from £253 million in Q3 2024[37]. - Operating profit for Private Banking & Wealth Management increased to £108 million, reflecting a return on equity of 23.4%[38]. - Total income for Commercial & Institutional was £2,208 million, up 3.6% from Q2 2025 and 6.6% from Q3 2024[42][43]. - Operating profit for Commercial & Institutional reached £1,041 million, with a return on equity of 19.7%[44]. Climate and Sustainability Initiatives - The company provided £7.6 billion in climate and transition finance during Q3 2025, contributing to its target of £200 billion by the end of 2030[26]. - NatWest Group aims to provide £200 billion in climate and transition finance between 1 July 2025 and the end of 2030, supporting customers' climate ambitions[186]. Legal and Regulatory Matters - NatWest Group plc is involved in multiple legal claims regarding the manipulation of USD LIBOR, with a summary judgment granted in favor of the defendants on 25 September 2025, dismissing all claims[141]. - The US Court of Appeals reinstated claims against NWM Plc related to alleged manipulation of Euribor on 22 August 2025, while affirming the dismissal of the Pound Sterling LIBOR case[142]. - NWM Plc settled a foreign exchange claim in Australia for an amount covered by an existing provision, approved by the court in August 2025[143]. - The company has recognized an asset of £153 million related to VAT assessments, which it expects to recover[149].

Financial Data and Key Metrics Changes - Lending has grown 4.4% since year-end to GBP 388 billion, consistent with an annual growth rate of over 4% over the past six years [3][4] - Income increased to GBP 12.1 billion, a 12.5% rise compared to the first nine months of the previous year [5][6] - Operating profit reached GBP 5.8 billion, with attributable profit at GBP 4.1 billion, resulting in a return on tangible equity of 19.5% [6][7] - Earnings per share grew 32.4% year-on-year, and TNAV per share increased 14.6% to 362 pence [7] Business Line Data and Key Metrics Changes - Mortgage lending rose by over GBP 5 billion for the first nine months, supported by new offers for first-time buyers and family-backed mortgages [4] - Unsecured lending grew by GBP 2.9 billion, or 17.3%, aided by the integration of Sainsbury's customers [4] - Commercial and institutional lending increased by GBP 7.9 billion, or 5.5%, particularly in infrastructure and sustainable finance [4][5] - Non-interest income grew due to higher fees from payments, cards, and strong performance in currencies and capital markets [5][9] Market Data and Key Metrics Changes - Deposits increased by 0.8% to GBP 435 billion, reflecting a balance between volume and value in a competitive market [5][11] - Assets under management and administration grew 14.5% to GBP 56 billion, indicating increased customer investment activity [5] Company Strategy and Development Direction - The company is focused on disciplined growth, bank-wide simplification, and effective balance sheet and risk management [3][6] - A new share buyback of GBP 750 million was announced, with 50% already executed [7] - The company aims to support large-scale infrastructure programs and has committed GBP 7.6 billion towards its 2030 Group Climate and Transition Finance target of GBP 200 billion [5] Management's Comments on Operating Environment and Future Outlook - Management noted that despite inflation above the Bank of England's target, the economy is growing with low unemployment and high levels of savings [3] - The company expects one further base rate cut this year, with rates projected to reach 3.75% by year-end [10] - Full-year income guidance has been revised to around GBP 16.3 billion, with returns expected to exceed 18% [6][10] Other Important Information - The cost-income ratio improved by five percentage points to 47.8%, with operating expenses up 2.5% to GBP 5.9 billion [6][12] - The CET1 ratio ended the third quarter at 14.2%, up 60 basis points from the previous quarter [14][15] Q&A Session Summary Question: Deposit momentum and non-interest income drivers - Management discussed that deposits are up around GBP 3.5 billion year-to-date, with different trends across business lines, and highlighted strong momentum in non-interest income driven by cards, payments, and capital markets [19][22] Question: Cost growth expectations and capital management - Management reiterated cost guidance for the year, emphasizing ongoing simplification efforts and the potential for continued cost management [30][34] Question: Loan growth sustainability and income drivers - Management expressed confidence in maintaining loan growth above market levels, with a strong track record and favorable conditions in commercial lending [60][72] Question: CET1 ratio target and deferred tax assets - Management indicated that the CET1 ratio target will be reviewed in February, with expectations for continued capital generation and a slight decrease in deferred tax asset utilization in the coming years [81][83]

Financial Data and Key Metrics Changes - Lending has grown 4.4% since year-end to £388 billion, consistent with an annual growth rate of over 4% over the past six years [3][4] - Income increased to £12.1 billion, up 12.5% compared to the first nine months of the previous year [5][7] - Operating profit reached £5.8 billion, with attributable profit of £4.1 billion, and return on tangible equity at 19.5% [7][8] - Earnings per share grew 32.4% year-on-year, and TNAV per share increased 14.6% to 362 pence [8] Business Line Data and Key Metrics Changes - Mortgage lending rose by over £5 billion for the first nine months, supported by new offers for first-time buyers and family-backed mortgages [4] - Unsecured lending grew by £2.9 billion, or 17.3%, with successful integration of Sainsbury's customers [4] - Commercial and institutional lending increased by £7.9 billion, or 5.5%, particularly in infrastructure and sustainable finance [4][5] - Deposits grew 0.8% to £435 billion, balancing volume with value in a competitive market [5][12] Market Data and Key Metrics Changes - Customer activity remains high, reflecting strong economic conditions with low unemployment and wage growth above inflation [3] - Assets under management and administration increased by 14.5% to £56 billion, contributing to non-interest income growth [5] Company Strategy and Development Direction - The company focuses on disciplined growth, bank-wide simplification, and effective balance sheet and risk management [3][7] - A new share buyback of £750 million was announced, with 50% already executed [8] - The company aims to support large-scale infrastructure programs and has committed £7.6 billion towards its 2030 Climate and Transition Finance target of £200 billion [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the economic environment, expecting continued growth despite inflation above the Bank of England's target [3] - Full-year guidance for income has been revised to around £16.3 billion, with returns expected to exceed 18% [7][10] - The company anticipates one further base rate cut this year, reaching a terminal rate of 3.75% by year-end [11] Other Important Information - The cost-income ratio improved by five percentage points to 47.8%, with operating expenses up 2.5% to £5.9 billion [7][12] - The CET1 ratio ended the third quarter at 14.2%, up 60 basis points from the previous quarter [15][16] Q&A Session Summary Question: Deposit momentum and non-interest income drivers - Management noted a £3.5 billion increase in deposits year-to-date, with varying trends across business lines [20] - Non-interest income showed strong momentum, particularly in cards, payments, and capital markets [23] Question: Cost growth expectations - Management reiterated cost guidance for the year, emphasizing ongoing simplification efforts [31][32] Question: Capital and CRD4 impact - Limited CRD4 impact was noted in the quarter, with expectations for more material effects in Q4 [35] Question: Loan growth sustainability - Management expressed confidence in maintaining above-market loan growth, particularly in commercial and institutional sectors [61] Question: CET1 ratio target and deferred tax assets - Management indicated ongoing discussions regarding CET1 targets, with expectations for reduced capital requirements under Basel 3.1 [83][84]

Financial Data and Key Metrics Changes - Lending has grown 4.4% since year-end to £388 billion, consistent with an annual growth rate of over 4% over the past six years [3][6] - Income increased to $12.1 billion, a 12.5% rise compared to the first nine months of the previous year [5][6] - Costs rose by 2.5% to €5.9 billion, resulting in an operating profit of €5.8 billion and an attributable profit of €4.1 billion [5][6] - Return on tangible equity was reported at 19.5% [5][6] - Earnings per share grew by 32.4% year-on-year, and TNAV per share increased by 14.6% to 3.62p [7] Business Line Data and Key Metrics Changes - Mortgage lending increased by over £5 billion for the first nine months, with new offers for first-time buyers and family-backed mortgages [3][4] - Unsecured lending grew by £2.9 billion or 17.3%, aided by the integration of recently acquired Sainsbury's customers [3][4] - Commercial and institutional lending grew by €7.9 billion or 5.5%, particularly in infrastructure and sustainable finance [4][5] - Non-interest income rose due to higher fees from payments, cards, and strong performance in currencies and capital markets [5][10] Market Data and Key Metrics Changes - Deposits grew by 0.8% to $435 billion, reflecting a balance between volume and value in a competitive market [4][5] - Retail banking deposit balances decreased by £800 million, while private banking balances fell by £700 million due to shifts into investments [13][14] - Commercial institutional deposits saw a slight increase of £400 million [13] Company Strategy and Development Direction - The company is focused on disciplined growth, simplification, and effective balance sheet management [2][19] - A new share buyback of $750 million was announced, with 50% already executed [6] - The company aims to support customers while investing in business growth and delivering attractive returns to shareholders [6][19] Management's Comments on Operating Environment and Future Outlook - Management noted that despite inflation above the Bank of England's target, the economy is growing with low unemployment and high levels of savings [2] - Full-year income guidance was revised to around €16.3 billion, with expected returns greater than 18% [6][11] - The company remains confident in its ability to manage costs and maintain a healthy cost profile moving forward [41][42] Other Important Information - The CET1 ratio at the end of Q3 was 14.2%, with strong capital generation allowing for continued investment and shareholder returns [6][17] - The company expects to complete the buyback by the full-year results [6] Q&A Session Summary Question: Deposit momentum and non-interest income drivers - Management indicated that deposits are up around £3.5 billion year-to-date, with different trends across business lines [25][30] - Non-interest income showed strong momentum, particularly in cards, payments, and capital markets [30] Question: Cost growth expectations - Management reiterated cost guidance for the year, emphasizing ongoing simplification efforts and cost management [40][41] Question: Capital and CRD impact - Limited CRD4 impact was noted for Q3, with expectations for more material impacts in Q4 [44][45] Question: Loan growth sustainability - Management expressed confidence in maintaining strong loan growth, particularly in commercial and institutional sectors [72][73] Question: Future return expectations - Management will provide updated return targets in February, with ongoing discussions about capital requirements and growth [90][96]

Financial Data and Key Metrics Changes - Lending has grown 4.4% since the year-end to £388 billion, consistent with an annual growth rate of over 4% over the past six years [3][5] - Income increased to £12.1 billion, representing a 12.5% rise compared to the first nine months of the previous year [4][5] - Operating profit reached £5.8 billion, with attributable profit at £4.1 billion, and return on tangible equity was reported at 19.5% [5][6] - Earnings per share grew by 32.4% year-on-year, and TNAV per share increased by 14.6% to 362 pence [6] Business Line Data and Key Metrics Changes - Mortgage lending increased by over £5 billion for the first nine months, supported by new offers for first-time buyers and family-backed mortgages [3] - Unsecured lending grew by £2.9 billion, or 17.3%, with successful integration of recently acquired Sainsbury's customers [3] - Commercial and institutional lending grew by £7.9 billion, or 5.5%, particularly in infrastructure, social housing, and sustainable finance [3][4] - Deposits increased by 0.8% to £435 billion, reflecting a balance between volume and value in a competitive market [4][11] Market Data and Key Metrics Changes - The bank attracted an additional 70,000 new customers in the quarter, indicating strong customer activity [3] - Assets under management and administration grew by 14.5% to £56 billion, contributing to non-interest income growth [4] Company Strategy and Development Direction - The company is focused on disciplined growth, bank-wide simplification, and effective balance sheet and risk management [2] - A new share buyback of £750 million was announced, with 50% already executed [5] - The company aims to support customers while investing in the business and delivering attractive returns to shareholders [5][15] Management's Comments on Operating Environment and Future Outlook - Management noted that despite inflation being above the Bank of England's target, the economy is growing with low unemployment and wage growth exceeding inflation [2] - The company expects one further base rate cut this year, with rates projected to reach 3.75% by year-end [10] - Full-year income guidance has been revised to around £16.3 billion, with returns expected to exceed 18% [5][10] Other Important Information - The cost-income ratio improved by five percentage points to 47.8%, with operating expenses up 2.5% to £5.9 billion [5][12] - The CET1 ratio at the end of the third quarter was 14.2%, up 60 basis points from the previous quarter [13][14] Q&A Session Summary Question: Deposit momentum and non-interest income drivers - Management indicated that deposits are up around £3.5 billion year-to-date, with different trends across business lines. Retail fixed-term outflows were noted, but current account balances are up [17][18] - Non-interest income showed strong momentum, particularly in cards, payments, and capital markets, with a focus on maintaining this growth [20] Question: Cost growth expectations and capital management - Management reiterated cost guidance for the year, emphasizing ongoing simplification efforts and the potential for cost control despite inflationary pressures [23][24] - Capital management remains a priority, with expectations for CRD4 impacts in Q4 and a focus on maintaining a CET1 ratio above 13% [28][30] Question: Loan growth sustainability and income drivers - Management expressed confidence in maintaining loan growth above market levels, with a strong track record across all business lines [48][55] - Future income growth is expected to continue, supported by strong customer demand and effective capital deployment [37][41] Question: Non-interest income and market performance - The strong performance in NatWest markets is attributed to strategic integration and robust customer demand, with expectations for continued performance despite market volatility [44][46] Question: Liquidity management and deposit outflows - Management acknowledged a rotation in liquidity from cash to government bonds, with a focus on maintaining a balanced portfolio [79][82]

Core Insights - NatWest's share price has experienced a significant bull run, reaching its highest level since 2008 [1] - The share price has increased by 62% from its lowest point this year, indicating strong market performance [1] - The company's market capitalization has surpassed $60 billion, reflecting its robust growth [1]

Financial Performance - NatWest Group's customer loans reached £435 billion, a 4.4% increase compared to December 2024[5] - Customer deposits totaled £56 billion, up 0.8% from December 2024[5] - Assets Under Management (AUMA) grew to £12.1 billion, a 14.5% increase since December 2024[5] - The Group's attributable profit was £4.1 billion, with a Return on Tangible Equity of 19.5%, compared to 17.0% in the first nine months of 2024[5] - Earnings Per Share (EPS) increased by 32.4% compared to the first nine months of 2024, reaching 51 pence[5] Income and Expenses - Net interest income, excluding notable items, for the first nine months of 2025 was £9.388 billion, a 13.0% increase compared to the same period in 2024[8] - Total income, excluding notable items, for the first nine months of 2025 was £12.128 billion, a 12.5% increase compared to the first nine months of 2024[8] - Other operating expenses for the first nine months of 2025 were £5.884 billion, a 2.5% increase compared to the same period in 2024[8] Capital and Ratios - The CET1 ratio stood at 14.2%, reflecting a 202 basis points capital generation in the first nine months of 2025[5] - Tangible Net Asset Value (TNAV) per share increased by 14.6% compared to the first nine months of 2024, reaching 362 pence[5] - The loan impairment rate was 17 basis points for the first nine months of 2025[8] Lending and Deposits - Total lending across three key business areas increased by £16.3 billion, a 4.4% rise[12] - Customer deposits increased by £3.4 billion, representing a 0.8% growth[15]