NatWest Group (NWG) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). An upward trend in earnings estimates -- one of the most powerful forces impacting stock prices -- has triggered this rating change.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.The power of a ch ...

Company Overview - NatWest Group (NWG) is headquartered in London and operates in the Finance sector, with a stock price change of 27.83% since the beginning of the year [3] - The bank currently pays a dividend of $0.39 per share, resulting in a dividend yield of 5.94%, which is significantly higher than the Banks - Foreign industry's yield of 3.73% and the S&P 500's yield of 1.6% [3] Dividend Performance - The current annualized dividend of $0.77 represents a 75% increase from the previous year, with a five-year average annual increase of 46.32% [4] - NatWest Group has increased its dividend five times on a year-over-year basis over the past five years [4] - The current payout ratio is 52%, indicating that the company pays out 52% of its trailing 12-month earnings per share as dividends [4] Earnings Outlook - For the fiscal year, NWG anticipates solid earnings growth, with the Zacks Consensus Estimate for 2025 at $1.50 per share, reflecting a 12.78% increase from the previous year [5] Investment Appeal - Dividends are favored by investors for various reasons, including tax advantages and reduced overall portfolio risk, which can enhance stock investing profits [6] - Larger, established companies are more likely to offer dividends compared to tech start-ups or high-growth businesses [7] - NWG is positioned as an attractive dividend play and a compelling investment opportunity, holding a Zacks Rank of 1 (Strong Buy) [7]

Financial Performance - Attributable profit for Q1 2025 was £1,252 million, with earnings per share of 15.5 pence and a return on tangible equity (RoTE) of 18.5%[14] - Operating profit before tax for Q1 2025 was £1,812 million, representing a 21.4% increase compared to Q4 2024[19] - Total income for Q1 2025 was £3,980 million, an increase of 14.5% compared to £3,475 million in Q1 2024[131] - Profit for the period increased to £1,341 million in Q1 2025, up 1% from £1,328 million in Q4 2024 and significantly up from £987 million in Q1 2024[106] - Total comprehensive income for the period reached £1,492 million, compared to £1,267 million in Q4 2024 and £903 million in Q1 2024, reflecting a strong year-over-year growth[106] Income and Revenue Growth - Total income excluding notable items increased by £80 million, or 2.1%, compared to Q4 2024, reaching £3,952 million, and was £538 million higher than Q1 2024[14] - Total income increased by 4.1% to £3,980 million compared to Q4 2024 and was 14.5% higher than Q1 2024, driven by deposit margin expansion and strong customer activity in trading income[24] - Total income increased by £56 million, or 2.7%, compared to Q4 2024, driven by strong customer activity in markets trading income and customer lending growth[39] Customer Loans and Deposits - Net loans to customers excluding central items rose by £3.4 billion, or 0.9%, to £371.9 billion, driven primarily by growth in Retail Banking mortgages and Corporate & Institutions[14] - Customer deposits excluding central items increased by £2.1 billion, or 0.5%, in the quarter, despite seasonal tax payment impacts[14] - Customer deposits rose to £434,617 million as of 31 March 2025, slightly up from £433,490 million at the end of 2024[108] - Net loans to customers increased by £3.4 billion to £371.9 billion, primarily due to a £2.0 billion increase in Retail Banking mortgage balances[24] Capital and Ratios - Common Equity Tier 1 (CET1) ratio improved to 13.8%, up 20 basis points from December 2024[16] - The CET1 ratio increased by 20 basis points to 13.8%, supported by attributable profit, despite an increase in risk-weighted assets (RWAs) of £3.8 billion to £187.0 billion[28] - The leverage ratio increased by 20 basis points to 5.2%, due to a £1.5 billion increase in Tier 1 capital, offset by a £5.3 billion increase in leverage exposure[77] - The liquidity coverage ratio (LCR) remained strong at 150%, with £54.2 billion headroom above the 100% minimum requirement[20] Impairment and Credit Quality - The net impairment charge was £189 million, or 19 basis points of gross customer loans, with an ECL provision of £3.5 billion and an ECL coverage ratio increasing from 0.83% to 0.86%[24] - An impairment charge of £78 million in Q1 2025, up from £39 million in Q1 2024, reflecting higher Stage 3 charges from larger counterparties[44] - ECL provisions by stage showed £1,890 million for Stage 1, £787 million for Stage 2, and £2,143 million for Stage 3, indicating a significant focus on higher-risk segments[67] Strategic Initiatives - The company continues to target providing £100 billion in climate and sustainable funding and financing by the end of 2025[14] - NatWest Group aims to provide £100 billion in climate and sustainable funding and financing by the end of 2025, with a target of at least £10 billion in lending for residential properties with EPC ratings A and B[142] Operational Efficiency - The cost:income ratio (excluding litigation and conduct) improved to 48.6% in Q1 2025 from 58.4% in Q1 2024[133] - Other operating expenses were £119 million, or 10.5%, lower than Q4 2024, mainly due to the non-repeat of the Q4 2024 annual Bank Levy[40] Employee and Market Data - The number of employees (FTEs) was reported at 61,300[50] - The average total equity increased to £40,354 million in Q1 2025 from £37,490 million in Q1 2024, reflecting a growth of 5.0%[139] Market Position and Growth - Retail Banking achieved a return on equity of 24.5% and an operating profit of £750 million, benefiting from deposit margin expansion[26] - Commercial & Institutional generated total income of £2,142 million, with an operating profit of £1,020 million and a return on equity of 19.3%[36]

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Investors in NatWest Group plc (NWG) need to pay close attention to the stock based on moves in the options market lately. That is because the May 16, 2025 $5 Put had some of the highest implied volatility of all equity options today. What is Implied Volatility?Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mea ...

Core Viewpoint - NatWest Group Plc has shown strong share price performance over the last year, primarily supported by the U.K. government's stake selldown, despite previous bearish sentiments towards the company [1]. Group 1: Company Performance - The share price of NatWest Group Plc has been robust in the past year [1]. - The performance is attributed to the U.K. government's reduction of its stake in the company [1]. Group 2: Analyst Background - The analysis is provided by a fund manager/analyst with over 18 years of experience in the financial sector, specifically in portfolio management [1].

Company Overview - NatWest Group (NWG) is headquartered in London and has experienced a price change of 17.9% this year [3] - The company currently pays a dividend of $0.38 per share, resulting in a dividend yield of 6.35%, which is significantly higher than the Banks - Foreign industry's yield of 3.7% and the S&P 500's yield of 1.59% [3] Dividend Performance - The current annualized dividend of $0.76 represents a 72.7% increase from the previous year [4] - Over the last 5 years, NatWest Group has increased its dividend 4 times year-over-year, with an average annual increase of 41.06% [4] - The company's current payout ratio is 23%, indicating that it paid out 23% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - The Zacks Consensus Estimate for NatWest Group's earnings for 2025 is $1.42 per share, reflecting a year-over-year growth rate of 6.77% [5] Investment Appeal - NatWest Group is considered a compelling investment opportunity due to its attractive dividend yield and strong Zacks Rank of 1 (Strong Buy) [7]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell even higher, with the expectation that established trends will continue [1] Company Overview: NatWest Group (NWG) - NatWest Group currently holds a Momentum Style Score of B, indicating a favorable position in momentum investing [3] - The company has a Zacks Rank of 1 (Strong Buy), which historically outperforms the market when combined with a Style Score of A or B [4] Performance Metrics - Over the past week, NWG shares increased by 5.26%, significantly outperforming the Zacks Banks - Foreign industry, which rose by only 0.17% [6] - In a longer timeframe, NWG shares have appreciated by 11.07% over the past month, compared to the industry's 5.62% [6] - Over the last quarter, NWG shares rose by 15.88%, and over the past year, they gained an impressive 98.03%, while the S&P 500 saw movements of -0.72% and 18.98%, respectively [7] Trading Volume - The average 20-day trading volume for NWG is 3,464,793 shares, which serves as a bullish indicator when combined with rising stock prices [8] Earnings Outlook - In the past two months, one earnings estimate for NWG has increased, while none have decreased, raising the consensus estimate from $1.35 to $1.42 [10] - For the next fiscal year, one estimate has also moved upwards with no downward revisions during the same period [10] Conclusion - Considering the positive performance metrics and earnings outlook, NWG is positioned as a 1 (Strong Buy) stock with a Momentum Score of B, making it a strong candidate for near-term investment [12]

Core Viewpoint - NatWest Group (NWG) has been upgraded to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [3][5]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [3]. Business Improvement Indicators - The increase in earnings estimates for NatWest indicates an improvement in the company's underlying business, which is expected to positively influence its stock price [4][9]. - Analysts have raised their earnings estimates for NatWest, with the Zacks Consensus Estimate increasing by 5.2% over the past three months [7]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [6][8]. - NatWest's upgrade to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [9].

Financial Performance - NatWest Group reported an income of £14,703 million for 2024, slightly down from £14,752 million in 2023[21]. - Profit before tax for the year was £6,195 million, compared to £6,178 million in 2023[21]. - The return on tangible equity was 17.5%, slightly down from 17.8% in 2023[22]. - NatWest Group achieved a strong financial performance in 2024, with income excluding notable items of £14.6 billion and a return on tangible equity (RoTE) of 17.5%[77]. - Total income excluding notable items for 2024 was £14,648 million, reflecting a 2.2% increase compared to 2023, driven by deposit margin expansion and lending growth[116]. - Total income for Retail Banking decreased to £5,650 million in 2024 from £5,931 million in 2023, representing a decline of 4.7%[163]. Customer Growth and Engagement - The operating profit before tax increased to £6.2 billion, and the bank welcomed approximately 500,000 new customers[78]. - In 2024, NatWest Group added approximately 500,000 new customers in Retail Banking, around 10,000 in Commercial & Institutional, and saw a 26% increase in referrals in Private Banking[115]. - The number of active mobile app users reached 10.5 million, with an average of 33 logins per month, indicating strong user engagement[165]. - NatWest Group serves over 19 million customers across its retail, private, and commercial banking sectors[160]. Loans and Deposits - Loans to customers increased to £400.3 billion, up from £381.4 billion in 2023, reflecting a growth of 5.0%[21]. - Customer deposits rose to £433.5 billion, a marginal increase from £431.4 billion in 2023[21]. - The bank's lending to business customers grew by £10 billion, and it welcomed 91,000 new start-ups in 2024[80]. - Customer deposits increased to £194.8 billion in 2024, up from £188.0 billion in 2023, marking a growth of 8.8%[163]. Shareholder Returns - Total capital returned to shareholders reached £4.0 billion, an increase from £3.6 billion in 2023[22]. - The bank returned £4.0 billion to shareholders through dividends and buybacks, with dividends per share increasing by 26%[79]. - The ordinary dividend per share increased to 21.5 pence in 2024, reflecting a 26% rise from 2023[147]. - Total buybacks in 2024 amounted to £2.2 billion, representing a 9% increase compared to 2023[147]. - The bank plans to increase its ordinary dividend payout ratio from approximately 40% to 50% starting in 2025[79]. Capital and Ratios - The Common Equity Tier 1 (CET1) ratio improved to 13.6%, compared to 13.4% in 2023[24]. - The Common Equity Tier 1 (CET1) ratio improved to 13.6%, up 20 basis points from 2023, primarily due to attributable profit[116]. - The loan impairment rate was 9 basis points in 2024, significantly lower than the 19 basis points average from 2018 to 2023[115]. Technology and Innovation - NatWest Group invested over £1.1 billion in 2024 to enhance technology capabilities and better serve customers[93]. - The bank's strategy focuses on becoming more technology-enabled and simplifying operations to better serve customer needs[50]. - The implementation of Generative AI-enabled tools has allowed advisors to spend more time with clients[200]. Climate and Sustainable Funding - NatWest Group aims to provide £100 billion in climate and sustainable funding by the end of 2025, having already provided £93.4 billion[37]. - NatWest Group provided £31.5 billion in climate and sustainable funding in 2024, reaching a cumulative total of £93.4 billion towards its £100 billion target by the end of 2025[82]. - NatWest Group provided £93.4 billion in climate and sustainable funding and financing towards a £100 billion target set for the period from July 2021 to the end of 2025[115][126]. Market Position and Strategy - The UK Government's shareholding in NatWest Group decreased from approximately 38% in December 2023 to 9.99% in December 2024, with expectations for complete divestment by 2025[59][60]. - NatWest Group's strategy focuses on disciplined growth, simplification, and active balance sheet management to create shareholder value[76]. - NatWest Group's strategy focuses on disciplined growth, simplification, and active balance sheet management to deliver attractive returns to shareholders[143]. - The bank's new intellectual property-backed lending initiative aims to support high-growth businesses lacking traditional fixed assets[136]. Customer Satisfaction - The Net Promoter Score (NPS) for Retail Banking increased from 21 in Q4 2023 to 23 in Q4 2024, indicating improved customer satisfaction[122]. - NatWest Group's digital engagement remained high, with 79% of Retail Banking customers banking entirely digitally in 2024, up from 77% in 2023[115].