Momentum investing revolves around the idea of following a stock's recent trend in either direction. In the 'long' context, investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades. Even though momentum is a popular stock cha ...

Lubo Ivanko I did wonder whether NatWest stock (NYSE:NWG) had run its course when I I last covered the bank back in May. It wasrit that a then-valuation of 1.1x tangible book value was expensive as such, but with the bank guiding for a circa 12-13% return on tangible equity ("ROTE"), theses shares were as close to fair value as they had been for a long time, and this ultimately drove my downgrade to 'Hold'. That call was clearly premature. Not only have these shares continued their excellent run, outperform ...

Financial Data and Key Metrics Changes - The company reported income of £7 billion and operating profit before tax of £3 billion for the first half of 2024, with attributable profit of £2.1 billion and a return on tangible equity (RoTE) of 16.4% [34][39] - The interim dividend was announced at 6p, representing a 9% increase from the previous year, supported by a reduction in the number of ordinary shares from 8.9 billion to 8.3 billion [30][35] - The tangible net asset value per share improved by 16% to 304p, with expectations for continued growth into 2025 and 2026 [30] Business Line Data and Key Metrics Changes - Retail Banking saw a charge of 12 basis points reflecting stable Stage 3 inflows, while Commercial & Institutional generated higher lending and financing fees [42][50] - Lending in the commercial mid-market business grew by £1.8 billion, and unsecured borrowing increased by around 19% due to acquisitions [7][44] - The mortgage portfolio from Metro Bank, valued at £2.5 billion, is expected to close in the second half of the year, enhancing the company's position in the mortgage market [31][44] Market Data and Key Metrics Changes - The company experienced deposit growth of over £6 billion across its three businesses, with total deposits reaching £425 billion [28][73] - The average interest rate on customer deposit funding stabilized at 2.1%, reflecting modest changes in mix and limited adjustments to deposit product rates [74] - The structural hedge is expected to deliver higher income in 2024 than in 2023, with £2.9 billion locked in for 2025 and 2026 [48][76] Company Strategy and Development Direction - The company is focused on disciplined growth through acquisitions that are EPS and RoTE accretive, with a target to reach £100 billion in climate and sustainable funding by the end of 2025 [2][28] - The strategic priorities include disciplined growth, bank-wide simplification, and active balance sheet and risk management [63][62] - The company aims to maintain a CET1 ratio of 13% to 14% while targeting a payout ratio of around 40% [40][81] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the economic outlook, noting improved consumer and business confidence, which has not yet led to interest rate cuts by the Bank of England [41][39] - The company anticipates continued NIM expansion, driven by business performance, although rate cuts may moderate this growth [24][86] - The management remains focused on generating capital to reinvest in the business and return value to shareholders [61][39] Other Important Information - The company has reduced risk-weighted assets (RWAs) by £5.5 billion, with a target of around £200 billion by the end of 2025 [52][81] - The company is actively managing its risk-weighted assets and has delivered a £4.3 billion reduction in the first half through various means [32][56] - The company is enhancing its digital transformation efforts, including improvements in customer journeys and the introduction of generative AI in customer interactions [38] Q&A Session Summary Question: What is the outlook for organic growth? - Management indicated that while they do not provide specific guidance on individual lines, they are focused on disciplined growth and have seen positive results in deposit growth and market share [4][130] Question: How does the company view the impact of rate cuts on NIM? - Management expects ongoing benefits from the hedge to offset deposit mix changes, but acknowledges that rate cuts will slow the pace of growth seen in the first half [86][24] Question: What is the company's strategy regarding capital management and distributions? - The company prioritizes ordinary dividends and has announced a 6p interim dividend, with plans to evaluate future distributions in conjunction with the Board [96][118]

Financial Performance - Profit attributable to ordinary shareholders for the half year ended 30 June 2024 was £2,099 million, down from £2,299 million in the same period of 2023, representing a decrease of 8.7%[11] - Return on equity for the half year ended 30 June 2024 was 11.2%, compared to 12.6% for the same period in 2023, indicating a decline of 1.4 percentage points[11] - Total income for the half year ended June 30, 2024, was £7,134 million, down from £7,727 million in the same period last year, representing a decrease of 7.7%[20] - Operating profit for H1 2024 was £3,029 million, with a return on equity of 11.2% and a return on tangible equity (RoTE) of 16.4%[64] - The company reported a profit for the period of £2,239 million, down 7.5% from £2,420 million in H1 2023[61] Equity and Capital - Adjusted total tangible equity as of 30 June 2024 was £25,626 million, slightly up from £25,210 million a year earlier, reflecting an increase of 1.7%[11] - Average total equity for the half year ended 30 June 2024 was £37,535 million, compared to £36,562 million for the same period in 2023, showing an increase of 2.7%[11] - The Common Equity Tier 1 (CET1) ratio increased to 13.6%, reflecting a 10 basis points rise from Q1 2024 due to attributable profit and a reduction in RWAs[59] - The company targets a CET1 ratio in the range of 13-14% and expects RWAs to be around £200 billion by the end of 2025[60] Operating Expenses - Operating expenses (excluding litigation and conduct) for the half year ended June 30, 2024, were £4,057 million, up from £3,915 million in the same period last year, reflecting a rise of 3.6%[23] - The cost:income ratio (excluding litigation and conduct) for the half year ended June 30, 2024, was 55.5%, compared to 49.3% for the same period in 2023, indicating increased operational costs relative to income[21] - Operating expenses for H1 2024 were £2,150 million, up from £1,987 million in H1 2023[97] Loans and Deposits - As of June 30, 2024, NatWest Group's loans to customers (excluding reverse repos) amounted to £354.37 billion, slightly down from £354.89 billion as of March 31, 2024[24] - Customer deposits (excluding repos) reached £426.13 billion as of June 30, 2024, compared to £421.36 billion as of March 31, 2024[24] - The loan-to-deposit ratio (excluding repos and reverse repos) was 83% as of June 30, 2024, an increase from 84% as of March 31, 2024[24] - Customer deposits increased to £433.0 billion, with total assets reaching £690.3 billion[131] Risk and Impairment - Net impairment charge of £48 million in H1 2024, representing 3 basis points of gross customer loans, with stable default levels[58] - The loan impairment rate improved to (5) basis points, with impairment provisions totaling £3.3 billion[131] - The ECL (Expected Credit Loss) provision at 1 January 2024 was £3.645 billion, with adjustments reflecting changes in economic forecasts and risk metrics[153] Acquisitions and Agreements - NatWest Group announced an agreement to acquire retail banking assets and liabilities from Sainsbury's Bank for approximately £2.5 billion, expected to complete in the first half of 2025[38] - The company agreed to acquire Sainsbury's Bank's credit card, unsecured personal loans, and savings balances, expected to add around one million customer accounts to its Retail Banking business[59] Economic Outlook - The ongoing economic and political risks, including inflation and interest rate fluctuations, may adversely affect NatWest Group's business and financial condition[25] - The Bank of England's base rate is expected to average 5.10% in 2024, with a downside scenario suggesting a rate of 4.69%[143] - The unemployment rate is projected to peak at 5.8% in Q3 2025, with a downside scenario suggesting a peak of 8.5% in Q4 2025[146] Customer Segments - Retail Banking reported an operating profit of £1.1 billion and a return on equity of 18.4% for H1 2024[114] - Commercial & Institutional reported a total income increase of £52 million, or 1.4%, compared to H1 2023, supported by client-driven capital markets activity[123] - Private Banking's total income decreased by £123 million, or 21.7%, compared to H1 2023, reflecting a change in deposit mix[118]

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While many investors like to look for momentum in stocks, this can be very tough to define. There is a lot of debate surrounding which metrics are the best to focus on and which are poor quality indicators of future performance. The Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us. It's also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. NatWest Group current ...

Acquisition Overview - NatWest Group plc (NWG) has agreed to acquire the retail banking assets and liabilities of Sainsbury's Bank plc, aligning with its growth strategy to enhance market presence [1] - The acquisition includes approximately £2.5 billion in gross customer assets, comprising £1.4 billion in unsecured personal loans and £1.1 billion in credit card balances, alongside £2.6 billion in customer deposits [3] - The deal will bring an additional 1 million customer accounts to NatWest [3] Strategic Rationale - The transaction is a strategic opportunity for NatWest to expand its retail banking business, particularly in unsecured personal lending and credit card sectors [2] - NatWest aims to leverage its expertise and digital banking capabilities to enhance services for the new customer base [2] - The acquisition is expected to be accretive to earnings and return on tangible equity, though it will reduce NatWest's Common Equity Tier 1 (CET1) ratio by 20 basis points upon completion [12] Transaction Details - Sainsbury's will pay NatWest a £125 million fee for assuming the assets and liabilities [4] - The transaction will be completed through NatWest's subsidiary, National Westminster Bank plc, under Part VII of the Financial Services and Markets Act 2000, pending court and regulatory approvals [9] - The acquisition excludes Sainsbury's Bank's operational infrastructure, commission income businesses (e.g., ATMs, insurance, travel money services), and Argos Financial Services [13][16] Industry Context - This move follows a similar transaction by Barclays, which acquired Tesco's retail banking business for £600 million, including £8.3 billion in unsecured lending balances [7] - NatWest's shares have surged 24.6% in the past three months, significantly outperforming the industry's growth of 0.6% [10] Sainsbury's Divestiture Strategy - Sainsbury's decision to divest its banking unit is part of a broader strategy to refocus on its core retail business, streamlining operations and concentrating resources on delivering quality and value in its primary market [5]

Sainsbury's, on the other hand, will retain its commission-income businesses such as insurance, ATMs, and travel money, which are considered capital-light and profitable, and have a strong connection to its core retail operations. The retailer plans to return at least £250 million of excess capital to investors after the disposal of its banking business. NatWest Group, one of the largest banks in the U.K., has announced its acquisition of the banking business of Sainsbury's, the second-largest grocer in the ...

The price trend for NatWest Group (NWG) has been bearish lately and the stock has lost 5.4% over the past four weeks. However, the formation of a hammer chart pattern in its last trading session indicates that the stock could witness a trend reversal soon, as bulls might have gained significant control over the price to help it find support. The formation of a hammer pattern is considered a technical indication of nearing a bottom with likely subsiding of selling pressure. But this is not the only factor th ...

Momentum investing is all about the idea of following a stock's recent trend, which can be in either direction. In the 'long' context, investors will essentially be "buying high, but hoping to sell even higher." And for investors following this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades. You ...