Goldman Sachs Sees New Drivers for European Banks, Adjusts NatWest (NWG) Stance

Core Viewpoint - NatWest Group plc is experiencing significant growth, with a notable increase in stock price and strong financial performance, despite potential risks from falling UK interest rates [2][3][4]. Financial Performance - The company's profit before tax increased by 30.4% year over year to £2.18 billion, while total income rose by 15.7% to £4.33 billion [3]. - Non-interest income climbed by 25.9% to £0.91 billion, and net interest income grew by 12.7% to £3.09 billion, indicating a shift towards fee-based businesses [4]. Market Position and Strategy - Goldman Sachs downgraded NatWest to Neutral but raised the price target to 685 GBp, reflecting a constructive outlook on the European banking sector [2]. - NatWest has implemented structural hedges to protect lending margins against potential rate cuts, extending its position into 2027, which may lead to industry-leading margins [5]. Customer Base and Operations - NatWest serves over 20 million customers and operates across retail, commercial, and private banking sectors in the UK [6].