The share price of Natwest has soared to its highest point since February 2015 in early trading today, as investors show confidence in the bank's growth prospects for 2025.
The º£½ÇÊÓƵ lender's stock has surged by 95 per cent over the past year, marking it as one of the FTSE 100's top performers, with no signs of momentum waning, as reported by .
Last month, RBC analyst Benjamin Toms noted the bank's "attractive net interest income (NII) momentum" heading into 2025.
NII is the differential between the interest banks earn on loans and other assets and what they pay out on deposits, with higher rates typically bolstering this income by allowing banks to charge more for lending.
"The domestic banks have large structural hedges, and based on current rate expectations, we think the hedge roll benefit will more than offset the impact of rate cuts," Bank of America analysts stated.
They also suggested that "Additional upside may come from higher loan growth, particularly in commercial, given the government’s growth agenda."
"Natwest should be best-placed to take advantage of any º£½ÇÊÓƵ growth" among º£½ÇÊÓƵ banks, they continued, forecasting an annual four per cent increase in the bank's loan book.
The analysts underscored Natwest's leverage to º£½ÇÊÓƵ economic expansion, especially in the corporate and commercial sectors, due to its status as Britain's largest commercial bank. Furthermore, last summer saw Natwest expand its market presence by acquiring Sainsbury’s Bank and the residential mortgage portfolio from Metro Bank.
RBC's Toms highlighted that Natwest stands out for having no exposure to the motor finance cases that are causing issues for many banks, with numerous lenders facing hefty fines for not disclosing commission rates to customers. Analysts at Bank of America have set a price target of 500p for Natwest, compared to its current price of 415p.
