London, Jan 26, 2026, 09:06 GMT — Regular session
- NatWest Group Plc (NWG.L) shares edged up 0.2%, hitting 647.6 pence in early London deals
- A Reuters report indicated NatWest may raise its 2027 profit target, joining other major UK lenders in doing so
- Bank earnings reports are in focus this week, with NatWest set to release its full-year results on Feb. 13
NatWest Group Plc shares nudged up on Monday following a report suggesting the UK lender may lift a key profit target in its upcoming annual results. The stock edged 0.15% higher to 647.6 pence, with volume rising after the open.
Britain’s largest banks are set to update guidance for investors who have pushed the sector higher this year. NatWest plans to raise its 2027 return on tangible equity target to as much as 17%, up from 15%, according to two sources familiar with the plans. HSBC and Barclays are also expected to revise their targets upward, though the banks declined to comment. “UK banks have benefited from earnings resilience … supported by higher interest rates, robust credit quality and tighter cost control,” said Peter Rothwell, head of banking at KPMG UK. Reuters
Why it matters now: bank targets shape expectations for dividends and buybacks, directly influencing valuations. Return on tangible equity, or ROTE, gauges profit relative to the bank’s tangible shareholder funds, excluding elements like goodwill.
For NatWest, changing the goal would signal management’s belief that today’s earnings strength will extend beyond the current cycle. Investors tend to react sharply when lenders set targets that seem overly ambitious, even if the headline figure appears more impressive.
NatWest shares have slipped from their 2026 high, with Monday’s early action showing little change. Yet the stock has quickly turned into a bellwether for UK retail banks as earnings season gets underway.
Traders will be alert to whether higher targets are paired with stricter cost controls, a more stable outlook on bad-loan provisions, and, most importantly, the implications for capital returns. When a bank boosts profit forecasts but stays cautious on payouts, the stock often loses momentum quickly.
The backdrop is shifting. Should interest rates drop more quickly than banks anticipate, net interest margins—the difference between loan earnings and deposit costs—could shrink, making targets tougher to reach.
Timing is another straightforward risk. Raising targets too much can corner a management team right as the economy slows, credit losses mount, or regulators tighten capital requirements.
Early bank results this week will serve as a key test for investors, who want to see if the positive mood extends beyond NatWest. How Lloyds and continental rivals perform will be crucial for UK bank sentiment.
NatWest is set to report its annual results on Friday, Feb. 13, with the numbers dropping at 7 a.m. GMT. A management presentation will follow later that morning.
