LONDON, June 24, 2026, 13:05 BST
NatWest Group shares were little changed on Wednesday but had kept about three-quarters of Monday’s 3.95% jump. At 1302 BST in open London trade, the stock was down 0.09% at 656.6 pence after touching 661.4 pence. It remained about 2.9% above Friday’s close.
Monday’s move was sector-wide. Barclays gained 3.9% and NatWest about 4% after Prime Minister Keir Starmer resigned and Andy Burnham emerged as the front-runner to replace him. Morningstar equities strategist Michael Field said, “The potential election of a popular candidate like Andy Burnham would likely improve market perception.” Reuters
Rate pricing has since become the clearer earnings driver. LSEG data showed traders expected at least one 25-basis-point Bank of England increase before year-end — a quarter-point move that would imply Bank Rate of at least 4%, from 3.75%. NatWest’s first-quarter plan assumed 3.75% through 2026. CEO Paul Thwaite said the bank had sped up its structural hedge, a portfolio that locks in returns on stable deposits, “supporting income growth in the years ahead.” Reuters
The market rate is also above NatWest’s published analyst consensus from May. The average model used a 3.86% year-end rate and a 2.53% net interest margin — interest income less funding costs as a share of interest-earning assets. Comparable 2026 income averaged £17.712 billion, against management guidance at the top of a £17.2 billion-to-£17.6 billion range, excluding Evelyn Partners.
At 656.6p, the shares trade at about 9 times the May consensus for 2026 earnings per share of 73.2p. The implied dividend yield is 5.6%, based on a 36.5p payout estimate. The price is 1.68 times forecast tangible book value, or net assets after goodwill and other intangibles.
First-quarter results show why the rate path matters. Net interest income rose 12.2% to £3.394 billion and net interest margin widened to 2.47% from 2.27%. Pretax operating profit rose 12.2% to £2.033 billion, while impairments climbed 49.7% to £283 million.
But the political leg can break. Reuters reported that analysts see a possible rise in bank taxes under a new Labour leader. State Street strategist Michael Metcalfe said, “We still need to get clarity on what will change if the fiscal rules stay the same.” A higher levy would cut capital returns even if rates lift revenue. Reuters
The economic risk is already visible. Britain’s June services purchasing managers’ index fell to 48.7, its lowest since January 2023, and new business was the weakest since January 2021. NatWest took a £140 million macroeconomic provision in the first quarter and forecast UK growth of 0.4% in 2026. A deeper contraction could push impairments above its guidance of less than 25 basis points of loans.
NatWest is due to report first-half results on July 31. The test is whether it raises its rate assumption or income range, and whether the June slowdown changes its impairment view.
