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Natwest shares jumped to a 13-year high on Monday after a leading broker upgraded the bank’s price target.
Shares in the London-listed bank, formerly known as Royal Bank of Scotland Group (RBS), jumped over three per cent on Monday to just under 390p per share.
The discernible jump came after analysts at Peel Hunt upgraded the bank’s price target from 410p to 450p. The bank cited its recent momentum and earnings upgrades, as well as liberation from knotty state intervention and legal issues.
Natwest has also escaped the fallout from the motor finance fiasco, which has sent a number of the UK’s major banking groups into a tailspin over the prospect of hefty fines.
“The [third quarter] period witnessed strong performances in all three of Natwest Group’s principal operating divisions,” Peel Hunt analysts Robert Sage and Stuart Duncan wrote in a note to markets.
“Although these across-the-board positive outcomes might soften in [the fourth quarter]… the underlying trajectory of travel is stronger than we and consensus had expected and is reflected in our upwardly revised estimates.”
Natwest shares spike after UK government steps back
Natwest’s share price has risen over 50 per cent since the UK government relinquished its controlling stake in the bank in March.
The group was one of the largest casualties of the financial crisis between 2007 and 2009. It briefly was the largest bank in the world in 2007 before its share price collapsed by over 96 per cent in just a few months.
The collapse led to a string of bailouts and de facto nationalisation in 2008, with the government maintaining its majority stake until March 2022.
The previous government had announced plans further to water down its stake in the bank, but Chancellor has put those plans on ice as she and her officials establish their preferred course of action.
She is expected to carry out an institutional offering of shares in the coming months, subject to market conditions.