NatWest earnings preview: interest rates and government stake sale in focus
NatWest reports annual results on 14 February. Here's what to expect from the UK bank's earnings and the key factors influencing its performance.
What to expect from NatWest's results
Analysts forecast NatWest Group will report a pre-tax profit of £6.1 billion for 2024, slightly below the £6.2 billion recorded in the previous year. The modest decline reflects the impact of easing interest rates on banking sector margins.
The bank's performance has remained resilient thanks to its structural hedges against interest rate volatility, helping to protect income as rates peaked.
NatWest's share price has doubled over the past year, with an 10% gain already in 2025, outperforming many peers as investor sentiment towards UK banking stocks improves.
Market watchers will closely monitor management's guidance on interest rate expectations for 2025, which will shape projections for net interest income - a key revenue driver for retail banks.
Government stake sale implications
The UK government's plan to divest its remaining stake in NatWest by June 2025 marks a significant milestone in the bank's post-financial crisis journey.
This planned exit could impact trading volumes and price action in NatWest shares over the coming months as the market absorbs additional supply.
Investors will look for details on how the stake sale might affect capital distribution plans, including dividends and share buybacks.
The transition to full private ownership could allow NatWest greater strategic flexibility in its operations and capital allocation decisions.
Net interest income outlook
With interest rates expected to decline throughout 2025, NatWest's net interest margin (NIM) will be under scrutiny from analysts and investors.
The bank's structural hedging program has helped protect income from rate volatility, but lower rates will likely pressure margins over time.
Management commentary on deposit trends and competition in 2025 will be important, as these factors influence funding costs and lending spreads.
Analysts will assess NatWest's ability to offset potential NIM compression through growth in lending volumes and fee income.
Cost management and efficiency
Operating costs remain a key focus area as NatWest navigates the changing interest rate environment in 2025.
The bank's ongoing digital transformation initiatives aim to improve efficiency and reduce the cost-to-income ratio.
Investors will watch for updates on branch network optimisation and technology investments that could impact future profitability.
Any guidance on cost targets for 2025 and beyond will be closely monitored by the market.
How to trade NatWest earnings
Before trading NatWest's results, research the company thoroughly and consider the broader banking sector outlook.
- Open a trading account with us to access NatWest shares through various trading methods.
- Monitor price movements and market sentiment leading up to the earnings announcement.
- Consider implementing risk management strategies given potential volatility around the results.
Technical analysis and market positioning
NatWest shares have shown strong momentum, trading above key moving averages on the daily chart.
This has been the case since early 2024, and so far the rally shows no sign of slowing. Weakness early in January was swiftly bought, and having broken through the 2015 high at 400p, the next target becomes 570p from April 2010.
NatWest chart
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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