NatWest stock: UBS cuts target as flat margins cloud outlook

UBS has lowered its price target for NatWest Group to 775 pence from 835 pence while retaining a Buy rating, according to Proactive via Yahoo Finance. The November 3 report said management's expectation of broadly stable net interest margins through 2027 was weaker than the market had anticipated.

Flat Margins Pressure Forecasts

NatWest's third-quarter net interest margin reached 2.50 percent, one basis point above the previous quarter and 15 basis points above the year-earlier level when excluding one-off adjustments. Market expectations had pointed to an expansion of more than 10 basis points in 2027, leaving UBS concerned that the flatter path could weigh on earnings growth.

UBS estimated that the margin outlook could leave NatWest's 2027 pretax profit 4 percent to 5 percent below consensus. The broker cut its adjusted earnings-per-share forecasts by 2 percent for 2026 and by 3 percent for both 2027 and 2028.

The third-quarter picture was mixed. Adjusted pretax profit of GBP 2.2 billion was 2 percent below consensus, while net interest income was 1 percent below market expectations. Operating costs were better than anticipated, but loan impairments were higher than forecast.

Capital Offers A Counterweight

UBS also identified factors supporting its positive stance. The broker expects risk-weighted assets of GBP 210 billion from January 2027, below the GBP 214 billion consensus estimate. It also expects a 43-basis-point reduction in NatWest's Pillar 2 capital requirement, which could release approximately GBP 1 billion of additional capital headroom.

Competitive pressure from Lloyds Banking Group and HSBC remains a concern for UK retail banks, according to the report. UBS nevertheless argued that NatWest's valuation does not fully reflect its earnings potential and capital generation, with an expected dividend yield of around 6 percent supporting the investment case.

NatWest stock traded at 7.13 euros on Lang & Schwarz at 12:19 CET on Monday, November 9, 2026. Investors can follow the real-time quote of NatWest stock.

The FTSE 100 provides the relevant market context for UK-listed banks.

Read more news and analyses on NatWest stock.