Berenberg reiterates 'buy' rating on NatWest

Analysts at Berenberg reiterated their 'buy' rating and 300.0p target price on major retail and commercial bank NatWest on Monday as it said the group's earnings outlook was "bright".

Berenberg stated that while the bank's cost guidance was, in isolation, "somewhat disappointing", it believes this will be "more than offset" by improvements in its revenue guidance.

The German bank also said updated guidance on the benefit to NatWest from rising interest rates also increased its conviction that consensus expectations of the bank's revenue growth were too low.

"Changes to our estimates largely reflect the reclassification of Ulster Bank's discontinued operations. Our underlying earnings are modestly weaker, reflecting higher costs (offset partially by higher revenues," said the analysts.

"Trading on 0.9x TBV for an FY 2023E RoTE of 11%, and considering the bank's circa 13% total effective yield, we believe that NatWest remains undervalued."