Natwest Group: ROTE now expected at >19% and buybacks to resume earlier

Research evidence excerpt

Natwest Group: ROTE now expected at >19% and buybacks to resume earlier

Sheel Shah, CFA AC Europe Equity Research

(44-20) 7134-8455 31 July 2026 C A Z E N O V E

sheel.shah@jpmorgan.com

Investment Thesis, Valuation and Risks

Natwest Group (Overweight; Price Target: 780p)

Investment Thesis

We are OW on Natwest with the group making sustainable stated ROTE of 20% over the

medium term (vs >18% 2028 targets), although with valuations at c7x not reflecting the

strength of returns or growth profile. We see strong NII momentum at a c8% CAGR 25-28E,

with potential upside given management’s conservatism, supported by resilient deposit

growth and market share gains in lending across multiple products, with gearing towards

Corporate momentum a potential surprise factor. While we expect no further buybacks until

1H27 given the Evelyn Partners transaction, we see a resilient dividend yield at c6%/y on

average across the next 3Y. We expect material EPS and TNAV/Sh growth across the next

few years, and across the longer term, we see stronger cross-sell opportunities across Wealth

Mgmt to offer incremental avenues for earnings growth.

Valuation

Our sum-of-the-parts-based Dec-27 price target for Natwest of 780p is calculated using

blended P/E multiples. We use a 9.5x PE multiple for the UK Retail division, 8.5x multiple

for Commercial & Institutional and a 11.0x multiple for Private Banking. We assume Basel

4 allocated equity of 13% for all divisions in line with the group’s operating capital targets.

Natwest SOP

£m

Adj post tax Allocated B4 Value per

profit 2028E Capital 2028E Valuation basis P/E multiple P/B3 multiple Value (£m) share (£)

UK Personal and Business Banking 3,080 9,644 P/E 9.5x 3.0x 29,258

Commercial and Instit 3,726 17,815 P/E 8.5x 1.8x 31,669