NatWest Share Price: Analysts Weigh In on Future Prospects
The NatWest Group (NWG.L) share price has experienced a remarkable surge of around 70% over the past 12 months, making it one of the FTSE 100’s (FTSE) standout performers. According to an analysis by The Motley Fool UK, a leading financial news provider, this rally has been driven by robust earnings, a declining government stake, and a supportive banking environment.
As we approach the midpoint of 2025, investors are eagerly asking whether this momentum can continue and where the NatWest share price could finish the year. The Motley Fool UK’s analysis suggests that NatWest’s forward-looking valuation metrics indicate the shares are still attractively priced. The bank currently trades with a forward price-to-earnings (P/E) ratio of about 7.5 times for 2025, falling to 6.6 times for 2026 and 6.3 times for 2027.
These multiples are below the long-term average for UK banks and suggest that the market may still be underestimating NatWest’s earnings power, especially given its strong capital position and improving returns. The price-to-book ratio is projected at 1.12 times in 2025, before moderating slightly thereafter, hitting 0.97 times by 2027. This reflects growing investor confidence in the bank’s ability to generate returns above its cost of equity.
A key catalyst for the share price movement has been NatWest’s commitment to returning more capital to shareholders. The payout ratio is set to increase to around 50% of earnings from 2025, with dividends forecast to rise from 21.5p in 2024 to 28p in 2025, equating to a forward yield of 6.8%. This is comfortably above the FTSE 100 average. As The Motley Fool UK notes, “It’s also significant because NatWest didn’t pay a dividend for over a decade after the Global Financial Crisis.”
Moreover, the UK government’s rapid reduction of its stake in NatWest – now below 5% for the first time since the financial crisis – has also been a major positive. The overhang from state ownership is fading, and NatWest’s buybacks have further tightened the share count, amplifying earnings per share growth.
NatWest is benefiting from what analysts call a “Goldilocks Zone” for UK banks, where interest rates are high enough to support healthy net interest margins, but not so high as to trigger a spike in loan defaults. A key driver here is the bank’s structural hedge, a portfolio of fixed-rate assets that’s being reinvested at higher yields as older, lower-yielding contracts mature.
Despite the positive outlook, risks remain. Global economic uncertainty, particularly around US and UK trade policy, could impact earnings forecasts. A sharp fall in interest rates or a rise in defaults would pressure margins and capital returns.
According to The Motley Fool UK, the stock is trading only 4% below the average share price target issued by analysts. After a period of rapid share price growth, the valuation multiples indicate some room for appreciation, but not much. The Motley Fool UK’s analysis suggests that the stock could end the year near the target – around 550p per share.
In conclusion, NatWest’s strong performance is expected to continue, driven by its solid earnings, improving returns, and commitment to shareholder value. However, investors must remain cautious of the risks and uncertainties surrounding the global economy.
The analysis from The Motley Fool UK highlights that NatWest’s shares may still offer value, but with the current price already near the target, investors may want to consider other opportunities. As The Motley Fool UK states, “I can see the stock ending the year near the target – around 550p per share. Despite this, I’m not buying right now. There could be better opportunities elsewhere.”
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