NatWest Group PLC

NatWest Group PLC (LON: NWG) is a FTSE 100 index business and commercial bank in the UK.

Investment Rationale for Valuation – Watch at GBX 251.70

• Interim Performance: In H1 FY22, NWG reported attributable profit of £1,891 million and a return on tangible equity of 13.1%. Subsequently, there was a 17% YoY jump in interim dividends. Besides the interim dividend of £364 million, or 3.5 pence per ordinary share, NWG also recommended a special dividend of £1,750 million, or 16.8 pence per share. The special dividend will be subject to shareholder approval at a General Meeting on 25 August 2022. If approved, special dividend is expected to be paid on 16 September 2022 to shareholders on the register on 26 August 2022. The ex-dividend for special dividend will be 30 August 2022.
• Limited Upside Potential: The stock has already rallied after posting a financial growth in its interim results, and now trading close to 52-week high level.
• Subdued Loan Growth: In FY21, NWG showed a negative loan growth, while the industry median for loan growth was 5.2%.
• Macroeconomic Risks: Rising fuel prices, four-decade high inflation, cost-of-living crisis can continue to impact the Company’s performance.
• Technical Standpoint: NWG’s stock price has breached the upper Bollinger Band with 14-day RSI of around 71.67, reflecting an overbought scenario.

One Year Share Price Chart

(Source: REFINITIV, Analysis by Kalkine Group)

Conclusion

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Based on the overstretched prices, macroeconomic uncertainties, and bearish technical indications, a “WATCH” recommendation has been given on NatWest Group PLC at the closing market price of GBX 251.70 (as of 1 August 2022).

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 2 August 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings.

Note 4:  Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 5: Dividend Yield may vary as per the stock price movement.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer

References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.

This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332. Kalkine Limited is authorised and regulated by the Financial Conduct Authority under reference number 579414.

The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation.

Kalkine does not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. Kalkine’s non-personalised advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested.

Kalkine Media Limited, an affiliate of Kalkine Limited, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.