Home Investing NatWest share price has soared. Is it a safe bank stock to buy?

NatWest share price has soared. Is it a safe bank stock to buy?


NatWest (LON: NWG) share price has done well in the past few weeks. The stock rose to a high of 256p, which was the highest it has been since February 11th of this year. It has risen by more than 37% from the lowest level in May this year, meaning it has outperformed its peers like Barclays and Lloyds.

Good times at NatWest

NatWest, formerly known as Royal Bank of Scotland, is a major British bank valued at over £38 billion. The bank operates some of the best-known brands in the UK like Ulster Bank, Coutts, Childs & Co, and Drummonds among others.

NatWest share price has continued its bullish momentum as inventors reflect on the most recent half-year results. The firm made a profit of £1.8 billion and a return on tangible equity (ROTE) of 13.1%. It managed to slash its costs, bringing its cost-to-income ratio to 58.3%. 

Further, the company said that its net lending increased by £9.3 billion to £361.6 billion while customer deposits in the same period rose to over £476.2 billion. Most importantly, the NWG share price rose after the company announced a special dividend, thanks to its strong results.

The bank’s strong performance was mostly because of the robust Bank of England (BoE), which has been hiking interest rates. Analysts expect that the bank will deliver another rate hike on Thursday. Unlike Barclays, NatWest does not have a major investment banking, which has helped cushion its performance this year.

NatWest stock price has also risen because of the rumors that the company was considering acquiring Quilter as it builds its wealth management business. If this happens, the acquisition will be about £1.7 billion. Analysts believe that the acquisition will help to diversify its business since Quilter has over £118 billion in assets under management.

NatWest share price forecast

The daily chart shows that the NWG share price was forming an ascending triangle pattern before it delivered its earnings. The upper side of this triangle was at 232p. In price action analysis, this pattern is usually a bullish sign.

The stock has managed to move above the 25-day and 50-day moving averages while the MACD has moved above the neutral point. Therefore, the shares will likely continue rising as bulls target the next key resistance at 300p. In the extremely short term, the stock will likely retest the support at 240p.

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