NatWest stock: UBS sees capital headroom against margin pressure

UBS has cut its price target for NatWest Group to 775 pence from 835 pence while retaining a Buy rating. The broker's assessment adds pressure to the earnings outlook after management signaled broadly stable net interest margins through 2027.

In a report cited by Proactive via Yahoo Finance, UBS said the flatter margin path was weaker than market expectations for an expansion of more than 10 basis points in 2027. The broker estimated that NatWest's 2027 pretax profit could come in 4 percent to 5 percent below consensus and reduced its adjusted earnings-per-share forecasts by 2 percent for 2026 and by 3 percent for both 2027 and 2028.

Margin outlook weighs on earnings

NatWest's third-quarter net interest margin reached 2.50 percent, one basis point above the previous quarter and 15 basis points above the year-earlier level when excluding one-off adjustments. Adjusted pretax profit of GBP 2.2 billion was 2 percent below consensus, while net interest income was 1 percent below market expectations.

Operating costs were better than anticipated, but loan impairments were higher than forecast. UBS also cited competitive pressure from Lloyds Banking Group and HSBC as a continuing risk for UK retail banks.

Capital provides a counterweight

UBS expects risk-weighted assets of GBP 210 billion from January 2027, below its cited consensus estimate of GBP 214 billion. The broker also expects a 43-basis-point reduction in NatWest's Pillar 2 capital requirement, which could release approximately GBP 1 billion of additional capital headroom.

NatWest stock traded at 7.13 euros on Lang & Schwarz at 12:19 CET on Monday, November 9, 2026.

The FTSE 100 provides the relevant market context for UK-listed banks.

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