NatWest Shares Downgraded But Analyst Says Bank Will Remain ‘Highly Profitable’

Goldman Sachs cut its rating on NatWest (LON: NWG) shares to Neutral from Buy in a note on Thursday, even as the bank is expected to remain among the sector’s strongest performers in the years ahead. 

The price target for the lender was raised slightly to 685 pence from 665 pence as Goldman updated its European banks outlook for 2026.

In its note, Goldman Sachs said it expects “NatWest will remain highly profitable and capital generative, facilitating further disciplined growth and ongoing shareholder return.” 

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The bank is seen as benefiting from solid balance sheet strength, strong capital generation and further scope for distributions.

However, Goldman pointed to a sharp improvement in earnings expectations and a significant valuation re-rating over the past year. 

NatWest shares have rallied more than 57% for the year-to-date.

Following significant positive earnings revisions since October 2024, Goldman now sees consensus estimates as “largely in the right place over 2025–27E, and sees the shares as broadly fairly valued.” 

With much of the earnings and valuation catch-up now reflected in the share price, Goldman believes the risk-reward profile is now balanced.

The broker emphasised that sentiment across Europe’s banks is shifting as investors move beyond interest rate sensitivity and focus more on growth, efficiency and capital deployment. 

While the sector outlook remains constructive, Goldman’s changes reflect where it sees the most attractive opportunities.

In the same sector review, Swedbank and Bankinter were both downgraded to Sell, while Nordea Bank and DNB Bank were cut to Neutral. Upgrades included Commerzbank to Neutral and Banco Comercial Português and Société Générale to Buy.