NatWest Shares Surge as Citi Bumps Price Target on Evelyn Partners Deal

NatWest's share price (LON:NWG) rallied sharply today, climbing 4.62% to 607as markets digested a bullish revision from Citi analysts and the strategic implications of the bank's £2.7 billion acquisition of wealth manager Evelyn Partners.

The upward move signals growing confidence in the lender's diversification strategy, despite lingering concerns over near-term capital dilution.

Citi analyst Andrew Coombs raised the firm's price target on NatWest to 840p from 810p, maintaining a Buy rating on the shares. The revision reflects updated earnings estimates that incorporate the transformative impact of the Evelyn Partners acquisition, which is poised to significantly expand NatWest's presence in the UK wealth management sector. At current levels, Citi's target implies upside of nearly 39%, suggesting the recent rally may have considerable room to run.

The acquisition itself represents a pivotal strategic shift for NatWest. Evelyn Partners brings £69 billion in assets under management and a comprehensive suite of financial planning and investment services, complementing NatWest's existing private banking operations. Once completed, the deal will boost NatWest's total assets under management to £127 billion and increase fee income by approximately 20%, reducing the bank's reliance on net interest income in an environment where rate cuts may pressure margins.

Management has outlined expectations for annual cost synergies of around £100 million, enhancing operational efficiency and supporting medium-term profitability. The transaction positions NatWest as a leading private banking and wealth management entity in the UK, diversifying revenue streams and strengthening its competitive position against peers increasingly focused on fee-generating businesses.

However, the deal has not been without scrutiny. The acquisition is projected to reduce NatWest's Common Equity Tier 1 ratio by approximately 130 basis points, raising questions among some market participants about the financial terms and potential capital dilution. Analysts at Morgan Stanley have acknowledged these concerns while noting that the strategic rationale aligns with NatWest's longer-term growth objectives in wealth management, a sector offering more stable and recurring income profiles than traditional lending.

Adding to the positive sentiment, UBS recently upgraded its earnings forecasts for NatWest, raising EPS estimates by 5% for 2026, 4% for 2027, and 3% for 2028. The firm maintains a Buy rating with a 780p price target, citing the bank's strong fourth-quarter performance, which saw pre-tax profit exceed consensus expectations by 7%. UBS also highlighted improvements in net interest income and net interest margin, suggesting underlying operational momentum remains robust.

Price Targets

The stock's performance reflects a broader reassessment of NatWest's strategic trajectory. Markets appear increasingly willing to look through near-term capital headwinds in favour of the longer-term revenue and diversification benefits the Evelyn Partners deal promises to deliver. With multiple analysts now pencilling in higher earnings and price targets, the rally may signal a sustained re-rating of NatWest's growth prospects in the wealth management space.