Stock Analysis & Valuation NatWest Group plc (RBS.SW)

• Previous Close: CHF3.00
• Sector Valuation Confidence Level: High

Valuation method	Value, CHF	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	3.20	7
Graham Formula	0.50	-83

Strategic Investment Analysis

Company Overview

NatWest Group plc (RBS.SW) is a leading UK-based diversified banking and financial services provider, offering a comprehensive range of products to personal, commercial, corporate, and institutional clients. Operating through key segments—Retail Banking, Commercial Banking, Private Banking, RBS International, and NatWest Markets—the company serves customers across the UK and internationally. With a history dating back to 1727, NatWest Group has evolved into a financial powerhouse, rebranding from The Royal Bank of Scotland Group in 2020 to reflect its broader market positioning. The bank maintains a strong physical presence with approximately 800 branches and 16,000 service points, complemented by robust digital banking solutions. NatWest Group plays a pivotal role in the UK financial sector, supporting SMEs, high-net-worth individuals, and institutional clients with tailored financial solutions. Its diversified revenue streams and strategic focus on digital transformation position it as a resilient player in the competitive banking landscape.

Investment Summary

NatWest Group plc presents a mixed investment profile. On the positive side, the bank reported CHF 10.42 billion in revenue and CHF 3.04 billion in net income for FY 2021, with a diluted EPS of CHF 0.25 and a dividend per share of CHF 0.526, indicating stable profitability and shareholder returns. The company’s strong operating cash flow (CHF 53.68 billion) and substantial cash reserves (CHF 177.82 billion) provide liquidity and financial flexibility. However, its total debt of CHF 58.33 billion and exposure to the UK’s economic uncertainties, including Brexit-related risks and potential regulatory changes, pose challenges. Investors should weigh NatWest’s established market position and diversified operations against macroeconomic and sector-specific risks.

Competitive Analysis

NatWest Group plc operates in the highly competitive UK and international banking sector, where it competes with both traditional high-street banks and digital-first challengers. Its competitive advantage lies in its extensive branch network, diversified business model, and strong brand recognition, particularly in commercial and SME banking. The bank’s rebranding to NatWest Group has helped unify its offerings and improve customer perception. However, it faces stiff competition from larger global banks with greater scale and digital-native fintech firms that offer more agile and cost-effective solutions. NatWest’s Private Banking and NatWest Markets segments provide niche strengths, but these areas also compete with specialized wealth managers and investment banks. The bank’s focus on digital transformation, including mobile and online banking enhancements, is critical to maintaining competitiveness. While its strong capital position and regulatory compliance are strengths, NatWest must continue innovating to fend off competitors and capture growth in a low-interest-rate environment.

Major Competitors

• HSBC Holdings plc (HSBA.L): HSBC is a global banking giant with a strong presence in Asia, Europe, and the Americas. Its extensive international network and scale give it an advantage over NatWest in cross-border banking and corporate services. However, HSBC’s complexity and regulatory challenges in multiple jurisdictions can be a drawback. Compared to NatWest, HSBC has a more diversified revenue base but faces higher geopolitical risks.
• Barclays plc (BARC.L): Barclays competes closely with NatWest in UK retail and commercial banking, with a strong investment banking arm that outpaces NatWest Markets. Barclays’ global investment banking operations provide higher revenue diversification but also expose it to market volatility. NatWest’s stronger focus on UK SMEs and digital retail banking gives it an edge in domestic markets.
• Lloyds Banking Group plc (LLOY.L): Lloyds is a dominant player in UK retail banking, with a larger customer base than NatWest. Its streamlined operations and cost efficiency are strengths, but its lack of significant international presence limits growth opportunities. NatWest’s broader commercial and private banking services provide a competitive differentiation.
• Banco Santander, S.A. (SAN.MC): Santander’s strong footprint in Europe and Latin America gives it geographic diversification that NatWest lacks. Its focus on retail banking and digital innovation is a strength, but its exposure to emerging markets introduces higher risk. NatWest’s UK-centric model offers more stability but less growth potential.