NatWest shares climb after UBS raises earnings forecasts

NatWest shares climbed on the London Stock Exchange on Tuesday following UBS's decision to raise the bank's earnings forecasts, citing improved performance in the UK banking sector. The bank's stock rose by 3.2% during morning trading, reaching £3.84 per share, as UBS analysts upgraded their rating from 'neutral' to 'buy' and increased their 12-month price target from £3.60 to £4.10. The Swiss banking giant highlighted NatWest's successful cost-cutting measures and improving loan quality as key factors behind their revised outlook. This positive sentiment came amid a broader recovery in European banking stocks, with the sector index gaining 1.8% on the day. NatWest, formerly known as Royal Bank of Scotland, has undergone significant restructuring since the 2008 financial crisis when it required a government bailout. The bank has been gradually reducing its government stake and focusing on its UK retail and commercial banking operations. Market analysts suggest that UBS's optimistic forecast could signal growing confidence in the UK's economic recovery post-pandemic, particularly as inflation shows signs of moderating. The improved outlook also positions NatWest favorably against its domestic competitors like Lloyds Banking Group and HSBC, which have faced different challenges in their respective markets.