Up 91% in one year, can Natwest shares go higher?
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Up 91% in one year, can Natwest shares go higher?

Up 91% in one year, can Natwest shares go higher?

Image source: Natwest Group PLC

In the past year, Natwest (LSE: NWG) has been an excellent investment for many shareholders. Natwest shares have moved up 91% during the 12 months. In addition, FTSE 100 Bank offers a dividend of 4.1% and has grown its usual dividend per share significantly over the past three years.

Despite the huge price increase, Natwest’s shares continue to sell a little less than Nine times revenue. It looks potentially cheap for me. So is it worth adding the bank to my portfolio now in the hope of future profits?

The prospect of banks seems uncertain

When I go back from Natwest specifically, as an investor, I feel that the market’s prospects for British banks must have changed significantly to justify the type of price measure we have seen in the past year.

Natwest’s increase of 91% is huge. But during the same period, Lloyd have moved up 45%, Bars 97% and HSBC 34%. So it seems that the city believes that the prospects for British banks in general now look significantly stronger than a year ago.

It reflects that the economy is a bit more resistant than feared, economic optimism globally comes in 2025 has been reinforced in some regions shown in strong stock market results And the potential for the central banks’ movements on interest rates to improve the growth rate.

Still, is it enough to motivate the rising bank’s share prices? The economy may wobble less than dreaded, but it still feels pretty fragile to me, both in a British and global perspective. The risk of a slower economy also entails risks for higher loan settings, which damages the profits from the banks including Natwest.

This part can continue to move up, but will it?

Another factor that is specific to Natwest has been the British government that sells the effort in the bank that it had held since he bailed it during the 2008 financial crisis. This week it fell below the 8% level.

Reducing then eliminating the state shareholding can over time lead to a lower number of shares in circulation and therefore drive up profits per share. It can increase the share price.

The bank’s revenue during the first nine months of last year showed growth from 4%year to year. With over 19 million customers, strong brands and a proven business model in a space that I expect to continue to see high demand, I think the well -known bank could do well. It can drive the Natwest parts.

On the other hand, however, I wonder if the market has been too quick to dismiss the economic risks. Natwest’s forces today were Sanna a year ago. A 91% stock rate search feels steep to me in these circumstances.

I think the global economy remains weak and the string in the British economy looks clearly shaky. I am still worried about the risk that constitutes the banks’ revenue – and their share prices. At least Natwest is not on my shopping list in the stock market.