The bank benefits the most from a strong UK mortgage market with recent price cuts not as concerning as it might seem as most were in the high loan to value product area.
Consumer credit volumes should also recover in 2022 as non -essential spending picks up.
Natwest is the purest of the UK banks, says Berenberg, and as well as benefiting from mortgage growth has double the interest rate sensitivity of Lloyds.
“NatWest’s earnings are supported further by its actions to reduce expenses by 4% annually. While NatWest trades at a modest premium to Lloyds, we believe this is more than justified by its strong capital return prospects (of more than 10% annually)”
NatWest is a buy with a target price of 24p, with Barclays is also a buy with 230p as the target.
Shares in NWG were up 1% at 225p and Barc up 0.9% at 1899.6p.