Until not too long ago, if you’d told me we’d see NatWest Group (LSE: NWG) shares more than double in just two years, I’d have laughed. But that’s what happened since around mid-February 2024. And it’s backed by a cracking set of 2025 results.
In fact, £5,000 of an investor’s ISA money put in the stock back then would have grown to around £13,500 today. And that’s the kind of tax-free gain that can make a huge difference for long-term investors.
Oh, and it’s without dividends — which are currently expected to yield 5.3% in 2026. So we can add an extra bit on for that too. The question is, what might the future hold for NatWest shareholders now? Let’s take a look.
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What the experts think
NatWest’s 2025 results were nicely ahead of expectations, with £16.4bn total income well ahead of the previous year. And earnings per share climbed 27% from 2024. That’s allowed the bank to schedule a new £750m share buyback, expected to complete in the first half of the current year.
It also means the board has upped its guidance for the new financial year. It now expects income of between £17.2bn and £17.6bn, and is targeting a Return on Tangible Equity of above 17%. That would be a very attractive return for a FTSE 100 high street bank. And we’re told it should exceed 18% by 2028.
Boosted by all this, analysts have been quick to start adjusting their targets for the NatWest share price — upwards, of course. Goldman Sachs, for example, has just raised the bar to 720p (from its previous 680p). And that would be another 14% on top of the rise we’ve already seen. It means £5,000 invested in NatWest shares today could soon grow to £5,700.
Thats not close to what we’ve already had, but it’s pretty good for a short-term target. And forecasts for the next few years show further profit gains. So, while I don’t expect another doubling in the next two years, NatWest’s bull run might still have quite some way to go.
What’s it worth?
Can it continue rising? It all comes down to valuation. And when a soaring share price pushes that up into the clouds, many stock market watchers will be bracing themselves for a downturn. But NatWest is still on a forward price-to-earnings (P/E) ratio of only around 8.5. And forecasts have that falling to 7.5 by 2028. This is at a time when we might expect brokers to raise these outlooks too. So we might even see valuations lowered a bit in the coming weeks and months.
I think NatWest shares still look cheap. And I fell long-term investors — especially those looking for a worthwhile income stream — should consider them.
Possibly the biggest risk I see is lowering Bank of England interest rates. And with annual inflation down to 3% — and not far above the target 2% — that could come sooner than we think. So bank margins could be squeezed, taking some of the shine off that rosy outlook. It’s a risk I might take.
