NatWest named top pick by Citi as European banking bull run nears final leg Proactive uses images sourced from Shutterstock
NatWest Group PLC (LSE:NWG) was named a top pick by Citi on Wednesday, even as the investment bank cautioned that the current European banking bull run is nearing its final leg.
The shares dipped 0.23% to 688.6p as Citi maintained an ‘overweight’ rating on the wider sector, observing that recent earnings upgrades have now broadened to other market sectors too.
At the heart of the update is a clear recognition that this broadening market momentum is actively reducing the historical scarcity value that European banks recently enjoyed among institutional investors.
While lenders are still seeing earnings per share upgrades on a superior revenue outlook, the broker believes the fundamental drivers of that continued growth must now inevitably begin to shift.
Looking ahead, analysts expect future earnings upgrades to be increasingly driven by underlying lending volumes rather than the fading macroeconomic tailwinds of peak central bank interest rates.
Those vital volume pushes are currently being supported by new corporate initiatives that are specifically designed to harness the expected benefits from banking ecosystems and AI capex.
On the same note, the broker highlighted ABN Amro Bank NV and Societe Generale SA alongside the British lender as its standout top picks.
These selections arrive as the broader market enters a phase where European bank valuations are still not demanding, but they are no longer considered excessively cheap either.
Crucially, analysts flagged that any aggressive push for faster organic and inorganic growth across the sector is now likely to come at the direct expense of lucrative share buybacks.