UBS Group AG

This is our first report on NatWest Group PLC, one of the prominent banking and financial service providers. The company demonstrated resilience and strength in the quarter, with a solid capital position and diverse funding sources contributing to its robust financial standing. NatWest’s strong liquidity position, supported by a well-established deposit franchise and prudent risk management, ensured stability and reliability. Despite reducing customer deposits due to increased competition and tax payments, NatWest Group maintained a diverse deposit mix and witnessed a shift towards term accounts. Their capital and leverage position remained robust, surpassing regulatory requirements and allowing for potential opportunities such as participating in a directed buyback from the government. Successful executions of transactions, including senior MREL issuances and a social bond supporting women-led enterprises, underscored the company’s commitment to sustainable finance and diverse business initiatives. The company further acquired Cushon, a fintech company specializing in workplace savings and pensions. This acquisition fosters the company’s long-term growth and broadens non-interest income sources. Overall, NatWest Group’s strong financial position, supported by capital strength and diverse funding sources, is anticipated to position it for resilience and sustained growth in the market. We initiate coverage on the stock of NatWest Group PLC with a ‘Hold’ rating.