Nomura upgrades RBS to 'neutral' after recent weakness
Nomura has raised its rating on banking group RBS from 'reduce' to 'neutral' after the recent fall in the stock.
Banks
3,895.51
17:09 19/04/24
FTSE 100
7,895.85
16:59 19/04/24
FTSE 350
4,341.08
17:09 19/04/24
FTSE All-Share
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17:08 19/04/24
NATWEST GROUP
276.70p
16:34 19/04/24
"Exposure to UK and Irish macro strength, release of excess capital from Citizens, and underperformance of c24% against SX7P [Stoxx Europe 600 Banks index] offset the litigation and execution risks, in our view, and we therefore upgrade the name to 'neutral'," said analyst Chintan Joshi.
At a price-to-earnings multiple of 11, the broker estimates that RBS's earnings power is worth £26.8bn, and so with a market cap of £38.8bn the implied excess capital is £12bn.
However, it said it sees "modest upside" to this number, though there is still the risk that regulators will "eat into this excess capital".
The stock was up 1% at 343.29p by 11:36, moving in line with Nomura's unchanged 350p target price.