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NatWest’s share price recently experienced a sharp decline amid growing concerns about the UK economy. The stock dropped to a low of 241p, its lowest point since July 25, marking a more than 12% fall from its August high. This decline mirrors the broader trend seen among other FTSE 250 bank stocks, including Virgin Money, Metro Bank, Barclays, and Bank of Georgia Group.
As one of the largest British banks, NatWest has a market cap exceeding £30 billion and owns well-known brands like Ulster, Royal Bank of Scotland, and Coutts. The company serves over 19 million customers and manages assets exceeding £1 trillion. For comparison, Lloyds Bank has over 30 million customers and more than £5 trillion in assets.
The recent drop in NatWest’s share price is largely due to investor concerns over the weakening UK economy. Analysts at Citigroup and Goldman Sachs predict that the country’s consumer price index (CPI) could surge to over 18% in the coming months, driven in part by a sharp increase in retail energy prices, which are expected to rise from under £2,000 to nearly £4,000.
Some analysts speculate that the new prime minister, Liz Truss, may introduce a plan to cap energy prices. While this could provide some relief, it would also likely result in a significant increase in public debt.
The rising inflation in the UK suggests that the Bank of England will continue to raise interest rates. Although banks like NatWest typically benefit from higher interest rates, the deteriorating economic conditions could limit loan growth and consumer spending.
Looking at the recent stock performance, NatWest’s share price reached a high of 284p last month but then plummeted last week as concerns about the British economy intensified. The stock saw a significant drop, falling below both the 25-day and 50-day moving averages and breaking through the important support level at 251p, which had been the peak on June 10.
Given these trends, NatWest’s share price is likely to continue declining, with sellers potentially targeting the next key support level at 226p. However, if the stock rises above the resistance point at 260p, this bearish outlook could be challenged.