J.P. Morgan Raises NatWest Price Target on Corporate Lending Outlook

J.P. Morgan has raised its price target on NatWest Group (LON: NWG), identifying the lender as its preferred UK bank stock due to its strong exposure to an expected corporate lending boom. In a research note, the investment bank described NatWest as the bank "most positively geared" to this trend, driven by its dominant market position.

Upgraded Outlook

J.P. Morgan lifted its December 2027 price target on NatWest to 830 pence from a previous 790 pence and maintained its “Overweight” rating. The new target implies a re-rating potential at 7.4 times the bank's projected 2028 earnings.

Analysts at the firm raised their earnings-per-share estimates for NatWest by 1%-2% for the 2027-2028 period. This revision reflects stronger corporate loan and deposit growth, as well as a resilient outlook for Bank of England interest rates, partially offset by an assumed higher bank tax surcharge.

Dominance in Corporate Banking

NatWest's strength lies in its Corporate & Institutional (C&I) business, which J.P. Morgan highlighted as a key differentiator. The C&I division is a significant contributor to the bank's performance:

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• It generated 53% of group income and pre-provision profits in 2025, compared to around 30% for competitor Lloyds.
• The C&I loan book expanded at a 22% annualized rate in the first half of 2026, one of the strongest growth rates in the sector.
• The bank holds an estimated 20% market share in corporate lending and 25% in corporate deposits.

According to the note, NatWest's competitive advantage is supported by a network of approximately 1,000 relationship managers and a leading technology platform. Corporate deposits have also shown robust growth, rising at an 8% annualized rate year-to-date.

Broader Market Tailwinds

J.P. Morgan forecasts a new "corporate releveraging cycle in its early innings" in the UK, projecting corporate lending growth at an 8%-9% compound annual rate between 2025 and 2028. The firm noted that UK corporate debt-to-GDP is currently at 59%, well below the 80% seen before the 2008 financial crisis, suggesting significant room for growth.

A specific catalyst identified is the financing required for AI data centers. J.P. Morgan estimates over £40 billion in financing will be needed to meet the UK government's 2030 capacity targets, providing a substantial opportunity for lenders like NatWest.