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NatWest Share Price is Up 36% in 3 Weeks – Is it a Buy After Earnings?

NatWest share price is up by more than 5% today after the company reported better-than-expected quarter results. The shares are the best-performers in the FTSE 100 today. Other banks like Barclays and Standard Chartered have also done well.

UK banks had an exciting quarter mostly because of the strong performance of the mortgage market. Fiscal stimulus by the government also helped boost consumer spending as evidenced by results from Lloyds, Standard Chartered, and Barclays.

In its results today, NatWest, formerly known as Royal Bank of Scotland, said that its pre-tax profit rose to £355 million. That was a better performance than the £75 million profit that analysts were expecting.

The strong performance was because of the mortgage and consumer lending business. It did more than $2.4 billion in mortgage lending as mortgage applications rose by 91% from the second quarter. This performance was offset by the weak NatWest Markets division and the retail and consumer business.

It was also because of lower provisions for bad debt. The company booked £254 million in bad debt compared to the previous’ quarter £628 million.

Still, the bank, which is 62% owned by taxpayers warned of challenging times ahead as the number of Covid cases in the UK continue rising. The statement said:

“Challenging times lie ahead, especially as the current government support schemes come to an end and as new Covid-19 related restrictions are introduced.”

NatWest, like all European banks, has been under intense pressure because of low-interest rates and higher delinquencies. As a result, its stock has dropped by more than 50% this year, bringing its market cap to £14 billion. Other banks, including Lloyds, Barclays, and Standard Chartered have also seen their shares fall by more than 40%.

NatWest (NWG) share price technical outlook

On the four-hour chart below, we see that NatWest share price has been in a strong upward trend since September 22, when it fell to 90.85p. It is now trading at 124.10, which is 36% higher than October’s low of 90.85p. The stock has also formed an ascending channel that is shown in pink. It is also slightly above the 15-day and 25-day exponential moving averages and slightly below the upper side of the channel, which is at 125p.

Therefore, it sees like there is strong momentum, which will see the index test this resistance level. On the flip side, a move below the lower side of the channel at 115p will invalidate this pattern.

NatWest technical chart