NatWest reported full-year results after announcing the £2.7bn purchase of wealth manager Evelyn Partners earlier this week. Its shares fell to their lowest level since October 2025 and tested the 200-day SMA, after starting February above 700p.
Net interest income rose 13.8% year on year to £12.8bn, while total income increased 13.2% to £16.64bn. Total profits climbed 21.3% to £5.83bn, despite annual impairments rising 86.9% to £671m.
Key 2026 Guidance
Net interest margin increased by 21bps to 2.34%, despite a lower rate environment. For 2026, NatWest expects total income of £17.2bn to £17.6bn and ROTE above 17%.
A final dividend of 23p per share took the total dividend for the year to 32.5p, up 51% on 2024. The share price fall has been linked to concerns about the Evelyn Partners deal and reduced share buybacks.
We are seeing a clear disconnect between NatWest’s strong performance and its current share price, which has fallen to test its 200-day moving average. This kind of disagreement between solid fundamentals and negative market sentiment often creates opportunities in the derivatives market. The drop appears linked to short-term concerns over the Evelyn Partners acquisition reducing share buybacks.
The bank’s guidance for 2026 is exceptionally strong, with a Return on Tangible Equity (ROTE) target exceeding 17%. For context, across 2023 and 2024, the average ROTE for major UK banks struggled to consistently stay above 12-14%, making this guidance a significant outlier. History shows markets sometimes punish stocks for large acquisitions in the short term, as we saw with initial uncertainty in other large financial mergers during the early 2020s.
Options Strategy Ideas
For traders who believe this price drop is an overreaction, selling out-of-the-money puts with strike prices near or below the October 2025 lows could be a sound strategy. This allows us to collect premium based on the belief that the strong earnings report and bullish forecast will provide a floor for the share price. The goal is for the options to expire worthless if the stock finds its footing and rebounds.
The current situation has likely pushed up the implied volatility on NatWest options. Elevated volatility increases the premium received from selling options, making strategies like selling cash-secured puts or bull put spreads more attractive in the coming weeks. We are essentially being paid to wait for market sentiment to catch up with the company’s financial reality.
More aggressive traders might consider buying call options, betting on a sharp reversal once the market looks past the buyback issue and focuses on the long-term value of the wealth management acquisition. A rebound from a key technical level like the 200-day SMA, especially after such positive news, can be swift. This strategy would profit from a quick recovery in the share price back towards the 700p level seen earlier this month.
