NatWest share price outlook after Lloyds weak earnings

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NatWest (LON: NWG) share price has made a strong recovery in the past few days as stability returned in London. The shares rose to a high of 247p, which was the highest point since February 23rd. It has risen by more than 15% from its lowest level this month.

NatWest earnings ahead

NatWest is a leading British Bank that was formerly known as Royal Bank of Scotland (RBS). It operates through its eponymous brand and other businesses like eponymous brand, Ulster, Coutts, and Drummonds among others. Coutts is well-known for being the bank for the Royal Family.

The NatWest share price will be in the spotlight on Friday as the company publishes its quarterly results. Analysts expect these results to show that the company’s business did well last quarter as interest rates remained at an elevated level. 

However, there are concerns that the bank will struggle like Lloyds did. In its report on Thursday, Lloyds Bank said that its profit dropped by 26% because of higher provisions for bad debt. Pre-tax profits dropped to 1.5 billion pounds after soaring to 2 billion pounds in the same quarter in 2021. 

Lloyds said that its net interest income rose by 19% to 3.4 billion pounds. This figure represents the spread that exists between interest earned on loans and paid out for savings. The bank set aside 668 million pounds to protect itself from bad loans.

NatWest and Lloyds Bank tends to have a close correlation because of how they operate. Unlike other banks like Barclays, Standard Chartered, and HSBC, NatWest and Lloyds are national banks with no major operations abroad. They also focus mostly on retail and business banking.

Therefore, the NatWest share price pulled back slightly since analysts expect that it will also announce higher provisions on Friday.

NatWest share price forecast

The hourly chart shows that the NWG share price has been in a strong bullish trend in the past few days. As a result, the stock has managed to move above the 25-day and 50-day moving averages. It has also risen above the 25-period and 50-period moving averages.

NatWest stock price has risen above the important support level at 238p, which was the highest point on October 4. It has also formed a rising wedge pattern that is shown in black. Therefore, there is a likelihood that the stock will have a bearish breakout after earnings.

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