Comps Analysis
- 1. Eva Dhimitri, Student ID:20030008, Yurgues Da Silva Pereira Duarte, Student ID:20033933 Kinjal Rameshbhai, Student ID:21022080 The Guildhall Schoolof Business and Law FE7062Commercial and Investment Banking Natwest Group Plc UK Module leader : Dr.Jonida Carungu & Dr. Shahbano Khan
- 2. Introduction 2 Analysis of the target company's data, the NatWest Group Plc (2018-2020). An overview of the business and financial profile. Examination of the bank financial analysis data by comparing it with Lloyds Bank Plc and Metro bank Plc (2018-2020). The Overall conclusion based on the banks performance for the given period.
- 3. National Westminster Bank/ NatWest Group Plc is : • The major retail and commercial bank in the United Kingdom. • Founded in 1968 by the unification of National Provincial Bank and Westminster Bank. Structure: NatWest Group Plc performs globally through its four principal branches: • NatWest Holdings • The Royal Bank of Scotland, • National Westminster Bank • Ulster Bank Ireland DAC. 3
- 4. BUSINESS PROFILE cont. 4 (NatWest, 2021) Financial Products and services: Retail Banking Commercial banking Investment banking Insurance services Distribution Channels : It has a great network of over 960 branches and 3,400 cash machines across United Kingdom and provides 24-hour Action line telephone and online banking services. Costumers and end markets: It has around 7.5 million personal customers and 850,000 small business accounts. Today: NatWest is evaluated as one of the Big Four clearing banks in the UK.
- 5. 5 The two charts below show an overview of earning trends based on comparable company analysis. In both charts from 2018 to 2020 is illustrated a downward trend in market valuation. Comparable Revenue EM Comparable Earnings per share (Bloomberg , 2021) As an investor, it is necessary the view of some critical indicators and evaluate if the NatWest Group Plc is suitable to be accepted or rejected based on main FINANCIAL KEY CHARACTERISTICS such as: Bank’s Size Profitability Growth Return on asset Credit Profile
- 6. FINANCIAL PROFILE 6 Moody's Positive outlook Fitch Stable outlook S&P 500 Stable outlook (Bloomberg , 2021) (Fitch Ratings, 2021)
- 7. FINANCIAL ANALYSIS 7 (Bloomberg , 2021) NatWest Growth Profile
- 8. COMPS SELECTION CRITERIA 8 From the perspective of Business Profile • Operate on banking industry • Are Retail and commercial banks located in the United Kingdom • Identical financial products and services, distributions channels and costumers and end markets. From the perspective of Financial profile • Similar to size, between £1B and £50 Billion • Similar growth rate, profitability and capital structure. (Lloyds Group, 2021) (Metro Bank 2021)
- 9. FINANCIAL PROFILE OF METRO BANK PLC AND LLOYDS GROUP PLC. 9 (Bloomberg , 2021)
- 10. FINANCIAL ANALYSIS 10 Market Capitalization EPS Adj Avg Assets/Avg Equity Market Capitalization EPS Adj Avg Assets/Avg Equity (Bloomberg , 2021)
- 11. Conclusion 11 To conclude, after analysing the key indicators, the suggested bank to invest is Lloyds Group due to efficiency and the profitable profile. Moreover, it shows a positive outlook of the profitability ratios. In general, the financial data presents a relatively stable trend. Regarding credit profile, Metro Bank all the given period 2018-2020 ranked in the lowest level. Its credit rated as highly speculative. In 2019 and 2020 the bank profitability ratios decreased dramatically. Although the strong competitors, NatWest group retain a trustworthy bank to invest. While, there is a mitigation in the key financial ratios, it remains well diversified geographically and by business line. In addition in 2020, year when Covid-19 and Brexit brought new challenges to the banking industry, it is to be appreciated that the NatWest Group ratios have been stable, with no drastic changes in comparison with Lloyd's group and Metro bank key financial ratios. However, it should be noted that there may be some limitation using this comparable companies analysis, such as : the banks are not exactly the same and the companies available data may not be accurate.
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- 13. References 13