NatWest Group PLC shares surged 4.6% on Monday after UBS upgraded its earnings forecasts for the British bank following strong fourth-quarter results. The Swiss bank maintained its buy rating and 780p price target, suggesting a potential 40% total return for investors.

UBS raised its diluted earnings per share forecasts by 5% for 2026, 4% for 2027, and 3% for 2028 after NatWest's fourth-quarter pre-tax profit exceeded consensus by 7%. The bank's net interest income was 3% above expectations while impairments performed 30% better than anticipated at 13 basis points of loans.

NatWest's common equity tier 1 (CET1) ratio reached 14.0%, 30 basis points above consensus, bolstered by a £750 million buyback announced alongside the Evelyn Partners transaction. The bank's new 2028 targets include return on tangible equity exceeding 18%, customer assets and liabilities growth of more than 4% compound annual growth, and a cost-to-income ratio below 45%.