NatWest had its best year on the stock market in more than three decades as it joined Rolls-Royce and the owner of British Airways at the top of the Footsie rankings for 2024.
The bank’s shares soared 83 percent last year – taking total returns, including dividends, to 95 percent – in a notable turnaround after years of stagnation since its near-collapse in the financial crisis when it was called Royal Bank of Scotland.
It was the biggest annual rise in its share price since 1993. Only BA owner IAG fared better, with returns of 99 per cent, while RollsRoyce enjoyed another stellar year under ‘Turbo’ Tufan Erginbilgic.
The shares have risen more than 500 per cent since he took over in 2023. IAG, NatWest and RollsRoyce were the biggest gainers as the FTSE 100 posted its fourth year of gains since the pandemic.
NatWest: Bank shares soared 83% last year
In a boost for millions of savers with money in shares through pensions and other investments, the blue-chip index added 52 points yesterday to take 2024 gains to 5.7 per cent.
The FTSE 250 rose 4.7 per cent last year but is 15 per cent below its 2021 high.
However, London’s gains were dwarfed by those in New York, with analysts noting a “lack of enthusiasm” on this side of the Atlantic even after the FTSE 100 hit a record high of 8,474 in May.
The rally lost steam in the second half of 2024, as optimism about political stability sparked by Labour’s landslide election victory evaporated in the face of bleak rhetoric from Chancellor Rachel Reeves and the £40bn tax raid in the budget.
Matt Britzman, equity analyst at Hargreaves Lansdown, called it “a year of resilience rather than runaway success for the UK’s blue-chip benchmark” as it “played second fiddle to boosted US markets.” by technology”.
Boosted by the “magnificent seven” technology stocks, the US benchmark S&P 500 index soared 25 percent to complete its best two-year streak since 1997 and 1998.
Highlights: Two banks make top five list, led by BA owner IAG
The tech-heavy Nasdaq index jumped 30 percent. Chipmaker Nvidia stood out again with shares soaring 185 percent as it rode enthusiasm for the rise of artificial intelligence, while Apple is poised to become the first $4 trillion (3.2 trillion) company. sterling) this year.
Independent City commentator Michael Hewson said the UK stock market “appears to be suffering from a significant lack of enthusiasm from global investors, especially relative to its peers”.
But with London shares considered undervalued, analysts say further gains are expected this year, with AJ Bell’s Russ Mold predicting the FTSE 100 will hit 9,000 by the end of 2025.
“I’m more optimistic now than I have been in the last 30 years of my career,” said Gervais Williams, manager of Premier Miton Investors’ Diverse Income Trust, pointing to the “low valuation” of UK stocks.
The rise in NatWest shares is a boost for boss Paul Thwaite, and came as the Government sold its stake below 10 per cent, having taken an 84 per cent stake when it saved the lender from collapse in a £46 billion bailout in the 2008-9 financial crisis.
It is expected to sell the rest of its stake in the next six months.