NatWest and Metro Bank identified as key plays for rising UK interest rates

NatWest Group Plc is being highlighted by analysts as a potential beneficiary of rising UK interest rates. RBC Capital Markets suggests that owning NatWest and Metro Bank may be an effective way to profit from higher rates over the next three months, as money markets now expect Bank of England rates to peak above 5%.

According to RBC, a one percentage point rise in swap rates could lift NatWest’s pre-tax profits by 6.6% in 2028. While NatWest has seen a 34% share rally over the past year and increased its interim dividend by 26%, analysts note that while current rates support medium-term targets, funding corporate loan growth through wholesale markets could impact net interest margins.

Other major UK banks are also being assessed: Metro Bank is positioned to reinvest maturing treasury assets at higher yields, Lloyds Banking Group remains focused on lending trends, and Barclays maintains an optimistic outlook regarding its long-term ambitions. HSBC remains more cautious regarding its 2027 projections due to business disposals and tougher comparisons.