NatWest (NWG) & Lloyds (LLOY): 2 banking stocks to buy now

Highlights

  • Around 46% of financial services companies plan to partner with fintech firms in the next year compared to 32% in 2020.
  • NatWest had recently acquired a fintech startup RoosterMoney, a pocket money app.

Several financial institutions in the UK are aiming to acquire or form partnerships with fintech firms to add new and advanced offerings to their portfolios and boost their position in the market, according to a Lloyds Bank report. As per the sixth annual Financial Institutions Sentiment Survey by Lloyds Bank, around 46% of financial services companies plan to partner with fintech firms in the next year compared to 32% in 2020.

According to the same survey, the development of new products and services garnered 66% in terms of banking groups fintech plans, followed by 53% voting for improving client experiences and 49% for driving growth. Over 75% of the interviewed senior leaders across financial institutions in the UK were of the opinion that technology, digital investment and automation are a top strategic priority for the coming year. Nearly 77% of the interviewed financial services companies intend to increase investments in technology systems and supporting platforms in the next one year compared to 62% of companies in 2020. Below is a detailed review of the investment prospect in 2 banking companies - NatWest Group and Lloyds Banking Group, which have been the leader in the fintech initiative.

Market cap and one year return

(Data source: Refinitiv)

NatWest Group Plc (LON: NWG)

NatWest Group is a major retail and commercial banking group in the UK. Recently, the company acquired a fintech startup RoosterMoney, a pocket money app.

In the early hours of trade at 8:03 AM BST on Tuesday 12 October 2021, the shares of NatWest Group were trading at GBX 231.00.

For H1 ended 30 June 2021, NatWest Group’s operating profit before tax stood at £2,505 million compared to the pre-tax loss of £770 million in H1 2020.  NatWest Group declared an interim dividend of 3 pence per share to shareholders for the half-year ended 30 June 2021.

In the last one year, the shares of NatWest Group returned 100.28% to shareholders, and the current market cap of the company is £25,878.45 million as of 12 October 2021.

Lloyds Banking Group Plc (LON: LLOY)

Lloyds Banking Group is an FTSE 100 listed and retail and commercial banking company in the UK. In July 2021, Lloyds Banking Group announced plans to acquire Embark Group, an advanced investment and retirement platform business. 

In the early hours of trade at 8:03 AM BST on Tuesday 12 October 2021, the shares of Lloyds Banking Group were trading at GBX 47.93.

During the six months ended 30 June 2021, Lloyds Banking Group registered a profit before tax of £193 million compared to £7 million for the half-year ended 30 June 2020, up by £186 million, driven by the robust performance in its retail banking and corporate sales sectors. Its total income was £350 million in H1 2021 compared to £291 million in H1 2020. 

In the last one year, the shares of Lloyds Banking Group returned 67.32% to shareholders, and the current market cap of the company is £33,268.56 million as of 12 October 2021.

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