RBC Capital Markets upgrades Lloyds, downgrades NatWest

Lloyds was lifted to ‘outperform’ from ‘underperform’ and the target price boosted to 57p from 44p.

RBC said it expects the market will start to reward Lloyds for better cost control and asset quality versus peers. It said the stock’s valuation screens "as attractive", hence the upgrade, and the target price implies 24% upside.

RBC cut NatWest to ‘sector perform’ from ‘outperform’ and reduced the price target to 290p from 300p. It said its call was "anti-consensus".

"Whilst valuation remains attractive, we see the potential for more upside elsewhere," it said. "Earnings momentum from higher rates may have peaked, and we worry about the bank's cost trajectory in FY23."