Business & Investment

FTSE 100 Watch: Need to buy this UK stock for stocks and stock ISA today?

The· FTSE 100 It’s full of British stocks that I think should prosper in 2021.However Nat waist group (LSE: NWG) This is one of the megacaps that we don’t add to Stocks and Shares ISA.Risk of this British bank PrettyNot only is the UK economy struggling, but as competition in the banking sector intensifies.

Banks are not only concerned about the possibility of a surge in bad debts and a decline in profits. Something like NatWest has enhanced cost savings in response to pandemics. And there are more branch closures on the cross to support the earnings of these UK stocks. However, their ability to keep costs down can be hurt if recent regulatory interventions are any sign.

FCA stuck (again)

Last week, the Financial Conduct Authority (FCA) told a British bankIf possible, consider suspending or postponing the closure of new branches, especially if they could have a significant impact on vulnerable customers... The body rolls out New rules In September, banks evaluated the impact of closures on customers, and customers saidTreat fairly“.

As digital banking is on track, NatWest and its peers have closed hundreds of branches in recent years. This has not caused a lack of concern from regulators, consumer groups, and members of the Treasury Special Committee. The FCA has taken the latest intervention because it fears that the blockade of Covid-19 will make it even more difficult for customers to reach the branch office. However, it can have long-term implications for the banking sector’s cost-cutting plans.

Expensive UK stocks

As I say, I’m not going to buy NatWest shares in 2021. But there is a reason why bank stocks could function strongly in the coming months. Signs that the domestic economic recovery is starting to click through gear could increase investors’ desire for such cyclical stocks.

The news that the balance sheets of FTSE 100 companies continue to be strengthened could also increase market interest. This has led to speculation that NatWest will pay dividends again after canning in early 2020. According to the latest financial information, the bank’s common stock (CET1) ratio has risen to 18.2% as of the end of September. This is a full percentage point increase from the midpoint of 2020.

City analysts believe NatWest will make a strong recovery from the Covid-19 hit 2020. They believe they will return to profits in 2021 after reporting last year’s losses. And they predict that UK equity earnings will surge by more than 170% year-on-year in 2022.

These forecasts will increase the bank’s price-earnings ratio (P / E) by a factor of 28. However, I think it’s a lot of reading to leave the risk of NatWest’s share price falling if profits are disappointed due to long-term strict trading conditions. With everything in mind, today I would like to buy my stock and other UK stocks for stock ISA.

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Royston Wild There are no positions in any of the listed shares. The Motley Fool UK does not have a position in any of the listed shares. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, by considering different insights, Better investors than us.

FTSE 100 Watch: Need to buy this UK stock for stocks and stock ISA today? FTSE 100 Watch: Need to buy this UK stock for stocks and stock ISA today?

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