Achi news desk-
One analyst said state-owned NatWest was the “best of the bunch” from this week’s bank reporting season.
“Lloyds and Barclays led the way this week and NatWest has certainly not disappointed with first quarter results almost overwhelmingly against expectations,” said Matt Britzman, equity analyst at Hargreaves Lansdown. “The impairments came in lower than expected, the net interest profit was higher than the previous quarter and customer loan and deposit levels increased.
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“The UK banking sector looks strong. NatWest has followed its peers in calling for a slowing of some of the headwinds that have been affecting performance in recent quarters. The shift of customers to higher rate accounts is slowing as expected loan impairment rates stabilize at low levels, the economic outlook has improved, and balance sheets remain strong.”
NatWest reported total income of £3.48bn for the first quarter, down from £3.54bn in the previous quarter and £3.88bn in the first three months of 2023, but above the £3.4bn forecast. The bank’s net interest margin – roughly the difference between interest banks charge on loans and charge on deposits – was 2.05%, six basis points higher than the fourth quarter of 2024.
A net impairment charge of £93m was booked against a forecast of £186m, which NatWest said “mainly reflects the continued strong performance of our loan book”. The bank added: “Default levels remain stable and at low levels across the portfolio.”
NatWest, which said operating costs were “fairly stable”, underlined its decision to return to full private ownership. The bank was saved by a £45.5bn bailout during the financial crisis of 2008 and 2009, which took it into public ownership. The stake held by the Treasury is now just under 30%.
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Chancellor of the Exchequer Jeremy Hunt has indicated that a retail offer of Treasury shares could take place this year.
John Moore, senior investment manager at RBC Brewin Dolphin, said: “Like its peers, NatWest’s profits have fallen – but it has still beaten expectations in a more competitive mortgage market and higher interest rate environment.
“Costs are stable and returns on equity remain high – although not where they were a year ago. Unlike Lloyds and Barclays, NatWest doesn’t have to deal with legacy auto finance and investment banking issues, so the bank has those advantages on its side along with its simpler business model. The key, as ever, is the sale of the government’s share, which should be addressed in the near future, and NatWest is in a positive position going into that process.”
Paul Thwaite, chief executive of NatWest, said: “The NatWest Group has delivered a strong set of results for the first quarter – with an operating profit of £1.3bn – as we continue to focus on the priorities we set out in February, which will helps. we shape the future of this bank.”
He added: “We are also pleased with the recent momentum in the reduction of HM Treasury’s stake in the bank. Returning the NatWest Group to private ownership is a shared ambition and we believe it is in the best interests of the bank and all our shareholders.”
Shares in NatWest were trading at 303.2p at 10am, up 13.3p or 4.6%.
