NatWest Group shares rose following a strong set of results for the first few months of 2024, surpassing City forecasts. However, operating pre-tax profit declined by more than 25% year on year due to previous Bank of England interest rate hikes. Despite this, total income decreased by 10% to £3.5 billion during the March quarter, exceeding analyst expectations by around £100 million. The bank reported an increase in customer loans and deposits compared to the previous year, along with credit impairments totaling £93 million, lower than predicted but higher than the same period in 2023.
NatWest’s net interest margin (NIM) rose to 2.05% for the first quarter, slightly above 2% but down 20 basis points from a year earlier. Operating pre-tax profit was £1.3 billion, lower than the previous year but in line with estimates. The bank’s CET1 capital ratio fell to 13.5% from 14.4% year on year but remained stable from the final three months of the previous year. CEO Paul Thwaite described the first-quarter results as strong, attributing the performance to the bank’s important role in the economy and the lives of its 19 million customers. He highlighted the increase in customer lending and deposits and low impairments, reflecting the bank’s well-diversified business.
NatWest maintained its forecast for income in 2024, aiming for between £13 billion and £13.5 billion. Thwaite expressed satisfaction with the reduction of HM Treasury’s stake in the bank, emphasizing the shared ambition to return NatWest Group to private ownership. The British government’s stake now stands below 30% following further sales in March, after the bank was nationalized in 2008 during the financial crisis. Analyst Matt Britzman of Hargreaves Lansdown praised NatWest as the best performer among FTSE rivals Lloyds and Barclays, citing lower impairments, higher net interest margin, and growth in customer loans and deposits. He noted strength in the UK banking sector, with stable impairment rates, improved economic outlook, and strong balance sheets.
Overall, NatWest Group reported positive first-quarter results, beating analyst expectations despite a decline in operating pre-tax profit. CEO Paul Thwaite emphasized the bank’s strong performance and its focus on customer lending and deposits, as well as progress towards reducing the government’s stake in the institution. Analysts view NatWest as a top performer in the UK banking sector, with higher customer loan and deposit levels, lower impairments than predicted, and improved net interest margin. The bank’s long-term forecast remains stable, with a continued push towards private ownership and sustained growth in income.
