Shares in NatWest Group rose on Friday after the bank reported better-than-expected results for the first few months of 2024. The FTSE 100 share was up 3.3% by the end of the week, despite a more than a quarter drop in operating pre-tax profit compared to the previous year. Total income for the quarter decreased by 10% to £3.5 billion, but still surpassed analyst forecasts by around £100 million. Customer loans and deposits both saw an annual increase, while credit impairments were lower than predicted at £93 million.
NatWest’s net interest margin for the first quarter was 2.05%, slightly higher than the year before but down by 20 basis points. Operating pre-tax profit stood at £1.3 billion, a decrease from the same period in 2023 but in line with expectations. The bank’s CET1 capital ratio fell to 13.5% from 14.4% year on year but remained stable compared to the previous quarter. Chief executive, Paul Thwaite, described the first-quarter results as strong and credited the bank’s performance to its role in the economy and the lives of its 19 million customers.
The bank maintained its forecast to deliver income of between £13 billion and £13.5 billion in 2024. Thwaite also expressed satisfaction with the reduction of HM Treasury’s stake in the bank, stating that returning NatWest Group to private ownership is a shared ambition. With the British government’s stake now below 30% following further share sales in March, the bank is on track to achieving this goal. Analyst Matt Britzman of Hargreaves Lansdown labeled NatWest as the best of the bunch among its FTSE rivals, attributing this to lower-than-expected impairments, a slight increase in net interest margin, and growth in customer loans and deposit levels.
Britzman noted that the overall UK banking sector is strong, with slowing customer shifts to higher-rate accounts, stabilised low levels of impairment rates on loans, an improved economic outlook, and strong balance sheets. Despite the challenges posed by macro-uncertainty, customer confidence and activity are on the rise, with both lending and deposits increasing in the quarter and impairments remaining low. NatWest Group remains committed to its target income range for 2024 and aims to continue reducing the government’s stake in the bank to return to private ownership for the benefit of all shareholders. The bank’s performance in the first quarter reflects its resilience and adaptability in a changing economic landscape.
