NatWest (NWG Stock) share price drops despite rising profits

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After seeing decent numbers from Lloyds and Barclays, expectations were high for NatWest Group’s third quarter numbers today.

NatWest’s share price has been a notable outperformer so far this year, with shares rising over 35% and at 20-month highs, so the bar was pretty high for Q3 numbers. Today, and frankly, the market reaction has been a bit disappointing, with stocks falling to the low of the FTSE100.

Income was positive, beating expectations at £ 2.77 billion.

Profits attributable to shareholders amounted to £ 674million, well above £ 61million last year, and even though they were ahead of expectations they were still nearly half from where they were in the second quarter, with the bank adding £ 242million for non-performers. loans, for a total of £ 949million added since the start of the year.

This was offset by the bank taking over a £ 294million charge after pleading guilty to three criminal charges of money laundering earlier this month.

Beyond quarterly figures, the bank is still well ahead of what it was a year ago, with profits to date of £ 2.5bn, compared to a loss of £ 644m over the same period in 2020.

The bank continues to struggle with regard to net interest margins, since they fell to 1.54%, against 1.61% in Q2.

In terms of loans and customer activity, NatWest reported similar trends to Lloyds before it. With net lending to customers reaching £ 180.5bn, with fairly strong mortgages. Personal loans and credit card loans were a bit more subdued, but still increased by £ 100million, perhaps reflecting a consumer’s willingness to spend more money as the economy would reopen during the summer.

Customer deposits in the various divisions increased by £ 9.1 billion, with retail trade increasing from £ 184.1 billion to £ 186.3 billion.

The bank kept its full-year forecast unchanged, saying it was optimistic about the future of the UK economy with low levels of defaults, due to falling unemployment.


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