NatWest (NWG Stock) share price drops despite rising profits


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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