Shares in NatWest Group rose after the bank reported better-than-expected results for the first few months of 2024. Despite a decline in operating pre-tax profit by over 25% year on year due to previous Bank of England interest rate increases, total income dropped 10% but beat analyst expectations by £100 million. Customer loans and deposits increased, with credit impairments totaling £93 million, which was lower than predicted.
NatWest’s net interest margin for the first quarter was 2.05%, rising back above 2% but down 20 basis points from a year earlier. Operating pre-tax profit was £1.3 billion, in line with estimates, and the CET1 capital ratio stood at 13.5%, within the bank’s target range of 13% to 14%. Chief Executive Paul Thwaite described the first-quarter numbers as a “strong set of results,” highlighting the bank’s role in the economy and the lives of its 19 million customers, with lending and deposits increasing and impairments remaining low.
The bank maintained its forecast to deliver income between £13 billion and £13.5 billion in 2024. Thwaite also expressed satisfaction with the reduction of HM Treasury’s stake in the bank, believing that returning NatWest Group to private ownership is in the best interests of the bank and shareholders. With the British government’s stake now below 30% following further share sales in March, NatWest’s nationalization in 2008 during the financial crisis is gradually being reversed.
Analyst Matt Britzman of Hargreaves Lansdown called NatWest “[the] best of the bunch” after comparing updates from rivals Lloyds and Barclays. He noted that impairments were lower than expected, net interest margin improved from the previous quarter, and customer loans and deposits saw growth. Britzman praised the UK banking sector’s strength, citing slowing customer shifts to higher-rate accounts, stable low levels of loan impairments, improved economic outlook, and strong balance sheets.
Overall, NatWest Group’s performance in the first quarter of 2024 exceeded analyst expectations despite a decline in operating pre-tax profit. The bank’s focus on customer lending and deposits, low impairments, and stable capital ratios were highlighted by CEO Paul Thwaite as contributing factors to the positive results. The bank’s forecast for 2024 remains unchanged, with a continued emphasis on reducing the government’s stake and ultimately returning to private ownership. Analysts view NatWest as a strong player in the UK banking sector, with favorable financial metrics and a positive outlook for the future.