Photographer: Hollie Adams/Bloomberg
Shares in NatWest Group
However, operating pre-tax profit slumped by more than a quarter year on year as the benefit of previous Bank of England interest rate hikes eroded.
At 299.4p per share, the FTSE 100 share was last dealing 3.3% higher in end-of-week business.
While total income dropped 10% to £3.5 billion during the March quarter, this beat analyst expectations by around £100 million. Both customer loans and deposits increased on an annual basis, the bank said.
Meanwhile, credit impairments totalling £93 million were around half of what had been predicted. This was up from £70 million during the same 2023 period, however.
NatWest’s net interest margin (NIM) came in at 2.05% for the first quarter, rising back above 2% but down 20 basis points from a year earlier.
Operating pre-tax profit of £1.3 billion was down from £1.8 billion in January to March 2023, though still in line with estimates.
The bank’s CET1 capital ratio fell to 13.5% from 14.4% year on year. But this was broadly stable from the final three months of last year and at the midpoint of NatWest’s target range of 13% to 14%.
"Strong" Numbers
Describing those first-quarter numbers as "a strong set of results," chief executive Paul Thwaite said that "our performance is grounded in the vital role we play in the economy and in the lives of our 19 million customers."
He noted that "though macro-uncertainty continues, customer confidence and activity is improving, with both lending and deposits up in the quarter and impairments remaining low, reflecting our well-diversified business."
The bank kept its forecast to deliver income (excluding notable items) of between £13 billion and £13.5 billion in 2024 unchanged.
Thwaite added that "we are also pleased with the recent momentum in the reduction of HM Treasury's stake in the bank." He commented that "returning NatWest Group to private ownership is a shared ambition and we believe it is in the best interests of both the bank and all our shareholders."
The British government’s stake in NatWest now stands below 30% following further share sales in March. The FTSE firm was nationalised in 2008 following the outbreak of the financial crisis.
"Best of the Bunch"
Analyst Matt Britzman of Hargreaves Lansdown described NatWest as "[the] best of the bunch" following updates from FTSE rivals Lloyds and Barclays earlier this week.
He noted that "impairments came in lower than expected, net interest margin ticked higher from the previous quarter and both customer loans and deposit levels grew."
Describing the broader UK banking sector as "strong," Britzman commented that "customers [are] shifting to higher-rate accounts is slowing as expected, impairment rates on loans have stabilised at low levels, the economic outlook has improved, and balance sheets remain strong."
