NatWest Shares Up as Profits Beat Expectations

Metro
Bank
shares
meanwhile
climbed
5.8%
to
40.05p.

The
high
street
lender
reported
total
income
of
£7.13
billion
for
the
first-half
of
2024,
down
7.7%
on-year
from
£7.73
billion.
Net
interest
income
dropped
5.6%
to
£5.41
billion
from
5.73
billion.
Pretax
profit
declined
16%
to
£3.03
billion
from
£3.59
billion.

In
the
second-quarter,
total
income
fell
5.0%
annually
to
£3.66
billion,
but
beat
company-compiled
consensus
of
£3.41
billion.
Pretax
profit,
which
declined
14%
to
£1.70
billion,
beat
consensus
of
£1.26
billion.

Impairment
charges
fell
to
£48
million
from
£223
million.

Net
interest
margin
of
2.10%
was
5
basis
points
higher
than
the
first
quarter
primarily
due
to
improved
deposit
margins,
the
firm
said.
But
it
was
down
from
2.23%
from
a
year
prior.

The
CET1
capital
ratio
was
little
changed
at
13.6%
at
the
end
of
the
second
quarter
compared
with
13.5%
in
the
previous
three
months.

NatWest
raised
its
interim
dividend
by
9.1%
to
6.0
pence
per
share
from
5.5p.

Chief
Executive
Paul
Thwaite
pointed
to
growth
across
the
business.

“We
have
attracted
over
200,000
new
customers
and
our
acquisition
from
Sainsbury’s
Bank
is
expected
to
add
around
one
million
customer
accounts
on
completion,”
he
noted.

He
hailed
“positive
momentum
and
progress
in
the
first
half”,
and
said
customers
are
“beginning
to
feel
more
confident,
with
activity
increasing
and
asset
quality
remaining
strong.”

Looking
ahead,
NatWest
now
expects
to
achieve
a
return
on
tangible
equity
above
14%,
its
outlook
raised
from
“around
12%”.

Income
excluding
notable
items
to
be
around
£14.0
billion,
ahead
of
its
previous
forecast
in
the
range
of
£13.0
billion
to
£13.5
billion.

Thwaite
said
he
was
“pleased”
with
the
continued
reduction
of
the
government’s
stake,
which
has
almost
halved
this
year.

After
the
market
close
Thursday,
Bloomberg
reported
Chancellor
Rachel
Reeves
is
leaning
toward
offloading
a
substantial
portion
of
the
government’s
£5.6
billion
stake
in
NatWest
to
institutional
shareholders
rather
than
continuing
with
her
predecessor’s
plans
to
offer
it
up
to
the
UK
public,
citing
people
familiar
with
the
matter.

The
sale
to
institutional
shareholders
would
come
alongside
the
government’s
existing
gradual
winding-down
of
its
shareholding
through
a
series
of
open
market
sales,
the
people
said.

Earlier
this
month,
the
government’s
stake
in
the
lender
dropped
below
20%
for
the
first
time
since
2008.

NatWest
said
the
deal
with
Metro
Bank
will
see
it
acquire
up
a
£2.5
billion
portfolio
of
prime
UK
residential
mortgages,
with
a
weighted
average
current
loan
to
value
of
around
62%.

Metro
said
it
had
agreed
to
sell
the
mortgage
book
to
NatWest
for
£2.4
billion
in
cash.

CEO
Thwaite
said
the
deal
would
see
NatWest
welcome
around
10,000
customers
to
the
bank.

“This
transaction
is
a
further
opportunity
to
accelerate
the
growth
of
our
retail
mortgage
book
within
our
existing
risk
appetite,
with
attractive
returns.
It
is
in
line
with
our
strategic
priorities
and
builds
on
our
recent
acquisition
from
Sainsbury’s
Bank.
We
are
focused
on
a
smooth
transition
and
have
a
strong
track
record
of
successful
integration
with
Metro
Bank,
following
our
previous
acquisition
of
mortgages
in
2020.”

In
June,
NatWest
agreed
to
buy
the
retail
banking
assets
and
liabilities
of
Sainsbury’s
Bank
from
J
Sainsbury
(SBRY).

NatWest
expects
to
acquire
around
£2.5
billion
of
gross
customer
assets,
comprising
£1.4
billion
of
unsecured
personal
loans
and
£1.1
billion
of
credit
cards
balances,
together
with
around
£2.6
billion
of
customer
deposits.

NatWest
also
expects
to
add
around
one
million
customer
accounts.

NatWest
said
the
impact
of
the
transaction,
based
on
its
CET1
ratio
at
June
30,
equates
to
a
reduction
of
less
than
10
basis
points.

Metro
Bank
CEO
Daniel
Frumkin
said:
“The
sale
is
in-line
with
Metro
Bank’s
strategy
to
reposition
its
balance
sheet
for
higher
risk
adjusted
returns
on
regulatory
capital.

“The
additional
lending
capacity
provided
by
this
sale
will
enable
us
to
continue
our
shift
into
high
yielding
assets
in
niche
and
underserved
markets
and
become
a
specialist
lender
of
choice.”

The
transaction
is
earnings,
NIM
and
capital
ratio
accretive,
and
creates
additional
lending
capacity
to
enable
Metro
Bank
to
continue
its
asset
rotation
towards
higher
yielding
commercial,
corporate,
SME
lending
and
specialist
mortgages,
the
company
added
in
a
statement.

By
Jeremy
Cutler,
Alliance
News
reporter

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