NatWest joins rivals in toasting forecast-beating profits

NatWest Group has become the latest banking giant to report better-than-expected third-quarter profits after a rise in loans and deposits.

The owner of Royal Bank of Scotland revealed a pre-tax operating profit of £1.7bn for the three months to September, compared with analysts’ forecasts of £1.5bn.

Profits were boosted by revenue growth of 7.3 per cent year-on-year to £3.7bn, thanks to higher loan volumes, deposit margin growth and increased client activity in capital markets .

Its net interest margin – the difference between what banks pay savers and what they charge borrowers – rose eight basis points from the previous quarter, to 2.18 percent.

At the same time, net lending to consumers increased by £8.4 billion, much of which came from the acquisition of Metro Bank’s residential mortgage portfolio.

NatWest’s profits further benefited from operating expenses falling by £102m to around £1.8bn, partly due to staff cuts and a non-recurrence of property disposal losses.

But NatWest declared £245m in impairment charges for the period, up from £45m of releases in the equivalent period last year.

This was above the £173m analysts expected the bank to set aside for bad loans.

NatWest now expects a return on tangible capital in excess of 15 per cent and revenue, excluding notable items, of around £14.4bn.

Paul Thwaites, chief executive of NatWest, said: “With customer activity increasing, defaults low and optimism among businesses and consumers, we are well positioned to succeed with our customers and shareholders in the months and years ahead.” coming.”

NatWest’s results come just after Barclays and Lloyds also announced they had beaten analysts’ projections in their third quarter results.

Barclays said its pre-tax profits rose 18 percent to £2.2 billion in the July to September period, supported by deals in its investment banking division.

And on Tuesday, Lloyds Banking Group reported £1.8bn in pre-tax profits, which it attributed to structural hedging gains boosting overall revenue levels.

Structural hedging is a financial strategy used by banks to preserve profits against interest rate fluctuations.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: ‘Looking ahead, the start of an interest rate cut cycle has eased pressure on deposits and mortgages.

‘Meanwhile, the anticipated economic pain from rising rates never really happened, or at least hasn’t happened yet.

“That leaves NatWest well positioned to benefit from improved trends and lean on structural hedging, which will act as a strong driver of earnings over the medium term.”

NatWest Group Shares rose 5.2 per cent to 380.5p on Friday morning, making them the top performers on the FTSE 100 index and taking their gains to around 72 per cent since the start of the year.