NatWest (NWG Stock) share price slips despite rise in profits

Having seen decent numbers from Lloyds and Barclays, expectations were high for NatWest Group’s Q3 numbers today.

NatWest share price has been a notable outperformer so far this year, its shares up over 35%, and at 20-month highs, so the bar was quite high for today’s Q3 numbers, and quite frankly the market reaction has been a little underwhelming, with the shares dropping to the bottom of the FTSE100.

Revenues were positive coming in ahead of expectations at £2.77bn.

Profits attributable to shareholders came in at £674m, well above last year’s £61m, and while they were ahead of expectations, they were still almost half the level they were in Q2, with the bank adding back £242m in respect of non-performing loans, making a total of £949m added back so far year to date.

This was offset by the bank taking a charge of £294m after pleading guilty to three criminal charges of money laundering earlier this month.

Looking past the quarterly numbers the bank is still well ahead of where it was a year ago, with profits year to date at £2.5bn, compared to a £644m loss over the same period in 2020.

The bank still continues to struggle where net interest margins are concerned, as they fell back to 1.54%, from 1.61% in Q2.

In terms of lending and client activity NatWest reported similar trends to Lloyds before it. With net loans to customers rising to £180.5bn, with mortgage lending quite strong. Personal loans and credit card lending was a little more subdued, however it still rose by £100m, reflecting a willingness perhaps of the consumer to spend more money as the economy reopened over the summer.     

Customer deposits across the different divisions rose by £9.1bn, with retail seeing an increase to £186.3bn from £184.1bn.

The bank kept its full year guidance unchanged, saying it was optimistic about the UK economy going forward with low levels of loan defaults, due to lower levels of unemployment.