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.