NatWest Group PLC profit beats City expectations

NatWest Group PLC (LSE: NWG) has reported strong growth in revenue and profit for the first quarter, although competition has led to a decrease in deposits.

The FTSE 100-listed lender described its Q1 2023 performance as “strong,” reporting an operating profit before tax of £1.82bn, up from £1.22bn from the previous year, and surpassing the City’s expected forecast of £1.6bn.

NatWest Group’s Chief Executive, Alison Rose, stated that the Q1 2023 performance was due to the lender’s robust balance sheet, high levels of capital and liquidity, and well-diversified loan book.

Total income increased by 37.2% to £1.04bn, primarily due to volume growth and yield curve movements. The bank also benefited from a rise in net interest margin, which climbed 7 basis points (bps) quarter-on-quarter to 3.27%.

However, customer deposits were reduced by £11.1bn or 2.6% during the quarter, reflecting the impact of higher customer tax payments, competition for deposits, and an overall market liquidity contraction.

The CET1 ratio increased by 20 bps to 14.4%, while operating expenses rose by 12.5% due to higher staff costs and the exit from the Republic of Ireland. The lender made a bad debt provision of £70mln but confirmed that default levels remain stable at low levels.

NatWest Group reported an increase in lending to customers of 1.6% to £352.4bn, reflecting £3.9bn of mortgage growth in Retail Banking and a £1.6bn increase in Commercial & Institutional. The return on tangible equity was 19.8%, nearly double last year’s 11.3%, but down from 20.6% in Q4.

The lender has maintained its guidance for the current financial year despite a decline in deposits.

Linking Shareholders and Executives :Share Talk

If anyone reads this article found it useful, helpful? Then please subscribe or follow SHARE TALK on our Twitter page for future updates. Terms of Website Use All information is provided on an as-is basis. Where we allow Bloggers to publish articles on our platform please note these are not our opinions or views and we have no affiliation with the companies mentioned

Weekly Newsletter

Sign up to receive exclusive stock market content in your inbox, once a week.

We don’t spam! Read our privacy policy for more info.