Natwest shares soar as lender lifts performance forecasts 

Shares in Natwest soared today after the group’s third quarter profit grew by 26 per cent, as the lender reported solid growth driven by its lending.

For the third quarter of 2024 the banking group recorded an operating pre-tax profit of £1.7bn, nearly a third higher than the £1.3bn generated this time last year.

Markets have reacted positively to the results as Natwest’s share price jumping nearly five per cent when the market first opened.

The Big Four bank’s total income, excluding notable items, rose to £3.77bn, a more than five per cent increase from the previous quarter, largely driven by growth in lending, deposits and net interest margin (NIM).

Other operating expenses declined by £144m compared to the second quarter. But were £38m higher, excluding costs in relation to a retail share offering, than the same period of 2023.

The bank recorded a net impairment charge of £245m with defaults “remaining at low levels” across the loan portfolio.

In terms of lending growth, net loans to customers, excluding central items, increased by £8.4bn, bolstered by a £2.3bn acquisition of Metro Bank’s mortgage portfolio and broad-based growth across the bank’s three business segments.

Notably, mortgage balances rose by £1.4bn over the quarter. Additionally, customer deposits, excluding central items, grew by £2.2bn, driven by savings accumulation across all three business units.

Looking ahead, the banking group states that it remains focused on adapting to evolving economic conditions, continuing to monitor market trends closely and adjusting its internal forecasts accordingly.

For 2024, the Natwest now aims to achieve a return on tangible equity above 15 per cent, with income excluding notable items projected to reach approximately £14.4bn.

It stated that its group operating costs, excluding litigation and conduct-related expenses, are expected to remain stable relative to 2023, with slight increases anticipated due to bank levies and costs linked to a retail share offering.

Commenting on the results, chief executive, Paul Thwaite said: “Throughout the third quarter of 2024, we have grown our lending, helping customers to buy or remortgage their homes or to start and grow their businesses.”

“With customer activity increasing, defaults remaining low and optimism amongst businesses and consumers, we are well placed to succeed with our customers and for our shareholders in the months and years ahead,” he added.

Matt Britzman, senior equity analyst, Hargreaves Lansdown stated that “NatWest marks the third major UK bank to report better than expected results this week, but this time it’s not driven by impairments.”

“Better income and costs drove the beat today, offset by higher impairments than expected, which does buck the trend we saw from Lloyds and Barclays,” he added.