NatWest beats forecasts as higher rates drive profits
By Frank Prenesti
Date: Friday 29 Jul 2022
(Sharecast News) - UK bank NatWest on Friday reported better-than-expected profits driven by rising interest rates.
The bank posted pre-tax profits of £2.6bn for the six months to June 30, up from £2.3bn a year earlier and above £2.2bn average in a company-compiled forecast by analysts.
Net interest margin, the difference between lending and savings rates, rose 26 basis points to 2.72% was 26 basis points higher than the first quarter, driven by the impact of base rate rises. NatWest also released £46m in bad debt provisions at a time when rivals were setting more cash aside as the credit crunch and rising prices start to hit hard-pressed households.
The Bank of England has been raising rates in an attempt to quell runaway inflation amid Britain's cost-of-living crisis.
NatWest declared an interim dividend of 3.5p a share and a special payout with share consolidation of £1.75bn, equivalent to 16.8p a share.
Around half of the dividends will end up with the UK Treasury as the taxpayer still holds a 48% stake in the bank after a £46bn state bailout at the height of the 2008 banking scandal.
Looking ahead, NatWest said it expected full-year income excluding notable items of around £12.5bn for 2022, an iuncrease from the £11bn forecast last April. The bank expects a return on tangible equity of 14% - 16%, compared with prior estimates of 10%.
Reporting by Frank Prenesti at Sharecast.com
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