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NatWest confirmed the permanent appointment of Paul Thwaites as chief executive on Friday, as the company reported better-than-expected results driven by rising interest rates.
The Bank of England's pre-tax operating profit for the three months to December fell 12% from a year earlier to £1.3bn, broadly in line with analyst forecasts. Meanwhile, sales fell 5% year-on-year to £3.5 billion, but exceeded market expectations of £3.4 billion.
For the full year, the company reported a 20% rise in profit to £6.2bn, beating expectations of just under £6bn. Shares rose 2% in Friday morning trading.
natwest The company said its net interest margin (the difference between the interest it receives on loans and the interest it pays on deposits) fell 8 basis points to 2.86% in the fourth quarter as customers shifted to higher-yield savings products. However, the annual net interest margin improved from 2.85% year-on-year to 3.04%.
NatWest did not provide guidance on next year's net interest margin, a closely watched metric amid expectations of rate cuts. The bank also lowered its outlook for return on tangible equity (ROTE), a key indicator of a bank's profitability, to a target of around 12% next year and more than 13% by 2026.
„This is a bank that used to be expected to have a rolling return of 14% to 16% over the medium term,“ said Benjamin Thoms, an analyst at RBC Capital Markets. „Currently, the company is a bank that is expected to achieve a 13% rotation in 2026,“ he said, adding that „earnings could be pulled down.“
The leading lender said retail bank customer deposits fell by £400m over the year due to lower current account balances, but growth in high-yield term products as customers took advantage of better interest rates. He said that this was partially offset by the NatWest said 16% of all customer deposits were held in term accounts at the end of the year, up from 6% in the same period last year.
But Chief Financial Officer Katie Murray said the trend was „slowing towards the end of the year“ and should stabilize further this year. The bank grew its deposit base by 1.9% in the final quarter, thanks to inflows worth £5.4bn into fixed deposit and instant access savings products, offsetting a £1.9bn decline in current account balances.
NatWest and its competitors have offered higher interest rates after the Financial Conduct Authority warned major lenders in July that they were too slow to share the benefits of a changing macroeconomic environment with customers. There is pressure to pass this on to savers.
Mr Thwaite stepped in after former chief secretary Dame Alison Rhodes resigned in July last year at the height of Nigel Farage's „debankment“ scandal.
His appointment was led by incoming chairman Rick Haythornwaite and ends a period of uncertainty regarding the bank's leadership. The approval clears the way for the government, which owns about 35% of the financial institution. keep pressing The company will sell its shares at retail before the end of the summer.
Mr Haythornthwaite claimed there was „no pressure whatsoever from the government“ to expedite the search process, but when he joined the board in early January, a figurative “ Bake Off,“ which led to a „very intense fight.“ 6 week process.”
Despite rising costs of living, the lender set aside £126m in bad debt provisions, compared to market expectations of £242m, as defaults across its loan book remained at a „low and stable“ level. Accumulated.
The group announced it would pay shareholders a final dividend of 11.5p per share and said it intended to acquire up to £300m of its own shares in 2024.
The state-backed bank announced it would pay out £356m in bonuses to staff, just below last year's £367m. NatWest announced in November that Mr Rose would be forfeiting £7.6m of his unpaid salary and bonuses due to him from the bank.