Natwest Group (NWG) Shares Plunged 18% on Q3 Earnings Miss

The Natwest Group PLC (LON: NWG) share price plunged 17.9% after releasing its interim Q3 earnings results, where the attributable profit reached £866 million, accompanied by a return on tangible equity (RoTE) of 14.7%.

Year to date, the company’s attributable profit stood at £3,165 million, with a RoTE of 17.1%. The decline in NWG’s share price was triggered by its earnings results, missing analysts' estimates. 

Total income, excluding notable items, saw a notable increase of £117 million, equivalent to 3.4% compared to Q3 2022. The increase was primarily attributed to the impact of volume growth and favourable movements in the yield curve. 

Over the nine months ending on September 30, 2023, total income, excluding notable items, amounted to £10,897 million, representing a substantial £1,602 million increase over the previous year.

The bank's net interest margin (NIM) was 2.94% in Q3 2023, 19 basis points lower than Q2 2023. This reduction was mainly attributed to changes in the deposit mix, as customers moved their balances from non-interest-bearing current accounts to interest-bearing savings accounts, especially term accounts.

Additionally, the ongoing impact on mortgage margins, as the higher-margin Covid-era book matured and was replaced at lower margins, contributed to the decline. The year-to-date bank NIM was 3.11%.

Other operating expenses increased by £22 million, equivalent to a 1.2% rise compared to Q3 2022. Over the nine months ending September 30, 2023, other operating expenses totalled £5.6 billion, representing a £345 million increase, or 6.6%, over the previous year. 

Natwest Group’s Chief Executive, Paul Thwaite, commented: “Today's Q3 2023 results show that NatWest is a strong bank which is performing well, generating sustainable profits and returns. This performance is built on the foundations of strong customer franchises and a robust balance sheet with high levels of liquidity and a well-diversified loan book. As a result, credit losses and impairments remain low, and we are ready and able to stand by our customers and businesses through the current economic uncertainty. Our leadership team has come together to ensure we all keep our eyes on the things that matter most – the 19 million people, families, and businesses we serve.”

Natwest (NWG) share price. 

The Natwest share price plunged 17.90% to trade at 168.47p from Thursday’s closing price of 205.20p.