NatWest shares (LON: NWG) jumped by more than 7% in Friday's trading session, setting new 52 week and 5 year highs (368.90p) before settling into the close at 361.90p. This run extends the appreciation in the stock to 64.35% through 2024, as the bank continues to impress across multiple metrics.
Ending the week on such a high was in part due to Natwest announcing an agreement to acquire a £2.5 billion portfolio of prime UK residential mortgages from Metro Bank plc, along with earnings that significantly beat consensus expectations.
With a weighted average current loan-to-value of approximately 62%, this acquisition is set to welcome around 10,000 customer accounts to NatWest, although Metro Bank will continue servicing these accounts under the existing arrangements.
Paul Thwaite, CEO of NatWest Group, highlighted the strategic benefits of the transaction: “We are acquiring £2.5 billion of prime residential mortgages from Metro Bank and, as a result, look forward to welcoming around 10,000 customers to NatWest Group.
“This transaction is a further opportunity to accelerate the growth of our Retail mortgage book within our existing risk appetite, with attractive returns. It is in line with our strategic priorities and builds on our recent acquisition from Sainsbury's Bank.”
The transition is expected to be smooth, leveraging NatWest's successful track record with Metro Bank, including a previous mortgage acquisition in 2020. The impact of this transaction on NatWest's Common Equity Tier 1 (CET1) ratio is minimal, reducing it by less than 10 basis points from its reported 13.6% as of 30 June 2024.
Completion of the transaction is anticipated to occur in the second half of 2024. This acquisition marks another strategic step for NatWest in strengthening its position in the UK residential mortgage market.
Elsewhere on Friday, The FTSE 100 bank posted its interim results, reporting a pretax operating profit of £3 billion, down from £3.6 billion last year, although it was ahead of the consensus estimate of £2.6 billion.
Net interest income, the revenue made from lending minus the cost of deposits, fell by 6%, declining to £5.4 billion from last year's figure of £5.7 billion.
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