NatWest Shares Hit Multi Year High as Profits Soar

NatWest's share price (NWG) made new 52 week highs to end the week, with 2.12% gains on the day bringing the YTD appreciation to a cumulative 67.53%. The bank's shares popped up to the new high bar of 381.50 in early trading, before giving up some of the gains on the day, as the FTSE 100 turned red, with competitor Lloyds Bank's results weighing on the index.

A substantial increase in third-quarter profits for Natwest helped the London-based banking institution to £1,172 million, reflecting a robust return on tangible equity (RoTE) of 18.3% for the period. This mark of profitability exemplifies a significant enhancement from previous figures, solidifying NatWest's financial growth trajectory.

The driving forces behind this financial uptick were a combination of vigorous lending activity and margin expansion. Specifically, NatWest's net loans to customers experienced an upswing of £8.4 billion. This increase in lending operations, coupled with a rise in customer deposits by £2.2 billion, depicts a healthy demand for the bank's services and buoyant customer confidence.

A closer look at the figures highlights a net interest margin (NIM) improvement to 2.18%, and the total income, excluding notable items, standing at £3,772 million. Further underscoring operational efficiency, the bank also reported a decline in other operating expenses by £144 million compared to the previous quarter.

From a fiscal health perspective, the liquidity coverage ratio (LCR) of NatWest was reported at 148%, with a substantial headroom of £52.7 billion above the 100% minimum requirement. Additionally, NatWest’s Common Equity Tier 1 (CET1) ratio showed improvement, reaching 13.9%.

In terms of year-to-date performance, NatWest's attributable profit was tallied at £3,271 million with a RoTE of 17.0%. The bank remains optimistic, projecting a return on tangible equity above 15% by 2024.

Looking ahead, NatWest outlines strategic objectives to maintain operating costs stable while aiming for a loan impairment rate for 2024 below 15 basis points. Moreover, the bank is setting its sights on achieving a return on tangible equity of over 13% by 2026.

NatWest Group's third-quarter financial performance presents a robust case for its forward-looking strategies and operational resilience. Shareholders and customers alike can look towards the future with heightened confidence as the bank navigates through the transitional financial landscape.