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NatWest Q2 2023 Results


NatWest, one of the leading banks in the United Kingdom, recently released its financial results for the second quarter of 2023. Let’s dive into the key highlights:

Operating Pretax Profit Surpasses Expectations

NatWest reported an operating pretax profit of £1.77 billion ($2.26 billion) for the three-month period ending on June 30. This figure exceeded both the company-compiled consensus estimate of £1.49 billion and the £1.40 billion reported in the same quarter of the previous year.

Net Profit Beat Expectations

The bank’s net profit attributable to ordinary shareholders amounted to £1.02 billion, surpassing the consensus estimate of £1.00 billion. However, it was slightly lower than the £1.05 billion reported in the corresponding quarter of the prior year.

Impressive Total Income

NatWest’s total income for the second quarter climbed to £3.85 billion, exceeding the consensus estimate of £3.71 billion. Net-interest income played a significant role in this increase, contributing £2.82 billion. The estimate for net-interest income had been set at £2.90 billion. In comparison, during the same period last year, total income amounted to £3.21 billion, including net-interest income of £2.31 billion.

What Caught Our Attention

Here are a few noteworthy points that caught our attention:

Net Interest Margin Slips

The bank’s net-interest margin for the second quarter was 3.13%, slightly lower than the estimated 3.22%. NatWest revised its 2023 guidance from around 3.20% to less than 3.20%. They also revealed their current projection for the full year stands at 3.15%.

Common Equity Tier 1 Ratio

NatWest’s common equity Tier 1 ratio, an important indicator of balance-sheet strength, stood at 13.5% as of June 30. This figure fell slightly short of the consensus estimate of 13.8% for the end of the period.

Capital Returns Strategies

The bank declared an interim dividend of 5.5 pence per share, which was slightly below the anticipated payout of 5.7 pence. However, investors were pleasantly surprised when NatWest announced a share buyback program worth £500 million for the second half of the year. The market consensus had expected a smaller buyback amounting to £251 million.

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