NatWest: the bank’s strength in numbers should hold

NatWest ended the quarterly reporting season of UK High-Stream Banks in a tone of encouragement. The former Royal Bank of Scotland recorded a 40% increase in pre-tax profits to £ 1.2bn compared to a year ago, which easily surpassed analysts’ forecasts.

This is good news for investors – including the government, which Holds a little less than half Bank shares – but also positive for the wider economy. Businesses, homeowners and others are more borrowers. While savers are moving further away than in the past, these sturdies are well below epidemic levels.

Also, rising interest rates help lenders, although competition and interest rate volatility reduce some of the benefits. NatWest’s spread on new or renewed mortgages is just 44 basis points, though it expects to raise it to 60 bp for applications in the current quarter.

Complacency would be wrong, like the NatWest bosses Well aware. Its customers have a lot to worry about in the form of obscure supply chains, exorbitant energy prices and the wider cost of living crisis. Providing conservative loans and the severe disruptions that precede clients’ worries are aimed at reducing pain.

The UK lender has a comfortable capital cushion, with a combined capital ratio of 15.2% at the end of the quarter, well above peers even if lower than analysts’ expectations. NatWest has a surplus of 14% by the end of the year.

Shareholders will love it because it is expected to lead to more payments over time, as well as a fixed cost compression that is expected to be 3 percent in 2022. This partly explains the relatively healthy valuation. Trading at 0.8 times the value in the book puts it at a slight premium to colleagues in the area.

NatWest may be a shadow Of the bloated RBS, which demanded government bailout during the global financial crisis, but is rapidly improving. Shares for the year to date have outperformed British-street counterparts, trailing only after Asia-focused HSBC. NatWest in good condition as it has been for a long time.

NatWest: the bank’s strength in numbers should hold Source link NatWest: the bank’s strength in numbers should hold

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