Key events
NatWest: We know some people are really struggling
Katie Murray, NatWest’s chief financial officer commented, says the bank has registered a “strong performance” in the first half of 2023.
Murray says NatWest’s loan arrears (customers falling behind in repaying their debts) remain low, but many people, families and businesses are “really struggling”.
Murray says:
“NatWest Group’s strong performance for the first half of the year is underpinned by our robust balance sheet, with a well-diversified loan book, robust liquidity and stable deposit base.
“As a result, we are able to continue lending to our customers and delivering sustainable returns and distributions to our shareholders, even in the current uncertain environment.
“Although arrears remain low, we know that people, families and businesses are anxious about their finances and many are really struggling. We are being proactive in our support for those who are hardest hit, helping to build the financial resilience of the customers and communities we serve.”
NatWest beats profit forecasts
NatWest’s results for the first half of 2023 are hitting the wires now.
And it has grown its profits year-on-year, and by more than forecast.
Operating profits, before tax, have risen to £3.589bn, up from £2.62bn in the same period a year ago. That’s better than the £3.3bn which City analysts had expected.
AJ Bell investment director Russ Mould.predicts that NatWest’s results for the first six months of the year “should be fine”.
He told BBC Radio 4’s Today Programme;
Analysts are looking for a healthy increase in pre tax profits to north of 3 billion pounds.
Analysts will be looking for any sign of a slowdown in loan growth and deposit growth, Mould adds, or rises in bad loans.
The City will also look at the “all important and politically and publicly very sensitive net interest margin” (which shows how much banks earn in interest on loans compared to the amount it is paying in interest on deposit).
Introduction: NatWest to report financial results
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
NatWest faces another day in the spotlight as the British bank reveals how it performed in the last quarter, and faces ongoing scrutiny over its treatment of former UK Independence party leader Nigel Farage.
NatWest is due to release its financial results at 7am. City analysts predict it will post an operating pretax profit of £1.49bn for the second quarter of 2023.
That would take earnings so far this year up to £3.3bn, up from £2.6bn in the same period last year.
NatWest, which has lost its CEO Alison Rose and the head of Coutts, Peter Flavel, in the last two days, may try to restore a sense of order as it updates investors about its performance.
Flavel quit yesterday, admitting that Coutts had “fallen below the bank’s high standards of personal service” in the way it handled Farage’s case.
It was only a matter of time before Peter Flavel, Coutts CEO, stood down.
The ultimate responsibility for the dossier de-banking me for my political views lies with him.
I even wrote to Mr Flavel twice before going public and didn’t receive an acknowledgment.
— Nigel Farage (@Nigel_Farage) July 27, 2023
These are the 2 emails I sent to Coutts CEO Peter Flavel, before going public on this story, that he completely ignored.
An extraordinary kind of arrogance from a man asleep at the wheel. pic.twitter.com/D1zhZOqNyD
— Nigel Farage (@Nigel_Farage) July 27, 2023
But pressure continues to build on chairman Howard Davies; yesterday, Rishi Sunak offered some rather lukewarm words when asked if he backed Davies.
Davies is expected to lead today’s call with investors (the largest being the UK government), alongside new interim CEO Paul Thwaite and the chief financial officer, Katie Murray.
The ongoing turmoil has already weighed on NatWest’s shares, which fell another 0.8% on Thursday, taking their total losses since Rose’s departure to about 4.5%, knocking £1bn off the market value of the bank.
The losses will be shared by the taxpayer, as the government holds 39% of the bank’s shares, having bailed out the group during the 2008 financial crisis. The intention is to continue reducing the government’s stake, which was originally just over 50%. Concerns about the banking sector after the collapse of Credit Suisse, and the current disruption, will have left investors shaken.
NatWest results will serve as a final report card on the performance of Alison Rose, who was forced to resign after admitting she had spoken to the BBC about Farage’s account.
But they will also give important insight into the state of the banking sector, and indeed the UK economy, as rising interest rates put pressure on mortgage holders.
NatWest may put aside more money to cover rising bad debts, as more borrowers struggle with debt repayments.
The agenda
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7am BST: NatWest releases its financial results for the first half of 2023
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9am BST: Germany’s Q2 2023 GDP report
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10am BST: Eurozone consumer and business confidence report for July
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1.30pm BST: US PCE price index inflation measure for June
