SHARES in Royal Bank of Scotland owner NatWest Group surged nearly 5% this morning after annual profits beat City forecasts and interim boss Paul Thwaite was confirmed as its permanent chief executive.
The state-backed lender reported an operating pre-tax profit of £6.2 billion for 2023, up 20% on the year before and ahead of the £6bn expected. Profits for the fourth quarter dipped to £1.26bn from £1.43bn in the corresponding period in 2022, which was broadly in line with forecasts.
Profits for 2023 were helped by provisions for bad debts coming in lower than had been expected, with provisions anticipated to remain low in 2024.
The bank will be looking to Mr Thwaite to continue to steady the ship following last year’s Nigel Farage “de-banking” scandal, which saw former chief executive Dame Alison Rose lose her job after she admitted to being the source of BBC stories concerning the financial affairs of the former UKIP leader.
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The appointment comes at a crucial time for NatWest, as the UK Government prepares to sell off the public’s stake in the lender. NatWest remains 37.97% owned by UK taxpayers, a legacy of its £45.5bn bail-out by the Government during the financial crisis of 2008 and 2009. A retail sale of the shares is expected this summer.
Matt Bitzman, equity analyst at stockbroker Hargreaves Lansdown, said: “NatWest is out with a big profit beat as Paul Thwaite gets confirmed as permanent CEO. Impairment charges were better than expected as customers continued to show remarkable resilience in the face of higher inflation and interest rates. Absent any major shock to unemployment, low default rates are expected to continue over 2024.
He added: “Retail customers continue to go in search of better rates from longer-term savings accounts. But crucially for NatWest, the pace of deposit migration was significantly slower in the fourth quarter than in the prior. Perhaps a sign that the peak in migration has come and gone – good news for net interest margins.
The bank this morning announced a final dividend of 11.5p per share. Along with an on-market buyback programme of up to £300m in 2024, the bank said total distributions deducted from capital in the year will total £3.6bn.
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Mr Thwaite, who was formerly chief executive of NatWest’s commercial and institutional business, said: “As we look ahead, I am ambitious and confident for the future of NatWest Group. We should not underestimate the strength of our foundations or the opportunity to build deeper relationships with our 19 million customers.
“Our number one priority is to serve our customers well and provide them with the products, services, and expertise they need. This year we are focussed on the things we can control; delivering profitable growth, becoming more efficient, more productive, and simpler to deal with, whilst managing our cost and capital efficiently. Together, these actions will drive long-term, sustainable value for our customers, shareholders, and the wider UK economy.”
Shares in NatWest were trading at 2.24.4p around 10.05am, up 4.71% or 10.1p.
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