PAUL Thwaite, chief executive of NatWest Group, may be wishing all Fridays could be like this.
The Liverpudlian had plenty to shout about when the Royal Bank of Scotland owner reported its first-half results to the City. Sure, profits and income were down, as they come up again tough comparisons with last year when results were driven high by the steady rise in interest rates.
But they were a lot better than the City had anticipated, as the bank rode the tailwind of increased customer activity and the improving economic outlook. Moreover, the bank expects conditions to improve further in the second half, giving it the confidence to increase its income guidance for the full-year to £14 billion from the £13bn to £13.5bn guided previously. It was enough to impress the City, which sent shares in the bank surging up by around 7%.
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Further cheer for investors came from the bank’s announcement that it had acquired £2.5 billion of prime UK residential mortgages from Metro Bank, with the deal adding a further 10,000 customer accounts to its retail banking operation. That came hard on the heels of NatWest’s acquisition of the retail banking assets and liabilities of Sainsbury’s Bank in June, which added around £2.5bn of gross customer assets to its balance sheet.
Mr Thwaite said the two acquisitions had brought “scale at attractive returns” to NatWest’s retail business and left the door open to further deals, while highlighting the bank’s strong potential to achieve continuing organic growth.
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The bank also provided some new information on the possible sale of the UK Government’s near-20% shareholding in the lender, telling the City that it has £24 million has been spent on preparations for ‘Tell Sid’ style offer.
However, doubts persist over whether the offer will go ahead following the change in Government at Westminster.
Mr Thwaite said it was down to the Government to decide if the sale proceeds and expressed satisfaction with progress made in selling down the public’s stake, which has nearly halved since December as a result of the ongoing trading plan and a directed buyback that took place in May.
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