The banks have spent 14 years recapitalising. Value environment and financials like rising rates (which I foresee continuing elevated, i.e. never going back to 0%).

No concern, expect financials to do well this decade.

6% or 9% moves are nothing. Are we investors or traders?

Here’s a succinct summary by Proactive. Having read it I can still feel myself saying “Huh?!” like I did yesterday for a full 5 minutes, head shaking in disbelief before calmly buying a load more shares. Time will tell on this one, but I suspect we’ll see a SP of £3 again relatively soon. Other outcomes are available.



NatWest Group PLC (LSE:NWG) reported a strong increase in annual profits, a big hike to the dividend and an £800mln share buyback as rising interest rates boosted performance.

Operating pre-tax profits in the 12 months to 31 December 2022 rose to £5.13bn from £3.84bn the year before, broadly in line with City expectations, while total income jumped to £13.16bn from £10.43bn and earnings per share rose to 33.8p from 27.3p.

Bank net interest margin (NIM) for the year was 2.85%, 55 basis points (bps) higher than 2021, with a strong increase in the fourth quarter to 3.2%, up 21 bps compared to the third quarter of 2022.

The FTSE 100-listed lender said it expects NIM of 3.2% in 2023, assuming interest rates of around 4% for the rest of the year.

Impairment charges were £337mln in 2022, around 9 bps of gross customer loans, principally reflecting the latest macro-economics.

“Underlying book performance remains strong, with credit conditions remaining benign and levels of default remaining low,” the bank said.

Impairment losses in 2023 are expected to be in line with the bank's through the cycle guidance of 20-30 bps, NatWest added.

The bumper profits saw shareholders rewarded with a final dividend of 10p, up from 7.5p a year ago, and the lender became the latest high profile firm to propose a share buyback, of up to £800mln. This will start in the first half of the new financial year.

NatWest said this took “total distributions deducted from capital in the year to £5.1bn, or 53p per share”.

Net lending increased by £7.3bn to £366.3bn during 2022, primarily reflecting £14.4bn of growth in Retail Banking mortgages, with gross new mortgage lending of £41.4bn, and a £5.7bn increase in Commercial & Institutional, partially offset by a £6.4bn decrease related to the exit from the Republic of Ireland.

The CET1 ratio of 14.2% was 170 bps lower than a year ago reflecting distributions and linked pension accruals.

NatWest continues to expect a return on tangible equity of 14-16%, forecast income for the year of £14.8bn and sees dividend payouts of 40% of attributable profit with further share buybacks dependent on government policy and limited to 4.99% of share capital.

…. or gamblers!

For any other holders still scratching their heads following the (over-?) reaction to Friday’s results, this summary by the pros at Barclays might be reassuring? Always good to get another perspective. Berenberg also updated their NWG guidance today, reducing their target price slightly to 360p as did Bank of America, to 390p (both rating it as a BUY). Obviously other opinions are available!! I always find these types of opinions (guesses?!) and the reasoning behind them really interesting.



Barclays Capital has cut its near-term earnings estimate for Natwest Group PLC following lower pre-provision profits but has lifted outer years slightly on lower impairments.

The UK clearing bank's current-year revenue guidance of £14.8bn appears underpinned by a number of conservative assumptions, which suggest upside potential, the research note said.

However, the outlook for deposits has emerged as a key area of uncertainty following fourth quarter outflows sooner than expected, rising deposit betas and mix shift, it said.

Barclays Capital sees Natwest's potential deposit outflows as potentially more significant than peers, it said.

Excess liquidity, resulting from Covid deposit inflows, is a rich source of income for the bank but any potential unwinding of this liquidity position, perhaps as a result of deposit outflows, could prove key.

Capital returns remain a key attraction, but Natwest's ongoing strategic efforts to address 'a structural underweight' in fee income may require further inorganic growth, following the recent acquisition of Cushon, Barclays said.

The shares were trading at about one time this year's tangible assets for a 15.7% to 15.2% return on tangible equity, the note said.

Barclays repeated its 'equal weight' recommendation on the stock and 400p price target - which is a 41% premium to the current share price of 283p.

Of the 22 banks and brokers following Natwest, 17 are positive on the stock. The consensus price target is 370p.

Thanks for the info.