NatWest has today reported a 26% rise in third-quarter profit and raised its outlook for 2024, as it expanded lending while maintaining margins in the face of falling central bank interest rates and a murky economic outlook.
The British lender reported pretax operating profit for the July-September period of £1.7 billion, up from £1.3 billion a year earlier and beating the £1.5 billion expected by analysts.
The bank is moving steadily towards a full exit from state ownership following its bailout in the 2008 crisis, with the government's stake falling below 16% as of this month.
NatWest said it now expects to achieve a return on tangible equity greater than 15% this year, up from a previous forecast of 14%.
NatWest's results were stronger than its biggest rival Lloyds Banking Group, which on Wednesday narrowly beat expectations reported third-quarter profit.
In common with rival Barclays, NatWest raised its income forecast for the year in response to slower than expected interest rate cuts, now saying it will now reach £14.4 billion from a previous estimate of £14 billion.
NatWest in July announced it would buy a £2.4 billion mortgage book from Metro Bank, seeking to expand its loan books and snap up assets from a smaller rival struggling to build scale in a competitive market.
The move, alongside the bank upgrading its performance outlook for the year, showed CEO Paul Thwaite's confidence despite a mixed British economic backdrop in which growth has been slower than expected.
NatWest reported a loan impairment charge of £245m for the third quarter, compared to £229m the same time a year ago, and said levels of default remain low across its portfolio.
A measure of the stark choices facing Britain's new Labour government will be revealed on October 30.
Finance minister Rachel Reeves will attempt to boost investment in ailing public services without spooking investors about the size of the gap in public finances, which the independent Office for Budget Responsibility has forecast will rise to £87 billion in 2024-2025.
UK consumer confidence slipped by 1 point to -21 in October, taking the score back down to a level last seen in March this year, GfK's closely-watched barometer showed today.
"As the Budget statement looms, consumers are in a despondent mood despite a fall in the headline rate of inflation," said Neil Bellamy, consumer insights director at GfK.
