Bank setback

NatWest shares plunge over customer concerns

Royal Bank of Scotland Gogarburn
NatWest HQ: the board is seeing ‘growing concerns among customers’ (pic: Terry Murden)

Shares in NatWest, trading as Royal Bank of Scotland north of the border, plunged 9.2% (22.8p)  to 225.65p as the bank warned of changes in customer behaviour.

It posted a lower attributable profit of £2.1bn for the nine months to 30 September from £2.5bn last year. The bank has taken an Impairments charge of £242m for Q3.

Underlying (operating) profit before tax came in at £4.1bn for the period, up from £3.5bn last year. Third quarter pre-tax profit came in flat at £1.1bn.

Alison Rose, chief executive, insisted that in a “challenging environment”, NatWest Group continues to deliver a “strong financial performance”.

However, she added: “At a time of increased economic uncertainty, we are acutely aware of the challenges that people, families and businesses are facing.

“Although we are not yet seeing signs of heightened financial distress, we are very conscious of the growing concerns of our customers and we are closely monitoring any changes to their finances or behaviours.

“The bank’s strong capital and liquidity mean we are able to help those who are likely to need it the most, through support for our community partners, proactive outreach to our customers and targeted lending packages for the most impacted sectors.”

On a media conference call, she said the decision to switch auditor from EY to PwC was “normal rotation”.

AJ Bell head of investment analysis, Laith Khalaf said: “The market did not like what it heard from Natwest one little bit.

“In one sense this was a surprise, the company upgraded its income forecast and revealed it had grown its mortgage business substantially.

“While chief executive Alison Rose says there are no signs yet of families facing added financial distress, the material increase in provisions tells a rather different story.

“Natwest’s larger mortgage book could be both a blessing and a curse as people move off fixed rate deals and find themselves needing to re-mortgage at rates they will struggle to afford.

“Its quarterly profit was also marred by rising costs and the impact of the company’s exit from Ireland. It could ill-afford to disappoint on this front given how jumpy markets are right now.”

Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.