Markets: Live

NatWest (RBS) profits jump | UK retail sales rebound


Royal Bank of Scotland Gogarburn

NatWest Group, trading as Royal Bank of Scotland north of the border, has posted underlying profit for 2022 of £5.1 billion against £3.8bn last time.

Attributable profit came in at £3.3bn from £3bn in the previous 12 months.

The bank announced that its bonus pool is up to £367.5m from £298m in 2021 as a reflection of improved performance. This included a total potential payout of £5.25m to its chief executive, Dame Alison Rose, who is the first in post to receive a cash bonus since the bailout in 2008.

It is recommending a 10 pence per share final dividend and an £800m share buyback. The net interest margin – the difference between what bank charges on loans and savings – rose 55 basis points to 2.85%.

Dame Alison said the bank made considerable progress against its strategic goals, maintained a well-balanced loan book and distributed significant capital to shareholders, including the UK government.

“Despite not yet seeing significant signs of financial distress among our customers, we are acutely aware that many people and businesses are struggling right now and that many more are worried about what the future holds,” she said.

“Our robust balance sheet, responsible lending and continued capital generation allow us to proactively support those who need it, whilst helping others to get ahead of the challenges to come. 

“As well as supporting our customers, this financial strength also allows us to continue investing in our business to meet their changing needs. By building long term relevance, trust and value through our purpose-led strategy, we will deliver sustainable returns and, ultimately, help to drive economic growth across the UK.”

FY’22 financials

  • Operating profit before tax – £5.1bn, vs £3.8bn in FY ’21.
  • £1.4bn for Q4 ‘22 vs £543m in Q4 ’21. 
  • Attributable profit – £3.3bn vs £3bn in FY ‘21.     
  • £1.3bn for Q4 ‘22 vs £434m in Q4 ’21. 
  • Impairments – £337m impairment charge in FY ’22 vs £1.2bn release in FY ‘21.
    • £144m charge in Q4 ’22 vs £247m in Q3 ’22.

4.30pm: FTSE 100 shrugs off NatWest sell-off

The blue chip FTSE 100 index ended the session at 8,004, marking a 122 point or 1.55% gain for the week. It was the first time in the benchmark’s history that it had breached the 8,000 threshold.

Despite the upbeat figures from NatWest, its shares fell sharply at the open. By the close they were 21p (6.87%) lower at 284.9p.

Cautious comments and below consensus forecasts in a number of key metrics explained the fall and analysts highlighted the bank faces challenges if margins don’t improve from here.

AJ Bell’s Russ Mould noted “NatWest may have delivered its biggest profit since the financial crisis but investors are far more concerned about what’s coming next and that’s less positive.”

Purple Bricks sale likely

Online estate agent PurpleBricks could be sold after the board announced a profit warning and said it had launched a review of its strategy.

It said that while the brand had value because of its name recognition, it may be more likely to reach its potential “under an alternative ownership structure”.

CEO Helena Marston said: “We recognise that our upside potential is not currently reflected in our market valuation, which is why the entire board has therefore concluded that a strategic review is now in the best interests of all shareholders.”

Retail sales

UK retail sales rebounded in January, rising 0.5%, following a fall of 1.2% in December 2022 (revised from a fall of 1%) and better than City forecasts for a fall of 0.3%, according to figures from the Office for National Statistics.

Sales volumes fell by 0.9% in the three months to January 2023 when compared with the previous three months leaving them 1.4% below their pre-coronavirus (COVID-19) February 2020 levels.

Global markets – new high for FTSE 100

London’s FTSE 100 index was set to open lower after yesterday closing above 8,000 for the first time.

It breached the 8,000 level for the first time on Wednesday in buoyant late afternoon trading and continued its surge on Thursay with an intra-day record high of 8,047.06. It closed the session 14.7 points higher at 8,012.53.

It was the fourth consecutive end-of-trading record set this week. 

A weaker pound tends to benefit the FTSE 100 as around 70% of its constituents derive most of their earnings from overseas.

The FTSE 100 on Thursday

The index recovered from dipping below 8,000 during afternoon trade after US wholesale prices data indicated that inflation pressures continue to underlie the US economy.

Wall Street stocks closed sharply lower as market participants digested a number of data points that seemed to stoke a fear of rate hikes.

At the close, the Dow Jones Industrial Average was down 1.26%, while the S&P 500 slipped 1.38

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.