NatWest profit beats forecasts as govt stake falls below 2%

(Sharecast News) - NatWest first quarter profit beat expectations with a 36% jump Friday, driven by higher margins on deposits and increased mortgage lending, in its first results since the UK government ceased being a major shareholder. Operating profit before tax for the three months to March 31 came in at £1.8bn, up from £1.3bn a year earlier and consensus estimates of £1.6bn.

Chief executive Paul Thwaite said the bank now expected to be at the upper end of income and returns guidance for 2025.

The British government's stake in NatWest fell just below 2% on Thursday, a sharp reduction from almost 40% just over a year ago and 84% when it was part nationalised at a cost of £46bn after banking industry malfeasance caused the 2008 global financial crash.

Of that enormous figure, taxpayers can only expect to get back around £25bn as successive governments continually selling the stock well below the 500p at which they were bought to rescue a private sector business.

NatWest also booked a net impairment charge for the quarter of £189, adding that it recognised "increased global economic uncertainty and will monitor and react to market conditions and refine our internal forecasts as the economic position evolves".

"NatWest has taken the spotlight this week in banking land, smashing profit expectations thanks to solid top-line growth and tight cost control," said Hargreaves Lansdown analyst Matt Britzman.

"Like we've seen across the sector, impairments came in a bit higher than expected as the bank plays it safe in case the economic backdrop worsens - but for now, borrowers are holding up well, so there's no major red flag there."

"Both loans and deposits headed in the right direction, with mortgage growth particularly strong as buyers scrambled to get ahead of stamp duty changes. The outlook was upbeat too - NatWest now expects full-year income to land toward the top of its guided range, aligning with where many analysts were already sitting."

Reporting by Frank Prenesti for Sharecast.com