27th Oct 2023 11:22
(Alliance News) - NatWest Group PLC shares unsurprisingly came under pressure on Friday, after it downgraded its net interest margin guidance, and reported a damning verdict on its handling of the closure of Nigel Farage's Coutts bank account.
Shares in NatWest plunged 11% to 183.95 pence each in London on Friday morning. Over the past 12 months, the stock is down 26%.
"It's not been a great year for the NatWest Group share price, and it got even worse this morning, the shares plunging to 30-month lows, after the bank lowered its full year guidance on NIM, as well announcing that the FCA is reviewing the findings of an independent review into its conduct over the Nigel Farage debanking case," CMC Markets analyst Michael Hewson commented.
The scandal concerning the closure of the Brexit politician's Coutts account culminated in the resignation of NatWest's chief executive officer at the time, Alison Rose, back in July. The board then commissioned an independent review into the bank's handling of the incident.
On Friday, NatWest said the report found the review identified 'a number of shortcomings' in how the decision to close Farage's account was reached, the bank's communications with him, and its treatment of his confidential information. The closure was found to be lawful, however.
Chair Howard Davies said: "This report sets out a number of serious failings in the treatment of Farage....We apologise once again to Farage for how he has been treated. His experience fell short of the standards that any customer should expect."
NatWest said it has accepted and will implement all the recommendations made by corporate law firm Travers Smith, which undertook the review.
NatWest also noted the UK Financial Conduct Authority has confirmed it is conducting supervisory work into the governance, systems and controls at both NatWest and Coutts, in order to 'identify and address any significant shortcomings'.
On Wednesday, the UK information watchdog ruled that former CEO Rose had infringed on Farage's data protection rights when discussing his Coutts account with a BBC journalist.
The Information Commissioner's Office said the disclosure was 'unacceptable'. Rose herself had admitted that the incident was a 'serious error of judgement'. The Travers Smith review described it as an 'honest mistake' stemming from confusion as to what was a matter of public record at that time.
CMC's Hewson said: "From a reputational standpoint this is hugely damaging, and even accounting for the increased competition for customer deposits the revelations of unprofessionalism this week about some of its staff could prompt some customers to take their business elsewhere."
The bank also shared its third-quarter results on Friday.
AJ Bell analyst Russ Mould said that while the Farage findings may have initially overshadowed the results, "investors didn't take long" to shift their focus.
NatWest reported that total income rose to GBP3.49 billion from GBP3.23 billion a year earlier. However, it missed company-compiled analyst forecasts of GBP3.59 billion.
Operating pretax profit rose to GBP1.33 billion from GBP1.09 billion, but slightly below forecasts of GBP1.36 billion.
Bank net interest margin fell 19 basis points from the second quarter to 2.94% in the third, which the bank said reflected changes in deposit mix as customers opted to move current account balances to interest bearings savings accounts. Company-compiled analyst consensus had expected a 3.07% figure.
For 2023, it expects a full-year bank net interest margin to be "greater than 3%", which is downgraded from its interim forecast of around 3.15%.
The bank's results dragged other lenders lower. Lloyds Banking Group PLC and Barclays PLC were down 2.4% and 1.5%.
By Sophie Rose, Alliance News reporter
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