29th Jul 2022 09:44
(Alliance News) - NatWest Group PLC on Friday reported a "strong" performance for the first half of 2022 against a beneficial backdrop of rising UK interest rates, as it anticipates an increase in the base rate to 2.0% by the end of the year.
The Bank of England's bank rate currently stands at 1.25%. Governor Andrew Bailey recently hinted that a 50 basis point hike to 1.75% is one of the options on the table for the central banks meeting next week.
Natwest shares were up 7.3% at 246.80 pence each on Friday morning in London, making it the best large-cap performer. The company remains 48% owned by UK taxpayers after a government bailout during the financial crisis more than a decade ago.
For the six months to June 30, the Edinburgh-headquartered bank said total income was GBP6.22 billion, up 21% from GBP5.14 billion last year. Operating pretax profit was GBP2.62 billion, up 13% from GBP2.32 billion.
In the 'Go-forward group', income increased by 122% to GBP6.20 billion from GBP5.07 billion, reflecting the "impact of base rate increases and volume growth," NatWest said.
NatWest said its net interest income during the period went up by 16% to GBP4.33 billion from GBP3.74 billion a year earlier. Bank net interest margin of 2.72% was 26 basis points higher for the second quarter than the first quarter of 2.46%, driven by the impact of base rate rises.
Chief Executive Alison Rose said: "NatWest Group delivered a strong performance in the first half of 2022, building on two years of progress against our strategic priorities."
Turning to returns, NatWest proposed an interim dividend of 3.5 pence per share, up 17% from last year and a special dividend with share consolidation of GBP1.75 billion, or 16.8 pence per share.
Taken together these will deliver 20.3p of dividends per share, it said. It also noted it has completed the GBP750 million share buyback programme launched in February.
NatWest said CET1 ratio is 14.3% compared to 18.2% a year ago. It aims to end 2022 with CET1 ratio of around 14%, with target 13-14% by 2023.
Looking ahead, NatWest upgraded its outlook for the year, saying it now expects income of GBP12.5 billion in the Go-forward group, up from GBP11 billion previously, even as the economic outlook remains uncertain.
Net interest margin is expected to be greater than 2.7% for the full year, amid the interest rate increases. It was 2.72% in the first half.
By Xindi Wei; [email protected]
Copyright 2022 Alliance News Limited. All Rights Reserved.
Related Shares:
Natwest