NatWest (NWG, Financial) has reported third-quarter earnings that exceeded market expectations and has subsequently raised its full-year guidance. The UK bank now anticipates its return on tangible equity for the year to surpass 15%, up from the previous forecast of 14%. Additionally, NatWest has revised its revenue forecast for the year from £14 billion to £14.4 billion ($18.7 billion).
For the third quarter, NatWest's operating profit before tax increased to £1.7 billion, surpassing analysts' predictions of £1.48 billion. The bank's net interest margin—a key profitability measure that indicates the difference between the interest earned on loans and the interest paid on deposits—improved to 2.18%, attributed to an expansion in deposits. Both net loans and net deposits showed growth during the period.
CEO Paul Thwaite highlighted the bank's efforts to expand its lending operations, facilitating customer activities such as buying or refinancing homes, starting businesses, and business growth. NatWest has provisioned £245 million to cover bad loans, which was higher than analysts' earlier estimates of £182 million. Nonetheless, the proportion of bad loans relative to total loans remains low.
Earlier this week, competitor Lloyds (LYG) also reported quarterly earnings that exceeded market forecasts, driven by better-than-expected borrower repayments. On Thursday, Barclays (BCS) raised its outlook for its UK operations.
