NatWest Group PLC (LSE:NWG) launched a rearguard action on Friday in an attempt to steady the ship after a turbulent week which has seen the bank’s chief executive Alison Rose resign, and the boss of Coutts, Peter Flavel, depart over the row with Nigel Farage.
The high street lender responded with better-than-expected interim results and a share buy-back while embattled chair Howard Davies announced a legal probe into the affairs that led to closure of Farage’s bank account.
In an attempt to draw a line under the affair, Davies told reporters following today's results the lender has appointed law firm Travers Smith to investigate the closure of Farage’s Coutts account.
The bank has been under intense scrutiny following an inaccurate report that Farage’s account at NatWest’s Coutts brand was closed for purely commercial reasons.
The turmoil continued to divert attention from better-than-expected results from the bank which also announced a £500mln share buy-back.
One interested party wasn’t surprised though. Showing his continued interest in the affairs of the bank, in which the government holds a 39% stake, Nigel Farage tweeted: “The NatWest profits are no great surprise. Interest payments have risen sharply yet deposits have lagged. The whole sector is making massive profits whilst treating the public badly.”
The NatWest profits are no great surprise. Interest payments have risen sharply yet deposits have lagged. The whole sector is making massive profits whilst treating the public badly.
— Nigel Farage (@Nigel_Farage) July 28, 2023
Perhaps Farage is set on a new career as a consumer champion. Unfortunately, for NatWest he shows no signs of moving on.
The view from the City was mixed. Richard Hunter, head of markets at interactive investor, commented “NatWest has endured some banking turmoil of its own this week, but the legacy of the departing CEO is that of a performing group built on rock solid foundations.”
He said “the bank is in extremely good shape in virtually all of its key metrics.”
Gary Greenwood at Shore Capital was less effusive describing the better profits as a “fairly low quality earnings beat, driven by better than expected impairments and below the line items, while income disappointed.”
He does rate the stock as ‘buy’ though.
For Matt Britzman, equity analyst at Hargreaves Lansdown the focus was on net interest margins.
“We know markets are laser-focused on net interest margin and at 3.13% for the second quarter that was below expectations, leading to a miss on net interest income.”
“But perhaps more importantly, full-year guidance has been dragged lower reflecting the ongoing deposit shift to accounts that offer better rates as consumers do all they can to make cash savings go further.”
He felt “the downgrade to margin guidance will be disappointing for many.”
CMC’s Michael Hewson noted “with all the distractions that are going on at the boardroom level it’s a relief to be able to focus on the fundamentals when it comes to the NatWest share price.”
“All in all, today’s results have come in pretty much in line with its peers earlier this week, however investors will be looking to ensure that recent events around the departure of CEO Alison Rose, and as well as the departure of the Coutts CEO Peter Flavel, are brought to a swift conclusion.”
With Nigel Farage never far from the airwaves the fall-out from this sorry affair looks set to stay in the headlines for some time yet.