Impairments in focus as NatWest results round off banking week

Elsewhere, Glencore will update on quarterly production levels

NatWest Group -
Natwest CEO Alison Rose

NatWest Group PLC (LON:NWG), which changed its name from Royal Bank of Scotland earlier this year, will close off the week of FTSE 100 banking results, with various trends set by its rivals in the preceding days.

NatWest took charges for loan impairments of £2.1bn in the second quarter, following impairments of £802mln in the first.

So, despite a strong performance from investment banking, this led to a £770mln loss for the first half of the year, with chief executive Alison Rose warning that the total charge for the year might be £3.5-4.5bn.

However, the most noticeable pattern elsewhere in the third quarter has been much lower new provisions for bad loans, which has allowed some to return to profitability.

While low interest rates continue to put pressure on income, all of the high street banks have been able to top-up their capital reserves.

While similar issues are certain to be in focus for NatWest, analysts at UBS said they expect attention to be paid to potential actions around Ulster Bank and NatWest Markets.

Also, the analysts pondered, investors will also wonder if any value should be attached to excess capital “in a market in which Brexit, COVID-19 and regulatory uncertainty are so pronounced”.

Glencore eyeing China

Glencore PLC (LON:GLEN) will be laying out its production report on Friday, having in August said it won’t be paying dividends during 2020 and cutting full-year production guidance for nickel and coal.

“The outlook remains uncertain in the short term,” boss Ivan Glasenberg said in the last statement from the company.

Some analysts have come out as extremely bullish for the mining sector of late, with those at JPMorgan Cazenove especially bullish about a potential recovery driven by China, which could be driven by its new five-year plan.

Significant announcements expected on Friday October 30:

Trading updates: Glencore PLC (LON:GLEN), NatWest Group PLC (Q3) (LON:NWB), Vivo Energy PLC (LON:VVO), AIB Group PLC (LON:AIBG)

Finals: Oncimmune PLC (LON:ONC)

AGMs: Ferro-Alloy Resources PLC (LON:FAR), MaxCyte Inc. (LON:MXCT), Sensyne Health PLC (LON:SENS), Vietnam Holding PLC (LON:VNH)

Economic data: UK consumer credit mortgage lending; US personal income and consumption; US Chicago PMI; US final University of Michigan consumer sentiment index

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