NatWest Group PLC (LSE:NWG) will be the first of the big UK high street banks to release its fourth-quarter earnings on 18 February, with analysts expecting broad growth and the first signs of the impacts of rate hikes on the company’s balance sheet.
NatWest enters earnings season with strong fundamental and wider contextual tailwinds.
FRIDAY UPDATE: NatWest swings into profit and announces £750mln share buyback
The bank’s share price has risen by 45% in the last year, and by 15% in the approximate three months since its last earnings, with confidence in the company coming from a number of angles.
Cash set aside for impairments from COVID-19 loans remains largely unused and there is the expectation of a boost to its net interest margin as the Bank of England targets further rate rises this year, both of which should help the company’s financial position.
Dividends are accordingly likely to be a key feature of that enhanced liquidity, with UBS expecting 7p and a share buyback of £1.2bn to be announced with the results.
The broker forecasts underlying pre-tax profits to rise by 30% year-on-year to hit £817mln, while the impact of UK interest rate raises is not yet expected to be reflected in the company’s net interest margin, down 2% year-on-year.
Some headwinds for 2022 may occur in the form of a return to loan losses after 2021’s write-backs, while IT and digitisation upgrades may add to costs.
Significant announcements expected
Interims: City of London Investment Trust (LSE:CTY) (City of London Investment Trust (LSE:CTY))
Finals: NatWest Group PLC (LSE:NWG) (NatWest Group PLC (LSE:NWG)), Pod Point Group Holdings PLC (LSE:PODP) (Pod Point Group Holdings PLC (LSE:PODP)), Segro PLC, TBC Bank (LSE:TBCG) (TBC Bank (LSE:TBCG)) Group PLC, The Renewables Infrastructure Group Ltd, Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF) (Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF), Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF))
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