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Second-quarter profits at NatWest comfortably beat expectations and the bank raised its outlook for the year as it was buoyed by rising interest rates and mortgage growth.
Revenues for the quarter to June 30 rose 26 per cent year on year to £3.2bn, beating analysts’ expectations of £2.9bn. That was driven in part by a jump in mortgage lending.
Operating profit before tax was £1.5bn, a 20 per cent increase on £1.28bn the previous year and well ahead of analysts’ expectations of £1bn. The figures exclude its Ulster Bank division in the Republic of Ireland, which it is exiting.
As with other lenders, NatWest has benefited from increasing interest rates. The Bank of England has raised rates to 1.25 percent as it tries to cool inflation.
But the lender, one of the UK’s largest banks, sounded a note of caution on the economy and higher prices.
“We know that continued increases in the cost of living are impacting people, families and businesses across the UK and we have put in place a range of targeted measures to support those who are likely to need it most,” said chief executive Alison Rose.
NatWest said it expected income excluding notable items to be about £12.5bn for 2022, up from guidance of above £11bn in April. It also said it expected to achieve a return on tangible equity in the range of 14 to 16 percent, compared with the return of more than 10 percent which it estimated in its full-year results.
The bank announced an interim dividend of 3.5p per share, up 17 per cent on 2021, as well as a special dividend of 16.8p per share.
Shares in NatWest rose by 8 percent in early trading in London.
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