- Stocks in the lending titan dropped 9.2% to 186p on Friday morning
- NatWest slashes yearly forecast on its net interest margin – a crucial measure of profitability
- The NIM of the company decreased by 19 basis points to 2.94% in the third quarter.
NatWest stocks declined after revising its earnings outlook – and the bank’s subsidiary, Coutts, faced severe criticism for its dealings with Nigel Farage in a review.Thank you for reading this post, don't forget to subscribe!
NatWest stocks fell 10 percent, or 21p, to 184.8p on Friday morning, making them the poorest performer ever on the FTSE 100 index.
The lending titan subsequently adjusted its yearly forecast on its net interest margin (NIM) – the disparity between what banks charge on loans and what they pay out in interest – from 3.2 percent to 3.15 percent.
Guidance: NatWest Group stocks fell on Friday after the group revised its earnings outlook
In the third quarter, the company’s net interest margin went down by 19 basis points to 2.94 percent, which was attributed to more customers transferring their funds to higher interest-paying savings accounts as well as narrower margins on mortgages. .
The significant banks are facing criticism for increasing mortgage rates much faster than savings rates, as they profit from sharp increases in the Bank of England’s base rate.
As a result, total income only rose by 3.4 percent to £3.49 billion, with growth propelled by higher lending and investment banking income and advantageous yield curve movements.
NatWest still reported pre-tax operating profit of £1.33 billion for the period from July to September, which is 23 percent higher than the same period last year and falls below analysts’ expectations of £1.4 billion.
Meanwhile, on a nine-month basis, the equivalent number was approximately one-third higher at £4.92 billion, primarily due to solid results from its commercial and institutional divisions.
Paul Thwaite, CEO of NatWest, said: ‘This performance is established on a foundation of robust customer franchises and a strong balance sheet with a high level of liquidity and a well-diversified loan book.
‘Consequently, credit losses and defaults remain low, and we are prepared and capable of supporting our customers and businesses during the current economic uncertainty.’
In addition to the results, NatWest released the findings of an independent review conducted by the bank’s subsidiary, Coutts, into the decision to ‘debank’ Nigel Farage earlier this summer.
The report by legal firm Travers Smith concluded that the bank’s decision to close the accounts of the former UKIP leader was ‘mainly commercial’ and did not violate the law.
However, it strongly criticized former NatWest CEO Dame Alison Rose for divulging confidential customer information about Mr. Farage, stating that it ‘likely’ breached data protection laws.
Rose and his counterpart at Coutts, Peter Flavell, both resigned within days of each other in relation to the controversy.
Howard Davies, Chairman of NatWest, said: ‘The findings disclose how this was accessed, as well as how we communicated with them and the shortcomings regarding customer privacy.
‘We once again apologize to Mr. Farage for the way he was treated. Their experience fell below the standards that any customer should expect.’