Financial Reporting and Standards - NatWest Group's financial statements are prepared in accordance with UK-adopted International Accounting Standards and International Financial Reporting Standards[18]. - Non-IFRS measures and alternative performance measures are included to provide a consistent basis for comparing business performance[13]. - The financial information spans pages 162-263, detailing consolidated statements and significant changes[8]. - The document outlines the organizational structure and business overview of NatWest Group[4]. - Major shareholders and related party transactions are discussed on pages 305-310[7]. Forward-Looking Statements and Risks - The document includes forward-looking statements regarding NatWest Group's financial condition, strategic priorities, and sustainability-related targets[9]. - Key risks affecting NatWest Group's future results include economic and political risks, changes in interest rates, and operational resilience risks[11]. - The document includes a cautionary statement regarding the inherent risks and uncertainties of forward-looking statements[10]. Sustainability and Climate Goals - The company aims to achieve net zero across financed emissions, assets under management, and operational value chain by 2050[15]. - The company emphasizes the importance of climate and sustainability-related disclosures, which are subject to change over time[15]. - Climate and sustainable funding and financing reached £93.4 billion against a target of £100 billion by the end of 2025, with £31.5 billion provided in 2024[38]. - Commercial & Institutional provided £27.8 billion in climate and sustainable funding to support customers transitioning to net zero[92]. Financial Performance - NatWest Group reported total income of £14.7 billion for 2024, a decrease of 0.3% compared to 2023, while total income excluding notable items increased by 2.2% to £14.6 billion[32]. - The return on equity (RoE) was 11.9% and the return on tangible equity (RoTE) was 17.5% for the year[31]. - Net loans to customers increased by £18.9 billion to £400.3 billion, with significant growth in Commercial & Institutional lending[37]. - Customer deposits rose by £2.1 billion to £433.5 billion, with a £6.8 billion increase in Retail Banking deposits[39]. - The CET1 ratio improved to 13.6%, reflecting a 20 basis point increase from 2023, supported by attributable profit[40]. - Total operating expenses increased by £153 million to £8.1 billion, driven by higher staff costs due to inflation[33]. - Earnings per share attributable to ordinary shareholders increased to 53.5 pence, a rise of 5.6 pence from the previous year[44]. - Total assets grew by 2.2% to £708.0 billion, with loans to customers increasing by 5.0% to £400.3 billion[50]. Credit and Impairment - The net impairment charge was £359 million, representing 9 basis points of gross customer loans, with stable default levels[35]. - The expected credit loss (ECL) coverage ratio decreased from 0.93% to 0.83%, while ECL provisions decreased by £0.2 billion to £3.4 billion[65]. - Impairment losses for 2024 were £359 million, compared to £578 million in 2023, reflecting a decrease of 37.9%[75]. - The loan impairment charge for Retail Banking decreased to £282 million, down £183 million or 39.4% from 2023, reflecting improved credit quality[83]. Risk Management - The bank emphasizes a strong risk management framework, ensuring governance and capabilities are in place to manage principal risks effectively[111][112]. - Risk appetite is defined to establish the levels of tolerance for various risks, supporting sound risk-taking aligned with strategic objectives[113][135]. - The three lines of defence model is employed to delineate responsibilities for risk management, with the first line managing direct risks, the second line providing oversight, and the third line offering independent assurance[127][130][133]. - NatWest Group's risk management framework is reviewed and approved annually by the Board, ensuring alignment with overall strategic objectives[112]. - The bank's risk culture promotes intelligent risk-taking, focusing on robust risk management behaviors to enhance customer outcomes and business sustainability[116][119]. Customer Segments and Business Overview - NatWest Group operates across various customer segments including Business Banking, Commercial Mid-market, and Corporate & Institutions, providing comprehensive financial services domestically and internationally[104]. - The bank faces competition from UK banks, specialist finance providers, and fintechs, particularly in the business banking market, which intensifies customer engagement efforts[105][107]. - NatWest Group's Corporate and Institution business competes with large domestic and international banks, offering financing and risk solutions to corporates in the UK, Western Europe, and the US[106]. Operational Highlights - Retail Banking reported a total income of £5.65 billion, a decrease of £281 million or 4.7% compared to 2023, primarily due to asset margin compression and a shift in deposit balance mix[81]. - Operating profit for Retail Banking was £2.43 billion, down £207 million or 7.8% from the previous year, with a return on equity of 19.9%[81]. - Private Banking achieved an operating profit of £264 million, with a return on equity of 14.2%, and saw assets under management (AUMA) increase by 19.9% to £48.9 billion[86]. - Commercial & Institutional's total income rose to £7.96 billion, an increase of £536 million or 7.2%, supported by a net interest income growth of 5.8%[89].

Group 1 - NatWest Group (NYSE: NWG) reported reasonable figures for its fourth quarter, although financials were slightly below consensus expectations [1] - The market has been catching up recently, indicating a positive outlook for the bank [1] - The investment approach favored is long-term, buy-and-hold, focusing on stocks that can sustainably deliver high-quality earnings, particularly in the dividend and income sectors [1]

Core Viewpoint - NatWest Group (NWG) is currently viewed as a better value opportunity compared to United Overseas Bank Ltd. (UOVEY) based on various financial metrics and Zacks Rank evaluations [1][3][7] Valuation Metrics - NWG has a Zacks Rank of 1 (Strong Buy), indicating a stronger earnings outlook compared to UOVEY, which has a Zacks Rank of 3 (Hold) [3] - The forward P/E ratio for NWG is 7.21, while UOVEY's forward P/E is 10.12, suggesting NWG is undervalued relative to UOVEY [5] - NWG's PEG ratio is 0.71, indicating a favorable valuation when considering expected earnings growth, whereas UOVEY's PEG ratio is 1.92 [5] - NWG has a P/B ratio of 0.82, compared to UOVEY's P/B ratio of 1.35, further supporting NWG's valuation advantage [6] - Based on these metrics, NWG earns a Value grade of B, while UOVEY receives a Value grade of D [6] Earnings Outlook - NWG is noted for its improving earnings outlook, which enhances its attractiveness in the Zacks Rank model [7]

Core Viewpoint - The article emphasizes a long-term, buy-and-hold investment strategy focused on stocks that can consistently deliver high-quality earnings, particularly in the dividend and income sectors [1]. Group 1 - The investment approach is characterized by a preference for stocks that provide sustainable earnings, which are often found in the dividend and income categories [1]. - The author engages in blogging about various US and Canadian stocks, as well as predominantly UK stocks, indicating a diverse geographical investment interest [1]. - There is a disclosure of a beneficial long position in the shares of NYG and LYG, suggesting a personal investment commitment to these companies [1].

Financial Data and Key Metrics Changes - The company upgraded its full-year income and returns guidance, expecting total income, excluding notable items, to be around GBP 14.4 billion, with a return on tangible equity greater than 15% [2][15] - For the first nine months, customer lending grew by GBP 8.1 billion to GBP 367 billion, while customer deposits increased by GBP 8.3 billion to GBP 427 billion [2][3] - Operating profit for the first nine months was GBP 4.7 billion, with attributable profit of GBP 3.3 billion and a return on tangible equity of 17% [5] Business Line Data and Key Metrics Changes - In Commercial & Institutional, lending to mid-market customers grew by GBP 1.5 billion, while corporate lending increased by GBP 3.2 billion [10] - The private bank's assets under management rose by GBP 5.7 billion to GBP 46.5 billion, including GBP 2.2 billion of net new inflows [4] - The existing mortgage book returned to growth, with balances up by GBP 3.8 billion, supported by new lending and the acquisition of a GBP 2.3 billion mortgage portfolio from Metro Bank [9] Market Data and Key Metrics Changes - The group net interest margin increased by 8 basis points to 218 basis points, driven by margin expansion across deposits and funding [8] - Non-interest income grew by 5.1% to GBP 3.8 billion in Q3, with contributions from strong lending and payment fees [7][57] - The company reported a net impairment charge of GBP 245 million for Q3, reflecting a cost of risk of 25 basis points [12] Company Strategy and Development Direction - The company is focused on disciplined growth, bank-wide simplification, and active balance sheet and risk management [2] - The strategic priority includes supporting customers while managing risks effectively, which is reflected in the strong financial performance [2][16] - The company aims to reach a target of GBP 100 billion in climate and sustainable funding by 2025, having already provided GBP 85.4 billion since July 2021 [3] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's momentum and ability to deliver strong shareholder returns, despite expected base rate cuts [16] - The company anticipates further base rate cuts in Q4, reaching 4.75% by year-end, with additional cuts expected in 2025 [8] - Management highlighted the resilience of customers and the strong performance of the loan portfolio, maintaining a low cost of risk [30] Other Important Information - The government has reduced its shareholding from 38% to under 16%, with plans to exit fully by 2025-2026 [5] - The company expects to incur higher operating expenses in Q4 due to severance and property costs, alongside a higher bank levy charge [12] Q&A Session Summary Question: On margins and NatWest Markets - Inquiry about the impact of deposit spreads and the timing of base rate cuts on future margins [17] - Management noted that market conditions have been supportive for NatWest Markets, which has seen a significant increase in capital markets activity [20] Question: Revenue guidance for Q4 - Question regarding the expected decline in revenues sequentially into Q4 and the normalization of other income [24] - Management explained that Q4 income is expected to be lower due to seasonality and anticipated base rate cuts, but overall guidance has been upgraded [26] Question: Cost of risk and Sainsbury's transaction - Inquiry about the cost of risk trends and the potential contribution of the Sainsbury's transaction to P&L [29] - Management confirmed a low cost of risk and indicated that the Sainsbury's acquisition is expected to be RoTE accretive upon completion [31] Question: RWA guidance and loan growth - Questions about RWA guidance for 2025 and confidence in loan growth prospects [35] - Management expressed confidence in mid-single digit loan growth, supported by strong performance in Q3 [36] Question: Deposit repricing lag and customer behavior - Inquiry about the impact of deposit repricing lag in Q3 and customer behavior regarding term deposits [48] - Management acknowledged the lag effects and noted that many customers are renewing into fixed-term accounts [51]

Financial Performance - Attributable profit for Q3 2024 was £1,172 million, with a return on tangible equity (RoTE) of 18.3%[7] - Operating profit for Q3 2024 was £1,674 million, with a return on tangible equity (RoTE) of 18.3%[20] - Profit attributable to ordinary shareholders for Q3 2024 was £1,172 million, with earnings per share of 14.1 pence[21] - Attributable profit for the period was £3,271 million, with an ordinary interim dividend paid of £497 million[85] - Profit for the period increased to £3,483 million for the nine months ended 30 September 2024, compared to £3,344 million in the same period last year, representing a growth of 4.1%[90] - The company reported a total comprehensive income for the period of £3,834 million, compared to £2,708 million in the previous year, representing a significant increase of 41.5%[91] Income and Revenue - Total income excluding notable items for Q3 2024 was £3,772 million, an increase of £182 million or 5.1% compared to Q2 2024, driven by lending and deposit growth[8] - Total income for Q3 2024 increased by 2.3% to £3,744 million compared to Q2 2024 and was 7.3% higher than Q3 2023[21] - Total income for the nine months ended 30 September 2024 was £10,878 million, a decrease of 3.0% from £11,215 million in the previous year[90] - Non-interest income decreased to £2,571 million from £2,804 million, a decline of 8.3% year-over-year[90] Loans and Deposits - Net loans to customers increased by £8.4 billion in Q3 2024, including £2.3 billion from the Metro Bank mortgage portfolio acquisition[9] - Customer deposits rose by £2.2 billion in Q3 2024, with growth across all three business segments[9] - Customer deposits increased to £431.1 billion, with net loans to customers at £386.7 billion[49] - Customer deposits totaled £435.9 billion, showing a significant increase in retail banking[52] - The loan impairment rate decreased to 28 basis points in Q3 2024 from 12 basis points in Q2 2024, reflecting improved asset quality[26] Capital and Ratios - The Common Equity Tier 1 (CET1) ratio was 13.9%, 30 basis points higher than Q2 2024, with capital generation of 57 basis points in the quarter[9] - The CET1 ratio improved to 13.9%, reflecting a 30 basis point increase from Q2 2024, primarily due to attributable profit for the quarter[25] - CET1 ratio increased to 13.9%, up 50 basis points from 13.4% as of December 31, 2023, driven by a £0.9 billion increase in CET1 capital and a £1.3 billion decrease in RWAs[77] - The overall capital requirement stands at 10.5% for CET1, with a headroom of 3.4%[79] Impairment and Credit Quality - Net impairment charge for Q3 2024 was £245 million, representing 25 basis points of gross customer loans, with low levels of default[8] - The company anticipates a loan impairment rate for 2024 to be below 15 basis points[14] - A net impairment charge of £245 million was recorded in Q3 2024, with the year-to-date charge at £293 million, representing 10 basis points of gross customer loans[21] - The expected credit loss (ECL) coverage ratio increased from 0.86% to 0.89%[21] Assets and Liquidity - Total assets as of 30 September 2024 were £711.9 billion, reflecting a 3.1% increase from the previous quarter[19] - The liquidity coverage ratio (LCR) was 148%, with £52.7 billion headroom above the 100% minimum requirement[9] - Liquidity portfolio increased by £3.7 billion to £226.5 billion, with primary liquidity rising by £14.2 billion to £162.3 billion[83] - Total regulatory capital reached £35.79 billion, with CET1 capital at £25.30 billion as of September 30, 2024[82] Operational Efficiency - Total operating expenses decreased by £180 million compared to Q2 2024 and were £102 million lower than Q3 2023[21] - The cost:income ratio (excluding litigation and conduct) improved to 47.6% for the total group, with retail banking at 45.0%[49] - The cost-to-income ratio increased to 54.1% from 52.1% in the previous year, indicating higher operational costs relative to income[121] Strategic Initiatives - The company provided £85.4 billion towards its target of £100 billion in climate and sustainable funding by September 2024, with £7.1 billion provided in Q3 2024[22] - NatWest Group aims to provide £100 billion in climate and sustainable funding and financing from July 1, 2021, to the end of 2025, with a target of at least £10 billion for residential properties with EPC ratings A and B by the end of 2025[123] Shareholder Returns - The company paid ordinary share dividends totaling £1,505 million during the period[95] - The company repurchased 173.3 million shares for a total consideration of £450.9 million during the period[95] - New shares issued amounted to £800 million, contributing to the overall equity increase[94]

NatWest Group plc (NYSE: NWG ) is expected to report its earnings related to Q3 2024 next Friday, which are expected to be resilient and maintain the positive trend of previous quarters.Labutes IR is a Fund Manager/Analyst specialized in the financial sector, with more than 18 years of experience in the financial markets. I have worked at several type of institutions in the industry, always at the buy side and related to portfolio management. Associated with the existing author The Outsider.Analyst’s Disclo ...

NatWest Group (NWG) could be a solid choice for investors given its recent upgrade to a Zacks Rank #1 (Strong Buy). This rating change essentially reflects an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices. A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years. The power ...

Momentum investing is all about the idea of following a stock's recent trend, which can be in either direction. In the 'long' context, investors will essentially be "buying high, but hoping to sell even higher." And for investors following this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades. Whi ...

Investors might want to bet on NatWest Group (NWG) , as it has been recently upgraded to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices. The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate. The power of a cha ...