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 ...

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 ...

Momentum investing revolves around the idea of following a stock's recent trend in either direction. In the 'long' context, investors will be essentially be "buying high, but hoping to sell even higher." With 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 that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades. Even though momentum is a popular stock cha ...

Lubo Ivanko I did wonder whether NatWest stock (NYSE:NWG) had run its course when I I last covered the bank back in May. It wasrit that a then-valuation of 1.1x tangible book value was expensive as such, but with the bank guiding for a circa 12-13% return on tangible equity ("ROTE"), theses shares were as close to fair value as they had been for a long time, and this ultimately drove my downgrade to 'Hold'. That call was clearly premature. Not only have these shares continued their excellent run, outperform ...

Financial Data and Key Metrics Changes - The company reported income of £7 billion and operating profit before tax of £3 billion for the first half of 2024, with attributable profit of £2.1 billion and a return on tangible equity (RoTE) of 16.4% [34][39] - The interim dividend was announced at 6p, representing a 9% increase from the previous year, supported by a reduction in the number of ordinary shares from 8.9 billion to 8.3 billion [30][35] - The tangible net asset value per share improved by 16% to 304p, with expectations for continued growth into 2025 and 2026 [30] Business Line Data and Key Metrics Changes - Retail Banking saw a charge of 12 basis points reflecting stable Stage 3 inflows, while Commercial & Institutional generated higher lending and financing fees [42][50] - Lending in the commercial mid-market business grew by £1.8 billion, and unsecured borrowing increased by around 19% due to acquisitions [7][44] - The mortgage portfolio from Metro Bank, valued at £2.5 billion, is expected to close in the second half of the year, enhancing the company's position in the mortgage market [31][44] Market Data and Key Metrics Changes - The company experienced deposit growth of over £6 billion across its three businesses, with total deposits reaching £425 billion [28][73] - The average interest rate on customer deposit funding stabilized at 2.1%, reflecting modest changes in mix and limited adjustments to deposit product rates [74] - The structural hedge is expected to deliver higher income in 2024 than in 2023, with £2.9 billion locked in for 2025 and 2026 [48][76] Company Strategy and Development Direction - The company is focused on disciplined growth through acquisitions that are EPS and RoTE accretive, with a target to reach £100 billion in climate and sustainable funding by the end of 2025 [2][28] - The strategic priorities include disciplined growth, bank-wide simplification, and active balance sheet and risk management [63][62] - The company aims to maintain a CET1 ratio of 13% to 14% while targeting a payout ratio of around 40% [40][81] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the economic outlook, noting improved consumer and business confidence, which has not yet led to interest rate cuts by the Bank of England [41][39] - The company anticipates continued NIM expansion, driven by business performance, although rate cuts may moderate this growth [24][86] - The management remains focused on generating capital to reinvest in the business and return value to shareholders [61][39] Other Important Information - The company has reduced risk-weighted assets (RWAs) by £5.5 billion, with a target of around £200 billion by the end of 2025 [52][81] - The company is actively managing its risk-weighted assets and has delivered a £4.3 billion reduction in the first half through various means [32][56] - The company is enhancing its digital transformation efforts, including improvements in customer journeys and the introduction of generative AI in customer interactions [38] Q&A Session Summary Question: What is the outlook for organic growth? - Management indicated that while they do not provide specific guidance on individual lines, they are focused on disciplined growth and have seen positive results in deposit growth and market share [4][130] Question: How does the company view the impact of rate cuts on NIM? - Management expects ongoing benefits from the hedge to offset deposit mix changes, but acknowledges that rate cuts will slow the pace of growth seen in the first half [86][24] Question: What is the company's strategy regarding capital management and distributions? - The company prioritizes ordinary dividends and has announced a 6p interim dividend, with plans to evaluate future distributions in conjunction with the Board [96][118]

Financial Performance - Profit attributable to ordinary shareholders for the half year ended 30 June 2024 was £2,099 million, down from £2,299 million in the same period of 2023, representing a decrease of 8.7%[11] - Return on equity for the half year ended 30 June 2024 was 11.2%, compared to 12.6% for the same period in 2023, indicating a decline of 1.4 percentage points[11] - Total income for the half year ended June 30, 2024, was £7,134 million, down from £7,727 million in the same period last year, representing a decrease of 7.7%[20] - Operating profit for H1 2024 was £3,029 million, with a return on equity of 11.2% and a return on tangible equity (RoTE) of 16.4%[64] - The company reported a profit for the period of £2,239 million, down 7.5% from £2,420 million in H1 2023[61] Equity and Capital - Adjusted total tangible equity as of 30 June 2024 was £25,626 million, slightly up from £25,210 million a year earlier, reflecting an increase of 1.7%[11] - Average total equity for the half year ended 30 June 2024 was £37,535 million, compared to £36,562 million for the same period in 2023, showing an increase of 2.7%[11] - The Common Equity Tier 1 (CET1) ratio increased to 13.6%, reflecting a 10 basis points rise from Q1 2024 due to attributable profit and a reduction in RWAs[59] - The company targets a CET1 ratio in the range of 13-14% and expects RWAs to be around £200 billion by the end of 2025[60] Operating Expenses - Operating expenses (excluding litigation and conduct) for the half year ended June 30, 2024, were £4,057 million, up from £3,915 million in the same period last year, reflecting a rise of 3.6%[23] - The cost:income ratio (excluding litigation and conduct) for the half year ended June 30, 2024, was 55.5%, compared to 49.3% for the same period in 2023, indicating increased operational costs relative to income[21] - Operating expenses for H1 2024 were £2,150 million, up from £1,987 million in H1 2023[97] Loans and Deposits - As of June 30, 2024, NatWest Group's loans to customers (excluding reverse repos) amounted to £354.37 billion, slightly down from £354.89 billion as of March 31, 2024[24] - Customer deposits (excluding repos) reached £426.13 billion as of June 30, 2024, compared to £421.36 billion as of March 31, 2024[24] - The loan-to-deposit ratio (excluding repos and reverse repos) was 83% as of June 30, 2024, an increase from 84% as of March 31, 2024[24] - Customer deposits increased to £433.0 billion, with total assets reaching £690.3 billion[131] Risk and Impairment - Net impairment charge of £48 million in H1 2024, representing 3 basis points of gross customer loans, with stable default levels[58] - The loan impairment rate improved to (5) basis points, with impairment provisions totaling £3.3 billion[131] - The ECL (Expected Credit Loss) provision at 1 January 2024 was £3.645 billion, with adjustments reflecting changes in economic forecasts and risk metrics[153] Acquisitions and Agreements - NatWest Group announced an agreement to acquire retail banking assets and liabilities from Sainsbury's Bank for approximately £2.5 billion, expected to complete in the first half of 2025[38] - The company agreed to acquire Sainsbury's Bank's credit card, unsecured personal loans, and savings balances, expected to add around one million customer accounts to its Retail Banking business[59] Economic Outlook - The ongoing economic and political risks, including inflation and interest rate fluctuations, may adversely affect NatWest Group's business and financial condition[25] - The Bank of England's base rate is expected to average 5.10% in 2024, with a downside scenario suggesting a rate of 4.69%[143] - The unemployment rate is projected to peak at 5.8% in Q3 2025, with a downside scenario suggesting a peak of 8.5% in Q4 2025[146] Customer Segments - Retail Banking reported an operating profit of £1.1 billion and a return on equity of 18.4% for H1 2024[114] - Commercial & Institutional reported a total income increase of £52 million, or 1.4%, compared to H1 2023, supported by client-driven capital markets activity[123] - Private Banking's total income decreased by £123 million, or 21.7%, compared to H1 2023, reflecting a change in deposit mix[118]

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While many investors like to look for momentum in stocks, this can be very tough to define. There is a lot of debate surrounding which metrics are the best to focus on and which are poor quality indicators of future performance. The Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us. It's also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. NatWest Group current ...