NatWest Expects Decline in Income for 2024, Beat Q4 Profit Expectations
NatWest Group, a British bank, announced that it expects its income to decrease this year, despite surpassing fourth-quarter profit expectations. The bank anticipates earning a total income of £13.0 billion to £13.5 billion for 2024, excluding exceptional items, as the boost from higher interest rates decreases due to expected cuts later in the year.
Income Projection and Profitability Outlook
- NatWest Guided for a total income between £13.0 billion and £13.5 billion for 2024.
- Expectations reflect the anticipated decline in income as the benefit of higher interest rates tapers off.
- In 2023, the bank’s top line was boosted to £14.75 billion due to higher interest rates.
- Return on Tangible Equity for 2024 expected to be around 12%, compared to 17.8% in 2023.
- Operating expenses for 2024 expected to remain stable, similar to the £8.0 billion in 2023.
Fourth-Quarter Performance Highlights
- Fourth-quarter pretax profit reached £1.26 billion, surpassing estimates of £1.02 billion.
- Total income for the quarter rose to £3.54 billion, exceeding analysts’ forecast of £3.38 billion.
- Net interest income dipped to £2.64 billion compared to the previous quarter.
- These strong earnings performance underscores NatWest’s ability to navigate through challenging market conditions.
Share Buyback and Dividend Proposal
- NatWest plans to launch an on-market share buyback of £300 million in 2024.
- The bank also proposed a final dividend of 11.5 pence per share, resulting in a full-year payout of 17.0 pence.
Despite the projected decline in income for 2024, NatWest’s fourth-quarter performance showcased its resilience and ability to outperform expectations. The bank’s commitment to returning value to shareholders through the share buyback and dividend proposal further strengthens its position in the market.
Analyst comment
Positive news. NatWest beat profit expectations and expects stable costs. However, they anticipate a decline in income due to expected interest rate cuts. Return on equity will decrease but share buyback and dividend increase offer some positive signals. Overall, market may experience some volatility due to income decline but potential for growth with buyback and dividend.
