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NatWest said it would be more profitable than previously expected this year, after the state-backed bank’s second-quarter results surpassed expectations.
The state-backed bank reported operating profits before tax of £1.7bn in the quarter, surpassing analysts’ expectations of £1.3bn. It now expects its return on tangible equity, a key measure of bank profitability, to be more than 14 per cent, up from a previous forecast of 12 per cent.
Shares in the bank jumped 8 per cent in early trading on Friday, taking their gains this year to almost 60 per cent.
NatWest also announced the acquisition of £2.5bn of prime residential mortgages from Metro Bank that it said would add about 10,000 customers. The acquisition comes after NatWest last month announced it would buy the bulk of Sainsbury’s Bank, giving it access to an expected 1mn new accounts and £2.5bn worth of unsecured loans.
“We have made good progress against our strategic priorities, taking decisive action to grow and simplify our business,” said chief executive Paul Thwaite. “Our customers are beginning to feel more confident, with activity increasing and asset quality remaining strong.”
Although revenues fell to £3.7bn in the quarter from a year earlier as the benefits from higher interest rates waned, they still beat expectations of £3.4bn.
The lender also said it had spent £24mn preparing for a plan drawn up under the previous Conservative government in which the state would sell some of the state’s remaining stake to retail investors. The outcome of the plan is uncertain.