FINANCIALS: NatWest: Results, Guidance, Capital All Better - Spread Positive

NatWest (NWG: A3/BBB+/A) 2Q24 headlines look positive with a big pre-tax beat, driven by revenues (5%> cons) and loss write-backs. Guidance is being upgraded to something a few pp above current consensus and there’s a big beat on capital following good RWA management. Spreads outperformed since last results but have tracked €IG banks for the last month – we can see these positives pushing them tighter today.

• Credit stats: loan losses were a write-back which was all out of the commercial bank (retail banking losses were stable q/q at 12bp though). Consensus had a charge of c.18bp. Non-performers look stable q/q (at 149bp). CET1 is better than expected (at 13.6%, cons: 13.1%) on a big chunk of RWA management. These are positive figures.
• Revenues were 5% ahead of consensus (NII being the biggest nominal beat, too), costs were only 3% ahead of expectations which, with that loss write-back, drives at 32% pre-tax beat. The equity market appears likely to be positive on this, even after recent outperformance.
• Guidance is being upgraded: revenues to GBP14bn (from 13-13.5bn, cons: 13.8bn), the loan impairment rate to <15bp (from <20bp, cons: c.18bp) and RoTE is up to >14% (from c.12%, cons: 13.5%).

Conf call is 0900 (London time) at: https://natwest-events.zoom.us/webinar/register/WN_nzF_gk4OSf2DnkGv7uFG8Q#/registration