FINANCIALS: NatWest: Spreads Performed Well But Outook Benign

NatWest (NWG: A3/BBB+/A) results are 26-Jun. Spreads have performed well since last time, margin performance was good and peer indications have been solid (so far). Expectations are relatively high, but the outlook also appears fairly benign, we feel.

• 1Q24 results (26-Apr) were well received by the equity market but spreads barely moved. Pre-tax profit expectations were surpassed (driven by good margin and revenue stats) and credit quality looked really quite good.
• NatWest announced the deal to buy Sainsbury’s bank last month, this is a <1% deal and had little effect on spreads. The UK state has continued to trim its equity stake, but a retail offer was paused by the UK election call. Margin indications from Sabadell were positive and Lloyds reports on 25-Jun, too – the outlook here will be key.
• Spreads have performed well; -15bp since last results (€IG banks -4bp) and the equity has outperformed by 12pp, too.
• Revenue estimates have been edged up c.1% which has moved EPS up 8% and 5% for the coming two years.

Results are due at 0700 (London time) with conf call at 0900 at: https://natwest-events.zoom.us/webinar/register/WN_nzF_gk4OSf2DnkGv7uFG8Q#/registration