NatWest falls as income outlook raised but not as much as City analysts predicted Proactive uses images sourced from Shutterstock
NatWest Group PLC (LSE:NWG) shares fell 3.6% to 564p after the lender’s first-quarter income was weaker than expected and the outlook was lifted less than expected.
The UK lender reported total income of £4.2 billion, around 2% below market expectations, driven by a 7% shortfall in non-interest income.
Pre-tax profit excluding one-offs was roughly in line with forecasts.
Analysts pointed to volatility in rates markets as a likely factor behind weaker trading income, though some offset came from positive one-off items at the statutory level.
Management upgraded full-year income guidance, now expecting it at the top end of the £17.2 billion to £17.6 billion range. It was noted that this assumes no Bank of England rate cuts, versus two before.
Shore Capital said: “this remains below current consensus of £18 billion and may therefore disappoint, especially given the first quarter miss on this metric”.
Jefferies struck a similar tone, noting the income miss and suggesting expectations may already reflect more favourable interest rate assumptions.
By contrast, UBS described the quarter as “slightly softer” but said consensus forecasts remain achievable, highlighting strong loan and deposit growth and a better than expected capital position.
Loans rose nearly 2% in the quarter, while the CET1 ratio of 14.3% came in ahead of expectations, underlining the strength of the balance sheet despite the softer revenue performance.
Jefferies said the balance sheet was “the standout”, with the increase in loans, deposits 0.7% higher “despite what is usually a weaker three-months around tax season”, both roughly 1% ahead of consensus.
The income outlook was seen by the broker as “hardly a disaster” for a share trading on 6.5 times 2028E earnings.