NatWest shares have followed Barclays’ playbook, declining despite the FTSE 100 bank reporting broadly positive Q4 and full-year 2024 results.
Fourth-quarter 2024 earnings were reasonably good, with total income and profit before tax slightly exceeding expectations and net interest margin meeting estimates.
However, shares fell 2% as investors looked to 2025 and booked gains in the stock that has rallied over 100% since lows in October 2023. NatWest’s guidance for the coming year was in line with expectations, leaving investors with little reason to build on existing positions.
NatWest reported a 2024FY profit of £4.5 billion and earnings per share of 53.5 pence, marking a 12% increase from the previous year. The banking group achieved a return on tangible equity of 17.5%, demonstrating robust profitability.
The bank’s total income, excluding notable items, grew by £0.3 billion to £14.6 billion, representing a 2.2% increase compared to 2023. This growth was primarily driven by expanded deposit margins and increased lending activity. The net interest margin remained relatively stable at 2.13%, slightly higher than the previous year.
Given the economic uncertainty towards the end of 2024, investors will be more than happy with the bank’s performance.
In terms of lending and deposits, NatWest saw significant growth in its core business areas. Net loans to customers increased by £12.9 billion to £368.5 billion, with notable growth in both retail banking and commercial sectors. Customer deposits also showed healthy growth, rising by £12.2 billion to reach £431.3 billion.
The bank has also announced a final dividend of 15.5 pence per share, bringing the total dividend for 2024 to 21.5 pence, representing a 26% increase compared to 2023. Total capital distributions for the year amounted to £4.0 billion, reflecting the bank’s strong capital position and commitment to shareholder returns.
“NatWest caps off a strong year with a good set of fourth-quarter numbers that saw a slight beat on the profit line driven by higher non-interest income and better impairments,” explained Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“There’s been a seismic sentiment shift over 2024, as the NatWest has moved on from its troubles at the helm and the UK banking environment has played out much better than some had feared. The setup for 2025 is one of cautious optimism, with borrowers remaining resilient, inflation in a more manageable place, and a UK economy that’s trying its hardest to squeeze out some growth.
“2025 could be the year NatWest finally sheds its government ties, with plans to return to full private ownership. After the UK government’s failed attempt to sell its stake earlier in 2024, this news will be a welcome development for investors who have long been waiting for the bank to regain its full independence.”