NatWest's pretax operating profit was lower than expected in the first half of the year, but it remains optimistic about the outlook for the second half of the year.
According to the report by CCTIME, NatWest's pretax operating profit for the first half of the year dropped by 16% to 3 billion pounds due to competition in the mortgage market and depositors shifting their deposits to high-yield products. NatWest has raised its expectation for its tangible return on equity by 2% from 12% to over 14% for 2024, indicating confidence in its performance for the rest of the year.
The British bank also announced that it will purchase a high-quality residential mortgage portfolio from Metro Bank for 2.4 billion pounds in an effort to establish its retail banking business. Earlier this month, the UK government's stake in the bank fell below 20%, taking a step towards full privatization after receiving government assistance during the 2008 financial crisis.
NatWest has raised its expectation for its tangible return on equity by 2% from 12% to over 14% for 2024, indicating confidence in its performance for the rest of the year; the bank expects this year's revenue to reach around 14 billion pounds, higher than the previous forecast of 13 billion to 13.5 billion pounds. Lloyds Banking Group, the bank's competitor, also issued a similar report on Thursday, reporting a 14% drop in profits for the first half of the year, but showing signs of optimism about the economic outlook for the second half of the year.
Lloyds Bank is the UK's largest mortgage lender and is seen as a barometer of the UK economy. The bank set aside 44 million pounds for bad loans in the second quarter, far below the market's expected 323 million pounds. This boosted pretax profit, which was 1.74 billion pounds for the quarter, better than market expectations.
Earlier this month, data from the UK National Statistics Office also showed acceleration in UK economic growth. UK economic growth in May was twice the expected rate, rising 0.4% month-on-month, above economists' previous estimate of 0.2%, marking the fastest expansion in the construction industry in almost a year.
NatWest CEO Paul Thwaite said on Friday, "Our customers are beginning to feel more confident, activity is increasing, asset quality remains strong, and we are able to help unlock growth across the UK through our unparalleled regional network."