NatWest shares slide despite good earnings
Traders have looked past the headline grabbing full-year profit-beating forecasts, at their highest levels since before the financial crisis, and decided the outlook is concerning.
IGTV’s Jeremy Naylor looks at the near 9% drop in shares bottoming out at a support line from 2022.
The bank, which is still 45% state-owned, is increasing its bonus pool as it tries to keep its banking talent on board.
(Video Transcript)
NatWest profits rise
Profits at NatWest have risen to their highest since before the financial crisis.
The bank, which is still 45% owned by the UK taxpayer, then of course we had to bail out the then RBS back in the financial crisis, has recorded an annual pretax profit of £5.1 billion in its 2022 full-year (FY) numbers.
Fourth quarter (Q4) figures came in at one and a quarter billion. We've been looking for something like around about £950 million. So it's beaten expectations there as well.
Share price chart
But if we look at the share price chart, it has dropped by a margin of more than 8% today. And it is now using this prior line of resistance, now support, at 275 to bounce off the lows today. Currently down 8.6% after 15 minutes of the session so far today.
Why has this happened? Well, the bank is concerned about the outlook. There's a lot of retail customers in here with mortgages and loans. And the concern si that I think that's going to start to build as we see the real concerns around the consumer.
The chief executive as well will receive a bonus for the first time since the 2008 bailout. It's also ramped up the bonus pool as well for its bankers by nearly £70 million last year to a total of £367.5 million. But shareholders also get a £1.10 each per share.
An £800 million share buyback scheme was announced, meaning the bank can increase its own stake back from the government. But the total sum of all this means the stock is down now by a margin of almost 9% on the session on this early part of Friday morning.
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