NatWest Group (LSE: NWG) released strong third-quarter results Friday, in a week that saw Lloyds reporting bumper quarterly figures.
Beating expectations
NatWest, formerly Royal Bank of Scotland, recorded an operating profit of £1,074m during the quarter. That’s significantly ahead of an analyst consensus of £677m. And it’s way better than the £355m recorded in the same quarter a year ago. But that was a particularly blighted period.
The bank has had to stump up £294m in litigation and conduct costs, relating to NatWest’s breaches of UK money laundering regulations. According to the Financial Conduct Authority, the bank failed to adequately monitor a client’s suspect deposits totalling around £365m over five years. The final penalty should be decided later in the year, with guidelines suggesting around £340m.
On the upside, the results benefited from a £242m impairment release as the UK’s economic outlook improves. Other banks, which had set aside more than needed during the pandemic to cope with bad debts and other risks, have been benefiting similarly.
NatWest share buybacks
The bank’s liquidity position appears strong. Chief executive Alison Rose said: “Our robust capital position means that we have been able to buy back £402m of our shares to date.“
Investors didn’t appear exactly overjoyed by the results, with the NatWest share price dropping 4% shortly after the market opened. But, at the time of writing, NatWest shares are still up 94% over the past 12 months. That’s a few percent ahead of Barclays, and quite a bit above Lloyds’ 80%.