NatWest Swung to 3Q Profit on Lower-Than-Expected Impairments -- Update
--NatWest unexpectedly reported a pretax profit of GBP355
million for the third quarter on lower-than-forecast
--Full-year impairment charges are likely to be at the lower end
of the GBP3.5 billion-GBP4.5 billion range
--The retail banking arm benefited from stronger debit and
credit card spending
By Sabela Ojea
NatWest Group PLC on Friday reported an unexpected swing to
profit for the third quarter of 2020 on lower-than-feared
The U.K. bank posted an operating pretax profit of 355 million
pounds ($459 million) after booking GBP254 million in impairment
losses. This compares with an operating pretax loss of GBP8 million
for the same period a year earlier and a loss of GBP1.29 billion in
the second quarter of the year.
NatWest was expected to report a pretax loss of GBP75 million
for the third quarter of the year, and impairment losses of GBP628
million, according to the bank's own compilation of forecasts.
The FTSE-100 bank's total income declined to GBP2.42 billion
from GBP2.90 billion in the year-earlier period. The lender said
total income decreased due to lower fee income on overdrafts, lower
deposit returns, mortgage margin dilution and lower international
spend-related fee income, partially offset by strong balance growth
in mortgages and customer deposits.
Nat West's Common Equity Tier 1 capital ratio --a measure of a
bank's financial strength-- stood at 18.2% at the end of the
quarter, up from 17.2% as at June 30. It was anticipated at 16.7%,
according to the lender's compilation of forecasts.
Regarding its retail banking customer activity, NatWest said
that debit and credit card spend levels improved 30% and 43%
respectively, which mortgage applications increasing 91%.
The bank added that it maintains its outlook guidance for the
whole year, but noted that impairment charges are now likely to be
at the lower end of the GBP3.5 billion-GBP4.5 billion range
following the limited level of defaults across lending portfolios
in the third quarter.
Write to Sabela Ojea at firstname.lastname@example.org; @sabelaojeaguix
(END) Dow Jones Newswires
October 30, 2020 05:16 ET (09:16 GMT)
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