NatWest Group – A Big Slug Of Shareholder Returns, But The Trend’s A Bit Weak

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NatWest Group – A Big Slug Of Shareholder Returns, But The Trend’s A Bit Weak
mohamed_hassan / Pixabay

Natwest Group PLC (LON:NWG) reported total income in the second quarter of £2.7bn. That’s broadly in line with the same period in 2020, as modest loan growth was offset by lower net interest margins (the difference between what the bank charges borrowers and pays for funding).

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Q2 2021 hedge fund letters, conferences and more

Lower restructuring and other costs, together with a $2.7bn positive swing in provisions for bad loans, meant the bank reported an operating profit of £1.6bn compared to a £1.3bn loss a year ago.

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NatWest announced an interim dividend of 3p, as well as a £750m share buyback. The group has increased its minimum distribution to shareholders over the next 3 years to £1.0bn.

NatWest shares fell 1.0% in early trading.

NatWest Group's Profits Leap Back Into Action

Nicholas Hyett, Equity Analyst at Hargreaves Lansdown:

“There are some headline grabbing shareholder returns in this announcement as the best capitalised of the UK’s large banks starts to wind down it’s huge war chest. Profits have also leapt back into action, boosted by releases from the bad loan provisions set aside at the beginning of the pandemic - the economic fall-out of the pandemic has been less damaging than anyone had expected a year ago. However, compared to rivals Lloyds and Barclays, the underlying trends are a bit weak.

Mortgages have boosted loan growth, but more profitable unsecured lending looks a little sluggish. Despite progress on cost cutting, the bank’s cost: income ratio also remains high compared to rivals. Put slow revenue growth and higher costs together and the underlying returns are a bit unexceptional.  That’s not an insurmountable problem, but together with reducing the government’s remaining 55% stake they make for long to do list.”


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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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