STAN and NWG Earnings Preview: What to Expect from these FTSE 100 Banks

The UK FTSE 100 banks’ earnings season has started, and Standard Chartered (GB:STAN) and NatWest Group (GB:NWG) are expected to report this week. Analysts have high hopes for their 2022 projections, as rising interest rates acted as the perfect base for these banks’ higher profits.

According to analysts, all five of the top banks in the FTSE 100 index are expected to declare profits surpassing historical records. 

Brokerage house AJ Bell (GB:AJB) forecasted around £37.4 billion of pre-tax profits from the top five UK banks for 2022.

Using the TipRanks Earnings Calendar for the UK market, investors could keep themselves updated on upcoming earnings. This tool provides a comprehensive list of the companies with their earnings date, forecasted EPS, analyst consensus, etc.

Let’s have a look at the details.

Standard Chartered Plc

Standard Chartered is among the top five banks in the UK, with a global presence across Asia, Africa, and the Middle East.

Since the start of 2023, the company’s stock has been in the news over a potential takeover by First Abu Dhabi Bank. The stock even touched its highest point in three years and is trading up by 14% YTD. The acquisition rumors are expected to continue until the company releases its 2022 annual results on February 16.

According to TipRanks, the consensus EPS forecast for the quarter is 0.12p per share, which is a big improvement over the negative EPS of 0.06p per share in the last quarter of 2021.

For 2022, the profit is expected to increase by 40% to $4.7 billion. The operating income is forecasted to increase by 11% on a year-over-year basis to $16.34 billion. The net interest margin is expected to cross 1.5% in Q4, up from 1.43% in the third quarter. For the year, the number is expected to be around 1.4%. With additional interest rate increases, the bank hopes to increase this margin to 1.65% by 2023.

Analysts remain worried about the bank’s bad debt position. The forecasted bad debt charge is around $750 million for the year. In its Q3 results, the bank had doubled its bad debt provisions to $227 million, due to its higher exposure to the Chinese real estate market.

What is Standard Chartered Price Target?

The average price target for the STAN stock is 892.03p, which has an upside of 22.8% from the current price.

Overall, the stock has a Hold rating, based on one Buy and five Hold recommendations.

NatWest Group Plc

NatWest is a leading bank in the UK, serving around 19 million customers’ financial needs.

NatWest will report full-year earnings for 2022 on February 17, before the market opens. According to TipRanks data, the forecasted EPS for the quarter will be around 0.09p, which is above the EPS of 0.04p in Q4 2021.

As compared to Standard Chartered, Citigroup analysts expect NatWest to post higher pre-tax profits of £5.1 billion in 2022, which could be its largest since 2008. In terms of its interest income, the forecasted net interest income for NatWest will be £9.9 billion, which is 32% higher than the previous year.

The bank is also expected to create a provision of £434 million for the potential bad debts.

On the flip side, the company could face some backlash over its expected increase in the bonus pool. In 2021, the company increased its bonus pool by 44% to £298 million, and any further hike to it could lead to new arguments.  

What is the Forecast for NatWest Shares?

According to TipRanks’ rating consensus, NatWest stock has a Moderate Buy rating, with six Buy recommendations.

The forecast for NWG shares is 370p, which suggests a growth of 21.5% on the current price level.

Ending Thoughts

While these banks are enjoying high interest rates after a decade, they are also under the radar for posting huge profits, contradicting the cost of living crisis in the economy. While such speculations continue, these banks are all set to release their yearly results with some record-breaking numbers.  

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