In key news on UK stocks, NatWest Group (GB:NWG) reported Q1 results for 2024, with profits and income slightly exceeding expectations amid pressures in the mortgage market. The bank reported a pre-tax operating profit of £1.33 billion, above the average forecast of £1.26 billion. However, Q1 2024 profit declined from the £1.8 billion reported in the prior corresponding period, mainly due to rising competition and margin impacts in lending and mortgage products. NWG gained 4.5% today as of writing.
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Sluggish Mortgage Market Hits UK Banks
NatWest is among the top four banks in the UK. Earlier this week, Lloyds Banking Group (GB:LLOY) and Barclays PLC (GB:BARC) also reported lower Q1 profits, reflecting the challenges in the UK mortgage market.
However, investors reacted positively as these banks managed to surpass expectations. Lloyds reported Q1 pre-tax profit of £1.6 billion, down from £2.3 billion in the previous year, but aligning with expectations. Meanwhile, Barclays’ pre-tax profits totalled £2.3 billion, surpassing expectations of £2.2 billion. Looking ahead, these banks have confirmed their full-year guidance numbers, hoping these pressures will ease out in 2024 amid the economic recovery in the UK.
NatWest’s Q1 Results
NatWest reported a total income of £3.47 billion for the first quarter, surpassing estimates of £3.43 billion. That said, Q1 income was down from £3.88 billion reported during the corresponding period in 2023 due to reduced deposits, as customers shop for high-yield products.
Similar to its peers, NatWest also maintained its outlook for the full year 2024. The bank expects a RoTE (return on tangible equity) of approximately 12% in 2024. Additionally, income, excluding notable items, is expected in the range of £13.0 billion to £13.5 billion. In Q1, NatWest reported RoTE of 14.2%, and total income, excluding notable items, was £3.41 billion.
Is NatWest a Good Share to Buy?
According to TipRanks, the NWG stock has a Moderate Buy rating based on 11 recommendations, including seven Buys. The NatWest share price forecast is 293.50p, which indicates a possible downside of 1.84% from the current level.
