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(Alliance News) - NatWest Group on Friday said it delivered a strong operating performance in the third quarter, but the state-backed bank's shares fell in early trading in London.
For the three months to September 30, total income was up 14% to GBP2.77 billion from GBP2.42 billion last year. Operating pretax profit more than tripled to GBP1.07 billion from GBP355 million, thanks to the release of impairment provisions.
Third-quarter attributable profit rose 10-fold to GBP674 million from GBP61 million.
Looking ahead, NatWest said it expects risk-weighted assets to be below its previously guided range of GBP185 billion to GBP195 billion on January 1, 2022.
"Throughout [the third quarter] NatWest continued to deliver a strong operating performance; growing in key areas and accelerating our digital transformation to improve customer experience and make our business more efficient. Our robust capital position means that we have been able to buy back GBP402 million of our shares to date whilst also investing for growth as we support our customers and drive sustainable returns to our shareholders," said Chief Executive Officer Alison Rose.
Richard Hunter, head of Markets at interactive investor said NatWest's pretax profit figure was "comfortably ahead of expectations".
"These are not results to shoot the lights out, particularly given the strength of the numbers from its peers so far, but there are nonetheless some reasons to be cheerful."
Hunter noted that total income also beat market estimates, and NatWest showed it has "an extraordinarily robust balance sheet".
"The destination for this embarrassment of riches is not totally clear, although the ongoing reduction of the government stake and further returns to shareholders are most likely. The bank has already repurchased GBP400 million of its own shares against the GBP750 million programme announced at the interims, while the current dividend yield of 2.6% is not punchy but could also be the focus of a further increase."
NatWest shares were down 4.5% early Friday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.4% at 7,218.34
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Hang Seng: down 0.8% at 25,341.85
Nikkei 225: closed up 0.3% at 28,892.69
DJIA: closed up 239.79 points, or 0.7%, at 35,730.48
S&P 500: closed up 1.0% at 4,596.42
Nasdaq Composite: closed up 1.4% at 15,448.12
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EUR: down at USD1.1668 (USD1.1682)
GBP: down at USD1.3788 (USD1.3808)
USD: up at JPY113.55 (JPY113.29)
Gold: down at USD1,796.25 per ounce (USD1,802.81)
Oil (Brent): up at USD84.36 a barrel (USD83.94)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
1100 CEST EU gross domestic product
1100 CEST EU consumer price index
0930 BST UK money and credit
0830 EDT US personal income & outlays
1000 EDT US University of Michigan survey of consumers
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The UK energy regulator might change the way it caps bills for millions of households across Britain as a major spike in gas prices drives suppliers to failure, PA reports. Ofgem has given no details of what adjustments it might make to how the cap is calculated, but will set out its thinking as it launches a consultation next month. Ofgem said in a letter to suppliers on Friday: "The unprecedented rise in energy prices this year has changed the perception of risk and uncertainty in this market. In order to protect the interests of consumers, we must ensure that the regulatory frameworks, including the price cap, fully reflect the costs, risks and uncertainties facing the supply companies we regulate." The consultation on potential changes will end in February, and they could be implemented at the beginning of April, when the price cap is set to change.
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BROKER RATING CHANGES
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HSBC RAISES UNITED UTILITIES TO 'HOLD' ('REDUCE')
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GOLDMAN SACHS INITIATES M&G WITH 'NEUTRAL' - TARGET 200 PENCE
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COMPANIES - FTSE 100
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Miner Glencore reported lower production of copper, gold and zinc in the third quarter, compared to a year before, down 14%, 30% and 12%, respectively. However, ferrochrome output jumped by 61% annually in the quarter. "The asset base has largely performed in line with our expectations and our full-year production guidance remains unchanged," said Chief Executive Officer Gary Nagle. "Notably, as energy markets have improved, we are recovering from the market-driven production cuts initiated within our Australian coal portfolio in H2 2020. For the company's Marketing arm, which trades commodities, Nagle said Glencore expects full-year adjusted earnings before interest and tax to exceed the top end of the company's USD2.2 billion to USD3.2 billion per annum long-term guidance range. Glencore reported adjusted Ebit of USD3.3 billion for the Marketing arm in 2020, up 41% from 2019.
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COMPANIES - FTSE 250
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Hilton Food Group said trading for the period from July 19 to date has been in line with expectations, driven predominantly by the rollout of its growth strategy in Australia and Asia Pacific, as well as through continued expansion across a range of protein categories. In Europe, Hilton Food said it continued to make good progress in a number of markets with overall regional revenue relatively flat for the quarter. It said the performance reflected the increase in the number of consumers eating out following the re-opening of food service. Still, Hilton remarked that it has seen growth in the slow cooked business in the UK, as well as in Central Europe, with continued volume growth in fresh food across both Tesco and Zabka. "The group's financial position remains strong, and we continue to explore opportunities to invest in and to grow the business in both domestic and overseas markets," the company said. Hilton Food said it has acquired UK meat supplier Fairfax Meadow Europe from Argent Holdings for GBP23.8 million. The purchase was funded from the company's debt facilities. Fairfax was loss-making in 2020, but Hilton Food said the business is recovering strongly.
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Computacenter said the third quarter ended September 30 was marginally above expectations, leaving the IT services provider track to deliver record revenue, profits and earnings per share for 2021. Computacenter also highlighted that product supply shortages were not as severe as some market predictions. However, it acknowledged shortages were affecting the timing of revenue bookings and increasing inventory levels, as it waits for components to complete orders. "Without these constraints our expected record performance would be even stronger," the company said. "We enter the fourth quarter with strong backlogs in both Services and Technology Sourcing. The Technology Sourcing backlog is at record levels driven by three factors - strong underlying demand, vendor product supply constraints and customers placing advance orders to mitigate the risk of product shortages," the company said.
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Medical products firm ConvaTec said revenue totalled USD511 million in the third quarter, up 3.7% on a year before, or 2.7% at constant currency and 2.2% organically. It said the performance was in line with expectations. The company now expects organic revenue growth towards the top end of its 3.5% to 5.0% guidance range for 2021, with a constant-currency adjusted Ebit margin of 18% to 19%.
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Friday's Shareholder Meetings
ADM Energy PLC - AGM
Adriatic Metals PLC - GM re funding package for Vares silver project
ITM Power PLC - AGM
Mattioli Woods PLC - AGM
MaxCyte PLC - AGM
OPG Power Ventures PLC - AGM
Sensyne Health PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
