FTSE 100 giant Natwest shares surge to 15-year high
Natwest shares rallied to a 15-year high on Monday morning after the lending giant’s post-results stock boom continued into the new week.
The FTSE 100 titan’s shares were up over one per cent in early trading to 578.60p.
It follows the group netting £2.2bn in operating profit before tax for the third quarter – a 30 per cent jump from £1.7bn last year.
For the year-to-date stock has rallied over 40 per cent.
The bank’s net interest margin (NIM) – a crucial measure to indicate the firm’s profitability from lending – swellled to 2.37 per cent, up nine basis points from the second quarter.
In retail banking the firm delivered an operating profit of £850m, which was driven by £1.7bn lending growth in mortgages.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said the results were “another reminder that UK-focused banks are quietly performing better than many give them credit for.”
The bumper performance also came as the group’s cost-cutting initiatives laid the ground for growth.
Natwest’s cost-cutting gives a boost
The banking giant highlighted its cost-cutting, where the lender said it made “good progress on becoming a simpler bank, delivering efficiencies”.
Natwest has taken the chop to operations in the last year as part of an overhaul to keep the lid on expenses.
The firm began moving roles to lower cost locations such as India, chief executive Paul Thwaite said in an investor conference in June.
Thwaite joins Big Four bank peers in cost-cutting endeavours to streamline operations.
Like Thwaite, Lloyds’ Charlie Nunn, HSBC’s Georges Elhedery and Barclays’ CS Venkatkrishnan have pledged major savings across their respective banks in a bid to bolster their attractiveness to investors.
William Howlett, financials analyst at Quilter Cheviot, told City PM simplification has become a “consistent buzzword” for lenders as they sought to streamline legacy systems.
Elhedery has tables the most ambitious plan, where the HSBC chief is targeting $1.5bn in savings by the end of 2026.