NatWest Shares Drop After Guidance Cut; Farage Account Closure Review Flags 'Serious Failings' -- 2nd Update
27 Outubro 2023 - 7:15AM
Dow Jones News
By Elena Vardon
NatWest Group shares tumbled after the bank cut its full-year
net interest margin guidance and admitted "serious failings" in its
treatment of Brexit campaigner Nigel Farage after an investigation
into the handling of his account.
At 0939 GMT, shares were down 11% to 182.7 pence having hit as
low as 168 pence earlier in the session, their lowest price since
February 2021.
The lender on Friday said it accepts and will implement the
recommendations of the review, which it said found that the closure
of Farage's account at the NatWest-owned private bank Coutts was
lawful.
The board commissioned U.K. law firm Travers Smith to look into
the bank's handling of Farage's account and the then-chief
executive Alison Rose's conversation with a journalist about the
matter, which led to her stepping down in July as the bank was
consumed in a political drama. Farage claimed he was dropped as a
client of Coutts for his political views. NatWest said the review
concluded that it was "predominantly a commercial decision".
"Although Travers Smith confirm the lawful basis for the exit
decision, the findings set out clear shortcomings in how it was
reached as well as failures in how we communicated with him and in
relation to client confidentiality," Chairman Howard Davies
said.
The U.K.'s Financial Conduct Authority said the report
highlighted what it called potential "regulatory breaches" at
NatWest and Coutts. "We confirmed to both firms that we are now
reviewing how the firms' governance, systems and controls are
working to identify and address any significant shortcomings," the
regulator said in a statement. It said it has been intensifying
supervisory work on them since the events.
Meanwhile, the lender--which is 41% owned by the U.K. Government
according to FactSet data--posted its third-quarter results, and
said it now sees net interest income margin for 2023 of more than
3%. This compares with its recently trimmed view of around 3.15%.
Peer Barclays lowered its net interest margin expectation for its
U.K. division on Tuesday, which disappointed the market and dragged
its shares and those of other domestic banks lower.
Analysts noted that the weakness in NatWest shares on Friday was
likely driven by the new guidance's implication of lower estimates
for 2024 profits and suggest that the benefits of high interest
rates might have peaked.
NatWest also lowered its total income expectation for 2023 to
14.3 billion pounds ($17.34 billion) from GBP14.8 billion
previously. For the three months ended Sept. 30, total income rose
to GBP3.49 billion from GBP3.23 billion in the same period the
previous year, but missed the GBP3.585 billion forecast by
analysts. Net interest income for the quarter was GBP2.685 billion
compared with consensus expectations of GBP2.80 million.
Its net interest margin for the quarter was 2.94%, against
expectations of 3.07%, and 3.13% in the second quarter. It
attributed the drop to changes in deposit mix and continued
mortgage margins dilution, though some analysts note that
regulatory pressure that is increasing competition as well as
reputational damage may be playing a role in customers taking their
deposits elsewhere.
The group posted an operating pretax profit of GBP1.33 billion
compared with GBP1.09 billion for the third quarter of 2022,
against the GBP1.36 billion expected in a company-compiled
consensus.
Its common equity Tier 1 ratio--a key measure of balance-sheet
strength--stood at 13.5% at Sept. 30, while consensus had penciled
in a 13.8%.
Write to Elena Vardon at elena.vardon@wsj.com
(END) Dow Jones Newswires
October 27, 2023 06:00 ET (10:00 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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