The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Natwest key facts
• Forward price/book ratio (next 12 months): 0.52
• Ten year average forward price/book ratio: 0.62
• Prospective dividend yield (next 12 months): 7.3%
• Ten year average prospective dividend yield: 4.1%
***All ratios are sourced from Refinitiv.
Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn't be looked at on their own - it's important to understand the big picture.
HL Views…
Nat West's record 2023 was marked by performance peaking early on.
But as we moved through the year headwinds started to become more pronounced. It's clear that we won't be going back to the levels of profit seen in early parts of 2023. That doesn't mean Nat West needs to be put on the sidelines and fourth quarter results were broadly better than expected.
As a traditional lender, loan default rates are an important risk to watch for. Impairment charges (money put aside in anticipation of more people defaulting on loan payments) were better than expected as customers continued to show remarkable resilience in the face of higher inflation and interest rates. We think it's reasonable to expect low default rates to continue over 2024.
Deposits make up the other side of the equation and we continue to see retail customers in search of better rates from longer-term savings accounts. That's been an ongoing headwind over the past year. But crucially for NatWest, the pace of deposit switching was significantly slower in the fourth quarter than in the prior. Perhaps a sign that the peak in switching has come and gone. That'd be good news for margins - something for investors to monitor.
Costs are a challenge, and a key focus for the new CEO.
We've been pleased to see continued progress on reducing the cost to income ratio (2023 51.8%) - medium-term targets look for sub 50% but we don't expect that to come anytime soon.
Investors will be a little unhappy to see a lack of specific guidance on margins and an income forecast that was lower than expected. But we think management have been overly cautious with their £13-£13.5bn income guide.
There are other positive developments too.
Mortgage pricing is currently a pain point, as more profitable business written over the pandemic is replaced. But that headwind should ease over 2024.
There's also the benefit from the structural hedge - think of this like a bond portfolio that's set to roll on to better rates over the coming years. Nat West is rolling off some of the lowest rates in the sector, and should be one of the biggest beneficiaries.
The UK banking sector is unloved, but with strong balance sheets and some easing headwinds on the horizon we see potential. Given recent turbulence at the executive level, NatWest's valuation gap to its closest peer, Lloyds, has expanded.
We now see it as having one of the better potential upsides in the sector. Though nothing is guaranteed, and a new leadership team adds risk.
Excerpt from HL - 01/03/2024z
Net interest income was down, offset somewhat by a gain from the smaller non-interest income line (fees). Operating profit fell 11.9% to £1.3bn.
Net interest margin (NIM, a measure of profitability in borrowing/ lending) fell quarter-on-quarter, to 2.86%, slightly higher than markets were expecting. No NIM guidance was provided for 2024.
Retail customer deposits increased £3.5bn quarter-on-quarter, as a dip in current account levels across the client base was more than offset by a rise in longer-term savings balances. The pace of shift from current to term accounts slowed over the quarter.
Arrears remained broadly stable and in line with pre-pandemic levels.
An impairment charge of £126mn was taken over the quarter in expectations for future defaults. The CET1 ratio, a key measure of financial resilience, was 13.4% (target range 13-14%).
Paul Thwaite was confirmed as permanent CEO and the group announced a final dividend of 11.5p, as well as an on-market buyback of up to £300mn over 2024.
The shares rose 2.9% in early trading.
My guess is you will be allowed to buy a limited quantity each person, such as max 300 shares.
Will you want to sell your entire shares to buy 300 NWG shares?
Well amongst the confusion the SP continues to show upwards momentum.
I’m interested too. Even if it’s the Government selling directly surely people will just sell any existing holding and buy the equivalent discounted shares? Hence the share price will drop regardless of any time limits they have to hold for?
Does anyone know how this "massively discounted" offer will not tank the sp?
Could there be caveat in place such as not allowed to sell for 3 yr?
Scurrilous rags brazenly reporting that Hunt will flog 20% of bank worth 3-4bill at min 10% discount. Bank will then buy 5% a year for next 3 years. Target audience are PIs with 300bill held in cash ISAs and other savings accounts. M&C Scratchy doing advertising campaign, Computashare registrar doing admin, H Lowdown and Ding Dong marketing to PIs. Find out more next Wednesday (budget).
I may have misunderstood the recent buyback information in the finals but it appears they are adding shares
21/2- 8,748,719,627
22/2-8,749,168,000
23/2- 8,749,360,984
26/2-8,749,653,883
27/2- 8,749,837,016
28/2-8,750,027,033
Dividend history and percentages here:
https://www.dividenddata.co.uk/dividend-history.py?epic=NWG
2nd post is correction.
IP3LY,
Thanks the information.
So, total divi for 23/24, 17 p. At todays p, that's a return of 7.4%.
The return on just the last 11.5p divi , at todays sp ,is 4.8%.
An excellent return.
IP3LY,
Thanks the information.
So, total divi for 23/24, 17 p. At todays p, that's a return of c13%.
The return on just the lat 11.5p divi , at todays sp ,is 4.8%.
I am always wary if the truism, 'if it look too good to be true, it is'
where are the dark clouds on the horizon?.
@testpack3 - interim dividend was 5.5p which went XD on 23rd Aug 2023 and was paid on 15th Sept 2023.
Upcoming FINAL dividend was was declared on 16th Feb 2024, and due to go XD on 14th March.
It will be 11.5p per share with payment date for this is 29th April 2024.
GLA & ATB
Inflationbuster.' Plonker', another uneducated trench digger on here. I didn't say 'please' because there was zero chance he would do it. capiche. I can see this board is as helpful as rats on the table at a school birthday party, and about same brain size. Byeeee.
@testpack3, How about look yourself plonker.
Lmao
How about a please, you lemon
Kentio. Thnx for recommending a 'member pay' site No thanks. Since you're a member, have a quick gander for me and let me know. Thnx in advance.
Yes of course. It’s a double vote winner (in their minds, if not in reality). Plebs given cheap shares and money raised used to fund some massively badly targeted tax cuts instead of supporting our crippled public services.
You don·t have to check the. RNS - look at. dividenddata.com
Save me trawling through rns anyone know what interim divi was 23/24. Thnx in advance.
Will the GOV. share sale be open to PI'S
And when Labour gets elected, they will say the books are worse than they thought so there will be more medicine to take.
Government wants immediate sale to fund give aways for re election. They aren’t concerned with what’s good for the tax payer long term, as they won’t be there in government long term.
Short termist governance is why our country is declining and eastern countries are growing