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(Alliance News) - NatWest Group PLC on Friday said it intended to start a much softer share buyback programme as it reported profit growth for 2023 and a mild outlook for 2024.
The Edinburgh-based bank said its pretax profit in 2023 totalled GBP6.18 billion, a rise of 20% from GBP5.13 billion in 2022. It topped company-compiled consensus of GBP5.97 billion.
Total income rose 12% to GBP14.75 billion from GBP13.16 billion, beating consensus of GBP14.61 billion. Net interest income alone shot up 12% to GBP11.05 billion from GBP9.84 billion on the back of interest rate hikes.
"Despite the macroeconomic uncertainty, our customers remained resilient, navigating both inflation and rising interest rates," the lender said.
However, NatWest's common equity tier 1 ratio deteriorated mildly to 13.4% in 2023 from 13.5% in 2022. The CET1 ratio compares a bank's capital against its risk assets, with a higher ratio being more financially sound.
For the final quarter, total income slipped 4.6% on-year to GBP3.57 billion, but ahead of consensus of GBP3.39 billion. Pretax profit amounted to GBP1.26 billion, a decline of 12% annually, but above a forecast of GBP1.03 billion.
NatWest achieved a bank net interest margin for the year of 3.04%, above its most recent guidance of "greater than 3%". That outlook had been downgraded from a previous forecast of around 3.15%.
NatWest declared a final dividend of 11.5 pence, up 15% from 10.0p. Its total dividend for the year amounted to 17.0p, an increase of 26% from 13.5p.
Further, it intends to start an on-market share buyback programme of up to GBP300 million in 2024, which it said would take total distributions deducted from capital in the year to GBP3.6 billion, or around 40 pence per share. This would be significantly lower than the share buyback programme of up to GBP800 million it had announced a year ago when it announced its 2022 results.
Looking to 2024, it expects a return on tangible equity of around 12%, down from 2023's 17.8%. The RoTE outlook falls short of the 14%-16% it previously said it expected over the medium term.
Further, it anticipates the figure to rise to "greater than" 13% for 2026.
Finally, NatWest expects income "excluding notable items" on the range of GBP13.0 billion to GBP13.5 billion for 2024, so down as much as 9.3% from 2023's GBP14.34 billion.
Meanwhile, NatWest confirmed interim chief executive Paul Thwaite as permanent chief executive, Thwaite took on the job in an interim basis last year after Alison Rose resigned from the role in July. The scandal concerning the closure of the Brexit-backing politician Nigel Farage's Coutts account culminated in Rose's resignation at the time.
NatWest shares rose 2.3% to 219.20 pence each on Friday morning in London.
By Tom Budszus, Alliance News slot editor
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