Member Info for JABH

Car finance is of no relevance to NatWest.

Some reports also saying the images of the UK's Chancellor of the Exchequer crying during Prime Ministers Questions has sent the bond markets into disarray. Suspect it's more the U-turn on welfare cuts but the tears send a terrible message to the world don't they. Can't have helped.

So, reading the article, are we saying that because the stupid Government didn't have the balls to stick to their guns today and reign in spending on benefits, the markets have sent the message they don't like the UK's creditworthiness at the current level of expenditure and borrowing sending the cost of UKG borrowing to levels that we can't really afford? In turn you have the classic case of the NWG share price being a bellwether of the state of the UK economy.

Presumably you mean that they won't sell until the market price goes over 250p? When they have sold huge tranches, privately, off-market to private investors they did so at a discount to market price and the moment it was announced the market SP was marked down. If only the Bank wasn't forced to simplify and sell off the likes of Citizens, Direct Line Group, and Worldpay, in exchange for the bailout, the Government could well have been making a profit on its shares at this point. I think that was an EU directive.

If the Government sells its shares to the public at a discount, presumably that will depress the share price for all of us? Is that right?

If the market doesn't react positively to those results then I don't know what would make them happy.

Haven't been on the board for a while but wow, CAN YOU BELIEVE IT?!?! :D

Some people have mentioned the Aviva Share Consolidation. It sounds like they went ahead with it (100 shares into 75) *and* on top of that the SP fell off a cliff on the consolidation date (16th May). Unless I'm reading it wrong, investors ended up with 25% fewer shares and a 35% drop in the Share Price.

Interest rate rises are great for the banks, so long as the public can afford them. Unfortunately these long awaited rises are happening in the midst of CoLC. We never get a break with this stock do we!

@mikeS02 True true true. Fingers crossed for a good few weeks. And happy to see that 500 point hit has already turned into something like 250 points.

A really good little nugget of info / theory from the NWG Chief Financial Officer just now about the SP drop.

Given that these results are so good (literally among the best for a long time), this raises the likelihood in the minds of investors about another batch sell-down of shares by the UK Government (not back to NWG but in a private off-market deal).

When UKG sells off-market, it sells to private investors at a small discount and because the number of shares sold is so large, this often temporarily pulls down the share price. There is a record of this happening even in comments on this chat. Given that the market now knows that UKG off-market sales put downward pressure on the SP, it is also the case that any *suspicion* of an off-marker sale by UKG will negatively impact the SP.

All that being said, I do wonder whether some of their gloomy language is a contributing factor. For example, is it really necessary to headline that the "economic outlook is uncertain"? That is a truism - it is the case every quarter and nothing in life is certain. They will never tell the market that the economic outlook is certain, so why feel the need to say it's not certain at such a market-sensitive time. I think they could do better at balancing the need of articulating the downside while also paying due care and attention to how their words can move the markets and damage people's investments.

So, quarterly profits rise 40% to £1.2bn. We absolutely smashed the analyst predictions. CET1 still well above target. We are releasing provisions while Lloyds and Barclays are having to take more of them. Government share ownership is now below 50%. Net lending growth of £6.7bn. 4.6% cost reduction Vs the same quarter last year. And, of course; Share Price down almost 500 points. Stupid markets. Stupid, stupid markets.

Well, that was weird...
10th Feb, SP 253p
"I image the Bank will post satisfactory or good results and, as seems to be the case every quarter, the SP will drop for some other reason. What do you think?
Last night I dreamt that they posted £3bn profit and SP dropped to 233p. Just putting it out there in case I turn out to be the next Mystic Meg of the trading world :D"

SP 233p at time of writing

I image the Bank will post satisfactory or good results and, as seems to be the case every quarter, the SP will drop for some other reason. What do you think?
Last night I dreamt that they posted £3bn profit and SP dropped to 233p. Just putting it out there in case I turn out to be the next Mystic Meg of the trading world :D

Vaccine immunity only wanes to the point that one's likelihood of becoming infected and having either an asymptomatic or mild experience increases somewhat. The very high protection against severe illness, hospitalisation, and/or death remains the same. There are very rare exceptions to this (i.e. double vaxed with severe case), notably among the very elderly and immunosuppressed.
Mild and asymptomatic cases are a trivial issue; they simply equate to even more natural immunity.

The Group CEO and the CFO have stated previously that they are aware that the market, analysts etc. would love NWG to thrill them with things like higher than forecast dividends, substantial buybacks etc. However, their position is one of sustainability, sustainability, sustainability. What this means is that we are less likely ever to experience a real shareholder bonanza, but what we should get in return is more of a Diageo situation where you have a very strong, safe, stable business where the SP continually grows, dividends creep upwards (not explode upwards), and they are paid every 6 months (and never missed).

The only real headwind I think is what the Government share sales do to the SP. We know that the off-market sales put downward pressure on the SP and now they are selling up to 15% of the daily volume on-market as well. And then we have the FCA prosecution which carries the potentially for an unlimited fine which could transform the Bank's capital position so I'm keeping my eye on that too. Of course, the Court may throw the case out in the Initial Hearing in September so that could go either way.

One thing that will create a huge bonus for Shareholders: rising interest rates which BoE will introduce if necessary to control inflation. This feels almost inevitable which is why it would seem like a good idea to buy into funds right now which spread investments generally in banks and insurance companies and other financials like brokerage firms / managed investment providers.

Interesting news.

https://news.sky.com/story/treasury-to-offload-up-to-15-of-state-backed-natwest-over-next-12-months-12361034

The initial hearing about the criminal charges being brought by FCA against NWG was originally scheduled for June I believe, but adjourned until tomorrow, 21st July. I just spoke to the courts who have confirmed that the initial hearing was adjourned again on Friday last week until Wednesday 15th September.

CET1 Ratio announced in Q1 was 18.2% (it's the measure of the level of capital held Vs risk weighted assets). The Banks are stress-tested by regulators and the higher the CET1 ratio the better they tend to weather the various economic scenarios they are tested against. 18.2% is pretty mega and means that the Bank is in a very strong position and, even if the SP can disappoint, the organisation is safe (it's the polar opposite of the time it went bankrupt during the financial crisis).

The redemption of the Tier 1 Capital Notes creates a CET1 gain of 8bps (meaning 0.08%). So, give or take the changes in CET1 since Q1 results, you would expect this to push the Group's CET1 ratio up to ~18.3%. I can't see this having a noticeable share price effect because any slight gain from it would certainly be drowned out by much stronger drivers relating to macroeconomic sentiment.

The good news is that although the SP does take a hit when UKG sells, so far, it has always recovered reasonably soon thereafter (not withstanding other macroeconomic issues that have their own pressures like pandemic, brexit, general elections etc). The other point to note is that if you have a set of major institutional investors buying hundreds of millions of NWG shares at a time (knowing that their discount will actually drag the SP down to the price they paid) then you have a good indication that some pretty big-hitters have done their homework and believe that there is good potential in the stock. The warning sign should be when UKG can't find buyers for the stock, even at a discount.