NatWest today said its profits have risen to their highest since the global financial crash.
The bank recorded profits of £5.1bn before tax in its 2022 full-year results, a high not seen since 2007 and an increase from the £3.8bn booked a year earlier.
“NatWest may have delivered its biggest profit since the financial crisis but investors are far more concerned about what’s coming next and that’s less positive,” said AJ Bell’s Russ Mould.
“Income for 2023 is now guided to be lower than expected, with the key net interest margin metric also falling short. Costs are also set to be higher than forecast.
“While impairments are anticipated to be a bit lower than estimates the market may be cautious of taking NatWest at its word given the difficult backdrop for consumers and businesses which could lead to a big increase in bad debts.
“With the rate cycle nearing its peak the recent momentum in banking shares could be difficult to maintain. Whether this will act as a catalyst for the government to sell down more of its remaining stake remains to be seen.
“Natwest’s rescue by the state during the financial crisis means criticism of its tardiness in passing on higher interest rates to savers arguably carries more weight and that could have some impact on profitability.”