Increased distributions to shareholders and better than expected results following up on last week’s road map to full privatisation – you’d think the market would be made up with Natwest.
However, its latest results have been met with a shrug as investors reflect on the lack of any special dividend, the fact that the better-than-expected profit was mainly driven by the release of provisions built up as a buffer in the pandemic and the sobering reality that even if the Government sells 15% of its stake as planned and returns Natwest to private control, it will still own a chunky 40% of the business.
“By placing shares gradually over the next 12 months, the Government could put something of a ceiling on Natwest’s share price and the key net interest margin metric – basically showing how profitable its banking operations are – was also slightly disappointing as it dropped quarter-on-quarter,” says AJ Bell financial analyst Danni Hewson.
“The ultimate reality is that despite rebranding as Natwest from Royal Bank of Scotland, the company is still working incredibly hard to escape the full extent of the damage wrought by the financial crisis more than a decade ago.
“Current CEO Alison Rose is just the latest person to try and lift a business which was left on its knees by its disgraced former boss Fred Goodwin in 2009. She has done a solid job and has steered Natwest successfully through another crisis in the form of the coronavirus pandemic.
“Will 2022 finally be the year she can start operating without one hand tied behind her back due to the majority of the bank being owned by the taxpayer?”