NatWest Group (NWG) Q2 2024 earnings summary

Executive summary

• H1 2024 attributable profit was £2.1bn, operating profit before tax £3bn, and ROTE 16.4%, with EPS of 24.2p.

• Customer base grew by over 200,000, with Sainsbury's Bank and Metro Bank mortgage acquisitions announced.

• CET1 ratio at 13.6%, interim dividend of 6p per share (up 9% year-over-year), and £1.7bn distributed to shareholders.

• Government shareholding reduced to just above 19% through buybacks, nearly halved in 2024.

• Asset quality remains strong, with loan impairment rate at 3bps and robust capital and liquidity positions.

Financial highlights

• H1 2024 total income was £7.13bn, down 7.7% year-over-year; Q2 income up 5.2% sequentially to £3.6bn.

• Net interest margin for Q2 2024 was 2.10%, up 5bps from Q1; net interest income for H1 2024 was £5.4bn.

• Operating expenses (excluding litigation/conduct) up 3.9% year-over-year; cost:income ratio for Q2 2024 was 52.7%.

• Net impairment charge of £48m in H1 2024, or 3bps of gross customer loans.

• Tangible net asset value per share increased to 304p at 30 June 2024, up 16% year-over-year.

Outlook and guidance

• 2024 guidance upgraded: total income (ex-notable items) expected around £14bn, ROTE above 14%, and loan impairment rate below 15bps.

• CET1 ratio to be maintained in the 13%-14% range; RWA expected to be around £200bn by end 2025.

• Ordinary dividend payout ratio targeted at ~40% of attributable profit.

• Group operating costs (excl. litigation/conduct) to be broadly stable vs. 2023, with £0.1bn higher bank levies and £24m retail share offer costs.

• 2026 ROTE target set at above 13%.