NatWest 2022 earnings preview: Where next for the NWG share price?

When will NatWest report 2022 earnings?

NatWest Group will release annual earnings for 2022 on Friday February 17. Management will hold a presentation at 0900 GMT on the same day.

NatWest 2022 earnings consensus

NatWest Group is forecast to report a 3% rise in full year attributable profit to £3.037 billion in 2022, according to consensus numbers from Bloomberg.

NatWest 2022 earnings preview

Income should be some 20% higher in 2022 at £12.8 billion thanks to higher interest rates boosting the amount made from its traditional banking activities and a strong performance from its investment banking division NatWest Markets.

Rising rates has also improved its net interest margin, which is forecast to average 2.8% over the full year compared to 2.4% in 2021. That should continue to climb this year and analysts believe it can hit 3.3%.

Return on tangible equity – or RoTE, a key measure of profitability for banks - continues to improve thanks to higher interest rates and a healthy loan book and is expected to climb to 11.3% in 2022 from 9.4% the year before. NatWest is currently aiming to deliver RoTE of 14% to 16% in 2023 and analysts think the bank will hit the middle of that range.

There is room for potential surprises when it comes to the outlook for 2023, especially from commentary on what the bank expects this year in terms of costs, as well as provisions that have to be put aside for potentially bad loans.

NatWest had proven fairly disciplined when it came to costs until it abandoned its guidance for expenses in the third quarter, warning it no longer expected them to be stable given inflationary pressures. Expenses should be down around 3% in 2022, but they will rise in 2023 as inflation remains persistent even if it is easing. Markets are currently pricing in a mild uptick in costs in 2023, so any signal that they could rise at a faster pace could be bearish for the stock.

Plus, consensus figures also show markets believe the cost of risk is greater than what NatWest is expecting in 2023, demonstrating they anticipate larger loan loss provisions and impairments may have to be booked. Provisions are set to drag down results by around £405 million in 2022 but markets think this could exceed £1.4 billion in 2023. NatWest said in the last quarter that it was yet to see any signs of distress from its customers. The ongoing withdrawal from the Republic of Ireland through Ulster Bank is also causing charges to be booked.

Where next for the NWG share price?

Barclays kicked off the earnings season for UK banks and experienced a heavy selloff after failing to impress the markets, and this has had a knock-on effect on other UK banks as investors fret that they will suffer the same fate. NatWest is down 2.3% today.

The uptrend that can be traced back to four months ago remains intact despite today’s heavy fall, but it could be vulnerable. We have seen markets be hesitant in recent sessions with the stock closing largely where it opened on several occasions over the past week, explaining why the Barclays results have weighed on the mind of the markets.

The 50-day moving average, which is currently aligned with the 2022-high at 284.4p, could provide a safety net should the supportive trendline fail. Any slip below here opens the door to a move back below 275p.

On the upside, the stock first needs to close today’s gap and recover above 303.3p. That would then allow it to pursue 309.9p, representing the highest level since May 2018. It can then bring 316p back into the crosshairs to target the high of that month. Notably, the 22 brokers covering the stock see much greater upside from current levels with the average target price sat at 379.70p.

How to trade NatWest stock

You can trade NatWest shares with City Index in just four easy steps:

Open a City Index account, or log-in if you’re already a customer.
Search for ‘NatWest’ in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

Or you can practice trading risk-free by signing up for our Demo Trading Account.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.