Recovery of economy from Covid a boom for NatWest with bank expected to receive earnings boost in results as result of lower losses from its loans
- Rising interest rates give shareholders confidence that profits will climb
- Analysts are predicting a profit of around £4billion for 2021
The recovery of the economy from Covid-19 has been a boom for NatWest, which has seen its share price soar by nearly 48 per cent over the last 12 months.
With the pandemic’s effects not being as bad as feared, the banking group is expected to receive an earnings boost in its results next Friday as a result of lower losses from its loans.
Meanwhile, the ongoing rise in interest rates will give shareholders confidence that NatWest’s profits will increase further as it rakes in more income from consumer borrowing.
Analysts are predicting a profit of around £4billion for 2021, a dramatic swing from the £351million loss suffered in 2020, although revenues are expected to dip slightly to £10.7billion from £10.8billion.
Also in focus will be growth in loans and deposits as people and businesses begin spending and borrowing again after guarding their savings to cushion themselves from the effects of Covid-19.
The dividend, as always, will be a key point of interest when the results are announced, with predictions of a final payment of 5.7p and a 0.5p special dividend on top, taking the total payout for the year to 9.2p per share, equivalent to around £1billion.
Following comments from US peer JPMorgan that it is spending more on IT and digital tech, analysts will also be on the lookout for any similar plans from NatWest and how any spending increases will weigh on its bottom line.
Any guidance on profit for 2022 will also be watched closely as the banking business will no longer have the added boost from its lower than expected loan losses during the pandemic.