NatWest shares slide on weaker than expected interest income outlook (updated)
UPDATE 1-NatWest shares slide on weaker than expected interest income outlook Adds details, analyst comment, updates shares
LONDON, Oct 30 (Reuters) - NatWest NWG.L shares fell 8.4% on Friday and were on track for their biggest one-day drop since March 19 after management gave a weaker-than-expected outlook for interest income, highlighting mounting competitive pressures in the UK banking market.
Like rivals HSBC HSBA.L and Lloyds LLOY.L, NatWest reaffirmed, rather than upgraded, its full-year targets, disappointing investors who had hoped for a stronger outlook despite a solid quarterly performance.
NatWest reported third-quarter operating pretax profit of £2.2 billion ($3.0 billion), in line with analysts' average forecast
Executives told analysts they expect net interest margin to remain "broadly stable" at 2.5% into 2027, versus consensus expectations for higher growth, underscoring pressure from stronger competition and lower interest rates
The bank's cost-to-income ratio improved to 45.7% in the year to date, 2.1 percentage points lower than a year earlier, helped by about £420 million of gross cost savings as it cuts jobs and invests in AI
Jefferies analyst Jonathan Pierce said the quarter showed UK banks "tearing off the band-aid" by lowering expectations for interest income growth as margin pressures intensify($1 = 0.7456 pounds)
(Reporting by Lawrence White; Editing by Tommy Reggiori Wilkes and Mark Potter)
((lawrence.white@tr.com; +44 7788 366940))
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