NatWest Share Price Dips as a Fall in Deposits Offsets a Jump in Q1 Profits

NatWest share price ended Friday’s trading session in the red despite recording bumper profits for the first quarter. The stock ended the week 3.75% lower at 262p. Shares of the British bank have dipped by nearly 2% in the year to date and 4.80% in the past week. NatWest has a total market cap of 25.9 billion pounds.

Q1 Performance

Banking stocks dragged on Friday, with the NatWest share price leading the losses in UK’s benchmark FTSE 100 index. Lloyds Banking Group, Barclays, and HSBC were among the banking stocks that plunged on Friday.

NatWest reported a jump in its quarterly profits for the first quarter of the year on the back of higher interest rates in the UK which allowed banks to charge more for loans and mortgages. The Bank of England (BoE) increased its interest rates to 4.25% over the past year in a bid to curb persistent inflation. Even so, the banking group has said that soaring prices have seen its customers dip into their savings.

The British lender said its net interest income climbed 43% in the first quarter to £2.9 billion. Pre-tax operating profit jumped 49% YoY to £1.8 billion. The bank’s revenue surged 29% to £3.9 billion, ahead of analysts’ estimates of £3.8 billion. Additionally, NatWest said that it had flagged £70 million for potential bad loans, significantly lower compared to analysts’ forecast of £238 million despite inflationary pressures.

However, analysts were disappointed that the company’s yearly outlook, as well as the revenue, remained unchanged despite a hike in interest rates. The company reported a £20 billion plunge in deposits in the first quarter as customers battled a cost of living crisis. Also weighing on the bank’s sentiment is the reignition of the banking fiasco.

NatWest Share Price Outlook

NatWest share price dropped to its lowest level since the start of the month when contagion fears were fading away. The NWG stock price has moved below the 25-day and 50-day exponential moving averages, on the daily chart. Its Relative Strength Index (RSI) has moved to 39, indicating a sell-off in the shares.

Therefore, the NatWest share price is likely to continue falling amid the ongoing jitters over the banking sector. If this happens, the next logical support target will be 252p. However, a flip of the hurdle at the 25-day EMA will likely push the price higher.

NWG Price Chart

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