NatWest’s Coutts Sees Profit Surge to £90 Million

NatWest Group's Coutts reports a significant profit increase to £90M in Q3 2024, highlighting strong income growth and strategic financial management.

NatWest's Coutts Sees Profit Surge to £90 Million

In a notable display of financial fortitude, NatWest Group has unveiled a robust performance from its private banking sector, particularly through its illustrious Coutts division. The latest figures reveal a remarkable surge in operating profit, which ascended to £90 million ($116.7 million) for the quarter ending September 2024, a significant leap from £59 million in the corresponding period of the previous year and an increase from £66 million recorded at the close of June.

The total income for this segment experienced an upward trajectory, climbing to £253 million in Q3 2024, compared to £214 million a year prior. Operating expenses also saw a rise, reaching £166 million, up from £157 million, as disclosed in a statement released by NatWest on Friday. Notably, the cost/income ratio for the private banking division, when excluding litigation expenses, contracted to 65.6 percent from a previous 73.4 percent, indicating enhanced operational efficiency.

The quarter also witnessed a remarkable £900 million in net inflows, a substantial increase from the £200 million recorded a year earlier. This influx of capital undoubtedly contributed to the buoyancy of the bank's shares, which appreciated approximately 1.7 percent on Friday and continued to show slight gains into the following day.

The uptick in income can be attributed primarily to an expansion in deposit margins and an increase in the balances of assets under management and administration, which collectively bolstered fee income. The net interest margin experienced a commendable rise of 20 basis points from the preceding quarter.

As of the end of September, total assets under management surged to £35.7 billion, up from £31.7 billion a year prior. When factoring in assets under administration, the cumulative total reached £46.5 billion, a notable increase from £40.8 billion.

On a broader scale, NatWest reported an operating pre-tax profit of £1.674 billion for Q3, an increase from £1.332 billion. Attributable profit stood at £1.172 billion, with a return on tangible equity of 17 percent. The Common Equity Tier 1 ratio, a critical indicator of a bank's capital adequacy, was reported at 13.9 percent, up from 13.4 percent a year earlier.

Looking forward, NatWest anticipates a return on tangible equity exceeding 15 percent for the fiscal year 2024. On the cost front, the bank projects stability in expenses for the year, excluding litigation and conduct costs. Furthermore, it expects its loan impairment rate to remain below 15 basis points, reflecting a cautiously optimistic outlook amidst the prevailing economic landscape.