NatWest swings to loss after taking £2.1bn Covid hit
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NATWEST Group capped off a bad week for the UK’s high street banks with a £2.1bn hit from the impact of the coronavirus crisis – worse than the most dire predictions by analysts.
The bank’s second quarter impairment charge was set aside to cover the bad debts that NatWest thinks might be on its books. It pushed the bank into a loss for the first half of the financial year.
Pre-tax loss was £770m, a swing from a £2.7bn profit in the same period a year earlier.
An average of analysts’ predictions, compiled by the bank, had forecast that NatWest, recently renamed from the Royal Bank of Scotland, would reveal a £943m hit. Even the most pessimistic analyst did not think the impairment would reach more than
AEROSPACE & DEFENCE
Avon Rbbr ..................................... £33 1/4 BAE Systems ................................. 490 1/4 Chemring ....................................... 239 Meggitt ........................................... 268 3/4 Rolls-Royce .................................... 231 5/8 Senior ................................................ 52 1/4
AIM
600 Group .......................................... 8 Highland Gold Mining .............. 296 Johnson Service Grp ................... 93 1/8 London Security .......................... £21 M”S Intl ........................................... 130 Nichols ......................................... 1310 Scapa Grp ........................................ 85 3/4 Youngs ............................................ 919
BANKS
Barclays .......................................... 100 1/2 HSBC Hldgs ................................... 342 1/4 Lloyds Banking Gp ....................... 26 1/4 NatWest Group ............................ 106 Standard Chartered ................... 385 3/4
BEVERAGES
Barr (AG) ......................................... 430 Diageo ............................................ £28
CHEMICALS
Croda International .................... £57 1/4 Elementis 98 ................................... 63 3/4 Johnsn Mat ................................... £22 3/8
CONSTRUCTION & MATERIALS
Balfour Beatty .............................. 240 5/8 C”R”H .............................................. £27 5/8 Costain .............................................. 60 1/4 Marshalls ........................................ 594 1/2
ELECTRICITY
DraxGp .......................................... 280 SSE ................................................ 1301
ELECTRONIC & ELECTRICAL EQUIPMENT
Morgan Advanced ...................... 217 Ox Instmts .................................. 1346 Volex ................................................ 136 1/2 -1/4 -14 3/4 -2 1/2 -6 3/4 -13 3/4 -2 +7 -7/8
-25 +2 1/2
-11
-1/4 -4 7/8 +1/8
-8 1/4
+1 1/2 -5/8
+1/2 +2 -5/8
-3 -5/8 +1/4 -4 1/2
+7 3/4 -11 1/2 -1 1/2 -24 +7 around £1.5bn.
Chief executive Alison Rose said: “Our performance in the first half of the year has been significantly impacted by the challenges and uncertainty our economy continues to face as a result of Covid-19.
“However, NatWest Group has a robust capital position, underpinned by a resilient, capital-generative and well-diversified business.”
Banks have been at the centre of the Government’s efforts to fight the coronavirus.
As the pandemic spread, the Treasury announced it would back what turned out to be millions of loans provided through the high street lenders.
So far, NatWest has lent £5.8bn
EQUITY INVESTMENT INSTRUMENTS
Aberdeen Diversified Income & Growth Trust ................................................... 86 5/8 -2 1/8 Alliance Trust ................................ 777 -8 Dunedin Inv .................................. 253
Edin Invst ....................................... 448 Electra Private Equity ................ 197 1/2
F&C Investment Trust ................ 666 Henderson Smllr Cos ................. 732 North American Inc ................... 223
Scot Am .......................................... 412 Scottish Mortgage ..................... 869 Witan ............................................... 178 5/8
FIXED LINE TELECOMMUNICATIONS
BT Grp ............................................... 98 5/8 Talktalk Telecom ............................ 69 1/2
FOOD & DRUG RETAILERS
Morrison (WM) ............................ 186 7/8 Sainsbury ....................................... 187 1/8 Tesco ............................................... 217 1/8
FOOD PRODUCERS
AB Food ....................................... 1765 Carrs Group ................................... 128 3/4 REA Hldgs ........................................ 57 1/2 TateLyle ......................................... 6511/4 Unilever .......................................... £45 3/4
GAS, WATER & MULTIUTILITIES
Centrica ............................................ 48 3/4 National Grid ................................ 900 3/8 Pennon Grp ................................ 1065 1/2 Severn ............................................. £24 1/2 United Utils ................................... 900
GENERAL FINANCIAL
3i Group ......................................... 889 5/8 Close Bros ................................... 1096 London StockExch ...................... £84 7/8 Man Group .................................... 124 ProvidentFinancial .................... 164 Schroders ...................................... £29 5/8 Schroders NV ................................ £20 1/2
GENERAL INDUSTRIALS
Smith (DS) ..................................... 261 1/4 Smiths Grp ................................. 1355
-8 +3 3/4 -5 +5 +4 -5 +4 -9 1/4 -1 1/2
-1/8 -2 -7/8
-32 1/2 -3
-9 1/4 -3/4
-1/4 +4 5/8 +13 +1/8 +7
+21 1/4 -11 +1 3/8 +1 1/8 -2 -1/8 -1/4
-7 7/8 -8 through the bounce back scheme, and £2.3bn in coronavirus business interruption loans (CBILS).
Ms Rose added: “Throughout this crisis we have provided exceptional levels of support to our customers, colleagues and the communities we serve. I am proud that our colleagues have consistently shown they are putting our purpose at the heart of everything they do.
“Through our strong balance sheet and prudent approach to risk, we are well placed not only to withstand Covid-19-related impacts but also to provide the right support to those who will need it most in the tough times to come.
“Our purposeful strategy will help our customers, colleagues and communities to recover, rebuild and, ultimately, to thrive. We are building a
GENERAL RETAILERS
Dixons Carphone .......................... 73 5/8 Inchcape ........................................ 4291/4 Kingfisher ...................................... 2417/8 M & S ................................................. 95 Mothercare ........................................ 6 1/2 Next ................................................. £54 1/2 WH Smith ...................................... 940
HEALTH CARE EQUIPMENT & SERVICES
Smith Nph .................................. 1517 1/2
HOUSEHOLD GOODS
Barratt Devel ................................ 510 5/8 Bellway ........................................... £25 1/2 Persimmon .................................... £24 Reckitt Benckiser ........................ £77 TaylorWimpey ............................. 1183/8
INDUSTRIAL ENGINEERING
I”M”I .............................................. 1044 Molins ............................................. 158 Renold .............................................. 10 3/4 Spirax-Sarco ............................... £103 1/8 Weir Grp ...................................... 1196 1/2
INDUSTRIAL METALS
Ferrexpo ......................................... 177 5/8
INDUSTRIAL TRANSPORTATION
Signature Avi ................................ 235
LIFE INSURANCE
Aviva ................................................ 263 3/4 Lgl&Gen ....................................... 214 Prudential ................................... 1105 1/2 Standard Life Aberdeen ........... 250 3/8
MEDIA
Daily Mail & Gen Tst ................... 631 ITV ...................................................... 56 5/8 Pearson ........................................... 531 Reach ................................................ 60 3/4 RELX .............................................. 1615 STV Group ..................................... 230 WPP ................................................. 568
MINING
Anglo American ....................... 1870 1/4 -1 1/2 +3 3/4 -2 5/8 -1 5/8 +1/8 -1/2 -17 -31 1/2
-8 5/8 -3/8 -1/4 -1 -3 1/2
-18
-3/8 -21 1/2
+2 5/8 -7/8
-3 +2 3/4 -6 1/2 -7/8
-2 -2 3/8 -8 1/4 -1/4 -24 1/2
-12 1/4 -13 3/8
Antofagasta ............................... 1027 1/2 BHP Group ................................. 1655 Fresnillo ....................................... 1232 1/2 Kaz Minerals ................................. 540 5/8 Rio Tinto ......................................... £46 1/8
MOBILE TELECOMMUNICATIONS
Vodafone Group ......................... 115 1/2
NONLIFE INSURANCE
AdmiralGrp .................................. £24 Marsh McL ..................................... £88 1/4 RSA Ins Gp ..................................... 429 1/8
OIL & GAS PRODUCERS
BP ..................................................... 275 1/8 Cairn Energy ................................. 119 5/8 Premier Oil ...................................... 35 1/4 Royal Dutch Shell A ................. 1121 5/8 Royal Dutch Shell B ................. 1080 3/4 Total ................................................. £28 1/8 Tullow Oil ......................................... 25 1/8
OIL EQUIPMENT & SERVICES
Petrofac .......................................... 140 Wood Gp(J) ................................... 191
PERSONAL GOODS
Burberry Gp ............................... 1252 1/2 PZ Cussons .................................... 190 3/8
PHARMACEUTICALS & BIOTECHNOLOGY
Astrazeneca .................................. £85 1/4 GlaxoSmithKline ...................... 1529 3/4
REAL ESTATE
Brit Land ......................................... 366 1/8 Hamrsn ............................................. 64 1/8 Land Securities ............................ 576 5/8 SEGRO ............................................. 969 1/4 -1/2 +9 1/8
-8 1/4 -4 1/2 +2 -37 1/4 -33 -5/8 +1 -2 1/4 +5/8
+8 5/8 +1/8 +17 3/4 +17 5/8
SOFTWARE & COMPUTER SERVICES
Computacenter ........................ 1983 Sage Group ................................... 729 3/8
SUPPORT SERVICES
Bunzl ............................................... £22 Capita ................................................ 34 1/4 Connect Group .............................. 20 1/2 sustainable business that will generate lasting value for all our stakeholders, as we work together to create a greener, fairer and more inclusive economy.”
NatWest’s results cap a gloomy week for the UK’s biggest retail banks.
Though Barclays escaped the worst of the pandemic thanks to its investment banking arm, Lloyds slumped to a pre-tax £602m loss, after a £2.9bn profit last year.
The bank set aside another £2.4bn to cover its impairments.
CMC Markets chief market analyst Michael Hewson said that the decisions of bosses at Lloyds and NatWest to focus on their retail bank and pare back their investment arms left them “much more exposed” to the effects of the pandemic than their US rivals.
“While the likes of JPMorgan Chase -1/2 -17 5/8 +24 -4 3/8 -5/8
-3
-1/2 -1
-38 +1 +23 +11 3/8
-1/4 -1 3/8 +1/2
De La Rue ....................................... 130 Elctro Com ..................................... 656 Electrocomp ................................. 656 Experian ......................................... £26 3/4 G4S ................................................... 142 Hays ................................................. 109 Homeserve ................................. 1328 Menzies J ....................................... 109 1/4 Redde Northgate ........................ 250 Rentokil .......................................... 534 1/4 Travis & P ..................................... 1108 1/2
TECHNOLOGY HARDWARE & EQUIPMENT
IBM ................................................... £92 3/4 Spirent Comms ............................ 280
TOBACCO
Br Am Tob ...................................... £25 1/4 Imperial Brands ........................ 1276
TRAVEL & LEISURE
Carnival .......................................... 826 5/8 Compass Grp ............................. 1050 1/2 easyJet ............................................ 493 1/4 FirstGroup ....................................... 35 1/4 Go-Ahead Gp ............................... 620 Intercontl Htls .............................. £35 1/8 Intl Cons Airl ................................. 164 3/4 Marston’s .......................................... 40 1/4 Mitchells & Butlers ...................... 153 Natl Express .................................. 151 1/2 Rank Org ........................................ 136 5/8 Restaurant Grp .............................. 44 1/4 Ryanair ............................................ 945 5/8 Stagecoach Group ....................... 47 3/8 Whitbread ..................................... £21 3/4 William Hill .................................... 104 3/8
INDEX FTSE 100 ......................... 5924.59 FTSE 250 ....................... 16932.65
-3/4 -5 -5 -3/4 -5 -1 7/8 +1 -6 5/8
-23 3/8 -46 -3/4 +22 -1 3/8 -65
-50 -19 -29 3/8 +1 1/8 -22 -3/4 -16 1/4 -3 1/2 -3 -3/4 -4 5/8 -1 3/8 -27 3/8 -2 1/2 -1 -1
-65.40 -84.40
and Morgan Stanley have thrived due to their investment banking operations, the backlash against so called ‘casino banking’ here in the UK has meant that the less diversified UK banks have struggled in what is an extremely competitive UK market,” he said.
He added: “While all three of these UK banks are acutely vulnerable to widespread consumer defaults, along with HSBC, who report next Monday, at least HSBC and Barclays have other revenues streams from their investment bank and overseas operations.
“This has certainly helped Barclays, which has seen its investment division start to perform better than expected in recent quarters, which in turn has helped it in respect of any underperformance in its domestic retail operations.”