British economy gets another boost! National Westminster Bank (NWG.US) raised its full-year revenue and dividend guidance.
AInvestFriday, Jul 26, 2024 5:10 am ET
1min read
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Wealthy West Bank (NWG.US) said on Friday that its half-year pre-tax profit fell 16% to £3bn (US$3.86bn) as competition for mortgage loans and savers moving money into higher-yielding products hit earnings. The UK bank raised its outlook for its 2024 dividend yield from 12% to above 14%, indicating confidence in its performance for the rest of the year. The bank’s shares rose 6.12 per cent in premarket trading at the time of writing.

The UK bank also said it would buy a portfolio of prime residential mortgage loans for £2.4bn from Metro Bank to help build its retail banking business. The bank said in May that the government’s stake had fallen below 20 per cent, a step towards full privatisation after the 2008 financial crisis.

NWG raised its outlook for its 2024 dividend yield from 12 per cent to above 14 per cent, indicating confidence in its performance for the rest of the year; it expects to make £14bn in income this year, up from the £13bn to £13.5bn it had forecast previously. Its rival Lloyds Banking Group (LYG.US) also released a similar report on Thursday, saying its first-half profit fell 14 per cent but showed signs of optimism for the outlook for the second half of the year.

Lloyds is the UK’s largest mortgage lender and is seen as a barometer of the UK economy. Lloyds set aside £44m for bad loans in the second quarter, far below the £323m that the market had expected. This boosted pre-tax profit to £1.74bn, above market expectations.

Earlier this month, data from the UK Office for National Statistics also showed that the UK economy was accelerating. The economy grew at twice the pace expected in May, with gross domestic product (GDP) rising 0.4 per cent in May, above the 0.2 per cent economists had forecast, and the fastest expansion in construction for nearly a year.

NWG chief executive Paul Thwaite said on Friday: “Our customers are starting to feel more confident, activity is picking up, asset quality is holding strong and we are able to help to pull the whole of the UK economy through our unrivalled regional network.”

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