NatWest (NWG.US) beats Q3 earnings expectations, raises full-year guidance

NatWest (NWG.US) reported better-than-expected third-quarter profits and raised its full-year guidance. The UK bank now expects its tangible common equity return to be more than 15%, up from its previous forecast of 14%, and raised its full-year revenue forecast to £14.4bn ($18.7bn) from £14bn. Third-quarter pre-tax operating profit rose to £1.7bn, topping analysts' expectations of £1.48bn. NatWest's third-quarter net interest margin was 2.18%, up from the previous quarter, "driven by deposit growth", a key measure of a bank's profitability that reflects the difference between the interest paid on deposits and the interest earned on loans. Both net loans and net deposits grew. "We expanded our lending business to help customers buy or remortgage their homes, or start and grow their businesses," NatWest chief executive Paul Thwaite said in a statement. The bank set aside £245m to cover bad loans, topping analysts' expectations of £182m. NatWest said the proportion of bad loans to total loans was still low. Earlier this week, rival Lloyds (LYG.US) also reported better-than-expected quarterly profits as its borrowers' repayments were better than expected. Barclays (BCS.US) raised its outlook for its UK business on Thursday.