NatWest Group - Time for a re-rating?

Q423 earnings demonstrated the inherent profitability and resilience of returns at NatWest Group (NWG). PBT came in 25% ahead of consensus, with beats on both revenues and impairments along with good cost control. Despite continuing normalisation of credit and assuming around two more base rate cuts in 2024 than are currently priced into the bond market, management expects to deliver a return on tangible equity (RoTE) of c 12%. On consensus estimates, the shares trade at 0.8x tangible net asset

NIM fears overdone ?

The third-quarter net interest margin miss should not be overinterpreted as confirmed by the group’s reiterated short and mid-term RoTE guidance.

Confirmed net interest margin pressure

The second quarter results were broadly in line with expectations thus enabling the management to marginally improve its guidance thanks to confirmed cost control and more resilient asset quality whereas the quarter showed that the net interest margin has peaked.

ESG excesses

Companies should not get involved in political matters. That is the lesson of Faragegate which could prove a salutary event.

UK Banks - Strong performance continues

Reiterated 2023 guidance

The first quarter results were boosted by fixed-income trading and benign asset quality trends. On the other hand, they confirmed that the interest rate tailwind is behind the UK banks. The management remains confident for 2023 while nobody expects it to forecast 2024.

14%-16% RoTE seen as sustainable

The negative post-release share price reaction sanctioned the lack of earnings surprise and a limited profit warning on 2024 consensus earnings expectations reflecting the management’s view that the liability side could reprice faster than expected.

No pain crisis ?

The management logically upgraded its guidance for 2022 on stronger interest rate hikes. The company reiterated its financial objectives for 2023 despite the looming crisis as it considers, like others, that this time banks will traverse the economic downturn unscathed.

Indecent RoTE objective

The group enjoyed a perfect quarter as rising interest rates inflated the net interest margin while not impacting asset quality trends. The management set aggressive financial objectives for 2023, showing strong confidence in ongoing profitability gains but which could prove indecent for a state-owned bank.

Supportive operating conditions

The first-quarter performance was boosted by market volatility and interest rate increases whereas the group continued to enjoy net provision recoveries. While this performance is not sustainable, it supports the management’s financial objectives for 2022 and 2023.

Ongoing restructuring to secure recovered profitability

The fourth-quarter results saw further litigation and restructuring charges opportunistically financed with loan provision recoveries. If the next two years are depressed by Ireland’s exit cost, the underlying profitability is expected to meet a decent, albeit not fully sustainable, 11% RoTE, as it will continue to enjoy some loan provision recoveries.

Slightly disappointing top line, ongoing provision recoveries

The bottom-line exceeded expectations on extra loan provision recoveries but slightly disappointed at the top-line level when adjusted for non-recurring items. The group continued to accumulate unproductive excess capital. In spite of management’s commitment, the latter will be returned to shareholders only very progressively.

Reiterated profitability guidance and increased capital distribution plan

The quarter enjoyed accelerated provision releases. The improved visibility on the group’s mid-term perspectives enabled management to increase its capital distribution plan over the next three years.

LIBERUM: Plus500: Strategic progress pays dividends

Tatton Asset Management (TAM LN) - Record net inflows

Tatton, the leading on-platform discretionary fund manager (DFM) and IFA support services Group has released a trading update ahead of its results to 31 March 2024, due on 18 June 2024.

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

Ondo InsurTech FY24 Trading Update

Ondo InsurTech has released a brief post-YE update revealing its good progress continued through 2H24 and consequently FY24 will be in line with market expectations.

BlackRock World Mining

BRWM’s managers: we see all the classic signs of high commodity prices...

NextEnergy Solar Fund - Attractive Refinancing

The refinancing of a £135m revolving credit facility and the extension of a similar £70m facility gives NESF firepower as development opportunities for new solar are especially attractive thanks to lower module prices in Europe. They give the fund key financial flexibility at a critical time as it pursues its capital recycling programme.

Morning Note – 18 April 2024

The Hardman & Co Monthly: April 2024

Feature article: Steady as she goes, but could be better: A review of investment company liquidity since 2016 Liquidity is the lifeblood of equity markets. The measurement of liquid asset availability to a market or company is a way of gauging a market’s health. This article builds on our previous work, which analysed the liquidity data for non-financial trading companies, by applying the same analytical techniques to the investment companies (IC) space. We analyse liquidity for ICs as a whol

Initial Equity Trading Comments - 19 February 2024

M Winkworth+ (WINK, House Stock at 163p) - Solid FY23A results, well placed to grow

Foxtons Group (FOXT LN) - 1Q24 IMS shows real momentum

Foxtons Group plc first quarter revenue rose 9% to £35.7m (1Q23: £32.9m) with growth delivered across all business segments. Trading is in line with management's expectations.

Foxtons Group - FY24 underpinned by market share gains

Foxtons Group’s Q1 revenue grew by 9%, supported by growth in all three divisions as the strategic initiatives continue to gain significant momentum, driven by investment in staff, best-in-class bespoke IT and data platforms. This implies that Foxtons’ medium-term targets are now coming into focus. Market share is being gained in all divisions, which puts Foxtons in a good position as the sales market stabilises. We maintain our valuation of 132p/share and believe that if interest rates stabilis

Resilient FY24, confident long-term outlook

Vp’s full year update highlights sector-leading results, once again benefiting from the diversity of its end markets and the quality of its specialist businesses. With results expected to be broadly in line with expectations, we trim our FY24 PBT forecast by c.5% to £39.0m, a shade below the FY23 outturn (£40.2m). We consider this an impressively resilient performance set against a mixed market backdrop. Under new leadership, a strategic refresh is underway and management is confident in long

Hybridan Small Cap Feast - 16/04/2024

16th April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radical Limited for

AUM up 30% in FY24, record flows, forecasts raised

AUM jumped £3.8bn or +30% in FY24, reaching £16.6bn on 31 Mar 24, 12% above our previous forecast of £14.7bn. Including 50%-owned 8AM Global, Assets Under Influence hit £17.6bn. Investment performance provided a tailwind, adding £1.5bn to AUM. But our key takeaway from Tatton’s hugely impressive last few years, is that it has designed and implemented a superior offering in platform-MPS with net flows consistently far higher than peers. That leadership looks even more pronounced in H2-24 with net