Bank shareholders eye returns as Barclays and Natwest report
Shareholders in two of the UK’s biggest banks will be hoping for further returns next week as they shed light on recent trading amid an uncertain economic backdrop.
Barclays and NatWest will lead a raft of annual results updates by UK banks, after a recent positive period for the sector.
Shares in both firms have more than doubled over the past year, with Barclays up 111 per cent and NatWest 105 per cent higher.
On thursday 13 february, Barclays will be the first to update shareholders when it unveils its full-year performance for 2024.
The company is expected to reveal stronger profits after a boost from high interest rates and improved deal-making over the year.
A consensus of analysts have predicted Barclays will report a pre-tax profit of £8.1bn for the year, up from £6.6bn a year earlier.
The firm said in its previous update in October that improving profits were supported by a continued recovery in mergers and acquisitions, helping the firm’s deal-making business.
Investment banking fees and revenue from underwriting were up 58 per cent year-on-year in the third quarter of 2024.
Recent positive trading means it is forecast to declare a dividend of 8.6p per share, handing a total of £3bn back to shareholders when combined with £1.8bn in share buybacks.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “Barclays has more exposure to the US than other UK banks, so there will be focus on how its US credit card customers are keeping up with repayments, as well as the usual eyes on UK loan default levels which have been robust of late.
“Interest rate expectations for 2025 will also be key, particularly any guidance on UK net interest income.”
Shareholders for both firms will be keen for their assessment on how they think expected further drops in interest rates will impact trading.
On Thursday, the Bank of England cut interest rates to 4.5 per cent and pointed towards further cuts over the rest of the year as it seeks to bring inflation back to its 2 per cent target.
NatWest is set to report its annual results on Friday 14 February.
Similarly, it has seen its share price move firmly higher over the past year, but is likely to deliver marginally lower profits.
Analysts have forecast the company will post a pre-tax profit of £6.1bn, compared with £6.2bn last year.
However, analysts have suggested this would still be a “solid” performance amid a backdrop of easing interest rates.
NatWest is also expected to benefit from a decline in impairments, as lower borrowing costs lead to fewer businesses and individuals defaulting on loans.
In its previous update late last year, NatWest delivered stronger-than-expected profits for the third quarter.
Susannah Streeter, head of money and markets at NatWest, said: “NatWest has been on a roll, with its share price doubling over the past year.
“It’s up 8 per cent in 2025 so far, benefiting from the tailwind of positive sentiment towards UK stocks and by its third quarter results beating expectations.
“There’s been continued progress in keeping costs under control and although mortgage pricing has been proving a little painful over recent quarters as more profitable business during the pandemic was replaced, that will drop out of the equation moving forward with profitability of new and existing business now the same.”
By Henry Saker-Clark, PA Deputy Business Editor