NatWest Predicts UK Interest Rates Have Reached Their Maximum
Quick Summary
NatWest believes that the Bank of England base rate has peaked at 4% in the first quarter of 2021 and will remain flat until 2024 when it will start to dip. This follows a steep rise in the past year. NatWest reported a 5.1 billion pound operating profit for 2022, but its shares dipped due to expectations that the bank’s returns target would remain unchanged and its costs higher than expected. Investors were concerned about the increasing gap between what borrowers are charged and what the bank pays for deposits.
Full Story – NatWest Believes UK Interest Rates Have Peaked
NatWest believes that interest rates in the United Kingdom have peaked.
The bank said in a Friday (Feb. 17) presentation that it expects that the Bank of England base rate will peak at 4% during the first quarter, remain flat through the first quarter of 2024 and begin to dip beginning around the first and second quarters of 2024.
This follows a steep rise in the Bank of England base rate over the last 12 months, according to the presentation.
The outlook was delivered as NatWest reported its annual results for 2022 and said its operating profit for the year was 5.1 billion pounds (about $6.1 billion), which was up from 3.8 billion pounds (about $4.6 billion) in 2021.
“In a difficult macroeconomic environment, our strong customer franchise, disciplined risk management and robust balance sheet mean we are well positioned to support our customers,” NatWest CEO Alison Rose said when announcing the results.
Reuters reported Friday that despite the bank’s leap in profit, NatWest shares dipped because the bank said its interest margins may stop rising this year.
After delivering its outlook for 2023, the shares slid as much as 9% because that didn’t meet investors’ expectations. One analyst said investors had not expected that the bank’s returns target would remain unchanged or that its anticipated costs would be higher than previously thought, according to the report.
Higher interest rates — and the increasing gap between what borrowers are charged and…
