NatWest Reports Higher Loan Losses and Cost Guidance Disappoints in Q3

No-moat NatWest reported third-quarter operating profit before tax of GBP 1,242 million versus consensus estimates of GBP 1,403 million. Although income generation was roughly in line with expectations, higher operating expenses, and litigation and conduct costs as well as higher impairment losses came as a surprise. That said, higher base interest rates are a stronger tailwind to NatWest’s underlying business than any concerns over headwinds from the slowing economy. We maintain our fair value estimate of GBX 300 per share.