By 
NatWest’s share price has jumped by over 5% today after the company reported better-than-expected quarterly results, making it the top performer in the FTSE 100. Other banks like Barclays and Standard Chartered also saw gains.
UK banks had a strong quarter, largely due to the robust performance of the mortgage market. Government fiscal stimulus also played a role in boosting consumer spending, as reflected in the positive results from Lloyds, Standard Chartered, and Barclays.
In its latest report, NatWest, previously known as Royal Bank of Scotland, announced that its pre-tax profit rose to £355 million, significantly surpassing analysts’ expectations of £75 million.
This strong performance was driven primarily by the mortgage and consumer lending business, with the bank handling over £2.4 billion in mortgage lending. Mortgage applications surged by 91% compared to the second quarter. However, this success was somewhat offset by weaker results in the NatWest Markets division and the retail and consumer business.
The bank also benefited from lower provisions for bad debt, booking £254 million compared to £628 million in the previous quarter.
Despite these positive results, NatWest, which is 62% owned by taxpayers, cautioned about the challenges ahead, particularly with the rising number of Covid cases in the UK. The company noted that tough times are expected, especially as government support schemes wind down and new Covid-19 restrictions are introduced.
Like other European banks, NatWest has faced significant pressure due to low-interest rates and rising delinquencies. Consequently, its stock has dropped by more than 50% this year, reducing its market cap to £14 billion. Other banks, such as Lloyds, Barclays, and Standard Chartered, have also seen their shares fall by more than 40%.
Looking at the four-hour chart, NatWest’s share price has been on a strong upward trend since September 22, when it fell to 90.85p. It is now trading at 124.10p, which is 36% higher than October’s low of 90.85p. The stock has formed an ascending channel and is currently slightly above the 15-day and 25-day exponential moving averages, just below the upper side of the channel at 125p.
Given this strong momentum, the share price is likely to test this resistance level. However, if the price drops below the lower side of the channel at 115p, it could invalidate this upward trend.