Key Takeaways
- NatWest (NWG) reported a strong 18% increase in first-half operating pretax profit to £3.6 billion, surpassing analyst forecasts and announcing a £750 million share buyback.
- The Bank of Japan (BoJ) is reportedly seeing an environment conducive to a potential rate hike this year, with markets pricing in a 65% chance of a quarter-point increase by year-end amidst elevated inflation.
- French consumer confidence in July edged up to 89, slightly exceeding estimates of 88 and remaining stable from the previous month, as reported by INSEE.
NatWest Surpasses Profit Forecasts, Announces Share Buyback
NatWest (NWG) delivered robust financial results for the first half of the year, with its operating pretax profit surging by 18% to £3.6 billion. This performance exceeded the average analyst forecast of £3.46 billion, driven by growth in both loans and deposits. The British lender also announced a new share buyback program worth £750 million, equivalent to approximately $1.01 billion.
The bank's income rose to £7.9 billion from £7.1 billion a year ago, reflecting an increase in lending and customer numbers. Furthermore, provisions for bad loans came in lower than expected at £193 million, compared to analysts' forecasts of £226 million. In a sign of confidence, NatWest also lifted its dividend by 58% to 9.5p per share and upgraded its full-year guidance, now expecting a return on tangible equity of 16.5% (up from previous guidance of up to 16%) and annual income above £16 billion (up from £15.2 billion – £15.7 billion).
Bank of Japan Hints at Potential Rate Hike This Year
Speculation is mounting that the Bank of Japan (BoJ) could implement a rate hike this year, with Bloomberg reporting that the central bank sees a potential environment for such a move. Markets are already pricing in a 65% chance of a quarter-point increase by year-end. BoJ Governor Kazuo Ueda is anticipated to maintain a wait-and-see approach this quarter, likely waiting to confirm the economic impacts of external factors, such as potential tariff measures, through hard data.
Despite elevated inflation, the BoJ has been cautious regarding the outlook for underlying inflation, seeking sustainable domestic wage growth. Analysts have adjusted their forecasts, with some pushing their BoJ rate hike expectations to October from July. The upcoming July policy meeting is expected to include revised forecasts for growth and inflation, as the central bank continues to assess the economic landscape.
French Consumer Confidence Shows Modest Improvement in July
French consumer confidence saw a slight uptick in July, with the index rising to 89. This figure surpassed the estimated 88 and remained stable compared to the previous month's reading of 88. The data, released by France's official statistics agency INSEE, measures consumer sentiment by analyzing a sample of households' views on business conditions, the labor market, and prospects for job and income growth. While the improvement is positive, the index still remains below its long-term average of 100, indicating that consumer optimism has not yet fully rebounded. LiveSquawk also provided a briefing on the EU, offering broader market context.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.