By Joe Hoppe

NatWest Group PLC on Friday reported that pretax profit for the third quarter rose but missed market views due to impairments, and said that its guidance for 2022 remains largely unchanged.

The FTSE 100-listed bank posted a pretax profit of 1.09 billion pounds ($1.26 billion) compared with a restated GBP976 million for the same period a year earlier. Pretax profit was expected to be GBP1.24 billion, according to the bank's compiled consensus.

The company reported a net impairment charge of GBP242 million in the core Go-forward group which largely reflected revised scenario weightings as U.K. interest rates rose. More weight has been placed on the downside scenario, but this is not due to underlying book performance, the company said.

"Although we are not yet seeing signs of heightened financial distress, we are very conscious of the growing concerns of our customers and we are closely monitoring any changes to their finances or behaviors," Chief Executive Alison Rose said.

Total income rose in line with market views to GBP3.23 billion from GBP2.69 billion the year before, driven by higher interest rates. It was anticipated to reach GBP3.22 billion, according to the lender's compiled consensus.

The bank ended the period with a common equity Tier 1 ratio--a key measure of balance sheet strength--of 14.3%. It was expected to be 14.4%, according to the consensus.

The company largely backed guidance it issued in its interim results. However, it now expects income excluding notable items from Go-forward to be around GBP12.8 billion.

For 2023, NatWest backed its target of a planned return on tangible equity--a key profitability measure--in the range of 14%-16%, but expects the composition to be different, as inflation and rising interest rates were driving up both income and costs.

Write to Joe Hoppe at joseph.hoppe@wsj.com

(END) Dow Jones Newswires

October 28, 2022 03:08 ET (07:08 GMT)

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