Skip to content

Natwest Group (NWG) Share Price Plunged 5.47% As Sellers Step Up Despite Upbeat Results

Simon Mugo trader
Updated 29 Oct 2021

Natwest Group PLC (LON: NWG) share price plunged 5.47% despite the bank’s Q3 profits beating analysts estimates by an impressive margin.

The banking group made a pre-tax profit of £1.074 billion, beating analysts estimates of a £677 million profit in a classic “buy the rumour, sell the news event.”

The primary trigger behind the falling share price was the bank’s falling net interest margins, which were lower than expected, indicating that the bank’s overall profitability had shrunk.

Investors were also unhappy to see that the bank did not reduce its provisioning for bad loans, which remained at £282 million despite the improving business conditions in the UK driven by the relaxation of many coronavirus-related lockdown measures.

It appears most UK banks are preparing for worse business conditions in future, given that all the banks that have reported earnings have maintained very high loans loss provisions, much to the dismay of investors.

Still, we should not ignore the bank’s impressive performance after raising its earnings per share to 5.8p, outpacing consensus estimates of 3.4p. 

Natwest Group also told investors that it had repurchased shares worth £420 million as part of its plan to repurchase shares worth a total of £750 million.

The banking group’s share price has risen over 31.6% this year and was much higher before today’s significant decline. 

Today’s decline was long overdue from a technical standpoint, given the group’s significant share appreciation over the past few months.

NWG shares are currently supported by the 50-day moving average, indicating that the bullish trend is still on. However, a break and close below the level could indicate further potential declines.

Investors should watch the company to see if its shares break below the 50-day MA in the coming days or if they will stay above it and launch a comeback. 

*This is not investment advice. Always do your due diligence before making investment decisions. 

Natwest Group share price.

IG chart of Natwest Group share price 29-10-2021
Source: IG

Natwest Group share price plunged 5.47% to trade at 218.45p, falling from Thursday’s closing price of 231.10p.

Should you invest in Natwest Group shares?

If you’re a smart investor, you will know that having large-cap stocks in your portfolio is vital. They are more mature companies, considered safer investments, trade with less volatility, have greater analyst coverage, and in most cases, have a steady dividend stream. Due to the current market environment, we think now is the perfect time to add large-cap stocks to your portfolio. But which large-cap shares should you buy? Our stock analysts regularly review the market and share their picks for some of the best large-caps to invest in

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading