NatWest (NWB), Darktrace (DARK), Microsoft (US:MSFT), Alphabet (US:GOOGL), Redde Northgate (REDD), Loungers (LGRS) and Kingspan (KGP)
The first quarter update from NatWest (NWB) had a defensive quality that some of the other bank updates have so far lacked this season. While broad revenue was essentially flat at £3.48bn, when interest income is included, lower impairment charges meant that quarterly pre-tax profits were 5 per cent ahead of consensus forecasts at £1.33bn (2023: £1.26bn). Notably, the bank’s return-on-tangible equity at 14 per cent was well ahead of the 12 per cent that management had forecast for the full year.
The net interest margin was 6 basis points higher at 2.05 per cent and seemed to confirm the general trend that the fall in bank net margins has started to ease. The net impairment charge was £93mn.
Customer deposits increased by £0.9bn, primarily reflecting growth of £2bn in retail banking, which was partially offset by a £1.2bn reduction in commercial deposits as churn and a lack of liquidity affected this market. Term balances fell by one percentage point to 16 per cent of the total book. Analysts at Peel Hunt said the results were better than expected and likely to lead to upgrades for the full year. JH
Read more: Will banking M&A pick up this year?
Private equity bidder offers £4.25bn for Darktrace
US equity firm Thoma Bravo has agreed to buy Darktrace (DARK) for a price of $7.75 a share, giving a total valuation of $5.32bn (£4.25bn).
The cash bid represents a 44 per cent premium to Darktrace's average share price in the three months prior to the bid, although it is 38 per cent adrift of Darktrace’s five-year-high share price recorded in September 2021. Darktrace’s share price has been on the rise since the final quarter of last year and in March it increased its full-year revenue and adjusted cash profit (Ebitda) margin guidance.
On release of its latest interim figures, we expressed concern that “R&D spending has dropped in absolute terms”, but Thoma Bravo reckons it has the requisite expertise to drive growth at the UK cybersecurity specialist. MR
Google owner Alphabet to pay dividend
Google owner Alphabet (US:GOOGL) followed in the footsteps of Meta Platforms (US:META) by introducing a dividend payment. Revenue in the three months to March grew by 15 per cent year-on-year to $80.5bn (£64.2bn) and operating profit rose by 46 per cent to $25.5bn. The Google advertising arm – still the main driver of revenue – grew sales by 13 per cent.
Diluted earnings per share rose by 62 per cent to $1.89 per share. The company announced a $0.20 per share dividend for the and a plan to buy back a further $70bn worth of stock.
Daniel Peris, author of The Ownership Dividend, said on social media that he was “delighted, but not surprised to see Alphabet bow to the inevitable” by introducing a dividend.
However, he pointed out that at its current level, an $0.80 annual dividend amounts to a cash outlay of $10bn, which is considerably less than the amount being spent on buybacks. MF
Read why dividends are more important than ever
Loungers delivers record revenue and raises guidance
Hospitality operator Loungers (LGRS) posted record annual revenue of £354mn on the back of 36 new site openings in the year to 21 April. This takes its portfolio of cafes, bars and restaurants to 257 locations. In a full year update, the company guided that cash profits would come in ahead of market expectations because of “disciplined management of costs and a continued easing of inflationary cost pressures”. The shares rose by 3 per cent in early trading. CA
