NatWest Group PLC (LSE:NWG) is going to be the last bank to release a quarterly update this week, following strong numbers from peers HSBC PLC (LSE:HSBA) and Lloyds Banking Group PLC (LSE:LLOY).
The report is coming amid a finely balanced debate on the Bank of England‘s next few interest rate decisions.
Recent statements from some senior members of the BoE’s monetary policy committee, including governor Andrew Bailey, has led markets to price in a first rate hike as soon as the meeting on 4 November. The market is also prising for four more rate hikes by the end of 2022.
NatWest is the most geared of the UK banks to higher interest rates, but for the past quarter this will not be the main thrust of the numbers.
Key within results will be assessing how those benefits are reinforced by a potentially larger rate hedge and offset by the significant decline in the flow of mortgage spreads, said UBS.
Rising yields would have significant implications for equity markets, the strategists said cyclical and value sectors such as banks and energy have the best macro skews to rising rates, with analysts at Berenberg seeing NatWest as likely to benefit most.
Significant announcements expected for Friday 29 October:
Trading updates: NatWest Group PLC (LSE:NWG), Evraz PLC (LSE:EVR)
Finals: Grit Real Estate Income Group (LSE:GR1T), Scancell Holdings PLC (AIM:SCLP, OTC:SCNLF), Time Out Group PLC (AIM:TMO)
AGMs: ADM Energy PLC (AIM:ADME, ETR:P4JC), ITM Power PLC (AIM:ITM), Mattioli Woods PLC (AIM:MTW), Maxcyte PLC, OPG Power Systems PLC, Sensyne Health PLC (AIM:SENS)
Economic data: Bank of England lending figures (UK)