London’s FTSE 100 dropped lower on Friday as a share price slump from NatWest and high street rival Lloyds weighed on the index.
The capital’s premier index jumped 0.53 per cent to 7,972.29 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, dropped 0.76 per cent to 20,028.37 points.
NatWest’s share price fell over eight per cent, despite raking in bumper profits for 2022, as it disappointed investors with its outlook.
Profits at the bank increased to £1.3bn in the final quarter, in line with market expectations and nearly tripling doubling compared to last year. This brought yearly profits to £3.6bn, jumping 34 per cent from last year.
But Steve Clayton, head of equity funds at Hargreaves Lansdown said “NatWest are also suggesting that margins will expand no further from here. With the stock having stormed 20% higher so far this year, some will be expecting more than that from the group.”
This is the second time this week that banks have weighed on the FTSE 100 after Barcalys outlined a disappointing outlook for 2023.
Lloyds also fell nearly five per cent as investors fear 2023 will be a less profitable year than 2022 proved to be. Lloyds releases its results next Wednesday.
Elsewhere on the FTSE 100, Segro climbed one per cent after it reported underlying profit was up nine per cent, with strong demand from occupiers contributing to a 19 per cent increase in rental income.
However, rising interest rates contributed to its net asset value falling 15 per cent.
Clayton commented “the market was expecting something along these lines and the shares are little changed in early trading.”
The pound fell to 1.1921 against the dollar from 1.1994. “Currency investors look to be backing the dollar, in anticipation of earning higher interest rates in the USA,” Clayton said.