Banks drag FTSE lower on disappointing NatWest outlook

The index closed down 8.17 points, a 0.1% reduction which landed it at 8004.36.

NatWest shares fell after it issued a disappointing outlook for 2023 (Matt Crossick/PA) (PA Wire)

London’s FTSE 100 ended the week with a day in the red, but managed to stay above the 8,000-point mark which it hit for the first time on Wednesday.

On Friday, the index – which contains many of the UK’s largest companies – closed down 8.17 points, a 0.1% reduction which landed it at 8004.36.

The mortgage lenders were the clear losers during the day after NatWest’s outlook for 2023 implied that the year might not be as good as some had hoped despite the recent interest rate hikes.

The bank’s shares plummeted on the news despite what seemed a decent set of results for last year.

By the end of the day NatWest’s share price was down by close to 7% while Lloyds – which also has a large UK mortgage book – was the FTSE’s second biggest faller, down 3.8%.

Barclays is a much more global bank and its shares were relatively unaffected, down just 0.2%.

“It’s been another record-breaking week for the FTSE 100, although we’ve slipped back from the highs, weighed down by underperformance in the banking sector, which has acted as a bit of a deadweight,” said CMC Markets analyst Michael Hewson.

He added: “NatWest Group has seen an underwhelming reaction to a strong set of full year results, an increase in the dividend and a share buyback.

“Given the share price reaction today, it seems there’s just no pleasing some people even accounting for the disappointment over its guidance, which appears to be being blamed for today’s weakness.”

Global markets were also in the red with the S&P 500 down 0.7% and its New York neighbour down 0.1% a short time after European markets closed.

The Dax in Germany and Paris’s Cac 40 both lost 0.3%.

The pound gained a third of a percent to 1.203 dollars, and rose 0.2% to 1.125 euros.

In other company news, Segro jumped to the top of the FTSE 100 as it saw the rent it collects from its warehouses increase by record amounts. Pre-tax profit rose by 8.4% last year, the business revealed.

Shares jumped 3.8%.

Elsewhere, shares in Purplebricks plummeted by nearly 18% after the business said that its turnaround plans have proven more expensive than thought.

The business said it might put itself up for sale. It announced a £17 million cost-cutting target in December and has so far identified £4 million in potential savings.

The biggest risers on the FTSE 100 were Segro, up 30p to 866.2p, Imperial Brands, up 58.5p to 2,037p, Flutter Entertainment, up 350p to 13,745p, CocaCola HBC, up 43p to 2,110p, and National Grid, up 21.5p to 1,070p.

The biggest fallers on the FTSE 100 were NatWest Group, down 21.0p to 284.6p, Lloyds, down 2.0p to 50.91p, Scottish Mortgage Investment Trust, down 23.6p to 737.4p, Rightmove, down 12.6p to 577.4p, and Shell, down 46.5p to 2,541p.