The bank said that customer deposits increased by £2billion in the first quarter, reflecting growth in both savings and current account balances since the end of 2023
NatWest Group’s profits have taken a hit, dropping by over a quarter in the early months of the year as competitive mortgage and savings rates bite into the high street bank’s earnings.
The banking giant reported an operating pre-tax profit of £1.3billion for the first quarter, a 27% decrease from £1.8billion in the same period last year. However, this figure still surpassed the £1.2billion profit forecasted by analysts.
NatWest saw its total income dip by 10%, driven by customers transferring funds from current to savings accounts to take advantage of higher interest rates. The bank also faced stiff competition in the mortgage sector, which has led to a reduction in rates from the lofty levels seen the previous year.
Despite these challenges, NatWest experienced a £2billion rise in customer deposits during the first quarter, signalling an increase in both savings and current account balances since the end of 2023. While total lending saw a modest increase of £1.4billion, this was tempered by a number of customers paying down their mortgages at the start of the year.
Nevertheless, the bank highlighted that loan defaults remained low amidst the ongoing cost-of-living crisis. Paul Thwaite, chief executive of NatWest, commented: “Though macro-uncertainty continues, customer confidence and activity is improving, with both lending and deposits up in the quarter and impairments remaining low, reflecting our well-diversified business.”
“Our first priority is delivering disciplined growth across our three businesses by serving our customers well. At the same time, we are becoming simpler, more productive and easier to deal with. We are also pleased with the recent momentum in the reduction of HM Treasury’s stake in the bank. Returning NatWest Group to private ownership is a shared ambition and we believe it is in the best interests of both the bank and all our shareholders.”
The Government is on track to sell its remaining shares in NatWest, which received a bailout during the 2008 financial crisis. A public share offering could be launched as soon as this summer, with plans to completely divest the Government’s stake by 2025 to 2026.
