Home Interest rate NatWest profits hit £1.2bn as bank benefits from rising interest rates

NatWest profits hit £1.2bn as bank benefits from rising interest rates

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NatWest has doubled its profits over the past three months, helped by rising interest rates and improving economic conditions, the bank said.

Bosses revealed pre-tax operating profits of £1.2bn for the first three months of 2022, up from £573m in the last three months of last year – beating analysts’ expectations of £755 million.

In the same period a year ago, pre-tax operating profit was £894m.

NatWest boss Alison Rose said earnings were strong but the cost of living crisis is a concern (Nick Ansell/PA)

(PA Archive)

But chief executive Alison Rose said the rest of the year is shaping up to be tough as customers and businesses grapple with the cost of living crisis.

She added that despite the rising cost of living, the bank has not seen an increase in the number of customers needing help or additional credit.

Ms Rose said: ‘We are not seeing any signs of distress or an increase in customer calls to the financial assistance team, no increase in forbearance, and credit card and overdraft limits remain below 2019 levels.

“Having said that, many families have never had to operate in an inflationary environment before, so there is a degree of anxiety.”

NatWest has referred 2,100 customers to charity partner Citizens Advice over the past year to support people in vulnerable situations.

Inflation hit 7% in March and the war in Ukraine has pushed up energy costs for many cash-strapped households.

But Ms Rose said many families have built up cash reserves as they have saved more during the pandemic and a large proportion of customers are tied to fixed-rate mortgages and therefore do not face immediate pressures from the rise in interest rates.

She also made no indication of further bank branch closures, but said decisions will continue to be guided by customer behavior regarding an acceleration in the use of online and mobile banking.

The government owns 48% of the lender (David Davies/PA)

(PA Archive)

Ms Rose added that the past three months had been a key period for the bank as it finally saw the UK government hand over majority control of the institution for the first time since the financial crisis.

Ministers sold the taxpayers’ stake in the bank to 48% earlier this year.

NatWest revealed total revenue for the three months to the end of March reached £3bn – up 16.8% – driven by strong growth in its mortgage division and favorable movements in the bond market.

Retail banking also improved as consumer spending levels recovered after Covid restrictions ended, and transactional bank fee levels rose.

Mortgages were up 1.5% from the last three months of the year to £2.7bn and customer deposits were up £800m from the three months to end December .

The bank also announced it would release £38m of cash held back during the Covid crisis, although this compares to the £98m previously released out of the £3.2bn held back at the start of the pandemic. .

NatWest says its earnings boost was driven by base rate hikes that translated into higher lending revenue for the bank, and increased economic activity after pandemic restrictions ended. also increased income.

UK banks have benefited from the economic rebound and the Bank of England raised the base rate to 0.75% last month from year-ago lows, prompting banks to raise their own interest rates. ‘interest.