The Press and Journal (Inverness, Highlands, and Islands)
Home loans by bank halved
NatWest has revealed its mortgage lending nearly halved at the start of the year as it retreated from parts of the market when competition among lenders stepped up.
The banking group said new mortgage lending totalled £5.2 billion in the first three months of the year, down from £9.9 billion the previous year.
Paul Thwaite, NatWest’s chief executive, said demand for mortgages reduced in 2023 and there were fewer deals on offer.
He added: “Because the market was relatively thin, price competition was very high and we took a conscious decision at that point to not compete across all segments during the latter part of the third and fourth quarter. We wanted to ensure we could get the right returns from the capital we were deploying.”
He said that explains the year-on-year decline in lending, but added that mortgage applications had since increased by about 25% and the lender has grown its share of the market to more than 12%.
The group, which also includes Royal Bank of Scotland and Coutts, reported an operating pretax profit of £1.3 billion for the first quarter, down 27% from £1.8 billion the previous year.
It is ahead of the £1.2 billion profit analysts were pencilling in for the quarter.
Total income for the bank fell by a 10th as more customers moved money from current accounts and into savings accounts with higher returns.
But NatWest revealed that customer deposits increased by £2 billion in the first quarter, reflecting growth in savings and current account balances since the end of 2023. It also insisted that the level of borrowers defaulting on loans remained low, despite the cost-of-living squeeze.
Mr Thwaite said there are signs that customer sentiment is improving since households were squeezed by cost-of-living pressures in recent years.
“We think the pressure is easing for retail consumers. There is evidence they’re starting to feel a bit more confident, albeit they’re continuing to take control of their budgets.”
Such customers are seeing average monthly repayments go up by around £250, he said.
Mr Thwaite said NatWest was taking the “necessary steps” in preparation for the UK Government to launch a sale of its remaining shares in the bank to retail investors, after bailing it out during the 2008 financial crisis.