Profits surge at RBS parent Natwest Group
Royal Bank of Scotland parent Natwest Group saw a doubling of profits in the first quarter as it benefited from rising interest rates and a post-lockdown recovery but the outlook remains challenging.
The lender revealed operating profits before tax of £1.2 billion for the first three months of 2022, compared to £573 million in the final three months of 2021 - beating analysts’ forecasts.
During the same period a year ago, operating pre-tax profits came in at £894m.
However, chief executive Alison Rose said the rest of the year was set to be more challenging as customers and businesses got to grips with the cost-of-living crisis.
She said: “The world has changed considerably during the last three months. Our thoughts are with everyone affected by the invasion of Ukraine and we are doing all that we can to support them.
“We are also very aware of the challenges and concerns the cost-of-living crisis is causing for many of our customers up and down the country.
“Natwest Group is focused onprovidingpracticalhelpand support for the people, families and businesses we serve.”
Rose added the past three months had been a key time for the bank, as it finally saw the UK government cede its majority control over the institution
for the first time since the financial crisis. Ministers sold down the taxpayers’ stake in the bank to 48 per cent earlier this year.
“Income and profits are substantially up, costs are down and we remain well capitalised as we build long-term value and deliver a simpler and better banking experience for our customers,” Rose added.
The group revealed total income for the three months to the end of March hit £3bn - up 16.8 per cent - driven by
strong growth in its mortgage division and favourable movements in the bond market.
Retail banking also improved as consumer spending levels recovered following the end of Covid restrictions, and there were higher levels of transactional banking fees.
John Moore, senior investment manager at wealth firm Brewin Dolphin, said: “Like its peers earlier this week, Natwest has delivered a strong set of results, with profits ahead of expectations.
“Despite the challenges presented by the conflict in Ukraine and the cost of living, there is an optimism in today’s statement from Natwest, which bodes well for the year ahead and it wouldn’t be surprising to see the government’s stake fall further.”
Richard Hunter, head of markets at Interactive Investor, noted: “Natwest has brought the curtain down on the banks’ reporting season in some style, with progress being seen virtually
across the board. In addition, the bank is also the first during this quarter to announce a credit impairment release, as opposed to the return to provisions for each of its UK peers.”
Shore Capital analyst Gary Greenwood added: “No interim dividend was proposed, as expected. No further share buyback or special distribution has been announced at this stage.”