NatWest Group, one of the largest banking institutions in the UK, has announced a significant decline in earnings for the first quarter of 2024. The company reported a pre-tax profit of £1.3bn, marking a 28% decrease compared to the same period last year. Despite this, the figure exceeded analysts’ expectations of £1.2bn, leading the bank’s chief executive to describe the results as “strong”.
The banking sector has been facing increased competition in the savings, lending, and mortgage market, resulting in squeezed margins. This trend was evident in the first quarter earnings of other major UK banks, with Lloyds Banking Group reporting a 28% drop in pre-tax profits and Barclays seeing a 12% decline.
NatWest also noted a £406m decrease in income compared to the same period last year, partly due to lower deposit balances and customers shifting their savings to higher-interest accounts. However, the bank’s impairments, a measure of loan losses, were better than expected at £93m, significantly lower than the forecast of £186m by analysts.
NatWest CEO Paul Thwaite commented on the results, saying, “NatWest Group has delivered a strong set of results for the first quarter – with an operating profit of £1.3bn – as we remain focused on the priorities we set out in February, which will help us shape the future of this bank.” He also highlighted the bank’s role in the economy and its 19 million customers, who have shown improved confidence and activity in the quarter.
While macro-uncertainty continues, Thwaite acknowledged the growth in both lending and deposits and the low impairments, which reflect the bank’s well-diversified business. He also mentioned that the reduction of the UK government’s stake in the bank to below 30% was a positive development, as the government is no longer the controlling shareholder.
NatWest, formerly known as RBS Group, received multiple bailouts during the 2008 financial crisis, which resulted in the UK government holding an 84% stake in the company. Thwaite expressed his satisfaction with the progress made in reducing the Treasury’s stake, stating, “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.”
This news comes after NatWest reported a full-year operating profit before tax of £6.2bn in 2023, a 20% increase from the previous year. Despite a tumultuous year for the bank, including a high-profile dispute over “debanking” that led to the departure of its former CEO Dame Alison Rose, NatWest remains the UK’s largest lender to small and medium-sized businesses.
However, figures from the Current Account Switch Service revealed that NatWest had a net loss of 43,182 customers in the fourth quarter of 2023, the highest among major UK banks. This may be an area of concern for the bank, but it remains committed to its customers and the economy as a whole.
