RBS owner NatWest beats profit hopes with 'reassuringly dull' results: reaction

Royal Bank of Scotland parent NatWest Group has become the latest big bank to beat profit expectations in what one analyst described as “reassuringly dull” results.

The group reported an operating profit before tax of £1.8 billion in the first three months of the year, despite seeing a jump in customers withdrawing money at the start of the year. The result comes in ahead of analysts’ expectations of £1.6bn for the quarter and some 50 per cent higher than the £1.2bn recorded this time last year. It follows rival bank Barclays posting a better-than-expected quarterly profit and its largest in at least 12 years.

NatWest Group, which includes RBS and Ulster Bank, also saw its total income surge by more than a third over the period, helped by higher interest rates which makes it more expensive to borrow. However, the bank said its customers withdrew nearly £20bn from accounts during the period, which it partly blamed on its exit from the Republic of Ireland this year, having decided to shut its entire Ulster Bank branch network in the region. Excluding that, £11bn flowed out of the bank, or 2.6 per cent of its total deposits, which NatWest said was a result of higher tax payments at the start of the year, fiercer competition for better savings rates and market volatility.

The group also revealed it saw a growing number of people using its fixed-term savings products in the first quarter as people looked to make the most of higher interest rates. The results come just days after NatWest held its annual shareholder meeting in Edinburgh and it emerged that thousands of former Royal Bank of Scotland staff face losing tens of thousands of pounds each in inflation-proofed pension payments following an executive “error”.

Dame Alison Rose, NatWest Group’s chief executive, said that despite cost-of-living pressures, the lender has not seen a rise in customers falling into arrears on their loans. She said: “Through a period of significant disruption and uncertainty, we continue to stand alongside the people, families and businesses we serve, providing targeted support and growing our lending responsibly. Our disciplined and consistent approach to risk management means that arrears and impairments remain low.

“By monitoring customer behaviour and looking closely for signs of financial distress, we are able to put in place proactive measures to help those who are struggling right now and those who are worried about the future,” she added.

Zoe Gillespie, investment manager at wealth firm RBC Brewin Dolphin, said: “Compared to just a few years ago, NatWest’s updates have become reassuringly dull. The bank continues to make progress, with another set of solid results which have beaten expectations. Profits are up, bad debt levels remain stable, and its net interest margin has risen again, buoyed by a higher base interest rate environment. Following on from Barclays’ results, NatWest shows that – despite the wobble of a few weeks ago – the UK’s major banks appear to be relatively resilient and are well prepared should the macro-economic backdrop take a turn for the worse.”

Matt Britzman, equity analyst at Hargreaves Lansdown, noted: “There was an outflow of customer deposits over the quarter, but it’s not cause for concern. Consumers shopping around for the best rates isn’t much of a surprise.”