NatWest Group reveals its profit slid by more than a quarter at start of year

It is ahead of the £1.2bn profit that analysts were pencilling in for the quarter.

Total income for the bank fell by a tenth, as more customers moved money from current accounts and into savings accounts with higher returns.

It also came amid greater competition in the mortgage market which has seen rates come down from the highs hit last year.

But NatWest revealed that customer deposits increased by £2bn in the first quarter, reflecting growth in both savings and current account balances since the end of 2023.

Total lending grew by £1.4bn, with growth in corporate lending being partially offset by more people paying off their mortgage at the start of the year.

It also revealed that the level of borrowers defaulting on their loans remained low, despite the cost-of-living squeeze.

Paul Thwaite, NatWest’s chief executive, said: “Though macro-uncertainty continues, customer confidence and activity is improving, with both lending and deposits up in the quarter and impairments remaining low, reflecting our well-diversified business.

“Our first priority is delivering disciplined growth across our three businesses by serving our customers well.

“At the same time, we are becoming simpler, more productive and easier to deal with.”

“We are also pleased with the recent momentum in the reduction of HM Treasury’s stake in the bank.

“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.”

The Government is gearing up to sell its remaining shareholding in NatWest, which it bailed out during the 2008 financial crisis.

A sale of shares to retail investors could come as early as the summer, with the Government hoping to fully offload its stake by 2025 to 2026.

Richard Hunter, Head of Markets at interactive investor, commented “NatWest has been able to flex its financial muscles once more, outpacing expectations and maintaining its guidance for the year.

"After a particularly strong start to the corresponding period last year, it is unsurprising that the headline numbers are lighter this time around. Even so, both of the key measures are ahead of forecasts.”

"Income has been affected on a number of fronts, such as lending margin pressure and lower deposit balances as customers search for higher rates of return after years in the doldrums. Nonetheless, the situation appears to be stabilising and the group has pointed to the fact that both net lending and customer deposits rose in the quarter. Of course, it remains to be seen whether this trend becomes established.”