NS&I overshoots net financing target after bonds attract £10bn of investment

Its target was £7.5bn with leeway of plus or minus £3bn – meaning a target range of £4.5bn to £10.5bn.

NS&I said it had been on track to meet its net financing target in December 2023 but “while still substantial, repayments to customers in January and February 2024 did not materialise to the levels anticipated”.

Chief executive Dax Harkins said in the report that NS&I had worked hard to “do the right thing” and quickly pass Bank of England base rate increases on to customers, while also ensuring that it met its operating framework to balance savers’ interests with those of taxpayers and broader market stability.

He said forecasting inflows and outflows had become harder in the competitive savings market, adding: “Competition for savers’ deposits was fierce.”

He went on: “By the summer, we were significantly behind our net financing target – despite successive rate increases to our variable and fixed products.

“In response, we launched new one-year issues of our popular Guaranteed Growth Bonds and Guaranteed Income Bonds.

“This enabled us to get back on track to meet our funding target and meant we had certainty on how long these funds would remain with us so we and competitors could plan accordingly.

“I’m pleased that more than 220,000 savers were able to invest over £10bn in these products.

“These funds helped ensure that, by December, we were on course to meet our net financing target.

“However, repayments to customers in January and February did not materialise to the levels expected based on the experience over the previous months, and a Premium Bonds rate decrease did not contribute to a lowering of our net financing total as much as we had anticipated.

“Consequently, our year-end position was £11.3bn, £0.8bn outside our target range.”

When customers invest in NS&I products, they are lending to the Government. In return, the Government pays interest or prizes for Premium Bonds. The Treasury-backed body offers a range of savings and investments to more than 24 million customers. Its products can be particularly attractive to savers as they offer 100 per cent capital security. NS&I also missed a service delivery measure for customer satisfaction. Its chairman, Ed Anderson, said in the report: “We were disappointed to miss our customer satisfaction target for the year.”

While it missed two of its six service delivery measures in 2023/24, NS&I met the remaining four – the service delivery measures for Government payment services delivery performance, digital-first, efficient administration of funds, and employee engagement.