NatWest reports £1bn profit boost as bank gripped by Farage account row
Its operating pre-tax profit was £3.6 billion in the six months to the end of June
NatWest Group’s profits have surged by nearly £1 billion, beating expectations as the bank faces scrutiny from shareholders after the departure of its boss this week.
The British bank, which has been embroiled in a row involving Nigel Farage over the closure of his bank account, reported a “strong” financial performance for the first half of the year.
Its operating pre-tax profit leaped to £3.6 billion in the six months to the end of June, up from £2.6 billion the same time last year.
Analysts had been expecting a lower profit of £3.3 billion for the latest half-year.
The lender, which is backed by the taxpayer, has benefited from higher interest rates, which has pushed up the cost of borrowing, and greater mortgage lending.
But the financial results come at a time of volatility for the group, with chief executive Dame Alison Rose resigning in the early hours of Wednesday after admitting to being the source of an incorrect BBC report on Mr Farage’s finances.
The boss of Coutts, the bank which shut down Mr Farage’s account and is owned by NatWest, also stepped down on Thursday.
Senior bosses of the group are set to face the scrutiny of shareholders and journalists on Friday morning.
NatWest’s chief financial officer, Katie Murray, said it was a “strong performance” for the first half of the year.
She added: “Although arrears remain low, we know that people, families and businesses are anxious about their finances and many are really struggling.
“We are being proactive in our support for those who are hardest hit, helping to build the financial resilience of the customers and communities we serve.”
But NatWest said it expects higher interest rates to be largely offset by savings rates and mortgage income reductions through the second half of the year.
It comes as UK lenders face mounting pressure to pass on higher interest rates to savers, and not just homeowners through higher mortgage rates.
The bank’s net interest margin, which shows the difference between what a bank earns from loans and pays out for deposits, shrank to 3.1% in the latest quarter, from 3.3% in the previous quarter.
It also saw customers moving deposits from “non-interest bearing to interest bearing balance”, which suggests savers were hunting for better deals to lock away their money in recent months.
It also set aside an impairment charge of £223 million to cover expected loan losses, more than quadruple the £54 million put aside last year.
Published: by Radio NewsHub