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NatWest’s profits rose by more than a third in the first quarter even as it set more money aside to cover the cost of bad loans due to economic uncertainty triggered by Donald Trump’s trade war.
The British bank’s pre-tax operating profits rose 36 per cent to £1.8bn in the three months to March, compared with £1.3bn a year ago, beating analyst expectations of £1.6bn.
Revenues rose year on year to £4bn, with the improved financial performance driven by higher deposits in NatWest’s retail and commercial banking operations and increased mortgage lending activity.
The group set aside a higher than expected £189mn for bad loans in part due to “economic uncertainty”. That included a £78mn provision for its commercial bank, where NatWest said it was fielding “demand to support clients’ risk management and funding needs during volatile markets”.
The high-street bank, however, said default levels remained “stable” across its portfolios. “In the face of increased global economic uncertainty, our customers remain resilient and we saw good levels of activity through [the first quarter]” said chief executive Paul Thwaite.
NatWest said that its net interest margin — the difference between the interest it receives on loans and the rate it pays for deposits — rose to 2.27 per cent, from 2.19 per cent in the previous three months as it increased its deposits and improved margins in its retail bank.
The bank is nearing a return to full private ownership, 17 years after its crisis-era rescue, when it was known as Royal Bank of Scotland.
On Thursday, the Treasury said it had sold more shares in the bank, taking its holding to just under 2 per cent, down from 38 per cent in December 2023. It is expected to sell its remaining shares in the coming weeks.
