By Lawrence White
LONDON (Reuters) -British bank NatWest’s first-quarter profit fell by a less than expected 27%, it said on Friday, with income squeezed by an increase in competition for savings, lending and mortgage products over the past year.
Rising central bank interest rates and political and media attention on the rates banks pay to savers has resulted in lower customers holding lower deposit balances while hunting for higher-paying products.
NatWest’s pretax operating profit for the three months to March 31 was 1.3 billion pounds ($1.63 billion), down from 1.8 billion pounds a year earlier and just above the average of analyst forecast of 1.2 billion pounds.
Despite the challenges, the results showed NatWest in relatively rude health as it prepares to return to full private ownership for the first time since the 2008 financial crisis.
Shares in the company rose 3.5% to 300 pence in early trading and are up by nearly a third so far this year.
“NatWest is best of the bunch. Lloyds and Barclays led the way this week and NatWest certainly hasn’t disappointed with first-quarter results very nearly a clean sweep vs expectations,” said Hargreaves Lansdown analyst Matt Britzman.
Barclays reported a slightly smaller than expected 12% fall in first-quarter profit this week while Lloyds Banking Group’s 28% fall in pretax profit was in line with expectations.
“Though macro-uncertainty continues, customer confidence and activity is improving, with both lending and deposits up in the quarter and impairments remaining low,” NatWest Chief Executive Paul Thwaite said.
The bank’s net interest margin, a closely watched measure of lending returns, rose to 2.05% after three consecutive quarters of declines.
NatWest is looking to end what its chairman this week called the “sorry tale” of its state ownership since the global financial crisis. It has been buying back shares while the government considers a further sale to retail investors this to sell reduce its close to 29% stake.
Prospects of a sale have been helped by the bank’s robust recent performance and signs it is weathering Britain’s economic stumbles.
Impairments, a closely-watched measure of loan losses as Britain tries to wrestle free from economic stagnation, was 93 million pounds for the quarter, compared with analyst expectations of 186 million pounds.
($1 = 0.7998 pounds)
(Reporting by Lawrence WhiteAdditional reporting by Yadarisa ShabongEditing by Tommy Reggiori Wilkes and David Goodman)
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