NATWEST Group, the owner of Royal Bank of Scotland, has reported a 40 per cent rise in first-quarter profits, ahead of expectations, against the deteriorating economic backdrop.
The institution, now less than 50 per cent owned by taxpayers following recent share sales by the UK Government, made an operating profit before tax of £1.2 billion in the three months to March 31, as concerns mounted over the cost-of-living crisis.
The bank, which had been forecast by analysts to see profits drop by 15% over the period, had made a profit of £885m at the same stage last year.
Chief executive Alison Rose acknowledged the change in global circumstances that had occurred during the quarter with the Russian invasion of Ukraine and soaring inflation, which reached seven per cent in March. Inflation is forecast to rise beyond 8% this spring.
Ms Rose said: "The world has changed considerably during the last three months. Our thoughts are with everyone affected by the invasion of Ukraine and we are doing all that we can to support them.
"We are also very aware of the challenges and concerns the cost-of-living crisis is causing for many of our customers up and down the country. NatWest Group is focused on providing practical help and support for the people, families and businesses we serve.
“Despite the challenging environment, I am pleased with our performance as we continue to execute well against our strategy, driving sustainable growth and returns. Income and profits are substantially up, costs are down and we remain well capitalised as we build long-term value and deliver a simpler and better banking experience for our customers.
“Government ownership also reduced to around 48% in Q1; the first time it has fallen below 50% since the financial crisis. This was an important milestone for our bank and a further demonstration of the progress we are making as we continue to deliver for our customers and shareholders."
In spite of the wider economic challenges, NatWest reported that total income had increased by 16.8% on the first quarter of last year to more than £3bn. Excluding Ulster Bank in the Republic of Ireland, which NatWest is exiting, the bank’s “Go-forward group” saw income rise by 8.6%, driven by volume growth in its mortgage book. Increased fee income was also reported in retail banking as consumer spending levels recovered, with higher transactional banking fee income in commercial and institutional, chief financial officer Katie Murray said in her report.
An impairment release of £38m was booked which Ms Murray said “reflects a decrease in underlying exposures, continued positive trends in portfolio performance and write-off activity”.
The bank noted that it had referred 2,100 customers to Citizens Advice, which provided help with “complex financial needs”, in the last year, through its partnership with the organisation.
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