THERE can be no doubt that results announcements have become increasingly mundane at NatWest Group, owner of Royal Bank of Scotland, in recent years.
After the years of controversy that followed its £45.5 billion bailout by the UK Government at the height of the financial crisis of 2008 and 2009, the bank is now routinely making big profits. Its balance sheet is strong, significant capital is being returned to shareholders, and the taxpayers’ shareholding is now below 42 per cent.
The first-quarter results published by the bank today offered more of the same, with profits of £1.8bn exceeding forecasts and chief executive Alison Rose signalling cautious optimism over the outlook for the economy, despite acknowledging the ongoing pressure on households and businesses from high interest rates and inflation.
Zoe Gillespie, investment manager at RBC Brewin Dolphin, noted that updates from NatWest to the City have become “reassuringly dull” compared with the fireworks of years gone by. But there is perhaps a feeling the bank could be doing better by its customers in at least one regard.
The bank reported that customer deposits had fallen by £20bn in the first quarter, or £11.1bn excluding its exit from Ulster Bank in the Republic of Ireland, which perhaps indicates that at least some savers have been voting with their feet and seeking better rates elsewhere.
Ms Rose appeared relaxed when quizzed by reporters on the fall in deposits, noting there was a seasonality to the outflow and observing that some customers were using savings built up during Covid to pay down more expensive debt such as mortgages. “I think that is good financial management,” she said.
Ms Rose acknowledged there was competition for deposits in the savings markets. She said NatWest was confident it has the right products to be competitive, and according to analyst Matt Britzman of Hargreaves Lansdown the fall in deposits was “not a cause for concern”.
But given the focus placed on the issue yesterday, there is perhaps room for improvement.
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