NatWest Group Plc beat estimates as it set aside less than expected for bad loans during an unsettled few months in the British economy.
(Bloomberg) — NatWest Group Plc beat estimates as it set aside less than expected for bad loans during an unsettled few months in the British economy.
The UK’s biggest corporate lender reported operating profit before tax for the first quarter of £1.8 billion ($2.2 billion), above analyst estimates compiled by Bloomberg of £1.55 billion. The result was 49% higher than a year ago.
“Through a period of significant macro disruption and uncertainty, we continue to stand alongside the people, families and businesses we serve,” said Alison Rose, chief executive officer. “By monitoring customer behavior and looking closely for signs of financial distress, we are able to put in place proactive measures to help those who are struggling.”
Provisions for bad loans were £70 million, compared with estimates of £270 million. British lenders have begun to brace for a rise in borrowers struggling with cost-of-living pressures, yet rate rises have helped to improve banks’ margins after a decade of rock-bottom returns.
Net interest margins at NatWest rose to 3.27% in the quarter. The results come a day after rival Barclays Plc reported a rise in its margins thanks to the increases in central bank rates.
NatWest’s costs increased 9% to almost £2 billion, including onetime items such as a £60 million cost of living payment for staff, but the bank said it’s still on track to meet guidance for the year.
Once one of the world’s largest banks, NatWest has been transformed into a largely domestic retail lender. The government continues to sell down its stake after a bailout during the financial crisis over a decade ago.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.