Top Stories
NatWest first-quarter profit slumps 27% as savings, mortgage competition bite
Global Banking & Finance Review®
Company
By Lawrence White
LONDON (Reuters) -NatWest’s first-quarter profit fell by a less than expected 27%, it said on Friday, hit by competition for savings, lending and mortgage products which has squeezed margins across the sector.
The British bank said pretax operating profit for the January-March period was 1.3 billion pounds ($1.63 billion), down from 1.8 billion pounds a year earlier and just above the average of analyst forecasts of 1.2 billion pounds.
NatWest said income was 406 million pounds lower than the same January-March period a year ago, due in part to lower deposit balances and customers shifting their savings to higher-returning products.
Rising interest rates in Britain in the last two years and political and media attention on the rates that banks pay to savers has fuelled a wave of such behaviour as customers prudently switch from low-yielding accounts to higher-paying products.
Britain’s biggest casualty of the 2008 crisis, NatWest is this year looking to end what its chairman this week called the “sorry tale” of its state ownership since that time.
The bank has been buying back its shares on the market, and the government is considering a further sale to retail investors later in the year as it looks to sell down the remainder of its sub-29% stake in the bank.
Prospects for such a sale have been helped by the bank’s robust recent performance and signs it is weathering Britain’s economic stumbles well.
Impairments, a closely-watched measure of loan losses as Britain’s economy tries to wrestle itself free from stagnation, came in at 93 million pounds for the quarter, better than the 186 million pounds forecast by analysts.
($1 = 0.7998 pounds)
(Reporting by Lawrence WhiteEditing by David Goodman and Tommy Reggiori Wilkes)
Pretax operating profit is the earnings a company generates from its operations before deducting taxes. It provides insight into the company's operational efficiency and profitability.
Impairments refer to the reduction in the value of a bank's assets, particularly loans, due to expected losses. It is a measure of the potential risk in the bank's loan portfolio.
A mortgage is a loan specifically used to purchase real estate, where the property itself serves as collateral. Borrowers repay the loan with interest over a specified period.
Savings accounts are deposit accounts held at banks or credit unions that earn interest on the deposited funds. They are designed for individuals to save money while keeping it accessible.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage. They fluctuate based on economic conditions and central bank policies.
Explore more articles in the Top Stories category
