NatWest: bank group profits fall 27% as mortgage competition intensifies and government plans stake share sale

NatWest Group has revealed that its profits declined by over a quarter during the initial months of the year, meaning it joins the ranks of high street lenders impacted by intensified competition in savings and mortgage rates.

The group - which also includes Royal Bank of Scotland and Coutts - reported an operating pre-tax profit of £1.3 billion for the first quarter, marking a 27% decrease from the previous year's £1.8 billion - though the figures still surpass analysts' expectations of £1.2 billion for the quarter.

The bank experienced a 10% decrease in total income, attributed to a shift of funds from current accounts to savings accounts offering higher returns by customers. It also came amid greater competition in the mortgage market which has seen rates come down from the highs hit last year.

But NatWest revealed that customer deposits increased by £2 billion in the first quarter, reflecting growth in both savings and current account balances since the end of 2023.

Total lending grew by £1.4 billion, with growth in corporate lending being partially offset by more people paying off their mortgage at the start of the year. It also assured that the level of borrowers defaulting on their loans remained low, despite the cost-of-living squeeze.

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Paul Thwaite, NatWest’s chief executive, said: “Though macro-uncertainty continues, customer confidence and activity is improving, with both lending and deposits up in the quarter and impairments remaining low, reflecting our well-diversified business.

“Our first priority is delivering disciplined growth across our three businesses by serving our customers well. At the same time, we are becoming simpler, more productive and easier to deal with.”

“We are also pleased with the recent momentum in the reduction of HM Treasury’s stake in the bank. Returning NatWest Group to private ownership is a shared ambition and we believe it is in the best interests of both the bank and all our shareholders.”

The Government is gearing up to sell its remaining shareholding in NatWest, which it bailed out during the 2008 financial crisis. A sale of shares to retail investors could come as early as the summer, with the Government hoping to fully offload its stake by 2025 to 2026.

Who is the chairman of Natwest Group?

Natwest Group chairman is Sir Howard Davies, a prominent figure in the world of finance with a career spanning several decades and banking, who has served as chairman since 2015.

Born in 1951, Sir Howard received his education at Oxford University, where he studied Philosophy, Politics, and Economics (PPE).

After completing his studies, Sir Howard began his career in the civil service, working for the Treasury and later the Foreign and Commonwealth Office, an early experience in government which provided him with a foundation in public policy and economic affairs.

In the 1980s, Sir Howard transitioned to the private sector, taking on various roles in finance and academia. He served as the Controller of the Audit Commission and later as the Director-General of the Confederation of British Industry (CBI), where he played a key role in shaping the organisation's policies on economic and industrial issues.

Sir Howard's career reached new heights when he was appointed as the Deputy Governor of the Bank of England in 1995, a position he held for three years before becoming the Chairman of the Financial Services Authority (FSA), the UK's financial regulatory body.

Read more: Who is Natwest chariman Sir Howard Davies?

During his tenure at the FSA, Sir Howard played a crucial role in implementing regulatory reforms aimed at strengthening the stability and integrity of the financial system in the wake of the global financial crisis of 2007-2008.

In addition to his regulatory work, Sir Howard has also held various board positions in both the public and private sectors. He has served as the Chairman of the Phoenix Group and as a Non-Executive Director of various companies, including Prudential plc and Morgan Stanley.

Sir Howard has been vocal about his views on Brexit, expressing concerns about its potential impact on the UK economy and financial sector, and emphasising the importance of maintaining close ties with the EU to preserve access to the European market and ensure the stability of the financial system.

In January 2024, he sparked controversy with remarks in which he suggested that purchasing a house in the UK was “not that difficult”.

According to Company Checker, Sir Howard Davies is worth an estimated $5 million (£4 million) in the last financial year, which included residuals made through his previous academic publications. 

The Economic Research Institute has also claimed that Sir Howard Davies receive an annual salary of £763,000 in total compensation as Non-Executive Director and Chairman of the Royal Bank of Scotland, with Natwest a subsidiary of the overall company structure.