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Rise in mortage lending lifts NatWest profits

One of NatWest’s 650  branches (Matt Crossick/ PA) (PA Wire)
One of NatWest’s 650 branches (Matt Crossick/ PA) (PA Wire)

A surge in first-quarter profit at NatWest helped by a rise in mortgage lending and low bad-loan rates added to signs of a rebound in the UK’s housing market today

The high street lender lender reported a surge of around 50% in first quarter pre-tax profit of almost £1.8 billion, beating City forecasts.  Nonetheless, it shares fell 16p to 257p, in part as traders seemed disappointed it did not lift profit guidance for the full year.

Joseph Dickerson at City stockbroker Jeffries said: “Management really needed to raise the £14.8 billion 2023 revenue guide to around £15 billion.”

Net loans to customers were up by £4.1 billion, or 2.1%, mainly due to a rise of £3.9 billion in the value of new mortgage lending in the period. That came as another of the recovery in demand for home loans after the disruption from the Truss government’s mini-Budget, when hundreds of fixed-rate mortgages were pulled across the industry.

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There was little sign at the lender that UK savers were unnerved by the turmoil in the European and US banking sector, when there was a run on several smaller US lenders and Credit Suisse.

NatWest’s customer deposits fell by over £11 billion, or 2.6%, in part due to customers paying “around £8 billion” in tax with annual self-assessment bills due in the period.

It wrote off £70 million in bad loans, an impairment charge it said meant “levels of default remain stable and at low levels across the portfolio.”

Around 40% of NatWest is still publicly owned and today’s numbers were for a period in which it announced plans to shut 42 branches, leaving it with around 650.

NatWest’s chief executive Alison Rose told The Standard that she was not looking at the particulars of any more closures of the at the moment.  “Our network remains very important,” she said but pointed out that “increasingly our customers are moving digitally online,” adding: “We will always look at branch usage and what it offers” with any future decisions on them “determined by customer behaviour.”