By Chris Dorrell
Natwest announced a new share buyback scheme after beating expectations in the second quarter, but cut its guidance as customers increasingly seek out higher rates on their deposits.
Operating pretax profit hit £1.8bn, rising from £1.4bn last year and significantly higher than the £1.5bn expected by analysts.
The bank was able to cash in on rising interest rates, with net interest income rising to £2.8bn, which was £500m more than the same period last year. On the back of this it upped its interim dividend to 5.5p per share, substantially higher than the 3.5p dividend announced last year, and announced a new £500m buyback scheme.
However, the bank’s net interest margin – a measure of the difference between what it pays out and receives in interest payment – fell to 3.13 per cent, 14 basis points lower than the quarter before.
Natwest said this came as customers moved their money form non-interest bearing accounts into interest bearing balances. It now expects its full year net interest margin to be less than 3.20 per cent, likely around 3.15 per cent, having previously guided for 3.20 per cent.
Impairment charges climbed to £153m, more than the double the £70m set aside last year. While arrears increased slightly, they remained relatively low.
“Although arrears remain low, we know that people, families and businesses are anxious about their finances and many are really struggling. We are being proactive in our support for those who are hardest hit, helping to build the financial resilience of the customers and communities we serve,” chief financial officer Katie Murray said.
The results come as Natwest battles to contain the fallout from the furore over Nigel Farage’s debanking. The lender has been engulfed in turmoil since it was revealed Nigel Farage’s account was closed, partially because of his political opinions.
Chief executive Alison Rose has already resigned while boss of private bank Coutts stepped down yesterday.
Farage has called on the entire board to stand down over the issue while leading shareholders have expressed their doubt about the position of chair Howard Davies, who is due to step down next year in any case.
More to follow
