NatWest Group Reports 28% Drop in Q1 Profits

NatWest Group, one of the UK’s major banking institutions, announced a significant decrease in its pre-tax profits for the first quarter of 2024, marking a 28% drop compared to the same period last year. The lender’s pre-tax profits for Q1 2024 stood at £1.3 billion, which, although a considerable decline, exceeded the £1.2 billion forecast by analysts.

NatWest’s chief executive, Paul Thwaite, described the results as “strong,” pointing to the competitive environment in the banking sector as a contributing factor to the reduced earnings. In recent months, increased competition for savings, lending, and mortgage products has put pressure on profit margins across the industry.

The earnings report revealed that NatWest’s income for the first quarter was £406 million lower than the same period in 2023, partly due to lower deposit balances and customers shifting their savings to higher-interest accounts. However, impairments—a key indicator of loan losses—were significantly better than expected, at £93 million compared to the £186 million predicted by analysts.

NatWest is not the only UK bank facing reduced profits. Lloyds Banking Group also reported a 28% drop in its pre-tax profits for the first quarter, while Barclays experienced a 12% decline.

Despite these challenges, Thwaite emphasised that NatWest remains focused on its core mission of supporting the economy and its 19 million customers. He noted that customer confidence and activity are on the rise, with both lending and deposits increasing during the quarter, while impairments remain relatively low, indicating a well-diversified business.

The announcement comes amid a period of transition for NatWest. The UK government’s stake in the bank recently fell below 30%, ending its position as the controlling shareholder. This follows the government’s multi billion-pound bailouts during the financial crisis of 2008-2009, which left the government with an 84% stake in what was then known as RBS Group.

Thwaite expressed optimism about the progress in reducing the Treasury’s stake, stating that returning NatWest to private ownership is a shared ambition that serves the interests of both the bank and its shareholders. 

NatWest’s Q1 earnings follow a tumultuous year in 2023, with the bank posting a full-year operating profit before tax of £6.2 billion, up 20% from the previous year. This was despite controversies such as the “debanking” scandal, which led to the resignation of former chief executive Dame Alison Rose. Additionally, the Current Account Switch Service reported that NatWest suffered a net loss of 43,182 customers in the last quarter of 2023, more than any other major bank.