NatWest, the banking group that is still 45% state-owned, is set to report £5.1bn in pre-tax profits for 2022 on Friday, which will be its largest annual profit since the 2008 financial crisis. This news comes amid concerns that NatWest will increase its bonus pool at the expense of consumers, who are struggling with the cost of living crisis. The bank’s bonus pool rose by 44% to £298m last year, and another increase is likely to renew controversy due to the government’s large stake.
Under the leadership of CEO Alison Rose, NatWest has made progress in repairing its reputation since being bailed out during the 2008 financial crisis when it was known as Royal Bank of Scotland Group. Analysts predict that the bank will see a 32% jump in net interest income to £9.9bn in 2022, up from £7.5bn in the previous year, due to a series of interest rate hikes by the Bank of England.
However, the rise in profits will likely trigger speculation over whether the government will sell more of its stake in NatWest, which is still worth over £10bn, to recoup some of the losses on the £45bn bailout of RBS in 2008. Last week, Rose played down the role that higher interest charges would have in her own bonus, stating that although profits were considered, “we would not be able to meet performance [targets] by … net interest margin”.
NatWest is also expected to have set aside £434m to cushion the blow of potential defaults by customers due to the cost of living crisis, which is heaping pressure on households and businesses. On Wednesday, Barclays, the first UK bank to report its 2022 earnings, is expected to have taken a £1.2bn charge for a potential surge in bad debts. Meanwhile, Lloyds Banking Group is expected to report flat profits of about £6.9bn for 2022, despite expectations for a near 40% jump in net interest income to £13bn.
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