NatWest profits soar 20% as Thwaites confirmed in CEO post

16th Feb 2024 07:03

(Sharecast News) - Scandal-hit NatWest Bank reported a better-than-expected 20% rise in pre-tax profit and confirmed Paul Thwaite as chief executive on a permanent basis.

The bank on Friday said 2023 pre-tax operating profit came in at £6.17bn, beating the £5.95bn average of analyst forecasts compiled by the bank. Total income rose to £14.7bn, up from £13.1bn a year earlier.

NatWest, 35% owned by UK taxpayers, announced a final dividend of 11.5p a share and a share buyback of £300m. The profit is the bank's largest since it made £10bn in 2007, the year before industry malfeasance led to a £45.5bn taxpayer-funded bailout.

Net interest margin - the difference between loan and savings rates - rose 19 basis points to 3.04% reflecting still-high interest rates, partially offset by lending margin pressure and lower deposits as customers shop around for better returns on their money and cheaper mortgages.

Looking ahead, NatWest warned that total income was expected to drop to £13bn -£13.5bn this year, noting that the economic outlook "remains uncertain" given interest rates are likely to fall as inflation cools.

Thwaites had been given a one-year contract last July after the departure of his predecessor Alison Rose, who resigned after she broke client confidentiality in relation to the closure of hard-right political activist Nigel Farage's account with NatWest's Coutts private banking arm for wealthy clients.

A row erupted when Coutts planned to shut Farage's bank accounts and the activist and agitator obtained internal documents revealing NatWest had concerns over his political views. Rose was then found to have discussed the matter with a BBC journalist.

She was forced to forgo £7.6m in pay from NatWest, despite an independent inquiry commissioned by the bank found she had made an "an honest mistake" in speaking with the BBC and Farage's account had become "commercially unviable because it was significantly loss-making," said the report by the law firm Travers Smith

Thwaites's appointment was expected to help clear a path for the government plans to sell shares in the lender to the general public later this year. So far, the Conservative government has yet to realise a profit on any of its stake sales in banks that were rescued after the 2008 financial crash.

Reporting by Frank Prenesti for Sharecast.com