© Reuters. FILE PHOTO: Signage at a branch of NatWest Bank pictured in central London, May 21, 2008. REUTERS/Luke MacGregor
By Iain Withers
LONDON (Reuters) -British state-backed bank NatWest (LON:) reported a 41% increase in first quarter profits on Friday, as rising interest rates and higher income boosted the lender’s performance.
NatWest reported pre-tax profits of 1.2 billion pounds ($1.50 billion) for the first three months of the year, up from 885 million pounds the previous year, restated to exclude its axed Irish business.
The profit was well ahead of the 755 million pounds average of analyst forecasts compiled by the bank.
British banks have benefitted from the country’s economic rebound from COVID-19 lockdowns and higher benchmark interest rates, but face potential further pain as soaring inflation squeezes household incomes and threatens higher loan defaults.
NatWest CEO Alison Rose said she was “very aware of the challenges and concerns the cost-of-living crisis is causing”, but the lender did not update its economic forecasts, leaving this to later in the year.
NatWest’s rivals Barclays (LON:), Lloyds (LON:) and HSBC all warned in earnings this week of potential damage to their finances from inflation, which has heightened due to the economic impact of Russia’s invasion of Ukraine.
Like its peers, the bank’s core capital ratio fell significantly, to 15.2% from 18.2% last year.
($1 = 0.7992 pounds)