NatWest Group PLC (LSE:NWG) reported strong growth in revenue and profit in the first quarter but said deposits had fallen as competition hots up.
The FTSE 100-listed lender described the performance as “strong” with operating profit before tax of £1.82bn, up from £1.22bn a year ago, and ahead of City forecasts of £1.6bn.
Chief executive Alison Rose commented: "NatWest Group's strong performance in Q1 2023 is underpinned by our robust balance sheet, our high levels of capital and liquidity and our well-diversified loan book.”
Total income jumped 37.2% to £1.04bn, reflecting the impact of volume growth and yield curve movements.
The high street bank continued to benefit from a rise in net interest margin, which climbed 7 basis points (bps) quarter-on-quarter to 3.27%, while the return on tangible equity was 19.8%, nearly double last year’s 11.3%, but down from 20.6% in the fourth quarter.
It said guidance for current financial year remained unchanged.
But customer deposits reduced by £11.1bn, or 2.6%, in the quarter, reflecting around £8bn higher customer tax payments, competition for deposits and an overall market liquidity contraction.
Lending to customers edged higher by 1.6% to £352.4bn, reflecting £3.9bn of mortgage growth in Retail Banking and a £1.6bn increase in Commercial & Institutional.
The CET1 ratio improved 20 bps to 14.4% while operating expenses jumped 12.5% due to higher staff costs and the exit from the Republic of Ireland.
A bad debt provision of £70mln was made but the bank said levels of default remain stable at low levels.