NatWest Group PLC (LSE:NWG) chief executive Dame Alison Rose said UK households and businesses are becoming more confident despite the ongoing cost of living crisis and worries over rising interest rates.
Speaking at the Goldman Sachs (NYSE:GS) European financials conference in Paris, Dame Alison said she was seeing resilience among the bank's customers and "very rational behaviour" from borrowers, despite nerves about the economy.
She pointed out borrowers were over-paying on their mortgages and paying down more expensive debts as rates jump, with no signs yet of customers across the board struggling with repayments.
But she thinks the recent jump in mortgage rates will have some impact on margins and customer behaviour.
She said NatWest's "all-weather balance sheet" will help the group withstand any impact, as will the "still underlying, resilient performance from our customers".
Her comments come amid turmoil in the mortgage market as lenders pull and re-price deals due to market forecasts for rates to keep rising.
Dame Alison said: "We're not seeing any material signs of distress."
But she said lower income households are "really struggling with high inflation and high interest rates". "Typically these are not significant borrowers with us," she said.