NatWest Group PLC (LSE:NWG) saw its net interest margin fall in the third quarter as more customers moved funds to savings accounts to benefit from higher interest rates.
The bank also published findings from the Travers Smith review into the bank’s closure of former UKIP leader Nigel Farage’s accounts with subsidiary Coutts, which saw the previous chief executive Dame Alison Rose lose her job.
The report said the “exit decision was lawful and was made in accordance with the relevant bank policies and processes" but it also identifies a number of shortcomings in "how the decision was reached, how the bank communicated with Mr Farage and how it treated his confidential information”.
NatWest said it has accepted - and will implement - all of the recommendations made by Travers Smith.
NatWest admits to 'serious failings' in treatment of Nigel Farage
Back to the results, and the high street lender said net interest margin (NIM) of 2.94% in the quarter ended September was 19 basis points lower than the second quarter with the reduction largely due to changes in deposit mix.
Customers have shifted balances from non-interest bearing current accounts to interest bearing savings accounts, while there is also a continued impact on mortgage margins as the higher margin Covid-era book rolls off and is replaced at lower margins.
NatWest said it expects full-year NIM to still be greater than 3%, compared to the 3.11% reported year-to-date, and the 3.15% it predicted before.
In the third quarter, total income rose to £3.49 billion from £3.23 billion a year ago with attributable profit of £866 million, up from £187 million and a return on tangible equity of 14.7%.
Net loans to customers increased by £1.8 billion to £354.5 billion, including a £1.3 billion uplift in Commercial & Institutional.
Retail Banking gross new mortgage lending was £7.5 billion in the quarter, down slightly from £7.6 billion in the second quarter.
Bad debt charges were £229 million, down from £247 million last year, or 24 basis points of gross customer loans, and the bank expects its impairment loss rate for 2023 to be below its through the cycle range of 20-30 basis points.
Customer deposits of £423.5 billion were £2.4 billion higher than the second quarter while the Common Equity Tier 1 ratio of 13.5% was in line with the position at the end of June.