NatWest Group PLC (LSE:NWG) reported a much-increased profit in the first quarter and, with interest rates rising, said it expects income this year to be “comfortably” above its previous guidance.
The FTSE 100 lender, the last of its blue-chip peer group to report, revealed it made £841mln of attributable profit in the first three months of 2022, up 35% on the first quarter of 2021 and well ahead of the £755mln average analyst forecast.
Total income of £3bn was up from £1.86bn a year ago, as its net interest margin rose to 2.43% from 2.28% three months ago and 2.25% a year ago.
Capital levels, in the form of a proforma CET1 ratio, were down to 15.2% from 15.9% at the start of the quarter on a proforma basis or from 18.2% on a statutory basis, which it said reflected the £1.2bn directed buyback of some of the UK government stake, taking it below 50% for the first time since the 2008 bailout.
NatWest reported a £38mln impairment release, of which most was in the Ulster Bank business and other discontinued operations, with provisions for expected credit losses reduced to £3.7bn.
The impairment release reflects a decrease in underlying exposures, continued positive trends in portfolio performance and write-off activity, the bank said, though it acknowledged significant uncertainty in the economic outlook, which was reflected in a £0.1bn addition to reflect the increased concerns arising from the Russian invasion of Ukraine and rising inflation.
On the outlook, guidance was maintained from that given in its final results, although full-year income is now expected to “be comfortably above £11bn”.
“Despite the challenging environment, I am pleased with our performance as we continue to execute well against our strategy, driving sustainable growth and returns,” said chief executive Alison Rose.
“Income and profits are substantially up, costs are down and we remain well capitalised as we build long-term value and deliver a simpler and better banking experience for our customers.”