NatWest wraps up bank reporting with ‘fair to middling performance’ and 1,000 job cuts
“We continue to see broad-based growth in our three customer franchises” – Paul Thwaite, CEO
Royal Bank of Scotland parent NatWest Group has rounded off the banks’ reporting season with a “fair to middling performance”, analysts said, as it emerged that an efficiency drive had led to 1,000 job cuts.
The Edinburgh-based banking giant reported an operating pre-tax profit of £2.2 billion for the three months to September, modestly up on the same period last year. It made around £3.6bn in net interest income - the difference between what banks make from loans and what they pay out on deposits - which was a jump of nearly 9 per cent, year on year.
NatWest also hailed the progress it had made towards becoming a simpler and technology-driven bank.
This has led to the reduction of about 1,000 full-time staff in the quarter, bringing the total of jobs lost to 1,400 so far this year. However, this year’s acquisition of wealth manager Evelyn Partners has brought around 2,200 staff into the group, pushing up its overall headcount.
Richard Hunter, head of markets at Interactive Investor, part of Aberdeen Group, said: “NatWest has rounded off the banks’ quarterly reporting season with a fair to middling performance which was not sufficient for the bank to upgrade guidance for the year.”
He added: “The increase to the bank surcharge in the Budget earlier this week was less than feared, manageable and temporary and led to a small relief rally in the domestic banks.”
The group joins other major high street lenders including Bank of Scotland owner Lloyds and Barclays that have reported an income increase while interest rates have remained high.
NatWest said it had managed to make cost savings of around £420 million, helping bring down its cost-to-income ratio - the amount it spends on running the business as a percentage of what it generates in income - to 45.7 per cent for the year-to-date.
This has been helped by investment into technology including AI tools, with recent trials of a spending insights helper and a fraud agent for credit card customers.
Chief executive Paul Thwaite said: “As we help more customers to save and invest, buy a home or expand their businesses, we continue to see broad-based growth in our three customer franchises, with lending, deposits and assets under management all increasing during the quarter.”
Nick Sherrard, managing director of Edinburgh-based consultancy Label Sessions, said: “From here, growth has to be created by the bank - it won’t just happen through external forces. The opportunity for NatWest is that it has lined up more of the levers than most of its peers, including the acquisition of Evelyn in wealth management, a new venture banking unit and AI-enablement.
“Against an increasingly uncertain economic backdrop, [these] results suggest NatWest is successfully balancing operational discipline with long-term investment well. But innovation stops being a strategy slide right now and needs to start being a bigger part of the earnings story - and there are indications that is beginning to happen.” he added.
Royal Bank of Scotland will mark its 300th anniversary next year.
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