NatWest, a major UK-based banking and financial services company providing a comprehensive suite of services to personal, business, and corporate clients, has announced a 12% rise in its first-quarter profit. The bank’s operating profit before tax for January-March reached 2 billion pounds, surpassing analyst predictions and up from 1.8 billion pounds year-on-year. This uplift was primarily driven by increased lending income, though the bank simultaneously took a modest charge for potential losses linked to the Middle East conflict and issued a warning about a darkening economic outlook for Britain.
Despite broader concerns regarding sluggish economic growth, NatWest has sustained a robust period of profitability and upgraded its income guidance for the year, anticipating it to be at the higher end of its 17.2-17.6 billion pound range. This positive outlook, however, contrasts with significant revisions to its UK economic forecasts. NatWest now projects Britain’s GDP growth at just 0.4% for the year, down from a previous 1%, and house price index growth at 0.7%, a notable drop from its earlier 3.4% estimate. Shares in NatWest, which had risen 19% over the past year, saw a 3% dip in early trading as investors absorbed the more bearish economic projections.
Chief Executive Paul Thwaite noted confidence in achieving guidance while acknowledging market uncertainty. The bank recorded a 283-million-pound impairment charge, which included 140 million pounds specifically for economic forecast downgrades related to the Middle East conflict. This compares to a 189-million-pound charge in the first quarter last year, showing losses, excluding the new provision, remained largely consistent. Similar impairment charges have been reported by other European lenders, reflecting renewed fears over rising inflation driven by volatile oil prices and other factors, with markets anticipating potential interest rate hikes from central banks like the Bank of England.
