NatWest Group has reported its best annual profit since just before the 2008 financial crisis, as it marks a departure from the recent bank demonetisation spree with the appointment of a permanent boss.
New CEO Paul Thwaite said he was “focused on what we can control”, such as building profits and cutting costs.
His appointment follows that of his former boss Dame Alison Rhodes, who resigned last year after admitting discussing former politician Nigel Farage’s bank accounts with journalists.
The banking group, which also includes Royal Bank of Scotland and Coutts & Ulster Bank, announced better-than-expected profits for 2023.
It reported pre-tax operating profit of £6.2 billion, higher than analysts’ expectations of £6 billion and a fifth increase compared to 2022.
This was its highest annual profit since 2007, when it was £9.9bn, before the global financial crisis led to a bailout by the UK government.
Rising bank revenues boosted profits, which rose tenfold to £14.3bn on the same period last year.
However, NatWest said it was affected by the increased competition in the savings rate environment brought about by the Bank of England’s hike in UK interest rates.
Customer deposits, excluding temporary products, fell by £13.8bn over the year as more customers shopped around for better deals on their savings. But more and more people are moving their money into fixed-rate savings accounts.
The bank said it has seen a change in customer behavior as people adapt to rising costs of living and homeowners face sharp increases in their monthly mortgage payments.
Mr Thwaites said: “In this environment, customers are looking for opportunities to increase their income and want more control over their spending.
“For example, usage of cashback sites increased by 20%, and spending and income from second-hand sales sites increased by more than 10%.”
NatWest’s net interest margin – which measures the difference between what banks pay on deposits and the profits they make on loans – fell in the last three months of the year compared to the previous quarter as it paid more to savers. .
It said it paid a total of £5.3bn in interest to customers in 2023.
NatWest is preparing to sell shares to retail investors as part of a retail offer announced by Finance Minister Jeremy Hunt last year.
Mr Thwaite said it was up to the Government to decide when and how the sale would take place, but that it was a “shared ambition to return NatWest to private ownership”. The government still holds about 35% of the bank’s shares.
In addition, incoming chairman Rick Haythornwaite stressed there was no pressure from the government on the bank to approve Dame Allison’s permanent successor.
But he said “uncertainty surrounding a CEO is never healthy for an organization,” adding that the company had begun a “rigorous and competitive” process to find its next boss.
He said Mr Thwaites had emerged as “an outstanding candidate and the right person to shape the future of NatWest”.
The new boss was appointed to lead the bank on an interim basis in July. He previously ran a commercial business.
“These are exciting times for our industry and banks,” he said.
“This year, we are focused on the things we can control to achieve profitable growth, be more efficient and productive, and be more manageable while effectively managing costs and capital. Masu.”
That could involve further digitization and automation across the bank, which would increase jobs in data and technology fields while reducing roles in areas such as operations, he said.
He also said NatWest was continuing to “continuously review” its branch network. Last year, the group announced the closure of more than 100 high street branches across the UK.
