Natwest beat earnings expectations for the first three months of this year.
NatWest Group, which includes the Royal Bank of Scotland and Ulster Bank, reported a pre-tax profit of £1.8 billion in the three months to March 31.
The total comes ahead of analysts’ forecasts of £1.6 billion for the first quarter and ahead of £1.2 billion over the same period last year.
This comes on the heels of rival Barclays Bank announcing better-than-expected profits thanks to US credit cards and higher interest rates, the highest in at least 12 years.
Group revenue for the quarter totaled £3.9 billion compared to £3.01 billion in the previous year and £3.76 billion expected. Net profit was £1.28 billion, compared to £841 million and ahead of expectations of £1.07 billion.
Natwest provided a modest £70m for bad debts this quarter, compared to releasing £38m this time last year.
NatWest sees deposit withdrawals worth £1bn
NatWest said £1 billion had been pulled from customer deposits as a result of rising tax payments, competition for better savings rates and market volatility.
After cutting back on investment banking in the wake of the financial crisis, Natwest makes the majority of its profits in retail banking making it particularly sensitive to changing interest rates.
NatWest Banking Crisis The NatWest findings come as the banking sector faces intense scrutiny in the wake of the collapse of Silicon Valley Bank (SVB).
While banks in the UK were for the most part insulated from the banking panic, First Republic’s ongoing troubles prompted fears that the global banking sector was not out of the woods yet.
Natwest results are ‘what the doctor ordered’
Laying it against the broader banking turmoil of recent months, said Richard Hunter, head of markets at Interactive Investor
Natwest’s findings were: “A solid, dependable, if slightly unexciting performer, the performance delivered by NatWest is exactly what the doctor ordered for the most risk-averse investors.”
He added that the current economic backdrop is one that suits the bank, as it has significant exposure to the UK economy where higher interest rates apply and where bad debt remains low and can be contained. At the same time, the group’s mortgage and lending growth remains particularly strong, with high trading volumes having a noticeable impact.
Shares of Natwest (NWG) have fallen 11 percent over the past three months, Hunter said, last dropping 5.55 percent at 257.10 pence.
Hunter added: “The somewhat negative reaction to numbers in early trading could contain an element of disappointment about customer balances and unchanged outlook guidance.
However, the share price still managed 14 percent gains over the past year, which compares to a 4.3 percent gain for the broader FTSE 100.
“It is the strength and stability of the group that attracts investors against a difficult background in general, and the market consensus on shares when buying reflects the investor’s belief in the bank’s ability to overcome the current economic turmoil.”