NatWest profits soar to £3.6bn as it continues to face fallout from debanking scandal that saw its CEO and Coutts boss quit over closure of Nigel Farage’s account
- British bank reports ‘strong’ financial performance for the first half of the year
- But it is embroiled in row involving Nigel Farage over closure of bank account
NatWest Group’s profits have surged by nearly £1billion, beating expectations as the bank faces scrutiny from shareholders after the departure of its boss this week.
The British bank – embroiled in a row involving Nigel Farage over the closure of his bank account – reported a ‘strong’ financial performance for the first half of the year.
The taxpayer-backed lender saw its operating pre-tax profit up to £3.6billion in the six months to the end of June, up from £2.6billion the same time last year.
Analysts had been expecting a lower profit of £3.3billion for the latest half-year.
NatWest has benefited from higher interest rates, which has pushed up the cost of borrowing, and greater mortgage lending.
NatWest Group’s profits have surged by nearly £1 billion, beating expectations
But the bank said it expects higher interest rates to be largely offset by savings rates and mortgage income reductions through the second half of the year.
The financial results also come at a time of volatility for the group, with chief executive Dame Alison Rose resigning on Wednesday after admitting to being the source of an incorrect BBC report on former Ukip leader Mr Farage’s finances.
Dame Alison had admitted a ‘serious error of judgement’ by discussing with a BBC journalist Mr Farage’s relationship with Coutts – the private bank which shut down his account and is owned by NatWest.
She said she did not disclose any personal financial information but was ‘wrong to respond to any question raised by the BBC about this case’.
But her resignation came hours after the board said it had full confidence in Dame Alison as chief executive, meaning the bank was forced to backpedal after the statement was given.
It raised concerns over a breach of confidentially at the top echelon of the business.
Senior bosses at NatWest will face scrutiny from shareholders following the fallout in the row sparked by Nigel Farage (pictured on Wednesday) over the closure of his Coutts bank account
Meanwhile, Coutts’ chief executive Peter Flavel stepped down yesterday after admitting the high-net-worth bank had ‘fallen below the bank’s high standards of personal service’.
Remaining top executives could face questions over the handling of the situation and how it plans to move forward.
NatWest and Coutts have faced heavy criticism for mishandling the closure of Mr Farage’s accounts after a dossier emerged showing a bank committee had said his views did not align with the lender’s own.
Senior bosses of the group are set to face the scrutiny of shareholders and journalists this morning.
The bank made scant reference to the incident in its earnings release today, other than to confirm that its former commercial banking boss Paul Thwaite had been promoted to interim chief executive for an initial period of 12 months.
The scandal culminated in the resignation of NatWest’s chief executive Dame Alison Rose
NatWest’s chief financial officer, Katie Murray, said: ‘NatWest Group’s strong performance for the first half of the year is underpinned by our robust balance sheet, with a high-quality deposit base, high levels of liquidity and a well-diversified loan book.
‘As a result, we are able to continue lending to our customers and delivering sustainable returns and distributions to our shareholders, even in the current uncertain economic environment.
‘Although arrears remain low, we know that people, families and businesses are anxious about their finances and many are really struggling.
‘We are being proactive in our support for those who are hardest hit, helping to build the financial resilience of the customers and communities we serve.’
The bank also announced an interim dividend of 5.5 pence per share and announced a share buyback of up to £500million for the second half of the year.
Coutts’ chief executive Peter Flavel stepped down yesterday after admitting the high-net-worth bank had ‘fallen below the bank’s high standards of personal service’
It follows rival lenders Lloyds Banking Group and Barclays reporting a jump in their half-year profits as they continue to benefit from interest rate rises.
Matt Britzman, equity analyst at Hargreaves Lansdown, said today: ‘It’s been a week to forget at NatWest as it’s had to lose two of its top execs because of the Nigel Farage account closure debacle.
‘Today’s results probably don’t do the group any favours either, despite a slight beat on the bottom line. We know markets are laser-focused on net interest margin and at 3.13 per cent for the second quarter that was below expectations, leading to a miss on net interest income.
‘But perhaps more importantly, full-year guidance has been dragged lower reflecting the ongoing deposit shift to accounts that offer better rates as consumers do all they can to make cash savings go further.
‘NatWest should be a little more robust than peers in this regard, owing to the fact more of its deposits are held by small and medium-sized businesses which tend to keep more cash current accounts that are more profitable for banks.’
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