NatWest lifts income guidance as Q1 profits jump 12%

(Sharecast News) - NatWest on Friday said it expected annual earnings to be at the upper end of guidance after posting a 12% jump in first quarter profits. The UK bank now expects income excluding notable items to be at the top end of its range of £17.2 - 17.6bn. Operating pre-tax profit for the three months to March 31 came in at £2bn compared with £1.8bn a year earlier and better than expectations of £1.94bn.

Total income increased 9.5% to £4.36bn including £3.4bn from net interest income--the difference between what banks charge on loans payout on deposits, while the overall net interest margin rose to 2.47% from 2.27%. High Street banks are benefiting from a slowdown in interest rate cuts due to the US-Israel war on Iran.

The Bank of England, European Central Bank and US Federal Reserve all held rates this week as they assess the impact of the conflict on inflation.

NatWest added that rising energy costs had weakened the near-term domestic growth outlook, and that it expected inflation to peak above 3.5%, economic growth to slow to 0.4% and the UK unemployment rate to rise to 5.7%.

Bad loan provisions were increased to £283m from £189m a year ago, including £140m due to the predicted economic fallout of the conflict.

"We are confident we will achieve our guidance. However, we recognise that market conditions are uncertain and we will refine our internal forecasts as the economic position evolves," said chief executive Paul Thwaite in a statement.

Reporting by Frank Prenesti for Sharecast.com

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