NatWest Reports Decline in First-Half Profit Amid Competitive Mortgage Market

NatWest Group announced a 16% decline in its pretax operating profit for the first half of the year, totaling £3 billion ($3.86 billion), a drop that was less severe than analysts had anticipated. The bank attributed this decrease to intensified competition in the mortgage market and a shift in savers' deposits towards higher-yielding products. In a strategic move to enhance its retail banking operations, NatWest revealed plans to acquire a portfolio of prime residential mortgages from Metro Bank for £2.4 billion. Despite the profit decline, NatWest expressed optimism about its future performance, raising its 2024 forecast for return on tangible equity to above 14%, up from the previously expected 12%. The bank also revised its income expectations for the year, projecting it to reach approximately £14 billion, an increase from the earlier estimate of between £13 billion and £13.5 billion. This positive outlook follows a similar report from Lloyds Banking Group, which also noted a profit drop but highlighted a more favorable economic outlook for the latter half of the year. CEO Paul Thwaite emphasized the growing confidence among customers, citing increased activity and strong asset quality as indicators of potential growth. He stated that NatWest is well-positioned to support economic development across the UK through its extensive regional network. Additionally, the bank noted that the UK government's stake in NatWest has fallen below 20%, moving the institution closer to full privatization following its bailout during the 2008 financial crisis.