NatWest first-quarter profits jump by 50% after interest rate rises

theguardian.com:

NatWest has reported bumper first-quarter profits on the back of a rise in UK interest rates but said persistently high prices were causing some customers to dip into their savings.

The banking group said it was largely unaffected by the banking turmoil that resulted in the collapse of Silicon Valley Bank and Credit Suisse last month, and despite uncertainty, managed to report a 50% jump in profits to £1.9bn in the first three months of the year. That was better than the £1.6bn forecast by analysts.

NatWest’s strong performance was driven by higher UK interest rates, which have soared to 4.25% over the past year and allowed UK lenders to charge more for loans and mortgages. NatWest said its net interest income – which accounts for the difference between what it pays savers and what it charges to borrowers – jumped 43% to £2.9bn in the first quarter.

However, investors, who remain jittery in the wake of the March banking crisis, sold off shares in the bank, which were down 5% on Friday, making NatWest the biggest faller on the FTSE 100. The share price fall appeared to be driven by disappointment over the bank’s outlook for the full year, which remained unchanged, and a near £20bn drop in deposits.

Shareholders have been worried about any signs of potential distress, after investors started to pull their money from small US banks and dump them with bigger national lenders including JP Morgan. However, NatWest’s chief executive, Alison Rose, said last month’s turmoil was not the driving force behind the drop in deposits.

Instead, the decrease was largely linked to its disposal of Ulster Bank in Ireland, as well as customers paying taxes at the end of the financial year. Competition with rival banks also played a role, with