NatWest has revealed its mortgage lending almost halved at the beginning of the 12 months because it retreated from components of the market when competitors amongst lenders stepped up.
The banking group mentioned new mortgage lending totalled £5.2 billion within the first three months of the 12 months, down from £9.9 billion the earlier 12 months.
Paul Thwaite, NatWest’s chief government, mentioned demand for mortgages decreased all through 2023 and there have been fewer offers on provide.
He added: “As a result of the market was comparatively skinny, worth competitors was very excessive and we took a aware determination at that time to not compete throughout all segments through the latter a part of the third and fourth quarter.
We expect that the stress is easing for retail shoppers. There’s proof they’re beginning to really feel a bit extra assured, albeit they’re persevering with to take management of their budgets
Paul Thwaite, NatWest’s chief government
“We needed to make sure we may get the suitable returns from the capital we have been deploying.”
He mentioned that explains the year-on-year decline in lending, however added that mortgage functions had since elevated by about 25% and the lender has grown its share of the market to greater than 12%.
The group, which additionally consists of Royal Financial institution of Scotland and Coutts, reported an working pre-tax revenue of £1.3 billion for the primary quarter, down 27% from £1.8 billion the earlier 12 months.
It’s forward of the £1.2 billion revenue analysts have been pencilling in for the quarter.
Whole earnings for the financial institution fell by a tenth as extra prospects moved cash from present accounts and into financial savings accounts with larger returns.
However NatWest revealed that buyer deposits elevated by £2 billion within the first quarter, reflecting development in financial savings and present account balances because the finish of 2023.
It additionally assured that the extent of debtors defaulting on loans remained low, regardless of the cost-of-living squeeze.
Mr Thwaite mentioned there are indicators that buyer sentiment is enhancing since households have been squeezed by cost-of-living pressures in recent times.
“We expect that the stress is easing for retail shoppers. There’s proof they’re beginning to really feel a bit extra assured, albeit they’re persevering with to take management of their budgets.
“That’s primarily pushed by expectations of lowering inflation and likewise a possible discount in Financial institution of England base charges.
“However it is very important be balanced – there nonetheless are some challenges. The price of residing continues to influence family budgets for these prospects who’re rolling off mortgages, probably on to larger funds.”
Such prospects are seeing common month-to-month repayments go up by round £250, he mentioned.
Mr Thwaite mentioned NatWest was taking the “needed steps” in preparation for the Authorities to launch a sale of its remaining shares within the financial institution to retail buyers, after bailing it out through the 2008 monetary disaster.
He mentioned selections across the timing and construction of the sale have been a matter for the Treasury, which beforehand mentioned it may come as early because the summer season.
The Authorities has mentioned it hopes to totally offload its stake by 2025 to 2026.
Shares in NatWest have been up greater than 4% on Friday morning.