Lending was similar to the previous quarter, however, when Natwest completed £5.6bn in gross mortgage lending.
Within its retail banking division, Natwest said loans to customers fell quarter-on-quarter, due to a decrease in mortgage balances caused by higher redemptions. This was partially offset by new mortgage lending.
Its total income excluding notable items came to £3.4bn, which was 0.8% or £28m lower than the previous quarter. Natwest attributed this to “mortgage margin dilution”.
Its net interest margin (NIM) improved by six basis points over Q4 to Q1 to reach 2.05%. Compared to 2023, this was down on the NIM of 2.25% in Q1.
Natwest reported an operating profit before tax of £1.3bn, down from £1.8bn a year earlier. Compared to the previous quarter, it was higher than the profit of £1.2bn in Q4.
Natwest: A strong set of results
Paul Thwaite, chief executive of Natwest, said: “Natwest Group has delivered a strong set of results for the first quarter – with an operating profit of £1.3bn – as we remain focused on the priorities we set out in February, which will help us shape the future of this bank.
“Our performance is grounded in the vital role we play in the economy and in the lives of our 19 million customers. Though macro uncertainty continues, customer confidence and activity is improving, with both lending and deposits up in the quarter and impairments remaining low, reflecting our well-diversified business.
“We are ambitious for this bank, and by succeeding for our customers, we will succeed for our shareholders. Our first priority is delivering disciplined growth across our three businesses by serving our customers well. At the same time, we are becoming simpler, more productive and easier to deal with. As a result, we aim to generate returns that allow us to support our customers, invest in our business and deliver attractive distributions to shareholders.”
He added: “We are also pleased with the recent momentum in the reduction of HM Treasury’s stake in the bank. Returning Natwest Group to private ownership is a shared ambition, and we believe it is in the best interests of both the bank and all our shareholders.”
Last month, the government reduced its stake in Natwest to 29.8%, meaning it no longer has a controlling share in the bank.
