The group’s retail banking segment “continued to pursue sustainable growth with an intelligent approach to risk,’ its H1 statement said.
“Lending growth was supported by a strong performance in mortgages, partially offset by continued UK government restrictions impacting customer spending and the continued repayment of unsecured balances,” it said.
Net interest margin (NIM) on retail banking was 2.07 per cent for H1, down by 16 basis points from 2.23 per cent in H1 2020.
However in Q2, the retail banking NIM increased by two basis points, “reflecting strong mortgage completion margin and a full quarter of savings customer rate changes,” the bank said.
“Mortgage completion margins of around 165 basis points were higher than the back book margin of 163 basis points, with application margins of around 155 basis points in the quarter decreasing to around 145 basis points in the latter part of Q2 2021, reflecting increased competition in the market,” it said.
For H1, retail banking net loans to customers increased by £5.8bn, due to continued strong mortgage growth of £6.2bn.
The retail banking segment had about 500 active mortgage payment holidays as of 30 June 2021, representing less than 0.1 per cent of the book by volume.
Housing bond issue
Across UK and RBSI retail and commercial, net lending, excluding government support schemes, was up by £4.1bn to £302.0bn – including £7.0bn of mortgage growth in H1. The net mortgage lending growth was partially offset by lower unsecured and commercial lending volumes.
The £1.9bn increase in Q2 2021 included mortgage lending growth of £3.6bn.
The lender issued a €1bn (£850m) affordable housing social bond, the first of its kind from a UK bank, during H1. Funds raised will support lending to not-for-profits and UK housing associations, and will form part of the bank’s commitment to provide £3bn to the affordable housing sector by the end of 2022.