Its retail mortgage book increased by £6.7bn which it owed to the gross mortgage lending but said was offset by redemptions. It closed the period with a 12.6 per cent stock share of the mortgage market.
In total, Natwest lent £312.3bn to customers, up from £301.7bn in the six months to December 2022.
The lender’s net interest income rose by £844m or 25 per cent annually to £4.25bn which it attributed to base rate increases and a rise in lending. However, it said this was partially offset by a reduction in mortgage margins.
As of H1, it had a net interest margin of 3.2 per cent. From quarter to quarter, its net interest margin fell from 3.27 per cent in the first three months of the year to 3.13 per cent in Q2. It said this drop in the margin reflected mortgage pressure and the higher cost of deposits.
Its mortgage book had an average loan to value (LTV) of 55 per cent and the lender said arrears remained stable.
Some 67 per cent of its portfolio is on a five-year fixed rate, 23 per cent are on a two-year fix, one per cent is on a 10-year fix and five per cent is on a tracker mortgage. Some four per cent of borrowers are paying the standard variable rate (SVR).
Natwest said it expected around 13.1 per cent or £24.7bn of its fixed book to expire by the end of the year.
Although the bank said arrears and defaults were stable, it saw a net impairment loss of £191m compared to a release of £18m last year. It put this down to increased economic uncertainty.
Profits on the up
For the first half of the year, Natwest reported a profit before tax of £3.6bn, up from £2.6bn last year.
Katie Murray, chief financial officer at Natwest, said: “NatWest Group’s strong performance for the first half of the year is underpinned by our robust balance sheet, with a high-quality deposit base, high levels of liquidity and a well-diversified loan book.
“Although arrears remain low, we know that people, families and businesses are anxious about their finances and many are really struggling. We are being proactive in our support for those who are hardest hit, helping to build the financial resilience of the customers and communities we serve.”
