This was also down on a total gross lending figure of £29.8bn completed over the whole of last year. 

Within its retail banking arm, NatWest said its mortgage balances decreased by £2.5bn as customer redemptions more than offset gross new lending. 

Meanwhile, in Q2, net loans to customers fell by £200m or 0.1% on the previous quarter, driven by a £700m decline in mortgage balances as redemptions offset “stronger gross new lending”. 

In H1, NatWest’s net interest margin (NIM) was 2.26%, 0.39% lower than a year earlier. The bank said this reflected mortgage margin compression and the impact of a change in the deposit balance mix. 

Its NIM improved over the quarter due to better deposit margins, NatWest said, rising from 2.05% in Q1 to 2.1% in Q2. 

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During the period, NatWest posted a post-tax profit of £1.7bn, 26% down from £2.3bn last year. 

 

Return to private ownership and mortgage acquisitions 

Following the announcement of its acquisition of a Metro Bank mortgage portfolio today, NatWest revealed it agreed to buy 392.4 million shares from the Treasury for a total consideration of £1.2bn, but cancelled 222.4 million shares valued at £706.9m. 

It said the nominal value of the share cancellation had been transferred to its capital redemption reserve. 

NatWest has been making progress to return to full ownership after the government took a majority stake in the bank following the global financial crisis. 

Earlier this month, it was announced that the government’s share in NatWest had fallen below 20%. 

Paul Thwaite, chief executive of NatWest, said: “As the UK’s leading business bank, and one of the largest retail banks, NatWest Group’s strong performance is grounded in the vital role we play in the UK economy and in the lives of our 19 million customers. In the first half of the year, we have delivered an operating profit of £3bn, a return on tangible equity of 16.4% and a 6 pence interim dividend, up 9% on last year’s dividend. We are also pleased with the continued reduction of the government’s stake, which has almost halved this year. 

“We have made good progress against our strategic priorities, taking decisive action to grow and simplify our business and to manage our capital and costs more efficiently. There has been growth across all three of our businesses, we have attracted over 200,000 new customers and our acquisition from Sainsbury’s Bank is expected to add around one million customer accounts on completion. We have also agreed to acquire £2.5bn of UK prime residential mortgages from Metro Bank, adding further scale to our retail banking business.” 

He added: “The positive momentum and progress in the first half reflect the ambition across the bank to deliver its full potential. Our customers are beginning to feel more confident, with activity increasing and asset quality remaining strong, and we are well-positioned to help unlock growth across the UK through our unrivalled regional network. Fundamentally, if we succeed with our customers, we will succeed for our shareholders and the wider economy.”