- Chairman of NatWest Affirms No Plans to Resign Amid De-Banking Turmoil
- NatWest Reports Strong Financial Results Despite Leadership Crisis
- Controversy Over Nigel Farage De-Banking Overshadows Bank’s Performance and Profit Increase
The de-banking turmoil engulfing the financial institution overshadows its most recent financial results, which were well-received by investors and marked the end of Dame Alison Rose’s tenure as CEO.
The chairman of NatWest has stated that he has no plans to follow Dame Alison Rose out the door as the taxpayer-backed lender continues to reel from the Nigel Farage de-banking scandal.
After a week in which the chief executive, Dame Alison, was forced to resign for her involvement in the saga, Sir Howard Davies stated that his succession plan remained unchanged.
He spoke hours after the bank reported £3.6bn in pre-tax profits for the first half of the year, up from £2.6bn for the same period in 2022, as rising interest rates bolstered its bottom line.
It made an additional provision of more than £220 million for bad loans due to the challenging economy but stated that arrears and defaults were presently low due to higher mortgage and other borrowing costs.
Following two days of share price declines resulting in a £1bn loss in market value, NatWest provided an update on its progress as a result of its leadership being in disarray as a result of the Farage scandal.
Dame Alison resigned after confessing she was the source of a false media report regarding the reason why the Brexit politician’s account with Coutts, a division of NatWest, was closed.
Peter Flavel, the chief executive officer of Coutts, followed her out the door on Thursday.
Mr. Farage has demanded the resignation of the entire board of directors of the group, including Sir Howard, who initially supported Dame Alison’s position but changed his mind amidst government outrage.
In a Friday call with journalists, Sir Howard said Alison Rose’s chief executive post was untenable due to political backlash.
The chairman said he would stay in office until next year when a succession process started in April will end.
He insisted that the group did not close accounts “based on people’s legally held political views” but declined to comment on whether Mr. Farage’s Coutts account would be reactivated.
As the banking industry under criticism for de-banking, a City law firm is reviewing its Farage case handling.
This week, lenders were dragged before the Treasury, with regulators also exerting pressure on the sector to ensure that everyone, regardless of political background or perceived beliefs, has access to banking.
The controversy has overshadowed the banking results season, with NatWest’s figures for the first half of 2023 demonstrating the benefits of rising interest rates as the Bank of England continues its fight against inflation.
The bank, which disclosed an interim dividend of 5.5p per share and a share buyback of up to £500m for the current second half of the year, had expected profits closer to £3.3bn for the period.
The net interest margin, an important measure for financial experts, was 3.2%.
This was an increase from the 2.6% recorded in the same period a year ago, but it declined in the second quarter, mirroring Lloyds, as political pressure mounted on banks to pass on improved rates to savers.
Ian King said Dame Alison’s financial management showed in the bank’s mortgage market share gain.
He stated, “This is a bank that was doing exceptionally well under Alison Rose.”
Paul Thwaite, the group’s former commercial and institutional banking head, will replace her temporarily.
Katie Murray, chief financial officer, commented on the results: “NatWest Group’s solid performance for the first half of the year is supported by our strong balance sheet, which includes a high-quality deposit base, high levels of liquidity, and a well-diversified loan book.
Despite the shaky economy, we can continue lending and paying stockholders.
We know that many individuals, families, and businesses are struggling financially, even while arrears are low.
“We are being proactive in our support for those who are hardest hit, thereby helping to build the financial resilience of the customers and communities we serve.”
Ahead of Friday’s opening bell, shares were down 10% for the year to date. During early trading, they were down fractionally, but later turned positive and gained nearly 3%.
Analysts were dissatisfied that the net interest margin was not higher during the initial decline.
Matt Britzman, equity analyst at Hargreaves Lansdown, added, “Perhaps more importantly, full-year guidance has been lowered as a result of the ongoing shift of deposits to accounts with higher interest rates, as consumers strive to make their cash savings stretch further.”
