NatWest shares plunge as it cuts profit forecasts

NatWest shares tumbled after it cuts its earnings outlook – and a review heavily criticised the bank’s Coutts subsidiary for its dealings with Nigel Farage.

NatWest shares plummeted by 10 per cent, or 21p, to 184.8p on Friday morning, making them by far the worst performer on the FTSE 100 Index.

It followed the lending giant lowering the annual forecast on its net interest margin (NIM) – the difference between what banks charge on loans and pay in interest – from 3.2 per cent to 3.15 per cent.

In the third quarter, the company’s net interest margin declined by 19 basis points to 2.94 per cent, which it attributed to more customers shifting their money towards better interest-paying savings accounts as well as narrowing margins on mortgages.

Big banks have come under fire for hiking mortgage rates far faster than savings rates, as they profit from the sharp rise in the Bank of England base rate. 

Total income only rose by 3.4 per cent to £3.49billion as a result, with growth driven by higher lending and investment banking income, and beneficial yield curve movements.

NatWest still recorded a pre-tax operating profit of £1.33billion for the July to September period, a 23 per cent rise on the same time last year and just below analyst expectations of £1.4billion.

On a nine-month basis, meanwhile, the equivalent figure was approximately a third higher at £4.92billion, thanks mainly to a robust result from its commercial and institutional division.

Paul Thwaite, chief executive of NatWest, said: ‘This performance is built on the foundations of strong customer franchises and a robust balance sheet with high levels of liquidity and a well-diversified loan book.

‘As a result, credit losses and impairments remain low, and we are ready and able to stand by our customers and businesses through the current economic uncertainty.’

Alongside the results, NatWest published findings from an independent review into the decision by Coutts, a subsidiary of the lender, to ‘debank’ Nigel Farage earlier this summer.

The report by legal firm Travers Smith concluded that the lender’s decision to close the former UKIP leader’s accounts was ‘predominantly a commercial’ one and had not broken the law.

But it severely lambasted former NatWest chief executive Dame Alison Rose for leaking confidential customer information about Mr Farage, saying it ‘probably’ broke data protection laws.

Both Rose and her counterpart at Coutts, Peter Flavel, resigned within days of each other over the saga.

Howard Davies, NatWest’s chairman, said: ‘The findings set out clear shortcomings in how it was reached as well as failures in how we communicated with him and in relation to client confidentiality.

‘We apologise once again to Mr Farage for how he has been treated. His experience fell short of the standards that any customer should expect.’