Home Money NatWest posts biggest profits since financial crisis, but shadow of Nigel Farage looms over share sale

NatWest posts biggest profits since financial crisis, but shadow of Nigel Farage looms over share sale

by Elijah
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NatWest posts biggest profits since financial crisis, but shadow of Nigel Farage looms over share sale
  • Lender confirms interim boss Paul Thwaite has replaced Dame Alison Rose
  • His appointment paves the way for the Government to promote the sale of shares
  • Farage says he will take legal action if bank does not pay him compensation

NatWest’s profits soared last year to the highest level since 2007 as the bank was boosted by interest rate rises.

The lender confirmed yesterday that interim boss Paul Thwaite (pictured) has permanently replaced former chief executive Dame Alison Rose, who resigned amid the Nigel Farage scandal.

His appointment clears the way for the Government – ​​which still owns a 35 per cent stake after its £45bn bailout in 2008 – to launch a share sale.

But Farage, the former UKIP leader, has threatened to derail the sale, saying he will take legal action against the bank within days if it does not resolve an ongoing compensation claim.

NatWest, which also owns RBS, Coutts and Ulster Bank, reported profits of £6.2 billion in 2023, up 20 per cent on the previous year.

Profits hit the highest level since the bank made almost £10bn in 2007, before it was bailed out by taxpayers in the financial crisis.

Revenue for the year was £14.3 billion, an increase of 10 per cent or £1.3 billion compared to 2022.

High borrowing costs (interest rates are at a 16-year high of 5.25 percent) have boosted banks’ profits as customers are charged more for loans and mortgages.

The net interest margin (NIM), a measure of the difference between the money earned on loans and what the bank pays out in savings, was 3.04 percent in 2023.

That was 19 basis points higher than in 2022. NatWest did not provide guidance on the NIM for 2024.

Despite the ongoing cost of living crisis and the country’s slide into recession, loan impairments were smaller than analysts expected in the final three months of the year.

NatWest reported impairment losses of £126 million in the fourth quarter, compared with a forecast of £242 million.

The Bank of England is expected to cut rates this year, hitting profits at NatWest and rival lenders.

The lender said revenue will be between £13bn and £13.5bn this year, a drop of up to £1.3bn.

Thwaite, who will receive a basic salary of £1.15m plus shares and bonuses, replaced Rose on an interim basis in July.

She was forced to resign after admitting speaking to a BBC journalist about Farage’s account at elite private bank Coutts. Rose told the journalist that the leading Brexiteer’s account was closed for commercial reasons.

But internal reports showed that his political leanings had been a factor in the decision.

Farage accused Thwaite, who previously headed the bank’s commercial division, of being a “continuity appointment”.

Thwaite, a NatWest veteran, said yesterday it was an “honour” to take on the top job. The bank’s incoming chairman, Richard Haythornthwaite, said: ‘Paul has demonstrated an unparalleled understanding of this business, our customers and the opportunities for growth.

“We are both ambitious for this organization and I fully expect that his powerful combination of NatWest knowledge and a thoughtful and imaginative leadership approach will prove key to forging success in the rapidly changing banking landscape.”

Haythornthwaite stressed that the Government had not put pressure on the bank to confirm a permanent successor to Rose before the planned share sale.

But he said “uncertainty around the chief executive is never healthy for an organization,” adding that he began a “rigorous and competitive” process to find the next boss.

Following the excellent performance, the bank will pay a final dividend of 11.5p per share and launch a £300m share buyback.

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