The bank are anticipating a ‘new, forward-looking chapter’ once it returns to fully private ownership. NatWest has reported a bigger-than-expected profit for 2024 as the bank edges closer to returning to private ownership. Chief executive Paul Thwaite said shedding the Government’s shareholding would mark a “new, forward-looking chapter” for the British lender. The group told investors it made an operating pre-tax profit of £6.2bn last year, about 0.3 per cent higher than in 2023. This was slightly ahead of the £6.1bn profit some analysts had been expecting.
Shares in the bank on the London Stock Exchange were down around 3.8 per cent by 11am GMT despite the positive results, with Russ Mould of AJ Bell saying “the market has already priced in that success” and noting that “investors were upset there wasn’t enough in the forward guidance to warrant large upgrades to earnings forecasts,” resulting in some profit-taking since shares are up over 100 per cent across the past year.
Mr. Thwaite’s new pay structure will be put to shareholders to vote on at the AGM in April. NatWest said it benefited from lending growth during the year, with mortgage demand increasing as the property market improved and after acquiring Metro Bank’s loan book. Deposits also increased year-on-year as savings balances grew, offsetting a decline in current account balances. The retail bank nonetheless generated less income than in 2023, as borrowing costs started to come down and more people moved savings into accounts with higher interest rates.
This means the bank generates less from loans, but pays out more for savings. Household savings continue to increase, and with interest rates coming down, spending is likely to pick up this year, Mr Thwaite suggested. Sentiment “certainly dropped in the fourth quarter” of 2024, amid businesses reacting to tax policy changes announced in the autumn Budget. But I do think there are some grounds for optimism based on falling interest rates, falling inflation, stronger housing market and a pick-up in business investment,” he said.
Meanwhile, the Government’s stake in NatWest has dropped to below 7 per cent as the bank continues on its path to privatisation, which it expects to reach during the first half of 2025. The Treasury spent almost £46bn to bail out RBS during the financial crisis of 2008, with a slow sale of shares now reducing that to the point that June may mark a full return to private ownership. NatWest announced that £1.2bn, or 15.5p a share, will be paid out to shareholders which the Guardian reports means the Treasury, which at its current sub-7 per cent holding, would receive around £84m of.
Mr Thwaite said the bank is optimistic about opportunities to grow the business “as we enter a new, forward-looking chapter”. He added it is continuing work to build a “simpler, more integrated and technology-driven bank” with it targeting cost savings across the business. This saw the bank’s total workforce cut by more than 3 per cent in 2024, incorporating a 10 per cent reduction in workers across its retail banking operations.
Separate accounts released by the bank show it handed out about £467 million in bonuses across eligible staff last year. This was a quarter higher than the 2023 bonus pool of £356 million, which it attributed to a stronger financial business. Rival bank Barclays, which has a bigger investment bank, said on Thursday it distributed £1.9bn in bonuses to staff last year after growing its annual profit.
