NatWest profit soars by almost a quarter while staff bonuses swell

Russ Mould, investment director at AJ Bell, said: “NatWest’s marginally better than expected headline numbers and upgraded guidance for returns have been helped by growth in its private banking and wealth division.

“Both NatWest and Lloyds have been expanding their interests to reduce their exposure to movements in interest rates, which have a major influence on what they charge to lend money.

“Bringing in fee-paying affluent customers should, in theory, make profit more consistent and reliable.

“NatWest’s recent acquisition in the wealth management space follows on from the capture of Sainsbury’s banking business and mortgage business from Metro Bank.

“However, it does not bear any real comparison to the £49 billion capture of ABN Amro on the cusp of the financial crisis.

“This contributed to well over a decade of public ownership – something NatWest only escaped last year.

“Full privatisation and a relaxation of the rules on bankers’ pay allow NatWest more flexibility when it comes to remuneration and its decision to hike bonuses and executive pay may draw some attention.

“For shareholders, there is unlikely to be significant disquiet given NatWest’s generosity with share buybacks and dividends and the recent strong showing for the share price.”