As NatWest posts £3.6bn in profit, the lender told… handing higher savings rates

NatWest came under further pressure to pass on the benefits of higher interest rates to savers or let them know if better offers could be found elsewhere.

Harriett Baldwin, chairman of the Commons Treasury committee, called on the banking giant and its rivals to stop “dragging” about raising savings rates.

“If the big banks continue to pay bad savings rates on their instant accounts, they need to make sure their customers know better rates are available. They seem to have no problem passing on higher rates to their existing borrowers,” she said.

She added: “As the government, the regulator and the governor of the Bank of England agree with the committee that action is needed, the time for whining and flimsy excuses is over.”

Baldwin’s comments echo those of Chancellor Jeremy Hunt, who has supported the Financial Conduct Authority’s efforts to get banks to pass better savings rates on to customers.

It came as NatWest reaped huge profits by raising interest payments on its loans, while the Bank of England appeared ready to raise rates again next week. The FTSE 100 company reported a profit of almost £3.6 billion for the six months to the end of June, compared to £2.6 billion in the same period last year.

The performance was boosted by a big increase in what it earned from charging interest, as it earned £5.7bn compared to £4.3bn in 2022.

Investors were also cheered by the unveiling of a £500 million share buyback, with £190 million going to the Treasury.

Shares rose 2.3 percent, or 5.6 pence, to 245.5 pence after the results.

The gain comes as NatWest law firm Travers Smith has been appointed to investigate how it handled the Nigel Farage affair, which led to the resignation of chief executive Dame Alison Rose this week.

It also looks at how many other accounts Coutts has closed lately and for what reasons.

The report can lead to more departures if the findings show that the client’s confidentiality has been violated.

Banks have benefited greatly from the recent interest rate hikes, which have risen from 0.1 percent to 5 percent since December 2021, the highest level since 2008.

Another hike is expected next Thursday, with markets predicting the Bank of England to raise rates by at least a quarter of a percentage point to 5.25 percent. Banks have been heavily criticized for immediately raising interest costs on loans – especially mortgages – when it took much longer to increase payouts to depositors.

NatWest bosses insisted yesterday that about 75 percent of the benefits of the last two rate hikes had been passed on to savers.

But the period of rising interest rates that fueled huge profits seemed to be drawing to a close as it predicted its net interest margin – the difference between what the bank charges in interest on loans and what it pays on its deposits – will grow to about 3.15 percent this year. would amount to. , lower than previous forecasts of 3.2 percent.

It followed similar ratings this week from rivals Barclays and Lloyds.

In its second-quarter results, Barclays forecast its own net interest margin to narrow from 3.2 percent to 3.15 percent as customers responded to rising interest rates by paying off debt early and shifting money to more lucrative savings products.

Lloyds, meanwhile, said its profits had been hit by increased competition for mortgages and savings amid growing political pressure to pass on the benefits of rate hikes to customers.