Gross new mortgage lending hits eye-catching levels
NatWest Group has announced robust performance in 2022, with pre-tax profit up by more than a third to £5.1 billion.
With the bank’s strong financial performance and delivery against targets, it has increased banker bonuses by nearly £70 million to £367.5 million as the 45% state-owned bank achieved its largest profit since the 2008 financial crisis.
NatWest’s net lending increased by £7.3 billion to £366.3 billion during 2022, primarily reflecting £14.4 billion of growth in retail banking mortgages, with gross new mortgage lending of £41.4 billion. Net impairment charge was set at £337 million, or nine basis points of gross customer loans.
We’ve released our 2022 Annual Results.
— NatWest Group (@NatWestGroup) February 17, 2023
See our key numbers and find out more here: #NatWestGroupResults https://t.co/tkGWstH8Qs pic.twitter.com/xqcbFhJv7Z
“We made considerable progress against our strategic goals, maintained a well-balanced loan book, and distributed significant capital to our shareholders, including the UK government,” Alison Rose (pictured), chief executive at NatWest, stated in the annual results announcement.
“Despite not yet seeing significant signs of financial distress among our customers, we are acutely aware that many people and businesses are struggling right now and that many more are worried about what the future holds.
“Our robust balance sheet, responsible lending, and continued capital generation allow us to proactively support those who need it, while helping others to get ahead of the challenges to come.”
Rose, who received a £5.25 million bonus, added that NatWest’s financial strength would allow them to continue investing in business to meet changing customer needs.
“By building long term relevance, trust, and value through our purpose-led strategy, we will deliver sustainable returns and, ultimately, help to drive economic growth across the UK,” she stated.
NatWest’s performance – Brokers react
Samuel Mather-Holgate of Swindon-based advisory firm Mather & Murray Financial, pointed out that while the data shows significant growth from last year, this is being compared to a year that was “stagnant at best,” following the major effects on the market of COVID-19.
“The loan impairment charge is interesting,” Mather-Holgate remarked. “Barclays was significantly higher, but that’s because they offer lending in the US at a level that NatWest doesn’t. It might imply the UK housing market is in a stronger position than our cousins across the pond.”
Graham Cox, founder of the Bristol-based broker SelfEmployedMortgageHub.com, noted that NatWest is “one of the more cautious lenders.”
“For self-employed applicants, they only lend four times the income, and the industry standard is 4.5 times,” Cox said. “So that may be part of the reason for the much lower impairment charge compared to Barclays. The government no doubt imposes strict controls as it still owns a sizeable stake in NatWest’s parent, RBS.”
Riz Malik, director at Southend-on-Sea-based R3 Mortgages, said that it would be interesting to see if net lending grows similarly in 2023, given the current economic outlook.
“At least the government and Treasury stand to benefit from the positive results given their significant ownership,” Malik remarked.
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