NatWest Group has reported an increase in its quarterly earnings after its drive for efficiency resulted in cost-cutting and the trimming of about 1,000 jobs.
An operating pre-tax profit of £2.2 billion was reported by the banking group for the three months to September. This is about 2 per cent higher than the same period last year.
Meanwhile, it made around £3.6 billion in net interest income, the difference between what banks make from loans and what they pay out on deposits, which was an increase of nearly 9 per cent compared with the year before.
NatWest is not alone in seeing income rise while interest rates have stayed high, joining other high street lenders including Lloyds and Barclays.
The bank also hailed the progress it had made towards becoming a simpler and technology-driven bank.
This has led to the reduction of about 1,000 full-time staff in the quarter, taking the total of jobs lost this year to 1,400.
The recent acquisition of wealth manager Evelyn Partners has, however, brought around 2,200 staff into the group, driving up its overall headcount.
Chief executive Paul Thwaite said the “underlying shape of the workforce is changing quite a bit”, adding: “It’s important we’ve got the right skills, the right individuals in the right roles.”
He would not be drawn into whether there would be further job cuts, saying the “the first people to hear about that would be our colleagues”.
NatWest said it had managed to make cost savings of around £420 million, helping bring down its cost-to-income ratio – the amount it spends on running the business as a percentage of what it generates in income – to 45.7 per cent for the year-to-date.
This has been helped by investment into technology including AI tools, with recent trials of a spending insights helper and a fraud agent for credit card customers.
Mr Thwaite said AI was “pervasive across the organisation and it is too often framed in quite a narrow way around efficiency”.
“The way that we’re using AI is for the benefit of our customers and for the benefit of our colleagues… so from that perspective, it is pretty universal,” he said.
“Roles are changing. We’ve got new roles that are very much dedicated on AI, and we’ve got other roles that are being changed because of AI.
He stressed there are “big opportunities in respect of AI for the banking sector”.
Mr Thwaite also said there was “good resilience” in the economy overall, with customer data showing that people and businesses were continuing to spend and invest.
“It’s obvious they’re also making some deliberate choices and adjustments to reflect the circumstances,” he added.
“We can see strong spending on travel, holidays and accommodation. On the flip side, fuel prices are very obvious and major pressure points – people are spending more and buying less.”
NatWest data showed that customers were spending on average 20 per cent more a year on fuel but buying 10 per cent fewer litres.
The lending book also increased in the third quarter, driven by higher mortgage balances.
NatWest said this was led by remortgaging activity, while there had been a modest decline in demand among buyers.
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