A drop in customer deposits, while nothing like on the scale seen at other crisis-ridden banks, has helped put the wind up investors in NatWest.
The gap between the amount NatWest charges for loans compared to what it pays out for deposits, also known as the net interest margin, is also tighter than many had hoped.
AJ Bell’s Russ Mould said: “This runs counter to Barclays’ own first quarter numbers which showed higher base interest rates were feeding into a strong net interest margin.
“The disappointing news elsewhere overshadowed NatWest’s better than expected earnings for the first quarter – driven by higher non-interest income and lower impairments on bad debts.
“It felt telling that full year guidance remained unchanged off the back the performance in the first three months of the year, including on the level of impairments, implying NatWest is expecting a deterioration in the credit outlook.
“Given its history of state ownership and uneven recovery from the credit crunch, NatWest has to work hard to earn the trust of the market and updates like today’s do not help.
“It was no surprise to see NatWest’s close lookalike Lloyds pulled lower ahead of its own results on 3 May.”