Having gorged itself on acquisitions in the run up to the financial crisis, Natwest (formerly Royal Bank of Scotland) feels like it has been in a slimming down process for much of the last decade and more.
The latest move to shake off some excess weight comes as the group confirms plans to exit its Irish business. While this might eventually release some capital, the process looks set to take some time.
“The rest of the report card on Natwest’s results would be a bit mixed, as dividends were reinstated at the maximum level stipulated by the regulator and provisions for bad loans were slightly below expectations but margins and overall returns looked pretty weak,” says AJ Bell.
“This reflects the extremely difficult backdrop faced by Natwest and other banks. Interest rates are still extremely low, with the potential threat of negative rates simmering in the background, the economy is facing a huge shock and many people who can afford to are paying down debt, while avoiding big purchases on credit.
“Natwest wants to place the focus on its medium-term ambitions to boost returns by increasing lending in its core UK market and reducing costs, while benefiting from an anticipated reduction in impairments.
“These are laudable ambitions but chief executive Alison Rose, in post for a little more than a year, wouldn’t be the first person at the helm to attempt a revival of Natwest’s fortunes and yet, for all these efforts, it remains 62% owned by the state.”