NatWest has cut around 1,400 jobs this year as part of a £420m cost-saving drive, while reporting an operating pre-tax profit of £2.2billion for the three months to September, up about 2% on the same period last year.
The banking giant made around £3.6billion in net interest income – the difference between what banks earn on loans and what they pay out on deposits – a jump of nearly 9% compared with the year before.
Workforce changes and growth
NatWest joins other high street lenders, including Lloyds and Barclays, that have reported income increases while interest rates have remained high. The group has hailed its progress towards becoming a simpler, tech-driven bank, which has led to the reduction of about 1,000 full-time staff in the quarter, bringing the total of jobs lost to 1,400 so far this year.
However, the recent acquisition of wealth manager Evelyn Partners has 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 on whether there would be further job cuts, saying the first people to hear about that would be NatWest colleagues.
Cost savings and AI investment
The lender said it had managed to make cost savings of around £420million, 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% for the year-to-date. This has been helped by investment in 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. He said: “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. 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” from AI in the banking sector.
Economic resilience and customer spending
Mr Thwaite also said there was good resilience in the economy overall, with customer data showing people and businesses were continuing to spend and invest. The CEO said: “It’s obvious they’re also making some deliberate choices and adjustments to reflect the circumstances. 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 customers were spending on average 20% more a year on fuel, but buying 10% 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.
