NatWest set itself up for a major sale of its shares back to the public today with a 20% leap in annual profits to £6.2 billion.
That should encourage Chancellor Jeremy Hunt to push ahead with a sale of the 35% of the stock the government still owns following a bailout in 2008.
Hunt has indicated a sale of that stake to the public could come as soon as June, providing a multi-billion pound boost to government coffers ahead of a general election later this year.
NatWest is still reeling from the Nigel Farage affair, which saw CEO Alison Rose ousted for revealing his banking details to a journalist. Rose, paid more than £5 million last year, forfeited £4.7 million in shares on her way out.
New CEO Paul Thwaite said today he is “ambitious and confident” for the future of the group. The profit figure is the best since 2007, the year before the financial crisis.
“The strength of our balance sheet allows us to support our customers and our performance is grounded in the services we have provided to help them reach their financial goals and manage their money better.”
On the share sale he told the Standard that the bank and government “have a shared ambition. They can decide the timing and the mechanics. I’d like to get the bank into private hands as quickly as possible”.
The bank is paying a final dividend of 11.5p a share taking the total return to shareholders to £3.6 billion including share buybacks.
The figures were a bit better than the City had been expecting. The impairment charge – the loss for loans that have gone bad – was £578 million which to Thwaite showed that customers are resilient.
The mortgage market has begun to pick up and large clients are keen to borrow, a positive sign for the economy.
NatWest Markets, the investment banking arm, made another loss for the year of £98 million. That was better than the £264 million loss of a year ago, but raised further questions about the future of that arm of the business.
Some City analysts say it should be scrapped. NatWest has tended to say that it performs a valuable service for big corporate clients. Thwaite indicated today he will keep the business, which employs more than 2000 in the City.
Thwaite’s appointment as permanent successor to Rose wasconfirmed today.
Incoming chairman Rick Haythornthwaite said: “Paul has shown an unrivalled understanding of this business, our customers, and the opportunities for growth. We are both ambitious for this organisation.”
Thwaite has been at NatWest since 1997.
Stuart Lamont, investment manager at RBC Brewin Dolphin, said: “The appointment of a new CEO provides NatWest with greater clarity over its future direction, after months of flux. Still, the bank is in relatively good shape – the process of simplifying its business and delivering cost efficiencies is yielding results.”
