For a bank like NatWest, an interest rate rise is warmly welcomed news. It means the spread increases between the rate it’s borrowing at and what it’s charging for interest on customers’ loans.
Although rates have risen, NatWest customers probably aren’t about to see more interest in their current accounts. They’re not going to benefit here, but NatWest is. That’s because the bank’s not worried about luring in more customers eager to make deposits.
NatWest doesn’t need to entice them with higher deposit rates – it’s already got enough cash on hand.
It’s all about raising the rates it charges on loans. NatWest’s Q4 net interest margin reached 2.38% – 3 basis points higher than the previous quarter.
That’s NatWest’s profit engine, and so long as it can keep widening that as rates rise, it’ll keep strutting through 2022.
So slowly but surely, NatWest’s getting back up on its feet. Its share…
