NatWest's profit tripled in the third quarter as Britain's resurgent economy buoyed its finances, but its margins contracted in a sign of potentially tougher times ahead.
Shares in NatWest fell more than 5%, however, as investors looked past the headline profit figure to a shrinking net interest margin, a core measure of profitability, that highlights its biggest headache.
A contraction in its net interest margin to 1.54%, from 1.65% a year ago, shows how rock-bottom central bank rates have squeezed the income it can make from lending, leaving it reliant on hoped-for benchmark rate hikes. "Although we are seeing challenges in the economy and for our customers - especially around supply chains and the cost of living - a number of key indicators remain positive; growth is good, unemployment is low and there are limited signs of default across our book," Chief Executive Alison Rose said.
NatWest said it would not disclose the exact provision for the fine, which will ultimately be determined at a sentencing expected in December, as court proceedings are ongoing.
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