NatWest boss: Customers becoming more ‘confident’ despite cost woes

Dame Alison Rose said the bank was seeing resilience among customers despite wider economic uncertainty and ‘very rational behaviour’ from borrowers.

NatWest chief executive Dame Alison Rose has said UK households and businesses are becoming more confident despite ongoing pressures from higher interest rates and the cost of living crisis (PA) (PA Wire)

NatWest chief executive Dame Alison Rose has said UK households and businesses are becoming more confident despite ongoing pressures from higher interest rates and the cost-of-living crisis.

Dame Alison told the Goldman Sachs European financials conference in Paris that she was seeing resilience among the bank’s customers despite wider economic uncertainty and “very rational behaviour” from borrowers.

She said borrowers were over-paying on their mortgages and paying down more expensive debts as rates jump, with no signs yet of customers across the board struggling with repayments.

But she said there were “challenges in the economy” and added that the recent jump in mortgage rates will have some impact.

She said: “What we’re seeing in the UK is a really strong, underlying resilience.

“Customers are behaving in a rational way.

“We have seen no increase in defaults or impairments and the same on the business side.”

She added: “What we’ve actually seen is an increase in confidence now.”

But she told the event that as markets increase their UK interest rate expectations – to as much as 5.75% from 4.5% currently – this will have some impact on its margins and customer behaviour.

She said NatWest’s “all-weather balance sheet” will help the group withstand any impact, as will the “still underlying, resilient performance from our customers”.

Her comments come amid turmoil in the mortgage market as lenders pull and re-price deals due to market forecasts for rates to keep rising.

The Bank of England has already increased rates 12 times in a row, but stubbornly high inflation is set to see it continue with hikes.

Its next decision is due next Thursday and most economists are pencilling in another rise, with the chances increasing for it to hike in August as well.

Dame Alison said: “We’re not seeing any material signs of distress.”

But she said lower income households are “really struggling with high inflation and high interest rates”.

“Typically these are not significant borrowers with us,” she said.

“We’re putting a lot of proactive help and support out to customers.”

The group is also “monitoring it very closely” she said.