NatWest chief executive Alison Rose pocketed a record £5.25million last year as profits soared.
The payout included a bonus – the first time the bank’s boss had received one since the company was rescued during the 2008 financial crisis.
Natwest’s annual profit rose by a third to £5.1 billion, benefiting from rising mortgage and loan rates.
The bank increased its overall bonus pool and said its strong performance was down to its employees.
The bonus pool for his bankers rose by almost £70m to £367.5m.
Alison Rose defended the bonus payout that gave her a 10% pay rise. She told the BBC’s Today programme: “I think a strong banking sector is positive, it allows us to support the economy and it allows us to support our customers.”
The group’s chief financial officer, Katie Murray, received a 4 per cent increase in her annual pay and took home a total salary package of £3.64million.
- Business confidence is falling, says Natwest boss
- Taxpayers no longer controlling NatWest
It was the first year of a new tightly performance-linked executive pay policy, which meant senior executives were able to take advantage of the bulging gains generated by higher interest charges.
Borrowers are facing increasing financial pressure as interest rates have risen steadily over the past year.
Alison Rose said the bank has passed rate increases on to savers and claims the bank is “helping people build regular savings habits”.
But an analysis for the BBC by rates experts Moneyfacts.co.uk showed that the increase in standard mortgage fees far outpaced that of standard savings accounts – by six times.
Interest on the bank’s variable-rate savings account was increased by just 0.55 percentage points over the course of 2022, from 0.1% to 0.65%.
Meanwhile, over the same period, the standard variable mortgage rate climbed more than three percentage points from 3.59% to 6.74%.
The bank offers other savings offers and recently increased the interest rate paid on its digital savings account to 6%. However, the account is only available to NatWest current account holders, who are only allowed to deposit up to £150 per month.
The bank said debt remained low and the number of borrowers defaulting on loans had not increased significantly.
However, in the last three months of the year, as economic conditions began to affect some customers, there was an increase in so-called Stage 3 defaults, meaning that a loss on a loan is expected.
“We’re seeing very low arrears and defaults, well below pre-Covid levels, and that’s positive, but it’s very difficult,” Alison Rose said.
However, the bank warned that the economic outlook remains uncertain, meaning its costs for 2023 will be higher than forecast while revenues will be lower than expected.
The news sent the bank’s shares down 7%.
“NatWest may have made its biggest gain since the financial crisis, but investors are much more concerned about what’s next, and that’s less positive,” said Russ Mold, investment director at AJ Bell.
The bank is now no longer majority-owned by the state and handed over EUR 2.6 billion in 2022.
The record profits and bonus payments prompted Sharon Graham, the leader of the Unite union, to call for an unexpected tax on big banks.
“It is insulting that Government ministers are insisting that NHS workers take another drastic pay cut while their big city banker friends are given carte blanche to make billions,” she said.
She said the greed of banks and energy companies is fueling the cost-of-living crisis.
“An epidemic of profiteering has brought this country to its knees – workers are not responsible and should not be paying for it.”
She called on the government to hold big companies accountable.
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