Lawrence White and Iain Withers

LONDON (Reuters – British lender NatWest reported a 41% increase in its first quarter profit on Friday. Rising rates have boosted household incomes, but they are still likely to squeeze further.

Banks have benefited from COVID-19 Lockdowns being lifted and the higher benchmark rates. However, Alison Rose, CEO of NatWest said that she is “very conscious of the difficulties and concerns the cost of living crisis is causing”.

According to the lender’s pretax profit, 1.2 billion pounds (or $1.50 billion) was reported. This is an increase of 885 million in a previous year. It has been adjusted to remove the Irish company it had exited.

This was more than the 755,000,000 expected by analysts according to a bank poll. It was lifted by an increase of 15% in income, which is now 3 billion pounds. Lending has been boosted by Britain’s buoyant housing markets.

NatWest shares rose 1% in 0705 GMT

Although the bank did not change its economic forecasts which will be updated later this year, it could still be severely exposed to any slowdown because it is one of Britain’s biggest lenders as well as its largest business bank.

NatWest released 38,000,000 pounds of cash, which had been saved for possible defaults during the first quarter.

Rivals Barclays (LON.), Lloyds (LON.) and HSBC warned of the potential financial damage that inflation could cause to their funds, which was heightened due to war in Ukraine.

As its peer banks, the bank’s core cash ratio declined significantly from 18.2% to 15.2% in last year. Partly due to changes to regulations.

After the sale of a portion of its stock by the government, the Royal Bank of Scotland (NYSE) finally made the long-awaited transition to private majority control. This was 14 years after it received taxpayer-funded bailout at the peak of the financial crisis.

Rose, CEO of Rose Investment Bank has attempted to reduce costs further since his takeover in 2019. This includes reducing the size and performance of its Irish business as well as its mininow investment bank.

($1 = 0.7992 pounds)