SHARES in Royal Bank of Scotland owner NatWest Group fell sharply this morning as the chief executive of the state-back lender acknowledged the impact of supply chain disruption and labour shortages on the economy.
The bank reported an operating profit of nearly £1.1 billion for the quarter ended September 30, around three times higher than at the same stage last year, with Alison Rose declaring that it remains “cautiously optimistic” over the outlook.
Ms Rose said loan defaults remain low as the bank released a further £242 million of impairment provisions in the quarter. She noted demand was in the economy was rebounding, employment levels were good and spending on credit and debit card spending was recovering to pre-Covid levels.
However, in a call with journalists this morning, Ms Rose cautioned “we are seeing… challenges on the supply chain” for small and medium-sized businesses, which she observed was related to the “speed of the economic recovery” and “how tightly supply chains have been wound down.”
Ms Rose said: “You are seeing disruption to the supply chain and that is definitely causing some impact. Costs are going up and you are seeing some inflationary pressure as a result of that… and over the last few weeks we are seeing that is affecting confidence from a business perspective.
“In particular, businesses talk to me about skills shortage and access to labour, so all of those elements are causing business confidence to drop a little, and as you know confidence is a really important thing for future investment.
“Having said that, we still remain cautiously optimistic about the economic recovery.”
Shares were trading down 5.4 per cent, or 12.6p, around 9am.
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