Shares of NatWest Group, the bank formerly known as RBS, fell as much as 5% on Friday despite the company announcing that its first-quarter operating profit before tax rose 40% to £1.245 billion and Q1 total income rose 17% to £3.027 billion.

NatWest said it now expects 2022 income “to be comfortably above £11.0 billion.”

The bank’s customer deposits increased by £4.2 billion in the quarter to £465.6 billon.

NatWest said its net lending increased by £6.7 billion to £359 billion in comparison to Q4 of 2021 principally reflecting retail banking mortgage growth of £2.6 billion and a £2.4 billion increase across commercial & institutional.

AJ Bell investment director Russ Mould said: “Like several of its rivals NatWest smashed forecasts but for investors the focus is much more on the outlook, which despite the boost to profit implied by rising interest rates, is heavily clouded by the risk of an increase in bad debts linked to the cost-of-living crisis.

“Households are under such severe financial pressure that it seems almost inevitable that some of the bank’s customers will get into difficulty.”

NatWest CEO Alison Rose said: “The world has changed considerably during the last three months.

“Our thoughts are with everyone affected by the invasion of Ukraine and we are doing all that we can to support them.

“We are also very aware of the challenges and concerns the cost-of-living crisis is causing for many of our customers up and down the country.

“NatWest Group is focused on providing practical help and support for the people, families and businesses we serve.

“Despite the challenging environment, I am pleased with our performance as we continue to execute well against our strategy, driving sustainable growth and returns.

“Income and profits are substantially up, costs are down and we remain well capitalised as we build long-term value and deliver a simpler and better banking experience for our customers.

“Government ownership also reduced to around 48% in Q1; the first time it has fallen below 50% since the financial crisis.

“This was an important milestone for our bank and a further demonstration of the progress we are making as we continue to deliver for our customers and shareholders.”