LONDON, Oct 27 Reuters NatWest downgraded its profit outlook on Friday, pinched by tighter competition for savers39; cash, as the lender deals with the reputational fallout from a damaging 39;debanking39; row with former Brexit Party leader Nigel Farage.

The taxpayerbacked bank reported pretax profit of 1.3 billion pounds 1.58 billion for the JulySeptember quarter, up from 1.1 billion a year earlier and broadly in line with the 1.4 billion pounds forecast by analysts in a poll compiled by the bank.

NatWest was thrown into crisis after a decision by its private bank Coutts to cut Farage as a client earlier this year led to a political backlash and ultimately cost former CEO Alison Rose her job.

The bank on Friday separately published the initial findings of a review by law firm Travers Smith into a decision by Coutts to cut Farage as a customer. It said the review found shortcomings but decided the move was lawful.

The turmoil comes at a tricky time, as the wider banking industry grapples with a tough economic outlook, a higher risk of loan defaults in a cost of living crisis, and margin pressure from fiercer competition for savings and mortgage products.

NatWest39;s net interest margin NIM a key measure of lending profitability came in at 2.94, down 0.19 percentage points as customers shifted savings from noninterest bearing savings accounts to those that paid out more.

As a result the lender downgraded its margin forecast for the full year, greater than 3 from a…