Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

NatWest ramps up investor payouts as profits bounce back

07/30/2021 | 03:12am EDT
FILE PHOTO: Outbreak of the coronavirus disease (COVID-19) in London

LONDON (Reuters) -NatWest accelerated returning cash to shareholders on Friday after a return to profit, rounding out a week of vastly improved earnings for British banks as the pandemic-battered economy reopens.

The state-backed bank said it would pay an interim dividend of 3 pence per share and carry out a share buyback of 750 million pounds, returning over 1.1 billion pounds ($1.53 billion) in total to shareholders.

The improved earnings follow similarly upbeat results from rivals Lloyds and Barclays this week and show a turnaround in fortunes for banks lifted by a housebuying boom and pick-up in customer spending.

The buyback plan comes after the government unveiled a blueprint to sell up to around 2 billion pounds of shares in the open market over the next year to cut its stake below 50%, following two stock sales earlier in the year.

NatWest - renamed from Royal Bank of Scotland last year - is still 55% taxpayer-owned following its 45 billion pound bailout in 2008 at the height of the financial crisis.

The bank also raised its target for investor payouts to at least 1 billion pounds a year, up from 800 million pounds previously.

NatWest reported pre-tax profit of 2.5 billion pounds for the six months to June, well above an average of analyst forecasts of 1.8 billion pounds. The bank had slumped to a half-year loss of 770 million pounds in 2020.

However, just like rivals, NatWest was primarily boosted by releasing hundreds of millions of pounds set aside to cover pandemic bad loans. The bank freed up 707 million pounds of its own credit provisions in response to the improved economic picture.

The bank's shares fell 0.6% amid a 1% drop in the benchmark FTSE index, as investors looked past the immediate profit rebound and payouts to longer-term questions about how it will grow income.

HURDLES AHEAD

NatWest still faces significant hurdles, including an impending money laundering criminal case - the first against a UK bank - and selling off its remaining under-performing Ulster Bank assets in the Republic of Ireland.

More broadly, British banks face a tough operating environment as rock-bottom central bank interest rates squeeze lending margins and competition for fee-based business, such as wealth management intensifies.

NatWest CEO Alison Rose has also cut costs, including scaling back the investment bank NatWest Markets, since taking on the role two years ago.

Income at NatWest Markets plunged 60% in the period, as it continues to slash its fixed income business, while pandemic-related trading was less frenzied than in the prior year.

However, NatWest grew core parts of its retail business, including raking in 7 billion pounds of new mortgages as people rushed to move house before emergency tax breaks reduced last month.

Customer deposits increased by a further 35.5 billion pounds as people continued to pile up savings and had fewer opportunities to spend money during lockdowns.

($1 = 0.7173 pounds)

(Reporting by Iain Withers and Lawrence WhiteEditing by Rachel Armstrong and Tomasz Janowski)

By Iain Withers and Lawrence White


ę Reuters 2021
Latest news "Economy & Forex"
12:01pGerman CDU/CSU and SPD tied in national election - exit poll
RE
11:55aBP says nearly a third of its UK fuel stations running on empty
RE
11:32aBOX OFFICE : 'Dear Evan Hansen' Hits Wrong Notes as 'Shang-Chi' Stays No. 1
RE
10:22aU.K.'s Wise to join the New Payments Platform in Australia
RE
09:52aFM : China to advance Global Development Initiative with all parties
PU
09:40aUK's Ofgem appoints Octopus Energy to take on collapsed Avro Energy's customers
RE
09:22aCENTRAL PEOPLE GOVERNMENT OF PEOPLE RE : China-CEEC innovation cooperation highlighted to address global challenges
PU
09:07aUK opposition hints at wealth taxes on shareholders and landlords
RE
09:00aCHINA EVERGRANDE : Wall St Week Ahead-Fed's coming taper fans talk of renewed 'reflation' trade
RE
08:53aMEDIA-WHO seeks to revive stalled inquiry into origins of COVID-19 with new team- WSJ
RE
Latest news "Economy & Forex"