NatWest resumed dividend payments and announced a share buyback as it swung to a half-year profit and released more cash set aside for bad debts as the economic outlook improved.
The bank posted an operating profit before tax of £2.5bn for the six months to June 30 compared with a loss of £770m last year and released £707m in impairments during the half. Analysts had forecast profits of £1.8bn
A dividend of 3p a share was announced along with a £750m buyback and a pledge to increase annual shareholder distribution to £1bn for the next three years.
The buyback comes after the UK government said it planned to sell up to around £2bn in shares in the open market over the next year to cut its stake below 50%, after two stock sales earlier in the year.
NatWest – renamed from Royal Bank of Scotland last year – is still 55% taxpayer-owned after its £45bn bailout in 2008 at the height of the financial crisis.
Its return to profit comes in a week where rivals Lloyds and Barclays also announced upbeat earnings performances mainly boosted by releasing hundreds of millions of pounds set aside to cover Covid pandemic bad loans.
The bank said it now expected the 2021 full year impairment loss to be a net release as defaults remained low.
“While we see the potential for a more rapid recovery, we will continue to take an appropriate and conservative approach as the government schemes wind down and the economy reopens,” it added.
