NatWest Group Sees Profits Up 82% Following Reduction in Bad Debt Provisions
NatWest Group saw an 82% rise in first-quarter profits as it joined rivals Lloyds and HSBC in reducing reserves for debt that could turn sour due to the pandemic.
The taxpayer-backed group, which is 59.8% government-owned, reported pre-tax operating profits of £ 946m for the first three months of 2021 from £ 519m a year earlier .
He has released £ 102million in cash set aside for loans that may not be repaid due to the coronavirus crisis.
A year earlier he invested £ 802million for loan losses and cashed £ 3.2million for those provisions over the whole of 2020.
Profits in the sector are rising as banks begin to reduce their loan loss reserves thanks to a better economic outlook for the UK due to the vaccination program and the lifting of foreclosure restrictions.
HSBC said on Tuesday it had released US $ 435 million (£ 313 million) in loan loss reserves, with Lloyds Banking Group also reducing its provisions by a net £ 323 million.
But NatWest – renamed Royal Bank of Scotland last year – has not changed its outlook for the full year as it remains cautious in the current economic uncertainty and with Covid-19 business loans due to be repaid.
Managing Director Alison Rose said: “Defaults remain low due to UK government support programs and there is reason for optimism as vaccination programs progress at a steady pace and restrictions are relaxed.
“However, uncertainty persists for our economy and for many of our customers due to Covid-19.”
The group saw new gross mortgages soar to £ 9.6bn, from £ 8.4bn in the previous three months, as it benefited from the boom in the property market boosted by the vacation of stamp duty.
Customer deposits at retail banks have also jumped £ 7.3bn, or 4.2%, to £ 179.1m since the end of 2020, as spending slumped and economies shrank. increased in case of locking.
The first quarter figures mark a significant improvement over last year, when the group fell to a loss of £ 351m from operating profits of £ 4.2bn in 2019.
But the group faces a lawsuit next month after the Financial Conduct Authority (FCA) launched criminal proceedings in March against the bank for alleged breaches of money laundering rules.
The city watchdog claims that NatWest’s systems and controls failed to properly monitor and investigate suspicious activity, which took place between November 11, 2011 and October 19, 2016.
The case is due to be heard at Westminster Magistrates’ Court on May 26.