NatWest has restored shareholder dividends after swinging back into profit, significantly beating expectations.
The state-backed bank posted a pre-tax profit of £2.5bn for the six months to June, compared with a loss of £770m the year before.
It makes NatWest the latest bank to smash forecasts, following on from both Barclays and Lloyds earlier this week.
NatWest boss Alison Rose says loan defaults remain low
Analysts had expected NatWest to report a £1.8bn profit.
The bounce back was fuelled by the release of £707m from NatWest’s “rainy day” impairment fund – cash set aside to cover loans that faced turning bad last year during the economic chaos caused by the COVID-19 pandemic.
Most of this – £605m – came in the second quarter of the year.
NatWest said that it was releasing the money after its economic outlook improved.
The business declared a 3p per share interim dividend, and will pay out £347m in total.
The UK government, which still owns a large stake in NatWest after bailing out Royal Bank of Scotland during the 2008 financial crisis, will net £190m of this payout.
The bank will also buy back shares worth up to £750m from its investors.
Chief executive Alison Rose said: “These results have been driven by good operating performances across the group, underpinned by a robust loan book and a strong capital position.
“Defaults remain low and, given the improved outlook, we have released a further £0.6bn of impairment provisions in the quarter.
“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.”