Natwest to hand out £3billion to investors as profits bounce back

NATWEST turned the dividend taps back on yesterday as it hailed the UK’s growing recovery from the pandemic.

Alison Rose, the state-owned bank’s chief executive, said there are signs of a ‘good recovery in the economy’ as lockdown restrictions ease and consumers ramp up spending again.

As a result, Natwest said it has this year released £707m previously put aside for bad loans and vowed to return £3bn to investors over the next three years.

This includes a £347m, or 3p per share, interim dividend and a £750m share buyback scheme.

The lender, formerly Royal Bank of Scotland, is the latest to begin unwinding financial fortifications it built up during the pandemic as the economic picture improves, after Lloyds and Barclays announced similar moves this week.

Natwest put an extra £2.4bn aside for bad loans at the height of the pandemic due to concerns about a wave of business defaults and job losses, taking its total provisions to £6.2bn. However, that figure has now fallen to £4.9bn.

Yesterday, Natwest said the economic impact of the crisis had been cushioned by government support schemes, while the booming housing market and a strong recovery since restrictions have eased are also seen as positive signs.

Rose (pictured) stressed that Natwest was still taking a ‘cautious’ approach but added: ‘Defaults remain low.

‘We are seeing consumer spending, particularly in debit and credit cards, coming back to pre-Covid levels, particularly as we come out of the lockdown.

‘Our view on the economic recovery is we are more optimistic. It’s early days, but the signs are very good.’

In another positive signal, the chief executive said that so far 92pc of firms that took out government-backed ‘bounceback loans’ have managed to keep up with repayments or are ahead of them. Almost 5pc of loans been paid down in full already.

Card balances grew by £100m during the three months to June 30, with debit and credit card spending almost back to pre-pandemic levels. However, at the same time, deposits continued to grow in the three months to June, suggesting that saving habits some developed during repeated lockdowns may turn out to be lasting.

Rose said the ‘big question’ was whether this trend would persist as international travel restrictions are lifted.

Natwest swung back into the black, from a £1.3bn quarterly loss to a £1.6bn profit in the three months to June 30.