The UK government is in line for a £1bn payout from its near-50% stake in NatWest Group, despite a dip in the bank’s second quarter profits and “uncertainty” over the UK’s economic outlook.
NatWest revealed on Friday it was poised to issue dividends worth 20.3p a share, after reporting “strong growth” in lending and deposits across the business, thanks in part to rising interest rates that meant it could charge borrowers more for loans and mortgages.
Nearly half of the dividends – about £1bn – will be handed to the Treasury, which still owns 48% of the bank’s shares after its £46bn state bailout at the height of the 2008 banking crisis.
The shareholder payout comes despite a dip in profits between April and June, which fell 5% to £1.4bn, down from £1.5bn a year earlier. However, that was better than the £940m that analysts had expected, according to consensus estimates.
The figures exclude the financial impact of Ulster Bank in Ireland, which is in the process of having its loan books sold as NatWest winds down the business.
The bank also released £18m that had originally been put aside to deal with potential defaults. That is despite “uncertainty” over economic forecasts, including the path of inflation which already hit a 40-year high of 9.4% in June.
The chief executive, Alison Rose, said the lender was keeping an eye on signs of financial strain and was working to support struggling customers as prices continue to climb.
“We know that continued increases in the cost of living are impacting people, families and businesses across the UK and we have put in place a range of targeted measures to support those who are likely to need it most. Our strong levels of profitability and capital generation mean we are well positioned to provide this support.
“By building deeper relationships with our customers at every stage of their lives, we will deliver sustainable growth and help them to thrive in a challenging environment,” she said.