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NatWest announces £346m dividend despite falling to loss

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·3-min read
A NatWest Bank cash out sign in Newcastle-under-Lyme, England. Photo: Nathan Stirk/Getty Images
A NatWest Bank cash out sign in Newcastle-under-Lyme, England. Photo: Nathan Stirk/Getty Images

NatWest Group (NWG.L) has reinstated its dividend even as the bank fell to a full-year loss.

The bank, which was known as Royal Bank of Scotland until last year, fell to a loss of £351m ($490m) last year on income of £10.8bn. Analysts were expecting a pre-tax profit of £1.3bn in 2020 on income of £10.8bn.

The operating loss came as a result of provisions taken during the year to cover an expected spike in bad loans. NatWest set aside a total of £3.2bn in 2020 to cover future losses linked the COVID-19 crisis, including a £130m charge in the final quarter. Analysts had expected annual loss provisions of £3.5bn.

The bank announced a final dividend of 3p per share, worth £364m. It follows the Bank of England's decision in December to lift a ban on investor payouts during the COVID crisis.

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£225m of the dividend will go to the UK government, which still owns around two thirds of NatWest after its financial crisis-era bailout. The bank said it plans to distribute at least £800m to shareholders each year up until 2023.

"Despite reporting a loss for the year, NatWest Group delivered a resilient underlying performance in a challenging operating environment," chief executive Alison Rose said in a statement.

"The bank continued to grow in key areas such as mortgages and commercial lending and our balance sheet remains strong, with one of the highest capital ratios amongst our UK and European peers.

"We have today announced our intention to pay a final dividend whilst reaffirming our commitment to regular capital returns for shareholders in the future.”

Shares fell 1.3% in early trade.

NatWest Group shares slipped in early trade in London. Photo: Yahoo Finance UK
NatWest Group shares slipped in early trade in London. Photo: Yahoo Finance UK

NatWest made a quarterly profit of £64m on income of £2.5bn in the final three months of the year. Analysts in the City had forecasts of a £1m quarterly loss on revenue of £2.5bn.

Bonuses for staff declined in 2020. The bonus pool was down by around a third to £206m.

Alongside results, NatWest announced plans to pull out of the Republic of Ireland. NatWest said it would sell-off its Ulster Bank business in the Republic over the coming years as part of a phased withdrawal.

NatWest is the second major British bank to report result, following numbers from Barclays (BARC.L) on Thursday. Barclays' earnings and revenues beat forecasts and the lender reinstated a dividend, alongside a newly announced share buyback scheme. However, shares sunk as the dividend was less than hoped for and the bank's outlook for the year ahead was cautious.

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