NatWest Group PLC lifted by bad debt write back, lower costs

PLC’s () profits rebounded in its first quarter as costs fell and it clawed back previous bad debt provisions as the UK economy’s outlook improves.

Operating profit before tax in the three months to end-March, 2021, rose to £946mln (2020: £519mln), which included an impairment release of £102mln largely for previous provisions in commercial banking said the FTSE100 group.

Alison Rose, chief executive, said the result reflected a good operating performance in its core businesses and modest impairment releases that reflect a better than expected loan book outlook.

“Defaults remain low as a result of the UK Government support schemes and there are reasons for optimism with the vaccine programmes progressing at pace and restrictions being eased,” she added.

Income from its retail and commercial bank arms fell by 8% due to a combination of lower interest rates, reduced consumer spending and less transactional business activity.

Net lending also fell by £1.8bn to £359bn while customer deposits rose by 3% to £12.1bn as customers reined back due to the pandemic.

Total income for the quarter at £2.66bn dropped almost 16% compared to a year ago though was up on the preceding three months.

NatWest is still 54% owned by the UK taxpayer after being rescued in the 2009 financial crash and it said its financial position remains strong even after buying back £1.1bn worth of shares in early March.

The key measure of its balance sheet strength (CET1) dipped slightly to 18.2% at the end of the quarter but that it is still very high.