NatWest Group has announced a major share buyback program after returning to profit last year following a lending boom as the UK economy rebounded.
The banking giant said it would buy up to £750m of its own shares in the first half of this year and return £3.8bn to investors via a dividend of 7.5p per share .
This includes £1.7bn for the UK government, which has a slight majority stake but has reduced its holdings since last March as part of plans to take the bank fully private.
Throwback: NatWest rebounded from a pre-tax loss of £481m in 2020 to a pre-tax profit of £4bn last year as the group posted more than £1.3bn of provisions for loan losses
Corporate bankers are also set to receive £298million in bonuses between them, up from £200million the year before, but a figure slightly lower than the year before the pandemic.
This follows NatWest rebounding from a pre-tax loss of £481m in 2020 to a pre-tax profit of £4bn last year as the group released more than £1.3bn pounds sterling he had set aside for possible defaults during the early stages of the Covid-19 pandemic.
It has further benefited from a boom in the UK property market propelled by the stamp duty holiday, historically low interest rates and a growing desire among Britons to live in more spacious places.
A £7.8bn rise in mortgage lending helped boost revenue for the group’s retail banking and private banking divisions, with the latter receiving a further boost from the sale of its Adam investment management business. & Company.
At the same time, customer deposits rose by nearly £50billion as store lockdown restrictions prompted customers to put more money aside for a rainy day.
But while profits and deposits rose, the company’s total revenue held steady as its investment banking arm suffered from major restructuring and lower client activity volumes.
Housing boom: NatWest Group has seen mortgages rise thanks to stamp duty exemptions, low interest rates and Britain’s growing desire for bigger homes
Profits were also hit by a £265million fine for its failure to prevent money laundering by a Bradford-based jeweler who deposited huge sums of cash – some in black bin bags – at a branch of NatWest in Walsall for three years.
“We deeply regret that we did not adequately monitor one of our clients between 2012 and 2016 to prevent money laundering,” Chief Executive Alison Rose said.
“And although the case is now closed, we continue to invest significant resources in the ongoing fight against financial crime and fraud.”
Amid an intense cost-of-living crisis, Rose also admitted the bank was “extremely aware of the challenges many individuals, families and businesses continue to face across the country.”
Cost of living: CEO Alison Rose said the bank was “very aware of the challenges that many individuals, families and businesses continue to face across the country”.
While the bank said the economic outlook was uncertain, it expects revenue to exceed £11bn this year and intends to keep dividend payouts at around 40% of attributable profit.
Interest rate hikes by the Bank of England to combat high inflation for three decades should provide another boost to the FTSE 100 group, on top of the two recent increases since December.
Mark Crouch, analyst at trading platform eToro, said: “The best is yet to come for the bank, which really only had a hint of interest rate hikes in its results.”
“NatWest is a company that is never far from some controversy, but the tailwind it will feel in 2022 thanks to the Bank of England will make a more compelling argument than usual for investors.
“That being said, the company still has headaches to manage in the form of potential loan losses as the economy begins to struggle this year and costly digital upgrades are desperately needed to drag the bank towards something akin to competitive tech against a FinTech bank. boom.’
The positive results did not prevent the company’s shares from falling 3.9% to 230.9p just after 11am on Friday.
Financial services firm TBC Bank also posted record levels of annual profits today as an exceptionally robust rebound in the Georgian economy boosted lending levels.
Pre-tax profits for the year nearly tripled to 921m Georgian lari (£226m) as net interest and non-interest income grew and the loan portfolio and customer deposits having increased by 18% and 25%, respectively.