NatWest shares rise as it resumes dividends

NatWest-RBS CEO Alison Rose

Shares of NatWest Group — formerly known as RBS — rose about 4% on Friday after it announced that its 2020 loss was smaller than analysts had expected and that it has resumed dividends.

NatWest Group reported a pre-tax loss of £351 million for the year, better than an average of analyst forecasts of a £418 million loss as bad loans came in below expectations.

The group posted an operating profit before tax of £64 million for the fourth quarter of 2020, compared to the loss expected by analysts.

Customer deposits rose £62.5 billion to £431.7 billion in 2020.

NatWest has recommended a final dividend of £364 million, or 3p per ordinary share, subject to shareholder approval at its Annual General Meeting on April 28.

The bank remains about 62% taxpayer-owned as a legacy of its UK state bailout in the 2007-09 financial crisis — meaning the UK government will receive about £225 million of £364 million.

Further, NatWest Group said it intends to “maintain ordinary dividends of around 40% of attributable profit and aims to distribute a minimum of £800 million per annum from 2021 to 2023 via a combination of ordinary and special dividends.”

The bank added: “NatWest Group intends to maintain the required capacity to participate in directed buybacks of the UK Government stake and recognises that any exercise of this authority would be dependent upon HMT’s intentions and is limited to 4.99% of issued share capital in any 12 month period.”

Nat West said its 2020 total income fell to £10.8 billion from £14.2 billion. Full year 2020 net impairment losses were £3.2 billion.

NatWest Group CEO Alison Rose said: “Despite reporting a loss for the year, NatWest Group delivered a resilient underlying performance in a challenging operating environment.

“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.

We made strong progress in executing the strategy we set out in February 2020 as we build a relationship bank for a digital world; a bank that will meet the rapidly evolving needs of our customers at different stages of their lives through an ever-increasing focus on digital and transformation.

“In turn, this will drive sustainable, long-term returns to our shareholders.

We cannot be certain of the long-term impact of the pandemic.

“But we can be certain that our bank will continue to support those who need it most as we build back better.

“By championing potential and helping people, families and businesses to rebuild and thrive, we will succeed together.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.