The UK government expects to pay £1 billion from its nearly 50 percent stake The NatWest Groupdespite a fall in the bank’s second-quarter profits and “uncertainty” about the UK’s economic outlook.
On Friday, NatWest said it was ready to issue a dividend of 20.3 per share after reporting “strong growth” in lending and deposits across the business, including thanks to higher interest rates which meant it could charge borrowers more than loans and mortgages.
Almost half of the dividend – around £1bn – will go to the Treasury, which still owns 48% of the bank following a £46bn government bailout at the height of the 2008 banking crisis.
The payout to shareholders comes despite a fall in profits between April and June, which fell 5% to £1.4bn from £1.5bn a year earlier. However, that was better than the £940m analysts were expecting, according to consensus estimates.
The figures exclude the financial impact of Ulster Bank in Ireland, which is in the process of selling off its loan books as NatWest winds down the business.
The bank also issued £18m of bonds that were initially set aside to deal with potential defaults. This is despite “uncertainty” in the economic outlook, including inflation, which already reached a 40-year high of 9.4% in June.
Chief executive Alison Rose said the lender was watching for signs of financial stress and was working to support struggling customers as prices continued to rise.
“We know that the continued rise in the cost of living is affecting people, families and businesses across the UK and we have introduced a range of targeted measures to support those who are likely to need it most. Our high levels of profitability and capital generation mean we are well placed to provide such support.
“By building deeper relationships with our customers at every stage of their lives, we will ensure sustainable growth and help them thrive in challenging environments,” she said.