NatWest Profits Triple To £1bn After A Spike In Mortgage Lending – – Daily Cryptocurrency and FX News

NatWest Bank branch in London

NatWest Bank releases £242m worth of provisions due to a stronger global economic position.

Following a jump in mortgage lending and a recovery in the economy despite setting aside cash to cover fines linked to money-laundering charges, NatWest Group tripled its profits in the third quarter to a better than expected £1.1bn.

In the three months that ended on September 30, the bank, which is majority-owned by the taxpayer, said the stronger economic position had allowed it to release £242m worth of provisions which it had made to cover a potential rise in defaults because of the coronavirus pandemic.

That amount compares with the £254m it put aside during the same period last year. Analysts had expected the bank to take a further £40m charge. NatWest’s chief financial officer, Katie Murray stated:

“Despite reports of an increase in company insolvencies, the bank is in a very good situation. So if there is an uptick, we’re not seeing it coming through yet, which is why we were comfortable to release what we released.”

The lender added:

“We will continue to assess this position as we see the impact within the economy of the UK government support measures winding down and we emerge from the pandemic”.

A £294m worth of litigation and conduct costs related to the money-laundering charges were offset with the release of the provisions. NatWest, earlier this month, admitted to three counts of failing to properly monitor £365m deposited into the account of a Bradford jeweler.

Under anti-money-laundering laws in the UK, it was the first time a financial institution had faced criminal prosecution and could result in a fine of up to £340m. A judge will determine the final figure at a hearing expected to take place in December. The chief executive, Alison Rose, said:

“There was no criminal intent on behalf of the bank or any of its staff, and we deeply regret what happened, and are much focused, and take our responsibilities very seriously.”

Increased lending also benefited the bank, including £2.5bn worth of mortgages.

This helped lift its third-quarter pre-tax profits from £355m this time last year to £1.1bn, and higher than the £677m expected by analysts.

National Westminster Bank

On Friday morning, NatWest shares, despite the strong results, fell 4.4% to 220p a share, making it one of the worst performers on the FTSE 100.

Michael Hewson, the chief market analyst at CMC Markets UK said: “Having seen decent numbers from Lloyds and Barclays, expectations were high for NatWest Group’s third-quarter numbers today. NatWest’s share price has been a notable outperformer so far this year, its shares up over 35%, and at 20-month highs, so the bar was quite high for today’s third-quarter numbers.”

Rose was quick to add:

“NatWest continued to deliver a strong operating performance; growing in key areas and accelerating our digital transformation to improve customer experience and make our business more efficient.”

“Although we are seeing challenges in the economy and for our customers – especially around supply chains and the cost of living – a number of key indicators remain positive; growth is good, unemployment is low and there are limited signs of default across our book.”

The fourth quarter appears bright for the banking sector around the world with the effects of the pandemic easing with the vaccine rollouts.

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