NatWest reports operating profits of £2.5bn in H1

Jake Carter

July 30, 2021

NatWest has reported operating profits before tax of £2.5bn in H1 2021, compared with an operating loss before tax of £770m in H1 2020.

The lender’s financial results also show in H1 2021 attributable profits of £1.8bn.

Income across the UK and RBSI retail and commercial businesses, excluding notable items, decreased by £160m, or 3.3%, compared with H1 2020, reflecting the lower yield curve and subdued transactional business activity, partially offset by balance sheet growth.

NatWest Markets (NWM) income, excluding asset disposals/strategic risk reduction and OCA, decreased by £492m, or 59.6%, compared with H1 2020 reflecting the exceptional level of market activity generated by the spread of the COVID-19 virus in the prior period, together with weak performance in the fixed income business in the current period.

Bank net interest margin (NIM) of 1.61% decreased by three basis points compared with Q1 2021 principally reflecting increased levels of liquidity.

Other expenses, excluding operating lease depreciation (OLD) and Ulster Bank RoI direct costs, were £185m, or 5.9% lower than H1 2020.

A net impairment release of £707m in the first half of 2021 mainly reflects releases in non-default portfolios as a result of the improved economic outlook.

As well as this, CET1 ratio of 18.2% was in line with Q1 2021 and the liquidity coverage ratio (LCR) of 164%, representing £75.3bn headroom above 100% minimum requirement, increased by 6 percentage points compared with Q1 2021, reflecting the continued growth in customer deposits.

Net lending increased by £2.2bn to £362.7bn during H1 2021. Across the UK and RBSI retail and commercial businesses, net lending excluding UK government support schemes, increased by £4.1bn, or 2.8% on an annualised basis, including £7.0bn of mortgage growth.

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