NatWest surged back into profit last year as the UK economy rebounded from the worst disruptions of the pandemic.
A booming mortgage market and fewer bad loans than forecast helped the state-owned bank to a net profit of £2.95bn last year, a sharp reversal from a £753mn loss in 2020.
Like its UK rivals, NatWest has benefited as the wider economic recovery fed demand for loans and sustained a hot mortgage market.
The bank, which is majority-owned by the UK government following its 2008 rescue during the financial crisis, began reversing its provisions for bad loans last spring. NatWest added to that on Friday as it reversed a further £1.3bn of provisions.
“As our economy recovers and the trend towards digital services accelerates, we are investing to deliver long term value in the bank and drive sustainable growth,” said chief executive Alison Rose.
The bank’s net lending last year, including loans made via government support programmes, rose 2.8 per cent to £352.3bn.
For the final three months of the year, NatWest’s net profit jumped to £434mn compared with a loss of £109mn in the year earlier period.
Following its return to profit, the bank said it would pay a 7.5p final dividend and announced a share buyback of £750mn.
Although an improved economic backdrop has helped lift the lender’s share price over the past year, the bank’s reputation took a hit when it became the first institution to face criminal prosecution from the Financial Conduct Authority under anti-money laundering laws. It was given a £264.8mn fine.