RBS parent NatWest boosts investor payouts but pledges help for cash-strapped customers

Royal Bank of Scotland parent NatWest is to give shareholders a special £1.8 billion payout after a hike in profits, but acknowledged that its customers are being impacted by the cost-of-living crisis.

The banking giant said pre-tax operating profit hit £2.6 billion in the first-half period, up 13 per cent and ahead of what analysts had been forecasting.

The group said it has released £46 million from the impairment charges that it had previously set aside for defaults. It declared an interim dividend of 3.5p per share and a special dividend of 16.8p per share, equating to some £1.8bn.

Chief executive Alison Rose said: “NatWest Group delivered a strong performance in the first half of 2022, building on two years of progress against our strategic priorities.

“We are growing our lending to customers and continuing our £3bn investment programme to create a simpler and better banking experience whilst delivering sustainable dividends and returns for our shareholders.”

She added: “We know that continued increases in the cost of living are impacting people, families and businesses across the UK and we have put in place a range of targeted measures to support those who are likely to need it most. Our strong levels of profitability and capital generation mean we are well positioned to provide this support.

“By building deeper relationships with our customers at every stage of their lives, we will deliver sustainable growth and help them to thrive in a challenging environment.”

John Moore, senior investment manager at wealth management firm Brewin Dolphin, said: “Today’s results from NatWest show the UK’s major banks are, largely, in rude health, buoyed by rising base interest rates. An inflation-busting increase to the ordinary dividend combined with a special dividend are positive news for shareholders, as is the intention to repurchase shares from the government at a rate of up to 4.99 per cent every 12 months.

NatWest chief executive Alison Rose: 'We know that continued increases in the cost of living are impacting people, families and businesses across the UK.' Picture: Nick Ansell/PA Wire

“With the bank simplified, costs in check, and its balance sheet in a strong position, there is an argument for NatWest to do something ‘different’ with the cash at its disposal.”

Richard Hunter, head of markets at investment platform Interactive Investor, added: “Amid all the progress, there are some challenges on the near horizon, not least of which is the potential for further UK economic deterioration.

“NatWest remains committed to keeping close to any worsening trends, however, and in the meantime continues to increase prudent lending against the backdrop of a robust balance sheet.”

The bank said it has proactively contacted 2.7 million customers so far this year to offer support and information on what they can do as prices soar.

The business launched an online hub where people can access resources and tools to find out what support they can get.

It has also set up a £4m hardship fund that is delivered by Citizens Advice, StepChange and Money Advice Trust.

The bank said it has handed out £661m of green mortgages over the first six months of the year. These give lower interest rates to homes that are more energy-efficient.