NatWest Group, formerly the Royal Bank of Scotland, said it has taken a £2.1 billion hit from the impact of the coronavirus, worse than the most dire predictions by analysts.
The bank’s second quarter impairment charge was set aside to cover the bad debts that NatWest thinks might be on its books. It pushed the bank into a loss for the first half of the financial year.
Pre-tax loss was £770 million, a swing from a £2.7 billion profit in the same period a year earlier.
An average of analysts’ predictions, compiled by the bank, had forecast that NatWest would reveal a £943 million hit. Even the most pessimistic analyst did not think the impairment would reach more than around £1.5 billion.
Chief executive Alison Rose said: “Our performance in the first half of the year has been significantly impacted by the challenges and uncertainty our economy continues to face as a result of Covid-19.
“However, NatWest Group has a robust capital position, underpinned by a resilient, capital-generative and well-diversified business.”
Banks have been at the centre of the Government’s efforts to fight the coronavirus.
As the pandemic spread, the Treasury announced it would back what turned out to be millions of loans provided through the high street lenders.
So far, NatWest has lent £5.8 billion through the bounce back scheme, and £2.3 billion in coronavirus business interruption loans (CBILS).
Ms Rose added: “Throughout this crisis we have provided exceptional levels of support to our customers, colleagues and the communities we serve. I am proud that our colleagues have consistently shown they are putting our purpose at the heart of everything they do.
“Through our strong balance sheet and prudent approach to risk, we are well placed not only to withstand Covid-19-related impacts but also to provide the right support to those who will need it most in the tough times to come.
“Our purposeful strategy will help our customers, colleagues and communities to recover, rebuild and, ultimately, to thrive. We are building a sustainable business that will generate lasting value for all our stakeholders, as we work together to create a greener, fairer and more inclusive economy.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article