NatWest Group tripled its profits in the third quarter to a better than expected £1.1bn thanks to a jump in mortgage lending and a recovery in the economy despite setting aside cash to cover fines linked to money-laundering charges.
The bank, which is majority-owned by the taxpayer, said the stronger economic position had allowed it to release £242m worth of provisions in the three months to 30 September, which it had made to cover a potential rise in defaults because of the coronavirus pandemic. That compares with the £254m it put aside during the same period last year. Analysts had expected the bank to take a further £40m charge.
The lender said it would “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”.
The release of the provisions helped offset £294m worth of litigation and conduct costs related to the money-laundering charges. Earlier this month, NatWest admitted to three counts of failing to properly monitor £365m deposited into the account of a Bradford jeweller.
It was the first time a financial institution has faced criminal prosecution under anti-money-laundering laws in the UK, and could result in a fine of up to £340m. The final figure will be determined by a judge at a hearing expected to take place in December.
The bank also benefited from increased lending, including a £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.
The chief executive, Alison Rose, said 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.”
Source: The Guardian