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Taxpayer-backed NatWest has smashed profit expectations after surfing the wave of a house price boom and post-lockdown economic rebound, allowing it to restore investor payouts in a move that will hand the Government £190m.
NatWest has been able to release money previously set aside to cover a possible surge in toxic debts as Covid hammered the economy, following similar decisions earlier this week by its rivals Barclays and Lloyds.
As Britain recovers from its worst recession in centuries, banks are now freeing up cash held back to save them from a crisis which never happened.
NatWest unveiled half-year profits of £2.5bn after it released £707m from its impairment pot, mostly in the second quarter. This time a year ago it reported a £770m pre-tax loss as the Covid crisis hit its loan book.
The bank lent £21.1bn to mortgage borrowers amid a race to cash in on the Chancellor Rishi Sunak's stamp duty cut, compared to £17.2bn a year earlier.
Natwest will now push ahead with more than £1bn of share buybacks and dividends, up from a previous target of £800m, after being forced to put rewards on hold last year at the height of the Covid crisis.
The government, which remains the bank's largest shareholder, will get about £190m in dividends.
Formerly known as Royal Bank of Scotland, the lender almost brought down Britain's financial system in 2008 when it was bailed out by the Government for £45bn after almost running out of money.
Whitehall said earlier this month that it will gradually offload some of its NatWest shares over a 12-month period starting in August, 13 years on from the bailout.
The sale is all but certain to result in a loss for taxpayers, who paid 502p a share for the 2008 rescue. The stock is now worth just under 200p after falling 3pc following Friday's results.
Natwest's investment banking arm, NatWest Markets, suffered a 60pc slide in profits compared to the same period last year, when markets swung wildly as Covid hit.