NatWest Group PLC (LSE:NWG) reported a return to profit in 2021 after it released provisions set aside to cover losses during the pandemic and also announced a £750mln share buyback programme for the first half of 2022.
The bank, which is majority owned by the UK government, reported operating profits of £4bn for the year to end-December 2021, compared with a £481mln loss the previous year.
The figure included impairment releases of £1.3bn, reflecting the low levels of realised losses during 2021.
Attributable profit rose to £2.95bn from a loss of £753mln, while return on tangible equity was 9.4%.
Net interest income increased to £7.61bn from £7.47bn, with net lending excluding government support schemes increasing by £7.8bn billion, or 2.6%, including £10.8bn of mortgage growth.
Customer deposits grew by £48.1bn to £479.8bn.
The net interest margin for the full year fell to 2.39% from 2.46%, although the fourth quarter saw a rise in margin to 2.38% from 2.35% in the third quarter of 2021.
The bank is proposing a final dividend of 7.5p, taking the total distribution to shareholders to over £3.8bn in 2021, including £1.7bn to the taxpayer.
It also announced plans for a share buyback programme of up to £750mln in the first half of the current year.
Noting that the outlook remains uncertain, Natwest forecast income excluding notable items of more than £11bn in 2022.
Having cut costs by 4% last year, it reduced its cost-cutting target to 3% a year for 2022 and 2023, reflecting higher inflation and ongoing investment in the business.
It upgraded its return on tangible equity target for 2023 to “comfortably above” 10%.
The bank said it intends to maintain dividends around 40% of attributable profit and to distribute a minimum of £1bn a year to shareholders in 2022 and 2023 via a combination of ordinary and special dividends.
It also said it would participate in directed buybacks of the government’s stake.