NatWest has restored shareholder dividends after swinging back into profit, significantly beating expectations.
The state-backed bank posted a pre-tax profit of £2.5bn for the six months to June, compared with a loss of £770m the year before.
Analysts had expected NatWest to report a £1.8bn profit.
The bounce back was fuelled by the release of £707m from NatWest’s “rainy day” impairment fund – cash set aside to cover loans that faced turning bad last year during the economic chaos caused by the COVID-19 pandemic.
Most of this – £605m – came in the second quarter of the year.
NatWest said that it was releasing the money after its economic outlook improved.
The business declared a 3p per share interim dividend, and will pay out £347m in total.
The UK government, which still owns a large stake in NatWest after bailing out Royal Bank of Scotland during the 2008 financial crisis, will net £190m of this payout.
The bank will also buy back shares worth up to £750m from its investors.
Chief executive Alison Rose said: “These results have been driven by good operating performances across the group, underpinned by a robust loan book and a strong capital position.
“Defaults remain low and, given the improved outlook, we have released a further £0.6bn of impairment provisions in the quarter.
“While we see the potential for a more rapid recovery, we will continue to take an appropriate and conservative approach as the government schemes wind down and the economy reopens.”