Final results
and a dividendhttps://www.investegate.co.uk/natwest-g ... 04247032P/NatWest Group plc
2020 NatWest Group performance summary
Alison Rose, Chief Executive Officer:
"The past year presented some extraordinary challenges for our customers, colleagues and communities. We provided exceptional levels of support to those who needed it, including the approval of over £14 billion of lending under UK Government schemes, demonstrating that we have truly put Our Purpose at the heart of this business. Being purpose-led isn't just the right thing to do, it has a powerful commercial imperative and is fundamental to building sustainable value in our business.
Despite reporting a loss for the year, NatWest Group delivered a resilient underlying performance in a challenging operating environment. The bank continued to grow in key areas such as mortgages and commercial lending and our balance sheet remains strong, with one of the highest capital ratios amongst our UK and European peers. We have today announced our intention to pay a final dividend whilst reaffirming our commitment to regular capital returns for shareholders in the future.
We made strong progress in executing the strategy we set out in February 2020 as we build a relationship bank for a digital world; a bank that will meet the rapidly evolving needs of our customers at different stages of their lives through an ever-increasing focus on digital and transformation. In turn, this will drive sustainable, long-term returns to our shareholders.
We cannot be certain of the long-term impact of the pandemic. But we can be certain that our bank will continue to support those who need it most as we build back better. By championing potential and helping people, families and businesses to rebuild and thrive, we will succeed together."
Financial performance in a challenging environment
● Full year 2020 operating loss of £351 million and an attributable loss of £753 million. Q4 2020 operating profit before tax of £64 million and an attributable loss of £109 million.
● Full year 2020 net impairment losses of £3,242 million, or 88 basis points of gross customer loans, resulted in an expected credit loss (ECL) coverage ratio of 1.66%.
● In comparison to 2019, income across the retail and commercial businesses, excluding notable items, decreased by 10.0% as the lower yield curve, subdued business activity and lower consumer spending were partially offset by strong balance growth.
● 2020 Bank net interest margin (NIM) of 1.71% decreased by 28 basis points compared with 2019. Q4 2020 Bank NIM of 1.66% increased by 1 basis point in comparison to Q3 2020 as lower average central liquidity and improved asset margins more than offset reduced structural hedge income as a result of lower swap rates.
● A cost reduction of £277 million was achieved during 2020, ahead of our £250 million target for the year.
Robust balance sheet with strong capital and liquidity levels
● CET1 ratio of 18.5%, was 230 basis points higher than 2019, including c.100 basis points related to IFRS 9 transitional relief. The CET1 ratio increased by 30 basis points in comparison to Q3 2020 as the £3.6 billion reduction in RWAs and a 23 basis point software intangible benefit were partially offset by the 3 pence proposed final dividend, 21 basis points, and linked pension contribution, 16 basis points.
● The liquidity coverage ratio (LCR) of 165%, representing £72.1 billion headroom above 100%, increased by 13 percentage points in comparison to 2019. In comparison to Q3 2020 LCR increased by 8 percentage points reflecting the continued growth in customer deposits.
● Net lending across the retail and commercial businesses increased by £20.9 billion in 2020 supported by £12.9 billion drawdowns against UK Government lending schemes and £16.2 billion mortgage lending, including £3.0 billion related to the Metro Bank plc mortgage portfolio acquisition. This growth has been partially offset by lower unsecured balances, which were impacted by lower spend and higher repayments, subdued business activity and increased loan provisions. In Q4 2020, net lending across the retail and commercial businesses increased by £4.5 billion as mortgage growth of £6.2 billion and £1.6 billion of lending against UK Government lending schemes more than offset £2.4 billion net revolving credit facility (RCF) repayments.
● Customer deposits increased by £62.5 billion in comparison to 2019, with retail and commercial balances £60.5 billion higher as consumer spending was impacted by government restrictions and customers retained liquidity. In Q4 2020, customer deposits increased by £13.3 billion.
● RWAs decreased by £8.9 billion in comparison to 2019, including an £11.0 billion reduction in NatWest Markets to £26.9 billion, partially offset by volume growth across the retail and commercial businesses with minimal levels of procyclical credit risk inflation. RWAs reduced by £3.6 billion in Q4 2020, largely in NatWest Markets.
6. Dividends
The company announces that the directors have recommended a final dividend of £364 million, or 3p per ordinary share (2019 - nil), subject to shareholder approval at the Annual General Meeting on 28 April 2021.
If approved, payment will be made on 4 May 2021 to shareholders on the register at the close of business on 26 March 2021. The ex-dividend date will be 25 March 2021.
Now that was a surprise I wasn't expecting a dividend from NWG.