British bank NatWest swings to a 2nd-quarter loss of $1.7 billion as income tumbles and impairment charges soar

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Alison Lithgow wearing a suit and tie smiling and looking at the camera: RBS


© RBS
RBS

  • NatWest posted sharply lower profits last quarter as less income and a hefty impairment charge weighed on its business.
  • The British bank’s total income tumbled 34% year-on-year to £2.7 billion ($3.5 billion) and its impairment losses soared to over £2 billion, meaning it swung from a pre-tax profit of £1.7 billion ($2.2 billion) to a £1.3 billion ($1.7 billion) loss.
  • “Our performance in the first half of the year has been significantly impacted by the challenges and uncertainty our economy continues to face as a result of Covid-19,” CEO Alison Rose said in the earnings release.
  • NatWest’s net interest margin fell and its loan impairment rate soared, but it also shored up its finances, increasing both its liquidity coverage ratio and common equity tier one (CET1) ratio.
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NatWest suffered a sharp slump in second-quarter profits as pandemic-related lockdowns and travel

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Opinion | The financial relief plan has worked. But it shows the woeful state of unemployment insurance.

dhita yudha

Consequently, the expected household debt crisis has not materialized. Total credit card debt has fallen from $900 billion in March to $800 billion now, and fewer than 2 percent of accounts are past due, according to the Wall Street Journal. (Of course, shopping and dining out were impossible in many places.) As for mortgages, 30-day past-due accounts have spiked, according to CoreLogic, but “serious” delinquencies — 90 days past due or more — are at a 20-year low, as are foreclosure rates.

People are struggling; the poorest most of all. But it could have been far worse. This is as it should be. Government called on the people, essentially, to cease producing goods and services, and so it was up to government to shield them from financial disaster — in effect, to take individual and small business debt onto the national balance sheet.

There is no immediate issue of “moral

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