NatWest CEO promises dividends 'as soon as possible'

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2 min read
Newly installed RBS Chief Executive Officer Alison Rose during a visit to meet with entrepeneur customers at a NatWest business hub in Islington, London. PA Photo. Picture date: Friday November 1,2019. See PA story CITY RBS . Photo credit should read: Dominic Lipinski/PA Wire
NatWest Group Chief Executive Officer Alison Rose . Photo: Dominic Lipinski/PA Wire

The boss of NatWest Group (NWG.L) has signalled the bank will hand cash to shareholders as soon as regulators allow it.

“We have very strong capital ratios,” Alison Rose told journalists. “It’s my intent to start paying dividends as soon as possible.”

Rose’s promise came as results at the bank showed billions of pounds sitting on the bank’s balance sheet. The bank’s CET1 ratio — a key measure of cash and cash equivalents — was 18.2% in the third quarter, up from 16.2% a year earlier. The ratio was well above the market average.

Rules require banks to hold a certain amount of cash on their balance sheets but analyst at Jefferies said NatWest has £16bn of excess cash that could go towards payouts. The balance sheet shows reserves between £7bn and £9bn above NatWest’s own internal targets, the analysts said.

“Clearly our sector-leading capital strength means we’re safe and secure,” Rose said on an earnings call. “We’ll review our capital position and our position on dividends. It is my intention to return capital to shareholders at the appropriate time.”

READ MORE: NatWest returns to profit but warns of 'challenging times ahead'

Any payout would boost the coffers of the Treasury. NatWest, which was known as Royal Bank of Scotland until July, remains 62% owned by the taxpayer after a bailout during the financial crisis.

NatWest could also return cash to investors by buying back shares. Rose said the bank would look at “all measures” when it was “appropriate”.

Earlier this year, the UK banking regulator banned banks from making any shareholder payouts due to the COVID-19 pandemic. The watchdog told lenders to instead build up cash reserves on their balance sheets to help weather any economic downturn.

Banking regulators are due to review the dividend and buyback ban in the coming months. Reports suggest they could allow banks to resume payouts subject to conditions.

HSBC (HSBA.L) said earlier this week it hopes to pay a “conservative” dividend if regulators allow it. Barclays (BARC.L) hinted it too could reinstate a payout, with chief executive Jes Staley saying the bank “recognises the importance of capital returns to shareholders”.

NatWest reported better-than-expected third quarter results on Friday, sending shares surging to the top of the FTSE 100 (^FTSE).

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