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Ulster Bank owner takes £2.1bn hit from Covid-19

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Challenges: Alison Rose

Challenges: Alison Rose

Challenges: Alison Rose

Ulster Bank parent company NatWest Group has announced a £2.1bn hit from the impact of the coronavirus crisis - worse than the most dire predictions by analysts.

NatWest Group's second quarter impairment charge was set aside to cover the bad debts that it thinks might be on its books. It pushed the bank into a loss for the first half of the financial year.

Pre-tax loss was £770m, a swing from a £2.7bn profit in the same period a year earlier.

The financial performance of Ulster Bank is not reported separately, but combined with the group results.

An average of analysts' predictions compiled by NatWest had forecast that the bank, recently renamed from the Royal Bank of Scotland, would reveal a £943m hit.

Even the most pessimistic analyst did not think the impairment would reach more than around £1.5bn.

Chief executive Alison Rose said: "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.

"However, NatWest Group has a robust capital position, underpinned by a resilient, capital-generative and well-diversified business."

Banks have been at the centre of the Government's efforts to fight the coronavirus.

As the pandemic spread the Treasury announced it would back what turned out to be millions of loans provided through the high street lenders.

So far NatWest has lent £5.8bn through the bounce back scheme, and £2.3bn in coronavirus business interruption loans (CBILS).

Ms Rose added: "Throughout this crisis we have provided exceptional levels of support to our customers, colleagues and the communities we serve. I am proud that our colleagues have consistently shown they are putting our purpose at the heart of everything they do.

"Through our strong balance sheet and prudent approach to risk, we are well placed not only to withstand Covid-19-related impacts but also to provide the right support to those who will need it most in the tough times to come."

Ulster Bank clients who have taken out CBILS loans include pub business Dorman's in Mid Ulster, plumbing merchant Stevenson and Reid and logistics company W.S. Dennison. It said that in the initial weeks after lockdown it approved more than 95% of business customer requests for support.

Belfast Telegraph