NatWest Bancorp revives

NATWEST'S US subsidiary continued its climb back to health with the announcement of a second-quarter profit and confirmation that it is heading for a significant full-year profit, writes Peter Rodgers.

After losing dollars 1bn ( pounds 520m) in three years, NatWest's American disaster area has taken a turn for the better in time for half-year results, due early next month. With one of the group's worst problems looking healthier, NatWest shares rose in London by 9p to 328p.

NatWest Bancorp, which lost heavily in East Coast property lending, reported net income in the second quarter of dollars 35.8m ( pounds 18.6m) compared with dollars 30.3m in the first quarter - when it first returned to profit - and a net loss of dollars 85.1m in the second quarter of last year.

John Tugwell, chairman of NatWest Bancorp, said he expected further improvements in the next two quarters, suggesting that the full-year profit will be at least dollars 130m.

The return on tangible equity was over 15 per cent in the latest six months, partly because there is almost no tax to pay, due to past losses. This tax benefit will continue for several years.

The bank has kept its costs flat by shedding 530 jobs, and has sold its merchant servicing cards business. 'The trends are looking nice,' Mr Tugwell said.

Provisions for losses on bad loans fell to dollars 61m in the latest six months, compared with dollars 356.6m in the same period a year earlier.

Loans which are not paying interest totalled dollars 1.126bn, compared with dollars 1.336bn a year before. The value of assets on which the bank has foreclosed fell by dollars 23m to dollars 331m in the six months to June.