NatWest slumps to loss on gloomy UK outlook
Banking giant NatWest Group has put aside another £2.1bn in case more people and firms default on loans because of the pandemic.
That meant it reported a £770m loss for the first half of 2020. Last year it made a £2.7bn profit.
Earlier this month, chief executive Alison Rose warned of "tough times ahead" as Covid-19's impact emerges.
The results are the first since the group changed its name from Royal Bank of Scotland Group just nine days ago.
It is thought that the rebrand was intended to help shift the lender's image away from its association with the financial crisis.
The bank was rescued by the government in 2008 in the aftermath of the crisis at a cost of £45bn and it is still 62% state-owned.
"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," Ms Rose said.
"However, NatWest Group has a robust capital position, underpinned by a resilient, capital generative and well diversified business.
"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."
Ms Rose told the BBC's Today programme that the bank was "making sure we support the economy and then stand alongside our customers to support them as the economy recovers".
She added that it was too early to say what the state of the economy would be in the coming months.
"We don't know how quickly the economy will recover and we don't know yet what the underlying scarring is to the economy," she said.
NatWest has now made provision of nearly £2.9bn against non-repayment of loans.
It said that it expected to set aside between £3.5bn and £4.5bn for the whole of 2020 to deal with the economic consequences of the pandemic.
Its actions follow those of other big High Street banks in earmarking more money to cover potential defaults.
On Thursday, Lloyds said it was increasing its provision by another £2.4bn. meaning it has now built up a total of £3.8bn for bad loans.
And earlier this week, Barclays said it had set aside £1.6bn in the second quarter of the year to cover the cost of non-repayment of loans. That took its total provisions for bad loans to £3.7bn for the first half of the year.
Donald Brown, senior investment manager at Brewin Dolphin, said: "Banks are expected to bear a lot of the economic fallout from Covid-19 and their share prices are down significantly this year - in NatWest's case, more than 50%.
"It is likely to be a treacherous road ahead for NatWest and many of its peers. With the UK banking season nearly complete, NatWest's statement adds to the downbeat tone heard this week."