FILE PHOTO: People maintain social distance while they queue outside a Natwest bank in Wimbledon, following the outbreak of the coronavirus disease (COVID-19), London, Britain, May 1, 2020. REUTERS/Hannah McKay
LONDON (Reuters) – NatWest reported its third quarter profits tripled on Friday, despite setting aside cash to prepare for an expected fine for money laundering failings as Britain’s resurgent economy lifted its finances.
The state-backed lender reported a pre-tax profit for the July-September period of 1.1 billion pounds ($1.52 billion), better than the 677 million pounds average of analyst forecasts and up from 355 million pounds a year ago.
The bank took a 294 million pound litigation and conduct charge for the quarter, which includes a provision for an anticipated fine after pleading guilty earlier this month to failing to prevent the laundering of nearly 400 million pounds.
NatWest’s profit rise despite the court case provision follows a run of bumper quarterly earnings reported by rivals Barclays (LON:BARC), HSBC and Lloyds (LON:LLOY) this month, as the economic rebound from pandemic lockdowns boosted profits.
All the banks were boosted by the release of bad loan reserves on the improved outlook, with NatWest unlocking 242 million pounds.
NatWest, which is Britain’s biggest business bank, was the first lender to admit criminal offences under a 2007 money laundering law.
The Financial Conduct Authority alleged NatWest had failed to monitor suspect activity by a client that deposited about 365 million pounds in its accounts over five years, of which 264 million was in cash.
A lawyer for the FCA had told Westminster Magistrates’ Court earlier this month the bank could face a potential penalty of around 340 million pounds under sentencing guidelines.
The level of fine will ultimately be determined by a judge at a sentencing expected in December.
NatWest has said it deeply regrets failing to prevent the money laundering and that the bank has invested 700 million pounds over five years in prevention systems.
($1 = 0.7253 pounds)