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Fewer people are in default due to the pandemic than expected, two major banks have said.
NatWest Group, which owns RBS, was able to release £ 102million that it had set aside for bad debts in the first quarter after “better than expected” repayments.
Standard Chartered, meanwhile, was hit with $ 20 million in bad debt during the same period, down $ 354 million from the previous quarter.
Earlier this week, HSBC and Lloyds both reported a similar trend.
Over the past year, many major banks have warned that customers of business and personal banking services may not be able to repay their debts as the coronavirus hits the UK economy.
NatWest itself faced £ 802million in loan impairment costs in the first quarter of 2020.
But Alison Rose, chief executive of NatWest Group, said defaults were lower than expected in the first three months of 2021 due to government support programs such as time off.
Partly for this reason, the group, which is 60% taxpayer-owned, reported profits attributable to shareholders of £ 620million – more than double the figure for the same period last year.
“There are reasons for optimism, with immunization programs progressing at a steady pace and restrictions being relaxed,” Ms. Rose said.
“However, uncertainty persists for our economy and for many of our customers due to Covid-19.”
At the end of March, 12,000 mortgage customers and 16,000 people with personal credit were still on repayment leave from the bank.
Standard Chartered, Lloyds and HSBC also reported posting fewer defaults than expected in the first quarter, while Barclays will release its results on Friday.
On Tuesday, HSBC said it had set aside $ 3 billion to cover bad debts last year, but released $ 400 million following “an improvement in economic prospects, especially in the UK”.
It comes as experts predict the UK economy will recover faster than expected this year, after contracting sharply in 2020.
This week, the EY Item Club raised its growth forecast for 2021 from 5% to 6.8%, which would mark the fastest rate since the records began.
And a Deloitte study found that consumer confidence grew at the fastest rate in a decade in the first three months of 2021.