NatWest, the lender formally known as Royal Bank of Scotland, swung to a first-half loss after it racked up impairment charges of £2.86bn and its margins shrank. Net losses for the six months through June amounted to £705m, compared to a profit of £2.04bn on-year. Profit before impairment losses dropped 31% to £2.09bn. As expected, NatWest did not declare a final dividend. The bank's net interest margin -- a key measure of profitability -- contracted 22 basis points to 1.67%, owing to lower interest rates, a changed lending mix and excess levels of liquidity. NatWest said it expected its impairment charge for the full year to be between £3.5bn and £4.5bn. Impairment charges in the second half would be driven, in part, by the developing economic outlook for the UK and Ireland, along with the effectiveness of government support schemes to reducing economic distress experienced by customers, the bank said. 'The impacts of Covid-19 on the economy and the mitigating benefits of government support schemes remain uncertain and could result in changes to our financial results in upcoming periods, including the possible impairment of goodwill,' it added. NatWest said it still expected to cut costs by £250m in 2020. Chief executive Alison Rose said the company's performance had been 'significantly impacted by the challenges and uncertainty our economy continues to face as a result of Covid-19'. 'However, NatWest has a robust capital position, underpinned by a resilient, capital generative and well diversified business,' she added.
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