Fewer people are defaulting on loans due to the pandemic than expected, two major banks have said.

NatWest Group, which owns RBS, was able to release £102m it had set aside for bad loans in the first quarter after "better than expected" repayments.

Standard Chartered meanwhile took a $20m hit from bad loans in the same period - down by $354m from the previous quarter.

Earlier this week HSBC and Lloyds both reported a similar trend.

Last year, many big banks warned that business and personal banking customers risked being unable to repay debts as coronavirus battered the UK economy.

NatWest itself faced £802m in loan impairment costs in the first quarter of 2020.

But Alison Rose, chief executive of NatWest Group, said defaults had been lower than feared in the first three months of 2021 as a result of government support schemes such as furlough.

Partly due to this, the group, which is 60% taxpayer owned, reported profits attributable to shareholders of £620m - more than double the figure for the same period last year.

'Continuing uncertainty'

"There are reasons for optimism with the vaccine programmes progressing at pace and restrictions being eased," Ms Rose said.

"However, there is continuing uncertainty for our economy and for many of our customers as a result of Covid-19."

At the end of March, 12,000 mortgage customers and 16,000 people with personal loans were still on repayment holidays with the bank.

Standard Chartered, Lloyds and HSBC have also reported seeing fewer defaults than expected in the first quarter, while Barclays will report its results on Friday.

On Tuesday, HSBC said it had set aside $3bn to cover bad debts last year, but had released $400m of that following "an improvement in the economic outlook, notably 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 upgraded its 2021 growth forecast from 5% to 6.8%, which would mark the fastest rate since records began.

And research from Deloitte found consumer confidence increased at the fastest rate in a decade in the first three months of 2021.