NatWest profits soar as lender prepares to return to private ownership
NatWest Group lifted full-year guidance on Friday after a strong start to 2025.
The lender told shareholders it expects full-year income to be at the upper end of guidance after recording deposit margin expansion, rising customer balances, and trading activity in the first quarter.
Natwest, which owns the Royal Bank of Scotland, reported its operating pre-tax profits climbed to £1.8billion in the three months ending March.
Earnings were 36.2 per cent higher than the same period last year and far above the £1.6billion anticipated by analysts.
It comes as NatWest prepares to return to full private ownership for the first time since it was rescued from collapse by the government at the height of the 2008 global financial crisis.
The government's stake in NatWest fell below 2 per cent on Thursday, having cut its shareholding from nearly 40 per cent in December 2023.
Natwest's overall profits jumped by 35.9 per cent to £1.3billion, although they rose by just 1 per cent from the prior quarter.
Total income touched nearly £4billion after increasing by 14.5 per year-on-year
Net interest income - the difference between what a bank pays savers and charges borrowers- soared by 14.1 per cent to over £3billion.
NatWest now predicts its annual income will be towards the upper end of its previously guided range of between £15.2billion and £15.7billion.
Paul Thwaite, chief executive of NatWest, said the 'performance demonstrates the positive momentum in our business as we deliver against clear strategic priorities'.
He added: 'The strength of our balance sheet means we are well placed to help our customers navigate any challenges, whilst also investing in our business and delivering returns to shareholders.'
The FTSE 100 firm also revealed net loans were 4.2 per cent higher at £371.9billion, thanks partly to homebuyers rushing to take out mortgages ahead of incoming tax hikes.
At the start of April, the zero threshold on stamp duty halved to £125,000, while the first-time buyers ' threshold slumped from £425,000 to £300,000.
But though stamp duty has gone up, all major UK lenders, including NatWest, have begun offering fixed-rate mortgage deals of under 4 per cent in recent weeks.
It comes amid hopes of base rate cuts by the Bank of England, which last reduced in February by 0.25 percentage points to 4.5 per cent.
Investment banking group Morgan Stanley believes the BoE will slash rates to as low as 3.25 per cent this year.
Richard Hunter, head of markets at Interactive Investor, said: 'While it may be over simplistic to describe banks as basically providing loans and taking deposits, these are of course crucial planks and both are currently growing'
NatWest Group shares were 2.2 per cent higher at 486.1p on Friday morning, taking their gains over the past year to around 60 per cent.
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