NatWest profits rise significantly following strategic acquisitions

In the first half of 2025, NatWest Group, which comprises NatWest, Royal Bank of Scotland, and Coutts, reported a substantial financial turnaround, achieving a pre-tax operating profit of £3.6 billion. This remarkable result signifies an 18% increase compared to the same period the previous year, surpassing analyst expectations of £3.5 billion. The growth is credited to a strategic acquisition of Sainsbury's Bank, which contributed significantly to customer acquisition and improved income performance. The banking group's total income showed an increase of approximately 12% year-on-year, especially bolstered by higher customer deposits and an uptick in mortgage lending. This increased lending behavior reflects a broader trend among UK lenders as first-time buyers rushed to take advantage of favorable mortgage conditions before changes to stamp duty relief came into effect in April. Paul Thwaite, the CEO, attributes the positive results to a rise in consumer confidence, with savings levels above the long-term average and improved spending on non-essential items. Despite economic uncertainties earlier in the year, particularly around March and April, Thwaite has observed a resilient customer base navigating the evolving external environment. NatWest was able to lower its cost-to-income ratio to 48.8%, down from 55.5% in the previous year. This reduction in business costs resulted from ongoing initiatives to simplify operations and enhance technology and AI capabilities, ultimately allowing the bank to adapt better to customer needs. In light of its successful financial performance and return to private ownership following the sale of government shares, NatWest announced the initiation of a new share buyback program worth £750 million for the second half of 2025, aiming to return value to its shareholders. Moreover, the banking giant has updated its financial outlook for the full year, indicating further positive trends.