Profits surge at NatWest as preparations are made for return to private control
Renewed Success for NatWest Group
Friday saw NatWest Group boost its full-year guidance, thanks to a robust start to 2025. This banking titan, behind the Royal Bank of Scotland, reported a significant jump in operating pre-tax profits, reaching a staggering £1.8 billion in Q1.
Earnings soared by 36.2% compared to the same period last year, far surpassing analysts' predictions of £1.6 billion. The government's stake in NatWest tumbled below 2%, dropping from a near 40% share held in December 2023.
NatWest's overall profits experienced a 35.9% leap to £1.3 billion, although the increase from the preceding quarter was minimal at 1%. Total income approached £4 billion, growing by an impressive 14.5% year-on-year. Net interest income, the difference between what banks pay savers and what they charge borrowers, skyrocketed by 14.1% to over £3 billion.
Now, the banking behemoth anticipates its annual income to be closer to the upper end of its previously stated range of between £15.2 billion and £15.7 billion.
Paul Thwaite, NatWest's chief executive, lauded the performance, stating, "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."
Homebuyers seeking mortgages before incoming tax hikes have contributed to an increase in net loans, which now stand at £371.9 billion—a 4.2% rise. The stamp duty threshold has doubled from £125,000, while the threshold for first-time buyers has dropped from £300,000 to £425,000.
Despite increased stamp duty, all major UK lenders, including NatWest, have recently provided fixed-rate mortgage deals under 4%. This move comes amid speculation of impending base rate cuts by the Bank of England, which last reduced rates by 0.25 percentage points in February, bringing them to 4.5%. Investment banking group Morgan Stanley predicts a further reduction to 3.25% this year.
Richard Hunter, head of markets at Interactive Investor, commented, "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 climbed 2.2% to 486.1p on Friday morning, resulting in a yearly gain of around 60%.
Related Articles- Previous- 1- Next- NatWest profits near £6.2bn with Government set to sell...- Government cuts NatWest stake to 11.4% with £1bn share sale
Footnotes[1]: CNN[2]: Reuters[3]: Financial Times[4]: NatWest Group Q1 Trading Update[5]: Bloomberg
- NatWest Group's anticipation for its annual income in 2025 is closer to the upper end of its previously stated range, suggesting significant investments and profit growth.
- Mortgage demand from homebuyers seeking to beat tax hikes has contributed to a rise in NatWest's net loans, reaching £371.9 billion in Q1 of 2025.
- Despite the increase in stamp duty, all major UK lenders, including NatWest, have provided fixed-rate mortgage deals under 4%, indicating a competitive environment in the banking sector.4.natWest's shareholding has seen a significant drop, with the government's stake now below 2%, following a sale of £1 billion in shares.
- In the finance world, NatWest Group's robust performance in Q1 of 2025 has stood out, with earnings soaring by 36.2% compared to the same period last year.
- Paul Thwaite, NatWest's chief executive, has highlighted the strength of the balance sheet, emphasizing that the bank is well-placed to navigate any challenges while also investing in its business and delivering returns to shareholders.
