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NatWest has upgraded its guidance after a 30 per cent surge in third-quarter profits, prompting shares to hit their highest level in 15 years.
The UK bank generated £2.2bn in pre tax profits for the three months to September on higher mortgage and corporate lending, compared with £1.7bn over the same period last year.
Total income rose to £4.3bn in the three months to September compared with £3.7bn in the same period last year. In the second quarter, NatWest generated just over £4bn in income.
The bank made £2.2bn in pre-tax profits in the third quarter compared with £1.7bn in the same period last year. Analysts had expected £1.8bn in profits. NatWest shares rose as much as 7 per cent to their highest level since May 2010.
Its lending increased by £4.4bn in the third quarter, including a £1.7bn increase in mortgage lending.
NatWest’s wealth business, which includes the private bank Coutts, generated £284mn over the quarter compared with £252mn in the same period last year.
The increases allowed NatWest to upgrade its guidance on income and return on tangible equity (Rote) — a key profitability measure. It has raised its Rote target from 16.5 to 18 per cent. It is also now aiming for £16.3bn in income in 2025, an increase from the £16bn it guided at half-year.
NatWest’s net interest margin — the difference between the rate it pays out on deposits and charges for loans — rose to 2.37 per cent, compared with 2.28 per cent last quarter. Like all banks, NatWest has benefited from structural hedges that smooth out the effects of interest rate fluctuations.
Despite the earnings boost the bank said that customer deposits fell by £1.1bn in the quarter because of a reduction in savings balances at its retail banking and wealth business.
The bank, a major lender to UK businesses, also set aside £153mn in provisions, lower than the £190mn expected by analysts.
Despite economic uncertainty and inflation, UK banks say their customers are in good financial health. On Thursday Lloyds Banking Group raised its outlook for net interest margin while its chief financial officer reported that the UK economy was stable. On Wednesday Barclays announced a £500mn share buyback.
NatWest returned to full private ownership in May, when the government sold the last of the shares it acquired as part of a £45.5bn bailout of the bank, then called RBS, during the financial crisis.
Paul Thwaite, NatWest’s chief executive, said: “NatWest Group delivered another strong performance in the third quarter of 2025, underpinned by healthy levels of customer activity . . . This is driving positive momentum across our three businesses, with continued lending growth and deposits remaining stable.”
Thwaite has set three strategic goals for the bank: simplifying its operations, “disciplined” growth and improving risk management.
Analysts have speculated that it is set on a major acquisition under private ownership. It offered £11bn to buy the UK operations of Santander UK this year and ran the rule over TSB, which was eventually bought by Santander.
Last year NatWest bought the majority of Sainsbury’s Bank and £2.5bn of prime residential mortgages from Metro Bank. However, Thwaite has also said that any target will need to meet a “high bar” for NatWest to go ahead with a deal.
Thwaite said on a media call that the bank was actively monitoring its exposure to the private credit market in the wake of the bankruptcies of both First Brands and Tricolor that have rippled across the private lending market. He said NatWest had no exposure to either company but that the bank had “less than £5bn” worth of lending to private credit funds.
