NatWest Group PLC (LSE:NWG) has raised its full-year profit expectations and boosted its dividend after reporting higher earnings for the first half of 2025, supported by growth in lending, deposits and customer numbers.
The lender posted an attributable profit of £2.5 billion for the six months to June, up 28% on the previous year.
Earnings per share rose to 30.9p, while return on tangible equity, which compares profits to the value of the bank’s assets minus liabilities, increased to 18.1%.
The cost-to-income ratio, which compares operating costs with income, improved to 48.8% from 55.5% last year, helped by investment in technology and efforts to simplify operations.
NatWest, which completed its return to full private ownership in the second quarter, said it would pay an interim dividend of 9.5p per share, up 58% on last year, and begin a £750 million share buyback in the second half of 2025.
The bank added 1.1 million new customers in the first half, supported by its acquisition of Sainsbury’s Bank in May. Net loans to customers rose by £11.6 billion, including £2.2 billion from Sainsbury’s Bank, and customer deposits increased by £4.5 billion.
NatWest said it had continued to simplify its business, improve productivity and enhance customer experience.
This has been done partly through greater use of artificial intelligence and new technology partnerships with OpenAI, Amazon Web Services and Accenture. These changes were reflected in improved customer satisfaction scores.
The bank’s Common Equity Tier 1 capital ratio, a key measure of financial strength, stood at 13.6% at the end of June, broadly unchanged since the end of last year.
Looking ahead, NatWest expects to achieve a return on tangible equity of more than 16.5% and income of over £16 billion in 2025.
Operating costs, excluding litigation and conduct, are expected to be around £8.1 billion, including £100 million of one-time integration costs.
The bank forecasts its loan impairment rate to be below 20 basis points and risk-weighted assets to finish the year between £190 billion and £195 billion, depending on final regulatory outcomes.
For 2027, NatWest continues to target a return on tangible equity of more than 15% and aims to maintain a Common Equity Tier 1 ratio between 13% and 14%.
It expects to pay ordinary dividends of around 50% of attributable profit from 2025 onwards and will consider further share buybacks as appropriate.
CEO Paul Thwaite said: "With positive momentum in our business, we are ambitious for the future and see clear opportunities for further disciplined growth.
"This is complemented by our focus on bank-wide simplification, as we quietly revolutionise how we operate, enhancing our tech and AI capabilities in order to better meet and anticipate the evolving needs of our customers."