Shares in NatWest Group PLC (LSE:NWG) climbed to their highest since the 2008 financial crisis after upgrading its full-year guidance and bringing forward plans for further share buybacks after first-half profit climbed on higher income and improved efficiency.
Attributable profit rose to £3 billion in the six months to June, while operating profit before tax increased 20.4% to £4.3 billion. Earnings per share climbed 23.3% to 38.1p.
Total income rose 11% to £8.9 billion, including a 12.6% increase in net interest income to £6.9 billion. Net interest margin widened by 20 basis points to 2.48%, reaching 2.49% in the second quarter. The cost-to-income ratio, excluding litigation and conduct charges, improved by 2.8 percentage points to 46%.
Return on tangible equity reached 19.7%, from 18.2% at the end of March, prompting management to lift the full-year target to more than 19%.
NatWest now expects income of around £17.9 billion and operating expenses of approximately £8.5 billion, both excluding specified items and including the recently completed Evelyn Partners acquisition.
The bank declared an interim dividend of 12p per share and said it would consider announcing its next share buyback alongside its full-year results – six months earlier than previously planned.
Chief executive Paul Thwaite said the "strong performance" showed that NatWest's strategy was "consistently delivering for customers and shareholders".
Customer assets and liabilities increased by £95.2 billion, including £71.7 billion added through Evelyn Partners. Excluding the acquisition, growth was £23.5 billion, or 2.6%.
NatWest's CET1 capital ratio stood at 13.2%, down around 80 basis points from the end of 2025, reflecting the acquisition. The loan impairment rate remained low at 19 basis points.
The shares jumped 3.9% to 710p in early trading.
Broker Jefferies said NatWest had closed the large domestic bank results season "with a very solid statement".
'Clean' pre-provision profits were in line with expectations and net interest margin was "fractionally light", but free cash flow was a "standout despite a balance sheet growing at pace", enabling buybacks to return and making 2028 targets looking "increasingly prudent".
Analyst Richard Hunter at Interactive Investor said: "NatWest is now enjoying a new lease of life. Its prodigious cash generation has enabled a generous round of shareholder returns, while it apparently remains on the acquisition trail, even if some questioned the £2.7 billion price paid for its recent purchase of Evelyn Partners in the wealth management space.
"However, this new-found freedom has already enabled a more aggressive acquisition policy, with NatWest having previously made what it described as two significant purchases in the form of Metro Bank’s mortgage book and Sainsbury’s Bank, both of which it would appear have been integrated seamlessly."
** UPDATE: Adds shares and broker comment **
