NatWest Group shares rose on Friday after delivering strong H1 2025 results with profit for the period increasing 19.5% to £2.7 billion.
There’s a lot to like in today’s results.
Earnings per share rose 28% to 30.9 pence compared to the prior year, whilst Return on Tangible Equity hit 18.1%.
The bank has upgraded its 2025 income guidance, now expecting income excluding notable items to exceed £16.0 billion.
Cost management improved significantly, with the cost-to-income ratio (excluding litigation and conduct costs) falling to 48.8% from 55.5% in the previous year – a 6.7 percentage point improvement.
The interim dividend increased substantially to 9.5 pence per share, representing a 58% rise on the prior year. NatWest also announced plans for a £750 million share buyback programme to commence in H2 2025.
Investors will be encouraged by NatWest’s plans to boost shareholder returns in the future. The bank targets paying ordinary dividends of around 50% of attributable profit from 2025, with additional buybacks to be considered as appropriate.
For 2025, NatWest expects Return on Tangible Equity to exceed 16.5%, maintaining its trajectory of improved profitability and shareholder value creation.
NatWest shares rose a modest 1% on Friday, but the gains must be appreciated in the context of a general retreat for FTSE 100 shares on the session. If NatWest had released these results during one of the more positive trading sessions this week, the market reaction would likely have been stronger.
“NatWest has given investors reason to cheer heading into the weekend with a broad-based beat this morning,” explained Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“It’s a similar story to Lloyds yesterday, with better impairments doing most of the work to bring profits in a good clip above expectations. Unlike Lloyds, NatWest has taken the opportunity to raise its guidance, though this simply aligns management to where consensus is already sitting.
“The overarching story here is a positive one. Borrowers are looking strong, loans and deposits are growing, and costs are under control. That’s providing a strong base for the bank’s secret weapon, the structural hedge, to sit on top of. The hedge is expected to bring home an additional £1 billion of income this year alone, as 0% products are being reinvested at yields of around 3.7%. This is a multi-year tailwind that’s helping underpin a positive outlook for NatWest.”