By Alex V 
NatWest Group (NWG.L) said on Friday it saw its first-half profits jump by 18%, exceeding expectations in the market and sending a positive signal to investors with the announcement of a new £750 million ($1.01 billion) share buyback. The robust showing, fuelled by expansion in both deposits and loans, highlights the return of the bank’s stability and profitability after years of restructuring and recovery after the 2008 financial crisis.
The British lender had reported a pretax operating profit of £3.6 billion for the half year to June 2025, slightly higher than the average estimate by analysts of £3.46 billion. The improvement reflects NatWest’s ongoing emphasis on retail and corporate banking, stable consumer resilience, and tight cost control despite overall economic challenges such as sticky inflation and muted GDP growth.
The bank also raised its full-year guidance. It now targets a return on tangible equity (ROTE) of 16.5%, from its earlier guidance of “up to 16%.” This indicates better-than-expected operating efficiency and profitability in the rest of 2025.
Shareholder Confidence Increases as Buyback and Strategic Actions Materialise.
NatWest’s new £750 million share buyback is in line with analyst estimates and follows a £730 million program previously forecast. The move follows as NatWest’s share price has already risen by 47% over the last 12 months, and the new buyback might add an extra boost in investor sentiment and share price momentum.
The news is another milestone for NatWest after it fell back under full private ownership earlier this year. The British government once held a major stake in the bank, formerly known as RBS, following its 2008 financial crisis bailout. With the completion of the last sale of public shares on May 30, the bank has now completed its return to private hands.
Strategic Acquisition Supports Loan Growth
NatWest’s evolution from an international investment giant to a UK-focused retail and commercial bank is working. Its buyout of the Sainsbury’s supermarket chain banking business in June 2024 brought in £2.2 billion of customer balances, helping to make up a good portion of the £8 billion in overall loan growth in Q2 2025.
As Britain’s economic environment continues to be precarious, impairments at NatWest have stayed low, indicative of good asset quality. Concerns about mass defaults as a result of inflation and paltry economic output have not yet been realized, bringing a welcome relief for investors and regulators.
Heightening Competition
The UK banking industry is still experiencing swift transformation. Santander’s recent takeover of TSB is building a scaled player, furthering competition with incumbents such as NatWest and Lloyds. Nevertheless, NatWest’s strong customer base, growing loan book, and operational effectiveness make it well placed to withstand increasing competitive pressure.
While international markets persist in rallying—with the Dow, S&P 500, and Nasdaq making new highs—NatWest’s solid domestic foundations and strategic emphasis put it on firm ground for further expansion and shareholder dividends.
Frequently Asked Questions (FAQs)
Why did the profit of NatWest increase during the first half of 2025?
NatWest’s 18% profit increase is mainly attributable to higher lending and deposit operations, minimal impairment charges, and the synergies of its acquisition of Sainsbury’s Bank. Operational efficiency and stable household demand also contributed greatly.
What does the £750 million share buyback imply for investors?
The buyback is a vote of confidence in the bank’s financial well-being and is intended to repay surplus capital to shareholders. It could result in an increased share price and better earnings per share, which profits existing investors.
How important is NatWest’s return to private ownership?
Extremely important. After 17 years of part-public ownership since the 2008 bailout, NatWest is once again fully in private hands. This is a significant milestone in the bank’s turnaround and represents its regained financial strength.
What was the effect of the Sainsbury’s Bank takeover?
The acquisition brought £2.2 billion in customer balances and funded NatWest’s Q2 loan growth. It increases NatWest’s retail banking presence and is one aspect of its overall growth-through-consolidation strategy.
What are the risks facing NatWest in the future?
NatWest will have to contend with a competitive banking environment, risk of economic slowdown, and inflationary headwinds. Yet, its present performance and strategic positioning look good to be able to successfully tackle these challenges.
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