NatWest lifts outlook after profit jump

Retail bank branch in financial district illustrating raised profit outlook and investor returns

Key Points

01NatWest (NWG.L) first-half profit before tax rose about 20% to £4.3bn
02Q2 operating profit before tax grew 29% to £2.285bn
03Full-year 2026 income guidance raised to about £17.9bn
04Dividend increased to 12p and buyback timing brought forward

Strong first-half performance

NatWest (NWG.L) delivered a materially stronger first-half performance, reporting operating profit before tax of £4.3 billion for January to June, up about 20% from £3.6 billion a year earlier. Attributable profit for the period was around £3.0 billion, underscoring robust profitability across the group.

The bank’s profitability was supported by solid income generation and efficiency, resulting in a Return on Tangible Equity of 19.7% for the first half. Management now expects RoTE for the full year to be greater than 19%, reflecting confidence in the sustainability of earnings.

Second-quarter earnings details

In the second quarter, NatWest (NWG.L) reported operating profit before tax of £2.285 billion, representing a 29% increase year-on-year. Profit attributable to ordinary shareholders rose by about 29.7% to £1.603 billion, and basic earnings per share reached 20.1 pence.

Total income in the quarter was £4.504 billion, with net interest income of £3.496 billion. These figures highlight continued strength in the bank’s core lending and deposit activities, which remain central drivers of profitability.

Upgraded guidance and performance targets

NatWest raised its full-year 2026 total income guidance excluding notable items to around £17.9 billion. This compares with the upper end of its previous £17.2–£17.6 billion range, indicating a higher expected revenue trajectory over the medium term.

The bank also increased its performance target for return on tangible equity for 2026 to greater than 19%, up from a prior expectation of above 17%. This higher RoTE ambition aligns with the strong first-half delivery and upgraded income outlook.

Cost outlook and capital return plans

Alongside the higher income guidance, NatWest updated its full-year operating expenses guidance to around £8.5 billion, compared with about £8.2 billion previously. The revised cost outlook reflects investment and operating dynamics within the group while maintaining focus on efficiency.

On capital returns, the board declared an interim dividend of 12.0 pence per share, an increase from 9.5 pence. In addition, the bank said it will consider share buybacks from the time it reports full-year 2026 results, bringing this timing forward by six months versus earlier plans.

The combination of stronger earnings, upgraded financial targets, and a clearer path for capital distribution underscores management’s confidence in NatWest’s medium-term performance and balance sheet resilience.

Key Takeaways

01NatWest’s earnings momentum is supporting higher income and RoTE targets, with guidance now pointing to stronger medium-term profitability.
02The bank is balancing increased cost guidance with solid revenue growth, keeping its efficiency and returns profile attractive.
03Enhanced dividends and earlier potential buybacks signal growing capacity for capital returns while maintaining a robust financial position.

References