NatWest has reported one of its strongest quarterly results in over 15 years, with pre-tax profits jumping 30.4% to £2.2 billion for the three months ending September — far surpassing City forecasts.
The FTSE 100 lender said total income rose nearly 16% to £4.3 billion, supported by widening deposit margins and an extra trading day in the quarter. Its net interest margin, a key indicator of profitability from the gap between lending and deposit rates, climbed to 2.37%, up from 2.18% a year earlier.
Investors reacted positively to the results, sending NatWest shares up 3% to 563p — their highest level since the bank’s 2008 government bailout.
Chief executive Paul Thwaite described the quarter’s performance as being “underpinned by healthy levels of customer activity,” adding that the group’s balance sheet “remains strong and resilient despite a challenging macroeconomic environment.”
Following the strong results, NatWest upgraded its full-year guidance, now expecting income excluding one-off items to reach around £16.3 billion, compared with a previous forecast of “more than £16 billion.” The bank also raised its target return on tangible equity to above 18%, up from 16.5%.
The results reflect how persistently high interest rates have boosted British banks’ earnings. Although the Bank of England has reduced its base rate from a peak of 5.25% to 4%, borrowing costs remain high enough for lenders to maintain robust margins on loans and deposits.
NatWest’s performance follows similarly strong results across the sector. Barclays reported pre-tax profits of £2.1 billion this week and announced a £500 million share buyback, while Lloyds Banking Group posted £1.2 billion despite setting aside £800 million for potential motor finance mis-selling claims.
Many banks have also benefited from “structural hedging” strategies, which use financial instruments to protect against interest rate volatility and provide steady returns in uncertain markets.
However, the surge in profits could draw political scrutiny ahead of the Chancellor’s Autumn Budget on 26 November. With Chancellor Rachel Reeves facing pressure to close a fiscal shortfall, analysts say banks’ healthy profits may make them potential targets for new tax measures or a windfall levy.
Industry leaders have warned against such a move, arguing that UK lenders already face one of the heaviest tax burdens globally. They caution that further taxation could undermine the competitiveness of Britain’s financial sector at a time when international banks are re-evaluating their investment in the UK.
