Shares of NatWest Group — the bank formerly known as RBS — hit a 17-year high on Friday after the company reported £2.18 billion operating profit before tax for the three months to September 30, up 30% on the same period a year ago.
NatWest shares are now up around 40% in 2025 to around £5.64 to give the bank a stock market value of roughly £45 billion.
NatWest-RBS reported that its “assets under management and administration ” grew strongly in the quarter, up 8.1% to £56 billion assisted by strong client net inflows.
The bank raised its guidance on full year outlook, saying: “We now expect income excluding notable items to be around £16.3 billion for 2025.”
Customer deposits excluding central items reduced £1.1 billion in the quarter to £434.7 billion “primarily reflecting a reduction in savings balances in Retail Banking and Private Banking & Wealth Management.”
NatWest-RBS returned to full private ownership earlier in 2025, with the UK Treasury no longer holding any shares in the business.
The UK taxpayer bailed out RBS in a £45 billion rescue deal during the last financial crisis in 2008-2009.
NatWest Group CEO Paul Thwaite said: “NatWest Group delivered another strong performance in the third quarter of 2025, underpinned by healthy levels of customer activity and the continued support we provide to them.
“This is driving positive momentum across our three businesses, with continued lending growth and deposits remaining stable.
“With our strategic focus on growth, NatWest Group’s impact can be felt right across the economy, as we help people get on the housing ladder, save and invest for the future and grow their businesses – from innovative start-ups and vital mid-market firms to the largest multinationals responsible for critical infrastructure projects.
“We are also becoming a much simpler bank, with tight control of costs supporting our digital transformation that is enabling us to anticipate and meet the changing needs of customers at pace.
“As a result of our consistent delivery and capital generation, we have upgraded our income and returns guidance for 2025 and are well placed to support our customers, invest for the future and deliver returns to our shareholders.”
REACTION:
Richard Hunter, Head of Markets at interactive investor: “This is a sparkling set of numbers by any standards, as NatWest continues its relentless recovery from its historic woes.
“As far as investors are concerned, NatWest is in a sweet spot. The government shackles have gone, the group has prodigious amounts of cash and acquisitions to boost growth further seem likely.
“Indeed, it remains to be seen whether this new-found freedom will enable a more aggressive acquisition policy, with NatWest already having made what it described as two significant purchases in the form of Metro Bank’s mortgage book and Sainsbury’s Bank and reportedly having been rebuffed in an approach for Santander’s UK operation.
“Its significant cash generation will provide an interesting dilemma on whether to continue to bolster shareholder returns, make further acquisitions, invest heavily in the business particularly in regard to growing digitalisation, or perhaps a combination of all of these options.
“At the headline level, profit of £1.68 billion was 35.1% higher than the previous year, with operating profit up by 30% to £2.18 billion, comfortably ahead of the expected £1.83 billion. Total income rose by 15.7% to £4.33 billion, again ahead of the £4.1 billion estimate.
“Within its three main units, operating profit rose by 30% to £850 million in Retail Banking, by 20% to £108 million in Private Banking and Wealth Management and by 2.4% to £1.04 billion in Commercial & Institutional.
“Revenue generally was boosted by both loan growth and structural hedge income, as well as a £4.4 billion increase in lending activity which included £1.7 billion of mortgage activity within Retail Banking. Possibly the only blot on the landscape was a decline of £1.1 billion in deposits, although given that assets under management and administration rose by 8.1% to £56 billion, this is of limited concern.
“Higher income was also accompanied by operating costs which increased by 9.4% to £2 billion, although the reduction in the cost/income ratio from 52.8% to 47.8% in the year to date is likely to prove a sector-beating number.
“Other key metrics also reflected strong progress, with a Return on Tangible Equity (ROTE) of 22.3% against 18.3% in the corresponding period, while a capital cushion or CET1 ratio of 14.2% breezed past the previous 13.6% number. There was an additional impairment charge for the quarter of £153 million, which compares to £245 million in the corresponding period, which is as much a measure of prudence rather than any underlying credit deterioration.
“As a result, NatWest also raised its guidance for the full year outlook, with income now expected to hit £16.3 billion and the ROTE to be in excess of 18% from the previous 16.5% level.”
Matt Britzman, senior equity analyst, Hargreaves Lansdown: “NatWest delivered a strong set of results, comfortably beating expectations with profits about 10% ahead of consensus.
“The good news was broad-based: revenues were higher, costs were lower, and even loan impairments came in better than feared. Net interest margins – a key measure of how much banks earn on lending – held up well, and management has enough confidence to nudge full-year guidance higher once more. Even so, that upgrade still feels a touch cautious given the margin strength, leaving room for more upside if trends continue.
“This is another reminder that UK-focused banks are quietly performing better than many give them credit for. Lloyds showed similar resilience recently, though its motor finance charge muddied the picture. Strip out the noise, and both lenders are proving they fully deserve their improving valuations. For investors, these results reinforce the idea that the domestic banking story still has more room to run.”