LONDON—NatWest Group, one of Britain’s banking heavyweights, dropped a bombshell on investors last week, reporting a first-quarter profit that obliterated expectations. The lender’s numbers, released on April 25, 2025, showed a pre-tax operating profit of £1.81 billion for the first three months of the year—a 36% leap from the same period in 2024. Analysts, who’d pegged the figure closer to £1.56 billion, were left scrambling to make sense of the surge.
The bank’s performance was no fluke. Net interest income, the cash raked in from loans minus what’s paid out on deposits, hit £3.03 billion, topping estimates of £2.98 billion. A key driver? NatWest’s net interest margin, a measure of lending profitability, climbed to 2.27%, edging out the forecasted 2.25%. Mortgage lending fueled much of the growth, with net loans swelling by £3.4 billion to £371.9 billion. The bank’s focus on squeezing more from deposits didn’t hurt either, as healthier margins padded the bottom line.
NatWest wasn’t shy about its confidence moving forward. The bank raised its full-year return on tangible equity target, now aiming for the high end of 15% to 16%. That’s a bold move in a year clouded by economic jitters—rising rates, sticky inflation, and whispers of slowdowns haven’t exactly made banking a walk in the park. Yet NatWest’s capital strength held firm, with a Common Equity Tier 1 ratio of 13.8%, signaling it’s got plenty of cushion against potential storms.
Bad debts, always a specter for lenders, didn’t haunt NatWest this quarter. Provisions for loan defaults rose by £100 million to £3.5 billion, a cautious nod to an uncertain economy, but nothing to spook investors. Total income for the quarter jumped 3.8% to £4 billion, driven by that lending spree and savvier deposit management.
The numbers sent NatWest’s shares climbing, hitting a 14-year high on April 25. It’s a remarkable turnaround for a bank that was on its knees during the 2008 financial crisis, propped up by a government bailout. Now, as it gears up to return fully to private ownership, NatWest’s latest results are a loud signal it’s ready to stand on its own.
The bank’s cost discipline also played a role. Its operating cost ratio, a measure of efficiency, dropped sharply from last year, showing NatWest’s not just banking on revenue to shine. It’s cutting fat where it counts.
For the first quarter of 2025, NatWest reported net income of £1.25 billion, pre-tax operating profit of £1.81 billion, net interest income of £3.03 billion, and a net interest margin of 2.27%. Total income reached £4 billion, with net loans at £371.9 billion and provisions for bad debts at £3.5 billion. The Common Equity Tier 1 ratio stood at 13.8%, and the bank forecasts a full-year return on tangible equity between 15% and 16%.