NatWest profits surge 18% after cutting costs and gaining Sainsbury’s Bank

NatWest Group has revealed its profits surged by 18% in the first half of 2025 as the banking group gained customers after buying Sainsbury’s Bank and bringing down business costs.

The group – which includes NatWest, Royal Bank of Scotland, and Coutts – revealed it is returning more cash to investors having returned to private ownership in May.

It reported a pre-tax operating profit of £3.6 billion for the first six months of the year.

This was 18% higher than the same period a year ago, and ahead of the £3.5 billion that some analysts were expecting.

Total income jumped by about 12% year-on-year, with its retail banking division boosted by higher customer deposits.

Savings among consumers were above the long-term average, according to the bank, while non-essential spending on things like recreation and entertainment was positive.

Paul Thwaite, NatWest Group’s chief executive, said this reflected signs that consumer confidence is increasing.

“There was an obvious low in March and April around some of the tariff news,” he said.

“What I see and what I hear from customers is that they’re resilient – they’re very mindful of that changing external environment, but activity levels are good.”

The bank also reported higher levels of lending to customers over the period, driven by bigger mortgage balances.

Mortgage lending picked up significantly for many UK lenders ahead of stamp duty relief becoming less generous at the start of April, with many first-time buyers hoping to secure home purchases before the deadline.

NatWest revealed it gained 1.1 million new customers in the first half of 2025, primarily from acquiring Sainsbury’s Bank in May and taking on its customers.

It marked the first set of financial results since the Government sold its remaining shares in the lender, returning it to private ownership for the first time since being rescued by taxpayers during the 2008 financial crisis.

Mr Thwaite said he characterised the shift as “symbolic” but added: “From a strategic perspective, it doesn’t change anything.”

Nevertheless, the banking group announced on Friday it is launching a new share buyback programme of £750 million in the second half of the year, in a bid to return cash to its shareholders.

It also said it had upgraded key elements of its financial outlook for the full year.

Mr Thwaite said the group is focused on “bank-wide simplification, as we quietly revolutionise how we operate, enhancing our tech and AI capabilities in order to better meet and anticipate the evolving needs of our customers”.

Efforts to simplify the bank helped bring down business costs over the latest period.

Its cost-to-income ratio fell to 48.8% over the first half, from 55.5% the prior year. This means it is spending less on running the business, as a percentage of the amount it generates in income.

Shares in NatWest were up by about 2% on Friday morning.