NatWest Group, the owner of the Royal Bank of Scotland, reported a sharp rise in third-quarter profits on October 24, 2025, beating analyst forecasts with strong customer demand and smart cost management. The bank’s shares climbed to a 15-year high as investors cheered the upbeat results and higher outlook for the full year.
Strong Q3 Performance Beats Expectations
The bank posted an operating profit before tax of £2.2 billion for the July to September period, a 30 percent increase from the same time last year. This figure topped the £1.83 billion that experts had predicted, showing NatWest’s solid grip on its business amid a tough economic scene.
Total income, excluding one-off items, reached £4.2 billion in the quarter, up £0.2 billion from the prior three months. For the first nine months of 2025, income hit £12.1 billion, a 12.5 percent jump year over year. Attributable profit for the quarter stood at £1.6 billion, with a return on tangible equity of 22.3 percent. These numbers highlight how NatWest turned healthy customer activity into real gains.
Over the nine months, the bank saw operating profit climb to £5.8 billion from £4.7 billion in 2024. The cost to income ratio improved to 47.8 percent, thanks to tight spending controls. Impairments dropped to £153 million in the quarter, down from £193 million before, with a loan impairment rate of just 15 basis points.
Lending Growth Fuels the Success
NatWest saw net loans to customers rise by £4.4 billion in the third quarter, excluding central items. This growth came from meeting customer needs in mortgages and business lending while picking spots with good returns.
Mortgage balances grew by £1.7 billion to £212.2 billion, driven by steady home buying interest. Commercial and institutional lending increased by £2.5 billion, focusing on areas like infrastructure and sustainable projects. The bank provided £7.6 billion in climate and transition finance during the quarter, moving toward its £200 billion goal by 2030.
Deposits stayed flat, but assets under management and administration jumped 8.1 percent to £56 billion, boosted by client inflows. The net interest margin improved to 2.37 percent, helped by lower funding costs and wider lending spreads. These moves show NatWest’s focus on balanced growth in a time of changing interest rates.
Here are key drivers of the lending success:
- Robust mortgage demand amid stable housing market signals.
- Strong business loans in green energy and infrastructure sectors.
- Disciplined risk management keeping arrears below industry averages.
Upgraded Guidance Signals Confidence
Buoyed by the quarter’s results, NatWest raised its full-year targets for 2025. The bank now expects total income excluding notable items to hit around £16.3 billion, up from the earlier view of more than £16 billion. It also forecasts a return on tangible equity above 18 percent, improved from 16.5 percent.
This marks the second upgrade this year, reflecting ongoing momentum. For 2027, NatWest aims for a return on tangible equity greater than 15 percent. The common equity tier 1 capital ratio strengthened to 14.2 percent, up 60 basis points from the end of 2024. Capital generation before distributions added 101 basis points in the quarter.
Chief Executive Paul Thwaite praised the “strong performance” tied to positive customer trends and cost discipline. He noted the bank’s role in supporting UK homes and businesses, while warning against tax hikes that could hurt stability. NatWest completed half of a £750 million share buyback and plans to finish it by year-end results on February 13, 2026.
| Key Financial Metrics | Q3 2025 | Q3 2024 | Change |
|---|---|---|---|
| Operating Profit Before Tax | £2.2bn | £1.7bn | +30% |
| Total Income (ex. notable items) | £4.2bn | N/A | +£0.2bn QoQ |
| Attributable Profit | £1.6bn | £1.24bn | +29% |
| Return on Tangible Equity (9M) | 19.5% | 17.0% | +2.5 pts |
| CET1 Ratio | 14.2% | N/A | +0.6 pts YoY |
| Cost/Income Ratio (9M) | 47.8% | 52.8% | -5 pts |
Shares Soar to 15-Year Peak
NatWest shares surged about 4 percent on October 24, 2025, reaching levels not seen since late 2008 during the financial crisis. The stock hit around 583 pence, up from 545.60 pence the day before, as the FTSE index stayed flat.
This rally came after the bank returned to full private ownership in May 2025, free from government ties. Recent deals, like buying Sainsbury’s Bank and parts of Metro Bank’s mortgage book, added to the buzz. Investors see NatWest as a top performer among UK banks, outpacing Barclays and Lloyds in returns.
The upgrade to the highest return on tangible equity guidance among British peers boosted sentiment. Shares have risen steadily this year, reflecting the bank’s shift to growth and efficiency. Yet, some watch for risks like potential mergers, recalling past acquisition pitfalls.
Analyst Views and Future Moves
Experts hailed the results as a sign of NatWest’s turnaround. One investment director noted that full private status suits the bank well, with share buybacks supporting earnings growth. A wealth manager pointed to revenue gains and cost controls strengthening the balance sheet.
Speculation grows on next steps, with rumors of more mergers in UK banking. NatWest’s low exposure to private credit, under £5 billion out of £420 billion total, eases concerns from US issues. The bank expects a Bank of England base rate cut in early 2026, with a long-term rate at 3.5 percent.
Compared to rivals, NatWest avoided hits from the car finance mis-selling probe that dinged Lloyds. Its diversified loan book, with 55 percent personal and 45 percent non-personal, keeps risks in check. As the UK economy stabilizes post-pandemic, NatWest stands ready to expand support for customers and investors.
This news brings hope for steady banking amid fiscal talks. Share your thoughts on NatWest’s path ahead in the comments below, and spread the word if it helps your view on UK finance.
