Natwest hikes targets again after jump in profit
Natwest has upgraded its income targets for a second quarter running as the bank posted better than expected profit and dished out a bumper dividend to investors.
The blue-chip lender reported a 20 per cent jump in pre-tax profit in the first six months of 2026 to £4.3bn, up from £3.6bn the year prior and surpassing analysts estimates of £4bn.
It came as total income swelled 11 per cent to £8.7bn led by near 13 per cent growth in net interest income at £6.9bn. The bank has benefited from interest rate expectations staying higher for longer, which has helped trigger another income forecast upgrade.
The FTSE 100 giant is pencilling in a total income of £17.9bn for 2026, up from the £17.2bn to £17.6bn range it guided to at the start of the year. This figure is also expected to include a £275m tailwind from the integration of Evelyn Partners.
Natwest’s net interest margin – a key metric for a bank’s profitability from lending – widened 20 basis points to 2.48 per cent compared with last year, driven by higher deposits across its retail and wealth operations.
Meanwhile costs inched up 2.6 per cent to £4.1bn but the bank’s cost-to-income ratio, which measures its expenses in relation to income, reduced to 46 per cent from 48.8 per cent.
Natwest shareholders get payout
The bank hiked its interim dividend by 26 per cent to 12p for the period, leading to a payout of £955m for investors. It added it would consider a share buyback from its full-year 2026 earnings release – six months earlier than previously planned.
In February, Natwest snapped up Evelyn Partners in a £2.7bn deal, which Thwaite said would create the banking groups “third growth engine”.
The move is set to shift Evelyn’s £69bn assets under management under the Natwest umbrella, meaning the bank will boast a total of around £127bn assets, making it the largest of the bank-owned wealth managers. But the lender’s share price sank in the trading session following, after it was revealed the firm paid a 9.7x multiple on Evelyn’s latest £179m in earnings
Wealth income rose over ten per cent in the first half of the year to £595m.
The latest Natwest update follows a series of bumper earnings from UK banks. Lloyds Banking Group – which owns the Bank of Scotland and Halifax as well as its namesake – recorded a £4.3bn pre-tax profit in the first half of 2026, breezing past an internal analyst target of £4.1bn. The figure was up 23 per cent from the £3.5bn scored in the same period last year.
Barclays also revealed a 30 per cent jump in profit to £3.3bn in the second quarter of the year as it put £1.3bn towards its bonus pool for the first six months, up from £1bn the year prior.
The earnings bump have fuelled calls from the Trades Union Congress (TUC) and left-wing members of Parliament for new Prime Minister Andy Burnham and his Chancellor John Healey to slap a tax on the sector.
Barclays boss’ CS Venkatakrishnan warned against the move, stating for every £1 off capital the bank has, around £8 to £10 is lent to business and households supporting growth.