NatWest Group reported a 30% increase in fourth-quarter pre-tax profits, reaching £1.94 billion ($2.6 billion), exceeding analyst expectations of £1.7 billion. The strong performance contributed to a record full-year profit of £7.7 billion, the highest since the 2008 financial crisis, also surpassing forecasts.
The London-based bank attributed its success to a robust net interest margin, which rose to 2.45% from 2.37% in the previous quarter, and a strategy of utilizing a trading approach known as structural hedging to mitigate risks associated with falling interest rates. Keefe Bruyette & Woods analysts Edward Firth and Elise Yu Ge described NatWest’s results as “a series of strong numbers with a solid outlook.”
NatWest announced a £2.7 billion agreement to acquire wealth management firm Evelyn Partners, aiming to expand its reach to high-net-worth clients in the UK. The bank also initiated a £750 million share buyback program, with further repurchases planned for later in 2025. Management anticipates profit growth in the mid-to-high single digits.
Chief Executive Paul Thwaite highlighted the strong performance across NatWest’s retail, commercial, and private banking divisions. He characterized the acquisition of Evelyn Partners as a “transformative contribution” to the bank’s wealth management business, positioning it for growth in a sector undergoing disruption from artificial intelligence. NatWest plans to invest £1.2 billion in technology, AI, and process simplification in 2025, expecting this to generate an additional £100 million in investment capacity.
Looking ahead, NatWest projects a tangible equity return of over 17% this year, rising to 18% in 2028. The bank also aims to reduce its cost-to-income ratio to below 45%, down from 48% last year. The bank expects pre-tax operating profit, including depreciation and amortization, to exceed £300 million in the third year following integration of the Evelyn Partners acquisition, with a return on invested capital exceeding 11%.