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NatWest Group (NYSE:NWG) delivered robust first-quarter results for 2025, reporting a 36.4% year-over-year increase in attributable profit to £1.3 billion. The strong performance, detailed in the bank’s May 2 presentation, was driven by income growth across all business segments and continued cost discipline.
Quarterly Performance Highlights
The UK-based banking group reported substantial improvements in key metrics compared to the same period last year. Return on tangible equity reached 18.5%, up from 14.2% in Q1 2024, while earnings per share jumped 48% to 15.5p.
"We’ve delivered disciplined growth across our businesses while maintaining strong returns," said Paul Thwaite, Chief Executive Officer of NatWest Group, highlighting the bank’s balanced approach to growth and profitability.
Total (EPA:TTEF) income excluding notable items rose 15.8% year-over-year to £4.0 billion, driven by growth in both net interest income and non-interest income. Meanwhile, operating expenses decreased by 3.6% to £2.0 billion, reflecting the bank’s ongoing cost management efforts.
As shown in the following comprehensive overview of key financial metrics:
Detailed Financial Analysis
NatWest’s strong performance was evident across multiple financial dimensions. Net interest income excluding notable items increased by 14.1% year-over-year to £3.0 billion, while non-interest income saw an even more impressive 21.4% growth to £926 million compared to Q1 2024.
The detailed quarterly results demonstrate significant improvement in operating profit before impairments, which surged 40.6% compared to the same period last year:
This performance was supported by continued income momentum across the bank’s business segments. The waterfall chart below illustrates the sequential growth in total income from Q4 2024 to Q1 2025:
On the balance sheet side, NatWest reported modest growth in both loans and deposits. Customer loans increased to £375 billion, up 0.9% from December 2024, while customer deposits rose 0.5% to £433 billion over the same period.
The loan portfolio breakdown shows a balanced mix across retail and commercial segments:
Similarly, the deposit base remains well-diversified across business segments and product types:
One area of caution was the impairment charge, which increased to £189 million in Q1 2025, representing a 103.2% increase compared to Q1 2024. The loan impairment rate rose to 19 basis points, up from 10 basis points a year earlier, reflecting a more normalized credit environment following the post-pandemic period.
Strategic Initiatives
A key strategic development highlighted in the presentation was NatWest’s acquisition of Sainsbury (LON:SBRY)’s Bank, which will add approximately one million customer accounts, £2.5 billion in gross customer loans, and £2.7 billion in customer deposits to the group’s portfolio.
The following chart illustrates the expected impact of the Sainsbury’s Bank transaction:
NatWest continues to maintain a strong capital position, with a CET1 ratio of 13.8% as of March 31, 2025. The bank generated 49 basis points of capital before distributions in Q1 2025, supporting its ability to return capital to shareholders while investing in growth.
The bank’s loan book remains well-diversified across sectors, with a balanced split between personal lending (56%) and wholesale lending (44%):
Forward-Looking Statements
Based on the strong Q1 performance, NatWest has raised its guidance for the full year 2025. The bank now expects total income excluding notable items to be at the upper end of its previously guided range of £15.2-15.7 billion, assuming a UK Bank rate of 3.75% by the end of 2025.
The bank also anticipates achieving a return on tangible equity at the upper end of its previously guided range of 15-16% for 2025, and is targeting a return on tangible equity of over 15% in 2027.
Operating costs, excluding litigation and conduct costs, are expected to be around £8.1 billion for 2025, including approximately £0.1 billion of one-time integration costs related to acquisitions.
NatWest continues to target a CET1 ratio in the range of 13-14% and plans to maintain an ordinary dividend payout ratio of around 50%, with surplus capital to be returned via share buybacks.
Katie Murray, Chief Financial Officer, noted during the presentation that the bank’s structural hedging strategy is providing a significant income tailwind, with product structural hedge income in 2025 expected to be approximately £1 billion greater than in 2024.
NatWest Group shares closed at $12.77 on May 1, 2025, down 1.16% for the day. The stock has traded between $7.76 and $13.18 over the past 52 weeks, according to the latest market data.
Full presentation:
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