NatWest lifts targets as FY profits jump 24%

13th Feb 2026 07:04

(Sharecast News) - UK bank NatWest on Friday reported a better-than-expected increase in full-year profits and lifted performance targets.

Pre-tax operating profit in the 12 months to December jumped 24.4% to £7.7bn, beating the £7.5bn company-compiled forecast. The lender also announced a £750m share buyback for the first half of 2026.

NatWest stretched its outlook for a return on tangible equity - a key industry measure - out to 2028, targeting more than 18% by the end of that year, up from previous guidance of greater than 15% in 2027. For this year it is set to be greater than 17%.

The results come just days after the lender agreed to buy wealth manager Evelyn Partners for £2.7bn in its largest deal since taxpayers bailed it out to the tune of more than £45.5bn after banking industry malfeasance caused the 2008 financial crisis.

Banks are looking to diversify income sources as interest rates look set to fall over the course of the year. NatWest already has a wealth management business with almost £60bn in funds and also owns the private bank Coutts.

Eyebrows were raised when it was revealed that chief executive Paul Thwaite would receive a £6.6m pay package, up 33% from 2024, the largest for the bank's boss since the disgraced Fred Goodwin took home £7.7m in 2006.

Net interest margin, the difference between savings and lending rates, jumped 21 basis points to 2.34%. Fourth-quarter profit came in at £1.48bn, compared to expectations of £1.24bn.

Total income for 2026 is expected to be £17.2bn - £17.6bn, following an increase of £1.8bn to £16.4bn in 2025, driven by deposit margin expansion as a result of higher customer balances and the impact of hedging against interest rate volatility.

Hargreaves Lansdown analyst Matt Britzman said the 2026 outlook "looks cautious rather than ambitious, but that's typical for NatWest and leaves room for upgrades as we move through the year".

"Investors should be pleased with these results, but there'll still be a lingering question mark around the price being paid for the Evelyn Partners deal that sent shares tumbling earlier in the week. Buybacks are still on the cards, but at a reduced level for the time being. The push for lucrative non-interest income shouldn't come as a surprise, and while the price may feel lofty, the strategic rationale looks solid."

"UK bank valuations aren't as attractive as they have been over the past couple of years, with much of the low-hanging fruit around poor sentiment having been resolved. Still, for high-quality names like NatWest, there's a reasonably attractive returns profile on offer."

Reporting by Frank Prenesti for Sharecast.com