NatWest tops 2025 profit forecasts, lifts RoTE target

Investing.com -- NatWest posted a 24% rise in annual profit, beating expectations and unveiling higher medium-term targets.

The lender reported a 2025 pretax operating profit of £7.7 billion, up from £6.2 billion a year earlier and slightly above the £7.5 billion consensus compiled by the bank.

NatWest said it now aims to deliver a return on tangible equity (RoTE) of more than 18% in 2028, compared with previous guidance of over 15% in 2027. “We are raising our ambition and sharpening our strategic focus, with stretching new targets in place,” CEO Paul Thwaite said in the earnings statement.

As for the rest of its 2028 targets, NatWest is aiming for customer assets and liabilities to grow at more than 4% annually. It is targeting a cost-to-income ratio below 45%, capital generation above 200 basis points and a CET1 ratio of around 13%, slightly lower than its current 13–14% range.

The results follow this week’s agreement to acquire Evelyn Partners for £2.7 billion, marking NatWest’s largest transaction since its 2008 government bailout during the financial crisis.

Management outlined further details on the deal, saying income is expected to grow at a mid- to high-single-digit rate. Including revenue and cost synergies, the year-three run-rate pretax operating profit is projected to exceed £0.3 billion, inclusive of depreciation and amortisation. The total return on invested capital is expected to be above 11%.

Commenting on the print, Bank of America analysts said NatWest "printed a solid set of Q4 results."

"A combination of growth commitment and cost discipline should translate into positive operating leverage each year and sustainable high-teens returns," they noted, lifting the target price to 770p from 735p.

The bank also announced a £750 million share buyback for the first half of 2026.

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