RBS owner NatWest could return to full private ownership this year after £6.2 billion profit haul

Royal Bank of Scotland parent NatWest Group has reported a better-than-expected annual profit as the bank edges closer to returning to private ownership.

Chief executive Paul Thwaite said shedding the UK Treasury’s remaining shareholding would mark a “new, forward-looking chapter” for the lending giant. The group told investors it made an operating pre-tax profit of £6.2 billion last year, some 0.3 per cent up on 2023. This was slightly ahead of the £6.1bn profit some analysts had been expecting.

NatWest said it benefited from lending growth during the year, with mortgage demand increasing as the property market improved and after acquiring Metro Bank’s loan book. Deposits also increased year-on-year as savings balances grew, offsetting a decline in current account balances.

Royal Bank of Scotland forms part of NatWest Group.

The retail bank nonetheless generated less income than in 2023, as borrowing costs started to come down and more people moved savings into accounts with higher interest rates. This means the bank generates less from loans, but pays out more for savings.

Meanwhile, the government’s stake in NatWest has dropped to below 7 per cent as the bank continues on its path to privatisation, which it expects to reach later this year.

Thwaite told investors: “As we enter a new, forward-looking chapter for NatWest Group , I am optimistic about the opportunities ahead of us to grow our business as a vital and trusted partner to our customers and the UK itself and, in doing so, create further value for our shareholders.”

He added that it was continuing work to build a “simpler, more integrated and technology-driven bank” with it targeting cost savings across the business.

Zoe Gillespie, investment manager at RBC Brewin Dolphin, said: “NatWest is in fine fettle. The bank has beaten expectations, exceeding its own upgraded guidance for 2024, while the government has accelerated the reduction of its stake. On this trajectory, NatWest could potentially return to full private ownership this year and, with that, new opportunities may open up to the bank.

“Combined with an expanding loan book - buoyed on the retail side by the acquisitions of Sainsbury’s Bank and Metro Bank’s mortgage portfolio - a simplified business model, and a strengthening balance sheet, NatWest has built a solid foundation for its next era and, all things being equal, should be free of the distractions of the past.”

Matt Britzman, senior equity analyst at investment platform Hargreaves Lansdown, said NatWest had moved on from its “troubles at the helm” while the UK banking environment played out much better than some had feared last year.

“2025 could be the year NatWest finally sheds its government ties, with the bank on track to return to full private ownership,” he noted. “After the UK government’s failed attempt to sell its stake earlier in 2024, this news will be a welcome development for investors who have long been waiting for the bank to regain its full independence. For the longer-term investor, this was a decent set of results, setting up another positive year in 2025.”

From Brexit and Covid to a brighter tomorrow - NatWest chief talks future of Scottish business