The banking giant said that operating profit before tax reached more than £2.5 billion in the six-month period, a swing from a £707 million loss in the same period last year.
It makes NatWest the latest big lender to beat forecasts, following on from both Barclays and Lloyds Banking Group, the owner of Bank of Scotland and Scottish Widows, earlier this week.
Analysts had expected NatWest to post profits of about £1.8bn for the fist half of the year.
Along with Lloyds and Barclays, NatWest set aside billions of pounds during the early days of Covid-19, in case it was needed during the ensuing economic chaos.
But the economy today looks better than it did then, allowing all three banks to dip back into these so-called impairment charges from last year.
NatWest decided to release £705m from its impairment pot, most of which – £605m – came in the second quarter of the year.
Chief executive Alison Rose said: “These results have been driven by good operating performances across the group, underpinned by a robust loan book and a strong capital position.
“Defaults remain low and, given the improved outlook, we have released a further £600m of impairment provisions in the quarter.
“While we see the potential for a more rapid recovery, we will continue to take an appropriate and conservative approach as the government schemes wind down and the economy reopens.”
The bank said it will pay an interim dividend of 3p per share, returning some £347m to shareholders in the process.
The UK government, which took a majority stake in the group during the 2008 financial crisis, will receive £190m of this.
NatWest will also buy back shares worth up to £750m from its investors.
John Moore, senior investment manager at Brewin Dolphin, said: “Results this week from the major UK banks have been like a scratched record – but for long-suffering shareholders the music has, at least, been worth listening to.
“NatWest has reported a solid capital position, strong profits, a large impairment release, and a hike to shareholder distributions.
“The bank has largely navigated the pandemic well and managed to continue on its transformation programme, which saw it make a deliberate break with the past.”
Freetrade senior analyst Dan Lane said: “The standout feature is just how eager the bank is to return capital to shareholders.
“Now that the regulatory shackles are off, the dividend is looking much healthier. A clear structure to get more cash back to investors, through share buybacks too, will sound like good news for last year’s yield-starved shareholders.
“Steadily releasing money set aside to deal with loans turning sour over lockdown will give the bank a bit more ballast too. The loan book hasn’t soured anywhere near as much as first feared so unlocking that cash pile that wasn’t really doing anything is a boon this morning.”