NatWest will give a further £1.5bn to shareholders only weeks after the UK government sold the final part of its stake in the once bailed-out bank.
The high street lender on Friday announced plans to distribute an interim dividend of 9.5p a share, worth a collective £768m, on top of a fresh £750m share buyback in the second half of the year.
It came as the bank beat market forecasts with a 4.4% rise in second-quarter profits to just under £1.8bn, thanks in part to higher income linked to its takeover of Sainsbury’s banking business, which it snapped up last year.
NatWest also improved its outlook for its performance in 2025, with bosses saying they now expect income – excluding notable items – to surpass £16bn. That is compared with previous guidance of £15.2bn-£15.7bn.
The shareholder windfall and strong results come as NatWest celebrates its first quarter as a fully privatised lender in 17 years, having been saved from collapse through a £45bn taxpayer-funded bailout during the 2008 financial crisis.
The UK government sold its final shares in the bank – formerly known as Royal Bank of Scotland – at the end of May.
While the government started to benefit from NatWest’s return to health and the relaunch of dividends in 2018, taxpayers ultimately took a £10bn loss, with shares having long languished below the average 502p level paid in the bailout as the state stake was sold off in stages.
NatWest shares rose almost 1% to 506p on Friday morning after the release of its second-quarter results.
Commenting on the latest financial report, NatWest’s chief executive, Paul Thwaite, said: “NatWest Group’s strong performance in the first half of the year reflects our consistent support for our customers and, in turn, delivery for our shareholders.
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“Having returned to full private ownership … NatWest Group is well placed to step up and play its part in supporting economic growth across the UK and, in doing so, to create sustainable value for all our stakeholders.”
Zoe Gillespie, a wealth manager at RBC Brewin Dolphin, said: “NatWest has posted another strong set of results, beating forecasts again as the bank’s turnaround really takes hold.
“Its strategy of simplification, cost reduction, and technology integration – combined with sensible bolt-on acquisitions – is driving income growth and greater profitability.”