NatWest's shares jump 5% after the UK bank's profits soar

Shares in NatWest rose by as much as 5% on Friday before falling back slightly after the UK bank’s operating profits were £200 million higher than expected during the third quarter.

The banking group said it made an operating pre-tax profit of £1.7 billion between July and September, nearly a third higher than the £1.3 billion generated this time last year. Analysts were forecasting profits of £1.5 billion.

The increase was partly driven by an increase in lending and the amount of money customers deposited with the bank.

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The results sent shares in the bank, which is 20% owned by the government, to their highest levels since 2015.

Chief executive, Paul Thwaite, said: “The strength of NatWest Group’s performance is underpinned by the support we provide to our 19 million customers in every nation and region of the UK.

“Throughout the third quarter of 2024, we have grown our lending, helping customers to buy or remortgage their homes or to start and grow their businesses. With customer activity increasing… and defaults remaining low, we are well placed to succeed with our customers and for our shareholders in the months and years ahead.”

NatWest joined Lloyds and Barclays in unveiling higher profits than analysts were expecting this week, as the banking sector continues to strengthen as interest rates start to fall.

Government ditches plan to sell remaining stake in NatWest

The profit jump comes after Rachel Reeves abandoned plans to sell the government’s remaining stake in NatWest to the public, saying it would not “represent value for money”.

The Labour chancellor said in July that a retail share sale of the bank would now not happen as it would mean having to offer the public discounts worth hundreds of millions of pounds, which would be damaging for taxpayers.

At one stage NatWest was 84% owned by the state after a £46 billion bailout at the height of the financial crisis.

A public sale would "not represent value for money, and it will not go ahead", Reeves told MPs as part of a statement on public finances. She added: “It’s a bad use of taxpayer money and we will not do it."

Sarah Coles, head of personal finance at Hargreaves Lansdown, said at the time: “The news that retail investors will be frozen out as NatWest shares are sold off is bitterly disappointing. Retail investors are all too often overlooked and yet they are important backers of UK companies, holding a greater proportion of their assets in the UK compared to the likes of pension funds.”