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 buy-back 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, and bosses said 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.
The NatWest chief executive, Paul Thwaite, said: “Since our first-quarter results, the government has sold its remaining stake in NatWest Group.
“This was clearly an important milestone, and the accelerated sell-down of government shares over the past 18 months allowed us to attract new investors who share our focus on driving growth across the business.”
However, Thwaite warned over potential tax increases on the banking sector, amid speculation that the chancellor, Rachel Reeves, could use her autumn budget to announce new levies on the industry. He suggested higher bank levies could harm the government’s growth efforts and spook investors.
“What’s very important, from an investor perspective, is that they have consistency, stability and predictability. So from that perspective, I think it’s very important that policymakers are thoughtful about any signals that they can send in respect of policy,” Thwaite said.
On a call with journalists, the NatWest boss was asked whether the bank was seeing any flight of customers after the abolition of the centuries old non-dom regime, particularly from its Coutts division for wealthy customers. The UK’s previous non-dom regime allowed wealthy foreign people to avoid paying tax on money they were earning outside the UK, and avoid paying inheritance tax on their global assets.
“We’re not at this stage seeing any meaningful change in terms of behaviour, but that customer base is very alive to policy change, be that tax or regulatory,” he said. “So we’re monitoring it very closely, but [see] no meaningful change at this stage.”
