NatWest’s profits surged in 2024 as the UK Treasury cut its stake below 7%, edging the bank closer to full privatisation. Strong lending and deposit growth fuel optimism, but investor confidence remains a key watchpoint.
NatWest Group (LSE: NWG) has reported a stronger-than-expected financial performance for 2024, buoyed by increased profits and shareholder returns, as the UK government continues to unwind its post-crisis stake in the bank. With His Majesty’s Treasury reducing its shareholding to just under 7%, NatWest edges closer to full private ownership—a milestone expected to be reached this year.
The bank posted a pre-tax operating profit of £6.2 billion for the year ending 31 December 2024, marginally surpassing analysts’ forecasts of £6.1 billion and reflecting a 0.3% increase from 2023. Attributable profit stood at £4.5 billion, up from £4.39 billion the previous year, underlining NatWest’s resilience despite a shifting macroeconomic landscape.
Shareholders were rewarded with a final dividend of 15.5p per share, bringing the total annual dividend to 21.5p—a 26% year-on-year increase. The bank also delivered a total £4 billion in shareholder distributions, reinforcing its commitment to returning value to investors.
The UK Treasury disposed of nearly 80 million shares, reducing its stake in NatWest to 6.98%, continuing a structured divestment plan initiated after the £46 billion bailout of Royal Bank of Scotland (RBS) during the 2008 financial crisis. CEO Paul Thwaite expressed confidence that NatWest will achieve full private ownership in 2025, marking a symbolic end to its state-backed chapter.
“The acceleration towards privatisation has attracted investment from those who share our growth ambition and will mark a new, forward-looking chapter for the bank,” Thwaite said.
NatWest’s financial momentum was driven by robust growth across its core segments:
Despite the easing of interest rates, NatWest managed to expand its net interest margin (NIM) by one basis point to just over 2%, demonstrating its ability to navigate an evolving rate environment.
NatWest’s share price has more than doubled over the past year, bolstered by the lender’s strategic growth initiatives and October’s upgraded profit targets. However, despite the strong full-year performance, shares dipped slightly following the results, as investors engaged in profit-taking.
Market analysts noted a familiar pattern seen across the banking sector, where solid results failed to trigger further stock rallies. Richard Hunter, head of markets at Interactive Investor, remarked:
“A strong final quarter ensured solid full-year numbers, though there was little within the results to sustain the rapid share price momentum seen in recent months.”
Similarly, AJ Bell investment director Russ Mould observed:
“The bank has been performing well, but the market had already priced in much of this success. Investors wanted more in terms of forward guidance to justify further upgrades.”
NatWest has set a new performance benchmark, aiming for a return on tangible equity of over 15% by 2027, reinforcing its long-term profitability ambitions.
The positive financials arrive amid renewed scrutiny of the bank’s governance. Former UK politician Nigel Farage recently indicated he is exploring private criminal proceedings against NatWest related to its 2023 debanking scandal, adding a potential reputational risk to its otherwise strong fundamentals.
As NatWest advances towards full privatisation, investors will closely watch how the bank sustains its growth trajectory amid evolving economic conditions. With a solid capital base, growing customer segments, and strong profitability, NatWest appears well-positioned for its post-government era—provided it can manage investor expectations and navigate regulatory challenges effectively.