By Elena Vardon

NatWest raised its guidance and launched a buyback after reporting second-quarter results that were supported by growth in lending, deposits and client assets.

The British lender now forecasts total income excluding notable items to exceed 16.0 billion pounds ($21.61 billion) for 2025. The revised outlook--which marks an improvement from a previous target at the high end of the 15.2 billion to 15.7 billion pound range--comes after its integration of Sainsbury's Bank and as loan growth and structural hedges continue to mitigate the effect of interest-rate cuts by the Bank of England. This has allowed NatWest to continue to benefit from tailwinds in an environment of falling rates. Analysts had already anticipated a higher figure, with a company-compiled consensus pointing to 15.975 billion pounds for the year.

The London-listed group also lifted its return-on-tangible-equity forecast--a key measure of profitability--to greater than 16.5%. This compares with its prior guidance for the higher end of the 15% to 16% range, after reporting 18.1% for the first six months. It reiterated its target of a return above 15% for 2027.

"With positive momentum in our business, we are ambitious for the future and see clear opportunities for further disciplined growth," Chief Executive Paul Thwaite said Friday.

The main street bank returned to private ownership during the quarter, 17 years after the government bailed out Royal Bank of Scotland--as it was formerly known before its 2020 rebranding--during the 2008-09 financial crisis. After the exit, "NatWest Group is well placed to step up and play its part in supporting economic growth across the U.K.," Thwaite added.

The company continues to invest in a simplified structure, artificial intelligence and winning customers. In early May, it closed its acquisition of Sainsbury's Bank through which it welcomed more than a million new clients and added scale to its unsecured lending business.

For the second quarter, NatWest reported total income of 4.01 billion pounds, a 9.5% increase on year that was largely in line with expectations. Net interest income--the difference between what banks earn on loans and what they pay out on client deposits--rose 12% to 3.09 billion pounds, also roughly meeting forecasts.

Net interest margin for the quarter was 2.28% as expected, up from 2.10% a year prior despite interest-rate cuts, thanks to the support from the structural hedges the bank has in place.

Pretax profit rose 4.4% on year to 1.77 billion pounds--surpassing a 1.65 billion pound estimate--as higher income outweighed slightly higher costs and provisions for bad loans.

NatWest declared an interim dividend of 9.5 pence a share and said that it would start a 750 million pounds buyback in the second half.

Shares opened around 1% higher at market open after what analysts described as solid results and capital returns.

Write to Elena Vardon at elena.vardon@wsj.com

(END) Dow Jones Newswires

July 25, 2025 03:31 ET (07:31 GMT)

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