Natwest has upgraded its income targets for the second quarter in a row after reporting better-than-expected profits and distributing a substantial dividend to investors. The bank's pre-tax profit for the first six months of 2026 jumped 20% to £4.3bn, up from £3.6bn in the same period last year.
Total income increased by 11% to £8.7bn, primarily due to a nearly 13% growth in net interest income, which reached £6.9bn. This performance has led the FTSE 100 bank to forecast a total income of £17.9bn for 2026, an increase from its earlier guidance of £17.2bn to £17.6bn.
The bank's net interest margin, a key measure of lending profitability, widened by 20 basis points to 2.48% compared to last year. Costs rose by 2.6% to £4.1bn, but the cost-to-income ratio improved to 46% from 48.8%.
Shareholders will receive an interim dividend of 12p per share, a 26% increase, amounting to a total payout of £955m. The bank's acquisition of Evelyn Partners for £2.7bn in February is expected to add £275m to its total income for 2026 and bring Evelyn's £69bn assets under management under the Natwest umbrella.
This update follows strong earnings reports from other UK banks, including Lloyds Banking Group, which posted a £4.3bn pre-tax profit, and Barclays, which saw a 30% profit jump in the second quarter. These results have prompted calls from the Trades Union Congress (TUC) and some Members of Parliament for a new tax on the banking sector.