NatWest shares just touched their highest point since 2009, and investors are loving it. The FTSE 100 banking giant saw its stock climb over 1% Monday morning to 578.60p, capping off a stellar year where shares have surged more than 40%. So what’s fuelling this comeback? A mix of solid profits, smart cost-cutting, and a net interest margin that’s finally working in their favour. Let’s break down why NatWest is quietly becoming one of the UK’s best-performing bank stocks.
NatWest’s Q3 Results Pack a Punch
The numbers tell the story. NatWest pulled in £2.2bn in operating profit before tax for Q3 — that’s a 30% jump from last year’s £1.7bn. Not bad for a bank that many wrote off as too UK-focused.
The real star? Net interest margin (NIM) climbed to 2.37%, up nine basis points from Q2. For those keeping score at home, NIM measures how much profit a bank squeezes from lending versus what it pays depositors. Higher NIM means better profitability, and right now, NatWest’s got momentum.
Retail banking delivered £850m in operating profit, boosted by £1.7bn in mortgage lending growth. Turns out people still need home loans, and NatWest’s there to write them.
Cost-Cutting Is the Secret Sauce
Here’s where things get interesting. NatWest isn’t just riding the interest rate wave — it’s actively trimming the fat.
The bank’s been moving roles to lower-cost locations like India and streamlining operations to become what CEO Paul Thwaite calls “a simpler bank.” Translation? Fewer redundant systems, leaner teams, and better margins.
Thwaite’s not alone. The Big Four UK banks are all playing the same game. Lloyds’ Charlie Nunn, HSBC’s Georges Elhedery, and Barclays’ CS Venkatakrishnan are all chasing major savings to keep investors happy.
HSBC’s going hardest — Elhedery’s targeting $1.5bn in savings by the end of 2026.
William Howlett from Quilter Cheviot nailed it: “Simplification has become a consistent buzzword” for UK lenders trying to ditch legacy systems and boost efficiency.
Why UK Banks Are Quietly Outperforming
Matt Britzman from Hargreaves Lansdown summed it up perfectly: these results are “another reminder that UK-focused banks are quietly performing better than many give them credit for.”
And he’s right. While everyone’s been obsessing over fintech disruptors and US mega-banks, NatWest and peers have been grinding out consistent wins. Strong NIMs, disciplined cost management, and solid lending growth are adding up.
The 40%+ stock rally this year isn’t a fluke — it’s a reflection of fundamentals finally aligning.
What’s Next for NatWest Shares?
NatWest’s riding high, but can it last? A few things to watch:
- Interest rate moves: If the Bank of England cuts rates aggressively, NIMs could compress
- Cost discipline: Can Thwaite keep expenses in check while growing?
- Competition: Other UK banks are playing the same cost-cutting playbook
For now, though, momentum’s on NatWest’s side. If you’ve been sleeping on UK banking stocks, this rally might be your wake-up call.
The Bottom Line
NatWest shares are at a 15-year high for good reason. The bank’s delivering strong profits, expanding its lending book, and cutting costs like a pro. While 40% gains in a year might seem too good to be true, the fundamentals back it up. Keep an eye on this one — UK banks might just be the sleeper hit of 2025.
FAQ
Q1: Why are NatWest shares at a 15-year high?
A: NatWest shares hit 578.60p thanks to strong Q3 results showing £2.2bn in operating profit (up 30% year-over-year) and an improving net interest margin of 2.37%. Cost-cutting initiatives and solid mortgage lending growth are also driving investor confidence.
Q2: What is net interest margin and why does it matter?
A: Net interest margin (NIM) measures the difference between what a bank earns from lending and what it pays on deposits. A higher NIM means better profitability. NatWest’s NIM rose to 2.37%, signaling stronger earnings from its lending business.
Q3: How much have NatWest shares gained this year?
A: NatWest shares have rallied over 40% year-to-date, significantly outperforming many FTSE 100 peers and reflecting strong operational performance and investor sentiment.
Q4: What cost-cutting measures is NatWest implementing?
A: NatWest is moving roles to lower-cost locations like India, streamlining operations, and simplifying legacy banking systems. CEO Paul Thwaite is focused on creating a “simpler bank” to reduce expenses and improve efficiency.
Q5: Are other UK banks also cutting costs?
A: Yes. Lloyds, HSBC, and Barclays are all pursuing major cost-reduction programs. HSBC’s CEO Georges Elhedery is targeting $1.5bn in savings by 2026, the most aggressive plan among the Big Four UK banks.
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Effective Date: 15th July 2025
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