Banks Face Fintech Coup: NatWest Sets Sights on Acquisition, Lloyds and RBS Must Adapt

NatWest, a UK bank, has reported record profits of £3.6 billion and increased its full-year income guidance to £16.5 billion. This has raised concerns among Labour politicians and Scottish Mortgage, a fintech-focused investment firm, about the bank's potential tax liabilities and the need for incumbent banks to invest in digital technology to stay competitive. Meanwhile, US Federal Reserve chairman Jay Powell was criticized by Donald Trump during a tour of the Fed headquarters, highlighting tensions over central bank independence.

NatWest Markets Plc (NWM Group) has released its interim results for the six months ended 30 June 2025, highlighting a robust financial performance against a backdrop of geopolitical uncertainty. The group reported a profit of £89 million, an increase of £6 million compared to the same period last year. Total income reached £762 million, up by £112 million, primarily driven by stronger performance in Currencies and Capital Markets. Operating expenses increased by £75 million to £667 million, due to higher litigation and conduct costs, and other operating expenses.

The group's capital and liquidity position remained strong, with total assets and liabilities increasing by £12.6 billion and £12.0 billion respectively. The Common Equity Tier 1 (CET1) ratio decreased to 17.1% at 30 June 2025, mainly due to regulatory deductions and reserve movements. NatWest Group plc announced the redemption of Additional Tier 1 (AT1) capital notes of $1.15 billion, which will increase NWM Plc's CET1 capital by approximately £59 million.

The NatWest Group climate and sustainable funding and financing target of £100 billion between 1 July 2021 and the end of 2025 was exceeded in Q1 2025, with NWM Group delivering £57.3 billion as at 30 June 2025. NatWest Group has now set a new target to provide £200 billion in climate and transition finance between 1 July 2025 and the end of 2030.

The group's outlook remains cautious, with management expecting the financial environment to remain challenging due to geopolitical uncertainties and market volatility. The results have sparked concerns among Labour politicians and Scottish Mortgage about NatWest's potential tax liabilities and the need for incumbent banks to invest in digital technology to stay competitive.

Meanwhile, US Federal Reserve chairman Jay Powell faced criticism from Donald Trump during a tour of the Fed headquarters, highlighting ongoing tensions over central bank independence.

References:
[1] NatWest Markets Plc - Interim Results 2025
https://www.actusnews.com/en/natwest-markets-plc/pr/2025/07/25/natwest-markets-plc-interim-results-2025