NatWest CEO Pushes Back Against Windfall Tax Amidst Soaring Profits
The bank's chief argues that a punitive tax would harm lending and economic growth.
NatWest CEO Paul Thwaite has voiced strong opposition to a windfall tax on banks, stating that robust financial institutions are crucial for a strong economy and that consistent policy is needed for businesses to plan effectively. His comments come as NatWest reported a significant 29% increase in second-quarter profits, reaching £2.3 billion, a performance expected to intensify calls for such a tax.
NatWest's improved financial results were driven by higher interest rates and enhanced trading activities, mirroring similar strong performances from other major banks like Lloyds Banking Group and Barclays. The bank's total income for the first half of its financial year rose by 11% to £8.7 billion, with pre-tax profit for the first six months of 2026 reaching £4.3 billion, surpassing analyst expectations. Net interest income, the difference between what banks charge borrowers and pay savers, saw a 12.6% increase to £6.9 billion.
Thwaite highlighted NatWest's "very strong performance" and its delivery of "the highest returns in the sector." The bank has also raised its full-year income forecast to £17.9 billion for 2026, up from its previous estimate. This upgrade is partly attributed to the integration of wealth manager Evelyn Partners, acquired in June for £2.2 billion. This acquisition, NatWest's largest since 2008, signifies a strategic move to expand its wealth management division.
The bank's private banking and wealth management division reported net inflows of £2 billion in the first half, with wealth income increasing by over 10% to £595 million. Operating profit also saw increases across NatWest's business units: 16% to £1.73 billion in retail banking, 18% to £212 million in private banking and wealth management, and 15% to £2.28 billion in commercial and institutional.
In response to the bank's strong results, NatWest shares increased by 4% on the news, and the bank announced plans to consider bringing forward share buybacks. The bank also raised its dividend by 26% to 12p, with a £955 million payout planned for shareholders. NatWest's stock performance has been notable, rising 29% over the past year and 110% over the last two years, outperforming the wider FTSE 100 index.
Despite the strong financial results, calls for a windfall tax have been amplified by groups such as the Trades Union Congress and the Labour Party's Left-wing. These calls are directed towards the government to consider imposing a new tax on the banking sector. However, bank executives, including Barclays CEO C.S. Venkatakrishnan, have warned against such measures, emphasizing the role of bank capital in lending to businesses and households to support economic growth. Chris Beauchamp, chief market analyst at IG, noted that the push into wealth management is a key growth strategy for banks, suggesting a rejuvenated banking sector with potential for further share price growth.