This growth propelled the bank’s operating pre-tax profit to reach £3.59bn, up from £2.62bn in the same period the previous year.

This financial progress came amidst the backdrop of a scandal, involving the closure of Nigel Farage’s Coutts bank account, which led to the resignation of NatWest CEO Alison Rose and Coutts’ head, Peter Flavel. The group’s board is now under increased shareholder scrutiny as they are expected to provide clarity on the events leading to the resignations.

Despite this upheaval, NatWest announced an interim dividend of 5.5 pence and plans to initiate a share buyback of up to £500 million in the second half of 2023. This comes on top of the £1.3bn buyback completed in the second quarter.

On the customer front, deposit balances remained stable in the second quarter following outflows in the first quarter. Excluding central items, customer deposits fell by £11.8bn to £421.1bn in the first half of the year. NatWest reiterated the guidance given in its annual report, but predicted that the 2023 bank net interest margin would likely be under 3.20%, currently estimated at around 3.15%.

Much of the bank’s profit growth hinges on the Bank of England’s interest rate policy. Given the uncertainty around rate direction, NatWest has downgraded its net interest margin forecast for this year from 3.20% to 3.15%. The bank’s working assumption is that average rates will hover around 5.5% until year-end. Meanwhile, mortgage pricing seems to have stabilised over the course of the half, which also contributes to the restraint on the net interest margin.

Credit losses of £153m were significantly lower than analysts had projected, reflecting better-than-expected economic conditions during the first half of 2023. The bank’s return on tangible equity was 16.4%, well above the 14-16% range targeted by management.

Katie Murray, NatWest Group chief financial officer, commented: “NatWest Group’s strong performance for the first half of the year is underpinned by our robust balance sheet, with a well-diversified loan book, robust liquidity and stable deposit base.

“As a result, we are able to continue lending to our customers and delivering sustainable returns and distributions to our shareholders, even in the current uncertain environment.

“Although arrears remain low, we know that people, families and businesses are anxious about their finances and many are really struggling. We are being proactive in our support for those who are hardest hit, helping to build the financial resilience of the customers and communities we serve.”