The bank reported net income of £4.8 billion, up from £4.6bn the previous year.

Chief executive Paul Thwaite highlighted the bank’s progress on strategic priorities, growth across all customer businesses, and the accelerated reduction of the UK government’s stake. The UK government, which rescued the bank (formerly RBS) with a £46bn bailout during the financial crisis, now holds less than 10% of shares, down from 38% in December 2023. Full privatisation is anticipated soon.

This return to private ownership is expected to allow NatWest to pursue more aggressive growth strategies, including potential acquisitions. Under Mr Thwaite’s leadership, the bank has already acquired a significant portion of Sainsbury’s Bank to expand its unsecured lending and £2.5bn of prime residential mortgages from Metro Bank.

Zoe Gillespie, investment manager at RBC Brewin Dolphin, said: “NatWest is in fine fettle. The bank has beaten expectations, exceeding its own upgraded guidance for 2024, while the government has accelerated the reduction of its stake.

“On this trajectory, NatWest could potentially return to full private ownership this year and, with that, new opportunities may open up to the bank.

“Combined with an expanding loan book – buoyed on the retail side by the acquisitions of Sainsbury’s Bank and Metro Bank’s mortgage portfolio – a simplified business model, and a strengthening balance sheet, NatWest has built a solid foundation for its next era and, all things being equal, should be free of the distractions of the past.”

Mr Thwaite’s permanent appointment as CEO followed a period of interim leadership after Dame Alison Rose’s resignation in 2023. NatWest’s share value has more than doubled in the past year, driven by increased lending and upgraded profit targets. Despite today’s positive results NatWest Group’s share price tumbled over 3% since market opening.

Russ Mould, investment director at AJ Bell, said: “It may be Valentine’s Day but there is not a huge amount of love for NatWest this morning – its results were received more like petrol station forecourt flowers than a bumper bouquet of roses.

“For the most part, the UK banking sector came into full-year earnings season with a fair bit of share price momentum. With two of the big names now having reported (NatWest and Barclays), that momentum looks to be ebbing away.

“NatWest’s numbers were solid enough – and actually came in slightly above expectations – but the 2025 outlook was only in line with the existing guidance and the market has reacted negatively to the lack of upgrades.

“There is one big milestone which the company could chalk up this year if it finally shakes off the last vestiges of state ownership. The government stake has been a gorilla on NatWest’s back for more than 16 years but that stake is now comfortably into single digits.

“On income and impairments, NatWest did a bit better than anticipated in 2024 although costs came in somewhat higher than had been forecast.

“The ideal scenario for NatWest is that Bank of England interest rate cuts remain gradual while the health of the UK economy improves and a lid is kept on bad debts.

“The company displayed some confidence in its future prospects by lifting the payout ratio to 50% and has said it is mulling share buybacks.

“An alternative use of its capital might be to pursue M&A, with CEO Paul Thwaite signalling late last year that he was looking for deals after taking over Sainsbury’s Bank in June.

“Thwaite was at pains to signal that these would be easy-to-swallow transactions – likely mindful that the market will remember the mess the company got into with its acquisition spree in the mid-to-late 2000s.”