NatWest Group plc NWG

The business

NatWest Group, the former Royal Bank of Scotland, is one of the UK's big-four banks: retail banking (current accounts, mortgages, savings, personal loans), commercial and institutional banking, private banking and wealth, and RBS International. The engine is net interest income, the spread between what it earns on loans and pays on deposits, which was about 79% of H1 income (£6.9B of £8.7B, both excluding notable items). That spread is earned on a £410B customer-loan book that is roughly half UK residential mortgages, funded by £448B of low-cost deposits at a 90% loan-to-deposit ratio. This is a domestic UK lender first, a wealth and markets business second.

Two things changed the picture in the last few quarters. First, the UK Treasury completed its exit in 2025, ending fifteen years of state ownership that began with the 2008 rescue, so management now runs purely for shareholder returns with no overhang on the multiple. Second, a structural hedge on the deposit book, a rolling portfolio of swaps that reinvests non-interest-bearing balances at prevailing rates, keeps repricing older low-yield positions into higher ones as they mature, cushioning net interest income even as the Bank of England cuts. In H1 2026 the bank also closed the Evelyn Partners wealth acquisition, which cost about 37p of tangible net asset value per share and roughly 80 basis points of capital, and raised full-year guidance on the back of the print.