NatWest (NWG) bumped up income and returns guidance after completing the £2.7bn acquisition of wealth manager Evelyn Partners and is planning a further share buyback six months ahead of schedule.

Management now expects total income (excluding notable items) of around £17.9bn this year, compared to its £17.2bn–£17.6bn range when the financial year kicked off. Around £275mn of that comes from the purchase of Evelyn, which completed on 30 June and brought in £72bn of assets under management.

We have previously discussed our concerns about the price paid for the acquisition, but are feeling more comfortable now given the outlook for returns and profitability. The dip in the common equity tier 1 ratio to 13.2 per cent, driven by the acquisition, is manageable.

Alongside the income upgrade, the group said that return on tangible equity (ROTE) should now be greater than 19 per cent this year, from a previous expectation of more than 17 per cent. ROTE came in at 19.7 per cent in the first half, up from 18.1 per cent last year.

Meanwhile, the dividend was increased by more than a quarter and management now expects to announce the next share buyback alongside the FY2026 annual results.

Pre-tax profit in the second quarter surged 29 per cent against the same period last year to £2.3bn, helped by double-digit retail banking growth.

Net interest income was up 13 per cent to £3.5bn in the quarter, while the net interest margin expanded 21 basis points to 2.49 per cent.

Impairment losses of £140mn were lower than expected. Over the half as a whole, the bank’s cost-to-income ratio improved by 2.8 percentage points to 46 per cent, year-on-year.

NatWest, boosted this week by interest rates staying put, trades on 1.6 times tangible book value for FY2027. We move upwards. Buy.

Last IC view: Hold, 589p, 13 Feb 2026

NATWEST GROUP (NWG)   ORD PRICE:711pMARKET VALUE:£56.6bnTOUCH:710-711p12-MONTH HIGH:712pLOW: 500pDIVIDEND YIELD:4.9%PE RATIO:9NET ASSET VALUE:551p*LEVERAGE: 22Half-year to 30 JunTotal income (£bn)Pre-tax profit (£bn)Earnings per share (p)Dividend per share (p)20257.993.5930.99.520268.864.3238.112% change+11+20+23+26Ex-div:13 AugPayment:18 Sep *Includes intangible assets of £10.2bn, or 128p a share