NatWest Reports Strong Q3 Profits Amidst Tax Concerns
NatWest Group's chief executive, Paul Thwaite, issued a warning to the United Kingdom government on October 24, 2025, urging against any increase in taxes on the banking sector. This caution was delivered as the high street lender announced a significant 30.4% jump in its pre-tax operating profits for the third quarter of 2025, reaching £2.18 billion for the three months ending September, up from £1.67 billion in the same period last year. The strong financial results surpassed analyst expectations, which had projected profits around £1.8 billion.
Thwaite's remarks come ahead of the Chancellor's autumn budget, anticipated on November 26, where the government is reportedly considering various tax measures to address a potential £30 billion shortfall in public finances.
CEO Emphasizes Stability and Growth
During a call with journalists, Paul Thwaite acknowledged the 'difficult choices' facing Chancellor Rachel Reeves but stressed the importance of balancing fiscal discipline with 'policies that create stability, consistency and support growth'. He stated, 'I think the government should be thoughtful about signals it sends to investors who are looking at the UK as a long-term home for capital.'
Thwaite further articulated his view, asserting that 'strong economies need strong banks' and that NatWest aims to use its capital to support customers. He highlighted the bank's role in providing capital for:
- Those buying or moving houses
- Businesses across various sectors
Robust Financial Performance and Industry Context
NatWest's impressive third-quarter results were driven by broad-based lending growth in both mortgages and business lending. The bank also upgraded its full-year income forecast for 2025 to approximately £16.3 billion, excluding notable items, and now expects a return on tangible equity of greater than 18% for the year.
The warning from NatWest's chief executive echoes sentiments from other leaders in the UK banking sector, including Lloyds CEO Charlie Nunn, who have previously cautioned against increased taxation, citing potential impacts on the competitiveness of the UK's financial services sector and its ability to lend to households and businesses. Speculation around a potential 'windfall tax' on banks has been fueled by think tanks such as the Institute for Public Policy Research (IPPR) and Positive Money, which have proposed levies to capture what they describe as 'windfall profits' enjoyed by lenders due to higher interest rates. However, analysis by PwC indicates that the UK's total tax rate for a model corporate and investment bank, at 46.4%, is already higher than in other major financial centers like New York (27.9%), Dublin (28.9%), Frankfurt (38.9%), and Amsterdam (42.2%), raising concerns about global competitiveness.
5 Comments
Michelangelo
They're lending to families and businesses. Don't punish success.
Leonardo
The CEO makes a valid point about creating stability for investors and supporting customers. However, the sheer scale of their profits raises legitimate questions about whether they're contributing enough when public services are under immense pressure.
Michelangelo
Higher taxes just push investment elsewhere. Competitiveness matters!
Leonardo
While the government clearly needs to address the budget shortfall, hitting banks with higher taxes could reduce their capacity to lend to businesses and homeowners. We need to consider the long-term impact on the real economy.
Michelangelo
The government needs that money. Banks must contribute to society.