Barclays and NatWest are set to unveil bigger profits for 2025 as the banking sector gets in its “best shape since the financial crisis”, experts think.
The lenders will publish their annual results on Tuesday and Friday respectively, reflecting a year that saw UK interest rates cut four times.
Barclays is expected to report a pre-tax profit of £9 billion for the year, which would be a jump from the £8.1 billion it made in 2024.
A group of analysts for AJ Bell said they think the bank’s UK mortgage business and investment banking division will have strengthened.
Mortgage rates fell over the last year and lenders have competed to offer a range of deals to borrowers, although wider economic and political uncertainty has helped slow the housing market’s recovery.
Barclays also has a major investment business, which experts think may have been boosted by increased activity in the financial markets and deal-making between firms.
AJ Bell’s analysts said earnings for its investment bank will be “under scrutiny” due to its volatile nature, “but for the moment financial markets remain buoyant, merger and acquisition activity robust” and it could benefit from a “new rush of flotations” on the stock markets.
Meanwhile, NatWest is also expected to report bigger earnings, with forecasts showing an operating pre-tax profit of £7.5 billion for the year, up from £6.2 billion in 2024.
In May, NatWest fully offloaded the Government’s stake in the group, returning it to private ownership for the first time since being bailed out during the 2008 financial crisis.
It has also reported growing mortgage balances during the year, and gained new customers after buying Metro Bank’s mortgage book and acquiring Sainsbury’s Bank.
Richard Hunter, head of markets for Interactive Investor, said: “As far as investors are concerned, NatWest is in a sweet spot.
“The government shackles have gone, the group has prodigious amounts of cash and acquisitions to boost growth further seem likely.”
He added: “Indeed, it remains to be seen whether this new-found freedom will enable a more aggressive acquisition policy.”
Michael Hewson, an analyst for MCH Market Insights, pointed out that both Barclays and NatWest’s shares have risen to their highest levels since 2008 in recent months.
“All in all, the UK banking sector appears to be in the best shape it has been since the financial crisis, with the only risk now is that it may well draw the attention of politicians who think the sector is perhaps making too much money,” he said.
