NatWest Group reported a significant rise in profits for the first half of 2026, with pre-tax earnings increasing by approximately 20% to £4.3 billion. This follows similar announcements from other major UK banks, with Barclays posting pre-tax profits of £6.1 billion and Lloyds Banking Group reporting £4.3 billion over the same period. The sector's strong financial performance has reignited debates over the taxation of banking profits.

NatWest’s chief executive, Paul Thwaite, highlighted the bank’s growth across retail banking and wealth management as key drivers behind the results. The group’s total income reached £4.5 billion in the second quarter alone, up from £4 billion in the previous year, with the retail division contributing £948 million in operating profit, a notable increase from £735 million. Thwaite also noted improved efficiency, with the bank lowering costs, and upgraded its full-year guidance for return on tangible equity from 17% to over 19%.

The bank’s private banking and wealth unit, including Coutts, saw operating profits rise 16% in the quarter. The group's strategy to expand its wealth management business was underscored by its recent £2.7 billion acquisition of Evelyn Partners, Britain’s third-largest wealth manager, aimed at focusing Coutts more on ultra-high-net-worth clients. This comes after the government fully divested its stake in NatWest last year.

While the strong earnings delighted investors, with NatWest shares rising 3.2% following the results, the figures have prompted calls from unions and some politicians for higher taxation on banks. Paul Nowak, general secretary of the Trades Union Congress (TUC), described the case for increasing the bank surcharge tax as "overwhelming," asserting that banks are benefiting disproportionately from higher interest rates while many households face financial pressure from rising mortgage costs and energy bills. The current bank surcharge is 3% on profits above £100 million, reduced from 8% in 2023, with the TUC advocating for a return to the higher rate, or even an increase, to generate substantial government revenue.

Thwaite, however, pushed back against these proposals, arguing that raising taxes on banks risks constraining lending and could harm the wider economy. He emphasized the importance of consistent and stable tax policies to maintain investor confidence and support economic growth. The executive also welcomed regional efforts like those led by Greater Manchester Mayor Andy Burnham to address cost-of-living challenges, stressing cooperation between government and the banking sector.

NatWest’s impairment losses declined compared to the previous year, standing at £140 million in the latest quarter versus £193 million a year earlier. The bank indicated it might initiate share buybacks at the end of the fiscal year, earlier than initially planned, reflecting confidence in its financial position.

The recent wave of strong profits across UK banks—driven primarily by a sustained period of high interest rates—continues to fuel a broader conversation about the role of the financial sector in supporting the economy and contributing to public finances amidst ongoing economic challenges.