NatWest has beaten its expectations in the fourth quarter of the year, capping off what analysts have described as a "strong year".

The bank’s total income in Q4 reached £3.8bn, beating estimates of £3.7bn, while its profit before tax hit £1.5bn in the same period, following expectations of £1.4bn.

The firm’s net interest margin reached 2.19%, as expected.

In 2024, NatWest’s attributable profit reached £4.5bn, with earnings per share increasing by 12% year-on-year to 53.5 pence.

Chief executive at NatWest, Paul Thwaite, said: "NatWest delivered a strong performance in 2024 with income excluding notable items of £14.6bn and a return on tangible equity of 17.5%, exceeding our upgraded guidance. Throughout the year, we made good progress against our strategic priorities by growing all three of our customer businesses, improving productivity and actively managing our capital.

"This performance is grounded in the support and services we provide to over 19 million customers, whether buying or refinancing their homes, helping them to invest or growing their businesses. Alongside this, we were also pleased to see an accelerated reduction in the government's shareholding."

In its outlook for 2025, NatWest expects to achieve a return on tangible equity between 15% and 16%, while its group operating costs are set to be around £8.1bn.

Looking further ahead, by 2027, the bank expects to achieve a return on tangible equity of greater than 15%.

Senior equity analyst at Hargreaves Lansdown, Matt Britzman, concluded: "NatWest caps off a strong year with a good set of fourth-quarter numbers that saw a slight beat on the profit line driven by higher non-interest income and better impairments. There’s been a seismic sentiment shift over 2024, as the NatWest has moved on from its troubles at the helm and the UK banking environment has played out much better than some had feared.

"The setup for 2025 is one of cautious optimism, with borrowers remaining resilient, inflation in a more manageable place, and a UK economy that’s trying its hardest to squeeze out some growth.

"[This year] could be the year NatWest finally sheds its Government ties, with plans to return to full private ownership. After the UK Government’s failed attempt to sell its stake earlier in 2024, this news will be a welcome development for investors who have long been waiting for the bank to regain its full independence.

"As we saw with Barclays yesterday, NatWest’s 2025 guidance is in line with expectations, which may cause some weakness in early trading. The buzz around the sector and better-than-expected results in the final quarter mean investors will have been hoping to get a punchier outlook. For the longer-term investor, this was a decent set of results, setting up another positive year in 2025."

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