The 14 per cent rise to pounds 872m in pre-tax profit was at the lower end of expectations, and helped by a fall in bad debt provisions of almost a third to pounds 251m. Lord Alexander, Nat-West's chairman, said the bottom of the bad debt cycle had been reached.
The City's interest focused on whether NatWest would give any clues on its expansion plans for its investment banking arm NatWest Markets.
NatWest said yesterday it was interested in parts of the Barings group earlier this year and it was also frustrated when SG Warburg's investment bank came up for sale.
"We've looked at a range of areas to expand but we are especially interested in corporate finance and investment management," NatWest chief executive Derek Wanless said.
Meantime, Mr Wanless says NatWest is expanding the markets arm from within, but said the bank would consider buying if it judged that an acquisition would give rapid growth in any particular area.
Mr Wanless said NatWest Markets had rebounded well to make a pre-tax profit contribution of pounds 208m in the first half of this year compared to pounds 158m in the second half of 1994. The division made pounds 201m in the first half of last year. He said the bank was spending money, pounds 40m in the first half, on developing NatWest Markets.
Another area of concern for analysts is costs - NatWest has the highest cost-to-income ratio in the sector. Wanless defended the bank's performance on costs as its cost-to-income ratio rose to 68.9 per cent compared to 67.6 per cent a year ago, but below the 70.8 per cent in the second half last year.
Apart from NatWest Markets, Mr Wanless said these included Coutts, NatWest Bancorp in the United States and its finance-house subsidiary Lombard North Central, which reported first-half profits down to pounds 105m from pounds 111m last time.
Domestically, Mr Wanless said the picture was "patchy". Medium-sized corporate customers who are strong exporters were fairly buoyant while small business and personal customers were still showing uncertainty, he said.