Owners of NatWest (LSE: NWG) shares were in a wasteland for years. They crashed and burned after the financial crisis, with the bank only saved by a £45bn bailout that taxpayers still struggle to forgive and forget.

They smoked quietly on for years, with the government holding an 84% stake in a toxic bank made up of the smouldering embers left by Fred Goodwin’s nightmare tenure at Royal Bank of Scotland.

And now they’ve gone gangbusters. The NatWest share price is up 53% in the last 12 months, 103% over two years, and more than 300% over five. Add dividends and buybacks, and investors have made even more.

Growth, cash and income

The bank’s now a favourite FTSE 100 recovery play among investors, especially since the UK government has finally offloaded its last shares.

Yesterday’s (25 July) interim results confirmed the trend. Pre-tax profit for the six months to 30 June climbed 18% to £3.6bn, beating analyst forecasts of £3.46bn. That helped pave the way for a £750m share buyback and a 58% hike to the interim dividend, now at 9.5p a share. Both were higher than hoped.

Income rose to £7.9bn, up from £7.1bn a year earlier, helped by rising customer numbers and a stable loan book. Provisions for bad loans came in below expectations at £193m.

FTSE 100 comeback kid

There may be more growth left in the tank. Analysts’ median 12-month price forecast is 573.4p. That’s around 10% above today’s level.

And while the trailing dividend yield is a modest 4.1% that’s forecast to hit 5.6% this year, covered twice by earnings. If those numbers hold, the total return could approach 15%. Not as explosive as recent gains, but still impressive.

The balance sheet looks solid. The CET1 ratio gives it a decent capital buffer. The share price still looks reasonable, with a price-to-earnings ratio of just under 10. The price-to-book ratio has edged up to 1.04, from as low as 0.4 a couple of years ago, but that’s no longer bargain territory.

Even so, this looks like a company finally living up to its potential. CEO Paul Thwaite’s leadership has brought clarity and ambition, as NatWest snaps up most of Sainsbury’s banking operations and a £2.5bn mortgage portfolio from Metro Bank.

Tax and default danger

There are still risks. The UK economy remains fragile. A recession would pressure borrowers, especially households and small businesses, and might force the bank to make larger provisions for defaults.

Political interference hasn’t gone away either. Chancellor Rachel Reeves is searching for fresh tax revenue, and banks would make an easy and popular target.

NatWest’s domestic focus could count against it if the UK struggles. It lacks the geographic spread of some global peers. Any knock to high-net-worth confidence, particularly from non-dom tax changes, could also hit Coutts.

But the general shift back towards FTSE 100 dividend stocks, especially among managers looking for defensive income, has brought banks back into favour.

NatWest clearly isn’t the dirt cheap recovery play it was. But with strong growth, consistent shareholder returns and a tempting valuation, I think it’s still worth considering as part of a diversified long-term income and growth portfolio. So is this the ultimate FTSE 100 all-rounder? It’s not far off.