British bank NatWest said on Friday that its profits rose in the first half, as revenues climbed on the back of higher UK interest rates.

NatWest, which in March returned to majority private ownership after years of government control, said net profit grew by 2.7 percent to £1.9 billion ($2.3 billion) in the period from January to June.

Revenues swelled by more than a fifth to £6.2 billion, as NatWest followed the Bank of England in raising interest rates.

And while rising rates also help savers, they hurt borrowers as loan repayments jump.

"We have delivered a strong financial performance in the first half of the year... reflecting the strong profit and capital generation capacity of the business in the current interest rate environment," said NatWest, formerly known as Royal Bank of Scotland.

The Bank of England has raised its key interest rate five times since December, lifting it to 1.25 percent from a record-low of 0.1 percent, in a bid to combat runaway inflation.

The majority of the hikes have been by 0.25 percentage points.

Some analysts predict the BoE could hike by as much as 0.5 percentage points next Thursday.

British annual inflation hit a new 40-year high of 9.4 percent in June, further eroding workers' wages in a cost-of-living crisis.

rfj/bcp/spm

NATWEST