NatWest Group reported operating profit before tax of £2.23 billion for the third quarter on Friday, up from £2.18 billion a year earlier, with a return on tangible equity of 21.6%. Its shares fell 8.4% on Friday after management gave a weaker-than-expected outlook for interest income, Reuters reported.
Executives told analysts they expect the net interest margin to remain "broadly stable" at 2.5% into 2027, according to Reuters, against consensus expectations for higher growth. Like HSBC and Lloyds, NatWest reaffirmed rather than upgraded its full-year targets. Jefferies analyst Jonathan Pierce said the quarter showed UK banks "tearing off the band-aid" by lowering expectations for interest income growth.
INCOME RISES, BUT SO DO IMPAIRMENTS
Total income rose 7% from a year earlier to £4.64 billion and net interest income rose 9% to £3.56 billion, according to Proactive Investors. The net interest margin improved to 2.50% from 2.37% a year earlier.
Impairment losses rose to £277 million from £153 million, and the loan impairment rate for the year to date was 21 basis points. The cost-to-income ratio improved to 45.7% in the year to date, 2.1 percentage points lower than a year earlier, helped by about £420 million of gross cost savings as the bank cuts jobs and invests in AI, Reuters reported.
Attributable profit was £1.53 billion, 4.4% lower than a year earlier, according to WealthBriefing. Earnings per share were 19.3 pence. Chief executive Paul Thwaite said the bank had delivered broad-based growth across its three customer businesses, with lending, deposits and assets under management all increasing.
A CROWDED HOME MARKET
NatWest is one of six groups that lead domestic retail and commercial banking in the United Kingdom, alongside Lloyds Banking Group, Barclays, HSBC UK, Santander UK and Nationwide, according to TGB's market profile. The balance sheet of UK-resident banks and building societies was £10.7 trillion in July 2026, about 3.6 times GDP.
LENDING, WEALTH AND CAPITAL
Customer loans excluding central items rose by £8.1 billion in the quarter to £414.3 billion, and customer deposits by £5.8 billion to £453.4 billion. The private banking and wealth arm, which includes Coutts and Evelyn Partners, made £156 million of operating profit, up from £108 million a year earlier, with £1 billion of net inflows and £118 billion of assets under management at the end of September.
The Common Equity Tier 1 ratio rose 30 basis points in the quarter to 13.5%. NatWest now expects risk-weighted assets of around £210 billion at the start of 2027, including the impact of Basel 3.1, and assumes that the Bank of England base rate will rise by 25 basis points to 4% in the fourth quarter.
THE TGB VIEW
NatWest Group ranks 16th in TGB's table of Europe's largest banks by total assets, with US$961.1bn, behind Barclays in 5th and Lloyds Banking Group in 11th, yet its 2025 return on equity of 13.7% was the highest of the three, against 9.8% at Lloyds and 9.2% at Barclays. On the latest quarter, NatWest's 21.6% return on tangible equity compares with 11.7% at Barclays, although Barclays has the higher CET1 ratio, at 14.2% against NatWest's 13.5%. The next marker NatWest has set is the start of 2027, when it expects risk-weighted assets of around £210 billion including Basel 3.1.
Related: UK's NatWest Group posts H1 2026 attributable profit of £3.0 billion; RoTE of 19.7%
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