NatWest posts £1.532 billion attributable profit in third quarter, down 4.1% year on year

Key Facts

NatWest Group said on October 30 that profit attributable to ordinary shareholders was £1.532 billion in the third quarter of 2026, down 4.1% from the same period and 4.4% from the previous quarter. Operating profit before tax was £2.225 billion, while operating profit before impairment losses reached £2.502 billion. In contrast, total income rose 7.1% year on year and 3.0% quarter on quarter to £4.640 billion. Return on tangible equity was 21.6%, compared with 22.3% a year earlier. The results showed a divergence between income growth and lower attributable profit, alongside an increase in credit provisions.

Net interest income was £3.559 billion, against average estimates of £3.608 billion in a consensus of 18 analysts. Total income of £4.640 billion was close to the average estimate of £4.641 billion. Analysts estimated return on tangible equity at 21.2% and earnings per share at 19.2 pence. The net interest margin rose one basis point from the previous quarter to 2.50%. The group attributed income growth, excluding notable items, to the acquisition, deposit margin expansion and one additional day in the quarter.

Impairment losses were £277 million, equivalent to 24 basis points of total customer loans, up £137 million from the second quarter. NatWest said the increase mainly reflected the non-recurrence of provision releases recorded in the previous quarter and higher Stage 3 charges. The expected credit loss provision remained stable at £3.6 billion, while its coverage ratio declined to 0.77%. The group kept post-model adjustments at £0.3 billion. Provisions increased as total income grew, but contributed to pressure on attributable profit.

In wealth management, the group recorded net inflows of assets under management of £1 billion during the quarter, equivalent to 3.4% of opening balances on an annualised basis. NatWest said the integration of Evelyn Partners was progressing well and both businesses were growing. Chief Executive Paul Thwaite added that the group had seen growth in lending, deposits and assets under management, supported by activity from more than 20 million customers. Excluding central items, net loans increased by £8.1 billion and deposits by £5.8 billion. Loans in the Commercial & Institutional segment alone rose £6.7 billion during the quarter.

The expansion of wealth management activity coincided with a £42 million, or 2.0%, increase in other operating expenses compared with the second quarter. These expenses included £128 million in costs related to Evelyn Partners, as well as higher investment and restructuring costs. Year on year, other operating expenses rose £107 million, or 5.4%. The group attributed this to the acquisition, investment, restructuring and higher pay in 2026, partly offset by the impact of simplification. This reflects the cost of integrating the new business alongside growth in inflows and banking activity.

The CET1 capital ratio strengthened by 30 basis points during the quarter to 13.5%. The average liquidity coverage ratio was 137%, providing a £40.9 billion buffer above the regulatory minimum of 100%. The group maintained its 2026 guidance, including total income, excluding notable items, of about £17.9 billion and operating expenses of about £8.5 billion. It also targets return on tangible equity above 19%. Management assumes the Bank of England's base rate will rise 25 basis points to 4% in the fourth quarter, and expects risk-weighted assets of about £210 billion on January 1, 2027, including the impact of Basel 3.1 rules.

NatWest shares, listed in London, fell 2.74% to 617.8 pence on October 30, reaching their lowest level since mid-June, while the FTSE 100 edged higher. Investing.com coverage linked the shares' weakness to lower attributable profit and higher credit provisions. The report said profit before tax rose 1.9% year on year to £2.23 billion, slightly ahead of a consensus of £2.20 billion. The share move followed the results announcement, unlike previous days' closing prices, which do not reflect post-announcement trading. The group is scheduled to hold an investor event on private banking and wealth management on November 25, 2026, ahead of announcing its 2026 annual results on February 12, 2027.