NatWest credit losses rise 97.9% quarter on quarter to £277 million
Key Facts
NatWest reported impairment losses of £277 million in the third quarter of 2026, up 97.9% from the previous quarter and 81.0% from the same period last year. Losses exceeded the average analyst forecast of £235 million, while total income was close to estimates. The bank said the net impairment charge was equivalent to 24 basis points of gross customer loans. The net charge increased by £137 million compared with the second quarter. The group, meanwhile, posted strong profit and a high return on tangible equity during the period.
NatWest attributed the quarterly increase mainly to the non-recurrence of impairment provision releases recorded in the second quarter, alongside higher Stage 3 charges. In its results, it said: "The increase primarily reflected the non-recurrence of releases in Q2 2026 and higher Stage 3 charges." This explanation puts part of the rise in provisions in the context of comparison with a quarter that saw releases, rather than treating it as a standalone change in credit quality. The bank said its credit portfolio remained resilient. The net impairment charge was £277 million in the third quarter, compared with £140 million in the second quarter and £153 million in the third quarter of 2025.
Profit attributable to ordinary shareholders was £1.532 billion in the third quarter, while return on tangible equity reached 21.6%. Basic earnings per share was 19.3 pence. Total income rose to £4.640 billion, up 3.0% from the second quarter and 7.1% from the same period a year earlier. The average analyst forecast for income was £4.641 billion, slightly above the actual result. The net interest margin was 2.50%, as pre-results expectations had focused on margin pressures facing British lenders.
British banks also face a temporary tax increase approved by the government on the banking surcharge to corporation tax. The rate will rise from 3% to 6% from 1 January 2027, applying to profits subject to the surcharge that exceed an allowance of £100 million. The increase will last 15 months and end on 31 March 2028. The Treasury estimated the measure would raise £1.5 billion in total during that period. Finance Minister John Healey told Parliament he hoped banks would help "provide breathing space for British families" amid difficult economic conditions.
On monetary policy, the Bank of England held its interest rate at 3.75% at its September meeting, by a vote of 6 to 3. Three members voted to raise the rate by 0.25 percentage points to 4%. NatWest said it assumes the central bank rate will rise 25 basis points to 4% in the fourth quarter of 2026. This assumption sets out the interest rate path the bank used in its estimates, while September's vote is not in itself a forecast of the next meeting's decision. The Bank of England is due to announce its decision and meeting minutes on 5 November 2026.
Available market data shows NatWest shares closed at 17.00 on 29 October, without specifying the price currency or establishing the direction of the move that day. Before the results were announced, the focus was on the bank's ability to sustain momentum amid fiscal and monetary policy changes, and on clarifying its capital returns plan and strategic positioning. The group's annual results for 2026 are scheduled for 12 February 2027. Between that date and the November announcement, the bank's interest rate assumption and the rise in provisions remain among the key elements of the context it presented in its third-quarter results.