What NatWest Group (NWG) Said on Its Q3 Earnings Call

Key Points

• Strong Q3 performance: NatWest reported £2.2 billion in operating profit, £1.5 billion attributable profit and a 21.6% return on tangible equity, while maintaining its 2026 income guidance of approximately £17.9 billion.
• Broad-based balance-sheet growth: Customer assets and liabilities rose 14.2% year over year and lending increased 7.7%, supported by mortgage growth, commercial and institutional financing, higher deposits and continued expansion in wealth-management assets following the Evelyn Partners acquisition.
• Capital and 2027 outlook: The bank ended the quarter with a 13.5% CET1 ratio and expects lower regulatory capital requirements from January. Management anticipates further customer growth, more than £1 billion of additional structural-hedge income in 2027 and plans to announce its next share buyback with full-year results.

NatWest Group NYSE: NWG reported continued growth in customer balances, higher income and strong capital generation in the third quarter of 2026, while maintaining its full-year guidance. Management said lending growth was broad-based across retail, private banking, commercial and institutional operations, and that cost discipline continued to improve operating leverage.

Chief Executive Officer Paul Thwaite said customer assets and liabilities rose 14.2% year over year, above the group’s target of more than 4%, while customer lending increased 7.7%. He said the group expects this to be the eighth consecutive year in which customer assets and liabilities grow by more than 4%.

“By driving disciplined growth, leveraging simplification, and actively managing capital and risk, we are delivering industry-leading returns,” Thwaite said. He added that NatWest had produced an average return on tangible equity of more than 17% over the past four years.

Third-Quarter Profit and Income

Chief Financial Officer Katie Murray said third-quarter income excluding notable items increased 3.1% from the second quarter to £4.6 billion. Operating costs rose 2.8% to £2.1 billion, resulting in a cost-income ratio of 45.1% for the quarter.

The bank recorded operating profit of £2.2 billion and profit attributable to ordinary shareholders of £1.5 billion. Return on tangible equity was 21.6% in the quarter, while earnings per share reached 57.4 pence, up 13.2% on the comparative period cited by management.

Net interest margin was broadly stable at 250 basis points. Murray said deposit-margin expansion was offset by mortgage repricing, lending mix and the bank’s annual review of customer repayment habits. Non-interest income increased 7.9%, or £75 million, helped by the inclusion of Evelyn Partners and a gain on the sale of NatWest’s Mentor SME consultancy business.

The company continues to expect full-year 2026 income excluding notable items of about £17.9 billion. It expects the Bank of England base rate to rise to 4% during the fourth quarter, although Murray said the benefit to 2026 income would be modest given the timing.

Lending, Deposits and Wealth Management

Customer assets and liabilities increased by £15.7 billion during the quarter. The increase included £8.1 billion of lending growth, £5.8 billion of deposit growth and a £1.8 billion increase in assets under management and administration.

• Retail banking and private banking and wealth management balances rose £1.5 billion, including £1.1 billion in mortgages and £300 million in unsecured lending.
• Commercial and institutional lending grew £6.6 billion, or 4%, led by corporate and institutional demand for infrastructure and renewable-energy financing.
• Retail deposits rose £3.1 billion as the bank introduced new savings products and channels, while commercial and institutional deposits increased £3 billion.

Mortgage balances increased £8.3 billion during the first nine months, and NatWest’s mortgage stock share rose to 12.7% from 12.5% at the start of the year. Murray said the bank had recorded its ninth consecutive quarter of net mortgage growth and entered the fourth quarter with a healthy pipeline.

Assets under management and administration reached £132.4 billion, more than doubling following the acquisition of Evelyn Partners. The total included £1 billion of net inflows to assets under management, £400 million of assets-under-administration flows and £400 million of positive market performance. Thwaite said integration of Evelyn Partners was on track.

Costs, Credit and Capital

For the first nine months, other operating expenses totaled £6.2 billion. NatWest said it delivered £420 million of year-over-year gross cost savings, which partly offset investment spending, the inclusion of Evelyn Partners and higher people-related costs. The group maintained its full-year expectation for other operating expenses of about £8.5 billion, including around £300 million related to Evelyn Partners.

The impairment charge was £277 million in the quarter, equivalent to 24 basis points of loans on an annualized basis. Murray said the increase from the second quarter mainly reflected the non-repeat of releases in retail portfolios. The nine-month impairment charge was 21 basis points, within the company’s guidance of below 25 basis points for the full year.

NatWest ended the quarter with a common equity tier 1 ratio of 13.5% after accruing 50% of attributable profit toward the final ordinary dividend. The ratio was 14.7% before distributions. The bank generated 288 basis points through earnings, including 47 basis points from risk-weighted-asset management, while the Evelyn Partners acquisition used 142 basis points of capital.

The bank said its Pillar 2A requirements will decline by 76 basis points from Jan. 1, including Basel 3.1 offsets. The CET1 component of the reduction is 43 basis points, lowering NatWest’s supervisory minimum to 11.1% from 11.6%. Management reiterated its target CET1 ratio of around 13%.

Outlook for 2027

While declining to provide formal 2027 income guidance, Murray said NatWest expects continued customer balance growth, more than £1 billion of additional structural-hedge income in 2027 compared with 2026, and broadly stable net interest margin. The group’s assumptions include a 4% Bank of England rate throughout 2027 and a five-year swap rate averaging 4%.

Murray said average interest-earning assets should grow more closely in line with loan growth in 2027, following the use of surplus deposit liquidity in 2026. NatWest expects to access additional wholesale funding as necessary to support balance-sheet growth, while maintaining what management described as a strong liquidity position.

The company also enhanced its risk-weighted-assets outlook, now expecting approximately £210 billion as of Jan. 1, 2027, reflecting Basel 3.1 and CRD IV effects, anticipated growth and fourth-quarter operational-risk movements. NatWest plans to announce its next share buyback alongside full-year results in February.

About NatWest Group (NYSE:NWG)

NatWest Group plc is a United Kingdom-based banking and financial services company. Through brands including NatWest, Royal Bank of Scotland, Ulster Bank and Coutts, it provides current accounts, savings products, mortgages, personal loans, credit cards, insurance and other financial services to individuals and households.

The group also serves small and medium-sized businesses, larger companies and institutional clients. Its commercial and institutional banking activities include lending, transaction banking, cash management, payments, trade finance, capital markets services and risk-management solutions.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.