London, May 1, 2026, 12:24 BST
NatWest Group Plc shares dropped Friday, even as the UK bank logged a 12% jump in first-quarter operating profit before tax and bumped up its income outlook. Investors zeroed in on a £140 million charge linked to the Iran war and more troubling signs for the UK economy.
Timing is key here. British banks continue to enjoy robust lending income, but fallout from the Middle East conflict has started creeping into credit models, mortgage assumptions, and inflation outlooks. NatWest’s central scenario: 0.4% UK GDP growth this year, 5.5% unemployment, inflation at 3.5%.
NatWest traded at 564.6 pence around 12:09 BST, off 3.52% from Thursday’s 585.2p close, according to AJ Bell prices. The shares opened Friday at 571.0p.
The headline numbers weren’t the issue. NatWest, headquartered in Edinburgh, reported pretax profit of £2.03 billion, up from £1.81 billion a year ago. Total income hit £4.36 billion, a 9.5% gain. Net interest income jumped 12% to £3.39 billion as the margin reached 2.47%.
Chief Executive Paul Thwaite described the quarter as one of “consistent delivery” and “positive momentum”. NatWest lifted its income outlook, now seeing income excluding notable items—those one-off or irregular entries—coming in right at the top end of its earlier £17.2 billion to £17.6 billion forecast. The 2026 targets do not factor in any effects from the pending Evelyn Partners deal. NatWest Group Investors
The balance sheet swelled again. NatWest reported customer loans at £400 billion, a 6.6% climb over last year. Deposits bumped up 2.6% to £445 billion, while assets under management and administration jumped 16.9% to £57 billion. The bank’s core capital buffer, or common equity tier 1 ratio, landed at 14.3%.
The miss landed below the topline. Morgan Stanley analysts flagged that underlying pre-provision operating profit—essentially profit before accounting for bad loans—fell 4% short of both their own and the consensus forecast. Non-interest income, which excludes loan margin revenue, was £829 million; that’s below the £891 million analysts were looking for.
That goes some way toward clarifying the stock’s reaction. Shore Capital’s Gary Greenwood flagged the underlying results as “a touch weaker than expected”, despite management bumping 2026 income guidance up to the top end of forecasts. The Guardian
Richard Hunter, head of markets at Interactive Investor, echoed the sentiment: “With high performance comes high expectations.” In his view, Friday’s drop was more about the outlook than the actual results, and on its own, doesn’t knock NatWest’s recovery off course. Interactive Investor
NatWest isn’t the only lender feeling the heat. Lloyds Banking Group on Wednesday posted a 33% jump in first-quarter profit, but also flagged a £151 million charge tied to global economic risks involving Iran. Earlier, Barclays’ results were clouded by a £228 million single-name impairment—a provision for a particular exposure—following the collapse of Market Financial Solutions.
The worry here: that charge could turn into more than just an accounting tweak. NatWest’s multiple economic scenario model, the tool banks use to gauge loan losses across economic outcomes, has shifted to a harsher UK base case. The worst-case scenario it runs now flags much steeper early-stage expected credit losses. If the energy shock drags on or joblessness jumps, that scenario comes into play.
NatWest continues to pitch its capital resilience and promises to shareholders. The bank’s aiming for an ordinary dividend worth roughly half of attributable profit, plus extra payouts via buybacks. For 2026, it’s flagging a return on tangible equity—profit relative to hard capital—north of 17%. Still, Friday’s trading signaled investors weren’t fully convinced.
