LONDON, May 2, 2026, 17:04 BST
- NatWest Group posted a first-quarter operating profit before tax of £2.03 billion, up 12.2%. The bank also recorded £283 million in impairment losses—funds reserved against potentially troubled loans.
- The bank bumped up its 2026 income outlook to the upper limit of its £17.2 billion-£17.6 billion guidance. Still, shares in London finished down 3.35% Friday, settling at 565.60 pence.
- About £140 million of the charge was linked to revised economic scenarios, as European lenders prepare for potential credit risks stemming from the Iran war.
NatWest Group Plc topped first-quarter profit expectations, yet shares slipped as the British bank combined higher income with a wary guidance and a £283 million loan-impairment charge, with part of that tied to the Iran war.
Timing’s crucial here. UK banks are still enjoying a lift from higher rates, though that environment is starting to pinch borrowers, cool housing appetite, and weigh on the broader economy. NatWest expects 2026 income—excluding notable items, or one-offs outside routine business—to land at the top of its previous £17.2 billion to £17.6 billion forecast.
The guidance boost didn’t do the trick. NatWest shares ended Friday at 565.60 pence, shedding 3.35%. Investors zeroed in on the bank’s cautious revenue guidance and disappointment over softer non-interest income—covering fees, trading, and all business outside traditional lending.
Operating profit before tax came in at £2.03 billion, up from £1.81 billion the previous year. Total income moved 9.5% higher to £4.36 billion. Profit for ordinary shareholders reached £1.43 billion, with earnings per share ticking up to 17.9 pence.
NatWest kicked off the year showing “positive momentum” in all three of its customer businesses, Chief Executive Paul Thwaite said. Even so, he flagged that conditions turned tougher near the end of the quarter. Thwaite pointed to the bank’s balance sheet and ties with its 20 million customers as key strengths for navigating more uncertain times. NatWest Group
NatWest turned in “a decent set of results, but guidance took centre stage,” Hargreaves Lansdown senior equity analyst Matt Britzman said. Impairments ticked up—Britzman attributed that to revised economic forecasts, not to an uptick in borrower distress. Default rates, for now, are still low. Hargreaves Lansdown
Richard Hunter, head of markets at Interactive Investor, echoed the sentiment, commenting that “with high performance comes high expectations.” According to Hunter, the market response hinged more on outlook than results themselves—a key point after NatWest’s share rally in the past two years. Interactive Investor
Net interest income climbed 12.2% year-on-year to £3.39 billion, as the gap between loan earnings and deposit payouts widened. NatWest’s net interest margin increased to 2.47% from 2.27%. Non-interest income, with notable items stripped out, dropped 10.5% to £829 million.
The balance sheet offered a bit of relief. Net loans to customers, stripping out central items, climbed £7.2 billion over the quarter. Customer deposits, also excluding central items, were up £3.1 billion. NatWest’s Common Equity Tier 1 ratio, a closely watched capital metric, edged higher to 14.3%.
Macro risks are front and center. NatWest now pegs its base-case UK GDP growth for 2026 at just 0.4%, projects house prices rising 0.7%, and sees unemployment hitting 5.5%, expecting inflation to top out above 3.5%. Should energy costs, interest rates, or layoffs deteriorate further, management could see impairments accelerate more quickly than planned.
NatWest isn’t the only one feeling the impact. Lloyds Banking Group recorded a £151 million charge linked to the Iran conflict; Deutsche Bank put aside €90 million, and Standard Chartered took a $190 million hit. The pattern points to European banks broadly increasing provisions—not just a single lender.
The push for more fee-driven revenues is underway. NatWest just struck a deal to acquire wealth manager Evelyn Partners, though 2026 targets don’t factor in any boost from that move. For the moment, Thwaite walks away from the first quarter with better-than-expected profits, a stronger balance sheet, and investors still looking for a more decisive upgrade.
