London, May 4, 2026, 14:13 BST
- NatWest trading is on hold in London for the Early May Bank Holiday, so Friday’s decline stands as the most recent market move.
- The bank raised its income guidance for 2026, though it also logged a bigger bad-loan charge, following reductions to certain UK economic forecasts.
- Investors are sizing up a jump in lending income, set against gloomier macro signals and a pivot toward wealth management.
NatWest Group Plc is headed for a Tuesday market test, its first since first-quarter profits topped forecasts but guidance came in on the cautious side, weighed down by a £140 million provision for softer economic outlooks. With the London Stock Exchange shut Monday for the Early May Bank Holiday, Friday’s selloff still stands as the most recent cash-market action on the stock.
NatWest’s upbeat results have a flipside. Sure, rising rates are boosting net interest income — that’s the gap between what banks make on loans versus what they pay out on deposits — but if economic growth cools, that same rate environment could start to squeeze borrowers.
London early afternoon: Hargreaves Lansdown quoted NatWest at 567.0 pence to sell, 567.4 pence to buy. The market was shut, prices delayed. On Friday, shares dipped—investors shrugged off the profit beat, zeroing in on the guidance.
NatWest posted an operating profit before tax of £2.03 billion for the quarter ended March 31, marking a 12.2% increase from the same period last year. Total income reached £4.36 billion, up 9.5%. Net interest margin bumped up to 2.47%. Return on tangible equity landed at 18.2%—that’s profit measured against shareholder funds, minus intangible assets.
Chief Executive Paul Thwaite described “positive momentum” for the bank at the start of the year, citing growth spanning all three of its businesses. Still, he flagged some caution—Thwaite said NatWest would revisit its forecasts as the economic picture evolves.
The bank lifted its income outlook, now seeing revenue excluding notable items—essentially, income stripped of one-offs—hitting the upper limit of its earlier £17.2 billion to £17.6 billion forecast. That projection doesn’t factor in the potential effect of the planned Evelyn Partners deal. Other targets remain as they were.
Credit risk proved trickier. NatWest logged a £283 million impairment charge—funds reserved for potentially bad loans—with roughly £140 million tied to revised economic projections. According to Reuters, the bank trimmed its UK GDP growth outlook for this year to 0.4%, down from 1%, and now sees house prices rising just 0.7% instead of 3.4%.
NatWest isn’t the only one in this boat. This week, Reuters pointed to comparable provisions at Lloyds Banking Group and Deutsche Bank, pulling the British bank into a wider European story: profits remain strong, yet managements are padding reserves as economic headwinds pick up.
NatWest had a “good quarter,” Morningstar senior equity analyst Niklas Kammer said, even as provisions climbed. Kammer still sees the shares as attractive, sticking with his GBX 710 fair-value estimate. He called NatWest the “best risk-reward trade-off” of the UK banks. But Kammer cautioned that stubborn macro uncertainty and rising loan losses are set to squeeze profit and capital generation. Morningstar
Capital returns haven’t dropped out of focus. NatWest’s May 1 SEC filing revealed it picked up ordinary shares from UBS on the London Stock Exchange, CHIX, and BATE last week, continuing its current buyback program. The bank plans to cancel all repurchased shares. Following settlement, NatWest expects its outstanding ordinary shares—excluding treasury stock—to total 7.97 billion.
NatWest is working to reduce its reliance on lending spreads for earnings. Back in February, the bank struck a £2.7 billion enterprise value deal to acquire wealth manager Evelyn Partners. NatWest said the move should boost fee income roughly 20% before any revenue synergies, positioning the combined group as a major player in UK private banking and wealth management.
The outlook isn’t wide open. Should inflation, swings in oil, or jobless numbers deteriorate more quickly than NatWest’s models are betting, that £140 million scenario charge could be the start, not the end. If arrears don’t climb, the bank gets a shot at defending its income goal’s upper band. Otherwise, some investors might wonder if Friday’s share reaction was just the opening round.
