GET DAILY SIGNALSNatWest Group (NWG) Q3 Earnings Show Steady Profit Growth Despite Higher Impairments
Key Takeaways
- Operating pretax profit rose 1.9% year over year to £2.23 billion, narrowly ahead of the £2.20 billion company-compiled consensus.
- Total income climbed 7.1% to £4.64 billion, while net interest income (NII) of £3.56 billion came in slightly below the £3.61 billion consensus estimate.
- Impairment charges nearly doubled to £277 million, exceeding the £235 million consensus and weighing on sequential profitability.
- Profit attributable to ordinary shareholders fell 4.1% to £1.53 billion from £1.60 billion a year earlier.
- The bank's Common Equity Tier 1 (CET1) ratio rose to 13.5%, and full-year guidance was reaffirmed at around £17.9 billion of income excluding notable items.
- Return on tangible equity (ROTE) eased to 21.6% from 22.3% a year ago, still among the highest in the UK banking sector.
Why These Results Matter Now
NatWest Group's third-quarter results arrived at a pivotal moment for UK banks, as investors weighed resilient lending growth against rising credit costs and a shifting interest-rate backdrop. The quarter marked the first full reporting period following the lender's acquisition of Evelyn Partners, which more than doubled its assets under management and administration (AUMA). That deal is central to NatWest's push into private banking and wealth management, diversifying revenue beyond traditional lending. With net interest margin (NIM) — the spread between what a bank earns on loans and pays on deposits — holding near 2.50%, the results offer a key read on how Britain's largest domestic lender is navigating mortgage repricing and deposit competition while sustaining industry-leading returns. I also checked this using Tickeron’s AI Screener to compare performance against peers in the sector.
The Reported Numbers
For the third quarter ended September 30, 2026, NatWest reported operating pretax profit of £2.23 billion, up 1.9% from £2.18 billion a year earlier and slightly ahead of the £2.20 billion consensus. Total income increased 7.1% to £4.64 billion, in line with analyst forecasts, while NII grew 8.9% to £3.56 billion — modestly below the £3.61 billion consensus. NIM expanded to 2.50% from 2.37% a year ago.
The quarter's most notable pressure point was impairments, which rose to £277 million from £153 million a year earlier and surpassed the £235 million consensus. Profit attributable to ordinary shareholders declined 4.1% to £1.53 billion, while ROTE eased to 21.6%. Encouragingly, the cost-to-income ratio improved to 45.1% from 45.8%, helped by around £420 million in gross cost savings.
On capital, the CET1 ratio — a measure of a bank's highest-quality capital relative to risk-weighted assets (RWA) — increased to 13.5% from 13.2% at the end of June. Management reaffirmed 2026 guidance for around £17.9 billion of income excluding notable items and ROTE above 19%.
Market Reaction
NatWest shares slipped following the release, with the stock down around 1.8% to 5.9% during Friday's London session. While top-line profit edged past consensus, the near-doubling of impairment charges and a modest miss on NII unsettled investors who had entered the report with elevated expectations. Sentiment was further pressured by the UK Budget delivered on October 28, which confirmed a time-limited doubling of the bank profit surcharge from 3% to 6%. Because NatWest generates virtually all of its revenue domestically, it is among the lenders most exposed to that change. The bank's decision to defer its next buyback announcement until full-year results in February also removed a near-term capital-return catalyst some investors had anticipated.
Forward Outlook
NatWest reaffirmed its full-year outlook, projecting around £17.9 billion in income excluding notable items and ROTE above 19%, while updating its expectation for RWA to roughly £210 billion as of January 1, 2027 — reflecting the introduction of the Basel 3.1 regulatory framework. Management also indicated it now expects Bank of England base rates to rise to 4% in the fourth quarter, with only a modest 2026 benefit given the timing.
Looking ahead, investors should monitor three areas. First, credit quality: after a sharp sequential rise in impairments to 24 basis points of loans, the trajectory of provisions will be closely watched against the bank's full-year guidance of below 25 basis points. Second, the integration of Evelyn Partners, including AUMA inflows and wealth-management fee growth, remains a key test of the diversification strategy. Third, capital returns — with the next buyback expected to be announced alongside full-year results in February — will depend on sustained capital generation, which management continues to expect to exceed 240 basis points in 2026.
The path of UK interest rates and the structural hedge, which is expected to contribute over £7 billion to income in 2027, are additional factors that will shape net interest income and margin stability in the quarters ahead. From what I see, these elements will determine how sustainable the current returns remain.
Using AI Tools in My Research
I often turn to Tickeron's AI-powered tools when analyzing bank results like these. The AI Screener helps me quickly filter financial stocks by patterns, fundamentals, and performance metrics, giving a clearer picture of where NatWest stands relative to the broader sector. It surfaces ideas efficiently without replacing my own fundamental review.
Disclaimer
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Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
NWG's MACD Histogram crosses above signal line
The Moving Average Convergence Divergence (MACD) for NWG turned positive on October 28, 2026. Looking at past instances where NWG's MACD turned positive, the stock continued to rise in 31 of 42 cases over the following month. The odds of a continued upward trend are 74%.
Technical Analysis (Indicators)
Bullish Trend Analysis
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. 36 of 57 cases where NWG's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are 63%.
Following a +1.64% 3-day Advance, the price is estimated to grow further. Considering data from situations where NWG advanced for three days, in 237 of 341 cases, the price rose further within the following month. The odds of a continued upward trend are 70%.
NWG may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on October 22, 2026. You may want to consider selling the stock, shorting the stock, or exploring put options on NWG as a result. In 40 of 81 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are 49%.
NWG moved below its 50-day moving average on September 28, 2026 date and that indicates a change from an upward trend to a downward trend.
The 10-day moving average for NWG crossed bearishly below the 50-day moving average on September 29, 2026. This indicates that the trend has shifted lower and could be considered a sell signal. In 8 of 16 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are 50%.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where NWG declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 55%.
The Aroon Indicator for NWG entered a downward trend on October 29, 2026. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Fundamental Analysis (Ratings)
The Tickeron SMR rating for this company is 5 (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is 9 (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 57, placing this stock better than average.
The Tickeron PE Growth Rating for this company is 19 (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Valuation Rating of 46 (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.539) is normal, around the industry mean (1.271). P/E Ratio (11.303) is within average values for comparable stocks, (13.491). Projected Growth (PEG Ratio) (1.468) is also within normal values, averaging (1.190). Dividend Yield (0.075) settles around the average of (0.035) among similar stocks. P/S Ratio (3.182) is also within normal values, averaging (3.738).
The Tickeron Seasonality Score of 50 (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Price Growth Rating for this company is 53 (best 1 - 100 worst), indicating fairly steady price growth. NWG’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
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