NatWest Group (NWG) Earnings Date & Reports
NatWest Group derives around 90% of its total income from the United Kingdom... Show more
NWG is expected to report earnings to 48 cents per share on July 31
NatWest Group (NWG) Q1 2026 Earnings Recap: Profit Beats Expectations Despite Income Miss
Key Takeaways
- Attributable profit reached £1.4 billion, up 14.4% year-over-year (YoY), slightly ahead of consensus estimates of £1.42 billion.
- Basic earnings per share (EPS) rose 15.5% YoY to 17.9 pence, beating analyst forecasts of 16.8 pence.
- Return on Tangible Equity (RoTE, a measure of profitability relative to tangible shareholders' equity) stood at 18.2%, surpassing the 17.3% consensus.
- Total income excluding notable items was £4.2 billion, up 6.9% YoY but below expectations of £4.3 billion, driven by a miss in non-interest income.
- Full-year 2026 income guidance strengthened to the top end of the £17.2-17.6 billion range.
- Customer lending grew 6.6% YoY to £400 billion, supporting balance sheet expansion.
Earnings Context and Why It Matters
NatWest Group, one of the UK's largest banks, released its Q1 2026 results on May 1, marking a strong start to the year amid stabilizing interest rates and economic uncertainty. This quarter's performance is critical as it sets the tone for full-year delivery against ambitious targets like RoTE above 17% and positive jaw (revenue growth outpacing costs). Investors watch closely for signs of lending momentum in mortgages and commercial banking, deposit stability, and credit quality amid potential slowdowns. With the Bank of England base rate influencing net interest margins, these results help gauge resilience in a competitive landscape, impacting dividend prospects and shareholder returns for a stock yielding around 5%.
NatWest Group reported total income excluding notable items of £4,223 million for Q1 2026 ended March 31, up 6.9% YoY from £3,952 million but short of the £4,303 million consensus. Net interest income (NII, revenue from loans minus deposit costs) was £3,394 million, a 12.2% YoY increase and nearly in line with £3,412 million expected. Non-interest income fell to £829 million, down 10.5% YoY and missing £891 million estimates due to seasonal factors and market volatility.
Operating expenses totaled £2,042 million, yielding a cost/income ratio of 46.5% (excluding litigation and conduct costs), an improvement from 48.6% YoY. Impairment losses rose to £283 million (loan impairment rate of 26 basis points), matching consensus but up 49.7% YoY from £189 million, reflecting macro-economic stress (MES) updates.
These drove operating profit of £2,033 million and attributable profit of £1,432 million, edging past £1,422 million forecasts. EPS of 17.9 pence beat estimates, with RoTE at 18.2%. Balance sheet growth included customer loans at £400 billion (+6.6% YoY) and deposits at £445 billion (+2.6% YoY). Net interest margin (NIM, NII as percentage of interest-earning assets) held at 2.47%.
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Market Reaction and Investor Sentiment
Despite the profit beat and upgraded guidance, NatWest Group's shares on the London Stock Exchange fell around 3.6% to 564 pence on May 1, reflecting disappointment over the income miss, particularly in non-interest revenue. The NYSE-listed ADR (NWG) closed down about 3.3% at $15.38. Sentiment remains cautiously positive on robust profitability and lending growth, but investors expressed concerns over higher impairments and guidance not exceeding prior ranges enough to offset revenue weakness.
Forward Outlook and Key Factors to Monitor
Management strengthened full-year 2026 guidance, now targeting total income excluding notable items at the upper end of £17.2-17.6 billion, assuming a UK base rate of 3.75% by year-end. Operating costs excluding litigation and conduct are seen at around £8.2 billion, with loan impairment rates below 25 basis points (within through-the-cycle 20-30 bps).
Key to watch includes sustained NIM stability amid rate cuts, as Q1's 2.47% benefited from lending and deposit mix shifts. Customer asset and liability growth is guided at over 4% compound annual growth rate (CAGR) from end-2025 to 2028, driven by retail mortgages, commercial real estate (CRE), and renewables lending.
Impairment trends will be pivotal, with underlying rate at 13 bps excluding one-offs; monitor unsecured lending and commercial portfolios. The CET1 ratio (common equity tier 1 capital ratio, a key measure of bank strength) stood at 14.3%, supporting capital generation of ~200 basis points pre-distributions. Upcoming catalysts include the Evelyn Partners acquisition (excluded from guidance) and progress toward 2028 targets: cost/income below 45%, RoTE above 18%.
Disclaimer
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