NatWest Q1 Results Raise Income Guidance

NatWest Group (NWG) reported a 12% rise in first-quarter profit on May 1, 2026, driven by stronger lending income and cost control. The bank upgraded its full-year 2026 income guidance despite higher provisions and weaker non-interest income, which tempered investor response.

Profit Growth and Guidance Upgrade

NatWest posted operating profit before tax of £2.0 billion in Q1 2026, exceeding the consensus forecast of £1.94 billion and up from £1.8 billion a year earlier, the company said in its Q1 results release. Total income excluding notable items rose 6.9% year-on-year and 4.8% sequentially to £4.2 billion, but overall income fell about 2% short of market expectations due to a roughly 7% shortfall in non-interest income.

Net interest income strengthened to £3.4 billion as the bank’s net interest margin widened 20 basis points year-on-year to 2.5%, supporting core revenue growth. Operating costs held steady at £2.0 billion, while the cost-to-income ratio excluding litigation and conduct improved to 46.5% from 48.6% a year earlier, aided by more than £100 million in cost savings. Chief Executive Paul Thwaite said, "We have started the year with positive momentum, underpinned by healthy customer activity."

Management raised full-year 2026 income guidance to the upper end of its £17.2 billion to £17.6 billion range, excluding benefits from the pending Evelyn Partners wealth acquisition. The group expects Evelyn Partners to contribute about £1.5 billion of income in 2026 and roughly £1.0 billion in 2027, with further growth through 2030. Shares fell 3.6% after the announcement as investors weighed the income mix and the scale of the guidance uplift.

Lending, Deposits, and Credit Quality

Lending growth continued, with net loans to customers increasing by £7.2 billion in the quarter, including a £3.3 billion rise in retail mortgages. The commercial business onboarded about 24,000 new startups, roughly 25% more than a year earlier, expanding the loan book to £396.4 billion.

Customer deposits grew by £3.1 billion to £444.8 billion, driven by corporate and current-account inflows that offset seasonal retail and wealth outflows. Customer Assets & Liabilities rose 0.9% in the quarter to £900.1 billion, up 5.2% year-on-year.

Impairment charges increased about 50% year-on-year to £283 million, including a £140 million forward-looking provision related to weaker macroeconomic scenarios tied to the Middle East conflict. Excluding this provision, impairment charges were broadly in line with the prior year, and actual credit losses remained modest.

Capital measures strengthened, with the Common Equity Tier 1 ratio rising 30 basis points sequentially to 14.3%. Tangible net asset value per share increased 16 pence to 400p, supported by capital generation before distributions of 65 basis points in the quarter. This left the group with continued capital headroom to support the upgraded income guidance. The Evelyn Partners acquisition remains in process and its benefits were excluded from the guidance.