Shares in NatWest (LON:NWG) were lower in early trading after the bank posted mixed Q3 earnings and confirmed its FY outlook. Although there were no obvious issues with the results, investors appeared unimpressed, and the lack of a FY upgrade also weighed on the shares.
Mixed Q3 results
For the three months to September, NatWest reported total income of £4.64 billion, up 7.1% on the previous year and in line with forecasts. Net interest income grew faster, up 8.9% to £3.56 billion, but this was marginally below the £3.61 billion consensus.
At the operating level, costs rose 2.8% to a slightly lower-than-expected £2.14 billion. However, provisions for bad loans were higher than expected at £277 million, almost double the £140 million of a year earlier.
Pre-tax operating profit rose 1.9% to £2.23 billion, while net profit slipped 3.5% to £1.61 billion, both in line with forecasts. Earnings per share were 19.3p against 20.1p a year earlier, and as expected the bank didn’t announce a buyback.
Key Q3 figures for NatWest (in £ millions)
| Q3 2026 | Q3 2025 | Change | |
| Net interest income | 3,559 | 3,268 | +8.9% |
| Total income | 4,640 | 4,332 | +7.1% |
| Operating profit | 2,225 | 2,183 | +1.9% |
| Net profit | 1,615 | 1,681 | -3.9% |
Source: Company accounts
Unchanged FY guidance
For the full year, the bank said based it was maintaining the outlook published with its H1 results. It also said it expects a further 0.25% rise in UK base rates to 4% before the end of the year.
CEO Paul Thwaite commented: ‘We continue to see broad-based growth in our three customer franchises, with lending, deposits and assets under management all increasing during the quarter.’ Thwaite also said the bank was ‘confident in the strengths we’ve created and in the opportunities we see ahead’.
Today’s update from NatWest makes it a full house for the big banks, with all four falling on results. For the UK-focussed lenders, our impression is expectations for net interest income were generally too high.
Investors had assumed higher-for-longer rates would mean the banks could increase their margins. However, given the softness of the UK economy the marketplace is still highly competitive.
Nowhere is that truer than in term deposits, where retail customers continue to take money out of low-interest accounts. Whether they are shopping around for higher rates or buying gilts, which now offer attractive yields, it’s bad news for the banks who rely on cheap funding.
Also, provisions for bad loans appear to be creeping up slowly but surely despite ‘low and stable’ arrears. For Vanquis (LON:VANQ), the admission this week credit card losses were rising was enough to send the shares down 40%.
In NatWest’s case, we would also flag the wholly unimpressive results at its investment bank. In Q3, it made £6 million of profit on £350 million of income and assets of nearly £190 billion. Which leads us to ask, what is the point?
