NatWest Shares Fall After Bank's Interest Income Guidance Disappoints

By Michael Hennessey

NatWest Group shares dropped after the bank forecast weaker-than-expected interest income next year and reported third-quarter results largely in line with analysts' expectations.

Shares in NatWest dropped 8.3% to 582.60 pence on Friday afternoon, putting the stock on track for its lowest close since May. It has fallen 11% in the year to date.

The British high-street bank said operating pretax profit climbed 1.9% on year to 2.23 billion pounds ($2.98 billion) for the third quarter. Analysts had expected operating pretax profit of 2.20 billion pounds, according to a company-compiled consensus.

Net interest income grew 8.9% to 3.56 billion pounds in the third-quarter, while the bank's net interest margin--which measures how much a bank earns on loans and what it pays out on client deposits--expanded to 2.50% from 2.37%.

The bank expects net interest margin to stay "flatter" in 2027, Chief Financial Officer Katie Murray said on a call with analysts.

Before the call, Jefferies analyst Jonathan Pierce said a net interest margin between 2.50% and 2.55% in 2027, instead of the wider margin of 2.62% expected by investors, would hit the market's net interest income forecasts. A flatter margin could reduce net interest income by between 250 million pounds and 500 million pounds, or between 3% and 6% of profit, Jefferies said.

"We do not think the risk to consensus net interest income estimates in 2027-28 has gone away, and we expect another bout of scrutiny on this today," the analyst said.

The lender said Friday that total income increased to 4.64 billion pounds from 4.33 billion pounds, in line with the analysts' forecast.

Total customer assets and liabilities climbed 1.6% in the quarter to just over 1 trillion pounds.

"We continue to see broad-based growth in our three customer franchises, with lending, deposits and assets under management all increasing during the quarter," Chief Executive Paul Thwaite said.

Return on tangible equity--a key profitability metric--fell to 21.6% in the third quarter from 22.3% a year ago.

NatWest's operating expenses increased 7.1% to 2.14 billion pounds in the third quarter. The bank said it cut 1,000 full-time jobs in the period, but headcount has increased by around 800 for the year-to-date, including 2,200 additional staff following the acquisition of wealth manager Evelyn Partners.

The bank maintained its guidance from its half-year results. It expects total income excluding notable items of around 17.9 billion pounds for the year, with a return on tangible equity greater than 19%.

Write to Michael Hennessey at michael.hennessey@wsj.com

(END) Dow Jones Newswires

October 30, 2026 10:25 ET (14:25 GMT)