NatWest shares drop as profit growth lags rivals

30th Oct 2026 10:33

(Sharecast News) - NatWest shares slumped on Friday after the UK banking group reported a modest increase in third-quarter profits, lagging the stronger earnings growth reported by its domestic rivals, as it revealed further workforce reductions under its efficiency drive.

NatWest reported operating pre-tax profit of £2.23bn for the three months to September, up just 1.9% from £2.18bn a year earlier. This represented the weakest year-on-year profit growth among the major UK banks to have reported so far this earnings season.

NatWest also revealed that its workforce had shrunk by around 1,000 full-time equivalent roles during the quarter, with its ongoing transformation programme accounting for a net reduction of approximately 1,400 roles since the start of the year, excluding the impact of acquisitions.

The reductions formed part of the bank's drive to simplify operations and improve efficiency, with gross cost savings reaching around £420m year to date. Its cost-to-income ratio improved to 45.7% from 47.8% a year earlier.

Customer assets and liabilities increased 1.6% during the quarter to £1.003trn, including growth in lending, deposits and assets under management.

Total income increased 7.1% to £4.64bn from £4.33bn, while net interest income rose 8.9% to £3.56bn, supported by higher lending volumes and improved deposit margins.

However, impairment charges rose to £277m from £153m in the same quarter last year, while profit attributable to ordinary shareholders fell 4.1% to £1.53bn from £1.60bn. Meanwhile, return on tangible equity declined to 21.6% from 22.3% a year earlier.

Chief executive Paul Thwaite labelled it a "strong performance [...] underpinned by the activity of more than 20 million customers and the significant role we play in supporting economic growth across the UK."

He added: "Our strategy is consistently delivering sector-leading growth and returns, with a Return on Tangible Equity of 20.2% for the year to date, supported by greater income diversification, disciplined cost management and strong capital generation."

NatWest reaffirmed its full-year guidance, including total income excluding notable items of approximately £17.9bn, operating expenses of around £8.5bn and return on tangible equity above 19%.

The lender also said it now expected risk-weighted assets to reach around £210bn at the start of 2027, including the impact of Basel 3.1 regulations.

Richard Hunter, head of markets at Interactive Investor, called the results a "fair to middling performance".

"The negative reaction to the numbers reflects some disappointment with the general tone of the update, shaving some of the 9% gain which the shares have made over the last year, as compared to a rise of 10% for the wider FTSE 100, and of 69% over the last two years," Hunter said.

"Despite this bump in the road, NatWest is currently the preferred play in the sector and the market consensus of the shares as a strong buy is more than likely to stay in place."

The stock was down 7.8% at 585.6p by 1006 GMT.

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