NatWest Group PLC (LSE:NWG) reported broadly unchanged third-quarter operating profit of £2.2 billion, meeting analyst expectations as growth in lending and deposits helped offset increasing competition and pressure on banking margins.
The UK banking group maintained its full-year financial targets rather than raising its guidance, reflecting a more challenging operating environment for British lenders.
The results come as banks face intensifying competition for customer deposits, alongside uncertainty over the outlook for interest income and the wider UK economy.
Third-Quarter Profit Meets Analyst Expectations
NatWest recorded pretax operating profit of £2.2 billion for the July-to-September 2026 period, broadly in line with the corresponding quarter last year.
The result matched the average analyst forecast, supported by continued lending growth and relatively stable deposit margins.
The bank reported increases in lending, customer deposits and assets under management across its three main customer businesses.
Chief Executive Officer 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”
Despite the growth in customer activity, NatWest maintained its existing annual performance targets, disappointing expectations among some investors for an upgrade.
The decision follows similar guidance announcements from HSBC and Lloyds Banking Group, highlighting the pressures facing the UK banking sector.
Cost Savings Improve Efficiency Ratio
NatWest reported a year-to-date cost-to-income ratio of 45.7%, representing an improvement of 2.1 percentage points compared with the previous year.
The reduction was supported by approximately £420 million in gross cost savings as the bank continued efforts to improve operational efficiency.
These initiatives include workforce reductions and investment in artificial intelligence to automate processes and streamline operations.
The improvement in the cost-to-income ratio indicates that NatWest has continued to control expenses while expanding its customer activities.
Maintaining this efficiency progress will remain important as competition places pressure on revenue growth and lending margins.
Wealth Management Assets Increase Following Acquisition
NatWest’s wealth management business recorded a £1 billion increase in assets during the third quarter following the acquisition of Evelyn Partners.
The expansion supports the bank’s efforts to develop its wealth management operations and increase its exposure to fee-generating financial services.
Growth in assets under management also provides an additional source of business activity alongside traditional lending and deposit services.
The bank’s broader customer franchises continued to report growth during the quarter, although competitive conditions remain a consideration for future profitability.
Banking Margin Pressures Remain in Focus
Competition for savings deposits continues to affect the outlook for UK banks, with lenders balancing the need to retain customer funds against the cost of offering competitive interest rates.
Analysts have also highlighted the potential for slower growth in net interest income as banking margins come under pressure.
Jefferies analyst Jonathan Pierce described the latest reporting period as one in which British banks were “tearing off the band aid” by reducing expectations for interest income growth.
For NatWest, the decision to maintain rather than upgrade its annual guidance suggests a cautious approach despite continued growth in lending, deposits and wealth management assets.
Investors will be monitoring the bank’s ability to preserve margins, deliver further cost savings and sustain profitability as competitive and economic conditions evolve.
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