NatWest Group (NYSE:NWG) reported what CEO Paul Thwaite described as a “strong momentum” start to the year in its first-quarter 2026 management presentation, pointing to growth across retail banking, private banking and wealth management, and commercial and institutional (C&I) banking alongside continued progress on cost reduction and active balance sheet management.
Thwaite said the bank is pursuing “disciplined growth” and highlighted several business developments, including increased mortgage market share and a new partnership to become the exclusive mortgage provider for Rightmove. In wealth management, he said NatWest’s acquisition of Evelyn Partners is “progressing well” and is expected to complete in the second quarter, subject to regulatory approval. In C&I, Thwaite said the bank onboarded 24,000 new U.K. startups during the quarter, up 25% from the prior-year period.
Quarterly performance and balance sheet trends
CFO Katie Murray added that income excluding notable items was £4.2 billion, down 1.1% versus the fourth quarter, while total operating costs fell 9.2% quarter-over-quarter to £2.0 billion. Operating profit before impairment rose 11.6% to £2.3 billion, she said. The impairment charge was £283 million, equivalent to 26 basis points of loans, resulting in operating profit of £2.0 billion and profit attributable to ordinary shareholders of £1.4 billion. Return on tangible equity was 18.2%.
On profitability and capital metrics discussed during the presentation, Thwaite said income grew 6.9% year-on-year to £4.2 billion, costs increased 4.8% year-on-year to £2.0 billion, and the cost-to-income ratio improved by 2.1 percentage points to 46.5%. He reported earnings per share of £0.179, up 15.5% year-on-year, and tangible net asset value per share of £4.00, up 15.1%. NatWest ended the quarter with a CET1 ratio of 14.3%.
Customer assets and liabilities (CAL) rose by £8.4 billion in the quarter to £900 billion, Murray said, reflecting lending growth of £7.3 billion, deposit growth of £3.1 billion, and a £1.8 billion decline in assets under management and administration (AUMA) due to market movements. AUMA ended the quarter at £56.7 billion, with £0.9 billion of net inflows (8.2% of opening AUMA), she said, while negative market movements of £1.7 billion weighed on balances but “were reversed during April.”
Net interest margin, mortgages, and deposit dynamics
Murray said net interest margin was 247 basis points, up 2 basis points, driven by deposit margin expansion and a small benefit from “funding and other,” while lending margin declined by 2 basis points “mainly driven by mortgages.”
Discussing mortgage pricing, Murray told analysts the bank continues to write mortgages at front-book spreads below the back book, consistent with its strategy, while noting volatility in March led to frequent repricing. She said April new business margins were “ahead of the back book,” but also cautioned that NatWest is seeing pressure on book margin from the roll-off of five-year COVID-era mortgages at spreads higher than current origination levels. Murray said she expects book margin “to reprice to around 60 basis points over the course of this year,” and reiterated prior guidance that mortgages could contribute a “1 to 2 basis points impact on our NIM walk per quarter throughout this year,” while adding that deposit margin expansion is expected to more than offset that headwind.
On deposits, NatWest reported £3.1 billion of growth despite “expected higher seasonal tax outflows,” Murray said. Commercial and institutional deposits increased £5.1 billion, partly offset by declines in retail and private banking deposits due to “higher customer tax payments of £10.3 billion.” Thwaite said personal current accounts increased and pointed to growth in “boxed” savings propositions provided through partners such as AA, Saga and Sainsbury’s.
Responding to a question about corporate deposit growth, Thwaite said deposits in the commercial bank have been “a big area of strategic focus,” supported by a broadened product range, digitization, and an increased focus on transaction banking that “brings high value operational deposits.” Murray said deposit margin expansion should be “greater in the coming months” after January’s tax outflows.
Updated macro assumptions and credit provisions
Management cited increased geopolitical uncertainty, with Thwaite noting conflict in the Middle East. While he said the bank has not seen “any material impact on our customers,” NatWest revised its economic scenarios to assume higher inflation and a Bank of England base rate held at 3.75% for the rest of the year, alongside slower growth and a “modest increase in unemployment.” Murray said the revised base case assumes CPI peaks at 3.5% in 2026, GDP growth of 0.4%, and unemployment peaking at 5.7%.
As a result of scenario changes, NatWest recorded an additional £140 million provision in the quarter, which Thwaite said “reflects our macroeconomic assumptions, not our credit performance.” Murray said underlying impairment was 16 basis points excluding the macroeconomic scenario charge and other items, adding, “There were no new signs of stress across our three businesses.” She reiterated guidance for a 2026 loan impairment rate “below 25 basis points.”
Costs, technology investments, and capital management
Thwaite said NatWest delivered over £100 million of additional cost savings in the first quarter. He also discussed the bank’s technology approach, saying NatWest employs more than 12,000 software engineers and is using artificial intelligence in development work, with “over 40% of our code” now written by AI. He said some proposition development timelines have been reduced significantly in certain scenarios through “agentic software development.”
Murray said costs were elevated year-on-year due to decisions to “accelerate investment spend and incur higher restructuring costs” in the quarter, though costs declined from the fourth quarter primarily due to cost savings and lower bank levies. She maintained full-year 2026 cost guidance of around £8.2 billion, while noting the cost profile will be “uneven throughout the year.”
On capital, Murray said the CET1 ratio rose 30 basis points in the quarter to 14.3%, with capital generation before distributions of 65 basis points, including 69 basis points from earnings. She said NatWest expects around 200 basis points of capital generation before distributions this year while operating at a CET1 ratio of around 13%.
Thwaite also said the bank took advantage of an upward move in the yield curve to “accelerate the increase in our structural hedge,” which he said supports future income growth. Murray said NatWest added about £5 billion to its product hedge in the first quarter and said reinvestment rates had been higher than prior guidance, helping support expectations that “total hedge income will grow annually through to 2030.”
Guidance and Evelyn Partners acquisition
NatWest updated its full-year income outlook. Thwaite said the bank now expects full-year income to be at the top end of the £17.2 billion to £17.6 billion range set in February, reflecting first-quarter momentum and updated rate assumptions that now include “zero” expected cuts this year. Murray emphasized the income guidance excludes the impact of the Evelyn Partners acquisition.
On Evelyn, Thwaite said the transaction is expected to close in the second quarter, pending regulatory approval, and that integration planning is progressing. He declined to comment on the performance of Evelyn prior to close, saying it “wouldn’t be appropriate” to discuss a business NatWest does not yet own. In response to a question on previously disclosed figures, Thwaite said “nothing’s changed since the original disclosures.” Murray said additional details on Evelyn’s cost impacts would be provided once the deal completes, including day-one transaction costs, operating costs post-consolidation, costs to achieve synergies, and amortization of intangibles.
In closing remarks, Thwaite highlighted what he called the strength of NatWest’s deposit franchise and “gearing” to higher-for-longer rates, continued growth momentum, improving efficiency, and results in the Bank of England stress tests, where he said NatWest was “the most resilient bank under stress.”
About NatWest Group (NYSE:NWG)
NatWest Group plc is a major UK-based banking and financial services group headquartered in Edinburgh, Scotland. The company traces its roots to the Royal Bank of Scotland, founded in 1727, and adopted the NatWest Group name in 2020 as part of a strategic refocus on its NatWest brand. NatWest Group is listed on the London Stock Exchange and also has American depositary shares trading on the New York Stock Exchange under the symbol NWG.
The group provides a broad range of banking services across retail, private, commercial, corporate and institutional segments.
