NatWest Sees Income and Returns Surpassing Guidance Amid Strong Loan Growth

NatWest has narrowed its guidance for income and returns, expecting them to reach the upper end of guidance for the year after beating market expectations. Loan growth and structural hedges contributed to the high-street bank's earnings, surpassing market views.

NatWest Group plc (NYSE:NWG) has updated its financial guidance for 2025, expecting income and returns to reach the upper end of its previously stated range, following a strong first quarter. The bank reported a GAAP EPS of 15.40p and total income of £3.95 billion for the period ended March 31, 2025, with a 13.5% year-over-year increase [1].

The bank's Chief Executive Officer, Paul Thwaite, attributed the resilience of its customers to the bank's performance, stating, "In the face of increased global economic uncertainty, our customers remain resilient and we saw good levels of activity through Q1" [2]. NatWest's pretax income for the quarter was £1.81 billion, up 38% from a year ago, and exceeded market expectations of £1.53 billion [2].

Key contributors to NatWest's earnings include loan growth and structural hedges, which mitigated the impact of interest-rate cuts by the Bank of England. The bank now expects total income excluding notable items for 2025 to be closer to £15.7 billion, compared to its previously guided range of £15.2 billion to £15.7 billion [3]. Additionally, NatWest's return on tangible equity is expected to reach the upper end of its previously guided range of 15-16%, following a first-quarter return of 18.5% [3].

NatWest's net interest margin, a key measure of profitability, was 2.27% for the quarter, slightly higher than the previous quarter and reflecting deposit margin expansion [1]. The bank also increased its provisions for bad loans to £189 million, up from £90 million a year ago, to cover potential economic uncertainty [2].

Looking ahead, NatWest expects its loan impairment rate to be below 20 basis points and its risk-weighted assets (RWAs) to be in the range of £190-195 billion at the end of 2025 [1]. The bank continues to target a CET1 ratio in the range of 13-14% and expects to pay ordinary dividends of around 50% of attributable profit from 2025, with the possibility of share buybacks [1].

References:
[1] https://seekingalpha.com/news/4440043-natwest-gaap-eps-of-1540p-total-income-of-395b-updates-fy-and-beyond-outlook
[2] https://www.bloomberg.com/news/articles/2025-05-02/natwest-says-customers-resilient-in-uncertainty-as-earnings-beat
[3] https://www.morningstar.com/news/dow-jones/202505021474/natwest-nudges-up-targets-after-profit-beat-update