More good news from FTSE 100 banks. NatWest profit surged 35% in the third quarter compared to the same period last year as income increased 15%.
Natwest shares rose by more than 3% in the immediate reaction after hitting their highest levels since 2010 in very early trade on Friday.
“NatWest has joined Barclays in upgrading guidance, a sign that things really are looking up for the UK banking sector,” said Chris Beauchamp, Chief Market Analyst UK at IG.
“It has been a good 24 hours for UK news, providing hope that the economy is moving out of the doldrums. NatWest’s performance means that speculation that it is poised to go hunting for more acquisitions can only increase from here, now that the turnaround efforts have borne fruit.”
NatWest’s total income surged 15.7% year-on-year in Q3 and 8.2% quarter-on-quarter as net interest margin rose 9 basis points to 2.37%.
Operating expenses fell by £43 million versus Q2 despite a £171 million year-on-year increase, while the bank reduced headcount by approximately 600 full-time equivalents compared to Q3 2024.
NatWest’s impairment charges were also relatively low compared to its peers, underscoring strong underlying customer health.
“NatWest’s Q3 results paint a picture of a bank firing on all cylinders, with total income of £4.332 billion, representing a 5.7% beat versus consensus,” explained Max Harper, Analyst at Third Bridge.
“Another rise in income guidance to £16.3 billion, from over £16 billion, is very positive and should signal confidence in their strategy to the market.
“Net Interest Income (NII) outperformed by 5.6% to £3.268 billion, supported by a 9 basis point expansion in Net Interest Margin (NIM) to 2.37%. Our experts believe this is down to NatWest’s core competitive advantage, which is its ability to build relationships. Compared with other UK banks, their customers are more sticky, with fewer rate chasers, resulting in a resilient customer base.”