NatWest Group Earnings Call Signals Confident Growth

Natwest Group Plc ((NWG)) has held its Q4 earnings call. Read on for the main highlights of the call.

NatWest Group’s latest earnings call struck a confident tone, with management emphasizing strong 2025 performance and a clear plan through 2028. Double‑digit income growth, robust capital generation and tighter cost control reassured investors, even as executives acknowledged rate, regulatory and integration risks that could test delivery in a volatile macro backdrop.

Strong top-line and profitability

Income excluding one‑offs rose 12% to £16.4bn, driving operating profit of £7.7bn and £5.5bn of attributable profit. Return on tangible equity hit an impressive 19.2% while earnings per share jumped 27% to 68p, underscoring a business that is both growing and highly profitable.

Material balance sheet growth

NatWest expanded its balance sheet materially, with gross lending up 5.6% to £392.7bn and deposits rising 2.4% to £442bn. Customer assets and liabilities grew 10% in Private Banking and 4% in Retail, while Commercial & Institutional loan books added £14bn, or 10%, demonstrating broad‑based franchise momentum.

Wealth and AUMA momentum

Wealth operations accelerated, with assets under management and administration jumping 20% to £58.5bn and net flows surging 44% to £4.6bn. Fee income from these assets rose 11% to £300m, supported by stronger net new flows and deeper engagement in Private Banking.

Improved efficiency and cost control

The bank delivered about £600m of gross cost savings, roughly 7% of its 2024 cost base, helping absorb inflationary pressures. Other operating expenses ticked up only 1.4% and the group cost‑income ratio improved to 48.6%, with notable gains across Retail, Commercial & Institutional and PBWM.

Strong capital generation and CET1

Capital generation remained a major strength, adding 252 basis points in 2025 and lifting the CET1 ratio to 14%, 40bps higher year on year. Management also guided to around 200bps of capital generation in 2026 before shareholder payouts, providing flexibility for growth, regulation and distributions.

Low impairments and disciplined risk

Credit quality stayed benign, with net loan impairments of £671m equating to just 16bps of loans and Stage 3 exposures down to 1.1%. Expected credit loss coverage stood at 83bps and management sees the 2026 impairment rate remaining below 25bps, reinforcing the bank’s disciplined risk appetite.

Customer franchise and new customers

NatWest added 1m new customers in 2025, taking its total base above 20m and growing Retail customers by more than 5%. The wealth and private banking arm attracted 50,000 new investing customers, highlighting cross‑sell potential and the opportunity to deepen relationships beyond traditional lending.

Strategic acquisition to scale Wealth

The headline strategic move was the acquisition of Evelyn Partners, which brings £69bn of additional assets under management and administration. The deal is expected to boost group fee income by around 20% on day one, lift PBWM to roughly 20% of group customer assets and liabilities, and deliver over £700m of extra income and about £100m in cost synergies.

Technology, AI and simplification progress

Management highlighted continued technology simplification, having decommissioned roughly 200 legacy applications and migrated 1m Sainsbury’s customers. Investments in generative AI, including enhancements to the Cora assistant and an AI research office, have increased query resolution and helped quadruple developer deployment frequency since 2021.

Rate and hedging uncertainties

The bank is planning for rate cuts, projecting Bank Rate to end 2026 around 3.25%, which it estimates will drag about £500m from income. At the same time, hedge income is expected to rise roughly £1.5bn in 2026 versus 2025, but management stressed that outcomes are sensitive to reinvestment yields and hedge notional growth.

RWA and regulatory headwinds

Regulation remains a key overhang, with Basel 3.1 from January 2027 expected to add around £10bn of risk‑weighted assets. CRD IV‑linked model inflation and higher operational RWAs already increased RWAs by over £11bn, raising capital demands and complicating balance sheet optimization.

Acquisition CET1 impact and execution risk

The Evelyn Partners deal will come with a notable day‑one CET1 hit of about 130bps due to intangibles, temporarily lowering capital ratios. Management acknowledged execution and adviser‑retention risks but argued that medium‑term RoTE accretion and an expected £400m of EBITDA by year three justify the near‑term capital and integration drag.

Margins and non-interest income pressure

Non‑interest income was broadly flat for the year, up just 1.3%, and dipped 3.7% in the fourth quarter due to normal Commercial & Institutional seasonality. Mortgage margin compression and intense competition for savings were flagged as ongoing headwinds to net interest income outside of hedge tailwinds.

Cost pressures ahead despite savings

Despite the sizable savings already banked, management expects 2026 other operating expenses to be around £8.2bn, driven by wage inflation, suppliers and continued transformation. Integration of Evelyn will add further near‑term costs, with about £96m already booked in 2025 and around £150m earmarked to deliver targeted synergies.

Income guidance and uncertain drivers

For 2026, the bank guided to £17.2bn–£17.6bn of income excluding notable items and excluding Evelyn Partners, highlighting sensitivity to customer activity, rate cuts and reinvestment yields. Management also cautioned that higher average tangible equity, regulatory impacts and rate dynamics could pull RoTE below the exceptional 2025 level.

Market and sector headwinds

Executives pointed to ongoing challenges in sectors such as retail and hospitality, which remain exposed to cost and demand pressures. They also noted intense competition in deposits and the threat from new technology‑driven entrants, which could further squeeze spreads and reshape customer behavior over time.

Forward-looking guidance and 2028 ambitions

Looking ahead, NatWest targets 2026 RoTE above 17%, a loan impairment rate below 25bps and about 200bps of capital generation before payouts while operating near a 13% CET1 ratio. By 2028, it aims for customer asset and liability growth above 4% annually, a cost‑income ratio below 45%, RoTE above 18% and strong hedge income growth, supporting an ongoing focus on dividends and potential buybacks.

NatWest’s earnings call painted the picture of a bank in strong shape today and ambitious about tomorrow, yet clear‑eyed about regulatory and rate challenges. For investors, the story is one of high profitability, growing capital and a bold push into wealth, with execution on Evelyn and navigation of macro and regulatory shifts likely to determine whether the group meets its 2028 targets.