NatWest Group Reports Strong Q3 2025 Performance and Upgrades 2025 Outlook

NatWest’s Q3 2025: strong profits, firmer margins, and upgraded guidance

NatWest Group has posted a punchy third quarter and lifted its full-year 2025 guidance. The numbers point to broad-based growth, firming margins and tight cost control, with capital and liquidity still comfortably above regulatory minimums.

Management now expects income excluding notable items of around £16.3 billion for 2025 and a Return on Tangible Equity (RoTE) of greater than 18.0%.

Headline numbers investors should know

Total income (excl. notable items) – Q3	£4,166m
Attributable profit – Q3	£1,598m
RoTE – Q3	22.3%
Net interest margin (NIM) – Q3	2.37% (up 9bps q/q)
Impairment charge – Q3	£153m (15bps of loans)
Net loans to customers	£415.3bn
Customer deposits	£435.5bn
Loan:deposit ratio (excl. repos)	88%
AUMA	£56.0bn (up 8.1% q/q)
CET1 ratio	14.2%
Average LCR	148%
TNAV per share	362p (up 11p q/q)

Guidance upgraded: why that matters

Upgrading guidance mid-year is a clear vote of confidence. Expecting c.£16.3 billion of income excluding notable items and RoTE above 18.0% for 2025 suggests management sees margin resilience and controlled costs continuing into Q4. In short, the engine is running hotter than earlier assumed.

Do note that Q3 RoTE of 22.3% included a tailwind from one-offs. Notable items within income totalled £166 million in the quarter, and management flagged a £147 million gain from releasing a funding valuation adjustment on a derivatives portfolio. Still, even stripping this out, underlying profitability remains robust.

What drove the quarter

• Income momentum: total income rose 8.2% versus Q2 and 15.7% year-on-year. Excluding notable items, income was up 3.9% quarter-on-quarter as deposit margins improved and there was one extra day in the period.
• Margin expansion: NIM rose 9bps to 2.37% as deposit pricing continued to help.
• Costs contained: other operating expenses rose just £19 million versus Q2 as simplification benefits offset investment and integration spend. The year-to-date cost:income ratio excluding litigation and conduct improved to 47.8% from 52.8% a year ago.
• Lending growth: net loans to customers excluding central items increased £4.4 billion, with growth across Retail and Commercial.
• Deposits broadly stable: customer deposits excluding central items dipped a modest £1.1 billion.
• Capital generation: CET1 improved to 14.2% and risk-weighted assets (RWAs) fell £1.0 billion quarter-on-quarter, helped by £2.2 billion of RWA management actions.

Segment results: who did what

Retail Banking: mortgages up, costs down

Retail delivered operating profit of £850 million, a ROE of 26.4% and NIM of 2.64% (up 5bps q/q). Total income rose 4.3% versus Q2 to £1,662 million, helped by deposit margin expansion and the full-quarter effect of balances acquired from Sainsbury’s Bank.

• Loans: up £1.7 billion to £216.0 billion, driven by mortgages.
• Deposits: down £0.8 billion to £195.8 billion, with lower savings partly offset by higher current accounts.
• Impairment: £97 million, lower than Q2, aided by model releases; Stage 3 charges stable.

Integration of acquired Sainsbury’s customers is progressing, and NatWest announced a partnership with Landbay to support more buy-to-let investors.

Private Banking & Wealth Management: AUMA momentum

Operating profit rose to £108 million with ROE at 23.4% and a 2.66% NIM. Total income increased to £284 million. AUMA climbed 8.1% in the quarter to £56.0 billion, supported by £1.2 billion of net flows and positive markets.

• Loans: up to £18.8 billion.
• Deposits: down £0.7 billion to £40.6 billion due to seasonal tax outflows and flows into investments.
• Cost discipline: cost:income ratio improved to 60.6%.

Commercial & Institutional: steady growth, lower impairments

C&I reported income of £2,208 million, operating profit of £1,041 million and a 19.7% ROE. NIM nudged to 2.36%.

• Loans: up £2.5 billion to £149.7 billion, with growth across Large Corporate, Funds, Regional and Commercial Real Estate.
• Deposits: up £0.4 billion to £198.3 billion.
• Impairment: fell to £52 million as Stage 3 charges eased.

FX risk management demand remained strong amid market volatility, and the bank highlighted continued support for UK infrastructure and social housing.

Credit quality: calm overall, watch the unsecured mix

The Q3 impairment charge was £153 million, equal to 15bps of gross customer loans, down from Q2. The expected credit loss (ECL) provision stayed at £3.7 billion with coverage of 0.87%.

Post model adjustments (overlays banks use to capture risks not fully in models) reduced to £265 million from £336 million at year-end, reflecting better metrics. Management noted that the Retail portfolio mix now has more unsecured exposure following the Sainsbury’s Bank acquisition, and Stage 3 ECL has increased year-to-date on unsecured books. It is not flashing red, but it is a sensible area to watch into 2026.

Balance sheet, capital and liquidity: plenty of headroom

• CET1 ratio: 14.2% (up c.60bps versus Q2 and Q4 2024). Pro forma CET1 excluding foreseeable items was 15.1%.
• Liquidity: average LCR of 148% and NSFR of 135% provide comfortable buffers despite higher lending. Liquidity portfolio stood at £239.1 billion.
• Funding: total wholesale funding increased to £92.9 billion in the quarter.
• TNAV per share: up to 362p, helped by profit generation (partly offset by the interim dividend).

The group also continued capital returns. Since 30 September 2025, NatWest has repurchased and cancelled a further 12.2 million shares for £65.99 million.

Climate and transition finance: target gathering pace

NatWest provided £7.569 billion in climate and transition finance in Q3, against its target to provide £200 billion between 1 July 2025 and the end of 2030. The bank also met its aim to provide £10 billion of lending for EPC A and B rated residential properties ahead of schedule, reaching £10.8 billion by 30 September 2025.

The positives and the pressure points

What looks good

• Upgraded 2025 guidance and double-digit income growth year-on-year.
• Broad-based lending growth with stable deposit base and stronger margins.
• Cost discipline shining through with a materially better cost:income ratio.
• Capital ratio at 14.2% with visible RWA management actions creating growth capacity.
• Lower impairments quarter-on-quarter and resilient credit metrics.

What to keep an eye on

• One-offs added more than 2 percentage points to Q3 RoTE; underlying momentum is solid, but not all of the boost repeats.
• Year-to-date impairments are higher than last year and unsecured exposure has increased with Sainsbury’s Bank balances.
• Retail and PBWM deposits slipped modestly as customers chased yield or paid tax; competitive deposit pricing could temper margin gains.
• Operating expenses were £171 million higher than Q3 2024, largely investment-led; execution discipline needs to continue.

My take

This is a high-quality quarter. The combination of margin expansion, lending growth and tighter costs has delivered a step-up in returns, and management is confident enough to raise full-year targets. The capital stack looks strong, giving room for growth and ongoing distributions.

Yes, some help came from one-offs and overlays are easing as conditions stabilise. Even so, the core story – simpler bank, improving efficiency, and a balanced loan book – is coming through. For retail investors, the upgraded guidance, solid CET1 and rising TNAV are the key markers. If credit performance stays steady and deposit pricing remains disciplined, NatWest looks set to end 2025 on the front foot.