NatWest Markets Reports Robust Q3 2025 Profit Amid Geopolitical Uncertainty

Q3 2025 highlights: profit jumps despite softer revenue

NatWest Markets Group (NWM Group) turned in a robust quarter. Profit for the period rose to £126 million in Q3 2025, up from £30 million in Q2 2025 and £20 million a year ago. That improvement came even as total income eased to £326 million from £368 million last quarter, with operating expenses falling sharply to £269 million.

The step-up in bottom line was helped by a £73 million tax credit following revised estimates of deductible costs, plus a £26 million litigation and conduct credit as legacy matters continue to be wound down.

Key numbers (£m unless stated)	Q3 2025	Q2 2025	Q3 2024
Total income	326	368	284
Operating expenses	269	344	254
Operating profit before tax	53	28	31
Tax credit/(charge)	73	2	-11
Profit for the period	126	30	20
CET1 ratio (capital strength)	17.5%	17.1%	Not disclosed
Liquidity Coverage Ratio (LCR)	203%	197%	Not disclosed

What drove the quarter: revenue mix and lower costs

Income mix: currencies and capital markets steadier than fixed income

Total income fell £42 million quarter-on-quarter to £326 million, mainly because of a £30 million debit from FX reserves recycling. That was triggered by the redemption of $1.15 billion of Additional Tier 1 (AT1) capital notes and a subsidiary capital repayment – essentially an accounting hit taken through non-interest income.

By desk in Q3 2025: Currencies delivered £158 million (down from a strong £169 million in Q2, but up from £139 million YoY), Capital Markets held steady at £189 million (up from £171 million YoY), while Fixed Income was weaker at £23 million (from £41 million in both Q2 and Q3 last year). The Capital Management Unit and other items were a £30 million drag.

Versus Q3 2024, income was up £42 million thanks to stronger Currencies and Capital Markets and a higher contribution from the profit share with fellow NatWest Group subsidiaries. NWM recognised £47 million of profit share in the quarter and £126 million in the first nine months.

Costs: litigation credits and VAT recoveries helped

Operating expenses dropped to £269 million from £344 million in Q2. The big swing was a £26 million litigation and conduct credit as legacy matters continue to be resolved, and lower other operating expenses helped by VAT recoveries. Year-on-year, other operating expenses rose to £295 million (from £231 million) due to higher technology investment and staff costs and lower VAT recoveries versus Q3 2024.

Net interest income softened to £109 million from £120 million on higher funding costs for the trading book and one-offs.

Balance sheet, capital and liquidity: bigger book, still well cushioned

Balance sheet expansion and trading flow

Total assets rose to £189.3 billion (from £183.2 billion at year end). Funded assets – a management metric that strips out derivatives – increased by £22.9 billion, driven by higher settlement balances, more trading assets, and loan growth, especially in Capital Markets. Trading assets climbed £7.9 billion, and loans at amortised cost increased by £4.5 billion. Customer and bank deposits (amortised cost) were up £8.8 billion as repo funding rose and deposits in NWM N.V. increased.

Derivative assets and liabilities fell £16.8 billion and £17.8 billion respectively, reflecting FX volatility – including a weaker USD in the period – and shifts in interest rates across currencies and tenors.

Capital and leverage ratios: still strong, but trending lower

• Risk-weighted assets (RWAs) rose to £21.7 billion (30 June 2025: £21.2 billion; 31 December 2024: £20.8 billion), mostly from higher credit risk and an annual update to operational risk RWAs, partly offset by lower market risk.
• The Common Equity Tier 1 (CET1) ratio dipped to 17.5% from 18.2% at year end. CET1 is the core equity capital buffer that absorbs losses.
• The leverage ratio fell to 4.5% (31 December 2024: 5.5%) on lower Tier 1 capital and higher leverage exposure. The leverage ratio is a simple capital-to-assets backstop that does not rely on risk weights – the decline is a watch point.
• Total MREL stayed around £10.0 billion, with the ratio at 46.1% of RWAs (48.2% at year end). MREL is the bail-in debt and capital stack used in resolution.

Liquidity and funding: comfortably above requirements

• NWM Plc’s LCR improved to 203% (195% at year end) despite a lower liquidity portfolio of £19.0 billion.
• Benchmark funding of £5.4 billion was issued year-to-date across EUR, CHF, USD and AUD, alongside other formats such as structured notes. Total wholesale funding stood at £36.4 billion.

In plain English: funding and liquidity are ample, and the group continues to issue across currencies and maturities, which supports resilience.

Legal and regulatory developments: directionally helpful

• USD LIBOR litigation in New York: on 25 September 2025 the court granted summary judgment for defendants and dismissed all claims – subject to appeal.
• Euribor class action: the US Court of Appeals reinstated claims on 22 August 2025, sending the case back for further proceedings. Pound Sterling LIBOR dismissal was affirmed on 15 September 2025.
• FX litigation in Australia: settled in May 2025, approved in August; covered by existing provisions.
• Odd-lot corporate bond antitrust case: dismissed again on 2 September 2025; no appeal lodged within the deadline.
• US Anti-Terrorism Act cases: motion to re-open one case to add aiding and abetting claims was denied on 30 September 2025; other similar actions remain pending.
• US fixed-income spoofing matter: the DOJ paused the monitorship in May and, after review, determined it is no longer necessary. NWM’s obligations under the plea agreement and probation run until December 2026.

Net-net, the legal backdrop looks incrementally better, though the Euribor case and ongoing obligations in the US remain active risks.

ESG and transition finance: steady contribution

By the end of Q3 2025, NWM had delivered £4.3 billion towards NatWest Group’s target to provide £200 billion of climate and transition finance between 1 July 2025 and the end of 2030. The framework is defined by NatWest Group and progress is counted against that group-wide goal.

My take: why this quarter matters for investors

• Bottom line momentum: Profit rebounded to £126 million despite lower income. The heavy lifting came from a sizeable tax credit and litigation credit, so the quality of earnings is mixed this quarter.
• Underlying revenue: The FX reserves recycling debit and softer Fixed Income masked decent showings in Currencies and Capital Markets. Year-on-year growth in income is encouraging, aided by the profit share with other NatWest Group subsidiaries (£47 million recognised in Q3).
• Cost discipline: Expenses fell materially versus Q2, but year-on-year other operating costs are higher due to tech and staff investment. Expect some stickiness here.
• Capital and liquidity: CET1 at 17.5% and LCR at 203% signal resilience, though the leverage ratio slide to 4.5% deserves attention if balance sheet growth continues.
• Legal overhang easing: A series of court decisions and the end of the DOJ monitorship are positives, albeit with ongoing cases and obligations through December 2026.

Risks and watch-list into Q4 2025

• Revenue volatility in Fixed Income and Currencies given geopolitical and rate/FX swings.
• Further FX reserve recycling or one-offs from capital actions – these can choppy the income line.
• RWAs creeping higher and the leverage ratio trending lower as the book grows.
• Progress on closing legacy legal matters and any developments in the Euribor case.

Bottom line

This is a solid set of numbers in a tricky market. Operationally, NWM is leaning on its Currencies and Capital Markets strengths while keeping a tight grip on costs. The capital stack remains strong, liquidity is ample, and several legal clouds have thinned. The quarter’s profit was flattered by non-recurring tax and litigation credits, so a cleaner read-through will come from how revenue and costs land in Q4.