NWG — NatWest Group plc

Summary of NatWest Group's Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Customer Lending: Grew 6.6% year-on-year to GBP 400 billion, with a Q1 increase of GBP 7.3 billion (GBP 3.3 billion in mortgages and GBP 3.8 billion in Commercial & Institutional).
• Customer Deposits: Increased by 2.6% year-on-year to GBP 445 billion, with a Q1 growth of GBP 3.1 billion.
• Income: Grew 6.9% to GBP 4.2 billion; however, income excluding notable items decreased 1.1% quarter-on-quarter.
• Costs: Up 4.8% year-on-year to GBP 2 billion; cost/income ratio improved by 2.1 percentage points to 46.5%.
• Return on Tangible Equity (RoTE): Maintained at 18.2%, with earnings per share rising 15.5% to 17.9p.
• Common Equity Tier 1 (CET1) Ratio: Remained strong at 14.3%, with capital generation of 65 basis points in Q1.

2. Strategic Updates and Business Highlights

• Disciplined Growth: Increased mortgage market share and onboarded 24,000 new start-ups in Commercial & Institutional, a 25% year-on-year uplift.
• Acquisition of Evelyn Partners: Expected to complete in Q2 2026, enhancing Private Banking & Wealth Management capabilities.
• Cost Savings: Over GBP 100 million in additional cost savings achieved in Q1, supported by investments in technology and AI, with over 40% of code now AI-generated.
• Climate Finance: Provided over GBP 10 billion in climate and transition finance, progressing towards a GBP 200 billion target by 2030.

3. Forward Guidance and Outlook

• Income Guidance: Revised to the top end of GBP 17.2 billion to GBP 17.6 billion range for 2026, reflecting strong Q1 performance and revised economic scenarios.
• Economic Assumptions: Expect higher inflation and interest rates to remain at 3.75% for the year, leading to slower economic growth and a modest rise in unemployment.
• Loan Impairment Guidance: Anticipate a loan impairment rate below 25 basis points for 2026, with current credit performance remaining strong.

4. Bad News, Challenges, or Points of Concern

• Geopolitical Uncertainty: Increased tensions in the Middle East have raised concerns, although no immediate impact on customer performance has been observed.
• Economic Outlook: Revised scenarios indicate slower growth and a modest increase in unemployment, necessitating an additional GBP 140 million provision in Q1.
• Deposit Competition: Intense competition in the ISA and term deposit markets may pressure margins, with some banks offering negative spreads.
• Market Volatility: Concerns over swap rate volatility affecting refinancing options for customers, potentially impacting net interest income.

5. Notable Q&A Insights

• Loan and Deposit Growth: Management emphasized broad-based growth across lending segments, particularly in Commercial & Institutional, with strong pipelines expected to sustain growth.
• Mortgage Spreads: Current spreads are stable, but there is a potential for pressure as COVID-era mortgages roll off. Management remains confident in managing refinancing risks.
• Impairment Sensitivity: Confidence in credit models was expressed, with management indicating that even under adverse scenarios, expected losses would remain manageable.
• Funds Lending: Management clarified that while they are a strong player in funds lending, they do not consider themselves a market leader, emphasizing a disciplined approach to risk and returns.

This summary encapsulates the key financial metrics, strategic initiatives, forward guidance, and challenges faced by NatWest Group in Q1 2026, providing a balanced view of the company's performance and outlook.