NatWest Group plc Q1 FY2026 earnings call

Paul Thwaite started by mentioning strong momentum across 3 businesses, pursuit of disciplined growth (e.g., Retail Banking increasing mortgage market share, Private Banking & Wealth Management's Evelyn Partners acquisition progressing, Commercial & Institutional growing share of U.K. start-ups), leveraging investments in simplification with over GBP 100 million of additional cost savings in Q1, over 40% of code written by AI, and active balance sheet management. Katie Murray then went into detail on income, costs, customer assets and liabilities, deposits, assets under management, impairments, capital, and guidance.

Customer lending grew 6.6% year-on-year to GBP 400 billion, with customer deposits growing 2.6% to GBP 445 billion. Lending growth of GBP 7.3 billion in the first quarter was well balanced across businesses, including GBP 3.3 billion in mortgages and GBP 3.8 billion in Commercial & Institutional. Assets under management and administration grew 16.9% year-on-year to GBP 57 billion. Income grew 6.9% to GBP 4.2 billion, costs were up 4.8% to GBP 2 billion, cost/income ratio reduced by 2.1 percentage points to 46.5%, return on tangible equity was 18.2%, earnings per share grew 15.5% to 17.9p, tangible net asset value per share was up 15.1% to GBP 4, and CET1 ratio was 14.3%. Customer deposits increased by GBP 3.1 billion in the first quarter with growth in Corporate & Institutional, partly offset by expected decrease in Retail and Private Banking. Retail Banking and Private Banking & Wealth Management balances grew GBP 3.5 billion or 1.5% (GBP 3.3 billion in mortgage lending and GBP 200 million in unsecured lending), mortgage stock share increased marginally to 12.6%. Commercial & Institutional lending increased by GBP 3.8 billion or 2.4% driven by good demand across sectors.

Now expect income, excluding notable items, to be at the top end of GBP 17.2 billion to GBP 17.6 billion range, excluding impact of Evelyn Partners. Other guidance and targets remain unchanged. Revised economic scenarios with higher inflation, interest rates at 3.75% for rest of year, slower growth, modest increase in unemployment, and additional provision of GBP 140 million in first quarter. Confident about outlook and 2026 guidance with resilient business, clear strategic focus, efficient operations, and active balance sheet management.

Conflict in the Middle East has increased geopolitical uncertainty, though yet to see material impact on customers. Revised economic scenarios with higher inflation, slower growth, and modest increase in unemployment pose risks. Mortgage book may face pressure from roll-off of COVID-era mortgages with higher spreads. Intense deposit competition in certain areas could impact deposit margins.

Q: On loan and deposit growth and average interest-earning assets.

A: Paul Thwaite and Katie Murray discussed broad-based lending growth, drivers of C&I lending growth, sustainability, and that AIEA reduction reflects optimization of surplus liquidity.

Q: On spreads, mortgages and commercial.

A: Katie Murray talked about mortgage front book spreads, impact of COVID mortgages, and Paul Thwaite discussed commercial spreads, business underwriting, and risk-adjusted returns.

Q: On income guidance and ISA deposit market.

A: Paul Thwaite and Katie Murray discussed upgraded income guidance, confidence in RoTE, and management of ISAs and deposit mix.

Q: On C&I noninterest income and impairment sensitivity.

A: Paul Thwaite and Katie Murray addressed C&I noninterest income drop and impairment sensitivity.

Q: On cost of risk and financial institutions growth.

A: Katie Murray and Paul Thwaite discussed mortgage refinancing profile and financial institutions growth strategy.

Q: On corporate banking risks and mortgage refi options.

A: Paul Thwaite and Katie Murray talked about corporate banking risks and management of mortgage refi options.

Q: On corporate deposits and cost base.

A: Paul Thwaite and Katie Murray discussed corporate deposit growth and cost profile.

Q: On deposit margin and income outlook.

A: Katie Murray and Paul Thwaite addressed deposit margin contribution and income outlook.

Q: On Evelyn and deposit margin.

A: Katie Murray and Paul Thwaite talked about Evelyn progress and deposit margin drivers.

Q: On Evelyn revenue/cost and risk appetite.

A: Paul Thwaite and Katie Murray discussed Evelyn revenue/cost expectations and risk appetite