revenue
17200–17600 $million
FY 2026
official guidance
NATWEST MARKETS PLC
| Revenue | £2.7B |
|---|---|
| Operating income | £37.0M |
| Net income | £53.0M |
| Free cash flow | £-137.0M |
| Operating margin | 1.4% |
| Net margin | 1.9% |
| Return on equity | 0.8% |
| Period | 2024 |
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OpenFilings analyst
Our analyst
Agentic read of the latest earnings call — recommendation updates when we process a new transcript. Research synthesis, not investment advice.
Strong BuyBuyHoldSellStrong Sell
Strong profitability is offset by margin compression, delayed capital returns and unresolved credit-growth questions.
NatWest delivered a strong Q1 with 18.2% ROTE, robust capital generation and revenue guidance of £17.2bn–£17.6bn for FY2026, supported by deposit growth, a largely locked-in hedge and resilient lending demand. However, mortgage margins are expected to fall toward 60bps, non-interest income remains exposed to weaker capital-markets activity, and management is not bringing forward the next buyback from June 2027; the risk/reward is balanced rather than a clean re-rating story.
Themes
- Mortgage Margin
- Structural Hedge
- Deposit Competition
- C And I Lending
- Capital Markets Income
- Rwa Management
Near term
Mortgage volumes and spreads: April volumes were encouraging, but management cautioned against extrapolating April margins and expects mortgage margin pressure through the year toward approximately 60bps.
Non-interest income is dependent on customer activity and capital-markets conditions; fixed income was weaker by low tens of millions in Q1 while currencies benefited from volatility.
Deposit mix has remained stable despite higher market rates, but retention pricing could intensify if UK fiscal or rate volatility worsens.
The £5bn structural-hedge increase is largely front-loaded; over 90% of FY2026 locked-in hedge income and over 70% of FY2027 are already secured.
Investors may continue to press for an earlier buyback, but management reiterated its June 2027 commitment and gave no firm acceleration.
Longer term
The digitised mortgage platform and ability to absorb application spikes appear to be a competitive advantage, but mortgage repricing is now broadly similar across peers, reducing differentiation to operational capacity and service levels.
Deposit franchise depth, corporate relationships and the Evelyn/Bestinvest wealth offering could support more durable customer relationships and fee growth.
Structural hedge benefits are increasingly driven by notional growth rather than clearly improving reinvestment yields; management acknowledged that the prior expected hedge-rate advantage has largely disappeared under current rate assumptions.
C&I lending growth is strong, but the sustainability and risk-adjusted returns of growth involving financial institutions, reverse repos and securitisations require closer scrutiny.
Ongoing SRT activity and capital optimisation can offset balance-sheet growth and support distributions, although benefits are lumpy and not all Q1 RWA management gains should be annualised.
Red flags
Management declined to provide single-counterparty exposure data after analysts highlighted £400m–£600m exposures across the sector, limiting transparency on concentration risk.
C&I lending was up 16% year on year, while management attributed part of the growth to financial institutions and reverse repos and provided limited detail on borrower composition and risk-adjusted returns.
Private-credit securitisations are approximately 2% of the book and other securitisations, including mortgages and CRE, are about £11bn; management said underwriting is robust but did not provide deeper portfolio-loss or concentration metrics.
Revenue guidance is below or different from parts of sell-side consensus, with management citing uncertain customer activity and capital-markets volumes; the call did not establish a clear upside catalyst.
The absence of an earlier buyback leaves a visible capital-return overhang despite strong profitability and capital generation.
Forward outlook
Recommendation history
OpenFilings analyst view from primary-source filings and earnings calls — not investment advice.
Documents
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—2026-07-230