NatWest Group plc

NatWest reported Q2 income excluding notable items of GBP 4.4 billion, up 5.4%, with total operating costs of GBP 2.1 billion, up 1.8%, and a cost-income ratio of 45.5%. Q2 impairment charge was GBP 140 million, equal to 13 basis points of loans, operating profit rose 12.4% to GBP 2.3 billion, profit attributable to ordinary shareholders was GBP 1.6 billion, and return on tangible equity was 21%. For H1, income excluding notable items rose 8.9%, cost growth was 4.5%, and ROTE was 19.7%. Management now expects full-year 2026 income excluding notable items of around GBP 17.9 billion, other operating expenses of around GBP 8.5 billion, capital generation before distributions and the impact of Evelyn Partners of greater than 240 basis points, and ROTE of more than 19%.

Katie Murray framed the half as evidence that NatWest has built a scale bank with strong compounding momentum, emphasizing sustainable growth, operating leverage and disciplined capital and risk management. She said the business is now the most efficient large UK bank with the lowest cost of risk, the strongest capital generation and highest returns, and highlighted progress toward the 2028 targets. Her tone was confident and upbeat, with repeated references to strong performance, customer growth and the ability to grow at scale.

Murray pointed to broad-based growth and leverage in the numbers: H1 income excluding notable items was up 8.9%, costs up 4.5%, and the cost-income ratio improved to 46%. She highlighted H1 capital generation of 197 basis points, a CET1 ratio of 13.2% after the Evelyn Partners acquisition, and said the group generated 137 basis points of capital in the quarter. Donal Quaid added that the group ended H1 with CET1 of 13.2%, total MREL of 30.6%, leverage of 4.7%, LCR of 140%, NSFR of 132% and primary liquidity of GBP 152 billion, and said 2026 capital generation before distributions and the impact of Evelyn Partners is now expected to be more than 240 basis points.

On the July Financial Stability Report proposals, management said it welcomed the direction of travel, especially potential leverage reform and more releasable buffers, but stressed there has been no change to capital requirements yet and no near-term benefit because risk-weighted assets remain the binding constraint. On funding, Donal Quaid said the group expects to remain active in H2 for MREL and likely AT1 optionality, but expects Tier 2 needs to be light, with issuance mostly driven by refinancing and balance sheet growth. On data centers, Katie Murray said exposure is not broken out as a separate category, but suggested investors look to Pillar 3 disclosures for the relevant SIC-code breakdown and said the bank is focused on long-term contracted assets with strong operators.