NatWest shares jump on guidance upgrade after Q3 profits surge

(Sharecast News) - NatWest shares jumped on Friday after the banking group raised its income and returns guidance for 2025 following a strong performance in the third quarter, helped by "healthy levels of customer activity". The lender said it now expects income excluding notable items to be around £16.3bn this year, up from earlier projections of at least £16.0bn, and to achieve a return on tangible equity of greater than 18.0%, up from 16.5%.

The stock was up 4.4% at 569.4p in early deals in London.

Total income excluding notable items rose 15.7% to £4.2bn in the third quarter, helped by growth across all customer businesses, driving a return on tangible equity of 22.3%.

Net loans to customers excluding central items increased £4.4bn in the third quarter, retail banking mortgage balances were £1.7bn higher, while commercial and institutional balances were up by £2.5bn.

Meanwhile, assets under management and administration grew 8.1% to £56.0bn, helped by strong client net inflows.

Net profits surged 35.1% to £1.68bn, helped by a higher top line, lower operating expenses and a 37.6% reduction in impairment losses to £153m. According to Hargreaves Lansdown, the bottom-line figure was around 10% ahead of consensus forecasts.

Chief executive Paul Thwaite called it "another strong performance [...] driving positive momentum across our three businesses, with continued lending growth and deposits remaining stable".

He added: "As a result of our consistent delivery and capital generation, we have upgraded our income and returns guidance for 2025 and are well placed to support our customers, invest for the future and deliver returns to our shareholders."

"NatWest delivered a strong set of results, comfortably beating expectations," said Matt Britzman, senior equity analyst at Hargreaves Lansdown. "Net interest margins - a key measure of how much banks earn on lending - held up well, and management has enough confidence to nudge full-year guidance higher once more. Even so, that upgrade still feels a touch cautious given the margin strength, leaving room for more upside if trends continue."