NatWest Group Plc (LON:NWG) has announced Q1 results 2025.
Chief Executive, Paul Thwaite, commented:
“Our strong first quarter performance demonstrates the positive momentum in our business as we deliver against clear strategic priorities, and we now expect to be at the upper end of our income and returns guidance for 2025. This performance is underpinned by continued growth across our three businesses and the support we provide to over 19 million customers, whether that is buying a home, growing a business or investing their money.
In the face of increased global economic uncertainty, our customers remain resilient and we saw good levels of activity through Q1 2025. The strength of our balance sheet means we are well placed to help our customers navigate any challenges, whilst also investing in our business and delivering returns to shareholders. At a time when there is a clear intent to deliver economic growth, NatWest Group is able to play an important role, shaping our future as a vital and trusted partner to our customers and to the UK itself.”
Strong Q1 2025 performance
– Attributable profit of £1,252 million, with earnings per share of 15.5 pence and a return on tangible equity (RoTE) of 18.5% driving capital generation pre-distributions of 49 basis points for the quarter.
– Total income excluding notable items(1) of £3,952 million was £80 million, or 2.1%, higher than Q4 2024, due to deposit margin expansion and increased trading income partially offset by the impact of two fewer days in the quarter, and was £538 million higher than Q1 2024 principally reflecting deposit margin expansion, balance growth and increased trading income.
– Net interest margin (NIM) of 2.27% was 8 basis points higher than Q4 2024 principally reflecting deposit margin expansion.
– Other operating expenses were £179 million, or 8.5%, lower than Q4 2024, reflecting seasonally higher costs in Q4 2024 and lower strategic costs relating to property exits, and were £93 million, or 4.6%, lower than Q1 2024 due to the timing of property exits and ongoing business transformation.
– A net impairment charge of £189 million, or 19 basis points of gross customer loans, with levels of default stable.
Robust balance sheet with strong capital and liquidity levels
– Net loans to customers excluding central items increased by £3.4 billion, or 0.9%, in the quarter to £371.9 billion largely driven by mortgages and growth in Corporate & Institutions.
– In the quarter we achieved our target to provide £100 billion climate and sustainable funding and financing between 1 July 2021 and the end of 2025.
– Customer deposits excluding central items increased by £2.1 billion, or 0.5%, in the quarter due to growth in Commercial & Institutional and Retail Banking, partially offset by a reduction in Private Banking due to seasonal tax payments.
– The liquidity coverage ratio (LCR) of 150%, representing £54.2 billion headroom above 100% minimum requirement, remained in line with Q4 2024 as increased lending was partially offset by increased issuance.
– TNAV per share increased by 18 pence in the quarter to 347 pence primarily reflecting the attributable profit for the period.
– Common Equity Tier 1 (CET1) ratio of 13.8% was 20 basis points higher than 31 December 2024.
– RWAs increased by £3.8 billion in the quarter to £187.0 billion largely reflecting the annual operational risk update of £2.2 billion and lending growth partially offset by £1.2 billion of RWA management actions.
Outlook(2)
The following statements are based on our current expectations for interest rates and economic conditions. We recognise increased global economic uncertainty and will monitor and react to market conditions and refine our internal forecasts as the economic position evolves.
In 2025 we expect:
– to achieve a return on tangible equity at the upper end of our previously guided range of 15-16%.
– income excluding notable items to be at the upper end of our previously guided range of £15.2-15.7 billion.
– Group operating costs, excluding litigation and conduct costs, to be around £8.1 billion including £0.1 billion of one-time integration costs.
– our loan impairment rate to be below 20 basis points.
– RWAs to be in the range of £190-195 billion at the end of 2025, dependent on final CRD IV model outcomes.
In 2027 we expect:
– to achieve a return on tangible equity for the Group of greater than 15%.
Capital:
– we continue to target a CET1 ratio in the range of 13-14%.
– we expect to pay ordinary dividends of around 50% of attributable profit from 2025 and will consider buybacks as appropriate.
(1) Refer to the Non-IFRS financial measures appendix for details of notable items.
(2) The guidance, targets, expectations and trends discussed in this section represent NatWest Group plc management’s current expectations and are subject to change, including as a result of the factors described in the NatWest Group plc Risk Factors in the 2024 Annual Report and Accounts and Form 20-F. These statements constitute forward-looking statements. Refer to Forward-looking statements in this announcement.
