NatWest has revealed its profits swelled to top £2 billion in the first quarter of 2026 as it expects to be boosted by interest rates staying higher, despite cautioning over a worsening outlook for the UK economy.
The banking group, which also includes Royal Bank of Scotland and Coutts, reported an operating pre-tax profit of £2 billion for the first three months of the year.
This was about 12% higher than the £1.8 billion it made over the same period a year ago.
It grew its lending book and customer deposits increased while the bank said it had made more than £100 million of extra cost savings in the first quarter.
Furthermore, like other high street lenders, NatWest expects to be bolstered by interest rates staying higher for longer, meaning it can generate more from loans.
As a result, it was now expecting to generate income at the “top end” of its guided range of between £17.2 billion and £17.6 billion for the year.
Nevertheless, the group revealed it had set aside more cash for bad loans after updating its forecasts for the UK economy, recognising that rising energy prices caused by war in the Middle East had weakened the outlook.
Credit impairment charges more than doubled from £136 million last year to £283 million for the latest quarter.
However, this was significantly less than the £823 million that Barclays set aside.
NatWest said it was now expecting UK economic growth to slow, inflation to rise to around 3.5%, and the unemployment rate to increase to peak higher than 5.7%, while interest rates are held at their current level for longer.
Paul Thwaite, NatWest’s chief executive, said: “We have started the year with positive momentum, underpinned by healthy customer activity – growing all of our three businesses, expanding our capabilities to meet more of our customers’ needs and further improving productivity as we use AI at scale across the bank.”