NatWest posted a stronger-than-expected rise in first-quarter profit, buoyed by higher lending income, but flagged growing economic uncertainty and set aside funds to cover potential fallout
from the conflict in the Middle East.
The British lender reported operating profit before tax of £2 billion for the January–March period, marking a 12% increase from £1.8 billion a year earlier and slightly ahead of analysts’ expectations of £1.9 billion. The performance underscores the bank’s resilience amid a challenging macroeconomic environment.
Despite the solid earnings, NatWest struck a cautious tone. It recorded a £283 million impairment charge, including £140 million tied directly to a downgraded economic outlook reflecting the impact of the Iran war. The move highlights rising concern among financial institutions about geopolitical instability and its potential to disrupt markets.
Chief Executive Paul Thwaite said the bank remains on track to meet its targets but acknowledged mounting uncertainty. “We are confident we will achieve our guidance,” he said, adding that forecasts would be adjusted as conditions evolve.
NatWest also raised its full-year income outlook, now expecting results near the upper end of its previously stated £17.2 billion to £17.6 billion range. However, this optimism was tempered by a more downbeat view of the UK economy.
The bank revised its GDP growth forecast for Britain sharply lower to 0.4% from 1%, while expectations for house price growth were cut to 0.7% from 3.4%. The downgrade reflects concerns over persistent inflation and volatility in oil prices, partly driven by tensions in the Middle East.
Markets are increasingly anticipating further interest rate hikes from central banks, including the Bank of England, as policymakers respond to inflationary pressures.
Investors reacted cautiously. NatWest shares, which have gained 19% over the past year, fell 3% in early trading. The decline followed weaker-than-expected non-interest income, which came in 7% below analyst forecasts, and the bank’s more pessimistic economic outlook.
The results mirror a broader trend across the UK banking sector, where lenders continue to benefit from higher interest rates but face growing headwinds from slowing economic growth and geopolitical risks. Photo by Man vyi, Wikimedia commons.
