The British bank's third-quarter operating profit of £2.23 billion edged past forecasts, but net interest income missed and its finance chief expects margins to be "flatter" next year.
NatWest gave investors a beat for this year and a warning for next.
The bank reported third-quarter operating profit before tax of £2.23 billion, up 1.9% from a year earlier and slightly above the £2.20 billion consensus compiled by the company. Return on tangible equity was 21.6%, and NatWest kept its guidance.
The miss was in the line that drives bank earnings. Net interest income, the difference between what NatWest earns on loans and pays on deposits, was £3.56 billion, below the £3.61 billion analysts expected.
The 2027 comment
The bigger issue was the outlook. Its chief financial officer said she expects the net interest margin to be "flatter" in 2027, according to Dow Jones Newswires.
NatWest shares fell about 8.3% in London to 582.6 pence, which Dow Jones tied to the margin outlook. Its American depositary receipts were down about 9.3% at $15.43 in early afternoon in New York.
Peak margin or high plateau?
One reading is that the margin tailwind is ending. If rates stop rising and deposit costs keep climbing, net interest income becomes harder to grow.
The other reading is that a 21.6% return on tangible equity is still exceptionally strong, profit beat estimates and guidance is unchanged. A flatter margin from a high level is not a decline.
What to watch
The Bank of England's next policy decision, NatWest's full-year results and its 2027 targets, and whether other British lenders signal a similar margin plateau.