NatWest Widens Margin as Lending Accelerates
Net interest margin expanded 21 basis points to 2.34% as customer lending increased.
NatWest Group (NWG), the British retail-and-commercial lender, widened its full-year net interest margin by 21 basis points to 2.34% in 2025, compared with a one-basis-point expansion in 2024. Net interest income rose 13.8% to £12.829 billion, accelerating from 2.0% growth the prior year, as higher customer balances, structural-hedge income and increased lending lifted the result.
Net loans to customers excluding central items increased 5.6% to £389.2 billion, compared with 3.6% growth in 2024. Commercial & Institutional accounted for £12.3 billion of the increase, led by Corporate & Institutions and Commercial Mid-market, while Retail Banking mortgage balances rose £5.1 billion.
Deposit growth remained positive but trailed lending. Customer deposits excluding central items increased 2.4% to £441.7 billion, slowing from 2.9% growth in 2024, even as Retail Banking deposit growth accelerated to £7.8 billion across savings and current accounts.
The revenue mix broadened beyond interest income. Non-interest income rose 11.2% to £3.812 billion after declining 7.4% in 2024, helped by higher foreign-exchange trading revenue and growth in assets under management and administration. AUMA increased 19.6% to £58.5 billion, supported by client inflows and more than 50,000 first-time investing clients.
Income growth outpaced expenses, pushing the cost-to-income ratio excluding litigation and conduct down 4.8 percentage points to 48.6%. Operating expenses rose 1.4% while total income increased 13.2%, and return on tangible equity advanced 1.7 percentage points to 19.2%.
NatWest ended the year with a 14.0% CET1 ratio, up 40 basis points despite a 5.5% increase in risk-weighted assets to £193.3 billion. RWA-management benefits reached £10.9 billion, compared with £6.8 billion in 2024. The company proposed a 23.0-pence final dividend, taking the full-year payout to 32.5 pence a share, and plans a £750 million buyback for the first half of 2026.
Credit costs moved higher as the balance sheet expanded. The impairment charge rose 86.9% to £671 million, while the loan-impairment rate increased 7 basis points to 16 basis points. Total impairment provisions climbed to £3.6 billion from £3.4 billion, with expected-credit-loss coverage steady at 0.83%.
Faster lending than deposit growth lifted the loan-to-deposit ratio by 3 percentage points to 88%, leaving the pace of funding growth and credit costs as key counterweights to NatWest’s wider margin.