NatWest Group closed Friday at £5.796, rounding off a bruising stretch that left the share price down about 20% over three months and roughly 13% over the past month. That weak tape met a punchy Q3 2026 earnings print, with basic earnings per share at £0.193 and a reported net interest margin of 2.5% that underpins the core banking engine. The real story sits on the balance sheet, though. Total loans reached £464.9b, raising the question of how investors should weigh short-term price pressure against a larger, growing book of credit risk.
Love NatWest Group's 2.5% net interest margin but uneasy about a £464.9b loan book during a choppy share price patch? Filter for banks and lenders with sturdier balance sheets and consistent fundamentals using our list of solid balance sheet and fundamentals stocks (10 results) .
Q3 2026 Earnings Summary
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Total Revenue (Q3 2026 vs Q3 2025):£4,363m vs. £4,179m (up about 4.4%)
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Net Income (Excl. Extra Items, Q3 2026 vs Q3 2025):£1,450m vs. £1,516m (down about 4.4%)
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Basic EPS (Q3 2026 vs Q3 2025):£0.193 vs. £0.198 (down about 2.5%)
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Net Interest Margin (Q3 2026 vs Q3 2025):2.5% vs. 2.37% (reflecting a higher margin on lending and deposits)
NatWest is promising a steady margin even as lending mix shifts. Ask Charlie what makes NatWest's 2027 margin outlook believable .
NatWest fee and AI ambition under the microscope
Supporters argue NatWest can lean on wealth, payments and AI to keep earnings resilient even if lending spreads tighten.
"Ongoing use of AI across software development and operations, including over 40% of code written by AI, rapid product delivery by small human and AI teams, and around 100,000 hours of front line capacity freed each year, provides a path for NatWest Group to push the cost to income ratio below the current mid 40s level and support net margins."
Q3 cost income around 45% and income rising slightly faster than expenses show that efficiency path is real. Net interest margin at 2.5% alongside these savings indicates earnings support is already coming through rather than sitting only in plans.
NatWest margin and funding worries meet the data
Sceptics focus on lending mix, funding costs and the risk that they chip away at profitability despite better fees and AI efficiencies.
"Loan growth is currently running ahead of deposit growth, with quarterly gross loans increasing by £9.7b compared with deposits increasing by £2.8b and the loan to deposit ratio rising to around 92%. The need for more wholesale funding such as covered bonds could increase funding costs and weigh on net margins and capital generation if this pattern continues."
Latest quarter shows loans at £464.9b and customer lending growth outpacing deposits year to date, so the balance sheet tilt is visible. Yet capital remains strong with CET1 around the mid teens and management still expects over 240 bps of capital generation for 2026, so margin risk has not yet eroded capital strength.
One Narrative disagrees with today's price. → See where this Narrative says NatWest Group should trade .
Hunt Quiet Setups Beyond NatWest
NatWest Group just showed how a busy balance sheet and moving margins can leave investors debating the story. The real opportunity could be finding stocks where fundamentals and price quietly diverge before that gap potentially narrows.
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Company 1 - 20% below our estimate - win contracts to stabilise ground for major transport routes and time-sensitive data centre projects.
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Company 2 - 32% below our estimate - shift cash-focused terminals toward digital payments, open banking, voucher platforms and parcel collection services.
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Company 3 - 35% below our estimate - knit recent IT acquisitions into one offer supplying AI-ready infrastructure and managed solutions.
That is three of the list. See the full list of 14 companies trading below our fair value estimates →
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include NWG.L .
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