NatWest ratings affirmed by Fitch as UK banking profile stays resilient

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NatWest rating affirmed by Fitch

Highlights

Fitch affirms NatWest Group plc's Viability Rating at a+ and Long-Term Issuer Default Ratings for major subsidiaries at AA with Stable Outlooks.
NatWest's impaired loans ratio was 1.1% at end-9M26, expected to stay below 1.5% in 2027 as high secured lending keeps impairment charges low.
Common equity Tier 1 ratio declined to 13.5% at end-9M26 due to acquisitions and distributions but remains comfortably above regulatory minimums, with funding over 70% from customer deposits.

Rating action and key credit strengths

As reported by Fitch Ratings, the agency affirms NatWest Group plc's Viability Rating at a+ and keeps the Long-Term Issuer Default Ratings of The Royal Bank of Scotland Public Limited Company, National Westminster Bank Plc and NatWest Markets Plc at AA with Stable Outlooks. Fitch also affirms the ratings of other subsidiaries and the group's debt instruments.

Fitch says the ratings reflect NatWest's strong retail and commercial banking franchise in the UK, diversified business mix and robust financial profile. The agency also says the holding company's viability rating is equalised with those of its main operating companies because of high integration, low common equity double leverage and an expectation that holding company liquidity continues to be managed prudently.

On risk, Fitch describes the group's credit exposure as well diversified. Residential mortgages account for about half of gross loans at end-9M26, while higher-risk credit card and unsecured personal lending make up less than 5%; commercial lending is larger than at some peers, but exposures are spread across sectors and borrowers.

Profitability, capital and funding outlook

Fitch expects NatWest's impaired loans ratio, at 1.1% at end-9M26, to deteriorate only slightly and remain below 1.5% in 2027. The agency says the high share of secured lending and conservative underwriting should keep impairment charges low enough to be readily absorbed by earnings in most downside scenarios.

Operating profitability, measured at 4.4% of risk-weighted assets in 9M26, benefits from still high interest rates, loan growth and contained operating costs, Fitch says. The agency expects profitability to remain resilient in 2027 and 2028, supported by NatWest's structural hedge and manageable loan impairment charges.

Capitalisation remains adequate, according to Fitch, even after the group's common equity Tier 1 ratio falls to 13.5% at end-9M26 from 14% at end-2025, reflecting the Evelyn Partners acquisition, growth in risk-weighted assets and dividend distributions. Fitch says the ratio still provides a cushion above the regulatory requirement plus buffers of 11.6%, falling to 11.1% from January 2027, and it expects NatWest to keep capital near its target of around 13%; funding and liquidity also remain strong, with more than 70% of funding coming from customer deposits and a loans-to-deposits ratio of 91% at end-9M26.

Our earlier coverage of the Bank of England’s assessment at the IMF meetings highlighted Deputy Governor Sarah Breeden’s view that the UK economy has absorbed the energy price shock better than initially feared. The piece noted that policy support helped stabilise markets, while inflation and market volatility remain key risks that officials are monitoring closely to safeguard UK financial stability.

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