NatWest has beaten expectations across a range of financial results, with its profit before tax reaching £1.7bn in Q3, £200m above previous estimates.

The bank’s total income reached £3.8bn in the period, which was a 5.1% increase quarter-on-quarter.

NatWest’s Q3 net interest margin reached 2.18%, after reports of an estimated 2.10% ,while quarter-on-quarter, the bank’s operating expenses dropped by £180m, while also falling by £102m year-on-year.

In Q3, its net loans to customers increased by £8.4bn, of which £2.3bn was in relation to the Metro Bank mortgage portfolio acquisition.

Chief executive at NatWest, Paul Thwaite, said: "The strength of NatWest Group's performance is underpinned by the support we provide to our 19 million customers in every nation and region of the UK.

"Throughout the third quarter of 2024, we have grown our lending, helping customers to buy or remortgage their homes or to start and grow their businesses. With customer activity increasing, defaults remaining low and optimism amongst businesses and consumers, we are well placed to succeed with our customers and for our shareholders in the months and years ahead."

Looking ahead, the bank said it expects to achieve a tangible equity above 15% in 2024, while its group operating costs are expected to be broadly stable when compared to 2023.

In the medium-term, it added that it continues to foresee a return on tangible equity for the group of greater than 13% in 2026.

Senior equity analyst at Hargreaves Lansdown, Matt Britzman, said that NatWest is now the third major UK bank to report better than expected results this week.

However, he added that these results were "not driven by impairments".

Britzman stated: "Better income and costs drove the beat today, offset by higher impairments than expected, which does buck the trend we saw from Lloyds and Barclays. That said, default levels remain low at NatWest and that bodes well for performance over the medium term.

"After Barclays raised net interest income guidance yesterday, NatWest was expected to follow suit, given that it also had too many rate cuts in projections - it hasn’t disappointed. Income guidance has now been bumped up to a level higher than both previous guidance and what analyst consensus had built in. That should be enough to force analysts to revise numbers higher and give investors something to smile about.

"Looking ahead, the start of an interest rate-cutting cycle has relieved pressure on deposits and mortgages. All the while, the anticipated economic pain of higher rates never really came to pass – or at least hasn’t yet. That leaves NatWest in a nice spot to benefit from improving trends and lean on the structural hedge which will act as a strong driver of medium-term earnings."

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