By Elena Vardon

NatWest forecast continued income growth and higher profitability this year and beyond, as the U.K. lender bets on its expanding in wealth management to attract new customers and diversify earnings to offset falling interest rates.

Banks are increasingly racing to bulk up their fee-generating engines to rely less on traditional lending income as central banks trim rates. NatWest earlier this week said it would buy wealth manager Evelyn Partners for 2.7 billion pounds ($3.68 billion), its first major acquisition since the U.K. government fully exited its stake in the bank last year.

"We start 2026 from a position of strength," Chief Executive Paul Thwaite said Friday. "We are raising our ambition and sharpening our strategic focus, with stretching new targets in place."

The British bank expects to generate between 17.2 billion and 17.6 billion pounds in total income for 2026. The guidance excludes the impact of the Evelyn Partners deal, which is set to close this summer and boost its wealth-management business by allowing it to capture a larger share of the mass affluent market.

NatWest's assets under management and administration--on which it earns fees and commissions--rose by a fifth last year to 58.5 billion pounds. The Evelyn deal is set to add a further 69 billion pounds in client assets to the group.

Like its peers, NatWest also has a structural hedge in place to help with the effect of interest-rate moves, which is set to keep supporting its top line. This mechanism, alongside loan growth and higher customer balances, lifted total income 13% higher last year.

Looking ahead, the bank expects these drivers to translate to broader growth and expects an expansion in volumes--across loans, deposits and managed wealth--of more than 4% a year through 2028.

NatWest also raised its profitability target and now expects a return on tangible equity of more than 17% in 2026 and of greater than 18% by 2028, up from a previous goal of above 15% for 2027. The uplift partly rests on cost efficiencies as the bank reaps the benefits of its simplification strategy and investments in technology, which should bring its cost-to-income ratio--an efficiency measure--below 45%.

The bank set out its outlook alongside results for the last quarter of 2025. For the three-month period, it reported a 30% jump in pretax profit to 1.94 billion pounds on total income that grew 13% to 4.32 billion pounds. Both metrics beat company-compiled consensus estimates.

Shares initially traded higher before dipping back into the red, extending a weekly slide. Political jitters and weak economic data in the U.K., as well as investor concerns about the disruption of artificial intelligence on the sector, sent shares tumbling in recent days and were compounded by questions around the lofty price paid for Evelyn Partners.

Analysts at Citi said the healthy quarterly beat was likely to be overshadowed by uninspiring targets as the guided metrics are already in line or below current consensus expectations.

"NatWest has a history of 'underpromising and overdelivering' and we expect it to be the same again, with the 2026 revenue guidance looking especially conservative," the Citi analysts wrote in a note to clients.

The board proposed a final dividend of 23.0 pence a share, bringing the full-year payout to 32.5 pence, 51% higher than the previous year's. NatWest intends to start a 750 million-pound buyback in the first half of the year.

Write to Elena Vardon at elena.vardon@wsj.com

(END) Dow Jones Newswires

February 13, 2026 06:23 ET (11:23 GMT)

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