Why is NatWest stock sliding today?

NatWest stock experienced a nearly 3% decline today following the bank's release of its third-quarter 2026 results before the London market opened. The report disclosed a sequential drop in attributable profit to £1.53 billion and a nearly doubling of impairment losses, which caught investors by surprise and triggered a reassessment of near-term earnings expectations.

Total income increased 7% year-on-year to £4.64 billion, with net interest income growing 9% to £3.56 billion and the net interest margin rising to 2.50% from 2.37% the previous year. However, the significant 98% quarter-on-quarter surge in impairment losses to £277 million and the sequential decline in profit overshadowed these positive aspects.

Furthermore, NatWest announced that it would postpone its next share buyback announcement until the full-year 2026 results, removing a potential near-term capital return catalyst anticipated by some investors. Analysts at RBC had already identified NatWest as one of the most exposed domestic lenders to the UK bank surcharge increase, as the majority of its revenues are generated within the UK.

The UK Autumn Budget on October 28 confirmed that Chancellor John Healey doubled the bank profit surcharge from 3% to 6% for a 15-month period, which initially provided some relief to markets, as it was lower than the feared 8% increase. Nevertheless, the sequential profit miss and the spike in impairment losses sparked renewed concerns about NatWest's near-term earnings performance under the higher tax burden.

Both Lloyds and Barclays faced similar challenges, indicating a broader recalibration across UK-focused banking stocks. The combination of weaker-than-expected sequential profitability, a near-doubling of credit impairments, the confirmed tax increase, and the removal of a buyback catalyst led NatWest shares to drop from an opening price of 630.6p to 617p, a decline of 2.9% on the day.

The stock now trades below its 52-week high of 726p, highlighting how quickly investor sentiment can change when a results release falls short of expectations.