REG - NatWest Group plc - NatWest Group plc 2024 Annual Results
14/02/2025 07:15
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RNS Number : 1141X NatWest Group plc 14 February 2025
Inside this report
Business performance summary
2 2024 performance summary
2 Group Chief Executive's review
6 Performance key metrics and ratios
8 Chief Financial Officer's review
10 Retail Banking
11 Private Banking
12 Commercial & Institutional
13 Central items & other
14 Segment performance
Risk and capital management
19 Capital, liquidity and funding risk
21 Credit risk
21 Main macroeconomic variables
22 ECL post model adjustments
23 Segment analysis - portfolio summary
25 Analysis of ECL provisions
Financial statements and notes
26 Condensed consolidated income statement
27 Condensed consolidated statement of
comprehensive income
28 Condensed consolidated balance sheet
29 Condensed consolidated statement of
changes in equity
31 Condensed consolidated cash flow
statement
Financial statements and notes continued
32 Presentation of condensed consolidated
financial statements
32 Tax
33 Litigation and regulatory matters
34 Related party transactions
34 Dividends
34 Post balance sheet events
Additional information
35 Statement of directors' responsibilities
36 Presentation of information
36 Statutory accounts
36 Contacts
36 Forward-looking statements
Appendix
38 Non-IFRS financial measures
44 Performance measures not defined
under IFRS
2024 performance summary
Chief Executive, Paul Thwaite, commented:
"NatWest Group delivered a strong performance in 2024 with income excluding
notable items of £14.6 billion and a return on tangible equity of 17.5%,
exceeding our upgraded guidance. Throughout the year, we made good progress
against our strategic priorities by growing all three of our customer
businesses, improving productivity and actively managing our capital. This
performance is grounded in the support and services we provide to over 19
million customers, whether buying or refinancing their homes, helping them to
invest or growing their businesses. Alongside this, we were also pleased to
see an accelerated reduction in the government's shareholding.
I am proud of all that our colleagues achieved in 2024, but our focus is
firmly on the future. We have positive momentum behind us and a clear ambition
to succeed with customers as we continue to build a simpler, more integrated
and technology-driven bank that is capable of even greater impact. As we enter
a new, forward-looking chapter for NatWest Group, I am optimistic about the
opportunities ahead of us to grow our business as a vital and trusted partner
to our customers and the UK itself and, in doing so, create further value for
our shareholders."
Full year 2024 performance
- Attributable profit £4.5 billion, with earnings per share of 53.5
pence, up 5.6 pence, or 12%, compared to 2023. Return on tangible equity
(RoTE) of 17.5%.
- TNAV per share increased 37 pence to 329 pence primarily reflecting
the attributable profit partially offset by the impact of distributions.
- A final dividend of 15.5 pence per share is proposed, bringing the
total for the year to 21.5 pence, up 26% compared to 2023. Total distributions
deducted from capital in the year are £4.0 billion.
- Common Equity Tier 1 (CET1) ratio of 13.6% was 20 basis points higher
than 31 December 2023. Capital generation pre distributions was 243 basis
points for the year. RWAs increased by £0.2 billion in the year to £183.2
billion.
- Total income excluding notable items((1)) of £14.6 billion increased
by £0.3 billion, or 2.2%, compared with 2023 principally reflecting deposit
margin expansion and lending growth. Net interest margin (NIM) of 2.13% was 1
basis point higher than 2023.
- Other operating expenses were £213 million (2.8%) higher than 2023,
or excluding costs in relation to a retail share offering of £24 million and
additional bank levies of £102 million, were 1.1% higher.
- A net impairment charge of £359 million for 2024, or 9 basis points
of gross customer loans, with levels of default stable.
- Net loans to customers excluding central items increased by £12.9
billion, or 3.6%, to £368.5 billion reflecting a £3.2 billion increase in
Retail Banking, of which £2.2 billion relates to the Metro Bank mortgage
portfolio, and a £10.0 billion increase in Commercial & Institutional.
- Customer deposits excluding central items increased by £12.2 billion,
or 2.9%, during 2024 to £431.3 billion as savings growth was partially offset
by lower current account balances within Retail Banking and Private Banking.
- The liquidity coverage ratio (LCR) of 150%, representing £53.4
billion headroom above 100% minimum requirement, increased by 6 percentage
points compared with 2023.
Q4 2024 performance
- Attributable profit of £1,248 million and a RoTE of 19.0%.
- Total income excluding notable items of £3,872 million was £100
million, or 2.7%, higher than Q3 2024. NIM increased 1 basis point to 2.19%.
- Other operating expenses increased by £330 million compared with Q3
2024 principally reflecting the annual Bank Levy and strategic costs including
property exits.
- Net loans to customers excluding central items increased by £4.8
billion in the quarter reflecting growth within Corporate & Institutions
and higher Retail Banking mortgage balances.
- Customer deposits excluding central items increased £3.9 billion in
Q4 2024.
- CET1 ratio reduced by 30 basis points. RWAs increased by £1.7 billion
primarily reflecting lending growth.
(1) Refer to the Non-IFRS financial measures appendix for details of
notable items.
Group Chief Executive's review
Overview
NatWest Group delivered a strong financial performance in 2024. Against an
uncertain external backdrop, we made good progress on our strategic
priorities, grew all three of our customer businesses, and saw an acceleration
in the reduction of the UK Government's shareholding.
The progress achieved in 2024 is reflected in our growing ambition for the
bank and our future. That ambition is simple: to succeed with customers.
Because when they succeed, so do we. As a vital and trusted partner, we are
growing with them, improving and scaling the services we offer, and generating
real momentum across the bank.
While I am proud of all that we achieved in 2024, our focus is now firmly on
the future. Having entered 2025 on a positive trajectory, I'm optimistic about
the opportunities ahead of us to build on our performance, grow our business
and create further value for our shareholders.
Business performance
When I was permanently appointed as Chief Executive in February 2024, I set
out three clear priorities to create value for our shareholders. Firstly, to
deliver disciplined growth; secondly, to enable bank-wide simplification; and
finally, to focus on active balance sheet and risk management. We made good
progress against each of these, and we now have strong conviction they are the
right priorities to help us succeed.
Throughout 2024, NatWest Group delivered a strong performance, with income
excluding notable items of £14.6 billion, and a return on tangible equity
(RoTE) of 17.5%.
Our operating profit before tax was up on 2023, at £6.2 billion. Importantly,
we welcomed around 500,000 new customers to NatWest Group, grew each of our
three customer businesses and delivered growth on both sides of the balance
sheet - with increases in lending and deposits, as well as assets under
management.
For our shareholders, we generated attractive returns and distributed £4.0
billion through a combination of dividends and buybacks, with dividends per
share increasing by 26%. We have also confirmed that we intend to increase our
ordinary dividend payout ratio from c.40% to c.50% from 2025.
Our performance is grounded in the support and services we provide to our
customers and the wider UK economy.
Throughout 2024, we helped over 351,000 mortgage customers to buy or refinance
their homes. This included helping over 35,000 first-time buyers to get on the
housing ladder. At the same time, we helped more than 400,000 customers to
save £100 with us for the first time in 2024. For business customers, we grew
our lending by £10 billion and welcomed 91,000 new start-ups to NatWest
Group, helping more businesses across Britain get started than any other bank.
We also continued to adapt and innovate, launching services to meet our
customers' changing needs and improve the services we offer. These included a
new proposition which allows high-growth businesses to secure lending against
their intellectual property. Elsewhere, putting customers' needs front of
mind, we brought to market a travel credit card with 0% foreign transaction
fees, and mortgage offers available in as little as 24 hours. Improvements to
internal processes have also enabled us to reduce our Foreign Exchange client
onboarding times by 83% on average.
We also provided £31.5 billion of climate and sustainable funding and
financing in 2024; this took our cumulative total to £93.4 billion towards
our target to provide £100 billion between 1 July 2021 and the end of 2025.
To complement the organic growth that we have generated in Retail Banking, we
were proactive in making a number of acquisitions that build on our existing
areas of strength. Our acquisition of the retail assets and liabilities from
Sainsbury's Bank will add around one million Retail Banking customer accounts
when it is completed. And, in September 2024, we also acquired £2.3 billion
of prime residential mortgages from Metro Bank. Both transactions help
accelerate growth at attractive returns, in line with our strategic
priorities.
Shaping our future
At the time of my appointment, I said that we should not underestimate the
strength of our foundations, or the opportunity we have to deepen our customer
relationships. The enterprise-wide strategy we've developed as a leadership
team, and agreed as a Board, is anchored in these competitive advantages.
Today, we serve over 19 million customers across our three businesses. We are
the UK's biggest bank for business, we have a large and highly digitalised
Retail Bank, and, in Coutts, we have an award-winning Private Bank and one of
the strongest wealth brands in the country. Importantly, each of these
delivers an attractive return on equity and has the potential for further
disciplined growth.
Group Chief Executive's review continued
These are businesses that are deeply connected into our local communities
across all nations and regions of the UK. Whether it's through our active
regional boards, our successful network of Accelerator Hubs, or our
international offices supporting UK businesses to trade globally - I've seen
time and again the depth of relationships our colleagues have built. This
makes them uniquely placed to understand the opportunities and challenges
within the cities, towns and communities where our customers live, work, and
do business.
The combination of our scale and these deep local connections equips us with
the insight and data to better anticipate, understand and respond to
customers' changing needs with the right services and expertise. In doing
this, we will continue to grow our business and customer base with a focus on
returns and improving share in target segments.
In recent years, we have proven our ability to grow our position in attractive
segments that provide good returns and present significant opportunities for
the future: whether that's building a share in the youth market, making
NatWest Group Britain's leading bank for start-ups, or growing our assets
under management and administration.
Our strategy also benefits from our clear and focused business model, refined
in recent years. Having now completed several structural and strategic changes
- for example, optimising the size of NatWest Markets and combining it into
our new Corporate & Institutional business segment, and our withdrawal
from the Republic of Ireland - we are now able to focus fully on the future
and the opportunities that lie ahead.
Succeeding with customers
Our focus today and for the years ahead remains our customers. At a time when
customers are facing multiple technological, environmental and social changes,
our ambition is to succeed with them and grow as a trusted and vital partner.
This means understanding their aspirations and priorities, as well as the
challenges they face, and providing the personalised services and expertise
they need to achieve their goals: whether it's buying a home, growing a
business, or investing for the future. As such, we evolved our purpose to
reflect this role we play for our customers, as the bank that turns
possibilities into progress.
To deliver on our ambition, we're becoming simpler, more agile, and more
technology-driven, and we invested over £1.1 billion in 2024 in developing
these capabilities to better serve our customers. We want to build on this,
using data and insight to anticipate, understand and respond to customers'
changing needs faster and more efficiently. At the same time, we're using
technology to give us the ability to serve our customers how, when and where
they want, whilst improving our productivity and efficiency.
As Rick Haythornthwaite has referenced in our 2024 Annual Report and Accounts,
we took the time as a Board in 2024 to reflect on culture, as well as our
strategy. Specifically, how we can work together as a more integrated,
future-fit bank that is capable of even greater impact.
The most rewarding part of my role is spending time with our customers and
colleagues; we have brilliant and committed people across the bank who are
dedicated to serving our customers - whether that's in our fraud teams, in our
branches, or through our relationship managers and software engineers.
However, the way we work together has become overly complicated and
fragmented. There remains huge opportunity if we can free ourselves from this
unnecessary complexity and use technology more effectively to create a working
environment that drives agility, simplicity and speed - all in service of the
customer.
The year ahead
As we enter 2025, we are realistic about the challenges and opportunities
ahead. However, there are some reasons for optimism. Inflation in the UK has
come down from previous highs, with modest economic growth predicted in the
year ahead. While consumer and business confidence dipped in the latter part
of 2024, we have seen resilience and good levels of activity amongst our
customer base. The new government has a clear intent to deliver growth across
all nations and regions of the UK and, importantly, has recognised the role
that our bank and the wider sector can play.
We can take confidence from our 2024 performance, and it is validation that
our strategy is working. However, there is no room for complacency in today's
competitive landscape. We are fully focused on delivery as we shape the future
of NatWest Group as a vital and trusted partner to our customers and to the
UK, and in doing so, create further value for our shareholders.
2025 is also likely to be the year that NatWest Group returns to full private
ownership. The acceleration towards privatisation has attracted investment
from those that share our growth ambition and will mark a new, forward-looking
chapter for the bank.
Finally, I would like to thank our colleagues for all their hard work
throughout 2024. Our strong performance is down to them and the support they
provide to our customers every day. Because ultimately, if we succeed with
customers, we win together, for our colleagues, our communities and our
shareholders.
Outlook((1))
The following statements are based on our current expectations for interest
rates and economic conditions. We will monitor and react to market conditions
and refine our internal forecasts as the economic position evolves.
In 2025 we expect:
- to achieve a return on tangible equity in the range of 15-16%.
- income excluding notable items to be in the range of £15.2-15.7
billion.
- Group operating costs, excluding litigation and conduct costs, to be
around £8.1 billion including £0.1 billion of one-time integration costs.
- our loan impairment rate to be below 20 basis points.
- RWAs to be to be in the range of £190-195 billion at the end of 2025,
dependent on final CRD IV model outcomes.
In 2027 we expect:
- to achieve a return on tangible equity for the Group of greater than
15%.
Capital:
- we continue to target a CET1 ratio in the range of 13-14%.
- we expect to pay ordinary dividends of around 50% of attributable
profit from 2025 and will consider buybacks as appropriate.
(1) The guidance, targets, expectations, and trends discussed in
this section represent NatWest Group plc management's current expectations and
are subject to change, including as a result of the factors described in the
NatWest Group plc Risk Factors section in the 2024 Annual Report and Accounts
and Form 20-F and the Summary Risk Factors in this announcement. These
statements constitute forward-looking statements. Refer to Forward-looking
statements in this announcement.
Business performance summary
Year ended Quarter ended
31 December 31 December 31 December 30 September 31 December
2024 2023 Variance 2024 2024 Variance 2023 Variance
Summary consolidated income statement £m £m % £m £m % £m %
Net interest income 11,275 11,049 2.0% 2,968 2,899 2.4% 2,638 12.5%
Non-interest income 3,428 3,703 (7.4%) 857 845 1.4% 899 (4.7%)
Total income 14,703 14,752 (0.3%) 3,825 3,744 2.2% 3,537 8.1%
Litigation and conduct costs (295) (355) (16.9%) (153) (41) nm (113) 35.4%
Other operating expenses (7,854) (7,641) 2.8% (2,114) (1,784) 18.5% (2,041) 3.6%
Operating expenses (8,149) (7,996) 1.9% (2,267) (1,825) 24.2% (2,154) 5.2%
Profit before impairment losses 6,554 6,756 (3.0%) 1,558 1,919 (18.8%) 1,383 12.7%
Impairment losses (359) (578) (37.9%) (66) (245) (73.1%) (126) (47.6%)
Operating profit before tax 6,195 6,178 0.3% 1,492 1,674 (10.9%) 1,257 18.7%
Tax (charge)/credit (1,465) (1,434) 2.2% (233) (431) (45.9%) 5 nm
Profit from continuing operations 4,730 4,744 (0.3%) 1,259 1,243 1.3% 1,262 (0.2%)
Profit/(loss) from discontinued operations, net of tax 81 (112) (172.3%) 69 1 nm 26 165.4%
Profit for the period 4,811 4,632 3.9% 1,328 1,244 6.8% 1,288 3.1%
Performance key metrics and ratios
Notable items within total income (1) £55m £413m nm (£47m) (£28m) nm £95m nm
Total income excluding notable items (1) £14,648m £14,339m 2.2% £3,872m £3,772m 2.7% £3,442m 12.5%
Net interest margin (1) 2.13% 2.12% 1bps 2.19% 2.18% 1bps 1.99% 20bps
Average interest earning assets (1) £529bn £521bn 1.5% £539bn £530bn 1.7% £525bn 2.7%
Cost:income ratio (excl. litigation and conduct) (1) 53.4% 51.8% 1.6% 55.3% 47.6% 7.7% 57.7% (2.4%)
Loan impairment rate (1) 9bps 15bps (6bps) 7bps 25bps (18bps) 13bps (6bps)
Profit attributable to ordinary shareholders £4,519m £4,394m 2.8% £1,248m £1,172m 6.5% £1,229m 1.5%
Total earnings per share attributable to ordinary shareholders - basic 53.5p 47.9p 5.6p 15.3p 14.1p 1.2p 13.9p 1.4p
Return on tangible equity (RoTE) (1) 17.5% 17.8% (0.3%) 19.0% 18.3% 0.7% 20.1% (1.1%)
Climate and sustainable funding and financing (2) £31.5bn £29.3bn 7.5% £8.1bn £7.1bn 14.1% £8.7bn (6.9%)
nm = not meaningful.
For the footnotes to this table refer to the following page.
Business performance summary continued
As at
31 December 30 September 31 December
2024 2024 Variance 2023 Variance
Balance sheet £bn £bn % £bn %
Total assets 708.0 711.9 (0.5%) 692.7 2.2%
Loans to customers - amortised cost 400.3 386.7 3.5% 381.4 5.0%
Loans to customers excluding central items (1,3) 368.5 363.7 1.3% 355.6 3.6%
Loans to customers and banks - amortised cost and FVOCI 410.2 397.0 3.3% 392.0 4.6%
Total impairment provisions (4) 3.4 3.6 (5.6%) 3.6 (5.6%)
Expected credit loss (ECL) coverage ratio 0.83% 0.89% (6bps) 0.93% (10bps)
Assets under management and administration (AUMA) (1) 48.9 46.5 5.2% 40.8 19.9%
Customer deposits 433.5 431.1 0.6% 431.4 0.5%
Customer deposits excluding central items (1,3) 431.3 427.4 0.9% 419.1 2.9%
Liquidity and funding
Liquidity coverage ratio (LCR) 150% 148% 2% 144% 6%
Liquidity portfolio 222 226 (1.8%) 223 (0.4%)
Net stable funding ratio (NSFR) 137% 137% - 133% 4%
Loan:deposit ratio (excl. repos and reverse repos) (1) 85% 84% 1% 84% 1%
Total wholesale funding 86 89 (3.4%) 80 7.5%
Short-term wholesale funding 33 31 6.5% 28 17.9%
Capital and leverage
Common Equity Tier 1 (CET1) ratio (5) 13.6% 13.9% (30bps) 13.4% 20bps
Total capital ratio (5) 19.7% 19.7% - 18.4% 130bps
Pro forma CET1 ratio (excl. foreseeable items) (6) 14.3% 14.4% (10bps) 14.2% 10bps
Risk-weighted assets (RWAs) 183.2 181.7 0.8% 183.0 0.1%
UK leverage ratio 5.0% 5.0% - 5.0% -
Tangible net asset value (TNAV) per ordinary share (1,7) 329p 316p 13p 292p 37p
Number of ordinary shares in issue (millions) (7) 8,043 8,293 (3.0%) 8,792 (8.5%)
(1) Refer to the Non-IFRS financial measures appendix for details of
the basis of preparation and reconciliation of non-IFRS financial measures and
performance metrics.
(2) NatWest Group uses its climate and sustainable funding and
financing inclusion (CSFFI) criteria to determine the assets, activities and
companies that are eligible to be included within its climate and sustainable
funding and financing target. This includes both provision of committed (on
and off-balance sheet) funding and financing, including provision of services
for underwriting issuances and private placements. Climate and sustainable
funding and financing, as defined in our CSFFI criteria, represents only a
relatively small proportion of our overall funding and financing.
(3) Central items includes treasury repo activity and Ulster Bank
Republic of Ireland.
(4) Includes £0.1 billion relating to off-balance sheet exposures
(30 September 2024 - £0.1 billion; 31 December 2023 - £0.1 billion).
(5) Refer to the Capital, liquidity and funding risk section for
details of the basis of preparation.
(6) The pro forma CET1 ratio at 31 December 2024 excludes a
foreseeable item of £1,249 million for ordinary dividends (30 September 2024
excludes a foreseeable item of £808 million for ordinary dividends; 31
December 2023 excludes foreseeable items of £1,538 million: £1,013 million
for ordinary dividends and £525 million other foreseeable charges).
(7) The number of ordinary shares in issue excludes own shares held.
Chief Financial Officer's review
We have delivered a strong performance in 2024 with a RoTE of 17.5% and income
excluding notable items exceeding our guidance at £14.6 billion. We remain
focused on cost discipline and have achieved our cost target to be broadly
stable, excluding the impact of increased bank levies and costs in relation to
a retail share offering. Levels of default remain stable at low levels.
Net loans to customers excluding central items increased by £12.9 billion,
with growth primarily due to an increase in Corporate & Institutions, term
loan facilities and the Metro Bank mortgage portfolio and customer deposits
excluding central items increased by £12.2 billion. Our robust balance sheet
means that we remain in a strong liquidity position with a LCR of 150%,
representing £53.4 billion headroom above 100% minimum requirement. CET1
ratio was within our targeted range at 13.6%, with total distributions
deducted from capital of £4.0 billion, around 50 pence per share. TNAV per
share increased by 37 pence to 329 pence.
Strong 2024 financial performance
- Total income decreased by 0.3% to £14.7 billion compared with 2023
largely due to foreign exchange recycling gains in 2023. Total income
excluding notable items of £14.6 billion was 2.2% higher than the prior year
principally reflecting deposit margin expansion, lending growth and strong
customer activity in capital markets partially offset by the impact of the
deposit balance mix shift from non-interest bearing to interest bearing
balances.
- Full year 2024 NIM of 2.13% was 1 basis point higher than 2023
primarily due to deposit margin expansion and higher deposit balances
partially offset with asset margin compression and the impact of the deposit
balance mix shift from non-interest bearing to interest bearing balances. Q4
2024 NIM of 2.19%, was 1 basis point up in the quarter primarily reflecting
deposit margin expansion partially offset by asset margin compression.
- Total operating expenses were £153 million higher than 2023. Other
operating expenses were £213 million (2.8%) higher, or excluding a £102
million increase in bank levies and £24 million of costs in relation to a
retail share offering, were 1.1% higher and in line with our guidance. The
increase was principally driven by higher staff costs due to inflation and
severance costs partially offset by savings from the ongoing simplification of
our business and lower costs in relation to our withdrawal from the Republic
of Ireland. In the quarter, a £330 million increase, compared with Q3 2024,
largely reflects the annual Bank Levy and strategic costs including property
exits. We created additional capacity from an acceleration of bank-wide
simplification initiatives to fund the additional redundancy and property exit
costs, as well as supporting further savings into 2025.
- FTE((1)) reduced by 3% to c.59,200 in the year principally reflecting
the transformation of our Retail Banking business and our withdrawal from the
Republic of Ireland.
- A net impairment charge of £359 million, or 9 basis points of gross
customer loans, with stable levels of default across the portfolio. Compared
with 2023, our ECL provision decreased by £0.2 billion to £3.4 billion and
our ECL coverage ratio has decreased from 0.93% to 0.83%. We retain post model
adjustments of £0.3 billion related to economic uncertainty, or 8.7% of total
impairment provisions. Whilst we are comfortable with the strong credit
performance of our book, we continue to assess this position regularly.
As a result, we are pleased to report an attributable profit for 2024 of £4.5
billion, with earnings per share of 53.5 pence and a RoTE of 17.5%, the profit
for the year includes a deferred tax asset benefit of £232 million, before UK
Group and loss relief adjustments which are partially offset by the current
tax charge.
Robust balance sheet with strong capital and liquidity levels
- Net loans to customers excluding central items increased by £12.9
billion in the year largely reflecting £10.0 billion of growth in Commercial
& Institutional due to an increase in term loan facilities and growth in
Corporate & Institutions, net of £2.0 billion of UK Government scheme
repayments; and a £3.2 billion increase in Retail Banking, including £2.2
billion in respect of the Metro Bank mortgage portfolio acquisition. In the
quarter, net loans to customers excluding central items increased by £4.8
billion reflecting growth within Corporate & Institutions and higher
Retail Banking mortgage balances.
- Up to 31 December 2024 we have provided £93.4 billion against our
target to provide £100 billion climate and sustainable funding and financing
between 1 July 2021 and the end of 2025. As part of this we aim to provide at
least £10 billion in lending for EPC A- and B-rated residential properties
between 1 January 2023 and the end of 2025. During 2024 we provided £31.5
billion climate and sustainable funding and financing, which included £3.5
billion in lending for EPC A- and B-rated residential properties.
- Customer deposits excluding central items increased by £12.2 billion
during 2024 to £431.3 billion principally reflecting £6.8 billion growth in
Retail Banking, as an increase in savings was partly offset by a reduction in
current account balances and a £4.7 billion increase in Private Banking, due
to savings balances partially offset by a reduction in current account and
term balances. Commercial & Institutional balances increased £0.7 billion
over the year primarily reflecting growth within Commercial Mid-market
partially offset by a reduction in Corporate & Institutions. Customer
deposits excluding central items increased £3.9 billion in Q4 2024 as growth
in savings balances in Retail and Private Banking were partially offset by
lower deposit balances in Corporate & Institutions. Term balances have
remained broadly stable throughout 2024 and compared to the end of 2023 at 16%
of the book.
(1) Full Time Equivalent is permanent and fixed-term contract
resource directly employed by NatWest Group; excludes Managed Service Workers
and other contractors. Each full-time employee is one FTE, with part-time
employees recorded based on hours worked.
Chief Financial Officer's review continued
- The LCR of 150%, representing £53.4 billion headroom above 100%
minimum requirement, increased by 6 percentage points during the year,
primarily driven by increased customer deposits and issuance partially offset
by increased lending (incl. Metro Bank mortgage portfolio acquisition) and
capital distributions (share buyback and dividends). Our primary liquidity
increased by £13.0 billion to £161.0 billion with £88.6 billion, or 55%,
being cash and balances at central banks. Total wholesale funding increased by
£6.0 billion in the year to £85.6 billion.
- TNAV per share increased by 37 pence in the year to 329 pence
primarily reflecting the attributable profit for the period partially offset
by the impact of distributions.
Strong returns driving strong capital generation
- The CET1 ratio of 13.6% was 20 basis points higher than 2023
principally reflecting the attributable profit, c.240 basis points partially
offset by distributions deducted from capital of c.220 basis points. The 30
basis points reduction in the quarter was primarily due to the directed
buy-back, c.55 basis points, ordinary dividend accrual, c.25 basis points and
the increase in RWAs, c.10 basis points, partially offset by the attributable
profit, c.50 basis points.
- RWAs increased by £0.2 billion during 2024 to £183.2 billion
principally reflecting lending growth, the annual update to operational risk
and £0.9 billion in relation to the Metro Bank mortgage portfolio partially
offset by RWA management reduction of £6.8 billion. In Q4 2024, RWAs
increased by £1.5 billion primarily reflecting lending growth.
Business performance summary
Retail Banking
Year ended Quarter ended or as at
31 December 31 December 31 December 30 September 31 December
2024 2023 2024 2024 2023
£m £m £m £m £m
Total income 5,650 5,931 1,501 1,459 1,369
Operating expenses (2,937) (2,828) (808) (659) (681)
of which: Other operating expenses (2,827) (2,711) (714) (656) (647)
Impairment losses (282) (465) (16) (144) (103)
Operating profit 2,431 2,638 677 656 585
Return on equity (1) 19.9% 23.8% 21.4% 21.4% 20.2%
Net interest margin (1) 2.36% 2.47% 2.47% 2.43% 2.23%
Cost:income ratio (excl. litigation
and conduct) (1) 50.0% 45.7% 47.6% 45.0% 47.3%
Loan impairment rate (1) 13bps 22bps 3bps 28bps 20bps
£bn £bn £bn
Net loans to customers
(amortised cost) 208.4 207.4 205.2
Customer deposits 194.8 192.0 188.0
RWAs 65.5 64.8 61.6
(1) Refer to the Non-IFRS financial measures appendix for details of
the basis of preparation and reconciliation of non-IFRS financial measures and
performance metrics.
During 2024, Retail Banking delivered a return on equity of 19.9% and an
operating profit of £2.4 billion, with positive income and net interest
margin momentum from the benefit of higher product structural hedge margins,
partly offset by the impact of interest rate cuts during 2024. We supported
customers with unsecured lending growth of £1.1 billion, or 7.9%, driven by
our credit card proposition, and increased mortgage lending of £1.9 billion,
or 1.0%, reflecting the acquisition of the Metro Bank mortgage portfolio and
positive underlying growth in the second half of the year reflecting improved
market conditions and increased demand.
Retail Banking provided £3.3 billion of climate and sustainable funding and
financing in 2024 from lending on properties with an EPC rating of A or B.
Full year 2024 performance
- Total income was £281 million, or 4.7%, lower compared with 2023
reflecting asset margin compression, the impact of the deposit balance mix
shift from non-interest bearing to interest bearing balances, partly offset by
the benefit of higher product structural hedge margins.
- Net interest margin was 11 basis points lower than 2023 largely
reflecting the factors noted above.
- Non-interest income of £417 million was £18 million, or 4.1%, lower
than 2023 reflecting the impact of supplier inflation, partially offset by
re-pricing activity.
- Other operating expenses were £116 million, or 4.3%, higher than 2023
due to the Bank of England Levy, higher severance and other non-staff costs,
partially offset by a 9.8% reduction in headcount.
- An impairment charge of £282 million, compared with a £465 million
charge in 2023, largely reflecting good book benefits, including post model
adjustment releases, model updates and the impact of IFRS 9 multiple economic
scenarios (MES) updates.
- Net loans to customers increased by £3.2 billion, or 1.6%, in 2024
driven by £1.9 billion higher mortgage balances including the £2.2 billion
Metro Bank mortgage portfolio. Cards balances increased by £1.1 billion, or
18.6%, in 2024 and personal advances were in line with 2023.
- Customer deposits increased by £6.8 billion, or 3.6%, in 2024
reflecting growth in savings partly offset by a reduction in current account
balances.
- RWAs increased by £3.9 billion, or 6.3%, in 2024 primarily due to
book movements including the impact of the Metro Bank mortgage portfolio
acquisition.
Q4 2024 performance
- Total income was £42 million, or 2.9%, higher than Q3 2024 due to the
benefit of higher product structural hedge margins and deposit balance growth,
partly offset by the impact of interest rate reductions on deposit income.
- Net interest margin was 4 basis points higher than Q3 2024 largely
reflecting the benefit of higher product structural hedge margin, partly
offset by the impact of interest rate cuts and asset margin compression.
- Other operating expenses were £58 million, or 8.8%, higher than Q3
2024 reflecting the inclusion of the annual Bank Levy, higher severance costs
and higher property exit costs.
- An impairment charge of £16 million, compared with a £144 million
charge in Q3 2024, largely reflecting good book releases as a result of model
updates and the Q4 2024 IFRS 9 MES update.
- Net loans to customers increased by £1.0 billion, or 0.5%, driven by
£0.7 billion higher mortgage balances. Cards balances increased by £0.1
billion and personal advances increased by £0.1 billion in Q4 2024.
- Customer deposits increased by £2.8 billion, or 1.5%, in Q4 2024
driven by growth in instant access savings and current account balances.
- RWAs increased by £0.7 billion, or 1.1%, in Q4 2024 primarily due to
book movements and model updates.
Business performance summary continued
Private Banking
Year ended Quarter ended or as at
31 December 31 December 31 December 30 September 31 December
2024 2023 2024 2024 2023
£m £m £m £m £m
Total income 969 990 272 253 209
Operating expenses (716) (685) (194) (166) (206)
of which: Other operating expenses (713) (676) (192) (166) (208)
Impairment releases/(losses) 11 (14) (3) 3 (5)
Operating profit/(loss) 264 291 75 90 (2)
Return on equity (1) 14.2% 14.8% 16.3% 19.7% (1.8%)
Net interest margin (1) 2.40% 2.62% 2.72% 2.50% 2.07%
Cost:income ratio (excl. litigation
and conduct) (1) 73.6% 68.3% 70.6% 65.6% 99.5%
Loan impairment rate (1) (6)bps 8bps 7bps (7)bps 11bps
AUMA net flows (£bn) (1) 3.2 1.9 1.0 0.9 0.4
£bn £bn £bn
Net loans to customers
(amortised cost) 18.2 18.2 18.5
Customer deposits 42.4 39.7 37.7
RWAs 11.0 11.0 11.2
Assets under management (AUMs) (1) 37.0 35.7 31.7
Assets under administration (AUAs) 11.9 10.8 9.1
Total assets under management
and administration (AUMA) (1) 48.9 46.5 40.8
(1) Refer to the Non-IFRS financial measures appendix for details of
basis of preparation and reconciliation of non-IFRS financial measures and
performance metrics.
In 2024, Private Banking delivered an operating profit of £264 million and
return on equity of 14.2%. We have continued to see strong customer engagement
across our propositions, and this has resulted in an increase in AUMA balances
of 19.9% in 2024 and strong deposit growth of 12.5%.
Private Banking provided £0.4 billion of climate and sustainable funding and
financing in 2024, principally in relation to mortgages on residential
properties with an EPC rating of A or B and wholesale transactions.
Full year 2024 performance
- Total income was £21 million, or 2.1%, lower than 2023 primarily
reflecting the impact of deposit balance mix shift from non-interest bearing
to interest bearing balances, which has been partly offset by income from
higher deposit balances, deposit margin expansion and an increase in
investment fee income from higher AUMA balances.
- Net interest margin was 22 basis points lower than 2023 largely
reflecting the impact of deposit balance mix shift from non-interest bearing
to interest bearing balances, partly offset by higher deposit balances and
deposit margin expansion.
- Non-interest income of £324 million was £44 million, or 15.7%,
higher than 2023 principally due to AUMA income growth of 12.7% from £237
million to £267 million which reflects higher AUMA balances.
- Other operating expenses were £37 million, or 5.5%, higher than 2023
primarily reflecting the Bank of England Levy, higher severance costs and
higher investment spend.
- An impairment release of £11 million, compared with an £14 million
charge in 2023, reflects higher good book releases, including benefits from
post model adjustments, with Stage 3 charges remaining at low levels.
- Net loans to customers reduced £0.3 billion, or 1.6%, in 2024 largely
driven by higher mortgage repayments offsetting gross new lending, and lower
personal lending.
- Customer deposits increased by £4.7 billion, or 12.5%, in 2024
reflecting growth in instant access savings, including transitory inflows in
Q4 2024, partly offset by a reduction in current account and term balances.
- AUMA of £48.9 billion increased by £8.1 billion in 2024 reflecting
AUM net flows of £2.2 billion driven by strong client engagement, £0.6
billion AUA net flows, £0.4 billion Cushon net flows, and £4.8 billion of
positive market movements.
Q4 2024 performance
- Total income was £19 million, or 7.5%, higher than Q3 2024 primarily
reflecting a £13 million one-off effective interest rate adjustment following
a review of customer mortgage repayment behaviour, as well as deposit margin
expansion, higher deposit balances and higher AUMA balances, partly offset by
the impact of interest rate reductions on deposit income..
- Net interest margin was 22 basis points higher than Q3 2024 largely
reflecting deposit margin expansion and higher deposit balances, partly offset
by the impact of interest rate reductions on deposit income.
- Other operating expenses were £26 million, or 15.7%, higher than Q3
2024 primarily due to the annual Bank Levy and higher investment spend.
- An impairment charge of £3 million, compared with a £3 million
release in Q3 2024, largely reflecting a reduction in good book releases, with
Stage 3 charges remaining at low levels.
- Net loans to customers remained broadly stable compared with Q3 2024
with mortgage gross new lending offset by redemptions.
- Customer deposits increased by £2.7 billion, or 6.8%, in Q4 2024
primarily reflecting growth in instant access savings, partly due to
transitory inflows.
- AUMA increased £2.4 billion in Q4 2024 driven by AUM net flows of
£0.4 billion reflecting strong client engagement, £0.5 billion AUA net
flows, £0.1 billion Cushon net flows, and £1.4 billion of positive market
movements.
Business performance summary continued
Commercial & Institutional
Year ended Quarter ended or as at
31 December 31 December 31 December 30 September 31 December
2024 2023 2024 2024 2023
£m £m £m £m £m
Net interest income 5,339 5,044 1,404 1,392 1,269
Non-interest income 2,618 2,377 682 679 563
Total income 7,957 7,421 2,086 2,071 1,832
Operating expenses (4,274) (4,091) (1,179) (945) (1,092)
of which: Other operating expenses (4,118) (3,867) (1,134) (911) (1,014)
Impairment loss (98) (94) (46) (109) (15)
Operating profit 3,585 3,236 861 1,017 725
Return on equity (1) 17.2% 15.4% 16.6% 19.9% 13.5%
Net interest margin (1) 2.16% 2.06% 2.21% 2.24% 2.05%
Cost:income ratio (excl. litigation
and conduct) (1) 51.8% 52.1% 54.4% 44.0% 55.3%
Loan impairment rate (1) 7bps 7bps 13bps 31bps 4bps
£bn £bn £bn
Net loans to customers
(amortised cost) 141.9 138.1 131.9
Customer deposits 194.1 195.7 193.4
Funded assets (1) 321.6 331.1 306.9
RWAs 104.7 104.0 107.4
(1) Refer to the Non-IFRS financial measures appendix for details of
the basis of preparation and reconciliation of non-IFRS financial measures and
performance metrics.
During 2024, Commercial & Institutional continued to support customers
with an increase in lending of 7.6% and delivered a strong performance in
income and operating profit supporting a return on equity of 17.2%, an
increase from 15.4% in 2023. We continued to see good client demand for
lending and net interest margin expansion supporting overall improved
profitability.
Commercial & Institutional provided £27.8 billion of climate and
sustainable funding and financing in 2024 to support customers investing in
the transition to net zero.
Full year 2024 performance
- Total income was £536 million, or 7.2%, higher than 2023 principally
reflecting deposit margin expansion, customer lending growth and strong
customer activity in capital markets underwriting and markets trading income.
- Net interest margin was 10 basis points higher than 2023 largely
reflecting deposit margin expansion.
- Non-interest income was £241 million, or 10.1%, higher than 2023
principally driven by strong customer activity in markets trading and capital
markets underwriting income, higher lending and financing fees in relation to
volume growth and higher payment services fees.
- Other operating expenses were £251 million, or 6.5%, higher than 2023
reflecting the impact of inflationary increases in staff costs, continued
investment in the business, introduction of the new Bank of England Levy and
an increase in severance costs.
- An impairment charge of £98 million in 2024, compared with a £94
million charge in 2023, reflecting higher Stage 3 charges due to a small
number of large counterparties, partially offset by larger good book releases,
including post model adjustments.
- Net loans to customers increased by £10.0 billion, or 7.6%, in 2024
principally due to growth within Corporate & Institutions and an increase
in term loan facilities within Commercial Mid-market, partly offset by UK
Government scheme repayments of £2.0 billion.
- Customer deposits increased by £0.7 billion, or 0.4%, in 2024
reflecting growth within Commercial Mid-market, partially offset by a
reduction in Corporate & Institutions.
- RWAs decreased by £2.7 billion, or 2.5%, compared with 2023 primarily
due to continued RWA management activity of £5.7 billion and risk parameter
improvements, partly offset by increased operational risk and lending growth.
Q4 2024 performance
- Total income was £15 million, or 0.7%, higher than Q3 2024
principally reflecting strong customer lending growth and higher product
structural hedge margins, partly offset by seasonal slow down from capital
markets underwriting income and the impact of interest rate reductions on
deposit income.
- Net interest margin was 3 basis points lower than Q3 2024 as higher
product structural hedge margin, was more than offset by asset margin
compression in Corporate & Institutions and the impact of interest rate
cuts.
- Other operating expenses were £223 million, or 24.5%, higher than Q3
2024 primarily reflecting the inclusion of the annual Bank Levy, non-repeat of
the VAT recovery benefit in Q3 2024 and increased severance costs.
- An impairment charge of £46 million in Q4 2024 compared with a £109
million charge in Q3 2024 reflecting lower Stage 3 charges in Q4 2024.
- Net loans to customers increased by £3.8 billion, or 2.8%, in Q4 2024
principally due to growth within Corporate & Institutions and Commercial
Mid-market, partly offset by UK Government scheme repayments of £0.5 billion.
- Customer deposits decreased by £1.6 billion, or 0.8%, in Q4 2024
largely reflecting lower deposit balances in Corporate & Institutions with
continued growth in Commercial Mid-market.
- RWAs increased by £0.7 billion, or 0.7%, compared with Q3 2024
primarily due to lending growth and adverse foreign exchange impacts from
foreign currency exposures which reverses benefits seen in Q3 2024, partially
offset by continued RWA management activity and lower market risk and
counterparty credit risk.
Business performance summary continued
Central items & other
Year ended Quarter ended or as at
31 December 31 December 31 December 30 September 31 December
2024 2023 2024 2024 2023
£m £m £m £m £m
Continuing operations
Total income 127 410 (34) (39) 127
Operating expenses (222) (392) (86) (55) (175)
of which: Other operating expenses (196) (387) (74) (51) (172)
of which: Ulster Bank RoI
direct expenses (83) (275) (14) (14) (69)
Impairment releases/(losses) 10 (5) (1) 5 (3)
Operating (loss)/profit (85) 13 (121) (89) (51)
£bn £bn £bn
Net loans to customers
(amortised cost) 31.8 23.0 25.8
Customer deposits 2.2 3.7 12.3
RWAs 2.0 1.9 2.8
Full year 2024 performance
- Total income was £283 million lower than 2023 primarily reflecting
notable items including foreign exchange recycling gains in 2023 partially
offset with higher gains on interest and foreign exchange risk management
derivatives not in hedge accounting relationships, higher business growth fund
gains, lower losses on liquidity asset bond sales and losses associated with
property lease terminations in 2023.
- Other operating expenses were £191 million, or 49.4%, lower than 2023
principally reflecting the reduction in cost due to our withdrawal of
operations from the Republic of Ireland.
- Net loans to customers increased by £6.0 billion, or 23.3%, driven by
reverse repo activity in Treasury.
- Customer deposits of £2.2 billion decreased by £10.1 billion in 2024
reflecting repo activity in Treasury.
Q4 2024 performance
- Total income was £5 million higher than Q3 2024 primarily reflecting
notable items including lower foreign exchange recycling losses, higher gains
on interest and foreign exchange risk management derivatives not in hedge
accounting relationships partially offset with lower business growth fund
gains.
- Net loans to customers increased by £8.8 billion, or 38.3%, in Q4
2024 primarily reflecting reverse repo activity in Treasury.
- Customer deposits decreased by £1.5 billion in Q4 2024 driven by repo
activity in Treasury.
Segment performance
Year ended 31 December 2024
Retail Private Commercial & Central items Total NatWest
Banking Banking Institutional & other Group
£m £m £m £m £m
Continuing operations
Income statement
Net interest income 5,233 645 5,339 58 11,275
Own credit adjustments - - (9) - (9)
Other non-interest income 417 324 2,627 69 3,437
Total income 5,650 969 7,957 127 14,703
Direct expenses (777) (255) (1,537) (5,285) (7,854)
Indirect expenses (2,050) (458) (2,581) 5,089 -
Other operating expenses (2,827) (713) (4,118) (196) (7,854)
Litigation and conduct costs (110) (3) (156) (26) (295)
Operating expenses (2,937) (716) (4,274) (222) (8,149)
Operating profit/(loss) before impairment losses/releases 2,713 253 3,683 (95) 6,554
Impairment (losses)/releases (282) 11 (98) 10 (359)
Operating profit/(loss) 2,431 264 3,585 (85) 6,195
Income excluding notable items (1) 5,650 969 7,966 63 14,648
Additional information
Return on tangible equity (1) na na na na 17.5%
Return on equity (1) 19.9% 14.2% 17.2% nm na
Cost:income ratio (excl. litigation and conduct) (1) 50.0% 73.6% 51.8% nm 53.4%
Total assets (£bn) 232.8 28.6 398.7 47.9 708.0
Funded assets (£bn) (1) 232.8 28.6 321.6 46.6 629.6
Net loans to customers - amortised cost (£bn) 208.4 18.2 141.9 31.8 400.3
Loan impairment rate (1) 13bps (6)bps 7bps nm 9bps
Impairment provisions (£bn) (1.8) (0.1) (1.5) - (3.4)
Impairment provisions - Stage 3 (£bn) (1.1) - (0.9) - (2.0)
Customer deposits (£bn) 194.8 42.4 194.1 2.2 433.5
Risk-weighted assets (RWAs) (£bn) 65.5 11.0 104.7 2.0 183.2
RWA equivalent (RWAe) (£bn) 66.5 11.0 105.9 2.5 185.9
Employee numbers (FTEs - thousands) 12.0 2.1 12.8 32.3 59.2
Third party customer asset rate (1) 4.02% 5.05% 6.64% nm nm
Third party customer funding rate (1) (2.05%) (3.13%) (1.90%) nm nm
Average interest earning assets (£bn) (1) 222.0 26.9 246.8 na 529.3
Net interest margin (1) 2.36% 2.40% 2.16% na 2.13%
nm = not meaningful, na = not applicable.
(1) Refer to the Non-IFRS financial measures appendix for details of
the basis of preparation and reconciliation of non-IFRS financial measures and
performance metrics.
Segment performance continued
Year ended 31 December 2023
Retail Private Commercial & Central items Total NatWest
Banking Banking Institutional & other Group
£m £m £m £m £m
Continuing operations
Income statement
Net interest income 5,496 710 5,044 (201) 11,049
Own credit adjustments - - (2) - (2)
Other non-interest income 435 280 2,379 611 3,705
Total income 5,931 990 7,421 410 14,752
Direct expenses (815) (255) (1,510) (5,061) (7,641)
Indirect expenses (1,896) (421) (2,357) 4,674 -
Other operating expenses (2,711) (676) (3,867) (387) (7,641)
Litigation and conduct costs (117) (9) (224) (5) (355)
Operating expenses (2,828) (685) (4,091) (392) (7,996)
Operating profit before impairment losses 3,103 305 3,330 18 6,756
Impairment losses (465) (14) (94) (5) (578)
Operating profit 2,638 291 3,236 13 6,178
Income excluding notable items (1) 5,931 990 7,420 (2) 14,339
Additional information
Return on tangible equity (1) na na na na 17.8%
Return on equity (1) 23.8% 14.8% 15.4% nm na
Cost:income ratio (excl. litigation and conduct) (1) 45.7% 68.3% 52.1% nm 51.8%
Total assets (£bn) 228.7 26.9 385.0 52.1 692.7
Funded assets (£bn) (1) 228.7 26.9 306.9 51.3 613.8
Net loans to customers - amortised cost (£bn) 205.2 18.5 131.9 25.8 381.4
Loan impairment rate (1) 22bps 8bps 7bps nm 15bps
Impairment provisions (£bn) (1.9) (0.1) (1.5) (0.1) (3.6)
Impairment provisions - Stage 3 (£bn) (1.1) - (0.9) - (2.0)
Customer deposits (£bn) 188.0 37.7 193.4 12.3 431.4
Risk-weighted assets (RWAs) (£bn) 61.6 11.2 107.4 2.8 183.0
RWA equivalent (RWAe) (£bn) 61.6 11.2 108.6 3.6 185.0
Employee numbers (FTEs - thousands) 13.3 2.3 12.5 33.1 61.2
Third party customer asset rate (1) 3.23% 4.54% 6.15% nm nm
Third party customer funding rate (1) (1.42%) (2.17%) (1.40%) nm nm
Average interest earning assets (£bn) (1) 222.2 27.1 244.4 na 520.6
Net interest margin (1) 2.47% 2.62% 2.06% na 2.12%
nm = not meaningful, na = not applicable.
(1) Refer to the Non-IFRS financial measures appendix for details of
the basis of preparation and reconciliation of non-IFRS financial measures and
performance metrics.
Segment performance continued
Quarter ended 31 December 2024
Retail Private Commercial & Central items Total NatWest
Banking Banking Institutional & other Group
£m £m £m £m £m
Continuing operations
Income statement
Net interest income 1,408 190 1,404 (34) 2,968
Own credit adjustments - - (4) - (4)
Other non-interest income 93 82 686 - 861
Total income 1,501 272 2,086 (34) 3,825
Direct expenses (191) (65) (417) (1,441) (2,114)
Indirect expenses (523) (127) (717) 1,367 -
Other operating expenses (714) (192) (1,134) (74) (2,114)
Litigation and conduct costs (94) (2) (45) (12) (153)
Operating expenses (808) (194) (1,179) (86) (2,267)
Operating profit/(loss) before impairment losses 693 78 907 (120) 1,558
Impairment losses (16) (3) (46) (1) (66)
Operating profit/(loss) 677 75 861 (121) 1,492
Income excluding notable items (1) 1,501 272 2,090 9 3,872
Additional information
Return on tangible equity (1) na na na na 19.0%
Return on equity (1) 21.4% 16.3% 16.6% nm na
Cost:income ratio (excl. litigation and conduct) (1) 47.6% 70.6% 54.4% nm 55.3%
Total assets (£bn) 232.8 28.6 398.7 47.9 708.0
Funded assets (£bn) (1) 232.8 28.6 321.6 46.6 629.6
Net loans to customers - amortised cost (£bn) 208.4 18.2 141.9 31.8 400.3
Loan impairment rate (1) 3bps 7bps 13bps nm 7bps
Impairment provisions (£bn) (1.8) (0.1) (1.5) - (3.4)
Impairment provisions - Stage 3 (£bn) (1.1) - (0.9) - (2.0)
Customer deposits (£bn) 194.8 42.4 194.1 2.2 433.5
Risk-weighted assets (RWAs) (£bn) 65.5 11.0 104.7 2.0 183.2
RWA equivalent (RWAe) (£bn) 66.5 11.0 105.9 2.5 185.9
Employee numbers (FTEs - thousands) 12.0 2.1 12.8 32.3 59.2
Third party customer asset rate (1) 4.21% 5.22% 6.36% nm nm
Third party customer funding rate (1) (1.97%) (3.06%) (1.83%) nm nm
Average interest earning assets (£bn) (1) 226.3 27.8 252.2 na 538.8
Net interest margin (1) 2.47% 2.72% 2.21% na 2.19%
nm = not meaningful, na = not applicable.
(1) Refer to the Non-IFRS financial measures appendix for details of
the basis of preparation and reconciliation of non-IFRS financial measures and
performance metrics.
Segment performance continued
Quarter ended 30 September 2024
Retail Private Commercial & Central items Total NatWest
Banking Banking Institutional & other Group
£m £m £m £m £m
Continuing operations
Income statement
Net interest income 1,350 170 1,392 (13) 2,899
Own credit adjustments - - 2 - 2
Other non-interest income 109 83 677 (26) 843
Total income 1,459 253 2,071 (39) 3,744
Direct expenses (205) (64) (356) (1,159) (1,784)
Indirect expenses (451) (102) (555) 1,108 -
Other operating expenses (656) (166) (911) (51) (1,784)
Litigation and conduct costs (3) - (34) (4) (41)
Operating expenses (659) (166) (945) (55) (1,825)
Operating profit/(loss) before impairment losses/releases 800 87 1,126 (94) 1,919
Impairment (losses)/releases (144) 3 (109) 5 (245)
Operating profit/(loss) 656 90 1,017 (89) 1,674
Income excluding notable items (1) 1,459 253 2,069 (9) 3,772
Additional information
Return on tangible equity (1) na na na na 18.3%
Return on equity (1) 21.4% 19.7% 19.9% nm na
Cost:income ratio (excl. litigation and conduct) (1) 45.0% 65.6% 44.0% nm 47.6%
Total assets (£bn) 231.1 27.3 398.7 54.8 711.9
Funded assets (£bn) (1) 231.1 27.3 331.1 53.7 643.2
Net loans to customers - amortised cost (£bn) 207.4 18.2 138.1 23.0 386.7
Loan impairment rate (1) 28bps (7)bps 31bps nm 25bps
Impairment provisions (£bn) (1.9) (0.1) (1.6) - (3.6)
Impairment provisions - Stage 3 (£bn) (1.1) - (1.0) - (2.1)
Customer deposits (£bn) 192.0 39.7 195.7 3.7 431.1
Risk-weighted assets (RWAs) (£bn) 64.8 11.0 104.0 1.9 181.7
RWA equivalent (RWAe) (£bn) 65.3 11.0 105.3 2.4 184.0
Employee numbers (FTEs - thousands) 12.2 2.2 12.8 32.5 59.7
Third party customer asset rate (1) 4.09% 5.01% 6.67% nm nm
Third party customer funding rate (1) (2.10%) (3.16%) (1.91%) nm nm
Average interest earning assets (£bn) (1) 221.4 27.0 246.8 na 529.8
Net interest margin (1) 2.43% 2.50% 2.24% na 2.18%
nm = not meaningful, na = not applicable.
(1) Refer to the Non-IFRS financial measures appendix for details of
the basis of preparation and reconciliation of non-IFRS financial measures and
performance metrics.
Segment performance continued
Quarter ended 31 December 2023
Retail Private Commercial & Central items Total NatWest
Banking Banking Institutional & other Group
£m £m £m £m £m
Continuing operations
Income statement
Net interest income 1,254 138 1,269 (23) 2,638
Own credit adjustments - - (5) - (5)
Other non-interest income 115 71 568 150 904
Total income 1,369 209 1,832 127 3,537
Direct expenses (211) (74) (392) (1,364) (2,041)
Indirect expenses (436) (134) (622) 1,192 -
Other operating expenses (647) (208) (1,014) (172) (2,041)
Litigation and conduct costs (34) 2 (78) (3) (113)
Operating expenses (681) (206) (1,092) (175) (2,154)
Operating profit/(loss) before impairment losses 688 3 740 (48) 1,383
Impairment losses (103) (5) (15) (3) (126)
Operating profit/(loss) 585 (2) 725 (51) 1,257
Income excluding notable items (1) 1,369 209 1,834 30 3,442
Additional information
Return on tangible equity (1) na na na na 20.1%
Return on equity (1) 20.2% (1.8%) 13.5% nm na
Cost:income ratio (excl. litigation and conduct) (1) 47.3% 99.5% 55.3% nm 57.7%
Total assets (£bn) 228.7 26.9 385.0 52.1 692.7
Funded assets (£bn) (1) 228.7 26.9 306.9 51.3 613.8
Net loans to customers - amortised cost (£bn) 205.2 18.5 131.9 25.8 381.4
Loan impairment rate (1) 20bps 11bps 4bps nm 13bps
Impairment provisions (£bn) (1.9) (0.1) (1.5) (0.1) (3.6)
Impairment provisions - Stage 3 (£bn) (1.1) - (0.9) - (2.0)
Customer deposits (£bn) 188.0 37.7 193.4 12.3 431.4
Risk-weighted assets (RWAs) (£bn) 61.6 11.2 107.4 2.8 183.0
RWA equivalent (RWAe) (£bn) 61.6 11.2 108.6 3.6 185.0
Employee numbers (FTEs - thousands) 13.3 2.3 12.5 33.1 61.2
Third party customer asset rate (1) 3.50% 4.88% 6.65% nm nm
Third party customer funding rate (1) (1.94%) (3.02%) (1.87%) nm nm
Average interest earning assets (£bn) (1) 223.2 26.5 245.2 na 524.7
Net interest margin (1) 2.23% 2.07% 2.05% na 1.99%
nm - not meaningful, na - not applicable
(1) Refer to the Non-IFRS financial measures appendix for details of
the basis of preparation and reconciliation of non-IFRS financial measures and
performance metrics.
Risk and capital management
Capital, liquidity and funding risk
Capital and leverage ratios
The table below sets out the key capital and leverage ratios. NatWest Group is
subject to the requirements set out in the UK CRR therefore the capital and
leverage ratios are presented under these frameworks on a transitional basis
((1)).
31 December 30 September 31 December
2024 2024 2023
Capital adequacy ratios (1) % % %
CET1 13.6 13.9 13.4
Tier 1 16.5 16.5 15.5
Total 19.7 19.7 18.4
Capital £m £m £m
Tangible equity 26,482 26,220 25,653
Expected loss less impairment (27) (23) -
Prudential valuation adjustment (230) (245) (279)
Deferred tax assets (1,084) (746) (979)
Own credit adjustments 28 18 (10)
Pension fund assets (147) (162) (143)
Cash flow hedging reserve 1,443 1,365 1,899
Foreseeable ordinary dividends (1,249) (808) (1,013)
Adjustment for trust assets (2) (365) (365) (365)
Foreseeable charges - - (525)
Adjustments under IFRS 9 transitional arrangements 33 42 202
Other adjustments for regulatory purposes 44 - -
Total regulatory adjustments (1,554) (924) (1,213)
CET1 capital 24,928 25,296 24,440
Additional AT1 capital 5,259 4,670 3,875
Tier 1 capital 30,187 29,966 28,315
Tier 2 capital 5,918 5,824 5,317
Total regulatory capital 36,105 35,790 33,632
Risk-weighted assets
Credit risk 148,078 145,448 147,598
Counterparty credit risk 7,103 7,255 7,830
Market risk 6,219 7,190 7,363
Operational risk 21,821 21,821 20,198
Total RWAs 183,221 181,714 182,989
(1) Based on current PRA rules, includes the transitional
arrangements for the capital impact of IFRS 9 expected credit loss (ECL)
accounting. The impact of the IFRS 9 transitional adjustments at 31 December
2024 was £33 million for CET1 capital, £33 million for total capital and £3
million RWAs (30 September 2024 - £42 million CET1 capital, £42 million
total capital and £3 million RWAs and 31 December 2023 - £0.2 billion CET1
capital, £54 million total capital and £17 million RWAs). Excluding this
adjustment, the CET1 ratio would be 13.6% (30 September 2024 - 13.9% and 31
December 2023 - 13.2%). Tier 1 capital ratio would be 16.5% (30 September 2024
- 16.5% and 31 December 2023 - 15.4%) and the Total capital ratio would be
19.7% (30 September 2024 - 19.7% and 31 December 2023 - 18.4%). The IFRS 9
transitional capital rules in respect of ECL provisions will no longer apply
from 1 January 2025.
(2) Prudent deduction in respect of agreement with the pension fund.
Risk and capital management continued
Capital, liquidity and funding risk continued
Capital and leverage ratios continued
31 December 30 September 31 December
2024 2024 2023
Leverage £m £m £m
Cash and balances at central banks 92,994 105,629 104,262
Trading assets 48,917 54,445 45,551
Derivatives 78,406 68,720 78,904
Financial assets 469,599 455,770 439,449
Other assets 18,069 27,333 24,507
Total assets 707,985 711,897 692,673
Derivatives
- netting and variation margin (76,101) (66,427) (79,299)
- potential future exposures 16,692 16,047 17,212
Securities financing transactions gross up 2,460 1,588 1,868
Other off balance sheet items 59,498 57,154 50,961
Regulatory deductions and other adjustments (11,014) (20,707) (16,043)
Claims on central banks (89,299) (102,090) (100,735)
Exclusion of bounce back loans (2,422) (2,746) (3,794)
UK leverage exposure 607,799 594,716 562,843
UK leverage ratio (%) (1) 5.0 5.0 5.0
(1) The UK leverage exposure and transitional Tier 1 capital are
calculated in accordance with current PRA rules. Excluding the IFRS 9
transitional adjustment, the UK leverage ratio would be 5.0% (31 December 2023
- 5.0%). The IFRS 9 transitional capital rules in respect of ECL will no
longer apply from 1 January 2025.
Risk and capital management continued
Credit risk
Main macroeconomic variables
The main macroeconomic variables for each of the four scenarios used for
expected credit loss (ECL) modelling are set out in the table below.
2024 2023
Extreme Weighted Extreme Weighted
Upside Base case Downside downside average Upside Base case Downside downside average
Five-year summary % % % % % % % % % %
GDP 2.0 1.3 0.5 (0.2) 1.1 1.8 1.0 0.5 (0.3) 0.9
Unemployment rate 3.6 4.3 5.0 6.7 4.6 3.5 4.6 5.2 6.8 4.8
House price index 5.8 3.5 0.8 (4.3) 2.7 3.9 0.3 (0.4) (5.7) 0.3
Commercial real estate price 5.4 1.2 (1.0) (5.7) 1.1 3.1 (0.2) (2.0) (6.8) (0.6)
Consumer price index 2.4 2.2 3.5 1.6 2.4 1.7 2.6 5.2 1.8 2.8
Bank of England base rate 4.4 4.0 3.0 1.6 3.6 3.8 3.7 5.6 2.9 4.0
Stock price index 6.3 5.0 3.4 1.1 4.5 4.8 3.3 1.2 (0.4) 2.8
World GDP 3.8 3.2 2.5 1.6 3.0 3.7 3.2 2.7 1.8 3.0
Probability weight 23.2 45.0 19.1 12.7 21.2 45.0 20.4 13.4
(1) The five year summary runs from 2024-28 for 31 December 2024 and
from 2023-27 for 31 December 2023.
(2) The table shows compound annual growth rate (CAGR) for GDP,
average levels for the unemployment rate and Bank of England base rate, and Q4
to Q4 CAGR for other parameters.
Risk and capital management continued
Credit risk continued
ECL post model adjustments
The table below shows ECL post model adjustments.
Retail Banking Private Commercial & Central items
Mortgages Other Banking Institutional & other Total
2024 £m £m £m £m £m £m
Deferred model calibrations - - 1 18 - 19
Economic uncertainty 90 22 8 179 - 299
Other adjustments - - - 18 - 18
Total 90 22 9 215 - 336
Of which:
- Stage 1 58 9 5 94 - 166
- Stage 2 26 13 4 119 - 162
- Stage 3 6 - - 2 - 8
2023
Deferred model calibrations - - 1 23 - 24
Economic uncertainty 118 39 13 256 3 429
Other adjustments 1 - - 8 23 32
Total 119 39 14 287 26 485
Of which:
- Stage 1 75 14 6 115 10 220
- Stage 2 31 25 8 167 9 240
- Stage 3 13 - - 5 7 25
Post model adjustments decreased significantly since 31 December 2023,
reflecting reduced economic uncertainty from inflation, higher-for-longer
interest rates and liquidity.
- Retail Banking - The post model adjustments for economic uncertainty
decreased to £112 million at 31 December 2024 (2023 - £157 million). This
reduction primarily reflected a revision to the cost of living post model
adjustment to £105 million (2023 - £144 million), reflecting enhancements to
the assessment approach, supported by back-testing of default outcomes for
higher risk segments. The cost of living post model adjustment captures the
risk on segments in the Retail Banking portfolio that are more susceptible to
the effects of cost of living rises. It focuses on key affordability lenses,
including lower-income customers in fuel poverty, over-indebted borrowers and
customers who remain vulnerable to higher mortgage rates.
- Commercial & Institutional - The post model adjustment for
economic uncertainty decreased to £179 million (2023 - £256 million). The
inflation, supply chain and liquidity post model adjustment of £150 million
(2023 - £206 million) was maintained for lending prior to 1 January 2024
being a sector level downgrade applied to the sectors that are considered most
at risk from the current headwinds. A further £29 million (2023 - £50
million) remains for customers that utilised government support schemes, this
adjustment is reducing as customers default or repay.
- The £18 million (2023 - £23 million) judgemental overlay for
deferred model calibrations relates to refinance risk, with the existing
mechanistic modelling approach not fully capturing the risk on deteriorated
exposures.
- The £18 million (2023 - £8 million) other post model adjustment was
to mitigate the effect of operational timing delays in the identification and
flagging of a SICR, with the increase due to a small number of large corporate
exposures moving quickly from Stage 1 into default.
Risk and capital management continued
Credit risk - Banking activities
Segment analysis - portfolio summary
The table below shows gross loans and ECL, by segment and stage, within the
scope of the IFRS 9 ECL framework.
Retail Private Commercial & Central items
Banking Banking Institutional & other Total
2024 £m £m £m £m £m
Loans - amortised cost and FVOCI (1,2)
Stage 1 182,366 17,155 128,988 35,312 363,821
Stage 2 24,242 844 15,339 49 40,474
Stage 3 3,268 322 2,340 - 5,930
Of which: individual - 233 1,052 - 1,285
Of which: collective 3,268 89 1,288 - 4,645
Total 209,876 18,321 146,667 35,361 410,225
ECL provisions (3)
Stage 1 279 16 289 14 598
Stage 2 428 12 346 1 787
Stage 3 1,063 36 941 - 2,040
Of which: individual - 36 415 - 451
Of which: collective 1,063 - 526 - 1,589
Total 1,770 64 1,576 15 3,425
ECL provisions coverage (4)
Stage 1 (%) 0.15 0.09 0.22 0.04 0.16
Stage 2 (%) 1.77 1.42 2.26 2.04 1.94
Stage 3 (%) 32.53 11.18 40.21 - 34.40
Total 0.84 0.35 1.07 0.04 0.83
Impairment releases/losses
ECL (release)/charge (5) 282 (11) 98 (10) 359
Stage 1 (208) (11) (205) (14) (438)
Stage 2 278 (1) 79 4 360
Stage 3 212 1 224 - 437
Of which: individual - 1 191 - 192
Of which: collective 212 - 33 - 245
Total 282 (11) 98 (10) 359
Amounts written-off 430 1 223 - 654
Of which: individual - 1 143 - 144
Of which: collective 430 - 80 - 510
For the notes to this table refer to the following page.
Risk and capital management continued
Credit risk - Banking activities continued
Segment analysis - portfolio summary continued
Retail Private Commercial & Central items
Banking Banking Institutional & other Total
2023 £m £m £m £m £m
Loans - amortised cost and FVOCI (1,2)
Stage 1 182,297 17,565 119,047 29,677 348,586
Stage 2 21,208 906 15,771 6 37,891
Stage 3 3,133 258 2,162 10 5,563
Of which: individual - 186 845 - 1,031
Of which: collective 3,133 72 1,317 10 4,532
Subtotal excluding disposal group loans 206,638 18,729 136,980 29,693 392,040
Disposal group loans 67 67
Total 29,760 392,107
ECL provisions (3)
Stage 1 306 20 356 27 709
Stage 2 502 20 447 7 976
Stage 3 1,097 34 819 10 1,960
Of which: individual - 34 298 - 332
Of which: collective 1,097 - 521 10 1,628
Subtotal excluding ECL provisions on disposal group loans 1,905 74 1,622 44 3,645
ECL provisions on disposal group loans 36 36
Total 80 3,681
ECL provisions coverage (4)
Stage 1 (%) 0.17 0.11 0.30 0.09 0.20
Stage 2 (%) 2.37 2.21 2.83 nm 2.58
Stage 3 (%) 35.01 13.18 37.88 100.00 35.23
ECL provisions coverage excluding disposal group loans (%) 0.92 0.40 1.18 0.15 0.93
ECL provisions coverage on disposal group loans (%) 53.73 53.73
Total 0.27 0.94
Impairment releases/losses
ECL (release)/charge (5) 465 14 94 5 578
Stage 1 (172) (9) (222) 6 (397)
Stage 2 440 15 182 8 645
Stage 3 197 8 134 (9) 330
Of which: individual - 8 80 1 89
Of which: collective 197 - 54 (10) 241
Continuing operations 465 14 94 5 578
Discontinued operations (6) (6)
Total (1) 572
Amounts written-off 188 2 122 7 319
Of which: individual - 2 40 - 42
Of which: collective 188 - 82 7 277
nm = not meaningful
(1) The table shows gross loans only and excludes amounts that were
outside the scope of the ECL framework. Other financial assets within the
scope of the IFRS 9 ECL framework were cash and balances at central banks
totalling £91.8 billion (2023 - £103.1 billion) and debt securities of
£62.4 billion (2023 - £50.1 billion).
(2) Fair value through other comprehensive income (FVOCI). Includes
loans to customers and banks.
(3) Includes £4 million (2023 - £9 million) related to assets
classified as FVOCI and £0.1 billion (2023 - £0.1 billion) related to
off-balance sheet exposures.
(4) ECL provisions coverage is calculated as ECL provisions divided
by loans - amortised cost and FVOCI. It is calculated on loans and total ECL
provisions, including ECL for other (non-loan) assets and unutilised exposure.
Some segments with a high proportion of debt securities or unutilised exposure
may result in a not meaningful (nm) coverage ratio.
(5) Includes a £12 million release (2023 - £16 million release)
related to other financial assets, of which £4 million release (2023 - £6
million charge) related to assets classified as FVOCI and includes a £5
million release (2023 - £9 million release) related to contingent
liabilities.
Risk and capital management continued
Credit risk - Banking activities continued
Analysis of ECL provisions
The table below shows gross loans and ECL provision analysis.
31 December 30 September 30 June 31 December
2024 2024 2024 2023
£m £m £m £m
Total loans 410,225 397,042 394,765 392,040
Personal 226,525 225,582 221,750 223,774
Wholesale 183,700 171,460 173,015 168,266
Value of loans in Stage 2 40,474 37,767 38,066 37,891
Personal 24,636 24,030 23,559 21,509
Wholesale 15,838 13,737 14,507 16,382
ECL provisions in Stage 2 787 815 816 976
Personal 429 480 466 506
Wholesale 358 335 350 470
ECL provision coverage in Stage 2 1.94% 2.16% 2.14% 2.58%
Personal 1.74% 2.00% 1.98% 2.35%
Wholesale 2.26% 2.44% 2.41% 2.87%
Condensed consolidated income statement
for the period ended 31 December 2024
Year ended Quarter ended
31 December 31 December 31 December 30 September 31 December
2024 2023 2024 2024 2023
£m £m £m £m £m
Interest receivable 25,187 21,026 6,453 6,444 5,955
Interest payable (13,912) (9,977) (3,485) (3,545) (3,317)
Net interest income 11,275 11,049 2,968 2,899 2,638
Fees and commissions receivable 3,175 2,983 797 811 770
Fees and commissions payable (708) (653) (179) (181) (169)
Trading income 825 794 218 257 185
Other operating income 136 579 21 (42) 113
Non-interest income 3,428 3,703 857 845 899
Total income 14,703 14,752 3,825 3,744 3,537
Staff costs (4,061) (3,901) (949) (965) (977)
Premises and equipment (1,211) (1,153) (348) (284) (308)
Other administrative expenses (1,819) (2,008) (666) (330) (618)
Depreciation and amortisation (1,058) (934) (304) (246) (251)
Operating expenses (8,149) (7,996) (2,267) (1,825) (2,154)
Profit before impairment losses 6,554 6,756 1,558 1,919 1,383
Impairment losses (359) (578) (66) (245) (126)
Operating profit before tax 6,195 6,178 1,492 1,674 1,257
Tax (charge)/credit (1,465) (1,434) (233) (431) 5
Profit from continuing operations 4,730 4,744 1,259 1,243 1,262
Profit/(loss) from discontinued operations, net of tax 81 (112) 69 1 26
Profit for the period 4,811 4,632 1,328 1,244 1,288
Attributable to:
Ordinary shareholders 4,519 4,394 1,248 1,172 1,229
Paid-in equity holders 283 242 81 73 60
Non-controlling interests 9 (4) (1) (1) (1)
4,811 4,632 1,328 1,244 1,288
Earnings per ordinary share - continuing operations 52.5p 49.2p 14.5p 14.1p 13.6p
Earnings per ordinary share - discontinued operations 1.0p (1.2)p 0.8p 0.0p 0.3p
Total earnings per share attributable to ordinary shareholders - basic 53.5p 47.9p 15.3p 14.1p 13.9p
Earnings per ordinary share - fully diluted continuing operations 52.1p 48.9p 14.4p 14.0p 13.6p
Earnings per ordinary share - fully diluted discontinued operations 1.0p (1.2)p 0.8p 0.0p 0.3p
Total earnings per share attributable to ordinary shareholders - fully diluted 53.1p 47.7p 15.2p 14.0p 13.9p
Condensed consolidated statement of comprehensive income
for the period ended 31 December 2024
Year ended Quarter ended
31 December 31 December 31 December 30 September 31 December
2024 2023 2024 2024 2023
£m £m £m £m £m
Profit for the period 4,811 4,632 1,328 1,244 1,288
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of retirement benefit schemes (166) (280) (74) (32) (175)
Changes in fair value of financial liabilities designated at fair value
through profit or loss (FVTPL) due to changes
in credit risk (33) (39) (8) 1 (12)
FVOCI financial assets 6 17 (10) 49 (19)
Tax 59 79 20 (5) 59
(134) (223) (72) 13 (147)
Items that will be reclassified subsequently to profit or loss when specific
conditions are met:
FVOCI financial assets (25) 49 (46) (20) (16)
Cash flow hedges (1) 622 1,208 (110) 611 1,416
Currency translation 5 (619) 124 (77) (218)
Tax (178) (361) 43 (164) (345)
424 277 11 350 837
Other comprehensive income/(losses) after tax 290 54 (61) 363 690
Total comprehensive income for the period 5,101 4,686 1,267 1,607 1,978
Attributable to:
Ordinary shareholders 4,809 4,448 1,187 1,535 1,919
Paid-in equity holders 283 242 81 73 60
Non-controlling interests 9 (4) (1) (1) (1)
5,101 4,686 1,267 1,607 1,978
(1) Refer to footnote 4 and 5 of the consolidated statement of
changes in equity.
Condensed consolidated balance sheet
as at 31 December 2024
31 December 30 September 31 December
2024 2024 2023
£m £m £m
Assets
Cash and balances at central banks 92,994 105,629 104,262
Trading assets 48,917 54,445 45,551
Derivatives 78,406 68,720 78,904
Settlement balances 2,085 11,637 7,231
Loans to banks - amortised cost 6,030 6,742 6,914
Loans to customers - amortised cost 400,326 386,723 381,433
Other financial assets 63,243 62,305 51,102
Intangible assets 7,588 7,588 7,614
Other assets 8,396 8,108 9,662
Total assets 707,985 711,897 692,673
Liabilities
Bank deposits 31,452 31,747 22,190
Customer deposits 433,490 431,070 431,377
Settlement balances 1,729 12,283 6,645
Trading liabilities 54,714 59,079 53,636
Derivatives 72,082 61,650 72,395
Other financial liabilities 61,087 63,552 55,089
Subordinated liabilities 6,136 6,669 5,714
Notes in circulation 3,316 3,304 3,237
Other liabilities 4,601 4,004 5,202
Total liabilities 668,607 673,358 655,485
Equity
Ordinary shareholders' interests 34,070 33,808 33,267
Other owners' interests 5,280 4,690 3,890
Owners' equity 39,350 38,498 37,157
Non-controlling interests 28 41 31
Total equity 39,378 38,539 37,188
Total liabilities and equity 707,985 711,897 692,673
Condensed consolidated statement of changes in equity
for the period ended 31 December 2024
Share Other Other reserves Total Non
capital and Paid-in statutory Retained Cash flow Foreign owners' controlling Total
share premium equity reserves (7) earnings Fair value hedging (4,5) exchange Merger equity interests equity
£m £m £m £m £m £m £m £m £m £m £m
At 1 January 2024 10,844 3,890 2,004 10,645 (49) (1,899) 841 10,881 37,157 31 37,188
Profit attributable to ordinary shareholders
and other equity owners
- continuing operations 4,721 4,721 9 4,730
- discontinued operations 81 81 81
Other comprehensive income
Realised gains in period on FVOCI equity shares 54 (54) - -
Remeasurement of retirement benefit schemes (166) (166) (166)
Changes in fair value of credit in financial liabilities
designated at FVTPL due to own credit risk (33) (33) (33)
Unrealised gains (40) (40) (40)
Amounts recognised in equity (872) (872) (872)
Retranslation of net assets (194) (194) (194)
Gains on hedges of net assets 122 122 122
Amount transferred from equity to earnings 21 1,494 77 1,592 1,592
Tax 48 19 (166) (20) (119) (119)
Total comprehensive income/(loss) 4,705 (54) 456 (15) - 5,092 9 5,101
Transactions with owners
Ordinary share dividends paid (1,505) (1,505) (12) (1,517)
Paid-in equity dividends paid (283) (283) (283)
Shares repurchased during the period (1,2,3) (711) 711 (2,176) (2,176) (2,176)
Securities issued in the year 1,390 1,390 1,390
Employee share schemes 17 17 17
Shares vested under employee share schemes 175 175 175
Share-based payments 23 23 23
Own shares acquired (540) (540) (540)
At 31 December 2024 10,133 5,280 2,350 11,426 (103) (1,443) 826 10,881 39,350 28 39,378
For the notes to this table refer to the following page.
Condensed consolidated statement of changes in equity for the period ended 31
December 2024 continued
Share Other Other reserves Total Non
capital and Paid-in statutory Retained Cash flow Foreign owners' controlling Total
share premium equity reserves (7) earnings Fair value hedging (4,5) exchange Merger equity interests equity
£m £m £m £m £m £m £m £m £m £m £m
At 1 January 2023 11,700 3,890 1,393 10,019 (102) (2,771) 1,478 10,881 36,488 8 36,496
Profit/(loss) attributable to ordinary shareholders
and other equity owners
- continuing operations 4,748 4,748 (4) 4,744
- discontinued operations (112) (112) - (112)
Other comprehensive income
Realised gains in period on FVOCI equity shares 1 (1) - -
Remeasurement of retirement benefit schemes (280) (280) (280)
Changes in fair value of credit in financial liabilities
designated at FVTPL due to own credit risk (39) (39) (39)
Unrealised gains 22 22 22
Amounts recognised in equity 187 187 187
Retranslation of net assets (239) (239) (239)
Gains on hedges of net assets 107 107 107
Amount transferred from equity to earnings (6) 44 1,021 (487) 578 578
Tax 84 (12) (336) (18) (282) (282)
Total comprehensive income/(loss) 4,402 53 872 (637) - 4,690 (4) 4,686
Transactions with owners
Ordinary share dividends paid (1,456) (1,456) (5) (1,461)
Paid in equity dividends (242) (242) (242)
Shares repurchased during the period (1,2,3) (856) 856 (2,057) (2,057) (2,057)
Employee share schemes 14 14 14
Shares vested under employees share schemes 114 114 114
Share-based payments (35) (35) (35)
Own shares acquired (359) (359) (359)
Acquisition of subsidiary - 32 32
At 31 December 2023 10,844 3,890 2,004 10,645 (49) (1,899) 841 10,881 37,157 31 37,188
(1) NatWest Group plc repurchased and cancelled 173.3 million (2023 - 460.3
million, of which 2.3 million were settled in January 2024) shares. The total
consideration for these shares excluding fees was £450.9 million (2023 -
£1,151.7 million of which 4.9 million were settled in January 2024), as part
of the On Market Share Buyback Programmes. The nominal value of the share
cancellations has been transferred to the capital redemption reserve.
(2) In June 2024, there was an agreement to buy 392.4 million (May 2023 - 469.2
million) ordinary shares of the Company from UK Government Investments Ltd
(UKGI) at 316.2 pence per share (May 2023 - 268.4 pence per share) for the
total consideration of £1.2 billion (2023 - £1.3 billion). NatWest Group
cancelled 222.4 million of the purchased ordinary shares, amounting to £706.9
million excluding fees and held the remaining 170.0 million shares as Own
Shares Held, amounting to £540.2 million excluding fees. The nominal value of
the share cancellation has been transferred to the capital redemption reserve.
(3) In November 2024, there was an agreement to buy 262.6 million ordinary shares
of the Company from UK Government Investments Ltd (UKGI) at 380.8p per share
for the total consideration of £1,005.0 million. NatWest Group cancelled all
the shares. The nominal value of the share cancellation has been transferred
to the capital redemption reserve.
(4) The change in the cash flow hedging reserve is driven by realised accrued
interest transferred to the income statement and an increase in swap rates in
the year. The portfolio of hedging instruments is predominantly receive fixed
swaps.
(5) The amount transferred from equity to the income statement is mostly recorded
within net interest income mainly within loans to banks and customers -
amortised cost, balances at central banks and customer deposits.
(6) Includes £460 million FX recycled to profit or loss upon a capital repayment
by UBIDAC in 2023.
(7) Other statutory reserves consist of Capital redemption reserves of £3,218
million (2023 - £2,507 million) and Own shares held reserves of £868 million
(2023 - £503 million).
Condensed consolidated cash flow statement
for the period ended 31 December 2024
Year ended
31 December 31 December
2024 2023
£m £m
Cash flows from operating activities
Operating profit before tax from continuing operations 6,195 6,178
Operating profit/(loss) before tax from discontinued operations 81 (112)
Adjustments for non-cash and other items 4,365 3,208
Net cash flows from trading activities 10,641 9,274
Changes in operating assets and liabilities (7,267) (25,679)
Net cash flows from operating activities before tax 3,374 (16,405)
Income taxes paid (1,602) (1,033)
Net cash flows from operating activities 1,772 (17,438)
Net cash flows from investing activities (12,699) (14,694)
Net cash flows from financing activities (1,886) (6,304)
Effects of exchange rate changes on cash and cash equivalents (1,166) (1,189)
Net decrease in cash and cash equivalents (13,979) (39,625)
Cash and cash equivalents at beginning of period 118,824 158,449
Cash and cash equivalents at end of period 104,845 118,824
Notes
1. Presentation of condensed consolidated financial statements
The condensed consolidated financial statements should be read in conjunction
with NatWest Group plc 2024 Annual Report and Accounts. The critical and
material accounting policies are the same as those applied in the consolidated
financial statements.
The directors have prepared the condensed consolidated financial statements on
a going concern basis after assessing the principal risks, forecasts,
projections and other relevant evidence over the twelve months from the date
they are approved.
2. Tax
Analysis of the tax charge for the year
The tax charge comprises current and deferred tax in respect of profits and
losses recognised or originating in the income statement. Tax on items
originating outside the income statement is charged to other comprehensive
income or direct to equity (as appropriate) and is therefore not reflected in
the table below. Current tax is tax payable or recoverable in respect of the
taxable profit or loss for the year and any adjustments to tax payable in
prior years.
2024 2023 2022
Continuing operations £m £m £m
Current tax
Charge for the year (1,415) (1,373) (1,611)
(Under)/over provision in respect of prior years (145) (123) 100
(1,560) (1,496) (1,511)
Deferred tax
(Charge)/credit for the year (343) (281) 47
UK tax rate change impact - - (10)
Net increase in the carrying value of deferred tax assets in respect of UK, 428 385 267
RoI and Netherlands losses
Over/(under) provision in respect of prior years 10 (42) (68)
Actual tax charge (1,465) (1,434) (1,275)
Judgement: tax contingencies
NatWest Group's corporate income tax charge and its provisions for corporate
income taxes necessarily involve a degree of estimation and judgement. The tax
treatment of some transactions is uncertain and tax computations are yet to be
agreed with the relevant tax authorities. NatWest Group recognises anticipated
tax liabilities based on all available evidence and, where appropriate, in the
light of external advice. Any difference between the final outcome and the
amounts provided will affect current and deferred income tax charges in the
period when the matter is resolved.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable in respect of
temporary differences where the carrying amount of an asset or liability
differs for accounting and tax purposes. Deferred tax liabilities reflect the
expected amount of tax payable in the future on these temporary differences.
Deferred tax assets reflect the expected amount of tax recoverable in the
future on these differences. The net deferred tax asset recognised by the
NatWest Group is shown below. The reduction of deferred tax asset is primarily
attributable to reduced cash flow hedge liabilities, and is taken in other
comprehensive income as part of the movements in cash flow reserves.
Analysis of deferred tax
2024 2023
£m £m
Deferred tax asset 1,876 1,894
Deferred tax liability (99) (141)
Net deferred tax asset 1,777 1,753
Notes continued
3. Litigation and regulatory matters
NatWest Group plc and certain members of NatWest Group are party to various
legal proceedings and are involved in, or subject to, various regulatory
matters, including as the subject of investigations and other regulatory and
governmental action (Matters) in the United Kingdom (UK), the United States
(US), the European Union (EU) and other jurisdictions. Note 25 in the NatWest
Group plc 2024 Annual Report and Accounts, issued on 14 February 2025 and
available at natwestgroup.com (Note 25) discusses the Matters in which NatWest
Group is currently involved and material developments. Other than the Matters
discussed in Note 25, no member of NatWest Group is or has been involved in
governmental, legal, or regulatory proceedings (including those which are
pending or threatened) that are expected to be material, individually or in
aggregate. Recent developments in the Matters identified in Note 25 that have
occurred since the Q3 2024 Interim Management Statement was issued on 25
October 2024, include, but are not limited to, those set out below.
Litigation
London Interbank Offered Rate (LIBOR) and other rates litigation
As previously disclosed, in August 2020, a complaint was filed in the United
States District Court for the Northern District of California by several
United States retail borrowers against the USD ICE LIBOR panel banks and their
affiliates (including NatWest Group plc, NWM Plc, NWMSI and NWB Plc), alleging
(i) that the very process of setting USD ICE LIBOR amounts to illegal
price-fixing; and (ii) that banks in the United States have illegally agreed
to use LIBOR as a component of price in variable retail loans. In September
2022, the district court dismissed the complaint. In December 2024, the United
States Court of Appeals for the Ninth Circuit affirmed the district court's
decision.
Foreign exchange litigation
As previously disclosed, two sets of proceedings are ongoing in the
Netherlands against NatWest Group plc, NWM Plc and NWM N.V. by Stichting FX
Claims on behalf of a number of parties, seeking declarations from the
district court in Amsterdam concerning liability for anti-competitive FX
market conduct described in decisions of the European Commission (EC) of 16
May 2019 and 2 December 2021, along with unspecified damages. In January 2025,
a third summons was served by Stichting FX Claims on NatWest Group plc, NWM
Plc and NWM N.V., on behalf of a new group of parties. The claimant seeks
similar declarations from the district court in Amsterdam to those being
sought in the previously disclosed claims, along with unspecified damages.
Regulatory matters
US investigations relating to fixed-income securities
In December 2021, NWM Plc pled guilty in the United States District Court for
the District of Connecticut to one count of wire fraud and one count of
securities fraud in connection with historical spoofing conduct by former
employees in US Treasuries markets between January 2008 and May 2014 and,
separately, during approximately three months in 2018. The 2018 trading
occurred during the term of a non-prosecution agreement (NPA) between NWMSI
and the United States Attorney's Office for the District of Connecticut (USAO
CT), under which non-prosecution was conditioned on NWMSI and affiliated
companies not engaging in criminal conduct during the term of the NPA. The
relevant trading in 2018 was conducted by two NWM traders in Singapore and
breached that NPA. The plea agreement reached with the US Department of
Justice (DOJ) and the USAO CT resolved both the spoofing conduct and the
breach of the NPA.
As required by the resolution and sentence imposed by the court, NWM Plc is
subject to a probationary period, which was extended to end concurrently with
the conclusion of the independent monitorship, which is also required under
the plea agreement. The term of the independent monitorship and the ongoing
implementation of recommendations made by it is currently scheduled to
conclude in December 2025 but may be extended by agreement with the DOJ. In
addition, NWM Plc has committed to compliance programme reviews and
improvements and agreed to reporting and co-operation obligations.
In the event that NWM Plc does not meet its obligations to the DOJ, this may
lead to adverse consequences such as increased costs from any extension of
monitorship and/or the period of the probation, findings that NWM Plc violated
its probation term, and possible re-sentencing, amongst other consequences.
Other material adverse collateral consequences may occur as a result of this
matter, as further described in the Risk Factor relating to legal, regulatory
and governmental actions and investigations set out on pages 422 to 423 of the
NatWest Group plc 2024 Annual Report and Accounts.
Notes continued
4. Related party transactions
UK Government
The UK Government's shareholding in NatWest Group plc is managed by UK
Government Investments Limited, a company wholly owned by the UK Government.
At 31 December 2024 HM Treasury's holding in NatWest Group plc's ordinary
shares was 9.99% (31 December 2023 - 37.97%). As a result, the UK Government
through HM Treasury is no longer the controlling shareholder of NatWest Group
plc as per UK listing rules. The UK Government and UK Government-controlled
bodies remain related parties of the NatWest Group.
NatWest Group enters into transactions with many of these bodies. Transactions
include the payment of: taxes - principally UK corporation tax and value added
tax; national insurance contributions; local authority rates; regulatory fees
and levies; together with banking transactions such as loans and deposits
undertaken in the normal course of banker-customer relationships.
Bank of England facilities
NatWest Group may participate in a number of schemes operated by the Bank of
England in the normal course of business.
In March 2024 Bank of England Levy replaced the Cash Ratio Deposit scheme.
Members of NatWest Group that are UK authorised institutions are required to
pay the levy having eligible liabilities greater than £600 million. They also
have access to Bank of England reserve accounts: sterling current accounts
that earn interest at the Bank of England Base rate.
NatWest Group provides guarantees for certain subsidiaries, liabilities to the
Bank of England.
Other related parties
(a) In their roles as providers of finance, NatWest Group companies provide
development and other types of capital support to businesses. These
investments are made in the normal course of business.
(b) To further strategic partnerships, NatWest Group may seek to invest in
third parties or allow third parties to hold a minority interest in a
subsidiary of NatWest Group. We disclose as related parties for associates and
joint ventures and where equity interests are over 10%. Ongoing business
transactions with these entities are on normal commercial terms.
(c) NatWest Group recharges the NatWest Group Pension Fund with the cost of
pension management services incurred by it.
(d) In accordance with IAS 24, transactions or balances between NatWest Group
entities that have been eliminated on consolidation are not reported.
Full details of NatWest Group's related party transactions for the year ended
31 December 2024 are included in NatWest Group plc 2024 Annual Report and
Accounts.
5. Dividends
The company has announced that the directors have recommended a final dividend
of £1.2 billion, or 15.5p per ordinary share (2023 - £1.0 billion, or 11.5p
per ordinary share) subject to shareholder approval at the Annual General
Meeting on 23 April 2025. If approved, payment will be made on 28 April 2025
to shareholders on the register at the close of business on 14 March 2025. The
ex-dividend date will be 13 March 2025.
6. Post balance sheet events
Other than as disclosed in this document, there have been no significant
events between 31 December 2024 and the date of approval of this announcement
which would require a change to, or additional disclosure, in the
announcement.
Statement of directors' responsibilities
The responsibility statement below has been prepared in connection with
NatWest Group's full Annual Report and Accounts for the year ended 31 December
2024.
We, the directors listed below, confirm that to the best of our knowledge:
- The financial statements, prepared in accordance with UK-adopted
International Accounting Standards and International Financial Reporting
Standards as issued by the International Accounting Standards Board, give a
true and fair view of the assets, liabilities, financial position and profit
or loss of the company and the undertakings included in the consolidation
taken as a whole; and
- The Strategic report and Directors' report (incorporating the Business
review) include a fair review of the development and performance of the
business and the position of the company and the undertakings included in the
consolidation taken as a whole, together with a description of the principal
risks and uncertainties that they face.
By order of the Board
Richard Haythornthwaite John-Paul Thwaite Katie Murray
Chair Group Chief Executive Officer Group Chief Financial Officer
13 February 2025
Board of directors
Chair Executive directors Non-executive directors
Richard Haythornthwaite John-Paul Thwaite Frank Dangeard
Katie Murray Roisin Donnelly
Patrick Flynn
Geeta Gopalan
Yasmin Jetha
Stuart Lewis
Mark Seligman
Gillian Whitehead
Lena Wilson
Presentation of information
'Parent company' refers to NatWest Group plc and 'NatWest Group' and 'we'
refers to NatWest Group plc and its subsidiary and associated undertakings.
The term 'NWH Group' refers to NatWest Holdings Limited (NWH) and its
subsidiary and associated undertakings. The term 'NWM Group' refers to NatWest
Markets Plc (NWM Plc) and its subsidiary and associated undertakings. The term
'NWM N.V.' refers to NatWest Markets N.V. The term 'NWMSI' refers to NatWest
Markets Securities, Inc. The term 'RBS plc' refers to The Royal Bank of
Scotland plc. The term 'NWB Plc' refers to National Westminster Bank Plc. The
term 'UBIDAC' refers to Ulster Bank Ireland DAC.
NatWest Group publishes its financial statements in pounds sterling ('£' or
'sterling'). The abbreviations '£m' and '£bn' represent millions and
thousands of millions of pounds sterling, respectively, and references to
'pence' or 'p' represent pence where the amounts are denominated in pounds
sterling ('GBP'). Reference to 'dollars' or '$' are to United States of
America ('US') dollars. The abbreviations '$m' and '$bn' represent millions
and thousands of millions of dollars, respectively. The abbreviation '€'
represents the 'euro', and the abbreviations '€m' and '€bn' represent
millions and thousands of millions of euros, respectively.
Statutory accounts
Financial information contained in this document does not constitute statutory
accounts within the meaning of section 434 of the Companies Act 2006 ('the
Act'). The statutory accounts for the year ended 31 December 2023 have been
filed with the Registrar of Companies and those for the year ended 31 December
2024 will be filed with the Registrar of Companies following the Annual
General Meeting. The report of the auditor on those statutory accounts was
unqualified, did not draw attention to any matters by way of emphasis and did
not contain a statement under section 498(2) or (3) of the Act.
Contacts
Analyst enquiries: Claire Kane, Investor
Relations +44 (0) 20 7672 1758
Media enquiries: NatWest Group Press
Office +44 (0) 131 523 4205
Management presentation Fixed income presentation
Date: 14 February 2025 14 February 2025
Time: 9am UK time 1.30pm UK time
Zoom ID: 920 9302 5198 949 6600 6385
Available on natwestgroup.com/results (http://www.rbs.com/results)
- Announcement and slides.
- NatWest Group plc 2024 Annual Report and Accounts.
- A financial supplement containing income statement, balance sheet and
segment performance for the four quarters ended 31 December 2024.
- NatWest Group and NWH Group Pillar 3 Report.
- NatWest Group plc 2024 Sustainability Report.
Forward-looking statements
Cautionary statement regarding forward-looking statements
Certain sections in this document contain 'forward-looking statements' as that
term is defined in the United States Private Securities Litigation Reform Act
of 1995, such as statements with respect to NatWest Group's financial
condition, results of operations and business, including its strategic
priorities, financial, investment and capital targets, and climate and
sustainability-related targets, commitments and ambitions described herein.
Statements that are not historical facts, including statements about NatWest
Group's beliefs and expectations, are forward-looking statements. Words such
as 'expect', 'estimate', 'project', 'anticipate', 'commit', 'believe',
'should', 'intend', 'will', 'plan', 'could', 'probability', 'risk', 'target',
'goal', 'objective', 'may', 'endeavour', 'outlook', 'optimistic', 'prospects'
and similar expressions or variations on these expressions are intended to
identify forward-looking statements. In particular, this document includes
forward-looking targets and guidance relating to financial performance
measures, such as income growth, operating expense, RoTE, ROE, discretionary
capital distribution targets, impairment loss rates, balance sheet reduction,
including the reduction of RWAs, CET1 ratio (and key drivers of the CET1 ratio
including timing, impact and details), Pillar 2 and other regulatory buffer
requirements and MREL and non-financial performance measures, such as NatWest
Group's initial area of focus, climate and sustainability-related performance
ambitions, targets and metrics, including in relation to initiatives to
transition to a net zero economy, climate and sustainable funding and
financing and financed emissions.
Limitations inherent to forward-looking statements
These statements are based on current plans, expectations, estimates, targets
and projections, and are subject to significant inherent risks, uncertainties
and other factors, both external and relating to NatWest Group's strategy or
operations, which may result in NatWest Group being unable to achieve the
current plans, expectations, estimates, targets, projections and other
anticipated outcomes expressed or implied by such forward-looking statements.
In addition, certain of these disclosures are dependent on choices relying on
key model characteristics and assumptions and are subject to various
limitations, including assumptions and estimates made by management. By their
nature, certain of these disclosures are only estimates and, as a result,
actual future results, gains or losses could differ materially from those that
have been estimated. Accordingly, undue reliance should not be placed on these
statements. The forward-looking statements contained in this document speak
only as of the date we make them and we expressly disclaim any obligation or
undertaking to update or revise any forward-looking statements contained
herein, whether to reflect any change in our expectations with regard thereto,
any change in events, conditions or circumstances on which any such statement
is based, or otherwise, except to the extent legally required.
Forward-looking statements continued
Important factors that could affect the actual outcome of the forward-looking
statements
We caution you that a large number of important factors could adversely affect
our results or our ability to implement our strategy, cause us to fail to meet
our targets, predictions, expectations and other anticipated outcomes or
affect the accuracy of forward-looking statements described in this document.
These factors include, but are not limited to, those set forth in the risk
factors and the other uncertainties described in NatWest Group plc's Annual
Report on Form 20-F and its other filings with the US Securities and Exchange
Commission. The principal risks and uncertainties that could adversely affect
NatWest Group's future results, its financial condition and/or prospects and
cause them to be materially different from what is forecast or expected,
include, but are not limited to: economic and political risk (including in
respect of: political and economic risks and uncertainty in the UK and global
markets, including as a result of inflation and interest rates, supply chain
disruption and geopolitical developments); changes in interest rates and
foreign currency exchange rates; and HM Treasury's ownership of NatWest Group
plc); business change and execution risk (including in respect of the
implementation of NatWest Group's strategy; future acquisitions and
divestments, and the transfer of its Western European corporate portfolio);
financial resilience risk (including in respect of: NatWest Group's ability to
meet targets and to make discretionary capital distributions; the competitive
environment; counterparty and borrower risk; liquidity and funding risks;
prudential regulatory requirements for capital and MREL; reductions in the
credit ratings; the requirements of regulatory stress tests; model risk;
sensitivity to accounting policies, judgments, estimates and assumptions (and
the economic, climate, competitive and other forward looking information
affecting those judgments, estimates and assumptions); changes in applicable
accounting standards; the value or effectiveness of credit protection; the
adequacy of NatWest Group's future assessments by the Prudential Regulation
Authority and the Bank of England; and the application of UK statutory
stabilisation or resolution powers); climate and sustainability risk
(including in respect of: risks relating to climate-related and
sustainability-related risks; both the execution and reputational risk
relating to NatWest Group's climate change-related strategy, ambitions,
targets and transition plan; climate and sustainability-related data and model
risk; increasing levels of climate, environmental, human rights and
sustainability-related regulation and oversight; and increasing; climate,
environmental and sustainability-related litigation, enforcement proceedings
investigations and conduct risk); operational and IT resilience risk
(including in respect of: operational risks (including reliance on third party
suppliers); cyberattacks; the accuracy and effective use of data; complex IT
systems; attracting, retaining and developing diverse senior management and
skilled personnel; NatWest Group's risk management framework; and reputational
risk); and legal, regulatory and conduct risk (including in respect of: the
impact of substantial regulation and oversight; the outcome of legal,
regulatory and governmental actions, investigations and remedial undertakings;
and changes in tax legislation or failure to generate future taxable profits).
Climate and sustainability-related disclosures
Climate and sustainability-related disclosures in this document are not
measures within the scope of International Financial Reporting Standards
('IFRS'), use a greater number and level of judgments, assumptions and
estimates, including with respect to the classification of climate and
sustainable funding and financing activities, than our reporting of historical
financial information in accordance with IFRS. These judgments, assumptions
and estimates are highly likely to change materially over time, and, when
coupled with the longer time frames used in these disclosures, make any
assessment of materiality inherently uncertain. In addition, our climate risk
analysis, our ambition to be net zero across our financed emissions, assets
under management and operational value chain by 2050 and, the implementation
of our climate transition plan remain under development, and the data
underlying our analysis and strategy remain subject to evolution over time.
The process we have adopted to define, gather and report data on our
performance on climate and sustainability-related measures is not subject to
the formal processes adopted for financial reporting in accordance with IFRS
and there are currently limited industry standards or globally recognised
established practices for measuring and defining climate and
sustainability-related metrics. As a result, we expect that certain climate
and sustainability-related disclosures made in this document are likely to be
amended, updated, recalculated or restated in the future. Refer to the
cautionary statement in the section entitled 'Climate and
sustainability-related and other forward-looking statements and metrics' of
the NatWest Group 2024 Sustainability Disclosures Report.
Cautionary statement regarding Non-IFRS financial measures and APMs
NatWest Group prepares its financial statements in accordance with
UK-adopted International Accounting Standards (IAS) and International
Financial Reporting Standards (IFRS). This document may contain financial
measures and ratios not specifically defined under GAAP or IFRS ('Non-IFRS')
and/or alternative performance measures ('APMs') as defined in European
Securities and Markets Authority ('ESMA') guidelines. Non-IFRS measures and
APMs are adjusted for notable and other defined items which management
believes are not representative of the underlying performance of the business
and which distort period-on-period comparison. Non-IFRS measures provide users
of the financial statements with a consistent basis for comparing business
performance between financial periods and information on elements of
performance that are one-off in nature. Any Non-IFRS measures and/or APMs
included in this document, are not measures within the scope of IFRS, are
based on a number of assumptions that are subject to uncertainties and change,
and are not a substitute for IFRS measures.
The information, statements and opinions contained in this document do not
constitute a public offer under any applicable legislation or an offer to sell
or a solicitation of an offer to buy any securities or financial instruments
or any advice or recommendation with respect to such securities or other
financial instruments.
Non-IFRS financial measures
NatWest Group prepares its financial statements in accordance with UK-adopted
International Accounting Standards (IAS) and International Financial Reporting
Standards (IFRS). This document contains a number of non-IFRS measures, also
known as alternative performance measures, defined under the European
Securities and Markets Authority (ESMA) guidance or non-GAAP financial
measures in accordance with the Securities and Exchange Commission (SEC)
regulations. These measures are adjusted for notable and other defined items
which management believes are not representative of the underlying performance
of the business and which distort period-on-period comparison.
The non-IFRS measures provide users of the financial statements with a
consistent basis for comparing business performance between financial periods
and information on elements of performance that are one-off in nature. The
non-IFRS measures also include the basis of calculation for metrics that are
used throughout the banking industry.
These non-IFRS measures are not a substitute for IFRS measures and a
reconciliation to the closest IFRS measure is presented where appropriate.
Measure Description
Cost:income ratio (excl. litigation and conduct) The cost:income ratio (excl. litigation and conduct) is calculated as other
operating expenses (operating expenses less litigation and conduct costs)
Refer to table 2. Cost:income ratio (excl. litigation and conduct) on page 40. divided by total income. Litigation and conduct costs are excluded as they are
one-off in nature, difficult to forecast for Outlook purposes and distort
period-on-period comparisons.
Customer deposits excluding central items Customer deposits excluding central items is calculated as total NatWest Group
customer deposits excluding Central items & other customer deposits.
Refer to Segmental performance on pages 14-18 for components of calculation. Central items & other includes Treasury repo activity and Ulster Bank RoI.
The exclusion of Central items & other removes the volatility relating
to Treasury repo activity and the reduction of deposits as part of our
withdrawal from the Republic of Ireland.
These items may distort period-on-period comparisons and their removal gives
the user of the financial statements a better understanding of the movements
in customer deposits.
Funded assets Funded assets is calculated as total assets less derivative assets. This
measure allows review of balance sheet trends excluding the volatility
Refer to Condensed consolidated balance sheet on page 28 for components of associated with derivative fair values.
calculation.
Loan:deposit ratio (excl. repos and reverse repos) Loan:deposit ratio (excl. repos and reverse repos) is calculated as net
customer loans held at amortised cost excluding reverse repos divided by total
Refer to table 5. Loan:deposit ratio (excl. repos and reverse repos) on page customer deposits excluding repos. This metric is used to assess liquidity.
42.
The removal of repos and reverse repos reduces volatility and presents the
ratio on a basis that is comparable to UK peers. The nearest ratio using IFRS
measures is loan:deposit ratio, calculated as net loans to customers held at
amortised cost divided by customer deposits.
NatWest Group return on tangible equity NatWest Group return on tangible equity comprises annualised profit or loss
for the period attributable to ordinary shareholders divided by average
Refer to table 6. NatWest Group return on tangible equity on page 42. tangible equity. Average tangible equity is average total equity excluding
average non-controlling interests, average other owners' equity and average
intangible assets. This measure shows the return NatWest Group generates on
tangible equity deployed. It is used to determine relative performance of
banks and used widely across the sector, although different banks may
calculate the rate differently. The nearest ratio using IFRS measures is
return on equity, calculated as profit attributable to ordinary shareholders
divided by average total equity.
Non-IFRS financial measures continued
Measure Description
Net interest margin and average interest earning assets Net interest margin is net interest income as a percentage of average interest
earning assets (IEA). Average IEA are average IEA of the banking business of
Refer to Segmental performance on pages 14-18 for components of calculation. NatWest Group and primarily consists of cash and balances at central banks,
loans to banks, loans to customers and other financial assets mostly
comprising debt securities. Average IEA shows the average asset base
generating interest over the period.
Net loans to customers excluding central items Net loans to customers excluding central items is calculated as total NatWest
Group net loans to customers excluding Central items & other net loans to
Refer to Segmental performance on pages 14-18 for components of calculation. customers. Central items & other includes Treasury reverse repo activity
and Ulster Bank RoI. The exclusion of Central items & other removes the
volatility relating to Treasury reverse repo activity and the reduction of
loans to customers as part of our withdrawal from the Republic of Ireland.
This allows for better period-on-period comparisons and gives the user of the
financial statements a better understanding of the movements in net loans to
customers.
Operating expenses excluding litigation and conduct The management analysis of operating expenses shows litigation and conduct
costs separately. These amounts are included within staff costs and other
Refer to table 4. Operating expenses excluding litigation and conduct on page administrative expenses in the statutory analysis. Other operating expenses
41. excludes litigation and conduct costs, which are more volatile and may distort
period-on-period comparisons.
Segmental return on equity Segmental return on equity comprises segmental operating profit or loss,
adjusted for paid-in equity and tax, divided by average notional equity.
Refer to table 7. Segmental return on equity on page 43. Average RWAe is defined as average segmental RWAs incorporating the effect of
capital deductions. This is multiplied by an allocated equity factor for each
segment to calculate the average notional equity. This measure shows the
return generated by operating segments on equity deployed.
Tangible net asset value (TNAV) per ordinary share TNAV per ordinary share is calculated as tangible equity divided by the number
of ordinary shares in issue. This is a measure used by external analysts in
Refer to table 3. Tangible net asset value (TNAV) per ordinary share on page valuing the bank and allows for comparison with other per ordinary share
41. metrics including the share price. The nearest ratio using IFRS measures is
net asset value (NAV) per ordinary share calculated as ordinary shareholders'
interests divided by the number of ordinary shares in issue.
Total income excluding notable items Total income excluding notable items is calculated as total income less
notable items. The exclusion of notable items aims to remove the impact of
Refer to table 1. Total income excluding notable items on page 40. one-offs and other items which may distort period-on-period comparisons.
Non-IFRS financial measures continued
1. Total income excluding notable items
Year ended Quarter ended
31 December 31 December 31 December 30 September 31 December
2024 2023 2024 2024 2023
£m £m £m £m £m
Continuing operations
Total income 14,703 14,752 3,825 3,744 3,537
Less notable items:
Commercial & Institutional
Tax interest on prior periods - 3 - - 3
Own credit adjustments (OCA) (9) (2) (4) 2 (5)
Central items & other
Liquidity Asset Bond sale losses - (43) - - (10)
Share of associate profits/(losses) for Business Growth Fund 21 (4) (1) 11 1
Property strategy update - (69) - - -
Interest and foreign exchange management derivatives not in hedge 150 79 19 5 (21)
accounting relationships
Foreign exchange recycling (losses)/gains (76) 484 (30) (46) 162
Tax interest on prior periods (31) (35) (31) - (35)
55 413 (47) (28) 95
Total income excluding notable items 14,648 14,339 3,872 3,772 3,442
2. Cost:income ratio (excl. litigation and conduct)
Year ended Quarter ended
31 December 31 December 31 December 30 September 31 December
2024 2023 2024 2024 2023
£m £m £m £m £m
Continuing operations
Operating expenses 8,149 7,996 2,267 1,825 2,154
Less litigation and conduct costs (295) (355) (153) (41) (113)
Other operating expenses 7,854 7,641 2,114 1,784 2,041
Total income 14,703 14,752 3,825 3,744 3,537
Cost:income ratio 55.4% 54.2% 59.3% 48.7% 60.9%
Cost:income ratio (excl. litigation and conduct) 53.4% 51.8% 55.3% 47.6% 57.7%
Non-IFRS financial measures continued
3. Tangible net asset value (TNAV) per ordinary share
Year ended or as at
31 December 30 September 31 December
2024 2024 2023
Ordinary shareholders' interests (£m) 34,070 33,808 33,267
Less intangible assets (£m) (7,588) (7,588) (7,614)
Tangible equity (£m) 26,482 26,220 25,653
Ordinary shares in issue (millions) (1) 8,043 8,293 8,792
NAV per ordinary share (pence) 424p 408p 378p
TNAV per ordinary share (pence) 329p 316p 292p
(1) The number of ordinary shares in issue excludes own shares
held.
4. Operating expenses excluding litigation and conduct
Year ended Quarter ended
31 December 31 December 31 December 30 September 31 December
2024 2023 2024 2024 2023
£m £m £m £m £m
Other operating expenses
Staff expenses 3,997 3,839 938 947 961
Premises and equipment 1,211 1,153 348 284 308
Other administrative expenses 1,588 1,715 524 307 521
Depreciation and amortisation 1,058 934 304 246 251
Total other operating expenses 7,854 7,641 2,114 1,784 2,041
Litigation and conduct costs
Staff expenses 64 62 11 18 16
Other administrative expenses 231 293 142 23 97
Total litigation and conduct costs 295 355 153 41 113
Total operating expenses 8,149 7,996 2,267 1,825 2,154
Operating expenses excluding litigation and conduct 7,854 7,641 2,114 1,784 2,041
Non-IFRS financial measures continued
5. Loan:deposit ratio (excl. repos and reverse repos)
As at
31 December 30 September 31 December
2024 2024 2023
£m £m £m
Loans to customers - amortised cost 400,326 386,723 381,433
Less reverse repos (34,846) (25,115) (27,117)
Loans to customers - amortised cost (excl. reverse repos) 365,480 361,608 354,316
Customer deposits 433,490 431,070 431,377
Less repos (1,363) (2,482) (10,844)
Customer deposits (excl. repos) 432,127 428,588 420,533
Loan:deposit ratio (%) 92% 90% 88%
Loan:deposit ratio (excl. repos and reverse repos) (%) 85% 84% 84%
6. NatWest Group return on tangible equity
Year ended or as at Quarter ended and as at
31 December 31 December 31 December 30 September 31 December
2024 2023 2024 2024 2023
£m £m £m £m £m
Profit attributable to ordinary shareholders 4,519 4,394 1,248 1,172 1,229
Annualised profit attributable to ordinary shareholders 4,992 4,688 4,916
Average total equity 38,018 36,201 38,915 37,960 36,134
Adjustment for average other owners' equity and intangible assets (12,226) (11,486) (12,703) (12,375) (11,686)
Adjusted total tangible equity 25,792 24,715 26,212 25,585 24,448
Return on equity 11.9% 12.1% 12.8% 12.3% 13.6%
Return on tangible equity 17.5% 17.8% 19.0% 18.3% 20.1%
Non-IFRS financial measures continued
7. Segmental return on equity
Year ended 31 December 2024 Year ended 31 December 2023
Retail Private Commercial & Retail Private Commercial &
Banking Banking Institutional Banking Banking Institutional
Operating profit (£m) 2,431 264 3,585 2,638 291 3,236
Paid-in equity cost allocation (£m) (79) (18) (183) (55) (23) (165)
Adjustment for tax (£m) (659) (69) (851) (723) (75) (768)
Adjusted attributable profit (£m) 1,693 177 2,551 1,860 193 2,303
Average RWAe (£bn) 63.4 11.1 107.0 57.8 11.4 107.0
Equity factor 13.4% 11.2% 13.8% 13.5% 11.5% 14.0%
Average notional equity (£bn) 8.5 1.2 14.8 7.8 1.3 15.0
Return on equity (%) 19.9% 14.2% 17.2% 23.8% 14.8% 15.4%
Quarter ended 31 December 2024 Quarter ended 30 September 2024 Quarter ended 31 December 2023
Retail Private Commercial & Retail Private Commercial & Retail Private Commercial &
Banking Banking Institutional Banking Banking Institutional Banking Banking Institutional
Operating profit (£m) 677 75 861 656 90 1,017 585 (2) 725
Paid-in equity cost allocation (£m) (23) (5) (53) (22) (5) (47) (12) (6) (40)
Adjustment for tax (£m) (183) (20) (202) (178) (24) (243) (160) 2 (171)
Adjusted attributable profit (£m) 471 50 606 456 61 728 413 (6) 514
Annualised adjusted attributable profit (£m) 1,884 202 2,424 1,826 245 2,910 1,650 (23) 2,055
Average RWAe (£bn) 65.6 11.0 106.0 63.8 11.1 106.0 60.5 11.4 109.0
Equity factor 13.4% 11.2% 13.8% 13.4% 11.2% 13.8% 13.5% 11.5% 14.0%
Average notional equity (£bn) 8.8 1.2 14.6 8.5 1.2 14.6 8.2 1.3 15.3
Return on equity (%) 21.4% 16.3% 16.6% 21.4% 19.7% 19.9% 20.2% (1.8%) 13.5%
Performance measures not defined under IFRS
The table below summarises other performance measures used by NatWest Group,
not defined under IFRS, and therefore a reconciliation to the nearest IFRS
measure is not applicable.
Measure Description
AUMAs AUMAs comprises both assets under management (AUMs) and assets under
administration (AUAs) serviced through the Private Banking segment. AUMs
comprise assets where the investment management is undertaken by Private
Banking on behalf of Private Banking, Retail Banking and Commercial &
Institutional customers.
AUAs comprise i) third party assets held on an execution-only basis in custody
by Private Banking, Retail Banking and Commercial & Institutional for
their customers, for which the execution services are supported by Private
Banking, and for which Private Banking receives a fee for providing investment
management and execution services to Retail Banking and Commercial &
Institutional business segments ii) AUA of Cushon, acquired on 1 June 2023,
which are supported by Private Banking and held and managed by third parties.
This measure is tracked and reported as the amount of funds that we manage or administer, and directly impacts the level of investment income that we receive.
AUMA net flows AUMA net flows represents assets under management and assets under
administration.
AUMA net flows is reported and tracked to monitor the business performance of
new business inflows and management of existing client withdrawals across
Private Banking, Retail Banking and Commercial & Institutional.
Climate and sustainable funding and financing The climate and sustainable funding and financing metric is used by NatWest Group to measure the level of support it provides customers, through lending products and underwriting activities, to help in their transition towards a net zero, climate resilient
and sustainable economy. We have a target to provide £100 billion of climate and sustainable funding and financing between the 1 July 2021 and the end of 2025. As part of this, we aim to provide at least £10 billion in lending for residential properties
with EPC ratings A and B between 1 January 2023 and the end of 2025.
Loan impairment rate Loan impairment rate is the annualised loan impairment charge divided by gross customer loans. This measure is used to assess the credit quality of the loan book.
Third party rates Third party customer asset rate is calculated as annualised interest receivable on third-party loans to customers as a percentage of third-party loans to customers. This excludes assets of disposal groups, intragroup items, loans to banks and liquid asset
portfolios. Third party customer funding rate reflects interest payable or receivable on third-party customer deposits, including interest bearing and non- interest bearing customer deposits. Intragroup items, bank deposits, debt securities in issue and
subordinated liabilities are excluded for customer funding rate calculation.
Wholesale funding Wholesale funding comprises deposits by banks (excluding repos), debt securities in issue and subordinated liabilities. Funding risk is the risk of not maintaining a diversified, stable and cost-effective funding base. The disclosure of wholesale funding
highlights the extent of our diversification and how we mitigate funding risk.
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