REG - NatWest Group plc - NWG plc Q1 2024 Interim Management Statement
26/04/2024 07:00
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RNS Number : 1225M NatWest Group plc 26 April 2024
NatWest Group
Q1 2024
Interim Management Statement
NatWest Group plc natwestgroup.com
NatWest Group Q1 2024 results Page
Highlights 2
Business performance summary
Chief Financial Officer's review 4
Retail Banking 5
Private Banking 6
Commercial & Institutional 7
Central items & other 8
Segment performance 9
Risk and capital management
Credit risk 13
Capital, liquidity and funding risk 21
Condensed consolidated financial statements 26
Notes to the financial statements 30
Additional information 31
Appendix - Non-IFRS financial measures 34
Q1 2024 performance summary
Chief Executive, Paul Thwaite, commented:
"NatWest Group has delivered a strong set of results for the first quarter -
with an operating profit of £1.3 billion - as we remain focused on the
priorities we set out in February, which will help us shape the future of this
bank.
Our performance is grounded in the vital role we play in the economy and in
the lives of our 19 million customers. Though macro-uncertainty continues,
customer confidence and activity is improving, with both lending((1)) and
deposits up in the quarter and impairments remaining low, reflecting our
well-diversified business.
We are ambitious for this bank, and by succeeding for our customers, we will
succeed for our shareholders. Our first priority is delivering disciplined
growth across our three businesses by serving our customers well. At the same
time, we are becoming simpler, more productive and easier to deal with. As a
result, we aim to generate returns that allow us to support our customers,
invest in our business and deliver attractive distributions to shareholders.
We are also pleased with the recent momentum in the reduction of HM Treasury's
stake in the bank. Returning NatWest Group to private ownership is a shared
ambition and we believe it is in the best interests of both the bank and all
our shareholders."
Strong Q1 2024 performance
- Q1 2024 attributable profit of £918 million and a return on tangible
equity (RoTE) of 14.2%.
- Total income excluding notable items was £3,414 million. The
reduction of £28 million, or 0.8%, compared with Q4 2023, was due to the
impact of one day fewer, with mortgage margin pressure largely offset by
higher markets income in Commercial & Institutional, and £406 million
lower than Q1 2023 principally reflecting lower deposit balances and mix
changes, and lending margin pressure.
- Net interest margin (NIM) of 2.05% was 6 basis points higher than Q4
2023 principally reflecting notable items and changes within central items,
while NIM across the three businesses was stable.
- Other operating expenses were broadly stable compared with Q4 2023
(£13 million lower), and £96 million, or 5.0%, higher than Q1 2023
principally reflecting the Bank of England Levy and increased staff costs due
to inflation and severance costs, partially offset by ongoing simplification
of our business and lower costs in relation to our withdrawal from the
Republic of Ireland.
- A net impairment charge of £93 million, or 10 basis points of gross
customer loans, principally reflected the continued strong performance of our
lending book. Levels of default remain stable and at low levels across the
portfolio.
Robust balance sheet with strong capital and liquidity levels
- Net loans to customers excluding central items increased by £1.4
billion, or 0.4% in the quarter, to £357.0 billion primarily reflecting
growth in Corporate & Institutions partially offset by increased mortgage
redemptions in the quarter within Retail Banking.
- Up to 31 March 2024 we have provided £68.5 billion of our target to
provide £100 billion climate and sustainable funding and financing between 1
July 2021 and the end of 2025.
- Customer deposits excluding central items increased by £0.9 billion,
or 0.2%, in the quarter primarily reflecting growth of £2.0 billion in Retail
Banking partially offset by a £1.2 billion reduction in Commercial &
Institutional due to active management of our commercial deposits and reduced
liquidity in the market. Term balances now account for 17% of our book, up
from 16% at the end of 2023.
- The loan:deposit ratio (LDR) (excl. repos and reverse repos) was 84%
at Q1 2024, with customer deposits exceeding net loans to customers by around
£66 billion.
- The liquidity coverage ratio (LCR) of 151%, representing £53.8
billion headroom above 100% minimum requirement, increased by 7 percentage
points compared with Q4 2023 primarily due to increased issuance and customer
deposits coupled with the replacement of the Cash Ratio Deposit scheme with a
Bank of England Levy.
- TNAV per share increased by 10 pence in the quarter to 302 pence
primarily reflecting the attributable profit for the period.
Shareholder return supported strong capital generation
- Common Equity Tier (CET1) ratio of 13.5% was 10 basis points higher
than Q4 2023 as the attributable profit for the quarter, c.50 basis points,
was largely offset by a £3.3 billion increase in RWAs, c.25 basis points, and
a £367 million ordinary dividend deduction, c.20 basis points.
- RWAs increased by £3.3 billion in the quarter to £186.3 billion
largely reflecting a £1.6 billion increase associated with the annual update
to operational risk and lending growth within Commercial &
Institutional.
Outlook ((2))
- We retain the outlook guidance provided in the 2023 Annual Report
and Accounts with the exception of full year 2024 Group operating costs
(excluding litigation and conduct costs) which is now expected to be broadly
stable compared with 2023 excluding around £0.1 billion increase in bank
levies.
(1) Loans to customers excluding central items.
(2) 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 in the 2023 Annual Report and Accounts and Form
20-F. These statements constitute forward-looking statements. Refer to
Forward-looking statements in this announcement.
Business performance summary
Quarter ended
31 March 31 December 31 March
2024 2023 2023
Summary consolidated income statement £m £m £m
Net interest income 2,651 2,638 2,902
Non-interest income 824 899 974
Total income 3,475 3,537 3,876
Litigation and conduct costs (24) (113) (56)
Other operating expenses (2,028) (2,041) (1,932)
Operating expenses (2,052) (2,154) (1,988)
Profit before impairments 1,423 1,383 1,888
Impairment losses (93) (126) (70)
Operating profit before tax 1,330 1,257 1,818
Tax (charge)/credit (339) 5 (512)
Profit from continuing operations 991 1,262 1,306
(Loss)/profit from discontinued operations, net of tax (4) 26 35
Profit for the period 987 1,288 1,341
Performance key metrics and ratios
Notable items within total income (1) £61m £95m £56m
Total income excluding notable items (1) £3,414m £3,442m £3,820m
Net interest margin (2) 2.05% 1.99% 2.25%
Average interest earning assets (2) £521bn £525bn £522bn
Cost:income ratio (excl. litigation and conduct) (1) 58.4% 57.7% 49.8%
Loan impairment rate (1) 10bps 13bps 7bps
Profit attributable to ordinary shareholders £918m £1,229m £1,279m
Total earnings per share attributable to ordinary shareholders - basic 10.5p 13.9p 13.2p
Return on tangible equity (RoTE) (1) 14.2% 20.1% 19.8%
Climate and sustainable funding and financing (3) £6.6bn £8.7bn £7.6bn
As at
31 March 31 December 31 March
2024 2023 2023
£bn £bn £bn
Balance sheet
Total assets 697.5 692.7 695.6
Loans to customers - amortised cost 378.0 381.4 374.2
Loans to customers excluding central items (1,4) 357.0 355.6 352.4
Loans to customers and banks - amortised cost and FVOCI 387.7 392.0 385.8
Total impairment provisions (5) 3.6 3.6 3.4
Expected credit loss (ECL) coverage ratio 0.94% 0.93% 0.89%
Assets under management and administration (AUMA) (1) 43.1 40.8 35.2
Customer deposits 432.8 431.4 430.5
Customer deposits excluding central items (1,4) 420.0 419.1 421.8
Liquidity and funding
Liquidity coverage ratio (LCR) 151% 144% 139%
Liquidity portfolio (6) 229 223 216
Net stable funding ratio (NSFR) 136% 133% 141%
Loan:deposit ratio (excl. repos and reverse repos) (1) 84% 84% 83%
Total wholesale funding 87 80 79
Short-term wholesale funding 31 28 25
Capital and leverage
Common Equity Tier 1 (CET1) ratio (7) 13.5% 13.4% 14.4%
Total capital ratio (7) 18.8% 18.4% 19.6%
Pro forma CET1 ratio (excl. foreseeable items) (8) 14.3% 14.2% 15.7%
Risk-weighted assets (RWAs) 186.3 183.0 178.1
UK leverage ratio 5.1% 5.0% 5.4%
Tangible net asset value (TNAV) per ordinary share (1,9) 302p 292p 278p
Number of ordinary shares in issue (millions) (9) 8,727 8,792 9,581
(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
(2) metrics.
Refer to page 37 of the Non-IFRS financial measures appendix for details.
(3) 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.
(4) Central items includes Treasury repo activity and Ulster Bank Republic of
Ireland.
(5) Includes £0.1 billion relating to off-balance sheet exposures (31 December
2023 - £0.1 billion; 31 March 2023 - £0.1 billion).
(6) Comparative period for March 2023 has been re-presented on an LCR basis in
line with the Liquidity portfolio definition as of 31 December 2023.
(7) Refer to the Capital, liquidity and funding risk section for details of the
basis of preparation.
(8) The pro forma CET1 ratio at 31 March 2024 excludes foreseeable items of
£1,633 million: £1,380 million for ordinary dividends and £253 million
foreseeable charges (31 December 2023 excludes foreseeable items of £1,538
million: £1,013 million for ordinary dividends and £525 million foreseeable
charges; 31 March 2023 excludes foreseeable items of £2,351 million: £1,479
million for ordinary dividends and £872 million foreseeable charges).
(9) The number of ordinary shares in issue excludes own shares held.
Business performance summary
Chief Financial Officer's review
We delivered an operating profit of £1,330 million in the first quarter with
a RoTE of 14.2%. Total income excluding notable items was broadly stable on Q4
2023, and we continue to see low levels of default across our portfolio, with
a net impairment charge of 10 basis points of gross customer loans.
Net lending across the three businesses has increased in the quarter, as
growth in Corporate & Institutions was partially offset by higher mortgage
redemptions, and we have seen growth in customer deposits. Our robust balance
sheet means that we remain in a strong liquidity position, with an LCR of
151%, representing £53.8 billion headroom above 100% minimum requirement, and
an LDR (excl. repos and reverse repos) of 84%. Our CET1 ratio remains within
our targeted range at 13.5%.
Financial performance
Total income decreased by 1.8% to £3,475 million compared with Q4 2023 and
was 10.3% lower than Q1 2023. Total income excluding notable items was £3,414
million, a reduction of £28 million, or 0.8%, compared with Q4 2023, due to
the impact of one day fewer, with mortgage margin pressure largely offset by
higher markets income in Commercial & Institutional, and £406 million
lower than Q1 2023 principally reflecting lower deposit balances and mix
changes, and lending margin pressure.
NIM of 2.05% was 6 basis points higher than Q4 2023 principally reflecting
notable items and changes within central items, while NIM across the three
businesses was stable.
Total operating expenses were £102 million lower than Q4 2023 and £64
million higher than Q1 2023. Other operating expenses were broadly stable
compared with Q4 2023 (£13 million lower), and £96 million, or 5.0%, higher
than Q1 2023 principally reflecting the Bank of England Levy and increased
staff costs due to inflation and severance costs, partially offset by
simplification in our business and lower costs in relation to our withdrawal
from the Republic of Ireland. We remain committed to deliver on our full year
cost guidance, excluding the impact of increased bank levies.
A net impairment charge of £93 million principally reflected the continued
strong performance of our lending book. Levels of default remain stable and at
low levels across the portfolio despite inflationary pressures and the higher
interest rate environment. Compared with Q4 2023, our ECL provision remained
flat at £3.6 billion and our ECL coverage ratio has increased from 0.93% to
0.94%. We retain post model adjustments of £0.4 billion related to economic
uncertainty, or 11.3% of total impairment provisions. Whilst we are
comfortable with the strong credit performance of our book, we will continue
to assess this position regularly and are closely monitoring the impacts of
inflationary pressures on the UK economy and our customers.
As a result, we are pleased to report an attributable profit for Q1 2024 of
£918 million, with earnings per share of 10.5 pence and a RoTE of 14.2%.
Net loans to customers excluding central items increased by £1.4 billion in
the quarter to £357.0 billion primarily reflecting a £3.4 billion increase
in Commercial & Institutional partially offset by £1.7 billion reduction
in Retail Banking due to higher mortgage redemptions. Total gross new mortgage
lending was £5.2 billion in the quarter, compared with £9.9 billion in Q1
2023 and £5.6 billion in Q4 2023, representing flow share of c.10.5%. Within
Commercial & Institutional, growth was largely within Corporate &
Institutions, partly offset by UK Government Scheme repayments of £0.6
billion.
Up to 31 March 2024 we have provided £68.5 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 Q1 2024 we provided £6.6 billion
climate and sustainable funding and financing, which included £0.5 billion in
lending for EPC A and B rated residential properties.
Customer deposits excluding central items increased by £0.9 billion in the
quarter to £420.0 billion reflecting £2.0 billion growth in Retail Banking
partially offset by a £1.2 billion reduction in Commercial &
Institutional primarily as a result of active management of our commercial
deposits and reduced liquidity in the market. Deposit mix was more stable in
the quarter than the levels of migration observed in 2023; term balances now
account for 17% of our book, up from 16% at Q4 2023.
TNAV per share increased by 10 pence in the quarter to 302 pence primarily
reflecting the attributable profit for the period.
Capital and leverage
The CET1 ratio was 13.5%, or 13.4% excluding IFRS 9 transitional relief, and
increased by 10 basis points in the quarter as the attributable profit, c.50
basis points, was largely offset by a £3.3 billion increase in RWAs, c.25
basis points, and a £367 million ordinary dividend deduction, c.20 basis
points. NatWest Group's minimum requirement for own funds and eligible
liabilities (MREL) was 30.7%.
RWAs increased by £3.3 billion in the quarter to £186.3 billion largely
reflecting a £1.6 billion increase associated with the annual update to
operational risk and lending growth within Commercial & Institutional.
Funding and liquidity
The LCR increased by 7 percentage points to 151%, representing £53.8 billion
headroom above 100% minimum requirements primarily due to increased issuance
and customer deposits coupled with the replacement of the Cash Ratio Deposit
scheme with a Bank of England Levy. Our primary liquidity at Q1 2024 was
£158.4 billion and £112.8 billion, or 71%, of this was cash at central
banks. Total wholesale funding increased by £7.0 billion in the quarter to
£86.6 billion.
Business performance summary
Retail Banking
Quarter ended
31 March 31 December 31 March
2024 2023 2023
£m £m £m
Total income 1,325 1,369 1,604
Operating expenses (773) (681) (696)
of which: Other operating expenses (767) (647) (693)
Impairment losses (63) (103) (114)
Operating profit 489 585 794
Return on equity (1) 16.5% 20.2% 30.0%
Net interest margin (2) 2.22% 2.23% 2.75%
Cost:income ratio (excl. litigation and conduct) (1) 57.9% 47.3% 43.2%
Loan impairment rate (1) 12bps 20bps 22bps
As at
31 March 31 December 31 March
2024 2023 2023
£bn £bn £bn
Net loans to customers (amortised cost) 203.5 205.2 201.7
Customer deposits 190.0 188.0 184.0
RWAs 62.5 61.6 55.6
(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
(2) metrics.
Refer to page 37 of the Non-IFRS financial measures appendix for details.
During Q1 2024, Retail Banking continued to take a measured approach to risk,
whilst delivering an operating profit of £0.5 billion and a return on equity
of 16.5%.
Retail Banking provided £0.5 billion of climate and sustainable funding and
financing in Q1 2024 from lending on properties with an EPC rating of A or B.
- Total income was £44 million, or 3.2%, lower than Q4 2023 due to continued
mortgage margin dilution and the impact of one day fewer in the quarter. Total
income was £279 million, or 17.4%, lower than Q1 2023 reflecting mortgage
margin dilution, impact of the deposit balance mix shift from non-interest
bearing to interest bearing balances and higher funding costs, partly offset
by lending growth.
- Net interest margin was 1 basis point lower than Q4 2023 largely reflecting
mortgage margin dilution partly offset by increasing structural hedge benefit.
- Other operating expenses were £120 million, or 18.5%, higher than Q4 2023
reflecting the Bank of England Levy, increased severance costs as well as
branch and property exit costs. Other operating expenses were £74 million, or
10.7%, higher than Q1 2023 reflecting the Bank of England Levy, increased
severance costs and branch and property exit costs partly offset by savings
from a 7.1% reduction in headcount.
- An impairment charge of £63 million in Q1 2024 with stage 3 inflows
reflecting normalisation of risk parameters, partly offset by good book
releases related to model updates.
- Net loans to customers were £1.7 billion, or 0.8%, lower than Q4 2023
reflecting lower mortgage balances of £1.8 billion with higher redemptions
only partly offset by gross new mortgage lending of £5.0 billion. Cards
balances increased by £0.3 billion partly offset by £0.2 billion lower
personal advances.
- Customer deposits increased by £2.0 billion, or 1.1%, in Q1 2024 reflecting
growth in savings and current account balances.
- RWAs increased by £0.9 billion, or 1.5%, in Q1 2024 primarily due to the
annual update for operational risk calculation.
Business performance summary
Private Banking
Quarter ended
31 March 31 December 31 March
2024 2023 2023
£m £m £m
Total income 208 209 296
Operating expenses (181) (206) (155)
of which: Other operating expenses (180) (208) (152)
Impairment releases/(losses) 6 (5) (8)
Operating profit/(loss) 33 (2) 133
Return on equity (1) 6.7% (1.8%) 28.5%
Net interest margin (2) 2.06% 2.07% 3.31%
Cost:income ratio (excl. litigation and conduct) (1) 86.5% 99.5% 51.4%
Loan impairment rate (1) (13)bps 11bps 17bps
AUM net flows (£bn) (1) 0.4 0.3 0.6
As at
31 March 31 December 31 March
2024 2023 2023
£bn £bn £bn
Net loans to customers (amortised cost) 18.2 18.5 19.2
Customer deposits 37.8 37.7 37.3
RWAs 11.3 11.2 11.4
Assets Under Management (AUMs) (1) 33.6 31.7 29.6
Assets Under Administration (AUAs) (1) 9.5 9.1 5.6
Total Assets Under Management and Administration (AUMA) (1) 43.1 40.8 35.2
(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
(2) metrics.
Refer to page 37 of the Non-IFRS financial measures appendix for details.
During Q1 2024, Private Banking delivered a return on equity of 6.7% and an
operating profit of £33 million, reflecting the impact of 2023 sharp changes
in deposit volume and mix adversely impacting hedge returns. Q1 2024 has seen
a strong performance in deposits given seasonal tax outflow impact and good
AUMA growth setting a strong foundation for improved profitability.
Private Banking provided £0.07 billion of climate and sustainable funding and
financing in Q1 2024 from lending on properties with an EPC rating of A or B.
- Total income was broadly flat compared to Q4 2023 as deposit balances and mix
continued to stabilise with the impact of one day fewer largely offset by
higher investment fee income from increased AUMA. Total income was £88
million, or 29.7%, lower than Q1 2023 reflecting lower deposit balances and a
change in product mix as customers migrated to savings products offering
higher returns, combined with a reduction in lending volumes and mortgage
margin dilution.
- Net interest margin was 1 basis point lower than Q4 2023 reflecting mortgage
margin dilution.
- Other operating expenses were £28 million, or 13.5%, lower than Q4 2023
reflecting the annual Bank Levy charge in Q4 2023, and a one-off additional
VAT charge catch up along with lower strategic severance costs. Other
operating expenses were £28 million, or 18.4%, higher than Q1 2023 primarily
reflecting the Bank of England Levy, an additional VAT charge and higher
strategic spend to increase operational efficiency.
- A net impairment release of £6 million, compared with an £8 million charge
in Q1 2023, largely reflects good book releases and lower stage 3 charges.
- Net loans to customers decreased by £0.3 billion, or 1.6%, in Q1 2024 driven
by higher mortgage redemptions, only partly offset by mortgage gross new
lending of £0.2 billion.
- Customer deposits increased by £0.1 billion, or 0.3%, compared with Q4 2023
with increases due to overall personal market growth offsetting tax outflows.
- AUMA increased by £2.3 billion in Q1 2024 to £43.1 billion, primarily driven
by £1.9 billion positive market movements and £0.4 billion AUM net
inflows.
Business performance summary
Commercial & Institutional
Quarter ended
31 March 31 December 31 March
2024 2023 2023
£m £m £m
Net interest income 1,246 1,269 1,261
Non-interest income 613 563 692
Total income 1,859 1,832 1,953
Operating expenses (1,051) (1,092) (1,003)
of which: Other operating expenses (1,020) (1,014) (959)
Impairment (losses)/releases (39) (15) 44
Operating profit 769 725 994
Return on equity (1) 14.6% 13.5% 19.5%
Net interest margin (2) 2.07% 2.05% 2.08%
Cost:income ratio (excl. litigation and conduct) (1) 54.9% 55.3% 49.1%
Loan impairment rate (1) 11bps 4bps (13)bps
As at
31 March 31 December 31 March
2024 2023 2023
£bn £bn £bn
Net loans to customers (amortised cost) 135.3 131.9 131.5
Customer deposits 192.2 193.4 200.5
Funded assets (1) 321.7 306.9 320.4
RWAs 109.9 107.4 104.8
(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
(2) metrics.
Refer to page 37 of the Non-IFRS financial measures appendix for details.
In Q1 2024, Commercial & Institutional continued to support customers with
an increase in lending of 2.6% and delivered a strong performance in income
and operating profit supporting a return on equity of 14.6%.
Commercial & Institutional provided £6.0 billion of climate and
sustainable funding and financing in Q1 2024 to support customers investing in
the transition to net zero.
- Total income was £27 million, or 1.5%, higher than Q4 2023 primarily
reflecting higher markets income, partially offset by the impact of one day
fewer. Total income was £94 million, or 4.8%, lower than Q1 2023 primarily
due to lower deposit returns reflecting lower volumes and continued deposit
mix shift from non-interest bearing to interest bearing balances, partially
offset by strong capital markets and lending growth in Corporate &
Institutions.
- Net interest margin was 2 basis points higher than Q4 2023 reflecting higher
deposit hedge returns and liquidity benefits, partially offset by lower
deposit volumes.
- Other operating expenses were £6 million, or 0.6%, higher than Q4 2023
reflecting increased staff costs partially offset by a reduction in bank
levies. Other operating expenses were £61 million, or 6.4%, higher than Q1
2023 reflecting the impact of inflationary increases in staff costs, continued
investment in the business and the introduction of the Bank of England Levy.
- An impairment charge of £39 million in Q1 2024 remains at low levels with an
increase in stage 3 inflows, partly offset by good book releases.
- Net loans to customers increased by £3.4 billion, or 2.6%, in Q1 2024 largely
reflecting a strong performance within Corporate & Institutions, partly
offset by continued UK Government scheme repayments of £0.6 billion.
- Customer deposits decreased by £1.2 billion, or 0.6%, in Q1 2024 largely
reflecting reductions within Commercial Mid-market and Business Banking due to
active management of our deposits and reduced liquidity in the market.
- RWAs increased by £2.5 billion, or 2.3%, in Q1 2024 primarily due to lending
book growth and the annual update for operational risk.
Business performance summary
Central items & other
Quarter ended
31 March 31 December 31 March
2024 2023 2023
£m £m £m
Continuing operations
Total income 83 127 23
Operating expenses (1) (47) (175) (134)
of which: Other operating expenses (61) (172) (128)
of which: Ulster Bank RoI direct expenses (25) (69) (100)
Impairment releases/(losses) 3 (3) 8
Operating profit/(loss) 39 (51) (103)
of which: Ulster Bank RoI (47) (124) (159)
As at
31 March 31 December 31 March
2024 2023 2023
£bn £bn £bn
Net loans to customers (amortised cost) (2) 21.0 25.8 21.8
Customer deposits 12.8 12.3 8.7
RWAs 2.6 2.8 6.3
(1) Includes withdrawal-related direct program costs of £8 million for the
quarter ended 31 March 2024 (31 December 2023 - £17 million; 31 March 2023 -
£49 million).
(2) Excludes £0.3 billion of loans to customers held at fair value through profit
or loss (31 December 2023 - £0.3 billion; 31 March 2023 - £0.5 billion).
- Total income was £44 million lower than Q4 2023 primarily reflecting foreign
exchange recycling gains in Q4 2023, not repeated in Q1 2024, partly offset by
higher gains on interest and foreign exchange risk management derivatives not
in accounting hedge relationships in Q1 2024. Total income was £60 million
higher than Q1 2023 primarily reflecting Business Growth Fund gains, gains on
liquidity asset bond sales and a loss on surrender of leases in Q1 2023
partially offset by lower gains on interest and foreign exchange risk
management derivatives not in accounting hedge relationships.
- Other operating expenses were £111 million, or 64.5%, lower than Q4 2023
primarily reflecting lower costs in relation to the withdrawal from our
operations in the Republic of Ireland, and were £67 million, or 52.3%, lower
than Q1 2023.
- Customer deposits increased by £0.5 billion, or 4.1% in Q1 2024 primarily
reflecting repo activity in Treasury. Ulster Bank RoI customer deposit
balances were £0.2 billion as at Q1 2024.
- Net loans to customers decreased £4.8 billion to £21.0 billion in Q1 2024
mainly due to reverse repo activity in Treasury.
Segment performance
Quarter ended 31 March 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 1,216 134 1,246 55 2,651
Non-interest income 109 74 613 28 824
Total income 1,325 208 1,859 83 3,475
Direct expenses (189) (61) (384) (1,394) (2,028)
Indirect expenses (578) (119) (636) 1,333 -
Other operating expenses (767) (180) (1,020) (61) (2,028)
Litigation and conduct costs (6) (1) (31) 14 (24)
Operating expenses (773) (181) (1,051) (47) (2,052)
Operating profit before impairment losses/releases 552 27 808 36 1,423
Impairment (losses)/releases (63) 6 (39) 3 (93)
Operating profit 489 33 769 39 1,330
Total income excluding notable items (1) 1,325 208 1,864 17 3,414
Additional information
Return on tangible equity (1) na na na na 14.2%
Return on equity (1) 16.5% 6.7% 14.6% nm na
Cost:income ratio (excl. litigation and conduct) (1) 57.9% 86.5% 54.9% nm 58.4%
Total assets (£bn) 226.4 26.5 388.8 55.8 697.5
Funded assets (£bn) (1) 226.4 26.5 321.7 54.7 629.3
Net loans to customers - amortised cost (£bn) 203.5 18.2 135.3 21.0 378.0
Loan impairment rate (1) 12bps (13)bps 11bps nm 10bps
Impairment provisions (£bn) (1.9) (0.1) (1.5) (0.1) (3.6)
Impairment provisions - stage 3 (£bn) (1.2) - (0.8) - (2.0)
Customer deposits (£bn) 190.0 37.8 192.2 12.8 432.8
Risk-weighted assets (RWAs) (£bn) 62.5 11.3 109.9 2.6 186.3
RWA equivalent (RWAe) (£bn) 62.6 11.3 111.1 3.1 188.1
Employee numbers (FTEs - thousands) 13.1 2.2 12.7 33.3 61.3
Third party customer asset rate (1) 3.79% 4.97% 6.81% nm nm
Third party customer funding rate (1) (2.05%) (3.14%) (1.93%) nm nm
Average interest earning assets (£bn) (2) 220.6 26.2 241.9 na 521.1
Net interest margin (2) 2.22% 2.06% 2.07% na 2.05%
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
(2) metrics.
Refer to page 37 of the Non-IFRS financial measures appendix for details.
Segment performance
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
Non-interest income 115 71 563 150 899
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
Total 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) (2) 223.2 26.5 245.2 na 524.7
Net interest margin (2) 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
(2) metrics.
Refer to page 37 of the Non-IFRS financial measures appendix for details.
Segment performance
Quarter ended 31 March 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 1,492 229 1,261 (80) 2,902
Non-interest income 112 67 692 103 974
Total income 1,604 296 1,953 23 3,876
Direct expenses (211) (60) (360) (1,301) (1,932)
Indirect expenses (482) (92) (599) 1,173 -
Other operating expenses (693) (152) (959) (128) (1,932)
Litigation and conduct costs (3) (3) (44) (6) (56)
Operating expenses (696) (155) (1,003) (134) (1,988)
Operating profit/(loss) before impairment losses/releases 908 141 950 (111) 1,888
Impairment (losses)/releases (114) (8) 44 8 (70)
Operating profit/(loss) 794 133 994 (103) 1,818
Total income excluding notable items (1) 1,604 296 1,947 (27) 3,820
Additional information
Return on tangible equity (1) na na na na 19.8%
Return on equity (1) 30.0% 28.5% 19.5% nm na
Cost:income ratio (excl. litigation and conduct) (1) 43.2% 51.4% 49.1% nm 49.8%
Total assets (£bn) 227.2 28.1 399.0 41.3 695.6
Funded assets (£bn) (1) 227.2 28.1 320.4 40.5 616.2
Net loans to customers - amortised cost (£bn) 201.7 19.2 131.5 21.8 374.2
Loan impairment rate (1) 22bps 17bps (13)bps nm 7bps
Impairment provisions (£bn) (1.7) (0.1) (1.5) (0.1) (3.4)
Impairment provisions - stage 3 (£bn) (1.0) - (0.7) (0.1) (1.8)
Customer deposits (£bn) 184.0 37.3 200.5 8.7 430.5
Risk-weighted assets (RWAs) (£bn) 55.6 11.4 104.8 6.3 178.1
RWA equivalent (RWAe) (£bn) 56.4 11.4 106.2 6.9 180.9
Employee numbers (FTEs - thousands) 14.1 2.3 12.5 32.9 61.8
Third party customer asset rate (1) 2.94% 4.07% 5.38% nm nm
Third party customer funding rate (1) (0.83%) (1.15%) (0.87%) nm nm
Average interest earning assets (£bn) (2) 220.3 28.1 246.0 na 522.4
Net interest margin (2) 2.75% 3.31% 2.08% na 2.25%
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
(2) metrics.
Refer to page 37 of the Non-IFRS financial measures appendix for details.
Risk and capital management
Page
Credit risk
Segment analysis - portfolio summary 13
Segment analysis - loans 14
Movement in ECL provision 14
ECL post model adjustments 15
Sector analysis - portfolio summary 16
Capital, liquidity and funding risk 21
Risk and capital management
Credit risk
Segment analysis - portfolio summary
The table below shows gross loans and expected credit loss (ECL), by segment
and stage, within the scope of the IFRS 9 ECL framework.
Retail Private Commercial & Central items
Banking Banking Institutional & other Total
31 March 2024 £m £m £m £m £m
Loans - amortised cost and FVOCI (1,2)
Stage 1 178,692 17,288 123,704 24,679 344,363
Stage 2 23,145 769 13,661 2 37,577
Stage 3 3,291 284 2,188 - 5,763
Of which: individual - 222 946 - 1,168
Of which: collective 3,291 62 1,242 - 4,595
Subtotal excluding disposal group loans 205,128 18,341 139,553 24,681 387,703
Disposal group loans - -
Total 24,681 387,703
ECL provisions (3)
Stage 1 294 19 336 20 669
Stage 2 473 13 425 2 913
Stage 3 1,162 37 845 - 2,044
Of which: individual - 37 302 - 339
Of which: collective 1,162 - 543 - 1,705
Subtotal excluding ECL provisions on disposal group loans 1,929 69 1,606 22 3,626
ECL provisions on disposal group loans - -
Total 22 3,626
ECL provisions coverage (4)
Stage 1 (%) 0.16 0.11 0.27 0.08 0.19
Stage 2 (%) 2.04 1.69 3.11 100.00 2.43
Stage 3 (%) 35.31 13.03 38.62 - 35.47
ECL provisions coverage excluding disposal group loans 0.94 0.38 1.15 0.09 0.94
ECL provisions coverage on disposal group loans - -
Total 0.09 0.94
31 December 2023
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
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 £115.8
billion (31 December 2023 - £103.1 billion) and debt securities of £49.0
billion (31 December 2023 - £50.1 billion).
(2) Fair value through other comprehensive income (FVOCI). Includes loans to
customers and banks.
(3) Includes £7 million (31 December 2023 - £9 million) related to assets
classified as FVOCI and £0.1 billion (31 December 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.
Risk and capital management
Credit risk continued
Segment analysis - loans
- Retail Banking - Loans to customers were lower than Q4 2023, mainly due
to a reduction in mortgage balances where higher redemptions were only partly
offset by new mortgage lending. Unsecured lending grew overall, with growth in
credit cards offset by a decrease in personal advances. New lending and
portfolio credit quality was maintained with limited increases in arrears in
line with expectations. Total ECL coverage increased slightly during the
quarter, reflective of Stage 3 ECL growth on unsecured portfolios, mainly due
to ongoing subdued write-off and debt sale activity. There was a modest
reduction in good book coverage, reflective of continued stable portfolio
performance alongside unsecured probability of default modelling updates.
- Commercial & Institutional - While overall Wholesale exposure
reduced in the quarter, there was Commercial & Institutional growth within
multiple sectors. Sector appetite continues to be reviewed regularly, with
particular focus on sector clusters and sub-sectors that are vulnerable to
challenges in the external environment or deemed to represent a heightened
risk. There was a marginal reduction in total ECL coverage during the quarter,
due to a decrease in performing ECL, resulting from positive portfolio
performance and the unwind of some PMAs. Stage 3 ECL increased due to a small
increase in defaults, although still lower than historic trends, and was
partially offset by write-off activity. There was a modest decrease in good
book coverage, reflective of continued stable portfolio performance alongside
PMA reductions.
Movement in ECL provision
The table below shows the main ECL provision movements during the quarter.
ECL provision
£m
At 1 January 2024 3,645
Transfers to disposal groups and reclassifications (16)
Changes in risk metrics and exposure: Stage 1 and Stage 2 (84)
Changes in risk metrics and exposure: Stage 3 219
Judgemental changes: changes in post model adjustments for Stage 1, Stage 2 (23)
and Stage 3
Write-offs and other (115)
At 31 March 2024 3,626
- ECL decreased marginally in Q1 2024, with increases in Stage 3 linked
to ongoing subdued write-offs and debt sales in the Personal portfolios. This
was offset by good book ECL reductions relating to stable portfolio
performance, reductions in post model adjustments and personal unsecured
probability of default modelling updates.
- For the Wholesale portfolios, there was an increase in Commercial
& Institutional Stage 3 charges in the quarter, mainly due to a small
number of individual charges, but charges were still lower than historic
trends.
Risk and capital management
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
31 March 2024 £m £m £m £m £m £m
Deferred model calibrations - - 1 20 - 21
Economic uncertainty 120 45 10 233 3 411
Other adjustments - - - 7 - 7
Total 120 45 11 260 3 439
Of which:
- Stage 1 72 16 5 108 3 204
- Stage 2 36 29 6 150 - 221
- Stage 3 12 - - 2 - 14
31 December 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
- Retail Banking - The post model adjustments for economic uncertainty
increased slightly to £165 million at 31 March 2024, from £157 million at 31
December 2023. Sustained inflationary pressure alongside high interest rates
continues to put pressure on consumer affordability risks. This economic
context, coupled with modelled ECL reductions, prompted a modest uplift in the
cost of living post model adjustment (up from £144 million to £153 million)
to maintain adequate provision levels on this higher risk segment of the
portfolio. 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 customers with lower income in fuel poverty, over-indebted borrowers
and customers vulnerable to a potential mortgage rate shock.
- Commercial & Institutional - The post model adjustments for
economic uncertainty decreased to £233 million at 31 March 2024, from £256
million at 31 December 2023. It still includes an overlay of £39 million
(£50 million at 31 December 2023) to cover the residual risks from COVID-19,
including the risks surrounding associated debt to customers that have
utilised government support schemes. The inflation, supply chain and liquidity
post model adjustment was maintained for lending prior to 1 January 2024, with
a sector-level downgrade being applied to the sectors that were considered
most at risk from the ongoing pressures from inflation being higher for
longer, supply chain challenges and broader concerns around reducing cash
reserves across many sectors. The £16 million reduction was a result of a
mechanistic refresh reflecting portfolio changes. The impact of the
sector-level downgrades was a post model adjustment decrease to £193 million
at 31 March 2024 from £206 million at 31 December 2023.
- The £20 million judgemental overlay for deferred model calibrations
relates to refinance risk with the existing modelling approach not fully
capturing the risk on deteriorated exposures.
- Central items & other - The £23 million post model adjustment in
other adjustments was removed in the quarter, reflecting the withdrawal from
the Republic of Ireland.
Risk and capital management
Credit risk continued
Sector analysis - portfolio summary
The table below shows financial assets and off-balance sheet exposures gross
of ECL and related ECL provisions, impairment and past due by sector, asset
quality and geographical region.
Personal Wholesale Total
Credit
Mortgages (1) cards Other Total Property Other FI Sovereign Total
31 March 2024 £m £m £m £m £m £m £m £m £m £m
Loans by geography 206,146 6,033 9,720 221,899 31,993 77,521 55,058 1,232 165,804 387,703
- UK 206,146 6,033 9,720 221,899 31,448 64,611 37,221 549 133,829 355,728
- RoI - - - - 10 953 217 - 1,180 1,180
- Other Europe - - - - 415 5,017 8,462 365 14,259 14,259
- RoW - - - - 120 6,940 9,158 318 16,536 16,536
Loans by asset quality (2) 206,146 6,033 9,720 221,899 31,993 77,521 55,058 1,232 165,804 387,703
- AQ1-AQ4 114,923 113 862 115,898 15,993 27,032 51,413 948 95,386 211,284
- AQ5-AQ8 87,895 5,704 7,646 101,245 15,295 48,621 3,557 129 67,602 168,847
- AQ9 947 69 183 1,199 74 331 72 133 610 1,809
- AQ10 2,381 147 1,029 3,557 631 1,537 16 22 2,206 5,763
Loans by stage 206,146 6,033 9,720 221,899 31,993 77,521 55,058 1,232 165,804 387,703
- Stage 1 183,705 3,916 7,284 194,905 28,608 65,458 54,312 1,080 149,458 344,363
- Stage 2 20,060 1,970 1,407 23,437 2,753 10,527 730 130 14,140 37,577
- Stage 3 2,381 147 1,029 3,557 632 1,536 16 22 2,206 5,763
- Of which: individual 137 - 21 158 283 700 5 22 1,010 1,168
- Of which: collective 2,244 147 1,008 3,399 349 836 11 - 1,196 4,595
Loans - past due analysis (3) 206,146 6,033 9,720 221,899 31,993 77,521 55,058 1,232 165,804 387,703
- Not past due 203,223 5,863 8,647 217,733 31,222 74,304 53,938 1,210 160,674 378,407
- Past due 1-30 days 1,185 41 82 1,308 337 2,289 1,111 - 3,737 5,045
- Past due 31-90 days 599 42 113 754 151 226 2 22 401 1,155
- Past due 90-180 days 388 34 107 529 61 125 2 - 188 717
- Past due >180 days 751 53 771 1,575 222 577 5 - 804 2,379
Loans - Stage 2 20,060 1,970 1,407 23,437 2,753 10,527 730 130 14,140 37,577
- Not past due 18,994 1,916 1,292 22,202 2,534 9,858 724 130 13,246 35,448
- Past due 1-30 days 787 26 44 857 100 518 4 - 622 1,479
- Past due 31-90 days 279 28 71 378 119 151 2 - 272 650
Weighted average life
- ECL measurement (years) 9 4 6 6 6 6 2 1 6 6
Weighted average 12 months PDs
- IFRS 9 (%) 0.51 3.38 5.10 0.76 1.32 1.54 0.19 1.25 1.04 0.88
- Basel (%) 0.70 3.47 3.35 0.88 0.91 1.26 0.19 5.60 0.86 0.87
ECL provisions by geography 445 357 1,171 1,973 399 1,172 65 17 1,653 3,626
- UK 445 357 1,171 1,973 388 1,018 37 13 1,456 3,429
- RoI - - - - - 2 1 - 3 3
- Other Europe - - - - 4 104 9 - 117 117
- RoW - - - - 7 48 18 4 77 77
ECL provisions by stage 445 357 1,171 1,973 399 1,172 65 17 1,653 3,626
- Stage 1 87 71 142 300 95 220 40 14 369 669
- Stage 2 70 188 216 474 78 341 19 1 439 913
- Stage 3 288 98 813 1,199 226 611 6 2 845 2,044
- Of which: individual 21 - 15 36 81 220 - 2 303 339
- Of which: collective 267 98 798 1,163 145 391 6 - 542 1,705
ECL provisions coverage (%) 0.22 5.92 12.05 0.89 1.25 1.51 0.12 1.38 1.00 0.94
- Stage 1 (%) 0.05 1.81 1.95 0.15 0.33 0.34 0.07 1.30 0.25 0.19
- Stage 2 (%) 0.35 9.54 15.35 2.02 2.83 3.24 2.60 0.77 3.10 2.43
- Stage 3 (%) 12.10 66.67 79.01 33.71 35.76 39.78 37.50 9.09 38.30 35.47
For the notes to this table refer to page 19.
Risk and capital management
Credit risk continued
Sector analysis - portfolio summary continued
Personal Wholesale Total
Credit
Mortgages (1) cards Other Total Property Other FI Sovereign Total
31 March 2024 £m £m £m £m £m £m £m £m £m £m
Loans by residual maturity 206,146 6,033 9,720 221,899 31,993 77,521 55,058 1,232 165,804 387,703
- <1 year 3,291 3,353 3,257 9,901 5,765 25,205 40,698 333 72,001 81,902
- 1-5 year 9,541 2,680 5,459 17,680 18,063 32,297 12,105 551 63,016 80,696
- >5< 15 year 45,751 - 996 46,747 5,605 14,744 2,221 311 22,881 69,628
- >15 year 147,563 - 8 147,571 2,560 5,275 34 37 7,906 155,477
Other financial assets by
asset quality (2) - - - - 1 2,912 27,208 134,631 164,752 164,752
- AQ1-AQ4 - - - - 1 2,910 26,463 134,631 164,005 164,005
- AQ5-AQ8 - - - - - 2 745 - 747 747
Off-balance sheet 10,293 18,043 8,355 36,691 14,215 60,200 21,039 259 95,713 132,404
- Loan commitments 10,293 18,043 8,311 36,647 13,858 57,410 19,234 259 90,761 127,408
- Financial guarantees - - 44 44 357 2,790 1,805 - 4,952 4,996
Off-balance sheet by
asset quality (2) 10,293 18,043 8,355 36,691 14,215 60,200 21,039 259 95,713 132,404
- AQ1-AQ4 9,597 449 7,119 17,165 10,909 36,856 19,413 166 67,344 84,509
- AQ5-AQ8 679 17,278 1,201 19,158 3,284 23,037 1,588 30 27,939 47,097
- AQ9 1 6 7 14 3 19 37 63 122 136
- AQ10 16 310 28 354 19 288 1 - 308 662
For the notes to this table refer to page 19.
Risk and capital management
Credit risk continued
Sector analysis - portfolio summary continued
Personal Wholesale Total
Credit
Mortgages (1) cards Other Total Property Other FI Sovereign Total
31 December 2023 £m £m £m £m £m £m £m £m £m £m
Loans by geography 208,275 5,904 9,595 223,774 31,207 77,339 57,087 2,633 168,266 392,040
- UK 208,275 5,893 9,592 223,760 30,703 65,033 39,906 2,016 137,658 361,418
- RoI - 11 3 14 9 888 279 - 1,176 1,190
- Other Europe - - - - 375 5,096 7,865 399 13,735 13,735
- RoW - - - - 120 6,322 9,037 218 15,697 15,697
Loans by asset quality (2) 208,275 5,904 9,595 223,774 31,207 77,339 57,087 2,633 168,266 392,040
- AQ1-AQ4 118,266 124 914 119,304 15,366 26,851 53,367 2,488 98,072 217,376
- AQ5-AQ8 86,868 5,577 7,552 99,997 15,145 48,673 3,686 123 67,627 167,624
- AQ9 860 63 150 1,073 75 311 18 - 404 1,477
- AQ10 2,281 140 979 3,400 621 1,504 16 22 2,163 5,563
Loans by stage 208,275 5,904 9,595 223,774 31,207 77,339 57,087 2,633 168,266 392,040
- Stage 1 188,140 3,742 6,983 198,865 27,316 63,690 56,105 2,610 149,721 348,586
- Stage 2 17,854 2,022 1,633 21,509 3,270 12,145 966 1 16,382 37,891
- Stage 3 2,281 140 979 3,400 621 1,504 16 22 2,163 5,563
- Of which: individual 122 - 20 142 240 625 2 22 889 1,031
- Of which: collective 2,159 140 959 3,258 381 879 14 - 1,274 4,532
Loans - past due analysis (3) 208,275 5,904 9,595 223,774 31,207 77,339 57,087 2,633 168,266 392,040
- Not past due 205,405 5,743 8,578 219,726 30,264 74,052 56,735 2,633 163,684 383,410
- Past due 1-30 days 1,178 41 71 1,290 491 2,222 332 - 3,045 4,335
- Past due 31-90 days 518 38 112 668 179 437 12 - 628 1,296
- Past due 90-180 days 445 32 103 580 42 71 2 - 115 695
- Past due >180 days 729 50 731 1,510 231 557 6 - 794 2,304
Loans - Stage 2 17,854 2,022 1,633 21,509 3,270 12,145 966 1 16,382 37,891
- Not past due 16,803 1,971 1,529 20,303 3,071 11,287 932 1 15,291 35,594
- Past due 1-30 days 765 27 40 832 100 516 24 - 640 1,472
- Past due 31-90 days 286 24 64 374 99 342 10 - 451 825
Weighted average life
- ECL measurement (years) 9 3 6 6 6 6 2 - 6 6
Weighted average 12 months PDs
- IFRS 9 (%) 0.50 3.45 5.29 0.75 1.45 1.59 0.19 0.37 1.07 0.89
- Basel (%) 0.67 3.37 3.15 0.84 0.94 1.25 0.17 0.37 0.81 0.83
ECL provisions by geography 420 376 1,168 1,964 398 1,201 66 16 1,681 3,645
- UK 420 365 1,163 1,948 384 999 38 13 1,434 3,382
- RoI - 11 5 16 - 6 1 - 7 23
- Other Europe - - - - 7 146 12 - 165 165
- RoW - - - - 7 50 15 3 75 75
ECL provisions by stage 420 376 1,168 1,964 398 1,201 66 16 1,681 3,645
- Stage 1 88 76 152 316 102 234 44 13 393 709
- Stage 2 61 207 238 506 98 356 15 1 470 976
- Stage 3 271 93 778 1,142 198 611 7 2 818 1,960
- Of which: individual 12 - 14 26 60 242 2 2 306 332
- Of which: collective 259 93 764 1,116 138 369 5 - 512 1,628
ECL provisions coverage (%) 0.20 6.37 12.17 0.88 1.28 1.55 0.12 0.61 1.00 0.93
- Stage 1 (%) 0.05 2.03 2.18 0.16 0.37 0.37 0.08 0.50 0.26 0.20
- Stage 2 (%) 0.34 10.24 14.57 2.35 3.00 2.93 1.55 100.00 2.87 2.58
- Stage 3 (%) 11.88 66.43 79.47 33.59 31.88 40.63 43.75 9.09 37.82 35.23
For the notes to this table refer to the following page.
Risk and capital management
Credit risk continued
Sector analysis - portfolio summary continued
Personal Wholesale Total
Credit
Mortgages (1) cards Other Total Property Other FI Sovereign Total
31 December 2023 £m £m £m £m £m £m £m £m £m £m
Loans by residual maturity 208,275 5,904 9,595 223,774 31,207 77,339 57,087 2,633 168,266 392,040
- <1 year 3,375 3,398 3,169 9,942 5,696 25,312 43,497 489 74,994 84,936
- 1-5 year 9,508 2,506 5,431 17,445 17,216 32,573 11,616 1,872 63,277 80,722
- >5< 15 year 46,453 - 993 47,446 5,701 14,167 1,939 199 22,006 69,452
- >15 year 148,939 - 2 148,941 2,594 5,287 35 73 7,989 156,930
Other financial assets by
asset quality (2) - - - - 1 2,689 26,816 123,683 153,189 153,189
- AQ1-AQ4 - - - - 1 2,689 26,084 123,683 152,457 152,457
- AQ5-AQ8 - - - - - - 732 - 732 732
Off-balance sheet 9,843 17,284 8,462 35,589 14,205 59,716 22,221 227 96,369 131,958
- Loan commitments 9,843 17,284 8,417 35,544 13,861 57,081 20,765 227 91,934 127,478
- Financial guarantees - - 45 45 344 2,635 1,456 - 4,435 4,480
Off-balance sheet by
asset quality (2) 9,843 17,284 8,462 35,589 14,205 59,716 22,221 227 96,369 131,958
- AQ1-AQ4 9,099 448 7,271 16,818 10,916 36,380 20,644 165 68,105 84,923
- AQ5-AQ8 721 16,518 1,162 18,401 3,266 23,030 1,574 45 27,915 46,316
- AQ9 7 6 4 17 3 12 - - 15 32
- AQ10 16 312 25 353 20 294 3 17 334 687
(1) Includes a portion of Private Banking lending secured against
residential real estate, in line with ECL calculation methodology. Private
Banking and RBS International mortgages are reported in UK, reflecting the
country of lending origination and includes crown dependencies.
(2) AQ bandings are based on Basel PDs and mapping is as follows:
Internal asset quality band Probability of default range Indicative S&P rating
AQ1 0% - 0.034% AAA to AA
AQ2 0.034% - 0.048% AA to AA-
AQ3 0.048% - 0.095% A+ to A
AQ4 0.095% - 0.381% BBB+ to BBB-
AQ5 0.381% - 1.076% BB+ to BB
AQ6 1.076% - 2.153% BB- to B+
AQ7 2.153% - 6.089% B+ to B
AQ8 6.089% - 17.222% B- to CCC+
AQ9 17.222% - 100% CCC to C
AQ10 100% D
£0.3 billion (31 December 2023 - £0.3 billion) of AQ10 Personal balances
primarily relate to loan commitments, the drawdown of which is effectively
prohibited.
(3) 30 DPD - 30 days past due, the mandatory 30 days past due backstop
as prescribed by the IFRS 9 guidance for a SICR.
Risk and capital management
Credit risk continued
Sector analysis - portfolio summary continued
The table below shows ECL by stage, for the Personal portfolio and selected
sectors of the Wholesale portfolio including those that contain an element of
exposure classified as heightened climate-related risk.
Off-balance sheet
Loans - amortised cost and FVOCI Loan Contingent ECL provisions
Stage 1 Stage 2 Stage 3 Total commitments liabilities Stage 1 Stage 2 Stage 3 Total
31 March 2024 £m £m £m £m £m £m £m £m £m £m
Personal 194,905 23,437 3,557 221,899 36,647 44 300 474 1,199 1,973
Mortgages (1) 183,705 20,060 2,381 206,146 10,293 - 87 70 288 445
Credit cards 3,916 1,970 147 6,033 18,043 - 71 188 98 357
Other personal 7,284 1,407 1,029 9,720 8,311 44 142 216 813 1,171
Wholesale 149,458 14,140 2,206 165,804 90,761 4,952 369 439 845 1,653
Property 28,608 2,753 632 31,993 13,858 357 95 78 226 399
Financial institutions (2) 54,312 730 16 55,058 19,234 1,805 40 19 6 65
Sovereign 1,080 130 22 1,232 259 - 14 1 2 17
Corporate 65,458 10,527 1,536 77,521 57,410 2,790 220 341 611 1,172
Of which:
Agriculture 3,934 918 107 4,959 957 21 17 35 36 88
Airlines and aerospace 2,073 359 3 2,435 2,056 162 3 6 2 11
Automotive 7,314 690 52 8,056 4,187 154 18 19 19 56
Building materials 1,417 244 19 1,680 1,391 67 6 8 7 21
Chemicals 293 124 4 421 765 13 1 9 4 14
Industrials 2,342 473 70 2,885 2,843 141 9 16 30 55
Land transport and logistics 4,515 452 76 5,043 2,980 195 11 14 21 46
Leisure 5,053 1,880 291 7,224 1,873 122 31 70 99 200
Mining and metals 263 37 5 305 531 7 - - 5 5
Oil and gas 697 52 55 804 1,909 240 3 2 46 51
Power utilities 5,457 323 79 5,859 8,054 593 14 8 29 51
Retail 5,969 1,152 211 7,332 4,314 475 20 32 80 132
Shipping 198 34 1 233 60 29 - 2 1 3
Water and waste 3,562 160 48 3,770 1,879 135 4 4 7 15
Total 344,363 37,577 5,763 387,703 127,408 4,996 669 913 2,044 3,626
31 December 2023
Personal 198,865 21,509 3,400 223,774 35,544 45 316 506 1,142 1,964
Mortgages (1) 188,140 17,854 2,281 208,275 9,843 - 88 61 271 420
Credit cards 3,742 2,022 140 5,904 17,284 - 76 207 93 376
Other personal 6,983 1,633 979 9,595 8,417 45 152 238 778 1,168
Wholesale 149,721 16,382 2,163 168,266 91,934 4,435 393 470 818 1,681
Property 27,316 3,270 621 31,207 13,861 344 102 98 198 398
Financial institutions (2) 56,105 966 16 57,087 20,765 1,456 44 15 7 66
Sovereign 2,610 1 22 2,633 227 - 13 1 2 16
Corporate 63,690 12,145 1,504 77,339 57,081 2,635 234 356 611 1,201
Of which:
Agriculture 3,851 1,011 90 4,952 950 21 19 35 34 88
Airlines and aerospace 1,525 454 3 1,982 1,788 178 4 7 2 13
Automotive 7,223 1,008 76 8,307 3,844 103 18 18 26 62
Building materials 1,204 282 72 1,558 1,475 72 6 9 8 23
Chemicals 354 62 4 420 785 13 1 9 1 11
Industrials 2,269 543 70 2,882 2,896 148 10 18 23 51
Land transport and logistics 4,231 578 61 4,870 3,025 184 11 14 18 43
Leisure 4,394 2,245 288 6,927 1,887 145 31 74 91 196
Mining and metals 241 32 4 277 545 7 - - 4 4
Oil and gas 915 125 27 1,067 1,959 237 3 2 29 34
Power utilities 5,604 418 40 6,062 8,257 554 13 13 24 50
Retail 5,846 1,318 224 7,388 4,717 429 23 35 118 176
Shipping 207 35 3 245 71 31 - 1 2 3
Water and waste 3,536 173 13 3,722 1,904 84 4 5 4 13
Total 348,586 37,891 5,563 392,040 127,478 4,480 709 976 1,960 3,645
(1) As at 31 March 2024, £138.1 billion, 67.0%, of the total residential
mortgages portfolio had Energy Performance Certificate (EPC) data available
(31 December 2023 - £140.8 billion, 67.6%). Of which, 44.6% were rated as EPC
A to C (31 December 2023 - 44.1%).
(2) Includes transactions, such as securitisations, where the underlying assets
may be in other sectors.
Risk and capital management
Capital, liquidity and funding risk
Introduction
NatWest Group takes a comprehensive approach to the management of capital,
liquidity and funding, underpinned by frameworks, risk appetite and policies,
to manage and mitigate capital, liquidity and funding risks. The framework
ensures the tools and capability are in place to facilitate the management and
mitigation of risk ensuring that NatWest Group operates within its regulatory
requirements and risk appetite.
Key developments since 31 December 2023
CET1 ratio Total RWAs
13.5% £186.3bn
(as at 31 December 2023 - 13.4%) (as at 31 December 2023 - £183.0bn)
The CET1 ratio increased by 10 basis points to 13.5%. The increase in the CET1 Total RWAs increased by £3.3 billion to £186.3 billion mainly reflecting:
ratio was due to a £0.6 billion increase in CET1 capital, partially offset by
a £3.3 billion increase in RWAs. - an increase in credit risk RWAs of £1.7 billion, primarily due to
drawdowns and new facilities within Commercial & Institutional in addition
The CET1 capital increase was mainly driven by an attributable profit for to an increase in unsecured lending within Retail Banking. There was also an
ordinary shareholders of £0.9 billion partially offset by a foreseeable increase in IRB Temporary Model Adjustment related to mortgages within Retail
ordinary dividend accrual of £0.4 billion. Banking.
- an increase in operational risk RWAs of £1.6 billion following
the annual recalculation and higher income compared to 2020.
UK leverage ratio LCR
5.1% 151%
(as at 31 December 2023 - 5.0%) (as at 31 December 2023 - 144%)
The leverage ratio increased by 10 basis points to 5.1% mainly due to a £0.6 The Liquidity Coverage Ratio (LCR) increased to 151%, during the quarter
billion increase in Tier 1 capital while the leverage exposure remained static driven by increased issuance and customer deposits coupled with replacement of
during the period. the Cash Ratio Deposit scheme with a Bank of England Levy.
Risk and capital management
Capital, liquidity and funding risk continued
Maximum Distributable Amount (MDA) and Minimum Capital Requirements
NatWest Group is subject to minimum capital requirements relative to RWAs. The
table below summarises the minimum capital requirements (the sum of Pillar 1
and Pillar 2A), and the additional capital buffers which are held in excess of
the regulatory minimum requirements and are usable in stress.
Where the CET1 ratio falls below the sum of the minimum capital and the
combined buffer requirement, there is a subsequent automatic restriction on
the amount available to service discretionary payments (including AT1
coupons), known as the MDA. Note that different requirements apply to
individual legal entities or sub-groups and that the table shown does not
reflect any incremental PRA buffer requirements, which are not disclosable.
The current capital position provides significant headroom above both our
minimum requirements and our MDA threshold requirements.
Type CET1 Total Tier 1 Total capital
Pillar 1 requirements 4.5% 6.0% 8.0%
Pillar 2A requirements 1.8% 2.4% 3.2%
Minimum Capital Requirements 6.3% 8.4% 11.2%
Capital conservation buffer 2.5% 2.5% 2.5%
Countercyclical capital buffer (1) 1.7% 1.7% 1.7%
MDA threshold (2) 10.5% n/a n/a
Overall capital requirement 10.5% 12.6% 15.4%
Capital ratios at 31 March 2024 13.5% 15.5% 18.8%
Headroom (3,4) 3.0% 2.9% 3.4%
(1) The UK countercyclical capital buffer (CCyB) rate is currently
being maintained at 2%. The rate may vary in either direction in the future,
depending on how risks develop. Foreign exposures may be subject to different
CCyB rates depending on the rates set in those jurisdictions.
(2) Pillar 2A requirements for NatWest Group are set as a variable
amount with the exception of some fixed add-ons.
(3) The headroom does not reflect excess distributable capital and may
vary over time.
(4) Headroom as at 31 December 2023 was CET1 2.9%, Total Tier 1 2.9%
and Total Capital 3.0%.
Leverage ratios
The table below summarises the minimum ratios of capital to leverage exposure
under the binding PRA UK leverage framework applicable for NatWest Group.
Type CET1 Total Tier 1
Minimum ratio 2.44% 3.25%
Countercyclical leverage ratio buffer (1) 0.6% 0.6%
Total 3.04% 3.85%
(1) The countercyclical leverage ratio buffer is set at 35% of NatWest
Group's CCyB.
Risk and capital management
Capital, liquidity and funding risk continued
Capital and leverage ratios
The tables below set out the key capital and leverage ratios. NatWest Group is
subject to the requirements set out in the UK CRR therefore capital and
leverage ratios are being presented under these frameworks on a transitional
basis.
31 March 31 December
2024 2023
Capital adequacy ratios (1) % %
CET1 13.5 13.4
Tier 1 15.5 15.5
Total 18.8 18.4
Capital £m £m
Tangible equity 26,360 25,653
Prudential valuation adjustment (249) (279)
Deferred tax assets (919) (979)
Own credit adjustments 16 (10)
Pension fund assets (160) (143)
Cash flow hedging reserve 1,944 1,899
Foreseeable ordinary dividends (1,380) (1,013)
Adjustment for trust assets (2) (365) (365)
Foreseeable charges (253) (525)
Adjustments under IFRS 9 transitional arrangements 74 202
Total regulatory adjustments (1,292) (1,213)
CET1 capital 25,068 24,440
Additional AT1 capital 3,875 3,875
Tier 1 capital 28,943 28,315
End-point Tier 2 capital 6,037 5,317
Tier 2 capital 6,037 5,317
Total regulatory capital 34,980 33,632
Risk-weighted assets
Credit risk 149,313 147,598
Counterparty credit risk 7,709 7,830
Market risk 7,452 7,363
Operational risk 21,821 20,198
Total RWAs 186,295 182,989
(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 March 2024 was £0.1
billion for CET1 capital, £24 million for total capital and £3 million RWAs
(31 December 2023 - £0.2 billion CET1 capital, £54 million total capital and
£17 million RWAs). Excluding this adjustment, the CET1 ratio would be 13.4%
(31 December 2023 - 13.2%). Tier 1 capital ratio would be 15.5% (31 December
2023 - 15.4%) and the Total capital ratio would be 18.8% (31 December 2023 -
18.4%).
(2) Prudent deduction in respect of agreement with the pension fund.
Risk and capital management
Capital, liquidity and funding risk continued
Capital and leverage ratios continued
31 March 31 December
2024 2023
Leverage £m £m
Cash and balances at central banks 116,916 104,262
Trading assets 50,277 45,551
Derivatives 68,133 78,904
Financial assets 434,344 439,449
Other assets 26,974 23,605
Assets of disposal groups 808 902
Total assets 697,452 692,673
Derivatives
- netting and variation margin (67,625) (79,299)
- potential future exposures 17,064 17,212
Securities financing transactions gross up 1,645 1,868
Other off balance sheet items 51,260 50,961
Regulatory deductions and other adjustments (20,028) (16,043)
Claims on central banks (113,504) (100,735)
Exclusion of bounce back loans (3,433) (3,794)
UK leverage exposure 562,831 562,843
UK leverage ratio (%) (1) 5.1 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 5.1% (31 December 2023 - 5.0%).
Capital flow statement
The table below analyses the movement in CET1, AT1 and Tier 2 capital for the
three months ended 31 March 2024. It is presented on a transitional basis
based on current PRA rules.
CET1 AT1 Tier 2 Total
£m £m £m £m
At 31 December 2023 24,440 3,875 5,317 33,632
Attributable profit for the period 918 - - 918
Foreseeable ordinary dividends (367) - - (367)
Foreign exchange reserve (32) - - (32)
FVOCI reserve 26 - - 26
Own credit 26 - - 26
Share capital and reserve movements in respect of employee share schemes 68 - - 68
Goodwill and intangibles deduction 16 - - 16
Deferred tax assets 60 - - 60
Prudential valuation adjustments 30 - - 30
Net dated subordinated debt instruments - - 764 764
Foreign exchange movements - - (4) (4)
Adjustment under IFRS 9 transitional arrangements (128) - - (128)
Other movements 11 - (40) (29)
At 31 March 2024 25,068 3,875 6,037 34,980
- For CET1 movements refer to the key points on page 21.
- Tier 2 instrument movements include £0.8 billion in relation to $1.0
billion 6.475% Fixed to Fixed Reset Tier 2 Notes 2034 issued in March 2024,
partially offset by amortisation and foreign exchange movements.
- Within Tier 2, there was also a decrease in the Tier 2 surplus
provisions.
Risk and capital management
Capital, liquidity and funding risk continued
Risk-weighted assets
The table below analyses the movement in RWAs during the period, by key
drivers.
Counterparty Operational
Credit risk credit risk Market risk risk Total
£bn £bn £bn £bn £bn
At 31 December 2023 147.6 7.8 7.4 20.2 183.0
Foreign exchange movement (0.1) - - - (0.1)
Business movement 1.6 (0.1) 0.2 1.6 3.3
Risk parameter changes (0.1) - - - (0.1)
Model updates 0.3 - (0.1) - 0.2
At 31 March 2024 149.3 7.7 7.5 21.8 186.3
The table below analyses segmental RWAs.
Total
Retail Private Commercial & Central items NatWest
Banking Banking Institutional & other (1) Group
Total RWAs £bn £bn £bn £bn £bn
At 31 December 2023 61.6 11.2 107.4 2.8 183.0
Foreign exchange movement - - (0.1) - (0.1)
Business movement 0.7 0.1 2.7 (0.2) 3.3
Risk parameter changes - - (0.1) - (0.1)
Model updates 0.2 - - - 0.2
At 31 March 2024 62.5 11.3 109.9 2.6 186.3
Credit risk 54.0 9.7 83.5 2.1 149.3
Counterparty credit risk 0.3 0.1 7.3 - 7.7
Market risk 0.1 - 7.4 - 7.5
Operational risk 8.1 1.5 11.7 0.5 21.8
Total RWAs 62.5 11.3 109.9 2.6 186.3
(1) £1.0 billion of Central items & other relates to Ulster Bank RoI.
Total RWAs increased by £3.3 billion to £186.3 billion during the period
mainly reflecting:
- An increase in business movements totalling £3.3 billion, primarily
driven by increased drawdowns and new facilities within Commercial &
Institutional in addition to increased RWAs following the annual recalculation
of operational risk due to higher income when compared to 2020.
- A decrease in risk parameter changes of £0.1 billion, reflecting
customers moving into default within Commercial & Institutional which is
partially offset by PD deterioration within Commercial & Institutional.
- An increase in model updates of £0.2 billion reflecting an increase
in IRB Temporary Model Adjustment related to mortgages within Retail Banking.
Liquidity portfolio
The table below shows the composition of the liquidity portfolio with primary
liquidity aligned to high-quality liquid assets on a regulatory LCR basis.
Secondary liquidity comprises of assets which are eligible as collateral for
local central bank liquidity facilities and do not form part of the LCR
eligible high-quality liquid assets.
Liquidity value
31 March 2024 31 December 2023
NatWest NatWest
Group (1) Group
£m £m
Cash and balances at central banks 112,774 99,855
High quality government/MDB/PSE and GSE bonds (2) 32,581 36,250
Extremely high quality covered bonds 4,113 4,164
LCR level 1 Eligible Assets 149,468 140,269
LCR level 2 Eligible Assets (3) 8,949 7,796
Primary liquidity (HQLA) (4) 158,417 148,065
Secondary liquidity 70,786 74,722
Total liquidity value 229,203 222,787
(1) NatWest Group includes the UK Domestic Liquidity Sub-Group (NWB Plc, RBS plc
and Coutts & Co), NatWest Markets Plc and other significant operating
subsidiaries that hold liquidity portfolios. These include The Royal Bank of
Scotland International Limited and NatWest Markets N.V. who hold managed
portfolios that comply with local regulations that may differ from PRA rules.
(2) Multilateral development bank abbreviated to MDB, public sector entities
abbreviated to PSE and government sponsored entities abbreviated to GSE.
(3) Includes Level 2A and Level 2B.
(4) High-quality liquid assets abbreviated to HQLA.
Condensed consolidated income statement
for the period ended 31 March 2024 (unaudited)
Quarter ended
31 March 31 December 31 March
2024 2023 2023
£m £m £m
Interest receivable 6,055 5,955 4,501
Interest payable (3,404) (3,317) (1,599)
Net interest income 2,651 2,638 2,902
Fees and commissions receivable 770 770 740
Fees and commissions payable (177) (169) (157)
Trading income 129 185 333
Other operating income 102 113 58
Non-interest income 824 899 974
Total income 3,475 3,537 3,876
Staff costs (1,062) (977) (1,040)
Premises and equipment (293) (308) (286)
Other administrative expenses (424) (618) (450)
Depreciation and amortisation (273) (251) (212)
Operating expenses (2,052) (2,154) (1,988)
Profit before impairment losses 1,423 1,383 1,888
Impairment losses (93) (126) (70)
Operating profit before tax 1,330 1,257 1,818
Tax (charge)/credit (339) 5 (512)
Profit from continuing operations 991 1,262 1,306
(Loss)/profit from discontinued operations, net of tax (4) 26 35
Profit for the period 987 1,288 1,341
Attributable to:
Ordinary shareholders 918 1,229 1,279
Paid-in equity holders 60 60 61
Non-controlling interests 9 (1) 1
987 1,288 1,341
Earnings per ordinary share - continuing operations 10.5p 13.6p 12.8p
Earnings per ordinary share - discontinued operations - 0.3p 0.4p
Total earnings per share attributable to ordinary shareholders - basic 10.5p 13.9p 13.2p
Earnings per ordinary share - fully diluted continuing operations 10.4p 13.6p 12.8p
Earnings per ordinary share - fully diluted discontinued operations - 0.3p 0.4p
Total earnings per share attributable to ordinary shareholders - fully diluted 10.4p 13.9p 13.2p
Condensed consolidated statement of comprehensive income
for the period ended 31 March 2024 (unaudited)
Quarter ended
31 March 31 December 31 March
2024 2023 2023
£m £m £m
Profit for the period 987 1,288 1,341
Items that do not qualify for reclassification
Remeasurement of retirement benefit schemes (36) (175) (39)
Changes in fair value of financial liabilities designated at fair value
through
profit or loss (FVTPL) due to changes in credit risk (23) (12) (6)
Fair value through other comprehensive income (FVOCI) financial assets (13) (19) 43
Tax 31 59 (2)
(41) (147) (4)
Items that do qualify for reclassification
FVOCI financial assets 45 (16) 40
Cash flow hedges (66) 1,416 298
Currency translation (25) (218) (59)
Tax 3 (345) (98)
(43) 837 181
Other comprehensive (loss)/income after tax (84) 690 177
Total comprehensive income for the period 903 1,978 1,518
Attributable to:
Ordinary shareholders 834 1,919 1,456
Paid-in equity holders 60 60 61
Non-controlling interests 9 (1) 1
903 1,978 1,518
Condensed consolidated balance sheet as at 31 March 2024 (unaudited)
31 March 31 December
2024 2023
£m £m
Assets
Cash and balances at central banks 116,916 104,262
Trading assets 50,277 45,551
Derivatives 68,133 78,904
Settlement balances 10,724 7,231
Loans to banks - amortised cost 6,051 6,914
Loans to customers - amortised cost 378,010 381,433
Other financial assets 50,283 51,102
Intangible assets 7,598 7,614
Other assets 8,652 8,760
Assets of disposal groups 808 902
Total assets 697,452 692,673
Liabilities
Bank deposits 21,614 22,190
Customer deposits 432,793 431,377
Settlement balances 10,758 6,645
Trading liabilities 56,696 53,636
Derivatives 61,689 72,395
Other financial liabilities 61,340 55,089
Subordinated liabilities 6,487 5,714
Notes in circulation 3,289 3,237
Other liabilities 4,898 5,202
Total liabilities 659,564 655,485
Equity
Ordinary shareholders' interests 33,958 33,267
Other owners' interests 3,890 3,890
Owners' equity 37,848 37,157
Non-controlling interests 40 31
Total equity 37,888 37,188
Total liabilities and equity 697,452 692,673
Condensed consolidated statement of changes in equity
for the period ended 31 March 2024 (unaudited)
Share
capital and Total Non
statutory Paid-in Retained Other owners' controlling Total
reserves (1) equity earnings reserves* equity interests equity
£m £m £m £m £m £m £m
At 1 January 2024 12,848 3,890 10,645 9,774 37,157 31 37,188
Profit attributable to ordinary shareholders
and other equity owners
- continuing operations 982 982 9 991
- discontinued operations (4) (4) - (4)
Other comprehensive income
- Realised gains in period
on FVOCI equity shares 1 (1) - -
- Remeasurement of retirement
benefit schemes (36) (36) (36)
- Changes in fair value of financial liabilities
designated at FVTPL due to changes in credit risk (23) (23) (23)
- Unrealised gains: FVOCI 30 30 30
- Amounts recognised in equity: cash flow hedges (499) (499) (499)
- Foreign exchange reserve movement (25) (25) - (25)
- Amount transferred from equity to earnings 435 435 435
- Tax 25 9 34 34
Paid-in equity dividends paid (60) (60) (60)
Shares repurchased during the period (2) - (235) (235) (235)
Share-based payments 71 21 92 92
At 31 March 2024 12,919 3,890 11,316 9,723 37,848 40 37,888
31 March
2024
Attributable to: £m
Ordinary shareholders 33,958
Paid-in equity holders 3,890
Non-controlling interests 40
37,888
*Other reserves consist of:
Merger reserve 10,881
FVOCI reserve (23)
Cash flow hedging reserve (1,944)
Foreign exchange reserve 809
9,723
(1) Share capital and statutory reserves includes share capital, share premium,
capital redemption reserve and own shares held.
(2) NatWest Group plc repurchased and cancelled 100.19 million shares for a total
consideration of £225.53 million excluding fees in Q1 2024 as part of the On
Market Share Buyback Programme; additionally, 2.25 million shares repurchased
in December 2023 for a total consideration of £4.93 million excluding fees
were settled and cancelled in January 2024. Of the 100.19 million shares
bought back, 0.64 million shares were settled and cancelled in April 2024. The
nominal value of the share cancellations has been transferred to the capital
redemption reserve.
Notes
1. Presentation of condensed consolidated financial statements
The condensed consolidated financial statements should be read in conjunction
with NatWest Group plc's 2023 Annual Report and Accounts. The 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.
Amendments to IFRS effective from 1 January 2024 had no material effect on the
condensed consolidated financial statements.
2. Litigation and regulatory matters
NatWest Group plc's 2023 Annual Report and Accounts, issued on 16 February
2024, included disclosures about NatWest Group's litigation and regulatory
matters in Note 26. Set out below are the material developments in those
matters (all of which have been previously disclosed) since publication of the
2023 Annual Report and Accounts.
Litigation
London Interbank Offered Rate (LIBOR) and other rates litigation
NWM Plc and certain other members of NatWest Group, including NatWest Group
plc, are defendants in a number of claims pending in the United States
District Court for the Southern District of New York (SDNY) with respect to
the setting of USD LIBOR. In March 2024, NatWest Group companies reached an
agreement in principle, subject to documentation and court approval, to settle
the USD LIBOR class action that asserts claims on behalf of lenders who made
LIBOR based loans. In April 2024, NatWest Group companies reached an
agreement, subject to court approval, to settle the USD LIBOR class action
that asserts claims on behalf of persons who transacted futures and options on
exchanges. The settlement amounts are covered in full by existing
provisions.
FX litigation
NWM Plc, NWMSI and/or NatWest Group plc are defendants in several cases
relating to NWM Plc's foreign exchange (FX) business. In February 2024, NWM
Plc executed an agreement to settle the claim in the Tel Aviv District Court
in Israel, subject to court approval. The settlement amount is covered in full
by an existing provision.
Government securities antitrust litigation
Class action antitrust claims commenced in March 2019 are pending in the SDNY
against NWM Plc, NWMSI and other banks in respect of Euro-denominated bonds
issued by various European central banks. In March 2024, NatWest Group
companies reached an agreement in principle, subject to final documentation
and court approval, to settle the class action. The settlement amount is
covered in full by an existing provision.
Swaps antitrust litigation
NWM Plc and other members of NatWest Group, including NatWest Group plc, as
well as a number of other interest rate swap dealers, are defendants in
several cases pending in the SDNY alleging violations of the US antitrust laws
in the market for interest rate swaps. There is a consolidated class action
complaint on behalf of persons who entered into interest rate swaps with the
defendants, as well as non-class action claims by three swap execution
facilities. In March 2024, NatWest Group companies reached an agreement in
principle, subject to documentation and court approval, to settle the class
action. The settlement amount is covered in full by an existing provision.
1MDB litigation
A Malaysian court claim was served in Switzerland in November 2022 by 1MDB, a
sovereign wealth fund, in which Coutts & Co Ltd was named, along with six
others, as a defendant in respect of losses allegedly incurred by 1MDB. It is
claimed that Coutts & Co Ltd is liable as a constructive trustee for
having dishonestly assisted the directors of 1MDB in the breach of their
fiduciary duties by failing (amongst other alleged claims) to undertake due
diligence in relation to a customer of Coutts & Co Ltd, through which
funds totalling c.US$1 billion were received and paid out between 2009 and
2011. The claimant seeks the return of that amount plus interest. Coutts &
Co Ltd filed an application in January 2023 challenging the validity of
service and the Malaysian court's jurisdiction to hear the claim, and a
hearing took place in February 2024. In March 2024, the court granted that
application. The claimant has filed a Notice of Appeal.
Coutts & Co Ltd (a subsidiary of RBS Netherlands Holdings B.V., which in
turn is a subsidiary of NWM Plc) is a company registered in Switzerland and is
in wind-down following the announced sale of its business assets in 2015.
Notes continued
3. Related party transactions
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 March 2024 HM Treasury's holding in NatWest Group plc's ordinary shares
was 29.82% (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. We are supporting the UK
Government plans for a possible retail offer of its shareholding.
4. Post balance sheet events
As part of the ongoing on-market share buyback programme, NatWest Group plc
has repurchased and cancelled a further 15.5 million shares since 31 March
2024 for a total consideration (excluding fees) of £42.4 million.
Other than as disclosed there have been no significant events between 31 March
2024 and the date of approval of these accounts that would require a change to
or additional disclosure in the condensed consolidated financial statements.
Additional information
Presentation of information
'Parent company' refers to NatWest Group plc, and 'NatWest Group', 'Group' or
'we' refers to NatWest Group plc and its subsidiaries. The term 'NWH Group'
refers to NatWest Holdings Limited ('NWH Limited') 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 'NWM N.V. Group' refers to
NatWest Markets N.V. and its subsidiary and associated undertakings 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. The
term 'RBSI Ltd' refers to The Royal Bank of Scotland International Limited.
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 ('GBP'), respectively, and references
to 'pence' represent pence where amounts are denominated in pounds sterling.
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 results
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 will be
filed with the Registrar of Companies. 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
Date: 26 April 2024
Time: 9:00AM UK time
Zoom ID: 967 0606 8948
Available at https://investors.natwestgroup.com/results-centre
(https://investors.natwestgroup.com/results-centre)
- Q1 2024 Interim Management Statement and presentation slides.
- A financial supplement containing income statement, balance sheet and
segment performance for the five quarters ended 31 March 2024.
- NatWest Group Pillar 3 supplement at 31 March 2024.
Forward-looking statements
This document may include forward-looking statements within the meaning of the
United States Private Securities Litigation Reform Act of 1995, such as
statements that include, without limitation, the words 'expect', 'estimate',
'project', 'anticipate', 'commit', 'believe', 'should', 'intend', 'will',
'plan', 'could', 'probability', 'risk', 'Value-at-Risk (VaR)', 'target',
'goal', 'objective', 'may', 'endeavour', 'outlook', 'optimistic', 'prospects'
and similar expressions or variations on these expressions. These statements
concern or may affect future matters, such as NatWest Group's future economic
results, business plans and strategies. In particular, this document may
include forward-looking statements relating to NatWest Group plc in respect
of, but not limited to: its economic and political risks, its financial
position, profitability and financial performance (including financial,
capital, cost savings and operational targets), the implementation of its
strategy, its climate and sustainability-related targets, increasing
competition from incumbents, challengers and new entrants and disruptive
technologies, its access to adequate sources of liquidity and funding, its
regulatory capital position and related requirements, its exposure to third
party risks, its ongoing compliance with the UK ring-fencing regime and
ensuring operational continuity in resolution, its impairment losses and
credit exposures under certain specified scenarios, substantial regulation and
oversight, ongoing legal, regulatory and governmental actions and
investigations, and NatWest Group's exposure to operational risk, conduct
risk, cyber, data and IT risk, financial crime risk, key person risk and
credit rating risk. Forward-looking statements are subject to a number of
risks and uncertainties that might cause actual results and performance to
differ materially from any expected future results or performance expressed or
implied by the forward-looking statements. Factors that could cause or
contribute to differences in current expectations include, but are not limited
to, future growth initiatives (including acquisitions, joint ventures and
strategic partnerships), the outcome of legal, regulatory and governmental
actions and investigations, the level and extent of future impairments and
write-downs, legislative, political, fiscal and regulatory developments,
accounting standards, competitive conditions, technological developments,
interest and exchange rate fluctuations, general economic and political
conditions and the impact of climate-related risks and the transitioning to a
net zero economy. These and other factors, risks and uncertainties that may
impact any forward-looking statement or NatWest Group plc's actual results are
discussed in NatWest Group plc's 2023 Annual Report on Form 20-F, NatWest
Group plc's Interim Management Statement for Q1 2024 on Form 6-K, and its
other public filings. The forward-looking statements contained in this
document speak only as of the date of this document and NatWest Group plc does
not assume or undertake any obligation or responsibility to update any of the
forward-looking statements contained in this document, whether as a result of
new information, future events or otherwise, except to the extent legally
required.
Appendix
Non-IFRS financial measures
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 guidance or non-GAAP financial measures in
accordance with 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 a calculation of metrics that are used
throughout the banking industry.
These non-IFRS measures are not a substitute for IFRS measures and should not
be considered in isolation. A reconciliation to the closest IFRS measure is
presented where appropriate.
1. 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 one-offs and other
volatile items which may distort period-on-period comparisons.
Quarter ended
31 March 31 December 31 March
2024 2023 2023
£m £m £m
Continuing operations
Total income 3,475 3,537 3,876
Less notable items
Commercial & Institutional
Own credit adjustments (OCA) (5) (5) 6
Tax interest on prior periods - 3 -
Central items & other
Liquidity Asset Bond sale losses - (10) (13)
Share of associate profits/(losses) for Business Growth Fund 7 1 (12)
Interest and FX risk management derivatives not in accounting
hedge
relationships 59 (21) 75
FX recycling gains - 162 -
Tax interest on prior periods - (35) -
61 95 56
Total income excluding notable items 3,414 3,442 3,820
Non-IFRS financial measures continued
2. Operating expenses - management view
The management analysis of operating expenses shows litigation and conduct
costs on a separate line. These amounts are included within staff costs and
other administrative expenses in the statutory analysis. Other operating
expenses excludes litigation and conduct costs, which are more volatile and
may distort period-on-period comparisons.
Quarter ended
31 March 2024
Litigation and Other Statutory
conduct operating operating
costs expenses expenses
£m £m £m
Continuing operations
Staff costs 15 1,047 1,062
Premises and equipment - 293 293
Other administrative expenses 9 415 424
Depreciation and amortisation - 273 273
Total 24 2,028 2,052
Quarter ended
31 December 2023
Litigation and Other Statutory
conduct operating operating
costs expenses expenses
£m £m £m
Continuing operations
Staff costs 16 961 977
Premises and equipment - 308 308
Other administrative expenses 97 521 618
Depreciation and amortisation - 251 251
Total 113 2,041 2,154
Quarter ended
31 March 2023
Litigation and Other Statutory
conduct operating operating
costs expenses expenses
£m £m £m
Continuing operations
Staff costs 14 1,026 1,040
Premises and equipment - 286 286
Other administrative expenses 42 408 450
Depreciation and amortisation - 212 212
Total 56 1,932 1,988
Non-IFRS financial measures continued
3. 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)
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. The calculation of the cost:income ratio (excl. litigation and
conduct) is shown below, along with a comparison to cost:income ratio
calculated using operating expenses.
Total
Retail Private Commercial & Central items NatWest
Banking Banking Institutional & other Group
Quarter ended 31 March 2024 £m £m £m £m £m
Continuing operations
Operating expenses 773 181 1,051 47 2,052
Less litigation and conduct costs (6) (1) (31) 14 (24)
Other operating expenses 767 180 1,020 61 2,028
Total income 1,325 208 1,859 83 3,475
Cost:income ratio 58.3% 87.0% 56.5% nm 59.1%
Cost:income ratio (excl. litigation and conduct) 57.9% 86.5% 54.9% nm 58.4%
Quarter ended 31 December 2023
Continuing operations
Operating expenses 681 206 1,092 175 2,154
Less litigation and conduct costs (34) 2 (78) (3) (113)
Other operating expenses 647 208 1,014 172 2,041
Total income 1,369 209 1,832 127 3,537
Cost:income ratio 49.7% 98.6% 59.6% nm 60.9%
Cost:income ratio (excl. litigation and conduct) 47.3% 99.5% 55.3% nm 57.7%
Quarter ended 31 March 2023
Continuing operations
Operating expenses 696 155 1,003 134 1,988
Less litigation and conduct costs (3) (3) (44) (6) (56)
Other operating expenses 693 152 959 128 1,932
Total income 1,604 296 1,953 23 3,876
Cost:income ratio 43.4% 52.4% 51.4% nm 51.3%
Cost:income ratio (excl. litigation and conduct) 43.2% 51.4% 49.1% nm 49.8%
4. NatWest Group return on tangible equity
Return on tangible equity comprises annualised profit or loss for the period
attributable to ordinary shareholders divided by average 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. A reconciliation is shown below including a comparison to the
nearest GAAP measure: return on equity. This comprises profit attributable to
ordinary shareholders divided by average total equity.
Quarter ended or as at
31 March 31 December 31 March
2024 2023 2023
NatWest Group return on tangible equity £m £m £m
Profit attributable to ordinary shareholders 918 1,229 1,279
Annualised profit attributable to ordinary shareholders 3,672 4,916 5,116
Average total equity 37,490 36,134 37,195
Adjustment for average other owners' equity and intangible assets (11,684) (11,686) (11,319)
Adjusted total tangible equity 25,806 24,448 25,876
Return on equity 9.8% 13.6% 13.8%
Return on tangible equity 14.2% 20.1% 19.8%
Non-IFRS financial measures continued
5. 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.
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.
Quarter ended or as at
Retail Private Commercial &
Quarter ended 31 March 2024 Banking Banking Institutional
Operating profit (£m) 489 33 769
Paid-in equity cost allocation (£m) (16) (4) (40)
Adjustment for tax (£m) (132) (8) (182)
Adjusted attributable profit (£m) 341 21 547
Annualised adjusted attributable profit (£m) 1,362 84 2,187
Average RWAe (£bn) 61.7 11.2 109.0
Equity factor 13.4% 11.2% 13.8%
Average notional equity (£bn) 8.3 1.3 15.0
Return on equity 16.5% 6.7% 14.6%
Quarter ended 31 December 2023
Operating profit (£m) 585 (2) 725
Paid-in equity cost allocation (£m) (12) (6) (40)
Adjustment for tax (£m) (160) 2 (171)
Adjusted attributable profit (£m) 413 (6) 514
Annualised adjusted attributable profit (£m) 1,650 (23) 2,055
Average RWAe (£bn) 60.5 11.4 109.0
Equity factor 13.5% 11.5% 14.0%
Average notional equity (£bn) 8.2 1.3 15.3
Return on equity 20.2% (1.8%) 13.5%
Quarter ended 31 March 2023
Operating profit (£m) 794 133 994
Paid-in equity cost allocation (£m) (15) (5) (44)
Adjustment for tax (£m) (218) (36) (238)
Adjusted attributable profit (£m) 561 92 713
Annualised adjusted attributable profit (£m) 2,244 369 2,850
Average RWAe (£bn) 55.4 11.2 104.0
Equity factor 13.5% 11.5% 14.0%
Average notional equity (£bn) 7.5 1.3 14.6
Return on equity 30.0% 28.5% 19.5%
6. Net interest margin and average interest earning assets (IEA)
Net interest margin is net interest income, as a percentage of average IEA.
NatWest Group has previously reported Bank net interest margin, calculated as
net interest income as a percentage of average IEA, excluding the liquid asset
buffer. Liquid asset buffer consists of assets held by NatWest Group, such as
cash and balances at central banks and debt securities in issue, that can be
used to ensure repayment of financial obligations as they fall due.
Bank net interest margin is a less relevant measure now that interest rates
have increased. Going forward we will report net interest margin as net
interest income as a percentage of average IEA, which we see as a more useful
measure of how we manage spreads between our interest earning assets,
including the liquid asset buffer, and interest bearing liabilities.
Average IEA are average IEA of the banking business of NatWest Group. This
primarily consists of cash and balances at central banks, loans to banks,
loans to customers and other financial assets mostly comprising of debt
securities. Average IEA shows the average asset base generating interest over
the period and is used in the calculation of net interest margin.
Non-IFRS financial measures continued
7. 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 valuing the bank and allows for
comparison with other per ordinary share metrics including the share price. A
reconciliation is shown below including a comparison to the nearest GAAP
measure: net asset value (NAV) per ordinary share. This comprises ordinary
shareholders' interests divided by the number of ordinary shares in issue.
Quarter ended or as at
31 March 31 December 31 March
2024 2023 2023
Ordinary shareholders' interests (£m) 33,958 33,267 33,817
Less intangible assets (£m) (7,598) (7,614) (7,171)
Tangible equity (£m) 26,360 25,653 26,646
Ordinary shares in issue (millions) (1) 8,727 8,792 9,581
NAV per ordinary share (pence) 389p 378p 353p
TNAV per ordinary share (pence) 302p 292p 278p
(1) The number of ordinary shares in issue excludes own shares held.
8. Customer deposits excluding central items
Customer deposits excluding central items is calculated as total NatWest Group
customer deposits excluding Central items & other customer deposits.
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.
As at
31 March 31 December 31 March
2024 2023 2023
£bn £bn £bn
Customer deposits 432.8 431.4 430.5
Less Central items & other (12.8) (12.3) (8.7)
Customer deposits excluding central items 420.0 419.1 421.8
Non-IFRS financial measures continued
9. 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
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.
As at
31 March 31 December 31 March
2024 2023 2023
£bn £bn £bn
Net loans to customers (amortised cost) 378.0 381.4 374.2
Less Central items & other (21.0) (25.8) (21.8)
Net loans to customers excluding central items 357.0 355.6 352.4
10. Loan:deposit ratio (excl. repos and reverse repos)
Loan:deposit ratio (excl. repos and reverse repos) is calculated as net loans
to customer held at amortised cost excluding reverse repos divided by customer
deposits excluding repos. This is a common metric used to assess liquidity.
The removal of repos and reverse repos reduces volatility and presents the
ratio on a basis that is comparable to UK peers. A reconciliation is shown
below including a comparison to the nearest GAAP measure: loan:deposit ratio.
This is calculated as net loans to customers held at amortised cost divided by
customer deposits.
As at
31 March 31 December 31 March
2024 2023 2023
£m £m £m
Net loans to customers - amortised cost 378,010 381,433 374,214
Less reverse repos (23,120) (27,117) (21,743)
Loans to customers - amortised cost (excl. reverse repos) 354,890 354,316 352,471
Customer deposits 432,793 431,377 430,537
Less repos (11,437) (10,844) (5,989)
Customer deposits (excl. repos) 421,356 420,533 424,548
Loan:deposit ratio 87% 88% 87%
Loan:deposit ratio (excl. repos and reverse repos) 84% 84% 83%
11. 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.
Quarter ended or as at
31 March 31 December 31 March
2024 2023 2023
Loan impairment charge/(release) (£m) 93 126 70
Annualised loan impairment charge/(release) (£m) 372 504 280
Gross customer loans (£bn) 381.6 385.0 377.6
Loan impairment rate 10bps 13bps 7bps
Non-IFRS financial measures continued
12. Funded assets
Funded assets is calculated as total assets less derivative assets. This
measure allows review of balance sheet trends exclusive of the volatility
associated with derivative fair values.
As at
31 March 31 December 31 March
2024 2023 2023
£m £m £m
Total assets 697,452 692,673 695,624
Less derivative assets (68,133) (78,904) (79,420)
Funded assets 629,319 613,769 616,204
13. AUMA
AUMA 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 directly impacts the level of investment income that we receive.
14. AUM net flows
AUM net flows refers to client cash inflows and outflows relating to
investment products (this can include transfers from savings accounts). AUM
net flows excludes the impact of European Economic Area (EEA) resident client
outflows following the UK's exit from the EU and Russian client outflows since
Q1 2022.
AUM net flows is reported and tracked to monitor the business performance of
new business inflows and management of existing client withdrawals across
Retail Banking, Private Banking and Commercial & Institutional Banking.
15. 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.
16. Third party rates
Third party customer asset rate is calculated as 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.
These metrics help investors better understand our net interest margin and
interest rate sensitivity.
17. 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 of 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.
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