REG - NatWest Group plc - AGM Statement

NatwestAnnouncement

28/04/2022 14:00

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RNS Number : 7395J  NatWest Group plc  28 April 2022

NatWest Group plc

 

Annual General Meeting Statements

 

28 April 2022

 

NatWest Group plc will hold its Annual General Meeting at 2.00 p.m. today. The
meeting will deal with the proposed resolutions as set out in the Notice of
Meeting previously issued to shareholders.

 

The following is an extract from the remarks to be made by Howard Davies,
Chairman, and Alison Rose, Chief Executive Officer, at the meeting. The
remarks expand on those which were made at the Virtual Shareholder Event held
on 21 April 2022.

 

Howard Davies

 

As well as being back in a physical setting, we have also changed the AGM
process a little this year to retain a virtual element and help maximise
shareholder involvement and engagement.

 

Alison Rose has been CEO for two and a half years, but it is her first 'live'
AGM appearance. In a moment she will update you on the progress we have made
across the Group during 2021. Alison will also report on the help the bank is
providing in response to the invasion of Ukraine.

 

Before that, I would like to give you an overview of your Board's governance
in what has been another eventful year.

 

For much of 2021, there was a sense of cautious optimism that we might finally
have put the worst of the COVID-19 pandemic behind us. As restrictions in the
UK began to ease, economic activity picked up strongly.

 

But, towards the end of the year our resilience was put to the test once more
as the spread of the Omicron variant reminded us of the unpredictable nature
of the pandemic.

Despite that, the UK banking industry as a whole held up well, remaining open
for business and well capitalised.

 

The NatWest Group delivered a strong financial performance in 2021, returning
to profitability and writing-back some of our pandemic-related impairment
provisions as the economic outlook improved.

 

The bank's share price also recovered throughout the year, increasing by
around 35%.

Against the backdrop of recent geopolitical events, including the invasion of
Ukraine, the share price has lost some of those gains, though on a 12 month
view we have outperformed the UK banks average.

 

The Group also retains one of the strongest capital ratios among major
European banks and we once again comfortably passed the Bank of England's
stress test in December 2021, further demonstrating the resilience of our
balance sheet.

 

That, combined with our continued capital generation, means our bank is well
placed to support its customers, invest for growth and drive sustainable
returns to shareholders.

£3.8 billion of shareholder distributions were announced for the 2021
financial year, through buybacks - both directed and on-market - and
dividends.

 

We also announced that we would distribute at least £1 billion in dividends
annually to 2023.

 

UK Government Investments, which manages the government's shareholding,
announced three separate transactions during the course of 2021: the directed
buyback by the Group; an on-market placement of shares; and a trading plan
under which it has instructed its brokers to sell NatWest Group shares in the
market through to  July  this year.

 

The government stake reduced from 62% at the start of 2021, to less than 53%
by the end of 2021, and it is now around 48%.

 

While the move below 50% has little practical impact on our governance or
operations, it was an important symbolic moment - a marker of how far we have
come, the changes we have made since 2008 and lessons we have learned on the
way.

 

Today we are seeking to renew our shareholder authority so that we may take
part in further directed buybacks should HM Treasury ask us to do so.

 

The bank's financial performance in 2021 included a fine following breaches of
the Money Laundering Regulations 2007. NatWest Group takes its responsibility
to prevent and detect financial crime extremely seriously.

 

We deeply regret that we failed adequately to monitor one of our customers
between 2012 and 2016 to prevent money laundering. And while the case has now
come to an end, we continue to invest significant resources in the ongoing
fight against financial crime and fraud.

 

It has been a period of stability in terms of Board composition, with no
changes to our membership since the 2021 AGM.

 

As you would expect, we keep the composition, skills and experience of the
Board under review, and over the next year or so we will need to recruit new
members to cope with planned retirements.

 

In the main, the Board continued to meet virtually through 2021. Our online
meeting technology has served us well during the pandemic and we will continue
to use it.

For 2022, we have therefore adopted a hybrid calendar with some meetings being
held virtually and some meetings in person.

 

The extensive support that the bank has provided to its customers, colleagues
and communities throughout the pandemic was a key focus for the Board in 2021.

We also spent a lot of time scrutinising the implementation of the bank's
strategy and transformation agenda as well as enhancing our oversight of the
bank's culture.

In keeping with its intention to maintain a progressive, shareholder focus,
your Board has taken the decision to give you the opportunity to have your say
on Climate by voting on a climate resolution at this year's AGM.

 

We are also proposing a new Directors' Remuneration Policy for approval. It
has been developed by Robert Gillespie, as the Chairman of the Group
Performance & Remuneration Committee.  It will be his last AGM, so I want
to thank him for all he has done for the Group over 9 years, steering the
Committee through choppy waters, as befits the skilled oarsman he is.

 

Looking at the year ahead, as well as the gradual recovery from the pandemic,
it's clear that there are some notable challenges facing our customers and the
UK economy.

Inflation, which was already on a steep trajectory at the end of 2021, looks
set to continue to rise as the reverberations from the invasion of Ukraine
have a direct impact on prices - especially of energy and commodities.

 

We are very conscious of the effects this will have on the increased cost of
living for many of our customers, and we are committed to helping them where
we can.

 

Finally, I would like to thank Alison and her strong and capable leadership
team for everything they have delivered in the past year. It was not easy to
run the bank well throughout the pandemic. And I take this opportunity of
thanking, in particular, our colleagues in branches who kept that essential
service working even at the most difficult time. Their actions and the hard
work of all our colleagues have ensured that NatWest Group is well placed to
succeed and grow as the needs and expectations of our customers evolve.

 

Alison Rose

 

Good afternoon and thank you for joining us today.

 

Since we last spoke just over two months ago, the world has changed
considerably. Our thoughts are with everyone affected by the invasion of
Ukraine and we are doing all we can to support them.

 

Last week, I visited our operations in Poland and heard first-hand how our
colleagues are helping Ukrainian refugees with food, medicine and
accommodation as well as other essential services.

 

And the bank has been keen to support the Ukrainian people in a number of
other ways. More than 9 million pounds has so far been donated by our
colleagues and customers to the Disasters Emergency Committee's Ukraine
Humanitarian Appeal, including 2.5 million of match-funding by the bank. I'd
like to take this opportunity to thank everyone who has donated for their
incredible generosity.

 

We have also taken measures to assist Ukrainian refugees, including helping
them to open bank accounts and setting aside part of our Edinburgh
headquarters as a welcome hub for those seeking refuge.

 

And we are donating £100,000 to the Perspektywy Foundation which will provide
support to 500 Ukrainian students as they begin their studies in Polish
universities and polytechnics.

 

In addition to the humanitarian cost, the invasion of Ukraine has led to
greater geo-political and macro-economic uncertainty, adding to the
inflationary pressures impacting households in the UK.

 

We are not seeing any significant signs of financial distress in our book at
this stage. We are, however, very aware of the challenges and concerns the
cost-of-living crisis is causing for many of our customers up and down the
country.

 

Therefore, in line with our approach throughout the pandemic, we are focussed
on providing the practical help and support that people, families and
businesses need to thrive.

 

This includes delivering more financial health checks to help customers
understand their personal finances better and providing a dedicated SME
ecosystem with access to specialist advice throughout the UK. We are also
working alongside charities such as Citizens Advice and GamCare to support
those who are most in need as well as helping young people develop greater
financial confidence through initiatives such as our Dream Bigger programme
and our collaboration with the footballer and campaigner Marcus Rashford.

 

It is this focus on building deeper relationships with our customers, combined
with two years of execution against our strategy, that means NatWest Group is
well placed to deliver sustainable growth and sustainable returns in the years
to come.

 

As I said in February, we are building from a position of strength, having
made considerable progress against our strategic targets during the past two
years in a difficult macro-economic environment:

 

For 2021, we delivered an operating profit of 4.3 billion pounds for the whole
Group, up from a loss of 351 million in 2020.

 

We removed a further 256 million pounds of costs from the business and retain
a capital ratio well above our target range.

 

And at the same time, our 3 billion pound investment programme, focused
primarily on technology, digitisation and data, is enabling our customers to
interact with us in different ways with almost 90% of retail customer needs
now being met digitally.

 

And now, with the economy starting to recover, the business is firmly
positioned for growth.

 

Importantly, one of the ways we will drive growth is by reflecting the values
and aspirations of our customers - especially in helping our customers tackle
climate change and the transition to net zero.

 

Of course, addressing the climate crisis is not something NatWest Group or any
individual organisation can do on its own.

 

As a bank, the biggest impact we can have on the transition to net zero comes
from supporting our 19 million customers to understand and reduce their
climate impact.

 

In practical terms, we have scaled our efforts to help meet the demand for
sustainable financing, building on our leadership position as the largest
lender to renewables.

 

In 2020, we set out to provide 20 billion pounds of climate and sustainable
funding and financing over two years.

 

Having met this initial target in under 18 months, we have committed to an
ambitious new goal of providing an additional 100 billion pounds of climate
and sustainable funding and financing by the end of 2025.

 

We are also taking a leading role in decarbonising UK homes, promoting
electric transport and supporting the transition to clean energy.

 

There is a clear commercial imperative in helping our customers to thrive as
we transition to net zero.

 

Our 'Springboard to Sustainable Recovery' report, which we published in 2021,
highlights this.

 

The report shows that if small and medium-sized enterprises get the right
support, they can deliver a significant amount of the UK's abatement targets.

 

An action which could deliver more than £160 billion in climate opportunities
for our customers.

 

We believe being transparent about our climate progress is also vital.

 

And as Howard has mentioned, through the bank's first climate resolution, we
are giving our shareholders a chance to have their Say on Climate.

 

This will not only promote transparency about our climate ambitions and
strategic direction, but also provide feedback to help us shape our future
climate transition planning.

 

We will also drive growth through our continued customer focus.

 

We know there is an opportunity in the UK for a bank that genuinely
understands its customers - what they want now, what they will need next, and
what they will need for the future.

And this - I believe - is the opportunity we uniquely have.

Whether that be through our continued investment in data and digital, giving
us the ability to know our customers and their needs better; or through
starting customer relationships earlier in the lifecycle, to support the next
generation.

For example, last year we launched our 'CareerSense' programme - providing
more than 8,000 young people with free access to tools that will develop
critical skills and support their employability prospects.

And recently, we announced our collaboration with Marcus Rashford. Together we
are creating a programme that builds young people's financial confidence and
helps them develop a positive relationship with money.

Finally, we continue to focus on supporting businesses across the country.

We are already the leading bank for small and medium businesses in the UK with
a leading net promoter score.

Last year we supported SME's with 2.2 billion pounds of gross lending and we
processed a quarter of all UK payments.

As the economy recovers, we continue to invest and support these businesses
which drive around half of UK turnover and employ 60% of the private sector
workforce.

One example of our investment is our payments proposition.

Our merchant acquiring platform Tyl allows businesses to take payments from
customers via a card, phone or online.

While another of our services, called Payit, uses open banking technology so
businesses can manage online payments direct to their customers' bank accounts
in near real time without needing to know or store their card or account
details.

These are just a couple of examples of the innovation we are pursuing to
support our business customers.

So, looking forward to this year and beyond, we can take confidence from the
strong progress of the last two years as we returned to profitability, reduced
government ownership to below 50% and continued our 3 billion pound investment
programme to make better use of data and digital to deliver a better and
simpler banking experience for our customers.

Against a challenging backdrop, it is as important as ever that the Group
remains focused on our purpose: championing potential, helping people,
families and businesses to thrive.

In doing so, we are able to create deeper and more meaningful relationships
with our customers, giving them the support they need at every stage of their
lives - whether that is buying a house, saving for retirement, or setting up
and growing their own business, and importantly, helping them navigate the
times ahead.

Living up to our purpose is therefore not only the right thing to do, it also
has a strong commercial imperative, helping us to create value, drive growth
and deliver sustainable returns for our shareholders.

 

 

Forward-looking statements

This document contains 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: the impact of the Covid-19 pandemic, its regulatory
capital position and related requirements, its financial position,
profitability and financial performance (including financial, capital, cost
savings and operational targets), the implementation of its Purpose-led
strategy, its ESG and climate related targets, its access to adequate sources
of liquidity and funding, increasing competition from new incumbents and
disruptive technologies, 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, the transition of
LIBOR and IBOR rates to alternative risk free rates and NatWest Group's
exposure to economic and political risks (including with respect to terms
surrounding Brexit and climate change), 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, the impact of the Covid-19 pandemic, 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 (including with respect to
goodwill), 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 UK 2021 Annual Report and Accounts (ARA) and
NatWest Group plc's filings with the US Securities and Exchange Commission,
including, but not limited to, NatWest Group plc's most recent Annual Report
on Form 20-F and Reports on Form 6-K. 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.

 

 

Legal Entity Identifier: 2138005O9XJIJN4JPN90

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