REG - NatWest Group plc - NatWest Group plc Interim Results 2025
25/07/2025 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250725:nRSY5189Sa&default-theme=true
RNS Number : 5189S NatWest Group plc 25 July 2025
Inside this report
Business performance summary
2 H1 2025 performance summary
3 Performance key metrics and ratios
5 Chief Financial Officer's review
7 Retail Banking
8 Private Banking & Wealth Management
9 Commercial & Institutional
10 Central items & other
11 Segment performance
Risk and capital management
16 Credit risk
16 Economic loss drivers
20 Governance and post model adjustments
22 Measurement uncertainty and ECL
sensitivity analysis
24 Measurement uncertainty and ECL
adequacy
25 Credit risk - Banking activities
25 Financial instruments within the scope of the
IFRS 9 ECL framework
26 Segment analysis - portfolio summary
28 Segmental loans and impairment metrics
29 Sector analysis - portfolio summary
34 Non-Personal forbearance
36 Personal portfolio
39 Commercial real estate
40 Flow statements
Risk and capital management continued
47 Stage 2 decomposition by a significant
increase in credit risk trigger
49 Asset quality
53 Credit risk - Trading activities
56 Capital, liquidity and funding risk
67 Non-traded market risk
71 Traded market risk
71 Pension risk
Financial statements and notes
72 Condensed consolidated income statement
73 Condensed consolidated statement of
comprehensive income
74 Condensed consolidated balance sheet
75 Condensed consolidated statement of
changes in equity
77 Condensed consolidated cash flow statement
78 Presentation of condensed consolidated
financial statements
78 Net interest income
79 Non-interest income
80 Operating expenses
81 Segmental analysis
84 Tax
85 Financial instruments - classification
87 Financial instruments - valuation
Financial statements and notes continued
92 Trading assets and liabilities
93 Loan impairment provisions
94 Provisions for liabilities and charges
94 Dividends
94 Contingent liabilities and commitments
95 Litigation and regulatory matters
101 Related party transactions
101 Post balance sheet events
101 Date of approval
102 Auditor's independent review report to NatWest Group plc
Group plc
Additional information
103 NatWest Group plc summary risk factors
105 Statement of directors' responsibilities
106 Presentation of information
106 Statutory accounts
106 Forward-looking statements
107 Share information and contacts
108 Appendix
108 Non-IFRS financial measures
113 Performance measures not defined
under IFRS
H1 2025 performance summary
Chief Executive, Paul Thwaite, commented:
"NatWest Group's strong performance in the first half of the year reflects our
consistent support for our customers and, in turn, delivery for our
shareholders. We have today upgraded our income and returns guidance for 2025,
as well as announcing a 9.5p interim dividend and a £750 million share
buyback.
The role we play as a trusted partner to over 20 million customers is
fundamental to our strategy and we continue to focus on helping them achieve
their ambitions, with lending, deposits and assets under management once again
increasing in H1 2025. With positive momentum in our business, we are
ambitious for the future and see clear opportunities for further disciplined
growth. This is complemented by our focus on bank-wide simplification, as we
quietly revolutionise how we operate, enhancing our tech and AI capabilities
in order to better meet and anticipate the evolving needs of our customers.
Having returned to full private ownership in Q2 2025, NatWest Group is well
placed to step up and play its part in supporting economic growth across the
UK and, in doing so, to create sustainable value for all our stakeholders."
H1 2025 performance
We have delivered a strong H1 2025 performance with continued balance sheet
growth, an attributable profit of £2.5 billion, with earnings per share of
30.9 pence, up 28% on prior year, a Return on Tangible Equity (RoTE) of 18.1%
and a cost:income ratio (excl. litigation and conduct) of 48.8%, compared with
55.5% in the prior year.
This drove strong capital generation pre-distributions of 101 basis points
which allows us to announce an interim dividend of 9.5 pence per share, 58%
higher than the prior year, and we intend to commence a share buyback
programme of £750 million in the second half of 2025.
- We continue to be disciplined in our approach to growth, deploying
capital where returns are attractive. We are pleased to have added 1.1 million
new customers in the first half of 2025, both organically and through the
Sainsbury's Bank transaction which completed on 1 May 2025. In the first half
of 2025 we delivered broad-based balance sheet growth, with net loans to
customers excluding central items up by £11.6 billion, including £2.2
billion of balances acquired from Sainsbury's Bank as we added scale to our
unsecured business. Customer deposits excluding central items increased by
£4.5 billion, including £2.4 billion of balances acquired from Sainsbury's
Bank.
- We are making good progress on becoming a simpler bank, delivering
efficiencies from our investment programmes as seen in the 6.7 percentage
point improvement in our cost:income (excl. litigation and conduct) ratio,
compared with the prior year. We are digitising more customer journeys and
deploying AI to improve our productivity and customer experience which is
reflected in our improved NPS scores across all three businesses. We announced
new collaborations with OpenAI, AWS and Accenture to accelerate our data
simplification and enable greater personalisation for our customers.
- We continue to actively manage our balance sheet and risk, delivering
£2.9 billion of RWA management actions as we created capacity for growth. Our
Common Equity Tier 1 (CET1) ratio of 13.6% was in line with Q4 2024 and c.20
basis points lower than Q1 2025. TNAV per share in H1 2025 increased by 22
pence to 351 pence.
Outlook((1))
The following statements are based on our current expectations for interest
rates and economic conditions. We will monitor and react to market conditions
and refine our internal forecasts as the economic position evolves.
We have strengthened our guidance and in 2025 we expect:
- to achieve a Return on Tangible Equity of greater than 16.5%.
- income excluding notable items to be greater than £16.0 billion.
- Group operating costs, excluding litigation and conduct costs, to
be around £8.1 billion including £0.1 billion of one-time integration costs.
- our loan impairment rate to be below 20 basis points.
- RWAs to be in the range of £190-195 billion at the end of 2025,
dependent on final CRD IV model outcomes.
In 2027 we continue to expect:
- to achieve a Return on Tangible Equity for the Group of greater
than 15%.
Capital:
- we continue to target a CET1 ratio in the range of 13-14%.
- we expect to pay ordinary dividends of around 50% of attributable
profit from 2025 and will consider buybacks as appropriate.
(1) The guidance, targets, expectations and trends discussed in this
section represent NatWest Group plc management's current expectations and are
subject to change, including as a result of the factors described in the
NatWest Group plc Risk Factors in the 2024 Annual Report and Accounts and Form
20-F and the Summary Risk Factors in this announcement. These statements
constitute forward-looking statements. Refer to Forward-looking statements in
this announcement.
Business performance summary
Half year ended Quarter ended
30 June 30 June 30 June 31 March 30 June
2025 2024 Variance 2025 2025 Variance 2024 Variance
Summary consolidated income statement £m £m % £m £m % £m %
Net interest income 6,120 5,408 13.2% 3,094 3,026 2.2% 2,757 12.2%
Non-interest income 1,865 1,726 8.1% 911 954 (4.5%) 902 1.0%
Total income 7,985 7,134 11.9% 4,005 3,980 0.6% 3,659 9.5%
Litigation and conduct costs (118) (101) 16.8% (74) (44) 68.2% (77) (3.9%)
Other operating expenses (3,900) (3,956) (1.4%) (1,965) (1,935) 1.6% (1,928) 1.9%
Operating expenses (4,018) (4,057) (1.0%) (2,039) (1,979) 3.0% (2,005) 1.7%
Profit before impairment losses/releases 3,967 3,077 28.9% 1,966 2,001 (1.7%) 1,654 18.9%
Impairment (losses)/releases (382) (48) nm (193) (189) 2.1% 45 nm
Operating profit before tax 3,585 3,029 18.4% 1,773 1,812 (2.2%) 1,699 4.4%
Tax charge (910) (801) 13.6% (439) (471) (6.8%) (462) (5.0%)
Profit from continuing operations 2,675 2,228 20.1% 1,334 1,341 (0.5%) 1,237 7.8%
Profit from discontinued operations, net of tax - 11 nm - - nm 15 nm
Profit for the period 2,675 2,239 19.5% 1,334 1,341 (0.5%) 1,252 6.5%
Performance key metrics and ratios
Notable items within total income (1) £23m £130m nm (£5m) £28m nm £69m nm
Total income excluding notable items (1) £7,962m £7,004m 13.7% £4,010m £3,952m 1.5% £3,590m 11.7%
Net interest margin (1) 2.28% 2.07% 21bps 2.28% 2.27% 1bp 2.10% 18bps
Average interest earning assets (1) £542bn £524bn 3.4% £543bn £542bn 0.2% £528bn 2.8%
Cost:income ratio (excl. litigation and conduct) (1) 48.8% 55.5% (6.7%) 49.1% 48.6% 0.5% 52.7% (3.6%)
Loan impairment rate (1) 19bps 3bps 16bps 19bps 19bps - (5bps) 24bps
Profit attributable to ordinary shareholders £2,488m £2,099m 18.5% £1,236m £1,252m (1.3%) £1,181m 4.7%
Total earnings per share attributable to ordinary shareholders - basic 30.9p 24.2p 6.7p 15.3p 15.5p (0.2p) 13.7p 1.6p
Return on Tangible Equity (RoTE) (1) 18.1% 16.4% 1.7% 17.7% 18.5% (0.8%) 18.5% (0.8%)
Climate and sustainable funding and financing (2) £16.9bn £16.3bn 3.7% £9.1bn £7.8bn 16.7% £9.7bn (6.2%)
nm = not meaningful.
For the footnotes to this table refer to the following page.
Business performance summary continued
As at
30 June 31 March 31 December
2025 2025 Variance 2024 Variance
Balance sheet £bn £bn % £bn %
Total assets 730.8 710.0 2.9% 708.0 3.2%
Loans to customers - amortised cost 407.1 398.8 2.1% 400.3 1.7%
Loans to customers excluding central items (1,3) 380.1 371.9 2.2% 368.5 3.1%
Loans to customers and banks - amortised cost and FVOCI 417.9 409.5 2.1% 410.2 1.9%
Total impairment provisions (4) 3.7 3.5 5.7% 3.4 8.8%
Expected credit loss (ECL) coverage ratio 0.87% 0.86% 1bp 0.83% 4bps
Assets under management and administration (AUMA) (1) 51.8 48.5 6.8% 48.9 5.9%
Customer deposits 436.8 434.6 0.5% 433.5 0.8%
Customer deposits excluding central items (1,3) 435.8 433.4 0.6% 431.3 1.0%
Liquidity and funding
Liquidity Coverage Ratio (LCR) 147% 150% (3.0%) 150% (3.0%)
Liquidity portfolio 217 222 (2.3%) 222 (2.3%)
Net Stable Funding Ratio (NSFR) 134% 136% (2.0%) 137% (3.0%)
Loan:deposit ratio (excl. repos and reverse repos) (1) 86% 85% 1% 85% 1%
Total wholesale funding 91 87 4.6% 86 5.8%
Short-term wholesale funding 35 33 6.1% 33 6.1%
Capital and leverage
Common Equity Tier 1 (CET1) ratio (5) 13.6% 13.8% (20bps) 13.6% -
Total capital ratio (5) 19.7% 20.6% (90bps) 19.7% -
Pro forma CET1 ratio (excl. foreseeable items) (6) 14.6% 14.8% (20bps) 14.3% 30bps
Risk-weighted assets (RWAs) 190.1 187.0 1.7% 183.2 3.8%
UK leverage ratio 5.0% 5.2% (0.2%) 5.0% -
Tangible net asset value (TNAV) per ordinary share (1,7) 351p 347p 4p 329p 22p
Number of ordinary shares in issue (millions) (7) 8,088 8,067 0.3% 8,043 0.6%
(1) Refer to the Non-IFRS financial measures appendix for details
of the basis of preparation and reconciliation of non-IFRS financial measures
and performance metrics.
(2) NatWest Group used 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 target to provide £100
billion in climate and sustainable funding and financing between 1 July 2021
and the end of 2025. This included both provision of committed (on and
off-balance sheet) funding and financing, including provision of services for
underwriting issuances and private placements. The climate and sustainable
funding and financing framework which underpinned our £100 billion target has
been retired and replaced with our climate and transition finance framework,
available on natwestgroup.com.
(3) Central items includes Treasury repo activity.
(4) Includes £0.1 billion relating to off-balance sheet exposures
(31 March 2025 - £0.1 billion; 31 December 2024 - £0.1 billion).
(5) Refer to the Capital, liquidity and funding risk section for
details of the basis of preparation.
(6) The pro forma CET1 ratio at 30 June 2025 excludes foreseeable
items of £1,994 million: £1,244 million for ordinary dividends and £750
million foreseeable charges (31 March 2025 excludes foreseeable items of
£1,875 million for ordinary dividends; 31 December 2024 excludes foreseeable
items of £1,249 million for ordinary dividends).
(7) The number of ordinary shares in issue excludes own shares
held.
Chief Financial Officer's review
We delivered a strong performance in the first half of 2025, with operating
profit of £3,585 million and a RoTE of 18.1%.
In the first half of 2025 we supported our customers and delivered broad-based
balance sheet growth, with net loans to customers excluding central items up
by £11.6 billion and customer deposits excluding central items increasing by
£4.5 billion, contributing to growth in total income excluding notable items,
up by 13.7% on H1 2024 and 1.5% on Q1 2025. Cost:income ratio (excl.
litigation and conduct) was 48.8% in H1 2025 compared with 55.5% in H1 2024 as
we continued to simplify the business.
Our CET1 ratio remains within our targeted range at 13.6% and we announce an
interim dividend of 9.5 pence per share and intend to commence a share buyback
programme of £750 million in the second half of 2025, bringing total
distributions announced in H1 2025 to £1.5 billion. We continued to actively
manage the balance sheet, delivering RWA management actions of £2.9 billion
in H1 2025 which created capacity for growth.
Strong H1 and Q2 2025 performance
- Total income increased by 0.6% in Q2 2025 compared with Q1 2025 and
was 11.9% higher in H1 2025 than H1 2024. Total income excluding notable items
was £58 million higher in Q2 2025 than Q1 2025 due to disciplined balance
sheet growth, deposit margin expansion and the benefit of one additional day
in the quarter. As a result, Q2 2025 NIM of 2.28% was 1 basis point higher
than Q1 2025. H1 2025 total income excluding notable items was 13.7% higher
than H1 2024 as balance growth, higher structural hedge income and increased
trading income were partly offset by the impact of base rate cuts and changes
in the mix of our customer deposits.
- Q2 2025 total operating expenses were £60 million higher than Q1 2025
and H1 2025 was £39 million lower than H1 2024. In Q2 2025, other operating
expenses were £30 million higher than Q1 2025 primarily reflecting property
exit costs as a result of transformation and digitisation, a £19 million
increase in one-time integration costs following the acquisition of balances
from Sainsbury's Bank and pay inflation and increased National Insurance
charges. H1 2025 other operating expenses were £56 million lower than the
prior year as we continue to make good progress on becoming a simpler bank,
including ongoing digitisation of Retail Banking, costs relating to the
strategic exit from Poland in H1 2024, contract efficiencies through the use
of strategic partners, and our withdrawal from the Republic of Ireland.
Headcount reduced by around 1,400 FTE compared with H1 2024 and was broadly
stable compared with H2 2024.
- A net impairment charge of £193 million, or 19 basis points of gross
customer loans, in Q2 2025 included an £81 million charge on the acquisition
of balances from Sainsbury's Bank and post model adjustment releases of £64
million. Compared with Q1 2025, our ECL provision increased by £0.1 billion
to £3.7 billion and our ECL coverage ratio has increased from 0.86% to 0.87%.
- We have reviewed and updated our macro-economic assumptions, with
limited changes compared with our previous assumptions, and we retain post
model adjustments of £0.2 billion related to economic uncertainty, or 6.4% of
total impairment provisions. We remain comfortable with the strong credit
performance of our diversified prime loan book.
- As a result, we are pleased to report an attributable profit for H1
2025 of £2,488 million, with earnings per share of 30.9 pence and a RoTE of
18.1%. Q2 2025 RoTE was 17.7%.
Robust balance sheet with strong capital and liquidity levels
- We continued to support our customers with net loans to customers
excluding central items growth of £11.6 billion in the first half of 2025 and
£8.2 billion in Q2 2025, which included £2.2 billion of balances acquired
from Sainsbury's Bank. The remaining £6.0 billion growth in Q2 2025 was
disciplined and well balanced across our portfolio, including an increase in
Commercial Mid-market, reflecting higher lending to housebuilders and housing
associations, and Corporate & Institutions, largely in funds lending.
Retail Banking mortgage balances increased by £1.4 billion in Q2 2025.
- Between 1 July 2021 and the 30 June 2025 we provided £110.3 billion
in climate and sustainable funding and financing and during Q1 2025 we
exceeded our target to provide £100 billion between 1 July 2021 and the end
of 2025. To reflect our progress, we have announced a new target to provide
£200 billion in climate and transition finance between 1 July 2025 and the
end of 2030. As part of this we will continue to monitor progress against our
aim to provide £10 billion in lending for EPC A and B-rated residential
properties between 1 January 2023 and the end of 2025, with £9.6 billion lent
up to 30 June 2025. The climate and sustainable funding and financing
framework which underpinned our previous £100 billion target has been retired
and replaced with our climate and transition finance framework, available on
natwestgroup.com.
- Customer deposits excluding central items increased £4.5 billion in
H1 2025 and £2.4 billion in Q2 2025, which included £2.4 billion of balances
acquired from Sainsbury's Bank and growth within Corporate & Institutions
partially offset by lower current account balances in Retail Banking. Term
balances remained broadly stable for the second quarter at 17% of the book, up
from 16% at Q1 2025.
- The LCR of 147%, representing £51.7 billion headroom above 100%
minimum requirement, decreased by 3 percentage points compared with Q1 2025
primarily due to increased lending (including balances acquired from
Sainsbury's Bank) partially offset by issuances. Our primary liquidity at Q2
2025 was £160.6 billion and £86.6 billion, or 54%, of which was cash and
balances at central banks. Total wholesale funding increased by £3.5 billion
in the quarter to £90.8 billion.
- TNAV per share increased by 4 pence in the quarter to 351 pence
primarily reflecting the profit for the period.
Chief Financial Officer's review continued
Shareholder return supported strong capital generation
- The CET1 ratio of 13.6% was c.20 basis points lower than Q1 2025
principally reflecting the increase in RWAs, c.20 basis points, the ordinary
dividend accrual, c.30 basis points, and share buybacks, c.40 basis points,
partially offset by the attributable profit for the quarter, c.70 basis
points.
- RWAs increased by £6.9 billion in the first half of 2025 to £190.1
billion and £3.1 billion in Q2 2025 largely reflecting lending growth, an
increase for CRD IV models and £1.6 billion in relation to the balances
acquired from Sainsbury's Bank partially offset by another strong quarter of
RWA management actions, £1.7 billion, as we continued to actively manage the
balance sheet creating capacity for growth.
Business performance summary
Retail Banking
Half year ended Quarter ended
30 June 30 June 30 June 31 March 30 June
2025 2024 2025 2025 2024
£m £m £m £m £m
Total income 3,134 2,690 1,594 1,540 1,365
Operating expenses (1,423) (1,470) (742) (681) (697)
of which: Other operating expenses (1,411) (1,457) (734) (677) (690)
Impairment losses (226) (122) (117) (109) (59)
Operating profit 1,485 1,098 735 750 609
Return on equity (1) 23.8% 18.4% 23.2% 24.5% 20.3%
Net interest margin (1) 2.58% 2.26% 2.59% 2.58% 2.31%
Cost:income ratio
(excl. litigation and conduct) (1) 45.0% 54.2% 46.0% 44.0% 50.5%
Loan impairment rate (1) 21bps 12bps 22bps 21bps 12bps
As at
30 June 31 March 31 December
2025 2025 2024
£bn £bn £bn
Net loans to customers (amortised cost) 214.3 210.4 208.4
Customer deposits 196.6 195.7 194.8
RWAs 69.4 66.8 65.5
(1) Refer to the Non-IFRS financial measures appendix for details of
the basis of preparation and reconciliation of non-IFRS financial measures and
performance metrics.
During H1 2025, Retail Banking delivered a return on equity of 23.8% and an
operating profit of £1,485 million, with continued positive income and net
interest margin momentum. We have supported sectors that are vital to the
health and success of the UK economy, including the housing market, with
increased net mortgage lending in H1 2025 of £3.4 billion. We welcomed an
additional 1 million customers from balances acquired from Sainsbury's Bank in
the quarter and have continued to improve our customer proposition, including
the launch of our family-backed mortgages.
Retail Banking provided £2.1 billion of climate and sustainable funding and
financing in H1 2025 from lending on properties with an EPC rating of A or B.
H1 2025 performance
- Total income was £444 million, or 16.5%, higher than H1 2024
reflecting deposit balance growth and deposit margin expansion, coupled with
the benefit of balances acquired from Sainsbury's Bank adding £21 million of
income, partly offset by the impact of base rate cuts and the mix shift from
non-interest bearing to interest bearing balances.
- Net interest margin was 32 basis points higher than H1 2024 largely
reflecting the factors noted above.
- Other operating expenses were £46 million, or 3.2%, lower than H1
2024 reflecting lower severance and property exit costs and a 6.3% reduction
in headcount. This was partially offset by the impact of costs associated with
the acquisition of balances from Sainsbury's Bank and timing of FCA regulatory
fees.
- An impairment charge of £226 million, compared with a £122 million
charge in H1 2024, largely driven by the impact of balances acquired from
Sainsbury's Bank.
- Net loans to customers increased by £5.9 billion, or 2.8%, in H1 2025
driven by £3.4 billion higher mortgage balances. Personal advances increased
by £1.4 billion, or 17.3% and credit card balances increased £1.3 billion,
or 18.6% in H1 2025, reflecting the impact of balances acquired from
Sainsbury's Bank and underlying credit card growth.
- Customer deposits increased by £1.8 billion, or 0.9%, in H1 2025,
driven by overall personal market growth, and £2.4 billion of savings
balances acquired from Sainsbury's Bank, partly offset by seasonal tax
payments.
- RWAs increased by £3.9 billion, or 6.0%, in H1 2025 primarily due to
the impact of balances acquired from Sainsbury's Bank, the annual update to
operational risk, model updates and book movements.
Q2 2025 performance
- Total income was £54 million or 3.5% higher than Q1 2025 reflecting
the impact of balances acquired from Sainsbury's Bank, deposit margin
expansion, and the impact of one additional day in the quarter.
- Net interest margin was 1 basis point higher than Q1 2025 largely
reflecting the factors noted above, offset by the flow through impact of new
mortgage lending in Q1 2025, ahead of the increase in Stamp Duty Land Tax on 1
April 2025.
- Other operating expenses were £57 million, or 8.4%, higher than Q1
2025 reflecting the impact of costs associated with the acquisition of
balances from Sainsbury's Bank, FCA regulatory fees, pay award and National
Insurance increase, and higher property exit costs, partly offset by the
non-repeat of the Q1 2025 Bank of England levy.
- An impairment charge of £117 million, compared with a £109 million
charge in Q1 2025, including £81 million impact of balances acquired from
Sainsbury's Bank offset by modelling related releases.
- Net loans to customers increased by £3.9 billion, or 1.9%, in Q2
2025. Personal advances increased £1.3 billion, or 15.9%, including £1.2
billion of balances acquired from Sainsbury's Bank, whilst credit cards
increased £1.3 billion or 18.6%, including £1.0 billion of balances acquired
from Sainsbury's Bank. Mortgages increased by £1.4 billion in the quarter.
- Customer deposits increased by £0.9 billion, or 0.5%, in Q2 2025
reflecting £2.4 billion of savings balances acquired from Sainsbury's Bank,
partly offset by lower current account balances.
- RWAs increased by £2.6 billion, or 3.9%, in Q2 2025 primarily due to
the impact of balances acquired from Sainsbury's Bank, model updates and book
movements.
Business performance summary continued
Private Banking & Wealth Management((1))
Half year ended Quarter ended
30 June 30 June 30 June 31 March 30 June
2025 2024 2025 2025 2024
£m £m £m £m £m
Total income 539 444 274 265 236
of which: AUMA income (2) 144 130 72 72 68
Operating expenses (359) (356) (172) (187) (175)
of which: Other operating expenses (358) (355) (171) (187) (175)
Impairment (losses)/releases (1) 11 - (1) 5
Operating profit 179 99 102 77 66
Return on equity (2) 19.8% 10.5% 22.5% 17.1% 14.4%
Net interest margin (2) 2.57% 2.18% 2.56% 2.59% 2.30%
Cost:income ratio
(excl. litigation and conduct) (2) 66.4% 80.0% 62.4% 70.6% 74.2%
Loan impairment rate (2) 1bp (12bps) - 2bps (11bps)
AUMA net flows (£bn) (2) 2.1 1.3 1.3 0.8 1.0
As at
30 June 31 March 31 December
2025 2025 2024
£bn £bn £bn
Net loans to customers (amortised cost) 18.6 18.4 18.2
Customer deposits 41.3 41.2 42.4
Assets under management (AUM) (2) 39.0 36.7 37.0
Assets under administration (AUA) (2) 12.8 11.8 11.9
Total assets under management and administration (AUMA) (2) 51.8 48.5 48.9
Total combined assets and liabilities (CAL) (2,3) 110.4 106.9 108.4
RWAs 11.5 11.3 11.0
(1) Effective from Q2 2025, the reportable segment Private Banking was
renamed Private Banking & Wealth Management. This does not change the
financial results of Private Banking & Wealth Management or the
consolidated financial results of NatWest Group.
(2) Refer to the Non-IFRS financial measures appendix for details of
basis of preparation and reconciliation of non-IFRS financial measures and
performance metrics.
(3) CAL refers to customer deposits, net loans to customers and AUMA.
To avoid double counting, investment cash is deducted as it is reported within
customer deposits and AUMA.
During H1 2025, Private Banking & Wealth Management continued to deliver a
strong performance with an operating profit of £179 million, return on equity
of 19.8% and cost:income ratio of 66.4%. We have seen growth across AUMAs,
lending and deposits in the quarter. In response to client demand, we have
introduced digital auto-renewal functionality for fixed-term deposits within
the Coutts app, enabling clients optionality and convenience.
Private Banking & Wealth Management provided £0.2 billion of climate and
sustainable funding and financing in H1 2025, principally in relation to
mortgages on residential properties with an EPC rating of A or B and wholesale
transactions.
H1 2025 performance
- Total income was £95 million, or 21.4%, higher than H1 2024 primarily
reflecting balance growth across deposits, lending and AUMA, and deposit
margin expansion.
- Net interest margin was 39 basis points higher than H1 2024 largely
reflecting deposit margin expansion and growth across lending and deposits.
- Other operating expenses were £3 million, or 0.8%, higher than H1
2024 primarily reflecting higher investment costs and one off items.
- An impairment charge of £1 million in H1 2025, compared with an £11
million release in H1 2024, largely reflecting the non-repeat of good book
releases in the prior year, with Stage 3 charges remaining at low levels.
- CAL was £2 billion, or 1.8%, higher in H1 2025, supported by growth
in AUMA and lending balances, partly offset by lower deposit balances.
- Net loans to customers were £0.4 billion, or 2.2%, higher in H1 2025
driven by higher commercial loan balances, due to strong client engagement and
competitive pricing strategies.
- Customer deposits decreased by £1.1 billion, or 2.6%, in H1 2025
largely reflecting seasonal tax payments and outflows of transitory balances.
- AUMA balances increased by £2.9 billion in H1 2025 primarily driven
by AUM net inflows of £1.5 billion, AUA net inflows of £0.2 billion, and
Cushon net inflows of £0.3 billion supported by positive market movements of
£0.8 billion. AUM net flows as a percentage of opening balances are 8.1% on
an annualised basis.
Q2 2025 performance
- Total income was £9 million, or 3.4%, higher than Q1 2025 primarily
reflecting an additional day in the quarter and the impact of higher fee
income.
- Net interest margin was 3 basis points lower than Q1 2025 largely
reflecting changes in product mix.
- Other operating expenses were £16 million, or 8.6%, lower than Q1
2025 primarily reflecting the non-repeat of the Q1 2025 Bank of England levy
and lower severance costs.
- CAL was £3.5 billion, or 3.3%, higher than Q1 2025 due to increases
in AUMA, deposits and lending balances.
- Net loans to customers were £0.2 billion, or 1.1%, higher than Q1
2025 driven by an increase in commercial loans.
- Customer deposits were £0.1 billion, or 0.2%, higher than Q1 2025 as
a strong performance on instant access was partially offset by a decrease in
current accounts.
- AUMA balances increased by £3.3 billion in the quarter primarily
driven by AUM net inflows of £0.7 billion, AUA net inflows of £0.4 billion
and Cushon net inflows of £0.1 billion, along with positive market movements
of £2.0 billion. AUM net flows as a percentage of opening balances are 7.6%
on an annualised basis.
Business performance summary continued
Commercial & Institutional
Half year ended Quarter ended
30 June 30 June 30 June 31 March 30 June
2025 2024 2025 2025 2024
£m £m £m £m £m
Net interest income 2,955 2,543 1,496 1,459 1,297
Non-interest income 1,334 1,257 651 683 644
Total income 4,289 3,800 2,147 2,142 1,941
Operating expenses (2,151) (2,150) (1,107) (1,044) (1,099)
of which: Other operating expenses (2,062) (2,073) (1,047) (1,015) (1,053)
Impairment (losses)/releases (154) 57 (76) (78) 96
Operating profit 1,984 1,707 964 1,020 938
Return on equity (1) 18.6% 16.2% 17.9% 19.3% 17.8%
Net interest margin (1) 2.33% 2.10% 2.35% 2.32% 2.12%
Cost:income ratio
(excl. litigation and conduct) (1) 48.1% 54.6% 48.8% 47.4% 54.3%
Loan impairment rate (1) 21bps (8bps) 20bps 22bps (28bps)
As at
30 June 31 March 31 December
2025 2025 2024
£bn £bn £bn
Net loans to customers (amortised cost) 147.2 143.1 141.9
Customer deposits 197.9 196.5 194.1
Funded assets (1) 343.1 336.1 321.6
RWAs 107.8 107.3 104.7
(1) Refer to the Non-IFRS financial measures appendix for details of
the basis of preparation and reconciliation of non-IFRS financial measures and
performance metrics.
During H1 2025, Commercial & Institutional continued to deliver a strong
performance in income and operating profit, supporting a return on equity of
18.6%, an increase from 16.2% in H1 2024. We saw another quarter of higher
demand for FX risk management against a backdrop of volatile markets,
supporting income. We have supported sectors that are vital to the health and
success of the UK economy, including continued support for Housing
Associations, as we made strong progress on our commitment to provide £7.5
billion by the end of 2026 with £2.7 billion in H1 2025 and £6.8 billion
delivered to date, and through our digital led Business Banking proposition
grew gross new lending by 63% in H1 2025 compared to H1 2024. We have improved
customer experience through our Bankline transformation, resulting in a
significant take up of connected products.
Commercial & Institutional provided £14.6 billion of climate and
sustainable funding and financing in H1 2025 to support customers investing in
the transition to net zero.
H1 2025 performance
- Total income was £489 million, or 12.9%, higher than H1 2024
primarily reflecting strong customer activity across markets supporting higher
trading income, customer lending growth and deposit margin expansion.
- Net interest margin was 23 basis points higher than H1 2024 primarily
reflecting deposit margin expansion.
- Other operating expenses were £11 million, or 0.5%, lower than H1
2024 reflecting lower staff and non-staff costs.
- An impairment charge of £154 million in H1 2025, compared with a £57
million release in H1 2024 reflecting lower good book releases and higher
Stage 3 charges.
- Net loans to customers increased by £5.3 billion, or 3.7%, in H1 2025
principally due to growth within Corporate & Institutions and Commercial
Mid-market, partly offset by UK Government scheme repayments of £0.8 billion.
- Customer deposits increased by £3.8 billion, or 2.0%, in H1 2025
largely reflecting growth within Corporate & Institutions((1)).
- RWAs increased by £3.1 billion, or 3.0%, in H1 2025 primarily driven
by the annual update to operational risk, an increase in credit risk from book
growth and an increase for CRD IV models, partly offset by lower market risk
and continued RWA management activity.
Q2 2025 performance
- Total income was £5 million, or 0.2%, higher than Q1 2025 primarily
due to currency trading income and lending growth, deposit margin expansion,
as well as the impact of an additional day in the quarter, partly offset by
lower debt capital markets and fixed income trading income.
- Net interest margin was 3 basis points higher than Q1 2025 primarily
reflecting deposit margin expansion, partly offset by asset mix impacts.
- Other operating expenses were £32 million, or 3.2%, higher than Q1
2025 primarily reflecting the impact of FCA fees and inflationary increases in
staff costs, partly offset by the non-repeat of the Q1 2025 Bank of England
levy.
- An impairment charge of £76 million in Q2 2025 compared with a £78
million charge in Q1 2025 reflecting a reduction in post model adjustments,
partly offset by an increase in Stage 3 charges.
- Net loans to customers increased by £4.1 billion, or 2.9%, in Q2 2025
principally due to growth within Commercial Mid-market and Corporate &
Institutions, partly offset by UK Government scheme repayments of £0.4
billion.
- Customer deposits increased by £1.4 billion, or 0.7%, in Q2 2025
largely reflecting growth within Corporate & Institutions.
- RWAs increased by £0.5 billion, or 0.5%, in Q2 2025 primarily driven
by book growth and an increase for CRD IV models, partly offset by lower
market risk and continued RWA management activity.
(1) In addition, client transfers from Commercial Mid-market to
Corporate & Institutions were undertaken with a value of £5.9 billion at
the end of Q2 2025 with an equivalent value of £3.3 billion at Q4 2024.
Business performance summary continued
Central items & other
Half year ended Quarter ended
30 June 30 June 30 June 31 March 30 June
2025 2024 2025 2025 2024
£m £m £m £m £m
Continuing operations
Total income 23 200 (10) 33 117
Operating expenses (85) (81) (18) (67) (34)
of which: Other operating expenses (69) (71) (13) (56) (10)
Impairment (losses)/releases (1) 6 - (1) 3
Operating (loss)/profit (63) 125 (28) (35) 86
As at
30 June 31 March 31 December
2025 2025 2024
£bn £bn £bn
Net loans to customers (amortised cost) 27.0 26.9 31.8
Customer deposits 1.0 1.2 2.2
RWAs 1.4 1.6 2.0
H1 2025 performance
- Total income was £177 million lower than H1 2024 primarily reflecting
lower gains on interest and FX risk management derivatives not in accounting
hedge relationships.
- Other operating expenses were £2 million, or 2.8%, lower than H1
2024.
- Net loans to customers decreased by £4.8 billion, or 15%, in H1 2025
driven by reverse repo activity in Treasury.
- Customer deposits of £1.0 billion decreased by £1.2 billion in H1
2025 primarily reflecting repo activity in Treasury.
Q2 2025 performance
- Total income was £43 million lower than Q1 2025 primarily driven by
lower Business Growth Fund profits and lower gains on interest and FX risk
management derivatives not in accounting hedge relationships.
- Other operating expenses were £43 million, or 77%, lower than Q1 2025
primarily due to one-off items including an HMRC tax credit and a VAT release.
- Net loans to customers increased by £0.1 billion in Q2 2025 driven by
reverse repo activity in Treasury.
- Customer deposits decreased by £0.2 billion in Q2 2025 reflecting
repo activity in Treasury.
Segment performance
Half year ended 30 June 2025
Private Banking
Retail & Wealth Commercial Central items Total NatWest
Banking Management (2) & Institutional & other Group
£m £m £m £m £m
Continuing operations
Income statement
Net interest income 2,922 363 2,955 (120) 6,120
Own credit adjustments - - 3 - 3
Other non-interest income 212 176 1,331 143 1,862
Total income 3,134 539 4,289 23 7,985
Direct expenses (396) (122) (782) (2,600) (3,900)
Indirect expenses (1,015) (236) (1,280) 2,531 -
Other operating expenses (1,411) (358) (2,062) (69) (3,900)
Litigation and conduct costs (12) (1) (89) (16) (118)
Operating expenses (1,423) (359) (2,151) (85) (4,018)
Operating profit/(loss) before impairment losses 1,711 180 2,138 (62) 3,967
Impairment losses (226) (1) (154) (1) (382)
Operating profit/(loss) 1,485 179 1,984 (63) 3,585
Income excluding notable items (1) 3,134 539 4,286 3 7,962
Additional information
Return on Tangible Equity (1) na na na na 18.1%
Return on equity (1) 23.8% 19.8% 18.6% nm na
Cost:income ratio (excl. litigation and conduct) (1) 45.0% 66.4% 48.1% nm 48.8%
Total assets (£bn) 238.6 29.1 414.9 48.2 730.8
Funded assets (£bn) (1) 238.6 29.1 343.1 47.0 657.8
Net loans to customers - amortised cost (£bn) 214.3 18.6 147.2 27.0 407.1
Loan impairment rate (1) 21bps 1bp 21bps nm 19bps
Impairment provisions (£bn) (1.9) (0.1) (1.7) - (3.7)
Impairment provisions - Stage 3 (£bn) (1.1) - (1.1) - (2.2)
Customer deposits (£bn) 196.6 41.3 197.9 1.0 436.8
Risk-weighted assets (RWAs) (£bn) 69.4 11.5 107.8 1.4 190.1
RWA equivalent (RWAe) (£bn) 70.0 11.5 108.8 2.0 192.3
Employee numbers (FTEs - thousands) 11.8 2.1 12.8 32.5 59.2
Third party customer asset rate (1) 4.31% 4.78% 6.12% nm nm
Third party customer funding rate (1) (1.83%) (2.82%) (1.65%) nm nm
Average interest earning assets (£bn) (1) 228.2 28.4 255.4 na 542.4
Net interest margin (1) 2.58% 2.57% 2.33% na 2.28%
nm = not meaningful, na = not applicable.
(1) Refer to the Non-IFRS financial measures appendix for details of
the basis of preparation and reconciliation of non-IFRS financial measures and
performance metrics.
(2) Effective from Q2 2025, the reportable segment Private Banking was
renamed Private Banking & Wealth Management. This does not change the
financial results of Private Banking & Wealth Management or the
consolidated financial results of NatWest Group.
Segment performance continued
Half year ended 30 June 2024
Private Banking
Retail & Wealth Commercial Central items Total NatWest
Banking Management (2) & Institutional & other Group
£m £m £m £m £m
Continuing operations
Income statement
Net interest income 2,475 285 2,543 105 5,408
Own credit adjustments - - (7) - (7)
Other non-interest income 215 159 1,264 95 1,733
Total income 2,690 444 3,800 200 7,134
Direct expenses (381) (126) (764) (2,685) (3,956)
Indirect expenses (1,076) (229) (1,309) 2,614 -
Other operating expenses (1,457) (355) (2,073) (71) (3,956)
Litigation and conduct costs (13) (1) (77) (10) (101)
Operating expenses (1,470) (356) (2,150) (81) (4,057)
Operating profit before impairment losses/releases 1,220 88 1,650 119 3,077
Impairment (losses)/releases (122) 11 57 6 (48)
Operating profit 1,098 99 1,707 125 3,029
Income excluding notable items (1) 2,690 444 3,807 63 7,004
Additional information
Return on Tangible Equity (1) na na na na 16.4%
Return on equity (1) 18.4% 10.5% 16.2% nm na
Cost:income ratio (excl. litigation and conduct) (1) 54.2% 80.0% 54.6% nm 55.5%
Total assets (£bn) 226.5 27.2 381.9 54.7 690.3
Funded assets (£bn) (1) 226.5 27.2 315.5 53.6 622.8
Net loans to customers - amortised cost (£bn) 203.3 18.1 133.9 24.0 379.3
Loan impairment rate (1) 12bps (12bps) (8bps) nm 3bps
Impairment provisions (£bn) (1.7) (0.1) (1.5) - (3.3)
Impairment provisions - Stage 3 (£bn) (1.0) - (0.9) (0.1) (2.0)
Customer deposits (£bn) 191.5 39.5 194.2 7.8 433.0
Risk-weighted assets (RWAs) (£bn) 62.3 11.0 104.9 2.6 180.8
RWA equivalent (RWAe) (£bn) 63.1 11.0 106.7 3.1 183.9
Employee numbers (FTEs - thousands) 12.6 2.2 12.8 33.0 60.6
Third party customer asset rate (1) 3.88% 4.99% 6.77% nm nm
Third party customer funding rate (1) (2.08%) (3.14%) (1.93%) nm nm
Average interest earning assets (£bn) (1) 220.1 26.3 244.0 na 524.4
Net interest margin (1) 2.26% 2.18% 2.10% na 2.07%
nm = not meaningful, na = not applicable.
(1) Refer to the Non-IFRS financial measures appendix for details of
the basis of preparation and reconciliation of non-IFRS financial measures and
performance metrics.
(2) Effective from Q2 2025, the reportable segment Private Banking was
renamed Private Banking & Wealth Management. This does not change the
financial results of Private Banking & Wealth Management or the
consolidated financial results of NatWest Group.
Segment performance continued
Quarter ended 30 June 2025
Private Banking
Retail & Wealth Commercial Central items Total NatWest
Banking Management (2) & Institutional & other Group
£m £m £m £m £m
Continuing operations
Income statement
Net interest income 1,484 182 1,496 (68) 3,094
Own credit adjustments - - (3) - (3)
Other non-interest income 110 92 654 58 914
Total income 1,594 274 2,147 (10) 4,005
Direct expenses (230) (63) (403) (1,269) (1,965)
Indirect expenses (504) (108) (644) 1,256 -
Other operating expenses (734) (171) (1,047) (13) (1,965)
Litigation and conduct costs (8) (1) (60) (5) (74)
Operating expenses (742) (172) (1,107) (18) (2,039)
Operating profit/(loss) before impairment losses 852 102 1,040 (28) 1,966
Impairment losses (117) - (76) - (193)
Operating profit/(loss) 735 102 964 (28) 1,773
Income excluding notable items (1) 1,594 274 2,150 (8) 4,010
Additional information
Return on Tangible Equity (1) na na na na 17.7%
Return on equity (1) 23.2% 22.5% 17.9% nm na
Cost:income ratio (excl. litigation and conduct) (1) 46.0% 62.4% 48.8% nm 49.1%
Total assets (£bn) 238.6 29.1 414.9 48.2 730.8
Funded assets (£bn) (1) 238.6 29.1 343.1 47.0 657.8
Net loans to customers - amortised cost (£bn) 214.3 18.6 147.2 27.0 407.1
Loan impairment rate (1) 22bps - 20bps nm 19bps
Impairment provisions (£bn) (1.9) (0.1) (1.7) - (3.7)
Impairment provisions - Stage 3 (£bn) (1.1) - (1.1) - (2.2)
Customer deposits (£bn) 196.6 41.3 197.9 1.0 436.8
Risk-weighted assets (RWAs) (£bn) 69.4 11.5 107.8 1.4 190.1
RWA equivalent (RWAe) (£bn) 70.0 11.5 108.8 2.0 192.3
Employee numbers (FTEs - thousands) 11.8 2.1 12.8 32.5 59.2
Third party customer asset rate (1) 4.32% 4.74% 6.00% nm nm
Third party customer funding rate (1) (1.79%) (2.74%) (1.60%) nm nm
Average interest earning assets (£bn) (1) 230.0 28.5 255.6 na 543.2
Net interest margin (1) 2.59% 2.56% 2.35% na 2.28%
nm = not meaningful, na = not applicable.
(1) Refer to the Non-IFRS financial measures appendix for details of
the basis of preparation and reconciliation of non-IFRS financial measures and
performance metrics.
(2) Effective from Q2 2025, the reportable segment Private Banking was
renamed Private Banking & Wealth Management. This does not change the
financial results of Private Banking & Wealth Management or the
consolidated financial results of NatWest Group.
Segment performance continued
Quarter ended 31 March 2025
Private Banking
Retail & Wealth Commercial Central items Total NatWest
Banking Management (2) & Institutional & other Group
£m £m £m £m £m
Continuing operations
Income statement
Net interest income 1,438 181 1,459 (52) 3,026
Own credit adjustments - - 6 - 6
Other non-interest income 102 84 677 85 948
Total income 1,540 265 2,142 33 3,980
Direct expenses (166) (59) (379) (1,331) (1,935)
Indirect expenses (511) (128) (636) 1,275 -
Other operating expenses (677) (187) (1,015) (56) (1,935)
Litigation and conduct costs (4) - (29) (11) (44)
Operating expenses (681) (187) (1,044) (67) (1,979)
Operating profit/(loss) before impairment losses 859 78 1,098 (34) 2,001
Impairment losses (109) (1) (78) (1) (189)
Operating profit/(loss) 750 77 1,020 (35) 1,812
Income excluding notable items (1) 1,540 265 2,136 11 3,952
Additional information
Return on Tangible Equity (1) na na na na 18.5%
Return on equity (1) 24.5% 17.1% 19.3% nm na
Cost:income ratio (excl. litigation and conduct) (1) 44.0% 70.6% 47.4% nm 48.6%
Total assets (£bn) 234.3 28.9 397.9 48.9 710.0
Funded assets (£bn) (1) 234.3 28.9 336.1 47.9 647.2
Net loans to customers - amortised cost (£bn) 210.4 18.4 143.1 26.9 398.8
Loan impairment rate (1) 21bps 2bps 22bps nm 19bps
Impairment provisions (£bn) (1.9) (0.1) (1.5) - (3.5)
Impairment provisions - Stage 3 (£bn) (1.1) - (1.0) - (2.1)
Customer deposits (£bn) 195.7 41.2 196.5 1.2 434.6
Risk-weighted assets (RWAs) (£bn) 66.8 11.3 107.3 1.6 187.0
RWA equivalent (RWAe) (£bn) 67.6 11.3 108.5 2.1 189.5
Employee numbers (FTEs - thousands) 11.9 2.2 12.8 32.5 59.4
Third party customer asset rate (1) 4.29% 4.83% 6.24% nm nm
Third party customer funding rate (1) (1.87%) (2.90%) (1.71%) nm nm
Average interest earning assets (£bn) (1) 226.5 28.4 255.2 na 541.6
Net interest margin (1) 2.58% 2.59% 2.32% na 2.27%
nm = not meaningful, na = not applicable.
(1) Refer to the Non-IFRS financial measures appendix for details of
the basis of preparation and reconciliation of non-IFRS financial measures and
performance metrics.
(2) Effective from Q2 2025, the reportable segment Private Banking was
renamed Private Banking & Wealth Management. This does not change the
financial results of Private Banking & Wealth Management or the
consolidated financial results of NatWest Group.
Segment performance continued
Quarter ended 30 June 2024
Private Banking
Retail & Wealth Commercial Central items Total NatWest
Banking Management (2) & Institutional & other Group
£m £m £m £m £m
Continuing operations
Income statement
Net interest income 1,259 151 1,297 50 2,757
Own credit adjustments - - (2) - (2)
Other non-interest income 106 85 646 67 904
Total income 1,365 236 1,941 117 3,659
Direct expenses (192) (65) (380) (1,291) (1,928)
Indirect expenses (498) (110) (673) 1,281 -
Other operating expenses (690) (175) (1,053) (10) (1,928)
Litigation and conduct costs (7) - (46) (24) (77)
Operating expenses (697) (175) (1,099) (34) (2,005)
Operating profit before impairment losses/releases 668 61 842 83 1,654
Impairment (losses)/releases (59) 5 96 3 45
Operating profit 609 66 938 86 1,699
Income excluding notable items (1) 1,365 236 1,943 46 3,590
Additional information
Return on Tangible Equity (1) na na na na 18.5%
Return on equity (1) 20.3% 14.4% 17.8% nm na
Cost:income ratio (excl. litigation and conduct) (1) 50.5% 74.2% 54.3% nm 52.7%
Total assets (£bn) 226.5 27.2 381.9 54.7 690.3
Funded assets (£bn) (1) 226.5 27.2 315.5 53.6 622.8
Net loans to customers - amortised cost (£bn) 203.3 18.1 133.9 24.0 379.3
Loan impairment rate (1) 12bps (11bps) (28bps) nm (5bps)
Impairment provisions (£bn) (1.7) (0.1) (1.5) - (3.3)
Impairment provisions - Stage 3 (£bn) (1.0) - (0.9) (0.1) (2.0)
Customer deposits (£bn) 191.5 39.5 194.2 7.8 433.0
Risk-weighted assets (RWAs) (£bn) 62.3 11.0 104.9 2.6 180.8
RWA equivalent (RWAe) (£bn) 63.1 11.0 106.7 3.1 183.9
Employee numbers (FTEs - thousands) 12.6 2.2 12.8 33.0 60.6
Third party customer asset rate (1) 3.97% 5.01% 6.73% nm nm
Third party customer funding rate (1) (2.10%) (3.15%) (1.93%) nm nm
Average interest earning assets (£bn) (1) 219.6 26.5 246.0 na 527.6
Net interest margin (1) 2.31% 2.30% 2.12% na 2.10%
nm - not meaningful, na - not applicable
(1) Refer to the Non-IFRS financial measures appendix for details
of the basis of preparation and reconciliation of non-IFRS financial measures
and performance metrics.
(2) Effective from Q2 2025, the reportable segment Private Banking
was renamed Private Banking & Wealth Management. This does not change the
financial results of Private Banking & Wealth Management or the
consolidated financial results of NatWest Group.
Risk and capital management
Certain disclosures in the Risk and capital management section are within the
scope of EY's review report and are marked as 'reviewed' in the section
header.
Credit risk
Credit risk is the risk that customers, counterparties or issuers fail to meet
a contractual obligation to settle outstanding amounts.
Economic loss drivers (reviewed)
Introduction
The portfolio segmentation and selection of economic loss drivers for IFRS 9
follows the approach used in stress testing. The stress models for each
portfolio segment (defined by product or asset class and where relevant,
industry sector and region) are based on a selected, small number of economic
variables that best explain the movements in portfolio loss rates. The process
to select economic loss drivers involves empirical analysis and expert
judgement.
The most significant economic loss drivers for material portfolios are shown
in the table below:
Portfolio Economic loss drivers
Personal mortgages Unemployment rate, sterling swap rate, house price index, real wage
Personal unsecured Unemployment rate, sterling swap rate, real wage
Corporates Stock price index, gross domestic product (GDP)
Commercial real estate Stock price index, commercial property price index, GDP
Economic scenarios
At 30 June 2025, the range of anticipated future economic conditions was
defined by a set of four internally developed scenarios and their respective
probabilities. In addition to the base case, they comprised upside, downside
and extreme downside scenarios.
For 30 June 2025, the four scenarios were deemed appropriate in capturing the
uncertainty in economic forecasts and the non-linearity in outcomes under
different scenarios. These four scenarios were developed to provide sufficient
coverage to current risks faced by the economy and consider varying outcomes
across the labour market, inflation, interest rate, asset price and economic
growth, around which there remains pronounced levels of uncertainty.
Since 31 December 2024, the near-term economic growth outlook has weakened.
This was mainly due to the weaker economic performance in the second half of
2024 and the drag from international trade policy related uncertainty.
Inflation has risen, with underlying price pressure remaining firm,
particularly on services inflation. As a result, inflation is assumed to
remain a little higher than 3% through most of 2025, taking longer to fall
back to the target level of 2%. The labour market has continued to cool. The
unemployment rate peak is now assumed to be modestly higher than at 31
December 2024, but it is still expected to remain low. The Bank of England is
expected to continue cutting interest rates in a 'gradual and careful' manner
with an assumed terminal rate in the base case of 3.5%. The housing market
continues to show signs of resilience, with prices still expected to grow
modestly.
High level narrative - potential developments, vulnerabilities and risks
Outperformance sustained - the economy continues to grow at a robust pace Upside
Growth
Steady growth - staying close to trend pace but with some near-term slowdown Base case
Stalling - lagged effect of higher inflation and cautious consumer amidst Downside
global trade policy and geopolitical uncertainty stalls the rebound
Extreme stress - extreme fall in GDP, with policy support to facilitate sharp Extreme downside
recovery
Sticky - strong growth and/or wage policies and/or interest rate cuts keep Upside
services inflation well above target
Inflation
Battle won - Beyond near-term volatility, downward drift in services inflation Base case
continues, ensuring 2% target is met on a sustained basis
Structural factors - sustained bouts of energy, food and goods price inflation Downside
on geopolitics/deglobalisation
Close to deflation - inflationary pressures diminish amidst pronounced Extreme downside
weakness in demand
Tighter, still - job growth rebounds strongly, pushing unemployment back down Upside
to 3.5%
Labour market
Cooling continues - gradual loosening prompts a gentle rise in unemployment Base case
(but remains low), job growth recovers
Job shedding - prolonged weakness in economy prompts redundancies, reduced Downside
hours, building slack
Depression - unemployment hits levels close to previous peaks amid severe Extreme downside
stress
Limited cuts - higher growth and inflation keeps the Monetary Policy Committee Upside
cautious
Rates
short-term
Steady - approximately one cut per quarter Base case
Mid-cycle quickening - sharp declines through 2025 to support recovery Downside
Sharp drop - drastic easing in policy to support a sharp deterioration in the Extreme downside
economy
Above consensus - 4% Upside
Rates long-term Middle - 3.5% Base case
Close to 2010s - 1-2%/2.5% Dow
nsi
de/
Ext
rem
e
dow
nsi
de
Risk and capital management continued
Credit risk continued
Economic loss drivers (reviewed)
Main macroeconomic variables
The main macroeconomic variables for each of the four scenarios used for
expected credit loss (ECL) modelling are set out in the table below.
30 June 2025 31 December 2024
Extreme Weighted Extreme Weighted
Upside Base case Downside downside average Upside Base case Downside downside average
Five-year summary % % % % % % % % % %
GDP 2.1 1.3 0.6 (0.1) 1.2 2.0 1.3 0.5 (0.2) 1.1
Unemployment rate 3.8 4.6 5.4 7.1 4.9 3.6 4.3 5.0 6.7 4.6
House price index 5.7 3.4 0.5 (4.3) 2.5 5.8 3.5 0.8 (4.3) 2.7
Commercial real estate price 6.1 2.0 (0.3) (4.8) 1.8 5.4 1.2 (1.0) (5.7) 1.1
Consumer price index 2.4 2.2 3.7 1.7 2.5 2.4 2.2 3.5 1.6 2.4
Bank of England base rate 4.1 3.6 2.5 1.2 3.2 4.4 4.0 3.0 1.6 3.6
Stock price index 5.2 3.8 2.6 0.7 3.5 6.3 5.0 3.4 1.1 4.5
World GDP 3.7 3.0 2.3 1.4 2.8 3.8 3.2 2.5 1.6 3.0
Probability weight 21.7 45.0 20.7 12.6 23.2 45.0 19.1 12.7
(1) The five-year summary runs from 2025-2029 for 30 June 2025 and
from 2024-2028 for 31 December 2024.
(2) The table shows compound annual growth rate (CAGR) for GDP,
average levels for the unemployment rate and Bank of England base rate and Q4
to Q4 CAGR for other parameters.
Risk and capital management continued
Credit risk continued
Economic loss drivers (reviewed)
Climate transition
Since 2023, NatWest Group explicitly includes assumptions about the changes in
transition policy, expressed as an additional implicit sectoral carbon price,
in the base case macroeconomic scenario. At 30 June 2025, this resulted in
climate transition policy contributing £9 million to the total ECL,
comparable with a contribution of £8 million at the end of 2024.
In 2025, NatWest Group has individually assessed 50 active and potential
transition policies that have a significant impact on the cost of emissions
and converted them into equivalent sectoral carbon prices, calculated as the
cost per tonne of the emissions abated, as a result of each policy. This
approach enables NatWest Group to estimate an aggregate macroeconomic impact
of the transition policies, and as a result, ECL contribution.
NatWest Group and its customers have a dependency on timely and appropriate
government policies to provide the necessary impetus for technology
development and customer behaviour changes, to enable the UK's successful
transition to net zero. Policy delays and the risks outlined in the UK CCC
annual Progress Reports, if not adequately addressed in a timely manner, put
at risk the UK's net zero transition and in turn, that of NatWest Group and
its customers.
Probability weightings of scenarios
NatWest Group's quantitative approach to IFRS 9 multiple economic scenarios
involves selecting a suitable set of discrete scenarios to characterise the
distribution of risks in the economic outlook and assigning appropriate
probability weights. This quantitative approach is used for 30 June 2025.
The approach involves comparing GDP paths for NatWest Group's scenarios
against a set of 1,000 model runs, following which, a percentile in the
distribution is established that most closely corresponded to the scenario.
The probability weight for base case is set first based on judgement, while
probability weights for the alternate scenarios are assigned based on these
percentiles scores.
The weights were broadly comparable to those used at 31 December 2024 but with
slightly more downside skew. The assigned probability weights were judged to
be aligned with the subjective assessment of balance of the risks in the
economy as global trade policy uncertainty increased, and geopolitical risks
remained elevated. US trade policy remains a key area of uncertainty for the
economy. NatWest Group is comfortable that the adjustments made to the base
case view reflect much of the adverse economic impacts from tariffs, while the
downside scenarios give good coverage to the potential for more significant
economic damage, including higher inflation and downturns in business
investment and consumer spending. Given the balance of risks that the economy
is exposed to, NatWest Group judges it appropriate that downside-biased
scenarios have higher combined probability weights than the upside-biased
scenario. It presents good coverage to the range of outcomes assumed in the
scenarios, including the potential for a robust recovery on the upside and
exceptionally challenging outcomes on the downside. A 21.7% weighting was
applied to the upside scenario, a 45.0% weighting applied to the base case
scenario, a 20.7% weighting applied to the downside scenario and a 12.6%
weighting applied to the extreme downside scenario.
Risk and capital management continued
Credit risk continued
Economic loss drivers (reviewed)
Annual figures
Extreme Weighted
Upside Base case Downside downside average
GDP - annual growth % % % % %
2025 1.4 1.1 1.0 (0.8) 0.9
2026 2.9 1.1 (0.2) (3.6) 0.6
2027 2.9 1.5 (0.4) 1.3 1.4
2028 1.8 1.4 0.9 1.4 1.4
2029 1.6 1.4 1.6 1.4 1.5
2030 1.5 1.4 1.5 1.4 1.4
Unemployment rate
- annual average
2025 4.5 4.6 4.7 4.8 4.6
2026 3.7 4.7 5.4 7.0 4.9
2027 3.5 4.6 5.8 8.4 5.1
2028 3.5 4.5 5.6 7.9 4.9
2029 3.6 4.5 5.3 7.3 4.8
2030 3.6 4.4 5.1 6.7 4.7
House price index
- four quarter change
2025 4.1 3.5 (0.3) (2.6) 2.1
2026 7.9 3.4 (2.2) (11.9) 1.4
2027 5.8 3.4 (2.7) (15.9) 0.8
2028 5.2 3.4 3.6 4.2 4.0
2029 5.6 3.4 4.3 6.5 4.4
2030 5.5 3.4 4.2 6.2 4.3
Commercial real estate price
- four quarter change
2025 10.6 2.3 (2.0) (10.5) 1.6
2026 6.3 2.3 (6.5) (24.8) (1.5)
2027 5.7 2.6 2.2 4.1 3.4
2028 4.7 1.5 2.6 5.8 2.9
2029 3.3 1.6 2.5 5.5 2.6
2030 3.0 1.4 2.5 5.3 2.4
Extreme Weighted
Consumer price index Upside Base case Downside downside average
- four quarter change % % % % %
2025 3.2 2.9 4.2 2.4 3.2
2026 2.7 2.2 5.8 0.7 2.9
2027 2.3 2.0 3.0 1.6 2.2
2028 2.0 2.0 2.8 2.0 2.2
2029 2.0 2.0 2.5 2.0 2.1
2030 2.0 2.0 2.5 2.0 2.1
Bank of England base rate
- annual average
2025 4.32 4.21 4.07 3.58 4.12
2026 4.00 3.52 2.25 0.11 2.93
2027 4.00 3.50 2.00 0.30 2.89
2028 4.00 3.50 2.00 0.64 2.94
2029 4.00 3.50 2.00 1.47 3.04
2030 4.00 3.50 2.44 2.03 3.20
Stock price index
- four quarter change
2025 9.7 6.1 (3.1) (19.3) 1.8
2026 5.7 3.3 (0.9) (9.5) 1.7
2027 4.0 3.3 5.8 14.0 4.9
2028 3.5 3.3 5.8 12.3 4.7
2029 3.1 3.3 5.8 11.0 4.5
2030 3.3 3.3 5.8 10.1 4.5
Risk and capital management continued
Credit risk continued
Economic loss drivers (reviewed)
Worst points
Extreme Weighted
Downside downside average
30 June 2025 % Quarter % Quarter %
GDP - Q2 2027 (4.8) Q2 2026 -
Unemployment rate - peak 5.8 Q2 2027 8.5 Q3 2027 5.1
House price index (5.0) Q4 2027 (28.0) Q1 2028 -
Commercial real estate price (8.4) Q4 2026 (33.5) Q1 2027 -
Consumer price index
- highest four quarter change 6.1 Q3 2026 3.2 Q2 2025 3.3
Bank of England base rate
- extreme level 2.0 Q1 2025 0.1 Q1 2025 2.9
Stock price index (6.6) Q2 2026 (32.1) Q2 2026 -
31 December 2024
GDP - Q1 2024 (4.1) Q4 2025 -
Unemployment rate - peak 5.6 Q4 2026 8.5 Q1 2027 4.9
House price index (1.9) Q2 2027 (25.6) Q3 2027 -
Commercial real estate price (10.5) Q2 2026 (35.0) Q3 2026 (1.8)
Consumer price index
- highest four quarter change 6.1 Q1 2026 3.5 Q1 2024 3.5
Bank of England base rate
- extreme level 2.0 Q1 2024 0.1 Q1 2024 2.9
Stock price index (0.2) Q4 2025 (27.4) Q4 2025 -
(1) The figures show falls relative to the starting period for GDP,
house price index, commercial real estate price and stock price index. For
unemployment rate, it shows highest value through the scenario horizon. For
consumer price index, it shows highest annual percentage change. For Bank of
England base rate, it shows highest or lowest value through the horizon. The
calculations are performed over five years, with a starting point of Q4 2024
for 30 June 2025 scenarios and Q4 2023 for 31 December 2024 scenarios.
Governance and post model adjustments (reviewed)
The IFRS 9 PD, EAD and LGD models are subject to NatWest Group's model risk
policy that stipulates periodic model monitoring, periodic re-validation and
defines approval procedures and authorities according to model materiality.
Various post model adjustments were applied where management judged they were
necessary to ensure an adequate level of overall ECL provision. All post model
adjustments were subject to review, challenge and approval through model or
provisioning committees.
Post model adjustments will remain a key focus area of NatWest Group's ongoing
ECL adequacy assessment process. A holistic framework has been established
including reviewing a range of economic data, external benchmark information
and portfolio performance trends with a particular focus on segments of the
portfolio (both Personal and Non-Personal) that are likely to be more
susceptible to high inflation, high interest rates and supply chain
disruption.
Risk and capital management continued
Credit risk continued
Governance and post model adjustments (reviewed)
ECL post model adjustments
The table below shows ECL post model adjustments.
Retail Banking Private Banking & Commercial &
Mortgages Other Wealth Management Institutional Total
30 June 2025 £m £m £m £m £m
Deferred model calibrations - - 1 16 17
Economic uncertainty 55 30 7 142 234
Other adjustments - - - 18 18
Total 55 30 8 176 269
Of which:
Stage 1 40 12 4 76 132
Stage 2 15 18 4 100 137
Stage 3 - - - - -
31 December 2024
Deferred model calibrations - - 1 18 19
Economic uncertainty 90 22 8 179 299
Other adjustments - - - 18 18
Total 90 22 9 215 336
Of which:
Stage 1 58 9 5 94 166
Stage 2 26 13 4 119 162
Stage 3 6 - - 2 8
Post model adjustments reduced since 31 December 2024, reflecting updates to
post model adjustment parameters.
- Retail Banking - As at 30 June 2025, the post model adjustments for
economic uncertainty decreased to £85 million (31 December 2024 - £112
million). This reduction primarily reflected a revision to the cost of living
post model adjustment, which reduced to £85 million (31 December 2024 - £105
million). This change was based on an updated review of back-testing default
outcomes for higher-risk segments, consistent with the reduction in rate shock
risk in the mortgage portfolio. Despite ongoing economic and geopolitical
uncertainty, the Retail Banking portfolios demonstrated resilience, supported
by a robust risk appetite. The cost of living post model adjustment continued
to address the risk in segments of the Retail Banking portfolio that were more
susceptible to affordability challenges. It focused on key affordability
factors, including lower-income customers in fuel poverty, over-indebted
borrowers, and customers vulnerable to higher mortgage rates.
- Commercial & Institutional - As at 30 June 2025, the post model
adjustment for economic uncertainty decreased to £142 million (31 December
2024 - £179 million). The inflation, supply chain and liquidity post model
adjustment of £122 million (31 December 2024 - £150 million) for lending
prior to 1 January 2024, remained the largest component of this adjustment.
Downgrades to risk profiles were applied to the sectors that were considered
most at risk from the current economic and geopolitical headwinds. The £27
million decrease reflected improved risk metrics along with reduced exposure
in the portfolio subject to the adjustment.
-
Risk and capital management continued
Credit risk continued
Measurement uncertainty and ECL sensitivity analysis (reviewed)
The recognition and measurement of ECL is complex and involves the use of
significant judgement and estimation, particularly in times of economic
volatility and uncertainty. This includes the formulation and incorporation of
multiple forward-looking economic conditions into ECL to meet the measurement
objective of IFRS 9. The ECL provision is sensitive to the model inputs and
economic assumptions underlying the estimate.
The impact arising from the base case, upside, downside and extreme downside
scenarios was simulated.
In the simulations, NatWest Group has assumed that the economic macro
variables associated with these scenarios replace the existing base case
economic assumptions, giving them a 100% probability weighting and therefore
serving as a single economic scenario.
These scenarios were applied to all modelled portfolios in the analysis below,
with the simulation impacting both PDs and LGDs. Post model adjustments
included in the ECL estimates that were modelled were sensitised in line with
the modelled ECL movements, but those that were judgemental in nature,
primarily those for deferred model calibrations and economic uncertainty, were
not (refer to the Governance and post model adjustments section) on the basis
these would be re-evaluated by management through ECL governance for any new
economic scenario outlook and not be subject to an automated calculation. As
expected, the scenarios create differing impacts on ECL by portfolio and the
impacts are deemed reasonable.
In this simulation, it is assumed that existing modelled relationships between
key economic variables and loss drivers hold, but in practice other factors
would also have an impact, for example, potential customer behaviour changes
and policy changes by lenders that might impact on the wider availability of
credit.
The focus of the simulations is on ECL provisioning requirements on performing
exposures in Stage 1 and Stage 2. The simulations are run on a stand-alone
basis and are independent of each other; the potential ECL impacts reflect the
simulated impact at 30 June 2025.
Scenario impacts on significant increase in credit risk (SICR) should be
considered when evaluating the ECL movements of Stage 1 and Stage 2. In all
scenarios the total exposure was the same but exposure by stage varied in each
scenario.
Stage 3 provisions are not subject to the same level of measurement
uncertainty - default is an observed event as at the balance sheet date. Stage
3 provisions therefore were not considered in this analysis.
NatWest Group's core criterion to identify a SICR is founded on PD
deterioration. Under the simulations, PDs change and result in exposures
moving between Stage 1 and Stage 2 contributing to the ECL impact.
Risk and capital management continued
Credit risk continued
Measurement uncertainty and ECL sensitivity analysis (reviewed)
Moderate Moderate Extreme
Base upside downside downside
30 June 2025 Actual scenario scenario scenario scenario
Stage 1 modelled loans (£m)
Retail Banking - mortgages 171,904 173,172 175,663 170,228 159,515
Retail Banking - unsecured 10,677 10,796 11,132 10,502 9,508
Non-Personal - property 29,450 29,539 29,587 29,444 27,053
Non-Personal - non-property 138,575 138,975 139,344 138,554 121,078
350,606 352,482 355,726 348,728 317,154
Stage 1 modelled ECL (£m)
Retail Banking - mortgages 50 50 50 48 41
Retail Banking - unsecured 227 231 224 227 210
Non-Personal - property 76 61 52 78 169
Non-Personal - non-property 192 170 160 195 311
545 512 486 548 731
Stage 1 coverage
Retail Banking - mortgages 0.03% 0.03% 0.03% 0.03% 0.03%
Retail Banking - unsecured 2.13% 2.14% 2.01% 2.16% 2.21%
Non-Personal - property 0.26% 0.21% 0.18% 0.26% 0.62%
Non-Personal - non-property 0.14% 0.12% 0.11% 0.14% 0.26%
0.16% 0.15% 0.14% 0.16% 0.23%
Stage 2 modelled loans (£m)
Retail Banking - mortgages 21,320 20,052 17,561 22,996 33,709
Retail Banking - unsecured 3,381 3,262 2,926 3,556 4,550
Non-Personal - property 3,206 3,117 3,069 3,212 5,603
Non-Personal - non-property 12,199 11,799 11,430 12,220 29,696
40,106 38,230 34,986 41,984 73,558
Stage 2 modelled ECL (£m)
Retail Banking - mortgages 51 46 38 57 99
Retail Banking - unsecured 374 358 310 398 530
Non-Personal - property 59 51 46 60 131
Non-Personal - non-property 246 223 199 251 519
730 678 593 766 1,279
Stage 2 coverage
Retail Banking - mortgages 0.24% 0.23% 0.22% 0.25% 0.29%
Retail Banking - unsecured 11.06% 10.97% 10.59% 11.19% 11.65%
Non-Personal - property 1.84% 1.64% 1.50% 1.87% 2.34%
Non-Personal - non-property 2.02% 1.89% 1.74% 2.05% 1.75%
1.82% 1.77% 1.69% 1.82% 1.74%
Stage 1 and Stage 2 modelled loans (£m)
Retail Banking - mortgages 193,224 193,224 193,224 193,224 193,224
Retail Banking - unsecured 14,058 14,058 14,058 14,058 14,058
Non-Personal - property 32,656 32,656 32,656 32,656 32,656
Non-Personal - non-property 150,774 150,774 150,774 150,774 150,774
390,712 390,712 390,712 390,712 390,712
Moderate Moderate Extreme
Base upside downside downside
30 June 2025 Actual scenario scenario scenario scenario
Stage 1 and Stage 2 modelled ECL (£m)
Retail Banking - mortgages 101 96 88 105 140
Retail Banking - unsecured 601 589 534 625 740
Non-Personal - property 135 112 98 138 300
Non-Personal - non-property 438 393 359 446 830
1,275 1,190 1,079 1,314 2,010
Stage 1 and Stage 2 coverage
Retail Banking - mortgages 0.05% 0.05% 0.05% 0.05% 0.07%
Retail Banking - unsecured 4.28% 4.19% 3.80% 4.45% 5.26%
Non-Personal - property 0.41% 0.34% 0.30% 0.42% 0.92%
Non-Personal - non-property 0.29% 0.26% 0.24% 0.30% 0.55%
0.33% 0.30% 0.28% 0.34% 0.51%
Reconciliation to Stage 1 and
Stage 2 ECL (£m)
ECL on modelled exposures 1,275 1,190 1,079 1,314 2,010
ECL on non-modelled exposures 114 115 115 115 115
Total Stage 1 and Stage 2 ECL (£m) 1,389 1,305 1,194 1,429 2,125
Variance to actual total Stage 1 and
Stage 2 ECL (£m) - (84) (195) 40 736
Reconciliation to Stage 1 and
Stage 2 flow exposures (£m)
Modelled loans 390,712 390,712 390,712 390,712 390,712
Non-modelled loans 23,392 23,392 23,392 23,392 23,392
Other asset classes 154,647 154,647 154,647 154,647 154,647
(1) Variations in future undrawn exposure values across the scenarios
are modelled. However, the exposure position reported is that used to
calculate modelled ECL as at 30 June 2025 and therefore does not include
variation in future undrawn exposure values.
(2) Reflects ECL for all modelled exposure in scope for IFRS 9. The
analysis excludes non-modelled portfolios and exposure relating to bonds and
cash.
(3) All simulations were run on a stand-alone basis and are
independent of each other, with the potential ECL impact reflecting the
simulated impact as at 30 June 2025. The simulations change the composition of
Stage 1 and Stage 2 exposure but total exposure was unchanged under each
scenario as the loan population was static.
(4) Refer to the Economic loss drivers section for details of economic
scenarios.
(5) Refer to the NatWest Group 2024 Annual Report and Accounts for 31
December 2024 comparatives.
Risk and capital management continued
Credit risk continued
Measurement uncertainty and ECL adequacy (reviewed)
- If the economics were as negative as observed in the extreme downside
(i.e. 100% probability weighting), total Stage 1 and Stage 2 ECL was simulated
to increase by £0.7 billion (approximately 53%). In this scenario, Stage 2
exposure increased significantly and was the key driver of the simulated ECL
rise. The movement in Stage 2 balances in the other simulations was less
significant.
- In the Non-Personal portfolio, there was a significant increase in ECL
under the extreme downside scenario. The Non-Personal property ECL increase
was mainly due to commercial real estate prices which showed negative growth
until 2026 and significant deterioration in the stock index. The non-property
increase was mainly due to GDP contraction and significant deterioration in
the stock index.
- Given the continued economic uncertainty, NatWest Group utilised a
framework of quantitative and qualitative measures to support the levels of
ECL coverage. This included economic data, credit performance insights and
problem debt trends. This was particularly important for consideration of post
model adjustments.
- As the effects of these economic risks evolve, there is a risk of
further credit deterioration. However, the income statement effect of this
should be mitigated by the forward-looking provisions retained on the balance
sheet at 30 June 2025.
- There are a number of key factors that could drive further downside to
impairments, through deteriorating economic and credit metrics and increased
stage migration as credit risk increases for more customers. Such factors
which could impact the IFRS 9 models, include an adverse deterioration in
unemployment, GDP and stock price index.
- The newly acquired Sainsbury's Bank portfolio (£2.2 billion in Stage
1 at 30 June 2025) with associated ECL of £0.1 billion was not included in
the modelled sensitivity analysis.
Movement in ECL provision
The table below shows the main ECL provision movements during H1 2025.
ECL provision
£m
At 1 January 2025 3,425
Acquisitions 81
Changes in economic forecasts 10
Changes in risk metrics and exposure: Stage 1 and Stage 2 (27)
Changes in risk metrics and exposure: Stage 3 404
Judgemental changes: changes in post model adjustments for Stage 1,
Stage 2 and Stage 3 (67)
Write-offs and other (176)
At 30 June 2025 3,650
- During H1 2025, overall ECL increased following Non-Personal Stage 3
charges and an increase in good book ECL in the Personal portfolio, driven by
the portfolio acquisition from Sainsbury's Bank.
- For the Non-Personal portfolio, ECL increased from Stage 3 charges,
driven by a small number of individual charges in the Commercial &
Institutional portfolio. This was partially offset by post model adjustment
releases in the good book.
- In the Personal portfolio, default inflows were broadly stable in H1
2025. However, Stage 3 ECL and stock increased on all unsecured portfolios,
with reduced debt sale activity. There was a reduction of Stage 3 ECL on
mortgages related to an enhancement to the application of the definition of
default, resulting in a £0.4 billion migration of loans from Stage 3 back to
the good book.
- Judgemental ECL post model adjustments decreased to £269 million (31
December 2024 - £336 million) and represented 7.4% of total ECL (31 December
2024 - 9.8%). This reflected revisions to the Retail Banking cost of living
post model adjustment after regular back testing, and Non-Personal portfolio
improvements in underlying risk profile. Refer to the Governance and post
model adjustments section for further details.
Risk and capital management continued
Credit risk - Banking activities
Introduction
This section details the credit risk profile of NatWest Group's banking
activities.
Financial instruments within the scope of the IFRS 9 ECL framework (reviewed)
Refer to Note 7 to the consolidated financial statements for balance sheet
analysis of financial assets that are classified as amortised cost or fair
value through other comprehensive income (FVOCI), the starting point for IFRS
9 ECL framework assessment.
30 June 2025 31 December 2024
Gross ECL Net Gross ECL Net
£bn £bn £bn £bn £bn £bn
Balance sheet total gross amortised cost and FVOCI 588.2 567.2
In scope of IFRS 9 ECL framework 578.2 564.4
% in scope 98% 100%
Loans to customers - in scope - amortised cost 411.2 3.6 407.6 404.2 3.4 400.8
Loans to customers - in scope - FVOCI 0.1 - 0.1 - - -
Loans to banks - in scope - amortised cost 6.6 - 6.6 6.0 - 6.0
Total loans - in scope 417.9 3.6 414.3 410.2 3.4 406.8
Stage 1 371.9 0.6 371.3 363.8 0.6 363.2
Stage 2 40.2 0.7 39.5 40.5 0.8 39.7
Stage 3 5.8 2.3 3.5 5.9 2.0 3.9
Other financial assets - in scope - amortised cost 117.5 - 117.5 116.4 - 116.4
Other financial assets - in scope - FVOCI 42.8 - 42.8 37.8 - 37.8
Total other financial assets - in scope 160.3 - 160.3 154.2 - 154.2
Stage 1 159.5 - 159.5 153.4 - 153.4
Stage 2 0.8 - 0.8 0.8 - 0.8
Out of scope of IFRS 9 ECL framework 10.0 na 10.0 2.8 na 2.8
Loans to customers - out of scope - amortised cost (0.5) na (0.5) (0.5) na (0.5)
Loans to banks - out of scope - amortised cost 0.8 na 0.8 0.1 na 0.1
Other financial assets - out of scope - amortised cost 9.4 na 9.4 3.2 na 3.2
Other financial assets - out of scope - FVOCI 0.3 na 0.3 - na -
na = not applicable
The assets outside the scope of the IFRS 9 ECL framework were as follows:
- Settlement balances, items in the course of collection, cash balances
and other non-credit risk assets of £10.0 billion (31 December 2024 - £3.3
billion). These were assessed as having no ECL unless there was evidence that
they were defaulted.
- Equity shares of £0.3 billion (31 December 2024 - £0.2 billion) as
not within the IFRS 9 ECL framework by definition.
- Fair value adjustments on loans hedged by interest rate swaps, where
the underlying loan was within the IFRS 9 ECL scope of £(0.4) billion (31
December 2024 - £(0.5) billion).
Contingent liabilities and commitments
Total contingent liabilities (including financial guarantees) and commitments
within IFRS 9 ECL scope of £146.4 billion (31 December 2024 - £140.0
billion) comprised Stage 1 £135.7 billion (31 December 2024 - £129.8
billion); Stage 2 £9.9 billion (31 December 2024 - £9.4 billion); and Stage
3 £0.8 billion (31 December 2024 - £0.8 billion).
The ECL relating to off-balance sheet exposures was £0.1 billion (31 December
2024 - £0.1 billion). The total ECL in the remainder of the Credit risk
section of £3.7 billion (31 December 2024 - £3.4 billion) included ECL for
both on and off-balance sheet exposures.
Risk and capital management continued
Credit risk - Banking activities continued
Segment analysis - portfolio summary (reviewed)
The table below shows gross loans and ECL, by segment and stage, within the
scope of the IFRS 9 ECL framework.
Of which:
Personal Non-Personal
Private Private Private
Banking & Central Banking & Central Banking & Central
Retail Wealth Commercial items Retail Wealth Commercial items Wealth Commercial items
Banking Management & Institutional & other Total Banking Management & Institutional & other Management & Institutional & other
30 June 2025 £m £m £m £m £m £m £m £m £m £m £m £m
Loans - amortised cost and FVOCI (1,2)
Stage 1 188,562 17,514 134,858 30,941 371,875 188,562 13,991 2,225 - 3,523 132,633 30,941
Stage 2 24,437 843 14,857 56 40,193 24,437 362 41 9 481 14,816 47
Stage 3 3,006 318 2,496 3 5,823 3,006 233 43 3 85 2,453 -
Of which: individual - 243 1,279 - 1,522 - 158 5 - 85 1,274 -
Of which: collective 3,006 75 1,217 3 4,301 3,006 75 38 3 - 1,179 -
Total 216,005 18,675 152,211 31,000 417,891 216,005 14,586 2,309 12 4,089 149,902 30,988
ECL provisions (3)
Stage 1 360 15 258 15 648 360 3 2 - 12 256 15
Stage 2 425 9 306 1 741 425 1 - - 8 306 1
Stage 3 1,128 42 1,090 1 2,261 1,128 22 16 - 20 1,074 1
Of which: individual - 42 569 - 611 - 22 5 - 20 564 -
Of which: collective 1,128 - 521 1 1,650 1,128 - 11 - - 510 1
Total 1,913 66 1,654 17 3,650 1,913 26 18 - 40 1,636 17
ECL provisions coverage (4)
Stage 1 (%) 0.19 0.09 0.19 0.05 0.17 0.19 0.02 0.09 - 0.34 0.19 0.05
Stage 2 (%) 1.74 1.07 2.06 1.79 1.84 1.74 0.28 - - 1.66 2.07 2.13
Stage 3 (%) 37.52 13.21 43.67 33.33 38.83 37.52 9.44 37.21 - 23.53 43.78 -
Total 0.89 0.35 1.09 0.05 0.87 0.89 0.18 0.78 - 0.98 1.09 0.05
Impairment (releases)/losses
ECL charge/(release) (5) 226 1 154 1 382 226 3 - - (2) 154 1
Stage 1 18 (5) (80) - (67) 18 - (1) - (5) (79) -
Stage 2 139 3 23 - 165 139 1 - - 2 23 -
Stage 3 69 3 211 1 284 69 2 1 - 1 210 1
Of which: individual - 3 191 - 194 - 2 - - 1 191 -
Of which: collective 69 - 20 1 90 69 - 1 - - 19 1
Total 226 1 154 1 382 226 3 - - (2) 154 1
Amounts written-off 94 1 97 - 192 94 1 - - - 97 -
Of which: individual - 1 60 - 61 - 1 - - - 60 -
Of which: collective 94 - 37 - 131 94 - - - - 37 -
For the notes to this table refer to the following page.
Risk and capital management continued
Credit risk - Banking activities continued
Segment analysis - portfolio summary (reviewed)
Of which:
Personal Non-Personal
Private Private Private
Banking & Central Banking & Central Banking & Central
Retail Wealth Commercial items Retail Wealth Commercial items Wealth Commercial items
Banking Management & Institutional & other Total Banking Management & Institutional & other Management & Institutional & other
31 December 2024 £m £m £m £m £m £m £m £m £m £m £m £m
Loans - amortised cost and FVOCI (1,2)
Stage 1 182,366 17,155 128,988 35,312 363,821 182,366 13,726 2,226 - 3,429 126,762 35,312
Stage 2 24,242 844 15,339 49 40,474 24,242 352 42 - 492 15,297 49
Stage 3 3,268 322 2,340 - 5,930 3,268 251 52 - 71 2,288 -
Of which: individual - 233 1,052 - 1,285 - 162 5 - 71 1,047
Of which: collective 3,268 89 1,288 - 4,645 3,268 89 47 - - 1,241 -
Total 209,876 18,321 146,667 35,361 410,225 209,876 14,329 2,320 - 3,992 144,347 35,361
ECL provisions (3)
Stage 1 279 16 289 14 598 279 2 3 - 14 286 14
Stage 2 428 12 346 1 787 428 1 - - 11 346 1
Stage 3 1,063 36 941 - 2,040 1,063 21 15 - 15 926 -
Of which: individual - 36 415 - 451 - 21 7 - 15 408 -
Of which: collective 1,063 - 526 - 1,589 1,063 - 8 - - 518 -
Total 1,770 64 1,576 15 3,425 1,770 24 18 - 40 1,558 15
ECL provisions coverage (4)
Stage 1 (%) 0.15 0.09 0.22 0.04 0.16 0.15 0.01 0.13 - 0.41 0.23 0.04
Stage 2 (%) 1.77 1.42 2.26 2.04 1.94 1.77 0.28 - - 2.24 2.26 2.04
Stage 3 (%) 32.53 11.18 40.21 - 34.40 32.53 8.37 28.85 - 21.13 40.47 -
Total 0.84 0.35 1.07 0.04 0.83 0.84 0.17 0.78 - 1.00 1.08 0.04
Half year ended 30 June 2024
Impairment (releases)/losses
ECL (release)/charge (5) 122 (11) (57) (6) 48 122 1 - - (12) (57) (6)
Stage 1 (166) (9) (182) (7) (364) (166) (1) - - (8) (182) (7)
Stage 2 178 (3) 14 1 190 178 1 - - (4) 14 1
Stage 3 110 1 111 - 222 110 1 - - - 111 -
Of which: individual - 1 79 - 80 - 1 - - - 79 -
Of which: collective 110 - 32 - 142 110 - - - - 32 -
Total 122 (11) (57) (6) 48 122 1 - - (12) (57) (6)
Amounts written-off 270 - 99 - 369 270 - 1 - - 98 -
Of which: individual - - 64 - 64 - - 1 - - 63 -
Of which: collective 270 - 35 - 305 270 - - - - 35 -
(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 £89.5 billion (31 December 2024 - £91.8 billion) and debt
securities of £70.8 billion (31 December 2024 - £62.4 billion).
(2) Fair value through other comprehensive income (FVOCI).
Includes loans to customers and banks.
(3) Includes £4 million (31 December 2024 - £4 million) related
to assets classified as FVOCI and £0.1 billion (31 December 2024 - £0.1
billion) related to off-balance sheet exposures.
(4) ECL provisions coverage is calculated as ECL provisions
divided by loans - amortised cost and FVOCI. It is calculated on loans and
total ECL provisions, including ECL for other (non-loan) assets and unutilised
exposure. Some segments with a high proportion of debt securities or
unutilised exposure may result in a not meaningful (nm) coverage ratio.
(5) Includes a £1 million release (30 June 2024 - £6 million
release) related to other financial assets, of which £0 million release (30
June 2024 - £5 million release) related to assets classified as FVOCI and
includes a £10 million charge (30 June 2024 - £4 million release) related to
contingent liabilities.
Risk and capital management continued
Credit risk - Banking activities continued
Segmental loans and impairment metrics (reviewed)
- Retail Banking - Asset quality and arrears rates remained stable and
within expectations for the first half of 2025. The overall increase in good
book and total ECL coverage was driven by the acquisition of the Sainsbury's
Bank portfolio which, in conjunction with continued organic growth on cards
and personal loan portfolios, increased the unsecured portfolio mix. The ECL
coverage levels on the Sainsbury's Bank portfolio reflected its strong book
quality. Good book coverage on the existing Retail Banking book decreased,
reflecting stable portfolio arrears and default trends, as well as resilience
to affordability risk concerns. This resilience was notably supported by the
reduction in the cost of living post model adjustment on mortgages, supported
by reduced default outcomes in at-risk segments. The ECL increases from the
latest economic update were minimal. The reduction in Stage 3 ratios was
influenced by both the acquisition of the Sainsbury's Bank portfolio on
unsecured and an enhancement to the application of the definition of default
used on mortgages. The latter resulted in a £0.4 billion migration of loans
from Stage 3 back to the good book. Flow rates into Stage 3 remained
consistent with 31 December 2024.
- Commercial & Institutional - ECL coverage increased in the first
half of the year reflecting a small number of individual charges in Stage 3.
Despite the increase in Stage 3 charges compared to the first half of 2024,
loan balances flowing into Stage 3 were marginally lower. Stage 3 charges were
partially offset through good book releases from improved portfolio risk
metrics and a reduction in post model adjustments. Increased loan balances
combined with reducing good ECL drove reduced coverage in both Stage 1 and
Stage 2. Write-offs were broadly consistent with the first half of 2024.
Risk and capital management continued
Credit risk - Banking activities continued
Sector analysis - portfolio summary (reviewed)
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 Non-Personal
Credit Other Corporate Financial
Mortgages (1) cards personal Total and other institutions Sovereign Total Total
30 June 2025 £m £m £m £m £m £m £m £m £m
Loans by geography 213,336 8,137 11,439 232,912 112,911 70,884 1,184 184,979 417,891
- UK 213,323 8,137 11,439 232,899 98,210 46,126 491 144,827 377,726
- Other Europe 13 - - 13 6,584 12,010 364 18,958 18,971
- RoW - - - - 8,117 12,748 329 21,194 21,194
Loans by stage 213,336 8,137 11,439 232,912 112,911 70,884 1,184 184,979 417,891
- Stage 1 189,743 6,011 9,024 204,778 95,737 70,335 1,025 167,097 371,875
- Stage 2 21,477 1,917 1,455 24,849 14,780 422 142 15,344 40,193
- Stage 3 2,116 209 960 3,285 2,394 127 17 2,538 5,823
- Of which: individual 138 - 25 163 1,222 120 17 1,359 1,522
- Of which: collective 1,978 209 935 3,122 1,172 7 - 1,179 4,301
Loans - past due analysis (2) 213,336 8,137 11,439 232,912 112,911 70,884 1,184 184,979 417,891
- Not past due 210,041 7,872 10,438 228,351 109,838 69,858 1,167 180,863 409,214
- Past due 1-30 days 1,559 61 78 1,698 1,802 1,007 - 2,809 4,507
- Past due 31-90 days 620 65 117 802 390 9 - 399 1,201
- Past due 90-180 days 368 52 108 528 98 - - 98 626
- Past due >180 days 748 87 698 1,533 783 10 17 810 2,343
Loans - Stage 2 21,477 1,917 1,455 24,849 14,780 422 142 15,344 40,193
- Not past due 20,093 1,836 1,331 23,260 13,906 410 142 14,458 37,718
- Past due 1-30 days 1,082 36 42 1,160 540 3 - 543 1,703
- Past due 31-90 days 302 45 82 429 334 9 - 343 772
Weighted average life
- ECL measurement (years) 8 4 5 5 6 4 nm 6 6
Weighted average 12 months PDs
- IFRS 9 (%) 0.52 3.35 4.75 0.77 1.19 0.18 6.13 0.82 0.80
- Basel (%) 0.68 3.77 3.33 0.88 1.08 0.16 6.13 0.75 0.82
ECL provisions by geography 386 472 1,099 1,957 1,527 144 22 1,693 3,650
- UK 386 472 1,099 1,957 1,361 90 13 1,464 3,421
- Other Europe - - - - 106 10 - 116 116
- RoW - - - - 60 44 9 113 113
ECL provisions by stage 386 472 1,099 1,957 1,527 144 22 1,693 3,650
- Stage 1 59 128 178 365 232 37 14 283 648
- Stage 2 51 197 178 426 305 8 2 315 741
- Stage 3 276 147 743 1,166 990 99 6 1,095 2,261
- Of which: individual 12 - 15 27 482 96 6 584 611
- Of which: collective 264 147 728 1,139 508 3 - 511 1,650
For the notes to this table refer to page 32.
Risk and capital management continued
Credit risk - Banking activities continued
Sector analysis - portfolio summary (reviewed)
Personal Non-Personal
Credit Other Corporate Financial
Mortgages (1) cards personal Total and other institutions Sovereign Total Total
30 June 2025 £m £m £m £m £m £m £m £m £m
ECL provisions coverage (%) 0.18 5.80 9.61 0.84 1.35 0.20 1.86 0.92 0.87
- Stage 1 (%) 0.03 2.13 1.97 0.18 0.24 0.05 1.37 0.17 0.17
- Stage 2 (%) 0.24 10.28 12.23 1.71 2.06 1.90 1.41 2.05 1.84
- Stage 3 (%) 13.04 70.33 77.40 35.49 41.35 77.95 35.29 43.14 38.83
ECL (release)/charge (86) 143 172 229 101 52 - 153 382
- UK (86) 143 172 229 97 51 - 148 377
- Other Europe - - - - 3 2 - 5 5
- RoW - - - - 1 (1) - - -
Amounts written-off 13 52 30 95 97 - - 97 192
Loans by residual maturity 213,336 8,137 11,439 232,912 112,911 70,884 1,184 184,979 417,891
- ≤1 year 2,151 2,594 2,920 7,665 32,591 52,260 344 85,195 92,860
- >1 and ≤5 year 8,453 5,543 6,873 20,869 49,964 13,956 497 64,417 85,286
- >5 and ≤15 year 42,661 - 1,642 44,303 22,203 4,532 309 27,044 71,347
- >15 year 160,071 - 4 160,075 8,153 136 34 8,323 168,398
Other financial assets by asset quality (3) - - - - 4,584 25,530 130,211 160,325 160,325
- AQ1-AQ4 - - - - 4,582 25,400 130,211 160,193 160,193
- AQ5-AQ8 - - - - 2 130 - 132 132
Off-balance sheet 14,489 25,919 7,739 48,147 76,535 21,510 192 98,237 146,384
- Loan commitments 14,489 25,919 7,701 48,109 73,735 20,157 192 94,084 142,193
- Contingent liabilities - - 38 38 2,800 1,353 - 4,153 4,191
Off-balance sheet by asset quality (3) 14,489 25,919 7,739 48,147 76,535 21,510 192 98,237 146,384
- AQ1-AQ4 13,642 516 6,296 20,454 48,124 19,608 121 67,853 88,307
- AQ5-AQ8 836 25,021 1,391 27,248 28,030 1,858 16 29,904 57,152
- AQ9 1 13 23 37 26 - 55 81 118
- AQ10 10 369 29 408 355 44 - 399 807
For the notes to this table refer to page 32.
Risk and capital management continued
Credit risk - Banking activities continued
Sector analysis - portfolio summary (reviewed)
Personal Non-Personal
Credit Other Corporate Financial
Mortgages (1) cards personal Total and other institutions Sovereign Total Total
31 December 2024 £m £m £m £m £m £m £m £m £m
Loans by geography 209,846 6,930 9,749 226,525 111,734 70,321 1,645 183,700 410,225
- UK 209,846 6,930 9,749 226,525 97,409 43,412 562 141,383 367,908
- Other Europe - - - - 6,311 14,747 766 21,824 21,824
- RoW - - - - 8,014 12,162 317 20,493 20,493
Loans by stage 209,846 6,930 9,749 226,525 111,734 70,321 1,645 183,700 410,225
- Stage 1 186,250 4,801 7,267 198,318 94,991 69,021 1,491 165,503 363,821
- Stage 2 21,061 1,953 1,622 24,636 14,464 1,241 133 15,838 40,474
- Stage 3 2,535 176 860 3,571 2,279 59 21 2,359 5,930
- Of which: individual 141 - 26 167 1,046 51 21 1,118 1,285
- Of which: collective 2,394 176 834 3,404 1,233 8 - 1,241 4,645
Loans - past due analysis (2) 209,846 6,930 9,749 226,525 111,734 70,321 1,645 183,700 410,225
- Not past due 206,739 6,721 8,865 222,325 107,855 70,055 1,627 179,537 401,862
- Past due 1-30 days 1,404 50 70 1,524 2,530 211 - 2,741 4,265
- Past due 31-90 days 580 51 99 730 398 2 18 418 1,148
- Past due 90-180 days 408 41 96 545 139 49 - 188 733
- Past due >180 days 715 67 619 1,401 812 4 - 816 2,217
Loans - Stage 2 21,061 1,953 1,622 24,636 14,464 1,241 133 15,838 40,474
- Not past due 19,939 1,889 1,521 23,349 13,485 1,228 133 14,846 38,195
- Past due 1-30 days 853 31 37 921 640 11 - 651 1,572
- Past due 31-90 days 269 33 64 366 339 2 - 341 707
Weighted average life
- ECL measurement (years) 8 4 6 6 6 2 nm 6 6
Weighted average 12 months PDs
- IFRS 9 (%) 0.51 3.23 4.59 0.76 1.24 0.16 5.51 0.86 0.80
- Basel (%) 0.68 3.65 3.18 0.87 1.11 0.15 4.16 0.76 0.82
ECL provisions by geography 462 381 969 1,812 1,504 90 19 1,613 3,425
- UK 462 381 969 1,812 1,335 37 12 1,384 3,196
- Other Europe - - - - 109 9 - 118 118
- RoW - - - - 60 44 7 111 111
ECL provisions by stage 462 381 969 1,812 1,504 90 19 1,613 3,425
- Stage 1 77 77 130 284 264 38 12 314 598
- Stage 2 60 186 183 429 344 12 2 358 787
- Stage 3 325 118 656 1,099 896 40 5 941 2,040
- Of which: individual 11 - 17 28 382 36 5 423 451
- Of which: collective 314 118 639 1,071 514 4 - 518 1,589
For the notes to this table refer to the following page.
Risk and capital management continued
Credit risk - Banking activities continued
Sector analysis - portfolio summary (reviewed)
Personal Non-Personal
Credit Other Corporate Financial
Mortgages (1) cards personal Total and other institutions Sovereign Total Total
31 December 2024 £m £m £m £m £m £m £m £m £m
ECL provisions coverage (%) 0.22 5.50 9.94 0.80 1.35 0.13 1.16 0.88 0.83
- Stage 1 (%) 0.04 1.60 1.79 0.14 0.28 0.06 0.80 0.19 0.16
- Stage 2 (%) 0.28 9.52 11.28 1.74 2.38 0.97 1.50 2.26 1.94
- Stage 3 (%) 12.82 67.05 76.28 30.78 39.32 67.80 23.81 39.89 34.40
Half year ended 30 June 2024
ECL (release)/charge (4) (19) 51 91 123 (95) 19 1 (75) 48
- UK (19) 51 91 123 (82) (4) - (86) 37
- Other Europe - - - - (7) (6) - (13) (13)
- RoW - - - - (6) 29 1.0 24 24
Amounts written-off (4) 9 38 224 271 98 - - 98 369
31 December 2024
Loans by residual maturity 209,846 6,930 9,749 226,525 111,734 70,321 1,645 183,700 410,225
- ≤1 year 3,367 3,903 3,186 10,456 34,929 54,971 822 90,722 101,178
- >1 and ≤5 year 11,651 3,027 5,551 20,229 48,075 10,967 488 59,530 79,759
- >5 and ≤15 year 45,454 - 1,006 46,460 20,623 4,270 298 25,191 71,651
- >15 year 149,374 - 6 149,380 8,107 113 37 8,257 157,637
Other financial assets by asset quality (3) - - - - 3,644 31,102 119,502 154,248 154,248
- AQ1-AQ4 - - - - 3,639 30,743 119,502 153,884 153,884
- AQ5-AQ8 - - - - 5 359 - 364 364
Off-balance sheet 13,806 20,135 7,947 41,888 75,964 21,925 239 98,128 140,016
- Loan commitments 13,806 20,135 7,906 41,847 72,940 20,341 239 93,520 135,367
- Contingent liabilities - - 41 41 3,024 1,584 - 4,608 4,649
Off-balance sheet by asset quality (3) 13,806 20,135 7,947 41,888 75,964 21,925 239 98,128 140,016
- AQ1-AQ4 12,951 510 6,568 20,029 47,896 20,063 155 68,114 88,143
- AQ5-AQ8 839 19,276 1,336 21,451 27,657 1,813 21 29,491 50,942
- AQ9 1 12 17 30 19 - 63 82 112
- AQ10 15 337 26 378 392 49 - 441 819
(1) Includes a portion of Private Banking & Wealth Management
lending secured against residential real estate, in line with ECL calculation
methodology. Private Banking & Wealth Management and RBS International
personal products are reported in the UK, reflecting the country of lending
origination and includes crown dependencies.
(2) AQ bandings are based on Basel PDs and mapping as follows:
Internal asset quality band Probability of default range Indicative S&P rating Internal asset quality band Probability of default range Indicative S&P rating
AQ1 0% - 0.034% AAA to AA AQ6 1.076% - 2.153% BB- to B+
AQ2 0.034% - 0.048% AA to AA- AQ7 2.153% - 6.089% B+ to B
AQ3 0.048% - 0.095% A+ to A AQ8 6.089% - 17.222% B- to CCC+
AQ4 0.095% - 0.381% BBB+ to BBB- AQ9 17.222% - 100% CCC to C
AQ5 0.381% - 1.076% BB+ to BB AQ10 100% D
£0.4 billion (31 December 2024 - £0.3 billion) of AQ10 Personal balances
primarily relate to loan commitments, the drawdown of which is effectively
prohibited.
Risk and capital management continued
Credit risk - Banking activities continued
Sector analysis - portfolio summary (reviewed)
The table below shows ECL by stage, for the Personal portfolio and
Non-Personal portfolio, including the three largest borrowing sector clusters
included in corporate and other.
Loans - amortised cost and FVOCI Off-balance sheet ECL provisions
Loan Contingent
Stage 1 Stage 2 Stage 3 Total commitments liabilities Stage 1 Stage 2 Stage 3 Total
30 June 2025 £m £m £m £m £m £m £m £m £m £m
Personal 204,778 24,849 3,285 232,912 48,109 38 365 426 1,166 1,957
Mortgages (1) 189,743 21,477 2,116 213,336 14,489 - 59 51 276 386
Credit cards 6,011 1,917 209 8,137 25,919 - 128 197 147 472
Other personal 9,024 1,455 960 11,439 7,701 38 178 178 743 1,099
Non-Personal 167,097 15,344 2,538 184,979 94,084 4,153 283 315 1,095 1,693
Financial institutions (2) 70,335 422 127 70,884 20,157 1,353 37 8 99 144
Sovereigns 1,025 142 17 1,184 192 - 14 2 6 22
Corporate and other 95,737 14,780 2,394 112,911 73,735 2,800 232 305 990 1,527
Of which:
Commercial real estate 16,855 1,274 368 18,497 6,637 161 64 26 135 225
Mobility and logistics 13,990 2,280 121 16,391 10,036 499 25 35 39 99
Consumer industries 12,882 2,592 445 15,919 10,891 517 32 71 202 305
Total 371,875 40,193 5,823 417,891 142,193 4,191 648 741 2,261 3,650
Loans - amortised cost and FVOCI Off-balance sheet ECL provisions
Loan Contingent
Stage 1 Stage 2 Stage 3 Total commitments liabilities Stage 1 Stage 2 Stage 3 Total
31 December 2024 £m £m £m £m £m £m £m £m £m £m
Personal 198,318 24,636 3,571 226,525 41,847 41 284 429 1,099 1,812
Mortgages (1) 186,250 21,061 2,535 209,846 13,806 - 77 60 325 462
Credit cards 4,801 1,953 176 6,930 20,135 - 77 186 118 381
Other personal 7,267 1,622 860 9,749 7,906 41 130 183 656 969
Non-Personal 165,503 15,838 2,359 183,700 93,520 4,608 314 358 941 1,613
Financial institutions (2) 69,021 1,241 59 70,321 20,341 1,584 38 12 40 90
Sovereigns 1,491 133 21 1,645 239 - 12 2 5 19
Corporate and other 94,991 14,464 2,279 111,734 72,940 3,024 264 344 896 1,504
Of which: - - - - - - - -
Commercial real estate 16,191 1,517 433 18,141 6,661 143 70 30 146 246
Mobility and logistics 13,363 2,384 148 15,895 9,367 595 26 35 67 128
Consumer industries 13,312 3,015 444 16,771 10,706 595 45 90 188 323
Total 363,821 40,474 5,930 410,225 135,367 4,649 598 787 2,040 3,425
(1) As at 30 June 2025, £140.1 billion, 65.7%, of the total
residential mortgages portfolio had Energy Performance Certificate (EPC) data
available (31 December 2024 - £139.1 billion, 66.3%). Of which, 47.7% were
rated as EPC A to C (31 December 2024 - 46.3%).
(2) Includes transactions, such as securitisations, where the
underlying risk may be in other sectors.
Risk and capital management continued
Credit risk - Banking activities continued
Non-Personal forbearance (reviewed)
The table below shows Non-Personal forbearance, Heightened Monitoring and Risk
of Credit Loss by sector. This table shows current exposure but reflects risk
transfers where there is a guarantee by another customer.
Corporate and Financial
other institutions Sovereign Total
30 June 2025 £m £m £m £m
Forbearance (flow) 2,287 66 14 2,367
Forbearance (stock) 4,267 117 14 4,398
Heightened Monitoring and Risk of Credit Loss 5,812 88 1 5,901
31 December 2024
Forbearance (flow) 3,359 119 18 3,496
Forbearance (stock) 4,556 106 18 4,680
Heightened Monitoring and Risk of Credit Loss 5,931 150 1 6,082
Risk and capital management continued
Credit risk - Banking activities continued
- Loans by geography and sector - In line with NatWest Group's
strategic focus, exposures continued to be mainly in the UK.
- Loans by stage - The increase in Stage 1, reflected the growth in
Personal lending on both mortgages and unsecured lending, alongside the
acquisition of the Sainsbury's Bank portfolio. Stage 2 balances remained
stable compared to 31 December 2024. Similarly, Stage 3 balances remained
stable overall, with a modest increase in Non-Personal Stage 3 balance, due to
a small number of defaults, spread across different sectors. This was largely
offset by the reduction seen in Personal mortgages, due to an enhancement to
the application of the definition of default used on mortgages, resulting in a
migration of loans back to the good book.
- Loans - Past due analysis - Within the Personal portfolio, arrears
balances increased during H1 2025, however, this was in line with expectations
following periods of balance growth. Arrears inflow rates remained stable. In
Non-Personal, the total level of past due loans was broadly stable since 31
December 2024, but with some offsetting movements in early arrears by sector.
Stage 2 loans past due reduced, in line with overall Stage 2 reductions.
- Weighted average 12 months PDs - Both IFRS 9 and Basel PDs
remained broadly stable during the year. In Non-Personal, some reductions were
observed in IFRS 9 PDs in the corporate portfolio due to economic and
portfolio improvements. PDs in sovereigns increased due to new lending, which
is fully backed by government guarantees.
- ECL provisions by stage and ECL provisions coverage - Overall
provisions coverage increased since 31 December 2024, following a small number
of individual Stage 3 charges in Non-Personal and an increase in good book ECL
coverage in the Personal portfolio. This was driven by the portfolio
acquisition from Sainsbury's Bank which increased the unsecured mix of the
Personal portfolio. Reductions in judgemental post model adjustments mitigated
the effect of some of these ECL increases.
- ECL charge - The H1 2025 impairment charge of £382 million,
primarily reflected a small number of individual charges in the Commercial
& Institutional portfolio alongside the initial ECL cost from the
portfolio acquisition from Sainsbury's Bank within Personal. This was
partially offset by post model adjustment releases in the good book and the
ECL release on Personal, with the migration of assets back to the good book
from Stage 3, following an enhancement to the application of the definition of
default used on mortgages.
- Loans by residual maturity - In mortgages, as expected, the vast
majority of exposures were greater than five years. In unsecured lending,
cards and other, exposures were concentrated in less than five years. In
Non-Personal, most loans mature in less than five years.
- Other financial assets by asset quality - Consisting almost
entirely of balances at central banks and debt securities held in the course
of treasury related management activities, these assets were mainly within the
AQ1-AQ4 bands.
- Off-balance sheet exposures by asset quality - In Personal,
undrawn exposures were reflective of available credit lines in credit cards
and current accounts. Additionally, the mortgage portfolio had undrawn
exposures, where a formal offer had been made to a customer but had not yet
drawn down; the value increased in line with the pipeline of offers. The
off-balance sheet commitments for credit cards increased due to the
Sainsbury's Bank portfolio acquisition. In Non-Personal, off-balance sheet
exposure consisted primarily of undrawn loan commitments to customers along
with contingent liabilities. The AQ band split of off-balance sheet exposures
broadly mirrored the drawn loans portfolio for non-defaulted exposures.
- Non-Personal problem debt - Exposures in the Problem Debt
Management framework reduced during H1 2025 due to some corporate customers
moving out of the framework. There was no change in the reasons for customers
moving into the Problem Debt Management framework, with trading issues and
cash/liquidity being the main drivers.
- Non-Personal forbearance - Exposures classified as forborne
reduced marginally across multiple sectors, leading to lower stock values in
corporates. A portion of forbearance flows related to cases in Customer
Lending Services subject to repeated forbearance.
Risk and capital management continued
Credit risk - Banking activities continued
Personal portfolio (reviewed)
Disclosures in the Personal portfolio section include drawn exposure (gross of
provisions).
30 June 2025 31 December 2024
Private Private
Banking Banking
Retail & Wealth Commercial Central items Retail & Wealth Commercial Central items
Banking Management & Institutional & other Total Banking Management & Institutional & other Total
Personal lending £m £m £m £m £m £m £m £m £m £m
Mortgages 198,260 12,871 2,160 13 213,304 194,865 12,826 2,161 - 209,852
Of which:
Owner occupied 179,036 11,475 1,466 12 191,989 176,137 11,348 1,457 - 188,942
Buy-to-let 19,224 1,396 694 1 21,315 18,728 1,478 704 - 20,910
Interest only 21,919 11,371 424 - 33,714 22,186 11,276 437 - 33,899
Mixed (1) 10,333 33 4 - 10,370 10,384 40 8 - 10,432
ECL provisions (2) 363 13 10 - 386 440 12 10 - 462
Other personal lending (3) 17,774 1,479 233 - 19,486 15,045 1,301 242 - 16,588
ECL provisions (2) 1,551 13 3 - 1,567 1,330 12 3 - 1,345
Total personal lending 216,034 14,350 2,393 13 232,790 209,910 14,127 2,403 - 226,440
Mortgage LTV ratios
Owner occupied 56% 59% 57% 49% 56% 56% 59% 56% - 56%
Stage 1 56% 59% 56% - 56% 56% 59% 55% - 56%
Stage 2 55% 58% 57% 34% 55% 55% 61% 56% - 55%
Stage 3 50% 62% 65% 91% 51% 50% 64% 74% - 51%
Buy-to-let 53% 60% 55% 35% 54% 53% 60% 52% - 53%
Stage 1 54% 60% 54% - 54% 54% 60% 51% - 54%
Stage 2 52% 57% 54% 35% 52% 52% 57% 55% - 52%
Stage 3 52% 57% 66% 35% 54% 52% 56% 59% - 53%
Gross new mortgage lending 15,991 745 125 - 16,861 26,440 1,395 257 - 28,092
Of which:
Owner occupied 14,834 701 90 - 15,625 25,300 1,266 183 - 26,749
- LTV > 90% 818 - - - 818 888 - - - 888
Weighted average LTV (4) 71% 66% 61% - 71% 70% 63% 71% - 70%
Buy-to-let 1,157 44 35 - 1,236 1,140 129 74 - 1,343
Weighted average LTV (4) 62% 62% 61% - 62% 61% 62% 56% - 61%
Interest only 1,182 677 19 - 1,878 1,575 1,238 42 - 2,855
Mixed (1) 520 - 1 - 521 1,150 - 1 - 1,151
For the notes to this table refer to the following page.
Risk and capital management continued
Credit risk - Banking activities continued
Personal portfolio (reviewed) continued
30 June 2025 31 December 2024
Private Private
Banking Banking
Retail & Wealth Commercial Central items Retail & Wealth Commercial Central items
Banking Management & Institutional & other Total Banking Management & Institutional & other Total
Mortgage forbearance £m £m £m £m £m £m £m £m £m £m
Forbearance flow (5) 196 12 1 - 209 473 8 6 - 487
Forbearance stock 1,764 14 12 1 1,791 1,680 20 15 - 1,715
Current 1,270 3 4 - 1,277 1,214 9 10 - 1,233
1-3 months in arrears 159 11 1 - 171 146 9 - - 155
> 3 months in arrears 335 - 7 1 343 320 2 5 - 327
(1) Includes accounts which have an interest only sub-account and a
capital and interest sub-account to provide a more comprehensive view of
interest only exposures.
(2) Retail Banking excludes a non-material amount of lending and
provisions held on relatively small legacy portfolios.
(3) Comprises unsecured lending except for Private Banking &
Wealth Management, which includes both secured and unsecured lending. It
excludes loans that are commercial in nature.
(4) New mortgage lending LTV reflects the LTV at the time of lending.
(5) Forbearance flows only include an account once per year, although
some accounts may be subject to multiple forbearance deals. Forbearance deals
post default are excluded from these flows.
Risk and capital management continued
Credit risk - Banking activities continued
Personal portfolio (reviewed)
Mortgage LTV distribution by stage
The table below shows gross mortgage lending and related ECL by LTV band for
the Retail Banking portfolio.
Mortgages ECL provisions ECL provisions coverage
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
30 June 2025 £m £m £m £m £m £m £m £m % % % %
≤50% 66,045 8,771 965 75,781 16 13 126 155 - 0.1 13.1 0.2
>50% and ≤70% 63,404 7,796 684 71,884 21 19 86 126 - 0.2 12.6 0.2
>70% and ≤80% 25,372 2,496 145 28,013 10 9 19 38 - 0.4 13.1 0.1
>80% and ≤90% 17,133 1,806 80 19,019 7 9 13 29 - 0.5 16.3 0.2
>90% and ≤100% 2,873 243 19 3,135 1 1 4 6 - 0.4 21.1 0.2
>100% 11 2 9 22 - - 5 5 - - 55.6 22.7
Total with LTVs 174,838 21,114 1,902 197,854 55 51 253 359 - 0.2 13.3 0.2
Other 404 1 1 406 3 - 1 4 0.7 - 100.0 1.0
Total 175,242 21,115 1,903 198,260 58 51 254 363 - 0.2 13.3 0.2
31 December 2024
≤50% 64,040 8,344 1,159 73,543 21 16 153 190 - 0.2 13.2 0.3
>50% and ≤70% 61,739 7,741 855 70,335 29 23 104 156 - 0.3 12.2 0.2
>70% and ≤80% 25,022 2,361 173 27,556 13 9 22 44 0.1 0.4 12.7 0.2
>80% and ≤90% 16,718 1,769 85 18,572 9 9 13 31 0.1 0.5 15.3 0.2
>90% and ≤100% 4,076 512 26 4,614 2 3 5 10 - 0.6 19.2 0.2
>100% 14 4 13 31 - - 6 6 - - 46.2 19.4
Total with LTVs 171,609 20,731 2,311 194,651 74 60 303 437 - 0.3 13.1 0.2
Other 212 1 1 214 2 - 1 3 0.9 - 100.0 1.4
Total 171,821 20,732 2,312 194,865 76 60 304 440 - 0.3 13.1 0.2
- Mortgage balances increased during H1 2025 with continued strong new
business in excess of redemptions. Unsecured balances increased, primarily
driven by the acquisition of personal loans and credit cards from Sainsbury's
Bank, as well as underlying credit card growth.
- In line with wider market trends, new business in the mortgage
portfolio was accelerated in Q1 2025, ahead of stamp duty changes introduced
on 1 April 2025. LTV for new business did therefore increase with a lower
proportion of remortgage new business. Overall portfolio LTV remained stable,
with house price growth reflected in the Office for National Statistics house
price indices and a reduction in redemptions compared to 2024.
- Portfolios and new business were closely monitored against agreed
operating limits. These included loan-to-value ratios, buy-to-let
concentrations, new-build concentrations and credit quality. Lending criteria,
affordability calculations and assumptions for new lending were adjusted
during the year, to maintain credit quality in line with appetite and to
ensure customers are assessed fairly as economic conditions change.
Risk and capital management continued
Credit risk - Banking activities continued
Commercial real estate (CRE) (reviewed)
CRE LTV distribution by stage
The table below shows CRE gross loans and related ECL by LTV band.
Gross loans ECL provisions ECL provisions coverage
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
30 June 2025 £m £m £m £m £m £m £m £m % % % %
≤50% 7,393 200 51 7,644 25 4 8 37 0.3 2.0 15.7 0.5
>50% and ≤60% 4,166 165 40 4,371 19 4 4 27 0.5 2.4 10.0 0.6
>60% and ≤70% 689 76 23 788 3 2 7 12 0.4 2.6 30.4 1.5
>70% and ≤100% 298 122 51 471 1 4 17 22 0.3 3.3 33.3 4.7
>100% 122 8 113 243 1 - 57 58 0.8 - 50.4 23.9
Total with LTVs 12,668 571 278 13,517 49 14 93 156 0.4 2.5 33.5 1.2
Total portfolio
average LTV 46% 59% 105% 48%
Other investment (1) 2,169 335 37 2,541 5 5 15 25 0.2 1.5 40.5 1.0
Investment 14,837 906 315 16,058 54 19 108 181 0.4 2.1 34.3 1.1
Development and
other (2) 2,018 368 53 2,439 10 7 27 44 0.5 1.9 50.9 1.8
Total 16,855 1,274 368 18,497 64 26 135 225 0.4 2.0 36.7 1.2
31 December 2024
≤50% 7,334 380 48 7,762 28 6 7 41 0.4 1.6 14.6 0.5
>50% and ≤60% 3,829 169 53 4,051 19 5 9 33 0.5 3.0 17.0 0.8
>60% and ≤70% 584 198 34 816 3 5 8 16 0.5 2.5 23.5 2.0
>70% and ≤100% 312 83 79 474 2 4 21 27 0.6 4.8 26.6 5.7
>100% 139 8 119 266 1 - 56 57 0.7 - 47.1 21.4
Total with LTVs 12,198 838 333 13,369 53 20 101 174 0.4 2.4 30.3 1.3
Total portfolio
average LTV 46% 51% 102% 48%
Other investment (1) 2,132 348 41 2,521 6 6 15 27 0.3 1.7 36.6 1.1
Investment 14,330 1,186 374 15,890 59 26 116 201 0.4 2.2 31.0 1.3
Development and
other (2) 1,861 331 59 2,251 11 4 30 45 0.6 1.2 50.8 2.0
Total 16,191 1,517 433 18,141 70 30 146 246 0.4 2.0 33.7 1.4
(1) Relates mainly to business banking and unsecured corporate
lending.
(2) Related to the development of commercial residential properties,
along with CRE activities that are not strictly investment or development. LTV
is not a meaningful measure for this type of lending activity.
- Overall - The majority of the CRE portfolio was located and managed in
the UK. Business appetite and strategy was aligned across NatWest Group.
- 2025 trends - There was strong growth in the residential sector, with
other CRE sectors remaining broadly flat. LTV profile remained stable.
- Credit quality - Credit quality improved, with fewer exposures in the
Problem Debt Management framework, and the average portfolio probability of
default holding steady.
- Risk appetite - Lending appetite is subject to regular review.
Risk and capital management continued
Credit risk - Banking activities continued
Flow statements (reviewed)
The flow statements that follow show the main ECL and related income statement
movements. They also show the changes in ECL as well as the changes in related
financial assets used in determining ECL. Due to differences in scope,
exposures may differ from those reported in other tables, principally in
relation to exposures in Stage 1 and Stage 2. These differences do not have a
material ECL effect. Other points to note:
- Financial assets include treasury liquidity portfolios, comprising
balances at central banks and debt securities, as well as loans. Both modelled
and non-modelled portfolios are included.
- Stage transfers (for example, exposures moving from Stage 1 into Stage
2) are a key feature of the ECL movements, with the net re-measurement cost of
transitioning to a worse stage being a primary driver of income statement
charges. Similarly, there is an ECL benefit for accounts improving stage.
- Changes in risk parameters shows the reassessment of the ECL within a
given stage, including any ECL overlays and residual income statement gains or
losses at the point of write-off or accounting write-down.
- Other (P&L only items) includes any subsequent changes in the
value of written-down assets (for example, fortuitous recoveries) along with
other direct write-off items such as direct recovery costs. Other (P&L
only items) affects the income statement but does not affect balance sheet ECL
movements.
- Amounts written-off represent the gross asset written-down against
accounts with ECL, including the net asset write-down for any debt sale
activity.
- There were some flows from Stage 1 into Stage 3 including transfers
due to unexpected default events with a post model adjustment in place for
Commercial & Institutional to account for this risk.
- The effect of any change in post model adjustments during the year is
typically reported under changes in risk parameters, as are any effects
arising from changes to the underlying models. Refer to the section on
Governance and post model adjustments for further details.
- All movements are captured monthly and aggregated. Interest suspended
post default is included within Stage 3 ECL, with the movement in the value of
suspended interest during the year reported under currency translation and
other adjustments.
Stage 1 Stage 2 Stage 3 Total
Financial Financial Financial Financial
assets ECL assets ECL assets ECL assets ECL
NatWest Group total £m £m £m £m £m £m £m £m
At 1 January 2025 515,556 598 42,165 787 5,901 2,040 563,622 3,425
Currency translation and other adjustments (2,318) - (28) - 87 94 (2,259) 94
Transfers from Stage 1 to Stage 2 (18,664) (104) 18,664 104 - - - -
Transfers from Stage 2 to Stage 1 15,135 215 (15,135) (215) - - - -
Transfers to Stage 3 (282) (3) (1,342) (131) 1,624 134 - -
Transfers from Stage 3 80 9 744 30 (824) (39) - -
Net re-measurement of ECL on stage transfer (148) 277 274 403
Changes in risk parameters (73) (14) 148 61
Other changes in net exposure 17,488 154 (3,312) (97) (857) (121) 13,319 (64)
Other (P&L only items) - (1) (17) (18)
Income statement (releases)/charges (67) 165 284 382
Transfers to disposal groups and fair value - - - - - - - -
Amounts written-off - - - - (192) (192) (192) (192)
Unwinding of discount - - (77) (77)
At 30 June 2025 526,995 648 41,756 741 5,739 2,261 574,490 3,650
Net carrying amount 526,347 41,015 3,478 570,840
At 1 January 2024 504,345 709 40,294 976 5,621 1,960 550,260 3,645
2024 movements (6,334) (124) (1,643) (174) 90 (4) (7,887) (302)
At 30 June 2024 498,011 585 38,651 802 5,711 1,956 542,373 3,343
Net carrying amount 497,426 37,849 3,755 539,030
Risk and capital management continued
Credit risk - Banking activities continued
Flow statements (reviewed)
Stage 1 Stage 2 Stage 3 Total
Financial Financial Financial Financial
assets ECL assets ECL assets ECL assets ECL
Retail Banking - mortgages £m £m £m £m £m £m £m £m
At 1 January 2025 171,333 76 20,992 60 2,303 305 194,628 441
Currency translation and other adjustments - - - - 52 51 52 51
Transfers from Stage 1 to Stage 2 (8,422) (11) 8,422 11 - - - -
Transfers from Stage 2 to Stage 1 6,890 11 (6,890) (11) - - - -
Transfers to Stage 3 (8) - (453) (4) 461 4 - -
Transfers from Stage 3 16 - 625 10 (641) (10) - -
Net re-measurement of ECL on stage transfer (2) - 4 2
Changes in risk parameters (13) (12) 30 5
Other changes in net exposure 4,092 (3) (1,359) (3) (271) (80) 2,462 (86)
Other (P&L only items) - - (10) (10)
Income statement (releases)/charges (18) (15) (56) (89)
Amounts written-off - - - - (13) (13) (13) (13)
Unwinding of discount - - (37) (37)
At 30 June 2025 173,901 58 21,337 51 1,891 254 197,129 363
Net carrying amount 173,843 21,286 1,637 196,766
At 1 January 2024 174,038 87 17,827 60 2,068 250 193,933 397
2024 movements (7,045) (38) 2,490 8 173 30 (4,382) -
At 30 June 2024 166,993 49 20,317 68 2,241 280 189,551 397
Net carrying amount 166,944 20,249 1,961 189,154
- ECL coverage for mortgages decreased during the first half of 2025,
primarily driven by the reduction in economic uncertainty post model
adjustments (supported by back-testing) and an enhancement to the application
of the definition of default. The latter resulted in a £0.4 billion migration
of loans from Stage 3 back to the good book.
- PDs and Stage 3 inflows remained broadly stable, with the portfolio
showing continued resilience during times when a number of customers have had
affordability pressures.
- The net flows into Stage 2 from Stage 1 were offset by a similar level
of outflows from Stage 2 to Stage 1 and balance paydown in Stage 2, supporting
a stable Stage 2 exposure population during 2025 to date.
- The relatively small ECL cost for net re-measurement on transfer into
Stage 3 included the effect of risk targeted ECL adjustments, when previously
in the good book. Refer to the Governance and post model adjustments section
for further details.
- Write-off occurs once the repossessed property has been sold and there
is a residual shortfall balance remaining outstanding. This would typically be
within five years from default but can be longer.
Risk and capital management continued
Credit risk - Banking activities continued
Flow statements (reviewed)
Stage 1 Stage 2 Stage 3 Total
Financial Financial Financial Financial
assets ECL assets ECL assets ECL assets ECL
Retail Banking - credit cards £m £m £m £m £m £m £m £m
At 1 January 2025 4,523 76 2,034 186 162 117 6,719 379
Currency translation and other adjustments - - - - 3 3 3 3
Transfers from Stage 1 to Stage 2 (1,110) (24) 1,110 24 - - - -
Transfers from Stage 2 to Stage 1 675 55 (675) (55) - - - -
Transfers to Stage 3 (16) (1) (99) (35) 115 36 - -
Transfers from Stage 3 2 1 5 2 (7) (3) - -
Net re-measurement of ECL on stage transfer (37) 95 42 100
Changes in risk parameters 9 17 9 35
Other changes in net exposure 1,594 47 (381) (37) (10) (1) 1,203 9
Other (P&L only items) - - (1) (1)
Income statement (releases)/charges 19 75 49 143
Amounts written-off - - - - (52) (52) (52) (52)
Unwinding of discount - - (5) (5)
At 30 June 2025 5,668 126 1,994 197 211 146 7,873 469
Net carrying amount 5,542 1,797 65 7,404
At 1 January 2024 3,475 70 2,046 204 146 89 5,667 363
2024 movements 648 11 (224) (16) 23 16 447 11
At 30 June 2024 4,123 81 1,822 188 169 105 6,114 374
Net carrying amount 4,042 1,634 64 5,740
- Overall ECL for cards increased during 2025, driven primarily by the
acquisition of Sainsbury's Bank credit card balances into Stage 1 (around £1
billion at 30 June 2025) alongside continued organic portfolio growth,
reflecting strong customer demand, while sustaining robust risk appetite.
- While portfolio performance remained stable, a net flow into Stage 2
from Stage 1 was observed, with the typical maturation of lending after a
period of strong growth in recent years.
- Flow rates into Stage 3 were slightly higher in 2025 compared to 2024.
This was linked to recent growth and portfolio maturation, but in line with
expectations.
- Charge-off (analogous to partial write-off) typically occurs after 12
missed payments.
Risk and capital management continued
Credit risk - Banking activities continued
Flow statements (reviewed)
Stage 1 Stage 2 Stage 3 Total
Financial Financial Financial Financial
assets ECL assets ECL assets ECL assets ECL
Retail Banking - other personal unsecured £m £m £m £m £m £m £m £m
At 1 January 2025 5,605 127 1,465 182 833 641 7,903 950
Currency translation and other adjustments - - - - 15 17 15 17
Transfers from Stage 1 to Stage 2 (998) (44) 998 44 - - - -
Transfers from Stage 2 to Stage 1 731 75 (731) (75) - - - -
Transfers to Stage 3 (38) (1) (152) (58) 190 59 - -
Transfers from Stage 3 4 1 11 5 (15) (6) - -
Net re-measurement of ECL on stage transfer (49) 104 26 81
Changes in risk parameters (13) (7) 60 40
Other changes in net exposure 1,808 80 (179) (18) (49) (24) 1,580 38
Other (P&L only items) - - 12 12
Income statement (releases)/charges 18 79 74 171
Amounts written-off - - - - (29) (29) (29) (29)
Unwinding of discount - - (17) (17)
At 30 June 2025 7,112 176 1,412 177 945 727 9,469 1,080
Net carrying amount 6,936 1,235 218 8,389
At 1 January 2024 5,240 149 1,657 238 963 758 7,860 1,145
2024 movements 477 (4) (432) (38) (118) (117) (73) (159)
At 30 June 2024 5,717 145 1,225 200 845 641 7,787 986
Net carrying amount 5,572 1,025 204 6,801
- Total ECL increased, driven primarily by the acquisition of
Sainsbury's Bank loan balances into Stage 1 (around £1.2 billion at 30 June
2025) alongside continued organic loan book growth.
- Stable arrears performance was observed during 2025 to date, which is
reflected in the good book ECL, with coverage levels showing a modest
reduction since 31 December 2024.
- Flow rates into Stage 3 remained stable during the first half of 2025,
in line with broader portfolio trends on arrears, with overall Stage 3
balances increasing as a result of reduced debt sale activity.
- Write-off occurs once recovery activity with the customer has been
concluded or there are no further recoveries expected, but no later than six
years after default.
Risk and capital management continued
Credit risk - Banking activities continued
Flow statements (reviewed)
Stage 1 Stage 2 Stage 3 Total
Financial Financial Financial Financial
assets ECL assets ECL assets ECL assets ECL
Commercial & Institutional - corporate £m £m £m £m £m £m £m £m
At 1 January 2025 62,575 175 11,450 273 1,562 659 75,587 1,107
Currency translation and other adjustments (574) (22) 9 2 (587) 2
Inter-group transfers 84 27 1 - - 111 1
Transfers from Stage 1 to Stage 2 (5,494) (19) 5,494 19 - - - -
Transfers from Stage 2 to Stage 1 4,080 51 (4,080) (51) - - - -
Transfers to Stage 3 (146) (1) (457) (28) 603 29 - -
Transfers from Stage 3 31 4 58 11 (89) (15) - -
Net re-measurement of ECL on stage transfer (42) 54 152 164
Changes in risk parameters (33) (7) 20 (20)
Other changes in net exposure 1,840 14 (990) (33) (326) 2 524 (17)
Other (P&L only items) - - (17) (17)
Income statement (releases)/charges (61) 14 157 110
Amounts written-off - (86) (86) (86) (86)
Unwinding of discount (13) (13)
At 30 June 2025 62,396 149 11,480 239 1,673 750 75,549 1,138
Net carrying amount 62,247 11,241 923 74,411
At 1 January 2024 61,402 226 12,275 344 1,454 602 75,131 1,172
2024 movements 1,914 (52) (2,180) (81) 6 9 (260) (124)
At 30 June 2024 63,316 174 10,095 263 1,460 611 74,871 1,048
Net carrying amount 63,142 9,832 849 73,823
- ECL increased in H1 2025 due to the impact of a small number of flows
into default. The charge on those cases is seen through net re-measurement of
ECL on stage transfer, reflecting the difference between good book ECL and
defaulted ECL.
- Performing ECL coverage decreased in line with ECL reductions in the
portfolio book as risk metrics improved, in particular from point-in-time
economics inputs, and reduced post model adjustments.
- Stage 2 exposure levels were stable in the period as flows into Stage
2 were broadly offset through flows back to Stage 1, repayments, and flows
into Stage 3.
Risk and capital management continued
Credit risk - Banking activities continued
Flow statements (reviewed)
Stage 1 Stage 2 Stage 3 Total
Financial Financial Financial Financial
assets ECL assets ECL assets ECL assets ECL
Commercial & Institutional - property £m £m £m £m £m £m £m £m
At 1 January 2025 27,468 77 2,980 61 590 225 31,038 363
Currency translation and other adjustments 5 - - - 8 13 13 13
Inter-group transfers (79) - (11) (1) - - (90) (1)
Transfers from Stage 1 to Stage 2 (1,429) (4) 1,429 4 - - - -
Transfers from Stage 2 to Stage 1 928 12 (928) (12) - - - -
Transfers to Stage 3 (3) - (83) (4) 86 4 - -
Transfers from Stage 3 16 2 16 2 (32) (4) - -
Net re-measurement of ECL on stage transfer (10) 17 9 16
Changes in risk parameters (12) (5) 7 (10)
Other changes in net exposure 1,425 6 (190) (4) (136) (17) 1,099 (15)
Other (P&L only items) - - - -
Income statement (releases)/charges (16) 8 (1) (9)
Amounts written-off - - - - (10) (10) (10) (10)
Unwinding of discount - - (5) (5)
At 30 June 2025 28,331 71 3,213 58 506 222 32,050 351
Net carrying amount 28,260 3,155 284 31,699
At 1 January 2024 26,040 94 3,155 89 606 195 29,801 378
2024 movements 486 (26) (180) (27) (43) 32 263 (21)
At 30 June 2024 26,526 68 2,975 62 563 227 30,064 357
Net carrying amount 26,458 2,913 336 29,707
- ECL reduced marginally across all stages in the first half of 2025.
Flows to Stage 3 and associated charges were notably reduced from the first
half of 2024 and more than offset by a reduction on other existing Stage 3
exposures.
- Exposures in Stage 2 increased as flows into Stage 2 were higher than
flows out and repayments, but remained at broadly 10% of total good book
exposure.
- Performing ECL reductions were driven by improved risk metrics and
reductions in post model adjustments.
Risk and capital management continued
Credit risk - Banking activities continued
Flow statements (reviewed)
Stage 1 Stage 2 Stage 3 Total
Financial Financial Financial Financial
assets ECL assets ECL assets ECL assets ECL
Commercial & Institutional - other £m £m £m £m £m £m £m £m
At 1 January 2025 93,724 37 1,739 12 123 57 95,586 106
Currency translation and other adjustments (1,287) - (8) - - 8 (1,295) 8
Inter-group transfers (5) - (16) - - - (21) -
Transfers from Stage 1 to Stage 2 (541) (1) 541 1 - - - -
Transfers from Stage 2 to Stage 1 1,266 5 (1,266) (5) - - - -
Transfers to Stage 3 (64) - (18) (1) 82 1 - -
Transfers from Stage 3 3 - 4 1 (7) (1) - -
Net re-measurement of ECL on stage transfer (3) 2 38 37
Changes in risk parameters (6) - 17 11
Other changes in net exposure (25) 6 (96) (1) (16) - (137) 5
Other (P&L only items) - - - -
Income statement (releases)/charges (3) 1 55 53
Amounts written-off - - - - (1) (1) (1) (1)
Unwinding of discount - - (1) (1)
At 30 June 2025 93,071 38 880 9 181 118 94,132 165
Net carrying amount 93,033 871 63 93,967
At 1 January 2024 88,860 36 1,599 14 101 22 90,560 72
2024 movements 889 (3) (628) (5) 34 32 295 24
At 30 June 2024 89,749 33 971 9 135 54 90,855 96
Net carrying amount 89,716 962 81 90,759
- ECL increased, primarily driven by Stage 3 exposures that defaulted in
the first half of 2025.
- The portion of good book exposure in Stage 2 reduced with flows from
Stage 1 into Stage 2 more than offset by flows back to Stage 1.
- Despite the increase in Stage 3 exposure, combined Stage 2 and Stage 3
exposure reduced and continued to be less than 2% of the total assets.
Risk and capital management continued
Credit risk - Banking activities continued
Stage 2 decomposition by a significant increase in credit risk trigger
The tables that follow show decomposition for the Personal and Non-Personal
portfolios.
Mortgages Credit cards Other Total
30 June 2025 £m % £m % £m % £m %
Personal trigger (1)
PD movement 14,701 68.3 1,412 73.7 771 53.0 16,884 67.9
PD persistence 4,076 19.0 372 19.4 279 19.2 4,727 19.0
Adverse credit bureau recorded with credit reference agency 956 4.5 81 4.2 124 8.5 1,161 4.7
Forbearance support provided 227 1.1 2 0.1 10 0.7 239 1.0
Customers in collections 169 0.8 12 0.6 21 1.4 202 0.8
Collective SICR and other reasons (2) 1,217 5.7 38 2.0 236 16.2 1,491 6.0
Days past due >30 131 0.6 - - 14 1.0 145 0.6
21,477 100.0 1,917 100.0 1,455 100.0 24,849 100.0
31 December 2024
Personal trigger (1)
PD movement 14,480 68.8 1,425 72.9 809 49.9 16,714 67.8
PD persistence 3,951 18.8 414 21.2 388 23.9 4,753 19.3
Adverse credit bureau recorded with credit reference agency 936 4.4 71 3.6 119 7.3 1,126 4.6
Forbearance support provided 189 0.9 1 0.1 9 0.6 199 0.8
Customers in collections 169 0.8 3 0.2 2 0.1 174 0.7
Collective SICR and other reasons (2) 1,248 5.9 39 2.0 290 17.9 1,577 6.4
Days past due >30 88 0.4 - - 5 0.3 93 0.4
21,061 100.0 1,953 100.0 1,622 100.0 24,636 100.0
For the notes to the table refer to the following page.
- The level of PD driven deterioration remained consistent with 31
December 2024, reflecting stability in portfolio PDs and underlying portfolio
arrears trends.
- Higher risk mortgage customers who utilised the new Mortgage Charter
measures continued to be collectively migrated into Stage 2 and were captured
in the collective SICR and other reasons category.
- Accounts that were less than 30 days past due continued to represent
the vast majority of the Stage 2 population.
Risk and capital management continued
Credit risk - Banking activities continued
Stage 2 decomposition by a significant increase in credit risk trigger
Corporate and other (3) Financial institutions Sovereign Total
30 June 2025 £m % £m % £m % £m %
Non-Personal trigger (1)
PD movement 11,814 80.0 284 67.3 141 99.3 12,239 79.9
PD persistence 226 1.5 3 0.7 - - 229 1.5
Heightened Monitoring and Risk of Credit Loss 1,761 11.9 11 2.6 - - 1,772 11.5
Forbearance support provided 345 2.3 - - - - 345 2.2
Customers in collections 33 0.2 - - - - 33 0.2
Collective SICR and other reasons (2) 380 2.6 124 29.4 1 0.7 505 3.3
Days past due >30 221 1.5 - - - - 221 1.4
14,780 100.0 422 100.0 142 100.0 15,344 100.0
31 December 2024
Non-Personal trigger (1)
PD movement 11,800 81.6 971 78.2 - - 12,771 80.6
PD persistence 310 2.1 2 0.2 - - 312 2.0
Heightened Monitoring and Risk of Credit Loss 1,599 11.1 83 6.7 132 99.2 1,814 11.5
Forbearance support provided 229 1.6 - - - - 229 1.4
Customers in collections 34 0.2 - - - - 34 0.2
Collective SICR and other reasons (2) 396 2.7 172 13.9 1 0.8 569 3.6
Days past due >30 96 0.7 13 1.0 - - 109 0.7
14,464 100.0 1,241 100.0 133 100.0 15,838 100.0
(1) The table is prepared on a hierarchical basis from top to bottom,
for example, accounts with PD deterioration may also trigger backstop(s) but
are only reported under PD deterioration.
(2) Includes cases where a PD assessment cannot be made and accounts
where the PD has deteriorated beyond a prescribed backstop threshold aligned
to risk management practices.
- Stage 2 loans were broadly stable compared to 31 December 2024. PD
movement continued to capture the vast majority of loans in Stage 2, with
values marginally reduced, reflective of improved PDs from point-in-time
economic metrics.
Risk and capital management continued
Credit risk - Banking activities continued
Asset quality (reviewed)
The table below shows asset quality bands of gross loans and ECL, by stage,
for the Personal portfolio.
Gross loans ECL provisions ECL provisions coverage
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
30 June 2025 £m £m £m £m £m £m £m £m % % % %
Mortgages
AQ1-AQ4 111,678 8,954 - 120,632 24 15 - 39 - 0.2 - -
AQ5-AQ8 77,908 11,465 - 89,373 35 29 - 64 - 0.3 - 0.1
AQ9 157 1,058 - 1,215 - 7 - 7 - 0.7 - 0.6
AQ10 - - 2,116 2,116 - - 276 276 - - 13.0 13.0
189,743 21,477 2,116 213,336 59 51 276 386 - 0.2 13.0 0.2
Credit cards
AQ1-AQ4 130 - - 130 1 - - 1 0.8 - - 0.8
AQ5-AQ8 5,858 1,817 - 7,675 126 178 - 304 2.2 9.8 - 4.0
AQ9 23 100 - 123 1 19 - 20 4.4 19.0 - 16.3
AQ10 - - 209 209 - - 147 147 - - 70.3 70.3
6,011 1,917 209 8,137 128 197 147 472 2.1 10.3 70.3 5.8
Other personal
AQ1-AQ4 751 104 - 855 6 11 - 17 0.8 10.6 - 2.0
AQ5-AQ8 8,214 1,209 - 9,423 167 131 - 298 2.0 10.8 - 3.2
AQ9 59 142 - 201 5 36 - 41 8.5 25.4 - 20.4
AQ10 - - 960 960 - - 743 743 - - 77.4 77.4
9,024 1,455 960 11,439 178 178 743 1,099 2.0 12.2 77.4 9.6
Total
AQ1-AQ4 112,559 9,058 - 121,617 31 26 - 57 - 0.3 - 0.1
AQ5-AQ8 91,980 14,491 - 106,471 328 338 - 666 0.4 2.3 - 0.6
AQ9 239 1,300 - 1,539 6 62 - 68 2.5 4.8 - 4.4
AQ10 - - 3,285 3,285 - - 1,166 1,166 - - 35.5 35.5
204,778 24,849 3,285 232,912 365 426 1,166 1,957 0.2 1.7 35.5 0.8
Risk and capital management continued
Credit risk - Banking activities continued
Asset quality (reviewed)
Gross loans ECL provisions ECL provisions coverage
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
31 December 2024 £m £m £m £m £m £m £m £m % % % %
Mortgages
AQ1-AQ4 104,793 8,416 - 113,209 29 16 - 45 - 0.2 - -
AQ5-AQ8 81,263 11,683 - 92,946 48 38 - 86 0.1 0.3 - 0.1
AQ9 194 962 - 1,156 - 6 - 6 - 0.6 - 0.5
AQ10 - - 2,535 2,535 - - 325 325 - - 12.8 12.8
186,250 21,061 2,535 209,846 77 60 325 462 - 0.3 12.8 0.2
Credit cards
AQ1-AQ4 128 - - 128 1 - - 1 0.8 - - 0.8
AQ5-AQ8 4,650 1,866 - 6,516 75 169 - 244 1.6 9.1 - 3.7
AQ9 23 87 - 110 1 17 - 18 4.4 19.5 - 16.4
AQ10 - - 176 176 - - 118 118 - - 67.1 67.1
4,801 1,953 176 6,930 77 186 118 381 1.6 9.5 67.1 5.5
Other personal
AQ1-AQ4 691 127 - 818 6 14 - 20 0.9 11.0 - 2.4
AQ5-AQ8 6,521 1,359 - 7,880 120 134 - 254 1.8 9.9 - 3.2
AQ9 55 136 - 191 4 35 - 39 7.3 25.7 - 20.4
AQ10 - - 860 860 - - 656 656 - - 76.3 76.3
7,267 1,622 860 9,749 130 183 656 969 1.8 11.3 76.3 9.9
Total
AQ1-AQ4 105,612 8,543 - 114,155 36 30 - 66 - 0.4 - 0.1
AQ5-AQ8 92,434 14,908 - 107,342 243 341 - 584 0.3 2.3 - 0.5
AQ9 272 1,185 - 1,457 5 58 - 63 1.8 4.9 - 4.3
AQ10 - - 3,571 3,571 - - 1,099 1,099 - - 30.8 30.8
198,318 24,636 3,571 226,525 284 429 1,099 1,812 0.1 1.7 30.8 0.8
- The portfolios acquired from Sainsbury's Bank, increased exposure to
AQ5-AQ8 within the credit cards and other personal segments.
- Stage 3 inflows remained broadly stable. The reduction in Stage3/AQ10
ratio was influenced at a total level by both the acquisition of the
Sainsbury's Bank portfolio on unsecured and an enhancement to the application
of the definition of default used on mortgages. The latter resulted in a £0.4
billion migration of loans from Stage 3/AQ10 back to the good book.
Risk and capital management continued
Credit risk - Banking activities continued
Asset quality (reviewed)
The table below shows asset quality bands of gross loans and ECL, by stage,
for the Non-Personal portfolio.
Gross loans ECL provisions ECL provisions coverage
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
30 June 2025 £m £m £m £m £m £m £m £m % % % %
Corporate and other
AQ1-AQ4 40,896 2,555 - 43,451 28 18 - 46 0.1 0.7 - 0.1
AQ5-AQ8 54,804 11,982 - 66,786 204 268 - 472 0.4 2.2 - 0.7
AQ9 37 243 - 280 - 19 - 19 - 7.8 - 6.8
AQ10 - - 2,394 2,394 - - 990 990 - - 41.4 41.4
95,737 14,780 2,394 112,911 232 305 990 1,527 0.2 2.1 41.4 1.4
Financial institutions
AQ1-AQ4 64,735 260 - 64,995 20 3 - 23 - 1.2 - -
AQ5-AQ8 5,599 161 - 5,760 17 5 - 22 0.3 3.1 - 0.4
AQ9 1 1 - 2 - - - - - - - -
AQ10 - - 127 127 - - 99 99 - - 78.0 78.0
70,335 422 127 70,884 37 8 99 144 0.1 1.9 78.0 0.2
Sovereign
AQ1-AQ4 894 1 - 895 14 1 - 15 1.6 100.0 - 1.7
AQ5-AQ8 131 - - 131 - - - - - - - -
AQ 9 - 141 - 141 - 1 - 1 - 0.7 - 0.7
AQ10 - - 17 17 - - 6 6 - - 35.3 35.3
1,025 142 17 1,184 14 2 6 22 1.4 1.4 35.3 1.9
Total
AQ1-AQ4 106,525 2,816 - 109,341 62 22 - 84 0.1 0.8 - 0.1
AQ5-AQ8 60,534 12,143 - 72,677 221 273 - 494 0.4 2.3 - 0.7
AQ9 38 385 - 423 - 20 - 20 - 5.2 - 4.7
AQ10 - - 2,538 2,538 - - 1,095 1,095 - - 43.1 43.1
167,097 15,344 2,538 184,979 283 315 1,095 1,693 0.2 2.1 43.1 0.9
Risk and capital management continued
Credit risk - Banking activities continued
Asset quality (reviewed)
Gross loans ECL provisions ECL provisions coverage
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
31 December 2024 £m £m £m £m £m £m £m £m % % % %
Corporate and other
AQ1-AQ4 41,509 2,409 - 43,918 32 19 - 51 0.1 0.8 - 0.1
AQ5-AQ8 53,448 11,783 - 65,231 232 306 - 538 0.4 2.6 - 0.8
AQ9 34 272 - 306 - 19 - 19 - 7.0 - 6.2
AQ10 - - 2,279 2,279 - - 896 896 - - 39.3 39.3
94,991 14,464 2,279 111,734 264 344 896 1,504 0.3 2.4 39.3 1.4
Financial institutions
AQ1-AQ4 64,845 233 - 65,078 21 2 - 23 - 0.9 - -
AQ5-AQ8 4,176 996 - 5,172 17 9 - 26 0.4 0.9 - 0.5
AQ9 - 12 - 12 - 1 - 1 - 8.3 - 8.3
AQ10 - - 59 59 - - 40 40 - - 67.8 67.8
69,021 1,241 59 70,321 38 12 40 90 0.1 1.0 67.8 0.1
Sovereign
AQ1-AQ4 1,364 1 - 1,365 12 1 - 13 0.9 100.0 - 1.0
AQ5-AQ8 127 - - 127 - - - - - - - -
AQ9 - 132 - 132 - 1 - 1 - 0.8 - 0.8
AQ10 - - 21 21 - - 5 5 - - 23.8 23.8
1,491 133 21 1,645 12 2 5 19 0.8 1.5 23.8 1.2
Total
AQ1-AQ4 107,718 2,643 - 110,361 65 22 - 87 0.1 0.8 - 0.1
AQ5-AQ8 57,751 12,779 - 70,530 249 315 - 564 0.4 2.5 - 0.8
AQ9 34 416 - 450 - 21 - 21 - 5.1 - 4.7
AQ10 - - 2,359 2,359 - - 941 941 - - 39.9 39.9
165,503 15,838 2,359 183,700 314 358 941 1,613 0.2 2.3 39.9 0.9
- Asset quality was broadly stable since 31 December 2024. The majority
of exposure for corporates and other continued to be in the AQ5 to AQ8 band,
which also accounted for the largest increase in the period.
- As expected, exposures in higher AQ bands attracted higher coverage
ratios.
Risk and capital management continued
Credit risk - Trading activities
This section details the credit risk profile of NatWest Group's trading
activities.
Securities financing transactions and collateral (reviewed)
The table below shows securities financing transactions in Commercial &
Institutional and Central items & other. Balance sheet captions include
balances held at all classifications under IFRS.
Reverse repos Repos
Of which: Outside netting Of which: Outside netting
Total can be offset arrangements Total can be offset arrangements
30 June 2025 £m £m £m £m £m £m
Gross 95,498 94,568 930 86,696 83,992 2,704
IFRS offset (33,802) (33,802) - (33,802) (33,802) -
Carrying value 61,696 60,766 930 52,894 50,190 2,704
Master netting arrangements (517) (517) - (517) (517) -
Securities collateral (59,424) (59,424) - (49,673) (49,673) -
Potential for offset not recognised under IFRS (59,941) (59,941) - (50,190) (50,190) -
Net 1,755 825 930 2,704 - 2,704
31 December 2024
Gross 87,901 87,861 40 68,024 67,321 703
IFRS offset (23,883) (23,883) - (23,883) (23,883) -
Carrying value 64,018 63,978 40 44,141 43,438 703
Master netting arrangements (1,549) (1,549) - (1,549) (1,549) -
Securities collateral (62,217) (62,217) - (41,889) (41,889) -
Potential for offset not recognised under IFRS (63,766) (63,766) - (43,438) (43,438) -
Net 252 212 40 703 - 703
Risk and capital management continued
Credit risk - Trading activities continued
Derivatives (reviewed)
The table below shows derivatives by type of contract. The master netting
agreements and collateral shown do not result in a net presentation on the
balance sheet under IFRS. A significant proportion of the derivatives relate
to trading activities in Commercial & Institutional. The table also
includes hedging derivatives in Central items & other.
30 June 2025 31 December 2024
Notional
GBP USD EUR Other Total Assets Liabilities Notional Assets Liabilities
£bn £bn £bn £bn £bn £m £m £bn £m £m
Gross exposure 90,087 84,878 97,152 93,109
IFRS offset (17,077) (18,895) (18,746) (21,027)
Carrying value 4,137 3,397 5,907 1,165 14,606 73,010 65,983 13,628 78,406 72,082
Of which:
Interest rate (1) 3,793 1,824 5,183 208 11,008 35,028 28,317 10,333 37,499 31,532
Exchange rate 341 1,569 717 957 3,584 37,897 37,496 3,279 40,797 40,306
Credit 1 4 7 - 12 85 170 14 110 244
Equity and commodity 2 - - - 2 - - 2 - -
Carrying value 4,137 3,397 5,907 1,165 14,606 73,010 65,983 13,628 78,406 72,082
Counterparty mark-to-market netting (57,011) (57,011) (61,883) (61,883)
Cash collateral (9,041) (4,723) (10,005) (5,801)
Securities collateral (3,814) (1,274) (4,072) (896)
Net exposure 3,144 2,975 2,446 3,502
Banks (2) 175 348 214 345
Other financial institutions (3) 1,839 1,286 1,429 1,456
Corporate (4) 1,071 1,318 769 1,669
Government (5) 59 23 34 32
Net exposure 3,144 2,975 2,446 3,502
UK 1,494 1,710 1,061 1,774
Europe 994 873 875 978
US 555 330 443 604
RoW 101 62 67 146
Net exposure 3,144 2,975 2,446 3,502
Asset quality of uncollateralised derivative assets
AQ1-AQ4 2,500 2,049
AQ5-AQ8 641 394
AQ9-AQ10 3 3
Net exposure 3,144 2,446
(1) The notional amount of interest rate derivatives included
£7,725 billion (31 December 2024 - £7,321 billion) in respect of contracts
cleared through central clearing counterparties.
(2) Transactions with certain counterparties with whom NatWest
Group has netting arrangements but collateral is not posted on a daily basis;
certain transactions with specific terms that may not fall within netting and
collateral arrangements; derivative positions in certain jurisdictions where
the collateral agreements are not deemed to be legally enforceable.
(3) Includes transactions with securitisation vehicles and funds
where collateral posting is contingent on NatWest Group's external rating.
(4) Mainly large corporates with whom NatWest Group may have
netting arrangements in place, but operational capability does not support
collateral posting.
(5) Sovereigns and supranational entities with no collateral
arrangements, collateral arrangements that are not considered enforceable, or
one-way collateral agreements in their favour.
Risk and capital management continued
Credit risk - Trading activities continued
Debt securities (reviewed)
The table below shows debt securities held at mandatory fair value through
profit or loss by issuer as well as ratings based on the lowest of Standard
& Poor's, Moody's and Fitch. Refer to Note 9 Trading assets and
liabilities for details on short positions.
Central and local government
UK US Other Financial institutions Corporate Total
30 June 2025 £m £m £m £m £m £m
AAA - - 2,610 1,572 - 4,182
AA to AA+ - 6,832 562 393 2 7,789
A to AA- 3,961 - 2,618 955 95 7,629
BBB- to A- - - 916 411 549 1,876
Non-investment grade - - - 65 132 197
Total 3,961 6,832 6,706 3,396 778 21,673
31 December 2024
AAA - - 1,335 1,368 - 2,703
AA to AA+ - 3,734 74 569 2 4,379
A to AA- 2,077 - 1,266 381 519 4,243
BBB- to A- - - 831 562 885 2,278
Non-investment grade - - - 108 167 275
Total 2,077 3,734 3,506 2,988 1,573 13,878
Risk and capital management continued
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 2024
CET1 ratio The CET1 ratio remained static due to a £0.9 billion increase in CET1 capital
offset by a £6.9 billion increase in RWAs.
13.6%
The CET1 capital increase was mainly driven by an attributable profit to
(2024 - 13.6%) ordinary shareholders in the period of £2.5 billion and other movements on
reserves and regulatory adjustments of £0.4 billion partially offset by a
share buyback of £0.8 billion and a foreseeable ordinary dividend accrual of
£1.2 billion.
RWAs Total RWAs increased by £6.9 billion to £190.1 billion during H1 2025
reflecting:
£190.1bn
- an increase in credit risk RWA's of £4.6 billion, primarily
(2024 - £183.2bn) driven by lending growth, balances acquired from Sainsbury's Bank and CRD IV
model updates. These increases were partially offset by reductions due to
active RWA management, movements in risk metrics and the impact of foreign
exchange.
- an increase in operational risk RWAs of £2.2 billion following
the annual recalculation.
- an increase in counterparty credit risk RWAs of £0.5 billion
driven by an increase in over-the-counter transaction under the IMM approach.
- a decrease in market risk RWAs of £0.4 billion, driven by the
IRC, reflecting changes in government bond positions.
UK leverage ratio The leverage ratio remained static due to a £1.6 billion increase in Tier 1
capital offset by a £27.8 billion increase in leverage exposure. The key
5.0% drivers in the leverage exposure were an increase in trading assets, other
financial assets and other off balance sheet items.
(2024 - 5.0%)
MREL ratio The Minimum Requirements of own funds and Eligible Liabilities (MREL) ratio
decreased by 60 basis points driven by a £6.9 billion increase in RWAs
32.4% partially offset by a £1.2 billion increase in MREL.
(2024 - 33.0%) MREL increased to £61.7 billion driven by a £0.9 billion increase in CET1
capital, issuance of a £0.7 billion Additional Tier 1 instrument and a €1.0
billion subordinated debt Tier 2 instrument, and redemption of a £1.0 billion
subordinated debt Tier 2 instrument. There was a £0.2 billion decrease in
senior unsecured debt driven by new issuances totalling £3.3 billion, offset
by the redemption of a €1.5 billion debt instrument, a $1.5 billion debt
instrument no longer being MREL eligible, and foreign exchange movements.
Liquidity portfolio The liquidity portfolio decreased by £5.7 billion to £216.6 billion compared
with Q4 2024. Primary liquidity decreased by £0.5 billion to £160.6 billion,
£216.6bn driven by increased lending (including balances acquired from Sainsbury's
Bank) partially offset by issuances. Secondary liquidity decreased by £5.2
(2024 - £222.3bn) billion due to reduced pre-positioned collateral at the Bank of England.
LCR spot The spot Liquidity Coverage Ratio (LCR) decreased by 3% to 147%, during H1
2025, driven by increased lending (including balances acquired from
147% Sainsbury's Bank) partially offset by issuances.
(2024 - 150%)
LCR average
150%
(2024 - 151%)
NSFR spot The spot Net Stable Funding Ratio (NSFR) decreased 3% to 134% driven by
increased lending (including balances acquired from Sainsbury's Bank),
134% partially offset by increased issuances.
(2024 - 137%)
NSFR average
136%
(2024 - 137%)
Risk and capital management continued
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 capital 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 NatWest
Group's minimum requirements and its 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 30 June 2025 13.6% 16.7% 19.7%
Headroom (3,4) 3.1% 4.1% 4.3%
(1) The UK countercyclical buffer (CCyB) rate is currently being
maintained at 2%. This may vary in either direction in the future subject to
how risks develop. Foreign exposures may be subject to different CCyB rates
depending on the rate 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 2024 was CET1 3.1%, Total Tier 1 3.9%
and Total Capital 4.3%.
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.
Liquidity and funding ratios
The table below summarises the minimum requirements for key liquidity and
funding metrics under the PRA framework.
Type
Liquidity Coverage Ratio (LCR) 100%
Net Stable Funding Ratio (NSFR) 100%
Risk and capital management continued
Capital, liquidity and funding risk continued
Capital and leverage ratios
The table below sets out the key capital and leverage metrics in accordance
with current PRA rules.
30 June 31 December
2025 2024
Capital adequacy ratios (1) % %
CET1 13.6 13.6
Tier 1 16.7 16.5
Total 19.7 19.7
RWAs £m £m
Credit risk 152,785 148,078
Counterparty credit risk 7,626 7,103
Market risk 5,777 6,219
Operational risk 23,959 21,821
Total RWAs 190,147 183,221
Capital £m £m
CET1 25,799 24,928
Tier1 31,804 30,187
Total 37,531 36,105
Leverage ratios (2) £m £m
Tier 1 capital 31,804 30,187
UK leverage exposure 635,551 607,799
UK leverage ratio (%) 5.0% 5.0%
UK average Tier 1 capital 31,795 29,923
UK average leverage exposure 629,158 600,354
UK average leverage ratio (%) 5.1% 5.0%
(1) The IFRS 9 transitional capital rules in respect of ECL
provisions no longer apply as of 1 January 2025. (The impact of the IFRS 9
transitional adjustments at 31 December 2024 was £33 million for CET1
capital, £33 million for total capital and £3 million RWAs. Excluding this
adjustment at 31 December 2024, the CET1 ratio was 13.6%, Tier 1 capital ratio
was 16.5% and the Total capital ratio was 19.7%).
(2) The UK leverage exposure and Tier 1 capital are calculated in
accordance with current PRA rules. The IFRS 9 transitional capital rules in
respect of ECL no longer apply as of 1 January 2025. (Excluding the IFRS 9
transitional adjustment, the UK leverage ratio at 31 December 2024 was 5.0%).
Risk and capital management continued
Capital, liquidity and funding risk continued
Capital and leverage ratios continued
30 June 31 December
2025 2024
Leverage £m £m
Cash and balances at central banks 90,706 92,994
Trading assets 56,706 48,917
Derivatives 73,010 78,406
Financial assets 486,305 469,599
Other assets 24,051 18,069
Total assets 730,778 707,985
Derivatives
- netting and variation margin (69,191) (76,101)
- potential future exposures 16,831 16,692
Securities financing transactions gross up 1,510 2,460
Other off balance sheet items 62,497 59,498
Regulatory deductions and other adjustments (17,869) (11,014)
Claims on central banks (87,228) (89,299)
Exclusion of bounce back loans (1,777) (2,422)
UK leverage exposure 635,551 607,799
UK leverage ratio (%) 5.0 5.0
Risk and capital management continued
Capital, liquidity and funding risk continued
Capital flow statement
The table below analyses the movement in CET1, AT1 and Tier 2 capital for the
half year ended 30 June 2025.
CET1 AT1 Tier 2 Total
£m £m £m £m
At 31 December 2024 24,928 5,259 5,918 36,105
Attributable profit for the period 2,488 - - 2,488
Share buyback (750) - - (750)
Foreseeable ordinary dividends (1,244) - - (1,244)
Foreign exchange reserve (82) - - (82)
FVOCI reserve 95 - - 95
Own credit (4) - - (4)
Share based remuneration and shares vested under employee share schemes 142 - - 142
Goodwill and intangibles deduction 80 - - 80
Deferred tax assets 149 - - 149
Prudential valuation adjustments 20 - - 20
New issues of capital instruments - 746 823 1,569
Redemption of capital instruments - - (1,000) (1,000)
Foreign exchange movements - - (54) (54)
Adjustment under IFRS 9 transitional arrangements (33) - - (33)
Expected loss less impairment 27 - - 27
Other movements (17) - 40 23
At 30 June 2025 25,799 6,005 5,727 37,531
- For CET1 movements refer to the key points on page 56.
- The AT1 movement reflects the £0.7 billion 7.500% Reset Perpetual
Subordinated Contingent Convertible Additional Tier 1 Capital Notes issued in
March 2025.
- Tier 2 movements of £0.2 billion include a decrease of £1.0
billion due to the redemption of 3.622% Fixed to Fixed Rate Reset Tier 2 Notes
due 2030 in May 2025 and foreign exchange movements partially offset by an
increase of £0.8 billion for a €1.0 billion 3.723% Fixed to Fixed Rate
Reset Tier 2 Notes 2035 issued in February 2025.
- Within other movements for Tier 2 capital, there was an increase
as a result of excess IRB provisions over expected losses in the period.
Capital generation pre-distributions
30 June 31 December
2025 2024
£ £
CET1 25,799 24,928
CET1 capital pre-distributions (1) 27,793 28,920
RWAs 190,147 183,221
% %
CET1 ratio - opening 13.61 13.36
CET1 pre-distributions - closing 14.62 15.78
Capital generation pre-distributions (1) 1.01 2.43
(1) The calculation of capital generation pre-distributions uses CET1
capital pre-distributions. Distributions includes ordinary dividends paid,
foreseeable ordinary dividends and share buybacks.
Risk and capital management continued
Capital, liquidity and funding risk continued
Capital resources (reviewed)
NatWest Group's regulatory capital is assessed against minimum requirements
that are set out under the UK CRR to determine the strength of its capital
base. This note shows a reconciliation of shareholders' equity to regulatory
capital.
30 June 31 December
2025 2024
£m £m
Shareholders' equity (excluding non-controlling interests)
Shareholders' equity 41,958 39,350
Other equity instruments (6,029) (5,280)
35,929 34,070
Regulatory adjustments and deductions
Own credit 24 28
Defined benefit pension fund adjustment (157) (147)
Cash flow hedging reserve 971 1,443
Deferred tax assets (935) (1,084)
Prudential valuation adjustments (210) (230)
Goodwill and other intangible assets (7,464) (7,544)
Expected loss less impairment - (27)
Foreseeable ordinary dividends (1,244) (1,249)
Adjustment for trust assets (1) (365) (365)
Foreseeable charges (2) (750) -
Adjustment under IFRS 9 transitional arrangements - 33
(10,130) (9,142)
CET1 capital 25,799 24,928
Additional Tier 1 (AT1) capital
Qualifying instruments and related share premium 6,005 5,259
AT1 capital 6,005 5,259
Tier 1 capital 31,804 30,187
Qualifying Tier 2 capital
Qualifying instruments and related share premium 5,687 5,918
Other regulatory adjustments 40 -
Tier 2 capital 5,727 5,918
Total regulatory capital 37,531 36,105
(1) Prudent deduction in respect of agreement with the pension
fund to establish legal structure to remove dividend linked contribution.
(2) For June 2025, the foreseeable charge of £750 million relates
to a share buyback.
Risk and capital management continued
Capital, liquidity and funding risk continued
Minimum requirements of own funds and eligible liabilities (MREL)
The following table illustrates the components of MREL in NatWest Group and
operating subsidiaries.
30 June 2025 31 December 2024
Balance Regulatory MREL Balance Regulatory MREL
Par value (1) sheet value value Value (2) Par value (1) sheet value value Value (2)
£bn £bn £bn £bn £bn £bn £bn £bn
CET1 capital (3) 25.8 25.8 25.8 25.8 24.9 24.9 24.9 24.9
Tier 1 capital: end-point CRR compliant AT1
of which: NatWest Group plc (holdco) 6.0 6.0 6.0 6.0 5.3 5.3 5.3 5.3
of which: NatWest Group plc operating subsidiaries (opcos) - - - - - - - -
6.0 6.0 6.0 6.0 5.3 5.3 5.3 5.3
Tier 1 capital: end-point CRR non-compliant
of which: holdco - - - - - - - -
of which: opcos 0.1 0.1 - - 0.1 0.1 - -
0.1 0.1 - - 0.1 0.1 - -
Tier 2 capital: end-point CRR compliant
of which: holdco 5.7 5.6 5.7 5.7 5.9 5.7 5.9 5.9
of which: opcos - - - - - - - -
5.7 5.6 5.7 5.7 5.9 5.7 5.9 5.9
Tier 2 capital: end-point CRR non-compliant
of which: holdco - - - - - - - -
of which: opcos 0.2 0.3 - - 0.2 0.3 - -
0.2 0.3 - - 0.2 0.3 - -
Senior unsecured debt securities
of which: holdco 25.3 25.2 - 24.2 24.4 24.0 - 24.4
of which: opcos( ) 36.9 36.9 - - 33.7 33.6 - -
62.2 62.1 - 24.2 58.1 57.6 - 24.4
Tier 2 capital
Other regulatory adjustments - - - - - - - -
Total 100.0 99.9 37.5 61.7 94.5 93.9 36.1 60.5
RWAs 190.1 183.2
UK leverage exposure 635.6 607.8
MREL as a ratio of RWAs 32.4% 33.0%
MREL as a ratio of UK leverage exposure 9.7% 9.9%
(1) Par value reflects the nominal value of securities issued.
(2) MREL value reflects NatWest Group's interpretation of the Bank of England's
approach to setting a MREL, published in December 2021 (Updating June 2018).
Liabilities excluded from MREL include instruments with less than one year
remaining to maturity, structured debt, operating company senior debt, and
other instruments that do not meet the MREL criteria. The MREL calculation
includes Tier 1 and Tier 2 securities before the application of any regulatory
caps or adjustments.
(3) Shareholders' equity was £42 billion (2024 - £39.4 billion).
Risk and capital management continued
Capital, liquidity and funding risk continued
Minimum requirements of own funds and eligible liabilities (MREL) continued
The following table illustrates the components of the stock of outstanding
issuance in NatWest Group plc and its operating subsidiaries including
external and internal issuances.
NatWest NatWest NWM RBS
NatWest Holdings NWB RBS NWM Markets Securities International
Group plc Limited Plc plc Plc N.V. Inc. (6) Limited (7)
£bn £bn £bn £bn £bn £bn £bn £bn
Additional Tier 1 Externally issued 6.0 - 0.1 - - - - -
Additional Tier 1 Internally issued - 4.4 3.8 0.5 2.1 0.2 - 0.3
6.0 4.4 3.9 0.5 2.1 0.2 - 0.3
Tier 2 Externally issued 5.6 - - - - 0.2 - -
Tier 2 Internally issued - 4.9 4.1 0.5 1.0 0.1 0.3 -
5.6 4.9 4.1 0.5 1.0 0.3 0.3 -
Senior unsecured Externally issued 25.2 - - - - - - -
Senior unsecured Internally issued - 13.0 7.3 1.0 4.6 - - 0.3
25.2 13.0 7.3 1.0 4.6 - - 0.3
Total outstanding issuance 36.8 22.3 15.3 2.0 7.7 0.5 0.3 0.6
(1) For AT1 and Tier 2, the balances are the IFRS balance sheet
carrying amounts, which may differ from the amount which the instrument
contributes to regulatory capital. Regulatory balances exclude, for example,
issuance costs and fair value movements, while dated capital is required to be
amortised on a straight-line basis over the final five years of maturity.
(2) Balance sheet amounts reported for AT1 and Tier 2 instruments are
before grandfathering restrictions imposed by CRR.
(3) Internal issuance for NWB Plc and RBS plc represents AT1, Tier 2
or Senior unsecured issuance to NWH Ltd and for NWM N.V. and NWM SI to NWM
Plc.
(4) The balances are the IFRS balance sheet carrying amounts for
Senior unsecured debt category and it does not include CP, CD and short
term/medium notes issued from NatWest Group operating subsidiaries.
(5) The above table does not include CET1 balance.
(6) NWM Securities Inc is regulated under US broker dealer rules.
(7) RBSI Ltd - the Resolution Regime is under development in Jersey.
Risk and capital management continued
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 2024 148.1 7.1 6.2 21.8 183.2
Foreign exchange movement (0.7) - - - (0.7)
Business movement 2.2 0.3 (0.4) 2.2 4.3
Risk parameter changes (0.5) - - - (0.5)
Model updates 2.0 0.2 - - 2.2
Acquisitions and disposals 1.6 - - - 1.6
At 30 June 2025 152.7 7.6 5.8 24.0 190.1
The table below analyses segmental RWAs.
Private Banking Total
Retail & Wealth Commercial Central items NatWest
Banking Management & Institutional & other Group
Total RWAs £bn £bn £bn £bn £bn
At 31 December 2024 65.5 11.0 104.7 2.0 183.2
Foreign exchange movement - - (0.7) - (0.7)
Business movement 1.5 0.5 2.9 (0.6) 4.3
Risk parameter changes 0.1 - (0.6) - (0.5)
Model updates 0.7 - 1.5 - 2.2
Acquisitions and disposals 1.6 - - - 1.6
At 30 June 2025 69.4 11.5 107.8 1.4 190.1
Credit risk 60.2 9.9 81.4 1.2 152.7
Counterparty credit risk 0.3 - 7.3 - 7.6
Market risk 0.2 - 5.6 - 5.8
Operational risk 8.7 1.6 13.5 0.2 24.0
Total RWAs 69.4 11.5 107.8 1.4 190.1
Total RWAs increased by £6.9 billion to £190.1 billion during the period
mainly reflecting:
- A reduction in risk-weighted assets from foreign exchange movement of
£0.7 billion due to sterling appreciation versus the US dollar and
depreciation versus the Euro.
- An increase in business movements totalling £4.3 billion, driven by
the annual recalculation of operational risk, an increase in credit risk due
to lending growth partially offset by reductions due to active RWA management.
A decrease in market risk was partially offset by an increase in counterparty
credit risk.
- A reduction in risk parameters of £0.5 billion primarily driven by
movements in risk metrics within Commercial & Institutional and Retail
Banking.
- An increase in model updates of £2.2 billion, driven by CRD IV model
updates within Commercial & Institutional and Retail Banking.
- An increase in acquisitions and disposals of £1.6 billion driven by
balances acquired from Sainsbury's Bank.
Risk and capital management continued
Capital, liquidity and funding risk continued
Funding sources (reviewed)
The table below shows the carrying values of the principal funding sources
based on contractual maturity. Balance sheet captions include balances held at
all classifications under IFRS 9.
30 June 2025 31 December 2024
Short-term Long-term Short-term Long-term
less than more than less than more than
1 year 1 year Total 1 year 1 year Total
£m £m £m £m £m £m
Bank deposits
Repos 17,996 - 17,996 11,967 - 11,967
Other bank deposits (1) 10,495 9,657 20,152 9,708 9,777 19,485
28,491 9,657 38,148 21,675 9,777 31,452
Customer deposits
Repos 988 - 988 1,363 - 1,363
Non-bank financial institutions 53,457 10 53,467 48,761 241 49,002
Personal 231,226 2,991 234,217 231,483 2,451 233,934
Corporate 148,038 46 148,084 149,086 105 149,191
433,709 3,047 436,756 430,693 2,797 433,490
Trading liabilities (2)
Repos (3) 33,014 897 33,911 29,752 810 30,562
Derivative collateral 11,597 - 11,597 12,509 - 12,509
Other bank customer deposits 591 280 871 627 268 895
Debt securities in issue - Medium term notes 9 242 251 20 237 257
45,211 1,419 46,630 42,908 1,315 44,223
Other financial liabilities
Customer deposits 854 1,129 1,983 471 1,341 1,812
Debt securities in issue:
Commercial paper and certificates of deposit 11,093 298 11,391 10,889 377 11,266
Medium term notes 13,401 37,153 50,554 11,118 34,967 46,085
Covered bonds - 749 749 - 749 749
Securitisation - 1,263 1,263 295 880 1,175
25,348 40,592 65,940 22,773 38,314 61,087
Subordinated liabilities 48 5,958 6,006 1,051 5,085 6,136
Total funding 532,807 60,673 593,480 519,100 57,288 576,388
Of which: available in resolution (4) 29,778 29,742
(1) Includes £12.0 billion (31 December 2024 - £12.0 billion)
relating to Term Funding Scheme with additional incentives for small and
medium-sized enterprises (SME) participation.
(2) Excludes short positions of £12.2 billion (31 December 2024 -
£10.5 billion).
(3) Comprises central & other bank repos of £9.6 billion (31
December 2024 - £7.2 billion), other financial institution repos of £20.8
billion (31 December 2024 - £20.4 billion) and other corporate repos of £3.5
billion (31 December 2024 - £3.0 billion).
(4) Eligible liabilities (as defined in the Banking Act 2009 as
amended from time to time) that meet the eligibility criteria set out in the
regulations, rules, policies, guidelines, or statements of the Bank of England
including the Statement of Policy published by the Bank of England in December
2021 (updating June 2018). The balance consists of £24.2 billion (31 December
2024 - £24.0 billion) under debt securities in issue (senior MREL) and £5.6
billion (31 December 2024 - £5.7 billion) under subordinated liabilities.
Risk and capital management continued
Capital, liquidity and funding risk continued
Liquidity portfolio (reviewed)
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. High-quality liquid assets cover both
Pillar 1 and Pillar 2 risks.
Liquidity value
30 June 2025 31 December 2024
NatWest NWH UK DoL NatWest NWH UK DoL
Group (1) Group (2) Sub Group (1) Group (2) Sub
£m £m £m £m £m £m
Cash and balances at central banks 86,589 55,027 54,353 88,617 58,313 57,523
High-quality government/MDB/PSE and GSE bonds (3) 61,527 44,580 44,580 58,818 43,275 43,275
Extremely high quality covered bonds 4,494 4,494 4,494 4,341 4,340 4,340
LCR level 1 assets 152,610 104,101 103,427 151,776 105,928 105,138
LCR level 2 Eligible Assets (4) 7,985 6,880 6,880 9,271 7,957 7,957
Primary liquidity (HQLA) (5) 160,595 110,981 110,307 161,047 113,885 113,095
Secondary liquidity 55,997 55,969 55,969 61,230 61,200 61,200
Total liquidity value 216,592 166,950 166,276 222,277 175,085 174,295
(1) NatWest Group includes the UK Domestic Liquidity Sub-Group (UK
DoLSub), NatWest Markets Plc and other significant operating subsidiaries that
hold liquidity portfolios. These include The RBSI Ltd and NWM N.V. who hold
managed portfolios that comply with local regulations that may differ from PRA
rules.
(2) NWH Group comprises UK DoLSub and NatWest Bank Europe GmbH who
hold managed portfolios that comply with local regulations that may differ
from PRA rules.
(3) Multilateral development bank abbreviated to MDB, public sector
entities abbreviated to PSE and government sponsored entities abbreviated to
GSE.
(4) Includes Level 2A and Level 2B.
(5) High-quality liquid assets abbreviated to HQLA.
Risk and capital management continued
Non-traded market risk
Non-traded market risk is the risk to the value of assets or liabilities
outside the trading book, or the risk to income, that arises from changes in
market prices such as interest rates, foreign exchange rates and equity
prices, or from changes in managed rates.
Key developments
- In the UK, the base rate reduced from 4.75% at 31 December 2024 to
4.25% at 30 June 2025.
- At 30 June 2025, longer-term interest rates continued to reflect
expectations of future cuts to the UK base rate. The five-year sterling swap
rate decreased to 3.65% at the end of June 2025 from 4.05% at the end of
December 2024. The ten-year sterling swap rate also decreased, to 3.98% from
4.07% over the same period.
- The structural hedge notional decreased by £1 billion to £193
billion from £194 billion, reflecting relatively stable deposits in the first
half of the year.
- The one-year positive sensitivity of net interest earnings to an
upward 25-basis-point parallel shift in all yield curves reduced slightly, to
£158 million at 30 June 2025 from £162 million at 31 December 2024. The
adverse sensitivity to a downward 25-basis-point parallel shift was also
broadly stable at £176 million at 30 June 2025 compared to £183 million at
31 December 2024.
- Sterling strengthened against the US dollar and weakened against the
euro over the period. Against the dollar, sterling was 1.37 at 30 June 2025
compared to 1.25 at 31 December 2024. Against the euro, it was 1.17 at 30 June
2025 compared to 1.20 at 31 December 2024. Structural foreign currency
exposures (excluding Additional Tier 1 economic hedges) of £2.3 billion at 30
June 2025, in sterling-equivalent nominal terms, were stable compared to 31
December 2024.
Non-traded internal VaR (1-day 99%) (reviewed)
The following table shows one-day internal banking book Value-at-Risk (VaR) at
a 99% confidence level, split by risk type.
Half year ended
30 June 2025 30 June 2024 31 December 2024
Period Period Period
Average Maximum Minimum end Average Maximum Minimum end Average Maximum Minimum end
£m £m £m £m £m £m £m £m £m £m £m £m
Interest rate 4.7 6.3 2.7 2.8 24.1 28.2 17.6 17.6 10.3 17.4 4.0 4.0
Credit spread 49.1 53.8 41.4 48.8 55.6 60.2 50.7 50.7 48.0 50.0 45.3 48.4
Structural foreign
exchange rate 6.4 7.1 6.0 7.1 9.2 12.3 7.1 12.3 6.7 8.0 5.1 6.3
Equity 7.1 7.8 6.1 7.8 9.3 10.3 8.2 8.2 7.8 8.1 7.6 7.7
Pipeline risk (1) 3.8 5.9 0.6 3.1 5.9 12.7 3.4 12.7 11.2 17.3 5.3 6.1
Diversification (2) (21.8) (19.2) (41.1) (39.7) (29.7) (23.4)
Total 49.3 51.8 42.6 50.4 63.0 73.8 52.9 61.8 54.3 57.8 49.1 49.1
(1) Pipeline risk is the risk of loss arising from Personal
customers owning an option to draw down a loan - typically a mortgage - at a
committed rate, where interest rate changes may result in greater or fewer
customers than anticipated taking up the committed offer.
(2) NatWest Group benefits from diversification across various
financial instrument types, currencies and markets. The extent of the
diversification benefit depends on the correlation between the assets and risk
factors in the portfolio at a particular time. The diversification factor is
the sum of the VaR on individual risk types less the total portfolio VaR.
- Total non-traded VaR increased slightly after April 2025 due to global
tariff-related volatility. However, on an average basis, it was overall lower
in H1 2025 than in 2024.
- Average interest rate VaR decreased in H1 2025, reflecting action
taken to manage down interest rate repricing mismatches across customer
products.
- Average pipeline VaR also decreased. This reflected changes in the
assumptions applied to customer behaviour through the fixed-rate mortgage
application process, which more closely aligned NatWest Group's estimates of
future customer completions to pipeline hedging activity.
Risk and capital management continued
Non-traded market risk continued
Structural hedging
NatWest Group has a significant pool of stable, non and low interest-bearing
liabilities, principally comprising current accounts and instant access
savings, as well as its equity and reserves. A proportion of these balances
are hedged, either by investing directly in longer-term fixed-rate assets
(such as fixed-rate mortgages) or by using interest rate swaps, which are
generally booked as cash flow hedges of floating-rate assets, in order to
provide a consistent and predictable revenue stream.
After hedging the net interest rate exposure, NatWest Group allocates income
to equity or products in structural hedges by reference to the relevant
interest rate swap curve. Over time, this approach has provided a basis for
stable income attribution for management purposes, to products and interest
rate returns. The programme aims to track a time series of medium-term swap
rates, but the yield will be affected by changes in NatWest Group's equity
capital.
The table below shows hedge income, total yield, incremental income and the
period-end and average notional balances allocated to equity and products in
respect of the structural hedges managed by NatWest Group. Hedge income
represents the fixed leg of the hedge. Incremental income represents the
difference between hedge income and short-term cash rates. For example, the
sterling overnight index average (SONIA) is used to estimate incremental
income from sterling structural hedges.
Half year ended
30 June 2025 30 June 2024 31 December 2024
Period Period Period
Incremental Hedge -end Average Total Incremental Hedge -end Average Total Incremental Hedge -end Average Total
income income notional notional yield income income notional notional yield income income notional notional yield
£m £m £bn £bn % £m £m £bn £bn % £m £m £bn £bn %
Equity (262) 216 22 22 2.01 (364) 218 22 22 1.95 (330) 222 22 22 1.99
Product (1,831) 1,900 172 171 2.24 (3,184) 1,392 175 176 1.58 (2,622) 1,647 172 172 1.90
Total (2,093) 2,116 194 193 2.21 (3,548) 1,610 197 198 1.62 (2,952) 1,869 194 194 1.91
Equity structural hedges refer to income allocated primarily to equity and
reserves. At 30 June 2025, the equity structural hedge notional was allocated
between NWH Group and NWM Group in a ratio of approximately 79%/21%
respectively.
Product structural hedges refer to income allocated to customer products,
mainly current accounts and customer deposits in Commercial &
Institutional, Retail Banking and Private Banking & Wealth Management.
At 30 June 2025, approximately 95% by notional of total structural hedges were
sterling-denominated.
Risk and capital management continued
Non-traded market risk continued
Sensitivity of net interest earnings
Net interest earnings are sensitive to changes in the level of interest rates,
mainly because maturing structural hedges are replaced at higher or lower
rates and changes to coupons on managed-margin products do not always match
changes in market rates of interest or central bank policy rates.
Earnings sensitivity is derived from a market-implied forward rate curve,
which will incorporate expected changes in central bank policy rates such as
the Bank of England base rate. A simple scenario is shown that projects
forward earnings based on the 30 June 2025 balance sheet, which is assumed to
remain constant. An earnings projection is derived from the market-implied
curve, which is then subject to interest rate shocks. The difference between
the market-implied projection and the shock gives an indication of underlying
sensitivity to interest rate movements.
Reported sensitivities should not be considered a forecast of future
performance in these rate scenarios. Actions that could reduce interest
earnings sensitivity include changes in pricing strategies on customer loans
and deposits as well as hedging. Management action may also be taken to
stabilise total income also taking into account non-interest income.
The table below shows the sensitivity of net interest earnings - for both
structural hedges and managed-margin products - on a one, two and three-year
forward-looking basis to an upward or downward interest rate shift of 25 basis
points.
+25 basis points upward shift -25 basis points downward shift
Year 1 Year 2 Year 3 Year 1 Year 2 Year 3
30 June 2025 £m £m £m £m £m £m
Structural hedges 40 125 213 (40) (125) (213)
Managed margin 118 101 116 (136) (97) (98)
Total 158 226 329 (176) (222) (311)
31 December 2024
Structural hedges 41 125 212 (41) (125) (212)
Managed margin 121 116 124 (142) (120) (125)
Total 162 241 336 (183) (245) (337)
(1) Earnings sensitivity considers only the main drivers, namely structural
hedging and managed margin products.
The following table presents the one-year sensitivity to upward and downward
25-basis-point and 100-basis-point shifts in the yield curve, analysed by
currency.
Shifts in yield curve
30 June 2025 31 December 2024
+25 basis -25 basis +100 basis -100 basis +25 basis -25 basis +100 basis -100 basis
points points points points points points points points
£m £m £m £m £m £m £m £m
Euro 14 (12) 56 (53) 11 (7) 38 (43)
Sterling 130 (149) 501 (615) 131 (155) 531 (646)
US dollar 12 (12) 46 (51) 15 (16) 63 (71)
Other 2 (3) 11 (9) 5 (5) 19 (17)
Total 158 (176) 614 (728) 162 (183) 651 (777)
Risk and capital management continued
Non-traded market risk continued
Foreign exchange risk (reviewed)
The table below shows structural foreign currency exposures.
Structural foreign Residual
Net investments in Net investment currency exposures Economic structural foreign
foreign operations hedges pre-economic hedges hedges (1) currency exposures
30 June 2025 £m £m £m £m £m
US dollar 1,716 (401) 1,315 (1,315) -
Euro 4,321 (2,515) 1,806 - 1,806
Other non-sterling 867 (375) 492 - 492
Total 6,904 (3,291) 3,613 (1,315) 2,298
31 December 2024
US dollar 1,826 (598) 1,228 (1,228) -
Euro 4,162 (2,351) 1,811 - 1,811
Other non-sterling 874 (372) 502 - 502
Total 6,862 (3,321) 3,541 (1,228) 2,313
(1) Economic hedges of US dollar net investments in foreign
operations represent US dollar equity securities that do not qualify as net
investment hedges for accounting purposes. They provide an offset to
structural foreign exchange exposures to the extent that there are net assets
in overseas operations available.
- Changes in foreign currency exchange rates affect equity in
proportion to structural foreign currency exposure. For example, a 5%
strengthening or weakening in foreign currencies against sterling would result
in a gain or loss of £0.2 billion in equity, respectively.
Risk and capital management continued
Traded market risk
Traded market risk is the risk arising from changes in fair value on
positions, assets, liabilities or commitments in trading portfolios as a
result of fluctuations in market prices.
Traded VaR (1-day 99%) (reviewed)
The table below shows one-day internal value-at-risk (VaR) for NatWest Group's
trading portfolios, split by exposure type.
Half year ended
30 June 2025 30 June 2024 31 December 2024
Period Period Period
Average Maximum Minimum end Average Maximum Minimum end Average Maximum Minimum end
£m £m £m £m £m £m £m £m £m £m £m £m
Interest rate 3.6 5.4 2.2 4.1 6.7 12.0 3.6 6.6 6.5 12.1 3.0 3.8
Credit spread 5.3 7.2 4.0 4.6 8.1 10.1 6.7 7.6 7.3 9.6 5.6 5.6
Currency 1.5 4.0 - 0.8 2.1 6.7 0.8 1.9 1.9 5.8 0.5 1.3
Equity - 0.1 - 0.1 0.1 0.1 0.1 0.1 0.1 0.3 - -
Diversification (1) (3.9) (4.0) (6.8) (5.5) (5.8) (5.4)
Total 6.5 9.7 4.3 5.6 10.2 16.2 7.0 10.7 10.0 16.1 5.3 5.3
(1) NatWest Group benefits from diversification across various
financial instrument types, currencies and markets. The extent of the
diversification benefit depends on the correlation between the assets and risk
factors in the portfolio at a particular time. The diversification factor is
the sum of the VaR on individual risk types less the total portfolio VaR.
- Both interest rate VaR and credit spread VaR decreased on an
average basis.
- This reflects the period of higher market volatility in H2 2022
rolling out of the VaR calculation window.
Pension risk
On 12 June 2025, the Trustee of the Main section of the NatWest Group Pension
Fund entered into a buy-in transaction with a third-party insurer for some of
its liabilities. This is an insurance policy that gives the Fund protection
against demographic and investment risks, so improves the security of member
benefits. The transaction did not affect the 2025 statement of comprehensive
income because the net pension asset was limited to zero due to the impact of
the asset ceiling.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FFFSLDTISFIERecent news on Natwest
See all newsREG - NatWest Group plc - Transaction in Own Shares
AnnouncementREG - NatWest Group plc - Transaction in Own Shares
AnnouncementREG - NatWest Group plc - Total Voting Rights
AnnouncementREG - NatWest Group plc - Holding(s) in Company - Norges Bank
AnnouncementREG - NatWest Group plc - Transaction in Own Shares
Announcement