NatWest Group
Q1 2024
Interim Management Statement
NatWest Group plc
|
natwestgroup.com
|
NatWest Group Q1 2024 results
|
Page
|
Highlights
|
2
|
Business performance summary
|
|
Chief Financial Officer's review
|
4
|
Retail Banking
|
5
|
Private Banking
|
6
|
Commercial &
Institutional
|
7
|
Central items &
other
|
8
|
Segment
performance
|
9
|
Risk and capital management
|
|
Credit risk
|
13
|
Capital, liquidity and
funding risk
|
21
|
Condensed consolidated financial statements
|
26
|
Notes to the financial statements
|
30
|
Additional information
|
31
|
Appendix - Non-IFRS financial measures
|
34
|
Q1 2024 performance
summary
Chief Executive, Paul Thwaite,
commented:
"NatWest Group has delivered a
strong set of results for the first quarter - with an operating
profit of £1.3 billion - as we remain focused on the priorities we
set out in February, which will help us shape the future of this
bank.
Our performance is grounded in the
vital role we play in the economy and in the lives of our 19
million customers. Though macro-uncertainty continues, customer
confidence and activity is improving, with both
lending(1) and deposits up in the quarter and
impairments remaining low, reflecting our well-diversified
business.
We are ambitious for this bank,
and by succeeding for our customers, we will succeed for our
shareholders. Our first priority is delivering disciplined growth
across our three businesses by serving our customers well. At the
same time, we are becoming simpler, more productive and easier to
deal with. As a result, we aim to generate returns that allow us to
support our customers, invest in our business and deliver
attractive distributions to shareholders.
We are also pleased with the
recent momentum in the reduction of HM Treasury's stake in the
bank. Returning NatWest Group to private ownership is a shared
ambition and we believe it is in the best interests of both the
bank and all our shareholders."
Strong Q1 2024 performance
-
Q1 2024 attributable profit of £918 million and a
return on tangible equity (RoTE) of 14.2%.
-
Total income excluding notable items was £3,414
million. The reduction of £28 million, or 0.8%, compared with Q4
2023, was due to the impact of one day fewer, with mortgage margin
pressure largely offset by higher markets income in Commercial
& Institutional, and £406 million lower than Q1 2023
principally reflecting lower deposit balances and mix changes, and
lending margin pressure.
-
Net interest margin (NIM) of 2.05% was 6 basis
points higher than Q4 2023 principally reflecting notable items and
changes within central items, while NIM across the three businesses
was stable.
-
Other operating expenses were broadly stable
compared with Q4 2023 (£13 million lower), and £96 million, or
5.0%, higher than Q1 2023 principally reflecting the Bank of
England Levy and increased staff costs due to inflation and
severance costs, partially offset by ongoing simplification of our
business and lower costs in relation to our withdrawal from the
Republic of Ireland.
-
A net impairment charge of £93 million, or 10
basis points of gross customer loans, principally reflected the
continued strong performance of our lending book. Levels of default
remain stable and at low levels across the portfolio.
|
Robust balance sheet with strong capital and liquidity
levels
-
Net loans to customers excluding central items
increased by £1.4 billion, or 0.4% in the quarter, to £357.0
billion primarily reflecting growth in Corporate & Institutions
partially offset by increased mortgage redemptions in the quarter
within Retail Banking.
-
Up to 31 March 2024 we have provided £68.5
billion of our target to provide £100 billion climate and
sustainable funding and financing between 1 July 2021 and the end
of 2025.
-
Customer deposits excluding central items
increased by £0.9 billion, or 0.2%, in the quarter primarily
reflecting growth of £2.0 billion in Retail Banking partially
offset by a £1.2 billion reduction in Commercial &
Institutional due to active management of our commercial deposits
and reduced liquidity in the market. Term balances now account for
17% of our book, up from 16% at the end of 2023.
-
The loan:deposit ratio (LDR) (excl. repos and
reverse repos) was 84% at Q1 2024, with customer deposits exceeding
net loans to customers by around £66 billion.
-
The liquidity coverage ratio (LCR) of 151%,
representing £53.8 billion headroom above 100% minimum requirement,
increased by 7 percentage points compared with Q4 2023 primarily
due to increased issuance and customer deposits coupled with the
replacement of the Cash Ratio Deposit scheme with a Bank of England
Levy.
-
TNAV per share increased by 10 pence in the
quarter to 302 pence primarily reflecting the attributable profit
for the period.
Shareholder return supported strong capital
generation
-
Common Equity Tier (CET1) ratio of 13.5% was 10
basis points higher than Q4 2023 as the attributable profit for the
quarter, c.50 basis points, was largely offset by a £3.3 billion
increase in RWAs, c.25 basis points, and a £367 million ordinary
dividend deduction, c.20 basis points.
-
RWAs increased by £3.3 billion in the quarter to
£186.3 billion largely reflecting a £1.6 billion increase
associated with the annual update to
operational risk and lending growth within Commercial &
Institutional.
Outlook (2)
- We
retain the outlook guidance provided in the 2023 Annual Report and
Accounts with the exception of full year 2024 Group operating costs
(excluding litigation and conduct costs) which is now expected to
be broadly stable compared with 2023 excluding around £0.1 billion
increase in bank levies.
|
(1)
Loans to customers excluding central
items.
(2)
The guidance, targets, expectations and trends
discussed in this section represent NatWest Group plc management's
current expectations and are subject to change, including as a
result of the factors described in the NatWest Group plc Risk
Factors in the 2023 Annual Report and Accounts and Form 20-F. These
statements constitute forward-looking statements. Refer to
Forward-looking statements in this announcement.
|
Business performance
summary
|
Quarter
ended
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
Summary consolidated income statement
|
£m
|
£m
|
£m
|
Net interest income
|
2,651
|
2,638
|
2,902
|
Non-interest income
|
824
|
899
|
974
|
Total income
|
3,475
|
3,537
|
3,876
|
Litigation and conduct
costs
|
(24)
|
(113)
|
(56)
|
Other operating
expenses
|
(2,028)
|
(2,041)
|
(1,932)
|
Operating expenses
|
(2,052)
|
(2,154)
|
(1,988)
|
Profit before impairments
|
1,423
|
1,383
|
1,888
|
Impairment losses
|
(93)
|
(126)
|
(70)
|
Operating profit before tax
|
1,330
|
1,257
|
1,818
|
Tax (charge)/credit
|
(339)
|
5
|
(512)
|
Profit from continuing operations
|
991
|
1,262
|
1,306
|
(Loss)/profit from discontinued operations, net of
tax
|
(4)
|
26
|
35
|
Profit for the period
|
987
|
1,288
|
1,341
|
|
|
|
|
Performance key metrics and ratios
|
|
|
|
Notable items within total
income (1)
|
£61m
|
£95m
|
£56m
|
Total income excluding notable
items (1)
|
£3,414m
|
£3,442m
|
£3,820m
|
Net interest
margin (2)
|
2.05%
|
1.99%
|
2.25%
|
Average interest earning
assets (2)
|
£521bn
|
£525bn
|
£522bn
|
Cost:income ratio (excl.
litigation and conduct) (1)
|
58.4%
|
57.7%
|
49.8%
|
Loan impairment
rate (1)
|
10bps
|
13bps
|
7bps
|
Profit attributable to ordinary
shareholders
|
£918m
|
£1,229m
|
£1,279m
|
Total earnings per share
attributable to ordinary shareholders - basic
|
10.5p
|
13.9p
|
13.2p
|
Return on tangible equity
(RoTE) (1)
|
14.2%
|
20.1%
|
19.8%
|
Climate and sustainable funding
and financing (3)
|
£6.6bn
|
£8.7bn
|
£7.6bn
|
|
As at
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
|
£bn
|
£bn
|
£bn
|
Balance sheet
|
|
|
|
Total assets
|
697.5
|
692.7
|
695.6
|
Loans to customers - amortised
cost
|
378.0
|
381.4
|
374.2
|
Loans to customers excluding
central items (1,4)
|
357.0
|
355.6
|
352.4
|
Loans to customers and banks -
amortised cost and FVOCI
|
387.7
|
392.0
|
385.8
|
Total impairment
provisions (5)
|
3.6
|
3.6
|
3.4
|
Expected credit loss (ECL)
coverage ratio
|
0.94%
|
0.93%
|
0.89%
|
Assets under management and
administration (AUMA) (1)
|
43.1
|
40.8
|
35.2
|
Customer
deposits
|
432.8
|
431.4
|
430.5
|
Customer deposits excluding
central items (1,4)
|
420.0
|
419.1
|
421.8
|
Liquidity and funding
|
|
|
|
Liquidity coverage ratio
(LCR)
|
151%
|
144%
|
139%
|
Liquidity
portfolio (6)
|
229
|
223
|
216
|
Net stable funding ratio
(NSFR)
|
136%
|
133%
|
141%
|
Loan:deposit ratio (excl. repos
and reverse repos) (1)
|
84%
|
84%
|
83%
|
Total wholesale funding
|
87
|
80
|
79
|
Short-term wholesale
funding
|
31
|
28
|
25
|
Capital and leverage
|
|
|
|
Common Equity Tier 1 (CET1)
ratio (7)
|
13.5%
|
13.4%
|
14.4%
|
Total capital
ratio (7)
|
18.8%
|
18.4%
|
19.6%
|
Pro forma CET1 ratio (excl.
foreseeable items) (8)
|
14.3%
|
14.2%
|
15.7%
|
Risk-weighted assets
(RWAs)
|
186.3
|
183.0
|
178.1
|
UK leverage ratio
|
5.1%
|
5.0%
|
5.4%
|
Tangible net asset value (TNAV)
per ordinary share (1,9)
|
302p
|
292p
|
278p
|
Number of ordinary shares in issue
(millions) (9)
|
8,727
|
8,792
|
9,581
|
(1)
(2)
|
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.
Refer to page 37 of the Non-IFRS
financial measures appendix for details.
|
(3)
|
NatWest Group uses its climate and
sustainable funding and financing inclusion (CSFFI) criteria to
determine the assets, activities and companies that are eligible to
be included within its climate and sustainable funding and
financing target. This includes both provision of committed (on and
off-balance sheet) funding and financing, including provision of
services for underwriting issuances and private
placements.
|
(4)
|
Central items includes Treasury
repo activity and Ulster Bank Republic of Ireland.
|
(5)
|
Includes £0.1 billion relating to
off-balance sheet exposures (31 December 2023 - £0.1 billion; 31
March 2023 - £0.1 billion).
|
(6)
|
Comparative period for March 2023
has been re-presented on an LCR basis in line with the Liquidity
portfolio definition as of 31 December 2023.
|
(7)
|
Refer to the Capital, liquidity
and funding risk section for details of the basis of
preparation.
|
(8)
|
The pro forma CET1 ratio at 31
March 2024 excludes foreseeable items of £1,633 million: £1,380
million for ordinary dividends and £253 million foreseeable charges
(31 December 2023 excludes foreseeable items of £1,538 million:
£1,013 million for ordinary dividends and £525 million foreseeable
charges; 31 March 2023 excludes foreseeable items of £2,351
million: £1,479 million for ordinary dividends and £872 million
foreseeable charges).
|
(9)
|
The number of ordinary shares in
issue excludes own shares held.
|
Business performance
summary
Chief Financial Officer's review
We delivered an operating profit
of £1,330 million in the first quarter with a RoTE of 14.2%. Total
income excluding notable items was broadly stable on Q4 2023, and
we continue to see low levels of default across our portfolio, with
a net impairment charge of 10 basis points of gross customer
loans.
Net lending across the three
businesses has increased in the quarter, as growth in Corporate
& Institutions was partially offset by higher mortgage
redemptions, and we have seen growth in customer deposits. Our
robust balance sheet means that we remain in a strong liquidity
position, with an LCR of 151%, representing £53.8 billion headroom
above 100% minimum requirement, and an LDR (excl. repos and reverse
repos) of 84%. Our CET1 ratio remains within our targeted range at
13.5%.
|
Financial performance
Total income decreased by 1.8% to
£3,475 million compared with Q4 2023 and was 10.3% lower than Q1
2023. Total income excluding notable items was £3,414 million, a
reduction of £28 million, or 0.8%, compared with Q4 2023, due to
the impact of one day fewer, with mortgage margin pressure largely
offset by higher markets income in Commercial & Institutional,
and £406 million lower than Q1 2023 principally reflecting lower
deposit balances and mix changes, and lending margin
pressure.
NIM of 2.05% was 6 basis points
higher than Q4 2023 principally reflecting notable items and
changes within central items, while NIM across the three businesses
was stable.
|
Total operating expenses were £102
million lower than Q4 2023 and £64 million higher than Q1 2023.
Other operating expenses were broadly stable compared with Q4 2023
(£13 million lower), and £96 million, or 5.0%, higher than Q1 2023
principally reflecting the Bank of England Levy and increased staff
costs due to inflation and severance costs, partially offset by
simplification in our business and lower costs in relation to our
withdrawal from the Republic of Ireland. We remain committed to
deliver on our full year cost guidance, excluding the impact of
increased bank levies.
|
A net impairment charge of £93
million principally reflected the continued strong performance of
our lending book. Levels of default remain stable and at low levels
across the portfolio despite inflationary pressures and the higher
interest rate environment. Compared with Q4 2023, our ECL provision
remained flat at £3.6 billion and our ECL coverage ratio has
increased from 0.93% to 0.94%. We retain post model adjustments of
£0.4 billion related to economic uncertainty, or 11.3% of total
impairment provisions. Whilst we are comfortable with the strong
credit performance of our book, we will continue to assess this
position regularly and are closely monitoring the impacts of
inflationary pressures on the UK economy and our
customers.
|
As a result, we are pleased to
report an attributable profit for Q1 2024 of £918 million, with
earnings per share of 10.5 pence and a RoTE of 14.2%.
|
Net loans to customers excluding
central items increased by £1.4 billion in the quarter to £357.0
billion primarily reflecting a £3.4 billion increase in Commercial
& Institutional partially offset by £1.7 billion reduction in
Retail Banking due to higher mortgage redemptions. Total gross new
mortgage lending was £5.2 billion in the quarter, compared with
£9.9 billion in Q1 2023 and £5.6 billion in Q4 2023, representing
flow share of c.10.5%. Within Commercial & Institutional,
growth was largely within Corporate & Institutions, partly
offset by UK Government Scheme repayments of £0.6
billion.
Up to 31 March 2024 we have
provided £68.5 billion against our target to provide £100 billion
climate and sustainable funding and financing between 1 July 2021
and the end of 2025. As part of this we aim to provide at least £10
billion in lending for EPC A and B rated residential properties
between 1 January 2023 and the end of 2025. During Q1 2024 we
provided £6.6 billion climate and sustainable funding and
financing, which included £0.5 billion in lending for EPC A and B
rated residential properties.
|
Customer deposits excluding
central items increased by £0.9 billion in the quarter to £420.0
billion reflecting £2.0 billion growth in Retail Banking partially
offset by a £1.2 billion reduction in Commercial &
Institutional primarily as a result of active management of our
commercial deposits and reduced liquidity in the market. Deposit
mix was more stable in the quarter than the levels of migration
observed in 2023; term balances now account for 17% of our book, up
from 16% at Q4 2023.
TNAV per share increased by 10
pence in the quarter to 302 pence primarily reflecting the
attributable profit for the period.
|
Capital and leverage
The CET1 ratio was 13.5%, or 13.4%
excluding IFRS 9 transitional relief, and increased by 10 basis
points in the quarter as the attributable profit, c.50 basis
points, was largely offset by a £3.3 billion increase in RWAs, c.25
basis points, and a £367 million ordinary dividend deduction, c.20
basis points. NatWest Group's minimum requirement for own funds and
eligible liabilities (MREL) was 30.7%.
RWAs increased by £3.3 billion in
the quarter to £186.3 billion largely reflecting a £1.6 billion
increase associated with the annual update to operational risk and
lending growth within Commercial &
Institutional.
|
Funding and liquidity
The LCR increased by 7 percentage
points to 151%, representing £53.8 billion headroom above 100%
minimum requirements primarily due to increased issuance and
customer deposits coupled with the replacement of the Cash Ratio
Deposit scheme with a Bank of England Levy. Our primary liquidity
at Q1 2024 was £158.4 billion and £112.8 billion, or 71%, of this
was cash at central banks. Total wholesale funding increased by
£7.0 billion in the quarter to £86.6 billion.
|
Business performance
summary
Retail Banking
|
Quarter
ended
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
|
£m
|
£m
|
£m
|
Total income
|
1,325
|
1,369
|
1,604
|
Operating expenses
|
(773)
|
(681)
|
(696)
|
of which: Other operating
expenses
|
(767)
|
(647)
|
(693)
|
Impairment losses
|
(63)
|
(103)
|
(114)
|
Operating profit
|
489
|
585
|
794
|
|
|
|
|
Return on
equity (1)
|
16.5%
|
20.2%
|
30.0%
|
Net interest
margin (2)
|
2.22%
|
2.23%
|
2.75%
|
Cost:income ratio (excl.
litigation and conduct) (1)
|
57.9%
|
47.3%
|
43.2%
|
Loan impairment
rate (1)
|
12bps
|
20bps
|
22bps
|
|
As at
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
|
£bn
|
£bn
|
£bn
|
Net loans to customers (amortised
cost)
|
203.5
|
205.2
|
201.7
|
Customer deposits
|
190.0
|
188.0
|
184.0
|
RWAs
|
62.5
|
61.6
|
55.6
|
(1)
(2)
|
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.
Refer to page 37 of the Non-IFRS
financial measures appendix for details.
|
During Q1 2024, Retail Banking
continued to take a measured approach to risk, whilst delivering an
operating profit of £0.5 billion and a return on equity of
16.5%.
Retail Banking provided £0.5
billion of climate and sustainable funding and financing in Q1 2024
from lending on properties with an EPC rating of A or B.
|
-
|
Total income was £44 million, or
3.2%, lower than Q4 2023 due to continued mortgage margin dilution
and the impact of one day fewer in the quarter. Total income was
£279 million, or 17.4%, lower than Q1 2023 reflecting mortgage
margin dilution, impact of the deposit balance mix shift from
non-interest bearing to interest bearing balances and higher
funding costs, partly offset by lending growth.
|
-
|
Net interest margin was 1 basis
point lower than Q4 2023 largely reflecting mortgage margin
dilution partly offset by increasing structural hedge
benefit.
|
-
|
Other operating expenses were £120
million, or 18.5%, higher than Q4 2023 reflecting the Bank of
England Levy, increased severance costs as well as branch and
property exit costs. Other operating expenses were £74 million, or
10.7%, higher than Q1 2023 reflecting the Bank of England Levy,
increased severance costs and branch and property exit costs partly
offset by savings from a 7.1% reduction in headcount.
|
-
|
An impairment charge of £63
million in Q1 2024 with stage 3 inflows reflecting normalisation of
risk parameters, partly offset by good book releases related to
model updates.
|
-
|
Net loans to customers were £1.7
billion, or 0.8%, lower than Q4 2023 reflecting lower mortgage
balances of £1.8 billion with higher redemptions only partly offset
by gross new mortgage lending of £5.0 billion. Cards balances
increased by £0.3 billion partly offset by £0.2 billion lower
personal advances.
|
-
|
Customer deposits increased by
£2.0 billion, or 1.1%, in Q1 2024 reflecting growth in savings and
current account balances.
|
-
|
RWAs increased by £0.9 billion, or
1.5%, in Q1 2024 primarily due to the annual update for operational
risk calculation.
|
Business performance
summary
Private Banking
|
Quarter
ended
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
|
£m
|
£m
|
£m
|
Total income
|
208
|
209
|
296
|
Operating expenses
|
(181)
|
(206)
|
(155)
|
of which: Other operating
expenses
|
(180)
|
(208)
|
(152)
|
Impairment
releases/(losses)
|
6
|
(5)
|
(8)
|
Operating profit/(loss)
|
33
|
(2)
|
133
|
|
|
|
|
Return on
equity (1)
|
6.7%
|
(1.8%)
|
28.5%
|
Net interest
margin (2)
|
2.06%
|
2.07%
|
3.31%
|
Cost:income ratio (excl.
litigation and conduct) (1)
|
86.5%
|
99.5%
|
51.4%
|
Loan impairment
rate (1)
|
(13)bps
|
11bps
|
17bps
|
AUM net flows
(£bn) (1)
|
0.4
|
0.3
|
0.6
|
|
As at
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
|
£bn
|
£bn
|
£bn
|
Net loans to customers (amortised
cost)
|
18.2
|
18.5
|
19.2
|
Customer deposits
|
37.8
|
37.7
|
37.3
|
RWAs
|
11.3
|
11.2
|
11.4
|
Assets Under Management
(AUMs) (1)
|
33.6
|
31.7
|
29.6
|
Assets Under Administration
(AUAs) (1)
|
9.5
|
9.1
|
5.6
|
Total Assets Under Management and
Administration (AUMA) (1)
|
43.1
|
40.8
|
35.2
|
(1)
(2)
|
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.
Refer to page 37 of the Non-IFRS
financial measures appendix for details.
|
During Q1 2024, Private Banking
delivered a return on equity of 6.7% and an operating profit of £33
million, reflecting the impact of 2023 sharp changes in deposit
volume and mix adversely impacting hedge returns. Q1 2024 has seen
a strong performance in deposits given seasonal tax outflow impact
and good AUMA growth setting a strong foundation for improved
profitability.
Private Banking provided £0.07
billion of climate and sustainable funding and financing in Q1 2024
from lending on properties with an EPC rating of A or B.
|
-
|
Total income was broadly flat
compared to Q4 2023 as deposit balances and mix continued to
stabilise with the impact of one day fewer largely offset by higher
investment fee income from increased AUMA. Total income was £88
million, or 29.7%, lower than Q1 2023 reflecting lower deposit
balances and a change in product mix as customers migrated to
savings products offering higher returns, combined with a reduction
in lending volumes and mortgage margin
dilution.
|
-
|
Net interest margin was 1 basis
point lower than Q4 2023 reflecting mortgage margin
dilution.
|
-
|
Other operating expenses were £28
million, or 13.5%, lower than Q4 2023 reflecting the annual Bank
Levy charge in Q4 2023, and a one-off additional VAT charge catch
up along with lower strategic severance costs. Other operating
expenses were £28 million, or 18.4%, higher than Q1 2023 primarily
reflecting the Bank of England Levy, an additional VAT charge and
higher strategic spend to increase operational
efficiency.
|
-
|
A net impairment release of £6
million, compared with an £8 million charge in Q1 2023, largely
reflects good book releases and lower stage 3 charges.
|
-
|
Net loans to customers decreased
by £0.3 billion, or 1.6%, in Q1 2024 driven by higher mortgage
redemptions, only partly offset by mortgage gross new lending of
£0.2 billion.
|
-
|
Customer deposits increased by
£0.1 billion, or 0.3%, compared with Q4 2023 with increases due to
overall personal market growth offsetting tax outflows.
|
-
|
AUMA increased by £2.3 billion in Q1
2024 to £43.1 billion, primarily driven by £1.9 billion positive
market movements and £0.4 billion AUM net inflows.
|
Business performance
summary
Commercial & Institutional
|
Quarter
ended
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
|
£m
|
£m
|
£m
|
Net interest income
|
1,246
|
1,269
|
1,261
|
Non-interest income
|
613
|
563
|
692
|
Total income
|
1,859
|
1,832
|
1,953
|
|
|
|
|
Operating expenses
|
(1,051)
|
(1,092)
|
(1,003)
|
of which: Other operating
expenses
|
(1,020)
|
(1,014)
|
(959)
|
Impairment
(losses)/releases
|
(39)
|
(15)
|
44
|
Operating profit
|
769
|
725
|
994
|
|
|
|
|
Return on
equity (1)
|
14.6%
|
13.5%
|
19.5%
|
Net interest
margin (2)
|
2.07%
|
2.05%
|
2.08%
|
Cost:income ratio (excl.
litigation and conduct) (1)
|
54.9%
|
55.3%
|
49.1%
|
Loan impairment
rate (1)
|
11bps
|
4bps
|
(13)bps
|
|
As at
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
|
£bn
|
£bn
|
£bn
|
Net loans to customers (amortised
cost)
|
135.3
|
131.9
|
131.5
|
Customer deposits
|
192.2
|
193.4
|
200.5
|
Funded assets (1)
|
321.7
|
306.9
|
320.4
|
RWAs
|
109.9
|
107.4
|
104.8
|
(1)
(2)
|
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.
Refer to page 37 of the Non-IFRS
financial measures appendix for details.
|
In Q1 2024, Commercial &
Institutional continued to support customers with an increase in
lending of 2.6% and delivered a strong performance in income and
operating profit supporting a return on equity of 14.6%.
Commercial & Institutional
provided £6.0 billion of climate and sustainable funding and
financing in Q1 2024 to support customers investing in the
transition to net zero.
|
-
|
Total income was £27 million, or
1.5%, higher than Q4 2023 primarily reflecting higher markets
income, partially offset by the impact of one day fewer. Total
income was £94 million, or 4.8%, lower than Q1 2023 primarily due
to lower deposit returns reflecting lower volumes and continued
deposit mix shift from non-interest bearing to interest bearing
balances, partially offset by strong capital markets and lending
growth in Corporate & Institutions.
|
-
|
Net interest margin was 2 basis
points higher than Q4 2023 reflecting higher deposit hedge returns
and liquidity benefits, partially offset by lower deposit
volumes.
|
-
|
Other operating expenses were £6
million, or 0.6%, higher than Q4 2023 reflecting increased staff
costs partially offset by a reduction in bank levies. Other
operating expenses were £61 million, or 6.4%, higher than Q1 2023
reflecting the impact of inflationary increases in staff costs,
continued investment in the business and the introduction of the
Bank of England Levy.
|
-
|
An impairment charge of £39
million in Q1 2024 remains at low levels with an increase in stage
3 inflows, partly offset by good book releases.
|
-
|
Net loans to customers increased
by £3.4 billion, or 2.6%, in Q1 2024 largely reflecting a strong
performance within Corporate & Institutions, partly offset by
continued UK Government scheme repayments of £0.6
billion.
|
-
|
Customer deposits decreased by
£1.2 billion, or 0.6%, in Q1 2024 largely reflecting reductions
within Commercial Mid-market and Business Banking due to active
management of our deposits and reduced liquidity in the
market.
|
-
|
RWAs increased by £2.5 billion, or
2.3%, in Q1 2024 primarily due to lending book growth and the
annual update for operational risk.
|
Business performance
summary
Central items & other
|
Quarter
ended
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
Total income
|
83
|
127
|
23
|
Operating
expenses (1)
|
(47)
|
(175)
|
(134)
|
of which: Other operating
expenses
|
(61)
|
(172)
|
(128)
|
of which: Ulster Bank RoI
direct expenses
|
(25)
|
(69)
|
(100)
|
Impairment
releases/(losses)
|
3
|
(3)
|
8
|
Operating profit/(loss)
|
39
|
(51)
|
(103)
|
of which: Ulster Bank
RoI
|
(47)
|
(124)
|
(159)
|
|
|
|
|
|
As at
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
|
£bn
|
£bn
|
£bn
|
Net loans to customers (amortised
cost) (2)
|
21.0
|
25.8
|
21.8
|
Customer deposits
|
12.8
|
12.3
|
8.7
|
RWAs
|
2.6
|
2.8
|
6.3
|
(1)
|
Includes withdrawal-related direct
program costs of £8 million for the quarter ended 31 March 2024 (31
December 2023 - £17 million; 31 March 2023 - £49
million).
|
(2)
|
Excludes £0.3 billion of loans to
customers held at fair value through profit or loss (31 December
2023 - £0.3 billion; 31 March 2023 - £0.5 billion).
|
-
|
Total income was £44 million lower
than Q4 2023 primarily reflecting foreign exchange recycling gains
in Q4 2023, not repeated in Q1 2024, partly offset by higher gains
on interest and foreign exchange risk management derivatives not in
accounting hedge relationships in Q1 2024. Total income was £60
million higher than Q1 2023 primarily reflecting Business Growth
Fund gains, gains on liquidity asset bond sales and a loss on
surrender of leases in Q1 2023 partially offset by lower gains on
interest and foreign exchange risk management derivatives not in
accounting hedge relationships.
|
-
|
Other operating expenses were £111
million, or 64.5%, lower than Q4 2023 primarily reflecting lower
costs in relation to the withdrawal from our operations in the
Republic of Ireland, and were £67 million, or 52.3%, lower than Q1
2023.
|
-
|
Customer deposits increased by
£0.5 billion, or 4.1% in Q1 2024 primarily reflecting repo activity
in Treasury. Ulster Bank RoI customer deposit balances were £0.2
billion as at Q1 2024.
|
-
|
Net loans to customers decreased
£4.8 billion to £21.0 billion in Q1 2024 mainly due to reverse repo
activity in Treasury.
|
|
|
Segment performance
|
Quarter ended 31 March
2024
|
|
Retail
|
Private
|
Commercial
&
|
Central
items
|
Total
NatWest
|
|
Banking
|
Banking
|
Institutional
|
&
other
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
Income statement
|
|
|
|
|
|
Net interest income
|
1,216
|
134
|
1,246
|
55
|
2,651
|
Non-interest income
|
109
|
74
|
613
|
28
|
824
|
Total income
|
1,325
|
208
|
1,859
|
83
|
3,475
|
Direct expenses
|
(189)
|
(61)
|
(384)
|
(1,394)
|
(2,028)
|
Indirect expenses
|
(578)
|
(119)
|
(636)
|
1,333
|
-
|
Other operating
expenses
|
(767)
|
(180)
|
(1,020)
|
(61)
|
(2,028)
|
Litigation and conduct
costs
|
(6)
|
(1)
|
(31)
|
14
|
(24)
|
Operating expenses
|
(773)
|
(181)
|
(1,051)
|
(47)
|
(2,052)
|
Operating profit before impairment
losses/releases
|
552
|
27
|
808
|
36
|
1,423
|
Impairment
(losses)/releases
|
(63)
|
6
|
(39)
|
3
|
(93)
|
Operating profit
|
489
|
33
|
769
|
39
|
1,330
|
|
|
|
|
|
|
Total income excluding notable
items (1)
|
1,325
|
208
|
1,864
|
17
|
3,414
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
Return on tangible
equity (1)
|
na
|
na
|
na
|
na
|
14.2%
|
Return on
equity (1)
|
16.5%
|
6.7%
|
14.6%
|
nm
|
na
|
Cost:income ratio (excl.
litigation and conduct) (1)
|
57.9%
|
86.5%
|
54.9%
|
nm
|
58.4%
|
Total assets (£bn)
|
226.4
|
26.5
|
388.8
|
55.8
|
697.5
|
Funded assets
(£bn) (1)
|
226.4
|
26.5
|
321.7
|
54.7
|
629.3
|
Net loans to customers - amortised
cost (£bn)
|
203.5
|
18.2
|
135.3
|
21.0
|
378.0
|
Loan impairment
rate (1)
|
12bps
|
(13)bps
|
11bps
|
nm
|
10bps
|
Impairment provisions
(£bn)
|
(1.9)
|
(0.1)
|
(1.5)
|
(0.1)
|
(3.6)
|
Impairment provisions - stage 3
(£bn)
|
(1.2)
|
-
|
(0.8)
|
-
|
(2.0)
|
Customer deposits (£bn)
|
190.0
|
37.8
|
192.2
|
12.8
|
432.8
|
Risk-weighted assets (RWAs)
(£bn)
|
62.5
|
11.3
|
109.9
|
2.6
|
186.3
|
RWA equivalent (RWAe)
(£bn)
|
62.6
|
11.3
|
111.1
|
3.1
|
188.1
|
Employee numbers (FTEs -
thousands)
|
13.1
|
2.2
|
12.7
|
33.3
|
61.3
|
Third party customer asset
rate (1)
|
3.79%
|
4.97%
|
6.81%
|
nm
|
nm
|
Third party customer funding
rate (1)
|
(2.05%)
|
(3.14%)
|
(1.93%)
|
nm
|
nm
|
Average interest earning assets
(£bn) (2)
|
220.6
|
26.2
|
241.9
|
na
|
521.1
|
Net interest
margin (2)
|
2.22%
|
2.06%
|
2.07%
|
na
|
2.05%
|
nm = not meaningful, na = not
applicable
(1)
(2)
|
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.
Refer to page 37 of the Non-IFRS
financial measures appendix for details.
|
|
|
Segment performance
|
Quarter
ended 31 December 2023
|
|
Retail
|
Private
|
Commercial &
|
Central
items
|
Total
NatWest
|
|
Banking
|
Banking
|
Institutional
|
&
other
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
Income statement
|
|
|
|
|
|
Net interest income
|
1,254
|
138
|
1,269
|
(23)
|
2,638
|
Non-interest income
|
115
|
71
|
563
|
150
|
899
|
Total income
|
1,369
|
209
|
1,832
|
127
|
3,537
|
Direct expenses
|
(211)
|
(74)
|
(392)
|
(1,364)
|
(2,041)
|
Indirect expenses
|
(436)
|
(134)
|
(622)
|
1,192
|
-
|
Other operating
expenses
|
(647)
|
(208)
|
(1,014)
|
(172)
|
(2,041)
|
Litigation and conduct
costs
|
(34)
|
2
|
(78)
|
(3)
|
(113)
|
Operating expenses
|
(681)
|
(206)
|
(1,092)
|
(175)
|
(2,154)
|
Operating profit/(loss) before impairment
losses
|
688
|
3
|
740
|
(48)
|
1,383
|
Impairment losses
|
(103)
|
(5)
|
(15)
|
(3)
|
(126)
|
Operating profit/(loss)
|
585
|
(2)
|
725
|
(51)
|
1,257
|
|
|
|
|
|
|
Total income excluding notable
items (1)
|
1,369
|
209
|
1,834
|
30
|
3,442
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
Return on tangible
equity (1)
|
na
|
na
|
na
|
na
|
20.1%
|
Return on
equity (1)
|
20.2%
|
(1.8%)
|
13.5%
|
nm
|
na
|
Cost:income ratio (excl.
litigation and conduct) (1)
|
47.3%
|
99.5%
|
55.3%
|
nm
|
57.7%
|
Total assets (£bn)
|
228.7
|
26.9
|
385.0
|
52.1
|
692.7
|
Funded assets
(£bn) (1)
|
228.7
|
26.9
|
306.9
|
51.3
|
613.8
|
Net loans to customers - amortised
cost (£bn)
|
205.2
|
18.5
|
131.9
|
25.8
|
381.4
|
Loan impairment
rate (1)
|
20bps
|
11bps
|
4bps
|
nm
|
13bps
|
Impairment provisions
(£bn)
|
(1.9)
|
(0.1)
|
(1.5)
|
(0.1)
|
(3.6)
|
Impairment provisions - stage 3
(£bn)
|
(1.1)
|
-
|
(0.9)
|
-
|
(2.0)
|
Customer deposits (£bn)
|
188.0
|
37.7
|
193.4
|
12.3
|
431.4
|
Risk-weighted assets (RWAs)
(£bn)
|
61.6
|
11.2
|
107.4
|
2.8
|
183.0
|
RWA equivalent (RWAe)
(£bn)
|
61.6
|
11.2
|
108.6
|
3.6
|
185.0
|
Employee numbers (FTEs -
thousands)
|
13.3
|
2.3
|
12.5
|
33.1
|
61.2
|
Third party customer asset
rate (1)
|
3.50%
|
4.88%
|
6.65%
|
nm
|
nm
|
Third party customer funding
rate (1)
|
(1.94%)
|
(3.02%)
|
(1.87%)
|
nm
|
nm
|
Average interest earning assets
(£bn) (2)
|
223.2
|
26.5
|
245.2
|
na
|
524.7
|
Net interest
margin (2)
|
2.23%
|
2.07%
|
2.05%
|
na
|
1.99%
|
nm = not meaningful, na = not
applicable
(1)
(2)
|
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.
Refer to page 37 of the Non-IFRS
financial measures appendix for details.
|
|
|
Segment performance
|
Quarter
ended 31 March 2023
|
|
Retail
|
Private
|
Commercial &
|
Central
items
|
Total
NatWest
|
|
Banking
|
Banking
|
Institutional
|
&
other
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
Income statement
|
|
|
|
|
|
Net interest income
|
1,492
|
229
|
1,261
|
(80)
|
2,902
|
Non-interest income
|
112
|
67
|
692
|
103
|
974
|
Total income
|
1,604
|
296
|
1,953
|
23
|
3,876
|
Direct expenses
|
(211)
|
(60)
|
(360)
|
(1,301)
|
(1,932)
|
Indirect expenses
|
(482)
|
(92)
|
(599)
|
1,173
|
-
|
Other operating
expenses
|
(693)
|
(152)
|
(959)
|
(128)
|
(1,932)
|
Litigation and conduct
costs
|
(3)
|
(3)
|
(44)
|
(6)
|
(56)
|
Operating expenses
|
(696)
|
(155)
|
(1,003)
|
(134)
|
(1,988)
|
Operating profit/(loss) before impairment
losses/releases
|
908
|
141
|
950
|
(111)
|
1,888
|
Impairment (losses)/releases
|
(114)
|
(8)
|
44
|
8
|
(70)
|
Operating profit/(loss)
|
794
|
133
|
994
|
(103)
|
1,818
|
|
|
|
|
|
|
Total income excluding notable
items (1)
|
1,604
|
296
|
1,947
|
(27)
|
3,820
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
Return on tangible
equity (1)
|
na
|
na
|
na
|
na
|
19.8%
|
Return on
equity (1)
|
30.0%
|
28.5%
|
19.5%
|
nm
|
na
|
Cost:income ratio (excl.
litigation and conduct) (1)
|
43.2%
|
51.4%
|
49.1%
|
nm
|
49.8%
|
Total assets (£bn)
|
227.2
|
28.1
|
399.0
|
41.3
|
695.6
|
Funded assets
(£bn) (1)
|
227.2
|
28.1
|
320.4
|
40.5
|
616.2
|
Net loans to customers - amortised
cost (£bn)
|
201.7
|
19.2
|
131.5
|
21.8
|
374.2
|
Loan impairment
rate (1)
|
22bps
|
17bps
|
(13)bps
|
nm
|
7bps
|
Impairment provisions
(£bn)
|
(1.7)
|
(0.1)
|
(1.5)
|
(0.1)
|
(3.4)
|
Impairment provisions - stage 3
(£bn)
|
(1.0)
|
-
|
(0.7)
|
(0.1)
|
(1.8)
|
Customer deposits (£bn)
|
184.0
|
37.3
|
200.5
|
8.7
|
430.5
|
Risk-weighted assets (RWAs)
(£bn)
|
55.6
|
11.4
|
104.8
|
6.3
|
178.1
|
RWA equivalent (RWAe)
(£bn)
|
56.4
|
11.4
|
106.2
|
6.9
|
180.9
|
Employee numbers (FTEs -
thousands)
|
14.1
|
2.3
|
12.5
|
32.9
|
61.8
|
Third party customer asset
rate (1)
|
2.94%
|
4.07%
|
5.38%
|
nm
|
nm
|
Third party customer funding
rate (1)
|
(0.83%)
|
(1.15%)
|
(0.87%)
|
nm
|
nm
|
Average interest earning assets
(£bn) (2)
|
220.3
|
28.1
|
246.0
|
na
|
522.4
|
Net interest
margin (2)
|
2.75%
|
3.31%
|
2.08%
|
na
|
2.25%
|
nm = not meaningful, na = not
applicable
(1)
(2)
|
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.
Refer to page 37 of the Non-IFRS
financial measures appendix for details.
|
|
|
Risk and capital
management
|
Page
|
Credit risk
|
|
Segment analysis -
portfolio summary
|
13
|
Segment analysis -
loans
|
14
|
Movement in ECL
provision
|
14
|
ECL post model
adjustments
|
15
|
Sector
analysis - portfolio summary
|
16
|
Capital, liquidity and funding risk
|
21
|
Risk and capital
management
Credit risk
Segment analysis - portfolio
summary
The table below shows gross loans
and expected credit loss (ECL), by segment and stage, within the
scope of the IFRS 9 ECL framework.
|
Retail
|
Private
|
Commercial
&
|
Central
items
|
|
|
Banking
|
Banking
|
Institutional
|
&
other
|
Total
|
31 March 2024
|
£m
|
£m
|
£m
|
£m
|
£m
|
Loans - amortised cost and
FVOCI (1,2)
|
|
|
|
|
|
Stage 1
|
178,692
|
17,288
|
123,704
|
24,679
|
344,363
|
Stage 2
|
23,145
|
769
|
13,661
|
2
|
37,577
|
Stage 3
|
3,291
|
284
|
2,188
|
-
|
5,763
|
Of which: individual
|
-
|
222
|
946
|
-
|
1,168
|
Of which: collective
|
3,291
|
62
|
1,242
|
-
|
4,595
|
Subtotal excluding disposal group
loans
|
205,128
|
18,341
|
139,553
|
24,681
|
387,703
|
Disposal group loans
|
|
|
|
-
|
-
|
Total
|
|
|
|
24,681
|
387,703
|
ECL provisions (3)
|
|
|
|
|
|
Stage 1
|
294
|
19
|
336
|
20
|
669
|
Stage 2
|
473
|
13
|
425
|
2
|
913
|
Stage 3
|
1,162
|
37
|
845
|
-
|
2,044
|
Of which: individual
|
-
|
37
|
302
|
-
|
339
|
Of which: collective
|
1,162
|
-
|
543
|
-
|
1,705
|
Subtotal excluding ECL provisions
on disposal group loans
|
1,929
|
69
|
1,606
|
22
|
3,626
|
ECL provisions on disposal group
loans
|
|
|
|
-
|
-
|
Total
|
|
|
|
22
|
3,626
|
ECL provisions
coverage (4)
|
|
|
|
|
|
Stage 1 (%)
|
0.16
|
0.11
|
0.27
|
0.08
|
0.19
|
Stage 2 (%)
|
2.04
|
1.69
|
3.11
|
100.00
|
2.43
|
Stage 3 (%)
|
35.31
|
13.03
|
38.62
|
-
|
35.47
|
ECL provisions coverage excluding
disposal group loans
|
0.94
|
0.38
|
1.15
|
0.09
|
0.94
|
ECL provisions coverage on
disposal group loans
|
|
|
|
-
|
-
|
Total
|
|
|
|
0.09
|
0.94
|
|
|
|
|
|
|
31 December 2023
|
|
|
|
|
|
Loans - amortised cost and
FVOCI (1,2)
|
|
|
|
|
|
Stage 1
|
182,297
|
17,565
|
119,047
|
29,677
|
348,586
|
Stage 2
|
21,208
|
906
|
15,771
|
6
|
37,891
|
Stage 3
|
3,133
|
258
|
2,162
|
10
|
5,563
|
Of which: individual
|
-
|
186
|
845
|
-
|
1,031
|
Of which: collective
|
3,133
|
72
|
1,317
|
10
|
4,532
|
Subtotal excluding disposal group
loans
|
206,638
|
18,729
|
136,980
|
29,693
|
392,040
|
Disposal group loans
|
|
|
|
67
|
67
|
Total
|
|
|
|
29,760
|
392,107
|
ECL provisions (3)
|
|
|
|
|
|
Stage 1
|
306
|
20
|
356
|
27
|
709
|
Stage 2
|
502
|
20
|
447
|
7
|
976
|
Stage 3
|
1,097
|
34
|
819
|
10
|
1,960
|
Of which: individual
|
-
|
34
|
298
|
-
|
332
|
Of which: collective
|
1,097
|
-
|
521
|
10
|
1,628
|
Subtotal excluding ECL provisions
on disposal group loans
|
1,905
|
74
|
1,622
|
44
|
3,645
|
ECL provisions on disposal group
loans
|
|
|
|
36
|
36
|
Total
|
|
|
|
80
|
3,681
|
ECL provisions
coverage (4)
|
|
|
|
|
|
Stage 1 (%)
|
0.17
|
0.11
|
0.30
|
0.09
|
0.20
|
Stage 2 (%)
|
2.37
|
2.21
|
2.83
|
nm
|
2.58
|
Stage 3 (%)
|
35.01
|
13.18
|
37.88
|
100.00
|
35.23
|
ECL provisions coverage excluding
disposal group loans
|
0.92
|
0.40
|
1.18
|
0.15
|
0.93
|
ECL provisions coverage on
disposal group loans
|
|
|
|
53.73
|
53.73
|
Total
|
|
|
|
0.27
|
0.94
|
nm = not meaningful
(1)
|
The table shows gross loans only
and excludes amounts that were outside the scope of the ECL
framework. Other financial assets within the scope of the IFRS 9
ECL framework were cash and balances at central banks totalling
£115.8 billion (31 December 2023 - £103.1 billion) and debt
securities of £49.0 billion (31 December 2023 - £50.1
billion).
|
(2)
|
Fair value through other
comprehensive income (FVOCI). Includes loans to customers and
banks.
|
(3)
|
Includes £7 million (31 December
2023 - £9 million) related to assets classified as FVOCI and £0.1
billion (31 December 2023 - £0.1 billion) related to off-balance
sheet exposures.
|
(4)
|
ECL provisions coverage is
calculated as ECL provisions divided by loans - amortised cost and
FVOCI. It is calculated on loans and total ECL provisions,
including ECL for other (non-loan) assets and unutilised exposure.
Some segments with a high proportion of debt securities or
unutilised exposure may result in a not meaningful (nm) coverage
ratio.
|
Risk and capital
management
Credit risk continued
Segment analysis -
loans
- Retail Banking
- Loans to customers were lower
than Q4 2023, mainly due to a reduction in mortgage balances where
higher redemptions were only partly offset by new mortgage lending.
Unsecured lending grew overall, with growth in credit cards offset
by a decrease in personal advances. New lending and portfolio
credit quality was maintained with limited increases in arrears in
line with expectations. Total ECL coverage increased slightly
during the quarter, reflective of Stage 3 ECL growth on unsecured
portfolios, mainly due to ongoing subdued write-off and debt sale
activity. There was a modest reduction in good book coverage,
reflective of continued stable portfolio performance alongside
unsecured probability of default modelling updates.
- Commercial &
Institutional - While overall
Wholesale exposure reduced in the quarter, there was Commercial
& Institutional growth within multiple sectors. Sector appetite
continues to be reviewed regularly, with particular focus on sector
clusters and sub-sectors that are vulnerable to challenges in the
external environment or deemed to represent a heightened risk.
There was a marginal reduction in total ECL coverage during the
quarter, due to a decrease in performing ECL, resulting from
positive portfolio performance and the unwind of some PMAs. Stage 3
ECL increased due to a small increase in defaults, although still
lower than historic trends, and was partially offset by write-off
activity. There was a modest decrease in good book coverage,
reflective of continued stable portfolio performance alongside PMA
reductions.
Movement in ECL
provision
The table below shows the main ECL
provision movements during the quarter.
|
ECL
provision
|
|
£m
|
At 1 January 2024
|
3,645
|
Transfers to disposal groups and
reclassifications
|
(16)
|
Changes in risk metrics and
exposure: Stage 1 and Stage 2
|
(84)
|
Changes in risk metrics and
exposure: Stage 3
|
219
|
Judgemental changes: changes in
post model adjustments for Stage 1, Stage 2 and Stage 3
|
(23)
|
Write-offs and other
|
(115)
|
At 31 March 2024
|
3,626
|
-
ECL decreased marginally in Q1 2024, with
increases in Stage 3 linked to ongoing subdued write-offs and debt
sales in the Personal portfolios. This was offset by good book ECL
reductions relating to stable portfolio performance, reductions in
post model adjustments and personal unsecured probability of
default modelling updates.
-
For the Wholesale portfolios, there was an
increase in Commercial & Institutional Stage 3 charges in the
quarter, mainly due to a small number of individual charges, but
charges were still lower than historic trends.
Risk and capital
management
Credit risk continued
ECL post model
adjustments
The table below shows ECL post
model adjustments.
|
Retail
Banking
|
Private
|
Commercial
&
|
Central
items
|
|
|
|
Mortgages
|
Other
|
Banking
|
Institutional
|
&
other
|
|
Total
|
31 March 2024
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
Deferred model
calibrations
|
-
|
-
|
1
|
20
|
-
|
|
21
|
Economic uncertainty
|
120
|
45
|
10
|
233
|
3
|
|
411
|
Other adjustments
|
-
|
-
|
-
|
7
|
-
|
|
7
|
Total
|
120
|
45
|
11
|
260
|
3
|
|
439
|
|
|
|
|
|
|
|
|
Of which:
|
|
|
|
|
|
|
|
- Stage 1
|
72
|
16
|
5
|
108
|
3
|
|
204
|
- Stage 2
|
36
|
29
|
6
|
150
|
-
|
|
221
|
- Stage 3
|
12
|
-
|
-
|
2
|
-
|
|
14
|
|
|
|
|
|
|
|
|
31 December 2023
|
|
Deferred model
calibrations
|
-
|
-
|
1
|
23
|
-
|
|
24
|
Economic uncertainty
|
118
|
39
|
13
|
256
|
3
|
|
429
|
Other adjustments
|
1
|
-
|
-
|
8
|
23
|
|
32
|
Total
|
119
|
39
|
14
|
287
|
26
|
|
485
|
|
|
|
|
|
|
|
|
Of which:
|
|
|
|
|
|
|
|
- Stage 1
|
75
|
14
|
6
|
115
|
10
|
|
220
|
- Stage 2
|
31
|
25
|
8
|
167
|
9
|
|
240
|
- Stage 3
|
13
|
-
|
-
|
5
|
7
|
|
25
|
-
Retail
Banking - The post model
adjustments for economic uncertainty increased slightly to £165
million at 31 March 2024, from £157 million at 31 December 2023.
Sustained inflationary pressure alongside high interest rates
continues to put pressure on consumer affordability risks. This
economic context, coupled with modelled ECL reductions, prompted a
modest uplift in the cost of living post model adjustment (up from
£144 million to £153 million) to maintain adequate provision levels
on this higher risk segment of the portfolio. The cost of living
post model adjustment captures the risk on segments in the Retail
Banking portfolio that are more susceptible to the effects of cost
of living rises. It focuses on key affordability lenses, including
customers with lower income in fuel poverty, over-indebted
borrowers and customers vulnerable to a potential mortgage rate
shock.
-
Commercial &
Institutional - The post model
adjustments for economic uncertainty decreased to £233 million at
31 March 2024, from £256 million at 31 December 2023. It still
includes an overlay of £39 million (£50 million at 31 December
2023) to cover the residual risks from COVID-19, including the
risks surrounding associated debt to customers that have utilised
government support schemes. The inflation, supply chain and
liquidity post model adjustment was maintained for lending prior to
1 January 2024, with a sector-level downgrade being applied to the
sectors that were considered most at risk from the ongoing
pressures from inflation being higher for longer, supply chain
challenges and broader concerns around reducing cash reserves
across many sectors. The £16 million reduction was a result of a
mechanistic refresh reflecting portfolio changes. The impact of the
sector-level downgrades was a post model adjustment decrease to
£193 million at 31 March 2024 from £206 million at 31 December
2023.
-
The £20 million judgemental overlay for deferred
model calibrations relates to refinance risk with the existing
modelling approach not fully capturing the risk on deteriorated
exposures.
- Central items &
other - The
£23 million post model adjustment in other adjustments was removed
in the quarter, reflecting the withdrawal from the Republic of
Ireland.
Risk and capital
management
Credit risk continued
Sector
analysis - portfolio summary
The table below shows financial
assets and off-balance sheet exposures gross of ECL and related ECL
provisions, impairment and past due by sector, asset quality and
geographical region.
|
Personal
|
|
Wholesale
|
|
Total
|
|
|
Credit
|
|
|
|
|
|
|
|
|
|
|
|
Mortgages
(1)
|
cards
|
Other
|
Total
|
|
Property
|
Other
|
FI
|
Sovereign
|
Total
|
|
|
31 March 2024
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
Loans by geography
|
206,146
|
6,033
|
9,720
|
221,899
|
|
31,993
|
77,521
|
55,058
|
1,232
|
165,804
|
|
387,703
|
- UK
|
206,146
|
6,033
|
9,720
|
221,899
|
|
31,448
|
64,611
|
37,221
|
549
|
133,829
|
|
355,728
|
- RoI
|
-
|
-
|
-
|
-
|
|
10
|
953
|
217
|
-
|
1,180
|
|
1,180
|
- Other
Europe
|
-
|
-
|
-
|
-
|
|
415
|
5,017
|
8,462
|
365
|
14,259
|
|
14,259
|
- RoW
|
-
|
-
|
-
|
-
|
|
120
|
6,940
|
9,158
|
318
|
16,536
|
|
16,536
|
Loans by asset quality (2)
|
206,146
|
6,033
|
9,720
|
221,899
|
|
31,993
|
77,521
|
55,058
|
1,232
|
165,804
|
|
387,703
|
- AQ1-AQ4
|
114,923
|
113
|
862
|
115,898
|
|
15,993
|
27,032
|
51,413
|
948
|
95,386
|
|
211,284
|
- AQ5-AQ8
|
87,895
|
5,704
|
7,646
|
101,245
|
|
15,295
|
48,621
|
3,557
|
129
|
67,602
|
|
168,847
|
-
AQ9
|
947
|
69
|
183
|
1,199
|
|
74
|
331
|
72
|
133
|
610
|
|
1,809
|
- AQ10
|
2,381
|
147
|
1,029
|
3,557
|
|
631
|
1,537
|
16
|
22
|
2,206
|
|
5,763
|
Loans by stage
|
206,146
|
6,033
|
9,720
|
221,899
|
|
31,993
|
77,521
|
55,058
|
1,232
|
165,804
|
|
387,703
|
- Stage 1
|
183,705
|
3,916
|
7,284
|
194,905
|
|
28,608
|
65,458
|
54,312
|
1,080
|
149,458
|
|
344,363
|
- Stage 2
|
20,060
|
1,970
|
1,407
|
23,437
|
|
2,753
|
10,527
|
730
|
130
|
14,140
|
|
37,577
|
- Stage 3
|
2,381
|
147
|
1,029
|
3,557
|
|
632
|
1,536
|
16
|
22
|
2,206
|
|
5,763
|
- Of which:
individual
|
137
|
-
|
21
|
158
|
|
283
|
700
|
5
|
22
|
1,010
|
|
1,168
|
- Of which:
collective
|
2,244
|
147
|
1,008
|
3,399
|
|
349
|
836
|
11
|
-
|
1,196
|
|
4,595
|
Loans - past due
analysis (3)
|
206,146
|
6,033
|
9,720
|
221,899
|
|
31,993
|
77,521
|
55,058
|
1,232
|
165,804
|
|
387,703
|
- Not past
due
|
203,223
|
5,863
|
8,647
|
217,733
|
|
31,222
|
74,304
|
53,938
|
1,210
|
160,674
|
|
378,407
|
- Past due 1-30
days
|
1,185
|
41
|
82
|
1,308
|
|
337
|
2,289
|
1,111
|
-
|
3,737
|
|
5,045
|
- Past due 31-90
days
|
599
|
42
|
113
|
754
|
|
151
|
226
|
2
|
22
|
401
|
|
1,155
|
- Past due 90-180
days
|
388
|
34
|
107
|
529
|
|
61
|
125
|
2
|
-
|
188
|
|
717
|
- Past due >180
days
|
751
|
53
|
771
|
1,575
|
|
222
|
577
|
5
|
-
|
804
|
|
2,379
|
Loans - Stage 2
|
20,060
|
1,970
|
1,407
|
23,437
|
|
2,753
|
10,527
|
730
|
130
|
14,140
|
|
37,577
|
- Not past
due
|
18,994
|
1,916
|
1,292
|
22,202
|
|
2,534
|
9,858
|
724
|
130
|
13,246
|
|
35,448
|
- Past due 1-30
days
|
787
|
26
|
44
|
857
|
|
100
|
518
|
4
|
-
|
622
|
|
1,479
|
- Past due 31-90
days
|
279
|
28
|
71
|
378
|
|
119
|
151
|
2
|
-
|
272
|
|
650
|
Weighted average life
|
|
|
|
|
|
|
|
|
|
|
|
|
- ECL measurement
(years)
|
9
|
4
|
6
|
6
|
|
6
|
6
|
2
|
1
|
6
|
|
6
|
Weighted average 12 months PDs
|
|
|
|
|
|
|
|
|
|
|
|
|
- IFRS 9
(%)
|
0.51
|
3.38
|
5.10
|
0.76
|
|
1.32
|
1.54
|
0.19
|
1.25
|
1.04
|
|
0.88
|
- Basel
(%)
|
0.70
|
3.47
|
3.35
|
0.88
|
|
0.91
|
1.26
|
0.19
|
5.60
|
0.86
|
|
0.87
|
ECL provisions by geography
|
445
|
357
|
1,171
|
1,973
|
|
399
|
1,172
|
65
|
17
|
1,653
|
|
3,626
|
- UK
|
445
|
357
|
1,171
|
1,973
|
|
388
|
1,018
|
37
|
13
|
1,456
|
|
3,429
|
- RoI
|
-
|
-
|
-
|
-
|
|
-
|
2
|
1
|
-
|
3
|
|
3
|
- Other
Europe
|
-
|
-
|
-
|
-
|
|
4
|
104
|
9
|
-
|
117
|
|
117
|
- RoW
|
-
|
-
|
-
|
-
|
|
7
|
48
|
18
|
4
|
77
|
|
77
|
ECL provisions by stage
|
445
|
357
|
1,171
|
1,973
|
|
399
|
1,172
|
65
|
17
|
1,653
|
|
3,626
|
- Stage 1
|
87
|
71
|
142
|
300
|
|
95
|
220
|
40
|
14
|
369
|
|
669
|
- Stage 2
|
70
|
188
|
216
|
474
|
|
78
|
341
|
19
|
1
|
439
|
|
913
|
- Stage 3
|
288
|
98
|
813
|
1,199
|
|
226
|
611
|
6
|
2
|
845
|
|
2,044
|
- Of which:
individual
|
21
|
-
|
15
|
36
|
|
81
|
220
|
-
|
2
|
303
|
|
339
|
- Of which:
collective
|
267
|
98
|
798
|
1,163
|
|
145
|
391
|
6
|
-
|
542
|
|
1,705
|
ECL provisions coverage (%)
|
0.22
|
5.92
|
12.05
|
0.89
|
|
1.25
|
1.51
|
0.12
|
1.38
|
1.00
|
|
0.94
|
- Stage 1
(%)
|
0.05
|
1.81
|
1.95
|
0.15
|
|
0.33
|
0.34
|
0.07
|
1.30
|
0.25
|
|
0.19
|
- Stage 2
(%)
|
0.35
|
9.54
|
15.35
|
2.02
|
|
2.83
|
3.24
|
2.60
|
0.77
|
3.10
|
|
2.43
|
- Stage 3
(%)
|
12.10
|
66.67
|
79.01
|
33.71
|
|
35.76
|
39.78
|
37.50
|
9.09
|
38.30
|
|
35.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the notes to this table refer
to page 19.
Risk and capital
management
Credit risk continued
Sector
analysis - portfolio summary continued
|
Personal
|
|
Wholesale
|
|
Total
|
|
|
Credit
|
|
|
|
|
|
|
|
|
|
|
|
Mortgages
(1)
|
cards
|
Other
|
Total
|
|
Property
|
Other
|
FI
|
Sovereign
|
Total
|
|
|
31 March 2024
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
Loans by residual maturity
|
206,146
|
6,033
|
9,720
|
221,899
|
|
31,993
|
77,521
|
55,058
|
1,232
|
165,804
|
|
387,703
|
- <1
year
|
3,291
|
3,353
|
3,257
|
9,901
|
|
5,765
|
25,205
|
40,698
|
333
|
72,001
|
|
81,902
|
- 1-5
year
|
9,541
|
2,680
|
5,459
|
17,680
|
|
18,063
|
32,297
|
12,105
|
551
|
63,016
|
|
80,696
|
- >5< 15
year
|
45,751
|
-
|
996
|
46,747
|
|
5,605
|
14,744
|
2,221
|
311
|
22,881
|
|
69,628
|
- >15
year
|
147,563
|
-
|
8
|
147,571
|
|
2,560
|
5,275
|
34
|
37
|
7,906
|
|
155,477
|
Other financial assets by
|
|
|
|
|
|
|
|
|
|
|
|
|
asset quality (2)
|
-
|
-
|
-
|
-
|
|
1
|
2,912
|
27,208
|
134,631
|
164,752
|
|
164,752
|
- AQ1-AQ4
|
-
|
-
|
-
|
-
|
|
1
|
2,910
|
26,463
|
134,631
|
164,005
|
|
164,005
|
- AQ5-AQ8
|
-
|
-
|
-
|
-
|
|
-
|
2
|
745
|
-
|
747
|
|
747
|
Off-balance sheet
|
10,293
|
18,043
|
8,355
|
36,691
|
|
14,215
|
60,200
|
21,039
|
259
|
95,713
|
|
132,404
|
- Loan
commitments
|
10,293
|
18,043
|
8,311
|
36,647
|
|
13,858
|
57,410
|
19,234
|
259
|
90,761
|
|
127,408
|
- Financial
guarantees
|
-
|
-
|
44
|
44
|
|
357
|
2,790
|
1,805
|
-
|
4,952
|
|
4,996
|
Off-balance sheet by
|
|
|
|
|
|
|
|
|
|
|
|
|
asset quality (2)
|
10,293
|
18,043
|
8,355
|
36,691
|
|
14,215
|
60,200
|
21,039
|
259
|
95,713
|
|
132,404
|
- AQ1-AQ4
|
9,597
|
449
|
7,119
|
17,165
|
|
10,909
|
36,856
|
19,413
|
166
|
67,344
|
|
84,509
|
- AQ5-AQ8
|
679
|
17,278
|
1,201
|
19,158
|
|
3,284
|
23,037
|
1,588
|
30
|
27,939
|
|
47,097
|
-
AQ9
|
1
|
6
|
7
|
14
|
|
3
|
19
|
37
|
63
|
122
|
|
136
|
- AQ10
|
16
|
310
|
28
|
354
|
|
19
|
288
|
1
|
-
|
308
|
|
662
|
For the notes to this table refer
to page 19.
Risk and capital
management
Credit risk continued
Sector
analysis - portfolio summary continued
|
Personal
|
|
Wholesale
|
|
Total
|
|
|
Credit
|
|
|
|
|
|
|
|
|
|
|
|
Mortgages (1)
|
cards
|
Other
|
Total
|
|
Property
|
Other
|
FI
|
Sovereign
|
Total
|
|
|
31 December 2023
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
Loans by geography
|
208,275
|
5,904
|
9,595
|
223,774
|
|
31,207
|
77,339
|
57,087
|
2,633
|
168,266
|
|
392,040
|
- UK
|
208,275
|
5,893
|
9,592
|
223,760
|
|
30,703
|
65,033
|
39,906
|
2,016
|
137,658
|
|
361,418
|
- RoI
|
-
|
11
|
3
|
14
|
|
9
|
888
|
279
|
-
|
1,176
|
|
1,190
|
- Other
Europe
|
-
|
-
|
-
|
-
|
|
375
|
5,096
|
7,865
|
399
|
13,735
|
|
13,735
|
- RoW
|
-
|
-
|
-
|
-
|
|
120
|
6,322
|
9,037
|
218
|
15,697
|
|
15,697
|
Loans by asset quality (2)
|
208,275
|
5,904
|
9,595
|
223,774
|
|
31,207
|
77,339
|
57,087
|
2,633
|
168,266
|
|
392,040
|
- AQ1-AQ4
|
118,266
|
124
|
914
|
119,304
|
|
15,366
|
26,851
|
53,367
|
2,488
|
98,072
|
|
217,376
|
- AQ5-AQ8
|
86,868
|
5,577
|
7,552
|
99,997
|
|
15,145
|
48,673
|
3,686
|
123
|
67,627
|
|
167,624
|
-
AQ9
|
860
|
63
|
150
|
1,073
|
|
75
|
311
|
18
|
-
|
404
|
|
1,477
|
- AQ10
|
2,281
|
140
|
979
|
3,400
|
|
621
|
1,504
|
16
|
22
|
2,163
|
|
5,563
|
Loans by stage
|
208,275
|
5,904
|
9,595
|
223,774
|
|
31,207
|
77,339
|
57,087
|
2,633
|
168,266
|
|
392,040
|
- Stage 1
|
188,140
|
3,742
|
6,983
|
198,865
|
|
27,316
|
63,690
|
56,105
|
2,610
|
149,721
|
|
348,586
|
- Stage 2
|
17,854
|
2,022
|
1,633
|
21,509
|
|
3,270
|
12,145
|
966
|
1
|
16,382
|
|
37,891
|
- Stage 3
|
2,281
|
140
|
979
|
3,400
|
|
621
|
1,504
|
16
|
22
|
2,163
|
|
5,563
|
- Of which:
individual
|
122
|
-
|
20
|
142
|
|
240
|
625
|
2
|
22
|
889
|
|
1,031
|
- Of which:
collective
|
2,159
|
140
|
959
|
3,258
|
|
381
|
879
|
14
|
-
|
1,274
|
|
4,532
|
Loans - past due
analysis (3)
|
208,275
|
5,904
|
9,595
|
223,774
|
|
31,207
|
77,339
|
57,087
|
2,633
|
168,266
|
|
392,040
|
- Not past
due
|
205,405
|
5,743
|
8,578
|
219,726
|
|
30,264
|
74,052
|
56,735
|
2,633
|
163,684
|
|
383,410
|
- Past due 1-30
days
|
1,178
|
41
|
71
|
1,290
|
|
491
|
2,222
|
332
|
-
|
3,045
|
|
4,335
|
- Past due 31-90
days
|
518
|
38
|
112
|
668
|
|
179
|
437
|
12
|
-
|
628
|
|
1,296
|
- Past due 90-180
days
|
445
|
32
|
103
|
580
|
|
42
|
71
|
2
|
-
|
115
|
|
695
|
- Past due >180
days
|
729
|
50
|
731
|
1,510
|
|
231
|
557
|
6
|
-
|
794
|
|
2,304
|
Loans - Stage 2
|
17,854
|
2,022
|
1,633
|
21,509
|
|
3,270
|
12,145
|
966
|
1
|
16,382
|
|
37,891
|
- Not past
due
|
16,803
|
1,971
|
1,529
|
20,303
|
|
3,071
|
11,287
|
932
|
1
|
15,291
|
|
35,594
|
- Past due 1-30
days
|
765
|
27
|
40
|
832
|
|
100
|
516
|
24
|
-
|
640
|
|
1,472
|
- Past due 31-90
days
|
286
|
24
|
64
|
374
|
|
99
|
342
|
10
|
-
|
451
|
|
825
|
Weighted average life
|
|
|
|
|
|
|
|
|
|
|
|
|
- ECL measurement
(years)
|
9
|
3
|
6
|
6
|
|
6
|
6
|
2
|
-
|
6
|
|
6
|
Weighted average 12 months PDs
|
|
|
|
|
|
|
|
|
|
|
|
- IFRS 9
(%)
|
0.50
|
3.45
|
5.29
|
0.75
|
|
1.45
|
1.59
|
0.19
|
0.37
|
1.07
|
|
0.89
|
- Basel
(%)
|
0.67
|
3.37
|
3.15
|
0.84
|
|
0.94
|
1.25
|
0.17
|
0.37
|
0.81
|
|
0.83
|
ECL provisions by geography
|
420
|
376
|
1,168
|
1,964
|
|
398
|
1,201
|
66
|
16
|
1,681
|
|
3,645
|
- UK
|
420
|
365
|
1,163
|
1,948
|
|
384
|
999
|
38
|
13
|
1,434
|
|
3,382
|
- RoI
|
-
|
11
|
5
|
16
|
|
-
|
6
|
1
|
-
|
7
|
|
23
|
- Other
Europe
|
-
|
-
|
-
|
-
|
|
7
|
146
|
12
|
-
|
165
|
|
165
|
- RoW
|
-
|
-
|
-
|
-
|
|
7
|
50
|
15
|
3
|
75
|
|
75
|
ECL provisions by stage
|
420
|
376
|
1,168
|
1,964
|
|
398
|
1,201
|
66
|
16
|
1,681
|
|
3,645
|
- Stage 1
|
88
|
76
|
152
|
316
|
|
102
|
234
|
44
|
13
|
393
|
|
709
|
- Stage 2
|
61
|
207
|
238
|
506
|
|
98
|
356
|
15
|
1
|
470
|
|
976
|
- Stage 3
|
271
|
93
|
778
|
1,142
|
|
198
|
611
|
7
|
2
|
818
|
|
1,960
|
- Of which:
individual
|
12
|
-
|
14
|
26
|
|
60
|
242
|
2
|
2
|
306
|
|
332
|
- Of which:
collective
|
259
|
93
|
764
|
1,116
|
|
138
|
369
|
5
|
-
|
512
|
|
1,628
|
ECL provisions coverage (%)
|
0.20
|
6.37
|
12.17
|
0.88
|
|
1.28
|
1.55
|
0.12
|
0.61
|
1.00
|
|
0.93
|
- Stage 1
(%)
|
0.05
|
2.03
|
2.18
|
0.16
|
|
0.37
|
0.37
|
0.08
|
0.50
|
0.26
|
|
0.20
|
- Stage 2
(%)
|
0.34
|
10.24
|
14.57
|
2.35
|
|
3.00
|
2.93
|
1.55
|
100.00
|
2.87
|
|
2.58
|
- Stage 3
(%)
|
11.88
|
66.43
|
79.47
|
33.59
|
|
31.88
|
40.63
|
43.75
|
9.09
|
37.82
|
|
35.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the notes to this table refer
to the following page.
Risk and capital
management
Credit risk continued
Sector
analysis - portfolio summary continued
|
|
|
Personal
|
|
Wholesale
|
|
Total
|
|
|
Credit
|
|
|
|
|
|
|
|
|
|
|
|
Mortgages (1)
|
cards
|
Other
|
Total
|
|
Property
|
Other
|
FI
|
Sovereign
|
Total
|
|
|
31 December 2023
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
Loans by residual maturity
|
208,275
|
5,904
|
9,595
|
223,774
|
|
31,207
|
77,339
|
57,087
|
2,633
|
168,266
|
|
392,040
|
- <1
year
|
3,375
|
3,398
|
3,169
|
9,942
|
|
5,696
|
25,312
|
43,497
|
489
|
74,994
|
|
84,936
|
- 1-5
year
|
9,508
|
2,506
|
5,431
|
17,445
|
|
17,216
|
32,573
|
11,616
|
1,872
|
63,277
|
|
80,722
|
- >5< 15
year
|
46,453
|
-
|
993
|
47,446
|
|
5,701
|
14,167
|
1,939
|
199
|
22,006
|
|
69,452
|
- >15
year
|
148,939
|
-
|
2
|
148,941
|
|
2,594
|
5,287
|
35
|
73
|
7,989
|
|
156,930
|
Other financial assets by
|
|
|
|
|
|
|
|
|
|
|
|
|
asset quality (2)
|
-
|
-
|
-
|
-
|
|
1
|
2,689
|
26,816
|
123,683
|
153,189
|
|
153,189
|
- AQ1-AQ4
|
-
|
-
|
-
|
-
|
|
1
|
2,689
|
26,084
|
123,683
|
152,457
|
|
152,457
|
- AQ5-AQ8
|
-
|
-
|
-
|
-
|
|
-
|
-
|
732
|
-
|
732
|
|
732
|
Off-balance sheet
|
9,843
|
17,284
|
8,462
|
35,589
|
|
14,205
|
59,716
|
22,221
|
227
|
96,369
|
|
131,958
|
- Loan
commitments
|
9,843
|
17,284
|
8,417
|
35,544
|
|
13,861
|
57,081
|
20,765
|
227
|
91,934
|
|
127,478
|
- Financial
guarantees
|
-
|
-
|
45
|
45
|
|
344
|
2,635
|
1,456
|
-
|
4,435
|
|
4,480
|
Off-balance sheet by
|
|
|
|
|
|
|
|
|
|
|
|
|
asset quality (2)
|
9,843
|
17,284
|
8,462
|
35,589
|
|
14,205
|
59,716
|
22,221
|
227
|
96,369
|
|
131,958
|
- AQ1-AQ4
|
9,099
|
448
|
7,271
|
16,818
|
|
10,916
|
36,380
|
20,644
|
165
|
68,105
|
|
84,923
|
- AQ5-AQ8
|
721
|
16,518
|
1,162
|
18,401
|
|
3,266
|
23,030
|
1,574
|
45
|
27,915
|
|
46,316
|
-
AQ9
|
7
|
6
|
4
|
17
|
|
3
|
12
|
-
|
-
|
15
|
|
32
|
- AQ10
|
16
|
312
|
25
|
353
|
|
20
|
294
|
3
|
17
|
334
|
|
687
|
(1)
Includes a portion of Private Banking lending secured against
residential real estate, in line with ECL calculation methodology.
Private Banking and RBS International mortgages are reported in UK,
reflecting the country of lending origination and includes crown
dependencies.
(2) AQ
bandings are based on Basel PDs and mapping is as
follows:
Internal asset quality
band
|
Probability of default
range
|
Indicative S&P
rating
|
AQ1
|
0% - 0.034%
|
AAA to AA
|
AQ2
|
0.034% - 0.048%
|
AA to AA-
|
AQ3
|
0.048% - 0.095%
|
A+ to A
|
AQ4
|
0.095% - 0.381%
|
BBB+ to BBB-
|
AQ5
|
0.381% - 1.076%
|
BB+ to BB
|
AQ6
|
1.076% - 2.153%
|
BB- to B+
|
AQ7
|
2.153% - 6.089%
|
B+ to B
|
AQ8
|
6.089% - 17.222%
|
B- to CCC+
|
AQ9
|
17.222% - 100%
|
CCC to C
|
AQ10
|
100%
|
D
|
£0.3 billion (31 December 2023 -
£0.3 billion) of AQ10 Personal balances primarily relate to loan
commitments, the drawdown of which is effectively
prohibited.
(3) 30 DPD
- 30 days past due, the mandatory 30 days past due backstop as
prescribed by the IFRS 9 guidance for a SICR.
Risk and capital
management
Credit risk continued
Sector
analysis - portfolio summary continued
The table below shows ECL by
stage, for the Personal portfolio and selected sectors of the
Wholesale portfolio including those that contain an element of
exposure classified as heightened climate-related risk.
|
|
Off-balance
sheet
|
|
|
|
Loans - amortised cost and
FVOCI
|
Loan
|
|
Contingent
|
|
ECL
provisions
|
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
commitments
|
|
liabilities
|
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
31 March 2024
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
|
£m
|
£m
|
£m
|
£m
|
Personal
|
194,905
|
23,437
|
3,557
|
221,899
|
36,647
|
|
44
|
|
300
|
474
|
1,199
|
1,973
|
Mortgages (1)
|
183,705
|
20,060
|
2,381
|
206,146
|
10,293
|
|
-
|
|
87
|
70
|
288
|
445
|
Credit cards
|
3,916
|
1,970
|
147
|
6,033
|
18,043
|
|
-
|
|
71
|
188
|
98
|
357
|
Other personal
|
7,284
|
1,407
|
1,029
|
9,720
|
8,311
|
|
44
|
|
142
|
216
|
813
|
1,171
|
Wholesale
|
149,458
|
14,140
|
2,206
|
165,804
|
90,761
|
|
4,952
|
|
369
|
439
|
845
|
1,653
|
Property
|
28,608
|
2,753
|
632
|
31,993
|
13,858
|
|
357
|
|
95
|
78
|
226
|
399
|
Financial
institutions (2)
|
54,312
|
730
|
16
|
55,058
|
19,234
|
|
1,805
|
|
40
|
19
|
6
|
65
|
Sovereign
|
1,080
|
130
|
22
|
1,232
|
259
|
|
-
|
|
14
|
1
|
2
|
17
|
Corporate
|
65,458
|
10,527
|
1,536
|
77,521
|
57,410
|
|
2,790
|
|
220
|
341
|
611
|
1,172
|
Of which:
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
3,934
|
918
|
107
|
4,959
|
957
|
|
21
|
|
17
|
35
|
36
|
88
|
Airlines
and aerospace
|
2,073
|
359
|
3
|
2,435
|
2,056
|
|
162
|
|
3
|
6
|
2
|
11
|
Automotive
|
7,314
|
690
|
52
|
8,056
|
4,187
|
|
154
|
|
18
|
19
|
19
|
56
|
Building
materials
|
1,417
|
244
|
19
|
1,680
|
1,391
|
|
67
|
|
6
|
8
|
7
|
21
|
Chemicals
|
293
|
124
|
4
|
421
|
765
|
|
13
|
|
1
|
9
|
4
|
14
|
Industrials
|
2,342
|
473
|
70
|
2,885
|
2,843
|
|
141
|
|
9
|
16
|
30
|
55
|
Land
transport and logistics
|
4,515
|
452
|
76
|
5,043
|
2,980
|
|
195
|
|
11
|
14
|
21
|
46
|
Leisure
|
5,053
|
1,880
|
291
|
7,224
|
1,873
|
|
122
|
|
31
|
70
|
99
|
200
|
Mining
and metals
|
263
|
37
|
5
|
305
|
531
|
|
7
|
|
-
|
-
|
5
|
5
|
Oil
and gas
|
697
|
52
|
55
|
804
|
1,909
|
|
240
|
|
3
|
2
|
46
|
51
|
Power
utilities
|
5,457
|
323
|
79
|
5,859
|
8,054
|
|
593
|
|
14
|
8
|
29
|
51
|
Retail
|
5,969
|
1,152
|
211
|
7,332
|
4,314
|
|
475
|
|
20
|
32
|
80
|
132
|
Shipping
|
198
|
34
|
1
|
233
|
60
|
|
29
|
|
-
|
2
|
1
|
3
|
Water
and waste
|
3,562
|
160
|
48
|
3,770
|
1,879
|
|
135
|
|
4
|
4
|
7
|
15
|
Total
|
344,363
|
37,577
|
5,763
|
387,703
|
127,408
|
|
4,996
|
|
669
|
913
|
2,044
|
3,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal
|
198,865
|
21,509
|
3,400
|
223,774
|
35,544
|
|
45
|
|
316
|
506
|
1,142
|
1,964
|
Mortgages (1)
|
188,140
|
17,854
|
2,281
|
208,275
|
9,843
|
|
-
|
|
88
|
61
|
271
|
420
|
Credit
cards
|
3,742
|
2,022
|
140
|
5,904
|
17,284
|
|
-
|
|
76
|
207
|
93
|
376
|
Other
personal
|
6,983
|
1,633
|
979
|
9,595
|
8,417
|
|
45
|
|
152
|
238
|
778
|
1,168
|
Wholesale
|
149,721
|
16,382
|
2,163
|
168,266
|
91,934
|
|
4,435
|
|
393
|
470
|
818
|
1,681
|
Property
|
27,316
|
3,270
|
621
|
31,207
|
13,861
|
|
344
|
|
102
|
98
|
198
|
398
|
Financial
institutions (2)
|
56,105
|
966
|
16
|
57,087
|
20,765
|
|
1,456
|
|
44
|
15
|
7
|
66
|
Sovereign
|
2,610
|
1
|
22
|
2,633
|
227
|
|
-
|
|
13
|
1
|
2
|
16
|
Corporate
|
63,690
|
12,145
|
1,504
|
77,339
|
57,081
|
|
2,635
|
|
234
|
356
|
611
|
1,201
|
Of which:
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
3,851
|
1,011
|
90
|
4,952
|
950
|
|
21
|
|
19
|
35
|
34
|
88
|
Airlines
and aerospace
|
1,525
|
454
|
3
|
1,982
|
1,788
|
|
178
|
|
4
|
7
|
2
|
13
|
Automotive
|
7,223
|
1,008
|
76
|
8,307
|
3,844
|
|
103
|
|
18
|
18
|
26
|
62
|
Building
materials
|
1,204
|
282
|
72
|
1,558
|
1,475
|
|
72
|
|
6
|
9
|
8
|
23
|
Chemicals
|
354
|
62
|
4
|
420
|
785
|
|
13
|
|
1
|
9
|
1
|
11
|
Industrials
|
2,269
|
543
|
70
|
2,882
|
2,896
|
|
148
|
|
10
|
18
|
23
|
51
|
Land
transport and logistics
|
4,231
|
578
|
61
|
4,870
|
3,025
|
|
184
|
|
11
|
14
|
18
|
43
|
Leisure
|
4,394
|
2,245
|
288
|
6,927
|
1,887
|
|
145
|
|
31
|
74
|
91
|
196
|
Mining
and metals
|
241
|
32
|
4
|
277
|
545
|
|
7
|
|
-
|
-
|
4
|
4
|
Oil
and gas
|
915
|
125
|
27
|
1,067
|
1,959
|
|
237
|
|
3
|
2
|
29
|
34
|
Power
utilities
|
5,604
|
418
|
40
|
6,062
|
8,257
|
|
554
|
|
13
|
13
|
24
|
50
|
Retail
|
5,846
|
1,318
|
224
|
7,388
|
4,717
|
|
429
|
|
23
|
35
|
118
|
176
|
Shipping
|
207
|
35
|
3
|
245
|
71
|
|
31
|
|
-
|
1
|
2
|
3
|
Water
and waste
|
3,536
|
173
|
13
|
3,722
|
1,904
|
|
84
|
|
4
|
5
|
4
|
13
|
Total
|
348,586
|
37,891
|
5,563
|
392,040
|
127,478
|
|
4,480
|
|
709
|
976
|
1,960
|
3,645
|
|
|
(1)
|
As at 31 March 2024, £138.1
billion, 67.0%, of the total residential mortgages portfolio had
Energy Performance Certificate (EPC) data available (31 December
2023 - £140.8 billion, 67.6%). Of which, 44.6% were rated as EPC A
to C (31 December 2023 - 44.1%).
|
(2)
|
Includes transactions, such as
securitisations, where the underlying assets may be in other
sectors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk and capital
management
Capital, liquidity and funding risk
Introduction
NatWest Group takes a
comprehensive approach to the management of capital, liquidity and
funding, underpinned by frameworks, risk appetite and policies, to
manage and mitigate capital, liquidity and funding risks. The
framework ensures the tools and capability are in place to
facilitate the management and mitigation of risk ensuring that
NatWest Group operates within its regulatory requirements and risk
appetite.
Key developments since 31 December 2023
CET1 ratio
13.5%
(as at 31 December 2023 -
13.4%)
|
|
Total RWAs
£186.3bn
(as at 31 December 2023 -
£183.0bn)
|
The CET1 ratio increased by 10
basis points to 13.5%. The increase in the CET1 ratio was due to a
£0.6 billion increase in CET1 capital, partially offset by a £3.3
billion increase in RWAs.
The CET1 capital increase was
mainly driven by an attributable profit for ordinary shareholders
of £0.9 billion partially offset by a foreseeable ordinary dividend
accrual of £0.4 billion.
|
|
Total RWAs increased by £3.3
billion to £186.3 billion mainly reflecting:
- an
increase in credit risk RWAs of £1.7 billion, primarily due to
drawdowns and new facilities within Commercial & Institutional
in addition to an increase in unsecured lending within Retail
Banking. There was also an increase in IRB Temporary Model
Adjustment related to mortgages within Retail Banking.
- an
increase in operational risk RWAs of £1.6 billion following the
annual recalculation and higher income compared to 2020.
|
|
|
|
UK leverage ratio
5.1%
(as at 31 December 2023 -
5.0%)
|
|
LCR
151%
(as at 31 December 2023 -
144%)
|
The leverage ratio increased by 10
basis points to 5.1% mainly due to a £0.6 billion increase in Tier
1 capital while the leverage exposure remained static during the
period.
|
|
The Liquidity Coverage Ratio (LCR)
increased to 151%, during the quarter driven by increased issuance
and customer deposits coupled with replacement of the Cash Ratio
Deposit scheme with a Bank of England Levy.
|
Risk and capital
management
Capital, liquidity and funding risk
continued
Maximum Distributable Amount (MDA)
and Minimum Capital Requirements
NatWest Group is subject to
minimum capital requirements relative to RWAs. The table below
summarises the minimum capital requirements (the sum of Pillar 1
and Pillar 2A), and the additional capital buffers which are held
in excess of the regulatory minimum requirements and are usable in
stress.
Where the CET1 ratio falls below
the sum of the minimum capital and the combined buffer requirement,
there is a subsequent automatic restriction on the amount available
to service discretionary payments (including AT1 coupons), known as
the MDA. Note that different requirements apply to individual legal
entities or sub-groups and that the table shown does not reflect
any incremental PRA buffer requirements, which are not
disclosable.
The current capital position
provides significant headroom above both our minimum requirements
and our MDA threshold requirements.
Type
|
CET1
|
Total Tier
1
|
Total
capital
|
Pillar 1 requirements
|
4.5%
|
6.0%
|
8.0%
|
Pillar 2A requirements
|
1.8%
|
2.4%
|
3.2%
|
Minimum Capital Requirements
|
6.3%
|
8.4%
|
11.2%
|
Capital conservation
buffer
|
2.5%
|
2.5%
|
2.5%
|
Countercyclical capital
buffer (1)
|
1.7%
|
1.7%
|
1.7%
|
MDA threshold (2)
|
10.5%
|
n/a
|
n/a
|
Overall capital
requirement
|
10.5%
|
12.6%
|
15.4%
|
Capital ratios at 31 March
2024
|
13.5%
|
15.5%
|
18.8%
|
Headroom (3,4)
|
3.0%
|
2.9%
|
3.4%
|
(1)
The UK countercyclical capital buffer (CCyB) rate
is currently being maintained at 2%. The rate may vary in
either direction in the future, depending on how risks develop.
Foreign exposures may be subject to different CCyB rates depending
on the rates set in those jurisdictions.
(2)
Pillar 2A requirements for NatWest Group are set
as a variable amount with the exception of some fixed
add-ons.
(3)
The headroom does not reflect excess
distributable capital and may vary over time.
(4)
Headroom as at 31 December 2023 was CET1 2.9%,
Total Tier 1 2.9% and Total Capital 3.0%.
|
|
|
Leverage ratios
The table below summarises the
minimum ratios of capital to leverage exposure under the binding
PRA UK leverage framework applicable for NatWest Group.
Type
|
CET1
|
Total Tier
1
|
Minimum ratio
|
2.44%
|
3.25%
|
Countercyclical leverage ratio
buffer (1)
|
0.6%
|
0.6%
|
Total
|
3.04%
|
3.85%
|
(1)
The countercyclical leverage ratio buffer is set
at 35% of NatWest Group's CCyB.
Risk and capital
management
Capital, liquidity and funding risk
continued
Capital and leverage
ratios
The tables below set out the key
capital and leverage ratios. NatWest Group is subject to the
requirements set out in the UK CRR therefore capital and leverage
ratios are being presented under these frameworks on a transitional
basis.
|
31 March
|
31
December
|
|
2024
|
2023
|
Capital adequacy
ratios (1)
|
%
|
%
|
CET1
|
13.5
|
13.4
|
Tier 1
|
15.5
|
15.5
|
Total
|
18.8
|
18.4
|
|
|
|
Capital
|
£m
|
£m
|
Tangible equity
|
26,360
|
25,653
|
|
|
|
Prudential valuation
adjustment
|
(249)
|
(279)
|
Deferred tax assets
|
(919)
|
(979)
|
Own credit adjustments
|
16
|
(10)
|
Pension fund assets
|
(160)
|
(143)
|
Cash flow hedging
reserve
|
1,944
|
1,899
|
Foreseeable ordinary
dividends
|
(1,380)
|
(1,013)
|
Adjustment for trust
assets (2)
|
(365)
|
(365)
|
Foreseeable charges
|
(253)
|
(525)
|
Adjustments under IFRS 9
transitional arrangements
|
74
|
202
|
Total regulatory adjustments
|
(1,292)
|
(1,213)
|
|
|
|
CET1 capital
|
25,068
|
24,440
|
|
|
|
Additional AT1 capital
|
3,875
|
3,875
|
Tier 1 capital
|
28,943
|
28,315
|
|
|
|
End-point Tier 2
capital
|
6,037
|
5,317
|
Tier 2 capital
|
6,037
|
5,317
|
|
|
|
Total regulatory capital
|
34,980
|
33,632
|
|
|
|
Risk-weighted assets
|
|
|
Credit risk
|
149,313
|
147,598
|
Counterparty credit
risk
|
7,709
|
7,830
|
Market risk
|
7,452
|
7,363
|
Operational risk
|
21,821
|
20,198
|
Total RWAs
|
186,295
|
182,989
|
(1)
Based on current PRA rules, includes the
transitional arrangements for the capital impact of IFRS 9 expected
credit loss (ECL) accounting. The impact of the IFRS 9 transitional
adjustments at 31 March 2024 was £0.1 billion for CET1 capital, £24
million for total capital and £3 million RWAs (31 December 2023 -
£0.2 billion CET1 capital, £54 million total capital and £17
million RWAs). Excluding this adjustment, the CET1 ratio would be
13.4% (31 December 2023 - 13.2%). Tier 1 capital ratio would be
15.5% (31 December 2023 - 15.4%) and the Total capital ratio would
be 18.8% (31 December 2023 - 18.4%).
|
(2) Prudent
deduction in respect of agreement with the pension fund.
|
Risk and capital
management
Capital, liquidity and funding risk
continued
Capital and leverage ratios
continued
|
31 March
|
31
December
|
|
2024
|
2023
|
Leverage
|
£m
|
£m
|
Cash and balances at central
banks
|
116,916
|
104,262
|
Trading assets
|
50,277
|
45,551
|
Derivatives
|
68,133
|
78,904
|
Financial assets
|
434,344
|
439,449
|
Other assets
|
26,974
|
23,605
|
Assets of disposal
groups
|
808
|
902
|
Total assets
|
697,452
|
692,673
|
Derivatives
|
|
|
- netting and variation margin
|
(67,625)
|
(79,299)
|
- potential future
exposures
|
17,064
|
17,212
|
Securities financing transactions
gross up
|
1,645
|
1,868
|
Other off balance sheet
items
|
51,260
|
50,961
|
Regulatory deductions and other
adjustments
|
(20,028)
|
(16,043)
|
Claims on central banks
|
(113,504)
|
(100,735)
|
Exclusion of bounce back
loans
|
(3,433)
|
(3,794)
|
UK leverage exposure
|
562,831
|
562,843
|
UK leverage ratio
(%) (1)
|
5.1
|
5.0
|
(1)
|
The UK leverage exposure and
transitional Tier 1 capital are calculated in accordance with
current PRA rules. Excluding the IFRS 9 transitional adjustment,
the UK leverage ratio would be 5.1% (31 December 2023 -
5.0%).
|
Capital flow statement
The table below analyses the
movement in CET1, AT1 and Tier 2 capital for the three months ended
31 March 2024. It is presented on a transitional basis based on
current PRA rules.
|
CET1
|
AT1
|
Tier 2
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
At 31 December 2023
|
24,440
|
3,875
|
5,317
|
33,632
|
Attributable profit for the
period
|
918
|
-
|
-
|
918
|
Foreseeable ordinary
dividends
|
(367)
|
-
|
-
|
(367)
|
Foreign exchange
reserve
|
(32)
|
-
|
-
|
(32)
|
FVOCI reserve
|
26
|
-
|
-
|
26
|
Own credit
|
26
|
-
|
-
|
26
|
Share capital and reserve
movements in respect of employee share schemes
|
68
|
-
|
-
|
68
|
Goodwill and intangibles
deduction
|
16
|
-
|
-
|
16
|
Deferred tax assets
|
60
|
-
|
-
|
60
|
Prudential valuation
adjustments
|
30
|
-
|
-
|
30
|
Net dated subordinated debt
instruments
|
-
|
-
|
764
|
764
|
Foreign exchange
movements
|
-
|
-
|
(4)
|
(4)
|
Adjustment under IFRS 9
transitional arrangements
|
(128)
|
-
|
-
|
(128)
|
Other movements
|
11
|
-
|
(40)
|
(29)
|
At 31 March 2024
|
25,068
|
3,875
|
6,037
|
34,980
|
-
For CET1 movements refer to the key points on
page 21.
-
Tier 2 instrument movements include £0.8 billion
in relation to $1.0 billion 6.475% Fixed to Fixed Reset Tier 2
Notes 2034 issued in March 2024, partially offset by amortisation
and foreign exchange movements.
-
Within Tier 2, there was also a decrease in the
Tier 2 surplus provisions.
Risk and capital
management
Capital, liquidity and funding risk
continued
Risk-weighted assets
The table below analyses the
movement in RWAs during the period, by key drivers.
|
|
Counterparty
|
|
Operational
|
|
|
Credit
risk
|
credit
risk
|
Market
risk
|
risk
|
Total
|
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
At 31 December 2023
|
147.6
|
7.8
|
7.4
|
20.2
|
183.0
|
Foreign exchange
movement
|
(0.1)
|
-
|
-
|
-
|
(0.1)
|
Business movement
|
1.6
|
(0.1)
|
0.2
|
1.6
|
3.3
|
Risk parameter changes
|
(0.1)
|
-
|
-
|
-
|
(0.1)
|
Model updates
|
0.3
|
-
|
(0.1)
|
-
|
0.2
|
At 31 March 2024
|
149.3
|
7.7
|
7.5
|
21.8
|
186.3
|
The table below analyses segmental
RWAs.
|
|
|
|
|
Total
|
|
Retail
|
Private
|
Commercial
&
|
Central
items
|
NatWest
|
|
Banking
|
Banking
|
Institutional
|
& other
(1)
|
Group
|
Total RWAs
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
At 31 December 2023
|
61.6
|
11.2
|
107.4
|
2.8
|
183.0
|
Foreign exchange
movement
|
-
|
-
|
(0.1)
|
-
|
(0.1)
|
Business movement
|
0.7
|
0.1
|
2.7
|
(0.2)
|
3.3
|
Risk parameter
changes
|
-
|
-
|
(0.1)
|
-
|
(0.1)
|
Model updates
|
0.2
|
-
|
-
|
-
|
0.2
|
At 31 March 2024
|
62.5
|
11.3
|
109.9
|
2.6
|
186.3
|
|
|
|
|
|
|
Credit risk
|
54.0
|
9.7
|
83.5
|
2.1
|
149.3
|
Counterparty credit
risk
|
0.3
|
0.1
|
7.3
|
-
|
7.7
|
Market risk
|
0.1
|
-
|
7.4
|
-
|
7.5
|
Operational risk
|
8.1
|
1.5
|
11.7
|
0.5
|
21.8
|
Total RWAs
|
62.5
|
11.3
|
109.9
|
2.6
|
186.3
|
(1)
|
£1.0 billion of Central items
& other relates to Ulster Bank RoI.
|
Total RWAs increased by £3.3
billion to £186.3 billion during the period mainly
reflecting:
-
An increase in business movements totalling £3.3
billion, primarily driven by increased drawdowns and new facilities
within Commercial & Institutional in addition to increased RWAs
following the annual recalculation of operational risk due to
higher income when compared to 2020.
-
A decrease in risk parameter changes of £0.1
billion, reflecting customers moving into default within Commercial
& Institutional which is partially offset by PD deterioration
within Commercial & Institutional.
-
An increase in model updates of £0.2 billion
reflecting an increase in IRB Temporary Model Adjustment related to
mortgages within Retail Banking.
Liquidity portfolio
The table below shows the
composition of the liquidity portfolio with primary liquidity
aligned to high-quality liquid assets on a regulatory LCR basis.
Secondary liquidity comprises of assets which are eligible as
collateral for local central bank liquidity facilities and do not
form part of the LCR eligible high-quality liquid
assets.
|
Liquidity
value
|
|
31 March
2024
|
|
31
December 2023
|
|
NatWest
|
|
NatWest
|
|
Group (1)
|
|
Group
|
|
£m
|
|
£m
|
Cash and balances at central
banks
|
112,774
|
|
99,855
|
High quality government/MDB/PSE
and GSE bonds (2)
|
32,581
|
|
36,250
|
Extremely high quality covered
bonds
|
4,113
|
|
4,164
|
LCR level 1 Eligible
Assets
|
149,468
|
|
140,269
|
LCR level 2 Eligible
Assets (3)
|
8,949
|
|
7,796
|
Primary liquidity
(HQLA) (4)
|
158,417
|
|
148,065
|
Secondary liquidity
|
70,786
|
|
74,722
|
Total liquidity value
|
229,203
|
|
222,787
|
(1)
|
NatWest Group includes the UK
Domestic Liquidity Sub-Group (NWB Plc, RBS plc and Coutts &
Co), NatWest Markets Plc and other significant operating
subsidiaries that hold liquidity portfolios. These include The
Royal Bank of Scotland International Limited and NatWest Markets
N.V. who hold managed portfolios that comply with local regulations
that may differ from PRA rules.
|
(2)
|
Multilateral development bank
abbreviated to MDB, public sector entities abbreviated to PSE and
government sponsored entities abbreviated to GSE.
|
(3)
|
Includes Level 2A and Level
2B.
|
(4)
|
High-quality liquid assets
abbreviated to HQLA.
|
Condensed consolidated income
statement
for the period ended 31 March
2024 (unaudited)
|
Quarter
ended
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
|
£m
|
£m
|
£m
|
Interest receivable
|
6,055
|
5,955
|
4,501
|
Interest payable
|
(3,404)
|
(3,317)
|
(1,599)
|
Net interest income
|
2,651
|
2,638
|
2,902
|
Fees and commissions
receivable
|
770
|
770
|
740
|
Fees and commissions
payable
|
(177)
|
(169)
|
(157)
|
Trading income
|
129
|
185
|
333
|
Other operating income
|
102
|
113
|
58
|
Non-interest income
|
824
|
899
|
974
|
Total income
|
3,475
|
3,537
|
3,876
|
Staff costs
|
(1,062)
|
(977)
|
(1,040)
|
Premises and equipment
|
(293)
|
(308)
|
(286)
|
Other administrative
expenses
|
(424)
|
(618)
|
(450)
|
Depreciation and
amortisation
|
(273)
|
(251)
|
(212)
|
Operating expenses
|
(2,052)
|
(2,154)
|
(1,988)
|
Profit before impairment losses
|
1,423
|
1,383
|
1,888
|
Impairment losses
|
(93)
|
(126)
|
(70)
|
Operating profit before tax
|
1,330
|
1,257
|
1,818
|
Tax (charge)/credit
|
(339)
|
5
|
(512)
|
Profit from continuing operations
|
991
|
1,262
|
1,306
|
(Loss)/profit from discontinued
operations, net of tax
|
(4)
|
26
|
35
|
Profit for the period
|
987
|
1,288
|
1,341
|
|
|
|
|
Attributable to:
|
|
|
|
Ordinary shareholders
|
918
|
1,229
|
1,279
|
Paid-in equity holders
|
60
|
60
|
61
|
Non-controlling
interests
|
9
|
(1)
|
1
|
|
987
|
1,288
|
1,341
|
|
|
|
|
Earnings per ordinary share -
continuing operations
|
10.5p
|
13.6p
|
12.8p
|
Earnings per ordinary share -
discontinued operations
|
-
|
0.3p
|
0.4p
|
Total earnings per share
attributable to ordinary shareholders - basic
|
10.5p
|
13.9p
|
13.2p
|
Earnings per ordinary share -
fully diluted continuing operations
|
10.4p
|
13.6p
|
12.8p
|
Earnings per ordinary share -
fully diluted discontinued operations
|
-
|
0.3p
|
0.4p
|
Total earnings per share
attributable to ordinary shareholders - fully diluted
|
10.4p
|
13.9p
|
13.2p
|
Condensed consolidated statement
of comprehensive income
for the period ended 31 March
2024 (unaudited)
|
|
Quarter
ended
|
|
|
31 March
|
31
December
|
31
March
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
Profit for the period
|
|
987
|
1,288
|
1,341
|
Items that do not qualify for
reclassification
|
|
|
|
|
Remeasurement of retirement
benefit schemes
|
|
(36)
|
(175)
|
(39)
|
Changes in fair value of financial
liabilities designated at fair value through
|
|
|
|
|
profit or loss
(FVTPL) due to changes in credit risk
|
|
(23)
|
(12)
|
(6)
|
Fair value through other
comprehensive income (FVOCI) financial assets
|
|
(13)
|
(19)
|
43
|
Tax
|
|
31
|
59
|
(2)
|
|
|
(41)
|
(147)
|
(4)
|
Items that do qualify for
reclassification
|
|
|
|
|
FVOCI financial assets
|
|
45
|
(16)
|
40
|
Cash flow hedges
|
|
(66)
|
1,416
|
298
|
Currency translation
|
|
(25)
|
(218)
|
(59)
|
Tax
|
|
3
|
(345)
|
(98)
|
|
|
(43)
|
837
|
181
|
Other comprehensive (loss)/income after tax
|
|
(84)
|
690
|
177
|
Total comprehensive income for the period
|
|
903
|
1,978
|
1,518
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Ordinary shareholders
|
|
834
|
1,919
|
1,456
|
Paid-in equity holders
|
|
60
|
60
|
61
|
Non-controlling
interests
|
|
9
|
(1)
|
1
|
|
|
903
|
1,978
|
1,518
|
Condensed consolidated balance
sheet as at 31 March 2024 (unaudited)
|
31 March
|
31
December
|
|
2024
|
2023
|
|
£m
|
£m
|
Assets
|
|
|
Cash and balances at central
banks
|
116,916
|
104,262
|
Trading assets
|
50,277
|
45,551
|
Derivatives
|
68,133
|
78,904
|
Settlement balances
|
10,724
|
7,231
|
Loans to banks - amortised
cost
|
6,051
|
6,914
|
Loans to customers - amortised
cost
|
378,010
|
381,433
|
Other financial assets
|
50,283
|
51,102
|
Intangible assets
|
7,598
|
7,614
|
Other assets
|
8,652
|
8,760
|
Assets of disposal
groups
|
808
|
902
|
Total assets
|
697,452
|
692,673
|
|
|
|
Liabilities
|
|
|
Bank deposits
|
21,614
|
22,190
|
Customer deposits
|
432,793
|
431,377
|
Settlement balances
|
10,758
|
6,645
|
Trading liabilities
|
56,696
|
53,636
|
Derivatives
|
61,689
|
72,395
|
Other financial
liabilities
|
61,340
|
55,089
|
Subordinated
liabilities
|
6,487
|
5,714
|
Notes in circulation
|
3,289
|
3,237
|
Other liabilities
|
4,898
|
5,202
|
Total liabilities
|
659,564
|
655,485
|
|
|
|
Equity
|
|
|
Ordinary shareholders'
interests
|
33,958
|
33,267
|
Other owners' interests
|
3,890
|
3,890
|
Owners' equity
|
37,848
|
37,157
|
Non-controlling
interests
|
40
|
31
|
Total equity
|
37,888
|
37,188
|
Total liabilities and equity
|
697,452
|
692,673
|
Condensed consolidated statement
of changes in equity
for the period ended 31 March
2024 (unaudited)
|
Share
|
|
|
|
|
|
|
|
capital
and
|
|
|
|
Total
|
Non
|
|
|
statutory
|
Paid-in
|
Retained
|
Other
|
owners'
|
controlling
|
Total
|
|
reserves
(1)
|
equity
|
earnings
|
reserves*
|
equity
|
interests
|
equity
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 1 January 2024
|
12,848
|
3,890
|
10,645
|
9,774
|
37,157
|
31
|
37,188
|
Profit attributable to ordinary
shareholders
|
|
|
|
|
|
|
|
and other
equity owners
|
|
|
|
|
|
|
|
- continuing operations
|
|
|
982
|
|
982
|
9
|
991
|
- discontinued operations
|
|
|
(4)
|
|
(4)
|
-
|
(4)
|
Other comprehensive
income
|
|
|
|
|
|
|
|
- Realised gains in period
|
|
|
|
|
|
|
|
on
FVOCI equity shares
|
|
|
1
|
(1)
|
-
|
|
-
|
- Remeasurement of retirement
|
|
|
|
|
|
|
|
benefit
schemes
|
|
|
(36)
|
|
(36)
|
|
(36)
|
- Changes in fair value of financial liabilities
|
|
|
|
|
|
|
|
designated
at FVTPL due to changes in credit risk
|
|
|
(23)
|
|
(23)
|
|
(23)
|
- Unrealised gains: FVOCI
|
|
|
|
30
|
30
|
|
30
|
- Amounts recognised in equity: cash flow hedges
|
|
|
|
(499)
|
(499)
|
|
(499)
|
- Foreign exchange reserve movement
|
|
|
|
(25)
|
(25)
|
-
|
(25)
|
- Amount transferred from equity to earnings
|
|
|
|
435
|
435
|
|
435
|
- Tax
|
|
|
25
|
9
|
34
|
|
34
|
Paid-in equity dividends
paid
|
|
|
(60)
|
|
(60)
|
|
(60)
|
Shares repurchased during the
period (2)
|
-
|
|
(235)
|
|
(235)
|
|
(235)
|
Share-based
payments
|
71
|
|
21
|
|
92
|
|
92
|
At 31 March 2024
|
12,919
|
3,890
|
11,316
|
9,723
|
37,848
|
40
|
37,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 March
|
|
|
|
|
|
|
|
2024
|
Attributable to:
|
|
|
|
|
£m
|
Ordinary shareholders
|
|
|
|
|
|
|
33,958
|
Paid-in equity holders
|
|
|
|
|
|
|
3,890
|
Non-controlling
interests
|
|
|
|
|
|
|
40
|
|
|
|
|
|
|
|
37,888
|
*Other reserves consist of:
|
|
|
|
|
|
|
Merger reserve
|
|
|
|
|
|
|
10,881
|
FVOCI reserve
|
|
|
|
|
|
|
(23)
|
Cash flow hedging
reserve
|
|
|
|
|
|
|
(1,944)
|
Foreign exchange
reserve
|
|
|
|
|
|
|
809
|
|
|
|
|
|
|
|
9,723
|
(1)
|
Share capital and statutory
reserves includes share capital, share premium, capital redemption
reserve and own shares held.
|
(2)
|
NatWest Group plc repurchased and
cancelled 100.19 million shares for a total consideration of
£225.53 million excluding fees in Q1 2024 as part of the On Market
Share Buyback Programme; additionally, 2.25 million shares
repurchased in December 2023 for a total consideration of £4.93
million excluding fees were settled and cancelled in January 2024.
Of the 100.19 million shares bought back, 0.64 million shares were
settled and cancelled in April 2024. The nominal value of the share
cancellations has been transferred to the capital redemption
reserve.
|
Notes
1. Presentation of condensed consolidated financial
statements
The condensed consolidated
financial statements should be read in conjunction with NatWest
Group plc's 2023 Annual Report and Accounts. The accounting
policies are the same as those applied in the consolidated
financial statements.
The directors have prepared the
condensed consolidated financial statements on a going concern
basis after assessing the principal risks, forecasts, projections
and other relevant evidence over the twelve months from the date
they are approved.
Amendments to IFRS effective from
1 January 2024 had no material effect on the condensed consolidated
financial statements.
2. Litigation and regulatory matters
NatWest Group plc's 2023 Annual
Report and Accounts, issued on 16 February
2024, included disclosures about NatWest Group's litigation and
regulatory matters in Note 26. Set out below are the material
developments in those matters (all of which have been previously
disclosed) since publication of the 2023 Annual Report and
Accounts.
Litigation
London Interbank Offered Rate (LIBOR) and other rates
litigation
NWM Plc and certain other members
of NatWest Group, including NatWest Group plc, are defendants in a
number of claims pending in the United States District Court for
the Southern District of New York (SDNY) with respect to the
setting of USD LIBOR. In March 2024, NatWest Group companies
reached an agreement in principle, subject to documentation and
court approval, to settle the USD LIBOR class action that asserts
claims on behalf of lenders who made LIBOR based loans. In April
2024, NatWest Group companies reached an agreement, subject to
court approval, to settle the USD LIBOR class action that asserts
claims on behalf of persons who transacted futures and options on
exchanges. The settlement amounts are covered in full by existing
provisions.
FX litigation
NWM Plc, NWMSI and/or NatWest
Group plc are defendants in several cases relating to NWM Plc's
foreign exchange (FX) business. In February 2024, NWM Plc executed
an agreement to settle the claim in the Tel Aviv District Court in
Israel, subject to court approval. The settlement amount is covered
in full by an existing provision.
Government securities antitrust litigation
Class action antitrust claims
commenced in March 2019 are pending in the SDNY against NWM Plc,
NWMSI and other banks in respect of Euro-denominated bonds issued
by various European central banks. In March 2024, NatWest Group
companies reached an agreement in principle, subject to final
documentation and court approval, to settle the class action. The
settlement amount is covered in full by an existing
provision.
Swaps antitrust litigation
NWM Plc and other members of
NatWest Group, including NatWest Group plc, as well as a number of
other interest rate swap dealers, are defendants in several cases
pending in the SDNY alleging violations of the US antitrust laws in
the market for interest rate swaps. There is a consolidated class
action complaint on behalf of persons who entered into interest
rate swaps with the defendants, as well as non-class action claims
by three swap execution facilities. In March 2024, NatWest Group
companies reached an agreement in principle, subject to
documentation and court approval, to settle the class action. The
settlement amount is covered in full by an existing
provision.
1MDB litigation
A Malaysian court claim was served
in Switzerland in November 2022 by 1MDB, a sovereign wealth fund,
in which Coutts & Co Ltd was named, along with six others, as a
defendant in respect of losses allegedly incurred by 1MDB. It is
claimed that Coutts & Co Ltd is liable as a constructive
trustee for having dishonestly assisted the directors of 1MDB in
the breach of their fiduciary duties by failing (amongst other
alleged claims) to undertake due diligence in relation to a
customer of Coutts & Co Ltd, through which funds totalling
c.US$1 billion were received and paid out between 2009 and 2011.
The claimant seeks the return of that amount plus interest. Coutts
& Co Ltd filed an application in January 2023 challenging the
validity of service and the Malaysian court's jurisdiction to hear
the claim, and a hearing took place in February 2024. In March
2024, the court granted that application. The claimant has filed a
Notice of Appeal.
Coutts & Co Ltd (a subsidiary
of RBS Netherlands Holdings B.V., which in turn is a subsidiary of
NWM Plc) is a company registered in Switzerland and is in wind-down
following the announced sale of its business assets in
2015.
Notes continued
3. Related party transactions
The UK Government's shareholding
in NatWest Group plc is managed by UK Government Investments
Limited, a company wholly owned by the UK Government. At 31 March
2024 HM Treasury's holding in NatWest Group plc's ordinary shares
was 29.82% (31 December 2023 - 37.97%). As a result, the UK
Government through HM Treasury is no longer the controlling
shareholder of NatWest Group plc as per UK listing rules. The UK
Government and UK Government-controlled bodies remain related
parties of the NatWest Group. We are supporting the UK Government
plans for a possible retail offer of its shareholding.
4. Post balance sheet events
As part of the ongoing on-market
share buyback programme, NatWest Group plc has repurchased and
cancelled a further 15.5 million shares since 31 March 2024 for a
total consideration (excluding fees) of £42.4 million.
Other than as disclosed there have
been no significant events between 31 March 2024 and the date of
approval of these accounts that would require a change to or
additional disclosure in the condensed consolidated financial
statements.
Additional information
Presentation of information
'Parent company' refers to NatWest
Group plc, and 'NatWest Group', 'Group' or 'we' refers to NatWest
Group plc and its subsidiaries. The term 'NWH Group' refers to
NatWest Holdings Limited ('NWH Limited') and its subsidiary and
associated undertakings. The term 'NWM Group' refers to NatWest
Markets Plc ('NWM Plc') and its subsidiary and associated
undertakings. The term 'NWM N.V.' refers to NatWest Markets N.V.
The term 'NWM N.V. Group' refers to NatWest Markets N.V. and its
subsidiary and associated undertakings The term 'NWMSI' refers to
NatWest Markets Securities, Inc. The term 'RBS plc' refers to The
Royal Bank of Scotland plc. The term 'NWB Plc' refers to National
Westminster Bank Plc. The term 'UBIDAC' refers to Ulster Bank
Ireland DAC. The term 'RBSI Ltd' refers to The Royal Bank of
Scotland International Limited.
NatWest Group publishes its
financial statements in pounds sterling ('£' or 'sterling'). The
abbreviations '£m' and '£bn' represent millions and thousands of
millions of pounds sterling ('GBP'), respectively, and references
to 'pence' represent pence where amounts are denominated in pounds
sterling. Reference to 'dollars' or '$' are to United States of
America ('US') dollars. The abbreviations '$m' and '$bn' represent
millions and thousands of millions of dollars, respectively. The
abbreviation '€' represents the 'euro', and the abbreviations '€m'
and '€bn' represent millions and thousands of millions of euros,
respectively.
Statutory results
Financial information contained in
this document does not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006 ('the Act'). The
statutory accounts for the year ended 31 December 2023 will be
filed with the Registrar of Companies. The report of the auditor on
those statutory accounts was unqualified, did not draw attention to
any matters by way of emphasis and did not contain a statement
under section 498(2) or (3) of the Act.
Contacts
Analyst
enquiries:
|
Claire Kane, Investor
Relations
|
+44 (0) 20 7672 1758
|
Media
enquiries:
|
NatWest Group Press
Office
|
+44 (0) 131 523 4205
|
Management presentation
|
Date: 26 April 2024
Time: 9:00AM UK time
|
Zoom ID: 967 0606
8948
|
Available at
https://investors.natwestgroup.com/results-centre
-
Q1 2024 Interim Management Statement and
presentation slides.
-
A financial supplement containing income
statement, balance sheet and segment performance for the five
quarters ended 31 March
2024.
-
NatWest Group Pillar 3 supplement at 31 March
2024.
Forward-looking
statements
This document may include
forward-looking statements within the meaning of the United States
Private Securities Litigation Reform Act of 1995, such as
statements that include, without limitation, the words 'expect',
'estimate', 'project', 'anticipate', 'commit', 'believe', 'should',
'intend', 'will', 'plan', 'could', 'probability', 'risk',
'Value-at-Risk (VaR)', 'target', 'goal', 'objective', 'may',
'endeavour', 'outlook', 'optimistic', 'prospects' and similar
expressions or variations on these expressions. These statements
concern or may affect future matters, such as NatWest Group's
future economic results, business plans and
strategies. In particular, this document may include forward-looking
statements relating to NatWest Group plc in respect of, but not
limited to: its economic and political risks, its financial
position, profitability and financial performance (including
financial, capital, cost savings and operational targets), the
implementation of its strategy, its climate and
sustainability-related targets, increasing competition from
incumbents, challengers and new entrants and disruptive
technologies, its access to adequate sources of liquidity and
funding, its regulatory capital position and related requirements,
its exposure to third party risks, its ongoing compliance with the
UK ring-fencing regime and ensuring operational continuity in
resolution, its impairment losses and credit exposures under
certain specified scenarios, substantial regulation and oversight,
ongoing legal, regulatory and governmental actions and
investigations, and NatWest Group's exposure to operational risk,
conduct risk, cyber, data and IT risk, financial crime risk, key
person risk and credit rating risk. Forward-looking statements are
subject to a number of risks and uncertainties that might cause
actual results and performance to differ materially from any
expected future results or performance expressed or implied by the
forward-looking statements. Factors that could cause or contribute
to differences in current expectations include, but are not limited
to, future growth initiatives (including acquisitions, joint
ventures and strategic partnerships), the outcome of legal,
regulatory and governmental actions and investigations, the level
and extent of future impairments and write-downs, legislative,
political, fiscal and regulatory developments, accounting
standards, competitive conditions, technological developments,
interest and exchange rate fluctuations, general economic and
political conditions and the impact of climate-related risks and
the transitioning to a net zero economy. These and other factors,
risks and uncertainties that may impact any forward-looking
statement or NatWest Group plc's actual results are discussed in
NatWest Group plc's 2023 Annual Report on Form 20-F, NatWest Group
plc's Interim Management Statement for Q1 2024 on Form 6-K,
and its other public filings. The forward-looking
statements contained in this document speak only as of the date of
this document and NatWest Group plc does not assume or undertake
any obligation or responsibility to update any of the
forward-looking statements contained in this document, whether as a
result of new information, future events or otherwise, except to
the extent legally required.
Appendix
Non-IFRS
financial measures
Non-IFRS financial
measures
NatWest Group prepares its
financial statements in accordance with UK-adopted International
Accounting Standards (IAS) and International Financial Reporting
Standards (IFRS). This document contains a number of non-IFRS
measures, also known as alternative performance measures, defined
under the European Securities and Markets Authority guidance or
non-GAAP financial measures in accordance with SEC regulations.
These measures are adjusted for notable and other defined items
which management believes are not representative of the underlying
performance of the business and which distort period-on-period
comparison.
The non-IFRS measures provide
users of the financial statements with a consistent basis for
comparing business performance between financial periods and
information on elements of performance that are one-off in nature.
The non-IFRS measures also include a calculation of metrics that
are used throughout the banking industry.
These non-IFRS measures are not a
substitute for IFRS measures and should not be considered in
isolation. A reconciliation to the closest IFRS measure is
presented where appropriate.
1. Total income excluding notable
items
Total income excluding notable
items is calculated as total income less notable items.
The exclusion of notable items
aims to remove the impact of one-offs and other volatile items
which may distort period-on-period comparisons.
|
Quarter
ended
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
Total income
|
3,475
|
3,537
|
3,876
|
Less notable items
|
|
|
|
Commercial &
Institutional
|
|
|
|
Own credit adjustments (OCA)
|
(5)
|
(5)
|
6
|
Tax interest on prior periods
|
-
|
3
|
-
|
Central items &
other
|
|
|
|
Liquidity Asset Bond sale losses
|
-
|
(10)
|
(13)
|
Share of associate profits/(losses) for Business Growth
Fund
|
7
|
1
|
(12)
|
Interest and FX risk management derivatives
not in
accounting hedge
|
|
|
|
relationships
|
59
|
(21)
|
75
|
FX recycling gains
|
-
|
162
|
-
|
Tax interest on prior periods
|
-
|
(35)
|
-
|
|
61
|
95
|
56
|
Total income excluding notable items
|
3,414
|
3,442
|
3,820
|
Non-IFRS financial measures
continued
2. Operating expenses - management
view
The management analysis of
operating expenses shows litigation and conduct costs on a separate
line. These amounts are included within staff costs and other
administrative expenses in the statutory analysis. Other operating
expenses excludes litigation and conduct costs, which are more
volatile and may distort period-on-period comparisons.
|
Quarter
ended
|
|
31 March
2024
|
|
Litigation
and
|
Other
|
Statutory
|
|
conduct
|
operating
|
operating
|
|
costs
|
expenses
|
expenses
|
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
Staff costs
|
15
|
1,047
|
1,062
|
Premises and equipment
|
-
|
293
|
293
|
Other administrative
expenses
|
9
|
415
|
424
|
Depreciation and
amortisation
|
-
|
273
|
273
|
Total
|
24
|
2,028
|
2,052
|
|
|
|
|
|
Quarter
ended
|
|
31
December 2023
|
|
Litigation and
|
Other
|
Statutory
|
|
conduct
|
operating
|
operating
|
|
costs
|
expenses
|
expenses
|
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
Staff costs
|
16
|
961
|
977
|
Premises and equipment
|
-
|
308
|
308
|
Other administrative
expenses
|
97
|
521
|
618
|
Depreciation and
amortisation
|
-
|
251
|
251
|
Total
|
113
|
2,041
|
2,154
|
|
|
|
|
|
Quarter
ended
|
|
31
March 2023
|
|
Litigation and
|
Other
|
Statutory
|
|
conduct
|
operating
|
operating
|
|
costs
|
expenses
|
expenses
|
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
Staff costs
|
14
|
1,026
|
1,040
|
Premises and equipment
|
-
|
286
|
286
|
Other administrative
expenses
|
42
|
408
|
450
|
Depreciation and
amortisation
|
-
|
212
|
212
|
Total
|
56
|
1,932
|
1,988
|
Non-IFRS financial measures
continued
3. Cost:income ratio (excl.
litigation and conduct)
The cost:income ratio (excl.
litigation and conduct) is calculated as other operating expenses
(operating expenses less litigation and conduct costs) divided by
total income.
Litigation and conduct costs are
excluded as they are one-off in nature, difficult to forecast for
Outlook purposes and distort period-on-period comparisons. The
calculation of the cost:income ratio (excl. litigation and conduct)
is shown below, along with a comparison to cost:income ratio
calculated using operating expenses.
|
|
|
|
|
Total
|
|
Retail
|
Private
|
Commercial
&
|
Central
items
|
NatWest
|
|
Banking
|
Banking
|
Institutional
|
&
other
|
Group
|
Quarter ended 31 March 2024
|
£m
|
£m
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
Operating expenses
|
773
|
181
|
1,051
|
47
|
2,052
|
Less litigation and conduct
costs
|
(6)
|
(1)
|
(31)
|
14
|
(24)
|
Other operating
expenses
|
767
|
180
|
1,020
|
61
|
2,028
|
|
|
|
|
|
|
Total income
|
1,325
|
208
|
1,859
|
83
|
3,475
|
|
|
|
|
|
|
Cost:income ratio
|
58.3%
|
87.0%
|
56.5%
|
nm
|
59.1%
|
Cost:income ratio (excl. litigation and
conduct)
|
57.9%
|
86.5%
|
54.9%
|
nm
|
58.4%
|
|
|
|
|
|
|
Quarter ended 31 December
2023
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
Operating expenses
|
681
|
206
|
1,092
|
175
|
2,154
|
Less litigation and conduct
costs
|
(34)
|
2
|
(78)
|
(3)
|
(113)
|
Other operating
expenses
|
647
|
208
|
1,014
|
172
|
2,041
|
|
|
|
|
|
|
Total income
|
1,369
|
209
|
1,832
|
127
|
3,537
|
|
|
|
|
|
|
Cost:income ratio
|
49.7%
|
98.6%
|
59.6%
|
nm
|
60.9%
|
Cost:income ratio (excl. litigation and
conduct)
|
47.3%
|
99.5%
|
55.3%
|
nm
|
57.7%
|
|
|
|
|
|
|
Quarter ended 31 March
2023
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
Operating expenses
|
696
|
155
|
1,003
|
134
|
1,988
|
Less litigation and conduct
costs
|
(3)
|
(3)
|
(44)
|
(6)
|
(56)
|
Other operating
expenses
|
693
|
152
|
959
|
128
|
1,932
|
|
|
|
|
|
|
Total income
|
1,604
|
296
|
1,953
|
23
|
3,876
|
|
|
|
|
|
|
Cost:income ratio
|
43.4%
|
52.4%
|
51.4%
|
nm
|
51.3%
|
Cost:income ratio (excl. litigation and
conduct)
|
43.2%
|
51.4%
|
49.1%
|
nm
|
49.8%
|
4. NatWest Group return on tangible
equity
Return on tangible equity
comprises annualised profit or loss for the period attributable to
ordinary shareholders divided by average tangible equity. Average
tangible equity is average total equity excluding average
non-controlling interests, average other owners equity and average
intangible assets.
This measure shows the return
NatWest Group generates on tangible equity deployed. It is used to
determine relative performance of banks and used widely across the
sector, although different banks may calculate the rate
differently. A reconciliation is shown below including a comparison
to the nearest GAAP measure: return on equity. This comprises
profit attributable to ordinary shareholders divided by average
total equity.
|
Quarter ended or as
at
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
NatWest Group return on tangible
equity
|
£m
|
£m
|
£m
|
Profit attributable to ordinary
shareholders
|
918
|
1,229
|
1,279
|
Annualised profit attributable to
ordinary shareholders
|
3,672
|
4,916
|
5,116
|
|
|
|
|
Average total
equity
|
37,490
|
36,134
|
37,195
|
Adjustment for average other
owners' equity and intangible assets
|
(11,684)
|
(11,686)
|
(11,319)
|
Adjusted total tangible
equity
|
25,806
|
24,448
|
25,876
|
|
|
|
|
Return on equity
|
9.8%
|
13.6%
|
13.8%
|
Return on tangible equity
|
14.2%
|
20.1%
|
19.8%
|
Non-IFRS financial measures
continued
5. Segmental return on
equity
Segmental return on equity
comprises segmental operating profit or loss, adjusted for paid-in
equity and tax, divided by average notional equity. Average RWAe is
defined as average segmental RWAs incorporating the effect of
capital deductions. This is multiplied by an allocated equity
factor for each segment to calculate the average notional
equity.
This measure shows the return
generated by operating segments on equity deployed.
|
Quarter ended or as
at
|
|
Retail
|
Private
|
Commercial
&
|
Quarter ended 31 March 2024
|
Banking
|
Banking
|
Institutional
|
Operating profit (£m)
|
489
|
33
|
769
|
Paid-in equity cost allocation
(£m)
|
(16)
|
(4)
|
(40)
|
Adjustment for tax (£m)
|
(132)
|
(8)
|
(182)
|
Adjusted attributable profit
(£m)
|
341
|
21
|
547
|
Annualised adjusted attributable
profit (£m)
|
1,362
|
84
|
2,187
|
Average RWAe (£bn)
|
61.7
|
11.2
|
109.0
|
Equity factor
|
13.4%
|
11.2%
|
13.8%
|
Average notional equity
(£bn)
|
8.3
|
1.3
|
15.0
|
Return on equity
|
16.5%
|
6.7%
|
14.6%
|
|
|
|
|
Quarter ended 31 December
2023
|
|
|
|
Operating profit (£m)
|
585
|
(2)
|
725
|
Paid-in equity cost allocation
(£m)
|
(12)
|
(6)
|
(40)
|
Adjustment for tax (£m)
|
(160)
|
2
|
(171)
|
Adjusted attributable profit
(£m)
|
413
|
(6)
|
514
|
Annualised adjusted attributable
profit (£m)
|
1,650
|
(23)
|
2,055
|
Average RWAe (£bn)
|
60.5
|
11.4
|
109.0
|
Equity factor
|
13.5%
|
11.5%
|
14.0%
|
Average notional equity
(£bn)
|
8.2
|
1.3
|
15.3
|
Return on equity
|
20.2%
|
(1.8%)
|
13.5%
|
|
|
|
|
Quarter ended 31 March
2023
|
|
|
|
Operating profit (£m)
|
794
|
133
|
994
|
Paid-in equity cost allocation
(£m)
|
(15)
|
(5)
|
(44)
|
Adjustment for tax (£m)
|
(218)
|
(36)
|
(238)
|
Adjusted attributable profit
(£m)
|
561
|
92
|
713
|
Annualised adjusted attributable
profit (£m)
|
2,244
|
369
|
2,850
|
Average RWAe (£bn)
|
55.4
|
11.2
|
104.0
|
Equity factor
|
13.5%
|
11.5%
|
14.0%
|
Average notional equity
(£bn)
|
7.5
|
1.3
|
14.6
|
Return on equity
|
30.0%
|
28.5%
|
19.5%
|
6. Net interest margin and average
interest earning assets (IEA)
Net interest margin is net
interest income, as a percentage of average IEA.
NatWest Group has previously
reported Bank net interest margin, calculated as net interest
income as a percentage of average IEA, excluding the liquid asset
buffer. Liquid asset buffer consists of assets held by NatWest
Group, such as cash and balances at central banks and debt
securities in issue, that can be used to ensure repayment of
financial obligations as they fall due.
Bank net interest margin is a less
relevant measure now that interest rates have increased. Going
forward we will report net interest margin as net interest income
as a percentage of average IEA, which we see as a more useful
measure of how we manage spreads between our interest earning
assets, including the liquid asset buffer, and interest bearing
liabilities.
Average IEA are average IEA of the
banking business of NatWest Group. This primarily consists of cash
and balances at central banks, loans to banks, loans to customers
and other financial assets mostly comprising of debt
securities. Average IEA shows the average asset base generating interest
over the period and is used in the calculation of net interest
margin.
Non-IFRS financial measures
continued
7. Tangible net asset value (TNAV)
per ordinary share
TNAV per ordinary share is
calculated as tangible equity divided by the number of ordinary
shares in issue.
This is a measure used by external
analysts in valuing the bank and allows for comparison with other
per ordinary share metrics including the share
price. A
reconciliation is shown below including a comparison to the nearest
GAAP measure: net asset value (NAV) per ordinary share. This
comprises ordinary shareholders' interests divided by the number of
ordinary shares in issue.
|
Quarter ended or as
at
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
Ordinary shareholders' interests
(£m)
|
33,958
|
33,267
|
33,817
|
Less intangible assets
(£m)
|
(7,598)
|
(7,614)
|
(7,171)
|
Tangible equity (£m)
|
26,360
|
25,653
|
26,646
|
|
|
|
|
Ordinary shares in issue
(millions) (1)
|
8,727
|
8,792
|
9,581
|
|
|
|
|
NAV per ordinary share (pence)
|
389p
|
378p
|
353p
|
TNAV per
ordinary share (pence)
|
302p
|
292p
|
278p
|
(1)
|
The number of ordinary shares in
issue excludes own shares held.
|
8. Customer deposits excluding
central items
Customer deposits excluding
central items is calculated as total NatWest Group customer
deposits excluding Central items & other customer
deposits.
Central items & other includes
Treasury repo activity and Ulster Bank RoI. The exclusion of
Central items & other removes the volatility relating to
Treasury repo activity and the reduction of deposits as part of our
withdrawal from the Republic of Ireland. These items may distort
period-on-period comparisons and their removal gives the user of
the financial statements a better understanding of the movements in
customer deposits.
|
As at
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
|
£bn
|
£bn
|
£bn
|
Customer deposits
|
432.8
|
431.4
|
430.5
|
Less Central items &
other
|
(12.8)
|
(12.3)
|
(8.7)
|
Customer deposits excluding central items
|
420.0
|
419.1
|
421.8
|
Non-IFRS financial measures
continued
9. Net loans to customers excluding
central items
Net loans to customers excluding
central items is calculated as total NatWest Group net loans to
customers excluding Central items & other net loans to
customers.
Central items & other includes
Treasury reverse repo activity and Ulster Bank RoI. The exclusion
of Central items & other removes the volatility relating to
Treasury reverse repo activity and the reduction of loans to
customers as part of our withdrawal from the Republic of Ireland.
This allows for better period-on-period comparisons and gives the
user of the financial statements a better understanding of the
movements in net loans to customers.
|
As at
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
|
£bn
|
£bn
|
£bn
|
Net loans to customers (amortised
cost)
|
378.0
|
381.4
|
374.2
|
Less Central items &
other
|
(21.0)
|
(25.8)
|
(21.8)
|
Net loans to customers excluding central
items
|
357.0
|
355.6
|
352.4
|
10. Loan:deposit ratio (excl. repos
and reverse repos)
Loan:deposit ratio (excl. repos
and reverse repos) is calculated as net loans to customer held at
amortised cost excluding reverse repos divided by customer deposits
excluding repos. This is a common metric used to assess
liquidity.
The removal of repos and reverse
repos reduces volatility and presents the ratio on a basis that is
comparable to UK peers. A reconciliation is shown below including a
comparison to the nearest GAAP measure: loan:deposit ratio. This is
calculated as net loans to customers held at amortised cost divided
by customer deposits.
|
As at
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
|
£m
|
£m
|
£m
|
Net loans to customers - amortised
cost
|
378,010
|
381,433
|
374,214
|
Less reverse repos
|
(23,120)
|
(27,117)
|
(21,743)
|
Loans to customers - amortised cost (excl.
reverse repos)
|
354,890
|
354,316
|
352,471
|
|
|
|
|
Customer
deposits
|
432,793
|
431,377
|
430,537
|
Less repos
|
(11,437)
|
(10,844)
|
(5,989)
|
Customer deposits (excl. repos)
|
421,356
|
420,533
|
424,548
|
|
|
|
|
Loan:deposit
ratio
|
87%
|
88%
|
87%
|
Loan:deposit ratio (excl. repos
and reverse repos)
|
84%
|
84%
|
83%
|
11. Loan impairment
rate
Loan impairment rate is the
annualised loan impairment charge divided by gross customer loans.
This measure is used to assess the credit quality of the loan
book.
|
Quarter ended or as
at
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
Loan impairment charge/(release)
(£m)
|
93
|
126
|
70
|
Annualised loan impairment
charge/(release) (£m)
|
372
|
504
|
280
|
|
|
|
|
Gross customer loans
(£bn)
|
381.6
|
385.0
|
377.6
|
|
|
|
|
Loan impairment rate
|
10bps
|
13bps
|
7bps
|
Non-IFRS financial measures
continued
12. Funded assets
Funded assets is calculated as
total assets less derivative assets. This measure allows review of
balance sheet trends exclusive of the volatility associated with
derivative fair values.
|
As at
|
|
31 March
|
31
December
|
31
March
|
|
2024
|
2023
|
2023
|
|
£m
|
£m
|
£m
|
Total assets
|
697,452
|
692,673
|
695,624
|
Less derivative assets
|
(68,133)
|
(78,904)
|
(79,420)
|
Funded assets
|
629,319
|
613,769
|
616,204
|
13. AUMA
AUMA comprises both assets under
management (AUMs) and assets under administration (AUAs) serviced
through the Private Banking segment. AUMs comprise assets where the
investment management is undertaken by Private Banking on behalf of
Private Banking, Retail Banking and Commercial & Institutional
customers. AUAs comprise i) third party assets held on an
execution-only basis in custody by Private Banking, Retail Banking
and Commercial & Institutional for their customers, for which
the execution services are supported by Private Banking, and for
which Private Banking receives a fee for providing investment
management and execution services to Retail Banking and Commercial
& Institutional business segments ii) AUA of Cushon, acquired
on 1 June 2023, which are supported by Private Banking and held and
managed by third parties.
This measure is tracked and
reported as the amount of funds that we manage or administer
directly impacts the level of investment income that we
receive.
14. AUM net flows
AUM net flows refers to client
cash inflows and outflows relating to investment products (this can
include transfers from savings accounts). AUM net flows excludes
the impact of European Economic Area (EEA) resident client outflows
following the UK's exit from the EU and Russian client outflows
since Q1 2022.
AUM net flows is reported and
tracked to monitor the business performance of new business inflows
and management of existing client withdrawals across Retail
Banking, Private Banking and Commercial & Institutional
Banking.
15. Wholesale funding
Wholesale funding comprises
deposits by banks (excluding repos), debt securities in issue and
subordinated liabilities.
Funding risk is the risk of not
maintaining a diversified, stable and cost-effective funding base.
The disclosure of wholesale funding highlights the extent of our
diversification and how we mitigate funding risk.
16. Third party rates
Third party customer asset rate is
calculated as interest receivable on third-party loans to customers
as a percentage of third-party loans to customers. This excludes
assets of disposal groups, intragroup items, loans to banks and
liquid asset portfolios. Third party customer funding rate reflects
interest payable or receivable on third-party customer deposits,
including interest bearing and non-interest bearing customer
deposits. Intragroup items, bank deposits, debt securities in issue
and subordinated liabilities are excluded for customer funding rate
calculation.
These metrics help investors
better understand our net interest margin and interest rate
sensitivity.
17. Climate and sustainable funding
and financing
The climate and sustainable
funding and financing metric is used by NatWest Group to measure
the level of support it provides customers, through lending
products and underwriting activities, to help in their transition
towards a net zero, climate resilient and sustainable economy. We
have a target to provide £100 billion of climate and sustainable
funding and financing between the 1 of July 2021 and the end of
2025. As part of this, we aim to provide at least £10 billion in
lending for residential properties with EPC ratings A and B between
1 January 2023 and the end of 2025.
Legal Entity Identifier:
2138005O9XJIJN4JPN90