Inside this report
| Business performance summary
| ||
| 2 | Q3 2024 performance summary | |
| 4 | Performance key metrics and ratios | |
| 6 | Chief Financial Officer's review | |
| 7 | Retail Banking | |
| 8 | Private Banking | |
| 9 | Commercial & Institutional | |
| 10 | Central items & other | |
| 11 | Segment performance | |
|
|
| |
| Risk and capital management | ||
| 16 | Credit risk | |
| 16 | Segment analysis - portfolio summary | |
| 17 | Segment analysis - loans | |
| 17 | Movement in ECL provision | |
| 18 | ECL post model adjustments | |
| 19 | Sector analysis - portfolio summary | |
| 24 | Capital, liquidity and funding risk | |
| 30 | Pension risk | |
|
| | |
| Financial statements and notes | ||
| 31 | Condensed consolidated income statement | |
| 32 | Condensed consolidated statement of comprehensive income | |
| 33 | Condensed consolidated balance sheet | |
| 34 | Condensed consolidated statement of changes in equity | |
| 36 | Presentation of condensed consolidated financial statements | |
| 36 | Litigation and regulatory matters | |
| 36 | Post balance sheet events | |
| Additional information | |
| 37 | Presentation of information |
| 37 | Statutory accounts |
| 37 | Contacts |
| 37 | Forward-looking statements |
|
| |
| Appendix | |
| 38 | Non-IFRS financial measures |
| 43 | Performance measures not defined under IFRS
|
Q3 2024 performance summary
Chief Executive, Paul Thwaite, commented:
"The strength of NatWest Group's performance is underpinned by the support we provide to our 19 million customers in every nation and region of the UK. By continuing to deliver against our strategy, we are growing and simplifying our bank whilst managing our capital more efficiently.
As the UK's biggest bank for business, and one that serves millions of households, NatWest Group plays a key role in driving economic growth across the UK. Throughout the third quarter of 2024, we have grown our lending, helping customers to buy or remortgage their homes or to start and grow their businesses. With customer activity increasing, defaults remaining low and optimism amongst businesses and consumers, we are well placed to succeed with our customers and for our shareholders in the months and years ahead."
Q3 2024 performance
- Attributable profit of £1,172 million and a return on tangible equity (RoTE) of 18.3%.
- Total income excluding notable items(1) of £3,772 million was £182 million, or 5.1%, higher than Q2 2024 primarily reflecting lending and deposit growth and margin expansion. Net interest margin (NIM) of 2.18% was 8 basis points higher.
- Other operating expenses were £144 million lower than Q2 2024.
- Net impairment charge of £245 million or 25 basis points of gross customer loans. Levels of default remain at low levels across the portfolio.
- Net loans to customers excluding central items increased by £8.4 billion in the quarter, of which £2.3 billion was in relation to the Metro Bank mortgage portfolio acquisition, with strong growth across the three businesses, including a £1.4 billion increase in mortgage balances.
- Customer deposits excluding central items increased by £2.2 billion with growth across all three businesses driven by savings.
- The liquidity coverage ratio (LCR) of 148%, representing £52.7 billion headroom above 100% minimum requirement, decreased by 3 percentage points compared with Q2 2024.
- TNAV per share showed good growth in the quarter as the profit drove a 12 pence increase to 316 pence.
- Common Equity Tier 1 (CET1) ratio of 13.9% was 30 basis points higher than Q2 2024. Capital generation pre distributions was 57 basis points in the quarter and 197 basis points for the year to date. RWAs of £181.7 billion increased by £0.9 billion.
Q3 year to date performance
- Attributable profit of £3,271 million and a RoTE of 17.0%.
- Total income excluding notable items(1) of £10,776 million was £121 million, or 1.1%, lower than prior year. NIM was 2.11% for the year to date.
- Other operating expenses were £140 million higher than the same period of 2023, or £38 million (0.7%) higher excluding costs in relation to a retail share offering(2) of £24 million and additional bank levies of £78 million.
- Net impairment charge of £293 million or 10 basis points of gross customer loans and levels of default remain stable for the year to date.
- Net loans to customers excluding central items increased by £8.1 billion reflecting £6.2 billion of growth in Commercial & Institutional and £2.3 billion in respect of the Metro Bank mortgage portfolio acquisition.
- Customer deposits excluding central items increased by £8.3 billion, including £4.0 billion of growth in Retail Banking, £2.0 billion in Private Banking and £2.3 billion in Commercial & Institutional.
(1) Refer to the Non-IFRS financial measures appendix for details of notable items.
(2) Costs incurred preparing for a retail share offering proposed by the previous UK Government, now not expected to proceed.
Q3 2024 performance summary continued
Outlook(1)
We continue to assess the economic outlook and will monitor and react to market conditions and refine our internal forecasts as the economic position evolves. The following statements are based on our current expectations for interest rates and economic activity.
In 2024 we now expect:
- to achieve a return on tangible equity above 15%.
- income excluding notable items to be around £14.4 billion.
- Group operating costs, excluding litigation and conduct costs, to be broadly stable compared with 2023 excluding around £0.1 billion increase in bank levies and £24 million of costs in relation to a retail share offering.
- our loan impairment rate for 2024 to be below 15 basis points.
In 2026 we continue to expect:
- to achieve a return on tangible equity for the Group of greater than 13%.
Capital - we continue to:
- target a CET1 ratio in the range of 13-14%.
- expect RWAs to be around £200 billion at the end of 2025, including the impact of Basel 3.1 on a pro-forma basis. We expect the impact of Basel 3.1 to be an uplift of around £8 billion on 1 January 2026.
- expect to pay ordinary dividends of around 40% of attributable profit and maintain capacity to participate in directed buybacks from the UK Government, recognising that any exercise of this authority would be dependent upon HMT's intentions. We will also consider further on-market buybacks as appropriate.
(1) The guidance, targets, expectations, and trends discussed in this section represent NatWest Group plc management's current expectations and are subject to change, including as a result of the factors described in the NatWest Group plc Risk Factors section in the 2023 Annual Report and Accounts and Form 20-F and the Summary Risk Factors in the NatWest Group plc Interim Results announcement. These statements constitute forward-looking statements. Refer to Forward-looking statements in this announcement.
Business performance summary
| | Nine months ended |
| Quarter ended | ||||||
| | 30 September | 30 September | | | 30 September | 30 June | | 30 September | |
| | 2024 | 2023 | Variance | | 2024 | 2024 | Variance | 2023 | Variance |
| Summary consolidated income statement | £m | £m | % | | £m | £m | % | £m | % |
| Net interest income | 8,307 | 8,411 | (1.2%) | | 2,899 | 2,757 | 5.2% | 2,685 | 8.0% |
| Non-interest income | 2,571 | 2,804 | (8.3%) | | 845 | 902 | (6.3%) | 803 | 5.2% |
| Total income | 10,878 | 11,215 | (3.0%) | | 3,744 | 3,659 | 2.3% | 3,488 | 7.3% |
| Litigation and conduct costs | (142) | (242) | (41.3%) | | (41) | (77) | (46.8%) | (134) | (69.4%) |
| Other operating expenses | (5,740) | (5,600) | 2.5% | | (1,784) | (1,928) | (7.5%) | (1,793) | (0.5%) |
| Operating expenses | (5,882) | (5,842) | 0.7% | | (1,825) | (2,005) | (9.0%) | (1,927) | (5.3%) |
| Profit before impairment losses/releases | 4,996 | 5,373 | (7.0%) | | 1,919 | 1,654 | 16.0% | 1,561 | 22.9% |
| Impairment (losses)/releases | (293) | (452) | (35.2%) | | (245) | 45 | nm | (229) | 7.0% |
| Operating profit before tax | 4,703 | 4,921 | (4.4%) | | 1,674 | 1,699 | (1.5%) | 1,332 | 25.7% |
| Tax charge | (1,232) | (1,439) | (14.4%) | | (431) | (462) | (6.7%) | (378) | 14.0% |
| Profit from continuing operations | 3,471 | 3,482 | (0.3%) | | 1,243 | 1,237 | 0.5% | 954 | 30.3% |
| Profit/(loss) from discontinued operations, net of tax | 12 | (138) | (108.7%) | | 1 | 15 | (93.3%) | (30) | (103.3%) |
| Profit for the period | 3,483 | 3,344 | 4.2% | | 1,244 | 1,252 | (0.6%) | 924 | 34.6% |
|
|
| | | |
| | | | |
| Performance key metrics and ratios |
| |
| | |||||
| Notable items within total income (1) | £102m | £318m | nm | | (£28m) | £69m | nm | (£26m) | nm |
| Total income excluding notable items (1) | £10,776m | £10,897m | (1.1%) | | £3,772m | £3,590m | 5.1% | £3,514m | 7.3% |
| Net interest margin (1) | 2.11% | 2.17% | (6bps) | | 2.18% | 2.10% | 8bps | 2.05% | 13bps |
| Average interest earning assets (1) | £526bn | £519bn | 1.3% | | £530bn | £528bn | 0.4% | £521bn | 1.7% |
| Cost:income ratio (excl. litigation and conduct) (1) | 52.8% | 49.9% | 2.9% | | 47.6% | 52.7% | (5.1%) | 51.4% | (3.8%) |
| Loan impairment rate (1) | 10bps | 16bps | (6bps) | | 25bps | (5bps) | 30bps | 24bps | 1bps |
| Profit attributable to ordinary shareholders | £3,271m | £3,165m | 3.3% | | £1,172m | £1,181m | (0.8%) | £866m | 35.3% |
| Total earnings per share attributable to ordinary shareholders - basic | 38.3p | 34.1p | 4.2p | | 14.1p | 13.7p | 0.4p | 9.8p | 4.3p |
| Return on tangible equity (RoTE) (1) | 17.0% | 17.1% | (0.1%) | | 18.3% | 18.5% | (0.2%) | 14.7% | 3.6% |
| Climate and sustainable funding and financing (2) | £23.4bn | £20.6bn | 13.6% | | £7.1bn | £9.7bn | (26.8%) | £4.6bn | 54.3% |
nm = not meaningful.
For the footnotes to this table refer to the following page.
Business performance summary continued
| |
| | | | As at | ||||
| | 30 September | 30 June | | 31 December | | ||||
| | 2024 | 2024 | Variance | 2023 | Variance | ||||
| Balance sheet |
| | | | £bn | £bn | % | £bn | % |
| Total assets |
| | | | 711.9 | 690.3 | 3.1% | 692.7 | 2.8% |
| Loans to customers - amortised cost |
| | | | 386.7 | 379.3 | 2.0% | 381.4 | 1.4% |
| Loans to customers excluding central items (1,3) |
| | | | 363.7 | 355.3 | 2.4% | 355.6 | 2.3% |
| Loans to customers and banks - amortised cost and FVOCI |
| | | | 397.0 | 388.9 | 2.1% | 392.0 | 1.3% |
| Total impairment provisions (4) |
| | | | 3.6 | 3.3 | 9.1% | 3.6 | - |
| Expected credit loss (ECL) coverage ratio |
| | | | 0.89% | 0.86% | 3bps | 0.93% | (4bps) |
| Assets under management and administration (AUMA) (1) |
| | | | 46.5 | 45.1 | 3.1% | 40.8 | 14.0% |
| Customer deposits |
| | | | 431.1 | 433.0 | (0.4%) | 431.4 | (0.1%) |
| Customer deposits excluding central items (1,3) |
| | | | 427.4 | 425.2 | 0.5% | 419.1 | 2.0% |
| Liquidity and funding |
| | | |
| | | | |
| Liquidity coverage ratio (LCR) |
| | | | 148% | 151% | (3.0%) | 144% | 4.0% |
| Liquidity portfolio |
| | | | 226 | 227 | (0.4%) | 223 | 1.3% |
| Net stable funding ratio (NSFR) |
| | | | 137% | 139% | (2.0%) | 133% | 4.0% |
| Loan:deposit ratio (excl. repos and reverse repos) (1) |
| | | | 84% | 83% | 1% | 84% | - |
| Total wholesale funding |
| | | | 89 | 83 | 7.2% | 80 | 11.3% |
| Short-term wholesale funding |
| | | | 31 | 27 | 14.8% | 28 | 10.7% |
| Capital and leverage |
| | | |
| | | | |
| Common Equity Tier 1 (CET1) ratio (5) |
| | | | 13.9% | 13.6% | 30bps | 13.4% | 50bps |
| Total capital ratio (5) |
| | | | 19.7% | 19.5% | 20bps | 18.4% | 130bps |
| Pro forma CET1 ratio (excl. foreseeable items) (6) |
| | | | 14.4% | 14.1% | 30bps | 14.2% | 20bps |
| Risk-weighted assets (RWAs) |
| | | | 181.7 | 180.8 | 0.5% | 183.0 | (0.7%) |
| UK leverage ratio |
| | | | 5.0% | 5.2% | (0.2%) | 5.0% | - |
| Tangible net asset value (TNAV) per ordinary share (1,7) |
| | | | 316p | 304p | 12p | 292p | 24p |
| Number of ordinary shares in issue (millions) (7) |
| | | | 8,293 | 8,307 | (0.2%) | 8,792 | (5.7%) |
(1) Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial measures and performance metrics.
(2) NatWest Group uses its climate and sustainable funding and financing inclusion (CSFFI) criteria to determine the assets, activities and companies that are eligible to be included within its climate and sustainable funding and financing target. This includes both provision of committed (on and off-balance sheet) funding and financing, including provision of services for underwriting issuances and private placements.
(3) Central items includes Treasury repo activity and Ulster Bank Republic of Ireland.
(4) Includes £0.1 billion relating to off-balance sheet exposures (30 June 2024 - £0.1 billion; 31 December 2023 - £0.1 billion).
(5) Refer to the Capital, liquidity and funding risk section for details of the basis of preparation.
(6) The pro forma CET1 ratio at 30 September 2024 excludes foreseeable items of £808 million for ordinary dividends (30 June 2024 excludes foreseeable items of £889 million: £839 million for ordinary dividends and £50 million foreseeable charges; 31 December 2023 excludes foreseeable items of £1,538 million: £1,013 million for ordinary dividends and £525 million foreseeable charges).
(7) The number of ordinary shares in issue excludes own shares held.
Chief Financial Officer's review
We delivered an operating profit of £1,674 million in Q3 2024 with a RoTE of 18.3%. Total income excluding notable items of £3.8 billion was up by 5.1% on Q2 2024.
Net loans to customers excluding central items growth of £8.4 billion was broad-based across Retail Banking, Commercial & Institutional customers and includes £2.3 billion relating to the acquisition of the Metro Bank mortgage portfolio.
Customer deposits excluding central items increased by £2.2 billion in the quarter and our robust balance sheet means that we remain in a strong liquidity position, with an LCR of 148% representing £52.7 billion headroom above 100% minimum requirement and an LDR (excl. repos and reverse repos) of 84%. Also, our CET1 ratio remains within our targeted range at 13.9%.
Strong Q3 2024 performance
- Total income increased by 2.3% in Q3 2024 to £3,744 million compared with Q2 2024 and was 7.3% higher than Q3 2023. Total income excluding notable items was £182 million higher than Q2 2024, primarily reflecting lending and deposit growth, margin expansion and the benefit of an additional day in the quarter.
- NIM of 2.18% was 8 basis points higher than Q2 2024 primarily driven by expansion across deposits, as well as in funding and other items.
- Total operating expenses reduced by £180 million compared with Q2 2024 and were £102 million lower than Q3 2023. Other operating expenses were £144 million lower than Q2 2024 primarily reflecting lower severance and other staff costs, costs incurred in relation to a retail share offering in the prior quarter and lower costs in relation to our withdrawal from the Republic of Ireland. Other operating expenses for the year to date were £140 million higher than the same period of 2023, or £38 million (0.7%) higher excluding costs in relation to a retail share offering of £24 million and additional bank levies of £78 million. We remain committed to deliver on our full year cost guidance, excluding the impact of increased bank levies and costs in relation to a retail share offering.
- A net impairment charge of £245 million was incurred in Q3 2024, with higher Stage 3 charges within Commercial & Institutional. The year to date charge was £293 million or 10 basis points of gross customer loans. Levels of default remain stable for the year to date and at low levels across the portfolio. Compared with Q2 2024, our ECL provision increased by £0.2 billion to £3.6 billion and our ECL coverage ratio has increased from 0.86% to 0.89%. We retain post model adjustments of £0.3 billion related to economic uncertainty, or 8.4% of total impairment provisions. Whilst we are comfortable with the strong credit performance of our book, we continue to assess this position regularly.
- As a result, we are pleased to report an attributable profit for Q3 2024 of £1,172 million, with earnings per share of 14.1 pence and a RoTE of 18.3%. The RoTE for the year to date was 17.0%.
Robust balance sheet with strong capital and liquidity levels
- Net loans to customers excluding central items increased by £8.4 billion, of which £2.3 billion was in relation to the Metro Bank mortgage portfolio acquisition. The remaining £6.1 billion increase in the quarter was primarily due to growth in Corporate & Institutions, an increase in term loan facilities in Commercial Mid-market and a £1.4 billion increase in Retail Banking mortgage balances. UK Government scheme repayments were £0.5 billion in the quarter.
- Up to 30 September 2024 we have provided £85.4 billion against our target to provide £100 billion climate and sustainable funding and financing between 1 July 2021 and the end of 2025. As part of this we aim to provide at least £10 billion in lending for EPC A- and B-rated residential properties between 1 January 2023 and the end of 2025. During Q3 2024 we provided £7.1 billion climate and sustainable funding and financing, which included £1.0 billion in lending for EPC A- and B-rated residential properties.
- Customer deposits excluding central items increased £2.2 billion in Q3 2024. Retail Banking deposits growth of £0.5 billion and Private Banking of £0.2 billion was as a result of increased savings balances, and Commercial & Institutional deposits increased £1.5 billion reflecting growth within Commercial Mid-market. Term balances remained stable for the third quarter at 17% of the book, up from 16% at the end of 2023.
- The LCR of 148%, representing £52.7 billion headroom above 100% minimum requirement, decreased by 3 percentage points compared with Q2 2024 primarily due to increased lending (including the Metro Bank mortgage portfolio acquisition) partially offset by increased customer deposits and capital issuance. Our primary liquidity at Q3 2024 was £162.3 billion and £101.4 billion, or 62%, of this was cash and balances at central banks. Total wholesale funding increased by £6.0 billion in the quarter to £88.9 billion.
- TNAV per share increased by 12 pence in Q3 2024 to 316 pence primarily reflecting the profit for the period and a c.£0.45 billion movement in cashflow hedging reserves partially offset by the interim dividend payment.
Strong returns driving strong capital generation
- The CET1 ratio of 13.9% was 30 basis points higher than Q2 2024 principally reflecting the attributable profit for the quarter, c.65 basis points, partially offset by the increase in RWAs, c.10 basis points, and the ordinary dividend accrual, c.25 basis points.
- RWAs increased by £0.9 billion in the third quarter to £181.7 billion largely reflecting lending growth and £0.9 billion in relation to the Metro Bank mortgage portfolio acquisition partially offset by RWA management of £1.3 billion.
Business performance summary
Retail Banking
| | Quarter ended | ||
| | 30 September | 30 June | 30 September |
| | 2024 | 2024 | 2023 |
| | £m | £m | £m |
| Total income | 1,459 | 1,365 | 1,442 |
| Operating expenses | (659) | (697) | (780) |
| of which: Other operating expenses | (656) | (690) | (721) |
| Impairment losses | (144) | (59) | (169) |
| Operating profit | 656 | 609 | 493 |
| |
| | |
| Return on equity (1) | 21.4% | 20.3% | 17.5% |
| Net interest margin (1) | 2.43% | 2.31% | 2.37% |
| Cost:income ratio (excl. litigation and conduct) (1) | 45.0% | 50.5% | 50.0% |
| Loan impairment rate (1) | 28bps | 12bps | 33bps |
| |
| | |
| | As at | ||
| | 30 September | 30 June | 31 December |
| | 2024 | 2024 | 2023 |
| | £bn | £bn | £bn |
| Net loans to customers (amortised cost) | 207.4 | 203.3 | 205.2 |
| Customer deposits | 192.0 | 191.5 | 188.0 |
| RWAs | 64.8 | 62.3 | 61.6 |
(1) Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial measures and performance metrics.
In Q3 2024, Retail Banking continued to support customers with increased mortgage lending and unsecured lending growth. In addition, lending increased £2.3 billion as a result of the Metro Bank mortgage portfolio acquisition. We delivered a return on equity of 21.4% and an operating profit of £0.7 billion, with positive income momentum and increased net interest margin from deposit margin expansion.
Retail Banking provided £0.9 billion of climate and sustainable funding and financing in Q3 2024 from lending on properties with an EPC rating of A or B.
Q3 2024 performance
- Total income was £94 million, or 6.9%, higher than Q2 2024 reflecting deposit margin expansion, lending growth and the impact of an additional day in the quarter. Q3 2024 total income was £17 million or 1.2% higher than Q3 2023 due to deposit margin expansion and lending growth, partly offset by asset margin compression and the impact of a deposit balance mix shift from current accounts to savings.
- Net interest margin was 12 basis points higher than Q2 2024 largely reflecting deposit margin expansion and benefits from treasury activity.
- Other operating expenses were £34 million, or 4.9%, lower than Q2 2024 reflecting savings from a 3.2% reduction in headcount in the quarter, as well as severance and property exit costs. Other operating expenses were £65 million, or 9.0%, lower than Q3 2023 reflecting savings from a 9.0% reduction in headcount and non-repeat of property disposal losses in Q3 2023.
- An impairment charge of £144 million, compared with a £59 million charge in Q2 2024, largely reflecting lower good book releases.
- Net loans to customers increased by £4.1 billion, or 2.0%, driven by £3.7 billion higher mortgage balances including £2.3 billion related to the Metro Bank mortgage portfolio acquisition and an underlying £1.4 billion increase in net mortgage lending. Personal advances increased by £0.2 billion and cards balances increased by £0.3 billion in Q3 2024.
- Customer deposits increased by £0.5 billion, or 0.3%, in Q3 2024 reflecting growth in savings partly offset by a reduction in current account balances.
- RWAs increased by £2.5 billion, or 4.0%, in the quarter primarily due to book movements and including the impact of the Metro Bank mortgage portfolio acquisition.
Business performance summary continued
Private Banking
| | Quarter ended | ||
| | 30 September | 30 June | 30 September |
| | 2024 | 2024 | 2023 |
| | £m | £m | £m |
| Total income | 253 | 236 | 214 |
| Operating expenses | (166) | (175) | (157) |
| of which: Other operating expenses | (166) | (175) | (157) |
| Impairment releases/(losses) | 3 | 5 | 2 |
| Operating profit | 90 | 66 | 59 |
| |
| | |
| Return on equity (1) | 19.7% | 14.4% | 11.7% |
| Net interest margin (1) | 2.50% | 2.30% | 2.15% |
| Cost:income ratio |
| | |
| (excl. litigation and conduct) (1) | 65.6% | 74.2% | 73.4% |
| Loan impairment rate (1) | (7)bps | (11)bps | (4)bps |
| AUMA net flows (£bn) (1,2) | 0.9 | 1.0 | 0.2 |
| |
| | |
| | As at | ||
| | 30 September | 30 June | 31 December |
| | 2024 | 2024 | 2023 |
| | £bn | £bn | £bn |
| Net loans to customers (amortised cost) | 18.2 | 18.1 | 18.5 |
| Customer deposits | 39.7 | 39.5 | 37.7 |
| RWAs | 11.0 | 11.0 | 11.2 |
| Assets under management (AUMs) (1) | 35.7 | 34.7 | 31.7 |
| Assets under administration (AUAs) (1) | 10.8 | 10.4 | 9.1 |
| Assets under management and |
| | |
| administration (AUMA) (1) | 46.5 | 45.1 | 40.8 |
(1) Refer to the Non-IFRS financial measures appendix for details of basis of preparation and reconciliation of non-IFRS financial measures and performance metrics.
(2) AUM net flows were previously reported.
In Q3 2024, Private Banking continued to support customers with an increase in AUMA balances reflecting net inflows of £0.9 billion. Private Banking delivered a return on equity of 19.7% and an operating profit of £90 million.
Private Banking provided £0.2 billion of climate and sustainable funding and financing in Q3 2024, principally in relation to mortgages on residential properties with an EPC rating of A or B and wholesale transactions.
Q3 2024 performance
- Total income was £17 million, or 7.2% higher than Q2 2024 primarily driven by deposit margin expansion and higher AUMA balances driving an increase in investment fee income. Q3 2024 total income was £39 million, or 18.2%, higher than Q3 2023 primarily reflecting deposit margin expansion and higher AUMA balances driving an increase in investment fee income, partly offset with the impact of deposit mix changes as customers migrated from current account accounts to savings products offering higher returns, combined with a reduction in lending volumes.
- Net interest margin was 20 basis points higher than Q2 2024 largely reflecting deposit margin expansion and benefits from treasury activity.
- Other operating expenses were £9 million, or 5.1%, lower than Q2 2024 primarily due to lower severance costs. Q3 2024 other operating expenses were £9 million, or 5.7%, higher than Q3 2023 primarily reflecting increased investment spend.
- An impairment release of £3 million, compared with a £5 million release in Q2 2024, largely reflecting a reduction in good book releases, with Stage 3 charges broadly flat and remaining at low levels.
- Net loans to customers were broadly stable compared with Q2 2024 with gross new mortgage lending offset by redemptions.
- Customer deposits increased by £0.2 billion, or 0.5%, in Q3 2024 reflecting growth in instant access savings, partially offset by lower current account balances.
- AUMA increased by £1.4 billion in Q3 2024, reflecting AUMA net inflows of £0.9 billion and £0.5 billion of positive market movements.
Business performance summary continued
Commercial & Institutional
| | Quarter ended | ||
| | 30 September | 30 June | 30 September |
| | 2024 | 2024 | 2023 |
| | £m | £m | £m |
| Net interest income | 1,392 | 1,297 | 1,271 |
| Non-interest income | 679 | 644 | 570 |
| Total income | 2,071 | 1,941 | 1,841 |
| |
| | |
| Operating expenses | (945) | (1,099) | (1,012) |
| of which: Other operating expenses | (911) | (1,053) | (960) |
| Impairment releases/(losses) | (109) | 96 | (59) |
| Operating profit | 1,017 | 938 | 770 |
| |
| | |
| Return on equity (1) | 19.9% | 17.8% | 14.7% |
| Net interest margin (1) | 2.24% | 2.12% | 2.07% |
| Cost:income ratio |
| | |
| (excl. litigation and conduct) (1) | 44.0% | 54.3% | 52.1% |
| Loan impairment rate (1) | 31bps | (28)bps | 18bps |
| |
| | |
| | As at | ||
| | 30 September | 30 June | 31 December |
| | 2024 | 2024 | 2023 |
| | £bn | £bn | £bn |
| Net loans to customers (amortised cost) | 138.1 | 133.9 | 131.9 |
| Customer deposits | 195.7 | 194.2 | 193.4 |
| Funded assets (1) | 331.1 | 315.5 | 306.9 |
| RWAs | 104.0 | 104.9 | 107.4 |
(1) Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial measures and performance metrics.
In Q3 2024, Commercial & Institutional continued to support customers with an increase in lending of 3.1% and delivered a strong performance in income and operating profit supporting a return on equity of 19.9%. We continued to see good client demand for lending and net interest margin expansion supporting overall improved profitability.
Commercial & Institutional provided £6.0 billion of climate and sustainable funding and financing in Q3 2024 to support customers investing in the transition to net zero.
Q3 2024 performance
- Total income was £130 million, or 6.7%, higher than Q2 2024 principally reflecting deposit margin expansion, customer lending growth and the impact of an additional day in the quarter. Total income was £230 million, or 12.5%, higher than Q3 2023 primarily due to deposit margin expansion, strong customer activity in capital markets and customer lending growth.
- Net interest margin was 12 basis points higher than Q2 2024 largely reflecting deposit margin expansion and benefits from treasury activity.
- Other operating expenses were £142 million, or 13.5%, lower than Q2 2024 reflecting reduced severance costs and benefit of VAT recovery. Other operating expenses were £49 million, or 5.1%, lower than Q3 2023 primarily due to a VAT recovery benefit.
- An impairment charge of £109 million compared with a £96 million release in Q2 2024, reflecting the non-repeat of good book releases in Q2 2024 and higher Stage 3 charges in Q3 2024.
- Net loans to customers increased by £4.2 billion, or 3.1%, in Q3 2024 principally due to growth within Corporate & Institutions and an increase in term loan facilities within Commercial Mid-market, partly offset by UK Government scheme repayments of £0.5 billion.
- Customer deposits increased by £1.5 billion, or 0.8%, in Q3 2024 largely reflecting growth in Commercial Mid-market.
- RWAs decreased by £0.9 billion, or 0.9%, compared with Q2 2024 primarily due to continued RWA management activity of £1.2 billion and foreign exchange benefits, partially offset by lending book growth and a small increase in market risk and counterparty credit risk.
Business performance summary continued
Central items & other
| | Quarter ended | ||
| | 30 September | 30 June | 30 September |
| | 2024 | 2024 | 2023 |
| | £m | £m | £m |
| Continuing operations |
| | |
| Total income | (39) | 117 | (9) |
| Operating expenses | (55) | (34) | 22 |
| of which: Other operating expenses | (51) | (10) | 45 |
| of which: Ulster Bank RoI direct expenses | (14) | (30) | (43) |
| Impairment releases/(losses) | 5 | 3 | (3) |
| Operating (loss)/profit | (89) | 86 | 10 |
| |
| As at |
|
| | 30 September | 30 June | 31 December |
| | 2024 | 2024 | 2023 |
| | £bn | £bn | £bn |
| Net loans to customers (amortised cost) | 23.0 | 24.0 | 25.8 |
| Customer deposits | 3.7 | 7.8 | 12.3 |
| RWAs | 1.9 | 2.6 | 2.8 |
Q3 2024 performance
- Total income was £156 million lower than Q2 2024 primarily reflecting foreign exchange recycling losses and lower gains on interest and foreign exchange risk management derivatives not in accounting hedge relationships and lower income in relation to our Ulster Bank RoI business. Total income was £30 million lower than Q3 2023 primarily reflecting foreign exchange recycling losses and lower gains on interest and foreign exchange risk management derivatives not in accounting hedge relationships partially offset with losses associated with property lease terminations in Q3 2023 not repeated in Q3 2024.
- Customer deposits decreased by £4.1 billion, or 52.6%, compared with Q2 2024 primarily reflecting repo activity in Treasury.
- Net loans to customers decreased £1.0 billion to £23.0 billion in Q3 2024 mainly due to reverse repo activity in Treasury.
Segment performance
|
| Nine months ended 30 September 2024 | ||||
| | Retail | Private | Commercial & | Central items | Total NatWest |
| | Banking | Banking | Institutional | & other | Group |
| | £m | £m | £m | £m | £m |
| Continuing operations | | ||||
| Income statement | | ||||
| Net interest income | 3,825 | 455 | 3,935 | 92 | 8,307 |
| Own credit adjustments | - | - | (5) | - | (5) |
| Other non-interest income | 324 | 242 | 1,941 | 69 | 2,576 |
| Total income | 4,149 | 697 | 5,871 | 161 | 10,878 |
| Direct expenses | (586) | (190) | (1,120) | (3,844) | (5,740) |
| Indirect expenses | (1,527) | (331) | (1,864) | 3,722 | - |
| Other operating expenses | (2,113) | (521) | (2,984) | (122) | (5,740) |
| Litigation and conduct costs | (16) | (1) | (111) | (14) | (142) |
| Operating expenses | (2,129) | (522) | (3,095) | (136) | (5,882) |
| Operating profit before impairment losses/releases | 2,020 | 175 | 2,776 | 25 | 4,996 |
| Impairment (losses)/releases | (266) | 14 | (52) | 11 | (293) |
| Operating profit | 1,754 | 189 | 2,724 | 36 | 4,703 |
| |
|
|
|
|
|
| Income excluding notable items (1) | 4,149 | 697 | 5,876 | 54 | 10,776 |
| |
|
|
|
|
|
| Additional information |
| ||||
| Return on tangible equity (1) | na | na | na | na | 17.0% |
| Return on equity (1) | 19.4% | 13.6% | 17.4% | nm | na |
| Cost:income ratio (excl. litigation and conduct) (1) | 50.9% | 74.7% | 50.8% | nm | 52.8% |
| Total assets (£bn) | 231.1 | 27.3 | 398.7 | 54.8 | 711.9 |
| Funded assets (£bn) (1) | 231.1 | 27.3 | 331.1 | 53.7 | 643.2 |
| Net loans to customers - amortised cost (£bn) | 207.4 | 18.2 | 138.1 | 23.0 | 386.7 |
| Loan impairment rate (1) | 17bps | (10)bps | 5bps | nm | 10bps |
| Impairment provisions (£bn) | (1.9) | (0.1) | (1.6) | - | (3.6) |
| Impairment provisions - Stage 3 (£bn) | (1.1) | - | (1.0) | - | (2.1) |
| Customer deposits (£bn) | 192.0 | 39.7 | 195.7 | 3.7 | 431.1 |
| Risk-weighted assets (RWAs) (£bn) | 64.8 | 11.0 | 104.0 | 1.9 | 181.7 |
| RWA equivalent (RWAe) (£bn) | 65.3 | 11.0 | 105.3 | 2.4 | 184.0 |
| Employee numbers (FTEs - thousands) | 12.2 | 2.2 | 12.8 | 32.5 | 59.7 |
| Third party customer asset rate (1) | 3.95% | 4.99% | 6.74% | nm | nm |
| Third party customer funding rate (1) | (2.08%) | (3.15%) | (1.92%) | nm | nm |
| Average interest earning assets (£bn) (1) | 220.5 | 26.6 | 244.9 | na | 526.2 |
| Net interest margin (1) | 2.32% | 2.29% | 2.15% | na | 2.11% |
nm = not meaningful, na = not applicable.
| (1) | Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial measures and performance metrics. |
Segment performance continued
|
| Nine months ended 30 September 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 | 4,242 | 572 | 3,775 | (178) | 8,411 |
| Own credit adjustments | - | - | 3 | - | 3 |
| Other non-interest income | 320 | 209 | 1,811 | 461 | 2,801 |
| Total income | 4,562 | 781 | 5,589 | 283 | 11,215 |
| Direct expenses | (604) | (181) | (1,118) | (3,697) | (5,600) |
| Indirect expenses | (1,460) | (287) | (1,735) | 3,482 | - |
| Other operating expenses | (2,064) | (468) | (2,853) | (215) | (5,600) |
| Litigation and conduct costs | (83) | (11) | (146) | (2) | (242) |
| Operating expenses | (2,147) | (479) | (2,999) | (217) | (5,842) |
| Operating profit before impairment losses | 2,415 | 302 | 2,590 | 66 | 5,373 |
| Impairment losses | (362) | (9) | (79) | (2) | (452) |
| Operating profit | 2,053 | 293 | 2,511 | 64 | 4,921 |
| | | ||||
| Income excluding notable items (1) | 4,562 | 781 | 5,586 | (32) | 10,897 |
| | | ||||
| Additional information | | | | | |
| Return on tangible equity (1) | na | na | na | na | 17.1% |
| Return on equity (1) | 25.1% | 20.3% | 16.1% | nm | na |
| Cost:income ratio (excl. litigation and conduct) (1) | 45.2% | 59.9% | 51.0% | nm | 49.9% |
| Total assets (£bn) | 229.1 | 26.8 | 411.6 | 49.6 | 717.1 |
| Funded assets (£bn) (1) | 229.1 | 26.8 | 325.2 | 48.5 | 629.6 |
| Net loans to customers - amortised cost (£bn) | 205.2 | 18.8 | 130.5 | 22.8 | 377.3 |
| Loan impairment rate (1) | 23bps | 6bps | 8bps | nm | 16bps |
| Impairment provisions (£bn) | (1.9) | (0.1) | (1.5) | - | (3.5) |
| Impairment provisions - Stage 3 (£bn) | (1.1) | - | (0.8) | - | (1.9) |
| Customer deposits (£bn) | 184.5 | 37.2 | 201.8 | 12.4 | 435.9 |
| Risk-weighted assets (RWAs) (£bn) | 58.9 | 11.6 | 107.9 | 3.2 | 181.6 |
| RWA equivalent (RWAe) (£bn) | 58.9 | 11.6 | 109.1 | 3.9 | 183.5 |
| Employee numbers (FTEs - thousands) | 13.4 | 2.4 | 12.6 | 33.3 | 61.7 |
| Third party customer asset rate (1) | 3.13% | 4.43% | 5.98% | nm | nm |
| Third party customer funding rate (1) | (1.24%) | (1.88%) | (1.23%) | nm | nm |
| Average interest earning assets (£bn) (1) | 221.8 | 27.3 | 244.2 | na | 519.2 |
| Net interest margin (1) | 2.56% | 2.80% | 2.07% | na | 2.17% |
nm = not meaningful, na = not applicable.
| (1) | Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial measures and performance metrics. |
Segment performance continued
|
| Quarter ended 30 September 2024 | ||||
| | Retail | Private | Commercial & | Central items | Total NatWest |
| | Banking | Banking | Institutional | & other | Group |
| | £m | £m | £m | £m | £m |
| Continuing operations |
|
|
|
|
|
| Income statement | | ||||
| Net interest income | 1,350 | 170 | 1,392 | (13) | 2,899 |
| Own credit adjustments | - | - | 2 | - | 2 |
| Other non-interest income | 109 | 83 | 677 | (26) | 843 |
| Total income | 1,459 | 253 | 2,071 | (39) | 3,744 |
| Direct expenses | (205) | (64) | (356) | (1,159) | (1,784) |
| Indirect expenses | (451) | (102) | (555) | 1,108 | - |
| Other operating expenses | (656) | (166) | (911) | (51) | (1,784) |
| Litigation and conduct costs | (3) | - | (34) | (4) | (41) |
| Operating expenses | (659) | (166) | (945) | (55) | (1,825) |
| Operating profit/(loss) before impairment losses/releases | 800 | 87 | 1,126 | (94) | 1,919 |
| Impairment (losses)/releases | (144) | 3 | (109) | 5 | (245) |
| Operating profit/(loss) | 656 | 90 | 1,017 | (89) | 1,674 |
| |
|
|
|
|
|
| Income excluding notable items (1) | 1,459 | 253 | 2,069 | (9) | 3,772 |
| |
|
|
|
|
|
| Additional information |
| ||||
| Return on tangible equity (1) | na | na | na | na | 18.3% |
| Return on equity (1) | 21.4% | 19.7% | 19.9% | nm | na |
| Cost:income ratio (excl. litigation and conduct) (1) | 45.0% | 65.6% | 44.0% | nm | 47.6% |
| Total assets (£bn) | 231.1 | 27.3 | 398.7 | 54.8 | 711.9 |
| Funded assets (£bn) (1) | 231.1 | 27.3 | 331.1 | 53.7 | 643.2 |
| Net loans to customers - amortised cost (£bn) | 207.4 | 18.2 | 138.1 | 23.0 | 386.7 |
| Loan impairment rate (1) | 28bps | (7)bps | 31bps | nm | 25bps |
| Impairment provisions (£bn) | (1.9) | (0.1) | (1.6) | - | (3.6) |
| Impairment provisions - Stage 3 (£bn) | (1.1) | - | (1.0) | - | (2.1) |
| Customer deposits (£bn) | 192.0 | 39.7 | 195.7 | 3.7 | 431.1 |
| Risk-weighted assets (RWAs) (£bn) | 64.8 | 11.0 | 104.0 | 1.9 | 181.7 |
| RWA equivalent (RWAe) (£bn) | 65.3 | 11.0 | 105.3 | 2.4 | 184.0 |
| Employee numbers (FTEs - thousands) | 12.2 | 2.2 | 12.8 | 32.5 | 59.7 |
| Third party customer asset rate (1) | 4.09% | 5.01% | 6.67% | nm | nm |
| Third party customer funding rate (1) | (2.10%) | (3.16%) | (1.91%) | nm | nm |
| Average interest earning assets (£bn) (1) | 221.4 | 27.0 | 246.8 | na | 529.8 |
| Net interest margin (1) | 2.43% | 2.50% | 2.24% | na | 2.18% |
nm = not meaningful, na = not applicable.
| (1) | Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial measures and performance metrics. |
Segment performance continued
|
| Quarter ended 30 June 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 | 1,259 | 151 | 1,297 | 50 | 2,757 |
| Own credit adjustments | - | - | (2) | - | (2) |
| Other non-interest income | 106 | 85 | 646 | 67 | 904 |
| Total income | 1,365 | 236 | 1,941 | 117 | 3,659 |
| Direct expenses | (192) | (65) | (380) | (1,291) | (1,928) |
| Indirect expenses | (498) | (110) | (673) | 1,281 | - |
| Other operating expenses | (690) | (175) | (1,053) | (10) | (1,928) |
| Litigation and conduct costs | (7) | - | (46) | (24) | (77) |
| Operating expenses | (697) | (175) | (1,099) | (34) | (2,005) |
| Operating profit before impairment losses/releases | 668 | 61 | 842 | 83 | 1,654 |
| Impairment (losses)/releases | (59) | 5 | 96 | 3 | 45 |
| Operating profit | 609 | 66 | 938 | 86 | 1,699 |
| | | ||||
| Income excluding notable items (1) | 1,365 | 236 | 1,943 | 46 | 3,590 |
| | | ||||
| Additional information | | | | | |
| Return on tangible equity (1) | na | na | na | na | 18.5% |
| Return on equity (1) | 20.3% | 14.4% | 17.8% | nm | na |
| Cost:income ratio (excl. litigation and conduct) (1) | 50.5% | 74.2% | 54.3% | nm | 52.7% |
| Total assets (£bn) | 226.5 | 27.2 | 381.9 | 54.7 | 690.3 |
| Funded assets (£bn) (1) | 226.5 | 27.2 | 315.5 | 53.6 | 622.8 |
| Net loans to customers - amortised cost (£bn) | 203.3 | 18.1 | 133.9 | 24.0 | 379.3 |
| Loan impairment rate (1) | 12bps | (11)bps | (28)bps | nm | (5)bps |
| Impairment provisions (£bn) | (1.7) | (0.1) | (1.5) | - | (3.3) |
| Impairment provisions - Stage 3 (£bn) | (1.0) | - | (0.9) | (0.1) | (2.0) |
| Customer deposits (£bn) | 191.5 | 39.5 | 194.2 | 7.8 | 433.0 |
| Risk-weighted assets (RWAs) (£bn) | 62.3 | 11.0 | 104.9 | 2.6 | 180.8 |
| RWA equivalent (RWAe) (£bn) | 63.1 | 11.0 | 106.7 | 3.1 | 183.9 |
| Employee numbers (FTEs - thousands) | 12.6 | 2.2 | 12.8 | 33.0 | 60.6 |
| Third party customer asset rate (1) | 3.97% | 5.01% | 6.73% | nm | nm |
| Third party customer funding rate (1) | (2.10%) | (3.15%) | (1.93%) | nm | nm |
| Average interest earning assets (£bn) (1) | 219.6 | 26.5 | 246.0 | na | 527.6 |
| Net interest margin (1) | 2.31% | 2.30% | 2.12% | na | 2.10% |
nm = not meaningful, na = not applicable.
| (1) | Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial measures and performance metrics. |
Segment performance continued
|
| Quarter ended 30 September 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 | 1,334 | 144 | 1,271 | (64) | 2,685 |
| Own credit adjustments | - | - | (6) | - | (6) |
| Other non-interest income | 108 | 70 | 576 | 55 | 809 |
| Total income | 1,442 | 214 | 1,841 | (9) | 3,488 |
| Direct expenses | (206) | (63) | (377) | (1,147) | (1,793) |
| Indirect expenses | (515) | (94) | (583) | 1,192 | - |
| Other operating expenses | (721) | (157) | (960) | 45 | (1,793) |
| Litigation and conduct costs | (59) | - | (52) | (23) | (134) |
| Operating expenses | (780) | (157) | (1,012) | 22 | (1,927) |
| Operating profit before impairment losses/releases | 662 | 57 | 829 | 13 | 1,561 |
| Impairment (losses)/releases | (169) | 2 | (59) | (3) | (229) |
| Operating profit | 493 | 59 | 770 | 10 | 1,332 |
| | | ||||
| Income excluding notable items (1) | 1,442 | 214 | 1,847 | 11 | 3,514 |
| | | ||||
| Additional information | | | | | |
| Return on tangible equity (1) | na | na | na | na | 14.7% |
| Return on equity (1) | 17.5% | 11.7% | 14.7% | nm | na |
| Cost:income ratio (excl. litigation and conduct) (1) | 50.0% | 73.4% | 52.1% | nm | 51.4% |
| Total assets (£bn) | 229.1 | 26.8 | 411.6 | 49.6 | 717.1 |
| Funded assets (£bn) (1) | 229.1 | 26.8 | 325.2 | 48.5 | 629.6 |
| Net loans to customers - amortised cost (£bn) | 205.2 | 18.8 | 130.5 | 22.8 | 377.3 |
| Loan impairment rate (1) | 33bps | (4)bps | 18bps | nm | 24bps |
| Impairment provisions (£bn) | (1.9) | (0.1) | (1.5) | - | (3.5) |
| Impairment provisions - Stage 3 (£bn) | (1.1) | - | (0.8) | - | (1.9) |
| Customer deposits (£bn) | 184.5 | 37.2 | 201.8 | 12.4 | 435.9 |
| Risk-weighted assets (RWAs) (£bn) | 58.9 | 11.6 | 107.9 | 3.2 | 181.6 |
| RWA equivalent (RWAe) (£bn) | 58.9 | 11.6 | 109.1 | 3.9 | 183.5 |
| Employee numbers (FTEs - thousands) | 13.4 | 2.4 | 12.6 | 33.3 | 61.7 |
| Third party customer asset rate (1) | 3.34% | 4.80% | 6.72% | nm | nm |
| Third party customer funding rate (1) | (1.69%) | (2.80%) | (1.65%) | nm | nm |
| Average interest earning assets (£bn) (1) | 223.7 | 26.6 | 243.4 | na | 520.8 |
| Net interest margin (1) | 2.37% | 2.15% | 2.07% | na | 2.05% |
nm - not meaningful, na - not applicable
| (1) | Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial measures and performance metrics. |
Risk and capital management
Credit risk
Segment analysis - portfolio summary
The table below shows gross loans and ECL, by segment and stage, within the scope of the IFRS 9 ECL framework.
| | 30 September 2024 | | 31 December 2023 | ||||||||
| | Retail | Private | Commercial & | Central items |
| | Retail | Private | Commercial & | Central items | |
| | Banking | Banking | Institutional | & other | Total | | Banking | Banking | Institutional | & other | Total |
|
| £m | £m | £m | £m | £m |
| £m | £m | £m | £m | £m |
| Loans - amortised cost and FVOCI (1,2) |
|
| |||||||||
| Stage 1 | 181,930 | 17,236 | 127,115 | 26,874 | 353,155 | | 182,297 | 17,565 | 119,047 | 29,677 | 348,586 |
| Stage 2 | 23,599 | 849 | 13,319 | - | 37,767 | | 21,208 | 906 | 15,771 | 6 | 37,891 |
| Stage 3 | 3,359 | 304 | 2,457 | - | 6,120 | | 3,133 | 258 | 2,162 | 10 | 5,563 |
| Of which: individual | - | 235 | 1,231 | - | 1,466 |
| - | 186 | 845 | - | 1,031 |
| Of which: collective | 3,359 | 69 | 1,226 | - | 4,654 |
| 3,133 | 72 | 1,317 | 10 | 4,532 |
| Subtotal excluding disposal group loans | 208,888 | 18,389 | 142,891 | 26,874 | 397,042 | | 206,638 | 18,729 | 136,980 | 29,693 | 392,040 |
| Disposal group loans |
| - | - | | 67 | 67 | |||||
| Total |
| 26,874 | 397,042 | | 29,760 | 392,107 | |||||
| ECL provisions (3) |
|
| |||||||||
| Stage 1 | 297 | 15 | 273 | 15 | 600 | | 306 | 20 | 356 | 27 | 709 |
| Stage 2 | 478 | 10 | 326 | 1 | 815 | | 502 | 20 | 447 | 7 | 976 |
| Stage 3 | 1,089 | 37 | 1,012 | - | 2,138 | | 1,097 | 34 | 819 | 10 | 1,960 |
| Of which: individual | - | 37 | 446 | - | 483 |
| - | 34 | 298 | - | 332 |
| Of which: collective | 1,089 | - | 566 | - | 1,655 |
| 1,097 | - | 521 | 10 | 1,628 |
| Subtotal excluding ECL provisions on disposal group loans | 1,864 | 62 | 1,611 | 16 | 3,553 | | 1,905 | 74 | 1,622 | 44 | 3,645 |
| ECL provisions on disposal group loans |
| - | - | | 36 | 36 | |||||
| Total |
| 16 | 3,553 | | 80 | 3,681 | |||||
| ECL provisions coverage (4) |
|
| |||||||||
| Stage 1 (%) | 0.16 | 0.09 | 0.21 | 0.06 | 0.17 | | 0.17 | 0.11 | 0.30 | 0.09 | 0.20 |
| Stage 2 (%) | 2.03 | 1.18 | 2.45 | nm | 2.16 | | 2.37 | 2.21 | 2.83 | nm | 2.58 |
| Stage 3 (%) | 32.42 | 12.17 | 41.19 | - | 34.93 | | 35.01 | 13.18 | 37.88 | 100.00 | 35.23 |
| ECL provisions coverage excluding disposal group loans | 0.89 | 0.34 | 1.13 | 0.06 | 0.89 | | 0.92 | 0.40 | 1.18 | 0.15 | 0.93 |
| ECL provisions coverage on disposal group loans |
| - | - | | 53.73 | 53.73 | |||||
| Total |
| 0.06 | 0.89 | | 0.27 | 0.94 | |||||
(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 £104.7 billion (31 December 2023 - £103.1 billion) and debt securities of £61.3 billion (31 December 2023 - £50.1 billion).
(2) Fair value through other comprehensive income (FVOCI). Includes loans to customers and banks.
(3) Includes £4 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 continued
Credit risk continued
Segment analysis - loans
- Retail Banking - Loans to customers increased during the year as a result of continued growth in credit card lending and the £2.3 billion Metro Bank mortgage portfolio acquisition. Excluding the acquisition, mortgage balances reduced as redemptions were only partially offset by new lending. New lending and portfolio credit quality was maintained with limited increases in arrears, in-line with expectations. Total ECL coverage decreased during the year reflective of Q2 2024 debt sale activity on unsecured portfolios (£0.2 billion of assets), reductions in economic uncertainty post model adjustments and stable underlying portfolio performance. The reduction in good book coverage so far this year was a result of unsecured PD modelling updates alongside an improved view on forward looking economics since 31 December 2023. Post model adjustments to capture increased affordability pressures on customers due to high inflation and interest rates decreased at Q2 2024, reflecting a revision of portfolio sub-segments deemed most at risk, supported by back-testing of default outcomes. Flow rates into Stage 3 reduced during H1 2024 and have remained consistent into Q3 2024.
- Commercial & Institutional - Growth in the first three quarters of 2024 was principally driven by financial institutions and a number of corporate sectors including commercial real estate. Sector appetite continues to be reviewed regularly, with particular focus on sector clusters deemed to represent a heightened risk. Total ECL coverage reduced during the year reflecting increased Stage 1 exposure and positive portfolio performance. Good book coverage improved due to portfolio growth and performance along with a reduction in post model adjustments. Stage 3 ECL increased due to flows into default on individually assessed customers.
Movement in ECL provision
The table below shows the main ECL provision movements during the year.
| | ECL provision |
| | £m |
| At 1 January 2024 | 3,645 |
| Transfers to disposal groups and reclassifications | (18) |
| Changes in economic forecasts | (17) |
| Changes in risk metrics and exposure: Stage 1 and Stage 2 | (124) |
| Changes in risk metrics and exposure: Stage 3 | 592 |
| Judgemental changes: changes in post model adjustments for Stage 1, |
|
| Stage 2 and Stage 3 | (135) |
| Write-offs and other | (390) |
| At 30 September 2024 | 3,553 |
- For the nine months to 30 September 2024, overall ECL decreased. This primarily reflected debt sale activity on Retail Banking unsecured assets (£0.2 billion), reductions in economic uncertainty post model adjustments, and stable underlying portfolio performance across NatWest Group. There was a slight reduction in total ECL coverage alongside increases in Stage 3 ECL.
- In the Personal portfolio, Stage 3 default inflows in 2024 reduced relative to 2023, as the recent trends of risk parameter normalisation stabilise.
- In the Non-personal portfolio, Stage 3 charges have started to normalise driven by individual exposures. The total number of defaults has increased in 2024 but is still lower than historical trends.
- Judgemental ECL post model adjustments decreased from 31 December 2023. This reflected management's view that the level of economic uncertainty due to inflation being higher for longer, higher interest rates and liquidity concerns, has reduced and now represents 9% of total ECL (31 December 2023 - 13%). Refer to the ECL post model adjustments section.
Risk and capital management continued
Credit risk continued
ECL post model adjustments
The table below shows ECL post model adjustments.
| | Retail Banking | | Private | Commercial & | Central items |
| |
| | Mortgages | Other |
| Banking | Institutional | & other | Total |
| 30 September 2024 | £m | £m |
| £m | £m | £m | £m |
| Deferred model calibrations | - | - |
| 1 | 17 | - | 18 |
| Economic uncertainty | 80 | 43 |
| 7 | 169 | - | 299 |
| Other adjustments | - | - |
| - | 10 | - | 10 |
| Total | 80 | 43 |
| 8 | 196 | - | 327 |
| Of which: |
|
|
|
|
|
|
|
| - Stage 1 | 38 | 21 |
| 4 | 82 | - | 145 |
| - Stage 2 | 33 | 22 |
| 4 | 112 | - | 171 |
| - Stage 3 | 9 | - |
| - | 2 | - | 11 |
|
| |||||||
| 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 adjustment for economic uncertainty of £123 million (31 December 2023 - £157 million) remained largely in line with Q2 2024. The reduction relative to the 2023 year end reflected a revision to the cost of living post model adjustment at Q2 2024 and is currently held at £114 million (31 December 2023 - £144 million). This update was supported by back-testing of default outcomes for higher risk segments. The cost of living post model adjustment captures the risk on segments in the Retail Banking portfolio that are more susceptible to the effects of cost of living rises. It focuses on key affordability lenses, including customers with lower income in fuel poverty, over-indebted borrowers and customers vulnerable to a potential mortgage rate shock.
- Commercial & Institutional - The post model adjustment for economic uncertainty decreased to £169 million (31 December 2023 - £256 million). The inflation, supply chain and liquidity post model adjustment of £138 million (31 December 2023 - £206 million) 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. While inflationary pressures are subsiding, geopolitical events could impact supply chains and there are ongoing concerns across many sectors in relation to reducing cash reserves. The £68 million reduction reflected positive portfolio movements and exposure reduction. A £30 million (31 December 2023 - £50 million) post model adjustment to cover the residual risks from Covid-19 remains for the risks surrounding associated debt to customers that have utilised government support schemes. This adjustment is reducing as customers default or repay.
- Central items & other - The £26 million reduction was mainly due to the £23 million post model adjustment in other adjustments being removed in the period, reflecting the withdrawal from the Republic of Ireland.
Risk and capital management continued
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 |
| Non-personal | | Total | ||||||
| |
| Credit |
|
|
| Corporate and | Financial |
|
| |
|
| | Mortgages (1) | cards | Other | Total |
| Other | institutions | Sovereign | Total | |
|
| 30 September 2024 | £m | £m | £m | £m |
| £m | £m | £m | £m | | £m |
| Loans by geography | 209,161 | 6,680 | 9,741 | 225,582 |
| 110,557 | 59,647 | 1,256 | 171,460 |
| 397,042 |
| - UK | 209,161 | 6,680 | 9,741 | 225,582 |
| 97,232 | 39,721 | 566 | 137,519 |
| 363,101 |
| - RoI | - | - | - | - |
| 1,097 | 974 | - | 2,071 |
| 2,071 |
| - Other Europe | - | - | - | - |
| 5,238 | 9,593 | 379 | 15,210 |
| 15,210 |
| - RoW | - | - | - | - |
| 6,990 | 9,359 | 311 | 16,660 |
| 16,660 |
| Loans by asset quality (2) | 209,161 | 6,680 | 9,741 | 225,582 |
| 110,557 | 59,647 | 1,256 | 171,460 |
| 397,042 |
| - AQ1-AQ4 | 111,141 | 122 | 814 | 112,077 |
| 43,664 | 55,087 | 978 | 99,729 |
| 211,806 |
| - AQ5-AQ8 | 94,378 | 6,299 | 7,832 | 108,509 |
| 64,168 | 4,490 | 125 | 68,783 |
| 177,292 |
| - AQ9 | 1,066 | 92 | 198 | 1,356 |
| 323 | 12 | 133 | 468 |
| 1,824 |
| - AQ10 | 2,576 | 167 | 897 | 3,640 |
| 2,402 | 58 | 20 | 2,480 |
| 6,120 |
| Loans by stage | 209,161 | 6,680 | 9,741 | 225,582 |
| 110,557 | 59,647 | 1,256 | 171,460 |
| 397,042 |
| - Stage 1 | 185,922 | 4,714 | 7,276 | 197,912 |
| 95,220 | 58,920 | 1,103 | 155,243 |
| 353,155 |
| - Stage 2 | 20,663 | 1,799 | 1,568 | 24,030 |
| 12,935 | 669 | 133 | 13,737 |
| 37,767 |
| - Stage 3 | 2,576 | 167 | 897 | 3,640 |
| 2,402 | 58 | 20 | 2,480 |
| 6,120 |
| - Of which: individual | 144 | - | 24 | 168 |
| 1,227 | 51 | 20 | 1,298 |
| 1,466 |
| - Of which: collective | 2,432 | 167 | 873 | 3,472 |
| 1,175 | 7 | - | 1,182 |
| 4,654 |
| Loans - past due analysis | 209,161 | 6,680 | 9,741 | 225,582 |
| 110,557 | 59,647 | 1,256 | 171,460 |
| 397,042 |
| - Not past due | 206,003 | 6,489 | 8,822 | 221,314 |
| 107,448 | 59,494 | 1,236 | 168,178 |
| 389,492 |
| - Past due 1-30 days | 1,143 | 44 | 67 | 1,254 |
| 1,738 | 138 | - | 1,876 |
| 3,130 |
| - Past due 31-90 days | 753 | 45 | 100 | 898 |
| 468 | 9 | - | 477 |
| 1,375 |
| - Past due 90-180 days | 495 | 40 | 93 | 628 |
| 90 | 1 | - | 91 |
| 719 |
| - Past due >180 days | 767 | 62 | 659 | 1,488 |
| 813 | 5 | 20 | 838 |
| 2,326 |
| Loans - Stage 2 | 20,663 | 1,799 | 1,568 | 24,030 |
| 12,935 | 669 | 133 | 13,737 |
| 37,767 |
| - Not past due | 19,503 | 1,745 | 1,467 | 22,715 |
| 12,020 | 642 | 133 | 12,795 |
| 35,510 |
| - Past due 1-30 days | 762 | 26 | 38 | 826 |
| 540 | 26 | - | 566 |
| 1,392 |
| - Past due 31-90 days | 398 | 28 | 63 | 489 |
| 375 | 1 | - | 376 |
| 865 |
| Weighted average life |
|
|
|
|
|
|
|
|
|
|
|
| - ECL measurement (years) | 8 | 4 | 6 | 5 |
| 6 | 2 | 1 | 6 |
| 6 |
| Weighted average 12 months PDs |
|
|
|
|
|
|
|
|
|
|
|
| - IFRS 9 (%) | 0.52 | 3.03 | 5.09 | 0.77 |
| 1.27 | 0.18 | 5.46 | 0.92 |
| 0.84 |
| - Basel (%) | 0.68 | 3.58 | 3.26 | 0.86 |
| 1.10 | 0.16 | 5.46 | 0.81 |
| 0.84 |
| ECL provisions by geography | 444 | 404 | 1,057 | 1,905 |
| 1,541 | 87 | 20 | 1,648 |
| 3,553 |
| - UK | 444 | 404 | 1,057 | 1,905 |
| 1,371 | 34 | 13 | 1,418 |
| 3,323 |
| - RoI | - | - | - | - |
| 3 | 1 | - | 4 |
| 4 |
| - Other Europe | - | - | - | - |
| 114 | 8 | - | 122 |
| 122 |
| - RoW | - | - | - | - |
| 53 | 44 | 7 | 104 |
| 104 |
For the notes to this table refer to page 22.
Risk and capital management continued
Credit risk continued
Sector analysis - portfolio summary continued
| | Personal |
| Non-personal | | Total | ||||||
| |
| Credit | Other |
|
| Corporate and | Financial |
|
| |
|
| | Mortgages (1) | cards | personal | Total |
| Other | institutions | Sovereign | Total | |
|
| 30 September 2024 | £m | £m | £m | £m |
| £m | £m | £m | £m | | £m |
| ECL provisions by stage | 444 | 404 | 1,057 | 1,905 |
| 1,541 | 87 | 20 | 1,648 |
| 3,553 |
| - Stage 1 | 60 | 92 | 150 | 302 |
| 249 | 36 | 13 | 298 |
| 600 |
| - Stage 2 | 68 | 198 | 214 | 480 |
| 324 | 9 | 2 | 335 |
| 815 |
| - Stage 3 | 316 | 114 | 693 | 1,123 |
| 968 | 42 | 5 | 1,015 |
| 2,138 |
| - Of which: individual | 12 | - | 14 | 26 |
| 415 | 37 | 5 | 457 |
| 483 |
| - Of which: collective | 304 | 114 | 679 | 1,097 |
| 553 | 5 | - | 558 |
| 1,655 |
| ECL provisions coverage (%) | 0.21 | 6.05 | 10.85 | 0.84 |
| 1.39 | 0.15 | 1.59 | 0.96 |
| 0.89 |
| - Stage 1 (%) | 0.03 | 1.95 | 2.06 | 0.15 |
| 0.26 | 0.06 | 1.18 | 0.19 |
| 0.17 |
| - Stage 2 (%) | 0.33 | 11.01 | 13.65 | 2.00 |
| 2.50 | 1.35 | 1.50 | 2.44 |
| 2.16 |
| - Stage 3 (%) | 12.27 | 68.26 | 77.26 | 30.85 |
| 40.30 | 72.41 | 25.00 | 40.93 |
| 34.93 |
| Loans by residual maturity | 209,161 | 6,680 | 9,741 | 225,582 |
| 110,557 | 59,647 | 1,256 | 171,460 |
| 397,042 |
| - <1 year | 3,368 | 3,680 | 3,180 | 10,228 |
| 34,826 | 45,266 | 426 | 80,518 |
| 90,746 |
| - 1-5 year | 11,732 | 3,000 | 5,544 | 20,276 |
| 47,007 | 11,542 | 499 | 59,048 |
| 79,324 |
| - >5<15 year | 45,515 | - | 1,011 | 46,526 |
| 20,867 | 2,805 | 297 | 23,969 |
| 70,495 |
| - >15 year | 148,546 | - | 6 | 148,552 |
| 7,857 | 34 | 34 | 7,925 |
| 156,477 |
| Other financial assets by asset quality (2) | - | - | - | - |
| 3,178 | 29,011 | 133,767 | 165,956 |
| 165,956 |
| - AQ1-AQ4 | - | - | - | - |
| 3,176 | 28,618 | 133,767 | 165,561 |
| 165,561 |
| - AQ5-AQ8 | - | - | - | - |
| 2 | 393 | - | 395 |
| 395 |
| Off-balance sheet | 13,625 | 19,434 | 8,118 | 41,177 |
| 74,529 | 21,246 | 237 | 96,012 |
| 137,189 |
| - Loan commitments | 13,625 | 19,434 | 8,077 | 41,136 |
| 71,483 | 19,772 | 237 | 91,492 |
| 132,628 |
| - Financial guarantees | - | - | 41 | 41 |
| 3,046 | 1,474 | - | 4,520 |
| 4,561 |
| Off-balance sheet by asset quality (2) | 13,625 | 19,434 | 8,118 | 41,177 |
| 74,529 | 21,246 | 237 | 96,012 |
| 137,189 |
| - AQ1-AQ4 | 12,805 | 510 | 6,736 | 20,051 |
| 47,313 | 19,601 | 150 | 67,064 |
| 87,115 |
| - AQ5-AQ8 | 806 | 18,585 | 1,335 | 20,726 |
| 26,783 | 1,601 | 23 | 28,407 |
| 49,133 |
| - AQ9 | - | 9 | 20 | 29 |
| 18 | - | 64 | 82 |
| 111 |
| - AQ10 | 14 | 330 | 27 | 371 |
| 415 | 44 | - | 459 |
| 830 |
For the notes to this table refer to page 22.
Risk and capital management continued
Credit risk continued
Sector analysis - portfolio summary continued
| | Personal | | Non-personal | | Total | ||||||
| | | Credit | | | | Corporate and | Financial | | | | |
| | Mortgages (1) | cards | Other | Total | | Other | institutions | Sovereign | Total | | |
| 31 December 2023 (3) | £m | £m | £m | £m | | £m | £m | £m | £m | | £m |
| Loans by geography | 208,275 | 5,904 | 9,595 | 223,774 | | 108,546 | 57,087 | 2,633 | 168,266 | | 392,040 |
| - UK | 208,275 | 5,893 | 9,592 | 223,760 |
| 95,736 | 39,906 | 2,016 | 137,658 |
| 361,418 |
| - RoI | - | 11 | 3 | 14 |
| 897 | 279 | - | 1,176 |
| 1,190 |
| - Other Europe | - | - | - | - |
| 5,471 | 7,865 | 399 | 13,735 |
| 13,735 |
| - RoW | - | - | - | - |
| 6,442 | 9,037 | 218 | 15,697 |
| 15,697 |
| Loans by asset quality (2) | 208,275 | 5,904 | 9,595 | 223,774 | | 108,546 | 57,087 | 2,633 | 168,266 | | 392,040 |
| - AQ1-AQ4 | 118,266 | 124 | 914 | 119,304 |
| 42,217 | 53,367 | 2,488 | 98,072 |
| 217,376 |
| - AQ5-AQ8 | 86,868 | 5,577 | 7,552 | 99,997 |
| 63,818 | 3,686 | 123 | 67,627 |
| 167,624 |
| - AQ9 | 860 | 63 | 150 | 1,073 |
| 386 | 18 | - | 404 |
| 1,477 |
| - AQ10 | 2,281 | 140 | 979 | 3,400 |
| 2,125 | 16 | 22 | 2,163 |
| 5,563 |
| Loans by stage | 208,275 | 5,904 | 9,595 | 223,774 | | 108,546 | 57,087 | 2,633 | 168,266 | | 392,040 |
| - Stage 1 | 188,140 | 3,742 | 6,983 | 198,865 |
| 91,006 | 56,105 | 2,610 | 149,721 |
| 348,586 |
| - Stage 2 | 17,854 | 2,022 | 1,633 | 21,509 |
| 15,415 | 966 | 1 | 16,382 |
| 37,891 |
| - Stage 3 | 2,281 | 140 | 979 | 3,400 |
| 2,125 | 16 | 22 | 2,163 |
| 5,563 |
| - Of which: individual | 122 | - | 20 | 142 |
| 865 | 2 | 22 | 889 |
| 1,031 |
| - Of which: collective | 2,159 | 140 | 959 | 3,258 |
| 1,260 | 14 | - | 1,274 |
| 4,532 |
| Loans - past due analysis | 208,275 | 5,904 | 9,595 | 223,774 | | 108,546 | 57,087 | 2,633 | 168,266 | | 392,040 |
| - Not past due | 205,405 | 5,743 | 8,578 | 219,726 |
| 104,316 | 56,735 | 2,633 | 163,684 |
| 383,410 |
| - Past due 1-30 days | 1,178 | 41 | 71 | 1,290 |
| 2,713 | 332 | - | 3,045 |
| 4,335 |
| - Past due 31-90 days | 518 | 38 | 112 | 668 |
| 616 | 12 | - | 628 |
| 1,296 |
| - Past due 90-180 days | 445 | 32 | 103 | 580 |
| 113 | 2 | - | 115 |
| 695 |
| - Past due >180 days | 729 | 50 | 731 | 1,510 |
| 788 | 6 | - | 794 |
| 2,304 |
| Loans - Stage 2 | 17,854 | 2,022 | 1,633 | 21,509 | | 15,415 | 966 | 1 | 16,382 | | 37,891 |
| - Not past due | 16,803 | 1,971 | 1,529 | 20,303 |
| 14,358 | 932 | 1 | 15,291 |
| 35,594 |
| - Past due 1-30 days | 765 | 27 | 40 | 832 |
| 616 | 24 | - | 640 |
| 1,472 |
| - Past due 31-90 days | 286 | 24 | 64 | 374 |
| 441 | 10 | - | 451 |
| 825 |
| Weighted average life | | ||||||||||
| - ECL measurement (years) | 9 | 3 | 6 | 6 |
| 6 | 2 | - | 6 |
| 6 |
| Weighted average 12 months PDs |
| | |||||||||
| - IFRS 9 (%) | 0.50 | 3.45 | 5.29 | 0.75 |
| 1.55 | 0.19 | 0.37 | 1.07 |
| 0.89 |
| - Basel (%) | 0.67 | 3.37 | 3.15 | 0.84 |
| 1.16 | 0.17 | 0.37 | 0.81 |
| 0.83 |
| ECL provisions by geography | 420 | 376 | 1,168 | 1,964 | | 1,599 | 66 | 16 | 1,681 | | 3,645 |
| - UK | 420 | 365 | 1,163 | 1,948 |
| 1,383 | 38 | 13 | 1,434 |
| 3,382 |
| - RoI | - | 11 | 5 | 16 |
| 6 | 1 | - | 7 |
| 23 |
| - Other Europe | - | - | - | - |
| 153 | 12 | - | 165 |
| 165 |
| - RoW | - | - | - | - |
| 57 | 15 | 3 | 75 |
| 75 |
For the notes to this table refer to page 22.
Risk and capital management continued
Credit risk continued
Sector analysis - portfolio summary continued
| | Personal | | Non-personal | | Total | ||||||
| | | Credit | Other | | | Corporate and | Financial | | | | |
| | Mortgages (1) | cards | personal | Total | | Other | institutions | Sovereign | Total | | |
| 31 December 2023 (3) | £m | £m | £m | £m | | £m | £m | £m | £m | | £m |
| ECL provisions by stage | 420 | 376 | 1,168 | 1,964 | | 1,599 | 66 | 16 | 1,681 | | 3,645 |
| - Stage 1 | 88 | 76 | 152 | 316 |
| 336 | 44 | 13 | 393 |
| 709 |
| - Stage 2 | 61 | 207 | 238 | 506 |
| 454 | 15 | 1 | 470 |
| 976 |
| - Stage 3 | 271 | 93 | 778 | 1,142 |
| 809 | 7 | 2 | 818 |
| 1,960 |
| - Of which: individual | 12 | - | 14 | 26 |
| 302 | 2 | 2 | 306 |
| 332 |
| - Of which: collective | 259 | 93 | 764 | 1,116 |
| 507 | 5 | - | 512 |
| 1,628 |
| ECL provisions coverage (%) | 0.20 | 6.37 | 12.17 | 0.88 | | 1.47 | 0.12 | 0.61 | 1.00 | | 0.93 |
| - Stage 1 (%) | 0.05 | 2.03 | 2.18 | 0.16 |
| 0.37 | 0.08 | 0.50 | 0.26 |
| 0.20 |
| - Stage 2 (%) | 0.34 | 10.24 | 14.57 | 2.35 |
| 2.95 | 1.55 | 100.00 | 2.87 |
| 2.58 |
| - Stage 3 (%) | 11.88 | 66.43 | 79.47 | 33.59 |
| 38.07 | 43.75 | 9.09 | 37.82 |
| 35.23 |
| Loans by residual maturity | 208,275 | 5,904 | 9,595 | 223,774 | | 108,546 | 57,087 | 2,633 | 168,266 | | 392,040 |
| - <1 year | 3,375 | 3,398 | 3,169 | 9,942 |
| 31,008 | 43,497 | 489 | 74,994 |
| 84,936 |
| - 1-5 year | 9,508 | 2,506 | 5,431 | 17,445 |
| 49,789 | 11616 | 1,872 | 63,277 |
| 80,722 |
| - >5<15 year | 46,453 | - | 993 | 47,446 |
| 19,868 | 1,939 | 199 | 22,006 |
| 69,452 |
| - >15 year | 148,939 | - | 2 | 148,941 |
| 7,881 | 35 | 73 | 7,989 |
| 156,930 |
| Other financial assets by asset quality (2) | - | - | - | - | | 2,690 | 26,816 | 123,683 | 153,189 | | 153,189 |
| - AQ1-AQ4 | - | - | - | - |
| 2,690 | 26,084 | 123,683 | 152,457 |
| 152,457 |
| - AQ5-AQ8 | - | - | - | - |
| - | 732 | - | 732 |
| 732 |
| Off-balance sheet | 9,843 | 17,284 | 8,462 | 35,589 | | 73,921 | 22,221 | 227 | 96,369 | | 131,958 |
| - Loan commitments | 9,843 | 17,284 | 8,417 | 35,544 |
| 70,942 | 20,765 | 227 | 91,934 |
| 127,478 |
| - Financial guarantees | - | - | 45 | 45 |
| 2,979 | 1,456 | - | 4,435 |
| 4,480 |
| Off-balance sheet by asset quality (2) | 9,843 | 17,284 | 8,462 | 35,589 | | 73,921 | 22,221 | 227 | 96,369 | | 131,958 |
| - AQ1-AQ4 | 9,099 | 448 | 7,271 | 16,818 |
| 47,296 | 20,644 | 165 | 68,105 |
| 84,923 |
| - AQ5-AQ8 | 721 | 16,518 | 1,162 | 18,401 |
| 26,296 | 1,574 | 45 | 27,915 |
| 46,316 |
| - AQ9 | 7 | 6 | 4 | 17 |
| 15 | - | - | 15 |
| 32 |
| - AQ10 | 16 | 312 | 25 | 353 |
| 314 | 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 | | Internal asset quality band | Probability of default range | Indicative S&P rating |
| AQ1 | 0% - 0.034% | AAA to AA | | AQ6 | 1.076% - 2.153% | BB- to B+ |
| AQ2 | 0.034% - 0.048% | AA to AA- | | AQ7 | 2.153% - 6.089% | B+ to B |
| AQ3 | 0.048% - 0.095% | A+ to A | | AQ8 | 6.089% - 17.222% | B- to CCC+ |
| AQ4 | 0.095% - 0.381% | BBB+ to BBB- | | AQ9 | 17.222% - 100% | CCC to C |
| AQ5 | 0.381% - 1.076% | BB+ to BB | | AQ10 | 100% | D |
£0.3 billion (31 December 2023 - £0.3 billion) of AQ10 Personal balances primarily relate to loan commitments, the drawdown of which is effectively prohibited.
(3) Previously published sectors for the Non-personal portfolio have been re-presented to reflect internal sector reporting. Property is now included in corporate and other.
Risk and capital management continued
Credit risk continued
Sector analysis - portfolio summary
The table below shows ECL by stage, for the Personal portfolio and Non-personal portfolio including the three largest borrowing sector clusters included in corporate and other.
| | Loans - amortised cost and FVOCI |
| Off-balance sheet |
| ECL provisions | |||||||
| |
|
| Loan | Contingent |
|
| ||||||
| | Stage 1 | Stage 2 | Stage 3 | Total |
| commitments | liabilities |
| Stage 1 | Stage 2 | Stage 3 | Total |
| 30 September 2024 | £m | £m | £m | £m |
| £m | £m |
| £m | £m | £m | £m |
| Personal | 197,912 | 24,030 | 3,640 | 225,582 |
| 41,136 | 41 |
| 302 | 480 | 1,123 | 1,905 |
| Mortgages (1) | 185,922 | 20,663 | 2,576 | 209,161 |
| 13,625 | - |
| 60 | 68 | 316 | 444 |
| Credit cards | 4,714 | 1,799 | 167 | 6,680 |
| 19,434 | - |
| 92 | 198 | 114 | 404 |
| Other personal | 7,276 | 1,568 | 897 | 9,741 |
| 8,077 | 41 |
| 150 | 214 | 693 | 1,057 |
| Non-personal | 155,243 | 13,737 | 2,480 | 171,460 |
| 91,492 | 4,520 |
| 298 | 335 | 1,015 | 1,648 |
| Financial institutions (2) | 58,920 | 669 | 58 | 59,647 |
| 19,772 | 1,474 |
| 36 | 9 | 42 | 87 |
| Sovereigns | 1,103 | 133 | 20 | 1,256 |
| 237 | - |
| 13 | 2 | 5 | 20 |
| Corporate and other | 95,220 | 12,935 | 2,402 | 110,557 |
| 71,483 | 3,046 |
| 249 | 324 | 968 | 1,541 |
| Of which: |
| |||||||||||
| Commercial real estate | 16,485 | 1,365 | 410 | 18,260 |
| 6,280 | 120 |
| 60 | 29 | 144 | 233 |
| Consumer industries | 13,114 | 3,399 | 468 | 16,981 |
| 10,533 | 576 |
| 42 | 91 | 198 | 331 |
| Mobility and logistics | 13,674 | 1,535 | 168 | 15,377 |
| 9,497 | 634 |
| 25 | 28 | 56 | 109 |
| Total | 353,155 | 37,767 | 6,120 | 397,042 |
| 132,628 | 4,561 |
| 600 | 815 | 2,138 | 3,553 |
| 31 December 2023 (3) | | | | | | | | | | | | |
| 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 |
| Non-personal | 149,721 | 16,382 | 2,163 | 168,266 | | 91,934 | 4,435 | | 393 | 470 | 818 | 1,681 |
| Financial institutions (2) | 56,105 | 966 | 16 | 57,087 | | 20,765 | 1,456 | | 44 | 15 | 7 | 66 |
| Sovereigns | 2,610 | 1 | 22 | 2,633 | | 227 | - | | 13 | 1 | 2 | 16 |
| Corporate and other | 91,006 | 15,415 | 2,125 | 108,546 | | 70,942 | 2,979 | | 336 | 454 | 809 | 1,599 |
| Of which: | | |||||||||||
| Commercial real estate | 14,998 | 2,040 | 374 | 17,412 |
| 7,155 | 106 |
| 86 | 58 | 112 | 256 |
| Consumer industries | 12,586 | 4,050 | 541 | 17,177 |
| 10,209 | 649 |
| 61 | 119 | 222 | 402 |
| Mobility and logistics | 13,186 | 2,074 | 143 | 15,403 |
| 8,728 | 496 |
| 33 | 39 | 48 | 120 |
| Total | 348,586 | 37,891 | 5,563 | 392,040 | | 127,478 | 4,480 | | 709 | 976 | 1,960 | 3,645 |
(1) As at 30 September 2024, £139.9 billion, 66.9%, of the total residential mortgages portfolio had Energy Performance Certificate (EPC) data available (31 December 2023 - £140.8 billion, 67.6%), of which, 45.7% were rated as EPC A to C (31 December 2023 - 44.1%).
(2) Includes transactions, such as securitisations, where the underlying risk may be in other sectors.
(3) Previously published sectors for the Non-personal portfolio have been re-presented to reflect internal sector reporting. Property is now included in corporate and other.
Risk and capital management continued
Capital, liquidity and funding risk
Introduction
NatWest Group takes a comprehensive approach to the management of capital, liquidity and funding, underpinned by frameworks, risk appetite and policies, to manage and mitigate capital, liquidity and funding risks. The framework ensures the tools and capability are in place to facilitate the management and mitigation of risk ensuring that NatWest Group operates within its regulatory requirements and risk appetite.
Key developments since 31 December 2023
| CET1 ratio 13.9% (as at 31 December 2023 - 13.4%) |
| MREL ratio 32.9% (as at 31 December 2023 - 30.5%) |
| RWAs £181.7bn (as at 31 December 2023 - £183.0bn) |
| The CET1 ratio increased by 50 basis points to 13.9%. The increase in the CET1 ratio was due to a £0.9 billion increase in CET1 capital and a £1.3 billion decrease in RWAs.
The CET1 capital increase was mainly driven by an attributable profit to ordinary shareholders of £2.8 billion (net of ordinary interim dividend paid) and other movements on reserves and regulatory adjustments of £0.1 billion partially offset by a directed buyback of £1.2 billion and a foreseeable ordinary dividend accrual of £0.8 billion.
|
| The Minimum Requirements of own funds and Eligible Liabilities (MREL) ratio increased by 240 basis points to 32.9%, driven by a £4.0 billion increase in MREL and £1.3 billion decrease in RWAs. MREL increased to £59.8 billion driven by a £2.2 billion increase in eligible capital and a £1.8 billion increase in senior unsecured debt. The increase in capital was driven by attributable profit and reserve movements, a £0.8 billion increase due to issuance of $1.0 billion Additional Tier 1 and a £0.6 billion increase driven by issuances and redemptions of subordinated debt instruments in the period. The increase in senior unsecured debt was driven by the issuance of USD debt instruments totalling $4.6 billion and EUR debt instruments totalling €1.8 billion, partially offset by redemption of a €0.8 billion debt instrument and a $2.0 billion debt instrument, and FX movements. |
| Total RWAs decreased by £1.3 billion to £181.7 billion reflecting:
- a decrease in credit risk RWAs of £2.2 billion, primarily due to active RWA management and a reduction in risk weighted assets from foreign exchange movements due to sterling appreciation versus the euro and US dollar. These movements are partially offset by drawdowns and new facilities within Commercial & Institutional, lending growth and the Metro Bank mortgage portfolio acquisition within Retail Banking. - a decrease of £0.5 billion in counterparty credit risk driven by reduced over-the-counter exposures. - a decrease in market risk RWAs of £0.2 billion, predominantly driven by risk reduction activity. - an increase of £1.6 billion in operational risk RWAs following the annual recalculation as a result of higher income compared to 2020. |
| UK leverage ratio 5.0% (as at 31 December 2023 - 5.0%) |
| Liquidity portfolio £226.5bn (as at 31 December 2023 - £222.8bn) |
| LCR 148% (as at 31 December 2023 - 144%) |
| The leverage ratio remains at 5.0%, due to a £31.9 billion increase in leverage exposure offset by a £1.7 billion increase in Tier 1 capital. The key drivers in the leverage exposure were an increase in other financial assets, trading assets, and other off-balance sheet items. |
| The liquidity portfolio increased by £3.7 billion to £226.5 billion during the year. Primary liquidity increased by £14.2 billion to £162.3 billion, driven by an increase in customer deposits and issuance partially offset by increased lending (incl. Metro Bank mortgage portfolio acquisition) and capital distributions (share buyback and dividends). Secondary liquidity decreased £10.5 billion due to a decrease in pre-positioned collateral at the Bank of England. |
| The Liquidity Coverage Ratio (LCR) increased by 4 percentage points to 148%, during the year, driven by increased customer deposits and issuance partially offset by increased lending (incl. Metro Bank mortgage portfolio acquisition) and capital distributions (share buyback and dividends). |
Risk and capital management continued
Capital, liquidity and funding risk continued
Maximum Distributable Amount (MDA) and Minimum Capital Requirements
NatWest Group is subject to minimum capital requirements relative to RWAs. The table below summarises the minimum capital requirements (the sum of Pillar 1 and Pillar 2A), and the additional capital buffers which are held in excess of the regulatory minimum requirements and are usable in stress.
Where the CET1 ratio falls below the sum of the minimum capital and the combined buffer requirement, there is a subsequent automatic restriction on the amount available to service discretionary payments (including AT1 coupons), known as the MDA. Note that different capital requirements apply to individual legal entities or sub-groups and that the table shown does not reflect any incremental PRA buffer requirements, which are not disclosable.
The current capital position provides significant headroom above both NatWest Group's minimum requirements and its MDA threshold requirements.
| Type | CET1 | Total Tier 1 | Total capital |
| Pillar 1 requirements | 4.5% | 6.0% | 8.0% |
| Pillar 2A requirements | 1.8% | 2.4% | 3.2% |
| Minimum Capital Requirements | 6.3% | 8.4% | 11.2% |
| Capital conservation buffer | 2.5% | 2.5% | 2.5% |
| Countercyclical capital buffer (1) | 1.7% | 1.7% | 1.7% |
| MDA threshold (2) | 10.5% | n/a | n/a |
| Overall capital requirement | 10.5% | 12.6% | 15.4% |
| Capital ratios at 30 September 2024 | 13.9% | 16.5% | 19.7% |
| Headroom (3,4) | 3.4% | 3.9% | 4.3% |
(1) The UK countercyclical buffer (CCyB) rate is currently being maintained at 2%. This may vary in either direction in the future subject to how risks develop. Foreign exposures may be subject to different CCyB rates depending on the rate set in those jurisdictions.
(2) Pillar 2A requirements for NatWest Group are set as a variable amount with the exception of some fixed add-ons.
(3) The headroom does not reflect excess distributable capital and may vary over time.
(4) Headroom as at 31 December 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 continued
Capital, liquidity and funding risk continued
Capital and leverage ratios
The table below sets out the key capital and leverage ratios. NatWest Group is subject to the requirements set out in the UK CRR therefore the capital and leverage ratios are presented under these frameworks on a transitional basis.
| | 30 September | 30 June | 31 December |
| | 2024 | 2024 | 2023 |
| Capital adequacy ratios (1) | % | % | % |
| CET1 | 13.9 | 13.6 | 13.4 |
| Tier 1 | 16.5 | 16.2 | 15.5 |
| Total | 19.7 | 19.5 | 18.4 |
| | | | |
| Capital | £m | £m | £m |
| Tangible equity | 26,220 | 25,241 | 25,653 |
| |
| | |
| Expected loss less impairment | (23) | (34) | - |
| Prudential valuation adjustment | (245) | (233) | (279) |
| Deferred tax assets | (746) | (822) | (979) |
| Own credit adjustments | 18 | 19 | (10) |
| Pension fund assets | (162) | (161) | (143) |
| Cash flow hedging reserve | 1,365 | 1,812 | 1,899 |
| Foreseeable ordinary dividends | (808) | (839) | (1,013) |
| Adjustment for trust assets (2) | (365) | (365) | (365) |
| Foreseeable charges | - | (50) | (525) |
| Adjustments under IFRS 9 transitional arrangements | 42 | 39 | 202 |
| Total regulatory adjustments | (924) | (634) | (1,213) |
| |
| | |
| CET1 capital | 25,296 | 24,607 | 24,440 |
| |
| | |
| Additional AT1 capital | 4,670 | 4,670 | 3,875 |
| Tier 1 capital | 29,966 | 29,277 | 28,315 |
| |
| | |
| Tier 2 capital | 5,824 | 5,924 | 5,317 |
| Total regulatory capital | 35,790 | 35,201 | 33,632 |
| |
| | |
| Risk-weighted assets |
| | |
| Credit risk | 145,448 | 144,852 | 147,598 |
| Counterparty credit risk | 7,255 | 7,139 | 7,830 |
| Market risk | 7,190 | 6,956 | 7,363 |
| Operational risk | 21,821 | 21,821 | 20,198 |
| Total RWAs | 181,714 | 180,768 | 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 30 September 2024 was £42 million for CET1 capital, £42 million for Total Capital and £3 million RWAs (30 June 2024 - £39 million CET1 capital, £39 million Total Capital and £1 million RWAs and 31 December 2023 - £0.2 billion CET1 capital, £54 million Total Capital and £17 million RWAs). Excluding this adjustment, the CET1 ratio would be 13.9% (30 June 2024 - 13.6% and 31 December 2023 - 13.2%). Tier 1 Capital ratio would be 16.5% (30 June 2024 - 16.2% and 31 December 2023 - 15.4%) and the Total Capital ratio would be 19.7% (30 June 2024 - 19.5% and 31 December 2023 - 18.4%).
(2) Prudent deduction in respect of agreement with the pension fund.
Risk and capital management continued
Capital, liquidity and funding risk continued
Capital and leverage ratios continued
|
| 30 September | 30 June | 31 December |
|
| 2024 | 2024 | 2023 |
| Leverage | £m | £m | £m |
| Cash and balances at central banks | 105,629 | 115,833 | 104,262 |
| Trading assets | 54,445 | 45,974 | 45,551 |
| Derivatives | 68,720 | 67,514 | 78,904 |
| Financial assets | 455,770 | 437,909 | 439,449 |
| Other assets | 27,317 | 22,116 | 23,605 |
| Assets of disposal groups | 16 | 992 | 902 |
| Total assets | 711,897 | 690,338 | 692,673 |
| Derivatives |
| | |
| - netting and variation margin | (66,427) | (66,846) | (79,299) |
| - potential future exposures | 16,047 | 16,829 | 17,212 |
| Securities financing transactions gross up | 1,588 | 1,645 | 1,868 |
| Other off balance sheet items | 57,154 | 55,003 | 50,961 |
| Regulatory deductions and other adjustments | (20,707) | (15,782) | (16,043) |
| Claims on central banks | (102,090) | (112,377) | (100,735) |
| Exclusion of bounce back loans | (2,746) | (3,084) | (3,794) |
| UK leverage exposure | 594,716 | 565,726 | 562,843 |
| UK leverage ratio (%) (1) | 5.0 | 5.2 | 5.0 |
(1) The UK leverage exposure and transitional Tier 1 capital are calculated in accordance with current PRA rules. Excluding the IFRS 9 transitional adjustment, the UK leverage ratio would be 5.0% (30 June 2024 - 5.2%, 31 December 2023 - 5.0%).
Risk and capital management continued
Capital, liquidity and funding risk continued
Capital flow statement
The table below analyses the movement in CET1, AT1 and Tier 2 capital for the nine months ended 30 September 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 | 3,271 | - | - | 3,271 |
| Ordinary interim dividend paid | (497) | - | - | (497) |
| Directed buyback | (1,241) | - | - | (1,241) |
| Foreseeable ordinary dividends | (808) | - | - | (808) |
| Foreign exchange reserve | (137) | - | - | (137) |
| FVOCI reserve | (8) | - | - | (8) |
| Own credit | 28 | - | - | 28 |
| Share based remuneration and shares vested under employee share schemes | 135 | - | - | 135 |
| Goodwill and intangibles deduction | 26 | - | - | 26 |
| Deferred tax assets | 233 | - | - | 233 |
| Prudential valuation adjustments | 34 | - | - | 34 |
| New issues of capital instruments | - | 795 | 1,341 | 2,136 |
| Redemption of capital instruments | - | - | (622) | (622) |
| Foreign exchange movements | - | - | (84) | (84) |
| Adjustment under IFRS 9 transitional arrangements | (160) | - | - | (160) |
| Expected loss less impairment | (23) | - | - | (23) |
| Other movements | 3 | - | (128) | (125) |
| At 30 September 2024 | 25,296 | 4,670 | 5,824 | 35,790 |
- For CET1 movements refer to the key points on page 24.
- AT1 movements reflects the £0.8 billion issued of the $1.0 billion 8.125% Reset Perpetual Subordinated Contingent Convertible Notes issued in May 2024.
- Tier 2 instrument movements of £0.6 billion include £0.8 billion in relation to $1.0 billion 6.475% Fixed to Fixed Reset Subordinated Tier 2 Notes 2034 issued in March 2024 and a £0.6 billion 5.642% Fixed to Fixed Reset Subordinated Tier 2 Notes 2034 issued in September 2024, partially offset by the £0.1 billion redemption of 5.125% Subordinated Tier 2 Notes 2024 in May 2024, £0.6 billion in relation to the $750 million redemption of Fixed to Fixed Reset Subordinated Tier 2 Notes 2029 in September 2024 and foreign exchange movements.
- Within Tier 2, there was also a decrease in the Tier 2 surplus provisions.
Risk and capital management continued
Capital, liquidity and funding risk continued
Risk-weighted assets
The table below analyses the movement in RWAs for the nine months ended 30 September 2024, 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 | (1.0) | - | - | - | (1.0) |
| Business movement | (1.4) | (0.4) | (0.2) | 1.6 | (0.4) |
| Risk parameter changes | (0.7) | (0.1) | - | - | (0.8) |
| Model updates | - | - | - | - | - |
| Acquisitions | 0.9 | - | - | - | 0.9 |
| At 30 September 2024 | 145.4 | 7.3 | 7.2 | 21.8 | 181.7 |
The table below analyses segmental RWAs.
| |
|
|
|
| Total |
| | Retail | Private | Commercial & | Central items | NatWest |
| | Banking | Banking | Institutional | & other | 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 | - | - | (1.0) | - | (1.0) |
| Business movement | 2.0 | (0.2) | (1.3) | (0.9) | (0.4) |
| Risk parameter changes | 0.1 | - | (0.9) | - | (0.8) |
| Model updates | 0.2 | - | (0.2) | - | - |
| Acquisitions | 0.9 | - | - | - | 0.9 |
| At 30 September 2024 | 64.8 | 11.0 | 104.0 | 1.9 | 181.7 |
| |
| ||||
| Credit risk | 56.4 | 9.5 | 78.1 | 1.4 | 145.4 |
| Counterparty credit risk | 0.2 | - | 7.1 | - | 7.3 |
| Market risk | 0.1 | - | 7.1 | - | 7.2 |
| Operational risk | 8.1 | 1.5 | 11.7 | 0.5 | 21.8 |
| Total RWAs | 64.8 | 11.0 | 104.0 | 1.9 | 181.7 |
Total RWAs decreased by £1.3 billion to £181.7 billion during the period mainly reflecting:
- A reduction in risk weighted assets from foreign exchange movements of £1.0 billion due to sterling appreciation versus the euro and US dollar.
- A decrease in business movements of £0.4 billion primarily due to active RWA management of £5.6 billion, partially offset by the recalculation of operational risk as a result of higher income when compared to 2020 and an increase in drawdowns and new facilities within Commercial & Institutional. Further increases in Retail Banking reflecting lending growth.
- Reduction in risk parameters of £0.8 billion primarily driven by customers moving into default and improved risk metrics within Commercial & Institutional.
- An offsetting movement in model updates driven by IRB Temporary Model Adjustment within Retail Banking and Commercial & Institutional.
- An increase in acquisitions of £0.9 billion for the Metro Bank mortgage portfolio acquisition within Retail Banking.
Risk and capital management continued
Capital, liquidity and funding risk continued
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 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 | ||||||||||
| | 30 September 2024 |
| 30 June 2024 |
| 31 December 2023 | ||||||
| | NatWest | NWH | UK DoL |
| NatWest | NWH | UK DoL |
| NatWest | NWH | UK DoL |
| | Group (1) | Group (2) | Sub |
| Group (1) | Group (2) | Sub |
| Group (1) | Group (2) | Sub |
| | £m | £m | £m |
| £m | £m | £m |
| £m | £m | £m |
| Cash and balances at central banks | 101,413 | 69,097 | 68,621 |
| 111,763 | 73,408 | 72,895 |
| 99,855 | 68,495 | 67,954 |
| High quality government/MDB/PSE and GSE bonds (4) | 48,401 | 36,187 | 36,187 |
| 35,616 | 26,253 | 26,253 |
| 36,250 | 26,510 | 26,510 |
| Extremely high quality covered bonds | 3,820 | 3,820 | 3,820 |
| 3,892 | 3,892 | 3,892 |
| 4,164 | 4,164 | 4,164 |
| LCR level 1 assets | 153,634 | 109,104 | 108,628 |
| 151,271 | 103,553 | 103,040 |
| 140,269 | 99,169 | 98,628 |
| LCR level 2 Eligible Assets (5) | 8,629 | 7,444 | 7,444 |
| 9,124 | 7,897 | 7,897 |
| 7,796 | 7,320 | 7,320 |
| Primary liquidity (HQLA) (6) | 162,263 | 116,548 | 116,072 |
| 160,395 | 111,450 | 110,937 |
| 148,065 | 106,489 | 105,948 |
| Secondary liquidity | 64,214 | 64,186 | 64,186 |
| 66,589 | 66,559 | 66,559 |
| 74,722 | 74,683 | 74,683 |
| Total liquidity value | 226,477 | 180,734 | 180,258 |
| 226,984 | 178,009 | 177,496 |
| 222,787 | 181,172 | 180,631 |
(1) NatWest Group includes the UK Domestic Liquidity Sub-Group (UK DoLSub), NatWest Markets Plc and other significant operating subsidiaries that hold liquidity portfolios. These include RBSI Ltd and NWM N.V. who hold managed portfolios that comply with local regulations that may differ from PRA rules.
(2) NWH Group comprises UK DoLSub and NatWest Bank Europe GmbH who hold managed portfolios that comply with local regulations that may differ from PRA rules.
(3) NatWest Markets Plc liquidity portfolio is reported in the NatWest Markets Plc 2023 Annual Report and Accounts.
(4) Multilateral development bank abbreviated to MDB, public sector entities abbreviated to PSE and government sponsored entities abbreviated to GSE.
(5) Includes Level 2A and Level 2B.
(6) High-quality liquid assets abbreviated to HQLA.
Pension risk
In September 2024, the Trustee of the NatWest Group Pension Fund entered into a further buy-in transaction with a third party insurer for some of the liabilities of the Main section. Around a third of the Main section is now covered by insurance policies that give protection against demographic and investment risks, improving security of the member benefits. The transaction does not affect the 2024 statement of comprehensive income because the net pension asset is limited to zero due to the impact of the asset ceiling.
Condensed consolidated income statement
for the period ended 30 September 2024 (unaudited)
|
| Nine months ended | | Quarter ended | |||
|
| 30 September | 30 September | | 30 September | 30 June | 30 September |
|
| 2024 | 2023 | | 2024 | 2024 | 2023 |
|
| £m | £m |
| £m | £m | £m |
| Interest receivable | 18,734 | 15,071 | | 6,444 | 6,235 | 5,589 |
| Interest payable | (10,427) | (6,660) | | (3,545) | (3,478) | (2,904) |
| Net interest income | 8,307 | 8,411 | | 2,899 | 2,757 | 2,685 |
| Fees and commissions receivable | 2,378 | 2,213 | | 811 | 797 | 754 |
| Fees and commissions payable | (529) | (484) | | (181) | (171) | (169) |
| Trading income | 607 | 609 | | 257 | 221 | 191 |
| Other operating income | 115 | 466 | | (42) | 55 | 27 |
| Non-interest income | 2,571 | 2,804 | | 845 | 902 | 803 |
| Total income | 10,878 | 11,215 | | 3,744 | 3,659 | 3,488 |
| Staff costs | (3,112) | (2,924) | | (965) | (1,085) | (919) |
| Premises and equipment | (863) | (845) | | (284) | (286) | (275) |
| Other administrative expenses | (1,153) | (1,390) | | (330) | (399) | (519) |
| Depreciation and amortisation | (754) | (683) | | (246) | (235) | (214) |
| Operating expenses | (5,882) | (5,842) | | (1,825) | (2,005) | (1,927) |
| Profit before impairment losses/releases | 4,996 | 5,373 | | 1,919 | 1,654 | 1,561 |
| Impairment (losses)/releases | (293) | (452) | | (245) | 45 | (229) |
| Operating profit before tax | 4,703 | 4,921 | | 1,674 | 1,699 | 1,332 |
| Tax charge | (1,232) | (1,439) | | (431) | (462) | (378) |
| Profit from continuing operations | 3,471 | 3,482 | | 1,243 | 1,237 | 954 |
| Profit/(loss) from discontinued operations, net of tax | 12 | (138) | | 1 | 15 | (30) |
| Profit for the period | 3,483 | 3,344 | | 1,244 | 1,252 | 924 |
| |
| | |
| | |
| Attributable to: |
| | |
| | |
| Ordinary shareholders | 3,271 | 3,165 | | 1,172 | 1,181 | 866 |
| Paid-in equity holders | 202 | 182 | | 73 | 69 | 61 |
| Non-controlling interests | 10 | (3) | | (1) | 2 | (3) |
| | 3,483 | 3,344 | | 1,244 | 1,252 | 924 |
| |
| | |
| | |
| |
| | |
| | |
| Earnings per ordinary share - continuing operations | 38.2p | 35.6p | | 14.1p | 13.5p | 10.1p |
| Earnings per ordinary share - discontinued operations | 0.1p | (1.5p) | | 0.0p | 0.2p | (0.3p) |
| Total earnings per share attributable to ordinary shareholders - basic | 38.3p | 34.1p | | 14.1p | 13.7p | 9.8p |
| Earnings per ordinary share - fully diluted continuing operations | 37.9p | 35.4p | | 14.0p | 13.4p | 10.1p |
| Earnings per ordinary share - fully diluted discontinued operations | 0.1p | (1.5p) | | 0.0p | 0.2p | (0.3p) |
| Total earnings per share attributable to ordinary shareholders - fully diluted | 38.0p | 33.9p | | 14.0p | 13.6p | 9.8p |
Condensed consolidated statement of comprehensive income
for the period ended 30 September 2024 (unaudited)
|
| Nine months ended |
| Quarter ended | |||
| | 30 September | 30 September | | 30 September | 30 June | 30 September |
| | 2024 | 2023 | | 2024 | 2024 | 2023 |
| | £m | £m | | £m | £m | £m |
| Profit for the period | 3,483 | 3,344 | | 1,244 | 1,252 | 924 |
| Items that will not be reclassified subsequently to profit or loss: |
| |
| | ||
| Remeasurement of retirement benefit schemes | (92) | (105) | | (32) | (24) | (41) |
| Changes in fair value of financial liabilities designated at fair value through profit or loss (FVTPL) |
| |
| | ||
| due to changes in credit risk | (25) | (27) | | 1 | (3) | (23) |
| FVOCI financial assets | 16 | 36 | | 49 | (20) | 6 |
| Tax | 39 | 20 | | (5) | 13 | 13 |
|
| (62) | (76) |
| 13 | (34) | (45) |
| Items that will be reclassified subsequently to profit or loss when specific conditions are met: | | | | | ||
| FVOCI financial assets | 21 | 65 | | (20) | (4) | 12 |
| Cash flow hedges | 732 | (208) | | 611 | 187 | 526 |
| Currency translation | (119) | (401) | | (77) | (17) | 68 |
| Tax | (221) | (16) | | (164) | (60) | (143) |
| | 413 | (560) | | 350 | 106 | 463 |
| Other comprehensive profit/(losses) after tax | 351 | (636) |
| 363 | 72 | 418 |
| Total comprehensive income for the period | 3,834 | 2,708 |
| 1,607 | 1,324 | 1,342 |
| |
| |
| | ||
| Attributable to: |
| |
| | ||
| Ordinary shareholders | 3,622 | 2,529 | | 1,535 | 1,253 | 1,284 |
| Paid-in equity holders | 202 | 182 | | 73 | 69 | 61 |
| Non-controlling interests | 10 | (3) | | (1) | 2 | (3) |
| | 3,834 | 2,708 | | 1,607 | 1,324 | 1,342 |
Condensed consolidated balance sheet
as at 30 September 2024 (unaudited)
|
| 30 September | 31 December |
|
| 2024 | 2023 |
|
| £m | £m |
| Assets |
| |
| Cash and balances at central banks | 105,629 | 104,262 |
| Trading assets | 54,445 | 45,551 |
| Derivatives | 68,720 | 78,904 |
| Settlement balances | 11,637 | 7,231 |
| Loans to banks - amortised cost | 6,742 | 6,914 |
| Loans to customers - amortised cost | 386,723 | 381,433 |
| Other financial assets | 62,305 | 51,102 |
| Intangible assets | 7,588 | 7,614 |
| Other assets | 8,092 | 8,760 |
| Assets of disposal groups | 16 | 902 |
| Total assets | 711,897 | 692,673 |
|
|
| |
| Liabilities |
| |
| Bank deposits | 31,747 | 22,190 |
| Customer deposits | 431,070 | 431,377 |
| Settlement balances | 12,283 | 6,645 |
| Trading liabilities | 59,079 | 53,636 |
| Derivatives | 61,650 | 72,395 |
| Other financial liabilities | 63,552 | 55,089 |
| Subordinated liabilities | 6,669 | 5,714 |
| Notes in circulation | 3,304 | 3,237 |
| Other liabilities | 4,004 | 5,202 |
| Total liabilities | 673,358 | 655,485 |
| |
| |
| Equity |
| |
| Ordinary shareholders' interests | 33,808 | 33,267 |
| Other owners' interests | 4,690 | 3,890 |
| Owners' equity | 38,498 | 37,157 |
| Non-controlling interests | 41 | 31 |
| Total equity | 38,539 | 37,188 |
|
|
| |
| Total liabilities and equity | 711,897 | 692,673 |
Condensed consolidated statement of changes in equity
for the period ended 30 September 2024 (unaudited)
|
| Share | | Other | | Other reserves | Total | Non |
| |||
| | capital and | Paid-in | statutory | Retained | | Cash flow | Foreign | | owners' | controlling | Total |
| | share premium | equity | reserves (3) | earnings | Fair value | hedging | exchange | Merger | equity | interests | equity |
| | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| At 1 January 2024 | 10,844 | 3,890 | 2,004 | 10,645 | (49) | (1,899) | 841 | 10,881 | 37,157 | 31 | 37,188 |
| Profit attributable to ordinary shareholders |
| ||||||||||
| and other equity owners |
| ||||||||||
| - continuing operations |
| 3,461 |
| 3,461 | 10 | 3,471 | |||||
| - discontinued operations |
| 12 |
| 12 | - | 12 | |||||
| |
|
|
|
|
|
| |||||
| Other comprehensive income |
| ||||||||||
| Realised gains in period on FVOCI equity shares |
| 54 | (54) |
| - |
| - | ||||
| Remeasurement of retirement benefit schemes |
| (92) |
| (92) |
| (92) | |||||
| Changes in fair value of credit in financial liabilities |
| ||||||||||
| designated at FVTPL due to own credit risk |
| (25) |
| (25) |
| (25) | |||||
| Unrealised gains |
| 24 |
| 24 |
| 24 | |||||
| Amounts recognised in equity |
| (442) |
| (442) |
| (442) | |||||
| Retranslation of net assets |
| (283) |
| (283) |
| (283) | |||||
| Gains on hedges of net assets |
| 122 |
| 122 |
| 122 | |||||
| Amount transferred from equity to earnings |
| 13 | 1,174 | 42 |
| 1,229 |
| 1,229 | |||
| Tax |
| 25 | 9 | (198) | (18) |
| (182) |
| (182) | ||
| Total comprehensive income/(loss) | - | - | - | 3,435 | (8) | 534 | (137) | - | 3,824 | 10 | 3,834 |
| |
| ||||||||||
| Transactions with owners |
| ||||||||||
| Ordinary share dividends paid |
| (1,505) |
| (1,505) | - | (1,505) | |||||
| Paid in equity dividends |
| (202) |
| (202) |
| (202) | |||||
| Securities issued |
| 800 |
| 800 |
| 800 | |||||
| Shares repurchased during the period (1,2) | (428) |
| 428 | (1,171) |
| (1,171) |
| (1,171) | |||
| Share based remuneration and shares vested |
| ||||||||||
| under employee share schemes |
| 142 | (7) |
| 135 |
| 135 | ||||
| Own shares acquired |
| (540) |
| (540) |
| (540) | |||||
| At 30 September 2024 | 10,416 | 4,690 | 2,034 | 11,195 | (57) | (1,365) | 704 | 10,881 | 38,498 | 41 | 38,539 |
Condensed consolidated statement of changes in equity for the period ended 30 September 2023 (unaudited) continued
|
| Share | | Other | | Other reserves | Total | Non | | |||
| | capital and | Paid-in | statutory | Retained | | Cash flow | Foreign | | owners' | controlling | Total |
| | share premium | equity | reserves (3) | earnings | Fair value | hedging | exchange | Merger | equity | interests | equity |
| | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| At 1 January 2023 | 11,700 | 3,890 | 1,393 | 10,019 | (102) | (2,771) | 1,478 | 10,881 | 36,488 | 8 | 36,496 |
| Profit/(loss) attributable to ordinary shareholders | | ||||||||||
| and other equity owners | | ||||||||||
| - continuing operations | | 3,485 | | 3,485 | (3) | 3,482 | |||||
| - discontinued operations | | (138) | | (138) | - | (138) | |||||
| | | | | | | | |||||
| Other comprehensive income | | ||||||||||
| Realised gains in period on FVOCI equity shares | | 2 | (2) | | - | | - | ||||
| Remeasurement of retirement benefit schemes | | (105) | | (105) | | (105) | |||||
| Changes in fair value of credit in financial liabilities | | ||||||||||
| designated at FVTPL due to own credit risk | | (27) | | (27) | | (27) | |||||
| Unrealised gains | | 68 | | 68 | | 68 | |||||
| Amounts recognised in equity | | (821) | | (821) | | (821) | |||||
| Retranslation of net assets | | (189) | | (189) | | (189) | |||||
| Gains on hedges of net assets | | 111 | | 111 | | 111 | |||||
| Amount transferred from equity to earnings (4) | | 33 | 613 | (323) | | 323 | | 323 | |||
| Tax | | 27 | (17) | 12 | (18) | | 4 | | 4 | ||
| Total comprehensive income/(loss) | - | - | - | 3,244 | 82 | (196) | (419) | - | 2,711 | (3) | 2,708 |
| | | ||||||||||
| Transactions with owners | | ||||||||||
| Ordinary share dividends paid | | (1,456) | | (1,456) | - | (1,456) | |||||
| Paid in equity dividends | | (182) | | (182) | | (182) | |||||
| Shares repurchased during the period (1,2) | (751) | | 751 | (1,852) | | (1,852) | | (1,852) | |||
| Share based remuneration and shares vested | | ||||||||||
| under employee share schemes | | (10) | | (10) | | (10) | |||||
| Own shares acquired | | (279) | | (279) | | (279) | |||||
| Acquisition of subsidiary | | - | 32 | 32 | |||||||
| At 30 September 2023 | 10,949 | 3,890 | 1,865 | 9,763 | (20) | (2,967) | 1,059 | 10,881 | 35,420 | 37 | 35,457 |
| (1) | As part of the On Market Share Buyback Programmes NatWest Group plc repurchased and cancelled 173.3 million (September 2023 - 364.3 million) shares. The total consideration of these shares excluding fees was £450.9 million (September 2023 - £951.0 million). Included in the retained earnings reserve movement is 2.3 million shares which were repurchased and cancelled in December 2023, settled in January 2024 for a total consideration of £4.9 million. The nominal value of the share cancellations has been transferred to the capital redemption reserve. |
| (2) | In June 2024, there was an agreement to buy 392.4 million (May 2023 - 469.2 million) ordinary shares of the Company from His Majesty's Treasury at 316.2 pence per share (May 2023 - 268.4 pence per share) for total consideration of £1.2 billion (May 2023 - £1.3 billion). NatWest Group cancelled 222.4 million (May 2023 - 336.2 million) of the purchased ordinary shares, amounting to £706.9 million (May 2023 - £906.9 million) excluding fees and held the remaining 170.0 million (May 2023 - 133.0 million) shares as Own Shares Held, amounting to £540.2 million (May 2023 - £358.8 million), excluding fees. The nominal value of the share cancellation has been transferred to the capital redemption reserve. |
| (3) | Other statutory reserves consist of Capital redemption reserves of £2,935 million (2023 - £2,402 million) and Own shares held reserves of (£901) million (2023 - (£537) million). |
| (4) | Includes £305 million FX recycled to profit or loss upon completion of a capital repayment by UBIDAC in 2023. |
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 Interim Results 2024, issued on 26 July 2024, included disclosures about NatWest Group's litigation and regulatory matters in Note 14. Set out below are the material developments in those matters (which have been previously disclosed) since publication of the Interim Results 2024.
Litigation
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. 1MDB 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. 1MDB has appealed that decision and a prior decision by the court not to allow them to discontinue their claim. Both appeals are scheduled to be heard in December 2024.
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.
Regulatory matters
Review and investigation of treatment of tracker mortgage customers in Ulster Bank Ireland DAC
In December 2015, correspondence was received from the Central Bank of Ireland setting out an industry examination framework in respect of the sale of tracker mortgages from approximately 2001 until the end of 2015. The redress and compensation process has now largely concluded, although a small number of cases remain outstanding relating to uncontactable customers.
UBIDAC customers have lodged tracker mortgage complaints with the Financial Services and Pensions Ombudsman (FSPO). UBIDAC challenged three FSPO adjudications in the Irish High Court. In June 2023, the High Court found in favour of the FSPO in all matters and a provision was recognised. UBIDAC appealed that decision to the Court of Appeal and a hearing took place in February 2024. In September 2024, the Court of Appeal allowed UBIDAC's appeal and set aside certain findings of the FSPO. The Court of Appeal directed one aspect of the FSPO decisions to be remitted to the FSPO for consideration following an oral hearing.
3. Post balance sheet events
Other than as disclosed in this document, there have been no significant events between 30 September 2024 and the date of approval of this announcement which would require a change to, or additional disclosure, in the announcement.
Presentation of information
'Parent company' refers to NatWest Group plc and 'NatWest Group' and 'we' refers to NatWest Group plc and its subsidiary and associated undertakings. The term 'NWH Group' refers to NatWest Holdings Limited (NWH) and its subsidiary and associated undertakings. The term 'NWM Group' refers to NatWest Markets Plc (NWM Plc) and its subsidiary and associated undertakings. The term 'NWM N.V.' refers to NatWest Markets N.V. The term 'NWMSI' refers to NatWest Markets Securities, Inc. The term 'RBS plc' refers to The Royal Bank of Scotland plc. The term 'NWB Plc' refers to National Westminster Bank Plc. The term 'UBIDAC' refers to Ulster Bank Ireland DAC.
NatWest Group publishes its financial statements in pounds sterling ('£' or 'sterling'). The abbreviations '£m' and '£bn' represent millions and thousands of millions of pounds sterling, respectively, and references to 'pence' or 'p' represent pence where the amounts are denominated in pounds sterling ('GBP'). Reference to 'dollars' or '$' are to United States of America ('US') dollars. The abbreviations '$m' and '$bn' represent millions and thousands of millions of dollars, respectively. The abbreviation '€' represents the 'euro', and the abbreviations '€m' and '€bn' represent millions and thousands of millions of euros, respectively.
Statutory accounts
Financial information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 ('the Act'). The statutory accounts for the year ended 31 December 2023 have been filed with the Registrar of Companies. 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: Time: Zoom ID: | 25 October 2024 9am 921 0980 4618 |
Available on natwestgroup.com/results
- Q3 2024 Interim Management Statement and background slides.
- A financial supplement containing income statement, balance sheet and segment performance for five quarters ended 30 September 2024.
- NatWest Group Pillar 3 at 30 September 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 outlook, guidance and targets (including in relation to RoTE, income, operating costs, loan impairment rate, CET1 ratio, RWA levels, payment of dividends and participation in directed buybacks), its economic and political risks, its financial position, profitability and financial performance, the implementation of its strategy, 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 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 uncertainties (such as the direct and indirect impacts of escalating armed conflicts) 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 Results for H1 2024 on Form 6-K, NatWest Group plc's Interim Management Statement for Q1 and Q3 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.
Non-IFRS financial measures
NatWest Group prepares its financial statements in accordance with UK-adopted International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS). This document contains a number of non-IFRS measures, also known as alternative performance measures, defined under the European Securities and Markets Authority (ESMA) guidance or non-GAAP financial measures in accordance with the Securities and Exchange Commission (SEC) regulations. These measures are adjusted for notable and other defined items which management believes are not representative of the underlying performance of the business and which distort period-on-period comparison.
The non-IFRS measures provide users of the financial statements with a consistent basis for comparing business performance between financial periods and information on elements of performance that are one-off in nature. The non-IFRS measures also include a calculation of metrics that are used throughout the banking industry.
These non-IFRS measures are not a substitute for IFRS measures and a reconciliation to the closest IFRS measure is presented where appropriate.
| Measure | Description |
| Cost:income ratio (excl. litigation and conduct) Refer to table 2. Cost:income ratio (excl. litigation and conduct) on page 40. | 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. |
| Customer deposits excluding central items Refer to Segmental performance on pages 11-15 for components of calculation. | 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. |
| Funded assets Refer to Condensed consolidated balance sheet on page 33 for components of calculation. | 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. |
| Loan:deposit ratio (excl. repos and reverse repos) Refer to table 5. Loan:deposit ratio (excl. repos and reverse repos) on page 41. | Loan:deposit ratio (excl. repos and reverse repos) is calculated as net customer loans held at amortised cost excluding reverse repos divided by total customer deposits excluding repos. This metric is 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. The nearest ratio using IFRS measures is loan:deposit ratio. This is calculated as net loans to customers held at amortised cost divided by customer deposits. |
| NatWest Group return on tangible equity Refer to table 6. NatWest Group return on tangible equity on page 42. | NatWest Group 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. The nearest ratio using IFRS measures is return on equity. This comprises profit attributable to ordinary shareholders divided by average total equity. |
Non-IFRS financial measures continued
| Measure | Description |
| Net interest margin (NIM) and average interest earning assets Refer to Segmental performance on pages 11-15 for components of calculation. | Net interest margin is net interest income, as a percentage of average interest earning assets (IEA). Average IEA are average IEA of the banking business of NatWest Group and 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. |
| Net loans to customers excluding central items Refer to Segmental performance on pages 11-15 for components of calculation. | 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. |
| Operating expenses excluding litigation and conduct Refer to table 4. Operating expenses excluding litigation and conduct on page 41. | The management analysis of operating expenses shows litigation and conduct costs separately. 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. |
| Segmental return on equity Refer to table 7. Segmental return on equity on page 42. | Segment 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. |
| Tangible net asset value (TNAV) per ordinary share Refer to table 3. Tangible net asset value (TNAV) per ordinary share on page 40. | 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. The nearest ratio using IFRS measures is: net asset value (NAV) per ordinary share - this comprises ordinary shareholders' interests divided by the number of ordinary shares in issue. |
| Total income excluding notable items Refer to table 1. Total income excluding notable items on page 40. | 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 items which may distort period-on-period comparisons. |
Non-IFRS financial measures continued
1. Total income excluding notable items
| | Nine months ended | | Quarter ended | |||
| | 30 September | 30 September | | 30 September | 30 June | 30 September |
|
| 2024 | 2023 | | 2024 | 2024 | 2023 |
|
| £m | £m | | £m | £m | £m |
| Continuing operations |
| | |
| | |
| Total income | 10,878 | 11,215 | | 3,744 | 3,659 | 3,488 |
| Less notable items: |
| | |
| | |
| Commercial & Institutional |
| | |
| | |
| Own credit adjustments (OCA) | (5) | 3 | | 2 | (2) | (6) |
| Central items & other |
| | |
| | |
| Liquidity Asset Bond sale losses | - | (33) | | - | - | (9) |
| Share of associate profits/(losses) for Business Growth Fund | 22 | (5) | | 11 | 4 | 10 |
| Property lease termination losses | - | (69) | | - | - | (69) |
| Interest and FX management derivatives not in hedge accounting relationships | 131 | 100 | | 5 | 67 | 48 |
| FX recycling (losses)/gains | (46) | 322 | | (46) | - | - |
| | 102 | 318 | | (28) | 69 | (26) |
| Total income excluding notable items | 10,776 | 10,897 | | 3,772 | 3,590 | 3,514 |
2. Cost:income ratio (excl. litigation and conduct)
|
| Nine months ended |
| Quarter ended | |||
|
| 30 September | 30 September |
| 30 September | 30 June | 30 September |
|
| 2024 | 2023 |
| 2024 | 2024 | 2023 |
|
| £m | £m |
| £m | £m | £m |
| Continuing operations |
|
|
|
|
|
|
| Operating expenses | 5,882 | 5,842 | | 1,825 | 2,005 | 1,927 |
| Less litigation and conduct costs | (142) | (242) | | (41) | (77) | (134) |
| Other operating expenses | 5,740 | 5,600 | | 1,784 | 1,928 | 1,793 |
| |
| |
| | ||
| Total income | 10,878 | 11,215 | | 3,744 | 3,659 | 3,488 |
| |
| |
| | ||
| Cost:income ratio | 54.1% | 52.1% | | 48.7% | 54.8% | 55.2% |
| Cost:income ratio (excl. litigation and conduct) | 52.8% | 49.9% | | 47.6% | 52.7% | 51.4% |
3. Tangible net asset value (TNAV) per ordinary share
|
| As at | ||
|
| 30 September | 30 June | 31 December |
|
| 2024 | 2024 | 2023 |
| Ordinary shareholders' interests (£m) | 33,808 | 32,831 | 33,267 |
| Less intangible assets (£m) | (7,588) | (7,590) | (7,614) |
| Tangible equity (£m) | 26,220 | 25,241 | 25,653 |
| |
| | |
| Ordinary shares in issue (millions) (1) | 8,293 | 8,307 | 8,792 |
| |
| | |
| NAV per ordinary share (pence) | 408p | 395p | 378p |
| TNAV per ordinary share (pence) | 316p | 304p | 292p |
(1) The number of ordinary shares in issue excludes own shares held.
Non-IFRS financial measures continued
4. Operating expenses excluding litigation and conduct
|
| Nine months ended | | Quarter ended | |||
|
| 30 September | 30 September | | 30 September | 30 June | 30 September |
|
| 2024 | 2023 | | 2024 | 2024 | 2023 |
|
| £m | £m | | £m | £m | £m |
| Other operating expenses |
|
|
|
|
|
|
| Staff expenses | 3,060 | 2,878 |
| 947 | 1,064 | 904 |
| Premises and equipment | 863 | 845 |
| 284 | 286 | 275 |
| Other administrative expenses | 1,063 | 1,194 |
| 307 | 343 | 400 |
| Depreciation and amortisation | 754 | 683 |
| 246 | 235 | 214 |
| Total other operating expenses | 5,740 | 5,600 |
| 1,784 | 1,928 | 1,793 |
| |
| |
|
| | |
| Litigation and conduct costs |
| |
|
| | |
| Staff expenses | 52 | 46 |
| 18 | 21 | 15 |
| Other administrative expenses | 90 | 196 |
| 23 | 56 | 119 |
| Total litigation and conduct costs | 142 | 242 |
| 41 | 77 | 134 |
| |
| |
|
| | |
| Total operating expenses | 5,882 | 5,842 |
| 1,825 | 2,005 | 1,927 |
| Operating expenses excluding litigation and conduct | 5,740 | 5,600 |
| 1,784 | 1,928 | 1,793 |
5. Loan:deposit ratio (excl. repos and reverse repos)
| | As at | ||
| | 30 September | 30 June | 31 December |
|
| 2024 | 2024 | 2023 |
|
| £m | £m | £m |
| Loans to customers - amortised cost | 386,723 | 379,331 | 381,433 |
| Less reverse repos | (25,115) | (24,961) | (27,117) |
| Loans to customers - amortised cost (excl. reverse repos) | 361,608 | 354,370 | 354,316 |
| |
| | |
| Customer deposits | 431,070 | 432,975 | 431,377 |
| Less repos | (2,482) | (6,846) | (10,844) |
| Customer deposits (excl. repos) | 428,588 | 426,129 | 420,533 |
| | | | |
| Loan:deposit ratio (%) | 90% | 88% | 88% |
| Loan:deposit ratio (excl. repos and reverse repos) (%) | 84% | 83% | 84% |
Non-IFRS financial measures continued
6. NatWest Group return on tangible equity
| | | Nine months ended and as at |
| Quarter ended and as at | ||||
| | 30 September | 30 September |
| 30 September | 30 June | 30 September | ||
| | 2024 | 2023 |
| 2024 | 2024 | 2023 | ||
|
| £m | £m |
| £m | £m | £m | ||
| Profit attributable to ordinary shareholders | | 3,271 | 3,165 | | 1,172 | 1,181 | 866 | |
| Annualised profit attributable to ordinary shareholders | | 4,361 | 4,220 |
| 4,688 | 4,724 | 3,464 | |
| |
| |
|
| | | ||
| Average total equity | | 37,707 | 36,150 |
| 37,960 | 37,659 | 35,081 | |
| Adjustment for average other owners' equity and intangible assets | | (12,040) | (11,427) |
| (12,375) | (12,080) | (11,583) | |
| Adjusted total tangible equity | | 25,667 | 24,723 |
| 25,585 | 25,579 | 23,498 | |
| Return on equity | | 11.6% | 11.7% |
| 12.3% | 12.5% | 9.9% | |
| Return on tangible equity | | 17.0% | 17.1% |
| 18.3% | 18.5% | 14.7% | |
7. Segmental return on equity
|
|
| Nine months ended 30 September 2024 |
| Nine months ended 30 September 2023 | ||||
|
| Retail | Private | Commercial & |
| Retail | Private | Commercial & | |
|
| Banking | Banking | Institutional |
| Banking | Banking | Institutional | |
| Operating profit (£m) | | 1,754 | 189 | 2,724 | | 2,053 | 293 | 2,511 |
| Paid-in equity cost allocation (£m) | | (56) | (13) | (130) | | (43) | (17) | (125) |
| Adjustment for tax (£m) | | (475) | (49) | (649) | | (563) | (77) | (597) |
| Adjusted attributable profit (£m) | | 1,223 | 127 | 1,946 | | 1,447 | 199 | 1,790 |
| Annualised adjusted attributable profit (£m) | | 1,630 | 169 | 2,594 | | 1,930 | 265 | 2,386 |
| Average RWAe (£bn) | | 62.7 | 11.1 | 108.0 | | 56.9 | 11.4 | 105.6 |
| Equity factor | | 13.4% | 11.2% | 13.8% | | 13.5% | 11.5% | 14.0% |
| Average notional equity (£bn) | | 8.4 | 1.2 | 14.9 | | 7.7 | 1.3 | 14.8 |
| Return on equity (%) | | 19.4% | 13.6% | 17.4% | | 25.1% | 20.3% | 16.1% |
|
| Quarter ended 30 September 2024 |
| Quarter ended 30 June 2024 | | Quarter ended 30 September 2023 | ||||||
|
| Retail | Private | Commercial & |
| Retail | Private | Commercial & | | Retail | Private | Commercial & |
|
| Banking | Banking | Institutional |
| Banking | Banking | Institutional | | Banking | Banking | Institutional |
| Operating profit (£m) | 656 | 90 | 1,017 | | 609 | 66 | 938 | | 493 | 59 | 770 |
| Paid-in equity cost allocation (£m) | (22) | (5) | (47) | | (18) | (4) | (43) | | (13) | (6) | (39) |
| Adjustment for tax (£m) | (178) | (24) | (243) | | (165) | (17) | (224) | | (134) | (15) | (183) |
| Adjusted attributable profit (£m) | 456 | 61 | 728 | | 426 | 45 | 671 | | 346 | 38 | 548 |
| Annualised adjusted attributable profit (£m) | 1,826 | 245 | 2,910 | | 1,702 | 179 | 2,685 | | 1,382 | 153 | 2,193 |
| Average RWAe (£bn) | 63.8 | 11.1 | 106.0 | | 62.7 | 11.1 | 109.0 | | 58.5 | 11.4 | 106.7 |
| Equity factor | 13.4% | 11.2% | 13.8% | | 13.4% | 11.2% | 13.8% | | 13.5% | 11.5% | 14.0% |
| Average notional equity (£bn) | 8.5 | 1.2 | 14.6 | | 8.4 | 1.2 | 15.0 | | 7.9 | 1.3 | 14.9 |
| Return on equity (%) | 21.4% | 19.7% | 19.9% | | 20.3% | 14.4% | 17.8% | | 17.5% | 11.7% | 14.7% |
Performance measures not defined under IFRS
The table below summarises other performance measures used by NatWest Group, not defined under IFRS, and therefore a reconciliation to the nearest IFRS measure is not applicable.
| Measure | Description |
| Assets under management and administration (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, and directly impacts the level of investment income that we receive. |
| AUMA net flows | AUMA net flows represents assets under management and assets under administration. AUMA net flows is reported and tracked to monitor the business performance of new business inflows and management of existing client withdrawals across Private Banking, Retail Banking and Commercial & Institutional. |
| Climate and sustainable funding and financing | The climate and sustainable funding and financing metric is used by NatWest Group to measure the level of support it provides customers, through lending products and underwriting activities, to help in their transition towards a net zero, climate resilient and sustainable economy. We have a target to provide £100 billion of climate and sustainable funding and financing between the 1 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. |
| Loan impairment rate | Loan impairment rate is the annualised loan impairment charge divided by gross customer loans. This measure is used to assess the credit quality of the loan book. |
| Third party rates | Third party customer asset rate is calculated as annualised interest receivable on third-party loans to customers as a percentage of third-party loans to customers. This excludes assets of disposal groups, intragroup items, loans to banks and liquid asset portfolios. Third party customer funding rate reflects interest payable or receivable on third-party customer deposits, including interest bearing and non- interest bearing customer deposits. Intragroup items, bank deposits, debt securities in issue and subordinated liabilities are excluded for customer funding rate calculation. |
| Wholesale funding | Wholesale funding comprises deposits by banks (excluding repos), debt securities in issue and subordinated liabilities. Funding risk is the risk of not maintaining a diversified, stable and cost-effective funding base. The disclosure of wholesale funding highlights the extent of our diversification and how we mitigate funding risk. |
Legal Entity Identifier: 2138005O9XJIJN4JPN90
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.