FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For
February 16, 2024
Commission
File Number: 001-10306
NatWest
Group plc
Gogarburn,
PO Box 1000
Edinburgh
EH12 1HQ
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form
20-F X Form 40-F
___
Indicate
by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
Yes ___
No X
If
"Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-
________
The following information was issued as Company announcements
in London, England and is furnished pursuant to General Instruction
B to the General Instructions to Form
6-K:
Annual Results
For the year ended 31 December 2023
natwestgroup.com
NatWest Group 2023
Results
|
Page
|
Highlights
|
2
|
Group Chief Executive's review
|
3
|
Outlook
|
5
|
Business performance summary
|
|
Chief Financial Officer review
|
7
|
Retail Banking
|
9
|
Private Banking
|
10
|
Commercial & Institutional
|
11
|
Central items & other
|
12
|
Segment performance
|
13
|
Risk and capital management
|
|
Capital, liquidity and funding risk
|
18
|
Credit risk
|
20
|
Condensed consolidated financial statements
|
24
|
Notes to the financial statements
|
30
|
Statement of directors' responsibilities
|
35
|
Additional information
|
36
|
Appendix - Non-IFRS financial measures
|
40
|
NatWest Group plc
2023
NatWest Group performance summary
Chief Executive, Paul Thwaite, commented:
"We
have delivered a strong performance in an exceptional macro
environment. Our operating profit was up 20% on the year before,
with a return on tangible equity of 17.8% and £3.6 billion of
distributions to shareholders.
The
strength of our balance sheet allows us to support our customers
and our performance is grounded in the services we have provided to
help them reach their financial goals and manage their money
better.
As we
look ahead, I am ambitious and confident for the future of NatWest
Group. We should not underestimate the strength of our foundations
or the opportunity to build deeper relationships with our 19
million customers. Our number one priority is to serve our
customers well and provide them with the products, services, and
expertise they need.
This
year we are focussed on the things we can control; delivering
profitable growth, becoming more efficient, more productive, and
simpler to deal with, whilst managing our cost and capital
efficiently. Together, these actions will drive long-term,
sustainable value for our customers, shareholders, and the wider UK
economy."
Strong financial performance and delivery against our
targets
-
|
Full
year attributable profit of £4.4 billion and a return on
tangible equity (RoTE) of 17.8%, above our guided
range.
|
-
|
Total
income excluding notable items(1) of £14.3
billion increased by £1.3 billion, or 9.8%, compared with 2022
principally reflecting the impact of favourable yield curve
movements, higher income in our markets business and lending growth
partially offset by reduced deposit balances and mix changes and
lending margin pressure.
|
-
|
Bank
net interest margin (NIM) of 3.04% was 19 basis points higher than
2022 with the increase reflecting favourable yield curve movements
partially offset by lending margin pressure, reduced deposits
balances and mix changes.
|
-
|
Other
operating expenses of £7.6 billion increased by £339
million, or 4.6%, compared with 2022. The cost:income ratio (excl.
litigation and conduct) was 51.8% for 2023 compared with 55.5% for
2022.
|
-
|
A net
impairment charge of £578 million for 2023, or 15 basis points
of gross customer loans, principally reflects continued low and
stable levels of stage 3 defaults across the portfolio and good
book charges related to unsecured lending.
|
Robust balance sheet with strong capital and liquidity
levels
-
|
Net
loans to customers excluding central items increased by £8.9
billion, or 2.6%, to £355.6 billion during 2023 reflecting a
£7.6 billion increase in Retail Banking and £2.0 billion
in Commercial & Institutional as term loan facilities and
private financing increased. Retail Banking gross new mortgage
lending was £29.8 billion for the year compared with
£41.4 billion in 2022 reflecting the smaller mortgage
market.
|
-
|
Up to
31 December 2023 we have provided £61.9 billion against our
target to provide £100 billion climate and sustainable funding
and financing between 1 July 2021 and the end of 2025.
|
-
|
Customer deposits
excluding central items reduced £13.8 billion, or 3.2%, during
2023 to £419.1 billion principally reflecting the competitive
environment for deposits and an overall market liquidity
contraction. Term balances now account for 16% of our book, up from
15% at the end of the third quarter and 6% at Q4 2022.
|
-
|
The
loan:deposit ratio (LDR) (excl. repos and reverse repos) was 84%
with customer deposits exceeding net loans to customers by around
£66 billion.
|
-
|
The
liquidity coverage ratio (LCR) of 144%, representing £45.4
billion headroom above 100% minimum requirement, decreased by 1
percentage point compared with 2022.
|
-
|
TNAV
per share increased by 28 pence in the year to 292 pence primarily
reflecting the attributable profit for the period and movements in
cash flow hedging reserves as rate expectations
lowered.
|
Shareholder return supported strong capital generation
-
|
A final
dividend of 11.5 pence per share is proposed and we intend to
commence an on-market buyback programme of up to £300 million
in 2024, taking total distributions deducted from capital in the
year to £3.6 billion, or around 40 pence per
share.
|
-
|
Common
Equity Tier 1 (CET1) ratio of 13.4% was 80 basis points lower than
31 December 2022 principally reflecting distributions of c.200
basis points and increased RWAs of c.50 basis points partially
offset by the attributable profit, c.220 basis points.
|
-
|
RWAs of
£183.0 billion increased £6.9 billion during the year
primarily due to lending growth in Commercial & Institutional
and a £3.0 billion increase due to CRD IV model updates
partially offset by a £4.0 billion reduction as we continue
our exit from the Republic of Ireland.
|
(1) Refer to the Non-IFRS
financial measures appendix for details of notable
items.
Group Chief Executive's review
NatWest
Group performed well in 2023, delivering for our customers, our
shareholders, and the wider UK economy.
Despite
the macroeconomic uncertainty, our customers remained resilient,
navigating both inflation and rising interest rates. Throughout the
year, we supported them to manage their finances, meeting our goal
to help 2 million customers save over £100 for the first
time(1),
and lent an additional £9 billion to the UK economy. Our
investment in digital and data capabilities continues to make it
easier for our customers to manage their money, and for our
colleagues to provide great service.
As we
look to 2024 and beyond, I am optimistic about the opportunities
ahead for NatWest Group, building on our UK heritage, leading
customer businesses, deep regional connections and financial
strength. It is therefore an honour to be asked to lead the
bank and to have the opportunity to shape the future of NatWest
Group.
Business performance
Our
overall operating profit of £6.2 billion was up 20% on 2022
and our return on tangible equity was 17.8%, compared with 12.3% at
the end of 2022. Income, excluding notable items, was up 10% on
2022 at £14.3 billion, with costs up 5%.
Our
disciplined approach to capital allocation and balance sheet
management delivered attractive returns and distributions for our
shareholders in 2023. We announced £3.6 billion of capital
returns to shareholders, including an interim dividend of 5.5p at
the half year and a proposed final dividend of 11.5p, bringing the
total for 2023 to 17.0p, representing a 26% increase on
2022.
Our
business performance was grounded in helping customers. In 2023, we
increased our lending to customers by £9 billion, opened over
100,000 new start-up accounts for entrepreneurs, and over a million
new personal current accounts, as well as helping 379,000 Retail
banking customers to buy or re-mortgage their home.
We also made progress against our Climate transition plan in
2023, helping
to build a more sustainable economy. We are working to support our
customers' transition to net zero across a range of sectors and we
have been a leading loan arranger to the UK power
infrastructure(2) and renewables sector over the last 10
years(3). We have now provided £61.9 billion in
climate and sustainable funding and financing against our target of
£100 billion between 1 July 2021 and the end of
2025.
Supporting our customers
During
a year of macroeconomic uncertainty, we focused on supporting our
customers to better manage their finances. In 2023, we helped six
million customers by conducting financial health checks, providing
improved personal insights on credit scores, and helping customers
to save for the first time. We were also one of the first high
street banks to sign up to the Mortgage Charter in July 2023 to
ease the pressure of increasing mortgage costs, and we allowed our
customers to lock in their next mortgage up to six months before
the end of a fixed-rate deal.
Over
1.5 million new savings accounts were opened in 2023. By making our
fixed term savings accounts available to more people, including
those without an existing account with NatWest Group, and providing
a broad range of flexible savings accounts, we met our goal to help
two million people save more than £100 for the first
time.
We are
the biggest supporter of UK businesses, serving more than 1.5
million business across the country. During 2023, our extensive
network of relationship managers continued to help corporate
customers grow, manage costs, find the right funding solutions, and
reduce risk in volatile markets. In the context of macroeconomic
volatility, we also provided centralised resources such as a
cashflow tool, energy calculator and supply chain navigator to
manage costs, in response to business customers' demand for help on
managing high energy prices. In response to broader concerns from
our SME customers, we collaborated with the Federation of Small
Business to give them access to independent support and advice on
topics such as obtaining funding and managing late
payments.
Our 19
million customer base means we are well placed to support our
customers to make sustainable choices, while driving value and
growth from the commercial opportunities arising from the
transition to a net-zero economy. Through initiatives such as
partnering with WWF-UK and food manufacturer McCain we are reducing
financial barriers for farmers transitioning to sustainable
agricultural practices. Through Lombard, no.1 in UK asset finance,
we supported customers with financing for electric vehicles,
renewables, and cleaner energy alternatives.
Simple for customers
We want
to make it easier for customers to do business with us and are
investing in technology and partnerships to be a simple, safe, and
smart bank, driven by data and digital innovation.
In 2023, our Retail Banking mobile app was used by more than 9.8
million customers and there were 10.9 million active digital
users(4) of our online and mobile banking platforms.
94% of our retail customer needs are now met digitally - up from
53% in 2019. In Commercial & Institutional, 86% of customers
are now actively using digital channels to interact with us, and
our innovative card and payments solution, Tyl, continued to grow.
We were one of the first banks to offer Apple and Android Tap to
Pay, a low-cost service removing the need for businesses to use
hardware to accept payments.
We are
also making it easier and quicker for our business customers to
access financing with the launch of a new online lending platform,
enabling customers to apply for a loan digitally in a matter of
minutes.
By
harnessing digital capabilities, we have also improved our customer
service and productivity. In 2023, we collaborated with technology
partners to responsibly use artificial intelligence (AI) to enhance
customer engagement and improve efficiency. This led to the
development of new AI capabilities, analysing customer behaviour to
help us detect scams and fraud earlier to reduce financial
loss.
Investing for the future
As set
out in our Investment Case, we have capacity for disciplined growth
across our three customer businesses. Our focus is on delivering
long-term value for our shareholders by putting our customers at
the heart of our strategy and deepening our relationships with them
to better meet their needs. Using data and technology will make the
business more efficient and effective, making it easier for our
customers to do business with us and improving engagement and
productivity for our colleagues. Accompanied by a disciplined
approach to cost, investment, and capital allocation, I am
confident that these actions will deliver long-term sustainable
value for our customers, shareholders, and the wider UK
economy.
Building our team and culture
It is
clear to me that our people are at the heart of our business, and I
am grateful to our colleagues for their hard work, enthusiasm, and
dedication throughout 2023. We have an engaged and resilient
colleague base, and I am particularly pleased that our colleagues
feel proud to deliver a great service to our
customers.
We are
also continuing to invest in future talent by providing colleagues
with the skills and capabilities to fulfil their potential and
build a high-performing culture. This includes offering reskilling
programmes to build skills in software and data engineering,
testing automation and human-centred designs, supporting future
talent through our early career programmes and developing a new
approach to performance management. These initiatives are equipping
our people with the tools and opportunities to develop their own
careers.
Conclusion
Our
leading positions across our three customer businesses, and 19
million customer base provide strong foundations on which to create
further long-term value for shareholders. In 2024, we will focus on
disciplined growth, improving bank-wide simplification to make it
easier to do business with us, and deploying capital efficiently
while maintaining strong risk management to drive strong capital
generation. This will enable us to continue supporting our
customers, reinvest in the business, generate attractive
distributions to shareholders, and make a meaningful contribution
to the UK economy.
Paul Thwaite
Group Chief Executive Officer
(1)
2020 goal: To help two million customers save over £100 for
the first time with NatWest Group since
2020.
(2)
Power infrastructure comprise battery storage, electricity
distribution, electricity smart meter and electricity
transmission.
(3)
NatWest Group ranked first among Loan Arrangers by deal value for
the period 2014-2023. Source: Infralogic 31 December
2023.
(4) An active
digital user is a customer who has accessed either their online
banking platform or mobile banking
app.
Outlook(1)
The
economic outlook remains uncertain. We 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 expect:
-
|
to
achieve a return on tangible equity of around 12%.
|
-
|
income
excluding notable items to be in the range of £13.0-13.5
billion.
|
-
|
Group
operating costs, excluding litigation and conduct costs, to be
broadly stable compared with 2023.
|
-
|
our
loan impairment rate to be below 20 basis points.
|
In 2026 we expect:
-
|
to
achieve a return on tangible equity for the Group of greater than
13%.
|
Capital
-
|
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, however this remains subject to final
rules and approval.
|
-
|
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 Risk Factors section of the 2023 NatWest Group plc
Annual Report and Accounts. These statements constitute
forward-looking statements. Refer to Forward-looking statements in
this document.
Business performance summary
|
Year ended
|
|
Quarter ended
|
|
31 December
|
31
December
|
|
31 December
|
30
September
|
31
December
|
|
2023
|
2022
|
|
2023
|
2023
|
2022
|
Summary consolidated income statement
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Net
interest income
|
11,049
|
9,842
|
|
2,638
|
2,685
|
2,868
|
Non-interest
income
|
3,703
|
3,314
|
|
899
|
803
|
840
|
Total income
|
14,752
|
13,156
|
|
3,537
|
3,488
|
3,708
|
Litigation
and conduct costs
|
(355)
|
(385)
|
|
(113)
|
(134)
|
(91)
|
Other
operating expenses
|
(7,641)
|
(7,302)
|
|
(2,041)
|
(1,793)
|
(2,047)
|
Operating expenses
|
(7,996)
|
(7,687)
|
|
(2,154)
|
(1,927)
|
(2,138)
|
Profit before impairment losses
|
6,756
|
5,469
|
|
1,383
|
1,561
|
1,570
|
Impairment
losses
|
(578)
|
(337)
|
|
(126)
|
(229)
|
(144)
|
Operating profit before tax
|
6,178
|
5,132
|
|
1,257
|
1,332
|
1,426
|
Tax
(charge)/credit
|
(1,434)
|
(1,275)
|
|
5
|
(378)
|
(46)
|
Profit from continuing operations
|
4,744
|
3,857
|
|
1,262
|
954
|
1,380
|
(Loss)/profit from discontinued operations, net of tax
|
(112)
|
(262)
|
|
26
|
(30)
|
(56)
|
Profit for the period
|
4,632
|
3,595
|
|
1,288
|
924
|
1,324
|
Performance key metrics and ratios
|
|
|
|
|
|
|
Notable items within total income (1)
|
£413m
|
£95m
|
|
£95m
|
(£26m)
|
(£58m)
|
Total income excluding notable items (1)
|
£14,339m
|
£13,061m
|
|
£3,442m
|
£3,514m
|
£3,766m
|
Bank net interest margin (1)
|
3.04%
|
2.85%
|
|
2.86%
|
2.94%
|
3.20%
|
Bank average interest earning assets (1)
|
£363bn
|
£345bn
|
|
£367bn
|
£363bn
|
£356bn
|
Cost:income ratio (excl. litigation and conduct) (1)
|
51.8%
|
55.5%
|
|
57.7%
|
51.4%
|
55.2%
|
Loan impairment rate (1)
|
15bps
|
9bps
|
|
13bps
|
24bps
|
16bps
|
Profit
attributable to ordinary shareholders
|
£4,394m
|
£3,340m
|
|
£1,229m
|
£866m
|
£1,262m
|
Total
earnings per share attributable to ordinary
|
|
|
|
|
|
|
shareholders - basic
|
47.9p
|
33.8p
|
|
13.9p
|
9.8p
|
13.1p
|
Return on tangible equity (RoTE) (1)
|
17.8%
|
12.3%
|
|
20.1%
|
14.7%
|
20.6%
|
Climate and sustainable funding and financing (2)
|
£29.3bn
|
£24.5bn
|
|
£8.7bn
|
£4.6bn
|
£6.4bn
|
|
|
|
|
|
|
|
|
|
|
|
As at
|
|
|
|
|
31 December
|
30
September
|
31
December
|
|
|
|
|
2023
|
2023
|
2022
|
|
|
|
|
£bn
|
£bn
|
£bn
|
Balance sheet
|
|
|
|
|
|
|
Total
assets
|
|
|
|
692.7
|
717.1
|
720.1
|
Loans
to customers - amortised cost
|
|
|
|
381.4
|
377.3
|
366.3
|
Loans to customers excluding central items (1,3)
|
|
|
|
355.6
|
354.5
|
346.7
|
Loans
to customers and banks - amortised cost and FVOCI
|
|
|
|
392.0
|
389.5
|
377.1
|
Total impairment provisions (4)
|
|
|
|
3.6
|
3.5
|
3.4
|
Expected
credit loss (ECL) coverage ratio
|
|
|
|
0.93%
|
0.94%
|
0.91%
|
Assets under management and administration
(AUMA) (1)
|
|
|
|
40.8
|
38.2
|
33.4
|
Customer
deposits
|
|
|
|
431.4
|
435.9
|
450.3
|
Customer deposits excluding central items (1,3)
|
|
|
|
419.1
|
423.5
|
432.9
|
Liquidity and funding
|
|
|
|
|
|
|
Liquidity
coverage ratio (LCR)
|
|
|
|
144%
|
145%
|
145%
|
Liquidity portfolio (5)
|
|
|
|
223
|
236
|
233
|
Net
stable funding ratio (NSFR)
|
|
|
|
133%
|
138%
|
145%
|
Loan:deposit ratio (excl. repos and reverse
repos) (1)
|
|
|
|
84%
|
83%
|
79%
|
Total
wholesale funding
|
|
|
|
80
|
82
|
74
|
Short-term
wholesale funding
|
|
|
|
28
|
29
|
21
|
Capital and leverage
|
|
|
|
|
|
|
Common Equity Tier 1 (CET1) ratio (6)
|
|
|
|
13.4%
|
13.5%
|
14.2%
|
Total capital ratio (6)
|
|
|
|
18.4%
|
18.7%
|
19.3%
|
Pro forma CET1 ratio (excl. foreseeable items) (7)
|
|
|
|
14.2%
|
14.1%
|
15.4%
|
Risk-weighted
assets (RWAs)
|
|
|
|
183.0
|
181.6
|
176.1
|
UK
leverage ratio
|
|
|
|
5.0%
|
5.1%
|
5.4%
|
Tangible net asset value (TNAV) per ordinary
share (1,8)
|
|
|
|
292p
|
271p
|
264p
|
Number of ordinary shares in issues (millions) (8)
|
|
|
|
8,792
|
8,871
|
9,659
|
(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 September 2023 - £0.1
billion; 31 December 2022 - £0.1
billion).
|
(5)
|
Comparative periods have been
re-presented on an LCR basis in line with the Liquidity portfolio
definition as of 31 December 2023.
|
(6)
|
Refer to the Capital, liquidity and
funding section for details of the basis of
preparation.
|
(7)
|
The pro forma CET1 ratio at 31
December 2023 excludes foreseeable items of £1,538 million:
£1,013 million for ordinary dividends and £525 million
foreseeable charges. (30 September 2023 excludes foreseeable items
of £1,004 million: £643 million for ordinary dividends
and £361 million foreseeable charges. 31 December 2022
excludes foreseeable items of £2,132 million: £967
million for ordinary dividends and £1,165 million foreseeable
charges).
|
(8)
|
The number of ordinary shares in
issue excludes own shares held.
|
Business performance summary continued
Chief Financial Officer review
We have
delivered a strong operating performance in 2023 with a RoTE of
17.8%, above our guided range. Total income excluding notable items
of £14.3 billion was up by 9.8% on prior year and levels of
default remain stable across our portfolio, with a net impairment
charge of 15 basis points of gross customer loans. We remain
focused on cost discipline and have achieved our cost target of
around £7.6 billion, with a cost:income ratio of
51.8%.
Our
robust balance sheet has allowed us to continue to lend to our
personal and business customers despite a competitive environment
for deposits. We retain strong liquidity and capital positions with
an LCR of 144%, representing £45.4 billion headroom above 100%
minimum requirement, and an LDR (excl. repos and reverse repos) of
84%. CET1 ratio was 13.4%, with total distributions deducted from
capital of £3.6 billion, around 200 basis points of CET1, or
c.40 pence per share. TNAV per share increased by 28 pence to 292
pence.
Financial performance
Total
income increased by 12.1% to £14.8 billion compared with 2022.
Total income excluding notable items of £14.3 billion was 9.8%
higher than the prior year principally driven by lending growth,
higher income in our markets business and favourable yield curve
movements partially offset by the change in deposit mix from
non-interest bearing to interest bearing and lower deposit
balances.
Bank
NIM of 3.04% was 19 basis points higher than 2022 primarily due to
benefits from yield curve movements, net of changes in deposit mix,
partially offset by lending margin pressure. Q4 2023 Bank NIM was
2.86%, 8 basis points down in the quarter reflecting asset margin
pressure of 2 basis points and deposit balance and mix impacts of 6
basis points.
Total operating expenses were £309 million higher than 2022.
Other operating expenses were £339 million, or 4.6%, higher
for the year at £7.6 billion, in line with our full year
guidance. The increase was principally due to higher staff costs,
including a payment to support our colleagues with cost of living
challenges and inflationary pressures on utility and contract
costs. In addition, depreciation and amortisation costs increased
by £101 million reflecting capitalised technology investment
and a property impairment. FTE(1) reduced by c.300 to c.61,200 principally
reflecting reductions as we continue our exit from the Republic of
Ireland and automation and simplification in Retail Banking,
partially offset by investment in technology and data
roles.
A net
impairment charge of £578 million, or 15 basis points of gross
customer loans, primarily reflects continued low and stable levels
of stage 3 defaults across the portfolio and good book charges
related to unsecured lending. Compared with 2022, our ECL provision
increased by £0.2 billion to £3.6 billion and our ECL
coverage ratio has increased from 0.91% to 0.93%. We retain post
model adjustments of £0.4 billion related to economic
uncertainty, or 11.8% of total impairment provisions. Whilst we are
comfortable with the strong credit performance of our book, we will
assess this position regularly and are closely monitoring the
impacts of inflationary pressures on the UK economy and our
customers.
As a
result, we are pleased to report an attributable profit for 2023 of
£4.4 billion, with earnings per share of 47.9 pence and a RoTE
of 17.8%, above our guided range, the profit for the year includes
a deferred tax asset write back of £385 million in respect of
tax losses.
Net
loans to customers excluding central items increased by £8.9
billion in the year largely reflecting a £7.6 billion increase
in Retail Banking and £2.0 billion of growth in Commercial
& Institutional due to an increase in term loan facilities and
private financing within Corporate & Institutions, net of
£2.7 billion of UK Government scheme repayments. Retail
Banking mortgage lending increased by £5.9 billion, with gross
new mortgage lending of £29.8 billion in 2023 compared with
£41.4 billion in 2022 reflecting the smaller mortgage market,
and unsecured lending increased by £2.0 billion with continued
strong customer demand. Private Banking net loans to customers
decreased by £0.7 billion driven by higher repayments on
mortgages.
Up to
31 December 2023 we have provided £61.9 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
residential properties with Energy Performance Certificate (EPC)
ratings A and B between 1 January 2023 and the end of 2025. During
2023 we provided £29.3 billion climate and sustainable funding
and financing, which included £3.9 billion in lending for
residential properties with EPC ratings A and B.
Customer
deposits excluding central items decreased by £13.8 billion
during 2023 to £419.1 billion principally reflecting the
competitive environment for deposits and an overall market
liquidity contraction. In the fourth quarter customer deposit
balances reduced by £4.5 billion largely within Corporate
& Institutions as a result of active management, with growth in
Retail Banking and Private Banking partially offsetting. We have
continued to see the mix of our book shift towards interest bearing
and term balances, with non-interest bearing balances now
accounting for 34% of balances and term at 16%, although the
movement was broadly in line with our expectations and the guidance
we provided at our Q3 results announcement.
TNAV
per share increased by 28 pence in the year to 292 pence primarily
reflecting the attributable profit for the period and an £872
million movement in cash flow hedging reserves as rate expectations
lowered, partially offset by the impact of distributions.
Intangible assets increased by £498 million in the year
primarily reflecting software capitalisation and the acquisition of
Cushon.
|
(1) Full Time Equivalents
of our permanent and internal fixed term resource. Each full-time
employee is one FTE, with part-time employees recorded based on
hours worked.
Business performance summary continued
Capital and leverage
|
The
CET1 ratio remains strong at 13.4%, or 13.2% excluding IFRS 9
transitional relief. The 80 basis point reduction compared with 31
December 2022 principally reflected distributions deducted from
capital of c.200 basis points, and increased RWAs of c.50 basis
points, partially offset by the attributable profit, NatWest
Group's minimum requirement for own funds and eligible liabilities
(MREL) ratio was 30.5%.
RWAs
increased by £6.9 billion during 2023 to £183.0 billion
principally reflecting lending growth in Commercial &
Institutional and a £3.0 billion uplift associated with CRD IV
model updates, partially offset by a £4.0 billion reduction as
we continue our exit from the Republic of Ireland.
|
Funding and liquidity
|
The LCR
of 144%, representing £45.4 billion headroom above 100%
minimum requirement, decreased by 1 percentage point during the
year, driven by growth in customer lending and reduced customer
deposits offset by an increase in wholesale funding and UBIDAC
asset sale.
|
Business performance summary
Retail Banking
|
Year ended
|
|
Quarter ended
|
|
31 December
|
31
December
|
|
31 December
|
30
September
|
31
December
|
|
2023
|
2022
|
|
2023
|
2023
|
2022
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Total
income
|
5,931
|
5,646
|
|
1,369
|
1,442
|
1,617
|
Operating
expenses
|
(2,828)
|
(2,593)
|
|
(681)
|
(780)
|
(658)
|
of which: Other
operating expenses
|
(2,711)
|
(2,484)
|
|
(647)
|
(721)
|
(670)
|
Impairment
losses
|
(465)
|
(229)
|
|
(103)
|
(169)
|
(87)
|
Operating
profit
|
2,638
|
2,824
|
|
585
|
493
|
872
|
|
|
|
|
|
|
|
Return on equity (1)
|
23.8%
|
28.6%
|
|
20.2%
|
17.5%
|
34.7%
|
Net interest margin (1)
|
2.68%
|
2.74%
|
|
2.39%
|
2.56%
|
3.02%
|
Cost:income ratio (excl. litigation and conduct) (1)
|
45.7%
|
44.0%
|
|
47.3%
|
50.0%
|
41.4%
|
Loan impairment rate (1)
|
22bps
|
11bps
|
|
20bps
|
33bps
|
17bps
|
|
|
|
|
|
|
|
|
|
|
|
As at
|
|
|
|
|
31 December
|
30
September
|
31
December
|
|
|
|
|
2023
|
2023
|
2022
|
|
|
|
|
£bn
|
£bn
|
£bn
|
Net
loans to customers (amortised cost)
|
|
|
|
205.2
|
205.2
|
197.6
|
Customer
deposits
|
|
|
|
188.0
|
184.5
|
188.4
|
RWAs
|
|
|
|
61.6
|
58.9
|
54.7
|
(1) Refer to the Non-IFRS
financial measures appendix for details of the basis of preparation
and reconciliation of non-IFRS financial measures and performance
metrics.
During
2023, Retail Banking continued to pursue sustainable lending
growth, increasing £7.6 billion, whilst taking a measured
approach to risk. Retail Banking delivered operating profit of
£2.6 billion and a return on equity of 23.8%, against a more
challenging operating environment and inflationary cost impacts.
Retail Banking provided £3.7 billion of climate and
sustainable funding and financing in 2023 from lending to
properties with an EPC rating of A or B.
2023 performance
−
|
Total
income was £285 million, or 5.0%, higher than 2022 reflecting
higher lending growth and the impact of rate rises on deposit
income, partly offset by mortgage margin dilution, higher treasury
funding costs and impact of the deposit balance mix shift from
non-interest bearing current accounts to interest bearing term
balances.
|
−
|
Net
interest margin was 6 basis points lower than 2022 largely
reflecting the movements impacting total income, partly offset by
the impact of pass-through management and hedges on deposit income
as interest rates increased.
|
−
|
Other
operating expenses were £227 million, or 9.1%, higher than
2022 reflecting higher pay awards to support our colleagues with
cost of living challenges, property lease termination losses,
increased restructuring costs and continued investment in the
business. This was partly offset by savings from a 6.3% reduction
in headcount.
|
−
|
An
impairment charge of £465 million in 2023, £236 million
higher than 2022, reflecting higher stage 3 inflows and increased
good book charges driven by both lending growth and normalisation
of risk parameters.
|
−
|
Net
loans to customers increased by £7.6 billion, or 3.8%, in 2023
reflecting mortgage growth of £5.9 billion, with gross new
mortgage lending of £29.8 billion, representing flow share of
around 13%. Cards balances increased by £1.5 billion and
personal advances increased by £0.5 billion in 2023 with
continued strong customer demand.
|
−
|
Customer
deposits decreased by £0.4 billion in 2023 reflecting lower
current accounts of £10.2 billion, partly offset by higher
fixed term deposits driving savings growth of £9.8 billion.
Term deposits now represents 11% of deposit balances.
|
−
|
RWAs
increased by £6.9 billion, or 12.6%, in 2023 driven by both
lending growth in the period and IRB temporary model
adjustments.
|
Q4 performance
−
|
Total
income was £73 million, or 5.1%, lower than Q3 2023 reflecting
timing of pass-through on interest bearing savings accounts,
deposit balance mix shift from non-interest bearing to interest
bearing balances, continued mortgage margin dilution, as well as
higher treasury funding costs, partly offset by increasing
structural hedge benefit and higher fee income.
|
−
|
Net
interest margin was 17 basis points lower than Q3 2023 largely
reflecting timing of pass-through on interest bearing savings
accounts, deposit mix shift from non-interest bearing to interest
bearing balances and mortgage margin dilution, partly offset by
increasing structural hedge benefit.
|
−
|
Other
operating expenses were £74 million, or 10.3%, lower than Q3
2023 reflecting non repeat of property lease termination losses,
partly offset by higher restructuring costs and the inclusion of
the annual UK bank levy charge.
|
−
|
An
impairment charge of £103 million in Q4 2023 largely reflects
stage 3 defaults, which remained broadly stable. Benefits from the
Q4 IFRS 9 multiple economic scenarios (MES) update more than offset
the impact of growth in unsecured lending, leading to lower good
book charges in the quarter.
|
−
|
Net
loans to customers balances were in line with Q3 2023 reflecting
lower mortgage balances of £0.4 billion with higher
redemptions in the quarter offset by increases in Cards balances of
£0.3 billion and personal advances of £0.1 billion with
continued strong customer demand. Mortgage gross new lending of
£5.3 billion, representing flow share of around 10% in the
quarter, down from around 13% in Q3 2023 as we sought to actively
manage the balance sheet.
|
−
|
Customer
deposits increased by £3.5 billion, or 1.9%, in Q4 2023
reflecting growth in fixed term savings and instant access savings
growth of £5.4 billion, partially offset by lower current
account balances of £1.9 billion.
|
−
|
RWAs
increased by £2.7 billion, or 4.6%, in Q4 2023 primarily due
to IRB temporary model adjustments.
|
Business performance summary
Private Banking
|
Year ended
|
|
Quarter ended
|
|
31 December
|
31
December
|
|
31 December
|
30
September
|
31
December
|
|
2023
|
2022
|
|
2023
|
2023
|
2022
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Total
income
|
990
|
1,056
|
|
209
|
214
|
310
|
Operating
expenses
|
(685)
|
(622)
|
|
(206)
|
(157)
|
(198)
|
of which: Other operating
expenses
|
(676)
|
(610)
|
|
(208)
|
(157)
|
(188)
|
Impairment
(losses)/releases
|
(14)
|
2
|
|
(5)
|
2
|
(2)
|
Operating
profit/(loss)
|
291
|
436
|
|
(2)
|
59
|
110
|
|
|
|
|
|
|
|
Return on equity (1)
|
14.8%
|
24.5%
|
|
(1.8%)
|
11.7%
|
24.2%
|
Net interest margin (1)
|
3.74%
|
4.07%
|
|
2.94%
|
3.02%
|
5.19%
|
Cost:income ratio (excl. litigation and conduct) (1)
|
68.3%
|
57.8%
|
|
99.5%
|
73.4%
|
60.6%
|
Loan impairment rate (1)
|
8bps
|
(1)bp
|
|
11bps
|
(4)bps
|
4bps
|
AUM net flows (£bn) (1)
|
1.3
|
2.0
|
|
0.3
|
-
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
As at
|
|
|
|
|
31 December
|
30
September
|
31
December
|
|
|
|
|
2023
|
2023
|
2022
|
|
|
|
|
£bn
|
£bn
|
£bn
|
Net
loans to customers (amortised cost)
|
|
|
|
18.5
|
18.8
|
19.2
|
Customer
deposits
|
|
|
|
37.7
|
37.2
|
41.2
|
RWAs
|
|
|
|
11.2
|
11.6
|
11.2
|
Assets Under Management (AUMs) (1)
|
|
|
|
31.7
|
29.8
|
28.3
|
Assets Under Administration (AUAs) (1)
|
|
|
|
9.1
|
8.4
|
5.1
|
Assets Under Management and Administration
(AUMA) (1)
|
|
|
40.8
|
38.2
|
33.4
|
(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.
During
2023, Private Banking continued to support customers to meet their
financial goals and manage their wealth responsibly, delivering a
return on equity of 14.8% which reflected the impact of a more
challenging operating environment. AUMA was 22.2% higher at
£40.8 billion and is now greater than customer deposits of
£37.7 billion which fell as a result of competitive pressure
and a change in customer behaviour. Private Banking provided
£0.2 billion of climate and sustainable funding and financing
in 2023, principally in relation to mortgages on residential
properties with EPC A or B certificates.
2023 performance
−
|
Total
income was £66 million, or 6.3%, lower than 2022 reflecting
lower deposit balances with mix shifting from non-interest bearing
to interest bearing balances, as customers migrated to savings
products offering higher returns, combined with reduced lending
volumes and mortgage margin dilution.
|
−
|
Net
interest margin was 33 basis points lower than 2022 reflecting
lower deposit balances with mix shift from non-interest bearing to
interest bearing balances and an increase in pass-through of
interest rate increases to customers, partly offset by the impact
of rate rises on deposit income.
|
−
|
Other
operating expenses were £66 million, or 10.8%, higher than
2022 reflecting an increase in pay awards to support our colleagues
with cost of living challenges, an additional VAT charge, property
revaluation costs and strategic spend to increase operational
efficiency.
|
−
|
The
impairment charge of £14 million in 2023, compared with a
£2 million release in 2022, largely reflects non-recurrence of
good book releases in 2022 whilst overall impairments remain at low
levels.
|
−
|
Net
loans to customers decreased by £0.7 billion, or 3.6%, in 2023
as higher levels of customer repayments more than offset gross new
lending.
|
−
|
Customer
deposits decreased by £3.5 billion, or 8.5%, in 2023
reflecting an increase in competition and higher tax outflows in Q1
2023. Changes in customer behaviour drove a shift in mix of
deposits with a decrease in instant access savings and current
accounts, and a switch to term and notice accounts which now
represent 30% of deposit balances.
|
−
|
AUMA
increased by £7.4 billion to £40.8 billion, reflecting
net inflows of £1.3 billion for AUM, and £0.4 billion
AUA: strong market performance of £3.4 billion and £2.3
billion Cushon balances following the acquisition in June
2023.
|
Q4 performance
−
|
Total
income was £5 million, or 2.3%, lower than Q3 2023 reflecting
the impacts of changes in deposit product mix as customers continue
to shift from non-interest bearing to interest bearing balances
along with lower lending volumes offset in part by an increase in
deposit volumes and improved mortgage margins.
|
−
|
Net
interest margin was 8 basis points lower than Q3 2023 largely
reflecting the continued change in the deposit book mix partially
offset by improved lending margins and an increase in deposit
volumes.
|
−
|
Other
operating expenses were £51 million, or 32.5%, higher than Q3
2023 primarily reflecting the inclusion of the annual UK bank levy
charge, an
additional VAT charge and strategic spend to increase operational
efficiency.
|
−
|
A net
impairment charge of £5 million in Q4 2023 largely reflects
good book charges whilst stage 3 defaults remain at low
levels.
|
−
|
Net
loans to customers decreased by £0.3 billion, or 1.6%, in Q4
2023 driven by higher customer mortgage
repayments.
|
−
|
Customer
deposits increased by £0.5 billion, or 1.3%, compared with Q3
2023 driven by seasonal increases in instant access, partially
offset by a reduction in current accounts.
|
−
|
AUMA
increased by £2.6 billion in Q4 2023, driven by new inflows of
£0.3 billion AUM and positive market movements of £2.1
billion.
|
Business performance summary
Commercial & Institutional
|
Year ended
|
|
Quarter ended
|
|
31 December
|
31
December
|
|
31 December
|
30
September
|
31
December
|
|
2023
|
2022
|
|
2023
|
2023
|
2022
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Net
interest income
|
5,044
|
4,171
|
|
1,269
|
1,271
|
1,276
|
Non-interest
income
|
2,377
|
2,242
|
|
563
|
570
|
543
|
Total
income
|
7,421
|
6,413
|
|
1,832
|
1,841
|
1,819
|
|
|
|
|
|
|
|
Operating
expenses
|
(4,091)
|
(3,744)
|
|
(1,092)
|
(1,012)
|
(1,031)
|
of which: Other operating
expenses
|
(3,867)
|
(3,563)
|
|
(1,014)
|
(960)
|
(989)
|
Impairment
losses
|
(94)
|
(122)
|
|
(15)
|
(59)
|
(62)
|
Operating
profit
|
3,236
|
2,547
|
|
725
|
770
|
726
|
|
|
|
|
|
|
|
Return on equity (1)
|
15.4%
|
12.2%
|
|
13.5%
|
14.7%
|
13.7%
|
Net interest margin (1)
|
3.84%
|
3.31%
|
|
3.77%
|
3.88%
|
3.89%
|
Cost:income ratio (excl. litigation and conduct) (1)
|
52.1%
|
55.6%
|
|
55.3%
|
52.1%
|
54.4%
|
Loan impairment rate (1)
|
7bps
|
9bps
|
|
4bps
|
18bps
|
19bps
|
|
|
|
|
|
|
|
|
|
|
|
As at
|
|
|
|
|
31 December
|
30
September
|
31
December
|
|
|
|
|
2023
|
2023
|
2022
|
|
|
|
|
£bn
|
£bn
|
£bn
|
Net
loans to customers (amortised cost)
|
|
|
|
131.9
|
130.5
|
129.9
|
Customer
deposits
|
|
|
|
193.4
|
201.8
|
203.3
|
Funded assets (1)
|
|
|
|
306.9
|
325.2
|
306.3
|
RWAs
|
|
|
|
107.4
|
107.9
|
103.2
|
(1) Refer to the Non-IFRS
financial measures appendix for details of the basis of preparation
and reconciliation of non-IFRS financial measures and performance
metrics.
During
2023, Commercial & Institutional continued to support customers
with an increase in lending of 1.5% and delivered a strong
performance with growth in revenues and operating profit supporting
a return on equity of 15.4%, an increase from 12.2% in 2022.
Commercial & Institutional provided £25.4 billion of
climate and sustainable funding and financing in 2023 to support
customers investing in the transition to net zero.
2023 performance
−
|
Total
income was £1,008 million, or 15.7%, higher than 2022
primarily reflecting higher deposit returns supported by interest
rate rises, growth in lending and higher markets income partly
offset by higher funding costs.
|
−
|
Net
interest margin was 53 basis points higher than 2022 reflecting
higher deposit returns partly offset by higher funding
costs.
|
−
|
Other
operating expenses were £304 million, or 8.5%, higher than
2022 reflecting higher pay awards to support our colleagues with
cost of living challenges and continued investment in the
business.
|
−
|
An
impairment charge of £94 million in 2023, £28 million
lower than 2022, reflecting good book releases and lower stage 3
charges.
|
−
|
Net
loans to customers increased by £2.0 billion, or 1.5%, in 2023
reflecting an increase of £4.7 billion from growth in private
financing activity, an increase in term loan facilities including
an increase in revolving credit utilisations within Corporate &
Institutions and asset finance growth within Commercial Mid-market,
partly offset by £2.7 billion of UK Government scheme
repayments.
|
−
|
Customer
deposits decreased by £9.9 billion, or 4.9%, in 2023 primarily
due to overall market liquidity contraction, particularly in
Commercial Mid-market. We have seen strong growth in term deposits
balances in 2023 which now represent 19% of deposit balances.
Across the year we continued to see a reduction in non-interest
bearing balances which now represent 36% of deposit
balances.
|
−
|
RWAs
increased by £4.2 billion, or 4.1%, in 2023 primarily
reflecting lending facility growth, partly offset by capital
optimisation activity and foreign exchange benefits.
|
Q4 performance
−
|
Total
income was broadly stable compared to Q3 2023.
|
−
|
Net
interest margin was 11 basis points lower than Q3 2023 largely
reflecting non-repeat of one-off items in Q3 2023, deposit mix and
higher funding costs.
|
−
|
Other
operating expenses were £54 million, or 5.6%, higher than Q3
2023 largely due to the inclusion of the annual bank levy
charge.
|
−
|
An
impairment charge of £15 million in Q4 2023 reflects continued
low levels of stage 3 charges largely offset by good book releases
as a result of the Q4 2023 MES update.
|
−
|
Net
loans to customers increased by £1.4 billion, or 1.1%, in Q4
2023 reflecting an increase of £2.1 billion largely due to
strong performance from private financing activity within Corporate
& Institutions, partly offset by UK Government scheme
repayments of £0.7 billion.
|
−
|
Customer
deposits decreased by £8.4 billion, or 4.2%, in Q4 2023
primarily due to reductions in Corporate & Institutions as we
managed down low value deposits.
|
−
|
RWAs
decreased by £0.5 billion, or 0.5%, in Q4 2023 primarily due
to lower market risk, lower traded risk and foreign exchange
benefits, partially offset by lending facility growth and changes
in book mix.
|
Business performance summary
Central items & other
|
Year ended
|
|
Quarter ended
|
|
31 December
|
31
December
|
|
31 December
|
30
September
|
31
December
|
|
2023
|
2022
|
|
2023
|
2023
|
2022
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
|
Total
income
|
410
|
41
|
|
127
|
(9)
|
(38)
|
Operating expenses (1)
|
(392)
|
(728)
|
|
(175)
|
22
|
(251)
|
of which:
Other operating expenses
|
(387)
|
(645)
|
|
(172)
|
45
|
(200)
|
of which:
Ulster Bank RoI direct expenses
|
(275)
|
(433)
|
|
(69)
|
(43)
|
(213)
|
Impairment
(losses)/releases
|
(5)
|
12
|
|
(3)
|
(3)
|
7
|
Operating
profit/(loss)
|
13
|
(675)
|
|
(51)
|
10
|
(282)
|
of which:
Ulster Bank RoI
|
(473)
|
(723)
|
|
(124)
|
(54)
|
(354)
|
|
|
|
|
As at
|
|
|
|
|
31 December
|
30
September
|
31
December
|
|
|
|
|
2023
|
2023
|
2022
|
|
|
|
|
£bn
|
£bn
|
£bn
|
Net loans to customers (amortised cost) (2)
|
|
|
|
25.8
|
22.8
|
19.6
|
Customer
deposits
|
|
|
|
12.3
|
12.4
|
17.4
|
RWAs
|
|
|
|
2.8
|
3.2
|
7.0
|
(1)
Includes withdrawal-related direct program costs of £91
million for the year ended 31 December 2023 (31 December 2022 -
£195 million) and £17 million for the quarter ended 31
December 2023 (30 September 2023 - £10 million and 31 December
2022 - £151 million).
(2) Excludes £0.3
billion of loans to customers held at fair value through profit or
loss (30 September 2023 - £0.3 billion and 31 December 2022 -
£0.5 billion).
2023 performance
−
|
Total
income was £369 million higher than 2022 primarily reflecting
notable items including foreign exchange recycling gains of
£484 million, lower losses on redemption of own debt, business
growth fund gains and lower losses on liquidity asset bond sales
partially offset by lower gains on interest and foreign exchange
risk management derivatives not in accounting hedge relationships
and losses associated with property lease
terminations.
|
−
|
Other
operating expenses were £258 million, or 40.0%, lower than
2022 principally reflecting the reduction in cost due to our
withdrawal of operations from the Republic of Ireland.
|
−
|
Net
loans to customers increased by £6.2 billion, to £25.8
billion, over the year mainly due to reverse repo activity in
Treasury, combined with withdrawal of our operations from the
Republic of Ireland.
|
−
|
Customer
deposits decreased by £5.1 billion 2023 primarily reflecting
our withdrawal of our operations from the Republic of Ireland.
Ulster Bank RoI customer deposit balances were £0.2 billion as
at Q4 2023.
|
Q4 performance
−
|
Total
income was £136 million higher than Q3 2023 primarily
reflecting notable items including foreign exchange recycling gains
and losses associated with property lease terminations in Q3 2023
not repeated in this quarter, partially offset with lower gains on
interest and foreign exchange risk management derivatives not in
accounting hedge relationships and lower business growth fund
gains.
|
−
|
Net
loans to customers increased by £3.0 billion in Q4 2023 mainly
due to reverse repo activity in Treasury.
|
−
|
Customer
deposits decreased £0.1 billion in the quarter mainly due to
repo activity in Treasury.
|
Segment performance
|
Year ended 31 December 2023
|
|
|
|
|
|
Total
|
|
Retail
|
Private
|
Commercial
|
Central items
|
NatWest
|
|
Banking
|
Banking
|
& Institutional
|
& other
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
Income statement
|
|
|
|
|
|
Net
interest income
|
5,496
|
710
|
5,044
|
(201)
|
11,049
|
Non-interest
income
|
435
|
280
|
2,377
|
611
|
3,703
|
Total income
|
5,931
|
990
|
7,421
|
410
|
14,752
|
Direct
expenses
|
(815)
|
(255)
|
(1,510)
|
(5,061)
|
(7,641)
|
Indirect
expenses
|
(1,896)
|
(421)
|
(2,357)
|
4,674
|
-
|
Other
operating expenses
|
(2,711)
|
(676)
|
(3,867)
|
(387)
|
(7,641)
|
Litigation
and conduct costs
|
(117)
|
(9)
|
(224)
|
(5)
|
(355)
|
Operating expenses
|
(2,828)
|
(685)
|
(4,091)
|
(392)
|
(7,996)
|
Operating profit before impairment losses (1)
|
3,103
|
305
|
3,330
|
18
|
6,756
|
Impairment
losses
|
(465)
|
(14)
|
(94)
|
(5)
|
(578)
|
Operating profit (1)
|
2,638
|
291
|
3,236
|
13
|
6,178
|
|
|
|
|
|
|
Income
excluding notable items
|
5,931
|
990
|
7,420
|
(2)
|
14,339
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
Return on tangible equity (1)
|
na
|
na
|
na
|
na
|
17.8%
|
Return on equity (1)
|
23.8%
|
14.8%
|
15.4%
|
nm
|
na
|
Cost:income ratio (excl. litigation and conduct) (1)
|
45.7%
|
68.3%
|
52.1%
|
nm
|
51.8%
|
Total
assets (£bn)
|
228.7
|
26.9
|
385.0
|
52.1
|
692.7
|
Funded assets (£bn) (1)
|
228.7
|
26.9
|
306.9
|
51.3
|
613.8
|
Net
loans to customers - amortised cost (£bn)
|
205.2
|
18.5
|
131.9
|
25.8
|
381.4
|
Loan impairment rate (1)
|
22bps
|
8bps
|
7bps
|
nm
|
15bps
|
Impairment
provisions (£bn)
|
(1.9)
|
(0.1)
|
(1.5)
|
(0.1)
|
(3.6)
|
Impairment
provisions - stage 3 (£bn)
|
(1.1)
|
-
|
(0.9)
|
-
|
(2.0)
|
Customer
deposits (£bn)
|
188.0
|
37.7
|
193.4
|
12.3
|
431.4
|
Risk-weighted
assets (RWAs) (£bn)
|
61.6
|
11.2
|
107.4
|
2.8
|
183.0
|
RWA
equivalent (RWAe) (£bn)
|
61.6
|
11.2
|
108.6
|
3.6
|
185.0
|
Employee
numbers (FTEs - thousands)
|
13.3
|
2.3
|
12.5
|
33.1
|
61.2
|
Third party customer asset rate (1)
|
3.23%
|
4.54%
|
6.15%
|
nm
|
nm
|
Third party customer funding rate (1)
|
(1.42%)
|
(2.17%)
|
(1.40%)
|
nm
|
nm
|
Bank average interest earning assets (£bn) (1)
|
205.4
|
19.0
|
131.5
|
na
|
362.9
|
Bank net interest margin (1)
|
2.68%
|
3.74%
|
3.84%
|
na
|
3.04%
|
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
|
Year
ended 31 December 2022
|
|
|
|
|
|
Total
|
|
Retail
|
Private
|
Commercial
|
Central
items
|
NatWest
|
|
Banking
|
Banking
|
&
Institutional
|
&
other
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
Income statement
|
|
|
|
|
|
Net
interest income
|
5,224
|
777
|
4,171
|
(330)
|
9,842
|
Non-interest
income
|
422
|
279
|
2,242
|
371
|
3,314
|
Total income
|
5,646
|
1,056
|
6,413
|
41
|
13,156
|
Direct
expenses
|
(709)
|
(235)
|
(1,506)
|
(4,852)
|
(7,302)
|
Indirect
expenses
|
(1,775)
|
(375)
|
(2,057)
|
4,207
|
-
|
Other
operating expenses
|
(2,484)
|
(610)
|
(3,563)
|
(645)
|
(7,302)
|
Litigation
and conduct costs
|
(109)
|
(12)
|
(181)
|
(83)
|
(385)
|
Operating expenses
|
(2,593)
|
(622)
|
(3,744)
|
(728)
|
(7,687)
|
Operating profit/(loss) before impairment
losses/releases (1)
|
3,053
|
434
|
2,669
|
(687)
|
5,469
|
Impairment
(losses)/releases
|
(229)
|
2
|
(122)
|
12
|
(337)
|
Operating
profit/(loss) (1)
|
2,824
|
436
|
2,547
|
(675)
|
5,132
|
|
|
|
|
|
|
Income
excluding notable items
|
5,646
|
1,056
|
6,416
|
(57)
|
13,061
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
Return on tangible equity (1)
|
na
|
na
|
na
|
na
|
12.3%
|
Return on equity (1)
|
28.6%
|
24.5%
|
12.2%
|
nm
|
na
|
Cost:income ratio (excl. litigation and conduct) (1)
|
44.0%
|
57.8%
|
55.6%
|
nm
|
55.5%
|
Total
assets (£bn)
|
226.4
|
29.9
|
404.8
|
59.0
|
720.1
|
Funded assets (£bn) (1)
|
226.4
|
29.9
|
306.3
|
57.9
|
620.5
|
Net
loans to customers - amortised cost (£bn)
|
197.6
|
19.2
|
129.9
|
19.6
|
366.3
|
Loan impairment rate (1)
|
11bps
|
(1)bp
|
9bps
|
nm
|
9bps
|
Impairment
provisions (£bn)
|
(1.6)
|
(0.1)
|
(1.6)
|
(0.1)
|
(3.4)
|
Impairment
provisions - stage 3 (£bn)
|
(0.9)
|
-
|
(0.7)
|
(0.1)
|
(1.7)
|
Customer
deposits (£bn)
|
188.4
|
41.2
|
203.3
|
17.4
|
450.3
|
Risk-weighted
assets (RWAs) (£bn)
|
54.7
|
11.2
|
103.2
|
7.0
|
176.1
|
RWA
equivalent (RWAe) (£bn)
|
54.7
|
11.2
|
104.6
|
7.5
|
178.0
|
Employee
numbers (FTEs - thousands)
|
14.2
|
2.2
|
12.4
|
32.7
|
61.5
|
Third party customer asset rate (1)
|
2.64%
|
3.01%
|
3.53%
|
nm
|
nm
|
Third party customer funding rate (1)
|
(0.20%)
|
(0.27%)
|
(0.21%)
|
nm
|
nm
|
Bank average interest earning assets (£bn) (1)
|
190.8
|
19.1
|
126.1
|
na
|
345.2
|
Bank net interest margin (1)
|
2.74%
|
4.07%
|
3.31%
|
na
|
2.85%
|
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 31 December 2023
|
|
|
|
|
|
Total
|
|
Retail
|
Private
|
Commercial
|
Central items
|
NatWest
|
|
Banking
|
Banking
|
& Institutional
|
& other
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
Income statement
|
|
|
|
|
|
Net
interest income
|
1,254
|
138
|
1,269
|
(23)
|
2,638
|
Non-interest
income
|
115
|
71
|
563
|
150
|
899
|
Total income
|
1,369
|
209
|
1,832
|
127
|
3,537
|
Direct
expenses
|
(211)
|
(74)
|
(392)
|
(1,364)
|
(2,041)
|
Indirect
expenses
|
(436)
|
(134)
|
(622)
|
1,192
|
-
|
Other
operating expenses
|
(647)
|
(208)
|
(1,014)
|
(172)
|
(2,041)
|
Litigation
and conduct costs
|
(34)
|
2
|
(78)
|
(3)
|
(113)
|
Operating expenses
|
(681)
|
(206)
|
(1,092)
|
(175)
|
(2,154)
|
Operating profit/(loss) before impairment losses (1)
|
688
|
3
|
740
|
(48)
|
1,383
|
Impairment
losses
|
(103)
|
(5)
|
(15)
|
(3)
|
(126)
|
Operating
profit/(loss) (1)
|
585
|
(2)
|
725
|
(51)
|
1,257
|
|
|
|
|
|
|
Income
excluding notable items
|
1,369
|
209
|
1,834
|
30
|
3,442
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
Return on tangible equity (1)
|
na
|
na
|
na
|
na
|
20.1%
|
Return on equity (1)
|
20.2%
|
(1.8%)
|
13.5%
|
nm
|
na
|
Cost:income ratio (excl. litigation and conduct) (1)
|
47.3%
|
99.5%
|
55.3%
|
nm
|
57.7%
|
Total
assets (£bn)
|
228.7
|
26.9
|
385.0
|
52.1
|
692.7
|
Funded assets (£bn) (1)
|
228.7
|
26.9
|
306.9
|
51.3
|
613.8
|
Net
loans to customers - amortised cost (£bn)
|
205.2
|
18.5
|
131.9
|
25.8
|
381.4
|
Loan impairment rate (1)
|
20bps
|
11bps
|
4bps
|
nm
|
13bps
|
Impairment
provisions (£bn)
|
(1.9)
|
(0.1)
|
(1.5)
|
(0.1)
|
(3.6)
|
Impairment
provisions - stage 3 (£bn)
|
(1.1)
|
-
|
(0.9)
|
-
|
(2.0)
|
Customer
deposits (£bn)
|
188.0
|
37.7
|
193.4
|
12.3
|
431.4
|
Risk-weighted
assets (RWAs) (£bn)
|
61.6
|
11.2
|
107.4
|
2.8
|
183.0
|
RWA
equivalent (RWAe) (£bn)
|
61.6
|
11.2
|
108.6
|
3.6
|
185.0
|
Employee
numbers (FTEs - thousands)
|
13.3
|
2.3
|
12.5
|
33.1
|
61.2
|
Third party customer asset rate (1)
|
3.50%
|
4.88%
|
6.65%
|
nm
|
nm
|
Third party customer funding rate (1)
|
(1.94%)
|
(3.02%)
|
(1.87%)
|
nm
|
nm
|
Bank average interest earning assets (£bn) (1)
|
208.0
|
18.7
|
133.4
|
na
|
366.5
|
Bank net interest margin (1)
|
2.39%
|
2.94%
|
3.77%
|
na
|
2.86%
|
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
|
|
|
|
|
|
Total
|
|
Retail
|
Private
|
Commercial
|
Central
items
|
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
|
Non-interest
income
|
108
|
70
|
570
|
55
|
803
|
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 (1)
|
662
|
57
|
829
|
13
|
1,561
|
Impairment
(losses)/releases
|
(169)
|
2
|
(59)
|
(3)
|
(229)
|
Operating profit (1)
|
493
|
59
|
770
|
10
|
1,332
|
|
|
|
|
|
|
Income
excluding notable items
|
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
|
Bank average interest earning assets (£bn) (1)
|
206.9
|
18.9
|
129.8
|
na
|
362.8
|
Bank net interest margin (1)
|
2.56%
|
3.02%
|
3.88%
|
na
|
2.94%
|
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 31 December 2022
|
|
|
|
|
|
Total
|
|
Retail
|
Private
|
Commercial
|
Central
items
|
NatWest
|
|
Banking
|
Banking
|
&
Institutional
|
&
other
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
Income statement
|
|
|
|
|
|
Net
interest income
|
1,505
|
251
|
1,276
|
(164)
|
2,868
|
Non-interest
income
|
112
|
59
|
543
|
126
|
840
|
Total income
|
1,617
|
310
|
1,819
|
(38)
|
3,708
|
Direct
expenses
|
(204)
|
(66)
|
(397)
|
(1,380)
|
(2,047)
|
Indirect
expenses
|
(466)
|
(122)
|
(592)
|
1,180
|
-
|
Other
operating expenses
|
(670)
|
(188)
|
(989)
|
(200)
|
(2,047)
|
Litigation
and conduct costs
|
12
|
(10)
|
(42)
|
(51)
|
(91)
|
Operating expenses
|
(658)
|
(198)
|
(1,031)
|
(251)
|
(2,138)
|
Operating profit/(loss) before impairment
losses/releases (1)
|
959
|
112
|
788
|
(289)
|
1,570
|
Impairment
(losses)/releases
|
(87)
|
(2)
|
(62)
|
7
|
(144)
|
Operating
profit/(loss) (1)
|
872
|
110
|
726
|
(282)
|
1,426
|
|
|
|
|
|
|
Income
excluding notable items
|
1,617
|
310
|
1,838
|
1
|
3,766
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
Return on tangible equity (1)
|
na
|
na
|
na
|
na
|
20.6%
|
Return on equity (1)
|
34.7%
|
24.2%
|
13.7%
|
nm
|
na
|
Cost:income ratio (excl. litigation and conduct) (1)
|
41.4%
|
60.6%
|
54.4%
|
nm
|
55.2%
|
Total
assets (£bn)
|
226.4
|
29.9
|
404.8
|
59.0
|
720.1
|
Funded assets (£bn) (1)
|
226.4
|
29.9
|
306.3
|
57.9
|
620.5
|
Net
loans to customers - amortised cost (£bn)
|
197.6
|
19.2
|
129.9
|
19.6
|
366.3
|
Loan impairment rate (1)
|
17bps
|
4bps
|
19bps
|
nm
|
16bps
|
Impairment
provisions (£bn)
|
(1.6)
|
(0.1)
|
(1.6)
|
(0.1)
|
(3.4)
|
Impairment
provisions - stage 3 (£bn)
|
(0.9)
|
-
|
(0.7)
|
(0.1)
|
(1.7)
|
Customer
deposits (£bn)
|
188.4
|
41.2
|
203.3
|
17.4
|
450.3
|
Risk-weighted
assets (RWAs) (£bn)
|
54.7
|
11.2
|
103.2
|
7.0
|
176.1
|
RWA
equivalent (RWAe) (£bn)
|
54.7
|
11.2
|
104.6
|
7.5
|
178.0
|
Employee
numbers (FTEs - thousands)
|
14.2
|
2.2
|
12.4
|
32.7
|
61.5
|
Third party customer asset rate (1)
|
2.72%
|
3.62%
|
4.44%
|
nm
|
nm
|
Third party customer funding rate (1)
|
(0.49%)
|
(0.65%)
|
(0.53%)
|
nm
|
nm
|
Bank average interest earning assets (£bn) (1)
|
197.4
|
19.2
|
130.3
|
na
|
355.8
|
Bank net interest margin (1)
|
3.02%
|
5.19%
|
3.89%
|
na
|
3.20%
|
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
Business performance summary
Capital and leverage ratios
The
table below sets out the key capital and leverage ratios and
measures. These are calculated on current PRA rules and presented
on a transitional basis for the remaining IFRS 9 transitional
relief in respect of ECL. The remaining Tier 2 instruments subject
to CRR2 grandfathering provisions were derecognised during Q3 2023
following regulatory approvals.
|
31 December
|
30
September
|
31
December
|
|
2023
|
2023
|
2022
|
Capital adequacy
ratios (1)
|
%
|
%
|
%
|
CET1
|
13.4
|
13.5
|
14.2
|
Tier
1
|
15.5
|
15.7
|
16.4
|
Total
|
18.4
|
18.7
|
19.3
|
|
|
|
|
Capital
|
£m
|
£m
|
£m
|
Tangible
equity
|
25,653
|
24,015
|
25,482
|
|
|
|
|
Prudential
valuation adjustment
|
(279)
|
(272)
|
(275)
|
Deferred
tax assets
|
(979)
|
(688)
|
(912)
|
Own
credit adjustments
|
(10)
|
(24)
|
(58)
|
Pension
fund assets
|
(143)
|
(246)
|
(227)
|
Cash
flow hedging reserve
|
1,899
|
2,967
|
2,771
|
Foreseeable
ordinary dividends
|
(1,013)
|
(643)
|
(967)
|
Adjustment for trust assets (2)
|
(365)
|
(365)
|
(365)
|
Foreseeable
charges
|
(525)
|
(361)
|
(800)
|
Adjustments
under IFRS 9 transitional arrangements
|
202
|
223
|
361
|
Insufficient
coverage for non-performing exposures
|
-
|
(21)
|
(18)
|
Total
regulatory adjustments
|
(1,213)
|
570
|
(490)
|
|
|
|
|
CET1
capital
|
24,440
|
24,585
|
24,992
|
|
|
|
|
Additional
AT1 capital
|
3,875
|
3,875
|
3,875
|
Tier 1
capital
|
28,315
|
28,460
|
28,867
|
|
|
|
|
End-point
Tier 2 capital
|
5,317
|
5,485
|
4,978
|
Grandfathered
instrument transitional arrangements
|
-
|
-
|
75
|
Tier 2
capital
|
5,317
|
5,485
|
5,053
|
Total regulatory capital
|
33,632
|
33,945
|
33,920
|
|
|
|
|
Risk-weighted assets
|
|
|
|
Credit
risk
|
147,598
|
143,974
|
141,963
|
Counterparty
credit risk
|
7,830
|
8,001
|
6,723
|
Market
risk
|
7,363
|
9,380
|
8,300
|
Operational
risk
|
20,198
|
20,198
|
19,115
|
Total RWAs
|
182,989
|
181,553
|
176,101
|
(1)
|
31 December 2023 includes the
transitional arrangements for the capital impact of IFRS 9 expected
credit loss (ECL) accounting and prior periods also include the
transitional relief on grandfathered capital instruments. The
impact of the IFRS 9 transitional adjustments at 31 December 2023
was £0.2 billion for CET1 capital, £54 million for total
capital and £17 million RWAs (30 September 2023 - £0.2
billion CET1 capital, £48 million total capital and £28
million RWAs; 31 December 2022 - £0.4 billion CET1 capital,
£36 million total capital and £71 million RWAs).
Excluding these adjustments, the CET1 ratio would be 13.2% (30
September 2023 - 13.4%; 31 December 2022 - 14.0%). The transitional
relief on grandfathered instruments at 31 December 2023 was nil (30
September 2023 - nil; 31 December 2022 - £0.1 billion).
Excluding both the transitional relief on grandfathered capital
instruments and the transitional arrangements for the capital
impact of IFRS 9 expected credit loss (ECL) accounting, the
end-point Tier 1 capital ratio would be 15.4% (30 September 2023 -
15.6%; 31 December 2022 - 16.2%) and the end-point Total capital
ratio would be 18.4% (30 September 2023 - 18.7%; 31 December 2022 -
19.3%).
|
(2)
|
Prudent deduction in respect of
agreement with the pension fund to establish new legal structure to
remove dividend linked contribution. Refer to Notes 5 and 33 in the
2023 consolidated financial statements of NatWest Group plc Annual
Report and Accounts.
|
|
|
Business performance summary
Capital and leverage ratios continued
|
31 December
|
30
September
|
31
December
|
|
2023
|
2023
|
2022
|
Leverage
|
£m
|
£m
|
£m
|
Cash
and balances at central banks
|
104,262
|
119,590
|
144,832
|
Trading
assets
|
45,551
|
49,621
|
45,577
|
Derivatives
|
78,904
|
87,504
|
99,545
|
Financial
assets
|
439,449
|
432,451
|
404,374
|
Other
assets
|
23,605
|
26,891
|
18,864
|
Assets
of disposal groups
|
902
|
1,084
|
6,861
|
Total
assets
|
692,673
|
717,141
|
720,053
|
Derivatives
|
|
|
|
- netting and variation
margin
|
(79,299)
|
(86,657)
|
(100,356)
|
- potential future exposures
|
17,212
|
17,226
|
18,327
|
Securities
financing transactions gross up
|
1,868
|
2,245
|
4,147
|
Other
off balance sheet items
|
50,961
|
50,528
|
46,144
|
Regulatory
deductions and other adjustments
|
(16,043)
|
(16,647)
|
(7,114)
|
Claims
on central banks
|
(100,735)
|
(116,157)
|
(141,144)
|
Exclusion
of bounce back loans
|
(3,794)
|
(4,198)
|
(5,444)
|
UK
leverage exposure
|
562,843
|
563,481
|
534,613
|
UK leverage ratio (%) (1)
|
5.0
|
5.1
|
5.4
|
(1)
|
Excluding the IFRS 9 transitional
adjustment, the UK leverage ratio would be 5.0% (30 September 2023
- 5.0%, 31 December 2022 - 5.3%).
|
Business performance summary
Credit risk
Economic loss drivers
The main macroeconomic variables for each of the four scenarios
used for expected credit loss (ECL) modelling are set out in the
main macroeconomic variables table below.
Main macroeconomic variables
|
2023
|
|
2022
|
|
|
|
|
Extreme
|
Weighted
|
|
|
|
|
Extreme
|
Weighted
|
|
Upside
|
Base case
|
Downside
|
downside
|
average
|
|
Upside
|
Base
case
|
Downside
|
downside
|
average
|
Five-year summary
|
%
|
%
|
%
|
%
|
%
|
|
%
|
%
|
%
|
%
|
%
|
GDP
|
1.8
|
1.0
|
0.5
|
(0.3)
|
0.9
|
|
2.2
|
1.3
|
0.8
|
0.4
|
1.2
|
Unemployment
|
3.5
|
4.6
|
5.2
|
6.8
|
4.8
|
|
3.9
|
4.5
|
4.9
|
6.7
|
4.8
|
House
price index
|
3.9
|
0.3
|
(0.4)
|
(5.7)
|
0.3
|
|
5.1
|
0.8
|
(0.7)
|
(4.4)
|
0.6
|
Commercial
real estate price
|
3.1
|
(0.2)
|
(2.0)
|
(6.8)
|
(0.6)
|
|
1.2
|
(1.9)
|
(2.8)
|
(9.1)
|
(2.5)
|
Consumer
price index
|
1.7
|
2.6
|
5.2
|
1.8
|
2.8
|
|
3.6
|
4.2
|
4.4
|
8.2
|
4.8
|
Bank of
England base rate
|
3.8
|
3.7
|
5.6
|
2.9
|
4.0
|
|
2.4
|
3.1
|
1.5
|
4.5
|
2.8
|
UK
stock price index
|
4.8
|
3.3
|
1.2
|
(0.4)
|
2.8
|
|
3.0
|
1.4
|
(1.1)
|
(3.7)
|
0.5
|
World
GDP
|
3.7
|
3.2
|
2.7
|
1.8
|
3.0
|
|
3.7
|
3.3
|
1.7
|
1.1
|
2.7
|
Probability
weight
|
21.2
|
45.0
|
20.4
|
13.4
|
|
|
18.6
|
45.0
|
20.8
|
15.6
|
|
(1)
The five-year summary runs from 2023-27 for 31 December 2023 and
from 2022-26 for 31 December 2022.
(2) The table shows
CAGR for annual GDP, average levels for the unemployment rate and
Bank of England base rate and Q4 to Q4 CAGR for other
parameters.
ECL post model adjustments
The table below shows ECL post model adjustments.
|
Retail Banking
|
|
Private
|
Commercial &
|
|
Central items &
|
|
|
|
Mortgages
|
Other
|
|
Banking
|
Institutional
|
|
other (1)
|
|
Total
|
2023
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
|
£m
|
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
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
Economic
uncertainty
|
102
|
51
|
|
6
|
191
|
|
2
|
|
352
|
Other
adjustments
|
8
|
20
|
|
-
|
16
|
|
15
|
|
59
|
Total
|
110
|
71
|
|
6
|
207
|
|
17
|
|
411
|
|
|
|
|
|
|
|
|
|
|
Of
which:
|
|
|
|
|
|
|
|
|
|
- Stage
1
|
62
|
27
|
|
3
|
63
|
|
-
|
|
155
|
- Stage
2
|
32
|
44
|
|
3
|
139
|
|
17
|
|
235
|
- Stage
3
|
16
|
-
|
|
-
|
5
|
|
1
|
|
22
|
Post model adjustments increased since 31 December 2022, with
notable shifts in all categories. This reflected:
−
|
The addition of deferred model calibration post model adjustments
to account for elevated refinance risks on
deteriorated
|
|
exposures
largely due to pressures from inflation and liquidity.
|
−
|
The increase in the economic uncertainty post model adjustments for
the Wholesale portfolios relating to inflation, supply
chain
|
|
and liquidity prompted by continued affordability risks, as a
result of higher interest rates and sustained inflation. This was
partially
|
|
offset by a reduction in COVID-19 related post model
adjustments.
|
Business performance summary
Portfolio summary - segment analysis
The table below shows gross loans and ECL, by segment and stage,
within the scope of the IFRS 9 ECL framework.
|
|
|
|
Central
|
|
|
Retail
|
Private
|
Commercial
|
items
|
|
|
Banking
|
Banking
|
& Institutional
|
& other
|
Total
|
2023
|
£m
|
£m
|
£m
|
£m
|
£m
|
Loans - amortised cost and FVOCI
|
|
|
|
|
|
Stage
1
|
182,297
|
17,565
|
119,047
|
29,677
|
348,586
|
Stage
2
|
21,208
|
906
|
15,771
|
6
|
37,891
|
Stage
3
|
3,133
|
258
|
2,162
|
10
|
5,563
|
Of which: individual
|
-
|
186
|
845
|
-
|
1,031
|
Of
which: collective
|
3,133
|
72
|
1,317
|
10
|
4,532
|
Subtotal
excluding disposal group loans
|
206,638
|
18,729
|
136,980
|
29,693
|
392,040
|
Disposal
group loans
|
|
|
|
67
|
67
|
Total
|
|
|
|
29,760
|
392,107
|
ECL provisions (1)
|
|
|
|
|
|
Stage
1
|
306
|
20
|
356
|
27
|
709
|
Stage
2
|
502
|
20
|
447
|
7
|
976
|
Stage
3
|
1,097
|
34
|
819
|
10
|
1,960
|
Of which: individual
|
-
|
34
|
298
|
-
|
332
|
Of which: collective
|
1,097
|
-
|
521
|
10
|
1,628
|
Subtotal
excluding ECL provisions on disposal group loans
|
1,905
|
74
|
1,622
|
44
|
3,645
|
ECL
provisions on disposal group loans
|
|
|
|
36
|
36
|
Total
|
|
|
|
80
|
3,681
|
ECL provisions
coverage (2)
|
|
|
|
|
|
Stage 1
(%)
|
0.17
|
0.11
|
0.30
|
0.09
|
0.20
|
Stage 2
(%)
|
2.37
|
2.21
|
2.83
|
nm
|
2.58
|
Stage 3
(%)
|
35.01
|
13.18
|
37.88
|
100.00
|
35.23
|
ECL
provisions coverage excluding disposal group loans
|
0.92
|
0.40
|
1.18
|
0.15
|
0.93
|
ECL
provisions coverage on disposal group loans
|
|
|
|
53.73
|
53.73
|
Total
|
|
|
|
0.27
|
0.94
|
Impairment losses/(releases)
|
|
|
|
|
|
ECL (release)/charge (3)
|
465
|
14
|
94
|
5
|
578
|
Stage
1
|
(172)
|
(9)
|
(222)
|
6
|
(397)
|
Stage
2
|
440
|
15
|
182
|
8
|
645
|
Stage
3
|
197
|
8
|
134
|
(9)
|
330
|
Of which: individual
|
-
|
8
|
80
|
1
|
89
|
Of which: collective
|
197
|
-
|
54
|
(10)
|
241
|
Continuing
operations
|
465
|
14
|
94
|
5
|
578
|
Discontinued
operations
|
|
|
|
(6)
|
(6)
|
Total
|
|
|
|
(1)
|
572
|
|
|
|
|
|
|
Amounts
written-off
|
188
|
2
|
122
|
7
|
319
|
Of which: individual
|
-
|
2
|
40
|
-
|
42
|
Of which: collective
|
188
|
-
|
82
|
7
|
277
|
Refer to the following page for the footnotes.
Business performance summary
Portfolio summary - segment analysis continued
|
|
|
|
Central
|
|
|
Retail
|
Private
|
Commercial
|
items
|
|
|
Banking
|
Banking
|
&
Institutional
|
&
other
|
Total
|
2022
|
£m
|
£m
|
£m
|
£m
|
£m
|
Loans - amortised cost and FVOCI
|
|
|
|
|
|
Stage
1
|
174,727
|
18,367
|
108,791
|
23,339
|
325,224
|
Stage
2
|
21,561
|
801
|
24,226
|
245
|
46,833
|
Stage
3
|
2,565
|
242
|
2,166
|
123
|
5,096
|
Of which: individual
|
-
|
168
|
905
|
48
|
1,121
|
Of which: collective
|
2,565
|
74
|
1,261
|
75
|
3,975
|
Subtotal excluding disposal group loans
|
198,853
|
19,410
|
135,183
|
23,707
|
377,153
|
Disposal group loans
|
|
|
|
1,502
|
1,502
|
Total
|
|
|
|
25,209
|
378,655
|
ECL provisions (1)
|
|
|
|
|
|
Stage
1
|
251
|
21
|
342
|
18
|
632
|
Stage
2
|
450
|
14
|
534
|
45
|
1,043
|
Stage
3
|
917
|
26
|
747
|
69
|
1,759
|
Of which: individual
|
-
|
26
|
251
|
10
|
287
|
Of which: collective
|
917
|
-
|
496
|
59
|
1,472
|
Subtotal excluding ECL provisions on disposal group
loans
|
1,618
|
61
|
1,623
|
132
|
3,434
|
ECL on disposal group loans
|
|
|
|
53
|
53
|
Total
|
|
|
|
185
|
3,487
|
ECL provisions
coverage (2)
|
|
|
|
|
|
Stage 1
(%)
|
0.14
|
0.11
|
0.31
|
0.08
|
0.19
|
Stage 2
(%)
|
2.09
|
1.75
|
2.20
|
18.37
|
2.23
|
Stage 3
(%)
|
35.75
|
10.74
|
34.49
|
56.10
|
34.52
|
ECL provisions coverage excluding disposal group loans
|
0.81
|
0.31
|
1.20
|
0.56
|
0.91
|
ECL provisions coverage on disposal group loans
|
|
|
|
3.53
|
3.53
|
Total
|
|
|
|
0.73
|
0.92
|
Impairment losses/(releases)
|
|
|
|
|
|
ECL (release)/charge (3)
|
229
|
(2)
|
122
|
(12)
|
337
|
Stage
1
|
(146)
|
2
|
(135)
|
(11)
|
(290)
|
Stage
2
|
268
|
(7)
|
108
|
24
|
393
|
Stage
3
|
107
|
3
|
149
|
(25)
|
234
|
Of which: individual
|
-
|
3
|
57
|
(6)
|
54
|
Of which: collective
|
107
|
-
|
92
|
(19)
|
180
|
Continuing operations
|
229
|
(2)
|
122
|
(12)
|
337
|
Discontinued operations
|
-
|
|
|
(71)
|
(71)
|
Total
|
|
|
|
(83)
|
266
|
|
|
|
|
|
|
Amounts
written-off
|
216
|
15
|
224
|
27
|
482
|
Of which: individual
|
-
|
15
|
153
|
-
|
168
|
Of which: collective
|
216
|
-
|
71
|
27
|
314
|
(1)
|
Includes loans to customers and
banks.
|
(2)
|
Includes £9 million (2022 -
£3 million) related to assets classified as FVOCI and
£0.1 billion (2022 - £0.1 billion) related to off-balance
sheet exposures
|
(3)
|
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 coverage
ratio.
|
(4)
|
Includes a £16 million release
(2022 - £3 million charge) related to other financial assets,
of which £6 million charge (2022 - nil) related to assets
classified as FVOCI, and includes a £9 million release (2022 -
£5 million release) related to contingent
liabilities.
|
(5)
|
The table shows gross loans only
and excludes amounts that were outside the scope of the ECL
framework. Refer to the Financial instruments within the scope of
the IFRS 9 ECL framework section for further details. Other
financial assets within the scope of the IFRS 9 ECL framework were
cash and balances at central banks totalling £103.1 billion
(2022 - £143.3 billion) and debt securities of £50.1
billion (2022 - £29.9 billion).
|
Business performance summary
Analysis of ECL provision
The
table below shows gross loans and ECL provision
analysis.
|
31 December
|
30
September
|
30
June
|
31
December
|
|
2023
|
2023
|
2023
|
2022
|
|
£m
|
£m
|
£m
|
£m
|
Total loans
|
392,040
|
389,552
|
385,252
|
377,153
|
Personal
|
223,774
|
224,175
|
223,664
|
217,123
|
Wholesale
|
168,266
|
165,377
|
161,588
|
160,030
|
|
|
|
|
|
Value of loans in Stage 2
|
37,891
|
37,646
|
43,440
|
46,833
|
Personal
|
21,509
|
18,233
|
22,989
|
21,854
|
Wholesale
|
16,382
|
19,413
|
20,471
|
24,979
|
|
|
|
|
|
ECL provisions in Stage 2
|
976
|
1,032
|
991
|
1,043
|
Personal
|
506
|
493
|
455
|
466
|
Wholesale
|
470
|
539
|
536
|
577
|
|
|
|
|
|
ECL provision coverage in Stage 2
|
2.58%
|
2.74%
|
2.28%
|
2.23%
|
Personal
|
2.35%
|
2.70%
|
1.98%
|
2.13%
|
Wholesale
|
2.87%
|
2.78%
|
2.62%
|
2.31%
|
Condensed consolidated income statement
for the period ended 31 December 2023
|
Year ended
|
|
Quarter ended
|
|
31 December
|
31
December
|
|
31 December
|
30
September
|
31
December
|
|
2023
|
2022
|
|
2023
|
2023
|
2022
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Interest
receivable
|
21,026
|
12,637
|
|
5,955
|
5,589
|
4,046
|
Interest
payable
|
(9,977)
|
(2,795)
|
|
(3,317)
|
(2,904)
|
(1,178)
|
|
|
|
|
|
|
|
Net interest income
|
11,049
|
9,842
|
|
2,638
|
2,685
|
2,868
|
|
|
|
|
|
|
|
Fees
and commissions receivable
|
2,983
|
2,915
|
|
770
|
754
|
770
|
Fees
and commissions payable
|
(653)
|
(623)
|
|
(169)
|
(169)
|
(155)
|
Income
from trading activities
|
794
|
1,133
|
|
185
|
191
|
164
|
Other
operating income
|
579
|
(111)
|
|
113
|
27
|
61
|
|
|
|
|
|
|
|
Non-interest income
|
3,703
|
3,314
|
|
899
|
803
|
840
|
|
|
|
|
|
|
|
Total income
|
14,752
|
13,156
|
|
3,537
|
3,488
|
3,708
|
|
|
|
|
|
|
|
Staff
costs
|
(3,901)
|
(3,716)
|
|
(977)
|
(919)
|
(1,029)
|
Premises
and equipment
|
(1,153)
|
(1,112)
|
|
(308)
|
(275)
|
(292)
|
Other
administrative expenses
|
(2,008)
|
(2,026)
|
|
(618)
|
(519)
|
(597)
|
Depreciation
and amortisation
|
(934)
|
(833)
|
|
(251)
|
(214)
|
(220)
|
|
|
|
|
|
|
|
Operating expenses
|
(7,996)
|
(7,687)
|
|
(2,154)
|
(1,927)
|
(2,138)
|
|
|
|
|
|
|
|
Profit before impairment losses
|
6,756
|
5,469
|
|
1,383
|
1,561
|
1,570
|
Impairment
losses
|
(578)
|
(337)
|
|
(126)
|
(229)
|
(144)
|
|
|
|
|
|
|
|
Operating profit before tax
|
6,178
|
5,132
|
|
1,257
|
1,332
|
1,426
|
Tax
(charge)/credit
|
(1,434)
|
(1,275)
|
|
5
|
(378)
|
(46)
|
Profit from continuing operations
|
4,744
|
3,857
|
|
1,262
|
954
|
1,380
|
(Loss)/profit from discontinued
operations, net of tax (1)
|
(112)
|
(262)
|
|
26
|
(30)
|
(56)
|
Profit for the period
|
4,632
|
3,595
|
|
1,288
|
924
|
1,324
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
Ordinary
shareholders
|
4,394
|
3,340
|
|
1,229
|
866
|
1,262
|
Paid-in
equity holders
|
242
|
249
|
|
60
|
61
|
61
|
Non-controlling
interests
|
(4)
|
6
|
|
(1)
|
(3)
|
1
|
|
4,632
|
3,595
|
|
1,288
|
924
|
1,324
|
Earnings
per ordinary share - continuing operations
|
49.2p
|
36.5p
|
|
13.6p
|
10.1p
|
13.7p
|
Earnings
per ordinary share - discontinued operations
|
(1.2p)
|
(2.7p)
|
|
0.3p
|
(0.3p)
|
(0.6p)
|
Total
earnings per share attributable to
|
|
|
|
|
|
|
ordinary
shareholders - basic (3)
|
47.9p
|
33.8p
|
|
13.9p
|
9.8p
|
13.1p
|
Earnings
per ordinary share - fully diluted
|
|
|
|
|
|
|
continuing operations
|
48.9p
|
36.2p
|
|
13.6p
|
10.1p
|
13.6p
|
Earnings
per ordinary share - fully diluted
|
|
|
|
|
|
|
discontinued operations
|
(1.2p)
|
(2.6p)
|
|
0.3p
|
(0.3p)
|
(0.6p)
|
Total
earnings per share attributable to
|
|
|
|
|
|
|
ordinary shareholders - fully
diluted
|
47.7p
|
33.6p
|
|
13.9p
|
9.8p
|
13.0p
|
(1)
|
The results of discontinued
operations, comprising the post-tax profit is shown as a single
amount on the face of the income statement. An analysis of this
amount is presented in Note 3 on page
31.
|
(2)
|
At the General Meeting and Class
Meeting on 25 August 2022, the shareholders approved the proposed
special dividend and share consolidation. On 30 August 2022 the
issued ordinary share capital was consolidated in the ratio of 14
existing shares for 13 new shares. The average number of shares and
earnings per share have been adjusted
retrospectively.
|
(3)
|
In 2023, the unrounded Total
earnings per share attributable to ordinary shareholders - basic is
47.948p. The unrounded Earnings per ordinary share - continuing
operations was 49.170p. The unrounded Earnings per ordinary share -
discontinued operations was (1.222p).
|
Condensed consolidated statement of comprehensive
income
for the period ended 31 December 2023
|
Year ended
|
|
Quarter ended
|
|
31 December
|
31
December
|
|
31 December
|
30
September
|
31
December
|
2023
|
2022
|
|
2023
|
2023
|
2022
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Profit
for the period
|
4,632
|
3,595
|
|
1,288
|
924
|
1,324
|
Items that do not qualify for reclassification
|
|
|
|
|
|
|
Remeasurement
of retirement benefit schemes
|
(280)
|
(840)
|
|
(175)
|
(41)
|
(158)
|
Changes
in fair value of credit in financial liabilities
|
|
|
|
|
|
|
designated at FVTPL
|
(39)
|
50
|
|
(12)
|
(23)
|
(52)
|
FVOCI
financial assets
|
17
|
59
|
|
(19)
|
6
|
17
|
Tax
|
79
|
187
|
|
59
|
13
|
51
|
|
(223)
|
(544)
|
|
(147)
|
(45)
|
(142)
|
Items that do qualify for reclassification
|
|
|
|
|
|
|
FVOCI
financial assets
|
49
|
(457)
|
|
(16)
|
12
|
(6)
|
Cash flow hedges (1)
|
1,208
|
(3,277)
|
|
1,416
|
526
|
701
|
Currency
translation
|
(619)
|
241
|
|
(218)
|
68
|
(117)
|
Tax
|
(361)
|
1,067
|
|
(345)
|
(143)
|
(192)
|
|
277
|
(2,426)
|
|
837
|
463
|
386
|
Other comprehensive income/(losses) after tax
|
54
|
(2,970)
|
|
690
|
418
|
244
|
Total comprehensive income for the year
|
4,686
|
625
|
|
1,978
|
1,342
|
1,568
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
Ordinary
shareholders
|
4,448
|
370
|
|
1,919
|
1,284
|
1,506
|
Paid-in
equity holders
|
242
|
249
|
|
60
|
61
|
61
|
Non-controlling
interests
|
(4)
|
6
|
|
(1)
|
(3)
|
1
|
|
4,686
|
625
|
|
1,978
|
1,342
|
1,568
|
(1)
|
Refer to footnote 5 and 6 of the
consolidated statement of changes in
equity.
|
Condensed consolidated balance sheet as at 31 December
2023
|
31 December
|
30
September
|
31
December
|
|
2023
|
2023
|
2022
|
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
Cash
and balances at central banks
|
104,262
|
119,590
|
144,832
|
Trading
assets
|
45,551
|
49,621
|
45,577
|
Derivatives
|
78,904
|
87,504
|
99,545
|
Settlement
balances
|
7,231
|
10,644
|
2,572
|
Loans
to banks - amortised cost
|
6,914
|
8,454
|
7,139
|
Loans
to customers - amortised cost
|
381,433
|
377,268
|
366,340
|
Other
financial assets
|
51,102
|
46,729
|
30,895
|
Intangible
assets
|
7,614
|
7,515
|
7,116
|
Other
assets
|
8,760
|
8,732
|
9,176
|
Assets
of disposal groups
|
902
|
1,084
|
6,861
|
Total assets
|
692,673
|
717,141
|
720,053
|
|
|
|
|
Liabilities
|
|
|
|
Bank
deposits
|
22,190
|
24,354
|
20,441
|
Customer
deposits
|
431,377
|
435,867
|
450,318
|
Settlement
balances
|
6,645
|
11,585
|
2,012
|
Trading
liabilities
|
53,636
|
58,495
|
52,808
|
Derivatives
|
72,395
|
81,135
|
94,047
|
Other
financial liabilities
|
55,089
|
56,302
|
49,107
|
Subordinated
liabilities
|
5,714
|
6,210
|
6,260
|
Notes
in circulation
|
3,237
|
3,144
|
3,218
|
Other
liabilities
|
5,202
|
4,592
|
5,346
|
Total liabilities
|
655,485
|
681,684
|
683,557
|
|
|
|
|
Equity
|
|
|
|
Ordinary
shareholders' interests
|
33,267
|
31,530
|
32,598
|
Other
owners' interests
|
3,890
|
3,890
|
3,890
|
Owners' equity
|
37,157
|
35,420
|
36,488
|
Non-controlling
interests
|
31
|
37
|
8
|
Total
equity
|
37,188
|
35,457
|
36,496
|
Total liabilities and equity
|
692,673
|
717,141
|
720,053
|
Condensed consolidated statement of changes in equity
for the period ended 31 December 2023
|
Year ended
|
|
Quarter ended
|
|
31 December
|
31
December
|
|
31 December
|
30
September
|
31
December
|
2023
|
2022
|
|
2023
|
2023
|
2022
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Called-up share capital - at beginning
of period
|
10,539
|
11,468
|
|
9,788
|
9,852
|
10,539
|
Share cancellation (1,
2)
|
(856)
|
(929)
|
|
(105)
|
(64)
|
-
|
At end
of period
|
9,683
|
10,539
|
|
9,683
|
9,788
|
10,539
|
|
|
|
|
|
|
|
Paid-in equity - at beginning and end of period
|
3,890
|
3,890
|
|
3,890
|
3,890
|
3,890
|
|
|
|
|
|
|
|
Share premium account - at beginning and end of period
|
1,161
|
1,161
|
|
1,161
|
1,161
|
1,161
|
|
|
|
|
|
|
|
Merger
reserve - at
beginning and end of period
|
10,881
|
10,881
|
|
10,881
|
10,881
|
10,881
|
|
|
|
|
|
|
|
FVOCI
reserve - at
beginning of period
|
(102)
|
269
|
|
(20)
|
(42)
|
(105)
|
Unrealised
gains/(losses)
|
22
|
(570)
|
|
(46)
|
8
|
(3)
|
Realised
losses
|
43
|
59
|
|
12
|
15
|
14
|
Tax
|
(12)
|
140
|
|
5
|
(1)
|
(8)
|
At end
of period
|
(49)
|
(102)
|
|
(49)
|
(20)
|
(102)
|
|
|
|
|
|
|
|
Cash flow hedging reserve - at
beginning of period
|
(2,771)
|
(395)
|
|
(2,967)
|
(3,344)
|
(3,273)
|
Amount recognised in equity (5)
|
187
|
(2,973)
|
|
1,008
|
127
|
734
|
Amount transferred from equity to earnings (6)
|
1,021
|
(304)
|
|
408
|
399
|
(33)
|
Tax
|
(336)
|
901
|
|
(348)
|
(149)
|
(199)
|
At end
of period
|
(1,899)
|
(2,771)
|
|
(1,899)
|
(2,967)
|
(2,771)
|
|
|
|
|
|
|
|
Foreign exchange reserve - at
beginning of period
|
1,478
|
1,205
|
|
1,059
|
986
|
1,589
|
Retranslation
of net assets
|
(239)
|
512
|
|
(50)
|
119
|
(87)
|
Foreign
currency gains/(losses) on hedges of net assets
|
107
|
(266)
|
|
(4)
|
(51)
|
(29)
|
Tax
|
(18)
|
32
|
|
-
|
5
|
6
|
Recycled to profit or loss on disposal of
businesses (3)
|
(487)
|
(5)
|
|
(164)
|
-
|
(1)
|
At end
of period
|
841
|
1,478
|
|
841
|
1,059
|
1,478
|
|
|
|
|
|
|
|
Capital redemption reserve - at
beginning of period
|
1,651
|
722
|
|
2,402
|
2,338
|
1,651
|
Share cancellation (1,2)
|
856
|
929
|
|
105
|
64
|
-
|
At end
of period
|
2,507
|
1,651
|
|
2,507
|
2,402
|
1,651
|
|
|
|
|
|
|
|
Retained earnings - at beginning of
period
|
10,019
|
12,966
|
|
9,763
|
9,576
|
8,886
|
Profit/(loss)
attributable to ordinary shareholders and
|
|
|
|
|
|
|
other equity owners
|
|
|
|
|
|
|
- continuing
operations
|
4,748
|
3,851
|
|
1,263
|
957
|
1,379
|
- discontinued
operations
|
(112)
|
(262)
|
|
26
|
(30)
|
(56)
|
Paid-in
equity dividends paid
|
(242)
|
(249)
|
|
(60)
|
(61)
|
(61)
|
Ordinary
dividends paid
|
(1,456)
|
(1,205)
|
|
-
|
(491)
|
-
|
Special
dividends paid
|
-
|
(1,746)
|
|
-
|
-
|
-
|
Shares repurchased (1,2)
|
(2,057)
|
(2,054)
|
|
(205)
|
(139)
|
-
|
Redemption of preference shares (4)
|
-
|
(750)
|
|
-
|
-
|
-
|
Redemption/reclassification
of paid-in equity
|
|
|
|
|
|
|
- tax
|
-
|
(36)
|
|
-
|
-
|
-
|
Realised
gains in period on FVOCI equity shares
|
|
|
|
|
|
|
- gross
|
1
|
113
|
|
(1)
|
(5)
|
-
|
- tax
|
(3)
|
(9)
|
|
-
|
-
|
12
|
Remeasurement
of retirement benefit schemes
|
|
|
|
|
|
|
- gross
|
(280)
|
(840)
|
|
(175)
|
(41)
|
(158)
|
- tax
|
81
|
192
|
|
54
|
12
|
40
|
For the notes to this table, refer to the following
page.
Condensed consolidated statement of changes in equity
for the period ended 31 December 2023 continued
|
Year ended
|
|
Quarter ended
|
|
31 December
|
31
December
|
|
31 December
|
30
September
|
31
December
|
2023
|
2022
|
|
2023
|
2023
|
2022
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Changes
in fair value of credit in financial liabilities
|
|
|
|
|
|
|
designated at FVTPL
|
|
|
|
|
|
|
- gross
|
(39)
|
50
|
|
(12)
|
(23)
|
(52)
|
- tax
|
6
|
(2)
|
|
3
|
3
|
8
|
Employee
share schemes
|
|
|
|
|
|
|
- gross
|
14
|
6
|
|
(7)
|
4
|
(2)
|
Share-based
payments
|
|
|
|
|
|
|
- gross
|
(18)
|
(7)
|
|
13
|
1
|
19
|
- tax
|
(17)
|
1
|
|
(17)
|
-
|
4
|
At end
of period
|
10,645
|
10,019
|
|
10,645
|
9,763
|
10,019
|
|
|
|
|
|
|
|
Own shares held - at beginning of
period
|
(258)
|
(371)
|
|
(537)
|
(540)
|
(275)
|
Shares
vested under employee share schemes
|
114
|
113
|
|
34
|
3
|
17
|
Own shares acquired (2)
|
(359)
|
-
|
|
-
|
-
|
-
|
At end
of period
|
(503)
|
(258)
|
|
(503)
|
(537)
|
(258)
|
|
|
|
|
|
|
|
Owners' equity at end of period
|
37,157
|
36,488
|
|
37,157
|
35,420
|
36,488
|
|
|
|
|
|
|
|
Non-controlling interests - at beginning of period
|
8
|
7
|
|
37
|
40
|
12
|
Profit
attributable to non-controlling interests
|
(4)
|
6
|
|
(1)
|
(3)
|
1
|
Acquisition
of subsidiary
|
32
|
-
|
|
-
|
-
|
-
|
Dividends
paid
|
(5)
|
(5)
|
|
(5)
|
-
|
(5)
|
At end
of period
|
31
|
8
|
|
31
|
37
|
8
|
|
|
|
|
|
|
|
Total equity at end of period
|
37,188
|
36,496
|
|
37,188
|
35,457
|
36,496
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
Ordinary
shareholders
|
33,267
|
32,598
|
|
33,267
|
31,530
|
32,598
|
Paid-in
equity holders
|
3,890
|
3,890
|
|
3,890
|
3,890
|
3,890
|
Non-controlling
interests
|
31
|
8
|
|
31
|
37
|
8
|
|
37,188
|
36,496
|
|
37,188
|
35,457
|
36,496
|
(1)
|
NatWest Group plc repurchased and
cancelled 460.3 million (2022 - 379.3 million) shares, of which 2.3
million were settled in January 2024. The total consideration of
these shares excluding fees was £1,151.7 million (2022 -
£829.3 million), of which £4.9 million were settled in
January 2024, as part of the On Market Share Buyback Programmes.
The nominal value of the share cancellations has been transferred
to the capital redemption reserve.
|
(2)
|
In May 2023, there was an agreement
to buy 469.2 million (March 2022 - 549.9 million) ordinary shares
of the Company from UK Government Investments Ltd (UKGI) at 268.4
pence per share (March 2022 - 220.5 pence per share) for the total
consideration of £1.3 billion (2022 - £1.2 billion).
NatWest Group cancelled 336.2 million of the purchased ordinary
shares, amounting to £906.9 million excluding fees and held
the remaining 133.0 million shares as Own Shares Held, amounting to
£358.8 million excluding fees. The nominal value of the share
cancellation has been transferred to the capital redemption
reserve.
|
(3)
|
Includes £460 million FX
recycled to profit or loss upon completion of a capital repayment
by UBIDAC.
|
(4)
|
Following an announcement of a
Regulatory Call in February 2022, the Series U preference shares
were reclassified to liabilities. A £254 million loss was
recognised in retained earnings as a result of FX
unlocking.
|
(5)
|
The change in the cash flow hedging
reserve is driven by realised accrued interest transferred into the
income statement and a decrease in swap rates compared to previous
periods where they rose. The portfolio of hedging instruments is
predominantly received fixed swaps.
|
(6)
|
The amount transferred from equity
to the income statement is mostly recorded within net interest
income mainly in loans to customers, balances at central banks and
customer deposits.
|
Condensed consolidated cash flow statement
for the year ended 31 December 2023
|
Year ended
|
|
31 December
|
31
December
|
2023
|
2022
|
|
£m
|
£m
|
Cash flows from operating activities
|
|
|
Operating
profit before tax from continuing operations
|
6,178
|
5,132
|
Operating
loss before tax from discontinued operations
|
(112)
|
(262)
|
Adjustments
for non-cash items
|
3,208
|
1,203
|
Net cash flows from trading activities
|
9,274
|
6,073
|
Changes
in operating assets and liabilities
|
(25,679)
|
(48,447)
|
Net cash flows from operating activities before tax
|
(16,405)
|
(42,374)
|
Income
taxes paid
|
(1,033)
|
(1,223)
|
Net cash flows from operating activities
|
(17,438)
|
(43,597)
|
Net cash flows from investing activities
|
(14,694)
|
19,059
|
Net cash flows from financing activities
|
(6,304)
|
(10,652)
|
Effects
of exchange rate changes on cash and cash equivalents
|
(1,189)
|
2,933
|
Net decrease in cash and cash equivalents
|
(39,625)
|
(32,257)
|
Cash
and cash equivalents at 1 January
|
158,449
|
190,706
|
Cash and cash equivalents at 31 December
|
118,824
|
158,449
|
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
critical and material 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.
2. Tax
Analysis of the tax charge for the year
The tax charge comprises current and deferred tax in respect of
profits and losses recognised or originating in the income
statement. Tax on items originating outside the income statement is
charged to other comprehensive income or direct to equity (as
appropriate) and is therefore not reflected in the table
below.
Current tax is tax payable or recoverable in respect of the taxable
profit or loss for the year and any adjustments to tax payable in
prior years.
|
2023
|
2022
|
2021
|
Continuing operations
|
£m
|
£m
|
£m
|
Current tax
|
|
|
|
Charge
for the year
|
(1,373)
|
(1,611)
|
(1,036)
|
(Under)/over
provision in respect of prior years
|
(123)
|
100
|
31
|
|
(1,496)
|
(1,511)
|
(1,005)
|
Deferred tax
|
|
|
|
(Charge)/credit
for the year
|
(281)
|
47
|
(185)
|
UK tax
rate change impact
|
-
|
(10)
|
165
|
Net
increase in the carrying value of deferred tax assets in respect of
UK,
|
|
|
|
RoI and Netherlands losses
|
385
|
267
|
12
|
(Under)/over
provision in respect of prior years
|
(42)
|
(68)
|
17
|
Tax charge for the year
|
(1,434)
|
(1,275)
|
(996)
|
Judgement: tax contingencies
NatWest Group's corporate income tax charge and its provisions for
corporate income taxes necessarily involve a degree of estimation
and judgement. The tax treatment of some transactions is uncertain
and tax computations are yet to be agreed with the relevant tax
authorities. NatWest Group recognises anticipated tax liabilities
based on all available evidence and, where appropriate, in the
light of external advice. Any difference between the final outcome
and the amounts provided will affect current and deferred income
tax charges in the period when the matter is resolved.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable in
respect of temporary differences where the carrying amount of an
asset or liability differs for accounting and tax purposes.
Deferred tax liabilities reflect the expected amount of tax payable
in the future on these temporary differences. Deferred tax assets
reflect the expected amount of tax recoverable in the future on
these differences. The net deferred tax asset recognised by the
NatWest Group is shown below. The reduction of deferred tax asset
is primarily attributable to reduced cash flow hedge liabilities,
and is taken in other comprehensive income as part of the movements
in cash flow reserves.
Analysis of deferred tax
|
2023
|
2022
|
|
£m
|
£m
|
Deferred
tax asset
|
(1,894)
|
(2,178)
|
Deferred
tax liability
|
141
|
227
|
Net
deferred tax asset
|
(1,753)
|
(1,951)
|
Notes
3. Discontinued operations and assets and liabilities of disposal
groups
Four
legally binding agreements for the sale of UBIDAC business have
been announced as part of the phased withdrawal from the Republic
of Ireland. The transaction with Allied Irish Banks, p.l.c. (AIB)
for the transfer of performing commercial loans and the transaction
with Permanent TSB p.l.c. (PTSB) for the sale of performing
non-tracker mortgages, the performing loans in the micro-SME
business, the UBIDAC Asset Finance business, including its Lombard
digital platform, and 25 Ulster Bank branch locations in the
Republic of Ireland, had both been fully completed by the end of Q3
2023. Material developments in the other two agreements during Q4
2023 are set out below.
Agreement with Allied Irish Banks, p.l.c. (AIB) for the sale of
performing tracker and linked mortgages.
There
were no loan sales during Q4 2023. The remaining migrations are
expected to be complete in 2024.
Agreement with Elmscott Property Finance DAC / AB CarVal (CarVal)
for the sale of a portfolio which consists mostly of non-performing
mortgages, unsecured personal loans and commercial facilities with
a gross value of c. €690 million. Pepper Finance Corporation
(Ireland) DAC will become the legal owner and servicer of the
facilities.
In
November 2023, c.€400 million of exposures transferred to
Pepper Finance Corporation (Ireland) DAC, with the remainder of the
portfolio expected to transfer in 2024.
The business activities relating to these sales that meet the
requirements of IFRS 5 are presented as a discontinued operation
and as a disposal group. Ulster Bank RoI continuing operations are
reported within Central items & other.
(a) (Loss)/profit from discontinued operations, net of
tax
|
Year ended
|
|
Quarter ended
|
|
31 December
|
31
December
|
|
31 December
|
30
September
|
31
December
|
|
2023
|
2022
|
|
2023
|
2023
|
2022
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Interest
receivable
|
22
|
177
|
|
-
|
(4)
|
17
|
Net
interest income
|
22
|
177
|
|
-
|
(4)
|
17
|
Non-interest income (1)
|
(16)
|
(472)
|
|
26
|
(28)
|
(63)
|
Total income
|
6
|
(295)
|
|
26
|
(32)
|
(46)
|
Operating
expenses
|
(124)
|
(38)
|
|
-
|
(2)
|
(3)
|
(Loss)/profit before impairment releases/losses
|
(118)
|
(333)
|
|
26
|
(34)
|
(49)
|
Impairment
releases/(losses)
|
6
|
71
|
|
-
|
4
|
(7)
|
Operating (loss)/profit before tax
|
(112)
|
(262)
|
|
26
|
(30)
|
(56)
|
Tax
charge
|
-
|
-
|
|
-
|
-
|
-
|
(Loss)/profit from discontinued
operations, net of tax
|
(112)
|
(262)
|
|
26
|
(30)
|
(56)
|
(1) Excludes
gain of £20 million (€24
million) recognised by NatWest Group as a result of acquisition of
PTSB shares in relation to disposal of UBIDAC assets to PTSB in
2022.
(b) Assets and liabilities of disposal groups
|
|
31 December
|
31
December
|
|
|
2023
|
2022
|
|
|
£m
|
£m
|
Assets of disposal groups
|
|
|
|
Loans
to customers - amortised cost
|
|
32
|
1,458
|
Other
financial assets - loans to customers
|
|
841
|
5,397
|
Other
assets
|
|
29
|
6
|
|
|
902
|
6,861
|
|
|
|
|
Liabilities of disposal groups
|
|
|
|
Other
liabilities
|
|
3
|
15
|
|
|
3
|
15
|
|
|
|
|
Net assets of disposal groups
|
|
899
|
6,846
|
(c) Operating cash flows attributable to discontinued
operations
|
31 December
|
31
December
|
|
2023
|
2022
|
|
£m
|
£m
|
Net
cash flows from operating activities
|
362
|
1,090
|
Net
cash flows from investing activities
|
5,473
|
6,164
|
Net
increase in cash and cash equivalents
|
5,835
|
7,254
|
Notes
4. Litigation and regulatory matters
NatWest
Group plc and certain members of NatWest Group are party to various
legal proceedings and are involved in, or subject to, various
regulatory matters, including as the subject of investigations and
other regulatory and governmental action (Matters) in the United
Kingdom (UK), the United States (US), the European Union (EU) and
other jurisdictions. Note 26 in the NatWest Group plc 2023 Annual
Report and Accounts, issued on 16 February 2024 and available at
natwestgroup.com (Note 26), discusses the Matters in which NatWest
Group is currently involved and material developments. Other than
the Matters discussed in Note 26, no member of NatWest Group is or
has been involved in governmental, legal, or regulatory proceedings
(including those which are pending or threatened) that are expected
to be material, individually or in aggregate. Recent developments
in the Matters identified in Note 26 that have occurred since the
Q3 2023 Interim Management Statement was issued on 27 October 2023,
include, but are not limited to, those set out below.
Litigation
London Interbank Offered Rate (LIBOR) and other rates
litigation
In
August 2020, a complaint was filed in the United States District
Court for the Northern District of California by several United
States retail borrowers against the USD ICE LIBOR panel banks and
their affiliates (including NatWest Group plc, NWM Plc, NWMSI and
NWB Plc), alleging (i) that the very process of setting USD ICE
LIBOR amounts to illegal price-fixing; and (ii) that banks in the
United States have illegally agreed to use LIBOR as a component of
price in variable retail loans. In September 2022, the district
court dismissed the complaint. The plaintiffs filed an amended
complaint but in October 2023, the district court dismissed that
complaint as well, and indicated that further amendment would not
be permitted. The plaintiffs have commenced an appeal to the United
States Court of Appeals for the Ninth Circuit which is currently
pending.
FX litigation
In July and December 2019, two separate applications seeking
opt-out collective proceedings orders were filed in the UK
Competition Appeal Tribunal (CAT) against NatWest Group plc, NWM
Plc and other banks. Both
applications were brought on behalf of persons who, between 18
December 2007 and 31 January 2013, entered into a relevant FX spot
or outright forward transaction in the EEA with a relevant
financial institution or on an electronic communications
network. In
March 2022, the CAT declined to certify as collective proceedings
either of the applications, which was appealed by the applicants,
and the subject of an application for judicial
review.
In its
amended judgment in November 2023, the Court of Appeal allowed the
appeal and decided that the claims should proceed on an opt-out
basis. Separately, the court determined which of the two competing
applicants can proceed as class representative, and dismissed the
application for judicial review of the CAT's decision. The case has
been remitted to the CAT for further case management and the banks
have sought permission to appeal directly to the UK Supreme
Court.
In
December 2021, a summons was served in the Netherlands against
NatWest Group plc, NWM Plc and NWM N.V. by Stichting FX Claims on
behalf of a number of parties, seeking declarations from the court
concerning liability for anti-competitive FX market conduct
described in decisions of the European Commission (EC) of 16 May
2019, along with unspecified damages. The claimant amended its
claim to also refer to a 2 December 2021 decision by the EC, which
described anti-competitive FX market conduct. NatWest Group plc,
NWM Plc and other defendants contested the jurisdiction of the
Dutch court. In March 2023, the district court in Amsterdam
accepted that it has jurisdiction to hear claims against NWM N.V.
but refused jurisdiction to hear any claims against the other
defendant banks (including NatWest Group plc and NWM Plc) brought
on behalf of the parties represented by the claimant that are
domiciled outside of the Netherlands. The claimant is appealing
that decision and the defendant banks have brought cross-appeals
which seek a ruling that the Dutch court has no jurisdiction to
hear any claims against the defendant banks domiciled outside of
the Netherlands, including claims brought on behalf of the parties
represented by the claimant that are domiciled in the
Netherlands.
In
September 2023, second summonses were served by Stichting FX Claims
on NWM N.V., NatWest Group plc and NWM Plc, for claims on behalf of
a new group of parties that have now been brought before the
district court in Amsterdam. The summonses seek declarations from
the Dutch court concerning liability for anti-competitive FX market
conduct described in the above referenced decisions of the EC of 16
May 2019 and 2 December 2021, along with unspecified
damages.
Government securities antitrust litigation
NWMSI and certain other US broker-dealers are defendants in a
consolidated antitrust class action in the United States District
Court for the Southern District of New York (SDNY)
on behalf of persons who transacted in US Treasury securities or
derivatives based on such instruments, including futures and
options. The plaintiffs allege that the defendants rigged the US
Treasury securities auction bidding process to deflate prices at
which they bought such securities and colluded to increase the
prices at which they sold such securities to the plaintiffs. In
March 2022, the SDNY dismissed the complaint, without leave to
re-plead. In February 2024, the United States Court of Appeals for
the Second Circuit affirmed the SDNY's decision dismissing the
complaint.
Swaps antitrust litigation
NWM Plc and other members of NatWest Group, including NatWest Group
plc, as well as a number of other interest rate swap dealers, are
defendants in several cases pending in the SDNY
alleging violations of the US antitrust laws in the market for
interest rate swaps. There is a consolidated class action complaint
on behalf of persons who entered into interest rate swaps with the
defendants, as well as non-class action claims by three swap
execution facilities (TeraExchange, Javelin, and trueEx). The
plaintiffs allege that the swap execution facilities would have
successfully established exchange-like trading of interest rate
swaps if the defendants had not unlawfully conspired to prevent
that from happening through boycotts and other means. Discovery in
these cases is complete. In December 2023, the SDNY denied the
plaintiffs' motion for class certification. The plaintiffs have
filed a petition requesting that the United States Court of Appeals
for the Second Circuit review the denial of class
certification.
Notes
4. Litigation and regulatory matters continued
In June
2021, a class action antitrust complaint was filed against a number
of credit default swap dealers, in New Mexico federal court on
behalf of persons who, from 2005 onwards, settled credit default
swaps in the United States by reference to the ISDA credit default
swap auction protocol. The complaint alleges that the defendants
conspired to manipulate that benchmark through various means
in violation of the antitrust laws and the Commodity Exchange
Act. The defendants filed a motion to dismiss the complaint and, in
June 2023, such motion was denied as regards NWMSI and other
financial institutions, but granted as regards to NWM Plc on the
ground that the court lacks jurisdiction over that entity. As a
result, the case entered the discovery phase as against the
non-dismissed defendants. In January 2024, the SDNY issued an order
barring the plaintiffs in the New Mexico case from pursuing claims
based on conduct occurring before 30 June 2014 on the ground that
such claims were extinguished by a 2015 settlement agreement that
resolved a prior class action relating to credit default
swaps.
EUA trading litigation
NWM Plc
was a named defendant in civil proceedings before the High Court of
Justice of England and Wales brought in 2015 by ten companies
(all in liquidation) (the 'Liquidated Companies') and their
respective liquidators (together, 'the Claimants'). The Liquidated
Companies previously traded in European Union Allowances (EUAs) in
2009 and were alleged to be VAT defaulting traders within (or
otherwise connected to) EUA supply chains of which NWM Plc was a
party. In March 2020, the court held that NWM Plc and Mercuria
Energy Europe Trading Limited ('Mercuria') were liable for
dishonestly assisting and knowingly being a party to fraudulent
trading during a seven business day period in 2009.
In
October 2020, the High Court quantified total damages against NWM
Plc and Mercuria at £45 million plus interest and costs, and
permitted the defendants to appeal to the Court of Appeal. In May
2021 the Court of Appeal set aside the High Court's judgment and
ordered that a retrial take place before a different High Court
judge. In January 2024, NWM Plc entered into an agreement to
resolve the claim against it. The settlement amount paid by NWM Plc
was covered in full by an existing provision.
1MDB litigation
A
Malaysian court claim was served in Switzerland in November 2022 by
1MDB, a Sovereign Wealth Fund, in which Coutts & Co Ltd was
named, along with six others, as a defendant in respect of losses
allegedly incurred by 1MDB. It is claimed that Coutts & Co Ltd
is liable as a constructive trustee for having dishonestly assisted
the directors of 1MDB in the breach of their fiduciary duties by
failing (amongst other alleged claims) to undertake due diligence
in relation to a customer of Coutts & Co Ltd, through which
funds totalling c.US$1 billion were received and paid out between
2009 and 2011. The claimant seeks the return of that amount plus
interest. Coutts & Co Ltd filed an application in January 2023
challenging the validity of service and the Malaysian court's
jurisdiction to hear the claim. Before that application was heard,
in April 2023, the claimant filed a notice of discontinuance of its
claim against certain defendants including Coutts & Co Ltd. The
claimant subsequently indicated that it intended to issue further
replacement proceedings. Coutts & Co Ltd challenged the
claimant's ability to take that step. In August 2023, the court
disallowed the discontinuation of the claim by the claimant (a
decision that the claimant has appealed) and directed that the
application by Coutts & Co Ltd challenging the validity of the
proceedings should proceed to a hearing, which took place in
February 2024. Judgment is awaited.
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
RBSI inspection report and referral to enforcement
Following
an inspection by the Isle of Man Financial Services Authority
(IOMFSA) in 2021 into The Royal Bank of Scotland International
Limited's (RBSI's) compliance with the Financial Services Rule Book
2016, the Anti-Money Laundering and Countering the Financing of
Terrorism Code 2015 (the "2015 Code") and the Anti-Money Laundering
and Countering the Financing of Terrorism Code 2019, RBSI and the
IOMFSA entered into a settlement agreement in February 2024 with an
agreed public statement that RBSI had contravened paragraph 7 of
the 2015 Code. RBSI did not complete its updated Customer Risk
Assessment process following the introduction of the 2015 Code
until 2018, resulting in 2,239 non-personal customers (on-boarded
to its Isle of Man branches between 2015 and 2018, and not rated as
high risk) being on-boarded using Customer Risk Assessments in line
with earlier legislation. This constituted less than 3% of the
total customer population of the Isle of Man branches. RBSI was
fined £1.0 million (after a discount for co-operation), which
was covered in full by an existing provision.
Reviews into customer account closures
In July
2023, NatWest Group plc commissioned an independent review by the
law firm Travers Smith LLP into issues that had arisen from
treatment of a customer in connection with an account closure
decision that attracted significant public attention and certain
related interactions with the media. NatWest Group plc has received
reports in connection with that review (and in October and December
2023 published summaries of the key findings and
recommendations).
In
addition, NatWest Group plc is conducting internal reviews with
respect to certain governance processes, policies, systems and
controls of NatWest Group entities, including with respect to
customer account closures.
The FCA
is conducting supervisory work into how the governance, systems and
controls of NatWest Group and Coutts & Company are working, to
identify and address any significant shortcomings.
5. Related party transactions
UK Government
UK
Government through HM Treasury is the controlling shareholder of
NatWest Group plc as per UK listing rules. The UK Government's
shareholding is managed by UK Government Investments Limited, a
company wholly owned by the UK Government. At 31 December 2023 HM
Treasury's holding in the company's ordinary shares was 37.97%. As
a result the UK Government and UK Government-controlled bodies are
related parties of the Group. NatWest Group's other transactions
with the UK Government include the payment of taxes, principally UK
corporation tax and value added tax; national insurance
contributions; local authority rates; and regulatory fees and
levies (including the bank levy and FSCS levies).
Bank of England facilities
In the
ordinary course of business, NatWest Group may from time to time
access market-wide facilities provided by the Bank of
England.
Other related parties
(a)
In their roles as providers of finance, NatWest Group companies
provide development and other types of capital support to
businesses. In some instances, the investment may extend to
ownership or control over 10% or more of the voting rights of the
investee company.
(b)
NatWest Group recharges NatWest Group Pension Fund with the cost of
pension management services incurred by it.
Full details of NatWest Group's related party transactions for the
year ended 31 December 2023 are included in the NatWest Group plc
2023 Annual Report and Accounts.
6. Dividends
The
company has announced that the directors have recommended a final
dividend of £1.0 billion, or 11.5p per ordinary share (2022 -
£1.0 billion, or 10.0p per ordinary share) subject to
shareholder approval at the Annual General Meeting on 23 April
2024. If approved, payment will be made on 29 April 2024 to
shareholders on the register at the close of business on 15 March
2024. The ex-dividend date will be 14 March 2024.
7. Post balance sheet events
As part
of the ongoing on-market share buyback programme, NatWest Group plc
has repurchased and cancelled a further 63.9 million shares since
December 2023 for a total consideration (excluding fees) of
£136.9 million.
Other
than as disclosed in this document, there have been no significant
events between 31 December 2023 and the date of approval of this
announcement which would require a change to, or additional
disclosure, in the announcement.
Statement of directors' responsibilities
The
responsibility statement below has been prepared in connection with
NatWest Group's full Annual Report and Accounts for the year ended
31 December 2023.
We, the
directors listed below, confirm that to the best of our
knowledge:
−
|
The
financial statements, prepared in accordance with UK-adopted
International Accounting Standards, International Financial
Reporting Standards as issued by the International Accounting
Standards Board, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the company
and the undertakings included in the consolidated taken as a whole;
and
|
−
|
The
Strategic report and Directors' report (incorporating the Business
review) include a fair review of the development and performance of
the business and the position of the company and the undertakings
included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they
face.
|
By
order of the Board
Howard
Davies
|
John-Paul
Thwaite
|
Katie
Murray
|
Chairman
|
Group
Chief Executive Officer
|
Group
Chief Financial Officer
|
15
February 2024
Board of directors
Chairman
|
Executive directors
|
Non-executive directors
|
Howard
Davies
|
John-Paul
Thwaite
Katie
Murray
|
Frank
Dangeard
Roisin
Donnelly
Patrick
Flynn
Rick
Haythornthwaite
Yasmin
Jetha
Stuart
Lewis
Mark
Seligman
Lena
Wilson
|
Additional information
Presentation of information
In the
Annual Report and Accounts, unless specified otherwise, 'parent
company' refers to NatWest Group plc, and 'NatWest Group', 'Group'
or 'we' refers to NatWest Group plc and its subsidiaries. The term
'NWH Group' refers to NatWest Holdings Limited ('NWH Limited') and
its subsidiary and associated undertakings. The term 'NWM Group'
refers to NatWest Markets Plc ('NWM Plc') and its subsidiary and
associated undertakings. The term 'NWM N.V.' refers to NatWest
Markets N.V. The term 'NWM N.V. Group' refers to Natwest Markets
N.V. and its subsidiary and associated undertakings The term
'NWMSI' refers to NatWest Markets Securities, Inc. The term 'RBS
plc' refers to The Royal Bank of Scotland plc. The term 'NWB Plc'
refers to National Westminster Bank Plc. The term 'UBIDAC' refers
to Ulster Bank Ireland DAC. The term 'RBSI Ltd' refers to The Royal
Bank of Scotland International Limited.
NatWest Group publishes its financial statements in pounds sterling
('£' or 'sterling'). The abbreviations '£m' and
'£bn' represent millions and thousands of millions of pounds
sterling, respectively, and references to 'pence' 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 results
Financial information contained in this document does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006 ('the Act'). The statutory accounts for the
year ended 31 December 2022 have been filed with the Registrar of
Companies and those for the year ended 31 December 2023 will be
filed with the register of companies following the Annual General
Meeting. 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.
MAR - Inside Information
This
announcement contains information that qualified or may have
qualified as inside information for NatWest Group plc, for the
purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014
(MAR) as it forms part of domestic law by virtue of the European
Union (Withdrawal) Act 2018. This
announcement is made by Claire Kane, Head of Investor Relations for
NatWest Group plc.
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
|
Fixed income presentation
|
|
Date: 16
February 2024
|
Date: 16
February 2024
|
|
Time: 9:00
AM UK time
|
Time: 1:00
PM UK time
|
|
Zoom ID: 983
5690 5481
|
Zoom ID: 957
8120 2404
|
|
|
|
|
|
|
Available on www.natwestgroup.com/results
−
|
Announcement
and slides.
|
−
|
NatWest
Group plc 2023 Annual Report and Accounts.
|
−
|
A
financial supplement containing income statement, balance sheet and
segment performance for the four quarters ended 31 December
2023.
|
−
|
NatWest
Group and NWH Group Pillar 3 Report.
|
−
|
Climate-related
Disclosures Report 2023.
|
−
|
Environmental,
Social and Governance (ESG) Disclosures Report 2023.
|
Forward looking statements
Cautionary statement regarding forward-looking
statements
Certain sections in this document contain 'forward-looking
statements' as that term is defined in the United States Private
Securities Litigation Reform Act of 1995, such as statements that
include 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. In particular, this document includes forward-looking
targets and guidance relating to financial performance measures,
such as income growth, operating expense, RoTE, ROE, discretionary
capital distribution targets, impairment loss rates, balance sheet
reduction, including the reduction of RWAs, CET1 ratio (and key
drivers of the CET1 ratio including timing, impact and details),
Pillar 2 and other regulatory buffer requirements and MREL and
non-financial performance measures, such as NatWest Group's initial
area of focus, climate and sustainability-related performance
ambitions, targets and metrics, including in relation to
initiatives to transition to a net zero economy, Climate and
Sustainable Funding and Financing (CSFF) and financed emissions. In
addition, this document includes forward-looking statements
relating, but not limited to: implementation of NatWest Group's
strategy (including in relation to: cost-controlling measures,
the Commercial & Institutional segment
and achieving a number of various targets within the relevant
timeframe); the timing and outcome of litigation and government and
regulatory investigations; direct and on-market buy-backs; funding
plans and credit risk profile; managing its capital position;
liquidity ratio; portfolios; net interest margin and drivers
related thereto; lending and income growth, product share and
growth in target segments; impairments and write-downs;
restructuring and remediation costs and charges; NatWest Group's
exposure to political risk, economic assumptions and risk, climate,
environmental and sustainability risk, operational risk, conduct
risk, financial crime risk, cyber, data and IT risk and credit
rating risk and to various types of market risk, including interest
rate risk, foreign exchange rate risk and commodity and equity
price risk; customer experience, including our Net Promoter Score;
employee engagement and gender balance in leadership
positions.
Limitations inherent to forward-looking statements
These
statements are based on current plans, expectations, estimates,
targets and projections, and are subject to significant inherent
risks, uncertainties and other factors, both external and relating
to NatWest Group's strategy or operations, which may result in
NatWest Group being unable to achieve the current plans,
expectations, estimates, targets, projections and other anticipated
outcomes expressed or implied by such forward-looking statements.
In addition, certain of these disclosures are dependent on choices
relying on key model characteristics and assumptions and are
subject to various limitations, including assumptions and estimates
made by management. By their nature, certain of these disclosures
are only estimates and, as a result, actual future results, gains
or losses could differ materially from those that have been
estimated. Accordingly, undue reliance should not be placed on
these statements. The forward-looking statements contained in this
document speak only as of the date we make them and we expressly
disclaim any obligation or undertaking to update or revise any
forward-looking statements contained herein, whether to reflect any
change in our expectations with regard thereto, any change in
events, conditions or circumstances on which any such statement is
based, or otherwise, except to the extent legally
required.
Important factors that could affect the actual outcome of the
forward-looking statements
We caution you that a large number of important factors could
adversely affect our results or our ability to implement our
strategy, cause us to fail to meet our targets, predictions,
expectations and other anticipated outcomes or affect the accuracy
of forward-looking statements described in this document. These
factors include, but are not limited to, those set forth in the
risk factors and the other uncertainties described in NatWest Group
plc's Annual Report on Form 20-F and its other filings with the US
Securities and Exchange Commission. The principal risks and
uncertainties that could adversely affect NatWest
Group's future results, its financial condition and/or prospects
and cause them to be materially different from what is forecast or
expected, include, but are not limited to: economic and political
risk (including in respect of: political and economic risks and
uncertainty in the UK and global markets, including due to GDP
growth, inflation and interest rates, political uncertainty and
instability, supply chain disruption and geopolitical tensions and
armed conflict); changes in foreign currency exchange rates;
uncertainty regarding the effects of Brexit; and HM Treasury's
ownership as the largest shareholder of NatWest Group plc);
strategic risk (including in respect of the implementation of
NatWest Group's strategy; future acquisitions and divestments
(including the phased withdrawal from ROI), and the transfer of its
Western European corporate portfolio); financial resilience risk
(including in respect of: NatWest Group's ability to meet targets
and to make discretionary capital distributions; the competitive
environment; counterparty and borrower risk; liquidity and funding
risks; prudential regulatory requirements for capital and MREL;
reductions in the credit ratings; the requirements of regulatory
stress tests; model risk; sensitivity to accounting policies,
judgements, estimates and assumptions (and the economic, climate,
competitive and other forward looking information affecting those
judgements, estimates and assumptions); changes in applicable
accounting standards; the value or effectiveness of credit
protection; the adequacy of NatWest Group's future assessments by
the Prudential Regulation Authority and the Bank of England; and
the application of UK statutory stabilisation or resolution
powers); climate and sustainability risk (including in respect of:
risks relating to climate-related and sustainability-related
risks; both the execution and reputational risk relating to NatWest
Group's climate change-related strategy, ambitions, targets and
transition plan; climate and sustainability-related data and model
risk; the failure to implement climate change resilient governance,
systems, controls and procedures; increasing levels of climate,
environmental, human rights and sustainability-related regulation
and oversight; increasing anti-greenwashing regulations; climate,
environmental and sustainability-related litigation, enforcement
proceedings investigations and conduct risk; and reductions in ESG
ratings); operational and IT resilience risk (including in respect
of: operational risks (including reliance on third party
suppliers); cyberattacks; the accuracy and effective use of data;
complex IT systems; attracting, retaining and developing diverse
senior management and skilled personnel; NatWest Group's risk
management framework; and reputational risk); and legal, regulatory
and conduct risk (including in respect of: the impact of
substantial regulation and oversight; the outcome of legal,
regulatory and governmental actions, investigations and remedial
undertakings; and changes in tax legislation or failure to generate
future taxable profits).
Climate and sustainability-related disclosures
Climate
and sustainability-related disclosures in this document are not
measures within the scope of International Financial Reporting
Standards ('IFRS'), use a greater number and level of judgements,
assumptions and estimates, including with respect to the
classification of climate and sustainable funding and financing
activities, than our reporting of historical financial information
in accordance with IFRS. These judgements, assumptions and
estimates are highly likely to change materially over time, and,
when coupled with the longer time frames used in these disclosures,
make any assessment of materiality inherently uncertain. In
addition, our climate risk analysis, net zero strategy, including
the implementation of our climate transition plan remain under
development, and the data underlying our analysis and strategy
remain subject to evolution over time. The process we have adopted
to define, gather and report data on our performance on climate and
sustainability-related measures is not subject to the formal
processes adopted for financial reporting in accordance with IFRS
and there are currently limited industry standards or globally
recognised established practices for measuring and defining climate
and sustainability-related metrics. As a result, we expect that
certain climate and sustainability-related disclosures made in this
document are likely to be amended, updated, recalculated or
restated in the future. Please also refer to the cautionary
statement in the section entitled 'Climate-related and other
forward-looking statements and metrics' of the NatWest Group 2023
Climate-related Disclosures Report.
Cautionary statement regarding Non-IFRS financial measures and
APMs
NatWest
Group prepares its financial statements in accordance with
generally accepted accounting principles (GAAP). This document may
contain financial measures and ratios not specifically defined
under GAAP or IFRS ('Non-IFRS') and/or alternative performance
measures ('APMs') as defined in European Securities and Markets
Authority ('ESMA') guidelines. Non-IFRS measures and APMs 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.
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. Any Non-IFRS measures and/or APMs included
in this document, are not measures within the scope of IFRS, are
based on a number of assumptions that are subject to uncertainties
and change, and are not a substitute for IFRS
measures.
The
information, statements and opinions contained in this document do
not constitute a public offer under any applicable legislation or
an offer to sell or a solicitation of an offer to buy any
securities or financial instruments or any advice or recommendation
with respect to such securities or other financial
instruments.
Appendix
Non-IFRS financial measures
Non-IFRS financial measures
NatWest
Group prepares its financial statements in accordance with UK
adopted International Accounting Standards (IAS) and International
Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB). This document contains a number
of non-IFRS measures, also known as alternative performance
measures, defined under the European Securities and Markets
Authority guidance or non-GAAP financial measures in accordance
with SEC regulations. These measures are adjusted for notable and
other defined items which management believes are not
representative of the underlying performance of the business and
which distort period-on-period comparison.
The
non-IFRS measures provide users of the financial statements with a
consistent basis for comparing business performance between
financial periods and information on elements of performance that
are one-off in nature. The non-IFRS measures also include a
calculation of metrics that are used throughout the banking
industry.
These
non-IFRS measures are not a substitute for IFRS measures and a
reconciliation to the closest IFRS measure is presented where
appropriate.
1. Total income excluding notable items
Total income
excluding notable items is calculated as total income less notable
items.
The
exclusion of notable items aims to remove the impact of one-offs
and other volatile items which may distort period-on-period
comparisons.
|
Year ended
|
|
Quarter ended
|
|
31 December
|
31
December
|
|
31 December
|
30
September
|
31
December
|
|
2023
|
2022
|
|
2023
|
2023
|
2022
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
|
Total
income
|
14,752
|
13,156
|
|
3,537
|
3,488
|
3,708
|
Less
notable items:
|
|
|
|
|
|
|
Commercial & Institutional
|
|
|
|
|
|
|
Fair
value, disposal losses and asset disposals/strategic
|
|
|
|
|
|
|
risk reduction
|
-
|
(45)
|
|
-
|
-
|
-
|
Own
credit adjustments (OCA)
|
(2)
|
42
|
|
(5)
|
(6)
|
(19)
|
Tax
interest on prior periods
|
3
|
-
|
|
3
|
-
|
-
|
Central items & other
|
|
|
|
|
|
|
Loss on
redemption of own debt
|
-
|
(161)
|
|
-
|
-
|
-
|
Effective
interest rate adjustment as a
|
|
|
|
|
|
|
result of redemption of own
debt
|
-
|
(41)
|
|
-
|
-
|
(41)
|
Profit
from insurance liabilities settlement
|
-
|
92
|
|
-
|
-
|
92
|
Liquidity
Asset Bond sale losses
|
(43)
|
(88)
|
|
(10)
|
(9)
|
-
|
Share
of associate (losses)/gains for Business Growth Fund
|
(4)
|
(22)
|
|
1
|
10
|
7
|
Property
strategy update
|
(69)
|
-
|
|
-
|
(69)
|
-
|
Interest
and FX management derivatives not in
|
|
|
|
|
|
|
hedge accounting
relationships
|
79
|
369
|
|
(21)
|
48
|
(46)
|
FX
recycling gains
|
484
|
-
|
|
162
|
-
|
-
|
Ulster
Bank Rol fair value mortgage adjustments
|
-
|
(51)
|
|
-
|
-
|
(51)
|
Tax
interest on prior periods
|
(35)
|
-
|
|
(35)
|
-
|
-
|
|
413
|
95
|
|
95
|
(26)
|
(58)
|
Total income excluding notable items
|
14,339
|
13,061
|
|
3,442
|
3,514
|
3,766
|
Non-IFRS financial measures continued
2. Operating expenses - management view
The
management analysis of operating expenses shows litigation and
conduct costs on a separate line. These amounts are included within
staff costs and other administrative expenses in the statutory
analysis. Other operating expenses excludes litigation and conduct
costs, which are more volatile and may distort comparisons with
prior periods.
|
Year ended
|
|
31 December 2023
|
|
31
December 2022
|
|
Litigation
|
Other
|
Statutory
|
|
Litigation
|
Other
|
Statutory
|
|
and conduct
|
operating
|
operating
|
|
and
conduct
|
operating
|
operating
|
|
costs
|
expenses
|
expenses
|
|
costs
|
expenses
|
expenses
|
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
|
|
Staff costs
|
62
|
3,839
|
3,901
|
|
45
|
3,671
|
3,716
|
Premises
and equipment
|
-
|
1,153
|
1,153
|
|
-
|
1,112
|
1,112
|
Depreciation
and amortisation
|
-
|
934
|
934
|
|
-
|
833
|
833
|
Other
administrative expenses
|
293
|
1,715
|
2,008
|
|
340
|
1,686
|
2,026
|
Total
|
355
|
7,641
|
7,996
|
|
385
|
7,302
|
7,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
|
31 December 2023
|
|
|
|
|
|
Litigation
|
Other
|
Statutory
|
|
|
|
|
|
and conduct
|
operating
|
operating
|
|
|
|
|
|
costs
|
expenses
|
expenses
|
|
|
|
|
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
|
|
Staff
costs
|
|
|
|
|
16
|
961
|
977
|
Premises
and equipment
|
|
|
|
|
-
|
308
|
308
|
Depreciation
and amortisation
|
|
|
|
|
-
|
251
|
251
|
Other
administrative expenses
|
|
|
|
|
97
|
521
|
618
|
Total
|
|
|
|
|
113
|
2,041
|
2,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
September 2023
|
|
|
|
|
|
Litigation
|
Other
|
Statutory
|
|
|
|
|
|
and
conduct
|
operating
|
operating
|
|
|
|
|
|
costs
|
expenses
|
expenses
|
|
|
|
|
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
|
|
Staff
costs
|
|
|
|
|
15
|
904
|
919
|
Premises
and equipment
|
|
|
|
|
-
|
275
|
275
|
Depreciation
and amortisation
|
|
|
|
|
-
|
214
|
214
|
Other
administrative expenses
|
|
|
|
|
119
|
400
|
519
|
Total
|
|
|
|
|
134
|
1,793
|
1,927
|
|
|
|
|
|
|
|
|
|
|
|
31
December 2022
|
|
|
|
|
|
Litigation
|
Other
|
Statutory
|
|
|
|
|
|
and
conduct
|
operating
|
operating
|
|
|
|
|
|
costs
|
expenses
|
expenses
|
|
|
|
|
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
|
|
Staff
costs
|
|
|
|
|
16
|
1,013
|
1,029
|
Premises
and equipment
|
|
|
|
|
-
|
292
|
292
|
Depreciation
and amortisation
|
|
|
|
|
-
|
220
|
220
|
Other
administrative expenses
|
|
|
|
|
75
|
522
|
597
|
Total
|
|
|
|
|
91
|
2,047
|
2,138
|
Non-IFRS financial measures continued
3. Cost: income ratio (excl. litigation and conduct)
NatWest Group uses cost:income ratio (excl. litigation and conduct)
in the Outlook guidance. This is calculated as other operating expenses (total
operating expenses less litigation and conduct costs) divided by
total income. Litigation and conduct costs are excluded as they are
one-off in nature, difficult to forecast for Outlook purposes and
distort period-on-period comparisons.
The
calculation of the cost:income ratio (excl. litigation and conduct)
is shown below, along with a comparison to cost:income ratio
calculated using total operating expenses.
|
|
|
|
Central
|
Total
|
|
Retail
|
Private
|
Commercial &
|
items
|
NatWest
|
|
Banking
|
Banking
|
Institutional
|
& other
|
Group
|
Year ended 31 December 2023
|
£m
|
£m
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
Operating expenses
|
2,828
|
685
|
4,091
|
392
|
7,996
|
Less litigation and conduct costs
|
(117)
|
(9)
|
(224)
|
(5)
|
(355)
|
Other operating expenses
|
2,711
|
676
|
3,867
|
387
|
7,641
|
|
|
|
|
|
|
Total income
|
5,931
|
990
|
7,421
|
410
|
14,752
|
|
|
|
|
|
|
Cost:income ratio
|
47.7%
|
69.2%
|
55.1%
|
nm
|
54.2%
|
Cost:income ratio (excl. litigation and conduct)
|
45.7%
|
68.3%
|
52.1%
|
nm
|
51.8%
|
|
|
|
|
|
|
Year ended 31 December 2022
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
Operating expenses
|
2,593
|
622
|
3,744
|
728
|
7,687
|
Less litigation and conduct costs
|
(109)
|
(12)
|
(181)
|
(83)
|
(385)
|
Other operating expenses
|
2,484
|
610
|
3,563
|
645
|
7,302
|
|
|
|
|
|
|
Total income
|
5,646
|
1,056
|
6,413
|
41
|
13,156
|
|
|
|
|
|
|
Cost:income ratio
|
45.9%
|
58.9%
|
58.4%
|
nm
|
58.4%
|
Cost:income ratio (excl. litigation and conduct)
|
44.0%
|
57.8%
|
55.6%
|
nm
|
55.5%
|
Quarter ended 31 December 2023
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
Operating
expenses
|
681
|
206
|
1,092
|
175
|
2,154
|
Less
litigation and conduct costs
|
(34)
|
2
|
(78)
|
(3)
|
(113)
|
Other
operating expenses
|
647
|
208
|
1,014
|
172
|
2,041
|
|
|
|
|
|
|
Total
income
|
1,369
|
209
|
1,832
|
127
|
3,537
|
|
|
|
|
|
|
Cost:income
ratio
|
49.7%
|
98.6%
|
59.6%
|
nm
|
60.9%
|
Cost:income
ratio (excl. litigation and conduct)
|
47.3%
|
99.5%
|
55.3%
|
nm
|
57.7%
|
|
|
|
|
|
|
Quarter ended 30 September 2023
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
Operating
expenses
|
780
|
157
|
1,012
|
(22)
|
1,927
|
Less
litigation and conduct costs
|
(59)
|
-
|
(52)
|
(23)
|
(134)
|
Other
operating expenses
|
721
|
157
|
960
|
(45)
|
1,793
|
|
|
|
|
|
|
Total
income
|
1,442
|
214
|
1,841
|
(9)
|
3,488
|
|
|
|
|
|
|
Cost:income
ratio
|
54.1%
|
73.4%
|
55.0%
|
nm
|
55.2%
|
Cost:income
ratio (excl. litigation and conduct)
|
50.0%
|
73.4%
|
52.1%
|
nm
|
51.4%
|
|
|
|
|
|
|
Quarter
ended 31 December 2022
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
Operating
expenses
|
658
|
198
|
1,031
|
251
|
2,138
|
Less
litigation and conduct costs
|
12
|
(10)
|
(42)
|
(51)
|
(91)
|
Other
operating expenses
|
670
|
188
|
989
|
200
|
2,047
|
|
|
|
|
|
|
Total
income
|
1,617
|
310
|
1,819
|
(38)
|
3,708
|
|
|
|
|
|
|
Cost:income
ratio
|
40.7%
|
63.9%
|
56.7%
|
nm
|
57.7%
|
Cost:income
ratio (excl. litigation and conduct)
|
41.4%
|
60.6%
|
54.4%
|
nm
|
55.2%
|
Non-IFRS financial measures continued
4. NatWest Group return on tangible equity
Return
on tangible equity comprises annualised profit or loss for the
period attributable to ordinary shareholders divided by average
tangible equity. Average tangible equity is average total equity
excluding average non-controlling interests, average other owners
equity and average intangible assets.
This
measure shows the return NatWest Group generates on tangible equity
deployed. It is used to determine relative performance of banks and
used widely across the sector, although different banks may
calculate the rate differently. A reconciliation is shown below
including a comparison to the nearest GAAP measure; return on
equity. This comprises profit attributable to ordinary shareholders
divided by average total equity.
|
Year ended or as at
|
|
Quarter ended or as at
|
|
31 December
|
31
December
|
|
31 December
|
30
September
|
31
December
|
|
2023
|
2022
|
|
2023
|
2023
|
2022
|
NatWest Group return on tangible
equity
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Profit
attributable to ordinary shareholders
|
4,394
|
3,340
|
|
1,229
|
866
|
1,262
|
Annualised
profit attributable to ordinary shareholders
|
|
|
|
4,916
|
3,464
|
5,048
|
|
|
|
|
|
|
|
Average
total equity
|
36,201
|
38,210
|
|
36,134
|
35,081
|
35,866
|
Adjustment
for other owners equity and intangibles
|
(11,486)
|
(11,153)
|
|
(11,686)
|
(11,583)
|
(11,350)
|
Adjusted
total tangible equity
|
24,715
|
27,057
|
|
24,448
|
23,498
|
24,516
|
|
|
|
|
|
|
|
Return
on equity
|
12.1%
|
8.7%
|
|
13.6%
|
9.9%
|
14.1%
|
Return
on tangible equity
|
17.8%
|
12.3%
|
|
20.1%
|
14.7%
|
20.6%
|
Non-IFRS financial measures continued
5. Segmental return on equity
Segmental
return on equity comprises segmental operating profit or loss,
adjusted for preference share dividends, 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 tangible
equity.
This
measure shows the return generated by operating segments on equity
deployed.
|
Retail
|
Private
|
Commercial &
|
Year ended 31 December 2023
|
Banking
|
Banking
|
Institutional
|
Operating
profit (£m)
|
2,638
|
291
|
3,236
|
Paid-in
equity cost allocation (£m)
|
(55)
|
(23)
|
(165)
|
Adjustment
for tax (£m)
|
(723)
|
(75)
|
(768)
|
Adjusted
attributable profit (£m)
|
1,860
|
193
|
2,303
|
Average
RWAe (£bn)
|
57.8
|
11.4
|
107.0
|
Equity
factor
|
13.5%
|
11.5%
|
14.0%
|
Average
notional equity (£bn)
|
7.8
|
1.3
|
15.0
|
Return
on equity
|
23.8%
|
14.8%
|
15.4%
|
|
|
|
|
Year
ended 31 December 2022
|
|
|
|
Operating
profit (£m)
|
2,824
|
436
|
2,547
|
Paid-in
equity cost allocation (£m)
|
(80)
|
(15)
|
(187)
|
Adjustment
for tax (£m)
|
(768)
|
(118)
|
(590)
|
Adjusted
attributable profit (£m)
|
1,976
|
303
|
1,770
|
Average
RWAe (£bn)
|
53.1
|
11.3
|
104.0
|
Equity
factor
|
13.0%
|
11.0%
|
14.0%
|
Average
notional equity (£bn)
|
6.9
|
1.2
|
14.6
|
Return
on equity
|
28.6%
|
24.5%
|
12.2%
|
|
Retail
|
Private
|
Commercial &
|
Quarter ended 31 December 2023
|
Banking
|
Banking
|
Institutional
|
Operating
profit/(loss) (£m)
|
585
|
(2)
|
725
|
Paid-in
equity cost allocation (£m)
|
(12)
|
(6)
|
(40)
|
Adjustment
for tax (£m)
|
(160)
|
2
|
(171)
|
Adjusted
attributable profit/(loss) (£m)
|
413
|
(6)
|
514
|
Annualised
adjusted attributable profit/(loss) (£m)
|
1,650
|
(23)
|
2,055
|
Average
RWAe (£bn)
|
60.5
|
11.4
|
109.0
|
Equity
factor
|
13.5%
|
11.5%
|
14.0%
|
Average
notional equity (£bn)
|
8.2
|
1.3
|
15.3
|
Return
on equity
|
20.2%
|
(1.8%)
|
13.5%
|
|
|
|
|
Quarter
ended 30 September 2023
|
|
|
|
Operating
profit (£m)
|
493
|
59
|
770
|
Paid-in
equity cost allocation (£m)
|
(13)
|
(6)
|
(39)
|
Adjustment
for tax (£m)
|
(134)
|
(15)
|
(183)
|
Adjusted
attributable profit (£m)
|
346
|
38
|
548
|
Annualised
adjusted attributable profit (£m)
|
1,382
|
153
|
2,193
|
Average
RWAe (£bn)
|
58.5
|
11.4
|
106.7
|
Equity
factor
|
13.5%
|
11.5%
|
14.0%
|
Average
notional equity (£bn)
|
7.9
|
1.3
|
14.9
|
Return
on equity
|
17.5%
|
11.7%
|
14.7%
|
|
|
|
|
Quarter
ended 31 December 2022
|
|
|
|
Operating
profit (£m)
|
872
|
110
|
726
|
Paid-in
equity cost allocation (£m)
|
(20)
|
(6)
|
(46)
|
Adjustment
for tax (£m)
|
(239)
|
(29)
|
(170)
|
Adjusted
attributable profit (£m)
|
613
|
75
|
510
|
Annualised
adjusted attributable profit (£m)
|
2,454
|
300
|
2,040
|
Average
RWAe (£bn)
|
54.4
|
11.2
|
106.0
|
Equity
factor
|
13.0%
|
11.0%
|
14.0%
|
Average
notional equity (£bn)
|
7.1
|
1.2
|
14.8
|
Return
on equity
|
34.7%
|
24.2%
|
13.7%
|
Non-IFRS financial measures continued
6. Bank net interest margin
Bank
net interest margin is annualised net interest income, as a
percentage of bank average interest-earning assets. Bank average
interest earning assets are the average interest earning assets of
the banking business of NatWest Group excluding liquid asset
buffer.
Liquid
asset buffer consists of assets held by NatWest Group, such as cash
and balances at central banks and debt securities in issue, that
can be used to ensure repayment of financial obligations as they
fall due. The exclusion of liquid asset buffer presents net
interest margin on a basis more comparable with UK peers and
excludes the impact of regulatory driven factors. A reconciliation
is shown below including a comparison to the nearest GAAP measure;
net interest margin. This is net interest income as a percentage of
average interest earning assets.
|
Year ended or as at
|
|
Quarter ended or as at
|
|
31 December
|
31
December
|
|
31 December
|
30
September
|
31
December
|
|
2023
|
2022
|
|
2023
|
2023
|
2022
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
|
NatWest
Group net interest income
|
11,049
|
9,842
|
|
2,638
|
2,685
|
2,868
|
Annualised
NatWest Group net interest income
|
|
|
|
10,466
|
10,652
|
11,378
|
|
|
|
|
|
|
|
Average
interest earning assets (IEA)
|
520,591
|
544,162
|
|
524,718
|
520,815
|
538,584
|
Less
liquid asset buffer average IEA
|
(157,677)
|
(198,927)
|
|
(158,192)
|
(157,972)
|
(182,797)
|
Bank
average IEA
|
362,914
|
345,235
|
|
366,526
|
362,843
|
355,787
|
|
|
|
|
|
|
|
NatWest
Group net interest margin
|
2.12%
|
1.81%
|
|
1.99%
|
2.05%
|
2.11%
|
Bank
net interest margin
|
3.04%
|
2.85%
|
|
2.86%
|
2.94%
|
3.20%
|
|
|
|
|
|
|
|
Retail Banking
|
|
|
|
|
|
|
Net
interest income
|
5,496
|
5,224
|
|
1,254
|
1,334
|
1,505
|
Annualised
net interest income
|
|
|
|
4,975
|
5,293
|
5,971
|
|
|
|
|
|
|
|
Retail
Banking average IEA
|
222,174
|
210,404
|
|
223,171
|
223,686
|
217,790
|
Less
liquid asset buffer average IEA
|
(16,730)
|
(19,581)
|
|
(15,130)
|
(16,745)
|
(20,383)
|
Adjusted
Retail Banking average IEA
|
205,444
|
190,823
|
|
208,041
|
206,941
|
197,407
|
|
|
|
|
|
|
|
Retail
Banking net interest margin
|
2.68%
|
2.74%
|
|
2.39%
|
2.56%
|
3.02%
|
|
|
|
|
|
|
|
Private Banking
|
|
|
|
|
|
|
Net
interest income
|
710
|
777
|
|
138
|
144
|
251
|
Annualised
net interest income
|
|
|
|
548
|
571
|
996
|
|
|
|
|
|
|
|
Private
Banking average IEA
|
27,072
|
29,308
|
|
26,487
|
26,595
|
29,140
|
Less
liquid asset buffer average IEA
|
(8,088)
|
(10,221)
|
|
(7,835)
|
(7,680)
|
(9,956)
|
Adjusted
Private Banking average IEA
|
18,984
|
19,087
|
|
18,652
|
18,915
|
19,184
|
|
|
|
|
|
|
|
Private
Banking net interest margin
|
3.74%
|
4.07%
|
|
2.94%
|
3.02%
|
5.19%
|
|
|
|
|
|
|
|
Commercial & Institutional
|
|
|
|
|
|
|
Net
interest income
|
5,044
|
4,171
|
|
1,269
|
1,271
|
1,276
|
Annualised
net interest income
|
|
|
|
5,035
|
5,043
|
5,062
|
|
|
|
|
|
|
|
Commercial
& Institutional average IEA
|
244,445
|
245,316
|
|
245,194
|
193,793
|
201,329
|
Less
liquid asset buffer average IEA
|
(112,931)
|
(119,244)
|
|
(111,757)
|
(63,944)
|
(71,039)
|
Adjusted
Commercial & Institutional average IEA
|
131,514
|
126,072
|
|
133,437
|
129,849
|
130,290
|
|
|
|
|
|
|
|
Commercial
& Institutional net interest margin
|
3.84%
|
3.31%
|
|
3.77%
|
3.88%
|
3.89%
|
Non-IFRS financial measures continued
7. Tangible net asset value (TNAV) per ordinary share
TNAV
per ordinary share is calculated as tangible equity divided by the
number of ordinary shares in issue.
This is a measure used by external analysts in valuing the bank and
allows for comparison with other per ordinary share metrics
including the share price.
|
Year ended or as at
|
|
31 December
|
30
September
|
31
December
|
|
2023
|
2023
|
2022
|
Ordinary
shareholders' interests (£m)
|
33,267
|
31,530
|
32,598
|
Less
intangible assets (£m)
|
(7,614)
|
(7,515)
|
(7,116)
|
Tangible equity (£m)
|
25,653
|
24,015
|
25,482
|
|
|
|
|
Ordinary shares in issue (millions) (1)
|
8,792
|
8,871
|
9,659
|
|
|
|
|
TNAV per ordinary share (pence)
|
292p
|
271p
|
264p
|
(1) At
the General Meeting and Class Meeting on 25 August, the
shareholders approved the proposed special dividend and share
consolidation. On 30 August the issued ordinary share capital was
consolidated in the ratio of 14 existing shares for 13 new shares.
Comparatives for the number of shares in issue and TNAV per
ordinary share have not been adjusted. The
number of ordinary shares in issue excludes own shares
held.
|
8. Customer deposits excluding central items
Customer
deposits excluding central items is calculated as total NatWest
Group customer deposits excluding Central items & other
customer deposits.
Central
items & other includes Treasury repo activity and Ulster Bank
RoI. The exclusion of Central items & other removes the
volatility relating to Treasury repo activity and the expected
reduction of deposits as part of our withdrawal from the Republic
of Ireland. These items may distort period-on-period comparisons
and their removal gives the user of the financial statements a
better understanding of the movements in customer
deposits.
|
As at
|
|
31 December
|
30
September
|
31
December
|
|
2023
|
2023
|
2022
|
|
£bn
|
£bn
|
£bn
|
Total
customer deposits
|
431.4
|
435.9
|
450.3
|
Less
Central items & other
|
(12.3)
|
(12.4)
|
(17.4)
|
Customer deposits excluding central items
|
419.1
|
423.5
|
432.9
|
9. Net loans to customers excluding central items
Net
loans to customers excluding central items is calculated as total
NatWest Group net loans to customers excluding Central items &
other net loans to customers.
Central
items & other includes Treasury reverse repo activity and
Ulster Bank RoI. The exclusion of Central items & other removes
the volatility relating to Treasury reverse repo activity and the
reduction of loans to customers over 2022 as part of our withdrawal
from the Republic of Ireland. This allows for better
period-on-period comparisons and gives the user of the financial
statements a better understanding of the movements in net loans to
customers.
|
As at
|
|
31 December
|
30
September
|
31
December
|
|
2023
|
2023
|
2022
|
|
£bn
|
£bn
|
£bn
|
Total
loans to customers (amortised cost)
|
381.4
|
377.3
|
366.3
|
Less
Central items & other
|
(25.8)
|
(22.8)
|
(19.6)
|
Net loans to customers excluding central items
|
355.6
|
354.5
|
346.7
|
Non-IFRS financial measures continued
10. Loan: deposit ratio (excl. repos and reverse
repos)
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 is a common metric
used to assess liquidity.
The
removal of repos and reverse repos reduces volatility and presents
the ratio on a basis that is comparable to UK peers. A
reconciliation is shown below including a comparison to the nearest
GAAP measure, loan:deposit ratio. This is calculated as net loans
to customers held at amortised cost divided by customer
deposits.
|
As at
|
|
31 December
|
30
September
|
31
December
|
|
2023
|
2023
|
2022
|
|
£m
|
£m
|
£m
|
Loans
to customers - amortised cost
|
381,433
|
377,268
|
366,340
|
Less
reverse repos
|
(27,117)
|
(23,095)
|
(19,749)
|
Loans to customers - amortised cost (excl. reverse
repos)
|
354,316
|
354,173
|
346,591
|
|
|
|
|
Customer
deposits
|
431,377
|
435,867
|
450,318
|
Less
repos
|
(10,844)
|
(10,692)
|
(9,828)
|
Customer deposits (excl. repos)
|
420,533
|
425,175
|
440,490
|
|
|
|
|
Loan:deposit
ratio (%)
|
88%
|
87%
|
81%
|
Loan:deposit
ratio (excl. repos and reverse repos) (%)
|
84%
|
83%
|
79%
|
11. Loan impairment rate
Loan
impairment rate is the annualised loan impairment charge divided by
gross customer loans. This measure is used to assess the credit
quality of the loan book.
|
Year ended
|
|
Quarter ended
|
|
31 December
|
31
December
|
|
31 December
|
30
September
|
31
December
|
|
2023
|
2022
|
|
2023
|
2023
|
2022
|
Loan
impairment charge (£m)
|
578
|
337
|
|
126
|
229
|
144
|
Annualised
loan impairment charge (£m)
|
|
|
|
504
|
916
|
576
|
|
|
|
|
|
|
|
Gross
customer loans (£bn)
|
384.9
|
369.7
|
|
384.9
|
380.8
|
369.7
|
|
|
|
|
|
|
|
Loan impairment rate
|
15bps
|
9bps
|
|
13bps
|
24bps
|
16bps
|
12. Funded assets
Funded
assets is calculated as total assets less derivative assets. This
measure allows review of balance sheet trends exclusive of the
volatility associated with derivative fair
values.
|
As at
|
|
31 December
|
30
September
|
31
December
|
|
2023
|
2023
|
2022
|
|
£m
|
£m
|
£m
|
Total
assets
|
692,673
|
717,141
|
720,053
|
Less
derivative assets
|
(78,904)
|
(87,504)
|
(99,545)
|
Funded assets
|
613,769
|
629,637
|
620,508
|
13. AUMAs
AUMAs
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.
Non-IFRS financial measures continued
14. AUM net flows
AUM net
flows refers to client cash inflows and outflows relating to
investment products (this can include transfers from savings
accounts). AUM net flows excludes the impact of European Economic
Area (EEA) resident client outflows following the UK's exit from
the EU and Russian client outflows since Q1 2022.
AUM net
flows is reported and tracked to monitor the business performance
of new business inflows and management of existing client
withdrawals across Private Banking, Retail Banking and Commercial
& Institutional.
15. Wholesale funding
Wholesale
funding comprises deposits by banks (excluding repos), debt
securities in issue and subordinated liabilities.
Funding
risk is the risk of not maintaining a diversified, stable and
cost-effective funding base. The disclosure of wholesale funding
highlights the extent of our diversification and how we mitigate
funding risk.
16. Third party rates
Third
party customer asset rate is calculated as 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.
These
metrics help investors better understand our net interest margin
and interest rate sensitivity.
17. Climate and sustainable funding and financing
The
climate and sustainable funding and financing metric is used by
NatWest Group to measure the level of support it provides
customers, through lending products and underwriting activities, to
help in their transition towards a net zero, climate resilient and
sustainable economy. We have a target to provide £100 billion
of climate and sustainable funding and financing between the 1 of
July 2021 and the end of 2025. As part of this, we aim to provide
at least £10 billion in lending for residential properties
with EPC ratings A and B between 1 January 2023 and the end of
2025.
Legal
Entity Identifier: 2138005O9XJIJN4JPN90
Date: 16
February 2024
|
NATWEST
GROUP plc (Registrant)
|
|
|
|
By: /s/
Jan Cargill
|
|
|
|
Name:
Jan Cargill
|
|
Title:
Chief Governance Officer and Company Secretary
|
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