6-K 1 a1230m.htm NWG PLC Q1 2024 INTERIM MANAGEMENT STATEMENT a1230m
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 April 26, 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: 
 
 
 
 
 
 
 
 
  
 
 
 
 
NatWest Group
Q1 2024
Interim Management Statement

 
 
NatWest Group plc
natwestgroup.com
 
 
 
NatWest Group Q1 2024 results
Page
Highlights
 
2
Business performance summary
 
 
  Chief Financial Officer's review
 
4
  Retail Banking
 
5
  Private Banking
 
6
  Commercial & Institutional
 
7
  Central items & other
 
8
  Segment performance
 
9
Risk and capital management
 
 
  Credit risk
 
13
  Capital, liquidity and funding risk
 
21
Condensed consolidated financial statements
 
26
Notes to the financial statements
 
30
Additional information
 
31
Appendix - Non-IFRS financial measures
 
34
 
 
 Q1 2024 performance summary
Chief Executive, Paul Thwaite, commented:
"NatWest Group has delivered a strong set of results for the first quarter - with an operating profit of £1.3 billion - as we remain focused on the priorities we set out in February, which will help us shape the future of this bank. 
 
Our performance is grounded in the vital role we play in the economy and in the lives of our 19 million customers. Though macro-uncertainty continues, customer confidence and activity is improving, with both lending(1) and deposits up in the quarter and impairments remaining low, reflecting our well-diversified business.
 
We are ambitious for this bank, and by succeeding for our customers, we will succeed for our shareholders. Our first priority is delivering disciplined growth across our three businesses by serving our customers well. At the same time, we are becoming simpler, more productive and easier to deal with. As a result, we aim to generate returns that allow us to support our customers, invest in our business and deliver attractive distributions to shareholders.
 
We are also pleased with the recent momentum in the reduction of HM Treasury's stake in the bank. Returning NatWest Group to private ownership is a shared ambition and we believe it is in the best interests of both the bank and all our shareholders."
 
Strong Q1 2024 performance
 
−     Q1 2024 attributable profit of £918 million and a return on tangible equity (RoTE) of 14.2%.
 
−     Total income excluding notable items was £3,414 million. The reduction of £28 million, or 0.8%, compared with Q4 2023, was due to the impact of one day fewer, with mortgage margin pressure largely offset by higher markets income in Commercial & Institutional, and £406 million lower than Q1 2023 principally reflecting lower deposit balances and mix changes, and lending margin pressure.
 
−     Net interest margin (NIM) of 2.05% was 6 basis points higher than Q4 2023 principally reflecting notable items and changes within central items, while NIM across the three businesses was stable.
 
−     Other operating expenses were broadly stable compared with Q4 2023 (£13 million lower), and £96 million, or 5.0%, higher than Q1 2023 principally reflecting the Bank of England Levy and increased staff costs due to inflation and severance costs, partially offset by ongoing simplification of our business and lower costs in  relation to our withdrawal from the Republic of Ireland. 
 
−     A net impairment charge of £93 million, or 10 basis points of gross customer loans, principally reflected the continued strong performance of our lending book. Levels of default remain stable and at low levels across the portfolio.
 
Robust balance sheet with strong capital and liquidity levels
 
−       Net loans to customers excluding central items increased by £1.4 billion, or 0.4% in the quarter, to £357.0 billion primarily reflecting growth in Corporate & Institutions partially offset by increased mortgage redemptions in the quarter within Retail Banking.
 
−       Up to 31 March 2024 we have provided £68.5 billion of our target to provide £100 billion climate and sustainable funding and financing between 1 July 2021 and the end of 2025.
 
−       Customer deposits excluding central items increased by £0.9 billion, or 0.2%, in the quarter primarily reflecting growth of £2.0 billion in Retail Banking partially offset by a £1.2 billion reduction in Commercial & Institutional due to active management of our commercial deposits and reduced liquidity in the market. Term balances now account for 17% of our book, up from 16% at the end of 2023.
 
−       The loan:deposit ratio (LDR) (excl. repos and reverse repos) was 84% at Q1 2024, with customer deposits exceeding net loans to customers by around £66 billion.
 
−       The liquidity coverage ratio (LCR) of 151%, representing £53.8 billion headroom above 100% minimum requirement, increased by 7 percentage points compared with Q4 2023 primarily due to increased issuance and customer deposits coupled with the replacement of the Cash Ratio Deposit scheme with a Bank of England Levy.
 
−       TNAV per share increased by 10 pence in the quarter to 302 pence primarily reflecting the attributable profit for the period.
 
Shareholder return supported strong capital generation
 
−       Common Equity Tier (CET1) ratio of 13.5% was 10 basis points higher than Q4 2023 as the attributable profit for the quarter, c.50 basis points, was largely offset by a £3.3 billion increase in RWAs, c.25 basis points, and a £367 million ordinary dividend deduction, c.20 basis points.
 
−       RWAs increased by £3.3 billion in the quarter to £186.3 billion largely reflecting a £1.6 billion increase associated with the annual update to operational risk and lending growth within Commercial & Institutional. 
 
Outlook (2)
−           We retain the outlook guidance provided in the 2023 Annual Report and Accounts with the exception of full year 2024 Group operating costs (excluding litigation and conduct costs) which is now expected to be broadly stable compared with 2023 excluding around £0.1 billion increase in bank levies.
 
(1)     Loans to customers excluding central items.
(2)     The guidance, targets, expectations and trends discussed in this section represent NatWest Group plc management's current expectations and are subject to change, including as a result of the factors described in the NatWest Group plc Risk Factors in the 2023 Annual Report and Accounts and Form 20-F. These statements constitute forward-looking statements. Refer to Forward-looking statements in this announcement.
 
 
 
Business performance summary
 
 
Quarter ended
 
31 March
31 December
31 March
 
2024
2023
2023
Summary consolidated income statement
£m 
£m 
£m 
Net interest income
2,651
2,638
2,902
Non-interest income
824
899
974
Total income
3,475
3,537
3,876
Litigation and conduct costs
(24)
(113)
(56)
Other operating expenses
(2,028)
(2,041)
(1,932)
Operating expenses
(2,052)
(2,154)
(1,988)
Profit before impairments
1,423
1,383
1,888
Impairment losses
(93)
(126)
(70)
Operating profit before tax
1,330
1,257
1,818
Tax (charge)/credit
(339)
5
(512)
Profit from continuing operations
991
1,262
1,306
(Loss)/profit from discontinued operations, net of tax
(4)
26
35
Profit for the period
987
1,288
1,341
 
 
 
 
Performance key metrics and ratios
 
 
 
Notable items within total income (1)
£61m
£95m
£56m
Total income excluding notable items (1)
£3,414m
£3,442m
£3,820m
Net interest margin (2)
2.05%
1.99%
2.25%
Average interest earning assets (2)
£521bn
£525bn
£522bn
Cost:income ratio (excl. litigation and conduct) (1)
58.4%
57.7%
49.8%
Loan impairment rate (1)
10bps
13bps
7bps
Profit attributable to ordinary shareholders
£918m
£1,229m
£1,279m
Total earnings per share attributable to ordinary shareholders - basic
10.5p
13.9p
13.2p
Return on tangible equity (RoTE) (1)
14.2%
20.1%
19.8%
Climate and sustainable funding and financing (3)
£6.6bn
£8.7bn
£7.6bn
 
As at
 
31 March
31 December
31 March
 
2024
2023
2023
 
£bn
£bn
£bn 
Balance sheet
 
 
 
Total assets
697.5
692.7
695.6
Loans to customers - amortised cost
378.0
381.4
374.2
Loans to customers excluding central items (1,4)
357.0
355.6
352.4
Loans to customers and banks - amortised cost and FVOCI 
387.7
392.0
385.8
Total impairment provisions (5)
3.6
3.6
3.4
Expected credit loss (ECL) coverage ratio
0.94%
0.93%
0.89%
Assets under management and administration (AUMA) (1)
43.1
40.8
35.2
Customer deposits 
432.8
431.4
430.5
Customer deposits excluding central items (1,4)
420.0
419.1
421.8
Liquidity and funding
 
 
 
Liquidity coverage ratio (LCR)
151%
144%
139%
Liquidity portfolio (6)
229
223
216
Net stable funding ratio (NSFR)
136%
133%
141%
Loan:deposit ratio (excl. repos and reverse repos) (1)
84%
84%
83%
Total wholesale funding
87
80
79
Short-term wholesale funding
31
28
25
Capital and leverage
 
 
 
Common Equity Tier 1 (CET1) ratio (7)
13.5%
13.4%
14.4%
Total capital ratio (7)
18.8%
18.4%
19.6%
Pro forma CET1 ratio (excl. foreseeable items) (8)
14.3%
14.2%
15.7%
Risk-weighted assets (RWAs)
186.3
183.0
178.1
UK leverage ratio
5.1%
5.0%
5.4%
Tangible net asset value (TNAV) per ordinary share (1,9)
302p
292p
278p
Number of ordinary shares in issue (millions) (9)
8,727
8,792
9,581
 
(1)
(2)
Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial measures and performance metrics.
Refer to page 37 of the Non-IFRS financial measures appendix for details.
(3)
NatWest Group uses its climate and sustainable funding and financing inclusion (CSFFI) criteria to determine the assets, activities and companies that are eligible to be included within its climate and sustainable funding and financing target. This includes both provision of committed (on and off-balance sheet) funding and financing, including provision of services for underwriting issuances and private placements.
(4)
Central items includes Treasury repo activity and Ulster Bank Republic of Ireland.
(5)
Includes £0.1 billion relating to off-balance sheet exposures (31 December 2023 - £0.1 billion; 31 March 2023 - £0.1 billion).
(6)
Comparative period for March 2023 has been re-presented on an LCR basis in line with the Liquidity portfolio definition as of 31 December 2023.
(7)
Refer to the Capital, liquidity and funding risk section for details of the basis of preparation.
(8)
The pro forma CET1 ratio at 31 March 2024 excludes foreseeable items of £1,633 million: £1,380 million for ordinary dividends and £253 million foreseeable charges (31 December 2023 excludes foreseeable items of £1,538 million: £1,013 million for ordinary dividends and £525 million foreseeable charges; 31 March 2023 excludes foreseeable items of £2,351 million: £1,479 million for ordinary dividends and £872 million foreseeable charges).
(9)
The number of ordinary shares in issue excludes own shares held.
 
Business performance summary
Chief Financial Officer's review
We delivered an operating profit of £1,330 million in the first quarter with a RoTE of 14.2%. Total income excluding notable items was broadly stable on Q4 2023, and we continue to see low levels of default across our portfolio, with a net impairment charge of 10 basis points of gross customer loans.
Net lending across the three businesses has increased in the quarter, as growth in Corporate & Institutions was partially offset by higher mortgage redemptions, and we have seen growth in customer deposits. Our robust balance sheet means that we remain in a strong liquidity position, with an LCR of 151%, representing £53.8 billion headroom above 100% minimum requirement, and an LDR (excl. repos and reverse repos) of 84%. Our CET1 ratio remains within our targeted range at 13.5%.
 
Financial performance
Total income decreased by 1.8% to £3,475 million compared with Q4 2023 and was 10.3% lower than Q1 2023. Total income excluding notable items was £3,414 million, a reduction of £28 million, or 0.8%, compared with Q4 2023, due to the impact of one day fewer, with mortgage margin pressure largely offset by higher markets income in Commercial & Institutional, and £406 million lower than Q1 2023 principally reflecting lower deposit balances and mix changes, and lending margin pressure.
NIM of 2.05% was 6 basis points higher than Q4 2023 principally reflecting notable items and changes within central items, while NIM across the three businesses was stable.
 
Total operating expenses were £102 million lower than Q4 2023 and £64 million higher than Q1 2023. Other operating expenses were broadly stable compared with Q4 2023 (£13 million lower), and £96 million, or 5.0%, higher than Q1 2023 principally reflecting the Bank of England Levy and increased staff costs due to inflation and severance costs, partially offset by simplification in our business and lower costs in relation to our withdrawal from the Republic of Ireland. We remain committed to deliver on our full year cost guidance, excluding the impact of increased bank levies.
 
A net impairment charge of £93 million principally reflected the continued strong performance of our lending book. Levels of default remain stable and at low levels across the portfolio despite inflationary pressures and the higher interest rate environment. Compared with Q4 2023, our ECL provision remained flat at £3.6 billion and our ECL coverage ratio has increased from 0.93% to 0.94%. We retain post model adjustments of £0.4 billion related to economic uncertainty, or 11.3% of total impairment provisions. Whilst we are comfortable with the strong credit performance of our book, we will continue to assess this position regularly and are closely monitoring the impacts of inflationary pressures on the UK economy and our customers.
 
As a result, we are pleased to report an attributable profit for Q1 2024 of £918 million, with earnings per share of 10.5 pence and a RoTE of 14.2%.
 
Net loans to customers excluding central items increased by £1.4 billion in the quarter to £357.0 billion primarily reflecting a £3.4 billion increase in Commercial & Institutional partially offset by £1.7 billion reduction in Retail Banking due to higher mortgage redemptions. Total gross new mortgage lending was £5.2 billion in the quarter, compared with £9.9 billion in Q1 2023 and £5.6 billion in Q4 2023, representing flow share of c.10.5%. Within Commercial & Institutional, growth was largely within Corporate & Institutions, partly offset by UK Government Scheme repayments of £0.6 billion.
Up to 31 March 2024 we have provided £68.5 billion against our target to provide £100 billion climate and sustainable funding and financing between 1 July 2021 and the end of 2025. As part of this we aim to provide at least £10 billion in lending for EPC A and B rated residential properties between 1 January 2023 and the end of 2025. During Q1 2024 we provided £6.6 billion climate and sustainable funding and financing, which included £0.5 billion in lending for EPC A and B rated residential properties.
 
Customer deposits excluding central items increased by £0.9 billion in the quarter to £420.0 billion reflecting £2.0 billion growth in Retail Banking partially offset by a £1.2 billion reduction in Commercial & Institutional primarily as a result of active management of our commercial deposits and reduced liquidity in the market. Deposit mix was more stable in the quarter than the levels of migration observed in 2023; term balances now account for 17% of our book, up from 16% at Q4 2023.
TNAV per share increased by 10 pence in the quarter to 302 pence primarily reflecting the attributable profit for the period.
 
Capital and leverage
The CET1 ratio was 13.5%, or 13.4% excluding IFRS 9 transitional relief, and increased by 10 basis points in the quarter as the attributable profit, c.50 basis points, was largely offset by a £3.3 billion increase in RWAs, c.25 basis points, and a £367 million ordinary dividend deduction, c.20 basis points. NatWest Group's minimum requirement for own funds and eligible liabilities (MREL) was 30.7%.
RWAs increased by £3.3 billion in the quarter to £186.3 billion largely reflecting a £1.6 billion increase associated with the annual update to operational risk and lending growth within Commercial & Institutional. 
 
Funding and liquidity
The LCR increased by 7 percentage points to 151%, representing £53.8 billion headroom above 100% minimum requirements primarily due to increased issuance and customer deposits coupled with the replacement of the Cash Ratio Deposit scheme with a Bank of England Levy. Our primary liquidity at Q1 2024 was £158.4 billion and £112.8 billion, or 71%, of this was cash at central banks. Total wholesale funding increased by £7.0 billion in the quarter to £86.6 billion.
 
 
Business performance summary
 
Retail Banking
 
 
Quarter ended
 
31 March
31 December
31 March
 
2024
2023
2023
 
£m
£m
£m
Total income
1,325
1,369
1,604
Operating expenses
(773)
(681)
(696)
   of which: Other operating expenses
(767)
(647)
(693)
Impairment losses
(63)
(103)
(114)
Operating profit
489
585
794
 
 
 
 
Return on equity (1)
16.5%
20.2%
30.0%
Net interest margin (2)
2.22%
2.23%
2.75%
Cost:income ratio (excl. litigation and conduct) (1)
57.9%
47.3%
43.2%
Loan impairment rate (1)
12bps
20bps
22bps
 
 
As at
 
31 March
31 December
31 March
 
2024
2023
2023
 
£bn
£bn
£bn
Net loans to customers (amortised cost)
203.5
205.2
201.7
Customer deposits
190.0
188.0
184.0
RWAs
62.5
61.6
55.6
 
(1)
(2)
Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial measures and performance metrics.
Refer to page 37 of the Non-IFRS financial measures appendix for details.
 
During Q1 2024, Retail Banking continued to take a measured approach to risk, whilst delivering an operating profit of £0.5 billion and a return on equity of 16.5%.
Retail Banking provided £0.5 billion of climate and sustainable funding and financing in Q1 2024 from lending on properties with an EPC rating of A or B.
 
−
Total income was £44 million, or 3.2%, lower than Q4 2023 due to continued mortgage margin dilution and the impact of one day fewer in the quarter. Total income was £279 million, or 17.4%, lower than Q1 2023 reflecting mortgage margin dilution, impact of the deposit balance mix shift from non-interest bearing to interest bearing balances and higher funding costs, partly offset by lending growth.
 
−
Net interest margin was 1 basis point lower than Q4 2023 largely reflecting mortgage margin dilution partly offset by increasing structural hedge benefit.
 
−
Other operating expenses were £120 million, or 18.5%, higher than Q4 2023 reflecting the Bank of England Levy, increased severance costs as well as branch and property exit costs. Other operating expenses were £74 million, or 10.7%, higher than Q1 2023 reflecting the Bank of England Levy, increased severance costs and branch and property exit costs partly offset by savings from a 7.1% reduction in headcount.
 
−
An impairment charge of £63 million in Q1 2024 with stage 3 inflows reflecting normalisation of risk parameters, partly offset by good book releases related to model updates.
 
−
Net loans to customers were £1.7 billion, or 0.8%, lower than Q4 2023 reflecting lower mortgage balances of £1.8 billion with higher redemptions only partly offset by gross new mortgage lending of £5.0 billion. Cards balances increased by £0.3 billion partly offset by £0.2 billion lower personal advances.
 
−
Customer deposits increased by £2.0 billion, or 1.1%, in Q1 2024 reflecting growth in savings and current account balances.
 
−
RWAs increased by £0.9 billion, or 1.5%, in Q1 2024 primarily due to the annual update for operational risk calculation.
 
 
 
Business performance summary
 
Private Banking
 
 
Quarter ended
 
31 March
31 December
31 March
 
2024
2023
2023
 
£m
£m
£m
Total income
208
209
296
Operating expenses
(181)
(206)
(155)
   of which: Other operating expenses
(180)
(208)
(152)
Impairment releases/(losses)
6
(5)
(8)
Operating profit/(loss)
33
(2)
133
 
 
 
 
Return on equity (1)
6.7%
(1.8%)
28.5%
Net interest margin (2)
2.06%
2.07%
3.31%
Cost:income ratio (excl. litigation and conduct) (1)
86.5%
99.5%
51.4%
Loan impairment rate (1)
(13)bps
11bps
17bps
AUM net flows (£bn) (1)
0.4
0.3
0.6
 
 
 
As at
 
31 March
31 December
31 March
 
2024
2023
2023
 
£bn
£bn
£bn
Net loans to customers (amortised cost)
18.2
18.5
19.2
Customer deposits
37.8
37.7
37.3
RWAs
11.3
11.2
11.4
Assets Under Management (AUMs) (1)
33.6
31.7
29.6
Assets Under Administration (AUAs) (1)
9.5
9.1
5.6
Total Assets Under Management and Administration (AUMA) (1)
43.1
40.8
35.2
 
(1)
(2)
Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial measures and performance metrics.
Refer to page 37 of the Non-IFRS financial measures appendix for details.
 
During Q1 2024, Private Banking delivered a return on equity of 6.7% and an operating profit of £33 million, reflecting the impact of 2023 sharp changes in deposit volume and mix adversely impacting hedge returns. Q1 2024 has seen a strong performance in deposits given seasonal tax outflow impact and good AUMA growth setting a strong foundation for improved profitability.
Private Banking provided £0.07 billion of climate and sustainable funding and financing in Q1 2024 from lending on properties with an EPC rating of A or B.
 
−
Total income was broadly flat compared to Q4 2023 as deposit balances and mix continued to stabilise with the impact of one day fewer largely offset by higher investment fee income from increased AUMA. Total income was £88 million, or 29.7%, lower than Q1 2023 reflecting lower deposit balances and a change in product mix as customers migrated to savings products offering higher returns, combined with a reduction in lending volumes and mortgage margin dilution.  
 
−
Net interest margin was 1 basis point lower than Q4 2023 reflecting mortgage margin dilution.
 
−
Other operating expenses were £28 million, or 13.5%, lower than Q4 2023 reflecting the annual Bank Levy charge in Q4 2023, and a one-off additional VAT charge catch up along with lower strategic severance costs. Other operating expenses were £28 million, or 18.4%, higher than Q1 2023 primarily reflecting the Bank of England Levy, an additional VAT charge and higher strategic spend to increase operational efficiency.
 
−
A net impairment release of £6 million, compared with an £8 million charge in Q1 2023, largely reflects good book releases and lower stage 3 charges.
 
−
Net loans to customers decreased by £0.3 billion, or 1.6%, in Q1 2024 driven by higher mortgage redemptions, only partly offset by mortgage gross new lending of £0.2 billion.
 
−
Customer deposits increased by £0.1 billion, or 0.3%, compared with Q4 2023 with increases due to overall personal market growth offsetting tax outflows.
 
−
AUMA increased by £2.3 billion in Q1 2024 to £43.1 billion, primarily driven by £1.9 billion positive market movements and £0.4 billion AUM net inflows. 
 
 
 
 
Business performance summary
 
Commercial & Institutional
 
 
Quarter ended
 
31 March
31 December
31 March
 
2024
2023
2023
 
£m
£m
£m
Net interest income
1,246
1,269
1,261
Non-interest income
613
563
692
Total income
1,859
1,832
1,953
 
 
 
 
Operating expenses
(1,051)
(1,092)
(1,003)
   of which: Other operating expenses
(1,020)
(1,014)
(959)
Impairment (losses)/releases
(39)
(15)
44
Operating profit
769
725
994
 
 
 
 
Return on equity (1)
14.6%
13.5%
19.5%
Net interest margin (2)
2.07%
2.05%
2.08%
Cost:income ratio (excl. litigation and conduct) (1)
54.9%
55.3%
49.1%
Loan impairment rate (1)
11bps
4bps
(13)bps
 
 
As at
 
31 March
31 December
31 March
 
2024
2023
2023
 
£bn
£bn
£bn
Net loans to customers (amortised cost)
135.3
131.9
131.5
Customer deposits
192.2
193.4
200.5
Funded assets (1)
321.7
306.9
320.4
RWAs
109.9
107.4
104.8
 
(1)
(2)
Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial measures and performance metrics.
Refer to page 37 of the Non-IFRS financial measures appendix for details.
 
In Q1 2024, Commercial & Institutional continued to support customers with an increase in lending of 2.6% and delivered a strong performance in income and operating profit supporting a return on equity of 14.6%.
Commercial & Institutional provided £6.0 billion of climate and sustainable funding and financing in Q1 2024 to support customers investing in the transition to net zero.
 
−
Total income was £27 million, or 1.5%, higher than Q4 2023 primarily reflecting higher markets income, partially offset by the impact of one day fewer. Total income was £94 million, or 4.8%, lower than Q1 2023 primarily due to lower deposit returns reflecting lower volumes and continued deposit mix shift from non-interest bearing to interest bearing balances, partially offset by strong capital markets and lending growth in Corporate & Institutions.
 
−
Net interest margin was 2 basis points higher than Q4 2023 reflecting higher deposit hedge returns and liquidity benefits, partially offset by lower deposit volumes. 
 
−
Other operating expenses were £6 million, or 0.6%, higher than Q4 2023 reflecting increased staff costs partially offset by a reduction in bank levies. Other operating expenses were £61 million, or 6.4%, higher than Q1 2023 reflecting the impact of inflationary increases in staff costs, continued investment in the business and the introduction of the Bank of England Levy.
 
−
An impairment charge of £39 million in Q1 2024 remains at low levels with an increase in stage 3 inflows, partly offset by good book releases.
 
−
Net loans to customers increased by £3.4 billion, or 2.6%, in Q1 2024 largely reflecting a strong performance within Corporate & Institutions, partly offset by continued UK Government scheme repayments of £0.6 billion.
 
−
Customer deposits decreased by £1.2 billion, or 0.6%, in Q1 2024 largely reflecting reductions within Commercial Mid-market and Business Banking due to active management of our deposits and reduced liquidity in the market.
 
−
RWAs increased by £2.5 billion, or 2.3%, in Q1 2024 primarily due to lending book growth and the annual update for operational risk.
 
 
 
 
Business performance summary
 
Central items & other
 
 
Quarter ended
 
31 March
31 December
31 March
 
2024
2023
2023
 
£m
£m
£m
Continuing operations
 
 
 
Total income
83
127
23
Operating expenses (1)
(47)
(175)
(134)
   of which: Other operating expenses
(61)
(172)
(128)
   of which: Ulster Bank RoI direct expenses
(25)
(69)
(100)
Impairment releases/(losses)
3
(3)
8
Operating profit/(loss)
39
(51)
(103)
   of which: Ulster Bank RoI
(47)
(124)
(159)
 
 
 
 
 
As at
 
31 March
31 December
31 March
 
2024
2023
2023
 
£bn
£bn
£bn
Net loans to customers (amortised cost) (2)
21.0
25.8
21.8
Customer deposits
12.8
12.3
8.7
RWAs
2.6
2.8
6.3
 
(1)
Includes withdrawal-related direct program costs of £8 million for the quarter ended 31 March 2024 (31 December 2023 - £17 million; 31 March 2023 - £49 million).
(2)
Excludes £0.3 billion of loans to customers held at fair value through profit or loss (31 December 2023 - £0.3 billion; 31 March 2023 - £0.5 billion).
 
−
Total income was £44 million lower than Q4 2023 primarily reflecting foreign exchange recycling gains in Q4 2023, not repeated in Q1 2024, partly offset by higher gains on interest and foreign exchange risk management derivatives not in accounting hedge relationships in Q1 2024. Total income was £60 million higher than Q1 2023 primarily reflecting Business Growth Fund gains, gains on liquidity asset bond sales and a loss on surrender of leases in Q1 2023 partially offset by lower gains on interest and foreign exchange risk management derivatives not in accounting hedge relationships.
 
−
Other operating expenses were £111 million, or 64.5%, lower than Q4 2023 primarily reflecting lower costs in relation to the withdrawal from our operations in the Republic of Ireland, and were £67 million, or 52.3%, lower than Q1 2023.
 
−
Customer deposits increased by £0.5 billion, or 4.1% in Q1 2024 primarily reflecting repo activity in Treasury. Ulster Bank RoI customer deposit balances were £0.2 billion as at Q1 2024.
 
−
Net loans to customers decreased £4.8 billion to £21.0 billion in Q1 2024 mainly due to reverse repo activity in Treasury.
 
 
 
 
 
Segment performance
 
 
Quarter ended 31 March 2024
 
Retail
Private
Commercial &
Central items
Total NatWest
 
Banking
Banking
Institutional
& other
Group
 
£m
£m
£m
£m
£m
Continuing operations
 
 
 
 
 
Income statement
 
 
 
 
 
Net interest income
1,216
134
1,246
55
2,651
Non-interest income
109
74
613
28
824
Total income
1,325
208
1,859
83
3,475
Direct expenses
(189)
(61)
(384)
(1,394)
(2,028)
Indirect expenses
(578)
(119)
(636)
1,333
-
Other operating expenses
(767)
(180)
(1,020)
(61)
(2,028)
Litigation and conduct costs
(6)
(1)
(31)
14
(24)
Operating expenses
(773)
(181)
(1,051)
(47)
(2,052)
Operating profit before impairment losses/releases
552
27
808
36
1,423
Impairment (losses)/releases
(63)
6
(39)
3
(93)
Operating profit
489
33
769
39
1,330
 
 
 
 
 
 
Total income excluding notable items (1)
1,325
208
1,864
17
3,414
 
 
 
 
 
 
Additional information
 
 
 
 
 
Return on tangible equity (1)
na
na
na
na
14.2%
Return on equity (1)
16.5%
6.7%
14.6%
nm
na
Cost:income ratio (excl. litigation and conduct) (1)
57.9%
86.5%
54.9%
nm
58.4%
Total assets (£bn)
226.4
26.5
388.8
55.8
697.5
Funded assets (£bn) (1)
226.4
26.5
321.7
54.7
629.3
Net loans to customers - amortised cost (£bn)
203.5
18.2
135.3
21.0
378.0
Loan impairment rate (1)
12bps
(13)bps
11bps
nm
10bps
Impairment provisions (£bn)
(1.9)
(0.1)
(1.5)
(0.1)
(3.6)
Impairment provisions - stage 3 (£bn)
(1.2)
-
(0.8)
-
(2.0)
Customer deposits (£bn)
190.0
37.8
192.2
12.8
432.8
Risk-weighted assets (RWAs) (£bn)
62.5
11.3
109.9
2.6
186.3
RWA equivalent (RWAe) (£bn)
62.6
11.3
111.1
3.1
188.1
Employee numbers (FTEs - thousands)
13.1
2.2
12.7
33.3
61.3
Third party customer asset rate (1)
3.79%
4.97%
6.81%
nm
nm
Third party customer funding rate (1)
(2.05%)
(3.14%)
(1.93%)
nm
nm
Average interest earning assets (£bn) (2)
220.6
26.2
241.9
na
521.1
Net interest margin (2)
2.22%
2.06%
2.07%
na
2.05%
 
nm = not meaningful, na = not applicable
 
(1)
(2)
Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial measures and performance metrics.
Refer to page 37 of the Non-IFRS financial measures appendix for details.
 
 
 
 
 
Segment performance
 
 
Quarter ended 31 December 2023
 
Retail
Private
Commercial &
Central items
Total NatWest
 
Banking
Banking
Institutional
& other
Group
 
£m
£m
£m
£m
£m
Continuing operations
 
 
 
 
 
Income statement
 
 
 
 
 
Net interest income
1,254
138
1,269
(23)
2,638
Non-interest income
115
71
563
150
899
Total income
1,369
209
1,832
127
3,537
Direct expenses
(211)
(74)
(392)
(1,364)
(2,041)
Indirect expenses
(436)
(134)
(622)
1,192
-
Other operating expenses
(647)
(208)
(1,014)
(172)
(2,041)
Litigation and conduct costs
(34)
2
(78)
(3)
(113)
Operating expenses
(681)
(206)
(1,092)
(175)
(2,154)
Operating profit/(loss) before impairment losses
688
3
740
(48)
1,383
Impairment losses
(103)
(5)
(15)
(3)
(126)
Operating profit/(loss)
585
(2)
725
(51)
1,257
 
 
 
 
 
 
Total income excluding notable items (1)
1,369
209
1,834
30
3,442
 
 
 
 
 
 
Additional information
 
 
 
 
 
Return on tangible equity (1)
na
na
na
na
20.1%
Return on equity (1)
20.2%
(1.8%)
13.5%
nm
na
Cost:income ratio (excl. litigation and conduct) (1)
47.3%
99.5%
55.3%
nm
57.7%
Total assets (£bn)
228.7
26.9
385.0
52.1
692.7
Funded assets (£bn) (1)
228.7
26.9
306.9
51.3
613.8
Net loans to customers - amortised cost (£bn)
205.2
18.5
131.9
25.8
381.4
Loan impairment rate (1)
20bps
11bps
4bps
nm
13bps
Impairment provisions (£bn)
(1.9)
(0.1)
(1.5)
(0.1)
(3.6)
Impairment provisions - stage 3 (£bn)
(1.1)
-
(0.9)
-
(2.0)
Customer deposits (£bn)
188.0
37.7
193.4
12.3
431.4
Risk-weighted assets (RWAs) (£bn)
61.6
11.2
107.4
2.8
183.0
RWA equivalent (RWAe) (£bn)
61.6
11.2
108.6
3.6
185.0
Employee numbers (FTEs - thousands)
13.3
2.3
12.5
33.1
61.2
Third party customer asset rate (1)
3.50%
4.88%
6.65%
nm
nm
Third party customer funding rate (1)
(1.94%)
(3.02%)
(1.87%)
nm
nm
Average interest earning assets (£bn) (2)
223.2
26.5
245.2
na
524.7
Net interest margin (2)
2.23%
2.07%
2.05%
na
1.99%
 
nm = not meaningful, na = not applicable
 
(1)
(2)
Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial measures and performance metrics.
Refer to page 37 of the Non-IFRS financial measures appendix for details.
 
 
 
 
 
Segment performance
 
 
Quarter ended 31 March 2023
 
Retail
Private
Commercial &
Central items
Total NatWest
 
Banking
Banking
Institutional
& other
Group
 
£m
£m
£m
£m
£m
Continuing operations
 
 
 
 
 
Income statement
 
 
 
 
 
Net interest income
1,492
229
1,261
(80)
2,902
Non-interest income
112
67
692
103
974
Total income
1,604
296
1,953
23
3,876
Direct expenses
(211)
(60)
(360)
(1,301)
(1,932)
Indirect expenses
(482)
(92)
(599)
1,173
-
Other operating expenses
(693)
(152)
(959)
(128)
(1,932)
Litigation and conduct costs
(3)
(3)
(44)
(6)
(56)
Operating expenses
(696)
(155)
(1,003)
(134)
(1,988)
Operating profit/(loss) before impairment losses/releases
908
141
950
(111)
1,888
Impairment (losses)/releases
(114)
(8)
44
8
(70)
Operating profit/(loss)
794
133
994
(103)
1,818
 
 
 
 
 
 
Total income excluding notable items (1)
1,604
296
1,947
(27)
3,820
 
 
 
 
 
 
Additional information
 
 
 
 
 
Return on tangible equity (1)
na
na
na
na
19.8%
Return on equity (1)
30.0%
28.5%
19.5%
nm
na
Cost:income ratio (excl. litigation and conduct) (1)
43.2%
51.4%
49.1%
nm
49.8%
Total assets (£bn)
227.2
28.1
399.0
41.3
695.6
Funded assets (£bn) (1)
227.2
28.1
320.4
40.5
616.2
Net loans to customers - amortised cost (£bn)
201.7
19.2
131.5
21.8
374.2
Loan impairment rate (1)
22bps
17bps
(13)bps
nm
7bps
Impairment provisions (£bn)
(1.7)
(0.1)
(1.5)
(0.1)
(3.4)
Impairment provisions - stage 3 (£bn)
(1.0)
-
(0.7)
(0.1)
(1.8)
Customer deposits (£bn)
184.0
37.3
200.5
8.7
430.5
Risk-weighted assets (RWAs) (£bn)
55.6
11.4
104.8
6.3
178.1
RWA equivalent (RWAe) (£bn)
56.4
11.4
106.2
6.9
180.9
Employee numbers (FTEs - thousands)
14.1
2.3
12.5
32.9
61.8
Third party customer asset rate (1)
2.94%
4.07%
5.38%
nm
nm
Third party customer funding rate (1)
(0.83%)
(1.15%)
(0.87%)
nm
nm
Average interest earning assets (£bn) (2)
220.3
28.1
246.0
na
522.4
Net interest margin (2)
2.75%
3.31%
2.08%
na
2.25%
 
nm = not meaningful, na = not applicable
 
(1)
(2)
Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial measures and performance metrics.
Refer to page 37 of the Non-IFRS financial measures appendix for details.
 
 
 
 
 
Risk and capital management
 
 
Page
 
Credit risk
 
 
   Segment analysis - portfolio summary
13
 
   Segment analysis - loans
14
 
   Movement in ECL provision
14
 
   ECL post model adjustments
15
 
   Sector analysis - portfolio summary
16
 
Capital, liquidity and funding risk
 
21
 
 
 
 
Risk and capital management
 
Credit risk
Segment analysis - portfolio summary 
 
The table below shows gross loans and expected credit loss (ECL), by segment and stage, within the scope of the IFRS 9 ECL framework.
 
 
Retail
Private
Commercial &
Central items
 
 
Banking
Banking
Institutional
& other
Total
31 March 2024
£m
£m
£m
£m
£m
Loans - amortised cost and FVOCI (1,2)
 
 
 
 
 
Stage 1
178,692
17,288
123,704
24,679
344,363
Stage 2
23,145
769
13,661
2
37,577
Stage 3
3,291
284
2,188
-
5,763
Of which: individual
-
222
946
-
1,168
Of which: collective
3,291
62
1,242
-
4,595
Subtotal excluding disposal group loans
205,128
18,341
139,553
24,681
387,703
Disposal group loans
 
 
 
-
-
Total
 
 
 
24,681
387,703
ECL provisions (3)
 
 
 
 
 
Stage 1
294
19
336
20
669
Stage 2
473
13
425
2
913
Stage 3
1,162
37
845
-
2,044
Of which: individual
-
37
302
-
339
Of which: collective
1,162
-
543
-
1,705
Subtotal excluding ECL provisions on disposal group loans
1,929
69
1,606
22
3,626
ECL provisions on disposal group loans
 
 
 
-
-
Total
 
 
 
22
3,626
ECL provisions coverage (4)
 
 
 
 
 
Stage 1 (%)
0.16
0.11
0.27
0.08
0.19
Stage 2 (%)
2.04
1.69
3.11
100.00
2.43
Stage 3 (%)
35.31
13.03
38.62
-
35.47
ECL provisions coverage excluding disposal group loans
0.94
0.38
1.15
0.09
0.94
ECL provisions coverage on disposal group loans
 
 
 
-
-
Total
 
 
 
0.09
0.94
 
 
 
 
 
 
 
31 December 2023
 
 
 
 
 
Loans - amortised cost and FVOCI (1,2)
 
 
 
 
 
Stage 1
182,297
17,565
119,047
29,677
348,586
Stage 2
21,208
906
15,771
6
37,891
Stage 3
3,133
258
2,162
10
5,563
Of which: individual
-
186
845
-
1,031
Of which: collective
3,133
72
1,317
10
4,532
Subtotal excluding disposal group loans
206,638
18,729
136,980
29,693
392,040
Disposal group loans
 
 
 
67
67
Total
 
 
 
29,760
392,107
ECL provisions (3)
 
 
 
 
 
Stage 1
306
20
356
27
709
Stage 2 
502
20
447
7
976
Stage 3
1,097
34
819
10
1,960
Of which: individual
-
34
298
-
332
Of which: collective
1,097
-
521
10
1,628
Subtotal excluding ECL provisions on disposal group loans
1,905
74
1,622
44
3,645
ECL provisions on disposal group loans
 
 
 
36
36
Total
 
 
 
80
3,681
ECL provisions coverage (4)
 
 
 
 
 
Stage 1 (%)
0.17
0.11
0.30
0.09
0.20
Stage 2 (%)
2.37
2.21
2.83
nm
2.58
Stage 3 (%)
35.01
13.18
37.88
100.00
35.23
ECL provisions coverage excluding disposal group loans
0.92
0.40
1.18
0.15
0.93
ECL provisions coverage on disposal group loans
 
 
 
53.73
53.73
Total
 
 
 
0.27
0.94
nm = not meaningful
 
(1)
The table shows gross loans only and excludes amounts that were outside the scope of the ECL framework. Other financial assets within the scope of the IFRS 9 ECL framework were cash and balances at central banks totalling £115.8 billion (31 December 2023 - £103.1 billion) and debt securities of £49.0 billion (31 December 2023 - £50.1 billion).
(2)
Fair value through other comprehensive income (FVOCI). Includes loans to customers and banks.
(3)
Includes £7 million (31 December 2023 - £9 million) related to assets classified as FVOCI and £0.1 billion (31 December 2023 - £0.1 billion) related to off-balance sheet exposures.
(4)
ECL provisions coverage is calculated as ECL provisions divided by loans - amortised cost and FVOCI. It is calculated on loans and total ECL provisions, including ECL for other (non-loan) assets and unutilised exposure. Some segments with a high proportion of debt securities or unutilised exposure may result in a not meaningful (nm) coverage ratio.
 
Risk and capital management
Credit risk continued
Segment analysis - loans
 
−     Retail Banking - Loans to customers were lower than Q4 2023, mainly due to a reduction in mortgage balances where higher redemptions were only partly offset by new mortgage lending. Unsecured lending grew overall, with growth in credit cards offset by a decrease in personal advances. New lending and portfolio credit quality was maintained with limited increases in arrears in line with expectations. Total ECL coverage increased slightly during the quarter, reflective of Stage 3 ECL growth on unsecured portfolios, mainly due to ongoing subdued write-off and debt sale activity. There was a modest reduction in good book coverage, reflective of continued stable portfolio performance alongside unsecured probability of default modelling updates.
 
−     Commercial & Institutional - While overall Wholesale exposure reduced in the quarter, there was Commercial & Institutional growth within multiple sectors. Sector appetite continues to be reviewed regularly, with particular focus on sector clusters and sub-sectors that are vulnerable to challenges in the external environment or deemed to represent a heightened risk. There was a marginal reduction in total ECL coverage during the quarter, due to a decrease in performing ECL, resulting from positive portfolio performance and the unwind of some PMAs. Stage 3 ECL increased due to a small increase in defaults, although still lower than historic trends, and was partially offset by write-off activity. There was a modest decrease in good book coverage, reflective of continued stable portfolio performance alongside PMA reductions.
 
Movement in ECL provision
The table below shows the main ECL provision movements during the quarter.
 
 
ECL provision
 
£m
At 1 January 2024
3,645
Transfers to disposal groups and reclassifications
(16)
Changes in risk metrics and exposure: Stage 1 and Stage 2
(84)
Changes in risk metrics and exposure: Stage 3
219
Judgemental changes: changes in post model adjustments for Stage 1, Stage 2 and Stage 3
(23)
Write-offs and other
(115)
At 31 March 2024
3,626
 
−       ECL decreased marginally in Q1 2024, with increases in Stage 3 linked to ongoing subdued write-offs and debt sales in the Personal portfolios. This was offset by good book ECL reductions relating to stable portfolio performance, reductions in post model adjustments and personal unsecured probability of default modelling updates.
 
−       For the Wholesale portfolios, there was an increase in Commercial & Institutional Stage 3 charges in the quarter, mainly due to a small number of individual charges, but charges were still lower than historic trends.
 
 

 
Risk and capital management
Credit risk continued
ECL post model adjustments
The table below shows ECL post model adjustments.
 
 
Retail Banking
Private
Commercial &
Central items
 
 
 
Mortgages
Other
Banking
Institutional
& other
 
Total
31 March 2024
£m
£m
£m
£m
£m
 
£m
Deferred model calibrations
-
-
1
20
-
 
21
Economic uncertainty
120
45
10
233
3
 
411
Other adjustments
-
-
-
7
-
 
7
Total
120
45
11
260
3
 
439
 
 
 
 
 
 
 
 
Of which:
 
 
 
 
 
 
 
- Stage 1
72
16
5
108
3
 
204
- Stage 2
36
29
6
150
-
 
221
- Stage 3 
12
-
-
2
-
 
14
 
 
 
 
 
 
 
 
31 December 2023
 
Deferred model calibrations
-
-
1
23
-
 
24
Economic uncertainty
118
39
13
256
3
 
429
Other adjustments
1
-
-
8
23
 
32
Total
119
39
14
287
26
 
485
 
 
 
 
 
 
 
 
Of which:
 
 
 
 
 
 
 
- Stage 1
75
14
6
115
10
 
220
- Stage 2
31
25
8
167
9
 
240
- Stage 3 
13
-
-
5
7
 
25
 
−       Retail Banking - The post model adjustments for economic uncertainty increased slightly to £165 million at 31 March 2024, from £157 million at 31 December 2023. Sustained inflationary pressure alongside high interest rates continues to put pressure on consumer affordability risks. This economic context, coupled with modelled ECL reductions, prompted a modest uplift in the cost of living post model adjustment (up from £144 million to £153 million) to maintain adequate provision levels on this higher risk segment of the portfolio. The cost of living post model adjustment captures the risk on segments in the Retail Banking portfolio that are more susceptible to the effects of cost of living rises. It focuses on key affordability lenses, including customers with lower income in fuel poverty, over-indebted borrowers and customers vulnerable to a potential mortgage rate shock.
 
−       Commercial & Institutional - The post model adjustments for economic uncertainty decreased to £233 million at 31 March 2024, from £256 million at 31 December 2023. It still includes an overlay of £39 million (£50 million at 31 December 2023) to cover the residual risks from COVID-19, including the risks surrounding associated debt to customers that have utilised government support schemes. The inflation, supply chain and liquidity post model adjustment was maintained for lending prior to 1 January 2024, with a sector-level downgrade being applied to the sectors that were considered most at risk from the ongoing pressures from inflation being higher for longer, supply chain challenges and broader concerns around reducing cash reserves across many sectors. The £16 million reduction was a result of a mechanistic refresh reflecting portfolio changes. The impact of the sector-level downgrades was a post model adjustment decrease to £193 million at 31 March 2024 from £206 million at 31 December 2023.
 
−       The £20 million judgemental overlay for deferred model calibrations relates to refinance risk with the existing modelling approach not fully capturing the risk on deteriorated exposures.
 
−     Central items & other - The £23 million post model adjustment in other adjustments was removed in the quarter, reflecting the withdrawal from the Republic of Ireland.
 
 

 
Risk and capital management
Credit risk continued
Sector analysis - portfolio summary
 
The table below shows financial assets and off-balance sheet exposures gross of ECL and related ECL provisions, impairment and past due by sector, asset quality and geographical region.
 
 
Personal
 
Wholesale
 
Total
 
 
Credit
 
 
 
 
 
 
 
 
 
 
 
Mortgages (1)
cards
Other
Total
 
Property
Other
FI
Sovereign
Total
 
 
31 March 2024
£m
£m
£m
£m
 
£m
£m
£m
£m
£m
 
£m
Loans by geography
206,146
6,033
9,720
221,899
 
31,993
77,521
55,058
1,232
165,804
 
387,703
  - UK
206,146
6,033
9,720
221,899
 
31,448
64,611
37,221
549
133,829
 
355,728
  - RoI
-
-
-
-
 
10
953
217
-
1,180
 
1,180
  - Other Europe
-
-
-
-
 
415
5,017
8,462
365
14,259
 
14,259
  - RoW
-
-
-
-
 
120
6,940
9,158
318
16,536
 
16,536
 Loans by asset quality (2)
206,146
6,033
9,720
221,899
 
31,993
77,521
55,058
1,232
165,804
 
387,703
  - AQ1-AQ4
114,923
113
862
115,898
 
15,993
27,032
51,413
948
95,386
 
211,284
  - AQ5-AQ8
87,895
5,704
7,646
101,245
 
15,295
48,621
3,557
129
67,602
 
168,847
  - AQ9 
947
69
183
1,199
 
74
331
72
133
610
 
1,809
  - AQ10
2,381
147
1,029
3,557
 
631
1,537
16
22
2,206
 
5,763
Loans by stage 
206,146
6,033
9,720
221,899
 
31,993
77,521
55,058
1,232
165,804
 
387,703
  - Stage 1
183,705
3,916
7,284
194,905
 
28,608
65,458
54,312
1,080
149,458
 
344,363
  - Stage 2
20,060
1,970
1,407
23,437
 
2,753
10,527
730
130
14,140
 
37,577
  - Stage 3
2,381
147
1,029
3,557
 
632
1,536
16
22
2,206
 
5,763
  - Of which: individual
137
-
21
158
 
283
700
5
22
1,010
 
1,168
  - Of which: collective
2,244
147
1,008
3,399
 
349
836
11
-
1,196
 
4,595
Loans - past due analysis (3)
206,146
6,033
9,720
221,899
 
31,993
77,521
55,058
1,232
165,804
 
387,703
  - Not past due
203,223
5,863
8,647
217,733
 
31,222
74,304
53,938
1,210
160,674
 
378,407
  - Past due 1-30 days
1,185
41
82
1,308
 
337
2,289
1,111
-
3,737
 
5,045
  - Past due 31-90 days
599
42
113
754
 
151
226
2
22
401
 
1,155
  - Past due 90-180 days
388
34
107
529
 
61
125
2
-
188
 
717
  - Past due >180 days
751
53
771
1,575
 
222
577
5
-
804
 
2,379
Loans - Stage 2
20,060
1,970
1,407
23,437
 
2,753
10,527
730
130
14,140
 
37,577
  - Not past due
18,994
1,916
1,292
22,202
 
2,534
9,858
724
130
13,246
 
35,448
  - Past due 1-30 days
787
26
44
857
 
100
518
4
-
622
 
1,479
  - Past due 31-90 days
279
28
71
378
 
119
151
2
-
272
 
650
Weighted average life
 
 
 
 
 
 
 
 
 
 
 
 
   - ECL measurement (years)
9
4
6
6
 
6
6
2
1
6
 
6
Weighted average 12 months PDs
 
 
 
 
 
 
 
 
 
 
 
 
  - IFRS 9 (%)
0.51
3.38
5.10
0.76
 
1.32
1.54
0.19
1.25
1.04
 
0.88
  - Basel (%)
0.70
3.47
3.35
0.88
 
0.91
1.26
0.19
5.60
0.86
 
0.87
ECL provisions by geography
445
357
1,171
1,973
 
399
1,172
65
17
1,653
 
3,626
  - UK
445
357
1,171
1,973
 
388
1,018
37
13
1,456
 
3,429
  - RoI
-
-
-
-
 
-
2
1
-
3
 
3
  - Other Europe
-
-
-
-
 
4
104
9
-
117
 
117
  - RoW
-
-
-
-
 
7
48
18
4
77
 
77
ECL provisions by stage 
445
357
1,171
1,973
 
399
1,172
65
17
1,653
 
3,626
  - Stage 1
87
71
142
300
 
95
220
40
14
369
 
669
  - Stage 2
70
188
216
474
 
78
341
19
1
439
 
913
  - Stage 3
288
98
813
1,199
 
226
611
6
2
845
 
2,044
  - Of which: individual
21
-
15
36
 
81
220
-
2
303
 
339
  - Of which: collective
267
98
798
1,163
 
145
391
6
-
542
 
1,705
ECL provisions coverage (%)
0.22
5.92
12.05
0.89
 
1.25
1.51
0.12
1.38
1.00
 
0.94
  - Stage 1 (%)
0.05
1.81
1.95
0.15
 
0.33
0.34
0.07
1.30
0.25
 
0.19
  - Stage 2 (%)
0.35
9.54
15.35
2.02
 
2.83
3.24
2.60
0.77
3.10
 
2.43
  - Stage 3 (%)
12.10
66.67
79.01
33.71
 
35.76
39.78
37.50
9.09
38.30
 
35.47
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the notes to this table refer to page 19.
 

 
Risk and capital management
Credit risk continued
Sector analysis - portfolio summary continued
 
 
Personal
 
Wholesale
 
Total
 
 
Credit
 
 
 
 
 
 
 
 
 
 
 
Mortgages (1)
cards
Other
Total
 
Property
Other
FI
Sovereign
Total
 
 
31 March 2024
£m
£m
£m
£m
 
£m
£m
£m
£m
£m
 
£m
Loans by residual maturity
206,146
6,033
9,720
221,899
 
31,993
77,521
55,058
1,232
165,804
 
387,703
  - <1 year 
3,291
3,353
3,257
9,901
 
5,765
25,205
40,698
333
72,001
 
81,902
  - 1-5 year
9,541
2,680
5,459
17,680
 
18,063
32,297
12,105
551
63,016
 
80,696
  - >5< 15 year
45,751
-
996
46,747
 
5,605
14,744
2,221
311
22,881
 
69,628
  - >15 year
147,563
-
8
147,571
 
2,560
5,275
34
37
7,906
 
155,477
Other financial assets by
 
 
 
 
 
 
 
 
 
 
 
 
  asset quality (2)
-
-
-
-
 
1
2,912
27,208
134,631
164,752
 
164,752
  - AQ1-AQ4
-
-
-
-
 
1
2,910
26,463
134,631
164,005
 
164,005
  - AQ5-AQ8
-
-
-
-
 
-
2
745
-
747
 
747
Off-balance sheet
10,293
18,043
8,355
36,691
 
14,215
60,200
21,039
259
95,713
 
132,404
  - Loan commitments
10,293
18,043
8,311
36,647
 
13,858
57,410
19,234
259
90,761
 
127,408
  - Financial guarantees
-
-
44
44
 
357
2,790
1,805
-
4,952
 
4,996
Off-balance sheet by
 
 
 
 
 
 
 
 
 
 
 
 
  asset quality (2)
10,293
18,043
8,355
36,691
 
14,215
60,200
21,039
259
95,713
 
132,404
  - AQ1-AQ4
9,597
449
7,119
17,165
 
10,909
36,856
19,413
166
67,344
 
84,509
  - AQ5-AQ8
679
17,278
1,201
19,158
 
3,284
23,037
1,588
30
27,939
 
47,097
  - AQ9 
1
6
7
14
 
3
19
37
63
122
 
136
  - AQ10
16
310
28
354
 
19
288
1
-
308
 
662
 
 
For the notes to this table refer to page 19.
 
 
 
 
Risk and capital management
Credit risk continued
Sector analysis - portfolio summary continued
 
 
 
Personal
 
Wholesale
 
Total
 
 
Credit
 
 
 
 
 
 
 
 
 
 
 
Mortgages (1)
cards
Other
Total
 
Property
Other
FI
Sovereign
Total
 
 
31 December 2023
£m
£m
£m
£m
 
£m
£m
£m
£m
£m
 
£m
Loans by geography
208,275
5,904
9,595
223,774
 
31,207
77,339
57,087
2,633
168,266
 
392,040
  - UK
208,275
5,893
9,592
223,760
 
30,703
65,033
39,906
2,016
137,658
 
361,418
  - RoI
-
11
3
14
 
9
888
279
-
1,176
 
1,190
  - Other Europe
-
-
-
-
 
375
5,096
7,865
399
13,735
 
13,735
  - RoW
-
-
-
-
 
120
6,322
9,037
218
15,697
 
15,697
 Loans by asset quality (2)
208,275
5,904
9,595
223,774
 
31,207
77,339
57,087
2,633
168,266
 
392,040
  - AQ1-AQ4
118,266
124
914
119,304
 
15,366
26,851
53,367
2,488
98,072
 
217,376
  - AQ5-AQ8
86,868
5,577
7,552
99,997
 
15,145
48,673
3,686
123
67,627
 
167,624
  - AQ9 
860
63
150
1,073
 
75
311
18
-
404
 
1,477
  - AQ10
2,281
140
979
3,400
 
621
1,504
16
22
2,163
 
5,563
Loans by stage
208,275
5,904
9,595
223,774
 
31,207
77,339
57,087
2,633
168,266
 
392,040
  - Stage 1
188,140
3,742
6,983
198,865
 
27,316
63,690
56,105
2,610
149,721
 
348,586
  - Stage 2
17,854
2,022
1,633
21,509
 
3,270
12,145
966
1
16,382
 
37,891
  - Stage 3
2,281
140
979
3,400
 
621
1,504
16
22
2,163
 
5,563
  - Of which: individual
122
-
20
142
 
240
625
2
22
889
 
1,031
  - Of which: collective
2,159
140
959
3,258
 
381
879
14
-
1,274
 
4,532
Loans - past due analysis (3)
208,275
5,904
9,595
223,774
 
31,207
77,339
57,087
2,633
168,266
 
392,040
  - Not past due
205,405
5,743
8,578
219,726
 
30,264
74,052
56,735
2,633
163,684
 
383,410
  - Past due 1-30 days
1,178
41
71
1,290
 
491
2,222
332
-
3,045
 
4,335
  - Past due 31-90 days
518
38
112
668
 
179
437
12
-
628
 
1,296
  - Past due 90-180 days
445
32
103
580
 
42
71
2
-
115
 
695
  - Past due >180 days
729
50
731
1,510
 
231
557
6
-
794
 
2,304
Loans - Stage 2
17,854
2,022
1,633
21,509
 
3,270
12,145
966
1
16,382
 
37,891
  - Not past due
16,803
1,971
1,529
20,303
 
3,071
11,287
932
1
15,291
 
35,594
  - Past due 1-30 days
765
27
40
832
 
100
516
24
-
640
 
1,472
  - Past due 31-90 days
286
24
64
374
 
99
342
10
-
451
 
825
Weighted average life
 
 
 
 
 
 
 
 
 
 
 
 
   - ECL measurement (years)
9
3
6
6
 
6
6
2
-
6
 
6
Weighted average 12 months PDs
 
 
 
 
 
 
 
 
 
 
 
  - IFRS 9 (%)
0.50
3.45
5.29
0.75
 
1.45
1.59
0.19
0.37
1.07
 
0.89
  - Basel (%)
0.67
3.37
3.15
0.84
 
0.94
1.25
0.17
0.37
0.81
 
0.83
ECL provisions by geography
420
376
1,168
1,964
 
398
1,201
66
16
1,681
 
3,645
  - UK
420
365
1,163
1,948
 
384
999
38
13
1,434
 
3,382
  - RoI
-
11
5
16
 
-
6
1
-
7
 
23
  - Other Europe
-
-
-
-
 
7
146
12
-
165
 
165
  - RoW
-
-
-
-
 
7
50
15
3
75
 
75
ECL provisions by stage 
420
376
1,168
1,964
 
398
1,201
66
16
1,681
 
3,645
  - Stage 1
88
76
152
316
 
102
234
44
13
393
 
709
  - Stage 2
61
207
238
506
 
98
356
15
1
470
 
976
  - Stage 3
271
93
778
1,142
 
198
611
7
2
818
 
1,960
  - Of which: individual
12
-
14
26
 
60
242
2
2
306
 
332
  - Of which: collective
259
93
764
1,116
 
138
369
5
-
512
 
1,628
ECL provisions coverage (%)
0.20
6.37
12.17
0.88
 
1.28
1.55
0.12
0.61
1.00
 
0.93
  - Stage 1 (%)
0.05
2.03
2.18
0.16
 
0.37
0.37
0.08
0.50
0.26
 
0.20
  - Stage 2 (%)
0.34
10.24
14.57
2.35
 
3.00
2.93
1.55
100.00
2.87
 
2.58
  - Stage 3 (%)
11.88
66.43
79.47
33.59
 
31.88
40.63
43.75
9.09
37.82
 
35.23
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the notes to this table refer to the following page.
 
 
 
Risk and capital management
Credit risk continued
Sector analysis - portfolio summary continued

 
 
 
 
Personal
 
Wholesale
 
Total
 
 
Credit
 
 
 
 
 
 
 
 
 
 
 
Mortgages (1)
cards
Other
Total
 
Property
Other
FI
Sovereign
Total
 
 
31 December 2023
£m
£m
£m
£m
 
£m
£m
£m
£m
£m
 
£m
Loans by residual maturity
208,275
5,904
9,595
223,774
 
31,207
77,339
57,087
2,633
168,266
 
392,040
  - <1 year 
3,375
3,398
3,169
9,942
 
5,696
25,312
43,497
489
74,994
 
84,936
  - 1-5 year
9,508
2,506
5,431
17,445
 
17,216
32,573
11,616
1,872
63,277
 
80,722
  - >5< 15 year
46,453
-
993
47,446
 
5,701
14,167
1,939
199
22,006
 
69,452
  - >15 year
148,939
-
2
148,941
 
2,594
5,287
35
73
7,989
 
156,930
Other financial assets by
 
 
 
 
 
 
 
 
 
 
 
 
  asset quality (2)
-
-
-
-
 
1
2,689
26,816
123,683
153,189
 
153,189
  - AQ1-AQ4
-
-
-
-
 
1
2,689
26,084
123,683
152,457
 
152,457
  - AQ5-AQ8
-
-
-
-
 
-
-
732
-
732
 
732
Off-balance sheet
9,843
17,284
8,462
35,589
 
14,205
59,716
22,221
227
96,369
 
131,958
  - Loan commitments
9,843
17,284
8,417
35,544
 
13,861
57,081
20,765
227
91,934
 
127,478
  - Financial guarantees
-
-
45
45
 
344
2,635
1,456
-
4,435
 
4,480
Off-balance sheet by
 
 
 
 
 
 
 
 
 
 
 
 
  asset quality (2)
9,843
17,284
8,462
35,589
 
14,205
59,716
22,221
227
96,369
 
131,958
  - AQ1-AQ4
9,099
448
7,271
16,818
 
10,916
36,380
20,644
165
68,105
 
84,923
  - AQ5-AQ8
721
16,518
1,162
18,401
 
3,266
23,030
1,574
45
27,915
 
46,316
  - AQ9 
7
6
4
17
 
3
12
-
-
15
 
32
  - AQ10
16
312
25
353
 
20
294
3
17
334
 
687
 
 
 
(1)     Includes a portion of Private Banking lending secured against residential real estate, in line with ECL calculation methodology. Private Banking and RBS International mortgages are reported in UK, reflecting the country of lending origination and includes crown dependencies.
(2)     AQ bandings are based on Basel PDs and mapping is as follows:
 
Internal asset quality band
Probability of default range
Indicative S&P rating
AQ1
0% - 0.034%
AAA to AA
AQ2
0.034% - 0.048%
AA to AA-
AQ3
0.048% - 0.095%
A+ to A
AQ4
0.095% - 0.381%
BBB+ to BBB-
AQ5
0.381% - 1.076%
BB+ to BB
AQ6
1.076% - 2.153%
BB- to B+
AQ7
2.153% - 6.089%
B+ to B
AQ8
6.089% - 17.222%
B- to CCC+
AQ9
17.222% - 100%
CCC to C
AQ10
100%
D
 
£0.3 billion (31 December 2023 - £0.3 billion) of AQ10 Personal balances primarily relate to loan commitments, the drawdown of which is effectively prohibited.
 
(3)     30 DPD - 30 days past due, the mandatory 30 days past due backstop as prescribed by the IFRS 9 guidance for a SICR.
 
 
 
 
Risk and capital management
Credit risk continued
Sector analysis - portfolio summary continued
 
The table below shows ECL by stage, for the Personal portfolio and selected sectors of the Wholesale portfolio including those that contain an element of exposure classified as heightened climate-related risk.
 
 
 
Off-balance sheet
 
 
 
Loans - amortised cost and FVOCI
Loan
 
Contingent
 
ECL provisions 
 
Stage 1
Stage 2
Stage 3
Total
commitments
 
liabilities
 
Stage 1
Stage 2
Stage 3
Total
31 March 2024
£m
£m
£m
£m
£m
 
£m
 
£m
£m
£m
£m
Personal
194,905
23,437
3,557
221,899
36,647
 
44
 
300
474
1,199
1,973
  Mortgages (1)
183,705
20,060
2,381
206,146
10,293
 
-
 
87
70
288
445
  Credit cards
3,916
1,970
147
6,033
18,043
 
-
 
71
188
98
357
  Other personal
7,284
1,407
1,029
9,720
8,311
 
44
 
142
216
813
1,171
Wholesale
149,458
14,140
2,206
165,804
90,761
 
4,952
 
369
439
845
1,653
   Property
28,608
2,753
632
31,993
13,858
 
357
 
95
78
226
399
   Financial institutions (2)
54,312
730
16
55,058
19,234
 
1,805
 
40
19
6
65
   Sovereign
1,080
130
22
1,232
259
 
-
 
14
1
2
17
   Corporate
65,458
10,527
1,536
77,521
57,410
 
2,790
 
220
341
611
1,172
   Of which:
 
 
 
 
 
 
 
 
 
 
 
 
      Agriculture
3,934
918
107
4,959
957
 
21
 
17
35
36
88
      Airlines and aerospace
2,073
359
3
2,435
2,056
 
162
 
3
6
2
11
      Automotive
7,314
690
52
8,056
4,187
 
154
 
18
19
19
56
      Building materials
1,417
244
19
1,680
1,391
 
67
 
6
8
7
21
      Chemicals
293
124
4
421
765
 
13
 
1
9
4
14
      Industrials
2,342
473
70
2,885
2,843
 
141
 
9
16
30
55
      Land transport and logistics
4,515
452
76
5,043
2,980
 
195
 
11
14
21
46
      Leisure
5,053
1,880
291
7,224
1,873
 
122
 
31
70
99
200
      Mining and metals
263
37
5
305
531
 
7
 
-
-
5
5
      Oil and gas
697
52
55
804
1,909
 
240
 
3
2
46
51
      Power utilities
5,457
323
79
5,859
8,054
 
593
 
14
8
29
51
      Retail
5,969
1,152
211
7,332
4,314
 
475
 
20
32
80
132
      Shipping
198
34
1
233
60
 
29
 
-
2
1
3
      Water and waste
3,562
160
48
3,770
1,879
 
135
 
4
4
7
15
Total
344,363
37,577
5,763
387,703
127,408
 
4,996
 
669
913
2,044
3,626
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31 December 2023
 
 
 
 
 
 
 
 
 
 
 
 
Personal
198,865
21,509
3,400
223,774
35,544
 
45
 
316
506
1,142
1,964
  Mortgages (1)
188,140
17,854
2,281
208,275
9,843
 
-
 
88
61
271
420
   Credit cards
3,742
2,022
140
5,904
17,284
 
-
 
76
207
93
376
   Other personal
6,983
1,633
979
9,595
8,417
 
45
 
152
238
778
1,168
Wholesale
149,721
16,382
2,163
168,266
91,934
 
4,435
 
393
470
818
1,681
   Property
27,316
3,270
621
31,207
13,861
 
344
 
102
98
198
398
   Financial institutions (2)
56,105
966
16
57,087
20,765
 
1,456
 
44
15
7
66
   Sovereign
2,610
1
22
2,633
227
 
-
 
13
1
2
16
   Corporate
63,690
12,145
1,504
77,339
57,081
 
2,635
 
234
356
611
1,201
   Of which:
 
 
 
 
 
 
 
 
 
 
 
 
      Agriculture
3,851
1,011
90
4,952
950
 
21
 
19
35
34
88
      Airlines and aerospace
1,525
454
3
1,982
1,788
 
178
 
4
7
2
13
      Automotive
7,223
1,008
76
8,307
3,844
 
103
 
18
18
26
62
      Building materials
1,204
282
72
1,558
1,475
 
72
 
6
9
8
23
      Chemicals
354
62
4
420
785
 
13
 
1
9
1
11
      Industrials
2,269
543
70
2,882
2,896
 
148
 
10
18
23
51
      Land transport and logistics
4,231
578
61
4,870
3,025
 
184
 
11
14
18
43
      Leisure
4,394
2,245
288
6,927
1,887
 
145
 
31
74
91
196
      Mining and metals
241
32
4
277
545
 
7
 
-
-
4
4
      Oil and gas
915
125
27
1,067
1,959
 
237
 
3
2
29
34
      Power utilities
5,604
418
40
6,062
8,257
 
554
 
13
13
24
50
      Retail
5,846
1,318
224
7,388
4,717
 
429
 
23
35
118
176
      Shipping
207
35
3
245
71
 
31
 
-
1
2
3
      Water and waste
3,536
173
13
3,722
1,904
 
84
 
4
5
4
13
Total
348,586
37,891
5,563
392,040
127,478
 
4,480
 
709
976
1,960
3,645
 
 
(1)
As at 31 March 2024, £138.1 billion, 67.0%, of the total residential mortgages portfolio had Energy Performance Certificate (EPC) data available (31 December 2023 - £140.8 billion, 67.6%). Of which, 44.6% were rated as EPC A to C (31 December 2023 - 44.1%).
(2)
Includes transactions, such as securitisations, where the underlying assets may be in other sectors.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk and capital management
Capital, liquidity and funding risk
Introduction  
 
NatWest Group takes a comprehensive approach to the management of capital, liquidity and funding, underpinned by frameworks, risk appetite and policies, to manage and mitigate capital, liquidity and funding risks. The framework ensures the tools and capability are in place to facilitate the management and mitigation of risk ensuring that NatWest Group operates within its regulatory requirements and risk appetite.
 
Key developments since 31 December 2023
CET1 ratio
13.5%
(as at 31 December 2023 - 13.4%)
 
 
Total RWAs
£186.3bn
(as at 31 December 2023 - £183.0bn)
 
The CET1 ratio increased by 10 basis points to 13.5%. The increase in the CET1 ratio was due to a £0.6 billion increase in CET1 capital, partially offset by a £3.3 billion increase in RWAs.
The CET1 capital increase was mainly driven by an attributable profit for ordinary shareholders of £0.9 billion partially offset by a foreseeable ordinary dividend accrual of £0.4 billion.
 
 
 
 
 
Total RWAs increased by £3.3 billion to £186.3 billion mainly reflecting:
−           an increase in credit risk RWAs of £1.7 billion, primarily due to drawdowns and new facilities within Commercial & Institutional in addition to an increase in unsecured lending within Retail Banking. There was also an increase in IRB Temporary Model Adjustment related to mortgages within Retail Banking.
−           an increase in operational risk RWAs of £1.6 billion following the annual recalculation and higher income compared to 2020.
 
 
 
 
UK leverage ratio
5.1%
(as at 31 December 2023 - 5.0%)
 
 
LCR
151%
(as at 31 December 2023 - 144%)
 
The leverage ratio increased by 10 basis points to 5.1% mainly due to a £0.6 billion increase in Tier 1 capital while the leverage exposure remained static during the period.
 
 
 
The Liquidity Coverage Ratio (LCR) increased to 151%, during the quarter driven by increased issuance and customer deposits coupled with replacement of the Cash Ratio Deposit scheme with a Bank of England Levy.
 
 
 
 
 
Risk and capital management
Capital, liquidity and funding risk continued
Maximum Distributable Amount (MDA) and Minimum Capital Requirements
 
NatWest Group is subject to minimum capital requirements relative to RWAs. The table below summarises the minimum capital requirements (the sum of Pillar 1 and Pillar 2A), and the additional capital buffers which are held in excess of the regulatory minimum requirements and are usable in stress.  
 
Where the CET1 ratio falls below the sum of the minimum capital and the combined buffer requirement, there is a subsequent automatic restriction on the amount available to service discretionary payments (including AT1 coupons), known as the MDA. Note that different requirements apply to individual legal entities or sub-groups and that the table shown does not reflect any incremental PRA buffer requirements, which are not disclosable.
 
The current capital position provides significant headroom above both our minimum requirements and our MDA threshold requirements.
 
Type
CET1
Total Tier 1
Total capital
Pillar 1 requirements
4.5%
6.0%
8.0%
Pillar 2A  requirements
1.8%
2.4%
3.2%
Minimum Capital Requirements
6.3%
8.4%
11.2%
Capital conservation buffer
2.5%
2.5%
2.5%
Countercyclical capital buffer (1)
1.7%
1.7%
1.7%
MDA threshold (2)
10.5%
n/a
n/a
Overall capital requirement
10.5%
12.6%
15.4%
Capital ratios at 31 March 2024
13.5%
15.5%
18.8%
Headroom (3,4)
3.0%
2.9%
3.4%
 
(1)     The UK countercyclical capital buffer (CCyB) rate is currently being maintained at 2%.  The rate may vary in either direction in the future, depending on how risks develop. Foreign exposures may be subject to different CCyB rates depending on the rates set in those jurisdictions.
(2)     Pillar 2A requirements for NatWest Group are set as a variable amount with the exception of some fixed add-ons.
(3)     The headroom does not reflect excess distributable capital and may vary over time.
(4)     Headroom as at 31 December 2023 was CET1 2.9%, Total Tier 1 2.9% and Total Capital 3.0%.
 
 
 
Leverage ratios
 
The table below summarises the minimum ratios of capital to leverage exposure under the binding PRA UK leverage framework applicable for NatWest Group.
 
Type
CET1
Total Tier 1
Minimum ratio
2.44%
3.25%
Countercyclical leverage ratio buffer (1)
0.6%
0.6%
Total
3.04%
3.85%
 
(1)     The countercyclical leverage ratio buffer is set at 35% of NatWest Group's CCyB.
 
 
Risk and capital management
Capital, liquidity and funding risk continued
Capital and leverage ratios
 
The tables below set out the key capital and leverage ratios. NatWest Group is subject to the requirements set out in the UK CRR therefore capital and leverage ratios are being presented under these frameworks on a transitional basis.
 
 
31 March
31 December
 
2024
2023
Capital adequacy ratios (1)
%
%
CET1
13.5
13.4
Tier 1
15.5
15.5
Total
18.8
18.4
 
 
 
Capital
£m
£m
Tangible equity
26,360
25,653
 
 
 
Prudential valuation adjustment
(249)
(279)
Deferred tax assets
(919)
(979)
Own credit adjustments
16
(10)
Pension fund assets
(160)
(143)
Cash flow hedging reserve
1,944
1,899
Foreseeable ordinary dividends
(1,380)
(1,013)
Adjustment for trust assets (2)
(365)
(365)
Foreseeable charges
(253)
(525)
Adjustments under IFRS 9 transitional arrangements
74
202
Total regulatory adjustments
(1,292)
(1,213)
 
 
 
CET1 capital
25,068
24,440
 
 
 
Additional AT1 capital
3,875
3,875
Tier 1 capital
28,943
28,315
 
 
 
End-point Tier 2 capital 
6,037
5,317
Tier 2 capital
6,037
5,317
 
 
 
Total regulatory capital
34,980
33,632
 
 
 
Risk-weighted assets
 
 
Credit risk
149,313
147,598
Counterparty credit risk
7,709
7,830
Market risk
7,452
7,363
Operational risk
21,821
20,198
Total RWAs
186,295
182,989
 
 
(1)     Based on current PRA rules, includes the transitional arrangements for the capital impact of IFRS 9 expected credit loss (ECL) accounting. The impact of the IFRS 9 transitional adjustments at 31 March 2024 was £0.1 billion for CET1 capital, £24 million for total capital and £3 million RWAs (31 December 2023 - £0.2 billion CET1 capital, £54 million total capital and £17 million RWAs). Excluding this adjustment, the CET1 ratio would be 13.4% (31 December 2023 - 13.2%). Tier 1 capital ratio would be 15.5% (31 December 2023 - 15.4%) and the Total capital ratio would be 18.8% (31 December 2023 - 18.4%).
(2)     Prudent deduction in respect of agreement with the pension fund.
 
 
 
 
Risk and capital management
Capital, liquidity and funding risk continued
Capital and leverage ratios continued
 
 
31 March
31 December
 
2024
2023
Leverage
£m
£m
Cash and balances at central banks
           116,916 
104,262
Trading assets
             50,277 
45,551
Derivatives
             68,133 
78,904
Financial assets
           434,344 
439,449
Other assets
             26,974 
23,605
Assets of disposal groups
                  808 
902
Total assets
697,452 
692,673
Derivatives
 
 
   - netting and variation margin
(67,625)
(79,299)
   - potential future exposures
17,064
17,212
Securities financing transactions gross up
1,645
1,868
Other off balance sheet items
51,260
50,961
Regulatory deductions and other adjustments
(20,028)
(16,043)
Claims on central banks
(113,504)
(100,735)
Exclusion of bounce back loans
(3,433)
(3,794)
UK leverage exposure
562,831
562,843
UK leverage ratio (%) (1)
5.1
5.0
 
 
(1)
The UK leverage exposure and transitional Tier 1 capital are calculated in accordance with current PRA rules. Excluding the IFRS 9 transitional adjustment, the UK leverage ratio would be 5.1% (31 December 2023 - 5.0%).
 
Capital flow statement
The table below analyses the movement in CET1, AT1 and Tier 2 capital for the three months ended 31 March 2024. It is presented on a transitional basis based on current PRA rules.
 
 
CET1
AT1
Tier 2
Total
 
£m
£m
£m
£m
At 31 December 2023
24,440
3,875
5,317
33,632
Attributable profit for the period
918
-
-
918
Foreseeable ordinary dividends
(367)
-
-
(367)
Foreign exchange reserve
(32)
-
-
(32)
FVOCI reserve
26
-
-
26
Own credit
26
-
-
26
Share capital and reserve movements in respect of employee share schemes
68
-
-
68
Goodwill and intangibles deduction
16
-
-
16
Deferred tax assets
60
-
-
60
Prudential valuation adjustments
30
-
-
30
Net dated subordinated debt instruments
-
-
764
764
Foreign exchange movements
-
-
(4)
(4)
Adjustment under IFRS 9 transitional arrangements
(128)
-
-
(128)
Other movements
11
-
(40)
(29)
At 31 March 2024
25,068
3,875
6,037
34,980
 
−       For CET1 movements refer to the key points on page 21.
 
−       Tier 2 instrument movements include £0.8 billion in relation to $1.0 billion 6.475% Fixed to Fixed Reset Tier 2 Notes 2034 issued in March 2024, partially offset by amortisation and foreign exchange movements.
 
−       Within Tier 2, there was also a decrease in the Tier 2 surplus provisions.
 
 
 
 
Risk and capital management
Capital, liquidity and funding risk continued
Risk-weighted assets
 
The table below analyses the movement in RWAs during the period, by key drivers.
 
 
 
Counterparty
 
Operational
 
 
Credit risk
credit risk
Market risk
 risk
Total
 
£bn
£bn
£bn
£bn
£bn
At 31 December 2023
147.6
7.8
7.4
20.2
183.0
Foreign exchange movement
(0.1)
-
-
-
(0.1)
Business movement
1.6
(0.1)
0.2
1.6
3.3
Risk parameter changes
(0.1)
-
-
-
(0.1)
Model updates
0.3
-
(0.1)
-
0.2
At 31 March 2024
149.3
7.7
7.5
21.8
186.3
 
The table below analyses segmental RWAs.
 
 
 
 
 
 
Total
 
Retail
Private
Commercial &
Central items
NatWest
 
Banking
Banking
Institutional
& other (1)
Group
Total RWAs
£bn
£bn
£bn
£bn
£bn
At 31 December 2023
61.6
11.2
107.4
2.8
183.0
Foreign exchange movement
-
-
(0.1)
-
(0.1)
Business movement
0.7
0.1
2.7
(0.2)
3.3
Risk parameter changes 
-
-
(0.1)
-
(0.1)
Model updates
0.2
-
-
-
0.2
At 31 March 2024
62.5
11.3
109.9
2.6
186.3
 
 
 
 
 
 
Credit risk
54.0
9.7
83.5
2.1
149.3
Counterparty credit risk
0.3
0.1
7.3
-
7.7
Market risk
0.1
-
7.4
-
7.5
Operational risk
8.1
1.5
11.7
0.5
21.8
Total RWAs
62.5
11.3
109.9
2.6
186.3
 
 
(1)
£1.0 billion of Central items & other relates to Ulster Bank RoI.
 
Total RWAs increased by £3.3 billion to £186.3 billion during the period mainly reflecting:
 
−       An increase in business movements totalling £3.3 billion, primarily driven by increased drawdowns and new facilities within Commercial & Institutional in addition to increased RWAs following the annual recalculation of operational risk due to higher income when compared to 2020.
 
−       A decrease in risk parameter changes of £0.1 billion, reflecting customers moving into default within Commercial & Institutional which is partially offset by PD deterioration within Commercial & Institutional.
 
−       An increase in model updates of £0.2 billion reflecting an increase in IRB Temporary Model Adjustment related to mortgages within Retail Banking.
 
Liquidity portfolio
 
The table below shows the composition of the liquidity portfolio with primary liquidity aligned to high-quality liquid assets on a regulatory LCR basis. Secondary liquidity comprises of assets which are eligible as collateral for local central bank liquidity facilities and do not form part of the LCR eligible high-quality liquid assets.
 
 
Liquidity value
 
31 March 2024
 
31 December 2023
 
NatWest
 
NatWest
 
Group (1)
 
Group
 
£m
 
£m
Cash and balances at central banks 
112,774
 
99,855
High quality government/MDB/PSE and GSE bonds (2)
32,581
 
36,250
Extremely high quality covered bonds
4,113
 
4,164
LCR level 1 Eligible Assets
149,468
 
140,269
LCR level 2 Eligible Assets (3)
8,949
 
7,796
Primary liquidity (HQLA) (4)
158,417
 
148,065
Secondary liquidity
70,786
 
74,722
Total liquidity value
229,203
 
222,787
 
(1)
NatWest Group includes the UK Domestic Liquidity Sub-Group (NWB Plc, RBS plc and Coutts & Co), NatWest Markets Plc and other significant operating subsidiaries that hold liquidity portfolios. These include The Royal Bank of Scotland International Limited and NatWest Markets N.V. who hold managed portfolios that comply with local regulations that may differ from PRA rules.
(2)
Multilateral development bank abbreviated to MDB, public sector entities abbreviated to PSE and government sponsored entities abbreviated to GSE.
(3)
Includes Level 2A and Level 2B.
(4)
High-quality liquid assets abbreviated to HQLA.
 
 
 
 
Condensed consolidated income statement
for the period ended 31 March 2024 (unaudited)
 
 
Quarter ended
 
31 March
31 December
31 March
 
2024
2023
2023
 
£m 
£m 
£m 
Interest receivable
6,055
5,955
4,501
Interest payable
(3,404)
(3,317)
(1,599)
Net interest income
2,651
2,638
2,902
Fees and commissions receivable
770
770
740
Fees and commissions payable
(177)
(169)
(157)
Trading income
129
185
333
Other operating income
102
113
58
Non-interest income
824
899
974
Total income
3,475
3,537
3,876
Staff costs
(1,062)
(977)
(1,040)
Premises and equipment
(293)
(308)
(286)
Other administrative expenses
(424)
(618)
(450)
Depreciation and amortisation
(273)
(251)
(212)
Operating expenses
(2,052)
(2,154)
(1,988)
Profit before impairment losses
1,423
1,383
1,888
Impairment losses
(93)
(126)
(70)
Operating profit before tax
1,330
1,257
1,818
Tax (charge)/credit
(339)
5
(512)
Profit from continuing operations
991
1,262
1,306
(Loss)/profit from discontinued operations, net of tax 
(4)
26
35
Profit for the period
987
1,288
1,341
 
 
 
 
Attributable to:
 
 
 
Ordinary shareholders
918
1,229
1,279
Paid-in equity holders
60
60
61
Non-controlling interests
9
(1)
1
 
987
1,288
1,341
 
 
 
 
Earnings per ordinary share - continuing operations
10.5p
13.6p
12.8p
Earnings per ordinary share - discontinued operations
-
0.3p
0.4p
Total earnings per share attributable to ordinary shareholders - basic 
10.5p
13.9p
13.2p
Earnings per ordinary share - fully diluted continuing operations
10.4p
13.6p
12.8p
Earnings per ordinary share - fully diluted discontinued operations
-
0.3p
0.4p
Total earnings per share attributable to ordinary shareholders - fully diluted
10.4p
13.9p
13.2p
 
 
 
Condensed consolidated statement of comprehensive income
for the period ended 31 March 2024 (unaudited)
 
 
 
Quarter ended
 
 
31 March
31 December
31 March
 
 
2024
2023
2023
 
 
£m
£m
£m
Profit for the period
 
987
1,288
1,341
Items that do not qualify for reclassification
 
 
 
 
Remeasurement of retirement benefit schemes 
 
(36)
(175)
(39)
Changes in fair value of financial liabilities designated at fair value through 
 
 
 
 
   profit or loss (FVTPL) due to changes in credit risk
 
(23)
(12)
(6)
Fair value through other comprehensive income (FVOCI) financial assets
 
(13)
(19)
43
Tax 
 
31
59
(2)
 
 
(41)
(147)
(4)
Items that do qualify for reclassification 
 
 
 
 
FVOCI financial assets
 
45
(16)
40
Cash flow hedges
 
(66)
1,416
298
Currency translation
 
(25)
(218)
(59)
Tax
 
3
(345)
(98)
 
 
(43)
837
181
Other comprehensive (loss)/income after tax
 
(84)
690
177
Total comprehensive income for the period
 
903
1,978
1,518
 
 
 
 
 
Attributable to:
 
 
 
 
Ordinary shareholders
 
834
1,919
1,456
Paid-in equity holders
 
60
60
61
Non-controlling interests
 
9
(1)
1
 
 
903
1,978
1,518
 
 
 
 
 
 

 
Condensed consolidated balance sheet as at 31 March 2024 (unaudited)
 
 
31 March
31 December
 
2024
2023
 
£m
£m 
Assets
 
 
Cash and balances at central banks
116,916
104,262
Trading assets
50,277
45,551
Derivatives
68,133
78,904
Settlement balances
10,724
7,231
Loans to banks - amortised cost
6,051
6,914
Loans to customers - amortised cost
378,010
381,433
Other financial assets
50,283
51,102
Intangible assets
7,598
7,614
Other assets
8,652
8,760
Assets of disposal groups
808
902
Total assets
697,452
692,673
 
 
 
Liabilities
 
 
Bank deposits
21,614
22,190
Customer deposits
432,793
431,377
Settlement balances
10,758
6,645
Trading liabilities
56,696
53,636
Derivatives
61,689
72,395
Other financial liabilities
61,340
55,089
Subordinated liabilities
6,487
5,714
Notes in circulation
3,289
3,237
Other liabilities
4,898
5,202
Total liabilities
659,564
655,485
 
 
 
Equity
 
 
Ordinary shareholders' interests
33,958
33,267
Other owners' interests
3,890
3,890
Owners' equity
37,848
37,157
Non-controlling interests
40
31
Total equity
37,888
37,188
Total liabilities and equity
697,452
692,673
 
 
 
 
Condensed consolidated statement of changes in equity
for the period ended 31 March 2024 (unaudited)
 
 
 
 
Share 
 
 
 
 
 
 
 
capital and
 
 
 
Total
Non
 
 
statutory
Paid-in
Retained
Other
owners'
controlling
Total 
 
reserves (1)
equity
earnings
reserves*
equity
 interests
equity
 
£m
£m
£m
£m
£m
£m
£m
At 1 January 2024
12,848
3,890
10,645
9,774
37,157
31
37,188
Profit attributable to ordinary shareholders
 
 
 
 
 
 
 
    and other equity owners  
 
 
 
 
 
 
 
      - continuing operations
 
 
982
 
982
9
991
      - discontinued operations
 
 
(4)
 
(4)
-
(4)
Other comprehensive income
 
 
 
 
 
 
 
  - Realised gains in period 
 
 
 
 
 
 
 
        on FVOCI equity shares 
 
 
1
(1)
-
 
-
  - Remeasurement of retirement 
 
 
 
 
 
 
 
        benefit schemes 
 
 
(36)
 
(36)
 
(36)
  - Changes in fair value of financial liabilities
 
 
 
 
 
 
 
        designated at FVTPL due to changes in credit risk
 
 
(23)
 
(23)
 
(23)
  - Unrealised gains: FVOCI
 
 
 
30
30
 
30
  - Amounts recognised in equity: cash flow hedges
 
 
 
(499)
(499)
 
(499)
  - Foreign exchange reserve movement
 
 
 
(25)
(25)
-
(25)
  - Amount transferred from equity to earnings
 
 
 
435
435
 
435
  - Tax 
 
 
25
9
34
 
34
Paid-in equity dividends paid
 
 
(60)
 
(60)
 
(60)
Shares repurchased during the period (2)
-
 
(235)
 
(235)
 
(235)
Share-based payments 
71
 
21
 
92
 
92
At 31 March 2024
12,919
3,890
11,316
9,723
37,848
40
37,888
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31 March
 
 
 
 
 
 
 
2024
Attributable to:
 
 
 
 
£m
Ordinary shareholders
 
 
 
 
 
 
33,958
Paid-in equity holders
 
 
 
 
 
 
3,890
Non-controlling interests
 
 
 
 
 
 
40
 
 
 
 
 
 
 
37,888
*Other reserves consist of:
 
 
 
 
 
 
Merger reserve
 
 
 
 
 
 
10,881
FVOCI reserve
 
 
 
 
 
 
(23)
Cash flow hedging reserve
 
 
 
 
 
 
(1,944)
Foreign exchange reserve
 
 
 
 
 
 
809
 
 
 
 
 
 
 
9,723
 
(1)
Share capital and statutory reserves includes share capital, share premium, capital redemption reserve and own shares held.
(2)
NatWest Group plc repurchased and cancelled 100.19 million shares for a total consideration of £225.53 million excluding fees in Q1 2024 as part of the On Market Share Buyback Programme; additionally, 2.25 million shares repurchased in December 2023 for a total consideration of £4.93 million excluding fees were settled and cancelled in January 2024. Of the 100.19 million shares bought back, 0.64 million shares were settled and cancelled in April 2024. The nominal value of the share cancellations has been transferred to the capital redemption reserve. 
 
 
 
 
Notes
 
1. Presentation of condensed consolidated financial statements
The condensed consolidated financial statements should be read in conjunction with NatWest Group plc's 2023 Annual Report and Accounts. The accounting policies are the same as those applied in the consolidated financial statements.
 
The directors have prepared the condensed consolidated financial statements on a going concern basis after assessing the principal risks, forecasts, projections and other relevant evidence over the twelve months from the date they are approved.
 
Amendments to IFRS effective from 1 January 2024 had no material effect on the condensed consolidated financial statements.
 
 
 
2. Litigation and regulatory matters
NatWest Group plc's 2023 Annual Report and Accounts, issued on 16 February 2024, included disclosures about NatWest Group's litigation and regulatory matters in Note 26. Set out below are the material developments in those matters (all of which have been previously disclosed) since publication of the 2023 Annual Report and Accounts.
 
Litigation
London Interbank Offered Rate (LIBOR) and other rates litigation
NWM Plc and certain other members of NatWest Group, including NatWest Group plc, are defendants in a number of claims pending in the United States District Court for the Southern District of New York (SDNY) with respect to the setting of USD LIBOR. In March 2024, NatWest Group companies reached an agreement in principle, subject to documentation and court approval, to settle the USD LIBOR class action that asserts claims on behalf of lenders who made LIBOR based loans. In April 2024, NatWest Group companies reached an agreement, subject to court approval, to settle the USD LIBOR class action that asserts claims on behalf of persons who transacted futures and options on exchanges. The settlement amounts are covered in full by existing provisions.  
 
FX litigation
NWM Plc, NWMSI and/or NatWest Group plc are defendants in several cases relating to NWM Plc's foreign exchange (FX) business. In February 2024, NWM Plc executed an agreement to settle the claim in the Tel Aviv District Court in Israel, subject to court approval. The settlement amount is covered in full by an existing provision.  
 
Government securities antitrust litigation
Class action antitrust claims commenced in March 2019 are pending in the SDNY against NWM Plc, NWMSI and other banks in respect of Euro-denominated bonds issued by various European central banks. In March 2024, NatWest Group companies reached an agreement in principle, subject to final documentation and court approval, to settle the class action. The settlement amount is covered in full by an existing provision.
 
Swaps antitrust litigation
NWM Plc and other members of NatWest Group, including NatWest Group plc, as well as a number of other interest rate swap dealers, are defendants in several cases pending in the SDNY alleging violations of the US antitrust laws in the market for interest rate swaps. There is a consolidated class action complaint on behalf of persons who entered into interest rate swaps with the defendants, as well as non-class action claims by three swap execution facilities. In March 2024, NatWest Group companies reached an agreement in principle, subject to documentation and court approval, to settle the class action. The settlement amount is covered in full by an existing provision.
 
1MDB litigation
A Malaysian court claim was served in Switzerland in November 2022 by 1MDB, a sovereign wealth fund, in which Coutts & Co Ltd was named, along with six others, as a defendant in respect of losses allegedly incurred by 1MDB. It is claimed that Coutts & Co Ltd is liable as a constructive trustee for having dishonestly assisted the directors of 1MDB in the breach of their fiduciary duties by failing (amongst other alleged claims) to undertake due diligence in relation to a customer of Coutts & Co Ltd, through which funds totalling c.US$1 billion were received and paid out between 2009 and 2011. The claimant seeks the return of that amount plus interest. Coutts & Co Ltd filed an application in January 2023 challenging the validity of service and the Malaysian court's jurisdiction to hear the claim, and a hearing took place in February 2024. In March 2024, the court granted that application. The claimant has filed a Notice of Appeal.
 
Coutts & Co Ltd (a subsidiary of RBS Netherlands Holdings B.V., which in turn is a subsidiary of NWM Plc) is a company registered in Switzerland and is in wind-down following the announced sale of its business assets in 2015.

 
Notes continued
 
3. Related party transactions
The UK Government's shareholding in NatWest Group plc is managed by UK Government Investments Limited, a company wholly owned by the UK Government. At 31 March 2024 HM Treasury's holding in NatWest Group plc's ordinary shares was 29.82% (31 December 2023 - 37.97%). As a result, the UK Government through HM Treasury is no longer the controlling shareholder of NatWest Group plc as per UK listing rules. The UK Government and UK Government-controlled bodies remain related parties of the NatWest Group. We are supporting the UK Government plans for a possible retail offer of its shareholding.
 
4. Post balance sheet events
As part of the ongoing on-market share buyback programme, NatWest Group plc has repurchased and cancelled a further 15.5 million shares since 31 March 2024 for a total consideration (excluding fees) of £42.4 million.
 
Other than as disclosed there have been no significant events between 31 March 2024 and the date of approval of these accounts that would require a change to or additional disclosure in the condensed consolidated financial statements.
 
 
 
Additional information
 
Presentation of information
'Parent company' refers to NatWest Group plc, and 'NatWest Group', 'Group' or 'we' refers to NatWest Group plc and its subsidiaries. The term 'NWH Group' refers to NatWest Holdings Limited ('NWH Limited') and its subsidiary and associated undertakings. The term 'NWM Group' refers to NatWest Markets Plc ('NWM Plc') and its subsidiary and associated undertakings. The term 'NWM N.V.' refers to NatWest Markets N.V. The term 'NWM N.V. Group' refers to NatWest Markets N.V. and its subsidiary and associated undertakings The term 'NWMSI' refers to NatWest Markets Securities, Inc. The term 'RBS plc' refers to The Royal Bank of Scotland plc. The term 'NWB Plc' refers to National Westminster Bank Plc. The term 'UBIDAC' refers to Ulster Bank Ireland DAC. The term 'RBSI Ltd' refers to The Royal Bank of Scotland International Limited.
 
NatWest Group publishes its financial statements in pounds sterling ('£' or 'sterling'). The abbreviations '£m' and '£bn' represent millions and thousands of millions of pounds sterling ('GBP'), respectively, and references to 'pence' represent pence where amounts are denominated in pounds sterling. Reference to 'dollars' or '$' are to United States of America ('US') dollars. The abbreviations '$m' and '$bn' represent millions and thousands of millions of dollars, respectively. The abbreviation '€' represents the 'euro', and the abbreviations '€m' and '€bn' represent millions and thousands of millions of euros, respectively.
 
Statutory results
Financial information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 ('the Act'). The statutory accounts for the year ended 31 December 2023 will be filed with the Registrar of Companies. The report of the auditor on those statutory accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Act.
 
Contacts
 
 Analyst enquiries:
 
Claire Kane, Investor Relations
 
+44 (0) 20 7672 1758
 
 Media enquiries:
 
NatWest Group Press Office
 
+44 (0) 131 523 4205
 
 
 
Management presentation
Date: 26 April 2024
Time: 9:00AM UK time
 
 
Zoom ID: 967 0606 8948
 
Available at https://investors.natwestgroup.com/results-centre
 
 
−       Q1 2024 Interim Management Statement and presentation slides.
 
−       A financial supplement containing income statement, balance sheet and segment performance for the five quarters ended 31 March 2024.
 
−       NatWest Group Pillar 3 supplement at 31 March 2024.
 
 
 
 
Forward-looking statements
 
This document may include forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, such as statements that include, without limitation, the words 'expect', 'estimate', 'project', 'anticipate', 'commit', 'believe', 'should', 'intend', 'will', 'plan', 'could', 'probability', 'risk', 'Value-at-Risk (VaR)', 'target', 'goal', 'objective', 'may', 'endeavour', 'outlook', 'optimistic', 'prospects' and similar expressions or variations on these expressions. These statements concern or may affect future matters, such as NatWest Group's future economic results, business plans and strategies.  In particular, this document may include forward-looking statements relating to NatWest Group plc in respect of, but not limited to: its economic and political risks, its financial position, profitability and financial performance (including financial, capital, cost savings and operational targets), the implementation of its strategy, its climate and sustainability-related targets, increasing competition from incumbents, challengers and new entrants and disruptive technologies, its access to adequate sources of liquidity and funding, its regulatory capital position and related requirements, its exposure to third party risks, its ongoing compliance with the UK ring-fencing regime and ensuring operational continuity in resolution, its impairment losses and credit exposures under certain specified scenarios, substantial regulation and oversight, ongoing legal, regulatory and governmental actions and investigations, and NatWest Group's exposure to operational risk, conduct risk, cyber, data and IT risk, financial crime risk, key person risk and credit rating risk. Forward-looking statements are subject to a number of risks and uncertainties that might cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statements. Factors that could cause or contribute to differences in current expectations include, but are not limited to, future growth initiatives (including acquisitions, joint ventures and strategic partnerships), the outcome of legal, regulatory and governmental actions and investigations, the level and extent of future impairments and write-downs, legislative, political, fiscal and regulatory developments, accounting standards, competitive conditions, technological developments, interest and exchange rate fluctuations, general economic and political conditions and the impact of climate-related risks and the transitioning to a net zero economy. These and other factors, risks and uncertainties that may impact any forward-looking statement or NatWest Group plc's actual results are discussed in NatWest Group plc's 2023 Annual Report on Form 20-F, NatWest Group plc's Interim Management Statement for Q1 2024 on Form 6-K, and its other public filings. The forward-looking statements contained in this document speak only as of the date of this document and NatWest Group plc does not assume or undertake any obligation or responsibility to update any of the forward-looking statements contained in this document, whether as a result of new information, future events or otherwise, except to the extent legally required.
 
 
 
 
Appendix
 
Non-IFRS financial measures
 
 
 
 
 
Non-IFRS financial measures
NatWest Group prepares its financial statements in accordance with UK-adopted International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS). This document contains a number of non-IFRS measures, also known as alternative performance measures, defined under the European Securities and Markets Authority guidance or non-GAAP financial measures in accordance with SEC regulations. These measures are adjusted for notable and other defined items which management believes are not representative of the underlying performance of the business and which distort period-on-period comparison.
 
The non-IFRS measures provide users of the financial statements with a consistent basis for comparing business performance between financial periods and information on elements of performance that are one-off in nature. The non-IFRS measures also include a calculation of metrics that are used throughout the banking industry.
 
These non-IFRS measures are not a substitute for IFRS measures and should not be considered in isolation. A reconciliation to the closest IFRS measure is presented where appropriate.
 
1. Total income excluding notable items
 
Total income excluding notable items is calculated as total income less notable items.
 
The exclusion of notable items aims to remove the impact of one-offs and other volatile items which may distort period-on-period comparisons.
 
 
Quarter ended 
 
31 March
31 December
31 March
 
2024
2023
2023
 
£m
£m
£m
Continuing operations
 
 
 
Total income
3,475
3,537
3,876
Less notable items
 
 
 
   Commercial & Institutional 
 
 
 
      Own credit adjustments (OCA)
(5)
(5)
6
      Tax interest on prior periods
-
3
-
   Central items & other
 
 
 
      Liquidity Asset Bond sale losses
-
(10)
(13)
      Share of associate profits/(losses) for Business Growth Fund
7
1
(12)
      Interest and FX risk management derivatives not in accounting hedge 
 
 
 
         relationships
59
(21)
75
      FX recycling gains
-
162
-
      Tax interest on prior periods
-
(35)
-
 
61
95
56
Total income excluding notable items
3,414
3,442
3,820
 
 
 
 
Non-IFRS financial measures continued
 
2. Operating expenses - management view
 
The management analysis of operating expenses shows litigation and conduct costs on a separate line. These amounts are included within staff costs and other administrative expenses in the statutory analysis. Other operating expenses excludes litigation and conduct costs, which are more volatile and may distort period-on-period comparisons.
 
 
Quarter ended
 
31 March 2024
 
Litigation and
Other
Statutory
 
conduct
operating
operating
 
costs
expenses
expenses
 
£m
£m
£m
Continuing operations
 
 
 
Staff costs
15
1,047
1,062
Premises and equipment
- 
293
293
Other administrative expenses
9
415
424
Depreciation and amortisation
- 
273
273
Total 
24
2,028
2,052
 
 
 
 
 
Quarter ended
 
31 December 2023
 
Litigation and
Other
Statutory
 
conduct
operating
operating
 
costs
expenses
expenses
 
£m
£m
£m
Continuing operations
 
 
 
Staff costs
16
961
977
Premises and equipment
- 
308
308
Other administrative expenses
97
521
618
Depreciation and amortisation
- 
251
251
Total 
113
2,041
2,154
 
 
 
 
 
Quarter ended
 
31 March 2023
 
Litigation and
Other
Statutory
 
conduct
operating
operating
 
costs
expenses
expenses
 
£m
£m
£m
Continuing operations
 
 
 
Staff costs
14
1,026
1,040
Premises and equipment
- 
286
286
Other administrative expenses
42
408
450
Depreciation and amortisation
- 
212
212
Total 
56
1,932
1,988
 
 
 
 
Non-IFRS financial measures continued
 
3. Cost:income ratio (excl. litigation and conduct)
 
The cost:income ratio (excl. litigation and conduct) is calculated as other operating expenses (operating expenses less litigation and conduct costs) divided by total income.
 
Litigation and conduct costs are excluded as they are one-off in nature, difficult to forecast for Outlook purposes and distort period-on-period comparisons. The calculation of the cost:income ratio (excl. litigation and conduct) is shown below, along with a comparison to cost:income ratio calculated using operating expenses.
 
 
 
 
 
 
Total
 
Retail
Private
Commercial & 
Central items 
NatWest
 
Banking
Banking
Institutional
& other
Group
Quarter ended 31 March 2024
£m
£m
£m
£m
£m
Continuing operations
 
 
 
 
 
Operating expenses
773
181
1,051
47
2,052
Less litigation and conduct costs
(6)
(1)
(31)
14
(24)
Other operating expenses
767
180
1,020
61
2,028
 
 
 
 
 
 
Total income
1,325
208
1,859
83
3,475
 
 
 
 
 
 
Cost:income ratio 
58.3%
87.0%
56.5%
nm
59.1%
Cost:income ratio (excl. litigation and conduct)
57.9%
86.5%
54.9%
nm
58.4%
 
 
 
 
 
 
Quarter ended 31 December 2023
 
 
 
 
 
Continuing operations
 
 
 
 
 
Operating expenses
681
206
1,092
175
2,154
Less litigation and conduct costs
(34)
2 
(78)
(3)
(113)
Other operating expenses
647
208
1,014
172
2,041
 
 
 
 
 
 
Total income
1,369 
209 
1,832 
127 
3,537 
 
 
 
 
 
 
Cost:income ratio 
49.7%
98.6%
59.6%
nm
60.9%
Cost:income ratio (excl. litigation and conduct)
47.3%
99.5%
55.3%
nm
57.7%
 
 
 
 
 
 
Quarter ended 31 March 2023
 
 
 
 
 
Continuing operations
 
 
 
 
 
Operating expenses
696
155
1,003
134
1,988
Less litigation and conduct costs
(3)
(3)
(44)
(6)
(56)
Other operating expenses
693
152
959
128
1,932
 
 
 
 
 
 
Total income
1,604 
296 
1,953 
23 
3,876 
 
 
 
 
 
 
Cost:income ratio 
43.4%
52.4%
51.4%
nm
51.3%
Cost:income ratio (excl. litigation and conduct)
43.2%
51.4%
49.1%
nm
49.8%
 
 
4. NatWest Group return on tangible equity
 
Return on tangible equity comprises annualised profit or loss for the period attributable to ordinary shareholders divided by average tangible equity. Average tangible equity is average total equity excluding average non-controlling interests, average other owners equity and average intangible assets.
 
This measure shows the return NatWest Group generates on tangible equity deployed. It is used to determine relative performance of banks and used widely across the sector, although different banks may calculate the rate differently. A reconciliation is shown below including a comparison to the nearest GAAP measure: return on equity. This comprises profit attributable to ordinary shareholders divided by average total equity.
 
Quarter ended or as at
 
31 March
31 December
31 March
 
2024
2023
2023
NatWest Group return on tangible equity 
£m
£m
£m
Profit attributable to ordinary shareholders 
918
1,229
1,279
Annualised profit attributable to ordinary shareholders 
3,672
4,916
5,116
 
 
 
 
Average total equity 
37,490
36,134
37,195
Adjustment for average other owners' equity and intangible assets 
(11,684)
(11,686)
(11,319)
Adjusted total tangible equity 
25,806
24,448
25,876
 
 
 
 
Return on equity
9.8%
13.6%
13.8%
Return on tangible equity
14.2%
20.1%
19.8%
 
 
 
Non-IFRS financial measures continued
 
5. Segmental return on equity
 
Segmental return on equity comprises segmental operating profit or loss, adjusted for paid-in equity and tax, divided by average notional equity. Average RWAe is defined as average segmental RWAs incorporating the effect of capital deductions. This is multiplied by an allocated equity factor for each segment to calculate the average notional equity.
 
This measure shows the return generated by operating segments on equity deployed.
 
 
Quarter ended or as at
 
Retail
Private
Commercial & 
Quarter ended 31 March 2024
Banking
Banking
Institutional
Operating profit (£m)
489
33
769
Paid-in equity cost allocation (£m)
(16)
(4)
(40)
Adjustment for tax (£m)
(132)
(8)
(182)
Adjusted attributable profit (£m)
341
21
547
Annualised adjusted attributable profit (£m)
1,362
84
2,187
Average RWAe (£bn)
61.7
11.2
109.0
Equity factor
13.4%
11.2%
13.8%
Average notional equity (£bn)
8.3
1.3
15.0
Return on equity
16.5%
6.7%
14.6%
 
 
 
 
Quarter ended 31 December 2023
 
 
 
Operating profit (£m)
585 
(2)
725 
Paid-in equity cost allocation (£m)
(12)
(6)
(40)
Adjustment for tax (£m)
(160)
2 
(171)
Adjusted attributable profit (£m)
413 
(6)
514 
Annualised adjusted attributable profit (£m)
1,650 
(23)
2,055 
Average RWAe (£bn)
60.5 
11.4 
109.0 
Equity factor
13.5%
11.5%
14.0%
Average notional equity (£bn)
8.2 
1.3 
15.3 
Return on equity
20.2%
(1.8%)
13.5%
 
 
 
 
Quarter ended 31 March 2023
 
 
 
Operating profit (£m)
794 
133 
994 
Paid-in equity cost allocation (£m)
(15)
(5)
(44)
Adjustment for tax (£m)
(218)
(36)
(238)
Adjusted attributable profit (£m)
561 
92 
713 
Annualised adjusted attributable profit (£m)
2,244 
369 
2,850 
Average RWAe (£bn)
55.4 
11.2 
104.0 
Equity factor
13.5%
11.5%
14.0%
Average notional equity (£bn)
7.5 
1.3 
14.6 
Return on equity
30.0%
28.5%
19.5%
 
 
6. Net interest margin and average interest earning assets (IEA)
 
Net interest margin is net interest income, as a percentage of average IEA.
 
NatWest Group has previously reported Bank net interest margin, calculated as net interest income as a percentage of average IEA, excluding the liquid asset buffer. Liquid asset buffer consists of assets held by NatWest Group, such as cash and balances at central banks and debt securities in issue, that can be used to ensure repayment of financial obligations as they fall due.
 
Bank net interest margin is a less relevant measure now that interest rates have increased. Going forward we will report net interest margin as net interest income as a percentage of average IEA, which we see as a more useful measure of how we manage spreads between our interest earning assets, including the liquid asset buffer, and interest bearing liabilities.
 
Average IEA are average IEA of the banking business of NatWest Group. This primarily consists of cash and balances at central banks, loans to banks, loans to customers and other financial assets mostly comprising of debt securities. Average IEA shows the average asset base generating interest over the period and is used in the calculation of net interest margin.
 
 
 
Non-IFRS financial measures continued
 
7. Tangible net asset value (TNAV) per ordinary share
 
TNAV per ordinary share is calculated as tangible equity divided by the number of ordinary shares in issue.
 
This is a measure used by external analysts in valuing the bank and allows for comparison with other per ordinary share metrics including the share price. A reconciliation is shown below including a comparison to the nearest GAAP measure: net asset value (NAV) per ordinary share. This comprises ordinary shareholders' interests divided by the number of ordinary shares in issue.
 
 
Quarter ended or as at
 
31 March
31 December
31 March
 
2024
2023
2023
Ordinary shareholders' interests (£m)
33,958
33,267
33,817
Less intangible assets (£m)
(7,598)
(7,614)
(7,171)
Tangible equity (£m)
26,360
25,653
26,646
 
 
 
 
Ordinary shares in issue (millions) (1)
8,727
8,792
9,581
 
 
 
 
NAV per ordinary share (pence)
389p
378p
353p
TNAV per ordinary share (pence)
302p
292p
278p
 
(1)
The number of ordinary shares in issue excludes own shares held.
 
 
8. Customer deposits excluding central items
 
Customer deposits excluding central items is calculated as total NatWest Group customer deposits excluding Central items & other customer deposits.
 
Central items & other includes Treasury repo activity and Ulster Bank RoI. The exclusion of Central items & other removes the volatility relating to Treasury repo activity and the reduction of deposits as part of our withdrawal from the Republic of Ireland. These items may distort period-on-period comparisons and their removal gives the user of the financial statements a better understanding of the movements in customer deposits.
 
 
As at
 
31 March
31 December
31 March
 
2024
2023
2023
 
£bn
£bn
£bn
Customer deposits
432.8
431.4
430.5
Less Central items & other
(12.8)
(12.3)
(8.7)
Customer deposits excluding central items
420.0
419.1
421.8
 
 
 
Non-IFRS financial measures continued
 
9. Net loans to customers excluding central items
 
Net loans to customers excluding central items is calculated as total NatWest Group net loans to customers excluding Central items & other net loans to customers.
 
Central items & other includes Treasury reverse repo activity and Ulster Bank RoI. The exclusion of Central items & other removes the volatility relating to Treasury reverse repo activity and the reduction of loans to customers as part of our withdrawal from the Republic of Ireland. This allows for better period-on-period comparisons and gives the user of the financial statements a better understanding of the movements in net loans to customers.
 
 
 
As at
 
31 March
31 December
31 March
 
2024
2023
2023
 
£bn
£bn
£bn
Net loans to customers (amortised cost)
378.0
381.4
374.2
Less Central items & other
(21.0)
(25.8)
(21.8)
Net loans to customers excluding central items
357.0
355.6
352.4
 
 
10. Loan:deposit ratio (excl. repos and reverse repos)
 
Loan:deposit ratio (excl. repos and reverse repos) is calculated as net loans to customer held at amortised cost excluding reverse repos divided by customer deposits excluding repos. This is a common metric used to assess liquidity.
 
The removal of repos and reverse repos reduces volatility and presents the ratio on a basis that is comparable to UK peers. A reconciliation is shown below including a comparison to the nearest GAAP measure: loan:deposit ratio. This is calculated as net loans to customers held at amortised cost divided by customer deposits.
 
 
As at
 
31 March
31 December
31 March
 
2024
2023
2023
 
£m
£m
£m
Net loans to customers - amortised cost 
378,010
381,433
374,214
Less reverse repos
(23,120)
(27,117)
(21,743)
Loans to customers  - amortised cost (excl. reverse repos)
354,890
354,316
352,471
 
 
 
 
Customer deposits 
432,793
431,377
430,537
Less repos
(11,437)
(10,844)
(5,989)
Customer deposits (excl. repos)
421,356
420,533
424,548
 
 
 
 
Loan:deposit ratio 
87%
88%
87%
Loan:deposit ratio (excl. repos and reverse repos)
84%
84%
83%
 
 
 
11. Loan impairment rate
 
Loan impairment rate is the annualised loan impairment charge divided by gross customer loans. This measure is used to assess the credit quality of the loan book.
 
 
Quarter ended or as at
 
31 March
31 December
31 March
 
2024
2023
2023
Loan impairment charge/(release) (£m)
93
126
70
Annualised loan impairment charge/(release) (£m)
372
504
280
 
 
 
 
Gross customer loans (£bn)
381.6
385.0
377.6
 
 
 
 
Loan impairment rate 
10bps
13bps
7bps
 
 
 
Non-IFRS financial measures continued
 
12. Funded assets
 
Funded assets is calculated as total assets less derivative assets. This measure allows review of balance sheet trends exclusive of the volatility associated with derivative fair values.
 
 
As at
 
31 March
31 December
31 March
 
2024
2023
2023
 
£m
£m
£m
Total assets
697,452
692,673
695,624
Less derivative assets
(68,133)
(78,904)
(79,420)
Funded assets
629,319
613,769
616,204
 
13. AUMA
 
AUMA comprises both assets under management (AUMs) and assets under administration (AUAs) serviced through the Private Banking segment. AUMs comprise assets where the investment management is undertaken by Private Banking on behalf of Private Banking, Retail Banking and Commercial & Institutional customers. AUAs comprise i) third party assets held on an execution-only basis in custody by Private Banking, Retail Banking and Commercial & Institutional for their customers, for which the execution services are supported by Private Banking, and for which Private Banking receives a fee for providing investment management and execution services to Retail Banking and Commercial & Institutional business segments ii) AUA of Cushon, acquired on 1 June 2023, which are supported by Private Banking and held and managed by third parties.
 
This measure is tracked and reported as the amount of funds that we manage or administer directly impacts the level of investment income that we receive.
 
 
14. AUM net flows
 
AUM net flows refers to client cash inflows and outflows relating to investment products (this can include transfers from savings accounts). AUM net flows excludes the impact of European Economic Area (EEA) resident client outflows following the UK's exit from the EU and Russian client outflows since Q1 2022.
 
AUM net flows is reported and tracked to monitor the business performance of new business inflows and management of existing client withdrawals across Retail Banking, Private Banking and Commercial & Institutional Banking.
 
 
15. Wholesale funding
 
Wholesale funding comprises deposits by banks (excluding repos), debt securities in issue and subordinated liabilities.
 
Funding risk is the risk of not maintaining a diversified, stable and cost-effective funding base. The disclosure of wholesale funding highlights the extent of our diversification and how we mitigate funding risk.
 
 
16. Third party rates
 
Third party customer asset rate is calculated as interest receivable on third-party loans to customers as a percentage of third-party loans to customers. This excludes assets of disposal groups, intragroup items, loans to banks and liquid asset portfolios. Third party customer funding rate reflects interest payable or receivable on third-party customer deposits, including interest bearing and non-interest bearing customer deposits. Intragroup items, bank deposits, debt securities in issue and subordinated liabilities are excluded for customer funding rate calculation.
 
These metrics help investors better understand our net interest margin and interest rate sensitivity.
 
 
17. Climate and sustainable funding and financing
 
The climate and sustainable funding and financing metric is used by NatWest Group to measure the level of support it provides customers, through lending products and underwriting activities, to help in their transition towards a net zero, climate resilient and sustainable economy. We have a target to provide £100 billion of climate and sustainable funding and financing between the 1 of July 2021 and the end of 2025. As part of this, we aim to provide at least £10 billion in lending for residential properties with EPC ratings A and B between 1 January 2023 and the end of 2025.
 
 
 
Legal Entity Identifier: 2138005O9XJIJN4JPN90
 
 
 
 
 
Date: 26 April 2024
 
 
 
NATWEST GROUP plc (Registrant)
 
 
 
By: /s/ Jan Cargill
 
 
 
Name: Jan Cargill
 
Title: Chief Governance Officer and Company Secretary