Condensed consolidated income statement
for the period ended 30 June 2024
(unaudited)
|
|
Half year
ended
|
|
|
30 June
|
30
June
|
|
|
2024
|
2023
|
|
|
£m
|
£m
|
Interest receivable
|
|
12,290
|
9,482
|
Interest payable
|
|
(6,882)
|
(3,756)
|
Net interest income
|
|
5,408
|
5,726
|
Fees and commissions
receivable
|
|
1,567
|
1,459
|
Fees and commissions
payable
|
|
(348)
|
(315)
|
Trading income
|
|
350
|
418
|
Other operating income
|
|
157
|
439
|
Non-interest income
|
|
1,726
|
2,001
|
Total income
|
|
7,134
|
7,727
|
Staff costs
|
|
(2,147)
|
(2,005)
|
Premises and equipment
|
|
(579)
|
(570)
|
Other administrative
expenses
|
|
(823)
|
(871)
|
Depreciation and
amortisation
|
|
(508)
|
(469)
|
Operating expenses
|
|
(4,057)
|
(3,915)
|
Profit before impairment losses
|
|
3,077
|
3,812
|
Impairment losses
|
|
(48)
|
(223)
|
Operating profit before tax
|
|
3,029
|
3,589
|
Tax charge
|
|
(801)
|
(1,061)
|
Profit from continuing operations
|
|
2,228
|
2,528
|
Profit/(loss) from discontinued operations, net of
tax
|
|
11
|
(108)
|
Profit for the period
|
|
2,239
|
2,420
|
|
|
|
|
Attributable to:
|
|
|
|
Ordinary shareholders
|
|
2,099
|
2,299
|
Paid-in equity holders
|
|
129
|
121
|
Non-controlling
interests
|
|
11
|
-
|
|
|
2,239
|
2,420
|
|
|
|
|
|
|
|
|
Earnings per ordinary share -
continuing operations
|
|
24.1p
|
25.4p
|
Earnings per ordinary share -
discontinued operations
|
|
0.1p
|
(1.1p)
|
Total earnings per share
attributable to ordinary shareholders - basic
|
|
24.2p
|
24.3p
|
Earnings per ordinary share -
fully diluted continuing operations
|
|
23.9p
|
25.2p
|
Earnings per ordinary share -
fully diluted discontinued operations
|
|
0.1p
|
(1.1p)
|
Total earnings per share
attributable to ordinary shareholders - fully diluted
|
|
24.0p
|
24.1p
|
Condensed consolidated statement
of comprehensive income
for the period ended 30 June 2024
(unaudited)
|
Half year
ended
|
|
30 June
|
30
June
|
|
2024
|
2023
|
|
£m
|
£m
|
Profit for the period
|
2,239
|
2,420
|
Items that will not be reclassified subsequently to profit or
loss:
|
|
|
Remeasurement of retirement
benefit schemes
|
(60)
|
(64)
|
Changes in fair value of financial
liabilities designated at fair value through profit or loss (FVTPL)
due to changes in credit risk
|
(26)
|
(4)
|
FVOCI financial assets
|
(33)
|
30
|
Tax
|
44
|
7
|
|
(75)
|
(31)
|
Items that will be reclassified subsequently to profit or
loss when specific conditions are met:
|
|
|
FVOCI financial assets
|
41
|
53
|
Cash flow
hedges (1)
|
121
|
(734)
|
Currency translation
|
(42)
|
(469)
|
Tax
|
(57)
|
127
|
|
63
|
(1,023)
|
Other comprehensive losses after tax
|
(12)
|
(1,054)
|
Total comprehensive income for the period
|
2,227
|
1,366
|
|
|
|
Attributable to:
|
|
|
Ordinary shareholders
|
2,087
|
1,245
|
Paid-in equity holders
|
129
|
121
|
Non-controlling
interests
|
11
|
-
|
|
2,227
|
1,366
|
(1) Refer
to footnote 3 of the consolidated statement of changes in
equity.
Condensed consolidated balance
sheet
as at 30 June 2024
(unaudited)
|
30 June
|
31
December
|
|
2024
|
2023
|
|
£m
|
£m
|
Assets
|
|
|
Cash and balances at central
banks
|
115,833
|
104,262
|
Trading assets
|
45,974
|
45,551
|
Derivatives
|
67,514
|
78,904
|
Settlement balances
|
6,260
|
7,231
|
Loans to banks - amortised
cost
|
5,974
|
6,914
|
Loans to customers - amortised
cost
|
379,331
|
381,433
|
Other financial assets
|
52,604
|
51,102
|
Intangible assets
|
7,590
|
7,614
|
Other assets
|
8,266
|
8,760
|
Assets of disposal
groups
|
992
|
902
|
Total assets
|
690,338
|
692,673
|
|
|
|
Liabilities
|
|
|
Bank deposits
|
25,626
|
22,190
|
Customer deposits
|
432,975
|
431,377
|
Settlement balances
|
7,142
|
6,645
|
Trading liabilities
|
54,167
|
53,636
|
Derivatives
|
60,849
|
72,395
|
Other financial
liabilities
|
58,275
|
55,089
|
Subordinated
liabilities
|
6,032
|
5,714
|
Notes in circulation
|
3,254
|
3,237
|
Other liabilities
|
4,455
|
5,202
|
Total liabilities
|
652,775
|
655,485
|
|
|
|
Equity
|
|
|
Ordinary shareholders'
interests
|
32,831
|
33,267
|
Other owners' interests
|
4,690
|
3,890
|
Owners' equity
|
37,521
|
37,157
|
Non-controlling
interests
|
42
|
31
|
Total equity
|
37,563
|
37,188
|
|
|
|
Total liabilities and equity
|
690,338
|
692,673
|
Condensed consolidated statement
of changes in equity
for the period ended 30 June 2024
(unaudited)
|
Share
|
|
Other
|
|
Other
reserves
|
Total
|
Non
|
|
|
capital
and
|
Paid-in
|
statutory
|
Retained
|
|
Cash flow
|
Foreign
|
|
owners'
|
controlling
|
Total
|
|
share
premium
|
equity
|
reserves
(4)
|
earnings
|
Fair value
|
hedging
(3)
|
exchange
|
Merger
|
equity
|
interests
|
equity
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 1 January 2024
|
10,844
|
3,890
|
2,004
|
10,645
|
(49)
|
(1,899)
|
841
|
10,881
|
37,157
|
31
|
37,188
|
Profit attributable to ordinary
shareholders
|
|
|
|
|
|
|
|
|
|
|
|
and other equity
owners
|
|
|
|
|
|
|
|
|
|
|
|
- continuing operations
|
|
|
|
2,217
|
|
|
|
|
2,217
|
11
|
2,228
|
- discontinued
operations
|
|
|
|
11
|
|
|
|
|
11
|
-
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
Realised gains in period on FVOCI
equity shares
|
|
|
|
2
|
(2)
|
|
|
|
-
|
|
-
|
Remeasurement of retirement
benefit schemes
|
|
|
|
(60)
|
|
|
|
|
(60)
|
|
(60)
|
Changes in fair value of credit in
financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
designated at
FVTPL due to own credit risk
|
|
|
|
(26)
|
|
|
|
|
(26)
|
|
(26)
|
Unrealised gains
|
|
|
|
|
1
|
|
|
|
1
|
|
1
|
Amounts recognised in
equity (3)
|
|
|
|
|
|
(559)
|
|
|
(559)
|
|
(559)
|
Retranslation of net
assets
|
|
|
|
|
|
|
(118)
|
|
(118)
|
|
(118)
|
Gains on hedges of net
assets
|
|
|
|
|
|
|
79
|
|
79
|
|
79
|
Amount transferred from equity to
earnings
|
|
|
|
|
7
|
680
|
(3)
|
|
684
|
|
684
|
Tax
|
|
|
|
32
|
-
|
(34)
|
(11)
|
|
(13)
|
|
(13)
|
Total comprehensive income/(loss)
|
-
|
-
|
-
|
2,176
|
6
|
87
|
(53)
|
-
|
2,216
|
11
|
2,227
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary share dividends
paid
|
|
|
|
(1,008)
|
|
|
|
|
(1,008)
|
-
|
(1,008)
|
Paid in equity
dividends
|
|
|
|
(129)
|
|
|
|
|
(129)
|
|
(129)
|
Securities issued
|
|
800
|
|
|
|
|
|
|
800
|
|
800
|
Shares repurchased during the
period (1,2)
|
(411)
|
|
411
|
(1,118)
|
|
|
|
|
(1,118)
|
|
(1,118)
|
Share based remuneration and
shares vested under
|
|
|
|
|
|
|
|
|
|
|
|
employee share
schemes
|
|
|
128
|
15
|
|
|
|
|
143
|
|
143
|
Own shares acquired
|
|
|
(540)
|
|
|
|
|
|
(540)
|
|
(540)
|
Acquisition of
subsidiary
|
|
|
|
|
|
|
|
|
-
|
|
-
|
At 30 June 2024
|
10,433
|
4,690
|
2,003
|
10,581
|
(43)
|
(1,812)
|
788
|
10,881
|
37,521
|
42
|
37,563
|
Condensed consolidated statement
of changes in equity for the period ended 30 June 2023 (unaudited)
continued
|
Share
|
|
Other
|
|
Other
reserves
|
Total
|
Non
|
|
|
capital
and
|
Paid-in
|
statutory
|
Retained
|
|
Cash
flow
|
Foreign
|
|
owners'
|
controlling
|
Total
|
|
share
premium
|
equity
|
reserves
(4)
|
earnings
|
Fair
value
|
hedging
(3)
|
exchange
|
Merger
|
equity
|
interests
|
equity
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 1 January 2023
|
11,700
|
3,890
|
1,393
|
10,019
|
(102)
|
(2,771)
|
1,478
|
10,881
|
36,488
|
8
|
36,496
|
Profit/(loss) attributable to
ordinary shareholders
|
|
|
|
|
|
|
|
|
|
|
|
and other equity
owners
|
|
|
|
|
|
|
|
|
|
|
|
- continuing operations
|
|
|
|
2,528
|
|
|
|
|
2,528
|
-
|
2,528
|
- discontinued
operations
|
|
|
|
(108)
|
|
|
|
|
(108)
|
-
|
(108)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
Realised gains in period on FVOCI
equity shares
|
|
|
|
7
|
(7)
|
|
|
|
-
|
|
-
|
Remeasurement of retirement
benefit schemes
|
|
|
|
(64)
|
|
|
|
|
(64)
|
|
(64)
|
Changes in fair value of credit in
financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
designated at
FVTPL due to own credit risk
|
|
|
|
(4)
|
|
|
|
|
(4)
|
|
(4)
|
Unrealised gains
|
|
|
|
|
60
|
|
|
|
60
|
|
60
|
Amounts recognised in
equity (3)
|
|
|
|
|
|
(948)
|
|
|
(948)
|
|
(948)
|
Retranslation of net
assets
|
|
|
|
|
|
|
(308)
|
|
(308)
|
|
(308)
|
Gains on hedges of net
assets
|
|
|
|
|
|
|
162
|
|
162
|
|
162
|
Amount transferred from equity to
earnings (5)
|
|
|
|
|
23
|
214
|
(322)
|
|
(85)
|
|
(85)
|
Tax
|
|
|
|
12
|
(16)
|
161
|
(24)
|
|
133
|
|
133
|
Total comprehensive income/(loss)
|
-
|
-
|
-
|
2,371
|
60
|
(573)
|
(492)
|
-
|
1,366
|
-
|
1,366
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary share dividends
paid
|
|
|
|
(965)
|
|
|
|
|
(965)
|
-
|
(965)
|
Paid in equity
dividends
|
|
|
|
(121)
|
|
|
|
|
(121)
|
|
(121)
|
Shares repurchased during the
period (1,2)
|
(687)
|
|
687
|
(1,713)
|
|
|
|
|
(1,713)
|
|
(1,713)
|
Share based remuneration and
shares vested under
|
|
|
|
|
|
|
|
|
|
|
|
employee share
schemes
|
|
|
77
|
(15)
|
|
|
|
|
62
|
|
62
|
Own shares acquired
|
|
|
(359)
|
|
|
|
|
|
(359)
|
|
(359)
|
Acquisition of
subsidiary
|
|
|
|
|
|
|
|
|
-
|
32
|
32
|
At 30 June 2023
|
11,013
|
3,890
|
1,798
|
9,576
|
(42)
|
(3,344)
|
986
|
10,881
|
34,758
|
40
|
34,798
|
(1)
|
As part of the On Market Share
Buyback Programmes NatWest Group plc repurchased and cancelled
161.9 million (June 2023 - 301.4 million) shares, of which 2.2
million were settled in July 2024. The total consideration of these
shares excluding fees was £410.8 million (June 2023 - £804.2
million), of which £6.8 million were settled in July 2024. Included
in the retained earnings reserve movement is 2.3 million shares
which were repurchased and cancelled in December 2023, settled in
January 2024 for a total consideration of £4.9 million . The
nominal value of the share cancellations has been transferred to
the capital redemption reserve.0
|
(2)
|
In June 2024, there was an
agreement to buy 392.4 million (May 2023 - 469.2 million) ordinary
shares of the Company from His Majesty's Treasury (HM Treasury) at
316.2 pence per share (May 2023 - 268.4 pence per share) for
total consideration of £1.2 billion (2023 - £1.3 billion). NatWest
Group cancelled 222.4 million (336.2 million) of the purchased
ordinary shares, amounting to £706.9 million (2023 - £906.9
million) excluding fees and held the remaining 170.0 million (2023
- 133 million) shares as Own Shares Held, amounting to £540.2
million (2023 - £358.8 million) excluding fees. The nominal
value of the share cancellation has been transferred to the capital
redemption reserve.
|
(3)
|
The change in the cash flow
hedging reserve is driven from realised accrued interest
transferred into the income statement. This is offset by a loss due
to an increase in swap rates compared to 31 December 2023. The
portfolio of hedging instruments is predominantly receive fixed
swaps. The unrealised losses on cash flow hedge reserves are mainly
driven by deferral of losses on GBP net received fixed swaps as
interest rates have increased.
|
(4)
|
Other statutory reserves consist
of Capital redemption reserves of £2,918 million (2023 - £2,338
million) and Own shares held reserves of £915 million (2023 - £540
million).
|
(5)
|
Includes £305 million FX recycled
to profit or loss upon completion of a capital repayment by UBIDAC
in 2023.
|
Condensed consolidated cash flow
statement
for the period ended 30 June 2024
(unaudited)
|
Half year
ended
|
|
30 June
|
30
June
|
2024
|
2023
|
|
£m
|
£m
|
Cash flows from operating activities
|
|
|
Operating profit before tax from
continuing operations
|
3,029
|
3,589
|
Operating profit/(loss) before tax
from discontinued operations
|
11
|
(108)
|
Adjustments for non-cash and other
items
|
2,284
|
2,133
|
Net cash flows from trading activities
|
5,324
|
5,614
|
Changes in operating assets and
liabilities
|
9,625
|
(17,376)
|
Net cash flows from operating activities before
tax
|
14,949
|
(11,762)
|
Income taxes paid
|
(877)
|
(631)
|
Net cash flows from operating activities
|
14,072
|
(12,393)
|
Net cash flows from investing activities
|
(1,524)
|
(2,833)
|
Net cash flows from financing activities
|
(2,350)
|
(3,260)
|
Effects of exchange rate changes
on cash and cash equivalents
|
(778)
|
(1,801)
|
Net increase/(decrease) in cash and cash
equivalents
|
9,420
|
(20,287)
|
Cash and cash equivalents at
beginning of period
|
118,824
|
158,449
|
Cash and cash equivalents at end of period
|
128,244
|
138,162
|
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 and in accordance with IAS 34 Interim Financial
Reporting, as adopted by the UK and as issued by the International
Accounting Standards Board (IASB), and the Disclosure Guidance and
Transparency Rules sourcebook of the UK's Financial Conduct
Authority.
Amendments to IFRS effective from 1
January 2024 had no material effect on the condensed consolidated
financial statements.
2. Net interest income
|
Half year
ended
|
|
30 June
|
30
June
|
|
2024
|
2023
|
Continuing operations
|
£m
|
£m
|
Balances at central banks and
loans to banks - amortised cost
|
2,070
|
1,722
|
Loans to customers - amortised
cost
|
8,924
|
7,130
|
Other financial assets
|
1,296
|
630
|
Interest receivable
|
12,290
|
9,482
|
|
|
|
Balances with banks
|
695
|
402
|
Customer deposits
|
4,151
|
1,695
|
Other financial
liabilities
|
1,575
|
1,345
|
Subordinated
liabilities
|
237
|
221
|
Internal funding of trading
businesses
|
224
|
93
|
Interest payable
|
6,882
|
3,756
|
|
|
|
Net interest income
|
5,408
|
5,726
|
Notes continued
3. Non-interest income
|
Half year
ended
|
|
30 June
|
30
June
|
|
2024
|
2023
|
Continuing operations
|
£m
|
£m
|
Net fees and
commissions (1)
|
1,219
|
1,144
|
|
|
|
Foreign exchange
|
140
|
125
|
Interest rate (2)
|
298
|
315
|
Credit
|
(82)
|
(34)
|
Changes in fair value of own debt
and derivative liabilities attributable to own credit risk - debt
securities in issue
|
(7)
|
9
|
Equities, commodities and
other
|
1
|
3
|
Income from trading
activities
|
350
|
418
|
|
|
|
Profit on redemption of own
debt
|
-
|
2
|
Rental income on operating lease
assets and investment property
|
116
|
118
|
Changes in fair value of financial
assets and liabilities designated at fair value through profit or
loss (3)
|
(43)
|
(3)
|
Hedge ineffectiveness
|
12
|
49
|
Loss on disposal of amortised cost
assets and liabilities
|
(1)
|
(2)
|
Loss on disposal of fair value
through other comprehensive income assets
|
(4)
|
(24)
|
Share of profit/(loss) of
associated entities
|
9
|
(17)
|
Other income (4)
|
68
|
316
|
Other operating income
|
157
|
439
|
|
|
|
Non-interest income
|
1,726
|
2,001
|
(1) Refer
to Note 5 for further analysis.
(2)
Includes fair value changes on derivatives which have not been
designated in a hedge accounting relationship and gains and losses
from the management of the NatWest Group's funding requirements
involving the use of derivatives including FX. These are aimed at
managing the interest rate and foreign exchange risk that NatWest
Group is exposed to.
(3)
Includes related derivatives.
(4)
Includes income from instruments that have failed solely payments
of principal and interest testing under IFRS 9. 30 June 2023
Includes £305 million FX recycled to profit or loss upon completion
of a capital repayment by UBIDAC.
Notes continued
4. Operating expenses
|
Half year
ended
|
|
30 June
|
30
June
|
|
2024
|
2023
|
Continuing operations
|
£m
|
£m
|
Salaries
|
1,254
|
1,252
|
Bonus awards
|
223
|
217
|
Temporary and contract
costs
|
80
|
106
|
Social security costs
|
187
|
180
|
Pension costs
|
169
|
151
|
-
defined benefit schemes
|
59
|
60
|
-
defined contribution schemes
|
110
|
91
|
Other
|
234
|
99
|
Staff costs
|
2,147
|
2,005
|
|
|
|
Premises and equipment
|
579
|
570
|
Depreciation and
amortisation (1)
|
508
|
469
|
Other administrative
expenses
|
823
|
871
|
Administrative expenses
|
1,910
|
1,910
|
Operating expenses
|
4,057
|
3,915
|
(1) Includes depreciation on right of use assets of £53 million
(30 June 2023 - £53 million).
Notes continued
5. Segmental analysis
The business is organised into the
following reportable segments: Retail Banking, Private Banking, Commercial & Institutional and
Central items & other.
Analysis of operating profit/(loss) before
tax
The following tables provide a
segmental analysis of operating profit/(loss) before tax by the
main income statement captions.
|
Retail
|
Private
|
Commercial
&
|
Central
items
|
|
|
Banking
|
Banking
|
Institutional
|
&
other
|
Total
|
Half year ended 30 June 2024
|
£m
|
£m
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
Net interest income
|
2,475
|
285
|
2,543
|
105
|
5,408
|
Net fees and
commissions
|
211
|
142
|
866
|
-
|
1,219
|
Other non-interest
income
|
4
|
17
|
391
|
95
|
507
|
Total income
|
2,690
|
444
|
3,800
|
200
|
7,134
|
Depreciation and
amortisation
|
(1)
|
-
|
(76)
|
(431)
|
(508)
|
Other operating
expenses
|
(1,469)
|
(356)
|
(2,074)
|
350
|
(3,549)
|
Impairment
(losses)/releases
|
(122)
|
11
|
57
|
6
|
(48)
|
Operating profit
|
1,098
|
99
|
1,707
|
125
|
3,029
|
|
|
|
|
|
|
Half year ended 30 June
2023
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
Net interest income
|
2,908
|
428
|
2,504
|
(114)
|
5,726
|
Net fees and
commissions
|
206
|
125
|
821
|
(8)
|
1,144
|
Other non-interest
income
|
6
|
14
|
423
|
414
|
857
|
Total income
|
3,120
|
567
|
3,748
|
292
|
7,727
|
Depreciation and
amortisation
|
-
|
-
|
(78)
|
(391)
|
(469)
|
Other operating
expenses
|
(1,367)
|
(322)
|
(1,909)
|
152
|
(3,446)
|
Impairment
(losses)/releases
|
(193)
|
(11)
|
(20)
|
1
|
(223)
|
Operating profit
|
1,560
|
234
|
1,741
|
54
|
3,589
|
Notes continued
5. Segmental analysis
Total revenue (1)
|
Retail
|
Private
|
Commercial
&
|
Central
items
|
|
|
Banking
|
Banking
|
Institutional
|
&
other
|
Total
|
Half year ended 30 June 2024
|
£m
|
£m
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
External
|
4,331
|
614
|
7,072
|
2,347
|
14,364
|
Inter-segmental
|
7
|
715
|
(936)
|
214
|
-
|
Total
|
4,338
|
1,329
|
6,136
|
2,561
|
14,364
|
|
|
|
|
|
|
Half year ended 30 June
2023
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
External
|
3,419
|
550
|
5,734
|
2,095
|
11,798
|
Inter-segmental
|
1
|
418
|
(720)
|
301
|
-
|
Total
|
3,420
|
968
|
5,014
|
2,396
|
11,798
|
(1) Total revenue comprises interest receivable, fees and
commissions receivable, income from trading activities and other
operating income.
Total assets and liabilities
|
Retail
|
Private
|
Commercial
&
|
Central
items
|
|
Banking
|
Banking
|
Institutional
|
&
other
|
Total
|
30 June 2024
|
£m
|
£m
|
£m
|
£m
|
£m
|
Assets
|
226,457
|
27,172
|
381,899
|
54,810
|
690,338
|
Liabilities
|
195,454
|
39,745
|
356,539
|
61,037
|
652,775
|
|
|
|
|
|
|
31 December 2023
|
|
|
|
|
|
Assets
|
228,684
|
26,894
|
384,958
|
52,137
|
692,673
|
Liabilities
|
191,936
|
37,806
|
359,766
|
65,977
|
655,485
|
Notes continued
5. Segmental analysis
continued
Analysis of net fees and commissions
|
Retail
|
Private
|
Commercial
&
|
Central
items
|
|
|
Banking
|
Banking
|
Institutional
|
&
other
|
Total
|
Half year ended 30 June 2024
|
£m
|
£m
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
Fees and commissions receivable
|
|
|
|
|
|
- Payment services
|
165
|
20
|
335
|
-
|
520
|
- Credit and debit card fees
|
196
|
6
|
130
|
2
|
334
|
- Lending and financing
|
9
|
3
|
372
|
-
|
384
|
- Brokerage
|
17
|
4
|
21
|
-
|
42
|
- Investment management, trustee and fiduciary
services
|
1
|
113
|
24
|
9
|
147
|
- Underwriting fees
|
-
|
-
|
93
|
-
|
93
|
- Other
|
4
|
6
|
52
|
(15)
|
47
|
Total
|
392
|
152
|
1,027
|
(4)
|
1,567
|
Fees and commissions
payable
|
(181)
|
(10)
|
(161)
|
4
|
(348)
|
Net fees and commissions
|
211
|
142
|
866
|
-
|
1,219
|
|
|
|
|
|
|
Half year ended 30 June
2023
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
Fees and commissions receivable
|
|
|
|
|
|
- Payment services
|
159
|
16
|
332
|
3
|
510
|
- Credit and debit card fees
|
197
|
6
|
129
|
2
|
334
|
- Lending and financing
|
8
|
3
|
335
|
1
|
347
|
- Brokerage
|
18
|
3
|
21
|
-
|
42
|
- Investment management, trustee and fiduciary
services
|
1
|
105
|
22
|
-
|
128
|
- Underwriting fees
|
-
|
-
|
71
|
-
|
71
|
- Other
|
1
|
2
|
31
|
(7)
|
27
|
Total
|
384
|
135
|
941
|
(1)
|
1,459
|
Fees and commissions
payable
|
(178)
|
(10)
|
(120)
|
(7)
|
(315)
|
Net fees and commissions
|
206
|
125
|
821
|
(8)
|
1,144
|
Notes continued
6. Tax
The actual tax charge differs from
the expected tax charge computed by applying the standard UK
corporation tax rate of 25% (2023 - 23.5%), as analysed
below:
|
Half year
ended
|
|
30 June
|
30
June
|
2024
|
2023
|
Continuing operations
|
£m
|
£m
|
Profit before tax
|
3,029
|
3,589
|
|
|
|
Expected tax charge
|
(757)
|
(843)
|
Losses and temporary differences
in period where no deferred tax assets recognised
|
(10)
|
(38)
|
Foreign profits taxed at other
rates
|
17
|
(21)
|
Items not allowed for
tax:
|
|
|
- losses on disposals and write-downs
|
(9)
|
(1)
|
- UK Bank Levy
|
(16)
|
(12)
|
- regulatory and legal actions
|
(3)
|
(3)
|
- other disallowable items
|
(17)
|
(18)
|
Non-taxable items:
|
|
|
- FX recycling on UBIDAC capital reduction
|
-
|
75
|
- RPI-related uplift on index-linked gilts
|
18
|
6
|
- other non-taxable items
|
4
|
8
|
Taxable foreign exchange
movements
|
2
|
6
|
Unrecognised losses bought forward
and utilised
|
12
|
8
|
Banking surcharge
|
(81)
|
(144)
|
Pillar 2 top-up tax
|
(11)
|
-
|
Tax on paid-in equity
dividends
|
33
|
22
|
Adjustments in respect of prior
years
|
17
|
(106)
|
Actual tax charge
|
(801)
|
(1,061)
|
At 30 June 2024, NatWest Group has
recognised a deferred tax asset of £1,719 million (31 December 2023
- £1,894 million) and a deferred tax liability of £108 million (31
December 2023 - £141 million). These
amounts include deferred tax assets recognised in respect of
trading losses of £853 million (31 December 2023 - £1,019
million). NatWest Group has considered the carrying value of these assets as at 30
June 2024 and concluded that they are recoverable.
Notes continued
7. Financial instruments -
classification
The
following tables analyse financial assets and liabilities in
accordance with the categories of financial instruments in IFRS
9.
|
|
|
|
Amortised
cost
|
Other
assets
|
|
|
MFVTPL
|
DFV
|
FVOCI
|
Total
|
Assets
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Cash and balances at central
banks
|
|
|
|
115,833
|
|
115,833
|
Trading assets
|
45,974
|
|
|
|
|
45,974
|
Derivatives (1)
|
67,514
|
|
|
|
|
67,514
|
Settlement balances
|
|
|
|
6,260
|
|
6,260
|
Loans to banks - amortised
cost (2)
|
|
|
|
5,974
|
|
5,974
|
Loans to customers - amortised
cost (3)
|
|
|
|
379,331
|
|
379,331
|
Other financial assets
|
716
|
5
|
27,954
|
23,929
|
|
52,604
|
Intangible assets
|
|
|
|
|
7,590
|
7,590
|
Other assets
|
|
|
|
|
8,266
|
8,266
|
Assets of disposal
groups (4)
|
|
|
|
|
992
|
992
|
30
June 2024
|
114,204
|
5
|
27,954
|
531,327
|
16,848
|
690,338
|
|
|
|
|
|
|
|
Cash and balances at central
banks
|
|
|
|
104,262
|
|
104,262
|
Trading assets
|
45,551
|
|
|
|
|
45,551
|
Derivatives (1)
|
78,904
|
|
|
|
|
78,904
|
Settlement balances
|
|
|
|
7,231
|
|
7,231
|
Loans to banks - amortised
cost (2)
|
|
|
|
6,914
|
|
6,914
|
Loans to customers - amortised
cost (3)
|
|
|
|
381,433
|
|
381,433
|
Other financial
assets
|
703
|
5
|
28,699
|
21,695
|
|
51,102
|
Intangible assets
|
|
|
|
|
7,614
|
7,614
|
Other assets
|
|
|
|
|
8,760
|
8,760
|
Assets of disposal
groups (4)
|
|
|
|
|
902
|
902
|
31 December 2023
|
125,158
|
5
|
28,699
|
521,535
|
17,276
|
692,673
|
For the notes to this table refer to
the following page.
Notes continued
7. Financial instruments -
classification continued
|
Held-for-trading
|
|
Amortised
cost
|
Other
liabilities
|
|
|
DFV
|
Total
|
Liabilities
|
£m
|
£m
|
£m
|
£m
|
£m
|
Bank deposits (5)
|
|
|
25,626
|
|
25,626
|
Customer deposits
|
|
|
432,975
|
|
432,975
|
Settlement balances
|
|
|
7,142
|
|
7,142
|
Trading liabilities
|
54,167
|
|
|
|
54,167
|
Derivatives (1)
|
60,849
|
|
|
|
60,849
|
Other financial
liabilities (6)
|
|
3,288
|
54,987
|
|
58,275
|
Subordinated
liabilities
|
|
229
|
5,803
|
|
6,032
|
Notes in circulation
|
|
|
3,254
|
|
3,254
|
Other
liabilities (7)
|
|
|
666
|
3,789
|
4,455
|
30 June 2024
|
115,016
|
3,517
|
530,453
|
3,789
|
652,775
|
|
|
|
|
|
|
Bank deposits (5)
|
|
|
22,190
|
|
22,190
|
Customer deposits
|
|
|
431,377
|
|
431,377
|
Settlement balances
|
|
|
6,645
|
|
6,645
|
Trading liabilities
|
53,636
|
|
|
|
53,636
|
Derivatives (1)
|
72,395
|
|
|
|
72,395
|
Other financial
liabilities (6)
|
|
2,888
|
52,201
|
|
55,089
|
Subordinated
liabilities
|
|
237
|
5,477
|
|
5,714
|
Notes in circulation
|
|
|
3,237
|
|
3,237
|
Other
liabilities (7)
|
|
|
748
|
4,454
|
5,202
|
31 December 2023
|
126,031
|
3,125
|
521,875
|
4,454
|
655,485
|
(1)
Includes net hedging derivative assets of £103 million (31 December
2023 - £114 million) and net hedging derivative liabilities of £359
million (31 December 2023 - £270 million).
(2)
Includes items in the course of collection from other banks of £281
million (31 December 2023 - £255 million).
(3)
Includes finance lease receivables of £8,974 million (31 December
2023 - £8,731 million).
(4)
Includes £972 million (31 December 2023 - £841 million) of assets
of disposal groups held at FVTPL. The portfolio is classified as
level 3 in the fair value hierarchy.
(5)
Includes items in the course of transmission to other banks of £496
million (31 December 2023 - £92 million).
(6) The
carrying amount of other customer accounts designated at fair value
through profit or loss is the same as the principal amount for both
periods. No amounts have been recognised in the profit or loss for
changes in credit risk associated with these liabilities as the
changes are immaterial both during the period and
cumulatively.
(7)
Includes lease liabilities of £610 million (31 December 2023 - £670
million), held at amortised cost.
Notes continued
8. Financial instruments -
valuation
Disclosures relating to the control
environment, valuation techniques and related aspects pertaining to
financial instruments measured at fair value are included in
NatWest Group plc's 2023 Annual Report and Accounts.
Valuation, sensitivity methodologies and inputs at
30 June 2024 are consistent with those described in Note 11 to
NatWest Group plc's 2023 Annual Report and Accounts.
Fair value hierarchy
The table below shows the assets
and liabilities held by NatWest Group split by fair value hierarchy
level. Level 1 are considered the most liquid instruments, and
level 3 the most illiquid, valued using expert judgment and hence
carry the most significant price uncertainty.
|
30 June
2024
|
|
31
December 2023
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
|
|
|
|
|
|
Trading assets
|
|
|
|
|
|
|
|
|
|
Loans
|
-
|
26,008
|
230
|
26,238
|
|
-
|
33,388
|
209
|
33,597
|
Securities
|
15,097
|
4,639
|
-
|
19,736
|
|
8,447
|
3,493
|
14
|
11,954
|
Derivatives
|
|
|
|
|
|
|
|
|
|
Interest rate
|
-
|
40,364
|
561
|
40,925
|
|
1
|
43,912
|
650
|
44,563
|
Foreign exchange
|
-
|
26,314
|
132
|
26,446
|
|
-
|
34,096
|
65
|
34,161
|
Other
|
-
|
74
|
69
|
143
|
|
-
|
72
|
108
|
180
|
Other financial assets
|
|
|
|
|
|
|
|
|
|
Loans
|
-
|
352
|
416
|
768
|
|
-
|
108
|
657
|
765
|
Securities
|
17,969
|
9,690
|
248
|
27,907
|
|
17,848
|
10,536
|
258
|
28,642
|
Total financial assets held at fair value
|
33,066
|
107,441
|
1,656
|
142,163
|
|
26,296
|
125,605
|
1,961
|
153,862
|
As a % of total fair value
assets
|
23%
|
76%
|
1%
|
|
|
17%
|
82%
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Trading liabilities
|
|
|
|
|
|
|
|
|
|
Deposits
|
-
|
44,151
|
-
|
44,151
|
|
-
|
43,126
|
1
|
43,127
|
Debt securities in issue
|
-
|
307
|
-
|
307
|
|
-
|
706
|
-
|
706
|
Short positions
|
7,843
|
1,864
|
2
|
9,709
|
|
7,936
|
1,865
|
2
|
9,803
|
Derivatives
|
|
|
|
|
|
|
|
|
|
Interest rate
|
-
|
34,698
|
440
|
35,138
|
|
-
|
38,044
|
439
|
38,483
|
Foreign exchange
|
-
|
25,374
|
67
|
25,441
|
|
-
|
33,528
|
58
|
33,586
|
Other
|
-
|
119
|
151
|
270
|
|
-
|
138
|
188
|
326
|
Other financial
liabilities
|
|
|
|
|
|
|
|
|
|
Debt securities in issue
|
-
|
1,636
|
3
|
1,639
|
|
-
|
1,605
|
3
|
1,608
|
Other deposits
|
-
|
1,626
|
23
|
1,649
|
|
-
|
1,280
|
-
|
1,280
|
Subordinated liabilities
|
-
|
229
|
-
|
229
|
|
-
|
237
|
-
|
237
|
Total financial liabilities held at fair
value
|
7,843
|
110,004
|
686
|
118,533
|
|
7,936
|
120,529
|
691
|
129,156
|
As a % of total fair value
liabilities
|
7%
|
92%
|
1%
|
|
|
6%
|
93%
|
1%
|
|
(1)
|
Level 1 - Instruments valued using
unadjusted quoted prices in active and liquid markets, for
identical financial instruments. Examples include government bonds,
listed equity shares and certain exchange-traded
derivatives.
Level 2 - Instruments valued using
valuation techniques that have observable inputs. Observable inputs
are those that are readily available with limited adjustments
required. Examples include most government agency securities,
investment-grade corporate bonds, certain mortgage products -
including CLOs, most bank loans, repos and reverse repos, state and
municipal obligations, most notes issued, certain money market
securities, loan commitments and most OTC derivatives.
Level 3 - Instruments valued using
a valuation technique where at least one input which could have a
significant effect on the instrument's valuation, is not based on
observable market data. Examples include non-derivative instruments
which trade infrequently, certain syndicated and commercial
mortgage loans, private equity, and derivatives with unobservable
model inputs.
|
(2)
|
Transfers between levels are
deemed to have occurred at the beginning of the quarter in which
the instrument was transferred.
|
(3)
|
For an analysis of debt securities
held at mandatorily fair value through profit or loss by issuer as
well as ratings and derivatives, by type and contract, refer to
Risk and capital management - Credit risk.
|
Notes continued
8. Financial instruments -
valuation continued
Valuation adjustments
When valuing financial instruments
in the trading book, adjustments are made to mid-market valuations
to cover bid-offer spread, funding and credit risk. These
adjustments are presented in the table below. For further
information refer to the descriptions of valuation adjustments
within 'Financial instruments - valuation' on page 345 of NatWest
Group plc's 2023 Annual Report and Accounts.
|
30 June
|
31
December
|
|
2024
|
2023
|
|
£m
|
£m
|
Funding - FVA
|
125
|
132
|
Credit - CVA
|
220
|
236
|
Bid - Offer
|
75
|
86
|
Product and deal
specific
|
149
|
103
|
Total
|
569
|
557
|
-
Valuation reserves comprising credit valuation
adjustments (CVA), funding valuation adjustment (FVA), bid-offer
and product and deal specific reserves, increased to £569 million
at 30 June 2024 (31 December 2023 - £557 million).
-
The movements in FVA and CVA were driven by a
reduction in exposure as interest rates increased. The decrease in
bid-offer was driven by overall risk reduction over the period.
Product and deal specific increased following valuation adjustments
on specific trades.
Notes continued
8. Financial instruments -
valuation continued
Level 3 sensitivities
The table below shows the high and
low range of fair value of the level 3 assets and
liabilities.
|
30 June
2024
|
|
31
December 2023
|
|
Level 3
|
Favourable
|
Unfavourable
|
|
Level
3
|
Favourable
|
Unfavourable
|
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
|
|
|
|
Trading assets
|
|
|
|
|
|
|
|
Loans
|
230
|
-
|
-
|
|
209
|
-
|
-
|
Securities
|
-
|
-
|
-
|
|
14
|
-
|
-
|
Derivatives
|
|
|
|
|
|
|
|
Interest rate
|
561
|
20
|
(20)
|
|
650
|
20
|
(20)
|
Foreign exchange
|
132
|
10
|
(10)
|
|
65
|
-
|
-
|
Other
|
69
|
-
|
-
|
|
108
|
10
|
(10)
|
Other financial assets
|
|
|
|
|
|
|
|
Loans
|
416
|
-
|
(10)
|
|
657
|
-
|
(40)
|
Securities
|
248
|
20
|
(40)
|
|
258
|
20
|
(50)
|
Total financial assets held at fair value
|
1,656
|
50
|
(80)
|
|
1,961
|
50
|
(120)
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Trading liabilities
|
|
|
|
|
|
|
|
Deposits
|
-
|
-
|
-
|
|
1
|
-
|
-
|
Short positions
|
2
|
-
|
-
|
|
2
|
-
|
-
|
Derivatives
|
|
|
|
|
|
|
|
Interest rate
|
440
|
10
|
(10)
|
|
439
|
10
|
(10)
|
Foreign exchange
|
67
|
-
|
-
|
|
58
|
-
|
-
|
Other
|
151
|
10
|
(10)
|
|
188
|
10
|
(10)
|
Other financial
liabilities
|
|
|
|
|
|
|
|
Debt securities in issue
|
3
|
-
|
-
|
|
3
|
-
|
-
|
Other deposits
|
23
|
-
|
(20)
|
|
-
|
-
|
-
|
Total financial liabilities held at fair
value
|
686
|
20
|
(40)
|
|
691
|
20
|
(20)
|
Alternative assumptions
Reasonably plausible alternative
assumptions of unobservable inputs are determined based on a
specified target level of certainty of 90%. Alternative assumptions
are determined with reference to all available evidence including
consideration of the following: quality of independent pricing
information considering consistency between different sources,
variation over time, perceived tradability or otherwise of
available quotes; consensus service dispersion ranges; volume of
trading activity and market bias (e.g. one-way inventory); day 1
profit or loss arising on new trades; number and nature of market
participants; market conditions; modelling consistency in the
market; size and nature of risk; length of holding of position; and
market intelligence.
Notes continued
8. Financial instruments -
valuation continued
Movement in level 3 assets and liabilities
The following table shows the
movement in level 3 assets and liabilities.
|
|
Other
|
Other
|
|
|
Other
|
Other
|
|
|
Derivatives
|
trading
|
financial
|
Total
|
Derivatives
|
trading
|
financial
|
Total
|
|
assets
|
assets (2)
|
assets (3)
|
assets
|
liabilities
|
liabilities
(2)
|
liabilities
|
liabilities
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 1 January 2024
|
823
|
223
|
915
|
1,961
|
685
|
3
|
3
|
691
|
Amounts recorded in the income
statement (1)
|
(70)
|
2
|
5
|
(63)
|
(28)
|
-
|
-
|
(28)
|
Amount recorded in the statement
of comprehensive income
|
-
|
-
|
(13)
|
(13)
|
-
|
-
|
-
|
-
|
Level 3 transfers in
|
7
|
-
|
-
|
7
|
1
|
-
|
23
|
24
|
Level 3 transfers out
|
(2)
|
(14)
|
(258)
|
(274)
|
(2)
|
(1)
|
-
|
(3)
|
Purchases/originations
|
82
|
25
|
23
|
130
|
67
|
1
|
-
|
68
|
Settlements/other
decreases
|
(38)
|
(7)
|
-
|
(45)
|
(29)
|
-
|
-
|
(29)
|
Sales
|
(40)
|
-
|
(2)
|
(42)
|
(34)
|
(1)
|
-
|
(35)
|
Foreign exchange and other
adjustments
|
-
|
1
|
(6)
|
(5)
|
(2)
|
-
|
-
|
(2)
|
At 30 June 2024
|
762
|
230
|
664
|
1,656
|
658
|
2
|
26
|
686
|
|
|
|
|
|
|
|
|
|
Amounts recorded in the income
statement in respect of balances held
|
|
|
|
|
|
|
|
|
at period end - unrealised
|
116
|
-
|
4
|
120
|
123
|
-
|
-
|
123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2023
|
1,007
|
396
|
930
|
2,333
|
975
|
1
|
-
|
976
|
Amounts recorded in the income
statement (1)
|
(52)
|
(28)
|
-
|
(80)
|
(84)
|
-
|
-
|
(84)
|
Amount recorded in the statement
of comprehensive income
|
-
|
-
|
12
|
12
|
-
|
-
|
-
|
-
|
Level 3 transfers in
|
4
|
-
|
(72)
|
(68)
|
6
|
1
|
-
|
7
|
Level 3 transfers out
|
(2)
|
(32)
|
-
|
(34)
|
(5)
|
-
|
-
|
(5)
|
Purchases/originations
|
86
|
6
|
68
|
160
|
89
|
-
|
-
|
89
|
Settlements/other
decreases
|
(20)
|
(4)
|
-
|
(24)
|
(27)
|
-
|
-
|
(27)
|
Sales
|
(92)
|
(58)
|
(25)
|
(175)
|
(54)
|
-
|
-
|
(54)
|
Foreign exchange and other
adjustments
|
(1)
|
(3)
|
(15)
|
(19)
|
(5)
|
-
|
-
|
(5)
|
At 30 June 2023
|
930
|
277
|
898
|
2,105
|
895
|
2
|
-
|
897
|
|
|
|
|
|
|
|
|
|
Amounts recorded in the income
statement in respect of balances held
|
|
|
|
|
|
|
|
|
at period end - unrealised
|
(52)
|
(28)
|
(1)
|
(81)
|
(84)
|
-
|
-
|
(84)
|
(1) There were £40 million
net losses on trading assets and liabilities (30 June 2023 - £4
million net losses) recorded in income from trading activities. Net
gains on other instruments of £5 million (30 June 2023 - nil) were
recorded in other operating income and interest income as
appropriate.
(2) Other trading assets
and other trading liabilities comprise assets and liabilities held
at fair value in trading portfolios.
(3) Other financial assets comprise fair value through other
comprehensive income, designated as at fair value through profit or
loss and other fair value through profit or loss.
Notes continued
8. Financial instruments -
valuation continued
Fair value of financial instruments measured at amortised cost
on the balance sheet
The following table shows the
carrying value and fair value of financial instruments carried at
amortised cost on the balance sheet.
|
|
|
|
|
|
Items
where
|
|
|
|
|
|
|
fair value
|
|
Carrying
|
|
Fair value hierarchy
level
|
approximates
|
|
value
|
Fair value
|
Level 1
|
Level 2
|
Level 3
|
carrying
value
|
30 June 2024
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
Financial assets
|
|
|
|
|
|
|
Cash and balances at central
banks
|
115.8
|
115.8
|
-
|
-
|
-
|
115.8
|
Settlement balances
|
6.3
|
6.3
|
-
|
-
|
-
|
6.3
|
Loans to banks
|
6.0
|
6.0
|
-
|
1.3
|
0.8
|
3.9
|
Loans to customers
|
379.3
|
372.4
|
-
|
25.2
|
347.2
|
-
|
Other financial assets -
securities
|
23.9
|
23.9
|
4.9
|
10.7
|
8.3
|
-
|
|
|
|
|
|
|
|
31 December 2023
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
Cash and balances at central
banks
|
104.3
|
104.3
|
-
|
-
|
-
|
104.3
|
Settlement balances
|
7.2
|
7.2
|
-
|
-
|
-
|
7.2
|
Loans to banks
|
6.9
|
7.0
|
-
|
2.2
|
0.6
|
4.2
|
Loans to customers
|
381.4
|
373.2
|
-
|
27.5
|
345.7
|
-
|
Other financial assets -
securities
|
21.7
|
21.6
|
4.0
|
6.6
|
11.0
|
-
|
|
|
|
|
|
|
|
30 June 2024
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
Bank deposits
|
25.6
|
25.6
|
-
|
17.5
|
3.7
|
4.4
|
Customer deposits
|
433.0
|
432.6
|
-
|
29.9
|
49.8
|
352.9
|
Settlement balances
|
7.1
|
7.1
|
-
|
-
|
-
|
7.1
|
Other financial
liabilities
|
|
|
|
|
|
|
- debt securities
in issue
|
55.0
|
55.0
|
-
|
45.0
|
10.0
|
-
|
Subordinated
liabilities
|
5.8
|
5.8
|
-
|
5.8
|
-
|
-
|
Notes in circulation
|
3.3
|
3.3
|
-
|
-
|
-
|
3.3
|
|
|
|
|
|
|
|
31 December 2023
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
Bank deposits
|
22.2
|
22.3
|
-
|
15.4
|
2.7
|
4.2
|
Customer deposits
|
431.4
|
431.0
|
-
|
30.7
|
48.8
|
351.5
|
Settlement balances
|
6.6
|
6.6
|
|
-
|
-
|
6.6
|
Other financial
liabilities
|
|
|
|
|
|
|
- debt securities
in issue
|
52.2
|
52.2
|
-
|
41.7
|
10.5
|
-
|
Subordinated
liabilities
|
5.5
|
5.4
|
-
|
5.4
|
-
|
-
|
Notes in circulation
|
3.2
|
3.2
|
-
|
-
|
-
|
3.2
|
The assumptions and methodologies
underlying the calculation of fair values of financial instruments
at the balance sheet date are as follows:
Short-term financial instruments
For certain short-term financial
instruments: cash and balances at central banks, items in the
course of collection from other banks, settlement balances, items
in the course of transmission to other banks, customer demand
deposits and notes in circulation, carrying value is deemed a
reasonable approximation of fair value.
Loans to banks and customers
In estimating the fair value of net
loans to customers and banks measured at amortised cost, NatWest
Group's loans are segregated into appropriate portfolios reflecting
the characteristics of the constituent loans. Two principal methods
are used to estimate fair value: contractual cash flows and
expected cash flows.
Debt securities and subordinated liabilities
Most debt securities are valued
using quoted prices in active markets or from quoted prices of
similar financial instruments in active markets. For the remaining
population, fair values are determined using market standard
valuation techniques, such as discounted cash flows.
Bank and customer deposits
Fair value of deposits is estimated
using discounted cash flow valuation techniques.
Notes continued
9. Trading assets and
liabilities
Trading assets and liabilities
comprise assets and liabilities held at fair value in trading
portfolios.
|
30 June
|
31
December
|
|
2024
|
2023
|
Assets
|
£m
|
£m
|
Loans
|
|
|
Reverse
repos
|
18,245
|
23,694
|
Collateral
given
|
7,506
|
9,141
|
Other
loans
|
487
|
762
|
Total loans
|
26,238
|
33,597
|
Securities
|
|
|
Central and local
government
|
|
|
-
UK
|
5,170
|
2,729
|
-
US
|
5,507
|
2,600
|
-
Other
|
4,646
|
3,062
|
Financial
institutions and corporate
|
4,413
|
3,563
|
Total securities
|
19,736
|
11,954
|
Total
|
45,974
|
45,551
|
|
|
|
Liabilities
|
|
|
Deposits
|
|
|
Repos
|
29,321
|
26,902
|
Collateral
received
|
14,030
|
15,075
|
Other
deposits
|
800
|
1,150
|
Total deposits
|
44,151
|
43,127
|
Debt securities in
issue
|
307
|
706
|
Short positions
|
|
|
Central and
local government
|
|
|
- UK
|
2,515
|
1,893
|
- US
|
813
|
2,071
|
- Other
|
4,836
|
4,049
|
Financial
institutions and corporate
|
1,545
|
1,790
|
Total short positions
|
9,709
|
9,803
|
Total
|
54,167
|
53,636
|
Notes continued
10. Loan impairment
provisions
Loan exposure and impairment metrics
The table below summarises loans
and related credit impairment measures on an IFRS 9
basis.
|
30 June
|
31
December
|
2024
|
2023
|
|
£m
|
£m
|
Loans - amortised cost and
FVOCI (1,2)
|
|
|
Stage 1
|
345,847
|
348,586
|
Stage 2
|
37,288
|
37,891
|
Stage 3
|
5,812
|
5,563
|
Of which: individual
|
1,216
|
1,031
|
Of which: collective
|
4,596
|
4,532
|
|
388,947
|
392,040
|
ECL provisions (3)
|
|
|
Stage 1
|
585
|
709
|
Stage 2
|
802
|
976
|
Stage 3
|
1,956
|
1,960
|
Of which: individual
|
366
|
332
|
Of which: collective
|
1,590
|
1,628
|
|
3,343
|
3,645
|
ECL provisions
coverage (4)
|
|
|
Stage 1 (%)
|
0.17
|
0.20
|
Stage 2 (%)
|
2.15
|
2.58
|
Stage 3 (%)
|
33.65
|
35.23
|
|
0.86
|
0.93
|
|
|
|
|
Half year
ended
|
|
30 June
|
30
June
|
|
2024
|
2023
|
|
£m
|
£m
|
Impairment losses
|
|
|
ECL
(release)/charge (5)
|
48
|
223
|
Stage 1
|
(364)
|
(209)
|
Stage 2
|
190
|
296
|
Stage 3
|
222
|
136
|
Of which: individual
|
80
|
13
|
Of which: collective
|
142
|
123
|
|
|
|
Amounts written off
|
369
|
122
|
Of which: individual
|
64
|
22
|
Of which: collective
|
305
|
100
|
(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
£114.8 billion (31 December 2023 - £103.1 billion) and debt
securities of £51.4 billion (31 December 2023 - £50.1
billion).
(2) Fair value through
other comprehensive income (FVOCI). Includes loans to customers and
banks.
(3) Includes £4 million (31 December 2023 - £9 million) related to
assets classified as FVOCI and £0.1 billion (31 December 2023 -
£0.1 billion) related to off-balance sheet exposures.
(4) ECL provisions
coverage is calculated as ECL provisions divided by loans -
amortised cost and FVOCI. It is calculated on loans and total ECL
provisions, including ECL for other (non-loan) assets and
unutilised exposure. Some segments with a high proportion of debt
securities or unutilised exposure may result in a not meaningful
(nm) coverage ratio.
(5) Includes a £6 million release (June 2023 - £5 million release)
related to other financial assets, of which £5 million release
(June 2023 - £1 million charge) related to assets classified as
FVOCI and includes a £4 million charge (June 2023 - £3 million
release) related to contingent liabilities.
Notes continued
11. Provisions for liabilities and
charges
|
|
|
|
Financial
|
|
|
|
Customer
|
Litigation
and
|
|
commitments
|
|
|
|
redress
|
other
regulatory
|
Property
|
and
guarantees
|
Other (1)
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 1 January 2024
|
486
|
156
|
99
|
78
|
171
|
990
|
Expected credit losses impairment
release
|
-
|
-
|
-
|
(22)
|
-
|
(22)
|
Currency translation and other
movements
|
1
|
1
|
-
|
-
|
(2)
|
-
|
Charge to income
statement
|
39
|
18
|
32
|
-
|
228
|
317
|
Release to income
statement
|
(22)
|
(20)
|
(21)
|
-
|
(16)
|
(79)
|
Provisions utilised
|
(50)
|
(18)
|
(11)
|
-
|
(85)
|
(164)
|
At 30 June 2024
|
454
|
137
|
99
|
56
|
296
|
1,042
|
(1)
Other materially comprises of provisions relating
to restructuring costs and Bank of England Levy. The charge for the
year includes restructuring costs of £149 million and Bank of
England Levy of £79 million.
Provisions are liabilities of
uncertain timing or amount and are recognised when there is a
present obligation as a result of a past event, the outflow of
economic benefit is probable and the outflow can be estimated
reliably. Any difference between the final outcome and the amounts
provided will affect the reported results in the period when the
matter is resolved.
12. Dividends
The 2023 final dividend was
approved by shareholders at the Annual General Meeting on 23 April
2024 and the payment made on 29 April 2024 to shareholders on the
register at the close of business on 15 March 2024.
NatWest Group plc announces an
interim dividend for 2024 of £500 million or 6 pence per ordinary
share. The interim dividend will be paid on 13 September 2024 to
shareholders on the register at close of business on 9 August 2024.
The ex-dividend date will be 8 August 2024.
13. Contingent liabilities and
commitments
The amounts shown in the table
below are intended only to provide an indication of the volume of
business outstanding at 30 June 2024. Although NatWest Group is
exposed to credit risk in the event of a customer's failure to meet
its obligations, the amounts shown do not, and are not intended to,
provide any indication of NatWest Group's expectation of future
losses.
|
30 June
|
31
December
|
2024
|
2023
|
|
£m
|
£m
|
Contingent liabilities and commitments
|
|
|
Guarantees
|
3,197
|
2,810
|
Other contingent
liabilities
|
1,367
|
1,380
|
Standby facilities, credit lines
and other commitments
|
118,218
|
115,441
|
Total
|
122,782
|
119,631
|
Commitments and contingent
obligations are subject to NatWest Group's normal credit approval
processes.
Notes continued
14. Litigation and regulatory
matters
NatWest Group plc and certain
members of NatWest Group are party to various legal proceedings and
are involved in, or subject to, various regulatory matters,
including as the subject of investigations and other regulatory and
governmental action (Matters) in the United Kingdom (UK), the
United States (US), the European Union (EU) and other
jurisdictions.
NatWest Group recognises a
provision for a liability in relation to these Matters when it is
probable that an outflow of economic benefits will be required to
settle an obligation resulting from past events, and a reliable
estimate can be made of the amount of the obligation.
In many of the Matters, it is not
possible to determine whether any loss is probable, or to estimate
reliably the amount of any loss, either as a direct consequence of
the relevant proceedings and regulatory matters or as a result of
adverse impacts or restrictions on NatWest Group's reputation,
businesses and operations. Numerous legal and factual issues may
need to be resolved, including through potentially lengthy
discovery and document production exercises and determination of
important factual matters, and by addressing novel or unsettled
legal questions relevant to the proceedings in question, before the
probability of a liability, if any, arising can reasonably be
estimated in respect of any Matter. NatWest Group cannot predict
if, how, or when such claims will be resolved or what the eventual
settlement, damages, fine, penalty or other relief, if any, may be,
particularly for Matters that are at an early stage in their
development or where claimants seek substantial or indeterminate
damages.
There are situations where NatWest
Group may pursue an approach that in some instances leads to a
settlement agreement. This may occur in order to avoid the expense,
management distraction or reputational implications of continuing
to contest liability, or in order to take account of the risks
inherent in defending or contesting Matters, even for those for
which NatWest Group believes it has credible defences and should
prevail on the merits. The uncertainties inherent in all Matters
affect the amount and timing of any potential economic outflows for
both Matters with respect to which provisions have been established
and other contingent liabilities in respect of any such
Matter.
It is not practicable to provide an
aggregate estimate of potential liability for our Matters as a
class of contingent liabilities.
The future economic outflow in
respect of any Matter may ultimately prove to be substantially
greater than, or less than, the aggregate provision, if any, that
NatWest Group has recognised in respect of such Matter. Where a
reliable estimate of the economic outflow cannot be reasonably
made, no provision has been recognised. NatWest Group expects that
in future periods, additional provisions and economic outflows
relating to Matters that may or may not be currently known by
NatWest Group will be necessary, in amounts that are expected to be
substantial in some instances. Refer to Note 11 for information on
material provisions.
Matters which are, or could be,
material, either individually or in aggregate, having regard to
NatWest Group, considered as a whole, in which NatWest Group is
currently involved are set out below. We have provided information
on the procedural history of certain Matters, where we believe
appropriate, to aid the understanding of the Matter.
For a discussion of certain risks
associated with NatWest Group's litigation and regulatory matters
(including the Matters), refer to the Risk Factor relating to
legal, regulatory and governmental actions and investigations set
out on pages 440 to 441 of NatWest Group plc's 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. The complainants allege that certain members
of NatWest Group and other panel banks violated various federal
laws, including the US commodities and antitrust laws, and state
statutory and common law, as well as contracts, by manipulating
LIBOR and prices of LIBOR-based derivatives in various markets
through various means.
Several purported class actions
relating to USD LIBOR, as well as more than a dozen non-class
actions concerning USD LIBOR and involving NatWest Group companies,
are part of a co-ordinated proceeding in the SDNY. The class
actions include claims on behalf of persons who purchased
LIBOR-linked instruments from defendants, bonds issued by
defendants, persons who transacted futures and options on
exchanges, and lenders who made LIBOR-based loans. The coordinated
proceeding is currently in the discovery phase.
Notes continued
14. Litigation and regulatory
matters continued
In March 2024, NatWest Group
companies reached an agreement, which remains subject to final
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, which
remains subject to final 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.
The non-class claims filed in the
SDNY include claims that the Federal Deposit Insurance Corporation
(FDIC) is asserting on behalf of certain failed US banks. In July
2017, the FDIC, on behalf of 39 of those failed US banks, commenced
substantially similar claims against NatWest Group companies and
others in the High Court of Justice of England and Wales. The
action alleges collusion with regard to the setting of USD LIBOR
and that the defendants breached UK and European competition law,
as well as asserting common law claims of fraud under US law. The
defendant banks consented to a request by the FDIC for
discontinuance of the claim in respect of 20 failed US banks,
leaving 19 failed US banks as claimants. The trial is currently
anticipated to commence in Q1 2026.
In addition to the USD LIBOR cases
described above, there is a class action relating to derivatives
allegedly tied to JPY LIBOR and Euroyen TIBOR, which was dismissed
by the SDNY in relation to NWM Plc and other NatWest Group
companies in September 2021. That dismissal may be the subject of a
future appeal.
Two other IBOR-related class
actions involving NWM Plc, concerning alleged manipulation of
Euribor and Pound Sterling LIBOR, were previously dismissed by the
SDNY for various reasons. The plaintiffs' appeals in those two
cases remain pending.
In August 2020, a complaint was
filed in the United States District Court for the Northern District
of California by several United States retail borrowers against the
USD ICE LIBOR panel banks and their affiliates (including NatWest
Group plc, NWM Plc, NWMSI and NWB Plc), alleging (i) that the very
process of setting USD ICE LIBOR amounts to illegal price-fixing;
and (ii) that banks in the United States have illegally agreed to
use LIBOR as a component of price in variable retail loans. In
September 2022, the district court dismissed the
complaint.
The plaintiffs filed an amended
complaint but in October 2023, the district court dismissed that
complaint as well, and indicated that further amendment would not
be permitted. The plaintiffs have commenced an appeal to the United
States Court of Appeals for the Ninth Circuit, which is currently
pending.
NWM Plc is also named as a
defendant in a motion to certify a class action relating to LIBOR
in the Tel Aviv District Court in Israel. NWM Plc filed a motion
for cancellation of service outside the jurisdiction, which was
granted in July 2020. The claimants appealed that decision and in
November 2020 the appeal was refused and the claim dismissed by the
Appellate Court. The claim could in future be recommenced depending
on the outcome of an appeal to Israel's Supreme Court in respect of
the dismissal of the substantive case against banks that had a
presence in Israel.
Foreign exchange
litigation
NWM Plc, NWMSI and/or NatWest Group
plc are defendants in several cases relating to NWM Plc's foreign
exchange (FX) business.
An FX-related class action, on
behalf of 'consumers and end-user businesses', was proceeding in
the SDNY against NWM Plc and others. In March 2023, the court
granted summary judgment in favour of the defendants, dismissing
the plaintiffs' claims. The plaintiffs appealed that decision but
the appeal was denied by the United States Court of Appeals for the
Second Circuit (US Court of Appeals), subject to potential review
by the United States Supreme Court.
In May 2019, a cartel class action
was filed in the Federal Court of Australia against NWM Plc and
four other banks on behalf of persons who bought or sold currency
through FX spots or forwards between 1 January 2008 and 15 October
2013 with a total transaction value exceeding AUD 0.5 million. The
claimant has alleged that the banks, including NWM Plc, contravened
Australian competition law by sharing information, coordinating
conduct, widening spreads and manipulating FX rates for certain
currency pairs during this period. NatWest Group plc and NWMSI have
been named in the action as 'other cartel participants', but are
not respondents. The claim was served in June 2019 and NWM Plc
filed its defence in March 2022. The court has ordered that
potential class members are required to either opt out of the
proceedings or register to be included in or benefit from any
potential settlement of the claim.
In July and December 2019, two
separate applications seeking opt-out collective proceedings orders
were filed in the UK Competition Appeal Tribunal (CAT) against
NatWest Group plc, NWM Plc and other banks. Both applications were
brought on behalf of persons who, between 18 December 2007 and 31
January 2013, entered into a relevant FX spot or outright forward
transaction in the European Economic Area with a relevant financial
institution or on an electronic communications network. In March
2022, the CAT declined to certify as collective proceedings either
of the applications, which was appealed by the applicants and the
subject of an application for judicial review.
Notes continued
14. Litigation and regulatory
matters continued
In its amended judgment in November
2023, the Court of Appeal allowed the appeal and decided that the
claims should proceed on an opt-out basis. Separately, the court
determined which of the two competing applicants can proceed as
class representative, and dismissed the application for judicial
review of the CAT's decision. The other applicant has discontinued
its claim and withdrawn from the proceedings. The banks sought
permission to appeal the Court of Appeal decision directly to the
UK Supreme Court, which was granted in April 2024.
Two motions to certify FX-related
class actions were filed in the Tel Aviv District Court in Israel
in September and October 2018, and were subsequently consolidated
into one motion. The consolidated motion to certify, which names
The Royal Bank of Scotland plc (now NWM Plc) and several other
banks as defendants, was served on NWM Plc in May 2020. The
applicants sought the court's permission to amend their motions to
certify the class actions. NWM Plc filed a motion challenging the
permission granted by the court for the applicants to serve the
consolidated motion outside the Israeli jurisdiction. That NWM Plc
motion remains pending. In February 2024, NWM Plc executed an
agreement to settle the claim, subject to court approval. The
settlement amount is covered in full by an existing
provision.
In December 2021, a summons was
served in the Netherlands against NatWest Group plc, NWM Plc and
NWM N.V. by Stichting FX Claims on behalf of a number of parties,
seeking declarations from the court concerning liability for
anti-competitive FX market conduct described in decisions of the
European Commission (EC) of 16 May 2019, along with unspecified
damages. The claimant amended its claim to also refer to a 2
December 2021 decision by the EC, which described anti-competitive
FX market conduct. NatWest Group plc, NWM Plc and other defendants
contested the jurisdiction of the Dutch court. In March 2023, the
district court in Amsterdam accepted that it has jurisdiction to
hear claims against NWM N.V. but refused jurisdiction to hear any
claims against the other defendant banks (including NatWest Group
plc and NWM Plc) brought on behalf of the parties represented by
the claimant that are domiciled outside of the Netherlands. The
claimant is appealing that decision. The defendant banks have
brought cross-appeals which seek a ruling that the Dutch court has
no jurisdiction to hear any claims against the defendant banks
domiciled outside of the Netherlands, irrespective of whether the
claim has been brought on behalf of a party represented by the
claimant that is domiciled within or outside of the Netherlands.
The Amsterdam Court of Appeal has stayed these appeal proceedings
until the Court of Justice of the European Union has answered
preliminary questions that have been referred to it in another
matter.
In September 2023, second summonses
were served by Stichting FX Claims on NWM N.V., NatWest Group plc
and NWM Plc, for claims on behalf of a new group of parties that
have been brought before the district court in Amsterdam. The
summonses seek declarations from the Dutch court concerning
liability for anti-competitive FX market conduct described in the
above referenced decisions of the EC of 16 May 2019 and 2 December
2021, along with unspecified damages. NatWest Group plc, NWM Plc
and other defendants are contesting the Dutch court's jurisdiction.
The district court has stayed proceedings pending judgment in the
above-mentioned appeals.
In May 2024, a new letter of claim
was received from Stichting FX Claims on behalf of a further group
of parties, containing allegations that are similar in nature to
those contained in the above-mentioned claims.
Certain other foreign exchange
transaction related claims have been or may be threatened. NatWest
Group cannot predict whether all or any of these claims will be
pursued.
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 (European government bonds or
EGBs). The complaint alleges a conspiracy among dealers of EGBs to
widen the bid-ask spreads they quoted to customers, thereby
increasing the prices customers paid for the EGBs or decreasing the
prices at which customers sold EGBs. The class consists of those
who purchased or sold EGBs in the US between 2007 and 2012.
Previously, in March 2022, the SDNY dismissed the claims against
NWM Plc and NWMSI on the ground that the complaint's conspiracy
allegations were insufficient. However, in September 2023, the SDNY
ruled that new allegations which plaintiffs have included in an
amended complaint are sufficient to bring those NatWest entities
back into the case as defendants.
In March 2024, NatWest Group
companies reached an agreement, subject to court approval, to
settle the class action. The settlement amount is covered in full
by an existing provision.
Notes continued
14. Litigation and regulatory
matters continued
Swaps antitrust
litigation
NWM Plc and other members of
NatWest Group, including NatWest Group plc, as well as a number of
other interest rate swap dealers, are defendants in several cases
pending in the SDNY alleging violations of the US antitrust laws in
the market for interest rate swaps. There is a consolidated class
action complaint on behalf of persons who entered into interest
rate swaps with the defendants, as well as non-class action claims
by three swap execution facilities (TeraExchange, Javelin, and
trueEx). The plaintiffs allege that the swap execution facilities
would have successfully established exchange-like trading of
interest rate swaps if the defendants had not unlawfully conspired
to prevent that from happening through boycotts and other means.
Discovery in the non-class action claims is complete. In March
2024, NatWest Group companies reached an agreement to settle the
class action, which remains subject to court approval. The
settlement amount is covered in full by an existing
provision.
In June 2021, a class action
antitrust complaint was filed against a number of credit default
swap dealers, in New Mexico federal court on behalf of persons who,
from 2005 onwards, settled credit default swaps in the United
States by reference to the ISDA credit default swap auction
protocol. The complaint alleges that the defendants conspired to
manipulate that benchmark through various means in violation of the
antitrust laws and the Commodity Exchange Act. The defendants filed
a motion to dismiss the complaint and, in June 2023, such motion
was denied as regards to NWMSI and other financial institutions,
but granted as regards to NWM Plc on the ground that the court
lacks jurisdiction over that entity. As a result, the case entered
the discovery phase as against the non-dismissed defendants. In
January 2024, the SDNY issued an order barring the plaintiffs in
the New Mexico case from pursuing claims based on conduct occurring
before 30 June 2014 on the ground that such claims were
extinguished by a 2015 settlement agreement that resolved a prior
class action relating to credit default swaps. The SDNY's decision
is the subject of a pending appeal to the US Court of
Appeals.
Odd lot corporate bond trading
antitrust litigation
In July 2024, the US Court of
Appeals vacated the SDNY's October 2021 dismissal of the class
action antitrust complaint alleging that from August 2006 onwards
various securities dealers, including NWMSI, conspired artificially
to widen spreads for odd lots of corporate bonds bought or sold in
the United States secondary market and to boycott electronic
trading platforms that would have allegedly promoted pricing
competition in the market for such bonds. The appellate court held
that the district judge who made the decision should not have been
presiding over the case because a member of the judge's family had
owned stock in one of the defendants while the motion was
pending. The
case will now return to the SDNY where the defendants will seek
dismissal by a different district court judge.
Spoofing litigation
In December 2021, three
substantially similar class actions complaints were filed in
federal court in the United States against NWM Plc and NWMSI
alleging Commodity Exchange Act and common law unjust enrichment
claims arising from manipulative trading known as spoofing. The
complaints refer to NWM Plc's December 2021 spoofing-related guilty
plea (described below under "US investigations relating to
fixed-income securities") and purport to assert claims on behalf of
those who transacted in US Treasury securities and futures and
options on US Treasury securities between 2008 and 2018. In July
2022, defendants filed a motion to dismiss these claims, which have
been consolidated into one matter in the United States District
Court for the Northern District of Illinois.
Madoff
NWM N.V. was named as a defendant
in two actions filed by the trustee for the bankrupt estates of
Bernard L. Madoff and Bernard L. Madoff Investment Securities LLC,
in bankruptcy court in New York, which together seek to clawback
more than US$298 million that NWM N.V. allegedly received from
certain Madoff feeder funds and certain swap counterparties. The
claims were previously dismissed, but as a result of an August 2021
decision by the US Court of Appeals, they are now proceeding in the
discovery phase in the bankruptcy court, where they have been
consolidated into one action.
Offshoring VAT
assessments
HMRC issued protective tax
assessments in 2018 against NatWest Group plc totalling £143
million relating to unpaid VAT in respect of the UK branches of two
NatWest Group companies registered in India. NatWest Group formally
requested reconsideration by HMRC of their assessments, and this
process was completed in November 2020. HMRC upheld their original
decision and, as a result, NatWest Group plc lodged an appeal with
the Tax Tribunal and an application for judicial review with the
High Court of Justice of England and Wales, both in December 2020.
In order to lodge the appeal with the Tax Tribunal, NatWest Group
plc was required to pay £143 million to HMRC, and payment was made
in December 2020. The appeal and the application for judicial
review have both been stayed pending resolution of separate cases
involving other banks.
US Anti-Terrorism Act
litigation
NWM N.V. and certain other
financial institutions are defendants in several actions filed by a
number of US nationals (or their estates, survivors, or heirs),
most of whom are or were US military personnel, who were killed or
injured in attacks in Iraq between 2003 and 2011. NWM Plc is also a
defendant in some of these cases.
Notes continued
14. Litigation and regulatory
matters continued
According to the plaintiffs'
allegations, the defendants are liable for damages arising from the
attacks because they allegedly conspired with and/or aided and
abetted Iran and certain Iranian banks to assist Iran in
transferring money to Hezbollah and the Iraqi terror cells that
committed the attacks, in violation of the US Anti-Terrorism Act,
by agreeing to engage in 'stripping' of transactions initiated by
the Iranian banks so that the Iranian nexus to the transactions
would not be detected.
The first of these actions,
alleging conspiracy claims but not aiding and abetting claims, was
filed in the United States District Court for the Eastern District
of New York in November 2014. In September 2019, the district court
dismissed the case, finding that the claims were deficient for
several reasons, including lack of sufficient allegations as to the
alleged conspiracy and causation. In January 2023, the US Court of
Appeals affirmed the district court's dismissal of this case. The
plaintiffs have now filed a motion in the district court to re-open
the case to assert aiding and abetting claims that they previously
did not assert, which the defendants are opposing. Another action,
filed in the SDNY in 2017, which asserted both conspiracy and
aiding and abetting claims, was dismissed by the SDNY in March 2019
on similar grounds as the first case, but remains subject to appeal
to the US Court of Appeals. Other follow-on actions that are
substantially similar to those described above are pending in the
same courts.
1MDB litigation
A Malaysian court claim was served
in Switzerland in November 2022 by 1MDB, a sovereign wealth fund,
in which Coutts & Co Ltd was named, along with six others, as a
defendant in respect of losses allegedly incurred by 1MDB. It is
claimed that Coutts & Co Ltd is liable as a constructive
trustee for having dishonestly assisted the directors of 1MDB in
the breach of their fiduciary duties by failing (amongst other
alleged claims) to undertake due diligence in relation to a
customer of Coutts & Co Ltd, through which funds totalling
c.US$1 billion were received and paid out between 2009 and 2011.
1MDB seeks the return of that amount plus interest. Coutts & Co
Ltd filed an application in January 2023 challenging the validity
of service and the Malaysian court's jurisdiction to hear the
claim, and a hearing took place in February 2024. In March 2024,
the court granted that application. 1MDB filed an appeal in April
2024.
Coutts & Co Ltd (a subsidiary
of RBS Netherlands Holdings B.V., which in turn is a subsidiary of
NWM Plc) is a company registered in Switzerland and is in wind-down
following the announced sale of its business assets in
2015.
Regulatory matters (including investigations and customer
redress programmes)
NatWest Group's businesses and
financial condition can be affected by the actions of various
governmental and regulatory authorities in the UK, the US, the EU
and elsewhere. NatWest Group has engaged, and will continue to
engage, in discussions with relevant governmental and regulatory
authorities, including in the UK, the US, the EU and elsewhere, on
an ongoing and regular basis, and in response to informal and
formal inquiries or investigations, regarding operational, systems
and control evaluations and issues including those related to
compliance with applicable laws and regulations, including consumer
protection, investment advice, business conduct,
competition/anti-trust, VAT recovery, anti-bribery, anti-money
laundering and sanctions regimes.
NatWest Group expects government
and regulatory intervention in financial services to be high for
the foreseeable future, including increased scrutiny from
competition and other regulators in the retail and SME business
sectors.
Any matters discussed or identified
during such discussions and inquiries may result in, among other
things, further inquiry or investigation, other action being taken
by governmental and regulatory authorities, increased costs being
incurred by NatWest Group, remediation of systems and controls,
public or private censure, restriction of NatWest Group's business
activities and/or fines. Any of the events or circumstances
mentioned in this paragraph or below could have a material adverse
effect on NatWest Group, its business, authorisations and licences,
reputation, results of operations or the price of securities issued
by it, or lead to material additional provisions being
taken.
NatWest Group is co-operating fully
with the matters described below.
US investigations relating to
fixed-income securities
In December 2021, NWM Plc pled
guilty in the United States District Court for the District of
Connecticut to one count of wire fraud and one count of securities
fraud in connection with historical spoofing conduct by former
employees in US Treasuries markets between January 2008 and May
2014 and, separately, during approximately three months in 2018.
The 2018 trading occurred during the term of a non-prosecution
agreement (NPA) between NWMSI and the United States Attorney's
Office for the District of Connecticut (USAO CT), under which
non-prosecution was conditioned on NWMSI and affiliated companies
not engaging in criminal conduct during the term of the NPA. The
relevant trading in 2018 was conducted by two NWM traders in
Singapore and breached that NPA. The plea agreement reached with
the US Department of Justice (DOJ) and the USAO CT resolved both
the spoofing conduct and the breach of the NPA.
Notes continued
14. Litigation and regulatory
matters continued
As required by the resolution and
sentence imposed by the court, NWM Plc is subject to a probationary
period until the conclusion of the independent monitorship, which
is also required under the plea agreement. In addition, NWM Plc has
committed to compliance programme reviews and improvements and
agreed to reporting and co-operation obligations.
In the event that NWM Plc does not
meet its obligations to the DOJ, this may lead to adverse
consequences such as increased costs from any extension of
monitorship and/or the period of the probation, findings that NWM
Plc violated its probation term and possible re-sentencing, amongst
other consequences. Other material adverse collateral consequences
may occur as a result of this matter, as further described in the
Risk Factor relating to legal, regulatory and governmental actions
and investigations set out on pages 440 to 441 of NatWest Group
plc's 2023 Annual Report and Accounts.
RBSI Ltd reliance regime and
referral to enforcement
In January 2023, the Jersey
Financial Services Commission (JFSC) notified RBSI Ltd that it had
been referred to its Enforcement Division in relation to RBSI Ltd's
operation of the reliance regime. The reliance regime is specific
to certain Crown Dependencies and enables RBSI Ltd to rely on
regulated third parties for specific due diligence information.
RBSI Ltd has provided information to the JFSC at its
request.
Investment advice review
In October 2019, the FCA notified
NatWest Group of its intention to appoint a Skilled Person under
section 166 of the Financial Services and Markets Act 2000 to
conduct a review of whether NatWest Group's past business review of
investment advice provided during 2010 to 2015 was subject to
appropriate governance and accountability and led to appropriate
customer outcomes. The Skilled Person's review has concluded and,
after discussion with the FCA, NatWest Group is undertaking
additional review / remediation work.
Reviews into customer account
closures
In July 2023, NatWest Group plc
commissioned an independent review by the law firm Travers Smith
LLP into issues that had arisen from treatment of a customer in
connection with an account closure decision that attracted
significant public attention and certain related interactions with
the media. NatWest Group plc received reports in connection with
that review (and in October and December 2023 published summaries
of the key findings and recommendations).
In addition, NatWest Group plc has
conducted internal reviews with respect to certain governance
processes, policies, systems and controls, including with respect
to customer account closures.
A programme of work is underway to
implement the recommendations of the external and internal
reviews.
The FCA is conducting supervisory
work into how the governance, systems and controls of NatWest Group
and Coutts & Company are working, to identify and address any
significant shortcomings.
Review and investigation of
treatment of tracker mortgage customers in Ulster Bank Ireland
DAC
In December 2015, correspondence
was received from the Central Bank of Ireland setting out an
industry examination framework in respect of the sale of tracker
mortgages from approximately 2001 until the end of 2015. The
redress and compensation process has now largely concluded,
although a small number of cases remain outstanding relating to
uncontactable customers.
UBIDAC customers have lodged
tracker mortgage complaints with the Financial Services and
Pensions Ombudsman (FSPO). UBIDAC challenged three FSPO
adjudications in the Irish High Court. In June 2023, the High Court
found in favour of the FSPO in all matters and a provision was
recognised. UBIDAC has appealed that decision to the Court of
Appeal. A hearing took place in February 2024 and judgment is
awaited.
Other customer remediation in
Ulster Bank Ireland DAC
UBIDAC identified other legacy
issues leading to the establishment of remediation requirements and
progress is ongoing to conclude activities.
Notes continued
15. Related party
transactions
UK
Government
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 30 June 2024 HM
Treasury's holding in NatWest Group plc's ordinary shares was
20.92% (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.
At 12 July 2024 HM Treasury's
holding in NatWest Group plc's ordinary shares fell below 20% to
19.97%.
NatWest Group enters into
transactions with many of these bodies. Transactions include the
payment of: taxes - principally UK corporation tax and value added
tax; national insurance contributions; local authority rates;
regulatory fees and levies; together with banking transactions such
as loans and deposits undertaken in the normal course of
banker-customer relationships.
Bank of England facilities
NatWest Group may participate in a
number of schemes operated by the Bank of England in the normal
course of business.
Other related parties
(a) In their roles as providers of
finance, NatWest Group companies provide development and other
types of capital support to businesses. These investments are made
in the normal course of business.
(b) To further strategic
partnerships, NatWest Group may seek to
invest in third parties or allow third parties to hold a minority
interest in a subsidiary of NatWest Group. We disclose as related
parties for associates and joint ventures and where equity
interests are over 10%. Ongoing business transactions with these
entities are on normal commercial terms.
(c) NatWest Group recharges the
NatWest Group Pension Fund with the cost of pension management
services incurred by it.
(d) In accordance with IAS 24,
transactions or balances between NatWest Group entities that have
been eliminated on consolidation are not reported.
Full details of NatWest Group's
related party transactions for the year ended 31 December 2023 are
included in NatWest Group plc's 2023 Annual Report and
Accounts.
16. Acquisitions
On 20 June 2024 NatWest Group plc
announced an agreement with Sainsbury's Bank plc to acquire the
retail banking assets and liabilities of Sainsbury's Bank plc,
subject to court and regulatory approvals. We expect to acquire
approximately £2.5 billion of gross customer assets, comprising
£1.4 billion of unsecured personal loans and £1.1 billion of credit
cards balances, together with approximately £2.6 billion of
customer deposits. The transaction is expected to complete during
the first half of 2025 and have a 20 basis point impact on NatWest
Group's CET1 ratio upon completion and be EPS and RoTE accretive
upon completion.
NatWest Group plc has also agreed
to acquire a £2.5 billion portfolio of prime UK residential
mortgages from Metro Bank plc, with a weighted average current loan
to value of c.62%. Completion is conditional on a satisfactory
response from the Competition and Markets Authority and is expected
to occur during H2 2024. On completion of the transaction, NatWest
Group plc expects to welcome around 10,000 customer accounts which
will continue to be serviced by Metro Bank plc, in accordance with
current arrangements, following the transfer to NatWest Group plc.
The impact of the transaction, based on NatWest Group's CET1 ratio
at 30 June 2024, equates to a reduction of less than 10 basis
points.
17. Post balance sheet
events
As part of the ongoing on-market
share buyback programme, NatWest Group plc has repurchased and
cancelled a further 12.5 million shares since 30 June 2024 for a
total consideration (excluding fees) of £40.9 million.
Other than as disclosed in this
document, there have been no significant events between 30 June
2024 and the date of approval of this announcement which would
require a change to, or additional disclosure, in the
announcement.
18. Date of approval
This announcement was approved by
the Board of Directors on 25 July 2024.
Independent review report to NatWest Group
plc
Conclusion
We have been engaged by NatWest
Group ("the Group") to review the condensed consolidated financial
statements in the half-yearly financial report for the six months
ended 30 June 2024 which comprises of the condensed consolidated
income statement, the condensed consolidated statement of
comprehensive income, the condensed consolidated balance sheet, the
condensed consolidated statement of changes in equity, the
condensed consolidated cash flow statement, related Notes 1 to 18
and the Risk and capital management disclosures for those
identified as within the scope of our review (together "the
condensed consolidated financial statements"). We have read the
other information contained in the half yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed
consolidated financial statements.
Based on our review, nothing has
come to our attention that causes us to believe that the condensed
consolidated financial statements in the half-yearly financial
report for the six months ended 30 June 2024 are not prepared, in
all material respects, in accordance with International Accounting
Standard 34 "Interim Financial Reporting" as adopted by the United
Kingdom (UK) and as issued by the International Accounting
Standards Board (IASB), and the Disclosure Guidance and
Transparency Rules of the UK's Financial Conduct
Authority.
Basis for conclusion
We conducted our review in
accordance with International Standard on Review Engagements 2410
(UK) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
As disclosed in Note 1, the annual
financial statements of the Group are prepared in accordance with
UK adopted International Accounting Standards, and International
Financial Reporting Standards as issued by the International
Accounting Standards Board. The condensed consolidated financial
statements included in this half-yearly financial report have been
prepared in accordance with International Accounting Standard 34,
as adopted by the UK and as issued by the IASB, and the Disclosure
Guidance and Transparency Rules of the UK's Financial Conduct
Authority.
Conclusions relating to Going
Concern
Based on our review procedures,
which are less extensive than those performed in an audit as
described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or
that management have identified material uncertainties relating to
going concern that are not appropriately disclosed.
This conclusion is based on the
review procedures performed in accordance with this ISRE, however
future events or conditions may cause the entity to cease to
continue as a going concern.
Responsibilities of the
directors
The directors are responsible for
preparing the half-yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules of the UK's Financial
Conduct Authority.
In preparing the half-yearly
financial report, the directors are responsible for assessing the
Group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's responsibilities for the
review of the financial information
In reviewing the half-yearly
report, we are responsible for expressing to the Group a conclusion
on the condensed consolidated financial statements in the
half-yearly financial report. Our conclusion, including our
Conclusions Relating to Going Concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for Conclusion paragraph of this report.
Use of our report
This report is made solely to the
Group in accordance with guidance contained in International
Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Group, for our work, for this report, or
for the conclusions we have formed.
Ernst & Young LLP
London, United Kingdom
25 July 2024
NatWest Group plc Summary Risk Factors
Summary of Principal Risks and
Uncertainties
Set out below is a summary of the
principal risks and uncertainties for the remaining six months of
the financial year which could adversely affect NatWest
Group.
This summary should not be regarded
as a complete and comprehensive statement of all potential risks
and uncertainties; a fuller description of these and other risk
factors is included on pages 417 to 441 of the NatWest Group plc
2023 Annual Report and Accounts and pages 160 to 184 of NatWest
Group plc's 2023 Form 20-F. Any of the risks identified may have a
material adverse effect on NatWest Group's business, operations,
financial condition or prospects.
Economic and political
risk
-
NatWest Group, its customers and its
counterparties face continued economic and political risks and
uncertainties in the UK and global markets, including as a result
of inflation and interest rates, supply chain disruption, fiscal
and monetary policy changes (such as increases in bank levies), and
geopolitical developments.
-
Changes in interest rates will continue to affect
NatWest Group's business and results.
-
Fluctuations in currency exchange rates may
adversely affect NatWest Group's results and financial
condition.
-
Continuing uncertainty regarding the effects and
extent of the UK's post Brexit divergence from EU laws and
regulation, and NatWest Group's post Brexit EU operating model may
adversely affect NatWest Group and its operating
environment.
-
HM Treasury (or UKGI on its behalf) could exercise
a significant degree of influence over NatWest Group and further
offers or sales of NatWest Group's shares held by HM Treasury may
affect NatWest Group's reputation or the price of its
securities.
Business change and execution
risk
-
NatWest Group continues to implement its strategy,
which carries significant execution and operational risks and it
may not achieve its stated aims and targeted outcomes.
-
Acquisitions, divestments, other transactions
and/or the withdrawal from the Republic of Ireland by NatWest Group
may not be successful, and consolidation or fragmentation of the
financial services industry may adversely affect NatWest
Group.
-
The transfer of NatWest Group's Western European
corporate portfolio involves certain risks.
Financial resilience risk
-
NatWest Group may not achieve its ambitions,
targets, guidance it communicates or be in a position to continue
to make discretionary capital distributions (including dividends to
shareholders).
-
NatWest Group operates in markets that are highly
competitive, with competitive pressures and technology
disruption.
-
NatWest Group has significant exposure to
counterparty and borrower risk including credit losses, which may
have an adverse effect on NatWest Group.
-
NatWest Group may not meet the prudential
regulatory requirements for liquidity and funding or may not be
able to adequately access sources of liquidity and funding, which
could trigger the execution of certain management actions or
recovery options.
-
NatWest Group may not meet the prudential
regulatory requirements for regulatory capital and MREL, or manage
its capital effectively, which could trigger the execution of
certain management actions or recovery options.
-
Any reduction in the credit rating and/or outlooks
assigned to NatWest Group plc, any of its subsidiaries or any of
their respective debt securities could adversely affect the
availability of funding for NatWest Group, reduce NatWest Group's
liquidity and funding position and increase the cost of
funding.
-
NatWest Group may be adversely affected if it
fails to meet the requirements of regulatory stress
tests.
-
NatWest Group could incur losses or be required to
maintain higher levels of capital as a result of limitations or
failure of various models.
-
NatWest Group's financial statements are sensitive
to underlying accounting policies, judgments, estimates and
assumptions.
-
Changes in accounting standards may materially
impact NatWest Group's financial results.
-
The value or effectiveness of any credit
protection that NatWest Group has purchased depends on the value of
the underlying assets and the financial condition of the insurers
and counterparties.
NatWest Group plc summary risk
factors continued
Financial resilience risk continued
-
NatWest Group is subject to Bank of England and
PRA oversight in respect of resolution, and NatWest Group could be
adversely affected should the Bank of England in the future deem
NatWest Group's preparations to be inadequate.
-
NatWest Group may become subject to the
application of UK statutory stabilisation or resolution powers
which may result in, for example, the cancellation, transfer or
dilution of ordinary shares, or the write-down or conversion of
certain other of NatWest Group's securities.
Climate and sustainability-related risks
- NatWest Group and its value chain face climate-related and
sustainability-related risk that may adversely affect NatWest
Group.
- Climate-related risks may adversely affect the global
financial system, NatWest Group or its value chain.
- NatWest Group and its value chain may face other
sustainability-related risks that may adversely affect NatWest
Group.
- NatWest Group's climate change related strategy, ambitions,
targets and transition plan entail significant execution and/or
reputational risks and are unlikely to be achieved without
significant and timely government policy, technology and customer
behavioural changes.
- There
are significant limitations related to accessing accurate,
reliable, verifiable, auditable, consistent and comparable climate
and other sustainability-related data that contribute to
substantial uncertainties in accurately modelling and reporting on
climate and sustainability information, as well as making
appropriate important internal decisions.
- Failure to implement effective governance, procedures, systems
and controls in compliance with legal, regulatory requirements and
societal expectations to manage climate and sustainability-related
risks and opportunities could adversely affect NatWest
Group.
- Increasing levels of climate and other sustainability-related
laws, regulation and oversight may adversely affect NatWest
Group.
- Increasing regulation of "greenwashing" is likely to increase
the risk of regulatory enforcement and investigation and
litigation.
- NatWest Group may be subject to potential climate and other
sustainability-related litigation, enforcement proceedings,
investigations and conduct risk.
- A
reduction in the ESG ratings of NatWest Group could have a negative
impact on NatWest Group's reputation and on investors' risk
appetite and customers' willingness to deal with NatWest
Group.
Operational and IT resilience risk
-
Operational risks (including reliance on third
party suppliers and outsourcing of certain activities) are inherent
in NatWest Group's businesses.
-
NatWest Group is subject to sophisticated and
frequent cyberattacks.
-
NatWest Group operations and strategy are highly
dependent on the accuracy and effective use of data.
-
NatWest Group's operations are highly dependent on
its complex IT systems and any IT failure could adversely affect
NatWest Group.
-
NatWest Group relies on attracting, retaining and
developing diverse senior management and skilled personnel, and is
required to maintain good employee relations.
-
A failure in NatWest Group's risk management
framework could adversely affect NatWest Group, including its
ability to achieve its strategic objectives.
-
NatWest Group's operations are subject to inherent
reputational risk.
Legal, regulatory and conduct risk
-
NatWest Group's businesses are subject to
substantial regulation and oversight, which are constantly evolving
and may adversely affect NatWest Group.
-
NatWest Group is exposed to the risks of various
litigation matters, regulatory and governmental actions and
investigations as well as remedial undertakings, the outcomes of
which are inherently difficult to predict, and which could have an
adverse effect on NatWest Group.
-
Changes in tax legislation or failure to generate
future taxable profits may impact the recoverability of certain
deferred tax assets recognised by NatWest Group.
Statement of directors' responsibilities
We, the directors listed below,
confirm that to the best of our knowledge:
-
the condensed financial statements have been
prepared in accordance with IAS 34 'Interim Financial Reporting',
as adopted by the UK and as issued by the International Accounting
Standards Board (IASB);
-
the interim management report includes a fair
review of the information required by DTR 4.2.7R (indication of
important events during the first six months and description of
principal risks and uncertainties for the remaining six months of
the year); and
-
the interim management report includes a fair
review of the information required by DTR 4.2.8R (disclosure of
related parties' transactions and changes therein).
By order of the Board
Richard Haythornthwaite
|
John-Paul Thwaite
|
Katie Murray
|
Chair
|
Group Chief Executive
Officer
|
Group Chief Financial
Officer
|
25 July 2024
Board of directors
Chair
|
Executive directors
|
Non-executive directors
|
Richard Haythornthwaite
|
John-Paul Thwaite
Katie Murray
|
Frank Dangeard
Roisin Donnelly
Patrick Flynn
Geeta Gopalan
Yasmin Jetha
Stuart Lewis
Mark Seligman
Lena Wilson
|
Presentation of
information
'Parent company' refers to NatWest
Group plc and 'NatWest Group' and 'we' refers to NatWest Group plc
and its subsidiary and associated undertakings. The term 'NWH
Group' refers to NatWest Holdings Limited (NWH) and its subsidiary
and associated undertakings. The term 'NWM Group' refers to NatWest
Markets Plc (NWM Plc) and its subsidiary and associated
undertakings. The term 'NWM N.V.' refers to NatWest Markets N.V.
The term 'NWMSI' refers to NatWest Markets Securities, Inc. The
term 'RBS plc' refers to The Royal Bank of Scotland plc. The term
'NWB Plc' refers to National Westminster Bank Plc. The term
'UBIDAC' refers to Ulster Bank Ireland DAC.
NatWest Group publishes its
financial statements in pounds sterling ('£' or 'sterling'). The
abbreviations '£m' and '£bn' represent millions and thousands of
millions of pounds sterling, respectively, and references to
'pence' or 'p' represent pence where the amounts are denominated in
pounds sterling ('GBP'). Reference to 'dollars' or '$' are to
United States of America ('US') dollars. The abbreviations '$m' and
'$bn' represent millions and thousands of millions of dollars,
respectively. The abbreviation '€' represents the 'euro', and the
abbreviations '€m' and '€bn' represent millions and thousands of
millions of euros, respectively.
Statutory accounts
Financial information contained in
this document does not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006 ('the Act'). The
statutory accounts for the year ended 31 December 2023 have been
filed with the Registrar of Companies. The report of the auditor on
those statutory accounts was unqualified, did not draw attention to
any matters by way of emphasis and did not contain a statement
under section 498(2) or (3) of the Act.
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
and H1 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.
Additional information
Share information
|
30
June
2024
|
31
March
2024
|
31
December
2023
|
|
|
|
|
Ordinary share price
(pence)
|
312
|
266
|
219
|
|
|
|
|
Number of ordinary shares in issue
(millions)
|
8,307
|
8,727
|
8,792
|
Financial calendar
2024 third quarter interim
management statement
|
25
October 2024
|
Contacts
Analyst enquiries:
Claire Kane, Investor
Relations
+44 (0) 20 7672 1758
Media
enquiries:
NatWest Group Press
Office
+44 (0) 131 523 4205
|
Management presentation
|
Fixed income call
|
Date:
|
26 July 2024
|
26 July 2024
|
Time:
|
9 am
|
1:30 pm
|
Zoom ID:
|
937 3466 0813
|
953 2264 1234
|
Available on natwestgroup.com/results
- Interim Results 2024 and presentation slides.
|
- A
financial supplement containing income statement, balance sheet and
segment performance information for the five quarters ended 30 June
2024.
|
- NatWest Group Pillar 3 at 30 June 2024.
|
Non-IFRS financial measures
NatWest Group prepares its
financial statements in accordance with UK-adopted International
Accounting Standards (IAS) and International Financial Reporting
Standards (IFRS). This document contains a number of non-IFRS
measures, also known as alternative performance measures, defined
under the European Securities and Markets Authority (ESMA) guidance
or non-GAAP financial measures in accordance with the Securities
and Exchange Commission (SEC) regulations. These measures are
adjusted for notable and other defined items which management
believes are not representative of the underlying performance of
the business and which distort period-on-period
comparison.
The non-IFRS measures provide users
of the financial statements with a consistent basis for comparing
business performance between financial periods and information on
elements of performance that are one-off in nature. The non-IFRS
measures also include a calculation of metrics that are used
throughout the banking industry.
These non-IFRS measures are not a
substitute for IFRS measures and a reconciliation to the closest
IFRS measure is presented where appropriate.
Measure
|
Description
|
Cost:income ratio (excl. litigation and
conduct)
Refer to table 2. Cost:income ratio
(excl. litigation and conduct) on page 115.
|
The cost:income ratio (excl.
litigation and conduct) is calculated as other operating expenses
(operating expenses less litigation and conduct costs) divided by
total income. Litigation and conduct costs are excluded as they are
one-off in nature, difficult to forecast for Outlook purposes and
distort period-on-period comparisons.
|
Customer deposits excluding central items
Refer to Segmental performance on
pages 12-16 for components of calculation.
|
Customer deposits excluding central
items is calculated as total NatWest Group customer deposits
excluding Central items & other customer deposits. Central
items & other includes Treasury repo activity and Ulster Bank
RoI. The
exclusion of Central items & other removes
the volatility relating to Treasury repo activity and the reduction
of deposits as part of our withdrawal from the Republic of
Ireland.
These items may distort
period-on-period comparisons and their removal gives the user of
the financial statements a better understanding of the movements in
customer deposits.
|
Funded assets
Refer to Condensed consolidated
balance sheet on page 79 for components of calculation.
|
Funded assets is calculated as
total assets less derivative assets. This measure allows review of
balance sheet trends exclusive of the volatility associated with
derivative fair values.
|
Loan:deposit ratio (excl. repos and reverse
repos)
Refer to table 5. Loan:deposit
ratio (excl. repos and reverse repos) on page 116.
|
Loan:deposit ratio (excl. repos and
reverse repos) is calculated as net customer loans held at
amortised cost excluding reverse repos divided by total customer
deposits excluding repos. This metric is used to assess
liquidity.
The removal of repos and reverse
repos reduces volatility and presents the ratio on a basis that is
comparable to UK peers. The nearest ratio using IFRS measures is:
loan:deposit ratio - this is calculated as net loans to customers
held at amortised cost divided by customer deposits.
|
NatWest Group return on tangible equity
Refer to table 6. NatWest Group
return on tangible equity on page 117.
|
NatWest Group return on tangible
equity comprises annualised profit or loss for the period
attributable to ordinary shareholders divided by average tangible
equity. Average tangible equity is average total equity excluding
average non-controlling interests, average other owners' equity and
average intangible assets. This measure shows the return NatWest
Group generates on tangible equity deployed. It is used to
determine relative performance of banks and used widely across the
sector, although different banks may calculate the rate
differently. The nearest ratio using IFRS measures is: return on
equity - this comprises profit attributable to ordinary
shareholders divided by average total equity.
|
Non-IFRS financial measures
continued
Measure
|
Description
|
Net interest margin and average interest earning
assets
Refer to Segmental performance on
pages 12-16 for components of calculation.
|
Net interest margin is net interest
income, as a percentage of average interest earning assets (IEA).
Average IEA are average IEA of the banking business of NatWest
Group and primarily consists of cash and balances at central banks,
loans to banks, loans to customers and other financial assets
mostly comprising of debt securities. Average IEA shows the average
asset base generating interest over the period.
|
Net loans to customers excluding central
items
Refer to Segmental performance on
pages 12-16 for components of calculation.
|
Net loans to customers excluding
central items is calculated as total NatWest Group net loans to
customers excluding Central items & other net loans to
customers. Central items & other includes Treasury reverse repo
activity and Ulster Bank RoI. The exclusion of Central items &
other removes the volatility relating to Treasury reverse repo
activity and the reduction of loans to customers as part of our
withdrawal from the Republic of Ireland.
This allows for better
period-on-period comparisons and gives the user of the financial
statements a better understanding of the movements in net loans to
customers.
|
Operating expenses excluding litigation and
conduct
Refer to table 4. Operating
expenses - management view on page 116.
|
The management analysis of
operating expenses shows litigation and conduct costs separately.
These amounts are included within staff costs and other
administrative expenses in the statutory analysis. Other operating
expenses excludes litigation and conduct costs, which are more
volatile and may distort period-on-period comparisons.
|
Segmental return on equity
Refer to table 7. Segmental return
on equity on page 117.
|
Segment return on equity comprises
segmental operating profit or loss, adjusted for paid-in equity and
tax, divided by average notional equity. Average RWAe is defined as
average segmental RWAs incorporating the effect of capital
deductions. This is multiplied by an allocated equity factor for
each segment to calculate the average notional equity. This measure
shows the return generated by operating segments on equity
deployed.
|
Tangible net asset value (TNAV) per ordinary
share
Refer to table 3. Tangible net
asset value (TNAV) per ordinary share on page 115.
|
TNAV per ordinary share is
calculated as tangible equity divided by the number of ordinary
shares in issue. This is a measure used by external analysts in
valuing the bank and allows for comparison with other per ordinary
share metrics including the share price. The nearest ratio using
IFRS measures is: net asset value (NAV) per ordinary share - this
comprises ordinary shareholders' interests divided by the number of
ordinary shares in issue.
|
Total income excluding notable items
Refer to table 1. Total income
excluding notable items on page 115.
|
Total income excluding notable
items is calculated as total income less notable items. The
exclusion of notable items aims to remove the impact of one-offs
and other items which may distort period-on-period
comparisons.
|
Non-IFRS financial measures
continued
1. Total income excluding notable
items
|
Half year
ended
|
|
Quarter
ended
|
|
30 June
|
30
June
|
|
30 June
|
31
March
|
30
June
|
|
2024
|
2023
|
|
2024
|
2024
|
2023
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
|
Total income
|
7,134
|
7,727
|
|
3,659
|
3,475
|
3,851
|
Less notable items:
|
|
|
|
|
|
|
Commercial & Institutional
|
|
|
|
|
|
|
Own credit
adjustments (OCA)
|
(7)
|
9
|
|
(2)
|
(5)
|
3
|
Central items & other
|
|
|
|
|
|
|
Liquidity Asset
Bond sale losses
|
-
|
(24)
|
|
-
|
-
|
(11)
|
Share of associate
profits/(losses) for Business Growth Fund
|
11
|
(15)
|
|
4
|
7
|
(3)
|
Interest and FX
management derivatives not in hedge accounting
relationships
|
126
|
52
|
|
67
|
59
|
(23)
|
FX recycling
gains
|
-
|
322
|
|
-
|
-
|
322
|
|
130
|
344
|
|
69
|
61
|
288
|
Total income excluding notable items
|
7,004
|
7,383
|
|
3,590
|
3,414
|
3,563
|
2. Cost:income ratio (excl.
litigation and conduct)
|
Half year
ended
|
|
Quarter
ended
|
|
30 June
|
30
June
|
|
30 June
|
31
March
|
30
June
|
|
2024
|
2023
|
|
2024
|
2024
|
2023
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
|
Operating expenses
|
4,057
|
3,915
|
|
2,005
|
2,052
|
1,927
|
Less litigation and conduct
costs
|
(101)
|
(108)
|
|
(77)
|
(24)
|
(52)
|
Other operating
expenses
|
3,956
|
3,807
|
|
1,928
|
2,028
|
1,875
|
|
|
|
|
|
|
|
Total income
|
7,134
|
7,727
|
|
3,659
|
3,475
|
3,851
|
|
|
|
|
|
|
|
Cost:income ratio
|
56.9%
|
50.7%
|
|
54.8%
|
59.1%
|
50.0%
|
Cost:income ratio (excl.
litigation and conduct)
|
55.5%
|
49.3%
|
|
52.7%
|
58.4%
|
48.7%
|
3. Tangible net asset value (TNAV)
per ordinary share
|
As at
|
|
30 June
|
31
March
|
31
December
|
|
2024
|
2024
|
2023
|
Ordinary shareholders' interests
(£m)
|
32,831
|
33,958
|
33,267
|
Less intangible assets
(£m)
|
(7,590)
|
(7,598)
|
(7,614)
|
Tangible equity (£m)
|
25,241
|
26,360
|
25,653
|
|
|
|
|
Ordinary shares in issue
(millions) (1)
|
8,307
|
8,727
|
8,792
|
|
|
|
|
NAV per ordinary share (pence)
|
395p
|
389p
|
378p
|
TNAV per ordinary share (pence)
|
304p
|
302p
|
292p
|
(1) The number of ordinary shares in issue excludes own shares
held.
Non-IFRS financial measures
continued
4. Operating expenses - management
view
|
Half year
ended
|
|
Quarter
ended
|
|
30 June
|
30
June
|
|
30 June
|
31
March
|
30
June
|
|
2024
|
2023
|
|
2024
|
2024
|
2023
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Other operating expenses
|
|
|
|
|
|
|
Staff expenses
|
2,112
|
1,974
|
|
1,064
|
1,047
|
948
|
Premises and equipment
|
579
|
570
|
|
286
|
293
|
284
|
Other administrative
expenses
|
757
|
794
|
|
343
|
415
|
386
|
Depreciation and
amortisation
|
508
|
469
|
|
235
|
273
|
257
|
Total other operating
expenses
|
3,956
|
3,807
|
|
1,928
|
2,028
|
1,875
|
|
|
|
|
|
|
|
Litigation and conduct costs
|
|
|
|
|
|
|
Staff expenses
|
35
|
31
|
|
21
|
15
|
17
|
Other administrative
expenses
|
66
|
77
|
|
56
|
9
|
35
|
Total litigation and conduct
costs
|
101
|
108
|
|
77
|
24
|
52
|
|
|
|
|
|
|
|
Total operating expenses
|
4,057
|
3,915
|
|
2,005
|
2,052
|
1,927
|
Operating expenses excluding litigation and
conduct
|
3,956
|
3,807
|
|
1,928
|
2,028
|
1,875
|
5. Loan:deposit ratio (excl. repos
and reverse repos)
|
As at
|
|
30 June
|
31
March
|
31
December
|
|
2024
|
2024
|
2023
|
|
£m
|
£m
|
£m
|
Loans to customers - amortised
cost
|
379,331
|
378,010
|
381,433
|
Less reverse repos
|
(24,961)
|
(23,120)
|
(27,117)
|
Loans to customers - amortised cost (excl. reverse
repos)
|
354,370
|
354,890
|
354,316
|
|
|
|
|
Customer deposits
|
432,975
|
432,793
|
431,377
|
Less repos
|
(6,846)
|
(11,437)
|
(10,844)
|
Customer deposits (excl. repos)
|
426,129
|
421,356
|
420,533
|
|
|
|
|
Loan:deposit ratio (%)
|
88%
|
87%
|
88%
|
Loan:deposit ratio (excl. repos
and reverse repos) (%)
|
83%
|
84%
|
84%
|
Non-IFRS financial measures
continued
6. NatWest Group return on tangible
equity
|
|
|
|
|
|
Half year ended and as
at
|
|
Quarter ended and as
at
|
|
|
|
|
|
|
30 June
|
30
June
|
|
30 June
|
31
March
|
30
June
|
|
|
|
|
|
|
2024
|
2023
|
|
2024
|
2024
|
2023
|
|
|
|
|
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Profit attributable to ordinary
shareholders
|
|
|
|
|
|
2,099
|
2,299
|
|
1,181
|
918
|
1,020
|
Annualised profit attributable to
ordinary shareholders
|
|
|
|
|
|
4,198
|
4,598
|
|
4,724
|
3,672
|
4,080
|
|
|
|
|
|
|
|
|
|
|
|
|
Average total
equity
|
|
|
|
|
|
37,535
|
36,562
|
|
37,659
|
37,490
|
36,216
|
Adjustment for average other
owners' equity and intangible assets
|
|
|
|
|
(11,909)
|
(11,352)
|
|
(12,080)
|
(11,684)
|
(11,378)
|
Adjusted total tangible
equity
|
|
|
|
|
|
25,626
|
25,210
|
|
25,579
|
25,806
|
24,838
|
Return on equity
|
|
|
|
|
|
11.2%
|
12.6%
|
|
12.5%
|
9.8%
|
11.3%
|
Return on tangible
equity
|
|
|
|
|
|
16.4%
|
18.2%
|
|
18.5%
|
14.2%
|
16.4%
|
7. Segmental return on
equity
|
|
|
|
|
Half year ended 30 June
2024
|
|
Half
year ended 30 June 2023
|
|
|
|
|
|
Retail
|
Private
|
Commercial
&
|
|
Retail
|
Private
|
Commercial &
|
|
|
|
|
|
Banking
|
Banking
|
Institutional
|
|
Banking
|
Banking
|
Institutional
|
Operating profit (£m)
|
|
|
|
|
1,098
|
99
|
1,707
|
|
1,560
|
234
|
1,741
|
Paid-in equity cost allocation
(£m)
|
|
|
|
|
(34)
|
(8)
|
(83)
|
|
(30)
|
(11)
|
(86)
|
Adjustment for tax (£m)
|
|
|
|
|
(298)
|
(25)
|
(406)
|
|
(428)
|
(62)
|
(414)
|
Adjusted attributable profit
(£m)
|
|
|
|
|
766
|
66
|
1,218
|
|
1,102
|
161
|
1,241
|
Annualised adjusted attributable
profit (£m)
|
|
|
|
|
1,532
|
131
|
2,436
|
|
2,203
|
321
|
2,483
|
Average RWAe (£bn)
|
|
|
|
|
62.2
|
11.1
|
109.0
|
|
56.1
|
11.3
|
105.1
|
Equity factor
|
|
|
|
|
13.4%
|
11.2%
|
13.8%
|
|
13.5%
|
11.5%
|
14.0%
|
Average notional equity
(£bn)
|
|
|
|
|
8.3
|
1.2
|
15.0
|
|
7.6
|
1.3
|
14.7
|
Return on equity (%)
|
|
|
|
|
18.4%
|
10.5%
|
16.2%
|
|
29.1%
|
24.7%
|
16.9%
|
|
Quarter ended 30 June
2024
|
|
Quarter
ended 31 March 2024
|
|
Quarter
ended 30 June 2023
|
|
Retail
|
Private
|
Commercial
&
|
|
Retail
|
Private
|
Commercial &
|
|
Retail
|
Private
|
Commercial &
|
|
Banking
|
Banking
|
Institutional
|
|
Banking
|
Banking
|
Institutional
|
|
Banking
|
Banking
|
Institutional
|
Operating profit (£m)
|
609
|
66
|
938
|
|
489
|
33
|
769
|
|
766
|
101
|
747
|
Paid-in equity cost allocation
(£m)
|
(18)
|
(4)
|
(43)
|
|
(16)
|
(4)
|
(40)
|
|
(15)
|
(6)
|
(42)
|
Adjustment for tax (£m)
|
(165)
|
(17)
|
(224)
|
|
(132)
|
(8)
|
(182)
|
|
(210)
|
(27)
|
(176)
|
Adjusted attributable profit
(£m)
|
426
|
45
|
671
|
|
341
|
21
|
547
|
|
541
|
68
|
529
|
Annualised adjusted attributable
profit (£m)
|
1,702
|
179
|
2,685
|
|
1,362
|
84
|
2,187
|
|
2,163
|
274
|
2,115
|
Average RWAe (£bn)
|
62.7
|
11.1
|
109.0
|
|
61.7
|
11.2
|
109.0
|
|
56.8
|
11.4
|
106.0
|
Equity factor
|
13.4%
|
11.2%
|
13.8%
|
|
13.4%
|
11.2%
|
13.8%
|
|
13.5%
|
11.5%
|
14.0%
|
Average notional equity
(£bn)
|
8.4
|
1.2
|
15.0
|
|
8.3
|
1.3
|
15.0
|
|
7.7
|
1.3
|
14.8
|
Return on equity (%)
|
20.3%
|
14.4%
|
17.8%
|
|
16.5%
|
6.7%
|
14.6%
|
|
28.2%
|
20.8%
|
14.3%
|
Performance measures not defined under IFRS
The table below summarises other
performance measures used by NatWest Group, not defined under IFRS,
and therefore a reconciliation to the nearest IFRS measure is not
applicable.
Measure
|
Description
|
AUMAs
|
AUMAs comprises both assets under
management (AUMs) and assets under administration (AUAs) serviced
through the Private Banking segment. AUMs comprise assets where the
investment management is undertaken by Private Banking on behalf of
Private Banking, Retail Banking and Commercial & Institutional
customers.
AUAs comprise i) third party assets
held on an execution-only basis in custody by Private Banking,
Retail Banking and Commercial & Institutional for their
customers, for which the execution services are supported by
Private Banking, and for which Private Banking receives a fee for
providing investment management and execution services to Retail
Banking and Commercial & Institutional business segments ii)
AUA of Cushon, acquired on 1 June 2023, which are supported by
Private Banking and held and managed by third parties.
This measure is tracked and
reported as the amount of funds that we manage or administer, and
directly impacts the level of investment income that we
receive.
|
AUM net flows
|
AUM net flows refer to client cash
inflows and outflows relating to investment products (this can
include transfers from savings accounts). AUM net flows exclude the
impact of European Economic Area (EEA) resident client outflows
following the UK's exit from the EU and Russian client outflows
since Q1 2022.
AUM net flows is reported and
tracked to monitor the business performance of new business inflows
and management of existing client withdrawals across Private
Banking, Retail Banking and Commercial &
Institutional.
|
Climate and sustainable funding and
financing
|
The climate and sustainable funding
and financing metric is used by NatWest Group to measure the level
of support it provides customers, through lending products and
underwriting activities, to help in their transition towards a net
zero, climate resilient and sustainable economy. We have a target
to provide £100 billion of climate and sustainable funding and
financing between the 1 of July 2021 and the end of 2025. As part
of this, we aim to provide at least £10 billion in lending for
residential properties with EPC ratings A and B between 1 January
2023 and the end of 2025.
|
Loan impairment rate
|
Loan impairment rate is the
annualised loan impairment charge divided by gross customer loans.
This measure is used to assess the credit quality of the loan
book.
|
Third party rates
|
Third party customer asset rate is
calculated as annualised interest receivable on third-party loans
to customers as a percentage of third-party loans to customers.
This excludes assets of disposal groups, intragroup items, loans to
banks and liquid asset portfolios. Third party customer funding
rate reflects interest payable or receivable on third-party
customer deposits, including interest bearing and non- interest
bearing customer deposits. Intragroup items, bank deposits, debt
securities in issue and subordinated liabilities are excluded for
customer funding rate calculation.
|
Wholesale funding
|
Wholesale funding comprises
deposits by banks (excluding repos), debt securities in issue and
subordinated liabilities. Funding risk is the risk of not
maintaining a diversified, stable and cost-effective funding base.
The disclosure of wholesale funding highlights the extent of our
diversification and how we mitigate funding risk.
|
Legal Entity Identifier:
2138005O9XJIJN4JPN90