FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For 19
February, 2021
Commission
File Number: 001-10306
NatWest
Group plc
RBS,
Gogarburn, PO Box 1000
Edinburgh
EH12 1HQ
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form
20-F X Form 40-F
___
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule
101(b)(1):_________
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule
101(b)(7):_________
Indicate
by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
Yes ___
No X
If
"Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-
________
The following information was issued as Company announcements
in London, England and is furnished pursuant to General Instruction
B to the General Instructions to Form
6-K:
Annual Results
For the year ended 31 December
2020
natwestgroup.com
NatWest Group plc
2020 NatWest Group performance summary
Alison Rose, Chief Executive Officer:
“The
past year presented some extraordinary challenges for our
customers, colleagues and communities. We provided exceptional
levels of support to those who needed it, including the approval of
over £14 billion of lending under UK Government schemes,
demonstrating that we have truly put Our Purpose at the heart of
this business. Being purpose-led isn’t just the right thing
to do, it has a powerful commercial imperative and is fundamental
to building sustainable value in our business.
Despite
reporting a loss for the year, NatWest Group delivered a resilient
underlying performance in a challenging operating environment. The
bank continued to grow in key areas such as mortgages and
commercial lending and our balance sheet remains strong, with one
of the highest capital ratios amongst our UK and European peers. We
have today announced our intention to pay a final dividend whilst
reaffirming our commitment to regular capital returns for
shareholders in the future.
We made
strong progress in executing the strategy we set out in February
2020 as we build a relationship bank for a digital world; a bank
that will meet the rapidly evolving needs of our customers at
different stages of their lives through an ever-increasing focus on
digital and transformation. In turn, this will drive sustainable,
long-term returns to our shareholders.
We
cannot be certain of the long-term impact of the pandemic. But we
can be certain that our bank will continue to support those who
need it most as we build back better. By championing potential and
helping people, families and businesses to rebuild and thrive, we
will succeed together.”
Financial performance in a challenging environment
●
|
Full
year 2020 operating loss of £351 million and an attributable
loss of £753 million. Q4 2020 operating profit before tax of
£64 million and an attributable loss of £109
million.
|
●
|
Full
year 2020 net impairment losses of £3,242 million, or 88 basis
points of gross customer loans, resulted in an expected credit loss
(ECL) coverage ratio of 1.66%.
|
●
|
In
comparison to 2019, income across the retail and commercial
businesses, excluding notable items, decreased by 10.0% as the
lower yield curve, subdued business activity and lower consumer
spending were partially offset by strong balance
growth.
|
●
|
2020
Bank net interest margin (NIM) of 1.71% decreased by 28 basis
points compared with 2019. Q4 2020 Bank NIM of 1.66% increased by 1
basis point in comparison to Q3 2020 as lower average central
liquidity and improved asset margins more than offset reduced
structural hedge income as a result of lower swap
rates.
|
●
|
A cost
reduction of £277 million was achieved during 2020, ahead of
our £250 million target for the year.
|
Robust balance sheet with strong capital and liquidity
levels
|
●
|
CET1
ratio of 18.5%, was 230 basis points higher than 2019, including
c.100 basis points related to IFRS 9 transitional relief. The CET1
ratio increased by 30 basis points in comparison to Q3 2020 as the
£3.6 billion reduction in RWAs and a 23 basis point software
intangible benefit were partially offset by the 3 pence proposed
final dividend, 21 basis points, and linked pension contribution,
16 basis points.
|
●
|
The
liquidity coverage ratio (LCR) of 165%, representing £72.1
billion headroom above 100%, increased by 13 percentage points in
comparison to 2019. In comparison to Q3 2020 LCR increased by 8
percentage points reflecting the continued growth in customer
deposits.
|
●
|
Net lending across the retail
and commercial businesses increased by £20.9 billion in 2020
supported by £12.9 billion drawdowns against UK Government
lending schemes and £16.2 billion mortgage lending, including
£3.0 billion related to the Metro Bank plc mortgage portfolio
acquisition. This growth has been partially offset by lower
unsecured balances, which were impacted by lower spend and higher
repayments, subdued business activity and increased loan
provisions. In Q4 2020, net lending across the retail and
commercial businesses increased by £4.5 billion as mortgage
growth of £6.2 billion and £1.6 billion of lending
against UK Government lending schemes more than offset £2.4
billion net revolving credit facility (RCF)
repayments.
|
●
|
Customer
deposits increased by £62.5 billion in comparison to 2019,
with retail and commercial balances £60.5 billion higher as
consumer spending was impacted by government restrictions and
customers retained liquidity. In Q4 2020, customer deposits
increased by £13.3 billion.
|
●
|
RWAs
decreased by £8.9 billion in comparison to 2019, including an
£11.0 billion reduction in NatWest Markets to £26.9
billion, partially offset by volume growth across the retail and
commercial businesses with minimal levels of procyclical credit
risk inflation. RWAs reduced by £3.6 billion in Q4 2020,
largely in NatWest Markets.
|
Our Purpose in action – we champion potential, helping
people, families and businesses to thrive
Helping our customers, colleagues and communities through the
impacts of COVID-19
Provided lending support to our customers with a disciplined
approach to risk:
●
Approved £14.1 billion through the government
lending initiatives.(1)
●
Facilitated approximately £9.5 billion of
COVID-19 Corporate Financing Facilities (CCFF)
issuances.(2)
Supported the financial health of our customers:
●
Helped customers with approximately 258,000
mortgage repayment holidays and provided payment holidays on over
74,000 business customer accounts.(3)
●
95%
of branches have been kept open during the pandemic and a new
'virtual queuing system' developed, with software developer Qudini,
so customers who need to visit one of our branches can do so as
safely as possible.
Long-term investment plan is powering our operational
effectiveness:
●
Increased
digital adoption with 9.4 million active digital users (2019 - 8.7
million), and with video banking now available across our entire
network, interactions have increased from fewer than 100 per week
in January 2020 to almost 9,000 per week by the end of
2020.
●
Announced
an integration with global small business platform Xero, allowing
its users to apply for NatWest Rapid Cash, a flexible line of
credit based on outstanding invoices up to the value of
£300,000, providing simple, swift support to a number of key
businesses during the pandemic.
Prioritised the wellbeing of our colleagues:
●
Continued
to support more than 50,000 colleagues to work from home. The
timing of a phased return to our offices will be led by UK
Government guidance and factors such as the progress of
vaccinations.
●
Introduced
a new digital physiotherapy offering, giving colleagues free access
to physiotherapy advice, complementing existing resources to
maintain and enhance colleague health, such as virtual GPs and the
SilverCloud wellbeing platform.
Partnered and responded proactively to support UK
communities:
●
Extended
our support for vulnerable customers through a joint referral
service with Citizens Advice, offering support to customers who
need assistance to address the root cause of their financial
vulnerability.
●
Launched
the Winter Sparkle campaign, sending food, clothes, basic home
supplies and toys from the Gogarburn food bank and charity
distribution centres to people experiencing winter poverty across
the UK.
Progress against areas of focus
Enterprise – addressing barriers to enterprise and business
creation:
●
Launched
an SME Transformation Taskforce, co-chaired by NatWest Group and
the Federation of Small Businesses, bringing together policymakers,
business groups and other stakeholders to share insights and
discuss recommendations of support to spark growth back into this
crucial part of the UK economy.
●
In
January 2020, we announced £1 billion of funding for female
entrepreneurs, which has all been committed, we have now doubled
this funding to £2 billion to help support female-led
businesses to recover from the disruption caused by the
coronavirus.
Learning – skill building, particularly around financial
confidence:
●
Reached
2.9 million people through financial capability interactions in
2020.
●
Launched
Financial Flex campaign to encourage Brits – especially
younger generations – to start talking more openly and
honestly about their finances to combat growing worries around
money.
Climate – supporting the necessary transition to a low carbon
economy:
●
Supported
our customers with £12.0 billion of Climate and Sustainable
Funding and Financing in 2020.
●
Launched
Green Mortgages offering a preferential interest rate to new or
existing customers who are purchasing an energy efficient
property.
●
Announced
we will be the banking sponsor of the 26th UN Climate Change
Conference of the Parties (COP26).
Diversity and inclusion – building an open and inclusive bank
where everyone can thrive:
●
At
the end of 2020 we have, on aggregate, 39% women in our top three
leadership layers, an increase of 10% since targets were introduced
in 2015.
●
As
at the 31 December 2020 we have on aggregate 10% Black, Asian and
Minority Ethnic colleagues in our top four leadership layers in the
UK, representing a 2% increase since targets were introduced to
improve representation to at least 14% by 2025.
Notes:
(1)
As at 31 December
2020, inclusive of Commercial Banking and Private Banking: Bounce
Back Loan Scheme (BBLS) – £8.6 billion; Coronavirus
Business Interruption Loan Scheme (CBILS) – £4.2
billion, Coronavirus Large Business Interruption Loan Scheme
(CLBILS) – £1.3 billion.
(2)
As at 31 December
2020.
(3)
For the year ended
31 December 2020 in Retail Banking and since 22 March 2020 in
Commercial Banking, there were c.16,000 active mortgage repayment
holidays and c.11,000 active payment holidays on business customer
accounts.
Chief Executive’s Statement
We champion potential, helping people, families and businesses to
thrive.
Dear
shareholders,
The
past year presented some extraordinary challenges for our
customers, colleagues and communities in the face of an ongoing
global health crisis that led to a widespread economic
crisis.
Throughout
the course of the year, we responded at pace, providing exceptional
levels of support to those who needed it and demonstrating that we
have truly put Our Purpose at the heart of this business. In the
face of such trying circumstances, I am proud of the resilience,
empathy and kindness exhibited by so many of my colleagues across
the bank.
We
champion potential; breaking down barriers and building financial
confidence so the 19 million people, families and businesses we
serve in communities up and down the country can rebuild and
thrive.
But
COVID-19 has created opportunities as well as challenges, and it
has accelerated a number of underlying trends in customer
behaviour, our ways of working and the future shape of our
economy.
We look
forward with renewed hope and positivity and although we cannot be
certain of the long-term impact of the pandemic, this bank will
continue to serve our customers and support those who need it most.
We will succeed together and, as a result, NatWest Group will drive
sustainable, long-term returns for our shareholders.
Financial Performance
Despite
reporting a loss for the year, NatWest Group delivered a resilient
underlying performance through the strength of our core franchises
and brands in a challenging operating environment. Our attributable
loss of £753 million for 2020 reflects an impairment charge of
£3.2 billion, a significant proportion of this impairment
charge relates to potential future loan losses under IFRS 9. We
continue to experience relatively low levels of actual default in
our lending book, which is well diversified with limited exposure
to unsecured loans. Before impairments, NatWest Group made an
operating profit of £2.9 billion.
At
18.5% our CET1 ratio – the key measure of financial strength
– is one of the highest amongst our UK and European peers.
This capital strength gives us the flexibility to navigate the
continuing uncertainty, return capital to shareholders and consider
options for creating shareholder value.
In the
face of extreme disruption, we made determined progress against the
strategy we set out in February 2020 and surpassed our financial
targets. We are building a relationship bank for a digital world; a
bank that supports customers at every stage of their lives, that is
simple to deal with and that is powered by innovation and
partnerships, with far sharper capital allocation.
We have
significant capacity to grow, with activity levels increasing
across both our retail and commercial businesses. Net lending grew
7% in 2020, while our gross new mortgage lending represented a
share of around 13%, taking our stock share to almost
11%.
In
December 2020, we supplemented the organic growth we continue to
achieve in mortgages with the acquisition of a £3 billion
mortgage book from Metro Bank plc. This was our first significant
acquisition since the financial crisis and represented a positive
use of our strong capital position in a key area of
focus.
Championing potential through COVID-19
Colleagues
The
safety and wellbeing of our colleagues has been, and remains, a
priority for the bank throughout the pandemic. We introduced
resources to maintain and enhance the physical and mental health of
our colleagues, providing access to virtual GPs, the SilverCloud
wellbeing platform and free physiotherapy advice. For almost 10,000
keyworker colleagues who have remained on the frontline, all of our
offices and branches were made COVID-secure. Around 50,000
colleagues have been working from home since March last year,
supported by the delivery of 37,000 tech bundles and over 25,000
chairs and desks. The timing of a phased return to our offices will
be led by UK Government guidance and factors such as the progress
of vaccinations.
We
continue to create opportunities for new talent from a range of
backgrounds to join our organisation, including through our Social
Mobility Apprenticeship Programme – one of the first of its
kind in the UK – as well as providing existing colleagues
with easy access to the very best learning through the NatWest
Group Learning Academy.
Chief Executive’s Statement continued
Customers
From
the start of the pandemic, it was clear that this was not business
as usual. By pivoting our business at pace and collaborating with
politicians, regulators and industry leaders, we were able to
continue to serve our customers in the face of unprecedented
demand.
In
total, we approved around £14 billion of loans for business
customers under the different government schemes in 2020 and
provided 258,000 mortgage holidays. We delivered £5.2 million
of cash securely to our customers in vulnerable situations and made
almost 480,000 calls to check up on them, whilst also introducing a
Companion Card that allowed trusted volunteers to pay for their
essential goods.
Thanks
to the extraordinary dedication of our colleagues, we have remained
on the high street, supporting our customers and consistently
keeping more than 95% of our branches open.
We have
more than 800 branches and 16,000 physical points of presence,
including our ATM network and our relationship with the Post
Office. These remain an important part of how we deliver services
to our customers.
The
pandemic has also accelerated trends in how our customers want to
bank with us. In particular, we have seen a rapid increase in
digital adoption. We now have 9.4 million active digital users and
7.7 million active users of our mobile app. 58% of our retail
customer base in the UK now exclusively uses digital channels to
interact with us, an increase of 12% compared with
2019.
For
business customers, we were able to extend over £8 billion of
Bounce Back Loans by creating an end to end digital application
process within the space of a week.
As we responded to COVID-19, we also migrated our enterprise
support initiatives to be delivered digitally. Our 12 entrepreneur
accelerator hubs held over 1,000 virtual events with 45,782
attendees since the start of lockdown.
Communities
As a
relationship bank that sits at the heart of communities up and down
the country, we have a responsibility to provide support to the
most vulnerable people in society.
Leveraging
existing relationships, part of our Gogarburn HQ was transformed
into a food bank distribution hub for the Social Bite, Trussell
Trust and Cyrenians charities. We’ve supported these
charities to produce over one million meals for those in need since
the start of March 2020 and we became
a vital distribution network for items such as 240,000 books and
education packs, 250,000 items of essential clothing and over
200,000 items of toiletries, masks, hand sanitisers and snacks.
Meanwhile, the roof garden at our Coutts office on The
Strand donated produce to the Felix Project which delivers surplus
food to food banks, schools and charities throughout
London.
The
bank also raised £10 million by match-funding customer
donations to the National Emergencies Trust and established a
£5 million fund with the Prince’s Trust to help young
entrepreneurs during the crisis. Working with SafeLives, we
launched a review into how we can better support customers who have
been victims of economic abuse and acquired coercive debt and
announced a £1 million fund to support survivors of economic
and domestic abuse.
Our Purpose
The
COVID-19 pandemic has not distracted us from Our Purpose; we
champion potential, helping people, families and businesses to
thrive. Nor has it distracted us from the three key areas of focus
we set out in February 2020. If anything, it has made them even
more important. Our Purpose also has a powerful commercial
imperative. If our customers succeed, so will we.
By
removing barriers, building financial capability, championing
equality and helping to tackle climate change, we are determined to
pave the way for a better future.
Removing barriers to enterprise
We are already the largest supporter of UK business, serving around
1 in 4 UK businesses. However, we know that setting up and running
a business is harder than it should be for under-represented
groups, including for female and Black, Asian and Minority
Ethnic-led businesses. We want to remove these
barriers.
In 2020, as a result of the pandemic, we launched an SME response
strategy that supported four million of our current customers to
help them survive and thrive through the crisis.
Chief Executive’s Statement continued
At the start of last year, we also created a £1 billion fund
aligned to our focus on supporting female entrepreneurs. During the
course of 2020, all of this fund was allocated, leading us to
announce an additional £1 billion in funding to help support
female-led businesses recover from the disruption caused by
coronavirus.
Building financial capability
Developing
good habits can help to transform people’s relationships with
money, and this has never been more important given the economic
disruption we continue to face. We helped 600,000(1) customers to start
saving with us in 2020, with a view to helping two million by
2023.
Building
financial confidence and capability is especially important for
young people. Over the last 26 years, our flagship MoneySense
financial education programme has reached more than nine million
children in 1 in 3 UK schools and last year we reached more than
2.9 million people though our various financial capability
interactions.
We also
launched Island Saver, the world’s first financial education
mobile, console and PC game for children. With more than 2.3
million downloads, it has helped us to engage children from a young
age in the importance of managing their money.
Leading the climate challenge
Climate
change is the greatest challenge facing the planet. Tackling it
requires collaboration across governments, industries and
society.
We are
determined to play a leading role in driving positive change. In
November 2020, we announced that NatWest Group will be one of the
Principal Partners and banking sponsor of the 26th UN Climate
Change Conference of the Parties (COP26), taking place in Glasgow
later this year.
There
is much more we can do, both to get our own house in order and to
help our customers in the transition to a low-carbon economy. We
have set ourselves the ambitious goals of at least halving the
climate impact of our financing by 2030 and making our own
operations climate positive by 2025, having made them net carbon
zero in 2020.
As a
founding signatory to the UN Principles for Responsible Banking we
are committed to aligning our strategy with the 2015 Paris Climate
and UN Sustainable Development Goals.
In
2020, we helped our business customers
with £12 billion of new climate and sustainable financing and
funding. We also launched our first ever Green Mortgage in
October 2020 and are supporting the drive to decarbonise the UK
transportation sector through the Future Mobility
Group.
Lord
Stern was appointed as an independent adviser to NatWest Group to
help us achieve our ambitions and James Close as our new Director,
Climate Change, to co-ordinate and deliver our climate
strategy.
Our strategy
NatWest Group will be a relationship bank for a digital world. Our
strategy is to deliver on Our Purpose and drive sustainable returns
to shareholders through our four strategic priorities.
Supporting
customers at every stage of their lives
We will be more relevant to our customers by building deeper
relationships and evolving our proposition to meet their needs
throughout their lives. We benefit from having strong customer
franchises across the business that provide multiple growth
opportunities. For example, by bringing together our wealth
businesses we can serve our customers better by focusing on the
changing financial requirements through each stage of their
lifetime.
Powered by innovation and partnerships
We invest around £1 billion each year to continuously improve
our customers’ experience by harnessing our internal
expertise and partnering with some of the most innovative companies
from around the world. We have already created a strong culture of
innovation with the development of customer propositions such as
Mettle. We have also partnered with Pollinate to produce the
award-winning Tyl. And we established a new relationship with
BlackRock to support our investment management processing
activity.
Note:
(1)
Includes
instances where customers had existing savings with other banks and
transferred them into their NatWest Group account.
Chief Executive’s Statement continued
Simple to deal with
We are becoming much simpler as a bank and much simpler to deal
with for our customers. As part of our One Bank operating
model, we are creating key Centres of Excellence in areas such as
climate change, fraud and financial crime which bring together the
expertise of colleagues from across NatWest Group for the benefit
of our customers. By reducing complexity and improving efficiency,
we continue to take costs out of our operating model, delivering
£277 million of cost reductions in 2020, against our £250
million target.
Sharpened capital allocation
Our capital is a resource to be used across the bank, to drive
growth and optimise returns from a safe and secure base. A crucial
element of this plan is refocusing NatWest Markets to serve our
corporate and commercial customers better. Risk weighted assets in
NatWest Markets reduced by £11 billion to £26.9 billion
in 2020, exceeding our target for 2020, with a further reduction to
£20 billion planned for the medium term. NatWest Markets is
far more closely aligned to the rest of NatWest Group and its
market-leading role in providing customers with access to COVID-19
Corporate Financing Facilities and to environmental, social and
governance (ESG) finance are further examples of the strength of
this franchise.
Ulster Bank RoI
In recent years, our strategy for Ulster Bank in the Republic of
Ireland has been to improve returns by growing the business,
reducing costs and resolving legacy issues. I want to pay tribute
to our colleagues who through their commitment and dedication have
helped to transform this business. Our priority over the coming
months will remain on supporting our customers, communities and
colleagues through these difficult times.
Following an extensive review and despite the progress that has
been made, it has become clear Ulster Bank will not be able to
generate sustainable long term returns for our shareholders. As a
result, we are to begin a phased withdrawal from the Republic of
Ireland over the coming years which will be undertaken with careful
consideration of the impact on customers and our
colleagues.
Overview
Overall, we delivered well against our strategy throughout 2020.
Looking ahead, we have set a number of financial targets across a
three year plan to 2023; to deliver lending growth above market
rate, to reduce costs by around 4% each year and to operate with a
CET1 capital ratio of 13% to 14% by 2023. Taken together, our four
strategic priorities will drive sustainable, long-term returns to
our shareholders and we are targeting a return on tangible equity
of 9% to 10% by 2023.
An
additional priority throughout the year was to put in place a
leadership structure to deliver our strategy. As a result, I made a
number of important external appointments including David Lindberg
as CEO, Retail Banking, Jen Tippin as Chief Transformation Officer,
Nigel Prideaux as Chief Communications Officer and Marg Jobling as
Chief Marketing Officer. Each brings considerable experience and
expertise to their respective roles and we are already working
closely together. Some of my former colleagues, including our CEO
of Retail Banking, Les Matheson, left the bank to pursue
opportunities elsewhere. I would like to thank them for their
invaluable contributions over many years and wish them all the best
for the future.
Chief Executive’s Statement continued
A diverse and inclusive bank
We
continue to focus on building a more diverse and inclusive
organisation. At the end of 2020, 39% of the roles in our top three
leadership layers were held by female colleagues, a 10% uplift
since our targets were introduced.
2020
also brought an increased focus on racial inequality with the
tragic death of George Floyd and the rise of the Black Lives Matter
movement. Following the establishment of a taskforce led by the
co-chairs of our multicultural network, we published a report -
Banking on Racial Equality: A Positive Roadmap for Change - looking
at what more we could do to champion the potential of colleagues,
customers and communities from Black, Asian and Minority Ethnic
backgrounds.
This
built on the targets we put in place in 2018 to increase the number
of colleagues from Black, Asian and Minority Ethnic backgrounds in
our top four UK leadership layers in the bank to 14% by 2025. We
currently have 10% Black, Asian and Minority Ethnic representation
amongst our UK senior leaders, a 2% increase since the targets were
introduced. Under our new commitments, we have launched a separate
goal to have 3% Black colleagues in senior UK roles by
2025.
A sustainable future
Our
robust balance sheet and sector-leading capital strength,
underpinned by a resilient business with strong capacity for
growth, gives us the flexibility to navigate the uncertain outlook,
support our customers and deliver sustainable returns to
shareholders.
But we
can only deliver these returns through our strong culture and
values, with purpose at our core. We have passionate, motivated and
engaged colleagues, despite all the challenges of COVID-19 and with
most people working from home for a considerable period of time:
95% of colleagues think we’re doing a good job responding to
the pandemic and 92% are proud of our contribution to community and
society. These numbers mean a lot to me. They give me confidence
that we are building a sustainable future for this
bank.
The way
we live and work is changing. And people’s expectations of
companies are changing as well. We won’t always get
everything right. But by collaborating with others and
demonstrating that we can play a positive role in society, we will
help to create a greener, fairer and more inclusive economy for
all, allowing us to deliver long-term sustainable value for all our
shareholders.
And by
championing potential and helping people, families and businesses
to rebuild and thrive, we will succeed together.
Outlook(1)
NatWest
Group, as with all companies, continues to deal with a range of
significant risks and uncertainties in the external economic,
political and regulatory environment. Expectations regarding the
rate of economic recovery continue to change rapidly in response to
government measures to limit the spread of COVID-19, expectations
around the rollout of COVID-19 vaccines and policy measures to
support the recovery.
Our central economic forecasts, as detailed on pages 173-175 in the
2020 Annual Report and Accounts, support our corporate plan, and
are in line with the consensus view. The rollout of COVID-19
vaccines enables recovery through 2021, with GDP
growth of around 4.5% expected, gradually moderating thereafter.
Interest rates are expected to remain low throughout the forecast
horizon, with an anticipated reduction in the central bank rate to
zero in the second quarter of 2021. The unemployment rate reaches
around 7% before beginning to steadily reduce from 2022, supported
by the ongoing recovery. A decline in house prices in the
low-single digits is forecast for 2021 before improving
steadily.
The
short and medium term outlook continues to be subject to
significant uncertainty and we will continue to actively monitor
and react to market conditions and refine our internal forecasts as
the economic position evolves.
2021 Outlook
We plan
on reducing other expenses, excluding OLD, by around 4% in
comparison to 2020, excluding any change in the direct cost base of
Ulster Bank RoI. We also expect to incur strategic costs of around
£0.8 billion during 2021 from the continued refocussing of
NatWest Markets and resizing of the Group’s cost
base.
We
expect NatWest Markets exit and disposal costs and the impact of
Commercial Banking capital management actions to total a combined
£0.3 billion in 2021.
Our
full year 2020 impairment loss rate was 88 basis points of gross
customer loans. We expect that the full year 2021 loss rate will be
at or below our through the cycle guidance of 30-40 basis points,
with losses driven by a combination of the developing economic
outlook for the UK and Republic of Ireland and the level of
economic distress experienced by our personal and commercial
customers as government support measures scale down and
restrictions ease.
We are
targeting above market rate lending growth across our UK and RBS
International retail and commercial businesses, excluding UK
Government financial support schemes.
We
expect NatWest Group RWAs, including Ulster Bank RoI, to be in the
range of £185-195 billion, when including on a proforma basis
the impact of Bank of England’s mortgage risk weight changes
and other model changes introduced on 1 January 2022. The impact of
the mortgage regulatory changes is expected to be around £12
billion, subject to the timing and quantum of any procyclicality
before implementation and based on the current book size and
weighting. The £12 billion equates to an anticipated book risk
weight of 15% which is subject to change. In 2021 we also expect to
achieve the majority of the remaining NatWest Markets RWA reduction
towards the medium term target of £20 billion, but expect
minimal reduction in RWAs in Ulster Bank RoI in 2021 as a result of
the completion of the strategic review announced today. Other
changes in RWAs will be driven by the level of procyclical
inflation driven by the economic outlook, downgrades in the credit
quality and assessments in the commercial book and ongoing demand
for lending from our customers.
NatWest
Group capital and funding plans focus on issuing £3-5 billion
of MREL-compliant instruments, with a continued focus on issuance
under our Green, Social and Sustainability Bond Framework, around
£1.0 billion of AT1 and around £2.0 billion of Tier 2
instruments. As in prior years, we will continue to target other
funding sources to diversify our funding structure.
Medium term outlook
We
expect to achieve a return on tangible equity of 9-10% and a CET1
capital ratio of 13-14% by 2023. Supporting this we are targeting
above market rate lending growth per annum across our UK and RBS
International retail and commercial businesses and expect annual
cost reduction of around 4%, excluding the impact of the phased
withdrawal from the Republic of Ireland, along with continued
strategic cost reduction.
We
anticipate RWA inflation from Basel 3 amendments to be less than 5%
of RWAs as at 31 December 2020 and currently expect implementation
in 2023. The details of Basel 3 amendments remain subject to
regulatory uncertainty on both quantum and timing.
As a
result of the decision to withdraw from the Republic of Ireland
announced today we would expect the level of RWAs to reduce in the
coming years, and for this withdrawal to be capital accretive for
NatWest Group across the multi-year process.
NatWest Group capital distributions
Subject
to economic conditions being in line with, or better than, our
central economic forecast, NatWest Group intends to maintain
ordinary dividends of around 40% of attributable profit and aims to
distribute a minimum of £800 million per annum from 2021 to
2023 via a combination of ordinary and special dividends. NatWest
Group intends to maintain the required capacity to participate in
directed buybacks of the UK Government stake and recognises that
any exercise of this authority would be dependent upon HMT’s
intentions and is limited to 4.99% of issued share capital in any
12 month period.
Note:
|
(1)
|
The guidance, targets, expectations and trends discussed in this
section represent NatWest Group plc management’s current
expectations and are subject to change, including as a result of
the factors described in the “Risk Factors” section on
pages 345 to 362 of the NatWest Group plc 2020 Annual Report and
Accounts and
on pages 156 to 172 of the NatWest Markets Plc 2020 Annual Report
and Accounts These statements constitute forward-looking
statements. Refer to Forward-looking statements in this
document.
|
Business performance summary
|
Year ended
|
|
Quarter ended
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
2020
|
2019
|
|
2020
|
2020
|
2019
|
Total income
|
£10,796m
|
£14,253m
|
|
£2,535m
|
£2,423m
|
£4,233m
|
Operating expenses
|
(£7,905m)
|
(£9,325m)
|
|
(£2,341m)
|
(£1,814m)
|
(£2,527m)
|
Profit before impairment losses
|
£2,891m
|
£4,928m
|
|
£194m
|
£609m
|
£1,706m
|
Operating (loss)/profit before tax
|
(£351m)
|
£4,232m
|
|
£64m
|
£355m
|
£1,546m
|
(Loss)/profit attributable to ordinary shareholders
|
(£753m)
|
£3,133m
|
|
(£109m)
|
£61m
|
£1,410m
|
|
|
|
|
|
|
|
Excluding notable items
within total income (1)
|
|
|
|
|
|
|
Total income excluding notable items
|
£11,180m
|
£12,138m
|
|
£2,616m
|
£2,720m
|
£3,019m
|
Operating expenses
|
(£7,905m)
|
(£9,325m)
|
|
(£2,341m)
|
(£1,814m)
|
(£2,527m)
|
Profit before impairment losses and excluding notable
items
|
£3,275m
|
£2,813m
|
|
£275m
|
£906m
|
£492m
|
Operating profit before tax and excluding notable
items
|
£33m
|
£2,117m
|
|
£145m
|
£652m
|
£332m
|
|
|
|
|
|
|
|
Performance key metrics and ratios
|
|
|
|
|
|
|
Bank net interest margin (NatWest Group NIM excluding NWM)
(2)
|
1.71%
|
1.99%
|
|
1.66%
|
1.65%
|
1.93%
|
Bank average interest earning assets
|
|
|
|
|
|
|
(NatWest Group excluding
NWM) (2)
|
£455bn
|
£413bn
|
|
£473bn
|
£469bn
|
£420bn
|
Cost:income ratio (2)
|
72.9%
|
65.1%
|
|
92.2%
|
74.5%
|
59.4%
|
Loan impairment rate (2)
|
88bps
|
21bps
|
|
14bps
|
28bps
|
19bps
|
Earnings per share
|
|
|
|
|
|
|
-
basic
|
(6.2p)
|
26.0p
|
|
(0.9p)
|
0.5p
|
11.7p
|
Return on tangible equity (2)
|
(2.4%)
|
9.4%
|
|
(1.4%)
|
0.8%
|
17.7%
|
|
31 December
|
30 September
|
31 December
|
|
2020
|
2020
|
2019
|
Balance sheet
|
|
|
|
Total assets
|
£799.5bn
|
£791.6bn
|
£723.0bn
|
Funded assets (2)
|
£633.0bn
|
£627.3bn
|
£573.0bn
|
Loans to customers - amortised cost
|
£360.5bn
|
£353.7bn
|
£326.9bn
|
Loans to customers and banks - amortised cost and
FVOCI *(3)
|
£372.4bn
|
£365.5bn
|
£336.8bn
|
Impairment provisions - amortised cost
|
£6.0bn
|
£6.1bn
|
£3.7bn
|
Total impairment provisions (3)
|
£6.2bn
|
£6.4bn
|
£3.8bn
|
Expected credit loss (ECL) coverage ratio *(3)
|
1.66%
|
1.74%
|
1.13%
|
Assets under management and administration (AUMA)
(2)
|
£32.1bn
|
£30.1bn
|
£30.4bn
|
Customer deposits
|
£431.7bn
|
£418.4bn
|
£369.2bn
|
|
|
|
|
Liquidity and funding
|
|
|
|
Liquidity coverage ratio (LCR)
|
165%
|
157%
|
152%
|
Liquidity portfolio
|
£262bn
|
£243bn
|
£199bn
|
Net stable funding ratio (NSFR) (4)
|
151%
|
147%
|
141%
|
Loan:deposit ratio (2)
|
84%
|
85%
|
89%
|
Total wholesale funding
|
£71bn
|
£75bn
|
£75bn
|
Short-term wholesale funding
|
£19bn
|
£25bn
|
£19bn
|
|
|
|
|
Capital and leverage
|
|
|
|
Common Equity Tier (CET1) ratio (5)
|
18.5%
|
18.2%
|
16.2%
|
Total capital ratio
|
24.5%
|
23.7%
|
21.2%
|
Pro forma CET1 ratio, pre dividend accrual (6)
|
18.8%
|
18.2%
|
17.0%
|
Risk-weighted assets (RWAs)
|
£170.3bn
|
£173.9bn
|
£179.2bn
|
CRR leverage ratio (5)
|
5.2%
|
5.2%
|
5.1%
|
UK leverage ratio
|
6.4%
|
6.2%
|
5.8%
|
Tangible net asset value (TNAV) per ordinary share
|
261p
|
265p
|
268p
|
* 2019 data has been restated for the accounting policy change for
balances held with central banks. Refer to Accounting policy
changes effective 1 January 2020 for further details.
Notes:
(1)
|
Refer
to page 12 for details of notable items within total
income.
|
(2)
|
Refer
to the Appendix for details of the basis of preparation and
reconciliation of non-financial and performance
measures.
|
(3)
|
Refer
to pages 21 and 22 for further details.
|
(4)
|
NSFR
reported in line with CRR2 regulations finalised in June
2019.
|
(5)
|
Based
on CRR end point including the IFRS 9 transitional adjustment of
£1.7 billion. Excluding this adjustment, the CET1 ratio would
be 17.5% and the CRR leverage ratio would be 4.9%.
|
(6)
|
The pro
forma CET1 ratio at 31 December 2020 excludes foreseeable charges
of £364 million for ordinary dividend (3p per share) and
£266 million pension contribution. 30 September 2020 -
£nil. 31 December 2019 excluded foreseeable charges of
£968 million for ordinary dividends (3p per share final
dividend and 5p per share special dividend) and £365 million
pension contribution.
|
Business performance summary
Chief Financial Officer review
Financial performance
●
|
Total
income decreased by £3,457 million, or 24.3%, compared with
2019. Excluding notable items, income decreased by
£958 million, or
7.9%, due to reductions across the retail and commercial
businesses, partially offset by higher NatWest Markets income
reflecting increased customer activity as the market reacted to the
spread of the COVID-19 virus.
|
●
|
Income
across the retail and commercial businesses, excluding notable
items, decreased by 10.0% compared with 2019 reflecting the lower
yield curve, mortgage margin dilution, subdued business activity
and lower consumer spending. Increased lending, whilst maintaining
a disciplined approach to risk, has partially offset, with gross
new mortgage lending of £31.5 billion in Retail Banking and
drawdowns against UK Government lending schemes in Commercial
Banking.
|
●
|
Bank
net interest margin (NIM) of 1.71% was 28 basis points lower than
2019, principally reflecting the impact of the falling yield curve
and mortgage margin dilution, although this partly receded in the
latter part of the year. Q4 2020 Bank NIM of 1.66% increased by 1
basis point in comparison to Q3 2020 as lower average central
liquidity and improved asset margins more than offset reduced
structural hedge income as a result of lower swap
rates.
|
●
|
NatWest
Markets income excluding asset disposal/strategic risk reduction,
own credit adjustments (OCA) and notable items increased by 21.4%
in comparison to 2019 reflecting increased customer activity as the
market reacted to the spread of the COVID-19 virus.
|
●
|
Litigation
and conduct costs of £113 million represent £473 million
of additional charges offset by various releases as programmes
conclude, including a £277 million PPI release, with final
agreement reached on 18 February 2021 with the Official Receiver in
relation to a portfolio of historical PPI claims. The
additional charges mainly represent increased cost of review and
execution of Other Customer Redress as well as Litigation
provisions.
|
●
|
Strategic
costs of £1,013 million included £256 million related to
property charges, £173 million redundancy costs and a
£154 million charge related to technology spend.
|
●
|
Other
expenses, excluding OLD, decreased by £277 million, or 4.0%,
compared with 2019 reflecting the continued transition from
physical to digital, the optimisation of our property footprint,
lower investment spend and reductions in NatWest Markets in line
with the strategic announcement made in February 2020. Headcount
reduced by c.4,100, or 6.4%.
|
●
|
The net
impairment loss of £3,242 million, 88 basis points of gross
customer loans, mainly reflects charges taken in the first half of
2020 due to the uncertain economic environment. The level of Stage
3 defaults remains low, reflecting the impact of government
support. Total impairment provisions increased by £2.4 billion
to £6.2 billion compared with 2019 and the ECL coverage ratio
increased from 1.13% to 1.66%.
|
●
|
The
full year attributable loss was £753 million with earnings per
share of (6.2) pence and a return on tangible equity of (2.4%). A
final dividend of 3 pence per share is proposed.
|
●
|
Net
lending across the retail and commercial businesses increased by
£20.9 billion in 2020 supported by £12.9 billion
drawdowns against UK Government lending schemes and £16.2
billion mortgage lending, including £3.0 billion related to
the Metro Bank plc mortgage portfolio acquisition. This growth has
been partially offset by lower unsecured balances, which were
impacted by lower spend and higher repayments, subdued business
activity and increased loan provisions. In Q4 2020, net lending
across the retail and commercial businesses increased by £4.5
billion as mortgage growth of £6.2 billion and £1.6
billion of lending against UK Government lending schemes more than
offset £2.4 billion net RCF repayments.
|
●
|
Customer
deposits increased by £62.5 billion, or 16.9%, in comparison
to 2019 with retail and commercial balances £60.5 billion
higher as consumer spending was impacted by government restrictions
and customers retained liquidity. In Q4 2020, customer deposits
increased by £13.3 billion.
|
Capital and leverage
|
●
|
CET1
ratio of 18.5%, was 230 basis points higher than 2019, including
c.100 basis points related to IFRS 9 transitional relief. The CET1
ratio increased by 30 basis points in comparison to Q3 2020 as the
£3.6 billion reduction in RWAs and a 23 basis point software
intangible benefit were partially offset by the 3 pence proposed
final dividend, 21 basis points, and linked pension contribution,
16 basis points.
|
●
|
The
total capital ratio increased by 330 basis points to 24.5% in
comparison to 2019.
|
●
|
RWAs
decreased by £8.9 billion, or 5.0%, compared with 2019
including an £11.0 billion reduction in NatWest Markets to
£26.9 billion, partially offset by volume growth across the
retail and commercial businesses with minimal levels of procyclical
credit risk inflation. RWAs reduced by £3.6 billion compared
with Q3 2020 mainly reflecting ongoing capital optimisation actions
in NatWest Markets, including the sale of the remaining
shareholding in Saudi British Bank (SABB).
|
●
|
The CRR
leverage ratio increased by c.10 basis points compared with 2019
reflecting a £3.3 billion increase in Tier 1 capital,
partially offset by a £59.2 billion increase in the leverage
exposure. The UK leverage ratio increased by c.60 basis points
reflecting a £3.3 billion increase in Tier 1
capital.
|
Funding and liquidity
●
|
The
liquidity portfolio increased by £63 billion in 2020 to
£262 billion primarily driven by the significant growth in
customer deposits, which exceeded lending growth. The LCR increased
by 13 percentage points in 2020 to 165%, representing £72.1
billion headroom above 100%, including the net £5.0 billion
reduction related to Term Funding Scheme (TFS) repayments and a
Term Funding Scheme with additional incentives for SMEs (TFSME)
drawdown in the year. In comparison to Q3 2020 LCR increased by 8
percentage points primarily reflecting the continued growth in
customer deposits.
|
●
|
The
loan:deposit ratio of 84% was 5 percentage points lower than 2019
as growth in customer deposits exceeded lending growth due to the
impact of government restrictions on consumer spending and
customers retaining liquidity.
|
●
|
Total
Wholesale funding increased by £4 billion compared with 2019.
Short-term wholesale funding was £19 billion, in line with
2019.
|
Summary consolidated income statement for the period ended 31
December 2020
|
Year ended
|
|
Quarter ended
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
2020
|
2019
|
|
2020
|
2020
|
2019
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Net interest income
|
7,749
|
8,047
|
|
1,971
|
1,926
|
2,037
|
Own credit adjustments
|
(24)
|
(80)
|
|
(43)
|
(34)
|
(22)
|
Strategic disposals
|
-
|
1,035
|
|
-
|
-
|
-
|
Other non-interest income
|
3,071
|
5,251
|
|
607
|
531
|
2,218
|
Non-interest income
|
3,047
|
6,206
|
|
564
|
497
|
2,196
|
Total income
|
10,796
|
14,253
|
|
2,535
|
2,423
|
4,233
|
Litigation and conduct costs
|
(113)
|
(895)
|
|
(194)
|
(8)
|
(85)
|
Strategic costs
|
(1,013)
|
(1,381)
|
|
(326)
|
(223)
|
(537)
|
Other expenses
|
(6,779)
|
(7,049)
|
|
(1,821)
|
(1,583)
|
(1,905)
|
Operating expenses
|
(7,905)
|
(9,325)
|
|
(2,341)
|
(1,814)
|
(2,527)
|
Profit before impairment losses
|
2,891
|
4,928
|
|
194
|
609
|
1,706
|
Impairment losses
|
(3,242)
|
(696)
|
|
(130)
|
(254)
|
(160)
|
Operating (loss)/profit before tax
|
(351)
|
4,232
|
|
64
|
355
|
1,546
|
Tax charge
|
(83)
|
(432)
|
|
(84)
|
(207)
|
(37)
|
(Loss)/profit for the period
|
(434)
|
3,800
|
|
(20)
|
148
|
1,509
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
Ordinary shareholders
|
(753)
|
3,133
|
|
(109)
|
61
|
1,410
|
Preference shareholders
|
26
|
39
|
|
5
|
5
|
9
|
Paid-in equity holders
|
355
|
367
|
|
83
|
80
|
90
|
Non-controlling interests
|
(62)
|
261
|
|
1
|
2
|
-
|
Notable items within total income
|
|
|
|
|
|
|
Own credit adjustments (OCA)
|
(24)
|
(80)
|
|
(43)
|
(34)
|
(22)
|
Alawwal bank merger gain in NatWest Markets
|
-
|
444
|
|
-
|
-
|
-
|
FX recycling (loss)/gain in Central items & other
(1)
|
(40)
|
1,459
|
|
(1)
|
64
|
1,169
|
Legacy liability release in Central items & other
|
-
|
256
|
|
-
|
-
|
-
|
Loss on redemption of own debt
|
(324)
|
-
|
|
-
|
(324)
|
-
|
Liquidity Asset Bond sale gain/(loss)
|
113
|
(16)
|
|
2
|
1
|
(8)
|
IFRS volatility in Central items & other (2)
|
83
|
9
|
|
45
|
49
|
43
|
Retail Banking debt sale gain
|
8
|
49
|
|
1
|
4
|
31
|
Metro Bank mortgage portfolio acquisition loss
|
(58)
|
-
|
|
(58)
|
-
|
-
|
Vocalink gain on disposal
|
-
|
45
|
|
-
|
-
|
-
|
Commercial Banking fair value and disposal (loss)/gain
|
(37)
|
(16)
|
|
(27)
|
1
|
1
|
NatWest Markets asset disposals/strategic risk
reduction (3)
|
(83)
|
(35)
|
|
(8)
|
(12)
|
-
|
Share of losses under equity accounting for
|
|
|
|
|
|
|
Business Growth
Fund
|
(22)
|
-
|
|
8
|
(46)
|
-
|
Total
|
(384)
|
2,115
|
|
(81)
|
(297)
|
1,214
|
Notes:
(1)
2019 Includes
£290 million arising on the completion of the Alawwal bank
merger, £1,102 million arising on the liquidation of RFS
Holdings and £67 million in relation to dividends from UBI
DAC.
(2)
IFRS volatility
relates to loans which are economically hedged but for which hedge
accounting is not permitted under IFRS.
(3)
Asset
disposals/strategic risk reduction in 2020 relates to the cost of
exiting positions and the impact of risk reduction transactions
entered into, in respect of the strategic announcement on 14
February 2020. Prior period comparatives refer to the previously
disclosed NatWest Markets legacy business disposal
losses.
Business performance summary
Retail Banking
|
Year ended and as at
|
|
Quarter ended and as at
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
2020
|
2019
|
|
2020
|
2020
|
2019
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Total income
|
4,181
|
4,866
|
|
974
|
1,022
|
1,195
|
Operating expenses
|
(2,540)
|
(3,618)
|
|
(818)
|
(647)
|
(788)
|
Impairment losses
|
(792)
|
(393)
|
|
(65)
|
(70)
|
(81)
|
Operating profit
|
849
|
855
|
|
91
|
305
|
326
|
Return on equity
|
10.2%
|
9.6%
|
|
3.8%
|
15.3%
|
14.9%
|
Net interest margin
|
2.13%
|
2.47%
|
|
2.03%
|
2.05%
|
2.32%
|
Cost:income ratio
|
60.8%
|
74.4%
|
|
84.0%
|
63.3%
|
65.9%
|
Loan impairment rate
|
45bps
|
25bps
|
|
15bps
|
17bps
|
20bps
|
|
|
|
|
£bn
|
£bn
|
£bn
|
Net loans to customers (amortised cost)
|
|
|
|
172.3
|
166.7
|
158.9
|
Customer deposits
|
|
|
|
171.8
|
164.9
|
150.3
|
RWAs
|
|
|
|
36.7
|
36.3
|
37.8
|
Note:
(1)
Comparisons with
prior periods are impacted by the transfer of the Private Client
Advice business to Private Banking from 1 January 2020. The net
impact on full year 2019 operating profit would have been to
decrease total income by £44 million and other expenses by
£8 million. The net impact on Q4 2019 operating profit would
have been to decrease total income by £11 million and other
expenses by £2 million. The net impact on the Q4 2019 balance
sheet would have been to decrease customer deposits by £0.2
billion.
Throughout
2020 Retail Banking helped approximately 258,000 customers with a
mortgage repayment holiday and as at 31 December 2020
had 16,000 active mortgage repayment holidays, representing 1% of
the book by volume. Additionally, Retail Banking had approximately
17,000, or 2%, of personal loan customers on active repayment
holidays as at Q4 2020.
NatWest
Group acquired a £3.0 billion prime UK mortgage portfolio from
Metro Bank plc on 18 December 2020. The impact on full year 2020
operating profit was a £58 million loss on acquisition, a
£2 million increase in net interest income and a £9
million increase in impairment losses. The impact on the Q4 2020
balance sheet was to increase net loans to customers by £3.0
billion and RWAs by £1.2 billion. The portfolio will be
earnings accretive within two years.
2020 compared with 2019
|
●
|
Total
income was £685 million, or 14.1%, lower as regulatory changes
and COVID-19 support measures impacted fee income, combined with
lower deposit returns and unsecured balances, partially offset by
strong balance growth in mortgages and customer
deposits.
|
●
|
Net
interest margin decreased by 34 basis points reflecting the impact
of the lower yield curve on deposit returns, lower unsecured
balances and mortgage margin pressure, as front book margins were
lower than back book margins.
|
●
|
Other
expenses decreased by £108 million, or 4.5%, reflecting a
significant reduction in headcount, enabled by digital
transformation benefits and increased digital adoption, lower fraud
costs and COVID-19 slowing down investment spend. Litigation and
conduct costs were £19 million.
|
●
|
Impairment
losses of £792 million largely reflect significant Stage 2 ECL
uplifts taken in H1 2020 for expected future economic
deterioration.
|
●
|
Net
loans to customers increased by £13.4 billion, or 8.4%, as a
result of strong gross new mortgage lending and retention. Gross
new mortgage lending was £31.5 billion with flow share of 13%,
supporting a stock share of 10.9%, up from 10.2% at Q4 2019.
Personal advances and cards reduced by £1.2 billion and
£0.5 billion respectively reflecting lower spend and higher
repayments due to COVID-19 restrictions.
|
●
|
Customer
deposits increased by £21.5 billion, or 14.3%, as UK
Government backed initiatives for COVID-19, combined with
restrictions, resulted in lower customer spend and increased
savings.
|
●
|
RWAs
decreased by £1.1 billion, or 2.9%, supported by lower
personal unsecured balances.
|
Q4 2020 compared with Q3 2020
|
●
|
Total
income was £48 million lower impacted by a £58 million
loss on acquisition. Excluding this impact, total income was
£10 million higher as increased mortgage margins, strong
balance growth, and a full quarter impact of customer rate changes
on overdrafts and savings offset the impact of the lower yield
curve. Net interest margin decreased by 2 basis points due to lower
deposit returns. Q4 2020 mortgage front book margins were
approximately 160 basis points, resulting in an improved overall
mortgage book margin, with application margins around 180 basis
points in the quarter.
|
●
|
Other
expenses were £6 million higher largely due to the inclusion
of the annual UK bank levy charge, partially offset by lower staff
costs related to a 3.6% reduction in headcount.
|
●
|
Litigation
and conduct costs of £210 million in Q4 2020 primarily reflect
additional charges related to the increased cost of review and
execution of Other Customer Redress.
|
●
|
Impairment
losses of £65 million in Q4 2020 primarily reflect Stage 3
default charges and updated economic scenarios.
|
●
|
Net
loans to customers increased by £5.6 billion, supported by
gross new mortgage lending of £8.4 billion.
|
Q4 2020 compared with Q4 2019
|
●
|
Total
income decreased by £221 million, or 18.5%, as a result of
lower deposit returns, reduced unsecured balances, lower fees from
regulatory changes and reduced customer spend, partially offset by
mortgage income growth.
|
●
|
Other
expenses were £76 million, or 11.8%, lower as headcount
reduction was enabled by digital simplification.
|
Business performance summary
Ulster Bank RoI
|
Year ended and as at
|
|
Quarter ended and as at
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
2020
|
2019
|
|
2020
|
2020
|
2019
|
|
€m
|
€m
|
|
€m
|
€m
|
€m
|
Total income
|
574
|
647
|
|
144
|
145
|
162
|
Operating expenses
|
(548)
|
(630)
|
|
(127)
|
(138)
|
(162)
|
Impairment releases/(losses)
|
(281)
|
38
|
|
3
|
(6)
|
(5)
|
Operating (loss)/profit
|
(255)
|
55
|
|
20
|
1
|
(5)
|
Return on equity
|
(11.7%)
|
2.3%
|
|
3.9%
|
0.2%
|
(0.9%)
|
Net interest margin (1)
|
1.50%
|
1.59%
|
|
1.48%
|
1.47%
|
1.57%
|
Cost:income ratio (1)
|
95.5%
|
97.4%
|
|
88.2%
|
95.2%
|
100.0%
|
Loan impairment rate (1)
|
134bps
|
(17)bps
|
|
(6)bps
|
11bps
|
9bps
|
|
|
|
|
€bn
|
€bn
|
€bn
|
Net loans to customers (amortised cost)
|
|
|
|
20.0
|
20.2
|
21.4
|
Customer deposits
|
|
|
|
21.8
|
21.6
|
21.7
|
RWAs
|
|
|
|
13.2
|
13.3
|
15.3
|
Note:
(1)
Ratios have been presented on a euro basis. Euro comparatives have
been restated.
Following
an extensive review and despite the progress that has been made, it
has become clear Ulster Bank will not be able to generate
sustainable long term returns for our shareholders. As a result, we
are to begin a phased withdrawal from the Republic of Ireland over
the coming years which will be undertaken with careful
consideration of the impact on customers and our
colleagues.
Throughout
the difficulties and uncertainties of 2020, Ulster Bank RoI has
continued to support its customers COVID-19 by keeping its
branches, cash and call centres open throughout and by making
significant improvements to its digital platforms. During 2020
almost 18,000 payment breaks were provided, with 82% returning to
payment arrangements as at 31 December 2020. Additionally, Ulster
Bank RoI continued to support its commercial customers by providing
them assistance with the Future Growth Loan and Credit Guarantee
schemes initiated by the Irish government.
|
|
2020 compared with 2019
|
●
|
Total
income decreased by €73 million, or 11.3%, reflecting lower lending volumes and
fee income due to the impact of COVID-19, lower FX gains, lower
hedging income and a one-off swap breakage benefit in 2019. Net
Interest margin decreased by 9 basis points due to the impact of
negative rates on increased liquid assets.
|
●
|
Other
expenses decreased by €25 million, or 4.7%, reflecting a 6.9%
headcount reduction following the scale-down of functional teams
and lower marketing, back office and project costs, partially
offset by higher pension costs due to a one-off credit in
2019.
|
●
|
Impairment
losses of €281 million reflect the charges taken in the first
half of 2020 which were significantly impacted by the uncertain
economic environment created by the COVID-19 pandemic.
|
●
|
Net
loans to customers decreased by €1.4 billion, or 6.5%, as
repayments exceeded gross new lending of €2.1 billion,
combined with a €0.3 billion de-recognition of non-performing
loans (NPLs) from a sale agreed in Q4 2019, and increased loan
provisions.
|
●
|
Customer
deposits increased by €0.1 billion, or 0.5%, due to a large
one-off placement at the end of the year, partially offset by
earlier reductions in commercial balances due to pricing changes,
including the implementation of negative rates on large and
mid-sized corporate customers and non-bank financial
institutions.
|
●
|
RWAs
decreased by €2.1 billion, or 13.7%, reflecting the impact of
NPL de-recognitions and lower lending volumes.
|
Q4 2020 compared with Q3 2020
|
●
|
Total
income and net interest margin remained broadly stable as government measures and lockdown
restrictions continued to impact transaction volumes.
|
●
|
Other
expenses decreased by €17 million reflecting lower project
costs, lower back office operations costs and a number of one-off
items.
|
●
|
A net
impairment release of €3 million in Q4 2020 reflects payment
breaks in part mitigating the full impact of credit losses
attributable to the COVID-19 pandemic.
|
●
|
Net
loans to customers decreased by €0.2 billion as repayments
continued to exceed gross new lending of €0.5 billion, which
was in line with the previous quarter.
|
●
|
Customer
deposits increased by €0.2 billion resulting in a
loan:deposit ratio of 92%, down from 93% in Q3 2020.
|
Q4 2020 compared with Q4 2019
|
●
|
Total
income decreased by €18 million, or 11.1%, reflecting the
impact of COVID-19 on lending volumes and fee income combined with
lower FX gains.
|
●
|
Other
expenses decreased by €16 million, or 12.5%, reflecting lower
staff, administration and marketing costs partially offset by
one-off items.
|
Business performance summary
Commercial Banking
|
Year ended and as at
|
|
Quarter ended and as at
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
2020
|
2019
|
|
2020
|
2020
|
2019
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Total income
|
3,958
|
4,318
|
|
951
|
1,004
|
1,076
|
Operating expenses
|
(2,430)
|
(2,600)
|
|
(656)
|
(553)
|
(700)
|
Impairment losses
|
(1,927)
|
(391)
|
|
(10)
|
(127)
|
(81)
|
Operating (loss)/profit
|
(399)
|
1,327
|
|
285
|
324
|
295
|
Return on equity
|
(4.5%)
|
8.4%
|
|
8.1%
|
9.2%
|
7.6%
|
Net interest margin
|
1.68%
|
1.95%
|
|
1.56%
|
1.65%
|
1.94%
|
Cost:income ratio
|
59.9%
|
58.9%
|
|
67.8%
|
53.4%
|
63.9%
|
Loan impairment rate
|
173bps
|
38bps
|
|
4bps
|
45bps
|
32bps
|
|
|
|
|
£bn
|
£bn
|
£bn
|
Net loans to customers (amortised cost)
|
|
|
|
108.2
|
110.0
|
101.2
|
Customer deposits
|
|
|
|
167.7
|
161.3
|
135.0
|
RWAs
|
|
|
|
75.1
|
76.5
|
72.5
|
Commercial
Banking continues to support customers through a comprehensive
package of initiatives including participation in the UK
Government’s financial support schemes. During 2020,
£8.6 billion BBLS, £3.9 billion CBILS and £1.3
billion CLBILS had been approved. Since 22 March 2020 Commercial
Banking provided payment holidays on over 74,000 customer accounts
and as at 31 December 2020 had active payment holidays on c.11,000
customer accounts, representing 4% of the lending book by
value.
|
|
2020 compared with 2019
|
●
|
Total
income decreased by £360 million, or 8.3%, reflecting lower
deposit returns and subdued transactional business activity,
combined with a £21 million increase in fair value and
disposal losses, primarily through risk mitigation actions. Net
Interest margin decreased by 27 basis points reflecting the impact
of the lower yield curve on deposit returns and increased liquidity
portfolio costs from higher deposit volumes, partially offset by
deposit repricing.
|
●
|
Other
expenses, excluding OLD, increased by £18 million, or 0.9%, as
£80 million higher back office operations costs, increased
innovation spend and £19 million lower VAT recoveries were
partially offset by a headcount reduction of 1.0% following
operating model efficiencies in the second half of 2019 and
COVID-19 slowing down investment spend.
|
●
|
Impairment
losses of £1,927 million primarily reflect the deterioration
of the economic outlook as a result of the COVID-19 pandemic
driving significant Stage 2 charges, with total Stage 3 charges of
£318 million, including a small number of single name
charges.
|
●
|
Net
loans to customers increased by £7.0 billion, or 6.9%, as
£12.6 billion drawdowns against UK Government lending schemes
were partially offset by lower specialised business lending and
increased loan provisions. RCF utilisation decreased to c.22% of
committed facilities, below Q4 2019 pre-COVID-19 levels of c.27%
and significantly lower than the peak of c.40% in April
2020.
|
●
|
Customer
deposits increased by £32.7 billion, or 24.2%, as customers
built and retained liquidity in light of economic uncertainty
combined with the impact of government and central bank actions in
light of COVID-19.
|
●
|
RWAs
increased by £2.6 billion, or 3.6%, reflecting volume growth
and £2.4 billion higher risk parameters, partially offset by a
£0.8 billion reduction related to active capital management
and a c.£1.5 billion reduction reflecting the CRR COVID-19
amendment to accelerate the planned changes to the SME supporting
factor and the introduction of an Infrastructure supporting
factor.
|
Q4 2020 compared with Q3 2020
|
●
|
Total
income decreased by £53 million reflecting £27 million
fair value and disposal losses, mainly through risk mitigation
actions, and the impact of lower deposit returns. Net Interest
margin decreased by 9 basis points primarily due to the lower yield
curve impacting deposit returns.
|
●
|
Other
expenses, excluding OLD, increased by £70 million as the
annual UK bank levy charge of £90 million and higher
innovation spend was partially offset by cost reduction actions and
£8 million higher VAT recoveries.
|
●
|
Net
loans to customers decreased by £1.8 billion as RCF repayments
of £2.4 billion more than offset by £1.4 billion
drawdowns against UK Government lending schemes, including
£0.7 billion related to BBLS, £0.5 billion related to
CBILS and £0.2 billion related to CLBILS.
|
●
|
Customer
deposits increased by £6.4 billion as customers continued to
build and retain liquidity in light of economic uncertainty
combined with the impact of government and central bank actions in
light of COVID-19.
|
●
|
RWAs
decreased by £1.4 billion as lower lending volumes and a
£0.6 billion reduction related to active capital management
were partially offset by £0.6 billion higher risk
parameters.
|
|
|
Q4 2020 compared with Q4 2019
|
●
|
Total
income decreased by £125 million, or 11.6%, reflecting the
impact of the lower yield curve on deposit returns and subdued
transactional business activity, combined with a £27 million
fair value and disposal loss, mainly through risk mitigation
actions, compared with a £1 million gain in Q4
2019.
|
●
|
Other
expenses, excluding OLD, increased by £18 million, or 3.3%,
reflecting £37 million higher back office operations costs,
£18 million lower VAT recoveries and increased innovation
spend, partially offset by a headcount reduction of 1.0% following
operating model efficiencies in the second half of 2019 and other
cost reduction actions.
|
Business performance summary
Private Banking – commentary adjusted for
transfers
|
Year ended and as at
|
|
Quarter ended and as at
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
2020
|
2019
|
|
2020
|
2020
|
2019
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Total income
|
763
|
777
|
|
184
|
187
|
195
|
Operating expenses
|
(455)
|
(486)
|
|
(91)
|
(112)
|
(135)
|
Impairment (losses)/releases
|
(100)
|
6
|
|
(26)
|
(18)
|
1
|
Operating profit
|
208
|
297
|
|
67
|
57
|
61
|
Return on equity
|
10.3%
|
15.4%
|
|
13.3%
|
11.2%
|
12.0%
|
Net interest margin
|
2.05%
|
2.40%
|
|
1.86%
|
1.99%
|
2.30%
|
Cost:income ratio
|
59.6%
|
62.5%
|
|
49.5%
|
59.9%
|
69.2%
|
Loan impairment rate
|
58bps
|
(4)bps
|
|
61bps
|
43bps
|
(3)bps
|
|
|
|
|
£bn
|
£bn
|
£bn
|
Net loans to customers (amortised cost)
|
|
|
|
17.0
|
16.5
|
15.5
|
Customer deposits
|
|
|
|
32.4
|
30.3
|
28.4
|
RWAs
|
|
|
|
10.9
|
10.6
|
10.1
|
Assets Under Management (AUMs)
|
|
|
|
29.1
|
27.3
|
23.2
|
Assets Under Administration (AUAs) (1)
|
|
|
|
3.0
|
2.8
|
7.2
|
Assets Under Management and Administration (AUMA)
|
|
|
|
32.1
|
30.1
|
30.4
|
Notes:
|
(1) Private Banking
manages assets under administration portfolios on behalf of Retail
Banking and RBSI and receives a management fee in respect of
providing this service.
(2) Comparisons with
prior periods are impacted by the transfer of the Private Client
Advice business from Retail Banking from 1 January 2020. The net
impact on full year 2019 operating profit would have been to
increase total income by £44 million and other expenses by
£8 million. The net impact on Q4 2019 operating profit would
have been to increase total income by £11 million and other
expenses by £2 million. The net impact on the Q4 2019 balance
sheet would have been to increase customer deposits by £0.2
billion. AUMs would have been £4.6 billion higher, with a
corresponding decrease in AUAs. Variances in the commentary below
have been adjusted for the impact of this transfer.
|
Private
Banking remains committed to supporting clients through a range of
initiatives, including the provision of mortgage and personal loan
repayment deferrals in appropriate circumstances and via
participation in the UK Government’s financial support
schemes. During 2020, £58 million BBLS, £237 million
CBILS and £44 million CLBILS had been approved.
|
|
2020
compared with 2019
|
●
|
Total
income decreased by £58 million, or 7.1%, primarily reflecting
lower deposit funding benefits and a reduction in fee income
partially offset by balance sheet growth. Net Interest margin
decreased by 35 basis points reflecting lower deposit funding
benefits and higher liquidity portfolio costs.
|
●
|
Other
expenses increased by £19 million, or 4.3%, reflecting higher
investment spend focused on enhancing the client proposition and a
number of one-off items partially offset by lower back office
operations costs.
|
●
|
Impairment
losses of £100 million primarily reflect Stage 1 and Stage 2
charges due to the deterioration of the economic outlook, with
total Stage 3 charges of £15 million.
|
●
|
Net
loans to customers increased by £1.5 billion, or 9.7%,
supported by £0.7 billion of mortgage lending growth and
£0.3 billion drawdowns against UK Government lending schemes.
RWAs increased by £0.8 billion, or 7.9%, primarily reflecting
increased lending volumes.
|
●
|
Customer
deposits increased by £3.8 billion, or 13.3%, reflecting
£2.3 billion of commercial inflows and £1.5 billion of
personal inflows.
|
●
|
AUMAs
increased by £1.7 billion, or 5.6%, reflecting positive
investment performance of £0.9 billion and net new money
inflows of £0.8 billion, which were impacted by EEA resident
client outflows following the UK’s exit from the
EU.
|
Q4
2020 compared with Q3 2020
|
●
|
Total
income decreased by £3 million mainly due to lower deposit
funding benefits and an internal profit share adjustment with RBS
International related to the provision of services partially offset
by an increase in fee income and balance sheet growth. Net Interest
margin decreased by 13 basis points primarily due to lower deposit
funding benefits.
|
●
|
Other
expenses increased by £13 million largely reflecting the
annual UK bank levy charge. Q4 2020 included a litigation and
conduct release of £29 million.
|
●
|
Net
loans to customers increased by £0.5 billion primarily due to
mortgage lending growth and drawdowns against UK Government lending
schemes.
|
●
|
Customer
deposits increased by £2.1 billion due to £1.0 billion of
commercial inflows and £1.1 billion of personal
inflows.
|
●
|
AUMAs
increased by £2.0 billion reflecting positive investment
performance of £1.8 billion and net new money inflows of
£0.2 billion, which were impacted by EEA resident client
outflows following the UK’s exit from the EU.
|
Q4
2020 compared with Q4 2019
|
●
|
Total
income decreased by £22 million, or 10.7%, reflecting lower
deposit funding benefits and a reduction in fee income partially
offset by balance sheet growth.
|
●
|
Other
expenses decreased by £3 million, or 2.5%, reflecting lower
back office operations costs partially offset by higher investment
spend and a number of one-off items.
|
Business performance summary
RBS International
|
Year ended and as at
|
|
Quarter ended and as at
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
2020
|
2019
|
|
2020
|
2020
|
2019
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Total income
|
497
|
610
|
|
126
|
112
|
150
|
Operating expenses
|
(291)
|
(264)
|
|
(112)
|
(53)
|
(83)
|
Impairment losses
|
(107)
|
(2)
|
|
(27)
|
(34)
|
(5)
|
Operating profit
|
99
|
344
|
|
(13)
|
25
|
62
|
Return on equity
|
6.1%
|
25.7%
|
|
(5.5%)
|
6.4%
|
17.3%
|
Net interest margin
|
1.17%
|
1.60%
|
|
1.03%
|
1.07%
|
1.47%
|
Cost:income ratio
|
58.6%
|
43.3%
|
|
88.9%
|
47.3%
|
55.3%
|
Loan impairment rate
|
80bps
|
1bps
|
|
81bps
|
105bps
|
14bps
|
|
|
|
|
£bn
|
£bn
|
£bn
|
Net loans to customers (amortised cost)
|
|
|
|
13.3
|
12.8
|
14.1
|
Customer deposits
|
|
|
|
31.3
|
30.4
|
30.1
|
RWAs
|
|
|
|
7.5
|
7.0
|
6.5
|
As at
31 December 2020, RBS International has supported 1,240 mortgage
repayment breaks, reflecting a mortgage value of £268 million,
and has provided financial support for 622 business customers with
working capital facilities, reflecting a value of £588
million, while continuing to suspend a range of fees and charges
for its personal and business customers.
|
|
2020
compared with 2019
|
●
|
Total
income decreased by £113 million, or 18.5%, primarily due to
the impact of the interest rate reductions on deposit income and
lower fee income reflecting the economic response to COVID-19. Net
Interest margin decreased by 43 basis points due to lower deposit
funding benefits as a result of central bank interest rate
reductions.
|
●
|
Other
expenses were stable as front office non-staff cost reduction
actions and a 5.6% headcount reduction were offset by a higher bank
levy charge.
|
●
|
Impairment
losses of £107 million primarily reflect a more uncertain
economic environment and refreshed staging and maturity date
analysis.
|
●
|
Net
loans to customers decreased by £0.8 billion, or 5.7%, as
customers repaid facilities to position themselves in the uncertain
environment, partially offset by increased investment activity in
the latter part of 2020.
|
●
|
Customer
deposits increased by £1.2 billion, or 3.8%, due to short term
placement inflows across both Institutional and Local
Banking.
|
●
|
RWAs
increased by £1.0 billion, or 15.4%, due to customer
maturities and higher lending facilities in the wholesale
sector.
|
Q4
2020 compared with Q3 2020
|
●
|
Total
income increased by £14 million due to the full quarter impact
of reinstating fees previously waived to support customers at the
start of the COVID-19 pandemic, an increase in internal profit
share in relation to agency fees in NatWest Markets and
the provision of services in Private Banking. Net Interest margin
reduced by 4 basis points primarily due to higher inflow of
customer deposit balances.
|
●
|
Other
expenses increased by £23 million mainly due to the inclusion
of the £17 million annual bank levy charge.
|
●
|
Impairment
losses of £27 million in Q4 2020 largely reflect Stage 1 and
Stage 2 charges within the wholesale sector. Stage 3 charges remain
low despite continued economic uncertainty.
|
●
|
Net
loans to customers increased by £0.5 billion reflecting
drawdowns in the Institutional Banking sector as investment
activity increased.
|
●
|
Customer
deposits increased by £0.9 billion due to short term
placements across both Institutional and Local
Banking.
|
●
|
RWAs
increased by £0.5 billion primarily reflecting increased
lending volumes in the Institutional Banking sector.
|
Q4
2020 compared with Q4 2019
|
●
|
Total
income decreased by £24 million, or 16.0%, primarily
reflecting lower deposit funding benefits due to central bank
interest rate reductions partially offset by higher fee income as a
result of non-utilisation fees and an internal profit share in
relation to agency fees in NatWest Markets and the provision of
services in Private Banking.
|
●
|
Other
expenses decreased by £5 million, or 6.4%, as a £10
million reduction in front office costs relating to lower non-staff
costs and lower headcount was partially offset by a higher bank
levy charge.
.
|
Business performance summary
NatWest Markets (1)
|
Year ended and as at
|
|
Quarter ended and as at
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
2020
|
2019
|
|
2020
|
2020
|
2019
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Total income
|
1,123
|
1,342
|
|
73
|
234
|
250
|
of which:
|
|
|
|
|
|
|
- Income excluding asset disposals/strategic
risk
|
|
|
|
|
|
|
reduction and own credit
adjustments
|
1,230
|
1,422
|
|
124
|
280
|
272
|
- Asset
disposals/strategic risk reduction (2)
|
(83)
|
-
|
|
(8)
|
(12)
|
-
|
- Own credit adjustments
|
(24)
|
(80)
|
|
(43)
|
(34)
|
(22)
|
Operating expenses
|
(1,310)
|
(1,418)
|
|
(301)
|
(302)
|
(392)
|
Impairment releases/(losses)
|
(40)
|
51
|
|
(2)
|
2
|
10
|
Operating (loss)
|
(227)
|
(25)
|
|
(230)
|
(66)
|
(132)
|
Return on equity
|
(3.8%)
|
(3.2%)
|
|
(15.0%)
|
(4.7%)
|
(6.5%)
|
Cost:income ratio
|
116.7%
|
105.7%
|
|
nm
|
129.1%
|
156.8%
|
|
|
|
|
£bn
|
£bn
|
£bn
|
Funded assets
|
|
|
|
105.9
|
121.3
|
116.2
|
RWAs
|
|
|
|
26.9
|
30.0
|
37.9
|
Notes:
(1)
The NatWest Markets
operating segment is not the same as the NatWest Markets Plc legal
entity (NWM Plc) or group (NWM or NWM Group). For 2019, NWM Group
includes NatWest Markets N.V. (NWM N.V.) from 29 November 2019
only. For periods prior to Q4 2019, NWM N.V. was excluded from the
NWM Group. In both 2019 and 2020 the NatWest Markets segment
excludes the Central items & other segment.
(2)
Asset
disposals/strategic risk reduction in 2020 relates to the cost of
exiting positions and the impact of risk reduction transactions
entered into, in respect of the strategic announcement on 14
February 2020.
NatWest
Markets has made significant progress in reshaping the business for
the future and advancing its transformation to deliver the
refocused strategy announced in February 2020. As progress has been
made against the strategy, RWAs have reduced and the business is
ahead of its plan to achieve the medium-term reduction to £20
billion.
By
accelerating its transformation to become a more integrated and
sustainable part of NatWest Group, NatWest Markets has focused on
what it does best and what matters to NatWest Group’s
customers. The product offering has been simplified and in Q2 2020
NatWest Markets entered an agreement with BNP Paribas to provide
‘house’ Futures and associated back office services.
NatWest Markets has consolidated certain customer coverage teams
and services and functional teams with their counterparts from
across NatWest Group, enhancing our collaborative approach to
customers.
|
2020
compared with 2019
|
●
|
Total
income decreased by £219 million, or 16.3%, reflecting the
£444 million Alawwal bank merger gain in 2019 and an increase
in disposal losses of £48 million partially offset by stronger
business performance in the current year.
|
●
|
Income
excluding asset disposals/strategic risk reduction, OCA and notable
items increased by £217 million, or 21.4%, reflecting a strong
performance over the year, particularly in the first half of 2020
as customer activity increased as the market reacted to the spread
of the COVID-19 virus.
|
●
|
Other
expenses decreased by £140 million, or 11.9%, reflecting
continued reductions in line with the strategic announcement in
February 2020.
|
●
|
Impairment
losses of £40 million reflect the impact of Stage 2 charges
taken in the first half of 2020 compared with a net impairment
release of £51 million in the prior year for a small number of
legacy cases.
|
●
|
RWAs
decreased by £11.0 billion, or 29.0%, as market risk and
counterparty credit risk decreased by £3.6 billion and
£3.5 billion respectively and credit risk decreased by
£3.4 billion as the business exceeded its target for RWA
reductions over the course of 2020.
|
Q4
2020 compared with Q3 2020
|
●
|
Total
income decreased by £161 million reflecting a weaker
performance in the Fixed Income business amid lower levels of
customer activity.
|
●
|
Other
expenses increased by £19 million primarily reflecting the
inclusion of the annual UK bank levy charge.
|
●
|
RWAs
decreased by £3.1 billion reflecting ongoing capital
optimisation actions, including the sale of NatWest Markets’
remaining shareholding in Saudi British Bank (SABB).
|
Q4
2020 compared with Q4 2019
|
●
|
Total
income decreased by £177 million, or 70.8%, reflecting a small
number of one-off releases in the prior year and a weaker
performance in the Fixed Income business amid lower levels of
customer activity.
|
●
|
Other
expenses decreased by £52 million, or 17.6%, reflecting
continued reductions in line with the strategic announcement in
February 2020.
|
Business performance summary
Central items & other
|
Year ended
|
|
Quarter ended
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
2020
|
2019
|
|
2020
|
2020
|
2019
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Central items not allocated
|
(655)
|
1,385
|
|
(154)
|
(285)
|
939
|
●
|
Central
items not allocated represented a £655 million operating loss
in 2020 principally reflecting the day one loss on redemption of
own debt of £324 million related to the repurchase of legacy
instruments, property related strategic costs, litigation and
conduct charges and other treasury income. 2019 included
£1,459 million of FX recycling gains, a £169 million
reimbursement under indemnification agreements relating to US
residential mortgage-backed securities (RMBS) and strategic costs
of £449 million, which were mainly property
related.
|
|
Business performance summary
Capital and leverage ratios
|
CRR basis (1)
|
|
31 December
|
30 September
|
31 December
|
|
2020
|
2020
|
2019
|
Capital adequacy ratios
|
%
|
%
|
%
|
CET1
|
18.5
|
18.2
|
16.2
|
Tier 1
|
21.4
|
20.5
|
18.5
|
Total
|
24.5
|
23.7
|
21.2
|
|
|
|
|
Capital
|
£m
|
£m
|
£m
|
Tangible equity
|
31,712
|
32,093
|
32,371
|
|
|
|
|
Expected loss less impairment provisions
|
-
|
-
|
(167)
|
Prudential valuation adjustment
|
(286)
|
(341)
|
(431)
|
Deferred tax assets
|
(760)
|
(835)
|
(757)
|
Own credit adjustments
|
(1)
|
(154)
|
(118)
|
Pension fund assets
|
(579)
|
(590)
|
(474)
|
Cash flow hedging reserve
|
(229)
|
(300)
|
(35)
|
Foreseeable ordinary and special dividends
|
(364)
|
-
|
(968)
|
Foreseeable charges
|
(266)
|
-
|
(365)
|
Prudential amortisation of software development costs
|
473
|
-
|
-
|
Adjustments under IFRS 9 transitional arrangements
|
1,747
|
1,719
|
-
|
Other adjustments for regulatory purposes
|
-
|
-
|
(2)
|
Total deductions
|
(265)
|
(501)
|
(3,317)
|
|
|
|
|
CET1 capital
|
31,447
|
31,592
|
29,054
|
AT1 capital
|
4,983
|
3,990
|
4,051
|
Tier 1 capital
|
36,430
|
35,582
|
33,105
|
Tier 2 capital
|
5,255
|
5,710
|
4,900
|
|
|
|
|
Total regulatory capital
|
41,685
|
41,292
|
38,005
|
|
|
|
|
Risk-weighted assets
|
|
|
|
Credit risk
|
129,914
|
132,387
|
131,012
|
Counterparty credit risk
|
9,104
|
10,170
|
12,631
|
Market risk
|
9,362
|
9,399
|
12,930
|
Operational risk
|
21,930
|
21,930
|
22,599
|
Total RWAs
|
170,310
|
173,886
|
179,172
|
|
|
|
|
Leverage (1)
|
|
|
|
Cash and balances at central banks*
|
124,489
|
111,681
|
80,993
|
Trading assets
|
68,990
|
70,820
|
76,745
|
Derivatives
|
166,523
|
164,311
|
150,029
|
Other financial assets*
|
422,647
|
418,998
|
395,953
|
Other assets
|
16,842
|
25,751
|
19,319
|
Total assets
|
799,491
|
791,561
|
723,039
|
Derivatives
|
|
|
|
- netting and variation
margin
|
(172,658)
|
(172,389)
|
(157,778)
|
- potential future
exposures
|
38,171
|
40,439
|
43,004
|
Securities financing transactions gross up
|
1,179
|
1,193
|
2,224
|
Undrawn commitments
|
45,853
|
44,650
|
42,363
|
Regulatory deductions and other adjustments
|
(8,943)
|
(17,167)
|
(8,978)
|
CRR Leverage exposure
|
703,093
|
688,287
|
643,874
|
|
|
|
|
CRR leverage ratio % (2)
|
5.2
|
5.2
|
5.1
|
|
|
|
|
UK leverage exposure
|
572,558
|
576,889
|
570,330
|
UK leverage ratio % (3)
|
6.4
|
6.2
|
5.8
|
*September
2020 and December 2019 data has been restated for the accounting
policy change for balances held with central banks. Refer to
Accounting policy changes effective 1 January 2020 for further
details.
Notes:
(1)
Based on CRR end
point including the IFRS 9 transitional uplift to capital of
£1.7 billion and £0.2 billion to RWAs. Excluding this
adjustment, the CET1 ratio would be 17.5%.
(2)
Presented on CRR
end point Tier 1 capital (including IFRS 9 transitional adjustment)
and leverage exposure under the CRR Delegated Act. Excluding the
IFRS 9 transitional adjustment, the leverage ratio would be
4.9%.
(3)
Presented on CRR
end point Tier 1 capital (including IFRS 9 transitional
adjustment). The UK leverage ratio excludes central bank claims
from the leverage exposure where deposits held are denominated in
the same currency and of contractual maturity that is equal or
longer than that of the central bank claims. Excluding the IFRS 9
transitional adjustment, the UK leverage ratio would be
6.1%.
Business performance summary
Portfolio summary – segment analysis
The
table below shows gross loans and ECL, by segment and stage, within
the scope of the IFRS 9 ECL framework.
|
Retail
|
Ulster Bank
|
Commercial
|
Private
|
RBS
|
NatWest
|
Central items
|
|
|
Banking
|
RoI
|
Banking
|
Banking
|
International
|
Markets
|
& other
|
Total
|
2020
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Loans - amortised cost and FVOCI
|
|
|
|
|
|
|
|
|
Stage 1
|
139,956
|
14,380
|
70,685
|
15,321
|
12,143
|
7,780
|
26,859
|
287,124
|
Stage 2
|
32,414
|
3,302
|
37,344
|
1,939
|
2,242
|
1,566
|
110
|
78,917
|
Stage 3
|
1,891
|
1,236
|
2,551
|
298
|
211
|
171
|
—
|
6,358
|
Of which: individual
|
—
|
43
|
1,578
|
298
|
211
|
162
|
—
|
2,292
|
Of which: collective
|
1,891
|
1,193
|
973
|
—
|
—
|
9
|
—
|
4,066
|
|
174,261
|
18,918
|
110,580
|
17,558
|
14,596
|
9,517
|
26,969
|
372,399
|
ECL provisions (1)
|
|
|
|
|
|
|
|
|
Stage 1
|
134
|
45
|
270
|
31
|
14
|
12
|
13
|
519
|
Stage 2
|
897
|
265
|
1,713
|
68
|
74
|
49
|
15
|
3,081
|
Stage 3
|
806
|
492
|
1,069
|
39
|
48
|
132
|
—
|
2,586
|
Of which: individual
|
—
|
13
|
607
|
39
|
48
|
124
|
—
|
831
|
Of which: collective
|
806
|
479
|
462
|
—
|
—
|
8
|
—
|
1,755
|
|
1,837
|
802
|
3,052
|
138
|
136
|
193
|
28
|
6,186
|
ECL provisions coverage (2,3)
|
|
|
|
|
|
|
|
|
Stage 1 (%)
|
0.10
|
0.31
|
0.38
|
0.20
|
0.12
|
0.15
|
0.05
|
0.18
|
Stage 2 (%)
|
2.77
|
8.03
|
4.59
|
3.51
|
3.30
|
3.13
|
13.64
|
3.90
|
Stage 3 (%)
|
42.62
|
39.81
|
41.91
|
13.09
|
22.75
|
77.19
|
—
|
40.67
|
|
1.05
|
4.24
|
2.76
|
0.79
|
0.93
|
2.03
|
0.10
|
1.66
|
Impairment losses
|
|
|
|
|
|
|
|
|
ECL charge (4)
|
792
|
250
|
1,927
|
100
|
107
|
40
|
26
|
3,242
|
Stage 1
|
(36)
|
(68)
|
(58)
|
25
|
8
|
(2)
|
10
|
(121)
|
Stage 2
|
619
|
261
|
1,667
|
60
|
71
|
54
|
15
|
2,747
|
Stage 3
|
209
|
57
|
318
|
15
|
28
|
(12)
|
1
|
616
|
Of which: individual
|
—
|
(12)
|
166
|
15
|
28
|
(3)
|
—
|
194
|
Of which: collective
|
209
|
69
|
152
|
—
|
—
|
(9)
|
1
|
422
|
ECL loss rate - annualised (basis points) (3)
|
45
|
132
|
174
|
57
|
73
|
42
|
10
|
87
|
Amounts written-off
|
378
|
219
|
321
|
5
|
3
|
11
|
—
|
937
|
Of which: individual
|
—
|
—
|
172
|
5
|
3
|
11
|
—
|
191
|
Of which: collective
|
378
|
219
|
149
|
—
|
—
|
—
|
—
|
746
|
Business performance summary
Portfolio summary – segment analysis continued
|
Retail
|
Ulster Bank
|
Commercial
|
Private
|
RBS
|
NatWest
|
Central items
|
|
|
Banking
|
RoI
|
Banking
|
Banking
|
International
|
Markets
|
& other
|
Total
|
2019*
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Loans - amortised cost and FVOCI
|
|
|
|
|
|
|
|
|
Stage 1
|
144,513
|
15,409
|
88,100
|
14,956
|
14,834
|
9,273
|
15,282
|
302,367
|
Stage 2
|
13,558
|
1,642
|
11,353
|
587
|
545
|
180
|
3
|
27,868
|
Stage 3
|
1,902
|
2,037
|
2,162
|
207
|
121
|
169
|
—
|
6,598
|
Of which: individual
|
—
|
68
|
1,497
|
207
|
121
|
158
|
—
|
2,051
|
Of which: collective
|
1,902
|
1,969
|
665
|
—
|
—
|
11
|
—
|
4,547
|
|
159,973
|
19,088
|
101,615
|
15,750
|
15,500
|
9,622
|
15,285
|
336,833
|
ECL provisions
|
|
|
|
|
|
|
|
|
Stage 1
|
114
|
29
|
152
|
7
|
4
|
10
|
6
|
322
|
Stage 2
|
467
|
53
|
214
|
7
|
6
|
5
|
—
|
752
|
Stage 3
|
823
|
693
|
1,021
|
29
|
21
|
131
|
—
|
2,718
|
Of which: individual
|
—
|
22
|
602
|
29
|
21
|
122
|
—
|
796
|
Of which: collective
|
823
|
671
|
419
|
—
|
—
|
9
|
—
|
1,922
|
|
1,404
|
775
|
1,387
|
43
|
31
|
146
|
6
|
3,792
|
ECL provisions coverage (2,3)
|
|
|
|
|
|
|
|
|
Stage 1 (%)
|
0.08
|
0.19
|
0.17
|
0.05
|
0.03
|
0.11
|
0.04
|
0.11
|
Stage 2 (%)
|
3.44
|
3.23
|
1.88
|
1.19
|
1.10
|
2.78
|
—
|
2.70
|
Stage 3 (%)
|
43.27
|
34.02
|
47.22
|
14.01
|
17.36
|
77.51
|
—
|
41.19
|
|
0.88
|
4.06
|
1.36
|
0.27
|
0.20
|
1.52
|
0.04
|
1.13
|
Impairment losses
|
|
|
|
|
|
|
|
|
ECL charge (4)
|
393
|
(34)
|
391
|
(6)
|
2
|
(51)
|
1
|
696
|
Stage 1
|
(90)
|
(37)
|
(66)
|
(14)
|
(5)
|
—
|
—
|
(212)
|
Stage 2
|
256
|
(35)
|
99
|
—
|
5
|
(8)
|
1
|
318
|
Stage 3
|
227
|
38
|
358
|
8
|
2
|
(43)
|
—
|
590
|
Of which: individual
|
—
|
—
|
328
|
8
|
2
|
(35)
|
—
|
303
|
Of which: collective
|
227
|
38
|
30
|
—
|
—
|
(8)
|
—
|
287
|
ECL loss rate - annualised (basis points) (3)
|
25
|
(15)
|
38
|
(4)
|
1
|
(53)
|
1
|
20
|
Amounts written-off
|
235
|
85
|
450
|
1
|
5
|
16
|
—
|
792
|
Of which: individual
|
—
|
5
|
345
|
1
|
5
|
16
|
—
|
372
|
Of which: collective
|
235
|
80
|
105
|
—
|
—
|
—
|
—
|
420
|
*2019
data has been restated for the accounting policy change for
balances held with central banks. Refer to Accounting policy
changes effective 1 January 2020 for further
details.
Notes:
(1)
Includes £6 million (2019 - £4 million) related to assets
classified as FVOCI.
(2)
ECL provisions
coverage is calculated as ECL provisions divided by loans –
amortised cost and FVOCI.
(3)
ECL provisions
coverage and ECL loss rates are calculated on third party loans and
related ECL provisions and charge respectively. ECL loss rate is
calculated as annualised third party ECL charge divided by loans
– amortised cost and FVOCI.
(4)
Includes a £12
million charge (2019 - £2 million) related to other financial
assets, of which £2 million (2019 - £1 million release)
related to assets classified as FVOCI; and £28 million (2019 -
nil) related to contingent liabilities.
(5)
The table shows
gross loans only and excludes amounts that are outside the scope of
the ECL framework. Refer to the Financial instruments within the
scope of the IFRS 9 ECL framework section in the NatWest Group plc
2020 Annual Report and Accounts for further details. Other
financial assets within the scope of the IFRS 9 ECL framework were
cash and balances at central banks totalling £122.7 billion
(2019 – £79.2 billion) and debt securities of £53.8
billion (2019 – £59.4 billion).
Analysis of ECL provision
The
table below shows gross loans and ECL provision
analysis.
|
31 December 2020
|
30 September 2020*
|
30 June 2020*
|
31 December 2019*
|
|
£m
|
£m
|
£m
|
£m
|
Total Loans
|
372,399
|
365,276
|
365,527
|
336,833
|
Personal
|
204,188
|
198,274
|
195,957
|
188,870
|
Wholesale
|
168,211
|
167,002
|
169,570
|
147,963
|
|
|
|
|
|
Value of loans in Stage 2
|
78,917
|
95,527
|
97,010
|
27,868
|
Personal
|
34,352
|
35,703
|
30,778
|
15,034
|
Wholesale
|
44,565
|
59,824
|
66,232
|
12,834
|
|
|
|
|
|
ECL Provisions in Stage 2
|
3,081
|
3,061
|
3,025
|
752
|
Personal
|
996
|
1,011
|
1,010
|
503
|
Wholesale
|
2,085
|
2,050
|
2,015
|
249
|
|
|
|
|
|
ECL Provision Coverage in Stage 2
|
3.90%
|
3.20%
|
3.12%
|
2.70%
|
Personal
|
2.90%
|
2.83%
|
3.28%
|
3.35%
|
Wholesale
|
4.68%
|
3.43%
|
3.04%
|
1.94%
|
*Q3
2020, Q2 2020 and Q4 2019 data has been restated for the accounting
policy change for balances held with central banks. Refer to
Accounting policy changes effective 1 January 2020 for further
details.
Segment performance
|
Year ended 31 December 2020
|
|
|
|
|
|
|
Central
|
Total
|
|
Retail
|
Ulster
|
Commercial
|
Private
|
RBS
|
NatWest
|
items &
|
NatWest
|
|
Banking
|
Bank RoI
|
Banking
|
Banking
|
International
|
Markets
|
other
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Income statement
|
|
|
|
|
|
|
|
|
Net interest income
|
3,868
|
395
|
2,740
|
489
|
371
|
(57)
|
(57)
|
7,749
|
Non-interest income
|
313
|
115
|
1,218
|
274
|
126
|
1,204
|
(179)
|
3,071
|
Own credit adjustments
|
-
|
-
|
-
|
-
|
-
|
(24)
|
-
|
(24)
|
Total income
|
4,181
|
510
|
3,958
|
763
|
497
|
1,123
|
(236)
|
10,796
|
Direct expenses - staff costs
|
(516)
|
(198)
|
(638)
|
(173)
|
(117)
|
(524)
|
(1,295)
|
(3,461)
|
- other
costs
|
(208)
|
(86)
|
(279)
|
(83)
|
(53)
|
(152)
|
(2,457)
|
(3,318)
|
Indirect expenses
|
(1,571)
|
(170)
|
(1,344)
|
(210)
|
(74)
|
(362)
|
3,731
|
-
|
Strategic costs
- direct
|
(52)
|
(12)
|
(40)
|
(2)
|
(45)
|
(237)
|
(625)
|
(1,013)
|
-
indirect
|
(174)
|
(13)
|
(139)
|
(13)
|
(4)
|
(30)
|
373
|
-
|
Litigation and conduct costs
|
(19)
|
(7)
|
10
|
26
|
2
|
(5)
|
(120)
|
(113)
|
Operating expenses
|
(2,540)
|
(486)
|
(2,430)
|
(455)
|
(291)
|
(1,310)
|
(393)
|
(7,905)
|
Operating profit/(loss) before impairment losses
|
1,641
|
24
|
1,528
|
308
|
206
|
(187)
|
(629)
|
2,891
|
Impairment losses
|
(792)
|
(250)
|
(1,927)
|
(100)
|
(107)
|
(40)
|
(26)
|
(3,242)
|
Operating profit/(loss)
|
849
|
(226)
|
(399)
|
208
|
99
|
(227)
|
(655)
|
(351)
|
Additional information
|
|
|
|
|
|
|
|
|
Return on equity (1)
|
10.2%
|
(11.7%)
|
(4.5%)
|
10.3%
|
6.1%
|
(3.8%)
|
nm
|
(2.4%)
|
Cost:income ratio (1)
|
60.8%
|
95.3%
|
59.9%
|
59.6%
|
58.6%
|
116.7%
|
nm
|
72.9%
|
Total assets (£bn)
|
197.6
|
26.6
|
187.4
|
26.2
|
34.0
|
270.1
|
57.6
|
799.5
|
Funded assets (£bn)
|
197.6
|
26.6
|
187.4
|
26.2
|
34.0
|
105.9
|
55.3
|
633.0
|
Net loans to customers - amortised cost (£bn)
|
172.3
|
18.0
|
108.2
|
17.0
|
13.3
|
8.4
|
23.3
|
360.5
|
Loan impairment rate (1)
|
45bps
|
133bps
|
173bps
|
58bps
|
80bps
|
nm
|
nm
|
88bps
|
Impairment provisions (£bn)
|
(1.8)
|
(0.8)
|
(2.9)
|
(0.1)
|
(0.1)
|
(0.2)
|
(0.1)
|
(6.0)
|
Impairment provisions - stage 3 (£bn)
|
(0.8)
|
(0.5)
|
(1.1)
|
-
|
-
|
(0.1)
|
(0.1)
|
(2.6)
|
Customer deposits (£bn)
|
171.8
|
19.6
|
167.7
|
32.4
|
31.3
|
2.6
|
6.3
|
431.7
|
Risk-weighted assets (RWAs) (£bn)
|
36.7
|
11.8
|
75.1
|
10.9
|
7.5
|
26.9
|
1.4
|
170.3
|
RWA equivalent (RWAe) (£bn)
|
36.7
|
11.8
|
75.1
|
10.9
|
7.5
|
28.7
|
1.6
|
172.3
|
Employee numbers (FTEs - thousands)
|
16.0
|
2.7
|
9.6
|
2.1
|
1.7
|
2.2
|
25.6
|
59.9
|
Average interest earning assets (£bn)
|
181.4
|
26.4
|
163.1
|
23.8
|
31.7
|
37.9
|
nm
|
493.5
|
Net interest margin
|
2.13%
|
1.50%
|
1.68%
|
2.05%
|
1.17%
|
(0.15%)
|
nm
|
1.57%
|
Third party customer asset rate (2)
|
2.89%
|
2.30%
|
2.86%
|
2.53%
|
2.52%
|
nm
|
nm
|
nm
|
Third party customer funding rate (2)
|
(0.19%)
|
(0.07%)
|
(0.08%)
|
(0.11%)
|
(0.01%)
|
nm
|
nm
|
nm
|
For the notes to this table, refer to page 27. nm = not
meaningful.
Segment performance
|
Year ended 31 December 2019
|
|
|
|
|
|
|
Central
|
Total
|
|
Retail
|
Ulster
|
Commercial
|
Private
|
RBS
|
NatWest
|
items &
|
NatWest
|
|
Banking
|
Bank RoI
|
Banking
|
Banking
|
International
|
Markets
|
other
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Income statement
|
|
|
|
|
|
|
|
|
Net interest income
|
4,130
|
400
|
2,842
|
521
|
478
|
(188)
|
(136)
|
8,047
|
Non-interest income
|
736
|
167
|
1,476
|
256
|
132
|
1,166
|
1,318
|
5,251
|
Own credit adjustments
|
-
|
-
|
-
|
-
|
-
|
(80)
|
-
|
(80)
|
Strategic disposals
|
-
|
-
|
-
|
-
|
-
|
444
|
591
|
1,035
|
Total income
|
4,866
|
567
|
4,318
|
777
|
610
|
1,342
|
1,773
|
14,253
|
Direct expenses - staff costs
|
(560)
|
(193)
|
(686)
|
(162)
|
(120)
|
(626)
|
(1,220)
|
(3,567)
|
- other
costs
|
(302)
|
(96)
|
(286)
|
(66)
|
(57)
|
(202)
|
(2,473)
|
(3,482)
|
Indirect expenses
|
(1,541)
|
(181)
|
(1,264)
|
(211)
|
(67)
|
(350)
|
3,614
|
-
|
Strategic costs
- direct
|
(17)
|
(33)
|
(41)
|
(2)
|
(12)
|
(178)
|
(1,098)
|
(1,381)
|
-
indirect
|
(273)
|
(27)
|
(261)
|
(36)
|
(8)
|
(44)
|
649
|
-
|
Litigation and conduct costs
|
(925)
|
(22)
|
(62)
|
(9)
|
-
|
(18)
|
141
|
(895)
|
Operating expenses
|
(3,618)
|
(552)
|
(2,600)
|
(486)
|
(264)
|
(1,418)
|
(387)
|
(9,325)
|
Operating profit/(loss) before impairment
(losses)/releases
|
1,248
|
15
|
1,718
|
291
|
346
|
(76)
|
1,386
|
4,928
|
Impairment (losses)/releases
|
(393)
|
34
|
(391)
|
6
|
(2)
|
51
|
(1)
|
(696)
|
Operating profit/(loss)
|
855
|
49
|
1,327
|
297
|
344
|
(25)
|
1,385
|
4,232
|
Additional information
|
|
|
|
|
|
|
|
|
Return on equity (1)
|
9.6%
|
2.3%
|
8.4%
|
15.4%
|
25.7%
|
(3.2%)
|
nm
|
9.4%
|
Cost:income ratio (1)
|
74.4%
|
97.4%
|
58.9%
|
62.5%
|
43.3%
|
105.7%
|
nm
|
65.1%
|
Total assets (£bn)
|
182.3
|
25.4
|
165.4
|
23.3
|
31.7
|
263.9
|
31.0
|
723.0
|
Funded assets (£bn)
|
182.3
|
25.4
|
165.4
|
23.3
|
31.7
|
116.2
|
28.7
|
573.0
|
Net loans to customers - amortised cost (£bn)
|
158.9
|
18.2
|
101.2
|
15.5
|
14.1
|
8.4
|
10.6
|
326.9
|
Loan impairment rate (1)
|
25bps
|
(18)bps
|
38bps
|
(4)bps
|
1bps
|
nm
|
nm
|
21bps
|
Impairment provisions (£bn)
|
(1.4)
|
(0.8)
|
(1.3)
|
-
|
-
|
(0.1)
|
(0.1)
|
(3.7)
|
Impairment provisions - stage 3 (£bn)
|
(0.8)
|
(0.7)
|
(1.0)
|
-
|
-
|
(0.1)
|
(0.1)
|
(2.7)
|
Customer deposits (£bn)
|
150.3
|
18.5
|
135.0
|
28.4
|
30.1
|
3.7
|
3.2
|
369.2
|
Risk-weighted assets (RWAs) (£bn)
|
37.8
|
13.0
|
72.5
|
10.1
|
6.5
|
37.9
|
1.4
|
179.2
|
RWA equivalent (RWAe) (£bn)
|
38.2
|
13.2
|
72.8
|
10.1
|
6.7
|
40.5
|
1.7
|
183.2
|
Employee numbers (FTEs - thousands)
|
18.0
|
2.9
|
9.7
|
1.9
|
1.8
|
5.0
|
24.7
|
64.0
|
Average interest earning assets (£bn)
|
167.2
|
25.1
|
145.9
|
21.7
|
29.9
|
35.4
|
nm
|
448.6
|
Net interest margin
|
2.47%
|
1.59%
|
1.95%
|
2.40%
|
1.60%
|
(0.53%)
|
nm
|
1.79%
|
Third party customer asset rate (2)
|
3.23%
|
2.28%
|
3.36%
|
2.93%
|
2.89%
|
nm
|
nm
|
nm
|
Third party customer funding rate (2)
|
(0.37%)
|
(0.09%)
|
(0.19%)
|
(0.35%)
|
(0.11%)
|
nm
|
nm
|
nm
|
For the notes to this table, refer to page 27. nm = not
meaningful.
Segment performance
|
Quarter ended 31 December 2020
|
|
|
|
|
|
|
Central
|
Total
|
Retail
|
Ulster
|
Commercial
|
Private
|
RBS
|
NatWest
|
items &
|
NatWest
|
|
Banking
|
Bank RoI
|
Banking
|
Banking
|
International
|
Markets
|
other
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Income statement
|
|
|
|
|
|
|
|
|
Net interest income
|
949
|
101
|
667
|
118
|
85
|
(2)
|
53
|
1,971
|
Non-interest income
|
25
|
30
|
284
|
66
|
41
|
118
|
43
|
607
|
Own credit adjustments
|
-
|
-
|
-
|
-
|
-
|
(43)
|
-
|
(43)
|
Total income
|
974
|
131
|
951
|
184
|
126
|
73
|
96
|
2,535
|
Direct expenses - staff costs
|
(117)
|
(48)
|
(141)
|
(36)
|
(25)
|
(90)
|
(381)
|
(838)
|
- other
costs
|
(56)
|
(21)
|
(68)
|
(22)
|
(16)
|
(21)
|
(779)
|
(983)
|
Indirect expenses
|
(393)
|
(31)
|
(386)
|
(61)
|
(32)
|
(133)
|
1,036
|
-
|
Strategic costs
- direct
|
(6)
|
(3)
|
(35)
|
2
|
(37)
|
(50)
|
(197)
|
(326)
|
-
indirect
|
(36)
|
(3)
|
(28)
|
(3)
|
(1)
|
(6)
|
77
|
-
|
Litigation and conduct costs
|
(210)
|
(8)
|
2
|
29
|
(1)
|
(1)
|
(5)
|
(194)
|
Operating expenses
|
(818)
|
(114)
|
(656)
|
(91)
|
(112)
|
(301)
|
(249)
|
(2,341)
|
Operating profit/(loss) before impairment
(losses)/releases
|
156
|
17
|
295
|
93
|
14
|
(228)
|
(153)
|
194
|
Impairment (losses)/releases
|
(65)
|
1
|
(10)
|
(26)
|
(27)
|
(2)
|
(1)
|
(130)
|
Operating profit/(loss)
|
91
|
18
|
285
|
67
|
(13)
|
(230)
|
(154)
|
64
|
Additional information
|
|
|
|
|
|
|
|
|
Return on equity (1)
|
3.8%
|
3.9%
|
8.1%
|
13.3%
|
(5.5%)
|
(15.0%)
|
nm
|
(1.4%)
|
Cost:income ratio (1)
|
84.0%
|
87.0%
|
67.8%
|
49.5%
|
88.9%
|
nm
|
nm
|
92.2%
|
Total assets (£bn)
|
197.6
|
26.6
|
187.4
|
26.2
|
34.0
|
270.1
|
57.6
|
799.5
|
Funded assets (£bn)
|
197.6
|
26.6
|
187.4
|
26.2
|
34.0
|
105.9
|
55.3
|
633.0
|
Net loans to customers - amortised cost (£bn)
|
172.3
|
18.0
|
108.2
|
17.0
|
13.3
|
8.4
|
23.3
|
360.5
|
Loan impairment rate (1)
|
15bps
|
(2)bps
|
4bps
|
61bps
|
81bps
|
nm
|
nm
|
14bps
|
Impairment provisions (£bn)
|
(1.8)
|
(0.8)
|
(2.9)
|
(0.1)
|
(0.1)
|
(0.2)
|
(0.1)
|
(6.0)
|
Impairment provisions - stage 3 (£bn)
|
(0.8)
|
(0.5)
|
(1.1)
|
-
|
-
|
(0.1)
|
(0.1)
|
(2.6)
|
Customer deposits (£bn)
|
171.8
|
19.6
|
167.7
|
32.4
|
31.3
|
2.6
|
6.3
|
431.7
|
Risk-weighted assets (RWAs) (£bn)
|
36.7
|
11.8
|
75.1
|
10.9
|
7.5
|
26.9
|
1.4
|
170.3
|
RWA equivalent (RWAe) (£bn)
|
36.7
|
11.8
|
75.1
|
10.9
|
7.5
|
28.7
|
1.6
|
172.3
|
Employee numbers (FTEs - thousands)
|
16.0
|
2.7
|
9.6
|
2.1
|
1.7
|
2.2
|
25.6
|
59.9
|
Average interest earning assets (£bn)
|
186.1
|
26.8
|
170.2
|
25.2
|
32.9
|
36.5
|
nm
|
509.6
|
Net interest margin
|
2.03%
|
1.50%
|
1.56%
|
1.86%
|
1.03%
|
(0.02%)
|
nm
|
1.54%
|
Third party customer asset rate (2)
|
2.81%
|
2.33%
|
2.65%
|
2.38%
|
2.34%
|
nm
|
nm
|
nm
|
Third party customer funding rate (2)
|
(0.10%)
|
(0.07%)
|
(0.01%)
|
(0.01%)
|
0.05%
|
nm
|
nm
|
nm
|
For the notes to this table, refer to page 27nm = not
meaningful.
Segment performance
|
Quarter ended 30 September 2020
|
|
|
|
|
|
|
Central
|
Total
|
|
Retail
|
Ulster
|
Commercial
|
Private
|
RBS
|
NatWest
|
items &
|
NatWest
|
|
Banking
|
Bank RoI
|
Banking
|
Banking
|
International
|
Markets
|
other
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Income statement
|
|
|
|
|
|
|
|
|
Net interest income
|
937
|
100
|
703
|
120
|
85
|
(21)
|
2
|
1,926
|
Non-interest income
|
85
|
30
|
301
|
67
|
27
|
289
|
(268)
|
531
|
Own credit adjustments
|
-
|
-
|
-
|
-
|
-
|
(34)
|
-
|
(34)
|
Total income
|
1,022
|
130
|
1,004
|
187
|
112
|
234
|
(266)
|
2,423
|
Direct expenses - staff costs
|
(131)
|
(50)
|
(156)
|
(44)
|
(27)
|
(108)
|
(311)
|
(827)
|
- other
costs
|
(49)
|
(23)
|
(71)
|
(14)
|
(10)
|
(37)
|
(552)
|
(756)
|
Indirect expenses
|
(380)
|
(47)
|
(300)
|
(48)
|
(13)
|
(80)
|
868
|
-
|
Strategic costs
- direct
|
(45)
|
(5)
|
(3)
|
(4)
|
(5)
|
(67)
|
(94)
|
(223)
|
-
indirect
|
(35)
|
(2)
|
(38)
|
-
|
2
|
(8)
|
81
|
-
|
Litigation and conduct costs
|
(7)
|
-
|
15
|
(2)
|
-
|
(2)
|
(12)
|
(8)
|
Operating expenses
|
(647)
|
(127)
|
(553)
|
(112)
|
(53)
|
(302)
|
(20)
|
(1,814)
|
Operating (loss)/profit before impairment
(losses)/releases
|
375
|
3
|
451
|
75
|
59
|
(68)
|
(286)
|
609
|
Impairment (losses)/releases
|
(70)
|
(8)
|
(127)
|
(18)
|
(34)
|
2
|
1
|
(254)
|
Operating (loss)/profit
|
305
|
(5)
|
324
|
57
|
25
|
(66)
|
(285)
|
355
|
Additional information
|
|
|
|
|
|
|
|
|
Return on equity (1)
|
15.3%
|
(1.0%)
|
9.2%
|
11.2%
|
6.4%
|
(4.7%)
|
nm
|
0.8%
|
Cost:income ratio (1)
|
63.3%
|
97.7%
|
53.4%
|
59.9%
|
47.3%
|
129.1%
|
nm
|
74.5%
|
Total assets (£bn)
|
189.5
|
27.4
|
186.9
|
24.9
|
32.7
|
283.2
|
47.0
|
791.6
|
Funded assets (£bn)
|
189.5
|
27.4
|
186.9
|
24.9
|
32.7
|
121.3
|
44.6
|
627.3
|
Net loans to customers - amortised cost (£bn)
|
166.7
|
18.3
|
110.0
|
16.5
|
12.8
|
10.1
|
19.3
|
353.7
|
Loan impairment rate (1)
|
17bps
|
17bps
|
45bps
|
43bps
|
105bps
|
nm
|
nm
|
28bps
|
Impairment provisions (£bn)
|
(1.9)
|
(0.8)
|
(3.0)
|
(0.1)
|
(0.1)
|
(0.2)
|
-
|
(6.1)
|
Impairment provisions - stage 3 (£bn)
|
(0.9)
|
(0.5)
|
(1.1)
|
-
|
-
|
(0.2)
|
-
|
(2.7)
|
Customer deposits (£bn)
|
164.9
|
19.6
|
161.3
|
30.3
|
30.4
|
4.7
|
7.2
|
418.4
|
Risk-weighted assets (RWAs) (£bn)
|
36.3
|
12.1
|
76.5
|
10.6
|
7.0
|
30.0
|
1.4
|
173.9
|
RWA equivalent (RWAe) (£bn)
|
36.3
|
12.1
|
76.6
|
10.6
|
7.1
|
32.0
|
1.4
|
176.1
|
Employee numbers (FTEs - thousands)
|
16.6
|
2.8
|
9.6
|
2.1
|
1.7
|
2.8
|
26.0
|
61.6
|
Average interest earning assets (£bn)
|
182.2
|
27.3
|
169.3
|
24.0
|
31.5
|
39.2
|
nm
|
508.2
|
Net interest margin
|
2.05%
|
1.46%
|
1.65%
|
1.99%
|
1.07%
|
(0.21%)
|
nm
|
1.51%
|
Third party customer asset rate (2)
|
2.82%
|
2.32%
|
2.73%
|
2.43%
|
2.41%
|
nm
|
nm
|
nm
|
Third party customer funding rate (2)
|
(0.13%)
|
(0.06%)
|
(0.02%)
|
(0.02%)
|
0.02%
|
nm
|
nm
|
nm
|
For the notes to this table, refer to the following page. nm = not
meaningful.
Segment performance
|
Quarter ended 31 December 2019
|
|
|
|
|
|
|
Central
|
Total
|
|
Retail
|
Ulster
|
Commercial
|
Private
|
RBS
|
NatWest
|
items &
|
NatWest
|
|
Banking
|
Bank RoI
|
Banking
|
Banking
|
International
|
Markets
|
other
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Income statement
|
|
|
|
|
|
|
|
|
Net interest income
|
1,012
|
98
|
715
|
130
|
117
|
(4)
|
(31)
|
2,037
|
Non-interest income
|
183
|
42
|
361
|
65
|
33
|
276
|
1,258
|
2,218
|
Own credit adjustments
|
-
|
(1)
|
-
|
-
|
-
|
(22)
|
1
|
(22)
|
Total income
|
1,195
|
139
|
1,076
|
195
|
150
|
250
|
1,228
|
4,233
|
Direct expenses - staff costs
|
(129)
|
(37)
|
(165)
|
(40)
|
(31)
|
(118)
|
(315)
|
(835)
|
- other
costs
|
(85)
|
(26)
|
(63)
|
(14)
|
(20)
|
(74)
|
(788)
|
(1,070)
|
Indirect expenses
|
(428)
|
(47)
|
(349)
|
(66)
|
(27)
|
(104)
|
1,021
|
-
|
Strategic costs
- direct
|
(9)
|
(21)
|
(21)
|
(2)
|
(3)
|
(74)
|
(407)
|
(537)
|
-
indirect
|
(130)
|
(8)
|
(90)
|
(6)
|
(2)
|
(7)
|
243
|
-
|
Litigation and conduct costs
|
(7)
|
(1)
|
(12)
|
(7)
|
-
|
(15)
|
(43)
|
(85)
|
Operating expenses
|
(788)
|
(140)
|
(700)
|
(135)
|
(83)
|
(392)
|
(289)
|
(2,527)
|
Operating profit/(loss) before impairment
(losses)/releases
|
407
|
(1)
|
376
|
60
|
67
|
(142)
|
939
|
1,706
|
Impairment (losses)/releases
|
(81)
|
(4)
|
(81)
|
1
|
(5)
|
10
|
-
|
(160)
|
Operating profit/(loss)
|
326
|
(5)
|
295
|
61
|
62
|
(132)
|
939
|
1,546
|
Additional information
|
|
|
|
|
|
|
|
|
Return on equity (1)
|
14.9%
|
(1.0%)
|
7.6%
|
12.0%
|
17.3%
|
(6.5%)
|
nm
|
17.7%
|
Cost:income ratio (1)
|
65.9%
|
100.7%
|
63.9%
|
69.2%
|
55.3%
|
156.8%
|
nm
|
59.4%
|
Total assets (£bn)
|
182.3
|
25.4
|
165.4
|
23.3
|
31.7
|
263.9
|
31.0
|
723.0
|
Funded assets (£bn)
|
182.3
|
25.4
|
165.4
|
23.3
|
31.7
|
116.2
|
28.7
|
573.0
|
Net loans to customers - amortised cost (£bn)
|
158.9
|
18.2
|
101.2
|
15.5
|
14.1
|
8.4
|
10.6
|
326.9
|
Loan impairment rate (1)
|
20bps
|
8bps
|
32bps
|
(3)bps
|
14bps
|
nm
|
nm
|
19bps
|
Impairment provisions (£bn)
|
(1.4)
|
(0.8)
|
(1.3)
|
-
|
-
|
(0.1)
|
(0.1)
|
(3.7)
|
Impairment provisions - stage 3 (£bn)
|
(0.8)
|
(0.7)
|
(1.0)
|
-
|
-
|
(0.1)
|
(0.1)
|
(2.7)
|
Customer deposits (£bn)
|
150.3
|
18.5
|
135.0
|
28.4
|
30.1
|
3.7
|
3.2
|
369.2
|
Risk-weighted assets (RWAs) (£bn)
|
37.8
|
13.0
|
72.5
|
10.1
|
6.5
|
37.9
|
1.4
|
179.2
|
RWA equivalent (RWAe) (£bn)
|
38.2
|
13.2
|
72.8
|
10.1
|
6.7
|
40.5
|
1.7
|
183.2
|
Employee numbers (FTEs - thousands)
|
18.0
|
2.9
|
9.7
|
1.9
|
1.8
|
5.0
|
24.7
|
64.0
|
Average interest earning assets (£bn)
|
172.9
|
24.8
|
146.4
|
22.4
|
31.6
|
36.6
|
nm
|
456.2
|
Net interest margin
|
2.32%
|
1.57%
|
1.94%
|
2.30%
|
1.47%
|
(0.04%)
|
nm
|
1.77%
|
Third party customer asset rate (2)
|
3.11%
|
2.24%
|
3.34%
|
2.88%
|
2.79%
|
nm
|
nm
|
nm
|
Third party customer funding rate (2)
|
(0.38%)
|
(0.08%)
|
(0.18%)
|
(0.33%)
|
(0.08%)
|
nm
|
nm
|
nm
|
nm = not meaningful
Notes:
(1)
Refer to the
Appendix for details of basis of preparation and reconciliation of
non-IFRS performance measures where relevant.
(2)
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 only. Third party customer funding rate reflects
interest payable on third-party customer deposits, including
interest bearing and non-interest bearing customer deposits. This
excludes intragroup items, loans to banks and liquid asset
portfolios. Intragroup items, bank deposits and debt securities in
issue are excluded for customer funding rate calculation.
Comparatives have been restated. Net interest margin is calculated
as net interest income as a percentage of the average
interest-earning assets without these exclusions.
Condensed consolidated income statement for the period ended 31
December 2020
|
|
Year ended
|
|
Quarter ended
|
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
|
2020
|
2019
|
|
2020
|
2020
|
2019
|
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
Interest receivable
|
10,071
|
11,375
|
|
2,369
|
2,512
|
2,901
|
|
Interest payable
|
(2,322)
|
(3,328)
|
|
(398)
|
(586)
|
(864)
|
|
|
|
|
|
|
|
|
|
Net interest income
|
7,749
|
8,047
|
|
1,971
|
1,926
|
2,037
|
|
|
|
|
|
|
|
|
|
Fees and commissions receivable
|
2,734
|
3,359
|
|
653
|
651
|
789
|
|
Fees and commissions payable
|
(722)
|
(848)
|
|
(131)
|
(199)
|
(175)
|
|
Income from trading activities
|
1,125
|
932
|
|
71
|
252
|
138
|
|
Other operating income
|
(90)
|
2,763
|
|
(29)
|
(207)
|
1,444
|
|
|
|
|
|
|
|
|
|
Non-interest income
|
3,047
|
6,206
|
|
564
|
497
|
2,196
|
|
|
|
|
|
|
|
|
|
Total income
|
10,796
|
14,253
|
|
2,535
|
2,423
|
4,233
|
|
|
|
|
|
|
|
|
|
Staff costs
|
(3,923)
|
(4,018)
|
|
(986)
|
(982)
|
(990)
|
|
Premises and equipment
|
(1,223)
|
(1,259)
|
|
(321)
|
(251)
|
(436)
|
|
Other administrative expenses
|
(1,845)
|
(2,828)
|
|
(764)
|
(385)
|
(743)
|
|
Depreciation and amortisation
|
(905)
|
(1,176)
|
|
(270)
|
(194)
|
(323)
|
|
Impairment of other intangible assets
|
(9)
|
(44)
|
|
-
|
(2)
|
(35)
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
(7,905)
|
(9,325)
|
|
(2,341)
|
(1,814)
|
(2,527)
|
|
|
|
|
|
|
|
|
|
Profit before impairment losses
|
2,891
|
4,928
|
|
194
|
609
|
1,706
|
|
Impairment losses
|
(3,242)
|
(696)
|
|
(130)
|
(254)
|
(160)
|
|
|
|
|
|
|
|
|
|
Operating (loss)/profit before tax
|
(351)
|
4,232
|
|
64
|
355
|
1,546
|
|
Tax charge
|
(83)
|
(432)
|
|
(84)
|
(207)
|
(37)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/profit for the period
|
(434)
|
3,800
|
|
(20)
|
148
|
1,509
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
Ordinary shareholders
|
(753)
|
3,133
|
|
(109)
|
61
|
1,410
|
|
Preference shareholders
|
26
|
39
|
|
5
|
5
|
9
|
|
Paid-in equity holders
|
355
|
367
|
|
83
|
80
|
90
|
|
Non-controlling interests
|
(62)
|
261
|
|
1
|
2
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ordinary share
|
(6.2)p
|
26.0p
|
|
(0.9)p
|
0.5p
|
11.7p
|
|
Earnings per ordinary share - fully diluted
|
(6.2)p
|
25.9p
|
|
(0.9)p
|
0.5p
|
11.6p
|
Condensed consolidated statement of comprehensive income for the
period ended 31 December 2020
|
|
Year ended
|
|
Quarter ended
|
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
|
2020
|
2019
|
|
2020
|
2020
|
2019
|
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
(Loss)/profit for the period
|
(434)
|
3,800
|
|
(20)
|
148
|
1,509
|
|
Items that do not qualify for reclassification
|
|
|
|
|
|
|
|
Remeasurement of retirement benefit schemes
|
4
|
(142)
|
|
(50)
|
(14)
|
(46)
|
|
(Loss)/profit on fair value of credit in financial
liabilities
|
|
|
|
|
|
|
|
designated at FVTPL due
to own credit risk
|
(52)
|
(189)
|
|
(72)
|
(63)
|
(74)
|
|
FVOCI financial assets
|
(64)
|
(71)
|
|
(21)
|
77
|
21
|
|
Tax
|
42
|
28
|
|
29
|
13
|
4
|
|
|
(70)
|
(374)
|
|
(114)
|
13
|
(95)
|
|
Items that do qualify for reclassification
|
|
|
|
|
|
|
|
FVOCI financial assets
|
44
|
(14)
|
|
81
|
74
|
(11)
|
|
Cash flow hedges
|
271
|
294
|
|
(93)
|
(53)
|
(394)
|
|
Currency translation
|
276
|
(1,836)
|
|
(149)
|
(150)
|
(1,538)
|
|
Tax
|
(89)
|
(170)
|
|
(4)
|
94
|
23
|
|
|
502
|
(1,726)
|
|
(165)
|
(35)
|
(1,920)
|
|
Other comprehensive income/(loss) after tax
|
432
|
(2,100)
|
|
(279)
|
(22)
|
(2,015)
|
|
|
|
|
|
|
|
|
|
Total comprehensive(loss)/income for the period
|
(2)
|
1,700
|
|
(299)
|
126
|
(506)
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
Ordinary shareholders
|
(338)
|
1,044
|
|
(389)
|
37
|
(580)
|
|
Preference shareholders
|
26
|
39
|
|
5
|
5
|
9
|
|
Paid-in equity holders
|
355
|
367
|
|
83
|
80
|
90
|
|
Non-controlling interests
|
(45)
|
250
|
|
2
|
4
|
(25)
|
|
|
(2)
|
1,700
|
|
(299)
|
126
|
(506)
|
Condensed consolidated balance sheet as at 31 December
2020
|
|
31 December
|
30 September
|
31 December
|
|
|
2020
|
2020
|
2019
|
|
|
£m
|
£m
|
£m
|
|
Assets
|
|
|
|
|
Cash and balances at central banks*
|
124,489
|
111,681
|
80,993
|
|
Trading assets
|
68,990
|
70,820
|
76,745
|
|
Derivatives
|
166,523
|
164,311
|
150,029
|
|
Settlement balances
|
2,297
|
10,947
|
4,387
|
|
Loans to banks - amortised cost*
|
6,955
|
6,571
|
7,554
|
|
Loans to customers - amortised cost
|
360,544
|
353,691
|
326,947
|
|
Other financial assets
|
55,148
|
58,736
|
61,452
|
|
Intangible assets
|
6,655
|
6,600
|
6,622
|
|
Other assets
|
7,890
|
8,204
|
8,310
|
|
|
|
|
|
|
Total assets
|
799,491
|
791,561
|
723,039
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Bank deposits
|
20,606
|
18,666
|
20,493
|
|
Customer deposits
|
431,739
|
418,358
|
369,247
|
|
Settlement balances
|
5,545
|
9,839
|
4,069
|
|
Trading liabilities
|
72,256
|
73,023
|
73,949
|
|
Derivatives
|
160,705
|
160,532
|
146,879
|
|
Other financial liabilities
|
45,811
|
48,848
|
45,220
|
|
Subordinated liabilities
|
9,962
|
10,467
|
9,979
|
|
Notes in circulation
|
2,655
|
2,308
|
2,109
|
|
Other liabilities
|
6,388
|
6,370
|
7,538
|
|
Total liabilities
|
755,667
|
748,411
|
679,483
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Ordinary shareholders' interests
|
38,367
|
38,693
|
38,993
|
|
Other owners' interests
|
5,493
|
4,495
|
4,554
|
|
Owners’ equity
|
43,860
|
43,188
|
43,547
|
|
Non-controlling interests
|
(36)
|
(38)
|
9
|
|
Total equity
|
43,824
|
43,150
|
43,556
|
|
Total liabilities and equity
|
799,491
|
791,561
|
723,039
|
|
|
|
|
|
*Prior
period data has been restated for the accounting policy change for
balances held with central banks. Refer to Accounting policy
changes effective 1 January 2020 for further details.
Condensed consolidated statement of changes in equity for the
period ended 31 December 2020
|
|
Year ended
|
|
Quarter ended
|
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
|
2020
|
2019
|
|
2020
|
2020
|
2019
|
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
Called-up share capital - at 1 January
|
12,094
|
12,049
|
|
12,127
|
12,125
|
12,094
|
|
Ordinary shares issued
|
35
|
45
|
|
2
|
2
|
-
|
|
At 31 December
|
12,129
|
12,094
|
|
12,129
|
12,127
|
12,094
|
|
|
|
|
|
|
|
|
|
Paid-in equity - at 1 January
|
4,058
|
4,058
|
|
4,001
|
4,058
|
4,058
|
|
Redeemed/reclassified (1)
|
(1,277)
|
-
|
|
-
|
(1,277)
|
-
|
|
Securities issued during the period (2)
|
2,218
|
-
|
|
998
|
1,220
|
-
|
|
At 31 December
|
4,999
|
4,058
|
|
4,999
|
4,001
|
4,058
|
|
|
|
|
|
|
|
|
|
Share premium account - at 1 January
|
1,094
|
1,027
|
|
1,110
|
1,110
|
1,094
|
|
Ordinary shares issued
|
17
|
67
|
|
1
|
-
|
-
|
|
At 31 December
|
1,111
|
1,094
|
|
1,111
|
1,110
|
1,094
|
|
|
|
|
|
|
|
|
|
Merger reserve - at 1 January and 31 December
|
10,881
|
10,881
|
|
10,881
|
10,881
|
10,881
|
|
|
|
|
|
|
|
|
|
FVOCI reserve
- at 1 January
|
138
|
343
|
|
(36)
|
(80)
|
125
|
|
Unrealised gains/(losses)
|
76
|
(107)
|
|
55
|
144
|
(11)
|
|
Realised losses/(gains) (3)
|
152
|
(90)
|
|
367
|
(108)
|
27
|
|
Tax
|
(6)
|
(8)
|
|
(26)
|
8
|
(3)
|
|
At 31 December
|
360
|
138
|
|
360
|
(36)
|
138
|
|
|
|
|
|
|
|
|
|
Cash flow hedging reserve - at 1 January
|
35
|
(191)
|
|
300
|
341
|
336
|
|
Amount recognised in equity
|
321
|
573
|
|
(75)
|
(49)
|
(285)
|
|
Amount transferred from equity to earnings
|
(50)
|
(279)
|
|
(18)
|
(4)
|
(109)
|
|
Tax
|
(77)
|
(68)
|
|
22
|
12
|
93
|
|
At 31 December
|
229
|
35
|
|
229
|
300
|
35
|
|
|
|
|
|
|
|
|
|
Foreign exchange reserve - at 1 January
|
1,343
|
3,278
|
|
1,758
|
1,809
|
2,924
|
|
Retranslation of net assets
|
297
|
(428)
|
|
(155)
|
(75)
|
(381)
|
|
Foreign currency (losses)/gains on hedges of net
assets
|
(55)
|
83
|
|
4
|
4
|
61
|
|
Tax
|
6
|
(110)
|
|
-
|
101
|
(116)
|
|
Recycled to profit or loss on disposal of
businesses (4)
|
17
|
(1,480)
|
|
1
|
(81)
|
(1,145)
|
|
At 31 December
|
1,608
|
1,343
|
|
1,608
|
1,758
|
1,343
|
|
|
|
|
|
|
|
|
|
Retained earnings - at 1 January
|
13,946
|
14,312
|
|
13,071
|
12,940
|
12,663
|
|
Implementation of IFRS 16 on 1 January 2019
|
-
|
(187)
|
|
-
|
-
|
-
|
|
(Loss)/profit attributable to ordinary shareholders
and
|
|
|
|
|
|
|
|
other equity
owners
|
(372)
|
3,539
|
|
(21)
|
146
|
1,509
|
|
Equity preference dividends paid
|
(26)
|
(39)
|
|
(5)
|
(5)
|
(9)
|
|
Paid-in equity dividends paid
|
(355)
|
(367)
|
|
(83)
|
(80)
|
(90)
|
|
Ordinary dividends paid
|
-
|
(3,018)
|
|
-
|
-
|
-
|
|
Unclaimed dividend
|
2
|
-
|
|
-
|
2
|
-
|
|
Redemption/reclassification of paid-in equity (1)
|
(355)
|
-
|
|
-
|
-
|
-
|
|
Realised (losses)/gains in period on FVOCI equity
shares
|
|
|
|
|
|
|
|
-
gross
|
(248)
|
112
|
|
(362)
|
115
|
(6)
|
|
-
tax
|
-
|
-
|
|
27
|
(27)
|
-
|
|
Remeasurement of the retirement benefit schemes
|
|
|
|
|
|
|
|
-
gross
|
4
|
(142)
|
|
(50)
|
(14)
|
(46)
|
|
-
tax
|
22
|
24
|
|
(7)
|
6
|
(1)
|
|
Changes in fair value of credit in financial
liabilities
|
|
|
|
|
|
|
|
designated at
FVTPL
|
|
|
|
|
|
|
|
-
gross
|
(52)
|
(189)
|
|
(72)
|
(63)
|
(74)
|
|
-
tax
|
8
|
20
|
|
9
|
7
|
6
|
|
Shares issued under employee share schemes
|
(11)
|
(6)
|
|
-
|
-
|
(2)
|
|
Share-based payments
|
4
|
(113)
|
|
60
|
44
|
(4)
|
|
At 31 December
|
12,567
|
13,946
|
|
12,567
|
13,071
|
13,946
|
Condensed consolidated statement of changes in equity for the
period ended 31 December 2020
|
|
Year ended
|
|
Quarter ended
|
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
|
2020
|
2019
|
|
2020
|
2020
|
2019
|
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
Own shares held - at 1 January
|
(42)
|
(21)
|
|
(24)
|
(24)
|
(45)
|
|
Shares issued under employee share schemes
|
95
|
39
|
|
-
|
-
|
5
|
|
Own shares acquired
|
(77)
|
(60)
|
|
-
|
-
|
(2)
|
|
At 31 December
|
(24)
|
(42)
|
|
(24)
|
(24)
|
(42)
|
|
Owners' equity at 31 December
|
43,860
|
43,547
|
|
43,860
|
43,188
|
43,547
|
|
|
|
|
|
|
|
|
|
Non-controlling interests - at 1 January
|
9
|
754
|
|
(38)
|
(42)
|
16
|
|
Currency translation adjustments and other movements
|
17
|
(11)
|
|
1
|
2
|
(25)
|
|
(Loss)/profit attributable to non-controlling
interests
|
(62)
|
261
|
|
1
|
2
|
-
|
|
Dividends paid
|
-
|
(5)
|
|
-
|
-
|
(5)
|
|
Equity raised (5)
|
-
|
45
|
|
-
|
-
|
-
|
|
Equity withdrawn and disposals (6)
|
-
|
(1,035)
|
|
-
|
-
|
23
|
|
At 31 December
|
(36)
|
9
|
|
(36)
|
(38)
|
9
|
|
|
|
|
|
|
|
|
|
Total equity at 31 December
|
43,824
|
43,556
|
|
43,824
|
43,150
|
43,556
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
Ordinary shareholders
|
38,367
|
38,993
|
|
38,367
|
38,693
|
38,993
|
|
Preference shareholders
|
494
|
496
|
|
494
|
494
|
496
|
|
Paid-in equity holders
|
4,999
|
4,058
|
|
4,999
|
4,001
|
4,058
|
|
Non-controlling interests
|
(36)
|
9
|
|
(36)
|
(38)
|
9
|
|
|
43,824
|
43,556
|
|
43,824
|
43,150
|
43,556
|
Notes:
(1)
Paid-in equity
reclassified to liabilities as the result of a call of US$2 billion
AT1 notes in June 2020, which were redeemed in August
2020.
(2)
AT1 capital notes
totalling US$1.5 billion less fees issued in June 2020. In November
2020 AT1 capital notes totalling £1.0 billion less fees were
issued.
(3)
During the year NWM
Plc sold its entire equity holding in Saudi British Bank (SABB)
leading to a realised loss of £337 million after tax which was
recognised through other comprehensive income and reclassified to
retained earnings. Also, following a conversion of Visa B and C
preference shares to Visa Class A Shares a gain of £125
million was realised. There has been a corresponding adjustment to
the conversion ratio of the Visa B and C preference
shares.
(4)
Includes £290
million recycled on completion of the Alawwal bank merger in June
2019 (with a further £48m shown in Tax), £1,102 million
recycled on the subsequent liquidation of RFS Holdings B.V. (with a
further £65m shown in Tax), and £67m attributable to the
capital repayment by UBI DAC in 2019. The Alawwal bank merger
resulted in the derecognition of the associate investment in
Alawwal bank and recognition of a new investment in SABB held at
FVOCI. The recycling gains arising from the liquidation of RFS
Holdings BV and capital repayment by UBI DAC have been calculated
using the step-by-step method in IFRIC 16 ‘Hedges of a Net
Investment in a Foreign Operation’ and by reference to the
proportion of capital repaid. Amount recycled also includes
£2,661 million related with historical hedge relationship
taken to non-interest income.
(5)
Capital injection
from RFS Holdings B.V Consortium members.
(6)
Distributed to RFS
Holding B.V. Consortium members on completion of the Alawwal bank
merger.
Condensed consolidated cash flow statement for the period ended 31
December 2020
|
|
Year ended
|
|
|
31 December
|
31 December
|
|
|
2020
|
2019
|
|
|
£m
|
£m
|
|
Operating activities
|
|
|
|
Operating (loss)/profit before tax
|
(351)
|
4,232
|
|
Adjustments for non-cash items
|
2,845
|
2,907
|
|
|
|
|
|
Net cash flows from trading activities
|
2,494
|
7,139
|
|
Changes in operating assets and liabilities
|
26,815
|
(9,940)
|
|
|
|
|
|
Net cash flows from operating activities before tax
|
29,309
|
(2,801)
|
|
Income taxes paid
|
(214)
|
(278)
|
|
|
|
|
|
Net cash flows from operating activities
|
29,095
|
(3,079)
|
|
|
|
|
|
Net cash flows from investing activities
|
7,547
|
(716)
|
|
|
|
|
|
Net cash flows from financing activities
|
90
|
(2,570)
|
|
|
|
|
|
Effects of exchange rate changes on cash and cash
equivalents
|
1,879
|
(1,983)
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents
|
38,611
|
(8,348)
|
|
Cash and cash equivalents at beginning of year
|
100,588
|
108,936
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
139,199
|
100,588
|
Notes
1. Basis of preparation
The
condensed consolidated financial statements should be read in
conjunction with NatWest Group plc 2020 Annual Report and Accounts
which were prepared in accordance with International Accounting
Standards in conformity with the requirements of the Companies Act
2006 and with International Financial Reporting Standards (IFRS)
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in
the European Union.
Going concern
Having
reviewed NatWest Group’s forecasts, projections, the
potential impact of COVID-19, and other relevant evidence, the
directors have a reasonable expectation that NatWest Group will
continue in operational existence for the foreseeable future.
Accordingly, the results for the year ended 31 December 2020 have
been prepared on a going concern basis (see the Report of the
directors, page 153, NatWest Group plc 2020 Annual Report and
Accounts).
2. Accounting policies
NatWest Group’s principal accounting policies are as set out
on pages 264 to 268 of the NatWest Group plc 2020 Annual Report and
Accounts. From 1 January 2020, the accounting policies have been
updated to reflect the adoption of the below.
Accounting policy changes effective 1 January 2020
Amendments to IFRS 3 Business Combinations (IFRS 3) - Changes to
the definition of a business
The
International Accounting Standards Board (IASB) amended IFRS 3
to provide additional guidance on the definition of a business. The
amendment aims to help entities when determining whether a
transaction should be accounted for as a business combination or as
an asset acquisition. The amendments are in line with current
accounting policy and therefore did not affect the
accounts.
Definition of material – Amendments to IAS 1 –
Presentation of Financial Statements (IAS 1) and IAS 8
-
Accounting Policies, Changes in Accounting Estimates and Errors
(IAS 8)
The
IASB clarified the definition of ‘material’ and aligned
the definition of material used in the Conceptual Framework and in
other IFRS standards. The amendments clarify that materiality will
depend on the nature or magnitude of information. Under the amended
definition of materiality, an entity will need to assess whether
the information, either individually or in combination with other
information, is material in the context of the accounts. A
misstatement of information is material if it could reasonably be
expected to influence decisions made by the primary users. NatWest
Group’s definition and application of materiality is in line
with the definition in the amendments.
Interest Rate Benchmark Reform (IBOR reform) Phase 1 amendments to
IFRS 9 and IAS 39
The
IASB issued 'Interest Rate Benchmark Reform (Amendments to IFRS 9,
IAS 39 and IFRS 7)' as a first reaction to the potential effects
the IBOR reform could have on financial reporting. The amendments
focused on hedge accounting and allow hedge relationships affected
by the IBOR reform to be accounted for as continuing hedges.
Amendments are effective for annual reporting periods beginning on
or after 1 January 2020 with early application permitted. NatWest
Group early adopted these amendments for the annual period ending
on 31 December 2019.
Interest Rate Benchmark Reform (IBOR reform) Phase 2 amendments to
IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
Phase 2
of the IASB’s IBOR project (published in August 2020)
addresses the wider accounting issues arising from the IBOR reform.
The amendments are effective for annual reporting periods beginning
on or after 1 January 2021 with early application permitted. As
NatWest Group early adopted these amendments for the annual period
ending on 31 December 2020, which have been endorsed by the EU and
UK in January 2021, NatWest Group has applied International
Accounting Standards, which have been adopted for use within the
UK. NatWest Group’s IBOR transition program remains on-track
and key milestones have been met. Conversion from rates subject to
reform to alternative risk-free rates (RFRs) is expected to
increase as RFR-based products become more widely available and key
market-driven conversion events occur.
Accounting policy change - balances held with central
banks
The
definitions of central banks and the classification of amounts that
are held in cash and balances at central banks and loans to banks -
amortised cost have been refined. Amounts not subject to mandatory
or term deposit restrictions that are held with central banks are
now classified as Cash and balances with central banks,
irrespective of jurisdiction. Amounts that are subject to mandatory
restrictions or time deposit restrictions of more than 24 hours are
classified as Loans to banks - amortised cost. Previously, this
also included amounts subject to restrictions of less than 24
hours.
This
change in accounting policy resulted in a £5.0 billion
increase in Cash and balances at central banks and a corresponding
reduction in Loans to banks - amortised cost at 31 December 2020,
and a balance sheet reclassification from Loans to banks -
amortised cost to Cash and balances at central banks of £3.1
billion at 31 December 2019 (1 January 2019 - £2.5 billion).
These did not impact the consolidated cash flow
statement.
Notes
2. Accounting policies continued
Critical accounting policies and key sources of estimation
uncertainty
The judgements and assumptions that are considered to be the most
important to the portrayal of NatWest Group’s financial
condition are those relating to deferred tax, fair value of
financial instruments, loan impairment provisions, goodwill and
provisions for liabilities and charges. These critical accounting
policies and judgements are described on page 268 of the NatWest
Group plc 2020 Annual Report and Accounts. Estimation uncertainty has been
affected by the COVID-19
pandemic during 2020.
Management’s consideration of this source of uncertainty is
outlined in the relevant sections of NatWest Group plc 2020 Annual
Report and Accounts, including the ECL estimate for the period in
the Risk and capital management section contained in the NatWest
Group plc 2020 Annual Report and Accounts.
Information used for significant estimates
The COVID-19 pandemic has continued to cause significant economic
and social disruption during year ended 31 December 2020. Key
financial estimates are based on management's latest five-year
revenue and cost forecasts. Measurement of goodwill, deferred tax
and expected credit losses are highly sensitive to reasonably
possible changes in those anticipated conditions. Other reasonably
possible assumptions about the future include a prolonged financial
effect of the COVID-19 pandemic on the economy of the UK and other
countries. Changes in judgements and assumptions could result in a
material adjustment to those estimates in the next reporting
periods. (Refer to the NatWest Group plc Risk factors in the 2020
Annual Report and Accounts).
3. Provisions for liabilities and charges
|
Payment
|
Other
|
Litigation and
|
|
|
|
protection
|
customer
|
other
|
|
|
|
insurance
|
redress
|
regulatory
|
Other (1)
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 1 January 2020
|
1,156
|
314
|
426
|
781
|
2,677
|
Expected credit losses impairment charge
|
-
|
-
|
-
|
46
|
46
|
Currency translation and other movements
|
-
|
3
|
21
|
-
|
24
|
Charge to income statement
|
-
|
13
|
98
|
17
|
128
|
Releases to income statement
|
(100)
|
(8)
|
(17)
|
(29)
|
(154)
|
Provisions utilised
|
(197)
|
(47)
|
(35)
|
(100)
|
(379)
|
At 31 March 2020
|
859
|
275
|
493
|
715
|
2,342
|
Expected credit losses impairment charge
|
-
|
-
|
-
|
77
|
77
|
Currency translation and other movements
|
-
|
1
|
2
|
-
|
3
|
Charge to income statement
|
1
|
62
|
2
|
134
|
199
|
Releases to income statement
|
(150)
|
(7)
|
(4)
|
(54)
|
(215)
|
Provisions utilised
|
(204)
|
(49)
|
(11)
|
(106)
|
(370)
|
At 30 June 2020
|
506
|
282
|
482
|
766
|
2,036
|
Expected credit losses impairment charge
|
-
|
-
|
-
|
16
|
16
|
Currency translation and other movements
|
-
|
1
|
(11)
|
1
|
(9)
|
Charge to income statement
|
-
|
15
|
11
|
112
|
138
|
Releases to income statement
|
-
|
(28)
|
(7)
|
(47)
|
(82)
|
Provisions utilised
|
(114)
|
(48)
|
(49)
|
(40)
|
(251)
|
At 30 September 2020
|
392
|
222
|
426
|
808
|
1,848
|
Expected credit losses impairment charge
|
-
|
-
|
-
|
(56)
|
(56)
|
Currency translation and other movements
|
-
|
-
|
(11)
|
(3)
|
(14)
|
Charge to income statement
|
-
|
262
|
9
|
137
|
408
|
Releases to income statement
|
(27)
|
(15)
|
(39)
|
(48)
|
(129)
|
Provisions utilised
|
(42)
|
(43)
|
(20)
|
(100)
|
(205)
|
At 31 December 2020
|
323
|
426
|
365
|
738
|
1,852
|
Note:
(1)
Materially
comprises provisions relating to property closures and
restructuring costs.
There
are uncertainties as to the eventual cost of redress in relation to
certain of the provisions contained in the table above. Assumptions
relating to these are inherently uncertain and the ultimate
financial impact may be different from the amount
provided.
4. Litigation and regulatory matters
NatWest
Group plc and certain members of NatWest Group are party to legal
proceedings and involved in regulatory matters, including as the
subject of investigations and other regulatory and governmental
action (“Matters”) in the United Kingdom (UK), the
United States (US), the European Union (EU) and other
jurisdictions. Note 26 in the NatWest Group plc 2020 Annual Report
and Accounts, issued on 19 February 2021 and available at
natwestgroup.com (“Note 26 ”), discusses the Matters in
which NatWest Group is currently involved and developments to those
matters. Other than the Matters discussed in Note 26, no member of
NatWest Group is or has been involved in governmental, legal, or
regulatory proceedings (including those which are pending or
threatened) that are expected to be material, individually or in
aggregate. Recent developments in the Matters identified in Note 26
that have occurred since the Q3 2020 Interim Management Statement
was issued on 29 October 2020, include, but are not limited to,
those set out below.
Notes
4. Litigation and regulatory matters continued
Litigation
London Interbank Offered Rate (LIBOR) and other rates
litigation
NWM Plc
is a defendant in a class action relating to alleged manipulation
of Swiss Franc LIBOR that was dismissed by the district court but
is currently on appeal to the United States Court of Appeals for
the Second Circuit. NWM Plc and the plaintiffs reached a settlement
in principle of this matter in February 2021. The amount of the
settlement, which remains subject to final documentation and court
approval, is covered by an existing provision.
FX litigation
In
November 2020, proceedings were issued in the High Court of Justice
of England and Wales against NWM Plc by a claimant who seeks an
account of profits or damages in respect of alleged historic FX
trading misconduct. The claimant has also issued similar
proceedings against a number of other banks. The claim against NWM
Plc makes allegations of fraud, deceit and dishonesty, as well as
breaches of contract, fiduciary duties, duties of confidence and
other matters, in respect of FX services provided by NWM Plc during
the period 2006 to 2010. NWM Plc awaits service of the
claim.
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 the £143
million to HMRC, and payment was made on 16 December
2020.
Regulatory matters
US investigations relating to fixed-income securities
In
December 2020, RBS Financial Products, Inc. agreed to pay US$18.2
million to resolve the State of Maryland’s investigation of
NatWest Group’s issuance and underwriting of residential
mortgage-backed securities. RBS Financial Products, Inc. has paid
the settlement amount, which was covered by an existing
provision.
Investment advice review
During
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.
NatWest Group is co-operating with the Skilled Person’s
review and, subject to discussion with the FCA, expects to conduct
additional review / remediation work during 2021. Accordingly,
NatWest Group recognised an increased provision in relation to
these matters at 31 December 2020.
5. Related party transactions
UK Government
The UK Government and bodies controlled or jointly controlled by
the UK Government and bodies over which it has significant
influence are related parties of NatWest Group.
Bank of England facilities
In the
ordinary course of business, NatWest Group may from time to time
access market-wide facilities provided by the Bank of England.
NatWest Group’s other transactions with the UK Government
include the payment of taxes, principally UK corporation tax and
value added tax; national insurance contributions; local authority
rates; and regulatory fees and levies (including the bank levy and
FSCS levies).
Other related parties
(a) In
their roles as providers of finance, NatWest Group companies
provide development and other types of capital support to
businesses. In some instances, the investment may extend to
ownership or control over 20% or more of the voting rights of the
investee company. However, these investments are not considered to
give rise to transactions of a materiality requiring disclosure
under IAS 24.
(b)
NatWest Group recharges The NatWest Group Pension Fund with the
cost of administration services incurred by it. The amounts
involved are not material to NatWest Group.
Full
details of NatWest Group’s related party transactions for the
year ended 31 December 2020 are included in the NatWest Group plc
2020 Annual Report and Accounts.
Notes
6. Dividends
The
company announces that the directors have recommended a final
dividend of £364 million, or 3p per ordinary share (2019
– nil), subject to shareholder approval at the Annual General
Meeting on 28 April 2021.
If
approved, payment will be made on 4 May 2021 to shareholders on the
register at the close of business on 26 March 2021. The ex-dividend
date will be 25 March 2021.
7. Post balance sheet events
NatWest
Group has announced a phased withdrawal from the Republic of
Ireland and has entered into a non-binding Memorandum of
Understanding (‘MOU’) with Allied Irish Banks, p.l.c.
for the sale of a c.€4bn portfolio of performing commercial
loans. The potential sale contemplated by the MoU remains subject
to due diligence, further negotiation and agreement of final terms
and definitive documentation, as well as obtaining regulatory and
other approvals and satisfying other conditions. The proposed sale
may not be concluded on the terms contemplated in the MoU, or at
all. No estimate of any financial effect of the potential
transaction can be made at the date of approval of these
accounts.
On 18
February 2021, NatWest Group reached final agreement with the
Official Receiver in relation to a portfolio of historical PPI
claims. NatWest Group carried adequate provision for this outcome
and there is no further charge/release as a result.
Other
than as disclosed in the accounts, there have been no other
significant events between 31 December 2020 and the date of
approval of these accounts which would require a change or
additional disclosure.
Statement of directors’ responsibilities
The
responsibility statement below has been prepared in connection with
NatWest Group’s full Annual Report and Accounts for the year
ended 31 December 2020.
We, the
directors listed below, confirm that to the best of our
knowledge:
●
|
The
financial statements, prepared in accordance with International
Financial Reporting Standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
company and the undertakings included in the consolidated taken as
a whole; and
|
●
|
The
Strategic report and Directors’ report (incorporating the
Business review) include a fair review of the development and
performance of the business and the position of the company and the
undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face.
|
By
order of the Board
Howard
Davies
|
Alison
Rose-Slade
|
Katie
Murray
|
Chairman
|
Group
Chief Executive Officer
|
Group
Chief Financial Officer
|
19
February 2021
Board of directors
Chairman
|
Executive directors
|
Non-executive directors
|
Howard
Davies
|
Alison
Rose-Slade
Katie
Murray
|
Frank
Dangeard
Patrick
Flynn
Morten
Friis
Robert
Gillespie
Yasmin
Jetha
Mike
Rogers
Mark
Seligman
Lena
Wilson
|
Additional information
Presentation of information
‘Parent company’ refers to NatWest Group plc and
‘NatWest Group’ 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 ‘UBI DAC’ refers
to Ulster Bank Ireland DAC. The term ‘RBSI
Limited’ refers to The Royal Bank of Scotland International
Limited.
NatWest Group publishes its financial statements in pounds sterling
(‘£’ or ‘sterling’).
The abbreviations
‘£m’ and ‘£bn’ represent millions
and thousands of millions of pounds sterling, respectively, and
references to ‘pence’ represent pence in the United
Kingdom (‘UK’). 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, and references to ‘cents’ represent cents
in the US. The abbreviation ‘€’ represents the
‘euro’, and the abbreviations ‘€m’
and ‘€bn’ represent millions and thousands of
millions of euros, respectively, and references to
‘cents’ represent cents in the European Union
(‘EU’).
To aid readability, this document retains references to EU
legislative and regulatory provisions in effect in the UK before 1
January 2021 that have now been implemented in UK domestic law.
These references should be read and construed as including
references to the applicable UK implementation measures with effect
from 1 January 2021.
Statutory results
Financial information contained in this document does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006 (‘the Act’). The statutory
accounts for the year ended 31 December 2019 have been filed with
the Registrar of Companies and those for the year ended 31 December
2020 will be filed with the register of companies following the
Annual General Meeting. The report of the auditor on those
statutory accounts was unqualified, did not draw attention to any
matters by way of emphasis and did not contain a statement under
section 498(2) or (3) of the Act.
MAR – Inside Information
This
announcement contains information that qualified or may have
qualified as inside information for NatWest Group plc, for the
purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014
(MAR) as it forms part of domestic law by virtue of the European
Union (Withdrawal) Act 2018. This announcement is made by
Alexander Holcroft, Head of Investor Relations for NatWest Group
plc.
Contacts
Analyst enquiries:
|
Alexander
Holcroft, Investor Relations
|
+44 (0)
20 7672 1758
|
Media enquiries:
|
NatWest
Group Press Office
|
+44 (0)
131 523 4205
|
|
Management presentation
|
Fixed income call
|
Webcast and dial in details
|
Date:
|
Friday
19 February 2021
|
Friday
19 February 2021
|
https://investors.natwestgroup.com/results-centre
|
Time:
|
9:00 am
UK time
|
1:00 pm
UK time
|
International:
+44 (0) 203 057 6566
|
Conference ID:
|
4244348
|
2299078
|
UK Free
Call: 0800 279 5995
US
Local Dial-In, New York: +1 646 741 2115
|
Available on www.natwestgroup.com/results
●
|
Announcement
and slides.
|
●
|
2020
Annual Report and Accounts.
|
●
|
A
financial supplement containing income statement, balance sheet and
segment performance for the nine quarters ended 31 December
2020.
|
●
|
NatWest
Group and NWH Group Pillar 3 Report.
|
Forward looking statements
Cautionary statement regarding forward-looking
statements
Certain
sections in this document contain ‘forward-looking
statements’ as that term is defined in the United States
Private Securities Litigation Reform Act of 1995, such as
statements that include the words ‘expect’,
‘estimate’, ‘project’,
‘anticipate’, ‘commit’,
‘believe’, ‘should’, ‘intend’,
‘will’, ‘plan’, ‘could’,
‘probability’, ‘risk’, ‘Value-at-Risk
(VaR)’, ‘target’, ‘goal’,
‘objective’, ‘may’,
‘endeavour’, ‘outlook’,
‘optimistic’, ‘prospects’ and similar
expressions or variations on these expressions. In particular, this
document includes forward-looking statements relating, but not
limited to: the COVID-19 pandemic and its impact on NatWest Group;
future profitability and performance, including financial
performance targets (such as RoTE) and discretionary capital
distribution targets; ESG and climate-related targets, including in
relation to sustainable financing and financed emissions; planned
cost savings; implementation of NatWest Group’s Purpose-led
strategy, including in relation to the refocusing of its NWM
franchise and the digitalisation of its operations and services;
the timing and outcome of litigation and government and regulatory
investigations; the implementation of the Alternative Remedies
Package; balance sheet reduction, including the reduction of RWAs;
capital, liquidity and leverage ratios and requirements, including
CET1 Ratio, RWAes, Pillar 2 and other regulatory buffer
requirements and MREL; funding plans and credit risk profile;
capitalisation; portfolios; net interest margin; customer loan and
income growth and market share; impairments and write-downs,
including with respect to goodwill; restructuring and remediation
costs and charges; NatWest Group’s exposure to political
risk, economic risk, climate, environmental and sustainability
risk, operational risk, conduct risk, cyber and IT risk and credit
rating risk and to various types of market risks, including
interest rate risk, foreign exchange rate risk and commodity and
equity price risk; customer experience, including our Net Promotor
Score (NPS); employee engagement and gender balance in leadership
positions.
Limitations inherent to forward-looking statements
These
statements are based on current plans, expectations, estimates,
targets and projections, and are subject to significant inherent
risks, uncertainties and other factors, both external and relating
to NatWest Group’s strategy or operations, which may result
in NatWest Group being unable to achieve the current plans,
expectations, estimates, targets, projections and other anticipated
outcomes expressed or implied by such forward-looking statements.
In addition, certain of these disclosures are dependent on choices
relying on key model characteristics and assumptions and are
subject to various limitations, including assumptions and estimates
made by management. By their nature, certain of these disclosures
are only estimates and, as a result, actual future results, gains
or losses could differ materially from those that have been
estimated. Accordingly, undue reliance should not be placed on
these statements. The forward-looking statements contained in this
document speak only as of the date we make them and we expressly
disclaim any obligation or undertaking to update or revise any
forward-looking statements contained herein, whether to reflect any
change in our expectations with regard thereto, any change in
events, conditions or circumstances on which any such statement is
based, or otherwise, except to the extent legally
required.
Important factors that could affect the actual outcome of the
forward-looking statements
We
caution you that a large number of important factors could
adversely affect our results or our ability to implement our
strategy, cause us to fail to meet our targets, predictions,
expectations and other anticipated outcomes or affect the accuracy
of forward-looking statements described in this document. These
factors include, but are not limited to, those set forth in the
risk factors and the other uncertainties described in NatWest Group
plc’s Annual Report on Form 20-F and its other filings with
the US Securities and Exchange Commission. The principal risks and
uncertainties that could adversely NatWest Group’s future
results, its financial condition and prospects and cause them to be
materially different from what is forecast or expected, include,
but are not limited to: risks relating to the COVID-19 pandemic
(including in respect of: the effects on the global economy and
financial markets, and NatWest Group’s customers; increased
counterparty risk; NatWest Group’s ability to meet its
targets and strategic objectives; increased operational and control
risks; increased funding risk; future impairments and write-downs);
economic and political risk (including in respect of: uncertainty
regarding the effects of Brexit; increased political and economic
risks and uncertainty in the UK and global markets; changes in
interest rates and foreign currency exchange rates; and HM
Treasury’s ownership of NatWest Group plc); strategic risk
(including in respect of the implementation of NatWest
Group’s Purpose-led Strategy, including the re-focusing of
the NWM franchise and NatWest Group’s ability to achieve its
targets); financial resilience risk (including in respect of:
NatWest Group’s ability to meet targets and to resume
discretionary capital distributions; the competitive environment;
counterparty risk; prudential regulatory requirements for capital
and MREL; funding risk; changes in the credit ratings; the adequacy
of NatWest Group’s resolution plans; the requirements of
regulatory stress tests; model risk; sensitivity to accounting
policies, judgments, assumptions and estimates; changes in
applicable accounting standards; the value or effectiveness of
credit protection; and the application of UK statutory
stabilisation or resolution powers); climate and sustainability
risk (including in respect of: risks relating to climate change and
the transitioning to a low carbon economy; the implementation of
NatWest Group’s climate change strategy and climate change
resilient systems, controls and procedures; increased model risk;
the failure to adapt to emerging climate, environmental and
sustainability risks and opportunities; changes in ESG ratings;
increasing levels of climate, environmental and sustainability
related regulation and oversight; and climate, environmental and
sustainability related litigation, enforcement proceedings and
investigations); operational and IT resilience risk (including in
respect of: operational risks (including reliance on third party
suppliers); cyberattacks; the accuracy and effective use of data;
complex IT systems (including those that enable remote working);
attracting, retaining and developing senior management and skilled
personnel; NatWest Group’s risk management framework; and
reputational risk); and legal, regulatory and conduct risk
(including in respect of: the impact of substantial regulation and
oversight; compliance with regulatory requirements; the outcome of
legal, regulatory and governmental actions and investigations; the
replacement of LIBOR, EURIBOR and other IBOR rates; heightened
regulatory and governmental scrutiny (including by competition
authorities); implementation of the Alternative Remedies Package;
and changes in tax legislation or failure to generate future
taxable profits).
The
information, statements and opinions contained in this document do
not constitute a public offer under any applicable legislation or
an offer to sell or a solicitation of an offer to buy any
securities or financial instruments or any advice or recommendation
with respect to such securities or other financial
instruments
Appendix
RBS
Non-IFRS financial measures
Appendix – Non–IFRS financial measures
As
described in the Accounting policies, NatWest Group prepares its
financial statements in accordance with the basis set out in the
accounting policies, page 34 which constitutes a body of generally
accepted accounting principles (GAAP). This document contains a
number of adjusted or alternative performance measures, also known
as non-GAAP or non-IFRS performance measures. These measures are
adjusted for certain items which management believe 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 the calculation of metrics that
are used throughout the banking industry. These non-IFRS measures
are not measures within the scope of IFRS and are not a substitute
for IFRS measures. These measures include:
Non-IFRS financial measures
Measure
|
Basis of preparation
|
Additional analysis or reconciliation
|
NatWest Group return on tangible equity
|
Annualised loss or profit for the period attributable to ordinary
shareholders divided by average tangible equity. Average tangible
equity is average total equity less average intangible assets and
average other owners’ equity.
|
Table 1
|
Segmental return on equity
|
Segmental operating profit adjusted for preference share dividends
and tax divided by average notional equity, allocated at an
operating segment specific rate, of the period average segmental
risk-weighted assets incorporating the effect of capital deductions
(RWAes).
|
Table 1
|
Operating expenses analysis – management view
|
The
management analysis of operating expenses shows strategic costs and
litigation
and
conduct costs in separate lines. Depreciation and amortisation,
impairment of
other
intangibles and other administrative expenses attributable to these
costs are
included
in strategic costs and litigation and conduct costs lines for
management
analysis.
These amounts are included in staff, premises and equipment and
other
administrative
expenses in the statutory analysis.
|
Table 2
|
Cost:income ratio
|
Total
operating expenses less operating lease depreciation divided by
total income less operating lease depreciation.
|
Table 3
|
Commentary – adjusted periodically for specific
items
|
NatWest
Group and segmental business performance commentary have been
adjusted for the impact of specific items such as notable items,
transfers, operating lease depreciation, strategic and litigation
and conduct costs.
|
Notable
items - page 12, Transfers – pages 13 and 16, Operating lease
depreciation,
Strategic
costs and litigation and conduct costs - pages 23 to
27
|
Net lending in the retail and commercial business
|
Comprises customer loans in the Retail Banking, Ulster Bank RoI,
Commercial Banking, Private Banking and RBSI operating
segments.
|
Pages 2 and 11
|
Bank net interest margin (NIM)
|
Net interest income of the banking business less NatWest Markets
(NWM) element as a percentage of interest-earning assets of the
banking business less NWM element.
|
Table 4
|
Performance metrics not defined under
IFRS(1)
Measure
|
Basis of preparation
|
Additional analysis or reconciliation
|
Loan:deposit ratio
|
Net customer loans held at amortised cost divided by total customer
deposits.
|
Table 5
|
Tangible net asset value (TNAV)
|
Tangible
equity divided by the number of ordinary shares in issue. Tangible
equity is ordinary shareholders’ interest less intangible
assets.
|
Page
10
|
NIM
|
Net interest income as a percentage of interest-earning
assets.
|
Page
10
|
Funded assets
|
Total
assets less derivatives.
|
Pages
23 to 27
|
ECL loss rate
|
The
annualised loan impairment charge divided by gross customer
loans.
|
Pages
23 to 27
|
Third party customer asset rate
|
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 only. This excludes intragroup
items, loans to banks and liquid asset portfolios, which are
included for the calculation of net interest margin.
|
Pages
23 to 27
|
Third party customer funding rate
|
Third
party customer funding rate is calculated as annualised interest
payable on third-party customer deposits as a percentage of
third-party customer deposits, including interest bearing and
non-interest bearing customer deposits. This excludes intragroup
items, bank deposits and debt securities in issue.
|
Pages
23 to 27
|
Assets under management and administration (AUMA)
|
Total
AUMA comprises both assets under management (AUMs) and assets under
administration (AUAs) managed within the Private Banking
franchise. AUMs comprise assets under management, assets under
custody and investment cash relating to Private Banking customers.
AUAs are managed by Private Banking on behalf of Retail
Banking and RBSI and a management fee is received in respect of
providing this service.
|
Page 16
|
Note:
(1) Metric based on GAAP measures, included as not defined under
IFRS and reported for compliance with ESMA adjusted performance
measure rules.
Appendix – Non–IFRS financial measures
I. Return on tangible equity
|
Year ended or as at
|
|
Quarter ended or as at
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
NatWest Group return on tangible equity
|
2020
|
2019
|
|
2020
|
2020
|
2019
|
(Loss)/profit attributable to ordinary shareholders
(£m)
|
(753)
|
3,133
|
|
(109)
|
61
|
1,410
|
Annualised (loss)/profit attributable to ordinary shareholders
(£m)
|
|
|
|
(436)
|
244
|
5,640
|
Average total equity (£m)
|
43,774
|
45,160
|
|
43,648
|
43,145
|
43,860
|
Adjustment for other owners equity and intangibles
(£m)
|
(11,872)
|
(11,960)
|
|
(11,895)
|
(11,482)
|
(11,952)
|
Adjusted total tangible equity (£m)
|
31,902
|
33,200
|
|
31,753
|
31,663
|
31,908
|
Return on tangible equity (%)
|
(2.4%)
|
9.4%
|
|
(1.4%)
|
0.8%
|
17.7%
|
|
|
Ulster
|
|
|
|
|
|
|
Retail
|
Bank
|
|
Commercial
|
Private
|
RBS
|
NatWest
|
Year ended 31 December 2020
|
Banking
|
RoI
|
|
Banking
|
Banking
|
International
|
Markets
|
Operating profit/(loss) (£m)
|
849
|
(226)
|
|
(399)
|
208
|
99
|
(227)
|
Preference share cost allocation (£m)
|
(88)
|
-
|
|
(153)
|
(22)
|
(20)
|
(68)
|
Adjustment for tax
(£m)
|
(213)
|
-
|
|
155
|
(52)
|
(11)
|
83
|
Adjusted attributable profit/(loss) (£m)
|
548
|
(226)
|
|
(397)
|
134
|
68
|
(212)
|
Average RWAe (£bn)
|
37.2
|
12.4
|
|
76.4
|
10.4
|
7.0
|
37.3
|
Equity factor
|
14.5%
|
15.5%
|
|
11.5%
|
12.5%
|
16.0%
|
15.0%
|
RWAe applying equity factor (£bn)
|
5.4
|
1.9
|
|
8.8
|
1.3
|
1.1
|
5.6
|
Return on equity
|
10.2%
|
(11.7%)
|
|
(4.5%)
|
10.3%
|
6.1%
|
(3.8%)
|
|
|
|
|
|
|
|
|
Year ended 31 December 2019
|
|
|
|
|
|
|
|
Operating profit/(loss) (£m)
|
855
|
49
|
|
1,327
|
297
|
344
|
(25)
|
Adjustment for tax (£m)
|
(236)
|
-
|
|
(372)
|
(83)
|
(48)
|
7
|
Preference share cost allocation (£m)
|
(74)
|
-
|
|
(163)
|
(18)
|
(11)
|
(64)
|
Adjustment for Alawwal bank merger gain (£m)
|
-
|
-
|
|
-
|
-
|
-
|
(150)
|
Adjusted attributable profit/(loss) (£m)
|
545
|
49
|
|
792
|
196
|
285
|
(232)
|
Average RWAe (£bn)
|
37.7
|
14.0
|
|
78.2
|
9.8
|
6.9
|
48.0
|
Equity factor
|
15.0%
|
15.0%
|
|
12.0%
|
13.0%
|
16.0%
|
15.0%
|
RWAe applying equity factor (£bn)
|
5.7
|
2.1
|
|
9.4
|
1.3
|
1.1
|
7.2
|
Return on equity
|
9.6%
|
2.3%
|
|
8.4%
|
15.4%
|
25.7%
|
(3.2%)
|
|
|
|
|
|
|
|
|
Appendix – Non–IFRS financial measures
I. Return on tangible equity
|
|
Ulster
|
|
|
|
|
|
|
Retail
|
Bank
|
|
Commercial
|
Private
|
RBS
|
NatWest
|
Quarter ended 31 December 2020
|
Banking
|
RoI
|
|
Banking
|
Banking
|
International
|
Markets
|
Operating profit/(loss) (£m)
|
91
|
18
|
|
285
|
67
|
(13)
|
(230)
|
Preference share cost allocation (£m)
|
(22)
|
-
|
|
(38)
|
(5)
|
(5)
|
(17)
|
Adjustment for tax (£m)
|
(19)
|
-
|
|
(69)
|
(17)
|
3
|
69
|
Adjusted attributable profit/(loss) (£m)
|
50
|
18
|
|
178
|
45
|
(15)
|
(178)
|
Annualised adjusted attributable profit/(loss)
(£m)
|
200
|
72
|
|
712
|
180
|
(60)
|
(712)
|
Average RWAe (£bn)
|
36.1
|
11.9
|
|
75.9
|
10.7
|
7.1
|
31.5
|
Equity factor
|
14.5%
|
15.5%
|
|
11.5%
|
12.5%
|
16.0%
|
15.0%
|
RWAe applying equity factor (£bn)
|
5.2
|
1.8
|
|
8.7
|
1.3
|
1.1
|
4.7
|
Return on equity
|
3.8%
|
3.9%
|
|
8.1%
|
13.3%
|
(5.5%)
|
(15.0%)
|
|
|
|
|
|
|
|
|
Quarter ended 30 September 2020
|
|
|
|
|
|
|
|
Operating profit/(loss) (£m)
|
305
|
(5)
|
|
324
|
57
|
25
|
(66)
|
Preference share cost allocation (£m)
|
(22)
|
-
|
|
(38)
|
(6)
|
(5)
|
(17)
|
Adjustment for tax (£m)
|
(79)
|
-
|
|
(80)
|
(14)
|
(3)
|
23
|
Adjusted attributable profit/(loss) (£m)
|
204
|
(5)
|
|
206
|
37
|
17
|
(60)
|
Annualised adjusted attributable profit/(loss)
(£m)
|
816
|
(20)
|
|
824
|
148
|
68
|
(240)
|
Average RWAe (£bn)
|
36.7
|
12.3
|
|
77.8
|
10.5
|
6.8
|
34.0
|
Equity factor
|
14.5%
|
15.5%
|
|
11.5%
|
12.5%
|
16.0%
|
15.0%
|
RWAe applying equity factor (£bn)
|
5.3
|
1.9
|
|
8.9
|
1.3
|
1.1
|
5.1
|
Return on equity
|
15.3%
|
(1.0%)
|
|
9.2%
|
11.2%
|
6.4%
|
(4.7%)
|
|
|
|
|
|
|
|
|
Quarter ended 31 December 2019
|
|
|
|
|
|
|
|
Operating profit/(loss) (£m)
|
326
|
(5)
|
|
295
|
61
|
62
|
(132)
|
Preference share cost allocation (£m)
|
(18)
|
-
|
|
(41)
|
(4)
|
(6)
|
(14)
|
Adjustment for tax (£m)
|
(91)
|
-
|
|
(83)
|
(17)
|
(9)
|
37
|
Adjusted attributable profit/(loss) (£m)
|
217
|
(5)
|
|
171
|
40
|
47
|
(109)
|
Annualised adjusted attributable profit/(loss)
(£m)
|
868
|
(20)
|
|
684
|
160
|
188
|
(436)
|
Average RWAe (£bn)
|
38.7
|
13.2
|
|
74.9
|
10.1
|
6.9
|
45.0
|
Equity factor
|
15.0%
|
15.0%
|
|
12.0%
|
13.0%
|
16.0%
|
15.0%
|
RWAe applying equity factor (£bn)
|
5.8
|
2.0
|
|
9.0
|
1.3
|
1.1
|
6.7
|
Return on equity
|
14.9%
|
(1.0%)
|
|
7.6%
|
12.0%
|
17.3%
|
(6.5%)
|
|
|
|
|
|
|
|
|
Appendix – Non–IFRS financial measures
II. Operating expenses analysis
Statutory analysis (1,2)
|
|
|
|
|
|
|
|
Year ended
|
|
Quarter ended
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
2020
|
2019
|
|
2020
|
2020
|
2019
|
Operating expenses
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Staff costs
|
3,923
|
4,018
|
|
986
|
982
|
990
|
Premises and equipment
|
1,223
|
1,259
|
|
321
|
251
|
436
|
Other administrative expenses
|
1,845
|
2,828
|
|
764
|
385
|
743
|
Depreciation and amortisation
|
905
|
1,176
|
|
270
|
194
|
323
|
Impairment of other intangible assets
|
9
|
44
|
|
-
|
2
|
35
|
Total operating expenses
|
7,905
|
9,325
|
|
2,341
|
1,814
|
2,527
|
Non-statutory analysis
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
31 December 2020
|
|
31 December 2019
|
|
|
Litigation
|
|
Statutory
|
|
|
Litigation
|
|
Statutory
|
|
Strategic
|
and conduct
|
Other
|
operating
|
|
Strategic
|
and conduct
|
Other
|
operating
|
Operating expenses
|
costs
|
costs
|
expenses
|
expenses
|
|
costs
|
costs
|
expenses
|
expenses
|
Staff costs
|
462
|
-
|
3,461
|
3,923
|
|
451
|
-
|
3,567
|
4,018
|
Premises and equipment
|
233
|
-
|
990
|
1,223
|
|
239
|
-
|
1,020
|
1,259
|
Other administrative expenses
|
197
|
113
|
1,535
|
1,845
|
|
295
|
895
|
1,638
|
2,828
|
Depreciation and amortisation
|
114
|
-
|
791
|
905
|
|
352
|
-
|
824
|
1,176
|
Impairment of other intangible assets
|
7
|
-
|
2
|
9
|
|
44
|
-
|
-
|
44
|
Total
|
1,013
|
113
|
6,779
|
7,905
|
|
1,381
|
895
|
7,049
|
9,325
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
31 December 2020
|
|
30 September 2020
|
|
|
Litigation
|
|
Statutory
|
|
|
Litigation
|
|
Statutory
|
|
Strategic
|
and conduct
|
Other
|
operating
|
|
Strategic
|
and conduct
|
Other
|
operating
|
Operating expenses
|
costs
|
costs
|
expenses
|
expenses
|
|
costs
|
costs
|
expenses
|
expenses
|
Staff costs
|
147
|
-
|
839
|
986
|
|
155
|
-
|
827
|
982
|
Premises and equipment
|
63
|
-
|
258
|
321
|
|
22
|
-
|
229
|
251
|
Other administrative expenses
|
54
|
194
|
516
|
764
|
|
43
|
8
|
334
|
385
|
Depreciation and amortisation
|
62
|
-
|
208
|
270
|
|
3
|
-
|
191
|
194
|
Impairment of other intangible assets
|
-
|
-
|
-
|
-
|
|
-
|
-
|
2
|
2
|
Total
|
326
|
194
|
1,821
|
2,341
|
|
223
|
8
|
1,583
|
1,814
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
|
|
|
|
31 December 2019
|
|
|
|
|
Litigation
|
|
Statutory
|
|
|
|
|
|
|
Strategic
|
and conduct
|
Other
|
operating
|
|
|
|
|
|
Operating expenses
|
costs
|
costs
|
expenses
|
expenses
|
|
|
|
|
|
Staff costs
|
155
|
-
|
835
|
990
|
|
|
|
|
|
Premises and equipment
|
146
|
-
|
290
|
436
|
|
|
|
|
|
Other administrative expenses
|
98
|
85
|
560
|
743
|
|
|
|
|
|
Depreciation and amortisation
|
119
|
-
|
204
|
323
|
|
|
|
|
|
Impairment of other intangible assets
|
19
|
-
|
16
|
35
|
|
|
|
|
|
Total
|
537
|
85
|
1,905
|
2,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
(1)
On a statutory, or
GAAP, basis, strategic costs are included within staff, premises
and equipment, depreciation and amortisation, impairment of other
intangible assets and other administrative expenses. Strategic
costs relate to restructuring provisions, related costs and
projects that are transformational in nature.
(2)
On a statutory, or
GAAP, basis, litigation and conduct costs are included within other
administrative expenses.
Appendix – Non–IFRS financial measures
III. Cost:income ratio
|
|
Ulster
|
|
|
|
|
|
|
|
|
Retail
|
Bank
|
Commercial
|
Private
|
RBS
|
NatWest
|
Central items
|
NatWest
|
|
Banking
|
RoI
|
|
Banking
|
Banking
|
International
|
Markets
|
& other
|
Group
|
Year ended 31 December 2020
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Operating expenses
|
(2,540)
|
(486)
|
|
(2,430)
|
(455)
|
(291)
|
(1,310)
|
(393)
|
(7,905)
|
Operating lease depreciation
|
-
|
-
|
|
145
|
-
|
-
|
-
|
-
|
145
|
Adjusted operating expenses
|
(2,540)
|
(486)
|
|
(2,285)
|
(455)
|
(291)
|
(1,310)
|
(393)
|
(7,760)
|
Total income
|
4,181
|
510
|
|
3,958
|
763
|
497
|
1,123
|
(236)
|
10,796
|
Operating lease depreciation
|
-
|
-
|
|
(145)
|
-
|
-
|
-
|
-
|
(145)
|
Adjusted total income
|
4,181
|
510
|
|
3,813
|
763
|
497
|
1,123
|
(236)
|
10,651
|
Cost:income ratio
|
60.8%
|
95.3%
|
|
59.9%
|
59.6%
|
58.6%
|
116.7%
|
nm
|
72.9%
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December 2019
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
(3,618)
|
(552)
|
|
(2,600)
|
(486)
|
(264)
|
(1,418)
|
(387)
|
(9,325)
|
Operating lease depreciation
|
-
|
-
|
|
138
|
-
|
-
|
-
|
-
|
138
|
Adjusted operating expenses
|
(3,618)
|
(552)
|
|
(2,462)
|
(486)
|
(264)
|
(1,418)
|
(387)
|
(9,187)
|
Total income
|
4,866
|
567
|
|
4,318
|
777
|
610
|
1,342
|
1,773
|
14,253
|
Operating lease depreciation
|
-
|
-
|
|
(138)
|
-
|
-
|
-
|
-
|
(138)
|
Adjusted total income
|
4,866
|
567
|
|
4,180
|
777
|
610
|
1,342
|
1,773
|
14,115
|
Cost:income ratio
|
74.4%
|
97.4%
|
|
58.9%
|
62.5%
|
43.3%
|
105.7%
|
nm
|
65.1%
|
|
|
|
|
|
|
|
|
|
|
Appendix – Non–IFRS financial measures
III. Cost:income ratio
|
|
Ulster
|
|
|
|
|
|
|
|
|
Retail
|
Bank
|
Commercial
|
Private
|
RBS
|
NatWest
|
Central items
|
NatWest
|
|
Banking
|
RoI
|
|
Banking
|
Banking
|
International
|
Markets
|
& other
|
Group
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Quarter ended 31 December 2020
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
(818)
|
(114)
|
|
(656)
|
(91)
|
(112)
|
(301)
|
(249)
|
(2,341)
|
Operating lease depreciation
|
-
|
-
|
|
35
|
-
|
-
|
-
|
-
|
35
|
Adjusted operating expenses
|
(818)
|
(114)
|
|
(621)
|
(91)
|
(112)
|
(301)
|
(249)
|
(2,306)
|
Total income
|
974
|
131
|
|
951
|
184
|
126
|
73
|
96
|
2,535
|
Operating lease depreciation
|
-
|
-
|
|
(35)
|
-
|
-
|
-
|
-
|
(35)
|
Adjusted total income
|
974
|
131
|
|
916
|
184
|
126
|
73
|
96
|
2,500
|
Cost:income ratio
|
84.0%
|
87.0%
|
|
67.8%
|
49.5%
|
88.9%
|
nm
|
nm
|
92.2%
|
|
|
|
|
|
|
|
|
|
|
Quarter ended 30 September 2020
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
(647)
|
(127)
|
|
(553)
|
(112)
|
(53)
|
(302)
|
(20)
|
(1,814)
|
Operating lease depreciation
|
-
|
-
|
|
37
|
-
|
-
|
-
|
-
|
37
|
Adjusted operating expenses
|
(647)
|
(127)
|
|
(516)
|
(112)
|
(53)
|
(302)
|
(20)
|
(1,777)
|
Total income
|
1,022
|
130
|
|
1,004
|
187
|
112
|
234
|
(266)
|
2,423
|
Operating lease depreciation
|
-
|
-
|
|
(37)
|
-
|
-
|
-
|
-
|
(37)
|
Adjusted total income
|
1,022
|
130
|
|
967
|
187
|
112
|
234
|
(266)
|
2,386
|
Cost:income ratio
|
63.3%
|
97.7%
|
|
53.4%
|
59.9%
|
47.3%
|
129.1%
|
nm
|
74.5%
|
|
|
|
|
|
|
|
|
|
|
Quarter ended 31 December 2019
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
(788)
|
(140)
|
|
(700)
|
(135)
|
(83)
|
(392)
|
(289)
|
(2,527)
|
Operating lease depreciation
|
-
|
-
|
|
35
|
-
|
-
|
-
|
-
|
35
|
Adjusted operating expenses
|
(788)
|
(140)
|
|
(665)
|
(135)
|
(83)
|
(392)
|
(289)
|
(2,492)
|
Total income
|
1,195
|
139
|
|
1,076
|
195
|
150
|
250
|
1,228
|
4,233
|
Operating lease depreciation
|
-
|
-
|
|
(35)
|
-
|
-
|
-
|
-
|
(35)
|
Adjusted total income
|
1,195
|
139
|
|
1,041
|
195
|
150
|
250
|
1,228
|
4,198
|
Cost:income ratio
|
65.9%
|
100.7%
|
|
63.9%
|
69.2%
|
55.3%
|
156.8%
|
nm
|
59.4%
|
IV. Net interest margin
|
Year ended or as at
|
|
Quarter ended or as at
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
2020
|
2019
|
|
2020
|
2020
|
2019
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
NatWest Group net interest income
|
7,749
|
8,047
|
|
1,971
|
1,926
|
2,037
|
Less: NWM net interest income
|
57
|
188
|
|
2
|
21
|
4
|
Net interest income excluding NWM
|
7,806
|
8,235
|
|
1,973
|
1,947
|
2,041
|
Annualised net interest income
|
|
|
|
7,820
|
7,662
|
8,082
|
Annualised net interest income excluding NWM
|
|
|
|
7,828
|
7,746
|
8,097
|
Average interest earning assets (IEA)
|
493,471
|
448,556
|
|
509,598
|
508,156
|
456,164
|
Less: NWM average IEA
|
37,929
|
35,444
|
|
36,515
|
39,213
|
36,594
|
Bank average IEA excluding NWM
|
455,542
|
413,112
|
|
473,083
|
468,943
|
419,570
|
|
|
|
|
|
|
|
Net interest margin
|
1.57%
|
1.79%
|
|
1.54%
|
1.51%
|
1.77%
|
Bank net interest margin (NatWest Group NIM excluding
NWM)
|
1.71%
|
1.99%
|
|
1.66%
|
1.65%
|
1.93%
|
V. Loan:deposit ratio
|
As at
|
|
31 December
|
31 December
|
|
2020
|
2019
|
|
£m
|
£m
|
Loans to customers - amortised cost
|
360,544
|
326,947
|
Customer deposits
|
431,739
|
369,247
|
Loan:deposit ratio (%)
|
84%
|
89%
|
Legal
Entity Identifier: 2138005O9XJIJN4JPN90
Date: 19
February 2021
|
NATWEST
GROUP plc (Registrant)
|
|
|
|
By: /s/
Jan Cargill
|
|
|
|
Name:
Jan Cargill
|
|
Title:
Deputy Secretary
|
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