FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For
April 29, 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:
Q1 2021
Interim Management Statement
natwestgroup.com
NatWest Group plc
Q1 2021 Interim Management Statement
Alison Rose, Chief Executive Officer, commented:
"NatWest Group's profit in the first quarter of 2021 is a result of
a good operating performance in our core franchises as well as
modest impairment releases that reflect the better than expected
performance of our loan book across the first three months of the
year.
We continue to make progress against our strategic targets; growing
in key areas, simplifying the bank and accelerating our digital
transformation to meet the rapidly evolving needs of our customers.
We are also pleased that we were able to use some of our excess
capital to buy back shares from the UK Government.
Defaults remain low as a result of the UK Government support
schemes and there are reasons for optimism with the vaccine
programmes progressing at pace and restrictions being eased.
However, there is continuing uncertainty for our economy and for
many of our customers as a result of COVID-19. Our capital strength
and well-diversified balance sheet means NatWest Group is well
positioned to help people, families and businesses to rebuild and
thrive.
We are building a relationship bank for a digital world. A bank
that champions potential and plays a positive role in society in
order to build long-term value and drive sustainable returns for
our shareholders."
Good financial performance in a challenging environment with better
than expected performance of the loan portfolio
●
|
Q1 2021
operating profit before tax of £946 million and an
attributable profit of £620 million.
|
●
|
Income
across the UK and RBSI retail and commercial businesses, excluding
notable items, decreased by £203 million, or 8.0%, compared
with Q1 2020 reflecting the lower yield curve, subdued
transactional business activity and lower consumer spending,
partially offset by balance sheet growth.
|
●
|
Bank net interest margin (NIM) of 1.64% was 2 basis points lower
than Q4 2020 principally reflecting lower structural hedge
income, 3 basis points, partly offset by mortgage margin
improvement, 1 basis point.
|
●
|
Other
expenses, excluding operating lease depreciation (OLD) and Ulster
Bank RoI direct costs, were £72 million, or 4.5%, lower than
Q1 2020.
|
●
|
A net
impairment release of £102 million in Q1 2021 reflects
releases in non-default portfolios, principally in Commercial
Banking.
|
Robust balance sheet with strong capital and liquidity
levels
|
●
|
CET1 ratio of 18.2% was 30 basis points lower than Q4 2020,
reflecting the directed buy back, associated pension contribution,
and foreseeable dividend accrual partially offset by the reduction
in RWAs and the attributable profit for the
period.
|
●
|
The liquidity coverage ratio (LCR) of 158%, representing £64.9
billion above 100%, decreased by 7 percentage points compared with
Q4 2020, following a repayment of the Term Funding
Scheme with additional incentives for SMEs
(TFSME).
|
●
|
Net
lending decreased by £1.8 billion to £358.7 billion in
comparison to Q4 2020. Across the UK and RBSI retail and commercial
businesses, net lending excluding UK Government support schemes,
increased by £2.2 billion, or 3.0% on an annualised basis,
including £3.4 billion related to mortgages. Retail Banking
gross new mortgage lending was £9.6 billion in the
quarter.
|
●
|
Customer
deposits increased by £21.6 billion compared with Q4 2020 to
£453.3 billon. Across the UK and RBSI retail and commercial
businesses customer deposits increased by £12.1 billion, or
3.0%, as customers sought to retain liquidity and reduced spending.
Treasury repo activity drove a further £10.9 billion increase
in the quarter.
|
●
|
RWAs
decreased by £5.6 billion compared with Q4 2020 mainly
reflecting reductions in Retail Banking and Commercial
Banking.
|
Outlook(1)
|
We
retain the outlook guidance provided in the 2020 Annual Results
document.
|
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
NatWest Group plc "Risk Factors" section on pages 345 to 362
of the 2020 Annual Report and Accounts and on pages 156 to 172 of
the NatWest Markets Group Plc 2020 Annual Report and Accounts.
These statements constitute forward-looking statements. Refer to
Forward-looking statements in this
announcement.
|
Our purpose in action
We champion potential, helping people, families and businesses to
thrive. By working to benefit our customers, colleagues and
communities, we will deliver long-term value and drive sustainable
returns to our shareholders. Some key achievements in Q1 2021
include:
People and families
●
|
NatWest Group is participating in the new mortgage guarantee
scheme, which provides a
UK Government guarantee to lenders on mortgages with just a 5%
deposit and will help many customers for whom home ownership has
felt far out of reach.
|
●
|
As part of our Digital Regular Saver, launched in 2020, we recently
announced a £10,000 prize draw that will provide further
incentive to our customers to start and continue saving, helping
them build financial security.
|
●
|
Our Personal Portfolio Funds - available through NatWest Invest,
Royal Bank Invest and Coutts Invest - support customers to invest
in their futures. Less than five years since their launch, Assets
under Management have exceeded £1 billion, with 30% growth in
Q1 2021.
|
●
|
We teamed up with the creators of 'No Really, I'm Fine' - a mental
health podcast - to bring listeners the 'Mind Over Money' podcast
tackling the issue of financial wellbeing, with practical tips to
avoid scams, manage spending habits and deal with a financial
crisis.
|
Businesses
|
●
|
In response to our SME Recovery Report, NatWest Group announced a
£6 billion funding commitment to support SMEs to scale and
grow, with £4 billion allocated outside London. We also formed
new strategic partnerships with Business in The Community (BITC),
Hatch and Digital Boost, to empower underrepresented entrepreneurs
and communities to embed new skills and technology.
|
●
|
Commercial Banking is playing a key role in helping customers
recover and grow, through Pay As You Grow for existing Bounce Back
Loans and supporting access to finance through the new Recovery
Loan Scheme.
|
●
|
Coutts has partnered with the Business Growth Fund to develop the
UK Enterprise Fund. This fund will co-invest equity growth capital,
taking minority stakes in businesses looking to scale in the UK,
with a focus on investing in female and diverse
entrepreneurs.
|
●
|
NatWest Group has joined forces with Microsoft to help UK
businesses better understand their carbon footprint and create
tailored action plans to reduce their carbon emissions, leveraging
digital technologies.
|
Colleagues
●
|
In our sixth year as
headline sponsor of National Careers Week, we announced the
creation of 240 social mobility apprenticeships across contact
centre, digital, technology and innovation skills. The new roles
will support young people facing barriers in their early career,
giving them the tools and support they need to
succeed.
|
●
|
In response to the pandemic's significant impact
on young
people, in
partnership with the Bank Workers Charity, we have launched a free online counselling and
wellbeing support service - Kooth - for
the dependants of current and former colleagues in the
UK,
aged 11-18 years old.
|
●
|
In Q1 2021, we launched the Chartered Banker Institute Enterprise
Membership to our colleagues, providing access to award winning
professional content, toolkits and development material, one of the
many ways we are supporting our colleagues to be the best they can
be.
|
Communities
|
●
|
One of our Edinburgh offices has been transformed into a mass
vaccination centre, at no cost to the NHS. The centre is running 12
hours a day, seven days a week and is currently capable of
providing 480 appointments every day.
|
●
|
In Q1 2021, NatWest Group issued a €1 billion affordable
housing social bond, the first of its kind by a UK bank. The
proceeds will support lending to not-for-profit, UK housing
associations as part of our commitment to provide £3 billion
of funding to the UK's affordable housing sector by the end of
2022.
|
●
|
NatWest Group launched an innovative offering with Octopus Energy
to help people and businesses switch to electric vehicles. It
provides tailored
advice, charging infrastructure funding solutions and access to
some of the latest renewable technologies.
|
●
|
NatWest Group was recently announced as a corporate patron of the
National Emergencies Trust (NET). Alongside the NET's other
patrons, we'll play an active role in shaping the response to
future emergencies, having helped to raise £10 million for the
NET Coronavirus Appeal in 2020.
|
Business performance summary
|
|
|
Quarter ended
|
|
|
|
|
31 March
|
31
December
|
31
March
|
|
|
|
|
2021
|
2020
|
2020
|
Total
income
|
|
|
|
£2,659m
|
£2,535m
|
£3,162m
|
Operating
expenses
|
|
|
|
(£1,815m)
|
(£2,341m)
|
(£1,841m)
|
Profit
before impairment releases/(losses)
|
|
|
|
£844m
|
£194m
|
£1,321m
|
Operating
profit before tax
|
|
|
|
£946m
|
£64m
|
£519m
|
Profit/(loss)
attributable to ordinary shareholders
|
|
|
|
£620m
|
(£109m)
|
£288m
|
|
|
|
|
|
|
|
Excluding notable items within total
income (1)
|
|
|
|
|
|
|
Total
income excluding notable items
|
|
|
|
£2,673m
|
£2,616m
|
£3,047m
|
Operating
expenses
|
|
|
|
(£1,815m)
|
(£2,341m)
|
(£1,841m)
|
Profit
before impairment releases/(losses) and excluding notable
items
|
|
|
£858m
|
£275m
|
£1,206m
|
Operating
profit before tax and excluding notable items
|
|
|
|
£960m
|
£145m
|
£404m
|
|
|
|
|
|
|
|
Performance key metrics and ratios
|
|
|
|
|
|
|
Bank net interest margin (NatWest Group NIM excluding
NWM) (2)
|
|
|
1.64%
|
1.66%
|
1.89%
|
Bank average interest earning assets (NatWest Group excluding
NWM) (2)
|
|
|
£480bn
|
£473bn
|
£422bn
|
Cost:income ratio (2)
|
|
|
|
67.8%
|
92.2%
|
57.7%
|
Loan impairment rate (2)
|
|
|
|
(11bps)
|
14bps
|
90bps
|
Earnings
per share - basic
|
|
|
|
5.1p
|
(0.9p)
|
2.4p
|
Return on tangible equity (2)
|
|
|
|
7.9%
|
(1.4%)
|
3.6%
|
|
31 March
|
31
December
|
31
March
|
|
2021
|
2020
|
2020
|
Balance sheet
|
|
|
|
Total
assets
|
£769.8bn
|
£799.5bn
|
£817.6bn
|
Funded assets (2)
|
£646.8bn
|
£633.0bn
|
£608.9bn
|
Loans
to customers - amortised cost
|
£358.7bn
|
£360.5bn
|
£351.3bn
|
Loans to customers and banks - amortised cost and
FVOCI (3)
|
£371.0bn
|
£372.4bn
|
£364.0bn
|
Impairment
provisions - amortised cost
|
£5.6bn
|
£6.0bn
|
£4.2bn
|
Total impairment provisions (3)
|
£5.8bn
|
£6.2bn
|
£4.3bn
|
Expected credit loss (ECL) coverage ratio (3)
|
1.56%
|
1.66%
|
1.19%
|
Assets under management and administration
(AUMA) (2)
|
£32.6bn
|
£32.1bn
|
£26.7bn
|
Customer
deposits
|
£453.3bn
|
£431.7bn
|
£384.8bn
|
|
|
|
|
Liquidity and funding
|
|
|
|
Liquidity
coverage ratio (LCR)
|
158%
|
165%
|
152%
|
Liquidity
portfolio
|
£263bn
|
£262bn
|
£201bn
|
Net stable funding ratio (NSFR) (4)
|
153%
|
151%
|
138%
|
Loan:deposit ratio (2)
|
79%
|
84%
|
91%
|
Total
wholesale funding
|
£61bn
|
£71bn
|
£86bn
|
Short-term
wholesale funding
|
£20bn
|
£19bn
|
£32bn
|
|
|
|
|
Capital and leverage
|
|
|
|
Common Equity Tier (CET1) ratio (5)
|
18.2%
|
18.5%
|
16.6%
|
Total
capital ratio
|
24.0%
|
24.5%
|
21.4%
|
Pro forma CET1 ratio, pre dividend accrual (6)
|
18.6%
|
18.8%
|
16.6%
|
Risk-weighted
assets (RWAs)
|
£164.7bn
|
£170.3bn
|
£185.2bn
|
CRR leverage ratio (5)
|
5.0%
|
5.2%
|
5.1%
|
UK
leverage ratio
|
6.2%
|
6.4%
|
5.8%
|
Tangible
net asset value (TNAV) per ordinary share
|
261p
|
261p
|
273p
|
Number of ordinary shares in issue (millions) (7)
|
11,560
|
12,129
|
12,094
|
Notes:
(1)
|
Refer to page 5 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 page 15 for further
details. 31 March 2020 has been restated for the accounting policy
change for balances held with central banks. Refer to Accounting
policy changes effective 1 January 2020 on page 264 in the NatWest
Group plc 2020 Annual Report and Accounts 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 17.2% and the CRR leverage
ratio would be 4.7%.
|
(6)
|
The pro forma CET1 ratio at 31
March 2021 excludes foreseeable charges of £547 million for
ordinary dividend including £200 million (11bps) in Q1 2021
(31 December 2020 excludes foreseeable charges of £364 million
for ordinary dividend (3p per share) and £266 million
pension
contribution). At 31
March 2020 there was no charge in CET1 for foreseeable dividends or
charges.
|
(7)
|
In March 2021, there was an
agreement with HM Treasury to buy 591 million ordinary shares in
the Company from UK Government Investments Ltd (UKGI). NatWest
Group cancelled 391 million of the purchased ordinary shares, and
held the remaining 200 million in own shares held.
The
number of ordinary shares in
issue excludes own shares held.
|
Non-IFRS financial measures
This
document contains a number of non-IFRS financial measures and
performance metrics not defined under IFRS. For details of the
basis of preparation and reconciliations, where applicable, refer
to the Appendix.
Business performance summary
Chief Financial Officer review
|
In the
first quarter of 2021 we have continued to make progress against
our strategic objectives and have delivered a good financial
performance. We continue to support our customers through this
period of uncertainty and expect to grow lending, excluding UK
Government financial support schemes, in our UK and RBSI retail and
commercial businesses above the market rate in 2021, whilst
reducing costs by around 4%. The Q1 2021 results include a small
impairment release, as support schemes continue to mitigate
realised levels of default. Finally, our capital and liquidity
positions remain robust.
|
Financial performance
Total
income decreased by £503 million, or 15.9%, compared with Q1
2020. Excluding notable items, income decreased by £374
million, or 12.3%, due to the lower yield curve, subdued
transactional business activity and a more normalised level of
customer activity in NatWest Markets, partially offset by balance
sheet growth. Bank NIM of 1.64% decreased by 2 basis points
compared with Q4 2020 as lower structural hedge income, 3 basis
points, was partly offset by mortgage margin improvement, 1 basis
point.
|
|
We
achieved a cost reduction of £72 million, or 4.5%, compared
with Q1 2020 mainly reflecting actions taken in NatWest Markets in
line with the strategic announcement made in February 2020 and
other actions across Retail Banking and Commercial Banking.
Headcount was 5.7% lower than Q1 2020. Strategic costs in the
quarter of £160 million included £53 million redundancy
charges, £24 million related to property charges and a
£14 million charge related to technology spend.
|
|
Whilst
we continue to navigate a high degree of uncertainty in the wider
economic environment, a net impairment release of £102 million
in the quarter reflects releases in non-default portfolios,
principally in Commercial Banking, as support schemes continue to
mitigate realised levels of default. Total impairment provisions
decreased by £0.4 billion to £5.8 billion in the quarter,
which resulted in a reduction in the ECL coverage ratio from 1.66%
at Q4 2020 to 1.56%.
|
|
As a
result, we are pleased to report an attributable profit of
£620 million, with earnings per share of 5.1 pence and a
return on tangible equity (RoTE) of 7.9%.
|
We
continued to support our customers during this period of
uncertainty, whilst taking a measured approach to risk. Across the
UK and RBSI retail and commercial businesses, net lending excluding
UK Government support schemes increased by £2.2 billion, or
3.0% on an annualised basis, including £3.4 billion of
mortgage growth partially offset by lower unsecured balances and a
reduction in SME & mid corporate lending.
|
|
Customer
deposits increased by £21.6 billion, or 5.0%, to £453.3
billon in the quarter. Across the UK and RBSI retail and commercial
businesses customer deposits increased by £12.1 billion, or
3.0%, as customers sought to retain liquidity and reduced spending.
Treasury repo activity drove a further £10.9 billion increase
in the quarter.
|
Capital and leverage
|
Following
the successful directed buy back in March 2021, the CET1 ratio
remains robust at 18.2%, or 17.2% excluding IFRS 9 transitional
relief. The 30 basis points reduction in the quarter reflected the
directed buy back, and associated pension contribution, 72 basis
points, and foreseeable dividend accrual, 11 basis points,
partially offset by the reduction in RWAs and the attributable
profit for the period. The total capital ratio decreased by 50
basis points in the quarter to 24.0%.
|
|
RWAs of
£164.7 billion decreased by £5.6 billion, or 3.3%, in the
quarter reflecting business movements, including lower unsecured
lending, of £2.5 billion, risk parameter improvements of
£1.0 billion, Commercial Banking capital management activity
and FX movements of £1.3 billion.
TNAV
per share was in line with Q4 2020 at 261 pence as the attributable
profit and directed buy back were offset by movements in FX
reserves, cash flow hedging reserves and the dividend linked
pension contribution.
|
The UK
leverage ratio of 6.2% decreased by 20 basis points in the
quarter.
|
Funding and liquidity
The
liquidity portfolio was £263 billion at the end of Q1 2021,
broadly stable with Q4 2020, and the LCR decreased by 7 percentage
points to 158%, representing £64.9 billion headroom above
100%, reflecting the £5.0 billion TFSME repayment in January
2021, the redemption of own debt, directed buy back and other
balance sheet movements, partially offset by the 3.0% increase in
customer deposits. The loan:deposit ratio reduced by 5 percentage
points in the quarter to 79%.
|
Total
wholesale funding decreased by £10 billion compared with Q4
2020. Short term wholesale funding increased by £1.0 billion
in the quarter to £20 billion.
Summary consolidated income statement for the period ended 31 March
2021
|
|
|
Quarter ended
|
|
|
|
|
31 March
|
31
December
|
31
March
|
|
|
|
|
2021
|
2020
|
2020
|
|
|
|
|
£m
|
£m
|
£m
|
Net interest income
|
|
|
|
1,931
|
1,971
|
1,942
|
Own
credit adjustments
|
|
|
|
2
|
(43)
|
155
|
Other
non-interest income
|
|
|
|
726
|
607
|
1,065
|
Non-interest income
|
|
|
|
728
|
564
|
1,220
|
Total income
|
|
|
|
2,659
|
2,535
|
3,162
|
Litigation
and conduct costs
|
|
|
|
(16)
|
(194)
|
4
|
Strategic
costs
|
|
|
|
(160)
|
(326)
|
(131)
|
Other
expenses
|
|
|
|
(1,639)
|
(1,821)
|
(1,714)
|
Operating expenses
|
|
|
|
(1,815)
|
(2,341)
|
(1,841)
|
Profit before impairment releases/(losses)
|
|
|
|
844
|
194
|
1,321
|
Impairment
releases/(losses)
|
|
|
|
102
|
(130)
|
(802)
|
Operating profit before tax
|
|
|
|
946
|
64
|
519
|
Tax
charge
|
|
|
|
(233)
|
(84)
|
(188)
|
Profit/(loss) for the period
|
|
|
|
713
|
(20)
|
331
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
Ordinary
shareholders
|
|
|
|
620
|
(109)
|
288
|
Preference
shareholders
|
|
|
|
5
|
5
|
8
|
Paid-in
equity holders
|
|
|
|
87
|
83
|
97
|
Non-controlling
interests
|
|
|
|
1
|
1
|
(62)
|
Notable items within total income
|
|
|
|
|
|
|
Own
credit adjustments (OCA)
|
|
|
|
2
|
(43)
|
155
|
FX
recycling loss in Central items & other
|
|
|
|
-
|
(1)
|
(64)
|
Liquidity
Asset Bond sale gain
|
|
|
|
-
|
2
|
93
|
IFRS volatility in Central items &
other (1)
|
|
|
|
(1)
|
45
|
(66)
|
Loss on
redemption of own debt
|
|
|
|
(118)
|
-
|
-
|
Retail
Banking debt sale gain
|
|
|
|
-
|
1
|
-
|
Metro
Bank mortgage portfolio acquisition loss
|
|
|
|
-
|
(58)
|
-
|
Commercial
Banking fair value and disposal loss
|
|
|
|
(14)
|
(27)
|
(19)
|
NatWest Markets asset disposals/strategic risk
reduction (2)
|
|
|
(4)
|
(8)
|
-
|
Share
of gains under equity accounting for Business Growth
Fund
|
|
|
121
|
8
|
16
|
Total
|
|
|
|
(14)
|
(81)
|
115
|
Notes:
(1) IFRS volatility
relates to derivatives used for risk management not in
IFRS hedge accounting relationships and IFRS hedge
ineffectiveness.
(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.
Business performance summary
Retail Banking
|
|
|
Quarter ended
|
|
|
|
|
|
31 March
|
31
December
|
31
March
|
|
|
|
|
|
2021
|
2020
|
2020
|
|
|
|
|
|
£m
|
£m
|
£m
|
Total
income
|
|
|
|
|
1,056
|
974
|
1,150
|
Operating
expenses
|
|
|
|
|
(587)
|
(818)
|
(529)
|
of which:
Other expenses
|
|
|
|
|
(557)
|
(566)
|
(592)
|
Impairment
losses
|
|
|
|
|
(34)
|
(65)
|
(297)
|
Operating
profit
|
|
|
|
|
435
|
91
|
324
|
Return
on equity
|
|
|
|
|
23.0%
|
3.8%
|
15.5%
|
Net
interest margin
|
|
|
|
|
2.06%
|
2.03%
|
2.28%
|
Cost:income
ratio
|
|
|
|
|
55.6%
|
84.0%
|
46.0%
|
Loan
impairment rate
|
|
|
|
|
8bps
|
15bps
|
72bps
|
|
|
|
As at
|
|
|
|
|
|
31 March
|
31
December
|
|
|
|
|
|
2021
|
2020
|
|
|
|
|
|
£bn
|
£bn
|
Net
loans to customers - amortised cost
|
|
|
|
|
174.8
|
172.3
|
Customer
deposits
|
|
|
|
|
179.1
|
171.8
|
RWAs
|
|
|
|
|
35.0
|
36.7
|
During
Q1 2021, Retail Banking continued to pursue sustainable growth with
an intelligent approach to risk. Lending growth in the quarter was
supported by a strong performance in mortgages, with gross new
mortgage lending of £9.6 billion in the quarter, partially
offset by the continued UK Government restrictions impacting
customer spending and resulting in higher repayments of unsecured
balances.
|
|
●
|
Retail
Banking continues to support customers whose income has been
impacted by COVID-19. As at 31 March 2021, Retail Banking had
c.12,000 active mortgage repayment holidays, representing around 1%
of the book by volume, and approximately 16,000, or 2%, of personal
loan customers on active repayment holidays at the end of Q1
2021.
|
●
|
Total
income was £94 million, or 8.2%, lower than Q1 2020 primarily
due to lower deposit returns and unsecured balances, combined with
regulatory changes impacting fee income, partially offset by strong
balance growth in mortgages and improved mortgage margins. Net
interest margin increased by 3 basis points compared with Q4 2020
reflecting mortgage margin improvement, partially offset by lower
hedge returns and lower unsecured balance mix. Mortgage completion
margins of around 180 basis points were higher than the back book
margin of around 160 basis points. Application margins were around
180 basis points in the quarter but decreased to around 165 basis
points in the latter part of Q1 2021 primarily due to rising swap
rates.
|
●
|
Other
expenses were £35 million, or 5.9%, lower than Q1 2020
primarily reflecting a reduction in headcount.
|
●
|
Impairment
losses of £34 million in Q1 2021 continue to reflect a low
level of Stage 3 defaults, which benefitted from a £17 million
provision release relating to a planned debt sale, and a small
release from accounts flowing from Stage 2 back to Stage
1.
|
●
|
Net
loans to customers increased by £2.5 billion, or 1.5%,
compared with Q4 2020 due to continued strong mortgage growth of
£3.0 billion, with gross new mortgage lending in the quarter
of £9.6 billion, and flow share of approximately 13%. Personal
advances and cards reduced by £0.2 billion and £0.3
billion respectively as customers spent less and made higher
repayments, reflecting the impact of the UK Government
restrictions.
|
●
|
Customer
deposits increased by £7.3 billion, or 4.2%, compared with Q4
2020 as continued UK Government initiatives combined with
restrictions, resulted in lower customer spend and increased
savings.
|
●
|
RWAs
decreased by £1.7 billion, or 4.6%, compared with Q4 2020
largely reflecting lower unsecured balances and continued quality
improvements supported by rising house prices and customer
behaviour.
|
Business performance summary
Private Banking
|
|
|
Quarter ended
|
|
|
|
|
31 March
|
31
December
|
31
March
|
|
|
|
|
2021
|
2020
|
2020
|
|
|
|
|
£m
|
£m
|
£m
|
Total
income
|
|
|
|
185
|
184
|
201
|
Operating
expenses
|
|
|
|
(121)
|
(91)
|
(123)
|
of which:
Other expenses
|
|
|
|
(122)
|
(119)
|
(118)
|
Impairment
releases/(losses)
|
|
|
|
-
|
(26)
|
(29)
|
Operating
profit
|
|
|
|
64
|
67
|
49
|
Return
on equity
|
|
|
|
12.4%
|
13.3%
|
9.8%
|
Net
interest margin
|
|
|
|
1.79%
|
1.86%
|
2.25%
|
Cost:income
ratio
|
|
|
|
65.4%
|
49.5%
|
61.2%
|
Loan
impairment rate
|
|
|
|
0bps
|
61bps
|
73bps
|
|
|
|
As at
|
|
|
|
|
31 March
|
31 December
|
|
|
|
|
|
2021
|
2020
|
|
|
|
|
|
£bn
|
£bn
|
|
Net loans to customers - amortised cost
|
|
|
|
17.5
|
17.0
|
|
Customer deposits
|
|
|
|
33.5
|
32.4
|
|
RWAs
|
|
|
|
11.2
|
10.9
|
|
Assets Under Management (AUMs)
|
|
|
|
29.4
|
29.1
|
|
Assets Under Administration (AUAs) (1)
|
|
|
|
3.2
|
3.0
|
|
Total Assets Under Management and Administration
(AUMA)
|
|
|
|
32.6
|
32.1
|
|
Note:
|
(1) Private Banking manages AUA
portfolios on behalf of Retail Banking and RBS International and
receives a management fee in respect of providing this
service.
|
Private
Banking delivered a resilient operating performance in the quarter,
including strong balance growth, which supported a Q1 2021 return
on equity of 12.4%. AUMA growth in the quarter included record
investment inflows of £245 million into digital investment
products: NatWest Invest, Royal Bank Invest and Coutts Invest, more
than double the level seen in Q4 2020.
|
|
●
|
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. As
at 31 March 2021, £61 million BBLS, £234 million CBILS
and £44 million CLBILS had been approved.
|
●
|
Total
income was £16 million, or 8.0%, lower than Q1 2020 primarily
reflecting lower deposit returns partially offset by strong balance
growth. Net interest margin decreased by 7 basis points compared
with Q4 2020 reflecting lower deposit returns and higher liquidity
portfolio costs.
|
●
|
Net
loans to customers increased by £0.5 billion, or 2.9%,
compared with Q4 2020 due to mortgage lending growth.
|
●
|
AUMAs
increased by £0.5 billion, or 1.6%, compared with Q4 2020
reflecting positive investment performance of £0.1 billion and
net new money inflows of £0.4 billion, which were impacted by
EEA resident client outflows following the UK's exit from the
EU.
|
|
|
Business performance summary
Commercial Banking
|
|
|
Quarter ended
|
|
|
|
|
|
31 March
|
31
December
|
31
March
|
|
|
|
|
|
2021
|
2020
|
2020
|
|
|
|
|
|
£m
|
£m
|
£m
|
Total
income
|
|
|
|
|
941
|
951
|
1,008
|
Operating
expenses
|
|
|
|
|
(583)
|
(656)
|
(610)
|
of which:
Other expenses (excluding OLD)
|
|
|
|
|
(513)
|
(560)
|
(532)
|
Impairment
releases/(losses)
|
|
|
|
|
117
|
(10)
|
(435)
|
Operating
profit/(loss)
|
|
|
|
|
475
|
285
|
(37)
|
Return
on equity
|
|
|
|
|
14.9%
|
8.1%
|
(2.5%)
|
Net
interest margin
|
|
|
|
|
1.54%
|
1.56%
|
1.83%
|
Cost:income
ratio
|
|
|
|
|
60.5%
|
67.8%
|
59.1%
|
Loan
impairment rate
|
|
|
|
|
(43)bps
|
4bps
|
157bps
|
|
|
|
|
As at
|
|
|
|
|
|
31 March
|
31 December
|
|
|
|
|
|
|
2021
|
2020
|
|
|
|
|
|
|
£bn
|
£bn
|
|
Net loans to customers - amortised cost
|
|
|
|
|
106.6
|
108.2
|
|
Customer deposits
|
|
|
|
|
169.4
|
167.7
|
|
RWAs
|
|
|
|
|
71.6
|
75.1
|
|
Commercial
Banking delivered a solid performance in Q1 2021 despite the
continued impact of UK Government restrictions and a challenging
operating environment. Commercial Banking will continue to
play a key role in helping its customers recover and grow as
the wider economy re-opens through Pay As You Grow, for existing
Bounce Back Loan customers, and by supporting continued access to
finance through the new Recovery Loan Scheme.
|
|
●
|
Commercial
Banking continues to support customers through a comprehensive
package of initiatives including participation in the UK
Government's financial support schemes. As at 31 March 2021,
£9.1 billion BBLS, £4.0 billion CBILS and £1.3
billion CLBILS had been approved and there were active payment
holidays on c.8,900 customer accounts, representing 2% of the
lending book by value, compared to 4% at the end of
2020.
|
●
|
Total
income was £67 million, or 6.6%, lower than Q1 2020 reflecting
lower deposit returns and subdued transactional business activity.
Net interest margin decreased by 2 basis points compared with Q4
2020 mainly reflecting lower hedge returns.
|
●
|
Other
expenses, excluding OLD, decreased by £19 million, or 3.6%,
compared with Q1 2020 as cost reduction actions were partially
offset by higher remediation costs and increased back office
operations costs.
|
●
|
A net
impairment release of £117 million in Q1 2021 mainly reflected
a modest improvement in underlying portfolio credit metrics, with
minimal Stage 3 defaults.
|
●
|
Net
loans to customers decreased by £1.6 billion, or 1.5%,
compared with Q4 2020 as lower SME & mid corporates lending and
net RCF repayments of £0.3 billion were partially offset by
£0.5 billion drawdowns against UK Government financial support
schemes, including £0.3 billion related to BBLS and £0.2
billion related to CBILS. RCF utilisation remained stable with Q4
2020 at c.22% of committed facilities.
|
●
|
Customer
deposits increased by £1.7 billion, or 1.0%, compared with Q4
2020 as customers continued to build and retain liquidity in light
of economic uncertainty and the continued impact of UK Government
initiatives.
|
●
|
RWAs
decreased by £3.5 billion, or 4.7%, compared with Q4 2020
reflecting lower lending volumes, £0.6 billion active capital
management, £0.5 billion lower operational risk and a
£0.2 billion risk parameter improvement.
|
Business performance summary
International Banking & Markets
RBS International
|
|
|
Quarter ended
|
|
|
|
|
|
31 March
|
31
December
|
31
March
|
|
|
|
|
|
2021
|
2020
|
2020
|
|
|
|
|
|
£m
|
£m
|
£m
|
Total
income
|
|
|
|
|
123
|
126
|
144
|
Operating
expenses
|
|
|
|
|
(57)
|
(112)
|
(61)
|
of which:
Other expenses
|
|
|
|
|
(52)
|
(73)
|
(60)
|
Impairment
releases/(losses)
|
|
|
|
|
2
|
(27)
|
(15)
|
Operating
profit/(loss)
|
|
|
|
|
68
|
(13)
|
68
|
Return
on equity
|
|
|
|
|
17.5%
|
(5.5%)
|
19.4%
|
Net
interest margin
|
|
|
|
|
1.06%
|
1.03%
|
1.45%
|
Cost:income
ratio
|
|
|
|
|
46.3%
|
88.9%
|
42.4%
|
Loan
impairment rate
|
|
|
|
|
(5)bps
|
81bps
|
44bps
|
|
|
|
|
|
As at
|
|
|
|
|
|
31 March
|
31 December
|
|
|
|
|
|
|
2021
|
2020
|
|
|
|
|
|
|
£bn
|
£bn
|
|
Net loans to customers - amortised cost
|
|
|
|
|
14.7
|
13.3
|
|
Customer deposits
|
|
|
|
|
33.3
|
31.3
|
|
RWAs
|
|
|
|
|
7.7
|
7.5
|
|
RBSI implemented a range of mobile and online
banking enhancements, including the introduction of Cora for RBSI
online and mobile, whilst continuing to support customers through
the ongoing COVID-19 pandemic.
|
|
●
|
As at 31 March
2021, RBSI was supporting 106 mortgage repayment breaks, reflecting
a mortgage value of £21 million, and was providing 226
business customers with working capital facilities, reflecting a
value of £424 million, whilst continuing to suspend a range of
fees and charges for its personal and business
customers.
|
●
|
Total income was
£21 million, or 14.6%, lower than Q1 2020 primarily reflecting
the impact of the interest rate reductions on deposit income. Net
interest margin increased by 3 basis points compared with Q4 2020
mainly reflecting higher average lending volumes in the
Institutional Banking sector.
|
●
|
Other expenses were
£8 million, or 13.3%, lower than Q1 2020 mainly reflecting
lower project spend and an 11.1% reduction in
headcount.
|
●
|
Net loans to
customers increased by £1.4 billion, or 10.5%, compared with
Q4 2020 reflecting incremental Funds business in the Institutional
Banking sector.
|
●
|
Customer deposits
increased by £2.0 billion, or 6.4%, compared with Q4 2020 due
to an inflow of short term call deposits in the Institutional
Banking sector as Funds customer activity increased.
|
Business performance summary
International Banking & Markets
NatWest Markets(1)
|
|
|
Quarter ended
|
|
|
|
|
|
31 March
|
31
December
|
31
March
|
|
|
|
|
|
2021
|
2020
|
2020
|
|
|
|
|
|
£m
|
£m
|
£m
|
Total
income
|
|
|
|
|
189
|
73
|
543
|
of which:
|
|
|
|
|
|
|
|
- Income
excluding asset disposals/strategic risk reduction and
own credit
adjustments
|
|
191
|
124
|
388
|
- Asset
disposals/strategic risk reduction (2)
|
|
|
|
(4)
|
(8)
|
-
|
- Own credit
adjustments
|
|
|
|
|
2
|
(43)
|
155
|
Operating
expenses
|
|
|
|
|
(275)
|
(301)
|
(342)
|
of which:
Other expenses
|
|
|
|
|
(240)
|
(244)
|
(298)
|
Impairment
releases/(losses)
|
|
|
|
|
6
|
(2)
|
5
|
Operating
(loss)/profit
|
|
|
|
|
(80)
|
(230)
|
206
|
Return
on equity
|
|
|
|
|
(6.3%)
|
(15.0%)
|
8.7%
|
Cost:income
ratio
|
|
|
|
|
145.5%
|
nm
|
63.0%
|
|
|
|
As at
|
|
|
|
|
|
31 March
|
31
December
|
|
|
|
|
|
2021
|
2020
|
|
|
|
|
|
£bn
|
£bn
|
Funded
Assets
|
|
|
|
|
105.7
|
105.9
|
RWAs
|
|
|
|
|
26.5
|
26.9
|
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). 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 continued to make good progress on refocusing to better
support NatWest Group's customers and to create a more sustainable
business. During the quarter NatWest Markets maintained its strong
performance in climate and sustainability financing delivering
£3.0 billion of financing towards NatWest Group's 2021 target.
Building on the momentum gained in 2020, further changes to
simplify its operations were announced in the first quarter of
2021, including plans to consolidate its operational footprint in
Asia. NatWest Markets also announced the last part of the One
Bank strategy to bring teams and expertise together from across the
bank.
|
●
|
Total
income was £354 million, or 65.2%, lower than Q1 2020
reflecting more normalised levels of customer activity, with the
prior period impacted by exceptional levels of market activity
generated by the initial spread of the COVID-19 virus, a £153
million reduction in OCA, as credit spreads tightened, and disposal
losses of £4 million in the current period.
|
●
|
Other
expenses were £58 million, or 19.5%, lower than Q1 2020
reflecting continued reductions in line with the strategic
announcement in February 2020.
|
●
|
RWAs
decreased by £0.4 billion compared with Q4 2020 reflecting
£0.6 billion lower counterparty credit risk and £0.5
billion lower credit risk partially offset by a £0.7 billion
increase in market risk as customer activity increased from the
seasonally lower level at the end of 2020.
|
Business performance summary
Ulster Bank RoI
|
|
|
Quarter ended
|
|
|
|
|
|
31 March
|
31
December
|
31
March
|
|
|
|
|
|
2021
|
2020
|
2020
|
|
|
|
|
|
€m
|
€m
|
€m
|
Total
income
|
|
|
|
|
142
|
144
|
150
|
Operating
expenses
|
|
|
|
|
(143)
|
(127)
|
(143)
|
of which:
Other expenses
|
|
|
|
|
(132)
|
(112)
|
(137)
|
Impairment
releases/(losses)
|
|
|
|
|
14
|
3
|
(32)
|
Operating
profit/(loss)
|
|
|
|
|
13
|
20
|
(25)
|
Return
on equity
|
|
|
|
|
2.6%
|
3.9%
|
(4.3%)
|
Net
interest margin
|
|
|
|
|
1.49%
|
1.48%
|
1.56%
|
Cost:income
ratio
|
|
|
|
|
100.7%
|
88.2%
|
95.3%
|
Loan
impairment rate
|
|
|
|
|
(27)bps
|
(6)bps
|
58bps
|
|
|
|
|
|
|
|
|
|
|
|
|
As at
|
|
|
|
|
|
31 March
|
31 December
|
|
|
|
|
|
|
2021
|
2020
|
|
|
|
|
|
|
€bn
|
€bn
|
|
Net loans to customers - amortised cost
|
|
|
|
|
19.8
|
20.0
|
|
Customer deposits
|
|
|
|
|
21.7
|
21.8
|
|
RWAs
|
|
|
|
|
13.1
|
13.2
|
|
Note:
(1)
Ratios have been presented on a Euro basis. Comparatives have been
restated.
|
|
Plans remain on
track to proceed with a phased withdrawal from the Republic of
Ireland over the coming years, which will be managed in an orderly
and considered manner. Ulster Bank RoI remains open for business
and continues to support its customers through this transition and
challenges of COVID-19. Constructive discussions remain
ongoing with Allied Irish Banks, p.l.c. for the sale of a
c.€4.0 billion portfolio of performing commercial loans and
continue with Permanent TSB Group Holdings p.l.c. among other
strategic banking counterparties about their potential interest in
other parts of the bank.
|
|
|
●
|
Total income was
€8 million, or 5.3%, lower than Q1 2020 reflecting a
reduction in lending volumes and fee income due to COVID-19, partly
offset by an increase in FX gains. Net interest margin of 1.49% was
broadly stable compared with Q4 2020.
|
●
|
Other expenses were
€5 million, or 3.6%, lower than Q1 2020 due to a 6.9%
reduction in headcount and lower back office operations costs,
partly offset by increased government levies.
|
●
|
A net impairment
release of €14 million in the quarter primarily reflects
improvements in the mortgage portfolio.
|
●
|
Net loans to
customers decreased by €0.2 billion, or 1.0%, compared with
Q4 2020 as repayments continued to exceed gross new lending of
€0.4 billion.
|
●
|
Customer deposits
decreased by €0.1 billion, or 0.5%, compared with Q4 2020
mainly due to a reduction in commercial balances. The loan:deposit
ratio remained broadly stable at 91%.
|
Central items & other
|
Quarter ended
|
|
|
31 March
|
31
December
|
31
March
|
|
|
|
|
2021
|
2020
|
2020
|
|
|
|
|
£m
|
£m
|
£m
|
|
|
|
Central
items not allocated
|
(27)
|
(154)
|
(70)
|
|
|
|
●
|
A
£27 million operating loss within central items not allocated
mainly reflects a £118 million day one loss on redemption of
own debt related to the repurchase of legacy instruments, which
will result in annual net interest savings of c.£49 million,
and strategic costs, largely offset by the £121 million share
of gains under equity accounting for Business Growth Fund and other
treasury income.
|
|
|
Segment performance
|
Quarter ended 31 March 2021
|
|
|
|
|
International Banking & Markets
|
|
|
|
|
Retail
|
Private
|
Commercial
|
RBS
|
NatWest
|
Ulster
|
Central items
|
Total NatWest
|
|
Banking
|
Banking
|
Banking
|
International
|
Markets
|
Bank RoI
|
& other
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Income statement
|
|
|
|
|
|
|
|
|
Net
interest income
|
973
|
115
|
643
|
89
|
(7)
|
94
|
24
|
1,931
|
Non-interest
income
|
83
|
70
|
298
|
34
|
194
|
30
|
17
|
726
|
Own
credit adjustments
|
-
|
-
|
-
|
-
|
2
|
-
|
-
|
2
|
Total income
|
1,056
|
185
|
941
|
123
|
189
|
124
|
41
|
2,659
|
Direct
expenses
|
|
|
|
|
|
|
|
|
- staff costs
|
(116)
|
(34)
|
(141)
|
(26)
|
(111)
|
(47)
|
(397)
|
(872)
|
- other costs
|
(61)
|
(9)
|
(66)
|
(13)
|
(29)
|
(23)
|
(566)
|
(767)
|
Indirect
expenses
|
(380)
|
(79)
|
(341)
|
(13)
|
(100)
|
(45)
|
958
|
-
|
Strategic
costs
|
|
|
|
|
|
|
|
|
- direct
|
(11)
|
-
|
(26)
|
(4)
|
(30)
|
-
|
(89)
|
(160)
|
- indirect
|
(17)
|
(4)
|
(9)
|
(1)
|
(5)
|
(1)
|
37
|
-
|
Litigation
and conduct costs
|
(2)
|
5
|
-
|
-
|
-
|
(9)
|
(10)
|
(16)
|
Operating expenses
|
(587)
|
(121)
|
(583)
|
(57)
|
(275)
|
(125)
|
(67)
|
(1,815)
|
Operating
profit/(loss)before impairment (losses)/releases
|
469
|
64
|
358
|
66
|
(86)
|
(1)
|
(26)
|
844
|
Impairment
(losses)/releases
|
(34)
|
-
|
117
|
2
|
6
|
12
|
(1)
|
102
|
Operating profit/(loss)
|
435
|
64
|
475
|
68
|
(80)
|
11
|
(27)
|
946
|
Additional information
|
|
|
|
|
|
|
|
|
Return on equity (1)
|
23.0%
|
12.4%
|
14.9%
|
17.5%
|
(6.3%)
|
2.5%
|
nm
|
7.9%
|
Cost:income ratio (1)
|
55.6%
|
65.4%
|
60.5%
|
46.3%
|
145.5%
|
100.8%
|
nm
|
67.8%
|
Total
assets (£bn)
|
199.2
|
26.9
|
187.1
|
36.7
|
226.8
|
25.9
|
67.2
|
769.8
|
Funded assets (£bn) (1)
|
199.2
|
26.9
|
187.1
|
36.7
|
105.7
|
25.9
|
65.3
|
646.8
|
Net
loans to customers - amortised cost (£bn)
|
174.8
|
17.5
|
106.6
|
14.7
|
7.5
|
16.9
|
20.7
|
358.7
|
Loan impairment rate (1)
|
8bps
|
0bps
|
(43)bps
|
(5)bps
|
nm
|
(27)bps
|
nm
|
(11)bps
|
Impairment
provisions (£bn)
|
(1.8)
|
(0.1)
|
(2.7)
|
(0.1)
|
(0.1)
|
(0.7)
|
(0.1)
|
(5.6)
|
Impairment
provisions - stage 3 (£bn)
|
(0.8)
|
-
|
(0.9)
|
-
|
(0.1)
|
(0.5)
|
(0.1)
|
(2.4)
|
Customer
deposits (£bn)
|
179.1
|
33.5
|
169.4
|
33.3
|
2.4
|
18.4
|
17.2
|
453.3
|
Risk-weighted
assets (RWAs) (£bn)
|
35.0
|
11.2
|
71.6
|
7.7
|
26.5
|
11.1
|
1.6
|
164.7
|
RWA
equivalent (RWAe) (£bn)
|
35.0
|
11.2
|
71.7
|
7.7
|
29.2
|
11.1
|
1.7
|
167.6
|
Employee
numbers (FTEs - thousands)
|
15.8
|
1.9
|
9.5
|
1.6
|
2.1
|
2.7
|
26.0
|
59.6
|
Third party customer asset rate (2)
|
2.73%
|
2.36%
|
2.65%
|
2.29%
|
nm
|
2.35%
|
nm
|
nm
|
Third party customer funding rate (2)
|
(0.08%)
|
(0.00%)
|
(0.01%)
|
0.05%
|
nm
|
(0.06%)
|
nm
|
nm
|
Average interest earning assets (£bn) (1)
|
191.2
|
26.0
|
169.4
|
34.1
|
32.4
|
25.8
|
nm
|
512.2
|
Bank net interest margin (1)
|
2.06%
|
1.79%
|
1.54%
|
1.06%
|
na
|
1.48%
|
nm
|
1.64%
|
nm = not meaningful, na = not applicable.
Refer to page 14 for the notes to this table.
Segment performance
|
Quarter ended 31 December 2020
|
|
|
|
|
International Banking & Markets
|
|
|
|
|
Retail
|
Private
|
Commercial
|
RBS
|
NatWest
|
Ulster
|
Central items
|
Total NatWest
|
|
Banking
|
Banking
|
Banking
|
International
|
Markets
|
Bank RoI
|
& other
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Income statement
|
|
|
|
|
|
|
|
|
Net
interest income
|
949
|
118
|
667
|
85
|
(2)
|
101
|
53
|
1,971
|
Non-interest
income
|
25
|
66
|
284
|
41
|
118
|
30
|
43
|
607
|
Own
credit adjustments
|
-
|
-
|
-
|
-
|
(43)
|
-
|
-
|
(43)
|
Total income
|
974
|
184
|
951
|
126
|
73
|
131
|
96
|
2,535
|
Direct
expenses
|
|
|
|
|
|
|
|
|
- staff costs
|
(117)
|
(32)
|
(141)
|
(25)
|
(90)
|
(48)
|
(385)
|
(838)
|
- other costs
|
(56)
|
(16)
|
(72)
|
(16)
|
(21)
|
(21)
|
(781)
|
(983)
|
Indirect
expenses
|
(393)
|
(71)
|
(382)
|
(32)
|
(133)
|
(31)
|
1,042
|
-
|
Strategic
costs
|
|
|
|
|
|
|
|
|
- direct
|
(6)
|
2
|
(35)
|
(37)
|
(50)
|
(3)
|
(197)
|
(326)
|
- indirect
|
(36)
|
(3)
|
(28)
|
(1)
|
(6)
|
(3)
|
77
|
-
|
Litigation
and conduct costs
|
(210)
|
29
|
2
|
(1)
|
(1)
|
(8)
|
(5)
|
(194)
|
Operating expenses
|
(818)
|
(91)
|
(656)
|
(112)
|
(301)
|
(114)
|
(249)
|
(2,341)
|
Operating
profit/(loss) before impairment (losses)/releases
|
156
|
93
|
295
|
14
|
(228)
|
17
|
(153)
|
194
|
Impairment
(losses)/releases
|
(65)
|
(26)
|
(10)
|
(27)
|
(2)
|
1
|
(1)
|
(130)
|
Operating profit/(loss)
|
91
|
67
|
285
|
(13)
|
(230)
|
18
|
(154)
|
64
|
Additional information
|
|
|
|
|
|
|
|
|
Return on equity (1)
|
3.8%
|
13.3%
|
8.1%
|
(5.5%)
|
(15.0%)
|
3.9%
|
nm
|
(1.4%)
|
Cost:income ratio (1)
|
84.0%
|
49.5%
|
67.8%
|
88.9%
|
nm
|
87.0%
|
nm
|
92.2%
|
Total
assets (£bn)
|
197.6
|
26.2
|
187.4
|
34.0
|
270.1
|
26.6
|
57.6
|
799.5
|
Funded assets (£bn) (1)
|
197.6
|
26.2
|
187.4
|
34.0
|
105.9
|
26.6
|
55.3
|
633.0
|
Net
loans to customers - amortised cost (£bn)
|
172.3
|
17.0
|
108.2
|
13.3
|
8.4
|
18.0
|
23.3
|
360.5
|
Loan impairment rate (1)
|
15bps
|
61bps
|
4bps
|
81bps
|
nm
|
(2)bps
|
nm
|
14bps
|
Impairment
provisions (£bn)
|
(1.8)
|
(0.1)
|
(2.9)
|
(0.1)
|
(0.2)
|
(0.8)
|
(0.1)
|
(6.0)
|
Impairment
provisions - stage 3 (£bn)
|
(0.8)
|
-
|
(1.1)
|
-
|
(0.1)
|
(0.5)
|
(0.1)
|
(2.6)
|
Customer
deposits (£bn)
|
171.8
|
32.4
|
167.7
|
31.3
|
2.6
|
19.6
|
6.3
|
431.7
|
Risk-weighted
assets (RWAs) (£bn)
|
36.7
|
10.9
|
75.1
|
7.5
|
26.9
|
11.8
|
1.4
|
170.3
|
RWA
equivalent (RWAe) (£bn)
|
36.7
|
10.9
|
75.1
|
7.5
|
28.7
|
11.8
|
1.6
|
172.3
|
Employee
numbers (FTEs - thousands)
|
16.0
|
1.8
|
9.6
|
1.7
|
2.2
|
2.7
|
25.9
|
59.9
|
Third party customer asset rate (2)
|
2.81%
|
2.38%
|
2.65%
|
2.34%
|
nm
|
2.33%
|
nm
|
nm
|
Third party customer funding rate (2)
|
(0.10%)
|
(0.01%)
|
(0.01%)
|
0.05%
|
nm
|
(0.07%)
|
nm
|
nm
|
Average interest earning assets (£bn) (1)
|
186.1
|
25.2
|
170.2
|
32.9
|
36.5
|
26.8
|
nm
|
509.6
|
Bank net interest margin (1)
|
2.03%
|
1.86%
|
1.56%
|
1.03%
|
na
|
1.50%
|
nm
|
1.66%
|
nm = not meaningful, na = not applicable.
Refer to page 14 for the notes to this table.
Segment performance
|
Quarter ended 31 March 2020
|
|
|
|
|
International Banking & Markets
|
|
|
|
|
Retail
|
Private
|
Commercial
|
RBS
|
NatWest
|
Ulster
|
Central items
|
Total NatWest
|
|
Banking
|
Banking
|
Banking
|
International
|
Markets
|
Bank RoI
|
& other
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Income statement
|
|
|
|
|
|
|
|
|
Net
interest income
|
1,007
|
127
|
674
|
111
|
(40)
|
97
|
(34)
|
1,942
|
Non-interest
income
|
143
|
74
|
334
|
33
|
428
|
32
|
21
|
1,065
|
Own
credit adjustments
|
-
|
-
|
-
|
-
|
155
|
-
|
-
|
155
|
Total income
|
1,150
|
201
|
1,008
|
144
|
543
|
129
|
(13)
|
3,162
|
Direct
expenses
|
|
|
|
|
|
|
|
|
- staff costs
|
(135)
|
(39)
|
(174)
|
(32)
|
(167)
|
(48)
|
(324)
|
(919)
|
- other costs
|
(58)
|
(16)
|
(73)
|
(14)
|
(57)
|
(24)
|
(553)
|
(795)
|
Indirect
expenses
|
(399)
|
(63)
|
(321)
|
(14)
|
(74)
|
(46)
|
917
|
-
|
Strategic
costs
|
|
|
|
|
|
|
|
|
- direct
|
-
|
-
|
(2)
|
(1)
|
(34)
|
(1)
|
(93)
|
(131)
|
- indirect
|
(34)
|
(5)
|
(39)
|
(3)
|
(8)
|
(4)
|
93
|
-
|
Litigation
and conduct costs
|
97
|
-
|
(1)
|
3
|
(2)
|
-
|
(93)
|
4
|
Operating expenses
|
(529)
|
(123)
|
(610)
|
(61)
|
(342)
|
(123)
|
(53)
|
(1,841)
|
Operating
profit/(loss) before impairment (losses)/releases
|
621
|
78
|
398
|
83
|
201
|
6
|
(66)
|
1,321
|
Impairment
(losses)/releases
|
(297)
|
(29)
|
(435)
|
(15)
|
5
|
(27)
|
(4)
|
(802)
|
Operating profit/(loss)
|
324
|
49
|
(37)
|
68
|
206
|
(21)
|
(70)
|
519
|
Additional information
|
|
|
|
|
|
|
|
|
Return on equity (1)
|
15.5%
|
9.8%
|
(2.5%)
|
19.4%
|
8.7%
|
(4.2%)
|
nm
|
3.6%
|
Cost:income ratio (1)
|
46.0%
|
61.2%
|
59.1%
|
42.4%
|
63.0%
|
95.3%
|
nm
|
57.7%
|
Total
assets (£bn)
|
186.3
|
23.4
|
178.3
|
33.2
|
335.7
|
26.3
|
34.4
|
817.6
|
Funded assets (£bn) (1)
|
186.3
|
23.4
|
178.3
|
33.2
|
129.6
|
26.3
|
31.8
|
608.9
|
Net
loans to customers - amortised cost (£bn)
|
163.7
|
15.8
|
109.2
|
13.6
|
12.2
|
18.7
|
18.1
|
351.3
|
Loan impairment rate (1)
|
72bps
|
73bps
|
157bps
|
44bps
|
nm
|
56bps
|
nm
|
90bps
|
Impairment
provisions (£bn)
|
(1.6)
|
(0.1)
|
(1.7)
|
-
|
(0.1)
|
(0.7)
|
-
|
(4.2)
|
Impairment
provisions - stage 3 (£bn)
|
(0.9)
|
-
|
(1.0)
|
-
|
(0.1)
|
(0.6)
|
-
|
(2.6)
|
Customer
deposits (£bn)
|
152.8
|
29.0
|
143.9
|
32.3
|
5.7
|
19.3
|
1.8
|
384.8
|
Risk-weighted
assets (RWAs) (£bn)
|
38.2
|
10.3
|
76.9
|
6.8
|
38.9
|
12.7
|
1.4
|
185.2
|
RWA
equivalent (RWAe) (£bn)
|
38.2
|
10.3
|
77.0
|
7.1
|
42.2
|
12.7
|
1.7
|
189.2
|
Employee
numbers (FTEs - thousands)
|
17.3
|
1.8
|
9.5
|
1.8
|
5.1
|
2.9
|
24.8
|
63.2
|
Third party customer asset rate (2)
|
3.07%
|
2.81%
|
3.22%
|
2.72%
|
nm
|
2.28%
|
nm
|
nm
|
Third party customer funding rate (2)
|
(0.36%)
|
(0.32%)
|
(0.18%)
|
(0.10%)
|
nm
|
(0.08%)
|
nm
|
nm
|
Average interest earning assets (£bn) (1)
|
177.4
|
22.7
|
148.4
|
30.9
|
36.1
|
24.9
|
nm
|
458.5
|
Bank net interest margin (1)
|
2.28%
|
2.25%
|
1.83%
|
1.45%
|
na
|
1.56%
|
nm
|
1.89%
|
nm = not meaningful, na = not applicable.
Notes:
(1) Refer
to the Appendix for details of the 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, debt securities in issue and
subordinated liabilities 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.
Risk and capital management
|
Page
|
Credit risk
|
|
Segment analysis - portfolio summary
|
15
|
Segment analysis - loans
|
16
|
Movement in ECL provision
|
16
|
Sector analysis
|
17
|
Wholesale support schemes
|
18
|
Capital, liquidity and funding risk
|
19
|
Credit risk
Segment analysis - portfolio summary
The
table below shows gross loans and expected credit loss (ECL), by
segment and stage, within the scope of the IFRS 9 ECL
framework.
|
|
|
|
International Banking & Markets
|
|
|
|
|
Retail
|
Private
|
Commercial
|
RBS
|
NatWest
|
Ulster
|
Central items
|
|
|
Banking
|
Banking
|
Banking
|
International
|
Markets
|
Bank RoI
|
& other
|
Total
|
31 March 2021
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Loans - amortised cost and FVOCI (1)
|
|
|
|
|
|
|
|
|
Stage
1
|
150,004
|
16,024
|
72,202
|
13,857
|
6,865
|
13,342
|
24,730
|
297,024
|
Stage
2
|
24,569
|
1,876
|
34,572
|
2,089
|
1,413
|
3,274
|
111
|
67,904
|
Stage
3
|
1,957
|
295
|
2,399
|
202
|
111
|
1,141
|
-
|
6,105
|
Of which: individual
|
-
|
295
|
1,380
|
202
|
102
|
83
|
-
|
2,062
|
Of which: collective
|
1,957
|
-
|
1,019
|
-
|
9
|
1,058
|
-
|
4,043
|
|
176,530
|
18,195
|
109,173
|
16,148
|
8,389
|
17,757
|
24,841
|
371,033
|
ECL provisions (2)
|
|
|
|
|
|
|
|
|
Stage
1
|
145
|
29
|
255
|
19
|
12
|
42
|
13
|
515
|
Stage
2
|
851
|
70
|
1,599
|
71
|
43
|
249
|
15
|
2,898
|
Stage
3
|
821
|
36
|
937
|
44
|
91
|
452
|
-
|
2,381
|
Of which: individual
|
-
|
36
|
494
|
44
|
82
|
14
|
-
|
670
|
Of which: collective
|
821
|
-
|
443
|
-
|
9
|
438
|
-
|
1,711
|
|
1,817
|
135
|
2,791
|
134
|
146
|
743
|
28
|
5,794
|
ECL provisions coverage (3,4)
|
|
|
|
|
|
|
|
|
Stage 1
(%)
|
0.10
|
0.18
|
0.35
|
0.14
|
0.17
|
0.31
|
0.05
|
0.17
|
Stage 2
(%)
|
3.46
|
3.73
|
4.63
|
3.40
|
3.04
|
7.61
|
13.51
|
4.27
|
Stage 3
(%)
|
41.95
|
12.20
|
39.06
|
21.78
|
81.98
|
39.61
|
-
|
39.00
|
|
1.03
|
0.74
|
2.56
|
0.83
|
1.74
|
4.18
|
0.11
|
1.56
|
31
December 2020
|
|
|
|
|
|
|
|
|
Loans - amortised cost and FVOCI (1)
|
|
|
|
|
|
|
|
|
Stage
1
|
139,956
|
15,321
|
70,685
|
12,143
|
7,780
|
14,380
|
26,859
|
287,124
|
Stage
2
|
32,414
|
1,939
|
37,344
|
2,242
|
1,566
|
3,302
|
110
|
78,917
|
Stage
3
|
1,891
|
298
|
2,551
|
211
|
171
|
1,236
|
-
|
6,358
|
Of which: individual
|
-
|
298
|
1,578
|
211
|
162
|
43
|
-
|
2,292
|
Of which: collective
|
1,891
|
-
|
973
|
-
|
9
|
1,193
|
-
|
4,066
|
|
174,261
|
17,558
|
110,580
|
14,596
|
9,517
|
18,918
|
26,969
|
372,399
|
ECL provisions (2)
|
|
|
|
|
|
|
|
|
Stage
1
|
134
|
31
|
270
|
14
|
12
|
45
|
13
|
519
|
Stage
2
|
897
|
68
|
1,713
|
74
|
49
|
265
|
15
|
3,081
|
Stage
3
|
806
|
39
|
1,069
|
48
|
132
|
492
|
-
|
2,586
|
Of which: individual
|
-
|
39
|
607
|
48
|
124
|
13
|
-
|
831
|
Of which: collective
|
806
|
-
|
462
|
-
|
8
|
479
|
-
|
1,755
|
|
1,837
|
138
|
3,052
|
136
|
193
|
802
|
28
|
6,186
|
ECL provisions coverage (3,4)
|
|
|
|
|
|
|
|
|
Stage 1
(%)
|
0.10
|
0.20
|
0.38
|
0.12
|
0.15
|
0.31
|
0.05
|
0.18
|
Stage 2
(%)
|
2.77
|
3.51
|
4.59
|
3.30
|
3.13
|
8.03
|
13.64
|
3.90
|
Stage 3
(%)
|
42.62
|
13.09
|
41.91
|
22.75
|
77.19
|
39.81
|
-
|
40.67
|
|
1.05
|
0.79
|
2.76
|
0.93
|
2.03
|
4.24
|
0.10
|
1.66
|
Notes:
(1) Fair value through other comprehensive income
(FVOCI).
(2) Includes £7 million (31 December 2020 -
£6 million) related to assets classified as
FVOCI.
(3) ECL provisions coverage is calculated as ECL
provisions divided by loans - amortised cost and
FVOCI.
(4) 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.
(5) The table shows gross loans only and excludes
amounts that are outside the scope of the ECL framework. Other
financial assets within the scope of the IFRS 9 ECL framework were
cash and balances at central banks totalling £139.2 billion
(31 December 2020 - £122.7 billion) and debt securities of
£51.2 billion (31 December 2020 - £53.8
billion).
Risk and capital management
Credit risk continued
Segment analysis - portfolio summary
Key points
●
Stage 1 and Stage 2
ECL reduced during Q1 2021, mainly in the Wholesale portfolios,
reflecting an improvement in underlying credit
metrics.
●
Stage 3 ECL
balances decreased due to the write-off of previously defaulted
debt. The extension of various COVID-19 related customer support
mechanisms has also mitigated new flows into default. It is
expected that defaults will increase once government support
mechanisms end.
●
Loan balances in
Stage 2 reduced during the quarter but remained elevated following
the deterioration in forward-looking probability of default (PD)
during H1 2020. In Q4 2020, the forecast economics improved,
resulting in reduced PDs and driving some migration of exposure
back into Stage 1 during Q1 2021.
●
The economic
scenarios driving the ECL requirement, as well as the model
performance considerations, were consistent with those described in
the NatWest Group plc 2020 Annual Report and Accounts, along with
further detail on various aspects of the IFRS 9
process.
Segment analysis - loans
Key points
●
Retail Banking: Balance sheet growth continued during Q1 2021,
driven by mortgages, where new lending remained strong. Unsecured
lending balances continued to reduce during Q1 2021, as customer
spend and demand for unsecured borrowing remained subdued, in line
with recent industry trends. Stage 2 balances decreased, primarily
as a result of the improved economic outlook since H1 2020, with
reduced PDs driving migration back into Stage 1 after conclusion of
the three month significant increase in credit risk "persistence"
period. Stage 3 ECL increased, predominantly driven by customers
exceeding 90 days past due after being unable to resume full
repayments following payment holidays that concluded in late 2020.
However, the various COVID-19 related customer support schemes (for
example, loan repayment holidays and the government job retention
scheme) continued to mitigate observable portfolio deterioration in
the short-term.
●
Commercial
Banking: Balance
sheet exposure reduced, with lower demand than Q3 and Q4 2020 for
new lending under government support schemes, as well as a decrease
in non-scheme lending. The uncertain outlook resulted in delayed
investment and low confidence among customers leading to the
repayment of revolving credit facilities and working capital
facilities as liquidity is optimised. Construction (in Property),
Retail and Leisure were the top three sectors for borrowers
accessing the government lending schemes. Stage 2 exposure
decreased further during the quarter. This was driven by modest
improvement in underlying credit metrics resulting in the migration
of exposure to Stage 1 coupled with underlying balance
reduction. For those balances that migrated to Stage 2 during
the period, consistent with prior periods, PD deterioration
remained the largest contributor to Stage 2 migration. The flow of
exposure into Stage 3 remained low during Q1 2021, as government
interventions and relief continue to mitigate against defaults.
Sector appetite continued to be regularly reviewed and was adjusted
for those sectors most affected by COVID-19, most notably a
reduction in off-balance sheet exposures in the Land Transport
& Logistics, Oil and Gas and Retail sectors. While Wholesale
forbearance increased significantly during the first half of 2020,
there has been a
reducing trend since then. This continued during Q1 2021 as
customers returned to normal repayment schedules. The Leisure,
Automotive and Services sectors represented the largest share of
forbearance flow in the Wholesale portfolio, by value, in Q1 2021.
Payment holidays and covenant waivers were the most common forms of
forbearance granted.
●
Ulster Bank RoI: Balance sheet exposure reduced with diminished
credit demand caused by ongoing COVID-19 disruption. The
weakening of the euro against sterling during the quarter further
contributed to this balance sheet reduction. The decrease in ECL
reflected continued improvements in the Stage 3 portfolio as well
as currency fluctuations.
Movement in ECL provision
The table below shows the main ECL provision movements during the
reporting period.
|
ECL provision
|
|
£m
|
At 1 January 2021
|
6,186
|
Changes
in economic forecasts
|
-
|
Changes
in risk metrics and exposure: Stage 1 and Stage 2
|
(198)
|
Changes
in risk metrics and exposure: Stage 3
|
58
|
Judgemental
changes: changes in post model adjustments for Stage 1, Stage 2 and
Stage 3
|
56
|
Write-offs
and other
|
(308)
|
At 31 March 2021
|
5,794
|
Key points
●
ECL reduced during
Q1 2021, reflecting a decrease in underlying exposures as well as
foreign exchange movements.
●
Stage 3 defaults
continued to be mitigated by COVID-19 support mechanisms.
Additionally, broader portfolio deterioration continued to be
subdued and resulted in favourable movements in IFRS 9 risk
metrics, which lead to some additional post model adjustments being
required to ensure provision adequacy.
Risk and capital management
Credit risk continued
Sector analysis
The table below shows ECL, by stage, for the Personal portfolio and
key sectors of the Wholesale portfolio, that continue to be
affected by COVID-19.
|
|
Off-balance sheet
|
|
|
|
Loans - amortised cost & FVOCI
|
Loan
|
|
Contingent
|
|
ECL provisions
|
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
commitments
|
|
liabilities
|
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
31 March 2021
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
|
£m
|
£m
|
£m
|
£m
|
Personal
|
176,310
|
26,576
|
3,212
|
206,098
|
37,221
|
|
43
|
|
181
|
949
|
1,201
|
2,331
|
Mortgages
|
168,293
|
22,389
|
2,484
|
193,166
|
12,523
|
|
2
|
|
49
|
309
|
605
|
963
|
Credit cards
|
2,236
|
1,219
|
85
|
3,540
|
14,571
|
|
-
|
|
59
|
214
|
65
|
338
|
Other personal
|
5,781
|
2,968
|
643
|
9,392
|
10,127
|
|
41
|
|
73
|
426
|
531
|
1,030
|
Wholesale
|
120,714
|
41,328
|
2,893
|
164,935
|
85,777
|
|
4,327
|
|
334
|
1,949
|
1,180
|
3,463
|
Property
|
24,299
|
12,055
|
1,236
|
37,590
|
16,948
|
|
505
|
|
126
|
435
|
485
|
1,046
|
Financial institutions
|
43,392
|
3,317
|
13
|
46,722
|
14,220
|
|
947
|
|
24
|
94
|
7
|
125
|
Sovereign
|
4,949
|
116
|
9
|
5,074
|
1,428
|
|
2
|
|
17
|
1
|
1
|
19
|
Corporate
|
48,074
|
25,840
|
1,635
|
75,549
|
53,181
|
|
2,873
|
|
167
|
1,419
|
687
|
2,273
|
Of
which:
|
|
|
|
|
|
|
|
|
|
|
|
|
Airlines
and aerospace
|
548
|
1,296
|
61
|
1,905
|
1,773
|
|
211
|
|
2
|
36
|
39
|
77
|
Automotive
|
4,376
|
1,760
|
124
|
6,260
|
4,173
|
|
97
|
|
15
|
67
|
16
|
98
|
Education
|
752
|
788
|
63
|
1,603
|
1,131
|
|
16
|
|
2
|
43
|
18
|
63
|
Health
|
2,880
|
2,624
|
176
|
5,680
|
670
|
|
13
|
|
13
|
202
|
51
|
266
|
Land
transport and logistics
|
3,004
|
1,658
|
94
|
4,756
|
3,110
|
|
184
|
|
7
|
102
|
31
|
140
|
Leisure
|
3,335
|
5,746
|
336
|
9,417
|
2,223
|
|
123
|
|
18
|
362
|
153
|
533
|
Oil
and gas
|
1,052
|
427
|
63
|
1,542
|
1,749
|
|
304
|
|
4
|
25
|
32
|
61
|
Retail
|
6,719
|
2,254
|
182
|
9,155
|
5,532
|
|
488
|
|
15
|
134
|
89
|
238
|
Total
|
297,024
|
67,904
|
6,105
|
371,033
|
122,998
|
|
4,370
|
|
515
|
2,898
|
2,381
|
5,794
|
31
December 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal
|
166,548
|
34,352
|
3,288
|
204,188
|
38,960
|
|
45
|
|
171
|
996
|
1,228
|
2,395
|
Mortgages
|
158,387
|
29,571
|
2,558
|
190,516
|
14,554
|
|
3
|
|
51
|
319
|
635
|
1,005
|
Credit cards
|
2,411
|
1,375
|
109
|
3,895
|
14,262
|
|
-
|
|
53
|
225
|
76
|
354
|
Other personal
|
5,750
|
3,406
|
621
|
9,777
|
10,144
|
|
42
|
|
67
|
452
|
517
|
1,036
|
Wholesale
|
120,576
|
44,565
|
3,070
|
168,211
|
89,845
|
|
4,785
|
|
348
|
2,085
|
1,358
|
3,791
|
Property
|
23,733
|
13,021
|
1,322
|
38,076
|
16,829
|
|
568
|
|
123
|
507
|
545
|
1,175
|
Financial institutions
|
44,002
|
3,624
|
17
|
47,643
|
15,935
|
|
1,076
|
|
23
|
90
|
8
|
121
|
Sovereign
|
4,751
|
204
|
4
|
4,959
|
1,585
|
|
2
|
|
14
|
1
|
2
|
17
|
Corporate
|
48,090
|
27,716
|
1,727
|
77,533
|
55,496
|
|
3,139
|
|
188
|
1,487
|
803
|
2,478
|
Of
which:
|
|
|
|
|
|
|
|
|
|
|
|
|
Airlines
and aerospace
|
753
|
1,213
|
41
|
2,007
|
1,888
|
|
215
|
|
2
|
42
|
25
|
69
|
Automotive
|
4,383
|
1,759
|
161
|
6,303
|
4,205
|
|
102
|
|
17
|
63
|
17
|
97
|
Education
|
821
|
754
|
63
|
1,638
|
1,016
|
|
16
|
|
2
|
41
|
17
|
60
|
Health
|
2,694
|
2,984
|
131
|
5,809
|
616
|
|
14
|
|
13
|
164
|
48
|
225
|
Land
transport and logistics
|
2,868
|
1,823
|
111
|
4,802
|
3,782
|
|
197
|
|
8
|
98
|
32
|
138
|
Leisure
|
3,299
|
6,135
|
385
|
9,819
|
2,199
|
|
125
|
|
22
|
439
|
204
|
665
|
Oil
and gas
|
1,178
|
300
|
83
|
1,561
|
2,225
|
|
346
|
|
4
|
20
|
59
|
83
|
Retail
|
6,702
|
2,282
|
187
|
9,171
|
5,888
|
|
512
|
|
18
|
112
|
101
|
231
|
Total
|
287,124
|
78,917
|
6,358
|
372,399
|
128,805
|
|
4,830
|
|
519
|
3,081
|
2,586
|
6,186
|
Key points
●
Personal: As noted earlier, ECL in Stage 1 and Stage 2
decreased due to continued reduction in unsecured balances and
subdued portfolio deterioration, maintaining the reduced PD levels
observed in Q4 2020. This resulted in a reduction of Stage 2 assets
during Q1 2021. The ECL coverage requirements were broadly stable
during Q1 2021.
●
Wholesale: On
and off-balance sheet exposure reduced during the quarter with
slowing demand for COVID-19 government lending schemes. There was a
£0.6 billion increase in government lending schemes in Q1 2021
(refer to the Wholesale Support Schemes table on the following page
for further information). When BBLS, CBILS and CLBILS closed,
approximately 315,000 applications across all the schemes had been
approved, totalling £14.7 billion in new lending, of which,
£13.5 billion had been drawdown. 62% of the total new lending
by value had been granted through BBLS. Construction
(in Property), Retail and Leisure remained the top three sectors
for borrowers accessing the government lending schemes. Sector
appetite continued to be regularly reviewed and where appropriate
adjusted, for those sectors most affected by COVID-19. Stage 2
exposures reduced during Q1 2021.
Risk and capital management
Credit risk continued
Wholesale support schemes
The table below shows the uptake of the Bounce Back Loan Scheme
(BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS)
and the Coronavirus Large Business Interruption Loan Scheme
(CLBILS) by Wholesale customers, by sector.
|
BBLS
|
|
CBILS
|
|
CLBILS
|
|
Approved
|
Drawdown
|
% of BBLS to
|
|
Approved
|
Drawdown
|
% of CBILS to
|
|
Approved
|
Drawdown
|
% of CLBILS to
|
31 March 2021
|
volume
|
amount (£m)
|
sector loans
|
|
volume
|
amount (£m)
|
sector loans
|
|
volume
|
amount (£m)
|
sector loans
|
Wholesale lending by sector
|
|
|
|
|
|
|
|
|
|
|
|
Airlines and aerospace
|
269
|
7
|
0.37%
|
|
20
|
9
|
0.47%
|
|
4
|
11
|
0.58%
|
Automotive
|
12,969
|
429
|
6.85%
|
|
584
|
150
|
2.40%
|
|
27
|
58
|
0.93%
|
Education
|
2,091
|
55
|
3.43%
|
|
120
|
76
|
4.74%
|
|
10
|
33
|
2.06%
|
Health
|
10,471
|
327
|
5.76%
|
|
621
|
100
|
1.76%
|
|
3
|
24
|
0.42%
|
Land transport and logistics
|
9,107
|
264
|
5.55%
|
|
392
|
102
|
2.14%
|
|
3
|
9
|
0.19%
|
Leisure
|
33,103
|
1,024
|
10.87%
|
|
2,162
|
565
|
6.00%
|
|
38
|
214
|
2.27%
|
Oil and gas
|
335
|
10
|
0.65%
|
|
14
|
7
|
0.45%
|
|
-
|
-
|
-
|
Retail
|
33,127
|
1,113
|
12.16%
|
|
1,638
|
430
|
4.70%
|
|
30
|
107
|
1.17%
|
Property
|
72,172
|
2,078
|
5.53%
|
|
2,465
|
692
|
1.84%
|
|
41
|
120
|
0.32%
|
Other (including Business
|
|
|
|
|
|
|
|
|
|
|
|
Banking)
|
124,611
|
3,321
|
3.82%
|
|
8,798
|
1,873
|
2.15%
|
|
86
|
275
|
0.32%
|
Total
|
298,255
|
8,628
|
5.23%
|
|
16,814
|
4,004
|
2.43%
|
|
242
|
851
|
0.52%
|
31
December 2020
|
|
|
|
|
|
Wholesale lending by sector
|
|
|
|
|
|
|
|
|
|
|
|
Airlines and aerospace
|
253
|
7
|
0.35%
|
|
21
|
9
|
0.45%
|
|
4
|
8
|
0.40%
|
Automotive
|
12,301
|
416
|
6.60%
|
|
553
|
139
|
2.21%
|
|
31
|
58
|
0.92%
|
Education
|
1,943
|
53
|
3.24%
|
|
111
|
73
|
4.46%
|
|
11
|
37
|
2.26%
|
Health
|
9,821
|
314
|
5.41%
|
|
601
|
101
|
1.74%
|
|
3
|
24
|
0.41%
|
Land transport and logistics
|
8,575
|
255
|
5.31%
|
|
365
|
97
|
2.02%
|
|
3
|
5
|
0.10%
|
Leisure
|
31,148
|
989
|
10.07%
|
|
1,983
|
512
|
5.21%
|
|
34
|
173
|
1.76%
|
Oil and gas
|
303
|
9
|
0.58%
|
|
15
|
8
|
0.51%
|
|
-
|
-
|
-
|
Retail
|
31,315
|
1,078
|
11.75%
|
|
1,548
|
416
|
4.54%
|
|
29
|
121
|
1.32%
|
Property
|
67,698
|
1,996
|
5.24%
|
|
2,350
|
664
|
1.74%
|
|
41
|
133
|
0.35%
|
Other (including Business
|
|
|
|
|
|
|
|
|
|
|
|
Banking)
|
118,486
|
3,181
|
3.57%
|
|
8,504
|
1,752
|
1.97%
|
|
86
|
267
|
0.30%
|
Total
|
281,843
|
8,298
|
4.93%
|
|
16,051
|
3,771
|
2.24%
|
|
242
|
826
|
0.49%
|
Notes:
(1) The table contains some cases which as at 31 March 2021
were approved but not yet drawn down. Approved limits as at 31
March 2021 were as follows: BBLS - £9.1 billion (94% drawn);
CBILS - £4.3 billion (94% drawn); and CLBILS - £1.3
billion (64% drawn).
(2) The UK Government schemes ended for new applications on
31 March 2021. NatWest Group will continue to help customers
recover and grow, through Pay as You Grow for existing BBLS
customers and supporting access to finance through the new Recovery
Loan Scheme.
Risk and capital management
Capital, liquidity and funding risk
Introduction
NatWest Group continually ensures a comprehensive approach is taken
to the management of Capital, Liquidity and Funding,
underpinned by frameworks, risk appetite and policies, to manage
and mitigate Capital, Liquidity and Funding risks. The framework
ensures the tools and capability are in place to facilitate the
management and mitigation of risk ensuring that NatWest Group
operates within its regulatory requirements and risk
appetite.
Within the 2020 Annual Report and Accounts, NatWest Group outlined
a number of COVID-19 specific relief measures which impacted
capital and leverage ratios during the year. Below is the one
relief measure which was only a temporary amendment and therefore
is reverting to the previous rules in 2021.
●
Prudential Valuation Adjustment
(PVA) - From
1 January 2021 the aggregation factor reverts back to 50% from 66%.
This has increased NatWest Group's PVA deduction by c.£85
million.
The CRR quick fix addressing COVID-19 relief measures also resulted
in the acceleration of a number of changes introduced in CRR2
including prudential amortisation for software, an Infrastructure
supporting factor, and a broadening of the SME supporting
factor.
Key developments
CET1
|
The
CET1 ratio decreased by 30 basis points to 18.2% reflecting the
impact of the directed buy back and associated pension contribution
of £1.2 billion (72 basis points), foreseeable dividend
accrual of £0.2 billion (11 basis points), partially offset by
the reduction in RWAs (c.60 basis points), attributable profit and
other reserve movements.
|
Total RWAs
|
Total
RWAs decreased by £5.6 billion during the period, mainly
reflecting a decrease in credit risk RWAs of £4.8 billion as
well as a reduction in operational risk RWAs of £0.9 billion
following the annual recalculation in Q1 2021. The decrease in
credit risk RWAs was mainly driven by reductions in Commercial
Banking, Retail Banking and Ulster Bank RoI. Counterparty
credit risk RWAs reduced by £0.5 billion during the period as
a result of reduced exposures in NatWest Markets. There were
offsetting increases in market risk RWAs of £0.6 billion,
mainly driven by higher SVaR-based RWAs.
|
CRR leverage ratio
|
The CRR
leverage ratio decreased c.20 basis points to 5.0% predominantly
due to a £1.0 billion decrease in Tier 1 capital in addition
to an £11.2 billion increase in the leverage exposure driven
primarily by cash and balances at central banks.
|
UK leverage ratio
|
The UK
leverage ratio decreased c.20 basis points to 6.2% driven by a
£1.0 billion decrease in Tier 1 capital.
|
Liquidity portfolio
|
The
liquidity portfolio in Q1 2021 remained broadly stable at £263
billion, with primary liquidity decreasing by £0.3 billion to
£170 billion. The decrease in primary liquidity was primarily
driven by repayment of TFSME funding, buy back of shares owned by
the UK Government, pension fund contributions, liability management
exercise and the purchase of Metro Bank loans; offset by an
increase in deposits and a methodology change to include UBI DAC
cash at central banks. The increase in secondary liquidity of
£0.7 billion is driven by unencumbrance of assets following
TFSME repayment during the quarter.
|
Risk and capital management
Capital, liquidity and funding risk continued
Maximum Distributable Amount (MDA) and Minimum Capital
Requirements
NatWest Group is subject to minimum capital requirements relative
to RWAs. The table below summarises the minimum capital
requirements (the sum of Pillar 1 and Pillar 2A), and the
additional capital buffers which are held in excess of the
regulatory minimum requirements and are usable in
stress.
Where the CET1 ratio falls below the sum of the minimum capital and
the combined buffer requirement, there is a subsequent automatic
restriction on the amount available to service discretionary
payments, known as the MDA. Note that different requirements apply
to individual legal entities or sub-groups and that the table shown
does not reflect any incremental PRA buffer requirements, which are
not disclosable.
The current capital position provides significant headroom above
both our minimum requirements and our MDA threshold
requirements.
Type
|
CET1
|
Total Tier 1
|
Total capital
|
Pillar
1 requirements
|
4.5%
|
6.0%
|
8.0%
|
Pillar
2A requirements
|
2.0%
|
2.6%
|
3.5%
|
Minimum
Capital Requirements
|
6.5%
|
8.6%
|
11.5%
|
Capital
conservation buffer
|
2.5%
|
2.5%
|
2.5%
|
Countercyclical
capital buffer (1)
|
-
|
-
|
-
|
MDA
Threshold (2)
|
9.0%
|
|
n/a
|
n/a
|
Subtotal
|
9.0%
|
|
11.1%
|
14.0%
|
Capital
ratios at 31 March 2021
|
18.2%
|
21.5%
|
24.0%
|
Headroom (3)
|
9.2%
|
10.4%
|
10.0%
|
Notes:
(1) Many countries announced reductions in their
countercyclical capital buffer rates in response to COVID-19. Most
notably for NatWest Group, the Financial Policy Committee reduced
the UK rate from 1% to 0% effective from 11 March 2020. The CBI
also announced a reduction of the Republic of Ireland rate from 1%
to 0% effective from 1 April 2020.
(2) Pillar 2A requirements for NatWest Group are set on
a nominal capital basis, which result in an implied 9.0%
MDA.
(3) The headroom does not reflect excess
distributable capital and may vary over time.
Risk and capital management
Capital, liquidity and funding risk continued
Capital and leverage ratios
The table below sets out the key capital and leverage
ratios.
|
CRR basis (1)
|
|
31 March
|
31
December
|
31
March
|
|
2021
|
2020
|
2020
|
Capital adequacy ratios
|
%
|
%
|
%
|
CET1
|
18.2
|
18.5
|
16.6
|
Tier
1
|
21.5
|
21.4
|
18.8
|
Total
|
24.0
|
24.5
|
21.4
|
|
|
|
|
Capital
|
£m
|
£m
|
£m
|
Tangible
equity
|
30,126
|
31,712
|
32,990
|
|
|
|
|
Prudential
valuation adjustment
|
(436)
|
(286)
|
(531)
|
Deferred
tax assets
|
(750)
|
(760)
|
(722)
|
Own
credit adjustments
|
6
|
(1)
|
(519)
|
Pension
fund assets
|
(570)
|
(579)
|
(488)
|
Cash
flow hedging reserve
|
38
|
(229)
|
(259)
|
Foreseeable
ordinary dividends
|
(547)
|
(364)
|
-
|
Foreseeable
charges
|
-
|
(266)
|
-
|
Prudential
amortisation of software development costs
|
524
|
473
|
-
|
Adjustments
under IFRS 9 transitional arrangements
|
1,655
|
1,747
|
296
|
Total deductions
|
(80)
|
(265)
|
(2,223)
|
|
|
|
|
CET1
capital
|
30,046
|
31,447
|
30,767
|
AT1
capital
|
5,380
|
4,983
|
4,051
|
Tier 1
capital
|
35,426
|
36,430
|
34,818
|
Tier 2
capital
|
4,118
|
5,255
|
4,883
|
Total regulatory capital
|
39,544
|
41,685
|
39,701
|
|
|
|
|
Risk-weighted assets
|
|
|
|
Credit
risk
|
125,131
|
129,914
|
136,354
|
Counterparty
credit risk
|
8,579
|
9,104
|
13,917
|
Market
risk
|
9,962
|
9,362
|
12,998
|
Operational
risk
|
21,031
|
21,930
|
21,930
|
Total RWAs
|
164,703
|
170,310
|
185,199
|
|
|
|
|
Leverage
|
|
|
|
Cash
and balances at central banks*
|
140,347
|
124,489
|
81,085
|
Trading
assets
|
65,558
|
68,990
|
81,843
|
Derivatives
|
122,955
|
166,523
|
208,734
|
Financial
assets*
|
418,290
|
422,647
|
421,456
|
Other
assets
|
22,626
|
16,842
|
24,526
|
Total assets
|
769,776
|
799,491
|
817,644
|
Derivatives
|
|
|
|
- netting and variation margin
|
(126,250)
|
(172,658)
|
(220,973)
|
- potential future exposures
|
38,279
|
38,171
|
46,254
|
Securities
financing transactions gross up
|
3,249
|
1,179
|
2,484
|
Other
off balance sheet items
|
43,734
|
45,853
|
39,580
|
Regulatory
deductions and other adjustments
|
(14,535)
|
(8,943)
|
(8,818)
|
CRR
leverage exposure
|
714,253
|
703,093
|
676,171
|
|
|
|
|
CRR leverage ratio % (2)
|
5.0
|
5.2
|
5.1
|
|
|
|
|
UK
leverage exposure
|
567,959
|
572,558
|
603,070
|
UK leverage ratio % (3)
|
6.2
|
6.4
|
5.8
|
*31 March 2020 has been restated for the accounting policy change
for balances held with central banks. Refer to Accounting policy
changes effective 1 January 2020 on page 264 in the NatWest Group
plc 2020 Annual Report and Accounts for further
details.
Notes:
(1) Based on CRR end-point
including the IFRS 9 transitional adjustment of £1,655
million. Excluding this adjustment, the CET1 ratio would be 17.2%.
The amended article for the prudential treatment of software assets
was implemented in December 2020, excluding this adjustment the
CET1 ratio at 31 March 2021 would be 18.0%.
(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
4.7%.
(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 6.0%.
Risk and capital management
Capital, liquidity and funding risk continued
Capital flow statement
The table below analyses the movement in CET1, AT1 and Tier 2
capital for the three months ended 31 March 2021.
|
CET1
|
AT1
|
Tier 2
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
At 1 January 2021
|
31,447
|
4,983
|
5,255
|
41,685
|
Attributable
profit for the period
|
620
|
-
|
-
|
620
|
Own
credit
|
7
|
-
|
-
|
7
|
Share
capital and reserve movements in respect of employee share
schemes
|
20
|
-
|
-
|
20
|
Directed
buy back
|
(1,231)
|
-
|
-
|
(1,231)
|
Foreign
exchange reserve
|
(348)
|
-
|
-
|
(348)
|
FVOCI
reserve
|
(89)
|
-
|
-
|
(89)
|
Goodwill
and intangibles deduction
|
40
|
-
|
-
|
40
|
Deferred
tax assets
|
10
|
-
|
-
|
10
|
Prudential
valuation adjustments
|
(150)
|
-
|
-
|
(150)
|
New
issues of capital instruments
|
-
|
397
|
-
|
397
|
Redemption
of capital instruments
|
-
|
-
|
(1,456)
|
(1,456)
|
Net
dated subordinated debt instruments
|
-
|
-
|
453
|
453
|
Foreign
exchange movements
|
-
|
-
|
(62)
|
(62)
|
Foreseeable
ordinary dividends
|
(183)
|
-
|
-
|
(183)
|
Adjustment
under IFRS 9 transitional arrangements
|
(92)
|
-
|
-
|
(92)
|
Other
movements
|
(5)
|
-
|
(72)
|
(77)
|
At 31 March 2021
|
30,046
|
5,380
|
4,118
|
39,544
|
Key points
●
CET1
decrease primarily due to the impact of the directed buy back and
associated pension contribution of £1.2 billion, foreseeable
dividend accrual of £0.2 billion and other offsetting
items.
●
AT1
reflects the £400 million 4.5% Reset Perpetual Subordinated
Contingent Convertible Notes issued in March
2021.
●
Tier
2 movement primarily due to the redemption of own debt of £1.5
billion.
Risk and capital management
Capital, liquidity and funding risk continued
Risk-weighted assets
The table below analyses the movement in RWAs during the period, by
key drivers.
|
|
Counterparty
|
|
Operational
|
|
|
Credit risk
|
credit risk
|
Market risk
|
risk
|
Total
|
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
At 1 January 2021
|
129.9
|
9.1
|
9.4
|
21.9
|
170.3
|
Foreign
exchange movement
|
(1.1)
|
(0.2)
|
-
|
-
|
(1.3)
|
Business
movement
|
(2.2)
|
(0.3)
|
0.9
|
(0.9)
|
(2.5)
|
Risk parameter changes (1)
|
(1.0)
|
-
|
-
|
-
|
(1.0)
|
Model
updates
|
(0.5)
|
-
|
(0.3)
|
-
|
(0.8)
|
At 31 March 2021
|
125.1
|
8.6
|
10.0
|
21.0
|
164.7
|
The table below analyses segmental RWAs.
|
|
|
|
International Banking & Markets
|
|
Central
|
|
|
Retail
|
Private
|
Commercial
|
RBS
|
NatWest
|
Ulster
|
items &
|
|
|
Banking
|
Banking
|
Banking
|
International
|
Markets
|
Bank RoI
|
other
|
Total
|
Total RWAs
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
At 1 January 2021
|
36.7
|
10.9
|
75.1
|
7.5
|
26.9
|
11.8
|
1.4
|
170.3
|
Foreign
exchange movement
|
-
|
-
|
(0.3)
|
(0.1)
|
(0.4)
|
(0.5)
|
-
|
(1.3)
|
Business
movement
|
(0.9)
|
0.3
|
(2.5)
|
0.3
|
0.3
|
(0.2)
|
0.2
|
(2.5)
|
Risk parameter changes (1)
|
(0.8)
|
-
|
(0.2)
|
-
|
-
|
-
|
-
|
(1.0)
|
Model
updates
|
-
|
-
|
(0.5)
|
-
|
(0.3)
|
-
|
-
|
(0.8)
|
At 31 March 2021
|
35.0
|
11.2
|
71.6
|
7.7
|
26.5
|
11.1
|
1.6
|
164.7
|
|
|
|
|
|
|
|
|
|
Credit
risk
|
27.9
|
9.8
|
63.3
|
6.6
|
5.7
|
10.2
|
1.6
|
125.1
|
Counterparty
credit risk
|
0.1
|
0.1
|
0.2
|
0.1
|
8.1
|
-
|
-
|
8.6
|
Market
risk
|
-
|
-
|
0.1
|
-
|
9.9
|
-
|
-
|
10.0
|
Operational
risk
|
7.0
|
1.3
|
8.0
|
1.0
|
2.8
|
0.9
|
-
|
21.0
|
Total
RWAs
|
35.0
|
11.2
|
71.6
|
7.7
|
26.5
|
11.1
|
1.6
|
164.7
|
Note:
(1) Risk parameter changes relate to changes in credit
quality metrics of customers and counterparties (such as
probability of default and loss given default) as well as internal
ratings based model changes relating to counterparty credit risk in
line with European Banking Authority Pillar 3
Guidelines.
Key point
●
|
Total
RWAs decreased by £5.6 billion during the period:
o Credit risk RWAs
reduced by £4.8 billion mainly driven by a decrease in lending
and active capital management in Commercial Banking along with
lower unsecured balances and improved risk metrics for key customer
portfolios within Retail Banking. In addition, favourable
foreign exchange movements resulted in further
reductions.
o Counterparty credit
risk RWAs reduced by £0.5 billion, mainly reflecting reduced
IMM exposures in NatWest Markets.
o The £0.6 billion
increase in market risk RWAs reflected an increase in modelled
market risk mainly driven by higher SVaR-based RWAs.
o Operational risk RWAs
decreased by £0.9 billion following the annual recalculation
in Q1 2021.
|
Risk and capital management
Capital, liquidity and funding risk continued
Credit risk exposure at default (EAD) and risk-weighted assets
(RWAs)
The table below analyses credit risk EADs and RWAs by on and off
balance sheet.
|
|
|
|
|
International Banking & Markets
|
|
|
|
|
|
Retail
|
Private
|
Commercial
|
RBS
|
NatWest
|
Ulster
|
Central items
|
|
|
Banking
|
Banking
|
Banking
|
International
|
Markets
|
Bank RoI
|
& other
|
Total
|
31 March 2021
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
EAD
|
On balance sheet
|
265.8
|
25.2
|
153.9
|
37.0
|
31.3
|
26.7
|
1.1
|
541.0
|
Off balance sheet
|
26.9
|
0.3
|
28.5
|
4.4
|
4.9
|
2.1
|
0.1
|
67.2
|
Total
|
292.7
|
25.5
|
182.4
|
41.4
|
36.2
|
28.8
|
1.2
|
608.2
|
|
|
|
|
|
|
|
|
|
|
RWAs
|
On balance sheet
|
25.6
|
9.6
|
49.5
|
5.4
|
3.8
|
9.2
|
1.6
|
104.7
|
Off balance sheet
|
2.3
|
0.2
|
13.8
|
1.2
|
1.9
|
1.0
|
-
|
20.4
|
Total
|
27.9
|
9.8
|
63.3
|
6.6
|
5.7
|
10.2
|
1.6
|
125.1
|
31
December 2020
|
|
|
|
|
|
|
|
|
EAD
|
On balance sheet
|
254.7
|
23.7
|
151.4
|
34.0
|
33.4
|
27.4
|
0.9
|
525.5
|
Off balance sheet
|
28.3
|
0.3
|
29.3
|
5.1
|
5.5
|
2.2
|
0.1
|
70.8
|
Total
|
283.0
|
24.0
|
180.7
|
39.1
|
38.9
|
29.6
|
1.0
|
596.3
|
|
|
|
|
|
|
|
|
|
|
RWAs
|
On balance sheet
|
26.7
|
9.4
|
52.5
|
5.1
|
4.1
|
9.6
|
1.4
|
108.8
|
Off balance sheet
|
2.5
|
0.2
|
13.8
|
1.4
|
2.1
|
1.1
|
-
|
21.1
|
Total
|
29.2
|
9.6
|
66.3
|
6.5
|
6.2
|
10.7
|
1.4
|
129.9
|
31
March 2020
|
|
|
|
|
|
|
|
|
EAD
|
On balance sheet
|
225.3
|
20.3
|
140.3
|
32.9
|
36.9
|
27.0
|
0.5
|
483.2
|
Off balance sheet
|
29.1
|
0.3
|
25.4
|
4.0
|
7.2
|
2.1
|
0.5
|
68.6
|
Total
|
254.4
|
20.6
|
165.7
|
36.9
|
44.1
|
29.1
|
1.0
|
551.8
|
|
|
|
|
|
|
|
|
|
|
RWAs
|
On balance sheet
|
27.6
|
8.8
|
56.6
|
4.6
|
7.2
|
10.5
|
1.2
|
116.5
|
Off balance sheet
|
3.0
|
0.2
|
11.5
|
1.2
|
2.7
|
1.1
|
0.2
|
19.9
|
Total
|
30.6
|
9.0
|
68.1
|
5.8
|
9.9
|
11.6
|
1.4
|
136.4
|
Liquidity portfolio
The table below shows the liquidity portfolio by product, with
primary liquidity aligned to internal stressed outflow coverage and
regulatory liquidity coverage ratio (LCR) categorisation. Secondary
liquidity comprises assets eligible for discount at central banks,
which do not form part of the liquid asset portfolio for LCR or
internal stressed outflow coverage purposes.
|
Liquidity value
|
|
31 March 2021
|
|
30 December 2020
|
|
31 March 2020
|
|
NatWest
|
|
NatWest
|
|
NatWest
|
|
Group (1)
|
|
Group (1)
|
|
Group (1)
|
|
£m
|
|
£m
|
|
£m
|
Cash
and balances at central banks
|
137,410
|
|
115,820
|
|
73,772
|
AAA to AA- rated governments
|
29,406
|
|
50,901
|
|
55,879
|
A+ and lower rated governments
|
7
|
|
79
|
|
1,362
|
Government guaranteed issuers, public sector entities
and
|
|
|
|
|
|
government sponsored entities
|
250
|
|
272
|
|
225
|
International organisations and multilateral development
banks
|
2,825
|
|
3,140
|
|
2,431
|
LCR
level 1 bonds
|
32,488
|
|
54,392
|
|
59,897
|
LCR
level 1 assets
|
169,898
|
|
170,212
|
|
133,669
|
LCR
level 2 assets
|
114
|
|
124
|
|
-
|
Non-LCR
eligible assets
|
-
|
|
-
|
|
82
|
Primary
liquidity
|
170,012
|
|
170,336
|
|
133,751
|
Secondary liquidity (2)
|
92,665
|
|
91,985
|
|
67,668
|
Total
liquidity value
|
262,677
|
|
262,321
|
|
201,419
|
Notes:
(1)
|
NatWest Group includes the UK Domestic Liquidity Sub-Group (NWB
Plc, RBS plc, Coutts & Co and Ulster Bank Limited), NatWest
Markets Plc and other significant operating subsidiaries that hold
liquidity portfolios. These include The Royal Bank of Scotland
International Limited, NWM N.V. and Ulster Bank Ireland DAC who
hold managed portfolios that comply with local regulations that may
differ from PRA rules.
|
(2)
(3)
|
Comprises
assets eligible for discounting at the Bank of England and other
central banks.
Following a change in methodology in our internal stressed outflow
coverage metric, cash placed at Central Bank of Ireland within UBI
DAC is now reported in the liquidity portfolio.
|
Condensed consolidated income statement for the period ended 31
March 2021 (unaudited)
|
|
|
Quarter ended
|
|
|
|
|
31 March
|
31
December
|
31
March
|
|
|
|
|
2021
|
2020
|
2020
|
|
|
|
|
£m
|
£m
|
£m
|
Interest
receivable
|
|
|
|
2,349
|
2,369
|
2,683
|
Interest
payable
|
|
|
|
(418)
|
(398)
|
(741)
|
Net interest income
|
|
|
|
1,931
|
1,971
|
1,942
|
Fees
and commissions receivable
|
|
|
|
647
|
653
|
748
|
Fees
and commissions payable
|
|
|
|
(141)
|
(131)
|
(175)
|
Income
from trading activities
|
|
|
|
160
|
71
|
592
|
Other operating income (1)
|
|
|
|
62
|
(29)
|
55
|
Non-interest income
|
|
|
|
728
|
564
|
1,220
|
Total income
|
|
|
|
2,659
|
2,535
|
3,162
|
Staff
costs
|
|
|
|
(985)
|
(986)
|
(992)
|
Premises
and equipment
|
|
|
|
(248)
|
(321)
|
(258)
|
Other
administrative expenses
|
|
|
|
(377)
|
(764)
|
(398)
|
Depreciation
and amortisation
|
|
|
|
(205)
|
(270)
|
(193)
|
Operating expenses
|
|
|
|
(1,815)
|
(2,341)
|
(1,841)
|
Profit before impairment releases/(losses)
|
|
|
|
844
|
194
|
1,321
|
Impairment
releases/(losses)
|
|
|
|
102
|
(130)
|
(802)
|
Operating profit before tax
|
|
|
|
946
|
64
|
519
|
Tax
charge
|
|
|
|
(233)
|
(84)
|
(188)
|
Profit/(loss) for the period
|
|
|
|
713
|
(20)
|
331
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
Ordinary
shareholders
|
|
|
|
620
|
(109)
|
288
|
Preference
shareholders
|
|
|
|
5
|
5
|
8
|
Paid-in
equity holders
|
|
|
|
87
|
83
|
97
|
Non-controlling
interests
|
|
|
|
1
|
1
|
(62)
|
|
|
|
|
|
|
|
Earnings per ordinary share
|
|
|
|
5.1p
|
(0.9)p
|
2.4p
|
Earnings per ordinary share - fully diluted
|
|
|
|
5.1p
|
(0.9)p
|
2.4p
|
Note:
(1) 31 March 2021 includes £118 million
loss on redemption of own debt.
Condensed consolidated statement of comprehensive income for the
period ended 31 March 2021 (unaudited)
|
|
|
Quarter ended
|
|
|
|
|
31 March
|
31
December
|
31
March
|
|
|
|
|
2021
|
2020
|
2020
|
|
|
|
|
£m
|
£m
|
£m
|
Profit/(loss) for the period
|
|
|
|
713
|
(20)
|
331
|
Items that do not qualify for reclassification
|
|
|
|
|
|
|
Remeasurement of retirement benefit
schemes (1)
|
|
|
|
(508)
|
(50)
|
(22)
|
(Loss)/profit
on fair value of credit in financial liabilities
|
|
|
|
|
|
|
designated as at FVTPL due to own credit
risk
|
|
|
|
(7)
|
(72)
|
188
|
FVOCI
financial assets
|
|
|
|
1
|
(21)
|
(253)
|
Tax (1)
|
|
|
|
137
|
29
|
-
|
|
|
|
|
(377)
|
(114)
|
(87)
|
Items that do qualify for reclassification
|
|
|
|
|
|
|
FVOCI
financial assets
|
|
|
|
(118)
|
81
|
(143)
|
Cash
flow hedges
|
|
|
|
(358)
|
(93)
|
312
|
Currency
translation
|
|
|
|
(343)
|
(149)
|
358
|
Tax
|
|
|
|
113
|
(4)
|
(53)
|
|
|
|
|
(706)
|
(165)
|
474
|
Other comprehensive (loss)/income after tax
|
|
|
|
(1,083)
|
(279)
|
387
|
Total comprehensive (loss)/income for the period
|
|
|
|
(370)
|
(299)
|
718
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
Ordinary
shareholders
|
|
|
|
(463)
|
(389)
|
662
|
Preference
shareholders
|
|
|
|
5
|
5
|
8
|
Paid-in
equity holders
|
|
|
|
87
|
83
|
97
|
Non-controlling
interests
|
|
|
|
1
|
2
|
(49)
|
|
|
|
|
(370)
|
(299)
|
718
|
Note:
(1) In March 2021, there was an
agreement with HM Treasury to buy 591 million ordinary shares in
the Company from UK Government Investments Ltd (UKGI), at 190.5p
per share. This triggered NatWest Group to contribute £500
million to its main pension scheme in line with the memorandum of
understanding announced on 17 April 2018. After tax relief, this
contribution reduced total equity by £365
million.
Condensed consolidated balance sheet as at 31 March
2021 (unaudited)
|
31 March
|
31
December
|
31
March
|
2021
|
2020
|
2020
|
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
Cash
and balances at central banks*
|
140,347
|
124,489
|
81,085
|
Trading
assets
|
65,558
|
68,990
|
81,843
|
Derivatives
|
122,955
|
166,523
|
208,734
|
Settlement
balances
|
8,013
|
2,297
|
9,840
|
Loans
to banks - amortised cost*
|
7,239
|
6,955
|
9,306
|
Loans
to customers - amortised cost
|
358,728
|
360,544
|
351,328
|
Other
financial assets
|
52,323
|
55,148
|
60,822
|
Intangible
assets
|
6,666
|
6,655
|
6,619
|
Other
assets
|
7,947
|
7,890
|
8,067
|
Total assets
|
769,776
|
799,491
|
817,644
|
|
|
|
|
Liabilities
|
|
|
|
Bank deposits
|
18,610
|
20,606
|
26,733
|
Customer
deposits
|
453,308
|
431,739
|
384,800
|
Settlement
balances
|
8,234
|
5,545
|
8,905
|
Trading
liabilities
|
70,508
|
72,256
|
80,767
|
Derivatives
|
116,015
|
160,705
|
204,477
|
Other
financial liabilities
|
43,743
|
45,811
|
47,870
|
Subordinated
liabilities
|
8,078
|
9,962
|
10,898
|
Notes
in circulation
|
2,705
|
2,655
|
2,009
|
Other
liabilities
|
5,926
|
6,388
|
7,062
|
Total liabilities
|
727,127
|
755,667
|
773,521
|
|
|
|
|
Equity
|
|
|
|
Ordinary
shareholders' interests
|
36,792
|
38,367
|
39,609
|
Other
owners' interests
|
5,892
|
5,493
|
4,554
|
Owners' equity
|
42,684
|
43,860
|
44,163
|
Non-controlling
interests
|
(35)
|
(36)
|
(40)
|
Total equity
|
42,649
|
43,824
|
44,123
|
Total liabilities and equity
|
769,776
|
799,491
|
817,644
|
*31 March 2020 has been restated for the accounting policy change
for balances held with central banks. Refer to Accounting policy
changes effective 1 January 2020 on page 264 in the NatWest Group
plc 2020 Annual Report and Accounts for further
details.
Condensed consolidated statement of changes in equity for the
period ended 31 March 2021 (unaudited)
|
Share
|
|
|
|
|
|
|
capital and
|
|
|
|
Total
|
Non
|
|
|
statutory
|
Paid-in
|
Retained
|
Other
|
owners'
|
controlling
|
Total
|
|
reserves (1)
|
equity
|
earnings
|
reserves*
|
equity
|
interests
|
equity
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 1 January 2021
|
13,216
|
4,999
|
12,567
|
13,078
|
43,860
|
(36)
|
43,824
|
Profit
attributable to ordinary shareholders
|
|
|
|
|
|
|
|
and other equity owners
|
-
|
-
|
712
|
-
|
712
|
1
|
713
|
Other
comprehensive income
|
|
|
|
|
|
|
|
- Realised gains in period
|
|
|
|
|
|
|
|
on FVOCI
equity shares
|
-
|
-
|
(3)
|
3
|
-
|
-
|
-
|
- Remeasurement of retirement
|
|
|
|
|
|
|
|
benefit schemes (2)
|
-
|
-
|
(508)
|
-
|
(508)
|
-
|
(508)
|
- Changes in fair value of credit in
financial
|
|
|
|
|
|
|
|
liabilities
at FVTPL
|
-
|
-
|
(7)
|
-
|
(7)
|
-
|
(7)
|
- Other amounts recognised in
equity
|
-
|
-
|
-
|
(799)
|
(799)
|
-
|
(799)
|
- Amount transferred from equity to
earnings
|
-
|
-
|
-
|
(19)
|
(19)
|
-
|
(19)
|
- Tax
|
-
|
-
|
139
|
111
|
250
|
-
|
250
|
Preference
share and paid-in equity
|
|
|
|
|
|
|
|
dividends paid
|
-
|
-
|
(92)
|
-
|
(92)
|
-
|
(92)
|
Shares repurchased during the year (3)
|
-
|
-
|
(748)
|
-
|
(748)
|
-
|
(748)
|
Shares and securities issued during the
year (4)
|
87
|
399
|
-
|
-
|
486
|
-
|
486
|
Share-based
payments
|
-
|
-
|
(67)
|
-
|
(67)
|
-
|
(67)
|
Movement in own shares held (3)
|
(384)
|
-
|
-
|
-
|
(384)
|
-
|
(384)
|
At 31 March 2021
|
12,919
|
5,398
|
11,993
|
12,374
|
42,684
|
(35)
|
42,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 March
|
|
|
|
|
|
|
|
2021
|
Attributable to:
|
|
|
|
|
£m
|
Ordinary
shareholders
|
|
|
|
|
|
|
36,792
|
Preference
shareholders
|
|
|
|
|
|
|
494
|
Paid-in
equity holders
|
|
|
|
|
|
|
5,398
|
Non-controlling
interests
|
|
|
|
|
|
|
(35)
|
|
|
|
|
|
|
|
42,649
|
*Other reserves consists of:
|
|
|
|
|
|
|
Merger
reserve
|
|
|
|
|
|
|
10,881
|
FVOCI
reserve
|
|
|
|
|
|
|
271
|
Cash
flow hedging reserve
|
|
|
|
|
|
|
(38)
|
Foreign
exchange reserve
|
|
|
|
|
|
|
1,260
|
|
|
|
|
|
|
|
12,374
|
Notes:
(1) Share capital and statutory
reserves includes share premium, capital redemption reserve and own
shares held.
(2) The purchase of ordinary shares
triggered NatWest Group to contribute £500 million to its main
pension scheme in line with the memorandum of understanding
announced on 17 April 2018. After tax relief, this contribution
reduced total equity by £365 million.
(3) In March 2021, there was an
agreement with HM Treasury to buy 591 million ordinary shares in
the Company from UK Government Investments Ltd (UKGI), at 190.5p
per share for the total consideration of £1.13 billion.
NatWest Group cancelled 391 million of the purchased ordinary
shares, amounting to £744 million excluding fees, and held the
remaining 200 million in own shares held, amounting to £381
million excluding fees. The nominal value of the Share cancellation
has been transferred to the capital redemption
reserve.
(4) AT1 capital notes, classified as
paid-in equity, totalling £400 million less fees were issued
in March 2021.
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.
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 a period of not less than twelve months.
Accordingly, the results for the period ended 31 March 2021 have
been prepared on a going concern basis.
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 2021, the accounting policies have been
updated to reflect the adoption of amendments to IFRS 16 (Leases)
covering COVID-19 Related Rent Concessions. The effect of the
amendment on NatWest Group's accounts is immaterial.
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 referenced on page 268 of the NatWest Group plc 2020
Annual Report and Accounts. Estimation uncertainty has been
affected by the COVID-19 pandemic. 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.
It was
announced in the UK Government's Budget on 3 March 2021 that the
main UK corporation tax rate will increase from 19% to 25% from 1
April 2023. This legislative change has not yet been substantively
enacted. The UK Government has also announced a review of the
current bank surcharge rate of 8% to ensure that the combined rate
of corporation tax, applicable to banking entities, does not
increase substantially from its current level when the proposed
change to the main UK corporation tax rate comes into effect.
NatWest Group has not made an estimate of the impact of the post
balance sheet date change in the main UK corporation tax rate on
the basis that it is uncertain what the combined rate of
corporation tax, applicable to banking entities from 1 April 2023,
will be until the UK Government has completed its review of the
bank surcharge.
Information used for significant estimates
The COVID-19 pandemic has continued to cause significant economic
and social disruption. 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).
Notes
3. Litigation and regulatory matters
NatWest Group plc's 2020 Annual Report and Accounts, issued on 19
February 2021, included disclosures about NatWest Group's
litigation and regulatory matters in Note 26. Set out below are the
material developments in those matters since publication of the
2020 Annual Report and Accounts.
Litigation
London Interbank Offered Rate (LIBOR) and other rates
litigation
NWM Plc is a defendant in a class action relating to alleged
manipulation of the Singapore Interbank Offered Rate and Singapore
Swap Offer Rate, pending in the United States District Court for
the Southern District of New York (SDNY). In July 2019, the SDNY
dismissed the complaint for lack of subject matter jurisdiction,
but on 17 March 2021, that decision was reversed by the United
States Court of Appeals for the Second Circuit. The case will now
return to the SDNY for further litigation.
Government securities antitrust litigation
NWMSI and certain other US broker-dealers are defendants in a
consolidated antitrust class action pending in the SDNY on behalf
of persons who transacted in US Treasury securities or derivatives
based on such instruments, including futures and options. The
complaint was dismissed on 31 March 2021, subject to the right of
the plaintiffs to replead their case.
EUA trading litigation
Following judgment against NWM Plc in March 2020 in the claim by
ten companies (all in liquidation) and their respective
liquidators, the High Court in October 2020, quantified
damages against NWM Plc at £45 million plus interest and costs
and permitted NWM Plc to appeal its judgment to the Court of
Appeal. The appeal hearing took place in March 2021 and judgment is
awaited.
US Anti-Terrorism Act litigation
NWB Plc is defending lawsuits filed in the United States District
Court for the Eastern District of New York by a number of US
nationals (or their estates, survivors, or heirs) who were victims
of terrorist attacks in Israel. In October 2017, the trial court
dismissed claims against NWB Plc with respect to two of the 18
terrorist attacks at issue. In March 2019, the trial court granted
summary judgment in favour of NWB Plc in respect of the remaining
claims. On 7 April 2021, the United States Court of Appeals for the
Second Circuit affirmed the trial court's judgment in favour of NWB
Plc, subject to the right of the plaintiffs to seek review by the
United States Supreme Court.
Regulatory matters
FCA investigation into NatWest Group's compliance with the Money
Laundering Regulations 2007
In July 2017, the FCA notified NatWest Group that it was
undertaking an investigation into NatWest Group's compliance with
the UK Money Laundering Regulations 2007 ("MLR 2007") in relation
to certain money service businesses and related parties. NatWest
Group is co-operating with the investigation, including responding
to information requests from the FCA.
On 15 March 2021, the FCA notified NatWest Group that it had
commenced criminal proceedings against NWB Plc for offences under
regulation 45(1) of the MLR 2007 for alleged failures to comply
with regulations 8(1), 8(3) and 14(1) of the MLR 2007 between 11
November 2011 and 19 October 2016, arising from the handling of the
accounts of a UK incorporated customer. NWB Plc will be required to
attend an initial hearing at Westminster Magistrates' Court on 26
May 2021. Material adverse collateral consequences, in addition to
further substantial costs and the recognition of provisions, may
occur as a result of these criminal proceedings.
Review and investigation of treatment of tracker mortgage customers
in Ulster Bank Ireland DAC
In April 2016, the CBI commenced an investigation into suspected
breaches by UBI DAC of specified provisions of the Consumer
Protection Code 2006 in its treatment of certain tracker mortgage
customers. On 23 March 2021, UBI DAC agreed with the CBI to pay a
fine of €37.8 million for breaches of its regulatory
obligations in respect of its treatment of tracker mortgage
customers. The fine was substantially covered by existing
provisions.
4. Post balance sheet events
Other than as disclosed there have been no other significant events
between 31 March 2021 and the date of approval of these accounts
which would require a change to or additional disclosure in the
condensed consolidated financial statements.
Additional information
Presentation of information
'Parent
company' refers to NatWest Group plc and 'NatWest Group' 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 Registrar 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
|
Webcast and dial in details
|
Date:
|
29
April 2021
|
www.natwestgroup.com/results
|
Time:
|
9am UK
time
|
International:
+44 (0) 203 057 6566
|
Conference ID:
|
8242757
|
UK Free
Call: 0800 279 5995
US
Local Dial-In, New York: +1 646 741 2115
|
|
|
|
|
|
Available on www.natwestgroup.com/results
●
Q1
2021 Interim Management Statement and slides.
●
A
financial supplement containing income statement, balance sheet and
segment performance for the quarter ended 31 March
2021.
●
NatWest
Group and NWH Group Pillar 3 supplements.
Forward looking statements
This document contains forward-looking statements within the
meaning of the United States Private Securities Litigation Reform
Act of 1995, such as statements that include, without limitation,
the words 'expect', 'estimate', 'project', 'anticipate', 'commit',
'believe', 'should', 'intend', 'will', 'plan', 'could',
'probability', 'risk', 'Value-at-Risk (VaR)', 'target', 'goal',
'objective', 'may', 'endeavour', 'outlook', 'optimistic',
'prospects' and similar expressions or variations on these
expressions. These statements concern or may affect future matters,
such as NatWest Group's future economic results, business plans and
strategies. In particular, this document may include
forward-looking statements relating to NatWest Group plc in respect
of, but not limited to: the impact of the COVID-19 pandemic, its
regulatory capital position and related requirements, its financial
position, profitability and financial performance (including
financial, capital, cost savings and operational targets), the
implementation of its Purpose-led strategy and the refocusing of
its NatWest Markets franchise, its ESG and climate related targets,
its access to adequate sources of liquidity and funding, increasing
competition from new incumbents and disruptive technologies, its
exposure to third party risks, its ongoing compliance with the UK
ring-fencing regime and ensuring operational continuity in
resolution, its impairment losses and credit exposures under
certain specified scenarios, substantial regulation and oversight,
ongoing legal, regulatory and governmental actions and
investigations, the transition of LIBOR and IBOR rates to
alternative risk free rates and NatWest Group's exposure to
economic and political risks (including with respect to terms
surrounding Brexit and climate change), operational risk, conduct
risk, cyber and IT risk, key person risk and credit rating
risk. Forward-looking statements are subject to a number of
risks and uncertainties that might cause actual results and
performance to differ materially from any expected future results
or performance expressed or implied by the forward-looking
statements. Factors that could cause or contribute to differences
in current expectations include, but are not limited to, the impact
of the COVID-19 pandemic, future acquisitions, the outcome of
legal, regulatory and governmental actions and investigations, the
level and extent of future impairments and write-downs (including
with respect to goodwill), legislative, political, fiscal and
regulatory developments, accounting standards, competitive
conditions, technological developments, interest and exchange rate
fluctuations, general economic and political conditions and the
impact of climate-related risks and the transitioning to a low
carbon economy. These and other factors, risks and uncertainties
that may impact any forward-looking statement or NatWest Group
plc's actual results are discussed in NatWest Group plc's UK 2020
Annual Report and Accounts (ARA), NatWest Group plc's Interim
Results for Q1 2021 and NatWest Group plc's filings with the US
Securities and Exchange Commission, including, but not limited to,
NatWest Group plc's most recent Annual Report on Form 20-F and
Reports on Form 6-K. The forward-looking statements contained in
this document speak only as of the date of this document and
NatWest Group plc does not assume or undertake any obligation or
responsibility to update any of the forward-looking statements
contained in this document, whether as a result of new information,
future events or otherwise, except to the extent legally
required.
Legal Entity Identifier: 2138005O9XJIJN4JPN90
Appendix
Non-IFRS financial measures
Appendix - Non-IFRS financial measures
As described in the Accounting policies on page 29, NatWest Group
prepares its financial statements in accordance with 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 profit or loss for the period attributable to ordinary
shareholders divided by average tangible equity. Average tangible
equity is average total equity excluding non-controlling interests
(NCI) less average intangible assets and average other owners'
equity.
|
Table 1
|
Segmental return on equity
|
Segmental operating profit or loss adjusted for preference share
dividends and tax divided by average notional tangible 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,
operating lease depreciation, strategic costs and litigation and
conduct costs.
|
Notable
items - page 5,
Operating lease depreciation,
Strategic
costs and litigation and conduct costs - pages 12 to 14
|
Net lending in the retail and commercial business
|
Comprises customer loans in the Retail Banking, Commercial Banking,
Private Banking and RBS International operating segments, excluding
UK Government support schemes.
|
Pages 1 and 4
|
Bank net interest margin (NIM)
|
Net interest income of the banking business less NatWest Markets
(NWM) element as a percentage of average interest-earning assets of
the banking business less NWM element.
|
Table 4
|
Performance metrics based on but not defined under
IFRS
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 (excluding
own shares held). Tangible equity is ordinary shareholders' equity
less intangible assets.
|
Page 3
|
NIM
|
Net interest income as a percentage of average interest-earning
assets.
|
Page 3
|
Funded assets
|
Total
assets less derivatives.
|
Pages 12
to 14
|
ECL loss rate
|
The
annualised loan impairment charge divided by gross customer
loans.
|
Pages 12
to 14
|
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 12
to 14
|
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, debt securities in issue and subordinated
liabilities.
|
Pages 12
to 14
|
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 7
|
Appendix Non-IFRS financial measures
1. Return on tangible equity
|
|
|
Quarter ended
|
|
|
|
|
31 March
|
31
December
|
31
March
|
|
|
|
|
2021
|
2020
|
2020
|
Profit/(loss)
attributable to ordinary shareholders (£m)
|
|
|
|
620
|
(109)
|
288
|
Annualised
profit/(loss) attributable to ordinary
|
|
|
|
|
|
|
shareholders (£m)
|
|
|
|
2,480
|
(436)
|
1,152
|
Average
total equity excluding NCI (£m)
|
|
|
|
43,566
|
43,648
|
44,018
|
Adjustment
for other owners' equity and intangibles (£m)
|
|
|
|
(12,333)
|
(11,895)
|
(11,911)
|
Adjusted
total tangible equity (£m)
|
|
|
|
31,233
|
31,753
|
32,107
|
Return
on tangible equity (%)
|
|
|
|
7.9%
|
(1.4%)
|
3.6%
|
|
|
|
|
|
|
|
|
|
|
|
International Banking & Markets
|
|
|
Retail
|
Private
|
Commercial
|
RBS
|
NatWest
|
Ulster
|
|
Banking
|
Banking
|
Banking
|
International
|
Markets
|
Bank RoI
|
Quarter ended 31 March 2021
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Operating
profit/(loss) (£m)
|
435
|
64
|
475
|
68
|
(80)
|
11
|
Preference
share cost allocation (£m)
|
(20)
|
(5)
|
(38)
|
(5)
|
(16)
|
-
|
Adjustment
for tax (£m)
|
(116)
|
(17)
|
(122)
|
(11)
|
27
|
-
|
Adjusted
attributable profit/(loss) (£m)
|
299
|
42
|
315
|
52
|
(69)
|
11
|
Annualised
adjusted attributable profit/(loss) (£m)
|
1,196
|
168
|
1,260
|
208
|
(276)
|
44
|
Average
RWAe (£bn)
|
35.8
|
11.0
|
73.6
|
7.4
|
29.2
|
11.4
|
Equity
factor
|
14.5%
|
12.5%
|
11.5%
|
16.0%
|
15.0%
|
15.5%
|
RWAe
applying equity factor (£bn)
|
5.2
|
1.4
|
8.5
|
1.2
|
4.4
|
1.8
|
Return
on equity
|
23.0%
|
12.4%
|
14.9%
|
17.5%
|
(6.3%)
|
2.5%
|
|
|
|
|
|
|
|
Quarter ended 31 December 2020
|
|
|
|
|
|
|
Operating
profit/(loss) (£m)
|
91
|
67
|
285
|
(13)
|
(230)
|
18
|
Preference
share cost allocation (£m)
|
(22)
|
(5)
|
(38)
|
(5)
|
(17)
|
-
|
Adjustment
for tax (£m)
|
(19)
|
(17)
|
(69)
|
3
|
69
|
-
|
Adjusted
attributable profit/(loss)(£m)
|
50
|
45
|
178
|
(15)
|
(178)
|
18
|
Annualised
adjusted attributable profit/(loss) (£m)
|
200
|
180
|
712
|
(60)
|
(712)
|
72
|
Average
RWAe (£bn)
|
36.1
|
10.7
|
75.9
|
7.1
|
31.5
|
11.9
|
Equity
factor
|
14.5%
|
12.5%
|
11.5%
|
16.0%
|
15.0%
|
15.5%
|
RWAe
applying equity factor (£bn)
|
5.2
|
1.3
|
8.7
|
1.1
|
4.7
|
1.8
|
Return
on equity
|
3.8%
|
13.3%
|
8.1%
|
(5.5%)
|
(15.0%)
|
3.9%
|
|
|
|
|
|
|
|
Quarter ended 31 March 2020
|
|
|
|
|
|
|
Operating
profit/(loss) (£m)
|
324
|
49
|
(37)
|
68
|
206
|
(21)
|
Preference
share cost allocation (£m)
|
(22)
|
(6)
|
(38)
|
(5)
|
(17)
|
-
|
Adjustment
for tax (£m)
|
(85)
|
(12)
|
21
|
(9)
|
(53)
|
-
|
Adjusted
attributable profit/(loss) (£m)
|
217
|
31
|
(54)
|
54
|
136
|
(21)
|
Annualised
adjusted attributable profit/(loss) (£m)
|
868
|
124
|
(216)
|
216
|
544
|
(84)
|
Average
RWAe (£bn)
|
38.7
|
10.2
|
74.1
|
7.0
|
41.9
|
12.8
|
Equity
factor
|
14.5%
|
12.5%
|
11.5%
|
16.0%
|
15.0%
|
15.5%
|
RWAe
applying equity factor (£bn)
|
5.6
|
1.3
|
8.5
|
1.1
|
6.3
|
2.0
|
Return
on equity
|
15.5%
|
9.8%
|
(2.5%)
|
19.4%
|
8.7%
|
(4.2%)
|
|
|
|
|
|
|
|
Appendix Non-IFRS financial measures
2. Operating expenses analysis
Statutory analysis (1,2)
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
|
|
31 March
|
31
December
|
31
March
|
|
|
|
|
2021
|
2020
|
2020
|
Operating expenses
|
|
|
|
£m
|
£m
|
£m
|
Staff
costs
|
|
|
|
985
|
986
|
992
|
Premises
and equipment
|
|
|
|
248
|
321
|
258
|
Other
administrative expenses
|
|
|
|
377
|
764
|
398
|
Depreciation
and amortisation
|
|
|
|
205
|
270
|
193
|
Total operating expenses
|
|
|
|
1,815
|
2,341
|
1,841
|
Non-statutory analysis
|
|
|
|
|
|
Quarter ended
|
|
31 March 2021
|
|
|
Litigation
|
|
|
|
|
and
|
|
Statutory
|
|
Strategic
|
conduct
|
Other
|
operating
|
Operating expenses
|
costs
|
costs
|
expenses
|
expenses
|
Staff
costs
|
111
|
-
|
874
|
985
|
Premises
and equipment
|
16
|
-
|
232
|
248
|
Other
administrative expenses
|
23
|
16
|
338
|
377
|
Depreciation
and amortisation
|
10
|
-
|
195
|
205
|
Total
|
160
|
16
|
1,639
|
1,815
|
|
|
|
|
|
|
Quarter ended
|
|
31 December 2020
|
|
|
Litigation
|
|
|
|
|
and
|
|
Statutory
|
|
Strategic
|
conduct
|
Other
|
operating
|
Operating expenses
|
costs
|
costs
|
expenses
|
expenses
|
Staff
costs
|
147
|
-
|
839
|
986
|
Premises
and equipment
|
63
|
-
|
258
|
321
|
Other
administrative expenses
|
54
|
194
|
516
|
764
|
Depreciation
and amortisation
|
62
|
-
|
208
|
270
|
Total
|
326
|
194
|
1,821
|
2,341
|
|
|
|
|
|
|
Quarter ended
|
|
31 March 2020
|
|
|
Litigation
|
|
|
|
|
and
|
|
Statutory
|
|
Strategic
|
conduct
|
Other
|
operating
|
Operating expenses
|
costs
|
costs
|
expenses
|
expenses
|
Staff
costs
|
73
|
-
|
919
|
992
|
Premises
and equipment
|
13
|
-
|
245
|
258
|
Other
administrative expenses
|
43
|
(4)
|
359
|
398
|
Depreciation
and amortisation
|
2
|
-
|
191
|
193
|
Total
|
131
|
(4)
|
1,714
|
1,841
|
Notes:
(1) On a statutory, or
GAAP, basis strategic costs are included within staff costs,
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 performance measures
3. Cost:income ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
International Banking & Markets
|
|
Central
|
Total
|
|
Retail
|
Private
|
Commercial
|
RBS
|
NatWest
|
Ulster
|
items
|
NatWest
|
|
Banking
|
Banking
|
Banking
|
International
|
Markets
|
Bank RoI
|
& other
|
Group
|
Quarter ended 31 March 2021
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Operating
expenses
|
(587)
|
(121)
|
(583)
|
(57)
|
(275)
|
(125)
|
(67)
|
(1,815)
|
Operating
lease depreciation
|
-
|
-
|
35
|
-
|
-
|
-
|
-
|
35
|
Adjusted
operating expenses
|
(587)
|
(121)
|
(548)
|
(57)
|
(275)
|
(125)
|
(67)
|
(1,780)
|
Total
income
|
1,056
|
185
|
941
|
123
|
189
|
124
|
41
|
2,659
|
Operating
lease depreciation
|
-
|
-
|
(35)
|
-
|
-
|
-
|
-
|
(35)
|
Adjusted
total income
|
1,056
|
185
|
906
|
123
|
189
|
124
|
41
|
2,624
|
Cost:income
ratio
|
55.6%
|
65.4%
|
60.5%
|
46.3%
|
145.5%
|
100.8%
|
nm
|
67.8%
|
|
|
|
|
|
|
|
|
|
Quarter ended 31 December 2020
|
|
|
|
|
|
|
|
|
Operating
expenses
|
(818)
|
(91)
|
(656)
|
(112)
|
(301)
|
(114)
|
(249)
|
(2,341)
|
Operating
lease depreciation
|
-
|
-
|
35
|
-
|
-
|
-
|
-
|
35
|
Adjusted
operating expenses
|
(818)
|
(91)
|
(621)
|
(112)
|
(301)
|
(114)
|
(249)
|
(2,306)
|
Total
income
|
974
|
184
|
951
|
126
|
73
|
131
|
96
|
2,535
|
Operating
lease depreciation
|
-
|
-
|
(35)
|
-
|
-
|
-
|
-
|
(35)
|
Adjusted
total income
|
974
|
184
|
916
|
126
|
73
|
131
|
96
|
2,500
|
Cost:income
ratio
|
84.0%
|
49.5%
|
67.8%
|
88.9%
|
nm
|
87.0%
|
nm
|
92.2%
|
|
|
|
|
|
|
|
|
|
Quarter ended 31 March 2020
|
|
|
|
|
|
|
|
|
Operating
expenses
|
(529)
|
(123)
|
(610)
|
(61)
|
(342)
|
(123)
|
(53)
|
(1,841)
|
Operating
lease depreciation
|
-
|
-
|
36
|
-
|
-
|
-
|
-
|
36
|
Adjusted
operating expenses
|
(529)
|
(123)
|
(574)
|
(61)
|
(342)
|
(123)
|
(53)
|
(1,805)
|
Total
income
|
1,150
|
201
|
1,008
|
144
|
543
|
129
|
(13)
|
3,162
|
Operating
lease depreciation
|
-
|
-
|
(36)
|
-
|
-
|
-
|
-
|
(36)
|
Adjusted
total income
|
1,150
|
201
|
972
|
144
|
543
|
129
|
(13)
|
3,126
|
Cost:income
ratio
|
46.0%
|
61.2%
|
59.1%
|
42.4%
|
63.0%
|
95.3%
|
nm
|
57.7%
|
4. Net interest margin
|
|
|
Quarter ended or as at
|
|
|
|
|
31 March
|
31
December
|
31
March
|
|
|
|
|
2021
|
2020
|
2020
|
|
|
|
|
£m
|
£m
|
£m
|
NatWest
Group net interest income
|
|
|
|
1,931
|
1,971
|
1,942
|
Less:
NWM net interest income
|
|
|
|
7
|
2
|
40
|
Net
interest income excluding NWM
|
|
|
|
1,938
|
1,973
|
1,982
|
Annualised
net interest income
|
|
|
|
7,831
|
7,820
|
7,811
|
Annualised
net interest income excluding NWM
|
|
|
|
7,860
|
7,828
|
7,972
|
Average
interest earning assets (IEA)
|
|
|
|
512,237
|
509,598
|
458,514
|
NWM
average IEA
|
|
|
|
32,429
|
36,515
|
36,113
|
Bank
average IEA excluding NWM
|
|
|
|
479,808
|
473,083
|
422,401
|
|
|
|
|
|
|
|
Net
interest margin
|
|
|
|
1.53%
|
1.54%
|
1.70%
|
Bank
net interest margin (NatWest Group NIM excluding NWM)
|
|
|
|
1.64%
|
1.66%
|
1.89%
|
5. Loan:deposit ratio
|
As at
|
|
31 March
|
31
December
|
31
March
|
|
2021
|
2020
|
2020
|
|
£m
|
£m
|
£m
|
Loans
to customers - amortised cost
|
358,728
|
360,544
|
351,328
|
Customer
deposits
|
453,308
|
431,739
|
384,800
|
Loan:deposit
ratio (%)
|
79%
|
84%
|
91%
|
Date: 29
April 2021
|
NATWEST
GROUP plc (Registrant)
|
|
|
|
By: /s/
Jan Cargill
|
|
|
|
Name:
Jan Cargill
|
|
Title:
Chief Governance Officer and Company Secretary
|
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