NatWest Bank Group
Interim Results 2024
National Westminster Bank Plc
natwestgroup.com
Interim results for the period
ended 30 June 2024
NatWest Bank Group (NWB Group)
reported an attributable profit for the period of £1,719 million
and a Common Equity Tier 1 (CET1) ratio of 11.4%.
H1 2024 performance
-
Total income decreased by £747 million to £5,863
million, compared to H1 2023, reflecting a
mix change in customer deposits as customers move towards interest
bearing and term balances.
-
Operating expenses increased by £193 million to
£3,458 million, compared to H1 2023, principally due to higher staff costs as a result of
inflation and severance costs, a profit sharing arrangement with
fellow NatWest Group subsidiaries, and the Bank of England Levy,
offset by a reduction in managed services and outsourcing
costs.
-
The cost:income ratio has increased to 59.0%
compared to 49.4% in H1 2023.
-
An impairment loss of £47 million compared with a
loss of £191 million in H1 2023, principally reflects
good book releases including post model
adjustments. Defaults remain stable and at low levels across the
portfolio.
Robust balance sheet with strong capital and liquidity
levels
-
Net loans to customers decreased by £2.8 billion
to £315.7 billion, primarily reflecting £1.8 billion decrease due to Treasury reverse repo activity in
Central items and other, £1.6 billion reduction in mortgage
balances driven by increased redemptions in Retail Banking, partly
offset by growth in reference rate lending in Commercial &
Institutional.
-
Customer deposits decreased by £0.4 billion to
£313.4 billion, driven by a £3.8 billion reduction in Treasury repo
activity in Central items & other, offsetting a £3.4 billion
increase in customer deposits largely driven by growth in savings
and term products across Retail Banking and Private
Banking.
-
The loan:deposit ratio (LDR) decreased to 95.3%
reflecting a reduction in customer lending of £2.8 billion and an
increase in bank deposits of £2.6 billion during the
period.
-
Total RWAs decreased by £1.0 billion during the
period primarily reflecting active RWA management initiatives
partially offset by an increase in operational risk RWAs of £1.6
billion following the annual recalculation as a result of higher
income when compared to 2020.
-
The CET1 ratio decreased by 20 basis points to
11.4%. The decrease in the CET1 ratio was due to a £0.3 billion
decrease in CET1 capital partially offset by a £1.0 billion
decrease in RWA's. The decrease in CET1 capital was primarily
driven by an attributable profit to ordinary shareholders offset by
a foreseeable ordinary dividend.
Financial review
Financial performance summary
The following tables provide a
segmental analysis of operating profit by the main income statement
captions and a note of the key performance metrics and
ratios.
|
|
|
|
|
|
|
|
|
|
|
Central
|
|
Half year
ended
|
|
|
|
Retail
|
Private
|
Commercial
|
items
|
|
30 June
|
30
June
|
|
|
|
Banking
|
Banking
|
&
Institutional
|
&
other
|
|
2024
|
2023
|
Variance
|
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
%
|
Net interest income
|
2,092
|
285
|
1,553
|
11
|
|
3,941
|
4,249
|
(308)
|
(7%)
|
Non-interest income
|
217
|
158
|
722
|
825
|
|
1,922
|
2,361
|
(439)
|
(19%)
|
Total income
|
2,309
|
443
|
2,275
|
836
|
|
5,863
|
6,610
|
(747)
|
(11%)
|
Operating expenses
|
(1,188)
|
(315)
|
(1,203)
|
(752)
|
|
(3,458)
|
(3,265)
|
(193)
|
6%
|
Profit before impairment losses/releases
|
1,121
|
128
|
1,072
|
84
|
|
2,405
|
3,345
|
(940)
|
(28%)
|
Impairment
(losses)/releases
|
(106)
|
11
|
44
|
4
|
|
(47)
|
(191)
|
144
|
(75%)
|
Operating profit
|
1,015
|
139
|
1,116
|
88
|
|
2,358
|
3,154
|
(796)
|
(25%)
|
Tax charge
|
|
|
|
|
|
(639)
|
(829)
|
190
|
(23%)
|
Profit for the period
|
|
|
|
|
|
1,719
|
2,325
|
(606)
|
(26%)
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
Ordinary shareholders
|
|
|
|
|
|
1,626
|
2,264
|
|
|
Paid-in equity holders
|
|
|
|
|
|
95
|
61
|
|
|
Non-controlling
interests
|
|
|
|
|
|
(2)
|
-
|
|
|
Profit for the period
|
|
|
|
|
|
1,719
|
2,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Half year
ended
|
|
|
|
|
|
|
|
30 June
|
30
June
|
|
|
Key metrics and ratios
|
|
|
|
|
|
2024
|
2023
|
|
|
Cost:income ratio
(%) (1)
|
|
|
|
|
|
59.0
|
49.4
|
|
|
Loan impairment rate
(bps) (2)
|
|
|
|
|
|
3
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at
|
|
|
|
|
|
|
|
30 June
|
31
December
|
|
|
|
|
|
|
|
|
2024
|
2023
|
|
|
CET1 ratio (%) (3)
|
|
|
|
|
|
11.4
|
11.6
|
|
|
Leverage ratio
(%) (4)
|
|
|
|
|
|
4.6
|
4.5
|
|
|
Risk weighted assets (RWAs)
(£bn)
|
|
|
|
|
|
120.8
|
121.7
|
|
|
Loan:deposit ratio
(%) (5)
|
|
|
|
|
|
95.3
|
97.0
|
|
|
(1)
Cost:income ratio is total operating expenses divided by total
income.
(2) Loan
impairment rate is the annualised loan impairment charge divided by
gross customer loans.
(3) CET1
ratio is CET1 capital divided by RWAs.
(4)
Leverage ratio is Tier 1 capital divided by total exposure. This
is in
accordance with changes to the UK's leverage ratio framework. Refer
to page 62 of the NatWest Bank Plc 2023 Annual Report and
Accounts for further details.
(5)
Loan deposit ratio is total loans divided by
total deposits.
|
Total income decreased by £747
million, or 11%, to £5,863 million compared with £6,610 million in
H1 2023.
Net interest income decreased by
£308 million, or 7%, to £3,941 million, compared with £4,249
million in H1 2023, reflecting a deposit mix change as customers
move towards interest bearing and term balances.
Non-interest income decreased by
£439 million, or 19%, to £1,922 million, compared with £2,361
million in H1 2023, reflecting:
-
net fees and commissions increase of £38 million
to £857 million, due to higher lending fees and payment services
income from increased volumes; offset by
-
other operating income decrease of £477 million
to £1,065 million, principally due to a £234 million gain on
redemption of own debt in H1 2023 and a £291 million reduction in
gains predominantly from derivatives held for economic hedging
purposes, reflecting the impact of interest rate volatility across
currencies.
Operating expenses increased by
£193 million, or 6%, to £3,458 million, largely driven by £155
million increased staff costs due to inflation and severance
costs, £71 million from
a profit sharing arrangement with fellow NatWest Group
subsidiaries, £63 million Bank of England Levy, and £38 million
property costs related to branch exits, partly offset by a decrease
of £155 million in consultancy, managed services and outsourcing
costs.
An impairment loss of £47 million,
compared with a loss of £191 million in H1 2023, principally
reflects good book releases including post model adjustments.
Defaults remain stable and at low levels across the portfolio.
Compared with H2 2023, the ECL provision decreased by £0.2 billion
to £2.7 billion and ECL coverage ratio has decreased from 0.88% to
0.83%. Post model adjustments of £0.2 billion related to economic
uncertainty were retained.
Financial review
Financial performance summary continued
Customer lending and
deposits
Customer lending decreased by £2.8
billion to £315.7 billion, predominantly driven
by:
-
£1.0 billion decrease in Retail Banking driven by
higher mortgage redemptions, partially offset by growth in credit
card and personal advances.
-
£0.6 billion increase in Commercial &
Institutional lending, primarily driven by growth in reference rate
lending as a result of favourable interest
rates.
-
£2.0 billion decrease in Central items &
other, driven by Treasury net repo activity.
-
£0.4 billion decrease in Private Banking driven
by higher mortgage redemptions.
Customer deposits decreased by
£0.4 billion to £313.4 billion, driven by Treasury repo activity in
Central items & other, offsetting customer deposit growth
largely driven by savings and term products across Retail Banking
and Private Banking.
Other balance sheet
movements
-
Derivative assets increased by £0.1 billion and
derivative liabilities decreased by £0.4 billion driven by interest
rate changes and EUR/USD foreign exchange rate
appreciation. 
-
Other financial assets increased by £0.4 billion
to £32.3 billion, due to the net impact of reverse repo and bond
activity.
-
Bank deposits increased by £2.6 billion to £20.6
billion driven by repo activity due to prevailing market
conditions.
-
Amounts due to holding companies and fellow
subsidiaries decreased by £3.3 billion to £43.9 billion
driven by a net reduction in loans, repo activity
and cash collateral, primarily reflecting net funding requirements
in other NatWest Group companies.
-
Other financial liabilities decreased by £1.5
billion primarily due to commercial paper and covered bond
redemptions.
-
Owners' equity increased by £1.7 billion due to
the net impact of profit in the period, offset by dividends
paid.
Business performance summary
Retail Banking
Operating profit was £1,015
million, compared with £1,363 million in H1
2023.
-
Net interest income decreased by £360 million to
£2,092 million, reflecting the impact of deposit
mix change as customers move towards interest bearing and term
accounts.
-
Non-interest income increased by £5 million to
£217 million, primarily reflecting higher payment
services income from increased volumes.
-
Operating expenses increased by £54 million to
£1,188 million, reflecting higher staff costs
driven by severance costs, and the Bank of England
Levy.
-
Impairment losses of £106 million in H1 2024
are £61 million lower than H1 2023 driven by
broadly stable Stage 3 inflows, partly offset by good book
releases.
-
Net loans to customers decreased by £1.0 billion
in H1 2024 mainly reflecting £1.6 billion lower
mortgage balances, partly offset by an increase in card balances
driven by higher spend, and personal advances.
-
Customer deposits increased by £3 billion in H1
2024 particularly in fixed term savings products,
amid a deposit growth market.
|
Financial review
Business performance summary continued
Private Banking
Operating profit was £139 million,
compared with £247 million in H1 2023.
-
Net interest income decreased by £141 million to
£285 million, reflecting the impact of deposit
mix change as customers move towards interest bearing accounts
offering higher returns.
-
Non-interest income increased by £21 million to
£158 million primarily driven by investment
income due to higher Assets under Management and Administration
reflecting net inflows and positive market
movements.
-
Operating expenses increased by £9 million to
£315 million, driven by higher staff costs from
inflation and severance costs, and the Bank of England
Levy.
-
Impairment release of £11 million in H1 2024,
compared with an impairment loss of £10 million in H1 2023,
reflects higher good book releases and continued
low level of Stage 3 charges.
-
Net loans to customers decreased by £0.4 billion to £18.1 billion, driven by higher
mortgage redemptions.
-
Customer deposits increased by £1.8 billion to
£39.5 billion reflecting growth largely in
interest bearing accounts and a large transitory client
inflow.
Commercial &
Institutional
Operating profit was £1,116
million, compared with £1,139 million in H1
2023.
-
Net interest income increased by £16 million to
£1,553 million, primarily reflecting an
increase in reference rate lending, partly offset by the impact of
deposit mix change as customers move towards interest bearing
accounts.
-
Non-interest income increased by £35 million to
£722 million primarily
reflecting improved lending fees and fair value
gains.
-
Operating expenses increased by £136 million to
£1,203 million, driven by severance costs,
a new profit sharing arrangement with other NatWest Group
companies, and the Bank of England Levy.
-
Impairment release of £44 million in H1 2024,
compared with an impairment loss of £18 million in H1 2023,
reflects good book releases. Stage 3 charges
remain at low levels.
-
Net loans to customers increased by £0.6 billion
to £84 billion, driven by growth in
reference rate lending.
-
Customer deposits decreased by £0.9 billion to
£110.4 billion with an underlying movement
towards interest bearing accounts.
Central items &
other
Operating profit was £88 million,
compared with £405 million in H1 2023.
-
Total income decreased by £323 million
primarily due to lower gains from hedging
activities reflecting interest rate movements and lower bond
disposals. This was partially offset by an increase in net interest
income from balances held with central banks as a result of
interest rate volatility across currencies.
-
Operating expenses reduced by £6 million to £752
million, primarily reflecting lower costs in relation to the
withdrawal from our operations in the Republic of
Ireland.
Financial review
Capital and leverage ratios
The table below sets out the key
capital and leverage ratios. NWB Plc is subject to the requirements
set out in UK CRR therefore capital and leverage ratios are
presented under these frameworks on a transitional
basis.
|
30 June
|
31
December
|
|
2024
|
2023
|
Capital adequacy ratios
|
%
|
%
|
CET1 (1)
|
11.4
|
11.6
|
Tier 1
|
14.0
|
13.4
|
Total
|
16.8
|
16.3
|
|
|
|
Capital
|
£m
|
£m
|
CET1 (1)
|
13,813
|
14,082
|
Tier 1
|
16,890
|
16,360
|
Total
|
20,273
|
19,798
|
|
|
|
Risk-weighted assets
|
|
|
Credit risk
|
104,378
|
106,696
|
Counterparty credit
risk
|
442
|
713
|
Market risk
|
37
|
12
|
Operational risk
|
15,923
|
14,319
|
Total RWAs
|
120,780
|
121,740
|
|
|
|
Leverage
|
|
|
Tier 1 capital (£m)
|
16,890
|
16,360
|
Leverage exposure
(£m) (2)
|
366,912
|
359,897
|
Leverage ratio
(%) (1)
|
4.6
|
4.5
|
(1)
Includes an IFRS 9 transitional adjustment of £39 million (31
December 2023 - £0.2 billion). Excluding this adjustment, the CET1
ratio would be 11.4% (31 December 2023 - 11.4%) and the leverage
ratio would be 4.6% (31 December 2023 - 4.5%).
(2)
Leverage exposure is broadly aligned to the
accounting value of on and off-balance sheet exposures albeit
subject to specific adjustments for derivatives, securities
financing positions and off-balance sheet exposures.
|
-
The CET1 ratio decreased by 20 basis points to
11.4%. The decrease in the CET1 ratio was due to a £0.3 billion
decrease in CET1 capital partially offset by a £1.0 billion
decrease in RWAs. The decrease in CET1 capital was primarily driven
by an attributable profit to ordinary shareholders offset by a
foreseeable ordinary dividend.
-
NWB Plc issued a £0.8 billion internal USD Tier 1
instrument in May 2024.
-
Total RWAs decreased by £1.0 billion during the
period primarily reflecting active RWA management initiatives
partially offset by an increase in operational risk RWAs of £1.6
billion following the annual recalculation as a result of higher
income when compared to 2020.
Condensed consolidated income
statement
for the period ended 30 June
2024 (unaudited)
|
Half year
ended
|
|
30 June
|
30
June
|
|
2024
|
2023
|
£m
|
£m
|
Interest receivable
|
8,798
|
6,613
|
Interest payable
|
(4,857)
|
(2,364)
|
Net interest income
|
3,941
|
4,249
|
Fees and commissions
receivable
|
1,117
|
1,070
|
Fees and commissions
payable
|
(260)
|
(251)
|
Other operating income
|
1,065
|
1,542
|
Non-interest income
|
1,922
|
2,361
|
Total income
|
5,863
|
6,610
|
Staff costs
|
(1,746)
|
(1,591)
|
Premises and equipment
|
(526)
|
(515)
|
Other administrative
expenses
|
(712)
|
(714)
|
Depreciation and
amortisation
|
(474)
|
(445)
|
Operating expenses
|
(3,458)
|
(3,265)
|
Profit before impairment losses
|
2,405
|
3,345
|
Impairment losses
|
(47)
|
(191)
|
Operating profit before tax
|
2,358
|
3,154
|
Tax charge
|
(639)
|
(829)
|
Profit for the period
|
1,719
|
2,325
|
|
|
|
Attributable to:
|
|
|
Ordinary shareholders
|
1,626
|
2,264
|
Paid-in equity holders
|
95
|
61
|
Non-controlling
interests
|
(2)
|
-
|
|
1,719
|
2,325
|
Condensed consolidated statement
of comprehensive income
for the period ended 30 June
2024 (unaudited)
|
Half year
ended
|
|
30 June
|
30
June
|
|
2024
|
2023
|
|
£m
|
£m
|
Profit for the period
|
1,719
|
2,325
|
Items that will not be reclassified subsequently to profit or
loss:
|
|
|
Remeasurement of retirement
benefit schemes
|
(63)
|
(64)
|
Tax
|
17
|
15
|
|
(46)
|
(49)
|
Items that will be reclassified subsequently to profit or
loss when specific conditions are met:
|
|
|
FVOCI financial
assets
|
26
|
44
|
Cash flow
hedges (1)
|
233
|
(221)
|
Currency translation
|
(8)
|
(18)
|
Tax
|
(75)
|
51
|
|
176
|
(144)
|
Other comprehensive income/(loss) after tax
|
130
|
(193)
|
Total comprehensive income for the period
|
1,849
|
2,132
|
|
|
|
Attributable to:
|
|
|
Ordinary shareholders
|
1,756
|
2,071
|
Paid-in equity holders
|
95
|
61
|
Non-controlling
interests
|
(2)
|
-
|
|
1,849
|
2,132
|
(1) Refer
to footnote 2 of the consolidated statement of changes in
equity.
Condensed consolidated balance
sheet as at 30 June 2024 (unaudited)
|
30 June
|
31
December
|
|
2024
|
2023
|
|
£m
|
£m
|
Assets
|
|
|
Cash and balances at central
banks
|
48,576
|
48,259
|
Derivatives
|
3,250
|
3,184
|
Loans to banks - amortised
cost
|
2,731
|
3,355
|
Loans to customers - amortised
cost
|
315,666
|
318,466
|
Amounts due from holding companies
and fellow subsidiaries
|
3,498
|
2,311
|
Other financial assets
|
32,298
|
31,944
|
Other assets
|
7,720
|
7,949
|
Total assets
|
413,739
|
415,468
|
|
|
|
Liabilities
|
|
|
Bank deposits
|
20,607
|
18,052
|
Customer deposits
|
313,353
|
313,752
|
Amounts due to holding companies
and fellow subsidiaries
|
43,905
|
47,252
|
Derivatives
|
1,299
|
1,718
|
Other financial
liabilities
|
7,537
|
9,011
|
Subordinated
liabilities
|
122
|
122
|
Notes in circulation
|
862
|
806
|
Other liabilities
|
2,946
|
3,325
|
Total liabilities
|
390,631
|
394,038
|
|
|
|
Owners' equity
|
23,075
|
21,395
|
Non-controlling
interests
|
33
|
35
|
Total equity
|
23,108
|
21,430
|
|
|
|
Total liabilities and equity
|
413,739
|
415,468
|
Condensed consolidated statement
of changes in equity
for the period ended 30 June
2024 (unaudited)
|
Half year
ended
|
|
30 June
|
30
June
|
|
2024
|
2023
|
|
£m
|
£m
|
Called-up share capital - at beginning and end of
period
|
1,678
|
1,678
|
|
|
|
Paid-in equity - at beginning of period
|
2,518
|
2,518
|
Issued (1)
|
799
|
-
|
At end of period
|
3,317
|
2,518
|
|
|
|
Share premium account - at beginning and end of
period
|
2,225
|
2,225
|
|
|
|
Merger reserve - at beginning of period
|
28
|
77
|
Amortisation
|
(19)
|
(24)
|
At end of period
|
9
|
53
|
|
|
|
FVOCI reserve - at beginning of period
|
(41)
|
(76)
|
Unrealised gains
|
23
|
20
|
Realised losses
|
3
|
24
|
Tax
|
(9)
|
(11)
|
At end of period
|
(24)
|
(43)
|
|
|
|
Cash flow hedging reserve - at beginning of
period
|
(600)
|
(391)
|
Amount recognised in
equity (2)
|
253
|
(82)
|
Amount transferred from equity to
earnings
|
(20)
|
(139)
|
Tax
|
(66)
|
62
|
At end of period
|
(433)
|
(550)
|
|
|
|
Foreign exchange reserve - at beginning of
period
|
(104)
|
(87)
|
Retranslation of net
assets
|
(23)
|
(48)
|
Foreign currency gains on hedges
of net assets
|
15
|
30
|
At end of period
|
(112)
|
(105)
|
|
|
|
Capital redemption reserve - at beginning and end of
period
|
820
|
820
|
|
|
|
Retained earnings - at beginning of period
|
14,871
|
13,302
|
Profit attributable to ordinary
shareholders and other equity owners
|
1,721
|
2,325
|
Paid-in equity dividends
paid
|
(95)
|
(61)
|
Ordinary dividends paid
|
(880)
|
(900)
|
Remeasurement of the retirement
benefit schemes
|
|
|
- gross
|
(63)
|
(64)
|
- tax
|
17
|
15
|
Share-based
remuneration
|
5
|
(5)
|
Amortisation of merger
reserve
|
19
|
24
|
At end of period
|
15,595
|
14,636
|
|
|
|
Owners' equity at end of period
|
23,075
|
21,232
|
For the notes to this table refer
the following page.
Condensed consolidated statement
of changes in equity
for the period ended 30 June 2024
continued (unaudited)
|
Half year
ended
|
|
30 June
|
30
June
|
|
2024
|
2023
|
|
£m
|
£m
|
Non-controlling interests - at beginning of
period
|
35
|
10
|
Loss attributable to
non-controlling interests
|
(2)
|
-
|
Acquisition of
subsidiary
|
-
|
31
|
At end of period
|
33
|
41
|
|
|
|
Total equity at end of period
|
23,108
|
21,273
|
|
|
|
Attributable to:
|
|
|
Ordinary shareholders
|
19,758
|
18,714
|
Paid-in equity holders
|
3,317
|
2,518
|
Non-controlling
interests
|
33
|
41
|
|
23,108
|
21,273
|
(1)
In May 2024, AT1 capital notes totalling $1.0
billion less fees were issued.
(2) The change
in the cash flow hedging reserve is driven from realised accrued
interest transferred into the income statement and a gain from an
increase in swap rates compared to 31 December 2023. The portfolio
of hedging instruments is predominantly pay fixed swaps.
Condensed consolidated cash flow
statement
for the period ended 30 June
2024 (unaudited)
|
Half year
ended
|
|
30
June
|
30
June
|
|
2024
|
2023
|
|
£m
|
£m
|
Cash flows from operating activities
|
|
|
Operating profit before
tax
|
2,358
|
3,154
|
Adjustments for non-cash and other
items
|
1,071
|
1,200
|
Net cash flows from trading activities
|
3,429
|
4,354
|
Changes in operating assets and
liabilities
|
(1,458)
|
(19,066)
|
Net cash flows from operating activities before
tax
|
1,971
|
(14,712)
|
Income taxes paid
|
(767)
|
(671)
|
Net cash flows from operating
activities
|
1,204
|
(15,383)
|
Net cash flows from investing activities
|
(529)
|
(2,786)
|
Net cash flows from financing activities
|
(433)
|
(139)
|
Effects of exchange rate changes
on cash and cash equivalents
|
(220)
|
(677)
|
Net increase/(decrease) in cash and cash
equivalents
|
22
|
(18,985)
|
Cash and cash equivalents at
beginning of period
|
52,001
|
76,318
|
Cash and cash equivalents at end of period
|
52,023
|
57,333
|
Notes
1. Presentation of condensed consolidated financial
statements
The condensed consolidated
financial statements should be read in conjunction with NatWest
Bank Plc's 2023 Annual Report and Accounts. The accounting policies
are the same as those applied in the consolidated financial
statements.
The directors have prepared the
condensed consolidated financial statements on a going concern
basis after assessing the principal risks, forecasts, projections
and other relevant evidence over the twelve months from the date
they are approved and in accordance with IAS 34 'Interim Financial
Reporting', as adopted by the UK and as issued by the International
Accounting Standards Board (IASB), and the Disclosure Guidance and
Transparency Rules sourcebook of the UK's Financial Conduct
Authority.
Amendments to IFRS effective from
1 January 2024 had no material effect on the condensed consolidated
financial statements.
2. Net interest income
|
Half year
ended
|
|
30 June
|
30
June
|
2024
|
2023
|
£m
|
£m
|
Balances at central banks and
loans to banks - amortised cost
|
900
|
531
|
Loans to customers - amortised
cost
|
7,117
|
5,691
|
Amounts due from holding companies
and fellow subsidiaries
|
51
|
79
|
Other financial assets
|
730
|
312
|
Interest receivable
|
8,798
|
6,613
|
|
|
|
Bank deposits
|
580
|
316
|
Customer deposits
|
2,734
|
859
|
Amounts due to holding companies
and fellow subsidiaries
|
1,253
|
960
|
Other financial
liabilities
|
285
|
222
|
Subordinated
liabilities
|
5
|
7
|
Interest payable
|
4,857
|
2,364
|
Net interest income
|
3,941
|
4,249
|
3. Operating expenses
|
Half year
ended
|
|
30 June
|
30
June
|
|
2024
|
2023
|
|
£m
|
£m
|
Staff costs
|
1,387
|
1,231
|
Temporary and contract
costs
|
62
|
88
|
Social security costs
|
153
|
145
|
Pension costs
|
144
|
127
|
-
defined benefit schemes
|
51
|
51
|
-
defined contribution schemes
|
93
|
76
|
|
|
|
Staff costs
|
1,746
|
1,591
|
Premises and equipment
|
526
|
515
|
Depreciation and
amortisation (1)
|
474
|
445
|
Other administrative
expenses (2)
|
712
|
714
|
Administrative expenses
|
1,712
|
1,674
|
Operating expenses
|
3,458
|
3,265
|
(1)
Includes depreciation on right of use assets of £44 million (30
June 2023 - £45 million).
(2)
Includes redress and
litigation costs. Further details are provided in Note
8.
Notes
4. Segmental analysis
The business is organised into the
following reportable segments: Retail Banking, Private Banking,
Commercial & Institutional and Central items &
other.
Analysis of operating
profit
|
Retail
|
Private
|
Commercial
|
Central
items
|
|
|
Banking
|
Banking
|
&
Institutional
|
&
other
|
Total
|
Half year ended 30 June 2024
|
£m
|
£m
|
£m
|
£m
|
£m
|
Net interest income
|
2,092
|
285
|
1,553
|
11
|
3,941
|
Net fees and
commissions
|
162
|
141
|
553
|
1
|
857
|
Other non-interest
income
|
55
|
17
|
169
|
824
|
1,065
|
Total income
|
2,309
|
443
|
2,275
|
836
|
5,863
|
Depreciation and
amortisation
|
(1)
|
-
|
(61)
|
(412)
|
(474)
|
Other operating
expenses
|
(1,187)
|
(315)
|
(1,142)
|
(340)
|
(2,984)
|
Impairment
(losses)/releases
|
(106)
|
11
|
44
|
4
|
(47)
|
Operating profit
|
1,015
|
139
|
1,116
|
88
|
2,358
|
|
|
|
|
|
|
Half year ended 30 June
2023
|
|
|
|
|
|
Net interest income
|
2,452
|
426
|
1,537
|
(166)
|
4,249
|
Net fees and
commissions
|
159
|
123
|
535
|
2
|
819
|
Other non-interest
income
|
53
|
14
|
152
|
1,323
|
1,542
|
Total income
|
2,664
|
563
|
2,224
|
1,159
|
6,610
|
Depreciation and
amortisation
|
-
|
-
|
(65)
|
(380)
|
(445)
|
Other operating
expenses
|
(1,134)
|
(306)
|
(1,002)
|
(378)
|
(2,820)
|
Impairment
(losses)/releases
|
(167)
|
(10)
|
(18)
|
4
|
(191)
|
Operating profit
|
1,363
|
247
|
1,139
|
405
|
3,154
|
Total revenue (1)
|
Retail
|
Private
|
Commercial
|
Central
items
|
|
|
Banking
|
Banking
|
&
Institutional
|
&
other
|
Total
|
Half year ended 30 June 2024
|
£m
|
£m
|
£m
|
£m
|
£m
|
External
|
3,918
|
618
|
3,528
|
2,916
|
10,980
|
Inter-segmental
|
(40)
|
708
|
(766)
|
98
|
-
|
Total
|
3,878
|
1,326
|
2,762
|
3,014
|
10,980
|
Half year ended 30 June
2023
|
|
|
|
|
|
External
|
3,027
|
409
|
2,988
|
2,801
|
9,225
|
Inter-segmental
|
(66)
|
559
|
(703)
|
210
|
-
|
Total
|
2,961
|
968
|
2,285
|
3,011
|
9,225
|
(1) Total
revenue comprises interest receivable, fees and commissions
receivable and other operating income.
Notes
4. Segmental analysis continued
Analysis of net fees and
commissions
|
Retail
|
Private
|
Commercial
|
Central
items
|
|
|
Banking
|
Banking
|
&
Institutional
|
&
other
|
Total
|
Half year ended 30 June 2024
|
£m
|
£m
|
£m
|
£m
|
£m
|
Fees and commissions
receivable
|
|
|
|
|
|
- Payment
services
|
133
|
19
|
264
|
-
|
416
|
- Credit and debit
card fees
|
161
|
7
|
97
|
2
|
267
|
- Lending and
financing
|
7
|
3
|
247
|
-
|
257
|
-
Brokerage
|
13
|
4
|
-
|
-
|
17
|
- Investment
management, trustee and fiduciary services
|
1
|
112
|
-
|
-
|
113
|
- Other
|
5
|
6
|
35
|
1
|
47
|
Total
|
320
|
151
|
643
|
3
|
1,117
|
Fees and commissions
payable
|
(158)
|
(10)
|
(90)
|
(2)
|
(260)
|
Net fees and
commissions
|
162
|
141
|
553
|
1
|
857
|
|
|
|
|
|
|
Half year ended 30 June
2023
|
|
|
|
|
|
Fees and commissions
receivable
|
|
|
|
|
|
- Payment
services
|
130
|
16
|
258
|
-
|
404
|
- Credit and debit
card fees
|
160
|
6
|
98
|
-
|
264
|
- Lending and
financing
|
7
|
3
|
232
|
-
|
242
|
-
Brokerage
|
14
|
3
|
-
|
-
|
17
|
- Investment
management, trustee and fiduciary services
|
1
|
102
|
-
|
-
|
103
|
- Other
|
1
|
2
|
28
|
9
|
40
|
Total
|
313
|
132
|
616
|
9
|
1,070
|
Fees and commissions
payable
|
(154)
|
(10)
|
(81)
|
(6)
|
(251)
|
Net fees and
commissions
|
159
|
122
|
535
|
3
|
819
|
Total assets and
liabilities
|
Retail
|
Private
|
Commercial
|
Central
items
|
|
|
Banking
|
Banking
|
&
Institutional
|
&
other
|
Total
|
30 June 2024
|
£m
|
£m
|
£m
|
£m
|
£m
|
Assets
|
193,411
|
18,821
|
90,361
|
111,146
|
413,739
|
Liabilities
|
157,160
|
39,753
|
122,999
|
70,719
|
390,631
|
|
|
|
|
|
|
31 December 2023
|
|
|
|
|
|
Assets
|
194,488
|
19,284
|
89,783
|
111,913
|
415,468
|
Liabilities
|
154,083
|
37,816
|
123,084
|
79,055
|
394,038
|
Notes
5. Tax
The actual tax charge differs from
the expected tax charge computed by applying the standard UK
corporation tax rate of 25% (2023 - 23.5%), as analysed
below:
|
Half year
ended
|
|
30 June
|
30
June
|
|
2024
|
2023
|
|
£m
|
£m
|
Profit before tax
|
2,358
|
3,154
|
|
|
|
Expected tax charge
|
(590)
|
(741)
|
Foreign profits taxed at other
rates
|
-
|
(1)
|
Items not allowed for
tax:
|
|
|
- losses on
disposals and write-downs
|
(9)
|
-
|
- UK Bank
Levy
|
(10)
|
(8)
|
- regulatory and
legal actions
|
(2)
|
(5)
|
- other
disallowable items
|
(21)
|
(10)
|
Non-taxable items
|
2
|
63
|
Increase in the carrying value of
deferred tax assets in respect of UK losses
|
-
|
1
|
Banking surcharge
|
(66)
|
(118)
|
Tax on paid-in equity
dividends
|
26
|
12
|
Adjustments in respect of prior
years
|
31
|
(22)
|
Actual tax charge
|
(639)
|
(829)
|
At 30 June 2024, NWB Group has
recognised a deferred tax asset of £767 million (31 December 2023 -
£981 million) and a deferred tax liability of £92 million (31
December 2023 - £89 million). These
amounts include deferred tax assets recognised in respect of
trading losses of £236 million (31 December 2023 - £362 million).
NWB Group has considered the carrying value of these assets as at
30 June 2024 and concluded that they are
recoverable.
Notes
6. Financial instruments -
classification
The
following tables analyse financial assets and liabilities in
accordance with the categories of financial instruments in IFRS
9.
|
|
|
Amortised
|
Other
|
|
|
MFVTPL
|
FVOCI
|
cost
|
assets
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
|
|
Cash and balances at central
banks
|
|
|
48,576
|
|
48,576
|
Derivatives (1)
|
3,250
|
|
|
|
3,250
|
Loans to banks - amortised
cost (2)
|
|
|
2,731
|
|
2,731
|
Loans to customers - amortised
cost (3)
|
|
|
315,666
|
|
315,666
|
Amounts due from holding companies
and fellow subsidiaries
|
67
|
-
|
2,928
|
503
|
3,498
|
Other financial assets
|
537
|
22,003
|
9,758
|
|
32,298
|
Other assets
|
|
|
|
7,720
|
7,720
|
30 June 2024
|
3,854
|
22,003
|
379,659
|
8,223
|
413,739
|
|
|
|
|
|
|
Cash and balances at central
banks
|
|
|
48,259
|
|
48,259
|
Derivatives (1)
|
3,184
|
|
|
|
3,184
|
Loans to banks - amortised
cost (2)
|
|
|
3,355
|
|
3,355
|
Loans to customers - amortised
cost (3)
|
|
|
318,466
|
|
318,466
|
Amounts due from holding companies
and fellow subsidiaries
|
-
|
-
|
1,808
|
503
|
2,311
|
Other financial assets
|
453
|
23,495
|
7,996
|
|
31,944
|
Other assets
|
|
|
|
7,949
|
7,949
|
31 December 2023
|
3,637
|
23,495
|
379,884
|
8,452
|
415,468
|
|
Held-for-
|
|
Amortised
|
Other
|
|
|
trading
|
DFV
|
cost
|
liabilities
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
Liabilities
|
|
|
|
|
|
Bank deposits
|
|
|
20,607
|
|
20,607
|
Customer deposits
|
|
|
313,353
|
|
313,353
|
Amounts due to holding companies
and fellow subsidiaries
|
21
|
-
|
43,692
|
192
|
43,905
|
Derivatives (1)
|
1,299
|
|
|
|
1,299
|
Other financial
liabilities
|
216
|
250
|
7,071
|
|
7,537
|
Subordinated
liabilities
|
|
|
122
|
|
122
|
Notes in circulation
|
|
|
862
|
|
862
|
Other
liabilities (4)
|
|
|
503
|
2,443
|
2,946
|
30 June 2024
|
1,536
|
250
|
386,210
|
2,635
|
390,631
|
|
|
|
|
|
|
Bank deposits
|
|
|
18,052
|
|
18,052
|
Customer deposits
|
|
|
313,752
|
|
313,752
|
Amounts due to holding companies
and fellow subsidiaries
|
17
|
-
|
46,956
|
279
|
47,252
|
Derivatives (1)
|
1,718
|
|
|
|
1,718
|
Other financial
liabilities
|
13
|
-
|
8,998
|
|
9,011
|
Subordinated
liabilities
|
|
|
122
|
|
122
|
Notes in circulation
|
|
|
806
|
|
806
|
Other
liabilities (4)
|
|
|
569
|
2,756
|
3,325
|
31 December 2023
|
1,748
|
-
|
389,255
|
3,035
|
394,038
|
(1)
|
Includes net hedging derivative
assets of £972 million (31 December 2023 -
£526 million) and net hedging derivative liabilities of £316
million (31 December 2023 - £405
million).
|
(2)
|
Includes items in the course of
collection from other banks of £22 million (31 December 2023
- £26 million).
|
(3)
|
Includes finance lease receivables
of £8,909 million (31 December 2023 -
£8,664 million).
|
(4)
|
Includes lease liabilities of £464
million (31 December 2023 - £513 million),
held at amortised cost.
|
|
|
|
|
Notes
6. Financial instruments -
valuation
Disclosures relating to the
control environment, valuation techniques and related aspects
pertaining to financial instruments measured at fair value are
included in NatWest Bank Plc's 2023 Annual Report and Accounts.
Valuation, sensitivity methodologies and inputs at 30 June 2024 are
consistent with those described in Note 10 to the financial
statements in the NatWest Bank Plc 2023 Annual Report and
Accounts.
Fair value hierarchy
The table below shows the assets
and liabilities held by NWB Group split by fair value hierarchy
level. Level 1 are considered the most liquid instruments, and
level 3 the most illiquid, valued using expert judgment and hence
carry the most significant price uncertainty.
|
30 June
2024
|
|
31
December 2023
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
|
|
|
|
Interest
rate
|
-
|
2,943
|
5
|
2,948
|
|
-
|
3,098
|
3
|
3,101
|
Foreign
exchange
|
-
|
302
|
-
|
302
|
|
-
|
83
|
-
|
83
|
Amounts due from holding
companies
|
|
|
|
|
|
|
|
|
|
and fellow
subsidiaries
|
-
|
67
|
-
|
67
|
|
-
|
-
|
-
|
-
|
Other financial assets
|
|
|
|
|
|
|
|
|
|
Securities
|
13,670
|
8,340
|
3
|
22,013
|
|
14,159
|
9,334
|
2
|
23,495
|
Loans
|
-
|
326
|
201
|
527
|
|
-
|
278
|
175
|
453
|
Total financial assets held at fair value
|
13,670
|
11,978
|
209
|
25,857
|
|
14,159
|
12,793
|
180
|
27,132
|
As % of total fair value
assets
|
53%
|
46%
|
1%
|
|
|
52%
|
47%
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
|
|
|
|
Interest
rate
|
-
|
1,186
|
5
|
1,191
|
|
-
|
1,460
|
9
|
1,469
|
Foreign
exchange
|
-
|
102
|
-
|
102
|
|
-
|
249
|
-
|
249
|
Other
|
-
|
6
|
-
|
6
|
|
-
|
-
|
-
|
-
|
Amounts due to holding
companies
|
|
|
|
|
|
|
|
|
|
and fellow
subsidiaries
|
-
|
21
|
-
|
21
|
|
-
|
17
|
-
|
17
|
Other financial
liabilities
|
|
|
|
|
|
|
|
|
|
Deposits
|
-
|
466
|
-
|
466
|
|
-
|
13
|
-
|
13
|
Total financial liabilities held at fair
value
|
-
|
1,781
|
5
|
1,786
|
|
-
|
1,739
|
9
|
1,748
|
As % of total fair value
liabilities
|
-
|
100%
|
-
|
|
|
-
|
99%
|
1%
|
|
(1)
|
Level 1 - Instruments valued using
unadjusted quoted prices in active and liquid markets, for
identical financial instruments. Examples include government bonds,
listed equity shares and certain exchange-traded
derivatives.
Level 2 - Instruments valued using
valuation techniques that have observable inputs. Observable inputs
are those that are readily available with limited adjustments
required. Examples include most government agency securities,
investment-grade corporate bonds, certain mortgage products -
including collateralised loan obligations (CLOs), most bank loans,
repos and reverse repos, state and municipal obligations, most
notes issued, certain money market securities, loan commitments and
most over the counter (OTC) derivatives.
Level 3 - Instruments valued using
a valuation technique where at least one input which could have a
significant effect on the instrument's valuation, is not based on
observable market data. Examples include non-derivative instruments
which trade infrequently, certain syndicated and commercial
mortgage loans, private equity, and derivatives with unobservable
model inputs.
|
(2)
|
Transfers between levels are
deemed to have occurred at the beginning of the quarter in which
the instruments were transferred.
|
Notes
6. Financial instruments -
valuation continued
Fair value of financial
instruments measured at amortised cost on the balance
sheet
The following table shows the
carrying value and fair value of financial instruments carried at
amortised cost on the balance sheet.
|
|
|
|
|
|
Items where
fair
|
|
Carrying
|
Fair
|
Fair value hierarchy
level
|
value
approximates
|
|
value
|
value
|
Level 1
|
Level 2
|
Level 3
|
carrying
value
|
30 June 2024
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
Financial assets
|
|
|
|
|
|
|
Cash and balances at central
banks
|
48.6
|
48.6
|
-
|
-
|
-
|
48.6
|
Loans to banks
|
2.7
|
2.7
|
-
|
1.0
|
0.5
|
1.2
|
Loans to customers
|
315.7
|
309.4
|
-
|
24.0
|
285.4
|
-
|
Amounts due from holding
companies
|
|
|
|
|
|
|
and fellow
subsidiaries
|
2.9
|
2.9
|
-
|
-
|
2.9
|
-
|
Other financial assets
|
|
|
|
|
|
|
Securities
|
9.7
|
9.7
|
3.1
|
6.0
|
0.6
|
-
|
|
|
|
|
|
|
|
31 December 2023
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
Cash and balances at central
banks
|
48.3
|
48.3
|
-
|
-
|
-
|
48.3
|
Loans to banks
|
3.4
|
3.4
|
-
|
1.7
|
0.3
|
1.4
|
Loans to customers
|
318.5
|
310.7
|
-
|
25.9
|
284.8
|
-
|
Amounts due from holding
companies
|
|
|
|
|
|
|
and fellow
subsidiaries
|
1.8
|
1.8
|
-
|
-
|
1.8
|
-
|
Other financial assets
|
|
|
|
|
|
|
Securities
|
8.0
|
8.0
|
1.9
|
5.7
|
0.4
|
-
|
|
|
|
|
|
|
|
30 June 2024
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
Bank deposits
|
20.6
|
20.5
|
-
|
17.5
|
-
|
3.0
|
Customer deposits
|
313.4
|
313.0
|
-
|
25.7
|
26.9
|
260.4
|
Amounts due to holding
companies
|
|
|
|
|
|
|
and fellow
subsidiaries
|
43.7
|
43.9
|
-
|
26.5
|
12.7
|
4.7
|
Other financial
liabilities
|
|
|
|
|
|
|
Settlement balances
|
0.2
|
0.2
|
-
|
-
|
-
|
0.2
|
Debt securities in
issue
|
6.9
|
6.9
|
-
|
0.8
|
6.1
|
-
|
Subordinated
liabilities
|
0.1
|
0.2
|
-
|
0.2
|
-
|
-
|
Notes in circulation
|
0.9
|
0.9
|
-
|
-
|
-
|
0.9
|
|
|
|
|
|
|
|
31 December 2023
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
Bank deposits
|
18.1
|
18.2
|
-
|
14.9
|
0.3
|
3.0
|
Customer deposits
|
313.8
|
313.4
|
-
|
26.8
|
27.1
|
259.5
|
Amounts due to holding
companies
|
|
-
|
-
|
|
|
|
and fellow
subsidiaries
|
47.0
|
47.0
|
-
|
29.8
|
12.6
|
4.6
|
Other financial
liabilities
|
|
|
|
|
|
|
Settlement balances
|
-
|
-
|
-
|
-
|
-
|
-
|
Debt securities in
issue
|
9.0
|
9.0
|
-
|
2.1
|
6.9
|
-
|
Subordinated
liabilities
|
0.1
|
0.2
|
-
|
0.2
|
-
|
-
|
Notes in circulation
|
0.8
|
0.8
|
-
|
-
|
-
|
0.8
|
The assumptions and methodologies
underlying the calculation of fair values of financial instruments
at the balance sheet date are as follows:
Short-term financial
instruments
For certain short-term financial
instruments: cash and balances at central banks, items in the
course of collection from other banks, settlement balances, items
in the course of transmission to other banks, customer demand
deposits and notes in circulation, carrying value is deemed a
reasonable approximation of fair value.
Loans to banks and
customers
In estimating the fair value of
net loans to customers and banks measured at amortised cost, NWB
Group's loans are segregated into appropriate portfolios reflecting
the characteristics of the constituent loans. Two principal methods
are used to estimate fair value; contractual cash flows and
expected cash flows.
Debt securities and subordinated
liabilities
Most debt securities are valued
using quoted prices in active markets or from quoted prices of
similar financial instruments in active markets. For the remaining
population, fair values are determined using market standard
valuation techniques, such as discounted cash flows.
Bank and customer
deposits
Fair value of deposits are
estimated using discounted cash flow valuation
techniques.
Notes
7. Loan impairment provisions
Economic loss drivers
Introduction
The portfolio segmentation and
selection of economic loss drivers for IFRS 9 follows the approach
used in stress testing. To enable robust modelling, the forecasting
models for each portfolio segment (defined by product or asset
class and where relevant, industry sector and region) are based on
a selected, small number of economic variables (typically three to
four) that best explain the movements in portfolio loss rates. The
process to select economic loss drivers involves empirical analysis
and expert judgement.
The most significant economic loss
drivers for the most material portfolios are shown in the table
below:
|
|
UK Personal mortgages
|
Unemployment rate, sterling swap
rate, house price index, real wage
|
UK Personal unsecured
|
Unemployment rate, sterling swap
rate, real wage
|
UK corporates
|
Stock price index, gross domestic
product (GDP)
|
UK commercial real
estate
|
Stock price index, commercial
property price index, GDP
|
Economic scenarios
At 30 June 2024, the range of
anticipated future economic conditions was defined by a set of four
internally developed scenarios and their respective probabilities.
In addition to the base case, they comprised upside, downside and
extreme downside scenarios. The scenarios primarily reflected the
current risks faced by the economy, particularly in relation to the
path of inflation and interest rates.
For 30 June 2024, the four
scenarios were deemed appropriate in capturing the uncertainty in
economic forecasts and the non-linearity in outcomes under
different scenarios. These four scenarios were developed to provide
sufficient coverage across potential rises in unemployment,
inflation, asset price declines and the degree of permanent damage
to the economy, around which there remains pronounced levels of
uncertainty.
Upside - This scenario
assumes robust growth as inflation falls sharply and rates are
lowered quicker than expected. Consumer spending is supported by
quicker recovery in household income, and further helped by higher
consumer confidence, fiscal support and strong business investment.
The labour market remains resilient with the unemployment rate
falling. The housing market shows robust growth.
Compared to 31 December 2023, the
upside scenario remains similarly configured, exploring a more
benign set of economic outcomes, including a stronger performing
stock market, real estate prices, and supported by a stronger
global growth backdrop, relative to the base case view.
Base case - Continued
declining inflation allows an easing cycle to start in the second
half of 2024. The unemployment rate rises modestly over 2024 but
there are no wide-spread job losses. Inflation remains very close
to the current level of 2% through the forecast period. Economic
output also experiences modest but stable growth in contrast to the
stagnation of recent years. The housing market experiences modest
nominal price increase. Housing market activity gradually
strengthens as interest rates fall and real incomes
recover.
Since 31 December 2023, the
economic outlook has improved as household incomes continued to
recover, and the labour market remained resilient. The declining
inflation trend has continued, albeit the progress was slower than
expected. As a result, rates are expected to remain
higher-for-longer than previously expected. The unemployment rate
still rises but the peak is marginally lower and is underpinned by
a resilient labour market. House prices were assumed to decline
previously in 2024, but there has been a better-than-expected
recovery in early 2024 and prices are now expected to show a modest
increase.
Downside - Core inflation
remains persistently high leading to resurgent inflation. The
economy experiences a recession as consumer confidence weakens due
to a fall in real incomes. Interest rates are raised higher than
the base case and remain higher-for-longer. High rates are assumed
to have a more significant impact on the labour market.
Unemployment is higher than the base case scenario while house
prices lose approximately ten percent of their value.
Compared to 31 December 2023, the
downside scenario is similarly configured and explores risks
associated with high inflation and significantly higher interest
rates across the period.
Extreme downside - This
scenario assumes a significant economic downturn with a loss of
consumer confidence leading to a deep economic recession. This
results in widespread job losses with the unemployment rate rising
above the levels seen during the 2008 financial crisis, further
compounding consumer weakness. Rates are cut sharply in response to
the demand shock, leading to some support to the recovery. House
prices lose approximately a third of their value.
Compared to 31 December 2023, the
extreme downside is similarly configured with an extreme set of
economic outcomes, low interest rates, very sharp falls in asset
prices and a marked deterioration in the labour
market.
Notes
7. Loan impairment provisions continued
Main macroeconomic
variables
The main macroeconomic variables
for each of the four scenarios used for expected credit loss (ECL)
modelling are set out in the main macroeconomic variables table
below.
|
30 June
2024
|
|
31
December 2023
|
|
|
|
|
Extreme
|
Weighted
|
|
|
|
|
Extreme
|
Weighted
|
|
Upside
|
Base case
|
Downside
|
downside
|
average
|
|
Upside
|
Base
case
|
Downside
|
downside
|
average
|
Five-year summary
|
%
|
%
|
%
|
%
|
%
|
|
%
|
%
|
%
|
%
|
%
|
GDP
|
1.9
|
1.2
|
0.6
|
(0.2)
|
1.1
|
|
1.8
|
1.0
|
0.5
|
(0.3)
|
0.9
|
Unemployment rate
|
3.5
|
4.3
|
5.4
|
7.1
|
4.7
|
|
3.5
|
4.6
|
5.2
|
6.8
|
4.8
|
House price index
|
5.3
|
3.3
|
1.0
|
(4.2)
|
2.5
|
|
3.9
|
0.3
|
(0.4)
|
(5.7)
|
0.3
|
Commercial real estate
price
|
4.4
|
1.2
|
(0.7)
|
(5.1)
|
0.8
|
|
3.1
|
(0.2)
|
(2.0)
|
(6.8)
|
(0.6)
|
Consumer price index
|
1.1
|
2.1
|
4.8
|
1.3
|
2.3
|
|
1.7
|
2.6
|
5.2
|
1.8
|
2.8
|
Bank of England base
rate
|
3.3
|
3.7
|
5.7
|
2.6
|
3.8
|
|
3.8
|
3.7
|
5.6
|
2.9
|
4.0
|
Stock price index
|
4.7
|
3.3
|
1.3
|
0.2
|
2.8
|
|
4.8
|
3.3
|
1.2
|
(0.4)
|
2.8
|
World GDP
|
3.7
|
3.1
|
2.7
|
1.8
|
3.0
|
|
3.7
|
3.2
|
2.7
|
1.8
|
3.0
|
Probability weight
|
22.0
|
45.0
|
19.4
|
13.6
|
|
|
21.2
|
45.0
|
20.4
|
13.4
|
|
(1) The five-year summary
runs from 2024-2028 for 30 June 2024 and from 2023-27 for 31
December 2023.
(2) The table shows
compound annual growth rate (CAGR) for GDP, average levels for the
unemployment rate and Bank of England base rate and Q4 to Q4 CAGR
for other parameters.
Probability weightings of
scenarios
NWB Group's quantitative approach
to IFRS 9 multiple economic scenarios (MES) involves selecting a
suitable set of discrete scenarios to characterise the distribution
of risks in the economic outlook and assigning appropriate
probability weights. This quantitative approach is used for 30 June
2024.
The approach involves comparing
GDP paths for NWB Group's scenarios against a set of 1,000 model
runs, following which, a percentile in the distribution is
established that most closely corresponded to the scenario.
Probability weight for base case is set first based on judgement,
while probability weights for the alternate scenarios are assigned
based on these percentiles scores.
The assigned probability weights
were judged to be aligned with the subjective assessment of balance
of the risks in the economy. The weights were broadly comparable to
those used at 31 December 2023 but with slightly less downside
skew. This is reasonable as the inflation outturn since then has
been encouraging, with inflation continuing to decline and a
reduced risk of stagflation. However, the risks of persistent
inflation remain elevated and there is considerable uncertainty in
the economic outlook, particularly with respect to persistence and
the range of outcomes on inflation. Given that backdrop, NWB Group
judges it appropriate that downside-biased scenarios have higher
combined probability weights than the upside-biased scenario. It
presents good coverage to the range of outcomes assumed in the
scenarios, including the potential for a robust recovery on the
upside and exceptionally challenging outcomes on the downside. A
22% weighting was applied to the upside scenario, a 45% weighting
applied to the base case scenario, a 19.4% weighting applied to the
downside scenario and a 13.6% weighting applied to the extreme
downside scenario.
Notes
7. Loan impairment provisions continued
Annual figures
|
|
|
|
Extreme
|
Weighted
|
|
Upside
|
Base case
|
Downside
|
downside
|
average
|
GDP - annual growth
|
%
|
%
|
%
|
%
|
%
|
2024
|
1.7
|
0.7
|
0.1
|
-
|
0.7
|
2025
|
3.9
|
1.2
|
(0.9)
|
(4.0)
|
0.7
|
2026
|
1.4
|
1.4
|
1.1
|
0.9
|
1.3
|
2027
|
1.2
|
1.4
|
1.3
|
1.2
|
1.3
|
2028
|
1.2
|
1.4
|
1.3
|
1.2
|
1.3
|
2029
|
1.3
|
1.4
|
1.3
|
1.3
|
1.3
|
|
|
|
|
|
|
Unemployment rate - annual average
|
|
|
|
|
|
2024
|
4.2
|
4.4
|
4.6
|
4.8
|
4.4
|
2025
|
3.4
|
4.4
|
5.7
|
7.8
|
4.9
|
2026
|
3.2
|
4.3
|
5.7
|
8.3
|
4.9
|
2027
|
3.3
|
4.3
|
5.5
|
7.7
|
4.7
|
2028
|
3.3
|
4.2
|
5.4
|
7.1
|
4.6
|
2029
|
3.3
|
4.2
|
5.3
|
6.8
|
4.6
|
|
|
|
|
|
|
House price index - four quarter
change
|
|
|
|
|
|
2024
|
6.8
|
3.1
|
(1.2)
|
(3.3)
|
2.2
|
2025
|
8.9
|
3.1
|
(6.0)
|
(13.2)
|
0.6
|
2026
|
4.5
|
3.4
|
1.0
|
(14.5)
|
1.3
|
2027
|
3.1
|
3.4
|
6.6
|
5.4
|
4.1
|
2028
|
3.5
|
3.4
|
5.2
|
6.8
|
4.1
|
2029
|
3.4
|
3.4
|
3.4
|
3.4
|
3.4
|
|
|
|
|
|
|
Commercial real estate price - four quarter
change
|
|
|
|
|
|
2024
|
6.2
|
(1.3)
|
(4.2)
|
(7.7)
|
(1.1)
|
2025
|
5.5
|
1.7
|
(8.0)
|
(30.8)
|
(3.4)
|
2026
|
4.6
|
2.0
|
3.1
|
3.3
|
3.0
|
2027
|
3.8
|
2.2
|
3.4
|
7.8
|
3.3
|
2028
|
1.8
|
1.5
|
3.0
|
8.5
|
2.5
|
2029
|
1.4
|
1.4
|
1.4
|
1.4
|
1.4
|
|
|
|
|
|
|
Consumer price index - four quarter change
|
|
|
|
|
|
2024
|
1.4
|
2.1
|
5.7
|
0.1
|
2.4
|
2025
|
0.5
|
2.1
|
6.7
|
0.5
|
2.5
|
2026
|
1.3
|
2.0
|
4.4
|
2.0
|
2.4
|
2027
|
1.2
|
2.0
|
3.8
|
2.0
|
2.2
|
2028
|
1.1
|
2.0
|
3.7
|
2.0
|
2.2
|
2029
|
2.0
|
2.0
|
2.0
|
2.0
|
2.0
|
|
|
|
|
|
|
Bank of England base rate - annual average
|
|
|
|
|
|
2024
|
4.83
|
5.10
|
5.50
|
4.69
|
5.06
|
2025
|
3.46
|
4.06
|
6.35
|
2.38
|
4.14
|
2026
|
2.85
|
3.08
|
5.83
|
2.00
|
3.42
|
2027
|
2.75
|
3.00
|
5.50
|
2.00
|
3.29
|
2028
|
2.75
|
3.00
|
5.19
|
2.06
|
3.24
|
2029
|
2.75
|
3.00
|
5.00
|
2.25
|
3.23
|
|
|
|
|
|
|
Stock price index - four quarter change
|
|
|
|
|
|
2024
|
6.8
|
3.3
|
(11.0)
|
(27.7)
|
(2.9)
|
2025
|
5.7
|
3.3
|
(1.5)
|
(7.4)
|
1.9
|
2026
|
4.1
|
3.3
|
8.6
|
21.2
|
6.0
|
2027
|
3.6
|
3.3
|
6.5
|
12.9
|
4.9
|
2028
|
3.2
|
3.3
|
5.3
|
10.2
|
4.4
|
2029
|
3.3
|
3.3
|
3.3
|
3.3
|
3.3
|
Notes
7.
Loan impairment provisions continued
Worst points
|
30 June
2024
|
|
31
December 2023
|
|
|
|
Extreme
|
|
Weighted
|
|
|
|
Extreme
|
|
Weighted
|
|
Downside
|
|
downside
|
|
average
|
|
Downside
|
|
downside
|
|
average
|
|
%
|
Quarter
|
%
|
Quarter
|
%
|
|
%
|
Quarter
|
%
|
Quarter
|
%
|
GDP
|
(0.9)
|
Q1 2025
|
(4.2)
|
Q2 2025
|
0.6
|
|
(1.2)
|
Q3
2024
|
(4.5)
|
Q4
2024
|
0.3
|
Unemployment rate -
peak
|
5.8
|
Q3 2025
|
8.5
|
Q4 2025
|
5.0
|
|
5.8
|
Q1
2025
|
8.5
|
Q2
2025
|
5.2
|
House price index
|
(8.0)
|
Q2 2026
|
(28.2)
|
Q4 2026
|
1.1
|
|
(12.5)
|
Q4
2025
|
(31.7)
|
Q2
2026
|
(6.5)
|
Commercial real estate
price
|
(11.9)
|
Q3 2025
|
(36.5)
|
Q1 2026
|
(4.4)
|
|
(16.6)
|
Q1
2025
|
(39.9)
|
Q3
2025
|
(10.2)
|
Consumer price index
|
|
|
|
|
|
|
|
|
|
|
|
- highest four quarter change
|
8.5
|
Q2 2025
|
3.5
|
Q1 2024
|
3.5
|
|
10.3
|
Q1
2023
|
10.3
|
Q1
2023
|
10.3
|
Bank of England base
rate
|
|
|
|
|
|
|
|
|
|
|
|
- extreme level
|
6.5
|
Q2 2025
|
5.3
|
Q1 2024
|
5.3
|
|
6.5
|
Q4
2024
|
5.3
|
Q4
2023
|
5.3
|
Stock price index
|
(16.0)
|
Q2 2025
|
(40.5)
|
Q2 2025
|
(4.2)
|
|
(14.3)
|
Q4
2024
|
(39.3)
|
Q4
2024
|
(2.4)
|
(1)
|
Unless specified otherwise, the
figures show falls relative to the starting period. The
calculations are performed over five years, with a starting point
of Q4 2023 for 30 June 2024 scenarios and Q4 2022 for 31 December
2023 scenarios.
|
Use of the scenarios in Personal
lending
Personal lending follows a
discrete scenario approach. The probability of default (PD),
exposure at default (EAD), loss given default (LGD) and resultant
ECL for each discrete scenario is calculated using product specific
economic response models. Probability weighted averages across the
suite of economic scenarios are then calculated for each of the
model outputs, with the weighted PD being used for staging
purposes.
Business Banking utilises the
Personal lending methodology rather than the Wholesale lending
methodology.
Use of the scenarios in Wholesale
lending
Wholesale lending follows a
continuous scenario approach to calculate ECL. PD and LGD values
arising from multiple economic forecasts (based on the concept of
credit cycle indices) are simulated around the central projection.
The central projection is a weighted average of economic scenarios
with the scenarios translated into credit cycle indices using the
Wholesale economic response models.
UK economic uncertainty
The high inflation environment
alongside high interest rates are presenting significant headwinds
for some businesses and consumers, in many cases compounding. These
cost pressures remain a feature of the economic environment, though
they are expected to moderate over 2024 and 2025 in the base case
scenario. NWB Group has considered where these are most likely to
affect the customer base, with the cost of borrowing during 2023
and 2024 for both businesses and consumers presenting an additional
affordability challenge.
The effects of these risks are not
expected to be fully captured by forward-looking credit modelling,
particularly given the high inflation environment, low unemployment
base case outlook. Any incremental ECL effects for these risks will
be captured via post model adjustments and are detailed further in
the Governance and post model adjustments section.
Notes
7. Loan impairment provisions continued
Governance and post model
adjustments
The IFRS 9 PD, EAD and LGD models
are subject to NWB Group's model risk policy that stipulates
periodic model monitoring, periodic re-validation and defines
approval procedures and authorities according to model materiality.
Various post model adjustments were applied where management judged
they were necessary to ensure an adequate level of overall ECL
provision. All post model adjustments were subject to review,
challenge and approval through model or provisioning
committees.
Post model adjustments will remain
a key focus area of NWB Group's ongoing ECL adequacy assessment
process. A holistic framework has been established including
reviewing a range of economic data, external benchmark information
and portfolio performance trends with a particular focus on
segments of the portfolio (both commercial and consumer) that are
likely to be more susceptible to high inflation, high interest
rates and supply chain disruption.
ECL post model
adjustments
The table below shows ECL post
model adjustments.
|
Retail
Banking
|
|
Private
|
Commercial
&
|
Central
items
|
|
|
Mortgages
|
Other
|
|
Banking
|
Institutional
|
&
other
|
Total
|
30 June 2024
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
£m
|
Deferred model
calibrations
|
-
|
-
|
|
1
|
12
|
-
|
13
|
Economic uncertainty
|
72
|
35
|
|
8
|
125
|
4
|
244
|
Other adjustments
|
-
|
-
|
|
-
|
3
|
-
|
3
|
Total
|
72
|
35
|
|
9
|
140
|
4
|
260
|
|
|
|
|
|
|
|
|
Of which:
|
|
|
|
|
|
|
|
- Stage 1
|
34
|
15
|
|
5
|
55
|
4
|
113
|
- Stage 2
|
31
|
20
|
|
4
|
83
|
-
|
138
|
- Stage 3
|
7
|
-
|
|
-
|
2
|
-
|
9
|
|
|
|
|
|
|
|
|
31 December 2023
|
|
|
|
|
|
|
|
Deferred model
calibrations
|
-
|
-
|
|
1
|
14
|
-
|
15
|
Economic uncertainty
|
109
|
31
|
|
13
|
191
|
3
|
347
|
Other adjustments
|
1
|
-
|
|
-
|
6
|
-
|
7
|
Total
|
110
|
31
|
|
14
|
211
|
3
|
369
|
|
|
|
|
|
|
|
|
Of which:
|
|
|
|
|
|
|
|
- Stage 1
|
72
|
11
|
|
6
|
83
|
-
|
172
|
- Stage 2
|
29
|
20
|
|
8
|
124
|
3
|
184
|
- Stage 3
|
9
|
-
|
|
-
|
4
|
-
|
13
|
Notes
7. Loan impairment provisions continued
Post model adjustments decreased
significantly since 31 December 2023, reflecting reduced economic
uncertainty from inflation, higher-for-longer interest rates and
liquidity.
-
Retail
Banking - The post model adjustment for
economic uncertainty decreased to £107 million (31 December 2023 -
£140 million). This reduction primarily reflected a revision to the
cost of living post model adjustment to £99 million (31 December
2023 - £130 million), supported by back-testing of default outcomes
for higher risk segments. The cost of living post model adjustment
captures the risk on segments in the Retail Banking portfolio that
are more susceptible to the effects of cost of living rises. It
focuses on key affordability lenses, including customers with lower
income in fuel poverty, over-indebted borrowers and customers
vulnerable to a potential mortgage rate shock.
-
Commercial &
Institutional - The post model adjustment for
economic uncertainty decreased to £125 million (31 December 2023 -
£191 million). The inflation, supply chain and liquidity post model
adjustment of £101 million (31 December 2023 - £153 million) was
maintained for lending prior to 1 January 2024, with a sector-level
downgrade being applied to the sectors that were considered most at
risk from the ongoing pressures from inflation and concerns around
reducing cash reserves across many sectors. The £52 million
reduction reflected the reduced risks along with portfolio
improvements and exposure reduction.
-
A £24 million (31 December 2023 - £38 million)
post model adjustment to cover the residual risks from COVID-19
remains for the risks surrounding associated debt to customers that
have utilised government support schemes. This adjustment is
reducing as customers default or repay.
-
The £12 million (31 December 2023 - £14 million)
judgemental overlay for deferred model calibrations relates to
refinance risk, with the existing mechanistic modelling approach
not fully capturing the risk on deteriorated exposures.
Measurement uncertainty and ECL
sensitivity analysis
The recognition and measurement of
ECL is complex and involves the use of significant judgment and
estimation, particularly in times of economic volatility and
uncertainty. This includes the formulation and incorporation of
multiple forward-looking economic conditions into ECL to meet the
measurement objective of IFRS 9. The ECL provision is sensitive to
the model inputs and economic assumptions underlying the
estimate.
The impact arising from the base
case, upside, downside and extreme downside scenarios was
simulated. These scenarios are used in the methodology for Personal
multiple economic scenarios as described in the Economic loss
drivers section. In the simulations, NWB Group has assumed that the
economic macro variables associated with these scenarios replace
the existing base case economic assumptions, giving them a 100%
probability weighting and therefore serving as a single economic
scenario.
These scenarios were applied to
all modelled portfolios in the analysis below, with the simulation
impacting both PDs and LGDs. Post model adjustments included in the
ECL estimates that were modelled were sensitised in line with the
modelled ECL movements, but those that were judgmental in nature,
primarily those for deferred model calibrations and economic
uncertainty, were not (refer to the Governance and post model
adjustments section) on the basis these would be re-evaluated by
management through ECL governance for any new economic scenario
outlook and not be subject to an automated calculation. As
expected, the scenarios create differing impacts on ECL by
portfolio and the impacts are deemed reasonable. In this
simulation, it is assumed that existing modelled relationships
between key economic variables and loss drivers hold, but in
practice other factors would also have an impact, for example,
potential customer behaviour changes and policy changes by lenders
that might impact on the wider availability of credit.
The focus of the simulations is on
ECL provisioning requirements on performing exposures in Stage 1
and Stage 2. The simulations are run on a stand-alone basis and are
independent of each other; the potential ECL impacts reflect the
simulated impact at 30 June 2024. Scenario impacts on SICR should
be considered when evaluating the ECL movements of Stage 1 and
Stage 2. In all scenarios the total exposure was the same but
exposure by stage varied in each scenario.
Stage 3 provisions are not subject
to the same level of measurement uncertainty - default is an
observed event as at the balance sheet date. Stage 3 provisions
therefore were not considered in this analysis.
NWB Group's core criterion to
identify a SICR is founded on PD deterioration. Under the
simulations, PDs change and result in exposures moving between
Stage 1 and Stage 2 contributing to the ECL impact.
Notes
7. Loan impairment provisions continued
Measurement uncertainty and ECL
sensitivity analysis
|
|
|
Moderate
|
Moderate
|
Extreme
|
|
|
Base
|
upside
|
downside
|
downside
|
30 June 2024
|
Actual
|
scenario
|
scenario
|
scenario
|
scenario
|
Stage 1 modelled loans
(£m)
|
|
|
|
|
|
Retail Banking -
mortgages
|
157,805
|
158,237
|
158,631
|
155,136
|
148,976
|
Retail Banking -
unsecured
|
8,160
|
8,232
|
8,332
|
7,953
|
7,385
|
Wholesale - property
|
18,614
|
18,647
|
18,747
|
18,342
|
15,507
|
Wholesale -
non-property
|
90,292
|
90,949
|
91,201
|
88,838
|
73,966
|
|
274,871
|
276,065
|
276,911
|
270,269
|
245,834
|
Stage 1 modelled ECL
(£m)
|
|
|
|
|
|
Retail Banking -
mortgages
|
44
|
43
|
42
|
44
|
42
|
Retail Banking -
unsecured
|
191
|
184
|
170
|
209
|
203
|
Wholesale - property
|
53
|
39
|
30
|
72
|
107
|
Wholesale -
non-property
|
162
|
140
|
115
|
202
|
246
|
|
450
|
406
|
357
|
527
|
598
|
Stage 2 modelled loans
(£m)
|
|
|
|
|
|
Retail Banking -
mortgages
|
18,395
|
17,963
|
17,569
|
21,064
|
27,224
|
Retail Banking -
unsecured
|
2,558
|
2,486
|
2,386
|
2,765
|
3,333
|
Wholesale - property
|
2,179
|
2,146
|
2,046
|
2,451
|
5,286
|
Wholesale -
non-property
|
9,082
|
8,425
|
8,173
|
10,536
|
25,408
|
|
32,214
|
31,020
|
30,174
|
36,816
|
61,251
|
Stage 2 modelled ECL
(£m)
|
|
|
|
|
|
Retail Banking -
mortgages
|
64
|
56
|
51
|
76
|
114
|
Retail Banking -
unsecured
|
326
|
301
|
262
|
381
|
500
|
Wholesale - property
|
46
|
41
|
36
|
58
|
136
|
Wholesale -
non-property
|
220
|
190
|
165
|
283
|
536
|
|
656
|
588
|
514
|
798
|
1,286
|
Stage 1 and Stage 2 modelled loans
(£m)
|
|
|
|
|
|
Retail Banking -
mortgages
|
176,200
|
176,200
|
176,200
|
176,200
|
176,200
|
Retail Banking -
unsecured
|
10,718
|
10,718
|
10,718
|
10,718
|
10,718
|
Wholesale - property
|
20,793
|
20,793
|
20,793
|
20,793
|
20,793
|
Wholesale -
non-property
|
99,374
|
99,374
|
99,374
|
99,374
|
99,374
|
|
307,085
|
307,085
|
307,085
|
307,085
|
307,085
|
Stage 1 and Stage 2 modelled ECL
(£m)
|
|
|
|
|
|
Retail Banking -
mortgages
|
108
|
99
|
93
|
120
|
156
|
Retail Banking -
unsecured
|
517
|
485
|
432
|
590
|
703
|
Wholesale - property
|
99
|
80
|
66
|
130
|
243
|
Wholesale -
non-property
|
382
|
330
|
280
|
485
|
782
|
|
1,106
|
994
|
871
|
1,325
|
1,884
|
Stage 1 and Stage 2 coverage
(%)
|
|
|
|
|
|
Retail Banking -
mortgages
|
0.06%
|
0.06%
|
0.05%
|
0.07%
|
0.09%
|
Retail Banking -
unsecured
|
4.82%
|
4.53%
|
4.03%
|
5.50%
|
6.56%
|
Wholesale - property
|
0.48%
|
0.38%
|
0.32%
|
0.63%
|
1.17%
|
Wholesale -
non-property
|
0.38%
|
0.33%
|
0.28%
|
0.49%
|
0.79%
|
|
0.36%
|
0.32%
|
0.28%
|
0.43%
|
0.61%
|
Reconciliation to Stage 1 and
Stage 2 ECL (£m)
|
|
|
|
|
|
ECL on modelled
exposures
|
1,106
|
994
|
871
|
1,325
|
1,884
|
ECL on non-modelled
exposures
|
26
|
26
|
26
|
26
|
26
|
Total Stage 1 and Stage 2
ECL
|
1,132
|
1,020
|
897
|
1,351
|
1,910
|
Variance to actual total Stage 1
and Stage 2 ECL
|
|
(112)
|
(235)
|
219
|
778
|
|
|
|
|
|
|
Reconciliation to Stage 1 and
Stage 2 flow exposure (£m)
|
|
|
|
|
|
Modelled loans
|
307,085
|
307,085
|
307,085
|
307,085
|
307,085
|
Non-modelled loans
|
16,532
|
16,532
|
16,532
|
16,532
|
16,532
|
Other asset classes
|
64,217
|
64,217
|
64,217
|
64,217
|
64,217
|
(1)
Variations in future undrawn exposure values across the scenarios
are modelled, however, the exposure position reported is that used
to calculate modelled ECL as at 30 June 2024 and therefore does not
include variation in future undrawn exposure values.
(2)
Reflects ECL for all modelled exposure in scope for IFRS 9. The
analysis excludes non-modelled portfolios and exposure relating to
bonds and cash.
(3)
Exposures related to Ulster Bank RoI continuing operations were not
included in the simulations, the current Ulster Bank RoI ECL was
included across all scenarios to enable reconciliation to other
disclosures.
(4) All
simulations were run on a stand-alone basis and are independent of
each other, with the potential ECL impact reflecting the simulated
impact as at 30 June 2024. The simulations
change the composition of Stage 1 and Stage 2 exposure but total
exposure is unchanged under each scenario as the loan population is
static.
(5) Refer
to the Economic loss drivers section for details of economic
scenarios.
(6) Refer
to the NatWest Bank Plc 2023 Annual Report and Accounts for 31
December 2023 comparatives.
Notes
7. Loan impairment provisions continued
Measurement uncertainty and ECL
adequacy
-
If the economics were as negative as observed in
the extreme downside (i.e. 100% probability weighting), total Stage
1 and Stage 2 ECL was simulated to increase by around £0.8 billion
(approximately 69%). In this scenario, Stage 2 exposure increased
and was the key driver of the simulated ECL rise. The movement in
Stage 2 balances in the other simulations was far less significant
and the impact to ECL less material.
-
In the Wholesale portfolio, there was a
significant increase in ECL under the extreme downside scenario.
The Wholesale property ECL increase was mainly due to commercial
real estate prices which showed negative growth particularly in
2025 and significant deterioration in the stock index in 2024 and
2025. The non-property increase was mainly due to GDP contraction
in 2025 and significant deterioration in the stock
index.
-
Given that continued uncertainty remained due to
persistent inflation, high interest rates and liquidity concerns at
H1 2024, NWB Group utilised a framework of quantitative and
qualitative measures to support the levels of ECL coverage. This
included economic data, credit performance insights, supply chain
contagion analysis and problem debt trends. This was particularly
important for consideration of post model adjustments.
-
As the effects of these economic risks evolve
during 2024, there is a risk of further credit deterioration.
However, the income statement effect of this should have been
mitigated by the forward-looking provisions retained on the balance
sheet at 30 June 2024.
-
There are a number of key factors that could
drive further downside to impairments, through deteriorating
economic and credit metrics and increased stage migration as credit
risk increases for more customers. Such factors which could impact
the IFRS 9 models, include an adverse deterioration in unemployment
and GDP in the economies in which NWB Group operates.
Loan exposure and impairment
metrics
The table below shows gross loans
and ECL, within the scope of the IFRS 9 ECL framework.
|
30 June
|
31
December
|
|
2024
|
2023
|
|
£m
|
£m
|
Loans - amortised cost
|
|
|
Stage 1
|
284,823
|
288,772
|
Stage 2
|
31,990
|
31,727
|
Stage 3
|
4,629
|
4,405
|
Inter-group (1)
|
2,931
|
1,809
|
Total
|
324,373
|
326,713
|
ECL provisions (2)
|
|
|
Stage 1
|
466
|
566
|
Stage 2
|
666
|
794
|
Stage 3
|
1,520
|
1,512
|
Inter-group
|
3
|
1
|
|
2,655
|
2,873
|
ECL provisions
coverage (3)
|
|
|
Stage 1 (%)
|
0.16
|
0.20
|
Stage 2 (%)
|
2.08
|
2.50
|
Stage 3 (%)
|
32.84
|
34.32
|
Inter-group (%)
|
0.10
|
0.06
|
|
0.83
|
0.88
|
|
|
|
|
Half year
ended
|
|
30 June
|
30
June
|
|
2024
|
2023
|
|
£m
|
£m
|
Impairment losses
|
|
|
ECL
(release)/charge (4)
|
|
|
Stage 1
|
(303)
|
(167)
|
Stage 2
|
170
|
237
|
Stage 3
|
179
|
119
|
Third party
|
46
|
189
|
Inter-group
|
1
|
2
|
|
47
|
191
|
|
|
|
Amounts written-off
|
298
|
88
|
(1)
NWB Group's intercompany assets were classified
in Stage 1.
(2)
Includes £4 million (31 December
2023 - £8 million) related to assets classified
as fair value through other comprehensive income
(FVOCI).
(3)
ECL provisions coverage is calculated as ECL
provisions divided by loans - amortised cost and FVOCI. It is
calculated on loans and total ECL provisions, including ECL for
other (non-loan) assets and unutilised exposure. Some segments with
a high proportion of debt securities or unutilised exposure may
result in a not meaningful coverage ratio.
(4)
Includes £6 million (30
June 2023 - £2
million) related to other financial assets, of which £5 million
(30 June 2023 - £1 million) related to assets
classified as FVOCI; and £3 million (30
June 2023 - nil)
related to contingent liabilities.
(5) The
table shows gross loans only and excludes amounts that were outside
the scope of the ECL framework. Refer to the Financial instruments
within the scope of the IFRS 9 ECL framework section in the NatWest
Bank Plc 2023 Annual Report and Accounts for further details. Other
financial assets within the scope of the
IFRS 9 ECL framework were cash and balances at central banks
totaling £48.2 billion (31 December
2023 - £47.8 billion) and debt securities of
£31.5 billion (31 December
2023 - £31.5 billion).
Notes
7. Loan impairment provisions continued
-
During the first half of the year, overall ECL
decreased with increases from Stage 3 inflows more than offset by
write-offs, including debt sale activity on Personal unsecured
assets, reductions in economic uncertainty post model adjustments,
as well as reflecting balance reductions and positive portfolio
performance across NWB Group.
-
In the Personal portfolios, Stage 3 default rates
during H1 2024 reduced relative to H2 2023 with trends on PDs and
Stage 2 either stable or improving.
-
For the Wholesale portfolio, Stage 3 defaults
increased but were still below historic trends.
-
Judgemental ECL post model adjustments, decreased
from 31 December 2023 and now represents 10% of total ECL (31
December 2023 - 13%). Refer to the Governance and post model
adjustments section for further details.
Sector analysis
The table below shows ECL by
stage, for the Personal portfolio and selected sectors of the
Wholesale portfolio including those that contain an element of
exposure classified as heightened climate-related risk.
|
Loans - amortised cost and
FVOCI
|
|
Off-balance
sheet
|
|
ECL
provisions
|
|
|
|
|
|
|
Loan
|
Contingent
|
|
|
|
|
|
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
|
commitments
|
liabilities
|
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
30 June 2024
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
£m
|
Personal
|
181,449
|
20,928
|
2,790
|
205,167
|
|
32,071
|
42
|
|
239
|
390
|
840
|
1,469
|
Mortgages
|
171,524
|
18,425
|
1,950
|
191,899
|
|
10,315
|
-
|
|
46
|
63
|
209
|
318
|
Credit
cards
|
3,743
|
1,488
|
130
|
5,361
|
|
15,061
|
-
|
|
69
|
158
|
88
|
315
|
Other
personal
|
6,182
|
1,015
|
710
|
7,907
|
|
6,695
|
42
|
|
124
|
169
|
543
|
836
|
Wholesale
|
103,374
|
11,062
|
1,839
|
116,275
|
|
56,978
|
2,861
|
|
227
|
276
|
680
|
1,183
|
Property
|
19,554
|
2,131
|
483
|
22,168
|
|
8,829
|
194
|
|
53
|
47
|
138
|
238
|
Financial
institutions
|
30,664
|
158
|
70
|
30,892
|
|
3,551
|
520
|
|
18
|
3
|
40
|
61
|
Sovereign
|
251
|
263
|
22
|
536
|
|
151
|
-
|
|
7
|
2
|
4
|
13
|
Corporate
|
52,905
|
8,510
|
1,264
|
62,679
|
|
44,447
|
2,147
|
|
149
|
224
|
498
|
871
|
Of which:
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
3,364
|
709
|
105
|
4,178
|
|
774
|
15
|
|
11
|
23
|
29
|
63
|
Airlines
and aerospace
|
1,851
|
235
|
4
|
2,090
|
|
1,546
|
219
|
|
4
|
2
|
2
|
8
|
Automotive
|
6,560
|
640
|
52
|
7,252
|
|
3,335
|
74
|
|
13
|
11
|
18
|
42
|
Building
materials
|
1,371
|
201
|
17
|
1,589
|
|
1,239
|
59
|
|
4
|
6
|
6
|
16
|
Chemicals
|
325
|
74
|
1
|
400
|
|
634
|
11
|
|
1
|
1
|
1
|
3
|
Industrials
|
1,751
|
361
|
69
|
2,181
|
|
2,095
|
102
|
|
5
|
10
|
26
|
41
|
Land
transport and logistics
|
3,776
|
284
|
48
|
4,108
|
|
2,125
|
174
|
|
7
|
10
|
13
|
30
|
Leisure
|
3,622
|
1,553
|
223
|
5,398
|
|
1,725
|
67
|
|
19
|
49
|
78
|
146
|
Mining
and metals
|
147
|
22
|
1
|
170
|
|
256
|
2
|
|
-
|
-
|
1
|
1
|
Oil
and gas
|
451
|
11
|
51
|
513
|
|
1,401
|
112
|
|
1
|
-
|
46
|
47
|
Power
utilities
|
5,059
|
298
|
79
|
5,436
|
|
4,415
|
519
|
|
11
|
7
|
32
|
50
|
Retail
|
4,413
|
869
|
153
|
5,435
|
|
3,703
|
309
|
|
11
|
22
|
65
|
98
|
Shipping
|
193
|
9
|
3
|
205
|
|
57
|
20
|
|
-
|
-
|
1
|
1
|
Water
and waste
|
3,456
|
323
|
20
|
3,799
|
|
1,686
|
114
|
|
3
|
3
|
5
|
11
|
Total
|
284,823
|
31,990
|
4,629
|
321,442
|
|
89,049
|
2,903
|
|
466
|
666
|
1,520
|
2,652
|
31 December 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal
|
184,964
|
18,945
|
2,689
|
206,598
|
|
28,344
|
45
|
|
270
|
424
|
889
|
1,583
|
Mortgages
|
176,085
|
15,951
|
1,774
|
193,810
|
|
7,537
|
-
|
|
83
|
55
|
183
|
321
|
Credit
cards
|
3,115
|
1,640
|
110
|
4,865
|
|
13,862
|
-
|
|
59
|
167
|
73
|
299
|
Other
personal
|
5,764
|
1,354
|
805
|
7,923
|
|
6,945
|
45
|
|
128
|
202
|
633
|
963
|
Wholesale
|
103,808
|
12,782
|
1,716
|
118,306
|
|
56,995
|
2,508
|
|
296
|
370
|
623
|
1,289
|
Property
|
18,341
|
2,282
|
411
|
21,034
|
|
9,023
|
216
|
|
74
|
69
|
123
|
266
|
Financial
institutions
|
32,311
|
189
|
11
|
32,511
|
|
3,928
|
318
|
|
22
|
8
|
3
|
33
|
Sovereign
|
1,552
|
-
|
22
|
1,574
|
|
122
|
-
|
|
7
|
1
|
2
|
10
|
Corporate
|
51,604
|
10,311
|
1,272
|
63,187
|
|
43,922
|
1,974
|
|
193
|
292
|
495
|
980
|
Of which:
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
3,305
|
821
|
75
|
4,201
|
|
768
|
14
|
|
16
|
28
|
26
|
70
|
Airlines
and aerospace
|
1,330
|
303
|
3
|
1,636
|
|
1,260
|
152
|
|
4
|
5
|
2
|
11
|
Automotive
|
6,749
|
989
|
73
|
7,811
|
|
3,078
|
34
|
|
17
|
17
|
25
|
59
|
Building
materials
|
1,112
|
250
|
67
|
1,429
|
|
1,265
|
67
|
|
6
|
8
|
5
|
19
|
Chemicals
|
311
|
61
|
4
|
376
|
|
684
|
11
|
|
1
|
9
|
1
|
11
|
Industrials
|
1,814
|
450
|
63
|
2,327
|
|
2,379
|
107
|
|
8
|
15
|
17
|
40
|
Land
transport and logistics
|
3,533
|
529
|
23
|
4,085
|
|
2,408
|
132
|
|
9
|
13
|
10
|
32
|
Leisure
|
3,435
|
1,867
|
233
|
5,535
|
|
1,446
|
98
|
|
25
|
58
|
74
|
157
|
Mining
and metals
|
127
|
30
|
1
|
158
|
|
376
|
2
|
|
-
|
-
|
1
|
1
|
Oil
and gas
|
607
|
124
|
25
|
756
|
|
1,415
|
132
|
|
2
|
2
|
25
|
29
|
Power
utilities
|
4,961
|
417
|
39
|
5,417
|
|
5,023
|
405
|
|
12
|
13
|
24
|
49
|
Retail
|
4,032
|
1,152
|
209
|
5,393
|
|
3,703
|
357
|
|
18
|
30
|
110
|
158
|
Shipping
|
191
|
8
|
3
|
202
|
|
54
|
21
|
|
-
|
-
|
2
|
2
|
Water
and waste
|
3,487
|
120
|
12
|
3,619
|
|
1,820
|
68
|
|
4
|
4
|
4
|
12
|
Total
|
288,772
|
31,727
|
4,405
|
324,904
|
|
85,339
|
2,553
|
|
566
|
794
|
1,512
|
2,872
|
Notes
7. Loan impairment provisions continued
-
Personal - Loans to customers were lower than Q4 2023, mainly due to a
reduction in mortgage balances where higher redemptions were only
partly offset by new mortgage lending. Unsecured lending grew
overall, driven by growth in credit cards. New lending and
portfolio credit quality was maintained with limited increases in
arrears in line with expectations. Total ECL coverage decreased
during H1 2024 reflective of Q2 2024 debt sale activity on
unsecured portfolios reductions in economic uncertainty post model
adjustments, and stable underlying portfolio performance. The
reduction in good book coverage in the first half of the year was
also a result of unsecured probability of default modelling updates
alongside an improved view on forward looking economics,
underpinning a reduction in Stage 2 balances. Post model
adjustments to capture increased affordability pressures on
customers due to high inflation and interest rates decreased since
Q4 2023, reflecting a revision of portfolio subsegments deemed most
at risk, supported by back-testing of default outcomes. Flow rates
into Stage 3 reduced during H1 2024.
-
Wholesale - Exposure decreased in H1 2024 mainly due to financial
institutions and sovereigns, partially offset by increases in
property. Sector appetite continues to be reviewed regularly, with
particular focus on sector clusters deemed to represent a
heightened risk. Total ECL reduced in H1
2024 due to releases in post model adjustments, positive portfolio
performance and improved economic scenarios. This was partially
offset by an increase in Stage 3 ECL, from flows into default on
individually assessed customers. The ECL decrease results in a
reduction in coverage levels, but coverage on Stage 1 and Stage 2
was still significantly above pre-COVID-19 levels, reflecting that
a degree of economic uncertainty remains.
Flow statements
The flow statements that follow
show the main ECL and related income statement movements. They also
show the changes in ECL as well as the changes in related financial
assets used in determining ECL. Due to differences in scope,
exposures may differ from those reported in other tables,
principally in relation to exposures in Stage 1 and Stage 2. These
differences do not have a material ECL effect. Other points to
note:
-
Financial assets include treasury liquidity
portfolios, comprising balances at central banks and debt
securities, as well as loans. Both modelled and non-modelled
portfolios are included.
-
Stage transfers (for example, exposures moving
from Stage 1 into Stage 2) are a key feature of the ECL movements,
with the net re-measurement cost of transitioning to a worse stage
being a primary driver of income statement charges. Similarly,
there is an ECL benefit for accounts improving stage.
-
Changes in risk parameters shows the reassessment
of the ECL within a given stage, including any ECL overlays and
residual income statement gains or losses at the point of write-off
or accounting write-down.
-
Other (P&L only items) includes any subsequent
changes in the value of written-down assets (for example,
fortuitous recoveries) along with other direct write-off items such
as direct recovery costs. Other (P&L only items) affects the
income statement but does not affect balance sheet ECL
movements.
-
Amounts written-off represent the gross asset
written-down against accounts with ECL, including the net asset
write-down for any debt sale activity.
-
There were flows from Stage 1 into Stage 3
including transfers due to unexpected default events.
-
The effect of any change in post model adjustments
during the year is typically reported under changes in risk
parameters, as are any effects arising from changes to the
underlying models. Refer to the section on Governance and post
model adjustments for further details.
-
All movements are captured monthly and aggregated.
Interest suspended post default is included within Stage 3 ECL,
with the movement in the value of suspended interest during the
year reported under currency translation and other
adjustments.
|
Stage 1
|
|
Stage 2
|
|
Stage 3
|
|
Total
|
|
Financial
|
|
|
Financial
|
|
|
Financial
|
|
|
Financial
|
|
|
assets
|
ECL
|
|
assets
|
ECL
|
|
assets
|
ECL
|
|
assets
|
ECL
|
NWB Group total
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
At 1 January 2024
|
361,888
|
566
|
|
33,756
|
794
|
|
4,440
|
1,512
|
|
400,084
|
2,872
|
Currency translation and other
adjustments
|
(540)
|
-
|
|
(23)
|
1
|
|
58
|
72
|
|
(505)
|
73
|
Transfers from Stage 1 to Stage
2
|
(17,351)
|
(88)
|
|
17,351
|
88
|
|
-
|
-
|
|
-
|
-
|
Transfers from Stage 2 to Stage
1
|
12,989
|
284
|
|
(12,989)
|
(284)
|
|
-
|
-
|
|
-
|
-
|
Transfers to Stage 3
|
(107)
|
(2)
|
|
(1,370)
|
(120)
|
|
1,477
|
122
|
|
-
|
-
|
Transfers from Stage 3
|
158
|
8
|
|
222
|
14
|
|
(380)
|
(22)
|
|
-
|
-
|
Net re-measurement
of ECL on stage transfer
|
|
(203)
|
|
|
276
|
|
|
118
|
|
|
191
|
Changes in risk
parameters
|
|
(160)
|
|
|
(36)
|
|
|
135
|
|
|
(61)
|
Other changes in
net exposure
|
(2,464)
|
61
|
|
(3,686)
|
(67)
|
|
(771)
|
(62)
|
|
(6,921)
|
(68)
|
Other (P&L
only items)
|
|
(1)
|
|
|
(3)
|
|
|
(12)
|
|
|
(16)
|
Income statement
(releases)/charges
|
|
(303)
|
|
|
170
|
|
|
179
|
|
|
46
|
Amounts written-off
|
-
|
-
|
|
-
|
-
|
|
(298)
|
(298)
|
|
(298)
|
(298)
|
Unwinding of discount
|
|
-
|
|
|
-
|
|
|
(57)
|
|
|
(57)
|
At 30 June 2024
|
354,573
|
466
|
|
33,261
|
666
|
|
4,526
|
1,520
|
|
392,360
|
2,652
|
Net carrying amount
|
354,107
|
|
|
32,595
|
|
|
3,006
|
|
|
389,708
|
|
At 1 January 2023
|
359,432
|
506
|
|
39,087
|
813
|
|
3,862
|
1,262
|
|
402,381
|
2,581
|
2023 movements
|
(16,772)
|
26
|
|
(2,383)
|
(35)
|
|
308
|
121
|
|
(18,847)
|
112
|
At 30 June 2023
|
342,660
|
532
|
|
36,704
|
778
|
|
4,170
|
1,383
|
|
383,534
|
2,693
|
Net carrying amount
|
342,128
|
|
|
35,926
|
|
|
2,787
|
|
|
380,841
|
|
Notes
7. Loan impairment provisions continued
Flow statements
|
Stage 1
|
|
Stage 2
|
|
Stage 3
|
|
Total
|
|
Financial
|
|
|
Financial
|
|
|
Financial
|
|
|
Financial
|
|
|
assets
|
ECL
|
|
assets
|
ECL
|
|
assets
|
ECL
|
|
assets
|
ECL
|
Retail Banking - mortgages
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
At 1 January 2024
|
163,974
|
83
|
|
15,942
|
55
|
|
1,600
|
171
|
|
181,516
|
309
|
Currency translation and other
adjustments
|
-
|
-
|
|
1
|
(1)
|
|
37
|
39
|
|
38
|
38
|
Transfers from Stage 1 to Stage
2
|
(9,282)
|
(11)
|
|
9,282
|
11
|
|
-
|
-
|
|
-
|
-
|
Transfers from Stage 2 to Stage
1
|
5,274
|
11
|
|
(5,274)
|
(11)
|
|
-
|
-
|
|
-
|
-
|
Transfers to Stage 3
|
(29)
|
-
|
|
(452)
|
(3)
|
|
481
|
3
|
|
-
|
-
|
Transfers from Stage 3
|
15
|
-
|
|
119
|
3
|
|
(134)
|
(3)
|
|
-
|
-
|
Net re-measurement
of ECL on stage transfer
|
|
(6)
|
|
|
14
|
|
|
2
|
|
|
10
|
Changes in risk
parameters
|
|
(27)
|
|
|
(1)
|
|
|
37
|
|
|
9
|
Other changes in
net exposure
|
(2,111)
|
(4)
|
|
(1,223)
|
(4)
|
|
(202)
|
(24)
|
|
(3,536)
|
(32)
|
Other (P&L
only items)
|
|
(1)
|
|
|
1
|
|
|
(3)
|
|
|
(3)
|
Income statement
(releases)/charges
|
|
(38)
|
|
|
10
|
|
|
12
|
|
|
(16)
|
Amounts written-off
|
-
|
-
|
|
-
|
-
|
|
(5)
|
(5)
|
|
(5)
|
(5)
|
Unwinding of discount
|
|
-
|
|
|
-
|
|
|
(24)
|
|
|
(24)
|
At 30 June 2024
|
157,841
|
46
|
|
18,395
|
63
|
|
1,777
|
196
|
|
178,013
|
305
|
Net carrying amount
|
157,795
|
|
|
18,332
|
|
|
1,581
|
|
|
177,708
|
|
At 1 January 2023
|
153,791
|
74
|
|
16,557
|
55
|
|
1,321
|
139
|
|
171,669
|
268
|
2023 movements
|
5,339
|
12
|
|
941
|
3
|
|
88
|
17
|
|
6,368
|
32
|
At 30 June 2023
|
159,130
|
86
|
|
17,498
|
58
|
|
1,409
|
156
|
|
178,037
|
300
|
Net carrying amount
|
159,044
|
|
|
17,440
|
|
|
1,253
|
|
|
177,737
|
|
-
ECL levels for mortgages remained broadly stable
overall during H1 2024, with growth in Stage 3 ECL offset by a
reduction in good book ECL, primarily driven by the reduction in
economic uncertainty post model adjustment levels.
-
As well as a net reduction in book size, aligned
to trends in the UK mortgage market, the decrease in Stage 1 ECL
was also driven by the cost of living post model adjustment
reduction, which proportionately allocated more ECL to Stage 1
given the forward-looking nature of the affordability threat. Refer
to the Governance and post model adjustments section for further
details.
-
Stage 3 inflows remained broadly stable, with
signs of improvement in default rates in recent months. Default
rates had been increasing during 2023 reflecting slightly poorer
arrears performance on mortgages recently rolled-off onto higher
product rates. The increase in Stage 3 ECL primarily reflected
increases in ECL for post-default interest alongside lower levels
of write-offs.
-
There were net flows into Stage 2 from Stage 1
with an upward trend in early arrears coupled with the collective
migration into Stage 2 of higher risk customers utilising new
Mortgage Charter treatments.
-
The relatively small ECL cost for net
re-measurement on stage transfer included the effect of risk
targeted ECL adjustments, when previously in the good book. Refer
to the Governance and post model adjustments section for further
details.
Notes
7. Loan impairment provisions continued
Flow statements
|
Stage 1
|
|
Stage 2
|
|
Stage 3
|
|
Total
|
|
Financial
|
|
|
Financial
|
|
|
Financial
|
|
|
Financial
|
|
|
assets
|
ECL
|
|
assets
|
ECL
|
|
assets
|
ECL
|
|
assets
|
ECL
|
Retail Banking - credit cards
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
At 1 January 2024
|
2,869
|
58
|
|
1,656
|
166
|
|
117
|
73
|
|
4,642
|
297
|
Currency translation and other
adjustments
|
-
|
(1)
|
|
-
|
1
|
|
2
|
2
|
|
2
|
2
|
Transfers from Stage 1 to Stage
2
|
(693)
|
(13)
|
|
693
|
13
|
|
-
|
-
|
|
-
|
-
|
Transfers from Stage 2 to Stage
1
|
606
|
42
|
|
(606)
|
(42)
|
|
-
|
-
|
|
-
|
-
|
Transfers to Stage 3
|
(9)
|
-
|
|
(64)
|
(24)
|
|
73
|
24
|
|
-
|
-
|
Transfers from Stage 3
|
1
|
1
|
|
3
|
1
|
|
(4)
|
(2)
|
|
-
|
-
|
Net re-measurement
of ECL on stage transfer
|
|
(26)
|
|
|
64
|
|
|
18
|
|
|
56
|
Changes in risk
parameters
|
|
1
|
|
|
2
|
|
|
7
|
|
|
10
|
Other changes in
net exposure
|
680
|
6
|
|
(173)
|
(25)
|
|
(19)
|
(1)
|
|
488
|
(20)
|
Other (P&L
only items)
|
|
-
|
|
|
-
|
|
|
1
|
|
|
1
|
Income statement
(releases)/charges
|
|
(19)
|
|
|
41
|
|
|
25
|
|
|
47
|
Amounts written-off
|
-
|
-
|
|
-
|
-
|
|
(30)
|
(30)
|
|
(30)
|
(30)
|
Unwinding of discount
|
|
-
|
|
|
-
|
|
|
(3)
|
|
|
(3)
|
At 30 June 2024
|
3,454
|
68
|
|
1,509
|
156
|
|
139
|
88
|
|
5,102
|
312
|
Net carrying amount
|
3,386
|
|
|
1,353
|
|
|
51
|
|
|
4,790
|
|
At 1 January 2023
|
2,420
|
47
|
|
855
|
91
|
|
88
|
57
|
|
3,363
|
195
|
2023 movements
|
140
|
-
|
|
351
|
24
|
|
12
|
8
|
|
503
|
32
|
At 30 June 2023
|
2,560
|
47
|
|
1,206
|
115
|
|
100
|
65
|
|
3,866
|
227
|
Net carrying amount
|
2,513
|
|
|
1,091
|
|
|
35
|
|
|
3,639
|
|
-
Overall ECL for cards remained broadly in-line
with the 2023 year-end, with portfolio growth mitigated by stable
portfolio performance and PD trends.
-
While portfolio performance remained stable, a net
flow into Stage 2 from Stage 1 was observed in Q1 2024 with the
typical maturation of lending after a period of strong growth in
recent years albeit Stage 2 reduced during the second quarter as
PDs reduced after PD modelling updates.
-
Credit card balances continued to grow during
2024, reflecting continued customer demand whilst remaining within
risk appetite.
-
Flow rates into Stage 3 reduced in H1 2024, in
line with broader portfolio performance.
Notes
7. Loan impairment provisions continued
Flow statements
|
Stage 1
|
|
Stage 2
|
|
Stage 3
|
|
Total
|
|
Financial
|
|
|
Financial
|
|
|
Financial
|
|
|
Financial
|
|
|
assets
|
ECL
|
|
assets
|
ECL
|
|
assets
|
ECL
|
|
assets
|
ECL
|
Retail Banking - other personal
unsecured
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
At 1 January 2024
|
4,247
|
126
|
|
1,371
|
201
|
|
796
|
625
|
|
6,414
|
952
|
Currency translation and other
adjustments
|
(1)
|
(1)
|
|
1
|
-
|
|
7
|
8
|
|
7
|
7
|
Transfers from Stage 1 to Stage
2
|
(726)
|
(35)
|
|
726
|
35
|
|
-
|
-
|
|
-
|
-
|
Transfers from Stage 2 to Stage
1
|
799
|
118
|
|
(799)
|
(118)
|
|
-
|
-
|
|
-
|
-
|
Transfers to Stage 3
|
(30)
|
(1)
|
|
(132)
|
(58)
|
|
162
|
59
|
|
-
|
-
|
Transfers from Stage 3
|
4
|
1
|
|
10
|
4
|
|
(14)
|
(5)
|
|
-
|
-
|
Net re-measurement
of ECL on stage transfer
|
|
(86)
|
|
|
115
|
|
|
10
|
|
|
39
|
Changes in risk
parameters
|
|
(35)
|
|
|
6
|
|
|
53
|
|
|
24
|
Other changes in
net exposure
|
349
|
35
|
|
(154)
|
(16)
|
|
(65)
|
(18)
|
|
130
|
1
|
Other (P&L
only items)
|
|
-
|
|
|
-
|
|
|
11
|
|
|
11
|
Income statement
(releases)/charges
|
|
(86)
|
|
|
105
|
|
|
56
|
|
|
75
|
Amounts written-off
|
-
|
-
|
|
-
|
-
|
|
(184)
|
(184)
|
|
(184)
|
(184)
|
Unwinding of discount
|
|
-
|
|
|
-
|
|
|
(15)
|
|
|
(15)
|
At 30 June 2024
|
4,642
|
122
|
|
1,023
|
169
|
|
702
|
533
|
|
6,367
|
824
|
Net carrying amount
|
4,520
|
|
|
854
|
|
|
169
|
|
|
5,543
|
|
At 1 January 2023
|
3,813
|
92
|
|
1,666
|
225
|
|
638
|
516
|
|
6,117
|
833
|
2023 movements
|
259
|
18
|
|
(128)
|
(34)
|
|
94
|
77
|
|
225
|
61
|
At 30 June 2023
|
4,072
|
110
|
|
1,538
|
191
|
|
732
|
593
|
|
6,342
|
894
|
Net carrying amount
|
3,962
|
|
|
1,347
|
|
|
139
|
|
|
5,448
|
|
-
Total ECL decreased, mainly in Stage 3 due to the
reduction of balances from debt sale activity on Personal unsecured
portfolios of £0.2 billion.
-
Stable portfolio performance and updates to PD
modelling resulted in a net migration from Stage 2 into Stage 1
with performing book ECL and coverage levels showing a modest
reduction since the 2023 year-end, supported by improved economic
outlook.
-
Flow rates into Stage 3 reduced in H1 2024, in
line with broader portfolio performance.
-
Unsecured retail performing balances grew steadily
during H1 2024, largely in line with industry trends.
-
Write-off occurs once recovery activity with the
customer has been concluded or there are no further recoveries
expected, but no later than six years after default.
Notes
7. Loan impairment provisions continued
Flow statements
|
Stage 1
|
|
Stage 2
|
|
Stage 3
|
|
Total
|
|
Financial
|
|
|
Financial
|
|
|
Financial
|
|
|
Financial
|
|
|
assets
|
ECL
|
|
assets
|
ECL
|
|
assets
|
ECL
|
|
assets
|
ECL
|
Commercial & Institutional total
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
At 1 January 2024
|
71,897
|
262
|
|
13,062
|
349
|
|
1,657
|
610
|
|
86,616
|
1,221
|
Currency translation and other
adjustments
|
(82)
|
-
|
|
(22)
|
-
|
|
10
|
22
|
|
(94)
|
22
|
Transfers from Stage 1 to Stage
2
|
(5,942)
|
(27)
|
|
5,942
|
27
|
|
-
|
-
|
|
-
|
-
|
Transfers from Stage 2 to Stage
1
|
5,351
|
103
|
|
(5,351)
|
(103)
|
|
-
|
-
|
|
-
|
-
|
Transfers to Stage 3
|
(29)
|
-
|
|
(606)
|
(34)
|
|
635
|
34
|
|
-
|
-
|
Transfers from Stage 3
|
110
|
6
|
|
76
|
6
|
|
(186)
|
(12)
|
|
-
|
-
|
Net re-measurement
of ECL on stage transfer
|
|
(78)
|
|
|
79
|
|
|
87
|
|
|
88
|
Changes in risk
parameters
|
|
(87)
|
|
|
(37)
|
|
|
35
|
|
|
(89)
|
Other changes in
net exposure
|
3,443
|
21
|
|
(2,012)
|
(22)
|
|
(426)
|
(19)
|
|
1,005
|
(20)
|
Other (P&L
only items)
|
|
(1)
|
|
|
(3)
|
|
|
(19)
|
|
|
(23)
|
Income statement
(releases)/charges
|
|
(145)
|
|
|
17
|
|
|
84
|
|
|
(44)
|
Amounts written-off
|
-
|
-
|
|
-
|
-
|
|
(79)
|
(79)
|
|
(79)
|
(79)
|
Unwinding of discount
|
|
-
|
|
|
-
|
|
|
(13)
|
|
|
(13)
|
At 30 June 2024
|
74,748
|
200
|
|
11,089
|
265
|
|
1,611
|
665
|
|
87,448
|
1,130
|
Net carrying amount
|
74,548
|
|
|
10,824
|
|
|
946
|
|
|
86,318
|
|
At 1 January 2023
|
63,844
|
259
|
|
18,360
|
419
|
|
1,567
|
524
|
|
83,771
|
1,202
|
2023 movements
|
5,207
|
(5)
|
|
(3,006)
|
(25)
|
|
94
|
15
|
|
2,295
|
(15)
|
At 30 June 2023
|
69,051
|
254
|
|
15,354
|
394
|
|
1,661
|
539
|
|
86,066
|
1,187
|
Net carrying amount
|
68,797
|
|
|
14,960
|
|
|
1,122
|
|
|
84,879
|
|
-
ECL levels decreased during H1 2024 with
significant reductions in Stage 1 and Stage 2 partially offset by
increases in Stage 3. Improved economic variables and risk metrics
reduced Stage 1 and Stage 2 ECL, with lower PDs contributing to
reductions in modelled ECL and post model adjustments.
-
Stage 3 ECL increased, mainly due to transfers
into Stage 3 and the re-measurement of ECL at the point of
transfer. This was partially offset by write-offs.
-
Exposure levels in Stage 1 and Stage 2 increased
with new exposures captured in Stage 1 more than offsetting
repayments in Stage 2.
|
Notes
7. Loan impairment provisions continued
Flow statements
|
Stage 1
|
|
Stage 2
|
|
Stage 3
|
|
Total
|
|
Financial
|
|
|
Financial
|
|
|
Financial
|
|
|
Financial
|
|
|
assets
|
ECL
|
|
assets
|
ECL
|
|
assets
|
ECL
|
|
assets
|
ECL
|
Commercial & Institutional - corporate
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
At 1 January 2024
|
49,945
|
185
|
|
10,287
|
281
|
|
1,213
|
484
|
|
61,445
|
950
|
Currency translation and other
adjustments
|
(58)
|
1
|
|
(19)
|
-
|
|
9
|
22
|
|
(68)
|
23
|
Inter-group transfers
|
63
|
-
|
|
27
|
3
|
|
1
|
-
|
|
91
|
3
|
Transfers from Stage 1 to Stage
2
|
(4,482)
|
(21)
|
|
4,482
|
21
|
|
-
|
-
|
|
-
|
-
|
Transfers from Stage 2 to Stage
1
|
4,238
|
82
|
|
(4,238)
|
(82)
|
|
-
|
-
|
|
-
|
-
|
Transfers to Stage 3
|
(27)
|
-
|
|
(449)
|
(22)
|
|
476
|
22
|
|
-
|
-
|
Transfers from Stage 3
|
93
|
4
|
|
57
|
5
|
|
(150)
|
(9)
|
|
-
|
-
|
Net re-measurement
of ECL on stage transfer
|
|
(63)
|
|
|
64
|
|
|
51
|
|
|
52
|
Changes in risk
parameters
|
|
(57)
|
|
|
(33)
|
|
|
23
|
|
|
(67)
|
Other changes in
net exposure
|
1,310
|
12
|
|
(1,598)
|
(20)
|
|
(270)
|
(15)
|
|
(558)
|
(23)
|
Other (P&L
only items)
|
|
(1)
|
|
|
(3)
|
|
|
(18)
|
|
|
(22)
|
Income statement
(releases)/charges
|
|
(109)
|
|
|
8
|
|
|
41
|
|
|
(60)
|
Amounts written-off
|
-
|
-
|
|
-
|
-
|
|
(74)
|
(74)
|
|
(74)
|
(74)
|
Unwinding of discount
|
|
-
|
|
|
-
|
|
|
(11)
|
|
|
(11)
|
At 30 June 2024
|
51,082
|
143
|
|
8,549
|
217
|
|
1,205
|
493
|
|
60,836
|
853
|
Net carrying amount
|
50,939
|
|
|
8,332
|
|
|
712
|
|
|
59,983
|
|
-
ECL levels decreased during H1 2024 with
significant reductions in Stage 1 and Stage 2. Improved economic
variables and risk metrics reduced Stage 1 and Stage 2 ECL, with
lower PDs contributing to reductions in modelled ECL and post model
adjustments.
-
Stage 3 ECL marginally increased with the impact
from transfers and the re-measurement of ECL at the point of
transfer, largely offset by write-offs.
-
Exposure levels in the performing portfolio, Stage
1 and Stage 2, remained broadly consistent with new exposures
captured in Stage 1 offset by repayments in Stage 2.
|
Stage 1
|
|
Stage 2
|
|
Stage 3
|
|
Total
|
|
Financial
|
|
|
Financial
|
|
|
Financial
|
|
|
Financial
|
|
|
assets
|
ECL
|
|
assets
|
ECL
|
|
assets
|
ECL
|
|
assets
|
ECL
|
Commercial & Institutional - property
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
At 1 January 2024
|
16,667
|
66
|
|
2,141
|
63
|
|
395
|
119
|
|
19,203
|
248
|
Currency translation and other
adjustments
|
(5)
|
-
|
|
-
|
-
|
|
2
|
1
|
|
(3)
|
1
|
Inter-group transfers
|
(8)
|
-
|
|
(27)
|
(3)
|
|
(2)
|
-
|
|
(37)
|
(3)
|
Transfers from Stage 1 to Stage
2
|
(1,195)
|
(5)
|
|
1,195
|
5
|
|
-
|
-
|
|
-
|
-
|
Transfers from Stage 2 to Stage
1
|
1,091
|
20
|
|
(1,091)
|
(20)
|
|
-
|
-
|
|
-
|
-
|
Transfers to Stage 3
|
(3)
|
-
|
|
(96)
|
(6)
|
|
99
|
6
|
|
-
|
-
|
Transfers from Stage 3
|
17
|
1
|
|
18
|
2
|
|
(35)
|
(3)
|
|
-
|
-
|
Net re-measurement
of ECL on stage transfer
|
|
(14)
|
|
|
13
|
|
|
7
|
|
|
6
|
Changes in risk
parameters
|
|
(28)
|
|
|
(7)
|
|
|
12
|
|
|
(23)
|
Other changes in
net exposure
|
986
|
8
|
|
(38)
|
(3)
|
|
(134)
|
(3)
|
|
814
|
2
|
Other (P&L
only items)
|
|
-
|
|
|
1
|
|
|
(2)
|
|
|
(1)
|
Income statement
(releases)/charges
|
|
(34)
|
|
|
4
|
|
|
14
|
|
|
(16)
|
Amounts written-off
|
-
|
-
|
|
-
|
-
|
|
(5)
|
(5)
|
|
(5)
|
(5)
|
Unwinding of discount
|
|
-
|
|
|
-
|
|
|
(3)
|
|
|
(3)
|
At 30 June 2024
|
17,550
|
48
|
|
2,102
|
44
|
|
320
|
131
|
|
19,972
|
223
|
Net carrying amount
|
17,502
|
|
|
2,058
|
|
|
189
|
|
|
19,749
|
|
-
There was a reduction in ECL during H1 2024 with
decreases in Stage 1 and Stage 2 partially offset by increases in
Stage 3.
-
Improved economic variables and risk metrics
reduced Stage 1 and Stage 2 ECL, with lower PDs contributing to
reductions in modelled ECL and post model adjustments.
-
Stage 3 exposure reduced with the primary driver
being repayments on the collective portfolio.
-
Exposure levels in Stage 1 increased, mainly due
to new exposures.
|
|
Notes
7. Loan impairment provisions continued
Flow statements
|
Stage 1
|
|
Stage 2
|
|
Stage 3
|
|
Total
|
|
Financial
|
|
|
Financial
|
|
|
Financial
|
|
|
Financial
|
|
|
assets
|
ECL
|
|
assets
|
ECL
|
|
assets
|
ECL
|
|
assets
|
ECL
|
Commercial & Institutional - other
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
At 1 January 2024
|
5,285
|
11
|
|
634
|
5
|
|
49
|
7
|
|
5,968
|
23
|
Currency translation and other
adjustments
|
(20)
|
-
|
|
(2)
|
-
|
|
-
|
(1)
|
|
(22)
|
(1)
|
Inter-group transfers
|
(55)
|
-
|
|
-
|
-
|
|
-
|
-
|
|
(55)
|
-
|
Transfers from Stage 1 to Stage
2
|
(264)
|
(1)
|
|
264
|
1
|
|
-
|
-
|
|
-
|
-
|
Transfers from Stage 2 to Stage
1
|
22
|
1
|
|
(22)
|
(1)
|
|
-
|
-
|
|
-
|
-
|
Transfers to Stage 3
|
-
|
-
|
|
(61)
|
(6)
|
|
61
|
6
|
|
-
|
-
|
Transfers from Stage 3
|
1
|
-
|
|
-
|
-
|
|
(1)
|
-
|
|
-
|
-
|
Net re-measurement
of ECL on stage transfer
|
|
(1)
|
|
|
2
|
|
|
30
|
|
|
31
|
Changes in risk
parameters
|
|
(2)
|
|
|
3
|
|
|
-
|
|
|
1
|
Other changes in
net exposure
|
1,147
|
1
|
|
(375)
|
-
|
|
(23)
|
(1)
|
|
749
|
-
|
Other (P&L
only items)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Income statement
(releases)/charges
|
|
(2)
|
|
|
5
|
|
|
29
|
|
|
32
|
Amounts written-off
|
-
|
-
|
|
-
|
-
|
|
-
|
-
|
|
-
|
-
|
Unwinding of discount
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
At 30 June 2024
|
6,116
|
9
|
|
438
|
4
|
|
86
|
41
|
|
6,640
|
54
|
Net carrying amount
|
6,107
|
|
|
434
|
|
|
45
|
|
|
6,586
|
|
-
ECL levels increased during H1 2024 with a rise in
Stage 3 only partially offset by minor reductions in Stage 1 and
Stage 2.
-
Stage 3 exposure and ECL increased mainly related
to an increase in ECL on newly defaulted individually assessed
customers. These defaults also contributed to a reduction in Stage
2 as the ECL was transferred to Stage 3 at the point of
default.
|
Mortgage LTV distribution by
stage
The table below shows gross
mortgage lending and related ECL by LTV band for the Retail Banking
portfolio.
|
Mortgages
|
|
ECL
provisions
|
|
ECL provisions
coverage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
30 June 2024
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
£m
|
|
%
|
%
|
%
|
%
|
≤50%
|
54,007
|
6,285
|
818
|
61,110
|
|
10
|
14
|
89
|
113
|
|
-
|
0.2
|
10.9
|
0.2
|
>50% and ≤70%
|
58,551
|
7,151
|
708
|
66,410
|
|
18
|
24
|
69
|
111
|
|
-
|
0.3
|
9.8
|
0.2
|
>70% and ≤80%
|
24,852
|
2,268
|
156
|
27,276
|
|
8
|
10
|
17
|
35
|
|
-
|
0.4
|
10.9
|
0.1
|
>80% and ≤90%
|
14,686
|
1,556
|
80
|
16,322
|
|
6
|
9
|
10
|
25
|
|
-
|
0.6
|
12.5
|
0.2
|
>90% and ≤100%
|
6,597
|
950
|
27
|
7,574
|
|
3
|
6
|
4
|
13
|
|
0.1
|
0.6
|
14.8
|
0.2
|
>100%
|
68
|
26
|
12
|
106
|
|
-
|
-
|
5
|
5
|
|
-
|
-
|
41.7
|
4.7
|
Total with LTVs
|
158,761
|
18,236
|
1,801
|
178,798
|
|
45
|
63
|
194
|
302
|
|
-
|
0.4
|
10.8
|
0.2
|
Other
|
254
|
1
|
3
|
258
|
|
1
|
-
|
2
|
3
|
|
0.4
|
-
|
66.7
|
1.2
|
Total
|
159,015
|
18,237
|
1,804
|
179,056
|
|
46
|
63
|
196
|
305
|
|
-
|
0.4
|
10.9
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
≤50%
|
61,263
|
6,230
|
832
|
68,325
|
|
24
|
16
|
88
|
128
|
|
-
|
0.3
|
10.6
|
0.2
|
>50% and ≤70%
|
63,356
|
6,478
|
629
|
70,463
|
|
34
|
24
|
58
|
116
|
|
0.1
|
0.4
|
9.2
|
0.2
|
>70% and ≤80%
|
22,141
|
1,580
|
100
|
23,821
|
|
13
|
7
|
11
|
31
|
|
0.1
|
0.4
|
11.0
|
0.1
|
>80% and ≤90%
|
13,330
|
1,097
|
43
|
14,470
|
|
9
|
6
|
5
|
20
|
|
0.1
|
0.6
|
11.6
|
0.1
|
>90% and ≤100%
|
2,968
|
361
|
11
|
3,340
|
|
2
|
2
|
2
|
6
|
|
0.1
|
0.6
|
18.2
|
0.2
|
>100%
|
21
|
6
|
9
|
36
|
|
-
|
-
|
4
|
4
|
|
-
|
-
|
44.4
|
11.1
|
Total with LTVs
|
163,079
|
15,752
|
1,624
|
180,455
|
|
82
|
55
|
168
|
305
|
|
0.1
|
0.4
|
10.3
|
0.2
|
Other
|
172
|
-
|
2
|
174
|
|
1
|
-
|
1
|
2
|
|
0.6
|
-
|
50.0
|
1.2
|
Total
|
163,251
|
15,752
|
1,626
|
180,629
|
|
83
|
55
|
169
|
307
|
|
0.1
|
0.4
|
10.4
|
0.2
|
Notes
8. Provisions for liabilities and charges
|
|
|
Financial
|
|
|
|
Redress and
other
|
|
commitments
and
|
|
|
|
litigation
|
Property
|
guarantees
|
Other (1)
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 1 January 2024
|
247
|
64
|
56
|
89
|
456
|
Expected credit losses impairment
release
|
-
|
-
|
(17)
|
-
|
(17)
|
Currency translation and other
movements
|
1
|
-
|
-
|
-
|
1
|
Charge to income
statement
|
30
|
28
|
-
|
202
|
260
|
Release to income
statement
|
(14)
|
(17)
|
-
|
(15)
|
(46)
|
Provisions utilised
|
(37)
|
(8)
|
-
|
(53)
|
(98)
|
At 30 June 2024
|
227
|
67
|
39
|
223
|
556
|
(1) Other
materially comprises provisions relating to restructuring
costs.
Provisions are liabilities of
uncertain timing or amount and are recognised when there is a
present obligation as a result of a past event, the outflow of
economic benefit is probable and the outflow can be estimated
reliably. Any difference between the final outcome and the amounts
provided will affect the reported results in the period when the
matter is resolved.
9. Dividends
The Board of National Westminster
Bank Plc has declared an interim dividend for H1 2024 of £1,636
million to be paid to NWH Ltd in H2 2024 (H1 2023 - £838
million).
10. Contingent liabilities and commitments
The amounts shown in the table
below are intended only to provide an indication of the volume of
business outstanding at 30 June 2024. Although NWB Group is exposed
to credit risk in the event of non-performance of the obligations
undertaken by customers, the amounts shown do not, and are not
intended to, provide any indication of NWB Group's expectation of
future losses.
|
30 June
|
31
December
|
|
2024
|
2023
|
|
£m
|
£m
|
Contingent liabilities and commitments
|
|
|
Guarantees
|
1,788
|
1,376
|
Other contingent
liabilities
|
1,027
|
1,003
|
Standby facilities, credit lines
and other commitments
|
79,969
|
77,149
|
Total
|
82,784
|
79,528
|
Commitments and contingent
obligations are subject to NWB Group's normal credit approval
processes.
Indemnity deed
In April 2019, NWM Plc and NWB Plc
entered into a cross indemnity agreement for losses incurred within
the entities in relation to business transferred to or from the
ring-fenced bank under the NatWest Group's structural
re-organisation. Under the agreement, NWM Plc is indemnified
by NWB Plc against losses relating to the NWB Plc transferring
businesses and ringfenced bank obligations and NWB Plc is
indemnified by NWM Plc against losses relating to NWM Plc
transferring businesses and non-ring-fenced bank obligations with
effect from the relevant transfer date.
Notes
11. Litigation and regulatory matters
NWB Plc and its subsidiary and
associated undertakings ('NWB Group') are party to various legal
proceedings and are involved in, or subject to, various regulatory
matters, including as the subject of investigations and other
regulatory and governmental action (Matters) in the United Kingdom
(UK), the United States (US), the European Union (EU) and other
jurisdictions.
NWB Group recognises a provision
for a liability in relation to these Matters when it is probable
that an outflow of economic benefits will be required to settle an
obligation resulting from past events, and a reliable estimate can
be made of the amount of the obligation.
In many of the Matters, it is not
possible to determine whether any loss is probable, or to estimate
reliably the amount of any loss, either as a direct consequence of
the relevant proceedings and regulatory matters or as a result of
adverse impacts or restrictions on NWB Group's reputation,
businesses and operations. Numerous legal and factual issues may
need to be resolved, including through potentially lengthy
discovery and document production exercises and determination of
important factual matters, and by addressing novel or unsettled
legal questions relevant to the proceedings in question, before the
probability of a liability, if any, arising can reasonably be
estimated in respect of any Matter. NWB Group cannot predict if,
how, or when such claims will be resolved or what the eventual
settlement, damages, fine, penalty or other relief, if any, may be,
particularly for Matters that are at an early stage in their
development or where claimants seek substantial or indeterminate
damages.
There are situations where NWB
Group may pursue an approach that in some instances leads to a
settlement agreement. This may occur in order to avoid the expense,
management distraction or reputational implications of continuing
to contest liability, or in order to take account of the risks
inherent in defending or contesting Matters, even for those for
which NWB Group believes it has credible defences and should
prevail on the merits. The uncertainties inherent in all Matters
affect the amount and timing of any potential economic outflows for
both Matters with respect to which provisions have been established
and other contingent liabilities in respect of any such
Matter.
It is not practicable to provide
an aggregate estimate of potential liability for our Matters as a
class of contingent liabilities.
The future economic outflow in
respect of any Matter may ultimately prove to be substantially
greater than, or less than, the aggregate provision, if any, that
NWB Group has recognised in respect of such Matter. Where a
reliable estimate of the economic outflow cannot be reasonably
made, no provision has been recognised. NWB Group expects that in
future periods, additional provisions and economic outflows
relating to Matters that may or may not be currently known by NWB
Group will be necessary, in amounts that are expected to be
substantial in some instances. Refer to Note 8 for information on
material provisions.
Matters which are, or could be,
material, either individually or in aggregate, having regard to NWB
Group, considered as a whole, in which NWB Group is currently
involved are set out below. We have provided information on the
procedural history of certain Matters, where we believe
appropriate, to aid the understanding of the Matter.
For a discussion of certain risks
associated with NWB Group's litigation and regulatory matters
(including the Matters), refer to the Risk Factor relating to
legal, regulatory and governmental actions and investigations set
out on page 185 of NatWest Bank Plc's 2023 Annual Report and
Accounts.
Litigation
London Interbank Offered Rate
(LIBOR) and other rates litigation
In August 2020, a complaint was
filed in the United States District Court for the Northern District
of California by several United States retail borrowers against the
USD ICE LIBOR panel banks and their affiliates (including NatWest
Group plc, NWM Plc, NatWest Markets
Securities Inc. and NWB Plc), alleging (i)
that the very process of setting USD ICE LIBOR amounts to illegal
price-fixing; and (ii) that banks in the United States have
illegally agreed to use LIBOR as a component of price in variable
retail loans. In September 2022, the district court dismissed the
complaint.
The plaintiffs filed an amended
complaint but in October 2023, the district court dismissed that
complaint as well, and indicated that further amendment would not
be permitted. The plaintiffs have commenced an appeal to the United
States Court of Appeals for the Ninth Circuit, which is currently
pending.
Offshoring VAT
assessments
HMRC issued protective tax
assessments in 2018 against NatWest Group plc totalling £143
million relating to unpaid VAT in respect of the UK branches of two
NatWest Group companies registered in India. NatWest Group formally
requested reconsideration by HMRC of their assessments, and this
process was completed in November 2020. HMRC upheld their original
decision and, as a result, NatWest Group plc lodged an appeal with
the Tax Tribunal and an application for judicial review with the
High Court of Justice of England and Wales, both in December 2020.
In order to lodge the appeal with the Tax Tribunal, NatWest Group
plc was required to pay £143 million to HMRC, and payment was made
in December 2020. The appeal and the application for judicial
review have both been stayed pending resolution of separate cases
involving other banks.
Notes
11. Litigation and regulatory matters
continued
Regulatory matters
NWB Group's financial condition
can be affected by the actions of various governmental and
regulatory authorities in the UK, the US, the EU and elsewhere. NWB
Group and/or NatWest Group have engaged, and will continue to
engage, in discussions with relevant governmental and regulatory
authorities, including in the UK, the US, the EU and elsewhere, on
an ongoing and regular basis, and in response to informal and
formal inquiries or investigations, regarding operational, systems
and control evaluations and issues including those related to
compliance with applicable laws and regulations, including consumer
protection, investment advice, business conduct,
competition/anti-trust, VAT recovery, anti-bribery, anti-money
laundering and sanctions regimes.
NWB Group expects government and
regulatory intervention in financial services to be high for the
foreseeable future, including increased scrutiny from competition
and other regulators in the retail and SME business
sectors.
Any matters discussed or
identified during such discussions and inquiries may result in,
among other things, further inquiry or investigation, other action
being taken by governmental and regulatory authorities, increased
costs being incurred by NWB Group, remediation of systems and
controls, public or private censure, restriction of NWB Group's
business activities and/or fines. Any of the events or
circumstances mentioned in this paragraph or below could have a
material adverse effect on NWB Group, its business, authorisations
and licences, reputation, results of operations or the price of
securities issued by it, or lead to material additional provisions
being taken.
NWB Group is co-operating fully
with the matters described below.
Investment advice
review
In October 2019, the FCA notified
NatWest Group of its intention to appoint a Skilled Person under
section 166 of the Financial Services and Markets Act 2000 to
conduct a review of whether NatWest Group's past business review of
investment advice provided during 2010 to 2015 was subject to
appropriate governance and accountability and led to appropriate
customer outcomes. The Skilled Person's review has concluded and,
after discussion with the FCA, NatWest Group is undertaking
additional review / remediation work.
Reviews into customer account
closures
In July 2023, NatWest Group plc
commissioned an independent review by the law firm Travers Smith
LLP into issues that had arisen from treatment of a customer in
connection with an account closure decision that attracted
significant public attention and certain related interactions with
the media. NatWest Group plc received reports in connection with
that review (and in October and December 2023 published summaries
of the key findings and recommendations).
In addition, NatWest Group plc has
conducted internal reviews with respect to certain governance
processes, policies, systems and controls, including with respect
to customer account closures.
A programme of work is underway to
implement the recommendations of the external and internal
reviews.
The FCA is conducting supervisory
work into how the governance, systems and controls of NatWest Group
and Coutts & Company are working, to identify and address any
significant shortcomings.
12. Related party transactions
UK Government
The UK Government's shareholding
in NatWest Group plc is managed by UK Government Investments
Limited, a company wholly owned by the UK Government. At 30 June
2024 HM Treasury's holding in NatWest Group plc's ordinary shares
was 20.92% (31 December 2023 - 37.97%). As a result, the UK
Government through HM Treasury is no longer the controlling
shareholder of NatWest Group plc as per UK listing rules. The UK
Government and UK Government-controlled bodies remain related
parties of the NatWest Group.
At 12 July 2024 HM Treasury's
holding in NatWest Group plc's ordinary shares fell below 20% to
19.97%.
NWB Group enters into transactions
with many of these bodies. Transactions include the payment of:
taxes - principally UK corporation tax and value added tax;
national insurance contributions; local authority rates; regulatory
fees and levies; together with banking transactions such as loans
and deposits undertaken in the normal course of banker-customer
relationships.
Bank of England
facilities
NWB Group may participate in a
number of schemes operated by the Bank of England in the normal
course of business.
Notes
12. Related party transactions continued
Other related parties
(a) In their roles as providers of
finance, NWB Group companies provide development
and other types of capital support to businesses. These investments
are made in the normal course of business.
(b) To further strategic
partnerships, NWB Group may seek to invest in third parties or
allow third parties to hold a minority interest in a subsidiary of
NWB Group. We disclose as related parties for associates and joint
ventures and where equity interest are over 10 per cent. Ongoing
business transactions with these entities are on normal commercial
terms.
(c) NWB Group recharges the
NatWest Group Pension Fund with the cost of pension management
services incurred by it.
(d) In accordance with IAS 24,
transactions or balances between NWB Group entities that have been
eliminated on consolidation are not reported.
Full details of NWB Group's
related party transactions for the year ended 31 December 2023 are
included in NatWest Bank Plc's 2023 Annual Report and
Accounts.
NWB Group's financial assets and
liabilities include amounts due from/to holding companies and
fellow subsidiaries as below:
|
30 June
2024
|
|
31
December 2023
|
|
Holding
|
Fellow
|
|
|
Holding
|
Fellow
|
|
|
companies
|
subsidiaries
|
Total
|
|
companies
|
subsidiaries
|
Total
|
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
|
|
|
|
Loans to banks - amortised
cost
|
-
|
2,915
|
2,915
|
|
-
|
1,797
|
1,797
|
Loans to customers - amortised
cost
|
-
|
13
|
13
|
|
-
|
11
|
11
|
Other financial assets
|
67
|
-
|
67
|
|
-
|
-
|
-
|
Other assets
|
113
|
390
|
503
|
|
104
|
399
|
503
|
Amounts due from holding companies
and
|
|
|
|
|
|
|
|
fellow
subsidiaries
|
180
|
3,318
|
3,498
|
|
104
|
2,207
|
2,311
|
|
|
|
|
|
|
|
|
Derivatives (1)
|
211
|
1,901
|
2,112
|
|
275
|
2,045
|
2,320
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Bank deposits
|
-
|
27,450
|
27,450
|
|
-
|
30,499
|
30,499
|
Customer deposits
|
5,574
|
11
|
5,585
|
|
6,262
|
11
|
6,273
|
Subordinated
liabilities
|
3,586
|
-
|
3,586
|
|
3,636
|
-
|
3,636
|
MREL instruments issued to NatWest
Holdings Ltd
|
6,493
|
-
|
6,493
|
|
6,548
|
-
|
6,548
|
Other financial
liabilities
|
-
|
599
|
599
|
|
-
|
17
|
17
|
Other liabilities
|
72
|
120
|
192
|
|
43
|
236
|
279
|
Amounts due to holding companies
and
|
|
|
|
|
|
|
|
fellow
subsidiaries
|
15,725
|
28,180
|
43,905
|
|
16,489
|
30,763
|
47,252
|
|
|
|
|
|
|
|
|
Derivatives (1)
|
261
|
559
|
820
|
|
258
|
710
|
968
|
(1)
Intercompany derivatives are included within
derivative classification on the balance sheet.
Notes
13. Acquisitions
On 20 June 2024 NatWest Group plc
announced an agreement with Sainsbury's Bank plc to acquire the
retail banking assets and liabilities of Sainsbury's Bank plc,
subject to court and regulatory approvals. We expect to acquire
approximately £2.5 billion of gross customer assets, comprising
£1.4 billion of unsecured personal loans and £1.1 billion of credit
cards balances, together with approximately £2.6 billion of
customer deposits. NatWest Group plc is entering into this
transaction through its subsidiary, National Westminster Bank
Plc.
NatWest Group plc has also agreed
to acquire a £2.5 billion portfolio of prime UK residential
mortgages from Metro Bank plc, with a weighted average current loan
to value of c.62%. Completion is
conditional on a satisfactory response from the Competition and
Markets Authority and is expected to occur during H2 2024. On
completion of the transaction, NatWest Group plc expects to welcome
around 10,000 customer accounts which will continue to be serviced
by Metro Bank plc, in accordance with current arrangements,
following the transfer to NatWest Group plc. NatWest Group plc is
entering into this transaction through its subsidiary, National
Westminster Bank plc.
14. Post balance sheet events
Other than as disclosed in this
document there have been no significant events between 30 June 2024
and the date of approval of this announcement which would require a
change to, or additional disclosure in, the
announcement.
15. Date of approval
This announcement was approved by
the Board of Directors on 25 July 2024.
Independent review report to
National Westminster Bank Plc
Conclusion
We have been engaged by National
Westminster Bank Plc ("the Group") to review the condensed
consolidated financial statements in the half-yearly financial
report for the six months ended 30 June 2024 which comprises of the
condensed consolidated income statement, the condensed consolidated
statement of comprehensive income, the condensed consolidated
balance sheet, the condensed consolidated statement of changes in
equity, the condensed consolidated cash flow statement, and related
Notes 1 to 15 (together "the condensed consolidated financial
statements"). We have read the other information contained in the
half yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed consolidated financial
statements.
Based on our review, nothing has
come to our attention that causes us to believe that the condensed
consolidated financial statements in the half-yearly financial
report for the six months ended 30 June 2024 are not prepared, in
all material respects, in accordance with International Accounting
Standard 34 Interim Financial Reporting as adopted by the United
Kingdom (UK) and as issued by the International Accounting
Standards Board (IASB), and the Disclosure Guidance and
Transparency Rules of the UK's Financial Conduct
Authority.
Basis for conclusion
We conducted our review in
accordance with International Standard on Review Engagements 2410
(UK) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
As disclosed in Note 1, the annual
financial statements of the Group are prepared in accordance with
UK adopted International Accounting Standards, and International
Financial Reporting Standards as issued by the International
Accounting Standards Board. The condensed consolidated financial
statements included in this half-yearly financial report have been
prepared in accordance with International Accounting Standard 34,
as adopted by the UK and as issued by the IASB and the Disclosure
Guidance and Transparency Rules of the UK's Financial Conduct
Authority.
Conclusions relating to Going Concern
Based on our review procedures,
which are less extensive than those performed in an audit as
described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or
that management have identified material uncertainties relating to
going concern that are not appropriately disclosed.
This conclusion is based on the
review procedures performed in accordance with this ISRE, however
future events or conditions may cause the entity to cease to
continue as a going concern.
Responsibilities of the directors
The directors are responsible for
preparing the half-yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules of the UK's Financial
Conduct Authority.
In preparing the half-yearly
financial report, the directors are responsible for assessing the
Group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the half-yearly
report, we are responsible for expressing to the Group a conclusion
on the condensed consolidated financial statements in the
half-yearly financial report. Our conclusion, including our
Conclusions Relating to Going Concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for Conclusion paragraph of this report.
Use of our report
This report is made solely to the
Group in accordance with guidance contained in International
Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Group, for our work, for this report, or
for the conclusions we have formed.
Ernst & Young LLP
London, United Kingdom
25 July
2024
NatWest Bank Plc Summary Risk
Factors
Summary of Principal Risks and
Uncertainties
Set out below is a summary of the
principal risks and uncertainties for the remaining six months of
the financial year which could adversely affect NWB Group. This
summary should not be regarded as a complete and comprehensive
statement of all potential risks and uncertainties; a fuller
description of these and other risk factors is included on pages
173 to 193 of the NatWest Bank Plc 2023 Annual Report and Accounts.
Any of the risks identified may have a material adverse effect on
NatWest Group's business, operations, financial condition or
prospects.
Economic and political
risk
- NWB
Group, its customers and its counterparties face continued economic
and political risks and uncertainties in the UK and global markets,
including as a result of inflation and interest rates, supply chain
disruption, fiscal and monetary policy changes (such as increases
in bank levies), and geopolitical developments.
- Changes in interest rates will continue to affect NWB Group's
business and results.
- Fluctuations in currency exchange rates may adversely affect
NWB Group's results and financial condition.
- Continuing uncertainty regarding the effects and extent of
the UK's post Brexit divergence from EU laws and regulation, and
NWB Group's post Brexit EU operating model may adversely affect NWB
Group and its operating environment.
- HM
Treasury (or UKGI on its behalf) could exercise a significant
degree of influence over NatWest Group and NWB Group is controlled
by NatWest Group.
Business change and execution
risk
- NatWest Group (of which NWB Group forms part) continues to
implement its strategy, which carries significant execution and
operational risks and it may not achieve its stated aims and
targeted outcomes.
- Acquisitions, divestments or other transactions by NatWest
Group (and/or NWB Group) may not be successful, and consolidation
or fragmentation of the financial services industry may adversely
affect NatWest Group.
- The
transfer of NatWest Group's Western European corporate portfolio
involves certain risks.
Financial resilience
risk
- NWB
Group may not achieve its ambitions, targets and guidance it
communicates or generate sustainable returns.
- NWB
Group has significant exposure to counterparty and borrower risk
including credit losses, which may have an adverse effect on NWB
Group.
- NWB
Group operates in markets that are highly competitive, with
competitive pressures and technology disruption.
- NWB
Group may not meet the prudential regulatory requirements for
liquidity and funding or may not be able to adequately access
sources of liquidity and funding, which could trigger the execution
of certain management actions or recovery options.
- NWB
Group may not meet the prudential regulatory requirements for
regulatory capital and MREL, or manage its capital effectively,
which could trigger the execution of certain management actions or
recovery options.
- NWB
Group is reliant on NatWest Group for capital and funding support,
and is substantially reliant on NatWest Group plc's ability to
issue sufficient amounts of capital and external MREL securities
and downstream the proceeds to NWB Group. The inability to do so
may adversely affect NWB Group.
- Any
reduction in the credit rating and/or outlooks assigned to NatWest
Group plc, any of its subsidiaries (including NWB Plc or other NWB
Group subsidiaries) or any of their respective debt securities
could adversely affect the availability of funding for NWB Group,
reduce NWB Group's liquidity position and funding and increase the
cost of funding.
- NWB
Group may be adversely affected if NatWest Group fails to meet the
requirements of regulatory stress tests.
- NWB
Group could incur losses or be required to maintain higher levels
of capital as a result of limitations or failure of various
models.
- NWB
Group's financial statements are sensitive to underlying accounting
policies, judgements, estimates and assumptions.
- Changes in accounting standards may materially impact NWB
Group's financial results.
- NatWest Group (including NWB Group) may become subject to the
application of UK statutory stabilisation or resolution powers
which may result in, for example, the write-down or conversion of
NWB Group's eligible liabilities.
- NatWest Group is subject to Bank of England and PRA oversight
in respect of resolution, and NWB Group could be adversely affected
should the Bank of England in the future deem NatWest Group's
preparations to be inadequate.
Climate and sustainability-related
risks
- NWB
Group and its value chain face climate-related and
sustainability-related risk that may adversely affect NWB
Group.
- Climate-related risks may adversely affect the global
financial system, NWB Group or its value chain.
- NWB
Group and its value chain may face other sustainability-related
risks that may adversely affect NWB Group.
- NatWest Group's climate change related strategy, ambitions,
targets and transition plan entail significant execution and/or
reputational risks and are unlikely to be achieved without
significant and timely government policy, technology and customer
behavioural changes.
- There
are significant limitations related to accessing accurate,
reliable, verifiable, auditable, consistent and comparable climate
and other sustainability-related data that contribute to
substantial uncertainties in accurately modelling and reporting on
climate and sustainability information, as well as making
appropriate important internal decisions.
- Failure to implement effective governance, procedures, systems
and controls in compliance with legal, regulatory requirements and
societal expectations to manage climate and sustainability-related
risks and opportunities could adversely affect NWB
Group.
- Increasing levels of climate and other sustainability-related
laws, regulation and oversight may adversely affect NWB
Group.
Summary of Principal Risks and Uncertainties
continued
Climate and sustainability-related
risks continued
- Increasing regulation of "greenwashing" is likely to increase
the risk of regulatory enforcement and investigation and
litigation.
- NWB
Group may be subject to potential climate and other
sustainability-related litigation, enforcement proceedings,
investigations and conduct risk.
- A
reduction in the ESG ratings of NatWest Group (including NWB Group)
could have a negative impact on NatWest Group's (including NWB
Group) reputation and on investors' risk appetite and customers'
willingness to deal with NatWest Group (including NWB
Group).
Operational and IT resilience
risk
- Operational risks (including reliance on third party
suppliers and outsourcing of certain activities) are inherent in
NWB Group's businesses.
- NWB
Group is subject to sophisticated and frequent
cyberattacks.
- NWB
Group operations and strategy are highly dependent on the accuracy
and effective use of data.
- NWB
Group's operations are highly dependent on its complex IT systems
and any IT failure could adversely affect NWB Group.
- NWB
Group relies on attracting, retaining and developing diverse senior
management and skilled personnel, and is required to maintain good
employee relations.
- A
failure in NWB Group's risk management framework could adversely
affect NWB Group, including its ability to achieve its strategic
objectives.
- NWB
Group's operations are subject to inherent reputational
risk.
Legal, regulatory and conduct
risk
- NWB
Group's businesses are subject to substantial regulation and
oversight, which are constantly evolving and may adversely affect
NWB Group.
- NWB
Group is exposed to the risks of various litigation matters,
regulatory and governmental actions and investigations as well as
remedial undertakings, the outcomes of which are inherently
difficult to predict, and which could have an adverse effect on NWB
Group.
- Changes in tax legislation or failure to generate future
taxable profits may impact the recoverability of certain deferred
tax assets recognised by NWB Group.
Statement of directors'
responsibilities
We, the directors listed below,
confirm that to the best of our knowledge:
-
the condensed financial statements have been
prepared in accordance with UK adopted IAS 34 'Interim Financial
Reporting';
-
the interim management report includes a fair
review of the information required by DTR 4.2.7R (indication of
important events during the first six months and description of
principal risks and uncertainties for the remaining six months of
the year); and
-
the interim management report includes a fair
review of the information required by DTR 4.2.8R (disclosure of
related parties' transactions and changes therein).
By order of the Board
Richard Haythornthwaite
Chair
|
John-Paul Thwaite
Chief
Executive Officer
|
Katie
Murray
Chief
Financial Officer
|
25 July 2024
Board of directors
Chair
|
Executive directors
|
Non-executive directors
|
Richard Haythornthwaite
|
John-Paul Thwaite
Katie Murray
|
Francesca Barnes
Ian Cormack
Roisin Donnelly
Patrick Flynn
Geeta Gopalan
Yasmin Jetha
Stuart Lewis
Mark Rennison
Mark Seligman
Lena Wilson
|
Additional Information
Presentation of information
National Westminster Bank Plc (NWB
Plc or NatWest Bank Plc) is a wholly-owned subsidiary of NatWest
Holdings Limited (NWH Ltd or 'the intermediate holding company').
The term 'NatWest Bank Group' or 'NWB Group' refers to NWB Plc and
its subsidiary and associated undertakings. The term 'NWH Group'
refers to NWH Ltd and its subsidiary and associated undertakings.
NatWest Group plc is 'the ultimate holding company'. The term
'NatWest Group' refers to NatWest Group plc and its subsidiary and
associated undertakings.
NWB Plc publishes its financial
statements in pounds sterling ('£' or 'sterling'). The
abbreviations '£m' and '£bn' represent millions and thousands of
millions of pounds sterling, respectively, and references to
'pence' or 'p' represent pence where the amounts are denominated in
pounds sterling ('GBP'). Reference to 'dollars' or '$' are to
United States of America ('US') dollars. The abbreviations '$m' and
'$bn' represent millions and thousands of millions of dollars,
respectively. The abbreviation '€' represents the 'euro', and the
abbreviations '€m' and '€bn' represent millions and thousands of
millions of euros, respectively.
Statutory accounts
Financial information contained in
this document does not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006 ("the Act"). The
statutory accounts for the year ended 31 December 2023 have been
filed with the Registrar of Companies. The report of the auditor on
those statutory accounts was unqualified, did not draw attention to
any matters by way of emphasis and did not contain a statement
under section 498(2) or (3) of the Act.
Contact
Claire Kane
|
Investor Relations
|
+44 (0) 20 7672 1758
|
Forward-looking statements
This document may include
forward-looking statements within the meaning of the United States
Private Securities Litigation Reform Act of 1995, such as
statements that include, without limitation, the words 'expect',
'estimate', 'project', 'anticipate', 'commit', 'believe', 'should',
'intend', 'will', 'plan', 'could', 'probability', 'risk',
'Value-at-Risk (VaR)', 'target', 'goal', 'objective', 'may',
'endeavour', 'outlook', 'optimistic', 'prospects' and similar
expressions or variations on these expressions. These statements
concern or may affect future matters, such as NWB Group's future
economic results, business plans and strategies. In particular,
this document may include forward-looking statements relating to
NWB Group in respect of, but not limited to: its economic and
political risks, 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 NatWest Group's
strategy, its climate and sustainability related targets, its
access to adequate sources of liquidity and funding, increasing
competition from incumbents, challengers and new entrants 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, and NWB Group's exposure
to, operational risk, conduct risk, cyber, data and IT risk,
financial crime risk, key person risk and credit rating risk.
Forward-looking statements are subject to a number of risks and
uncertainties that might cause actual results and performance to
differ materially from any expected future results or performance
expressed or implied by the forward-looking statements. Factors
that could cause or contribute to differences in current
expectations include, but are not limited to, future growth
initiatives (including acquisitions, joint ventures and strategic
partnerships), the outcome of legal, regulatory and governmental
actions and investigations, the level and extent of future
impairments and write-downs, legislative, political, fiscal and
regulatory developments, accounting standards, competitive
conditions, technological developments, interest and exchange rate
fluctuations, and general economic and political conditions and the
impact of climate related risks and the transitioning to a net zero
economy. These and other factors, risks and uncertainties that may
impact any forward-looking statement or the NWB Group's actual
results are discussed in the NWB Plc's 2023 Annual Report and
Accounts (ARA), and NWB Plc's Interim Results for H1 2024. The
forward-looking statements contained in this document speak only as
of the date of this document and NWB 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:
213800IBT39XQ9C4CP71