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providing a wide range of banking and
other financial services. Details of the
organisational structure and a business
overview of NatWest Group are contained
in the Business review. This includes details
of the products and services provided
by each of our operating areas and the
markets where they operate. Details
of the strategy for delivering the
company\u2019s objectives can be found
in the Strategic report ", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00239": { "value": "Credit risk
\u00a0
Page
Introduction
\u00a0
Definition, sources of risk and key developments in 2024
181
Governance and risk appetite
181
Identification and measurement
182
Mitigation
182
Assessment and monitoring
182
Problem debt management
183
Forbearance
184
Credit grading models
185
Impairment, provisioning and write-offs
185
Governance and post model adjustments
186
Significant increase in credit risk
188
Asset lifetimes
188
Economic loss drivers
188
Measurement uncertainty and ECL sensitivity analysis
194
Measurement uncertainty and ECL adequacy
195
Movement in ECL provision
196
Credit risk \u2013 Banking activities
\u00a0
Financial instruments within the scope of the IFRS 9 ECL framework
197
Segment analysis \u2013 portfolio summary
198
Segmental loans and impairment metrics
201
Sector analysis \u2013 portfolio summary
202
Non-Personal forbearance
207
Credit risk enhancement and mitigation
208
Personal portfolio
209
Commercial real estate
214
Flow statements
215
Stage 2 decomposition \u2013 by a significant increase in credit risk trigger
223
Stage 3 vintage analysis
225
Asset quality
226
Credit risk \u2013 Trading activities
\u00a0
Securities financing transactions and collateral
230
Derivatives
231
Debt securities
232
Cross border exposure
233
\n
Definition (audited)
Credit risk is the risk that customers,
counterparties or issuers fail to meet a
contractual obligation to settle
outstanding amounts.
Sources of risk
(audited)
The principal sources of credit risk for
NatWest Group are lending, off-balance
sheet products, derivatives and securities
financing, and debt securities. NatWest
Group is also exposed to settlement risk
through foreign exchange, trade finance
and payments activities. Governance
(audited)
The credit risk function provides oversight
and challenge of frontline credit risk
management activities. Governance
activities include:
\ue001
Defining and proposing credit risk
appetite measures for Board approval.
\ue001
Establishing credit risk policy, standards
and toolkits which set out the
mandatory limits and parameters
required to ensure that credit risk is
managed within risk appetite and which
provide the minimum standards for the
identification, assessment, management,
monitoring and reporting of credit risk.
\ue001
Oversight of the first line of defence to
ensure that credit risk remains within
the appetite set by the Board and that it
is being managed adequately and
effectively.
\ue001
Assessing the adequacy of ECL
provisions including approving key IFRS
9 inputs (such as significant increase in
credit risk (SICR) thresholds) and any
necessary in-model and post model
adjustments through NatWest Group
and business unit provisions and model
committees.
\ue001
Development and approval of credit
grading models.
\ue001
Providing regular reporting on credit risk
to the Board Risk Committee and Board.Identification and measurement
Credit stewardship
(audited)
\n
Risks are identified through relationship
\n
management and credit stewardship of
\n
customers and portfolios. Credit
\n
stewardship takes place throughout the
\n
customer relationship, beginning with the
\n
initial approval. It includes the application
\n
of credit assessment standards, credit
\n
risk mitigation and collateral, ensuring
\n
that credit documentation is complete
\n
and appropriate, carrying out regular
\n
portfolio or customer reviews and
\n
problem debt identification and
\n
management.
\n
Asset quality (audited)
\n
All credit grades map to an asset quality
\n
(AQ) scale, used for financial reporting.
\n
This AQ scale is based on Basel PDs.
\n
Performing loans are defined as AQ1-
\n
AQ9 (where the PD is less than 100%)
\n
and defaulted non-performing loans as
\n
AQ10 or Stage 3 under IFRS 9 (where
\n
the PD is 100%). Loans are defined as
\n
defaulted when the payment status
\n
becomes 90 days past due, or earlier if
\n
there is clear evidence that the borrower
\n
is unlikely to repay, for example
bankruptcy or insolvency.Forbearance
(audited)
Forbearance takes place when a
concession is made on the contractual
terms of a loan/debt in response to a
customer\u2019s financial difficulties.
The aim of forbearance is to support and
restore the customer to financial health
while minimising risk. To ensure that
forbearance is appropriate for the needs
of the customer, minimum standards are
applied when assessing, recording,
monitoring and reporting of forbearance.
A credit exposure may be forborne more
than once, generally where a temporary
concession has been granted and
circumstances warrant another
temporary or permanent revision of the
loan\u2019s terms.
Loans are reported as forborne until they
meet the exit criteria as detailed in the
appropriate regulatory guidance. These
include being classified as performing for
two years since the last forbearance
event, making regular repayments and
the loan/debt being less than 30 days
past due.Impairment, provisioning and
write-offs (audited)
In the overall assessment of credit risk,
impairment provisioning and write-offs
are used as key indicators of credit
quality.
NatWest Group\u2019s IFRS 9 provisioning
models, which use existing internal
ratings based (IRB) models as a starting
point, incorporate term structures and
economic forecasts.
Regulatory conservatism within the IRB
models has been removed as appropriate
to comply with the IFRS 9 requirement
for unbiased ECL estimates.
Five key areas may materially influence
the measurement of credit impairment
under IFRS 9 \u2013 two of these relate to
model build and three relate to model
application:
Model build:
\ue001
The determination of economic
indicators that have most influence
on credit loss for each portfolio and
the severity of impact (this leverages
existing stress testing models which
are reviewed annually).
\ue001
The build of term structures to
extend the determination of the risk
of loss beyond 12 months that will
influence the impact of lifetime loss
for exposures in Stage 2.
\n\n\n\n\n\n\n\n\n\n\n\n
Model application:
\n
\ue001
The assessment of the SICR and the
\n
formation of a framework capable of
\n
consistent application.
\n
\ue001
The determination of asset lifetimes
\n
that reflect behavioural
\n
characteristics while also
\n
representing management actions
\n
and processes (using historical data
\n
and experience).
\n
\ue001
The choice of forward-looking
\n
economic scenarios and their
\n
respective probability weights.
\n
For accounting policy information, refer
\n
to Accounting policy 2.3.
\n
IFRS 9 ECL model design principles
\n
(audited)
\n
Modelling of ECL for IFRS 9 follows the
\n
conventional approach to divide the
\n
estimation of credit losses into its
\n
component parts of PD, LGD and EAD.
\n
To meet IFRS 9 requirements, the PD,
\n
LGD and EAD parameters differ from
\n
their Pillar 1 IRB counterparts in the
\n
following aspects:
\n
\ue001
Unbiased \u2013
conservatism has been
\n
removed from IFRS 9 parameters to
\n
produce unbiased estimates.
\n
\ue001
Point-in-time
\u2013 IFRS 9 parameters
\n
reflect actual economic conditions at
\n
the reporting date instead of long-run
\n
average or downturn conditions.
\n
\ue001
Economic forecasts
\u2013 IFRS 9 PD
\n
estimates and, where appropriate,
\n
EAD and LGD estimates reflect
\n
forward-looking economic conditions.
\n
\ue001
Lifetime measurement
\u2013 IFRS 9 PD,
\n
LGD and EAD are provided as multi-
\n
period term structures up to
\n
exposure lifetimes instead of over a
\n
fixed one-year horizon.
\n
IFRS 9 requires that, at each reporting
\n
date, an entity shall assess whether the
\n
credit risk on an account has increased
\n
significantly since initial recognition. Part
\n
of this assessment requires a comparison
\n
to be made between the current lifetime
\n
PD (i.e. the PD over the remaining lifetime
\n
at the reporting date) and the equivalent
\n
lifetime PD as determined at the date of
\n
initial recognition.
\n
For assets originated before IFRS 9 was
\n
introduced, comparable lifetime
\n
origination PDs did not exist.
\n
These have been retrospectively created
\n
using the relevant model inputs applicable
\n
at initial recognition.
\n
PD estimates
\n
Personal models
\n
Personal PD models follow a discrete
\n
multi-horizon survival approach,
\n
predicting quarterly PDs up to lifetime at
\n
account level, with a key driver being
\n
scores from related IRB PD models.
\n
Forward-looking economic information is
\n
brought in by economic response models,
\n
which leverage the existing stress test
\n
model suite. The current suite of PD
\n
models was introduced in 2022 replacing
\n
the previous, first-generation models to
\n
remediate a range of model weaknesses.
\n
Non-Personal models
\n
Non-Personal PD models use a point-in-
\n
time/through-the-cycle framework to
\n
convert one-year regulatory PDs into
\n
point-in-time estimates that reflect
\n
economic conditions at the reporting
\n
date. The framework utilises credit cycle
\n
indices (CCIs) for a comprehensive set of
\n
region/industry segments. Further detail
\n
on CCIs is provided in the Economic loss
\n
drivers section.
\n
One-year PDs are extended to lifetime
\n
PDs using a conditional transition matrix
\n
approach and economic forecasts.
\n
LGD estimates
\n
The general approach for the IFRS 9 LGD
\n
models is to leverage corresponding IRB
\n
LGD models with bespoke adjustments to
\n
ensure estimates are unbiased and,
\n
where relevant, include economic
\n
forecasts.
\n
Personal
\n
Economic forecasts are incorporated for
\n
the secured portfolios, where changes in
\n
property prices can be readily
\n
accommodated. Analysis has shown
\n
minimal impact of economic conditions on
\n
LGDs for the other Personal portfolios.
\n
Non-Personal
\n
Economic forecasts are incorporated into
\n
LGD estimates using the existing point-in-
\n
time/through-the-cycle framework. For
\n
low-default portfolios, including
\n
sovereigns and banks, loss data is too
\n
scarce to substantiate estimates that
\n
vary with economic conditions.
\n
Consequently, for these portfolios, LGD
\n
estimates are assumed to be constant
\n
throughout the projection horizon.
\n
EAD estimates
\n
Personal
\n
The IFRS 9 Personal modelling approach
\n
for EAD is dependent on product type.
\n
\ue001
Revolving products use the existing
\n
IRB models as a basis, with
\n
appropriate adjustments
\n
incorporating a term structure based
\n
on time to default.
\n
\ue001
Amortising products use an
\n
amortising schedule, where a formula
\n
is used to calculate the expected
\n
balance based on remaining terms
\n
and interest rates.
\n
Analysis has indicated that there is
\n
minimal impact on EAD arising from
\n
changes in the economy for all Personal
\n
portfolios except mortgages. Therefore,
\n
forward-looking information is only
\n
incorporated in the mortgage EAD model
\n
(through forecast changes in interest
\n
rates).
\n
Non-Personal
\n
For Non-Personal, EAD values are
\n
projected using product-specific credit
\n
conversion factors (CCFs), closely
\n
following the product segmentation and
\n
approach of the respective IRB model.
\n
The CCFs are estimated over multi-year
\n
time horizons and contain no regulatory
\n
conservatism or downturn assumptions.
\n
No explicit economic forecasts are
\n
incorporated, on the basis of analysis
\n
showing the movement in CCFs is mainly
\n
attributable to changes in exposure
\n
management practices rather than
\n
economic conditions.
\n
Governance and post model
\n
adjustments
(audited)
\n
The IFRS 9 PD, EAD and LGD models are
\n
subject to NatWest Group\u2019s model risk
\n
policy that stipulates periodic model
\n
monitoring, periodic re-validation and
\n
defines approval procedures and
\n
authorities according to model
\n
materiality. Various post model
\n
adjustments were applied where
\n
management judged they were
\n
necessary to ensure an adequate level of
\n
overall ECL provision. All post model
\n
adjustments were subject to review,
\n
challenge and approval through model or
\n
provisioning committees.
\n
Post model adjustments will remain a key
\n
focus area of NatWest Group\u2019s ongoing
\n
ECL adequacy assessment process. A
\n
holistic framework has been established
\n
including reviewing a range of economic
\n
data, external benchmark information
\n
and portfolio performance trends with a
\n
particular focus on segments of the
\n
portfolio (both Personal and Non-
\n
Personal) that are likely to be more
\n
susceptible to high inflation, high interest
\n
rates and supply chain disruption.
\n\n\n\n\n\n\n\n\n\n\n\n
ECL post model adjustments (audited)
\n
The table below shows ECL post model adjustments.
\n\n \n
Retail Banking
Commercial
Central items
Mortgages
Other
Private Banking
& Institutional
& other
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Deferred model calibrations
-
-
1
18
-
19
Economic uncertainty
90
22
8
179
-
299
Other adjustments
-
-
-
18
-
18
Total
90
22
9
215
-
336
Of which:
- Stage 1
58
9
5
94
-
166
- Stage 2
26
13
4
119
-
162
- Stage 3
6
-
-
2
-
8
2023
Deferred model calibrations
-
-
1
23
-
24
Economic uncertainty
118
39
13
256
3
429
Other adjustments
1
-
-
8
23
32
Total
119
39
14
287
26
485
Of which:
- Stage 1
75
14
6
115
10
220
- Stage 2
31
25
8
167
9
240
- Stage 3
13
-
-
5
7
25
\n
.
\n
Post model adjustments decreased significantly since 31 December 2023, reflecting reduced economic uncertainty from inflation, higher-for-longer interest rates and liquidity.
\n
\ue001
Retail Banking
\u2013 The post model adjustments for economic uncertainty decreased to \u00a3112 million at 31 December 2024 (2023 \u2013 \u00a3157 million). This reduction primarily reflected a
\n
revision to the cost of living post model adjustment to \u00a3105 million (2023 \u2013 \u00a3144 million), reflecting enhancements to the assessment approach, supported by back-testing of
\n
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
\n
effects of cost of living rises. It focuses on key affordability lenses, including lower-income customers in fuel poverty, over-indebted borrowers and customers who remain
\n
vulnerable to higher mortgage rates.
\n
\ue001
Commercial & Institutional
\u2013 The post model adjustment for economic uncertainty decreased to \u00a3179 million (2023 \u2013 \u00a3256 million). The inflation, supply chain and liquidity post
\n
model adjustment of \u00a3150 million (2023 \u2013 \u00a3206 million) was maintained for lending prior to 1 January 2024 being a sector level downgrade applied to the sectors that are
\n
considered most at risk from the current headwinds. A further \u00a329 million (2023 \u2013 \u00a350 million) remains for customers that utilised government support schemes, this adjustment is
\n
reducing as customers default or repay.
\n
\ue001
The \u00a318 million (2023 \u2013 \u00a323 million) judgemental overlay for deferred model calibrations relates to refinance risk, with the existing mechanistic modelling approach not fully
\n
capturing the risk on deteriorated exposures.
\n
\ue001
The \u00a318 million (2023 \u2013 \u00a38 million) other post model adjustment was to mitigate the effect of operational timing delays in the identification and flagging of a SICR, with the increase
\n
due to a small number of large corporate exposures moving quickly from Stage 1 into default.
\n\n\n\n\n\n\n\n\n\n\n\n
SICR (audited)
\n
Exposures that are considered
\n
significantly credit-deteriorated since
\n
initial recognition are classified in Stage 2
\n
and assessed for lifetime ECL
\n
measurement (exposures not considered
\n
deteriorated carry a 12-month ECL).
\n
NatWest Group has adopted a
\n
framework to identify deterioration based
\n
primarily on relative movements in
\n
lifetime PD supported by additional
\n
qualitative backstops. The principles
\n
applied are consistent across NatWest
\n
Group and align to credit risk
\n
management practices, where
\n
appropriate.
\n
The framework comprises the following
\n
elements:
\n
\ue001
IFRS 9 lifetime PD assessment (the
\n
primary driver)
\u2013
on modelled
\n
portfolios, the assessment is based on
\n
the relative deterioration in forward-
\n
looking lifetime PD and is assessed
\n
monthly. To assess whether credit
\n
deterioration has occurred, the
\n
residual lifetime PD at balance sheet
\n
date (which PD is established at date
\n
of initial recognition (DOIR)) is
\n
compared to the current PD. If the
\n
current lifetime PD exceeds the
\n
residual origination PD by more than
\n
a threshold amount, deterioration is
\n
assumed to have occurred and the
\n
exposure transferred into Stage 2 for
\n
a lifetime loss assessment. For Non-
\n
Personal, a doubling of PD would
\n
indicate a SICR subject to a minimum
\n
PD uplift of 0.1%. For Personal
\n
portfolios and SME Retail, the criteria
\n
vary by risk band, with lower-risk
\n
exposures needing to deteriorate
\n
more than higher-risk exposures, as
\n
outlined in the following table:
\n\n \n
PD bandings
(based
on
residual
lifetime PD
Personal risk
calculated at
PD deterioration
bands
DOIR)
threshold criteria
A
<0.762%
PD@DOIR + 1%
B
<4.306%
PD@DOIR + 3%
C
>=4.306%
1.7 x PD@DOIR
\n
\ue001
Qualitative high-risk backstops
\u2013
the
\n
PD assessment is complemented with
\n
the use of qualitative high-risk
\n
backstops to further inform whether
\n
significant deterioration in lifetime risk
\n
of default has occurred. The
\n
qualitative high-risk backstop
\n
assessment includes the use of the
\n
mandatory 30+ days past due
\n
backstop, as prescribed by IFRS 9
\n
guidance, and other features such as
\n
forbearance support, Non-Personal
\n
exposures managed within the
\n
Wholesale Problem Debt
\n
Management framework, and
\n
adverse credit bureau results for
\n
Personal customers.
\n
\ue001
Persistence (Personal and SME Retail
\n
customers only)
\u2013
the persistence rule
\n
ensures that accounts which have
\n
met the criteria for PD-driven
\n
deterioration are still considered to be
\n
significantly deteriorated for three
\n
months thereafter. This additional rule
\n
enhances the timeliness of capture in
\n
Stage 2. The persistence rule is
\n
applied to PD-driven deterioration
\n
only.
\n
The criteria are based on a significant
\n
amount of empirical analysis and seek to
\n
meet three key objectives:
\n
\ue001
Criteria effectiveness
\u2013
the criteria
\n
should be effective in identifying
\n
significant credit deterioration and
\n
prospective default population.
\n
\ue001
Stage 2
stability
\u2013 the criteria should
\n
not introduce unnecessary volatility in
\n
the Stage 2 population.
\n
\ue001
Portfolio analysis
\u2013
the criteria should
\n
produce results which are intuitive
\n
when reported as part of the wider
\n
credit portfolio.
\n
Monitoring the effect on relative PD
\n
deterioration when originating new
\n
lending at times of weaker economic
\n
outlook (therefore, higher PDs at initial
\n
recognition) is important to ensure SICR
\n
criteria remains effective.
\n
Asset lifetimes
(audited)
\n
The choice of initial recognition and asset
\n
duration is another critical judgement in
\n
determining the quantum of lifetime
\n
losses that apply.
\n
\ue001
The date of initial recognition reflects
\n
the date that a transaction (or
\n
account) was first recognised on the
\n
balance sheet; the PD recorded at
\n
that time provides the baseline used
\n
for subsequent determination of SICR
\n
as detailed above.
\n
\ue001
For asset duration, the approach
\n
applied (in line with IFRS 9
\n
requirements) is:
\n
\ue001
Term lending \u2013
the contractual
\n
maturity date, reduced for
\n
behavioural trends where
\n
appropriate (such as, expected
\n
prepayment and amortisation).
\n
\ue001
Revolving facilities
\u2013
for Personal
\n
portfolios (except credit cards),
\n
asset duration is based on
\n
behavioural life and this is
\n
normally greater than
\n
contractual life (which would
\n
typically be overnight). For the
\n
Non-Personal portfolios, asset
\n
duration is based on annual
\n
customer review schedules and
\n
will be set to the next review
\n
date.
\n
In the case of credit cards, the most
\n
significant judgement is to reflect the
\n
operational practice of card reissuance
\n
and the associated credit assessment as
\n
enabling a formal re-origination trigger.
\n
As a consequence, a capped lifetime
\n
approach of up to 36 months is used on
\n
credit card balances. If the approach was
\n
uncapped, the ECL impact is estimated
\n
at approximately \u00a371 million (2023 \u2013
\n
\u00a3110 million). However, credit card
\n
balances originated under the 0% balance
\n
transfer product and representing
\n
approximately 47% (2023 \u2013 37%) of
\n
performing card balances, have their ECL
\n
calculated on a behavioural lifetime
\n
approach as opposed to being capped at
\n
a maximum of three years.
\n
The capped approach reflects NatWest
\n
Group practice of a credit-based review
\n
of customers prior to credit card issuance
\n
and complies with IFRS 9. Benchmarking
\n
information indicates that peer UK banks
\n
use behavioural approaches in the main
\n
for credit card portfolios with average
\n
durations between three and ten years.
\n
Across Europe, durations are shorter and
\n
are, in some cases, as low as one year.
\n
Economic loss drivers
(audited)
\n
Introduction
\n
The portfolio segmentation and selection
\n
of economic loss drivers for IFRS 9
\n
follows the approach used in stress
\n
testing. The stress models for each
\n
portfolio segment (defined by product or
\n
asset class and where relevant, industry
\n
sector and region) are based on a
\n
selected, small number of economic
\n
variables that best explain the
\n
movements in portfolio loss rates. The
\n
process to select economic loss drivers
\n
involves empirical analysis and expert
\n
judgement.
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
The most significant economic
\n
loss drivers for material portfolios
\n
are shown in the table below:
\n\n \n
Portfolio
Economic loss
drivers
Personal
Unemployment
mortgages
rate, sterling
swap rate, house
price index, real
wage
Personal
Unemployment
unsecured
rate, sterling
swap rate, real
wage
Corporates
Stock price index,
gross domestic
product (GDP)
Commercial
Stock price index,
real estate
commercial
property price
index, GDP
\n
Economic scenarios
\n
At 31 December 2024, the range
\n
of anticipated future economic
\n
conditions was defined by a set
\n
of four internally developed
\n
scenarios and their respective
\n
probabilities. In addition to the
\n
base case, they comprised
\n
upside, downside and extreme
\n
downside scenarios. The
\n
scenarios primarily reflected the
\n
current risks faced by the
\n
economy. The scenarios primarily
\n
reflected the current risks faced
\n
by the economy. This approach
\n
was similar to that used at 31
\n
December 2023.
\n
For 31 December 2024, the four
\n
scenarios were deemed
\n
appropriate in capturing the
\n
uncertainty in economic forecasts
\n
and the non-linearity in outcomes
\n
under different scenarios. These
\n
four scenarios were developed to
\n
provide sufficient coverage
\n
across potential rises in
\n
unemployment, inflation, asset
\n
price declines and the degree of
\n
permanent damage to the
\n
economy, around which there
\n
remains pronounced levels of
\n
uncertainty.
\n
Since 31 December 2023, the
\n
economic outlook has evolved.
\n
The economy came out of post-
\n
COVID-19 stagnation with an
\n
upswing in the first half of 2024
\n
as household income recovered.
\n
The growth lost momentum in
\n
the second half of 2024 and the
\n
outlook remains that of moderate
\n
growth. Inflation declined over
\n
the year, although the progress is
\n
slower than expected and
\n
inflation is likely to take longer to
\n
reach the target of 2%. As a
\n
result, rates are expected to
\n
remain higher-for-longer than
\n
previously expected. The
\n
unemployment rate increased
\n
modestly but it is underpinned by
\n
a still resilient labour market.
\n
There was emerging risk to the
\n
labour market due to higher tax
\n
burdens, but the impact is likely
\n
to be moderate. House prices
\n
were previously assumed to
\n
decline in 2024, but they
\n
performed better than expected.
\n
However, the higher interest rate
\n
environment poses a risk to the
\n
recovery.
\n
Headline macro variables: what are the risks and where are they captured?
\n\n \n
Base
Extreme
Mini narratives \u2013 potential developments, vulnerabilities and risks
Upside
case
Downside
downside
Outperformance sustained \u2013
economy remains close
to H1 2024 pace on strong consumer
Steady growth \u2013
staying close to trend pace from
H2 2024 and beyond
Growth
Stalling \u2013
2024 strength proves fleeting, lagged
effect of higher rates and cautious consumer stalls
the rebound
Extreme stress
\u2013 extreme fall in GDP, with policy
support to facilitate sharp recovery
Close to deflation \u2013
inflationary pressures diminish
amidst pronounced weakness in demand
Battle won \u2013
continued downward drift in services
inflation, ensuring 2% target is met on sustained
Inflation
basis
Sticky \u2013
strong growth and/or wage policies and/or
interest rate cuts keep services inflation well above
target
Structural factors \u2013
sustained bouts of energy, food
and goods price inflation on
geopolitics/deglobalisation
Tighter, still \u2013
job growth rebounds strongly, pushing
unemployment back down to sub-3.5%
Cooling continues \u2013
gradual loosening prompts a
Labour
gentle rise in unemployment (but remains low), job
market
growth recovers
Job shedding \u2013
prolonged weakness in economy
prompts redundancies, reduced hours, building slack
Depression \u2013
unemployment hits levels close to
previous peaks amid severe stress
Limited cuts
\u2013 higher growth and inflation keeps the
MPC cautious
Rates
Steady \u2013
approximately one cut per quarter
short-
Mid-cycle quickening \u2013
sharp declines through 2025
term
to support recovery
Sharp drop \u2013
drastic easing in policy to support a
sharp deterioration in the economy
Rates
Above consensus \u2013
4%
long-
Middle \u2013
3-3.5%
term
Close to 2010s \u2013
1-2%/2.5%
\n\n\n\n\n\n\n\n\n\n\n\n
Economic loss drivers
(audited)
\n
Main macroeconomic variables
\n
The main macroeconomic variables for each of the four scenarios used for ECL modelling are set out in the main macroeconomic variables table below.
\n\n \n
2024
2023
Extreme
Weighted
Extreme
Weighted
Upside
Base case
Downside
downside
average
Upside
Base case
Downside
downside
average
Five-year summary
%
%
%
%
%
%
%
%
%
%
GDP
2.0
1.3
0.5
(0.2)
1.1
1.8
1.0
0.5
(0.3)
0.9
Unemployment rate
3.6
4.3
5.0
6.7
4.6
3.5
4.6
5.2
6.8
4.8
House price index
5.8
3.5
0.8
(4.3)
2.7
3.9
0.3
(0.4)
(5.7)
0.3
Commercial real estate price
5.4
1.2
(1.0)
(5.7)
1.1
3.1
(0.2)
(2.0)
(6.8)
(0.6)
Consumer price index
2.4
2.2
3.5
1.6
2.4
1.7
2.6
5.2
1.8
2.8
Bank of England base rate
4.4
4.0
3.0
1.6
3.6
3.8
3.7
5.6
2.9
4.0
Stock price index
6.3
5.0
3.4
1.1
4.5
4.8
3.3
1.2
(0.4)
2.8
World GDP
3.8
3.2
2.5
1.6
3.0
3.7
3.2
2.7
1.8
3.0
Probability weight
23.2
45.0
19.1
12.7
21.2
45.0
20.4
13.4
\n
(1)
The five-year summary runs from 2024-28 for 31 December 2024 and from 2023-27 for 31 December 2023.
\n
(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.
\n
Climate transition
\n
Since 2023, NatWest Group has included
\n
explicit assumptions about changes in
\n
transition policy, expressed as an
\n
additional implicit sectoral carbon price, in
\n
the base-case macroeconomic scenario.
\n
This approach has been used for financial
\n
planning and IFRS 9 reporting ever since.
\n
This analysis resulted in climate transition
\n
policy contributing \u00a38 million to the total
\n
ECL of \u00a33.4 billion at the end of 2024.
\n
In 2024, NatWest Group refined its
\n
approach. Instead of applying the
\n
economy-wide carbon price from an
\n
external scenario used in 2023, NatWest
\n
Group calculated the expected implicit
\n
carbon prices associated with specific
\n
climate transition policies. NatWest Group
\n
individually assessed 46 active and
\n
potential transition policies that had a
\n
significant impact on the cost of
\n
emissions and converted them into
\n
equivalent sectoral carbon prices. This
\n
was calculated as the cost per tonne of
\n
the emissions (CO2e) abated as a result
\n
of each policy.
\n
NatWest Group estimated that the
\n
weighted average carbon price
\n
associated with the policies assessed will
\n
increase from \u00a373 per tonne in 2024 to
\n
\u00a3123 per tonne in 2029. Sectoral carbon
\n
prices feed into the climate risk macro
\n
model. The model has been developed
\n
and improved over the past few years to
\n
enable NatWest Group to estimate the
\n
impact of carbon prices on a
\n
macroeconomic scenario.
\n
UK government policies which are
\n
estimated to have the largest impact on
\n
sectoral carbon prices are:
\n
\ue001
Emissions Trading Scheme
\n
\ue001
Climate Change Levy
\n
\ue001
Renewables Obligation
\n
\ue001
VAT on domestic energy
\n
This analysis presents a very narrow
\n
view of climate transition impact from 46
\n
analysed policies. It only covers base
\n
case macroeconomic scenario and does
\n
not include physical impacts.
\n
NatWest Group and its customers have a
\n
dependency on timely and appropriate
\n
government policies to provide the
\n
necessary impetus for technology
\n
development and customer behaviour
\n
changes, to enable the UK\u2019s successful
\n
transition to net zero. Policy delays and
\n
the risks outlined in the UK CCC 2022,
\n
2023 and 2024 Progress Reports, if not
\n
adequately addressed in a timely
\n
manner, put at risk the UK\u2019s net zero
\n
transition and, in turn, that of NatWest
\n
Group and its customers.
\n
Probability weightings of scenarios
\n
NatWest Group\u2019s quantitative approach
\n
to IFRS 9 multiple economic scenarios
\n
(MES) involves selecting a suitable set of
\n
discrete scenarios to characterise the
\n
distribution of risks in the economic
\n
outlook and assigning appropriate
\n
probability weights. This quantitative
\n
approach is used for 31 December 2024.
\n
The approach involves comparing GDP
\n
paths for NatWest Group\u2019s scenarios
\n
against a set of 1,000 model runs,
\n
following which a percentile in the
\n
distribution is established that most
\n
closely corresponded to the scenario. The
\n
probability weight for base case is set
\n
first based on judgement, while
\n
probability weights for the alternate
\n
scenarios are assigned based on these
\n
percentiles scores.The assigned
\n
probability weights were judged to be
\n
aligned with the subjective assessment of
\n
balance of the risks in the economy. The
\n
weights were marginally less downside
\n
skewed compared to those used at 31
\n
December 2023. The downside risks
\n
associated with a materially high inflation
\n
have reduced, with inflation lower at the
\n
end of 2024 compared to a year ago.
\n
However, the economic outlook is still
\n
subject to considerable uncertainty
\n
especially with respect to persistence of
\n
inflation, restrictive trade policies and
\n
various geopolitical flashpoints. Given that
\n
backdrop, NatWest Group judges it
\n
appropriate that downside-biased
\n
scenarios have higher combined
\n
probability weights than the upside-
\n
biased scenario. It presents good
\n
coverage to the range of outcomes
\n
assumed in the scenarios, including the
\n
potential for a robust recovery on the
\n
upside and exceptionally challenging
\n
outcomes on the downside. A 23.2%
\n
weighting was applied to the upside
\n
scenario, a 45.0% weighting applied to
\n
the base case scenario, a 19.1%
\n
weighting applied to the downside
\n
scenario and a 12.7% weighting applied
\n
to the extreme downside scenario.
\n\n\n\n\n\n\n\n\n\n\n\n
Economic loss drivers
\n\n\n\n\n\n\n\n\n\n\n\n
Economic loss drivers
(audited)
\n
Annual figures
\n\n \n
GDP - annual growth
Consumer price index - four quarter change
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
2024
0.9
0.9
0.9
0.9
0.9
2024
2.4
2.4
2.4
2.4
2.4
2025
2.0
1.4
0.4
(4.1)
0.6
2025
2.9
2.3
5.8
0.6
2.9
2026
3.2
1.5
(0.5)
(0.3)
1.3
2026
2.4
2.1
4.2
1.1
2.4
2027
2.3
1.4
0.2
1.4
1.4
2027
2.1
2.0
2.6
1.8
2.1
2028
1.6
1.4
1.3
1.4
1.4
2028
2.0
2.0
2.4
2.0
2.1
2029
1.6
1.4
1.7
1.4
1.5
2029
2.0
2.0
2.5
2.0
2.1
\n\n \n
Unemployment rate - annual average
Bank of England base rate - annual average
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
2024
4.2
4.2
4.2
4.2
4.2
2024
5.11
5.11
5.11
5.11
5.11
2025
3.9
4.4
4.8
5.4
4.5
2025
4.63
4.21
3.42
1.40
3.80
2026
3.3
4.4
5.5
8.0
4.8
2026
4.02
3.52
2.10
0.18
2.94
2027
3.3
4.3
5.5
8.3
4.8
2027
4.00
3.50
2.00
0.40
2.94
2028
3.4
4.3
5.3
7.6
4.7
2028
4.00
3.50
2.15
1.03
3.04
2029
3.4
4.2
5.0
6.9
4.5
2029
4.00
3.50
2.50
1.83
3.21
\n\n \n
House price index - four quarter change
Stock price index - four quarter change
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
2024
3.5
3.5
3.5
3.5
3.5
2024
11.6
11.6
11.6
11.6
11.6
2025
7.8
3.5
(1.2)
(7.6)
2.2
2025
8.1
3.4
(10.5)
(35.0)
(3.0)
2026
7.2
3.4
(2.8)
(14.7)
1.1
2026
5.1
3.4
5.8
15.1
5.3
2027
5.1
3.4
0.1
(8.0)
2.2
2027
3.5
3.4
5.8
13.1
4.8
2028
5.4
3.4
4.4
6.9
4.4
2028
3.5
3.4
5.8
11.6
4.7
2029
5.6
3.4
4.2
6.3
4.4
2029
3.0
3.4
5.8
10.4
4.5
\n\n \n
Commercial real estate price - four quarter change
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
2024
(0.9)
(0.9)
(0.9)
(0.9)
(0.9)
2025
14.1
2.4
(6.8)
(23.7)
0.1
2026
4.4
1.5
(2.5)
(12.7)
0.2
2027
5.5
1.4
2.8
6.7
3.3
2028
4.2
1.5
2.6
5.7
2.8
2029
2.7
1.4
2.5
5.4
2.3
\n\n\n\n\n\n\n\n\n\n\n\n
Economic loss drivers
(audited)
\n
Worst points
\n\n \n
2024
2023
Extreme
Weighted
Extreme
Weighted
Downside
downside
average
Downside
downside
average
%
Quarter
%
Quarter
%
%
Quarter
%
Quarter
%
GDP
-
Q1 2024
(4.1)
Q4 2025
-
(1.2)
Q3 2024
(4.5)
Q4 2024
0.3
Unemployment rate - peak
5.6
Q4 2026
8.5
Q1 2027
4.9
5.8
Q1 2025
8.5
Q2 2025
5.2
House price index
(1.9)
Q2 2027
(25.6)
Q3 2027
-
(12.5)
Q4 2025
(31.7)
Q2 2026
(6.5)
Commercial real estate price
(10.5)
Q2 2026
(35.0)
Q3 2026
(1.8)
(16.6)
Q1 2025
(39.9)
Q3 2025
(10.2)
Consumer price index - highest four quarter change
6.1
Q1 2026
3.5
Q1 2024
3.5
10.3
Q1 2023
10.3
Q1 2023
10.3
Bank of England base rate - extreme level
2.0
Q1 2024
0.1
Q1 2024
2.9
6.5
Q4 2024
5.3
Q4 2023
5.3
Stock price index
(0.2)
Q4 2025
(27.4)
Q4 2025
-
(14.3)
Q4 2024
(39.3)
Q4 2024
(2.4)
\n
(1)
The figures show falls relative to the starting period for GDP, house price index, commercial real estate price and stock price index. For unemployment rate, it shows highest value through the scenario horizon. For consumer price index, it shows highest
\n
annual percentage change. For Bank of England base rate, it shows highest or lowest value through the horizon. The calculations are performed over five years, with a starting point of Q4 2023 for 31 December 2024 scenarios and Q4 2022 for 31
\n
December 2023 scenarios.
\n\n\n\n\n\n\n\n\n\n\n\n
Measurement uncertainty and
\n
ECL sensitivity analysis
(audited)
\n
The recognition and measurement of
\n
ECL is complex and involves the use of
\n
significant judgement and estimation,
\n
particularly in times of economic volatility
\n
and uncertainty. This includes the
\n
formulation and incorporation of multiple
\n
forward-looking economic conditions into
\n
ECL to meet the measurement objective
\n
of IFRS 9. The ECL provision is sensitive
\n
to the model inputs and economic
\n
assumptions underlying the estimate.
\n
The impact arising from the base case,
\n
upside, downside and extreme downside
\n
scenarios was simulated.
\n
In the simulations, NatWest Group has
\n
assumed that the economic macro
\n
variables associated with these scenarios
\n
replace the existing base case economic
\n
assumptions, giving them a 100%
\n
probability weighting and therefore
\n
serving as a single economic scenario.
\n
These scenarios were applied to all
\n
modelled portfolios in the analysis below,
\n
with the simulation impacting both PDs
\n
and LGDs. Post model adjustments
\n
included in the ECL estimates that were
\n
modelled were sensitised in line with the
\n
modelled ECL movements, but those that
\n
were judgemental in nature, primarily
\n
those for deferred model calibrations and
\n
economic uncertainty, were not (refer to
\n
the Governance and post model
\n
adjustments section) on the basis these
\n
would be re-evaluated by management
\n
through ECL governance for any new
\n
economic scenario outlook and not be
\n
subject to an automated calculation. As
\n
expected, the scenarios create differing
\n
impacts on ECL by portfolio and the
\n
impacts are deemed reasonable.
\n
In this simulation, it is assumed that
\n
existing modelled relationships between
\n
key economic variables and loss drivers
\n
hold, but in practice other factors would
\n
also have an impact, for example,
\n
potential customer behaviour changes
\n
and policy changes by lenders that might
\n
impact on the wider availability of credit.
\n
The focus of the simulations is on ECL
\n
provisioning requirements on performing
\n
exposures in Stage 1 and Stage 2. The
\n
simulations are run on a stand-alone
\n
basis and are independent of each other;
\n
the potential ECL impacts reflect the
\n
simulated impact at 31 December 2024.
\n
Scenario impacts on SICR should be
\n
considered when evaluating the ECL
\n
movements of Stage 1 and Stage 2. In all
\n
scenarios the total exposure was the
\n
same but exposure by stage varied in
\n
each scenario.
\n
Stage 3 provisions are not subject to the
\n
same level of measurement uncertainty \u2013
\n
default is an observed event as at the
\n
balance sheet date. Stage 3 provisions
\n
therefore were not considered in this
\n
analysis.
\n
NatWest Group\u2019s core criterion to identify
\n
a SICR is founded on PD deterioration.
\n
Under the simulations, PDs change and
\n
result in exposures moving between
\n
Stage 1 and Stage 2 contributing to the
\n
ECL impact.
\n
Measurement uncertainty and ECL sensitivity analysis
(audited)
\n\n \n
Moderate
Moderate
Extreme
Base
upside
downside
downside
2024
Actual
scenario
scenario
scenario
scenario
Stage 1 modelled loans (\u00a3m)
Retail Banking - mortgages
169,090
170,887
173,703
164,370
154,604
Retail Banking - unsecured
10,269
10,485
10,876
9,847
8,925
Non-personal - property
28,598
28,684
28,827
28,452
25,402
Non-personal - non-property
126,487
127,179
127,557
125,790
107,287
334,444
337,235
340,963
328,459
296,218
Stage 1 modelled ECL (\u00a3m)
Retail Banking - mortgages
67
69
71
61
50
Retail Banking - unsecured
204
212
210
198
185
Non-personal - property
82
66
59
85
164
Non-personal - non-property
218
197
191
219
331
571
544
531
563
730
Stage 1 coverage
Retail Banking - mortgages
0.04%
0.04%
0.04%
0.04%
0.03%
Retail Banking - unsecured
1.99%
2.02%
1.93%
2.01%
2.07%
Non-personal - property
0.29%
0.23%
0.20%
0.30%
0.65%
Non-personal - non-property
0.17%
0.15%
0.15%
0.17%
0.31%
0.17%
0.16%
0.16%
0.17%
0.25%
Stage 2 modelled loans (\u00a3m)
Retail Banking - mortgages
20,980
19,183
16,367
25,700
35,466
Retail Banking - unsecured
3,513
3,297
2,906
3,935
4,857
Non-personal - property
3,019
2,933
2,790
3,165
6,215
Non-personal - non-property
13,143
12,451
12,073
13,840
32,343
40,655
37,864
34,136
46,640
78,881
Stage 2 modelled ECL (\u00a3m)
Retail Banking - mortgages
60
53
44
72
118
Retail Banking - unsecured
370
348
300
407
532
Non-personal - property
62
53
47
66
183
Non-personal - non-property
286
251
228
307
628
778
705
619
852
1,461
Stage 2 coverage
Retail Banking - mortgages
0.29%
0.28%
0.27%
0.28%
0.33%
Retail Banking - unsecured
10.53%
10.56%
10.32%
10.34%
10.95%
Non-personal - property
2.05%
1.81%
1.68%
2.09%
2.94%
Non-personal - non-property
2.18%
2.02%
1.89%
2.22%
1.94%
1.91%
1.86%
1.81%
1.83%
1.85%
\n\n\n\n\n\n\n\n\n\n\n\n
Measurement uncertainty and ECL sensitivity analysis
(audited)
\u00a0 \u00a0 \u00a0
Moderate
Moderate
Extreme
\u00a0 \u00a0
Base
upside
downside
downside
2024
Actual
scenario
scenario
scenario
scenario
Stage 1 and Stage 2 modelled loans (\u00a3m)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Retail Banking - mortgages
190,070
190,070
190,070
190,070
190,070
Retail Banking - unsecured
13,782
13,782
13,782
13,782
13,782
Non-personal - property
31,617
31,617
31,617
31,617
31,617
Non-personal - non-property
139,630
139,630
139,630
139,630
139,630
\u00a0
375,099
375,099
375,099
375,099
375,099
Stage 1 and Stage 2 modelled ECL (\u00a3m)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Retail Banking - mortgages
127
122
115
133
168
Retail Banking - unsecured
574
560
510
605
717
Non-personal - property
144
119
106
151
347
Non-personal - non-property
504
448
419
526
959
\u00a0
1,349
1,249
1,150
1,415
2,191
Stage 1 and Stage 2 coverage
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Retail Banking - mortgages
0.07%
0.06%
0.06%
0.07%
0.09%
Retail Banking - unsecured
4.16%
4.06%
3.70%
4.39%
5.20%
Non-personal - property
0.46%
0.38%
0.34%
0.48%
1.10%
Non-personal - non-property
0.36%
0.32%
0.30%
0.38%
0.69%
\u00a0
0.36%
0.33%
0.31%
0.38%
0.58%
Reconciliation to Stage 1 and Stage 2
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
ECL (\u00a3m)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
ECL on modelled exposures
1,349
1,249
1,150
1,415
2,191
ECL on non-modelled exposures
36
36
36
36
36
Total Stage 1 and Stage 2 ECL (\u00a3m)
1,385
1,285
1,186
1,451
2,227
Variance to actual total Stage 1 and
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 2 ECL (\u00a3m)
\u00a0
(100)
(199)
66
842
Reconciliation to Stage 1 and Stage 2
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
flow exposures (\u00a3m)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Modelled loans
375,099
375,099
375,099
375,099
375,099
Non-modelled loans
21,074
21,074
21,074
21,074
21,074
Other asset classes
161,548
161,548
161,548
161,548
161,548
\n
(1)
Variations in future undrawn exposure values across the scenarios are modelled, however the exposure position
\n
reported is that used to calculate modelled ECL as at 31 December 2024 and therefore does not include variation in
\n
future undrawn exposure values.
\n
(2)
Reflects ECL for all modelled exposure in scope for IFRS 9. The analysis excludes non-modelled portfolios and exposure
\n
relating to bonds and cash.
\n
(3)
All simulations are run on a stand-alone basis and are independent of each other, with the potential ECL impact
\n
reflecting the simulated impact as at 31 December 2024
The simulations change the composition of Stage 1 and Stage
\n
2 exposure but total exposure was unchanged under each scenario as the loan population was static.
\n
(4)
Refer to the Economic loss drivers section for details of economic scenarios.
\n
(5)
Refer to the NatWest Group 2023 Annual Report and Accounts for 2023 comparatives.
\n
Measurement uncertainty and ECL adequacy
(audited)
\n
\ue001
If the economics were as negative as observed in the extreme downside (i.e. 100%
\n
probability weighting), total Stage 1 and Stage 2 ECL was simulated to increase by
\n
\u00a30.8 billion (approximately 61%). In this scenario, Stage 2 exposure increased
\n
significantly and was the key driver of the simulated ECL rise. The movement in
\n
Stage 2 balances in the other simulations was less significant.
\n
\ue001
In the Non-Personal portfolio, there was a significant increase in ECL under the
\n
extreme downside scenario. The Non-Personal property ECL increase was mainly
\n
due to commercial real estate prices which showed negative growth until 2026 and
\n
significant deterioration in the stock index. The non-property increase was mainly
\n
due to GDP contraction and significant deterioration in the stock index.
\n
\ue001
Given the continued economic uncertainty, NatWest Group utilised a framework of
\n
quantitative and qualitative measures to support the levels of ECL coverage. This
\n
included economic data, credit performance insights and problem debt trends. This
\n
was particularly important for consideration of post model adjustments.
\n
\ue001
As the effects of these economic risks evolve into 2025, there is a risk of further
\n
credit deterioration. However, the income statement effect of this should be
\n
mitigated by the forward-looking provisions retained on the balance sheet at 31
\n
December 2024.
\n
\ue001
There are a number of key factors that could drive further downside to impairments,
\n
through deteriorating economic and credit metrics and increased stage migration as
\n
credit risk increases for more customers. Such factors which could impact the IFRS 9
\n
models, include an adverse deterioration in unemployment, GDP and stock price
\nindex in which NatWest Group operates. Credit risk \u2013 Banking activitiesFinancial instruments within the scope of the IFRS 9 ECL framework (audited)
Refer to Note 9 to the consolidated financial statements for balance sheet analysis of financial assets that are classified as amortised
cost or fair value through other comprehensive income (FVOCI), the starting point for IFRS 9 ECL framework assessment.
\u00a0
31 December 2024
31 December 2023
\u00a0
Gross
ECL
Net
Gross
ECL
Net
\u00a0
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Balance sheet total gross amortised cost and FVOCI
567.2
\u00a0 \u00a0
553.8
\u00a0 \u00a0
In scope of IFRS 9 ECL framework
564.4
\u00a0 \u00a0
545.3
\u00a0 \u00a0
% in scope
100%
\u00a0 \u00a0
98%
\u00a0 \u00a0
Loans to customers - in scope - amortised cost
404.2
3.4
400.8
385.3
3.6
381.7
Loans to customers - in scope - FVOCI
-
-
-
0.1
-
0.1
Loans to banks - in scope - amortised cost
6.0
-
6.0
6.7
-
6.7
Total loans - in scope
410.2
3.4
406.8
392.1
3.6
388.5
Stage 1
363.8
0.6
363.2
348.6
0.7
347.9
Stage 2
40.5
0.8
39.7
37.9
0.9
37.0
Stage 3
5.9
2.0
3.9
5.6
2.0
3.6
Other financial assets - in scope - amortised cost
116.4
-
116.4
124.9
-
124.9
Other financial assets - in scope - FVOCI
37.8
-
37.8
28.3
-
28.3
Total other financial assets - in scope
154.2
-
154.2
153.2
-
153.2
Stage 1
153.4
-
153.4
152.0
-
152.0
Stage 2
0.8
-
0.8
1.2
-
1.2
Out of scope of IFRS 9 ECL framework
2.8
na
2.8
8.5
na
8.5
Loans to customers - out of scope - amortised cost
(0.5)
na
(0.5)
(0.4)
na
(0.4)
Loans to banks - out of scope - amortised cost
0.1
na
0.1
0.3
na
0.3
Other financial assets - out of scope - amortised cost
3.2
na
3.2
8.3
na
8.3
Other financial assets - out of scope - FVOCI
-
na
-
0.3
na
0.3
\n
na = not applicable
The assets outside the scope of IFRS 9 ECL framework were as follows:
\ue001
Settlement balances, items in the course of collection, cash balances and other non-credit risk assets of \u00a33.3 billion (2023 \u2013 \u00a38.6
billion). These were assessed as having no ECL unless there was evidence that they were defaulted.
\ue001
Equity shares of \u00a30.2 billion (2023 \u2013 \u00a30.3 billion) as not within the IFRS 9 ECL framework by definition.
\ue001
Fair value adjustments on loans hedged by interest rate swaps, where the underlying loan was within the IFRS 9 ECL scope of
\u00a3(0.5) billion (2023 \u2013 \u00a3(0.3) billion).
Contingent liabilities and
commitments
Total
contingent liabilities (including
financial guarantees) and commitments
within IFRS 9 ECL scope of \u00a3140.0 billion
(2023 \u2013 \u00a3132.0 billion) comprised Stage 1
\u00a3129.8 billion (2023 \u2013 \u00a3120.6 billion);
Stage 2 \u00a39.4 billion (2023 \u2013 \u00a310.7 billion);
and Stage 3 \u00a30.8 billion (2023 \u2013 \u00a30.7
billion).
The ECL relating to off balance sheet
exposures was \u00a30.1 billion (2023 \u2013 \u00a30.1
billion). The total ECL in the remainder of
the Credit risk section of \u00a33.4 billion
(2023 \u2013 \u00a33.6 billion) included ECL for both
on and off-balance sheet exposures for
non-disposal groups.
\n\n\n\n\n\n\n\n\n\n\n\n
Segment analysis \u2013 portfolio summary (audited)
\n
The table below shows gross loans and ECL, by segment and stage, within the scope of the IFRS 9 ECL framework.
\n\n \n
Of which:
Personal
Non-personal
Retail
Private
Commercial
Central items
Retail
Private
Commercial
Central items
Private
Commercial
Central items
&
&
&
Banking
Banking
Institutional
& other
Total
Banking
Banking
Institutional
& other
Banking
Institutional
& other
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans - amortised cost and FVOCI
(1,2)
Stage 1
182,366
17,155
128,988
35,312
363,821
182,366
13,726
2,226
-
3,429
126,762
35,312
Stage 2
24,242
844
15,339
49
40,474
24,242
352
42
-
492
15,297
49
Stage 3
3,268
322
2,340
-
5,930
3,268
251
52
-
71
2,288
-
Of which: individual
-
233
1,052
-
1,285
-
162
5
-
71
1,047
-
Of which: collective
3,268
89
1,288
-
4,645
3,268
89
47
-
-
1,241
-
Total
209,876
18,321
146,667
35,361
410,225
209,876
14,329
2,320
-
3,992
144,347
35,361
ECL provisions
(3)
Stage 1
279
16
289
14
598
279
2
3
-
14
286
14
Stage 2
428
12
346
1
787
428
1
-
-
11
346
1
Stage 3
1,063
36
941
-
2,040
1,063
21
15
-
15
926
-
Of which: individual
-
36
415
-
451
-
21
7
-
15
408
-
Of which: collective
1,063
-
526
-
1,589
1,063
-
8
-
-
518
-
Total
1,770
64
1,576
15
3,425
1,770
24
18
-
40
1,558
15
\n
For the notes to this table refer to page 201.
\n\n\n\n\n\n\n\n\n\n\n\n
Segment analysis \u2013 portfolio summary (audited)
\n\n \n
Of which:
Personal
Non-personal
Commercial
Commercial
Retail
Private
Commercial
&
Central items
Retail
Private
&
Central items
Private
&
Central items
Banking
Banking
Institutional
& other
Total
Banking
Banking
Institutional
& other
Banking
Institutional
& other
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ECL provisions coverage
(4)
Stage 1 (%)
0.15
0.09
0.22
0.04
0.16
0.15
0.01
0.13
-
0.41
0.23
0.04
Stage 2 (%)
1.77
1.42
2.26
2.04
1.94
1.77
0.28
-
-
2.24
2.26
2.04
Stage 3 (%)
32.53
11.18
40.21
-
34.40
32.53
8.37
28.85
-
21.13
40.47
-
Total
0.84
0.35
1.07
0.04
0.83
0.84
0.17
0.78
-
1.00
1.08
0.04
Impairment (releases)/losses
ECL (release)/charge
(5)
282
(11)
98
(10)
359
282
1
1
-
(12)
97
(10)
Stage 1
(208)
(11)
(205)
(14)
(438)
(208)
(2)
(1)
-
(9)
(204)
(14)
Stage 2
278
(1)
79
4
360
278
2
1
-
(3)
78
4
Stage 3
212
1
224
-
437
212
1
1
-
-
223
-
Of which: individual
-
1
191
-
192
-
1
(1)
-
-
192
-
Of which: collective
212
-
33
-
245
212
-
2
-
-
31
-
Total
282
(11)
98
(10)
359
282
1
1
-
(12)
97
(10)
Amounts written-off
430
1
223
-
654
430
1
2
-
-
221
-
Of which: individual
-
1
143
-
144
-
1
-
-
-
143
-
Of which: collective
430
-
80
-
510
430
-
2
-
-
78
-
\n
For the notes to this table refer
to
page
201.
\n\n\n\n\n\n\n\n\n\n\n\n
Segment analysis \u2013 portfolio summary (audited)
\n\n \n
Of which:
Personal
Non-personal
Retail
Private
Commercial
Central items
Retail
Private
Commercial
Central items
Private
Commercial
Central items
&
&
&
Banking
Banking
Institutional
& other
Total
Banking
Banking
Institutional
& other
Banking
Institutional
& other
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans - amortised cost and FVOCI
(1,2)
Stage 1
182,297
17,565
119,047
29,677
348,586
182,297
14,296
2,268
4
3,269
116,779
29,673
Stage 2
21,208
906
15,771
6
37,891
21,208
255
43
3
651
15,728
3
Stage 3
3,133
258
2,162
10
5,563
3,133
209
52
6
49
2,110
4
Of which: individual
-
186
845
-
1,031
-
137
5
-
49
840
-
Of which: collective
3,133
72
1,317
10
4,532
3,133
72
47
6
-
1,270
4
Subtotal excluding disposal group loans
206,638
18,729
136,980
29,693
392,040
206,638
14,760
2,363
13
3,969
134,617
29,680
Disposal group loans
67
67
8
59
Total
29,760
392,107
21
29,739
ECL provisions
(3)
Stage 1
306
20
356
27
709
306
3
2
5
17
354
22
Stage 2
502
20
447
7
976
502
2
-
2
18
447
5
Stage 3
1,097
34
819
10
1,960
1,097
20
16
9
14
803
1
Of which: individual
-
34
298
-
332
-
20
5
-
14
293
-
Of which: collective
1,097
-
521
10
1,628
1,097
-
11
9
-
510
1
Subtotal excluding ECL provisions on disposal group loans
1,905
74
1,622
44
3,645
1,905
25
18
16
49
1,604
28
ECL provisions on disposal group loans
36
36
2
34
Total
80
3,681
18
62
\n
For the notes to this table refer to the following page
.
\n\n\n\n\n\n\n\n\n\n\n\n
Segment analysis \u2013 portfolio summary (audited)
\n\n \n
Of which:
Personal
Non-personal
Commercial
Commercial
Commercial
Retail
Private
&
Central items
Retail
Private
&
Central items
Private
&
Central items
Banking
Banking
Institutional
& other
Total
Banking
Banking
Institutional
& other
Banking
Institutional
& other
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ECL provisions coverage
(4)
Stage 1 (%)
0.17
0.11
0.30
0.09
0.20
0.17
0.02
0.09
nm
0.52
0.30
0.07
Stage 2 (%)
2.37
2.21
2.83
nm
2.58
2.37
0.78
-
66.67
2.76
2.84
nm
Stage 3 (%)
35.01
13.18
37.88
100.00
35.23
35.01
9.57
30.77
nm
28.57
38.06
25.00
ECL provisions coverage excluding disposal group loans
0.92
0.40
1.18
0.15
0.93
0.92
0.17
0.76
nm
1.23
1.19
0.09
ECL provisions coverage on disposal group loans
53.73
53.73
25.00
57.63
Total
0.27
0.94
85.71
0.21
Impairment (releases)/losses
ECL (release)/charge
(5)
465
14
94
5
578
465
(3)
5
15
17
89
(10)
Stage 1
(172)
(9)
(222)
6
(397)
(172)
(7)
(3)
4
(2)
(219)
2
Stage 2
440
15
182
8
645
440
4
-
7
11
182
1
Stage 3
197
8
134
(9)
330
197
-
8
4
8
126
(13)
Of which: individual
-
8
80
1
89
-
-
5
-
8
75
1
Of which: collective
197
-
54
(10)
241
197
-
3
4
-
51
(14)
Continuing operations
465
14
94
5
578
465
(3)
5
15
17
89
(10)
Discontinued operations
(6)
(6)
-
(6)
Total
(1)
572
15
(16)
Amounts written-off
188
2
122
7
319
188
2
1
2
-
121
5
Of which: individual
-
2
40
-
42
-
2
1
-
-
39
-
Of which: collective
188
-
82
7
277
188
-
-
2
-
82
5
\n
(1)
The table shows gross loans only and excludes amounts that were outside the scope of the ECL framework. Other financial assets within the scope of the IFRS 9 ECL framework were cash and balances at central banks totalling \u00a391.8 billion (2023 \u2013
\n
\u00a3103.1 billion) and debt securities of \u00a362.4 billion (2023 \u2013 \u00a350.1 billion).
\n
(2)
Includes loans to customers and banks.
\n
(3)
Includes \u00a34 million (2023 \u2013 \u00a39 million) related to assets classified as FVOCI and \u00a30.1 billion (2023 \u2013 \u00a30.1 billion) related to off-balance sheet exposures.
\n
(4)
ECL provisions coverage is calculated as ECL provisions divided by loans \u2013 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
\n
proportion of debt securities or unutilised exposure may result in a not meaningful coverage ratio.
\n
(5)
Includes a \u00a312 million release (2023 \u2013 \u00a316 million releasee) related to other financial assets, of which \u00a34 million release (2023 \u2013 \u00a36 million charge) related to assets classified as FVOCI and includes a \u00a35 million release (2023 \u2013 \u00a39 million release) related to
\n
contingent liabilities.
\n
Segmental loans and impairment metrics (audited)
\n
\ue001
Retail Banking
\u2013 Loans to customers increased during the year as a result of
\n
continued growth in mortgages, including the Metro Bank portfolio acquisition and
\n
credit card lending. Arrears balances increased during 2024, however, this was in
\n
line with expectations and wider-industry trends following periods of balance
\n
growth and normalisation since COVID-19. Arrears inflow rates remained stable.
\n
The reduction in good book ECL coverage in 2024 was primarily driven by
\n
unsecured PD modelling updates, alongside reductions in economic uncertainty
\n
post model adjustments and stable underlying portfolio performance. Post model
\n
adjustments to capture increased affordability pressures on customers due to high
\n
inflation and interest rates decreased during the year reflecting a revision of the
\n
assessment approach, supported by back-testing of default outcomes.
\n
Underpinned by good book ECL coverage dynamics, total ECL coverage
\n
decreased during the year and was further amplified by 2024 debt sale activity on
\n
unsecured portfolios. Flow rates into Stage 3 reduced during H1 2024 and
\n
remained consistent across H2 2024.
\n
\ue001
Commercial & Institutional
\u2013 Increased lending during 2024 was driven by
\n
corporate and non-bank financial institutions sectors, aligned to customer strategy.
\n
Sector appetite continues to be reviewed regularly. Portfolio performance remained
\n
stable with a small reduction in total ECL. Stage 1 and Stage 2 ECL and coverage
\n
decreased due to reductions in post model adjustments, net improvements in
\n
economic scenarios and weightings along with stable portfolio performance. Stage
\n
3 ECL increased due to a small number of large counterparties, but the total
\n
number of individual defaults remained low.
\n\n\n\n\n\n\n\n\n\n\n\n
Sector analysis \u2013 portfolio summary (audited)
\n
The table below shows financial assets and off-balance sheet exposures gross of ECL and related ECL provisions, impairment and past due by sector, asset quality and geographical
\n
region.
\n\n \n
Personal
Non-personal
Mortgages (1)
Credit cards
Other personal
Total
Corporate and Other (2)
FI
Sovereign
Total
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans by geography
209,846
6,930
9,749
226,525
111,734
70,321
1,645
183,700
410,225
- UK
209,846
6,930
9,749
226,525
97,409
43,412
562
141,383
367,908
- Other Europe
-
-
-
-
6,311
14,747
766
21,824
21,824
- RoW
-
-
-
-
8,014
12,162
317
20,493
20,493
Loans by stage
209,846
6,930
9,749
226,525
111,734
70,321
1,645
183,700
410,225
- Stage 1
186,250
4,801
7,267
198,318
94,991
69,021
1,491
165,503
363,821
- Stage 2
21,061
1,953
1,622
24,636
14,464
1,241
133
15,838
40,474
- Stage 3
2,535
176
860
3,571
2,279
59
21
2,359
5,930
- Of which: individual
141
-
26
167
1,046
51
21
1,118
1,285
- Of which: collective
2,394
176
834
3,404
1,233
8
-
1,241
4,645
Loans - past due analysis
(2)
209,846
6,930
9,749
226,525
111,734
70,321
1,645
183,700
410,225
- Not past due
206,739
6,721
8,865
222,325
107,855
70,055
1,627
179,537
401,862
- Past due 1-30 days
1,404
50
70
1,524
2,530
211
-
2,741
4,265
- Past due 31-90 days
580
51
99
730
398
2
18
418
1,148
- Past due 91-180 days
408
41
96
545
139
49
-
188
733
- Past due >180 days
715
67
619
1,401
812
4
-
816
2,217
Loans - Stage 2
21,061
1,953
1,622
24,636
14,464
1,241
133
15,838
40,474
- Not past due
19,939
1,889
1,521
23,349
13,485
1,228
133
14,846
38,195
- Past due 1-30 days
853
31
37
921
640
11
-
651
1,572
- Past due 31-90 days
269
33
64
366
339
2
-
341
707
Weighted average life
(4)
- ECL measurement (years)
8
4
6
6
6
2
1
6
6
Weighted average 12 months PDs
(4)
- IFRS 9 (%)
0.51
3.23
4.59
0.76
1.24
0.16
5.51
0.86
0.80
- Basel (%)
0.68
3.65
3.18
0.87
1.11
0.15
4.16
0.76
0.82
ECL provisions by geography
462
381
969
1,812
1,504
90
19
1,613
3,425
- UK
462
381
969
1,812
1,335
37
12
1,384
3,196
- Other Europe
-
-
-
-
109
9
-
118
118
- RoW
-
-
-
-
60
44
7
111
111
\n
For the notes to this table refer to page 205.
\n\n\n\n\n\n\n\n\n\n\n\n
Sector analysis \u2013 portfolio summary (audited)
\n\n \n
Personal
Non-personal
Mortgages
(1)
Credit cards
Other personal
Total
Corporate and Other (2)
FI
Sovereign
Total
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ECL provisions by stage
462
381
969
1,812
1,504
90
19
1,613
3,425
- Stage 1
77
77
130
284
264
38
12
314
598
- Stage 2
60
186
183
429
344
12
2
358
787
- Stage 3
325
118
656
1,099
896
40
5
941
2,040
- Of which: individual
11
-
17
28
382
36
5
423
451
- Of which: collective
314
118
639
1,071
514
4
-
518
1,589
ECL provisions coverage (%)
0.22
5.50
9.94
0.80
1.35
0.13
1.16
0.88
0.83
- Stage 1 (%)
0.04
1.60
1.79
0.14
0.28
0.06
0.80
0.19
0.16
- Stage 2 (%)
0.28
9.52
11.28
1.74
2.38
0.97
1.50
2.26
1.94
- Stage 3 (%)
12.82
67.05
76.28
30.78
39.32
67.80
23.81
39.89
34.40
ECL (release)/charge
8
115
161
284
55
19
1
75
359
- UK
8
115
161
284
43
1
-
44
328
- Other Europe
-
-
-
-
17
(7)
-
10
10
- RoW
-
-
-
-
(5)
25
1
21
21
Amounts written-off
18
102
313
433
221
-
-
221
654
Loans by residual maturity
209,846
6,930
9,749
226,525
111,734
70,321
1,645
183,700
410,225
- <1 year
3,367
3,903
3,186
10,456
34,929
54,971
822
90,722
101,178
- 1-5 year
11,651
3,027
5,551
20,229
48,075
10,967
488
59,530
79,759
- > 5 < 15 year
45,454
-
1,006
46,460
20,623
4,270
298
25,191
71,651
- > 15 year
149,374
-
6
149,380
8,107
113
37
8,257
157,637
Other financial assets by asset quality
(3)
-
-
-
-
3,644
31,102
119,502
154,248
154,248
- AQ1-AQ4
-
-
-
-
3,639
30,743
119,502
153,884
153,884
- AQ5-AQ8
-
-
-
-
5
359
-
364
364
Off-balance sheet
13,806
20,135
7,947
41,888
75,964
21,925
239
98,128
140,016
- Loan commitments
13,806
20,135
7,906
41,847
72,940
20,341
239
93,520
135,367
- Financial guarantees
-
-
41
41
3,024
1,584
-
4,608
4,649
Off-balance sheet by asset quality
(3)
13,806
20,135
7,947
41,888
75,964
21,925
239
98,128
140,016
- AQ1-AQ4
12,951
510
6,568
20,029
47,896
20,063
155
68,114
88,143
- AQ5-AQ8
839
19,276
1,336
21,451
27,657
1,813
21
29,491
50,942
- AQ9
1
12
17
30
19
-
63
82
112
- AQ10
15
337
26
378
392
49
-
441
819
\n
For the notes to this table refer to page 205.
\n\n\n\n\n\n\n\n\n\n\n\n
Sector analysis \u2013 portfolio summary (audited)
\n\n \n
Personal
Non-personal
Mortgages (1)
Credit cards
Other personal
Total
Corporate and Other (2)
FI
Sovereign
Total
Total
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans by geography
208,275
5,904
9,595
223,774
108,546
57,087
2,633
168,266
392,040
- UK
208,275
5,893
9,592
223,760
95,736
39,906
2,016
137,658
361,418
- Other Europe
-
11
3
14
6,368
8,144
399
14,911
14,925
- RoW
-
-
-
-
6,442
9,037
218
15,697
15,697
Loans by stage
208,275
5,904
9,595
223,774
108,546
57,087
2,633
168,266
392,040
- Stage 1
188,140
3,742
6,983
198,865
91,006
56,105
2,610
149,721
348,586
- Stage 2
17,854
2,022
1,633
21,509
15,415
966
1
16,382
37,891
- Stage 3
2,281
140
979
3,400
2,125
16
22
2,163
5,563
- Of which: individual
122
-
20
142
865
2
22
889
1,031
- Of which: collective
2,159
140
959
3,258
1,260
14
-
1,274
4,532
Loans - past due analysis
(2)
208,275
5,904
9,595
223,774
108,546
57,087
2,633
168,266
392,040
- Not past due
205,405
5,743
8,578
219,726
104,316
56,735
2,633
163,684
383,410
- Past due 1-30 days
1,178
41
71
1,290
2,713
332
-
3,045
4,335
- Past due 31-90 days
518
38
112
668
616
12
-
628
1,296
- Past due 91-180 days
445
32
103
580
113
2
-
115
695
- Past due >180 days
729
50
731
1,510
788
6
-
794
2,304
Loans - Stage 2
17,854
2,022
1,633
21,509
15,415
966
1
16,382
37,891
- Not past due
16,803
1,971
1,529
20,303
14,358
932
1
15,291
35,594
- Past due 1-30 days
765
27
40
832
616
24
-
640
1,472
- Past due 31-90 days
286
24
64
374
441
10
-
451
825
Weighted average life
(4)
- ECL measurement (years)
9
3
6
6
6
2
-
6
6
Weighted average 12 months PDs
(4)
- IFRS 9 (%)
0.50
3.45
5.29
0.75
1.55
0.19
0.37
1.07
0.89
- Basel (%)
0.67
3.37
3.15
0.84
1.16
0.17
0.37
0.81
0.83
ECL provisions by geography
420
376
1,168
1,964
1,599
66
16
1,681
3,645
- UK
420
365
1,163
1,948
1,383
38
13
1,434
3,382
- Other Europe
-
11
5
16
159
13
-
172
188
- RoW
-
-
-
-
57
15
3
75
75
\n
For the notes to this table refer to the following page.
Sector analysis \u2013 portfolio summary (audited)
\n \n
Personal
Non-personal
Mortgages (1)
Credit cards
Other personal
Total
Corporate and Other (2)
FI
Sovereign
Total
Total
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ECL provisions by stage
420
376
1,168
1,964
1,599
66
16
1,681
3,645
- Stage 1
88
76
152
316
336
44
13
393
709
- Stage 2
61
207
238
506
454
15
1
470
976
- Stage 3
271
93
778
1,142
809
7
2
818
1,960
- Of which: individual
12
-
14
26
302
2
2
306
332
- Of which: collective
259
93
764
1,116
507
5
-
512
1,628
ECL provisions coverage (%)
0.20
6.37
12.17
0.88
1.47
0.12
0.61
1.00
0.93
- Stage 1 (%)
0.05
2.03
2.18
0.16
0.37
0.08
0.50
0.26
0.20
- Stage 2 (%)
0.34
10.24
14.57
2.35
2.95
1.55
100.00
2.87
2.58
- Stage 3 (%)
11.88
66.43
79.47
33.59
38.07
43.75
9.09
37.82
35.23
ECL (release)/charge
35
193
254
482
92
6
(2)
96
578
- UK
35
184
249
468
103
(4)
(2)
97
565
- Other Europe
-
9
5
14
39
12
-
51
65
- RoW
-
-
-
-
(50)
(2)
-
(52)
(52)
Amounts written-off
32
70
91
193
125
1
-
126
319
Loans by residual maturity
208,275
5,904
9,595
223,774
108,546
57,087
2,633
168,266
392,040
- <1 year
3,375
3,398
3,169
9,942
31,008
43,497
489
74,994
84,936
- 1-5 year
9,508
2,506
5,431
17,445
49,789
11,616
1,872
63,277
80,722
- > 5 < 15 year
46,453
-
993
47,446
19,868
1,939
199
22,006
69,452
- > 15 year
148,939
-
2
148,941
7,881
35
73
7,989
156,930
Other financial assets by asset quality
(3)
-
-
-
-
2,690
26,816
123,683
153,189
153,189
- AQ1-AQ4
-
-
-
-
2,690
26,084
123,683
152,457
152,457
- AQ5-AQ8
-
-
-
-
-
732
-
732
732
Off-balance sheet
9,843
17,284
8,462
35,589
73,921
22,221
227
96,369
131,958
- Loan commitments
9,843
17,284
8,417
35,544
70,942
20,765
227
91,934
127,478
- Financial guarantees
-
-
45
45
2,979
1,456
-
4,435
4,480
Off-balance sheet by asset quality
(3)
9,843
17,284
8,462
35,589
73,921
22,221
227
96,369
131,958
- AQ1-AQ4
9,099
448
7,271
16,818
47,296
20,644
165
68,105
84,923
- AQ5-AQ8
721
16,518
1,162
18,401
26,296
1,574
45
27,915
46,316
- AQ9
7
6
4
17
15
-
-
15
32
- AQ10
16
312
25
353
314
3
17
334
687
(1)
Includes a portion of Private Banking lending secured against residential real estate, in line with ECL calculation methodology. Private Banking and RBS International mortgages are reported in UK, reflecting the country of lending origination and includes
crown dependencies.
(2)
Previously published sectors for the Non-personal portfolio have been re-presented to reflect internal sector reporting. Property is now included in corporate and other.
(3)
AQ bandings are based on Basel PDs and mapping is as follows:
\n \n
Internal asset quality band
Probability of default range
Indicative S&P rating
Internal asset quality band
Probability of default range
Indicative S&P rating
AQ1
0% - 0.034%
AAA to AA
AQ6
1.076% - 2.153%
BB- to B+
AQ2
0.034% - 0.048%
AA to AA-
AQ7
2.153% - 6.089%
B+ to B
AQ3
0.048% - 0.095%
A+ to A
AQ8
6.089% - 17.222%
B- to CCC+
AQ4
0.095% - 0.381%
BBB+ to BBB-
AQ9
17.222% - 100%
CCC to C
AQ5
0.381% - 1.076%
BB+ to BB
AQ10
100%
\u00a30.3 billion (2023 \u2013 \u00a30.3 billion) of AQ10 Personal balances primarily relate to loan commitments, the drawdown of which is effectively prohibited.
(4)
Not within the scope of the independent auditors\u2019 report.
D
\n\n\n\n\n\n\n\n\n\n\n\n
Sector analysis \u2013 portfolio summary (audited)
\n
The table below shows ECL by stage, for the Personal portfolio and Non-Personal portfolio including the three largest borrowing sector clusters included in corporate and other.
\n\n \n
Loans - amortised cost and FVOCI
Off-balance sheet
ECL provisions
Stage 1
Stage 2
Stage 3
Total
Loan commitments
Contingent liabilities
Stage 1
Stage 2
Stage 3
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Personal
198,318
24,636
3,571
226,525
41,847
41
284
429
1,099
1,812
Mortgages
186,250
21,061
2,535
209,846
13,806
-
77
60
325
462
Credit cards
4,801
1,953
176
6,930
20,135
-
77
186
118
381
Other personal
7,267
1,622
860
9,749
7,906
41
130
183
656
969
Non-personal
165,503
15,838
2,359
183,700
93,520
4,608
314
358
941
1,613
Financial institutions
(1)
69,021
1,241
59
70,321
20,341
1,584
38
12
40
90
Sovereigns
1,491
133
21
1,645
239
-
12
2
5
19
Corporate and other
(2)
94,991
14,464
2,279
111,734
72,940
3,024
264
344
896
1,504
Of which:
Commercial real estate
16,191
1,517
433
18,141
6,661
143
70
30
146
246
Consumer industries
13,312
3,015
444
16,771
10,706
595
45
90
188
323
Mobility and logistics
13,363
2,384
148
15,895
9,367
595
26
35
67
128
Total
363,821
40,474
5,930
410,225
135,367
4,649
598
787
2,040
3,425
\n\n \n
Loans - amortised cost and FVOCI
Off-balance sheet
ECL provisions
Stage 1
Stage 2
Stage 3
Total
Loan commitments
Contingent liabilities
Stage 1
Stage 2
Stage 3
Total
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Personal
198,865
21,509
3,400
223,774
35,544
45
316
506
1,142
1,964
Mortgages
188,140
17,854
2,281
208,275
9,843
-
88
61
271
420
Credit cards
3,742
2,022
140
5,904
17,284
-
76
207
93
376
Other personal
6,983
1,633
979
9,595
8,417
45
152
238
778
1,168
Non-personal
149,721
16,382
2,163
168,266
91,934
4,435
393
470
818
1,681
Financial institutions
(1)
56,105
966
16
57,087
20,765
1,456
44
15
7
66
Sovereigns
2,610
1
22
2,633
227
-
13
1
2
16
Corporate and other
(2)
91,006
15,415
2,125
108,546
70,942
2,979
336
454
809
1,599
Of which:
Commercial real estate
14,998
2,040
374
17,412
7,155
106
86
58
112
256
Consumer industries
12,586
4,050
541
17,177
10,209
649
61
119
222
402
Mobility and logistics
13,186
2,074
143
15,403
8,728
496
33
39
48
120
Total
348,586
37,891
5,563
392,040
127,478
4,480
709
976
1,960
3,645
\n
(1)
Includes transactions, such as securitisations, where the underlying assets may be in other sectors.
\n
(2)
Previously published sectors for the Non-personal portfolio have been re-presented to reflect internal sector reporting. Property is now included in corporate and other.
Non-personal forbearance (audited)
The table below shows Non-personal forbearance, Heightened Monitoring and Risk of Credit Loss by sector. The table shows current exposure but reflects risk transfers where there
is a guarantee by another customer.
\n \n
Corporate and Other
Financial institution
Sovereign
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Forbearance (flow)
3,359
119
18
3,496
Forbearance (stock)
4,556
106
18
4,680
Heightened Monitoring and Risk of Credit Loss
5,931
150
1
6,082
2023
Forbearance (flow)
3,484
56
22
3,562
Forbearance (stock)
4,823
70
22
4,915
Heightened Monitoring and Risk of Credit Loss
5,208
276
-
5,484
Sector analysis \u2013 portfolio summary (audited)
\ue001
Loans by geography and sector
\u2013 In line with NatWest Group\u2019s strategic focus, exposures continued to be mainly in the UK.
\ue001
Loans by stage
\u2013 The increase in Stage 1 reflected the growth in Non-Personal lending, alongside continued growth in Personal unsecured portfolios. There was an increase in
Stage 2 balances in 2024, driven by mortgages, but noting that there was a significant proportion of mortgage cases in Stage 2, due to PD persistence only. The modest increase
in Stage 3 balance was mainly due to a small number of large corporate customers, with Personal lending increases largely mitigated by debt sale activity on unsecured assets.
\ue001
Loans \u2013 Past due analysis
\u2013 Within the Personal portfolio, arrears balances increased during 2024, however, this was in line with expectations following periods of balance growth
and normalisation since COVID-19. Arrears inflow rates remained stable. In Non-Personal, past due composition was stable.
\ue001
Weighted average 12 months PDs
\u2013
Both IFRS 9 and Basel PDs remained broadly stable during the year. In the Personal portfolios, there was a notable reduction in unsecured
IFRS 9 PDs due to modelling updates. In Non-Personal, some reductions were observed in IFRS 9 PDs in the corporate portfolios due to economic and portfolio improvements. PDs
in sovereigns increased significantly due to new lending but all new lending is fully backed by government guarantees.
\ue001
ECL provisions by stage and ECL provisions coverage
\u2013 Overall provisions coverage reduced since 31 December 2023. In the performing book, this was mainly a result of stable
portfolio performance, reduced economic uncertainty post model adjustments and PD reductions across a number of portfolios, primarily relating to modelling updates in Personal.
Furthermore, Stage 3 and total book coverage reduced, supported by the 2024 debt sale activity on Personal unsecured portfolios.
\ue001
ECL charge \u2013
The full year impairment charge for 2024 of \u00a3359 million primarily reflected stable default performance, alongside reduced PD levels and impairment releases driven
by the reduction in economic uncertainty post model adjustments.
\ue001
Loans by residual maturity
\u2013
The maturity profile of the portfolios remained consistent with prior periods. In mortgages, as expected, the vast majority of exposures were greater
than five years. In unsecured lending, cards and other, exposures were concentrated in less than five years. In Non-Personal, most loans mature in less than five years.
\ue001
Other financial assets by asset quality
\u2013
Consisting almost entirely of balances at central banks and debt securities held in the course of treasury related management activities,
these assets were mainly within the AQ1-AQ4 bands.
\ue001
Off-balance sheet exposures by asset quality
\u2013 In Personal, undrawn exposures were reflective of available credit lines in credit cards and current accounts. Additionally, the
mortgage portfolio had undrawn exposures, where a formal offer had been made to a customer but had not yet drawn down; the value increased in line with the pipeline of offers.
There was also a legacy portfolio of flexible mortgages where a customer had the right and ability to draw down further funds. In Non-Personal, off-balance sheet exposures
increased moderately driven by loan commitments. Asset quality was mainly in the AQ1-AQ8 bandings.
\ue001
Non-Personal problem debt \u2013
There was an increase in exposures during 2024 driven by corporate sectors, although volumes were flat. The framework is closely monitored, and
there were no material thematic concerns.
\ue001
Non-Personal forbearance \u2013
Forbearance was lower at the end of 2024, compared to 2023, reflecting stable portfolio performance.
\n\n\n\n\n\n\n\n\n\n\n\n
Credit risk enhancement and mitigation (audited)
\n
The table below shows exposures of modelled portfolios within the scope of the ECL framework and related credit risk enhancement and mitigation (CREM).
\n \n \n
Gross
Maximum credit risk
CREM by type
CREM coverage
Exposure post CREM
exposure
ECL
Total
Stage 3
Financial (1)
Property
Other (2)
Total
Stage 3
Total
Stage 3
2024
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Financial assets
Cash and balances at central banks
91.8
-
91.8
-
-
-
-
-
-
91.8
-
Loans - amortised cost
(3)
410.2
3.3
406.9
3.9
46.3
253.0
25.5
324.8
3.4
82.1
0.5
Personal
(4)
226.5
1.8
224.7
2.5
0.8
209.1
-
209.9
2.2
14.8
0.3
Non-personal
(5)
183.7
1.5
182.2
1.4
45.5
43.9
25.5
114.9
1.2
67.3
0.2
Debt securities
62.5
-
62.5
-
0.1
-
-
0.1
-
62.4
-
Total financial assets
564.5
3.3
561.2
3.9
46.4
253.0
25.5
324.9
3.4
236.3
0.5
Contingent liabilities and commitments
Personal
(6,7)
41.9
-
41.9
0.4
1.1
3.7
-
4.8
-
37.1
0.4
Non-personal
98.1
0.1
98.0
0.4
3.1
8.2
5.1
16.4
0.1
81.6
0.3
Total off-balance sheet
140.0
0.1
139.9
0.8
4.2
11.9
5.1
21.2
0.1
118.7
0.7
Total exposure
704.5
3.4
701.1
4.7
50.6
264.9
30.6
346.1
3.5
355.0
1.2
2023
Financial assets
Cash and balances at central banks
103.1
-
103.1
-
-
-
-
-
-
103.1
-
Loans - amortised cost
(3)
392.0
3.5
388.5
3.5
37.4
248.2
21.8
307.4
3.1
81.1
0.4
Personal
(4)
223.7
1.9
221.8
2.2
0.9
207.5
-
208.4
2.0
13.4
0.2
Non-personal
(5)
168.3
1.6
166.7
1.3
36.5
40.7
21.8
99.0
1.1
67.7
0.2
Debt securities
50.1
-
50.1
-
-
-
-
-
-
50.1
-
Total financial assets
545.2
3.5
541.7
3.5
37.4
248.2
21.8
307.4
3.1
234.3
0.4
Contingent liabilities and commitments
Personal
(6,7)
35.6
-
35.6
0.3
1.0
4.0
-
5.0
-
30.6
0.3
Non-personal
96.4
0.1
96.3
0.4
2.6
7.1
4.1
13.8
0.1
82.5
0.3
Total off-balance sheet
132.0
0.1
131.9
0.7
3.6
11.1
4.1
18.8
0.1
113.1
0.6
Total exposure
677.2
3.6
673.6
4.2
41.0
259.3
25.9
326.2
3.2
347.4
1.0
\n
(1)
Includes cash and securities collateral.
\n
(2)
Includes guarantees, charges over trade debtors, other asset finance related physical collateral as well as the amount by which credit risk exposure is reduced through netting arrangements, mainly cash management pooling, which give NatWest Group a
\n
legal right to set off the financial asset against a financial liability due to the same counterparty. Any additional credit risk mitigation from a synthetic securitization is not included in the table above.
\n
(3)
NatWest Group holds collateral in respect of individual loans \u2013 amortised cost to banks and customers. This collateral includes mortgages over property (both personal and commercial); charges over business assets such as plant and equipment;
\n
inventories and trade debtors; and guarantees of lending from parties other than the borrower. NatWest Group obtains collateral in the form of securities in reverse repurchase agreements. Collateral values are capped at the value of the loan.
\n
(4)
Stage 3 mortgage exposures have relatively limited uncovered exposure reflecting the security held. On unsecured credit cards and other personal borrowing, the residual uncovered amount reflects historical experience of continued cash recovery post
\n
default through ongoing engagement with customers.
\n
(5)
Stage 3 exposures post credit risk enhancement and mitigation in Non-personal mainly represent enterprise value and the impact of written down collateral values; an individual assessment to determine ECL will consider multiple scenarios and in some
\n
instances allocate a probability weighting to a collateral value in excess of the written down value.
\n
(6)
\u00a30.3 billion (2023
\u2013
\u00a30.3 billion) Personal Stage 3 balances primarily relate to loan commitments, the draw down of which is effectively prohibited.
\n
(7)
The Personal gross exposure value includes \u00a310.1 billion (2023
\u2013
\u00a35.9 billion) in respect of pipeline mortgages where a committed offer has been made to a customer but where the funds have not yet been drawn down. When drawn down, the exposure
\n
would be covered by a security over the borrower\u2019s property.
\n\n\n\n\n\n\n\n\n\n\n\n
Personal portfolio (audited)
\n
Disclosures in the Personal portfolio section include drawn exposure (gross of provisions).
\n\n \n
2024
Retail
Private
Commercial &
Central items
Banking
Banking
Institutional
& other
Total
Personal lending
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Mortgages
194,865
12,826
2,161
-
209,852
Of which:
Owner occupied
176,137
11,348
1,457
-
188,942
Buy-to-let
18,728
1,478
704
-
20,910
Interest only
22,186
11,276
437
-
33,899
Mixed
(1)
10,384
40
8
-
10,432
ECL provisions
(2)
440
12
10
-
462
Other personal lending
(3)
15,045
1,301
242
-
16,588
ECL provisions
(2)
1,330
12
3
-
1,345
Total personal lending
209,910
14,127
2,403
-
226,440
Mortgage LTV ratios
- Owner occupied
56%
59%
56%
-
56%
- Stage 1
56%
59%
55%
-
56%
- Stage 2
55%
61%
56%
-
55%
- Stage 3
50%
64%
74%
-
51%
- Buy-to-let
53%
60%
52%
-
53%
- Stage 1
54%
60%
51%
-
54%
- Stage 2
52%
57%
55%
-
52%
- Stage 3
52%
56%
59%
-
53%
Gross new mortgage lending
26,440
1,395
257
-
28,092
Of which:
Owner occupied
25,300
1,266
183
-
26,749
- LTV > 90%
888
-
-
-
888
Weighted average LTV
(4)
70%
63%
71%
-
70%
Buy-to-let
1,140
129
74
-
1,343
Weighted average LTV
(4)
61%
62%
56%
-
61%
Interest only
1,575
1,238
42
-
2,855
Mixed
(1)
1,150
-
1
-
1,151
Mortgage forbearance
Forbearance flow
(5)
473
8
6
-
487
Forbearance stock
1,680
20
15
-
1,715
Current
1,214
9
10
-
1,233
1-3 months in arrears
146
9
-
-
155
>3 months in arrears
320
2
5
-
327
\n
For the notes to this table refer to the following page.
\n\n\n\n\n\n\n\n\n\n\n\n
Personal portfolio (audited)
\n\n \n
2023
Retail
Private
Commercial &
Central items
Banking
Banking
Institutional
& other
Total
Personal lending
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Mortgages
192,915
13,222
2,200
-
208,337
Of which:
Owner occupied
174,167
11,629
1,464
-
187,260
Buy-to-let
18,748
1,593
736
-
21,077
Interest only
25,805
11,631
461
-
37,897
Mixed
(1)
10,068
25
10
-
10,103
ECL provisions
(2)
397
12
6
-
415
Other personal lending
(3)
13,758
1,395
222
13
15,388
ECL provisions
(2)
1,508
12
2
16
1,538
Total personal lending
206,673
14,617
2,422
13
223,725
Mortgage LTV ratios
- Owner occupied
55%
59%
56%
-
55%
- Stage 1
55%
59%
54%
-
55%
- Stage 2
54%
63%
54%
-
54%
- Stage 3
48%
61%
72%
-
49%
- Buy-to-let
52%
59%
52%
-
53%
- Stage 1
52%
60%
52%
-
53%
- Stage 2
50%
57%
49%
-
50%
- Stage 3
50%
53%
58%
-
51%
Gross new mortgage lending
29,664
1,400
180
-
31,244
Of which:
Owner occupied
27,718
1,267
136
-
29,121
- LTV > 90%
1,173
-
-
-
1,173
Weighted average LTV
(4)
70%
63%
69%
-
70%
Buy-to-let
1,946
133
44
-
2,123
Weighted average LTV
(4)
58%
65%
52%
-
58%
Interest only
2,680
1,224
23
-
3,927
Mixed
(1)
1,568
2
-
-
1,570
Mortgage forbearance
Forbearance flow
(5)
569
22
9
-
600
Forbearance stock
1,416
28
15
-
1,459
Current
950
10
6
-
966
1-3 months in arrears
116
2
2
-
120
>3 months in arrears
350
16
7
-
373
\n
(1)
Includes accounts which have an interest only sub-
\n
account and a capital and interest sub-account to
\n
provide a more comprehensive view of interest only
\n
exposures.
\n
(2)
Retail Banking excludes a non-material amount of
\n
lending and provisions held on relatively small legacy
\n
portfolios.
\n
(3)
Comprises unsecured lending except for Private
\n
Banking, which includes both secured and unsecured
\n
lending. It excludes loans that are commercial in
\n
nature.
\n
(4)
New mortgage lending LTV reflects the LTV at the
\n
time of lending.
\n
(5)
Forbearance flows only include an account once per
\n
year, although some accounts may be subject to
\n
multiple forbearance deals. Forbearance deals post
\n
default are excluded from these flows.
\n\n\n\n\n\n\n\n\n\n\n\n
Personal portfolio (audited)
\n
Mortgage LTV distribution by stage
\n
The table below shows gross mortgage lending and related ECL by LTV band for the Retail Banking portfolio.
\n \n \n
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
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
\u226450%
64,040
8,344
1,159
73,543
21
16
153
190
-
0.2
13.2
0.3
>50% and \u226470%
61,739
7,741
855
70,335
29
23
104
156
-
0.3
12.2
0.2
>70% and \u226480%
25,022
2,361
173
27,556
13
9
22
44
0.1
0.4
12.7
0.2
>80% and \u226490%
16,718
1,769
85
18,572
9
9
13
31
0.1
0.5
15.3
0.2
>90% and \u2264100%
4,076
512
26
4,614
2
3
5
10
-
0.6
19.2
0.2
>100%
14
4
13
31
-
-
6
6
-
-
46.2
19.4
Total with LTVs
171,609
20,731
2,311
194,651
74
60
303
437
-
0.3
13.1
0.2
Other
212
1
1
214
2
-
1
3
0.9
-
100.0
1.4
Total
171,821
20,732
2,312
194,865
76
60
304
440
-
0.3
13.1
0.2
2023
\u226450%
68,092
7,447
1,145
76,684
27
18
134
179
-
0.2
11.7
0.2
>50% and \u226470%
65,777
7,011
767
73,555
35
26
85
146
0.1
0.4
11.1
0.2
>70% and \u226480%
22,537
1,633
113
24,283
13
7
15
35
0.1
0.4
13.3
0.1
>80% and \u226490%
13,583
1,143
47
14,773
9
6
7
22
0.1
0.5
14.9
0.1
>90% and \u2264100%
3,008
370
14
3,392
2
3
3
8
0.1
0.8
21.4
0.2
>100%
22
6
11
39
-
-
5
5
-
-
45.5
12.8
Total with LTVs
173,019
17,610
2,097
192,726
86
60
249
395
0.1
0.3
11.9
0.2
Other
186
1
2
189
1
-
1
2
0.5
-
50.0
1.1
Total
173,205
17,611
2,099
192,915
87
60
250
397
0.1
0.3
11.9
0.2
\n
\ue001
Mortgage balances increased during 2024 as a result of the Metro Bank mortgage portfolio acquisition. Unsecured lending grew overall, driven by growth in credit cards, prime
\n
quality whole of market lending and balance transfer segments.
\n
\ue001
The proportion of overall interest-only mortgage balances decreased in 2024. Higher levels of interest-only at the 2023 year end were driven by the implementation of the
\n
Mortgage Charter. However, applications for Mortgage Charter support decreased during 2024 and customers have rolled-off from interest-only periods.
\n
\ue001
Portfolios and new business were closely monitored against agreed operating limits. These included loan-to-value ratios, buy-to-let concentrations, new-build concentrations and
\n
credit quality. Lending criteria, affordability calculations and assumptions for new lending were adjusted during the year, to maintain credit quality in line with appetite and to
\n
ensure customers are assessed fairly as economic conditions change.
\n
\ue001
Consistent with lower mortgage inflows to collections in 2024, the flow of forbearance reduced compared to the prior year.
\n\n\n\n\n\n\n\n\n\n\n\n
Personal portfolio (audited)
\n
Mortgage LTV distribution by region
\n
The table below shows gross mortgage lending by LTV band for Retail Banking, by geographical region.
\n\n \n
Flood risk (1,2)
Weighted
% of regional
% of regional
Lending at high/
\u226450%
50%\u226480%
80%\u2264100%
>100%
Total
average LTV
Other
Total
Total
lending at high
lending at very
very high risk (3)
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
\u00a3m
\u00a3m
%
risk (>60)
high risk (>80)
%
South East
13,622
19,007
4,506
1
37,136
56
3
37,139
19
3.6
1.2
4.8
Greater London
13,951
18,537
3,391
2
35,881
55
3
35,884
18
4.8
0.9
5.7
East of England
7,776
11,730
3,211
2
22,719
58
1
22,720
12
2.9
1.4
4.3
North West
7,507
8,305
1,878
2
17,692
54
1
17,693
9
2.9
1.9
4.8
South West
6,577
8,455
2,055
1
17,088
56
1
17,089
9
2.6
1.0
3.6
West Midlands
5,379
6,970
1,683
1
14,033
56
1
14,034
7
1.8
0.6
2.4
Scotland
4,860
5,766
1,591
1
12,218
55
1
12,219
6
2.4
1.2
3.6
Rest of the UK
13,871
19,121
4,871
21
37,884
57
203
38,087
20
2.4
2.5
4.9
Total
73,543
97,891
23,186
31
194,651
56
214
194,865
100
3.1
1.4
4.5
2023
South East
14,645
18,510
3,107
1
36,263
54
2
36,265
19
3.8
1.2
5.0
Greater London
14,689
18,044
2,366
1
35,100
53
3
35,103
18
5.2
0.9
6.1
East of England
8,576
11,810
2,208
-
22,594
55
2
22,596
12
3.1
1.4
4.5
North West
7,314
8,629
1,881
2
17,826
54
2
17,828
9
3.0
1.9
4.9
South West
7,308
8,296
1,379
1
16,984
53
1
16,985
9
2.7
1.0
3.7
West Midlands
5,391
7,072
1,404
1
13,868
55
1
13,869
7
1.9
0.6
2.5
Scotland
5,051
5,938
1,445
1
12,435
54
2
12,437
6
2.9
1.4
4.2
Rest of the UK
13,711
19,540
4,374
32
37,657
56
175
37,832
20
2.7
1.8
4.5
Total
76,685
97,839
18,164
39
192,727
54
188
192,915
100
3.4
1.3
4.7
\n
(1)
Not within the scope of the independent auditors\u2019 report.
\n
(2)
As at 31 December 2024, \u00a312.6 billion, 98.0%, of the private banking mortgage portfolio had flood risk data available (2023 \u2013 \u00a313.0 billion, 98.1%). Of which, 5.4% were rated as high flood risk and 1.0% as very high flood risk
(2023 \u2013 5.74% high flood risk
\n
and 1.1% very high flood risk). 63% of the exposure is in the Greater London region.
\n
(3)
Flood risk is modelled by calculating an estimated loss for each flood source different types of flooding (fluvial, pluvial, tidal), annualised for each source and combined for a total flood score. Flood defences were considered where available. Flood scores
\n
were allocated per property based on the potential annualised loss (\u00a3) to a property dependent on the type, frequency and depth of flooding modelled across different return periods. The scoring ranged from 0 to 100, with 0 being lowest and 100 being
\n
the highest risk. A score of 61 and above was considered to be high risk and properties with a score of 81 and above were considered to be very high risk after flood mitigants were taken-into-account.
Personal portfolio (audited)
Retail Banking fixed rate mortgages by roll-off date
(1)
The table below shows gross fixed rate mortgage lending for Retail Banking, by roll-off date.
2024
2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Retail Banking mortgages - gross exposure
(2)
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Fixed rate roll-off
<=1 year
34,989
4,309
336
39,634
30,867
3,670
295
34,832
>1<= 2 years
44,146
5,080
418
49,644
39,013
3,513
290
42,816
>2 years
78,629
8,667
693
87,989
87,402
7,461
590
95,453
Total
157,764
18,056
1,447
177,267
157,282
14,644
1,175
173,101
(1)
Not within the scope of the independent auditors\u2019 report.
(2)
Excluding the Metro Bank portfolio acquired during 2024.
Retail Banking mortgages by Energy Performance Certificate (EPC) rating
(1)
The table below shows the energy efficiency of Retail Banking residential mortgages.
2024
2023
Owner occupied
Buy-to-let
Total
Owner occupied
Buy-to-let
Total
EPC rating
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
A
788
18
806
547
13
560
B
21,923
1,480
23,403
21,566
1,458
23,024
C
31,353
5,876
37,229
29,764
5,712
35,476
D
45,455
5,748
51,203
46,924
6,056
52,980
E
14,455
1,369
15,824
16,027
1,557
17,584
F
3,026
55
3,081
3,360
62
3,422
G
695
13
708
736
16
752
Unclassified
58,442
4,169
62,611
55,243
3,874
59,117
Total
176,137
18,728
194,865
174,167
18,748
192,915
(1)
Not within the scope of the independent auditors\u2019 report.
(2)
As at 31 December 2024, \u00a3139.1 billion, 66.3%, of the total residential mortgages portfolio had Energy Performance Certificate (EPC) data available (2023 \u2013 \u00a3140.8 billion, 67.6%). Of which, 46.3% were rated as EPC A to C (2023 \u2013 44.1%).
Commercial real estate (CRE)
CRE LTV distribution by stage (audited)
The table below shows CRE gross loans and related ECL by LTV band.
Gross loans
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
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
\u226450%
7,334
380
48
7,762
28
6
7
41
0.4
1.6
14.6
0.5
>50% and \u226470%
4,413
367
87
4,867
22
10
17
49
0.5
2.7
19.5
1.0
>70% and \u2264100%
312
83
79
474
2
4
21
27
0.6
4.8
26.6
5.7
>100%
139
8
119
266
1
-
56
57
0.7
-
47.1
21.4
Total with LTVs
12,198
838
333
13,369
53
20
101
174
0.4
2.4
30.3
1.3
Total portfolio average LTV
46%
51%
102%
48%
Other Investment
(1)
2,132
348
41
2,521
6
6
15
27
0.3
1.7
36.6
1.1
Investment
14,330
1,186
374
15,890
59
26
116
201
0.4
2.2
31.0
1.3
Development and other
(2)
1,861
331
59
2,251
11
4
30
45
0.6
1.2
50.8
2.0
Total
16,191
1,517
433
18,141
70
30
146
246
0.4
2.0
33.7
1.4
2023
\u226450%
7,173
664
61
7,898
38
15
9
62
0.5
2.3
14.8
0.8
>50% and \u226470%
3,165
619
94
3,878
22
21
18
61
0.7
3.4
19.1
1.6
>70% and \u2264100%
319
112
84
515
3
6
21
30
0.9
5.4
25.0
5.8
>100%
241
6
26
273
1
1
16
18
0.4
16.7
61.5
6.6
Total with LTVs
10,898
1,401
265
12,564
64
43
64
171
0.6
3.1
24.2
1.4
Total portfolio average LTV
47%
51%
72%
48%
Other Investment
(1)
2,189
390
45
2,624
10
7
19
36
0.5
1.8
42.2
1.4
Investment
13,087
1,791
310
15,188
74
50
83
207
0.6
2.8
26.8
1.4
Development and other
(2)
1,911
249
64
2,224
12
8
29
49
0.6
3.2
45.3
2.2
Total
14,998
2,040
374
17,412
86
58
112
256
0.6
2.8
29.9
1.5
(1)
Relates mainly to business banking and unsecured corporate lending.
(2)
Relates to the development of commercial and residential properties, along with CRE activities that are not strictly investment or development. LTV is not a meaningful measure for this type of lending activity.
\ue001
The majority of the CRE portfolio was located and managed in the UK. Business appetite and strategy was aligned across NatWest Group. Lending appetite is subject to regular
review.
\ue001
While the real estate investment market was subdued through much of 2024, the portfolio remained resilient and there was moderate growth.
\ue001
Credit quality remained stable with very limited instances of specific cases deteriorating. Challenges persist in parts of the office sub-sector, but NatWest Group remains
comfortable with exposures held in this sub-sector, representing approximately 16% of the overall CRE book.
Flow statements (audited)
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:
\ue001
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.
\ue001
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.
\ue001
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.
\ue001
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.
\ue001
Amounts written-off represent the gross asset written-down against accounts with ECL, including the net asset write-down for any debt sale activity.
\ue001
There were some flows from Stage 1 into Stage 3 including transfers due to unexpected default events with a post model adjustment in place for Commercial & Institutional to
account for this risk.
\ue001
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.
\ue001
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 assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
NatWest Group total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
504,345
709
40,294
976
5,621
1,960
550,260
3,645
Currency translation and other adjustments
(1,354)
-
(40)
(1)
158
204
(1,236)
203
Transfers from Stage 1 to Stage 2
(40,745)
(231)
40,745
231
-
-
-
-
Transfers from Stage 2 to Stage 1
27,808
552
(27,808)
(552)
-
-
-
-
Transfers to Stage 3
(247)
(5)
(3,489)
(269)
3,736
274
-
-
Transfers from Stage 3
296
19
761
37
(1,057)
(56)
-
-
Net re-measurement of ECL on stage transfer
(390)
657
344
611
Changes in risk parameters
(206)
(114)
302
(18)
Other changes in net exposure
25,749
155
(8,288)
(174)
(1,891)
(176)
15,570
(195)
Other (P&L only items)
3
(9)
(33)
(39)
Income statement (releases)/charges
(438)
360
437
359
Transfers to disposal groups and fair value
(296)
(5)
(9)
(3)
(13)
(10)
(318)
(18)
Amounts written-off
-
-
(1)
(1)
(653)
(653)
(654)
(654)
Unwinding of discount
-
-
(149)
(149)
At 31 December 2024
515,556
598
42,165
787
5,901
2,040
563,622
3,425
Net carrying amount
514,958
41,378
3,861
560,197
At 1 January 2023
507,539
632
48,482
1,043
5,231
1,759
561,252
3,434
2023 movements
(3,194)
77
(8,188)
(67)
390
201
(10,992)
211
At 31 December 2023
504,345
709
40,294
976
5,621
1,960
550,260
3,645
Net carrying amount
503,636
39,318
3,661
546,615
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Retail Banking - mortgages
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
174,038
87
17,827
60
2,068
250
193,933
397
Currency translation and other adjustments
-
(1)
-
1
109
110
109
110
Transfers from Stage 1 to Stage 2
(19,074)
(20)
19,074
20
-
-
-
-
Transfers from Stage 2 to Stage 1
12,454
24
(12,454)
(24)
-
-
-
-
Transfers to Stage 3
(52)
-
(1,079)
(8)
1,131
8
-
-
Transfers from Stage 3
48
1
392
7
(440)
(8)
-
-
Net re-measurement of ECL on stage transfer
(13)
26
6
19
Changes in risk parameters
3
(15)
96
84
Other changes in net exposure
3,919
(5)
(2,768)
(7)
(550)
(75)
601
(87)
Other (P&L only items)
-
(1)
(10)
(11)
Income statement (releases)/charges
(15)
3
17
5
Amounts written-off
-
-
-
-
(15)
(15)
(15)
(15)
Unwinding of discount
-
-
(67)
(67)
At 31 December 2024
171,333
76
20,992
60
2,303
305
194,628
441
Net carrying amount
171,257
20,932
1,998
194,187
At 1 January 2023
165,264
79
18,831
61
1,762
215
185,857
355
2023 movements
8,774
8
(1,004)
(1)
306
35
8,076
42
At 31 December 2023
174,038
87
17,827
60
2,068
250
193,933
397
Net carrying amount
173,951
17,767
1,818
193,536
\n
\ue001
ECL coverage for mortgages remained stable overall during 2024, with growth in Stage 3 ECL partly offset by a reduction in good book ECL, primarily driven by the reduction in
\n
economic uncertainty post model adjustment levels. PDs remained broadly flat with the effect of the modest increase in arrears levels being offset by the impact of improved
\n
economics since 2023 and stable portfolio performance overall.
\n
\ue001
The decrease in Stage 1 ECL was also driven by the cost of living post model adjustment reduction. Refer to the Governance and post model adjustments section for further
\n
details.
\n
\ue001
The Stage 3 inflows remained broadly stable, albeit with signs of an upward drift in default rates, reflecting slightly poorer arrears performance on mortgages recently rolled-off
\n
onto higher product rates. The increase in Stage 3 ECL primarily reflected increases in ECL for post-default interest.
\n
\ue001
There were net flows into Stage 2 from Stage 1 in line with a modest upward trend in arrears.
\n
\ue001
The relatively small ECL cost for net re-measurement on transfer into Stage 3 included the effect of risk targeted ECL adjustments, when previously in the good book. Refer to the
\n
Governance and post model adjustments section for further details.
\n
\ue001
Write-off occurs once the repossessed property has been sold and there is a residual shortfall balance remaining outstanding. This would typically be within five years from default
\n
but can be longer.
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Retail Banking - credit cards
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
3,475
70
2,046
204
146
89
5,667
363
Currency translation and other adjustments
-
(1)
-
1
4
3
4
3
Transfers from Stage 1 to Stage 2
(1,895)
(42)
1,895
42
-
-
-
-
Transfers from Stage 2 to Stage 1
1,300
94
(1,300)
(94)
-
-
-
-
Transfers to Stage 3
(24)
(1)
(158)
(58)
182
59
-
-
Transfers from Stage 3
3
1
9
3
(12)
(4)
-
-
Net re-measurement of ECL on stage transfer
(58)
167
46
155
Changes in risk parameters
(3)
(13)
37
21
Other changes in net exposure
1,664
16
(458)
(66)
(56)
(2)
1,150
(52)
Other (P&L only items)
-
-
(9)
(9)
Income statement (releases)/charges
(45)
88
72
115
Amounts written-off
-
-
-
-
(102)
(102)
(102)
(102)
Unwinding of discount
-
-
(9)
(9)
At 31 December 2024
4,523
76
2,034
186
162
117
6,719
379
Net carrying amount
4,447
1,848
45
6,340
At 1 January 2023
3,062
61
1,098
120
113
71
4,273
252
2023 movements
413
9
948
84
33
18
1,394
111
At 31 December 2023
3,475
70
2,046
204
146
89
5,667
363
Net carrying amount
3,405
1,842
57
5,304
\n
\ue001
Overall ECL for cards remained broadly in line with 2023, with portfolio growth mitigated by stable portfolio performance, lower PD levels and a reduction in economic uncertainty
\n
post model adjustment levels.
\n
\ue001
Credit card balances continued to grow during the year, in line with industry trends in the UK, reflecting strong customer demand, while sustaining robust risk appetite.
\n
\ue001
While portfolio performance remained stable, a net flow into Stage 2 from Stage 1 was observed, with the typical maturation of lending after a period of strong growth in recent
\n
years. The staging ECL uplift was offset by modelling updates in PDs and LGDs.
\n
\ue001
Flow rates into Stage 3 showed modest improvement in 2024 in comparison to 2023, in line with broader portfolio performance.
\n
\ue001
Charge-off (analogous to partial write-off) typically occurs after 12 missed payments.
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Retail Banking - other personal unsecured
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
5,240
149
1,657
238
963
758
7,860
1,145
Currency translation and other adjustments
-
1
1
-
20
21
21
22
Transfers from Stage 1 to Stage 2
(2,156)
(103)
2,156
103
-
-
-
-
Transfers from Stage 2 to Stage 1
1,672
229
(1,672)
(229)
-
-
-
-
Transfers to Stage 3
(69)
(3)
(304)
(126)
373
129
-
-
Transfers from Stage 3
9
3
23
9
(32)
(12)
-
-
Net re-measurement of ECL on stage transfer
(161)
269
29
137
Changes in risk parameters
(69)
(40)
107
(2)
Other changes in net exposure
909
81
(395)
(41)
(179)
(45)
335
(5)
Other (P&L only items)
1
(1)
32
32
Income statement (releases)/charges
(148)
187
123
162
Amounts written-off
-
-
(1)
(1)
(312)
(312)
(313)
(313)
Unwinding of discount
-
-
(34)
(34)
At 31 December 2024
5,605
127
1,465
182
833
641
7,903
950
Net carrying amount
5,478
1,283
192
6,953
At 1 January 2023
4,784
111
2,028
269
779
631
7,591
1,011
2023 movements
456
38
(371)
(31)
184
127
269
134
At 31 December 2023
5,240
149
1,657
238
963
758
7,860
1,145
Net carrying amount
5,091
1,419
205
6,715
\n
\ue001
Total ECL decreased, mainly in Stage 3, due to the reduction of balances from debt sale activity on Personal unsecured portfolios.
\n
\ue001
Stable portfolio performance was observed during the year. PD modelling updates coupled with LGD modelling updates were reflected in the performing book ECL, with coverage
\n
levels showing a modest reduction since the prior period.
\n
\ue001
Flow rates into Stage 3 reduced for the year, in line with broader portfolio performance.
\n
\ue001
Unsecured retail performing balances grew steadily in 2024, largely in line with industry trends.
\n
\ue001
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.
Flow statements
(audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Commercial & Institutional total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
176,302
356
17,029
447
2,161
819
195,492
1,622
Currency translation and other adjustments
(826)
-
(41)
(1)
22
65
(845)
64
Transfers from Stage 1 to Stage 2
(16,117)
(62)
16,117
62
-
-
-
-
Transfers from Stage 2 to Stage 1
11,022
190
(11,022)
(190)
-
-
-
-
Transfers to Stage 3
(90)
(1)
(1,745)
(76)
1,835
77
-
-
Transfers from Stage 3
194
14
315
17
(509)
(31)
-
-
Net re-measurement of ECL on stage transfer
(148)
184
263
299
Changes in risk parameters
(118)
(39)
61
(96)
Other changes in net exposure
13,282
58
(4,484)
(58)
(1,011)
(53)
7,787
(53)
Other (P&L only items)
3
(8)
(47)
(52)
Income statement (releases)/charges
(205)
79
224
98
Amounts written-off
-
-
-
-
(223)
(223)
(223)
(223)
Unwinding of discount
-
-
(37)
(37)
At 31 December 2024
183,767
289
16,169
346
2,275
941
202,211
1,576
Net carrying amount
183,478
15,823
1,334
200,635
At 1 January 2023
160,352
342
24,711
534
2,198
747
187,261
1,623
2023 movements
15,950
14
(7,682)
(87)
(37)
72
8,231
(1)
At 31 December 2023
176,302
356
17,029
447
2,161
819
195,492
1,622
Net carrying amount
175,946
16,582
1,342
193,870
\n
\ue001
The growth in exposures was mainly driven by non-bank financial institutions.
\n
\ue001
Stage 1 and Stage 2 ECL reduced, reflecting a combination of stable portfolio performance, reductions in post model adjustments and net improvements in economic scenarios.
\n
\ue001
Stage 3 ECL increased due to a small number of large counterparties, but in total, the number of individual defaults remained low. Flows into Stage 3 were consistent with 2023
\n
and considerably below historical trends.
\n
\ue001
Write-offs levels continue to remain below historical trends.
\n
\ue001
Overall, impairment charges were low, with Stage 3 individual charges offset by performing book releases.
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Commercial & Institutional - corporate
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
61,402
226
12,275
344
1,454
602
75,131
1,172
Currency translation and other adjustments
(127)
-
(34)
(1)
22
53
(139)
52
Inter-group transfers
98
1
38
3
3
-
139
4
Transfers from Stage 1 to Stage 2
(10,835)
(47)
10,835
47
-
-
-
-
Transfers from Stage 2 to Stage 1
7,725
144
(7,725)
(144)
-
-
-
-
Transfers to Stage 3
(77)
(1)
(1,358)
(55)
1,435
56
-
-
Transfers from Stage 3
154
11
262
12
(416)
(23)
-
-
Net re-measurement of ECL on stage transfer
(112)
138
186
212
Changes in risk parameters
(74)
(29)
51
(52)
Other changes in net exposure
4,235
27
(2,843)
(42)
(737)
(41)
655
(56)
Other (P&L only items)
3
(7)
(43)
(47)
Income statement (releases)/charges
(156)
60
153
57
Amounts written-off
-
-
-
-
(199)
(199)
(199)
(199)
Unwinding of discount
-
-
(26)
(26)
At 31 December 2024
62,575
175
11,450
273
1,562
659
75,587
1,107
Net carrying amount
62,400
11,177
903
74,480
\n
\ue001
There was modest exposure growth, with increased new lending largely offset by repayments.
\n
\ue001
Stage 1 and Stage 2 ECL reduced, reflecting a combination of stable portfolio performance, reductions in post model adjustments and net improvements in economic scenarios.
\n
\ue001
Stage 3 ECL increased due to charges on a small number of large counterparties, partially offset by write-offs.
\n
\ue001
Overall, impairment charges were low, with Stage 3 individual charges offset by performing book releases.
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Commercial & Institutional - property
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
26,040
94
3,155
89
606
195
29,801
378
Currency translation and other adjustments
(10)
1
(3)
-
1
5
(12)
6
Inter-group transfers
(45)
(1)
(43)
(2)
(3)
-
(91)
(3)
Transfers from Stage 1 to Stage 2
(3,143)
(13)
3,143
13
-
-
-
-
Transfers from Stage 2 to Stage 1
2,291
37
(2,291)
(37)
-
-
-
-
Transfers to Stage 3
(9)
-
(304)
(16)
313
16
-
-
Transfers from Stage 3
34
3
49
4
(83)
(7)
-
-
Net re-measurement of ECL on stage transfer
(28)
37
44
53
Changes in risk parameters
(35)
(13)
10
(38)
Other changes in net exposure
2,310
19
(726)
(14)
(223)
(9)
1,361
(4)
Other (P&L only items)
-
-
(1)
(1)
Income statement (releases)/charges
(44)
10
44
10
Amounts written-off
-
-
-
-
(21)
(21)
(21)
(21)
Unwinding of discount
-
-
(8)
(8)
At 31 December 2024
27,468
77
2,980
61
590
225
31,038
363
Net carrying amount
27,391
2,919
365
30,675
\n
\ue001
Stage 1 and Stage 2 ECL reduced, reflecting a combination of stable portfolio performance, reductions in post model adjustments and net improvements in economic scenarios.
\n
\ue001
Stage 3 ECL increased due to charges on a small number of large counterparties, partially offset by write-offs.
\n
\ue001
Overall, impairment charges were low, with Stage 3 individual charges offset by performing book releases.
Flow statements (audited)
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Commercial & Institutional - other
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
88,860
36
1,599
14
101
22
90,560
72
Currency translation and other adjustments
(689)
-
(5)
-
(1)
8
(695)
8
Inter-group transfers
(53)
-
4
-
-
-
(49)
-
Transfers from Stage 1 to Stage 2
(2,140)
(3)
2,140
3
-
-
-
-
Transfers from Stage 2 to Stage 1
1,006
9
(1,006)
(9)
-
-
-
-
Transfers to Stage 3
(4)
-
(83)
(6)
87
6
-
-
Transfers from Stage 3
6
-
4
1
(10)
(1)
-
-
Net re-measurement of ECL on stage transfer
(7)
9
33
35
Changes in risk parameters
(10)
3
1
(6)
Other changes in net exposure
6,738
12
(914)
(3)
(52)
(4)
5,772
5
Other (P&L only items)
-
-
(3)
(3)
Income statement (releases)/charges
(5)
9
27
31
Amounts written-off
-
-
-
-
(2)
(2)
(2)
(2)
Unwinding of discount
-
-
(3)
(3)
At 31 December 2024
93,724
37
1,739
12
123
57
95,586
106
Net carrying amount
93,687
1,727
66
95,480
\ue001
The growth in exposures was mainly driven by non-bank financial institutions.
\ue001
Stage 3 ECL increased due to charges on a small number of large counterparties.Asset quality (audited)
The table below shows asset quality bands of gross loans and ECL, by stage, for the Personal portfolio.
Gross loans
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
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
Mortgages
AQ1-AQ4
104,793
8,416
-
113,209
29
16
-
45
0.0
0.2
-
0.0
AQ5-AQ8
81,263
11,683
-
92,946
48
38
-
86
0.1
0.3
-
0.1
AQ9
194
962
-
1,156
-
6
-
6
-
0.6
-
0.5
AQ10
-
-
2,535
2,535
-
-
325
325
-
-
12.8
12.8
186,250
21,061
2,535
209,846
77
60
325
462
0.0
0.3
12.8
0.2
Credit cards
AQ1-AQ4
128
-
-
128
1
-
-
1
0.8
-
-
0.8
AQ5-AQ8
4,650
1,866
-
6,516
75
169
-
244
1.6
9.1
-
3.7
AQ9
23
87
-
110
1
17
-
18
4.4
19.5
-
16.4
AQ10
-
-
176
176
-
-
118
118
-
-
67.1
67.1
4,801
1,953
176
6,930
77
186
118
381
1.6
9.5
67.1
5.5
Other personal
AQ1-AQ4
691
127
-
818
6
14
-
20
0.9
11.0
-
2.4
AQ5-AQ8
6,521
1,359
-
7,880
120
134
-
254
1.8
9.9
-
3.2
AQ9
55
136
-
191
4
35
-
39
7.3
25.7
-
20.4
AQ10
-
-
860
860
-
-
656
656
-
-
76.3
76.3
7,267
1,622
860
9,749
130
183
656
969
1.8
11.3
76.3
9.9
Total
AQ1-AQ4
105,612
8,543
-
114,155
36
30
-
66
0.0
0.4
-
0.1
AQ5-AQ8
92,434
14,908
-
107,342
243
341
-
584
0.3
2.3
-
0.5
AQ9
272
1,185
-
1,457
5
58
-
63
1.8
4.9
-
4.3
AQ10
-
-
3,571
3,571
-
-
1,099
1,099
-
-
30.8
30.8
198,318
24,636
3,571
226,525
284
429
1,099
1,812
0.1
1.7
30.8
0.8
\n\n\n\n\n\n\n\n\n\n\n\n
Asset quality (audited)
\n\n \n
Gross loans
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
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
Mortgages
AQ1-AQ4
110,694
7,572
-
118,266
51
20
-
71
0.1
0.3
-
0.1
AQ5-AQ8
77,290
9,578
-
86,868
37
37
-
74
0.1
0.4
-
0.1
AQ9
156
704
-
860
-
4
-
4
-
0.6
-
0.5
AQ10
-
-
2,281
2,281
-
-
271
271
-
-
11.9
11.9
188,140
17,854
2,281
208,275
88
61
271
420
0.1
0.3
11.9
0.2
Credit cards
AQ1-AQ4
124
-
-
124
1.0
-
-
1.0
0.8
-
-
0.8
AQ5-AQ8
3,612
1,965
-
5,577
75
193
-
268
2.1
9.8
-
4.8
AQ9
6
57
-
63
-
14
-
14
-
24.6
-
22.2
AQ10
-
-
140
140
-
-
93
93
-
-
66.4
66.4
3,742
2,022
140
5,904
76
207
93
376
2.0
10.2
66.4
6.4
Other personal
AQ1-AQ4
764
150
-
914
11
23
-
34
1.4
15.3
-
3.7
AQ5-AQ8
6,178
1,374
-
7,552
138
180
-
318
2.2
13.1
-
4.2
AQ9
41
109
-
150
3
35
-
38
7.3
32.1
-
25.3
AQ10
-
-
979
979
-
-
778
778
-
-
79.5
79.5
6,983
1,633
979
9,595
152
238
778
1,168
2.2
14.6
79.5
12.2
Total
AQ1-AQ4
111,582
7,722
-
119,304
63
43
-
106
0.1
0.6
-
0.1
AQ5-AQ8
87,080
12,917
-
99,997
250
410
-
660
0.3
3.2
-
0.7
AQ9
203
870
-
1,073
3
53
-
56
1.5
6.1
-
5.2
AQ10
-
-
3,400
3,400
-
-
1,142
1,142
-
-
33.6
33.6
198,865
21,509
3,400
223,774
316
506
1,142
1,964
0.2
2.4
33.6
0.9
\n
\ue001
In the Personal portfolio, the majority of exposures were in AQ4 and AQ5 within mortgages. In line with the stable mortgage portfolio performance overall, the distribution of lending
\n
across AQ bands remained largely consistent with the prior year.
\n
\ue001
Debt sale activity during the year reduced the proportion of AQ10 in Other Personal lending.
\n\n\n\n\n\n\n\n\n\n\n\n
Asset quality (audited)
\n
The table below shows asset quality bands of gross loans and ECL, by stage, for the Non-Personal portfolio.
\n\n \n
Gross loans
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
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
Corporate and other
(1)
AQ1-AQ4
41,509
2,409
-
43,918
32
19
-
51
0.1
0.8
-
0.1
AQ5-AQ8
53,448
11,783
-
65,231
232
306
-
538
0.4
2.6
-
0.8
AQ9
34
272
-
306
-
19
-
19
-
7.0
-
6.2
AQ10
-
-
2,279
2,279
-
-
896
896
-
-
39.3
39.3
94,991
14,464
2,279
111,734
264
344
896
1,504
0.3
2.4
39.3
1.4
Financial institutions
AQ1-AQ4
64,845
233
-
65,078
21
2
-
23
0.0
0.9
-
0.0
AQ5-AQ8
4,176
996
-
5,172
17
9
-
26
0.4
0.9
-
0.5
AQ9
-
12
-
12
-
1
-
1
-
8.3
-
8.3
AQ10
-
-
59
59
-
-
40
40
-
-
67.8
67.8
69,021
1,241
59
70,321
38
12
40
90
0.1
1.0
67.8
0.1
Sovereign
AQ1-AQ4
1,364
1
-
1,365
12
1
-
13
0.9
100.0
-
1.0
AQ5-AQ8
127
-
-
127
-
-
-
-
-
-
-
-
AQ9
-
132
-
132
-
1
-
1
-
0.8
-
0.8
AQ10
-
-
21
21
-
-
5
5
-
-
23.8
23.8
1,491
133
21
1,645
12
2
5
19
0.8
1.5
23.8
1.2
Total
AQ1-AQ4
107,718
2,643
-
110,361
65
22
-
87
0.1
0.8
-
0.1
AQ5-AQ8
57,751
12,779
-
70,530
249
315
-
564
0.4
2.5
-
0.8
AQ9
34
416
-
450
-
21
-
21
-
5.1
-
4.7
AQ10
-
-
2,359
2,359
-
-
941
941
-
-
39.9
39.9
165,503
15,838
2,359
183,700
314
358
941
1,613
0.2
2.3
39.9
0.9
Asset quality (audited)
Gross loans
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
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
Corporate and other
(1)
AQ1-AQ4
40,875
1,342
-
42,217
43
18
-
61
0.1
1.3
-
0.1
AQ5-AQ8
50,084
13,734
-
63,818
293
411
-
704
0.6
3.0
-
1.1
AQ9
47
339
-
386
-
25
-
25
-
7.4
-
6.5
AQ10
-
-
2,125
2,125
-
-
809
809
-
-
38.1
38.1
91,006
15,415
2,125
108,546
336
454
809
1,599
0.4
2.9
38.1
1.5
Financial institutions
AQ1-AQ4
52,702
665
-
53,367
28
6
-
34
0.1
0.9
-
0.1
AQ5-AQ8
3,402
284
-
3,686
16
9
-
25
0.5
3.2
-
0.7
AQ9
1
17
-
18
-
-
-
-
-
-
-
-
AQ10
-
-
16
16
-
-
7
7
-
-
43.8
43.8
56,105
966
16
57,087
44
15
7
66
0.1
1.6
43.8
0.1
Sovereign
AQ1-AQ4
2,487
1
-
2,488
13
1
-
14
0.5
100
-
0.6
AQ5-AQ8
123
-
-
123
-
-
-
-
-
-
-
-
AQ9
-
-
-
-
-
-
-
-
-
-
-
-
AQ10
-
-
22
22
-
-
2
2
-
-
9.1
9.1
2,610
1
22
2,633
13
1
2
16
0.5
100.0
9.1
0.6
Total
AQ1-AQ4
96,064
2,008
-
98,072
84
25
-
109
0.1
1.3
-
0.1
AQ5-AQ8
53,609
14,018
-
67,627
309
420
-
729
0.6
3.0
-
1.1
AQ9
48
356
-
404
-
25
-
25
-
7.0
-
6.2
AQ10
-
-
2,163
2,163
-
-
818
818
-
-
37.8
37.8
149,721
16,382
2,163
168,266
393
470
818
1,681
0.3
2.9
37.8
1.0
(1)
Previously published sectors for the Non-personal portfolio have been re-presented to reflect internal sector reporting. Property is now included in corporate and other.
\ue001
Asset quality remained broadly stable, with a slightly higher proportion of exposures within AQ1-AQ4. Credit grades are reassessed for all customers at least annually, when a
new request is made, if a material credit event impacting that customer has occurred or when a scheduled review is performed.
Credit risk \u2013 Trading activities
\n\n\n\n\n\n\n\n\n\n\n\n
This section details the credit risk profile of NatWest Group\u2019s trading activities.
\n
Securities financing transactions and collateral (audited)
\n
The table below shows securities financing transactions in Commercial & Institutional and Central items & other. Balance sheet captions include balances held at all classifications
\n
under IFRS.
Reverse repos
Repos
Of which:
Outside netting
Of which:
Outside netting
Total
can be offset
arrangements
Total
can be offset
arrangements
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Gross
87,901
87,861
40
68,024
67,321
703
IFRS offset
(23,883)
(23,883)
-
(23,883)
(23,883)
-
Carrying value
64,018
63,978
40
44,141
43,438
703
Master netting arrangements
(1,549)
(1,549)
-
(1,549)
(1,549)
-
Securities collateral
(62,217)
(62,217)
-
(41,889)
(41,889)
-
Potential for offset not recognised under IFRS
(63,766)
(63,766)
-
(43,438)
(43,438)
-
Net
252
212
40
703
-
703
2023
Gross
77,508
77,050
458
66,767
66,047
720
IFRS offset
(25,903)
(25,903)
-
(25,903)
(25,903)
-
Carrying value
51,605
51,147
458
40,864
40,144
720
Master netting arrangements
(669)
(669)
-
(669)
(669)
-
Securities collateral
(50,287)
(50,287)
-
(39,475)
(39,475)
-
Potential for offset not recognised under IFRS
(50,956)
(50,956)
-
(40,144)
(40,144)
-
Net
649
191
458
720
-
720
Derivatives (audited)
The table below shows derivatives by type of contract. The master netting agreements and collateral shown do not result in a net presentation on the balance sheet under IFRS. A
significant proportion of the derivatives relate to trading activities in Commercial & Institutional. The table also includes hedging derivatives in Central items & other.
2024
2023
Notional
GBP
USD
EUR
Other
Total
Assets
Liabilities
Notional
Assets
Liabilities
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3m
\u00a3m
\u00a3bn
\u00a3m
\u00a3m
Gross exposure
97,152
93,109
99,501
96,264
IFRS offset
(18,746)
(21,027)
(20,597)
(23,869)
Carrying value
3,551
3,425
5,500
1,152
13,628
78,406
72,082
13,403
78,904
72,395
Of which:
Interest rate
(1)
3,228
1,973
4,847
285
10,333
37,499
31,532
10,268
44,563
38,483
Exchange rate
321
1,446
645
867
3,279
40,797
40,306
3,120
34,161
33,586
Credit
-
6
8
-
14
110
244
15
180
326
Equity and commodity
2
-
-
-
2
-
-
-
-
-
Carrying value
13,628
78,406
72,082
13,403
78,904
72,395
Counterparty mark-to-market
netting
(61,883)
(61,883)
(60,355)
(60,355)
Cash collateral
(10,005)
(5,801)
(12,284)
(6,788)
Securities collateral
(4,072)
(896)
(3,408)
(1,664)
Net exposure
2,446
3,502
2,857
3,588
Banks
(2)
214
345
335
555
Other financial institutions
(3)
1,429
1,456
1,422
1,304
Corporate
(4)
769
1,669
1,063
1,690
Government
(5)
34
32
37
39
Net exposure
2,446
3,502
2,857
3,588
UK
1,061
1,774
1,283
1,912
Europe
875
978
800
1,209
US
443
604
607
381
RoW
67
146
167
86
Net exposure
2,446
3,502
2,857
3,588
Asset quality of uncollateralised derivative assets
AQ1-AQ4
2,049
2,382
AQ5-AQ8
394
471
AQ9-AQ10
3
4
Net exposure
2,446
2,857
(1)
The notional amount of interest rate derivatives includes \u00a37,321 billion (2023 \u2013 \u00a37,280 billion) in respect of contracts cleared through central clearing counterparties.
(2)
Transactions with certain counterparties with whom NatWest Group has netting arrangements but collateral is not posted on a daily basis; certain transactions with specific terms that may not fall within netting and collateral arrangements; derivative
positions in certain jurisdictions where the collateral agreements are not deemed to be legally enforceable.
(3)
Includes transactions with securitisation vehicles and funds where collateral posting is contingent on NatWest Group\u2019s external rating.
(4)
Mainly large corporates with whom NatWest Group may have netting arrangements in place with no collateral posting.
(5)
Sovereigns and supranational entities with no collateral arrangements, collateral arrangements that are not considered enforceable, or one-way collateral agreements in their favour
.
Debt securities (audited)
The table below shows debt securities held at mandatory fair value through profit or loss by issuer as well as ratings based on the lowest of Standard & Poor\u2019s, Moody\u2019s and Fitch.
Refer to Note 12 on Trading assets and liabilities for details on short positions.
Central and local government
UK
US
Other
Financial institutions
Corporate
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
AAA
-
-
1,335
1,368
-
2,703
AA to AA+
-
3,734
74
569
2
4,379
A to AA-
2,077
-
1,266
381
519
4,243
BBB- to A-
-
-
831
562
885
2,278
Non-investment grade
-
-
-
108
167
275
Total
2,077
3,734
3,506
2,988
1,573
13,878
2023
AAA
-
-
1,333
1,132
-
2,465
AA to AA+
-
2,600
19
762
4
3,385
A to AA-
2,729
-
1,017
251
283
4,280
BBB- to A-
-
-
693
295
489
1,477
Non-investment grade
-
-
-
198
149
347
Total
2,729
2,600
3,062
2,638
925
11,954
Capital, liquidity and funding riskFunding sources (audited)
The table below shows the carrying values of the principal funding sources based on contractual maturity. Balance sheet captions include balances held at all classifications under
IFRS 9.
\u00a0
2024
2023
\u00a0
Short-term less
Long-term more
\u00a0
Short-term less
Long-term more
\u00a0
\u00a0
than 1 year
than 1 year
Total
than 1 year
than 1 year
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bank Deposits
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Repos
11,967
-
11,967
3,118
-
3,118
Other bank deposits
(1)
9,708
9,777
19,485
5,836
13,236
19,072
\u00a0
21,675
9,777
31,452
8,954
13,236
22,190
Customer Deposits
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Repos
1,363
-
1,363
10,844
-
10,844
Non-bank financial institutions
48,761
241
49,002
46,875
13
46,888
Personal
231,483
2,451
233,934
216,456
6,436
222,892
Corporate
149,086
105
149,191
150,718
35
150,753
\u00a0
430,693
2,797
433,490
424,893
6,484
431,377
Trading liabilities
(2)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Repos
(3)
29,752
810
30,562
26,634
268
26,902
Derivatives collateral
12,509
-
12,509
15,075
-
15,075
Other bank and customer deposits
627
268
895
768
382
1,150
Debt securities in issue - Medium term notes
20
237
257
418
288
706
\u00a0
42,908
1,315
44,223
42,895
938
43,833
Other financial liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Customer deposits including repos
471
1,341
1,812
194
1,086
1,280
Debt securities in issue:
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Commercial paper and certificates of deposit
10,889
377
11,266
11,116
205
11,321
Medium term notes
11,118
34,967
46,085
6,878
32,625
39,503
Covered bonds
-
749
749
2,122
-
2,122
Securitisation
295
880
1,175
-
863
863
\u00a0
22,773
38,314
61,087
20,310
34,779
55,089
Subordinated liabilities
1,051
5,085
6,136
1,047
4,667
5,714
Total funding
519,100
57,288
576,388
498,099
60,104
558,203
Of which: available in resolution
(4)
\u00a0 \u00a0
29,742
-
-
26,561
\n
(1)
Includes \u00a312.0 billion (2023 \u2013 \u00a312.0 billion) relating to Term Funding Scheme with additional incentives for Small and Medium-sized Enterprises participation.
(2)
Excludes short positions of \u00a310.5 billion (2023 \u2013 \u00a39.8 billion).
(3)
Comprises central & other bank repos of \u00a37.2 billion (2023 \u2013 \u00a34.0 billion), other financial institution repos of \u00a320.4 billion (2023 \u2013 \u00a320.4 billion) and other corporate repos of \u00a33.0 billion (2023 \u2013 \u00a32.5 billion).
(4)
Eligible liabilities (as defined in the Banking Act 2009 as amended from time to time) that meet the eligibility criteria set out in the regulations, rules, policies, guidelines, or statements of the Bank of England including the Statement of Policy published by
the Bank of England in December 2021 (updating June 2018). The balance consists of \u00a324.0 billion (2023 \u2013 \u00a321.7 billion) under debt securities in issue (senior MREL) and \u00a35.74 billion (2023 \u2013 \u00a34.9 billion) under subordinated liabilities.
Contractual maturity (audited)
This table shows the residual maturity of financial instruments, based on contractual date of maturity of NatWest Group\u2019s banking activities, including hedging derivatives. Trading
activities, comprising mandatory fair value through profit or loss (MFVTPL) assets and held-for-trading (HFT) liabilities have been excluded from the maturity analysis and are shown in
total in the table below.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Banking activities
\u00a0 \u00a0
\u00a0
Less than
\u00a0 \u00a0
6 months-
\u00a0 \u00a0 \u00a0
More than
\u00a0
Trading
\u00a0
\u00a0
1 months
1-3 months
3-6 months
1 year
Subtotal
1-3 years
3-5 years
5 years
Total
activities
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cash and balances at central banks
92,994
-
-
-
92,994
-
-
-
92,994
-
92,994
Trading assets
-
-
-
-
-
-
-
-
-
48,917
48,917
Derivatives
-
(2)
37
-
35
65
18
1
119
78,287
78,406
Settlement balances
2,085
-
-
-
2,085
-
-
-
2,085
-
2,085
Loans to banks - amortised cost
4,699
386
259
16
5,360
533
1
136
6,030
-
6,030
Loans to customers -
amortised cost
(1)
43,451
19,278
15,927
25,329
103,985
59,798
44,831
195,057
403,671
-
403,671
Personal
5,682
2,271
3,089
6,033
17,075
23,657
20,420
164,886
226,038
-
226,038
Corporate
19,003
5,762
3,794
8,033
36,592
29,353
20,506
25,721
112,172
-
112,172
Non-bank financial institutions
18,766
11,245
9,044
11,263
50,318
6,788
3,905
4,450
65,461
-
65,461
Other financial assets
2,840
3,263
2,478
5,832
14,413
16,083
11,563
20,381
62,440
803
63,243
Total financial assets
146,069
22,925
18,701
31,177
218,872
76,479
56,413
215,575
567,339
128,007
695,346
2023
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Total financial assets
153,397
22,051
17,695
26,226
219,369
71,664
54,626
208,215
553,874
125,050
678,924
\n
(1)
Loans to customers excludes \u00a33.3 billion (2023 - \u00a33.5 billion) of impairment provisions.
\n\n\n\n\n\n\n\n\n\n\n\n
Contractual maturity (audited)
\n\n \n
Banking activities
Less than
6 months - 1
More than
Trading
1 months
1-3 months
3-6 months
year
Subtotal
1-3 years
3-5 years
5 years
Total
activities
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bank deposits excluding repos
4,857
260
284
4,307
9,708
9,629
81
67
19,485
-
19,485
Bank repos
10,692
954
321
-
11,967
-
-
-
11,967
-
11,967
Customer repos
1,363
-
-
-
1,363
-
-
-
1,363
-
1,363
Customer deposits excluding repos
373,869
21,381
16,416
17,664
429,330
2,709
14
74
432,127
-
432,127
Personal
202,658
5,728
8,010
15,087
231,483
2,450
1
-
233,934
-
233,934
Corporate
127,646
11,633
7,703
2,104
149,086
87
11
7
149,191
-
149,191
Non-bank financial institutions
43,565
4,020
703
473
48,761
172
2
67
49,002
-
49,002
Settlement balances
1,729
-
-
-
1,729
-
-
-
1,729
-
1,729
Trading liabilities
-
-
-
-
-
-
-
-
-
54,714
54,714
Derivatives
14
17
174
88
293
169
-
2
464
71,618
72,082
Other financial liabilities
3,473
6,266
3,074
9,960
22,773
19,729
13,429
5,156
61,087
-
61,087
CPs and CDs
3,390
2,329
2,792
2,378
10,889
377
-
-
11,266
-
11,266
Medium term notes
70
3,914
214
6,920
11,118
18,426
12,409
4,132
46,085
-
46,085
Covered bonds
-
-
-
-
-
-
749
-
749
-
749
Securitisations
-
-
-
295
295
7
-
873
1,175
-
1,175
Customer deposits including repos
13
23
68
367
471
919
271
151
1,812
-
1,812
Subordinated liabilities
-
42
1,007
2
1,051
1,523
2,623
939
6,136
-
6,136
Notes in circulation
3,316
-
-
-
3,316
-
-
-
3,316
-
3,316
Lease liabilities
10
16
23
45
94
146
93
297
630
-
630
Total financial liabilities
399,323
28,936
21,299
32,066
481,624
33,905
16,240
6,535
538,304
126,332
664,636
2023
Total financial liabilities
392,957
27,195
22,914
22,236
465,302
31,146
22,787
5,956
525,191
125,762
650,953
Senior notes and subordinated liabilities - residual maturity profile by instrument type (audited)
The table below shows NatWest Group\u2019s debt securities in issue and subordinated liabilities by residual maturity.
\u00a0
Trading
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
\u00a0
liabilities
Other financial liabilities
\u00a0
\u00a0 \u00a0
Debt securities in issue
\u00a0 \u00a0 \u00a0 \u00a0
\u00a0
Debt securities
Commercial
\u00a0
Covered
\u00a0
Subordinated
\u00a0
Total notes
\u00a0
in issue MTNs
paper and CDs
MTNs
bonds
Securitisation
liabilities
Total
in issue
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Less than 1 year
20
10,889
11,118
-
295
1,051
23,353
23,373
1-3 years
35
377
18,426
-
7
1,523
20,333
20,368
3-5 years
42
-
12,409
749
-
2,623
15,781
15,823
More than 5 years
160
-
4,132
-
873
939
5,944
6,104
Total
257
11,266
46,085
749
1,175
6,136
65,411
65,668
2023
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Less than 1 year
418
11,116
6,878
2,122
-
1,047
21,163
21,581
1-3 years
48
205
16,188
-
297
1,877
18,567
18,615
3-5 years
-
-
11,953
-
376
1,874
14,203
14,203
More than 5 years
240
-
4,484
-
190
916
5,590
5,830
Total
706
11,321
39,503
2,122
863
5,714
59,523
60,229
\n
The table below shows the currency breakdown.
\u00a0
GBP
USD
EUR
Other
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Commercial paper and CDs
4,282
2,340
4,644
-
11,266
MTNs
5,015
20,089
18,233
3,005
46,342
Covered bonds
749
-
-
-
749
Securitisation
1,175
-
-
-
1,175
Subordinated liabilities
3,320
1,368
1,448
-
6,136
Total
14,541
23,797
24,325
3,005
65,668
2023
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Total
13,605
21,780
21,766
3,078
60,229
Non-traded market risk
Definition
(audited)
Non-traded market risk is the risk to the
value of assets or liabilities outside the
trading book, or the risk to income, that
arises from changes in market prices
such as interest rates, foreign exchange
rates and equity prices, or from changes
in managed rates.
Sources of risk
(audited)
Non-traded market risk exists in all
balance-sheet exposure that makes
reference to market risk factors, when
customer behaviour could impact the size
and timing of the repricing or maturity of
future cash flows, or when valuation of
assets and liabilities is driven by market
risk factors such as interest rates or
foreign exchange rates.
The key sources of non-traded market
risk are interest rate risk, credit spread
risk, foreign exchange risk, equity risk
and accounting volatility risk. Qualitative
and quantitative information on these risk
types is provided following the VaR table
below.Governance (audited)
Responsibility for identifying, measuring,
monitoring and controlling market risk
arising from non-trading activities lies
with the relevant business. Oversight is
provided by the independent Risk
function.
Non-traded market risk policy sets out
the governance and risk management
framework.Traded market risk
Definition (audited)
Traded market risk is the risk of losses in
trading book positions from fluctuations in
market variables, such as interest rates,
credit spreads, foreign exchange rates,
equity prices, implied volatilities and asset
correlations.
Sources of risk
(audited)
NatWest Group is exposed to traded
market risk through trading activities
entered into by NatWest Markets where
such risk arises from market-making
activity and by facilitating customer-
facing business that cannot be
immediately offset with other customers
or market participants.
From a market
risk perspective, activities are focused on
rates; currencies; and traded credit.
NatWest Markets undertakes
transactions in financial instruments
including debt securities, as well as
securities financing and derivatives.
The key categories of traded market risk
are interest rate risk, credit spread risk
and foreign currency price risk.
Trading activities may also give rise to
counterparty credit risk. For further detail
refer to the Credit risk section.Governance
(audited)
Traded market risk policy defines the key
principles and approach to managing and
reporting traded market risks across
NatWest Group. Responsibility for
identifying, measuring, monitoring and
controlling market risk arising from
trading activities lies with the relevant
trading business. The Market Risk
function independently advises on,
monitors and challenges the risk-taking
activities undertaken by the trading
business ensuring these are within the
constraints of the market risk framework,
policies, and risk appetite statements and
measures.2.3. Loan impairment provisions:
expected credit losses (ECL)
At each balance sheet date each financial
asset or portfolio of financial assets
measured at amortised cost or at fair
value through other comprehensive
income, issued financial guarantee and
loan commitment (other than those
classified as held for trading) is assessed
for impairment. Any change in
impairment is reported in the income
statement.
Loss allowances are forward-looking,
based on 12-month ECL where there has
not been a significant increase in credit
risk rating, otherwise allowances are
based on lifetime expected losses.
ECL is a probability-weighted estimate of
credit losses. The probability is
determined by the risk of default which is
applied to the cash flow estimates. In the
absence of a change in credit rating,
allowances are recognised when there is
a reduction in the net present value of
expected cash flows. Following a
significant increase in credit risk, ECL is
adjusted from 12 months to lifetime. This
will lead to a higher impairment charge.
The measurement of expected credit loss
considers the ability of borrowers to
make payments as they fall due. Future
cashflows are discounted, so long-dated
cashflows are less likely to affect current
expectations on credit loss. Our
assessment of sector specific risks, and
whether additional adjustments are
required, include expectations of the
ability of those sectors to meet their
financing needs in the market. Changes
in credit stewardship and credit risk
appetite that stem from climate transition
policies may directly affect our positions.
Judgement is exercised as follows:
\ue001
Non-modelled portfolios
\u2013 use a
standardised capital requirement
under Basel II. Under IFRS 9, they
have bespoke treatments for the
identification of significant increase in
credit risk. Benchmark PDs, EADs
and LGDs are reviewed annually for
appropriateness. The ECL calculation
is based on expected future cash
flows, which is typically applied at a
portfolio level.
\ue001
Multiple economic scenarios (MES)
\u2013
the central, or base, scenario is most
critical to the ECL calculation,
independent of the method used to
generate a range of alternative
outcomes and their probabilities.
\ue001
Significant increase in credit risk
\u2013
IFRS 9 requires that at each reporting
date, an entity shall assess whether
the credit risk on an account has
increased significantly since initial
recognition. Part of this assessment
requires a comparison to be made
between the current lifetime PD (i.e.
the current probability of default over
the remaining lifetime) with the
equivalent lifetime PD as determined
at the date of initial recognition.
On restructuring where a financial asset
is not derecognised, the revised cash
flows are used in re-estimating the credit
loss. Where restructuring causes
derecognition of the original financial
asset, the fair value of the replacement
asset is used as the closing cash flow of
the original asset.
Where in the course of the orderly
realisation of a loan, it is exchanged for
equity shares or property, the exchange
is accounted for as the sale of the loan
and the acquisition of equity securities or
investment property. Where our acquired
interest is in equity shares, relevant
policies for control, associates and joint
ventures apply.
Impaired financial assets are written off
and therefore derecognised from the
balance sheet when we conclude that
there is no longer any realistic prospect
of recovery of part, or all, of the loan. For
financial assets that are individually
assessed for impairment, the timing of
the write-off is determined on a case-by-
case basis.
Such financial assets are reviewed
regularly and write-off will be prompted
by bankruptcy, insolvency, re-negotiation,
and similar events
The typical time frames from initial
impairment to write-off for our
collectively assessed portfolios are:
\ue001
Retail mortgages: write-off usually
occurs within five years, or earlier,
when an account is closed, but can
be longer where the customer
engages constructively;
\ue001
Credit cards: the irrecoverable
amount is typically written off after
twelve arrears cycles or at four years
post default any remaining amounts
outstanding are written off;
\ue001
Overdrafts and other unsecured
loans: write-off occurs within six
years;
\ue001
Commercial loans: write-offs are
determined in the light of individual
circumstances; and uncollateralised
impaired business loans are generally
written off within five years.14 Loan impairment provisions
There is a risk that customers and counterparties fail to meet their contractual obligation to settle outstanding amounts, for which we hold expected credit losses
(ECL). The calculation of ECL considers historical, current, and forward-looking information to determine the amount we do not expect to recover. It considers losses
on both defaulted exposures and performing exposures that may default in future. ECL is recognised on drawn exposures, loans commitments, and contingent
liabilities.
For accounting policy information refer to Accounting policy 2.3. Further disclosures on credit risk and information on ECL methodology are shown from page 181.
Loan exposure and impairment metrics
The table below summarises loans and credit impairment measures within the scope of IFRS 9 Expected credit loss framework.
2024
2023
\u00a3m
\u00a3m
Loans - amortised cost and FVOCI
(1,2)
Stage 1
363,821
348,586
Stage 2
40,474
37,891
Stage 3
5,930
5,563
Of which: individual
1,285
1,031
Of which: collective
4,645
4,532
410,225
392,040
ECL provisions
(3)
- Stage 1
598
709
- Stage 2
787
976
- Stage 3
2,040
1,960
Of which: individual
451
332
Of which: collective
1,589
1,628
3,425
3,645
ECL provision coverage
(4)
- Stage 1 (%)
0.16
0.20
- Stage 2 (%)
1.94
2.58
- Stage 3 (%)
34.40
35.23
0.83
0.93
Continuing operations
Impairment (releases)/losses
ECL charge
(5)
359
578
Stage 1
(438)
(397)
Stage 2
360
645
Stage 3
437
330
Of which: individual
192
89
Of which: collective
245
241
Amounts written off
654
319
Of which: individual
144
42
Of which: collective
510
277
(1)
The table shows gross loans only and excludes
amounts that are outside the scope of the ECL
framework. Refer to Financial instruments within the
scope of the IFRS 9 ECL framework for further
details. Other financial assets within the scope of the
IFRS 9 ECL framework were cash and balances at
central banks totalling \u00a391.8 billion (2023 \u2013 \u00a3103.1
billion) and debt securities of \u00a362.4 billion (2023 \u2013
\u00a350.1 billion).
(2)
Includes loans to customers and banks.
(3)
Includes \u00a34 million (2023 - \u00a39 million) related to
assets classified as FVOCI and \u00a30.1 billion (2023 -
\u00a30.1 billion) related to off-balance sheet exposures.
(4)
ECL provisions coverage is calculated as ECL
provisions divided by loans \u2013 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.
(5)
Includes a \u00a312 million release (2023 - \u00a316 million
release) related to other financial assets, of which \u00a34
million release (2023 - \u00a36 million charge) related to
assets classified as FVOCI; and \u00a35 million release
(2023 - \u00a39 million release) related to contingent
liabilities.
Credit risk enhancement and mitigation
For information on Credit risk enhancement and mitigation held as security, refer to Risk and capital management \u2013 Credit risk enhancement and mitigation section.
Critical accounting policy: Loan impairment provisions
Accounting policy 2.3 sets out how the expected loss approach is applied. At 31 December 2024, impairment provisions amounted to \u00a33,425 million (2023 - \u00a33,645 million). A loan is
impaired when there is objective evidence that the cash flows will not occur in the manner expected when the loan was advanced. Such evidence includes changes in the credit rating
of a borrower, the failure to make payments in accordance with the loan agreement, significant reduction in the value of any security, breach of limits or covenants, and observable
data about relevant macroeconomic measures.
The impairment loss is the difference between the carrying value of the loan and the present value of estimated future cash flows at the loan's original effective interest rate.
The measurement of credit impairment under the IFRS expected loss model depends on management\u2019s assessment of any potential deterioration in the creditworthiness of the
borrower, its modelling of expected performance and the application of economic forecasts. All three elements require judgements that are potentially significant to the estimate of
impairment losses. For further information and sensitivity analysis, refer to Risk and capital management \u2013 Measurement uncertainty and ECL sensitivity analysis section.
IFRS 9 ECL model design principles
Refer to Credit risk \u2013 IFRS 9 ECL model design principles section for further details.
Approach for multiple economic scenarios (MES)
The base scenario plays a greater part in the calculation of ECL than the approach to MES. Refer to Credit risk \u2013 Economic loss drivers - Probability weightings of scenarios section
for further details.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00727": { "value": "Credit risk
\u00a0
Page
Introduction
\u00a0
Definition, sources of risk and key developments in 2024
181
Governance and risk appetite
181
Identification and measurement
182
Mitigation
182
Assessment and monitoring
182
Problem debt management
183
Forbearance
184
Credit grading models
185
Impairment, provisioning and write-offs
185
Governance and post model adjustments
186
Significant increase in credit risk
188
Asset lifetimes
188
Economic loss drivers
188
Measurement uncertainty and ECL sensitivity analysis
194
Measurement uncertainty and ECL adequacy
195
Movement in ECL provision
196
Credit risk \u2013 Banking activities
\u00a0
Financial instruments within the scope of the IFRS 9 ECL framework
197
Segment analysis \u2013 portfolio summary
198
Segmental loans and impairment metrics
201
Sector analysis \u2013 portfolio summary
202
Non-Personal forbearance
207
Credit risk enhancement and mitigation
208
Personal portfolio
209
Commercial real estate
214
Flow statements
215
Stage 2 decomposition \u2013 by a significant increase in credit risk trigger
223
Stage 3 vintage analysis
225
Asset quality
226
Credit risk \u2013 Trading activities
\u00a0
Securities financing transactions and collateral
230
Derivatives
231
Debt securities
232
Cross border exposure
233
\n
Definition (audited)
Credit risk is the risk that customers,
counterparties or issuers fail to meet a
contractual obligation to settle
outstanding amounts.
Sources of risk
(audited)
The principal sources of credit risk for
NatWest Group are lending, off-balance
sheet products, derivatives and securities
financing, and debt securities. NatWest
Group is also exposed to settlement risk
through foreign exchange, trade finance
and payments activities. Governance
(audited)
The credit risk function provides oversight
and challenge of frontline credit risk
management activities. Governance
activities include:
\ue001
Defining and proposing credit risk
appetite measures for Board approval.
\ue001
Establishing credit risk policy, standards
and toolkits which set out the
mandatory limits and parameters
required to ensure that credit risk is
managed within risk appetite and which
provide the minimum standards for the
identification, assessment, management,
monitoring and reporting of credit risk.
\ue001
Oversight of the first line of defence to
ensure that credit risk remains within
the appetite set by the Board and that it
is being managed adequately and
effectively.
\ue001
Assessing the adequacy of ECL
provisions including approving key IFRS
9 inputs (such as significant increase in
credit risk (SICR) thresholds) and any
necessary in-model and post model
adjustments through NatWest Group
and business unit provisions and model
committees.
\ue001
Development and approval of credit
grading models.
\ue001
Providing regular reporting on credit risk
to the Board Risk Committee and Board.Identification and measurement
Credit stewardship
(audited)
\n
Risks are identified through relationship
\n
management and credit stewardship of
\n
customers and portfolios. Credit
\n
stewardship takes place throughout the
\n
customer relationship, beginning with the
\n
initial approval. It includes the application
\n
of credit assessment standards, credit
\n
risk mitigation and collateral, ensuring
\n
that credit documentation is complete
\n
and appropriate, carrying out regular
\n
portfolio or customer reviews and
\n
problem debt identification and
\n
management.
\n
Asset quality (audited)
\n
All credit grades map to an asset quality
\n
(AQ) scale, used for financial reporting.
\n
This AQ scale is based on Basel PDs.
\n
Performing loans are defined as AQ1-
\n
AQ9 (where the PD is less than 100%)
\n
and defaulted non-performing loans as
\n
AQ10 or Stage 3 under IFRS 9 (where
\n
the PD is 100%). Loans are defined as
\n
defaulted when the payment status
\n
becomes 90 days past due, or earlier if
\n
there is clear evidence that the borrower
\n
is unlikely to repay, for example
bankruptcy or insolvency.Forbearance
(audited)
Forbearance takes place when a
concession is made on the contractual
terms of a loan/debt in response to a
customer\u2019s financial difficulties.
The aim of forbearance is to support and
restore the customer to financial health
while minimising risk. To ensure that
forbearance is appropriate for the needs
of the customer, minimum standards are
applied when assessing, recording,
monitoring and reporting of forbearance.
A credit exposure may be forborne more
than once, generally where a temporary
concession has been granted and
circumstances warrant another
temporary or permanent revision of the
loan\u2019s terms.
Loans are reported as forborne until they
meet the exit criteria as detailed in the
appropriate regulatory guidance. These
include being classified as performing for
two years since the last forbearance
event, making regular repayments and
the loan/debt being less than 30 days
past due.Impairment, provisioning and
write-offs (audited)
In the overall assessment of credit risk,
impairment provisioning and write-offs
are used as key indicators of credit
quality.
NatWest Group\u2019s IFRS 9 provisioning
models, which use existing internal
ratings based (IRB) models as a starting
point, incorporate term structures and
economic forecasts.
Regulatory conservatism within the IRB
models has been removed as appropriate
to comply with the IFRS 9 requirement
for unbiased ECL estimates.
Five key areas may materially influence
the measurement of credit impairment
under IFRS 9 \u2013 two of these relate to
model build and three relate to model
application:
Model build:
\ue001
The determination of economic
indicators that have most influence
on credit loss for each portfolio and
the severity of impact (this leverages
existing stress testing models which
are reviewed annually).
\ue001
The build of term structures to
extend the determination of the risk
of loss beyond 12 months that will
influence the impact of lifetime loss
for exposures in Stage 2.
\n\n\n\n\n\n\n\n\n\n\n\n
Model application:
\n
\ue001
The assessment of the SICR and the
\n
formation of a framework capable of
\n
consistent application.
\n
\ue001
The determination of asset lifetimes
\n
that reflect behavioural
\n
characteristics while also
\n
representing management actions
\n
and processes (using historical data
\n
and experience).
\n
\ue001
The choice of forward-looking
\n
economic scenarios and their
\n
respective probability weights.
\n
For accounting policy information, refer
\n
to Accounting policy 2.3.
\n
IFRS 9 ECL model design principles
\n
(audited)
\n
Modelling of ECL for IFRS 9 follows the
\n
conventional approach to divide the
\n
estimation of credit losses into its
\n
component parts of PD, LGD and EAD.
\n
To meet IFRS 9 requirements, the PD,
\n
LGD and EAD parameters differ from
\n
their Pillar 1 IRB counterparts in the
\n
following aspects:
\n
\ue001
Unbiased \u2013
conservatism has been
\n
removed from IFRS 9 parameters to
\n
produce unbiased estimates.
\n
\ue001
Point-in-time
\u2013 IFRS 9 parameters
\n
reflect actual economic conditions at
\n
the reporting date instead of long-run
\n
average or downturn conditions.
\n
\ue001
Economic forecasts
\u2013 IFRS 9 PD
\n
estimates and, where appropriate,
\n
EAD and LGD estimates reflect
\n
forward-looking economic conditions.
\n
\ue001
Lifetime measurement
\u2013 IFRS 9 PD,
\n
LGD and EAD are provided as multi-
\n
period term structures up to
\n
exposure lifetimes instead of over a
\n
fixed one-year horizon.
\n
IFRS 9 requires that, at each reporting
\n
date, an entity shall assess whether the
\n
credit risk on an account has increased
\n
significantly since initial recognition. Part
\n
of this assessment requires a comparison
\n
to be made between the current lifetime
\n
PD (i.e. the PD over the remaining lifetime
\n
at the reporting date) and the equivalent
\n
lifetime PD as determined at the date of
\n
initial recognition.
\n
For assets originated before IFRS 9 was
\n
introduced, comparable lifetime
\n
origination PDs did not exist.
\n
These have been retrospectively created
\n
using the relevant model inputs applicable
\n
at initial recognition.
\n
PD estimates
\n
Personal models
\n
Personal PD models follow a discrete
\n
multi-horizon survival approach,
\n
predicting quarterly PDs up to lifetime at
\n
account level, with a key driver being
\n
scores from related IRB PD models.
\n
Forward-looking economic information is
\n
brought in by economic response models,
\n
which leverage the existing stress test
\n
model suite. The current suite of PD
\n
models was introduced in 2022 replacing
\n
the previous, first-generation models to
\n
remediate a range of model weaknesses.
\n
Non-Personal models
\n
Non-Personal PD models use a point-in-
\n
time/through-the-cycle framework to
\n
convert one-year regulatory PDs into
\n
point-in-time estimates that reflect
\n
economic conditions at the reporting
\n
date. The framework utilises credit cycle
\n
indices (CCIs) for a comprehensive set of
\n
region/industry segments. Further detail
\n
on CCIs is provided in the Economic loss
\n
drivers section.
\n
One-year PDs are extended to lifetime
\n
PDs using a conditional transition matrix
\n
approach and economic forecasts.
\n
LGD estimates
\n
The general approach for the IFRS 9 LGD
\n
models is to leverage corresponding IRB
\n
LGD models with bespoke adjustments to
\n
ensure estimates are unbiased and,
\n
where relevant, include economic
\n
forecasts.
\n
Personal
\n
Economic forecasts are incorporated for
\n
the secured portfolios, where changes in
\n
property prices can be readily
\n
accommodated. Analysis has shown
\n
minimal impact of economic conditions on
\n
LGDs for the other Personal portfolios.
\n
Non-Personal
\n
Economic forecasts are incorporated into
\n
LGD estimates using the existing point-in-
\n
time/through-the-cycle framework. For
\n
low-default portfolios, including
\n
sovereigns and banks, loss data is too
\n
scarce to substantiate estimates that
\n
vary with economic conditions.
\n
Consequently, for these portfolios, LGD
\n
estimates are assumed to be constant
\n
throughout the projection horizon.
\n
EAD estimates
\n
Personal
\n
The IFRS 9 Personal modelling approach
\n
for EAD is dependent on product type.
\n
\ue001
Revolving products use the existing
\n
IRB models as a basis, with
\n
appropriate adjustments
\n
incorporating a term structure based
\n
on time to default.
\n
\ue001
Amortising products use an
\n
amortising schedule, where a formula
\n
is used to calculate the expected
\n
balance based on remaining terms
\n
and interest rates.
\n
Analysis has indicated that there is
\n
minimal impact on EAD arising from
\n
changes in the economy for all Personal
\n
portfolios except mortgages. Therefore,
\n
forward-looking information is only
\n
incorporated in the mortgage EAD model
\n
(through forecast changes in interest
\n
rates).
\n
Non-Personal
\n
For Non-Personal, EAD values are
\n
projected using product-specific credit
\n
conversion factors (CCFs), closely
\n
following the product segmentation and
\n
approach of the respective IRB model.
\n
The CCFs are estimated over multi-year
\n
time horizons and contain no regulatory
\n
conservatism or downturn assumptions.
\n
No explicit economic forecasts are
\n
incorporated, on the basis of analysis
\n
showing the movement in CCFs is mainly
\n
attributable to changes in exposure
\n
management practices rather than
\n
economic conditions.
\n
Governance and post model
\n
adjustments
(audited)
\n
The IFRS 9 PD, EAD and LGD models are
\n
subject to NatWest Group\u2019s model risk
\n
policy that stipulates periodic model
\n
monitoring, periodic re-validation and
\n
defines approval procedures and
\n
authorities according to model
\n
materiality. Various post model
\n
adjustments were applied where
\n
management judged they were
\n
necessary to ensure an adequate level of
\n
overall ECL provision. All post model
\n
adjustments were subject to review,
\n
challenge and approval through model or
\n
provisioning committees.
\n
Post model adjustments will remain a key
\n
focus area of NatWest Group\u2019s ongoing
\n
ECL adequacy assessment process. A
\n
holistic framework has been established
\n
including reviewing a range of economic
\n
data, external benchmark information
\n
and portfolio performance trends with a
\n
particular focus on segments of the
\n
portfolio (both Personal and Non-
\n
Personal) that are likely to be more
\n
susceptible to high inflation, high interest
\n
rates and supply chain disruption.
\n\n\n\n\n\n\n\n\n\n\n\n
ECL post model adjustments (audited)
\n
The table below shows ECL post model adjustments.
\n\n \n
Retail Banking
Commercial
Central items
Mortgages
Other
Private Banking
& Institutional
& other
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Deferred model calibrations
-
-
1
18
-
19
Economic uncertainty
90
22
8
179
-
299
Other adjustments
-
-
-
18
-
18
Total
90
22
9
215
-
336
Of which:
- Stage 1
58
9
5
94
-
166
- Stage 2
26
13
4
119
-
162
- Stage 3
6
-
-
2
-
8
2023
Deferred model calibrations
-
-
1
23
-
24
Economic uncertainty
118
39
13
256
3
429
Other adjustments
1
-
-
8
23
32
Total
119
39
14
287
26
485
Of which:
- Stage 1
75
14
6
115
10
220
- Stage 2
31
25
8
167
9
240
- Stage 3
13
-
-
5
7
25
\n
.
\n
Post model adjustments decreased significantly since 31 December 2023, reflecting reduced economic uncertainty from inflation, higher-for-longer interest rates and liquidity.
\n
\ue001
Retail Banking
\u2013 The post model adjustments for economic uncertainty decreased to \u00a3112 million at 31 December 2024 (2023 \u2013 \u00a3157 million). This reduction primarily reflected a
\n
revision to the cost of living post model adjustment to \u00a3105 million (2023 \u2013 \u00a3144 million), reflecting enhancements to the assessment approach, supported by back-testing of
\n
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
\n
effects of cost of living rises. It focuses on key affordability lenses, including lower-income customers in fuel poverty, over-indebted borrowers and customers who remain
\n
vulnerable to higher mortgage rates.
\n
\ue001
Commercial & Institutional
\u2013 The post model adjustment for economic uncertainty decreased to \u00a3179 million (2023 \u2013 \u00a3256 million). The inflation, supply chain and liquidity post
\n
model adjustment of \u00a3150 million (2023 \u2013 \u00a3206 million) was maintained for lending prior to 1 January 2024 being a sector level downgrade applied to the sectors that are
\n
considered most at risk from the current headwinds. A further \u00a329 million (2023 \u2013 \u00a350 million) remains for customers that utilised government support schemes, this adjustment is
\n
reducing as customers default or repay.
\n
\ue001
The \u00a318 million (2023 \u2013 \u00a323 million) judgemental overlay for deferred model calibrations relates to refinance risk, with the existing mechanistic modelling approach not fully
\n
capturing the risk on deteriorated exposures.
\n
\ue001
The \u00a318 million (2023 \u2013 \u00a38 million) other post model adjustment was to mitigate the effect of operational timing delays in the identification and flagging of a SICR, with the increase
\n
due to a small number of large corporate exposures moving quickly from Stage 1 into default.
\n\n\n\n\n\n\n\n\n\n\n\n
SICR (audited)
\n
Exposures that are considered
\n
significantly credit-deteriorated since
\n
initial recognition are classified in Stage 2
\n
and assessed for lifetime ECL
\n
measurement (exposures not considered
\n
deteriorated carry a 12-month ECL).
\n
NatWest Group has adopted a
\n
framework to identify deterioration based
\n
primarily on relative movements in
\n
lifetime PD supported by additional
\n
qualitative backstops. The principles
\n
applied are consistent across NatWest
\n
Group and align to credit risk
\n
management practices, where
\n
appropriate.
\n
The framework comprises the following
\n
elements:
\n
\ue001
IFRS 9 lifetime PD assessment (the
\n
primary driver)
\u2013
on modelled
\n
portfolios, the assessment is based on
\n
the relative deterioration in forward-
\n
looking lifetime PD and is assessed
\n
monthly. To assess whether credit
\n
deterioration has occurred, the
\n
residual lifetime PD at balance sheet
\n
date (which PD is established at date
\n
of initial recognition (DOIR)) is
\n
compared to the current PD. If the
\n
current lifetime PD exceeds the
\n
residual origination PD by more than
\n
a threshold amount, deterioration is
\n
assumed to have occurred and the
\n
exposure transferred into Stage 2 for
\n
a lifetime loss assessment. For Non-
\n
Personal, a doubling of PD would
\n
indicate a SICR subject to a minimum
\n
PD uplift of 0.1%. For Personal
\n
portfolios and SME Retail, the criteria
\n
vary by risk band, with lower-risk
\n
exposures needing to deteriorate
\n
more than higher-risk exposures, as
\n
outlined in the following table:
\n\n \n
PD bandings
(based
on
residual
lifetime PD
Personal risk
calculated at
PD deterioration
bands
DOIR)
threshold criteria
A
<0.762%
PD@DOIR + 1%
B
<4.306%
PD@DOIR + 3%
C
>=4.306%
1.7 x PD@DOIR
\n
\ue001
Qualitative high-risk backstops
\u2013
the
\n
PD assessment is complemented with
\n
the use of qualitative high-risk
\n
backstops to further inform whether
\n
significant deterioration in lifetime risk
\n
of default has occurred. The
\n
qualitative high-risk backstop
\n
assessment includes the use of the
\n
mandatory 30+ days past due
\n
backstop, as prescribed by IFRS 9
\n
guidance, and other features such as
\n
forbearance support, Non-Personal
\n
exposures managed within the
\n
Wholesale Problem Debt
\n
Management framework, and
\n
adverse credit bureau results for
\n
Personal customers.
\n
\ue001
Persistence (Personal and SME Retail
\n
customers only)
\u2013
the persistence rule
\n
ensures that accounts which have
\n
met the criteria for PD-driven
\n
deterioration are still considered to be
\n
significantly deteriorated for three
\n
months thereafter. This additional rule
\n
enhances the timeliness of capture in
\n
Stage 2. The persistence rule is
\n
applied to PD-driven deterioration
\n
only.
\n
The criteria are based on a significant
\n
amount of empirical analysis and seek to
\n
meet three key objectives:
\n
\ue001
Criteria effectiveness
\u2013
the criteria
\n
should be effective in identifying
\n
significant credit deterioration and
\n
prospective default population.
\n
\ue001
Stage 2
stability
\u2013 the criteria should
\n
not introduce unnecessary volatility in
\n
the Stage 2 population.
\n
\ue001
Portfolio analysis
\u2013
the criteria should
\n
produce results which are intuitive
\n
when reported as part of the wider
\n
credit portfolio.
\n
Monitoring the effect on relative PD
\n
deterioration when originating new
\n
lending at times of weaker economic
\n
outlook (therefore, higher PDs at initial
\n
recognition) is important to ensure SICR
\n
criteria remains effective.
\n
Asset lifetimes
(audited)
\n
The choice of initial recognition and asset
\n
duration is another critical judgement in
\n
determining the quantum of lifetime
\n
losses that apply.
\n
\ue001
The date of initial recognition reflects
\n
the date that a transaction (or
\n
account) was first recognised on the
\n
balance sheet; the PD recorded at
\n
that time provides the baseline used
\n
for subsequent determination of SICR
\n
as detailed above.
\n
\ue001
For asset duration, the approach
\n
applied (in line with IFRS 9
\n
requirements) is:
\n
\ue001
Term lending \u2013
the contractual
\n
maturity date, reduced for
\n
behavioural trends where
\n
appropriate (such as, expected
\n
prepayment and amortisation).
\n
\ue001
Revolving facilities
\u2013
for Personal
\n
portfolios (except credit cards),
\n
asset duration is based on
\n
behavioural life and this is
\n
normally greater than
\n
contractual life (which would
\n
typically be overnight). For the
\n
Non-Personal portfolios, asset
\n
duration is based on annual
\n
customer review schedules and
\n
will be set to the next review
\n
date.
\n
In the case of credit cards, the most
\n
significant judgement is to reflect the
\n
operational practice of card reissuance
\n
and the associated credit assessment as
\n
enabling a formal re-origination trigger.
\n
As a consequence, a capped lifetime
\n
approach of up to 36 months is used on
\n
credit card balances. If the approach was
\n
uncapped, the ECL impact is estimated
\n
at approximately \u00a371 million (2023 \u2013
\n
\u00a3110 million). However, credit card
\n
balances originated under the 0% balance
\n
transfer product and representing
\n
approximately 47% (2023 \u2013 37%) of
\n
performing card balances, have their ECL
\n
calculated on a behavioural lifetime
\n
approach as opposed to being capped at
\n
a maximum of three years.
\n
The capped approach reflects NatWest
\n
Group practice of a credit-based review
\n
of customers prior to credit card issuance
\n
and complies with IFRS 9. Benchmarking
\n
information indicates that peer UK banks
\n
use behavioural approaches in the main
\n
for credit card portfolios with average
\n
durations between three and ten years.
\n
Across Europe, durations are shorter and
\n
are, in some cases, as low as one year.
\n
Economic loss drivers
(audited)
\n
Introduction
\n
The portfolio segmentation and selection
\n
of economic loss drivers for IFRS 9
\n
follows the approach used in stress
\n
testing. The stress models for each
\n
portfolio segment (defined by product or
\n
asset class and where relevant, industry
\n
sector and region) are based on a
\n
selected, small number of economic
\n
variables that best explain the
\n
movements in portfolio loss rates. The
\n
process to select economic loss drivers
\n
involves empirical analysis and expert
\n
judgement.
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
The most significant economic
\n
loss drivers for material portfolios
\n
are shown in the table below:
\n\n \n
Portfolio
Economic loss
drivers
Personal
Unemployment
mortgages
rate, sterling
swap rate, house
price index, real
wage
Personal
Unemployment
unsecured
rate, sterling
swap rate, real
wage
Corporates
Stock price index,
gross domestic
product (GDP)
Commercial
Stock price index,
real estate
commercial
property price
index, GDP
\n
Economic scenarios
\n
At 31 December 2024, the range
\n
of anticipated future economic
\n
conditions was defined by a set
\n
of four internally developed
\n
scenarios and their respective
\n
probabilities. In addition to the
\n
base case, they comprised
\n
upside, downside and extreme
\n
downside scenarios. The
\n
scenarios primarily reflected the
\n
current risks faced by the
\n
economy. The scenarios primarily
\n
reflected the current risks faced
\n
by the economy. This approach
\n
was similar to that used at 31
\n
December 2023.
\n
For 31 December 2024, the four
\n
scenarios were deemed
\n
appropriate in capturing the
\n
uncertainty in economic forecasts
\n
and the non-linearity in outcomes
\n
under different scenarios. These
\n
four scenarios were developed to
\n
provide sufficient coverage
\n
across potential rises in
\n
unemployment, inflation, asset
\n
price declines and the degree of
\n
permanent damage to the
\n
economy, around which there
\n
remains pronounced levels of
\n
uncertainty.
\n
Since 31 December 2023, the
\n
economic outlook has evolved.
\n
The economy came out of post-
\n
COVID-19 stagnation with an
\n
upswing in the first half of 2024
\n
as household income recovered.
\n
The growth lost momentum in
\n
the second half of 2024 and the
\n
outlook remains that of moderate
\n
growth. Inflation declined over
\n
the year, although the progress is
\n
slower than expected and
\n
inflation is likely to take longer to
\n
reach the target of 2%. As a
\n
result, rates are expected to
\n
remain higher-for-longer than
\n
previously expected. The
\n
unemployment rate increased
\n
modestly but it is underpinned by
\n
a still resilient labour market.
\n
There was emerging risk to the
\n
labour market due to higher tax
\n
burdens, but the impact is likely
\n
to be moderate. House prices
\n
were previously assumed to
\n
decline in 2024, but they
\n
performed better than expected.
\n
However, the higher interest rate
\n
environment poses a risk to the
\n
recovery.
\n
Headline macro variables: what are the risks and where are they captured?
\n\n \n
Base
Extreme
Mini narratives \u2013 potential developments, vulnerabilities and risks
Upside
case
Downside
downside
Outperformance sustained \u2013
economy remains close
to H1 2024 pace on strong consumer
Steady growth \u2013
staying close to trend pace from
H2 2024 and beyond
Growth
Stalling \u2013
2024 strength proves fleeting, lagged
effect of higher rates and cautious consumer stalls
the rebound
Extreme stress
\u2013 extreme fall in GDP, with policy
support to facilitate sharp recovery
Close to deflation \u2013
inflationary pressures diminish
amidst pronounced weakness in demand
Battle won \u2013
continued downward drift in services
inflation, ensuring 2% target is met on sustained
Inflation
basis
Sticky \u2013
strong growth and/or wage policies and/or
interest rate cuts keep services inflation well above
target
Structural factors \u2013
sustained bouts of energy, food
and goods price inflation on
geopolitics/deglobalisation
Tighter, still \u2013
job growth rebounds strongly, pushing
unemployment back down to sub-3.5%
Cooling continues \u2013
gradual loosening prompts a
Labour
gentle rise in unemployment (but remains low), job
market
growth recovers
Job shedding \u2013
prolonged weakness in economy
prompts redundancies, reduced hours, building slack
Depression \u2013
unemployment hits levels close to
previous peaks amid severe stress
Limited cuts
\u2013 higher growth and inflation keeps the
MPC cautious
Rates
Steady \u2013
approximately one cut per quarter
short-
Mid-cycle quickening \u2013
sharp declines through 2025
term
to support recovery
Sharp drop \u2013
drastic easing in policy to support a
sharp deterioration in the economy
Rates
Above consensus \u2013
4%
long-
Middle \u2013
3-3.5%
term
Close to 2010s \u2013
1-2%/2.5%
\n\n\n\n\n\n\n\n\n\n\n\n
Economic loss drivers
(audited)
\n
Main macroeconomic variables
\n
The main macroeconomic variables for each of the four scenarios used for ECL modelling are set out in the main macroeconomic variables table below.
\n\n \n
2024
2023
Extreme
Weighted
Extreme
Weighted
Upside
Base case
Downside
downside
average
Upside
Base case
Downside
downside
average
Five-year summary
%
%
%
%
%
%
%
%
%
%
GDP
2.0
1.3
0.5
(0.2)
1.1
1.8
1.0
0.5
(0.3)
0.9
Unemployment rate
3.6
4.3
5.0
6.7
4.6
3.5
4.6
5.2
6.8
4.8
House price index
5.8
3.5
0.8
(4.3)
2.7
3.9
0.3
(0.4)
(5.7)
0.3
Commercial real estate price
5.4
1.2
(1.0)
(5.7)
1.1
3.1
(0.2)
(2.0)
(6.8)
(0.6)
Consumer price index
2.4
2.2
3.5
1.6
2.4
1.7
2.6
5.2
1.8
2.8
Bank of England base rate
4.4
4.0
3.0
1.6
3.6
3.8
3.7
5.6
2.9
4.0
Stock price index
6.3
5.0
3.4
1.1
4.5
4.8
3.3
1.2
(0.4)
2.8
World GDP
3.8
3.2
2.5
1.6
3.0
3.7
3.2
2.7
1.8
3.0
Probability weight
23.2
45.0
19.1
12.7
21.2
45.0
20.4
13.4
\n
(1)
The five-year summary runs from 2024-28 for 31 December 2024 and from 2023-27 for 31 December 2023.
\n
(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.
\n
Climate transition
\n
Since 2023, NatWest Group has included
\n
explicit assumptions about changes in
\n
transition policy, expressed as an
\n
additional implicit sectoral carbon price, in
\n
the base-case macroeconomic scenario.
\n
This approach has been used for financial
\n
planning and IFRS 9 reporting ever since.
\n
This analysis resulted in climate transition
\n
policy contributing \u00a38 million to the total
\n
ECL of \u00a33.4 billion at the end of 2024.
\n
In 2024, NatWest Group refined its
\n
approach. Instead of applying the
\n
economy-wide carbon price from an
\n
external scenario used in 2023, NatWest
\n
Group calculated the expected implicit
\n
carbon prices associated with specific
\n
climate transition policies. NatWest Group
\n
individually assessed 46 active and
\n
potential transition policies that had a
\n
significant impact on the cost of
\n
emissions and converted them into
\n
equivalent sectoral carbon prices. This
\n
was calculated as the cost per tonne of
\n
the emissions (CO2e) abated as a result
\n
of each policy.
\n
NatWest Group estimated that the
\n
weighted average carbon price
\n
associated with the policies assessed will
\n
increase from \u00a373 per tonne in 2024 to
\n
\u00a3123 per tonne in 2029. Sectoral carbon
\n
prices feed into the climate risk macro
\n
model. The model has been developed
\n
and improved over the past few years to
\n
enable NatWest Group to estimate the
\n
impact of carbon prices on a
\n
macroeconomic scenario.
\n
UK government policies which are
\n
estimated to have the largest impact on
\n
sectoral carbon prices are:
\n
\ue001
Emissions Trading Scheme
\n
\ue001
Climate Change Levy
\n
\ue001
Renewables Obligation
\n
\ue001
VAT on domestic energy
\n
This analysis presents a very narrow
\n
view of climate transition impact from 46
\n
analysed policies. It only covers base
\n
case macroeconomic scenario and does
\n
not include physical impacts.
\n
NatWest Group and its customers have a
\n
dependency on timely and appropriate
\n
government policies to provide the
\n
necessary impetus for technology
\n
development and customer behaviour
\n
changes, to enable the UK\u2019s successful
\n
transition to net zero. Policy delays and
\n
the risks outlined in the UK CCC 2022,
\n
2023 and 2024 Progress Reports, if not
\n
adequately addressed in a timely
\n
manner, put at risk the UK\u2019s net zero
\n
transition and, in turn, that of NatWest
\n
Group and its customers.
\n
Probability weightings of scenarios
\n
NatWest Group\u2019s quantitative approach
\n
to IFRS 9 multiple economic scenarios
\n
(MES) involves selecting a suitable set of
\n
discrete scenarios to characterise the
\n
distribution of risks in the economic
\n
outlook and assigning appropriate
\n
probability weights. This quantitative
\n
approach is used for 31 December 2024.
\n
The approach involves comparing GDP
\n
paths for NatWest Group\u2019s scenarios
\n
against a set of 1,000 model runs,
\n
following which a percentile in the
\n
distribution is established that most
\n
closely corresponded to the scenario. The
\n
probability weight for base case is set
\n
first based on judgement, while
\n
probability weights for the alternate
\n
scenarios are assigned based on these
\n
percentiles scores.The assigned
\n
probability weights were judged to be
\n
aligned with the subjective assessment of
\n
balance of the risks in the economy. The
\n
weights were marginally less downside
\n
skewed compared to those used at 31
\n
December 2023. The downside risks
\n
associated with a materially high inflation
\n
have reduced, with inflation lower at the
\n
end of 2024 compared to a year ago.
\n
However, the economic outlook is still
\n
subject to considerable uncertainty
\n
especially with respect to persistence of
\n
inflation, restrictive trade policies and
\n
various geopolitical flashpoints. Given that
\n
backdrop, NatWest Group judges it
\n
appropriate that downside-biased
\n
scenarios have higher combined
\n
probability weights than the upside-
\n
biased scenario. It presents good
\n
coverage to the range of outcomes
\n
assumed in the scenarios, including the
\n
potential for a robust recovery on the
\n
upside and exceptionally challenging
\n
outcomes on the downside. A 23.2%
\n
weighting was applied to the upside
\n
scenario, a 45.0% weighting applied to
\n
the base case scenario, a 19.1%
\n
weighting applied to the downside
\n
scenario and a 12.7% weighting applied
\n
to the extreme downside scenario.
\n\n\n\n\n\n\n\n\n\n\n\n
Economic loss drivers
\n\n\n\n\n\n\n\n\n\n\n\n
Economic loss drivers
(audited)
\n
Annual figures
\n\n \n
GDP - annual growth
Consumer price index - four quarter change
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
2024
0.9
0.9
0.9
0.9
0.9
2024
2.4
2.4
2.4
2.4
2.4
2025
2.0
1.4
0.4
(4.1)
0.6
2025
2.9
2.3
5.8
0.6
2.9
2026
3.2
1.5
(0.5)
(0.3)
1.3
2026
2.4
2.1
4.2
1.1
2.4
2027
2.3
1.4
0.2
1.4
1.4
2027
2.1
2.0
2.6
1.8
2.1
2028
1.6
1.4
1.3
1.4
1.4
2028
2.0
2.0
2.4
2.0
2.1
2029
1.6
1.4
1.7
1.4
1.5
2029
2.0
2.0
2.5
2.0
2.1
\n\n \n
Unemployment rate - annual average
Bank of England base rate - annual average
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
2024
4.2
4.2
4.2
4.2
4.2
2024
5.11
5.11
5.11
5.11
5.11
2025
3.9
4.4
4.8
5.4
4.5
2025
4.63
4.21
3.42
1.40
3.80
2026
3.3
4.4
5.5
8.0
4.8
2026
4.02
3.52
2.10
0.18
2.94
2027
3.3
4.3
5.5
8.3
4.8
2027
4.00
3.50
2.00
0.40
2.94
2028
3.4
4.3
5.3
7.6
4.7
2028
4.00
3.50
2.15
1.03
3.04
2029
3.4
4.2
5.0
6.9
4.5
2029
4.00
3.50
2.50
1.83
3.21
\n\n \n
House price index - four quarter change
Stock price index - four quarter change
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
2024
3.5
3.5
3.5
3.5
3.5
2024
11.6
11.6
11.6
11.6
11.6
2025
7.8
3.5
(1.2)
(7.6)
2.2
2025
8.1
3.4
(10.5)
(35.0)
(3.0)
2026
7.2
3.4
(2.8)
(14.7)
1.1
2026
5.1
3.4
5.8
15.1
5.3
2027
5.1
3.4
0.1
(8.0)
2.2
2027
3.5
3.4
5.8
13.1
4.8
2028
5.4
3.4
4.4
6.9
4.4
2028
3.5
3.4
5.8
11.6
4.7
2029
5.6
3.4
4.2
6.3
4.4
2029
3.0
3.4
5.8
10.4
4.5
\n\n \n
Commercial real estate price - four quarter change
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
2024
(0.9)
(0.9)
(0.9)
(0.9)
(0.9)
2025
14.1
2.4
(6.8)
(23.7)
0.1
2026
4.4
1.5
(2.5)
(12.7)
0.2
2027
5.5
1.4
2.8
6.7
3.3
2028
4.2
1.5
2.6
5.7
2.8
2029
2.7
1.4
2.5
5.4
2.3
\n\n\n\n\n\n\n\n\n\n\n\n
Economic loss drivers
(audited)
\n
Worst points
\n\n \n
2024
2023
Extreme
Weighted
Extreme
Weighted
Downside
downside
average
Downside
downside
average
%
Quarter
%
Quarter
%
%
Quarter
%
Quarter
%
GDP
-
Q1 2024
(4.1)
Q4 2025
-
(1.2)
Q3 2024
(4.5)
Q4 2024
0.3
Unemployment rate - peak
5.6
Q4 2026
8.5
Q1 2027
4.9
5.8
Q1 2025
8.5
Q2 2025
5.2
House price index
(1.9)
Q2 2027
(25.6)
Q3 2027
-
(12.5)
Q4 2025
(31.7)
Q2 2026
(6.5)
Commercial real estate price
(10.5)
Q2 2026
(35.0)
Q3 2026
(1.8)
(16.6)
Q1 2025
(39.9)
Q3 2025
(10.2)
Consumer price index - highest four quarter change
6.1
Q1 2026
3.5
Q1 2024
3.5
10.3
Q1 2023
10.3
Q1 2023
10.3
Bank of England base rate - extreme level
2.0
Q1 2024
0.1
Q1 2024
2.9
6.5
Q4 2024
5.3
Q4 2023
5.3
Stock price index
(0.2)
Q4 2025
(27.4)
Q4 2025
-
(14.3)
Q4 2024
(39.3)
Q4 2024
(2.4)
\n
(1)
The figures show falls relative to the starting period for GDP, house price index, commercial real estate price and stock price index. For unemployment rate, it shows highest value through the scenario horizon. For consumer price index, it shows highest
\n
annual percentage change. For Bank of England base rate, it shows highest or lowest value through the horizon. The calculations are performed over five years, with a starting point of Q4 2023 for 31 December 2024 scenarios and Q4 2022 for 31
\n
December 2023 scenarios.
\n\n\n\n\n\n\n\n\n\n\n\n
Measurement uncertainty and
\n
ECL sensitivity analysis
(audited)
\n
The recognition and measurement of
\n
ECL is complex and involves the use of
\n
significant judgement and estimation,
\n
particularly in times of economic volatility
\n
and uncertainty. This includes the
\n
formulation and incorporation of multiple
\n
forward-looking economic conditions into
\n
ECL to meet the measurement objective
\n
of IFRS 9. The ECL provision is sensitive
\n
to the model inputs and economic
\n
assumptions underlying the estimate.
\n
The impact arising from the base case,
\n
upside, downside and extreme downside
\n
scenarios was simulated.
\n
In the simulations, NatWest Group has
\n
assumed that the economic macro
\n
variables associated with these scenarios
\n
replace the existing base case economic
\n
assumptions, giving them a 100%
\n
probability weighting and therefore
\n
serving as a single economic scenario.
\n
These scenarios were applied to all
\n
modelled portfolios in the analysis below,
\n
with the simulation impacting both PDs
\n
and LGDs. Post model adjustments
\n
included in the ECL estimates that were
\n
modelled were sensitised in line with the
\n
modelled ECL movements, but those that
\n
were judgemental in nature, primarily
\n
those for deferred model calibrations and
\n
economic uncertainty, were not (refer to
\n
the Governance and post model
\n
adjustments section) on the basis these
\n
would be re-evaluated by management
\n
through ECL governance for any new
\n
economic scenario outlook and not be
\n
subject to an automated calculation. As
\n
expected, the scenarios create differing
\n
impacts on ECL by portfolio and the
\n
impacts are deemed reasonable.
\n
In this simulation, it is assumed that
\n
existing modelled relationships between
\n
key economic variables and loss drivers
\n
hold, but in practice other factors would
\n
also have an impact, for example,
\n
potential customer behaviour changes
\n
and policy changes by lenders that might
\n
impact on the wider availability of credit.
\n
The focus of the simulations is on ECL
\n
provisioning requirements on performing
\n
exposures in Stage 1 and Stage 2. The
\n
simulations are run on a stand-alone
\n
basis and are independent of each other;
\n
the potential ECL impacts reflect the
\n
simulated impact at 31 December 2024.
\n
Scenario impacts on SICR should be
\n
considered when evaluating the ECL
\n
movements of Stage 1 and Stage 2. In all
\n
scenarios the total exposure was the
\n
same but exposure by stage varied in
\n
each scenario.
\n
Stage 3 provisions are not subject to the
\n
same level of measurement uncertainty \u2013
\n
default is an observed event as at the
\n
balance sheet date. Stage 3 provisions
\n
therefore were not considered in this
\n
analysis.
\n
NatWest Group\u2019s core criterion to identify
\n
a SICR is founded on PD deterioration.
\n
Under the simulations, PDs change and
\n
result in exposures moving between
\n
Stage 1 and Stage 2 contributing to the
\n
ECL impact.
\n
Measurement uncertainty and ECL sensitivity analysis
(audited)
\n\n \n
Moderate
Moderate
Extreme
Base
upside
downside
downside
2024
Actual
scenario
scenario
scenario
scenario
Stage 1 modelled loans (\u00a3m)
Retail Banking - mortgages
169,090
170,887
173,703
164,370
154,604
Retail Banking - unsecured
10,269
10,485
10,876
9,847
8,925
Non-personal - property
28,598
28,684
28,827
28,452
25,402
Non-personal - non-property
126,487
127,179
127,557
125,790
107,287
334,444
337,235
340,963
328,459
296,218
Stage 1 modelled ECL (\u00a3m)
Retail Banking - mortgages
67
69
71
61
50
Retail Banking - unsecured
204
212
210
198
185
Non-personal - property
82
66
59
85
164
Non-personal - non-property
218
197
191
219
331
571
544
531
563
730
Stage 1 coverage
Retail Banking - mortgages
0.04%
0.04%
0.04%
0.04%
0.03%
Retail Banking - unsecured
1.99%
2.02%
1.93%
2.01%
2.07%
Non-personal - property
0.29%
0.23%
0.20%
0.30%
0.65%
Non-personal - non-property
0.17%
0.15%
0.15%
0.17%
0.31%
0.17%
0.16%
0.16%
0.17%
0.25%
Stage 2 modelled loans (\u00a3m)
Retail Banking - mortgages
20,980
19,183
16,367
25,700
35,466
Retail Banking - unsecured
3,513
3,297
2,906
3,935
4,857
Non-personal - property
3,019
2,933
2,790
3,165
6,215
Non-personal - non-property
13,143
12,451
12,073
13,840
32,343
40,655
37,864
34,136
46,640
78,881
Stage 2 modelled ECL (\u00a3m)
Retail Banking - mortgages
60
53
44
72
118
Retail Banking - unsecured
370
348
300
407
532
Non-personal - property
62
53
47
66
183
Non-personal - non-property
286
251
228
307
628
778
705
619
852
1,461
Stage 2 coverage
Retail Banking - mortgages
0.29%
0.28%
0.27%
0.28%
0.33%
Retail Banking - unsecured
10.53%
10.56%
10.32%
10.34%
10.95%
Non-personal - property
2.05%
1.81%
1.68%
2.09%
2.94%
Non-personal - non-property
2.18%
2.02%
1.89%
2.22%
1.94%
1.91%
1.86%
1.81%
1.83%
1.85%
\n\n\n\n\n\n\n\n\n\n\n\n
Measurement uncertainty and ECL sensitivity analysis
(audited)
\u00a0 \u00a0 \u00a0
Moderate
Moderate
Extreme
\u00a0 \u00a0
Base
upside
downside
downside
2024
Actual
scenario
scenario
scenario
scenario
Stage 1 and Stage 2 modelled loans (\u00a3m)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Retail Banking - mortgages
190,070
190,070
190,070
190,070
190,070
Retail Banking - unsecured
13,782
13,782
13,782
13,782
13,782
Non-personal - property
31,617
31,617
31,617
31,617
31,617
Non-personal - non-property
139,630
139,630
139,630
139,630
139,630
\u00a0
375,099
375,099
375,099
375,099
375,099
Stage 1 and Stage 2 modelled ECL (\u00a3m)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Retail Banking - mortgages
127
122
115
133
168
Retail Banking - unsecured
574
560
510
605
717
Non-personal - property
144
119
106
151
347
Non-personal - non-property
504
448
419
526
959
\u00a0
1,349
1,249
1,150
1,415
2,191
Stage 1 and Stage 2 coverage
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Retail Banking - mortgages
0.07%
0.06%
0.06%
0.07%
0.09%
Retail Banking - unsecured
4.16%
4.06%
3.70%
4.39%
5.20%
Non-personal - property
0.46%
0.38%
0.34%
0.48%
1.10%
Non-personal - non-property
0.36%
0.32%
0.30%
0.38%
0.69%
\u00a0
0.36%
0.33%
0.31%
0.38%
0.58%
Reconciliation to Stage 1 and Stage 2
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
ECL (\u00a3m)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
ECL on modelled exposures
1,349
1,249
1,150
1,415
2,191
ECL on non-modelled exposures
36
36
36
36
36
Total Stage 1 and Stage 2 ECL (\u00a3m)
1,385
1,285
1,186
1,451
2,227
Variance to actual total Stage 1 and
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 2 ECL (\u00a3m)
\u00a0
(100)
(199)
66
842
Reconciliation to Stage 1 and Stage 2
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
flow exposures (\u00a3m)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Modelled loans
375,099
375,099
375,099
375,099
375,099
Non-modelled loans
21,074
21,074
21,074
21,074
21,074
Other asset classes
161,548
161,548
161,548
161,548
161,548
\n
(1)
Variations in future undrawn exposure values across the scenarios are modelled, however the exposure position
\n
reported is that used to calculate modelled ECL as at 31 December 2024 and therefore does not include variation in
\n
future undrawn exposure values.
\n
(2)
Reflects ECL for all modelled exposure in scope for IFRS 9. The analysis excludes non-modelled portfolios and exposure
\n
relating to bonds and cash.
\n
(3)
All simulations are run on a stand-alone basis and are independent of each other, with the potential ECL impact
\n
reflecting the simulated impact as at 31 December 2024
The simulations change the composition of Stage 1 and Stage
\n
2 exposure but total exposure was unchanged under each scenario as the loan population was static.
\n
(4)
Refer to the Economic loss drivers section for details of economic scenarios.
\n
(5)
Refer to the NatWest Group 2023 Annual Report and Accounts for 2023 comparatives.
\n
Measurement uncertainty and ECL adequacy
(audited)
\n
\ue001
If the economics were as negative as observed in the extreme downside (i.e. 100%
\n
probability weighting), total Stage 1 and Stage 2 ECL was simulated to increase by
\n
\u00a30.8 billion (approximately 61%). In this scenario, Stage 2 exposure increased
\n
significantly and was the key driver of the simulated ECL rise. The movement in
\n
Stage 2 balances in the other simulations was less significant.
\n
\ue001
In the Non-Personal portfolio, there was a significant increase in ECL under the
\n
extreme downside scenario. The Non-Personal property ECL increase was mainly
\n
due to commercial real estate prices which showed negative growth until 2026 and
\n
significant deterioration in the stock index. The non-property increase was mainly
\n
due to GDP contraction and significant deterioration in the stock index.
\n
\ue001
Given the continued economic uncertainty, NatWest Group utilised a framework of
\n
quantitative and qualitative measures to support the levels of ECL coverage. This
\n
included economic data, credit performance insights and problem debt trends. This
\n
was particularly important for consideration of post model adjustments.
\n
\ue001
As the effects of these economic risks evolve into 2025, there is a risk of further
\n
credit deterioration. However, the income statement effect of this should be
\n
mitigated by the forward-looking provisions retained on the balance sheet at 31
\n
December 2024.
\n
\ue001
There are a number of key factors that could drive further downside to impairments,
\n
through deteriorating economic and credit metrics and increased stage migration as
\n
credit risk increases for more customers. Such factors which could impact the IFRS 9
\n
models, include an adverse deterioration in unemployment, GDP and stock price
\nindex in which NatWest Group operates. Credit risk \u2013 Banking activitiesFinancial instruments within the scope of the IFRS 9 ECL framework (audited)
Refer to Note 9 to the consolidated financial statements for balance sheet analysis of financial assets that are classified as amortised
cost or fair value through other comprehensive income (FVOCI), the starting point for IFRS 9 ECL framework assessment.
\u00a0
31 December 2024
31 December 2023
\u00a0
Gross
ECL
Net
Gross
ECL
Net
\u00a0
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Balance sheet total gross amortised cost and FVOCI
567.2
\u00a0 \u00a0
553.8
\u00a0 \u00a0
In scope of IFRS 9 ECL framework
564.4
\u00a0 \u00a0
545.3
\u00a0 \u00a0
% in scope
100%
\u00a0 \u00a0
98%
\u00a0 \u00a0
Loans to customers - in scope - amortised cost
404.2
3.4
400.8
385.3
3.6
381.7
Loans to customers - in scope - FVOCI
-
-
-
0.1
-
0.1
Loans to banks - in scope - amortised cost
6.0
-
6.0
6.7
-
6.7
Total loans - in scope
410.2
3.4
406.8
392.1
3.6
388.5
Stage 1
363.8
0.6
363.2
348.6
0.7
347.9
Stage 2
40.5
0.8
39.7
37.9
0.9
37.0
Stage 3
5.9
2.0
3.9
5.6
2.0
3.6
Other financial assets - in scope - amortised cost
116.4
-
116.4
124.9
-
124.9
Other financial assets - in scope - FVOCI
37.8
-
37.8
28.3
-
28.3
Total other financial assets - in scope
154.2
-
154.2
153.2
-
153.2
Stage 1
153.4
-
153.4
152.0
-
152.0
Stage 2
0.8
-
0.8
1.2
-
1.2
Out of scope of IFRS 9 ECL framework
2.8
na
2.8
8.5
na
8.5
Loans to customers - out of scope - amortised cost
(0.5)
na
(0.5)
(0.4)
na
(0.4)
Loans to banks - out of scope - amortised cost
0.1
na
0.1
0.3
na
0.3
Other financial assets - out of scope - amortised cost
3.2
na
3.2
8.3
na
8.3
Other financial assets - out of scope - FVOCI
-
na
-
0.3
na
0.3
\n
na = not applicable
The assets outside the scope of IFRS 9 ECL framework were as follows:
\ue001
Settlement balances, items in the course of collection, cash balances and other non-credit risk assets of \u00a33.3 billion (2023 \u2013 \u00a38.6
billion). These were assessed as having no ECL unless there was evidence that they were defaulted.
\ue001
Equity shares of \u00a30.2 billion (2023 \u2013 \u00a30.3 billion) as not within the IFRS 9 ECL framework by definition.
\ue001
Fair value adjustments on loans hedged by interest rate swaps, where the underlying loan was within the IFRS 9 ECL scope of
\u00a3(0.5) billion (2023 \u2013 \u00a3(0.3) billion).
Contingent liabilities and
commitments
Total
contingent liabilities (including
financial guarantees) and commitments
within IFRS 9 ECL scope of \u00a3140.0 billion
(2023 \u2013 \u00a3132.0 billion) comprised Stage 1
\u00a3129.8 billion (2023 \u2013 \u00a3120.6 billion);
Stage 2 \u00a39.4 billion (2023 \u2013 \u00a310.7 billion);
and Stage 3 \u00a30.8 billion (2023 \u2013 \u00a30.7
billion).
The ECL relating to off balance sheet
exposures was \u00a30.1 billion (2023 \u2013 \u00a30.1
billion). The total ECL in the remainder of
the Credit risk section of \u00a33.4 billion
(2023 \u2013 \u00a33.6 billion) included ECL for both
on and off-balance sheet exposures for
non-disposal groups.
\n\n\n\n\n\n\n\n\n\n\n\n
Segment analysis \u2013 portfolio summary (audited)
\n
The table below shows gross loans and ECL, by segment and stage, within the scope of the IFRS 9 ECL framework.
\n\n \n
Of which:
Personal
Non-personal
Retail
Private
Commercial
Central items
Retail
Private
Commercial
Central items
Private
Commercial
Central items
&
&
&
Banking
Banking
Institutional
& other
Total
Banking
Banking
Institutional
& other
Banking
Institutional
& other
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans - amortised cost and FVOCI
(1,2)
Stage 1
182,366
17,155
128,988
35,312
363,821
182,366
13,726
2,226
-
3,429
126,762
35,312
Stage 2
24,242
844
15,339
49
40,474
24,242
352
42
-
492
15,297
49
Stage 3
3,268
322
2,340
-
5,930
3,268
251
52
-
71
2,288
-
Of which: individual
-
233
1,052
-
1,285
-
162
5
-
71
1,047
-
Of which: collective
3,268
89
1,288
-
4,645
3,268
89
47
-
-
1,241
-
Total
209,876
18,321
146,667
35,361
410,225
209,876
14,329
2,320
-
3,992
144,347
35,361
ECL provisions
(3)
Stage 1
279
16
289
14
598
279
2
3
-
14
286
14
Stage 2
428
12
346
1
787
428
1
-
-
11
346
1
Stage 3
1,063
36
941
-
2,040
1,063
21
15
-
15
926
-
Of which: individual
-
36
415
-
451
-
21
7
-
15
408
-
Of which: collective
1,063
-
526
-
1,589
1,063
-
8
-
-
518
-
Total
1,770
64
1,576
15
3,425
1,770
24
18
-
40
1,558
15
\n
For the notes to this table refer to page 201.
\n\n\n\n\n\n\n\n\n\n\n\n
Segment analysis \u2013 portfolio summary (audited)
\n\n \n
Of which:
Personal
Non-personal
Commercial
Commercial
Retail
Private
Commercial
&
Central items
Retail
Private
&
Central items
Private
&
Central items
Banking
Banking
Institutional
& other
Total
Banking
Banking
Institutional
& other
Banking
Institutional
& other
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ECL provisions coverage
(4)
Stage 1 (%)
0.15
0.09
0.22
0.04
0.16
0.15
0.01
0.13
-
0.41
0.23
0.04
Stage 2 (%)
1.77
1.42
2.26
2.04
1.94
1.77
0.28
-
-
2.24
2.26
2.04
Stage 3 (%)
32.53
11.18
40.21
-
34.40
32.53
8.37
28.85
-
21.13
40.47
-
Total
0.84
0.35
1.07
0.04
0.83
0.84
0.17
0.78
-
1.00
1.08
0.04
Impairment (releases)/losses
ECL (release)/charge
(5)
282
(11)
98
(10)
359
282
1
1
-
(12)
97
(10)
Stage 1
(208)
(11)
(205)
(14)
(438)
(208)
(2)
(1)
-
(9)
(204)
(14)
Stage 2
278
(1)
79
4
360
278
2
1
-
(3)
78
4
Stage 3
212
1
224
-
437
212
1
1
-
-
223
-
Of which: individual
-
1
191
-
192
-
1
(1)
-
-
192
-
Of which: collective
212
-
33
-
245
212
-
2
-
-
31
-
Total
282
(11)
98
(10)
359
282
1
1
-
(12)
97
(10)
Amounts written-off
430
1
223
-
654
430
1
2
-
-
221
-
Of which: individual
-
1
143
-
144
-
1
-
-
-
143
-
Of which: collective
430
-
80
-
510
430
-
2
-
-
78
-
\n
For the notes to this table refer
to
page
201.
\n\n\n\n\n\n\n\n\n\n\n\n
Segment analysis \u2013 portfolio summary (audited)
\n\n \n
Of which:
Personal
Non-personal
Retail
Private
Commercial
Central items
Retail
Private
Commercial
Central items
Private
Commercial
Central items
&
&
&
Banking
Banking
Institutional
& other
Total
Banking
Banking
Institutional
& other
Banking
Institutional
& other
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans - amortised cost and FVOCI
(1,2)
Stage 1
182,297
17,565
119,047
29,677
348,586
182,297
14,296
2,268
4
3,269
116,779
29,673
Stage 2
21,208
906
15,771
6
37,891
21,208
255
43
3
651
15,728
3
Stage 3
3,133
258
2,162
10
5,563
3,133
209
52
6
49
2,110
4
Of which: individual
-
186
845
-
1,031
-
137
5
-
49
840
-
Of which: collective
3,133
72
1,317
10
4,532
3,133
72
47
6
-
1,270
4
Subtotal excluding disposal group loans
206,638
18,729
136,980
29,693
392,040
206,638
14,760
2,363
13
3,969
134,617
29,680
Disposal group loans
67
67
8
59
Total
29,760
392,107
21
29,739
ECL provisions
(3)
Stage 1
306
20
356
27
709
306
3
2
5
17
354
22
Stage 2
502
20
447
7
976
502
2
-
2
18
447
5
Stage 3
1,097
34
819
10
1,960
1,097
20
16
9
14
803
1
Of which: individual
-
34
298
-
332
-
20
5
-
14
293
-
Of which: collective
1,097
-
521
10
1,628
1,097
-
11
9
-
510
1
Subtotal excluding ECL provisions on disposal group loans
1,905
74
1,622
44
3,645
1,905
25
18
16
49
1,604
28
ECL provisions on disposal group loans
36
36
2
34
Total
80
3,681
18
62
\n
For the notes to this table refer to the following page
.
\n\n\n\n\n\n\n\n\n\n\n\n
Segment analysis \u2013 portfolio summary (audited)
\n\n \n
Of which:
Personal
Non-personal
Commercial
Commercial
Commercial
Retail
Private
&
Central items
Retail
Private
&
Central items
Private
&
Central items
Banking
Banking
Institutional
& other
Total
Banking
Banking
Institutional
& other
Banking
Institutional
& other
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ECL provisions coverage
(4)
Stage 1 (%)
0.17
0.11
0.30
0.09
0.20
0.17
0.02
0.09
nm
0.52
0.30
0.07
Stage 2 (%)
2.37
2.21
2.83
nm
2.58
2.37
0.78
-
66.67
2.76
2.84
nm
Stage 3 (%)
35.01
13.18
37.88
100.00
35.23
35.01
9.57
30.77
nm
28.57
38.06
25.00
ECL provisions coverage excluding disposal group loans
0.92
0.40
1.18
0.15
0.93
0.92
0.17
0.76
nm
1.23
1.19
0.09
ECL provisions coverage on disposal group loans
53.73
53.73
25.00
57.63
Total
0.27
0.94
85.71
0.21
Impairment (releases)/losses
ECL (release)/charge
(5)
465
14
94
5
578
465
(3)
5
15
17
89
(10)
Stage 1
(172)
(9)
(222)
6
(397)
(172)
(7)
(3)
4
(2)
(219)
2
Stage 2
440
15
182
8
645
440
4
-
7
11
182
1
Stage 3
197
8
134
(9)
330
197
-
8
4
8
126
(13)
Of which: individual
-
8
80
1
89
-
-
5
-
8
75
1
Of which: collective
197
-
54
(10)
241
197
-
3
4
-
51
(14)
Continuing operations
465
14
94
5
578
465
(3)
5
15
17
89
(10)
Discontinued operations
(6)
(6)
-
(6)
Total
(1)
572
15
(16)
Amounts written-off
188
2
122
7
319
188
2
1
2
-
121
5
Of which: individual
-
2
40
-
42
-
2
1
-
-
39
-
Of which: collective
188
-
82
7
277
188
-
-
2
-
82
5
\n
(1)
The table shows gross loans only and excludes amounts that were outside the scope of the ECL framework. Other financial assets within the scope of the IFRS 9 ECL framework were cash and balances at central banks totalling \u00a391.8 billion (2023 \u2013
\n
\u00a3103.1 billion) and debt securities of \u00a362.4 billion (2023 \u2013 \u00a350.1 billion).
\n
(2)
Includes loans to customers and banks.
\n
(3)
Includes \u00a34 million (2023 \u2013 \u00a39 million) related to assets classified as FVOCI and \u00a30.1 billion (2023 \u2013 \u00a30.1 billion) related to off-balance sheet exposures.
\n
(4)
ECL provisions coverage is calculated as ECL provisions divided by loans \u2013 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
\n
proportion of debt securities or unutilised exposure may result in a not meaningful coverage ratio.
\n
(5)
Includes a \u00a312 million release (2023 \u2013 \u00a316 million releasee) related to other financial assets, of which \u00a34 million release (2023 \u2013 \u00a36 million charge) related to assets classified as FVOCI and includes a \u00a35 million release (2023 \u2013 \u00a39 million release) related to
\n
contingent liabilities.
\n
Segmental loans and impairment metrics (audited)
\n
\ue001
Retail Banking
\u2013 Loans to customers increased during the year as a result of
\n
continued growth in mortgages, including the Metro Bank portfolio acquisition and
\n
credit card lending. Arrears balances increased during 2024, however, this was in
\n
line with expectations and wider-industry trends following periods of balance
\n
growth and normalisation since COVID-19. Arrears inflow rates remained stable.
\n
The reduction in good book ECL coverage in 2024 was primarily driven by
\n
unsecured PD modelling updates, alongside reductions in economic uncertainty
\n
post model adjustments and stable underlying portfolio performance. Post model
\n
adjustments to capture increased affordability pressures on customers due to high
\n
inflation and interest rates decreased during the year reflecting a revision of the
\n
assessment approach, supported by back-testing of default outcomes.
\n
Underpinned by good book ECL coverage dynamics, total ECL coverage
\n
decreased during the year and was further amplified by 2024 debt sale activity on
\n
unsecured portfolios. Flow rates into Stage 3 reduced during H1 2024 and
\n
remained consistent across H2 2024.
\n
\ue001
Commercial & Institutional
\u2013 Increased lending during 2024 was driven by
\n
corporate and non-bank financial institutions sectors, aligned to customer strategy.
\n
Sector appetite continues to be reviewed regularly. Portfolio performance remained
\n
stable with a small reduction in total ECL. Stage 1 and Stage 2 ECL and coverage
\n
decreased due to reductions in post model adjustments, net improvements in
\n
economic scenarios and weightings along with stable portfolio performance. Stage
\n
3 ECL increased due to a small number of large counterparties, but the total
\n
number of individual defaults remained low.
\n\n\n\n\n\n\n\n\n\n\n\n
Sector analysis \u2013 portfolio summary (audited)
\n
The table below shows financial assets and off-balance sheet exposures gross of ECL and related ECL provisions, impairment and past due by sector, asset quality and geographical
\n
region.
\n\n \n
Personal
Non-personal
Mortgages (1)
Credit cards
Other personal
Total
Corporate and Other (2)
FI
Sovereign
Total
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans by geography
209,846
6,930
9,749
226,525
111,734
70,321
1,645
183,700
410,225
- UK
209,846
6,930
9,749
226,525
97,409
43,412
562
141,383
367,908
- Other Europe
-
-
-
-
6,311
14,747
766
21,824
21,824
- RoW
-
-
-
-
8,014
12,162
317
20,493
20,493
Loans by stage
209,846
6,930
9,749
226,525
111,734
70,321
1,645
183,700
410,225
- Stage 1
186,250
4,801
7,267
198,318
94,991
69,021
1,491
165,503
363,821
- Stage 2
21,061
1,953
1,622
24,636
14,464
1,241
133
15,838
40,474
- Stage 3
2,535
176
860
3,571
2,279
59
21
2,359
5,930
- Of which: individual
141
-
26
167
1,046
51
21
1,118
1,285
- Of which: collective
2,394
176
834
3,404
1,233
8
-
1,241
4,645
Loans - past due analysis
(2)
209,846
6,930
9,749
226,525
111,734
70,321
1,645
183,700
410,225
- Not past due
206,739
6,721
8,865
222,325
107,855
70,055
1,627
179,537
401,862
- Past due 1-30 days
1,404
50
70
1,524
2,530
211
-
2,741
4,265
- Past due 31-90 days
580
51
99
730
398
2
18
418
1,148
- Past due 91-180 days
408
41
96
545
139
49
-
188
733
- Past due >180 days
715
67
619
1,401
812
4
-
816
2,217
Loans - Stage 2
21,061
1,953
1,622
24,636
14,464
1,241
133
15,838
40,474
- Not past due
19,939
1,889
1,521
23,349
13,485
1,228
133
14,846
38,195
- Past due 1-30 days
853
31
37
921
640
11
-
651
1,572
- Past due 31-90 days
269
33
64
366
339
2
-
341
707
Weighted average life
(4)
- ECL measurement (years)
8
4
6
6
6
2
1
6
6
Weighted average 12 months PDs
(4)
- IFRS 9 (%)
0.51
3.23
4.59
0.76
1.24
0.16
5.51
0.86
0.80
- Basel (%)
0.68
3.65
3.18
0.87
1.11
0.15
4.16
0.76
0.82
ECL provisions by geography
462
381
969
1,812
1,504
90
19
1,613
3,425
- UK
462
381
969
1,812
1,335
37
12
1,384
3,196
- Other Europe
-
-
-
-
109
9
-
118
118
- RoW
-
-
-
-
60
44
7
111
111
\n
For the notes to this table refer to page 205.
\n\n\n\n\n\n\n\n\n\n\n\n
Sector analysis \u2013 portfolio summary (audited)
\n\n \n
Personal
Non-personal
Mortgages
(1)
Credit cards
Other personal
Total
Corporate and Other (2)
FI
Sovereign
Total
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ECL provisions by stage
462
381
969
1,812
1,504
90
19
1,613
3,425
- Stage 1
77
77
130
284
264
38
12
314
598
- Stage 2
60
186
183
429
344
12
2
358
787
- Stage 3
325
118
656
1,099
896
40
5
941
2,040
- Of which: individual
11
-
17
28
382
36
5
423
451
- Of which: collective
314
118
639
1,071
514
4
-
518
1,589
ECL provisions coverage (%)
0.22
5.50
9.94
0.80
1.35
0.13
1.16
0.88
0.83
- Stage 1 (%)
0.04
1.60
1.79
0.14
0.28
0.06
0.80
0.19
0.16
- Stage 2 (%)
0.28
9.52
11.28
1.74
2.38
0.97
1.50
2.26
1.94
- Stage 3 (%)
12.82
67.05
76.28
30.78
39.32
67.80
23.81
39.89
34.40
ECL (release)/charge
8
115
161
284
55
19
1
75
359
- UK
8
115
161
284
43
1
-
44
328
- Other Europe
-
-
-
-
17
(7)
-
10
10
- RoW
-
-
-
-
(5)
25
1
21
21
Amounts written-off
18
102
313
433
221
-
-
221
654
Loans by residual maturity
209,846
6,930
9,749
226,525
111,734
70,321
1,645
183,700
410,225
- <1 year
3,367
3,903
3,186
10,456
34,929
54,971
822
90,722
101,178
- 1-5 year
11,651
3,027
5,551
20,229
48,075
10,967
488
59,530
79,759
- > 5 < 15 year
45,454
-
1,006
46,460
20,623
4,270
298
25,191
71,651
- > 15 year
149,374
-
6
149,380
8,107
113
37
8,257
157,637
Other financial assets by asset quality
(3)
-
-
-
-
3,644
31,102
119,502
154,248
154,248
- AQ1-AQ4
-
-
-
-
3,639
30,743
119,502
153,884
153,884
- AQ5-AQ8
-
-
-
-
5
359
-
364
364
Off-balance sheet
13,806
20,135
7,947
41,888
75,964
21,925
239
98,128
140,016
- Loan commitments
13,806
20,135
7,906
41,847
72,940
20,341
239
93,520
135,367
- Financial guarantees
-
-
41
41
3,024
1,584
-
4,608
4,649
Off-balance sheet by asset quality
(3)
13,806
20,135
7,947
41,888
75,964
21,925
239
98,128
140,016
- AQ1-AQ4
12,951
510
6,568
20,029
47,896
20,063
155
68,114
88,143
- AQ5-AQ8
839
19,276
1,336
21,451
27,657
1,813
21
29,491
50,942
- AQ9
1
12
17
30
19
-
63
82
112
- AQ10
15
337
26
378
392
49
-
441
819
\n
For the notes to this table refer to page 205.
\n\n\n\n\n\n\n\n\n\n\n\n
Sector analysis \u2013 portfolio summary (audited)
\n\n \n
Personal
Non-personal
Mortgages (1)
Credit cards
Other personal
Total
Corporate and Other (2)
FI
Sovereign
Total
Total
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans by geography
208,275
5,904
9,595
223,774
108,546
57,087
2,633
168,266
392,040
- UK
208,275
5,893
9,592
223,760
95,736
39,906
2,016
137,658
361,418
- Other Europe
-
11
3
14
6,368
8,144
399
14,911
14,925
- RoW
-
-
-
-
6,442
9,037
218
15,697
15,697
Loans by stage
208,275
5,904
9,595
223,774
108,546
57,087
2,633
168,266
392,040
- Stage 1
188,140
3,742
6,983
198,865
91,006
56,105
2,610
149,721
348,586
- Stage 2
17,854
2,022
1,633
21,509
15,415
966
1
16,382
37,891
- Stage 3
2,281
140
979
3,400
2,125
16
22
2,163
5,563
- Of which: individual
122
-
20
142
865
2
22
889
1,031
- Of which: collective
2,159
140
959
3,258
1,260
14
-
1,274
4,532
Loans - past due analysis
(2)
208,275
5,904
9,595
223,774
108,546
57,087
2,633
168,266
392,040
- Not past due
205,405
5,743
8,578
219,726
104,316
56,735
2,633
163,684
383,410
- Past due 1-30 days
1,178
41
71
1,290
2,713
332
-
3,045
4,335
- Past due 31-90 days
518
38
112
668
616
12
-
628
1,296
- Past due 91-180 days
445
32
103
580
113
2
-
115
695
- Past due >180 days
729
50
731
1,510
788
6
-
794
2,304
Loans - Stage 2
17,854
2,022
1,633
21,509
15,415
966
1
16,382
37,891
- Not past due
16,803
1,971
1,529
20,303
14,358
932
1
15,291
35,594
- Past due 1-30 days
765
27
40
832
616
24
-
640
1,472
- Past due 31-90 days
286
24
64
374
441
10
-
451
825
Weighted average life
(4)
- ECL measurement (years)
9
3
6
6
6
2
-
6
6
Weighted average 12 months PDs
(4)
- IFRS 9 (%)
0.50
3.45
5.29
0.75
1.55
0.19
0.37
1.07
0.89
- Basel (%)
0.67
3.37
3.15
0.84
1.16
0.17
0.37
0.81
0.83
ECL provisions by geography
420
376
1,168
1,964
1,599
66
16
1,681
3,645
- UK
420
365
1,163
1,948
1,383
38
13
1,434
3,382
- Other Europe
-
11
5
16
159
13
-
172
188
- RoW
-
-
-
-
57
15
3
75
75
\n
For the notes to this table refer to the following page.
Sector analysis \u2013 portfolio summary (audited)
\n \n
Personal
Non-personal
Mortgages (1)
Credit cards
Other personal
Total
Corporate and Other (2)
FI
Sovereign
Total
Total
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ECL provisions by stage
420
376
1,168
1,964
1,599
66
16
1,681
3,645
- Stage 1
88
76
152
316
336
44
13
393
709
- Stage 2
61
207
238
506
454
15
1
470
976
- Stage 3
271
93
778
1,142
809
7
2
818
1,960
- Of which: individual
12
-
14
26
302
2
2
306
332
- Of which: collective
259
93
764
1,116
507
5
-
512
1,628
ECL provisions coverage (%)
0.20
6.37
12.17
0.88
1.47
0.12
0.61
1.00
0.93
- Stage 1 (%)
0.05
2.03
2.18
0.16
0.37
0.08
0.50
0.26
0.20
- Stage 2 (%)
0.34
10.24
14.57
2.35
2.95
1.55
100.00
2.87
2.58
- Stage 3 (%)
11.88
66.43
79.47
33.59
38.07
43.75
9.09
37.82
35.23
ECL (release)/charge
35
193
254
482
92
6
(2)
96
578
- UK
35
184
249
468
103
(4)
(2)
97
565
- Other Europe
-
9
5
14
39
12
-
51
65
- RoW
-
-
-
-
(50)
(2)
-
(52)
(52)
Amounts written-off
32
70
91
193
125
1
-
126
319
Loans by residual maturity
208,275
5,904
9,595
223,774
108,546
57,087
2,633
168,266
392,040
- <1 year
3,375
3,398
3,169
9,942
31,008
43,497
489
74,994
84,936
- 1-5 year
9,508
2,506
5,431
17,445
49,789
11,616
1,872
63,277
80,722
- > 5 < 15 year
46,453
-
993
47,446
19,868
1,939
199
22,006
69,452
- > 15 year
148,939
-
2
148,941
7,881
35
73
7,989
156,930
Other financial assets by asset quality
(3)
-
-
-
-
2,690
26,816
123,683
153,189
153,189
- AQ1-AQ4
-
-
-
-
2,690
26,084
123,683
152,457
152,457
- AQ5-AQ8
-
-
-
-
-
732
-
732
732
Off-balance sheet
9,843
17,284
8,462
35,589
73,921
22,221
227
96,369
131,958
- Loan commitments
9,843
17,284
8,417
35,544
70,942
20,765
227
91,934
127,478
- Financial guarantees
-
-
45
45
2,979
1,456
-
4,435
4,480
Off-balance sheet by asset quality
(3)
9,843
17,284
8,462
35,589
73,921
22,221
227
96,369
131,958
- AQ1-AQ4
9,099
448
7,271
16,818
47,296
20,644
165
68,105
84,923
- AQ5-AQ8
721
16,518
1,162
18,401
26,296
1,574
45
27,915
46,316
- AQ9
7
6
4
17
15
-
-
15
32
- AQ10
16
312
25
353
314
3
17
334
687
(1)
Includes a portion of Private Banking lending secured against residential real estate, in line with ECL calculation methodology. Private Banking and RBS International mortgages are reported in UK, reflecting the country of lending origination and includes
crown dependencies.
(2)
Previously published sectors for the Non-personal portfolio have been re-presented to reflect internal sector reporting. Property is now included in corporate and other.
(3)
AQ bandings are based on Basel PDs and mapping is as follows:
\n \n
Internal asset quality band
Probability of default range
Indicative S&P rating
Internal asset quality band
Probability of default range
Indicative S&P rating
AQ1
0% - 0.034%
AAA to AA
AQ6
1.076% - 2.153%
BB- to B+
AQ2
0.034% - 0.048%
AA to AA-
AQ7
2.153% - 6.089%
B+ to B
AQ3
0.048% - 0.095%
A+ to A
AQ8
6.089% - 17.222%
B- to CCC+
AQ4
0.095% - 0.381%
BBB+ to BBB-
AQ9
17.222% - 100%
CCC to C
AQ5
0.381% - 1.076%
BB+ to BB
AQ10
100%
\u00a30.3 billion (2023 \u2013 \u00a30.3 billion) of AQ10 Personal balances primarily relate to loan commitments, the drawdown of which is effectively prohibited.
(4)
Not within the scope of the independent auditors\u2019 report.
D
\n\n\n\n\n\n\n\n\n\n\n\n
Sector analysis \u2013 portfolio summary (audited)
\n
The table below shows ECL by stage, for the Personal portfolio and Non-Personal portfolio including the three largest borrowing sector clusters included in corporate and other.
\n\n \n
Loans - amortised cost and FVOCI
Off-balance sheet
ECL provisions
Stage 1
Stage 2
Stage 3
Total
Loan commitments
Contingent liabilities
Stage 1
Stage 2
Stage 3
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Personal
198,318
24,636
3,571
226,525
41,847
41
284
429
1,099
1,812
Mortgages
186,250
21,061
2,535
209,846
13,806
-
77
60
325
462
Credit cards
4,801
1,953
176
6,930
20,135
-
77
186
118
381
Other personal
7,267
1,622
860
9,749
7,906
41
130
183
656
969
Non-personal
165,503
15,838
2,359
183,700
93,520
4,608
314
358
941
1,613
Financial institutions
(1)
69,021
1,241
59
70,321
20,341
1,584
38
12
40
90
Sovereigns
1,491
133
21
1,645
239
-
12
2
5
19
Corporate and other
(2)
94,991
14,464
2,279
111,734
72,940
3,024
264
344
896
1,504
Of which:
Commercial real estate
16,191
1,517
433
18,141
6,661
143
70
30
146
246
Consumer industries
13,312
3,015
444
16,771
10,706
595
45
90
188
323
Mobility and logistics
13,363
2,384
148
15,895
9,367
595
26
35
67
128
Total
363,821
40,474
5,930
410,225
135,367
4,649
598
787
2,040
3,425
\n\n \n
Loans - amortised cost and FVOCI
Off-balance sheet
ECL provisions
Stage 1
Stage 2
Stage 3
Total
Loan commitments
Contingent liabilities
Stage 1
Stage 2
Stage 3
Total
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Personal
198,865
21,509
3,400
223,774
35,544
45
316
506
1,142
1,964
Mortgages
188,140
17,854
2,281
208,275
9,843
-
88
61
271
420
Credit cards
3,742
2,022
140
5,904
17,284
-
76
207
93
376
Other personal
6,983
1,633
979
9,595
8,417
45
152
238
778
1,168
Non-personal
149,721
16,382
2,163
168,266
91,934
4,435
393
470
818
1,681
Financial institutions
(1)
56,105
966
16
57,087
20,765
1,456
44
15
7
66
Sovereigns
2,610
1
22
2,633
227
-
13
1
2
16
Corporate and other
(2)
91,006
15,415
2,125
108,546
70,942
2,979
336
454
809
1,599
Of which:
Commercial real estate
14,998
2,040
374
17,412
7,155
106
86
58
112
256
Consumer industries
12,586
4,050
541
17,177
10,209
649
61
119
222
402
Mobility and logistics
13,186
2,074
143
15,403
8,728
496
33
39
48
120
Total
348,586
37,891
5,563
392,040
127,478
4,480
709
976
1,960
3,645
\n
(1)
Includes transactions, such as securitisations, where the underlying assets may be in other sectors.
\n
(2)
Previously published sectors for the Non-personal portfolio have been re-presented to reflect internal sector reporting. Property is now included in corporate and other.
Non-personal forbearance (audited)
The table below shows Non-personal forbearance, Heightened Monitoring and Risk of Credit Loss by sector. The table shows current exposure but reflects risk transfers where there
is a guarantee by another customer.
\n \n
Corporate and Other
Financial institution
Sovereign
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Forbearance (flow)
3,359
119
18
3,496
Forbearance (stock)
4,556
106
18
4,680
Heightened Monitoring and Risk of Credit Loss
5,931
150
1
6,082
2023
Forbearance (flow)
3,484
56
22
3,562
Forbearance (stock)
4,823
70
22
4,915
Heightened Monitoring and Risk of Credit Loss
5,208
276
-
5,484
Sector analysis \u2013 portfolio summary (audited)
\ue001
Loans by geography and sector
\u2013 In line with NatWest Group\u2019s strategic focus, exposures continued to be mainly in the UK.
\ue001
Loans by stage
\u2013 The increase in Stage 1 reflected the growth in Non-Personal lending, alongside continued growth in Personal unsecured portfolios. There was an increase in
Stage 2 balances in 2024, driven by mortgages, but noting that there was a significant proportion of mortgage cases in Stage 2, due to PD persistence only. The modest increase
in Stage 3 balance was mainly due to a small number of large corporate customers, with Personal lending increases largely mitigated by debt sale activity on unsecured assets.
\ue001
Loans \u2013 Past due analysis
\u2013 Within the Personal portfolio, arrears balances increased during 2024, however, this was in line with expectations following periods of balance growth
and normalisation since COVID-19. Arrears inflow rates remained stable. In Non-Personal, past due composition was stable.
\ue001
Weighted average 12 months PDs
\u2013
Both IFRS 9 and Basel PDs remained broadly stable during the year. In the Personal portfolios, there was a notable reduction in unsecured
IFRS 9 PDs due to modelling updates. In Non-Personal, some reductions were observed in IFRS 9 PDs in the corporate portfolios due to economic and portfolio improvements. PDs
in sovereigns increased significantly due to new lending but all new lending is fully backed by government guarantees.
\ue001
ECL provisions by stage and ECL provisions coverage
\u2013 Overall provisions coverage reduced since 31 December 2023. In the performing book, this was mainly a result of stable
portfolio performance, reduced economic uncertainty post model adjustments and PD reductions across a number of portfolios, primarily relating to modelling updates in Personal.
Furthermore, Stage 3 and total book coverage reduced, supported by the 2024 debt sale activity on Personal unsecured portfolios.
\ue001
ECL charge \u2013
The full year impairment charge for 2024 of \u00a3359 million primarily reflected stable default performance, alongside reduced PD levels and impairment releases driven
by the reduction in economic uncertainty post model adjustments.
\ue001
Loans by residual maturity
\u2013
The maturity profile of the portfolios remained consistent with prior periods. In mortgages, as expected, the vast majority of exposures were greater
than five years. In unsecured lending, cards and other, exposures were concentrated in less than five years. In Non-Personal, most loans mature in less than five years.
\ue001
Other financial assets by asset quality
\u2013
Consisting almost entirely of balances at central banks and debt securities held in the course of treasury related management activities,
these assets were mainly within the AQ1-AQ4 bands.
\ue001
Off-balance sheet exposures by asset quality
\u2013 In Personal, undrawn exposures were reflective of available credit lines in credit cards and current accounts. Additionally, the
mortgage portfolio had undrawn exposures, where a formal offer had been made to a customer but had not yet drawn down; the value increased in line with the pipeline of offers.
There was also a legacy portfolio of flexible mortgages where a customer had the right and ability to draw down further funds. In Non-Personal, off-balance sheet exposures
increased moderately driven by loan commitments. Asset quality was mainly in the AQ1-AQ8 bandings.
\ue001
Non-Personal problem debt \u2013
There was an increase in exposures during 2024 driven by corporate sectors, although volumes were flat. The framework is closely monitored, and
there were no material thematic concerns.
\ue001
Non-Personal forbearance \u2013
Forbearance was lower at the end of 2024, compared to 2023, reflecting stable portfolio performance.
\n\n\n\n\n\n\n\n\n\n\n\n
Credit risk enhancement and mitigation (audited)
\n
The table below shows exposures of modelled portfolios within the scope of the ECL framework and related credit risk enhancement and mitigation (CREM).
\n \n \n
Gross
Maximum credit risk
CREM by type
CREM coverage
Exposure post CREM
exposure
ECL
Total
Stage 3
Financial (1)
Property
Other (2)
Total
Stage 3
Total
Stage 3
2024
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Financial assets
Cash and balances at central banks
91.8
-
91.8
-
-
-
-
-
-
91.8
-
Loans - amortised cost
(3)
410.2
3.3
406.9
3.9
46.3
253.0
25.5
324.8
3.4
82.1
0.5
Personal
(4)
226.5
1.8
224.7
2.5
0.8
209.1
-
209.9
2.2
14.8
0.3
Non-personal
(5)
183.7
1.5
182.2
1.4
45.5
43.9
25.5
114.9
1.2
67.3
0.2
Debt securities
62.5
-
62.5
-
0.1
-
-
0.1
-
62.4
-
Total financial assets
564.5
3.3
561.2
3.9
46.4
253.0
25.5
324.9
3.4
236.3
0.5
Contingent liabilities and commitments
Personal
(6,7)
41.9
-
41.9
0.4
1.1
3.7
-
4.8
-
37.1
0.4
Non-personal
98.1
0.1
98.0
0.4
3.1
8.2
5.1
16.4
0.1
81.6
0.3
Total off-balance sheet
140.0
0.1
139.9
0.8
4.2
11.9
5.1
21.2
0.1
118.7
0.7
Total exposure
704.5
3.4
701.1
4.7
50.6
264.9
30.6
346.1
3.5
355.0
1.2
2023
Financial assets
Cash and balances at central banks
103.1
-
103.1
-
-
-
-
-
-
103.1
-
Loans - amortised cost
(3)
392.0
3.5
388.5
3.5
37.4
248.2
21.8
307.4
3.1
81.1
0.4
Personal
(4)
223.7
1.9
221.8
2.2
0.9
207.5
-
208.4
2.0
13.4
0.2
Non-personal
(5)
168.3
1.6
166.7
1.3
36.5
40.7
21.8
99.0
1.1
67.7
0.2
Debt securities
50.1
-
50.1
-
-
-
-
-
-
50.1
-
Total financial assets
545.2
3.5
541.7
3.5
37.4
248.2
21.8
307.4
3.1
234.3
0.4
Contingent liabilities and commitments
Personal
(6,7)
35.6
-
35.6
0.3
1.0
4.0
-
5.0
-
30.6
0.3
Non-personal
96.4
0.1
96.3
0.4
2.6
7.1
4.1
13.8
0.1
82.5
0.3
Total off-balance sheet
132.0
0.1
131.9
0.7
3.6
11.1
4.1
18.8
0.1
113.1
0.6
Total exposure
677.2
3.6
673.6
4.2
41.0
259.3
25.9
326.2
3.2
347.4
1.0
\n
(1)
Includes cash and securities collateral.
\n
(2)
Includes guarantees, charges over trade debtors, other asset finance related physical collateral as well as the amount by which credit risk exposure is reduced through netting arrangements, mainly cash management pooling, which give NatWest Group a
\n
legal right to set off the financial asset against a financial liability due to the same counterparty. Any additional credit risk mitigation from a synthetic securitization is not included in the table above.
\n
(3)
NatWest Group holds collateral in respect of individual loans \u2013 amortised cost to banks and customers. This collateral includes mortgages over property (both personal and commercial); charges over business assets such as plant and equipment;
\n
inventories and trade debtors; and guarantees of lending from parties other than the borrower. NatWest Group obtains collateral in the form of securities in reverse repurchase agreements. Collateral values are capped at the value of the loan.
\n
(4)
Stage 3 mortgage exposures have relatively limited uncovered exposure reflecting the security held. On unsecured credit cards and other personal borrowing, the residual uncovered amount reflects historical experience of continued cash recovery post
\n
default through ongoing engagement with customers.
\n
(5)
Stage 3 exposures post credit risk enhancement and mitigation in Non-personal mainly represent enterprise value and the impact of written down collateral values; an individual assessment to determine ECL will consider multiple scenarios and in some
\n
instances allocate a probability weighting to a collateral value in excess of the written down value.
\n
(6)
\u00a30.3 billion (2023
\u2013
\u00a30.3 billion) Personal Stage 3 balances primarily relate to loan commitments, the draw down of which is effectively prohibited.
\n
(7)
The Personal gross exposure value includes \u00a310.1 billion (2023
\u2013
\u00a35.9 billion) in respect of pipeline mortgages where a committed offer has been made to a customer but where the funds have not yet been drawn down. When drawn down, the exposure
\n
would be covered by a security over the borrower\u2019s property.
\n\n\n\n\n\n\n\n\n\n\n\n
Personal portfolio (audited)
\n
Disclosures in the Personal portfolio section include drawn exposure (gross of provisions).
\n\n \n
2024
Retail
Private
Commercial &
Central items
Banking
Banking
Institutional
& other
Total
Personal lending
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Mortgages
194,865
12,826
2,161
-
209,852
Of which:
Owner occupied
176,137
11,348
1,457
-
188,942
Buy-to-let
18,728
1,478
704
-
20,910
Interest only
22,186
11,276
437
-
33,899
Mixed
(1)
10,384
40
8
-
10,432
ECL provisions
(2)
440
12
10
-
462
Other personal lending
(3)
15,045
1,301
242
-
16,588
ECL provisions
(2)
1,330
12
3
-
1,345
Total personal lending
209,910
14,127
2,403
-
226,440
Mortgage LTV ratios
- Owner occupied
56%
59%
56%
-
56%
- Stage 1
56%
59%
55%
-
56%
- Stage 2
55%
61%
56%
-
55%
- Stage 3
50%
64%
74%
-
51%
- Buy-to-let
53%
60%
52%
-
53%
- Stage 1
54%
60%
51%
-
54%
- Stage 2
52%
57%
55%
-
52%
- Stage 3
52%
56%
59%
-
53%
Gross new mortgage lending
26,440
1,395
257
-
28,092
Of which:
Owner occupied
25,300
1,266
183
-
26,749
- LTV > 90%
888
-
-
-
888
Weighted average LTV
(4)
70%
63%
71%
-
70%
Buy-to-let
1,140
129
74
-
1,343
Weighted average LTV
(4)
61%
62%
56%
-
61%
Interest only
1,575
1,238
42
-
2,855
Mixed
(1)
1,150
-
1
-
1,151
Mortgage forbearance
Forbearance flow
(5)
473
8
6
-
487
Forbearance stock
1,680
20
15
-
1,715
Current
1,214
9
10
-
1,233
1-3 months in arrears
146
9
-
-
155
>3 months in arrears
320
2
5
-
327
\n
For the notes to this table refer to the following page.
\n\n\n\n\n\n\n\n\n\n\n\n
Personal portfolio (audited)
\n\n \n
2023
Retail
Private
Commercial &
Central items
Banking
Banking
Institutional
& other
Total
Personal lending
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Mortgages
192,915
13,222
2,200
-
208,337
Of which:
Owner occupied
174,167
11,629
1,464
-
187,260
Buy-to-let
18,748
1,593
736
-
21,077
Interest only
25,805
11,631
461
-
37,897
Mixed
(1)
10,068
25
10
-
10,103
ECL provisions
(2)
397
12
6
-
415
Other personal lending
(3)
13,758
1,395
222
13
15,388
ECL provisions
(2)
1,508
12
2
16
1,538
Total personal lending
206,673
14,617
2,422
13
223,725
Mortgage LTV ratios
- Owner occupied
55%
59%
56%
-
55%
- Stage 1
55%
59%
54%
-
55%
- Stage 2
54%
63%
54%
-
54%
- Stage 3
48%
61%
72%
-
49%
- Buy-to-let
52%
59%
52%
-
53%
- Stage 1
52%
60%
52%
-
53%
- Stage 2
50%
57%
49%
-
50%
- Stage 3
50%
53%
58%
-
51%
Gross new mortgage lending
29,664
1,400
180
-
31,244
Of which:
Owner occupied
27,718
1,267
136
-
29,121
- LTV > 90%
1,173
-
-
-
1,173
Weighted average LTV
(4)
70%
63%
69%
-
70%
Buy-to-let
1,946
133
44
-
2,123
Weighted average LTV
(4)
58%
65%
52%
-
58%
Interest only
2,680
1,224
23
-
3,927
Mixed
(1)
1,568
2
-
-
1,570
Mortgage forbearance
Forbearance flow
(5)
569
22
9
-
600
Forbearance stock
1,416
28
15
-
1,459
Current
950
10
6
-
966
1-3 months in arrears
116
2
2
-
120
>3 months in arrears
350
16
7
-
373
\n
(1)
Includes accounts which have an interest only sub-
\n
account and a capital and interest sub-account to
\n
provide a more comprehensive view of interest only
\n
exposures.
\n
(2)
Retail Banking excludes a non-material amount of
\n
lending and provisions held on relatively small legacy
\n
portfolios.
\n
(3)
Comprises unsecured lending except for Private
\n
Banking, which includes both secured and unsecured
\n
lending. It excludes loans that are commercial in
\n
nature.
\n
(4)
New mortgage lending LTV reflects the LTV at the
\n
time of lending.
\n
(5)
Forbearance flows only include an account once per
\n
year, although some accounts may be subject to
\n
multiple forbearance deals. Forbearance deals post
\n
default are excluded from these flows.
\n\n\n\n\n\n\n\n\n\n\n\n
Personal portfolio (audited)
\n
Mortgage LTV distribution by stage
\n
The table below shows gross mortgage lending and related ECL by LTV band for the Retail Banking portfolio.
\n \n \n
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
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
\u226450%
64,040
8,344
1,159
73,543
21
16
153
190
-
0.2
13.2
0.3
>50% and \u226470%
61,739
7,741
855
70,335
29
23
104
156
-
0.3
12.2
0.2
>70% and \u226480%
25,022
2,361
173
27,556
13
9
22
44
0.1
0.4
12.7
0.2
>80% and \u226490%
16,718
1,769
85
18,572
9
9
13
31
0.1
0.5
15.3
0.2
>90% and \u2264100%
4,076
512
26
4,614
2
3
5
10
-
0.6
19.2
0.2
>100%
14
4
13
31
-
-
6
6
-
-
46.2
19.4
Total with LTVs
171,609
20,731
2,311
194,651
74
60
303
437
-
0.3
13.1
0.2
Other
212
1
1
214
2
-
1
3
0.9
-
100.0
1.4
Total
171,821
20,732
2,312
194,865
76
60
304
440
-
0.3
13.1
0.2
2023
\u226450%
68,092
7,447
1,145
76,684
27
18
134
179
-
0.2
11.7
0.2
>50% and \u226470%
65,777
7,011
767
73,555
35
26
85
146
0.1
0.4
11.1
0.2
>70% and \u226480%
22,537
1,633
113
24,283
13
7
15
35
0.1
0.4
13.3
0.1
>80% and \u226490%
13,583
1,143
47
14,773
9
6
7
22
0.1
0.5
14.9
0.1
>90% and \u2264100%
3,008
370
14
3,392
2
3
3
8
0.1
0.8
21.4
0.2
>100%
22
6
11
39
-
-
5
5
-
-
45.5
12.8
Total with LTVs
173,019
17,610
2,097
192,726
86
60
249
395
0.1
0.3
11.9
0.2
Other
186
1
2
189
1
-
1
2
0.5
-
50.0
1.1
Total
173,205
17,611
2,099
192,915
87
60
250
397
0.1
0.3
11.9
0.2
\n
\ue001
Mortgage balances increased during 2024 as a result of the Metro Bank mortgage portfolio acquisition. Unsecured lending grew overall, driven by growth in credit cards, prime
\n
quality whole of market lending and balance transfer segments.
\n
\ue001
The proportion of overall interest-only mortgage balances decreased in 2024. Higher levels of interest-only at the 2023 year end were driven by the implementation of the
\n
Mortgage Charter. However, applications for Mortgage Charter support decreased during 2024 and customers have rolled-off from interest-only periods.
\n
\ue001
Portfolios and new business were closely monitored against agreed operating limits. These included loan-to-value ratios, buy-to-let concentrations, new-build concentrations and
\n
credit quality. Lending criteria, affordability calculations and assumptions for new lending were adjusted during the year, to maintain credit quality in line with appetite and to
\n
ensure customers are assessed fairly as economic conditions change.
\n
\ue001
Consistent with lower mortgage inflows to collections in 2024, the flow of forbearance reduced compared to the prior year.
\n\n\n\n\n\n\n\n\n\n\n\n
Personal portfolio (audited)
\n
Mortgage LTV distribution by region
\n
The table below shows gross mortgage lending by LTV band for Retail Banking, by geographical region.
\n\n \n
Flood risk (1,2)
Weighted
% of regional
% of regional
Lending at high/
\u226450%
50%\u226480%
80%\u2264100%
>100%
Total
average LTV
Other
Total
Total
lending at high
lending at very
very high risk (3)
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
\u00a3m
\u00a3m
%
risk (>60)
high risk (>80)
%
South East
13,622
19,007
4,506
1
37,136
56
3
37,139
19
3.6
1.2
4.8
Greater London
13,951
18,537
3,391
2
35,881
55
3
35,884
18
4.8
0.9
5.7
East of England
7,776
11,730
3,211
2
22,719
58
1
22,720
12
2.9
1.4
4.3
North West
7,507
8,305
1,878
2
17,692
54
1
17,693
9
2.9
1.9
4.8
South West
6,577
8,455
2,055
1
17,088
56
1
17,089
9
2.6
1.0
3.6
West Midlands
5,379
6,970
1,683
1
14,033
56
1
14,034
7
1.8
0.6
2.4
Scotland
4,860
5,766
1,591
1
12,218
55
1
12,219
6
2.4
1.2
3.6
Rest of the UK
13,871
19,121
4,871
21
37,884
57
203
38,087
20
2.4
2.5
4.9
Total
73,543
97,891
23,186
31
194,651
56
214
194,865
100
3.1
1.4
4.5
2023
South East
14,645
18,510
3,107
1
36,263
54
2
36,265
19
3.8
1.2
5.0
Greater London
14,689
18,044
2,366
1
35,100
53
3
35,103
18
5.2
0.9
6.1
East of England
8,576
11,810
2,208
-
22,594
55
2
22,596
12
3.1
1.4
4.5
North West
7,314
8,629
1,881
2
17,826
54
2
17,828
9
3.0
1.9
4.9
South West
7,308
8,296
1,379
1
16,984
53
1
16,985
9
2.7
1.0
3.7
West Midlands
5,391
7,072
1,404
1
13,868
55
1
13,869
7
1.9
0.6
2.5
Scotland
5,051
5,938
1,445
1
12,435
54
2
12,437
6
2.9
1.4
4.2
Rest of the UK
13,711
19,540
4,374
32
37,657
56
175
37,832
20
2.7
1.8
4.5
Total
76,685
97,839
18,164
39
192,727
54
188
192,915
100
3.4
1.3
4.7
\n
(1)
Not within the scope of the independent auditors\u2019 report.
\n
(2)
As at 31 December 2024, \u00a312.6 billion, 98.0%, of the private banking mortgage portfolio had flood risk data available (2023 \u2013 \u00a313.0 billion, 98.1%). Of which, 5.4% were rated as high flood risk and 1.0% as very high flood risk
(2023 \u2013 5.74% high flood risk
\n
and 1.1% very high flood risk). 63% of the exposure is in the Greater London region.
\n
(3)
Flood risk is modelled by calculating an estimated loss for each flood source different types of flooding (fluvial, pluvial, tidal), annualised for each source and combined for a total flood score. Flood defences were considered where available. Flood scores
\n
were allocated per property based on the potential annualised loss (\u00a3) to a property dependent on the type, frequency and depth of flooding modelled across different return periods. The scoring ranged from 0 to 100, with 0 being lowest and 100 being
\n
the highest risk. A score of 61 and above was considered to be high risk and properties with a score of 81 and above were considered to be very high risk after flood mitigants were taken-into-account.
Personal portfolio (audited)
Retail Banking fixed rate mortgages by roll-off date
(1)
The table below shows gross fixed rate mortgage lending for Retail Banking, by roll-off date.
2024
2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Retail Banking mortgages - gross exposure
(2)
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Fixed rate roll-off
<=1 year
34,989
4,309
336
39,634
30,867
3,670
295
34,832
>1<= 2 years
44,146
5,080
418
49,644
39,013
3,513
290
42,816
>2 years
78,629
8,667
693
87,989
87,402
7,461
590
95,453
Total
157,764
18,056
1,447
177,267
157,282
14,644
1,175
173,101
(1)
Not within the scope of the independent auditors\u2019 report.
(2)
Excluding the Metro Bank portfolio acquired during 2024.
Retail Banking mortgages by Energy Performance Certificate (EPC) rating
(1)
The table below shows the energy efficiency of Retail Banking residential mortgages.
2024
2023
Owner occupied
Buy-to-let
Total
Owner occupied
Buy-to-let
Total
EPC rating
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
A
788
18
806
547
13
560
B
21,923
1,480
23,403
21,566
1,458
23,024
C
31,353
5,876
37,229
29,764
5,712
35,476
D
45,455
5,748
51,203
46,924
6,056
52,980
E
14,455
1,369
15,824
16,027
1,557
17,584
F
3,026
55
3,081
3,360
62
3,422
G
695
13
708
736
16
752
Unclassified
58,442
4,169
62,611
55,243
3,874
59,117
Total
176,137
18,728
194,865
174,167
18,748
192,915
(1)
Not within the scope of the independent auditors\u2019 report.
(2)
As at 31 December 2024, \u00a3139.1 billion, 66.3%, of the total residential mortgages portfolio had Energy Performance Certificate (EPC) data available (2023 \u2013 \u00a3140.8 billion, 67.6%). Of which, 46.3% were rated as EPC A to C (2023 \u2013 44.1%).
Commercial real estate (CRE)
CRE LTV distribution by stage (audited)
The table below shows CRE gross loans and related ECL by LTV band.
Gross loans
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
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
\u226450%
7,334
380
48
7,762
28
6
7
41
0.4
1.6
14.6
0.5
>50% and \u226470%
4,413
367
87
4,867
22
10
17
49
0.5
2.7
19.5
1.0
>70% and \u2264100%
312
83
79
474
2
4
21
27
0.6
4.8
26.6
5.7
>100%
139
8
119
266
1
-
56
57
0.7
-
47.1
21.4
Total with LTVs
12,198
838
333
13,369
53
20
101
174
0.4
2.4
30.3
1.3
Total portfolio average LTV
46%
51%
102%
48%
Other Investment
(1)
2,132
348
41
2,521
6
6
15
27
0.3
1.7
36.6
1.1
Investment
14,330
1,186
374
15,890
59
26
116
201
0.4
2.2
31.0
1.3
Development and other
(2)
1,861
331
59
2,251
11
4
30
45
0.6
1.2
50.8
2.0
Total
16,191
1,517
433
18,141
70
30
146
246
0.4
2.0
33.7
1.4
2023
\u226450%
7,173
664
61
7,898
38
15
9
62
0.5
2.3
14.8
0.8
>50% and \u226470%
3,165
619
94
3,878
22
21
18
61
0.7
3.4
19.1
1.6
>70% and \u2264100%
319
112
84
515
3
6
21
30
0.9
5.4
25.0
5.8
>100%
241
6
26
273
1
1
16
18
0.4
16.7
61.5
6.6
Total with LTVs
10,898
1,401
265
12,564
64
43
64
171
0.6
3.1
24.2
1.4
Total portfolio average LTV
47%
51%
72%
48%
Other Investment
(1)
2,189
390
45
2,624
10
7
19
36
0.5
1.8
42.2
1.4
Investment
13,087
1,791
310
15,188
74
50
83
207
0.6
2.8
26.8
1.4
Development and other
(2)
1,911
249
64
2,224
12
8
29
49
0.6
3.2
45.3
2.2
Total
14,998
2,040
374
17,412
86
58
112
256
0.6
2.8
29.9
1.5
(1)
Relates mainly to business banking and unsecured corporate lending.
(2)
Relates to the development of commercial and residential properties, along with CRE activities that are not strictly investment or development. LTV is not a meaningful measure for this type of lending activity.
\ue001
The majority of the CRE portfolio was located and managed in the UK. Business appetite and strategy was aligned across NatWest Group. Lending appetite is subject to regular
review.
\ue001
While the real estate investment market was subdued through much of 2024, the portfolio remained resilient and there was moderate growth.
\ue001
Credit quality remained stable with very limited instances of specific cases deteriorating. Challenges persist in parts of the office sub-sector, but NatWest Group remains
comfortable with exposures held in this sub-sector, representing approximately 16% of the overall CRE book.
Flow statements (audited)
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:
\ue001
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.
\ue001
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.
\ue001
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.
\ue001
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.
\ue001
Amounts written-off represent the gross asset written-down against accounts with ECL, including the net asset write-down for any debt sale activity.
\ue001
There were some flows from Stage 1 into Stage 3 including transfers due to unexpected default events with a post model adjustment in place for Commercial & Institutional to
account for this risk.
\ue001
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.
\ue001
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 assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
NatWest Group total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
504,345
709
40,294
976
5,621
1,960
550,260
3,645
Currency translation and other adjustments
(1,354)
-
(40)
(1)
158
204
(1,236)
203
Transfers from Stage 1 to Stage 2
(40,745)
(231)
40,745
231
-
-
-
-
Transfers from Stage 2 to Stage 1
27,808
552
(27,808)
(552)
-
-
-
-
Transfers to Stage 3
(247)
(5)
(3,489)
(269)
3,736
274
-
-
Transfers from Stage 3
296
19
761
37
(1,057)
(56)
-
-
Net re-measurement of ECL on stage transfer
(390)
657
344
611
Changes in risk parameters
(206)
(114)
302
(18)
Other changes in net exposure
25,749
155
(8,288)
(174)
(1,891)
(176)
15,570
(195)
Other (P&L only items)
3
(9)
(33)
(39)
Income statement (releases)/charges
(438)
360
437
359
Transfers to disposal groups and fair value
(296)
(5)
(9)
(3)
(13)
(10)
(318)
(18)
Amounts written-off
-
-
(1)
(1)
(653)
(653)
(654)
(654)
Unwinding of discount
-
-
(149)
(149)
At 31 December 2024
515,556
598
42,165
787
5,901
2,040
563,622
3,425
Net carrying amount
514,958
41,378
3,861
560,197
At 1 January 2023
507,539
632
48,482
1,043
5,231
1,759
561,252
3,434
2023 movements
(3,194)
77
(8,188)
(67)
390
201
(10,992)
211
At 31 December 2023
504,345
709
40,294
976
5,621
1,960
550,260
3,645
Net carrying amount
503,636
39,318
3,661
546,615
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Retail Banking - mortgages
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
174,038
87
17,827
60
2,068
250
193,933
397
Currency translation and other adjustments
-
(1)
-
1
109
110
109
110
Transfers from Stage 1 to Stage 2
(19,074)
(20)
19,074
20
-
-
-
-
Transfers from Stage 2 to Stage 1
12,454
24
(12,454)
(24)
-
-
-
-
Transfers to Stage 3
(52)
-
(1,079)
(8)
1,131
8
-
-
Transfers from Stage 3
48
1
392
7
(440)
(8)
-
-
Net re-measurement of ECL on stage transfer
(13)
26
6
19
Changes in risk parameters
3
(15)
96
84
Other changes in net exposure
3,919
(5)
(2,768)
(7)
(550)
(75)
601
(87)
Other (P&L only items)
-
(1)
(10)
(11)
Income statement (releases)/charges
(15)
3
17
5
Amounts written-off
-
-
-
-
(15)
(15)
(15)
(15)
Unwinding of discount
-
-
(67)
(67)
At 31 December 2024
171,333
76
20,992
60
2,303
305
194,628
441
Net carrying amount
171,257
20,932
1,998
194,187
At 1 January 2023
165,264
79
18,831
61
1,762
215
185,857
355
2023 movements
8,774
8
(1,004)
(1)
306
35
8,076
42
At 31 December 2023
174,038
87
17,827
60
2,068
250
193,933
397
Net carrying amount
173,951
17,767
1,818
193,536
\n
\ue001
ECL coverage for mortgages remained stable overall during 2024, with growth in Stage 3 ECL partly offset by a reduction in good book ECL, primarily driven by the reduction in
\n
economic uncertainty post model adjustment levels. PDs remained broadly flat with the effect of the modest increase in arrears levels being offset by the impact of improved
\n
economics since 2023 and stable portfolio performance overall.
\n
\ue001
The decrease in Stage 1 ECL was also driven by the cost of living post model adjustment reduction. Refer to the Governance and post model adjustments section for further
\n
details.
\n
\ue001
The Stage 3 inflows remained broadly stable, albeit with signs of an upward drift in default rates, reflecting slightly poorer arrears performance on mortgages recently rolled-off
\n
onto higher product rates. The increase in Stage 3 ECL primarily reflected increases in ECL for post-default interest.
\n
\ue001
There were net flows into Stage 2 from Stage 1 in line with a modest upward trend in arrears.
\n
\ue001
The relatively small ECL cost for net re-measurement on transfer into Stage 3 included the effect of risk targeted ECL adjustments, when previously in the good book. Refer to the
\n
Governance and post model adjustments section for further details.
\n
\ue001
Write-off occurs once the repossessed property has been sold and there is a residual shortfall balance remaining outstanding. This would typically be within five years from default
\n
but can be longer.
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Retail Banking - credit cards
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
3,475
70
2,046
204
146
89
5,667
363
Currency translation and other adjustments
-
(1)
-
1
4
3
4
3
Transfers from Stage 1 to Stage 2
(1,895)
(42)
1,895
42
-
-
-
-
Transfers from Stage 2 to Stage 1
1,300
94
(1,300)
(94)
-
-
-
-
Transfers to Stage 3
(24)
(1)
(158)
(58)
182
59
-
-
Transfers from Stage 3
3
1
9
3
(12)
(4)
-
-
Net re-measurement of ECL on stage transfer
(58)
167
46
155
Changes in risk parameters
(3)
(13)
37
21
Other changes in net exposure
1,664
16
(458)
(66)
(56)
(2)
1,150
(52)
Other (P&L only items)
-
-
(9)
(9)
Income statement (releases)/charges
(45)
88
72
115
Amounts written-off
-
-
-
-
(102)
(102)
(102)
(102)
Unwinding of discount
-
-
(9)
(9)
At 31 December 2024
4,523
76
2,034
186
162
117
6,719
379
Net carrying amount
4,447
1,848
45
6,340
At 1 January 2023
3,062
61
1,098
120
113
71
4,273
252
2023 movements
413
9
948
84
33
18
1,394
111
At 31 December 2023
3,475
70
2,046
204
146
89
5,667
363
Net carrying amount
3,405
1,842
57
5,304
\n
\ue001
Overall ECL for cards remained broadly in line with 2023, with portfolio growth mitigated by stable portfolio performance, lower PD levels and a reduction in economic uncertainty
\n
post model adjustment levels.
\n
\ue001
Credit card balances continued to grow during the year, in line with industry trends in the UK, reflecting strong customer demand, while sustaining robust risk appetite.
\n
\ue001
While portfolio performance remained stable, a net flow into Stage 2 from Stage 1 was observed, with the typical maturation of lending after a period of strong growth in recent
\n
years. The staging ECL uplift was offset by modelling updates in PDs and LGDs.
\n
\ue001
Flow rates into Stage 3 showed modest improvement in 2024 in comparison to 2023, in line with broader portfolio performance.
\n
\ue001
Charge-off (analogous to partial write-off) typically occurs after 12 missed payments.
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Retail Banking - other personal unsecured
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
5,240
149
1,657
238
963
758
7,860
1,145
Currency translation and other adjustments
-
1
1
-
20
21
21
22
Transfers from Stage 1 to Stage 2
(2,156)
(103)
2,156
103
-
-
-
-
Transfers from Stage 2 to Stage 1
1,672
229
(1,672)
(229)
-
-
-
-
Transfers to Stage 3
(69)
(3)
(304)
(126)
373
129
-
-
Transfers from Stage 3
9
3
23
9
(32)
(12)
-
-
Net re-measurement of ECL on stage transfer
(161)
269
29
137
Changes in risk parameters
(69)
(40)
107
(2)
Other changes in net exposure
909
81
(395)
(41)
(179)
(45)
335
(5)
Other (P&L only items)
1
(1)
32
32
Income statement (releases)/charges
(148)
187
123
162
Amounts written-off
-
-
(1)
(1)
(312)
(312)
(313)
(313)
Unwinding of discount
-
-
(34)
(34)
At 31 December 2024
5,605
127
1,465
182
833
641
7,903
950
Net carrying amount
5,478
1,283
192
6,953
At 1 January 2023
4,784
111
2,028
269
779
631
7,591
1,011
2023 movements
456
38
(371)
(31)
184
127
269
134
At 31 December 2023
5,240
149
1,657
238
963
758
7,860
1,145
Net carrying amount
5,091
1,419
205
6,715
\n
\ue001
Total ECL decreased, mainly in Stage 3, due to the reduction of balances from debt sale activity on Personal unsecured portfolios.
\n
\ue001
Stable portfolio performance was observed during the year. PD modelling updates coupled with LGD modelling updates were reflected in the performing book ECL, with coverage
\n
levels showing a modest reduction since the prior period.
\n
\ue001
Flow rates into Stage 3 reduced for the year, in line with broader portfolio performance.
\n
\ue001
Unsecured retail performing balances grew steadily in 2024, largely in line with industry trends.
\n
\ue001
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.
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements
(audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Commercial & Institutional total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
176,302
356
17,029
447
2,161
819
195,492
1,622
Currency translation and other adjustments
(826)
-
(41)
(1)
22
65
(845)
64
Transfers from Stage 1 to Stage 2
(16,117)
(62)
16,117
62
-
-
-
-
Transfers from Stage 2 to Stage 1
11,022
190
(11,022)
(190)
-
-
-
-
Transfers to Stage 3
(90)
(1)
(1,745)
(76)
1,835
77
-
-
Transfers from Stage 3
194
14
315
17
(509)
(31)
-
-
Net re-measurement of ECL on stage transfer
(148)
184
263
299
Changes in risk parameters
(118)
(39)
61
(96)
Other changes in net exposure
13,282
58
(4,484)
(58)
(1,011)
(53)
7,787
(53)
Other (P&L only items)
3
(8)
(47)
(52)
Income statement (releases)/charges
(205)
79
224
98
Amounts written-off
-
-
-
-
(223)
(223)
(223)
(223)
Unwinding of discount
-
-
(37)
(37)
At 31 December 2024
183,767
289
16,169
346
2,275
941
202,211
1,576
Net carrying amount
183,478
15,823
1,334
200,635
At 1 January 2023
160,352
342
24,711
534
2,198
747
187,261
1,623
2023 movements
15,950
14
(7,682)
(87)
(37)
72
8,231
(1)
At 31 December 2023
176,302
356
17,029
447
2,161
819
195,492
1,622
Net carrying amount
175,946
16,582
1,342
193,870
\n
\ue001
The growth in exposures was mainly driven by non-bank financial institutions.
\n
\ue001
Stage 1 and Stage 2 ECL reduced, reflecting a combination of stable portfolio performance, reductions in post model adjustments and net improvements in economic scenarios.
\n
\ue001
Stage 3 ECL increased due to a small number of large counterparties, but in total, the number of individual defaults remained low. Flows into Stage 3 were consistent with 2023
\n
and considerably below historical trends.
\n
\ue001
Write-offs levels continue to remain below historical trends.
\n
\ue001
Overall, impairment charges were low, with Stage 3 individual charges offset by performing book releases.
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Commercial & Institutional - corporate
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
61,402
226
12,275
344
1,454
602
75,131
1,172
Currency translation and other adjustments
(127)
-
(34)
(1)
22
53
(139)
52
Inter-group transfers
98
1
38
3
3
-
139
4
Transfers from Stage 1 to Stage 2
(10,835)
(47)
10,835
47
-
-
-
-
Transfers from Stage 2 to Stage 1
7,725
144
(7,725)
(144)
-
-
-
-
Transfers to Stage 3
(77)
(1)
(1,358)
(55)
1,435
56
-
-
Transfers from Stage 3
154
11
262
12
(416)
(23)
-
-
Net re-measurement of ECL on stage transfer
(112)
138
186
212
Changes in risk parameters
(74)
(29)
51
(52)
Other changes in net exposure
4,235
27
(2,843)
(42)
(737)
(41)
655
(56)
Other (P&L only items)
3
(7)
(43)
(47)
Income statement (releases)/charges
(156)
60
153
57
Amounts written-off
-
-
-
-
(199)
(199)
(199)
(199)
Unwinding of discount
-
-
(26)
(26)
At 31 December 2024
62,575
175
11,450
273
1,562
659
75,587
1,107
Net carrying amount
62,400
11,177
903
74,480
\n
\ue001
There was modest exposure growth, with increased new lending largely offset by repayments.
\n
\ue001
Stage 1 and Stage 2 ECL reduced, reflecting a combination of stable portfolio performance, reductions in post model adjustments and net improvements in economic scenarios.
\n
\ue001
Stage 3 ECL increased due to charges on a small number of large counterparties, partially offset by write-offs.
\n
\ue001
Overall, impairment charges were low, with Stage 3 individual charges offset by performing book releases.
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Commercial & Institutional - property
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
26,040
94
3,155
89
606
195
29,801
378
Currency translation and other adjustments
(10)
1
(3)
-
1
5
(12)
6
Inter-group transfers
(45)
(1)
(43)
(2)
(3)
-
(91)
(3)
Transfers from Stage 1 to Stage 2
(3,143)
(13)
3,143
13
-
-
-
-
Transfers from Stage 2 to Stage 1
2,291
37
(2,291)
(37)
-
-
-
-
Transfers to Stage 3
(9)
-
(304)
(16)
313
16
-
-
Transfers from Stage 3
34
3
49
4
(83)
(7)
-
-
Net re-measurement of ECL on stage transfer
(28)
37
44
53
Changes in risk parameters
(35)
(13)
10
(38)
Other changes in net exposure
2,310
19
(726)
(14)
(223)
(9)
1,361
(4)
Other (P&L only items)
-
-
(1)
(1)
Income statement (releases)/charges
(44)
10
44
10
Amounts written-off
-
-
-
-
(21)
(21)
(21)
(21)
Unwinding of discount
-
-
(8)
(8)
At 31 December 2024
27,468
77
2,980
61
590
225
31,038
363
Net carrying amount
27,391
2,919
365
30,675
\n
\ue001
Stage 1 and Stage 2 ECL reduced, reflecting a combination of stable portfolio performance, reductions in post model adjustments and net improvements in economic scenarios.
\n
\ue001
Stage 3 ECL increased due to charges on a small number of large counterparties, partially offset by write-offs.
\n
\ue001
Overall, impairment charges were low, with Stage 3 individual charges offset by performing book releases.
Flow statements (audited)
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Commercial & Institutional - other
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
88,860
36
1,599
14
101
22
90,560
72
Currency translation and other adjustments
(689)
-
(5)
-
(1)
8
(695)
8
Inter-group transfers
(53)
-
4
-
-
-
(49)
-
Transfers from Stage 1 to Stage 2
(2,140)
(3)
2,140
3
-
-
-
-
Transfers from Stage 2 to Stage 1
1,006
9
(1,006)
(9)
-
-
-
-
Transfers to Stage 3
(4)
-
(83)
(6)
87
6
-
-
Transfers from Stage 3
6
-
4
1
(10)
(1)
-
-
Net re-measurement of ECL on stage transfer
(7)
9
33
35
Changes in risk parameters
(10)
3
1
(6)
Other changes in net exposure
6,738
12
(914)
(3)
(52)
(4)
5,772
5
Other (P&L only items)
-
-
(3)
(3)
Income statement (releases)/charges
(5)
9
27
31
Amounts written-off
-
-
-
-
(2)
(2)
(2)
(2)
Unwinding of discount
-
-
(3)
(3)
At 31 December 2024
93,724
37
1,739
12
123
57
95,586
106
Net carrying amount
93,687
1,727
66
95,480
\ue001
The growth in exposures was mainly driven by non-bank financial institutions.
\ue001
Stage 3 ECL increased due to charges on a small number of large counterparties.Asset quality (audited)
The table below shows asset quality bands of gross loans and ECL, by stage, for the Personal portfolio.
Gross loans
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
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
Mortgages
AQ1-AQ4
104,793
8,416
-
113,209
29
16
-
45
0.0
0.2
-
0.0
AQ5-AQ8
81,263
11,683
-
92,946
48
38
-
86
0.1
0.3
-
0.1
AQ9
194
962
-
1,156
-
6
-
6
-
0.6
-
0.5
AQ10
-
-
2,535
2,535
-
-
325
325
-
-
12.8
12.8
186,250
21,061
2,535
209,846
77
60
325
462
0.0
0.3
12.8
0.2
Credit cards
AQ1-AQ4
128
-
-
128
1
-
-
1
0.8
-
-
0.8
AQ5-AQ8
4,650
1,866
-
6,516
75
169
-
244
1.6
9.1
-
3.7
AQ9
23
87
-
110
1
17
-
18
4.4
19.5
-
16.4
AQ10
-
-
176
176
-
-
118
118
-
-
67.1
67.1
4,801
1,953
176
6,930
77
186
118
381
1.6
9.5
67.1
5.5
Other personal
AQ1-AQ4
691
127
-
818
6
14
-
20
0.9
11.0
-
2.4
AQ5-AQ8
6,521
1,359
-
7,880
120
134
-
254
1.8
9.9
-
3.2
AQ9
55
136
-
191
4
35
-
39
7.3
25.7
-
20.4
AQ10
-
-
860
860
-
-
656
656
-
-
76.3
76.3
7,267
1,622
860
9,749
130
183
656
969
1.8
11.3
76.3
9.9
Total
AQ1-AQ4
105,612
8,543
-
114,155
36
30
-
66
0.0
0.4
-
0.1
AQ5-AQ8
92,434
14,908
-
107,342
243
341
-
584
0.3
2.3
-
0.5
AQ9
272
1,185
-
1,457
5
58
-
63
1.8
4.9
-
4.3
AQ10
-
-
3,571
3,571
-
-
1,099
1,099
-
-
30.8
30.8
198,318
24,636
3,571
226,525
284
429
1,099
1,812
0.1
1.7
30.8
0.8
\n\n\n\n\n\n\n\n\n\n\n\n
Asset quality (audited)
\n\n \n
Gross loans
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
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
Mortgages
AQ1-AQ4
110,694
7,572
-
118,266
51
20
-
71
0.1
0.3
-
0.1
AQ5-AQ8
77,290
9,578
-
86,868
37
37
-
74
0.1
0.4
-
0.1
AQ9
156
704
-
860
-
4
-
4
-
0.6
-
0.5
AQ10
-
-
2,281
2,281
-
-
271
271
-
-
11.9
11.9
188,140
17,854
2,281
208,275
88
61
271
420
0.1
0.3
11.9
0.2
Credit cards
AQ1-AQ4
124
-
-
124
1.0
-
-
1.0
0.8
-
-
0.8
AQ5-AQ8
3,612
1,965
-
5,577
75
193
-
268
2.1
9.8
-
4.8
AQ9
6
57
-
63
-
14
-
14
-
24.6
-
22.2
AQ10
-
-
140
140
-
-
93
93
-
-
66.4
66.4
3,742
2,022
140
5,904
76
207
93
376
2.0
10.2
66.4
6.4
Other personal
AQ1-AQ4
764
150
-
914
11
23
-
34
1.4
15.3
-
3.7
AQ5-AQ8
6,178
1,374
-
7,552
138
180
-
318
2.2
13.1
-
4.2
AQ9
41
109
-
150
3
35
-
38
7.3
32.1
-
25.3
AQ10
-
-
979
979
-
-
778
778
-
-
79.5
79.5
6,983
1,633
979
9,595
152
238
778
1,168
2.2
14.6
79.5
12.2
Total
AQ1-AQ4
111,582
7,722
-
119,304
63
43
-
106
0.1
0.6
-
0.1
AQ5-AQ8
87,080
12,917
-
99,997
250
410
-
660
0.3
3.2
-
0.7
AQ9
203
870
-
1,073
3
53
-
56
1.5
6.1
-
5.2
AQ10
-
-
3,400
3,400
-
-
1,142
1,142
-
-
33.6
33.6
198,865
21,509
3,400
223,774
316
506
1,142
1,964
0.2
2.4
33.6
0.9
\n
\ue001
In the Personal portfolio, the majority of exposures were in AQ4 and AQ5 within mortgages. In line with the stable mortgage portfolio performance overall, the distribution of lending
\n
across AQ bands remained largely consistent with the prior year.
\n
\ue001
Debt sale activity during the year reduced the proportion of AQ10 in Other Personal lending.
\n\n\n\n\n\n\n\n\n\n\n\n
Asset quality (audited)
\n
The table below shows asset quality bands of gross loans and ECL, by stage, for the Non-Personal portfolio.
\n\n \n
Gross loans
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
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
Corporate and other
(1)
AQ1-AQ4
41,509
2,409
-
43,918
32
19
-
51
0.1
0.8
-
0.1
AQ5-AQ8
53,448
11,783
-
65,231
232
306
-
538
0.4
2.6
-
0.8
AQ9
34
272
-
306
-
19
-
19
-
7.0
-
6.2
AQ10
-
-
2,279
2,279
-
-
896
896
-
-
39.3
39.3
94,991
14,464
2,279
111,734
264
344
896
1,504
0.3
2.4
39.3
1.4
Financial institutions
AQ1-AQ4
64,845
233
-
65,078
21
2
-
23
0.0
0.9
-
0.0
AQ5-AQ8
4,176
996
-
5,172
17
9
-
26
0.4
0.9
-
0.5
AQ9
-
12
-
12
-
1
-
1
-
8.3
-
8.3
AQ10
-
-
59
59
-
-
40
40
-
-
67.8
67.8
69,021
1,241
59
70,321
38
12
40
90
0.1
1.0
67.8
0.1
Sovereign
AQ1-AQ4
1,364
1
-
1,365
12
1
-
13
0.9
100.0
-
1.0
AQ5-AQ8
127
-
-
127
-
-
-
-
-
-
-
-
AQ9
-
132
-
132
-
1
-
1
-
0.8
-
0.8
AQ10
-
-
21
21
-
-
5
5
-
-
23.8
23.8
1,491
133
21
1,645
12
2
5
19
0.8
1.5
23.8
1.2
Total
AQ1-AQ4
107,718
2,643
-
110,361
65
22
-
87
0.1
0.8
-
0.1
AQ5-AQ8
57,751
12,779
-
70,530
249
315
-
564
0.4
2.5
-
0.8
AQ9
34
416
-
450
-
21
-
21
-
5.1
-
4.7
AQ10
-
-
2,359
2,359
-
-
941
941
-
-
39.9
39.9
165,503
15,838
2,359
183,700
314
358
941
1,613
0.2
2.3
39.9
0.9
Asset quality (audited)
Gross loans
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
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
Corporate and other
(1)
AQ1-AQ4
40,875
1,342
-
42,217
43
18
-
61
0.1
1.3
-
0.1
AQ5-AQ8
50,084
13,734
-
63,818
293
411
-
704
0.6
3.0
-
1.1
AQ9
47
339
-
386
-
25
-
25
-
7.4
-
6.5
AQ10
-
-
2,125
2,125
-
-
809
809
-
-
38.1
38.1
91,006
15,415
2,125
108,546
336
454
809
1,599
0.4
2.9
38.1
1.5
Financial institutions
AQ1-AQ4
52,702
665
-
53,367
28
6
-
34
0.1
0.9
-
0.1
AQ5-AQ8
3,402
284
-
3,686
16
9
-
25
0.5
3.2
-
0.7
AQ9
1
17
-
18
-
-
-
-
-
-
-
-
AQ10
-
-
16
16
-
-
7
7
-
-
43.8
43.8
56,105
966
16
57,087
44
15
7
66
0.1
1.6
43.8
0.1
Sovereign
AQ1-AQ4
2,487
1
-
2,488
13
1
-
14
0.5
100
-
0.6
AQ5-AQ8
123
-
-
123
-
-
-
-
-
-
-
-
AQ9
-
-
-
-
-
-
-
-
-
-
-
-
AQ10
-
-
22
22
-
-
2
2
-
-
9.1
9.1
2,610
1
22
2,633
13
1
2
16
0.5
100.0
9.1
0.6
Total
AQ1-AQ4
96,064
2,008
-
98,072
84
25
-
109
0.1
1.3
-
0.1
AQ5-AQ8
53,609
14,018
-
67,627
309
420
-
729
0.6
3.0
-
1.1
AQ9
48
356
-
404
-
25
-
25
-
7.0
-
6.2
AQ10
-
-
2,163
2,163
-
-
818
818
-
-
37.8
37.8
149,721
16,382
2,163
168,266
393
470
818
1,681
0.3
2.9
37.8
1.0
(1)
Previously published sectors for the Non-personal portfolio have been re-presented to reflect internal sector reporting. Property is now included in corporate and other.
\ue001
Asset quality remained broadly stable, with a slightly higher proportion of exposures within AQ1-AQ4. Credit grades are reassessed for all customers at least annually, when a
new request is made, if a material credit event impacting that customer has occurred or when a scheduled review is performed.
Credit risk \u2013 Trading activities
\n\n\n\n\n\n\n\n\n\n\n\n
This section details the credit risk profile of NatWest Group\u2019s trading activities.
\n
Securities financing transactions and collateral (audited)
\n
The table below shows securities financing transactions in Commercial & Institutional and Central items & other. Balance sheet captions include balances held at all classifications
\n
under IFRS.
Reverse repos
Repos
Of which:
Outside netting
Of which:
Outside netting
Total
can be offset
arrangements
Total
can be offset
arrangements
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Gross
87,901
87,861
40
68,024
67,321
703
IFRS offset
(23,883)
(23,883)
-
(23,883)
(23,883)
-
Carrying value
64,018
63,978
40
44,141
43,438
703
Master netting arrangements
(1,549)
(1,549)
-
(1,549)
(1,549)
-
Securities collateral
(62,217)
(62,217)
-
(41,889)
(41,889)
-
Potential for offset not recognised under IFRS
(63,766)
(63,766)
-
(43,438)
(43,438)
-
Net
252
212
40
703
-
703
2023
Gross
77,508
77,050
458
66,767
66,047
720
IFRS offset
(25,903)
(25,903)
-
(25,903)
(25,903)
-
Carrying value
51,605
51,147
458
40,864
40,144
720
Master netting arrangements
(669)
(669)
-
(669)
(669)
-
Securities collateral
(50,287)
(50,287)
-
(39,475)
(39,475)
-
Potential for offset not recognised under IFRS
(50,956)
(50,956)
-
(40,144)
(40,144)
-
Net
649
191
458
720
-
720
Derivatives (audited)
The table below shows derivatives by type of contract. The master netting agreements and collateral shown do not result in a net presentation on the balance sheet under IFRS. A
significant proportion of the derivatives relate to trading activities in Commercial & Institutional. The table also includes hedging derivatives in Central items & other.
2024
2023
Notional
GBP
USD
EUR
Other
Total
Assets
Liabilities
Notional
Assets
Liabilities
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3m
\u00a3m
\u00a3bn
\u00a3m
\u00a3m
Gross exposure
97,152
93,109
99,501
96,264
IFRS offset
(18,746)
(21,027)
(20,597)
(23,869)
Carrying value
3,551
3,425
5,500
1,152
13,628
78,406
72,082
13,403
78,904
72,395
Of which:
Interest rate
(1)
3,228
1,973
4,847
285
10,333
37,499
31,532
10,268
44,563
38,483
Exchange rate
321
1,446
645
867
3,279
40,797
40,306
3,120
34,161
33,586
Credit
-
6
8
-
14
110
244
15
180
326
Equity and commodity
2
-
-
-
2
-
-
-
-
-
Carrying value
13,628
78,406
72,082
13,403
78,904
72,395
Counterparty mark-to-market
netting
(61,883)
(61,883)
(60,355)
(60,355)
Cash collateral
(10,005)
(5,801)
(12,284)
(6,788)
Securities collateral
(4,072)
(896)
(3,408)
(1,664)
Net exposure
2,446
3,502
2,857
3,588
Banks
(2)
214
345
335
555
Other financial institutions
(3)
1,429
1,456
1,422
1,304
Corporate
(4)
769
1,669
1,063
1,690
Government
(5)
34
32
37
39
Net exposure
2,446
3,502
2,857
3,588
UK
1,061
1,774
1,283
1,912
Europe
875
978
800
1,209
US
443
604
607
381
RoW
67
146
167
86
Net exposure
2,446
3,502
2,857
3,588
Asset quality of uncollateralised derivative assets
AQ1-AQ4
2,049
2,382
AQ5-AQ8
394
471
AQ9-AQ10
3
4
Net exposure
2,446
2,857
(1)
The notional amount of interest rate derivatives includes \u00a37,321 billion (2023 \u2013 \u00a37,280 billion) in respect of contracts cleared through central clearing counterparties.
(2)
Transactions with certain counterparties with whom NatWest Group has netting arrangements but collateral is not posted on a daily basis; certain transactions with specific terms that may not fall within netting and collateral arrangements; derivative
positions in certain jurisdictions where the collateral agreements are not deemed to be legally enforceable.
(3)
Includes transactions with securitisation vehicles and funds where collateral posting is contingent on NatWest Group\u2019s external rating.
(4)
Mainly large corporates with whom NatWest Group may have netting arrangements in place with no collateral posting.
(5)
Sovereigns and supranational entities with no collateral arrangements, collateral arrangements that are not considered enforceable, or one-way collateral agreements in their favour
.
Debt securities (audited)
The table below shows debt securities held at mandatory fair value through profit or loss by issuer as well as ratings based on the lowest of Standard & Poor\u2019s, Moody\u2019s and Fitch.
Refer to Note 12 on Trading assets and liabilities for details on short positions.
Central and local government
UK
US
Other
Financial institutions
Corporate
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
AAA
-
-
1,335
1,368
-
2,703
AA to AA+
-
3,734
74
569
2
4,379
A to AA-
2,077
-
1,266
381
519
4,243
BBB- to A-
-
-
831
562
885
2,278
Non-investment grade
-
-
-
108
167
275
Total
2,077
3,734
3,506
2,988
1,573
13,878
2023
AAA
-
-
1,333
1,132
-
2,465
AA to AA+
-
2,600
19
762
4
3,385
A to AA-
2,729
-
1,017
251
283
4,280
BBB- to A-
-
-
693
295
489
1,477
Non-investment grade
-
-
-
198
149
347
Total
2,729
2,600
3,062
2,638
925
11,954
2.3. Loan impairment provisions:
expected credit losses (ECL)
At each balance sheet date each financial
asset or portfolio of financial assets
measured at amortised cost or at fair
value through other comprehensive
income, issued financial guarantee and
loan commitment (other than those
classified as held for trading) is assessed
for impairment. Any change in
impairment is reported in the income
statement.
Loss allowances are forward-looking,
based on 12-month ECL where there has
not been a significant increase in credit
risk rating, otherwise allowances are
based on lifetime expected losses.
ECL is a probability-weighted estimate of
credit losses. The probability is
determined by the risk of default which is
applied to the cash flow estimates. In the
absence of a change in credit rating,
allowances are recognised when there is
a reduction in the net present value of
expected cash flows. Following a
significant increase in credit risk, ECL is
adjusted from 12 months to lifetime. This
will lead to a higher impairment charge.
The measurement of expected credit loss
considers the ability of borrowers to
make payments as they fall due. Future
cashflows are discounted, so long-dated
cashflows are less likely to affect current
expectations on credit loss. Our
assessment of sector specific risks, and
whether additional adjustments are
required, include expectations of the
ability of those sectors to meet their
financing needs in the market. Changes
in credit stewardship and credit risk
appetite that stem from climate transition
policies may directly affect our positions.
Judgement is exercised as follows:
\ue001
Non-modelled portfolios
\u2013 use a
standardised capital requirement
under Basel II. Under IFRS 9, they
have bespoke treatments for the
identification of significant increase in
credit risk. Benchmark PDs, EADs
and LGDs are reviewed annually for
appropriateness. The ECL calculation
is based on expected future cash
flows, which is typically applied at a
portfolio level.
\ue001
Multiple economic scenarios (MES)
\u2013
the central, or base, scenario is most
critical to the ECL calculation,
independent of the method used to
generate a range of alternative
outcomes and their probabilities.
\ue001
Significant increase in credit risk
\u2013
IFRS 9 requires that at each reporting
date, an entity shall assess whether
the credit risk on an account has
increased significantly since initial
recognition. Part of this assessment
requires a comparison to be made
between the current lifetime PD (i.e.
the current probability of default over
the remaining lifetime) with the
equivalent lifetime PD as determined
at the date of initial recognition.
On restructuring where a financial asset
is not derecognised, the revised cash
flows are used in re-estimating the credit
loss. Where restructuring causes
derecognition of the original financial
asset, the fair value of the replacement
asset is used as the closing cash flow of
the original asset.
Where in the course of the orderly
realisation of a loan, it is exchanged for
equity shares or property, the exchange
is accounted for as the sale of the loan
and the acquisition of equity securities or
investment property. Where our acquired
interest is in equity shares, relevant
policies for control, associates and joint
ventures apply.
Impaired financial assets are written off
and therefore derecognised from the
balance sheet when we conclude that
there is no longer any realistic prospect
of recovery of part, or all, of the loan. For
financial assets that are individually
assessed for impairment, the timing of
the write-off is determined on a case-by-
case basis.
Such financial assets are reviewed
regularly and write-off will be prompted
by bankruptcy, insolvency, re-negotiation,
and similar events
The typical time frames from initial
impairment to write-off for our
collectively assessed portfolios are:
\ue001
Retail mortgages: write-off usually
occurs within five years, or earlier,
when an account is closed, but can
be longer where the customer
engages constructively;
\ue001
Credit cards: the irrecoverable
amount is typically written off after
twelve arrears cycles or at four years
post default any remaining amounts
outstanding are written off;
\ue001
Overdrafts and other unsecured
loans: write-off occurs within six
years;
\ue001
Commercial loans: write-offs are
determined in the light of individual
circumstances; and uncollateralised
impaired business loans are generally
written off within five years.14 Loan impairment provisions
There is a risk that customers and counterparties fail to meet their contractual obligation to settle outstanding amounts, for which we hold expected credit losses
(ECL). The calculation of ECL considers historical, current, and forward-looking information to determine the amount we do not expect to recover. It considers losses
on both defaulted exposures and performing exposures that may default in future. ECL is recognised on drawn exposures, loans commitments, and contingent
liabilities.
For accounting policy information refer to Accounting policy 2.3. Further disclosures on credit risk and information on ECL methodology are shown from page 181.
Loan exposure and impairment metrics
The table below summarises loans and credit impairment measures within the scope of IFRS 9 Expected credit loss framework.
2024
2023
\u00a3m
\u00a3m
Loans - amortised cost and FVOCI
(1,2)
Stage 1
363,821
348,586
Stage 2
40,474
37,891
Stage 3
5,930
5,563
Of which: individual
1,285
1,031
Of which: collective
4,645
4,532
410,225
392,040
ECL provisions
(3)
- Stage 1
598
709
- Stage 2
787
976
- Stage 3
2,040
1,960
Of which: individual
451
332
Of which: collective
1,589
1,628
3,425
3,645
ECL provision coverage
(4)
- Stage 1 (%)
0.16
0.20
- Stage 2 (%)
1.94
2.58
- Stage 3 (%)
34.40
35.23
0.83
0.93
Continuing operations
Impairment (releases)/losses
ECL charge
(5)
359
578
Stage 1
(438)
(397)
Stage 2
360
645
Stage 3
437
330
Of which: individual
192
89
Of which: collective
245
241
Amounts written off
654
319
Of which: individual
144
42
Of which: collective
510
277
(1)
The table shows gross loans only and excludes
amounts that are outside the scope of the ECL
framework. Refer to Financial instruments within the
scope of the IFRS 9 ECL framework for further
details. Other financial assets within the scope of the
IFRS 9 ECL framework were cash and balances at
central banks totalling \u00a391.8 billion (2023 \u2013 \u00a3103.1
billion) and debt securities of \u00a362.4 billion (2023 \u2013
\u00a350.1 billion).
(2)
Includes loans to customers and banks.
(3)
Includes \u00a34 million (2023 - \u00a39 million) related to
assets classified as FVOCI and \u00a30.1 billion (2023 -
\u00a30.1 billion) related to off-balance sheet exposures.
(4)
ECL provisions coverage is calculated as ECL
provisions divided by loans \u2013 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.
(5)
Includes a \u00a312 million release (2023 - \u00a316 million
release) related to other financial assets, of which \u00a34
million release (2023 - \u00a36 million charge) related to
assets classified as FVOCI; and \u00a35 million release
(2023 - \u00a39 million release) related to contingent
liabilities.
Credit risk enhancement and mitigation
For information on Credit risk enhancement and mitigation held as security, refer to Risk and capital management \u2013 Credit risk enhancement and mitigation section.
Critical accounting policy: Loan impairment provisions
Accounting policy 2.3 sets out how the expected loss approach is applied. At 31 December 2024, impairment provisions amounted to \u00a33,425 million (2023 - \u00a33,645 million). A loan is
impaired when there is objective evidence that the cash flows will not occur in the manner expected when the loan was advanced. Such evidence includes changes in the credit rating
of a borrower, the failure to make payments in accordance with the loan agreement, significant reduction in the value of any security, breach of limits or covenants, and observable
data about relevant macroeconomic measures.
The impairment loss is the difference between the carrying value of the loan and the present value of estimated future cash flows at the loan's original effective interest rate.
The measurement of credit impairment under the IFRS expected loss model depends on management\u2019s assessment of any potential deterioration in the creditworthiness of the
borrower, its modelling of expected performance and the application of economic forecasts. All three elements require judgements that are potentially significant to the estimate of
impairment losses. For further information and sensitivity analysis, refer to Risk and capital management \u2013 Measurement uncertainty and ECL sensitivity analysis section.
IFRS 9 ECL model design principles
Refer to Credit risk \u2013 IFRS 9 ECL model design principles section for further details.
Approach for multiple economic scenarios (MES)
The base scenario plays a greater part in the calculation of ECL than the approach to MES. Refer to Credit risk \u2013 Economic loss drivers - Probability weightings of scenarios section
for further details.", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00253": { "value": "Credit risk
\u00a0
Page
Introduction
\u00a0
Definition, sources of risk and key developments in 2024
181
Governance and risk appetite
181
Identification and measurement
182
Mitigation
182
Assessment and monitoring
182
Problem debt management
183
Forbearance
184
Credit grading models
185
Impairment, provisioning and write-offs
185
Governance and post model adjustments
186
Significant increase in credit risk
188
Asset lifetimes
188
Economic loss drivers
188
Measurement uncertainty and ECL sensitivity analysis
194
Measurement uncertainty and ECL adequacy
195
Movement in ECL provision
196
Credit risk \u2013 Banking activities
\u00a0
Financial instruments within the scope of the IFRS 9 ECL framework
197
Segment analysis \u2013 portfolio summary
198
Segmental loans and impairment metrics
201
Sector analysis \u2013 portfolio summary
202
Non-Personal forbearance
207
Credit risk enhancement and mitigation
208
Personal portfolio
209
Commercial real estate
214
Flow statements
215
Stage 2 decomposition \u2013 by a significant increase in credit risk trigger
223
Stage 3 vintage analysis
225
Asset quality
226
Credit risk \u2013 Trading activities
\u00a0
Securities financing transactions and collateral
230
Derivatives
231
Debt securities
232
Cross border exposure
233
\n
Definition (audited)
Credit risk is the risk that customers,
counterparties or issuers fail to meet a
contractual obligation to settle
outstanding amounts.
Sources of risk
(audited)
The principal sources of credit risk for
NatWest Group are lending, off-balance
sheet products, derivatives and securities
financing, and debt securities. NatWest
Group is also exposed to settlement risk
through foreign exchange, trade finance
and payments activities. Governance
(audited)
The credit risk function provides oversight
and challenge of frontline credit risk
management activities. Governance
activities include:
\ue001
Defining and proposing credit risk
appetite measures for Board approval.
\ue001
Establishing credit risk policy, standards
and toolkits which set out the
mandatory limits and parameters
required to ensure that credit risk is
managed within risk appetite and which
provide the minimum standards for the
identification, assessment, management,
monitoring and reporting of credit risk.
\ue001
Oversight of the first line of defence to
ensure that credit risk remains within
the appetite set by the Board and that it
is being managed adequately and
effectively.
\ue001
Assessing the adequacy of ECL
provisions including approving key IFRS
9 inputs (such as significant increase in
credit risk (SICR) thresholds) and any
necessary in-model and post model
adjustments through NatWest Group
and business unit provisions and model
committees.
\ue001
Development and approval of credit
grading models.
\ue001
Providing regular reporting on credit risk
to the Board Risk Committee and Board.
Risk appetite
\n
Credit risk appetite is approved by the
\n
Board and is set and monitored through
\n
risk appetite frameworks tailored to
\n
NatWest Group\u2019s Personal and Non-
\n
Personal segments. NatWest Group\u2019s
\n
qualitative appetite is set out in the credit
\n
risk appetite statement. Risk appetite
\n
statements and associated measures are
\n
reviewed and approved at least annually
\n
by the Board on the Board Risk
\n
Committee\u2019s recommendation to ensure
\n
they remain appropriate and aligned to
\n
strategy.
\n
Performance against risk appetite is
\n
reported regularly to the Executive Risk
\n
Committee, the Board Risk Committee,
\n
and the Board. Relevant credit risk
\n
matters are escalated through the
\n
Executive Risk Committee and Board
\n
Risk Committee and to the Board as
\n
applicable. For more information, refer to
\n
the Governance and remuneration
\n
section.
\n
Personal
\n
The Personal credit risk appetite
\n
framework sets limits that control the
\n
quality and concentration of both existing
\n
and new business for each relevant
\n
business segment. These risk appetite
\n
measures consider the segments\u2019 ability
\n
to grow sustainably and the level of
\n
losses expected under stress. Credit risk
\n
is further controlled through operational
\n
limits specific to customer or product
\n
characteristics.
\n
Non-Personal
\n
For Non-Personal credit, the framework
\n
has been designed to reflect factors that
\n
influence the ability to operate within risk
\n
appetite. Tools such as stress testing and
\n
economic capital are used to measure
\n
credit risk volatility and develop links
\n
between the framework and risk appetite
\n
limits.
\n
The framework is used to manage
\n
concentrations of risk which may arise
\n
across four lenses \u2013 single name, sector,
\n
country and product and asset classes.
\n
The framework is supported by a suite of
\n
transactional acceptance standards that
\n
set out the risk parameters within which
\n
businesses should operate.
\n
Identification and measurement
\n
Credit stewardship
(audited)
\n
Risks are identified through relationship
\n
management and credit stewardship of
\n
customers and portfolios. Credit
\n
stewardship takes place throughout the
\n
customer relationship, beginning with the
\n
initial approval. It includes the application
\n
of credit assessment standards, credit
\n
risk mitigation and collateral, ensuring
\n
that credit documentation is complete
\n
and appropriate, carrying out regular
\n
portfolio or customer reviews and
\n
problem debt identification and
\n
management.
\n
Asset quality (audited)
\n
All credit grades map to an asset quality
\n
(AQ) scale, used for financial reporting.
\n
This AQ scale is based on Basel PDs.
\n
Performing loans are defined as AQ1-
\n
AQ9 (where the PD is less than 100%)
\n
and defaulted non-performing loans as
\n
AQ10 or Stage 3 under IFRS 9 (where
\n
the PD is 100%). Loans are defined as
\n
defaulted when the payment status
\n
becomes 90 days past due, or earlier if
\n
there is clear evidence that the borrower
\n
is unlikely to repay, for example
\nbankruptcy or insolvency.Forbearance
(audited)
Forbearance takes place when a
concession is made on the contractual
terms of a loan/debt in response to a
customer\u2019s financial difficulties.
The aim of forbearance is to support and
restore the customer to financial health
while minimising risk. To ensure that
forbearance is appropriate for the needs
of the customer, minimum standards are
applied when assessing, recording,
monitoring and reporting of forbearance.
A credit exposure may be forborne more
than once, generally where a temporary
concession has been granted and
circumstances warrant another
temporary or permanent revision of the
loan\u2019s terms.
Loans are reported as forborne until they
meet the exit criteria as detailed in the
appropriate regulatory guidance. These
include being classified as performing for
two years since the last forbearance
event, making regular repayments and
the loan/debt being less than 30 days
past due.
Types of forbearance
Personal
In the Personal portfolio, forbearance
may involve payment concessions, loan
rescheduling (including extensions in
contractual maturity), charging simple
interest and capitalisation of arrears.
Forbearance support is provided for both
mortgages and unsecured lending.
Non-Personal
In the Non-Personal portfolio,
forbearance may involve covenant
waivers, amendments to margins,
payment concessions and loan
rescheduling (including extensions in
contractual maturity), capitalisation of
arrears, and debt forgiveness or debt-
for-equity swaps.
Monitoring of forbearance
Personal
For Personal portfolios, forborne loans
are separated and regularly monitored
and reported while the forbearance
strategy is implemented, until they exit
forbearance.
Non-Personal
In the Non-Personal portfolio, customer
PDs and facility LGDs are reassessed
prior to finalising any forbearance
arrangement. The ultimate outcome of a
forbearance strategy is highly dependent
on the co-operation of the borrower and
a viable business or repayment outcome.
Where forbearance is no longer
appropriate, NatWest Group will consider
other options such as demanding
repayment of facilities, and in the event
repayment does not take place, the
enforcement of security, insolvency
proceedings or both, although these are
options of last resort.
Provisioning for forbearance (audited)
Personal
The methodology used for provisioning in
respect of Personal forborne loans will
differ depending on whether the loans
are performing or non-performing and
which business is managing them due to
local market conditions.
Granting forbearance will only change
the arrears status of the loan in specific
circumstances, which can include
capitalisation of principal and interest in
arrears, where the loan may be returned
to the performing book if the customer
has demonstrated an ability to meet
regular payments and is likely to continue
to do so.
The loan would continue to be reported
as forborne until it meets the exit criteria
set out by the appropriate regulatory
guidance.
For ECL provisioning, all forborne but
performing exposures are categorised as
Stage 2 and are subject to a lifetime loss
provisioning assessment. Where the
forbearance treatment includes the
cessation of interest on the customer
balance (i.e. non-accrual), this will be
treated as a Stage 3 default.
For non-performing forborne loans, the
Stage 3 loss assessment process is the
same as for non-forborne loans.
Non-Personal
Provisions for forborne loans are
assessed in accordance with normal
provisioning policies. The customer\u2019s
financial position and prospects \u2013 as well
as the likely effect of the forbearance,
including any concessions granted, and
revised PD or LGD gradings \u2013 are
considered in order to establish whether
an impairment provision increase is
required.
Non-Personal loans granted forbearance
are individually credit assessed in most
cases. Performing loans subject to
forbearance treatment are categorised
as Stage 2 and subject to a lifetime loss
assessment.
In line with regulatory guidance,
forbearance may lead to a customer
being classified as non-performing. In the
case of non-performing forborne loans,
an individual loan impairment provision
assessment generally takes place prior to
forbearance being granted.
The amount of the loan impairment
provision may change once the terms of
the forbearance are known, resulting in
an additional provision charge or a
release of the provision in the period the
forbearance is granted.
The transfer of Non-Personal loans from
impaired to performing status follows
assessment by relationship managers
and credit. When no further losses are
anticipated and the customer is expected
to meet the loan\u2019s revised terms, any
provision is written-off or released and
the balance of the loan can be returned
to performing status once the exit
criteria, as set out by regulatory
guidance, are met. Refer to pages 207
and 209 for further details on Non -
Personal and Personal forbearance.Impairment, provisioning and
write-offs (audited)
In the overall assessment of credit risk,
impairment provisioning and write-offs
are used as key indicators of credit
quality.
NatWest Group\u2019s IFRS 9 provisioning
models, which use existing internal
ratings based (IRB) models as a starting
point, incorporate term structures and
economic forecasts.
Regulatory conservatism within the IRB
models has been removed as appropriate
to comply with the IFRS 9 requirement
for unbiased ECL estimates.
Five key areas may materially influence
the measurement of credit impairment
under IFRS 9 \u2013 two of these relate to
model build and three relate to model
application:
Model build:
\ue001
The determination of economic
indicators that have most influence
on credit loss for each portfolio and
the severity of impact (this leverages
existing stress testing models which
are reviewed annually).
\ue001
The build of term structures to
extend the determination of the risk
of loss beyond 12 months that will
influence the impact of lifetime loss
for exposures in Stage 2.
Model application:
\n
\ue001
The assessment of the SICR and the
\n
formation of a framework capable of
\n
consistent application.
\n
\ue001
The determination of asset lifetimes
\n
that reflect behavioural
\n
characteristics while also
\n
representing management actions
\n
and processes (using historical data
\n
and experience).
\n
\ue001
The choice of forward-looking
\n
economic scenarios and their
\n
respective probability weights.
\n
For accounting policy information, refer
\n
to Accounting policy 2.3.
\n
IFRS 9 ECL model design principles
\n
(audited)
\n
Modelling of ECL for IFRS 9 follows the
\n
conventional approach to divide the
\n
estimation of credit losses into its
\n
component parts of PD, LGD and EAD.
\n
To meet IFRS 9 requirements, the PD,
\n
LGD and EAD parameters differ from
\n
their Pillar 1 IRB counterparts in the
\n
following aspects:
\n
\ue001
Unbiased \u2013
conservatism has been
\n
removed from IFRS 9 parameters to
\n
produce unbiased estimates.
\n
\ue001
Point-in-time
\u2013 IFRS 9 parameters
\n
reflect actual economic conditions at
\n
the reporting date instead of long-run
\n
average or downturn conditions.
\n
\ue001
Economic forecasts
\u2013 IFRS 9 PD
\n
estimates and, where appropriate,
\n
EAD and LGD estimates reflect
\n
forward-looking economic conditions.
\n
\ue001
Lifetime measurement
\u2013 IFRS 9 PD,
\n
LGD and EAD are provided as multi-
\n
period term structures up to
\n
exposure lifetimes instead of over a
\n
fixed one-year horizon.
\n
IFRS 9 requires that, at each reporting
\n
date, an entity shall assess whether the
\n
credit risk on an account has increased
\n
significantly since initial recognition. Part
\n
of this assessment requires a comparison
\n
to be made between the current lifetime
\n
PD (i.e. the PD over the remaining lifetime
\n
at the reporting date) and the equivalent
\n
lifetime PD as determined at the date of
\n
initial recognition.
\n
For assets originated before IFRS 9 was
\n
introduced, comparable lifetime
\n
origination PDs did not exist.
\n
These have been retrospectively created
\n
using the relevant model inputs applicable
\n
at initial recognition.
\n
PD estimates
\n
Personal models
\n
Personal PD models follow a discrete
\n
multi-horizon survival approach,
\n
predicting quarterly PDs up to lifetime at
\n
account level, with a key driver being
\n
scores from related IRB PD models.
\n
Forward-looking economic information is
\n
brought in by economic response models,
\n
which leverage the existing stress test
\n
model suite. The current suite of PD
\n
models was introduced in 2022 replacing
\n
the previous, first-generation models to
\n
remediate a range of model weaknesses.
\n
Non-Personal models
\n
Non-Personal PD models use a point-in-
\n
time/through-the-cycle framework to
\n
convert one-year regulatory PDs into
\n
point-in-time estimates that reflect
\n
economic conditions at the reporting
\n
date. The framework utilises credit cycle
\n
indices (CCIs) for a comprehensive set of
\n
region/industry segments. Further detail
\n
on CCIs is provided in the Economic loss
\n
drivers section.
\n
One-year PDs are extended to lifetime
\n
PDs using a conditional transition matrix
\n
approach and economic forecasts.
\n
LGD estimates
\n
The general approach for the IFRS 9 LGD
\n
models is to leverage corresponding IRB
\n
LGD models with bespoke adjustments to
\n
ensure estimates are unbiased and,
\n
where relevant, include economic
\n
forecasts.
\n
Personal
\n
Economic forecasts are incorporated for
\n
the secured portfolios, where changes in
\n
property prices can be readily
\n
accommodated. Analysis has shown
\n
minimal impact of economic conditions on
\n
LGDs for the other Personal portfolios.
\n
Non-Personal
\n
Economic forecasts are incorporated into
\n
LGD estimates using the existing point-in-
\n
time/through-the-cycle framework. For
\n
low-default portfolios, including
\n
sovereigns and banks, loss data is too
\n
scarce to substantiate estimates that
\n
vary with economic conditions.
\n
Consequently, for these portfolios, LGD
\n
estimates are assumed to be constant
\n
throughout the projection horizon.
\n
EAD estimates
\n
Personal
\n
The IFRS 9 Personal modelling approach
\n
for EAD is dependent on product type.
\n
\ue001
Revolving products use the existing
\n
IRB models as a basis, with
\n
appropriate adjustments
\n
incorporating a term structure based
\n
on time to default.
\n
\ue001
Amortising products use an
\n
amortising schedule, where a formula
\n
is used to calculate the expected
\n
balance based on remaining terms
\n
and interest rates.
\n
Analysis has indicated that there is
\n
minimal impact on EAD arising from
\n
changes in the economy for all Personal
\n
portfolios except mortgages. Therefore,
\n
forward-looking information is only
\n
incorporated in the mortgage EAD model
\n
(through forecast changes in interest
\n
rates).
\n
Non-Personal
\n
For Non-Personal, EAD values are
\n
projected using product-specific credit
\n
conversion factors (CCFs), closely
\n
following the product segmentation and
\n
approach of the respective IRB model.
\n
The CCFs are estimated over multi-year
\n
time horizons and contain no regulatory
\n
conservatism or downturn assumptions.
\n
No explicit economic forecasts are
\n
incorporated, on the basis of analysis
\n
showing the movement in CCFs is mainly
\n
attributable to changes in exposure
\n
management practices rather than
\n
economic conditions.
\n
Governance and post model
\n
adjustments
(audited)
\n
The IFRS 9 PD, EAD and LGD models are
\n
subject to NatWest Group\u2019s model risk
\n
policy that stipulates periodic model
\n
monitoring, periodic re-validation and
\n
defines approval procedures and
\n
authorities according to model
\n
materiality. Various post model
\n
adjustments were applied where
\n
management judged they were
\n
necessary to ensure an adequate level of
\n
overall ECL provision. All post model
\n
adjustments were subject to review,
\n
challenge and approval through model or
\n
provisioning committees.
\n
Post model adjustments will remain a key
\n
focus area of NatWest Group\u2019s ongoing
\n
ECL adequacy assessment process. A
\n
holistic framework has been established
\n
including reviewing a range of economic
\n
data, external benchmark information
\n
and portfolio performance trends with a
\n
particular focus on segments of the
\n
portfolio (both Personal and Non-
\n
Personal) that are likely to be more
\n
susceptible to high inflation, high interest
\n
rates and supply chain disruption.
ECL post model adjustments (audited)
\n
The table below shows ECL post model adjustments.
\n\n \n
Retail Banking
Commercial
Central items
Mortgages
Other
Private Banking
& Institutional
& other
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Deferred model calibrations
-
-
1
18
-
19
Economic uncertainty
90
22
8
179
-
299
Other adjustments
-
-
-
18
-
18
Total
90
22
9
215
-
336
Of which:
- Stage 1
58
9
5
94
-
166
- Stage 2
26
13
4
119
-
162
- Stage 3
6
-
-
2
-
8
2023
Deferred model calibrations
-
-
1
23
-
24
Economic uncertainty
118
39
13
256
3
429
Other adjustments
1
-
-
8
23
32
Total
119
39
14
287
26
485
Of which:
- Stage 1
75
14
6
115
10
220
- Stage 2
31
25
8
167
9
240
- Stage 3
13
-
-
5
7
25
\n
.
\n
Post model adjustments decreased significantly since 31 December 2023, reflecting reduced economic uncertainty from inflation, higher-for-longer interest rates and liquidity.
\n
\ue001
Retail Banking
\u2013 The post model adjustments for economic uncertainty decreased to \u00a3112 million at 31 December 2024 (2023 \u2013 \u00a3157 million). This reduction primarily reflected a
\n
revision to the cost of living post model adjustment to \u00a3105 million (2023 \u2013 \u00a3144 million), reflecting enhancements to the assessment approach, supported by back-testing of
\n
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
\n
effects of cost of living rises. It focuses on key affordability lenses, including lower-income customers in fuel poverty, over-indebted borrowers and customers who remain
\n
vulnerable to higher mortgage rates.
\n
\ue001
Commercial & Institutional
\u2013 The post model adjustment for economic uncertainty decreased to \u00a3179 million (2023 \u2013 \u00a3256 million). The inflation, supply chain and liquidity post
\n
model adjustment of \u00a3150 million (2023 \u2013 \u00a3206 million) was maintained for lending prior to 1 January 2024 being a sector level downgrade applied to the sectors that are
\n
considered most at risk from the current headwinds. A further \u00a329 million (2023 \u2013 \u00a350 million) remains for customers that utilised government support schemes, this adjustment is
\n
reducing as customers default or repay.
\n
\ue001
The \u00a318 million (2023 \u2013 \u00a323 million) judgemental overlay for deferred model calibrations relates to refinance risk, with the existing mechanistic modelling approach not fully
\n
capturing the risk on deteriorated exposures.
\n
\ue001
The \u00a318 million (2023 \u2013 \u00a38 million) other post model adjustment was to mitigate the effect of operational timing delays in the identification and flagging of a SICR, with the increase
\n
due to a small number of large corporate exposures moving quickly from Stage 1 into default.
SICR (audited)
\n
Exposures that are considered
\n
significantly credit-deteriorated since
\n
initial recognition are classified in Stage 2
\n
and assessed for lifetime ECL
\n
measurement (exposures not considered
\n
deteriorated carry a 12-month ECL).
\n
NatWest Group has adopted a
\n
framework to identify deterioration based
\n
primarily on relative movements in
\n
lifetime PD supported by additional
\n
qualitative backstops. The principles
\n
applied are consistent across NatWest
\n
Group and align to credit risk
\n
management practices, where
\n
appropriate.
\n
The framework comprises the following
\n
elements:
\n
\ue001
IFRS 9 lifetime PD assessment (the
\n
primary driver)
\u2013
on modelled
\n
portfolios, the assessment is based on
\n
the relative deterioration in forward-
\n
looking lifetime PD and is assessed
\n
monthly. To assess whether credit
\n
deterioration has occurred, the
\n
residual lifetime PD at balance sheet
\n
date (which PD is established at date
\n
of initial recognition (DOIR)) is
\n
compared to the current PD. If the
\n
current lifetime PD exceeds the
\n
residual origination PD by more than
\n
a threshold amount, deterioration is
\n
assumed to have occurred and the
\n
exposure transferred into Stage 2 for
\n
a lifetime loss assessment. For Non-
\n
Personal, a doubling of PD would
\n
indicate a SICR subject to a minimum
\n
PD uplift of 0.1%. For Personal
\n
portfolios and SME Retail, the criteria
\n
vary by risk band, with lower-risk
\n
exposures needing to deteriorate
\n
more than higher-risk exposures, as
\n
outlined in the following table:
\n\n \n
PD bandings
(based
on
residual
lifetime PD
Personal risk
calculated at
PD deterioration
bands
DOIR)
threshold criteria
A
<0.762%
PD@DOIR + 1%
B
<4.306%
PD@DOIR + 3%
C
>=4.306%
1.7 x PD@DOIR
\n
\ue001
Qualitative high-risk backstops
\u2013
the
\n
PD assessment is complemented with
\n
the use of qualitative high-risk
\n
backstops to further inform whether
\n
significant deterioration in lifetime risk
\n
of default has occurred. The
\n
qualitative high-risk backstop
\n
assessment includes the use of the
\n
mandatory 30+ days past due
\n
backstop, as prescribed by IFRS 9
\n
guidance, and other features such as
\n
forbearance support, Non-Personal
\n
exposures managed within the
\n
Wholesale Problem Debt
\n
Management framework, and
\n
adverse credit bureau results for
\n
Personal customers.
\n
\ue001
Persistence (Personal and SME Retail
\n
customers only)
\u2013
the persistence rule
\n
ensures that accounts which have
\n
met the criteria for PD-driven
\n
deterioration are still considered to be
\n
significantly deteriorated for three
\n
months thereafter. This additional rule
\n
enhances the timeliness of capture in
\n
Stage 2. The persistence rule is
\n
applied to PD-driven deterioration
\n
only.
\n
The criteria are based on a significant
\n
amount of empirical analysis and seek to
\n
meet three key objectives:
\n
\ue001
Criteria effectiveness
\u2013
the criteria
\n
should be effective in identifying
\n
significant credit deterioration and
\n
prospective default population.
\n
\ue001
Stage 2
stability
\u2013 the criteria should
\n
not introduce unnecessary volatility in
\n
the Stage 2 population.
\n
\ue001
Portfolio analysis
\u2013
the criteria should
\n
produce results which are intuitive
\n
when reported as part of the wider
\n
credit portfolio.
\n
Monitoring the effect on relative PD
\n
deterioration when originating new
\n
lending at times of weaker economic
\n
outlook (therefore, higher PDs at initial
\n
recognition) is important to ensure SICR
\n
criteria remains effective.
\n
Asset lifetimes
(audited)
\n
The choice of initial recognition and asset
\n
duration is another critical judgement in
\n
determining the quantum of lifetime
\n
losses that apply.
\n
\ue001
The date of initial recognition reflects
\n
the date that a transaction (or
\n
account) was first recognised on the
\n
balance sheet; the PD recorded at
\n
that time provides the baseline used
\n
for subsequent determination of SICR
\n
as detailed above.
\n
\ue001
For asset duration, the approach
\n
applied (in line with IFRS 9
\n
requirements) is:
\n
\ue001
Term lending \u2013
the contractual
\n
maturity date, reduced for
\n
behavioural trends where
\n
appropriate (such as, expected
\n
prepayment and amortisation).
\n
\ue001
Revolving facilities
\u2013
for Personal
\n
portfolios (except credit cards),
\n
asset duration is based on
\n
behavioural life and this is
\n
normally greater than
\n
contractual life (which would
\n
typically be overnight). For the
\n
Non-Personal portfolios, asset
\n
duration is based on annual
\n
customer review schedules and
\n
will be set to the next review
\n
date.
\n
In the case of credit cards, the most
\n
significant judgement is to reflect the
\n
operational practice of card reissuance
\n
and the associated credit assessment as
\n
enabling a formal re-origination trigger.
\n
As a consequence, a capped lifetime
\n
approach of up to 36 months is used on
\n
credit card balances. If the approach was
\n
uncapped, the ECL impact is estimated
\n
at approximately \u00a371 million (2023 \u2013
\n
\u00a3110 million). However, credit card
\n
balances originated under the 0% balance
\n
transfer product and representing
\n
approximately 47% (2023 \u2013 37%) of
\n
performing card balances, have their ECL
\n
calculated on a behavioural lifetime
\n
approach as opposed to being capped at
\n
a maximum of three years.
\n
The capped approach reflects NatWest
\n
Group practice of a credit-based review
\n
of customers prior to credit card issuance
\n
and complies with IFRS 9. Benchmarking
\n
information indicates that peer UK banks
\n
use behavioural approaches in the main
\n
for credit card portfolios with average
\n
durations between three and ten years.
\n
Across Europe, durations are shorter and
\n
are, in some cases, as low as one year.
\n
Economic loss drivers
(audited)
\n
Introduction
\n
The portfolio segmentation and selection
\n
of economic loss drivers for IFRS 9
\n
follows the approach used in stress
\n
testing. The stress models for each
\n
portfolio segment (defined by product or
\n
asset class and where relevant, industry
\n
sector and region) are based on a
\n
selected, small number of economic
\n
variables that best explain the
\n
movements in portfolio loss rates. The
\n
process to select economic loss drivers
\n
involves empirical analysis and expert
\n
judgement.
The most significant economic
\n
loss drivers for material portfolios
\n
are shown in the table below:
\n\n \n
Portfolio
Economic loss
drivers
Personal
Unemployment
mortgages
rate, sterling
swap rate, house
price index, real
wage
Personal
Unemployment
unsecured
rate, sterling
swap rate, real
wage
Corporates
Stock price index,
gross domestic
product (GDP)
Commercial
Stock price index,
real estate
commercial
property price
index, GDP
\n
Economic scenarios
\n
At 31 December 2024, the range
\n
of anticipated future economic
\n
conditions was defined by a set
\n
of four internally developed
\n
scenarios and their respective
\n
probabilities. In addition to the
\n
base case, they comprised
\n
upside, downside and extreme
\n
downside scenarios. The
\n
scenarios primarily reflected the
\n
current risks faced by the
\n
economy. The scenarios primarily
\n
reflected the current risks faced
\n
by the economy. This approach
\n
was similar to that used at 31
\n
December 2023.
\n
For 31 December 2024, the four
\n
scenarios were deemed
\n
appropriate in capturing the
\n
uncertainty in economic forecasts
\n
and the non-linearity in outcomes
\n
under different scenarios. These
\n
four scenarios were developed to
\n
provide sufficient coverage
\n
across potential rises in
\n
unemployment, inflation, asset
\n
price declines and the degree of
\n
permanent damage to the
\n
economy, around which there
\n
remains pronounced levels of
\n
uncertainty.
\n
Since 31 December 2023, the
\n
economic outlook has evolved.
\n
The economy came out of post-
\n
COVID-19 stagnation with an
\n
upswing in the first half of 2024
\n
as household income recovered.
\n
The growth lost momentum in
\n
the second half of 2024 and the
\n
outlook remains that of moderate
\n
growth. Inflation declined over
\n
the year, although the progress is
\n
slower than expected and
\n
inflation is likely to take longer to
\n
reach the target of 2%. As a
\n
result, rates are expected to
\n
remain higher-for-longer than
\n
previously expected. The
\n
unemployment rate increased
\n
modestly but it is underpinned by
\n
a still resilient labour market.
\n
There was emerging risk to the
\n
labour market due to higher tax
\n
burdens, but the impact is likely
\n
to be moderate. House prices
\n
were previously assumed to
\n
decline in 2024, but they
\n
performed better than expected.
\n
However, the higher interest rate
\n
environment poses a risk to the
\n
recovery.
\n
Headline macro variables: what are the risks and where are they captured?
\n\n \n
Base
Extreme
Mini narratives \u2013 potential developments, vulnerabilities and risks
Upside
case
Downside
downside
Outperformance sustained \u2013
economy remains close
to H1 2024 pace on strong consumer
Steady growth \u2013
staying close to trend pace from
H2 2024 and beyond
Growth
Stalling \u2013
2024 strength proves fleeting, lagged
effect of higher rates and cautious consumer stalls
the rebound
Extreme stress
\u2013 extreme fall in GDP, with policy
support to facilitate sharp recovery
Close to deflation \u2013
inflationary pressures diminish
amidst pronounced weakness in demand
Battle won \u2013
continued downward drift in services
inflation, ensuring 2% target is met on sustained
Inflation
basis
Sticky \u2013
strong growth and/or wage policies and/or
interest rate cuts keep services inflation well above
target
Structural factors \u2013
sustained bouts of energy, food
and goods price inflation on
geopolitics/deglobalisation
Tighter, still \u2013
job growth rebounds strongly, pushing
unemployment back down to sub-3.5%
Cooling continues \u2013
gradual loosening prompts a
Labour
gentle rise in unemployment (but remains low), job
market
growth recovers
Job shedding \u2013
prolonged weakness in economy
prompts redundancies, reduced hours, building slack
Depression \u2013
unemployment hits levels close to
previous peaks amid severe stress
Limited cuts
\u2013 higher growth and inflation keeps the
MPC cautious
Rates
Steady \u2013
approximately one cut per quarter
short-
Mid-cycle quickening \u2013
sharp declines through 2025
term
to support recovery
Sharp drop \u2013
drastic easing in policy to support a
sharp deterioration in the economy
Rates
Above consensus \u2013
4%
long-
Middle \u2013
3-3.5%
term
Close to 2010s \u2013
1-2%/2.5%
Economic loss drivers
(audited)
\n
Main macroeconomic variables
\n
The main macroeconomic variables for each of the four scenarios used for ECL modelling are set out in the main macroeconomic variables table below.
\n\n \n
2024
2023
Extreme
Weighted
Extreme
Weighted
Upside
Base case
Downside
downside
average
Upside
Base case
Downside
downside
average
Five-year summary
%
%
%
%
%
%
%
%
%
%
GDP
2.0
1.3
0.5
(0.2)
1.1
1.8
1.0
0.5
(0.3)
0.9
Unemployment rate
3.6
4.3
5.0
6.7
4.6
3.5
4.6
5.2
6.8
4.8
House price index
5.8
3.5
0.8
(4.3)
2.7
3.9
0.3
(0.4)
(5.7)
0.3
Commercial real estate price
5.4
1.2
(1.0)
(5.7)
1.1
3.1
(0.2)
(2.0)
(6.8)
(0.6)
Consumer price index
2.4
2.2
3.5
1.6
2.4
1.7
2.6
5.2
1.8
2.8
Bank of England base rate
4.4
4.0
3.0
1.6
3.6
3.8
3.7
5.6
2.9
4.0
Stock price index
6.3
5.0
3.4
1.1
4.5
4.8
3.3
1.2
(0.4)
2.8
World GDP
3.8
3.2
2.5
1.6
3.0
3.7
3.2
2.7
1.8
3.0
Probability weight
23.2
45.0
19.1
12.7
21.2
45.0
20.4
13.4
\n
(1)
The five-year summary runs from 2024-28 for 31 December 2024 and from 2023-27 for 31 December 2023.
\n
(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.
\n
Climate transition
\n
Since 2023, NatWest Group has included
\n
explicit assumptions about changes in
\n
transition policy, expressed as an
\n
additional implicit sectoral carbon price, in
\n
the base-case macroeconomic scenario.
\n
This approach has been used for financial
\n
planning and IFRS 9 reporting ever since.
\n
This analysis resulted in climate transition
\n
policy contributing \u00a38 million to the total
\n
ECL of \u00a33.4 billion at the end of 2024.
\n
In 2024, NatWest Group refined its
\n
approach. Instead of applying the
\n
economy-wide carbon price from an
\n
external scenario used in 2023, NatWest
\n
Group calculated the expected implicit
\n
carbon prices associated with specific
\n
climate transition policies. NatWest Group
\n
individually assessed 46 active and
\n
potential transition policies that had a
\n
significant impact on the cost of
\n
emissions and converted them into
\n
equivalent sectoral carbon prices. This
\n
was calculated as the cost per tonne of
\n
the emissions (CO2e) abated as a result
\n
of each policy.
\n
NatWest Group estimated that the
\n
weighted average carbon price
\n
associated with the policies assessed will
\n
increase from \u00a373 per tonne in 2024 to
\n
\u00a3123 per tonne in 2029. Sectoral carbon
\n
prices feed into the climate risk macro
\n
model. The model has been developed
\n
and improved over the past few years to
\n
enable NatWest Group to estimate the
\n
impact of carbon prices on a
\n
macroeconomic scenario.
\n
UK government policies which are
\n
estimated to have the largest impact on
\n
sectoral carbon prices are:
\n
\ue001
Emissions Trading Scheme
\n
\ue001
Climate Change Levy
\n
\ue001
Renewables Obligation
\n
\ue001
VAT on domestic energy
\n
This analysis presents a very narrow
\n
view of climate transition impact from 46
\n
analysed policies. It only covers base
\n
case macroeconomic scenario and does
\n
not include physical impacts.
\n
NatWest Group and its customers have a
\n
dependency on timely and appropriate
\n
government policies to provide the
\n
necessary impetus for technology
\n
development and customer behaviour
\n
changes, to enable the UK\u2019s successful
\n
transition to net zero. Policy delays and
\n
the risks outlined in the UK CCC 2022,
\n
2023 and 2024 Progress Reports, if not
\n
adequately addressed in a timely
\n
manner, put at risk the UK\u2019s net zero
\n
transition and, in turn, that of NatWest
\n
Group and its customers.
\n
Probability weightings of scenarios
\n
NatWest Group\u2019s quantitative approach
\n
to IFRS 9 multiple economic scenarios
\n
(MES) involves selecting a suitable set of
\n
discrete scenarios to characterise the
\n
distribution of risks in the economic
\n
outlook and assigning appropriate
\n
probability weights. This quantitative
\n
approach is used for 31 December 2024.
\n
The approach involves comparing GDP
\n
paths for NatWest Group\u2019s scenarios
\n
against a set of 1,000 model runs,
\n
following which a percentile in the
\n
distribution is established that most
\n
closely corresponded to the scenario. The
\n
probability weight for base case is set
\n
first based on judgement, while
\n
probability weights for the alternate
\n
scenarios are assigned based on these
\n
percentiles scores.The assigned
\n
probability weights were judged to be
\n
aligned with the subjective assessment of
\n
balance of the risks in the economy. The
\n
weights were marginally less downside
\n
skewed compared to those used at 31
\n
December 2023. The downside risks
\n
associated with a materially high inflation
\n
have reduced, with inflation lower at the
\n
end of 2024 compared to a year ago.
\n
However, the economic outlook is still
\n
subject to considerable uncertainty
\n
especially with respect to persistence of
\n
inflation, restrictive trade policies and
\n
various geopolitical flashpoints. Given that
\n
backdrop, NatWest Group judges it
\n
appropriate that downside-biased
\n
scenarios have higher combined
\n
probability weights than the upside-
\n
biased scenario. It presents good
\n
coverage to the range of outcomes
\n
assumed in the scenarios, including the
\n
potential for a robust recovery on the
\n
upside and exceptionally challenging
\n
outcomes on the downside. A 23.2%
\n
weighting was applied to the upside
\n
scenario, a 45.0% weighting applied to
\n
the base case scenario, a 19.1%
\n
weighting applied to the downside
\n
scenario and a 12.7% weighting applied
\n
to the extreme downside scenario.
Economic loss drivers
Economic loss drivers
(audited)
\n
Annual figures
\n\n \n
GDP - annual growth
Consumer price index - four quarter change
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
2024
0.9
0.9
0.9
0.9
0.9
2024
2.4
2.4
2.4
2.4
2.4
2025
2.0
1.4
0.4
(4.1)
0.6
2025
2.9
2.3
5.8
0.6
2.9
2026
3.2
1.5
(0.5)
(0.3)
1.3
2026
2.4
2.1
4.2
1.1
2.4
2027
2.3
1.4
0.2
1.4
1.4
2027
2.1
2.0
2.6
1.8
2.1
2028
1.6
1.4
1.3
1.4
1.4
2028
2.0
2.0
2.4
2.0
2.1
2029
1.6
1.4
1.7
1.4
1.5
2029
2.0
2.0
2.5
2.0
2.1
\n\n \n
Unemployment rate - annual average
Bank of England base rate - annual average
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
2024
4.2
4.2
4.2
4.2
4.2
2024
5.11
5.11
5.11
5.11
5.11
2025
3.9
4.4
4.8
5.4
4.5
2025
4.63
4.21
3.42
1.40
3.80
2026
3.3
4.4
5.5
8.0
4.8
2026
4.02
3.52
2.10
0.18
2.94
2027
3.3
4.3
5.5
8.3
4.8
2027
4.00
3.50
2.00
0.40
2.94
2028
3.4
4.3
5.3
7.6
4.7
2028
4.00
3.50
2.15
1.03
3.04
2029
3.4
4.2
5.0
6.9
4.5
2029
4.00
3.50
2.50
1.83
3.21
\n\n \n
House price index - four quarter change
Stock price index - four quarter change
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
2024
3.5
3.5
3.5
3.5
3.5
2024
11.6
11.6
11.6
11.6
11.6
2025
7.8
3.5
(1.2)
(7.6)
2.2
2025
8.1
3.4
(10.5)
(35.0)
(3.0)
2026
7.2
3.4
(2.8)
(14.7)
1.1
2026
5.1
3.4
5.8
15.1
5.3
2027
5.1
3.4
0.1
(8.0)
2.2
2027
3.5
3.4
5.8
13.1
4.8
2028
5.4
3.4
4.4
6.9
4.4
2028
3.5
3.4
5.8
11.6
4.7
2029
5.6
3.4
4.2
6.3
4.4
2029
3.0
3.4
5.8
10.4
4.5
\n\n \n
Commercial real estate price - four quarter change
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
2024
(0.9)
(0.9)
(0.9)
(0.9)
(0.9)
2025
14.1
2.4
(6.8)
(23.7)
0.1
2026
4.4
1.5
(2.5)
(12.7)
0.2
2027
5.5
1.4
2.8
6.7
3.3
2028
4.2
1.5
2.6
5.7
2.8
2029
2.7
1.4
2.5
5.4
2.3
Economic loss drivers
(audited)
\n
Worst points
\n\n \n
2024
2023
Extreme
Weighted
Extreme
Weighted
Downside
downside
average
Downside
downside
average
%
Quarter
%
Quarter
%
%
Quarter
%
Quarter
%
GDP
-
Q1 2024
(4.1)
Q4 2025
-
(1.2)
Q3 2024
(4.5)
Q4 2024
0.3
Unemployment rate - peak
5.6
Q4 2026
8.5
Q1 2027
4.9
5.8
Q1 2025
8.5
Q2 2025
5.2
House price index
(1.9)
Q2 2027
(25.6)
Q3 2027
-
(12.5)
Q4 2025
(31.7)
Q2 2026
(6.5)
Commercial real estate price
(10.5)
Q2 2026
(35.0)
Q3 2026
(1.8)
(16.6)
Q1 2025
(39.9)
Q3 2025
(10.2)
Consumer price index - highest four quarter change
6.1
Q1 2026
3.5
Q1 2024
3.5
10.3
Q1 2023
10.3
Q1 2023
10.3
Bank of England base rate - extreme level
2.0
Q1 2024
0.1
Q1 2024
2.9
6.5
Q4 2024
5.3
Q4 2023
5.3
Stock price index
(0.2)
Q4 2025
(27.4)
Q4 2025
-
(14.3)
Q4 2024
(39.3)
Q4 2024
(2.4)
\n
(1)
The figures show falls relative to the starting period for GDP, house price index, commercial real estate price and stock price index. For unemployment rate, it shows highest value through the scenario horizon. For consumer price index, it shows highest
\n
annual percentage change. For Bank of England base rate, it shows highest or lowest value through the horizon. The calculations are performed over five years, with a starting point of Q4 2023 for 31 December 2024 scenarios and Q4 2022 for 31
\n
December 2023 scenarios.
Measurement uncertainty and
\n
ECL sensitivity analysis
(audited)
\n
The recognition and measurement of
\n
ECL is complex and involves the use of
\n
significant judgement and estimation,
\n
particularly in times of economic volatility
\n
and uncertainty. This includes the
\n
formulation and incorporation of multiple
\n
forward-looking economic conditions into
\n
ECL to meet the measurement objective
\n
of IFRS 9. The ECL provision is sensitive
\n
to the model inputs and economic
\n
assumptions underlying the estimate.
\n
The impact arising from the base case,
\n
upside, downside and extreme downside
\n
scenarios was simulated.
\n
In the simulations, NatWest Group has
\n
assumed that the economic macro
\n
variables associated with these scenarios
\n
replace the existing base case economic
\n
assumptions, giving them a 100%
\n
probability weighting and therefore
\n
serving as a single economic scenario.
\n
These scenarios were applied to all
\n
modelled portfolios in the analysis below,
\n
with the simulation impacting both PDs
\n
and LGDs. Post model adjustments
\n
included in the ECL estimates that were
\n
modelled were sensitised in line with the
\n
modelled ECL movements, but those that
\n
were judgemental in nature, primarily
\n
those for deferred model calibrations and
\n
economic uncertainty, were not (refer to
\n
the Governance and post model
\n
adjustments section) on the basis these
\n
would be re-evaluated by management
\n
through ECL governance for any new
\n
economic scenario outlook and not be
\n
subject to an automated calculation. As
\n
expected, the scenarios create differing
\n
impacts on ECL by portfolio and the
\n
impacts are deemed reasonable.
\n
In this simulation, it is assumed that
\n
existing modelled relationships between
\n
key economic variables and loss drivers
\n
hold, but in practice other factors would
\n
also have an impact, for example,
\n
potential customer behaviour changes
\n
and policy changes by lenders that might
\n
impact on the wider availability of credit.
\n
The focus of the simulations is on ECL
\n
provisioning requirements on performing
\n
exposures in Stage 1 and Stage 2. The
\n
simulations are run on a stand-alone
\n
basis and are independent of each other;
\n
the potential ECL impacts reflect the
\n
simulated impact at 31 December 2024.
\n
Scenario impacts on SICR should be
\n
considered when evaluating the ECL
\n
movements of Stage 1 and Stage 2. In all
\n
scenarios the total exposure was the
\n
same but exposure by stage varied in
\n
each scenario.
\n
Stage 3 provisions are not subject to the
\n
same level of measurement uncertainty \u2013
\n
default is an observed event as at the
\n
balance sheet date. Stage 3 provisions
\n
therefore were not considered in this
\n
analysis.
\n
NatWest Group\u2019s core criterion to identify
\n
a SICR is founded on PD deterioration.
\n
Under the simulations, PDs change and
\n
result in exposures moving between
\n
Stage 1 and Stage 2 contributing to the
\n
ECL impact.
\n
Measurement uncertainty and ECL sensitivity analysis
(audited)
\n\n \n
Moderate
Moderate
Extreme
Base
upside
downside
downside
2024
Actual
scenario
scenario
scenario
scenario
Stage 1 modelled loans (\u00a3m)
Retail Banking - mortgages
169,090
170,887
173,703
164,370
154,604
Retail Banking - unsecured
10,269
10,485
10,876
9,847
8,925
Non-personal - property
28,598
28,684
28,827
28,452
25,402
Non-personal - non-property
126,487
127,179
127,557
125,790
107,287
334,444
337,235
340,963
328,459
296,218
Stage 1 modelled ECL (\u00a3m)
Retail Banking - mortgages
67
69
71
61
50
Retail Banking - unsecured
204
212
210
198
185
Non-personal - property
82
66
59
85
164
Non-personal - non-property
218
197
191
219
331
571
544
531
563
730
Stage 1 coverage
Retail Banking - mortgages
0.04%
0.04%
0.04%
0.04%
0.03%
Retail Banking - unsecured
1.99%
2.02%
1.93%
2.01%
2.07%
Non-personal - property
0.29%
0.23%
0.20%
0.30%
0.65%
Non-personal - non-property
0.17%
0.15%
0.15%
0.17%
0.31%
0.17%
0.16%
0.16%
0.17%
0.25%
Stage 2 modelled loans (\u00a3m)
Retail Banking - mortgages
20,980
19,183
16,367
25,700
35,466
Retail Banking - unsecured
3,513
3,297
2,906
3,935
4,857
Non-personal - property
3,019
2,933
2,790
3,165
6,215
Non-personal - non-property
13,143
12,451
12,073
13,840
32,343
40,655
37,864
34,136
46,640
78,881
Stage 2 modelled ECL (\u00a3m)
Retail Banking - mortgages
60
53
44
72
118
Retail Banking - unsecured
370
348
300
407
532
Non-personal - property
62
53
47
66
183
Non-personal - non-property
286
251
228
307
628
778
705
619
852
1,461
Stage 2 coverage
Retail Banking - mortgages
0.29%
0.28%
0.27%
0.28%
0.33%
Retail Banking - unsecured
10.53%
10.56%
10.32%
10.34%
10.95%
Non-personal - property
2.05%
1.81%
1.68%
2.09%
2.94%
Non-personal - non-property
2.18%
2.02%
1.89%
2.22%
1.94%
1.91%
1.86%
1.81%
1.83%
1.85%
Measurement uncertainty and ECL sensitivity analysis
(audited)
\u00a0 \u00a0 \u00a0
Moderate
Moderate
Extreme
\u00a0 \u00a0
Base
upside
downside
downside
2024
Actual
scenario
scenario
scenario
scenario
Stage 1 and Stage 2 modelled loans (\u00a3m)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Retail Banking - mortgages
190,070
190,070
190,070
190,070
190,070
Retail Banking - unsecured
13,782
13,782
13,782
13,782
13,782
Non-personal - property
31,617
31,617
31,617
31,617
31,617
Non-personal - non-property
139,630
139,630
139,630
139,630
139,630
\u00a0
375,099
375,099
375,099
375,099
375,099
Stage 1 and Stage 2 modelled ECL (\u00a3m)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Retail Banking - mortgages
127
122
115
133
168
Retail Banking - unsecured
574
560
510
605
717
Non-personal - property
144
119
106
151
347
Non-personal - non-property
504
448
419
526
959
\u00a0
1,349
1,249
1,150
1,415
2,191
Stage 1 and Stage 2 coverage
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Retail Banking - mortgages
0.07%
0.06%
0.06%
0.07%
0.09%
Retail Banking - unsecured
4.16%
4.06%
3.70%
4.39%
5.20%
Non-personal - property
0.46%
0.38%
0.34%
0.48%
1.10%
Non-personal - non-property
0.36%
0.32%
0.30%
0.38%
0.69%
\u00a0
0.36%
0.33%
0.31%
0.38%
0.58%
Reconciliation to Stage 1 and Stage 2
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
ECL (\u00a3m)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
ECL on modelled exposures
1,349
1,249
1,150
1,415
2,191
ECL on non-modelled exposures
36
36
36
36
36
Total Stage 1 and Stage 2 ECL (\u00a3m)
1,385
1,285
1,186
1,451
2,227
Variance to actual total Stage 1 and
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 2 ECL (\u00a3m)
\u00a0
(100)
(199)
66
842
Reconciliation to Stage 1 and Stage 2
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
flow exposures (\u00a3m)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Modelled loans
375,099
375,099
375,099
375,099
375,099
Non-modelled loans
21,074
21,074
21,074
21,074
21,074
Other asset classes
161,548
161,548
161,548
161,548
161,548
\n
(1)
Variations in future undrawn exposure values across the scenarios are modelled, however the exposure position
\n
reported is that used to calculate modelled ECL as at 31 December 2024 and therefore does not include variation in
\n
future undrawn exposure values.
\n
(2)
Reflects ECL for all modelled exposure in scope for IFRS 9. The analysis excludes non-modelled portfolios and exposure
\n
relating to bonds and cash.
\n
(3)
All simulations are run on a stand-alone basis and are independent of each other, with the potential ECL impact
\n
reflecting the simulated impact as at 31 December 2024
The simulations change the composition of Stage 1 and Stage
\n
2 exposure but total exposure was unchanged under each scenario as the loan population was static.
\n
(4)
Refer to the Economic loss drivers section for details of economic scenarios.
\n
(5)
Refer to the NatWest Group 2023 Annual Report and Accounts for 2023 comparatives.
\n
Measurement uncertainty and ECL adequacy
(audited)
\n
\ue001
If the economics were as negative as observed in the extreme downside (i.e. 100%
\n
probability weighting), total Stage 1 and Stage 2 ECL was simulated to increase by
\n
\u00a30.8 billion (approximately 61%). In this scenario, Stage 2 exposure increased
\n
significantly and was the key driver of the simulated ECL rise. The movement in
\n
Stage 2 balances in the other simulations was less significant.
\n
\ue001
In the Non-Personal portfolio, there was a significant increase in ECL under the
\n
extreme downside scenario. The Non-Personal property ECL increase was mainly
\n
due to commercial real estate prices which showed negative growth until 2026 and
\n
significant deterioration in the stock index. The non-property increase was mainly
\n
due to GDP contraction and significant deterioration in the stock index.
\n
\ue001
Given the continued economic uncertainty, NatWest Group utilised a framework of
\n
quantitative and qualitative measures to support the levels of ECL coverage. This
\n
included economic data, credit performance insights and problem debt trends. This
\n
was particularly important for consideration of post model adjustments.
\n
\ue001
As the effects of these economic risks evolve into 2025, there is a risk of further
\n
credit deterioration. However, the income statement effect of this should be
\n
mitigated by the forward-looking provisions retained on the balance sheet at 31
\n
December 2024.
\n
\ue001
There are a number of key factors that could drive further downside to impairments,
\n
through deteriorating economic and credit metrics and increased stage migration as
\n
credit risk increases for more customers. Such factors which could impact the IFRS 9
\n
models, include an adverse deterioration in unemployment, GDP and stock price
\nindex in which NatWest Group operates. Financial instruments within the scope of the IFRS 9 ECL framework (audited)
Refer to Note 9 to the consolidated financial statements for balance sheet analysis of financial assets that are classified as amortised
cost or fair value through other comprehensive income (FVOCI), the starting point for IFRS 9 ECL framework assessment.
\u00a0
31 December 2024
31 December 2023
\u00a0
Gross
ECL
Net
Gross
ECL
Net
\u00a0
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Balance sheet total gross amortised cost and FVOCI
567.2
\u00a0 \u00a0
553.8
\u00a0 \u00a0
In scope of IFRS 9 ECL framework
564.4
\u00a0 \u00a0
545.3
\u00a0 \u00a0
% in scope
100%
\u00a0 \u00a0
98%
\u00a0 \u00a0
Loans to customers - in scope - amortised cost
404.2
3.4
400.8
385.3
3.6
381.7
Loans to customers - in scope - FVOCI
-
-
-
0.1
-
0.1
Loans to banks - in scope - amortised cost
6.0
-
6.0
6.7
-
6.7
Total loans - in scope
410.2
3.4
406.8
392.1
3.6
388.5
Stage 1
363.8
0.6
363.2
348.6
0.7
347.9
Stage 2
40.5
0.8
39.7
37.9
0.9
37.0
Stage 3
5.9
2.0
3.9
5.6
2.0
3.6
Other financial assets - in scope - amortised cost
116.4
-
116.4
124.9
-
124.9
Other financial assets - in scope - FVOCI
37.8
-
37.8
28.3
-
28.3
Total other financial assets - in scope
154.2
-
154.2
153.2
-
153.2
Stage 1
153.4
-
153.4
152.0
-
152.0
Stage 2
0.8
-
0.8
1.2
-
1.2
Out of scope of IFRS 9 ECL framework
2.8
na
2.8
8.5
na
8.5
Loans to customers - out of scope - amortised cost
(0.5)
na
(0.5)
(0.4)
na
(0.4)
Loans to banks - out of scope - amortised cost
0.1
na
0.1
0.3
na
0.3
Other financial assets - out of scope - amortised cost
3.2
na
3.2
8.3
na
8.3
Other financial assets - out of scope - FVOCI
-
na
-
0.3
na
0.3
\n
na = not applicable
The assets outside the scope of IFRS 9 ECL framework were as follows:
\ue001
Settlement balances, items in the course of collection, cash balances and other non-credit risk assets of \u00a33.3 billion (2023 \u2013 \u00a38.6
billion). These were assessed as having no ECL unless there was evidence that they were defaulted.
\ue001
Equity shares of \u00a30.2 billion (2023 \u2013 \u00a30.3 billion) as not within the IFRS 9 ECL framework by definition.
\ue001
Fair value adjustments on loans hedged by interest rate swaps, where the underlying loan was within the IFRS 9 ECL scope of
\u00a3(0.5) billion (2023 \u2013 \u00a3(0.3) billion).
Contingent liabilities and
commitments
Total
contingent liabilities (including
financial guarantees) and commitments
within IFRS 9 ECL scope of \u00a3140.0 billion
(2023 \u2013 \u00a3132.0 billion) comprised Stage 1
\u00a3129.8 billion (2023 \u2013 \u00a3120.6 billion);
Stage 2 \u00a39.4 billion (2023 \u2013 \u00a310.7 billion);
and Stage 3 \u00a30.8 billion (2023 \u2013 \u00a30.7
billion).
The ECL relating to off balance sheet
exposures was \u00a30.1 billion (2023 \u2013 \u00a30.1
billion). The total ECL in the remainder of
the Credit risk section of \u00a33.4 billion
(2023 \u2013 \u00a33.6 billion) included ECL for both
on and off-balance sheet exposures for
non-disposal groups.
Segment analysis \u2013 portfolio summary (audited)
\n
The table below shows gross loans and ECL, by segment and stage, within the scope of the IFRS 9 ECL framework.
\n\n \n
Of which:
Personal
Non-personal
Retail
Private
Commercial
Central items
Retail
Private
Commercial
Central items
Private
Commercial
Central items
&
&
&
Banking
Banking
Institutional
& other
Total
Banking
Banking
Institutional
& other
Banking
Institutional
& other
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans - amortised cost and FVOCI
(1,2)
Stage 1
182,366
17,155
128,988
35,312
363,821
182,366
13,726
2,226
-
3,429
126,762
35,312
Stage 2
24,242
844
15,339
49
40,474
24,242
352
42
-
492
15,297
49
Stage 3
3,268
322
2,340
-
5,930
3,268
251
52
-
71
2,288
-
Of which: individual
-
233
1,052
-
1,285
-
162
5
-
71
1,047
-
Of which: collective
3,268
89
1,288
-
4,645
3,268
89
47
-
-
1,241
-
Total
209,876
18,321
146,667
35,361
410,225
209,876
14,329
2,320
-
3,992
144,347
35,361
ECL provisions
(3)
Stage 1
279
16
289
14
598
279
2
3
-
14
286
14
Stage 2
428
12
346
1
787
428
1
-
-
11
346
1
Stage 3
1,063
36
941
-
2,040
1,063
21
15
-
15
926
-
Of which: individual
-
36
415
-
451
-
21
7
-
15
408
-
Of which: collective
1,063
-
526
-
1,589
1,063
-
8
-
-
518
-
Total
1,770
64
1,576
15
3,425
1,770
24
18
-
40
1,558
15
\n
For the notes to this table refer to page 201.
Segment analysis \u2013 portfolio summary (audited)
\n\n \n
Of which:
Personal
Non-personal
Commercial
Commercial
Retail
Private
Commercial
&
Central items
Retail
Private
&
Central items
Private
&
Central items
Banking
Banking
Institutional
& other
Total
Banking
Banking
Institutional
& other
Banking
Institutional
& other
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ECL provisions coverage
(4)
Stage 1 (%)
0.15
0.09
0.22
0.04
0.16
0.15
0.01
0.13
-
0.41
0.23
0.04
Stage 2 (%)
1.77
1.42
2.26
2.04
1.94
1.77
0.28
-
-
2.24
2.26
2.04
Stage 3 (%)
32.53
11.18
40.21
-
34.40
32.53
8.37
28.85
-
21.13
40.47
-
Total
0.84
0.35
1.07
0.04
0.83
0.84
0.17
0.78
-
1.00
1.08
0.04
Impairment (releases)/losses
ECL (release)/charge
(5)
282
(11)
98
(10)
359
282
1
1
-
(12)
97
(10)
Stage 1
(208)
(11)
(205)
(14)
(438)
(208)
(2)
(1)
-
(9)
(204)
(14)
Stage 2
278
(1)
79
4
360
278
2
1
-
(3)
78
4
Stage 3
212
1
224
-
437
212
1
1
-
-
223
-
Of which: individual
-
1
191
-
192
-
1
(1)
-
-
192
-
Of which: collective
212
-
33
-
245
212
-
2
-
-
31
-
Total
282
(11)
98
(10)
359
282
1
1
-
(12)
97
(10)
Amounts written-off
430
1
223
-
654
430
1
2
-
-
221
-
Of which: individual
-
1
143
-
144
-
1
-
-
-
143
-
Of which: collective
430
-
80
-
510
430
-
2
-
-
78
-
\n
For the notes to this table refer
to
page
201.
Segment analysis \u2013 portfolio summary (audited)
\n\n \n
Of which:
Personal
Non-personal
Retail
Private
Commercial
Central items
Retail
Private
Commercial
Central items
Private
Commercial
Central items
&
&
&
Banking
Banking
Institutional
& other
Total
Banking
Banking
Institutional
& other
Banking
Institutional
& other
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans - amortised cost and FVOCI
(1,2)
Stage 1
182,297
17,565
119,047
29,677
348,586
182,297
14,296
2,268
4
3,269
116,779
29,673
Stage 2
21,208
906
15,771
6
37,891
21,208
255
43
3
651
15,728
3
Stage 3
3,133
258
2,162
10
5,563
3,133
209
52
6
49
2,110
4
Of which: individual
-
186
845
-
1,031
-
137
5
-
49
840
-
Of which: collective
3,133
72
1,317
10
4,532
3,133
72
47
6
-
1,270
4
Subtotal excluding disposal group loans
206,638
18,729
136,980
29,693
392,040
206,638
14,760
2,363
13
3,969
134,617
29,680
Disposal group loans
67
67
8
59
Total
29,760
392,107
21
29,739
ECL provisions
(3)
Stage 1
306
20
356
27
709
306
3
2
5
17
354
22
Stage 2
502
20
447
7
976
502
2
-
2
18
447
5
Stage 3
1,097
34
819
10
1,960
1,097
20
16
9
14
803
1
Of which: individual
-
34
298
-
332
-
20
5
-
14
293
-
Of which: collective
1,097
-
521
10
1,628
1,097
-
11
9
-
510
1
Subtotal excluding ECL provisions on disposal group loans
1,905
74
1,622
44
3,645
1,905
25
18
16
49
1,604
28
ECL provisions on disposal group loans
36
36
2
34
Total
80
3,681
18
62
\n
For the notes to this table refer to the following page
.
Segment analysis \u2013 portfolio summary (audited)
\n\n \n
Of which:
Personal
Non-personal
Commercial
Commercial
Commercial
Retail
Private
&
Central items
Retail
Private
&
Central items
Private
&
Central items
Banking
Banking
Institutional
& other
Total
Banking
Banking
Institutional
& other
Banking
Institutional
& other
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ECL provisions coverage
(4)
Stage 1 (%)
0.17
0.11
0.30
0.09
0.20
0.17
0.02
0.09
nm
0.52
0.30
0.07
Stage 2 (%)
2.37
2.21
2.83
nm
2.58
2.37
0.78
-
66.67
2.76
2.84
nm
Stage 3 (%)
35.01
13.18
37.88
100.00
35.23
35.01
9.57
30.77
nm
28.57
38.06
25.00
ECL provisions coverage excluding disposal group loans
0.92
0.40
1.18
0.15
0.93
0.92
0.17
0.76
nm
1.23
1.19
0.09
ECL provisions coverage on disposal group loans
53.73
53.73
25.00
57.63
Total
0.27
0.94
85.71
0.21
Impairment (releases)/losses
ECL (release)/charge
(5)
465
14
94
5
578
465
(3)
5
15
17
89
(10)
Stage 1
(172)
(9)
(222)
6
(397)
(172)
(7)
(3)
4
(2)
(219)
2
Stage 2
440
15
182
8
645
440
4
-
7
11
182
1
Stage 3
197
8
134
(9)
330
197
-
8
4
8
126
(13)
Of which: individual
-
8
80
1
89
-
-
5
-
8
75
1
Of which: collective
197
-
54
(10)
241
197
-
3
4
-
51
(14)
Continuing operations
465
14
94
5
578
465
(3)
5
15
17
89
(10)
Discontinued operations
(6)
(6)
-
(6)
Total
(1)
572
15
(16)
Amounts written-off
188
2
122
7
319
188
2
1
2
-
121
5
Of which: individual
-
2
40
-
42
-
2
1
-
-
39
-
Of which: collective
188
-
82
7
277
188
-
-
2
-
82
5
\n
(1)
The table shows gross loans only and excludes amounts that were outside the scope of the ECL framework. Other financial assets within the scope of the IFRS 9 ECL framework were cash and balances at central banks totalling \u00a391.8 billion (2023 \u2013
\n
\u00a3103.1 billion) and debt securities of \u00a362.4 billion (2023 \u2013 \u00a350.1 billion).
\n
(2)
Includes loans to customers and banks.
\n
(3)
Includes \u00a34 million (2023 \u2013 \u00a39 million) related to assets classified as FVOCI and \u00a30.1 billion (2023 \u2013 \u00a30.1 billion) related to off-balance sheet exposures.
\n
(4)
ECL provisions coverage is calculated as ECL provisions divided by loans \u2013 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
\n
proportion of debt securities or unutilised exposure may result in a not meaningful coverage ratio.
\n
(5)
Includes a \u00a312 million release (2023 \u2013 \u00a316 million releasee) related to other financial assets, of which \u00a34 million release (2023 \u2013 \u00a36 million charge) related to assets classified as FVOCI and includes a \u00a35 million release (2023 \u2013 \u00a39 million release) related to
\n
contingent liabilities.
\n
Segmental loans and impairment metrics (audited)
\n
\ue001
Retail Banking
\u2013 Loans to customers increased during the year as a result of
\n
continued growth in mortgages, including the Metro Bank portfolio acquisition and
\n
credit card lending. Arrears balances increased during 2024, however, this was in
\n
line with expectations and wider-industry trends following periods of balance
\n
growth and normalisation since COVID-19. Arrears inflow rates remained stable.
\n
The reduction in good book ECL coverage in 2024 was primarily driven by
\n
unsecured PD modelling updates, alongside reductions in economic uncertainty
\n
post model adjustments and stable underlying portfolio performance. Post model
\n
adjustments to capture increased affordability pressures on customers due to high
\n
inflation and interest rates decreased during the year reflecting a revision of the
\n
assessment approach, supported by back-testing of default outcomes.
\n
Underpinned by good book ECL coverage dynamics, total ECL coverage
\n
decreased during the year and was further amplified by 2024 debt sale activity on
\n
unsecured portfolios. Flow rates into Stage 3 reduced during H1 2024 and
\n
remained consistent across H2 2024.
\n
\ue001
Commercial & Institutional
\u2013 Increased lending during 2024 was driven by
\n
corporate and non-bank financial institutions sectors, aligned to customer strategy.
\n
Sector appetite continues to be reviewed regularly. Portfolio performance remained
\n
stable with a small reduction in total ECL. Stage 1 and Stage 2 ECL and coverage
\n
decreased due to reductions in post model adjustments, net improvements in
\n
economic scenarios and weightings along with stable portfolio performance. Stage
\n
3 ECL increased due to a small number of large counterparties, but the total
\n
number of individual defaults remained low.
Sector analysis \u2013 portfolio summary (audited)
\n
The table below shows financial assets and off-balance sheet exposures gross of ECL and related ECL provisions, impairment and past due by sector, asset quality and geographical
\n
region.
\n\n \n
Personal
Non-personal
Mortgages (1)
Credit cards
Other personal
Total
Corporate and Other (2)
FI
Sovereign
Total
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans by geography
209,846
6,930
9,749
226,525
111,734
70,321
1,645
183,700
410,225
- UK
209,846
6,930
9,749
226,525
97,409
43,412
562
141,383
367,908
- Other Europe
-
-
-
-
6,311
14,747
766
21,824
21,824
- RoW
-
-
-
-
8,014
12,162
317
20,493
20,493
Loans by stage
209,846
6,930
9,749
226,525
111,734
70,321
1,645
183,700
410,225
- Stage 1
186,250
4,801
7,267
198,318
94,991
69,021
1,491
165,503
363,821
- Stage 2
21,061
1,953
1,622
24,636
14,464
1,241
133
15,838
40,474
- Stage 3
2,535
176
860
3,571
2,279
59
21
2,359
5,930
- Of which: individual
141
-
26
167
1,046
51
21
1,118
1,285
- Of which: collective
2,394
176
834
3,404
1,233
8
-
1,241
4,645
Loans - past due analysis
(2)
209,846
6,930
9,749
226,525
111,734
70,321
1,645
183,700
410,225
- Not past due
206,739
6,721
8,865
222,325
107,855
70,055
1,627
179,537
401,862
- Past due 1-30 days
1,404
50
70
1,524
2,530
211
-
2,741
4,265
- Past due 31-90 days
580
51
99
730
398
2
18
418
1,148
- Past due 91-180 days
408
41
96
545
139
49
-
188
733
- Past due >180 days
715
67
619
1,401
812
4
-
816
2,217
Loans - Stage 2
21,061
1,953
1,622
24,636
14,464
1,241
133
15,838
40,474
- Not past due
19,939
1,889
1,521
23,349
13,485
1,228
133
14,846
38,195
- Past due 1-30 days
853
31
37
921
640
11
-
651
1,572
- Past due 31-90 days
269
33
64
366
339
2
-
341
707
Weighted average life
(4)
- ECL measurement (years)
8
4
6
6
6
2
1
6
6
Weighted average 12 months PDs
(4)
- IFRS 9 (%)
0.51
3.23
4.59
0.76
1.24
0.16
5.51
0.86
0.80
- Basel (%)
0.68
3.65
3.18
0.87
1.11
0.15
4.16
0.76
0.82
ECL provisions by geography
462
381
969
1,812
1,504
90
19
1,613
3,425
- UK
462
381
969
1,812
1,335
37
12
1,384
3,196
- Other Europe
-
-
-
-
109
9
-
118
118
- RoW
-
-
-
-
60
44
7
111
111
\n
For the notes to this table refer to page 205.
Sector analysis \u2013 portfolio summary (audited)
\n\n \n
Personal
Non-personal
Mortgages
(1)
Credit cards
Other personal
Total
Corporate and Other (2)
FI
Sovereign
Total
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ECL provisions by stage
462
381
969
1,812
1,504
90
19
1,613
3,425
- Stage 1
77
77
130
284
264
38
12
314
598
- Stage 2
60
186
183
429
344
12
2
358
787
- Stage 3
325
118
656
1,099
896
40
5
941
2,040
- Of which: individual
11
-
17
28
382
36
5
423
451
- Of which: collective
314
118
639
1,071
514
4
-
518
1,589
ECL provisions coverage (%)
0.22
5.50
9.94
0.80
1.35
0.13
1.16
0.88
0.83
- Stage 1 (%)
0.04
1.60
1.79
0.14
0.28
0.06
0.80
0.19
0.16
- Stage 2 (%)
0.28
9.52
11.28
1.74
2.38
0.97
1.50
2.26
1.94
- Stage 3 (%)
12.82
67.05
76.28
30.78
39.32
67.80
23.81
39.89
34.40
ECL (release)/charge
8
115
161
284
55
19
1
75
359
- UK
8
115
161
284
43
1
-
44
328
- Other Europe
-
-
-
-
17
(7)
-
10
10
- RoW
-
-
-
-
(5)
25
1
21
21
Amounts written-off
18
102
313
433
221
-
-
221
654
Loans by residual maturity
209,846
6,930
9,749
226,525
111,734
70,321
1,645
183,700
410,225
- <1 year
3,367
3,903
3,186
10,456
34,929
54,971
822
90,722
101,178
- 1-5 year
11,651
3,027
5,551
20,229
48,075
10,967
488
59,530
79,759
- > 5 < 15 year
45,454
-
1,006
46,460
20,623
4,270
298
25,191
71,651
- > 15 year
149,374
-
6
149,380
8,107
113
37
8,257
157,637
Other financial assets by asset quality
(3)
-
-
-
-
3,644
31,102
119,502
154,248
154,248
- AQ1-AQ4
-
-
-
-
3,639
30,743
119,502
153,884
153,884
- AQ5-AQ8
-
-
-
-
5
359
-
364
364
Off-balance sheet
13,806
20,135
7,947
41,888
75,964
21,925
239
98,128
140,016
- Loan commitments
13,806
20,135
7,906
41,847
72,940
20,341
239
93,520
135,367
- Financial guarantees
-
-
41
41
3,024
1,584
-
4,608
4,649
Off-balance sheet by asset quality
(3)
13,806
20,135
7,947
41,888
75,964
21,925
239
98,128
140,016
- AQ1-AQ4
12,951
510
6,568
20,029
47,896
20,063
155
68,114
88,143
- AQ5-AQ8
839
19,276
1,336
21,451
27,657
1,813
21
29,491
50,942
- AQ9
1
12
17
30
19
-
63
82
112
- AQ10
15
337
26
378
392
49
-
441
819
\n
For the notes to this table refer to page 205.
Sector analysis \u2013 portfolio summary (audited)
\n\n \n
Personal
Non-personal
Mortgages (1)
Credit cards
Other personal
Total
Corporate and Other (2)
FI
Sovereign
Total
Total
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans by geography
208,275
5,904
9,595
223,774
108,546
57,087
2,633
168,266
392,040
- UK
208,275
5,893
9,592
223,760
95,736
39,906
2,016
137,658
361,418
- Other Europe
-
11
3
14
6,368
8,144
399
14,911
14,925
- RoW
-
-
-
-
6,442
9,037
218
15,697
15,697
Loans by stage
208,275
5,904
9,595
223,774
108,546
57,087
2,633
168,266
392,040
- Stage 1
188,140
3,742
6,983
198,865
91,006
56,105
2,610
149,721
348,586
- Stage 2
17,854
2,022
1,633
21,509
15,415
966
1
16,382
37,891
- Stage 3
2,281
140
979
3,400
2,125
16
22
2,163
5,563
- Of which: individual
122
-
20
142
865
2
22
889
1,031
- Of which: collective
2,159
140
959
3,258
1,260
14
-
1,274
4,532
Loans - past due analysis
(2)
208,275
5,904
9,595
223,774
108,546
57,087
2,633
168,266
392,040
- Not past due
205,405
5,743
8,578
219,726
104,316
56,735
2,633
163,684
383,410
- Past due 1-30 days
1,178
41
71
1,290
2,713
332
-
3,045
4,335
- Past due 31-90 days
518
38
112
668
616
12
-
628
1,296
- Past due 91-180 days
445
32
103
580
113
2
-
115
695
- Past due >180 days
729
50
731
1,510
788
6
-
794
2,304
Loans - Stage 2
17,854
2,022
1,633
21,509
15,415
966
1
16,382
37,891
- Not past due
16,803
1,971
1,529
20,303
14,358
932
1
15,291
35,594
- Past due 1-30 days
765
27
40
832
616
24
-
640
1,472
- Past due 31-90 days
286
24
64
374
441
10
-
451
825
Weighted average life
(4)
- ECL measurement (years)
9
3
6
6
6
2
-
6
6
Weighted average 12 months PDs
(4)
- IFRS 9 (%)
0.50
3.45
5.29
0.75
1.55
0.19
0.37
1.07
0.89
- Basel (%)
0.67
3.37
3.15
0.84
1.16
0.17
0.37
0.81
0.83
ECL provisions by geography
420
376
1,168
1,964
1,599
66
16
1,681
3,645
- UK
420
365
1,163
1,948
1,383
38
13
1,434
3,382
- Other Europe
-
11
5
16
159
13
-
172
188
- RoW
-
-
-
-
57
15
3
75
75
\n
For the notes to this table refer to the following page.
Sector analysis \u2013 portfolio summary (audited)
\n \n
Personal
Non-personal
Mortgages (1)
Credit cards
Other personal
Total
Corporate and Other (2)
FI
Sovereign
Total
Total
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ECL provisions by stage
420
376
1,168
1,964
1,599
66
16
1,681
3,645
- Stage 1
88
76
152
316
336
44
13
393
709
- Stage 2
61
207
238
506
454
15
1
470
976
- Stage 3
271
93
778
1,142
809
7
2
818
1,960
- Of which: individual
12
-
14
26
302
2
2
306
332
- Of which: collective
259
93
764
1,116
507
5
-
512
1,628
ECL provisions coverage (%)
0.20
6.37
12.17
0.88
1.47
0.12
0.61
1.00
0.93
- Stage 1 (%)
0.05
2.03
2.18
0.16
0.37
0.08
0.50
0.26
0.20
- Stage 2 (%)
0.34
10.24
14.57
2.35
2.95
1.55
100.00
2.87
2.58
- Stage 3 (%)
11.88
66.43
79.47
33.59
38.07
43.75
9.09
37.82
35.23
ECL (release)/charge
35
193
254
482
92
6
(2)
96
578
- UK
35
184
249
468
103
(4)
(2)
97
565
- Other Europe
-
9
5
14
39
12
-
51
65
- RoW
-
-
-
-
(50)
(2)
-
(52)
(52)
Amounts written-off
32
70
91
193
125
1
-
126
319
Loans by residual maturity
208,275
5,904
9,595
223,774
108,546
57,087
2,633
168,266
392,040
- <1 year
3,375
3,398
3,169
9,942
31,008
43,497
489
74,994
84,936
- 1-5 year
9,508
2,506
5,431
17,445
49,789
11,616
1,872
63,277
80,722
- > 5 < 15 year
46,453
-
993
47,446
19,868
1,939
199
22,006
69,452
- > 15 year
148,939
-
2
148,941
7,881
35
73
7,989
156,930
Other financial assets by asset quality
(3)
-
-
-
-
2,690
26,816
123,683
153,189
153,189
- AQ1-AQ4
-
-
-
-
2,690
26,084
123,683
152,457
152,457
- AQ5-AQ8
-
-
-
-
-
732
-
732
732
Off-balance sheet
9,843
17,284
8,462
35,589
73,921
22,221
227
96,369
131,958
- Loan commitments
9,843
17,284
8,417
35,544
70,942
20,765
227
91,934
127,478
- Financial guarantees
-
-
45
45
2,979
1,456
-
4,435
4,480
Off-balance sheet by asset quality
(3)
9,843
17,284
8,462
35,589
73,921
22,221
227
96,369
131,958
- AQ1-AQ4
9,099
448
7,271
16,818
47,296
20,644
165
68,105
84,923
- AQ5-AQ8
721
16,518
1,162
18,401
26,296
1,574
45
27,915
46,316
- AQ9
7
6
4
17
15
-
-
15
32
- AQ10
16
312
25
353
314
3
17
334
687
(1)
Includes a portion of Private Banking lending secured against residential real estate, in line with ECL calculation methodology. Private Banking and RBS International mortgages are reported in UK, reflecting the country of lending origination and includes
crown dependencies.
(2)
Previously published sectors for the Non-personal portfolio have been re-presented to reflect internal sector reporting. Property is now included in corporate and other.
(3)
AQ bandings are based on Basel PDs and mapping is as follows:
\n \n
Internal asset quality band
Probability of default range
Indicative S&P rating
Internal asset quality band
Probability of default range
Indicative S&P rating
AQ1
0% - 0.034%
AAA to AA
AQ6
1.076% - 2.153%
BB- to B+
AQ2
0.034% - 0.048%
AA to AA-
AQ7
2.153% - 6.089%
B+ to B
AQ3
0.048% - 0.095%
A+ to A
AQ8
6.089% - 17.222%
B- to CCC+
AQ4
0.095% - 0.381%
BBB+ to BBB-
AQ9
17.222% - 100%
CCC to C
AQ5
0.381% - 1.076%
BB+ to BB
AQ10
100%
\u00a30.3 billion (2023 \u2013 \u00a30.3 billion) of AQ10 Personal balances primarily relate to loan commitments, the drawdown of which is effectively prohibited.
(4)
Not within the scope of the independent auditors\u2019 report.
D
Sector analysis \u2013 portfolio summary (audited)
\n
The table below shows ECL by stage, for the Personal portfolio and Non-Personal portfolio including the three largest borrowing sector clusters included in corporate and other.
\n\n \n
Loans - amortised cost and FVOCI
Off-balance sheet
ECL provisions
Stage 1
Stage 2
Stage 3
Total
Loan commitments
Contingent liabilities
Stage 1
Stage 2
Stage 3
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Personal
198,318
24,636
3,571
226,525
41,847
41
284
429
1,099
1,812
Mortgages
186,250
21,061
2,535
209,846
13,806
-
77
60
325
462
Credit cards
4,801
1,953
176
6,930
20,135
-
77
186
118
381
Other personal
7,267
1,622
860
9,749
7,906
41
130
183
656
969
Non-personal
165,503
15,838
2,359
183,700
93,520
4,608
314
358
941
1,613
Financial institutions
(1)
69,021
1,241
59
70,321
20,341
1,584
38
12
40
90
Sovereigns
1,491
133
21
1,645
239
-
12
2
5
19
Corporate and other
(2)
94,991
14,464
2,279
111,734
72,940
3,024
264
344
896
1,504
Of which:
Commercial real estate
16,191
1,517
433
18,141
6,661
143
70
30
146
246
Consumer industries
13,312
3,015
444
16,771
10,706
595
45
90
188
323
Mobility and logistics
13,363
2,384
148
15,895
9,367
595
26
35
67
128
Total
363,821
40,474
5,930
410,225
135,367
4,649
598
787
2,040
3,425
\n\n \n
Loans - amortised cost and FVOCI
Off-balance sheet
ECL provisions
Stage 1
Stage 2
Stage 3
Total
Loan commitments
Contingent liabilities
Stage 1
Stage 2
Stage 3
Total
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Personal
198,865
21,509
3,400
223,774
35,544
45
316
506
1,142
1,964
Mortgages
188,140
17,854
2,281
208,275
9,843
-
88
61
271
420
Credit cards
3,742
2,022
140
5,904
17,284
-
76
207
93
376
Other personal
6,983
1,633
979
9,595
8,417
45
152
238
778
1,168
Non-personal
149,721
16,382
2,163
168,266
91,934
4,435
393
470
818
1,681
Financial institutions
(1)
56,105
966
16
57,087
20,765
1,456
44
15
7
66
Sovereigns
2,610
1
22
2,633
227
-
13
1
2
16
Corporate and other
(2)
91,006
15,415
2,125
108,546
70,942
2,979
336
454
809
1,599
Of which:
Commercial real estate
14,998
2,040
374
17,412
7,155
106
86
58
112
256
Consumer industries
12,586
4,050
541
17,177
10,209
649
61
119
222
402
Mobility and logistics
13,186
2,074
143
15,403
8,728
496
33
39
48
120
Total
348,586
37,891
5,563
392,040
127,478
4,480
709
976
1,960
3,645
\n
(1)
Includes transactions, such as securitisations, where the underlying assets may be in other sectors.
\n
(2)
Previously published sectors for the Non-personal portfolio have been re-presented to reflect internal sector reporting. Property is now included in corporate and other.
Non-personal forbearance (audited)
The table below shows Non-personal forbearance, Heightened Monitoring and Risk of Credit Loss by sector. The table shows current exposure but reflects risk transfers where there
is a guarantee by another customer.
\n \n
Corporate and Other
Financial institution
Sovereign
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Forbearance (flow)
3,359
119
18
3,496
Forbearance (stock)
4,556
106
18
4,680
Heightened Monitoring and Risk of Credit Loss
5,931
150
1
6,082
2023
Forbearance (flow)
3,484
56
22
3,562
Forbearance (stock)
4,823
70
22
4,915
Heightened Monitoring and Risk of Credit Loss
5,208
276
-
5,484
Sector analysis \u2013 portfolio summary (audited)
\ue001
Loans by geography and sector
\u2013 In line with NatWest Group\u2019s strategic focus, exposures continued to be mainly in the UK.
\ue001
Loans by stage
\u2013 The increase in Stage 1 reflected the growth in Non-Personal lending, alongside continued growth in Personal unsecured portfolios. There was an increase in
Stage 2 balances in 2024, driven by mortgages, but noting that there was a significant proportion of mortgage cases in Stage 2, due to PD persistence only. The modest increase
in Stage 3 balance was mainly due to a small number of large corporate customers, with Personal lending increases largely mitigated by debt sale activity on unsecured assets.
\ue001
Loans \u2013 Past due analysis
\u2013 Within the Personal portfolio, arrears balances increased during 2024, however, this was in line with expectations following periods of balance growth
and normalisation since COVID-19. Arrears inflow rates remained stable. In Non-Personal, past due composition was stable.
\ue001
Weighted average 12 months PDs
\u2013
Both IFRS 9 and Basel PDs remained broadly stable during the year. In the Personal portfolios, there was a notable reduction in unsecured
IFRS 9 PDs due to modelling updates. In Non-Personal, some reductions were observed in IFRS 9 PDs in the corporate portfolios due to economic and portfolio improvements. PDs
in sovereigns increased significantly due to new lending but all new lending is fully backed by government guarantees.
\ue001
ECL provisions by stage and ECL provisions coverage
\u2013 Overall provisions coverage reduced since 31 December 2023. In the performing book, this was mainly a result of stable
portfolio performance, reduced economic uncertainty post model adjustments and PD reductions across a number of portfolios, primarily relating to modelling updates in Personal.
Furthermore, Stage 3 and total book coverage reduced, supported by the 2024 debt sale activity on Personal unsecured portfolios.
\ue001
ECL charge \u2013
The full year impairment charge for 2024 of \u00a3359 million primarily reflected stable default performance, alongside reduced PD levels and impairment releases driven
by the reduction in economic uncertainty post model adjustments.
\ue001
Loans by residual maturity
\u2013
The maturity profile of the portfolios remained consistent with prior periods. In mortgages, as expected, the vast majority of exposures were greater
than five years. In unsecured lending, cards and other, exposures were concentrated in less than five years. In Non-Personal, most loans mature in less than five years.
\ue001
Other financial assets by asset quality
\u2013
Consisting almost entirely of balances at central banks and debt securities held in the course of treasury related management activities,
these assets were mainly within the AQ1-AQ4 bands.
\ue001
Off-balance sheet exposures by asset quality
\u2013 In Personal, undrawn exposures were reflective of available credit lines in credit cards and current accounts. Additionally, the
mortgage portfolio had undrawn exposures, where a formal offer had been made to a customer but had not yet drawn down; the value increased in line with the pipeline of offers.
There was also a legacy portfolio of flexible mortgages where a customer had the right and ability to draw down further funds. In Non-Personal, off-balance sheet exposures
increased moderately driven by loan commitments. Asset quality was mainly in the AQ1-AQ8 bandings.
\ue001
Non-Personal problem debt \u2013
There was an increase in exposures during 2024 driven by corporate sectors, although volumes were flat. The framework is closely monitored, and
there were no material thematic concerns.
\ue001
Non-Personal forbearance \u2013
Forbearance was lower at the end of 2024, compared to 2023, reflecting stable portfolio performance.
Credit risk enhancement and mitigation (audited)
\n
The table below shows exposures of modelled portfolios within the scope of the ECL framework and related credit risk enhancement and mitigation (CREM).
\n \n \n
Gross
Maximum credit risk
CREM by type
CREM coverage
Exposure post CREM
exposure
ECL
Total
Stage 3
Financial (1)
Property
Other (2)
Total
Stage 3
Total
Stage 3
2024
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Financial assets
Cash and balances at central banks
91.8
-
91.8
-
-
-
-
-
-
91.8
-
Loans - amortised cost
(3)
410.2
3.3
406.9
3.9
46.3
253.0
25.5
324.8
3.4
82.1
0.5
Personal
(4)
226.5
1.8
224.7
2.5
0.8
209.1
-
209.9
2.2
14.8
0.3
Non-personal
(5)
183.7
1.5
182.2
1.4
45.5
43.9
25.5
114.9
1.2
67.3
0.2
Debt securities
62.5
-
62.5
-
0.1
-
-
0.1
-
62.4
-
Total financial assets
564.5
3.3
561.2
3.9
46.4
253.0
25.5
324.9
3.4
236.3
0.5
Contingent liabilities and commitments
Personal
(6,7)
41.9
-
41.9
0.4
1.1
3.7
-
4.8
-
37.1
0.4
Non-personal
98.1
0.1
98.0
0.4
3.1
8.2
5.1
16.4
0.1
81.6
0.3
Total off-balance sheet
140.0
0.1
139.9
0.8
4.2
11.9
5.1
21.2
0.1
118.7
0.7
Total exposure
704.5
3.4
701.1
4.7
50.6
264.9
30.6
346.1
3.5
355.0
1.2
2023
Financial assets
Cash and balances at central banks
103.1
-
103.1
-
-
-
-
-
-
103.1
-
Loans - amortised cost
(3)
392.0
3.5
388.5
3.5
37.4
248.2
21.8
307.4
3.1
81.1
0.4
Personal
(4)
223.7
1.9
221.8
2.2
0.9
207.5
-
208.4
2.0
13.4
0.2
Non-personal
(5)
168.3
1.6
166.7
1.3
36.5
40.7
21.8
99.0
1.1
67.7
0.2
Debt securities
50.1
-
50.1
-
-
-
-
-
-
50.1
-
Total financial assets
545.2
3.5
541.7
3.5
37.4
248.2
21.8
307.4
3.1
234.3
0.4
Contingent liabilities and commitments
Personal
(6,7)
35.6
-
35.6
0.3
1.0
4.0
-
5.0
-
30.6
0.3
Non-personal
96.4
0.1
96.3
0.4
2.6
7.1
4.1
13.8
0.1
82.5
0.3
Total off-balance sheet
132.0
0.1
131.9
0.7
3.6
11.1
4.1
18.8
0.1
113.1
0.6
Total exposure
677.2
3.6
673.6
4.2
41.0
259.3
25.9
326.2
3.2
347.4
1.0
\n
(1)
Includes cash and securities collateral.
\n
(2)
Includes guarantees, charges over trade debtors, other asset finance related physical collateral as well as the amount by which credit risk exposure is reduced through netting arrangements, mainly cash management pooling, which give NatWest Group a
\n
legal right to set off the financial asset against a financial liability due to the same counterparty. Any additional credit risk mitigation from a synthetic securitization is not included in the table above.
\n
(3)
NatWest Group holds collateral in respect of individual loans \u2013 amortised cost to banks and customers. This collateral includes mortgages over property (both personal and commercial); charges over business assets such as plant and equipment;
\n
inventories and trade debtors; and guarantees of lending from parties other than the borrower. NatWest Group obtains collateral in the form of securities in reverse repurchase agreements. Collateral values are capped at the value of the loan.
\n
(4)
Stage 3 mortgage exposures have relatively limited uncovered exposure reflecting the security held. On unsecured credit cards and other personal borrowing, the residual uncovered amount reflects historical experience of continued cash recovery post
\n
default through ongoing engagement with customers.
\n
(5)
Stage 3 exposures post credit risk enhancement and mitigation in Non-personal mainly represent enterprise value and the impact of written down collateral values; an individual assessment to determine ECL will consider multiple scenarios and in some
\n
instances allocate a probability weighting to a collateral value in excess of the written down value.
\n
(6)
\u00a30.3 billion (2023
\u2013
\u00a30.3 billion) Personal Stage 3 balances primarily relate to loan commitments, the draw down of which is effectively prohibited.
\n
(7)
The Personal gross exposure value includes \u00a310.1 billion (2023
\u2013
\u00a35.9 billion) in respect of pipeline mortgages where a committed offer has been made to a customer but where the funds have not yet been drawn down. When drawn down, the exposure
\n
would be covered by a security over the borrower\u2019s property.
Personal portfolio (audited)
\n
Disclosures in the Personal portfolio section include drawn exposure (gross of provisions).
\n\n \n
2024
Retail
Private
Commercial &
Central items
Banking
Banking
Institutional
& other
Total
Personal lending
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Mortgages
194,865
12,826
2,161
-
209,852
Of which:
Owner occupied
176,137
11,348
1,457
-
188,942
Buy-to-let
18,728
1,478
704
-
20,910
Interest only
22,186
11,276
437
-
33,899
Mixed
(1)
10,384
40
8
-
10,432
ECL provisions
(2)
440
12
10
-
462
Other personal lending
(3)
15,045
1,301
242
-
16,588
ECL provisions
(2)
1,330
12
3
-
1,345
Total personal lending
209,910
14,127
2,403
-
226,440
Mortgage LTV ratios
- Owner occupied
56%
59%
56%
-
56%
- Stage 1
56%
59%
55%
-
56%
- Stage 2
55%
61%
56%
-
55%
- Stage 3
50%
64%
74%
-
51%
- Buy-to-let
53%
60%
52%
-
53%
- Stage 1
54%
60%
51%
-
54%
- Stage 2
52%
57%
55%
-
52%
- Stage 3
52%
56%
59%
-
53%
Gross new mortgage lending
26,440
1,395
257
-
28,092
Of which:
Owner occupied
25,300
1,266
183
-
26,749
- LTV > 90%
888
-
-
-
888
Weighted average LTV
(4)
70%
63%
71%
-
70%
Buy-to-let
1,140
129
74
-
1,343
Weighted average LTV
(4)
61%
62%
56%
-
61%
Interest only
1,575
1,238
42
-
2,855
Mixed
(1)
1,150
-
1
-
1,151
Mortgage forbearance
Forbearance flow
(5)
473
8
6
-
487
Forbearance stock
1,680
20
15
-
1,715
Current
1,214
9
10
-
1,233
1-3 months in arrears
146
9
-
-
155
>3 months in arrears
320
2
5
-
327
\n
For the notes to this table refer to the following page.
Personal portfolio (audited)
\n\n \n
2023
Retail
Private
Commercial &
Central items
Banking
Banking
Institutional
& other
Total
Personal lending
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Mortgages
192,915
13,222
2,200
-
208,337
Of which:
Owner occupied
174,167
11,629
1,464
-
187,260
Buy-to-let
18,748
1,593
736
-
21,077
Interest only
25,805
11,631
461
-
37,897
Mixed
(1)
10,068
25
10
-
10,103
ECL provisions
(2)
397
12
6
-
415
Other personal lending
(3)
13,758
1,395
222
13
15,388
ECL provisions
(2)
1,508
12
2
16
1,538
Total personal lending
206,673
14,617
2,422
13
223,725
Mortgage LTV ratios
- Owner occupied
55%
59%
56%
-
55%
- Stage 1
55%
59%
54%
-
55%
- Stage 2
54%
63%
54%
-
54%
- Stage 3
48%
61%
72%
-
49%
- Buy-to-let
52%
59%
52%
-
53%
- Stage 1
52%
60%
52%
-
53%
- Stage 2
50%
57%
49%
-
50%
- Stage 3
50%
53%
58%
-
51%
Gross new mortgage lending
29,664
1,400
180
-
31,244
Of which:
Owner occupied
27,718
1,267
136
-
29,121
- LTV > 90%
1,173
-
-
-
1,173
Weighted average LTV
(4)
70%
63%
69%
-
70%
Buy-to-let
1,946
133
44
-
2,123
Weighted average LTV
(4)
58%
65%
52%
-
58%
Interest only
2,680
1,224
23
-
3,927
Mixed
(1)
1,568
2
-
-
1,570
Mortgage forbearance
Forbearance flow
(5)
569
22
9
-
600
Forbearance stock
1,416
28
15
-
1,459
Current
950
10
6
-
966
1-3 months in arrears
116
2
2
-
120
>3 months in arrears
350
16
7
-
373
\n
(1)
Includes accounts which have an interest only sub-
\n
account and a capital and interest sub-account to
\n
provide a more comprehensive view of interest only
\n
exposures.
\n
(2)
Retail Banking excludes a non-material amount of
\n
lending and provisions held on relatively small legacy
\n
portfolios.
\n
(3)
Comprises unsecured lending except for Private
\n
Banking, which includes both secured and unsecured
\n
lending. It excludes loans that are commercial in
\n
nature.
\n
(4)
New mortgage lending LTV reflects the LTV at the
\n
time of lending.
\n
(5)
Forbearance flows only include an account once per
\n
year, although some accounts may be subject to
\n
multiple forbearance deals. Forbearance deals post
\n
default are excluded from these flows.
Personal portfolio (audited)
\n
Mortgage LTV distribution by stage
\n
The table below shows gross mortgage lending and related ECL by LTV band for the Retail Banking portfolio.
\n \n \n
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
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
\u226450%
64,040
8,344
1,159
73,543
21
16
153
190
-
0.2
13.2
0.3
>50% and \u226470%
61,739
7,741
855
70,335
29
23
104
156
-
0.3
12.2
0.2
>70% and \u226480%
25,022
2,361
173
27,556
13
9
22
44
0.1
0.4
12.7
0.2
>80% and \u226490%
16,718
1,769
85
18,572
9
9
13
31
0.1
0.5
15.3
0.2
>90% and \u2264100%
4,076
512
26
4,614
2
3
5
10
-
0.6
19.2
0.2
>100%
14
4
13
31
-
-
6
6
-
-
46.2
19.4
Total with LTVs
171,609
20,731
2,311
194,651
74
60
303
437
-
0.3
13.1
0.2
Other
212
1
1
214
2
-
1
3
0.9
-
100.0
1.4
Total
171,821
20,732
2,312
194,865
76
60
304
440
-
0.3
13.1
0.2
2023
\u226450%
68,092
7,447
1,145
76,684
27
18
134
179
-
0.2
11.7
0.2
>50% and \u226470%
65,777
7,011
767
73,555
35
26
85
146
0.1
0.4
11.1
0.2
>70% and \u226480%
22,537
1,633
113
24,283
13
7
15
35
0.1
0.4
13.3
0.1
>80% and \u226490%
13,583
1,143
47
14,773
9
6
7
22
0.1
0.5
14.9
0.1
>90% and \u2264100%
3,008
370
14
3,392
2
3
3
8
0.1
0.8
21.4
0.2
>100%
22
6
11
39
-
-
5
5
-
-
45.5
12.8
Total with LTVs
173,019
17,610
2,097
192,726
86
60
249
395
0.1
0.3
11.9
0.2
Other
186
1
2
189
1
-
1
2
0.5
-
50.0
1.1
Total
173,205
17,611
2,099
192,915
87
60
250
397
0.1
0.3
11.9
0.2
\n
\ue001
Mortgage balances increased during 2024 as a result of the Metro Bank mortgage portfolio acquisition. Unsecured lending grew overall, driven by growth in credit cards, prime
\n
quality whole of market lending and balance transfer segments.
\n
\ue001
The proportion of overall interest-only mortgage balances decreased in 2024. Higher levels of interest-only at the 2023 year end were driven by the implementation of the
\n
Mortgage Charter. However, applications for Mortgage Charter support decreased during 2024 and customers have rolled-off from interest-only periods.
\n
\ue001
Portfolios and new business were closely monitored against agreed operating limits. These included loan-to-value ratios, buy-to-let concentrations, new-build concentrations and
\n
credit quality. Lending criteria, affordability calculations and assumptions for new lending were adjusted during the year, to maintain credit quality in line with appetite and to
\n
ensure customers are assessed fairly as economic conditions change.
\n
\ue001
Consistent with lower mortgage inflows to collections in 2024, the flow of forbearance reduced compared to the prior year.
Personal portfolio (audited)
\n
Mortgage LTV distribution by region
\n
The table below shows gross mortgage lending by LTV band for Retail Banking, by geographical region.
\n\n \n
Flood risk (1,2)
Weighted
% of regional
% of regional
Lending at high/
\u226450%
50%\u226480%
80%\u2264100%
>100%
Total
average LTV
Other
Total
Total
lending at high
lending at very
very high risk (3)
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
\u00a3m
\u00a3m
%
risk (>60)
high risk (>80)
%
South East
13,622
19,007
4,506
1
37,136
56
3
37,139
19
3.6
1.2
4.8
Greater London
13,951
18,537
3,391
2
35,881
55
3
35,884
18
4.8
0.9
5.7
East of England
7,776
11,730
3,211
2
22,719
58
1
22,720
12
2.9
1.4
4.3
North West
7,507
8,305
1,878
2
17,692
54
1
17,693
9
2.9
1.9
4.8
South West
6,577
8,455
2,055
1
17,088
56
1
17,089
9
2.6
1.0
3.6
West Midlands
5,379
6,970
1,683
1
14,033
56
1
14,034
7
1.8
0.6
2.4
Scotland
4,860
5,766
1,591
1
12,218
55
1
12,219
6
2.4
1.2
3.6
Rest of the UK
13,871
19,121
4,871
21
37,884
57
203
38,087
20
2.4
2.5
4.9
Total
73,543
97,891
23,186
31
194,651
56
214
194,865
100
3.1
1.4
4.5
2023
South East
14,645
18,510
3,107
1
36,263
54
2
36,265
19
3.8
1.2
5.0
Greater London
14,689
18,044
2,366
1
35,100
53
3
35,103
18
5.2
0.9
6.1
East of England
8,576
11,810
2,208
-
22,594
55
2
22,596
12
3.1
1.4
4.5
North West
7,314
8,629
1,881
2
17,826
54
2
17,828
9
3.0
1.9
4.9
South West
7,308
8,296
1,379
1
16,984
53
1
16,985
9
2.7
1.0
3.7
West Midlands
5,391
7,072
1,404
1
13,868
55
1
13,869
7
1.9
0.6
2.5
Scotland
5,051
5,938
1,445
1
12,435
54
2
12,437
6
2.9
1.4
4.2
Rest of the UK
13,711
19,540
4,374
32
37,657
56
175
37,832
20
2.7
1.8
4.5
Total
76,685
97,839
18,164
39
192,727
54
188
192,915
100
3.4
1.3
4.7
\n
(1)
Not within the scope of the independent auditors\u2019 report.
\n
(2)
As at 31 December 2024, \u00a312.6 billion, 98.0%, of the private banking mortgage portfolio had flood risk data available (2023 \u2013 \u00a313.0 billion, 98.1%). Of which, 5.4% were rated as high flood risk and 1.0% as very high flood risk
(2023 \u2013 5.74% high flood risk
\n
and 1.1% very high flood risk). 63% of the exposure is in the Greater London region.
\n
(3)
Flood risk is modelled by calculating an estimated loss for each flood source different types of flooding (fluvial, pluvial, tidal), annualised for each source and combined for a total flood score. Flood defences were considered where available. Flood scores
\n
were allocated per property based on the potential annualised loss (\u00a3) to a property dependent on the type, frequency and depth of flooding modelled across different return periods. The scoring ranged from 0 to 100, with 0 being lowest and 100 being
\n
the highest risk. A score of 61 and above was considered to be high risk and properties with a score of 81 and above were considered to be very high risk after flood mitigants were taken-into-account.
Personal portfolio (audited)
Retail Banking fixed rate mortgages by roll-off date
(1)
The table below shows gross fixed rate mortgage lending for Retail Banking, by roll-off date.
2024
2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Retail Banking mortgages - gross exposure
(2)
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Fixed rate roll-off
<=1 year
34,989
4,309
336
39,634
30,867
3,670
295
34,832
>1<= 2 years
44,146
5,080
418
49,644
39,013
3,513
290
42,816
>2 years
78,629
8,667
693
87,989
87,402
7,461
590
95,453
Total
157,764
18,056
1,447
177,267
157,282
14,644
1,175
173,101
(1)
Not within the scope of the independent auditors\u2019 report.
(2)
Excluding the Metro Bank portfolio acquired during 2024.
Retail Banking mortgages by Energy Performance Certificate (EPC) rating
(1)
The table below shows the energy efficiency of Retail Banking residential mortgages.
2024
2023
Owner occupied
Buy-to-let
Total
Owner occupied
Buy-to-let
Total
EPC rating
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
A
788
18
806
547
13
560
B
21,923
1,480
23,403
21,566
1,458
23,024
C
31,353
5,876
37,229
29,764
5,712
35,476
D
45,455
5,748
51,203
46,924
6,056
52,980
E
14,455
1,369
15,824
16,027
1,557
17,584
F
3,026
55
3,081
3,360
62
3,422
G
695
13
708
736
16
752
Unclassified
58,442
4,169
62,611
55,243
3,874
59,117
Total
176,137
18,728
194,865
174,167
18,748
192,915
(1)
Not within the scope of the independent auditors\u2019 report.
(2)
As at 31 December 2024, \u00a3139.1 billion, 66.3%, of the total residential mortgages portfolio had Energy Performance Certificate (EPC) data available (2023 \u2013 \u00a3140.8 billion, 67.6%). Of which, 46.3% were rated as EPC A to C (2023 \u2013 44.1%).Flow statements (audited)
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:
\ue001
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.
\ue001
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.
\ue001
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.
\ue001
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.
\ue001
Amounts written-off represent the gross asset written-down against accounts with ECL, including the net asset write-down for any debt sale activity.
\ue001
There were some flows from Stage 1 into Stage 3 including transfers due to unexpected default events with a post model adjustment in place for Commercial & Institutional to
account for this risk.
\ue001
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.
\ue001
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 assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
NatWest Group total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
504,345
709
40,294
976
5,621
1,960
550,260
3,645
Currency translation and other adjustments
(1,354)
-
(40)
(1)
158
204
(1,236)
203
Transfers from Stage 1 to Stage 2
(40,745)
(231)
40,745
231
-
-
-
-
Transfers from Stage 2 to Stage 1
27,808
552
(27,808)
(552)
-
-
-
-
Transfers to Stage 3
(247)
(5)
(3,489)
(269)
3,736
274
-
-
Transfers from Stage 3
296
19
761
37
(1,057)
(56)
-
-
Net re-measurement of ECL on stage transfer
(390)
657
344
611
Changes in risk parameters
(206)
(114)
302
(18)
Other changes in net exposure
25,749
155
(8,288)
(174)
(1,891)
(176)
15,570
(195)
Other (P&L only items)
3
(9)
(33)
(39)
Income statement (releases)/charges
(438)
360
437
359
Transfers to disposal groups and fair value
(296)
(5)
(9)
(3)
(13)
(10)
(318)
(18)
Amounts written-off
-
-
(1)
(1)
(653)
(653)
(654)
(654)
Unwinding of discount
-
-
(149)
(149)
At 31 December 2024
515,556
598
42,165
787
5,901
2,040
563,622
3,425
Net carrying amount
514,958
41,378
3,861
560,197
At 1 January 2023
507,539
632
48,482
1,043
5,231
1,759
561,252
3,434
2023 movements
(3,194)
77
(8,188)
(67)
390
201
(10,992)
211
At 31 December 2023
504,345
709
40,294
976
5,621
1,960
550,260
3,645
Net carrying amount
503,636
39,318
3,661
546,615
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Retail Banking - mortgages
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
174,038
87
17,827
60
2,068
250
193,933
397
Currency translation and other adjustments
-
(1)
-
1
109
110
109
110
Transfers from Stage 1 to Stage 2
(19,074)
(20)
19,074
20
-
-
-
-
Transfers from Stage 2 to Stage 1
12,454
24
(12,454)
(24)
-
-
-
-
Transfers to Stage 3
(52)
-
(1,079)
(8)
1,131
8
-
-
Transfers from Stage 3
48
1
392
7
(440)
(8)
-
-
Net re-measurement of ECL on stage transfer
(13)
26
6
19
Changes in risk parameters
3
(15)
96
84
Other changes in net exposure
3,919
(5)
(2,768)
(7)
(550)
(75)
601
(87)
Other (P&L only items)
-
(1)
(10)
(11)
Income statement (releases)/charges
(15)
3
17
5
Amounts written-off
-
-
-
-
(15)
(15)
(15)
(15)
Unwinding of discount
-
-
(67)
(67)
At 31 December 2024
171,333
76
20,992
60
2,303
305
194,628
441
Net carrying amount
171,257
20,932
1,998
194,187
At 1 January 2023
165,264
79
18,831
61
1,762
215
185,857
355
2023 movements
8,774
8
(1,004)
(1)
306
35
8,076
42
At 31 December 2023
174,038
87
17,827
60
2,068
250
193,933
397
Net carrying amount
173,951
17,767
1,818
193,536
\n
\ue001
ECL coverage for mortgages remained stable overall during 2024, with growth in Stage 3 ECL partly offset by a reduction in good book ECL, primarily driven by the reduction in
\n
economic uncertainty post model adjustment levels. PDs remained broadly flat with the effect of the modest increase in arrears levels being offset by the impact of improved
\n
economics since 2023 and stable portfolio performance overall.
\n
\ue001
The decrease in Stage 1 ECL was also driven by the cost of living post model adjustment reduction. Refer to the Governance and post model adjustments section for further
\n
details.
\n
\ue001
The Stage 3 inflows remained broadly stable, albeit with signs of an upward drift in default rates, reflecting slightly poorer arrears performance on mortgages recently rolled-off
\n
onto higher product rates. The increase in Stage 3 ECL primarily reflected increases in ECL for post-default interest.
\n
\ue001
There were net flows into Stage 2 from Stage 1 in line with a modest upward trend in arrears.
\n
\ue001
The relatively small ECL cost for net re-measurement on transfer into Stage 3 included the effect of risk targeted ECL adjustments, when previously in the good book. Refer to the
\n
Governance and post model adjustments section for further details.
\n
\ue001
Write-off occurs once the repossessed property has been sold and there is a residual shortfall balance remaining outstanding. This would typically be within five years from default
\n
but can be longer.
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Retail Banking - credit cards
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
3,475
70
2,046
204
146
89
5,667
363
Currency translation and other adjustments
-
(1)
-
1
4
3
4
3
Transfers from Stage 1 to Stage 2
(1,895)
(42)
1,895
42
-
-
-
-
Transfers from Stage 2 to Stage 1
1,300
94
(1,300)
(94)
-
-
-
-
Transfers to Stage 3
(24)
(1)
(158)
(58)
182
59
-
-
Transfers from Stage 3
3
1
9
3
(12)
(4)
-
-
Net re-measurement of ECL on stage transfer
(58)
167
46
155
Changes in risk parameters
(3)
(13)
37
21
Other changes in net exposure
1,664
16
(458)
(66)
(56)
(2)
1,150
(52)
Other (P&L only items)
-
-
(9)
(9)
Income statement (releases)/charges
(45)
88
72
115
Amounts written-off
-
-
-
-
(102)
(102)
(102)
(102)
Unwinding of discount
-
-
(9)
(9)
At 31 December 2024
4,523
76
2,034
186
162
117
6,719
379
Net carrying amount
4,447
1,848
45
6,340
At 1 January 2023
3,062
61
1,098
120
113
71
4,273
252
2023 movements
413
9
948
84
33
18
1,394
111
At 31 December 2023
3,475
70
2,046
204
146
89
5,667
363
Net carrying amount
3,405
1,842
57
5,304
\n
\ue001
Overall ECL for cards remained broadly in line with 2023, with portfolio growth mitigated by stable portfolio performance, lower PD levels and a reduction in economic uncertainty
\n
post model adjustment levels.
\n
\ue001
Credit card balances continued to grow during the year, in line with industry trends in the UK, reflecting strong customer demand, while sustaining robust risk appetite.
\n
\ue001
While portfolio performance remained stable, a net flow into Stage 2 from Stage 1 was observed, with the typical maturation of lending after a period of strong growth in recent
\n
years. The staging ECL uplift was offset by modelling updates in PDs and LGDs.
\n
\ue001
Flow rates into Stage 3 showed modest improvement in 2024 in comparison to 2023, in line with broader portfolio performance.
\n
\ue001
Charge-off (analogous to partial write-off) typically occurs after 12 missed payments.
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Retail Banking - other personal unsecured
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
5,240
149
1,657
238
963
758
7,860
1,145
Currency translation and other adjustments
-
1
1
-
20
21
21
22
Transfers from Stage 1 to Stage 2
(2,156)
(103)
2,156
103
-
-
-
-
Transfers from Stage 2 to Stage 1
1,672
229
(1,672)
(229)
-
-
-
-
Transfers to Stage 3
(69)
(3)
(304)
(126)
373
129
-
-
Transfers from Stage 3
9
3
23
9
(32)
(12)
-
-
Net re-measurement of ECL on stage transfer
(161)
269
29
137
Changes in risk parameters
(69)
(40)
107
(2)
Other changes in net exposure
909
81
(395)
(41)
(179)
(45)
335
(5)
Other (P&L only items)
1
(1)
32
32
Income statement (releases)/charges
(148)
187
123
162
Amounts written-off
-
-
(1)
(1)
(312)
(312)
(313)
(313)
Unwinding of discount
-
-
(34)
(34)
At 31 December 2024
5,605
127
1,465
182
833
641
7,903
950
Net carrying amount
5,478
1,283
192
6,953
At 1 January 2023
4,784
111
2,028
269
779
631
7,591
1,011
2023 movements
456
38
(371)
(31)
184
127
269
134
At 31 December 2023
5,240
149
1,657
238
963
758
7,860
1,145
Net carrying amount
5,091
1,419
205
6,715
\n
\ue001
Total ECL decreased, mainly in Stage 3, due to the reduction of balances from debt sale activity on Personal unsecured portfolios.
\n
\ue001
Stable portfolio performance was observed during the year. PD modelling updates coupled with LGD modelling updates were reflected in the performing book ECL, with coverage
\n
levels showing a modest reduction since the prior period.
\n
\ue001
Flow rates into Stage 3 reduced for the year, in line with broader portfolio performance.
\n
\ue001
Unsecured retail performing balances grew steadily in 2024, largely in line with industry trends.
\n
\ue001
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.
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements
(audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Commercial & Institutional total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
176,302
356
17,029
447
2,161
819
195,492
1,622
Currency translation and other adjustments
(826)
-
(41)
(1)
22
65
(845)
64
Transfers from Stage 1 to Stage 2
(16,117)
(62)
16,117
62
-
-
-
-
Transfers from Stage 2 to Stage 1
11,022
190
(11,022)
(190)
-
-
-
-
Transfers to Stage 3
(90)
(1)
(1,745)
(76)
1,835
77
-
-
Transfers from Stage 3
194
14
315
17
(509)
(31)
-
-
Net re-measurement of ECL on stage transfer
(148)
184
263
299
Changes in risk parameters
(118)
(39)
61
(96)
Other changes in net exposure
13,282
58
(4,484)
(58)
(1,011)
(53)
7,787
(53)
Other (P&L only items)
3
(8)
(47)
(52)
Income statement (releases)/charges
(205)
79
224
98
Amounts written-off
-
-
-
-
(223)
(223)
(223)
(223)
Unwinding of discount
-
-
(37)
(37)
At 31 December 2024
183,767
289
16,169
346
2,275
941
202,211
1,576
Net carrying amount
183,478
15,823
1,334
200,635
At 1 January 2023
160,352
342
24,711
534
2,198
747
187,261
1,623
2023 movements
15,950
14
(7,682)
(87)
(37)
72
8,231
(1)
At 31 December 2023
176,302
356
17,029
447
2,161
819
195,492
1,622
Net carrying amount
175,946
16,582
1,342
193,870
\n
\ue001
The growth in exposures was mainly driven by non-bank financial institutions.
\n
\ue001
Stage 1 and Stage 2 ECL reduced, reflecting a combination of stable portfolio performance, reductions in post model adjustments and net improvements in economic scenarios.
\n
\ue001
Stage 3 ECL increased due to a small number of large counterparties, but in total, the number of individual defaults remained low. Flows into Stage 3 were consistent with 2023
\n
and considerably below historical trends.
\n
\ue001
Write-offs levels continue to remain below historical trends.
\n
\ue001
Overall, impairment charges were low, with Stage 3 individual charges offset by performing book releases.
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Commercial & Institutional - corporate
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
61,402
226
12,275
344
1,454
602
75,131
1,172
Currency translation and other adjustments
(127)
-
(34)
(1)
22
53
(139)
52
Inter-group transfers
98
1
38
3
3
-
139
4
Transfers from Stage 1 to Stage 2
(10,835)
(47)
10,835
47
-
-
-
-
Transfers from Stage 2 to Stage 1
7,725
144
(7,725)
(144)
-
-
-
-
Transfers to Stage 3
(77)
(1)
(1,358)
(55)
1,435
56
-
-
Transfers from Stage 3
154
11
262
12
(416)
(23)
-
-
Net re-measurement of ECL on stage transfer
(112)
138
186
212
Changes in risk parameters
(74)
(29)
51
(52)
Other changes in net exposure
4,235
27
(2,843)
(42)
(737)
(41)
655
(56)
Other (P&L only items)
3
(7)
(43)
(47)
Income statement (releases)/charges
(156)
60
153
57
Amounts written-off
-
-
-
-
(199)
(199)
(199)
(199)
Unwinding of discount
-
-
(26)
(26)
At 31 December 2024
62,575
175
11,450
273
1,562
659
75,587
1,107
Net carrying amount
62,400
11,177
903
74,480
\n
\ue001
There was modest exposure growth, with increased new lending largely offset by repayments.
\n
\ue001
Stage 1 and Stage 2 ECL reduced, reflecting a combination of stable portfolio performance, reductions in post model adjustments and net improvements in economic scenarios.
\n
\ue001
Stage 3 ECL increased due to charges on a small number of large counterparties, partially offset by write-offs.
\n
\ue001
Overall, impairment charges were low, with Stage 3 individual charges offset by performing book releases.
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Commercial & Institutional - property
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
26,040
94
3,155
89
606
195
29,801
378
Currency translation and other adjustments
(10)
1
(3)
-
1
5
(12)
6
Inter-group transfers
(45)
(1)
(43)
(2)
(3)
-
(91)
(3)
Transfers from Stage 1 to Stage 2
(3,143)
(13)
3,143
13
-
-
-
-
Transfers from Stage 2 to Stage 1
2,291
37
(2,291)
(37)
-
-
-
-
Transfers to Stage 3
(9)
-
(304)
(16)
313
16
-
-
Transfers from Stage 3
34
3
49
4
(83)
(7)
-
-
Net re-measurement of ECL on stage transfer
(28)
37
44
53
Changes in risk parameters
(35)
(13)
10
(38)
Other changes in net exposure
2,310
19
(726)
(14)
(223)
(9)
1,361
(4)
Other (P&L only items)
-
-
(1)
(1)
Income statement (releases)/charges
(44)
10
44
10
Amounts written-off
-
-
-
-
(21)
(21)
(21)
(21)
Unwinding of discount
-
-
(8)
(8)
At 31 December 2024
27,468
77
2,980
61
590
225
31,038
363
Net carrying amount
27,391
2,919
365
30,675
\n
\ue001
Stage 1 and Stage 2 ECL reduced, reflecting a combination of stable portfolio performance, reductions in post model adjustments and net improvements in economic scenarios.
\n
\ue001
Stage 3 ECL increased due to charges on a small number of large counterparties, partially offset by write-offs.
\n
\ue001
Overall, impairment charges were low, with Stage 3 individual charges offset by performing book releases.
Flow statements (audited)
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Commercial & Institutional - other
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
88,860
36
1,599
14
101
22
90,560
72
Currency translation and other adjustments
(689)
-
(5)
-
(1)
8
(695)
8
Inter-group transfers
(53)
-
4
-
-
-
(49)
-
Transfers from Stage 1 to Stage 2
(2,140)
(3)
2,140
3
-
-
-
-
Transfers from Stage 2 to Stage 1
1,006
9
(1,006)
(9)
-
-
-
-
Transfers to Stage 3
(4)
-
(83)
(6)
87
6
-
-
Transfers from Stage 3
6
-
4
1
(10)
(1)
-
-
Net re-measurement of ECL on stage transfer
(7)
9
33
35
Changes in risk parameters
(10)
3
1
(6)
Other changes in net exposure
6,738
12
(914)
(3)
(52)
(4)
5,772
5
Other (P&L only items)
-
-
(3)
(3)
Income statement (releases)/charges
(5)
9
27
31
Amounts written-off
-
-
-
-
(2)
(2)
(2)
(2)
Unwinding of discount
-
-
(3)
(3)
At 31 December 2024
93,724
37
1,739
12
123
57
95,586
106
Net carrying amount
93,687
1,727
66
95,480
\ue001
The growth in exposures was mainly driven by non-bank financial institutions.
\ue001
Stage 3 ECL increased due to charges on a small number of large counterparties.Asset quality (audited)
The table below shows asset quality bands of gross loans and ECL, by stage, for the Personal portfolio.
Gross loans
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
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
Mortgages
AQ1-AQ4
104,793
8,416
-
113,209
29
16
-
45
0.0
0.2
-
0.0
AQ5-AQ8
81,263
11,683
-
92,946
48
38
-
86
0.1
0.3
-
0.1
AQ9
194
962
-
1,156
-
6
-
6
-
0.6
-
0.5
AQ10
-
-
2,535
2,535
-
-
325
325
-
-
12.8
12.8
186,250
21,061
2,535
209,846
77
60
325
462
0.0
0.3
12.8
0.2
Credit cards
AQ1-AQ4
128
-
-
128
1
-
-
1
0.8
-
-
0.8
AQ5-AQ8
4,650
1,866
-
6,516
75
169
-
244
1.6
9.1
-
3.7
AQ9
23
87
-
110
1
17
-
18
4.4
19.5
-
16.4
AQ10
-
-
176
176
-
-
118
118
-
-
67.1
67.1
4,801
1,953
176
6,930
77
186
118
381
1.6
9.5
67.1
5.5
Other personal
AQ1-AQ4
691
127
-
818
6
14
-
20
0.9
11.0
-
2.4
AQ5-AQ8
6,521
1,359
-
7,880
120
134
-
254
1.8
9.9
-
3.2
AQ9
55
136
-
191
4
35
-
39
7.3
25.7
-
20.4
AQ10
-
-
860
860
-
-
656
656
-
-
76.3
76.3
7,267
1,622
860
9,749
130
183
656
969
1.8
11.3
76.3
9.9
Total
AQ1-AQ4
105,612
8,543
-
114,155
36
30
-
66
0.0
0.4
-
0.1
AQ5-AQ8
92,434
14,908
-
107,342
243
341
-
584
0.3
2.3
-
0.5
AQ9
272
1,185
-
1,457
5
58
-
63
1.8
4.9
-
4.3
AQ10
-
-
3,571
3,571
-
-
1,099
1,099
-
-
30.8
30.8
198,318
24,636
3,571
226,525
284
429
1,099
1,812
0.1
1.7
30.8
0.8
Asset quality (audited)
\n\n \n
Gross loans
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
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
Mortgages
AQ1-AQ4
110,694
7,572
-
118,266
51
20
-
71
0.1
0.3
-
0.1
AQ5-AQ8
77,290
9,578
-
86,868
37
37
-
74
0.1
0.4
-
0.1
AQ9
156
704
-
860
-
4
-
4
-
0.6
-
0.5
AQ10
-
-
2,281
2,281
-
-
271
271
-
-
11.9
11.9
188,140
17,854
2,281
208,275
88
61
271
420
0.1
0.3
11.9
0.2
Credit cards
AQ1-AQ4
124
-
-
124
1.0
-
-
1.0
0.8
-
-
0.8
AQ5-AQ8
3,612
1,965
-
5,577
75
193
-
268
2.1
9.8
-
4.8
AQ9
6
57
-
63
-
14
-
14
-
24.6
-
22.2
AQ10
-
-
140
140
-
-
93
93
-
-
66.4
66.4
3,742
2,022
140
5,904
76
207
93
376
2.0
10.2
66.4
6.4
Other personal
AQ1-AQ4
764
150
-
914
11
23
-
34
1.4
15.3
-
3.7
AQ5-AQ8
6,178
1,374
-
7,552
138
180
-
318
2.2
13.1
-
4.2
AQ9
41
109
-
150
3
35
-
38
7.3
32.1
-
25.3
AQ10
-
-
979
979
-
-
778
778
-
-
79.5
79.5
6,983
1,633
979
9,595
152
238
778
1,168
2.2
14.6
79.5
12.2
Total
AQ1-AQ4
111,582
7,722
-
119,304
63
43
-
106
0.1
0.6
-
0.1
AQ5-AQ8
87,080
12,917
-
99,997
250
410
-
660
0.3
3.2
-
0.7
AQ9
203
870
-
1,073
3
53
-
56
1.5
6.1
-
5.2
AQ10
-
-
3,400
3,400
-
-
1,142
1,142
-
-
33.6
33.6
198,865
21,509
3,400
223,774
316
506
1,142
1,964
0.2
2.4
33.6
0.9
\n
\ue001
In the Personal portfolio, the majority of exposures were in AQ4 and AQ5 within mortgages. In line with the stable mortgage portfolio performance overall, the distribution of lending
\n
across AQ bands remained largely consistent with the prior year.
\n
\ue001
Debt sale activity during the year reduced the proportion of AQ10 in Other Personal lending.
Asset quality (audited)
\n
The table below shows asset quality bands of gross loans and ECL, by stage, for the Non-Personal portfolio.
\n\n \n
Gross loans
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
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
Corporate and other
(1)
AQ1-AQ4
41,509
2,409
-
43,918
32
19
-
51
0.1
0.8
-
0.1
AQ5-AQ8
53,448
11,783
-
65,231
232
306
-
538
0.4
2.6
-
0.8
AQ9
34
272
-
306
-
19
-
19
-
7.0
-
6.2
AQ10
-
-
2,279
2,279
-
-
896
896
-
-
39.3
39.3
94,991
14,464
2,279
111,734
264
344
896
1,504
0.3
2.4
39.3
1.4
Financial institutions
AQ1-AQ4
64,845
233
-
65,078
21
2
-
23
0.0
0.9
-
0.0
AQ5-AQ8
4,176
996
-
5,172
17
9
-
26
0.4
0.9
-
0.5
AQ9
-
12
-
12
-
1
-
1
-
8.3
-
8.3
AQ10
-
-
59
59
-
-
40
40
-
-
67.8
67.8
69,021
1,241
59
70,321
38
12
40
90
0.1
1.0
67.8
0.1
Sovereign
AQ1-AQ4
1,364
1
-
1,365
12
1
-
13
0.9
100.0
-
1.0
AQ5-AQ8
127
-
-
127
-
-
-
-
-
-
-
-
AQ9
-
132
-
132
-
1
-
1
-
0.8
-
0.8
AQ10
-
-
21
21
-
-
5
5
-
-
23.8
23.8
1,491
133
21
1,645
12
2
5
19
0.8
1.5
23.8
1.2
Total
AQ1-AQ4
107,718
2,643
-
110,361
65
22
-
87
0.1
0.8
-
0.1
AQ5-AQ8
57,751
12,779
-
70,530
249
315
-
564
0.4
2.5
-
0.8
AQ9
34
416
-
450
-
21
-
21
-
5.1
-
4.7
AQ10
-
-
2,359
2,359
-
-
941
941
-
-
39.9
39.9
165,503
15,838
2,359
183,700
314
358
941
1,613
0.2
2.3
39.9
0.9
Asset quality (audited)
Gross loans
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
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
Corporate and other
(1)
AQ1-AQ4
40,875
1,342
-
42,217
43
18
-
61
0.1
1.3
-
0.1
AQ5-AQ8
50,084
13,734
-
63,818
293
411
-
704
0.6
3.0
-
1.1
AQ9
47
339
-
386
-
25
-
25
-
7.4
-
6.5
AQ10
-
-
2,125
2,125
-
-
809
809
-
-
38.1
38.1
91,006
15,415
2,125
108,546
336
454
809
1,599
0.4
2.9
38.1
1.5
Financial institutions
AQ1-AQ4
52,702
665
-
53,367
28
6
-
34
0.1
0.9
-
0.1
AQ5-AQ8
3,402
284
-
3,686
16
9
-
25
0.5
3.2
-
0.7
AQ9
1
17
-
18
-
-
-
-
-
-
-
-
AQ10
-
-
16
16
-
-
7
7
-
-
43.8
43.8
56,105
966
16
57,087
44
15
7
66
0.1
1.6
43.8
0.1
Sovereign
AQ1-AQ4
2,487
1
-
2,488
13
1
-
14
0.5
100
-
0.6
AQ5-AQ8
123
-
-
123
-
-
-
-
-
-
-
-
AQ9
-
-
-
-
-
-
-
-
-
-
-
-
AQ10
-
-
22
22
-
-
2
2
-
-
9.1
9.1
2,610
1
22
2,633
13
1
2
16
0.5
100.0
9.1
0.6
Total
AQ1-AQ4
96,064
2,008
-
98,072
84
25
-
109
0.1
1.3
-
0.1
AQ5-AQ8
53,609
14,018
-
67,627
309
420
-
729
0.6
3.0
-
1.1
AQ9
48
356
-
404
-
25
-
25
-
7.0
-
6.2
AQ10
-
-
2,163
2,163
-
-
818
818
-
-
37.8
37.8
149,721
16,382
2,163
168,266
393
470
818
1,681
0.3
2.9
37.8
1.0
(1)
Previously published sectors for the Non-personal portfolio have been re-presented to reflect internal sector reporting. Property is now included in corporate and other.
\ue001
Asset quality remained broadly stable, with a slightly higher proportion of exposures within AQ1-AQ4. Credit grades are reassessed for all customers at least annually, when a
new request is made, if a material credit event impacting that customer has occurred or when a scheduled review is performed.Securities financing transactions and collateral (audited)
The table below shows securities financing transactions in Commercial & Institutional and Central items & other. Balance sheet captions include balances held at all classifications
\n
under IFRS.
Reverse repos
Repos
Of which:
Outside netting
Of which:
Outside netting
Total
can be offset
arrangements
Total
can be offset
arrangements
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Gross
87,901
87,861
40
68,024
67,321
703
IFRS offset
(23,883)
(23,883)
-
(23,883)
(23,883)
-
Carrying value
64,018
63,978
40
44,141
43,438
703
Master netting arrangements
(1,549)
(1,549)
-
(1,549)
(1,549)
-
Securities collateral
(62,217)
(62,217)
-
(41,889)
(41,889)
-
Potential for offset not recognised under IFRS
(63,766)
(63,766)
-
(43,438)
(43,438)
-
Net
252
212
40
703
-
703
2023
Gross
77,508
77,050
458
66,767
66,047
720
IFRS offset
(25,903)
(25,903)
-
(25,903)
(25,903)
-
Carrying value
51,605
51,147
458
40,864
40,144
720
Master netting arrangements
(669)
(669)
-
(669)
(669)
-
Securities collateral
(50,287)
(50,287)
-
(39,475)
(39,475)
-
Potential for offset not recognised under IFRS
(50,956)
(50,956)
-
(40,144)
(40,144)
-
Net
649
191
458
720
-
720
Derivatives (audited)
The table below shows derivatives by type of contract. The master netting agreements and collateral shown do not result in a net presentation on the balance sheet under IFRS. A
significant proportion of the derivatives relate to trading activities in Commercial & Institutional. The table also includes hedging derivatives in Central items & other.
2024
2023
Notional
GBP
USD
EUR
Other
Total
Assets
Liabilities
Notional
Assets
Liabilities
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3m
\u00a3m
\u00a3bn
\u00a3m
\u00a3m
Gross exposure
97,152
93,109
99,501
96,264
IFRS offset
(18,746)
(21,027)
(20,597)
(23,869)
Carrying value
3,551
3,425
5,500
1,152
13,628
78,406
72,082
13,403
78,904
72,395
Of which:
Interest rate
(1)
3,228
1,973
4,847
285
10,333
37,499
31,532
10,268
44,563
38,483
Exchange rate
321
1,446
645
867
3,279
40,797
40,306
3,120
34,161
33,586
Credit
-
6
8
-
14
110
244
15
180
326
Equity and commodity
2
-
-
-
2
-
-
-
-
-
Carrying value
13,628
78,406
72,082
13,403
78,904
72,395
Counterparty mark-to-market
netting
(61,883)
(61,883)
(60,355)
(60,355)
Cash collateral
(10,005)
(5,801)
(12,284)
(6,788)
Securities collateral
(4,072)
(896)
(3,408)
(1,664)
Net exposure
2,446
3,502
2,857
3,588
Banks
(2)
214
345
335
555
Other financial institutions
(3)
1,429
1,456
1,422
1,304
Corporate
(4)
769
1,669
1,063
1,690
Government
(5)
34
32
37
39
Net exposure
2,446
3,502
2,857
3,588
UK
1,061
1,774
1,283
1,912
Europe
875
978
800
1,209
US
443
604
607
381
RoW
67
146
167
86
Net exposure
2,446
3,502
2,857
3,588
Asset quality of uncollateralised derivative assets
AQ1-AQ4
2,049
2,382
AQ5-AQ8
394
471
AQ9-AQ10
3
4
Net exposure
2,446
2,857
(1)
The notional amount of interest rate derivatives includes \u00a37,321 billion (2023 \u2013 \u00a37,280 billion) in respect of contracts cleared through central clearing counterparties.
(2)
Transactions with certain counterparties with whom NatWest Group has netting arrangements but collateral is not posted on a daily basis; certain transactions with specific terms that may not fall within netting and collateral arrangements; derivative
positions in certain jurisdictions where the collateral agreements are not deemed to be legally enforceable.
(3)
Includes transactions with securitisation vehicles and funds where collateral posting is contingent on NatWest Group\u2019s external rating.
(4)
Mainly large corporates with whom NatWest Group may have netting arrangements in place with no collateral posting.
(5)
Sovereigns and supranational entities with no collateral arrangements, collateral arrangements that are not considered enforceable, or one-way collateral agreements in their favour
.
Debt securities (audited)
The table below shows debt securities held at mandatory fair value through profit or loss by issuer as well as ratings based on the lowest of Standard & Poor\u2019s, Moody\u2019s and Fitch.
Refer to Note 12 on Trading assets and liabilities for details on short positions.
Central and local government
UK
US
Other
Financial institutions
Corporate
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
AAA
-
-
1,335
1,368
-
2,703
AA to AA+
-
3,734
74
569
2
4,379
A to AA-
2,077
-
1,266
381
519
4,243
BBB- to A-
-
-
831
562
885
2,278
Non-investment grade
-
-
-
108
167
275
Total
2,077
3,734
3,506
2,988
1,573
13,878
2023
AAA
-
-
1,333
1,132
-
2,465
AA to AA+
-
2,600
19
762
4
3,385
A to AA-
2,729
-
1,017
251
283
4,280
BBB- to A-
-
-
693
295
489
1,477
Non-investment grade
-
-
-
198
149
347
Total
2,729
2,600
3,062
2,638
925
11,954
2.3. Loan impairment provisions:
expected credit losses (ECL)
At each balance sheet date each financial
asset or portfolio of financial assets
measured at amortised cost or at fair
value through other comprehensive
income, issued financial guarantee and
loan commitment (other than those
classified as held for trading) is assessed
for impairment. Any change in
impairment is reported in the income
statement.
Loss allowances are forward-looking,
based on 12-month ECL where there has
not been a significant increase in credit
risk rating, otherwise allowances are
based on lifetime expected losses.
ECL is a probability-weighted estimate of
credit losses. The probability is
determined by the risk of default which is
applied to the cash flow estimates. In the
absence of a change in credit rating,
allowances are recognised when there is
a reduction in the net present value of
expected cash flows. Following a
significant increase in credit risk, ECL is
adjusted from 12 months to lifetime. This
will lead to a higher impairment charge.
The measurement of expected credit loss
considers the ability of borrowers to
make payments as they fall due. Future
cashflows are discounted, so long-dated
cashflows are less likely to affect current
expectations on credit loss. Our
assessment of sector specific risks, and
whether additional adjustments are
required, include expectations of the
ability of those sectors to meet their
financing needs in the market. Changes
in credit stewardship and credit risk
appetite that stem from climate transition
policies may directly affect our positions.
Judgement is exercised as follows:
\ue001
Non-modelled portfolios
\u2013 use a
standardised capital requirement
under Basel II. Under IFRS 9, they
have bespoke treatments for the
identification of significant increase in
credit risk. Benchmark PDs, EADs
and LGDs are reviewed annually for
appropriateness. The ECL calculation
is based on expected future cash
flows, which is typically applied at a
portfolio level.
\ue001
Multiple economic scenarios (MES)
\u2013
the central, or base, scenario is most
critical to the ECL calculation,
independent of the method used to
generate a range of alternative
outcomes and their probabilities.
\ue001
Significant increase in credit risk
\u2013
IFRS 9 requires that at each reporting
date, an entity shall assess whether
the credit risk on an account has
increased significantly since initial
recognition. Part of this assessment
requires a comparison to be made
between the current lifetime PD (i.e.
the current probability of default over
the remaining lifetime) with the
equivalent lifetime PD as determined
at the date of initial recognition.
On restructuring where a financial asset
is not derecognised, the revised cash
flows are used in re-estimating the credit
loss. Where restructuring causes
derecognition of the original financial
asset, the fair value of the replacement
asset is used as the closing cash flow of
the original asset.
Where in the course of the orderly
realisation of a loan, it is exchanged for
equity shares or property, the exchange
is accounted for as the sale of the loan
and the acquisition of equity securities or
investment property. Where our acquired
interest is in equity shares, relevant
policies for control, associates and joint
ventures apply.
Impaired financial assets are written off
and therefore derecognised from the
balance sheet when we conclude that
there is no longer any realistic prospect
of recovery of part, or all, of the loan. For
financial assets that are individually
assessed for impairment, the timing of
the write-off is determined on a case-by-
case basis.
Such financial assets are reviewed
regularly and write-off will be prompted
by bankruptcy, insolvency, re-negotiation,
and similar events
The typical time frames from initial
impairment to write-off for our
collectively assessed portfolios are:
\ue001
Retail mortgages: write-off usually
occurs within five years, or earlier,
when an account is closed, but can
be longer where the customer
engages constructively;
\ue001
Credit cards: the irrecoverable
amount is typically written off after
twelve arrears cycles or at four years
post default any remaining amounts
outstanding are written off;
\ue001
Overdrafts and other unsecured
loans: write-off occurs within six
years;
\ue001
Commercial loans: write-offs are
determined in the light of individual
circumstances; and uncollateralised
impaired business loans are generally
written off within five years.14 Loan impairment provisions
There is a risk that customers and counterparties fail to meet their contractual obligation to settle outstanding amounts, for which we hold expected credit losses
(ECL). The calculation of ECL considers historical, current, and forward-looking information to determine the amount we do not expect to recover. It considers losses
on both defaulted exposures and performing exposures that may default in future. ECL is recognised on drawn exposures, loans commitments, and contingent
liabilities.
For accounting policy information refer to Accounting policy 2.3. Further disclosures on credit risk and information on ECL methodology are shown from page 181.
Loan exposure and impairment metrics
The table below summarises loans and credit impairment measures within the scope of IFRS 9 Expected credit loss framework.
2024
2023
\u00a3m
\u00a3m
Loans - amortised cost and FVOCI
(1,2)
Stage 1
363,821
348,586
Stage 2
40,474
37,891
Stage 3
5,930
5,563
Of which: individual
1,285
1,031
Of which: collective
4,645
4,532
410,225
392,040
ECL provisions
(3)
- Stage 1
598
709
- Stage 2
787
976
- Stage 3
2,040
1,960
Of which: individual
451
332
Of which: collective
1,589
1,628
3,425
3,645
ECL provision coverage
(4)
- Stage 1 (%)
0.16
0.20
- Stage 2 (%)
1.94
2.58
- Stage 3 (%)
34.40
35.23
0.83
0.93
Continuing operations
Impairment (releases)/losses
ECL charge
(5)
359
578
Stage 1
(438)
(397)
Stage 2
360
645
Stage 3
437
330
Of which: individual
192
89
Of which: collective
245
241
Amounts written off
654
319
Of which: individual
144
42
Of which: collective
510
277
(1)
The table shows gross loans only and excludes
amounts that are outside the scope of the ECL
framework. Refer to Financial instruments within the
scope of the IFRS 9 ECL framework for further
details. Other financial assets within the scope of the
IFRS 9 ECL framework were cash and balances at
central banks totalling \u00a391.8 billion (2023 \u2013 \u00a3103.1
billion) and debt securities of \u00a362.4 billion (2023 \u2013
\u00a350.1 billion).
(2)
Includes loans to customers and banks.
(3)
Includes \u00a34 million (2023 - \u00a39 million) related to
assets classified as FVOCI and \u00a30.1 billion (2023 -
\u00a30.1 billion) related to off-balance sheet exposures.
(4)
ECL provisions coverage is calculated as ECL
provisions divided by loans \u2013 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.
(5)
Includes a \u00a312 million release (2023 - \u00a316 million
release) related to other financial assets, of which \u00a34
million release (2023 - \u00a36 million charge) related to
assets classified as FVOCI; and \u00a35 million release
(2023 - \u00a39 million release) related to contingent
liabilities.
Credit risk enhancement and mitigation
For information on Credit risk enhancement and mitigation held as security, refer to Risk and capital management \u2013 Credit risk enhancement and mitigation section.
Critical accounting policy: Loan impairment provisions
Accounting policy 2.3 sets out how the expected loss approach is applied. At 31 December 2024, impairment provisions amounted to \u00a33,425 million (2023 - \u00a33,645 million). A loan is
impaired when there is objective evidence that the cash flows will not occur in the manner expected when the loan was advanced. Such evidence includes changes in the credit rating
of a borrower, the failure to make payments in accordance with the loan agreement, significant reduction in the value of any security, breach of limits or covenants, and observable
data about relevant macroeconomic measures.
The impairment loss is the difference between the carrying value of the loan and the present value of estimated future cash flows at the loan's original effective interest rate.
The measurement of credit impairment under the IFRS expected loss model depends on management\u2019s assessment of any potential deterioration in the creditworthiness of the
borrower, its modelling of expected performance and the application of economic forecasts. All three elements require judgements that are potentially significant to the estimate of
impairment losses. For further information and sensitivity analysis, refer to Risk and capital management \u2013 Measurement uncertainty and ECL sensitivity analysis section.
IFRS 9 ECL model design principles
Refer to Credit risk \u2013 IFRS 9 ECL model design principles section for further details.
Approach for multiple economic scenarios (MES)
The base scenario plays a greater part in the calculation of ECL than the approach to MES. Refer to Credit risk \u2013 Economic loss drivers - Probability weightings of scenarios section
for further details.", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00241": { "value": "Credit risk Definition (audited)
Credit risk is the risk that customers,
counterparties or issuers fail to meet a
contractual obligation to settle
outstanding amounts.
Sources of risk
(audited)
The principal sources of credit risk for
NatWest Group are lending, off-balance
sheet products, derivatives and securities
financing, and debt securities. NatWest
Group is also exposed to settlement risk
through foreign exchange, trade finance
and payments activities. Governance
(audited)
The credit risk function provides oversight
and challenge of frontline credit risk
management activities. Governance
activities include:
\ue001
Defining and proposing credit risk
appetite measures for Board approval.
\ue001
Establishing credit risk policy, standards
and toolkits which set out the
mandatory limits and parameters
required to ensure that credit risk is
managed within risk appetite and which
provide the minimum standards for the
identification, assessment, management,
monitoring and reporting of credit risk.
\ue001
Oversight of the first line of defence to
ensure that credit risk remains within
the appetite set by the Board and that it
is being managed adequately and
effectively.
\ue001
Assessing the adequacy of ECL
provisions including approving key IFRS
9 inputs (such as significant increase in
credit risk (SICR) thresholds) and any
necessary in-model and post model
adjustments through NatWest Group
and business unit provisions and model
committees.
\ue001
Development and approval of credit
grading models.
\ue001
Providing regular reporting on credit risk
to the Board Risk Committee and Board.Identification and measurement
Credit stewardship
(audited)
\n
Risks are identified through relationship
\n
management and credit stewardship of
\n
customers and portfolios. Credit
\n
stewardship takes place throughout the
\n
customer relationship, beginning with the
\n
initial approval. It includes the application
\n
of credit assessment standards, credit
\n
risk mitigation and collateral, ensuring
\n
that credit documentation is complete
\n
and appropriate, carrying out regular
\n
portfolio or customer reviews and
\n
problem debt identification and
\n
management.
\n
Asset quality (audited)
\n
All credit grades map to an asset quality
\n
(AQ) scale, used for financial reporting.
\n
This AQ scale is based on Basel PDs.
\n
Performing loans are defined as AQ1-
\n
AQ9 (where the PD is less than 100%)
\n
and defaulted non-performing loans as
\n
AQ10 or Stage 3 under IFRS 9 (where
\n
the PD is 100%). Loans are defined as
\n
defaulted when the payment status
\n
becomes 90 days past due, or earlier if
\n
there is clear evidence that the borrower
\n
is unlikely to repay, for example
bankruptcy or insolvency.Forbearance
(audited)
Forbearance takes place when a
concession is made on the contractual
terms of a loan/debt in response to a
customer\u2019s financial difficulties.
The aim of forbearance is to support and
restore the customer to financial health
while minimising risk. To ensure that
forbearance is appropriate for the needs
of the customer, minimum standards are
applied when assessing, recording,
monitoring and reporting of forbearance.
A credit exposure may be forborne more
than once, generally where a temporary
concession has been granted and
circumstances warrant another
temporary or permanent revision of the
loan\u2019s terms.Impairment, provisioning and
write-offs (audited)
In the overall assessment of credit risk,
impairment provisioning and write-offs
are used as key indicators of credit
quality.
NatWest Group\u2019s IFRS 9 provisioning
models, which use existing internal
ratings based (IRB) models as a starting
point, incorporate term structures and
economic forecasts.
Regulatory conservatism within the IRB
models has been removed as appropriate
to comply with the IFRS 9 requirement
for unbiased ECL estimates.
Five key areas may materially influence
the measurement of credit impairment
under IFRS 9 \u2013 two of these relate to
model build and three relate to model
application:
Model build:
\ue001
The determination of economic
indicators that have most influence
on credit loss for each portfolio and
the severity of impact (this leverages
existing stress testing models which
are reviewed annually).
\ue001
The build of term structures to
extend the determination of the risk
of loss beyond 12 months that will
influence the impact of lifetime loss
for exposures in Stage 2.
\n\n\n\n\n\n\n\n\n\n\n\n
Model application:
\n
\ue001
The assessment of the SICR and the
\n
formation of a framework capable of
\n
consistent application.
\n
\ue001
The determination of asset lifetimes
\n
that reflect behavioural
\n
characteristics while also
\n
representing management actions
\n
and processes (using historical data
\n
and experience).
\n
\ue001
The choice of forward-looking
\n
economic scenarios and their
\n
respective probability weights.
\n
For accounting policy information, refer
\n
to Accounting policy 2.3.
\n
IFRS 9 ECL model design principles
\n
(audited)
\n
Modelling of ECL for IFRS 9 follows the
\n
conventional approach to divide the
\n
estimation of credit losses into its
\n
component parts of PD, LGD and EAD.
\n
To meet IFRS 9 requirements, the PD,
\n
LGD and EAD parameters differ from
\n
their Pillar 1 IRB counterparts in the
\n
following aspects:
\n
\ue001
Unbiased \u2013
conservatism has been
\n
removed from IFRS 9 parameters to
\n
produce unbiased estimates.
\n
\ue001
Point-in-time
\u2013 IFRS 9 parameters
\n
reflect actual economic conditions at
\n
the reporting date instead of long-run
\n
average or downturn conditions.
\n
\ue001
Economic forecasts
\u2013 IFRS 9 PD
\n
estimates and, where appropriate,
\n
EAD and LGD estimates reflect
\n
forward-looking economic conditions.
\n
\ue001
Lifetime measurement
\u2013 IFRS 9 PD,
\n
LGD and EAD are provided as multi-
\n
period term structures up to
\n
exposure lifetimes instead of over a
\n
fixed one-year horizon.
\n
IFRS 9 requires that, at each reporting
\n
date, an entity shall assess whether the
\n
credit risk on an account has increased
\n
significantly since initial recognition. Part
\n
of this assessment requires a comparison
\n
to be made between the current lifetime
\n
PD (i.e. the PD over the remaining lifetime
\n
at the reporting date) and the equivalent
\n
lifetime PD as determined at the date of
\n
initial recognition.
\n
For assets originated before IFRS 9 was
\n
introduced, comparable lifetime
\n
origination PDs did not exist.
\n
These have been retrospectively created
\n
using the relevant model inputs applicable
\n
at initial recognition.
\n
PD estimates
\n
Personal models
\n
Personal PD models follow a discrete
\n
multi-horizon survival approach,
\n
predicting quarterly PDs up to lifetime at
\n
account level, with a key driver being
\n
scores from related IRB PD models.
\n
Forward-looking economic information is
\n
brought in by economic response models,
\n
which leverage the existing stress test
\n
model suite. The current suite of PD
\n
models was introduced in 2022 replacing
\n
the previous, first-generation models to
\n
remediate a range of model weaknesses.
\n
Non-Personal models
\n
Non-Personal PD models use a point-in-
\n
time/through-the-cycle framework to
\n
convert one-year regulatory PDs into
\n
point-in-time estimates that reflect
\n
economic conditions at the reporting
\n
date. The framework utilises credit cycle
\n
indices (CCIs) for a comprehensive set of
\n
region/industry segments. Further detail
\n
on CCIs is provided in the Economic loss
\n
drivers section.
\n
One-year PDs are extended to lifetime
\n
PDs using a conditional transition matrix
\n
approach and economic forecasts.
\n
LGD estimates
\n
The general approach for the IFRS 9 LGD
\n
models is to leverage corresponding IRB
\n
LGD models with bespoke adjustments to
\n
ensure estimates are unbiased and,
\n
where relevant, include economic
\n
forecasts.
\n
Personal
\n
Economic forecasts are incorporated for
\n
the secured portfolios, where changes in
\n
property prices can be readily
\n
accommodated. Analysis has shown
\n
minimal impact of economic conditions on
\n
LGDs for the other Personal portfolios.
\n
Non-Personal
\n
Economic forecasts are incorporated into
\n
LGD estimates using the existing point-in-
\n
time/through-the-cycle framework. For
\n
low-default portfolios, including
\n
sovereigns and banks, loss data is too
\n
scarce to substantiate estimates that
\n
vary with economic conditions.
\n
Consequently, for these portfolios, LGD
\n
estimates are assumed to be constant
\n
throughout the projection horizon.
\n
EAD estimates
\n
Personal
\n
The IFRS 9 Personal modelling approach
\n
for EAD is dependent on product type.
\n
\ue001
Revolving products use the existing
\n
IRB models as a basis, with
\n
appropriate adjustments
\n
incorporating a term structure based
\n
on time to default.
\n
\ue001
Amortising products use an
\n
amortising schedule, where a formula
\n
is used to calculate the expected
\n
balance based on remaining terms
\n
and interest rates.
\n
Analysis has indicated that there is
\n
minimal impact on EAD arising from
\n
changes in the economy for all Personal
\n
portfolios except mortgages. Therefore,
\n
forward-looking information is only
\n
incorporated in the mortgage EAD model
\n
(through forecast changes in interest
\n
rates).
\n
Non-Personal
\n
For Non-Personal, EAD values are
\n
projected using product-specific credit
\n
conversion factors (CCFs), closely
\n
following the product segmentation and
\n
approach of the respective IRB model.
\n
The CCFs are estimated over multi-year
\n
time horizons and contain no regulatory
\n
conservatism or downturn assumptions.
\n
No explicit economic forecasts are
\n
incorporated, on the basis of analysis
\n
showing the movement in CCFs is mainly
\n
attributable to changes in exposure
\n
management practices rather than
\n
economic conditions.
\n
Governance and post model
\n
adjustments
(audited)
\n
The IFRS 9 PD, EAD and LGD models are
\n
subject to NatWest Group\u2019s model risk
\n
policy that stipulates periodic model
\n
monitoring, periodic re-validation and
\n
defines approval procedures and
\n
authorities according to model
\n
materiality. Various post model
\n
adjustments were applied where
\n
management judged they were
\n
necessary to ensure an adequate level of
\n
overall ECL provision. All post model
\n
adjustments were subject to review,
\n
challenge and approval through model or
\n
provisioning committees.
\n
Post model adjustments will remain a key
\n
focus area of NatWest Group\u2019s ongoing
\n
ECL adequacy assessment process. A
\n
holistic framework has been established
\n
including reviewing a range of economic
\n
data, external benchmark information
\n
and portfolio performance trends with a
\n
particular focus on segments of the
\n
portfolio (both Personal and Non-
\n
Personal) that are likely to be more
\n
susceptible to high inflation, high interest
\n
rates and supply chain disruption.
\n\n\n\n\n\n\n\n\n\n\n\n
ECL post model adjustments (audited)
\n
The table below shows ECL post model adjustments.
\n\n \n
Retail Banking
Commercial
Central items
Mortgages
Other
Private Banking
& Institutional
& other
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Deferred model calibrations
-
-
1
18
-
19
Economic uncertainty
90
22
8
179
-
299
Other adjustments
-
-
-
18
-
18
Total
90
22
9
215
-
336
Of which:
- Stage 1
58
9
5
94
-
166
- Stage 2
26
13
4
119
-
162
- Stage 3
6
-
-
2
-
8
2023
Deferred model calibrations
-
-
1
23
-
24
Economic uncertainty
118
39
13
256
3
429
Other adjustments
1
-
-
8
23
32
Total
119
39
14
287
26
485
Of which:
- Stage 1
75
14
6
115
10
220
- Stage 2
31
25
8
167
9
240
- Stage 3
13
-
-
5
7
25
\n
.
\n
Post model adjustments decreased significantly since 31 December 2023, reflecting reduced economic uncertainty from inflation, higher-for-longer interest rates and liquidity.
\n
\ue001
Retail Banking
\u2013 The post model adjustments for economic uncertainty decreased to \u00a3112 million at 31 December 2024 (2023 \u2013 \u00a3157 million). This reduction primarily reflected a
\n
revision to the cost of living post model adjustment to \u00a3105 million (2023 \u2013 \u00a3144 million), reflecting enhancements to the assessment approach, supported by back-testing of
\n
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
\n
effects of cost of living rises. It focuses on key affordability lenses, including lower-income customers in fuel poverty, over-indebted borrowers and customers who remain
\n
vulnerable to higher mortgage rates.
\n
\ue001
Commercial & Institutional
\u2013 The post model adjustment for economic uncertainty decreased to \u00a3179 million (2023 \u2013 \u00a3256 million). The inflation, supply chain and liquidity post
\n
model adjustment of \u00a3150 million (2023 \u2013 \u00a3206 million) was maintained for lending prior to 1 January 2024 being a sector level downgrade applied to the sectors that are
\n
considered most at risk from the current headwinds. A further \u00a329 million (2023 \u2013 \u00a350 million) remains for customers that utilised government support schemes, this adjustment is
\n
reducing as customers default or repay.
\n
\ue001
The \u00a318 million (2023 \u2013 \u00a323 million) judgemental overlay for deferred model calibrations relates to refinance risk, with the existing mechanistic modelling approach not fully
\n
capturing the risk on deteriorated exposures.
\n
\ue001
The \u00a318 million (2023 \u2013 \u00a38 million) other post model adjustment was to mitigate the effect of operational timing delays in the identification and flagging of a SICR, with the increase
\n
due to a small number of large corporate exposures moving quickly from Stage 1 into default.
\n\n\n\n\n\n\n\n\n\n\n\n
SICR (audited)
\n
Exposures that are considered
\n
significantly credit-deteriorated since
\n
initial recognition are classified in Stage 2
\n
and assessed for lifetime ECL
\n
measurement (exposures not considered
\n
deteriorated carry a 12-month ECL).
\n
NatWest Group has adopted a
\n
framework to identify deterioration based
\n
primarily on relative movements in
\n
lifetime PD supported by additional
\n
qualitative backstops. The principles
\n
applied are consistent across NatWest
\n
Group and align to credit risk
\n
management practices, where
\n
appropriate.
\n
The framework comprises the following
\n
elements:
\n
\ue001
IFRS 9 lifetime PD assessment (the
\n
primary driver)
\u2013
on modelled
\n
portfolios, the assessment is based on
\n
the relative deterioration in forward-
\n
looking lifetime PD and is assessed
\n
monthly. To assess whether credit
\n
deterioration has occurred, the
\n
residual lifetime PD at balance sheet
\n
date (which PD is established at date
\n
of initial recognition (DOIR)) is
\n
compared to the current PD. If the
\n
current lifetime PD exceeds the
\n
residual origination PD by more than
\n
a threshold amount, deterioration is
\n
assumed to have occurred and the
\n
exposure transferred into Stage 2 for
\n
a lifetime loss assessment. For Non-
\n
Personal, a doubling of PD would
\n
indicate a SICR subject to a minimum
\n
PD uplift of 0.1%. For Personal
\n
portfolios and SME Retail, the criteria
\n
vary by risk band, with lower-risk
\n
exposures needing to deteriorate
\n
more than higher-risk exposures, as
\n
outlined in the following table:
\n\n \n
PD bandings
(based
on
residual
lifetime PD
Personal risk
calculated at
PD deterioration
bands
DOIR)
threshold criteria
A
<0.762%
PD@DOIR + 1%
B
<4.306%
PD@DOIR + 3%
C
>=4.306%
1.7 x PD@DOIR
\n
\ue001
Qualitative high-risk backstops
\u2013
the
\n
PD assessment is complemented with
\n
the use of qualitative high-risk
\n
backstops to further inform whether
\n
significant deterioration in lifetime risk
\n
of default has occurred. The
\n
qualitative high-risk backstop
\n
assessment includes the use of the
\n
mandatory 30+ days past due
\n
backstop, as prescribed by IFRS 9
\n
guidance, and other features such as
\n
forbearance support, Non-Personal
\n
exposures managed within the
\n
Wholesale Problem Debt
\n
Management framework, and
\n
adverse credit bureau results for
\n
Personal customers.
\n
\ue001
Persistence (Personal and SME Retail
\n
customers only)
\u2013
the persistence rule
\n
ensures that accounts which have
\n
met the criteria for PD-driven
\n
deterioration are still considered to be
\n
significantly deteriorated for three
\n
months thereafter. This additional rule
\n
enhances the timeliness of capture in
\n
Stage 2. The persistence rule is
\n
applied to PD-driven deterioration
\n
only.
\n
The criteria are based on a significant
\n
amount of empirical analysis and seek to
\n
meet three key objectives:
\n
\ue001
Criteria effectiveness
\u2013
the criteria
\n
should be effective in identifying
\n
significant credit deterioration and
\n
prospective default population.
\n
\ue001
Stage 2
stability
\u2013 the criteria should
\n
not introduce unnecessary volatility in
\n
the Stage 2 population.
\n
\ue001
Portfolio analysis
\u2013
the criteria should
\n
produce results which are intuitive
\n
when reported as part of the wider
\n
credit portfolio.
\n
Monitoring the effect on relative PD
\n
deterioration when originating new
\n
lending at times of weaker economic
\n
outlook (therefore, higher PDs at initial
\n
recognition) is important to ensure SICR
\n
criteria remains effective.
\n
Asset lifetimes
(audited)
\n
The choice of initial recognition and asset
\n
duration is another critical judgement in
\n
determining the quantum of lifetime
\n
losses that apply.
\n
\ue001
The date of initial recognition reflects
\n
the date that a transaction (or
\n
account) was first recognised on the
\n
balance sheet; the PD recorded at
\n
that time provides the baseline used
\n
for subsequent determination of SICR
\n
as detailed above.
\n
\ue001
For asset duration, the approach
\n
applied (in line with IFRS 9
\n
requirements) is:
\n
\ue001
Term lending \u2013
the contractual
\n
maturity date, reduced for
\n
behavioural trends where
\n
appropriate (such as, expected
\n
prepayment and amortisation).
\n
\ue001
Revolving facilities
\u2013
for Personal
\n
portfolios (except credit cards),
\n
asset duration is based on
\n
behavioural life and this is
\n
normally greater than
\n
contractual life (which would
\n
typically be overnight). For the
\n
Non-Personal portfolios, asset
\n
duration is based on annual
\n
customer review schedules and
\n
will be set to the next review
\n
date.
\n
In the case of credit cards, the most
\n
significant judgement is to reflect the
\n
operational practice of card reissuance
\n
and the associated credit assessment as
\n
enabling a formal re-origination trigger.
\n
As a consequence, a capped lifetime
\n
approach of up to 36 months is used on
\n
credit card balances. If the approach was
\n
uncapped, the ECL impact is estimated
\n
at approximately \u00a371 million (2023 \u2013
\n
\u00a3110 million). However, credit card
\n
balances originated under the 0% balance
\n
transfer product and representing
\n
approximately 47% (2023 \u2013 37%) of
\n
performing card balances, have their ECL
\n
calculated on a behavioural lifetime
\n
approach as opposed to being capped at
\n
a maximum of three years.
\n
The capped approach reflects NatWest
\n
Group practice of a credit-based review
\n
of customers prior to credit card issuance
\n
and complies with IFRS 9. Benchmarking
\n
information indicates that peer UK banks
\n
use behavioural approaches in the main
\n
for credit card portfolios with average
\n
durations between three and ten years.
\n
Across Europe, durations are shorter and
\n
are, in some cases, as low as one year.
\n
Economic loss drivers
(audited)
\n
Introduction
\n
The portfolio segmentation and selection
\n
of economic loss drivers for IFRS 9
\n
follows the approach used in stress
\n
testing. The stress models for each
\n
portfolio segment (defined by product or
\n
asset class and where relevant, industry
\n
sector and region) are based on a
\n
selected, small number of economic
\n
variables that best explain the
\n
movements in portfolio loss rates. The
\n
process to select economic loss drivers
\n
involves empirical analysis and expert
\n
judgement.
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
The most significant economic
\n
loss drivers for material portfolios
\n
are shown in the table below:
\n\n \n
Portfolio
Economic loss
drivers
Personal
Unemployment
mortgages
rate, sterling
swap rate, house
price index, real
wage
Personal
Unemployment
unsecured
rate, sterling
swap rate, real
wage
Corporates
Stock price index,
gross domestic
product (GDP)
Commercial
Stock price index,
real estate
commercial
property price
index, GDP
\n
Economic scenarios
\n
At 31 December 2024, the range
\n
of anticipated future economic
\n
conditions was defined by a set
\n
of four internally developed
\n
scenarios and their respective
\n
probabilities. In addition to the
\n
base case, they comprised
\n
upside, downside and extreme
\n
downside scenarios. The
\n
scenarios primarily reflected the
\n
current risks faced by the
\n
economy. The scenarios primarily
\n
reflected the current risks faced
\n
by the economy. This approach
\n
was similar to that used at 31
\n
December 2023.
\n
For 31 December 2024, the four
\n
scenarios were deemed
\n
appropriate in capturing the
\n
uncertainty in economic forecasts
\n
and the non-linearity in outcomes
\n
under different scenarios. These
\n
four scenarios were developed to
\n
provide sufficient coverage
\n
across potential rises in
\n
unemployment, inflation, asset
\n
price declines and the degree of
\n
permanent damage to the
\n
economy, around which there
\n
remains pronounced levels of
\n
uncertainty.
\n
Since 31 December 2023, the
\n
economic outlook has evolved.
\n
The economy came out of post-
\n
COVID-19 stagnation with an
\n
upswing in the first half of 2024
\n
as household income recovered.
\n
The growth lost momentum in
\n
the second half of 2024 and the
\n
outlook remains that of moderate
\n
growth. Inflation declined over
\n
the year, although the progress is
\n
slower than expected and
\n
inflation is likely to take longer to
\n
reach the target of 2%. As a
\n
result, rates are expected to
\n
remain higher-for-longer than
\n
previously expected. The
\n
unemployment rate increased
\n
modestly but it is underpinned by
\n
a still resilient labour market.
\n
There was emerging risk to the
\n
labour market due to higher tax
\n
burdens, but the impact is likely
\n
to be moderate. House prices
\n
were previously assumed to
\n
decline in 2024, but they
\n
performed better than expected.
\n
However, the higher interest rate
\n
environment poses a risk to the
\n
recovery.
\n
Headline macro variables: what are the risks and where are they captured?
\n\n \n
Base
Extreme
Mini narratives \u2013 potential developments, vulnerabilities and risks
Upside
case
Downside
downside
Outperformance sustained \u2013
economy remains close
to H1 2024 pace on strong consumer
Steady growth \u2013
staying close to trend pace from
H2 2024 and beyond
Growth
Stalling \u2013
2024 strength proves fleeting, lagged
effect of higher rates and cautious consumer stalls
the rebound
Extreme stress
\u2013 extreme fall in GDP, with policy
support to facilitate sharp recovery
Close to deflation \u2013
inflationary pressures diminish
amidst pronounced weakness in demand
Battle won \u2013
continued downward drift in services
inflation, ensuring 2% target is met on sustained
Inflation
basis
Sticky \u2013
strong growth and/or wage policies and/or
interest rate cuts keep services inflation well above
target
Structural factors \u2013
sustained bouts of energy, food
and goods price inflation on
geopolitics/deglobalisation
Tighter, still \u2013
job growth rebounds strongly, pushing
unemployment back down to sub-3.5%
Cooling continues \u2013
gradual loosening prompts a
Labour
gentle rise in unemployment (but remains low), job
market
growth recovers
Job shedding \u2013
prolonged weakness in economy
prompts redundancies, reduced hours, building slack
Depression \u2013
unemployment hits levels close to
previous peaks amid severe stress
Limited cuts
\u2013 higher growth and inflation keeps the
MPC cautious
Rates
Steady \u2013
approximately one cut per quarter
short-
Mid-cycle quickening \u2013
sharp declines through 2025
term
to support recovery
Sharp drop \u2013
drastic easing in policy to support a
sharp deterioration in the economy
Rates
Above consensus \u2013
4%
long-
Middle \u2013
3-3.5%
term
Close to 2010s \u2013
1-2%/2.5%
\n\n\n\n\n\n\n\n\n\n\n\n
Economic loss drivers
(audited)
\n
Main macroeconomic variables
\n
The main macroeconomic variables for each of the four scenarios used for ECL modelling are set out in the main macroeconomic variables table below.
\n\n \n
2024
2023
Extreme
Weighted
Extreme
Weighted
Upside
Base case
Downside
downside
average
Upside
Base case
Downside
downside
average
Five-year summary
%
%
%
%
%
%
%
%
%
%
GDP
2.0
1.3
0.5
(0.2)
1.1
1.8
1.0
0.5
(0.3)
0.9
Unemployment rate
3.6
4.3
5.0
6.7
4.6
3.5
4.6
5.2
6.8
4.8
House price index
5.8
3.5
0.8
(4.3)
2.7
3.9
0.3
(0.4)
(5.7)
0.3
Commercial real estate price
5.4
1.2
(1.0)
(5.7)
1.1
3.1
(0.2)
(2.0)
(6.8)
(0.6)
Consumer price index
2.4
2.2
3.5
1.6
2.4
1.7
2.6
5.2
1.8
2.8
Bank of England base rate
4.4
4.0
3.0
1.6
3.6
3.8
3.7
5.6
2.9
4.0
Stock price index
6.3
5.0
3.4
1.1
4.5
4.8
3.3
1.2
(0.4)
2.8
World GDP
3.8
3.2
2.5
1.6
3.0
3.7
3.2
2.7
1.8
3.0
Probability weight
23.2
45.0
19.1
12.7
21.2
45.0
20.4
13.4
\n
(1)
The five-year summary runs from 2024-28 for 31 December 2024 and from 2023-27 for 31 December 2023.
\n
(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.
\n
Climate transition
\n
Since 2023, NatWest Group has included
\n
explicit assumptions about changes in
\n
transition policy, expressed as an
\n
additional implicit sectoral carbon price, in
\n
the base-case macroeconomic scenario.
\n
This approach has been used for financial
\n
planning and IFRS 9 reporting ever since.
\n
This analysis resulted in climate transition
\n
policy contributing \u00a38 million to the total
\n
ECL of \u00a33.4 billion at the end of 2024.
\n
In 2024, NatWest Group refined its
\n
approach. Instead of applying the
\n
economy-wide carbon price from an
\n
external scenario used in 2023, NatWest
\n
Group calculated the expected implicit
\n
carbon prices associated with specific
\n
climate transition policies. NatWest Group
\n
individually assessed 46 active and
\n
potential transition policies that had a
\n
significant impact on the cost of
\n
emissions and converted them into
\n
equivalent sectoral carbon prices. This
\n
was calculated as the cost per tonne of
\n
the emissions (CO2e) abated as a result
\n
of each policy.
\n
NatWest Group estimated that the
\n
weighted average carbon price
\n
associated with the policies assessed will
\n
increase from \u00a373 per tonne in 2024 to
\n
\u00a3123 per tonne in 2029. Sectoral carbon
\n
prices feed into the climate risk macro
\n
model. The model has been developed
\n
and improved over the past few years to
\n
enable NatWest Group to estimate the
\n
impact of carbon prices on a
\n
macroeconomic scenario.
\n
UK government policies which are
\n
estimated to have the largest impact on
\n
sectoral carbon prices are:
\n
\ue001
Emissions Trading Scheme
\n
\ue001
Climate Change Levy
\n
\ue001
Renewables Obligation
\n
\ue001
VAT on domestic energy
\n
This analysis presents a very narrow
\n
view of climate transition impact from 46
\n
analysed policies. It only covers base
\n
case macroeconomic scenario and does
\n
not include physical impacts.
\n
NatWest Group and its customers have a
\n
dependency on timely and appropriate
\n
government policies to provide the
\n
necessary impetus for technology
\n
development and customer behaviour
\n
changes, to enable the UK\u2019s successful
\n
transition to net zero. Policy delays and
\n
the risks outlined in the UK CCC 2022,
\n
2023 and 2024 Progress Reports, if not
\n
adequately addressed in a timely
\n
manner, put at risk the UK\u2019s net zero
\n
transition and, in turn, that of NatWest
\n
Group and its customers.
\n
Probability weightings of scenarios
\n
NatWest Group\u2019s quantitative approach
\n
to IFRS 9 multiple economic scenarios
\n
(MES) involves selecting a suitable set of
\n
discrete scenarios to characterise the
\n
distribution of risks in the economic
\n
outlook and assigning appropriate
\n
probability weights. This quantitative
\n
approach is used for 31 December 2024.
\n
The approach involves comparing GDP
\n
paths for NatWest Group\u2019s scenarios
\n
against a set of 1,000 model runs,
\n
following which a percentile in the
\n
distribution is established that most
\n
closely corresponded to the scenario. The
\n
probability weight for base case is set
\n
first based on judgement, while
\n
probability weights for the alternate
\n
scenarios are assigned based on these
\n
percentiles scores.The assigned
\n
probability weights were judged to be
\n
aligned with the subjective assessment of
\n
balance of the risks in the economy. The
\n
weights were marginally less downside
\n
skewed compared to those used at 31
\n
December 2023. The downside risks
\n
associated with a materially high inflation
\n
have reduced, with inflation lower at the
\n
end of 2024 compared to a year ago.
\n
However, the economic outlook is still
\n
subject to considerable uncertainty
\n
especially with respect to persistence of
\n
inflation, restrictive trade policies and
\n
various geopolitical flashpoints. Given that
\n
backdrop, NatWest Group judges it
\n
appropriate that downside-biased
\n
scenarios have higher combined
\n
probability weights than the upside-
\n
biased scenario. It presents good
\n
coverage to the range of outcomes
\n
assumed in the scenarios, including the
\n
potential for a robust recovery on the
\n
upside and exceptionally challenging
\n
outcomes on the downside. A 23.2%
\n
weighting was applied to the upside
\n
scenario, a 45.0% weighting applied to
\n
the base case scenario, a 19.1%
\n
weighting applied to the downside
\n
scenario and a 12.7% weighting applied
\n
to the extreme downside scenario.
\n\n\n\n\n\n\n\n\n\n\n\n
Economic loss drivers
\n\n\n\n\n\n\n\n\n\n\n\n
Economic loss drivers
(audited)
\n
Annual figures
\n\n \n
GDP - annual growth
Consumer price index - four quarter change
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
2024
0.9
0.9
0.9
0.9
0.9
2024
2.4
2.4
2.4
2.4
2.4
2025
2.0
1.4
0.4
(4.1)
0.6
2025
2.9
2.3
5.8
0.6
2.9
2026
3.2
1.5
(0.5)
(0.3)
1.3
2026
2.4
2.1
4.2
1.1
2.4
2027
2.3
1.4
0.2
1.4
1.4
2027
2.1
2.0
2.6
1.8
2.1
2028
1.6
1.4
1.3
1.4
1.4
2028
2.0
2.0
2.4
2.0
2.1
2029
1.6
1.4
1.7
1.4
1.5
2029
2.0
2.0
2.5
2.0
2.1
\n\n \n
Unemployment rate - annual average
Bank of England base rate - annual average
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
2024
4.2
4.2
4.2
4.2
4.2
2024
5.11
5.11
5.11
5.11
5.11
2025
3.9
4.4
4.8
5.4
4.5
2025
4.63
4.21
3.42
1.40
3.80
2026
3.3
4.4
5.5
8.0
4.8
2026
4.02
3.52
2.10
0.18
2.94
2027
3.3
4.3
5.5
8.3
4.8
2027
4.00
3.50
2.00
0.40
2.94
2028
3.4
4.3
5.3
7.6
4.7
2028
4.00
3.50
2.15
1.03
3.04
2029
3.4
4.2
5.0
6.9
4.5
2029
4.00
3.50
2.50
1.83
3.21
\n\n \n
House price index - four quarter change
Stock price index - four quarter change
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
2024
3.5
3.5
3.5
3.5
3.5
2024
11.6
11.6
11.6
11.6
11.6
2025
7.8
3.5
(1.2)
(7.6)
2.2
2025
8.1
3.4
(10.5)
(35.0)
(3.0)
2026
7.2
3.4
(2.8)
(14.7)
1.1
2026
5.1
3.4
5.8
15.1
5.3
2027
5.1
3.4
0.1
(8.0)
2.2
2027
3.5
3.4
5.8
13.1
4.8
2028
5.4
3.4
4.4
6.9
4.4
2028
3.5
3.4
5.8
11.6
4.7
2029
5.6
3.4
4.2
6.3
4.4
2029
3.0
3.4
5.8
10.4
4.5
\n\n \n
Commercial real estate price - four quarter change
Upside %
Base case %
Downside %
Extreme downside %
Weighted average %
2024
(0.9)
(0.9)
(0.9)
(0.9)
(0.9)
2025
14.1
2.4
(6.8)
(23.7)
0.1
2026
4.4
1.5
(2.5)
(12.7)
0.2
2027
5.5
1.4
2.8
6.7
3.3
2028
4.2
1.5
2.6
5.7
2.8
2029
2.7
1.4
2.5
5.4
2.3
\n\n\n\n\n\n\n\n\n\n\n\n
Economic loss drivers
(audited)
\n
Worst points
\n\n \n
2024
2023
Extreme
Weighted
Extreme
Weighted
Downside
downside
average
Downside
downside
average
%
Quarter
%
Quarter
%
%
Quarter
%
Quarter
%
GDP
-
Q1 2024
(4.1)
Q4 2025
-
(1.2)
Q3 2024
(4.5)
Q4 2024
0.3
Unemployment rate - peak
5.6
Q4 2026
8.5
Q1 2027
4.9
5.8
Q1 2025
8.5
Q2 2025
5.2
House price index
(1.9)
Q2 2027
(25.6)
Q3 2027
-
(12.5)
Q4 2025
(31.7)
Q2 2026
(6.5)
Commercial real estate price
(10.5)
Q2 2026
(35.0)
Q3 2026
(1.8)
(16.6)
Q1 2025
(39.9)
Q3 2025
(10.2)
Consumer price index - highest four quarter change
6.1
Q1 2026
3.5
Q1 2024
3.5
10.3
Q1 2023
10.3
Q1 2023
10.3
Bank of England base rate - extreme level
2.0
Q1 2024
0.1
Q1 2024
2.9
6.5
Q4 2024
5.3
Q4 2023
5.3
Stock price index
(0.2)
Q4 2025
(27.4)
Q4 2025
-
(14.3)
Q4 2024
(39.3)
Q4 2024
(2.4)
\n
(1)
The figures show falls relative to the starting period for GDP, house price index, commercial real estate price and stock price index. For unemployment rate, it shows highest value through the scenario horizon. For consumer price index, it shows highest
\n
annual percentage change. For Bank of England base rate, it shows highest or lowest value through the horizon. The calculations are performed over five years, with a starting point of Q4 2023 for 31 December 2024 scenarios and Q4 2022 for 31
\n
December 2023 scenarios.
\n\n\n\n\n\n\n\n\n\n\n\n
Measurement uncertainty and
\n
ECL sensitivity analysis
(audited)
\n
The recognition and measurement of
\n
ECL is complex and involves the use of
\n
significant judgement and estimation,
\n
particularly in times of economic volatility
\n
and uncertainty. This includes the
\n
formulation and incorporation of multiple
\n
forward-looking economic conditions into
\n
ECL to meet the measurement objective
\n
of IFRS 9. The ECL provision is sensitive
\n
to the model inputs and economic
\n
assumptions underlying the estimate.
\n
The impact arising from the base case,
\n
upside, downside and extreme downside
\n
scenarios was simulated.
\n
In the simulations, NatWest Group has
\n
assumed that the economic macro
\n
variables associated with these scenarios
\n
replace the existing base case economic
\n
assumptions, giving them a 100%
\n
probability weighting and therefore
\n
serving as a single economic scenario.
\n
These scenarios were applied to all
\n
modelled portfolios in the analysis below,
\n
with the simulation impacting both PDs
\n
and LGDs. Post model adjustments
\n
included in the ECL estimates that were
\n
modelled were sensitised in line with the
\n
modelled ECL movements, but those that
\n
were judgemental in nature, primarily
\n
those for deferred model calibrations and
\n
economic uncertainty, were not (refer to
\n
the Governance and post model
\n
adjustments section) on the basis these
\n
would be re-evaluated by management
\n
through ECL governance for any new
\n
economic scenario outlook and not be
\n
subject to an automated calculation. As
\n
expected, the scenarios create differing
\n
impacts on ECL by portfolio and the
\n
impacts are deemed reasonable.
\n
In this simulation, it is assumed that
\n
existing modelled relationships between
\n
key economic variables and loss drivers
\n
hold, but in practice other factors would
\n
also have an impact, for example,
\n
potential customer behaviour changes
\n
and policy changes by lenders that might
\n
impact on the wider availability of credit.
\n
The focus of the simulations is on ECL
\n
provisioning requirements on performing
\n
exposures in Stage 1 and Stage 2. The
\n
simulations are run on a stand-alone
\n
basis and are independent of each other;
\n
the potential ECL impacts reflect the
\n
simulated impact at 31 December 2024.
\n
Scenario impacts on SICR should be
\n
considered when evaluating the ECL
\n
movements of Stage 1 and Stage 2. In all
\n
scenarios the total exposure was the
\n
same but exposure by stage varied in
\n
each scenario.
\n
Stage 3 provisions are not subject to the
\n
same level of measurement uncertainty \u2013
\n
default is an observed event as at the
\n
balance sheet date. Stage 3 provisions
\n
therefore were not considered in this
\n
analysis.
\n
NatWest Group\u2019s core criterion to identify
\n
a SICR is founded on PD deterioration.
\n
Under the simulations, PDs change and
\n
result in exposures moving between
\n
Stage 1 and Stage 2 contributing to the
\n
ECL impact.
\n
Measurement uncertainty and ECL sensitivity analysis
(audited)
\n\n \n
Moderate
Moderate
Extreme
Base
upside
downside
downside
2024
Actual
scenario
scenario
scenario
scenario
Stage 1 modelled loans (\u00a3m)
Retail Banking - mortgages
169,090
170,887
173,703
164,370
154,604
Retail Banking - unsecured
10,269
10,485
10,876
9,847
8,925
Non-personal - property
28,598
28,684
28,827
28,452
25,402
Non-personal - non-property
126,487
127,179
127,557
125,790
107,287
334,444
337,235
340,963
328,459
296,218
Stage 1 modelled ECL (\u00a3m)
Retail Banking - mortgages
67
69
71
61
50
Retail Banking - unsecured
204
212
210
198
185
Non-personal - property
82
66
59
85
164
Non-personal - non-property
218
197
191
219
331
571
544
531
563
730
Stage 1 coverage
Retail Banking - mortgages
0.04%
0.04%
0.04%
0.04%
0.03%
Retail Banking - unsecured
1.99%
2.02%
1.93%
2.01%
2.07%
Non-personal - property
0.29%
0.23%
0.20%
0.30%
0.65%
Non-personal - non-property
0.17%
0.15%
0.15%
0.17%
0.31%
0.17%
0.16%
0.16%
0.17%
0.25%
Stage 2 modelled loans (\u00a3m)
Retail Banking - mortgages
20,980
19,183
16,367
25,700
35,466
Retail Banking - unsecured
3,513
3,297
2,906
3,935
4,857
Non-personal - property
3,019
2,933
2,790
3,165
6,215
Non-personal - non-property
13,143
12,451
12,073
13,840
32,343
40,655
37,864
34,136
46,640
78,881
Stage 2 modelled ECL (\u00a3m)
Retail Banking - mortgages
60
53
44
72
118
Retail Banking - unsecured
370
348
300
407
532
Non-personal - property
62
53
47
66
183
Non-personal - non-property
286
251
228
307
628
778
705
619
852
1,461
Stage 2 coverage
Retail Banking - mortgages
0.29%
0.28%
0.27%
0.28%
0.33%
Retail Banking - unsecured
10.53%
10.56%
10.32%
10.34%
10.95%
Non-personal - property
2.05%
1.81%
1.68%
2.09%
2.94%
Non-personal - non-property
2.18%
2.02%
1.89%
2.22%
1.94%
1.91%
1.86%
1.81%
1.83%
1.85%
\n\n\n\n\n\n\n\n\n\n\n\n
Measurement uncertainty and ECL sensitivity analysis
(audited)
\u00a0 \u00a0 \u00a0
Moderate
Moderate
Extreme
\u00a0 \u00a0
Base
upside
downside
downside
2024
Actual
scenario
scenario
scenario
scenario
Stage 1 and Stage 2 modelled loans (\u00a3m)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Retail Banking - mortgages
190,070
190,070
190,070
190,070
190,070
Retail Banking - unsecured
13,782
13,782
13,782
13,782
13,782
Non-personal - property
31,617
31,617
31,617
31,617
31,617
Non-personal - non-property
139,630
139,630
139,630
139,630
139,630
\u00a0
375,099
375,099
375,099
375,099
375,099
Stage 1 and Stage 2 modelled ECL (\u00a3m)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Retail Banking - mortgages
127
122
115
133
168
Retail Banking - unsecured
574
560
510
605
717
Non-personal - property
144
119
106
151
347
Non-personal - non-property
504
448
419
526
959
\u00a0
1,349
1,249
1,150
1,415
2,191
Stage 1 and Stage 2 coverage
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Retail Banking - mortgages
0.07%
0.06%
0.06%
0.07%
0.09%
Retail Banking - unsecured
4.16%
4.06%
3.70%
4.39%
5.20%
Non-personal - property
0.46%
0.38%
0.34%
0.48%
1.10%
Non-personal - non-property
0.36%
0.32%
0.30%
0.38%
0.69%
\u00a0
0.36%
0.33%
0.31%
0.38%
0.58%
Reconciliation to Stage 1 and Stage 2
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
ECL (\u00a3m)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
ECL on modelled exposures
1,349
1,249
1,150
1,415
2,191
ECL on non-modelled exposures
36
36
36
36
36
Total Stage 1 and Stage 2 ECL (\u00a3m)
1,385
1,285
1,186
1,451
2,227
Variance to actual total Stage 1 and
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 2 ECL (\u00a3m)
\u00a0
(100)
(199)
66
842
Reconciliation to Stage 1 and Stage 2
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
flow exposures (\u00a3m)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Modelled loans
375,099
375,099
375,099
375,099
375,099
Non-modelled loans
21,074
21,074
21,074
21,074
21,074
Other asset classes
161,548
161,548
161,548
161,548
161,548
\n
(1)
Variations in future undrawn exposure values across the scenarios are modelled, however the exposure position
\n
reported is that used to calculate modelled ECL as at 31 December 2024 and therefore does not include variation in
\n
future undrawn exposure values.
\n
(2)
Reflects ECL for all modelled exposure in scope for IFRS 9. The analysis excludes non-modelled portfolios and exposure
\n
relating to bonds and cash.
\n
(3)
All simulations are run on a stand-alone basis and are independent of each other, with the potential ECL impact
\n
reflecting the simulated impact as at 31 December 2024
The simulations change the composition of Stage 1 and Stage
\n
2 exposure but total exposure was unchanged under each scenario as the loan population was static.
\n
(4)
Refer to the Economic loss drivers section for details of economic scenarios.
\n
(5)
Refer to the NatWest Group 2023 Annual Report and Accounts for 2023 comparatives.
\n
Measurement uncertainty and ECL adequacy
(audited)
\n
\ue001
If the economics were as negative as observed in the extreme downside (i.e. 100%
\n
probability weighting), total Stage 1 and Stage 2 ECL was simulated to increase by
\n
\u00a30.8 billion (approximately 61%). In this scenario, Stage 2 exposure increased
\n
significantly and was the key driver of the simulated ECL rise. The movement in
\n
Stage 2 balances in the other simulations was less significant.
\n
\ue001
In the Non-Personal portfolio, there was a significant increase in ECL under the
\n
extreme downside scenario. The Non-Personal property ECL increase was mainly
\n
due to commercial real estate prices which showed negative growth until 2026 and
\n
significant deterioration in the stock index. The non-property increase was mainly
\n
due to GDP contraction and significant deterioration in the stock index.
\n
\ue001
Given the continued economic uncertainty, NatWest Group utilised a framework of
\n
quantitative and qualitative measures to support the levels of ECL coverage. This
\n
included economic data, credit performance insights and problem debt trends. This
\n
was particularly important for consideration of post model adjustments.
\n
\ue001
As the effects of these economic risks evolve into 2025, there is a risk of further
\n
credit deterioration. However, the income statement effect of this should be
\n
mitigated by the forward-looking provisions retained on the balance sheet at 31
\n
December 2024.
\n
\ue001
There are a number of key factors that could drive further downside to impairments,
\n
through deteriorating economic and credit metrics and increased stage migration as
\n
credit risk increases for more customers. Such factors which could impact the IFRS 9
\n
models, include an adverse deterioration in unemployment, GDP and stock price
\nindex in which NatWest Group operates. Credit risk \u2013 Banking activitiesFinancial instruments within the scope of the IFRS 9 ECL framework (audited)
Refer to Note 9 to the consolidated financial statements for balance sheet analysis of financial assets that are classified as amortised
cost or fair value through other comprehensive income (FVOCI), the starting point for IFRS 9 ECL framework assessment.
\u00a0
31 December 2024
31 December 2023
\u00a0
Gross
ECL
Net
Gross
ECL
Net
\u00a0
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Balance sheet total gross amortised cost and FVOCI
567.2
\u00a0 \u00a0
553.8
\u00a0 \u00a0
In scope of IFRS 9 ECL framework
564.4
\u00a0 \u00a0
545.3
\u00a0 \u00a0
% in scope
100%
\u00a0 \u00a0
98%
\u00a0 \u00a0
Loans to customers - in scope - amortised cost
404.2
3.4
400.8
385.3
3.6
381.7
Loans to customers - in scope - FVOCI
-
-
-
0.1
-
0.1
Loans to banks - in scope - amortised cost
6.0
-
6.0
6.7
-
6.7
Total loans - in scope
410.2
3.4
406.8
392.1
3.6
388.5
Stage 1
363.8
0.6
363.2
348.6
0.7
347.9
Stage 2
40.5
0.8
39.7
37.9
0.9
37.0
Stage 3
5.9
2.0
3.9
5.6
2.0
3.6
Other financial assets - in scope - amortised cost
116.4
-
116.4
124.9
-
124.9
Other financial assets - in scope - FVOCI
37.8
-
37.8
28.3
-
28.3
Total other financial assets - in scope
154.2
-
154.2
153.2
-
153.2
Stage 1
153.4
-
153.4
152.0
-
152.0
Stage 2
0.8
-
0.8
1.2
-
1.2
Out of scope of IFRS 9 ECL framework
2.8
na
2.8
8.5
na
8.5
Loans to customers - out of scope - amortised cost
(0.5)
na
(0.5)
(0.4)
na
(0.4)
Loans to banks - out of scope - amortised cost
0.1
na
0.1
0.3
na
0.3
Other financial assets - out of scope - amortised cost
3.2
na
3.2
8.3
na
8.3
Other financial assets - out of scope - FVOCI
-
na
-
0.3
na
0.3
\n
na = not applicable
The assets outside the scope of IFRS 9 ECL framework were as follows:
\ue001
Settlement balances, items in the course of collection, cash balances and other non-credit risk assets of \u00a33.3 billion (2023 \u2013 \u00a38.6
billion). These were assessed as having no ECL unless there was evidence that they were defaulted.
\ue001
Equity shares of \u00a30.2 billion (2023 \u2013 \u00a30.3 billion) as not within the IFRS 9 ECL framework by definition.
\ue001
Fair value adjustments on loans hedged by interest rate swaps, where the underlying loan was within the IFRS 9 ECL scope of
\u00a3(0.5) billion (2023 \u2013 \u00a3(0.3) billion).
Contingent liabilities and
commitments
Total
contingent liabilities (including
financial guarantees) and commitments
within IFRS 9 ECL scope of \u00a3140.0 billion
(2023 \u2013 \u00a3132.0 billion) comprised Stage 1
\u00a3129.8 billion (2023 \u2013 \u00a3120.6 billion);
Stage 2 \u00a39.4 billion (2023 \u2013 \u00a310.7 billion);
and Stage 3 \u00a30.8 billion (2023 \u2013 \u00a30.7
billion).
The ECL relating to off balance sheet
exposures was \u00a30.1 billion (2023 \u2013 \u00a30.1
billion). The total ECL in the remainder of
the Credit risk section of \u00a33.4 billion
(2023 \u2013 \u00a33.6 billion) included ECL for both
on and off-balance sheet exposures for
non-disposal groups.
\n\n\n\n\n\n\n\n\n\n\n\n
Segment analysis \u2013 portfolio summary (audited)
\n
The table below shows gross loans and ECL, by segment and stage, within the scope of the IFRS 9 ECL framework.
\n\n \n
Of which:
Personal
Non-personal
Retail
Private
Commercial
Central items
Retail
Private
Commercial
Central items
Private
Commercial
Central items
&
&
&
Banking
Banking
Institutional
& other
Total
Banking
Banking
Institutional
& other
Banking
Institutional
& other
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans - amortised cost and FVOCI
(1,2)
Stage 1
182,366
17,155
128,988
35,312
363,821
182,366
13,726
2,226
-
3,429
126,762
35,312
Stage 2
24,242
844
15,339
49
40,474
24,242
352
42
-
492
15,297
49
Stage 3
3,268
322
2,340
-
5,930
3,268
251
52
-
71
2,288
-
Of which: individual
-
233
1,052
-
1,285
-
162
5
-
71
1,047
-
Of which: collective
3,268
89
1,288
-
4,645
3,268
89
47
-
-
1,241
-
Total
209,876
18,321
146,667
35,361
410,225
209,876
14,329
2,320
-
3,992
144,347
35,361
ECL provisions
(3)
Stage 1
279
16
289
14
598
279
2
3
-
14
286
14
Stage 2
428
12
346
1
787
428
1
-
-
11
346
1
Stage 3
1,063
36
941
-
2,040
1,063
21
15
-
15
926
-
Of which: individual
-
36
415
-
451
-
21
7
-
15
408
-
Of which: collective
1,063
-
526
-
1,589
1,063
-
8
-
-
518
-
Total
1,770
64
1,576
15
3,425
1,770
24
18
-
40
1,558
15
\n
For the notes to this table refer to page 201.
\n\n\n\n\n\n\n\n\n\n\n\n
Segment analysis \u2013 portfolio summary (audited)
\n\n \n
Of which:
Personal
Non-personal
Commercial
Commercial
Retail
Private
Commercial
&
Central items
Retail
Private
&
Central items
Private
&
Central items
Banking
Banking
Institutional
& other
Total
Banking
Banking
Institutional
& other
Banking
Institutional
& other
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ECL provisions coverage
(4)
Stage 1 (%)
0.15
0.09
0.22
0.04
0.16
0.15
0.01
0.13
-
0.41
0.23
0.04
Stage 2 (%)
1.77
1.42
2.26
2.04
1.94
1.77
0.28
-
-
2.24
2.26
2.04
Stage 3 (%)
32.53
11.18
40.21
-
34.40
32.53
8.37
28.85
-
21.13
40.47
-
Total
0.84
0.35
1.07
0.04
0.83
0.84
0.17
0.78
-
1.00
1.08
0.04
Impairment (releases)/losses
ECL (release)/charge
(5)
282
(11)
98
(10)
359
282
1
1
-
(12)
97
(10)
Stage 1
(208)
(11)
(205)
(14)
(438)
(208)
(2)
(1)
-
(9)
(204)
(14)
Stage 2
278
(1)
79
4
360
278
2
1
-
(3)
78
4
Stage 3
212
1
224
-
437
212
1
1
-
-
223
-
Of which: individual
-
1
191
-
192
-
1
(1)
-
-
192
-
Of which: collective
212
-
33
-
245
212
-
2
-
-
31
-
Total
282
(11)
98
(10)
359
282
1
1
-
(12)
97
(10)
Amounts written-off
430
1
223
-
654
430
1
2
-
-
221
-
Of which: individual
-
1
143
-
144
-
1
-
-
-
143
-
Of which: collective
430
-
80
-
510
430
-
2
-
-
78
-
\n
For the notes to this table refer
to
page
201.
\n\n\n\n\n\n\n\n\n\n\n\n
Segment analysis \u2013 portfolio summary (audited)
\n\n \n
Of which:
Personal
Non-personal
Retail
Private
Commercial
Central items
Retail
Private
Commercial
Central items
Private
Commercial
Central items
&
&
&
Banking
Banking
Institutional
& other
Total
Banking
Banking
Institutional
& other
Banking
Institutional
& other
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans - amortised cost and FVOCI
(1,2)
Stage 1
182,297
17,565
119,047
29,677
348,586
182,297
14,296
2,268
4
3,269
116,779
29,673
Stage 2
21,208
906
15,771
6
37,891
21,208
255
43
3
651
15,728
3
Stage 3
3,133
258
2,162
10
5,563
3,133
209
52
6
49
2,110
4
Of which: individual
-
186
845
-
1,031
-
137
5
-
49
840
-
Of which: collective
3,133
72
1,317
10
4,532
3,133
72
47
6
-
1,270
4
Subtotal excluding disposal group loans
206,638
18,729
136,980
29,693
392,040
206,638
14,760
2,363
13
3,969
134,617
29,680
Disposal group loans
67
67
8
59
Total
29,760
392,107
21
29,739
ECL provisions
(3)
Stage 1
306
20
356
27
709
306
3
2
5
17
354
22
Stage 2
502
20
447
7
976
502
2
-
2
18
447
5
Stage 3
1,097
34
819
10
1,960
1,097
20
16
9
14
803
1
Of which: individual
-
34
298
-
332
-
20
5
-
14
293
-
Of which: collective
1,097
-
521
10
1,628
1,097
-
11
9
-
510
1
Subtotal excluding ECL provisions on disposal group loans
1,905
74
1,622
44
3,645
1,905
25
18
16
49
1,604
28
ECL provisions on disposal group loans
36
36
2
34
Total
80
3,681
18
62
\n
For the notes to this table refer to the following page
.
\n\n\n\n\n\n\n\n\n\n\n\n
Segment analysis \u2013 portfolio summary (audited)
\n\n \n
Of which:
Personal
Non-personal
Commercial
Commercial
Commercial
Retail
Private
&
Central items
Retail
Private
&
Central items
Private
&
Central items
Banking
Banking
Institutional
& other
Total
Banking
Banking
Institutional
& other
Banking
Institutional
& other
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ECL provisions coverage
(4)
Stage 1 (%)
0.17
0.11
0.30
0.09
0.20
0.17
0.02
0.09
nm
0.52
0.30
0.07
Stage 2 (%)
2.37
2.21
2.83
nm
2.58
2.37
0.78
-
66.67
2.76
2.84
nm
Stage 3 (%)
35.01
13.18
37.88
100.00
35.23
35.01
9.57
30.77
nm
28.57
38.06
25.00
ECL provisions coverage excluding disposal group loans
0.92
0.40
1.18
0.15
0.93
0.92
0.17
0.76
nm
1.23
1.19
0.09
ECL provisions coverage on disposal group loans
53.73
53.73
25.00
57.63
Total
0.27
0.94
85.71
0.21
Impairment (releases)/losses
ECL (release)/charge
(5)
465
14
94
5
578
465
(3)
5
15
17
89
(10)
Stage 1
(172)
(9)
(222)
6
(397)
(172)
(7)
(3)
4
(2)
(219)
2
Stage 2
440
15
182
8
645
440
4
-
7
11
182
1
Stage 3
197
8
134
(9)
330
197
-
8
4
8
126
(13)
Of which: individual
-
8
80
1
89
-
-
5
-
8
75
1
Of which: collective
197
-
54
(10)
241
197
-
3
4
-
51
(14)
Continuing operations
465
14
94
5
578
465
(3)
5
15
17
89
(10)
Discontinued operations
(6)
(6)
-
(6)
Total
(1)
572
15
(16)
Amounts written-off
188
2
122
7
319
188
2
1
2
-
121
5
Of which: individual
-
2
40
-
42
-
2
1
-
-
39
-
Of which: collective
188
-
82
7
277
188
-
-
2
-
82
5
\n
(1)
The table shows gross loans only and excludes amounts that were outside the scope of the ECL framework. Other financial assets within the scope of the IFRS 9 ECL framework were cash and balances at central banks totalling \u00a391.8 billion (2023 \u2013
\n
\u00a3103.1 billion) and debt securities of \u00a362.4 billion (2023 \u2013 \u00a350.1 billion).
\n
(2)
Includes loans to customers and banks.
\n
(3)
Includes \u00a34 million (2023 \u2013 \u00a39 million) related to assets classified as FVOCI and \u00a30.1 billion (2023 \u2013 \u00a30.1 billion) related to off-balance sheet exposures.
\n
(4)
ECL provisions coverage is calculated as ECL provisions divided by loans \u2013 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
\n
proportion of debt securities or unutilised exposure may result in a not meaningful coverage ratio.
\n
(5)
Includes a \u00a312 million release (2023 \u2013 \u00a316 million releasee) related to other financial assets, of which \u00a34 million release (2023 \u2013 \u00a36 million charge) related to assets classified as FVOCI and includes a \u00a35 million release (2023 \u2013 \u00a39 million release) related to
\n
contingent liabilities.
\n
Segmental loans and impairment metrics (audited)
\n
\ue001
Retail Banking
\u2013 Loans to customers increased during the year as a result of
\n
continued growth in mortgages, including the Metro Bank portfolio acquisition and
\n
credit card lending. Arrears balances increased during 2024, however, this was in
\n
line with expectations and wider-industry trends following periods of balance
\n
growth and normalisation since COVID-19. Arrears inflow rates remained stable.
\n
The reduction in good book ECL coverage in 2024 was primarily driven by
\n
unsecured PD modelling updates, alongside reductions in economic uncertainty
\n
post model adjustments and stable underlying portfolio performance. Post model
\n
adjustments to capture increased affordability pressures on customers due to high
\n
inflation and interest rates decreased during the year reflecting a revision of the
\n
assessment approach, supported by back-testing of default outcomes.
\n
Underpinned by good book ECL coverage dynamics, total ECL coverage
\n
decreased during the year and was further amplified by 2024 debt sale activity on
\n
unsecured portfolios. Flow rates into Stage 3 reduced during H1 2024 and
\n
remained consistent across H2 2024.
\n
\ue001
Commercial & Institutional
\u2013 Increased lending during 2024 was driven by
\n
corporate and non-bank financial institutions sectors, aligned to customer strategy.
\n
Sector appetite continues to be reviewed regularly. Portfolio performance remained
\n
stable with a small reduction in total ECL. Stage 1 and Stage 2 ECL and coverage
\n
decreased due to reductions in post model adjustments, net improvements in
\n
economic scenarios and weightings along with stable portfolio performance. Stage
\n
3 ECL increased due to a small number of large counterparties, but the total
\n
number of individual defaults remained low.
\n\n\n\n\n\n\n\n\n\n\n\n
Sector analysis \u2013 portfolio summary (audited)
\n
The table below shows financial assets and off-balance sheet exposures gross of ECL and related ECL provisions, impairment and past due by sector, asset quality and geographical
\n
region.
\n\n \n
Personal
Non-personal
Mortgages (1)
Credit cards
Other personal
Total
Corporate and Other (2)
FI
Sovereign
Total
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans by geography
209,846
6,930
9,749
226,525
111,734
70,321
1,645
183,700
410,225
- UK
209,846
6,930
9,749
226,525
97,409
43,412
562
141,383
367,908
- Other Europe
-
-
-
-
6,311
14,747
766
21,824
21,824
- RoW
-
-
-
-
8,014
12,162
317
20,493
20,493
Loans by stage
209,846
6,930
9,749
226,525
111,734
70,321
1,645
183,700
410,225
- Stage 1
186,250
4,801
7,267
198,318
94,991
69,021
1,491
165,503
363,821
- Stage 2
21,061
1,953
1,622
24,636
14,464
1,241
133
15,838
40,474
- Stage 3
2,535
176
860
3,571
2,279
59
21
2,359
5,930
- Of which: individual
141
-
26
167
1,046
51
21
1,118
1,285
- Of which: collective
2,394
176
834
3,404
1,233
8
-
1,241
4,645
Loans - past due analysis
(2)
209,846
6,930
9,749
226,525
111,734
70,321
1,645
183,700
410,225
- Not past due
206,739
6,721
8,865
222,325
107,855
70,055
1,627
179,537
401,862
- Past due 1-30 days
1,404
50
70
1,524
2,530
211
-
2,741
4,265
- Past due 31-90 days
580
51
99
730
398
2
18
418
1,148
- Past due 91-180 days
408
41
96
545
139
49
-
188
733
- Past due >180 days
715
67
619
1,401
812
4
-
816
2,217
Loans - Stage 2
21,061
1,953
1,622
24,636
14,464
1,241
133
15,838
40,474
- Not past due
19,939
1,889
1,521
23,349
13,485
1,228
133
14,846
38,195
- Past due 1-30 days
853
31
37
921
640
11
-
651
1,572
- Past due 31-90 days
269
33
64
366
339
2
-
341
707
Weighted average life
(4)
- ECL measurement (years)
8
4
6
6
6
2
1
6
6
Weighted average 12 months PDs
(4)
- IFRS 9 (%)
0.51
3.23
4.59
0.76
1.24
0.16
5.51
0.86
0.80
- Basel (%)
0.68
3.65
3.18
0.87
1.11
0.15
4.16
0.76
0.82
ECL provisions by geography
462
381
969
1,812
1,504
90
19
1,613
3,425
- UK
462
381
969
1,812
1,335
37
12
1,384
3,196
- Other Europe
-
-
-
-
109
9
-
118
118
- RoW
-
-
-
-
60
44
7
111
111
\n
For the notes to this table refer to page 205.
\n\n\n\n\n\n\n\n\n\n\n\n
Sector analysis \u2013 portfolio summary (audited)
\n\n \n
Personal
Non-personal
Mortgages
(1)
Credit cards
Other personal
Total
Corporate and Other (2)
FI
Sovereign
Total
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ECL provisions by stage
462
381
969
1,812
1,504
90
19
1,613
3,425
- Stage 1
77
77
130
284
264
38
12
314
598
- Stage 2
60
186
183
429
344
12
2
358
787
- Stage 3
325
118
656
1,099
896
40
5
941
2,040
- Of which: individual
11
-
17
28
382
36
5
423
451
- Of which: collective
314
118
639
1,071
514
4
-
518
1,589
ECL provisions coverage (%)
0.22
5.50
9.94
0.80
1.35
0.13
1.16
0.88
0.83
- Stage 1 (%)
0.04
1.60
1.79
0.14
0.28
0.06
0.80
0.19
0.16
- Stage 2 (%)
0.28
9.52
11.28
1.74
2.38
0.97
1.50
2.26
1.94
- Stage 3 (%)
12.82
67.05
76.28
30.78
39.32
67.80
23.81
39.89
34.40
ECL (release)/charge
8
115
161
284
55
19
1
75
359
- UK
8
115
161
284
43
1
-
44
328
- Other Europe
-
-
-
-
17
(7)
-
10
10
- RoW
-
-
-
-
(5)
25
1
21
21
Amounts written-off
18
102
313
433
221
-
-
221
654
Loans by residual maturity
209,846
6,930
9,749
226,525
111,734
70,321
1,645
183,700
410,225
- <1 year
3,367
3,903
3,186
10,456
34,929
54,971
822
90,722
101,178
- 1-5 year
11,651
3,027
5,551
20,229
48,075
10,967
488
59,530
79,759
- > 5 < 15 year
45,454
-
1,006
46,460
20,623
4,270
298
25,191
71,651
- > 15 year
149,374
-
6
149,380
8,107
113
37
8,257
157,637
Other financial assets by asset quality
(3)
-
-
-
-
3,644
31,102
119,502
154,248
154,248
- AQ1-AQ4
-
-
-
-
3,639
30,743
119,502
153,884
153,884
- AQ5-AQ8
-
-
-
-
5
359
-
364
364
Off-balance sheet
13,806
20,135
7,947
41,888
75,964
21,925
239
98,128
140,016
- Loan commitments
13,806
20,135
7,906
41,847
72,940
20,341
239
93,520
135,367
- Financial guarantees
-
-
41
41
3,024
1,584
-
4,608
4,649
Off-balance sheet by asset quality
(3)
13,806
20,135
7,947
41,888
75,964
21,925
239
98,128
140,016
- AQ1-AQ4
12,951
510
6,568
20,029
47,896
20,063
155
68,114
88,143
- AQ5-AQ8
839
19,276
1,336
21,451
27,657
1,813
21
29,491
50,942
- AQ9
1
12
17
30
19
-
63
82
112
- AQ10
15
337
26
378
392
49
-
441
819
\n
For the notes to this table refer to page 205.
\n\n\n\n\n\n\n\n\n\n\n\n
Sector analysis \u2013 portfolio summary (audited)
\n\n \n
Personal
Non-personal
Mortgages (1)
Credit cards
Other personal
Total
Corporate and Other (2)
FI
Sovereign
Total
Total
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans by geography
208,275
5,904
9,595
223,774
108,546
57,087
2,633
168,266
392,040
- UK
208,275
5,893
9,592
223,760
95,736
39,906
2,016
137,658
361,418
- Other Europe
-
11
3
14
6,368
8,144
399
14,911
14,925
- RoW
-
-
-
-
6,442
9,037
218
15,697
15,697
Loans by stage
208,275
5,904
9,595
223,774
108,546
57,087
2,633
168,266
392,040
- Stage 1
188,140
3,742
6,983
198,865
91,006
56,105
2,610
149,721
348,586
- Stage 2
17,854
2,022
1,633
21,509
15,415
966
1
16,382
37,891
- Stage 3
2,281
140
979
3,400
2,125
16
22
2,163
5,563
- Of which: individual
122
-
20
142
865
2
22
889
1,031
- Of which: collective
2,159
140
959
3,258
1,260
14
-
1,274
4,532
Loans - past due analysis
(2)
208,275
5,904
9,595
223,774
108,546
57,087
2,633
168,266
392,040
- Not past due
205,405
5,743
8,578
219,726
104,316
56,735
2,633
163,684
383,410
- Past due 1-30 days
1,178
41
71
1,290
2,713
332
-
3,045
4,335
- Past due 31-90 days
518
38
112
668
616
12
-
628
1,296
- Past due 91-180 days
445
32
103
580
113
2
-
115
695
- Past due >180 days
729
50
731
1,510
788
6
-
794
2,304
Loans - Stage 2
17,854
2,022
1,633
21,509
15,415
966
1
16,382
37,891
- Not past due
16,803
1,971
1,529
20,303
14,358
932
1
15,291
35,594
- Past due 1-30 days
765
27
40
832
616
24
-
640
1,472
- Past due 31-90 days
286
24
64
374
441
10
-
451
825
Weighted average life
(4)
- ECL measurement (years)
9
3
6
6
6
2
-
6
6
Weighted average 12 months PDs
(4)
- IFRS 9 (%)
0.50
3.45
5.29
0.75
1.55
0.19
0.37
1.07
0.89
- Basel (%)
0.67
3.37
3.15
0.84
1.16
0.17
0.37
0.81
0.83
ECL provisions by geography
420
376
1,168
1,964
1,599
66
16
1,681
3,645
- UK
420
365
1,163
1,948
1,383
38
13
1,434
3,382
- Other Europe
-
11
5
16
159
13
-
172
188
- RoW
-
-
-
-
57
15
3
75
75
\n
For the notes to this table refer to the following page.
Sector analysis \u2013 portfolio summary (audited)
\n \n
Personal
Non-personal
Mortgages (1)
Credit cards
Other personal
Total
Corporate and Other (2)
FI
Sovereign
Total
Total
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ECL provisions by stage
420
376
1,168
1,964
1,599
66
16
1,681
3,645
- Stage 1
88
76
152
316
336
44
13
393
709
- Stage 2
61
207
238
506
454
15
1
470
976
- Stage 3
271
93
778
1,142
809
7
2
818
1,960
- Of which: individual
12
-
14
26
302
2
2
306
332
- Of which: collective
259
93
764
1,116
507
5
-
512
1,628
ECL provisions coverage (%)
0.20
6.37
12.17
0.88
1.47
0.12
0.61
1.00
0.93
- Stage 1 (%)
0.05
2.03
2.18
0.16
0.37
0.08
0.50
0.26
0.20
- Stage 2 (%)
0.34
10.24
14.57
2.35
2.95
1.55
100.00
2.87
2.58
- Stage 3 (%)
11.88
66.43
79.47
33.59
38.07
43.75
9.09
37.82
35.23
ECL (release)/charge
35
193
254
482
92
6
(2)
96
578
- UK
35
184
249
468
103
(4)
(2)
97
565
- Other Europe
-
9
5
14
39
12
-
51
65
- RoW
-
-
-
-
(50)
(2)
-
(52)
(52)
Amounts written-off
32
70
91
193
125
1
-
126
319
Loans by residual maturity
208,275
5,904
9,595
223,774
108,546
57,087
2,633
168,266
392,040
- <1 year
3,375
3,398
3,169
9,942
31,008
43,497
489
74,994
84,936
- 1-5 year
9,508
2,506
5,431
17,445
49,789
11,616
1,872
63,277
80,722
- > 5 < 15 year
46,453
-
993
47,446
19,868
1,939
199
22,006
69,452
- > 15 year
148,939
-
2
148,941
7,881
35
73
7,989
156,930
Other financial assets by asset quality
(3)
-
-
-
-
2,690
26,816
123,683
153,189
153,189
- AQ1-AQ4
-
-
-
-
2,690
26,084
123,683
152,457
152,457
- AQ5-AQ8
-
-
-
-
-
732
-
732
732
Off-balance sheet
9,843
17,284
8,462
35,589
73,921
22,221
227
96,369
131,958
- Loan commitments
9,843
17,284
8,417
35,544
70,942
20,765
227
91,934
127,478
- Financial guarantees
-
-
45
45
2,979
1,456
-
4,435
4,480
Off-balance sheet by asset quality
(3)
9,843
17,284
8,462
35,589
73,921
22,221
227
96,369
131,958
- AQ1-AQ4
9,099
448
7,271
16,818
47,296
20,644
165
68,105
84,923
- AQ5-AQ8
721
16,518
1,162
18,401
26,296
1,574
45
27,915
46,316
- AQ9
7
6
4
17
15
-
-
15
32
- AQ10
16
312
25
353
314
3
17
334
687
(1)
Includes a portion of Private Banking lending secured against residential real estate, in line with ECL calculation methodology. Private Banking and RBS International mortgages are reported in UK, reflecting the country of lending origination and includes
crown dependencies.
(2)
Previously published sectors for the Non-personal portfolio have been re-presented to reflect internal sector reporting. Property is now included in corporate and other.
(3)
AQ bandings are based on Basel PDs and mapping is as follows:
\n \n
Internal asset quality band
Probability of default range
Indicative S&P rating
Internal asset quality band
Probability of default range
Indicative S&P rating
AQ1
0% - 0.034%
AAA to AA
AQ6
1.076% - 2.153%
BB- to B+
AQ2
0.034% - 0.048%
AA to AA-
AQ7
2.153% - 6.089%
B+ to B
AQ3
0.048% - 0.095%
A+ to A
AQ8
6.089% - 17.222%
B- to CCC+
AQ4
0.095% - 0.381%
BBB+ to BBB-
AQ9
17.222% - 100%
CCC to C
AQ5
0.381% - 1.076%
BB+ to BB
AQ10
100%
\u00a30.3 billion (2023 \u2013 \u00a30.3 billion) of AQ10 Personal balances primarily relate to loan commitments, the drawdown of which is effectively prohibited.
(4)
Not within the scope of the independent auditors\u2019 report.
D
\n\n\n\n\n\n\n\n\n\n\n\n
Sector analysis \u2013 portfolio summary (audited)
\n
The table below shows ECL by stage, for the Personal portfolio and Non-Personal portfolio including the three largest borrowing sector clusters included in corporate and other.
\n\n \n
Loans - amortised cost and FVOCI
Off-balance sheet
ECL provisions
Stage 1
Stage 2
Stage 3
Total
Loan commitments
Contingent liabilities
Stage 1
Stage 2
Stage 3
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Personal
198,318
24,636
3,571
226,525
41,847
41
284
429
1,099
1,812
Mortgages
186,250
21,061
2,535
209,846
13,806
-
77
60
325
462
Credit cards
4,801
1,953
176
6,930
20,135
-
77
186
118
381
Other personal
7,267
1,622
860
9,749
7,906
41
130
183
656
969
Non-personal
165,503
15,838
2,359
183,700
93,520
4,608
314
358
941
1,613
Financial institutions
(1)
69,021
1,241
59
70,321
20,341
1,584
38
12
40
90
Sovereigns
1,491
133
21
1,645
239
-
12
2
5
19
Corporate and other
(2)
94,991
14,464
2,279
111,734
72,940
3,024
264
344
896
1,504
Of which:
Commercial real estate
16,191
1,517
433
18,141
6,661
143
70
30
146
246
Consumer industries
13,312
3,015
444
16,771
10,706
595
45
90
188
323
Mobility and logistics
13,363
2,384
148
15,895
9,367
595
26
35
67
128
Total
363,821
40,474
5,930
410,225
135,367
4,649
598
787
2,040
3,425
\n\n \n
Loans - amortised cost and FVOCI
Off-balance sheet
ECL provisions
Stage 1
Stage 2
Stage 3
Total
Loan commitments
Contingent liabilities
Stage 1
Stage 2
Stage 3
Total
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Personal
198,865
21,509
3,400
223,774
35,544
45
316
506
1,142
1,964
Mortgages
188,140
17,854
2,281
208,275
9,843
-
88
61
271
420
Credit cards
3,742
2,022
140
5,904
17,284
-
76
207
93
376
Other personal
6,983
1,633
979
9,595
8,417
45
152
238
778
1,168
Non-personal
149,721
16,382
2,163
168,266
91,934
4,435
393
470
818
1,681
Financial institutions
(1)
56,105
966
16
57,087
20,765
1,456
44
15
7
66
Sovereigns
2,610
1
22
2,633
227
-
13
1
2
16
Corporate and other
(2)
91,006
15,415
2,125
108,546
70,942
2,979
336
454
809
1,599
Of which:
Commercial real estate
14,998
2,040
374
17,412
7,155
106
86
58
112
256
Consumer industries
12,586
4,050
541
17,177
10,209
649
61
119
222
402
Mobility and logistics
13,186
2,074
143
15,403
8,728
496
33
39
48
120
Total
348,586
37,891
5,563
392,040
127,478
4,480
709
976
1,960
3,645
\n
(1)
Includes transactions, such as securitisations, where the underlying assets may be in other sectors.
\n
(2)
Previously published sectors for the Non-personal portfolio have been re-presented to reflect internal sector reporting. Property is now included in corporate and other.
Non-personal forbearance (audited)
The table below shows Non-personal forbearance, Heightened Monitoring and Risk of Credit Loss by sector. The table shows current exposure but reflects risk transfers where there
is a guarantee by another customer.
\n \n
Corporate and Other
Financial institution
Sovereign
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Forbearance (flow)
3,359
119
18
3,496
Forbearance (stock)
4,556
106
18
4,680
Heightened Monitoring and Risk of Credit Loss
5,931
150
1
6,082
2023
Forbearance (flow)
3,484
56
22
3,562
Forbearance (stock)
4,823
70
22
4,915
Heightened Monitoring and Risk of Credit Loss
5,208
276
-
5,484
Sector analysis \u2013 portfolio summary (audited)
\ue001
Loans by geography and sector
\u2013 In line with NatWest Group\u2019s strategic focus, exposures continued to be mainly in the UK.
\ue001
Loans by stage
\u2013 The increase in Stage 1 reflected the growth in Non-Personal lending, alongside continued growth in Personal unsecured portfolios. There was an increase in
Stage 2 balances in 2024, driven by mortgages, but noting that there was a significant proportion of mortgage cases in Stage 2, due to PD persistence only. The modest increase
in Stage 3 balance was mainly due to a small number of large corporate customers, with Personal lending increases largely mitigated by debt sale activity on unsecured assets.
\ue001
Loans \u2013 Past due analysis
\u2013 Within the Personal portfolio, arrears balances increased during 2024, however, this was in line with expectations following periods of balance growth
and normalisation since COVID-19. Arrears inflow rates remained stable. In Non-Personal, past due composition was stable.
\ue001
Weighted average 12 months PDs
\u2013
Both IFRS 9 and Basel PDs remained broadly stable during the year. In the Personal portfolios, there was a notable reduction in unsecured
IFRS 9 PDs due to modelling updates. In Non-Personal, some reductions were observed in IFRS 9 PDs in the corporate portfolios due to economic and portfolio improvements. PDs
in sovereigns increased significantly due to new lending but all new lending is fully backed by government guarantees.
\ue001
ECL provisions by stage and ECL provisions coverage
\u2013 Overall provisions coverage reduced since 31 December 2023. In the performing book, this was mainly a result of stable
portfolio performance, reduced economic uncertainty post model adjustments and PD reductions across a number of portfolios, primarily relating to modelling updates in Personal.
Furthermore, Stage 3 and total book coverage reduced, supported by the 2024 debt sale activity on Personal unsecured portfolios.
\ue001
ECL charge \u2013
The full year impairment charge for 2024 of \u00a3359 million primarily reflected stable default performance, alongside reduced PD levels and impairment releases driven
by the reduction in economic uncertainty post model adjustments.
\ue001
Loans by residual maturity
\u2013
The maturity profile of the portfolios remained consistent with prior periods. In mortgages, as expected, the vast majority of exposures were greater
than five years. In unsecured lending, cards and other, exposures were concentrated in less than five years. In Non-Personal, most loans mature in less than five years.
\ue001
Other financial assets by asset quality
\u2013
Consisting almost entirely of balances at central banks and debt securities held in the course of treasury related management activities,
these assets were mainly within the AQ1-AQ4 bands.
\ue001
Off-balance sheet exposures by asset quality
\u2013 In Personal, undrawn exposures were reflective of available credit lines in credit cards and current accounts. Additionally, the
mortgage portfolio had undrawn exposures, where a formal offer had been made to a customer but had not yet drawn down; the value increased in line with the pipeline of offers.
There was also a legacy portfolio of flexible mortgages where a customer had the right and ability to draw down further funds. In Non-Personal, off-balance sheet exposures
increased moderately driven by loan commitments. Asset quality was mainly in the AQ1-AQ8 bandings.
\ue001
Non-Personal problem debt \u2013
There was an increase in exposures during 2024 driven by corporate sectors, although volumes were flat. The framework is closely monitored, and
there were no material thematic concerns.
\ue001
Non-Personal forbearance \u2013
Forbearance was lower at the end of 2024, compared to 2023, reflecting stable portfolio performance.
\n\n\n\n\n\n\n\n\n\n\n\n
Credit risk enhancement and mitigation (audited)
\n
The table below shows exposures of modelled portfolios within the scope of the ECL framework and related credit risk enhancement and mitigation (CREM).
\n \n \n
Gross
Maximum credit risk
CREM by type
CREM coverage
Exposure post CREM
exposure
ECL
Total
Stage 3
Financial (1)
Property
Other (2)
Total
Stage 3
Total
Stage 3
2024
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Financial assets
Cash and balances at central banks
91.8
-
91.8
-
-
-
-
-
-
91.8
-
Loans - amortised cost
(3)
410.2
3.3
406.9
3.9
46.3
253.0
25.5
324.8
3.4
82.1
0.5
Personal
(4)
226.5
1.8
224.7
2.5
0.8
209.1
-
209.9
2.2
14.8
0.3
Non-personal
(5)
183.7
1.5
182.2
1.4
45.5
43.9
25.5
114.9
1.2
67.3
0.2
Debt securities
62.5
-
62.5
-
0.1
-
-
0.1
-
62.4
-
Total financial assets
564.5
3.3
561.2
3.9
46.4
253.0
25.5
324.9
3.4
236.3
0.5
Contingent liabilities and commitments
Personal
(6,7)
41.9
-
41.9
0.4
1.1
3.7
-
4.8
-
37.1
0.4
Non-personal
98.1
0.1
98.0
0.4
3.1
8.2
5.1
16.4
0.1
81.6
0.3
Total off-balance sheet
140.0
0.1
139.9
0.8
4.2
11.9
5.1
21.2
0.1
118.7
0.7
Total exposure
704.5
3.4
701.1
4.7
50.6
264.9
30.6
346.1
3.5
355.0
1.2
2023
Financial assets
Cash and balances at central banks
103.1
-
103.1
-
-
-
-
-
-
103.1
-
Loans - amortised cost
(3)
392.0
3.5
388.5
3.5
37.4
248.2
21.8
307.4
3.1
81.1
0.4
Personal
(4)
223.7
1.9
221.8
2.2
0.9
207.5
-
208.4
2.0
13.4
0.2
Non-personal
(5)
168.3
1.6
166.7
1.3
36.5
40.7
21.8
99.0
1.1
67.7
0.2
Debt securities
50.1
-
50.1
-
-
-
-
-
-
50.1
-
Total financial assets
545.2
3.5
541.7
3.5
37.4
248.2
21.8
307.4
3.1
234.3
0.4
Contingent liabilities and commitments
Personal
(6,7)
35.6
-
35.6
0.3
1.0
4.0
-
5.0
-
30.6
0.3
Non-personal
96.4
0.1
96.3
0.4
2.6
7.1
4.1
13.8
0.1
82.5
0.3
Total off-balance sheet
132.0
0.1
131.9
0.7
3.6
11.1
4.1
18.8
0.1
113.1
0.6
Total exposure
677.2
3.6
673.6
4.2
41.0
259.3
25.9
326.2
3.2
347.4
1.0
\n
(1)
Includes cash and securities collateral.
\n
(2)
Includes guarantees, charges over trade debtors, other asset finance related physical collateral as well as the amount by which credit risk exposure is reduced through netting arrangements, mainly cash management pooling, which give NatWest Group a
\n
legal right to set off the financial asset against a financial liability due to the same counterparty. Any additional credit risk mitigation from a synthetic securitization is not included in the table above.
\n
(3)
NatWest Group holds collateral in respect of individual loans \u2013 amortised cost to banks and customers. This collateral includes mortgages over property (both personal and commercial); charges over business assets such as plant and equipment;
\n
inventories and trade debtors; and guarantees of lending from parties other than the borrower. NatWest Group obtains collateral in the form of securities in reverse repurchase agreements. Collateral values are capped at the value of the loan.
\n
(4)
Stage 3 mortgage exposures have relatively limited uncovered exposure reflecting the security held. On unsecured credit cards and other personal borrowing, the residual uncovered amount reflects historical experience of continued cash recovery post
\n
default through ongoing engagement with customers.
\n
(5)
Stage 3 exposures post credit risk enhancement and mitigation in Non-personal mainly represent enterprise value and the impact of written down collateral values; an individual assessment to determine ECL will consider multiple scenarios and in some
\n
instances allocate a probability weighting to a collateral value in excess of the written down value.
\n
(6)
\u00a30.3 billion (2023
\u2013
\u00a30.3 billion) Personal Stage 3 balances primarily relate to loan commitments, the draw down of which is effectively prohibited.
\n
(7)
The Personal gross exposure value includes \u00a310.1 billion (2023
\u2013
\u00a35.9 billion) in respect of pipeline mortgages where a committed offer has been made to a customer but where the funds have not yet been drawn down. When drawn down, the exposure
\n
would be covered by a security over the borrower\u2019s property.
\n\n\n\n\n\n\n\n\n\n\n\n
Personal portfolio (audited)
\n
Disclosures in the Personal portfolio section include drawn exposure (gross of provisions).
\n\n \n
2024
Retail
Private
Commercial &
Central items
Banking
Banking
Institutional
& other
Total
Personal lending
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Mortgages
194,865
12,826
2,161
-
209,852
Of which:
Owner occupied
176,137
11,348
1,457
-
188,942
Buy-to-let
18,728
1,478
704
-
20,910
Interest only
22,186
11,276
437
-
33,899
Mixed
(1)
10,384
40
8
-
10,432
ECL provisions
(2)
440
12
10
-
462
Other personal lending
(3)
15,045
1,301
242
-
16,588
ECL provisions
(2)
1,330
12
3
-
1,345
Total personal lending
209,910
14,127
2,403
-
226,440
Mortgage LTV ratios
- Owner occupied
56%
59%
56%
-
56%
- Stage 1
56%
59%
55%
-
56%
- Stage 2
55%
61%
56%
-
55%
- Stage 3
50%
64%
74%
-
51%
- Buy-to-let
53%
60%
52%
-
53%
- Stage 1
54%
60%
51%
-
54%
- Stage 2
52%
57%
55%
-
52%
- Stage 3
52%
56%
59%
-
53%
Gross new mortgage lending
26,440
1,395
257
-
28,092
Of which:
Owner occupied
25,300
1,266
183
-
26,749
- LTV > 90%
888
-
-
-
888
Weighted average LTV
(4)
70%
63%
71%
-
70%
Buy-to-let
1,140
129
74
-
1,343
Weighted average LTV
(4)
61%
62%
56%
-
61%
Interest only
1,575
1,238
42
-
2,855
Mixed
(1)
1,150
-
1
-
1,151
Mortgage forbearance
Forbearance flow
(5)
473
8
6
-
487
Forbearance stock
1,680
20
15
-
1,715
Current
1,214
9
10
-
1,233
1-3 months in arrears
146
9
-
-
155
>3 months in arrears
320
2
5
-
327
\n
For the notes to this table refer to the following page.
\n\n\n\n\n\n\n\n\n\n\n\n
Personal portfolio (audited)
\n\n \n
2023
Retail
Private
Commercial &
Central items
Banking
Banking
Institutional
& other
Total
Personal lending
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Mortgages
192,915
13,222
2,200
-
208,337
Of which:
Owner occupied
174,167
11,629
1,464
-
187,260
Buy-to-let
18,748
1,593
736
-
21,077
Interest only
25,805
11,631
461
-
37,897
Mixed
(1)
10,068
25
10
-
10,103
ECL provisions
(2)
397
12
6
-
415
Other personal lending
(3)
13,758
1,395
222
13
15,388
ECL provisions
(2)
1,508
12
2
16
1,538
Total personal lending
206,673
14,617
2,422
13
223,725
Mortgage LTV ratios
- Owner occupied
55%
59%
56%
-
55%
- Stage 1
55%
59%
54%
-
55%
- Stage 2
54%
63%
54%
-
54%
- Stage 3
48%
61%
72%
-
49%
- Buy-to-let
52%
59%
52%
-
53%
- Stage 1
52%
60%
52%
-
53%
- Stage 2
50%
57%
49%
-
50%
- Stage 3
50%
53%
58%
-
51%
Gross new mortgage lending
29,664
1,400
180
-
31,244
Of which:
Owner occupied
27,718
1,267
136
-
29,121
- LTV > 90%
1,173
-
-
-
1,173
Weighted average LTV
(4)
70%
63%
69%
-
70%
Buy-to-let
1,946
133
44
-
2,123
Weighted average LTV
(4)
58%
65%
52%
-
58%
Interest only
2,680
1,224
23
-
3,927
Mixed
(1)
1,568
2
-
-
1,570
Mortgage forbearance
Forbearance flow
(5)
569
22
9
-
600
Forbearance stock
1,416
28
15
-
1,459
Current
950
10
6
-
966
1-3 months in arrears
116
2
2
-
120
>3 months in arrears
350
16
7
-
373
\n
(1)
Includes accounts which have an interest only sub-
\n
account and a capital and interest sub-account to
\n
provide a more comprehensive view of interest only
\n
exposures.
\n
(2)
Retail Banking excludes a non-material amount of
\n
lending and provisions held on relatively small legacy
\n
portfolios.
\n
(3)
Comprises unsecured lending except for Private
\n
Banking, which includes both secured and unsecured
\n
lending. It excludes loans that are commercial in
\n
nature.
\n
(4)
New mortgage lending LTV reflects the LTV at the
\n
time of lending.
\n
(5)
Forbearance flows only include an account once per
\n
year, although some accounts may be subject to
\n
multiple forbearance deals. Forbearance deals post
\n
default are excluded from these flows.
\n\n\n\n\n\n\n\n\n\n\n\n
Personal portfolio (audited)
\n
Mortgage LTV distribution by stage
\n
The table below shows gross mortgage lending and related ECL by LTV band for the Retail Banking portfolio.
\n \n \n
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
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
\u226450%
64,040
8,344
1,159
73,543
21
16
153
190
-
0.2
13.2
0.3
>50% and \u226470%
61,739
7,741
855
70,335
29
23
104
156
-
0.3
12.2
0.2
>70% and \u226480%
25,022
2,361
173
27,556
13
9
22
44
0.1
0.4
12.7
0.2
>80% and \u226490%
16,718
1,769
85
18,572
9
9
13
31
0.1
0.5
15.3
0.2
>90% and \u2264100%
4,076
512
26
4,614
2
3
5
10
-
0.6
19.2
0.2
>100%
14
4
13
31
-
-
6
6
-
-
46.2
19.4
Total with LTVs
171,609
20,731
2,311
194,651
74
60
303
437
-
0.3
13.1
0.2
Other
212
1
1
214
2
-
1
3
0.9
-
100.0
1.4
Total
171,821
20,732
2,312
194,865
76
60
304
440
-
0.3
13.1
0.2
2023
\u226450%
68,092
7,447
1,145
76,684
27
18
134
179
-
0.2
11.7
0.2
>50% and \u226470%
65,777
7,011
767
73,555
35
26
85
146
0.1
0.4
11.1
0.2
>70% and \u226480%
22,537
1,633
113
24,283
13
7
15
35
0.1
0.4
13.3
0.1
>80% and \u226490%
13,583
1,143
47
14,773
9
6
7
22
0.1
0.5
14.9
0.1
>90% and \u2264100%
3,008
370
14
3,392
2
3
3
8
0.1
0.8
21.4
0.2
>100%
22
6
11
39
-
-
5
5
-
-
45.5
12.8
Total with LTVs
173,019
17,610
2,097
192,726
86
60
249
395
0.1
0.3
11.9
0.2
Other
186
1
2
189
1
-
1
2
0.5
-
50.0
1.1
Total
173,205
17,611
2,099
192,915
87
60
250
397
0.1
0.3
11.9
0.2
\n
\ue001
Mortgage balances increased during 2024 as a result of the Metro Bank mortgage portfolio acquisition. Unsecured lending grew overall, driven by growth in credit cards, prime
\n
quality whole of market lending and balance transfer segments.
\n
\ue001
The proportion of overall interest-only mortgage balances decreased in 2024. Higher levels of interest-only at the 2023 year end were driven by the implementation of the
\n
Mortgage Charter. However, applications for Mortgage Charter support decreased during 2024 and customers have rolled-off from interest-only periods.
\n
\ue001
Portfolios and new business were closely monitored against agreed operating limits. These included loan-to-value ratios, buy-to-let concentrations, new-build concentrations and
\n
credit quality. Lending criteria, affordability calculations and assumptions for new lending were adjusted during the year, to maintain credit quality in line with appetite and to
\n
ensure customers are assessed fairly as economic conditions change.
\n
\ue001
Consistent with lower mortgage inflows to collections in 2024, the flow of forbearance reduced compared to the prior year.
\n\n\n\n\n\n\n\n\n\n\n\n
Personal portfolio (audited)
\n
Mortgage LTV distribution by region
\n
The table below shows gross mortgage lending by LTV band for Retail Banking, by geographical region.
\n\n \n
Flood risk (1,2)
Weighted
% of regional
% of regional
Lending at high/
\u226450%
50%\u226480%
80%\u2264100%
>100%
Total
average LTV
Other
Total
Total
lending at high
lending at very
very high risk (3)
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
\u00a3m
\u00a3m
%
risk (>60)
high risk (>80)
%
South East
13,622
19,007
4,506
1
37,136
56
3
37,139
19
3.6
1.2
4.8
Greater London
13,951
18,537
3,391
2
35,881
55
3
35,884
18
4.8
0.9
5.7
East of England
7,776
11,730
3,211
2
22,719
58
1
22,720
12
2.9
1.4
4.3
North West
7,507
8,305
1,878
2
17,692
54
1
17,693
9
2.9
1.9
4.8
South West
6,577
8,455
2,055
1
17,088
56
1
17,089
9
2.6
1.0
3.6
West Midlands
5,379
6,970
1,683
1
14,033
56
1
14,034
7
1.8
0.6
2.4
Scotland
4,860
5,766
1,591
1
12,218
55
1
12,219
6
2.4
1.2
3.6
Rest of the UK
13,871
19,121
4,871
21
37,884
57
203
38,087
20
2.4
2.5
4.9
Total
73,543
97,891
23,186
31
194,651
56
214
194,865
100
3.1
1.4
4.5
2023
South East
14,645
18,510
3,107
1
36,263
54
2
36,265
19
3.8
1.2
5.0
Greater London
14,689
18,044
2,366
1
35,100
53
3
35,103
18
5.2
0.9
6.1
East of England
8,576
11,810
2,208
-
22,594
55
2
22,596
12
3.1
1.4
4.5
North West
7,314
8,629
1,881
2
17,826
54
2
17,828
9
3.0
1.9
4.9
South West
7,308
8,296
1,379
1
16,984
53
1
16,985
9
2.7
1.0
3.7
West Midlands
5,391
7,072
1,404
1
13,868
55
1
13,869
7
1.9
0.6
2.5
Scotland
5,051
5,938
1,445
1
12,435
54
2
12,437
6
2.9
1.4
4.2
Rest of the UK
13,711
19,540
4,374
32
37,657
56
175
37,832
20
2.7
1.8
4.5
Total
76,685
97,839
18,164
39
192,727
54
188
192,915
100
3.4
1.3
4.7
\n
(1)
Not within the scope of the independent auditors\u2019 report.
\n
(2)
As at 31 December 2024, \u00a312.6 billion, 98.0%, of the private banking mortgage portfolio had flood risk data available (2023 \u2013 \u00a313.0 billion, 98.1%). Of which, 5.4% were rated as high flood risk and 1.0% as very high flood risk
(2023 \u2013 5.74% high flood risk
\n
and 1.1% very high flood risk). 63% of the exposure is in the Greater London region.
\n
(3)
Flood risk is modelled by calculating an estimated loss for each flood source different types of flooding (fluvial, pluvial, tidal), annualised for each source and combined for a total flood score. Flood defences were considered where available. Flood scores
\n
were allocated per property based on the potential annualised loss (\u00a3) to a property dependent on the type, frequency and depth of flooding modelled across different return periods. The scoring ranged from 0 to 100, with 0 being lowest and 100 being
\n
the highest risk. A score of 61 and above was considered to be high risk and properties with a score of 81 and above were considered to be very high risk after flood mitigants were taken-into-account.
Personal portfolio (audited)
Retail Banking fixed rate mortgages by roll-off date
(1)
The table below shows gross fixed rate mortgage lending for Retail Banking, by roll-off date.
2024
2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Retail Banking mortgages - gross exposure
(2)
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Fixed rate roll-off
<=1 year
34,989
4,309
336
39,634
30,867
3,670
295
34,832
>1<= 2 years
44,146
5,080
418
49,644
39,013
3,513
290
42,816
>2 years
78,629
8,667
693
87,989
87,402
7,461
590
95,453
Total
157,764
18,056
1,447
177,267
157,282
14,644
1,175
173,101
(1)
Not within the scope of the independent auditors\u2019 report.
(2)
Excluding the Metro Bank portfolio acquired during 2024.
Retail Banking mortgages by Energy Performance Certificate (EPC) rating
(1)
The table below shows the energy efficiency of Retail Banking residential mortgages.
2024
2023
Owner occupied
Buy-to-let
Total
Owner occupied
Buy-to-let
Total
EPC rating
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
A
788
18
806
547
13
560
B
21,923
1,480
23,403
21,566
1,458
23,024
C
31,353
5,876
37,229
29,764
5,712
35,476
D
45,455
5,748
51,203
46,924
6,056
52,980
E
14,455
1,369
15,824
16,027
1,557
17,584
F
3,026
55
3,081
3,360
62
3,422
G
695
13
708
736
16
752
Unclassified
58,442
4,169
62,611
55,243
3,874
59,117
Total
176,137
18,728
194,865
174,167
18,748
192,915
(1)
Not within the scope of the independent auditors\u2019 report.
(2)
As at 31 December 2024, \u00a3139.1 billion, 66.3%, of the total residential mortgages portfolio had Energy Performance Certificate (EPC) data available (2023 \u2013 \u00a3140.8 billion, 67.6%). Of which, 46.3% were rated as EPC A to C (2023 \u2013 44.1%).
Commercial real estate (CRE)
CRE LTV distribution by stage (audited)
The table below shows CRE gross loans and related ECL by LTV band.
Gross loans
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
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
\u226450%
7,334
380
48
7,762
28
6
7
41
0.4
1.6
14.6
0.5
>50% and \u226470%
4,413
367
87
4,867
22
10
17
49
0.5
2.7
19.5
1.0
>70% and \u2264100%
312
83
79
474
2
4
21
27
0.6
4.8
26.6
5.7
>100%
139
8
119
266
1
-
56
57
0.7
-
47.1
21.4
Total with LTVs
12,198
838
333
13,369
53
20
101
174
0.4
2.4
30.3
1.3
Total portfolio average LTV
46%
51%
102%
48%
Other Investment
(1)
2,132
348
41
2,521
6
6
15
27
0.3
1.7
36.6
1.1
Investment
14,330
1,186
374
15,890
59
26
116
201
0.4
2.2
31.0
1.3
Development and other
(2)
1,861
331
59
2,251
11
4
30
45
0.6
1.2
50.8
2.0
Total
16,191
1,517
433
18,141
70
30
146
246
0.4
2.0
33.7
1.4
2023
\u226450%
7,173
664
61
7,898
38
15
9
62
0.5
2.3
14.8
0.8
>50% and \u226470%
3,165
619
94
3,878
22
21
18
61
0.7
3.4
19.1
1.6
>70% and \u2264100%
319
112
84
515
3
6
21
30
0.9
5.4
25.0
5.8
>100%
241
6
26
273
1
1
16
18
0.4
16.7
61.5
6.6
Total with LTVs
10,898
1,401
265
12,564
64
43
64
171
0.6
3.1
24.2
1.4
Total portfolio average LTV
47%
51%
72%
48%
Other Investment
(1)
2,189
390
45
2,624
10
7
19
36
0.5
1.8
42.2
1.4
Investment
13,087
1,791
310
15,188
74
50
83
207
0.6
2.8
26.8
1.4
Development and other
(2)
1,911
249
64
2,224
12
8
29
49
0.6
3.2
45.3
2.2
Total
14,998
2,040
374
17,412
86
58
112
256
0.6
2.8
29.9
1.5
(1)
Relates mainly to business banking and unsecured corporate lending.
(2)
Relates to the development of commercial and residential properties, along with CRE activities that are not strictly investment or development. LTV is not a meaningful measure for this type of lending activity.
\ue001
The majority of the CRE portfolio was located and managed in the UK. Business appetite and strategy was aligned across NatWest Group. Lending appetite is subject to regular
review.
\ue001
While the real estate investment market was subdued through much of 2024, the portfolio remained resilient and there was moderate growth.
\ue001
Credit quality remained stable with very limited instances of specific cases deteriorating. Challenges persist in parts of the office sub-sector, but NatWest Group remains
comfortable with exposures held in this sub-sector, representing approximately 16% of the overall CRE book.Flow statements (audited)
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:
\ue001
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.
\ue001
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.
\ue001
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.
\ue001
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.
\ue001
Amounts written-off represent the gross asset written-down against accounts with ECL, including the net asset write-down for any debt sale activity.
\ue001
There were some flows from Stage 1 into Stage 3 including transfers due to unexpected default events with a post model adjustment in place for Commercial & Institutional to
account for this risk.
\ue001
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.
\ue001
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 assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
NatWest Group total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
504,345
709
40,294
976
5,621
1,960
550,260
3,645
Currency translation and other adjustments
(1,354)
-
(40)
(1)
158
204
(1,236)
203
Transfers from Stage 1 to Stage 2
(40,745)
(231)
40,745
231
-
-
-
-
Transfers from Stage 2 to Stage 1
27,808
552
(27,808)
(552)
-
-
-
-
Transfers to Stage 3
(247)
(5)
(3,489)
(269)
3,736
274
-
-
Transfers from Stage 3
296
19
761
37
(1,057)
(56)
-
-
Net re-measurement of ECL on stage transfer
(390)
657
344
611
Changes in risk parameters
(206)
(114)
302
(18)
Other changes in net exposure
25,749
155
(8,288)
(174)
(1,891)
(176)
15,570
(195)
Other (P&L only items)
3
(9)
(33)
(39)
Income statement (releases)/charges
(438)
360
437
359
Transfers to disposal groups and fair value
(296)
(5)
(9)
(3)
(13)
(10)
(318)
(18)
Amounts written-off
-
-
(1)
(1)
(653)
(653)
(654)
(654)
Unwinding of discount
-
-
(149)
(149)
At 31 December 2024
515,556
598
42,165
787
5,901
2,040
563,622
3,425
Net carrying amount
514,958
41,378
3,861
560,197
At 1 January 2023
507,539
632
48,482
1,043
5,231
1,759
561,252
3,434
2023 movements
(3,194)
77
(8,188)
(67)
390
201
(10,992)
211
At 31 December 2023
504,345
709
40,294
976
5,621
1,960
550,260
3,645
Net carrying amount
503,636
39,318
3,661
546,615
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Retail Banking - mortgages
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
174,038
87
17,827
60
2,068
250
193,933
397
Currency translation and other adjustments
-
(1)
-
1
109
110
109
110
Transfers from Stage 1 to Stage 2
(19,074)
(20)
19,074
20
-
-
-
-
Transfers from Stage 2 to Stage 1
12,454
24
(12,454)
(24)
-
-
-
-
Transfers to Stage 3
(52)
-
(1,079)
(8)
1,131
8
-
-
Transfers from Stage 3
48
1
392
7
(440)
(8)
-
-
Net re-measurement of ECL on stage transfer
(13)
26
6
19
Changes in risk parameters
3
(15)
96
84
Other changes in net exposure
3,919
(5)
(2,768)
(7)
(550)
(75)
601
(87)
Other (P&L only items)
-
(1)
(10)
(11)
Income statement (releases)/charges
(15)
3
17
5
Amounts written-off
-
-
-
-
(15)
(15)
(15)
(15)
Unwinding of discount
-
-
(67)
(67)
At 31 December 2024
171,333
76
20,992
60
2,303
305
194,628
441
Net carrying amount
171,257
20,932
1,998
194,187
At 1 January 2023
165,264
79
18,831
61
1,762
215
185,857
355
2023 movements
8,774
8
(1,004)
(1)
306
35
8,076
42
At 31 December 2023
174,038
87
17,827
60
2,068
250
193,933
397
Net carrying amount
173,951
17,767
1,818
193,536
\n
\ue001
ECL coverage for mortgages remained stable overall during 2024, with growth in Stage 3 ECL partly offset by a reduction in good book ECL, primarily driven by the reduction in
\n
economic uncertainty post model adjustment levels. PDs remained broadly flat with the effect of the modest increase in arrears levels being offset by the impact of improved
\n
economics since 2023 and stable portfolio performance overall.
\n
\ue001
The decrease in Stage 1 ECL was also driven by the cost of living post model adjustment reduction. Refer to the Governance and post model adjustments section for further
\n
details.
\n
\ue001
The Stage 3 inflows remained broadly stable, albeit with signs of an upward drift in default rates, reflecting slightly poorer arrears performance on mortgages recently rolled-off
\n
onto higher product rates. The increase in Stage 3 ECL primarily reflected increases in ECL for post-default interest.
\n
\ue001
There were net flows into Stage 2 from Stage 1 in line with a modest upward trend in arrears.
\n
\ue001
The relatively small ECL cost for net re-measurement on transfer into Stage 3 included the effect of risk targeted ECL adjustments, when previously in the good book. Refer to the
\n
Governance and post model adjustments section for further details.
\n
\ue001
Write-off occurs once the repossessed property has been sold and there is a residual shortfall balance remaining outstanding. This would typically be within five years from default
\n
but can be longer.
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Retail Banking - credit cards
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
3,475
70
2,046
204
146
89
5,667
363
Currency translation and other adjustments
-
(1)
-
1
4
3
4
3
Transfers from Stage 1 to Stage 2
(1,895)
(42)
1,895
42
-
-
-
-
Transfers from Stage 2 to Stage 1
1,300
94
(1,300)
(94)
-
-
-
-
Transfers to Stage 3
(24)
(1)
(158)
(58)
182
59
-
-
Transfers from Stage 3
3
1
9
3
(12)
(4)
-
-
Net re-measurement of ECL on stage transfer
(58)
167
46
155
Changes in risk parameters
(3)
(13)
37
21
Other changes in net exposure
1,664
16
(458)
(66)
(56)
(2)
1,150
(52)
Other (P&L only items)
-
-
(9)
(9)
Income statement (releases)/charges
(45)
88
72
115
Amounts written-off
-
-
-
-
(102)
(102)
(102)
(102)
Unwinding of discount
-
-
(9)
(9)
At 31 December 2024
4,523
76
2,034
186
162
117
6,719
379
Net carrying amount
4,447
1,848
45
6,340
At 1 January 2023
3,062
61
1,098
120
113
71
4,273
252
2023 movements
413
9
948
84
33
18
1,394
111
At 31 December 2023
3,475
70
2,046
204
146
89
5,667
363
Net carrying amount
3,405
1,842
57
5,304
\n
\ue001
Overall ECL for cards remained broadly in line with 2023, with portfolio growth mitigated by stable portfolio performance, lower PD levels and a reduction in economic uncertainty
\n
post model adjustment levels.
\n
\ue001
Credit card balances continued to grow during the year, in line with industry trends in the UK, reflecting strong customer demand, while sustaining robust risk appetite.
\n
\ue001
While portfolio performance remained stable, a net flow into Stage 2 from Stage 1 was observed, with the typical maturation of lending after a period of strong growth in recent
\n
years. The staging ECL uplift was offset by modelling updates in PDs and LGDs.
\n
\ue001
Flow rates into Stage 3 showed modest improvement in 2024 in comparison to 2023, in line with broader portfolio performance.
\n
\ue001
Charge-off (analogous to partial write-off) typically occurs after 12 missed payments.
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Retail Banking - other personal unsecured
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
5,240
149
1,657
238
963
758
7,860
1,145
Currency translation and other adjustments
-
1
1
-
20
21
21
22
Transfers from Stage 1 to Stage 2
(2,156)
(103)
2,156
103
-
-
-
-
Transfers from Stage 2 to Stage 1
1,672
229
(1,672)
(229)
-
-
-
-
Transfers to Stage 3
(69)
(3)
(304)
(126)
373
129
-
-
Transfers from Stage 3
9
3
23
9
(32)
(12)
-
-
Net re-measurement of ECL on stage transfer
(161)
269
29
137
Changes in risk parameters
(69)
(40)
107
(2)
Other changes in net exposure
909
81
(395)
(41)
(179)
(45)
335
(5)
Other (P&L only items)
1
(1)
32
32
Income statement (releases)/charges
(148)
187
123
162
Amounts written-off
-
-
(1)
(1)
(312)
(312)
(313)
(313)
Unwinding of discount
-
-
(34)
(34)
At 31 December 2024
5,605
127
1,465
182
833
641
7,903
950
Net carrying amount
5,478
1,283
192
6,953
At 1 January 2023
4,784
111
2,028
269
779
631
7,591
1,011
2023 movements
456
38
(371)
(31)
184
127
269
134
At 31 December 2023
5,240
149
1,657
238
963
758
7,860
1,145
Net carrying amount
5,091
1,419
205
6,715
\n
\ue001
Total ECL decreased, mainly in Stage 3, due to the reduction of balances from debt sale activity on Personal unsecured portfolios.
\n
\ue001
Stable portfolio performance was observed during the year. PD modelling updates coupled with LGD modelling updates were reflected in the performing book ECL, with coverage
\n
levels showing a modest reduction since the prior period.
\n
\ue001
Flow rates into Stage 3 reduced for the year, in line with broader portfolio performance.
\n
\ue001
Unsecured retail performing balances grew steadily in 2024, largely in line with industry trends.
\n
\ue001
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.
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements
(audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Commercial & Institutional total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
176,302
356
17,029
447
2,161
819
195,492
1,622
Currency translation and other adjustments
(826)
-
(41)
(1)
22
65
(845)
64
Transfers from Stage 1 to Stage 2
(16,117)
(62)
16,117
62
-
-
-
-
Transfers from Stage 2 to Stage 1
11,022
190
(11,022)
(190)
-
-
-
-
Transfers to Stage 3
(90)
(1)
(1,745)
(76)
1,835
77
-
-
Transfers from Stage 3
194
14
315
17
(509)
(31)
-
-
Net re-measurement of ECL on stage transfer
(148)
184
263
299
Changes in risk parameters
(118)
(39)
61
(96)
Other changes in net exposure
13,282
58
(4,484)
(58)
(1,011)
(53)
7,787
(53)
Other (P&L only items)
3
(8)
(47)
(52)
Income statement (releases)/charges
(205)
79
224
98
Amounts written-off
-
-
-
-
(223)
(223)
(223)
(223)
Unwinding of discount
-
-
(37)
(37)
At 31 December 2024
183,767
289
16,169
346
2,275
941
202,211
1,576
Net carrying amount
183,478
15,823
1,334
200,635
At 1 January 2023
160,352
342
24,711
534
2,198
747
187,261
1,623
2023 movements
15,950
14
(7,682)
(87)
(37)
72
8,231
(1)
At 31 December 2023
176,302
356
17,029
447
2,161
819
195,492
1,622
Net carrying amount
175,946
16,582
1,342
193,870
\n
\ue001
The growth in exposures was mainly driven by non-bank financial institutions.
\n
\ue001
Stage 1 and Stage 2 ECL reduced, reflecting a combination of stable portfolio performance, reductions in post model adjustments and net improvements in economic scenarios.
\n
\ue001
Stage 3 ECL increased due to a small number of large counterparties, but in total, the number of individual defaults remained low. Flows into Stage 3 were consistent with 2023
\n
and considerably below historical trends.
\n
\ue001
Write-offs levels continue to remain below historical trends.
\n
\ue001
Overall, impairment charges were low, with Stage 3 individual charges offset by performing book releases.
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Commercial & Institutional - corporate
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
61,402
226
12,275
344
1,454
602
75,131
1,172
Currency translation and other adjustments
(127)
-
(34)
(1)
22
53
(139)
52
Inter-group transfers
98
1
38
3
3
-
139
4
Transfers from Stage 1 to Stage 2
(10,835)
(47)
10,835
47
-
-
-
-
Transfers from Stage 2 to Stage 1
7,725
144
(7,725)
(144)
-
-
-
-
Transfers to Stage 3
(77)
(1)
(1,358)
(55)
1,435
56
-
-
Transfers from Stage 3
154
11
262
12
(416)
(23)
-
-
Net re-measurement of ECL on stage transfer
(112)
138
186
212
Changes in risk parameters
(74)
(29)
51
(52)
Other changes in net exposure
4,235
27
(2,843)
(42)
(737)
(41)
655
(56)
Other (P&L only items)
3
(7)
(43)
(47)
Income statement (releases)/charges
(156)
60
153
57
Amounts written-off
-
-
-
-
(199)
(199)
(199)
(199)
Unwinding of discount
-
-
(26)
(26)
At 31 December 2024
62,575
175
11,450
273
1,562
659
75,587
1,107
Net carrying amount
62,400
11,177
903
74,480
\n
\ue001
There was modest exposure growth, with increased new lending largely offset by repayments.
\n
\ue001
Stage 1 and Stage 2 ECL reduced, reflecting a combination of stable portfolio performance, reductions in post model adjustments and net improvements in economic scenarios.
\n
\ue001
Stage 3 ECL increased due to charges on a small number of large counterparties, partially offset by write-offs.
\n
\ue001
Overall, impairment charges were low, with Stage 3 individual charges offset by performing book releases.
\n\n\n\n\n\n\n\n\n\n\n\n
Flow statements (audited)
\n\n \n
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Commercial & Institutional - property
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
26,040
94
3,155
89
606
195
29,801
378
Currency translation and other adjustments
(10)
1
(3)
-
1
5
(12)
6
Inter-group transfers
(45)
(1)
(43)
(2)
(3)
-
(91)
(3)
Transfers from Stage 1 to Stage 2
(3,143)
(13)
3,143
13
-
-
-
-
Transfers from Stage 2 to Stage 1
2,291
37
(2,291)
(37)
-
-
-
-
Transfers to Stage 3
(9)
-
(304)
(16)
313
16
-
-
Transfers from Stage 3
34
3
49
4
(83)
(7)
-
-
Net re-measurement of ECL on stage transfer
(28)
37
44
53
Changes in risk parameters
(35)
(13)
10
(38)
Other changes in net exposure
2,310
19
(726)
(14)
(223)
(9)
1,361
(4)
Other (P&L only items)
-
-
(1)
(1)
Income statement (releases)/charges
(44)
10
44
10
Amounts written-off
-
-
-
-
(21)
(21)
(21)
(21)
Unwinding of discount
-
-
(8)
(8)
At 31 December 2024
27,468
77
2,980
61
590
225
31,038
363
Net carrying amount
27,391
2,919
365
30,675
\n
\ue001
Stage 1 and Stage 2 ECL reduced, reflecting a combination of stable portfolio performance, reductions in post model adjustments and net improvements in economic scenarios.
\n
\ue001
Stage 3 ECL increased due to charges on a small number of large counterparties, partially offset by write-offs.
\n
\ue001
Overall, impairment charges were low, with Stage 3 individual charges offset by performing book releases.
Flow statements (audited)
Stage 1
Stage 2
Stage 3
Total
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Financial assets
ECL
Commercial & Institutional - other
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
88,860
36
1,599
14
101
22
90,560
72
Currency translation and other adjustments
(689)
-
(5)
-
(1)
8
(695)
8
Inter-group transfers
(53)
-
4
-
-
-
(49)
-
Transfers from Stage 1 to Stage 2
(2,140)
(3)
2,140
3
-
-
-
-
Transfers from Stage 2 to Stage 1
1,006
9
(1,006)
(9)
-
-
-
-
Transfers to Stage 3
(4)
-
(83)
(6)
87
6
-
-
Transfers from Stage 3
6
-
4
1
(10)
(1)
-
-
Net re-measurement of ECL on stage transfer
(7)
9
33
35
Changes in risk parameters
(10)
3
1
(6)
Other changes in net exposure
6,738
12
(914)
(3)
(52)
(4)
5,772
5
Other (P&L only items)
-
-
(3)
(3)
Income statement (releases)/charges
(5)
9
27
31
Amounts written-off
-
-
-
-
(2)
(2)
(2)
(2)
Unwinding of discount
-
-
(3)
(3)
At 31 December 2024
93,724
37
1,739
12
123
57
95,586
106
Net carrying amount
93,687
1,727
66
95,480
\ue001
The growth in exposures was mainly driven by non-bank financial institutions.
\ue001
Stage 3 ECL increased due to charges on a small number of large counterparties.Asset quality (audited)
The table below shows asset quality bands of gross loans and ECL, by stage, for the Personal portfolio.
Gross loans
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
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
Mortgages
AQ1-AQ4
104,793
8,416
-
113,209
29
16
-
45
0.0
0.2
-
0.0
AQ5-AQ8
81,263
11,683
-
92,946
48
38
-
86
0.1
0.3
-
0.1
AQ9
194
962
-
1,156
-
6
-
6
-
0.6
-
0.5
AQ10
-
-
2,535
2,535
-
-
325
325
-
-
12.8
12.8
186,250
21,061
2,535
209,846
77
60
325
462
0.0
0.3
12.8
0.2
Credit cards
AQ1-AQ4
128
-
-
128
1
-
-
1
0.8
-
-
0.8
AQ5-AQ8
4,650
1,866
-
6,516
75
169
-
244
1.6
9.1
-
3.7
AQ9
23
87
-
110
1
17
-
18
4.4
19.5
-
16.4
AQ10
-
-
176
176
-
-
118
118
-
-
67.1
67.1
4,801
1,953
176
6,930
77
186
118
381
1.6
9.5
67.1
5.5
Other personal
AQ1-AQ4
691
127
-
818
6
14
-
20
0.9
11.0
-
2.4
AQ5-AQ8
6,521
1,359
-
7,880
120
134
-
254
1.8
9.9
-
3.2
AQ9
55
136
-
191
4
35
-
39
7.3
25.7
-
20.4
AQ10
-
-
860
860
-
-
656
656
-
-
76.3
76.3
7,267
1,622
860
9,749
130
183
656
969
1.8
11.3
76.3
9.9
Total
AQ1-AQ4
105,612
8,543
-
114,155
36
30
-
66
0.0
0.4
-
0.1
AQ5-AQ8
92,434
14,908
-
107,342
243
341
-
584
0.3
2.3
-
0.5
AQ9
272
1,185
-
1,457
5
58
-
63
1.8
4.9
-
4.3
AQ10
-
-
3,571
3,571
-
-
1,099
1,099
-
-
30.8
30.8
198,318
24,636
3,571
226,525
284
429
1,099
1,812
0.1
1.7
30.8
0.8
\n\n\n\n\n\n\n\n\n\n\n\n
Asset quality (audited)
\n\n \n
Gross loans
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
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
Mortgages
AQ1-AQ4
110,694
7,572
-
118,266
51
20
-
71
0.1
0.3
-
0.1
AQ5-AQ8
77,290
9,578
-
86,868
37
37
-
74
0.1
0.4
-
0.1
AQ9
156
704
-
860
-
4
-
4
-
0.6
-
0.5
AQ10
-
-
2,281
2,281
-
-
271
271
-
-
11.9
11.9
188,140
17,854
2,281
208,275
88
61
271
420
0.1
0.3
11.9
0.2
Credit cards
AQ1-AQ4
124
-
-
124
1.0
-
-
1.0
0.8
-
-
0.8
AQ5-AQ8
3,612
1,965
-
5,577
75
193
-
268
2.1
9.8
-
4.8
AQ9
6
57
-
63
-
14
-
14
-
24.6
-
22.2
AQ10
-
-
140
140
-
-
93
93
-
-
66.4
66.4
3,742
2,022
140
5,904
76
207
93
376
2.0
10.2
66.4
6.4
Other personal
AQ1-AQ4
764
150
-
914
11
23
-
34
1.4
15.3
-
3.7
AQ5-AQ8
6,178
1,374
-
7,552
138
180
-
318
2.2
13.1
-
4.2
AQ9
41
109
-
150
3
35
-
38
7.3
32.1
-
25.3
AQ10
-
-
979
979
-
-
778
778
-
-
79.5
79.5
6,983
1,633
979
9,595
152
238
778
1,168
2.2
14.6
79.5
12.2
Total
AQ1-AQ4
111,582
7,722
-
119,304
63
43
-
106
0.1
0.6
-
0.1
AQ5-AQ8
87,080
12,917
-
99,997
250
410
-
660
0.3
3.2
-
0.7
AQ9
203
870
-
1,073
3
53
-
56
1.5
6.1
-
5.2
AQ10
-
-
3,400
3,400
-
-
1,142
1,142
-
-
33.6
33.6
198,865
21,509
3,400
223,774
316
506
1,142
1,964
0.2
2.4
33.6
0.9
\n
\ue001
In the Personal portfolio, the majority of exposures were in AQ4 and AQ5 within mortgages. In line with the stable mortgage portfolio performance overall, the distribution of lending
\n
across AQ bands remained largely consistent with the prior year.
\n
\ue001
Debt sale activity during the year reduced the proportion of AQ10 in Other Personal lending.
\n\n\n\n\n\n\n\n\n\n\n\n
Asset quality (audited)
\n
The table below shows asset quality bands of gross loans and ECL, by stage, for the Non-Personal portfolio.
\n\n \n
Gross loans
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
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
Corporate and other
(1)
AQ1-AQ4
41,509
2,409
-
43,918
32
19
-
51
0.1
0.8
-
0.1
AQ5-AQ8
53,448
11,783
-
65,231
232
306
-
538
0.4
2.6
-
0.8
AQ9
34
272
-
306
-
19
-
19
-
7.0
-
6.2
AQ10
-
-
2,279
2,279
-
-
896
896
-
-
39.3
39.3
94,991
14,464
2,279
111,734
264
344
896
1,504
0.3
2.4
39.3
1.4
Financial institutions
AQ1-AQ4
64,845
233
-
65,078
21
2
-
23
0.0
0.9
-
0.0
AQ5-AQ8
4,176
996
-
5,172
17
9
-
26
0.4
0.9
-
0.5
AQ9
-
12
-
12
-
1
-
1
-
8.3
-
8.3
AQ10
-
-
59
59
-
-
40
40
-
-
67.8
67.8
69,021
1,241
59
70,321
38
12
40
90
0.1
1.0
67.8
0.1
Sovereign
AQ1-AQ4
1,364
1
-
1,365
12
1
-
13
0.9
100.0
-
1.0
AQ5-AQ8
127
-
-
127
-
-
-
-
-
-
-
-
AQ9
-
132
-
132
-
1
-
1
-
0.8
-
0.8
AQ10
-
-
21
21
-
-
5
5
-
-
23.8
23.8
1,491
133
21
1,645
12
2
5
19
0.8
1.5
23.8
1.2
Total
AQ1-AQ4
107,718
2,643
-
110,361
65
22
-
87
0.1
0.8
-
0.1
AQ5-AQ8
57,751
12,779
-
70,530
249
315
-
564
0.4
2.5
-
0.8
AQ9
34
416
-
450
-
21
-
21
-
5.1
-
4.7
AQ10
-
-
2,359
2,359
-
-
941
941
-
-
39.9
39.9
165,503
15,838
2,359
183,700
314
358
941
1,613
0.2
2.3
39.9
0.9
Asset quality (audited)
Gross loans
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
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
%
%
%
%
Corporate and other
(1)
AQ1-AQ4
40,875
1,342
-
42,217
43
18
-
61
0.1
1.3
-
0.1
AQ5-AQ8
50,084
13,734
-
63,818
293
411
-
704
0.6
3.0
-
1.1
AQ9
47
339
-
386
-
25
-
25
-
7.4
-
6.5
AQ10
-
-
2,125
2,125
-
-
809
809
-
-
38.1
38.1
91,006
15,415
2,125
108,546
336
454
809
1,599
0.4
2.9
38.1
1.5
Financial institutions
AQ1-AQ4
52,702
665
-
53,367
28
6
-
34
0.1
0.9
-
0.1
AQ5-AQ8
3,402
284
-
3,686
16
9
-
25
0.5
3.2
-
0.7
AQ9
1
17
-
18
-
-
-
-
-
-
-
-
AQ10
-
-
16
16
-
-
7
7
-
-
43.8
43.8
56,105
966
16
57,087
44
15
7
66
0.1
1.6
43.8
0.1
Sovereign
AQ1-AQ4
2,487
1
-
2,488
13
1
-
14
0.5
100
-
0.6
AQ5-AQ8
123
-
-
123
-
-
-
-
-
-
-
-
AQ9
-
-
-
-
-
-
-
-
-
-
-
-
AQ10
-
-
22
22
-
-
2
2
-
-
9.1
9.1
2,610
1
22
2,633
13
1
2
16
0.5
100.0
9.1
0.6
Total
AQ1-AQ4
96,064
2,008
-
98,072
84
25
-
109
0.1
1.3
-
0.1
AQ5-AQ8
53,609
14,018
-
67,627
309
420
-
729
0.6
3.0
-
1.1
AQ9
48
356
-
404
-
25
-
25
-
7.0
-
6.2
AQ10
-
-
2,163
2,163
-
-
818
818
-
-
37.8
37.8
149,721
16,382
2,163
168,266
393
470
818
1,681
0.3
2.9
37.8
1.0
(1)
Previously published sectors for the Non-personal portfolio have been re-presented to reflect internal sector reporting. Property is now included in corporate and other.
\ue001
Asset quality remained broadly stable, with a slightly higher proportion of exposures within AQ1-AQ4. Credit grades are reassessed for all customers at least annually, when a
new request is made, if a material credit event impacting that customer has occurred or when a scheduled review is performed.Derivatives (audited)
The table below shows derivatives by type of contract. The master netting agreements and collateral shown do not result in a net presentation on the balance sheet under IFRS. A
significant proportion of the derivatives relate to trading activities in Commercial & Institutional. The table also includes hedging derivatives in Central items & other.
2024
2023
Notional
GBP
USD
EUR
Other
Total
Assets
Liabilities
Notional
Assets
Liabilities
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3m
\u00a3m
\u00a3bn
\u00a3m
\u00a3m
Gross exposure
97,152
93,109
99,501
96,264
IFRS offset
(18,746)
(21,027)
(20,597)
(23,869)
Carrying value
3,551
3,425
5,500
1,152
13,628
78,406
72,082
13,403
78,904
72,395
Of which:
Interest rate
(1)
3,228
1,973
4,847
285
10,333
37,499
31,532
10,268
44,563
38,483
Exchange rate
321
1,446
645
867
3,279
40,797
40,306
3,120
34,161
33,586
Credit
-
6
8
-
14
110
244
15
180
326
Equity and commodity
2
-
-
-
2
-
-
-
-
-
Carrying value
13,628
78,406
72,082
13,403
78,904
72,395
Counterparty mark-to-market
netting
(61,883)
(61,883)
(60,355)
(60,355)
Cash collateral
(10,005)
(5,801)
(12,284)
(6,788)
Securities collateral
(4,072)
(896)
(3,408)
(1,664)
Net exposure
2,446
3,502
2,857
3,588
Banks
(2)
214
345
335
555
Other financial institutions
(3)
1,429
1,456
1,422
1,304
Corporate
(4)
769
1,669
1,063
1,690
Government
(5)
34
32
37
39
Net exposure
2,446
3,502
2,857
3,588
UK
1,061
1,774
1,283
1,912
Europe
875
978
800
1,209
US
443
604
607
381
RoW
67
146
167
86
Net exposure
2,446
3,502
2,857
3,588
Asset quality of uncollateralised derivative assets
AQ1-AQ4
2,049
2,382
AQ5-AQ8
394
471
AQ9-AQ10
3
4
Net exposure
2,446
2,857
(1)
The notional amount of interest rate derivatives includes \u00a37,321 billion (2023 \u2013 \u00a37,280 billion) in respect of contracts cleared through central clearing counterparties.
(2)
Transactions with certain counterparties with whom NatWest Group has netting arrangements but collateral is not posted on a daily basis; certain transactions with specific terms that may not fall within netting and collateral arrangements; derivative
positions in certain jurisdictions where the collateral agreements are not deemed to be legally enforceable.
(3)
Includes transactions with securitisation vehicles and funds where collateral posting is contingent on NatWest Group\u2019s external rating.
(4)
Mainly large corporates with whom NatWest Group may have netting arrangements in place with no collateral posting.
(5)
Sovereigns and supranational entities with no collateral arrangements, collateral arrangements that are not considered enforceable, or one-way collateral agreements in their favour
.
Debt securities (audited)
The table below shows debt securities held at mandatory fair value through profit or loss by issuer as well as ratings based on the lowest of Standard & Poor\u2019s, Moody\u2019s and Fitch.
Refer to Note 12 on Trading assets and liabilities for details on short positions.
Central and local government
UK
US
Other
Financial institutions
Corporate
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
AAA
-
-
1,335
1,368
-
2,703
AA to AA+
-
3,734
74
569
2
4,379
A to AA-
2,077
-
1,266
381
519
4,243
BBB- to A-
-
-
831
562
885
2,278
Non-investment grade
-
-
-
108
167
275
Total
2,077
3,734
3,506
2,988
1,573
13,878
2023
AAA
-
-
1,333
1,132
-
2,465
AA to AA+
-
2,600
19
762
4
3,385
A to AA-
2,729
-
1,017
251
283
4,280
BBB- to A-
-
-
693
295
489
1,477
Non-investment grade
-
-
-
198
149
347
Total
2,729
2,600
3,062
2,638
925
11,954
Capital, liquidity and funding riskFunding sources (audited)
The table below shows the carrying values of the principal funding sources based on contractual maturity. Balance sheet captions include balances held at all classifications under
IFRS 9.
\u00a0
2024
2023
\u00a0
Short-term less
Long-term more
\u00a0
Short-term less
Long-term more
\u00a0
\u00a0
than 1 year
than 1 year
Total
than 1 year
than 1 year
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bank Deposits
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Repos
11,967
-
11,967
3,118
-
3,118
Other bank deposits
(1)
9,708
9,777
19,485
5,836
13,236
19,072
\u00a0
21,675
9,777
31,452
8,954
13,236
22,190
Customer Deposits
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Repos
1,363
-
1,363
10,844
-
10,844
Non-bank financial institutions
48,761
241
49,002
46,875
13
46,888
Personal
231,483
2,451
233,934
216,456
6,436
222,892
Corporate
149,086
105
149,191
150,718
35
150,753
\u00a0
430,693
2,797
433,490
424,893
6,484
431,377
Trading liabilities
(2)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Repos
(3)
29,752
810
30,562
26,634
268
26,902
Derivatives collateral
12,509
-
12,509
15,075
-
15,075
Other bank and customer deposits
627
268
895
768
382
1,150
Debt securities in issue - Medium term notes
20
237
257
418
288
706
\u00a0
42,908
1,315
44,223
42,895
938
43,833
Other financial liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Customer deposits including repos
471
1,341
1,812
194
1,086
1,280
Debt securities in issue:
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Commercial paper and certificates of deposit
10,889
377
11,266
11,116
205
11,321
Medium term notes
11,118
34,967
46,085
6,878
32,625
39,503
Covered bonds
-
749
749
2,122
-
2,122
Securitisation
295
880
1,175
-
863
863
\u00a0
22,773
38,314
61,087
20,310
34,779
55,089
Subordinated liabilities
1,051
5,085
6,136
1,047
4,667
5,714
Total funding
519,100
57,288
576,388
498,099
60,104
558,203
Of which: available in resolution
(4)
\u00a0 \u00a0
29,742
-
-
26,561
\n
(1)
Includes \u00a312.0 billion (2023 \u2013 \u00a312.0 billion) relating to Term Funding Scheme with additional incentives for Small and Medium-sized Enterprises participation.
(2)
Excludes short positions of \u00a310.5 billion (2023 \u2013 \u00a39.8 billion).
(3)
Comprises central & other bank repos of \u00a37.2 billion (2023 \u2013 \u00a34.0 billion), other financial institution repos of \u00a320.4 billion (2023 \u2013 \u00a320.4 billion) and other corporate repos of \u00a33.0 billion (2023 \u2013 \u00a32.5 billion).
(4)
Eligible liabilities (as defined in the Banking Act 2009 as amended from time to time) that meet the eligibility criteria set out in the regulations, rules, policies, guidelines, or statements of the Bank of England including the Statement of Policy published by
the Bank of England in December 2021 (updating June 2018). The balance consists of \u00a324.0 billion (2023 \u2013 \u00a321.7 billion) under debt securities in issue (senior MREL) and \u00a35.74 billion (2023 \u2013 \u00a34.9 billion) under subordinated liabilities.
Contractual maturity (audited)
This table shows the residual maturity of financial instruments, based on contractual date of maturity of NatWest Group\u2019s banking activities, including hedging derivatives. Trading
activities, comprising mandatory fair value through profit or loss (MFVTPL) assets and held-for-trading (HFT) liabilities have been excluded from the maturity analysis and are shown in
total in the table below.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Banking activities
\u00a0 \u00a0
\u00a0
Less than
\u00a0 \u00a0
6 months-
\u00a0 \u00a0 \u00a0
More than
\u00a0
Trading
\u00a0
\u00a0
1 months
1-3 months
3-6 months
1 year
Subtotal
1-3 years
3-5 years
5 years
Total
activities
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cash and balances at central banks
92,994
-
-
-
92,994
-
-
-
92,994
-
92,994
Trading assets
-
-
-
-
-
-
-
-
-
48,917
48,917
Derivatives
-
(2)
37
-
35
65
18
1
119
78,287
78,406
Settlement balances
2,085
-
-
-
2,085
-
-
-
2,085
-
2,085
Loans to banks - amortised cost
4,699
386
259
16
5,360
533
1
136
6,030
-
6,030
Loans to customers -
amortised cost
(1)
43,451
19,278
15,927
25,329
103,985
59,798
44,831
195,057
403,671
-
403,671
Personal
5,682
2,271
3,089
6,033
17,075
23,657
20,420
164,886
226,038
-
226,038
Corporate
19,003
5,762
3,794
8,033
36,592
29,353
20,506
25,721
112,172
-
112,172
Non-bank financial institutions
18,766
11,245
9,044
11,263
50,318
6,788
3,905
4,450
65,461
-
65,461
Other financial assets
2,840
3,263
2,478
5,832
14,413
16,083
11,563
20,381
62,440
803
63,243
Total financial assets
146,069
22,925
18,701
31,177
218,872
76,479
56,413
215,575
567,339
128,007
695,346
2023
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Total financial assets
153,397
22,051
17,695
26,226
219,369
71,664
54,626
208,215
553,874
125,050
678,924
\n
(1)
Loans to customers excludes \u00a33.3 billion (2023 - \u00a33.5 billion) of impairment provisions.
Contractual maturity (audited)
\n\n \n
Banking activities
Less than
6 months - 1
More than
Trading
1 months
1-3 months
3-6 months
year
Subtotal
1-3 years
3-5 years
5 years
Total
activities
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bank deposits excluding repos
4,857
260
284
4,307
9,708
9,629
81
67
19,485
-
19,485
Bank repos
10,692
954
321
-
11,967
-
-
-
11,967
-
11,967
Customer repos
1,363
-
-
-
1,363
-
-
-
1,363
-
1,363
Customer deposits excluding repos
373,869
21,381
16,416
17,664
429,330
2,709
14
74
432,127
-
432,127
Personal
202,658
5,728
8,010
15,087
231,483
2,450
1
-
233,934
-
233,934
Corporate
127,646
11,633
7,703
2,104
149,086
87
11
7
149,191
-
149,191
Non-bank financial institutions
43,565
4,020
703
473
48,761
172
2
67
49,002
-
49,002
Settlement balances
1,729
-
-
-
1,729
-
-
-
1,729
-
1,729
Trading liabilities
-
-
-
-
-
-
-
-
-
54,714
54,714
Derivatives
14
17
174
88
293
169
-
2
464
71,618
72,082
Other financial liabilities
3,473
6,266
3,074
9,960
22,773
19,729
13,429
5,156
61,087
-
61,087
CPs and CDs
3,390
2,329
2,792
2,378
10,889
377
-
-
11,266
-
11,266
Medium term notes
70
3,914
214
6,920
11,118
18,426
12,409
4,132
46,085
-
46,085
Covered bonds
-
-
-
-
-
-
749
-
749
-
749
Securitisations
-
-
-
295
295
7
-
873
1,175
-
1,175
Customer deposits including repos
13
23
68
367
471
919
271
151
1,812
-
1,812
Subordinated liabilities
-
42
1,007
2
1,051
1,523
2,623
939
6,136
-
6,136
Notes in circulation
3,316
-
-
-
3,316
-
-
-
3,316
-
3,316
Lease liabilities
10
16
23
45
94
146
93
297
630
-
630
Total financial liabilities
399,323
28,936
21,299
32,066
481,624
33,905
16,240
6,535
538,304
126,332
664,636
2023
Total financial liabilities
392,957
27,195
22,914
22,236
465,302
31,146
22,787
5,956
525,191
125,762
650,953
Senior notes and subordinated liabilities - residual maturity profile by instrument type (audited)
The table below shows NatWest Group\u2019s debt securities in issue and subordinated liabilities by residual maturity.
\u00a0
Trading
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
\u00a0
liabilities
Other financial liabilities
\u00a0
\u00a0 \u00a0
Debt securities in issue
\u00a0 \u00a0 \u00a0 \u00a0
\u00a0
Debt securities
Commercial
\u00a0
Covered
\u00a0
Subordinated
\u00a0
Total notes
\u00a0
in issue MTNs
paper and CDs
MTNs
bonds
Securitisation
liabilities
Total
in issue
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Less than 1 year
20
10,889
11,118
-
295
1,051
23,353
23,373
1-3 years
35
377
18,426
-
7
1,523
20,333
20,368
3-5 years
42
-
12,409
749
-
2,623
15,781
15,823
More than 5 years
160
-
4,132
-
873
939
5,944
6,104
Total
257
11,266
46,085
749
1,175
6,136
65,411
65,668
2023
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Less than 1 year
418
11,116
6,878
2,122
-
1,047
21,163
21,581
1-3 years
48
205
16,188
-
297
1,877
18,567
18,615
3-5 years
-
-
11,953
-
376
1,874
14,203
14,203
More than 5 years
240
-
4,484
-
190
916
5,590
5,830
Total
706
11,321
39,503
2,122
863
5,714
59,523
60,229
\n
The table below shows the currency breakdown.
\u00a0
GBP
USD
EUR
Other
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Commercial paper and CDs
4,282
2,340
4,644
-
11,266
MTNs
5,015
20,089
18,233
3,005
46,342
Covered bonds
749
-
-
-
749
Securitisation
1,175
-
-
-
1,175
Subordinated liabilities
3,320
1,368
1,448
-
6,136
Total
14,541
23,797
24,325
3,005
65,668
2023
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Total
13,605
21,780
21,766
3,078
60,229
Non-traded market risk
Definition
(audited)
Non-traded market risk is the risk to the
value of assets or liabilities outside the
trading book, or the risk to income, that
arises from changes in market prices
such as interest rates, foreign exchange
rates and equity prices, or from changes
in managed rates.
Sources of risk
(audited)
Non-traded market risk exists in all
balance-sheet exposure that makes
reference to market risk factors, when
customer behaviour could impact the size
and timing of the repricing or maturity of
future cash flows, or when valuation of
assets and liabilities is driven by market
risk factors such as interest rates or
foreign exchange rates.
The key sources of non-traded market
risk are interest rate risk, credit spread
risk, foreign exchange risk, equity risk
and accounting volatility risk. Qualitative
and quantitative information on these risk
types is provided following the VaR table
below.Governance (audited)
Responsibility for identifying, measuring,
monitoring and controlling market risk
arising from non-trading activities lies
with the relevant business. Oversight is
provided by the independent Risk
function.
Non-traded market risk policy sets out
the governance and risk management
framework.2.3. Loan impairment provisions:
expected credit losses (ECL)
At each balance sheet date each financial
asset or portfolio of financial assets
measured at amortised cost or at fair
value through other comprehensive
income, issued financial guarantee and
loan commitment (other than those
classified as held for trading) is assessed
for impairment. Any change in
impairment is reported in the income
statement.
Loss allowances are forward-looking,
based on 12-month ECL where there has
not been a significant increase in credit
risk rating, otherwise allowances are
based on lifetime expected losses.
ECL is a probability-weighted estimate of
credit losses. The probability is
determined by the risk of default which is
applied to the cash flow estimates. In the
absence of a change in credit rating,
allowances are recognised when there is
a reduction in the net present value of
expected cash flows. Following a
significant increase in credit risk, ECL is
adjusted from 12 months to lifetime. This
will lead to a higher impairment charge.
The measurement of expected credit loss
considers the ability of borrowers to
make payments as they fall due. Future
cashflows are discounted, so long-dated
cashflows are less likely to affect current
expectations on credit loss. Our
assessment of sector specific risks, and
whether additional adjustments are
required, include expectations of the
ability of those sectors to meet their
financing needs in the market. Changes
in credit stewardship and credit risk
appetite that stem from climate transition
policies may directly affect our positions.
Judgement is exercised as follows:
\ue001
Non-modelled portfolios
\u2013 use a
standardised capital requirement
under Basel II. Under IFRS 9, they
have bespoke treatments for the
identification of significant increase in
credit risk. Benchmark PDs, EADs
and LGDs are reviewed annually for
appropriateness. The ECL calculation
is based on expected future cash
flows, which is typically applied at a
portfolio level.
\ue001
Multiple economic scenarios (MES)
\u2013
the central, or base, scenario is most
critical to the ECL calculation,
independent of the method used to
generate a range of alternative
outcomes and their probabilities.
\ue001
Significant increase in credit risk
\u2013
IFRS 9 requires that at each reporting
date, an entity shall assess whether
the credit risk on an account has
increased significantly since initial
recognition. Part of this assessment
requires a comparison to be made
between the current lifetime PD (i.e.
the current probability of default over
the remaining lifetime) with the
equivalent lifetime PD as determined
at the date of initial recognition.
On restructuring where a financial asset
is not derecognised, the revised cash
flows are used in re-estimating the credit
loss. Where restructuring causes
derecognition of the original financial
asset, the fair value of the replacement
asset is used as the closing cash flow of
the original asset.
Where in the course of the orderly
realisation of a loan, it is exchanged for
equity shares or property, the exchange
is accounted for as the sale of the loan
and the acquisition of equity securities or
investment property. Where our acquired
interest is in equity shares, relevant
policies for control, associates and joint
ventures apply.
Impaired financial assets are written off
and therefore derecognised from the
balance sheet when we conclude that
there is no longer any realistic prospect
of recovery of part, or all, of the loan. For
financial assets that are individually
assessed for impairment, the timing of
the write-off is determined on a case-by-
case basis.
Such financial assets are reviewed
regularly and write-off will be prompted
by bankruptcy, insolvency, re-negotiation,
and similar events
The typical time frames from initial
impairment to write-off for our
collectively assessed portfolios are:
\ue001
Retail mortgages: write-off usually
occurs within five years, or earlier,
when an account is closed, but can
be longer where the customer
engages constructively;
\ue001
Credit cards: the irrecoverable
amount is typically written off after
twelve arrears cycles or at four years
post default any remaining amounts
outstanding are written off;
\ue001
Overdrafts and other unsecured
loans: write-off occurs within six
years;
\ue001
Commercial loans: write-offs are
determined in the light of individual
circumstances; and uncollateralised
impaired business loans are generally
written off within five years.14 Loan impairment provisions
There is a risk that customers and counterparties fail to meet their contractual obligation to settle outstanding amounts, for which we hold expected credit losses
(ECL). The calculation of ECL considers historical, current, and forward-looking information to determine the amount we do not expect to recover. It considers losses
on both defaulted exposures and performing exposures that may default in future. ECL is recognised on drawn exposures, loans commitments, and contingent
liabilities.
For accounting policy information refer to Accounting policy 2.3. Further disclosures on credit risk and information on ECL methodology are shown from page 181.
Loan exposure and impairment metrics
The table below summarises loans and credit impairment measures within the scope of IFRS 9 Expected credit loss framework.
2024
2023
\u00a3m
\u00a3m
Loans - amortised cost and FVOCI
(1,2)
Stage 1
363,821
348,586
Stage 2
40,474
37,891
Stage 3
5,930
5,563
Of which: individual
1,285
1,031
Of which: collective
4,645
4,532
410,225
392,040
ECL provisions
(3)
- Stage 1
598
709
- Stage 2
787
976
- Stage 3
2,040
1,960
Of which: individual
451
332
Of which: collective
1,589
1,628
3,425
3,645
ECL provision coverage
(4)
- Stage 1 (%)
0.16
0.20
- Stage 2 (%)
1.94
2.58
- Stage 3 (%)
34.40
35.23
0.83
0.93
Continuing operations
Impairment (releases)/losses
ECL charge
(5)
359
578
Stage 1
(438)
(397)
Stage 2
360
645
Stage 3
437
330
Of which: individual
192
89
Of which: collective
245
241
Amounts written off
654
319
Of which: individual
144
42
Of which: collective
510
277
(1)
The table shows gross loans only and excludes
amounts that are outside the scope of the ECL
framework. Refer to Financial instruments within the
scope of the IFRS 9 ECL framework for further
details. Other financial assets within the scope of the
IFRS 9 ECL framework were cash and balances at
central banks totalling \u00a391.8 billion (2023 \u2013 \u00a3103.1
billion) and debt securities of \u00a362.4 billion (2023 \u2013
\u00a350.1 billion).
(2)
Includes loans to customers and banks.
(3)
Includes \u00a34 million (2023 - \u00a39 million) related to
assets classified as FVOCI and \u00a30.1 billion (2023 -
\u00a30.1 billion) related to off-balance sheet exposures.
(4)
ECL provisions coverage is calculated as ECL
provisions divided by loans \u2013 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.
(5)
Includes a \u00a312 million release (2023 - \u00a316 million
release) related to other financial assets, of which \u00a34
million release (2023 - \u00a36 million charge) related to
assets classified as FVOCI; and \u00a35 million release
(2023 - \u00a39 million release) related to contingent
liabilities.
Credit risk enhancement and mitigation
For information on Credit risk enhancement and mitigation held as security, refer to Risk and capital management \u2013 Credit risk enhancement and mitigation section.
Critical accounting policy: Loan impairment provisions
Accounting policy 2.3 sets out how the expected loss approach is applied. At 31 December 2024, impairment provisions amounted to \u00a33,425 million (2023 - \u00a33,645 million). A loan is
impaired when there is objective evidence that the cash flows will not occur in the manner expected when the loan was advanced. Such evidence includes changes in the credit rating
of a borrower, the failure to make payments in accordance with the loan agreement, significant reduction in the value of any security, breach of limits or covenants, and observable
data about relevant macroeconomic measures.
The impairment loss is the difference between the carrying value of the loan and the present value of estimated future cash flows at the loan's original effective interest rate.
The measurement of credit impairment under the IFRS expected loss model depends on management\u2019s assessment of any potential deterioration in the creditworthiness of the
borrower, its modelling of expected performance and the application of economic forecasts. All three elements require judgements that are potentially significant to the estimate of
impairment losses. For further information and sensitivity analysis, refer to Risk and capital management \u2013 Measurement uncertainty and ECL sensitivity analysis section.
IFRS 9 ECL model design principles
Refer to Credit risk \u2013 IFRS 9 ECL model design principles section for further details.
Approach for multiple economic scenarios (MES)
The base scenario plays a greater part in the calculation of ECL than the approach to MES. Refer to Credit risk \u2013 Economic loss drivers - Probability weightings of scenarios section
for further details.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00728": { "value": "Capital, liquidity and funding riskFunding sources (audited)
The table below shows the carrying values of the principal funding sources based on contractual maturity. Balance sheet captions include balances held at all classifications under
IFRS 9.
\u00a0
2024
2023
\u00a0
Short-term less
Long-term more
\u00a0
Short-term less
Long-term more
\u00a0
\u00a0
than 1 year
than 1 year
Total
than 1 year
than 1 year
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bank Deposits
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Repos
11,967
-
11,967
3,118
-
3,118
Other bank deposits
(1)
9,708
9,777
19,485
5,836
13,236
19,072
\u00a0
21,675
9,777
31,452
8,954
13,236
22,190
Customer Deposits
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Repos
1,363
-
1,363
10,844
-
10,844
Non-bank financial institutions
48,761
241
49,002
46,875
13
46,888
Personal
231,483
2,451
233,934
216,456
6,436
222,892
Corporate
149,086
105
149,191
150,718
35
150,753
\u00a0
430,693
2,797
433,490
424,893
6,484
431,377
Trading liabilities
(2)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Repos
(3)
29,752
810
30,562
26,634
268
26,902
Derivatives collateral
12,509
-
12,509
15,075
-
15,075
Other bank and customer deposits
627
268
895
768
382
1,150
Debt securities in issue - Medium term notes
20
237
257
418
288
706
\u00a0
42,908
1,315
44,223
42,895
938
43,833
Other financial liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Customer deposits including repos
471
1,341
1,812
194
1,086
1,280
Debt securities in issue:
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Commercial paper and certificates of deposit
10,889
377
11,266
11,116
205
11,321
Medium term notes
11,118
34,967
46,085
6,878
32,625
39,503
Covered bonds
-
749
749
2,122
-
2,122
Securitisation
295
880
1,175
-
863
863
\u00a0
22,773
38,314
61,087
20,310
34,779
55,089
Subordinated liabilities
1,051
5,085
6,136
1,047
4,667
5,714
Total funding
519,100
57,288
576,388
498,099
60,104
558,203
Of which: available in resolution
(4)
\u00a0 \u00a0
29,742
-
-
26,561
\n
(1)
Includes \u00a312.0 billion (2023 \u2013 \u00a312.0 billion) relating to Term Funding Scheme with additional incentives for Small and Medium-sized Enterprises participation.
(2)
Excludes short positions of \u00a310.5 billion (2023 \u2013 \u00a39.8 billion).
(3)
Comprises central & other bank repos of \u00a37.2 billion (2023 \u2013 \u00a34.0 billion), other financial institution repos of \u00a320.4 billion (2023 \u2013 \u00a320.4 billion) and other corporate repos of \u00a33.0 billion (2023 \u2013 \u00a32.5 billion).
(4)
Eligible liabilities (as defined in the Banking Act 2009 as amended from time to time) that meet the eligibility criteria set out in the regulations, rules, policies, guidelines, or statements of the Bank of England including the Statement of Policy published by
the Bank of England in December 2021 (updating June 2018). The balance consists of \u00a324.0 billion (2023 \u2013 \u00a321.7 billion) under debt securities in issue (senior MREL) and \u00a35.74 billion (2023 \u2013 \u00a34.9 billion) under subordinated liabilities. Contractual maturity (audited)
This table shows the residual maturity of financial instruments, based on contractual date of maturity of NatWest Group\u2019s banking activities, including hedging derivatives. Trading
activities, comprising mandatory fair value through profit or loss (MFVTPL) assets and held-for-trading (HFT) liabilities have been excluded from the maturity analysis and are shown in
total in the table below.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Banking activities
\u00a0 \u00a0
\u00a0
Less than
\u00a0 \u00a0
6 months-
\u00a0 \u00a0 \u00a0
More than
\u00a0
Trading
\u00a0
\u00a0
1 months
1-3 months
3-6 months
1 year
Subtotal
1-3 years
3-5 years
5 years
Total
activities
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cash and balances at central banks
92,994
-
-
-
92,994
-
-
-
92,994
-
92,994
Trading assets
-
-
-
-
-
-
-
-
-
48,917
48,917
Derivatives
-
(2)
37
-
35
65
18
1
119
78,287
78,406
Settlement balances
2,085
-
-
-
2,085
-
-
-
2,085
-
2,085
Loans to banks - amortised cost
4,699
386
259
16
5,360
533
1
136
6,030
-
6,030
Loans to customers -
amortised cost
(1)
43,451
19,278
15,927
25,329
103,985
59,798
44,831
195,057
403,671
-
403,671
Personal
5,682
2,271
3,089
6,033
17,075
23,657
20,420
164,886
226,038
-
226,038
Corporate
19,003
5,762
3,794
8,033
36,592
29,353
20,506
25,721
112,172
-
112,172
Non-bank financial institutions
18,766
11,245
9,044
11,263
50,318
6,788
3,905
4,450
65,461
-
65,461
Other financial assets
2,840
3,263
2,478
5,832
14,413
16,083
11,563
20,381
62,440
803
63,243
Total financial assets
146,069
22,925
18,701
31,177
218,872
76,479
56,413
215,575
567,339
128,007
695,346
2023
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Total financial assets
153,397
22,051
17,695
26,226
219,369
71,664
54,626
208,215
553,874
125,050
678,924
\n
(1)
Loans to customers excludes \u00a33.3 billion (2023 - \u00a33.5 billion) of impairment provisions.
\n\n\n\n\n\n\n\n\n\n\n\n
Contractual maturity (audited)
\n\n \n
Banking activities
Less than
6 months - 1
More than
Trading
1 months
1-3 months
3-6 months
year
Subtotal
1-3 years
3-5 years
5 years
Total
activities
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bank deposits excluding repos
4,857
260
284
4,307
9,708
9,629
81
67
19,485
-
19,485
Bank repos
10,692
954
321
-
11,967
-
-
-
11,967
-
11,967
Customer repos
1,363
-
-
-
1,363
-
-
-
1,363
-
1,363
Customer deposits excluding repos
373,869
21,381
16,416
17,664
429,330
2,709
14
74
432,127
-
432,127
Personal
202,658
5,728
8,010
15,087
231,483
2,450
1
-
233,934
-
233,934
Corporate
127,646
11,633
7,703
2,104
149,086
87
11
7
149,191
-
149,191
Non-bank financial institutions
43,565
4,020
703
473
48,761
172
2
67
49,002
-
49,002
Settlement balances
1,729
-
-
-
1,729
-
-
-
1,729
-
1,729
Trading liabilities
-
-
-
-
-
-
-
-
-
54,714
54,714
Derivatives
14
17
174
88
293
169
-
2
464
71,618
72,082
Other financial liabilities
3,473
6,266
3,074
9,960
22,773
19,729
13,429
5,156
61,087
-
61,087
CPs and CDs
3,390
2,329
2,792
2,378
10,889
377
-
-
11,266
-
11,266
Medium term notes
70
3,914
214
6,920
11,118
18,426
12,409
4,132
46,085
-
46,085
Covered bonds
-
-
-
-
-
-
749
-
749
-
749
Securitisations
-
-
-
295
295
7
-
873
1,175
-
1,175
Customer deposits including repos
13
23
68
367
471
919
271
151
1,812
-
1,812
Subordinated liabilities
-
42
1,007
2
1,051
1,523
2,623
939
6,136
-
6,136
Notes in circulation
3,316
-
-
-
3,316
-
-
-
3,316
-
3,316
Lease liabilities
10
16
23
45
94
146
93
297
630
-
630
Total financial liabilities
399,323
28,936
21,299
32,066
481,624
33,905
16,240
6,535
538,304
126,332
664,636
2023
Total financial liabilities
392,957
27,195
22,914
22,236
465,302
31,146
22,787
5,956
525,191
125,762
650,953
Senior notes and subordinated liabilities - residual maturity profile by instrument type (audited)
The table below shows NatWest Group\u2019s debt securities in issue and subordinated liabilities by residual maturity.
\u00a0
Trading
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
\u00a0
liabilities
Other financial liabilities
\u00a0
\u00a0 \u00a0
Debt securities in issue
\u00a0 \u00a0 \u00a0 \u00a0
\u00a0
Debt securities
Commercial
\u00a0
Covered
\u00a0
Subordinated
\u00a0
Total notes
\u00a0
in issue MTNs
paper and CDs
MTNs
bonds
Securitisation
liabilities
Total
in issue
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Less than 1 year
20
10,889
11,118
-
295
1,051
23,353
23,373
1-3 years
35
377
18,426
-
7
1,523
20,333
20,368
3-5 years
42
-
12,409
749
-
2,623
15,781
15,823
More than 5 years
160
-
4,132
-
873
939
5,944
6,104
Total
257
11,266
46,085
749
1,175
6,136
65,411
65,668
2023
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Less than 1 year
418
11,116
6,878
2,122
-
1,047
21,163
21,581
1-3 years
48
205
16,188
-
297
1,877
18,567
18,615
3-5 years
-
-
11,953
-
376
1,874
14,203
14,203
More than 5 years
240
-
4,484
-
190
916
5,590
5,830
Total
706
11,321
39,503
2,122
863
5,714
59,523
60,229
\n
The table below shows the currency breakdown.
\u00a0
GBP
USD
EUR
Other
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Commercial paper and CDs
4,282
2,340
4,644
-
11,266
MTNs
5,015
20,089
18,233
3,005
46,342
Covered bonds
749
-
-
-
749
Securitisation
1,175
-
-
-
1,175
Subordinated liabilities
3,320
1,368
1,448
-
6,136
Total
14,541
23,797
24,325
3,005
65,668
2023
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Total
13,605
21,780
21,766
3,078
60,229
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00277": { "value": "Funding sources (audited)
The table below shows the carrying values of the principal funding sources based on contractual maturity. Balance sheet captions include balances held at all classifications under
IFRS 9.
\u00a0
2024
2023
\u00a0
Short-term less
Long-term more
\u00a0
Short-term less
Long-term more
\u00a0
\u00a0
than 1 year
than 1 year
Total
than 1 year
than 1 year
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bank Deposits
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Repos
11,967
-
11,967
3,118
-
3,118
Other bank deposits
(1)
9,708
9,777
19,485
5,836
13,236
19,072
\u00a0
21,675
9,777
31,452
8,954
13,236
22,190
Customer Deposits
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Repos
1,363
-
1,363
10,844
-
10,844
Non-bank financial institutions
48,761
241
49,002
46,875
13
46,888
Personal
231,483
2,451
233,934
216,456
6,436
222,892
Corporate
149,086
105
149,191
150,718
35
150,753
\u00a0
430,693
2,797
433,490
424,893
6,484
431,377
Trading liabilities
(2)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Repos
(3)
29,752
810
30,562
26,634
268
26,902
Derivatives collateral
12,509
-
12,509
15,075
-
15,075
Other bank and customer deposits
627
268
895
768
382
1,150
Debt securities in issue - Medium term notes
20
237
257
418
288
706
\u00a0
42,908
1,315
44,223
42,895
938
43,833
Other financial liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Customer deposits including repos
471
1,341
1,812
194
1,086
1,280
Debt securities in issue:
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Commercial paper and certificates of deposit
10,889
377
11,266
11,116
205
11,321
Medium term notes
11,118
34,967
46,085
6,878
32,625
39,503
Covered bonds
-
749
749
2,122
-
2,122
Securitisation
295
880
1,175
-
863
863
\u00a0
22,773
38,314
61,087
20,310
34,779
55,089
Subordinated liabilities
1,051
5,085
6,136
1,047
4,667
5,714
Total funding
519,100
57,288
576,388
498,099
60,104
558,203
Of which: available in resolution
(4)
\u00a0 \u00a0
29,742
-
-
26,561
\n
(1)
Includes \u00a312.0 billion (2023 \u2013 \u00a312.0 billion) relating to Term Funding Scheme with additional incentives for Small and Medium-sized Enterprises participation.
(2)
Excludes short positions of \u00a310.5 billion (2023 \u2013 \u00a39.8 billion).
(3)
Comprises central & other bank repos of \u00a37.2 billion (2023 \u2013 \u00a34.0 billion), other financial institution repos of \u00a320.4 billion (2023 \u2013 \u00a320.4 billion) and other corporate repos of \u00a33.0 billion (2023 \u2013 \u00a32.5 billion).
(4)
Eligible liabilities (as defined in the Banking Act 2009 as amended from time to time) that meet the eligibility criteria set out in the regulations, rules, policies, guidelines, or statements of the Bank of England including the Statement of Policy published by
the Bank of England in December 2021 (updating June 2018). The balance consists of \u00a324.0 billion (2023 \u2013 \u00a321.7 billion) under debt securities in issue (senior MREL) and \u00a35.74 billion (2023 \u2013 \u00a34.9 billion) under subordinated liabilities. 3.11. Derivatives and hedging
Derivatives are reported on the balance
sheet at fair value.
We use derivatives as part of our trading
activities, to manage our own risk such
as interest rate, foreign exchange, or
credit risk or in certain customer
transactions. Not all derivatives used to
manage risk are in hedge accounting
relationships (an IFRS method to reduce
accounting mismatch from changes in
the fair value of the derivatives reported
in the income statement).
Gains and losses arising from changes in
the fair value of derivatives that are not
in hedge relationships are recognised in
Income from trading activities unless
those derivatives are managed together
with financial instruments designated at
fair value; these gains and losses are
included in Other operating income.
Hedge accounting
Hedge accounting relationships are
designated and documented at inception
in line with the requirements of IAS 39
Financial instruments \u2013 Recognition and
Measurement.
The documentation identifies the hedged
item, the hedging instrument and details
of the risk that is being hedged and the
way in which effectiveness will be
assessed at inception and during the
period of the hedge. When designating a
hedging relationship, we consider: the
economic relationship between the
hedged item (including the risk being
hedged) and the hedging instrument; the
nature of the risk; the risk management
objective and strategy for undertaking
the hedge; and the appropriateness of
the method that will be used to assess
hedge effectiveness.
Designated hedging relationships must be
expected to be highly effective both on a
prospective and retrospective basis. This
is assessed using regression techniques
which model the degree of offsetting
between the changes in fair value or
cash flows attributable to the hedged risk
and the changes in fair value of the
designated hedging derivatives.
Ineffectiveness is measured based on
actual levels of offsetting and recognised
in the income statement.
We enter into three types of hedge
accounting relationships.
Fair value hedge
- the gain or loss on the
hedging instrument and the hedged item
attributable to the hedged risk is
recognised in the income statement.
Where the hedged item is measured at
amortised cost, the balance sheet
amount of the hedged item is also
adjusted.
Cash flow hedge
- the effective portion of
the designated hedge relationship is
recognised in other comprehensive
income and the ineffective portion in the
income statement. When the hedged
item (forecasted cash flows) results in the
recognition of a financial asset or financial
liability, the cumulative gain or loss is
reclassified from equity to the income
statement in the same periods in which
the hedged forecasted cash flows affect
the income statement.
Hedge of net investment in a foreign
operation
-
in the hedge of a net
investment in a foreign operation, the
effective portion of the designated hedge
relationship is recognised in other
comprehensive income. Any ineffective
portion is recognised in profit or loss.
Non-derivative financial liabilities as well
as derivatives may be designated as a
hedging instrument in a net investment
hedge.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the
hedge no longer meets the criteria for
hedge accounting i.e. the hedge is not
highly effective in offsetting changes in
fair value or cash flows attributable to the
hedged risk, consistent with the
documented risk management strategy;
the hedging instrument expires or is sold,
terminated or exercised; or if hedge
designation is revoked.
For fair value hedging any cumulative
adjustment is amortised to the income
statement over the life of the hedged
item. Where the hedged item is no longer
on the balance sheet the adjustment to
the hedged item is reported in the
income statement. For cash flow hedging
the cumulative unrealised gain or loss is
reclassified from equity to the income
statement when the hedged cash flows
occur or, if the forecast transaction
results in the recognition of a financial
asset or financial liability, when the
hedged forecast cash flows affect the
income statement. Where a forecast
transaction is no longer expected to
occur, the cumulative unrealised gain or
loss is reclassified from equity to the
income statement immediately.
For net investment hedging on disposal
or partial disposal of a foreign operation,
the amount accumulated in equity is
reclassified from equity to the income
statement.23 Asset transfers
This note provides an overview of assets that have been transferred but where the NatWest Group retains substantially all the risks and rewards of the transferred
assets and therefore continues to recognize them on balance sheet.
Transfers that do not qualify for derecognition
NatWest Group enters into securities repurchase, lending and total return transactions in
accordance with normal market practice which includes the provision of additional
collateral if necessary. Under standard terms in the UK and US markets, the recipient
has an unrestricted right to sell or repledge collateral, subject to returning equivalent
securities on settlement of the transaction.
Securities sold under repurchase transactions and transactions with the substance of
securities repurchase agreements are not derecognised if NatWest Group retains
substantially all the risks and rewards of ownership. The fair value (and carrying value)
of securities transferred under such transactions included on the balance sheet are set
out below. All of these securities could be sold or repledged by the holder.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
The following assets have failed derecognition
(1)
\u00a3m
\u00a3m
Trading assets
7,708
7,907
Loans to bank - amortised cost
70
10
Loans to customers - amortised cost
45
281
Other financial assets
13,174
8,764
Total
20,997
16,962
\n
(1)
Associated liabilities were \u00a320,394 million (2023 \u2013 \u00a316,522 million).
Assets pledged as collateral
NatWest Group pledges collateral with its counterparties in respect of derivative
liabilities, bank and stock borrowings and other transactions.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Assets pledged against liabilities
\u00a3m
\u00a3m
Trading assets
10,288
10,976
Loans to banks - amortised cost
-
63
Loans to customers - amortised cost
19,030
21,611
Other financial assets
(1)
4,451
6,506
Total
33,769
39,156
\n
(1)
Includes assets pledged for pension derivatives and \u00a3499 million of debt securities under the continuing control of NWB
Plc. This follows the agreement between NWB Plc and the Group Pension Fund to establish a bankruptcy remote
reservoir trust to hold these assets. Refer to Note 5 for additional information.
As part of the covered debt programme \u00a39,668 million of loans to customers and other
debt instruments (2023 \u2013 \u00a311,067 million) have been transferred to bankruptcy remote
limited liability partnerships within the NatWest Group to provide collateral for issuances
of debt securities and other borrowings by the NatWest Group of \u00a32,305 million (2023 \u2013
\u00a33,619 million). Refer to Note 22.", "dimensions": { "concept": "ifrs-full:DisclosureOfRepurchaseAndReverseRepurchaseAgreementsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00726": { "value": "Non-traded market risk
Definition
(audited)
Non-traded market risk is the risk to the
value of assets or liabilities outside the
trading book, or the risk to income, that
arises from changes in market prices
such as interest rates, foreign exchange
rates and equity prices, or from changes
in managed rates.
Sources of risk
(audited)
Non-traded market risk exists in all
balance-sheet exposure that makes
reference to market risk factors, when
customer behaviour could impact the size
and timing of the repricing or maturity of
future cash flows, or when valuation of
assets and liabilities is driven by market
risk factors such as interest rates or
foreign exchange rates.
The key sources of non-traded market
risk are interest rate risk, credit spread
risk, foreign exchange risk, equity risk
and accounting volatility risk. Qualitative
and quantitative information on these risk
types is provided following the VaR table
below.Governance (audited)
Responsibility for identifying, measuring,
monitoring and controlling market risk
arising from non-trading activities lies
with the relevant business. Oversight is
provided by the independent Risk
function.
Non-traded market risk policy sets out
the governance and risk management
framework.Equity risk (audited)
Non-traded equity risk is the potential
variation in income and reserves arising
from changes in equity valuations. Equity
positions are carried on the balance
sheet at fair value based on market
prices where available. Equity positions
may take the form of shares that are
publicly listed on a recognised exchange,
such as NatWest Group\u2019s investment in
Permanent TSB, privately owned
investments and shareholdings in
industry participations including SWIFT.
Further disclosure of NatWest Group\u2019s
investments in equity shareholdings, fair
value gains and losses and valuation
techniques may be found in the notes to
the consolidated financial statements.
Investments, acquisitions or disposals of a
strategic nature are referred to the
Acquisitions & Disposals Committee.
Once approved by the CFO with support
from the Acquisitions & Disposals
Committee for execution, such
transactions are referred for approval to
the Board, the Executive Committee, the
Chief Executive, the Chief Financial
Officer or as otherwise required.
Decisions to acquire or hold equity
positions in the non-trading book that are
not of a strategic nature are taken by
authorised persons with delegated
authority.
Non-traded equity value at risk is
monitored monthly and capital allocation
to the risk is included in NatWest Group\u2019s
annual Internal Capital Adequacy
Assessment Process (ICAAP).Traded market risk
Definition (audited)
Traded market risk is the risk of losses in
trading book positions from fluctuations in
market variables, such as interest rates,
credit spreads, foreign exchange rates,
equity prices, implied volatilities and asset
correlations.
Sources of risk
(audited)
NatWest Group is exposed to traded
market risk through trading activities
entered into by NatWest Markets where
such risk arises from market-making
activity and by facilitating customer-
facing business that cannot be
immediately offset with other customers
or market participants.
From a market
risk perspective, activities are focused on
rates; currencies; and traded credit.
NatWest Markets undertakes
transactions in financial instruments
including debt securities, as well as
securities financing and derivatives.
The key categories of traded market risk
are interest rate risk, credit spread risk
and foreign currency price risk.
Trading activities may also give rise to
counterparty credit risk. For further detail
refer to the Credit risk section.Governance
(audited)
Traded market risk policy defines the key
principles and approach to managing and
reporting traded market risks across
NatWest Group. Responsibility for
identifying, measuring, monitoring and
controlling market risk arising from
trading activities lies with the relevant
trading business. The Market Risk
function independently advises on,
monitors and challenges the risk-taking
activities undertaken by the trading
business ensuring these are within the
constraints of the market risk framework,
policies, and risk appetite statements and
measures.", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "ConsolidatedIncomeStatement_Label_001": { "value": "25187000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:RevenueFromInterest", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "ConsolidatedIncomeStatement_Label_002": { "value": "21026000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:RevenueFromInterest", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:GBP" } }, "ConsolidatedIncomeStatement_Label_003": { "value": "12637000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:RevenueFromInterest", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:GBP" } }, "ConsolidatedIncomeStatement_NegatedLabel_004": { "value": "13912000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:InterestExpense", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "ConsolidatedIncomeStatement_NegatedLabel_005": { "value": "9977000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:InterestExpense", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:GBP" } }, "ConsolidatedIncomeStatement_NegatedLabel_006": { "value": "2795000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:InterestExpense", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:GBP" } }, "ConsolidatedIncomeStatement_TotalLabel_0014": { "value": "11275000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:InterestRevenueExpense", "entity": "scheme:2138005O9XJIJN4JPN90", 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Board of directors on 13 February 2025
\n
and signed on its behalf by:
\n
Richard Haythornthwaite
\n
Chair
\n
John-Paul Thwaite
\n
Group Chief Executive Officer
\n
Katie Murray
\n
Group Chief Financial Officer
\n
NatWest Group plc
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"2357000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:InterestPaidClassifiedAsOperatingActivities", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:GBP" } }, "ConsolidatedCashFlowStatementParenthetical_Label_00289": { "value": "95000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashOutflowForLeases", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "ConsolidatedCashFlowStatementParenthetical_Label_00290": { "value": "122000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashOutflowForLeases", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:GBP" } }, "ConsolidatedCashFlowStatementParenthetical_Label_00291": { "value": "170000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashOutflowForLeases", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:GBP" } }, "ConsolidatedCashFlowStatementParenthetical_Label_00636": { "value": "79000000.0", "decimals": -6, "dimensions": { "concept": "nwg:PaymentsOfPrincipalAmountLeaseLiabilities", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "ConsolidatedCashFlowStatementParenthetical_Label_00638": { "value": "102000000.0", "decimals": -6, "dimensions": { "concept": "nwg:PaymentsOfPrincipalAmountLeaseLiabilities", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:GBP" } }, "ConsolidatedCashFlowStatementParenthetical_Label_00637": { "value": "145000000.0", "decimals": -6, "dimensions": { "concept": "nwg:PaymentsOfPrincipalAmountLeaseLiabilities", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:GBP" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00216": { "value": "Accounting policies
This section includes the basis of
preparation and critical and material
accounting policies used to prepare
the financial statements.
Our accounting policies are the
specific principles, bases, conventions,
rules, and practices we apply in
preparing and presenting the financial
statements. Further information is
provided where judgement and
estimation is applied to critical
accounting policies and key sources of
estimation uncertainty.
Future accounting developments
details new, or amendments to
existing, accounting standards, from
when they are effective from and, we
are assessing their impact on future
financial statements.
1. Presentation of financial
statements
NatWest Group plc is incorporated in the
UK and registered in Scotland. The
financial statements are presented in the
functional currency, pounds sterling.
The audited financial statements include
these accounting policies, the
accompanying notes to the financial
statements on pages 307 to 378 and the
audited sections of the Risk and capital
management section on pages 171 to
277 which together from an integral part
of the primary financial statements.
The directors have prepared the 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 the financial statements are
approved (refer to the Report of the
directors) and in accordance with UK-
adopted International Accounting
Standards (IAS), and International
Financial Reporting Standards (IFRS) as
issued by the International
Accounting
Standards Board (IASB). The critical and
material accounting policies and related
judgements are set out below.
The financial statements are presented
on an historical cost basis except for
certain financial instruments which are
stated at fair value.
The effect of the amendments to IFRS
effective from 1 January 2024 on our
financial statements was immaterial.
We have applied the exception from the
accounting requirements for deferred
taxes in IAS 12 Income taxes in respect
of Pillar 2 income taxes issued by the
IASB in May 2023. Accordingly, we have
not recognised or disclosed information
about deferred tax assets and liabilities
related to Pillar 2 income taxes.
Our consolidated financial statements
incorporate the results of NatWest Group
plc and the entities it controls. Control
arises when we have the power to direct
the activities of an entity so as to affect
the return from the entity. Control is
assessed by reference to our ability to
enforce our will on the other entity,
typically through voting rights. The
consolidated financial statements are
prepared under consistent accounting
policies.
A subsidiary is included in the
consolidated financial statements at fair
value on acquisition from the date it is
controlled by us until the date we cease
to control it through a sale or a significant
change in circumstances.
Changes in our interest in a subsidiary
that do not result in us ceasing to control
that subsidiary are accounted for as
equity transactions.
We apply accounting for associates and
joint arrangements to entities where we
have significant influence, but not control,
over the operating and financial policies.
We assess significant influence by
reference to a presumption of voting
rights of more than 20%, but less than
50%, supplemented by a qualitative
assessment of substantive rights which
include representation at the Board of
Directors and significant exchange of
managerial personnel or technology
amongst others.
Investments in associates and joint
ventures are recorded upon initial
recognition at cost and increased or
decreased each period by the share of
the subsequent levels of profit or loss.
Other changes in equity are considered in
line with their nature.
The judgements and assumptions
involved in our accounting policies that
are considered by the Board to be the
most important to the portrayal of its
financial condition are noted below. The
use of estimates, assumptions or models
that differ from those adopted by us
would affect our reported results.
How Climate risk affects our
accounting judgements and estimates
Business planning
Key financial estimates are based on
management's latest five-year revenue
and cost forecasts. The outputs from this
forecast affect forward-looking
accounting estimates.
Measurement of deferred tax and
expected credit losses are highly sensitive
to reasonably possible changes in those
anticipated conditions. In 2024, our
scenario planning was enhanced by the
further integration of NatWest Group\u2019s
climate transition plan, including the
assessment of climate-related risks and
opportunities.
Our Climate transition plan includes an
assessment of:
\ue001
changes in products, services and
business operations to support
customer transition towards net
zero;
\ue001
financial impacts of supporting
customer transition, including
investment required. The linkage
between our financial plan and our
Climate transition plan will continue
to be developed and refreshed
annually as part of the financial
planning cycle;
\ue001
the climate impact of policies, using
the UK Climate Change Committee
(UK CCC) Balanced Net Zero (BNZ)
pathway scenario, aligned with the
UK\u2019s Sixth Carbon Budget. In
addition, we have used the credibility
ratings for sectoral policies provided
by the UK CCC 2024 Progress
Report, published in July, to the
Parliament to develop a BNZ
adjusted pathway to reflect
estimated time delays of these
policies.
There remains considerable uncertainty
regarding this policy response, including
the effect of wider geo-political
uncertainty on governmental ambitions
regarding climate transition and the
effect of decarbonisation on wider
economic growth, technology
development and customer behaviours.
Information used in other accounting
\n
estimates
\n
We make use of reasonable and
\n
supportable information to make
\n
accounting judgements and estimates.
\n
This includes information about the
\n
observable effects of the physical and
\n
transition risks of climate change on the
\n
current creditworthiness of borrowers,
\n
asset values and market indicators. Many
\n
of the effects arising from climate change
\n
will be longer term in nature, with an
\n
inherent level of uncertainty, and have
\n
limited effect on accounting judgements
\n
and estimates for the current period.
\n
Some physical and transition risks can
\n
manifest in the shorter term. The
\n
following items represent the most
\n
significant effects:
\n
\ue001
The classification of financial
\n
instruments linked to climate, or
\n
other sustainability indicators.
\n
Consideration is given to whether
\n
the effect of climate-related terms
\n
prevent the instrument cashflows
\n
being solely payments of principal
\n
and interest.
\n
\ue001
The use of market indicators as
\n
inputs to fair value is assumed to
\n
include current information and
\n
knowledge regarding the effect of
\n
climate risk.
\n
Effect of climate change in the
\n
estimation of expected credit loss
\n
We are monitoring the effect of the
\n
physical and transition consequences of
\n
climate change on our experience of loan
\n
loss. We use available information
\n
regarding the effect of climate transition
\n
policy largely driven by carbon prices as
\n
an adjustment to macroeconomic factors
\n
that are used as inputs to the models
\n
that generate PD and LGD outcomes,
\n
which are key inputs to the ECL
\n
calculation. The determination of whether
\n
specific loss drivers and climate events
\n
generate specific losses is ongoing and is
\n
necessary to determine how sensitive
\n
changes in ECL could be to climate
\n
inputs.
\n
Future cashflows are discounted, so long-
\n
dated cashflows are less likely to affect
\n
current expectations on credit loss. Our
\n
assessment of sector-specific risks, and
\n
whether additional adjustments are
\n
required, includes expectations of the
\n
ability of those sectors to meet their
\n
financing needs in the market. Changes
\n
in credit stewardship and credit risk
\n
appetite that stem from climate transition
\n
policies may directly affect our positions.
\n
2. Critical accounting policies
\n
The judgements and assumptions involved in our accounting policies that are considered
\n
by the Board to be the most important to the portrayal of our financial condition are
\n
noted below. The use of estimates, assumptions or models that differ from those
\n
adopted by us would affect our reported results. Management\u2019s consideration of
\n
uncertainty is outlined in the relevant sections, including the ECL estimate in the Risk
\n
and capital management section.
\n
Information used for significant estimate
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0 \u00a0
Further
Policy
Judgement
Estimate
information
Deferred tax
Determination of whether
Our estimates are based
Note 7
\u00a0
sufficient sustainable
on the five-year revenue
\u00a0
\u00a0
taxable profits will be
and cost forecasts
\u00a0
\u00a0
generated in future years
(which include inherent
\u00a0
\u00a0
to recover the deferred tax
uncertainties).
\u00a0
\u00a0
asset.
\u00a0 \u00a0
Fair value \u2013
Classification of a fair value
Estimation of the fair
Note 10
financial
instrument as level 3,
value, where it is
\u00a0
instruments
where the valuation is
reasonably possible to
\u00a0
\u00a0
driven by unobservable
have alternative
\u00a0
\u00a0
inputs.
assumptions in
\u00a0
\u00a0 \u00a0
determining the FV.
\u00a0
Loan impairment
Definition of default against
ECL estimates contain a
Note 14
provisions
which to apply PD, LGD
number of measurement
\u00a0
\u00a0
and EAD models.
uncertainties (such as
\u00a0
\u00a0
Selection of multiple
the weighting of multiple
\u00a0
\u00a0
economic scenarios.
economic scenarios) and
\u00a0
\u00a0
Criteria for a significant
disclosures include
\u00a0
\u00a0
increase in credit risk.
sensitivities to show the
\u00a0
\u00a0
Identification of risks not
impact on other
\u00a0
\u00a0
captured by the models.
reasonably possible
\u00a0
\u00a0 \u00a0
scenarios.
\u00a0
\n
Changes in judgements and assumptions could result in a material adjustment to those
\n
estimates in future reporting periods.
2.1. Deferred tax
Deferred tax is the estimated tax
expected to be payable or recoverable in
respect of temporary differences
between the carrying amount of an asset
or liability for accounting purposes and
the carrying amount for tax purposes in
the future. Deferred tax liabilities are
generally recognised for all taxable
temporary differences and deferred tax
assets are recognised to the extent their
recovery is probable.
Deferred tax is calculated using tax rates
expected to apply in the periods when
the assets will be realised or the liabilities
settled, based on tax rates and laws
enacted, or substantively enacted, at the
balance sheet date.
Deferred tax asset recoverability is based
on the level of supporting eligible and
available deferred tax liabilities we have
and of our future taxable profits. These
future taxable profits are based on our
five-year revenue and cost forecasts and
the expectation of long-term economic
growth beyond this period. The five-year
forecast takes account of management\u2019s
current expectations of competitiveness
and profitability. The long-term growth
rate reflects external indicators which will
include market expectations on climate
risk. We do not consider any additional
adjustments to this indicator.
2.2. Fair value \u2013 financial instruments
We measure financial instruments at fair
value when they are classified as
mandatory fair value through profit or
loss; held-for-trading; designated fair
value through profit or loss and fair value
through other comprehensive income
and they are recognised in the financial
statements at fair value. All derivatives
are measured at fair value.
We manage some portfolios of financial
assets and financial liabilities based on
our net exposure to either market or
credit risk. In these cases, the fair value is
derived from the net risk exposure of that
portfolio with portfolio level adjustments
applied to incorporate bid-offer spreads,
counterparty credit risk, and funding
costs (refer to \u2018Valuation Adjustments\u2019).
Where the market for a financial
instrument is not active, fair value is
established using a valuation technique.
These valuation techniques involve a
degree of estimation, the extent of which
depends on the instrument\u2019s complexity
and the availability of market-based data.
The complexity and uncertainty in the
financial instrument\u2019s fair value is
categorised using the fair value
hierarchy.
The use of market indicators as inputs to
fair value is assumed to include current
information and knowledge regarding the
effect of climate risk.
2.3. Loan impairment provisions:
expected credit losses (ECL)
At each balance sheet date each financial
asset or portfolio of financial assets
measured at amortised cost or at fair
value through other comprehensive
income, issued financial guarantee and
loan commitment (other than those
classified as held for trading) is assessed
for impairment. Any change in
impairment is reported in the income
statement.
Loss allowances are forward-looking,
based on 12-month ECL where there has
not been a significant increase in credit
risk rating, otherwise allowances are
based on lifetime expected losses.
ECL is a probability-weighted estimate of
credit losses. The probability is
determined by the risk of default which is
applied to the cash flow estimates. In the
absence of a change in credit rating,
allowances are recognised when there is
a reduction in the net present value of
expected cash flows. Following a
significant increase in credit risk, ECL is
adjusted from 12 months to lifetime. This
will lead to a higher impairment charge.
The measurement of expected credit loss
considers the ability of borrowers to
make payments as they fall due. Future
cashflows are discounted, so long-dated
cashflows are less likely to affect current
expectations on credit loss. Our
assessment of sector specific risks, and
whether additional adjustments are
required, include expectations of the
ability of those sectors to meet their
financing needs in the market. Changes
in credit stewardship and credit risk
appetite that stem from climate transition
policies may directly affect our positions.
Judgement is exercised as follows:
\ue001
Non-modelled portfolios
\u2013 use a
standardised capital requirement
under Basel II. Under IFRS 9, they
have bespoke treatments for the
identification of significant increase in
credit risk. Benchmark PDs, EADs
and LGDs are reviewed annually for
appropriateness. The ECL calculation
is based on expected future cash
flows, which is typically applied at a
portfolio level.
\ue001
Multiple economic scenarios (MES)
\u2013
the central, or base, scenario is most
critical to the ECL calculation,
independent of the method used to
generate a range of alternative
outcomes and their probabilities.
\ue001
Significant increase in credit risk
\u2013
IFRS 9 requires that at each reporting
date, an entity shall assess whether
the credit risk on an account has
increased significantly since initial
recognition. Part of this assessment
requires a comparison to be made
between the current lifetime PD (i.e.
the current probability of default over
the remaining lifetime) with the
equivalent lifetime PD as determined
at the date of initial recognition.
On restructuring where a financial asset
is not derecognised, the revised cash
flows are used in re-estimating the credit
loss. Where restructuring causes
derecognition of the original financial
asset, the fair value of the replacement
asset is used as the closing cash flow of
the original asset.
Where in the course of the orderly
realisation of a loan, it is exchanged for
equity shares or property, the exchange
is accounted for as the sale of the loan
and the acquisition of equity securities or
investment property. Where our acquired
interest is in equity shares, relevant
policies for control, associates and joint
ventures apply.
Impaired financial assets are written off
and therefore derecognised from the
balance sheet when we conclude that
there is no longer any realistic prospect
of recovery of part, or all, of the loan. For
financial assets that are individually
assessed for impairment, the timing of
the write-off is determined on a case-by-
case basis.
Such financial assets are reviewed
regularly and write-off will be prompted
by bankruptcy, insolvency, re-negotiation,
and similar events
The typical time frames from initial
impairment to write-off for our
collectively assessed portfolios are:
\ue001
Retail mortgages: write-off usually
occurs within five years, or earlier,
when an account is closed, but can
be longer where the customer
engages constructively;
\ue001
Credit cards: the irrecoverable
amount is typically written off after
twelve arrears cycles or at four years
post default any remaining amounts
outstanding are written off;
\ue001
Overdrafts and other unsecured
loans: write-off occurs within six
years;
\ue001
Commercial loans: write-offs are
determined in the light of individual
circumstances; and uncollateralised
impaired business loans are generally
written off within five years.
3. Material accounting policies
3.1. Revenue recognition
Interest receivable and payable are
recognised in the income statement using
the effective interest rate method for all
financial instruments measured at
amortised cost; debt instruments
measured as fair value through other
comprehensive income; and the effective
part of any related accounting hedging
instruments.
Finance lease income is recognised at a
constant periodic rate of return before
tax on the net investment on the lease.
Other interest relating to financial
instruments measured at fair value is
recognised as part of the movement in
fair value and is reported in income from
trading activities or other operating
income as relevant. Fees in respect of
services are recognised as the right to
consideration accrues through the
performance of each distinct service
obligation to the customer. The
arrangements are generally contractual
and the cost of providing the service is
incurred as the service is rendered. The
price is usually fixed and always
determinable.
3.2. Discontinued operations, held for
sale and disposal groups
The results of discontinued operations
are excluded from the results of
continuing operations and are presented
as a single amount as profit or loss from
discontinued operations, net of tax in the
income statement. Comparatives are re-
presented for the income statement,
cash flow statement, statement of
changes in equity and related notes.
An asset or disposal group (assets and
liabilities) is classified as held for sale if we
will recover its carrying amount
principally through a sale transaction
rather than through continuing use. It is
measured at the lower of its carrying
amount or fair value less cost to sell
unless the existing measurement
provisions of IFRS apply. These are
presented as single amounts;
comparatives are not re-presented.
3.3. Staff costs
Employee costs, such as salaries, paid
absences, and other benefits are
recognised over the period in which the
employees provide the related services to
us.
Employees may receive variable
compensation in cash, in deferred cash
or debt instruments of NatWest Group or
in ordinary shares of NatWest Group plc
subject to deferral, clawback and
forfeiture criteria. We operate a number
of share-based compensation schemes
under which we grant awards of
NatWest Group plc shares and share
options to our employees. Such awards
are subject to vesting conditions.
Variable compensation that is settled in
cash or debt instruments is charged to
the income statement on a straight-line
basis over the period during which
services are provided, taking account of
forfeiture and clawback criteria. The
value of employee services received in
exchange for NatWest Group plc shares
and share options is recognised as an
expense over the vesting period, subject
to deferral, clawback, cancellation and
forfeiture criteria with a corresponding
increase in equity. The fair value of
shares granted is the market price
adjusted for the expected effect of
dividends as employees are not entitled
to dividends until shares are vested.
The fair value of options granted is
determined using option pricing models to
estimate the numbers of shares likely to
vest. These consider the exercise price of
the option, the current share price, the
risk-free interest rate, the expected
volatility of the share price over the life of
the option and other relevant factors
such as the dividend yield.
Defined contribution pension scheme
A scheme where we pay fixed
contributions and there is no legal or
constructive obligation to pay further
contributions or benefits. Contributions
are recognised in the income statement
as employee service costs accrue.
Defined benefit pension scheme
A scheme that defines the benefit an
employee will receive on retirement and
is dependent on one or more factors
such as age, salary, and years of service.
The net of the recognisable scheme
assets and obligations is reported on the
balance sheet in other assets or other
liabilities. The defined benefit obligation is
measured on an actuarial basis.
The charge to the income statement for
pension costs (mainly the service cost
and the net interest on the net defined
benefit asset or liability) is recognised in
operating expenses.
Actuarial gains and losses (i.e. gains
and/or losses on re-measuring the net
defined benefit asset or liability due to
changes in actuarial measurement
assumptions) are recognised in other
comprehensive income in full in the
period in which they arise, and not
subject to recycling to the income
statement.
The difference between scheme assets
and scheme liabilities, the net defined
benefit asset or liability, is recognised on
the balance sheet if the criteria of the
asset ceiling test are met. This requires
the net defined benefit surplus to be
limited to the present value of any
economic benefits available to us in the
form of refunds from the plan or reduced
contributions to it.
We will recognise a liability where a
minimum funding requirement exists for
any of our defined benefit pension
schemes. This reflects agreed minimum
funding and the availability of a net
surplus as described above.
When estimating the liability for minimum
funding requirements we only include
contributions that are substantively or
contractually agreed and do not include
contingent and discretionary features,
including dividend-linked contributions or
contributions subject to contingent events
requiring future verification.
We recognise a net defined benefit asset
when the net defined benefit surplus can
generate a benefit in the form of a refund
or reduction in future contributions to the
plan. The net benefit pension asset is
recognised at the present value of the
benefits that will be available to us
excluding interest and the effect of the
asset ceiling (if any), excluding interest.
Changes in the present value of the net
benefit pension asset are recognised
immediately in other comprehensive
income.
In instances where Trustees have the
ability to declare augmented benefits to
participants, we do not recognise a
defined benefit pension asset and record
the surplus immediately in other
comprehensive income.
3.4. Intangible assets
Intangible assets are identifiable non-
monetary assets without physical
substance acquired or developed by us,
and are stated at cost less accumulated
amortisation and impairment losses.
Amortisation is a method to spread the
cost of such assets over time in the
income statement.
This is charged to the income statement
over the assets' estimated useful
economic lives using methods that best
reflect the pattern of economic benefits.
The estimated useful economic lives are:
Computer software 3 to 10 years
Other acquired intangibles 3 to 5 years
Direct costs relating to the development
of internal-use computer software are
reported on the balance sheet after
technical feasibility and economic viability
have been established. These direct costs
include payroll, the costs of materials and
services, and directly attributable
overheads. Capitalisation of costs ceases
when the software can operate as
intended.
During and after development,
accumulated costs are reviewed for
impairment against the benefits that the
software is expected to generate. Costs
incurred prior to the establishment of
technical feasibility and economic viability
are expensed to the income statement as
incurred, as are all training costs and
general overheads. The costs of licences
to use computer software that are
expected to generate economic benefits
beyond three years are also reported on
the balance sheet.
Goodwill on the acquisition of a subsidiary
is the excess of the fair value of the
consideration paid, the fair value of any
existing interest in the subsidiary and the
amount of any non-controlling interest
measured either at fair value or at its
share of the subsidiary\u2019s net assets over
the net fair value of the subsidiary\u2019s
identifiable assets, liabilities, and
contingent liabilities.
Goodwill is measured at initial cost less
any subsequent impairment losses. The
gain or loss on the disposal of a
subsidiary includes the carrying value of
any related goodwill.
3.5. Impairment of non-financial
assets
Goodwill is tested for impairment annually
or more frequently if events or changes
in circumstances indicate that it might be
impaired.
At each balance sheet date, we assess
whether there is any indication that other
intangible assets or property, plant and
equipment are impaired. If any such
indication exists, we estimate the
recoverable amount of the asset and
compare it to its balance sheet value to
calculate if an impairment loss should be
recognised in the income statement. A
reversal of an impairment loss on other
intangible assets or property, plant and
equipment is recognised in the income
statement provided the increased
carrying value is not greater than it
would have been had no impairment loss
been recognised.
The recoverable amount of an asset that
does not generate cash flows that are
independent from those of other assets
or groups of assets, is determined as part
of the cash-generating unit to which the
asset belongs.
A cash-generating unit is the smallest
identifiable group of assets that
generates cash inflows that are largely
independent of the cash inflows from
other assets or groups of assets. For the
purposes of impairment testing, goodwill
acquired in a business combination is
allocated to our cash-generating units or
groups of cash-generating units expected
to benefit from the combination.
The recoverable amount of an asset or
cash-generating unit is the higher of its
fair value less cost to sell or its value in
use. Value in use is the present value of
future cash flows from the asset or cash-
generating unit discounted at a rate that
reflects market interest rates adjusted for
risks specific to the asset or cash-
generating unit that have not been
considered in estimating future cash
flows.
The assessment of asset impairment is
based upon value in use. This represents
the value of future cashflows and uses
our five-year revenue and cost forecasts
and the expectation of long term
economic growth beyond this period. The
five-year forecast takes account of
management\u2019s current expectations of
competitiveness and profitability,
including near-term effects of climate
transition risk. The long-term growth rate
reflects external indicators which will
include market expectations on climate
risk. We do not consider any additional
adjustments to this indicator.
3.6. Foreign currencies
Foreign exchange differences arising on
the settlement of foreign currency
transactions and from the translation of
monetary assets and liabilities are
reported in income from trading activities
except for differences arising on cash
flow hedges and hedges of net
investments in foreign operations.
Non-monetary items denominated in
foreign currencies that are stated at fair
value are translated into the functional
currency at the foreign exchange rates
ruling at the dates the values are
determined. Translation differences are
recognised in the income statement
except for differences arising on non-
monetary financial assets classified as fair
value through other comprehensive
income.
Income and expenses of foreign
subsidiaries and branches are translated
into sterling at average exchange rates
unless these do not approximate the
foreign exchange rates ruling at the
dates of the transactions. Foreign
exchange differences arising on the
translation of a foreign operation are
recognised in other comprehensive
income. The amount accumulated in
equity is reclassified from equity to the
income statement on disposal of a foreign
operation.
3.7. Tax
Tax encompassing current tax and
deferred tax is recognised in the income
statement except when taxable items are
recognised in other comprehensive
income or equity. Tax consequences
arising from servicing financial
instruments classified as equity are
recognised in the income statement.
Accounting for taxes is judgemental and
carries a degree of uncertainty because
tax law is subject to interpretation, which
might be questioned by the relevant tax
authority. We recognise the most likely
current and deferred tax liability or asset,
assessed for uncertainty using consistent
judgements and estimates. Current and
deferred tax assets are only recognised
where their recovery is deemed probable,
and current and deferred tax liabilities
are recognised at the amount that
represents the best estimate of the
probable outcome having regard to their
acceptance by the tax authorities.
3.8. Financial instruments
Financial instruments are measured at
fair value on initial recognition on the
balance sheet.
Monetary financial assets are classified
into one of the following subsequent
measurement categories (subject to
business model assessment and review of
contractual cash flow for the purposes of
sole payments of principal and interest
where applicable):
\ue001
amortised cost
measured at cost
using the effective interest rate
method, less any impairment
allowance;
\ue001
fair value through other
comprehensive income (FVOCI)
measured at fair value, using the
effective interest rate method and
changes in fair value through other
comprehensive income;
\ue001
mandatory fair value through profit or
loss (MFVTPL)
measured at fair value
and changes in fair value reported in
the income statement; or
\ue001
designated at fair value through profit
or loss (DFV)
measured at fair value
and changes in fair value reported in
the income statement.
Classification by business model reflects
how we manage our financial assets to
generate cash flows. A business model
assessment helps to ascertain the
measurement approach depending on
whether cash flows result from holding
financial assets to collect the contractual
cash flows, from selling those financial
assets, or both.
Business model assessment of assets is
made at portfolio level, being the level at
which they are managed to achieve a
predefined business objective. This is
expected to result in the most consistent
classification of assets because it aligns
with the stated objectives for the
portfolio, its risk management, manager\u2019s
remuneration and the ability to monitor
sales of assets from a portfolio. When a
significant change to our business is
communicated to external parties, we
reassess our business model for
managing those financial assets. We
reclassify financial assets if we have a
significant change to the business model.
A reclassification is applied prospectively
from the reclassification date.
The contractual terms of a financial
asset; any leverage features; prepayment
and extension terms; and discounts or
penalties to interest rates that are part of
meeting environmental, social and
governance targets as well as other
contingent and leverage features, non-
recourse arrangements and features that
could modify the timing and/or amount of
the contractual cash flows that might
reset the effective rate of interest; are
considered in determining whether cash
flows are solely payments of principal and
interest.
Certain financial assets may be
designated at fair value through profit or
loss (DFV) upon initial recognition if such
designation eliminates, or significantly
reduces, accounting mismatch.
Equity shares are measured at fair value
through profit or loss unless specifically
elected as at fair value through other
comprehensive income (FVOCI).
Upon disposal, the cumulative gains or
losses in fair value through other
comprehensive income reserve are
recycled to the income statement for
monetary assets and for non-monetary
assets (equity shares) the cumulative
gains or losses are transferred directly to
retained earnings.
Regular way purchases and sales of
financial assets classified as amortised
cost are recognised on the settlement
date; all other regular way transactions in
financial assets are recognised on the
trade date.
Financial liabilities are classified into one
of following measurement categories:
\ue001
amortised cost measured at cost
using the effective interest rate
method;
\ue001
held for trading measured at fair
value and changes in fair value
reported in income statement; or
\ue001
designated at fair value through profit
or loss measured at fair value and
changes in fair value reported in the
income statement except changes in
fair value attributable to the credit
risk component recognised in other
comprehensive income when no
accounting mismatch occurs.
3.9. Netting
Financial assets and financial liabilities are
offset, and the net amount presented on
the balance sheet when, and only when,
we currently have a legally enforceable
right to set off the recognised amounts
and we intend either to settle on a net
basis or to realise the asset and settle the
liability simultaneously. We are party to a
number of arrangements, including
master netting agreements, that give us
the right to offset financial assets and
financial liabilities, but where we do not
intend to settle the amounts net or
simultaneously, the assets and liabilities
concerned are presented separately on
the balance sheet.
3.10. Capital instruments
We classify a financial instrument that we
issue as a financial liability if it is a
contractual obligation to deliver cash or
another financial asset, or to exchange
financial assets or financial liabilities on
potentially unfavourable terms and as
equity if we evidence a residual interest in
our assets after the deduction of
liabilities. Incremental costs and related
tax that are directly attributable to an
equity transaction are deducted from
equity.
The consideration for any ordinary
shares of NatWest Group plc purchased
by us (known as treasury shares or own
shares held) is deducted from retained
earnings. On the cancellation of treasury
shares their nominal value is removed
from retained earnings and a
consequential amount recognised in
capital redemption reserve in compliance
with the Companies Act 2006.
On the sale or re-issue of treasury shares
the consideration received and related
tax are credited to equity, net of any
directly attributable incremental costs.
3.11. Derivatives and hedging
Derivatives are reported on the balance
sheet at fair value.
We use derivatives as part of our trading
activities, to manage our own risk such
as interest rate, foreign exchange, or
credit risk or in certain customer
transactions. Not all derivatives used to
manage risk are in hedge accounting
relationships (an IFRS method to reduce
accounting mismatch from changes in
the fair value of the derivatives reported
in the income statement).
Gains and losses arising from changes in
the fair value of derivatives that are not
in hedge relationships are recognised in
Income from trading activities unless
those derivatives are managed together
with financial instruments designated at
fair value; these gains and losses are
included in Other operating income.
Hedge accounting
Hedge accounting relationships are
designated and documented at inception
in line with the requirements of IAS 39
Financial instruments \u2013 Recognition and
Measurement.
The documentation identifies the hedged
item, the hedging instrument and details
of the risk that is being hedged and the
way in which effectiveness will be
assessed at inception and during the
period of the hedge. When designating a
hedging relationship, we consider: the
economic relationship between the
hedged item (including the risk being
hedged) and the hedging instrument; the
nature of the risk; the risk management
objective and strategy for undertaking
the hedge; and the appropriateness of
the method that will be used to assess
hedge effectiveness.
Designated hedging relationships must be
expected to be highly effective both on a
prospective and retrospective basis. This
is assessed using regression techniques
which model the degree of offsetting
between the changes in fair value or
cash flows attributable to the hedged risk
and the changes in fair value of the
designated hedging derivatives.
Ineffectiveness is measured based on
actual levels of offsetting and recognised
in the income statement.
We enter into three types of hedge
accounting relationships.
Fair value hedge
- the gain or loss on the
hedging instrument and the hedged item
attributable to the hedged risk is
recognised in the income statement.
Where the hedged item is measured at
amortised cost, the balance sheet
amount of the hedged item is also
adjusted.
Cash flow hedge
- the effective portion of
the designated hedge relationship is
recognised in other comprehensive
income and the ineffective portion in the
income statement. When the hedged
item (forecasted cash flows) results in the
recognition of a financial asset or financial
liability, the cumulative gain or loss is
reclassified from equity to the income
statement in the same periods in which
the hedged forecasted cash flows affect
the income statement.
Hedge of net investment in a foreign
operation
-
in the hedge of a net
investment in a foreign operation, the
effective portion of the designated hedge
relationship is recognised in other
comprehensive income. Any ineffective
portion is recognised in profit or loss.
Non-derivative financial liabilities as well
as derivatives may be designated as a
hedging instrument in a net investment
hedge.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the
hedge no longer meets the criteria for
hedge accounting i.e. the hedge is not
highly effective in offsetting changes in
fair value or cash flows attributable to the
hedged risk, consistent with the
documented risk management strategy;
the hedging instrument expires or is sold,
terminated or exercised; or if hedge
designation is revoked.
For fair value hedging any cumulative
adjustment is amortised to the income
statement over the life of the hedged
item. Where the hedged item is no longer
on the balance sheet the adjustment to
the hedged item is reported in the
income statement. For cash flow hedging
the cumulative unrealised gain or loss is
reclassified from equity to the income
statement when the hedged cash flows
occur or, if the forecast transaction
results in the recognition of a financial
asset or financial liability, when the
hedged forecast cash flows affect the
income statement. Where a forecast
transaction is no longer expected to
occur, the cumulative unrealised gain or
loss is reclassified from equity to the
income statement immediately.
For net investment hedging on disposal
or partial disposal of a foreign operation,
the amount accumulated in equity is
reclassified from equity to the income
statement.
3.12. Provisions
We recognise a provision for a present
obligation resulting from a past event
when it is more likely than not that we
will be required to pay to settle the
obligation and the amount of the
obligation can be estimated reliably.
Provision is made for restructuring costs,
including the costs of redundancy, when
we have a constructive obligation.
An obligation exists when we have a
detailed formal plan for the restructuring
and have raised a valid expectation in
those affected either by starting to
implement the plan or by announcing its
main features.
We recognise any onerous cost of the
present obligation under a contract as a
provision. An onerous cost is the
unavoidable cost of meeting our
contractual obligations that exceed the
expected economic benefits. When we
intend to vacate a leasehold property or
right of use asset, the asset would be
tested for impairment and a provision
may be recognised for the ancillary
contractual occupancy costs.
4. Future accounting
developments
International Financial Reporting
Standards
Effective 1 January 2026
\ue001
Amendments to the Classification and
Measurement of Financial
Instruments (Amendments to IFRS 9
and IFRS 7 \u2013 Issued May 2024)
Effective 1 January 2027
\ue001
P
resentation and Disclosures in
Financial Statements (IFRS 18 \u2013
Issued April 2024)
\ue001
Subsidiaries without Public
Accountability (IFRS 19 \u2013 Issued May
2024)
We are assessing the effect of adopting
these accounting developments on our
financial statements.Significant judgement is required when setting the criteria for bonds to be included in the basket of bonds that is used to determine the discount rate used in the IAS 19 valuations. The
criteria include issue size, quality of pricing and the exclusion of outliers. Judgement is also required in determining the shape of the yield curve at long durations; a constant credit
spread relative to gilts is assumed. Sensitivity to the main assumptions is presented below.Judgement: tax contingencies
NatWest Group\u2019s corporate income tax charge and its provisions for corporate income taxes necessarily involve a degree of estimation and judgement. The tax treatment of some
transactions is uncertain and tax computations are yet to be agreed with the relevant tax authorities. NatWest Group recognises anticipated tax liabilities based on all available
evidence and, where appropriate, in the light of external advice. Any difference between the final outcome and the amounts provided will affect current and deferred income tax
charges in the period when the matter is resolved.Critical accounting policy: Deferred tax
NatWest Group has recognised a deferred tax asset of \u00a31,876 million (2023 - \u00a31,894
million) and a deferred tax liability of \u00a399 million (2023 - \u00a3141 million). These include
amounts recognised in respect of UK and overseas tax losses of \u00a31,106 million (2023 -
\u00a31,019 million).
The main UK corporation tax increased from 19% to 25%, and the UK banking
surcharge decreased from 8% to 3%, from 1 April 2023.
Judgement
\u2013
NatWest Group has considered the carrying value of deferred tax assets
and concluded that, based on management\u2019s estimates, sufficient sustainable taxable
profits will be generated in future years to recover recognised deferred tax assets.
Estimates
\u2013
For entities with mature business models and a longer track record of
profitability and stable earnings, these estimates are partly based on forecast
performance beyond the horizon for management\u2019s detailed plans. They have regard to
inherent uncertainties. The deferred tax assets in NWM Plc and UBIDAC are supported
substantially by future reversing taxable temporary differences on which deferred tax
liabilities are recognised at 31 December 2024.
UK tax losses
Under UK tax rules, tax losses can be carried forward indefinitely. As the recognised tax
losses in NatWest Group arose prior to 1 April 2015, credit in future periods is given
against 25% of profits at the main rate of UK corporation tax, excluding the Banking
Surcharge rate introduced by The Finance (No. 2) Act 2015.
NWM Plc
\u2013
No deferred tax assets have been recognised at 31 December 2024 (2023 -
nil). The basis of recognition in NWM plc is by way of future reversing taxable temporary
differences on which deferred tax liabilities are recognised at 31 December 2024. Losses
of \u00a35,520 million have not been recognised in the deferred tax balance at 31 December
2024.
NWB Plc
\u2013
A deferred tax asset of \u00a3333 million (2023 - \u00a3362 million) has been
recognised in respect of losses of \u00a31,333 million of total losses of \u00a32,195 million carried
forward at 31 December 2024. The losses arose principally as a result of significant
impairment and conduct charges between 2009 and 2012 during challenging economic
conditions in the UK banking sector. NWB Plc returned to tax profitability during 2015,
and based on a seven year recovery period, expects the deferred tax asset to be utilised
against future taxable profits by the end of 2031.
RBS plc
\u2013
A deferred tax asset of \u00a3685 million (2023 - \u00a3597 million) has been recognised
in respect of losses of \u00a32,740 million of total losses of \u00a32,948 million carried forward at
31 December 2024. The losses were transferred from NatWest Markets Plc as a
consequence of the ring fencing regulations. Based on a 7-year recovery period, RBS plc
expects the deferred tax asset to be utilised against future taxable profits by the end of
2031.
Overseas tax losses
UBIDAC
\u2013
A deferred tax asset of \u00a35 million (2023 - \u00a35 million) has been recognised in
respect of losses of \u00a340 million, and is now entirely supported by way of future reversing
taxable temporary differences on which deferred tax liabilities are recognised at 31
December 2024.
NatWest Markets N.V. (NWM N.V.)
\u2013
A deferred tax asset of \u00a383 million (2023 - \u00a355
million) has been recognised in respect of losses of \u00a3322 million of total losses of \u00a32,308
million carried forward at 31 December 2024. NWM N.V. Group considers it to be
probable, based on its 5-year budget forecast, that future taxable profits will be available
against which the tax losses and tax credits can be partially utilised. The tax losses and
the tax credits have no expiry date.
Unrecognised deferred tax
Deferred tax assets of \u00a34,960 million (2023 - \u00a35,168 million; 2022 - \u00a35,534 million) have
not been recognised in respect of tax losses and other deductible temporary differences
carried forward of \u00a323,238 million (2023 - \u00a324,438 million; 2022 - \u00a325,742 million) in
jurisdictions where doubt exists over the availability of future taxable profits. Of these
losses and other deductible temporary differences, \u00a34,535 million expire after 10 years.
The balance of tax losses and other deductible temporary differences carried forward
has no expiry date.
Deferred tax liabilities of \u00a3269 million (2023 - \u00a3256 million; 2022 - \u00a3257 million) on
aggregate underlying temporary differences of \u00a31,241 million (2023 - \u00a31,005 million;
2022 - \u00a31,010 million) have not been recognised in respect of retained earnings of
overseas subsidiaries and held-over gains on the incorporation of certain overseas
branches. Retained earnings of overseas subsidiaries are expected to be reinvested
indefinitely or remitted to the UK free from further taxation. No taxation is expected to
arise in the foreseeable future in respect of held-over gains on which deferred tax is not
recognised. UK tax legislation largely exempts from UK tax overseas dividends received.Judgement: classification of financial assets
Classification of financial assets between amortised cost and fair
value through other comprehensive income requires a degree of
judgement in respect of business models and contractual
cashflows.
\ue001
The business model criteria is assessed at a portfolio level to
determine whether assets are classified as held to collect or
held to collect and sell. Information that is considered in
determining the applicable business model includes: the
portfolio\u2019s policies and objectives; how the performance and
risks of the portfolio are managed, evaluated and reported
to management; and the frequency, volume and timing of
sales in prior periods, sales expectation for future periods,
and the reasons for sales.
\ue001
The contractual cash flow characteristics of financial assets
are assessed with reference to whether the cash flows
represent solely payments of principal and interest (SPPI). A
level of judgement is made in assessing terms that could
change the contractual cash flows so that it would not meet
the condition for SPPI, including contingent and leverage
features,
non-recourse arrangements and features that
could modify the time value of money.
For accounting policy information refer to Accounting policies
3.8, 3.9 and 3.11.Critical accounting policy: Fair value \u2013 financial
instruments
\n
Financial instruments classified as mandatory fair value through
\n
profit or loss; held-for-trading; designated fair value through
\n
profit or loss; and fair value through other comprehensive
\n
income are recognised in the financial statements at fair value.
\n
All derivatives are measured at fair value.
\n
Fair value is the price that would be received to sell an asset or
\n
paid to transfer a liability in an orderly transaction between
\n
market participants at the measurement date. A fair value
\n
measurement considers the characteristics of the asset or
\n
liability and the assumptions that a market participant would
\n
consider when pricing the asset or liability.
\n
NatWest Group manages some portfolios of financial assets
\n
and financial liabilities based on its net exposure to either
\n
market or credit risk. In these cases, the fair value is derived
\n
from the net risk exposure of that portfolio with portfolio level
\n
adjustments applied to incorporate bid-offer spreads,
\n
counterparty credit risk, and funding costs (refer to \u2018Valuation
\n
Adjustments\u2019).
\n
Where the market for a financial instrument is not active, fair
\n
value is established using a valuation technique. These
\n
valuation techniques involve a degree of estimation, the extent
\n
of which depends on the instrument\u2019s complexity and the
\n
availability of market-based data. The complexity and
\n
uncertainty in the financial instrument\u2019s fair value is categorised
\n
using the fair value hierarchy.
\n
For accounting policy information refer to Accounting policies
\n2.2, 3.8 and 3.11.Key areas of judgement
Over the years the business has
\n
simplified, with most products classified
\n
as level 1 or 2 of the fair value hierarchy.
\n
However, the diverse range of products
\n
historically traded by NatWest Group
\n
means some products remain classified
\n
as level 3. Level 3 indicates a significant
\n
level of pricing uncertainty, where expert
\n
judgement is used. As such, extra
\n
disclosures are required in respect of
\n
level 3 instruments.
\n
In general, the degree of expert
\n
judgement used and hence valuation
\n
uncertainty depends on the degree of
\n
liquidity of an instrument or input.
\n
Where markets are liquid, little judgement
\n
is required. However, when the
\n
information regarding the liquidity in a
\n
particular market is not clear, a
\n
judgement may need to be made. For
\n
example, for an equity traded on an
\n
exchange, daily volumes of trading can
\n
be seen, but for an OTC derivative,
\n
assessing the liquidity of the market with
\n
no central exchange is more challenging.
\n
A key related matter is where a market
\n
moves from liquid to illiquid or vice versa.
\n
Where this movement is considered
\n
temporary, the fair value level is not
\n
changed. For example, if there is little
\n
market trading in a product on a
\n
reporting date but at the previous
\n
reporting date and during the intervening
\n
period the market has been liquid. In this
\n
case, the instrument will continue to be
\n
classified at the same level in the
\n
hierarchy. This is to provide consistency
\n
so that transfers between levels are
\n
driven by genuine changes in market
\n
liquidity and do not reflect short term or
\n
seasonal effects. Material movements
\n
between levels are reviewed quarterly by
\n
the business and IPV.
\n
The breadth and depth of the IPV data
\n
allows for a rules-based quality
\n
assessment to be made of market
\n
activity, liquidity, and pricing uncertainty,
\n
which assists with the process of
\n
allocation to an appropriate level. Where
\n
suitable independent pricing information
\n
is not readily available, the quality
\n
assessment will result in the instrument
\nbeing assessed as level 3.Critical accounting policy: Loan impairment provisions
Accounting policy 2.3 sets out how the expected loss approach is applied. At 31 December 2024, impairment provisions amounted to \u00a33,425 million (2023 - \u00a33,645 million). A loan is
impaired when there is objective evidence that the cash flows will not occur in the manner expected when the loan was advanced. Such evidence includes changes in the credit rating
of a borrower, the failure to make payments in accordance with the loan agreement, significant reduction in the value of any security, breach of limits or covenants, and observable
data about relevant macroeconomic measures.
The impairment loss is the difference between the carrying value of the loan and the present value of estimated future cash flows at the loan's original effective interest rate.
The measurement of credit impairment under the IFRS expected loss model depends on management\u2019s assessment of any potential deterioration in the creditworthiness of the
borrower, its modelling of expected performance and the application of economic forecasts. All three elements require judgements that are potentially significant to the estimate of
impairment losses. For further information and sensitivity analysis, refer to Risk and capital management \u2013 Measurement uncertainty and ECL sensitivity analysis section.
IFRS 9 ECL model design principles
Refer to Credit risk \u2013 IFRS 9 ECL model design principles section for further details.
Approach for multiple economic scenarios (MES)
The base scenario plays a greater part in the calculation of ECL than the approach to MES. Refer to Credit risk \u2013 Economic loss drivers - Probability weightings of scenarios section
for further details.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.
For accounting policy information refer to Accounting policy 3.12.
Background information on all material provisions is given in Note 25
. ", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00311": { "value": "1. Presentation of financial
statements
NatWest Group plc is incorporated in the
UK and registered in Scotland. The
financial statements are presented in the
functional currency, pounds sterling.
The audited financial statements include
these accounting policies, the
accompanying notes to the financial
statements on pages 307 to 378 and the
audited sections of the Risk and capital
management section on pages 171 to
277 which together from an integral part
of the primary financial statements.
The directors have prepared the 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 the financial statements are
approved (refer to the Report of the
directors) and in accordance with UK-
adopted International Accounting
Standards (IAS), and International
Financial Reporting Standards (IFRS) as
issued by the International
Accounting
Standards Board (IASB). The critical and
material accounting policies and related
judgements are set out below.
The financial statements are presented
on an historical cost basis except for
certain financial instruments which are
stated at fair value.
The effect of the amendments to IFRS
effective from 1 January 2024 on our
financial statements was immaterial.
We have applied the exception from the
accounting requirements for deferred
taxes in IAS 12 Income taxes in respect
of Pillar 2 income taxes issued by the
IASB in May 2023. Accordingly, we have
not recognised or disclosed information
about deferred tax assets and liabilities
related to Pillar 2 income taxes.
Our consolidated financial statements
incorporate the results of NatWest Group
plc and the entities it controls. Control
arises when we have the power to direct
the activities of an entity so as to affect
the return from the entity. Control is
assessed by reference to our ability to
enforce our will on the other entity,
typically through voting rights. The
consolidated financial statements are
prepared under consistent accounting
policies.
A subsidiary is included in the
consolidated financial statements at fair
value on acquisition from the date it is
controlled by us until the date we cease
to control it through a sale or a significant
change in circumstances.
Changes in our interest in a subsidiary
that do not result in us ceasing to control
that subsidiary are accounted for as
equity transactions.
We apply accounting for associates and
joint arrangements to entities where we
have significant influence, but not control,
over the operating and financial policies.
We assess significant influence by
reference to a presumption of voting
rights of more than 20%, but less than
50%, supplemented by a qualitative
assessment of substantive rights which
include representation at the Board of
Directors and significant exchange of
managerial personnel or technology
amongst others.
Investments in associates and joint
ventures are recorded upon initial
recognition at cost and increased or
decreased each period by the share of
the subsequent levels of profit or loss.
Other changes in equity are considered in
line with their nature.
The judgements and assumptions
involved in our accounting policies that
are considered by the Board to be the
most important to the portrayal of its
financial condition are noted below. The
use of estimates, assumptions or models
that differ from those adopted by us
would affect our reported results. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00217": { "value": "1. Presentation of financial statementsThe directors have prepared the 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 the financial statements are
approved (refer to the Report of the
directors) and in accordance with UK-
adopted International Accounting
Standards (IAS), and International
Financial Reporting Standards (IFRS) as
issued by the International
Accounting
Standards Board (IASB).", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00215": { "value": "1. Presentation of financial
statements
NatWest Group plc is incorporated in the
UK and registered in Scotland. The
financial statements are presented in the
functional currency, pounds sterling.
The audited financial statements include
these accounting policies, the
accompanying notes to the financial
statements on pages 307 to 378 and the
audited sections of the Risk and capital
management section on pages 171 to
277 which together from an integral part
of the primary financial statements.
The directors have prepared the 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 the financial statements are
approved (refer to the Report of the
directors) and in accordance with UK-
adopted International Accounting
Standards (IAS), and International
Financial Reporting Standards (IFRS) as
issued by the International
Accounting
Standards Board (IASB). The critical and
material accounting policies and related
judgements are set out below.
The financial statements are presented
on an historical cost basis except for
certain financial instruments which are
stated at fair value.
The effect of the amendments to IFRS
effective from 1 January 2024 on our
financial statements was immaterial.
We have applied the exception from the
accounting requirements for deferred
taxes in IAS 12 Income taxes in respect
of Pillar 2 income taxes issued by the
IASB in May 2023. Accordingly, we have
not recognised or disclosed information
about deferred tax assets and liabilities
related to Pillar 2 income taxes.
Our consolidated financial statements
incorporate the results of NatWest Group
plc and the entities it controls. Control
arises when we have the power to direct
the activities of an entity so as to affect
the return from the entity. Control is
assessed by reference to our ability to
enforce our will on the other entity,
typically through voting rights. The
consolidated financial statements are
prepared under consistent accounting
policies.
A subsidiary is included in the
consolidated financial statements at fair
value on acquisition from the date it is
controlled by us until the date we cease
to control it through a sale or a significant
change in circumstances.
Changes in our interest in a subsidiary
that do not result in us ceasing to control
that subsidiary are accounted for as
equity transactions.
We apply accounting for associates and
joint arrangements to entities where we
have significant influence, but not control,
over the operating and financial policies.
We assess significant influence by
reference to a presumption of voting
rights of more than 20%, but less than
50%, supplemented by a qualitative
assessment of substantive rights which
include representation at the Board of
Directors and significant exchange of
managerial personnel or technology
amongst others.
Investments in associates and joint
ventures are recorded upon initial
recognition at cost and increased or
decreased each period by the share of
the subsequent levels of profit or loss.
Other changes in equity are considered in
line with their nature.
The judgements and assumptions
involved in our accounting policies that
are considered by the Board to be the
most important to the portrayal of its
financial condition are noted below. The
use of estimates, assumptions or models
that differ from those adopted by us
would affect our reported results.
How Climate risk affects our
accounting judgements and estimates
Business planning
Key financial estimates are based on
management's latest five-year revenue
and cost forecasts. The outputs from this
forecast affect forward-looking
accounting estimates.
Measurement of deferred tax and
expected credit losses are highly sensitive
to reasonably possible changes in those
anticipated conditions. In 2024, our
scenario planning was enhanced by the
further integration of NatWest Group\u2019s
climate transition plan, including the
assessment of climate-related risks and
opportunities.
Our Climate transition plan includes an
assessment of:
\ue001
changes in products, services and
business operations to support
customer transition towards net
zero;
\ue001
financial impacts of supporting
customer transition, including
investment required. The linkage
between our financial plan and our
Climate transition plan will continue
to be developed and refreshed
annually as part of the financial
planning cycle;
\ue001
the climate impact of policies, using
the UK Climate Change Committee
(UK CCC) Balanced Net Zero (BNZ)
pathway scenario, aligned with the
UK\u2019s Sixth Carbon Budget. In
addition, we have used the credibility
ratings for sectoral policies provided
by the UK CCC 2024 Progress
Report, published in July, to the
Parliament to develop a BNZ
adjusted pathway to reflect
estimated time delays of these
policies.
There remains considerable uncertainty
regarding this policy response, including
the effect of wider geo-political
uncertainty on governmental ambitions
regarding climate transition and the
effect of decarbonisation on wider
economic growth, technology
development and customer behaviours.
\n\n\n\n\n\n\n\n\n\n\n\n
Information used in other accounting
\n
estimates
\n
We make use of reasonable and
\n
supportable information to make
\n
accounting judgements and estimates.
\n
This includes information about the
\n
observable effects of the physical and
\n
transition risks of climate change on the
\n
current creditworthiness of borrowers,
\n
asset values and market indicators. Many
\n
of the effects arising from climate change
\n
will be longer term in nature, with an
\n
inherent level of uncertainty, and have
\n
limited effect on accounting judgements
\n
and estimates for the current period.
\n
Some physical and transition risks can
\n
manifest in the shorter term. The
\n
following items represent the most
\n
significant effects:
\n
\ue001
The classification of financial
\n
instruments linked to climate, or
\n
other sustainability indicators.
\n
Consideration is given to whether
\n
the effect of climate-related terms
\n
prevent the instrument cashflows
\n
being solely payments of principal
\n
and interest.
\n
\ue001
The use of market indicators as
\n
inputs to fair value is assumed to
\n
include current information and
\n
knowledge regarding the effect of
\n
climate risk.
\n
Effect of climate change in the
\n
estimation of expected credit loss
\n
We are monitoring the effect of the
\n
physical and transition consequences of
\n
climate change on our experience of loan
\n
loss. We use available information
\n
regarding the effect of climate transition
\n
policy largely driven by carbon prices as
\n
an adjustment to macroeconomic factors
\n
that are used as inputs to the models
\n
that generate PD and LGD outcomes,
\n
which are key inputs to the ECL
\n
calculation. The determination of whether
\n
specific loss drivers and climate events
\n
generate specific losses is ongoing and is
\n
necessary to determine how sensitive
\n
changes in ECL could be to climate
\n
inputs.
\n
Future cashflows are discounted, so long-
\n
dated cashflows are less likely to affect
\n
current expectations on credit loss. Our
\n
assessment of sector-specific risks, and
\n
whether additional adjustments are
\n
required, includes expectations of the
\n
ability of those sectors to meet their
\n
financing needs in the market. Changes
\n
in credit stewardship and credit risk
\n
appetite that stem from climate transition
\npolicies may directly affect our positions.", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00211": { "value": "NatWest Group plc", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00208": { "value": "NatWest Group plc", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00205": { "value": "NatWest Group plc", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00213": { "value": "plc", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00206": { "value": "the UK", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00212": { "value": "UK", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00218": { "value": "The audited financial statements include
these accounting policies, the
accompanying notes to the financial
statements on pages 307 to 378 and the
audited sections of the Risk and capital
management section on pages 171 to
277 which together from an integral part
of the primary financial statements.
The directors have prepared the 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 the financial statements are
approved (refer to the Report of the
directors) and in accordance with UK-
adopted International Accounting
Standards (IAS), and International
Financial Reporting Standards (IFRS) as
issued by the International
Accounting
Standards Board (IASB). The critical and
material accounting policies and related
judgements are set out below.", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00209": { "value": "UK", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00730": { "value": "Our consolidated financial statements
incorporate the results of NatWest Group
plc and the entities it controls. Control
arises when we have the power to direct
the activities of an entity so as to affect
the return from the entity. Control is
assessed by reference to our ability to
enforce our will on the other entity,
typically through voting rights. The
consolidated financial statements are
prepared under consistent accounting
policies.
A subsidiary is included in the
consolidated financial statements at fair
value on acquisition from the date it is
controlled by us until the date we cease
to control it through a sale or a significant
change in circumstances.
Changes in our interest in a subsidiary
that do not result in us ceasing to control
that subsidiary are accounted for as
equity transactions.", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00723": { "value": "How Climate risk affects our
accounting judgements and estimates
Business planning
Key financial estimates are based on
management's latest five-year revenue
and cost forecasts. The outputs from this
forecast affect forward-looking
accounting estimates.
Measurement of deferred tax and
expected credit losses are highly sensitive
to reasonably possible changes in those
anticipated conditions. In 2024, our
scenario planning was enhanced by the
further integration of NatWest Group\u2019s
climate transition plan, including the
assessment of climate-related risks and
opportunities.
Our Climate transition plan includes an
assessment of:
\ue001
changes in products, services and
business operations to support
customer transition towards net
zero;
\ue001
financial impacts of supporting
customer transition, including
investment required. The linkage
between our financial plan and our
Climate transition plan will continue
to be developed and refreshed
annually as part of the financial
planning cycle;
\ue001
the climate impact of policies, using
the UK Climate Change Committee
(UK CCC) Balanced Net Zero (BNZ)
pathway scenario, aligned with the
UK\u2019s Sixth Carbon Budget. In
addition, we have used the credibility
ratings for sectoral policies provided
by the UK CCC 2024 Progress
Report, published in July, to the
Parliament to develop a BNZ
adjusted pathway to reflect
estimated time delays of these
policies.
There remains considerable uncertainty
regarding this policy response, including
the effect of wider geo-political
uncertainty on governmental ambitions
regarding climate transition and the
effect of decarbonisation on wider
economic growth, technology
development and customer behaviours.
\n\n\n\n\n\n\n\n\n\n\n\n
Information used in other accounting
\n
estimates
\n
We make use of reasonable and
\n
supportable information to make
\n
accounting judgements and estimates.
\n
This includes information about the
\n
observable effects of the physical and
\n
transition risks of climate change on the
\n
current creditworthiness of borrowers,
\n
asset values and market indicators. Many
\n
of the effects arising from climate change
\n
will be longer term in nature, with an
\n
inherent level of uncertainty, and have
\n
limited effect on accounting judgements
\n
and estimates for the current period.
\n
Some physical and transition risks can
\n
manifest in the shorter term. The
\n
following items represent the most
\n
significant effects:
\n
\ue001
The classification of financial
\n
instruments linked to climate, or
\n
other sustainability indicators.
\n
Consideration is given to whether
\n
the effect of climate-related terms
\n
prevent the instrument cashflows
\n
being solely payments of principal
\n
and interest.
\n
\ue001
The use of market indicators as
\n
inputs to fair value is assumed to
\n
include current information and
\n
knowledge regarding the effect of
\n
climate risk.
\n
Effect of climate change in the
\n
estimation of expected credit loss
\n
We are monitoring the effect of the
\n
physical and transition consequences of
\n
climate change on our experience of loan
\n
loss. We use available information
\n
regarding the effect of climate transition
\n
policy largely driven by carbon prices as
\n
an adjustment to macroeconomic factors
\n
that are used as inputs to the models
\n
that generate PD and LGD outcomes,
\n
which are key inputs to the ECL
\n
calculation. The determination of whether
\n
specific loss drivers and climate events
\n
generate specific losses is ongoing and is
\n
necessary to determine how sensitive
\n
changes in ECL could be to climate
\n
inputs.
\n
Future cashflows are discounted, so long-
\n
dated cashflows are less likely to affect
\n
current expectations on credit loss. Our
\n
assessment of sector-specific risks, and
\n
whether additional adjustments are
\n
required, includes expectations of the
\n
ability of those sectors to meet their
\n
financing needs in the market. Changes
\n
in credit stewardship and credit risk
\n
appetite that stem from climate transition
\n
policies may directly affect our positions.
\n
2. Critical accounting policies
\n
The judgements and assumptions involved in our accounting policies that are considered
\n
by the Board to be the most important to the portrayal of our financial condition are
\n
noted below. The use of estimates, assumptions or models that differ from those
\n
adopted by us would affect our reported results. Management\u2019s consideration of
\n
uncertainty is outlined in the relevant sections, including the ECL estimate in the Risk
\n
and capital management section.
\n
Information used for significant estimate
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0 \u00a0
Further
Policy
Judgement
Estimate
information
Deferred tax
Determination of whether
Our estimates are based
Note 7
\u00a0
sufficient sustainable
on the five-year revenue
\u00a0
\u00a0
taxable profits will be
and cost forecasts
\u00a0
\u00a0
generated in future years
(which include inherent
\u00a0
\u00a0
to recover the deferred tax
uncertainties).
\u00a0
\u00a0
asset.
\u00a0 \u00a0
Fair value \u2013
Classification of a fair value
Estimation of the fair
Note 10
financial
instrument as level 3,
value, where it is
\u00a0
instruments
where the valuation is
reasonably possible to
\u00a0
\u00a0
driven by unobservable
have alternative
\u00a0
\u00a0
inputs.
assumptions in
\u00a0
\u00a0 \u00a0
determining the FV.
\u00a0
Loan impairment
Definition of default against
ECL estimates contain a
Note 14
provisions
which to apply PD, LGD
number of measurement
\u00a0
\u00a0
and EAD models.
uncertainties (such as
\u00a0
\u00a0
Selection of multiple
the weighting of multiple
\u00a0
\u00a0
economic scenarios.
economic scenarios) and
\u00a0
\u00a0
Criteria for a significant
disclosures include
\u00a0
\u00a0
increase in credit risk.
sensitivities to show the
\u00a0
\u00a0
Identification of risks not
impact on other
\u00a0
\u00a0
captured by the models.
reasonably possible
\u00a0
\u00a0 \u00a0
scenarios.
\u00a0
\n
Changes in judgements and assumptions could result in a material adjustment to those
\nestimates in future reporting periods. ", "dimensions": { "concept": "ifrs-full:ExplanationOfAssumptionAboutFutureWithSignificantRiskOfResultingInMaterialAdjustments", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00724": { "value": "2. Critical accounting policies
The judgements and assumptions involved in our accounting policies that are considered
\n
by the Board to be the most important to the portrayal of our financial condition are
\n
noted below. The use of estimates, assumptions or models that differ from those
\n
adopted by us would affect our reported results. Management\u2019s consideration of
\n
uncertainty is outlined in the relevant sections, including the ECL estimate in the Risk
\n
and capital management section.
\n
Information used for significant estimate
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0 \u00a0
Further
Policy
Judgement
Estimate
information
Deferred tax
Determination of whether
Our estimates are based
Note 7
\u00a0
sufficient sustainable
on the five-year revenue
\u00a0
\u00a0
taxable profits will be
and cost forecasts
\u00a0
\u00a0
generated in future years
(which include inherent
\u00a0
\u00a0
to recover the deferred tax
uncertainties).
\u00a0
\u00a0
asset.
\u00a0 \u00a0
Fair value \u2013
Classification of a fair value
Estimation of the fair
Note 10
financial
instrument as level 3,
value, where it is
\u00a0
instruments
where the valuation is
reasonably possible to
\u00a0
\u00a0
driven by unobservable
have alternative
\u00a0
\u00a0
inputs.
assumptions in
\u00a0
\u00a0 \u00a0
determining the FV.
\u00a0
Loan impairment
Definition of default against
ECL estimates contain a
Note 14
provisions
which to apply PD, LGD
number of measurement
\u00a0
\u00a0
and EAD models.
uncertainties (such as
\u00a0
\u00a0
Selection of multiple
the weighting of multiple
\u00a0
\u00a0
economic scenarios.
economic scenarios) and
\u00a0
\u00a0
Criteria for a significant
disclosures include
\u00a0
\u00a0
increase in credit risk.
sensitivities to show the
\u00a0
\u00a0
Identification of risks not
impact on other
\u00a0
\u00a0
captured by the models.
reasonably possible
\u00a0
\u00a0 \u00a0
scenarios.
\u00a0
\n
Changes in judgements and assumptions could result in a material adjustment to those
estimates in future reporting periods.
2.1. Deferred tax
Deferred tax is the estimated tax
expected to be payable or recoverable in
respect of temporary differences
between the carrying amount of an asset
or liability for accounting purposes and
the carrying amount for tax purposes in
the future. Deferred tax liabilities are
generally recognised for all taxable
temporary differences and deferred tax
assets are recognised to the extent their
recovery is probable.
Deferred tax is calculated using tax rates
expected to apply in the periods when
the assets will be realised or the liabilities
settled, based on tax rates and laws
enacted, or substantively enacted, at the
balance sheet date.
Deferred tax asset recoverability is based
on the level of supporting eligible and
available deferred tax liabilities we have
and of our future taxable profits. These
future taxable profits are based on our
five-year revenue and cost forecasts and
the expectation of long-term economic
growth beyond this period. The five-year
forecast takes account of management\u2019s
current expectations of competitiveness
and profitability. The long-term growth
rate reflects external indicators which will
include market expectations on climate
risk. We do not consider any additional
adjustments to this indicator.
2.2. Fair value \u2013 financial instruments
We measure financial instruments at fair
value when they are classified as
mandatory fair value through profit or
loss; held-for-trading; designated fair
value through profit or loss and fair value
through other comprehensive income
and they are recognised in the financial
statements at fair value. All derivatives
are measured at fair value.
We manage some portfolios of financial
assets and financial liabilities based on
our net exposure to either market or
credit risk. In these cases, the fair value is
derived from the net risk exposure of that
portfolio with portfolio level adjustments
applied to incorporate bid-offer spreads,
counterparty credit risk, and funding
costs (refer to \u2018Valuation Adjustments\u2019).
Where the market for a financial
instrument is not active, fair value is
established using a valuation technique.
These valuation techniques involve a
degree of estimation, the extent of which
depends on the instrument\u2019s complexity
and the availability of market-based data.
The complexity and uncertainty in the
financial instrument\u2019s fair value is
categorised using the fair value
hierarchy.
The use of market indicators as inputs to
fair value is assumed to include current
information and knowledge regarding the
effect of climate risk.
2.3. Loan impairment provisions:
expected credit losses (ECL)
At each balance sheet date each financial
asset or portfolio of financial assets
measured at amortised cost or at fair
value through other comprehensive
income, issued financial guarantee and
loan commitment (other than those
classified as held for trading) is assessed
for impairment. Any change in
impairment is reported in the income
statement.
Loss allowances are forward-looking,
based on 12-month ECL where there has
not been a significant increase in credit
risk rating, otherwise allowances are
based on lifetime expected losses.
ECL is a probability-weighted estimate of
credit losses. The probability is
determined by the risk of default which is
applied to the cash flow estimates. In the
absence of a change in credit rating,
allowances are recognised when there is
a reduction in the net present value of
expected cash flows. Following a
significant increase in credit risk, ECL is
adjusted from 12 months to lifetime. This
will lead to a higher impairment charge.
The measurement of expected credit loss
considers the ability of borrowers to
make payments as they fall due. Future
cashflows are discounted, so long-dated
cashflows are less likely to affect current
expectations on credit loss. Our
assessment of sector specific risks, and
whether additional adjustments are
required, include expectations of the
ability of those sectors to meet their
financing needs in the market. Changes
in credit stewardship and credit risk
appetite that stem from climate transition
policies may directly affect our positions.
Judgement is exercised as follows:
\ue001
Non-modelled portfolios
\u2013 use a
standardised capital requirement
under Basel II. Under IFRS 9, they
have bespoke treatments for the
identification of significant increase in
credit risk. Benchmark PDs, EADs
and LGDs are reviewed annually for
appropriateness. The ECL calculation
is based on expected future cash
flows, which is typically applied at a
portfolio level.
\ue001
Multiple economic scenarios (MES)
\u2013
the central, or base, scenario is most
critical to the ECL calculation,
independent of the method used to
generate a range of alternative
outcomes and their probabilities.
\ue001
Significant increase in credit risk
\u2013
IFRS 9 requires that at each reporting
date, an entity shall assess whether
the credit risk on an account has
increased significantly since initial
recognition. Part of this assessment
requires a comparison to be made
between the current lifetime PD (i.e.
the current probability of default over
the remaining lifetime) with the
equivalent lifetime PD as determined
at the date of initial recognition.
On restructuring where a financial asset
is not derecognised, the revised cash
flows are used in re-estimating the credit
loss. Where restructuring causes
derecognition of the original financial
asset, the fair value of the replacement
asset is used as the closing cash flow of
the original asset.
Where in the course of the orderly
realisation of a loan, it is exchanged for
equity shares or property, the exchange
is accounted for as the sale of the loan
and the acquisition of equity securities or
investment property. Where our acquired
interest is in equity shares, relevant
policies for control, associates and joint
ventures apply.
Impaired financial assets are written off
and therefore derecognised from the
balance sheet when we conclude that
there is no longer any realistic prospect
of recovery of part, or all, of the loan. For
financial assets that are individually
assessed for impairment, the timing of
the write-off is determined on a case-by-
case basis.
Such financial assets are reviewed
regularly and write-off will be prompted
by bankruptcy, insolvency, re-negotiation,
and similar events
The typical time frames from initial
impairment to write-off for our
collectively assessed portfolios are:
\ue001
Retail mortgages: write-off usually
occurs within five years, or earlier,
when an account is closed, but can
be longer where the customer
engages constructively;
\ue001
Credit cards: the irrecoverable
amount is typically written off after
twelve arrears cycles or at four years
post default any remaining amounts
outstanding are written off;
\ue001
Overdrafts and other unsecured
loans: write-off occurs within six
years;
\ue001
Commercial loans: write-offs are
determined in the light of individual
circumstances; and uncollateralised
impaired business loans are generally
written off within five years.4. Future accounting
developments
International Financial Reporting
Standards
Effective 1 January 2026
\ue001
Amendments to the Classification and
Measurement of Financial
Instruments (Amendments to IFRS 9
and IFRS 7 \u2013 Issued May 2024)
Effective 1 January 2027
\ue001
P
resentation and Disclosures in
Financial Statements (IFRS 18 \u2013
Issued April 2024)
\ue001
Subsidiaries without Public
Accountability (IFRS 19 \u2013 Issued May
2024)
We are assessing the effect of adopting
these accounting developments on our
financial statements.Judgement: tax contingencies
NatWest Group\u2019s corporate income tax charge and its provisions for corporate income taxes necessarily involve a degree of estimation and judgement. The tax treatment of some
transactions is uncertain and tax computations are yet to be agreed with the relevant tax authorities. NatWest Group recognises anticipated tax liabilities based on all available
evidence and, where appropriate, in the light of external advice. Any difference between the final outcome and the amounts provided will affect current and deferred income tax
charges in the period when the matter is resolved.Critical accounting policy: Deferred tax
NatWest Group has recognised a deferred tax asset of \u00a31,876 million (2023 - \u00a31,894
million) and a deferred tax liability of \u00a399 million (2023 - \u00a3141 million). These include
amounts recognised in respect of UK and overseas tax losses of \u00a31,106 million (2023 -
\u00a31,019 million).
The main UK corporation tax increased from 19% to 25%, and the UK banking
surcharge decreased from 8% to 3%, from 1 April 2023.
Judgement
\u2013
NatWest Group has considered the carrying value of deferred tax assets
and concluded that, based on management\u2019s estimates, sufficient sustainable taxable
profits will be generated in future years to recover recognised deferred tax assets.
Estimates
\u2013
For entities with mature business models and a longer track record of
profitability and stable earnings, these estimates are partly based on forecast
performance beyond the horizon for management\u2019s detailed plans. They have regard to
inherent uncertainties. The deferred tax assets in NWM Plc and UBIDAC are supported
substantially by future reversing taxable temporary differences on which deferred tax
liabilities are recognised at 31 December 2024. Judgement: classification of financial assets
Classification of financial assets between amortised cost and fair
value through other comprehensive income requires a degree of
judgement in respect of business models and contractual
cashflows.
\ue001
The business model criteria is assessed at a portfolio level to
determine whether assets are classified as held to collect or
held to collect and sell. Information that is considered in
determining the applicable business model includes: the
portfolio\u2019s policies and objectives; how the performance and
risks of the portfolio are managed, evaluated and reported
to management; and the frequency, volume and timing of
sales in prior periods, sales expectation for future periods,
and the reasons for sales.
\ue001
The contractual cash flow characteristics of financial assets
are assessed with reference to whether the cash flows
represent solely payments of principal and interest (SPPI). A
level of judgement is made in assessing terms that could
change the contractual cash flows so that it would not meet
the condition for SPPI, including contingent and leverage
features,
non-recourse arrangements and features that
could modify the time value of money.
For accounting policy information refer to Accounting policies
3.8, 3.9 and 3.11.Critical accounting policy: Fair value \u2013 financial
instruments
\n
Financial instruments classified as mandatory fair value through
\n
profit or loss; held-for-trading; designated fair value through
\n
profit or loss; and fair value through other comprehensive
\n
income are recognised in the financial statements at fair value.
\n
All derivatives are measured at fair value.
\n
Fair value is the price that would be received to sell an asset or
\n
paid to transfer a liability in an orderly transaction between
\n
market participants at the measurement date. A fair value
\n
measurement considers the characteristics of the asset or
\n
liability and the assumptions that a market participant would
\n
consider when pricing the asset or liability.
\n
NatWest Group manages some portfolios of financial assets
\n
and financial liabilities based on its net exposure to either
\n
market or credit risk. In these cases, the fair value is derived
\n
from the net risk exposure of that portfolio with portfolio level
\n
adjustments applied to incorporate bid-offer spreads,
\n
counterparty credit risk, and funding costs (refer to \u2018Valuation
\n
Adjustments\u2019).
\n
Where the market for a financial instrument is not active, fair
\n
value is established using a valuation technique. These
\n
valuation techniques involve a degree of estimation, the extent
\n
of which depends on the instrument\u2019s complexity and the
\n
availability of market-based data. The complexity and
\n
uncertainty in the financial instrument\u2019s fair value is categorised
\n
using the fair value hierarchy.
\n
For accounting policy information refer to Accounting policies
\n2.2, 3.8 and 3.11.Key areas of judgement
Over the years the business has
\n
simplified, with most products classified
\n
as level 1 or 2 of the fair value hierarchy.
\n
However, the diverse range of products
\n
historically traded by NatWest Group
\n
means some products remain classified
\n
as level 3. Level 3 indicates a significant
\n
level of pricing uncertainty, where expert
\n
judgement is used. As such, extra
\n
disclosures are required in respect of
\n
level 3 instruments.
\n
In general, the degree of expert
\n
judgement used and hence valuation
\n
uncertainty depends on the degree of
\n
liquidity of an instrument or input.
\n
Where markets are liquid, little judgement
\n
is required. However, when the
\n
information regarding the liquidity in a
\n
particular market is not clear, a
\n
judgement may need to be made. For
\n
example, for an equity traded on an
\n
exchange, daily volumes of trading can
\n
be seen, but for an OTC derivative,
\n
assessing the liquidity of the market with
\n
no central exchange is more challenging.
\n
A key related matter is where a market
\n
moves from liquid to illiquid or vice versa.
\n
Where this movement is considered
\n
temporary, the fair value level is not
\n
changed. For example, if there is little
\n
market trading in a product on a
\n
reporting date but at the previous
\n
reporting date and during the intervening
\n
period the market has been liquid. In this
\n
case, the instrument will continue to be
\n
classified at the same level in the
\n
hierarchy. This is to provide consistency
\n
so that transfers between levels are
\n
driven by genuine changes in market
\n
liquidity and do not reflect short term or
\n
seasonal effects. Material movements
\n
between levels are reviewed quarterly by
\n
the business and IPV.
\n
The breadth and depth of the IPV data
\n
allows for a rules-based quality
\n
assessment to be made of market
\n
activity, liquidity, and pricing uncertainty,
\n
which assists with the process of
\n
allocation to an appropriate level. Where
\n
suitable independent pricing information
\n
is not readily available, the quality
\n
assessment will result in the instrument
\nbeing assessed as level 3.Critical accounting policy: Loan impairment provisions
Accounting policy 2.3 sets out how the expected loss approach is applied. At 31 December 2024, impairment provisions amounted to \u00a33,425 million (2023 - \u00a33,645 million). A loan is
impaired when there is objective evidence that the cash flows will not occur in the manner expected when the loan was advanced. Such evidence includes changes in the credit rating
of a borrower, the failure to make payments in accordance with the loan agreement, significant reduction in the value of any security, breach of limits or covenants, and observable
data about relevant macroeconomic measures.
The impairment loss is the difference between the carrying value of the loan and the present value of estimated future cash flows at the loan's original effective interest rate.
The measurement of credit impairment under the IFRS expected loss model depends on management\u2019s assessment of any potential deterioration in the creditworthiness of the
borrower, its modelling of expected performance and the application of economic forecasts. All three elements require judgements that are potentially significant to the estimate of
impairment losses. For further information and sensitivity analysis, refer to Risk and capital management \u2013 Measurement uncertainty and ECL sensitivity analysis section. 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.
For accounting policy information refer to Accounting policy 3.12.
Background information on all material provisions is given in Note 25
. ", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00697": { "value": "2.1. Deferred tax
Deferred tax is the estimated tax
expected to be payable or recoverable in
respect of temporary differences
between the carrying amount of an asset
or liability for accounting purposes and
the carrying amount for tax purposes in
the future. Deferred tax liabilities are
generally recognised for all taxable
temporary differences and deferred tax
assets are recognised to the extent their
recovery is probable.
Deferred tax is calculated using tax rates
expected to apply in the periods when
the assets will be realised or the liabilities
settled, based on tax rates and laws
enacted, or substantively enacted, at the
balance sheet date.
Deferred tax asset recoverability is based
on the level of supporting eligible and
available deferred tax liabilities we have
and of our future taxable profits. These
future taxable profits are based on our
five-year revenue and cost forecasts and
the expectation of long-term economic
growth beyond this period. The five-year
forecast takes account of management\u2019s
current expectations of competitiveness
and profitability. The long-term growth
rate reflects external indicators which will
include market expectations on climate
risk. We do not consider any additional
adjustments to this indicator.3.7. Tax
Tax encompassing current tax and
deferred tax is recognised in the income
statement except when taxable items are
recognised in other comprehensive
income or equity. Tax consequences
arising from servicing financial
instruments classified as equity are
recognised in the income statement.
Accounting for taxes is judgemental and
carries a degree of uncertainty because
tax law is subject to interpretation, which
might be questioned by the relevant tax
authority. We recognise the most likely
current and deferred tax liability or asset,
assessed for uncertainty using consistent
judgements and estimates. Current and
deferred tax assets are only recognised
where their recovery is deemed probable,
and current and deferred tax liabilities
are recognised at the amount that
represents the best estimate of the
probable outcome having regard to their
acceptance by the tax authorities.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00696": { "value": "2.1. Deferred tax
Deferred tax is the estimated tax
expected to be payable or recoverable in
respect of temporary differences
between the carrying amount of an asset
or liability for accounting purposes and
the carrying amount for tax purposes in
the future. Deferred tax liabilities are
generally recognised for all taxable
temporary differences and deferred tax
assets are recognised to the extent their
recovery is probable.
Deferred tax is calculated using tax rates
expected to apply in the periods when
the assets will be realised or the liabilities
settled, based on tax rates and laws
enacted, or substantively enacted, at the
balance sheet date.
Deferred tax asset recoverability is based
on the level of supporting eligible and
available deferred tax liabilities we have
and of our future taxable profits. These
future taxable profits are based on our
five-year revenue and cost forecasts and
the expectation of long-term economic
growth beyond this period. The five-year
forecast takes account of management\u2019s
current expectations of competitiveness
and profitability. The long-term growth
rate reflects external indicators which will
include market expectations on climate
risk. We do not consider any additional
adjustments to this indicator.3.7. Tax
Tax encompassing current tax and
deferred tax is recognised in the income
statement except when taxable items are
recognised in other comprehensive
income or equity. Tax consequences
arising from servicing financial
instruments classified as equity are
recognised in the income statement.
Accounting for taxes is judgemental and
carries a degree of uncertainty because
tax law is subject to interpretation, which
might be questioned by the relevant tax
authority. We recognise the most likely
current and deferred tax liability or asset,
assessed for uncertainty using consistent
judgements and estimates. Current and
deferred tax assets are only recognised
where their recovery is deemed probable,
and current and deferred tax liabilities
are recognised at the amount that
represents the best estimate of the
probable outcome having regard to their
acceptance by the tax authorities.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00238": { "value": "2.1. Deferred tax
Deferred tax is the estimated tax
expected to be payable or recoverable in
respect of temporary differences
between the carrying amount of an asset
or liability for accounting purposes and
the carrying amount for tax purposes in
the future. Deferred tax liabilities are
generally recognised for all taxable
temporary differences and deferred tax
assets are recognised to the extent their
recovery is probable.
Deferred tax is calculated using tax rates
expected to apply in the periods when
the assets will be realised or the liabilities
settled, based on tax rates and laws
enacted, or substantively enacted, at the
balance sheet date.
Deferred tax asset recoverability is based
on the level of supporting eligible and
available deferred tax liabilities we have
and of our future taxable profits. These
future taxable profits are based on our
five-year revenue and cost forecasts and
the expectation of long-term economic
growth beyond this period. The five-year
forecast takes account of management\u2019s
current expectations of competitiveness
and profitability. The long-term growth
rate reflects external indicators which will
include market expectations on climate
risk. We do not consider any additional
adjustments to this indicator.3.7. Tax
Tax encompassing current tax and
deferred tax is recognised in the income
statement except when taxable items are
recognised in other comprehensive
income or equity. Tax consequences
arising from servicing financial
instruments classified as equity are
recognised in the income statement.
Accounting for taxes is judgemental and
carries a degree of uncertainty because
tax law is subject to interpretation, which
might be questioned by the relevant tax
authority. We recognise the most likely
current and deferred tax liability or asset,
assessed for uncertainty using consistent
judgements and estimates. Current and
deferred tax assets are only recognised
where their recovery is deemed probable,
and current and deferred tax liabilities
are recognised at the amount that
represents the best estimate of the
probable outcome having regard to their
acceptance by the tax authorities.7 Tax
NatWest Group\u2019s corporate income tax charge for the period is set out below, together with a reconciliation to the expected tax charge calculated using the UK standard corporation
tax rate and details of the NatWest Group\u2019s deferred tax balances.
For accounting policy information refer to Accounting policies 2.1 and 3.7.
Analysis of the tax charge for the year
The tax charge comprises current and deferred tax in respect of profits and losses recognised or originating in the income statement. Tax on items originating outside
the income statement is charged to other comprehensive income or direct to equity (as appropriate) and is therefore not reflected in the table below.
Current tax is tax payable or recoverable in respect of the taxable profit or loss for the year and any adjustments to tax payable in prior years. Deferred tax is
explained on page 325.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Current tax
\u00a0 \u00a0 \u00a0
Charge for the year
(1,415)
(1,373)
(1,611)
(Under)/over provision in respect of prior years
(145)
(123)
100
\u00a0
(1,560)
(1,496)
(1,511)
Deferred tax
\u00a0 \u00a0 \u00a0
(Charge)/credit for the year
(343)
(281)
47
UK tax rate change impact
-
-
(10)
Net increase in the carrying value of deferred tax assets in respect of UK, RoI and Netherlands losses
428
385
267
Over/(under) provision in respect of prior years
10
(42)
(68)
Tax charge for the year
(1,465)
(1,434)
(1,275)
\n
Factors affecting the tax charge for the year
Taxable profits differ from profits reported in the income statement as certain amounts of income and expense may not be taxable or deductible. In addition, taxable profits may
reflect items that have been included outside the income statement (for instance, in other comprehensive income) or adjustments that are made for tax purposes only.
Current tax for the year ended 31 December 2024 is based on rates of 25% for the standard rate of UK corporation tax and 3% for the UK banking surcharge.
The expected tax charge for the year is calculated by applying the standard UK corporation tax rate of 25% (2023 \u2013 23.5% and 2022 \u2013 19%) to the Operating profit or loss before tax
in the income statement.
The actual tax charge differs from the expected tax charge as follows:
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Expected tax charge
(1,549)
(1,452)
(975)
Losses and temporary differences in year where no deferred tax asset recognised
(18)
(56)
(118)
Foreign profits and losses taxed at other rates
37
10
(62)
Items not allowed for tax:
\u00a0\u00a0\u00a0
- losses on disposals and write-downs
(22)
(63)
(10)
- UK bank levy
(31)
(27)
(20)
- regulatory and legal actions
(47)
(1)
(7)
- other disallowable items
(61)
(57)
(51)
Non-taxable items:
\u00a0\u00a0\u00a0
- foreign exchange recycling on UBIDAC capital reduction
-
114
-
- RPI-related uplift on index linked gilts
18
6
67
- other non-taxable items
11
20
29
Taxable foreign exchange movements
7
9
(19)
Unrecognised losses brought forward and utilised
33
27
6
Net increase/(decrease) in the carrying value of deferred tax assets in respect of:
\u00a0\u00a0\u00a0
- UK losses
(2)
378
371
272
- RoI losses
-
(1)
(5)
- Netherlands losses
50
15
-
Banking surcharge
(169)
(236)
(447)
Pillar 2 top-up tax
(20)
-
-
Tax on paid-in equity dividends
53
52
43
UK tax rate change impact
-
-
(10)
Adjustments in respect of prior years
(1, 2)
(135)
(165)
32
Actual tax charge
(1,465)
(1,434)
(1,275)
\n
(1)
Prior year tax adjustments incorporate refinements to tax computations made on submission and agreement with the tax authorities and adjustments to provisions in respect of uncertain tax positions.
(2)
Includes a net \u00a361 million benefit from UK group relief and loss relief claims at higher tax rates (refer to the Deferred Tax section below for details of the recent changes in UK tax rates).
Global minimum top-up tax
The Group is subject to the global minimum top-up tax under Pillar Two tax legislation. The top-up tax relates to the Group\u2019s operations in Jersey, Guernsey, Isle of Man and Gibraltar
where the statutory tax rate is below 15%. The Group recognised a current tax expense of \u00a320 million related to the top-up tax (2023 - \u00a30 million) which is levied on NatWest Group
plc.
The Group has applied a temporary mandatory relief from deferred tax accounting for the impacts of the top-up tax and accounts for it as a current tax when it is incurred.
In October 2024, Jersey enacted new tax legislation to implement a domestic minimum top-up tax, which is effective from 1 January 2025. As a result, from 2025, The Royal Bank of
Scotland International Limited will be liable for the top-up tax in relation to its operations instead of NatWest Group plc.
Judgement: tax contingencies
NatWest Group\u2019s corporate income tax charge and its provisions for corporate income taxes necessarily involve a degree of estimation and judgement. The tax treatment of some
transactions is uncertain and tax computations are yet to be agreed with the relevant tax authorities. NatWest Group recognises anticipated tax liabilities based on all available
evidence and, where appropriate, in the light of external advice. Any difference between the final outcome and the amounts provided will affect current and deferred income tax
charges in the period when the matter is resolved.
\n\n\n\n\n\n\n\n\n\n\n\n\n
Deferred tax
\n
Deferred tax is the tax expected to be payable or recoverable in respect of temporary differences where the carrying amount of an asset or liability differs for
\n
accounting and tax purposes. Deferred tax liabilities reflect the expected amount of tax payable in the future on these temporary differences. Deferred tax assets
\n
reflect the expected amount of tax recoverable in the future on these differences.
\n
The net deferred tax asset recognised by the NatWest Group is shown below, together with details of the accounting judgements and tax rates that have been used to
\n
calculate the deferred tax. Details are also provided of any deferred tax assets or liabilities that have not been recognised on the balance sheet.
\n
Analysis of deferred tax
\n\n \n
2024
2023
\u00a3m
\u00a3m
Deferred tax asset
1,876
1,894
Deferred tax liability
(99)
(141)
Net deferred tax asset
1,777
1,753
\n\n \n
Accelerated
capital
Expense
Financial
Tax losses
Pension
allowances
provisions
instruments (1)
carried forward
Other
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2023
(23)
75
82
805
952
60
1,951
(Charge)/credit to income statement:
- continuing operations
(1)
1
(21)
(16)
67
32
62
- discontinued operations
-
-
-
-
-
-
-
Credit/(charge) to other comprehensive income
8
-
-
(249)
-
(17)
(258)
Currency translation and other adjustments
-
-
-
(2)
-
-
(2)
At 1 January 2024
(16)
76
61
538
1,019
75
1,753
Credit/(charge) to income statement:
- continuing operations
3
85
16
(57)
90
(42)
95
- discontinued operations
-
-
-
-
-
-
-
(Charge)/credit to other comprehensive income
(15)
-
-
(77)
-
26
(66)
Currency translation and other adjustments
(1)
-
-
(1)
(3)
-
(5)
At 31 December 2024
(29)
161
77
403
1,106
59
1,777
\n
(1)
The in-year movement predominantly relates to cash flow hedges.
Deferred tax assets in respect of carried forward tax losses are recognised if the losses
can be used to offset probable future taxable profits after taking into account the
expected reversal of other temporary differences. Recognised deferred tax assets in
respect of tax losses are analysed further below.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
UK tax losses carried forward
\u00a0 \u00a0
- NWM Plc
-
-
- NWB Plc
333
362
- RBS plc
685
597
Total
1,018
959
Overseas tax losses carried forward
\u00a0 \u00a0
- UBIDAC
5
5
- NWM N.V.
83
55
\u00a0
1,106
1,019
\n
Critical accounting policy: Deferred tax
NatWest Group has recognised a deferred tax asset of \u00a31,876 million (2023 - \u00a31,894
million) and a deferred tax liability of \u00a399 million (2023 - \u00a3141 million). These include
amounts recognised in respect of UK and overseas tax losses of \u00a31,106 million (2023 -
\u00a31,019 million).
The main UK corporation tax increased from 19% to 25%, and the UK banking
surcharge decreased from 8% to 3%, from 1 April 2023.
Judgement
\u2013
NatWest Group has considered the carrying value of deferred tax assets
and concluded that, based on management\u2019s estimates, sufficient sustainable taxable
profits will be generated in future years to recover recognised deferred tax assets.
Estimates
\u2013
For entities with mature business models and a longer track record of
profitability and stable earnings, these estimates are partly based on forecast
performance beyond the horizon for management\u2019s detailed plans. They have regard to
inherent uncertainties. The deferred tax assets in NWM Plc and UBIDAC are supported
substantially by future reversing taxable temporary differences on which deferred tax
liabilities are recognised at 31 December 2024.
UK tax losses
Under UK tax rules, tax losses can be carried forward indefinitely. As the recognised tax
losses in NatWest Group arose prior to 1 April 2015, credit in future periods is given
against 25% of profits at the main rate of UK corporation tax, excluding the Banking
Surcharge rate introduced by The Finance (No. 2) Act 2015.
NWM Plc
\u2013
No deferred tax assets have been recognised at 31 December 2024 (2023 -
nil). The basis of recognition in NWM plc is by way of future reversing taxable temporary
differences on which deferred tax liabilities are recognised at 31 December 2024. Losses
of \u00a35,520 million have not been recognised in the deferred tax balance at 31 December
2024.
NWB Plc
\u2013
A deferred tax asset of \u00a3333 million (2023 - \u00a3362 million) has been
recognised in respect of losses of \u00a31,333 million of total losses of \u00a32,195 million carried
forward at 31 December 2024. The losses arose principally as a result of significant
impairment and conduct charges between 2009 and 2012 during challenging economic
conditions in the UK banking sector. NWB Plc returned to tax profitability during 2015,
and based on a seven year recovery period, expects the deferred tax asset to be utilised
against future taxable profits by the end of 2031.
RBS plc
\u2013
A deferred tax asset of \u00a3685 million (2023 - \u00a3597 million) has been recognised
in respect of losses of \u00a32,740 million of total losses of \u00a32,948 million carried forward at
31 December 2024. The losses were transferred from NatWest Markets Plc as a
consequence of the ring fencing regulations. Based on a 7-year recovery period, RBS plc
expects the deferred tax asset to be utilised against future taxable profits by the end of
2031.
Overseas tax losses
UBIDAC
\u2013
A deferred tax asset of \u00a35 million (2023 - \u00a35 million) has been recognised in
respect of losses of \u00a340 million, and is now entirely supported by way of future reversing
taxable temporary differences on which deferred tax liabilities are recognised at 31
December 2024.
NatWest Markets N.V. (NWM N.V.)
\u2013
A deferred tax asset of \u00a383 million (2023 - \u00a355
million) has been recognised in respect of losses of \u00a3322 million of total losses of \u00a32,308
million carried forward at 31 December 2024. NWM N.V. Group considers it to be
probable, based on its 5-year budget forecast, that future taxable profits will be available
against which the tax losses and tax credits can be partially utilised. The tax losses and
the tax credits have no expiry date.
Unrecognised deferred tax
Deferred tax assets of \u00a34,960 million (2023 - \u00a35,168 million; 2022 - \u00a35,534 million) have
not been recognised in respect of tax losses and other deductible temporary differences
carried forward of \u00a323,238 million (2023 - \u00a324,438 million; 2022 - \u00a325,742 million) in
jurisdictions where doubt exists over the availability of future taxable profits. Of these
losses and other deductible temporary differences, \u00a34,535 million expire after 10 years.
The balance of tax losses and other deductible temporary differences carried forward
has no expiry date.
Deferred tax liabilities of \u00a3269 million (2023 - \u00a3256 million; 2022 - \u00a3257 million) on
aggregate underlying temporary differences of \u00a31,241 million (2023 - \u00a31,005 million;
2022 - \u00a31,010 million) have not been recognised in respect of retained earnings of
overseas subsidiaries and held-over gains on the incorporation of certain overseas
branches. Retained earnings of overseas subsidiaries are expected to be reinvested
indefinitely or remitted to the UK free from further taxation. No taxation is expected to
arise in the foreseeable future in respect of held-over gains on which deferred tax is not
recognised. UK tax legislation largely exempts from UK tax overseas dividends received. 17 Other assets
Other assets are non-financial assets and reflect a grouping of assets that are not large enough to present separately on the balance sheet.
.
\n \n
2024
2023
\u00a3m
\u00a3m
Interests in associates
(1)
690
668
Property, plant and equipment
(2)
3,967
4,227
Pension schemes in net surplus (Note 5)
190
201
Tax recoverable
7
49
Deferred tax (Note 7)
1,876
1,894
Assets of disposal groups
64
902
Other
1,602
1,721
Other assets
8,396
9,662
20 Other liabilities
Other liabilities are amounts due to third parties that are not financial liabilities but including lease liabilities held at amortised cost. Other liabilities represent, for
example, amounts due for goods and services that have been received but not invoiced,
tax due to HMRC, and retirement benefit liabilities. Liabilities which have a
level of uncertainty regarding their timing or the future cost to settle them are included in other liabilities as provisions for liabilities and charges.
2024
2023
Other liabilities
\u00a3m
\u00a3m
Lease liabilities
630
670
Provisions for liabilities and charges
864
990
Retirement benefit liabilities (Note 5)
80
99
Accruals
1,353
1,411
Deferred income
394
402
Current tax
263
332
Deferred tax (Note 7)
99
141
Other liabilities
(1)
918
1,157
Total
4,601
5,202
(1)
Other liabilities include liabilities of disposal groups of nil (2023 - \u00a33 million).
Provisions for liabilities and charges
Litigation and
Commitments
Customer redress
other regulatory
Property
and guarantees
Other (1)
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
486
156
99
78
171
990
Expected credit loss impairment release
-
-
-
(23)
-
(23)
Currency translation and other movements
(1)
-
(1)
-
(3)
(5)
Charge to income statement
194
30
47
-
301
572
Release to income statement
(137)
(23)
(36)
-
(46)
(242)
Provisions utilised
(122)
(35)
(19)
-
(252)
(428)
At 31 December 2024
420
128
90
55
171
864
(1)
Other materially comprises provisions for restructuring costs and provision for Bank of England Levy.
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.
For accounting policy information refer to Accounting policy 3.12.
Background information on all material provisions is given in Note 25
.", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00237": { "value": "2.1. Deferred tax
Deferred tax is the estimated tax
expected to be payable or recoverable in
respect of temporary differences
between the carrying amount of an asset
or liability for accounting purposes and
the carrying amount for tax purposes in
the future. Deferred tax liabilities are
generally recognised for all taxable
temporary differences and deferred tax
assets are recognised to the extent their
recovery is probable.
Deferred tax is calculated using tax rates
expected to apply in the periods when
the assets will be realised or the liabilities
settled, based on tax rates and laws
enacted, or substantively enacted, at the
balance sheet date.
Deferred tax asset recoverability is based
on the level of supporting eligible and
available deferred tax liabilities we have
and of our future taxable profits. These
future taxable profits are based on our
five-year revenue and cost forecasts and
the expectation of long-term economic
growth beyond this period. The five-year
forecast takes account of management\u2019s
current expectations of competitiveness
and profitability. The long-term growth
rate reflects external indicators which will
include market expectations on climate
risk. We do not consider any additional
adjustments to this indicator. 3.7. Tax
Tax encompassing current tax and
deferred tax is recognised in the income
statement except when taxable items are
recognised in other comprehensive
income or equity. Tax consequences
arising from servicing financial
instruments classified as equity are
recognised in the income statement.
Accounting for taxes is judgemental and
carries a degree of uncertainty because
tax law is subject to interpretation, which
might be questioned by the relevant tax
authority. We recognise the most likely
current and deferred tax liability or asset,
assessed for uncertainty using consistent
judgements and estimates. Current and
deferred tax assets are only recognised
where their recovery is deemed probable,
and current and deferred tax liabilities
are recognised at the amount that
represents the best estimate of the
probable outcome having regard to their
acceptance by the tax authorities.7 Tax
NatWest Group\u2019s corporate income tax charge for the period is set out below, together with a reconciliation to the expected tax charge calculated using the UK standard corporation
tax rate and details of the NatWest Group\u2019s deferred tax balances.
For accounting policy information refer to Accounting policies 2.1 and 3.7.
Analysis of the tax charge for the year
The tax charge comprises current and deferred tax in respect of profits and losses recognised or originating in the income statement. Tax on items originating outside
the income statement is charged to other comprehensive income or direct to equity (as appropriate) and is therefore not reflected in the table below.
Current tax is tax payable or recoverable in respect of the taxable profit or loss for the year and any adjustments to tax payable in prior years. Deferred tax is
explained on page 325.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Current tax
\u00a0 \u00a0 \u00a0
Charge for the year
(1,415)
(1,373)
(1,611)
(Under)/over provision in respect of prior years
(145)
(123)
100
\u00a0
(1,560)
(1,496)
(1,511)
Deferred tax
\u00a0 \u00a0 \u00a0
(Charge)/credit for the year
(343)
(281)
47
UK tax rate change impact
-
-
(10)
Net increase in the carrying value of deferred tax assets in respect of UK, RoI and Netherlands losses
428
385
267
Over/(under) provision in respect of prior years
10
(42)
(68)
Tax charge for the year
(1,465)
(1,434)
(1,275)
\n
Factors affecting the tax charge for the year
Taxable profits differ from profits reported in the income statement as certain amounts of income and expense may not be taxable or deductible. In addition, taxable profits may
reflect items that have been included outside the income statement (for instance, in other comprehensive income) or adjustments that are made for tax purposes only.
Current tax for the year ended 31 December 2024 is based on rates of 25% for the standard rate of UK corporation tax and 3% for the UK banking surcharge.
The expected tax charge for the year is calculated by applying the standard UK corporation tax rate of 25% (2023 \u2013 23.5% and 2022 \u2013 19%) to the Operating profit or loss before tax
in the income statement.
The actual tax charge differs from the expected tax charge as follows:
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Expected tax charge
(1,549)
(1,452)
(975)
Losses and temporary differences in year where no deferred tax asset recognised
(18)
(56)
(118)
Foreign profits and losses taxed at other rates
37
10
(62)
Items not allowed for tax:
\u00a0\u00a0\u00a0
- losses on disposals and write-downs
(22)
(63)
(10)
- UK bank levy
(31)
(27)
(20)
- regulatory and legal actions
(47)
(1)
(7)
- other disallowable items
(61)
(57)
(51)
Non-taxable items:
\u00a0\u00a0\u00a0
- foreign exchange recycling on UBIDAC capital reduction
-
114
-
- RPI-related uplift on index linked gilts
18
6
67
- other non-taxable items
11
20
29
Taxable foreign exchange movements
7
9
(19)
Unrecognised losses brought forward and utilised
33
27
6
Net increase/(decrease) in the carrying value of deferred tax assets in respect of:
\u00a0\u00a0\u00a0
- UK losses
(2)
378
371
272
- RoI losses
-
(1)
(5)
- Netherlands losses
50
15
-
Banking surcharge
(169)
(236)
(447)
Pillar 2 top-up tax
(20)
-
-
Tax on paid-in equity dividends
53
52
43
UK tax rate change impact
-
-
(10)
Adjustments in respect of prior years
(1, 2)
(135)
(165)
32
Actual tax charge
(1,465)
(1,434)
(1,275)
\n
(1)
Prior year tax adjustments incorporate refinements to tax computations made on submission and agreement with the tax authorities and adjustments to provisions in respect of uncertain tax positions.
(2)
Includes a net \u00a361 million benefit from UK group relief and loss relief claims at higher tax rates (refer to the Deferred Tax section below for details of the recent changes in UK tax rates).
Global minimum top-up tax
The Group is subject to the global minimum top-up tax under Pillar Two tax legislation. The top-up tax relates to the Group\u2019s operations in Jersey, Guernsey, Isle of Man and Gibraltar
where the statutory tax rate is below 15%. The Group recognised a current tax expense of \u00a320 million related to the top-up tax (2023 - \u00a30 million) which is levied on NatWest Group
plc.
The Group has applied a temporary mandatory relief from deferred tax accounting for the impacts of the top-up tax and accounts for it as a current tax when it is incurred.
In October 2024, Jersey enacted new tax legislation to implement a domestic minimum top-up tax, which is effective from 1 January 2025. As a result, from 2025, The Royal Bank of
Scotland International Limited will be liable for the top-up tax in relation to its operations instead of NatWest Group plc.
Judgement: tax contingencies
NatWest Group\u2019s corporate income tax charge and its provisions for corporate income taxes necessarily involve a degree of estimation and judgement. The tax treatment of some
transactions is uncertain and tax computations are yet to be agreed with the relevant tax authorities. NatWest Group recognises anticipated tax liabilities based on all available
evidence and, where appropriate, in the light of external advice. Any difference between the final outcome and the amounts provided will affect current and deferred income tax
charges in the period when the matter is resolved.
Deferred tax
\n
Deferred tax is the tax expected to be payable or recoverable in respect of temporary differences where the carrying amount of an asset or liability differs for
\n
accounting and tax purposes. Deferred tax liabilities reflect the expected amount of tax payable in the future on these temporary differences. Deferred tax assets
\n
reflect the expected amount of tax recoverable in the future on these differences.
\n
The net deferred tax asset recognised by the NatWest Group is shown below, together with details of the accounting judgements and tax rates that have been used to
\n
calculate the deferred tax. Details are also provided of any deferred tax assets or liabilities that have not been recognised on the balance sheet.
\n
Analysis of deferred tax
\n\n \n
2024
2023
\u00a3m
\u00a3m
Deferred tax asset
1,876
1,894
Deferred tax liability
(99)
(141)
Net deferred tax asset
1,777
1,753
\n\n \n
Accelerated
capital
Expense
Financial
Tax losses
Pension
allowances
provisions
instruments (1)
carried forward
Other
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2023
(23)
75
82
805
952
60
1,951
(Charge)/credit to income statement:
- continuing operations
(1)
1
(21)
(16)
67
32
62
- discontinued operations
-
-
-
-
-
-
-
Credit/(charge) to other comprehensive income
8
-
-
(249)
-
(17)
(258)
Currency translation and other adjustments
-
-
-
(2)
-
-
(2)
At 1 January 2024
(16)
76
61
538
1,019
75
1,753
Credit/(charge) to income statement:
- continuing operations
3
85
16
(57)
90
(42)
95
- discontinued operations
-
-
-
-
-
-
-
(Charge)/credit to other comprehensive income
(15)
-
-
(77)
-
26
(66)
Currency translation and other adjustments
(1)
-
-
(1)
(3)
-
(5)
At 31 December 2024
(29)
161
77
403
1,106
59
1,777
\n
(1)
The in-year movement predominantly relates to cash flow hedges.
Deferred tax assets in respect of carried forward tax losses are recognised if the losses
can be used to offset probable future taxable profits after taking into account the
expected reversal of other temporary differences. Recognised deferred tax assets in
respect of tax losses are analysed further below.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
UK tax losses carried forward
\u00a0 \u00a0
- NWM Plc
-
-
- NWB Plc
333
362
- RBS plc
685
597
Total
1,018
959
Overseas tax losses carried forward
\u00a0 \u00a0
- UBIDAC
5
5
- NWM N.V.
83
55
\u00a0
1,106
1,019
\n
Critical accounting policy: Deferred tax
NatWest Group has recognised a deferred tax asset of \u00a31,876 million (2023 - \u00a31,894
million) and a deferred tax liability of \u00a399 million (2023 - \u00a3141 million). These include
amounts recognised in respect of UK and overseas tax losses of \u00a31,106 million (2023 -
\u00a31,019 million).
The main UK corporation tax increased from 19% to 25%, and the UK banking
surcharge decreased from 8% to 3%, from 1 April 2023.
Judgement
\u2013
NatWest Group has considered the carrying value of deferred tax assets
and concluded that, based on management\u2019s estimates, sufficient sustainable taxable
profits will be generated in future years to recover recognised deferred tax assets.
Estimates
\u2013
For entities with mature business models and a longer track record of
profitability and stable earnings, these estimates are partly based on forecast
performance beyond the horizon for management\u2019s detailed plans. They have regard to
inherent uncertainties. The deferred tax assets in NWM Plc and UBIDAC are supported
substantially by future reversing taxable temporary differences on which deferred tax
liabilities are recognised at 31 December 2024.
UK tax losses
Under UK tax rules, tax losses can be carried forward indefinitely. As the recognised tax
losses in NatWest Group arose prior to 1 April 2015, credit in future periods is given
against 25% of profits at the main rate of UK corporation tax, excluding the Banking
Surcharge rate introduced by The Finance (No. 2) Act 2015.
NWM Plc
\u2013
No deferred tax assets have been recognised at 31 December 2024 (2023 -
nil). The basis of recognition in NWM plc is by way of future reversing taxable temporary
differences on which deferred tax liabilities are recognised at 31 December 2024. Losses
of \u00a35,520 million have not been recognised in the deferred tax balance at 31 December
2024.
NWB Plc
\u2013
A deferred tax asset of \u00a3333 million (2023 - \u00a3362 million) has been
recognised in respect of losses of \u00a31,333 million of total losses of \u00a32,195 million carried
forward at 31 December 2024. The losses arose principally as a result of significant
impairment and conduct charges between 2009 and 2012 during challenging economic
conditions in the UK banking sector. NWB Plc returned to tax profitability during 2015,
and based on a seven year recovery period, expects the deferred tax asset to be utilised
against future taxable profits by the end of 2031.
RBS plc
\u2013
A deferred tax asset of \u00a3685 million (2023 - \u00a3597 million) has been recognised
in respect of losses of \u00a32,740 million of total losses of \u00a32,948 million carried forward at
31 December 2024. The losses were transferred from NatWest Markets Plc as a
consequence of the ring fencing regulations. Based on a 7-year recovery period, RBS plc
expects the deferred tax asset to be utilised against future taxable profits by the end of
2031.
Overseas tax losses
UBIDAC
\u2013
A deferred tax asset of \u00a35 million (2023 - \u00a35 million) has been recognised in
respect of losses of \u00a340 million, and is now entirely supported by way of future reversing
taxable temporary differences on which deferred tax liabilities are recognised at 31
December 2024.
NatWest Markets N.V. (NWM N.V.)
\u2013
A deferred tax asset of \u00a383 million (2023 - \u00a355
million) has been recognised in respect of losses of \u00a3322 million of total losses of \u00a32,308
million carried forward at 31 December 2024. NWM N.V. Group considers it to be
probable, based on its 5-year budget forecast, that future taxable profits will be available
against which the tax losses and tax credits can be partially utilised. The tax losses and
the tax credits have no expiry date.
Unrecognised deferred tax
Deferred tax assets of \u00a34,960 million (2023 - \u00a35,168 million; 2022 - \u00a35,534 million) have
not been recognised in respect of tax losses and other deductible temporary differences
carried forward of \u00a323,238 million (2023 - \u00a324,438 million; 2022 - \u00a325,742 million) in
jurisdictions where doubt exists over the availability of future taxable profits. Of these
losses and other deductible temporary differences, \u00a34,535 million expire after 10 years.
The balance of tax losses and other deductible temporary differences carried forward
has no expiry date.
Deferred tax liabilities of \u00a3269 million (2023 - \u00a3256 million; 2022 - \u00a3257 million) on
aggregate underlying temporary differences of \u00a31,241 million (2023 - \u00a31,005 million;
2022 - \u00a31,010 million) have not been recognised in respect of retained earnings of
overseas subsidiaries and held-over gains on the incorporation of certain overseas
branches. Retained earnings of overseas subsidiaries are expected to be reinvested
indefinitely or remitted to the UK free from further taxation. No taxation is expected to
arise in the foreseeable future in respect of held-over gains on which deferred tax is not
recognised. UK tax legislation largely exempts from UK tax overseas dividends received.17 Other assets
Other assets are non-financial assets and reflect a grouping of assets that are not large enough to present separately on the balance sheet.
.
\n \n
2024
2023
\u00a3m
\u00a3m
Interests in associates
(1)
690
668
Property, plant and equipment
(2)
3,967
4,227
Pension schemes in net surplus (Note 5)
190
201
Tax recoverable
7
49
Deferred tax (Note 7)
1,876
1,894
Assets of disposal groups
64
902
Other
1,602
1,721
Other assets
8,396
9,662
(1)
Includes interest in Business Growth Fund \u00a3678 million (2023 - \u00a3658 million).
(2)
The estimated useful lives of NatWest Group\u2019s property, plant and equipment are: freehold buildings and long leasehold 50 years, short leaseholds for unexpired period of lease, property adaptation costs 10 to 15 years, computer equipment up to 5 years
and other equipment 4 to 15 years.20 Other liabilities
Other liabilities are amounts due to third parties that are not financial liabilities but including lease liabilities held at amortised cost. Other liabilities represent, for
example, amounts due for goods and services that have been received but not invoiced,
tax due to HMRC, and retirement benefit liabilities. Liabilities which have a
level of uncertainty regarding their timing or the future cost to settle them are included in other liabilities as provisions for liabilities and charges.
2024
2023
Other liabilities
\u00a3m
\u00a3m
Lease liabilities
630
670
Provisions for liabilities and charges
864
990
Retirement benefit liabilities (Note 5)
80
99
Accruals
1,353
1,411
Deferred income
394
402
Current tax
263
332
Deferred tax (Note 7)
99
141
Other liabilities
(1)
918
1,157
Total
4,601
5,202
(1)
Other liabilities include liabilities of disposal groups of nil (2023 - \u00a33 million).
Provisions for liabilities and charges
Litigation and
Commitments
Customer redress
other regulatory
Property
and guarantees
Other (1)
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
486
156
99
78
171
990
Expected credit loss impairment release
-
-
-
(23)
-
(23)
Currency translation and other movements
(1)
-
(1)
-
(3)
(5)
Charge to income statement
194
30
47
-
301
572
Release to income statement
(137)
(23)
(36)
-
(46)
(242)
Provisions utilised
(122)
(35)
(19)
-
(252)
(428)
At 31 December 2024
420
128
90
55
171
864
(1)
Other materially comprises provisions for restructuring costs and provision for Bank of England Levy.
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.
For accounting policy information refer to Accounting policy 3.12.
Background information on all material provisions is given in Note 25
.", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00701": { "value": "2.2. Fair value \u2013 financial instruments
We measure financial instruments at fair
value when they are classified as
mandatory fair value through profit or
loss; held-for-trading; designated fair
value through profit or loss and fair value
through other comprehensive income
and they are recognised in the financial
statements at fair value. All derivatives
are measured at fair value.
We manage some portfolios of financial
assets and financial liabilities based on
our net exposure to either market or
credit risk. In these cases, the fair value is
derived from the net risk exposure of that
portfolio with portfolio level adjustments
applied to incorporate bid-offer spreads,
counterparty credit risk, and funding
costs (refer to \u2018Valuation Adjustments\u2019).
Where the market for a financial
instrument is not active, fair value is
established using a valuation technique.
These valuation techniques involve a
degree of estimation, the extent of which
depends on the instrument\u2019s complexity
and the availability of market-based data.
The complexity and uncertainty in the
financial instrument\u2019s fair value is
categorised using the fair value
hierarchy.
The use of market indicators as inputs to
fair value is assumed to include current
information and knowledge regarding the
effect of climate risk.3.8. Financial instrumentsFinancial liabilities are classified into one
of following measurement categories:
\ue001
amortised cost measured at cost
using the effective interest rate
method;
\ue001
held for trading measured at fair
value and changes in fair value
reported in income statement; or
\ue001
designated at fair value through profit
or loss measured at fair value and
changes in fair value reported in the
income statement except changes in
fair value attributable to the credit
risk component recognised in other
comprehensive income when no
accounting mismatch occurs.
3.9. Netting
Financial assets and financial liabilities are
offset, and the net amount presented on
the balance sheet when, and only when,
we currently have a legally enforceable
right to set off the recognised amounts
and we intend either to settle on a net
basis or to realise the asset and settle the
liability simultaneously. We are party to a
number of arrangements, including
master netting agreements, that give us
the right to offset financial assets and
financial liabilities, but where we do not
intend to settle the amounts net or
simultaneously, the assets and liabilities
concerned are presented separately on
the balance sheet.
3.10. Capital instruments
We classify a financial instrument that we
issue as a financial liability if it is a
contractual obligation to deliver cash or
another financial asset, or to exchange
financial assets or financial liabilities on
potentially unfavourable terms and as
equity if we evidence a residual interest in
our assets after the deduction of
liabilities. Incremental costs and related
tax that are directly attributable to an
equity transaction are deducted from
equity.
The consideration for any ordinary
shares of NatWest Group plc purchased
by us (known as treasury shares or own
shares held) is deducted from retained
earnings. On the cancellation of treasury
shares their nominal value is removed
from retained earnings and a
consequential amount recognised in
capital redemption reserve in compliance
with the Companies Act 2006.
On the sale or re-issue of treasury shares
the consideration received and related
tax are credited to equity, net of any
directly attributable incremental costs.
3.11. Derivatives and hedging
Derivatives are reported on the balance
sheet at fair value.
We use derivatives as part of our trading
activities, to manage our own risk such
as interest rate, foreign exchange, or
credit risk or in certain customer
transactions. Not all derivatives used to
manage risk are in hedge accounting
relationships (an IFRS method to reduce
accounting mismatch from changes in
the fair value of the derivatives reported
in the income statement).
Gains and losses arising from changes in
the fair value of derivatives that are not
in hedge relationships are recognised in
Income from trading activities unless
those derivatives are managed together
with financial instruments designated at
fair value; these gains and losses are
included in Other operating income.
Hedge accounting
Hedge accounting relationships are
designated and documented at inception
in line with the requirements of IAS 39
Financial instruments \u2013 Recognition and
Measurement.
The documentation identifies the hedged
item, the hedging instrument and details
of the risk that is being hedged and the
way in which effectiveness will be
assessed at inception and during the
period of the hedge. When designating a
hedging relationship, we consider: the
economic relationship between the
hedged item (including the risk being
hedged) and the hedging instrument; the
nature of the risk; the risk management
objective and strategy for undertaking
the hedge; and the appropriateness of
the method that will be used to assess
hedge effectiveness.
Designated hedging relationships must be
expected to be highly effective both on a
prospective and retrospective basis. This
is assessed using regression techniques
which model the degree of offsetting
between the changes in fair value or
cash flows attributable to the hedged risk
and the changes in fair value of the
designated hedging derivatives.
Ineffectiveness is measured based on
actual levels of offsetting and recognised
in the income statement.
We enter into three types of hedge
accounting relationships.
Fair value hedge
- the gain or loss on the
hedging instrument and the hedged item
attributable to the hedged risk is
recognised in the income statement.
Where the hedged item is measured at
amortised cost, the balance sheet
amount of the hedged item is also
adjusted.
Cash flow hedge
- the effective portion of
the designated hedge relationship is
recognised in other comprehensive
income and the ineffective portion in the
income statement. When the hedged
item (forecasted cash flows) results in the
recognition of a financial asset or financial
liability, the cumulative gain or loss is
reclassified from equity to the income
statement in the same periods in which
the hedged forecasted cash flows affect
the income statement.
Hedge of net investment in a foreign
operation
-
in the hedge of a net
investment in a foreign operation, the
effective portion of the designated hedge
relationship is recognised in other
comprehensive income. Any ineffective
portion is recognised in profit or loss.
Non-derivative financial liabilities as well
as derivatives may be designated as a
hedging instrument in a net investment
hedge.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the
hedge no longer meets the criteria for
hedge accounting i.e. the hedge is not
highly effective in offsetting changes in
fair value or cash flows attributable to the
hedged risk, consistent with the
documented risk management strategy;
the hedging instrument expires or is sold,
terminated or exercised; or if hedge
designation is revoked.
For fair value hedging any cumulative
adjustment is amortised to the income
statement over the life of the hedged
item. Where the hedged item is no longer
on the balance sheet the adjustment to
the hedged item is reported in the
income statement. For cash flow hedging
the cumulative unrealised gain or loss is
reclassified from equity to the income
statement when the hedged cash flows
occur or, if the forecast transaction
results in the recognition of a financial
asset or financial liability, when the
hedged forecast cash flows affect the
income statement. Where a forecast
transaction is no longer expected to
occur, the cumulative unrealised gain or
loss is reclassified from equity to the
income statement immediately.
For net investment hedging on disposal
or partial disposal of a foreign operation,
the amount accumulated in equity is
reclassified from equity to the income
statement.Critical accounting policy: Fair value \u2013 financial
instruments
\n
Financial instruments classified as mandatory fair value through
\n
profit or loss; held-for-trading; designated fair value through
\n
profit or loss; and fair value through other comprehensive
\n
income are recognised in the financial statements at fair value.
\n
All derivatives are measured at fair value.
\n
Fair value is the price that would be received to sell an asset or
\n
paid to transfer a liability in an orderly transaction between
\n
market participants at the measurement date. A fair value
\n
measurement considers the characteristics of the asset or
\n
liability and the assumptions that a market participant would
\n
consider when pricing the asset or liability.
\n
NatWest Group manages some portfolios of financial assets
\n
and financial liabilities based on its net exposure to either
\n
market or credit risk. In these cases, the fair value is derived
\n
from the net risk exposure of that portfolio with portfolio level
\n
adjustments applied to incorporate bid-offer spreads,
\n
counterparty credit risk, and funding costs (refer to \u2018Valuation
\n
Adjustments\u2019).
\n
Where the market for a financial instrument is not active, fair
\n
value is established using a valuation technique. These
\n
valuation techniques involve a degree of estimation, the extent
\n
of which depends on the instrument\u2019s complexity and the
\n
availability of market-based data. The complexity and
\n
uncertainty in the financial instrument\u2019s fair value is categorised
\n
using the fair value hierarchy.
\n
For accounting policy information refer to Accounting policies
\n2.2, 3.8 and 3.11.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00702": { "value": "2.2. Fair value \u2013 financial instruments
We measure financial instruments at fair
value when they are classified as
mandatory fair value through profit or
loss; held-for-trading; designated fair
value through profit or loss and fair value
through other comprehensive income
and they are recognised in the financial
statements at fair value. All derivatives
are measured at fair value.
We manage some portfolios of financial
assets and financial liabilities based on
our net exposure to either market or
credit risk. In these cases, the fair value is
derived from the net risk exposure of that
portfolio with portfolio level adjustments
applied to incorporate bid-offer spreads,
counterparty credit risk, and funding
costs (refer to \u2018Valuation Adjustments\u2019).
Where the market for a financial
instrument is not active, fair value is
established using a valuation technique.
These valuation techniques involve a
degree of estimation, the extent of which
depends on the instrument\u2019s complexity
and the availability of market-based data.
The complexity and uncertainty in the
financial instrument\u2019s fair value is
categorised using the fair value
hierarchy.
The use of market indicators as inputs to
fair value is assumed to include current
information and knowledge regarding the
effect of climate risk.3.8. Financial instruments
Financial instruments are measured at
fair value on initial recognition on the
balance sheet.
Monetary financial assets are classified
into one of the following subsequent
measurement categories (subject to
business model assessment and review of
contractual cash flow for the purposes of
sole payments of principal and interest
where applicable):
\ue001
amortised cost
measured at cost
using the effective interest rate
method, less any impairment
allowance;
\ue001
fair value through other
comprehensive income (FVOCI)
measured at fair value, using the
effective interest rate method and
changes in fair value through other
comprehensive income;
\ue001
mandatory fair value through profit or
loss (MFVTPL)
measured at fair value
and changes in fair value reported in
the income statement; or
\ue001
designated at fair value through profit
or loss (DFV)
measured at fair value
and changes in fair value reported in
the income statement.
Classification by business model reflects
how we manage our financial assets to
generate cash flows. A business model
assessment helps to ascertain the
measurement approach depending on
whether cash flows result from holding
financial assets to collect the contractual
cash flows, from selling those financial
assets, or both.
Business model assessment of assets is
made at portfolio level, being the level at
which they are managed to achieve a
predefined business objective. This is
expected to result in the most consistent
classification of assets because it aligns
with the stated objectives for the
portfolio, its risk management, manager\u2019s
remuneration and the ability to monitor
sales of assets from a portfolio. When a
significant change to our business is
communicated to external parties, we
reassess our business model for
managing those financial assets. We
reclassify financial assets if we have a
significant change to the business model.
A reclassification is applied prospectively
from the reclassification date.
The contractual terms of a financial
asset; any leverage features; prepayment
and extension terms; and discounts or
penalties to interest rates that are part of
meeting environmental, social and
governance targets as well as other
contingent and leverage features, non-
recourse arrangements and features that
could modify the timing and/or amount of
the contractual cash flows that might
reset the effective rate of interest; are
considered in determining whether cash
flows are solely payments of principal and
interest.
Certain financial assets may be
designated at fair value through profit or
loss (DFV) upon initial recognition if such
designation eliminates, or significantly
reduces, accounting mismatch.
Equity shares are measured at fair value
through profit or loss unless specifically
elected as at fair value through other
comprehensive income (FVOCI).
Upon disposal, the cumulative gains or
losses in fair value through other
comprehensive income reserve are
recycled to the income statement for
monetary assets and for non-monetary
assets (equity shares) the cumulative
gains or losses are transferred directly to
retained earnings.
Regular way purchases and sales of
financial assets classified as amortised
cost are recognised on the settlement
date; all other regular way transactions in
financial assets are recognised on the
trade date.
Financial liabilities are classified into one
of following measurement categories:
\ue001
amortised cost measured at cost
using the effective interest rate
method;
\ue001
held for trading measured at fair
value and changes in fair value
reported in income statement; or
\ue001
designated at fair value through profit
or loss measured at fair value and
changes in fair value reported in the
income statement except changes in
fair value attributable to the credit
risk component recognised in other
comprehensive income when no
accounting mismatch occurs.3.11. Derivatives and hedging
Derivatives are reported on the balance
sheet at fair value.
We use derivatives as part of our trading
activities, to manage our own risk such
as interest rate, foreign exchange, or
credit risk or in certain customer
transactions. Not all derivatives used to
manage risk are in hedge accounting
relationships (an IFRS method to reduce
accounting mismatch from changes in
the fair value of the derivatives reported
in the income statement).
Gains and losses arising from changes in
the fair value of derivatives that are not
in hedge relationships are recognised in
Income from trading activities unless
those derivatives are managed together
with financial instruments designated at
fair value; these gains and losses are
included in Other operating income.
Hedge accounting
Hedge accounting relationships are
designated and documented at inception
in line with the requirements of IAS 39
Financial instruments \u2013 Recognition and
Measurement.
The documentation identifies the hedged
item, the hedging instrument and details
of the risk that is being hedged and the
way in which effectiveness will be
assessed at inception and during the
period of the hedge. When designating a
hedging relationship, we consider: the
economic relationship between the
hedged item (including the risk being
hedged) and the hedging instrument; the
nature of the risk; the risk management
objective and strategy for undertaking
the hedge; and the appropriateness of
the method that will be used to assess
hedge effectiveness.
Designated hedging relationships must be
expected to be highly effective both on a
prospective and retrospective basis. This
is assessed using regression techniques
which model the degree of offsetting
between the changes in fair value or
cash flows attributable to the hedged risk
and the changes in fair value of the
designated hedging derivatives.
Ineffectiveness is measured based on
actual levels of offsetting and recognised
in the income statement.
We enter into three types of hedge
accounting relationships.
Fair value hedge
- the gain or loss on the
hedging instrument and the hedged item
attributable to the hedged risk is
recognised in the income statement.
Where the hedged item is measured at
amortised cost, the balance sheet
amount of the hedged item is also
adjusted.
Cash flow hedge
- the effective portion of
the designated hedge relationship is
recognised in other comprehensive
income and the ineffective portion in the
income statement. When the hedged
item (forecasted cash flows) results in the
recognition of a financial asset or financial
liability, the cumulative gain or loss is
reclassified from equity to the income
statement in the same periods in which
the hedged forecasted cash flows affect
the income statement.
Hedge of net investment in a foreign
operation
-
in the hedge of a net
investment in a foreign operation, the
effective portion of the designated hedge
relationship is recognised in other
comprehensive income. Any ineffective
portion is recognised in profit or loss.
Non-derivative financial liabilities as well
as derivatives may be designated as a
hedging instrument in a net investment
hedge.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the
hedge no longer meets the criteria for
hedge accounting i.e. the hedge is not
highly effective in offsetting changes in
fair value or cash flows attributable to the
hedged risk, consistent with the
documented risk management strategy;
the hedging instrument expires or is sold,
terminated or exercised; or if hedge
designation is revoked.
For fair value hedging any cumulative
adjustment is amortised to the income
statement over the life of the hedged
item. Where the hedged item is no longer
on the balance sheet the adjustment to
the hedged item is reported in the
income statement. For cash flow hedging
the cumulative unrealised gain or loss is
reclassified from equity to the income
statement when the hedged cash flows
occur or, if the forecast transaction
results in the recognition of a financial
asset or financial liability, when the
hedged forecast cash flows affect the
income statement. Where a forecast
transaction is no longer expected to
occur, the cumulative unrealised gain or
loss is reclassified from equity to the
income statement immediately.
For net investment hedging on disposal
or partial disposal of a foreign operation,
the amount accumulated in equity is
reclassified from equity to the income
statement.9 Financial instruments - classification
Financial instruments are contracts that give rise to a financial asset of one entity and a corresponding financial liability or equity instrument of a counterparty entity,
such as cash, derivatives, loans, deposits and settlement balances. This note presents financial instruments classified in accordance with IFRS 9 \u2013 Financial Instruments.
Judgement: classification of financial assets
Classification of financial assets between amortised cost and fair
value through other comprehensive income requires a degree of
judgement in respect of business models and contractual
cashflows.
\ue001
The business model criteria is assessed at a portfolio level to
determine whether assets are classified as held to collect or
held to collect and sell. Information that is considered in
determining the applicable business model includes: the
portfolio\u2019s policies and objectives; how the performance and
risks of the portfolio are managed, evaluated and reported
to management; and the frequency, volume and timing of
sales in prior periods, sales expectation for future periods,
and the reasons for sales.
\ue001
The contractual cash flow characteristics of financial assets
are assessed with reference to whether the cash flows
represent solely payments of principal and interest (SPPI). A
level of judgement is made in assessing terms that could
change the contractual cash flows so that it would not meet
the condition for SPPI, including contingent and leverage
features,
non-recourse arrangements and features that
could modify the time value of money.
For accounting policy information refer to Accounting policies
3.8, 3.9 and 3.11.
The following tables analyse financial assets and liabilities in accordance with the categories of financial
instruments in IFRS 9.
\u00a0 \u00a0 \u00a0 \u00a0\n \n
Amortised
Other
MFVTPL
DFV
FVOCI
cost
assets
Total
Assets
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cash and balances at central banks
92,994
92,994
Trading assets
48,917
48,917
Derivatives
(1)
78,406
78,406
Settlement balances
2,085
2,085
Loans to bank - amortised cost
(2)
6,030
6,030
Loans to customers - amortised cost
(3)
400,326
400,326
Other financial assets
798
5
37,843
24,597
63,243
Intangible assets
7,588
7,588
Other assets
(4)
8,396
8,396
31 December 2024
128,121
5
37,843
526,032
15,984
707,985
Cash and balances at central banks
104,262
104,262
Trading assets
45,551
45,551
Derivatives
(1)
78,904
78,904
Settlement balances
7,231
7,231
Loans to bank - amortised cost
(2)
6,914
6,914
Loans to customers - amortised cost
(3)
381,433
381,433
Other financial assets
703
5
28,699
21,695
51,102
Intangible assets
7,614
7,614
Other assets
(4)
9,662
9,662
31 December 2023
125,158
5
28,699
521,535
17,276
692,673
\n
For the notes to this table refer to the following page.
\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n
Amortised
Other
Held-for-trading
DFV
cost
liabilities
Total
Liabilities
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bank deposits
(5)
31,452
31,452
Customer deposits
433,490
433,490
Settlement balances
1,729
1,729
Trading liabilities
54,714
54,714
Derivatives
(1)
72,082
72,082
Other financial liabilities
(6)
3,548
57,539
61,087
Subordinated liabilities
234
5,902
6,136
Notes in circulation
3,316
3,316
Other liabilities
(7)
684
3,917
4,601
31 December 2024
126,796
3,782
534,112
3,917
668,607
Bank deposits
(5)
22,190
22,190
Customer deposits
431,377
431,377
Settlement balances
6,645
6,645
Trading liabilities
53,636
53,636
Derivatives
(1)
72,395
72,395
Other financial liabilities
(6)
2,888
52,201
55,089
Subordinated liabilities
237
5,477
5,714
Notes in circulation
3,237
3,237
Other liabilities
(7)
748
4,454
5,202
31 December 2023
126,031
3,125
521,875
4,454
655,485
\n
(1)
Includes net hedging derivatives assets of \u00a3118 million (2023 - \u00a3114 million)
\n
and net hedging derivatives liabilities of \u00a3464 million (2023 - \u00a3270 million).
\n
(2)
Includes items in the course of collection from other banks of \u00a359 million (2023
\n
- \u00a3255 million).
\n
(3)
Includes finance lease receivables of \u00a38,998 million (2023 - \u00a38,731 million).
\n
(4)
Includes assets of disposal groups held at FVTPL of nil (2023 - \u00a3841 million).
\n
The portfolio is classified as level 3 in the fair value hierarchy.
\n
(5)
Includes items in the course of transmission to other banks of \u00a3136 million
\n
(2023 - \u00a392 million).
\n
(6)
The carrying amount of customer deposits designated at fair value through
\n
profit or loss is materially the same as the principal amount for both periods.
\n
No amounts have been recognised in the profit or loss for changes in credit
\n
risk associated with these liabilities as the changes are immaterial both during
\n
the period and cumulatively.
\n
(7)
Includes lease liabilities of \u00a3630 million (2023 - \u00a3670 million), held at amortised
\n
cost.
We originate loans that include features that change the contractual cash flows based on the borrower meeting certain contractually specified environmental, social and governance
(ESG) targets. These are known as ESG-linked, or sustainability-linked, loans. As part of the terms of these loans, the contractual interest rate is reduced or increased if the borrower
meets, or fails to meet, specific targets linked to the activity of the borrower, for example reducing carbon emissions, increasing the level of diversity at Board level, or achieving a
sustainable supply chain. ESG features are first assessed to ascertain whether the adjustment to the contractual cash flows results in a de minimis exposure to risks or volatility in
those contractual cash flows. If this is the case the classification of the loan is not affected. If the effect of the ESG feature is assessed as being more than de minimis, we apply
judgement to ensure that the ESG features do not generate compensation for risks that are not in line with a basic lending arrangement. This includes, amongst other aspects, a
review of the consistency of the ESG targets with the asset or activity of the borrower, and consideration of the targets within our risk appetite. Some of these loans are an integral
part of our climate and sustainable funding and financing target disclosed on page 13.
The table below analyses financial assets forming a component of ESG-linked loans and other products with contractual terms that could change the timing or amount of cash flows.
This is based on balance sheet values as at 31 December and the maximum impact of the potential margin changes on these over a 12 month period.
\u00a0 \u00a0
2024
\u00a0
2023
\u00a0 \u00a0
Positive impact on
Negative impact on
\u00a0
\u00a0
Carrying value
product margin
product margin
Carrying value
\u00a0
\u00a3bn
bps
bps
\u00a3bn
Sustainability-linked loans
6.9
3.1
4.0
6.5
Other products
20.2
-
-
16.1
Lending subject to performance triggers
27.1
\u00a0 \u00a0
22.6
\n
Additional information on finance lease receivables
The following table shows the reconciliation of undiscounted finance lease receivables to net investment in finance leases which are presented under Loans to customers-amortised
cost on the balance sheet.
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Amount receivable under finance leases
\u00a0 \u00a0
Within 1 year
3,493
3,340
1 to 2 years
2,499
2,358
2 to 3 years
1,612
1,625
3 to 4 years
842
900
4 to 5 years
464
388
After 5 years
1,043
1,079
Total lease payments
9,953
9,690
Unguaranteed residual values
150
169
Future drawdowns
(12)
(12)
Unearned income
(1,001)
(1,025)
Present value of lease payments
9,090
8,822
Impairments
(92)
(91)
Net investment in finance leases
8,998
8,731
Financial instruments \u2013 financial assets and liabilities that can be offset
The tables below present information on financial assets and financial liabilities that are offset on the balance sheet under IFRS or subject to enforceable master netting agreements
together with financial collateral received or given.
\n\n \u00a0\n \n
Instruments which can be offset
Potential for offset not recognised by IFRS
Effect of master
Net amount after
Instruments
netting and similar
Cash
Securities
netting agreements and
outside netting
Balance sheet
Gross
IFRS offset
Balance sheet
agreements
collateral
collateral
effect of related collateral
agreements
total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative assets
96,624
(18,746)
77,878
(61,883)
(10,005)
(4,072)
1,918
528
78,406
Derivative liabilities
92,620
(21,027)
71,593
(61,883)
(5,801)
(896)
3,013
489
72,082
Net position
(1)
4,004
2,281
6,285
-
(4,204)
(3,176)
(1,095)
39
6,324
Trading reverse repos
42,261
(15,174)
27,087
(1,469)
-
(25,406)
212
40
27,127
Trading repos
45,033
(15,174)
29,859
(1,469)
-
(28,390)
-
703
30,562
Net position
(2,772)
-
(2,772)
-
-
2,984
212
(663)
(3,435)
Non trading reverse repos
45,600
(8,709)
36,891
(80)
-
(36,811)
-
-
36,891
Non trading repos
22,288
(8,709)
13,579
(80)
-
(13,499)
-
-
13,579
Net position
23,312
-
23,312
-
-
(23,312)
-
-
23,312
2023
Derivative assets
99,023
(20,597)
78,426
(60,355)
(12,284)
(3,408)
2,379
478
78,904
Derivative liabilities
95,734
(23,869)
71,865
(60,355)
(6,788)
(1,663)
3,059
530
72,395
Net position
(1)
3,289
3,272
6,561
-
(5,496)
(1,745)
(680)
(52)
6,509
Trading reverse repos
39,573
(16,257)
23,316
(664)
-
(22,461)
191
378
23,694
Trading repos
42,442
(16,257)
26,185
(664)
-
(25,520)
1
717
26,902
Net position
(2,869)
-
(2,869)
-
-
3,059
190
(339)
(3,208)
Non trading reverse repos
37,477
(9,646)
27,831
(5)
-
(27,826)
-
80
27,911
Non trading repos
23,605
(9,646)
13,959
(5)
-
(13,954)
-
3
13,962
Net position
13,872
-
13,872
-
-
(13,872)
-
77
13,949
\n
(1)
Net IFRS offset balance of \u00a32,281 million (2023 - \u00a33,272 million) relates to variation margin netting reflected on other balance sheet lines.
10 Financial instruments - valuation
\n
Financial instruments recognised at fair value are revalued using techniques that can include observable inputs (pricing information that is readily available in the
\n
market, for example UK Government securities), and unobservable inputs (pricing information that is not readily available, for example unlisted securities). Gains
\n
and losses are recognised in the income statement and statement of comprehensive income as appropriate.
This note presents information on the valuation of
\n
financial instruments.
\n
The table below provides an overview of the various sections contained within the note.
\n
Critical accounting policy: Fair value \u2013 financial
\n
instruments
\n
Financial instruments classified as mandatory fair value through
\n
profit or loss; held-for-trading; designated fair value through
\n
profit or loss; and fair value through other comprehensive
\n
income are recognised in the financial statements at fair value.
\n
All derivatives are measured at fair value.
\n
Fair value is the price that would be received to sell an asset or
\n
paid to transfer a liability in an orderly transaction between
\n
market participants at the measurement date. A fair value
\n
measurement considers the characteristics of the asset or
\n
liability and the assumptions that a market participant would
\n
consider when pricing the asset or liability.
\n
NatWest Group manages some portfolios of financial assets
\n
and financial liabilities based on its net exposure to either
\n
market or credit risk. In these cases, the fair value is derived
\n
from the net risk exposure of that portfolio with portfolio level
\n
adjustments applied to incorporate bid-offer spreads,
\n
counterparty credit risk, and funding costs (refer to \u2018Valuation
\n
Adjustments\u2019).
\n
Where the market for a financial instrument is not active, fair
\n
value is established using a valuation technique. These
\n
valuation techniques involve a degree of estimation, the extent
\n
of which depends on the instrument\u2019s complexity and the
\n
availability of market-based data. The complexity and
\n
uncertainty in the financial instrument\u2019s fair value is categorised
\n
using the fair value hierarchy.
\n
For accounting policy information refer to Accounting policies
\n
2.2, 3.8 and 3.11.
\n
Valuation
\n\n \n
Page
Financial instruments
Critical accounting policy: Fair value
332
Valuation
Fair value hierarchy
(D)
333
Valuation techniques
(D)
333
Inputs to valuation models
(D)
333
Valuation control
(D)
334
Key areas of judgement
(D)
334
Assets and liabilities split by fair value hierarchy level
(T)
335
Valuation adjustments
Fair value adjustments made
(T)
336
Funding valuation adjustments (FVA)
(D)
336
Credit valuation adjustments (CVA)
(D)
336
Bid-offer
(D)
336
Product and deal specific
(D)
336
Own credit
(D)
336
Level 3 additional information
Level 3 ranges of unobservable inputs
(D)
337
Level 3 instruments, valuation techniques and inputs
(T)
337
Level 3 sensitivities
(D)
337
Alternative assumptions
(D)
338
Other considerations
(D)
338
High and low range of fair value of level 3 assets and liabilities
(T)
338
Movement in level 3 assets and liabilities over the reporting period
(D)
339
Movement in level 3 assets and liabilities
(T)
339
Fair value of financial instruments measured at amortised cost
Fair value of financial instruments measured at amortised cost on the balance sheet
balance sheet
balance sheet
340
(D) = Descriptive; (T) = Table
Fair value hierarchy
\n
Financial instruments carried at fair value
\n
have been classified under the fair value
\n
hierarchy. The classification ranges from
\n
level 1 to level 3, with more expert
\n
judgement and price uncertainty for
\n
those classified at level 3.
\n
The determination of an instrument\u2019s
\n
level cannot be made at a global product
\n
level as a single product type can be in
\n
more than one level. For example, a
\n
single name corporate credit default
\n
swap could be in level 2 or level 3
\n
depending on the level of market activity
\n
for the referenced entity.
\n
Level 1
\u2013 instruments valued using
\n
unadjusted quoted prices in active and
\n
liquid markets, for identical financial
\n
instruments. Examples include
\n
government bonds, listed equity shares
\n
and certain exchange-traded derivatives.
\n
Level 2
\u2013 instruments valued using
\n
valuation techniques that have
\n
observable inputs. Observable inputs are
\n
those that are readily available with
\n
limited adjustments required. Examples
\n
include most government agency
\n
securities, investment-grade corporate
\n
bonds, certain mortgage products -
\n
including collateralised loan obligations
\n
(CLOs), most bank loans, repos and
\n
reverse repos, state and municipal
\n
obligations, most notes issued, certain
\n
money market securities, loan
\n
commitments and most over the counter
\n
(OTC) derivatives.
\n
Level 3
\u2013 instruments valued using a
\n
valuation technique where at least one
\n
input which could have a significant effect
\n
on the instrument\u2019s valuation, is not
\n
based on observable market data.
\n
Examples include non-derivative
\n
instruments which trade infrequently,
\n
certain syndicated and commercial
\n
mortgage loans, private equity, and
\n
derivatives with unobservable model
\n
inputs.
\n
Valuation techniques
\n
NatWest Group derives the fair value of
\n
its instruments differently depending on
\n
whether the instrument is a non-
\n
modelled or a modelled product.
\n
Non-modelled products
are valued
\n
directly from a price input, typically on a
\n
position-by-position basis. Examples
\n
include equities and most debt securities.
\n
Non-modelled products can fall into any
\n
fair value levelling hierarchy depending
\n
on the observable market activity,
\n
liquidity, and assessment of valuation
\n
uncertainty of the instruments. The
\n
assessment of fair value and the
\n
classification of the instrument to a fair
\n
value level is subject to the valuation
\n
controls discussed in the Valuation
\n
control section.
\n
Modelled products
\u2013 valued using a
\n
pricing model range in complexity from
\n
comparatively vanilla products such as
\n
interest rate swaps and options (e.g.,
\n
interest rate caps and floors) through to
\n
more complex derivatives (e.g., balance
\n
guarantee swaps).
\n
For modelled products the fair value is
\n
derived using the model and the
\n
appropriate model inputs or parameters,
\n
as opposed to a cash price equivalent.
\n
Model inputs are taken either directly or
\n
indirectly from available data, where
\n
some inputs are also modelled.
\n
Fair value classification of modelled
\n
instruments is either level 2 or level 3,
\n
depending on the product/model
\n
combination, the observability and quality
\n
of input parameters and other factors. All
\n
these must be assessed to classify a
\n
position.
\n
The modelled product is assigned to the
\n
lowest fair value hierarchy level of any
\n
significant input used in that valuation.
\n
Most derivative instruments, for example
\n
vanilla interest rate swaps, foreign
\n
exchange swaps and liquid single name
\n
credit derivatives, are classified as level 2.
\n
This is because they are vanilla products
\n
valued using standard market models
\n
and with observable inputs. Level 2
\n
products range from vanilla to more
\n
complex products, where more complex
\n
products remain classified as level 2 due
\n
to the low materiality of any
\n
unobservable inputs.
\n
Inputs to valuation models
\n
When using valuation techniques, the fair
\n
value can be significantly affected by the
\n
choice of
valuation model
and underlying
\n
assumptions. Factors considered include
\n
the cashflow amounts and timing of
\n
those cash flows, and application of
\n
appropriate discount rates, incorporating
\n
both funding and credit risk. Values
\n
between and beyond available data
\n
points are obtained by interpolation and
\n
extrapolation. The principal inputs to
\n
these valuation techniques are as follows:
\n
Bond prices
\u2013 quoted prices are generally
\n
available for government bonds, certain
\n
corporate securities, and some
\n
mortgage-related products.
\n
Credit spreads/margins
\u2013 these reflect
\n
credit default swap levels or the return
\n
required over a benchmark rate or index
\n
to compensate for the referenced credit
\n
risk. Where available, these are derived
\n
from the price of credit default swaps or
\n
other credit-based instruments, such as
\n
debt securities. When direct prices are
\n
not available; credit spreads/margins are
\n
determined with reference to available
\n
prices of entities with similar
\n
characteristics.
\n
Interest rates
\u2013 these are principally
\n
based on interest rate swap prices
\n
referencing benchmark interest rates.
\n
Interest rates, include SONIA (Sterling
\n
Overnight Interbank Average Rate) and
\n
other overnight rates. Other quoted
\n
interest rates may also be used from
\n
both the bond, and futures markets.
\n
Foreign currency exchange rates
\u2013 there
\n
are observable prices both for spot and
\n
forward contracts and futures in the
\n
world's major currencies.
\n
Equity and equity index prices
\u2013 quoted
\n
prices are generally readily available for
\n
equity shares listed on the world's major
\n
stock exchanges and for major indices on
\n
such shares.
\n
Price volatilities and correlations
\u2013
\n
volatility is a measure of the tendency of
\n
a price to change with time. Correlation
\n
measures the degree which two or more
\n
prices or variables are observed to move
\n
together. Variables that move in the
\n
same direction show positive correlation;
\n
those that move in opposite directions
\n
are negatively correlated.
\n
Prepayment rates
\u2013 are used to reflect
\n
how fast a pool of assets prepay. The fair
\n
value of a financial instrument that can
\n
be prepaid by the issuer or borrower
\n
differs from that of an instrument that
\n
cannot be prepaid. When valuing
\n
prepayable instruments, the value of this
\n
prepayment option is considered.
\n
Recovery rates/loss given default
\u2013 are
\n
used as an input to valuation models and
\n
reserves for asset-backed securities and
\n
other credit products as an indicator of
\n
severity of losses on default. Recovery
\n
rates are primarily sourced from market
\n
data providers, the value of the
\n
underlying collateral or inferred from
\n
observable credit spreads.
Valuation control
\n
NatWest Group's control environment for
\n
the determination of the fair value of
\n
financial instruments includes formalised
\n
procedures for the review and validation
\n
of fair values. The review of market
\n
prices and inputs is performed by an
\n
independent price verification (IPV) team.
\n
IPV is a key element of the control
\n
environment. Valuations are first
\n
performed by the business which entered
\n
into the transaction. These valuations are
\n
then reviewed by the IPV team,
\n
independent of those trading the financial
\n
instruments, in light of available pricing
\n
evidence.
\n
Independent pricing data is collated from
\n
a range of sources. Each source is
\n
reviewed for quality and the independent
\n
data applied in the IPV processes using a
\n
formalised input quality hierarchy.
\n
Consensus services are one source of
\n
independent data and encompass
\n
interest rate, currency, credit, and bond
\n
markets, providing comprehensive
\n
coverage of vanilla products and a wide
\n
selection of exotic products.
\n
Where measurement differences are
\n
identified through the IPV process these
\n
are grouped by the quality hierarchy of
\n
the independent data. If the size of the
\n
difference exceeds defined thresholds, an
\n
adjustment is made to bring the valuation
\n
to within the independently calculated fair
\n
value range.
\n
IPV takes place at least monthly, for all
\n
fair value financial instruments. The IPV
\n
control includes formalised reporting and
\n
escalation of any valuation differences in
\n
breach of established thresholds.
\n
The quality and completeness of the
\n
information gathered in the IPV process
\n
gives an indication as to the liquidity and
\n
valuation uncertainty of an instrument
\n
and forms part of the information
\n
considered when determining fair value
\n
hierarchy classifications.
\n
Initial fair value level classification of a
\n
financial instrument is carried out by the
\n
IPV team. These initial classifications are
\n
subject to senior management review.
\n
Particular attention is paid to instruments
\n
transferring from one level to another,
\n
new instrument classes or products,
\n
instruments where the transaction price
\n
is significantly different from the fair value
\n
and instruments where valuation
\n
uncertainty is high.
\n
Valuation Committees are made up of
\n
valuation specialists and senior business
\n
representatives from various functions
\n
and oversees pricing, reserving and
\n
valuations issues. These committees
\n
meet monthly to review and ratify any
\n
methodology changes. The Executive
\n
Valuation Committee meets quarterly to
\n
address key material and subjective
\n
valuation issues, to review items
\n
escalated by Valuation Committees and
\n
to discuss other relevant industry
\n
matters.
\n
The Group model risk policy sets the
\n
policy for model documentation, testing
\n
and review. Governance of the model
\n
risk policy is carried out by the Group
\n
model risk oversight committee, which
\n
comprises model risk owners and
\n
independent model experts. All models
\n
are required to be independently
\n
validated in accordance with the Model
\n
Risk Policy.
\n
Key areas of judgement
\n
Over the years the business has
\n
simplified, with most products classified
\n
as level 1 or 2 of the fair value hierarchy.
\n
However, the diverse range of products
\n
historically traded by NatWest Group
\n
means some products remain classified
\n
as level 3. Level 3 indicates a significant
\n
level of pricing uncertainty, where expert
\n
judgement is used. As such, extra
\n
disclosures are required in respect of
\n
level 3 instruments.
\n
In general, the degree of expert
\n
judgement used and hence valuation
\n
uncertainty depends on the degree of
\n
liquidity of an instrument or input.
\n
Where markets are liquid, little judgement
\n
is required. However, when the
\n
information regarding the liquidity in a
\n
particular market is not clear, a
\n
judgement may need to be made. For
\n
example, for an equity traded on an
\n
exchange, daily volumes of trading can
\n
be seen, but for an OTC derivative,
\n
assessing the liquidity of the market with
\n
no central exchange is more challenging.
\n
A key related matter is where a market
\n
moves from liquid to illiquid or vice versa.
\n
Where this movement is considered
\n
temporary, the fair value level is not
\n
changed. For example, if there is little
\n
market trading in a product on a
\n
reporting date but at the previous
\n
reporting date and during the intervening
\n
period the market has been liquid. In this
\n
case, the instrument will continue to be
\n
classified at the same level in the
\n
hierarchy. This is to provide consistency
\n
so that transfers between levels are
\n
driven by genuine changes in market
\n
liquidity and do not reflect short term or
\n
seasonal effects. Material movements
\n
between levels are reviewed quarterly by
\n
the business and IPV.
\n
The breadth and depth of the IPV data
\n
allows for a rules-based quality
\n
assessment to be made of market
\n
activity, liquidity, and pricing uncertainty,
\n
which assists with the process of
\n
allocation to an appropriate level. Where
\n
suitable independent pricing information
\n
is not readily available, the quality
\n
assessment will result in the instrument
\n
being assessed as level 3.
The table below shows the assets and liabilities held by NatWest Group split by fair value hierarchy level. Level 1 are considered the most liquid instruments, and level 3 the most
\n
illiquid, valued using expert judgement and so carry the most significant price uncertainty.
\n\n \n
2024
2023
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
Trading assets
Loans
-
34,761
278
35,039
-
33,388
209
33,597
Securities
8,772
5,106
-
13,878
8,447
3,493
14
11,954
Derivatives
Interest rate
-
37,026
473
37,499
1
43,912
650
44,563
Foreign exchange
-
40,687
110
40,797
-
34,096
65
34,161
Other
-
63
47
110
-
72
108
180
Other financial assets
Loans
-
288
565
853
-
108
657
765
Securities
23,943
13,641
209
37,793
17,848
10,536
258
28,642
Total financial assets held at fair value
32,715
131,572
1,682
165,969
26,296
125,605
1,961
153,862
As a % of total fair value assets
20%
79%
1%
17%
82%
1%
Liabilities
Trading liabilities
Deposits
-
43,966
-
43,966
-
43,126
1
43,127
Debt securities in issue
-
257
-
257
-
706
-
706
Short positions
8,766
1,724
1
10,491
7,936
1,865
2
9,803
Derivatives
Interest rate
-
31,253
279
31,532
-
38,044
439
38,483
Foreign exchange
-
40,240
66
40,306
-
33,528
58
33,586
Other
-
124
120
244
-
138
188
326
Other financial liabilities
Debt securities in issue
-
1,733
3
1,736
-
1,605
3
1,608
Other deposits
-
1,787
25
1,812
-
1,280
-
1,280
Subordinated liabilities
-
234
-
234
-
237
-
237
Total financial liabilities held at fair value
8,766
121,318
494
130,578
7,936
120,529
691
129,156
As a % of total fair value liabilities
7%
93%
0%
6%
93%
1%
\n
(1)
Transfers between levels are deemed to have occurred at the beginning of the quarter in which the instrument was transferred.
\n
(2)
For an analysis of debt securities held at mandatory fair value through profit or loss by issuer as well as ratings and derivatives, by type and contract, refer to Risk and capital management \u2013 Credit risk.
Valuation adjustments
\n
When valuing financial instruments in the trading book, adjustments are made to mid-
\n
market valuations to cover bid-offer spread, funding and credit risk. These adjustments
\n
are presented in the table below:
\n\n \n
2024
2023
Adjustment
\u00a3m
\u00a3m
Funding valuation adjustments
123
132
Credit valuation adjustments
190
236
Bid-offer
76
86
Product and deal specific
157
103
Total
546
557
\n
The decrease in funding valuation adjustments was driven by net exposures switching
\n
from positive to negative, primarily due to interest rates increasing. The decrease in
\n
credit valuation adjustments was driven by a reduction in exposures, primarily due to
\n
interest rates increasing and trade unwinds. The decrease in bid-offer was driven by risk
\n
reduction. New trading activity was the driver of the increase in product and deal
\n
specific, partially offset by trade unwinds.
\n
Funding valuation adjustments (FVA)
\n
FVA represents an estimate of the adjustment that a market participant would make to
\n
incorporate funding costs and benefits that arise in relation to derivative exposures. FVA
\n
is calculated as a portfolio level adjustment and can result in either a funding charge
\n
(positive) or funding benefit (negative).
\n
Funding levels are applied to estimated potential future exposures. For uncollateralised
\n
derivatives, the exposure reflects the future valuation of the derivative. For collateralised
\n
derivatives, the exposure reflects the difference between the future valuation of the
\n
derivative and the level of collateral posted.
\n
Credit valuation adjustments (CVA)
\n
CVA represents an estimate of the adjustment to fair value that is made to incorporate
\n
the counterparty credit risk inherent in derivative exposures. CVA is calculated on a
\n
portfolio basis reflecting an estimate of the amount a third party would charge to
\n
assume the credit risk.
\n
Collateral held under a credit support agreement is factored into the CVA calculation. In
\n
such cases where NatWest Group holds collateral against counterparty exposures, CVA
\n
is held to the extent that residual risk remains.
\n
FVA and CVA are actively managed by a credit and market risk hedging process, and
\n
therefore movements in CVA and FVA are partially offset by trading revenue on the
\n
hedges.
\n
Bid-offer
\n
Fair value positions are required to be marked to exit levels, represented by bid (long
\n
positions) or offer (short positions) levels. Non-derivative positions are typically marked
\n
directly to bid or offer prices. However derivative exposures are adjusted to exit levels
\n
by taking bid-offer reserves calculated on a portfolio basis. The reserving approach is
\n
based on current market bid-offer spreads and standard market bucketing of risk.
\n
Bid-offer spreads vary by maturity and risk type to reflect different spreads in the
\n
market. For positions where there is no observable quote, the bid-offer spreads are
\n
widened in comparison to proxies to reflect reduced liquidity or observability.
\n
Netting is applied on a portfolio basis to reflect the value at which NatWest Group
\n
believes it could exit the net risk of the portfolio, rather than the sum of exit costs for
\n
each of the portfolio\u2019s individual trades. This is applied where the asset and liability
\n
positions are managed as a portfolio for risk and reporting purposes.
\n
Product and deal specific
\n
On initial recognition of financial assets and liabilities valued using valuation techniques
\n
which have a significant dependence on information other than observable market data,
\n
any difference between the transaction price and that derived from the valuation
\n
technique is deferred. Such amounts are recognised in the income statement over the
\n
life of the transaction, when market data becomes observable, or when the transaction
\n
matures or is closed out as appropriate. On 31 December 2024, net gains of \u00a3139
\n
million (2023 - \u00a378 million) were carried forward. During the year, net gains of \u00a3218
\n
million (2023 - \u00a3119 million) were deferred and \u00a3157 million (2023 - \u00a3115 million) were
\n
recognised in the income statement.
\n
Where system-generated valuations do not accurately reflect market prices, manual
\n
valuation adjustments are applied either at a position or portfolio level. Manual
\n
adjustments are subject to the scrutiny of independent control teams and are subject to
\n
monthly review by senior management.
\n
Own credit
\n
NatWest Group considers the effect of its own credit standing when valuing financial
\n
liabilities recorded at fair value. Own credit spread adjustments are made when valuing
\n
issued debt held at fair value, including issued structured notes. An own credit
\n
adjustment is applied to positions where it is believed that counterparties would consider
\n
NatWest Group\u2019s creditworthiness when pricing trades. Accumulated changes in fair
\n
value due to credit risk are \u00a344 million (2023 \u2013 nil).
Level 3 additional information
\n
For illiquid assets and liabilities, classified as level 3, additional information is provided on the valuation techniques used and price sensitivity of the products to those inputs. This is to
\n
enable the reader to gauge the level of uncertainty that arises from positions with significant unobservable inputs or modelling parameters.
\n
Level 3 ranges of unobservable inputs
\n
The table below provides additional information on level 3 instruments and inputs. This shows the valuation technique used for the fair value calculation, the unobservable input and
\n
input range.
\n\n \n
2024
20
23
Financial instrument
Valuation technique
Unobservable inputs
Units
Low
High
Low
High
Trading assets and Other financial assets
Loans
Price-based
Price
%
88
123
88
123
Discount cash flow
Credit spreads
bps
36
93
49
119
Debt securities
Price-based
Price
%
-
116
-
119
Equity Shares
Price-based
Price
GBP
-
47,312
-
32,142
Price-based
Price
%
-
15
-
30
Discount cash flow
Discount margin
%
9
13
7
9
Net asset valuation
Fund NAV
%
80
120
80
120
Derivative assets and liabilities
Credit derivatives
Credit derivative pricing
Credit spreads
bps
15
86
13
600
Option pricing
Correlation
%
(15)
95
(15)
95
Volatility
%
30
80
30
80
Upfront points
%
-
99
-
99
Recovery rate
%
-
60
-
60
Interest rate & FX
Option pricing
Correlation
%
(50)
98
(50)
99
derivatives
Volatility
%
3
99
30
111
Constant Prepayment Rate
%
2
20
2
22
Mean Reversion
%
-
20
-
20
Inflation volatility
%
1
2
2
2
Inflation rate
%
2
2
2
3
\n
(1)
Valuation for private equity investments may be estimated by looking at past prices of similar stocks and from valuation statements where valuations are usually derived from earnings measures such as EBITDA or net asset value (NAV). Similarly, for
\n
equity or bond fund investments, prices may be estimated from valuation or credit statements using NAV or similar measures.
\n
(2)
NatWest Group does not have any material liabilities measured at fair value that are issued with an inseparable third-party credit enhancement.
\n
Level 3 sensitivities
\n
The level 3 sensitivities presented on the next page are calculated at a trade or low-level portfolio basis rather than an overall portfolio basis. As individual sensitivities are aggregated
\n
with no reflection of the correlated nature between instruments, the overall portfolio sensitivity may not be accurately reflected. For example, some portfolios may be negatively
\n
correlated to others, where a downwards movement in one asset would produce an upwards movement in another. However, due to the additive presentation of the above figures
\n
this correlation impact cannot be displayed. As such, the actual potential downside sensitivity of the total portfolio may be less than the non-correlated sum of the additive figures as
\n
shown in the table on the next page.
Alternative assumptions
\n
Reasonably plausible alternative assumptions of unobservable inputs are determined based on a specified target level of certainty of 90%.
\n
Alternative assumptions are determined with reference to all available evidence including consideration of the following: quality of independent pricing information considering
\n
consistency between different sources, variation over time, perceived tradability or otherwise of available quotes; consensus service dispersion ranges; volume of trading activity and
\n
market bias (e.g. one-way inventory); day 1 profit or loss arising on new trades; number and nature of market participants; market conditions; modelling consistency in the market;
\n
size and nature of risk; length of holding of position; and market intelligence.
\n
Other considerations
\n
Whilst certain inputs used to calculate CVA, FVA and own credit adjustments are not based on observable market data, the uncertainty of these inputs is not considered to have a
\n
significant effect on the net valuation of the related derivative portfolios and issued debt.
\n
As such, the fair value levelling of the derivative portfolios and issued debt is not determined by CVA, FVA or own credit inputs. In addition, any fair value sensitivity driven by these
\n
inputs is not included in the level 3 sensitivities presented.
\n
The table below shows the high and low range of fair value of the level 3 assets and liabilities. This range incorporates the range of fair value inputs as described in the previous table.
\n\n \n
2024
2023
Level 3
Favourable
Unfavourable
Level 3
Favourable
Unfavourable
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
Trading assets
Loans
278
-
-
209
-
-
Securities
-
-
-
14
-
-
Derivatives
Interest rate
473
20
(20)
650
20
(20)
Foreign exchange
110
-
-
65
-
-
Other
47
-
-
108
10
(10)
Other financial assets
Loans
565
-
(10)
657
-
(40)
Securities
209
20
(30)
258
20
(50)
Total financial assets held at fair value
1,682
40
(60)
1,961
50
(120)
Liabilities
Trading liabilities
Deposits
-
-
-
1
-
-
Short positions
1
-
-
2
-
-
Derivatives
Interest rate
279
10
(10)
439
10
(10)
Foreign exchange
66
-
-
58
-
-
Other
120
10
(10)
188
10
(10)
Other financial liabilities
Debt securities in issue
3
-
-
3
-
-
Other deposits
25
10
(20)
-
-
-
Total financial liabilities held at fair value
494
30
(40)
691
20
(20)
Movement in level 3 assets and liabilities
\n
The following table shows the movement in level 3 assets and liabilities in the year.
\n\n \n
Other
Other
Other
Other
Derivatives
trading
financial
Total
Derivatives
trading
financial
Total
assets
assets (2)
assets (3)
assets
liabilities
liabilities (2)
liabilities
liabilities
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January
823
223
915
1,961
685
3
3
691
Amounts recorded in the income statement
(1)
(122)
(17)
12
(127)
(121)
-
-
(121)
Amount recorded in the statement of
comprehensive income
-
-
13
13
-
-
-
-
Level 3 transfers in
7
1
56
64
1
2
25
28
Level 3 transfers out
(3)
(19)
(241)
(263)
(2)
(3)
-
(5)
Purchases/originations
147
118
117
382
121
1
-
122
Settlements/other decreases
(44)
(27)
(18)
(89)
(32)
-
-
(32)
Sales
(178)
-
(72)
(250)
(182)
(2)
-
(184)
Foreign exchange and other adjustments
-
(1)
(8)
(9)
(5)
-
-
(5)
At 31 December
630
278
774
1,682
465
1
28
494
Amounts recorded in the income statement in respect of balances held
at period end - unrealised
83
1
12
96
56
-
-
56
2023
At 1 January
1,007
396
930
2,333
975
1
-
976
Amounts recorded in the income statement
(1)
(156)
(88)
1
(243)
(313)
-
-
(313)
Amount recorded in the statement of comprehensive income
-
-
32
32
-
-
-
-
Level 3 transfers in
6
15
16
37
7
2
-
9
Level 3 transfers out
(5)
(32)
(190)
(227)
(9)
(2)
-
(11)
Purchases/originations
180
8
275
463
195
2
3
200
Settlements/other decreases
(70)
(8)
(86)
(164)
(51)
-
-
(51)
Sales
(137)
(65)
(52)
(254)
(116)
-
-
(116)
Foreign exchange and other adjustments
(2)
(3)
(11)
(16)
(3)
-
-
(3)
At 31 December
823
223
915
1,961
685
3
3
691
Amounts recorded in the income statement in respect of balances held
at period end - unrealised
67
(39)
1
29
(121)
-
-
(121)
\n
(1)
There were net losses on trading assets and liabilities of \u00a318 million (2023 - net gains of \u00a369 million) was included in income from trading activities. Net gains on other instruments of \u00a312 million (2023 - net gains of \u00a31 million) was included in other
\n
operating income or interest income as appropriate.
\n
(2)
Other trading assets and other trading liabilities comprise assets and liabilities held at fair value in trading portfolios.
\n
(3)
Other financial assets comprise fair value through other comprehensive income, designated as at fair value through profit or loss and other fair value through profit or loss.
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 measured at amortised cost
on the balance sheet.
\n\n \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\n \n
Items where
fair value
Carrying
Fair value hierarchy level
approximates
value
Fair value
Level 1
Level 2
Level 3
carrying value
2024
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Financial assets
Cash and balances at central banks
93.0
93.0
-
-
-
93.0
Settlement balances
2.1
2.1
-
-
-
2.1
Loans to banks
6.0
5.9
-
1.8
0.5
3.6
Loans to customers
400.3
396.6
-
34.9
361.7
-
Other financial assets - securities
24.6
24.6
4.3
12.4
7.9
-
2023
Financial assets
Cash and balances at central banks
104.3
104.3
-
-
-
104.3
Settlement balances
7.2
7.2
-
-
-
7.2
Loans to banks
6.9
7.0
-
2.2
0.6
4.2
Loans to customers
381.4
373.2
-
27.5
345.7
-
Other financial assets - securities
21.7
21.6
4.0
6.6
11.0
-
2024
Financial liabilities
Bank deposits
31.5
31.2
-
23.9
3.0
4.3
Customer deposits
433.5
433.3
-
24.3
46.0
363.0
Settlement balances
1.7
1.7
-
-
-
1.7
Other financial liabilities
- debt securities in issue
57.5
57.6
-
48.9
8.7
-
Subordinated liabilities
5.9
6.0
-
6.0
-
-
Notes in circulation
3.3
3.3
-
-
-
3.3
2023
Financial liabilities
Bank deposits
22.2
22.3
-
15.4
2.7
4.2
Customer deposits
431.4
431.0
-
30.7
48.8
351.5
Settlement balances
6.6
6.6
-
-
-
6.6
Other financial liabilities
- debt securities in issue
52.2
52.2
-
41.7
10.5
-
Subordinated liabilities
5.5
5.4
-
5.4
-
-
Notes in circulation
3.2
3.2
-
-
-
3.2
\n
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, including but not
limited to, cash and balances at central banks, settlement
balances, loans with short-term maturities, notes in circulation
and customer demand deposits, carrying value is deemed a
reasonable approximation of fair value.
Loans to banks and customers
In estimating the fair value of net loans to customers and banks
measured at amortised cost, NatWest Group\u2019s loans are
segregated into appropriate portfolios reflecting the
characteristics of the constituent loans. Two principal methods
are used to estimate fair value:
(a)
Contractual cash flows that are discounted using a market
discount rate that incorporates the current spread for the
borrower or where this is not observable, the spread for
borrowers of a similar credit standing.
(b)
Expected cash flows (unadjusted for credit losses) are
discounted at the current offer rate for the same or similar
products. The current methodology caps all loan values at
par rather than modelling clients\u2019 option to repay loans
early. This approach is adopted for lending portfolios in
Retail Banking, Commercial & Institutional (SME loans) and
Private Banking in order to reflect the homogeneous nature
of these portfolios.
Debt securities and subordinated liabilities
Most debt securities are valued using quoted prices in active
markets or from quoted prices of similar financial instruments.
The remaining population is valued using discounted cashflows
at current offer rates.
Bank and customer deposits
Fair values of deposits are estimated using discounted cash
flow valuation techniques. Where required, methodologies can
be revised as additional information and valuation inputs
become available.12 Trading assets and liabilities
Trading assets and liabilities comprise assets and liabilities held at fair value and classified as held-for-trading. Financial instruments are classified as held-for-trading if
they are held for the purpose of selling or repurchasing them in the short term, to make a spread between purchase and sale price or held to take advantage of
movements in prices and yields.
For accounting policy information refer to Accounting policy 3.8.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Assets
\u00a3m
\u00a3m
Loans
\u00a0 \u00a0
Reverse repos
27,127
23,694
Collateral given
7,367
9,141
Other loans
545
762
Total loans
35,039
33,597
Securities
\u00a0 \u00a0
Central and local government
\u00a0 \u00a0
- UK
2,077
2,729
- US
3,734
2,600
- Other
3,506
3,062
Financial institutions and corporate
4,561
3,563
Total securities
13,878
11,954
Total
48,917
45,551
Liabilities
\u00a0 \u00a0
Deposits
\u00a0 \u00a0
Repos
30,562
26,902
Collateral received
12,509
15,075
Other deposits
895
1,150
Total deposits
43,966
43,127
Debt securities in issue
257
706
Short positions
\u00a0 \u00a0
Central and local government
\u00a0 \u00a0
- UK
2,680
1,893
- US
1,677
2,071
- Other
4,755
4,049
Financial institutions and Corporate
1,379
1,790
Total short positions
10,491
9,803
Total
54,714
53,636
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00729": { "value": "2.2. Fair value \u2013 financial instruments
We measure financial instruments at fair
value when they are classified as
mandatory fair value through profit or
loss; held-for-trading; designated fair
value through profit or loss and fair value
through other comprehensive income
and they are recognised in the financial
statements at fair value. All derivatives
are measured at fair value.
We manage some portfolios of financial
assets and financial liabilities based on
our net exposure to either market or
credit risk. In these cases, the fair value is
derived from the net risk exposure of that
portfolio with portfolio level adjustments
applied to incorporate bid-offer spreads,
counterparty credit risk, and funding
costs (refer to \u2018Valuation Adjustments\u2019).
Where the market for a financial
instrument is not active, fair value is
established using a valuation technique.
These valuation techniques involve a
degree of estimation, the extent of which
depends on the instrument\u2019s complexity
and the availability of market-based data.
The complexity and uncertainty in the
financial instrument\u2019s fair value is
categorised using the fair value
hierarchy.
The use of market indicators as inputs to
fair value is assumed to include current
information and knowledge regarding the
effect of climate risk.3.8. Financial instruments
Financial instruments are measured at
fair value on initial recognition on the
balance sheet.
Monetary financial assets are classified
into one of the following subsequent
measurement categories (subject to
business model assessment and review of
contractual cash flow for the purposes of
sole payments of principal and interest
where applicable):
\ue001
amortised cost
measured at cost
using the effective interest rate
method, less any impairment
allowance;
\ue001
fair value through other
comprehensive income (FVOCI)
measured at fair value, using the
effective interest rate method and
changes in fair value through other
comprehensive income;
\ue001
mandatory fair value through profit or
loss (MFVTPL)
measured at fair value
and changes in fair value reported in
the income statement; or
\ue001
designated at fair value through profit
or loss (DFV)
measured at fair value
and changes in fair value reported in
the income statement.
Classification by business model reflects
how we manage our financial assets to
generate cash flows. A business model
assessment helps to ascertain the
measurement approach depending on
whether cash flows result from holding
financial assets to collect the contractual
cash flows, from selling those financial
assets, or both.
Business model assessment of assets is
made at portfolio level, being the level at
which they are managed to achieve a
predefined business objective. This is
expected to result in the most consistent
classification of assets because it aligns
with the stated objectives for the
portfolio, its risk management, manager\u2019s
remuneration and the ability to monitor
sales of assets from a portfolio. When a
significant change to our business is
communicated to external parties, we
reassess our business model for
managing those financial assets. We
reclassify financial assets if we have a
significant change to the business model.
A reclassification is applied prospectively
from the reclassification date.
The contractual terms of a financial
asset; any leverage features; prepayment
and extension terms; and discounts or
penalties to interest rates that are part of
meeting environmental, social and
governance targets as well as other
contingent and leverage features, non-
recourse arrangements and features that
could modify the timing and/or amount of
the contractual cash flows that might
reset the effective rate of interest; are
considered in determining whether cash
flows are solely payments of principal and
interest.
Certain financial assets may be
designated at fair value through profit or
loss (DFV) upon initial recognition if such
designation eliminates, or significantly
reduces, accounting mismatch.
Equity shares are measured at fair value
through profit or loss unless specifically
elected as at fair value through other
comprehensive income (FVOCI).
Upon disposal, the cumulative gains or
losses in fair value through other
comprehensive income reserve are
recycled to the income statement for
monetary assets and for non-monetary
assets (equity shares) the cumulative
gains or losses are transferred directly to
retained earnings.
Regular way purchases and sales of
financial assets classified as amortised
cost are recognised on the settlement
date; all other regular way transactions in
financial assets are recognised on the
trade date.
Financial liabilities are classified into one
of following measurement categories:
\ue001
amortised cost measured at cost
using the effective interest rate
method;
\ue001
held for trading measured at fair
value and changes in fair value
reported in income statement; or
\ue001
designated at fair value through profit
or loss measured at fair value and
changes in fair value reported in the
income statement except changes in
fair value attributable to the credit
risk component recognised in other
comprehensive income when no
accounting mismatch occurs.
3.9. Netting
Financial assets and financial liabilities are
offset, and the net amount presented on
the balance sheet when, and only when,
we currently have a legally enforceable
right to set off the recognised amounts
and we intend either to settle on a net
basis or to realise the asset and settle the
liability simultaneously. We are party to a
number of arrangements, including
master netting agreements, that give us
the right to offset financial assets and
financial liabilities, but where we do not
intend to settle the amounts net or
simultaneously, the assets and liabilities
concerned are presented separately on
the balance sheet.
3.10. Capital instruments
We classify a financial instrument that we
issue as a financial liability if it is a
contractual obligation to deliver cash or
another financial asset, or to exchange
financial assets or financial liabilities on
potentially unfavourable terms and as
equity if we evidence a residual interest in
our assets after the deduction of
liabilities. Incremental costs and related
tax that are directly attributable to an
equity transaction are deducted from
equity.
The consideration for any ordinary
shares of NatWest Group plc purchased
by us (known as treasury shares or own
shares held) is deducted from retained
earnings. On the cancellation of treasury
shares their nominal value is removed
from retained earnings and a
consequential amount recognised in
capital redemption reserve in compliance
with the Companies Act 2006.
On the sale or re-issue of treasury shares
the consideration received and related
tax are credited to equity, net of any
directly attributable incremental costs.
3.11. Derivatives and hedging
Derivatives are reported on the balance
sheet at fair value.
We use derivatives as part of our trading
activities, to manage our own risk such
as interest rate, foreign exchange, or
credit risk or in certain customer
transactions. Not all derivatives used to
manage risk are in hedge accounting
relationships (an IFRS method to reduce
accounting mismatch from changes in
the fair value of the derivatives reported
in the income statement).
Gains and losses arising from changes in
the fair value of derivatives that are not
in hedge relationships are recognised in
Income from trading activities unless
those derivatives are managed together
with financial instruments designated at
fair value; these gains and losses are
included in Other operating income.
Hedge accounting
Hedge accounting relationships are
designated and documented at inception
in line with the requirements of IAS 39
Financial instruments \u2013 Recognition and
Measurement.
The documentation identifies the hedged
item, the hedging instrument and details
of the risk that is being hedged and the
way in which effectiveness will be
assessed at inception and during the
period of the hedge. When designating a
hedging relationship, we consider: the
economic relationship between the
hedged item (including the risk being
hedged) and the hedging instrument; the
nature of the risk; the risk management
objective and strategy for undertaking
the hedge; and the appropriateness of
the method that will be used to assess
hedge effectiveness.
Designated hedging relationships must be
expected to be highly effective both on a
prospective and retrospective basis. This
is assessed using regression techniques
which model the degree of offsetting
between the changes in fair value or
cash flows attributable to the hedged risk
and the changes in fair value of the
designated hedging derivatives.
Ineffectiveness is measured based on
actual levels of offsetting and recognised
in the income statement.
We enter into three types of hedge
accounting relationships.
Fair value hedge
- the gain or loss on the
hedging instrument and the hedged item
attributable to the hedged risk is
recognised in the income statement.
Where the hedged item is measured at
amortised cost, the balance sheet
amount of the hedged item is also
adjusted.
Cash flow hedge
- the effective portion of
the designated hedge relationship is
recognised in other comprehensive
income and the ineffective portion in the
income statement. When the hedged
item (forecasted cash flows) results in the
recognition of a financial asset or financial
liability, the cumulative gain or loss is
reclassified from equity to the income
statement in the same periods in which
the hedged forecasted cash flows affect
the income statement.
Hedge of net investment in a foreign
operation
-
in the hedge of a net
investment in a foreign operation, the
effective portion of the designated hedge
relationship is recognised in other
comprehensive income. Any ineffective
portion is recognised in profit or loss.
Non-derivative financial liabilities as well
as derivatives may be designated as a
hedging instrument in a net investment
hedge.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the
hedge no longer meets the criteria for
hedge accounting i.e. the hedge is not
highly effective in offsetting changes in
fair value or cash flows attributable to the
hedged risk, consistent with the
documented risk management strategy;
the hedging instrument expires or is sold,
terminated or exercised; or if hedge
designation is revoked.
For fair value hedging any cumulative
adjustment is amortised to the income
statement over the life of the hedged
item. Where the hedged item is no longer
on the balance sheet the adjustment to
the hedged item is reported in the
income statement. For cash flow hedging
the cumulative unrealised gain or loss is
reclassified from equity to the income
statement when the hedged cash flows
occur or, if the forecast transaction
results in the recognition of a financial
asset or financial liability, when the
hedged forecast cash flows affect the
income statement. Where a forecast
transaction is no longer expected to
occur, the cumulative unrealised gain or
loss is reclassified from equity to the
income statement immediately.
For net investment hedging on disposal
or partial disposal of a foreign operation,
the amount accumulated in equity is
reclassified from equity to the income
statement.9 Financial instruments - classification
Financial instruments are contracts that give rise to a financial asset of one entity and a corresponding financial liability or equity instrument of a counterparty entity,
such as cash, derivatives, loans, deposits and settlement balances. This note presents financial instruments classified in accordance with IFRS 9 \u2013 Financial Instruments.
Judgement: classification of financial assets
Classification of financial assets between amortised cost and fair
value through other comprehensive income requires a degree of
judgement in respect of business models and contractual
cashflows.
\ue001
The business model criteria is assessed at a portfolio level to
determine whether assets are classified as held to collect or
held to collect and sell. Information that is considered in
determining the applicable business model includes: the
portfolio\u2019s policies and objectives; how the performance and
risks of the portfolio are managed, evaluated and reported
to management; and the frequency, volume and timing of
sales in prior periods, sales expectation for future periods,
and the reasons for sales.
\ue001
The contractual cash flow characteristics of financial assets
are assessed with reference to whether the cash flows
represent solely payments of principal and interest (SPPI). A
level of judgement is made in assessing terms that could
change the contractual cash flows so that it would not meet
the condition for SPPI, including contingent and leverage
features,
non-recourse arrangements and features that
could modify the time value of money.
For accounting policy information refer to Accounting policies
3.8, 3.9 and 3.11.
The following tables analyse financial assets and liabilities in accordance with the categories of financial
instruments in IFRS 9.
\u00a0 \u00a0 \u00a0 \u00a0\n \n
Amortised
Other
MFVTPL
DFV
FVOCI
cost
assets
Total
Assets
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cash and balances at central banks
92,994
92,994
Trading assets
48,917
48,917
Derivatives
(1)
78,406
78,406
Settlement balances
2,085
2,085
Loans to bank - amortised cost
(2)
6,030
6,030
Loans to customers - amortised cost
(3)
400,326
400,326
Other financial assets
798
5
37,843
24,597
63,243
Intangible assets
7,588
7,588
Other assets
(4)
8,396
8,396
31 December 2024
128,121
5
37,843
526,032
15,984
707,985
Cash and balances at central banks
104,262
104,262
Trading assets
45,551
45,551
Derivatives
(1)
78,904
78,904
Settlement balances
7,231
7,231
Loans to bank - amortised cost
(2)
6,914
6,914
Loans to customers - amortised cost
(3)
381,433
381,433
Other financial assets
703
5
28,699
21,695
51,102
Intangible assets
7,614
7,614
Other assets
(4)
9,662
9,662
31 December 2023
125,158
5
28,699
521,535
17,276
692,673
\n
For the notes to this table refer to the following page.
\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n
Amortised
Other
Held-for-trading
DFV
cost
liabilities
Total
Liabilities
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bank deposits
(5)
31,452
31,452
Customer deposits
433,490
433,490
Settlement balances
1,729
1,729
Trading liabilities
54,714
54,714
Derivatives
(1)
72,082
72,082
Other financial liabilities
(6)
3,548
57,539
61,087
Subordinated liabilities
234
5,902
6,136
Notes in circulation
3,316
3,316
Other liabilities
(7)
684
3,917
4,601
31 December 2024
126,796
3,782
534,112
3,917
668,607
Bank deposits
(5)
22,190
22,190
Customer deposits
431,377
431,377
Settlement balances
6,645
6,645
Trading liabilities
53,636
53,636
Derivatives
(1)
72,395
72,395
Other financial liabilities
(6)
2,888
52,201
55,089
Subordinated liabilities
237
5,477
5,714
Notes in circulation
3,237
3,237
Other liabilities
(7)
748
4,454
5,202
31 December 2023
126,031
3,125
521,875
4,454
655,485
\n
(1)
Includes net hedging derivatives assets of \u00a3118 million (2023 - \u00a3114 million)
\n
and net hedging derivatives liabilities of \u00a3464 million (2023 - \u00a3270 million).
\n
(2)
Includes items in the course of collection from other banks of \u00a359 million (2023
\n
- \u00a3255 million).
\n
(3)
Includes finance lease receivables of \u00a38,998 million (2023 - \u00a38,731 million).
\n
(4)
Includes assets of disposal groups held at FVTPL of nil (2023 - \u00a3841 million).
\n
The portfolio is classified as level 3 in the fair value hierarchy.
\n
(5)
Includes items in the course of transmission to other banks of \u00a3136 million
\n
(2023 - \u00a392 million).
\n
(6)
The carrying amount of customer deposits designated at fair value through
\n
profit or loss is materially the same as the principal amount for both periods.
\n
No amounts have been recognised in the profit or loss for changes in credit
\n
risk associated with these liabilities as the changes are immaterial both during
\n
the period and cumulatively.
\n
(7)
Includes lease liabilities of \u00a3630 million (2023 - \u00a3670 million), held at amortised
\n
cost.
We originate loans that include features that change the contractual cash flows based on the borrower meeting certain contractually specified environmental, social and governance
(ESG) targets. These are known as ESG-linked, or sustainability-linked, loans. As part of the terms of these loans, the contractual interest rate is reduced or increased if the borrower
meets, or fails to meet, specific targets linked to the activity of the borrower, for example reducing carbon emissions, increasing the level of diversity at Board level, or achieving a
sustainable supply chain. ESG features are first assessed to ascertain whether the adjustment to the contractual cash flows results in a de minimis exposure to risks or volatility in
those contractual cash flows. If this is the case the classification of the loan is not affected. If the effect of the ESG feature is assessed as being more than de minimis, we apply
judgement to ensure that the ESG features do not generate compensation for risks that are not in line with a basic lending arrangement. This includes, amongst other aspects, a
review of the consistency of the ESG targets with the asset or activity of the borrower, and consideration of the targets within our risk appetite. Some of these loans are an integral
part of our climate and sustainable funding and financing target disclosed on page 13.
The table below analyses financial assets forming a component of ESG-linked loans and other products with contractual terms that could change the timing or amount of cash flows.
This is based on balance sheet values as at 31 December and the maximum impact of the potential margin changes on these over a 12 month period.
\u00a0 \u00a0
2024
\u00a0
2023
\u00a0 \u00a0
Positive impact on
Negative impact on
\u00a0
\u00a0
Carrying value
product margin
product margin
Carrying value
\u00a0
\u00a3bn
bps
bps
\u00a3bn
Sustainability-linked loans
6.9
3.1
4.0
6.5
Other products
20.2
-
-
16.1
Lending subject to performance triggers
27.1
\u00a0 \u00a0
22.6
\n
Additional information on finance lease receivables
The following table shows the reconciliation of undiscounted finance lease receivables to net investment in finance leases which are presented under Loans to customers-amortised
cost on the balance sheet.
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Amount receivable under finance leases
\u00a0 \u00a0
Within 1 year
3,493
3,340
1 to 2 years
2,499
2,358
2 to 3 years
1,612
1,625
3 to 4 years
842
900
4 to 5 years
464
388
After 5 years
1,043
1,079
Total lease payments
9,953
9,690
Unguaranteed residual values
150
169
Future drawdowns
(12)
(12)
Unearned income
(1,001)
(1,025)
Present value of lease payments
9,090
8,822
Impairments
(92)
(91)
Net investment in finance leases
8,998
8,731
Financial instruments \u2013 financial assets and liabilities that can be offset
The tables below present information on financial assets and financial liabilities that are offset on the balance sheet under IFRS or subject to enforceable master netting agreements
together with financial collateral received or given.
\n\n \u00a0\n \n
Instruments which can be offset
Potential for offset not recognised by IFRS
Effect of master
Net amount after
Instruments
netting and similar
Cash
Securities
netting agreements and
outside netting
Balance sheet
Gross
IFRS offset
Balance sheet
agreements
collateral
collateral
effect of related collateral
agreements
total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative assets
96,624
(18,746)
77,878
(61,883)
(10,005)
(4,072)
1,918
528
78,406
Derivative liabilities
92,620
(21,027)
71,593
(61,883)
(5,801)
(896)
3,013
489
72,082
Net position
(1)
4,004
2,281
6,285
-
(4,204)
(3,176)
(1,095)
39
6,324
Trading reverse repos
42,261
(15,174)
27,087
(1,469)
-
(25,406)
212
40
27,127
Trading repos
45,033
(15,174)
29,859
(1,469)
-
(28,390)
-
703
30,562
Net position
(2,772)
-
(2,772)
-
-
2,984
212
(663)
(3,435)
Non trading reverse repos
45,600
(8,709)
36,891
(80)
-
(36,811)
-
-
36,891
Non trading repos
22,288
(8,709)
13,579
(80)
-
(13,499)
-
-
13,579
Net position
23,312
-
23,312
-
-
(23,312)
-
-
23,312
2023
Derivative assets
99,023
(20,597)
78,426
(60,355)
(12,284)
(3,408)
2,379
478
78,904
Derivative liabilities
95,734
(23,869)
71,865
(60,355)
(6,788)
(1,663)
3,059
530
72,395
Net position
(1)
3,289
3,272
6,561
-
(5,496)
(1,745)
(680)
(52)
6,509
Trading reverse repos
39,573
(16,257)
23,316
(664)
-
(22,461)
191
378
23,694
Trading repos
42,442
(16,257)
26,185
(664)
-
(25,520)
1
717
26,902
Net position
(2,869)
-
(2,869)
-
-
3,059
190
(339)
(3,208)
Non trading reverse repos
37,477
(9,646)
27,831
(5)
-
(27,826)
-
80
27,911
Non trading repos
23,605
(9,646)
13,959
(5)
-
(13,954)
-
3
13,962
Net position
13,872
-
13,872
-
-
(13,872)
-
77
13,949
\n
(1)
Net IFRS offset balance of \u00a32,281 million (2023 - \u00a33,272 million) relates to variation margin netting reflected on other balance sheet lines.
\n\n\n\n\n\n\n\n\n\n\n\n
10 Financial instruments - valuation
\n
Financial instruments recognised at fair value are revalued using techniques that can include observable inputs (pricing information that is readily available in the
\n
market, for example UK Government securities), and unobservable inputs (pricing information that is not readily available, for example unlisted securities). Gains
\n
and losses are recognised in the income statement and statement of comprehensive income as appropriate.
This note presents information on the valuation of
\n
financial instruments.
\n
The table below provides an overview of the various sections contained within the note.
\n
Critical accounting policy: Fair value \u2013 financial
\n
instruments
\n
Financial instruments classified as mandatory fair value through
\n
profit or loss; held-for-trading; designated fair value through
\n
profit or loss; and fair value through other comprehensive
\n
income are recognised in the financial statements at fair value.
\n
All derivatives are measured at fair value.
\n
Fair value is the price that would be received to sell an asset or
\n
paid to transfer a liability in an orderly transaction between
\n
market participants at the measurement date. A fair value
\n
measurement considers the characteristics of the asset or
\n
liability and the assumptions that a market participant would
\n
consider when pricing the asset or liability.
\n
NatWest Group manages some portfolios of financial assets
\n
and financial liabilities based on its net exposure to either
\n
market or credit risk. In these cases, the fair value is derived
\n
from the net risk exposure of that portfolio with portfolio level
\n
adjustments applied to incorporate bid-offer spreads,
\n
counterparty credit risk, and funding costs (refer to \u2018Valuation
\n
Adjustments\u2019).
\n
Where the market for a financial instrument is not active, fair
\n
value is established using a valuation technique. These
\n
valuation techniques involve a degree of estimation, the extent
\n
of which depends on the instrument\u2019s complexity and the
\n
availability of market-based data. The complexity and
\n
uncertainty in the financial instrument\u2019s fair value is categorised
\n
using the fair value hierarchy.
\n
For accounting policy information refer to Accounting policies
\n
2.2, 3.8 and 3.11.
\n
Valuation
\n\n \n
Page
Financial instruments
Critical accounting policy: Fair value
332
Valuation
Fair value hierarchy
(D)
333
Valuation techniques
(D)
333
Inputs to valuation models
(D)
333
Valuation control
(D)
334
Key areas of judgement
(D)
334
Assets and liabilities split by fair value hierarchy level
(T)
335
Valuation adjustments
Fair value adjustments made
(T)
336
Funding valuation adjustments (FVA)
(D)
336
Credit valuation adjustments (CVA)
(D)
336
Bid-offer
(D)
336
Product and deal specific
(D)
336
Own credit
(D)
336
Level 3 additional information
Level 3 ranges of unobservable inputs
(D)
337
Level 3 instruments, valuation techniques and inputs
(T)
337
Level 3 sensitivities
(D)
337
Alternative assumptions
(D)
338
Other considerations
(D)
338
High and low range of fair value of level 3 assets and liabilities
(T)
338
Movement in level 3 assets and liabilities over the reporting period
(D)
339
Movement in level 3 assets and liabilities
(T)
339
Fair value of financial instruments measured at amortised cost
Fair value of financial instruments measured at amortised cost on the balance sheet
balance sheet
balance sheet
340
(D) = Descriptive; (T) = Table
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Fair value hierarchy
\n
Financial instruments carried at fair value
\n
have been classified under the fair value
\n
hierarchy. The classification ranges from
\n
level 1 to level 3, with more expert
\n
judgement and price uncertainty for
\n
those classified at level 3.
\n
The determination of an instrument\u2019s
\n
level cannot be made at a global product
\n
level as a single product type can be in
\n
more than one level. For example, a
\n
single name corporate credit default
\n
swap could be in level 2 or level 3
\n
depending on the level of market activity
\n
for the referenced entity.
\n
Level 1
\u2013 instruments valued using
\n
unadjusted quoted prices in active and
\n
liquid markets, for identical financial
\n
instruments. Examples include
\n
government bonds, listed equity shares
\n
and certain exchange-traded derivatives.
\n
Level 2
\u2013 instruments valued using
\n
valuation techniques that have
\n
observable inputs. Observable inputs are
\n
those that are readily available with
\n
limited adjustments required. Examples
\n
include most government agency
\n
securities, investment-grade corporate
\n
bonds, certain mortgage products -
\n
including collateralised loan obligations
\n
(CLOs), most bank loans, repos and
\n
reverse repos, state and municipal
\n
obligations, most notes issued, certain
\n
money market securities, loan
\n
commitments and most over the counter
\n
(OTC) derivatives.
\n
Level 3
\u2013 instruments valued using a
\n
valuation technique where at least one
\n
input which could have a significant effect
\n
on the instrument\u2019s valuation, is not
\n
based on observable market data.
\n
Examples include non-derivative
\n
instruments which trade infrequently,
\n
certain syndicated and commercial
\n
mortgage loans, private equity, and
\n
derivatives with unobservable model
\n
inputs.
\n
Valuation techniques
\n
NatWest Group derives the fair value of
\n
its instruments differently depending on
\n
whether the instrument is a non-
\n
modelled or a modelled product.
\n
Non-modelled products
are valued
\n
directly from a price input, typically on a
\n
position-by-position basis. Examples
\n
include equities and most debt securities.
\n
Non-modelled products can fall into any
\n
fair value levelling hierarchy depending
\n
on the observable market activity,
\n
liquidity, and assessment of valuation
\n
uncertainty of the instruments. The
\n
assessment of fair value and the
\n
classification of the instrument to a fair
\n
value level is subject to the valuation
\n
controls discussed in the Valuation
\n
control section.
\n
Modelled products
\u2013 valued using a
\n
pricing model range in complexity from
\n
comparatively vanilla products such as
\n
interest rate swaps and options (e.g.,
\n
interest rate caps and floors) through to
\n
more complex derivatives (e.g., balance
\n
guarantee swaps).
\n
For modelled products the fair value is
\n
derived using the model and the
\n
appropriate model inputs or parameters,
\n
as opposed to a cash price equivalent.
\n
Model inputs are taken either directly or
\n
indirectly from available data, where
\n
some inputs are also modelled.
\n
Fair value classification of modelled
\n
instruments is either level 2 or level 3,
\n
depending on the product/model
\n
combination, the observability and quality
\n
of input parameters and other factors. All
\n
these must be assessed to classify a
\n
position.
\n
The modelled product is assigned to the
\n
lowest fair value hierarchy level of any
\n
significant input used in that valuation.
\n
Most derivative instruments, for example
\n
vanilla interest rate swaps, foreign
\n
exchange swaps and liquid single name
\n
credit derivatives, are classified as level 2.
\n
This is because they are vanilla products
\n
valued using standard market models
\n
and with observable inputs. Level 2
\n
products range from vanilla to more
\n
complex products, where more complex
\n
products remain classified as level 2 due
\n
to the low materiality of any
\n
unobservable inputs.
\n
Inputs to valuation models
\n
When using valuation techniques, the fair
\n
value can be significantly affected by the
\n
choice of
valuation model
and underlying
\n
assumptions. Factors considered include
\n
the cashflow amounts and timing of
\n
those cash flows, and application of
\n
appropriate discount rates, incorporating
\n
both funding and credit risk. Values
\n
between and beyond available data
\n
points are obtained by interpolation and
\n
extrapolation. The principal inputs to
\n
these valuation techniques are as follows:
\n
Bond prices
\u2013 quoted prices are generally
\n
available for government bonds, certain
\n
corporate securities, and some
\n
mortgage-related products.
\n
Credit spreads/margins
\u2013 these reflect
\n
credit default swap levels or the return
\n
required over a benchmark rate or index
\n
to compensate for the referenced credit
\n
risk. Where available, these are derived
\n
from the price of credit default swaps or
\n
other credit-based instruments, such as
\n
debt securities. When direct prices are
\n
not available; credit spreads/margins are
\n
determined with reference to available
\n
prices of entities with similar
\n
characteristics.
\n
Interest rates
\u2013 these are principally
\n
based on interest rate swap prices
\n
referencing benchmark interest rates.
\n
Interest rates, include SONIA (Sterling
\n
Overnight Interbank Average Rate) and
\n
other overnight rates. Other quoted
\n
interest rates may also be used from
\n
both the bond, and futures markets.
\n
Foreign currency exchange rates
\u2013 there
\n
are observable prices both for spot and
\n
forward contracts and futures in the
\n
world's major currencies.
\n
Equity and equity index prices
\u2013 quoted
\n
prices are generally readily available for
\n
equity shares listed on the world's major
\n
stock exchanges and for major indices on
\n
such shares.
\n
Price volatilities and correlations
\u2013
\n
volatility is a measure of the tendency of
\n
a price to change with time. Correlation
\n
measures the degree which two or more
\n
prices or variables are observed to move
\n
together. Variables that move in the
\n
same direction show positive correlation;
\n
those that move in opposite directions
\n
are negatively correlated.
\n
Prepayment rates
\u2013 are used to reflect
\n
how fast a pool of assets prepay. The fair
\n
value of a financial instrument that can
\n
be prepaid by the issuer or borrower
\n
differs from that of an instrument that
\n
cannot be prepaid. When valuing
\n
prepayable instruments, the value of this
\n
prepayment option is considered.
\n
Recovery rates/loss given default
\u2013 are
\n
used as an input to valuation models and
\n
reserves for asset-backed securities and
\n
other credit products as an indicator of
\n
severity of losses on default. Recovery
\n
rates are primarily sourced from market
\n
data providers, the value of the
\n
underlying collateral or inferred from
\n
observable credit spreads.
\n\n\n\n\n\n\n\n\n\n\n\n
Valuation control
\n
NatWest Group's control environment for
\n
the determination of the fair value of
\n
financial instruments includes formalised
\n
procedures for the review and validation
\n
of fair values. The review of market
\n
prices and inputs is performed by an
\n
independent price verification (IPV) team.
\n
IPV is a key element of the control
\n
environment. Valuations are first
\n
performed by the business which entered
\n
into the transaction. These valuations are
\n
then reviewed by the IPV team,
\n
independent of those trading the financial
\n
instruments, in light of available pricing
\n
evidence.
\n
Independent pricing data is collated from
\n
a range of sources. Each source is
\n
reviewed for quality and the independent
\n
data applied in the IPV processes using a
\n
formalised input quality hierarchy.
\n
Consensus services are one source of
\n
independent data and encompass
\n
interest rate, currency, credit, and bond
\n
markets, providing comprehensive
\n
coverage of vanilla products and a wide
\n
selection of exotic products.
\n
Where measurement differences are
\n
identified through the IPV process these
\n
are grouped by the quality hierarchy of
\n
the independent data. If the size of the
\n
difference exceeds defined thresholds, an
\n
adjustment is made to bring the valuation
\n
to within the independently calculated fair
\n
value range.
\n
IPV takes place at least monthly, for all
\n
fair value financial instruments. The IPV
\n
control includes formalised reporting and
\n
escalation of any valuation differences in
\n
breach of established thresholds.
\n
The quality and completeness of the
\n
information gathered in the IPV process
\n
gives an indication as to the liquidity and
\n
valuation uncertainty of an instrument
\n
and forms part of the information
\n
considered when determining fair value
\n
hierarchy classifications.
\n
Initial fair value level classification of a
\n
financial instrument is carried out by the
\n
IPV team. These initial classifications are
\n
subject to senior management review.
\n
Particular attention is paid to instruments
\n
transferring from one level to another,
\n
new instrument classes or products,
\n
instruments where the transaction price
\n
is significantly different from the fair value
\n
and instruments where valuation
\n
uncertainty is high.
\n
Valuation Committees are made up of
\n
valuation specialists and senior business
\n
representatives from various functions
\n
and oversees pricing, reserving and
\n
valuations issues. These committees
\n
meet monthly to review and ratify any
\n
methodology changes. The Executive
\n
Valuation Committee meets quarterly to
\n
address key material and subjective
\n
valuation issues, to review items
\n
escalated by Valuation Committees and
\n
to discuss other relevant industry
\n
matters.
\n
The Group model risk policy sets the
\n
policy for model documentation, testing
\n
and review. Governance of the model
\n
risk policy is carried out by the Group
\n
model risk oversight committee, which
\n
comprises model risk owners and
\n
independent model experts. All models
\n
are required to be independently
\n
validated in accordance with the Model
\n
Risk Policy.
\n
Key areas of judgement
\n
Over the years the business has
\n
simplified, with most products classified
\n
as level 1 or 2 of the fair value hierarchy.
\n
However, the diverse range of products
\n
historically traded by NatWest Group
\n
means some products remain classified
\n
as level 3. Level 3 indicates a significant
\n
level of pricing uncertainty, where expert
\n
judgement is used. As such, extra
\n
disclosures are required in respect of
\n
level 3 instruments.
\n
In general, the degree of expert
\n
judgement used and hence valuation
\n
uncertainty depends on the degree of
\n
liquidity of an instrument or input.
\n
Where markets are liquid, little judgement
\n
is required. However, when the
\n
information regarding the liquidity in a
\n
particular market is not clear, a
\n
judgement may need to be made. For
\n
example, for an equity traded on an
\n
exchange, daily volumes of trading can
\n
be seen, but for an OTC derivative,
\n
assessing the liquidity of the market with
\n
no central exchange is more challenging.
\n
A key related matter is where a market
\n
moves from liquid to illiquid or vice versa.
\n
Where this movement is considered
\n
temporary, the fair value level is not
\n
changed. For example, if there is little
\n
market trading in a product on a
\n
reporting date but at the previous
\n
reporting date and during the intervening
\n
period the market has been liquid. In this
\n
case, the instrument will continue to be
\n
classified at the same level in the
\n
hierarchy. This is to provide consistency
\n
so that transfers between levels are
\n
driven by genuine changes in market
\n
liquidity and do not reflect short term or
\n
seasonal effects. Material movements
\n
between levels are reviewed quarterly by
\n
the business and IPV.
\n
The breadth and depth of the IPV data
\n
allows for a rules-based quality
\n
assessment to be made of market
\n
activity, liquidity, and pricing uncertainty,
\n
which assists with the process of
\n
allocation to an appropriate level. Where
\n
suitable independent pricing information
\n
is not readily available, the quality
\n
assessment will result in the instrument
\n
being assessed as level 3.
\n\n\n\n\n\n\n\n\n\n\n\n\n
The table below shows the assets and liabilities held by NatWest Group split by fair value hierarchy level. Level 1 are considered the most liquid instruments, and level 3 the most
\n
illiquid, valued using expert judgement and so carry the most significant price uncertainty.
\n\n \n
2024
2023
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
Trading assets
Loans
-
34,761
278
35,039
-
33,388
209
33,597
Securities
8,772
5,106
-
13,878
8,447
3,493
14
11,954
Derivatives
Interest rate
-
37,026
473
37,499
1
43,912
650
44,563
Foreign exchange
-
40,687
110
40,797
-
34,096
65
34,161
Other
-
63
47
110
-
72
108
180
Other financial assets
Loans
-
288
565
853
-
108
657
765
Securities
23,943
13,641
209
37,793
17,848
10,536
258
28,642
Total financial assets held at fair value
32,715
131,572
1,682
165,969
26,296
125,605
1,961
153,862
As a % of total fair value assets
20%
79%
1%
17%
82%
1%
Liabilities
Trading liabilities
Deposits
-
43,966
-
43,966
-
43,126
1
43,127
Debt securities in issue
-
257
-
257
-
706
-
706
Short positions
8,766
1,724
1
10,491
7,936
1,865
2
9,803
Derivatives
Interest rate
-
31,253
279
31,532
-
38,044
439
38,483
Foreign exchange
-
40,240
66
40,306
-
33,528
58
33,586
Other
-
124
120
244
-
138
188
326
Other financial liabilities
Debt securities in issue
-
1,733
3
1,736
-
1,605
3
1,608
Other deposits
-
1,787
25
1,812
-
1,280
-
1,280
Subordinated liabilities
-
234
-
234
-
237
-
237
Total financial liabilities held at fair value
8,766
121,318
494
130,578
7,936
120,529
691
129,156
As a % of total fair value liabilities
7%
93%
0%
6%
93%
1%
\n
(1)
Transfers between levels are deemed to have occurred at the beginning of the quarter in which the instrument was transferred.
\n
(2)
For an analysis of debt securities held at mandatory fair value through profit or loss by issuer as well as ratings and derivatives, by type and contract, refer to Risk and capital management \u2013 Credit risk.
\n\n\n\n\n\n\n\n\n\n\n\n\n
Valuation adjustments
\n
When valuing financial instruments in the trading book, adjustments are made to mid-
\n
market valuations to cover bid-offer spread, funding and credit risk. These adjustments
\n
are presented in the table below:
\n\n \n
2024
2023
Adjustment
\u00a3m
\u00a3m
Funding valuation adjustments
123
132
Credit valuation adjustments
190
236
Bid-offer
76
86
Product and deal specific
157
103
Total
546
557
\n
The decrease in funding valuation adjustments was driven by net exposures switching
\n
from positive to negative, primarily due to interest rates increasing. The decrease in
\n
credit valuation adjustments was driven by a reduction in exposures, primarily due to
\n
interest rates increasing and trade unwinds. The decrease in bid-offer was driven by risk
\n
reduction. New trading activity was the driver of the increase in product and deal
\n
specific, partially offset by trade unwinds.
\n
Funding valuation adjustments (FVA)
\n
FVA represents an estimate of the adjustment that a market participant would make to
\n
incorporate funding costs and benefits that arise in relation to derivative exposures. FVA
\n
is calculated as a portfolio level adjustment and can result in either a funding charge
\n
(positive) or funding benefit (negative).
\n
Funding levels are applied to estimated potential future exposures. For uncollateralised
\n
derivatives, the exposure reflects the future valuation of the derivative. For collateralised
\n
derivatives, the exposure reflects the difference between the future valuation of the
\n
derivative and the level of collateral posted.
\n
Credit valuation adjustments (CVA)
\n
CVA represents an estimate of the adjustment to fair value that is made to incorporate
\n
the counterparty credit risk inherent in derivative exposures. CVA is calculated on a
\n
portfolio basis reflecting an estimate of the amount a third party would charge to
\n
assume the credit risk.
\n
Collateral held under a credit support agreement is factored into the CVA calculation. In
\n
such cases where NatWest Group holds collateral against counterparty exposures, CVA
\n
is held to the extent that residual risk remains.
\n
FVA and CVA are actively managed by a credit and market risk hedging process, and
\n
therefore movements in CVA and FVA are partially offset by trading revenue on the
\n
hedges.
\n
Bid-offer
\n
Fair value positions are required to be marked to exit levels, represented by bid (long
\n
positions) or offer (short positions) levels. Non-derivative positions are typically marked
\n
directly to bid or offer prices. However derivative exposures are adjusted to exit levels
\n
by taking bid-offer reserves calculated on a portfolio basis. The reserving approach is
\n
based on current market bid-offer spreads and standard market bucketing of risk.
\n
Bid-offer spreads vary by maturity and risk type to reflect different spreads in the
\n
market. For positions where there is no observable quote, the bid-offer spreads are
\n
widened in comparison to proxies to reflect reduced liquidity or observability.
\n
Netting is applied on a portfolio basis to reflect the value at which NatWest Group
\n
believes it could exit the net risk of the portfolio, rather than the sum of exit costs for
\n
each of the portfolio\u2019s individual trades. This is applied where the asset and liability
\n
positions are managed as a portfolio for risk and reporting purposes.
\n
Product and deal specific
\n
On initial recognition of financial assets and liabilities valued using valuation techniques
\n
which have a significant dependence on information other than observable market data,
\n
any difference between the transaction price and that derived from the valuation
\n
technique is deferred. Such amounts are recognised in the income statement over the
\n
life of the transaction, when market data becomes observable, or when the transaction
\n
matures or is closed out as appropriate. On 31 December 2024, net gains of \u00a3139
\n
million (2023 - \u00a378 million) were carried forward. During the year, net gains of \u00a3218
\n
million (2023 - \u00a3119 million) were deferred and \u00a3157 million (2023 - \u00a3115 million) were
\n
recognised in the income statement.
\n
Where system-generated valuations do not accurately reflect market prices, manual
\n
valuation adjustments are applied either at a position or portfolio level. Manual
\n
adjustments are subject to the scrutiny of independent control teams and are subject to
\n
monthly review by senior management.
\n
Own credit
\n
NatWest Group considers the effect of its own credit standing when valuing financial
\n
liabilities recorded at fair value. Own credit spread adjustments are made when valuing
\n
issued debt held at fair value, including issued structured notes. An own credit
\n
adjustment is applied to positions where it is believed that counterparties would consider
\n
NatWest Group\u2019s creditworthiness when pricing trades. Accumulated changes in fair
\n
value due to credit risk are \u00a344 million (2023 \u2013 nil).
\n\n\n\n\n\n\n\n\n\n\n\n\n
Level 3 additional information
\n
For illiquid assets and liabilities, classified as level 3, additional information is provided on the valuation techniques used and price sensitivity of the products to those inputs. This is to
\n
enable the reader to gauge the level of uncertainty that arises from positions with significant unobservable inputs or modelling parameters.
\n
Level 3 ranges of unobservable inputs
\n
The table below provides additional information on level 3 instruments and inputs. This shows the valuation technique used for the fair value calculation, the unobservable input and
\n
input range.
\n\n \n
2024
20
23
Financial instrument
Valuation technique
Unobservable inputs
Units
Low
High
Low
High
Trading assets and Other financial assets
Loans
Price-based
Price
%
88
123
88
123
Discount cash flow
Credit spreads
bps
36
93
49
119
Debt securities
Price-based
Price
%
-
116
-
119
Equity Shares
Price-based
Price
GBP
-
47,312
-
32,142
Price-based
Price
%
-
15
-
30
Discount cash flow
Discount margin
%
9
13
7
9
Net asset valuation
Fund NAV
%
80
120
80
120
Derivative assets and liabilities
Credit derivatives
Credit derivative pricing
Credit spreads
bps
15
86
13
600
Option pricing
Correlation
%
(15)
95
(15)
95
Volatility
%
30
80
30
80
Upfront points
%
-
99
-
99
Recovery rate
%
-
60
-
60
Interest rate & FX
Option pricing
Correlation
%
(50)
98
(50)
99
derivatives
Volatility
%
3
99
30
111
Constant Prepayment Rate
%
2
20
2
22
Mean Reversion
%
-
20
-
20
Inflation volatility
%
1
2
2
2
Inflation rate
%
2
2
2
3
\n
(1)
Valuation for private equity investments may be estimated by looking at past prices of similar stocks and from valuation statements where valuations are usually derived from earnings measures such as EBITDA or net asset value (NAV). Similarly, for
\n
equity or bond fund investments, prices may be estimated from valuation or credit statements using NAV or similar measures.
\n
(2)
NatWest Group does not have any material liabilities measured at fair value that are issued with an inseparable third-party credit enhancement.
\n
Level 3 sensitivities
\n
The level 3 sensitivities presented on the next page are calculated at a trade or low-level portfolio basis rather than an overall portfolio basis. As individual sensitivities are aggregated
\n
with no reflection of the correlated nature between instruments, the overall portfolio sensitivity may not be accurately reflected. For example, some portfolios may be negatively
\n
correlated to others, where a downwards movement in one asset would produce an upwards movement in another. However, due to the additive presentation of the above figures
\n
this correlation impact cannot be displayed. As such, the actual potential downside sensitivity of the total portfolio may be less than the non-correlated sum of the additive figures as
\n
shown in the table on the next page.
\n\n\n\n\n\n\n\n\n\n\n\n\n
Alternative assumptions
\n
Reasonably plausible alternative assumptions of unobservable inputs are determined based on a specified target level of certainty of 90%.
\n
Alternative assumptions are determined with reference to all available evidence including consideration of the following: quality of independent pricing information considering
\n
consistency between different sources, variation over time, perceived tradability or otherwise of available quotes; consensus service dispersion ranges; volume of trading activity and
\n
market bias (e.g. one-way inventory); day 1 profit or loss arising on new trades; number and nature of market participants; market conditions; modelling consistency in the market;
\n
size and nature of risk; length of holding of position; and market intelligence.
\n
Other considerations
\n
Whilst certain inputs used to calculate CVA, FVA and own credit adjustments are not based on observable market data, the uncertainty of these inputs is not considered to have a
\n
significant effect on the net valuation of the related derivative portfolios and issued debt.
\n
As such, the fair value levelling of the derivative portfolios and issued debt is not determined by CVA, FVA or own credit inputs. In addition, any fair value sensitivity driven by these
\n
inputs is not included in the level 3 sensitivities presented.
\n
The table below shows the high and low range of fair value of the level 3 assets and liabilities. This range incorporates the range of fair value inputs as described in the previous table.
\n\n \n
2024
2023
Level 3
Favourable
Unfavourable
Level 3
Favourable
Unfavourable
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
Trading assets
Loans
278
-
-
209
-
-
Securities
-
-
-
14
-
-
Derivatives
Interest rate
473
20
(20)
650
20
(20)
Foreign exchange
110
-
-
65
-
-
Other
47
-
-
108
10
(10)
Other financial assets
Loans
565
-
(10)
657
-
(40)
Securities
209
20
(30)
258
20
(50)
Total financial assets held at fair value
1,682
40
(60)
1,961
50
(120)
Liabilities
Trading liabilities
Deposits
-
-
-
1
-
-
Short positions
1
-
-
2
-
-
Derivatives
Interest rate
279
10
(10)
439
10
(10)
Foreign exchange
66
-
-
58
-
-
Other
120
10
(10)
188
10
(10)
Other financial liabilities
Debt securities in issue
3
-
-
3
-
-
Other deposits
25
10
(20)
-
-
-
Total financial liabilities held at fair value
494
30
(40)
691
20
(20)
\n\n\n\n\n\n\n\n\n\n\n\n\n
Movement in level 3 assets and liabilities
\n
The following table shows the movement in level 3 assets and liabilities in the year.
\n\n \n
Other
Other
Other
Other
Derivatives
trading
financial
Total
Derivatives
trading
financial
Total
assets
assets (2)
assets (3)
assets
liabilities
liabilities (2)
liabilities
liabilities
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January
823
223
915
1,961
685
3
3
691
Amounts recorded in the income statement
(1)
(122)
(17)
12
(127)
(121)
-
-
(121)
Amount recorded in the statement of
comprehensive income
-
-
13
13
-
-
-
-
Level 3 transfers in
7
1
56
64
1
2
25
28
Level 3 transfers out
(3)
(19)
(241)
(263)
(2)
(3)
-
(5)
Purchases/originations
147
118
117
382
121
1
-
122
Settlements/other decreases
(44)
(27)
(18)
(89)
(32)
-
-
(32)
Sales
(178)
-
(72)
(250)
(182)
(2)
-
(184)
Foreign exchange and other adjustments
-
(1)
(8)
(9)
(5)
-
-
(5)
At 31 December
630
278
774
1,682
465
1
28
494
Amounts recorded in the income statement in respect of balances held
at period end - unrealised
83
1
12
96
56
-
-
56
2023
At 1 January
1,007
396
930
2,333
975
1
-
976
Amounts recorded in the income statement
(1)
(156)
(88)
1
(243)
(313)
-
-
(313)
Amount recorded in the statement of comprehensive income
-
-
32
32
-
-
-
-
Level 3 transfers in
6
15
16
37
7
2
-
9
Level 3 transfers out
(5)
(32)
(190)
(227)
(9)
(2)
-
(11)
Purchases/originations
180
8
275
463
195
2
3
200
Settlements/other decreases
(70)
(8)
(86)
(164)
(51)
-
-
(51)
Sales
(137)
(65)
(52)
(254)
(116)
-
-
(116)
Foreign exchange and other adjustments
(2)
(3)
(11)
(16)
(3)
-
-
(3)
At 31 December
823
223
915
1,961
685
3
3
691
Amounts recorded in the income statement in respect of balances held
at period end - unrealised
67
(39)
1
29
(121)
-
-
(121)
\n
(1)
There were net losses on trading assets and liabilities of \u00a318 million (2023 - net gains of \u00a369 million) was included in income from trading activities. Net gains on other instruments of \u00a312 million (2023 - net gains of \u00a31 million) was included in other
\n
operating income or interest income as appropriate.
\n
(2)
Other trading assets and other trading liabilities comprise assets and liabilities held at fair value in trading portfolios.
\n
(3)
Other financial assets comprise fair value through other comprehensive income, designated as at fair value through profit or loss and other fair value through profit or loss.
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 measured at amortised cost
on the balance sheet.
\n\n \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\n \n
Items where
fair value
Carrying
Fair value hierarchy level
approximates
value
Fair value
Level 1
Level 2
Level 3
carrying value
2024
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Financial assets
Cash and balances at central banks
93.0
93.0
-
-
-
93.0
Settlement balances
2.1
2.1
-
-
-
2.1
Loans to banks
6.0
5.9
-
1.8
0.5
3.6
Loans to customers
400.3
396.6
-
34.9
361.7
-
Other financial assets - securities
24.6
24.6
4.3
12.4
7.9
-
2023
Financial assets
Cash and balances at central banks
104.3
104.3
-
-
-
104.3
Settlement balances
7.2
7.2
-
-
-
7.2
Loans to banks
6.9
7.0
-
2.2
0.6
4.2
Loans to customers
381.4
373.2
-
27.5
345.7
-
Other financial assets - securities
21.7
21.6
4.0
6.6
11.0
-
2024
Financial liabilities
Bank deposits
31.5
31.2
-
23.9
3.0
4.3
Customer deposits
433.5
433.3
-
24.3
46.0
363.0
Settlement balances
1.7
1.7
-
-
-
1.7
Other financial liabilities
- debt securities in issue
57.5
57.6
-
48.9
8.7
-
Subordinated liabilities
5.9
6.0
-
6.0
-
-
Notes in circulation
3.3
3.3
-
-
-
3.3
2023
Financial liabilities
Bank deposits
22.2
22.3
-
15.4
2.7
4.2
Customer deposits
431.4
431.0
-
30.7
48.8
351.5
Settlement balances
6.6
6.6
-
-
-
6.6
Other financial liabilities
- debt securities in issue
52.2
52.2
-
41.7
10.5
-
Subordinated liabilities
5.5
5.4
-
5.4
-
-
Notes in circulation
3.2
3.2
-
-
-
3.2
\n
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, including but not
limited to, cash and balances at central banks, settlement
balances, loans with short-term maturities, notes in circulation
and customer demand deposits, carrying value is deemed a
reasonable approximation of fair value.
Loans to banks and customers
In estimating the fair value of net loans to customers and banks
measured at amortised cost, NatWest Group\u2019s loans are
segregated into appropriate portfolios reflecting the
characteristics of the constituent loans. Two principal methods
are used to estimate fair value:
(a)
Contractual cash flows that are discounted using a market
discount rate that incorporates the current spread for the
borrower or where this is not observable, the spread for
borrowers of a similar credit standing.
(b)
Expected cash flows (unadjusted for credit losses) are
discounted at the current offer rate for the same or similar
products. The current methodology caps all loan values at
par rather than modelling clients\u2019 option to repay loans
early. This approach is adopted for lending portfolios in
Retail Banking, Commercial & Institutional (SME loans) and
Private Banking in order to reflect the homogeneous nature
of these portfolios.
Debt securities and subordinated liabilities
Most debt securities are valued using quoted prices in active
markets or from quoted prices of similar financial instruments.
The remaining population is valued using discounted cashflows
at current offer rates.
Bank and customer deposits
Fair values of deposits are estimated using discounted cash
flow valuation techniques. Where required, methodologies can
be revised as additional information and valuation inputs
become available.12 Trading assets and liabilities
Trading assets and liabilities comprise assets and liabilities held at fair value and classified as held-for-trading. Financial instruments are classified as held-for-trading if
they are held for the purpose of selling or repurchasing them in the short term, to make a spread between purchase and sale price or held to take advantage of
movements in prices and yields.
For accounting policy information refer to Accounting policy 3.8.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Assets
\u00a3m
\u00a3m
Loans
\u00a0 \u00a0
Reverse repos
27,127
23,694
Collateral given
7,367
9,141
Other loans
545
762
Total loans
35,039
33,597
Securities
\u00a0 \u00a0
Central and local government
\u00a0 \u00a0
- UK
2,077
2,729
- US
3,734
2,600
- Other
3,506
3,062
Financial institutions and corporate
4,561
3,563
Total securities
13,878
11,954
Total
48,917
45,551
Liabilities
\u00a0 \u00a0
Deposits
\u00a0 \u00a0
Repos
30,562
26,902
Collateral received
12,509
15,075
Other deposits
895
1,150
Total deposits
43,966
43,127
Debt securities in issue
257
706
Short positions
\u00a0 \u00a0
Central and local government
\u00a0 \u00a0
- UK
2,680
1,893
- US
1,677
2,071
- Other
4,755
4,049
Financial institutions and Corporate
1,379
1,790
Total short positions
10,491
9,803
Total
54,714
53,636
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsDesignatedAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00700": { "value": "2.2. Fair value \u2013 financial instruments
We measure financial instruments at fair
value when they are classified as
mandatory fair value through profit or
loss; held-for-trading; designated fair
value through profit or loss and fair value
through other comprehensive income
and they are recognised in the financial
statements at fair value. All derivatives
are measured at fair value.
We manage some portfolios of financial
assets and financial liabilities based on
our net exposure to either market or
credit risk. In these cases, the fair value is
derived from the net risk exposure of that
portfolio with portfolio level adjustments
applied to incorporate bid-offer spreads,
counterparty credit risk, and funding
costs (refer to \u2018Valuation Adjustments\u2019).
Where the market for a financial
instrument is not active, fair value is
established using a valuation technique.
These valuation techniques involve a
degree of estimation, the extent of which
depends on the instrument\u2019s complexity
and the availability of market-based data.
The complexity and uncertainty in the
financial instrument\u2019s fair value is
categorised using the fair value
hierarchy.
The use of market indicators as inputs to
fair value is assumed to include current
information and knowledge regarding the
effect of climate risk.3.8. Financial instruments
Financial instruments are measured at
fair value on initial recognition on the
balance sheet.
Monetary financial assets are classified
into one of the following subsequent
measurement categories (subject to
business model assessment and review of
contractual cash flow for the purposes of
sole payments of principal and interest
where applicable):
\ue001
amortised cost
measured at cost
using the effective interest rate
method, less any impairment
allowance;
\ue001
fair value through other
comprehensive income (FVOCI)
measured at fair value, using the
effective interest rate method and
changes in fair value through other
comprehensive income;
\ue001
mandatory fair value through profit or
loss (MFVTPL)
measured at fair value
and changes in fair value reported in
the income statement; or
\ue001
designated at fair value through profit
or loss (DFV)
measured at fair value
and changes in fair value reported in
the income statement.
Classification by business model reflects
how we manage our financial assets to
generate cash flows. A business model
assessment helps to ascertain the
measurement approach depending on
whether cash flows result from holding
financial assets to collect the contractual
cash flows, from selling those financial
assets, or both.
Business model assessment of assets is
made at portfolio level, being the level at
which they are managed to achieve a
predefined business objective. This is
expected to result in the most consistent
classification of assets because it aligns
with the stated objectives for the
portfolio, its risk management, manager\u2019s
remuneration and the ability to monitor
sales of assets from a portfolio. When a
significant change to our business is
communicated to external parties, we
reassess our business model for
managing those financial assets. We
reclassify financial assets if we have a
significant change to the business model.
A reclassification is applied prospectively
from the reclassification date.
The contractual terms of a financial
asset; any leverage features; prepayment
and extension terms; and discounts or
penalties to interest rates that are part of
meeting environmental, social and
governance targets as well as other
contingent and leverage features, non-
recourse arrangements and features that
could modify the timing and/or amount of
the contractual cash flows that might
reset the effective rate of interest; are
considered in determining whether cash
flows are solely payments of principal and
interest.
Certain financial assets may be
designated at fair value through profit or
loss (DFV) upon initial recognition if such
designation eliminates, or significantly
reduces, accounting mismatch.
Equity shares are measured at fair value
through profit or loss unless specifically
elected as at fair value through other
comprehensive income (FVOCI).
Upon disposal, the cumulative gains or
losses in fair value through other
comprehensive income reserve are
recycled to the income statement for
monetary assets and for non-monetary
assets (equity shares) the cumulative
gains or losses are transferred directly to
retained earnings.
Regular way purchases and sales of
financial assets classified as amortised
cost are recognised on the settlement
date; all other regular way transactions in
financial assets are recognised on the
trade date.
Financial liabilities are classified into one
of following measurement categories:
\ue001
amortised cost measured at cost
using the effective interest rate
method;
\ue001
held for trading measured at fair
value and changes in fair value
reported in income statement; or
\ue001
designated at fair value through profit
or loss measured at fair value and
changes in fair value reported in the
income statement except changes in
fair value attributable to the credit
risk component recognised in other
comprehensive income when no
accounting mismatch occurs.3.11. Derivatives and hedging
Derivatives are reported on the balance
sheet at fair value.
We use derivatives as part of our trading
activities, to manage our own risk such
as interest rate, foreign exchange, or
credit risk or in certain customer
transactions. Not all derivatives used to
manage risk are in hedge accounting
relationships (an IFRS method to reduce
accounting mismatch from changes in
the fair value of the derivatives reported
in the income statement).
Gains and losses arising from changes in
the fair value of derivatives that are not
in hedge relationships are recognised in
Income from trading activities unless
those derivatives are managed together
with financial instruments designated at
fair value; these gains and losses are
included in Other operating income.
Hedge accounting
Hedge accounting relationships are
designated and documented at inception
in line with the requirements of IAS 39
Financial instruments \u2013 Recognition and
Measurement.
The documentation identifies the hedged
item, the hedging instrument and details
of the risk that is being hedged and the
way in which effectiveness will be
assessed at inception and during the
period of the hedge. When designating a
hedging relationship, we consider: the
economic relationship between the
hedged item (including the risk being
hedged) and the hedging instrument; the
nature of the risk; the risk management
objective and strategy for undertaking
the hedge; and the appropriateness of
the method that will be used to assess
hedge effectiveness.
Designated hedging relationships must be
expected to be highly effective both on a
prospective and retrospective basis. This
is assessed using regression techniques
which model the degree of offsetting
between the changes in fair value or
cash flows attributable to the hedged risk
and the changes in fair value of the
designated hedging derivatives.
Ineffectiveness is measured based on
actual levels of offsetting and recognised
in the income statement.
We enter into three types of hedge
accounting relationships.
Fair value hedge
- the gain or loss on the
hedging instrument and the hedged item
attributable to the hedged risk is
recognised in the income statement.
Where the hedged item is measured at
amortised cost, the balance sheet
amount of the hedged item is also
adjusted.
Cash flow hedge
- the effective portion of
the designated hedge relationship is
recognised in other comprehensive
income and the ineffective portion in the
income statement. When the hedged
item (forecasted cash flows) results in the
recognition of a financial asset or financial
liability, the cumulative gain or loss is
reclassified from equity to the income
statement in the same periods in which
the hedged forecasted cash flows affect
the income statement.
Hedge of net investment in a foreign
operation
-
in the hedge of a net
investment in a foreign operation, the
effective portion of the designated hedge
relationship is recognised in other
comprehensive income. Any ineffective
portion is recognised in profit or loss.
Non-derivative financial liabilities as well
as derivatives may be designated as a
hedging instrument in a net investment
hedge.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the
hedge no longer meets the criteria for
hedge accounting i.e. the hedge is not
highly effective in offsetting changes in
fair value or cash flows attributable to the
hedged risk, consistent with the
documented risk management strategy;
the hedging instrument expires or is sold,
terminated or exercised; or if hedge
designation is revoked.
For fair value hedging any cumulative
adjustment is amortised to the income
statement over the life of the hedged
item. Where the hedged item is no longer
on the balance sheet the adjustment to
the hedged item is reported in the
income statement. For cash flow hedging
the cumulative unrealised gain or loss is
reclassified from equity to the income
statement when the hedged cash flows
occur or, if the forecast transaction
results in the recognition of a financial
asset or financial liability, when the
hedged forecast cash flows affect the
income statement. Where a forecast
transaction is no longer expected to
occur, the cumulative unrealised gain or
loss is reclassified from equity to the
income statement immediately.
For net investment hedging on disposal
or partial disposal of a foreign operation,
the amount accumulated in equity is
reclassified from equity to the income
statement.Critical accounting policy: Fair value \u2013 financial
instruments
\n
Financial instruments classified as mandatory fair value through
\n
profit or loss; held-for-trading; designated fair value through
\n
profit or loss; and fair value through other comprehensive
\n
income are recognised in the financial statements at fair value.
\n
All derivatives are measured at fair value.
\n
Fair value is the price that would be received to sell an asset or
\n
paid to transfer a liability in an orderly transaction between
\n
market participants at the measurement date. A fair value
\n
measurement considers the characteristics of the asset or
\n
liability and the assumptions that a market participant would
\n
consider when pricing the asset or liability.
\n
NatWest Group manages some portfolios of financial assets
\n
and financial liabilities based on its net exposure to either
\n
market or credit risk. In these cases, the fair value is derived
\n
from the net risk exposure of that portfolio with portfolio level
\n
adjustments applied to incorporate bid-offer spreads,
\n
counterparty credit risk, and funding costs (refer to \u2018Valuation
\n
Adjustments\u2019).
\n
Where the market for a financial instrument is not active, fair
\n
value is established using a valuation technique. These
\n
valuation techniques involve a degree of estimation, the extent
\n
of which depends on the instrument\u2019s complexity and the
\n
availability of market-based data. The complexity and
\n
uncertainty in the financial instrument\u2019s fair value is categorised
\n
using the fair value hierarchy.
\n
For accounting policy information refer to Accounting policies
\n2.2, 3.8 and 3.11.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00699": { "value": "2.2. Fair value \u2013 financial instruments
We measure financial instruments at fair
value when they are classified as
mandatory fair value through profit or
loss; held-for-trading; designated fair
value through profit or loss and fair value
through other comprehensive income
and they are recognised in the financial
statements at fair value. All derivatives
are measured at fair value.
We manage some portfolios of financial
assets and financial liabilities based on
our net exposure to either market or
credit risk. In these cases, the fair value is
derived from the net risk exposure of that
portfolio with portfolio level adjustments
applied to incorporate bid-offer spreads,
counterparty credit risk, and funding
costs (refer to \u2018Valuation Adjustments\u2019).
Where the market for a financial
instrument is not active, fair value is
established using a valuation technique.
These valuation techniques involve a
degree of estimation, the extent of which
depends on the instrument\u2019s complexity
and the availability of market-based data.
The complexity and uncertainty in the
financial instrument\u2019s fair value is
categorised using the fair value
hierarchy.
The use of market indicators as inputs to
fair value is assumed to include current
information and knowledge regarding the
effect of climate risk.
2.3. Loan impairment provisions:
expected credit losses (ECL)
At each balance sheet date each financial
asset or portfolio of financial assets
measured at amortised cost or at fair
value through other comprehensive
income, issued financial guarantee and
loan commitment (other than those
classified as held for trading) is assessed
for impairment. Any change in
impairment is reported in the income
statement.
Loss allowances are forward-looking,
based on 12-month ECL where there has
not been a significant increase in credit
risk rating, otherwise allowances are
based on lifetime expected losses.
ECL is a probability-weighted estimate of
credit losses. The probability is
determined by the risk of default which is
applied to the cash flow estimates. In the
absence of a change in credit rating,
allowances are recognised when there is
a reduction in the net present value of
expected cash flows. Following a
significant increase in credit risk, ECL is
adjusted from 12 months to lifetime. This
will lead to a higher impairment charge.
The measurement of expected credit loss
considers the ability of borrowers to
make payments as they fall due. Future
cashflows are discounted, so long-dated
cashflows are less likely to affect current
expectations on credit loss. Our
assessment of sector specific risks, and
whether additional adjustments are
required, include expectations of the
ability of those sectors to meet their
financing needs in the market. Changes
in credit stewardship and credit risk
appetite that stem from climate transition
policies may directly affect our positions.
Judgement is exercised as follows:
\ue001
Non-modelled portfolios
\u2013 use a
standardised capital requirement
under Basel II. Under IFRS 9, they
have bespoke treatments for the
identification of significant increase in
credit risk. Benchmark PDs, EADs
and LGDs are reviewed annually for
appropriateness. The ECL calculation
is based on expected future cash
flows, which is typically applied at a
portfolio level.
\ue001
Multiple economic scenarios (MES)
\u2013
the central, or base, scenario is most
critical to the ECL calculation,
independent of the method used to
generate a range of alternative
outcomes and their probabilities.
\ue001
Significant increase in credit risk
\u2013
IFRS 9 requires that at each reporting
date, an entity shall assess whether
the credit risk on an account has
increased significantly since initial
recognition. Part of this assessment
requires a comparison to be made
between the current lifetime PD (i.e.
the current probability of default over
the remaining lifetime) with the
equivalent lifetime PD as determined
at the date of initial recognition.
On restructuring where a financial asset
is not derecognised, the revised cash
flows are used in re-estimating the credit
loss. Where restructuring causes
derecognition of the original financial
asset, the fair value of the replacement
asset is used as the closing cash flow of
the original asset.
Where in the course of the orderly
realisation of a loan, it is exchanged for
equity shares or property, the exchange
is accounted for as the sale of the loan
and the acquisition of equity securities or
investment property. Where our acquired
interest is in equity shares, relevant
policies for control, associates and joint
ventures apply.
Impaired financial assets are written off
and therefore derecognised from the
balance sheet when we conclude that
there is no longer any realistic prospect
of recovery of part, or all, of the loan. For
financial assets that are individually
assessed for impairment, the timing of
the write-off is determined on a case-by-
case basis.
Such financial assets are reviewed
regularly and write-off will be prompted
by bankruptcy, insolvency, re-negotiation,
and similar events
The typical time frames from initial
impairment to write-off for our
collectively assessed portfolios are:
\ue001
Retail mortgages: write-off usually
occurs within five years, or earlier,
when an account is closed, but can
be longer where the customer
engages constructively;
\ue001
Credit cards: the irrecoverable
amount is typically written off after
twelve arrears cycles or at four years
post default any remaining amounts
outstanding are written off;
\ue001
Overdrafts and other unsecured
loans: write-off occurs within six
years;
\ue001
Commercial loans: write-offs are
determined in the light of individual
circumstances; and uncollateralised
impaired business loans are generally
written off within five years.3.8. Financial instruments
Financial instruments are measured at
fair value on initial recognition on the
balance sheet.
Monetary financial assets are classified
into one of the following subsequent
measurement categories (subject to
business model assessment and review of
contractual cash flow for the purposes of
sole payments of principal and interest
where applicable):
\ue001
amortised cost
measured at cost
using the effective interest rate
method, less any impairment
allowance;
\ue001
fair value through other
comprehensive income (FVOCI)
measured at fair value, using the
effective interest rate method and
changes in fair value through other
comprehensive income;
\ue001
mandatory fair value through profit or
loss (MFVTPL)
measured at fair value
and changes in fair value reported in
the income statement; or
\ue001
designated at fair value through profit
or loss (DFV)
measured at fair value
and changes in fair value reported in
the income statement.
Classification by business model reflects
how we manage our financial assets to
generate cash flows. A business model
assessment helps to ascertain the
measurement approach depending on
whether cash flows result from holding
financial assets to collect the contractual
cash flows, from selling those financial
assets, or both.
Business model assessment of assets is
made at portfolio level, being the level at
which they are managed to achieve a
predefined business objective. This is
expected to result in the most consistent
classification of assets because it aligns
with the stated objectives for the
portfolio, its risk management, manager\u2019s
remuneration and the ability to monitor
sales of assets from a portfolio. When a
significant change to our business is
communicated to external parties, we
reassess our business model for
managing those financial assets. We
reclassify financial assets if we have a
significant change to the business model.
A reclassification is applied prospectively
from the reclassification date.
The contractual terms of a financial
asset; any leverage features; prepayment
and extension terms; and discounts or
penalties to interest rates that are part of
meeting environmental, social and
governance targets as well as other
contingent and leverage features, non-
recourse arrangements and features that
could modify the timing and/or amount of
the contractual cash flows that might
reset the effective rate of interest; are
considered in determining whether cash
flows are solely payments of principal and
interest.
Certain financial assets may be
designated at fair value through profit or
loss (DFV) upon initial recognition if such
designation eliminates, or significantly
reduces, accounting mismatch.
Equity shares are measured at fair value
through profit or loss unless specifically
elected as at fair value through other
comprehensive income (FVOCI).
Upon disposal, the cumulative gains or
losses in fair value through other
comprehensive income reserve are
recycled to the income statement for
monetary assets and for non-monetary
assets (equity shares) the cumulative
gains or losses are transferred directly to
retained earnings.
Regular way purchases and sales of
financial assets classified as amortised
cost are recognised on the settlement
date; all other regular way transactions in
financial assets are recognised on the
trade date.
Financial liabilities are classified into one
of following measurement categories:
\ue001
amortised cost measured at cost
using the effective interest rate
method;
\ue001
held for trading measured at fair
value and changes in fair value
reported in income statement; or
\ue001
designated at fair value through profit
or loss measured at fair value and
changes in fair value reported in the
income statement except changes in
fair value attributable to the credit
risk component recognised in other
comprehensive income when no
accounting mismatch occurs.
3.9. Netting
Financial assets and financial liabilities are
offset, and the net amount presented on
the balance sheet when, and only when,
we currently have a legally enforceable
right to set off the recognised amounts
and we intend either to settle on a net
basis or to realise the asset and settle the
liability simultaneously. We are party to a
number of arrangements, including
master netting agreements, that give us
the right to offset financial assets and
financial liabilities, but where we do not
intend to settle the amounts net or
simultaneously, the assets and liabilities
concerned are presented separately on
the balance sheet.3.11. Derivatives and hedging
Derivatives are reported on the balance
sheet at fair value.
We use derivatives as part of our trading
activities, to manage our own risk such
as interest rate, foreign exchange, or
credit risk or in certain customer
transactions. Not all derivatives used to
manage risk are in hedge accounting
relationships (an IFRS method to reduce
accounting mismatch from changes in
the fair value of the derivatives reported
in the income statement).
Gains and losses arising from changes in
the fair value of derivatives that are not
in hedge relationships are recognised in
Income from trading activities unless
those derivatives are managed together
with financial instruments designated at
fair value; these gains and losses are
included in Other operating income.
Hedge accounting
Hedge accounting relationships are
designated and documented at inception
in line with the requirements of IAS 39
Financial instruments \u2013 Recognition and
Measurement.
The documentation identifies the hedged
item, the hedging instrument and details
of the risk that is being hedged and the
way in which effectiveness will be
assessed at inception and during the
period of the hedge. When designating a
hedging relationship, we consider: the
economic relationship between the
hedged item (including the risk being
hedged) and the hedging instrument; the
nature of the risk; the risk management
objective and strategy for undertaking
the hedge; and the appropriateness of
the method that will be used to assess
hedge effectiveness.
Designated hedging relationships must be
expected to be highly effective both on a
prospective and retrospective basis. This
is assessed using regression techniques
which model the degree of offsetting
between the changes in fair value or
cash flows attributable to the hedged risk
and the changes in fair value of the
designated hedging derivatives.
Ineffectiveness is measured based on
actual levels of offsetting and recognised
in the income statement.
We enter into three types of hedge
accounting relationships.
Fair value hedge
- the gain or loss on the
hedging instrument and the hedged item
attributable to the hedged risk is
recognised in the income statement.
Where the hedged item is measured at
amortised cost, the balance sheet
amount of the hedged item is also
adjusted.
Cash flow hedge
- the effective portion of
the designated hedge relationship is
recognised in other comprehensive
income and the ineffective portion in the
income statement. When the hedged
item (forecasted cash flows) results in the
recognition of a financial asset or financial
liability, the cumulative gain or loss is
reclassified from equity to the income
statement in the same periods in which
the hedged forecasted cash flows affect
the income statement.
Hedge of net investment in a foreign
operation
-
in the hedge of a net
investment in a foreign operation, the
effective portion of the designated hedge
relationship is recognised in other
comprehensive income. Any ineffective
portion is recognised in profit or loss.
Non-derivative financial liabilities as well
as derivatives may be designated as a
hedging instrument in a net investment
hedge.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the
hedge no longer meets the criteria for
hedge accounting i.e. the hedge is not
highly effective in offsetting changes in
fair value or cash flows attributable to the
hedged risk, consistent with the
documented risk management strategy;
the hedging instrument expires or is sold,
terminated or exercised; or if hedge
designation is revoked.
For fair value hedging any cumulative
adjustment is amortised to the income
statement over the life of the hedged
item. Where the hedged item is no longer
on the balance sheet the adjustment to
the hedged item is reported in the
income statement. For cash flow hedging
the cumulative unrealised gain or loss is
reclassified from equity to the income
statement when the hedged cash flows
occur or, if the forecast transaction
results in the recognition of a financial
asset or financial liability, when the
hedged forecast cash flows affect the
income statement. Where a forecast
transaction is no longer expected to
occur, the cumulative unrealised gain or
loss is reclassified from equity to the
income statement immediately.
For net investment hedging on disposal
or partial disposal of a foreign operation,
the amount accumulated in equity is
reclassified from equity to the income
statement.9 Financial instruments - classification
Financial instruments are contracts that give rise to a financial asset of one entity and a corresponding financial liability or equity instrument of a counterparty entity,
such as cash, derivatives, loans, deposits and settlement balances. This note presents financial instruments classified in accordance with IFRS 9 \u2013 Financial Instruments.
Judgement: classification of financial assets
Classification of financial assets between amortised cost and fair
value through other comprehensive income requires a degree of
judgement in respect of business models and contractual
cashflows.
\ue001
The business model criteria is assessed at a portfolio level to
determine whether assets are classified as held to collect or
held to collect and sell. Information that is considered in
determining the applicable business model includes: the
portfolio\u2019s policies and objectives; how the performance and
risks of the portfolio are managed, evaluated and reported
to management; and the frequency, volume and timing of
sales in prior periods, sales expectation for future periods,
and the reasons for sales.
\ue001
The contractual cash flow characteristics of financial assets
are assessed with reference to whether the cash flows
represent solely payments of principal and interest (SPPI). A
level of judgement is made in assessing terms that could
change the contractual cash flows so that it would not meet
the condition for SPPI, including contingent and leverage
features,
non-recourse arrangements and features that
could modify the time value of money.
For accounting policy information refer to Accounting policies
3.8, 3.9 and 3.11.Critical accounting policy: Fair value \u2013 financial
instruments
\n
Financial instruments classified as mandatory fair value through
\n
profit or loss; held-for-trading; designated fair value through
\n
profit or loss; and fair value through other comprehensive
\n
income are recognised in the financial statements at fair value.
\n
All derivatives are measured at fair value.
\n
Fair value is the price that would be received to sell an asset or
\n
paid to transfer a liability in an orderly transaction between
\n
market participants at the measurement date. A fair value
\n
measurement considers the characteristics of the asset or
\n
liability and the assumptions that a market participant would
\n
consider when pricing the asset or liability.
\n
NatWest Group manages some portfolios of financial assets
\n
and financial liabilities based on its net exposure to either
\n
market or credit risk. In these cases, the fair value is derived
\n
from the net risk exposure of that portfolio with portfolio level
\n
adjustments applied to incorporate bid-offer spreads,
\n
counterparty credit risk, and funding costs (refer to \u2018Valuation
\n
Adjustments\u2019).
\n
Where the market for a financial instrument is not active, fair
\n
value is established using a valuation technique. These
\n
valuation techniques involve a degree of estimation, the extent
\n
of which depends on the instrument\u2019s complexity and the
\n
availability of market-based data. The complexity and
\n
uncertainty in the financial instrument\u2019s fair value is categorised
\n
using the fair value hierarchy.
\n
For accounting policy information refer to Accounting policies
\n2.2, 3.8 and 3.11.Critical accounting policy: Loan impairment provisions
Accounting policy 2.3 sets out how the expected loss approach is applied. At 31 December 2024, impairment provisions amounted to \u00a33,425 million (2023 - \u00a33,645 million). A loan is
impaired when there is objective evidence that the cash flows will not occur in the manner expected when the loan was advanced. Such evidence includes changes in the credit rating
of a borrower, the failure to make payments in accordance with the loan agreement, significant reduction in the value of any security, breach of limits or covenants, and observable
data about relevant macroeconomic measures.
The impairment loss is the difference between the carrying value of the loan and the present value of estimated future cash flows at the loan's original effective interest rate.
The measurement of credit impairment under the IFRS expected loss model depends on management\u2019s assessment of any potential deterioration in the creditworthiness of the
borrower, its modelling of expected performance and the application of economic forecasts. All three elements require judgements that are potentially significant to the estimate of
impairment losses. For further information and sensitivity analysis, refer to Risk and capital management \u2013 Measurement uncertainty and ECL sensitivity analysis section. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00698": { "value": "2.2. Fair value \u2013 financial instruments
We measure financial instruments at fair
value when they are classified as
mandatory fair value through profit or
loss; held-for-trading; designated fair
value through profit or loss and fair value
through other comprehensive income
and they are recognised in the financial
statements at fair value. All derivatives
are measured at fair value.
We manage some portfolios of financial
assets and financial liabilities based on
our net exposure to either market or
credit risk. In these cases, the fair value is
derived from the net risk exposure of that
portfolio with portfolio level adjustments
applied to incorporate bid-offer spreads,
counterparty credit risk, and funding
costs (refer to \u2018Valuation Adjustments\u2019).
Where the market for a financial
instrument is not active, fair value is
established using a valuation technique.
These valuation techniques involve a
degree of estimation, the extent of which
depends on the instrument\u2019s complexity
and the availability of market-based data.
The complexity and uncertainty in the
financial instrument\u2019s fair value is
categorised using the fair value
hierarchy.
The use of market indicators as inputs to
fair value is assumed to include current
information and knowledge regarding the
effect of climate risk.
2.3. Loan impairment provisions:
expected credit losses (ECL)
At each balance sheet date each financial
asset or portfolio of financial assets
measured at amortised cost or at fair
value through other comprehensive
income, issued financial guarantee and
loan commitment (other than those
classified as held for trading) is assessed
for impairment. Any change in
impairment is reported in the income
statement.
Loss allowances are forward-looking,
based on 12-month ECL where there has
not been a significant increase in credit
risk rating, otherwise allowances are
based on lifetime expected losses.
ECL is a probability-weighted estimate of
credit losses. The probability is
determined by the risk of default which is
applied to the cash flow estimates. In the
absence of a change in credit rating,
allowances are recognised when there is
a reduction in the net present value of
expected cash flows. Following a
significant increase in credit risk, ECL is
adjusted from 12 months to lifetime. This
will lead to a higher impairment charge.
The measurement of expected credit loss
considers the ability of borrowers to
make payments as they fall due. Future
cashflows are discounted, so long-dated
cashflows are less likely to affect current
expectations on credit loss. Our
assessment of sector specific risks, and
whether additional adjustments are
required, include expectations of the
ability of those sectors to meet their
financing needs in the market. Changes
in credit stewardship and credit risk
appetite that stem from climate transition
policies may directly affect our positions.
Judgement is exercised as follows:
\ue001
Non-modelled portfolios
\u2013 use a
standardised capital requirement
under Basel II. Under IFRS 9, they
have bespoke treatments for the
identification of significant increase in
credit risk. Benchmark PDs, EADs
and LGDs are reviewed annually for
appropriateness. The ECL calculation
is based on expected future cash
flows, which is typically applied at a
portfolio level.
\ue001
Multiple economic scenarios (MES)
\u2013
the central, or base, scenario is most
critical to the ECL calculation,
independent of the method used to
generate a range of alternative
outcomes and their probabilities.
\ue001
Significant increase in credit risk
\u2013
IFRS 9 requires that at each reporting
date, an entity shall assess whether
the credit risk on an account has
increased significantly since initial
recognition. Part of this assessment
requires a comparison to be made
between the current lifetime PD (i.e.
the current probability of default over
the remaining lifetime) with the
equivalent lifetime PD as determined
at the date of initial recognition.
On restructuring where a financial asset
is not derecognised, the revised cash
flows are used in re-estimating the credit
loss. Where restructuring causes
derecognition of the original financial
asset, the fair value of the replacement
asset is used as the closing cash flow of
the original asset.
Where in the course of the orderly
realisation of a loan, it is exchanged for
equity shares or property, the exchange
is accounted for as the sale of the loan
and the acquisition of equity securities or
investment property. Where our acquired
interest is in equity shares, relevant
policies for control, associates and joint
ventures apply.
Impaired financial assets are written off
and therefore derecognised from the
balance sheet when we conclude that
there is no longer any realistic prospect
of recovery of part, or all, of the loan. For
financial assets that are individually
assessed for impairment, the timing of
the write-off is determined on a case-by-
case basis.
Such financial assets are reviewed
regularly and write-off will be prompted
by bankruptcy, insolvency, re-negotiation,
and similar events
The typical time frames from initial
impairment to write-off for our
collectively assessed portfolios are:
\ue001
Retail mortgages: write-off usually
occurs within five years, or earlier,
when an account is closed, but can
be longer where the customer
engages constructively;
\ue001
Credit cards: the irrecoverable
amount is typically written off after
twelve arrears cycles or at four years
post default any remaining amounts
outstanding are written off;
\ue001
Overdrafts and other unsecured
loans: write-off occurs within six
years;
\ue001
Commercial loans: write-offs are
determined in the light of individual
circumstances; and uncollateralised
impaired business loans are generally
written off within five years.3.8. Financial instruments
Financial instruments are measured at
fair value on initial recognition on the
balance sheet.
Monetary financial assets are classified
into one of the following subsequent
measurement categories (subject to
business model assessment and review of
contractual cash flow for the purposes of
sole payments of principal and interest
where applicable):
\ue001
amortised cost
measured at cost
using the effective interest rate
method, less any impairment
allowance;
\ue001
fair value through other
comprehensive income (FVOCI)
measured at fair value, using the
effective interest rate method and
changes in fair value through other
comprehensive income;
\ue001
mandatory fair value through profit or
loss (MFVTPL)
measured at fair value
and changes in fair value reported in
the income statement; or
\ue001
designated at fair value through profit
or loss (DFV)
measured at fair value
and changes in fair value reported in
the income statement.
Classification by business model reflects
how we manage our financial assets to
generate cash flows. A business model
assessment helps to ascertain the
measurement approach depending on
whether cash flows result from holding
financial assets to collect the contractual
cash flows, from selling those financial
assets, or both.
Business model assessment of assets is
made at portfolio level, being the level at
which they are managed to achieve a
predefined business objective. This is
expected to result in the most consistent
classification of assets because it aligns
with the stated objectives for the
portfolio, its risk management, manager\u2019s
remuneration and the ability to monitor
sales of assets from a portfolio. When a
significant change to our business is
communicated to external parties, we
reassess our business model for
managing those financial assets. We
reclassify financial assets if we have a
significant change to the business model.
A reclassification is applied prospectively
from the reclassification date.
The contractual terms of a financial
asset; any leverage features; prepayment
and extension terms; and discounts or
penalties to interest rates that are part of
meeting environmental, social and
governance targets as well as other
contingent and leverage features, non-
recourse arrangements and features that
could modify the timing and/or amount of
the contractual cash flows that might
reset the effective rate of interest; are
considered in determining whether cash
flows are solely payments of principal and
interest.
Certain financial assets may be
designated at fair value through profit or
loss (DFV) upon initial recognition if such
designation eliminates, or significantly
reduces, accounting mismatch.
Equity shares are measured at fair value
through profit or loss unless specifically
elected as at fair value through other
comprehensive income (FVOCI).
Upon disposal, the cumulative gains or
losses in fair value through other
comprehensive income reserve are
recycled to the income statement for
monetary assets and for non-monetary
assets (equity shares) the cumulative
gains or losses are transferred directly to
retained earnings.
Regular way purchases and sales of
financial assets classified as amortised
cost are recognised on the settlement
date; all other regular way transactions in
financial assets are recognised on the
trade date.
Financial liabilities are classified into one
of following measurement categories:
\ue001
amortised cost measured at cost
using the effective interest rate
method;
\ue001
held for trading measured at fair
value and changes in fair value
reported in income statement; or
\ue001
designated at fair value through profit
or loss measured at fair value and
changes in fair value reported in the
income statement except changes in
fair value attributable to the credit
risk component recognised in other
comprehensive income when no
accounting mismatch occurs.
3.9. Netting
Financial assets and financial liabilities are
offset, and the net amount presented on
the balance sheet when, and only when,
we currently have a legally enforceable
right to set off the recognised amounts
and we intend either to settle on a net
basis or to realise the asset and settle the
liability simultaneously. We are party to a
number of arrangements, including
master netting agreements, that give us
the right to offset financial assets and
financial liabilities, but where we do not
intend to settle the amounts net or
simultaneously, the assets and liabilities
concerned are presented separately on
the balance sheet.
3.10. Capital instruments
We classify a financial instrument that we
issue as a financial liability if it is a
contractual obligation to deliver cash or
another financial asset, or to exchange
financial assets or financial liabilities on
potentially unfavourable terms and as
equity if we evidence a residual interest in
our assets after the deduction of
liabilities. Incremental costs and related
tax that are directly attributable to an
equity transaction are deducted from
equity.
The consideration for any ordinary
shares of NatWest Group plc purchased
by us (known as treasury shares or own
shares held) is deducted from retained
earnings. On the cancellation of treasury
shares their nominal value is removed
from retained earnings and a
consequential amount recognised in
capital redemption reserve in compliance
with the Companies Act 2006.
On the sale or re-issue of treasury shares
the consideration received and related
tax are credited to equity, net of any
directly attributable incremental costs.
3.11. Derivatives and hedging
Derivatives are reported on the balance
sheet at fair value.
We use derivatives as part of our trading
activities, to manage our own risk such
as interest rate, foreign exchange, or
credit risk or in certain customer
transactions. Not all derivatives used to
manage risk are in hedge accounting
relationships (an IFRS method to reduce
accounting mismatch from changes in
the fair value of the derivatives reported
in the income statement).
Gains and losses arising from changes in
the fair value of derivatives that are not
in hedge relationships are recognised in
Income from trading activities unless
those derivatives are managed together
with financial instruments designated at
fair value; these gains and losses are
included in Other operating income.
Hedge accounting
Hedge accounting relationships are
designated and documented at inception
in line with the requirements of IAS 39
Financial instruments \u2013 Recognition and
Measurement.
The documentation identifies the hedged
item, the hedging instrument and details
of the risk that is being hedged and the
way in which effectiveness will be
assessed at inception and during the
period of the hedge. When designating a
hedging relationship, we consider: the
economic relationship between the
hedged item (including the risk being
hedged) and the hedging instrument; the
nature of the risk; the risk management
objective and strategy for undertaking
the hedge; and the appropriateness of
the method that will be used to assess
hedge effectiveness.
Designated hedging relationships must be
expected to be highly effective both on a
prospective and retrospective basis. This
is assessed using regression techniques
which model the degree of offsetting
between the changes in fair value or
cash flows attributable to the hedged risk
and the changes in fair value of the
designated hedging derivatives.
Ineffectiveness is measured based on
actual levels of offsetting and recognised
in the income statement.
We enter into three types of hedge
accounting relationships.
Fair value hedge
- the gain or loss on the
hedging instrument and the hedged item
attributable to the hedged risk is
recognised in the income statement.
Where the hedged item is measured at
amortised cost, the balance sheet
amount of the hedged item is also
adjusted.
Cash flow hedge
- the effective portion of
the designated hedge relationship is
recognised in other comprehensive
income and the ineffective portion in the
income statement. When the hedged
item (forecasted cash flows) results in the
recognition of a financial asset or financial
liability, the cumulative gain or loss is
reclassified from equity to the income
statement in the same periods in which
the hedged forecasted cash flows affect
the income statement.
Hedge of net investment in a foreign
operation
-
in the hedge of a net
investment in a foreign operation, the
effective portion of the designated hedge
relationship is recognised in other
comprehensive income. Any ineffective
portion is recognised in profit or loss.
Non-derivative financial liabilities as well
as derivatives may be designated as a
hedging instrument in a net investment
hedge.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the
hedge no longer meets the criteria for
hedge accounting i.e. the hedge is not
highly effective in offsetting changes in
fair value or cash flows attributable to the
hedged risk, consistent with the
documented risk management strategy;
the hedging instrument expires or is sold,
terminated or exercised; or if hedge
designation is revoked.
For fair value hedging any cumulative
adjustment is amortised to the income
statement over the life of the hedged
item. Where the hedged item is no longer
on the balance sheet the adjustment to
the hedged item is reported in the
income statement. For cash flow hedging
the cumulative unrealised gain or loss is
reclassified from equity to the income
statement when the hedged cash flows
occur or, if the forecast transaction
results in the recognition of a financial
asset or financial liability, when the
hedged forecast cash flows affect the
income statement. Where a forecast
transaction is no longer expected to
occur, the cumulative unrealised gain or
loss is reclassified from equity to the
income statement immediately.
For net investment hedging on disposal
or partial disposal of a foreign operation,
the amount accumulated in equity is
reclassified from equity to the income
statement.Critical accounting policy: Fair value \u2013 financial
instruments
\n
Financial instruments classified as mandatory fair value through
\n
profit or loss; held-for-trading; designated fair value through
\n
profit or loss; and fair value through other comprehensive
\n
income are recognised in the financial statements at fair value.
\n
All derivatives are measured at fair value.
\n
Fair value is the price that would be received to sell an asset or
\n
paid to transfer a liability in an orderly transaction between
\n
market participants at the measurement date. A fair value
\n
measurement considers the characteristics of the asset or
\n
liability and the assumptions that a market participant would
\n
consider when pricing the asset or liability.
\n
NatWest Group manages some portfolios of financial assets
\n
and financial liabilities based on its net exposure to either
\n
market or credit risk. In these cases, the fair value is derived
\n
from the net risk exposure of that portfolio with portfolio level
\n
adjustments applied to incorporate bid-offer spreads,
\n
counterparty credit risk, and funding costs (refer to \u2018Valuation
\n
Adjustments\u2019).
\n
Where the market for a financial instrument is not active, fair
\n
value is established using a valuation technique. These
\n
valuation techniques involve a degree of estimation, the extent
\n
of which depends on the instrument\u2019s complexity and the
\n
availability of market-based data. The complexity and
\n
uncertainty in the financial instrument\u2019s fair value is categorised
\n
using the fair value hierarchy.
\n
For accounting policy information refer to Accounting policies
\n2.2, 3.8 and 3.11.Critical accounting policy: Loan impairment provisions
Accounting policy 2.3 sets out how the expected loss approach is applied. At 31 December 2024, impairment provisions amounted to \u00a33,425 million (2023 - \u00a33,645 million). A loan is
impaired when there is objective evidence that the cash flows will not occur in the manner expected when the loan was advanced. Such evidence includes changes in the credit rating
of a borrower, the failure to make payments in accordance with the loan agreement, significant reduction in the value of any security, breach of limits or covenants, and observable
data about relevant macroeconomic measures.
The impairment loss is the difference between the carrying value of the loan and the present value of estimated future cash flows at the loan's original effective interest rate.
The measurement of credit impairment under the IFRS expected loss model depends on management\u2019s assessment of any potential deterioration in the creditworthiness of the
borrower, its modelling of expected performance and the application of economic forecasts. All three elements require judgements that are potentially significant to the estimate of
impairment losses. For further information and sensitivity analysis, refer to Risk and capital management \u2013 Measurement uncertainty and ECL sensitivity analysis section. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00243": { "value": "2.2. Fair value \u2013 financial instruments
We measure financial instruments at fair
value when they are classified as
mandatory fair value through profit or
loss; held-for-trading; designated fair
value through profit or loss and fair value
through other comprehensive income
and they are recognised in the financial
statements at fair value. All derivatives
are measured at fair value.
We manage some portfolios of financial
assets and financial liabilities based on
our net exposure to either market or
credit risk. In these cases, the fair value is
derived from the net risk exposure of that
portfolio with portfolio level adjustments
applied to incorporate bid-offer spreads,
counterparty credit risk, and funding
costs (refer to \u2018Valuation Adjustments\u2019).
Where the market for a financial
instrument is not active, fair value is
established using a valuation technique.
These valuation techniques involve a
degree of estimation, the extent of which
depends on the instrument\u2019s complexity
and the availability of market-based data.
The complexity and uncertainty in the
financial instrument\u2019s fair value is
categorised using the fair value
hierarchy.
The use of market indicators as inputs to
fair value is assumed to include current
information and knowledge regarding the
effect of climate risk.
2.3. Loan impairment provisions:
expected credit losses (ECL)
At each balance sheet date each financial
asset or portfolio of financial assets
measured at amortised cost or at fair
value through other comprehensive
income, issued financial guarantee and
loan commitment (other than those
classified as held for trading) is assessed
for impairment. Any change in
impairment is reported in the income
statement.
Loss allowances are forward-looking,
based on 12-month ECL where there has
not been a significant increase in credit
risk rating, otherwise allowances are
based on lifetime expected losses.
ECL is a probability-weighted estimate of
credit losses. The probability is
determined by the risk of default which is
applied to the cash flow estimates. In the
absence of a change in credit rating,
allowances are recognised when there is
a reduction in the net present value of
expected cash flows. Following a
significant increase in credit risk, ECL is
adjusted from 12 months to lifetime. This
will lead to a higher impairment charge.
The measurement of expected credit loss
considers the ability of borrowers to
make payments as they fall due. Future
cashflows are discounted, so long-dated
cashflows are less likely to affect current
expectations on credit loss. Our
assessment of sector specific risks, and
whether additional adjustments are
required, include expectations of the
ability of those sectors to meet their
financing needs in the market. Changes
in credit stewardship and credit risk
appetite that stem from climate transition
policies may directly affect our positions.
Judgement is exercised as follows:
\ue001
Non-modelled portfolios
\u2013 use a
standardised capital requirement
under Basel II. Under IFRS 9, they
have bespoke treatments for the
identification of significant increase in
credit risk. Benchmark PDs, EADs
and LGDs are reviewed annually for
appropriateness. The ECL calculation
is based on expected future cash
flows, which is typically applied at a
portfolio level.
\ue001
Multiple economic scenarios (MES)
\u2013
the central, or base, scenario is most
critical to the ECL calculation,
independent of the method used to
generate a range of alternative
outcomes and their probabilities.
\ue001
Significant increase in credit risk
\u2013
IFRS 9 requires that at each reporting
date, an entity shall assess whether
the credit risk on an account has
increased significantly since initial
recognition. Part of this assessment
requires a comparison to be made
between the current lifetime PD (i.e.
the current probability of default over
the remaining lifetime) with the
equivalent lifetime PD as determined
at the date of initial recognition.
On restructuring where a financial asset
is not derecognised, the revised cash
flows are used in re-estimating the credit
loss. Where restructuring causes
derecognition of the original financial
asset, the fair value of the replacement
asset is used as the closing cash flow of
the original asset.
Where in the course of the orderly
realisation of a loan, it is exchanged for
equity shares or property, the exchange
is accounted for as the sale of the loan
and the acquisition of equity securities or
investment property. Where our acquired
interest is in equity shares, relevant
policies for control, associates and joint
ventures apply.
Impaired financial assets are written off
and therefore derecognised from the
balance sheet when we conclude that
there is no longer any realistic prospect
of recovery of part, or all, of the loan. For
financial assets that are individually
assessed for impairment, the timing of
the write-off is determined on a case-by-
case basis.
Such financial assets are reviewed
regularly and write-off will be prompted
by bankruptcy, insolvency, re-negotiation,
and similar events
The typical time frames from initial
impairment to write-off for our
collectively assessed portfolios are:
\ue001
Retail mortgages: write-off usually
occurs within five years, or earlier,
when an account is closed, but can
be longer where the customer
engages constructively;
\ue001
Credit cards: the irrecoverable
amount is typically written off after
twelve arrears cycles or at four years
post default any remaining amounts
outstanding are written off;
\ue001
Overdrafts and other unsecured
loans: write-off occurs within six
years;
\ue001
Commercial loans: write-offs are
determined in the light of individual
circumstances; and uncollateralised
impaired business loans are generally
written off within five years.3.8. Financial instruments
Financial instruments are measured at
fair value on initial recognition on the
balance sheet.
Monetary financial assets are classified
into one of the following subsequent
measurement categories (subject to
business model assessment and review of
contractual cash flow for the purposes of
sole payments of principal and interest
where applicable):
\ue001
amortised cost
measured at cost
using the effective interest rate
method, less any impairment
allowance;
\ue001
fair value through other
comprehensive income (FVOCI)
measured at fair value, using the
effective interest rate method and
changes in fair value through other
comprehensive income;
\ue001
mandatory fair value through profit or
loss (MFVTPL)
measured at fair value
and changes in fair value reported in
the income statement; or
\ue001
designated at fair value through profit
or loss (DFV)
measured at fair value
and changes in fair value reported in
the income statement.
Classification by business model reflects
how we manage our financial assets to
generate cash flows. A business model
assessment helps to ascertain the
measurement approach depending on
whether cash flows result from holding
financial assets to collect the contractual
cash flows, from selling those financial
assets, or both.
Business model assessment of assets is
made at portfolio level, being the level at
which they are managed to achieve a
predefined business objective. This is
expected to result in the most consistent
classification of assets because it aligns
with the stated objectives for the
portfolio, its risk management, manager\u2019s
remuneration and the ability to monitor
sales of assets from a portfolio. When a
significant change to our business is
communicated to external parties, we
reassess our business model for
managing those financial assets. We
reclassify financial assets if we have a
significant change to the business model.
A reclassification is applied prospectively
from the reclassification date.
The contractual terms of a financial
asset; any leverage features; prepayment
and extension terms; and discounts or
penalties to interest rates that are part of
meeting environmental, social and
governance targets as well as other
contingent and leverage features, non-
recourse arrangements and features that
could modify the timing and/or amount of
the contractual cash flows that might
reset the effective rate of interest; are
considered in determining whether cash
flows are solely payments of principal and
interest.
Certain financial assets may be
designated at fair value through profit or
loss (DFV) upon initial recognition if such
designation eliminates, or significantly
reduces, accounting mismatch.
Equity shares are measured at fair value
through profit or loss unless specifically
elected as at fair value through other
comprehensive income (FVOCI).
Upon disposal, the cumulative gains or
losses in fair value through other
comprehensive income reserve are
recycled to the income statement for
monetary assets and for non-monetary
assets (equity shares) the cumulative
gains or losses are transferred directly to
retained earnings.
Regular way purchases and sales of
financial assets classified as amortised
cost are recognised on the settlement
date; all other regular way transactions in
financial assets are recognised on the
trade date.
Financial liabilities are classified into one
of following measurement categories:
\ue001
amortised cost measured at cost
using the effective interest rate
method;
\ue001
held for trading measured at fair
value and changes in fair value
reported in income statement; or
\ue001
designated at fair value through profit
or loss measured at fair value and
changes in fair value reported in the
income statement except changes in
fair value attributable to the credit
risk component recognised in other
comprehensive income when no
accounting mismatch occurs.3.11. Derivatives and hedging
Derivatives are reported on the balance
sheet at fair value.
We use derivatives as part of our trading
activities, to manage our own risk such
as interest rate, foreign exchange, or
credit risk or in certain customer
transactions. Not all derivatives used to
manage risk are in hedge accounting
relationships (an IFRS method to reduce
accounting mismatch from changes in
the fair value of the derivatives reported
in the income statement).
Gains and losses arising from changes in
the fair value of derivatives that are not
in hedge relationships are recognised in
Income from trading activities unless
those derivatives are managed together
with financial instruments designated at
fair value; these gains and losses are
included in Other operating income.
Hedge accounting
Hedge accounting relationships are
designated and documented at inception
in line with the requirements of IAS 39
Financial instruments \u2013 Recognition and
Measurement.
The documentation identifies the hedged
item, the hedging instrument and details
of the risk that is being hedged and the
way in which effectiveness will be
assessed at inception and during the
period of the hedge. When designating a
hedging relationship, we consider: the
economic relationship between the
hedged item (including the risk being
hedged) and the hedging instrument; the
nature of the risk; the risk management
objective and strategy for undertaking
the hedge; and the appropriateness of
the method that will be used to assess
hedge effectiveness.
Designated hedging relationships must be
expected to be highly effective both on a
prospective and retrospective basis. This
is assessed using regression techniques
which model the degree of offsetting
between the changes in fair value or
cash flows attributable to the hedged risk
and the changes in fair value of the
designated hedging derivatives.
Ineffectiveness is measured based on
actual levels of offsetting and recognised
in the income statement.
We enter into three types of hedge
accounting relationships.
Fair value hedge
- the gain or loss on the
hedging instrument and the hedged item
attributable to the hedged risk is
recognised in the income statement.
Where the hedged item is measured at
amortised cost, the balance sheet
amount of the hedged item is also
adjusted.
Cash flow hedge
- the effective portion of
the designated hedge relationship is
recognised in other comprehensive
income and the ineffective portion in the
income statement. When the hedged
item (forecasted cash flows) results in the
recognition of a financial asset or financial
liability, the cumulative gain or loss is
reclassified from equity to the income
statement in the same periods in which
the hedged forecasted cash flows affect
the income statement.
Hedge of net investment in a foreign
operation
-
in the hedge of a net
investment in a foreign operation, the
effective portion of the designated hedge
relationship is recognised in other
comprehensive income. Any ineffective
portion is recognised in profit or loss.
Non-derivative financial liabilities as well
as derivatives may be designated as a
hedging instrument in a net investment
hedge.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the
hedge no longer meets the criteria for
hedge accounting i.e. the hedge is not
highly effective in offsetting changes in
fair value or cash flows attributable to the
hedged risk, consistent with the
documented risk management strategy;
the hedging instrument expires or is sold,
terminated or exercised; or if hedge
designation is revoked.
For fair value hedging any cumulative
adjustment is amortised to the income
statement over the life of the hedged
item. Where the hedged item is no longer
on the balance sheet the adjustment to
the hedged item is reported in the
income statement. For cash flow hedging
the cumulative unrealised gain or loss is
reclassified from equity to the income
statement when the hedged cash flows
occur or, if the forecast transaction
results in the recognition of a financial
asset or financial liability, when the
hedged forecast cash flows affect the
income statement. Where a forecast
transaction is no longer expected to
occur, the cumulative unrealised gain or
loss is reclassified from equity to the
income statement immediately.
For net investment hedging on disposal
or partial disposal of a foreign operation,
the amount accumulated in equity is
reclassified from equity to the income
statement.9 Financial instruments - classification
Financial instruments are contracts that give rise to a financial asset of one entity and a corresponding financial liability or equity instrument of a counterparty entity,
such as cash, derivatives, loans, deposits and settlement balances. This note presents financial instruments classified in accordance with IFRS 9 \u2013 Financial Instruments.
Judgement: classification of financial assets
Classification of financial assets between amortised cost and fair
value through other comprehensive income requires a degree of
judgement in respect of business models and contractual
cashflows.
\ue001
The business model criteria is assessed at a portfolio level to
determine whether assets are classified as held to collect or
held to collect and sell. Information that is considered in
determining the applicable business model includes: the
portfolio\u2019s policies and objectives; how the performance and
risks of the portfolio are managed, evaluated and reported
to management; and the frequency, volume and timing of
sales in prior periods, sales expectation for future periods,
and the reasons for sales.
\ue001
The contractual cash flow characteristics of financial assets
are assessed with reference to whether the cash flows
represent solely payments of principal and interest (SPPI). A
level of judgement is made in assessing terms that could
change the contractual cash flows so that it would not meet
the condition for SPPI, including contingent and leverage
features,
non-recourse arrangements and features that
could modify the time value of money.
For accounting policy information refer to Accounting policies
3.8, 3.9 and 3.11.
The following tables analyse financial assets and liabilities in accordance with the categories of financial
instruments in IFRS 9.
\u00a0 \u00a0 \u00a0 \u00a0\n \n
Amortised
Other
MFVTPL
DFV
FVOCI
cost
assets
Total
Assets
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cash and balances at central banks
92,994
92,994
Trading assets
48,917
48,917
Derivatives
(1)
78,406
78,406
Settlement balances
2,085
2,085
Loans to bank - amortised cost
(2)
6,030
6,030
Loans to customers - amortised cost
(3)
400,326
400,326
Other financial assets
798
5
37,843
24,597
63,243
Intangible assets
7,588
7,588
Other assets
(4)
8,396
8,396
31 December 2024
128,121
5
37,843
526,032
15,984
707,985
Cash and balances at central banks
104,262
104,262
Trading assets
45,551
45,551
Derivatives
(1)
78,904
78,904
Settlement balances
7,231
7,231
Loans to bank - amortised cost
(2)
6,914
6,914
Loans to customers - amortised cost
(3)
381,433
381,433
Other financial assets
703
5
28,699
21,695
51,102
Intangible assets
7,614
7,614
Other assets
(4)
9,662
9,662
31 December 2023
125,158
5
28,699
521,535
17,276
692,673
\n
For the notes to this table refer to the following page.
\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n
Amortised
Other
Held-for-trading
DFV
cost
liabilities
Total
Liabilities
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bank deposits
(5)
31,452
31,452
Customer deposits
433,490
433,490
Settlement balances
1,729
1,729
Trading liabilities
54,714
54,714
Derivatives
(1)
72,082
72,082
Other financial liabilities
(6)
3,548
57,539
61,087
Subordinated liabilities
234
5,902
6,136
Notes in circulation
3,316
3,316
Other liabilities
(7)
684
3,917
4,601
31 December 2024
126,796
3,782
534,112
3,917
668,607
Bank deposits
(5)
22,190
22,190
Customer deposits
431,377
431,377
Settlement balances
6,645
6,645
Trading liabilities
53,636
53,636
Derivatives
(1)
72,395
72,395
Other financial liabilities
(6)
2,888
52,201
55,089
Subordinated liabilities
237
5,477
5,714
Notes in circulation
3,237
3,237
Other liabilities
(7)
748
4,454
5,202
31 December 2023
126,031
3,125
521,875
4,454
655,485
\n
(1)
Includes net hedging derivatives assets of \u00a3118 million (2023 - \u00a3114 million)
\n
and net hedging derivatives liabilities of \u00a3464 million (2023 - \u00a3270 million).
\n
(2)
Includes items in the course of collection from other banks of \u00a359 million (2023
\n
- \u00a3255 million).
\n
(3)
Includes finance lease receivables of \u00a38,998 million (2023 - \u00a38,731 million).
\n
(4)
Includes assets of disposal groups held at FVTPL of nil (2023 - \u00a3841 million).
\n
The portfolio is classified as level 3 in the fair value hierarchy.
\n
(5)
Includes items in the course of transmission to other banks of \u00a3136 million
\n
(2023 - \u00a392 million).
\n
(6)
The carrying amount of customer deposits designated at fair value through
\n
profit or loss is materially the same as the principal amount for both periods.
\n
No amounts have been recognised in the profit or loss for changes in credit
\n
risk associated with these liabilities as the changes are immaterial both during
\n
the period and cumulatively.
\n
(7)
Includes lease liabilities of \u00a3630 million (2023 - \u00a3670 million), held at amortised
\n
cost.
We originate loans that include features that change the contractual cash flows based on the borrower meeting certain contractually specified environmental, social and governance
(ESG) targets. These are known as ESG-linked, or sustainability-linked, loans. As part of the terms of these loans, the contractual interest rate is reduced or increased if the borrower
meets, or fails to meet, specific targets linked to the activity of the borrower, for example reducing carbon emissions, increasing the level of diversity at Board level, or achieving a
sustainable supply chain. ESG features are first assessed to ascertain whether the adjustment to the contractual cash flows results in a de minimis exposure to risks or volatility in
those contractual cash flows. If this is the case the classification of the loan is not affected. If the effect of the ESG feature is assessed as being more than de minimis, we apply
judgement to ensure that the ESG features do not generate compensation for risks that are not in line with a basic lending arrangement. This includes, amongst other aspects, a
review of the consistency of the ESG targets with the asset or activity of the borrower, and consideration of the targets within our risk appetite. Some of these loans are an integral
part of our climate and sustainable funding and financing target disclosed on page 13.
The table below analyses financial assets forming a component of ESG-linked loans and other products with contractual terms that could change the timing or amount of cash flows.
This is based on balance sheet values as at 31 December and the maximum impact of the potential margin changes on these over a 12 month period.
\u00a0 \u00a0
2024
\u00a0
2023
\u00a0 \u00a0
Positive impact on
Negative impact on
\u00a0
\u00a0
Carrying value
product margin
product margin
Carrying value
\u00a0
\u00a3bn
bps
bps
\u00a3bn
Sustainability-linked loans
6.9
3.1
4.0
6.5
Other products
20.2
-
-
16.1
Lending subject to performance triggers
27.1
\u00a0 \u00a0
22.6
\n
Additional information on finance lease receivables
The following table shows the reconciliation of undiscounted finance lease receivables to net investment in finance leases which are presented under Loans to customers-amortised
cost on the balance sheet.
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Amount receivable under finance leases
\u00a0 \u00a0
Within 1 year
3,493
3,340
1 to 2 years
2,499
2,358
2 to 3 years
1,612
1,625
3 to 4 years
842
900
4 to 5 years
464
388
After 5 years
1,043
1,079
Total lease payments
9,953
9,690
Unguaranteed residual values
150
169
Future drawdowns
(12)
(12)
Unearned income
(1,001)
(1,025)
Present value of lease payments
9,090
8,822
Impairments
(92)
(91)
Net investment in finance leases
8,998
8,731
Financial instruments \u2013 financial assets and liabilities that can be offset
The tables below present information on financial assets and financial liabilities that are offset on the balance sheet under IFRS or subject to enforceable master netting agreements
together with financial collateral received or given.
\n\n \u00a0\n \n
Instruments which can be offset
Potential for offset not recognised by IFRS
Effect of master
Net amount after
Instruments
netting and similar
Cash
Securities
netting agreements and
outside netting
Balance sheet
Gross
IFRS offset
Balance sheet
agreements
collateral
collateral
effect of related collateral
agreements
total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative assets
96,624
(18,746)
77,878
(61,883)
(10,005)
(4,072)
1,918
528
78,406
Derivative liabilities
92,620
(21,027)
71,593
(61,883)
(5,801)
(896)
3,013
489
72,082
Net position
(1)
4,004
2,281
6,285
-
(4,204)
(3,176)
(1,095)
39
6,324
Trading reverse repos
42,261
(15,174)
27,087
(1,469)
-
(25,406)
212
40
27,127
Trading repos
45,033
(15,174)
29,859
(1,469)
-
(28,390)
-
703
30,562
Net position
(2,772)
-
(2,772)
-
-
2,984
212
(663)
(3,435)
Non trading reverse repos
45,600
(8,709)
36,891
(80)
-
(36,811)
-
-
36,891
Non trading repos
22,288
(8,709)
13,579
(80)
-
(13,499)
-
-
13,579
Net position
23,312
-
23,312
-
-
(23,312)
-
-
23,312
2023
Derivative assets
99,023
(20,597)
78,426
(60,355)
(12,284)
(3,408)
2,379
478
78,904
Derivative liabilities
95,734
(23,869)
71,865
(60,355)
(6,788)
(1,663)
3,059
530
72,395
Net position
(1)
3,289
3,272
6,561
-
(5,496)
(1,745)
(680)
(52)
6,509
Trading reverse repos
39,573
(16,257)
23,316
(664)
-
(22,461)
191
378
23,694
Trading repos
42,442
(16,257)
26,185
(664)
-
(25,520)
1
717
26,902
Net position
(2,869)
-
(2,869)
-
-
3,059
190
(339)
(3,208)
Non trading reverse repos
37,477
(9,646)
27,831
(5)
-
(27,826)
-
80
27,911
Non trading repos
23,605
(9,646)
13,959
(5)
-
(13,954)
-
3
13,962
Net position
13,872
-
13,872
-
-
(13,872)
-
77
13,949
\n
(1)
Net IFRS offset balance of \u00a32,281 million (2023 - \u00a33,272 million) relates to variation margin netting reflected on other balance sheet lines.
\n\n\n\n\n\n\n\n\n\n\n\n
10 Financial instruments - valuation
\n
Financial instruments recognised at fair value are revalued using techniques that can include observable inputs (pricing information that is readily available in the
\n
market, for example UK Government securities), and unobservable inputs (pricing information that is not readily available, for example unlisted securities). Gains
\n
and losses are recognised in the income statement and statement of comprehensive income as appropriate.
This note presents information on the valuation of
\n
financial instruments.
\n
The table below provides an overview of the various sections contained within the note.
\n
Critical accounting policy: Fair value \u2013 financial
\n
instruments
\n
Financial instruments classified as mandatory fair value through
\n
profit or loss; held-for-trading; designated fair value through
\n
profit or loss; and fair value through other comprehensive
\n
income are recognised in the financial statements at fair value.
\n
All derivatives are measured at fair value.
\n
Fair value is the price that would be received to sell an asset or
\n
paid to transfer a liability in an orderly transaction between
\n
market participants at the measurement date. A fair value
\n
measurement considers the characteristics of the asset or
\n
liability and the assumptions that a market participant would
\n
consider when pricing the asset or liability.
\n
NatWest Group manages some portfolios of financial assets
\n
and financial liabilities based on its net exposure to either
\n
market or credit risk. In these cases, the fair value is derived
\n
from the net risk exposure of that portfolio with portfolio level
\n
adjustments applied to incorporate bid-offer spreads,
\n
counterparty credit risk, and funding costs (refer to \u2018Valuation
\n
Adjustments\u2019).
\n
Where the market for a financial instrument is not active, fair
\n
value is established using a valuation technique. These
\n
valuation techniques involve a degree of estimation, the extent
\n
of which depends on the instrument\u2019s complexity and the
\n
availability of market-based data. The complexity and
\n
uncertainty in the financial instrument\u2019s fair value is categorised
\n
using the fair value hierarchy.
\n
For accounting policy information refer to Accounting policies
\n
2.2, 3.8 and 3.11.
\n
Valuation
\n\n \n
Page
Financial instruments
Critical accounting policy: Fair value
332
Valuation
Fair value hierarchy
(D)
333
Valuation techniques
(D)
333
Inputs to valuation models
(D)
333
Valuation control
(D)
334
Key areas of judgement
(D)
334
Assets and liabilities split by fair value hierarchy level
(T)
335
Valuation adjustments
Fair value adjustments made
(T)
336
Funding valuation adjustments (FVA)
(D)
336
Credit valuation adjustments (CVA)
(D)
336
Bid-offer
(D)
336
Product and deal specific
(D)
336
Own credit
(D)
336
Level 3 additional information
Level 3 ranges of unobservable inputs
(D)
337
Level 3 instruments, valuation techniques and inputs
(T)
337
Level 3 sensitivities
(D)
337
Alternative assumptions
(D)
338
Other considerations
(D)
338
High and low range of fair value of level 3 assets and liabilities
(T)
338
Movement in level 3 assets and liabilities over the reporting period
(D)
339
Movement in level 3 assets and liabilities
(T)
339
Fair value of financial instruments measured at amortised cost
Fair value of financial instruments measured at amortised cost on the balance sheet
balance sheet
balance sheet
340
(D) = Descriptive; (T) = Table
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Fair value hierarchy
\n
Financial instruments carried at fair value
\n
have been classified under the fair value
\n
hierarchy. The classification ranges from
\n
level 1 to level 3, with more expert
\n
judgement and price uncertainty for
\n
those classified at level 3.
\n
The determination of an instrument\u2019s
\n
level cannot be made at a global product
\n
level as a single product type can be in
\n
more than one level. For example, a
\n
single name corporate credit default
\n
swap could be in level 2 or level 3
\n
depending on the level of market activity
\n
for the referenced entity.
\n
Level 1
\u2013 instruments valued using
\n
unadjusted quoted prices in active and
\n
liquid markets, for identical financial
\n
instruments. Examples include
\n
government bonds, listed equity shares
\n
and certain exchange-traded derivatives.
\n
Level 2
\u2013 instruments valued using
\n
valuation techniques that have
\n
observable inputs. Observable inputs are
\n
those that are readily available with
\n
limited adjustments required. Examples
\n
include most government agency
\n
securities, investment-grade corporate
\n
bonds, certain mortgage products -
\n
including collateralised loan obligations
\n
(CLOs), most bank loans, repos and
\n
reverse repos, state and municipal
\n
obligations, most notes issued, certain
\n
money market securities, loan
\n
commitments and most over the counter
\n
(OTC) derivatives.
\n
Level 3
\u2013 instruments valued using a
\n
valuation technique where at least one
\n
input which could have a significant effect
\n
on the instrument\u2019s valuation, is not
\n
based on observable market data.
\n
Examples include non-derivative
\n
instruments which trade infrequently,
\n
certain syndicated and commercial
\n
mortgage loans, private equity, and
\n
derivatives with unobservable model
\n
inputs.
\n
Valuation techniques
\n
NatWest Group derives the fair value of
\n
its instruments differently depending on
\n
whether the instrument is a non-
\n
modelled or a modelled product.
\n
Non-modelled products
are valued
\n
directly from a price input, typically on a
\n
position-by-position basis. Examples
\n
include equities and most debt securities.
\n
Non-modelled products can fall into any
\n
fair value levelling hierarchy depending
\n
on the observable market activity,
\n
liquidity, and assessment of valuation
\n
uncertainty of the instruments. The
\n
assessment of fair value and the
\n
classification of the instrument to a fair
\n
value level is subject to the valuation
\n
controls discussed in the Valuation
\n
control section.
\n
Modelled products
\u2013 valued using a
\n
pricing model range in complexity from
\n
comparatively vanilla products such as
\n
interest rate swaps and options (e.g.,
\n
interest rate caps and floors) through to
\n
more complex derivatives (e.g., balance
\n
guarantee swaps).
\n
For modelled products the fair value is
\n
derived using the model and the
\n
appropriate model inputs or parameters,
\n
as opposed to a cash price equivalent.
\n
Model inputs are taken either directly or
\n
indirectly from available data, where
\n
some inputs are also modelled.
\n
Fair value classification of modelled
\n
instruments is either level 2 or level 3,
\n
depending on the product/model
\n
combination, the observability and quality
\n
of input parameters and other factors. All
\n
these must be assessed to classify a
\n
position.
\n
The modelled product is assigned to the
\n
lowest fair value hierarchy level of any
\n
significant input used in that valuation.
\n
Most derivative instruments, for example
\n
vanilla interest rate swaps, foreign
\n
exchange swaps and liquid single name
\n
credit derivatives, are classified as level 2.
\n
This is because they are vanilla products
\n
valued using standard market models
\n
and with observable inputs. Level 2
\n
products range from vanilla to more
\n
complex products, where more complex
\n
products remain classified as level 2 due
\n
to the low materiality of any
\n
unobservable inputs.
\n
Inputs to valuation models
\n
When using valuation techniques, the fair
\n
value can be significantly affected by the
\n
choice of
valuation model
and underlying
\n
assumptions. Factors considered include
\n
the cashflow amounts and timing of
\n
those cash flows, and application of
\n
appropriate discount rates, incorporating
\n
both funding and credit risk. Values
\n
between and beyond available data
\n
points are obtained by interpolation and
\n
extrapolation. The principal inputs to
\n
these valuation techniques are as follows:
\n
Bond prices
\u2013 quoted prices are generally
\n
available for government bonds, certain
\n
corporate securities, and some
\n
mortgage-related products.
\n
Credit spreads/margins
\u2013 these reflect
\n
credit default swap levels or the return
\n
required over a benchmark rate or index
\n
to compensate for the referenced credit
\n
risk. Where available, these are derived
\n
from the price of credit default swaps or
\n
other credit-based instruments, such as
\n
debt securities. When direct prices are
\n
not available; credit spreads/margins are
\n
determined with reference to available
\n
prices of entities with similar
\n
characteristics.
\n
Interest rates
\u2013 these are principally
\n
based on interest rate swap prices
\n
referencing benchmark interest rates.
\n
Interest rates, include SONIA (Sterling
\n
Overnight Interbank Average Rate) and
\n
other overnight rates. Other quoted
\n
interest rates may also be used from
\n
both the bond, and futures markets.
\n
Foreign currency exchange rates
\u2013 there
\n
are observable prices both for spot and
\n
forward contracts and futures in the
\n
world's major currencies.
\n
Equity and equity index prices
\u2013 quoted
\n
prices are generally readily available for
\n
equity shares listed on the world's major
\n
stock exchanges and for major indices on
\n
such shares.
\n
Price volatilities and correlations
\u2013
\n
volatility is a measure of the tendency of
\n
a price to change with time. Correlation
\n
measures the degree which two or more
\n
prices or variables are observed to move
\n
together. Variables that move in the
\n
same direction show positive correlation;
\n
those that move in opposite directions
\n
are negatively correlated.
\n
Prepayment rates
\u2013 are used to reflect
\n
how fast a pool of assets prepay. The fair
\n
value of a financial instrument that can
\n
be prepaid by the issuer or borrower
\n
differs from that of an instrument that
\n
cannot be prepaid. When valuing
\n
prepayable instruments, the value of this
\n
prepayment option is considered.
\n
Recovery rates/loss given default
\u2013 are
\n
used as an input to valuation models and
\n
reserves for asset-backed securities and
\n
other credit products as an indicator of
\n
severity of losses on default. Recovery
\n
rates are primarily sourced from market
\n
data providers, the value of the
\n
underlying collateral or inferred from
\n
observable credit spreads.
\n\n\n\n\n\n\n\n\n\n\n\n
Valuation control
\n
NatWest Group's control environment for
\n
the determination of the fair value of
\n
financial instruments includes formalised
\n
procedures for the review and validation
\n
of fair values. The review of market
\n
prices and inputs is performed by an
\n
independent price verification (IPV) team.
\n
IPV is a key element of the control
\n
environment. Valuations are first
\n
performed by the business which entered
\n
into the transaction. These valuations are
\n
then reviewed by the IPV team,
\n
independent of those trading the financial
\n
instruments, in light of available pricing
\n
evidence.
\n
Independent pricing data is collated from
\n
a range of sources. Each source is
\n
reviewed for quality and the independent
\n
data applied in the IPV processes using a
\n
formalised input quality hierarchy.
\n
Consensus services are one source of
\n
independent data and encompass
\n
interest rate, currency, credit, and bond
\n
markets, providing comprehensive
\n
coverage of vanilla products and a wide
\n
selection of exotic products.
\n
Where measurement differences are
\n
identified through the IPV process these
\n
are grouped by the quality hierarchy of
\n
the independent data. If the size of the
\n
difference exceeds defined thresholds, an
\n
adjustment is made to bring the valuation
\n
to within the independently calculated fair
\n
value range.
\n
IPV takes place at least monthly, for all
\n
fair value financial instruments. The IPV
\n
control includes formalised reporting and
\n
escalation of any valuation differences in
\n
breach of established thresholds.
\n
The quality and completeness of the
\n
information gathered in the IPV process
\n
gives an indication as to the liquidity and
\n
valuation uncertainty of an instrument
\n
and forms part of the information
\n
considered when determining fair value
\n
hierarchy classifications.
\n
Initial fair value level classification of a
\n
financial instrument is carried out by the
\n
IPV team. These initial classifications are
\n
subject to senior management review.
\n
Particular attention is paid to instruments
\n
transferring from one level to another,
\n
new instrument classes or products,
\n
instruments where the transaction price
\n
is significantly different from the fair value
\n
and instruments where valuation
\n
uncertainty is high.
\n
Valuation Committees are made up of
\n
valuation specialists and senior business
\n
representatives from various functions
\n
and oversees pricing, reserving and
\n
valuations issues. These committees
\n
meet monthly to review and ratify any
\n
methodology changes. The Executive
\n
Valuation Committee meets quarterly to
\n
address key material and subjective
\n
valuation issues, to review items
\n
escalated by Valuation Committees and
\n
to discuss other relevant industry
\n
matters.
\n
The Group model risk policy sets the
\n
policy for model documentation, testing
\n
and review. Governance of the model
\n
risk policy is carried out by the Group
\n
model risk oversight committee, which
\n
comprises model risk owners and
\n
independent model experts. All models
\n
are required to be independently
\n
validated in accordance with the Model
\n
Risk Policy.
\n
Key areas of judgement
\n
Over the years the business has
\n
simplified, with most products classified
\n
as level 1 or 2 of the fair value hierarchy.
\n
However, the diverse range of products
\n
historically traded by NatWest Group
\n
means some products remain classified
\n
as level 3. Level 3 indicates a significant
\n
level of pricing uncertainty, where expert
\n
judgement is used. As such, extra
\n
disclosures are required in respect of
\n
level 3 instruments.
\n
In general, the degree of expert
\n
judgement used and hence valuation
\n
uncertainty depends on the degree of
\n
liquidity of an instrument or input.
\n
Where markets are liquid, little judgement
\n
is required. However, when the
\n
information regarding the liquidity in a
\n
particular market is not clear, a
\n
judgement may need to be made. For
\n
example, for an equity traded on an
\n
exchange, daily volumes of trading can
\n
be seen, but for an OTC derivative,
\n
assessing the liquidity of the market with
\n
no central exchange is more challenging.
\n
A key related matter is where a market
\n
moves from liquid to illiquid or vice versa.
\n
Where this movement is considered
\n
temporary, the fair value level is not
\n
changed. For example, if there is little
\n
market trading in a product on a
\n
reporting date but at the previous
\n
reporting date and during the intervening
\n
period the market has been liquid. In this
\n
case, the instrument will continue to be
\n
classified at the same level in the
\n
hierarchy. This is to provide consistency
\n
so that transfers between levels are
\n
driven by genuine changes in market
\n
liquidity and do not reflect short term or
\n
seasonal effects. Material movements
\n
between levels are reviewed quarterly by
\n
the business and IPV.
\n
The breadth and depth of the IPV data
\n
allows for a rules-based quality
\n
assessment to be made of market
\n
activity, liquidity, and pricing uncertainty,
\n
which assists with the process of
\n
allocation to an appropriate level. Where
\n
suitable independent pricing information
\n
is not readily available, the quality
\n
assessment will result in the instrument
\n
being assessed as level 3.
\n\n\n\n\n\n\n\n\n\n\n\n\n
The table below shows the assets and liabilities held by NatWest Group split by fair value hierarchy level. Level 1 are considered the most liquid instruments, and level 3 the most
\n
illiquid, valued using expert judgement and so carry the most significant price uncertainty.
\n\n \n
2024
2023
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
Trading assets
Loans
-
34,761
278
35,039
-
33,388
209
33,597
Securities
8,772
5,106
-
13,878
8,447
3,493
14
11,954
Derivatives
Interest rate
-
37,026
473
37,499
1
43,912
650
44,563
Foreign exchange
-
40,687
110
40,797
-
34,096
65
34,161
Other
-
63
47
110
-
72
108
180
Other financial assets
Loans
-
288
565
853
-
108
657
765
Securities
23,943
13,641
209
37,793
17,848
10,536
258
28,642
Total financial assets held at fair value
32,715
131,572
1,682
165,969
26,296
125,605
1,961
153,862
As a % of total fair value assets
20%
79%
1%
17%
82%
1%
Liabilities
Trading liabilities
Deposits
-
43,966
-
43,966
-
43,126
1
43,127
Debt securities in issue
-
257
-
257
-
706
-
706
Short positions
8,766
1,724
1
10,491
7,936
1,865
2
9,803
Derivatives
Interest rate
-
31,253
279
31,532
-
38,044
439
38,483
Foreign exchange
-
40,240
66
40,306
-
33,528
58
33,586
Other
-
124
120
244
-
138
188
326
Other financial liabilities
Debt securities in issue
-
1,733
3
1,736
-
1,605
3
1,608
Other deposits
-
1,787
25
1,812
-
1,280
-
1,280
Subordinated liabilities
-
234
-
234
-
237
-
237
Total financial liabilities held at fair value
8,766
121,318
494
130,578
7,936
120,529
691
129,156
As a % of total fair value liabilities
7%
93%
0%
6%
93%
1%
\n
(1)
Transfers between levels are deemed to have occurred at the beginning of the quarter in which the instrument was transferred.
\n
(2)
For an analysis of debt securities held at mandatory fair value through profit or loss by issuer as well as ratings and derivatives, by type and contract, refer to Risk and capital management \u2013 Credit risk.
\n\n\n\n\n\n\n\n\n\n\n\n\n
Valuation adjustments
\n
When valuing financial instruments in the trading book, adjustments are made to mid-
\n
market valuations to cover bid-offer spread, funding and credit risk. These adjustments
\n
are presented in the table below:
\n\n \n
2024
2023
Adjustment
\u00a3m
\u00a3m
Funding valuation adjustments
123
132
Credit valuation adjustments
190
236
Bid-offer
76
86
Product and deal specific
157
103
Total
546
557
\n
The decrease in funding valuation adjustments was driven by net exposures switching
\n
from positive to negative, primarily due to interest rates increasing. The decrease in
\n
credit valuation adjustments was driven by a reduction in exposures, primarily due to
\n
interest rates increasing and trade unwinds. The decrease in bid-offer was driven by risk
\n
reduction. New trading activity was the driver of the increase in product and deal
\n
specific, partially offset by trade unwinds.
\n
Funding valuation adjustments (FVA)
\n
FVA represents an estimate of the adjustment that a market participant would make to
\n
incorporate funding costs and benefits that arise in relation to derivative exposures. FVA
\n
is calculated as a portfolio level adjustment and can result in either a funding charge
\n
(positive) or funding benefit (negative).
\n
Funding levels are applied to estimated potential future exposures. For uncollateralised
\n
derivatives, the exposure reflects the future valuation of the derivative. For collateralised
\n
derivatives, the exposure reflects the difference between the future valuation of the
\n
derivative and the level of collateral posted.
\n
Credit valuation adjustments (CVA)
\n
CVA represents an estimate of the adjustment to fair value that is made to incorporate
\n
the counterparty credit risk inherent in derivative exposures. CVA is calculated on a
\n
portfolio basis reflecting an estimate of the amount a third party would charge to
\n
assume the credit risk.
\n
Collateral held under a credit support agreement is factored into the CVA calculation. In
\n
such cases where NatWest Group holds collateral against counterparty exposures, CVA
\n
is held to the extent that residual risk remains.
\n
FVA and CVA are actively managed by a credit and market risk hedging process, and
\n
therefore movements in CVA and FVA are partially offset by trading revenue on the
\n
hedges.
\n
Bid-offer
\n
Fair value positions are required to be marked to exit levels, represented by bid (long
\n
positions) or offer (short positions) levels. Non-derivative positions are typically marked
\n
directly to bid or offer prices. However derivative exposures are adjusted to exit levels
\n
by taking bid-offer reserves calculated on a portfolio basis. The reserving approach is
\n
based on current market bid-offer spreads and standard market bucketing of risk.
\n
Bid-offer spreads vary by maturity and risk type to reflect different spreads in the
\n
market. For positions where there is no observable quote, the bid-offer spreads are
\n
widened in comparison to proxies to reflect reduced liquidity or observability.
\n
Netting is applied on a portfolio basis to reflect the value at which NatWest Group
\n
believes it could exit the net risk of the portfolio, rather than the sum of exit costs for
\n
each of the portfolio\u2019s individual trades. This is applied where the asset and liability
\n
positions are managed as a portfolio for risk and reporting purposes.
\n
Product and deal specific
\n
On initial recognition of financial assets and liabilities valued using valuation techniques
\n
which have a significant dependence on information other than observable market data,
\n
any difference between the transaction price and that derived from the valuation
\n
technique is deferred. Such amounts are recognised in the income statement over the
\n
life of the transaction, when market data becomes observable, or when the transaction
\n
matures or is closed out as appropriate. On 31 December 2024, net gains of \u00a3139
\n
million (2023 - \u00a378 million) were carried forward. During the year, net gains of \u00a3218
\n
million (2023 - \u00a3119 million) were deferred and \u00a3157 million (2023 - \u00a3115 million) were
\n
recognised in the income statement.
\n
Where system-generated valuations do not accurately reflect market prices, manual
\n
valuation adjustments are applied either at a position or portfolio level. Manual
\n
adjustments are subject to the scrutiny of independent control teams and are subject to
\n
monthly review by senior management.
\n
Own credit
\n
NatWest Group considers the effect of its own credit standing when valuing financial
\n
liabilities recorded at fair value. Own credit spread adjustments are made when valuing
\n
issued debt held at fair value, including issued structured notes. An own credit
\n
adjustment is applied to positions where it is believed that counterparties would consider
\n
NatWest Group\u2019s creditworthiness when pricing trades. Accumulated changes in fair
\n
value due to credit risk are \u00a344 million (2023 \u2013 nil).
\n\n\n\n\n\n\n\n\n\n\n\n\n
Level 3 additional information
\n
For illiquid assets and liabilities, classified as level 3, additional information is provided on the valuation techniques used and price sensitivity of the products to those inputs. This is to
\n
enable the reader to gauge the level of uncertainty that arises from positions with significant unobservable inputs or modelling parameters.
\n
Level 3 ranges of unobservable inputs
\n
The table below provides additional information on level 3 instruments and inputs. This shows the valuation technique used for the fair value calculation, the unobservable input and
\n
input range.
\n\n \n
2024
20
23
Financial instrument
Valuation technique
Unobservable inputs
Units
Low
High
Low
High
Trading assets and Other financial assets
Loans
Price-based
Price
%
88
123
88
123
Discount cash flow
Credit spreads
bps
36
93
49
119
Debt securities
Price-based
Price
%
-
116
-
119
Equity Shares
Price-based
Price
GBP
-
47,312
-
32,142
Price-based
Price
%
-
15
-
30
Discount cash flow
Discount margin
%
9
13
7
9
Net asset valuation
Fund NAV
%
80
120
80
120
Derivative assets and liabilities
Credit derivatives
Credit derivative pricing
Credit spreads
bps
15
86
13
600
Option pricing
Correlation
%
(15)
95
(15)
95
Volatility
%
30
80
30
80
Upfront points
%
-
99
-
99
Recovery rate
%
-
60
-
60
Interest rate & FX
Option pricing
Correlation
%
(50)
98
(50)
99
derivatives
Volatility
%
3
99
30
111
Constant Prepayment Rate
%
2
20
2
22
Mean Reversion
%
-
20
-
20
Inflation volatility
%
1
2
2
2
Inflation rate
%
2
2
2
3
\n
(1)
Valuation for private equity investments may be estimated by looking at past prices of similar stocks and from valuation statements where valuations are usually derived from earnings measures such as EBITDA or net asset value (NAV). Similarly, for
\n
equity or bond fund investments, prices may be estimated from valuation or credit statements using NAV or similar measures.
\n
(2)
NatWest Group does not have any material liabilities measured at fair value that are issued with an inseparable third-party credit enhancement.
\n
Level 3 sensitivities
\n
The level 3 sensitivities presented on the next page are calculated at a trade or low-level portfolio basis rather than an overall portfolio basis. As individual sensitivities are aggregated
\n
with no reflection of the correlated nature between instruments, the overall portfolio sensitivity may not be accurately reflected. For example, some portfolios may be negatively
\n
correlated to others, where a downwards movement in one asset would produce an upwards movement in another. However, due to the additive presentation of the above figures
\n
this correlation impact cannot be displayed. As such, the actual potential downside sensitivity of the total portfolio may be less than the non-correlated sum of the additive figures as
\n
shown in the table on the next page.
\n\n\n\n\n\n\n\n\n\n\n\n\n
Alternative assumptions
\n
Reasonably plausible alternative assumptions of unobservable inputs are determined based on a specified target level of certainty of 90%.
\n
Alternative assumptions are determined with reference to all available evidence including consideration of the following: quality of independent pricing information considering
\n
consistency between different sources, variation over time, perceived tradability or otherwise of available quotes; consensus service dispersion ranges; volume of trading activity and
\n
market bias (e.g. one-way inventory); day 1 profit or loss arising on new trades; number and nature of market participants; market conditions; modelling consistency in the market;
\n
size and nature of risk; length of holding of position; and market intelligence.
\n
Other considerations
\n
Whilst certain inputs used to calculate CVA, FVA and own credit adjustments are not based on observable market data, the uncertainty of these inputs is not considered to have a
\n
significant effect on the net valuation of the related derivative portfolios and issued debt.
\n
As such, the fair value levelling of the derivative portfolios and issued debt is not determined by CVA, FVA or own credit inputs. In addition, any fair value sensitivity driven by these
\n
inputs is not included in the level 3 sensitivities presented.
\n
The table below shows the high and low range of fair value of the level 3 assets and liabilities. This range incorporates the range of fair value inputs as described in the previous table.
\n\n \n
2024
2023
Level 3
Favourable
Unfavourable
Level 3
Favourable
Unfavourable
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
Trading assets
Loans
278
-
-
209
-
-
Securities
-
-
-
14
-
-
Derivatives
Interest rate
473
20
(20)
650
20
(20)
Foreign exchange
110
-
-
65
-
-
Other
47
-
-
108
10
(10)
Other financial assets
Loans
565
-
(10)
657
-
(40)
Securities
209
20
(30)
258
20
(50)
Total financial assets held at fair value
1,682
40
(60)
1,961
50
(120)
Liabilities
Trading liabilities
Deposits
-
-
-
1
-
-
Short positions
1
-
-
2
-
-
Derivatives
Interest rate
279
10
(10)
439
10
(10)
Foreign exchange
66
-
-
58
-
-
Other
120
10
(10)
188
10
(10)
Other financial liabilities
Debt securities in issue
3
-
-
3
-
-
Other deposits
25
10
(20)
-
-
-
Total financial liabilities held at fair value
494
30
(40)
691
20
(20)
\n\n\n\n\n\n\n\n\n\n\n\n\n
Movement in level 3 assets and liabilities
\n
The following table shows the movement in level 3 assets and liabilities in the year.
\n\n \n
Other
Other
Other
Other
Derivatives
trading
financial
Total
Derivatives
trading
financial
Total
assets
assets (2)
assets (3)
assets
liabilities
liabilities (2)
liabilities
liabilities
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January
823
223
915
1,961
685
3
3
691
Amounts recorded in the income statement
(1)
(122)
(17)
12
(127)
(121)
-
-
(121)
Amount recorded in the statement of
comprehensive income
-
-
13
13
-
-
-
-
Level 3 transfers in
7
1
56
64
1
2
25
28
Level 3 transfers out
(3)
(19)
(241)
(263)
(2)
(3)
-
(5)
Purchases/originations
147
118
117
382
121
1
-
122
Settlements/other decreases
(44)
(27)
(18)
(89)
(32)
-
-
(32)
Sales
(178)
-
(72)
(250)
(182)
(2)
-
(184)
Foreign exchange and other adjustments
-
(1)
(8)
(9)
(5)
-
-
(5)
At 31 December
630
278
774
1,682
465
1
28
494
Amounts recorded in the income statement in respect of balances held
at period end - unrealised
83
1
12
96
56
-
-
56
2023
At 1 January
1,007
396
930
2,333
975
1
-
976
Amounts recorded in the income statement
(1)
(156)
(88)
1
(243)
(313)
-
-
(313)
Amount recorded in the statement of comprehensive income
-
-
32
32
-
-
-
-
Level 3 transfers in
6
15
16
37
7
2
-
9
Level 3 transfers out
(5)
(32)
(190)
(227)
(9)
(2)
-
(11)
Purchases/originations
180
8
275
463
195
2
3
200
Settlements/other decreases
(70)
(8)
(86)
(164)
(51)
-
-
(51)
Sales
(137)
(65)
(52)
(254)
(116)
-
-
(116)
Foreign exchange and other adjustments
(2)
(3)
(11)
(16)
(3)
-
-
(3)
At 31 December
823
223
915
1,961
685
3
3
691
Amounts recorded in the income statement in respect of balances held
at period end - unrealised
67
(39)
1
29
(121)
-
-
(121)
\n
(1)
There were net losses on trading assets and liabilities of \u00a318 million (2023 - net gains of \u00a369 million) was included in income from trading activities. Net gains on other instruments of \u00a312 million (2023 - net gains of \u00a31 million) was included in other
\n
operating income or interest income as appropriate.
\n
(2)
Other trading assets and other trading liabilities comprise assets and liabilities held at fair value in trading portfolios.
\n
(3)
Other financial assets comprise fair value through other comprehensive income, designated as at fair value through profit or loss and other fair value through profit or loss.
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 measured at amortised cost
on the balance sheet.
\n\n \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\n \n
Items where
fair value
Carrying
Fair value hierarchy level
approximates
value
Fair value
Level 1
Level 2
Level 3
carrying value
2024
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Financial assets
Cash and balances at central banks
93.0
93.0
-
-
-
93.0
Settlement balances
2.1
2.1
-
-
-
2.1
Loans to banks
6.0
5.9
-
1.8
0.5
3.6
Loans to customers
400.3
396.6
-
34.9
361.7
-
Other financial assets - securities
24.6
24.6
4.3
12.4
7.9
-
2023
Financial assets
Cash and balances at central banks
104.3
104.3
-
-
-
104.3
Settlement balances
7.2
7.2
-
-
-
7.2
Loans to banks
6.9
7.0
-
2.2
0.6
4.2
Loans to customers
381.4
373.2
-
27.5
345.7
-
Other financial assets - securities
21.7
21.6
4.0
6.6
11.0
-
2024
Financial liabilities
Bank deposits
31.5
31.2
-
23.9
3.0
4.3
Customer deposits
433.5
433.3
-
24.3
46.0
363.0
Settlement balances
1.7
1.7
-
-
-
1.7
Other financial liabilities
- debt securities in issue
57.5
57.6
-
48.9
8.7
-
Subordinated liabilities
5.9
6.0
-
6.0
-
-
Notes in circulation
3.3
3.3
-
-
-
3.3
2023
Financial liabilities
Bank deposits
22.2
22.3
-
15.4
2.7
4.2
Customer deposits
431.4
431.0
-
30.7
48.8
351.5
Settlement balances
6.6
6.6
-
-
-
6.6
Other financial liabilities
- debt securities in issue
52.2
52.2
-
41.7
10.5
-
Subordinated liabilities
5.5
5.4
-
5.4
-
-
Notes in circulation
3.2
3.2
-
-
-
3.2
\n
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, including but not
limited to, cash and balances at central banks, settlement
balances, loans with short-term maturities, notes in circulation
and customer demand deposits, carrying value is deemed a
reasonable approximation of fair value.
Loans to banks and customers
In estimating the fair value of net loans to customers and banks
measured at amortised cost, NatWest Group\u2019s loans are
segregated into appropriate portfolios reflecting the
characteristics of the constituent loans. Two principal methods
are used to estimate fair value:
(a)
Contractual cash flows that are discounted using a market
discount rate that incorporates the current spread for the
borrower or where this is not observable, the spread for
borrowers of a similar credit standing.
(b)
Expected cash flows (unadjusted for credit losses) are
discounted at the current offer rate for the same or similar
products. The current methodology caps all loan values at
par rather than modelling clients\u2019 option to repay loans
early. This approach is adopted for lending portfolios in
Retail Banking, Commercial & Institutional (SME loans) and
Private Banking in order to reflect the homogeneous nature
of these portfolios.
Debt securities and subordinated liabilities
Most debt securities are valued using quoted prices in active
markets or from quoted prices of similar financial instruments.
The remaining population is valued using discounted cashflows
at current offer rates.
Bank and customer deposits
Fair values of deposits are estimated using discounted cash
flow valuation techniques. Where required, methodologies can
be revised as additional information and valuation inputs
become available.12 Trading assets and liabilities
Trading assets and liabilities comprise assets and liabilities held at fair value and classified as held-for-trading. Financial instruments are classified as held-for-trading if
they are held for the purpose of selling or repurchasing them in the short term, to make a spread between purchase and sale price or held to take advantage of
movements in prices and yields.
For accounting policy information refer to Accounting policy 3.8.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Assets
\u00a3m
\u00a3m
Loans
\u00a0 \u00a0
Reverse repos
27,127
23,694
Collateral given
7,367
9,141
Other loans
545
762
Total loans
35,039
33,597
Securities
\u00a0 \u00a0
Central and local government
\u00a0 \u00a0
- UK
2,077
2,729
- US
3,734
2,600
- Other
3,506
3,062
Financial institutions and corporate
4,561
3,563
Total securities
13,878
11,954
Total
48,917
45,551
Liabilities
\u00a0 \u00a0
Deposits
\u00a0 \u00a0
Repos
30,562
26,902
Collateral received
12,509
15,075
Other deposits
895
1,150
Total deposits
43,966
43,127
Debt securities in issue
257
706
Short positions
\u00a0 \u00a0
Central and local government
\u00a0 \u00a0
- UK
2,680
1,893
- US
1,677
2,071
- Other
4,755
4,049
Financial institutions and Corporate
1,379
1,790
Total short positions
10,491
9,803
Total
54,714
53,636
\n
13 Derivatives
Derivative is a term covering a wide range of financial instruments that derive their
fair value from an underlying rate or price, for example interest rates or exchange
rates (the underlying). NatWest Group uses derivatives as a part of its trading activities, to manage its own risks such as interest rate, foreign exchange, or credit risk
and in certain customer transactions. This note
shows contracted volumes of derivatives, how they are used for hedging purposes and the effects of the application of
hedge accounting.
For accounting policy information refer to Accounting policies 3.8 and 3.11.
\n\n \u00a0 \n \n
Notional
Asset
Liability
Traded on
Traded on
Traded on
recognised
Traded over
recognised
Traded over
recognised
Traded over
exchanges
the counter
Total
exchanges
the counter
Total
exchanges
the counter
Total
2024
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Interest rate
1,066
9,267
10,333
20
37,479
37,499
2
31,530
31,532
- Swaps
-
7,015
7,015
-
28,960
28,960
-
23,138
23,138
- Options
736
1,490
2,226
20
8,519
8,539
2
8,392
8,394
- Forwards and futures
330
762
1,092
-
-
-
-
-
-
Exchange rate
1
3,278
3,279
6
40,791
40,797
15
40,291
40,306
- Swaps
-
454
454
-
8,450
8,450
-
8,195
8,195
- Options
1
851
852
6
5,385
5,391
15
5,561
5,576
- Spot, forwards and futures
-
1,973
1,973
-
26,956
26,956
-
26,535
26,535
Credit
-
14
14
-
110
110
-
244
244
Equity and commodity
-
2
2
-
-
-
-
-
-
Total
1,067
12,561
13,628
26
78,380
78,406
17
72,065
72,082
2023
Interest rate
819
9,449
10,268
48
44,515
44,563
34
38,449
38,483
- Swaps
-
6,533
6,533
-
33,807
33,807
-
27,424
27,424
- Options
510
1,674
2,184
48
10,708
10,756
34
11,025
11,059
- Forwards and futures
309
1,242
1,551
-
-
-
-
-
-
Exchange rate
1
3,119
3,120
-
34,161
34,161
-
33,586
33,586
- Swaps
-
449
449
-
8,173
8,173
-
7,370
7,370
- Options
1
674
675
-
4,181
4,181
-
4,197
4,197
- Spot, forwards and futures
-
1,996
1,996
-
21,807
21,807
-
22,019
22,019
Credit
-
15
15
-
180
180
-
326
326
Equity and commodity
-
-
-
-
-
-
-
-
-
Total
820
12,583
13,403
48
78,856
78,904
34
72,361
72,395
\n
Included in the table above is the notional amount of \u00a37,321 billion (2023 - \u00a37,280 billion) of interest rate derivatives that are traded over the counter and settled through central
clearing counterparties. NatWest Group has no other type of derivatives that are settled through central counterparties.
Hedge accounting using
\n
derivatives
\n
NatWest Group applies hedge accounting
\n
to reduce the accounting mismatch
\n
caused in the income statement by using
\n
derivatives to hedge the following risks:
\n
interest rate, foreign exchange and the
\n
foreign exchange risk associated with net
\n
investment in foreign operations.
\n
NatWest Group\u2019s interest rate hedging
\n
relates to the management of NatWest
\n
Group\u2019s non-trading structural interest
\n
rate risk, caused by the mismatch
\n
between fixed interest rates and floating
\n
interest rates on its financial instruments.
\n
NatWest Group manages this risk within
\n
approved limits. Residual risk positions
\n
are hedged with derivatives, principally
\n
interest rate swaps.
\n
Cash flow hedges of interest rate risk
\n
relate to exposures to the variability in
\n
future interest payments and receipts
\n
due to the movement of interest rates on
\n
forecast transactions and on financial
\n
assets and financial liabilities. This
\n
variability in cash flows is hedged by
\n
interest rate swaps, which convert
\n
variable cash flows into fixed. For these
\n
cash flow hedge relationships, the
\n
hedged items are actual and forecast
\n
variable interest rate cash flows arising
\n
from financial assets and financial
\n
liabilities with interest rates linked to the
\n
relevant interest rates, most notably
\n
SOFR, EURIBOR, the European Central
\n
Bank deposit rate, SONIA and the Bank
\n
of England Official Bank Rate. The
\n
variability in cash flows due to
\n
movements in the relevant interest rate is
\n
hedged; this risk component is identified
\n
using the risk management systems of
\n
NatWest Group and encompasses the
\n
majority of cash flow variability risk.
\n
Suitable larger fixed rate financial
\n
instruments are subject to fair value
\n
hedging in line with documented risk
\n
management strategies.
\n
Fair value hedges of interest rate risk
\n
involve interest rate swaps transforming
\n
the fixed interest rate risk in financial
\n
assets and financial liabilities to floating.
\n
The hedged risk is the risk of changes in
\n
the hedged item\u2019s fair value attributable
\n
to changes in the interest rate risk
\n
component of the hedged item. The
\n
significant interest rates identified as risk
\n
components are SOFR, EURIBOR, ESTR
\n
and SONIA. These risk components are
\n
identified using the risk management
\n
systems of NatWest Group and
\n
encompass the majority of the hedged
\n
item\u2019s fair value risk.
\n
NatWest Group hedges the exchange
\n
rate risk of its net investment in foreign
\n
currency denominated operations with
\n
currency borrowings and forward foreign
\n
exchange contracts.
\n
NatWest Group reviews the value of the
\n
investments\u2019 net assets, executing
\n
hedges where appropriate to reduce the
\n
sensitivity of capital ratios to foreign
\n
exchange rate movement. Hedge
\n
accounting relationships will be
\n
designated where required.
\n
Exchange rate risk also arises in NatWest
\n
Group where payments are denominated
\n
in currencies other than the functional
\n
currency. Residual risk positions are
\n
hedged with foreign exchange
\n
derivatives, fixing the exchange rate the
\n
payments will be settled in. The
\n
derivatives are documented as cash flow
\n
hedges.
\n
For all cash flow hedging, fair value
\n
hedge relationships and net investment
\n
hedging, NatWest Group determines that
\n
there is an economic relationship
\n
between the hedged item and hedging
\n
instrument via assessing the initial and
\n
ongoing effectiveness by comparing
\n
movements in the fair value of the
\n
expected highly probable forecast
\n
interest cash flows/ fair value of the
\n
hedged item attributable to the hedged
\n
risk with movements in the fair value of
\n
the expected changes in cash flows from
\n
the hedging instrument. The method
\n
used for comparing movements is either
\n
regression testing, or the dollar offset
\n
method. The method for testing
\n
effectiveness and the period over which
\n
the test is performed depends on the
\n
applicable risk management strategy and
\n
is applied consistently to each risk
\n
management strategy. Hedge
\n
effectiveness is assessed on a cumulative
\n
basis and the determination of
\n
effectiveness is in line with the
\n
requirements of IAS 39.
\n
NatWest Group uses either the actual
\n
ratio between the hedged item and
\n
hedging instrument(s) or one that
\n
minimises hedge ineffectiveness to
\n
establish the hedge ratio for hedge
\n
accounting. Hedge ineffectiveness is
\n
measured in line with the requirements of
\n
IAS 39 and recognised in the income
\n
statement as it arises.
Derivatives in hedge accounting relationships
\n
Included in the table below are derivatives held for hedging purposes as follows.
\n\n \n
2024
2023
Changes in fair value used for
Changes in fair value used for
Notional
Assets
Liabilities
hedge ineffectiveness (1)
Notional
Assets
Liabilities
hedge ineffectiveness (1)
\u00a3bn
\u00a3m
\u00a3m
\u00a3m
\u00a3bn
\u00a3m
\u00a3m
\u00a3m
Fair value hedging
Interest rate contracts
(2)
83.1
1,096
1,965
958
67.6
1,139
2,607
406
Cash flow hedging
Interest rate contracts
167.9
1,424
3,300
581
140.0
1,924
4,970
1,211
Exchange rate contracts
14.4
116
457
1
16.9
112
254
(12)
Net investment hedging
Exchange rate contracts
(3)
0.3
2
1
9
0.3
2
7
(3)
265.7
2,638
5,723
1,549
224.8
3,177
7,838
1,602
IFRS netting and clearing house settlements
(2,520)
(5,259)
(3,063)
(7,568)
118
464
114
270
\n
(1)
The change in fair value used for hedge ineffectiveness includes instruments that were derecognised in the year.
\n
(2)
The hedged risk includes inflation risk.
\n
(3)
In addition to the derivative hedging instruments above, NatWest Group held notionals of \u00a33,144 million (2023 - \u00a33,054 million) of non-derivative hedging instruments with a carrying value of \u00a33,163 million (2023 - \u00a33,061 million), that were used in net
\n
investment hedges. The non-derivative instruments are other financial liabilities - debt securities in issue.
\n
Hedge ineffectiveness
\n
Hedge ineffectiveness recognised in other operating income comprises.
\n\n \n
2024
2023
2022
\u00a3m
\u00a3m
\u00a3m
Fair value hedging
Loss on hedged items attributable to the hedged risk
(954)
(364)
(442)
Gain on the hedging instruments
958
406
482
Fair value hedging ineffectiveness
4
42
40
Cash flow hedging
Interest rate risk
(2)
10
(60)
Cash flow hedging ineffectiveness
(2)
10
(60)
Total
2
52
(20)
\n
The main sources of ineffectiveness for interest rate risk hedge accounting relationships are:
\n
\ue001
The effect of the counterparty credit risk on the fair value of the interest rate swap which is not reflected in the fair value of the hedged item attributable to the change in interest
\n
rate (fair value hedge);
\n
\ue001
Differences in the repricing basis between the hedging instrument and hedged cash flows (cash flow hedge); and
\n
\ue001
Upfront present values on the hedging derivatives where hedge accounting relationships have been designated after the trade date (cash flow hedge and fair value hedge).
Maturity of notional hedging contracts
\n
The following table shows the period in which the notional of hedging contract ends.
\n \n \n
0-3 months
3-12 months
1-3 years
3-5 years
5-10 years
Over 10 years
Total
2024
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Fair value hedging
Interest rate risk
(1)
Hedging assets
4.0
5.5
12.6
9.7
6.6
3.7
42.1
Hedging liabilities
0.8
4.3
14.2
15.5
5.7
0.5
41.0
2023
Fair value hedging
Interest rate risk
(1)
Hedging assets
0.1
1.7
7.1
9.0
5.9
4.7
28.5
Hedging liabilities
2.7
3.3
13.4
11.3
7.7
0.7
39.1
2024
Cash flow hedging
Interest rate risk
Hedging assets
10.6
10.8
22.0
30.3
12.0
-
85.7
Hedging liabilities
2.5
17.1
50.7
10.1
1.4
0.4
82.2
Exchange rate risk
Hedging assets
0.5
0.8
0.5
-
-
-
1.8
Hedging liabilities
3.1
2.5
3.7
3.3
-
-
12.6
2023
Cash flow hedging
Interest rate risk
Hedging assets
3.9
14.5
33.9
22.8
10.1
-
85.2
Hedging liabilities
0.8
3.9
39.1
10.1
0.3
0.6
54.8
Exchange rate risk
Hedging assets
0.3
0.7
1.6
-
-
-
2.6
Hedging liabilities
8.4
0.8
2.4
2.5
0.2
-
14.3
\n
(1)
The hedged risk includes inflation risk.
Average fixed interest rates
\n
The following table shows average fixed rate for cash flow hedges, interest rate risk.
\n\n \n
0-3 months
3-12 months
1-3 years
3-5 years
5-10 years
Over 10 years
Total
2024
%
%
%
%
%
%
%
Average fixed interest rate
Hedging assets
3.85
0.98
2.52
3.32
2.84
3.12
2.82
Hedging liabilities
4.34
4.76
3.97
3.09
3.64
4.18
4.03
2023
Average fixed interest rate
Hedging assets
1.16
2.46
1.19
3.3
1.77
3.12
2.04
Hedging liabilities
0.93
2.54
4.36
2.28
2.36
4.5
3.79
\n
Average foreign exchange rates
\n
For cash flow hedging of exchange rate risk, the average foreign exchange rates applicable across the relationships were as below for the main currencies hedged.
\n\n \n
2024
2023
INR/GBP
109.07
105.03
USD/GBP
1.30
1.28
CHF/GBP
1.08
1.08
JPY/GBP
176.04
170.54
JPY/USD
130.79
129.75
NOK/USD
9.21
9.21
Analysis of hedged items and related hedging instruments
\n
The table below analyses assets and liabilities subject to hedging derivatives.
\n\n \n
Changes in fair value
Carrying value of
Impact on hedged items
used as a basis to
hedged assets and liabilities
included in carrying value
determine ineffectiveness (1)
2024
\u00a3m
\u00a3m
\u00a3m
Fair value hedging - interest rate
(2)
Loans to banks and customers - amortised cost
5,318
(478)
(182)
Other financial assets - securities
36,724
(29)
(347)
Total
(3)
42,042
(507)
(529)
Bank and customer deposits
382
-
(3)
Other financial liabilities - debt securities in issue
(5)
37,548
(784)
(315)
Subordinated liabilities
5,772
(244)
(107)
Total
43,702
(1,028)
(425)
2023
Fair value hedging - interest rate
(2)
Loans to banks and customers - amortised cost
5,663
(316)
167
Other financial assets - securities
22,896
174
636
Total
(3)
28,559
(142)
803
Bank and customer deposits
745
(3)
(6)
Other financial liabilities - debt securities in issue
(5)
36,305
(1,151)
(1,023)
Subordinated liabilities
5,346
(320)
(138)
Total
42,396
(1,474)
(1,167)
\n
For the notes to this table refer to the following page.
\n \n
Changes in fair value
Carrying value of
used as a basis to
hedged assets and liabilities
determine ineffectiveness (1)
2024
\u00a3m
\u00a3m
Cash flow hedging - interest rate
Loans to banks and customers - amortised cost
(4)
84,065
(190)
Other financial assets - securities
1,625
(2)
Total
85,690
(192)
Bank and customer deposits
82,081
(391)
Other financial liabilities - debt securities in issue
149
-
Total
82,230
(391)
Cash flow hedging - exchange rate
Loans to banks and customers - amortised cost
(4)
223
-
Other financial assets - securities
1,598
-
Total
1,821
-
Other financial liabilities - debt securities in issue
8,279
(1)
Other
195
-
Total
8,474
(1)
2023
Cash flow hedging - interest rate
Loans to banks and customers - amortised cost
(4)
84,583
(2,796)
Other financial assets - securities
623
(22)
Total
85,206
(2,818)
Bank and customer deposits
54,675
1,610
Other financial liabilities - debt securities in issue
156
7
Total
54,831
1,617
Cash flow hedging - exchange rate
Loans to banks and customer - amortised cost
(4)
583
-
Other financial assets - securities
1,839
-
Total
2,422
-
Other financial liabilities - debt securities in issue
11,460
9
Other
201
3
Total
11,661
12
\n
(1)
The change in fair value used for hedge ineffectiveness includes instruments that were derecognised in the year.
\n
(2)
The hedged risk includes inflation risk.
\n
(3)
Carrying values include \u00a346 million (2023 - \u00a357 million) adjustment for discontinued fair value hedges.
\n
(4)
Includes cash and balances at central banks.
\n
(5)
The carrying value include \u00a34,631 million (2023 - \u00a32,957 million) of debt securities held at amortised cost.
Analysis of cash flow and foreign exchange hedge reserve
The following table shows an analysis of the pre-tax cash flow hedge reserve and foreign exchange hedge reserve.
\n \n
2024
2023
Foreign
Foreign
Cash flow
exchange
Cash flow
exchange
hedge reserve
hedge reserve
hedge reserve
hedge reserve
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Continuing
Interest rate risk
(1,564)
-
(2,330)
-
Foreign exchange risk
(6)
15
1
(18)
De-designated
Interest rate risk
(437)
-
(304)
-
Foreign exchange risk
2
(663)
4
(771)
Total
(2,005)
(648)
(2,629)
(789)
\n \n
2024
2023
Foreign
Foreign
Cash flow
exchange
Cash flow
exchange
hedge reserve
hedge reserve
hedge reserve
hedge reserve
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Amount recognised in equity
Interest rate risk
(931)
-
137
-
Foreign exchange risk
59
122
50
107
Total
(872)
122
187
107
Amount transferred from equity to earnings
Interest rate risk to net interest income
1,562
-
1,112
-
Interest rate risk to non interest income
-
-
(10)
-
Foreign exchange risk to net interest income
(73)
-
(74)
-
Foreign exchange risk to non interest income
-
19
(9)
69
Foreign exchange risk to operating expenses
5
-
2
-
Total
1,494
19
1,021
69
15 Other financial assets
Other financial assets consist of debt securities, equity shares and loans that are not held for trading. Balances consist of local and central government securities, a
part of NatWest Group\u2019s liquidity portfolio.
For accounting policy information refer to Accounting policy 3.8.
\n \n
Debt securities
Central and local government
UK
US
Other
Other debt
Total
Equity shares
Loans
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Mandatory fair value through profit or loss
-
-
-
1
1
4
793
798
Designated at fair value
-
-
2
3
5
-
-
5
Fair value through other comprehensive income
(1)
13,281
4,587
6,192
13,476
37,536
247
60
37,843
Amortised cost
3,571
500
85
20,441
24,597
-
-
24,597
Total
16,852
5,087
6,279
33,921
62,139
251
853
63,243
2023
Mandatory fair value through profit or loss
-
-
-
1
1
2
700
703
Designated at fair value
-
-
3
2
5
-
-
5
Fair value through other comprehensive income
(1)
6,441
5,517
5,738
10,627
28,323
311
65
28,699
Amortised cost
2,889
647
35
18,124
21,695
-
-
21,695
Total
9,330
6,164
5,776
28,754
50,024
313
765
51,102
(1)
Upon initial recognition, NatWest Group occasionally irrevocably
designates some of its equity investments as equity instruments at FVOCI when they meet the definition of equity under IAS 32 Financial instruments: presentation, are not held for trading or
they are held for strategic purposes. Such classification is determined on an instrument-by-instrument basis. Gains and losses on these equity instruments are not recycled to the income statement and dividends are recognised in profit or loss except
when they represent a recovery of part of the cost of the instrument, in which case such gains are recorded in OCI. Equity instruments at FVOCI are not subject to an impairment assessment.
There were no significant acquisitions of equity shares in either year.
NatWest Group disposed of equity shares in VISA Inc. of \u00a362 million (2023 \u2013 nil). In 2023, NatWest Group disposed of equity shares in Permanent TSB p.l.c of \u00a347 million and UBS
Equity Funds of \u00a335 million. There were no significant dividends on equity shares held at FVOCI in either year.18 Other financial liabilities
Other financial liabilities consist of customer deposits designated at fair value and debt securities in issue.
For accounting policy information refer to Accounting policies 3.8 and 3.10.
\n \n
2024
2023
\u00a3m
\u00a3m
Customer deposits including repos
1,812
1,280
Debt securities in issue
- MRELs
23,998
21,660
- Other medium term notes
22,087
17,843
- Commercial paper and certificates of deposit
11,266
11,321
- Covered bonds
749
2,122
- Securitisation
1,175
863
Total
61,087
55,089
19 Subordinated liabilities
Subordinated liabilities are debt securities that, in the event of winding up or bankruptcy, rank below other liabilities for interest payments and repayment.
For accounting policy information refer to Accounting policies 3.8 and 3.10.
\n \n
2024
2023
\u00a3m
\u00a3m
Dated loan capital
5,996
5,573
Undated loan capital
21
22
Preference shares
119
119
6,136
5,714
Certain preference shares issued by the company are classified as liabilities; these securities remain subject to the capital maintenance rules of the Companies Act 2006.
\n \n
First call
Maturity
Capital
2024
2023
Dated loan capital
date
date
treatment
\u00a3m
\u00a3m
NatWest Group plc
$2,250 million
5.125% notes
-
May-24
Tier 2
-
418
\u00a31,000 million
3.622% notes
May-25
Aug-30
Tier 2
1,006
985
\u00a31,000 million
2.105% notes
Aug-26
Nov-31
Tier 2
1,001
1,000
$1,000 million
6.475% notes
Mar-29
Jun-34
Tier 2
799
-
$850 million
3.032% notes
Aug-30
Nov-35
Tier 2
550
541
\u20ac750 million
1.043% notes
Jun-27
Sep-32
Tier 2
624
652
$750 million
3.754% notes
Nov-24
Nov-29
Tier 2
-
592
\u20ac700 million
5.763% notes
Nov-28
Feb-34
Tier 2
608
636
\u00a3650 million
7.416% notes
Mar-28
Jun-33
Tier 2
644
657
\u00a3600 million
5.642% notes
Oct-29
Oct-34
Tier 2
608
-
5,840
5,481
Other subsidiaries
\u20ac170 million
Floating rate notes
-
Feb-41
Not applicable
234
237
$150 million
7.125% notes
-
Oct-93
Not applicable
17
17
6,091
5,735
Fair value hedging
(95)
(162)
5,996
5,573
First call
Maturity
Capital
2024
2023
Undated loan capital
date
date
treatment
\u00a3m
\u00a3m
Other subsidiaries
\u00a331 million
7.380% notes
-
-
Not applicable
1
1
\u00a316 million
5.630% notes
Sep-26
-
Not applicable
17
18
\u00a34.9 million
2.500% fixed notes
-
-
Not applicable
3
3
21
22
Preference shares
Other subsidiaries
\u00a3140 million
Non-cumulative preference shares of \u00a31
-
-
Not applicable
119
119
119
119
Total
6,136
5,714
Amounts included in the NatWest Group financial statements, in aggregate, by category
of related party are as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Associates and joint
Equity
\u00a0
\u00a0
ventures
shares (1)
Total
31 December 2024
\u00a3m
\u00a3m
\u00a3m
Investments
690
122
812
Loans to customers - amortised cost
-
4
4
Customer deposits
1
1
2
Other comprehensive income
-
(22)
(22)
Other operating income
19
-
19
31 December 2023
\u00a0\u00a0\u00a0
Investments
668
145
813
Loans to customers - amortised cost
-
13
13
Customer deposits
2
10
12
Other comprehensive income
-
(8)
(8)
Other operating income
(11)
-
(11)
\n
(1)
Represents investments in entities where ownership is more than 10%", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00244": { "value": "2.2. Fair value \u2013 financial instruments
We measure financial instruments at fair
value when they are classified as
mandatory fair value through profit or
loss; held-for-trading; designated fair
value through profit or loss and fair value
through other comprehensive income
and they are recognised in the financial
statements at fair value. All derivatives
are measured at fair value.
We manage some portfolios of financial
assets and financial liabilities based on
our net exposure to either market or
credit risk. In these cases, the fair value is
derived from the net risk exposure of that
portfolio with portfolio level adjustments
applied to incorporate bid-offer spreads,
counterparty credit risk, and funding
costs (refer to \u2018Valuation Adjustments\u2019).
Where the market for a financial
instrument is not active, fair value is
established using a valuation technique.
These valuation techniques involve a
degree of estimation, the extent of which
depends on the instrument\u2019s complexity
and the availability of market-based data.
The complexity and uncertainty in the
financial instrument\u2019s fair value is
categorised using the fair value
hierarchy.
The use of market indicators as inputs to
fair value is assumed to include current
information and knowledge regarding the
effect of climate risk.3.8. Financial instruments
Financial instruments are measured at
fair value on initial recognition on the
balance sheet.
Monetary financial assets are classified
into one of the following subsequent
measurement categories (subject to
business model assessment and review of
contractual cash flow for the purposes of
sole payments of principal and interest
where applicable):
\ue001
amortised cost
measured at cost
using the effective interest rate
method, less any impairment
allowance;
\ue001
fair value through other
comprehensive income (FVOCI)
measured at fair value, using the
effective interest rate method and
changes in fair value through other
comprehensive income;
\ue001
mandatory fair value through profit or
loss (MFVTPL)
measured at fair value
and changes in fair value reported in
the income statement; or
\ue001
designated at fair value through profit
or loss (DFV)
measured at fair value
and changes in fair value reported in
the income statement.
Classification by business model reflects
how we manage our financial assets to
generate cash flows. A business model
assessment helps to ascertain the
measurement approach depending on
whether cash flows result from holding
financial assets to collect the contractual
cash flows, from selling those financial
assets, or both.
Business model assessment of assets is
made at portfolio level, being the level at
which they are managed to achieve a
predefined business objective. This is
expected to result in the most consistent
classification of assets because it aligns
with the stated objectives for the
portfolio, its risk management, manager\u2019s
remuneration and the ability to monitor
sales of assets from a portfolio. When a
significant change to our business is
communicated to external parties, we
reassess our business model for
managing those financial assets. We
reclassify financial assets if we have a
significant change to the business model.
A reclassification is applied prospectively
from the reclassification date.
The contractual terms of a financial
asset; any leverage features; prepayment
and extension terms; and discounts or
penalties to interest rates that are part of
meeting environmental, social and
governance targets as well as other
contingent and leverage features, non-
recourse arrangements and features that
could modify the timing and/or amount of
the contractual cash flows that might
reset the effective rate of interest; are
considered in determining whether cash
flows are solely payments of principal and
interest.
Certain financial assets may be
designated at fair value through profit or
loss (DFV) upon initial recognition if such
designation eliminates, or significantly
reduces, accounting mismatch.
Equity shares are measured at fair value
through profit or loss unless specifically
elected as at fair value through other
comprehensive income (FVOCI).
Upon disposal, the cumulative gains or
losses in fair value through other
comprehensive income reserve are
recycled to the income statement for
monetary assets and for non-monetary
assets (equity shares) the cumulative
gains or losses are transferred directly to
retained earnings.Regular way purchases and sales of
financial assets classified as amortised
cost are recognised on the settlement
date; all other regular way transactions in
financial assets are recognised on the
trade date.
Financial liabilities are classified into one
of following measurement categories:
\ue001
amortised cost measured at cost
using the effective interest rate
method;
\ue001
held for trading measured at fair
value and changes in fair value
reported in income statement; or
\ue001
designated at fair value through profit
or loss measured at fair value and
changes in fair value reported in the
income statement except changes in
fair value attributable to the credit
risk component recognised in other
comprehensive income when no
accounting mismatch occurs.3.11. Derivatives and hedging
Derivatives are reported on the balance
sheet at fair value.
We use derivatives as part of our trading
activities, to manage our own risk such
as interest rate, foreign exchange, or
credit risk or in certain customer
transactions. Not all derivatives used to
manage risk are in hedge accounting
relationships (an IFRS method to reduce
accounting mismatch from changes in
the fair value of the derivatives reported
in the income statement).
Gains and losses arising from changes in
the fair value of derivatives that are not
in hedge relationships are recognised in
Income from trading activities unless
those derivatives are managed together
with financial instruments designated at
fair value; these gains and losses are
included in Other operating income.
Hedge accounting
Hedge accounting relationships are
designated and documented at inception
in line with the requirements of IAS 39
Financial instruments \u2013 Recognition and
Measurement.
The documentation identifies the hedged
item, the hedging instrument and details
of the risk that is being hedged and the
way in which effectiveness will be
assessed at inception and during the
period of the hedge. When designating a
hedging relationship, we consider: the
economic relationship between the
hedged item (including the risk being
hedged) and the hedging instrument; the
nature of the risk; the risk management
objective and strategy for undertaking
the hedge; and the appropriateness of
the method that will be used to assess
hedge effectiveness.
Designated hedging relationships must be
expected to be highly effective both on a
prospective and retrospective basis. This
is assessed using regression techniques
which model the degree of offsetting
between the changes in fair value or
cash flows attributable to the hedged risk
and the changes in fair value of the
designated hedging derivatives.
Ineffectiveness is measured based on
actual levels of offsetting and recognised
in the income statement.
We enter into three types of hedge
accounting relationships.
Fair value hedge
- the gain or loss on the
hedging instrument and the hedged item
attributable to the hedged risk is
recognised in the income statement.
Where the hedged item is measured at
amortised cost, the balance sheet
amount of the hedged item is also
adjusted.
Cash flow hedge
- the effective portion of
the designated hedge relationship is
recognised in other comprehensive
income and the ineffective portion in the
income statement. When the hedged
item (forecasted cash flows) results in the
recognition of a financial asset or financial
liability, the cumulative gain or loss is
reclassified from equity to the income
statement in the same periods in which
the hedged forecasted cash flows affect
the income statement.
Hedge of net investment in a foreign
operation
-
in the hedge of a net
investment in a foreign operation, the
effective portion of the designated hedge
relationship is recognised in other
comprehensive income. Any ineffective
portion is recognised in profit or loss.
Non-derivative financial liabilities as well
as derivatives may be designated as a
hedging instrument in a net investment
hedge.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the
hedge no longer meets the criteria for
hedge accounting i.e. the hedge is not
highly effective in offsetting changes in
fair value or cash flows attributable to the
hedged risk, consistent with the
documented risk management strategy;
the hedging instrument expires or is sold,
terminated or exercised; or if hedge
designation is revoked.
For fair value hedging any cumulative
adjustment is amortised to the income
statement over the life of the hedged
item. Where the hedged item is no longer
on the balance sheet the adjustment to
the hedged item is reported in the
income statement. For cash flow hedging
the cumulative unrealised gain or loss is
reclassified from equity to the income
statement when the hedged cash flows
occur or, if the forecast transaction
results in the recognition of a financial
asset or financial liability, when the
hedged forecast cash flows affect the
income statement. Where a forecast
transaction is no longer expected to
occur, the cumulative unrealised gain or
loss is reclassified from equity to the
income statement immediately.
For net investment hedging on disposal
or partial disposal of a foreign operation,
the amount accumulated in equity is
reclassified from equity to the income
statement.10 Financial instruments - valuation
Financial instruments recognised at fair value are revalued using techniques that can include observable inputs (pricing information that is readily available in the
\n
market, for example UK Government securities), and unobservable inputs (pricing information that is not readily available, for example unlisted securities). Gains
\n
and losses are recognised in the income statement and statement of comprehensive income as appropriate.
This note presents information on the valuation of
\n
financial instruments.
\n
The table below provides an overview of the various sections contained within the note.
\n
Critical accounting policy: Fair value \u2013 financial
\n
instruments
\n
Financial instruments classified as mandatory fair value through
\n
profit or loss; held-for-trading; designated fair value through
\n
profit or loss; and fair value through other comprehensive
\n
income are recognised in the financial statements at fair value.
\n
All derivatives are measured at fair value.
\n
Fair value is the price that would be received to sell an asset or
\n
paid to transfer a liability in an orderly transaction between
\n
market participants at the measurement date. A fair value
\n
measurement considers the characteristics of the asset or
\n
liability and the assumptions that a market participant would
\n
consider when pricing the asset or liability.
\n
NatWest Group manages some portfolios of financial assets
\n
and financial liabilities based on its net exposure to either
\n
market or credit risk. In these cases, the fair value is derived
\n
from the net risk exposure of that portfolio with portfolio level
\n
adjustments applied to incorporate bid-offer spreads,
\n
counterparty credit risk, and funding costs (refer to \u2018Valuation
\n
Adjustments\u2019).
\n
Where the market for a financial instrument is not active, fair
\n
value is established using a valuation technique. These
\n
valuation techniques involve a degree of estimation, the extent
\n
of which depends on the instrument\u2019s complexity and the
\n
availability of market-based data. The complexity and
\n
uncertainty in the financial instrument\u2019s fair value is categorised
\n
using the fair value hierarchy.
\n
For accounting policy information refer to Accounting policies
\n
2.2, 3.8 and 3.11.
\n
Valuation
\n\n \n
Page
Financial instruments
Critical accounting policy: Fair value
332
Valuation
Fair value hierarchy
(D)
333
Valuation techniques
(D)
333
Inputs to valuation models
(D)
333
Valuation control
(D)
334
Key areas of judgement
(D)
334
Assets and liabilities split by fair value hierarchy level
(T)
335
Valuation adjustments
Fair value adjustments made
(T)
336
Funding valuation adjustments (FVA)
(D)
336
Credit valuation adjustments (CVA)
(D)
336
Bid-offer
(D)
336
Product and deal specific
(D)
336
Own credit
(D)
336
Level 3 additional information
Level 3 ranges of unobservable inputs
(D)
337
Level 3 instruments, valuation techniques and inputs
(T)
337
Level 3 sensitivities
(D)
337
Alternative assumptions
(D)
338
Other considerations
(D)
338
High and low range of fair value of level 3 assets and liabilities
(T)
338
Movement in level 3 assets and liabilities over the reporting period
(D)
339
Movement in level 3 assets and liabilities
(T)
339
Fair value of financial instruments measured at amortised cost
Fair value of financial instruments measured at amortised cost on the balance sheet
balance sheet
balance sheet
340
(D) = Descriptive; (T) = Table
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Fair value hierarchy
\n
Financial instruments carried at fair value
\n
have been classified under the fair value
\n
hierarchy. The classification ranges from
\n
level 1 to level 3, with more expert
\n
judgement and price uncertainty for
\n
those classified at level 3.
\n
The determination of an instrument\u2019s
\n
level cannot be made at a global product
\n
level as a single product type can be in
\n
more than one level. For example, a
\n
single name corporate credit default
\n
swap could be in level 2 or level 3
\n
depending on the level of market activity
\n
for the referenced entity.
\n
Level 1
\u2013 instruments valued using
\n
unadjusted quoted prices in active and
\n
liquid markets, for identical financial
\n
instruments. Examples include
\n
government bonds, listed equity shares
\n
and certain exchange-traded derivatives.
\n
Level 2
\u2013 instruments valued using
\n
valuation techniques that have
\n
observable inputs. Observable inputs are
\n
those that are readily available with
\n
limited adjustments required. Examples
\n
include most government agency
\n
securities, investment-grade corporate
\n
bonds, certain mortgage products -
\n
including collateralised loan obligations
\n
(CLOs), most bank loans, repos and
\n
reverse repos, state and municipal
\n
obligations, most notes issued, certain
\n
money market securities, loan
\n
commitments and most over the counter
\n
(OTC) derivatives.
\n
Level 3
\u2013 instruments valued using a
\n
valuation technique where at least one
\n
input which could have a significant effect
\n
on the instrument\u2019s valuation, is not
\n
based on observable market data.
\n
Examples include non-derivative
\n
instruments which trade infrequently,
\n
certain syndicated and commercial
\n
mortgage loans, private equity, and
\n
derivatives with unobservable model
\n
inputs.
\n
Valuation techniques
\n
NatWest Group derives the fair value of
\n
its instruments differently depending on
\n
whether the instrument is a non-
\n
modelled or a modelled product.
\n
Non-modelled products
are valued
\n
directly from a price input, typically on a
\n
position-by-position basis. Examples
\n
include equities and most debt securities.
\n
Non-modelled products can fall into any
\n
fair value levelling hierarchy depending
\n
on the observable market activity,
\n
liquidity, and assessment of valuation
\n
uncertainty of the instruments. The
\n
assessment of fair value and the
\n
classification of the instrument to a fair
\n
value level is subject to the valuation
\n
controls discussed in the Valuation
\n
control section.
\n
Modelled products
\u2013 valued using a
\n
pricing model range in complexity from
\n
comparatively vanilla products such as
\n
interest rate swaps and options (e.g.,
\n
interest rate caps and floors) through to
\n
more complex derivatives (e.g., balance
\n
guarantee swaps).
\n
For modelled products the fair value is
\n
derived using the model and the
\n
appropriate model inputs or parameters,
\n
as opposed to a cash price equivalent.
\n
Model inputs are taken either directly or
\n
indirectly from available data, where
\n
some inputs are also modelled.
\n
Fair value classification of modelled
\n
instruments is either level 2 or level 3,
\n
depending on the product/model
\n
combination, the observability and quality
\n
of input parameters and other factors. All
\n
these must be assessed to classify a
\n
position.
\n
The modelled product is assigned to the
\n
lowest fair value hierarchy level of any
\n
significant input used in that valuation.
\n
Most derivative instruments, for example
\n
vanilla interest rate swaps, foreign
\n
exchange swaps and liquid single name
\n
credit derivatives, are classified as level 2.
\n
This is because they are vanilla products
\n
valued using standard market models
\n
and with observable inputs. Level 2
\n
products range from vanilla to more
\n
complex products, where more complex
\n
products remain classified as level 2 due
\n
to the low materiality of any
\n
unobservable inputs.
\n
Inputs to valuation models
\n
When using valuation techniques, the fair
\n
value can be significantly affected by the
\n
choice of
valuation model
and underlying
\n
assumptions. Factors considered include
\n
the cashflow amounts and timing of
\n
those cash flows, and application of
\n
appropriate discount rates, incorporating
\n
both funding and credit risk. Values
\n
between and beyond available data
\n
points are obtained by interpolation and
\n
extrapolation. The principal inputs to
\n
these valuation techniques are as follows:
\n
Bond prices
\u2013 quoted prices are generally
\n
available for government bonds, certain
\n
corporate securities, and some
\n
mortgage-related products.
\n
Credit spreads/margins
\u2013 these reflect
\n
credit default swap levels or the return
\n
required over a benchmark rate or index
\n
to compensate for the referenced credit
\n
risk. Where available, these are derived
\n
from the price of credit default swaps or
\n
other credit-based instruments, such as
\n
debt securities. When direct prices are
\n
not available; credit spreads/margins are
\n
determined with reference to available
\n
prices of entities with similar
\n
characteristics.
\n
Interest rates
\u2013 these are principally
\n
based on interest rate swap prices
\n
referencing benchmark interest rates.
\n
Interest rates, include SONIA (Sterling
\n
Overnight Interbank Average Rate) and
\n
other overnight rates. Other quoted
\n
interest rates may also be used from
\n
both the bond, and futures markets.
\n
Foreign currency exchange rates
\u2013 there
\n
are observable prices both for spot and
\n
forward contracts and futures in the
\n
world's major currencies.
\n
Equity and equity index prices
\u2013 quoted
\n
prices are generally readily available for
\n
equity shares listed on the world's major
\n
stock exchanges and for major indices on
\n
such shares.
\n
Price volatilities and correlations
\u2013
\n
volatility is a measure of the tendency of
\n
a price to change with time. Correlation
\n
measures the degree which two or more
\n
prices or variables are observed to move
\n
together. Variables that move in the
\n
same direction show positive correlation;
\n
those that move in opposite directions
\n
are negatively correlated.
\n
Prepayment rates
\u2013 are used to reflect
\n
how fast a pool of assets prepay. The fair
\n
value of a financial instrument that can
\n
be prepaid by the issuer or borrower
\n
differs from that of an instrument that
\n
cannot be prepaid. When valuing
\n
prepayable instruments, the value of this
\n
prepayment option is considered.
\n
Recovery rates/loss given default
\u2013 are
\n
used as an input to valuation models and
\n
reserves for asset-backed securities and
\n
other credit products as an indicator of
\n
severity of losses on default. Recovery
\n
rates are primarily sourced from market
\n
data providers, the value of the
\n
underlying collateral or inferred from
\n
observable credit spreads.
\n\n\n\n\n\n\n\n\n\n\n\n
Valuation control
\n
NatWest Group's control environment for
\n
the determination of the fair value of
\n
financial instruments includes formalised
\n
procedures for the review and validation
\n
of fair values. The review of market
\n
prices and inputs is performed by an
\n
independent price verification (IPV) team.
\n
IPV is a key element of the control
\n
environment. Valuations are first
\n
performed by the business which entered
\n
into the transaction. These valuations are
\n
then reviewed by the IPV team,
\n
independent of those trading the financial
\n
instruments, in light of available pricing
\n
evidence.
\n
Independent pricing data is collated from
\n
a range of sources. Each source is
\n
reviewed for quality and the independent
\n
data applied in the IPV processes using a
\n
formalised input quality hierarchy.
\n
Consensus services are one source of
\n
independent data and encompass
\n
interest rate, currency, credit, and bond
\n
markets, providing comprehensive
\n
coverage of vanilla products and a wide
\n
selection of exotic products.
\n
Where measurement differences are
\n
identified through the IPV process these
\n
are grouped by the quality hierarchy of
\n
the independent data. If the size of the
\n
difference exceeds defined thresholds, an
\n
adjustment is made to bring the valuation
\n
to within the independently calculated fair
\n
value range.
\n
IPV takes place at least monthly, for all
\n
fair value financial instruments. The IPV
\n
control includes formalised reporting and
\n
escalation of any valuation differences in
\n
breach of established thresholds.
\n
The quality and completeness of the
\n
information gathered in the IPV process
\n
gives an indication as to the liquidity and
\n
valuation uncertainty of an instrument
\n
and forms part of the information
\n
considered when determining fair value
\n
hierarchy classifications.
\n
Initial fair value level classification of a
\n
financial instrument is carried out by the
\n
IPV team. These initial classifications are
\n
subject to senior management review.
\n
Particular attention is paid to instruments
\n
transferring from one level to another,
\n
new instrument classes or products,
\n
instruments where the transaction price
\n
is significantly different from the fair value
\n
and instruments where valuation
\n
uncertainty is high.
\n
Valuation Committees are made up of
\n
valuation specialists and senior business
\n
representatives from various functions
\n
and oversees pricing, reserving and
\n
valuations issues. These committees
\n
meet monthly to review and ratify any
\n
methodology changes. The Executive
\n
Valuation Committee meets quarterly to
\n
address key material and subjective
\n
valuation issues, to review items
\n
escalated by Valuation Committees and
\n
to discuss other relevant industry
\n
matters.
\n
The Group model risk policy sets the
\n
policy for model documentation, testing
\n
and review. Governance of the model
\n
risk policy is carried out by the Group
\n
model risk oversight committee, which
\n
comprises model risk owners and
\n
independent model experts. All models
\n
are required to be independently
\n
validated in accordance with the Model
\n
Risk Policy.
\n
Key areas of judgement
\n
Over the years the business has
\n
simplified, with most products classified
\n
as level 1 or 2 of the fair value hierarchy.
\n
However, the diverse range of products
\n
historically traded by NatWest Group
\n
means some products remain classified
\n
as level 3. Level 3 indicates a significant
\n
level of pricing uncertainty, where expert
\n
judgement is used. As such, extra
\n
disclosures are required in respect of
\n
level 3 instruments.
\n
In general, the degree of expert
\n
judgement used and hence valuation
\n
uncertainty depends on the degree of
\n
liquidity of an instrument or input.
\n
Where markets are liquid, little judgement
\n
is required. However, when the
\n
information regarding the liquidity in a
\n
particular market is not clear, a
\n
judgement may need to be made. For
\n
example, for an equity traded on an
\n
exchange, daily volumes of trading can
\n
be seen, but for an OTC derivative,
\n
assessing the liquidity of the market with
\n
no central exchange is more challenging.
\n
A key related matter is where a market
\n
moves from liquid to illiquid or vice versa.
\n
Where this movement is considered
\n
temporary, the fair value level is not
\n
changed. For example, if there is little
\n
market trading in a product on a
\n
reporting date but at the previous
\n
reporting date and during the intervening
\n
period the market has been liquid. In this
\n
case, the instrument will continue to be
\n
classified at the same level in the
\n
hierarchy. This is to provide consistency
\n
so that transfers between levels are
\n
driven by genuine changes in market
\n
liquidity and do not reflect short term or
\n
seasonal effects. Material movements
\n
between levels are reviewed quarterly by
\n
the business and IPV.
\n
The breadth and depth of the IPV data
\n
allows for a rules-based quality
\n
assessment to be made of market
\n
activity, liquidity, and pricing uncertainty,
\n
which assists with the process of
\n
allocation to an appropriate level. Where
\n
suitable independent pricing information
\n
is not readily available, the quality
\n
assessment will result in the instrument
\n
being assessed as level 3.
\n\n\n\n\n\n\n\n\n\n\n\n\n
The table below shows the assets and liabilities held by NatWest Group split by fair value hierarchy level. Level 1 are considered the most liquid instruments, and level 3 the most
\n
illiquid, valued using expert judgement and so carry the most significant price uncertainty.
\n\n \n
2024
2023
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
Trading assets
Loans
-
34,761
278
35,039
-
33,388
209
33,597
Securities
8,772
5,106
-
13,878
8,447
3,493
14
11,954
Derivatives
Interest rate
-
37,026
473
37,499
1
43,912
650
44,563
Foreign exchange
-
40,687
110
40,797
-
34,096
65
34,161
Other
-
63
47
110
-
72
108
180
Other financial assets
Loans
-
288
565
853
-
108
657
765
Securities
23,943
13,641
209
37,793
17,848
10,536
258
28,642
Total financial assets held at fair value
32,715
131,572
1,682
165,969
26,296
125,605
1,961
153,862
As a % of total fair value assets
20%
79%
1%
17%
82%
1%
Liabilities
Trading liabilities
Deposits
-
43,966
-
43,966
-
43,126
1
43,127
Debt securities in issue
-
257
-
257
-
706
-
706
Short positions
8,766
1,724
1
10,491
7,936
1,865
2
9,803
Derivatives
Interest rate
-
31,253
279
31,532
-
38,044
439
38,483
Foreign exchange
-
40,240
66
40,306
-
33,528
58
33,586
Other
-
124
120
244
-
138
188
326
Other financial liabilities
Debt securities in issue
-
1,733
3
1,736
-
1,605
3
1,608
Other deposits
-
1,787
25
1,812
-
1,280
-
1,280
Subordinated liabilities
-
234
-
234
-
237
-
237
Total financial liabilities held at fair value
8,766
121,318
494
130,578
7,936
120,529
691
129,156
As a % of total fair value liabilities
7%
93%
0%
6%
93%
1%
\n
(1)
Transfers between levels are deemed to have occurred at the beginning of the quarter in which the instrument was transferred.
\n
(2)
For an analysis of debt securities held at mandatory fair value through profit or loss by issuer as well as ratings and derivatives, by type and contract, refer to Risk and capital management \u2013 Credit risk.
\n\n\n\n\n\n\n\n\n\n\n\n\n
Valuation adjustments
\n
When valuing financial instruments in the trading book, adjustments are made to mid-
\n
market valuations to cover bid-offer spread, funding and credit risk. These adjustments
\n
are presented in the table below:
\n\n \n
2024
2023
Adjustment
\u00a3m
\u00a3m
Funding valuation adjustments
123
132
Credit valuation adjustments
190
236
Bid-offer
76
86
Product and deal specific
157
103
Total
546
557
\n
The decrease in funding valuation adjustments was driven by net exposures switching
\n
from positive to negative, primarily due to interest rates increasing. The decrease in
\n
credit valuation adjustments was driven by a reduction in exposures, primarily due to
\n
interest rates increasing and trade unwinds. The decrease in bid-offer was driven by risk
\n
reduction. New trading activity was the driver of the increase in product and deal
\n
specific, partially offset by trade unwinds.
\n
Funding valuation adjustments (FVA)
\n
FVA represents an estimate of the adjustment that a market participant would make to
\n
incorporate funding costs and benefits that arise in relation to derivative exposures. FVA
\n
is calculated as a portfolio level adjustment and can result in either a funding charge
\n
(positive) or funding benefit (negative).
\n
Funding levels are applied to estimated potential future exposures. For uncollateralised
\n
derivatives, the exposure reflects the future valuation of the derivative. For collateralised
\n
derivatives, the exposure reflects the difference between the future valuation of the
\n
derivative and the level of collateral posted.
\n
Credit valuation adjustments (CVA)
\n
CVA represents an estimate of the adjustment to fair value that is made to incorporate
\n
the counterparty credit risk inherent in derivative exposures. CVA is calculated on a
\n
portfolio basis reflecting an estimate of the amount a third party would charge to
\n
assume the credit risk.
\n
Collateral held under a credit support agreement is factored into the CVA calculation. In
\n
such cases where NatWest Group holds collateral against counterparty exposures, CVA
\n
is held to the extent that residual risk remains.
\n
FVA and CVA are actively managed by a credit and market risk hedging process, and
\n
therefore movements in CVA and FVA are partially offset by trading revenue on the
\n
hedges.
\n
Bid-offer
\n
Fair value positions are required to be marked to exit levels, represented by bid (long
\n
positions) or offer (short positions) levels. Non-derivative positions are typically marked
\n
directly to bid or offer prices. However derivative exposures are adjusted to exit levels
\n
by taking bid-offer reserves calculated on a portfolio basis. The reserving approach is
\n
based on current market bid-offer spreads and standard market bucketing of risk.
\n
Bid-offer spreads vary by maturity and risk type to reflect different spreads in the
\n
market. For positions where there is no observable quote, the bid-offer spreads are
\n
widened in comparison to proxies to reflect reduced liquidity or observability.
\n
Netting is applied on a portfolio basis to reflect the value at which NatWest Group
\n
believes it could exit the net risk of the portfolio, rather than the sum of exit costs for
\n
each of the portfolio\u2019s individual trades. This is applied where the asset and liability
\n
positions are managed as a portfolio for risk and reporting purposes.
\n
Product and deal specific
\n
On initial recognition of financial assets and liabilities valued using valuation techniques
\n
which have a significant dependence on information other than observable market data,
\n
any difference between the transaction price and that derived from the valuation
\n
technique is deferred. Such amounts are recognised in the income statement over the
\n
life of the transaction, when market data becomes observable, or when the transaction
\n
matures or is closed out as appropriate. On 31 December 2024, net gains of \u00a3139
\n
million (2023 - \u00a378 million) were carried forward. During the year, net gains of \u00a3218
\n
million (2023 - \u00a3119 million) were deferred and \u00a3157 million (2023 - \u00a3115 million) were
\n
recognised in the income statement.
\n
Where system-generated valuations do not accurately reflect market prices, manual
\n
valuation adjustments are applied either at a position or portfolio level. Manual
\n
adjustments are subject to the scrutiny of independent control teams and are subject to
\n
monthly review by senior management.
\n
Own credit
\n
NatWest Group considers the effect of its own credit standing when valuing financial
\n
liabilities recorded at fair value. Own credit spread adjustments are made when valuing
\n
issued debt held at fair value, including issued structured notes. An own credit
\n
adjustment is applied to positions where it is believed that counterparties would consider
\n
NatWest Group\u2019s creditworthiness when pricing trades. Accumulated changes in fair
\n
value due to credit risk are \u00a344 million (2023 \u2013 nil).
\n\n\n\n\n\n\n\n\n\n\n\n\n
Level 3 additional information
\n
For illiquid assets and liabilities, classified as level 3, additional information is provided on the valuation techniques used and price sensitivity of the products to those inputs. This is to
\n
enable the reader to gauge the level of uncertainty that arises from positions with significant unobservable inputs or modelling parameters.
\n
Level 3 ranges of unobservable inputs
\n
The table below provides additional information on level 3 instruments and inputs. This shows the valuation technique used for the fair value calculation, the unobservable input and
\n
input range.
\n\n \n
2024
20
23
Financial instrument
Valuation technique
Unobservable inputs
Units
Low
High
Low
High
Trading assets and Other financial assets
Loans
Price-based
Price
%
88
123
88
123
Discount cash flow
Credit spreads
bps
36
93
49
119
Debt securities
Price-based
Price
%
-
116
-
119
Equity Shares
Price-based
Price
GBP
-
47,312
-
32,142
Price-based
Price
%
-
15
-
30
Discount cash flow
Discount margin
%
9
13
7
9
Net asset valuation
Fund NAV
%
80
120
80
120
Derivative assets and liabilities
Credit derivatives
Credit derivative pricing
Credit spreads
bps
15
86
13
600
Option pricing
Correlation
%
(15)
95
(15)
95
Volatility
%
30
80
30
80
Upfront points
%
-
99
-
99
Recovery rate
%
-
60
-
60
Interest rate & FX
Option pricing
Correlation
%
(50)
98
(50)
99
derivatives
Volatility
%
3
99
30
111
Constant Prepayment Rate
%
2
20
2
22
Mean Reversion
%
-
20
-
20
Inflation volatility
%
1
2
2
2
Inflation rate
%
2
2
2
3
\n
(1)
Valuation for private equity investments may be estimated by looking at past prices of similar stocks and from valuation statements where valuations are usually derived from earnings measures such as EBITDA or net asset value (NAV). Similarly, for
\n
equity or bond fund investments, prices may be estimated from valuation or credit statements using NAV or similar measures.
\n
(2)
NatWest Group does not have any material liabilities measured at fair value that are issued with an inseparable third-party credit enhancement.
\n
Level 3 sensitivities
\n
The level 3 sensitivities presented on the next page are calculated at a trade or low-level portfolio basis rather than an overall portfolio basis. As individual sensitivities are aggregated
\n
with no reflection of the correlated nature between instruments, the overall portfolio sensitivity may not be accurately reflected. For example, some portfolios may be negatively
\n
correlated to others, where a downwards movement in one asset would produce an upwards movement in another. However, due to the additive presentation of the above figures
\n
this correlation impact cannot be displayed. As such, the actual potential downside sensitivity of the total portfolio may be less than the non-correlated sum of the additive figures as
\n
shown in the table on the next page.
\n\n\n\n\n\n\n\n\n\n\n\n\n
Alternative assumptions
\n
Reasonably plausible alternative assumptions of unobservable inputs are determined based on a specified target level of certainty of 90%.
\n
Alternative assumptions are determined with reference to all available evidence including consideration of the following: quality of independent pricing information considering
\n
consistency between different sources, variation over time, perceived tradability or otherwise of available quotes; consensus service dispersion ranges; volume of trading activity and
\n
market bias (e.g. one-way inventory); day 1 profit or loss arising on new trades; number and nature of market participants; market conditions; modelling consistency in the market;
\n
size and nature of risk; length of holding of position; and market intelligence.
\n
Other considerations
\n
Whilst certain inputs used to calculate CVA, FVA and own credit adjustments are not based on observable market data, the uncertainty of these inputs is not considered to have a
\n
significant effect on the net valuation of the related derivative portfolios and issued debt.
\n
As such, the fair value levelling of the derivative portfolios and issued debt is not determined by CVA, FVA or own credit inputs. In addition, any fair value sensitivity driven by these
\n
inputs is not included in the level 3 sensitivities presented.
\n
The table below shows the high and low range of fair value of the level 3 assets and liabilities. This range incorporates the range of fair value inputs as described in the previous table.
\n\n \n
2024
2023
Level 3
Favourable
Unfavourable
Level 3
Favourable
Unfavourable
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
Trading assets
Loans
278
-
-
209
-
-
Securities
-
-
-
14
-
-
Derivatives
Interest rate
473
20
(20)
650
20
(20)
Foreign exchange
110
-
-
65
-
-
Other
47
-
-
108
10
(10)
Other financial assets
Loans
565
-
(10)
657
-
(40)
Securities
209
20
(30)
258
20
(50)
Total financial assets held at fair value
1,682
40
(60)
1,961
50
(120)
Liabilities
Trading liabilities
Deposits
-
-
-
1
-
-
Short positions
1
-
-
2
-
-
Derivatives
Interest rate
279
10
(10)
439
10
(10)
Foreign exchange
66
-
-
58
-
-
Other
120
10
(10)
188
10
(10)
Other financial liabilities
Debt securities in issue
3
-
-
3
-
-
Other deposits
25
10
(20)
-
-
-
Total financial liabilities held at fair value
494
30
(40)
691
20
(20)
\n\n\n\n\n\n\n\n\n\n\n\n\n
Movement in level 3 assets and liabilities
\n
The following table shows the movement in level 3 assets and liabilities in the year.
\n\n \n
Other
Other
Other
Other
Derivatives
trading
financial
Total
Derivatives
trading
financial
Total
assets
assets (2)
assets (3)
assets
liabilities
liabilities (2)
liabilities
liabilities
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January
823
223
915
1,961
685
3
3
691
Amounts recorded in the income statement
(1)
(122)
(17)
12
(127)
(121)
-
-
(121)
Amount recorded in the statement of
comprehensive income
-
-
13
13
-
-
-
-
Level 3 transfers in
7
1
56
64
1
2
25
28
Level 3 transfers out
(3)
(19)
(241)
(263)
(2)
(3)
-
(5)
Purchases/originations
147
118
117
382
121
1
-
122
Settlements/other decreases
(44)
(27)
(18)
(89)
(32)
-
-
(32)
Sales
(178)
-
(72)
(250)
(182)
(2)
-
(184)
Foreign exchange and other adjustments
-
(1)
(8)
(9)
(5)
-
-
(5)
At 31 December
630
278
774
1,682
465
1
28
494
Amounts recorded in the income statement in respect of balances held
at period end - unrealised
83
1
12
96
56
-
-
56
2023
At 1 January
1,007
396
930
2,333
975
1
-
976
Amounts recorded in the income statement
(1)
(156)
(88)
1
(243)
(313)
-
-
(313)
Amount recorded in the statement of comprehensive income
-
-
32
32
-
-
-
-
Level 3 transfers in
6
15
16
37
7
2
-
9
Level 3 transfers out
(5)
(32)
(190)
(227)
(9)
(2)
-
(11)
Purchases/originations
180
8
275
463
195
2
3
200
Settlements/other decreases
(70)
(8)
(86)
(164)
(51)
-
-
(51)
Sales
(137)
(65)
(52)
(254)
(116)
-
-
(116)
Foreign exchange and other adjustments
(2)
(3)
(11)
(16)
(3)
-
-
(3)
At 31 December
823
223
915
1,961
685
3
3
691
Amounts recorded in the income statement in respect of balances held
at period end - unrealised
67
(39)
1
29
(121)
-
-
(121)
\n
(1)
There were net losses on trading assets and liabilities of \u00a318 million (2023 - net gains of \u00a369 million) was included in income from trading activities. Net gains on other instruments of \u00a312 million (2023 - net gains of \u00a31 million) was included in other
\n
operating income or interest income as appropriate.
\n
(2)
Other trading assets and other trading liabilities comprise assets and liabilities held at fair value in trading portfolios.
\n
(3)
Other financial assets comprise fair value through other comprehensive income, designated as at fair value through profit or loss and other fair value through profit or loss.
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 measured at amortised cost
on the balance sheet.
\n\n \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\n \n
Items where
fair value
Carrying
Fair value hierarchy level
approximates
value
Fair value
Level 1
Level 2
Level 3
carrying value
2024
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Financial assets
Cash and balances at central banks
93.0
93.0
-
-
-
93.0
Settlement balances
2.1
2.1
-
-
-
2.1
Loans to banks
6.0
5.9
-
1.8
0.5
3.6
Loans to customers
400.3
396.6
-
34.9
361.7
-
Other financial assets - securities
24.6
24.6
4.3
12.4
7.9
-
2023
Financial assets
Cash and balances at central banks
104.3
104.3
-
-
-
104.3
Settlement balances
7.2
7.2
-
-
-
7.2
Loans to banks
6.9
7.0
-
2.2
0.6
4.2
Loans to customers
381.4
373.2
-
27.5
345.7
-
Other financial assets - securities
21.7
21.6
4.0
6.6
11.0
-
2024
Financial liabilities
Bank deposits
31.5
31.2
-
23.9
3.0
4.3
Customer deposits
433.5
433.3
-
24.3
46.0
363.0
Settlement balances
1.7
1.7
-
-
-
1.7
Other financial liabilities
- debt securities in issue
57.5
57.6
-
48.9
8.7
-
Subordinated liabilities
5.9
6.0
-
6.0
-
-
Notes in circulation
3.3
3.3
-
-
-
3.3
2023
Financial liabilities
Bank deposits
22.2
22.3
-
15.4
2.7
4.2
Customer deposits
431.4
431.0
-
30.7
48.8
351.5
Settlement balances
6.6
6.6
-
-
-
6.6
Other financial liabilities
- debt securities in issue
52.2
52.2
-
41.7
10.5
-
Subordinated liabilities
5.5
5.4
-
5.4
-
-
Notes in circulation
3.2
3.2
-
-
-
3.2
\n
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, including but not
limited to, cash and balances at central banks, settlement
balances, loans with short-term maturities, notes in circulation
and customer demand deposits, carrying value is deemed a
reasonable approximation of fair value.
Loans to banks and customers
In estimating the fair value of net loans to customers and banks
measured at amortised cost, NatWest Group\u2019s loans are
segregated into appropriate portfolios reflecting the
characteristics of the constituent loans. Two principal methods
are used to estimate fair value:
(a)
Contractual cash flows that are discounted using a market
discount rate that incorporates the current spread for the
borrower or where this is not observable, the spread for
borrowers of a similar credit standing.
(b)
Expected cash flows (unadjusted for credit losses) are
discounted at the current offer rate for the same or similar
products. The current methodology caps all loan values at
par rather than modelling clients\u2019 option to repay loans
early. This approach is adopted for lending portfolios in
Retail Banking, Commercial & Institutional (SME loans) and
Private Banking in order to reflect the homogeneous nature
of these portfolios.
Debt securities and subordinated liabilities
Most debt securities are valued using quoted prices in active
markets or from quoted prices of similar financial instruments.
The remaining population is valued using discounted cashflows
at current offer rates.
Bank and customer deposits
Fair values of deposits are estimated using discounted cash
flow valuation techniques. Where required, methodologies can
be revised as additional information and valuation inputs
become available.", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00703": { "value": "2.3. Loan impairment provisions:
expected credit losses (ECL)
At each balance sheet date each financial
asset or portfolio of financial assets
measured at amortised cost or at fair
value through other comprehensive
income, issued financial guarantee and
loan commitment (other than those
classified as held for trading) is assessed
for impairment. Any change in
impairment is reported in the income
statement.
Loss allowances are forward-looking,
based on 12-month ECL where there has
not been a significant increase in credit
risk rating, otherwise allowances are
based on lifetime expected losses.
ECL is a probability-weighted estimate of
credit losses. The probability is
determined by the risk of default which is
applied to the cash flow estimates. In the
absence of a change in credit rating,
allowances are recognised when there is
a reduction in the net present value of
expected cash flows. Following a
significant increase in credit risk, ECL is
adjusted from 12 months to lifetime. This
will lead to a higher impairment charge.
The measurement of expected credit loss
considers the ability of borrowers to
make payments as they fall due. Future
cashflows are discounted, so long-dated
cashflows are less likely to affect current
expectations on credit loss. Our
assessment of sector specific risks, and
whether additional adjustments are
required, include expectations of the
ability of those sectors to meet their
financing needs in the market. Changes
in credit stewardship and credit risk
appetite that stem from climate transition
policies may directly affect our positions.
Judgement is exercised as follows:
\ue001
Non-modelled portfolios
\u2013 use a
standardised capital requirement
under Basel II. Under IFRS 9, they
have bespoke treatments for the
identification of significant increase in
credit risk. Benchmark PDs, EADs
and LGDs are reviewed annually for
appropriateness. The ECL calculation
is based on expected future cash
flows, which is typically applied at a
portfolio level.
\ue001
Multiple economic scenarios (MES)
\u2013
the central, or base, scenario is most
critical to the ECL calculation,
independent of the method used to
generate a range of alternative
outcomes and their probabilities.
\ue001
Significant increase in credit risk
\u2013
IFRS 9 requires that at each reporting
date, an entity shall assess whether
the credit risk on an account has
increased significantly since initial
recognition. Part of this assessment
requires a comparison to be made
between the current lifetime PD (i.e.
the current probability of default over
the remaining lifetime) with the
equivalent lifetime PD as determined
at the date of initial recognition.
On restructuring where a financial asset
is not derecognised, the revised cash
flows are used in re-estimating the credit
loss. Where restructuring causes
derecognition of the original financial
asset, the fair value of the replacement
asset is used as the closing cash flow of
the original asset.
Where in the course of the orderly
realisation of a loan, it is exchanged for
equity shares or property, the exchange
is accounted for as the sale of the loan
and the acquisition of equity securities or
investment property. Where our acquired
interest is in equity shares, relevant
policies for control, associates and joint
ventures apply.
Impaired financial assets are written off
and therefore derecognised from the
balance sheet when we conclude that
there is no longer any realistic prospect
of recovery of part, or all, of the loan. For
financial assets that are individually
assessed for impairment, the timing of
the write-off is determined on a case-by-
case basis.
Such financial assets are reviewed
regularly and write-off will be prompted
by bankruptcy, insolvency, re-negotiation,
and similar events
The typical time frames from initial
impairment to write-off for our
collectively assessed portfolios are:
\ue001
Retail mortgages: write-off usually
occurs within five years, or earlier,
when an account is closed, but can
be longer where the customer
engages constructively;
\ue001
Credit cards: the irrecoverable
amount is typically written off after
twelve arrears cycles or at four years
post default any remaining amounts
outstanding are written off;
\ue001
Overdrafts and other unsecured
loans: write-off occurs within six
years;
\ue001
Commercial loans: write-offs are
determined in the light of individual
circumstances; and uncollateralised
impaired business loans are generally
written off within five years.Critical accounting policy: Loan impairment provisions
Accounting policy 2.3 sets out how the expected loss approach is applied. At 31 December 2024, impairment provisions amounted to \u00a33,425 million (2023 - \u00a33,645 million). A loan is
impaired when there is objective evidence that the cash flows will not occur in the manner expected when the loan was advanced. Such evidence includes changes in the credit rating
of a borrower, the failure to make payments in accordance with the loan agreement, significant reduction in the value of any security, breach of limits or covenants, and observable
data about relevant macroeconomic measures.
The impairment loss is the difference between the carrying value of the loan and the present value of estimated future cash flows at the loan's original effective interest rate.
The measurement of credit impairment under the IFRS expected loss model depends on management\u2019s assessment of any potential deterioration in the creditworthiness of the
borrower, its modelling of expected performance and the application of economic forecasts. All three elements require judgements that are potentially significant to the estimate of
impairment losses. For further information and sensitivity analysis, refer to Risk and capital management \u2013 Measurement uncertainty and ECL sensitivity analysis section. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00704": { "value": "2.3. Loan impairment provisions:
expected credit losses (ECL)
At each balance sheet date each financial
asset or portfolio of financial assets
measured at amortised cost or at fair
value through other comprehensive
income, issued financial guarantee and
loan commitment (other than those
classified as held for trading) is assessed
for impairment. Any change in
impairment is reported in the income
statement.
Loss allowances are forward-looking,
based on 12-month ECL where there has
not been a significant increase in credit
risk rating, otherwise allowances are
based on lifetime expected losses.
ECL is a probability-weighted estimate of
credit losses. The probability is
determined by the risk of default which is
applied to the cash flow estimates. In the
absence of a change in credit rating,
allowances are recognised when there is
a reduction in the net present value of
expected cash flows. Following a
significant increase in credit risk, ECL is
adjusted from 12 months to lifetime. This
will lead to a higher impairment charge.
The measurement of expected credit loss
considers the ability of borrowers to
make payments as they fall due. Future
cashflows are discounted, so long-dated
cashflows are less likely to affect current
expectations on credit loss. Our
assessment of sector specific risks, and
whether additional adjustments are
required, include expectations of the
ability of those sectors to meet their
financing needs in the market. Changes
in credit stewardship and credit risk
appetite that stem from climate transition
policies may directly affect our positions.
Judgement is exercised as follows:
\ue001
Non-modelled portfolios
\u2013 use a
standardised capital requirement
under Basel II. Under IFRS 9, they
have bespoke treatments for the
identification of significant increase in
credit risk. Benchmark PDs, EADs
and LGDs are reviewed annually for
appropriateness. The ECL calculation
is based on expected future cash
flows, which is typically applied at a
portfolio level.
\ue001
Multiple economic scenarios (MES)
\u2013
the central, or base, scenario is most
critical to the ECL calculation,
independent of the method used to
generate a range of alternative
outcomes and their probabilities.
\ue001
Significant increase in credit risk
\u2013
IFRS 9 requires that at each reporting
date, an entity shall assess whether
the credit risk on an account has
increased significantly since initial
recognition. Part of this assessment
requires a comparison to be made
between the current lifetime PD (i.e.
the current probability of default over
the remaining lifetime) with the
equivalent lifetime PD as determined
at the date of initial recognition.
On restructuring where a financial asset
is not derecognised, the revised cash
flows are used in re-estimating the credit
loss. Where restructuring causes
derecognition of the original financial
asset, the fair value of the replacement
asset is used as the closing cash flow of
the original asset.
Where in the course of the orderly
realisation of a loan, it is exchanged for
equity shares or property, the exchange
is accounted for as the sale of the loan
and the acquisition of equity securities or
investment property. Where our acquired
interest is in equity shares, relevant
policies for control, associates and joint
ventures apply.
Impaired financial assets are written off
and therefore derecognised from the
balance sheet when we conclude that
there is no longer any realistic prospect
of recovery of part, or all, of the loan. For
financial assets that are individually
assessed for impairment, the timing of
the write-off is determined on a case-by-
case basis.
Such financial assets are reviewed
regularly and write-off will be prompted
by bankruptcy, insolvency, re-negotiation,
and similar events
The typical time frames from initial
impairment to write-off for our
collectively assessed portfolios are:
\ue001
Retail mortgages: write-off usually
occurs within five years, or earlier,
when an account is closed, but can
be longer where the customer
engages constructively;
\ue001
Credit cards: the irrecoverable
amount is typically written off after
twelve arrears cycles or at four years
post default any remaining amounts
outstanding are written off;
\ue001
Overdrafts and other unsecured
loans: write-off occurs within six
years;
\ue001
Commercial loans: write-offs are
determined in the light of individual
circumstances; and uncollateralised
impaired business loans are generally
written off within five years.Critical accounting policy: Loan impairment provisions
Accounting policy 2.3 sets out how the expected loss approach is applied. At 31 December 2024, impairment provisions amounted to \u00a33,425 million (2023 - \u00a33,645 million). A loan is
impaired when there is objective evidence that the cash flows will not occur in the manner expected when the loan was advanced. Such evidence includes changes in the credit rating
of a borrower, the failure to make payments in accordance with the loan agreement, significant reduction in the value of any security, breach of limits or covenants, and observable
data about relevant macroeconomic measures.
The impairment loss is the difference between the carrying value of the loan and the present value of estimated future cash flows at the loan's original effective interest rate.
The measurement of credit impairment under the IFRS expected loss model depends on management\u2019s assessment of any potential deterioration in the creditworthiness of the
borrower, its modelling of expected performance and the application of economic forecasts. All three elements require judgements that are potentially significant to the estimate of
impairment losses. For further information and sensitivity analysis, refer to Risk and capital management \u2013 Measurement uncertainty and ECL sensitivity analysis section.
IFRS 9 ECL model design principles
Refer to Credit risk \u2013 IFRS 9 ECL model design principles section for further details.
Approach for multiple economic scenarios (MES)
The base scenario plays a greater part in the calculation of ECL than the approach to MES. Refer to Credit risk \u2013 Economic loss drivers - Probability weightings of scenarios section
for further details.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00710": { "value": "2.3. Loan impairment provisions:
expected credit losses (ECL)
At each balance sheet date each financial
asset or portfolio of financial assets
measured at amortised cost or at fair
value through other comprehensive
income, issued financial guarantee and
loan commitment (other than those
classified as held for trading) is assessed
for impairment. Any change in
impairment is reported in the income
statement.
Loss allowances are forward-looking,
based on 12-month ECL where there has
not been a significant increase in credit
risk rating, otherwise allowances are
based on lifetime expected losses.
ECL is a probability-weighted estimate of
credit losses. The probability is
determined by the risk of default which is
applied to the cash flow estimates. In the
absence of a change in credit rating,
allowances are recognised when there is
a reduction in the net present value of
expected cash flows. Following a
significant increase in credit risk, ECL is
adjusted from 12 months to lifetime. This
will lead to a higher impairment charge.
The measurement of expected credit loss
considers the ability of borrowers to
make payments as they fall due. Future
cashflows are discounted, so long-dated
cashflows are less likely to affect current
expectations on credit loss. Our
assessment of sector specific risks, and
whether additional adjustments are
required, include expectations of the
ability of those sectors to meet their
financing needs in the market. Changes
in credit stewardship and credit risk
appetite that stem from climate transition
policies may directly affect our positions.
Judgement is exercised as follows:
\ue001
Non-modelled portfolios
\u2013 use a
standardised capital requirement
under Basel II. Under IFRS 9, they
have bespoke treatments for the
identification of significant increase in
credit risk. Benchmark PDs, EADs
and LGDs are reviewed annually for
appropriateness. The ECL calculation
is based on expected future cash
flows, which is typically applied at a
portfolio level.
\ue001
Multiple economic scenarios (MES)
\u2013
the central, or base, scenario is most
critical to the ECL calculation,
independent of the method used to
generate a range of alternative
outcomes and their probabilities.
\ue001
Significant increase in credit risk
\u2013
IFRS 9 requires that at each reporting
date, an entity shall assess whether
the credit risk on an account has
increased significantly since initial
recognition. Part of this assessment
requires a comparison to be made
between the current lifetime PD (i.e.
the current probability of default over
the remaining lifetime) with the
equivalent lifetime PD as determined
at the date of initial recognition.
On restructuring where a financial asset
is not derecognised, the revised cash
flows are used in re-estimating the credit
loss. Where restructuring causes
derecognition of the original financial
asset, the fair value of the replacement
asset is used as the closing cash flow of
the original asset.
Where in the course of the orderly
realisation of a loan, it is exchanged for
equity shares or property, the exchange
is accounted for as the sale of the loan
and the acquisition of equity securities or
investment property. Where our acquired
interest is in equity shares, relevant
policies for control, associates and joint
ventures apply.
Impaired financial assets are written off
and therefore derecognised from the
balance sheet when we conclude that
there is no longer any realistic prospect
of recovery of part, or all, of the loan. For
financial assets that are individually
assessed for impairment, the timing of
the write-off is determined on a case-by-
case basis.
Such financial assets are reviewed
regularly and write-off will be prompted
by bankruptcy, insolvency, re-negotiation,
and similar events
The typical time frames from initial
impairment to write-off for our
collectively assessed portfolios are:
\ue001
Retail mortgages: write-off usually
occurs within five years, or earlier,
when an account is closed, but can
be longer where the customer
engages constructively;
\ue001
Credit cards: the irrecoverable
amount is typically written off after
twelve arrears cycles or at four years
post default any remaining amounts
outstanding are written off;
\ue001
Overdrafts and other unsecured
loans: write-off occurs within six
years;
\ue001
Commercial loans: write-offs are
determined in the light of individual
circumstances; and uncollateralised
impaired business loans are generally
written off within five years.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLoansAndReceivablesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00223": { "value": "3.1. Revenue recognition
Interest receivable and payable are
recognised in the income statement using
the effective interest rate method for all
financial instruments measured at
amortised cost; debt instruments
measured as fair value through other
comprehensive income; and the effective
part of any related accounting hedging
instruments.
Finance lease income is recognised at a
constant periodic rate of return before
tax on the net investment on the lease.
Other interest relating to financial
instruments measured at fair value is
recognised as part of the movement in
fair value and is reported in income from
trading activities or other operating
income as relevant. Fees in respect of
services are recognised as the right to
consideration accrues through the
performance of each distinct service
obligation to the customer. The
arrangements are generally contractual
and the cost of providing the service is
incurred as the service is rendered. The
price is usually fixed and always
determinable.3.6. Foreign currencies
Foreign exchange differences arising on
the settlement of foreign currency
transactions and from the translation of
monetary assets and liabilities are
reported in income from trading activities
except for differences arising on cash
flow hedges and hedges of net
investments in foreign operations.
Non-monetary items denominated in
foreign currencies that are stated at fair
value are translated into the functional
currency at the foreign exchange rates
ruling at the dates the values are
determined. Translation differences are
recognised in the income statement
except for differences arising on non-
monetary financial assets classified as fair
value through other comprehensive
income.
Income and expenses of foreign
subsidiaries and branches are translated
into sterling at average exchange rates
unless these do not approximate the
foreign exchange rates ruling at the
dates of the transactions. Foreign
exchange differences arising on the
translation of a foreign operation are
recognised in other comprehensive
income. The amount accumulated in
equity is reclassified from equity to the
income statement on disposal of a foreign
operation.1 Net interest income
Net interest income is the difference between the interest NatWest Group earns from its interest-bearing assets, such as loans, balances with central banks and other
financial assets, and the interest paid on its interest-bearing liabilities, such as deposits and subordinated liabilities.
Interest receivable on financial instruments classified as amortised cost, debt instruments classified as FVOCI and the interest element of the effective portion of any designated
hedging relationships are measured using the effective interest rate method, which allocates the interest receivable or interest payable over the expected life of the financial
instrument at the rate that exactly discounts all estimated future cash flows to equal the financial instrument's initial carrying amount. Calculation of the effective interest rate takes
into account fees payable or receivable that are an integral part of the financial instrument\u2019s yield, premiums or discounts on acquisition or issue, early redemption fees and
transaction costs. All contractual terms of a financial instrument are considered when estimating future cash flows. Negative interest on financial
assets is presented in interest payable
and negative interest on
financial liabilities is presented in interest receivable.
Included in interest receivable is finance lease income of \u00a3549 million (2023 - \u00a3484 million; 2022 - \u00a3314
million) which is recognised at a constant periodic rate of return before tax on the net investment.
For accounting policy information refer to Accounting policy 3.1.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Balances at central banks and loans to banks - amortised cost
4,047
3,737
1,987
Loans to customers - amortised cost
18,295
15,553
10,085
Other financial assets
2,845
1,736
565
Interest receivable
25,187
21,026
12,637
Bank deposits
1,534
1,039
379
Customer deposits
8,332
5,276
785
Other financial liabilities
3,096
2,977
1,196
Subordinated liabilities
465
464
370
Internal funding of trading businesses
485
221
65
Interest payable
13,912
9,977
2,795
Net interest income
11,275
11,049
9,842
\n
2 Non-interest income
There are three main categories of non-interest income: net fees and commissions, trading income, and other operating income.
Net fees and commissions is the difference between fees received from customers for services provided by NatWest Group, such as credit card annual fees,
underwriting fees, payment services, brokerage fees, trade finance, investment management fees, trustee and fiduciary services, and fees incurred in the provision of
those services, such as credit card interchange fees, customer incentives, loan administration, foreign currency transaction charges, and brokerage fees.
Trading income is earned from short-term financial assets and financial liabilities to either make a spread between purchase and sale price or held to take advantage
of movements in prices and yields.
Other operating income includes revenue from other operating activities which are not related to the principal activities of the company, such as: share of profit or loss
from associates; operating lease income; the profit or loss on the sale of a subsidiary or property, plant and equipment profit or loss on own debt; and changes in the
fair value of financial assets and liabilities designated at fair value through profit or loss.
For accounting policy information refer to Accounting policies 3.1 and 3.6.
.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Net fees and commissions
(1)
2,467
2,330
2,292
Trading income
\u00a0 \u00a0 \u00a0
Foreign exchange
310
270
305
Interest rate
(2)
687
595
752
Credit
(163)
(72)
17
Changes in fair value of own debt and derivative liabilities
\u00a0 \u00a0 \u00a0
attributable to own credit risk - debt securities in issue
(9)
(2)
42
Equities, commodities and other
-
3
17
\u00a0
825
794
1,133
Other operating income
\u00a0 \u00a0 \u00a0
Gain/(loss) on redemption of own debt
-
3
(161)
Rental income on operating lease assets and investment property
233
234
230
Changes in fair value of financial assets and liabilities designated at fair value
\u00a0 \u00a0 \u00a0
through profit or loss
(3)
(137)
(150)
17
Changes in fair value of other financial assets at fair value through profit or loss
(4)
75
50
(45)
Hedge ineffectiveness
2
52
(20)
Profit/(loss) on disposal of amortised cost assets and liabilities
5
(5)
(15)
Loss on disposal of fair value through other comprehensive income assets
(19)
(43)
(168)
Profit/(loss) on sale of property, plant and equipment
31
(21)
(5)
Share of profits/(losses) of associated entities
19
(9)
(30)
Foreign exchange recycling (losses)/gains
(76)
484
5
Other income
(5)
3
(16)
81
\u00a0
136
579
(111)
\u00a0
3,428
3,703
3,314
\n
(1)
Refer to Note 4 for further analysis.
(2)
Includes fair value changes on derivatives not designated in a hedge
accounting relationship, and gains and losses from structural hedges.
(3)
Includes related derivatives.
(4)
Includes instruments that have failed solely payments of principal and
interest testing under IFRS 9.
(5)
2022 includes \u00a392 million profit from insurance liabilities.", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00226": { "value": "3.1. Revenue recognition
Interest receivable and payable are
recognised in the income statement using
the effective interest rate method for all
financial instruments measured at
amortised cost; debt instruments
measured as fair value through other
comprehensive income; and the effective
part of any related accounting hedging
instruments.
Finance lease income is recognised at a
constant periodic rate of return before
tax on the net investment on the lease.
Other interest relating to financial
instruments measured at fair value is
recognised as part of the movement in
fair value and is reported in income from
trading activities or other operating
income as relevant. Fees in respect of
services are recognised as the right to
consideration accrues through the
performance of each distinct service
obligation to the customer. The
arrangements are generally contractual
and the cost of providing the service is
incurred as the service is rendered. The
price is usually fixed and always
determinable.3.6. Foreign currencies
Foreign exchange differences arising on
the settlement of foreign currency
transactions and from the translation of
monetary assets and liabilities are
reported in income from trading activities
except for differences arising on cash
flow hedges and hedges of net
investments in foreign operations.
Non-monetary items denominated in
foreign currencies that are stated at fair
value are translated into the functional
currency at the foreign exchange rates
ruling at the dates the values are
determined. Translation differences are
recognised in the income statement
except for differences arising on non-
monetary financial assets classified as fair
value through other comprehensive
income.2 Non-interest income
There are three main categories of non-interest income: net fees and commissions, trading income, and other operating income.
Net fees and commissions is the difference between fees received from customers for services provided by NatWest Group, such as credit card annual fees,
underwriting fees, payment services, brokerage fees, trade finance, investment management fees, trustee and fiduciary services, and fees incurred in the provision of
those services, such as credit card interchange fees, customer incentives, loan administration, foreign currency transaction charges, and brokerage fees.
Trading income is earned from short-term financial assets and financial liabilities to either make a spread between purchase and sale price or held to take advantage
of movements in prices and yields.
Other operating income includes revenue from other operating activities which are not related to the principal activities of the company, such as: share of profit or loss
from associates; operating lease income; the profit or loss on the sale of a subsidiary or property, plant and equipment profit or loss on own debt; and changes in the
fair value of financial assets and liabilities designated at fair value through profit or loss.
For accounting policy information refer to Accounting policies 3.1 and 3.6.
.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Net fees and commissions
(1)
2,467
2,330
2,292
Trading income
\u00a0 \u00a0 \u00a0
Foreign exchange
310
270
305
Interest rate
(2)
687
595
752
Credit
(163)
(72)
17
Changes in fair value of own debt and derivative liabilities
\u00a0 \u00a0 \u00a0
attributable to own credit risk - debt securities in issue
(9)
(2)
42
Equities, commodities and other
-
3
17
\u00a0
825
794
1,133
Other operating income
\u00a0 \u00a0 \u00a0
Gain/(loss) on redemption of own debt
-
3
(161)
Rental income on operating lease assets and investment property
233
234
230
Changes in fair value of financial assets and liabilities designated at fair value
\u00a0 \u00a0 \u00a0
through profit or loss
(3)
(137)
(150)
17
Changes in fair value of other financial assets at fair value through profit or loss
(4)
75
50
(45)
Hedge ineffectiveness
2
52
(20)
Profit/(loss) on disposal of amortised cost assets and liabilities
5
(5)
(15)
Loss on disposal of fair value through other comprehensive income assets
(19)
(43)
(168)
Profit/(loss) on sale of property, plant and equipment
31
(21)
(5)
Share of profits/(losses) of associated entities
19
(9)
(30)
Foreign exchange recycling (losses)/gains
(76)
484
5
Other income
(5)
3
(16)
81
\u00a0
136
579
(111)
\u00a0
3,428
3,703
3,314
\n
(1)
Refer to Note 4 for further analysis.
(2)
Includes fair value changes on derivatives not designated in a hedge
accounting relationship, and gains and losses from structural hedges.
(3)
Includes related derivatives.
(4)
Includes instruments that have failed solely payments of principal and
interest testing under IFRS 9.
(5)
2022 includes \u00a392 million profit from insurance liabilities.3 Operating expenses
Operating expenses are expenses NatWest Group incurs in the running of its business such as all staff costs (for example salaries, bonus awards, pension costs and
\n
social security costs), premises and equipment costs that arise from the occupation of premises and the use of equipment, depreciation and amortisation and other
\n
administrative expenses.
\n
For accounting policy information refer to Accounting policies 3.3, 3.4 and 3.5.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Salaries
2,477
2,483
2,250
Bonus awards
411
353
334
Temporary and contract costs
162
199
234
Social security costs
371
352
328
Pension costs
311
313
363
- defined benefit schemes (Note 5)
86
122
205
- defined contribution schemes
225
191
158
Other
329
201
207
Staff costs
4,061
3,901
3,716
Premises and equipment
1,211
1,153
1,112
UK bank levy
142
109
101
Depreciation and amortisation
(1)
1,058
934
833
Other administrative expenses
(2)
1,677
1,899
1,925
Administrative expenses
4,088
4,095
3,971
\u00a0
8,149
7,996
7,687
\n
(1)
Includes depreciation of right of use assets of \u00a3103 million (2023 - \u00a3104 million; 2022 - \u00a3119 million).
\n
(2)
Includes litigation and conduct costs, net of amounts recovered. Refer to Note 20 for further details.
\n
The average number of persons employed, rounded to the nearest hundred, during the
\n
year, excluding temporary staff, was 60,700 (2023 \u2013 61,500; 2022 \u2013 60,000). The
\n
average number of temporary employees during 2024 was 1,400 (2023 \u2013 2,100; 2022 \u2013
\n
2,500).
\n
The number of persons employed at 31 December, excluding temporary staff, by
\n
reportable segment, was as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Continuing operations
2024
2023
2022
Retail Banking
13,000
14,300
15,100
Private Banking
2,200
2,400
2,300
Commercial & Institutional
12,700
12,400
12,200
Central items & other
(1)
31,800
32,500
31,400
Total
59,700
61,600
61,000
UK
40,100
41,500
41,200
India
17,600
16,900
15,700
Poland
800
1,500
1,500
USA
300
300
300
Republic of Ireland
100
400
1,400
Rest of the World
800
1,000
900
Total
59,700
61,600
61,000
\n
(1)
Central items & other includes Ulster Bank RoI. The total number of persons employed in Ulster Bank RoI of 200 (2023 \u2013
\n
500; 2022 \u2013 2,200) includes nil people employed in discontinued operations at 31 December 2024 (2023 \u2013 nil; 2022 \u2013
\n
400).
Share-based payments
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Award plan
Eligible employees
Nature of award
Vesting conditions (1)
Settlement
Sharesave
UK, Channel Islands, Gibraltar,
Option to buy shares under
Continuing employment or leavers in certain circumstances
2025 to 2029
\u00a0
Isle of Man, Poland and India.
employee savings plan
\u00a0 \u00a0
Deferred performance
All
Awards of ordinary shares
Continuing employment or leavers in certain circumstances
2025 to 2032
awards
\u00a0
and conditional shares
\u00a0 \u00a0
Long-term incentives
(2,3)
Senior employees
Awards of ordinary shares
Continuing employment or leavers in certain circumstances
2025 to 2031
\u00a0 \u00a0
and conditional shares
and/or satisfaction of the pre-vesting assessment and underpins
\u00a0
Sharing in Success
(
4)
All
Awards of ordinary shares
Future continuing employment and achievement of pre-defined
2025
\u00a0 \u00a0
and conditional shares
measures.
\u00a0
\n
(1)
All awards are subject to discretion of Remuneration Committee.
(2)
Long-term incentives include buy-out awards offered to compensate certain new hires for the loss of forfeited awards from their previous employment.
Existing Long-term incentives vest over 3 to 7 years.
(3)
The existing Restricted Share Plan scheme would be replaced by Performance Share Plan in 2025.
(4)
In 2024 16 million shares at total value of \u00a349 million were granted and vested under Sharing in Success.
Sharesave
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Average
Shares
Average
Shares
Average
Shares
\u00a0
exercise
under
exercise
under
exercise
under
\u00a0
price
option
price
option
price
option
\u00a0
\u00a3
(million)
\u00a3
(million)
\u00a3
(million)
At 1 January
1.59
114
1.63
99
1.61
95
Granted
2.94
24
1.42
43
1.86
25
Exercised
1.52
(32)
1.44
(23)
1.88
(15)
Cancelled
1.60
(5)
1.72
(5)
1.60
(6)
At 31 December
1.93
101
1.59
114
1.63
99
\n
The fair value of Sharesave options granted in 2024 was determined using a pricing
model that included: expected volatility of share price determined at the grant date
based on historical share price volatility over a period of up to five years; expected
option lives that equal the vesting period; estimated dividend yield on equity shares; and
risk-free interest rates determined from UK gilts with terms matching the expected lives
of the options.
The exercise price of options and the fair value on granting awards of fully paid shares is
the average market price over the five trading days (three trading days for Sharesave)
preceding grant date. When estimating the fair value of the award, the number of
shares granted and the prevailing market price as defined on page 151 are used.
The
fair value of the award is recognised as services are provided by employees over the
vesting period.
Options are exercisable within six months of vesting; 8.9 million options were exercisable
at 31 December 2024 (2023 \u2013 19.0 million; 2022 \u2013 5.1 million). The weighted average
share price at the date of exercise of options was \u00a34.03 (2023 - \u00a32.20; 2022 - \u00a32.59). At
31 December 2024, exercise prices ranged from \u00a31.42 to \u00a32.94 (2023 - \u00a31.12 to \u00a31.89;
2022 - \u00a31.12 to \u00a32.27) and the remaining average contractual life was 2.35 years (2023
\u2013 2.25 years; 2022 \u2013 2 years). The fair value of options granted in 2024 was \u00a328.3
million (2023 - \u00a327.3 million; 2022 - \u00a322.1 million).
Deferred performance awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Value at
Shares
Value at
Shares
Value at
Shares
\u00a0
grant
awarded
grant
awarded
grant
awarded
\u00a0
\u00a3m
(million)
\u00a3m
(million)
\u00a3m
(million)
At 1 January
76
35
93
46
132
65
Granted
50
23
52
20
46
20
Forfeited
(3)
(1)
(2)
(1)
(4)
(2)
Vested
(57)
(27)
(67)
(30)
(81)
(37)
At 31 December
66
30
76
35
93
46
\n
The awards granted in 2024 vest in equal tranches on the anniversary of the award,
predominantly over three years.
Long-term incentives
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Value at
Shares
Value at
Shares
Value at
Shares
\u00a0
grant
awarded
grant
awarded
grant
awarded
\u00a0
\u00a3m
(million)
\u00a3m
(million)
\u00a3m
(million)
At 1 January
49
23
49
23
44
21
Granted
9
5
11
5
16
7
Vested/exercised
(11)
(5)
(10)
(4)
(10)
(4)
Lapsed
(7)
(4)
(1)
(1)
(1)
(1)
At 31 December
40
19
49
23
49
23
\n
The market value of awards vested/exercised in 2024 was \u00a319.3 million (2023 - \u00a39.5
million; 2022 - \u00a311.7 million).
Bonus awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Change
\u00a0
\u00a3m
\u00a3m
%
March awards
(1)
63
43
47%
Deferred cash awards
324
262
24%
Deferred share awards
61
51
20%
Total deferred bonus awards
385
313
23%
Total bonus awards
(2)
448
356
26%
Bonus awards as a % of operating profit before tax and bonus awards
7%
5%
\u00a0
Proportion of bonus awards that are deferred
\u00a0 \u00a0 \u00a0
- deferred cash awards
86%
86%
\u00a0
- deferred share awards
14%
14%
\u00a0
\n
Reconciliation of bonus awards to income statement charge
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Bonus awarded
448
356
370
Less: deferral of charge for amounts awarded for current year
(144)
(114)
(127)
Income statement charge for amounts awarded in current year
304
242
243
Add: current year charge for amounts deferred from prior years
109
115
94
Less: forfeiture of amounts deferred from prior years
(2)
(4)
(3)
Income statement charge for amounts deferred from prior years
107
111
91
Income statement charge for bonus awards
(2)
411
353
334
\n
(1)
March cash awards are limited to \u00a32,000 for all employees.
(2)
Excludes other performance-related compensation.
Year in which income statement charge is expected to be taken for deferred bonus awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Actual
Expected
\u00a0
2022
2023
2024
2025
2026 and beyond
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bonus awards deferred from 2022 and earlier
94
115
17
8
6
Bonus awards deferred from 2023
-
-
92
8
9
Less: forfeiture of amounts deferred from prior years
(3)
(4)
(2)
-
-
Bonus awards deferred for 2024
-
-
-
122
22
\u00a0
91
111
107
138
37
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00224": { "value": "3.1. Revenue recognitionOther interest relating to financial
instruments measured at fair value is
recognised as part of the movement in
fair value and is reported in income from
trading activities or other operating
income as relevant. Fees in respect of
services are recognised as the right to
consideration accrues through the
performance of each distinct service
obligation to the customer. The
arrangements are generally contractual
and the cost of providing the service is
incurred as the service is rendered. The
price is usually fixed and always
determinable.3.6. Foreign currencies
Foreign exchange differences arising on
the settlement of foreign currency
transactions and from the translation of
monetary assets and liabilities are
reported in income from trading activities
except for differences arising on cash
flow hedges and hedges of net
investments in foreign operations.
Non-monetary items denominated in
foreign currencies that are stated at fair
value are translated into the functional
currency at the foreign exchange rates
ruling at the dates the values are
determined. Translation differences are
recognised in the income statement
except for differences arising on non-
monetary financial assets classified as fair
value through other comprehensive
income.
Income and expenses of foreign
subsidiaries and branches are translated
into sterling at average exchange rates
unless these do not approximate the
foreign exchange rates ruling at the
dates of the transactions. Foreign
exchange differences arising on the
translation of a foreign operation are
recognised in other comprehensive
income. The amount accumulated in
equity is reclassified from equity to the
income statement on disposal of a foreign
operation.2 Non-interest income
There are three main categories of non-interest income: net fees and commissions, trading income, and other operating income.
Net fees and commissions is the difference between fees received from customers for services provided by NatWest Group, such as credit card annual fees,
underwriting fees, payment services, brokerage fees, trade finance, investment management fees, trustee and fiduciary services, and fees incurred in the provision of
those services, such as credit card interchange fees, customer incentives, loan administration, foreign currency transaction charges, and brokerage fees.
Trading income is earned from short-term financial assets and financial liabilities to either make a spread between purchase and sale price or held to take advantage
of movements in prices and yields.
Other operating income includes revenue from other operating activities which are not related to the principal activities of the company, such as: share of profit or loss
from associates; operating lease income; the profit or loss on the sale of a subsidiary or property, plant and equipment profit or loss on own debt; and changes in the
fair value of financial assets and liabilities designated at fair value through profit or loss.
For accounting policy information refer to Accounting policies 3.1 and 3.6.
.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Net fees and commissions
(1)
2,467
2,330
2,292
Trading income
\u00a0 \u00a0 \u00a0
Foreign exchange
310
270
305
Interest rate
(2)
687
595
752
Credit
(163)
(72)
17
Changes in fair value of own debt and derivative liabilities
\u00a0 \u00a0 \u00a0
attributable to own credit risk - debt securities in issue
(9)
(2)
42
Equities, commodities and other
-
3
17
\u00a0
825
794
1,133
Other operating income
\u00a0 \u00a0 \u00a0
Gain/(loss) on redemption of own debt
-
3
(161)
Rental income on operating lease assets and investment property
233
234
230
Changes in fair value of financial assets and liabilities designated at fair value
\u00a0 \u00a0 \u00a0
through profit or loss
(3)
(137)
(150)
17
Changes in fair value of other financial assets at fair value through profit or loss
(4)
75
50
(45)
Hedge ineffectiveness
2
52
(20)
Profit/(loss) on disposal of amortised cost assets and liabilities
5
(5)
(15)
Loss on disposal of fair value through other comprehensive income assets
(19)
(43)
(168)
Profit/(loss) on sale of property, plant and equipment
31
(21)
(5)
Share of profits/(losses) of associated entities
19
(9)
(30)
Foreign exchange recycling (losses)/gains
(76)
484
5
Other income
(5)
3
(16)
81
\u00a0
136
579
(111)
\u00a0
3,428
3,703
3,314
\n
(1)
Refer to Note 4 for further analysis.
(2)
Includes fair value changes on derivatives not designated in a hedge
accounting relationship, and gains and losses from structural hedges.
(3)
Includes related derivatives.
(4)
Includes instruments that have failed solely payments of principal and
interest testing under IFRS 9.
(5)
2022 includes \u00a392 million profit from insurance liabilities.", "dimensions": { "concept": "ifrs-full:DisclosureOfFeeAndCommissionIncomeExpenseExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00689": { "value": "3.1. Revenue recognition
Interest receivable and payable are
recognised in the income statement using
the effective interest rate method for all
financial instruments measured at
amortised cost; debt instruments
measured as fair value through other
comprehensive income; and the effective
part of any related accounting hedging
instruments.
Finance lease income is recognised at a
constant periodic rate of return before
tax on the net investment on the lease.
Other interest relating to financial
instruments measured at fair value is
recognised as part of the movement in
fair value and is reported in income from
trading activities or other operating
income as relevant. Fees in respect of
services are recognised as the right to
consideration accrues through the
performance of each distinct service
obligation to the customer. The
arrangements are generally contractual
and the cost of providing the service is
incurred as the service is rendered. The
price is usually fixed and always
determinable.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00227": { "value": "3.1. Revenue recognition
Interest receivable and payable are
recognised in the income statement using
the effective interest rate method for all
financial instruments measured at
amortised cost; debt instruments
measured as fair value through other
comprehensive income; and the effective
part of any related accounting hedging
instruments.
Finance lease income is recognised at a
constant periodic rate of return before
tax on the net investment on the lease.
Other interest relating to financial
instruments measured at fair value is
recognised as part of the movement in
fair value and is reported in income from
trading activities or other operating
income as relevant. Fees in respect of
services are recognised as the right to
consideration accrues through the
performance of each distinct service
obligation to the customer. The
arrangements are generally contractual
and the cost of providing the service is
incurred as the service is rendered. The
price is usually fixed and always
determinable.3.6. Foreign currencies
Foreign exchange differences arising on
the settlement of foreign currency
transactions and from the translation of
monetary assets and liabilities are
reported in income from trading activities
except for differences arising on cash
flow hedges and hedges of net
investments in foreign operations.
Non-monetary items denominated in
foreign currencies that are stated at fair
value are translated into the functional
currency at the foreign exchange rates
ruling at the dates the values are
determined. Translation differences are
recognised in the income statement
except for differences arising on non-
monetary financial assets classified as fair
value through other comprehensive
income.2 Non-interest income
There are three main categories of non-interest income: net fees and commissions, trading income, and other operating income.
Net fees and commissions is the difference between fees received from customers for services provided by NatWest Group, such as credit card annual fees,
underwriting fees, payment services, brokerage fees, trade finance, investment management fees, trustee and fiduciary services, and fees incurred in the provision of
those services, such as credit card interchange fees, customer incentives, loan administration, foreign currency transaction charges, and brokerage fees.
Trading income is earned from short-term financial assets and financial liabilities to either make a spread between purchase and sale price or held to take advantage
of movements in prices and yields.
Other operating income includes revenue from other operating activities which are not related to the principal activities of the company, such as: share of profit or loss
from associates; operating lease income; the profit or loss on the sale of a subsidiary or property, plant and equipment profit or loss on own debt; and changes in the
fair value of financial assets and liabilities designated at fair value through profit or loss.
For accounting policy information refer to Accounting policies 3.1 and 3.6.
.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Net fees and commissions
(1)
2,467
2,330
2,292
Trading income
\u00a0 \u00a0 \u00a0
Foreign exchange
310
270
305
Interest rate
(2)
687
595
752
Credit
(163)
(72)
17
Changes in fair value of own debt and derivative liabilities
\u00a0 \u00a0 \u00a0
attributable to own credit risk - debt securities in issue
(9)
(2)
42
Equities, commodities and other
-
3
17
\u00a0
825
794
1,133
Other operating income
\u00a0 \u00a0 \u00a0
Gain/(loss) on redemption of own debt
-
3
(161)
Rental income on operating lease assets and investment property
233
234
230
Changes in fair value of financial assets and liabilities designated at fair value
\u00a0 \u00a0 \u00a0
through profit or loss
(3)
(137)
(150)
17
Changes in fair value of other financial assets at fair value through profit or loss
(4)
75
50
(45)
Hedge ineffectiveness
2
52
(20)
Profit/(loss) on disposal of amortised cost assets and liabilities
5
(5)
(15)
Loss on disposal of fair value through other comprehensive income assets
(19)
(43)
(168)
Profit/(loss) on sale of property, plant and equipment
31
(21)
(5)
Share of profits/(losses) of associated entities
19
(9)
(30)
Foreign exchange recycling (losses)/gains
(76)
484
5
Other income
(5)
3
(16)
81
\u00a0
136
579
(111)
\u00a0
3,428
3,703
3,314
\n
(1)
Refer to Note 4 for further analysis.
(2)
Includes fair value changes on derivatives not designated in a hedge
accounting relationship, and gains and losses from structural hedges.
(3)
Includes related derivatives.
(4)
Includes instruments that have failed solely payments of principal and
interest testing under IFRS 9.
(5)
2022 includes \u00a392 million profit from insurance liabilities.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00225": { "value": "3.1. Revenue recognition
Interest receivable and payable are
recognised in the income statement using
the effective interest rate method for all
financial instruments measured at
amortised cost; debt instruments
measured as fair value through other
comprehensive income; and the effective
part of any related accounting hedging
instruments.
Finance lease income is recognised at a
constant periodic rate of return before
tax on the net investment on the lease.
Other interest relating to financial
instruments measured at fair value is
recognised as part of the movement in
fair value and is reported in income from
trading activities or other operating
income as relevant. Fees in respect of
services are recognised as the right to
consideration accrues through the
performance of each distinct service
obligation to the customer. The
arrangements are generally contractual
and the cost of providing the service is
incurred as the service is rendered. The
price is usually fixed and always
determinable.3.6. Foreign currencies
Foreign exchange differences arising on
the settlement of foreign currency
transactions and from the translation of
monetary assets and liabilities are
reported in income from trading activities
except for differences arising on cash
flow hedges and hedges of net
investments in foreign operations.
Non-monetary items denominated in
foreign currencies that are stated at fair
value are translated into the functional
currency at the foreign exchange rates
ruling at the dates the values are
determined. Translation differences are
recognised in the income statement
except for differences arising on non-
monetary financial assets classified as fair
value through other comprehensive
income.2 Non-interest income
There are three main categories of non-interest income: net fees and commissions, trading income, and other operating income.
Net fees and commissions is the difference between fees received from customers for services provided by NatWest Group, such as credit card annual fees,
underwriting fees, payment services, brokerage fees, trade finance, investment management fees, trustee and fiduciary services, and fees incurred in the provision of
those services, such as credit card interchange fees, customer incentives, loan administration, foreign currency transaction charges, and brokerage fees.
Trading income is earned from short-term financial assets and financial liabilities to either make a spread between purchase and sale price or held to take advantage
of movements in prices and yields.
Other operating income includes revenue from other operating activities which are not related to the principal activities of the company, such as: share of profit or loss
from associates; operating lease income; the profit or loss on the sale of a subsidiary or property, plant and equipment profit or loss on own debt; and changes in the
fair value of financial assets and liabilities designated at fair value through profit or loss.
For accounting policy information refer to Accounting policies 3.1 and 3.6.
.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Net fees and commissions
(1)
2,467
2,330
2,292
Trading income
\u00a0 \u00a0 \u00a0
Foreign exchange
310
270
305
Interest rate
(2)
687
595
752
Credit
(163)
(72)
17
Changes in fair value of own debt and derivative liabilities
\u00a0 \u00a0 \u00a0
attributable to own credit risk - debt securities in issue
(9)
(2)
42
Equities, commodities and other
-
3
17
\u00a0
825
794
1,133
Other operating income
\u00a0 \u00a0 \u00a0
Gain/(loss) on redemption of own debt
-
3
(161)
Rental income on operating lease assets and investment property
233
234
230
Changes in fair value of financial assets and liabilities designated at fair value
\u00a0 \u00a0 \u00a0
through profit or loss
(3)
(137)
(150)
17
Changes in fair value of other financial assets at fair value through profit or loss
(4)
75
50
(45)
Hedge ineffectiveness
2
52
(20)
Profit/(loss) on disposal of amortised cost assets and liabilities
5
(5)
(15)
Loss on disposal of fair value through other comprehensive income assets
(19)
(43)
(168)
Profit/(loss) on sale of property, plant and equipment
31
(21)
(5)
Share of profits/(losses) of associated entities
19
(9)
(30)
Foreign exchange recycling (losses)/gains
(76)
484
5
Other income
(5)
3
(16)
81
\u00a0
136
579
(111)
\u00a0
3,428
3,703
3,314
\n
(1)
Refer to Note 4 for further analysis.
(2)
Includes fair value changes on derivatives not designated in a hedge
accounting relationship, and gains and losses from structural hedges.
(3)
Includes related derivatives.
(4)
Includes instruments that have failed solely payments of principal and
interest testing under IFRS 9.
(5)
2022 includes \u00a392 million profit from insurance liabilities.", "dimensions": { "concept": "ifrs-full:DisclosureOfTradingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00222": { "value": "3.1. Revenue recognition
Interest receivable and payable are
recognised in the income statement using
the effective interest rate method for all
financial instruments measured at
amortised cost; debt instruments
measured as fair value through other
comprehensive income; and the effective
part of any related accounting hedging
instruments.
Finance lease income is recognised at a
constant periodic rate of return before
tax on the net investment on the lease.
Other interest relating to financial
instruments measured at fair value is
recognised as part of the movement in
fair value and is reported in income from
trading activities or other operating
income as relevant. Fees in respect of
services are recognised as the right to
consideration accrues through the
performance of each distinct service
obligation to the customer. The
arrangements are generally contractual
and the cost of providing the service is
incurred as the service is rendered. The
price is usually fixed and always
determinable.1 Net interest income
Net interest income is the difference between the interest NatWest Group earns from its interest-bearing assets, such as loans, balances with central banks and other
financial assets, and the interest paid on its interest-bearing liabilities, such as deposits and subordinated liabilities.
Interest receivable on financial instruments classified as amortised cost, debt instruments classified as FVOCI and the interest element of the effective portion of any designated
hedging relationships are measured using the effective interest rate method, which allocates the interest receivable or interest payable over the expected life of the financial
instrument at the rate that exactly discounts all estimated future cash flows to equal the financial instrument's initial carrying amount. Calculation of the effective interest rate takes
into account fees payable or receivable that are an integral part of the financial instrument\u2019s yield, premiums or discounts on acquisition or issue, early redemption fees and
transaction costs. All contractual terms of a financial instrument are considered when estimating future cash flows. Negative interest on financial
assets is presented in interest payable
and negative interest on
financial liabilities is presented in interest receivable.
Included in interest receivable is finance lease income of \u00a3549 million (2023 - \u00a3484 million; 2022 - \u00a3314
million) which is recognised at a constant periodic rate of return before tax on the net investment.
For accounting policy information refer to Accounting policy 3.1.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Balances at central banks and loans to banks - amortised cost
4,047
3,737
1,987
Loans to customers - amortised cost
18,295
15,553
10,085
Other financial assets
2,845
1,736
565
Interest receivable
25,187
21,026
12,637
Bank deposits
1,534
1,039
379
Customer deposits
8,332
5,276
785
Other financial liabilities
3,096
2,977
1,196
Subordinated liabilities
465
464
370
Internal funding of trading businesses
485
221
65
Interest payable
13,912
9,977
2,795
Net interest income
11,275
11,049
9,842
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00221": { "value": "3.1. Revenue recognition
Interest receivable and payable are
recognised in the income statement using
the effective interest rate method for all
financial instruments measured at
amortised cost; debt instruments
measured as fair value through other
comprehensive income; and the effective
part of any related accounting hedging
instruments.
Finance lease income is recognised at a
constant periodic rate of return before
tax on the net investment on the lease.
Other interest relating to financial
instruments measured at fair value is
recognised as part of the movement in
fair value and is reported in income from
trading activities or other operating
income as relevant. Fees in respect of
services are recognised as the right to
consideration accrues through the
performance of each distinct service
obligation to the customer. The
arrangements are generally contractual
and the cost of providing the service is
incurred as the service is rendered. The
price is usually fixed and always
determinable.1 Net interest income
Net interest income is the difference between the interest NatWest Group earns from its interest-bearing assets, such as loans, balances with central banks and other
financial assets, and the interest paid on its interest-bearing liabilities, such as deposits and subordinated liabilities.
Interest receivable on financial instruments classified as amortised cost, debt instruments classified as FVOCI and the interest element of the effective portion of any designated
hedging relationships are measured using the effective interest rate method, which allocates the interest receivable or interest payable over the expected life of the financial
instrument at the rate that exactly discounts all estimated future cash flows to equal the financial instrument's initial carrying amount. Calculation of the effective interest rate takes
into account fees payable or receivable that are an integral part of the financial instrument\u2019s yield, premiums or discounts on acquisition or issue, early redemption fees and
transaction costs. All contractual terms of a financial instrument are considered when estimating future cash flows. Negative interest on financial
assets is presented in interest payable
and negative interest on
financial liabilities is presented in interest receivable.
Included in interest receivable is finance lease income of \u00a3549 million (2023 - \u00a3484 million; 2022 - \u00a3314
million) which is recognised at a constant periodic rate of return before tax on the net investment.
For accounting policy information refer to Accounting policy 3.1.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Balances at central banks and loans to banks - amortised cost
4,047
3,737
1,987
Loans to customers - amortised cost
18,295
15,553
10,085
Other financial assets
2,845
1,736
565
Interest receivable
25,187
21,026
12,637
Bank deposits
1,534
1,039
379
Customer deposits
8,332
5,276
785
Other financial liabilities
3,096
2,977
1,196
Subordinated liabilities
465
464
370
Internal funding of trading businesses
485
221
65
Interest payable
13,912
9,977
2,795
Net interest income
11,275
11,049
9,842
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00220": { "value": "3.1. Revenue recognition
Interest receivable and payable are
recognised in the income statement using
the effective interest rate method for all
financial instruments measured at
amortised cost; debt instruments
measured as fair value through other
comprehensive income; and the effective
part of any related accounting hedging
instruments.
Finance lease income is recognised at a
constant periodic rate of return before
tax on the net investment on the lease.
Other interest relating to financial
instruments measured at fair value is
recognised as part of the movement in
fair value and is reported in income from
trading activities or other operating
income as relevant. Fees in respect of
services are recognised as the right to
consideration accrues through the
performance of each distinct service
obligation to the customer. The
arrangements are generally contractual
and the cost of providing the service is
incurred as the service is rendered. The
price is usually fixed and always
determinable.1 Net interest income
Net interest income is the difference between the interest NatWest Group earns from its interest-bearing assets, such as loans, balances with central banks and other
financial assets, and the interest paid on its interest-bearing liabilities, such as deposits and subordinated liabilities.
Interest receivable on financial instruments classified as amortised cost, debt instruments classified as FVOCI and the interest element of the effective portion of any designated
hedging relationships are measured using the effective interest rate method, which allocates the interest receivable or interest payable over the expected life of the financial
instrument at the rate that exactly discounts all estimated future cash flows to equal the financial instrument's initial carrying amount. Calculation of the effective interest rate takes
into account fees payable or receivable that are an integral part of the financial instrument\u2019s yield, premiums or discounts on acquisition or issue, early redemption fees and
transaction costs. All contractual terms of a financial instrument are considered when estimating future cash flows. Negative interest on financial
assets is presented in interest payable
and negative interest on
financial liabilities is presented in interest receivable.
Included in interest receivable is finance lease income of \u00a3549 million (2023 - \u00a3484 million; 2022 - \u00a3314
million) which is recognised at a constant periodic rate of return before tax on the net investment.
For accounting policy information refer to Accounting policy 3.1.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Balances at central banks and loans to banks - amortised cost
4,047
3,737
1,987
Loans to customers - amortised cost
18,295
15,553
10,085
Other financial assets
2,845
1,736
565
Interest receivable
25,187
21,026
12,637
Bank deposits
1,534
1,039
379
Customer deposits
8,332
5,276
785
Other financial liabilities
3,096
2,977
1,196
Subordinated liabilities
465
464
370
Internal funding of trading businesses
485
221
65
Interest payable
13,912
9,977
2,795
Net interest income
11,275
11,049
9,842
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00731": { "value": "3.1. Revenue recognition
Interest receivable and payable are
recognised in the income statement using
the effective interest rate method for all
financial instruments measured at
amortised cost; debt instruments
measured as fair value through other
comprehensive income; and the effective
part of any related accounting hedging
instruments.
Finance lease income is recognised at a
constant periodic rate of return before
tax on the net investment on the lease.
Other interest relating to financial
instruments measured at fair value is
recognised as part of the movement in
fair value and is reported in income from
trading activities or other operating
income as relevant. Fees in respect of
services are recognised as the right to
consideration accrues through the
performance of each distinct service
obligation to the customer. The
arrangements are generally contractual
and the cost of providing the service is
incurred as the service is rendered. The
price is usually fixed and always
determinable.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00711": { "value": "Finance lease income is recognised at a
constant periodic rate of return before
tax on the net investment on the lease.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00714": { "value": "3.2. Discontinued operations, held for
sale and disposal groups
The results of discontinued operations
are excluded from the results of
continuing operations and are presented
as a single amount as profit or loss from
discontinued operations, net of tax in the
income statement. Comparatives are re-
presented for the income statement,
cash flow statement, statement of
changes in equity and related notes.
An asset or disposal group (assets and
liabilities) is classified as held for sale if we
will recover its carrying amount
principally through a sale transaction
rather than through continuing use. It is
measured at the lower of its carrying
amount or fair value less cost to sell
unless the existing measurement
provisions of IFRS apply. These are
presented as single amounts;
comparatives are not re-presented.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00713": { "value": "3.2. Discontinued operations, held for
sale and disposal groups
The results of discontinued operations
are excluded from the results of
continuing operations and are presented
as a single amount as profit or loss from
discontinued operations, net of tax in the
income statement. Comparatives are re-
presented for the income statement,
cash flow statement, statement of
changes in equity and related notes.
An asset or disposal group (assets and
liabilities) is classified as held for sale if we
will recover its carrying amount
principally through a sale transaction
rather than through continuing use. It is
measured at the lower of its carrying
amount or fair value less cost to sell
unless the existing measurement
provisions of IFRS apply. These are
presented as single amounts;
comparatives are not re-presented.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00712": { "value": "3.2. Discontinued operations, held for
sale and disposal groups
The results of discontinued operations
are excluded from the results of
continuing operations and are presented
as a single amount as profit or loss from
discontinued operations, net of tax in the
income statement. Comparatives are re-
presented for the income statement,
cash flow statement, statement of
changes in equity and related notes.
An asset or disposal group (assets and
liabilities) is classified as held for sale if we
will recover its carrying amount
principally through a sale transaction
rather than through continuing use. It is
measured at the lower of its carrying
amount or fair value less cost to sell
unless the existing measurement
provisions of IFRS apply. These are
presented as single amounts;
comparatives are not re-presented.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00229": { "value": "3.3. Staff costs
Employee costs, such as salaries, paid
absences, and other benefits are
recognised over the period in which the
employees provide the related services to
us.
Employees may receive variable
compensation in cash, in deferred cash
or debt instruments of NatWest Group or
in ordinary shares of NatWest Group plc
subject to deferral, clawback and
forfeiture criteria. We operate a number
of share-based compensation schemes
under which we grant awards of
NatWest Group plc shares and share
options to our employees. Such awards
are subject to vesting conditions.
Variable compensation that is settled in
cash or debt instruments is charged to
the income statement on a straight-line
basis over the period during which
services are provided, taking account of
forfeiture and clawback criteria. The
value of employee services received in
exchange for NatWest Group plc shares
and share options is recognised as an
expense over the vesting period, subject
to deferral, clawback, cancellation and
forfeiture criteria with a corresponding
increase in equity. The fair value of
shares granted is the market price
adjusted for the expected effect of
dividends as employees are not entitled
to dividends until shares are vested.
The fair value of options granted is
determined using option pricing models to
estimate the numbers of shares likely to
vest. These consider the exercise price of
the option, the current share price, the
risk-free interest rate, the expected
volatility of the share price over the life of
the option and other relevant factors
such as the dividend yield.
Defined contribution pension scheme
A scheme where we pay fixed
contributions and there is no legal or
constructive obligation to pay further
contributions or benefits. Contributions
are recognised in the income statement
as employee service costs accrue.
Defined benefit pension scheme
A scheme that defines the benefit an
employee will receive on retirement and
is dependent on one or more factors
such as age, salary, and years of service.
The net of the recognisable scheme
assets and obligations is reported on the
balance sheet in other assets or other
liabilities. The defined benefit obligation is
measured on an actuarial basis.
The charge to the income statement for
pension costs (mainly the service cost
and the net interest on the net defined
benefit asset or liability) is recognised in
operating expenses.
Actuarial gains and losses (i.e. gains
and/or losses on re-measuring the net
defined benefit asset or liability due to
changes in actuarial measurement
assumptions) are recognised in other
comprehensive income in full in the
period in which they arise, and not
subject to recycling to the income
statement.
The difference between scheme assets
and scheme liabilities, the net defined
benefit asset or liability, is recognised on
the balance sheet if the criteria of the
asset ceiling test are met. This requires
the net defined benefit surplus to be
limited to the present value of any
economic benefits available to us in the
form of refunds from the plan or reduced
contributions to it.
We will recognise a liability where a
minimum funding requirement exists for
any of our defined benefit pension
schemes. This reflects agreed minimum
funding and the availability of a net
surplus as described above.
When estimating the liability for minimum
funding requirements we only include
contributions that are substantively or
contractually agreed and do not include
contingent and discretionary features,
including dividend-linked contributions or
contributions subject to contingent events
requiring future verification.
We recognise a net defined benefit asset
when the net defined benefit surplus can
generate a benefit in the form of a refund
or reduction in future contributions to the
plan. The net benefit pension asset is
recognised at the present value of the
benefits that will be available to us
excluding interest and the effect of the
asset ceiling (if any), excluding interest.
Changes in the present value of the net
benefit pension asset are recognised
immediately in other comprehensive
income.
In instances where Trustees have the
ability to declare augmented benefits to
participants, we do not recognise a
defined benefit pension asset and record
the surplus immediately in other
comprehensive income.3 Operating expenses
Operating expenses are expenses NatWest Group incurs in the running of its business such as all staff costs (for example salaries, bonus awards, pension costs and
\n
social security costs), premises and equipment costs that arise from the occupation of premises and the use of equipment, depreciation and amortisation and other
\n
administrative expenses.
\n
For accounting policy information refer to Accounting policies 3.3, 3.4 and 3.5.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Salaries
2,477
2,483
2,250
Bonus awards
411
353
334
Temporary and contract costs
162
199
234
Social security costs
371
352
328
Pension costs
311
313
363
- defined benefit schemes (Note 5)
86
122
205
- defined contribution schemes
225
191
158
Other
329
201
207
Staff costs
4,061
3,901
3,716
Premises and equipment
1,211
1,153
1,112
UK bank levy
142
109
101
Depreciation and amortisation
(1)
1,058
934
833
Other administrative expenses
(2)
1,677
1,899
1,925
Administrative expenses
4,088
4,095
3,971
\u00a0
8,149
7,996
7,687
\n
(1)
Includes depreciation of right of use assets of \u00a3103 million (2023 - \u00a3104 million; 2022 - \u00a3119 million).
\n
(2)
Includes litigation and conduct costs, net of amounts recovered. Refer to Note 20 for further details.
\n
The average number of persons employed, rounded to the nearest hundred, during the
\n
year, excluding temporary staff, was 60,700 (2023 \u2013 61,500; 2022 \u2013 60,000). The
\n
average number of temporary employees during 2024 was 1,400 (2023 \u2013 2,100; 2022 \u2013
\n
2,500).
\n
The number of persons employed at 31 December, excluding temporary staff, by
\n
reportable segment, was as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Continuing operations
2024
2023
2022
Retail Banking
13,000
14,300
15,100
Private Banking
2,200
2,400
2,300
Commercial & Institutional
12,700
12,400
12,200
Central items & other
(1)
31,800
32,500
31,400
Total
59,700
61,600
61,000
UK
40,100
41,500
41,200
India
17,600
16,900
15,700
Poland
800
1,500
1,500
USA
300
300
300
Republic of Ireland
100
400
1,400
Rest of the World
800
1,000
900
Total
59,700
61,600
61,000
\n
(1)
Central items & other includes Ulster Bank RoI. The total number of persons employed in Ulster Bank RoI of 200 (2023 \u2013
\n
500; 2022 \u2013 2,200) includes nil people employed in discontinued operations at 31 December 2024 (2023 \u2013 nil; 2022 \u2013
\n
400).
Share-based payments
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Award plan
Eligible employees
Nature of award
Vesting conditions (1)
Settlement
Sharesave
UK, Channel Islands, Gibraltar,
Option to buy shares under
Continuing employment or leavers in certain circumstances
2025 to 2029
\u00a0
Isle of Man, Poland and India.
employee savings plan
\u00a0 \u00a0
Deferred performance
All
Awards of ordinary shares
Continuing employment or leavers in certain circumstances
2025 to 2032
awards
\u00a0
and conditional shares
\u00a0 \u00a0
Long-term incentives
(2,3)
Senior employees
Awards of ordinary shares
Continuing employment or leavers in certain circumstances
2025 to 2031
\u00a0 \u00a0
and conditional shares
and/or satisfaction of the pre-vesting assessment and underpins
\u00a0
Sharing in Success
(
4)
All
Awards of ordinary shares
Future continuing employment and achievement of pre-defined
2025
\u00a0 \u00a0
and conditional shares
measures.
\u00a0
\n
(1)
All awards are subject to discretion of Remuneration Committee.
(2)
Long-term incentives include buy-out awards offered to compensate certain new hires for the loss of forfeited awards from their previous employment.
Existing Long-term incentives vest over 3 to 7 years.
(3)
The existing Restricted Share Plan scheme would be replaced by Performance Share Plan in 2025.
(4)
In 2024 16 million shares at total value of \u00a349 million were granted and vested under Sharing in Success.
Sharesave
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Average
Shares
Average
Shares
Average
Shares
\u00a0
exercise
under
exercise
under
exercise
under
\u00a0
price
option
price
option
price
option
\u00a0
\u00a3
(million)
\u00a3
(million)
\u00a3
(million)
At 1 January
1.59
114
1.63
99
1.61
95
Granted
2.94
24
1.42
43
1.86
25
Exercised
1.52
(32)
1.44
(23)
1.88
(15)
Cancelled
1.60
(5)
1.72
(5)
1.60
(6)
At 31 December
1.93
101
1.59
114
1.63
99
\n
The fair value of Sharesave options granted in 2024 was determined using a pricing
model that included: expected volatility of share price determined at the grant date
based on historical share price volatility over a period of up to five years; expected
option lives that equal the vesting period; estimated dividend yield on equity shares; and
risk-free interest rates determined from UK gilts with terms matching the expected lives
of the options.
The exercise price of options and the fair value on granting awards of fully paid shares is
the average market price over the five trading days (three trading days for Sharesave)
preceding grant date. When estimating the fair value of the award, the number of
shares granted and the prevailing market price as defined on page 151 are used.
The
fair value of the award is recognised as services are provided by employees over the
vesting period.
Options are exercisable within six months of vesting; 8.9 million options were exercisable
at 31 December 2024 (2023 \u2013 19.0 million; 2022 \u2013 5.1 million). The weighted average
share price at the date of exercise of options was \u00a34.03 (2023 - \u00a32.20; 2022 - \u00a32.59). At
31 December 2024, exercise prices ranged from \u00a31.42 to \u00a32.94 (2023 - \u00a31.12 to \u00a31.89;
2022 - \u00a31.12 to \u00a32.27) and the remaining average contractual life was 2.35 years (2023
\u2013 2.25 years; 2022 \u2013 2 years). The fair value of options granted in 2024 was \u00a328.3
million (2023 - \u00a327.3 million; 2022 - \u00a322.1 million).
Deferred performance awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Value at
Shares
Value at
Shares
Value at
Shares
\u00a0
grant
awarded
grant
awarded
grant
awarded
\u00a0
\u00a3m
(million)
\u00a3m
(million)
\u00a3m
(million)
At 1 January
76
35
93
46
132
65
Granted
50
23
52
20
46
20
Forfeited
(3)
(1)
(2)
(1)
(4)
(2)
Vested
(57)
(27)
(67)
(30)
(81)
(37)
At 31 December
66
30
76
35
93
46
\n
The awards granted in 2024 vest in equal tranches on the anniversary of the award,
predominantly over three years.
Long-term incentives
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Value at
Shares
Value at
Shares
Value at
Shares
\u00a0
grant
awarded
grant
awarded
grant
awarded
\u00a0
\u00a3m
(million)
\u00a3m
(million)
\u00a3m
(million)
At 1 January
49
23
49
23
44
21
Granted
9
5
11
5
16
7
Vested/exercised
(11)
(5)
(10)
(4)
(10)
(4)
Lapsed
(7)
(4)
(1)
(1)
(1)
(1)
At 31 December
40
19
49
23
49
23
\n
The market value of awards vested/exercised in 2024 was \u00a319.3 million (2023 - \u00a39.5
million; 2022 - \u00a311.7 million).
Bonus awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Change
\u00a0
\u00a3m
\u00a3m
%
March awards
(1)
63
43
47%
Deferred cash awards
324
262
24%
Deferred share awards
61
51
20%
Total deferred bonus awards
385
313
23%
Total bonus awards
(2)
448
356
26%
Bonus awards as a % of operating profit before tax and bonus awards
7%
5%
\u00a0
Proportion of bonus awards that are deferred
\u00a0 \u00a0 \u00a0
- deferred cash awards
86%
86%
\u00a0
- deferred share awards
14%
14%
\u00a0
\n
Reconciliation of bonus awards to income statement charge
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Bonus awarded
448
356
370
Less: deferral of charge for amounts awarded for current year
(144)
(114)
(127)
Income statement charge for amounts awarded in current year
304
242
243
Add: current year charge for amounts deferred from prior years
109
115
94
Less: forfeiture of amounts deferred from prior years
(2)
(4)
(3)
Income statement charge for amounts deferred from prior years
107
111
91
Income statement charge for bonus awards
(2)
411
353
334
\n
(1)
March cash awards are limited to \u00a32,000 for all employees.
(2)
Excludes other performance-related compensation.
Year in which income statement charge is expected to be taken for deferred bonus awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Actual
Expected
\u00a0
2022
2023
2024
2025
2026 and beyond
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bonus awards deferred from 2022 and earlier
94
115
17
8
6
Bonus awards deferred from 2023
-
-
92
8
9
Less: forfeiture of amounts deferred from prior years
(3)
(4)
(2)
-
-
Bonus awards deferred for 2024
-
-
-
122
22
\u00a0
91
111
107
138
37
\n5 Pensions
NatWest Group operates two types of pension scheme: defined contribution and defined benefit. The defined contribution schemes invest contributions in a choice of
\n
funds and the accumulated contributions and investment returns are used by the employee to provide benefits on retirement. There is no legal or constructive
\n
obligation for NatWest Group to pay any further contributions or benefits. The defined benefit schemes provide pensions in retirement based on employees'
\n
pensionable salaries and service.
\n
NatWest Group\u2019s balance sheet includes
\n
any defined benefit pension scheme
\n
surplus or deficit as a retirement benefit
\n
asset or liability reported in other assets
\n
and other liabilities. The surplus or deficit
\n
is the difference between the liabilities to
\n
be paid from the defined benefit scheme
\n
and the assets held by the scheme to
\n
meet these liabilities. The liabilities are
\n
calculated by external actuaries using a
\n
number of financial and demographic
\n
assumptions.
\n
For some NatWest Group defined benefit
\n
schemes where there is a net defined
\n
benefit surplus in excess of the present
\n
value of any economic benefits that can
\n
be obtained from that surplus, the
\n
application of accounting standards
\n
means we do not recognise that surplus
\n
on the balance sheet.
\n
For accounting policy information refer to
\n
Accounting policy 3.3.
\n
Defined contribution schemes
\n
NatWest Group sponsors several defined
\n
contribution schemes in different
\n
territories, which new employees are
\n
entitled to join. NatWest Group pays
\n
specific contributions into individual
\n
investment funds on employees\u2019 behalf.
\n
Once those contributions are paid, there
\n
is no further liability on the NatWest
\n
Group balance sheet relating to the
\n
defined contribution schemes.
\n
Defined benefit schemes
\n
NatWest Group sponsors a number of
\n
pension schemes in the UK and overseas,
\n
including the Main section of the NatWest
\n
Group Pension Fund (the Main section)
\n
which operates under UK trust law and is
\n
managed and administered on behalf of
\n
its members in accordance with the
\n
terms of the trust deed, the scheme rules
\n
and UK legislation.
\n
Pension fund trustees are appointed to
\n
operate each fund and ensure benefits
\n
are paid in accordance with the scheme
\n
rules and national law. The trustees are
\n
the legal owner of a scheme\u2019s assets,
\n
and have a duty to act in the best
\n
interests of all scheme members.
\n
The schemes generally provide a pension
\n
of one-sixtieth of final pensionable salary
\n
for each year of service prior to
\n
retirement up to a maximum of 40 years
\n
and are contributory for current
\n
members.
\n
These have been closed to new entrants
\n
for over ten years, although active
\n
members continue to build up additional
\n
pension benefits, currently subject to 2%
\n
maximum annual salary inflation, while
\n
they remain employed by NatWest
\n
Group.
\n
The Main section corporate trustee is
\n
NatWest Pension Trustee Limited (the
\n
Trustee), a wholly owned subsidiary of
\n
NWB Plc, Principal Employer of the Main
\n
section.
\n
The Board of the Trustee includes
\n
member trustee directors selected from
\n
eligible active staff, deferred and
\n
pensioner members who apply and
\n
trustee directors appointed by NatWest
\n
Group.
\n
Under UK legislation, a defined benefit
\n
pension scheme is required to meet the
\n
statutory funding objective of having
\n
sufficient and appropriate assets to cover
\n
its liabilities (the pensions that have been
\n
promised to members).
\n
Similar governance principles apply to
\n
NatWest Group\u2019s other defined benefit
\n
pension schemes.
\n
Investment strategy
\n
The assets of the Main section represent
\n
90% of all plan assets at 31 December
\n
2024 (2023 - 91%) and are invested as
\n
shown below.
\n
Within the non-insured portfolio the Main
\n
section employs physical, derivative and
\n
non-derivative instruments to achieve a
\n
desired asset class exposure and to
\n
reduce the section\u2019s interest rate,
\n
inflation, and currency risk. This means
\n
that the net funding position is
\n
considerably less sensitive to changes in
\n
market conditions than the value of the
\n
assets or liabilities in isolation. In
\n
particular, movements in interest rate
\n
and inflation are substantially hedged by
\n
the Trustee.
\n
During 2023, the Trustee completed a
\n
buy-in insurance transaction for the AA
\n
section of the Group Pension Fund.
\n
Further transactions for the Main section
\n
were completed during 2024. Each
\n
transaction saw a premium paid to an
\n
insurer in exchange for a buy-in
\n
insurance contract. The contracts
\n
provide a stream of cashflows to the
\n
Trustee replicating payments due to
\n
members, thereby passing material
\n
demographic and market risk to the
\n
insurer.
\n
At 31 December 2024, the Main section
\n
included buy-in insurance contracts
\n
covering around a third of the liabilities,
\n
while around 99% of AA section liabilities
\n
were insured.
\n
The premium for each transaction was
\n
determined by the insurer using its
\n
pricing basis. Under IAS 19, the value
\n
placed on this asset mirrors the valuation
\n
of the defined benefit obligations covered,
\n
incorporating an assessment of credit
\n
risk. Since the insurer\u2019s pricing basis is
\n
more conservative than the best-
\n
estimate valuation under IAS 19, a
\n
material asset loss arises at the outset.
\n
However, the asset loss is offset by a
\n
corresponding movement in the asset
\n
ceiling, meaning the net balance sheet
\n
and OCI impacts are neutral. Once the
\n
contract has been established, the value
\n
of the buy-in insurance contracts will
\n
move in line with movements in the
\n
defined benefit obligations covered,
\n
protecting the scheme against
\n
demographic and market risk.
Major classes of plan assets as a percentage of total plan assets of the Main section
\n\n \n
2024
2023
Quoted
Unquoted
Total
Quoted
Unquoted
Total
%
%
%
%
%
%
Equities
0.1
6.6
6.7
0.1
6.7
6.8
Index-linked bonds
23.6
-
23.6
36.7
-
36.7
Government bonds
9.9
-
9.9
13.3
-
13.3
Corporate and other bonds
14.4
4.1
18.5
19.2
6.4
25.6
Real estate
-
2.4
2.4
-
4.5
4.5
Derivatives
-
0.1
0.1
-
2.7
2.7
Buy-in insurance contracts
-
27.0
27.0
-
-
-
Cash and other assets
-
11.8
11.8
-
10.4
10.4
48.0
52.0
100.0
69.3
30.7
100.0
\n
The Main section\u2019s holdings of derivative instruments are summarised in the table below
:
\n\n \n
2024
2023
Fair value
Fair value
Notional
Notional
amounts
Assets
Liabilities
amounts
Assets
Liabilities
\u00a3bn
\u00a3m
\u00a3m
\u00a3bn
\u00a3m
\u00a3m
Inflation rate swaps
24
1,548
812
29
1,929
940
Interest rate swaps
57
3,096
3,763
52
3,121
3,394
Currency forwards
8
60
130
13
235
34
Equity and bond call options
-
-
-
-
-
-
Equity and bond put options
-
-
-
-
-
4
Other
1
22
4
1
8
20
\n
Swaps have been executed at prevailing market rates and within standard market bid/offer spreads with a number of counterparties, including NWB Plc.
\n
At 31 December 2024, the gross notional value of the swaps was \u00a381 billion (2023 - \u00a381 billion) and had a net positive fair value of \u00a373 million (2023 - \u00a3714 million) against which the
\n
scheme had posted 85% collateral.
\n
The schemes do not invest directly in NatWest Group but may have exposure to NatWest Group through indirect holdings. The trustees of the respective UK schemes are responsible
\n
for ensuring that indirect investments in NatWest Group do not exceed the regulatory limit of 5% of plan assets.
Changes in value of net pension assets/(liability)
\n\n \n
Main section
All schemes
Fair value
Present value of
Asset ceiling/
Net pension
Fair value
Present value
Asset ceiling/
Net
of plan
defined benefit
minimum
assets/
of plan
of defined
minimum
pension
benefit obligation
assets
obligation (1)
funding
liability
assets
(1)
funding
assets (2)
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2023
34,016
(24,733)
(9,283)
-
37,598
(27,601)
(9,777)
220
Currency translation and other adjustments
-
-
-
-
(21)
21
4
4
Income statement - operating expenses
1,677
(1,286)
(464)
(73)
1,841
(1,478)
(485)
(122)
Other comprehensive income
(1,042)
(1,737)
2,643
(136)
(1,182)
(1,939)
2,841
(280)
Contributions by employer
209
-
-
209
278
2
-
280
Contributions by plan participants and other scheme members
7
(7)
-
-
12
(12)
-
-
Assets/liabilities extinguished upon settlement
-
-
-
-
(50)
50
-
-
Benefits paid
(1,229)
1,229
-
-
(1,365)
1,365
-
-
At 1 January 2024
33,638
(26,534)
(7,104)
-
37,111
(29,592)
(7,417)
102
Currency translation and other adjustments
-
-
-
-
(5)
9
(4)
-
Income statement - operating expenses
Net interest expense
1,589
(1,244)
(341)
4
1,737
(1,374)
(355)
8
Current service cost
-
(72)
-
(72)
-
(99)
-
(99)
Past service cost
-
(3)
-
(3)
-
(3)
-
(3)
Loss on curtailments and settlements
-
-
-
-
-
8
-
8
1,589
(1,319)
(341)
(71)
1,737
(1,468)
(355)
(86)
Other comprehensive income
Return on plan assets excluding recognised interest income
(3)
(4,612)
-
-
(4,612)
(4,860)
-
-
(4,860)
Experience gains and losses
-
13
-
13
-
(3)
-
(3)
Effect of changes in actuarial financial assumptions
-
2,182
-
2,182
-
2,343
-
2,343
Effect of changes in actuarial demographic assumptions
-
(77)
-
(77)
-
(62)
-
(62)
Asset ceiling adjustments
(3)
-
-
2,360
2,360
-
-
2,416
2,416
(4,612)
2,118
2,360
(134)
(4,860)
2,278
2,416
(166)
Contributions by employer
(4)
205
-
-
205
250
-
-
250
Contributions by plan participants and other scheme members
7
(7)
-
-
11
(11)
-
-
Assets/liabilities extinguished upon settlement
-
-
-
-
(42)
42
-
-
Benefits paid
(1,281)
1,281
-
-
(1,445)
1,455
-
10
At 31 December 2024
(5)
29,546
(24,461)
(5,085)
-
32,757
(27,287)
(5,360)
110
\n
(1)
Defined benefit obligations are subject to annual valuation by independent actuaries.
\n
(2)
NatWest Group recognises the net pension scheme surplus or deficit as a net asset or liability. In doing so, the funded status is adjusted to reflect any schemes with a surplus that NatWest Group may not be able to access, as well as any minimum funding
\n
requirement to pay in additional contributions. This is most relevant to the Main section, where the surplus is not recognised as the trustees have rights over the use of the surplus. Other NatWest Group schemes that this applies to include the Ulster Bank
\n
Pension Scheme (NI) and the NatWest Markets section.
\n
(3)
Buy-in transactions have had a significant, offsetting impact on the \u2018Return on plan assets excluding recognised income\u2019 and \u201cAsset ceiling adjustments\u201d line items recognised in OCI.
\n
(4)
NatWest Group expects to make contributions to the Main section of \u00a339 million in 2025.
\n
(5)
During 2024, the Court of Appeal upheld the initial High Court ruling in respect of Virgin Media v NTL Pension Trustees II Limited (and others), calling into question the validity of rule amendments made between 1997 and 2016. In 2023, a selection of
\n
amendments from the relevant period judged as material, were reviewed. While uncertainties remain, the review indicated the risk of a change in the defined benefit obligation (DBO) was remote, so no adjustment was made to the DBO value. This
\n
position is unchanged at year end.
Amounts recognised on the balance sheet
\n\n \n
All schemes
2024
2023
\u00a3m
\u00a3m
Fund asset at fair value
32,757
37,111
Present value of fund liabilities
(27,287)
(29,592)
Funded status
5,470
7,519
Assets ceiling/minimum funding
(5,360)
(7,417)
110
102
\n
Net pension asset/(liability) comprises
\n\n \n
2024
2023
\u00a3m
\u00a3m
Net assets of schemes in surplus (refer to Note 17)
190
201
Net liabilities of schemes in deficit (refer to Note 20)
(80)
(99)
110
102
\n
Funding and contributions by NatWest Group
\n
In the UK, the trustees of defined benefit pension schemes are required to perform
\n
funding valuations every three years. The trustees and the sponsor, with the support of
\n
the Scheme Actuary, agree the assumptions used to value the liabilities and to
\n
determine future contribution requirements. The funding assumptions incorporate a
\n
margin for prudence over and above the expected cost of providing the benefits
\n
promised to members, taking into account the sponsor\u2019s covenant and the investment
\n
strategy of the scheme. Similar arrangements apply in the other territories where
\n
NatWest Group sponsors defined benefit pension schemes.
\n
A full triennial funding valuation of the Main section, effective 31 December 2023, was
\n
completed during financial year 2024.
\n
This triennial funding valuation determined the funding level to be 115%, pension liabilities
\n
to be \u00a329 billion and the surplus to be \u00a34 billion, all assessed on the agreed funding
\n
basis. The average cost of the future service of current members is 21.2% of salary
\n
before contributions from those members.
Given the strong funding level, it was agreed
\n
that future service contributions would cease from 1 January 2025. The sponsor will
\n
continue to meet administrative expenses.
\n
The key assumptions used to determine the uninsured funding liabilities were the
\n
discount rate, which is determined based on fixed interest swap and gilt yields plus
\n
0.64% per annum, and mortality assumptions, which result in life expectancies of
\n
27.1/29.1 years for male/female pensioners who were age 60 and 28.5/30.6 years from
\n
age 60 for males/females who were age 40 at the valuation date.
\n
Accounting Assumptions
\n
Placing a value on NatWest Group\u2019s defined benefit pension schemes\u2019 liabilities requires
\n
NatWest Group\u2019s management to make a number of assumptions, with the support of
\n
independent actuaries. The ultimate cost of the defined benefit obligations depends upon
\n
actual future events and the assumptions made are unlikely to be exactly borne out in
\n
practice, meaning the final cost may be higher or lower than expected.
\n
The most significant assumptions used for the Main section are shown below:
\n\n \n
Principal IAS 19 actuarial assumptions
(1)
2024
2023
%
%
Discount rate
5.6
4.8
Inflation assumption (RPI)
3.2
3.1
Rate of increase in salaries
1.8
1.8
Rate of increase in deferred pensions
3.4
3.2
Rate of increase in pensions in payment
2.6
2.4
Lump sum conversion rate at retirement
18.0
18.0
\n\n \n
Longevity at age 60:
years
years
Current pensioners
Males
26.5
26.8
Females
28.5
28.6
Future pensioners, currently aged 40
Males
27.5
27.7
Females
29.7
29.5
\n
(1)
The above financial assumptions are long-term assumptions set with reference to the period over which the obligations
\n
are expected to be settled.
Discount rate
The IAS 19 valuation uses a single discount rate set by reference to the yield on a basket of high quality sterling corporate bonds.
Significant judgement is required when setting the criteria for bonds to be included in the basket of bonds that is used to determine the discount rate used in the IAS 19 valuations. The
criteria include issue size, quality of pricing and the exclusion of outliers. Judgement is also required in determining the shape of the yield curve at long durations; a constant credit
spread relative to gilts is assumed. Sensitivity to the main assumptions is presented below.
The weighted average duration of the Main section\u2019s defined benefit obligation at 31 December 2024 is 13 years (2023 \u2013 14.0 years). The chart below shows the projected benefit
payment pattern for the Main section in nominal terms. These cashflows are based on the most recent formal actuarial valuation, effective 31 December 2023.
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2025
2027
2029
2031
2033
2035
2037
2039
2041
2043
2045
2047
2049
2051
2053
2055
2057
2059
2061
2063
2065
2067
2069
2071
2073
2075
2077
2079
2081
2083
2085
2087
2089
2091
2093
2095
Pensioner
Non pensioner
Expected Cashflows (\u00a3m)
Year
The table below shows how the present value of the net pension asset of the Main section would change if the key assumptions used were changed independently. In practice the
\n
variables have a degree of correlation and do not move completely in isolation.
\n \n \n
(Decrease)/
(Decrease)/
Increase in net
increase in value
increase in value
pension
of assets
of liabilities
(obligations)/assets
2024
\u00a3m
\u00a3m
\u00a3m
0.5% increase in interest rates/discount rate
(1,554)
(1,529)
(25)
0.25% increase in inflation
648
571
77
0.5% increase in credit spreads
(4)
(1,529)
1,525
Longevity increase of one year
295
832
(537)
0.25% additional rate of increase in pensions in payment
205
605
(400)
Increase in equity values of 10%
(1)
199
na
199
2023
0.5% increase in interest rates/discount rate
(2,292)
(1,746)
(546)
0.25% increase in inflation
811
578
233
0.5% increase in credit spreads
(12)
(1,746)
1,734
Longevity increase of one year
na
902
(902)
0.25% additional rate of increase in pensions in payment
na
706
(706)
Increase in equity values of 10%
(1)
229
na
229
\n
na = not applicable
\n
(1)
Includes both quoted and private equity.
\n
The table below shows the combined change in defined benefit obligation from larger movements in these assumptions, assuming no changes in other assumptions.
\n\n \n
Change in life expectancies
- 2 years
- 1 year
No change
+ 1 year
+ 2 years
2024
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Change in credit spreads
+50 bps
(3.1)
(2.3)
(1.5)
(0.7)
-
No change
(1.7)
(0.9)
-
0.8
1.7
-50 bps
(0.2)
0.7
1.7
2.5
3.4
2023
Change in credit spreads
+50 bps
(3.5)
(2.6)
(1.7)
(0.9)
(0.1)
No change
(1.9)
(0.9)
-
0.9
1.8
-50 bps
-
1.0
2.0
2.9
3.9
The defined benefit obligation of the Main section is attributable to the different classes of scheme members in the following proportions:
\u00a0
2024
2023
Membership category
%
%
Active members
6.9
7.5
Deferred members
40.7
41.9
Pensioners and dependants
52.4
50.6
\u00a0
100.0
100.0
\n
The experience history of NatWest Group schemes is shown below:
\u00a0
Main section
All schemes
\u00a0
2024
2023
2022
2021
2020
2024
2023
2022
2021
2020
Experience history of defined benefit schemes
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Fair value of plan assets
29,546
33,638
34,016
52,021
51,323
32,757
37,111
37,598
57,787
57,249
Present value of plan obligations
(24,461)
(26,534)
(24,733)
(42,020)
(43,870)
(27,287)
(29,592)
(27,601)
(46,808)
(48,864)
Net surplus
5,085
7,104
9,283
10,001
7,453
5,470
7,519
9,997
10,979
8,385
Experience (losses)/gains on plan liabilities
13
(1,531)
(2,053)
241
427
(3)
(1,599)
(2,137)
237
455
Experience (losses)/gains on plan assets
(4,612)
(1,042)
(18,180)
841
5,486
(4,860)
(1,182)
(20,326)
872
6,027
Actual return on plan assets
(3,023)
634
(17,248)
1,554
6,422
(3,123)
659
(19,285)
1,667
7,064
Actual return on plan assets
(9.0%)
1.9%
(33.2%)
3.0%
13.8%
(8.4%)
1.8%
(33.4%)
2.9%
13.6%
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00693": { "value": "3.3. Staff costs
Employee costs, such as salaries, paid
absences, and other benefits are
recognised over the period in which the
employees provide the related services to
us.
Employees may receive variable
compensation in cash, in deferred cash
or debt instruments of NatWest Group or
in ordinary shares of NatWest Group plc
subject to deferral, clawback and
forfeiture criteria. We operate a number
of share-based compensation schemes
under which we grant awards of
NatWest Group plc shares and share
options to our employees. Such awards
are subject to vesting conditions.
Variable compensation that is settled in
cash or debt instruments is charged to
the income statement on a straight-line
basis over the period during which
services are provided, taking account of
forfeiture and clawback criteria. The
value of employee services received in
exchange for NatWest Group plc shares
and share options is recognised as an
expense over the vesting period, subject
to deferral, clawback, cancellation and
forfeiture criteria with a corresponding
increase in equity. The fair value of
shares granted is the market price
adjusted for the expected effect of
dividends as employees are not entitled
to dividends until shares are vested.
The fair value of options granted is
determined using option pricing models to
estimate the numbers of shares likely to
vest. These consider the exercise price of
the option, the current share price, the
risk-free interest rate, the expected
volatility of the share price over the life of
the option and other relevant factors
such as the dividend yield.
Defined contribution pension scheme
A scheme where we pay fixed
contributions and there is no legal or
constructive obligation to pay further
contributions or benefits. Contributions
are recognised in the income statement
as employee service costs accrue.
Defined benefit pension scheme
A scheme that defines the benefit an
employee will receive on retirement and
is dependent on one or more factors
such as age, salary, and years of service.
The net of the recognisable scheme
assets and obligations is reported on the
balance sheet in other assets or other
liabilities. The defined benefit obligation is
measured on an actuarial basis.
The charge to the income statement for
pension costs (mainly the service cost
and the net interest on the net defined
benefit asset or liability) is recognised in
operating expenses.
Actuarial gains and losses (i.e. gains
and/or losses on re-measuring the net
defined benefit asset or liability due to
changes in actuarial measurement
assumptions) are recognised in other
comprehensive income in full in the
period in which they arise, and not
subject to recycling to the income
statement.
The difference between scheme assets
and scheme liabilities, the net defined
benefit asset or liability, is recognised on
the balance sheet if the criteria of the
asset ceiling test are met. This requires
the net defined benefit surplus to be
limited to the present value of any
economic benefits available to us in the
form of refunds from the plan or reduced
contributions to it.
We will recognise a liability where a
minimum funding requirement exists for
any of our defined benefit pension
schemes. This reflects agreed minimum
funding and the availability of a net
surplus as described above.
When estimating the liability for minimum
funding requirements we only include
contributions that are substantively or
contractually agreed and do not include
contingent and discretionary features,
including dividend-linked contributions or
contributions subject to contingent events
requiring future verification.
We recognise a net defined benefit asset
when the net defined benefit surplus can
generate a benefit in the form of a refund
or reduction in future contributions to the
plan. The net benefit pension asset is
recognised at the present value of the
benefits that will be available to us
excluding interest and the effect of the
asset ceiling (if any), excluding interest.
Changes in the present value of the net
benefit pension asset are recognised
immediately in other comprehensive
income.
In instances where Trustees have the
ability to declare augmented benefits to
participants, we do not recognise a
defined benefit pension asset and record
the surplus immediately in other
comprehensive income.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00690": { "value": "3.3. Staff costs
Employee costs, such as salaries, paid
absences, and other benefits are
recognised over the period in which the
employees provide the related services to
us.
Employees may receive variable
compensation in cash, in deferred cash
or debt instruments of NatWest Group or
in ordinary shares of NatWest Group plc
subject to deferral, clawback and
forfeiture criteria. We operate a number
of share-based compensation schemes
under which we grant awards of
NatWest Group plc shares and share
options to our employees. Such awards
are subject to vesting conditions.
Variable compensation that is settled in
cash or debt instruments is charged to
the income statement on a straight-line
basis over the period during which
services are provided, taking account of
forfeiture and clawback criteria. The
value of employee services received in
exchange for NatWest Group plc shares
and share options is recognised as an
expense over the vesting period, subject
to deferral, clawback, cancellation and
forfeiture criteria with a corresponding
increase in equity. The fair value of
shares granted is the market price
adjusted for the expected effect of
dividends as employees are not entitled
to dividends until shares are vested.
The fair value of options granted is
determined using option pricing models to
estimate the numbers of shares likely to
vest. These consider the exercise price of
the option, the current share price, the
risk-free interest rate, the expected
volatility of the share price over the life of
the option and other relevant factors
such as the dividend yield.
Defined contribution pension scheme
A scheme where we pay fixed
contributions and there is no legal or
constructive obligation to pay further
contributions or benefits. Contributions
are recognised in the income statement
as employee service costs accrue.
Defined benefit pension scheme
A scheme that defines the benefit an
employee will receive on retirement and
is dependent on one or more factors
such as age, salary, and years of service.
The net of the recognisable scheme
assets and obligations is reported on the
balance sheet in other assets or other
liabilities. The defined benefit obligation is
measured on an actuarial basis.
The charge to the income statement for
pension costs (mainly the service cost
and the net interest on the net defined
benefit asset or liability) is recognised in
operating expenses.
Actuarial gains and losses (i.e. gains
and/or losses on re-measuring the net
defined benefit asset or liability due to
changes in actuarial measurement
assumptions) are recognised in other
comprehensive income in full in the
period in which they arise, and not
subject to recycling to the income
statement.
The difference between scheme assets
and scheme liabilities, the net defined
benefit asset or liability, is recognised on
the balance sheet if the criteria of the
asset ceiling test are met. This requires
the net defined benefit surplus to be
limited to the present value of any
economic benefits available to us in the
form of refunds from the plan or reduced
contributions to it.
We will recognise a liability where a
minimum funding requirement exists for
any of our defined benefit pension
schemes. This reflects agreed minimum
funding and the availability of a net
surplus as described above.
When estimating the liability for minimum
funding requirements we only include
contributions that are substantively or
contractually agreed and do not include
contingent and discretionary features,
including dividend-linked contributions or
contributions subject to contingent events
requiring future verification.
We recognise a net defined benefit asset
when the net defined benefit surplus can
generate a benefit in the form of a refund
or reduction in future contributions to the
plan. The net benefit pension asset is
recognised at the present value of the
benefits that will be available to us
excluding interest and the effect of the
asset ceiling (if any), excluding interest.
Changes in the present value of the net
benefit pension asset are recognised
immediately in other comprehensive
income.
In instances where Trustees have the
ability to declare augmented benefits to
participants, we do not recognise a
defined benefit pension asset and record
the surplus immediately in other
comprehensive income.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00231": { "value": "3.3. Staff costs
Employee costs, such as salaries, paid
absences, and other benefits are
recognised over the period in which the
employees provide the related services to
us.
Employees may receive variable
compensation in cash, in deferred cash
or debt instruments of NatWest Group or
in ordinary shares of NatWest Group plc
subject to deferral, clawback and
forfeiture criteria. We operate a number
of share-based compensation schemes
under which we grant awards of
NatWest Group plc shares and share
options to our employees. Such awards
are subject to vesting conditions.
Variable compensation that is settled in
cash or debt instruments is charged to
the income statement on a straight-line
basis over the period during which
services are provided, taking account of
forfeiture and clawback criteria. The
value of employee services received in
exchange for NatWest Group plc shares
and share options is recognised as an
expense over the vesting period, subject
to deferral, clawback, cancellation and
forfeiture criteria with a corresponding
increase in equity. The fair value of
shares granted is the market price
adjusted for the expected effect of
dividends as employees are not entitled
to dividends until shares are vested.
The fair value of options granted is
determined using option pricing models to
estimate the numbers of shares likely to
vest. These consider the exercise price of
the option, the current share price, the
risk-free interest rate, the expected
volatility of the share price over the life of
the option and other relevant factors
such as the dividend yield.
Defined contribution pension scheme
A scheme where we pay fixed
contributions and there is no legal or
constructive obligation to pay further
contributions or benefits. Contributions
are recognised in the income statement
as employee service costs accrue.
Defined benefit pension scheme
A scheme that defines the benefit an
employee will receive on retirement and
is dependent on one or more factors
such as age, salary, and years of service.
The net of the recognisable scheme
assets and obligations is reported on the
balance sheet in other assets or other
liabilities. The defined benefit obligation is
measured on an actuarial basis.
The charge to the income statement for
pension costs (mainly the service cost
and the net interest on the net defined
benefit asset or liability) is recognised in
operating expenses.
Actuarial gains and losses (i.e. gains
and/or losses on re-measuring the net
defined benefit asset or liability due to
changes in actuarial measurement
assumptions) are recognised in other
comprehensive income in full in the
period in which they arise, and not
subject to recycling to the income
statement.
The difference between scheme assets
and scheme liabilities, the net defined
benefit asset or liability, is recognised on
the balance sheet if the criteria of the
asset ceiling test are met. This requires
the net defined benefit surplus to be
limited to the present value of any
economic benefits available to us in the
form of refunds from the plan or reduced
contributions to it.
We will recognise a liability where a
minimum funding requirement exists for
any of our defined benefit pension
schemes. This reflects agreed minimum
funding and the availability of a net
surplus as described above.
When estimating the liability for minimum
funding requirements we only include
contributions that are substantively or
contractually agreed and do not include
contingent and discretionary features,
including dividend-linked contributions or
contributions subject to contingent events
requiring future verification.
We recognise a net defined benefit asset
when the net defined benefit surplus can
generate a benefit in the form of a refund
or reduction in future contributions to the
plan. The net benefit pension asset is
recognised at the present value of the
benefits that will be available to us
excluding interest and the effect of the
asset ceiling (if any), excluding interest.
Changes in the present value of the net
benefit pension asset are recognised
immediately in other comprehensive
income.
In instances where Trustees have the
ability to declare augmented benefits to
participants, we do not recognise a
defined benefit pension asset and record
the surplus immediately in other
comprehensive income.3 Operating expenses
Operating expenses are expenses NatWest Group incurs in the running of its business such as all staff costs (for example salaries, bonus awards, pension costs and
\n
social security costs), premises and equipment costs that arise from the occupation of premises and the use of equipment, depreciation and amortisation and other
\n
administrative expenses.
\n
For accounting policy information refer to Accounting policies 3.3, 3.4 and 3.5.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Salaries
2,477
2,483
2,250
Bonus awards
411
353
334
Temporary and contract costs
162
199
234
Social security costs
371
352
328
Pension costs
311
313
363
- defined benefit schemes (Note 5)
86
122
205
- defined contribution schemes
225
191
158
Other
329
201
207
Staff costs
4,061
3,901
3,716
Premises and equipment
1,211
1,153
1,112
UK bank levy
142
109
101
Depreciation and amortisation
(1)
1,058
934
833
Other administrative expenses
(2)
1,677
1,899
1,925
Administrative expenses
4,088
4,095
3,971
\u00a0
8,149
7,996
7,687
\n
(1)
Includes depreciation of right of use assets of \u00a3103 million (2023 - \u00a3104 million; 2022 - \u00a3119 million).
\n
(2)
Includes litigation and conduct costs, net of amounts recovered. Refer to Note 20 for further details.
\n
The average number of persons employed, rounded to the nearest hundred, during the
\n
year, excluding temporary staff, was 60,700 (2023 \u2013 61,500; 2022 \u2013 60,000). The
\n
average number of temporary employees during 2024 was 1,400 (2023 \u2013 2,100; 2022 \u2013
\n
2,500).
\n
The number of persons employed at 31 December, excluding temporary staff, by
\n
reportable segment, was as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Continuing operations
2024
2023
2022
Retail Banking
13,000
14,300
15,100
Private Banking
2,200
2,400
2,300
Commercial & Institutional
12,700
12,400
12,200
Central items & other
(1)
31,800
32,500
31,400
Total
59,700
61,600
61,000
UK
40,100
41,500
41,200
India
17,600
16,900
15,700
Poland
800
1,500
1,500
USA
300
300
300
Republic of Ireland
100
400
1,400
Rest of the World
800
1,000
900
Total
59,700
61,600
61,000
\n
(1)
Central items & other includes Ulster Bank RoI. The total number of persons employed in Ulster Bank RoI of 200 (2023 \u2013
\n
500; 2022 \u2013 2,200) includes nil people employed in discontinued operations at 31 December 2024 (2023 \u2013 nil; 2022 \u2013
\n
400).
Share-based payments
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Award plan
Eligible employees
Nature of award
Vesting conditions (1)
Settlement
Sharesave
UK, Channel Islands, Gibraltar,
Option to buy shares under
Continuing employment or leavers in certain circumstances
2025 to 2029
\u00a0
Isle of Man, Poland and India.
employee savings plan
\u00a0 \u00a0
Deferred performance
All
Awards of ordinary shares
Continuing employment or leavers in certain circumstances
2025 to 2032
awards
\u00a0
and conditional shares
\u00a0 \u00a0
Long-term incentives
(2,3)
Senior employees
Awards of ordinary shares
Continuing employment or leavers in certain circumstances
2025 to 2031
\u00a0 \u00a0
and conditional shares
and/or satisfaction of the pre-vesting assessment and underpins
\u00a0
Sharing in Success
(
4)
All
Awards of ordinary shares
Future continuing employment and achievement of pre-defined
2025
\u00a0 \u00a0
and conditional shares
measures.
\u00a0
\n
(1)
All awards are subject to discretion of Remuneration Committee.
(2)
Long-term incentives include buy-out awards offered to compensate certain new hires for the loss of forfeited awards from their previous employment.
Existing Long-term incentives vest over 3 to 7 years.
(3)
The existing Restricted Share Plan scheme would be replaced by Performance Share Plan in 2025.
(4)
In 2024 16 million shares at total value of \u00a349 million were granted and vested under Sharing in Success.
Sharesave
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Average
Shares
Average
Shares
Average
Shares
\u00a0
exercise
under
exercise
under
exercise
under
\u00a0
price
option
price
option
price
option
\u00a0
\u00a3
(million)
\u00a3
(million)
\u00a3
(million)
At 1 January
1.59
114
1.63
99
1.61
95
Granted
2.94
24
1.42
43
1.86
25
Exercised
1.52
(32)
1.44
(23)
1.88
(15)
Cancelled
1.60
(5)
1.72
(5)
1.60
(6)
At 31 December
1.93
101
1.59
114
1.63
99
\n
The fair value of Sharesave options granted in 2024 was determined using a pricing
model that included: expected volatility of share price determined at the grant date
based on historical share price volatility over a period of up to five years; expected
option lives that equal the vesting period; estimated dividend yield on equity shares; and
risk-free interest rates determined from UK gilts with terms matching the expected lives
of the options.
The exercise price of options and the fair value on granting awards of fully paid shares is
the average market price over the five trading days (three trading days for Sharesave)
preceding grant date. When estimating the fair value of the award, the number of
shares granted and the prevailing market price as defined on page 151 are used.
The
fair value of the award is recognised as services are provided by employees over the
vesting period.
Options are exercisable within six months of vesting; 8.9 million options were exercisable
at 31 December 2024 (2023 \u2013 19.0 million; 2022 \u2013 5.1 million). The weighted average
share price at the date of exercise of options was \u00a34.03 (2023 - \u00a32.20; 2022 - \u00a32.59). At
31 December 2024, exercise prices ranged from \u00a31.42 to \u00a32.94 (2023 - \u00a31.12 to \u00a31.89;
2022 - \u00a31.12 to \u00a32.27) and the remaining average contractual life was 2.35 years (2023
\u2013 2.25 years; 2022 \u2013 2 years). The fair value of options granted in 2024 was \u00a328.3
million (2023 - \u00a327.3 million; 2022 - \u00a322.1 million).
Deferred performance awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Value at
Shares
Value at
Shares
Value at
Shares
\u00a0
grant
awarded
grant
awarded
grant
awarded
\u00a0
\u00a3m
(million)
\u00a3m
(million)
\u00a3m
(million)
At 1 January
76
35
93
46
132
65
Granted
50
23
52
20
46
20
Forfeited
(3)
(1)
(2)
(1)
(4)
(2)
Vested
(57)
(27)
(67)
(30)
(81)
(37)
At 31 December
66
30
76
35
93
46
\n
The awards granted in 2024 vest in equal tranches on the anniversary of the award,
predominantly over three years.
Long-term incentives
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Value at
Shares
Value at
Shares
Value at
Shares
\u00a0
grant
awarded
grant
awarded
grant
awarded
\u00a0
\u00a3m
(million)
\u00a3m
(million)
\u00a3m
(million)
At 1 January
49
23
49
23
44
21
Granted
9
5
11
5
16
7
Vested/exercised
(11)
(5)
(10)
(4)
(10)
(4)
Lapsed
(7)
(4)
(1)
(1)
(1)
(1)
At 31 December
40
19
49
23
49
23
\n
The market value of awards vested/exercised in 2024 was \u00a319.3 million (2023 - \u00a39.5
million; 2022 - \u00a311.7 million).
Bonus awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Change
\u00a0
\u00a3m
\u00a3m
%
March awards
(1)
63
43
47%
Deferred cash awards
324
262
24%
Deferred share awards
61
51
20%
Total deferred bonus awards
385
313
23%
Total bonus awards
(2)
448
356
26%
Bonus awards as a % of operating profit before tax and bonus awards
7%
5%
\u00a0
Proportion of bonus awards that are deferred
\u00a0 \u00a0 \u00a0
- deferred cash awards
86%
86%
\u00a0
- deferred share awards
14%
14%
\u00a0
\n
Reconciliation of bonus awards to income statement charge
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Bonus awarded
448
356
370
Less: deferral of charge for amounts awarded for current year
(144)
(114)
(127)
Income statement charge for amounts awarded in current year
304
242
243
Add: current year charge for amounts deferred from prior years
109
115
94
Less: forfeiture of amounts deferred from prior years
(2)
(4)
(3)
Income statement charge for amounts deferred from prior years
107
111
91
Income statement charge for bonus awards
(2)
411
353
334
\n
(1)
March cash awards are limited to \u00a32,000 for all employees.
(2)
Excludes other performance-related compensation.
Year in which income statement charge is expected to be taken for deferred bonus awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Actual
Expected
\u00a0
2022
2023
2024
2025
2026 and beyond
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bonus awards deferred from 2022 and earlier
94
115
17
8
6
Bonus awards deferred from 2023
-
-
92
8
9
Less: forfeiture of amounts deferred from prior years
(3)
(4)
(2)
-
-
Bonus awards deferred for 2024
-
-
-
122
22
\u00a0
91
111
107
138
37
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00233": { "value": "3.3. Staff costs
Employee costs, such as salaries, paid
absences, and other benefits are
recognised over the period in which the
employees provide the related services to
us.
Employees may receive variable
compensation in cash, in deferred cash
or debt instruments of NatWest Group or
in ordinary shares of NatWest Group plc
subject to deferral, clawback and
forfeiture criteria. We operate a number
of share-based compensation schemes
under which we grant awards of
NatWest Group plc shares and share
options to our employees. Such awards
are subject to vesting conditions.
Variable compensation that is settled in
cash or debt instruments is charged to
the income statement on a straight-line
basis over the period during which
services are provided, taking account of
forfeiture and clawback criteria. The
value of employee services received in
exchange for NatWest Group plc shares
and share options is recognised as an
expense over the vesting period, subject
to deferral, clawback, cancellation and
forfeiture criteria with a corresponding
increase in equity. The fair value of
shares granted is the market price
adjusted for the expected effect of
dividends as employees are not entitled
to dividends until shares are vested.
The fair value of options granted is
determined using option pricing models to
estimate the numbers of shares likely to
vest. These consider the exercise price of
the option, the current share price, the
risk-free interest rate, the expected
volatility of the share price over the life of
the option and other relevant factors
such as the dividend yield.
Defined contribution pension scheme
A scheme where we pay fixed
contributions and there is no legal or
constructive obligation to pay further
contributions or benefits. Contributions
are recognised in the income statement
as employee service costs accrue.
Defined benefit pension scheme
A scheme that defines the benefit an
employee will receive on retirement and
is dependent on one or more factors
such as age, salary, and years of service.
The net of the recognisable scheme
assets and obligations is reported on the
balance sheet in other assets or other
liabilities. The defined benefit obligation is
measured on an actuarial basis.
The charge to the income statement for
pension costs (mainly the service cost
and the net interest on the net defined
benefit asset or liability) is recognised in
operating expenses.
Actuarial gains and losses (i.e. gains
and/or losses on re-measuring the net
defined benefit asset or liability due to
changes in actuarial measurement
assumptions) are recognised in other
comprehensive income in full in the
period in which they arise, and not
subject to recycling to the income
statement.
The difference between scheme assets
and scheme liabilities, the net defined
benefit asset or liability, is recognised on
the balance sheet if the criteria of the
asset ceiling test are met. This requires
the net defined benefit surplus to be
limited to the present value of any
economic benefits available to us in the
form of refunds from the plan or reduced
contributions to it.
We will recognise a liability where a
minimum funding requirement exists for
any of our defined benefit pension
schemes. This reflects agreed minimum
funding and the availability of a net
surplus as described above.
When estimating the liability for minimum
funding requirements we only include
contributions that are substantively or
contractually agreed and do not include
contingent and discretionary features,
including dividend-linked contributions or
contributions subject to contingent events
requiring future verification.
We recognise a net defined benefit asset
when the net defined benefit surplus can
generate a benefit in the form of a refund
or reduction in future contributions to the
plan. The net benefit pension asset is
recognised at the present value of the
benefits that will be available to us
excluding interest and the effect of the
asset ceiling (if any), excluding interest.
Changes in the present value of the net
benefit pension asset are recognised
immediately in other comprehensive
income.
In instances where Trustees have the
ability to declare augmented benefits to
participants, we do not recognise a
defined benefit pension asset and record
the surplus immediately in other
comprehensive income.3 Operating expenses
Operating expenses are expenses NatWest Group incurs in the running of its business such as all staff costs (for example salaries, bonus awards, pension costs and
\n
social security costs), premises and equipment costs that arise from the occupation of premises and the use of equipment, depreciation and amortisation and other
\n
administrative expenses.
\n
For accounting policy information refer to Accounting policies 3.3, 3.4 and 3.5.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Salaries
2,477
2,483
2,250
Bonus awards
411
353
334
Temporary and contract costs
162
199
234
Social security costs
371
352
328
Pension costs
311
313
363
- defined benefit schemes (Note 5)
86
122
205
- defined contribution schemes
225
191
158
Other
329
201
207
Staff costs
4,061
3,901
3,716
Premises and equipment
1,211
1,153
1,112
UK bank levy
142
109
101
Depreciation and amortisation
(1)
1,058
934
833
Other administrative expenses
(2)
1,677
1,899
1,925
Administrative expenses
4,088
4,095
3,971
\u00a0
8,149
7,996
7,687
\n
(1)
Includes depreciation of right of use assets of \u00a3103 million (2023 - \u00a3104 million; 2022 - \u00a3119 million).
\n
(2)
Includes litigation and conduct costs, net of amounts recovered. Refer to Note 20 for further details.
\n
The average number of persons employed, rounded to the nearest hundred, during the
\n
year, excluding temporary staff, was 60,700 (2023 \u2013 61,500; 2022 \u2013 60,000). The
\n
average number of temporary employees during 2024 was 1,400 (2023 \u2013 2,100; 2022 \u2013
\n
2,500).
\n
The number of persons employed at 31 December, excluding temporary staff, by
\n
reportable segment, was as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Continuing operations
2024
2023
2022
Retail Banking
13,000
14,300
15,100
Private Banking
2,200
2,400
2,300
Commercial & Institutional
12,700
12,400
12,200
Central items & other
(1)
31,800
32,500
31,400
Total
59,700
61,600
61,000
UK
40,100
41,500
41,200
India
17,600
16,900
15,700
Poland
800
1,500
1,500
USA
300
300
300
Republic of Ireland
100
400
1,400
Rest of the World
800
1,000
900
Total
59,700
61,600
61,000
\n
(1)
Central items & other includes Ulster Bank RoI. The total number of persons employed in Ulster Bank RoI of 200 (2023 \u2013
\n
500; 2022 \u2013 2,200) includes nil people employed in discontinued operations at 31 December 2024 (2023 \u2013 nil; 2022 \u2013
\n
400).
Share-based payments
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Award plan
Eligible employees
Nature of award
Vesting conditions (1)
Settlement
Sharesave
UK, Channel Islands, Gibraltar,
Option to buy shares under
Continuing employment or leavers in certain circumstances
2025 to 2029
\u00a0
Isle of Man, Poland and India.
employee savings plan
\u00a0 \u00a0
Deferred performance
All
Awards of ordinary shares
Continuing employment or leavers in certain circumstances
2025 to 2032
awards
\u00a0
and conditional shares
\u00a0 \u00a0
Long-term incentives
(2,3)
Senior employees
Awards of ordinary shares
Continuing employment or leavers in certain circumstances
2025 to 2031
\u00a0 \u00a0
and conditional shares
and/or satisfaction of the pre-vesting assessment and underpins
\u00a0
Sharing in Success
(
4)
All
Awards of ordinary shares
Future continuing employment and achievement of pre-defined
2025
\u00a0 \u00a0
and conditional shares
measures.
\u00a0
\n
(1)
All awards are subject to discretion of Remuneration Committee.
(2)
Long-term incentives include buy-out awards offered to compensate certain new hires for the loss of forfeited awards from their previous employment.
Existing Long-term incentives vest over 3 to 7 years.
(3)
The existing Restricted Share Plan scheme would be replaced by Performance Share Plan in 2025.
(4)
In 2024 16 million shares at total value of \u00a349 million were granted and vested under Sharing in Success.
Sharesave
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Average
Shares
Average
Shares
Average
Shares
\u00a0
exercise
under
exercise
under
exercise
under
\u00a0
price
option
price
option
price
option
\u00a0
\u00a3
(million)
\u00a3
(million)
\u00a3
(million)
At 1 January
1.59
114
1.63
99
1.61
95
Granted
2.94
24
1.42
43
1.86
25
Exercised
1.52
(32)
1.44
(23)
1.88
(15)
Cancelled
1.60
(5)
1.72
(5)
1.60
(6)
At 31 December
1.93
101
1.59
114
1.63
99
\n
The fair value of Sharesave options granted in 2024 was determined using a pricing
model that included: expected volatility of share price determined at the grant date
based on historical share price volatility over a period of up to five years; expected
option lives that equal the vesting period; estimated dividend yield on equity shares; and
risk-free interest rates determined from UK gilts with terms matching the expected lives
of the options.
The exercise price of options and the fair value on granting awards of fully paid shares is
the average market price over the five trading days (three trading days for Sharesave)
preceding grant date. When estimating the fair value of the award, the number of
shares granted and the prevailing market price as defined on page 151 are used.
The
fair value of the award is recognised as services are provided by employees over the
vesting period.
Options are exercisable within six months of vesting; 8.9 million options were exercisable
at 31 December 2024 (2023 \u2013 19.0 million; 2022 \u2013 5.1 million). The weighted average
share price at the date of exercise of options was \u00a34.03 (2023 - \u00a32.20; 2022 - \u00a32.59). At
31 December 2024, exercise prices ranged from \u00a31.42 to \u00a32.94 (2023 - \u00a31.12 to \u00a31.89;
2022 - \u00a31.12 to \u00a32.27) and the remaining average contractual life was 2.35 years (2023
\u2013 2.25 years; 2022 \u2013 2 years). The fair value of options granted in 2024 was \u00a328.3
million (2023 - \u00a327.3 million; 2022 - \u00a322.1 million).
Deferred performance awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Value at
Shares
Value at
Shares
Value at
Shares
\u00a0
grant
awarded
grant
awarded
grant
awarded
\u00a0
\u00a3m
(million)
\u00a3m
(million)
\u00a3m
(million)
At 1 January
76
35
93
46
132
65
Granted
50
23
52
20
46
20
Forfeited
(3)
(1)
(2)
(1)
(4)
(2)
Vested
(57)
(27)
(67)
(30)
(81)
(37)
At 31 December
66
30
76
35
93
46
\n
The awards granted in 2024 vest in equal tranches on the anniversary of the award,
predominantly over three years.
Long-term incentives
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Value at
Shares
Value at
Shares
Value at
Shares
\u00a0
grant
awarded
grant
awarded
grant
awarded
\u00a0
\u00a3m
(million)
\u00a3m
(million)
\u00a3m
(million)
At 1 January
49
23
49
23
44
21
Granted
9
5
11
5
16
7
Vested/exercised
(11)
(5)
(10)
(4)
(10)
(4)
Lapsed
(7)
(4)
(1)
(1)
(1)
(1)
At 31 December
40
19
49
23
49
23
\n
The market value of awards vested/exercised in 2024 was \u00a319.3 million (2023 - \u00a39.5
million; 2022 - \u00a311.7 million).
Bonus awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Change
\u00a0
\u00a3m
\u00a3m
%
March awards
(1)
63
43
47%
Deferred cash awards
324
262
24%
Deferred share awards
61
51
20%
Total deferred bonus awards
385
313
23%
Total bonus awards
(2)
448
356
26%
Bonus awards as a % of operating profit before tax and bonus awards
7%
5%
\u00a0
Proportion of bonus awards that are deferred
\u00a0 \u00a0 \u00a0
- deferred cash awards
86%
86%
\u00a0
- deferred share awards
14%
14%
\u00a0
\n
Reconciliation of bonus awards to income statement charge
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Bonus awarded
448
356
370
Less: deferral of charge for amounts awarded for current year
(144)
(114)
(127)
Income statement charge for amounts awarded in current year
304
242
243
Add: current year charge for amounts deferred from prior years
109
115
94
Less: forfeiture of amounts deferred from prior years
(2)
(4)
(3)
Income statement charge for amounts deferred from prior years
107
111
91
Income statement charge for bonus awards
(2)
411
353
334
\n
(1)
March cash awards are limited to \u00a32,000 for all employees.
(2)
Excludes other performance-related compensation.
Year in which income statement charge is expected to be taken for deferred bonus awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Actual
Expected
\u00a0
2022
2023
2024
2025
2026 and beyond
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bonus awards deferred from 2022 and earlier
94
115
17
8
6
Bonus awards deferred from 2023
-
-
92
8
9
Less: forfeiture of amounts deferred from prior years
(3)
(4)
(2)
-
-
Bonus awards deferred for 2024
-
-
-
122
22
\u00a0
91
111
107
138
37
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00691": { "value": "3.3. Staff costs
Employee costs, such as salaries, paid
absences, and other benefits are
recognised over the period in which the
employees provide the related services to
us.
Employees may receive variable
compensation in cash, in deferred cash
or debt instruments of NatWest Group or
in ordinary shares of NatWest Group plc
subject to deferral, clawback and
forfeiture criteria. We operate a number
of share-based compensation schemes
under which we grant awards of
NatWest Group plc shares and share
options to our employees. Such awards
are subject to vesting conditions.
Variable compensation that is settled in
cash or debt instruments is charged to
the income statement on a straight-line
basis over the period during which
services are provided, taking account of
forfeiture and clawback criteria. The
value of employee services received in
exchange for NatWest Group plc shares
and share options is recognised as an
expense over the vesting period, subject
to deferral, clawback, cancellation and
forfeiture criteria with a corresponding
increase in equity. The fair value of
shares granted is the market price
adjusted for the expected effect of
dividends as employees are not entitled
to dividends until shares are vested.
The fair value of options granted is
determined using option pricing models to
estimate the numbers of shares likely to
vest. These consider the exercise price of
the option, the current share price, the
risk-free interest rate, the expected
volatility of the share price over the life of
the option and other relevant factors
such as the dividend yield.
Defined contribution pension scheme
A scheme where we pay fixed
contributions and there is no legal or
constructive obligation to pay further
contributions or benefits. Contributions
are recognised in the income statement
as employee service costs accrue.
Defined benefit pension scheme
A scheme that defines the benefit an
employee will receive on retirement and
is dependent on one or more factors
such as age, salary, and years of service.
The net of the recognisable scheme
assets and obligations is reported on the
balance sheet in other assets or other
liabilities. The defined benefit obligation is
measured on an actuarial basis.
The charge to the income statement for
pension costs (mainly the service cost
and the net interest on the net defined
benefit asset or liability) is recognised in
operating expenses.
Actuarial gains and losses (i.e. gains
and/or losses on re-measuring the net
defined benefit asset or liability due to
changes in actuarial measurement
assumptions) are recognised in other
comprehensive income in full in the
period in which they arise, and not
subject to recycling to the income
statement.
The difference between scheme assets
and scheme liabilities, the net defined
benefit asset or liability, is recognised on
the balance sheet if the criteria of the
asset ceiling test are met. This requires
the net defined benefit surplus to be
limited to the present value of any
economic benefits available to us in the
form of refunds from the plan or reduced
contributions to it.
We will recognise a liability where a
minimum funding requirement exists for
any of our defined benefit pension
schemes. This reflects agreed minimum
funding and the availability of a net
surplus as described above.
When estimating the liability for minimum
funding requirements we only include
contributions that are substantively or
contractually agreed and do not include
contingent and discretionary features,
including dividend-linked contributions or
contributions subject to contingent events
requiring future verification.
We recognise a net defined benefit asset
when the net defined benefit surplus can
generate a benefit in the form of a refund
or reduction in future contributions to the
plan. The net benefit pension asset is
recognised at the present value of the
benefits that will be available to us
excluding interest and the effect of the
asset ceiling (if any), excluding interest.
Changes in the present value of the net
benefit pension asset are recognised
immediately in other comprehensive
income.
In instances where Trustees have the
ability to declare augmented benefits to
participants, we do not recognise a
defined benefit pension asset and record
the surplus immediately in other
comprehensive income.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00717": { "value": "3.4. Intangible assets
Intangible assets are identifiable non-
monetary assets without physical
substance acquired or developed by us,
and are stated at cost less accumulated
amortisation and impairment losses.
Amortisation is a method to spread the
cost of such assets over time in the
income statement.
This is charged to the income statement
over the assets' estimated useful
economic lives using methods that best
reflect the pattern of economic benefits.
The estimated useful economic lives are:
Computer software 3 to 10 years
Other acquired intangibles 3 to 5 years
Direct costs relating to the development
of internal-use computer software are
reported on the balance sheet after
technical feasibility and economic viability
have been established. These direct costs
include payroll, the costs of materials and
services, and directly attributable
overheads. Capitalisation of costs ceases
when the software can operate as
intended.
During and after development,
accumulated costs are reviewed for
impairment against the benefits that the
software is expected to generate. Costs
incurred prior to the establishment of
technical feasibility and economic viability
are expensed to the income statement as
incurred, as are all training costs and
general overheads. The costs of licences
to use computer software that are
expected to generate economic benefits
beyond three years are also reported on
the balance sheet.
Goodwill on the acquisition of a subsidiary
is the excess of the fair value of the
consideration paid, the fair value of any
existing interest in the subsidiary and the
amount of any non-controlling interest
measured either at fair value or at its
share of the subsidiary\u2019s net assets over
the net fair value of the subsidiary\u2019s
identifiable assets, liabilities, and
contingent liabilities.
Goodwill is measured at initial cost less
any subsequent impairment losses. The
gain or loss on the disposal of a
subsidiary includes the carrying value of
any related goodwill.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00716": { "value": "3.4. Intangible assets
Intangible assets are identifiable non-
monetary assets without physical
substance acquired or developed by us,
and are stated at cost less accumulated
amortisation and impairment losses.
Amortisation is a method to spread the
cost of such assets over time in the
income statement.
This is charged to the income statement
over the assets' estimated useful
economic lives using methods that best
reflect the pattern of economic benefits.
The estimated useful economic lives are:
Computer software 3 to 10 years
Other acquired intangibles 3 to 5 years
Direct costs relating to the development
of internal-use computer software are
reported on the balance sheet after
technical feasibility and economic viability
have been established. These direct costs
include payroll, the costs of materials and
services, and directly attributable
overheads. Capitalisation of costs ceases
when the software can operate as
intended.
During and after development,
accumulated costs are reviewed for
impairment against the benefits that the
software is expected to generate. Costs
incurred prior to the establishment of
technical feasibility and economic viability
are expensed to the income statement as
incurred, as are all training costs and
general overheads. The costs of licences
to use computer software that are
expected to generate economic benefits
beyond three years are also reported on
the balance sheet.
Goodwill on the acquisition of a subsidiary
is the excess of the fair value of the
consideration paid, the fair value of any
existing interest in the subsidiary and the
amount of any non-controlling interest
measured either at fair value or at its
share of the subsidiary\u2019s net assets over
the net fair value of the subsidiary\u2019s
identifiable assets, liabilities, and
contingent liabilities.
Goodwill is measured at initial cost less
any subsequent impairment losses. The
gain or loss on the disposal of a
subsidiary includes the carrying value of
any related goodwill.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00715": { "value": "3.4. Intangible assets
Intangible assets are identifiable non-
monetary assets without physical
substance acquired or developed by us,
and are stated at cost less accumulated
amortisation and impairment losses.
Amortisation is a method to spread the
cost of such assets over time in the
income statement.
This is charged to the income statement
over the assets' estimated useful
economic lives using methods that best
reflect the pattern of economic benefits.
The estimated useful economic lives are:
Computer software 3 to 10 years
Other acquired intangibles 3 to 5 years
Direct costs relating to the development
of internal-use computer software are
reported on the balance sheet after
technical feasibility and economic viability
have been established. These direct costs
include payroll, the costs of materials and
services, and directly attributable
overheads. Capitalisation of costs ceases
when the software can operate as
intended.
During and after development,
accumulated costs are reviewed for
impairment against the benefits that the
software is expected to generate. Costs
incurred prior to the establishment of
technical feasibility and economic viability
are expensed to the income statement as
incurred, as are all training costs and
general overheads. The costs of licences
to use computer software that are
expected to generate economic benefits
beyond three years are also reported on
the balance sheet.
Goodwill on the acquisition of a subsidiary
is the excess of the fair value of the
consideration paid, the fair value of any
existing interest in the subsidiary and the
amount of any non-controlling interest
measured either at fair value or at its
share of the subsidiary\u2019s net assets over
the net fair value of the subsidiary\u2019s
identifiable assets, liabilities, and
contingent liabilities.
Goodwill is measured at initial cost less
any subsequent impairment losses. The
gain or loss on the disposal of a
subsidiary includes the carrying value of
any related goodwill.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00718": { "value": "Goodwill on the acquisition of a subsidiary
is the excess of the fair value of the
consideration paid, the fair value of any
existing interest in the subsidiary and the
amount of any non-controlling interest
measured either at fair value or at its
share of the subsidiary\u2019s net assets over
the net fair value of the subsidiary\u2019s
identifiable assets, liabilities, and
contingent liabilities.
Goodwill is measured at initial cost less
any subsequent impairment losses. The
gain or loss on the disposal of a
subsidiary includes the carrying value of
any related goodwill.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00719": { "value": "3.5. Impairment of non-financial
assets
Goodwill is tested for impairment annually
or more frequently if events or changes
in circumstances indicate that it might be
impaired.
At each balance sheet date, we assess
whether there is any indication that other
intangible assets or property, plant and
equipment are impaired. If any such
indication exists, we estimate the
recoverable amount of the asset and
compare it to its balance sheet value to
calculate if an impairment loss should be
recognised in the income statement. A
reversal of an impairment loss on other
intangible assets or property, plant and
equipment is recognised in the income
statement provided the increased
carrying value is not greater than it
would have been had no impairment loss
been recognised.
The recoverable amount of an asset that
does not generate cash flows that are
independent from those of other assets
or groups of assets, is determined as part
of the cash-generating unit to which the
asset belongs.
A cash-generating unit is the smallest
identifiable group of assets that
generates cash inflows that are largely
independent of the cash inflows from
other assets or groups of assets. For the
purposes of impairment testing, goodwill
acquired in a business combination is
allocated to our cash-generating units or
groups of cash-generating units expected
to benefit from the combination.
The recoverable amount of an asset or
cash-generating unit is the higher of its
fair value less cost to sell or its value in
use. Value in use is the present value of
future cash flows from the asset or cash-
generating unit discounted at a rate that
reflects market interest rates adjusted for
risks specific to the asset or cash-
generating unit that have not been
considered in estimating future cash
flows.
The assessment of asset impairment is
based upon value in use. This represents
the value of future cashflows and uses
our five-year revenue and cost forecasts
and the expectation of long term
economic growth beyond this period. The
five-year forecast takes account of
management\u2019s current expectations of
competitiveness and profitability,
including near-term effects of climate
transition risk. The long-term growth rate
reflects external indicators which will
include market expectations on climate
risk. We do not consider any additional
adjustments to this indicator.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00692": { "value": "3.6. Foreign currencies
Foreign exchange differences arising on
the settlement of foreign currency
transactions and from the translation of
monetary assets and liabilities are
reported in income from trading activities
except for differences arising on cash
flow hedges and hedges of net
investments in foreign operations.
Non-monetary items denominated in
foreign currencies that are stated at fair
value are translated into the functional
currency at the foreign exchange rates
ruling at the dates the values are
determined. Translation differences are
recognised in the income statement
except for differences arising on non-
monetary financial assets classified as fair
value through other comprehensive
income.
Income and expenses of foreign
subsidiaries and branches are translated
into sterling at average exchange rates
unless these do not approximate the
foreign exchange rates ruling at the
dates of the transactions. Foreign
exchange differences arising on the
translation of a foreign operation are
recognised in other comprehensive
income. The amount accumulated in
equity is reclassified from equity to the
income statement on disposal of a foreign
operation.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00720": { "value": "3.6. Foreign currencies
Foreign exchange differences arising on
the settlement of foreign currency
transactions and from the translation of
monetary assets and liabilities are
reported in income from trading activities
except for differences arising on cash
flow hedges and hedges of net
investments in foreign operations.
Non-monetary items denominated in
foreign currencies that are stated at fair
value are translated into the functional
currency at the foreign exchange rates
ruling at the dates the values are
determined. Translation differences are
recognised in the income statement
except for differences arising on non-
monetary financial assets classified as fair
value through other comprehensive
income.
Income and expenses of foreign
subsidiaries and branches are translated
into sterling at average exchange rates
unless these do not approximate the
foreign exchange rates ruling at the
dates of the transactions. Foreign
exchange differences arising on the
translation of a foreign operation are
recognised in other comprehensive
income. The amount accumulated in
equity is reclassified from equity to the
income statement on disposal of a foreign
operation.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00725": { "value": "3.8. Financial instruments
Financial instruments are measured at
fair value on initial recognition on the
balance sheet.
Monetary financial assets are classified
into one of the following subsequent
measurement categories (subject to
business model assessment and review of
contractual cash flow for the purposes of
sole payments of principal and interest
where applicable):
\ue001
amortised cost
measured at cost
using the effective interest rate
method, less any impairment
allowance;
\ue001
fair value through other
comprehensive income (FVOCI)
measured at fair value, using the
effective interest rate method and
changes in fair value through other
comprehensive income;
\ue001
mandatory fair value through profit or
loss (MFVTPL)
measured at fair value
and changes in fair value reported in
the income statement; or
\ue001
designated at fair value through profit
or loss (DFV)
measured at fair value
and changes in fair value reported in
the income statement.
Classification by business model reflects
how we manage our financial assets to
generate cash flows. A business model
assessment helps to ascertain the
measurement approach depending on
whether cash flows result from holding
financial assets to collect the contractual
cash flows, from selling those financial
assets, or both.
Business model assessment of assets is
made at portfolio level, being the level at
which they are managed to achieve a
predefined business objective. This is
expected to result in the most consistent
classification of assets because it aligns
with the stated objectives for the
portfolio, its risk management, manager\u2019s
remuneration and the ability to monitor
sales of assets from a portfolio. When a
significant change to our business is
communicated to external parties, we
reassess our business model for
managing those financial assets. We
reclassify financial assets if we have a
significant change to the business model.
A reclassification is applied prospectively
from the reclassification date.
The contractual terms of a financial
asset; any leverage features; prepayment
and extension terms; and discounts or
penalties to interest rates that are part of
meeting environmental, social and
governance targets as well as other
contingent and leverage features, non-
recourse arrangements and features that
could modify the timing and/or amount of
the contractual cash flows that might
reset the effective rate of interest; are
considered in determining whether cash
flows are solely payments of principal and
interest.
Certain financial assets may be
designated at fair value through profit or
loss (DFV) upon initial recognition if such
designation eliminates, or significantly
reduces, accounting mismatch.
Equity shares are measured at fair value
through profit or loss unless specifically
elected as at fair value through other
comprehensive income (FVOCI).
Upon disposal, the cumulative gains or
losses in fair value through other
comprehensive income reserve are
recycled to the income statement for
monetary assets and for non-monetary
assets (equity shares) the cumulative
gains or losses are transferred directly to
retained earnings.
Regular way purchases and sales of
financial assets classified as amortised
cost are recognised on the settlement
date; all other regular way transactions in
financial assets are recognised on the
trade date.
Financial liabilities are classified into one
of following measurement categories:
\ue001
amortised cost measured at cost
using the effective interest rate
method;
\ue001
held for trading measured at fair
value and changes in fair value
reported in income statement; or
\ue001
designated at fair value through profit
or loss measured at fair value and
changes in fair value reported in the
income statement except changes in
fair value attributable to the credit
risk component recognised in other
comprehensive income when no
accounting mismatch occurs.3.11. Derivatives and hedging
Derivatives are reported on the balance
sheet at fair value.
We use derivatives as part of our trading
activities, to manage our own risk such
as interest rate, foreign exchange, or
credit risk or in certain customer
transactions. Not all derivatives used to
manage risk are in hedge accounting
relationships (an IFRS method to reduce
accounting mismatch from changes in
the fair value of the derivatives reported
in the income statement).
Gains and losses arising from changes in
the fair value of derivatives that are not
in hedge relationships are recognised in
Income from trading activities unless
those derivatives are managed together
with financial instruments designated at
fair value; these gains and losses are
included in Other operating income.
Hedge accounting
Hedge accounting relationships are
designated and documented at inception
in line with the requirements of IAS 39
Financial instruments \u2013 Recognition and
Measurement.
The documentation identifies the hedged
item, the hedging instrument and details
of the risk that is being hedged and the
way in which effectiveness will be
assessed at inception and during the
period of the hedge. When designating a
hedging relationship, we consider: the
economic relationship between the
hedged item (including the risk being
hedged) and the hedging instrument; the
nature of the risk; the risk management
objective and strategy for undertaking
the hedge; and the appropriateness of
the method that will be used to assess
hedge effectiveness.
Designated hedging relationships must be
expected to be highly effective both on a
prospective and retrospective basis. This
is assessed using regression techniques
which model the degree of offsetting
between the changes in fair value or
cash flows attributable to the hedged risk
and the changes in fair value of the
designated hedging derivatives.
Ineffectiveness is measured based on
actual levels of offsetting and recognised
in the income statement.
We enter into three types of hedge
accounting relationships.
Fair value hedge
- the gain or loss on the
hedging instrument and the hedged item
attributable to the hedged risk is
recognised in the income statement.
Where the hedged item is measured at
amortised cost, the balance sheet
amount of the hedged item is also
adjusted.
Cash flow hedge
- the effective portion of
the designated hedge relationship is
recognised in other comprehensive
income and the ineffective portion in the
income statement. When the hedged
item (forecasted cash flows) results in the
recognition of a financial asset or financial
liability, the cumulative gain or loss is
reclassified from equity to the income
statement in the same periods in which
the hedged forecasted cash flows affect
the income statement.
Hedge of net investment in a foreign
operation
-
in the hedge of a net
investment in a foreign operation, the
effective portion of the designated hedge
relationship is recognised in other
comprehensive income. Any ineffective
portion is recognised in profit or loss.
Non-derivative financial liabilities as well
as derivatives may be designated as a
hedging instrument in a net investment
hedge.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the
hedge no longer meets the criteria for
hedge accounting i.e. the hedge is not
highly effective in offsetting changes in
fair value or cash flows attributable to the
hedged risk, consistent with the
documented risk management strategy;
the hedging instrument expires or is sold,
terminated or exercised; or if hedge
designation is revoked.
For fair value hedging any cumulative
adjustment is amortised to the income
statement over the life of the hedged
item. Where the hedged item is no longer
on the balance sheet the adjustment to
the hedged item is reported in the
income statement. For cash flow hedging
the cumulative unrealised gain or loss is
reclassified from equity to the income
statement when the hedged cash flows
occur or, if the forecast transaction
results in the recognition of a financial
asset or financial liability, when the
hedged forecast cash flows affect the
income statement. Where a forecast
transaction is no longer expected to
occur, the cumulative unrealised gain or
loss is reclassified from equity to the
income statement immediately.
For net investment hedging on disposal
or partial disposal of a foreign operation,
the amount accumulated in equity is
reclassified from equity to the income
statement.Critical accounting policy: Fair value \u2013 financial
instruments
\n
Financial instruments classified as mandatory fair value through
\n
profit or loss; held-for-trading; designated fair value through
\n
profit or loss; and fair value through other comprehensive
\n
income are recognised in the financial statements at fair value.
\n
All derivatives are measured at fair value.
\n
Fair value is the price that would be received to sell an asset or
\n
paid to transfer a liability in an orderly transaction between
\n
market participants at the measurement date. A fair value
\n
measurement considers the characteristics of the asset or
\n
liability and the assumptions that a market participant would
\n
consider when pricing the asset or liability.
\n
NatWest Group manages some portfolios of financial assets
\n
and financial liabilities based on its net exposure to either
\n
market or credit risk. In these cases, the fair value is derived
\n
from the net risk exposure of that portfolio with portfolio level
\n
adjustments applied to incorporate bid-offer spreads,
\n
counterparty credit risk, and funding costs (refer to \u2018Valuation
\n
Adjustments\u2019).
\n
Where the market for a financial instrument is not active, fair
\n
value is established using a valuation technique. These
\n
valuation techniques involve a degree of estimation, the extent
\n
of which depends on the instrument\u2019s complexity and the
\n
availability of market-based data. The complexity and
\n
uncertainty in the financial instrument\u2019s fair value is categorised
\n
using the fair value hierarchy.
\n
For accounting policy information refer to Accounting policies
\n2.2, 3.8 and 3.11.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00242": { "value": "3.8. Financial instruments
Financial instruments are measured at
fair value on initial recognition on the
balance sheet.
Monetary financial assets are classified
into one of the following subsequent
measurement categories (subject to
business model assessment and review of
contractual cash flow for the purposes of
sole payments of principal and interest
where applicable):
\ue001
amortised cost
measured at cost
using the effective interest rate
method, less any impairment
allowance;
\ue001
fair value through other
comprehensive income (FVOCI)
measured at fair value, using the
effective interest rate method and
changes in fair value through other
comprehensive income;
\ue001
mandatory fair value through profit or
loss (MFVTPL)
measured at fair value
and changes in fair value reported in
the income statement; or
\ue001
designated at fair value through profit
or loss (DFV)
measured at fair value
and changes in fair value reported in
the income statement.
Classification by business model reflects
how we manage our financial assets to
generate cash flows. A business model
assessment helps to ascertain the
measurement approach depending on
whether cash flows result from holding
financial assets to collect the contractual
cash flows, from selling those financial
assets, or both.
Business model assessment of assets is
made at portfolio level, being the level at
which they are managed to achieve a
predefined business objective. This is
expected to result in the most consistent
classification of assets because it aligns
with the stated objectives for the
portfolio, its risk management, manager\u2019s
remuneration and the ability to monitor
sales of assets from a portfolio. When a
significant change to our business is
communicated to external parties, we
reassess our business model for
managing those financial assets. We
reclassify financial assets if we have a
significant change to the business model.
A reclassification is applied prospectively
from the reclassification date.
The contractual terms of a financial
asset; any leverage features; prepayment
and extension terms; and discounts or
penalties to interest rates that are part of
meeting environmental, social and
governance targets as well as other
contingent and leverage features, non-
recourse arrangements and features that
could modify the timing and/or amount of
the contractual cash flows that might
reset the effective rate of interest; are
considered in determining whether cash
flows are solely payments of principal and
interest.
Certain financial assets may be
designated at fair value through profit or
loss (DFV) upon initial recognition if such
designation eliminates, or significantly
reduces, accounting mismatch.
Equity shares are measured at fair value
through profit or loss unless specifically
elected as at fair value through other
comprehensive income (FVOCI).
Upon disposal, the cumulative gains or
losses in fair value through other
comprehensive income reserve are
recycled to the income statement for
monetary assets and for non-monetary
assets (equity shares) the cumulative
gains or losses are transferred directly to
retained earnings.
Regular way purchases and sales of
financial assets classified as amortised
cost are recognised on the settlement
date; all other regular way transactions in
financial assets are recognised on the
trade date.
Financial liabilities are classified into one
of following measurement categories:
\ue001
amortised cost measured at cost
using the effective interest rate
method;
\ue001
held for trading measured at fair
value and changes in fair value
reported in income statement; or
\ue001
designated at fair value through profit
or loss measured at fair value and
changes in fair value reported in the
income statement except changes in
fair value attributable to the credit
risk component recognised in other
comprehensive income when no
accounting mismatch occurs.3.11. Derivatives and hedging
Derivatives are reported on the balance
sheet at fair value.
We use derivatives as part of our trading
activities, to manage our own risk such
as interest rate, foreign exchange, or
credit risk or in certain customer
transactions. Not all derivatives used to
manage risk are in hedge accounting
relationships (an IFRS method to reduce
accounting mismatch from changes in
the fair value of the derivatives reported
in the income statement).
Gains and losses arising from changes in
the fair value of derivatives that are not
in hedge relationships are recognised in
Income from trading activities unless
those derivatives are managed together
with financial instruments designated at
fair value; these gains and losses are
included in Other operating income.
Hedge accounting
Hedge accounting relationships are
designated and documented at inception
in line with the requirements of IAS 39
Financial instruments \u2013 Recognition and
Measurement.
The documentation identifies the hedged
item, the hedging instrument and details
of the risk that is being hedged and the
way in which effectiveness will be
assessed at inception and during the
period of the hedge. When designating a
hedging relationship, we consider: the
economic relationship between the
hedged item (including the risk being
hedged) and the hedging instrument; the
nature of the risk; the risk management
objective and strategy for undertaking
the hedge; and the appropriateness of
the method that will be used to assess
hedge effectiveness.
Designated hedging relationships must be
expected to be highly effective both on a
prospective and retrospective basis. This
is assessed using regression techniques
which model the degree of offsetting
between the changes in fair value or
cash flows attributable to the hedged risk
and the changes in fair value of the
designated hedging derivatives.
Ineffectiveness is measured based on
actual levels of offsetting and recognised
in the income statement.
We enter into three types of hedge
accounting relationships.
Fair value hedge
- the gain or loss on the
hedging instrument and the hedged item
attributable to the hedged risk is
recognised in the income statement.
Where the hedged item is measured at
amortised cost, the balance sheet
amount of the hedged item is also
adjusted.
Cash flow hedge
- the effective portion of
the designated hedge relationship is
recognised in other comprehensive
income and the ineffective portion in the
income statement. When the hedged
item (forecasted cash flows) results in the
recognition of a financial asset or financial
liability, the cumulative gain or loss is
reclassified from equity to the income
statement in the same periods in which
the hedged forecasted cash flows affect
the income statement.
Hedge of net investment in a foreign
operation
-
in the hedge of a net
investment in a foreign operation, the
effective portion of the designated hedge
relationship is recognised in other
comprehensive income. Any ineffective
portion is recognised in profit or loss.
Non-derivative financial liabilities as well
as derivatives may be designated as a
hedging instrument in a net investment
hedge.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the
hedge no longer meets the criteria for
hedge accounting i.e. the hedge is not
highly effective in offsetting changes in
fair value or cash flows attributable to the
hedged risk, consistent with the
documented risk management strategy;
the hedging instrument expires or is sold,
terminated or exercised; or if hedge
designation is revoked.
For fair value hedging any cumulative
adjustment is amortised to the income
statement over the life of the hedged
item. Where the hedged item is no longer
on the balance sheet the adjustment to
the hedged item is reported in the
income statement. For cash flow hedging
the cumulative unrealised gain or loss is
reclassified from equity to the income
statement when the hedged cash flows
occur or, if the forecast transaction
results in the recognition of a financial
asset or financial liability, when the
hedged forecast cash flows affect the
income statement. Where a forecast
transaction is no longer expected to
occur, the cumulative unrealised gain or
loss is reclassified from equity to the
income statement immediately.
For net investment hedging on disposal
or partial disposal of a foreign operation,
the amount accumulated in equity is
reclassified from equity to the income
statement.9 Financial instruments - classification
Financial instruments are contracts that give rise to a financial asset of one entity and a corresponding financial liability or equity instrument of a counterparty entity,
such as cash, derivatives, loans, deposits and settlement balances. This note presents financial instruments classified in accordance with IFRS 9 \u2013 Financial Instruments.
Judgement: classification of financial assets
Classification of financial assets between amortised cost and fair
value through other comprehensive income requires a degree of
judgement in respect of business models and contractual
cashflows.
\ue001
The business model criteria is assessed at a portfolio level to
determine whether assets are classified as held to collect or
held to collect and sell. Information that is considered in
determining the applicable business model includes: the
portfolio\u2019s policies and objectives; how the performance and
risks of the portfolio are managed, evaluated and reported
to management; and the frequency, volume and timing of
sales in prior periods, sales expectation for future periods,
and the reasons for sales.
\ue001
The contractual cash flow characteristics of financial assets
are assessed with reference to whether the cash flows
represent solely payments of principal and interest (SPPI). A
level of judgement is made in assessing terms that could
change the contractual cash flows so that it would not meet
the condition for SPPI, including contingent and leverage
features,
non-recourse arrangements and features that
could modify the time value of money.
For accounting policy information refer to Accounting policies
3.8, 3.9 and 3.11.
The following tables analyse financial assets and liabilities in accordance with the categories of financial
instruments in IFRS 9.
\u00a0 \u00a0 \u00a0 \u00a0\n \n
Amortised
Other
MFVTPL
DFV
FVOCI
cost
assets
Total
Assets
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cash and balances at central banks
92,994
92,994
Trading assets
48,917
48,917
Derivatives
(1)
78,406
78,406
Settlement balances
2,085
2,085
Loans to bank - amortised cost
(2)
6,030
6,030
Loans to customers - amortised cost
(3)
400,326
400,326
Other financial assets
798
5
37,843
24,597
63,243
Intangible assets
7,588
7,588
Other assets
(4)
8,396
8,396
31 December 2024
128,121
5
37,843
526,032
15,984
707,985
Cash and balances at central banks
104,262
104,262
Trading assets
45,551
45,551
Derivatives
(1)
78,904
78,904
Settlement balances
7,231
7,231
Loans to bank - amortised cost
(2)
6,914
6,914
Loans to customers - amortised cost
(3)
381,433
381,433
Other financial assets
703
5
28,699
21,695
51,102
Intangible assets
7,614
7,614
Other assets
(4)
9,662
9,662
31 December 2023
125,158
5
28,699
521,535
17,276
692,673
\n
For the notes to this table refer to the following page.
\n \n
Amortised
Other
Held-for-trading
DFV
cost
liabilities
Total
Liabilities
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bank deposits
(5)
31,452
31,452
Customer deposits
433,490
433,490
Settlement balances
1,729
1,729
Trading liabilities
54,714
54,714
Derivatives
(1)
72,082
72,082
Other financial liabilities
(6)
3,548
57,539
61,087
Subordinated liabilities
234
5,902
6,136
Notes in circulation
3,316
3,316
Other liabilities
(7)
684
3,917
4,601
31 December 2024
126,796
3,782
534,112
3,917
668,607
Bank deposits
(5)
22,190
22,190
Customer deposits
431,377
431,377
Settlement balances
6,645
6,645
Trading liabilities
53,636
53,636
Derivatives
(1)
72,395
72,395
Other financial liabilities
(6)
2,888
52,201
55,089
Subordinated liabilities
237
5,477
5,714
Notes in circulation
3,237
3,237
Other liabilities
(7)
748
4,454
5,202
31 December 2023
126,031
3,125
521,875
4,454
655,485
\n
(1)
Includes net hedging derivatives assets of \u00a3118 million (2023 - \u00a3114 million)
\n
and net hedging derivatives liabilities of \u00a3464 million (2023 - \u00a3270 million).
\n
(2)
Includes items in the course of collection from other banks of \u00a359 million (2023
\n
- \u00a3255 million).
\n
(3)
Includes finance lease receivables of \u00a38,998 million (2023 - \u00a38,731 million).
\n
(4)
Includes assets of disposal groups held at FVTPL of nil (2023 - \u00a3841 million).
\n
The portfolio is classified as level 3 in the fair value hierarchy.
\n
(5)
Includes items in the course of transmission to other banks of \u00a3136 million
\n
(2023 - \u00a392 million).
\n
(6)
The carrying amount of customer deposits designated at fair value through
\n
profit or loss is materially the same as the principal amount for both periods.
\n
No amounts have been recognised in the profit or loss for changes in credit
\n
risk associated with these liabilities as the changes are immaterial both during
\n
the period and cumulatively.
\n
(7)
Includes lease liabilities of \u00a3630 million (2023 - \u00a3670 million), held at amortised
\n
cost.
We originate loans that include features that change the contractual cash flows based on the borrower meeting certain contractually specified environmental, social and governance
(ESG) targets. These are known as ESG-linked, or sustainability-linked, loans. As part of the terms of these loans, the contractual interest rate is reduced or increased if the borrower
meets, or fails to meet, specific targets linked to the activity of the borrower, for example reducing carbon emissions, increasing the level of diversity at Board level, or achieving a
sustainable supply chain. ESG features are first assessed to ascertain whether the adjustment to the contractual cash flows results in a de minimis exposure to risks or volatility in
those contractual cash flows. If this is the case the classification of the loan is not affected. If the effect of the ESG feature is assessed as being more than de minimis, we apply
judgement to ensure that the ESG features do not generate compensation for risks that are not in line with a basic lending arrangement. This includes, amongst other aspects, a
review of the consistency of the ESG targets with the asset or activity of the borrower, and consideration of the targets within our risk appetite. Some of these loans are an integral
part of our climate and sustainable funding and financing target disclosed on page 13.
The table below analyses financial assets forming a component of ESG-linked loans and other products with contractual terms that could change the timing or amount of cash flows.
This is based on balance sheet values as at 31 December and the maximum impact of the potential margin changes on these over a 12 month period.
\u00a0 \u00a0
2024
\u00a0
2023
\u00a0 \u00a0
Positive impact on
Negative impact on
\u00a0
\u00a0
Carrying value
product margin
product margin
Carrying value
\u00a0
\u00a3bn
bps
bps
\u00a3bn
Sustainability-linked loans
6.9
3.1
4.0
6.5
Other products
20.2
-
-
16.1
Lending subject to performance triggers
27.1
\u00a0 \u00a0
22.6
\n
Additional information on finance lease receivables
The following table shows the reconciliation of undiscounted finance lease receivables to net investment in finance leases which are presented under Loans to customers-amortised
cost on the balance sheet.
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Amount receivable under finance leases
\u00a0 \u00a0
Within 1 year
3,493
3,340
1 to 2 years
2,499
2,358
2 to 3 years
1,612
1,625
3 to 4 years
842
900
4 to 5 years
464
388
After 5 years
1,043
1,079
Total lease payments
9,953
9,690
Unguaranteed residual values
150
169
Future drawdowns
(12)
(12)
Unearned income
(1,001)
(1,025)
Present value of lease payments
9,090
8,822
Impairments
(92)
(91)
Net investment in finance leases
8,998
8,731
Financial instruments \u2013 financial assets and liabilities that can be offset
The tables below present information on financial assets and financial liabilities that are offset on the balance sheet under IFRS or subject to enforceable master netting agreements
together with financial collateral received or given.
\n\n \u00a0\n \n
Instruments which can be offset
Potential for offset not recognised by IFRS
Effect of master
Net amount after
Instruments
netting and similar
Cash
Securities
netting agreements and
outside netting
Balance sheet
Gross
IFRS offset
Balance sheet
agreements
collateral
collateral
effect of related collateral
agreements
total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative assets
96,624
(18,746)
77,878
(61,883)
(10,005)
(4,072)
1,918
528
78,406
Derivative liabilities
92,620
(21,027)
71,593
(61,883)
(5,801)
(896)
3,013
489
72,082
Net position
(1)
4,004
2,281
6,285
-
(4,204)
(3,176)
(1,095)
39
6,324
Trading reverse repos
42,261
(15,174)
27,087
(1,469)
-
(25,406)
212
40
27,127
Trading repos
45,033
(15,174)
29,859
(1,469)
-
(28,390)
-
703
30,562
Net position
(2,772)
-
(2,772)
-
-
2,984
212
(663)
(3,435)
Non trading reverse repos
45,600
(8,709)
36,891
(80)
-
(36,811)
-
-
36,891
Non trading repos
22,288
(8,709)
13,579
(80)
-
(13,499)
-
-
13,579
Net position
23,312
-
23,312
-
-
(23,312)
-
-
23,312
2023
Derivative assets
99,023
(20,597)
78,426
(60,355)
(12,284)
(3,408)
2,379
478
78,904
Derivative liabilities
95,734
(23,869)
71,865
(60,355)
(6,788)
(1,663)
3,059
530
72,395
Net position
(1)
3,289
3,272
6,561
-
(5,496)
(1,745)
(680)
(52)
6,509
Trading reverse repos
39,573
(16,257)
23,316
(664)
-
(22,461)
191
378
23,694
Trading repos
42,442
(16,257)
26,185
(664)
-
(25,520)
1
717
26,902
Net position
(2,869)
-
(2,869)
-
-
3,059
190
(339)
(3,208)
Non trading reverse repos
37,477
(9,646)
27,831
(5)
-
(27,826)
-
80
27,911
Non trading repos
23,605
(9,646)
13,959
(5)
-
(13,954)
-
3
13,962
Net position
13,872
-
13,872
-
-
(13,872)
-
77
13,949
\n
(1)
Net IFRS offset balance of \u00a32,281 million (2023 - \u00a33,272 million) relates to variation margin netting reflected on other balance sheet lines.13 Derivatives
Derivative is a term covering a wide range of financial instruments that derive their
fair value from an underlying rate or price, for example interest rates or exchange
rates (the underlying). NatWest Group uses derivatives as a part of its trading activities, to manage its own risks such as interest rate, foreign exchange, or credit risk
and in certain customer transactions. This note
shows contracted volumes of derivatives, how they are used for hedging purposes and the effects of the application of
hedge accounting.
For accounting policy information refer to Accounting policies 3.8 and 3.11.
\n\n \u00a0 \n \n
Notional
Asset
Liability
Traded on
Traded on
Traded on
recognised
Traded over
recognised
Traded over
recognised
Traded over
exchanges
the counter
Total
exchanges
the counter
Total
exchanges
the counter
Total
2024
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Interest rate
1,066
9,267
10,333
20
37,479
37,499
2
31,530
31,532
- Swaps
-
7,015
7,015
-
28,960
28,960
-
23,138
23,138
- Options
736
1,490
2,226
20
8,519
8,539
2
8,392
8,394
- Forwards and futures
330
762
1,092
-
-
-
-
-
-
Exchange rate
1
3,278
3,279
6
40,791
40,797
15
40,291
40,306
- Swaps
-
454
454
-
8,450
8,450
-
8,195
8,195
- Options
1
851
852
6
5,385
5,391
15
5,561
5,576
- Spot, forwards and futures
-
1,973
1,973
-
26,956
26,956
-
26,535
26,535
Credit
-
14
14
-
110
110
-
244
244
Equity and commodity
-
2
2
-
-
-
-
-
-
Total
1,067
12,561
13,628
26
78,380
78,406
17
72,065
72,082
2023
Interest rate
819
9,449
10,268
48
44,515
44,563
34
38,449
38,483
- Swaps
-
6,533
6,533
-
33,807
33,807
-
27,424
27,424
- Options
510
1,674
2,184
48
10,708
10,756
34
11,025
11,059
- Forwards and futures
309
1,242
1,551
-
-
-
-
-
-
Exchange rate
1
3,119
3,120
-
34,161
34,161
-
33,586
33,586
- Swaps
-
449
449
-
8,173
8,173
-
7,370
7,370
- Options
1
674
675
-
4,181
4,181
-
4,197
4,197
- Spot, forwards and futures
-
1,996
1,996
-
21,807
21,807
-
22,019
22,019
Credit
-
15
15
-
180
180
-
326
326
Equity and commodity
-
-
-
-
-
-
-
-
-
Total
820
12,583
13,403
48
78,856
78,904
34
72,361
72,395
\n
Included in the table above is the notional amount of \u00a37,321 billion (2023 - \u00a37,280 billion) of interest rate derivatives that are traded over the counter and settled through central
clearing counterparties. NatWest Group has no other type of derivatives that are settled through central counterparties.
\n\n\n\n\n\n\n\n\n\n\n\n\n
Hedge accounting using
\n
derivatives
\n
NatWest Group applies hedge accounting
\n
to reduce the accounting mismatch
\n
caused in the income statement by using
\n
derivatives to hedge the following risks:
\n
interest rate, foreign exchange and the
\n
foreign exchange risk associated with net
\n
investment in foreign operations.
\n
NatWest Group\u2019s interest rate hedging
\n
relates to the management of NatWest
\n
Group\u2019s non-trading structural interest
\n
rate risk, caused by the mismatch
\n
between fixed interest rates and floating
\n
interest rates on its financial instruments.
\n
NatWest Group manages this risk within
\n
approved limits. Residual risk positions
\n
are hedged with derivatives, principally
\n
interest rate swaps.
\n
Cash flow hedges of interest rate risk
\n
relate to exposures to the variability in
\n
future interest payments and receipts
\n
due to the movement of interest rates on
\n
forecast transactions and on financial
\n
assets and financial liabilities. This
\n
variability in cash flows is hedged by
\n
interest rate swaps, which convert
\n
variable cash flows into fixed. For these
\n
cash flow hedge relationships, the
\n
hedged items are actual and forecast
\n
variable interest rate cash flows arising
\n
from financial assets and financial
\n
liabilities with interest rates linked to the
\n
relevant interest rates, most notably
\n
SOFR, EURIBOR, the European Central
\n
Bank deposit rate, SONIA and the Bank
\n
of England Official Bank Rate. The
\n
variability in cash flows due to
\n
movements in the relevant interest rate is
\n
hedged; this risk component is identified
\n
using the risk management systems of
\n
NatWest Group and encompasses the
\n
majority of cash flow variability risk.
\n
Suitable larger fixed rate financial
\n
instruments are subject to fair value
\n
hedging in line with documented risk
\n
management strategies.
\n
Fair value hedges of interest rate risk
\n
involve interest rate swaps transforming
\n
the fixed interest rate risk in financial
\n
assets and financial liabilities to floating.
\n
The hedged risk is the risk of changes in
\n
the hedged item\u2019s fair value attributable
\n
to changes in the interest rate risk
\n
component of the hedged item. The
\n
significant interest rates identified as risk
\n
components are SOFR, EURIBOR, ESTR
\n
and SONIA. These risk components are
\n
identified using the risk management
\n
systems of NatWest Group and
\n
encompass the majority of the hedged
\n
item\u2019s fair value risk.
\n
NatWest Group hedges the exchange
\n
rate risk of its net investment in foreign
\n
currency denominated operations with
\n
currency borrowings and forward foreign
\n
exchange contracts.
\n
NatWest Group reviews the value of the
\n
investments\u2019 net assets, executing
\n
hedges where appropriate to reduce the
\n
sensitivity of capital ratios to foreign
\n
exchange rate movement. Hedge
\n
accounting relationships will be
\n
designated where required.
\n
Exchange rate risk also arises in NatWest
\n
Group where payments are denominated
\n
in currencies other than the functional
\n
currency. Residual risk positions are
\n
hedged with foreign exchange
\n
derivatives, fixing the exchange rate the
\n
payments will be settled in. The
\n
derivatives are documented as cash flow
\n
hedges.
\n
For all cash flow hedging, fair value
\n
hedge relationships and net investment
\n
hedging, NatWest Group determines that
\n
there is an economic relationship
\n
between the hedged item and hedging
\n
instrument via assessing the initial and
\n
ongoing effectiveness by comparing
\n
movements in the fair value of the
\n
expected highly probable forecast
\n
interest cash flows/ fair value of the
\n
hedged item attributable to the hedged
\n
risk with movements in the fair value of
\n
the expected changes in cash flows from
\n
the hedging instrument. The method
\n
used for comparing movements is either
\n
regression testing, or the dollar offset
\n
method. The method for testing
\n
effectiveness and the period over which
\n
the test is performed depends on the
\n
applicable risk management strategy and
\n
is applied consistently to each risk
\n
management strategy. Hedge
\n
effectiveness is assessed on a cumulative
\n
basis and the determination of
\n
effectiveness is in line with the
\n
requirements of IAS 39.
\n
NatWest Group uses either the actual
\n
ratio between the hedged item and
\n
hedging instrument(s) or one that
\n
minimises hedge ineffectiveness to
\n
establish the hedge ratio for hedge
\n
accounting. Hedge ineffectiveness is
\n
measured in line with the requirements of
\n
IAS 39 and recognised in the income
\n
statement as it arises.
\n\n\n\n\n\n\n\n\n\n\n\n\n
Derivatives in hedge accounting relationships
\n
Included in the table below are derivatives held for hedging purposes as follows.
\n\n \n
2024
2023
Changes in fair value used for
Changes in fair value used for
Notional
Assets
Liabilities
hedge ineffectiveness (1)
Notional
Assets
Liabilities
hedge ineffectiveness (1)
\u00a3bn
\u00a3m
\u00a3m
\u00a3m
\u00a3bn
\u00a3m
\u00a3m
\u00a3m
Fair value hedging
Interest rate contracts
(2)
83.1
1,096
1,965
958
67.6
1,139
2,607
406
Cash flow hedging
Interest rate contracts
167.9
1,424
3,300
581
140.0
1,924
4,970
1,211
Exchange rate contracts
14.4
116
457
1
16.9
112
254
(12)
Net investment hedging
Exchange rate contracts
(3)
0.3
2
1
9
0.3
2
7
(3)
265.7
2,638
5,723
1,549
224.8
3,177
7,838
1,602
IFRS netting and clearing house settlements
(2,520)
(5,259)
(3,063)
(7,568)
118
464
114
270
\n
(1)
The change in fair value used for hedge ineffectiveness includes instruments that were derecognised in the year.
\n
(2)
The hedged risk includes inflation risk.
\n
(3)
In addition to the derivative hedging instruments above, NatWest Group held notionals of \u00a33,144 million (2023 - \u00a33,054 million) of non-derivative hedging instruments with a carrying value of \u00a33,163 million (2023 - \u00a33,061 million), that were used in net
\n
investment hedges. The non-derivative instruments are other financial liabilities - debt securities in issue.
\n
Hedge ineffectiveness
\n
Hedge ineffectiveness recognised in other operating income comprises.
\n\n \n
2024
2023
2022
\u00a3m
\u00a3m
\u00a3m
Fair value hedging
Loss on hedged items attributable to the hedged risk
(954)
(364)
(442)
Gain on the hedging instruments
958
406
482
Fair value hedging ineffectiveness
4
42
40
Cash flow hedging
Interest rate risk
(2)
10
(60)
Cash flow hedging ineffectiveness
(2)
10
(60)
Total
2
52
(20)
\n
The main sources of ineffectiveness for interest rate risk hedge accounting relationships are:
\n
\ue001
The effect of the counterparty credit risk on the fair value of the interest rate swap which is not reflected in the fair value of the hedged item attributable to the change in interest
\n
rate (fair value hedge);
\n
\ue001
Differences in the repricing basis between the hedging instrument and hedged cash flows (cash flow hedge); and
\n
\ue001
Upfront present values on the hedging derivatives where hedge accounting relationships have been designated after the trade date (cash flow hedge and fair value hedge).
\n\n\n\n\n\n\n\n\n\n\n\n\n
Maturity of notional hedging contracts
\n
The following table shows the period in which the notional of hedging contract ends.
\n \n \n
0-3 months
3-12 months
1-3 years
3-5 years
5-10 years
Over 10 years
Total
2024
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Fair value hedging
Interest rate risk
(1)
Hedging assets
4.0
5.5
12.6
9.7
6.6
3.7
42.1
Hedging liabilities
0.8
4.3
14.2
15.5
5.7
0.5
41.0
2023
Fair value hedging
Interest rate risk
(1)
Hedging assets
0.1
1.7
7.1
9.0
5.9
4.7
28.5
Hedging liabilities
2.7
3.3
13.4
11.3
7.7
0.7
39.1
2024
Cash flow hedging
Interest rate risk
Hedging assets
10.6
10.8
22.0
30.3
12.0
-
85.7
Hedging liabilities
2.5
17.1
50.7
10.1
1.4
0.4
82.2
Exchange rate risk
Hedging assets
0.5
0.8
0.5
-
-
-
1.8
Hedging liabilities
3.1
2.5
3.7
3.3
-
-
12.6
2023
Cash flow hedging
Interest rate risk
Hedging assets
3.9
14.5
33.9
22.8
10.1
-
85.2
Hedging liabilities
0.8
3.9
39.1
10.1
0.3
0.6
54.8
Exchange rate risk
Hedging assets
0.3
0.7
1.6
-
-
-
2.6
Hedging liabilities
8.4
0.8
2.4
2.5
0.2
-
14.3
\n
(1)
The hedged risk includes inflation risk.
\n\n\n\n\n\n\n\n\n\n\n\n\n
Average fixed interest rates
\n
The following table shows average fixed rate for cash flow hedges, interest rate risk.
\n\n \n
0-3 months
3-12 months
1-3 years
3-5 years
5-10 years
Over 10 years
Total
2024
%
%
%
%
%
%
%
Average fixed interest rate
Hedging assets
3.85
0.98
2.52
3.32
2.84
3.12
2.82
Hedging liabilities
4.34
4.76
3.97
3.09
3.64
4.18
4.03
2023
Average fixed interest rate
Hedging assets
1.16
2.46
1.19
3.3
1.77
3.12
2.04
Hedging liabilities
0.93
2.54
4.36
2.28
2.36
4.5
3.79
\n
Average foreign exchange rates
\n
For cash flow hedging of exchange rate risk, the average foreign exchange rates applicable across the relationships were as below for the main currencies hedged.
\n\n \n
2024
2023
INR/GBP
109.07
105.03
USD/GBP
1.30
1.28
CHF/GBP
1.08
1.08
JPY/GBP
176.04
170.54
JPY/USD
130.79
129.75
NOK/USD
9.21
9.21
\n\n\n\n\n\n\n\n\n\n\n\n\n
Analysis of hedged items and related hedging instruments
\n
The table below analyses assets and liabilities subject to hedging derivatives.
\n\n \n
Changes in fair value
Carrying value of
Impact on hedged items
used as a basis to
hedged assets and liabilities
included in carrying value
determine ineffectiveness (1)
2024
\u00a3m
\u00a3m
\u00a3m
Fair value hedging - interest rate
(2)
Loans to banks and customers - amortised cost
5,318
(478)
(182)
Other financial assets - securities
36,724
(29)
(347)
Total
(3)
42,042
(507)
(529)
Bank and customer deposits
382
-
(3)
Other financial liabilities - debt securities in issue
(5)
37,548
(784)
(315)
Subordinated liabilities
5,772
(244)
(107)
Total
43,702
(1,028)
(425)
2023
Fair value hedging - interest rate
(2)
Loans to banks and customers - amortised cost
5,663
(316)
167
Other financial assets - securities
22,896
174
636
Total
(3)
28,559
(142)
803
Bank and customer deposits
745
(3)
(6)
Other financial liabilities - debt securities in issue
(5)
36,305
(1,151)
(1,023)
Subordinated liabilities
5,346
(320)
(138)
Total
42,396
(1,474)
(1,167)
\n
For the notes to this table refer to the following page.
\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n
Changes in fair value
Carrying value of
used as a basis to
hedged assets and liabilities
determine ineffectiveness (1)
2024
\u00a3m
\u00a3m
Cash flow hedging - interest rate
Loans to banks and customers - amortised cost
(4)
84,065
(190)
Other financial assets - securities
1,625
(2)
Total
85,690
(192)
Bank and customer deposits
82,081
(391)
Other financial liabilities - debt securities in issue
149
-
Total
82,230
(391)
Cash flow hedging - exchange rate
Loans to banks and customers - amortised cost
(4)
223
-
Other financial assets - securities
1,598
-
Total
1,821
-
Other financial liabilities - debt securities in issue
8,279
(1)
Other
195
-
Total
8,474
(1)
2023
Cash flow hedging - interest rate
Loans to banks and customers - amortised cost
(4)
84,583
(2,796)
Other financial assets - securities
623
(22)
Total
85,206
(2,818)
Bank and customer deposits
54,675
1,610
Other financial liabilities - debt securities in issue
156
7
Total
54,831
1,617
Cash flow hedging - exchange rate
Loans to banks and customer - amortised cost
(4)
583
-
Other financial assets - securities
1,839
-
Total
2,422
-
Other financial liabilities - debt securities in issue
11,460
9
Other
201
3
Total
11,661
12
\n
(1)
The change in fair value used for hedge ineffectiveness includes instruments that were derecognised in the year.
\n
(2)
The hedged risk includes inflation risk.
\n
(3)
Carrying values include \u00a346 million (2023 - \u00a357 million) adjustment for discontinued fair value hedges.
\n
(4)
Includes cash and balances at central banks.
\n
(5)
The carrying value include \u00a34,631 million (2023 - \u00a32,957 million) of debt securities held at amortised cost.
Analysis of cash flow and foreign exchange hedge reserve
The following table shows an analysis of the pre-tax cash flow hedge reserve and foreign exchange hedge reserve.
\n \n
2024
2023
Foreign
Foreign
Cash flow
exchange
Cash flow
exchange
hedge reserve
hedge reserve
hedge reserve
hedge reserve
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Continuing
Interest rate risk
(1,564)
-
(2,330)
-
Foreign exchange risk
(6)
15
1
(18)
De-designated
Interest rate risk
(437)
-
(304)
-
Foreign exchange risk
2
(663)
4
(771)
Total
(2,005)
(648)
(2,629)
(789)
\n \n
2024
2023
Foreign
Foreign
Cash flow
exchange
Cash flow
exchange
hedge reserve
hedge reserve
hedge reserve
hedge reserve
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Amount recognised in equity
Interest rate risk
(931)
-
137
-
Foreign exchange risk
59
122
50
107
Total
(872)
122
187
107
Amount transferred from equity to earnings
Interest rate risk to net interest income
1,562
-
1,112
-
Interest rate risk to non interest income
-
-
(10)
-
Foreign exchange risk to net interest income
(73)
-
(74)
-
Foreign exchange risk to non interest income
-
19
(9)
69
Foreign exchange risk to operating expenses
5
-
2
-
Total
1,494
19
1,021
69
Amounts included in the NatWest Group financial statements, in aggregate, by category
of related party are as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Associates and joint
Equity
\u00a0
\u00a0
ventures
shares (1)
Total
31 December 2024
\u00a3m
\u00a3m
\u00a3m
Investments
690
122
812
Loans to customers - amortised cost
-
4
4
Customer deposits
1
1
2
Other comprehensive income
-
(22)
(22)
Other operating income
19
-
19
31 December 2023
\u00a0\u00a0\u00a0
Investments
668
145
813
Loans to customers - amortised cost
-
13
13
Customer deposits
2
10
12
Other comprehensive income
-
(8)
(8)
Other operating income
(11)
-
(11)
\n
(1)
Represents investments in entities where ownership is more than 10%", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00252": { "value": "3.8. Financial instruments
Financial instruments are measured at
fair value on initial recognition on the
balance sheet.
Monetary financial assets are classified
into one of the following subsequent
measurement categories (subject to
business model assessment and review of
contractual cash flow for the purposes of
sole payments of principal and interest
where applicable):
\ue001
amortised cost
measured at cost
using the effective interest rate
method, less any impairment
allowance;
\ue001
fair value through other
comprehensive income (FVOCI)
measured at fair value, using the
effective interest rate method and
changes in fair value through other
comprehensive income;
\ue001
mandatory fair value through profit or
loss (MFVTPL)
measured at fair value
and changes in fair value reported in
the income statement; or
\ue001
designated at fair value through profit
or loss (DFV)
measured at fair value
and changes in fair value reported in
the income statement.
Classification by business model reflects
how we manage our financial assets to
generate cash flows. A business model
assessment helps to ascertain the
measurement approach depending on
whether cash flows result from holding
financial assets to collect the contractual
cash flows, from selling those financial
assets, or both.
Business model assessment of assets is
made at portfolio level, being the level at
which they are managed to achieve a
predefined business objective. This is
expected to result in the most consistent
classification of assets because it aligns
with the stated objectives for the
portfolio, its risk management, manager\u2019s
remuneration and the ability to monitor
sales of assets from a portfolio. When a
significant change to our business is
communicated to external parties, we
reassess our business model for
managing those financial assets. We
reclassify financial assets if we have a
significant change to the business model.
A reclassification is applied prospectively
from the reclassification date.
The contractual terms of a financial
asset; any leverage features; prepayment
and extension terms; and discounts or
penalties to interest rates that are part of
meeting environmental, social and
governance targets as well as other
contingent and leverage features, non-
recourse arrangements and features that
could modify the timing and/or amount of
the contractual cash flows that might
reset the effective rate of interest; are
considered in determining whether cash
flows are solely payments of principal and
interest.
Certain financial assets may be
designated at fair value through profit or
loss (DFV) upon initial recognition if such
designation eliminates, or significantly
reduces, accounting mismatch.
Equity shares are measured at fair value
through profit or loss unless specifically
elected as at fair value through other
comprehensive income (FVOCI).
Upon disposal, the cumulative gains or
losses in fair value through other
comprehensive income reserve are
recycled to the income statement for
monetary assets and for non-monetary
assets (equity shares) the cumulative
gains or losses are transferred directly to
retained earnings.
Regular way purchases and sales of
financial assets classified as amortised
cost are recognised on the settlement
date; all other regular way transactions in
financial assets are recognised on the
trade date.
Financial liabilities are classified into one
of following measurement categories:
\ue001
amortised cost measured at cost
using the effective interest rate
method;
\ue001
held for trading measured at fair
value and changes in fair value
reported in income statement; or
\ue001
designated at fair value through profit
or loss measured at fair value and
changes in fair value reported in the
income statement except changes in
fair value attributable to the credit
risk component recognised in other
comprehensive income when no
accounting mismatch occurs.Financial instruments \u2013 financial assets and liabilities that can be offset
The tables below present information on financial assets and financial liabilities that are offset on the balance sheet under IFRS or subject to enforceable master netting agreements
together with financial collateral received or given.
\n\n \u00a0\n \n
Instruments which can be offset
Potential for offset not recognised by IFRS
Effect of master
Net amount after
Instruments
netting and similar
Cash
Securities
netting agreements and
outside netting
Balance sheet
Gross
IFRS offset
Balance sheet
agreements
collateral
collateral
effect of related collateral
agreements
total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative assets
96,624
(18,746)
77,878
(61,883)
(10,005)
(4,072)
1,918
528
78,406
Derivative liabilities
92,620
(21,027)
71,593
(61,883)
(5,801)
(896)
3,013
489
72,082
Net position
(1)
4,004
2,281
6,285
-
(4,204)
(3,176)
(1,095)
39
6,324
Trading reverse repos
42,261
(15,174)
27,087
(1,469)
-
(25,406)
212
40
27,127
Trading repos
45,033
(15,174)
29,859
(1,469)
-
(28,390)
-
703
30,562
Net position
(2,772)
-
(2,772)
-
-
2,984
212
(663)
(3,435)
Non trading reverse repos
45,600
(8,709)
36,891
(80)
-
(36,811)
-
-
36,891
Non trading repos
22,288
(8,709)
13,579
(80)
-
(13,499)
-
-
13,579
Net position
23,312
-
23,312
-
-
(23,312)
-
-
23,312
2023
Derivative assets
99,023
(20,597)
78,426
(60,355)
(12,284)
(3,408)
2,379
478
78,904
Derivative liabilities
95,734
(23,869)
71,865
(60,355)
(6,788)
(1,663)
3,059
530
72,395
Net position
(1)
3,289
3,272
6,561
-
(5,496)
(1,745)
(680)
(52)
6,509
Trading reverse repos
39,573
(16,257)
23,316
(664)
-
(22,461)
191
378
23,694
Trading repos
42,442
(16,257)
26,185
(664)
-
(25,520)
1
717
26,902
Net position
(2,869)
-
(2,869)
-
-
3,059
190
(339)
(3,208)
Non trading reverse repos
37,477
(9,646)
27,831
(5)
-
(27,826)
-
80
27,911
Non trading repos
23,605
(9,646)
13,959
(5)
-
(13,954)
-
3
13,962
Net position
13,872
-
13,872
-
-
(13,872)
-
77
13,949
\n
(1)
Net IFRS offset balance of \u00a32,281 million (2023 - \u00a33,272 million) relates to variation margin netting reflected on other balance sheet lines.12 Trading assets and liabilities
Trading assets and liabilities comprise assets and liabilities held at fair value and classified as held-for-trading. Financial instruments are classified as held-for-trading if
they are held for the purpose of selling or repurchasing them in the short term, to make a spread between purchase and sale price or held to take advantage of
movements in prices and yields.
For accounting policy information refer to Accounting policy 3.8.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Assets
\u00a3m
\u00a3m
Loans
\u00a0 \u00a0
Reverse repos
27,127
23,694
Collateral given
7,367
9,141
Other loans
545
762
Total loans
35,039
33,597
Securities
\u00a0 \u00a0
Central and local government
\u00a0 \u00a0
- UK
2,077
2,729
- US
3,734
2,600
- Other
3,506
3,062
Financial institutions and corporate
4,561
3,563
Total securities
13,878
11,954
Total
48,917
45,551
Liabilities
\u00a0 \u00a0
Deposits
\u00a0 \u00a0
Repos
30,562
26,902
Collateral received
12,509
15,075
Other deposits
895
1,150
Total deposits
43,966
43,127
Debt securities in issue
257
706
Short positions
\u00a0 \u00a0
Central and local government
\u00a0 \u00a0
- UK
2,680
1,893
- US
1,677
2,071
- Other
4,755
4,049
Financial institutions and Corporate
1,379
1,790
Total short positions
10,491
9,803
Total
54,714
53,636
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialLiabilitiesHeldForTradingExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00251": { "value": "3.8. Financial instruments
Financial instruments are measured at
fair value on initial recognition on the
balance sheet.
Monetary financial assets are classified
into one of the following subsequent
measurement categories (subject to
business model assessment and review of
contractual cash flow for the purposes of
sole payments of principal and interest
where applicable):
\ue001
amortised cost
measured at cost
using the effective interest rate
method, less any impairment
allowance;
\ue001
fair value through other
comprehensive income (FVOCI)
measured at fair value, using the
effective interest rate method and
changes in fair value through other
comprehensive income;
\ue001
mandatory fair value through profit or
loss (MFVTPL)
measured at fair value
and changes in fair value reported in
the income statement; or
\ue001
designated at fair value through profit
or loss (DFV)
measured at fair value
and changes in fair value reported in
the income statement.
Classification by business model reflects
how we manage our financial assets to
generate cash flows. A business model
assessment helps to ascertain the
measurement approach depending on
whether cash flows result from holding
financial assets to collect the contractual
cash flows, from selling those financial
assets, or both.
Business model assessment of assets is
made at portfolio level, being the level at
which they are managed to achieve a
predefined business objective. This is
expected to result in the most consistent
classification of assets because it aligns
with the stated objectives for the
portfolio, its risk management, manager\u2019s
remuneration and the ability to monitor
sales of assets from a portfolio. When a
significant change to our business is
communicated to external parties, we
reassess our business model for
managing those financial assets. We
reclassify financial assets if we have a
significant change to the business model.
A reclassification is applied prospectively
from the reclassification date.
The contractual terms of a financial
asset; any leverage features; prepayment
and extension terms; and discounts or
penalties to interest rates that are part of
meeting environmental, social and
governance targets as well as other
contingent and leverage features, non-
recourse arrangements and features that
could modify the timing and/or amount of
the contractual cash flows that might
reset the effective rate of interest; are
considered in determining whether cash
flows are solely payments of principal and
interest.
Certain financial assets may be
designated at fair value through profit or
loss (DFV) upon initial recognition if such
designation eliminates, or significantly
reduces, accounting mismatch.
Equity shares are measured at fair value
through profit or loss unless specifically
elected as at fair value through other
comprehensive income (FVOCI).
Upon disposal, the cumulative gains or
losses in fair value through other
comprehensive income reserve are
recycled to the income statement for
monetary assets and for non-monetary
assets (equity shares) the cumulative
gains or losses are transferred directly to
retained earnings.
Regular way purchases and sales of
financial assets classified as amortised
cost are recognised on the settlement
date; all other regular way transactions in
financial assets are recognised on the
trade date.
Financial liabilities are classified into one
of following measurement categories:
\ue001
amortised cost measured at cost
using the effective interest rate
method;
\ue001
held for trading measured at fair
value and changes in fair value
reported in income statement; or
\ue001
designated at fair value through profit
or loss measured at fair value and
changes in fair value reported in the
income statement except changes in
fair value attributable to the credit
risk component recognised in other
comprehensive income when no
accounting mismatch occurs.Financial instruments \u2013 financial assets and liabilities that can be offset
The tables below present information on financial assets and financial liabilities that are offset on the balance sheet under IFRS or subject to enforceable master netting agreements
together with financial collateral received or given.
\n\n \u00a0\n \n
Instruments which can be offset
Potential for offset not recognised by IFRS
Effect of master
Net amount after
Instruments
netting and similar
Cash
Securities
netting agreements and
outside netting
Balance sheet
Gross
IFRS offset
Balance sheet
agreements
collateral
collateral
effect of related collateral
agreements
total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative assets
96,624
(18,746)
77,878
(61,883)
(10,005)
(4,072)
1,918
528
78,406
Derivative liabilities
92,620
(21,027)
71,593
(61,883)
(5,801)
(896)
3,013
489
72,082
Net position
(1)
4,004
2,281
6,285
-
(4,204)
(3,176)
(1,095)
39
6,324
Trading reverse repos
42,261
(15,174)
27,087
(1,469)
-
(25,406)
212
40
27,127
Trading repos
45,033
(15,174)
29,859
(1,469)
-
(28,390)
-
703
30,562
Net position
(2,772)
-
(2,772)
-
-
2,984
212
(663)
(3,435)
Non trading reverse repos
45,600
(8,709)
36,891
(80)
-
(36,811)
-
-
36,891
Non trading repos
22,288
(8,709)
13,579
(80)
-
(13,499)
-
-
13,579
Net position
23,312
-
23,312
-
-
(23,312)
-
-
23,312
2023
Derivative assets
99,023
(20,597)
78,426
(60,355)
(12,284)
(3,408)
2,379
478
78,904
Derivative liabilities
95,734
(23,869)
71,865
(60,355)
(6,788)
(1,663)
3,059
530
72,395
Net position
(1)
3,289
3,272
6,561
-
(5,496)
(1,745)
(680)
(52)
6,509
Trading reverse repos
39,573
(16,257)
23,316
(664)
-
(22,461)
191
378
23,694
Trading repos
42,442
(16,257)
26,185
(664)
-
(25,520)
1
717
26,902
Net position
(2,869)
-
(2,869)
-
-
3,059
190
(339)
(3,208)
Non trading reverse repos
37,477
(9,646)
27,831
(5)
-
(27,826)
-
80
27,911
Non trading repos
23,605
(9,646)
13,959
(5)
-
(13,954)
-
3
13,962
Net position
13,872
-
13,872
-
-
(13,872)
-
77
13,949
\n
(1)
Net IFRS offset balance of \u00a32,281 million (2023 - \u00a33,272 million) relates to variation margin netting reflected on other balance sheet lines.12 Trading assets and liabilities
Trading assets and liabilities comprise assets and liabilities held at fair value and classified as held-for-trading. Financial instruments are classified as held-for-trading if
they are held for the purpose of selling or repurchasing them in the short term, to make a spread between purchase and sale price or held to take advantage of
movements in prices and yields.
For accounting policy information refer to Accounting policy 3.8.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Assets
\u00a3m
\u00a3m
Loans
\u00a0 \u00a0
Reverse repos
27,127
23,694
Collateral given
7,367
9,141
Other loans
545
762
Total loans
35,039
33,597
Securities
\u00a0 \u00a0
Central and local government
\u00a0 \u00a0
- UK
2,077
2,729
- US
3,734
2,600
- Other
3,506
3,062
Financial institutions and corporate
4,561
3,563
Total securities
13,878
11,954
Total
48,917
45,551
Liabilities
\u00a0 \u00a0
Deposits
\u00a0 \u00a0
Repos
30,562
26,902
Collateral received
12,509
15,075
Other deposits
895
1,150
Total deposits
43,966
43,127
Debt securities in issue
257
706
Short positions
\u00a0 \u00a0
Central and local government
\u00a0 \u00a0
- UK
2,680
1,893
- US
1,677
2,071
- Other
4,755
4,049
Financial institutions and Corporate
1,379
1,790
Total short positions
10,491
9,803
Total
54,714
53,636
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsHeldForTradingExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00250": { "value": "3.8. Financial instruments
Financial instruments are measured at
fair value on initial recognition on the
balance sheet.
Monetary financial assets are classified
into one of the following subsequent
measurement categories (subject to
business model assessment and review of
contractual cash flow for the purposes of
sole payments of principal and interest
where applicable):
\ue001
amortised cost
measured at cost
using the effective interest rate
method, less any impairment
allowance;
\ue001
fair value through other
comprehensive income (FVOCI)
measured at fair value, using the
effective interest rate method and
changes in fair value through other
comprehensive income;
\ue001
mandatory fair value through profit or
loss (MFVTPL)
measured at fair value
and changes in fair value reported in
the income statement; or
\ue001
designated at fair value through profit
or loss (DFV)
measured at fair value
and changes in fair value reported in
the income statement.
Classification by business model reflects
how we manage our financial assets to
generate cash flows. A business model
assessment helps to ascertain the
measurement approach depending on
whether cash flows result from holding
financial assets to collect the contractual
cash flows, from selling those financial
assets, or both.
Business model assessment of assets is
made at portfolio level, being the level at
which they are managed to achieve a
predefined business objective. This is
expected to result in the most consistent
classification of assets because it aligns
with the stated objectives for the
portfolio, its risk management, manager\u2019s
remuneration and the ability to monitor
sales of assets from a portfolio. When a
significant change to our business is
communicated to external parties, we
reassess our business model for
managing those financial assets. We
reclassify financial assets if we have a
significant change to the business model.
A reclassification is applied prospectively
from the reclassification date.
The contractual terms of a financial
asset; any leverage features; prepayment
and extension terms; and discounts or
penalties to interest rates that are part of
meeting environmental, social and
governance targets as well as other
contingent and leverage features, non-
recourse arrangements and features that
could modify the timing and/or amount of
the contractual cash flows that might
reset the effective rate of interest; are
considered in determining whether cash
flows are solely payments of principal and
interest.
Certain financial assets may be
designated at fair value through profit or
loss (DFV) upon initial recognition if such
designation eliminates, or significantly
reduces, accounting mismatch.
Equity shares are measured at fair value
through profit or loss unless specifically
elected as at fair value through other
comprehensive income (FVOCI).
Upon disposal, the cumulative gains or
losses in fair value through other
comprehensive income reserve are
recycled to the income statement for
monetary assets and for non-monetary
assets (equity shares) the cumulative
gains or losses are transferred directly to
retained earnings.
Regular way purchases and sales of
financial assets classified as amortised
cost are recognised on the settlement
date; all other regular way transactions in
financial assets are recognised on the
trade date.
Financial liabilities are classified into one
of following measurement categories:
\ue001
amortised cost measured at cost
using the effective interest rate
method;
\ue001
held for trading measured at fair
value and changes in fair value
reported in income statement; or
\ue001
designated at fair value through profit
or loss measured at fair value and
changes in fair value reported in the
income statement except changes in
fair value attributable to the credit
risk component recognised in other
comprehensive income when no
accounting mismatch occurs.Financial instruments \u2013 financial assets and liabilities that can be offset
The tables below present information on financial assets and financial liabilities that are offset on the balance sheet under IFRS or subject to enforceable master netting agreements
together with financial collateral received or given.
\n\n \u00a0\n \n
Instruments which can be offset
Potential for offset not recognised by IFRS
Effect of master
Net amount after
Instruments
netting and similar
Cash
Securities
netting agreements and
outside netting
Balance sheet
Gross
IFRS offset
Balance sheet
agreements
collateral
collateral
effect of related collateral
agreements
total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative assets
96,624
(18,746)
77,878
(61,883)
(10,005)
(4,072)
1,918
528
78,406
Derivative liabilities
92,620
(21,027)
71,593
(61,883)
(5,801)
(896)
3,013
489
72,082
Net position
(1)
4,004
2,281
6,285
-
(4,204)
(3,176)
(1,095)
39
6,324
Trading reverse repos
42,261
(15,174)
27,087
(1,469)
-
(25,406)
212
40
27,127
Trading repos
45,033
(15,174)
29,859
(1,469)
-
(28,390)
-
703
30,562
Net position
(2,772)
-
(2,772)
-
-
2,984
212
(663)
(3,435)
Non trading reverse repos
45,600
(8,709)
36,891
(80)
-
(36,811)
-
-
36,891
Non trading repos
22,288
(8,709)
13,579
(80)
-
(13,499)
-
-
13,579
Net position
23,312
-
23,312
-
-
(23,312)
-
-
23,312
2023
Derivative assets
99,023
(20,597)
78,426
(60,355)
(12,284)
(3,408)
2,379
478
78,904
Derivative liabilities
95,734
(23,869)
71,865
(60,355)
(6,788)
(1,663)
3,059
530
72,395
Net position
(1)
3,289
3,272
6,561
-
(5,496)
(1,745)
(680)
(52)
6,509
Trading reverse repos
39,573
(16,257)
23,316
(664)
-
(22,461)
191
378
23,694
Trading repos
42,442
(16,257)
26,185
(664)
-
(25,520)
1
717
26,902
Net position
(2,869)
-
(2,869)
-
-
3,059
190
(339)
(3,208)
Non trading reverse repos
37,477
(9,646)
27,831
(5)
-
(27,826)
-
80
27,911
Non trading repos
23,605
(9,646)
13,959
(5)
-
(13,954)
-
3
13,962
Net position
13,872
-
13,872
-
-
(13,872)
-
77
13,949
\n
(1)
Net IFRS offset balance of \u00a32,281 million (2023 - \u00a33,272 million) relates to variation margin netting reflected on other balance sheet lines.12 Trading assets and liabilities
Trading assets and liabilities comprise assets and liabilities held at fair value and classified as held-for-trading. Financial instruments are classified as held-for-trading if
they are held for the purpose of selling or repurchasing them in the short term, to make a spread between purchase and sale price or held to take advantage of
movements in prices and yields.
For accounting policy information refer to Accounting policy 3.8.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Assets
\u00a3m
\u00a3m
Loans
\u00a0 \u00a0
Reverse repos
27,127
23,694
Collateral given
7,367
9,141
Other loans
545
762
Total loans
35,039
33,597
Securities
\u00a0 \u00a0
Central and local government
\u00a0 \u00a0
- UK
2,077
2,729
- US
3,734
2,600
- Other
3,506
3,062
Financial institutions and corporate
4,561
3,563
Total securities
13,878
11,954
Total
48,917
45,551
Liabilities
\u00a0 \u00a0
Deposits
\u00a0 \u00a0
Repos
30,562
26,902
Collateral received
12,509
15,075
Other deposits
895
1,150
Total deposits
43,966
43,127
Debt securities in issue
257
706
Short positions
\u00a0 \u00a0
Central and local government
\u00a0 \u00a0
- UK
2,680
1,893
- US
1,677
2,071
- Other
4,755
4,049
Financial institutions and Corporate
1,379
1,790
Total short positions
10,491
9,803
Total
54,714
53,636
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsHeldForTradingExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00247": { "value": "3.8. Financial instruments
Financial instruments are measured at
fair value on initial recognition on the
balance sheet.
Monetary financial assets are classified
into one of the following subsequent
measurement categories (subject to
business model assessment and review of
contractual cash flow for the purposes of
sole payments of principal and interest
where applicable):
\ue001
amortised cost
measured at cost
using the effective interest rate
method, less any impairment
allowance;
\ue001
fair value through other
comprehensive income (FVOCI)
measured at fair value, using the
effective interest rate method and
changes in fair value through other
comprehensive income;
\ue001
mandatory fair value through profit or
loss (MFVTPL)
measured at fair value
and changes in fair value reported in
the income statement; or
\ue001
designated at fair value through profit
or loss (DFV)
measured at fair value
and changes in fair value reported in
the income statement.
Classification by business model reflects
how we manage our financial assets to
generate cash flows. A business model
assessment helps to ascertain the
measurement approach depending on
whether cash flows result from holding
financial assets to collect the contractual
cash flows, from selling those financial
assets, or both.
Business model assessment of assets is
made at portfolio level, being the level at
which they are managed to achieve a
predefined business objective. This is
expected to result in the most consistent
classification of assets because it aligns
with the stated objectives for the
portfolio, its risk management, manager\u2019s
remuneration and the ability to monitor
sales of assets from a portfolio. When a
significant change to our business is
communicated to external parties, we
reassess our business model for
managing those financial assets. We
reclassify financial assets if we have a
significant change to the business model.
A reclassification is applied prospectively
from the reclassification date.
The contractual terms of a financial
asset; any leverage features; prepayment
and extension terms; and discounts or
penalties to interest rates that are part of
meeting environmental, social and
governance targets as well as other
contingent and leverage features, non-
recourse arrangements and features that
could modify the timing and/or amount of
the contractual cash flows that might
reset the effective rate of interest; are
considered in determining whether cash
flows are solely payments of principal and
interest.
Certain financial assets may be
designated at fair value through profit or
loss (DFV) upon initial recognition if such
designation eliminates, or significantly
reduces, accounting mismatch.
Equity shares are measured at fair value
through profit or loss unless specifically
elected as at fair value through other
comprehensive income (FVOCI).
Upon disposal, the cumulative gains or
losses in fair value through other
comprehensive income reserve are
recycled to the income statement for
monetary assets and for non-monetary
assets (equity shares) the cumulative
gains or losses are transferred directly to
retained earnings.
Regular way purchases and sales of
financial assets classified as amortised
cost are recognised on the settlement
date; all other regular way transactions in
financial assets are recognised on the
trade date.
Financial liabilities are classified into one
of following measurement categories:
\ue001
amortised cost measured at cost
using the effective interest rate
method;
\ue001
held for trading measured at fair
value and changes in fair value
reported in income statement; or
\ue001
designated at fair value through profit
or loss measured at fair value and
changes in fair value reported in the
income statement except changes in
fair value attributable to the credit
risk component recognised in other
comprehensive income when no
accounting mismatch occurs.3.10. Capital instruments
We classify a financial instrument that we
issue as a financial liability if it is a
contractual obligation to deliver cash or
another financial asset, or to exchange
financial assets or financial liabilities on
potentially unfavourable terms and as
equity if we evidence a residual interest in
our assets after the deduction of
liabilities. Incremental costs and related
tax that are directly attributable to an
equity transaction are deducted from
equity.
The consideration for any ordinary
shares of NatWest Group plc purchased
by us (known as treasury shares or own
shares held) is deducted from retained
earnings. On the cancellation of treasury
shares their nominal value is removed
from retained earnings and a
consequential amount recognised in
capital redemption reserve in compliance
with the Companies Act 2006.
On the sale or re-issue of treasury shares
the consideration received and related
tax are credited to equity, net of any
directly attributable incremental costs.Debt securities and subordinated liabilities
Most debt securities are valued using quoted prices in active
markets or from quoted prices of similar financial instruments.
The remaining population is valued using discounted cashflows
at current offer rates.15 Other financial assets
Other financial assets consist of debt securities, equity shares and loans that are not held for trading. Balances consist of local and central government securities, a
part of NatWest Group\u2019s liquidity portfolio.
For accounting policy information refer to Accounting policy 3.8.
\n \n
Debt securities
Central and local government
UK
US
Other
Other debt
Total
Equity shares
Loans
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Mandatory fair value through profit or loss
-
-
-
1
1
4
793
798
Designated at fair value
-
-
2
3
5
-
-
5
Fair value through other comprehensive income
(1)
13,281
4,587
6,192
13,476
37,536
247
60
37,843
Amortised cost
3,571
500
85
20,441
24,597
-
-
24,597
Total
16,852
5,087
6,279
33,921
62,139
251
853
63,243
2023
Mandatory fair value through profit or loss
-
-
-
1
1
2
700
703
Designated at fair value
-
-
3
2
5
-
-
5
Fair value through other comprehensive income
(1)
6,441
5,517
5,738
10,627
28,323
311
65
28,699
Amortised cost
2,889
647
35
18,124
21,695
-
-
21,695
Total
9,330
6,164
5,776
28,754
50,024
313
765
51,102
(1)
Upon initial recognition, NatWest Group occasionally irrevocably
designates some of its equity investments as equity instruments at FVOCI when they meet the definition of equity under IAS 32 Financial instruments: presentation, are not held for trading or
they are held for strategic purposes. Such classification is determined on an instrument-by-instrument basis. Gains and losses on these equity instruments are not recycled to the income statement and dividends are recognised in profit or loss except
when they represent a recovery of part of the cost of the instrument, in which case such gains are recorded in OCI. Equity instruments at FVOCI are not subject to an impairment assessment.
There were no significant acquisitions of equity shares in either year.
NatWest Group disposed of equity shares in VISA Inc. of \u00a362 million (2023 \u2013 nil). In 2023, NatWest Group disposed of equity shares in Permanent TSB p.l.c of \u00a347 million and UBS
Equity Funds of \u00a335 million. There were no significant dividends on equity shares held at FVOCI in either year.18 Other financial liabilities
Other financial liabilities consist of customer deposits designated at fair value and debt securities in issue.
For accounting policy information refer to Accounting policies 3.8 and 3.10.
\n \n
2024
2023
\u00a3m
\u00a3m
Customer deposits including repos
1,812
1,280
Debt securities in issue
- MRELs
23,998
21,660
- Other medium term notes
22,087
17,843
- Commercial paper and certificates of deposit
11,266
11,321
- Covered bonds
749
2,122
- Securitisation
1,175
863
Total
61,087
55,089
", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00706": { "value": "3.9. Netting
Financial assets and financial liabilities are
offset, and the net amount presented on
the balance sheet when, and only when,
we currently have a legally enforceable
right to set off the recognised amounts
and we intend either to settle on a net
basis or to realise the asset and settle the
liability simultaneously. We are party to a
number of arrangements, including
master netting agreements, that give us
the right to offset financial assets and
financial liabilities, but where we do not
intend to settle the amounts net or
simultaneously, the assets and liabilities
concerned are presented separately on
the balance sheet.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForOffsettingOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00721": { "value": "3.10. Capital instruments
We classify a financial instrument that we
issue as a financial liability if it is a
contractual obligation to deliver cash or
another financial asset, or to exchange
financial assets or financial liabilities on
potentially unfavourable terms and as
equity if we evidence a residual interest in
our assets after the deduction of
liabilities. Incremental costs and related
tax that are directly attributable to an
equity transaction are deducted from
equity.
The consideration for any ordinary
shares of NatWest Group plc purchased
by us (known as treasury shares or own
shares held) is deducted from retained
earnings. On the cancellation of treasury
shares their nominal value is removed
from retained earnings and a
consequential amount recognised in
capital redemption reserve in compliance
with the Companies Act 2006.
On the sale or re-issue of treasury shares
the consideration received and related
tax are credited to equity, net of any
directly attributable incremental costs.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00274": { "value": "3.10. Capital instruments
We classify a financial instrument that we
issue as a financial liability if it is a
contractual obligation to deliver cash or
another financial asset, or to exchange
financial assets or financial liabilities on
potentially unfavourable terms and as
equity if we evidence a residual interest in
our assets after the deduction of
liabilities. Incremental costs and related
tax that are directly attributable to an
equity transaction are deducted from
equity.
The consideration for any ordinary
shares of NatWest Group plc purchased
by us (known as treasury shares or own
shares held) is deducted from retained
earnings. On the cancellation of treasury
shares their nominal value is removed
from retained earnings and a
consequential amount recognised in
capital redemption reserve in compliance
with the Companies Act 2006.
On the sale or re-issue of treasury shares
the consideration received and related
tax are credited to equity, net of any
directly attributable incremental costs.Merger reserve
-
the merger reserve
comprises the premium on shares issued
to acquire NatWest Bank Plc less goodwill
amortisation charged under previous
GAAP.
Capital redemption reserve -
under UK
companies legislation, when shares are
redeemed or purchased wholly or partly
out of the company's profits, the amount
by which the company's issued share
capital is diminished must be transferred
to the capital redemption reserve. The
capital maintenance provisions of UK
companies legislation apply to the capital
redemption reserve as if it were part of
the company\u2019s paid up share capital. The
nominal value of the shares bought back
from HMT in March 2023 and via the
Programme during 2023 have been
transferred to the Capital redemption
reserve.
Own shares held
-
at 31 December
2024, 11 million ordinary shares of
\u00a31.0769 each of the company (2023 - 12
million) were held by employee share
trusts in respect of share awards and
options granted to employees.
During 2024, the employee share trusts
purchased no ordinary shares and
delivered 1 million ordinary shares in
satisfaction of the exercise of options and
the vesting of share awards under the
employee share plans. The company
retains the flexibility to use newly issued
shares, shares purchased by the
NatWest Group Employee Share
Ownership Trust and any available
treasury shares to satisfy obligations
under its employee share plans.
The company does not use performance
conditions or targets based on earnings
per share (EPS), total shareholder return
(TSR), and net asset value (NAV) in
connection with its employee share plans.
As part of the shares bought back from
HMT in May 2024, the company
transferred 170 million ordinary shares to
own shares held. The company has used
a total of 80 million treasury shares in
2024 to satisfy the exercise of options
and the vesting of share awards under
the employee share plans. The balance of
ordinary shares held in treasury as at 31
December 2024 was 277 million.
NatWest Group plc optimises capital
efficiency by maintaining reserves in
subsidiaries, including regulated entities.
Certain preference shares and
subordinated debt are also included
within regulatory capital. The remittance
of reserves to the company or the
redemption of shares or subordinated
capital by regulated entities may be
subject to maintaining the capital
resources required by the relevant
regulator.
UK law prescribes that only the reserves
of the company are taken into account
for the purpose of making distributions
and in determining permissible
applications of the share premium
account.", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00270": { "value": "3.10. Capital instruments
We classify a financial instrument that we
issue as a financial liability if it is a
contractual obligation to deliver cash or
another financial asset, or to exchange
financial assets or financial liabilities on
potentially unfavourable terms and as
equity if we evidence a residual interest in
our assets after the deduction of
liabilities. Incremental costs and related
tax that are directly attributable to an
equity transaction are deducted from
equity.
The consideration for any ordinary
shares of NatWest Group plc purchased
by us (known as treasury shares or own
shares held) is deducted from retained
earnings. On the cancellation of treasury
shares their nominal value is removed
from retained earnings and a
consequential amount recognised in
capital redemption reserve in compliance
with the Companies Act 2006.
On the sale or re-issue of treasury shares
the consideration received and related
tax are credited to equity, net of any
directly attributable incremental costs.21 Share capital and other equity
Share capital consists of ordinary shares and preference shares and is measured as the number of shares allotted and fully paid, multiplied by the nominal value of a
share. Other equity includes paid-in equity, merger reserve, capital redemption reserve and own shares held.
For accounting policy information refer to Accounting policy 3.10.
\n \n
Number of shares
2024
2023
2024
2023
Allotted, called up and fully paid
\u00a3m
\u00a3m
000s
000s
Ordinary shares of \u00a31.0769
(1)
8,972
9,683
8,331,145
8,991,737
Cumulative preference shares of \u00a31
0.5
0.5
483.0
483.0
(1)
The nominal value of ordinary shares without rounding is \u00a31.076923076923077 per share.
Movement in allotted, called up and fully paid
\n \n
Number of shares
ordinary shares
\u00a3m
000s
At 31 December 2022
10,539
9,786,024
Share cancellation
(856)
(794,287)
At 31 December 2023
9,683
8,991,737
Share cancellation
(711)
(660,592)
At 31 December 2024
8,972
8,331,145
Ordinary shares
There is no authorised share capital under the company\u2019s constitution. At 31 December
2024, the directors had authority granted at the 2024 Annual General Meeting (AGM) to
issue up to \u00a3472 million nominal of ordinary shares other than by pre-emption to existing
shareholders.
On-market purchases
At the AGM in 2023, shareholders renewed the authority for the company to make
market purchases of up to 967 million ordinary shares. The
directors used the authority
obtained at the 2023 AGM (2023 Authority) to carry out share buyback programmes of
up to \u00a3500 million (2023 Programme) and \u00a3300 million (2024 Programme).
The maximum number of ordinary shares that could be purchased under the 2023
Programme was 920 million (reflecting the impact on the 2023 Authority of the reduction
in issued share capital following the off-market buyback announced on 22 May 2023).
The maximum number of Ordinary Shares that could be purchased under the 2024
Programme was 697 million (reflecting the impact on the 2023 Authority of the reduction
in issued share capital following the off-market buyback announced on 22 May 2023 and
further reduced by the number of shares purchased to 19 February 2024 under the
2023 Programme).
The 2023 Programme started on 31 July
2023 and ended on 22 March 2024. 228
million ordinary shares (nominal value
\u00a3245 million) were purchased by the
company under the Programme at a
volume weighted average price of
217.1788 pence per Ordinary Share for a
total consideration of \u00a3495 million. All of
the purchased ordinary shares were
cancelled, representing 2.52% of the
company\u2019s issued ordinary share capital.
The 2024 Programme started on 19
February 2024 and ended on 24 July
2024. 104 million ordinary shares
(nominal value \u00a3113 million) were
purchased by the company under the
Programme at a volume weighted
average price of 287.1225 pence per
ordinary share for a total consideration of
\u00a3300 million. All of the purchased
ordinary shares were cancelled,
representing 1.19% of the company\u2019s
issued ordinary share capital.
Shareholders will be asked to renew the
authority for the company to make
market purchases of ordinary shares at
the AGM in 2025.
Off-market purchases
A Directed Buyback Contract between
the Company and HMT was approved by
the shareholders of the Company at a
General Meeting on 6 February 2019.
Amendments to the Directed Buyback
Contract were approved by the
shareholders at a General Meeting on 25
August 2022 and at the 2024 AGM.
The authority from shareholders to make
off-market purchases of ordinary shares
from HMT (or its nominee) under the
terms of the Directed Buyback Contract
was renewed at the 2024 AGM.
The company used this authority to make
an off-market purchase of 392 million
ordinary shares (nominal value \u00a3423
million) in the company from HMT on 31
May 2024, at a price of 316.2 pence per
ordinary share for the total consideration
of \u00a31,241 million, representing 4.50% of
the company\u2019s issued ordinary share
capital. The company cancelled 222
million of the purchased ordinary shares
and transferred the remaining 170 million
ordinary shares to treasury.
On 11 November 2024, the company
made a further off-market purchase of
263 million ordinary shares (nominal
value \u00a3283 million) in the company from
HMT, at a price of 380.8 pence per
ordinary share for the total consideration
of \u00a31 billion, representing 3.16% of the
company\u2019s issued ordinary share capital.
The company cancelled all of purchased
ordinary shares.
Shareholders will be asked to renew the authority for the company to make off-market
purchases of its ordinary shares from HMT
(or its nominee) at the AGM in 2025.
Dividends
In 2024 NatWest Group paid an interim dividend of \u00a3498 million, or 6 pence per ordinary
share (2023 \u2013 \u00a3491 million, or 5.5 pence per ordinary share).
The company has announced that the directors have recommended a final dividend of
\u00a31.2 billion, or 15.5 pence per ordinary share
(2023 \u2013 \u00a31.0 billion, or 11.5 pence per
ordinary share). The final dividend recommended by directors is subject to shareholders\u2019
approval at the AGM on 23 April 2025. If approved, payment will be made on 28 April
2025 to shareholders on the register at the close of business on 14 March 2025. The ex-
dividend date will be 13 March 2025.
Cumulative preference shares
At the AGM in 2024, shareholders renewed the authority for the company to make an
off-market purchase of its preference shares. Shareholders will be asked to renew the
authority at the AGM in 2025.
Other equity
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Additional Tier 1 notes
\u00a0 \u00a0 \u00a0
$1.15 billion 8.000% notes callable August 2025
(1)
736
735
735
$1.50 billion 6.000% notes callable
\u00a0 \u00a0 \u00a0
December 2025 - June 2026
(2)
1,220
1,220
1,220
\u00a31.00 billion 5.125% notes callable May - November 2027
(3)
998
998
998
\u00a30.40 billion 4.5% notes callable March 2028
(4)
399
399
399
$0.75 billion 4.6% notes callable June 2031
(5)
539
538
538
$1.00 billion 8.125% notes callable November 2033
(6)
798
-
-
$0.75 billion 7.3% notes callable November 2034
(7)
590
-
-
\u00a0
5,280
3,890
3,890
\n
(1)
Issued in August 2015. In the event of conversion, converted into ordinary shares at a price of $3.314 per share.
(2)
Issued in June 2020. In the event of conversion, converted into ordinary shares at a price of $2.191 (translated at
applicable exchange rate) per share.
(3)
Issued in November 2020. In the event of conversion, converted into ordinary shares at a price of \u00a31.764 per share.
(4)
Issued in March 2021. In the event of conversion, converted into ordinary shares at a price of \u00a31.764 per share.
(5)
Issued in June 2021. In the event of conversion, converted into ordinary shares at a price of $2.462 (translated at
applicable exchange rate) per share.
(6)
Issued in May 2024. In the event of conversion, converted into ordinary shares at a price of $2.205 (translated at
applicable exchange rate) per share.
(7)
Issued in November 2024. In the event of conversion, converted into ordinary shares at a price of $2.226 (translated at
applicable exchange rate) per share.
Paid-in equity
-
comprises equity
instruments issued by the company other
than those legally constituted as shares.
Additional Tier 1 instruments issued by
NatWest Group plc having the legal form
of debt are classified as equity under
IFRS. The coupons on these instruments
are non-cumulative and payable at the
company\u2019s discretion. In the event
NatWest Group\u2019s CET1 ratio falls below
7% any outstanding instruments will be
converted into ordinary shares at a fixed
price.
Capital recognised for regulatory
purposes cannot be redeemed without
Prudential Regulation Authority consent.
This includes ordinary shares, preference
shares and additional Tier 1
instruments.
Merger reserve
-
the merger reserve
comprises the premium on shares issued
to acquire NatWest Bank Plc less goodwill
amortisation charged under previous
GAAP.
Capital redemption reserve -
under UK
companies legislation, when shares are
redeemed or purchased wholly or partly
out of the company's profits, the amount
by which the company's issued share
capital is diminished must be transferred
to the capital redemption reserve. The
capital maintenance provisions of UK
companies legislation apply to the capital
redemption reserve as if it were part of
the company\u2019s paid up share capital. The
nominal value of the shares bought back
from HMT in March 2023 and via the
Programme during 2023 have been
transferred to the Capital redemption
reserve.
Own shares held
-
at 31 December
2024, 11 million ordinary shares of
\u00a31.0769 each of the company (2023 - 12
million) were held by employee share
trusts in respect of share awards and
options granted to employees.
During 2024, the employee share trusts
purchased no ordinary shares and
delivered 1 million ordinary shares in
satisfaction of the exercise of options and
the vesting of share awards under the
employee share plans. The company
retains the flexibility to use newly issued
shares, shares purchased by the
NatWest Group Employee Share
Ownership Trust and any available
treasury shares to satisfy obligations
under its employee share plans.
The company does not use performance
conditions or targets based on earnings
per share (EPS), total shareholder return
(TSR), and net asset value (NAV) in
connection with its employee share plans.
As part of the shares bought back from
HMT in May 2024, the company
transferred 170 million ordinary shares to
own shares held. The company has used
a total of 80 million treasury shares in
2024 to satisfy the exercise of options
and the vesting of share awards under
the employee share plans. The balance of
ordinary shares held in treasury as at 31
December 2024 was 277 million.
NatWest Group plc optimises capital
efficiency by maintaining reserves in
subsidiaries, including regulated entities.
Certain preference shares and
subordinated debt are also included
within regulatory capital. The remittance
of reserves to the company or the
redemption of shares or subordinated
capital by regulated entities may be
subject to maintaining the capital
resources required by the relevant
regulator.
UK law prescribes that only the reserves
of the company are taken into account
for the purpose of making distributions
and in determining permissible
applications of the share premium
account.", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00722": { "value": "The consideration for any ordinary
shares of NatWest Group plc purchased
by us (known as treasury shares or own
shares held) is deducted from retained
earnings. On the cancellation of treasury
shares their nominal value is removed
from retained earnings and a
consequential amount recognised in
capital redemption reserve in compliance
with the Companies Act 2006.
On the sale or re-issue of treasury shares
the consideration received and related
tax are credited to equity, net of any
directly attributable incremental costs.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00709": { "value": "3.11. Derivatives and hedgingHedge accounting
Hedge accounting relationships are
designated and documented at inception
in line with the requirements of IAS 39
Financial instruments \u2013 Recognition and
Measurement.
The documentation identifies the hedged
item, the hedging instrument and details
of the risk that is being hedged and the
way in which effectiveness will be
assessed at inception and during the
period of the hedge. When designating a
hedging relationship, we consider: the
economic relationship between the
hedged item (including the risk being
hedged) and the hedging instrument; the
nature of the risk; the risk management
objective and strategy for undertaking
the hedge; and the appropriateness of
the method that will be used to assess
hedge effectiveness.
Designated hedging relationships must be
expected to be highly effective both on a
prospective and retrospective basis. This
is assessed using regression techniques
which model the degree of offsetting
between the changes in fair value or
cash flows attributable to the hedged risk
and the changes in fair value of the
designated hedging derivatives.
Ineffectiveness is measured based on
actual levels of offsetting and recognised
in the income statement.
We enter into three types of hedge
accounting relationships.
Fair value hedge
- the gain or loss on the
hedging instrument and the hedged item
attributable to the hedged risk is
recognised in the income statement.
Where the hedged item is measured at
amortised cost, the balance sheet
amount of the hedged item is also
adjusted.
Cash flow hedge
- the effective portion of
the designated hedge relationship is
recognised in other comprehensive
income and the ineffective portion in the
income statement. When the hedged
item (forecasted cash flows) results in the
recognition of a financial asset or financial
liability, the cumulative gain or loss is
reclassified from equity to the income
statement in the same periods in which
the hedged forecasted cash flows affect
the income statement.
Hedge of net investment in a foreign
operation
-
in the hedge of a net
investment in a foreign operation, the
effective portion of the designated hedge
relationship is recognised in other
comprehensive income. Any ineffective
portion is recognised in profit or loss.
Non-derivative financial liabilities as well
as derivatives may be designated as a
hedging instrument in a net investment
hedge.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the
hedge no longer meets the criteria for
hedge accounting i.e. the hedge is not
highly effective in offsetting changes in
fair value or cash flows attributable to the
hedged risk, consistent with the
documented risk management strategy;
the hedging instrument expires or is sold,
terminated or exercised; or if hedge
designation is revoked.
For fair value hedging any cumulative
adjustment is amortised to the income
statement over the life of the hedged
item. Where the hedged item is no longer
on the balance sheet the adjustment to
the hedged item is reported in the
income statement. For cash flow hedging
the cumulative unrealised gain or loss is
reclassified from equity to the income
statement when the hedged cash flows
occur or, if the forecast transaction
results in the recognition of a financial
asset or financial liability, when the
hedged forecast cash flows affect the
income statement. Where a forecast
transaction is no longer expected to
occur, the cumulative unrealised gain or
loss is reclassified from equity to the
income statement immediately.
For net investment hedging on disposal
or partial disposal of a foreign operation,
the amount accumulated in equity is
reclassified from equity to the income
statement.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00708": { "value": "3.11. Derivatives and hedging
Derivatives are reported on the balance
sheet at fair value.
We use derivatives as part of our trading
activities, to manage our own risk such
as interest rate, foreign exchange, or
credit risk or in certain customer
transactions. Not all derivatives used to
manage risk are in hedge accounting
relationships (an IFRS method to reduce
accounting mismatch from changes in
the fair value of the derivatives reported
in the income statement).
Gains and losses arising from changes in
the fair value of derivatives that are not
in hedge relationships are recognised in
Income from trading activities unless
those derivatives are managed together
with financial instruments designated at
fair value; these gains and losses are
included in Other operating income.
Hedge accounting
Hedge accounting relationships are
designated and documented at inception
in line with the requirements of IAS 39
Financial instruments \u2013 Recognition and
Measurement.
The documentation identifies the hedged
item, the hedging instrument and details
of the risk that is being hedged and the
way in which effectiveness will be
assessed at inception and during the
period of the hedge. When designating a
hedging relationship, we consider: the
economic relationship between the
hedged item (including the risk being
hedged) and the hedging instrument; the
nature of the risk; the risk management
objective and strategy for undertaking
the hedge; and the appropriateness of
the method that will be used to assess
hedge effectiveness.
Designated hedging relationships must be
expected to be highly effective both on a
prospective and retrospective basis. This
is assessed using regression techniques
which model the degree of offsetting
between the changes in fair value or
cash flows attributable to the hedged risk
and the changes in fair value of the
designated hedging derivatives.
Ineffectiveness is measured based on
actual levels of offsetting and recognised
in the income statement.
We enter into three types of hedge
accounting relationships.
Fair value hedge
- the gain or loss on the
hedging instrument and the hedged item
attributable to the hedged risk is
recognised in the income statement.
Where the hedged item is measured at
amortised cost, the balance sheet
amount of the hedged item is also
adjusted.
Cash flow hedge
- the effective portion of
the designated hedge relationship is
recognised in other comprehensive
income and the ineffective portion in the
income statement. When the hedged
item (forecasted cash flows) results in the
recognition of a financial asset or financial
liability, the cumulative gain or loss is
reclassified from equity to the income
statement in the same periods in which
the hedged forecasted cash flows affect
the income statement.
Hedge of net investment in a foreign
operation
-
in the hedge of a net
investment in a foreign operation, the
effective portion of the designated hedge
relationship is recognised in other
comprehensive income. Any ineffective
portion is recognised in profit or loss.
Non-derivative financial liabilities as well
as derivatives may be designated as a
hedging instrument in a net investment
hedge.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the
hedge no longer meets the criteria for
hedge accounting i.e. the hedge is not
highly effective in offsetting changes in
fair value or cash flows attributable to the
hedged risk, consistent with the
documented risk management strategy;
the hedging instrument expires or is sold,
terminated or exercised; or if hedge
designation is revoked.
For fair value hedging any cumulative
adjustment is amortised to the income
statement over the life of the hedged
item. Where the hedged item is no longer
on the balance sheet the adjustment to
the hedged item is reported in the
income statement. For cash flow hedging
the cumulative unrealised gain or loss is
reclassified from equity to the income
statement when the hedged cash flows
occur or, if the forecast transaction
results in the recognition of a financial
asset or financial liability, when the
hedged forecast cash flows affect the
income statement. Where a forecast
transaction is no longer expected to
occur, the cumulative unrealised gain or
loss is reclassified from equity to the
income statement immediately.
For net investment hedging on disposal
or partial disposal of a foreign operation,
the amount accumulated in equity is
reclassified from equity to the income
statement.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00707": { "value": "3.11. Derivatives and hedging
Derivatives are reported on the balance
sheet at fair value.
We use derivatives as part of our trading
activities, to manage our own risk such
as interest rate, foreign exchange, or
credit risk or in certain customer
transactions. Not all derivatives used to
manage risk are in hedge accounting
relationships (an IFRS method to reduce
accounting mismatch from changes in
the fair value of the derivatives reported
in the income statement).
Gains and losses arising from changes in
the fair value of derivatives that are not
in hedge relationships are recognised in
Income from trading activities unless
those derivatives are managed together
with financial instruments designated at
fair value; these gains and losses are
included in Other operating income.
Hedge accounting
Hedge accounting relationships are
designated and documented at inception
in line with the requirements of IAS 39
Financial instruments \u2013 Recognition and
Measurement.
The documentation identifies the hedged
item, the hedging instrument and details
of the risk that is being hedged and the
way in which effectiveness will be
assessed at inception and during the
period of the hedge. When designating a
hedging relationship, we consider: the
economic relationship between the
hedged item (including the risk being
hedged) and the hedging instrument; the
nature of the risk; the risk management
objective and strategy for undertaking
the hedge; and the appropriateness of
the method that will be used to assess
hedge effectiveness.
Designated hedging relationships must be
expected to be highly effective both on a
prospective and retrospective basis. This
is assessed using regression techniques
which model the degree of offsetting
between the changes in fair value or
cash flows attributable to the hedged risk
and the changes in fair value of the
designated hedging derivatives.
Ineffectiveness is measured based on
actual levels of offsetting and recognised
in the income statement.
We enter into three types of hedge
accounting relationships.
Fair value hedge
- the gain or loss on the
hedging instrument and the hedged item
attributable to the hedged risk is
recognised in the income statement.
Where the hedged item is measured at
amortised cost, the balance sheet
amount of the hedged item is also
adjusted.
Cash flow hedge
- the effective portion of
the designated hedge relationship is
recognised in other comprehensive
income and the ineffective portion in the
income statement. When the hedged
item (forecasted cash flows) results in the
recognition of a financial asset or financial
liability, the cumulative gain or loss is
reclassified from equity to the income
statement in the same periods in which
the hedged forecasted cash flows affect
the income statement.
Hedge of net investment in a foreign
operation
-
in the hedge of a net
investment in a foreign operation, the
effective portion of the designated hedge
relationship is recognised in other
comprehensive income. Any ineffective
portion is recognised in profit or loss.
Non-derivative financial liabilities as well
as derivatives may be designated as a
hedging instrument in a net investment
hedge.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the
hedge no longer meets the criteria for
hedge accounting i.e. the hedge is not
highly effective in offsetting changes in
fair value or cash flows attributable to the
hedged risk, consistent with the
documented risk management strategy;
the hedging instrument expires or is sold,
terminated or exercised; or if hedge
designation is revoked.
For fair value hedging any cumulative
adjustment is amortised to the income
statement over the life of the hedged
item. Where the hedged item is no longer
on the balance sheet the adjustment to
the hedged item is reported in the
income statement. For cash flow hedging
the cumulative unrealised gain or loss is
reclassified from equity to the income
statement when the hedged cash flows
occur or, if the forecast transaction
results in the recognition of a financial
asset or financial liability, when the
hedged forecast cash flows affect the
income statement. Where a forecast
transaction is no longer expected to
occur, the cumulative unrealised gain or
loss is reclassified from equity to the
income statement immediately.
For net investment hedging on disposal
or partial disposal of a foreign operation,
the amount accumulated in equity is
reclassified from equity to the income
statement.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00267": { "value": "3.12. Provisions
We recognise a provision for a present
obligation resulting from a past event
when it is more likely than not that we
will be required to pay to settle the
obligation and the amount of the
obligation can be estimated reliably.
Provision is made for restructuring costs,
including the costs of redundancy, when
we have a constructive obligation.
An obligation exists when we have a
detailed formal plan for the restructuring
and have raised a valid expectation in
those affected either by starting to
implement the plan or by announcing its
main features.
We recognise any onerous cost of the
present obligation under a contract as a
provision. An onerous cost is the
unavoidable cost of meeting our
contractual obligations that exceed the
expected economic benefits. When we
intend to vacate a leasehold property or
right of use asset, the asset would be
tested for impairment and a provision
may be recognised for the ancillary
contractual occupancy costs.20 Other liabilities
Other liabilities are amounts due to third parties that are not financial liabilities but including lease liabilities held at amortised cost. Other liabilities represent, for
example, amounts due for goods and services that have been received but not invoiced,
tax due to HMRC, and retirement benefit liabilities. Liabilities which have a
level of uncertainty regarding their timing or the future cost to settle them are included in other liabilities as provisions for liabilities and charges.
2024
2023
Other liabilities
\u00a3m
\u00a3m
Lease liabilities
630
670
Provisions for liabilities and charges
864
990
Retirement benefit liabilities (Note 5)
80
99
Accruals
1,353
1,411
Deferred income
394
402
Current tax
263
332
Deferred tax (Note 7)
99
141
Other liabilities
(1)
918
1,157
Total
4,601
5,202
(1)
Other liabilities include liabilities of disposal groups of nil (2023 - \u00a33 million).
Provisions for liabilities and charges
Litigation and
Commitments
Customer redress
other regulatory
Property
and guarantees
Other (1)
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
486
156
99
78
171
990
Expected credit loss impairment release
-
-
-
(23)
-
(23)
Currency translation and other movements
(1)
-
(1)
-
(3)
(5)
Charge to income statement
194
30
47
-
301
572
Release to income statement
(137)
(23)
(36)
-
(46)
(242)
Provisions utilised
(122)
(35)
(19)
-
(252)
(428)
At 31 December 2024
420
128
90
55
171
864
(1)
Other materially comprises provisions for restructuring costs and provision for Bank of England Levy.
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.
For accounting policy information refer to Accounting policy 3.12.
Background information on all material provisions is given in Note 25
.
21 Share capital and other equity
Share capital consists of ordinary shares and preference shares and is measured as the number of shares allotted and fully paid, multiplied by the nominal value of a
share. Other equity includes paid-in equity, merger reserve, capital redemption reserve and own shares held.
For accounting policy information refer to Accounting policy 3.10.
\n \n
Number of shares
2024
2023
2024
2023
Allotted, called up and fully paid
\u00a3m
\u00a3m
000s
000s
Ordinary shares of \u00a31.0769
(1)
8,972
9,683
8,331,145
8,991,737
Cumulative preference shares of \u00a31
0.5
0.5
483.0
483.0
(1)
The nominal value of ordinary shares without rounding is \u00a31.076923076923077 per share.
Movement in allotted, called up and fully paid
\n \n
Number of shares
ordinary shares
\u00a3m
000s
At 31 December 2022
10,539
9,786,024
Share cancellation
(856)
(794,287)
At 31 December 2023
9,683
8,991,737
Share cancellation
(711)
(660,592)
At 31 December 2024
8,972
8,331,145
Ordinary shares
There is no authorised share capital under the company\u2019s constitution. At 31 December
2024, the directors had authority granted at the 2024 Annual General Meeting (AGM) to
issue up to \u00a3472 million nominal of ordinary shares other than by pre-emption to existing
shareholders.
On-market purchases
At the AGM in 2023, shareholders renewed the authority for the company to make
market purchases of up to 967 million ordinary shares. The
directors used the authority
obtained at the 2023 AGM (2023 Authority) to carry out share buyback programmes of
up to \u00a3500 million (2023 Programme) and \u00a3300 million (2024 Programme).
The maximum number of ordinary shares that could be purchased under the 2023
Programme was 920 million (reflecting the impact on the 2023 Authority of the reduction
in issued share capital following the off-market buyback announced on 22 May 2023).
The maximum number of Ordinary Shares that could be purchased under the 2024
Programme was 697 million (reflecting the impact on the 2023 Authority of the reduction
in issued share capital following the off-market buyback announced on 22 May 2023 and
further reduced by the number of shares purchased to 19 February 2024 under the
2023 Programme).
The 2023 Programme started on 31 July
2023 and ended on 22 March 2024. 228
million ordinary shares (nominal value
\u00a3245 million) were purchased by the
company under the Programme at a
volume weighted average price of
217.1788 pence per Ordinary Share for a
total consideration of \u00a3495 million. All of
the purchased ordinary shares were
cancelled, representing 2.52% of the
company\u2019s issued ordinary share capital.
The 2024 Programme started on 19
February 2024 and ended on 24 July
2024. 104 million ordinary shares
(nominal value \u00a3113 million) were
purchased by the company under the
Programme at a volume weighted
average price of 287.1225 pence per
ordinary share for a total consideration of
\u00a3300 million. All of the purchased
ordinary shares were cancelled,
representing 1.19% of the company\u2019s
issued ordinary share capital.
Shareholders will be asked to renew the
authority for the company to make
market purchases of ordinary shares at
the AGM in 2025.
Off-market purchases
A Directed Buyback Contract between
the Company and HMT was approved by
the shareholders of the Company at a
General Meeting on 6 February 2019.
Amendments to the Directed Buyback
Contract were approved by the
shareholders at a General Meeting on 25
August 2022 and at the 2024 AGM.
The authority from shareholders to make
off-market purchases of ordinary shares
from HMT (or its nominee) under the
terms of the Directed Buyback Contract
was renewed at the 2024 AGM.
The company used this authority to make
an off-market purchase of 392 million
ordinary shares (nominal value \u00a3423
million) in the company from HMT on 31
May 2024, at a price of 316.2 pence per
ordinary share for the total consideration
of \u00a31,241 million, representing 4.50% of
the company\u2019s issued ordinary share
capital. The company cancelled 222
million of the purchased ordinary shares
and transferred the remaining 170 million
ordinary shares to treasury.
On 11 November 2024, the company
made a further off-market purchase of
263 million ordinary shares (nominal
value \u00a3283 million) in the company from
HMT, at a price of 380.8 pence per
ordinary share for the total consideration
of \u00a31 billion, representing 3.16% of the
company\u2019s issued ordinary share capital.
The company cancelled all of purchased
ordinary shares.
Shareholders will be asked to renew the authority for the company to make off-market
purchases of its ordinary shares from HMT
(or its nominee) at the AGM in 2025.
Dividends
In 2024 NatWest Group paid an interim dividend of \u00a3498 million, or 6 pence per ordinary
share (2023 \u2013 \u00a3491 million, or 5.5 pence per ordinary share).
The company has announced that the directors have recommended a final dividend of
\u00a31.2 billion, or 15.5 pence per ordinary share
(2023 \u2013 \u00a31.0 billion, or 11.5 pence per
ordinary share). The final dividend recommended by directors is subject to shareholders\u2019
approval at the AGM on 23 April 2025. If approved, payment will be made on 28 April
2025 to shareholders on the register at the close of business on 14 March 2025. The ex-
dividend date will be 13 March 2025.
Cumulative preference shares
At the AGM in 2024, shareholders renewed the authority for the company to make an
off-market purchase of its preference shares. Shareholders will be asked to renew the
authority at the AGM in 2025.
Other equity
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Additional Tier 1 notes
\u00a0 \u00a0 \u00a0
$1.15 billion 8.000% notes callable August 2025
(1)
736
735
735
$1.50 billion 6.000% notes callable
\u00a0 \u00a0 \u00a0
December 2025 - June 2026
(2)
1,220
1,220
1,220
\u00a31.00 billion 5.125% notes callable May - November 2027
(3)
998
998
998
\u00a30.40 billion 4.5% notes callable March 2028
(4)
399
399
399
$0.75 billion 4.6% notes callable June 2031
(5)
539
538
538
$1.00 billion 8.125% notes callable November 2033
(6)
798
-
-
$0.75 billion 7.3% notes callable November 2034
(7)
590
-
-
\u00a0
5,280
3,890
3,890
\n
(1)
Issued in August 2015. In the event of conversion, converted into ordinary shares at a price of $3.314 per share.
(2)
Issued in June 2020. In the event of conversion, converted into ordinary shares at a price of $2.191 (translated at
applicable exchange rate) per share.
(3)
Issued in November 2020. In the event of conversion, converted into ordinary shares at a price of \u00a31.764 per share.
(4)
Issued in March 2021. In the event of conversion, converted into ordinary shares at a price of \u00a31.764 per share.
(5)
Issued in June 2021. In the event of conversion, converted into ordinary shares at a price of $2.462 (translated at
applicable exchange rate) per share.
(6)
Issued in May 2024. In the event of conversion, converted into ordinary shares at a price of $2.205 (translated at
applicable exchange rate) per share.
(7)
Issued in November 2024. In the event of conversion, converted into ordinary shares at a price of $2.226 (translated at
applicable exchange rate) per share.
Paid-in equity
-
comprises equity
instruments issued by the company other
than those legally constituted as shares.
Additional Tier 1 instruments issued by
NatWest Group plc having the legal form
of debt are classified as equity under
IFRS. The coupons on these instruments
are non-cumulative and payable at the
company\u2019s discretion. In the event
NatWest Group\u2019s CET1 ratio falls below
7% any outstanding instruments will be
converted into ordinary shares at a fixed
price.
Capital recognised for regulatory
purposes cannot be redeemed without
Prudential Regulation Authority consent.
This includes ordinary shares, preference
shares and additional Tier 1
instruments.
Merger reserve
-
the merger reserve
comprises the premium on shares issued
to acquire NatWest Bank Plc less goodwill
amortisation charged under previous
GAAP.
Capital redemption reserve -
under UK
companies legislation, when shares are
redeemed or purchased wholly or partly
out of the company's profits, the amount
by which the company's issued share
capital is diminished must be transferred
to the capital redemption reserve. The
capital maintenance provisions of UK
companies legislation apply to the capital
redemption reserve as if it were part of
the company\u2019s paid up share capital. The
nominal value of the shares bought back
from HMT in March 2023 and via the
Programme during 2023 have been
transferred to the Capital redemption
reserve.
Own shares held
-
at 31 December
2024, 11 million ordinary shares of
\u00a31.0769 each of the company (2023 - 12
million) were held by employee share
trusts in respect of share awards and
options granted to employees.
During 2024, the employee share trusts
purchased no ordinary shares and
delivered 1 million ordinary shares in
satisfaction of the exercise of options and
the vesting of share awards under the
employee share plans. The company
retains the flexibility to use newly issued
shares, shares purchased by the
NatWest Group Employee Share
Ownership Trust and any available
treasury shares to satisfy obligations
under its employee share plans.
The company does not use performance
conditions or targets based on earnings
per share (EPS), total shareholder return
(TSR), and net asset value (NAV) in
connection with its employee share plans.
As part of the shares bought back from
HMT in May 2024, the company
transferred 170 million ordinary shares to
own shares held. The company has used
a total of 80 million treasury shares in
2024 to satisfy the exercise of options
and the vesting of share awards under
the employee share plans. The balance of
ordinary shares held in treasury as at 31
December 2024 was 277 million.
NatWest Group plc optimises capital
efficiency by maintaining reserves in
subsidiaries, including regulated entities.
Certain preference shares and
subordinated debt are also included
within regulatory capital. The remittance
of reserves to the company or the
redemption of shares or subordinated
capital by regulated entities may be
subject to maintaining the capital
resources required by the relevant
regulator.
UK law prescribes that only the reserves
of the company are taken into account
for the purpose of making distributions
and in determining permissible
applications of the share premium
account.
22 Structured entities
A structured entity (SE) is an entity that has been designed such that voting or similar rights are not the dominant factor in deciding who controls the entity, for
example, when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements. SEs are usually
established for a specific, limited purpose. They do not carry out a business or trade and typically have no employees.
Securitisations
In a securitisation, assets, or interests in a
pool of assets, are transferred, or the
credit risk is transferred via a derivative
or financial guarantee to a SE which then
issues liabilities to third party investors.
NatWest Group\u2019s involvement in client
securitisations takes a number of forms.
It may provide secured finance to, or
purchase asset-backed notes from, client
sponsored SEs secured on assets
transferred by the client entity; purchase
asset backed securities issued by client
sponsored SEs in the primary or
secondary markets; or provide liquidity
facilities to client sponsored SEs. In
addition, NatWest Group arranges or
acts as lead manager or placement
agent in client primary markets
securitisations. NatWest Group provides
portfolio structured derivative hedging
solutions to clients. NatWest Group
undertakes own-asset securitisations to
transfer the credit risk on portfolios of
financial assets.
Other credit risk transfer
securitisations
NatWest Group transfers credit risk on
originated loans and mortgages without
the transfer of assets to a SE. As part of
this, NatWest Group enters into credit
derivative and financial guarantee
contracts with consolidated SEs. At 31
December 2024, debt securities in issue
by such SEs (and held by third parties)
were \u00a31,175 million (2023 - \u00a3863 million).
The associated loans and mortgages at
31 December 2024 were \u00a313,226 million
(2023 - \u00a32,687 million). At 31 December,
ECL in relation to non-defaulted assets
was reduced by \u00a343 million (2023 - \u00a311
million) as a result of financial guarantee
contracts with consolidated SEs.
Covered debt programme
Group companies have assigned loans to
customers and debt investments to
bankruptcy remote limited liability
partnerships to provide security for issues
of debt securities. NatWest Group retains
all of the risks and rewards of these
assets and continues to recognise them.
The partnerships are consolidated by
NatWest Group and the related covered
bonds included within other financial
liabilities. At 31 December 2024, \u00a39,668
million (2023 - \u00a311,067 million) of loans to
customers provided security for debt
securities in issue and other borrowing of
\u00a32,305 million (2023 - \u00a33,619 million).
Lending of own issued securities
NatWest Group has issued, retained, and
lent debt securities under securities
lending arrangements. Under standard
terms in the UK and US markets, the
recipient has an unrestricted right to sell
or repledge collateral, subject to
returning equivalent securities on
maturity of the transaction.
NatWest
Group retains all of the risks and rewards
of own issued liabilities lent under such
arrangements and does not recognise
them. At 31 December 2024, \u00a34,715
million (2023 - \u00a34,062 million) of secured
own issued liabilities have been retained
and lent under securities lending
arrangements. At 31 December 2024,
\u00a34,878 million (2023 - \u00a34,168 million) of
loans and other debt instruments
provided security for secured own issued
liabilities that have been retained and lent
under securities lending arrangements.
Unconsolidated structured entities
The term \u2018unconsolidated structured entities\u2019 refers to structured entities not controlled
by NatWest Group, and which are established either by NatWest Group or a third party.
An interest in a structured entity is any form of contractual or non-contractual
involvement which creates variability in returns for NatWest Group arising from the
performance of the entity. Such interests include holdings of debt or equity securities,
derivatives that transfer financial risks from the entity to NatWest Group, provision of
lending and loan commitments, financial guarantees and investment management
agreements. NatWest Group enters into transactions with unconsolidated structured
entities in the normal course of business to facilitate customer transactions, to provide
risk management services and for specific investment opportunities. Structured entities
may take the form of funds, trusts, partnerships, securitisation vehicles, and private
investment companies. NatWest Group considers itself to be the sponsor of a structured
entity where it is primarily involved in the set up and design of the entity and where
NatWest Group transfers assets to the entity, markets products associated with the
entity in its own name, and/or provides guarantees in relation to the performance of the
entity. The nature and extent of NatWest Group\u2019s interests in structured entities is
summarised in the following table:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
Asset-backed
Investment
\u00a0
Asset-backed
Investment
\u00a0
\u00a0
securitisation
funds
\u00a0
securitisation
funds
\u00a0
\u00a0
vehicles
and other
Total
vehicles
and other
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Trading assets
252
216
468
303
311
614
Derivatives
94
-
94
134
-
134
Loans to customers
5,399
1,601
7,000
2,701
999
3,700
Other financial assets
15,744
923
16,667
13,096
1,062
14,158
Total
21,489
2,740
24,229
16,234
2,372
18,606
Liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Derivatives
153
8
161
213
17
230
Total
153
8
161
213
17
230
Off balance sheet
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Liquidity facilities/loan
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
commitments
2,134
457
2,591
1,873
396
2,269
Guarantees
-
104
104
-
127
127
Total
2,134
561
2,695
1,873
523
2,396
Maximum exposure
23,470
3,293
26,763
17,894
2,878
20,772
\n
23 Asset transfers
This note provides an overview of assets that have been transferred but where the NatWest Group retains substantially all the risks and rewards of the transferred
assets and therefore continues to recognize them on balance sheet.
Transfers that do not qualify for derecognition
NatWest Group enters into securities repurchase, lending and total return transactions in
accordance with normal market practice which includes the provision of additional
collateral if necessary. Under standard terms in the UK and US markets, the recipient
has an unrestricted right to sell or repledge collateral, subject to returning equivalent
securities on settlement of the transaction.
Securities sold under repurchase transactions and transactions with the substance of
securities repurchase agreements are not derecognised if NatWest Group retains
substantially all the risks and rewards of ownership. The fair value (and carrying value)
of securities transferred under such transactions included on the balance sheet are set
out below. All of these securities could be sold or repledged by the holder.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
The following assets have failed derecognition
(1)
\u00a3m
\u00a3m
Trading assets
7,708
7,907
Loans to bank - amortised cost
70
10
Loans to customers - amortised cost
45
281
Other financial assets
13,174
8,764
Total
20,997
16,962
\n
(1)
Associated liabilities were \u00a320,394 million (2023 \u2013 \u00a316,522 million).
Assets pledged as collateral
NatWest Group pledges collateral with its counterparties in respect of derivative
liabilities, bank and stock borrowings and other transactions.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Assets pledged against liabilities
\u00a3m
\u00a3m
Trading assets
10,288
10,976
Loans to banks - amortised cost
-
63
Loans to customers - amortised cost
19,030
21,611
Other financial assets
(1)
4,451
6,506
Total
33,769
39,156
\n
(1)
Includes assets pledged for pension derivatives and \u00a3499 million of debt securities under the continuing control of NWB
Plc. This follows the agreement between NWB Plc and the Group Pension Fund to establish a bankruptcy remote
reservoir trust to hold these assets. Refer to Note 5 for additional information.
As part of the covered debt programme \u00a39,668 million of loans to customers and other
debt instruments (2023 \u2013 \u00a311,067 million) have been transferred to bankruptcy remote
limited liability partnerships within the NatWest Group to provide collateral for issuances
of debt securities and other borrowings by the NatWest Group of \u00a32,305 million (2023 \u2013
\u00a33,619 million). Refer to Note 22.
24 Capital resources
NatWest Group\u2019s regulatory capital is assessed against minimum requirements that are set out under the UK Capital Requirements Regulation to determine the
strength of its capital base. This note shows a reconciliation of shareholders\u2019 equity to regulatory capital.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Shareholders\u2019 equity (excluding non-controlling interests)
\u00a0 \u00a0
Shareholders\u2019 equity
39,350
37,157
Other equity instruments
(5,280)
(3,890)
\u00a0
34,070
33,267
Regulatory adjustments and deductions
\u00a0 \u00a0
Own credit
28
(10)
Defined benefit pension fund adjustment
(147)
(143)
Cash flow hedging reserve
1,443
1,899
Deferred tax assets
(1,084)
(979)
Prudential valuation adjustments
(230)
(279)
Goodwill and other intangible assets
(7,544)
(7,614)
Expected loss less impairment
(27)
-
Foreseeable ordinary dividends
(1,249)
(1,013)
Adjustment for trust assets
(1)
(365)
(365)
Foreseeable charges
-
(525)
Adjustment under IFRS 9 transitional arrangements
33
202
\u00a0
(9,142)
(8,827)
CET1 capital
24,928
24,440
Additional Tier 1 (AT1) capital
\u00a0 \u00a0
Qualifying instruments and related share premium
5,259
3,875
AT1 capital
5,259
3,875
Tier 1 capital
30,187
28,315
Qualifying Tier 2 capital
\u00a0 \u00a0
Qualifying instruments and related share premium
5,918
5,189
Other regulatory adjustments
-
128
Tier 2 capital
5,918
5,317
Total regulatory capital
36,105
33,632
\n
(1)
Prudent deduction in respect of agreement with the pension fund to establish legal structure to remove dividend linked contribution. Refer Notes 5 and 32.
It is NatWest Group policy to maintain a
strong capital base, to expand it as
appropriate and to utilise it efficiently
throughout its activities to optimise the
return to shareholders while maintaining
a prudent relationship between the
capital base and the underlying risks of
the business. In carrying out this policy,
NatWest Group has regard to the
supervisory requirements of the PRA. The
PRA uses capital ratios as a measure of
capital adequacy in the UK banking
sector, comparing a bank's capital
resources with its risk-weighted assets
(the assets and off-balance sheet
exposures are weighted to reflect the
inherent credit and other risks); by
international agreement, the Pillar 1
capital ratios should be not less than 8%
with a Common Equity Tier 1 component
of not less than 4.5%. NatWest Group has
complied with the PRA\u2019s capital
requirements throughout the year.
A number of subsidiaries and sub-groups
within NatWest Group, principally banking
entities, are subject to various individual
regulatory capital requirements in the UK
and overseas. Furthermore, the payment
of dividends by subsidiaries and the ability
of members of NatWest Group to lend
money to other members of NatWest
Group may be subject to restrictions such
as local regulatory or legal requirements,
the availability of reserves and financial
and operating performance.
25 Memorandum items
Contingent liabilities and commitments
NatWest Group provides its customers with a variety of services to support
their businesses, such as guarantees. These are reported as commitments.
Contingent liabilities are possible obligations dependent on a future event or
present obligations which are either not probable or cannot be measured
reliably.
The amounts shown in the table below are intended only to provide an indication of the
volume of business outstanding at 31 December 2024. Although NatWest Group is
exposed to credit risk in the event of a customer\u2019s failure to meet its obligations, the
amounts shown do not, and are not intended to, provide any indication of NatWest
Group's expectation of future losses.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Contingent liabilities and commitments
\u00a0 \u00a0
Guarantees
3,060
2,823
Other contingent liabilities
1,496
1,633
Standby facilities, credit lines and other commitments
135,405
127,424
Total
139,961
131,880
\n
(1)
Updated to reflect the regulatory treatment of revocable commitments.
Banking commitments and contingent obligations, which have been entered into on
behalf of customers and for which there are corresponding obligations from customers,
are not included in assets and liabilities. NatWest Group's maximum exposure to credit
loss, in the event of its obligation crystallising and all counterclaims, collateral or security
proving valueless, is represented by the contractual nominal amount of these
instruments included in the table above. These commitments and contingent obligations
are subject to NatWest Group's normal credit approval processes.
Guarantees
\u2013
NatWest Group gives guarantees on behalf of customers. A financial
guarantee represents an irrevocable undertaking that NatWest Group will meet a
customer's specified obligations to a third party if the customer fails to do so. The
maximum amount that NatWest Group could be required to pay under a guarantee is its
principal amount as disclosed in the table above. NatWest Group expects most
guarantees it provides to expire unused.
Other contingent liabilities
- these include standby letters of credit, supporting customer
debt issues and contingent liabilities relating to customer trading activities such as those
arising from performance and customs bonds, warranties and indemnities.
Standby facilities and credit lines
- under a loan commitment, NatWest Group agrees to
make funds available to a customer in the future. Loan commitments, which are usually
for a specified term, may be unconditionally cancellable or may persist, provided all
conditions in the loan facility are satisfied or waived. Commitments to lend include
commercial standby facilities and credit lines, liquidity facilities to commercial paper
conduits and unutilised overdraft facilities.
Other commitments
- these include documentary credits, which are commercial letters
of credit providing for payment by NatWest Group to a named beneficiary against
presentation of specified documents, forward asset purchases, forward deposits placed
and undrawn note issuance and revolving underwriting facilities, and other short-term
trade related transactions.
Contractual obligations for future expenditure not provided for in the accounts
The following table shows contractual obligations for future expenditure not provided for
in the accounts at the year end.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Capital expenditure on property, plant and equipment
14
38
Contracts to purchase goods or services
(1)
1,160
1,121
\u00a0
1,174
1,159
\n
(1)
Of which due within 1 year: \u00a3356 million (2023 \u2013 \u00a3379 million).
Trustee and other fiduciary activities
In its capacity as trustee or other fiduciary role, NatWest Group may hold or place
assets on behalf of individuals, trusts, companies, pension schemes and others. The
assets and their income are not included in NatWest Group's financial statements.
NatWest Group earned fee income of \u00a3302 million (2023 - \u00a3264 million; 2022 - \u00a3266
million) from these activities.
The Financial Services Compensation Scheme
The Financial Services Compensation Scheme (FSCS), the UK's statutory fund of last
resort for customers of authorised financial services firms, pays compensation if a firm is
unable to meet its obligations. The FSCS funds compensation for customers by raising
management expenses levies and compensation levies on the industry. In relation to
protected deposits, each deposit-taking institution contributes towards these levies in
proportion to their share of total protected deposits on 31 December of the year
preceding the scheme year (which runs from 1 April to 31 March), subject to annual
maxima set by the Prudential Regulation Authority. In addition, the FSCS has the power
to raise levies on a firm that has ceased to participate in the scheme and is in the
process of ceasing to be authorised for the costs that it would have been liable to pay
had the FSCS made a levy in the financial year it ceased to be a participant in the
scheme.
Litigation and regulatory matters
\n
NatWest Group plc and certain members
\n
of NatWest Group are party to various
\n
legal proceedings and are involved in, or
\n
subject to, various regulatory matters,
\n
including as the subject of investigations
\n
and other regulatory and governmental
\n
action (Matters) in the United Kingdom
\n
(UK), the United States (US), the
\n
European Union (EU) and other
\n
jurisdictions.
\n
NatWest Group recognises a provision for
\n
a liability in relation to these Matters
\n
when it is probable that an outflow of
\n
economic benefits will be required to
\n
settle an obligation resulting from past
\n
events, and a reliable estimate can be
\n
made of the amount of the obligation.
\n
In many of the Matters, it is not possible
\n
to determine whether any loss is
\n
probable, or to estimate reliably the
\n
amount of any loss, either as a direct
\n
consequence of the relevant proceedings
\n
and regulatory matters or as a result of
\n
adverse impacts or restrictions on
\n
NatWest Group\u2019s reputation, businesses
\n
and operations. Numerous legal and
\n
factual issues may need to be resolved,
\n
including through potentially lengthy
\n
discovery and document production
\n
exercises and determination of important
\n
factual matters, and by addressing novel
\n
or unsettled legal questions relevant to
\n
the proceedings in question, before the
\n
probability of a liability, if any, arising can
\n
reasonably be estimated in respect of
\n
any Matter. NatWest Group cannot
\n
predict if, how, or when such claims will
\n
be resolved or what the eventual
\n
settlement, damages, fine, penalty or
\n
other relief, if any, may be, particularly
\n
for Matters that are at an early stage in
\n
their development or where claimants
\n
seek substantial or indeterminate
\n
damages.
\n
There are situations where NatWest
\n
Group may pursue an approach that in
\n
some instances leads to a settlement
\n
agreement. This may occur in order to
\n
avoid the expense, management
\n
distraction or reputational implications of
\n
continuing to contest liability, or in order
\n
to take account of the risks inherent in
\n
defending or contesting Matters, even for
\n
those for which NatWest Group believes
\n
it has credible defences and should
\n
prevail on the merits. The uncertainties
\n
inherent in all Matters affect the amount
\n
and timing of any potential economic
\n
outflows for both Matters with respect to
\n
which provisions have been established
\n
and other contingent liabilities in respect
\n
of any such Matter.
\n
It is not practicable to provide an
\n
aggregate estimate of potential liability
\n
for our Matters as a class of contingent
\n
liabilities.
\n
The future economic outflow in respect of
\n
any Matter may ultimately prove to be
\n
substantially greater than, or less than,
\n
the aggregate provision, if any, that
\n
NatWest Group has recognised in respect
\n
of such Matter. Where a reliable estimate
\n
of the economic outflow cannot be
\n
reasonably made, no provision has been
\n
recognised. NatWest Group expects that
\n
in future periods, additional provisions
\n
and economic outflows relating to
\n
Matters that may or may not be
\n
currently known by NatWest Group will
\n
be necessary, in amounts that are
\n
expected to be substantial in some
\n
instances. Refer to Note 20 for
\n
information on material provisions.
\n
Matters which are, or could be, material,
\n
either individually or in aggregate, having
\n
regard to NatWest Group, considered as
\n
a whole, in which NatWest Group is
\n
currently involved are set out below. We
\n
have provided information on the
\n
procedural history of certain Matters,
\n
where we believe appropriate, to aid the
\n
understanding of the Matter.
\n
For a discussion of certain risks
\n
associated with NatWest Group\u2019s
\n
litigation and regulatory matters
\n
(including the Matters), refer to the Risk
\n
Factor relating to legal, regulatory and
\n
governmental actions and investigations
\n
set out on pages 422 to 423.
\n
Litigation
\n
London Interbank Offered Rate (LIBOR)
\n
and other rates litigation
\n
NatWest Group plc and certain other
\n
members of NatWest Group, including
\n
NWM Plc, are defendants in a number of
\n
claims pending in the United States
\n
District Court for the Southern District of
\n
New York (SDNY) with respect to the
\n
setting of USD LIBOR. The complainants
\n
allege that certain members of NatWest
\n
Group and other panel banks violated
\n
various federal laws, including the US
\n
commodities and antitrust laws, and state
\n
statutory and common law, as well as
\n
contracts, by manipulating LIBOR and
\n
prices of LIBOR-based derivatives in
\n
various markets through various means.
\n
The co-ordinated proceeding in the SDNY
\n
relating to USD LIBOR now includes one
\n
remaining class action, which is on behalf
\n
of persons who purchased LIBOR-linked
\n
instruments from defendants and bonds
\n
issued by defendants, as well as several
\n
non-class actions. The defendants in the
\n
co-ordinated proceeding have filed a
\n
summary judgment motion on the issue
\n
of liability, and briefing on that motion
\n
concluded in January 2025.
\n
In March 2024, NatWest Group
\n
companies reached an agreement to
\n
settle the USD LIBOR class action that
\n
asserted claims on behalf of lenders who
\n
made USD LIBOR based loans. The
\n
settlement amount, which was covered in
\n
full by an existing provision, has been
\n
paid and the settlement has now
\n
received final court approval.
\n
The non-class claims filed in the SDNY
\n
include claims that the Federal Deposit
\n
Insurance Corporation (FDIC) is asserting
\n
on behalf of certain failed US banks. In
\n
July 2017, the FDIC, on behalf of 39 of
\n
those failed US banks, commenced
\n
substantially similar claims against
\n
NatWest Group companies and others in
\n
the High Court of Justice of England and
\n
Wales. The action alleges collusion with
\n
regard to the setting of USD LIBOR and
\n
that the defendants breached UK and
\n
European competition law, as well as
\n
asserting common law claims of fraud
\n
under US law. The defendant banks
\n
consented to a request by the FDIC for
\n
discontinuance of the claim in respect of
\n
20 failed US banks, leaving 19 failed US
\n
banks as claimants. The trial is currently
\n
scheduled to commence in Q1 2026.
\n
In addition to the USD LIBOR cases
\n
described above, there is a class action
\n
relating to derivatives allegedly tied to
\n
JPY LIBOR and Euroyen TIBOR, which
\n
was dismissed by the SDNY in relation to
\n
NWM Plc and other NatWest Group
\n
companies in September 2021. That
\n
dismissal is now the subject of an appeal
\n
to the United States Court of Appeals for
\n
the Second Circuit (US Court of Appeals).
\n
Two other IBOR-related class actions
\n
involving NWM Plc, concerning alleged
\n
manipulation of Euribor and Pound
\n
Sterling LIBOR, were previously dismissed
\n
by the SDNY for various reasons. The
\n
plaintiffs\u2019 appeals in those two cases
\n
remain pending.
\n
In August 2020, a complaint was filed in
\n
the United States District Court for the
\n
Northern District of California by several
\n
United States retail borrowers against
\n
the USD ICE LIBOR panel banks and their
\n
affiliates (including NatWest Group plc,
NWM Plc, NWMSI and NWB Plc), alleging
\n
(i) that the very process of setting USD
\n
ICE LIBOR amounts to illegal price-fixing;
\n
and (ii) that banks in the United States
\n
have illegally agreed to use LIBOR as a
\n
component of price in variable retail
\n
loans. In September 2022, the district
\n
court dismissed the complaint. In
\n
December 2024, the United States Court
\n
of Appeals for the Ninth Circuit affirmed
\n
the district court\u2019s decision.
\n
NWM Plc is also named as a defendant in
\n
a motion to certify a class action relating
\n
to LIBOR in the Tel Aviv District Court in
\n
Israel. NWM Plc filed a motion for
\n
cancellation of service outside the
\n
jurisdiction, which was granted in July
\n
2020. The claimants appealed that
\n
decision and in November 2020 the
\n
appeal was refused and the claim
\n
dismissed by the Appellate Court. The
\n
claim could in future be recommenced
\n
depending on the outcome of an appeal
\n
to Israel\u2019s Supreme Court in respect of
\n
the dismissal of the substantive case
\n
against banks that had a presence in
\n
Israel.
\n
Foreign exchange litigation
\n
NatWest Group plc, NWM Plc and/or
\n
NWMSI are defendants in several cases
\n
relating to NWM Plc\u2019s foreign exchange
\n
(FX) business.
\n
In May 2019, a cartel class action was
\n
filed in the Federal Court of Australia
\n
against NWM Plc and four other banks
\n
on behalf of persons who bought or sold
\n
currency through FX spots or forwards
\n
between 1 January 2008 and 15 October
\n
2013 with a total transaction value
\n
exceeding AUD 0.5 million. The claimant
\n
has alleged that the banks, including
\n
NWM Plc, contravened Australian
\n
competition law by sharing information,
\n
coordinating conduct, widening spreads
\n
and manipulating FX rates for certain
\n
currency pairs during this period.
\n
NatWest Group plc and NWMSI have
\n
been named in the action as \u2018other cartel
\n
participants\u2019, but are not respondents.
\n
The claim was served in June 2019 and
\n
NWM Plc filed its defence in March 2022.
\n
The court has ordered that potential
\n
class members are required to either opt
\n
out of the proceedings or register to be
\n
included in or benefit from any potential
\n
settlement of the claim. Directions have
\n
been made for the provision of evidence
\n
during 2025 and 2026.
\n
In July and December 2019, two
\n
separate applications seeking opt-out
\n
collective proceedings orders were filed in
\n
the UK Competition Appeal Tribunal
\n
(CAT) against NatWest Group plc, NWM
\n
Plc and other banks. Both applications
\n
were brought on behalf of persons who,
\n
between 18 December 2007 and 31
\n
January 2013, entered into a relevant FX
\n
spot or outright forward transaction in
\n
the European Economic Area with a
\n
relevant financial institution or on an
\n
electronic communications network. In
\n
March 2022, the CAT declined to certify
\n
as collective proceedings either of the
\n
applications, which was appealed by the
\n
applicants and the subject of an
\n
application for judicial review.
\n
In its amended judgment in November
\n
2023, the Court of Appeal allowed the
\n
appeal and decided that the claims
\n
should proceed on an opt-out basis.
\n
Separately, the court determined which
\n
of the two competing applicants can
\n
proceed as class representative, and
\n
dismissed the application for judicial
\n
review of the CAT\u2019s decision. The other
\n
applicant has discontinued its claim and
\n
withdrawn from the proceedings. The
\n
banks sought permission to appeal the
\n
Court of Appeal decision directly to the
\n
UK Supreme Court, which was granted in
\n
April 2024. The appeal is scheduled to be
\n
heard in April 2025.
\n
Two motions to certify FX-related class
\n
actions were filed in the Tel Aviv District
\n
Court in Israel in September and October
\n
2018, and were subsequently
\n
consolidated into one motion. The
\n
consolidated motion to certify, which
\n
names The Royal Bank of Scotland plc
\n
(now NWM Plc) and several other banks
\n
as defendants, was served on NWM Plc
\n
in May 2020. The applicants sought the
\n
court\u2019s permission to amend their
\n
motions to certify the class actions. NWM
\n
Plc filed a motion challenging the
\n
permission granted by the court for the
\n
applicants to serve the consolidated
\n
motion outside the Israeli jurisdiction.
\n
That NWM Plc motion remains pending.
\n
In February 2024, NWM Plc executed an
\n
agreement to settle the claim, subject to
\n
court approval. The settlement amount is
\n
covered in full by an existing provision.
\n
In December 2021, a summons was
\n
served in the Netherlands against
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V. by Stichting FX Claims on behalf of a
\n
number of parties, seeking declarations
\n
from the court concerning liability for
\n
anti-competitive FX market conduct
\n
described in decisions of the European
\n
Commission (EC) of 16 May 2019, along
\n
with unspecified damages. The claimant
\n
amended its claim to also refer to a 2
\n
December 2021 decision by the EC,
\n
which described anti-competitive FX
\n
market conduct. NatWest Group plc,
\n
NWM Plc and other defendants contested
\n
the jurisdiction of the Dutch court. In
\n
March 2023, the district court in
\n
Amsterdam accepted that it has
\n
jurisdiction to hear claims against NWM
\n
N.V. but refused jurisdiction to hear any
\n
claims against the other defendant banks
\n
(including NatWest Group plc and NWM
\n
Plc) brought on behalf of the parties
\n
represented by the claimant that are
\n
domiciled outside of the Netherlands. The
\n
claimant is appealing that decision. The
\n
defendant banks have brought cross-
\n
appeals which seek a ruling that the
\n
Dutch court has no jurisdiction to hear
\n
any claims against the defendant banks
\n
domiciled outside of the Netherlands,
\n
irrespective of whether the claim has
\n
been brought on behalf of a party
\n
represented by the claimant that is
\n
domiciled within or outside of the
\n
Netherlands. The Amsterdam Court of
\n
Appeal has stayed these appeal
\n
proceedings until the Court of Justice of
\n
the European Union has answered
\n
preliminary questions that have been
\n
referred to it in another matter.
\n
In September 2023, a second summons
\n
was served by Stichting FX Claims on
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V., on behalf of a new group of parties.
\n
The claimant seeks declarations from the
\n
district court in Amsterdam concerning
\n
liability for anti-competitive FX market
\n
conduct described in the above
\n
referenced decisions of the EC of 16 May
\n
2019 and 2 December 2021, along with
\n
unspecified damages. NatWest Group plc,
\n
NWM Plc and other defendants are
\n
contesting the Dutch court's jurisdiction.
\n
The district court has stayed the
\n
proceedings pending judgment in the
\n
above-mentioned appeals.
\n
In January 2025, a third summons was
\n
served by Stichting FX Claims on
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V., on behalf of another new group of
\n
parties. The claimant seeks similar
\n
declarations from the district court in
\n
Amsterdam to those being sought in the
\n
above-mentioned claims, along with
\n
unspecified damages.
\n
Certain other foreign exchange
\n
transaction related claims have been or
\n
may be threatened. NatWest Group
\n
cannot predict whether all or any of
these claims will be pursued.
\n
Government securities antitrust litigation
\n
Class action antitrust claims commenced
\n
in March 2019 were pending in the SDNY
\n
against NWM Plc, NWMSI and other
\n
banks in respect of Euro-denominated
\n
bonds issued by various European central
\n
banks (European government bonds or
\n
EGBs). The complaint alleged a
\n
conspiracy among dealers of EGBs to
\n
widen the bid-ask spreads they quoted to
\n
customers, thereby increasing the prices
\n
customers paid for the EGBs or
\n
decreasing the prices at which customers
\n
sold EGBs.
\n
In March 2024, NatWest Group
\n
companies reached an agreement to
\n
settle the class action. The settlement
\n
amount, which was covered in full by an
\n
existing provision, has been paid and the
\n
settlement has now received final court
\n
approval.
\n
Swaps antitrust litigation
\n
NWM Plc and other members of NatWest
\n
Group, including NatWest Group plc, as
\n
well as a number of other interest rate
\n
swap dealers, are defendants in several
\n
cases pending in the SDNY alleging
\n
violations of the US antitrust laws in the
\n
market for interest rate swaps. There is a
\n
consolidated class action complaint on
\n
behalf of persons who entered into
\n
interest rate swaps with the defendants,
\n
as well as non-class action claims by
\n
three swap execution facilities
\n
(TeraExchange, Javelin, and trueEx). The
\n
plaintiffs allege that the swap execution
\n
facilities would have successfully
\n
established exchange-like trading of
\n
interest rate swaps if the defendants had
\n
not unlawfully conspired to prevent that
\n
from happening through boycotts and
\n
other means. Discovery in the non-class
\n
action claims is complete. In March 2024,
\n
NatWest Group companies reached an
\n
agreement to settle the class action. The
\n
settlement amount has been paid into
\n
escrow pending final court approval of
\n
the settlement and was covered in full by
\n
an existing provision.
\n
In June 2021, a class action antitrust
\n
complaint was filed against a number of
\n
credit default swap dealers, in New
\n
Mexico federal court on behalf of persons
\n
who, from 2005 onwards, settled credit
\n
default swaps in the United States by
\n
reference to the ISDA credit default swap
\n
auction protocol. The complaint alleges
\n
that the defendants conspired to
\n
manipulate that benchmark through
\n
various means in violation of the antitrust
\n
laws and the Commodity Exchange Act.
\n
The defendants filed a motion to dismiss
\n
the complaint and, in June 2023, such
\n
motion was denied as regards to NWMSI
\n
and other financial institutions, but
\n
granted as regards to NWM Plc on the
\n
ground that the court lacks jurisdiction
\n
over that entity. As a result, the case
\n
entered the discovery phase as against
\n
the non-dismissed defendants. In January
\n
2024, the SDNY issued an order barring
\n
the plaintiffs in the New Mexico case
\n
from pursuing claims based on conduct
\n
occurring before 30 June 2014 on the
\n
ground that such claims were
\n
extinguished by a 2015 settlement
\n
agreement that resolved a prior class
\n
action relating to credit default swaps.
\n
The SDNY\u2019s decision is the subject of a
\n
pending appeal to the US Court of
\n
Appeals.
\n
Odd lot corporate bond trading antitrust
\n
litigation
\n
In July 2024, the US Court of Appeals
\n
vacated the SDNY's October 2021
\n
dismissal of the class action antitrust
\n
complaint alleging that from August 2006
\n
onwards various securities dealers,
\n
including NWMSI, conspired artificially to
\n
widen spreads for odd lots of corporate
\n
bonds bought or sold in the United States
\n
secondary market and to boycott
\n
electronic trading platforms that would
\n
have allegedly promoted pricing
\n
competition in the market for such bonds.
\n
The appellate court held that the district
\n
judge who made the decision should not
\n
have been presiding over the case
\n
because a member of the judge\u2019s family
\n
had owned stock in one of the
\n
defendants while the motion was
\n
pending.
The defendants are now seeking
\n
dismissal by a different district court
\n
judge.
\n
Spoofing litigation
\n
In December 2021, three substantially
\n
similar class actions complaints were filed
\n
in federal court in the United States
\n
against NWM Plc and NWMSI alleging
\n
Commodity Exchange Act and common
\n
law unjust enrichment claims arising from
\n
manipulative trading known as spoofing.
\n
The complaints refer to NWM Plc\u2019s
\n
December 2021 spoofing-related guilty
\n
plea (described below under \u201cUS
\n
investigations relating to fixed-income
\n
securities\u201d) and purport to assert claims
\n
on behalf of those who transacted in US
\n
Treasury securities and futures and
\n
options on US Treasury securities
\n
between 2008 and 2018. In July 2022,
\n
the defendants filed a motion to dismiss
\n
these claims, which have been
\n
consolidated into one matter in the
\n
United States District Court for the
\n
Northern District of Illinois.
\n
Madoff
\n
NWM N.V. was named as a defendant in
\n
two actions filed by the trustee for the
\n
bankrupt estates of Bernard L. Madoff
\n
and Bernard L. Madoff Investment
\n
Securities LLC, in bankruptcy court in
\n
New York, which together seek to
\n
clawback more than US$298 million that
\n
NWM N.V. allegedly received from certain
\n
Madoff feeder funds and certain swap
\n
counterparties. The claims were
\n
previously dismissed, but as a result of an
\n
August 2021 decision by the US Court of
\n
Appeals, they are now proceeding in the
\n
discovery phase in the bankruptcy court,
\n
where they have been consolidated into
\n
one action.
\n
Offshoring VAT assessments
\n
HMRC, as part of an industry-wide
\n
review, issued protective tax
\n
assessments in 2018 against NatWest
\n
Group plc totalling \u00a3143 million relating to
\n
unpaid VAT in respect of the UK
\n
branches of two NatWest Group
\n
companies registered in India for the
\n
period from 1 January 2014 until 31
\n
December 2017 inclusive. NatWest Group
\n
formally requested reconsideration by
\n
HMRC of their assessments, and this
\n
process was completed in November
\n
2020. HMRC upheld their original decision
\n
and, as a result, NatWest Group plc
\n
lodged an appeal with the Tax Tribunal
\n
and an application for judicial review with
\n
the High Court of Justice of England and
\n
Wales, both in December 2020. In order
\n
to lodge the appeal with the Tax
\n
Tribunal, NatWest Group plc was
\n
required to pay amounts totalling \u00a3153
\n
million (including statutory interest) to
\n
HMRC in December 2020 and May 2022.
\n
The appeal and the application for judicial
\n
review have both been stayed pending
\n
further discussion with HMRC in relation
\n
to a separate case involving another
\n
bank.
The amount of \u00a3153 million
\n
continues to be recognised as an asset
\n
that NatWest Group plc expects to
\n
recover. Since 1 January 2018, NatWest
\n
Group plc has paid VAT on intra-group
\n
supplies from the India-registered
\n
NatWest Group companies.
\n
US Anti-Terrorism Act litigation
\n
NWM N.V. and certain other financial
\n
institutions are defendants in several
\n
actions filed by a number of US nationals
\n
(or their estates, survivors, or heirs), most
\n
of whom are or were US military
personnel, who were killed or injured in
\n
attacks in Iraq between 2003 and 2011.
\n
NWM Plc is also a defendant in some of
\n
these cases.
\n
According to the plaintiffs\u2019 allegations, the
\n
defendants are liable for damages arising
\n
from the attacks because they allegedly
\n
conspired with and/or aided and abetted
\n
Iran and certain Iranian banks to assist
\n
Iran in transferring money to Hezbollah
\n
and the Iraqi terror cells that committed
\n
the attacks, in violation of the US Anti-
\n
Terrorism Act, by agreeing to engage in
\n
\u2018stripping\u2019 of transactions initiated by the
\n
Iranian banks so that the Iranian nexus to
\n
the transactions would not be detected.
\n
The first of these actions, alleging
\n
conspiracy claims but not aiding and
\n
abetting claims, was filed in the United
\n
States District Court for the Eastern
\n
District of New York in November 2014.
\n
In September 2019, the district court
\n
dismissed the case, finding that the
\n
claims were deficient for several reasons,
\n
including lack of sufficient allegations as
\n
to the alleged conspiracy and causation.
\n
In January 2023, the US Court of Appeals
\n
affirmed the district court\u2019s dismissal of
\n
this case. The plaintiffs have now filed a
\n
motion in the district court to re-open the
\n
case to assert aiding and abetting claims
\n
that they previously did not assert, which
\n
the defendants are opposing. Another
\n
action, filed in the SDNY in 2017, which
\n
asserted both conspiracy and aiding and
\n
abetting claims, was dismissed by the
\n
SDNY in March 2019 on similar grounds
\n
as the first case, but remains subject to
\n
appeal to the US Court of Appeals.
\n
Other follow-on actions that are
\n
substantially similar to those described
\n
above are pending in the same courts.
\n
1MDB litigation
\n
A Malaysian court claim was served in
\n
Switzerland in November 2022 by 1MDB,
\n
a sovereign wealth fund, in which Coutts
\n
& Co Ltd was named, along with six
\n
others, as a defendant in respect of
\n
losses allegedly incurred by 1MDB. It is
\n
claimed that Coutts & Co Ltd is liable as
\n
a constructive trustee for having
\n
dishonestly assisted the directors of
\n
1MDB in the breach of their fiduciary
\n
duties by failing (amongst other alleged
\n
claims) to undertake due diligence in
\n
relation to a customer of Coutts & Co
\n
Ltd, through which funds totalling c.US$1
\n
billion were received and paid out
\n
between 2009 and 2011. 1MDB seeks
\n
the return of that amount plus interest.
\n
Coutts & Co Ltd filed an application in
\n
January 2023 challenging the validity of
\n
service and the Malaysian court\u2019s
\n
jurisdiction to hear the claim, and a
\n
hearing took place in February 2024. In
\n
March 2024, the court granted that
\n
application. 1MDB has appealed that
\n
decision and a prior decision by the court
\n
not to allow them to discontinue their
\n
claim. Both appeals are scheduled to be
\n
heard in November 2025.
\n
Coutts & Co Ltd (a subsidiary of RBS
\n
Netherlands Holdings B.V., which in turn
\n
is a subsidiary of NWM Plc) is a company
\n
registered in Switzerland and is in wind-
\n
down following the announced sale of its
\n
business assets in 2015.
\n
Regulatory matters (including
\n
investigations and customer redress
\n
programmes
)
\n
NatWest Group\u2019s businesses and financial
\n
condition can be affected by the actions
\n
of various governmental and regulatory
\n
authorities in the UK, the US, the EU and
\n
elsewhere. NatWest Group has engaged,
\n
and will continue to engage, in
\n
discussions with relevant governmental
\n
and regulatory authorities, including in
\n
the UK, the US, the EU and elsewhere,
\n
on an ongoing and regular basis, and in
\n
response to informal and formal inquiries
\n
or investigations, regarding operational,
\n
systems and control evaluations and
\n
issues including those related to
\n
compliance with applicable laws and
\n
regulations, including consumer
\n
protection, investment advice, business
\n
conduct, competition/anti-trust, VAT
\n
recovery, anti-bribery, anti-money
\n
laundering and sanctions regimes.
\n
NatWest Group expects government and
\n
regulatory intervention in financial
\n
services to be high for the foreseeable
\n
future, including increased scrutiny from
\n
competition and other regulators in the
\n
retail and SME business sectors.
\n
Any matters discussed or identified
\n
during such discussions and inquiries may
\n
result in, among other things, further
\n
inquiry or investigation, other action
\n
being taken by governmental and
\n
regulatory authorities, increased costs
\n
being incurred by NatWest Group,
\n
remediation of systems and controls,
\n
public or private censure, restriction of
\n
NatWest Group\u2019s business activities
\n
and/or fines. Any of the events or
\n
circumstances mentioned in this
\n
paragraph or below could have a
\n
material adverse effect on NatWest
\n
Group, its business, authorisations and
\n
licences, reputation, results of operations
\n
or the price of securities issued by it, or
\n
lead to material additional provisions
\n
being taken.
\n
NatWest Group is co-operating fully with
\n
the matters described below.
\n
US investigations relating to fixed-
\n
income securities
\n
In December 2021, NWM Plc pled guilty
\n
in the United States District Court for the
\n
District of Connecticut to one count of
\n
wire fraud and one count of securities
\n
fraud in connection with historical
\n
spoofing conduct by former employees in
\n
US Treasuries markets between January
\n
2008 and May 2014 and, separately,
\n
during approximately three months in
\n
2018. The 2018 trading occurred during
\n
the term of a non-prosecution agreement
\n
(NPA) between NWMSI and the United
\n
States Attorney's Office for the District of
\n
Connecticut (USAO CT), under which
\n
non-prosecution was conditioned on
\n
NWMSI and affiliated companies not
\n
engaging in criminal conduct during the
\n
term of the NPA. The relevant trading in
\n
2018 was conducted by two NWM
\n
traders in Singapore and breached that
\n
NPA. The plea agreement reached with
\n
the US Department of Justice (DOJ) and
\n
the USAO CT resolved both the spoofing
\n
conduct and the breach of the NPA.
\n
As required by the resolution and
\n
sentence imposed by the court, NWM Plc
\n
is subject to a probationary period, which
\n
was extended to end concurrently with
\n
the conclusion of the independent
\n
monitorship, which is also required under
\n
the plea agreement. The term of the
\n
independent monitorship and the ongoing
\n
implementation of recommendations
\n
made by it is currently scheduled to
\n
conclude in December 2025 but may be
\n
extended by agreement with the DOJ. In
\n
addition, NWM Plc has committed to
\n
compliance programme reviews and
\n
improvements and agreed to reporting
\n
and co-operation obligations.
\n
In the event that NWM Plc does not meet
\n
its obligations to the DOJ, this may lead
\n
to adverse consequences such as
\n
increased costs from any extension of
\n
monitorship and/or the period of the
\n
probation, findings that NWM Plc violated
\n
its probation term, and possible re-
\n
sentencing, amongst other
\n
consequences. Other material adverse
\n
collateral consequences may occur as a
\n
result of this matter, as further described
\n
in the Risk Factor relating to legal,
\n
regulatory and governmental actions and
\n
investigations set out on pages 422 to
\n
423.
RBSI Ltd reliance regime and referral to
enforcement
In January 2023, the Jersey Financial
Services Commission (JFSC) notified RBSI
Ltd that it had been referred to its
Enforcement Division in relation to RBSI
Ltd\u2019s operation of the reliance regime.
The reliance regime is specific to certain
Crown Dependencies and enables RBSI
Ltd to rely on regulated third parties for
specific due diligence information. RBSI
Ltd has provided information to the JFSC
at its request.
Investment advice review
In October 2019, the FCA notified
NatWest Group of its intention to appoint
a Skilled Person under section 166 of the
Financial Services and Markets Act 2000
to conduct a review of whether NatWest
Group\u2019s 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\u2019s review has concluded
and, after discussion with the FCA,
NatWest Group is undertaking additional
review / remediation work.
Review and investigation of treatment of
tracker mortgage customers in Ulster
Bank Ireland DAC
In December 2015, correspondence was
received from the Central Bank of Ireland
setting out an industry examination
framework in respect of the sale of
tracker mortgages from approximately
2001 until the end of 2015.
The redress and compensation process
has now largely concluded, although a
small number of cases remain
outstanding relating to uncontactable
customers.
UBIDAC customers have lodged tracker
mortgage complaints with the Financial
Services and Pensions Ombudsman
(FSPO). UBIDAC challenged three FSPO
adjudications in the Irish High Court. In
June 2023, the High Court found in
favour of the FSPO in all matters.
UBIDAC appealed that decision to the
Court of Appeal. In September 2024, the
Court of Appeal allowed UBIDAC\u2019s
appeal and set aside certain findings of
the FSPO. The Court of Appeal directed
one aspect of the FSPO decisions to be
remitted to the FSPO for its consideration
following an oral hearing, and UBIDAC is
following up with the FSPO in that
regard.
Other customer remediation in Ulster
Bank Ireland DAC
UBIDAC identified other legacy issues
leading to the establishment of
remediation requirements and progress is
ongoing to conclude activities.", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00266": { "value": "3.12. Provisions
We recognise a provision for a present
obligation resulting from a past event
when it is more likely than not that we
will be required to pay to settle the
obligation and the amount of the
obligation can be estimated reliably.
Provision is made for restructuring costs,
including the costs of redundancy, when
we have a constructive obligation.
An obligation exists when we have a
detailed formal plan for the restructuring
and have raised a valid expectation in
those affected either by starting to
implement the plan or by announcing its
main features.
We recognise any onerous cost of the
present obligation under a contract as a
provision. An onerous cost is the
unavoidable cost of meeting our
contractual obligations that exceed the
expected economic benefits. When we
intend to vacate a leasehold property or
right of use asset, the asset would be
tested for impairment and a provision
may be recognised for the ancillary
contractual occupancy costs.20 Other liabilities
Other liabilities are amounts due to third parties that are not financial liabilities but including lease liabilities held at amortised cost. Other liabilities represent, for
example, amounts due for goods and services that have been received but not invoiced,
tax due to HMRC, and retirement benefit liabilities. Liabilities which have a
level of uncertainty regarding their timing or the future cost to settle them are included in other liabilities as provisions for liabilities and charges.
2024
2023
Other liabilities
\u00a3m
\u00a3m
Lease liabilities
630
670
Provisions for liabilities and charges
864
990
Retirement benefit liabilities (Note 5)
80
99
Accruals
1,353
1,411
Deferred income
394
402
Current tax
263
332
Deferred tax (Note 7)
99
141
Other liabilities
(1)
918
1,157
Total
4,601
5,202
(1)
Other liabilities include liabilities of disposal groups of nil (2023 - \u00a33 million).
Provisions for liabilities and charges
Litigation and
Commitments
Customer redress
other regulatory
Property
and guarantees
Other (1)
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
486
156
99
78
171
990
Expected credit loss impairment release
-
-
-
(23)
-
(23)
Currency translation and other movements
(1)
-
(1)
-
(3)
(5)
Charge to income statement
194
30
47
-
301
572
Release to income statement
(137)
(23)
(36)
-
(46)
(242)
Provisions utilised
(122)
(35)
(19)
-
(252)
(428)
At 31 December 2024
420
128
90
55
171
864
(1)
Other materially comprises provisions for restructuring costs and provision for Bank of England Levy.
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.
For accounting policy information refer to Accounting policy 3.12.
Background information on all material provisions is given in Note 25
.25 Memorandum items
Contingent liabilities and commitments
NatWest Group provides its customers with a variety of services to support
their businesses, such as guarantees. These are reported as commitments.
Contingent liabilities are possible obligations dependent on a future event or
present obligations which are either not probable or cannot be measured
reliably.
The amounts shown in the table below are intended only to provide an indication of the
volume of business outstanding at 31 December 2024. Although NatWest Group is
exposed to credit risk in the event of a customer\u2019s failure to meet its obligations, the
amounts shown do not, and are not intended to, provide any indication of NatWest
Group's expectation of future losses.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Contingent liabilities and commitments
\u00a0 \u00a0
Guarantees
3,060
2,823
Other contingent liabilities
1,496
1,633
Standby facilities, credit lines and other commitments
135,405
127,424
Total
139,961
131,880
\n
(1)
Updated to reflect the regulatory treatment of revocable commitments.
Banking commitments and contingent obligations, which have been entered into on
behalf of customers and for which there are corresponding obligations from customers,
are not included in assets and liabilities. NatWest Group's maximum exposure to credit
loss, in the event of its obligation crystallising and all counterclaims, collateral or security
proving valueless, is represented by the contractual nominal amount of these
instruments included in the table above. These commitments and contingent obligations
are subject to NatWest Group's normal credit approval processes.
Guarantees
\u2013
NatWest Group gives guarantees on behalf of customers. A financial
guarantee represents an irrevocable undertaking that NatWest Group will meet a
customer's specified obligations to a third party if the customer fails to do so. The
maximum amount that NatWest Group could be required to pay under a guarantee is its
principal amount as disclosed in the table above. NatWest Group expects most
guarantees it provides to expire unused.
Other contingent liabilities
- these include standby letters of credit, supporting customer
debt issues and contingent liabilities relating to customer trading activities such as those
arising from performance and customs bonds, warranties and indemnities.
Standby facilities and credit lines
- under a loan commitment, NatWest Group agrees to
make funds available to a customer in the future. Loan commitments, which are usually
for a specified term, may be unconditionally cancellable or may persist, provided all
conditions in the loan facility are satisfied or waived. Commitments to lend include
commercial standby facilities and credit lines, liquidity facilities to commercial paper
conduits and unutilised overdraft facilities.
Other commitments
- these include documentary credits, which are commercial letters
of credit providing for payment by NatWest Group to a named beneficiary against
presentation of specified documents, forward asset purchases, forward deposits placed
and undrawn note issuance and revolving underwriting facilities, and other short-term
trade related transactions.
Contractual obligations for future expenditure not provided for in the accounts
The following table shows contractual obligations for future expenditure not provided for
in the accounts at the year end.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Capital expenditure on property, plant and equipment
14
38
Contracts to purchase goods or services
(1)
1,160
1,121
\u00a0
1,174
1,159
\n
(1)
Of which due within 1 year: \u00a3356 million (2023 \u2013 \u00a3379 million).
Trustee and other fiduciary activities
In its capacity as trustee or other fiduciary role, NatWest Group may hold or place
assets on behalf of individuals, trusts, companies, pension schemes and others. The
assets and their income are not included in NatWest Group's financial statements.
NatWest Group earned fee income of \u00a3302 million (2023 - \u00a3264 million; 2022 - \u00a3266
million) from these activities.
The Financial Services Compensation Scheme
The Financial Services Compensation Scheme (FSCS), the UK's statutory fund of last
resort for customers of authorised financial services firms, pays compensation if a firm is
unable to meet its obligations. The FSCS funds compensation for customers by raising
management expenses levies and compensation levies on the industry. In relation to
protected deposits, each deposit-taking institution contributes towards these levies in
proportion to their share of total protected deposits on 31 December of the year
preceding the scheme year (which runs from 1 April to 31 March), subject to annual
maxima set by the Prudential Regulation Authority. In addition, the FSCS has the power
to raise levies on a firm that has ceased to participate in the scheme and is in the
process of ceasing to be authorised for the costs that it would have been liable to pay
had the FSCS made a levy in the financial year it ceased to be a participant in the
scheme.
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Litigation and regulatory matters
\n
NatWest Group plc and certain members
\n
of NatWest Group are party to various
\n
legal proceedings and are involved in, or
\n
subject to, various regulatory matters,
\n
including as the subject of investigations
\n
and other regulatory and governmental
\n
action (Matters) in the United Kingdom
\n
(UK), the United States (US), the
\n
European Union (EU) and other
\n
jurisdictions.
\n
NatWest Group recognises a provision for
\n
a liability in relation to these Matters
\n
when it is probable that an outflow of
\n
economic benefits will be required to
\n
settle an obligation resulting from past
\n
events, and a reliable estimate can be
\n
made of the amount of the obligation.
\n
In many of the Matters, it is not possible
\n
to determine whether any loss is
\n
probable, or to estimate reliably the
\n
amount of any loss, either as a direct
\n
consequence of the relevant proceedings
\n
and regulatory matters or as a result of
\n
adverse impacts or restrictions on
\n
NatWest Group\u2019s reputation, businesses
\n
and operations. Numerous legal and
\n
factual issues may need to be resolved,
\n
including through potentially lengthy
\n
discovery and document production
\n
exercises and determination of important
\n
factual matters, and by addressing novel
\n
or unsettled legal questions relevant to
\n
the proceedings in question, before the
\n
probability of a liability, if any, arising can
\n
reasonably be estimated in respect of
\n
any Matter. NatWest Group cannot
\n
predict if, how, or when such claims will
\n
be resolved or what the eventual
\n
settlement, damages, fine, penalty or
\n
other relief, if any, may be, particularly
\n
for Matters that are at an early stage in
\n
their development or where claimants
\n
seek substantial or indeterminate
\n
damages.
\n
There are situations where NatWest
\n
Group may pursue an approach that in
\n
some instances leads to a settlement
\n
agreement. This may occur in order to
\n
avoid the expense, management
\n
distraction or reputational implications of
\n
continuing to contest liability, or in order
\n
to take account of the risks inherent in
\n
defending or contesting Matters, even for
\n
those for which NatWest Group believes
\n
it has credible defences and should
\n
prevail on the merits. The uncertainties
\n
inherent in all Matters affect the amount
\n
and timing of any potential economic
\n
outflows for both Matters with respect to
\n
which provisions have been established
\n
and other contingent liabilities in respect
\n
of any such Matter.
\n
It is not practicable to provide an
\n
aggregate estimate of potential liability
\n
for our Matters as a class of contingent
\n
liabilities.
\n
The future economic outflow in respect of
\n
any Matter may ultimately prove to be
\n
substantially greater than, or less than,
\n
the aggregate provision, if any, that
\n
NatWest Group has recognised in respect
\n
of such Matter. Where a reliable estimate
\n
of the economic outflow cannot be
\n
reasonably made, no provision has been
\n
recognised. NatWest Group expects that
\n
in future periods, additional provisions
\n
and economic outflows relating to
\n
Matters that may or may not be
\n
currently known by NatWest Group will
\n
be necessary, in amounts that are
\n
expected to be substantial in some
\n
instances. Refer to Note 20 for
\n
information on material provisions.
\n
Matters which are, or could be, material,
\n
either individually or in aggregate, having
\n
regard to NatWest Group, considered as
\n
a whole, in which NatWest Group is
\n
currently involved are set out below. We
\n
have provided information on the
\n
procedural history of certain Matters,
\n
where we believe appropriate, to aid the
\n
understanding of the Matter.
\n
For a discussion of certain risks
\n
associated with NatWest Group\u2019s
\n
litigation and regulatory matters
\n
(including the Matters), refer to the Risk
\n
Factor relating to legal, regulatory and
\n
governmental actions and investigations
\n
set out on pages 422 to 423.
\n
Litigation
\n
London Interbank Offered Rate (LIBOR)
\n
and other rates litigation
\n
NatWest Group plc and certain other
\n
members of NatWest Group, including
\n
NWM Plc, are defendants in a number of
\n
claims pending in the United States
\n
District Court for the Southern District of
\n
New York (SDNY) with respect to the
\n
setting of USD LIBOR. The complainants
\n
allege that certain members of NatWest
\n
Group and other panel banks violated
\n
various federal laws, including the US
\n
commodities and antitrust laws, and state
\n
statutory and common law, as well as
\n
contracts, by manipulating LIBOR and
\n
prices of LIBOR-based derivatives in
\n
various markets through various means.
\n
The co-ordinated proceeding in the SDNY
\n
relating to USD LIBOR now includes one
\n
remaining class action, which is on behalf
\n
of persons who purchased LIBOR-linked
\n
instruments from defendants and bonds
\n
issued by defendants, as well as several
\n
non-class actions. The defendants in the
\n
co-ordinated proceeding have filed a
\n
summary judgment motion on the issue
\n
of liability, and briefing on that motion
\n
concluded in January 2025.
\n
In March 2024, NatWest Group
\n
companies reached an agreement to
\n
settle the USD LIBOR class action that
\n
asserted claims on behalf of lenders who
\n
made USD LIBOR based loans. The
\n
settlement amount, which was covered in
\n
full by an existing provision, has been
\n
paid and the settlement has now
\n
received final court approval.
\n
The non-class claims filed in the SDNY
\n
include claims that the Federal Deposit
\n
Insurance Corporation (FDIC) is asserting
\n
on behalf of certain failed US banks. In
\n
July 2017, the FDIC, on behalf of 39 of
\n
those failed US banks, commenced
\n
substantially similar claims against
\n
NatWest Group companies and others in
\n
the High Court of Justice of England and
\n
Wales. The action alleges collusion with
\n
regard to the setting of USD LIBOR and
\n
that the defendants breached UK and
\n
European competition law, as well as
\n
asserting common law claims of fraud
\n
under US law. The defendant banks
\n
consented to a request by the FDIC for
\n
discontinuance of the claim in respect of
\n
20 failed US banks, leaving 19 failed US
\n
banks as claimants. The trial is currently
\n
scheduled to commence in Q1 2026.
\n
In addition to the USD LIBOR cases
\n
described above, there is a class action
\n
relating to derivatives allegedly tied to
\n
JPY LIBOR and Euroyen TIBOR, which
\n
was dismissed by the SDNY in relation to
\n
NWM Plc and other NatWest Group
\n
companies in September 2021. That
\n
dismissal is now the subject of an appeal
\n
to the United States Court of Appeals for
\n
the Second Circuit (US Court of Appeals).
\n
Two other IBOR-related class actions
\n
involving NWM Plc, concerning alleged
\n
manipulation of Euribor and Pound
\n
Sterling LIBOR, were previously dismissed
\n
by the SDNY for various reasons. The
\n
plaintiffs\u2019 appeals in those two cases
\n
remain pending.
\n
In August 2020, a complaint was filed in
\n
the United States District Court for the
\n
Northern District of California by several
\n
United States retail borrowers against
\n
the USD ICE LIBOR panel banks and their
\n
affiliates (including NatWest Group plc,
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
NWM Plc, NWMSI and NWB Plc), alleging
\n
(i) that the very process of setting USD
\n
ICE LIBOR amounts to illegal price-fixing;
\n
and (ii) that banks in the United States
\n
have illegally agreed to use LIBOR as a
\n
component of price in variable retail
\n
loans. In September 2022, the district
\n
court dismissed the complaint. In
\n
December 2024, the United States Court
\n
of Appeals for the Ninth Circuit affirmed
\n
the district court\u2019s decision.
\n
NWM Plc is also named as a defendant in
\n
a motion to certify a class action relating
\n
to LIBOR in the Tel Aviv District Court in
\n
Israel. NWM Plc filed a motion for
\n
cancellation of service outside the
\n
jurisdiction, which was granted in July
\n
2020. The claimants appealed that
\n
decision and in November 2020 the
\n
appeal was refused and the claim
\n
dismissed by the Appellate Court. The
\n
claim could in future be recommenced
\n
depending on the outcome of an appeal
\n
to Israel\u2019s Supreme Court in respect of
\n
the dismissal of the substantive case
\n
against banks that had a presence in
\n
Israel.
\n
Foreign exchange litigation
\n
NatWest Group plc, NWM Plc and/or
\n
NWMSI are defendants in several cases
\n
relating to NWM Plc\u2019s foreign exchange
\n
(FX) business.
\n
In May 2019, a cartel class action was
\n
filed in the Federal Court of Australia
\n
against NWM Plc and four other banks
\n
on behalf of persons who bought or sold
\n
currency through FX spots or forwards
\n
between 1 January 2008 and 15 October
\n
2013 with a total transaction value
\n
exceeding AUD 0.5 million. The claimant
\n
has alleged that the banks, including
\n
NWM Plc, contravened Australian
\n
competition law by sharing information,
\n
coordinating conduct, widening spreads
\n
and manipulating FX rates for certain
\n
currency pairs during this period.
\n
NatWest Group plc and NWMSI have
\n
been named in the action as \u2018other cartel
\n
participants\u2019, but are not respondents.
\n
The claim was served in June 2019 and
\n
NWM Plc filed its defence in March 2022.
\n
The court has ordered that potential
\n
class members are required to either opt
\n
out of the proceedings or register to be
\n
included in or benefit from any potential
\n
settlement of the claim. Directions have
\n
been made for the provision of evidence
\n
during 2025 and 2026.
\n
In July and December 2019, two
\n
separate applications seeking opt-out
\n
collective proceedings orders were filed in
\n
the UK Competition Appeal Tribunal
\n
(CAT) against NatWest Group plc, NWM
\n
Plc and other banks. Both applications
\n
were brought on behalf of persons who,
\n
between 18 December 2007 and 31
\n
January 2013, entered into a relevant FX
\n
spot or outright forward transaction in
\n
the European Economic Area with a
\n
relevant financial institution or on an
\n
electronic communications network. In
\n
March 2022, the CAT declined to certify
\n
as collective proceedings either of the
\n
applications, which was appealed by the
\n
applicants and the subject of an
\n
application for judicial review.
\n
In its amended judgment in November
\n
2023, the Court of Appeal allowed the
\n
appeal and decided that the claims
\n
should proceed on an opt-out basis.
\n
Separately, the court determined which
\n
of the two competing applicants can
\n
proceed as class representative, and
\n
dismissed the application for judicial
\n
review of the CAT\u2019s decision. The other
\n
applicant has discontinued its claim and
\n
withdrawn from the proceedings. The
\n
banks sought permission to appeal the
\n
Court of Appeal decision directly to the
\n
UK Supreme Court, which was granted in
\n
April 2024. The appeal is scheduled to be
\n
heard in April 2025.
\n
Two motions to certify FX-related class
\n
actions were filed in the Tel Aviv District
\n
Court in Israel in September and October
\n
2018, and were subsequently
\n
consolidated into one motion. The
\n
consolidated motion to certify, which
\n
names The Royal Bank of Scotland plc
\n
(now NWM Plc) and several other banks
\n
as defendants, was served on NWM Plc
\n
in May 2020. The applicants sought the
\n
court\u2019s permission to amend their
\n
motions to certify the class actions. NWM
\n
Plc filed a motion challenging the
\n
permission granted by the court for the
\n
applicants to serve the consolidated
\n
motion outside the Israeli jurisdiction.
\n
That NWM Plc motion remains pending.
\n
In February 2024, NWM Plc executed an
\n
agreement to settle the claim, subject to
\n
court approval. The settlement amount is
\n
covered in full by an existing provision.
\n
In December 2021, a summons was
\n
served in the Netherlands against
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V. by Stichting FX Claims on behalf of a
\n
number of parties, seeking declarations
\n
from the court concerning liability for
\n
anti-competitive FX market conduct
\n
described in decisions of the European
\n
Commission (EC) of 16 May 2019, along
\n
with unspecified damages. The claimant
\n
amended its claim to also refer to a 2
\n
December 2021 decision by the EC,
\n
which described anti-competitive FX
\n
market conduct. NatWest Group plc,
\n
NWM Plc and other defendants contested
\n
the jurisdiction of the Dutch court. In
\n
March 2023, the district court in
\n
Amsterdam accepted that it has
\n
jurisdiction to hear claims against NWM
\n
N.V. but refused jurisdiction to hear any
\n
claims against the other defendant banks
\n
(including NatWest Group plc and NWM
\n
Plc) brought on behalf of the parties
\n
represented by the claimant that are
\n
domiciled outside of the Netherlands. The
\n
claimant is appealing that decision. The
\n
defendant banks have brought cross-
\n
appeals which seek a ruling that the
\n
Dutch court has no jurisdiction to hear
\n
any claims against the defendant banks
\n
domiciled outside of the Netherlands,
\n
irrespective of whether the claim has
\n
been brought on behalf of a party
\n
represented by the claimant that is
\n
domiciled within or outside of the
\n
Netherlands. The Amsterdam Court of
\n
Appeal has stayed these appeal
\n
proceedings until the Court of Justice of
\n
the European Union has answered
\n
preliminary questions that have been
\n
referred to it in another matter.
\n
In September 2023, a second summons
\n
was served by Stichting FX Claims on
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V., on behalf of a new group of parties.
\n
The claimant seeks declarations from the
\n
district court in Amsterdam concerning
\n
liability for anti-competitive FX market
\n
conduct described in the above
\n
referenced decisions of the EC of 16 May
\n
2019 and 2 December 2021, along with
\n
unspecified damages. NatWest Group plc,
\n
NWM Plc and other defendants are
\n
contesting the Dutch court's jurisdiction.
\n
The district court has stayed the
\n
proceedings pending judgment in the
\n
above-mentioned appeals.
\n
In January 2025, a third summons was
\n
served by Stichting FX Claims on
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V., on behalf of another new group of
\n
parties. The claimant seeks similar
\n
declarations from the district court in
\n
Amsterdam to those being sought in the
\n
above-mentioned claims, along with
\n
unspecified damages.
\n
Certain other foreign exchange
\n
transaction related claims have been or
\n
may be threatened. NatWest Group
\n
cannot predict whether all or any of
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
these claims will be pursued.
\n
Government securities antitrust litigation
\n
Class action antitrust claims commenced
\n
in March 2019 were pending in the SDNY
\n
against NWM Plc, NWMSI and other
\n
banks in respect of Euro-denominated
\n
bonds issued by various European central
\n
banks (European government bonds or
\n
EGBs). The complaint alleged a
\n
conspiracy among dealers of EGBs to
\n
widen the bid-ask spreads they quoted to
\n
customers, thereby increasing the prices
\n
customers paid for the EGBs or
\n
decreasing the prices at which customers
\n
sold EGBs.
\n
In March 2024, NatWest Group
\n
companies reached an agreement to
\n
settle the class action. The settlement
\n
amount, which was covered in full by an
\n
existing provision, has been paid and the
\n
settlement has now received final court
\n
approval.
\n
Swaps antitrust litigation
\n
NWM Plc and other members of NatWest
\n
Group, including NatWest Group plc, as
\n
well as a number of other interest rate
\n
swap dealers, are defendants in several
\n
cases pending in the SDNY alleging
\n
violations of the US antitrust laws in the
\n
market for interest rate swaps. There is a
\n
consolidated class action complaint on
\n
behalf of persons who entered into
\n
interest rate swaps with the defendants,
\n
as well as non-class action claims by
\n
three swap execution facilities
\n
(TeraExchange, Javelin, and trueEx). The
\n
plaintiffs allege that the swap execution
\n
facilities would have successfully
\n
established exchange-like trading of
\n
interest rate swaps if the defendants had
\n
not unlawfully conspired to prevent that
\n
from happening through boycotts and
\n
other means. Discovery in the non-class
\n
action claims is complete. In March 2024,
\n
NatWest Group companies reached an
\n
agreement to settle the class action. The
\n
settlement amount has been paid into
\n
escrow pending final court approval of
\n
the settlement and was covered in full by
\n
an existing provision.
\n
In June 2021, a class action antitrust
\n
complaint was filed against a number of
\n
credit default swap dealers, in New
\n
Mexico federal court on behalf of persons
\n
who, from 2005 onwards, settled credit
\n
default swaps in the United States by
\n
reference to the ISDA credit default swap
\n
auction protocol. The complaint alleges
\n
that the defendants conspired to
\n
manipulate that benchmark through
\n
various means in violation of the antitrust
\n
laws and the Commodity Exchange Act.
\n
The defendants filed a motion to dismiss
\n
the complaint and, in June 2023, such
\n
motion was denied as regards to NWMSI
\n
and other financial institutions, but
\n
granted as regards to NWM Plc on the
\n
ground that the court lacks jurisdiction
\n
over that entity. As a result, the case
\n
entered the discovery phase as against
\n
the non-dismissed defendants. In January
\n
2024, the SDNY issued an order barring
\n
the plaintiffs in the New Mexico case
\n
from pursuing claims based on conduct
\n
occurring before 30 June 2014 on the
\n
ground that such claims were
\n
extinguished by a 2015 settlement
\n
agreement that resolved a prior class
\n
action relating to credit default swaps.
\n
The SDNY\u2019s decision is the subject of a
\n
pending appeal to the US Court of
\n
Appeals.
\n
Odd lot corporate bond trading antitrust
\n
litigation
\n
In July 2024, the US Court of Appeals
\n
vacated the SDNY's October 2021
\n
dismissal of the class action antitrust
\n
complaint alleging that from August 2006
\n
onwards various securities dealers,
\n
including NWMSI, conspired artificially to
\n
widen spreads for odd lots of corporate
\n
bonds bought or sold in the United States
\n
secondary market and to boycott
\n
electronic trading platforms that would
\n
have allegedly promoted pricing
\n
competition in the market for such bonds.
\n
The appellate court held that the district
\n
judge who made the decision should not
\n
have been presiding over the case
\n
because a member of the judge\u2019s family
\n
had owned stock in one of the
\n
defendants while the motion was
\n
pending.
The defendants are now seeking
\n
dismissal by a different district court
\n
judge.
\n
Spoofing litigation
\n
In December 2021, three substantially
\n
similar class actions complaints were filed
\n
in federal court in the United States
\n
against NWM Plc and NWMSI alleging
\n
Commodity Exchange Act and common
\n
law unjust enrichment claims arising from
\n
manipulative trading known as spoofing.
\n
The complaints refer to NWM Plc\u2019s
\n
December 2021 spoofing-related guilty
\n
plea (described below under \u201cUS
\n
investigations relating to fixed-income
\n
securities\u201d) and purport to assert claims
\n
on behalf of those who transacted in US
\n
Treasury securities and futures and
\n
options on US Treasury securities
\n
between 2008 and 2018. In July 2022,
\n
the defendants filed a motion to dismiss
\n
these claims, which have been
\n
consolidated into one matter in the
\n
United States District Court for the
\n
Northern District of Illinois.
\n
Madoff
\n
NWM N.V. was named as a defendant in
\n
two actions filed by the trustee for the
\n
bankrupt estates of Bernard L. Madoff
\n
and Bernard L. Madoff Investment
\n
Securities LLC, in bankruptcy court in
\n
New York, which together seek to
\n
clawback more than US$298 million that
\n
NWM N.V. allegedly received from certain
\n
Madoff feeder funds and certain swap
\n
counterparties. The claims were
\n
previously dismissed, but as a result of an
\n
August 2021 decision by the US Court of
\n
Appeals, they are now proceeding in the
\n
discovery phase in the bankruptcy court,
\n
where they have been consolidated into
\n
one action.
\n
Offshoring VAT assessments
\n
HMRC, as part of an industry-wide
\n
review, issued protective tax
\n
assessments in 2018 against NatWest
\n
Group plc totalling \u00a3143 million relating to
\n
unpaid VAT in respect of the UK
\n
branches of two NatWest Group
\n
companies registered in India for the
\n
period from 1 January 2014 until 31
\n
December 2017 inclusive. NatWest Group
\n
formally requested reconsideration by
\n
HMRC of their assessments, and this
\n
process was completed in November
\n
2020. HMRC upheld their original decision
\n
and, as a result, NatWest Group plc
\n
lodged an appeal with the Tax Tribunal
\n
and an application for judicial review with
\n
the High Court of Justice of England and
\n
Wales, both in December 2020. In order
\n
to lodge the appeal with the Tax
\n
Tribunal, NatWest Group plc was
\n
required to pay amounts totalling \u00a3153
\n
million (including statutory interest) to
\n
HMRC in December 2020 and May 2022.
\n
The appeal and the application for judicial
\n
review have both been stayed pending
\n
further discussion with HMRC in relation
\n
to a separate case involving another
\n
bank.
The amount of \u00a3153 million
\n
continues to be recognised as an asset
\n
that NatWest Group plc expects to
\n
recover. Since 1 January 2018, NatWest
\n
Group plc has paid VAT on intra-group
\n
supplies from the India-registered
\n
NatWest Group companies.
\n
US Anti-Terrorism Act litigation
\n
NWM N.V. and certain other financial
\n
institutions are defendants in several
\n
actions filed by a number of US nationals
\n
(or their estates, survivors, or heirs), most
\n
of whom are or were US military
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
personnel, who were killed or injured in
\n
attacks in Iraq between 2003 and 2011.
\n
NWM Plc is also a defendant in some of
\n
these cases.
\n
According to the plaintiffs\u2019 allegations, the
\n
defendants are liable for damages arising
\n
from the attacks because they allegedly
\n
conspired with and/or aided and abetted
\n
Iran and certain Iranian banks to assist
\n
Iran in transferring money to Hezbollah
\n
and the Iraqi terror cells that committed
\n
the attacks, in violation of the US Anti-
\n
Terrorism Act, by agreeing to engage in
\n
\u2018stripping\u2019 of transactions initiated by the
\n
Iranian banks so that the Iranian nexus to
\n
the transactions would not be detected.
\n
The first of these actions, alleging
\n
conspiracy claims but not aiding and
\n
abetting claims, was filed in the United
\n
States District Court for the Eastern
\n
District of New York in November 2014.
\n
In September 2019, the district court
\n
dismissed the case, finding that the
\n
claims were deficient for several reasons,
\n
including lack of sufficient allegations as
\n
to the alleged conspiracy and causation.
\n
In January 2023, the US Court of Appeals
\n
affirmed the district court\u2019s dismissal of
\n
this case. The plaintiffs have now filed a
\n
motion in the district court to re-open the
\n
case to assert aiding and abetting claims
\n
that they previously did not assert, which
\n
the defendants are opposing. Another
\n
action, filed in the SDNY in 2017, which
\n
asserted both conspiracy and aiding and
\n
abetting claims, was dismissed by the
\n
SDNY in March 2019 on similar grounds
\n
as the first case, but remains subject to
\n
appeal to the US Court of Appeals.
\n
Other follow-on actions that are
\n
substantially similar to those described
\n
above are pending in the same courts.
\n
1MDB litigation
\n
A Malaysian court claim was served in
\n
Switzerland in November 2022 by 1MDB,
\n
a sovereign wealth fund, in which Coutts
\n
& Co Ltd was named, along with six
\n
others, as a defendant in respect of
\n
losses allegedly incurred by 1MDB. It is
\n
claimed that Coutts & Co Ltd is liable as
\n
a constructive trustee for having
\n
dishonestly assisted the directors of
\n
1MDB in the breach of their fiduciary
\n
duties by failing (amongst other alleged
\n
claims) to undertake due diligence in
\n
relation to a customer of Coutts & Co
\n
Ltd, through which funds totalling c.US$1
\n
billion were received and paid out
\n
between 2009 and 2011. 1MDB seeks
\n
the return of that amount plus interest.
\n
Coutts & Co Ltd filed an application in
\n
January 2023 challenging the validity of
\n
service and the Malaysian court\u2019s
\n
jurisdiction to hear the claim, and a
\n
hearing took place in February 2024. In
\n
March 2024, the court granted that
\n
application. 1MDB has appealed that
\n
decision and a prior decision by the court
\n
not to allow them to discontinue their
\n
claim. Both appeals are scheduled to be
\n
heard in November 2025.
\n
Coutts & Co Ltd (a subsidiary of RBS
\n
Netherlands Holdings B.V., which in turn
\n
is a subsidiary of NWM Plc) is a company
\n
registered in Switzerland and is in wind-
\n
down following the announced sale of its
\n
business assets in 2015.
\n
Regulatory matters (including
\n
investigations and customer redress
\n
programmes
)
\n
NatWest Group\u2019s businesses and financial
\n
condition can be affected by the actions
\n
of various governmental and regulatory
\n
authorities in the UK, the US, the EU and
\n
elsewhere. NatWest Group has engaged,
\n
and will continue to engage, in
\n
discussions with relevant governmental
\n
and regulatory authorities, including in
\n
the UK, the US, the EU and elsewhere,
\n
on an ongoing and regular basis, and in
\n
response to informal and formal inquiries
\n
or investigations, regarding operational,
\n
systems and control evaluations and
\n
issues including those related to
\n
compliance with applicable laws and
\n
regulations, including consumer
\n
protection, investment advice, business
\n
conduct, competition/anti-trust, VAT
\n
recovery, anti-bribery, anti-money
\n
laundering and sanctions regimes.
\n
NatWest Group expects government and
\n
regulatory intervention in financial
\n
services to be high for the foreseeable
\n
future, including increased scrutiny from
\n
competition and other regulators in the
\n
retail and SME business sectors.
\n
Any matters discussed or identified
\n
during such discussions and inquiries may
\n
result in, among other things, further
\n
inquiry or investigation, other action
\n
being taken by governmental and
\n
regulatory authorities, increased costs
\n
being incurred by NatWest Group,
\n
remediation of systems and controls,
\n
public or private censure, restriction of
\n
NatWest Group\u2019s business activities
\n
and/or fines. Any of the events or
\n
circumstances mentioned in this
\n
paragraph or below could have a
\n
material adverse effect on NatWest
\n
Group, its business, authorisations and
\n
licences, reputation, results of operations
\n
or the price of securities issued by it, or
\n
lead to material additional provisions
\n
being taken.
\n
NatWest Group is co-operating fully with
\n
the matters described below.
\n
US investigations relating to fixed-
\n
income securities
\n
In December 2021, NWM Plc pled guilty
\n
in the United States District Court for the
\n
District of Connecticut to one count of
\n
wire fraud and one count of securities
\n
fraud in connection with historical
\n
spoofing conduct by former employees in
\n
US Treasuries markets between January
\n
2008 and May 2014 and, separately,
\n
during approximately three months in
\n
2018. The 2018 trading occurred during
\n
the term of a non-prosecution agreement
\n
(NPA) between NWMSI and the United
\n
States Attorney's Office for the District of
\n
Connecticut (USAO CT), under which
\n
non-prosecution was conditioned on
\n
NWMSI and affiliated companies not
\n
engaging in criminal conduct during the
\n
term of the NPA. The relevant trading in
\n
2018 was conducted by two NWM
\n
traders in Singapore and breached that
\n
NPA. The plea agreement reached with
\n
the US Department of Justice (DOJ) and
\n
the USAO CT resolved both the spoofing
\n
conduct and the breach of the NPA.
\n
As required by the resolution and
\n
sentence imposed by the court, NWM Plc
\n
is subject to a probationary period, which
\n
was extended to end concurrently with
\n
the conclusion of the independent
\n
monitorship, which is also required under
\n
the plea agreement. The term of the
\n
independent monitorship and the ongoing
\n
implementation of recommendations
\n
made by it is currently scheduled to
\n
conclude in December 2025 but may be
\n
extended by agreement with the DOJ. In
\n
addition, NWM Plc has committed to
\n
compliance programme reviews and
\n
improvements and agreed to reporting
\n
and co-operation obligations.
\n
In the event that NWM Plc does not meet
\n
its obligations to the DOJ, this may lead
\n
to adverse consequences such as
\n
increased costs from any extension of
\n
monitorship and/or the period of the
\n
probation, findings that NWM Plc violated
\n
its probation term, and possible re-
\n
sentencing, amongst other
\n
consequences. Other material adverse
\n
collateral consequences may occur as a
\n
result of this matter, as further described
\n
in the Risk Factor relating to legal,
\n
regulatory and governmental actions and
\n
investigations set out on pages 422 to
\n
423.
RBSI Ltd reliance regime and referral to
enforcement
In January 2023, the Jersey Financial
Services Commission (JFSC) notified RBSI
Ltd that it had been referred to its
Enforcement Division in relation to RBSI
Ltd\u2019s operation of the reliance regime.
The reliance regime is specific to certain
Crown Dependencies and enables RBSI
Ltd to rely on regulated third parties for
specific due diligence information. RBSI
Ltd has provided information to the JFSC
at its request.
Investment advice review
In October 2019, the FCA notified
NatWest Group of its intention to appoint
a Skilled Person under section 166 of the
Financial Services and Markets Act 2000
to conduct a review of whether NatWest
Group\u2019s 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\u2019s review has concluded
and, after discussion with the FCA,
NatWest Group is undertaking additional
review / remediation work.
Review and investigation of treatment of
tracker mortgage customers in Ulster
Bank Ireland DAC
In December 2015, correspondence was
received from the Central Bank of Ireland
setting out an industry examination
framework in respect of the sale of
tracker mortgages from approximately
2001 until the end of 2015.
The redress and compensation process
has now largely concluded, although a
small number of cases remain
outstanding relating to uncontactable
customers.
UBIDAC customers have lodged tracker
mortgage complaints with the Financial
Services and Pensions Ombudsman
(FSPO). UBIDAC challenged three FSPO
adjudications in the Irish High Court. In
June 2023, the High Court found in
favour of the FSPO in all matters.
UBIDAC appealed that decision to the
Court of Appeal. In September 2024, the
Court of Appeal allowed UBIDAC\u2019s
appeal and set aside certain findings of
the FSPO. The Court of Appeal directed
one aspect of the FSPO decisions to be
remitted to the FSPO for its consideration
following an oral hearing, and UBIDAC is
following up with the FSPO in that
regard.
Other customer remediation in Ulster
Bank Ireland DAC
UBIDAC identified other legacy issues
leading to the establishment of
remediation requirements and progress is
ongoing to conclude activities.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00269": { "value": "3.12. Provisions
We recognise a provision for a present
obligation resulting from a past event
when it is more likely than not that we
will be required to pay to settle the
obligation and the amount of the
obligation can be estimated reliably.
Provision is made for restructuring costs,
including the costs of redundancy, when
we have a constructive obligation.
An obligation exists when we have a
detailed formal plan for the restructuring
and have raised a valid expectation in
those affected either by starting to
implement the plan or by announcing its
main features.
We recognise any onerous cost of the
present obligation under a contract as a
provision. An onerous cost is the
unavoidable cost of meeting our
contractual obligations that exceed the
expected economic benefits. When we
intend to vacate a leasehold property or
right of use asset, the asset would be
tested for impairment and a provision
may be recognised for the ancillary
contractual occupancy costs.20 Other liabilities
Other liabilities are amounts due to third parties that are not financial liabilities but including lease liabilities held at amortised cost. Other liabilities represent, for
example, amounts due for goods and services that have been received but not invoiced,
tax due to HMRC, and retirement benefit liabilities. Liabilities which have a
level of uncertainty regarding their timing or the future cost to settle them are included in other liabilities as provisions for liabilities and charges.
2024
2023
Other liabilities
\u00a3m
\u00a3m
Lease liabilities
630
670
Provisions for liabilities and charges
864
990
Retirement benefit liabilities (Note 5)
80
99
Accruals
1,353
1,411
Deferred income
394
402
Current tax
263
332
Deferred tax (Note 7)
99
141
Other liabilities
(1)
918
1,157
Total
4,601
5,202
(1)
Other liabilities include liabilities of disposal groups of nil (2023 - \u00a33 million).
Provisions for liabilities and charges
Litigation and
Commitments
Customer redress
other regulatory
Property
and guarantees
Other (1)
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
486
156
99
78
171
990
Expected credit loss impairment release
-
-
-
(23)
-
(23)
Currency translation and other movements
(1)
-
(1)
-
(3)
(5)
Charge to income statement
194
30
47
-
301
572
Release to income statement
(137)
(23)
(36)
-
(46)
(242)
Provisions utilised
(122)
(35)
(19)
-
(252)
(428)
At 31 December 2024
420
128
90
55
171
864
(1)
Other materially comprises provisions for restructuring costs and provision for Bank of England Levy.
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.
For accounting policy information refer to Accounting policy 3.12.
Background information on all material provisions is given in Note 25
. 25 Memorandum items
Contingent liabilities and commitments
NatWest Group provides its customers with a variety of services to support
their businesses, such as guarantees. These are reported as commitments.
Contingent liabilities are possible obligations dependent on a future event or
present obligations which are either not probable or cannot be measured
reliably.
The amounts shown in the table below are intended only to provide an indication of the
volume of business outstanding at 31 December 2024. Although NatWest Group is
exposed to credit risk in the event of a customer\u2019s failure to meet its obligations, the
amounts shown do not, and are not intended to, provide any indication of NatWest
Group's expectation of future losses.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Contingent liabilities and commitments
\u00a0 \u00a0
Guarantees
3,060
2,823
Other contingent liabilities
1,496
1,633
Standby facilities, credit lines and other commitments
135,405
127,424
Total
139,961
131,880
\n
(1)
Updated to reflect the regulatory treatment of revocable commitments.
Banking commitments and contingent obligations, which have been entered into on
behalf of customers and for which there are corresponding obligations from customers,
are not included in assets and liabilities. NatWest Group's maximum exposure to credit
loss, in the event of its obligation crystallising and all counterclaims, collateral or security
proving valueless, is represented by the contractual nominal amount of these
instruments included in the table above. These commitments and contingent obligations
are subject to NatWest Group's normal credit approval processes.
Guarantees
\u2013
NatWest Group gives guarantees on behalf of customers. A financial
guarantee represents an irrevocable undertaking that NatWest Group will meet a
customer's specified obligations to a third party if the customer fails to do so. The
maximum amount that NatWest Group could be required to pay under a guarantee is its
principal amount as disclosed in the table above. NatWest Group expects most
guarantees it provides to expire unused.
Other contingent liabilities
- these include standby letters of credit, supporting customer
debt issues and contingent liabilities relating to customer trading activities such as those
arising from performance and customs bonds, warranties and indemnities.
Standby facilities and credit lines
- under a loan commitment, NatWest Group agrees to
make funds available to a customer in the future. Loan commitments, which are usually
for a specified term, may be unconditionally cancellable or may persist, provided all
conditions in the loan facility are satisfied or waived. Commitments to lend include
commercial standby facilities and credit lines, liquidity facilities to commercial paper
conduits and unutilised overdraft facilities.
Other commitments
- these include documentary credits, which are commercial letters
of credit providing for payment by NatWest Group to a named beneficiary against
presentation of specified documents, forward asset purchases, forward deposits placed
and undrawn note issuance and revolving underwriting facilities, and other short-term
trade related transactions.
Contractual obligations for future expenditure not provided for in the accounts
The following table shows contractual obligations for future expenditure not provided for
in the accounts at the year end.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Capital expenditure on property, plant and equipment
14
38
Contracts to purchase goods or services
(1)
1,160
1,121
\u00a0
1,174
1,159
\n
(1)
Of which due within 1 year: \u00a3356 million (2023 \u2013 \u00a3379 million).
Trustee and other fiduciary activities
In its capacity as trustee or other fiduciary role, NatWest Group may hold or place
assets on behalf of individuals, trusts, companies, pension schemes and others. The
assets and their income are not included in NatWest Group's financial statements.
NatWest Group earned fee income of \u00a3302 million (2023 - \u00a3264 million; 2022 - \u00a3266
million) from these activities.
The Financial Services Compensation Scheme
The Financial Services Compensation Scheme (FSCS), the UK's statutory fund of last
resort for customers of authorised financial services firms, pays compensation if a firm is
unable to meet its obligations. The FSCS funds compensation for customers by raising
management expenses levies and compensation levies on the industry. In relation to
protected deposits, each deposit-taking institution contributes towards these levies in
proportion to their share of total protected deposits on 31 December of the year
preceding the scheme year (which runs from 1 April to 31 March), subject to annual
maxima set by the Prudential Regulation Authority. In addition, the FSCS has the power
to raise levies on a firm that has ceased to participate in the scheme and is in the
process of ceasing to be authorised for the costs that it would have been liable to pay
had the FSCS made a levy in the financial year it ceased to be a participant in the
scheme.
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Litigation and regulatory matters
\n
NatWest Group plc and certain members
\n
of NatWest Group are party to various
\n
legal proceedings and are involved in, or
\n
subject to, various regulatory matters,
\n
including as the subject of investigations
\n
and other regulatory and governmental
\n
action (Matters) in the United Kingdom
\n
(UK), the United States (US), the
\n
European Union (EU) and other
\n
jurisdictions.
\n
NatWest Group recognises a provision for
\n
a liability in relation to these Matters
\n
when it is probable that an outflow of
\n
economic benefits will be required to
\n
settle an obligation resulting from past
\n
events, and a reliable estimate can be
\n
made of the amount of the obligation.
\n
In many of the Matters, it is not possible
\n
to determine whether any loss is
\n
probable, or to estimate reliably the
\n
amount of any loss, either as a direct
\n
consequence of the relevant proceedings
\n
and regulatory matters or as a result of
\n
adverse impacts or restrictions on
\n
NatWest Group\u2019s reputation, businesses
\n
and operations. Numerous legal and
\n
factual issues may need to be resolved,
\n
including through potentially lengthy
\n
discovery and document production
\n
exercises and determination of important
\n
factual matters, and by addressing novel
\n
or unsettled legal questions relevant to
\n
the proceedings in question, before the
\n
probability of a liability, if any, arising can
\n
reasonably be estimated in respect of
\n
any Matter. NatWest Group cannot
\n
predict if, how, or when such claims will
\n
be resolved or what the eventual
\n
settlement, damages, fine, penalty or
\n
other relief, if any, may be, particularly
\n
for Matters that are at an early stage in
\n
their development or where claimants
\n
seek substantial or indeterminate
\n
damages.
\n
There are situations where NatWest
\n
Group may pursue an approach that in
\n
some instances leads to a settlement
\n
agreement. This may occur in order to
\n
avoid the expense, management
\n
distraction or reputational implications of
\n
continuing to contest liability, or in order
\n
to take account of the risks inherent in
\n
defending or contesting Matters, even for
\n
those for which NatWest Group believes
\n
it has credible defences and should
\n
prevail on the merits. The uncertainties
\n
inherent in all Matters affect the amount
\n
and timing of any potential economic
\n
outflows for both Matters with respect to
\n
which provisions have been established
\n
and other contingent liabilities in respect
\n
of any such Matter.
\n
It is not practicable to provide an
\n
aggregate estimate of potential liability
\n
for our Matters as a class of contingent
\n
liabilities.
\n
The future economic outflow in respect of
\n
any Matter may ultimately prove to be
\n
substantially greater than, or less than,
\n
the aggregate provision, if any, that
\n
NatWest Group has recognised in respect
\n
of such Matter. Where a reliable estimate
\n
of the economic outflow cannot be
\n
reasonably made, no provision has been
\n
recognised. NatWest Group expects that
\n
in future periods, additional provisions
\n
and economic outflows relating to
\n
Matters that may or may not be
\n
currently known by NatWest Group will
\n
be necessary, in amounts that are
\n
expected to be substantial in some
\n
instances. Refer to Note 20 for
\n
information on material provisions.
\n
Matters which are, or could be, material,
\n
either individually or in aggregate, having
\n
regard to NatWest Group, considered as
\n
a whole, in which NatWest Group is
\n
currently involved are set out below. We
\n
have provided information on the
\n
procedural history of certain Matters,
\n
where we believe appropriate, to aid the
\n
understanding of the Matter.
\n
For a discussion of certain risks
\n
associated with NatWest Group\u2019s
\n
litigation and regulatory matters
\n
(including the Matters), refer to the Risk
\n
Factor relating to legal, regulatory and
\n
governmental actions and investigations
\n
set out on pages 422 to 423.
\n
Litigation
\n
London Interbank Offered Rate (LIBOR)
\n
and other rates litigation
\n
NatWest Group plc and certain other
\n
members of NatWest Group, including
\n
NWM Plc, are defendants in a number of
\n
claims pending in the United States
\n
District Court for the Southern District of
\n
New York (SDNY) with respect to the
\n
setting of USD LIBOR. The complainants
\n
allege that certain members of NatWest
\n
Group and other panel banks violated
\n
various federal laws, including the US
\n
commodities and antitrust laws, and state
\n
statutory and common law, as well as
\n
contracts, by manipulating LIBOR and
\n
prices of LIBOR-based derivatives in
\n
various markets through various means.
\n
The co-ordinated proceeding in the SDNY
\n
relating to USD LIBOR now includes one
\n
remaining class action, which is on behalf
\n
of persons who purchased LIBOR-linked
\n
instruments from defendants and bonds
\n
issued by defendants, as well as several
\n
non-class actions. The defendants in the
\n
co-ordinated proceeding have filed a
\n
summary judgment motion on the issue
\n
of liability, and briefing on that motion
\n
concluded in January 2025.
\n
In March 2024, NatWest Group
\n
companies reached an agreement to
\n
settle the USD LIBOR class action that
\n
asserted claims on behalf of lenders who
\n
made USD LIBOR based loans. The
\n
settlement amount, which was covered in
\n
full by an existing provision, has been
\n
paid and the settlement has now
\n
received final court approval.
\n
The non-class claims filed in the SDNY
\n
include claims that the Federal Deposit
\n
Insurance Corporation (FDIC) is asserting
\n
on behalf of certain failed US banks. In
\n
July 2017, the FDIC, on behalf of 39 of
\n
those failed US banks, commenced
\n
substantially similar claims against
\n
NatWest Group companies and others in
\n
the High Court of Justice of England and
\n
Wales. The action alleges collusion with
\n
regard to the setting of USD LIBOR and
\n
that the defendants breached UK and
\n
European competition law, as well as
\n
asserting common law claims of fraud
\n
under US law. The defendant banks
\n
consented to a request by the FDIC for
\n
discontinuance of the claim in respect of
\n
20 failed US banks, leaving 19 failed US
\n
banks as claimants. The trial is currently
\n
scheduled to commence in Q1 2026.
\n
In addition to the USD LIBOR cases
\n
described above, there is a class action
\n
relating to derivatives allegedly tied to
\n
JPY LIBOR and Euroyen TIBOR, which
\n
was dismissed by the SDNY in relation to
\n
NWM Plc and other NatWest Group
\n
companies in September 2021. That
\n
dismissal is now the subject of an appeal
\n
to the United States Court of Appeals for
\n
the Second Circuit (US Court of Appeals).
\n
Two other IBOR-related class actions
\n
involving NWM Plc, concerning alleged
\n
manipulation of Euribor and Pound
\n
Sterling LIBOR, were previously dismissed
\n
by the SDNY for various reasons. The
\n
plaintiffs\u2019 appeals in those two cases
\n
remain pending.
\n
In August 2020, a complaint was filed in
\n
the United States District Court for the
\n
Northern District of California by several
\n
United States retail borrowers against
\n
the USD ICE LIBOR panel banks and their
\n
affiliates (including NatWest Group plc,
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
NWM Plc, NWMSI and NWB Plc), alleging
\n
(i) that the very process of setting USD
\n
ICE LIBOR amounts to illegal price-fixing;
\n
and (ii) that banks in the United States
\n
have illegally agreed to use LIBOR as a
\n
component of price in variable retail
\n
loans. In September 2022, the district
\n
court dismissed the complaint. In
\n
December 2024, the United States Court
\n
of Appeals for the Ninth Circuit affirmed
\n
the district court\u2019s decision.
\n
NWM Plc is also named as a defendant in
\n
a motion to certify a class action relating
\n
to LIBOR in the Tel Aviv District Court in
\n
Israel. NWM Plc filed a motion for
\n
cancellation of service outside the
\n
jurisdiction, which was granted in July
\n
2020. The claimants appealed that
\n
decision and in November 2020 the
\n
appeal was refused and the claim
\n
dismissed by the Appellate Court. The
\n
claim could in future be recommenced
\n
depending on the outcome of an appeal
\n
to Israel\u2019s Supreme Court in respect of
\n
the dismissal of the substantive case
\n
against banks that had a presence in
\n
Israel.
\n
Foreign exchange litigation
\n
NatWest Group plc, NWM Plc and/or
\n
NWMSI are defendants in several cases
\n
relating to NWM Plc\u2019s foreign exchange
\n
(FX) business.
\n
In May 2019, a cartel class action was
\n
filed in the Federal Court of Australia
\n
against NWM Plc and four other banks
\n
on behalf of persons who bought or sold
\n
currency through FX spots or forwards
\n
between 1 January 2008 and 15 October
\n
2013 with a total transaction value
\n
exceeding AUD 0.5 million. The claimant
\n
has alleged that the banks, including
\n
NWM Plc, contravened Australian
\n
competition law by sharing information,
\n
coordinating conduct, widening spreads
\n
and manipulating FX rates for certain
\n
currency pairs during this period.
\n
NatWest Group plc and NWMSI have
\n
been named in the action as \u2018other cartel
\n
participants\u2019, but are not respondents.
\n
The claim was served in June 2019 and
\n
NWM Plc filed its defence in March 2022.
\n
The court has ordered that potential
\n
class members are required to either opt
\n
out of the proceedings or register to be
\n
included in or benefit from any potential
\n
settlement of the claim. Directions have
\n
been made for the provision of evidence
\n
during 2025 and 2026.
\n
In July and December 2019, two
\n
separate applications seeking opt-out
\n
collective proceedings orders were filed in
\n
the UK Competition Appeal Tribunal
\n
(CAT) against NatWest Group plc, NWM
\n
Plc and other banks. Both applications
\n
were brought on behalf of persons who,
\n
between 18 December 2007 and 31
\n
January 2013, entered into a relevant FX
\n
spot or outright forward transaction in
\n
the European Economic Area with a
\n
relevant financial institution or on an
\n
electronic communications network. In
\n
March 2022, the CAT declined to certify
\n
as collective proceedings either of the
\n
applications, which was appealed by the
\n
applicants and the subject of an
\n
application for judicial review.
\n
In its amended judgment in November
\n
2023, the Court of Appeal allowed the
\n
appeal and decided that the claims
\n
should proceed on an opt-out basis.
\n
Separately, the court determined which
\n
of the two competing applicants can
\n
proceed as class representative, and
\n
dismissed the application for judicial
\n
review of the CAT\u2019s decision. The other
\n
applicant has discontinued its claim and
\n
withdrawn from the proceedings. The
\n
banks sought permission to appeal the
\n
Court of Appeal decision directly to the
\n
UK Supreme Court, which was granted in
\n
April 2024. The appeal is scheduled to be
\n
heard in April 2025.
\n
Two motions to certify FX-related class
\n
actions were filed in the Tel Aviv District
\n
Court in Israel in September and October
\n
2018, and were subsequently
\n
consolidated into one motion. The
\n
consolidated motion to certify, which
\n
names The Royal Bank of Scotland plc
\n
(now NWM Plc) and several other banks
\n
as defendants, was served on NWM Plc
\n
in May 2020. The applicants sought the
\n
court\u2019s permission to amend their
\n
motions to certify the class actions. NWM
\n
Plc filed a motion challenging the
\n
permission granted by the court for the
\n
applicants to serve the consolidated
\n
motion outside the Israeli jurisdiction.
\n
That NWM Plc motion remains pending.
\n
In February 2024, NWM Plc executed an
\n
agreement to settle the claim, subject to
\n
court approval. The settlement amount is
\n
covered in full by an existing provision.
\n
In December 2021, a summons was
\n
served in the Netherlands against
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V. by Stichting FX Claims on behalf of a
\n
number of parties, seeking declarations
\n
from the court concerning liability for
\n
anti-competitive FX market conduct
\n
described in decisions of the European
\n
Commission (EC) of 16 May 2019, along
\n
with unspecified damages. The claimant
\n
amended its claim to also refer to a 2
\n
December 2021 decision by the EC,
\n
which described anti-competitive FX
\n
market conduct. NatWest Group plc,
\n
NWM Plc and other defendants contested
\n
the jurisdiction of the Dutch court. In
\n
March 2023, the district court in
\n
Amsterdam accepted that it has
\n
jurisdiction to hear claims against NWM
\n
N.V. but refused jurisdiction to hear any
\n
claims against the other defendant banks
\n
(including NatWest Group plc and NWM
\n
Plc) brought on behalf of the parties
\n
represented by the claimant that are
\n
domiciled outside of the Netherlands. The
\n
claimant is appealing that decision. The
\n
defendant banks have brought cross-
\n
appeals which seek a ruling that the
\n
Dutch court has no jurisdiction to hear
\n
any claims against the defendant banks
\n
domiciled outside of the Netherlands,
\n
irrespective of whether the claim has
\n
been brought on behalf of a party
\n
represented by the claimant that is
\n
domiciled within or outside of the
\n
Netherlands. The Amsterdam Court of
\n
Appeal has stayed these appeal
\n
proceedings until the Court of Justice of
\n
the European Union has answered
\n
preliminary questions that have been
\n
referred to it in another matter.
\n
In September 2023, a second summons
\n
was served by Stichting FX Claims on
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V., on behalf of a new group of parties.
\n
The claimant seeks declarations from the
\n
district court in Amsterdam concerning
\n
liability for anti-competitive FX market
\n
conduct described in the above
\n
referenced decisions of the EC of 16 May
\n
2019 and 2 December 2021, along with
\n
unspecified damages. NatWest Group plc,
\n
NWM Plc and other defendants are
\n
contesting the Dutch court's jurisdiction.
\n
The district court has stayed the
\n
proceedings pending judgment in the
\n
above-mentioned appeals.
\n
In January 2025, a third summons was
\n
served by Stichting FX Claims on
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V., on behalf of another new group of
\n
parties. The claimant seeks similar
\n
declarations from the district court in
\n
Amsterdam to those being sought in the
\n
above-mentioned claims, along with
\n
unspecified damages.
\n
Certain other foreign exchange
\n
transaction related claims have been or
\n
may be threatened. NatWest Group
\n
cannot predict whether all or any of
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
these claims will be pursued.
\n
Government securities antitrust litigation
\n
Class action antitrust claims commenced
\n
in March 2019 were pending in the SDNY
\n
against NWM Plc, NWMSI and other
\n
banks in respect of Euro-denominated
\n
bonds issued by various European central
\n
banks (European government bonds or
\n
EGBs). The complaint alleged a
\n
conspiracy among dealers of EGBs to
\n
widen the bid-ask spreads they quoted to
\n
customers, thereby increasing the prices
\n
customers paid for the EGBs or
\n
decreasing the prices at which customers
\n
sold EGBs.
\n
In March 2024, NatWest Group
\n
companies reached an agreement to
\n
settle the class action. The settlement
\n
amount, which was covered in full by an
\n
existing provision, has been paid and the
\n
settlement has now received final court
\n
approval.
\n
Swaps antitrust litigation
\n
NWM Plc and other members of NatWest
\n
Group, including NatWest Group plc, as
\n
well as a number of other interest rate
\n
swap dealers, are defendants in several
\n
cases pending in the SDNY alleging
\n
violations of the US antitrust laws in the
\n
market for interest rate swaps. There is a
\n
consolidated class action complaint on
\n
behalf of persons who entered into
\n
interest rate swaps with the defendants,
\n
as well as non-class action claims by
\n
three swap execution facilities
\n
(TeraExchange, Javelin, and trueEx). The
\n
plaintiffs allege that the swap execution
\n
facilities would have successfully
\n
established exchange-like trading of
\n
interest rate swaps if the defendants had
\n
not unlawfully conspired to prevent that
\n
from happening through boycotts and
\n
other means. Discovery in the non-class
\n
action claims is complete. In March 2024,
\n
NatWest Group companies reached an
\n
agreement to settle the class action. The
\n
settlement amount has been paid into
\n
escrow pending final court approval of
\n
the settlement and was covered in full by
\n
an existing provision.
\n
In June 2021, a class action antitrust
\n
complaint was filed against a number of
\n
credit default swap dealers, in New
\n
Mexico federal court on behalf of persons
\n
who, from 2005 onwards, settled credit
\n
default swaps in the United States by
\n
reference to the ISDA credit default swap
\n
auction protocol. The complaint alleges
\n
that the defendants conspired to
\n
manipulate that benchmark through
\n
various means in violation of the antitrust
\n
laws and the Commodity Exchange Act.
\n
The defendants filed a motion to dismiss
\n
the complaint and, in June 2023, such
\n
motion was denied as regards to NWMSI
\n
and other financial institutions, but
\n
granted as regards to NWM Plc on the
\n
ground that the court lacks jurisdiction
\n
over that entity. As a result, the case
\n
entered the discovery phase as against
\n
the non-dismissed defendants. In January
\n
2024, the SDNY issued an order barring
\n
the plaintiffs in the New Mexico case
\n
from pursuing claims based on conduct
\n
occurring before 30 June 2014 on the
\n
ground that such claims were
\n
extinguished by a 2015 settlement
\n
agreement that resolved a prior class
\n
action relating to credit default swaps.
\n
The SDNY\u2019s decision is the subject of a
\n
pending appeal to the US Court of
\n
Appeals.
\n
Odd lot corporate bond trading antitrust
\n
litigation
\n
In July 2024, the US Court of Appeals
\n
vacated the SDNY's October 2021
\n
dismissal of the class action antitrust
\n
complaint alleging that from August 2006
\n
onwards various securities dealers,
\n
including NWMSI, conspired artificially to
\n
widen spreads for odd lots of corporate
\n
bonds bought or sold in the United States
\n
secondary market and to boycott
\n
electronic trading platforms that would
\n
have allegedly promoted pricing
\n
competition in the market for such bonds.
\n
The appellate court held that the district
\n
judge who made the decision should not
\n
have been presiding over the case
\n
because a member of the judge\u2019s family
\n
had owned stock in one of the
\n
defendants while the motion was
\n
pending.
The defendants are now seeking
\n
dismissal by a different district court
\n
judge.
\n
Spoofing litigation
\n
In December 2021, three substantially
\n
similar class actions complaints were filed
\n
in federal court in the United States
\n
against NWM Plc and NWMSI alleging
\n
Commodity Exchange Act and common
\n
law unjust enrichment claims arising from
\n
manipulative trading known as spoofing.
\n
The complaints refer to NWM Plc\u2019s
\n
December 2021 spoofing-related guilty
\n
plea (described below under \u201cUS
\n
investigations relating to fixed-income
\n
securities\u201d) and purport to assert claims
\n
on behalf of those who transacted in US
\n
Treasury securities and futures and
\n
options on US Treasury securities
\n
between 2008 and 2018. In July 2022,
\n
the defendants filed a motion to dismiss
\n
these claims, which have been
\n
consolidated into one matter in the
\n
United States District Court for the
\n
Northern District of Illinois.
\n
Madoff
\n
NWM N.V. was named as a defendant in
\n
two actions filed by the trustee for the
\n
bankrupt estates of Bernard L. Madoff
\n
and Bernard L. Madoff Investment
\n
Securities LLC, in bankruptcy court in
\n
New York, which together seek to
\n
clawback more than US$298 million that
\n
NWM N.V. allegedly received from certain
\n
Madoff feeder funds and certain swap
\n
counterparties. The claims were
\n
previously dismissed, but as a result of an
\n
August 2021 decision by the US Court of
\n
Appeals, they are now proceeding in the
\n
discovery phase in the bankruptcy court,
\n
where they have been consolidated into
\n
one action.
\n
Offshoring VAT assessments
\n
HMRC, as part of an industry-wide
\n
review, issued protective tax
\n
assessments in 2018 against NatWest
\n
Group plc totalling \u00a3143 million relating to
\n
unpaid VAT in respect of the UK
\n
branches of two NatWest Group
\n
companies registered in India for the
\n
period from 1 January 2014 until 31
\n
December 2017 inclusive. NatWest Group
\n
formally requested reconsideration by
\n
HMRC of their assessments, and this
\n
process was completed in November
\n
2020. HMRC upheld their original decision
\n
and, as a result, NatWest Group plc
\n
lodged an appeal with the Tax Tribunal
\n
and an application for judicial review with
\n
the High Court of Justice of England and
\n
Wales, both in December 2020. In order
\n
to lodge the appeal with the Tax
\n
Tribunal, NatWest Group plc was
\n
required to pay amounts totalling \u00a3153
\n
million (including statutory interest) to
\n
HMRC in December 2020 and May 2022.
\n
The appeal and the application for judicial
\n
review have both been stayed pending
\n
further discussion with HMRC in relation
\n
to a separate case involving another
\n
bank.
The amount of \u00a3153 million
\n
continues to be recognised as an asset
\n
that NatWest Group plc expects to
\n
recover. Since 1 January 2018, NatWest
\n
Group plc has paid VAT on intra-group
\n
supplies from the India-registered
\n
NatWest Group companies.
\n
US Anti-Terrorism Act litigation
\n
NWM N.V. and certain other financial
\n
institutions are defendants in several
\n
actions filed by a number of US nationals
\n
(or their estates, survivors, or heirs), most
\n
of whom are or were US military
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
personnel, who were killed or injured in
\n
attacks in Iraq between 2003 and 2011.
\n
NWM Plc is also a defendant in some of
\n
these cases.
\n
According to the plaintiffs\u2019 allegations, the
\n
defendants are liable for damages arising
\n
from the attacks because they allegedly
\n
conspired with and/or aided and abetted
\n
Iran and certain Iranian banks to assist
\n
Iran in transferring money to Hezbollah
\n
and the Iraqi terror cells that committed
\n
the attacks, in violation of the US Anti-
\n
Terrorism Act, by agreeing to engage in
\n
\u2018stripping\u2019 of transactions initiated by the
\n
Iranian banks so that the Iranian nexus to
\n
the transactions would not be detected.
\n
The first of these actions, alleging
\n
conspiracy claims but not aiding and
\n
abetting claims, was filed in the United
\n
States District Court for the Eastern
\n
District of New York in November 2014.
\n
In September 2019, the district court
\n
dismissed the case, finding that the
\n
claims were deficient for several reasons,
\n
including lack of sufficient allegations as
\n
to the alleged conspiracy and causation.
\n
In January 2023, the US Court of Appeals
\n
affirmed the district court\u2019s dismissal of
\n
this case. The plaintiffs have now filed a
\n
motion in the district court to re-open the
\n
case to assert aiding and abetting claims
\n
that they previously did not assert, which
\n
the defendants are opposing. Another
\n
action, filed in the SDNY in 2017, which
\n
asserted both conspiracy and aiding and
\n
abetting claims, was dismissed by the
\n
SDNY in March 2019 on similar grounds
\n
as the first case, but remains subject to
\n
appeal to the US Court of Appeals.
\n
Other follow-on actions that are
\n
substantially similar to those described
\n
above are pending in the same courts.
\n
1MDB litigation
\n
A Malaysian court claim was served in
\n
Switzerland in November 2022 by 1MDB,
\n
a sovereign wealth fund, in which Coutts
\n
& Co Ltd was named, along with six
\n
others, as a defendant in respect of
\n
losses allegedly incurred by 1MDB. It is
\n
claimed that Coutts & Co Ltd is liable as
\n
a constructive trustee for having
\n
dishonestly assisted the directors of
\n
1MDB in the breach of their fiduciary
\n
duties by failing (amongst other alleged
\n
claims) to undertake due diligence in
\n
relation to a customer of Coutts & Co
\n
Ltd, through which funds totalling c.US$1
\n
billion were received and paid out
\n
between 2009 and 2011. 1MDB seeks
\n
the return of that amount plus interest.
\n
Coutts & Co Ltd filed an application in
\n
January 2023 challenging the validity of
\n
service and the Malaysian court\u2019s
\n
jurisdiction to hear the claim, and a
\n
hearing took place in February 2024. In
\n
March 2024, the court granted that
\n
application. 1MDB has appealed that
\n
decision and a prior decision by the court
\n
not to allow them to discontinue their
\n
claim. Both appeals are scheduled to be
\n
heard in November 2025.
\n
Coutts & Co Ltd (a subsidiary of RBS
\n
Netherlands Holdings B.V., which in turn
\n
is a subsidiary of NWM Plc) is a company
\n
registered in Switzerland and is in wind-
\n
down following the announced sale of its
\n
business assets in 2015.
\n
Regulatory matters (including
\n
investigations and customer redress
\n
programmes
)
\n
NatWest Group\u2019s businesses and financial
\n
condition can be affected by the actions
\n
of various governmental and regulatory
\n
authorities in the UK, the US, the EU and
\n
elsewhere. NatWest Group has engaged,
\n
and will continue to engage, in
\n
discussions with relevant governmental
\n
and regulatory authorities, including in
\n
the UK, the US, the EU and elsewhere,
\n
on an ongoing and regular basis, and in
\n
response to informal and formal inquiries
\n
or investigations, regarding operational,
\n
systems and control evaluations and
\n
issues including those related to
\n
compliance with applicable laws and
\n
regulations, including consumer
\n
protection, investment advice, business
\n
conduct, competition/anti-trust, VAT
\n
recovery, anti-bribery, anti-money
\n
laundering and sanctions regimes.
\n
NatWest Group expects government and
\n
regulatory intervention in financial
\n
services to be high for the foreseeable
\n
future, including increased scrutiny from
\n
competition and other regulators in the
\n
retail and SME business sectors.
\n
Any matters discussed or identified
\n
during such discussions and inquiries may
\n
result in, among other things, further
\n
inquiry or investigation, other action
\n
being taken by governmental and
\n
regulatory authorities, increased costs
\n
being incurred by NatWest Group,
\n
remediation of systems and controls,
\n
public or private censure, restriction of
\n
NatWest Group\u2019s business activities
\n
and/or fines. Any of the events or
\n
circumstances mentioned in this
\n
paragraph or below could have a
\n
material adverse effect on NatWest
\n
Group, its business, authorisations and
\n
licences, reputation, results of operations
\n
or the price of securities issued by it, or
\n
lead to material additional provisions
\n
being taken.
\n
NatWest Group is co-operating fully with
\n
the matters described below.
\n
US investigations relating to fixed-
\n
income securities
\n
In December 2021, NWM Plc pled guilty
\n
in the United States District Court for the
\n
District of Connecticut to one count of
\n
wire fraud and one count of securities
\n
fraud in connection with historical
\n
spoofing conduct by former employees in
\n
US Treasuries markets between January
\n
2008 and May 2014 and, separately,
\n
during approximately three months in
\n
2018. The 2018 trading occurred during
\n
the term of a non-prosecution agreement
\n
(NPA) between NWMSI and the United
\n
States Attorney's Office for the District of
\n
Connecticut (USAO CT), under which
\n
non-prosecution was conditioned on
\n
NWMSI and affiliated companies not
\n
engaging in criminal conduct during the
\n
term of the NPA. The relevant trading in
\n
2018 was conducted by two NWM
\n
traders in Singapore and breached that
\n
NPA. The plea agreement reached with
\n
the US Department of Justice (DOJ) and
\n
the USAO CT resolved both the spoofing
\n
conduct and the breach of the NPA.
\n
As required by the resolution and
\n
sentence imposed by the court, NWM Plc
\n
is subject to a probationary period, which
\n
was extended to end concurrently with
\n
the conclusion of the independent
\n
monitorship, which is also required under
\n
the plea agreement. The term of the
\n
independent monitorship and the ongoing
\n
implementation of recommendations
\n
made by it is currently scheduled to
\n
conclude in December 2025 but may be
\n
extended by agreement with the DOJ. In
\n
addition, NWM Plc has committed to
\n
compliance programme reviews and
\n
improvements and agreed to reporting
\n
and co-operation obligations.
\n
In the event that NWM Plc does not meet
\n
its obligations to the DOJ, this may lead
\n
to adverse consequences such as
\n
increased costs from any extension of
\n
monitorship and/or the period of the
\n
probation, findings that NWM Plc violated
\n
its probation term, and possible re-
\n
sentencing, amongst other
\n
consequences. Other material adverse
\n
collateral consequences may occur as a
\n
result of this matter, as further described
\n
in the Risk Factor relating to legal,
\n
regulatory and governmental actions and
\n
investigations set out on pages 422 to
\n
423.
RBSI Ltd reliance regime and referral to
enforcement
In January 2023, the Jersey Financial
Services Commission (JFSC) notified RBSI
Ltd that it had been referred to its
Enforcement Division in relation to RBSI
Ltd\u2019s operation of the reliance regime.
The reliance regime is specific to certain
Crown Dependencies and enables RBSI
Ltd to rely on regulated third parties for
specific due diligence information. RBSI
Ltd has provided information to the JFSC
at its request.
Investment advice review
In October 2019, the FCA notified
NatWest Group of its intention to appoint
a Skilled Person under section 166 of the
Financial Services and Markets Act 2000
to conduct a review of whether NatWest
Group\u2019s 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\u2019s review has concluded
and, after discussion with the FCA,
NatWest Group is undertaking additional
review / remediation work.
Review and investigation of treatment of
tracker mortgage customers in Ulster
Bank Ireland DAC
In December 2015, correspondence was
received from the Central Bank of Ireland
setting out an industry examination
framework in respect of the sale of
tracker mortgages from approximately
2001 until the end of 2015.
The redress and compensation process
has now largely concluded, although a
small number of cases remain
outstanding relating to uncontactable
customers.
UBIDAC customers have lodged tracker
mortgage complaints with the Financial
Services and Pensions Ombudsman
(FSPO). UBIDAC challenged three FSPO
adjudications in the Irish High Court. In
June 2023, the High Court found in
favour of the FSPO in all matters.
UBIDAC appealed that decision to the
Court of Appeal. In September 2024, the
Court of Appeal allowed UBIDAC\u2019s
appeal and set aside certain findings of
the FSPO. The Court of Appeal directed
one aspect of the FSPO decisions to be
remitted to the FSPO for its consideration
following an oral hearing, and UBIDAC is
following up with the FSPO in that
regard.
Other customer remediation in Ulster
Bank Ireland DAC
UBIDAC identified other legacy issues
leading to the establishment of
remediation requirements and progress is
ongoing to conclude activities.", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00695": { "value": "3.12. Provisions
We recognise a provision for a present
obligation resulting from a past event
when it is more likely than not that we
will be required to pay to settle the
obligation and the amount of the
obligation can be estimated reliably.
Provision is made for restructuring costs,
including the costs of redundancy, when
we have a constructive obligation.
An obligation exists when we have a
detailed formal plan for the restructuring
and have raised a valid expectation in
those affected either by starting to
implement the plan or by announcing its
main features.
We recognise any onerous cost of the
present obligation under a contract as a
provision. An onerous cost is the
unavoidable cost of meeting our
contractual obligations that exceed the
expected economic benefits. When we
intend to vacate a leasehold property or
right of use asset, the asset would be
tested for impairment and a provision
may be recognised for the ancillary
contractual occupancy costs. 20 Other liabilities
Other liabilities are amounts due to third parties that are not financial liabilities but including lease liabilities held at amortised cost. Other liabilities represent, for
example, amounts due for goods and services that have been received but not invoiced,
tax due to HMRC, and retirement benefit liabilities. Liabilities which have a
level of uncertainty regarding their timing or the future cost to settle them are included in other liabilities as provisions for liabilities and charges.
2024
2023
Other liabilities
\u00a3m
\u00a3m
Lease liabilities
630
670
Provisions for liabilities and charges
864
990
Retirement benefit liabilities (Note 5)
80
99
Accruals
1,353
1,411
Deferred income
394
402
Current tax
263
332
Deferred tax (Note 7)
99
141
Other liabilities
(1)
918
1,157
Total
4,601
5,202
(1)
Other liabilities include liabilities of disposal groups of nil (2023 - \u00a33 million).
Provisions for liabilities and charges
Litigation and
Commitments
Customer redress
other regulatory
Property
and guarantees
Other (1)
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
486
156
99
78
171
990
Expected credit loss impairment release
-
-
-
(23)
-
(23)
Currency translation and other movements
(1)
-
(1)
-
(3)
(5)
Charge to income statement
194
30
47
-
301
572
Release to income statement
(137)
(23)
(36)
-
(46)
(242)
Provisions utilised
(122)
(35)
(19)
-
(252)
(428)
At 31 December 2024
420
128
90
55
171
864
(1)
Other materially comprises provisions for restructuring costs and provision for Bank of England Levy.
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.
For accounting policy information refer to Accounting policy 3.12.
Background information on all material provisions is given in Note 25
. 25 Memorandum items
Contingent liabilities and commitments
NatWest Group provides its customers with a variety of services to support
their businesses, such as guarantees. These are reported as commitments.
Contingent liabilities are possible obligations dependent on a future event or
present obligations which are either not probable or cannot be measured
reliably.
The amounts shown in the table below are intended only to provide an indication of the
volume of business outstanding at 31 December 2024. Although NatWest Group is
exposed to credit risk in the event of a customer\u2019s failure to meet its obligations, the
amounts shown do not, and are not intended to, provide any indication of NatWest
Group's expectation of future losses.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Contingent liabilities and commitments
\u00a0 \u00a0
Guarantees
3,060
2,823
Other contingent liabilities
1,496
1,633
Standby facilities, credit lines and other commitments
135,405
127,424
Total
139,961
131,880
\n
(1)
Updated to reflect the regulatory treatment of revocable commitments.
Banking commitments and contingent obligations, which have been entered into on
behalf of customers and for which there are corresponding obligations from customers,
are not included in assets and liabilities. NatWest Group's maximum exposure to credit
loss, in the event of its obligation crystallising and all counterclaims, collateral or security
proving valueless, is represented by the contractual nominal amount of these
instruments included in the table above. These commitments and contingent obligations
are subject to NatWest Group's normal credit approval processes.
Guarantees
\u2013
NatWest Group gives guarantees on behalf of customers. A financial
guarantee represents an irrevocable undertaking that NatWest Group will meet a
customer's specified obligations to a third party if the customer fails to do so. The
maximum amount that NatWest Group could be required to pay under a guarantee is its
principal amount as disclosed in the table above. NatWest Group expects most
guarantees it provides to expire unused.
Other contingent liabilities
- these include standby letters of credit, supporting customer
debt issues and contingent liabilities relating to customer trading activities such as those
arising from performance and customs bonds, warranties and indemnities.
Standby facilities and credit lines
- under a loan commitment, NatWest Group agrees to
make funds available to a customer in the future. Loan commitments, which are usually
for a specified term, may be unconditionally cancellable or may persist, provided all
conditions in the loan facility are satisfied or waived. Commitments to lend include
commercial standby facilities and credit lines, liquidity facilities to commercial paper
conduits and unutilised overdraft facilities.
Other commitments
- these include documentary credits, which are commercial letters
of credit providing for payment by NatWest Group to a named beneficiary against
presentation of specified documents, forward asset purchases, forward deposits placed
and undrawn note issuance and revolving underwriting facilities, and other short-term
trade related transactions.
Contractual obligations for future expenditure not provided for in the accounts
The following table shows contractual obligations for future expenditure not provided for
in the accounts at the year end.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Capital expenditure on property, plant and equipment
14
38
Contracts to purchase goods or services
(1)
1,160
1,121
\u00a0
1,174
1,159
\n
(1)
Of which due within 1 year: \u00a3356 million (2023 \u2013 \u00a3379 million).
Trustee and other fiduciary activities
In its capacity as trustee or other fiduciary role, NatWest Group may hold or place
assets on behalf of individuals, trusts, companies, pension schemes and others. The
assets and their income are not included in NatWest Group's financial statements.
NatWest Group earned fee income of \u00a3302 million (2023 - \u00a3264 million; 2022 - \u00a3266
million) from these activities.
The Financial Services Compensation Scheme
The Financial Services Compensation Scheme (FSCS), the UK's statutory fund of last
resort for customers of authorised financial services firms, pays compensation if a firm is
unable to meet its obligations. The FSCS funds compensation for customers by raising
management expenses levies and compensation levies on the industry. In relation to
protected deposits, each deposit-taking institution contributes towards these levies in
proportion to their share of total protected deposits on 31 December of the year
preceding the scheme year (which runs from 1 April to 31 March), subject to annual
maxima set by the Prudential Regulation Authority. In addition, the FSCS has the power
to raise levies on a firm that has ceased to participate in the scheme and is in the
process of ceasing to be authorised for the costs that it would have been liable to pay
had the FSCS made a levy in the financial year it ceased to be a participant in the
scheme.
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Litigation and regulatory matters
\n
NatWest Group plc and certain members
\n
of NatWest Group are party to various
\n
legal proceedings and are involved in, or
\n
subject to, various regulatory matters,
\n
including as the subject of investigations
\n
and other regulatory and governmental
\n
action (Matters) in the United Kingdom
\n
(UK), the United States (US), the
\n
European Union (EU) and other
\n
jurisdictions.
\n
NatWest Group recognises a provision for
\n
a liability in relation to these Matters
\n
when it is probable that an outflow of
\n
economic benefits will be required to
\n
settle an obligation resulting from past
\n
events, and a reliable estimate can be
\n
made of the amount of the obligation.
\n
In many of the Matters, it is not possible
\n
to determine whether any loss is
\n
probable, or to estimate reliably the
\n
amount of any loss, either as a direct
\n
consequence of the relevant proceedings
\n
and regulatory matters or as a result of
\n
adverse impacts or restrictions on
\n
NatWest Group\u2019s reputation, businesses
\n
and operations. Numerous legal and
\n
factual issues may need to be resolved,
\n
including through potentially lengthy
\n
discovery and document production
\n
exercises and determination of important
\n
factual matters, and by addressing novel
\n
or unsettled legal questions relevant to
\n
the proceedings in question, before the
\n
probability of a liability, if any, arising can
\n
reasonably be estimated in respect of
\n
any Matter. NatWest Group cannot
\n
predict if, how, or when such claims will
\n
be resolved or what the eventual
\n
settlement, damages, fine, penalty or
\n
other relief, if any, may be, particularly
\n
for Matters that are at an early stage in
\n
their development or where claimants
\n
seek substantial or indeterminate
\n
damages.
\n
There are situations where NatWest
\n
Group may pursue an approach that in
\n
some instances leads to a settlement
\n
agreement. This may occur in order to
\n
avoid the expense, management
\n
distraction or reputational implications of
\n
continuing to contest liability, or in order
\n
to take account of the risks inherent in
\n
defending or contesting Matters, even for
\n
those for which NatWest Group believes
\n
it has credible defences and should
\n
prevail on the merits. The uncertainties
\n
inherent in all Matters affect the amount
\n
and timing of any potential economic
\n
outflows for both Matters with respect to
\n
which provisions have been established
\n
and other contingent liabilities in respect
\n
of any such Matter.
\n
It is not practicable to provide an
\n
aggregate estimate of potential liability
\n
for our Matters as a class of contingent
\n
liabilities.
\n
The future economic outflow in respect of
\n
any Matter may ultimately prove to be
\n
substantially greater than, or less than,
\n
the aggregate provision, if any, that
\n
NatWest Group has recognised in respect
\n
of such Matter. Where a reliable estimate
\n
of the economic outflow cannot be
\n
reasonably made, no provision has been
\n
recognised. NatWest Group expects that
\n
in future periods, additional provisions
\n
and economic outflows relating to
\n
Matters that may or may not be
\n
currently known by NatWest Group will
\n
be necessary, in amounts that are
\n
expected to be substantial in some
\n
instances. Refer to Note 20 for
\n
information on material provisions.
\n
Matters which are, or could be, material,
\n
either individually or in aggregate, having
\n
regard to NatWest Group, considered as
\n
a whole, in which NatWest Group is
\n
currently involved are set out below. We
\n
have provided information on the
\n
procedural history of certain Matters,
\n
where we believe appropriate, to aid the
\n
understanding of the Matter.
\n
For a discussion of certain risks
\n
associated with NatWest Group\u2019s
\n
litigation and regulatory matters
\n
(including the Matters), refer to the Risk
\n
Factor relating to legal, regulatory and
\n
governmental actions and investigations
\n
set out on pages 422 to 423.
\n
Litigation
\n
London Interbank Offered Rate (LIBOR)
\n
and other rates litigation
\n
NatWest Group plc and certain other
\n
members of NatWest Group, including
\n
NWM Plc, are defendants in a number of
\n
claims pending in the United States
\n
District Court for the Southern District of
\n
New York (SDNY) with respect to the
\n
setting of USD LIBOR. The complainants
\n
allege that certain members of NatWest
\n
Group and other panel banks violated
\n
various federal laws, including the US
\n
commodities and antitrust laws, and state
\n
statutory and common law, as well as
\n
contracts, by manipulating LIBOR and
\n
prices of LIBOR-based derivatives in
\n
various markets through various means.
\n
The co-ordinated proceeding in the SDNY
\n
relating to USD LIBOR now includes one
\n
remaining class action, which is on behalf
\n
of persons who purchased LIBOR-linked
\n
instruments from defendants and bonds
\n
issued by defendants, as well as several
\n
non-class actions. The defendants in the
\n
co-ordinated proceeding have filed a
\n
summary judgment motion on the issue
\n
of liability, and briefing on that motion
\n
concluded in January 2025.
\n
In March 2024, NatWest Group
\n
companies reached an agreement to
\n
settle the USD LIBOR class action that
\n
asserted claims on behalf of lenders who
\n
made USD LIBOR based loans. The
\n
settlement amount, which was covered in
\n
full by an existing provision, has been
\n
paid and the settlement has now
\n
received final court approval.
\n
The non-class claims filed in the SDNY
\n
include claims that the Federal Deposit
\n
Insurance Corporation (FDIC) is asserting
\n
on behalf of certain failed US banks. In
\n
July 2017, the FDIC, on behalf of 39 of
\n
those failed US banks, commenced
\n
substantially similar claims against
\n
NatWest Group companies and others in
\n
the High Court of Justice of England and
\n
Wales. The action alleges collusion with
\n
regard to the setting of USD LIBOR and
\n
that the defendants breached UK and
\n
European competition law, as well as
\n
asserting common law claims of fraud
\n
under US law. The defendant banks
\n
consented to a request by the FDIC for
\n
discontinuance of the claim in respect of
\n
20 failed US banks, leaving 19 failed US
\n
banks as claimants. The trial is currently
\n
scheduled to commence in Q1 2026.
\n
In addition to the USD LIBOR cases
\n
described above, there is a class action
\n
relating to derivatives allegedly tied to
\n
JPY LIBOR and Euroyen TIBOR, which
\n
was dismissed by the SDNY in relation to
\n
NWM Plc and other NatWest Group
\n
companies in September 2021. That
\n
dismissal is now the subject of an appeal
\n
to the United States Court of Appeals for
\n
the Second Circuit (US Court of Appeals).
\n
Two other IBOR-related class actions
\n
involving NWM Plc, concerning alleged
\n
manipulation of Euribor and Pound
\n
Sterling LIBOR, were previously dismissed
\n
by the SDNY for various reasons. The
\n
plaintiffs\u2019 appeals in those two cases
\n
remain pending.
\n
In August 2020, a complaint was filed in
\n
the United States District Court for the
\n
Northern District of California by several
\n
United States retail borrowers against
\n
the USD ICE LIBOR panel banks and their
\n
affiliates (including NatWest Group plc,
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
NWM Plc, NWMSI and NWB Plc), alleging
\n
(i) that the very process of setting USD
\n
ICE LIBOR amounts to illegal price-fixing;
\n
and (ii) that banks in the United States
\n
have illegally agreed to use LIBOR as a
\n
component of price in variable retail
\n
loans. In September 2022, the district
\n
court dismissed the complaint. In
\n
December 2024, the United States Court
\n
of Appeals for the Ninth Circuit affirmed
\n
the district court\u2019s decision.
\n
NWM Plc is also named as a defendant in
\n
a motion to certify a class action relating
\n
to LIBOR in the Tel Aviv District Court in
\n
Israel. NWM Plc filed a motion for
\n
cancellation of service outside the
\n
jurisdiction, which was granted in July
\n
2020. The claimants appealed that
\n
decision and in November 2020 the
\n
appeal was refused and the claim
\n
dismissed by the Appellate Court. The
\n
claim could in future be recommenced
\n
depending on the outcome of an appeal
\n
to Israel\u2019s Supreme Court in respect of
\n
the dismissal of the substantive case
\n
against banks that had a presence in
\n
Israel.
\n
Foreign exchange litigation
\n
NatWest Group plc, NWM Plc and/or
\n
NWMSI are defendants in several cases
\n
relating to NWM Plc\u2019s foreign exchange
\n
(FX) business.
\n
In May 2019, a cartel class action was
\n
filed in the Federal Court of Australia
\n
against NWM Plc and four other banks
\n
on behalf of persons who bought or sold
\n
currency through FX spots or forwards
\n
between 1 January 2008 and 15 October
\n
2013 with a total transaction value
\n
exceeding AUD 0.5 million. The claimant
\n
has alleged that the banks, including
\n
NWM Plc, contravened Australian
\n
competition law by sharing information,
\n
coordinating conduct, widening spreads
\n
and manipulating FX rates for certain
\n
currency pairs during this period.
\n
NatWest Group plc and NWMSI have
\n
been named in the action as \u2018other cartel
\n
participants\u2019, but are not respondents.
\n
The claim was served in June 2019 and
\n
NWM Plc filed its defence in March 2022.
\n
The court has ordered that potential
\n
class members are required to either opt
\n
out of the proceedings or register to be
\n
included in or benefit from any potential
\n
settlement of the claim. Directions have
\n
been made for the provision of evidence
\n
during 2025 and 2026.
\n
In July and December 2019, two
\n
separate applications seeking opt-out
\n
collective proceedings orders were filed in
\n
the UK Competition Appeal Tribunal
\n
(CAT) against NatWest Group plc, NWM
\n
Plc and other banks. Both applications
\n
were brought on behalf of persons who,
\n
between 18 December 2007 and 31
\n
January 2013, entered into a relevant FX
\n
spot or outright forward transaction in
\n
the European Economic Area with a
\n
relevant financial institution or on an
\n
electronic communications network. In
\n
March 2022, the CAT declined to certify
\n
as collective proceedings either of the
\n
applications, which was appealed by the
\n
applicants and the subject of an
\n
application for judicial review.
\n
In its amended judgment in November
\n
2023, the Court of Appeal allowed the
\n
appeal and decided that the claims
\n
should proceed on an opt-out basis.
\n
Separately, the court determined which
\n
of the two competing applicants can
\n
proceed as class representative, and
\n
dismissed the application for judicial
\n
review of the CAT\u2019s decision. The other
\n
applicant has discontinued its claim and
\n
withdrawn from the proceedings. The
\n
banks sought permission to appeal the
\n
Court of Appeal decision directly to the
\n
UK Supreme Court, which was granted in
\n
April 2024. The appeal is scheduled to be
\n
heard in April 2025.
\n
Two motions to certify FX-related class
\n
actions were filed in the Tel Aviv District
\n
Court in Israel in September and October
\n
2018, and were subsequently
\n
consolidated into one motion. The
\n
consolidated motion to certify, which
\n
names The Royal Bank of Scotland plc
\n
(now NWM Plc) and several other banks
\n
as defendants, was served on NWM Plc
\n
in May 2020. The applicants sought the
\n
court\u2019s permission to amend their
\n
motions to certify the class actions. NWM
\n
Plc filed a motion challenging the
\n
permission granted by the court for the
\n
applicants to serve the consolidated
\n
motion outside the Israeli jurisdiction.
\n
That NWM Plc motion remains pending.
\n
In February 2024, NWM Plc executed an
\n
agreement to settle the claim, subject to
\n
court approval. The settlement amount is
\n
covered in full by an existing provision.
\n
In December 2021, a summons was
\n
served in the Netherlands against
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V. by Stichting FX Claims on behalf of a
\n
number of parties, seeking declarations
\n
from the court concerning liability for
\n
anti-competitive FX market conduct
\n
described in decisions of the European
\n
Commission (EC) of 16 May 2019, along
\n
with unspecified damages. The claimant
\n
amended its claim to also refer to a 2
\n
December 2021 decision by the EC,
\n
which described anti-competitive FX
\n
market conduct. NatWest Group plc,
\n
NWM Plc and other defendants contested
\n
the jurisdiction of the Dutch court. In
\n
March 2023, the district court in
\n
Amsterdam accepted that it has
\n
jurisdiction to hear claims against NWM
\n
N.V. but refused jurisdiction to hear any
\n
claims against the other defendant banks
\n
(including NatWest Group plc and NWM
\n
Plc) brought on behalf of the parties
\n
represented by the claimant that are
\n
domiciled outside of the Netherlands. The
\n
claimant is appealing that decision. The
\n
defendant banks have brought cross-
\n
appeals which seek a ruling that the
\n
Dutch court has no jurisdiction to hear
\n
any claims against the defendant banks
\n
domiciled outside of the Netherlands,
\n
irrespective of whether the claim has
\n
been brought on behalf of a party
\n
represented by the claimant that is
\n
domiciled within or outside of the
\n
Netherlands. The Amsterdam Court of
\n
Appeal has stayed these appeal
\n
proceedings until the Court of Justice of
\n
the European Union has answered
\n
preliminary questions that have been
\n
referred to it in another matter.
\n
In September 2023, a second summons
\n
was served by Stichting FX Claims on
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V., on behalf of a new group of parties.
\n
The claimant seeks declarations from the
\n
district court in Amsterdam concerning
\n
liability for anti-competitive FX market
\n
conduct described in the above
\n
referenced decisions of the EC of 16 May
\n
2019 and 2 December 2021, along with
\n
unspecified damages. NatWest Group plc,
\n
NWM Plc and other defendants are
\n
contesting the Dutch court's jurisdiction.
\n
The district court has stayed the
\n
proceedings pending judgment in the
\n
above-mentioned appeals.
\n
In January 2025, a third summons was
\n
served by Stichting FX Claims on
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V., on behalf of another new group of
\n
parties. The claimant seeks similar
\n
declarations from the district court in
\n
Amsterdam to those being sought in the
\n
above-mentioned claims, along with
\n
unspecified damages.
\n
Certain other foreign exchange
\n
transaction related claims have been or
\n
may be threatened. NatWest Group
\n
cannot predict whether all or any of
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
these claims will be pursued.
\n
Government securities antitrust litigation
\n
Class action antitrust claims commenced
\n
in March 2019 were pending in the SDNY
\n
against NWM Plc, NWMSI and other
\n
banks in respect of Euro-denominated
\n
bonds issued by various European central
\n
banks (European government bonds or
\n
EGBs). The complaint alleged a
\n
conspiracy among dealers of EGBs to
\n
widen the bid-ask spreads they quoted to
\n
customers, thereby increasing the prices
\n
customers paid for the EGBs or
\n
decreasing the prices at which customers
\n
sold EGBs.
\n
In March 2024, NatWest Group
\n
companies reached an agreement to
\n
settle the class action. The settlement
\n
amount, which was covered in full by an
\n
existing provision, has been paid and the
\n
settlement has now received final court
\n
approval.
\n
Swaps antitrust litigation
\n
NWM Plc and other members of NatWest
\n
Group, including NatWest Group plc, as
\n
well as a number of other interest rate
\n
swap dealers, are defendants in several
\n
cases pending in the SDNY alleging
\n
violations of the US antitrust laws in the
\n
market for interest rate swaps. There is a
\n
consolidated class action complaint on
\n
behalf of persons who entered into
\n
interest rate swaps with the defendants,
\n
as well as non-class action claims by
\n
three swap execution facilities
\n
(TeraExchange, Javelin, and trueEx). The
\n
plaintiffs allege that the swap execution
\n
facilities would have successfully
\n
established exchange-like trading of
\n
interest rate swaps if the defendants had
\n
not unlawfully conspired to prevent that
\n
from happening through boycotts and
\n
other means. Discovery in the non-class
\n
action claims is complete. In March 2024,
\n
NatWest Group companies reached an
\n
agreement to settle the class action. The
\n
settlement amount has been paid into
\n
escrow pending final court approval of
\n
the settlement and was covered in full by
\n
an existing provision.
\n
In June 2021, a class action antitrust
\n
complaint was filed against a number of
\n
credit default swap dealers, in New
\n
Mexico federal court on behalf of persons
\n
who, from 2005 onwards, settled credit
\n
default swaps in the United States by
\n
reference to the ISDA credit default swap
\n
auction protocol. The complaint alleges
\n
that the defendants conspired to
\n
manipulate that benchmark through
\n
various means in violation of the antitrust
\n
laws and the Commodity Exchange Act.
\n
The defendants filed a motion to dismiss
\n
the complaint and, in June 2023, such
\n
motion was denied as regards to NWMSI
\n
and other financial institutions, but
\n
granted as regards to NWM Plc on the
\n
ground that the court lacks jurisdiction
\n
over that entity. As a result, the case
\n
entered the discovery phase as against
\n
the non-dismissed defendants. In January
\n
2024, the SDNY issued an order barring
\n
the plaintiffs in the New Mexico case
\n
from pursuing claims based on conduct
\n
occurring before 30 June 2014 on the
\n
ground that such claims were
\n
extinguished by a 2015 settlement
\n
agreement that resolved a prior class
\n
action relating to credit default swaps.
\n
The SDNY\u2019s decision is the subject of a
\n
pending appeal to the US Court of
\n
Appeals.
\n
Odd lot corporate bond trading antitrust
\n
litigation
\n
In July 2024, the US Court of Appeals
\n
vacated the SDNY's October 2021
\n
dismissal of the class action antitrust
\n
complaint alleging that from August 2006
\n
onwards various securities dealers,
\n
including NWMSI, conspired artificially to
\n
widen spreads for odd lots of corporate
\n
bonds bought or sold in the United States
\n
secondary market and to boycott
\n
electronic trading platforms that would
\n
have allegedly promoted pricing
\n
competition in the market for such bonds.
\n
The appellate court held that the district
\n
judge who made the decision should not
\n
have been presiding over the case
\n
because a member of the judge\u2019s family
\n
had owned stock in one of the
\n
defendants while the motion was
\n
pending.
The defendants are now seeking
\n
dismissal by a different district court
\n
judge.
\n
Spoofing litigation
\n
In December 2021, three substantially
\n
similar class actions complaints were filed
\n
in federal court in the United States
\n
against NWM Plc and NWMSI alleging
\n
Commodity Exchange Act and common
\n
law unjust enrichment claims arising from
\n
manipulative trading known as spoofing.
\n
The complaints refer to NWM Plc\u2019s
\n
December 2021 spoofing-related guilty
\n
plea (described below under \u201cUS
\n
investigations relating to fixed-income
\n
securities\u201d) and purport to assert claims
\n
on behalf of those who transacted in US
\n
Treasury securities and futures and
\n
options on US Treasury securities
\n
between 2008 and 2018. In July 2022,
\n
the defendants filed a motion to dismiss
\n
these claims, which have been
\n
consolidated into one matter in the
\n
United States District Court for the
\n
Northern District of Illinois.
\n
Madoff
\n
NWM N.V. was named as a defendant in
\n
two actions filed by the trustee for the
\n
bankrupt estates of Bernard L. Madoff
\n
and Bernard L. Madoff Investment
\n
Securities LLC, in bankruptcy court in
\n
New York, which together seek to
\n
clawback more than US$298 million that
\n
NWM N.V. allegedly received from certain
\n
Madoff feeder funds and certain swap
\n
counterparties. The claims were
\n
previously dismissed, but as a result of an
\n
August 2021 decision by the US Court of
\n
Appeals, they are now proceeding in the
\n
discovery phase in the bankruptcy court,
\n
where they have been consolidated into
\n
one action.
\n
Offshoring VAT assessments
\n
HMRC, as part of an industry-wide
\n
review, issued protective tax
\n
assessments in 2018 against NatWest
\n
Group plc totalling \u00a3143 million relating to
\n
unpaid VAT in respect of the UK
\n
branches of two NatWest Group
\n
companies registered in India for the
\n
period from 1 January 2014 until 31
\n
December 2017 inclusive. NatWest Group
\n
formally requested reconsideration by
\n
HMRC of their assessments, and this
\n
process was completed in November
\n
2020. HMRC upheld their original decision
\n
and, as a result, NatWest Group plc
\n
lodged an appeal with the Tax Tribunal
\n
and an application for judicial review with
\n
the High Court of Justice of England and
\n
Wales, both in December 2020. In order
\n
to lodge the appeal with the Tax
\n
Tribunal, NatWest Group plc was
\n
required to pay amounts totalling \u00a3153
\n
million (including statutory interest) to
\n
HMRC in December 2020 and May 2022.
\n
The appeal and the application for judicial
\n
review have both been stayed pending
\n
further discussion with HMRC in relation
\n
to a separate case involving another
\n
bank.
The amount of \u00a3153 million
\n
continues to be recognised as an asset
\n
that NatWest Group plc expects to
\n
recover. Since 1 January 2018, NatWest
\n
Group plc has paid VAT on intra-group
\n
supplies from the India-registered
\n
NatWest Group companies.
\n
US Anti-Terrorism Act litigation
\n
NWM N.V. and certain other financial
\n
institutions are defendants in several
\n
actions filed by a number of US nationals
\n
(or their estates, survivors, or heirs), most
\n
of whom are or were US military
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
personnel, who were killed or injured in
\n
attacks in Iraq between 2003 and 2011.
\n
NWM Plc is also a defendant in some of
\n
these cases.
\n
According to the plaintiffs\u2019 allegations, the
\n
defendants are liable for damages arising
\n
from the attacks because they allegedly
\n
conspired with and/or aided and abetted
\n
Iran and certain Iranian banks to assist
\n
Iran in transferring money to Hezbollah
\n
and the Iraqi terror cells that committed
\n
the attacks, in violation of the US Anti-
\n
Terrorism Act, by agreeing to engage in
\n
\u2018stripping\u2019 of transactions initiated by the
\n
Iranian banks so that the Iranian nexus to
\n
the transactions would not be detected.
\n
The first of these actions, alleging
\n
conspiracy claims but not aiding and
\n
abetting claims, was filed in the United
\n
States District Court for the Eastern
\n
District of New York in November 2014.
\n
In September 2019, the district court
\n
dismissed the case, finding that the
\n
claims were deficient for several reasons,
\n
including lack of sufficient allegations as
\n
to the alleged conspiracy and causation.
\n
In January 2023, the US Court of Appeals
\n
affirmed the district court\u2019s dismissal of
\n
this case. The plaintiffs have now filed a
\n
motion in the district court to re-open the
\n
case to assert aiding and abetting claims
\n
that they previously did not assert, which
\n
the defendants are opposing. Another
\n
action, filed in the SDNY in 2017, which
\n
asserted both conspiracy and aiding and
\n
abetting claims, was dismissed by the
\n
SDNY in March 2019 on similar grounds
\n
as the first case, but remains subject to
\n
appeal to the US Court of Appeals.
\n
Other follow-on actions that are
\n
substantially similar to those described
\n
above are pending in the same courts.
\n
1MDB litigation
\n
A Malaysian court claim was served in
\n
Switzerland in November 2022 by 1MDB,
\n
a sovereign wealth fund, in which Coutts
\n
& Co Ltd was named, along with six
\n
others, as a defendant in respect of
\n
losses allegedly incurred by 1MDB. It is
\n
claimed that Coutts & Co Ltd is liable as
\n
a constructive trustee for having
\n
dishonestly assisted the directors of
\n
1MDB in the breach of their fiduciary
\n
duties by failing (amongst other alleged
\n
claims) to undertake due diligence in
\n
relation to a customer of Coutts & Co
\n
Ltd, through which funds totalling c.US$1
\n
billion were received and paid out
\n
between 2009 and 2011. 1MDB seeks
\n
the return of that amount plus interest.
\n
Coutts & Co Ltd filed an application in
\n
January 2023 challenging the validity of
\n
service and the Malaysian court\u2019s
\n
jurisdiction to hear the claim, and a
\n
hearing took place in February 2024. In
\n
March 2024, the court granted that
\n
application. 1MDB has appealed that
\n
decision and a prior decision by the court
\n
not to allow them to discontinue their
\n
claim. Both appeals are scheduled to be
\n
heard in November 2025.
\n
Coutts & Co Ltd (a subsidiary of RBS
\n
Netherlands Holdings B.V., which in turn
\n
is a subsidiary of NWM Plc) is a company
\n
registered in Switzerland and is in wind-
\n
down following the announced sale of its
\n
business assets in 2015.
\n
Regulatory matters (including
\n
investigations and customer redress
\n
programmes
)
\n
NatWest Group\u2019s businesses and financial
\n
condition can be affected by the actions
\n
of various governmental and regulatory
\n
authorities in the UK, the US, the EU and
\n
elsewhere. NatWest Group has engaged,
\n
and will continue to engage, in
\n
discussions with relevant governmental
\n
and regulatory authorities, including in
\n
the UK, the US, the EU and elsewhere,
\n
on an ongoing and regular basis, and in
\n
response to informal and formal inquiries
\n
or investigations, regarding operational,
\n
systems and control evaluations and
\n
issues including those related to
\n
compliance with applicable laws and
\n
regulations, including consumer
\n
protection, investment advice, business
\n
conduct, competition/anti-trust, VAT
\n
recovery, anti-bribery, anti-money
\n
laundering and sanctions regimes.
\n
NatWest Group expects government and
\n
regulatory intervention in financial
\n
services to be high for the foreseeable
\n
future, including increased scrutiny from
\n
competition and other regulators in the
\n
retail and SME business sectors.
\n
Any matters discussed or identified
\n
during such discussions and inquiries may
\n
result in, among other things, further
\n
inquiry or investigation, other action
\n
being taken by governmental and
\n
regulatory authorities, increased costs
\n
being incurred by NatWest Group,
\n
remediation of systems and controls,
\n
public or private censure, restriction of
\n
NatWest Group\u2019s business activities
\n
and/or fines. Any of the events or
\n
circumstances mentioned in this
\n
paragraph or below could have a
\n
material adverse effect on NatWest
\n
Group, its business, authorisations and
\n
licences, reputation, results of operations
\n
or the price of securities issued by it, or
\n
lead to material additional provisions
\n
being taken.
\n
NatWest Group is co-operating fully with
\n
the matters described below.
\n
US investigations relating to fixed-
\n
income securities
\n
In December 2021, NWM Plc pled guilty
\n
in the United States District Court for the
\n
District of Connecticut to one count of
\n
wire fraud and one count of securities
\n
fraud in connection with historical
\n
spoofing conduct by former employees in
\n
US Treasuries markets between January
\n
2008 and May 2014 and, separately,
\n
during approximately three months in
\n
2018. The 2018 trading occurred during
\n
the term of a non-prosecution agreement
\n
(NPA) between NWMSI and the United
\n
States Attorney's Office for the District of
\n
Connecticut (USAO CT), under which
\n
non-prosecution was conditioned on
\n
NWMSI and affiliated companies not
\n
engaging in criminal conduct during the
\n
term of the NPA. The relevant trading in
\n
2018 was conducted by two NWM
\n
traders in Singapore and breached that
\n
NPA. The plea agreement reached with
\n
the US Department of Justice (DOJ) and
\n
the USAO CT resolved both the spoofing
\n
conduct and the breach of the NPA.
\n
As required by the resolution and
\n
sentence imposed by the court, NWM Plc
\n
is subject to a probationary period, which
\n
was extended to end concurrently with
\n
the conclusion of the independent
\n
monitorship, which is also required under
\n
the plea agreement. The term of the
\n
independent monitorship and the ongoing
\n
implementation of recommendations
\n
made by it is currently scheduled to
\n
conclude in December 2025 but may be
\n
extended by agreement with the DOJ. In
\n
addition, NWM Plc has committed to
\n
compliance programme reviews and
\n
improvements and agreed to reporting
\n
and co-operation obligations.
\n
In the event that NWM Plc does not meet
\n
its obligations to the DOJ, this may lead
\n
to adverse consequences such as
\n
increased costs from any extension of
\n
monitorship and/or the period of the
\n
probation, findings that NWM Plc violated
\n
its probation term, and possible re-
\n
sentencing, amongst other
\n
consequences. Other material adverse
\n
collateral consequences may occur as a
\n
result of this matter, as further described
\n
in the Risk Factor relating to legal,
\n
regulatory and governmental actions and
\n
investigations set out on pages 422 to
\n
423.
RBSI Ltd reliance regime and referral to
enforcement
In January 2023, the Jersey Financial
Services Commission (JFSC) notified RBSI
Ltd that it had been referred to its
Enforcement Division in relation to RBSI
Ltd\u2019s operation of the reliance regime.
The reliance regime is specific to certain
Crown Dependencies and enables RBSI
Ltd to rely on regulated third parties for
specific due diligence information. RBSI
Ltd has provided information to the JFSC
at its request.
Investment advice review
In October 2019, the FCA notified
NatWest Group of its intention to appoint
a Skilled Person under section 166 of the
Financial Services and Markets Act 2000
to conduct a review of whether NatWest
Group\u2019s 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\u2019s review has concluded
and, after discussion with the FCA,
NatWest Group is undertaking additional
review / remediation work.
Review and investigation of treatment of
tracker mortgage customers in Ulster
Bank Ireland DAC
In December 2015, correspondence was
received from the Central Bank of Ireland
setting out an industry examination
framework in respect of the sale of
tracker mortgages from approximately
2001 until the end of 2015.
The redress and compensation process
has now largely concluded, although a
small number of cases remain
outstanding relating to uncontactable
customers.
UBIDAC customers have lodged tracker
mortgage complaints with the Financial
Services and Pensions Ombudsman
(FSPO). UBIDAC challenged three FSPO
adjudications in the Irish High Court. In
June 2023, the High Court found in
favour of the FSPO in all matters.
UBIDAC appealed that decision to the
Court of Appeal. In September 2024, the
Court of Appeal allowed UBIDAC\u2019s
appeal and set aside certain findings of
the FSPO. The Court of Appeal directed
one aspect of the FSPO decisions to be
remitted to the FSPO for its consideration
following an oral hearing, and UBIDAC is
following up with the FSPO in that
regard.
Other customer remediation in Ulster
Bank Ireland DAC
UBIDAC identified other legacy issues
leading to the establishment of
remediation requirements and progress is
ongoing to conclude activities.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00694": { "value": "3.12. Provisions
We recognise a provision for a present
obligation resulting from a past event
when it is more likely than not that we
will be required to pay to settle the
obligation and the amount of the
obligation can be estimated reliably.
Provision is made for restructuring costs,
including the costs of redundancy, when
we have a constructive obligation.
An obligation exists when we have a
detailed formal plan for the restructuring
and have raised a valid expectation in
those affected either by starting to
implement the plan or by announcing its
main features.
We recognise any onerous cost of the
present obligation under a contract as a
provision. An onerous cost is the
unavoidable cost of meeting our
contractual obligations that exceed the
expected economic benefits. When we
intend to vacate a leasehold property or
right of use asset, the asset would be
tested for impairment and a provision
may be recognised for the ancillary
contractual occupancy 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.
For accounting policy information refer to Accounting policy 3.12.
Background information on all material provisions is given in Note 25
. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00219": { "value": "4. Future accounting
developments
International Financial Reporting
Standards
Effective 1 January 2026
\ue001
Amendments to the Classification and
Measurement of Financial
Instruments (Amendments to IFRS 9
and IFRS 7 \u2013 Issued May 2024)
Effective 1 January 2027
\ue001
P
resentation and Disclosures in
Financial Statements (IFRS 18 \u2013
Issued April 2024)
\ue001
Subsidiaries without Public
Accountability (IFRS 19 \u2013 Issued May
2024)
We are assessing the effect of adopting
these accounting developments on our
financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00688": { "value": "4. Future accounting
developments
International Financial Reporting
Standards
Effective 1 January 2026
\ue001
Amendments to the Classification and
Measurement of Financial
Instruments (Amendments to IFRS 9
and IFRS 7 \u2013 Issued May 2024)
Effective 1 January 2027
\ue001
P
resentation and Disclosures in
Financial Statements (IFRS 18 \u2013
Issued April 2024)
\ue001
Subsidiaries without Public
Accountability (IFRS 19 \u2013 Issued May
2024)
We are assessing the effect of adopting
these accounting developments on our
financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00732": { "value": "There are three main categories of non-interest income: net fees and commissions, trading income, and other operating income.
Net fees and commissions is the difference between fees received from customers for services provided by NatWest Group, such as credit card annual fees,
underwriting fees, payment services, brokerage fees, trade finance, investment management fees, trustee and fiduciary services, and fees incurred in the provision of
those services, such as credit card interchange fees, customer incentives, loan administration, foreign currency transaction charges, and brokerage fees.
Trading income is earned from short-term financial assets and financial liabilities to either make a spread between purchase and sale price or held to take advantage
of movements in prices and yields.
Other operating income includes revenue from other operating activities which are not related to the principal activities of the company, such as: share of profit or loss
from associates; operating lease income; the profit or loss on the sale of a subsidiary or property, plant and equipment profit or loss on own debt; and changes in the
fair value of financial assets and liabilities designated at fair value through profit or loss.
For accounting policy information refer to Accounting policies 3.1 and 3.6", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFeeAndCommissionIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00228": { "value": "3 Operating expenses
Operating expenses are expenses NatWest Group incurs in the running of its business such as all staff costs (for example salaries, bonus awards, pension costs and
\n
social security costs), premises and equipment costs that arise from the occupation of premises and the use of equipment, depreciation and amortisation and other
\n
administrative expenses.
\n
For accounting policy information refer to Accounting policies 3.3, 3.4 and 3.5.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Salaries
2,477
2,483
2,250
Bonus awards
411
353
334
Temporary and contract costs
162
199
234
Social security costs
371
352
328
Pension costs
311
313
363
- defined benefit schemes (Note 5)
86
122
205
- defined contribution schemes
225
191
158
Other
329
201
207
Staff costs
4,061
3,901
3,716
Premises and equipment
1,211
1,153
1,112
UK bank levy
142
109
101
Depreciation and amortisation
(1)
1,058
934
833
Other administrative expenses
(2)
1,677
1,899
1,925
Administrative expenses
4,088
4,095
3,971
\u00a0
8,149
7,996
7,687
\n
(1)
Includes depreciation of right of use assets of \u00a3103 million (2023 - \u00a3104 million; 2022 - \u00a3119 million).
\n
(2)
Includes litigation and conduct costs, net of amounts recovered. Refer to Note 20 for further details.
\n
The average number of persons employed, rounded to the nearest hundred, during the
\n
year, excluding temporary staff, was 60,700 (2023 \u2013 61,500; 2022 \u2013 60,000). The
\n
average number of temporary employees during 2024 was 1,400 (2023 \u2013 2,100; 2022 \u2013
\n
2,500).
\n
The number of persons employed at 31 December, excluding temporary staff, by
\n
reportable segment, was as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Continuing operations
2024
2023
2022
Retail Banking
13,000
14,300
15,100
Private Banking
2,200
2,400
2,300
Commercial & Institutional
12,700
12,400
12,200
Central items & other
(1)
31,800
32,500
31,400
Total
59,700
61,600
61,000
UK
40,100
41,500
41,200
India
17,600
16,900
15,700
Poland
800
1,500
1,500
USA
300
300
300
Republic of Ireland
100
400
1,400
Rest of the World
800
1,000
900
Total
59,700
61,600
61,000
\n
(1)
Central items & other includes Ulster Bank RoI. The total number of persons employed in Ulster Bank RoI of 200 (2023 \u2013
\n
500; 2022 \u2013 2,200) includes nil people employed in discontinued operations at 31 December 2024 (2023 \u2013 nil; 2022 \u2013
\n
400).
Share-based payments
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Award plan
Eligible employees
Nature of award
Vesting conditions (1)
Settlement
Sharesave
UK, Channel Islands, Gibraltar,
Option to buy shares under
Continuing employment or leavers in certain circumstances
2025 to 2029
\u00a0
Isle of Man, Poland and India.
employee savings plan
\u00a0 \u00a0
Deferred performance
All
Awards of ordinary shares
Continuing employment or leavers in certain circumstances
2025 to 2032
awards
\u00a0
and conditional shares
\u00a0 \u00a0
Long-term incentives
(2,3)
Senior employees
Awards of ordinary shares
Continuing employment or leavers in certain circumstances
2025 to 2031
\u00a0 \u00a0
and conditional shares
and/or satisfaction of the pre-vesting assessment and underpins
\u00a0
Sharing in Success
(
4)
All
Awards of ordinary shares
Future continuing employment and achievement of pre-defined
2025
\u00a0 \u00a0
and conditional shares
measures.
\u00a0
\n
(1)
All awards are subject to discretion of Remuneration Committee.
(2)
Long-term incentives include buy-out awards offered to compensate certain new hires for the loss of forfeited awards from their previous employment.
Existing Long-term incentives vest over 3 to 7 years.
(3)
The existing Restricted Share Plan scheme would be replaced by Performance Share Plan in 2025.
(4)
In 2024 16 million shares at total value of \u00a349 million were granted and vested under Sharing in Success.
Sharesave
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Average
Shares
Average
Shares
Average
Shares
\u00a0
exercise
under
exercise
under
exercise
under
\u00a0
price
option
price
option
price
option
\u00a0
\u00a3
(million)
\u00a3
(million)
\u00a3
(million)
At 1 January
1.59
114
1.63
99
1.61
95
Granted
2.94
24
1.42
43
1.86
25
Exercised
1.52
(32)
1.44
(23)
1.88
(15)
Cancelled
1.60
(5)
1.72
(5)
1.60
(6)
At 31 December
1.93
101
1.59
114
1.63
99
\n
The fair value of Sharesave options granted in 2024 was determined using a pricing
model that included: expected volatility of share price determined at the grant date
based on historical share price volatility over a period of up to five years; expected
option lives that equal the vesting period; estimated dividend yield on equity shares; and
risk-free interest rates determined from UK gilts with terms matching the expected lives
of the options.
The exercise price of options and the fair value on granting awards of fully paid shares is
the average market price over the five trading days (three trading days for Sharesave)
preceding grant date. When estimating the fair value of the award, the number of
shares granted and the prevailing market price as defined on page 151 are used.
The
fair value of the award is recognised as services are provided by employees over the
vesting period.
Options are exercisable within six months of vesting; 8.9 million options were exercisable
at 31 December 2024 (2023 \u2013 19.0 million; 2022 \u2013 5.1 million). The weighted average
share price at the date of exercise of options was \u00a34.03 (2023 - \u00a32.20; 2022 - \u00a32.59). At
31 December 2024, exercise prices ranged from \u00a31.42 to \u00a32.94 (2023 - \u00a31.12 to \u00a31.89;
2022 - \u00a31.12 to \u00a32.27) and the remaining average contractual life was 2.35 years (2023
\u2013 2.25 years; 2022 \u2013 2 years). The fair value of options granted in 2024 was \u00a328.3
million (2023 - \u00a327.3 million; 2022 - \u00a322.1 million).
Deferred performance awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Value at
Shares
Value at
Shares
Value at
Shares
\u00a0
grant
awarded
grant
awarded
grant
awarded
\u00a0
\u00a3m
(million)
\u00a3m
(million)
\u00a3m
(million)
At 1 January
76
35
93
46
132
65
Granted
50
23
52
20
46
20
Forfeited
(3)
(1)
(2)
(1)
(4)
(2)
Vested
(57)
(27)
(67)
(30)
(81)
(37)
At 31 December
66
30
76
35
93
46
\n
The awards granted in 2024 vest in equal tranches on the anniversary of the award,
predominantly over three years.
Long-term incentives
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Value at
Shares
Value at
Shares
Value at
Shares
\u00a0
grant
awarded
grant
awarded
grant
awarded
\u00a0
\u00a3m
(million)
\u00a3m
(million)
\u00a3m
(million)
At 1 January
49
23
49
23
44
21
Granted
9
5
11
5
16
7
Vested/exercised
(11)
(5)
(10)
(4)
(10)
(4)
Lapsed
(7)
(4)
(1)
(1)
(1)
(1)
At 31 December
40
19
49
23
49
23
\n
The market value of awards vested/exercised in 2024 was \u00a319.3 million (2023 - \u00a39.5
million; 2022 - \u00a311.7 million).
Bonus awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Change
\u00a0
\u00a3m
\u00a3m
%
March awards
(1)
63
43
47%
Deferred cash awards
324
262
24%
Deferred share awards
61
51
20%
Total deferred bonus awards
385
313
23%
Total bonus awards
(2)
448
356
26%
Bonus awards as a % of operating profit before tax and bonus awards
7%
5%
\u00a0
Proportion of bonus awards that are deferred
\u00a0 \u00a0 \u00a0
- deferred cash awards
86%
86%
\u00a0
- deferred share awards
14%
14%
\u00a0
\n
Reconciliation of bonus awards to income statement charge
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Bonus awarded
448
356
370
Less: deferral of charge for amounts awarded for current year
(144)
(114)
(127)
Income statement charge for amounts awarded in current year
304
242
243
Add: current year charge for amounts deferred from prior years
109
115
94
Less: forfeiture of amounts deferred from prior years
(2)
(4)
(3)
Income statement charge for amounts deferred from prior years
107
111
91
Income statement charge for bonus awards
(2)
411
353
334
\n
(1)
March cash awards are limited to \u00a32,000 for all employees.
(2)
Excludes other performance-related compensation.
Year in which income statement charge is expected to be taken for deferred bonus awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Actual
Expected
\u00a0
2022
2023
2024
2025
2026 and beyond
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bonus awards deferred from 2022 and earlier
94
115
17
8
6
Bonus awards deferred from 2023
-
-
92
8
9
Less: forfeiture of amounts deferred from prior years
(3)
(4)
(2)
-
-
Bonus awards deferred for 2024
-
-
-
122
22
\u00a0
91
111
107
138
37
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00232": { "value": "3 Operating expenses
Operating expenses are expenses NatWest Group incurs in the running of its business such as all staff costs (for example salaries, bonus awards, pension costs and
\n
social security costs), premises and equipment costs that arise from the occupation of premises and the use of equipment, depreciation and amortisation and other
\n
administrative expenses.
\n
For accounting policy information refer to Accounting policies 3.3, 3.4 and 3.5.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Salaries
2,477
2,483
2,250
Bonus awards
411
353
334
Temporary and contract costs
162
199
234
Social security costs
371
352
328
Pension costs
311
313
363
- defined benefit schemes (Note 5)
86
122
205
- defined contribution schemes
225
191
158
Other
329
201
207
Staff costs
4,061
3,901
3,716
Premises and equipment
1,211
1,153
1,112
UK bank levy
142
109
101
Depreciation and amortisation
(1)
1,058
934
833
Other administrative expenses
(2)
1,677
1,899
1,925
Administrative expenses
4,088
4,095
3,971
\u00a0
8,149
7,996
7,687
\n
(1)
Includes depreciation of right of use assets of \u00a3103 million (2023 - \u00a3104 million; 2022 - \u00a3119 million).
\n
(2)
Includes litigation and conduct costs, net of amounts recovered. Refer to Note 20 for further details.
\n
The average number of persons employed, rounded to the nearest hundred, during the
\n
year, excluding temporary staff, was 60,700 (2023 \u2013 61,500; 2022 \u2013 60,000). The
\n
average number of temporary employees during 2024 was 1,400 (2023 \u2013 2,100; 2022 \u2013
\n
2,500).
\n
The number of persons employed at 31 December, excluding temporary staff, by
\n
reportable segment, was as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Continuing operations
2024
2023
2022
Retail Banking
13,000
14,300
15,100
Private Banking
2,200
2,400
2,300
Commercial & Institutional
12,700
12,400
12,200
Central items & other
(1)
31,800
32,500
31,400
Total
59,700
61,600
61,000
UK
40,100
41,500
41,200
India
17,600
16,900
15,700
Poland
800
1,500
1,500
USA
300
300
300
Republic of Ireland
100
400
1,400
Rest of the World
800
1,000
900
Total
59,700
61,600
61,000
\n
(1)
Central items & other includes Ulster Bank RoI. The total number of persons employed in Ulster Bank RoI of 200 (2023 \u2013
\n
500; 2022 \u2013 2,200) includes nil people employed in discontinued operations at 31 December 2024 (2023 \u2013 nil; 2022 \u2013
\n
400).
Share-based payments
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Award plan
Eligible employees
Nature of award
Vesting conditions (1)
Settlement
Sharesave
UK, Channel Islands, Gibraltar,
Option to buy shares under
Continuing employment or leavers in certain circumstances
2025 to 2029
\u00a0
Isle of Man, Poland and India.
employee savings plan
\u00a0 \u00a0
Deferred performance
All
Awards of ordinary shares
Continuing employment or leavers in certain circumstances
2025 to 2032
awards
\u00a0
and conditional shares
\u00a0 \u00a0
Long-term incentives
(2,3)
Senior employees
Awards of ordinary shares
Continuing employment or leavers in certain circumstances
2025 to 2031
\u00a0 \u00a0
and conditional shares
and/or satisfaction of the pre-vesting assessment and underpins
\u00a0
Sharing in Success
(
4)
All
Awards of ordinary shares
Future continuing employment and achievement of pre-defined
2025
\u00a0 \u00a0
and conditional shares
measures.
\u00a0
\n
(1)
All awards are subject to discretion of Remuneration Committee.
(2)
Long-term incentives include buy-out awards offered to compensate certain new hires for the loss of forfeited awards from their previous employment.
Existing Long-term incentives vest over 3 to 7 years.
(3)
The existing Restricted Share Plan scheme would be replaced by Performance Share Plan in 2025.
(4)
In 2024 16 million shares at total value of \u00a349 million were granted and vested under Sharing in Success.
Sharesave
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Average
Shares
Average
Shares
Average
Shares
\u00a0
exercise
under
exercise
under
exercise
under
\u00a0
price
option
price
option
price
option
\u00a0
\u00a3
(million)
\u00a3
(million)
\u00a3
(million)
At 1 January
1.59
114
1.63
99
1.61
95
Granted
2.94
24
1.42
43
1.86
25
Exercised
1.52
(32)
1.44
(23)
1.88
(15)
Cancelled
1.60
(5)
1.72
(5)
1.60
(6)
At 31 December
1.93
101
1.59
114
1.63
99
\n
The fair value of Sharesave options granted in 2024 was determined using a pricing
model that included: expected volatility of share price determined at the grant date
based on historical share price volatility over a period of up to five years; expected
option lives that equal the vesting period; estimated dividend yield on equity shares; and
risk-free interest rates determined from UK gilts with terms matching the expected lives
of the options.
The exercise price of options and the fair value on granting awards of fully paid shares is
the average market price over the five trading days (three trading days for Sharesave)
preceding grant date. When estimating the fair value of the award, the number of
shares granted and the prevailing market price as defined on page 151 are used.
The
fair value of the award is recognised as services are provided by employees over the
vesting period.
Options are exercisable within six months of vesting; 8.9 million options were exercisable
at 31 December 2024 (2023 \u2013 19.0 million; 2022 \u2013 5.1 million). The weighted average
share price at the date of exercise of options was \u00a34.03 (2023 - \u00a32.20; 2022 - \u00a32.59). At
31 December 2024, exercise prices ranged from \u00a31.42 to \u00a32.94 (2023 - \u00a31.12 to \u00a31.89;
2022 - \u00a31.12 to \u00a32.27) and the remaining average contractual life was 2.35 years (2023
\u2013 2.25 years; 2022 \u2013 2 years). The fair value of options granted in 2024 was \u00a328.3
million (2023 - \u00a327.3 million; 2022 - \u00a322.1 million).
Deferred performance awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Value at
Shares
Value at
Shares
Value at
Shares
\u00a0
grant
awarded
grant
awarded
grant
awarded
\u00a0
\u00a3m
(million)
\u00a3m
(million)
\u00a3m
(million)
At 1 January
76
35
93
46
132
65
Granted
50
23
52
20
46
20
Forfeited
(3)
(1)
(2)
(1)
(4)
(2)
Vested
(57)
(27)
(67)
(30)
(81)
(37)
At 31 December
66
30
76
35
93
46
\n
The awards granted in 2024 vest in equal tranches on the anniversary of the award,
predominantly over three years.
Long-term incentives
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Value at
Shares
Value at
Shares
Value at
Shares
\u00a0
grant
awarded
grant
awarded
grant
awarded
\u00a0
\u00a3m
(million)
\u00a3m
(million)
\u00a3m
(million)
At 1 January
49
23
49
23
44
21
Granted
9
5
11
5
16
7
Vested/exercised
(11)
(5)
(10)
(4)
(10)
(4)
Lapsed
(7)
(4)
(1)
(1)
(1)
(1)
At 31 December
40
19
49
23
49
23
\n
The market value of awards vested/exercised in 2024 was \u00a319.3 million (2023 - \u00a39.5
million; 2022 - \u00a311.7 million).
Bonus awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Change
\u00a0
\u00a3m
\u00a3m
%
March awards
(1)
63
43
47%
Deferred cash awards
324
262
24%
Deferred share awards
61
51
20%
Total deferred bonus awards
385
313
23%
Total bonus awards
(2)
448
356
26%
Bonus awards as a % of operating profit before tax and bonus awards
7%
5%
\u00a0
Proportion of bonus awards that are deferred
\u00a0 \u00a0 \u00a0
- deferred cash awards
86%
86%
\u00a0
- deferred share awards
14%
14%
\u00a0
\n
Reconciliation of bonus awards to income statement charge
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Bonus awarded
448
356
370
Less: deferral of charge for amounts awarded for current year
(144)
(114)
(127)
Income statement charge for amounts awarded in current year
304
242
243
Add: current year charge for amounts deferred from prior years
109
115
94
Less: forfeiture of amounts deferred from prior years
(2)
(4)
(3)
Income statement charge for amounts deferred from prior years
107
111
91
Income statement charge for bonus awards
(2)
411
353
334
\n
(1)
March cash awards are limited to \u00a32,000 for all employees.
(2)
Excludes other performance-related compensation.
Year in which income statement charge is expected to be taken for deferred bonus awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Actual
Expected
\u00a0
2022
2023
2024
2025
2026 and beyond
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bonus awards deferred from 2022 and earlier
94
115
17
8
6
Bonus awards deferred from 2023
-
-
92
8
9
Less: forfeiture of amounts deferred from prior years
(3)
(4)
(2)
-
-
Bonus awards deferred for 2024
-
-
-
122
22
\u00a0
91
111
107
138
37
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00230": { "value": "3 Operating expenses
Operating expenses are expenses NatWest Group incurs in the running of its business such as all staff costs (for example salaries, bonus awards, pension costs and
\n
social security costs), premises and equipment costs that arise from the occupation of premises and the use of equipment, depreciation and amortisation and other
\n
administrative expenses.
\n
For accounting policy information refer to Accounting policies 3.3, 3.4 and 3.5.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
Continuing operations
\u00a3m
\u00a3m
\u00a3m
Salaries
2,477
2,483
2,250
Bonus awards
411
353
334
Temporary and contract costs
162
199
234
Social security costs
371
352
328
Pension costs
311
313
363
- defined benefit schemes (Note 5)
86
122
205
- defined contribution schemes
225
191
158
Other
329
201
207
Staff costs
4,061
3,901
3,716
Premises and equipment
1,211
1,153
1,112
UK bank levy
142
109
101
Depreciation and amortisation
(1)
1,058
934
833
Other administrative expenses
(2)
1,677
1,899
1,925
Administrative expenses
4,088
4,095
3,971
\u00a0
8,149
7,996
7,687
\n
(1)
Includes depreciation of right of use assets of \u00a3103 million (2023 - \u00a3104 million; 2022 - \u00a3119 million).
\n
(2)
Includes litigation and conduct costs, net of amounts recovered. Refer to Note 20 for further details.
\n
The average number of persons employed, rounded to the nearest hundred, during the
\n
year, excluding temporary staff, was 60,700 (2023 \u2013 61,500; 2022 \u2013 60,000). The
\n
average number of temporary employees during 2024 was 1,400 (2023 \u2013 2,100; 2022 \u2013
\n
2,500).
\n
The number of persons employed at 31 December, excluding temporary staff, by
\n
reportable segment, was as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Continuing operations
2024
2023
2022
Retail Banking
13,000
14,300
15,100
Private Banking
2,200
2,400
2,300
Commercial & Institutional
12,700
12,400
12,200
Central items & other
(1)
31,800
32,500
31,400
Total
59,700
61,600
61,000
UK
40,100
41,500
41,200
India
17,600
16,900
15,700
Poland
800
1,500
1,500
USA
300
300
300
Republic of Ireland
100
400
1,400
Rest of the World
800
1,000
900
Total
59,700
61,600
61,000
\n
(1)
Central items & other includes Ulster Bank RoI. The total number of persons employed in Ulster Bank RoI of 200 (2023 \u2013
\n
500; 2022 \u2013 2,200) includes nil people employed in discontinued operations at 31 December 2024 (2023 \u2013 nil; 2022 \u2013
\n
400).
Share-based payments
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Award plan
Eligible employees
Nature of award
Vesting conditions (1)
Settlement
Sharesave
UK, Channel Islands, Gibraltar,
Option to buy shares under
Continuing employment or leavers in certain circumstances
2025 to 2029
\u00a0
Isle of Man, Poland and India.
employee savings plan
\u00a0 \u00a0
Deferred performance
All
Awards of ordinary shares
Continuing employment or leavers in certain circumstances
2025 to 2032
awards
\u00a0
and conditional shares
\u00a0 \u00a0
Long-term incentives
(2,3)
Senior employees
Awards of ordinary shares
Continuing employment or leavers in certain circumstances
2025 to 2031
\u00a0 \u00a0
and conditional shares
and/or satisfaction of the pre-vesting assessment and underpins
\u00a0
Sharing in Success
(
4)
All
Awards of ordinary shares
Future continuing employment and achievement of pre-defined
2025
\u00a0 \u00a0
and conditional shares
measures.
\u00a0
\n
(1)
All awards are subject to discretion of Remuneration Committee.
(2)
Long-term incentives include buy-out awards offered to compensate certain new hires for the loss of forfeited awards from their previous employment.
Existing Long-term incentives vest over 3 to 7 years.
(3)
The existing Restricted Share Plan scheme would be replaced by Performance Share Plan in 2025.
(4)
In 2024 16 million shares at total value of \u00a349 million were granted and vested under Sharing in Success.
Sharesave
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Average
Shares
Average
Shares
Average
Shares
\u00a0
exercise
under
exercise
under
exercise
under
\u00a0
price
option
price
option
price
option
\u00a0
\u00a3
(million)
\u00a3
(million)
\u00a3
(million)
At 1 January
1.59
114
1.63
99
1.61
95
Granted
2.94
24
1.42
43
1.86
25
Exercised
1.52
(32)
1.44
(23)
1.88
(15)
Cancelled
1.60
(5)
1.72
(5)
1.60
(6)
At 31 December
1.93
101
1.59
114
1.63
99
\n
The fair value of Sharesave options granted in 2024 was determined using a pricing
model that included: expected volatility of share price determined at the grant date
based on historical share price volatility over a period of up to five years; expected
option lives that equal the vesting period; estimated dividend yield on equity shares; and
risk-free interest rates determined from UK gilts with terms matching the expected lives
of the options.
The exercise price of options and the fair value on granting awards of fully paid shares is
the average market price over the five trading days (three trading days for Sharesave)
preceding grant date. When estimating the fair value of the award, the number of
shares granted and the prevailing market price as defined on page 151 are used.
The
fair value of the award is recognised as services are provided by employees over the
vesting period.
Options are exercisable within six months of vesting; 8.9 million options were exercisable
at 31 December 2024 (2023 \u2013 19.0 million; 2022 \u2013 5.1 million). The weighted average
share price at the date of exercise of options was \u00a34.03 (2023 - \u00a32.20; 2022 - \u00a32.59). At
31 December 2024, exercise prices ranged from \u00a31.42 to \u00a32.94 (2023 - \u00a31.12 to \u00a31.89;
2022 - \u00a31.12 to \u00a32.27) and the remaining average contractual life was 2.35 years (2023
\u2013 2.25 years; 2022 \u2013 2 years). The fair value of options granted in 2024 was \u00a328.3
million (2023 - \u00a327.3 million; 2022 - \u00a322.1 million).
Deferred performance awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Value at
Shares
Value at
Shares
Value at
Shares
\u00a0
grant
awarded
grant
awarded
grant
awarded
\u00a0
\u00a3m
(million)
\u00a3m
(million)
\u00a3m
(million)
At 1 January
76
35
93
46
132
65
Granted
50
23
52
20
46
20
Forfeited
(3)
(1)
(2)
(1)
(4)
(2)
Vested
(57)
(27)
(67)
(30)
(81)
(37)
At 31 December
66
30
76
35
93
46
\n
The awards granted in 2024 vest in equal tranches on the anniversary of the award,
predominantly over three years.
Long-term incentives
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Value at
Shares
Value at
Shares
Value at
Shares
\u00a0
grant
awarded
grant
awarded
grant
awarded
\u00a0
\u00a3m
(million)
\u00a3m
(million)
\u00a3m
(million)
At 1 January
49
23
49
23
44
21
Granted
9
5
11
5
16
7
Vested/exercised
(11)
(5)
(10)
(4)
(10)
(4)
Lapsed
(7)
(4)
(1)
(1)
(1)
(1)
At 31 December
40
19
49
23
49
23
\n
The market value of awards vested/exercised in 2024 was \u00a319.3 million (2023 - \u00a39.5
million; 2022 - \u00a311.7 million).
Bonus awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Change
\u00a0
\u00a3m
\u00a3m
%
March awards
(1)
63
43
47%
Deferred cash awards
324
262
24%
Deferred share awards
61
51
20%
Total deferred bonus awards
385
313
23%
Total bonus awards
(2)
448
356
26%
Bonus awards as a % of operating profit before tax and bonus awards
7%
5%
\u00a0
Proportion of bonus awards that are deferred
\u00a0 \u00a0 \u00a0
- deferred cash awards
86%
86%
\u00a0
- deferred share awards
14%
14%
\u00a0
\n
Reconciliation of bonus awards to income statement charge
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Bonus awarded
448
356
370
Less: deferral of charge for amounts awarded for current year
(144)
(114)
(127)
Income statement charge for amounts awarded in current year
304
242
243
Add: current year charge for amounts deferred from prior years
109
115
94
Less: forfeiture of amounts deferred from prior years
(2)
(4)
(3)
Income statement charge for amounts deferred from prior years
107
111
91
Income statement charge for bonus awards
(2)
411
353
334
\n
(1)
March cash awards are limited to \u00a32,000 for all employees.
(2)
Excludes other performance-related compensation.
Year in which income statement charge is expected to be taken for deferred bonus awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Actual
Expected
\u00a0
2022
2023
2024
2025
2026 and beyond
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bonus awards deferred from 2022 and earlier
94
115
17
8
6
Bonus awards deferred from 2023
-
-
92
8
9
Less: forfeiture of amounts deferred from prior years
(3)
(4)
(2)
-
-
Bonus awards deferred for 2024
-
-
-
122
22
\u00a0
91
111
107
138
37
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00234": { "value": "Share-based payments \n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Award plan
Eligible employees
Nature of award
Vesting conditions (1)
Settlement
Sharesave
UK, Channel Islands, Gibraltar,
Option to buy shares under
Continuing employment or leavers in certain circumstances
2025 to 2029
\u00a0
Isle of Man, Poland and India.
employee savings plan
\u00a0 \u00a0
Deferred performance
All
Awards of ordinary shares
Continuing employment or leavers in certain circumstances
2025 to 2032
awards
\u00a0
and conditional shares
\u00a0 \u00a0
Long-term incentives
(2,3)
Senior employees
Awards of ordinary shares
Continuing employment or leavers in certain circumstances
2025 to 2031
\u00a0 \u00a0
and conditional shares
and/or satisfaction of the pre-vesting assessment and underpins
\u00a0
Sharing in Success
(
4)
All
Awards of ordinary shares
Future continuing employment and achievement of pre-defined
2025
\u00a0 \u00a0
and conditional shares
measures.
\u00a0
\n
(1)
All awards are subject to discretion of Remuneration Committee.
(2)
Long-term incentives include buy-out awards offered to compensate certain new hires for the loss of forfeited awards from their previous employment.
Existing Long-term incentives vest over 3 to 7 years.
(3)
The existing Restricted Share Plan scheme would be replaced by Performance Share Plan in 2025.
(4)
In 2024 16 million shares at total value of \u00a349 million were granted and vested under Sharing in Success.
Sharesave
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Average
Shares
Average
Shares
Average
Shares
\u00a0
exercise
under
exercise
under
exercise
under
\u00a0
price
option
price
option
price
option
\u00a0
\u00a3
(million)
\u00a3
(million)
\u00a3
(million)
At 1 January
1.59
114
1.63
99
1.61
95
Granted
2.94
24
1.42
43
1.86
25
Exercised
1.52
(32)
1.44
(23)
1.88
(15)
Cancelled
1.60
(5)
1.72
(5)
1.60
(6)
At 31 December
1.93
101
1.59
114
1.63
99
\n
The fair value of Sharesave options granted in 2024 was determined using a pricing
model that included: expected volatility of share price determined at the grant date
based on historical share price volatility over a period of up to five years; expected
option lives that equal the vesting period; estimated dividend yield on equity shares; and
risk-free interest rates determined from UK gilts with terms matching the expected lives
of the options.
The exercise price of options and the fair value on granting awards of fully paid shares is
the average market price over the five trading days (three trading days for Sharesave)
preceding grant date. When estimating the fair value of the award, the number of
shares granted and the prevailing market price as defined on page 151 are used.
The
fair value of the award is recognised as services are provided by employees over the
vesting period.
Options are exercisable within six months of vesting; 8.9 million options were exercisable
at 31 December 2024 (2023 \u2013 19.0 million; 2022 \u2013 5.1 million). The weighted average
share price at the date of exercise of options was \u00a34.03 (2023 - \u00a32.20; 2022 - \u00a32.59). At
31 December 2024, exercise prices ranged from \u00a31.42 to \u00a32.94 (2023 - \u00a31.12 to \u00a31.89;
2022 - \u00a31.12 to \u00a32.27) and the remaining average contractual life was 2.35 years (2023
\u2013 2.25 years; 2022 \u2013 2 years). The fair value of options granted in 2024 was \u00a328.3
million (2023 - \u00a327.3 million; 2022 - \u00a322.1 million).
Deferred performance awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Value at
Shares
Value at
Shares
Value at
Shares
\u00a0
grant
awarded
grant
awarded
grant
awarded
\u00a0
\u00a3m
(million)
\u00a3m
(million)
\u00a3m
(million)
At 1 January
76
35
93
46
132
65
Granted
50
23
52
20
46
20
Forfeited
(3)
(1)
(2)
(1)
(4)
(2)
Vested
(57)
(27)
(67)
(30)
(81)
(37)
At 31 December
66
30
76
35
93
46
\n
The awards granted in 2024 vest in equal tranches on the anniversary of the award,
predominantly over three years.
Long-term incentives
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Value at
Shares
Value at
Shares
Value at
Shares
\u00a0
grant
awarded
grant
awarded
grant
awarded
\u00a0
\u00a3m
(million)
\u00a3m
(million)
\u00a3m
(million)
At 1 January
49
23
49
23
44
21
Granted
9
5
11
5
16
7
Vested/exercised
(11)
(5)
(10)
(4)
(10)
(4)
Lapsed
(7)
(4)
(1)
(1)
(1)
(1)
At 31 December
40
19
49
23
49
23
\n
The market value of awards vested/exercised in 2024 was \u00a319.3 million (2023 - \u00a39.5
million; 2022 - \u00a311.7 million).
Bonus awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Change
\u00a0
\u00a3m
\u00a3m
%
March awards
(1)
63
43
47%
Deferred cash awards
324
262
24%
Deferred share awards
61
51
20%
Total deferred bonus awards
385
313
23%
Total bonus awards
(2)
448
356
26%
Bonus awards as a % of operating profit before tax and bonus awards
7%
5%
\u00a0
Proportion of bonus awards that are deferred
\u00a0 \u00a0 \u00a0
- deferred cash awards
86%
86%
\u00a0
- deferred share awards
14%
14%
\u00a0
\n
Reconciliation of bonus awards to income statement charge
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Bonus awarded
448
356
370
Less: deferral of charge for amounts awarded for current year
(144)
(114)
(127)
Income statement charge for amounts awarded in current year
304
242
243
Add: current year charge for amounts deferred from prior years
109
115
94
Less: forfeiture of amounts deferred from prior years
(2)
(4)
(3)
Income statement charge for amounts deferred from prior years
107
111
91
Income statement charge for bonus awards
(2)
411
353
334
\n
(1)
March cash awards are limited to \u00a32,000 for all employees.
(2)
Excludes other performance-related compensation.
Year in which income statement charge is expected to be taken for deferred bonus awards
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Actual
Expected
\u00a0
2022
2023
2024
2025
2026 and beyond
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Bonus awards deferred from 2022 and earlier
94
115
17
8
6
Bonus awards deferred from 2023
-
-
92
8
9
Less: forfeiture of amounts deferred from prior years
(3)
(4)
(2)
-
-
Bonus awards deferred for 2024
-
-
-
122
22
\u00a0
91
111
107
138
37
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00235": { "value": "4 Segmental analysis
NatWest Group analyses its performance between the different operating segments of the Group as required by IFRS 8, Operating segments. The presentation is
consistent with internal financial reporting and how senior management assesses the performance of each operating segment.
Reportable operating segments:
The business is organised into the following reportable
segments: Retail Banking, Private Banking, Commercial &
Institutional, and Central items & other.
Retail Banking
serves personal customers in the UK, including
Ulster Bank customers in Northern Ireland.
Private Banking
serves UK-connected high net worth individuals
and their business interests.
Commercial & Institutional
consists of customer businesses
reported under Business Banking, Commercial Mid-market and
Corporate & Institutions, supporting our customers across the
full non-personal customer lifecycle, both domestically and
internationally. Our Markets offering helps our customers
manage financial risks across different geographies, while our
International offering provides full-service banking operations in
the Channel Islands, Isle of Man, Gibraltar and Luxembourg.
Central items & other
includes corporate functions, such as
treasury, finance, risk management, compliance, legal,
communications and human resources. Central functions
manage NatWest Group capital resources and NatWest Group-
wide regulatory projects and provide services to the reportable
segments.
Central items & other includes businesses and
amounts not directly related to any of the other reportable
segments. Ulster Bank RoI is no longer an operating segment
and its continuing operations now form part of Central items &
other.
Allocation of central balance sheet items
NatWest Group allocates all central costs relating to central
functions to the business using appropriate drivers; these are
reported as indirect costs in the segmental income statements.
Assets and risk-weighted assets held centrally, mainly relating to
NatWest Group Treasury, are allocated to the business using
appropriate drivers
.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Retail
Private
Commercial &
Central items
\u00a0
\u00a0
Banking
Banking
Institutional
& other
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Continuing operations
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Net interest income
5,233
645
5,339
58
11,275
Net fees and commissions
408
290
1,765
4
2,467
Other non-interest income
9
34
853
65
961
Total income
5,650
969
7,957
127
14,703
Depreciation and amortisation
(1)
(1)
(154)
(902)
(1,058)
Other operating expenses
(2,936)
(715)
(4,120)
680
(7,091)
Impairment (losses)/releases
(282)
11
(98)
10
(359)
Operating profit/(loss)
2,431
264
3,585
(85)
6,195
2023
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Continuing operations
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Net interest income
5,496
710
5,044
(201)
11,049
Net fees and commissions
427
249
1,654
-
2,330
Other non-interest income
8
31
723
611
1,373
Total income
5,931
990
7,421
410
14,752
Depreciation and amortisation
(1)
(1)
(154)
(778)
(934)
Other operating expenses
(2,827)
(684)
(3,937)
386
(7,062)
Impairment losses
(465)
(14)
(94)
(5)
(578)
Operating profit
2,638
291
3,236
13
6,178
2022
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Continuing operations
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Net interest income
5,224
777
4,171
(330)
9,842
Net fees and commissions
422
250
1,580
40
2,292
Other non-interest income
-
29
662
331
1,022
Total income
5,646
1,056
6,413
41
13,156
Depreciation and amortisation
-
-
(161)
(672)
(833)
Other operating expenses
(2,593)
(622)
(3,583)
(56)
(6,854)
Impairment (losses)/releases
(229)
2
(122)
12
(337)
Operating profit/(loss)
2,824
436
2,547
(675)
5,132
Total revenue
\n
(1)
\n\n \n
Retail
Private
Commercial &
Central items
Banking
Banking
Institutional
& other
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Continuing operations
External
9,041
1,250
14,194
4,838
29,323
Inter-segmental
(2)
11
1,538
(1,769)
220
-
Total
9,052
2,788
12,425
5,058
29,323
2023
Continuing operations
External
7,366
1,157
12,519
4,340
25,382
Inter-segmental
(2)
5
1,000
(1,602)
597
-
Total
7,371
2,157
10,917
4,937
25,382
2022
Continuing operations
External
5,773
874
7,258
2,669
16,574
Inter-segmental
(2)
-
389
(395)
6
-
Total
5,773
1,263
6,863
2,675
16,574
\n
Total income
\n\n \n
Retail
Private
Commercial &
Central items
Banking
Banking
Institutional
& other
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Continuing operations
External
4,743
26
8,250
1,684
14,703
Inter-segmental
(2)
907
943
(293)
(1,557)
-
Total
5,650
969
7,957
127
14,703
2023
Continuing operations
External
4,170
327
7,730
2,525
14,752
Inter-segmental
(2)
1,761
663
(309)
(2,115)
-
Total
5,931
990
7,421
410
14,752
2022
Continuing operations
External
4,956
778
5,920
1,502
13,156
Inter-segmental
(2)
690
278
493
(1,461)
-
Total
5,646
1,056
6,413
41
13,156
\n
For the notes to this table refer to page 315.
Analysis of net fees and commissions
\n \n \n
Retail
Private
Commercial &
Central items
Banking
Banking
Institutional
& other
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Continuing operations
Fees and commissions receivable
- Payment services
322
37
700
-
1,059
- Credit and debit card fees
402
13
261
5
681
- Lending and financing
18
5
771
-
794
- Brokerage
34
9
46
-
89
- Investment management, trustee and fiduciary services
2
235
48
19
304
- Underwriting fees
-
-
155
-
155
- Other
7
11
95
(20)
93
Total
785
310
2,076
4
3,175
Fees and commissions payable
(377)
(20)
(311)
-
(708)
Net fees and commissions
408
290
1,765
4
2,467
2023
Continuing operations
Fees and commissions receivable
- Payment services
324
32
671
3
1,030
- Credit and debit card fees
400
13
260
3
676
- Lending and financing
14
5
709
1
729
- Brokerage
35
6
42
-
83
- Investment management, trustee and fiduciary services
2
209
45
10
266
- Underwriting fees
-
-
123
-
123
- Other
4
5
73
(6)
76
Total
779
270
1,923
11
2,983
Fees and commissions payable
(352)
(21)
(269)
(11)
(653)
Net fees and commissions
427
249
1,654
-
2,330
2022
Continuing operations
Fees and commissions receivable
- Payment services
314
25
642
43
1,024
- Credit and debit card fees
401
15
227
18
661
- Lending and financing
17
8
673
3
701
- Brokerage
43
6
44
-
93
- Investment management, trustee and fiduciary services
4
219
46
-
269
- Underwriting fees
-
-
120
-
120
- Other
-
3
88
(44)
47
Total
779
276
1,840
20
2,915
Fees and commissions payable
(357)
(26)
(260)
20
(623)
Net fees and commissions
422
250
1,580
40
2,292
\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Retail Banking
232,835
198,795
228,684
191,936
226,375
192,282
Private Banking
28,593
42,603
26,894
37,806
29,867
41,491
Commercial & Institutional
398,750
367,342
384,958
359,766
404,817
383,768
Central items & other
47,807
59,867
52,137
65,977
58,994
66,016
Total
707,985
668,607
692,673
655,485
720,053
683,557
\n
Segmental analysis of goodwill
The total carrying value of goodwill at 31 December 2024 was \u00a35,675 million (2023 -
\u00a35,680 million) comprising: Retail Banking \u00a32,607 million (2023 - \u00a32,607 million);
Commercial & Institutional \u00a32,904 million (2023 - \u00a32,905 million); Private Banking \u00a39
million (2023 - \u00a39 million) and Central items & other \u00a3155 million (2023 \u2013 \u00a3159 million).
Geographical segments
The geographical analysis in the tables below has been compiled on the basis of location
of office where the transactions are recorded.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
UK
USA
Europe
RoW
Total
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Continuing operations
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Total revenue
(1)
28,067
297
857
102
29,323
Interest receivable
24,276
32
859
20
25,187
Interest payable
(13,328)
(63)
(516)
(5)
(13,912)
Net fees and commissions
2,096
108
207
56
2,467
Trading income
648
135
18
24
825
Other operating income
403
(4)
(264)
1
136
Total income
(3)
14,095
208
304
96
14,703
Operating profit/(loss) before tax
6,146
75
(151)
125
6,195
Total assets
627,519
25,793
53,392
1,281
707,985
Total liabilities
608,708
23,495
35,602
802
668,607
Contingent liabilities and
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
commitments
(4)
132,035
-
7,925
1
139,961
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
UK
USA
Europe
RoW
Total
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Continuing operations
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Total revenue
(1)
24,096
167
1,016
103
25,382
Interest receivable
20,192
39
774
21
21,026
Interest payable
(9,500)
(1)
(472)
(4)
(9,977)
Net fees and commissions
2,052
49
172
57
2,330
Trading income
704
66
1
23
794
Other operating income
556
(10)
30
3
579
Total income
(3)
14,004
143
505
100
14,752
Operating profit/(loss) before tax
6,196
45
(149)
86
6,178
Total assets
610,831
23,725
56,001
2,116
692,673
Total liabilities
594,250
22,106
37,506
1,623
655,485
Contingent liabilities and
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
commitments
(4)
124,298
-
7,561
21
131,880
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
2022
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Continuing operations
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Total revenue
(1)
15,795
117
558
104
16,574
Interest receivable
12,242
37
344
14
12,637
Interest payable
(2,567)
(2)
(221)
(5)
(2,795)
Net fees and commissions
1,983
44
207
58
2,292
Trading income
1,208
1
(104)
28
1,133
Other operating income
(140)
14
12
3
(111)
Total income
(3)
12,726
94
238
98
13,156
Operating (loss)/profit before tax
5,716
(46)
(620)
82
5,132
Total assets
589,758
25,979
101,164
3,152
720,053
Total liabilities
579,476
27,039
75,092
1,950
683,557
Contingent liabilities and
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
commitments
(4)
127,854
-
8,965
17
136,836
\n
(1)
Total revenue comprises interest receivable, fees and commissions receivable, income from trading activities and other
operating income.
(2)
Revenue and income from transactions between segments of the group are reported as inter-segment in both the
current and comparative information.
(3)
Total income excludes internal service fee income which has been calculated on a cost plus mark-up basis.
(4)
Refer to Note 25 Memorandum items \u2013 Contingent liabilities and commitments. ", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00734": { "value": "NatWest Group analyses its performance between the different operating segments of the Group as required by IFRS 8, Operating segments. The presentation is consistent with internal financial reporting and how senior management assesses the performance of each operating segment", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00236": { "value": "6 Auditor\u2019s remuneration
Amounts payable to NatWest Group's auditors for statutory audit and other services are set out below.
All audit-related and other services are approved by the Group Audit Committee and are subject to strict controls to ensure the external auditor\u2019s independence is unaffected by the
provision of other services. The Group Audit Committee recognises that for certain assignments, the auditors are best placed to perform the work economically; for other work,
NatWest Group selects the supplier best placed to meet its requirements. NatWest Group\u2019s auditors are permitted to tender for such work in competition with other firms where the
work is permissible under audit independence rules.
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Fees payable for:
\u00a0 \u00a0 \u00a0
- the audit of NatWest Group\u2019s annual accounts
(1)
5.1
4.9
4.7
- the audit of NatWest Group plc\u2019s subsidiaries
(1)
32.5
32.3
31.9
- audit-related assurance services
(1,2)
4.2
4.5
3.9
Total audit and audit-related assurance services fees
41.8
41.7
40.5
Other assurance services
1.0
0.7
1.2
Corporate finance services
(3)
3.1
0.7
0.5
Total other services
4.1
1.4
1.7
\n
(1)
The 2024 audit fee was approved by the Group Audit Committee. At 31 December 2024, \u00a316 million has been billed and paid in respect of the 2024 NatWest Group audit fees.
(2)
Comprises fees of \u00a31.4 million (2023 - \u00a31.4 million) for reviews of interim financial information and \u00a32.8 million (2023 - \u00a32.8 million) for reports to NatWest Group\u2019s regulators in the UK and overseas.
(3)
Comprises fees of \u00a32.3 million (2023 \u2013 nil) in relation to a retail share offering and \u00a30.8 million (2023 - \u00a30.7 million) for work performed by the auditors as reporting accountants on debt and equity issuances undertaken by NatWest Group.", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00240": { "value": "8 Earnings per share
Earnings per share measures how much profit NatWest Group makes for each share in issue during the year.
Basic earnings per ordinary share is calculated by
dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding. Diluted earnings per ordinary share is
calculated by dividing the basic earnings by the weighted average number of ordinary shares outstanding plus the weighted average number of ordinary shares that
would be issued on conversion of dilutive share options and convertible securities. The assessment of whether the effect of share options and convertible securities is
dilutive or not, is based on the earnings from continuing operations.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Earnings
\u00a0 \u00a0 \u00a0
Profit from continuing operations attributable to ordinary shareholders
4,438
4,506
3,602
Profit/(loss) from discontinued operations attributable to ordinary shareholders
81
(112)
(262)
Profit attributable to ordinary shareholders
4,519
4,394
3,340
Weighted average number of shares (millions)
\u00a0 \u00a0 \u00a0
Weighted average number of ordinary shares outstanding during the year
(1)
8,450
9,164
9,872
Effect of dilutive share options and convertible securities
66
55
57
Diluted weighted average number of ordinary shares outstanding during the year
8,516
9,219
9,929
Earnings per ordinary share - continuing operations
52.5p
49.2p
36.5p
Earnings per ordinary share - discontinued operations
1.0p
(1.2p)
(2.7p)
Total earnings per share attributable to ordinary shareholders - basic
(2)
53.5p
47.9p
33.8p
Earnings per ordinary share - fully diluted continuing operations
52.1p
48.9p
36.2p
Earnings per ordinary share - fully diluted discontinued operations
1.0p
(1.2p)
(2.6p)
Total earnings per share attributable to ordinary shareholders - fully diluted
53.1p
47.7p
33.6p
\n
(1)
At the General Meeting and Class Meeting on 25 August 2022, the shareholders approved the proposed special dividend and share consolidation. On 30 August 2022 the issued ordinary share capital was consolidated in the ratio of 14 existing shares
for 13 new shares. The average number of shares and earnings per share have been adjusted retrospectively.
(2)
In 2023, the unrounded Total earnings per share attributable to ordinary shareholders \u2013 basic is 47.948p. The unrounded Earnings per ordinary share \u2013 continuing operations was 49.170p. The unrounded Earnings per ordinary share \u2013 discontinued
operations was (1.222p).", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00733": { "value": "Additional information on finance lease receivables
The following table shows the reconciliation of undiscounted finance lease receivables to net investment in finance leases which are presented under Loans to customers-amortised
cost on the balance sheet.
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Amount receivable under finance leases
\u00a0 \u00a0
Within 1 year
3,493
3,340
1 to 2 years
2,499
2,358
2 to 3 years
1,612
1,625
3 to 4 years
842
900
4 to 5 years
464
388
After 5 years
1,043
1,079
Total lease payments
9,953
9,690
Unguaranteed residual values
150
169
Future drawdowns
(12)
(12)
Unearned income
(1,001)
(1,025)
Present value of lease payments
9,090
8,822
Impairments
(92)
(91)
Net investment in finance leases
8,998
8,731
20 Other liabilities
Other liabilities are amounts due to third parties that are not financial liabilities but including lease liabilities held at amortised cost. Other liabilities represent, for
example, amounts due for goods and services that have been received but not invoiced,
tax due to HMRC, and retirement benefit liabilities. Liabilities which have a
level of uncertainty regarding their timing or the future cost to settle them are included in other liabilities as provisions for liabilities and charges.
2024
2023
Other liabilities
\u00a3m
\u00a3m
Lease liabilities
630
670
Provisions for liabilities and charges
864
990
Retirement benefit liabilities (Note 5)
80
99
Accruals
1,353
1,411
Deferred income
394
402
Current tax
263
332
Deferred tax (Note 7)
99
141
Other liabilities
(1)
918
1,157
Total
4,601
5,202
(1)
Other liabilities include liabilities of disposal groups of nil (2023 - \u00a33 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00245": { "value": "Loans to banks and customers
In estimating the fair value of net loans to customers and banks
measured at amortised cost, NatWest Group\u2019s loans are
segregated into appropriate portfolios reflecting the
characteristics of the constituent loans. Two principal methods
are used to estimate fair value:
(a)
Contractual cash flows that are discounted using a market
discount rate that incorporates the current spread for the
borrower or where this is not observable, the spread for
borrowers of a similar credit standing.
(b)
Expected cash flows (unadjusted for credit losses) are
discounted at the current offer rate for the same or similar
products. The current methodology caps all loan values at
par rather than modelling clients\u2019 option to repay loans
early. This approach is adopted for lending portfolios in
Retail Banking, Commercial & Institutional (SME loans) and
Private Banking in order to reflect the homogeneous nature
of these portfolios.11 Financial instruments \u2013 maturity analysis
This note shows the maturity profile of NatWest Group\u2019s financial assets and liabilities by contractual date of maturity and contractual cash flows.
Remaining maturity
The following table shows the residual maturity of financial instruments, based on contractual date of maturity.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
Less than
More than
\u00a0
Less than
More than
\u00a0
\u00a0
12 months
12 months
Total
12 months
12 months
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Cash and balances at central banks
92,994
-
92,994
104,262
-
104,262
Trading assets
37,168
11,749
48,917
36,723
8,828
45,551
Derivatives
34,267
44,139
78,406
29,839
49,065
78,904
Settlement balances
2,085
-
2,085
7,231
-
7,231
Loans to banks - amortised cost
5,360
670
6,030
6,650
264
6,914
Loans to customers - amortised cost
99,793
300,533
400,326
87,663
293,770
381,433
Other financial assets
14,524
48,719
63,243
10,192
40,910
51,102
Liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Bank deposits
21,675
9,777
31,452
8,954
13,236
22,190
Customer deposits
430,693
2,797
433,490
424,893
6,484
431,377
Settlement balances
1,729
-
1,729
6,645
-
6,645
Trading liabilities
44,683
10,031
54,714
45,349
8,287
53,636
Derivatives
34,134
37,948
72,082
30,721
41,674
72,395
Other financial liabilities
22,773
38,314
61,087
20,310
34,779
55,089
Subordinated liabilities
1,051
5,085
6,136
1,047
4,667
5,714
Notes in circulation
3,316
-
3,316
3,237
-
3,237
Lease liabilities
94
536
630
102
568
670
\n
Assets and liabilities by contractual cash flows up to 20 years
The tables on the following page show the contractual undiscounted cash flows receivable and payable, up to a period of 20 years, including future receipts and payments of interest
of financial assets and liabilities by contractual maturity. The balances in the following tables do not agree directly with the consolidated balance sheet, as the tables include all cash
flows relating to principal and future coupon payments, presented on an undiscounted basis. The tables have been prepared on the following basis:
Financial assets have been reflected in the time band of the latest date on which they could be repaid, unless earlier repayment can be demanded by NatWest Group. Financial
liabilities are included at the earliest date on which the counterparty can require repayment, regardless of whether or not such early repayment results in a penalty. If the repayment
of a financial instrument is triggered by, or is subject to, specific criteria such as market price hurdles being reached, the asset is included in the time band that contains the latest date
on which it can be repaid, regardless of early repayment. The liability is included in the time band that contains the earliest possible date on which the conditions could be fulfilled,
without considering the probability of the conditions being met.
\n\n\n\n\n\n\n\n\n\n\n\n\n
For example, if a structured note is automatically prepaid when an equity index exceeds a certain level, the cash outflow will be included in the less than three months period,
\n
whatever the level of the index at the year end. The settlement date of debt securities in issue, issued by certain securitisation vehicles consolidated by NatWest Group, depends on
\n
when cash flows are received from the securitised assets. Where these assets are prepayable, the timing of the cash outflow relating to securities assumes that each asset will be
\n
prepaid at the earliest possible date. As the repayments of assets and liabilities are linked, the repayment of assets in securitisations is shown on the earliest date that the asset can be
\n
prepaid, as this is the basis used for liabilities.
\n
The principal amounts of financial assets and liabilities that are repayable after 20 years or where the counterparty has no right to repayment of the principal are excluded from the
\n
table, as are interest payments after 20 years.
\n
The maturity of guarantees and commitments is based on the earliest possible date they would be drawn in order to evaluate NatWest Group\u2019s liquidity position.
\n
MFVTPL assets of \u00a3128 billion (2023 - \u00a3125.1 billion) and HFT liabilities of \u00a3126.3 billion (2023 - \u00a3125.8 billion) have been excluded from the following tables.
\n\n \n
0-3 months
3-12 months
1-3 years
3-5 years
5-10 years
10-20 years
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets by contractual maturity up to 20 years
Cash and balances at central banks
92,994
-
-
-
-
-
Derivatives held for hedging
17
66
107
61
53
76
Settlement balances
2,085
-
-
-
-
-
Loans to banks - amortised cost
5,080
297
612
9
23
158
Loans to customers - amortised cost
59,702
56,264
82,995
63,857
99,837
123,946
Other financial assets
(1)
7,068
9,414
17,417
11,643
11,843
7,493
Finance lease
27
89
126
105
207
325
166,973
66,130
101,257
75,675
111,963
131,998
Liabilities by contractual maturity up to 20 years
Bank deposits
16,914
5,315
10,114
81
79
-
Customer deposits
396,703
34,316
2,713
82
-
14
Settlement balances
1,729
-
-
-
-
-
Derivatives held for hedging
63
343
335
271
43
2
Other financial liabilities
8,305
13,501
22,869
15,350
4,710
987
Subordinated liabilities
53
1,201
2,059
2,927
754
339
Other liabilities - Notes in circulation
3,316
-
-
-
-
-
Lease liabilities
24
68
185
96
168
102
427,107
54,744
38,275
18,807
5,754
1,444
Guarantees and commitments - notional amount
(2)
Guarantees
(3)
3,060
-
-
-
-
-
Commitments
(4)
132,958
-
-
-
-
-
136,018
-
-
-
-
-
\n
For the notes to this table refer to the following page.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
0-3 months
3-12 months
1-3 years
3-5 years
5-10 years
10-20 years
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets by contractual maturity up to 20 years
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Cash and balances at central banks
104,262
-
-
-
-
-
Derivatives held for hedging
31
29
128
104
49
49
Settlement balances
7,231
-
-
-
-
-
Loans to banks - amortised cost
5,234
1,437
23
302
-
-
Loans to customers - amortised cost
52,175
46,894
81,445
61,465
96,577
114,806
Other financial assets
(1)
4,897
6,756
12,304
11,183
10,019
8,063
Finance lease
61
242
735
401
656
359
\u00a0
173,891
55,358
94,635
73,455
107,301
123,277
Liabilities by contractual maturity up to 20 years
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Bank deposits
8,334
1,279
6,069
8,307
-
-
Customer deposits
393,363
31,900
6,464
11
14
19
Settlement balances
6,645
-
-
-
-
-
Derivatives held for hedging
71
175
366
192
92
8
Other financial liabilities
9,094
12,319
18,843
13,818
4,769
346
Subordinated liabilities
72
1,167
2,301
1,512
1,406
342
Other liabilities - Notes in circulation
3,237
-
-
-
-
-
Lease liabilities
30
79
172
111
175
132
\u00a0
420,846
46,919
34,215
23,951
6,456
847
Guarantees and commitments - notional amount
(2)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Guarantees
(3)
2,833
-
-
-
-
-
Commitments
(4)
124,790
-
-
-
-
-
\u00a0
127,623
-
-
-
-
-
\n
(1)
Other financial assets exclude equity shares.
(2)
Refer to Note 25 Memorandum items \u2013 Contingent liabilities and commitments.
(3)
NatWest Group is only called upon to satisfy a guarantee when the guaranteed party fails to meet its obligations. NatWest Group expects most guarantees it provides to expire unused.
(4)
NatWest Group has given commitments to provide funds to customers under undrawn formal facilities, credit lines and other commitments to lend subject to certain conditions being met by the counterparty. NatWest Group does not expect all facilities to
be drawn, and some may lapse before drawdown.", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToCustomersExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00246": { "value": "Loans to banks and customers
In estimating the fair value of net loans to customers and banks
measured at amortised cost, NatWest Group\u2019s loans are
segregated into appropriate portfolios reflecting the
characteristics of the constituent loans. Two principal methods
are used to estimate fair value:
(a)
Contractual cash flows that are discounted using a market
discount rate that incorporates the current spread for the
borrower or where this is not observable, the spread for
borrowers of a similar credit standing.
(b)
Expected cash flows (unadjusted for credit losses) are
discounted at the current offer rate for the same or similar
products. The current methodology caps all loan values at
par rather than modelling clients\u2019 option to repay loans
early. This approach is adopted for lending portfolios in
Retail Banking, Commercial & Institutional (SME loans) and
Private Banking in order to reflect the homogeneous nature
of these portfolios.11 Financial instruments \u2013 maturity analysis
This note shows the maturity profile of NatWest Group\u2019s financial assets and liabilities by contractual date of maturity and contractual cash flows.
Remaining maturity
The following table shows the residual maturity of financial instruments, based on contractual date of maturity.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
Less than
More than
\u00a0
Less than
More than
\u00a0
\u00a0
12 months
12 months
Total
12 months
12 months
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Cash and balances at central banks
92,994
-
92,994
104,262
-
104,262
Trading assets
37,168
11,749
48,917
36,723
8,828
45,551
Derivatives
34,267
44,139
78,406
29,839
49,065
78,904
Settlement balances
2,085
-
2,085
7,231
-
7,231
Loans to banks - amortised cost
5,360
670
6,030
6,650
264
6,914
Loans to customers - amortised cost
99,793
300,533
400,326
87,663
293,770
381,433
Other financial assets
14,524
48,719
63,243
10,192
40,910
51,102
Liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Bank deposits
21,675
9,777
31,452
8,954
13,236
22,190
Customer deposits
430,693
2,797
433,490
424,893
6,484
431,377
Settlement balances
1,729
-
1,729
6,645
-
6,645
Trading liabilities
44,683
10,031
54,714
45,349
8,287
53,636
Derivatives
34,134
37,948
72,082
30,721
41,674
72,395
Other financial liabilities
22,773
38,314
61,087
20,310
34,779
55,089
Subordinated liabilities
1,051
5,085
6,136
1,047
4,667
5,714
Notes in circulation
3,316
-
3,316
3,237
-
3,237
Lease liabilities
94
536
630
102
568
670
\n
Assets and liabilities by contractual cash flows up to 20 years
The tables on the following page show the contractual undiscounted cash flows receivable and payable, up to a period of 20 years, including future receipts and payments of interest
of financial assets and liabilities by contractual maturity. The balances in the following tables do not agree directly with the consolidated balance sheet, as the tables include all cash
flows relating to principal and future coupon payments, presented on an undiscounted basis. The tables have been prepared on the following basis:
Financial assets have been reflected in the time band of the latest date on which they could be repaid, unless earlier repayment can be demanded by NatWest Group. Financial
liabilities are included at the earliest date on which the counterparty can require repayment, regardless of whether or not such early repayment results in a penalty. If the repayment
of a financial instrument is triggered by, or is subject to, specific criteria such as market price hurdles being reached, the asset is included in the time band that contains the latest date
on which it can be repaid, regardless of early repayment. The liability is included in the time band that contains the earliest possible date on which the conditions could be fulfilled,
without considering the probability of the conditions being met.
\n\n\n\n\n\n\n\n\n\n\n\n\n
For example, if a structured note is automatically prepaid when an equity index exceeds a certain level, the cash outflow will be included in the less than three months period,
\n
whatever the level of the index at the year end. The settlement date of debt securities in issue, issued by certain securitisation vehicles consolidated by NatWest Group, depends on
\n
when cash flows are received from the securitised assets. Where these assets are prepayable, the timing of the cash outflow relating to securities assumes that each asset will be
\n
prepaid at the earliest possible date. As the repayments of assets and liabilities are linked, the repayment of assets in securitisations is shown on the earliest date that the asset can be
\n
prepaid, as this is the basis used for liabilities.
\n
The principal amounts of financial assets and liabilities that are repayable after 20 years or where the counterparty has no right to repayment of the principal are excluded from the
\n
table, as are interest payments after 20 years.
\n
The maturity of guarantees and commitments is based on the earliest possible date they would be drawn in order to evaluate NatWest Group\u2019s liquidity position.
\n
MFVTPL assets of \u00a3128 billion (2023 - \u00a3125.1 billion) and HFT liabilities of \u00a3126.3 billion (2023 - \u00a3125.8 billion) have been excluded from the following tables.
\n\n \n
0-3 months
3-12 months
1-3 years
3-5 years
5-10 years
10-20 years
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets by contractual maturity up to 20 years
Cash and balances at central banks
92,994
-
-
-
-
-
Derivatives held for hedging
17
66
107
61
53
76
Settlement balances
2,085
-
-
-
-
-
Loans to banks - amortised cost
5,080
297
612
9
23
158
Loans to customers - amortised cost
59,702
56,264
82,995
63,857
99,837
123,946
Other financial assets
(1)
7,068
9,414
17,417
11,643
11,843
7,493
Finance lease
27
89
126
105
207
325
166,973
66,130
101,257
75,675
111,963
131,998
Liabilities by contractual maturity up to 20 years
Bank deposits
16,914
5,315
10,114
81
79
-
Customer deposits
396,703
34,316
2,713
82
-
14
Settlement balances
1,729
-
-
-
-
-
Derivatives held for hedging
63
343
335
271
43
2
Other financial liabilities
8,305
13,501
22,869
15,350
4,710
987
Subordinated liabilities
53
1,201
2,059
2,927
754
339
Other liabilities - Notes in circulation
3,316
-
-
-
-
-
Lease liabilities
24
68
185
96
168
102
427,107
54,744
38,275
18,807
5,754
1,444
Guarantees and commitments - notional amount
(2)
Guarantees
(3)
3,060
-
-
-
-
-
Commitments
(4)
132,958
-
-
-
-
-
136,018
-
-
-
-
-
\n
For the notes to this table refer to the following page.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
0-3 months
3-12 months
1-3 years
3-5 years
5-10 years
10-20 years
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets by contractual maturity up to 20 years
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Cash and balances at central banks
104,262
-
-
-
-
-
Derivatives held for hedging
31
29
128
104
49
49
Settlement balances
7,231
-
-
-
-
-
Loans to banks - amortised cost
5,234
1,437
23
302
-
-
Loans to customers - amortised cost
52,175
46,894
81,445
61,465
96,577
114,806
Other financial assets
(1)
4,897
6,756
12,304
11,183
10,019
8,063
Finance lease
61
242
735
401
656
359
\u00a0
173,891
55,358
94,635
73,455
107,301
123,277
Liabilities by contractual maturity up to 20 years
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Bank deposits
8,334
1,279
6,069
8,307
-
-
Customer deposits
393,363
31,900
6,464
11
14
19
Settlement balances
6,645
-
-
-
-
-
Derivatives held for hedging
71
175
366
192
92
8
Other financial liabilities
9,094
12,319
18,843
13,818
4,769
346
Subordinated liabilities
72
1,167
2,301
1,512
1,406
342
Other liabilities - Notes in circulation
3,237
-
-
-
-
-
Lease liabilities
30
79
172
111
175
132
\u00a0
420,846
46,919
34,215
23,951
6,456
847
Guarantees and commitments - notional amount
(2)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Guarantees
(3)
2,833
-
-
-
-
-
Commitments
(4)
124,790
-
-
-
-
-
\u00a0
127,623
-
-
-
-
-
\n
(1)
Other financial assets exclude equity shares.
(2)
Refer to Note 25 Memorandum items \u2013 Contingent liabilities and commitments.
(3)
NatWest Group is only called upon to satisfy a guarantee when the guaranteed party fails to meet its obligations. NatWest Group expects most guarantees it provides to expire unused.
(4)
NatWest Group has given commitments to provide funds to customers under undrawn formal facilities, credit lines and other commitments to lend subject to certain conditions being met by the counterparty. NatWest Group does not expect all facilities to
be drawn, and some may lapse before drawdown.", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToBanksExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00249": { "value": "Bank and customer deposits
Fair values of deposits are estimated using discounted cash
flow valuation techniques. Where required, methodologies can
be revised as additional information and valuation inputs
become available.
11 Financial instruments \u2013 maturity analysis
This note shows the maturity profile of NatWest Group\u2019s financial assets and liabilities by contractual date of maturity and contractual cash flows.
Remaining maturity
The following table shows the residual maturity of financial instruments, based on contractual date of maturity.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
Less than
More than
\u00a0
Less than
More than
\u00a0
\u00a0
12 months
12 months
Total
12 months
12 months
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Cash and balances at central banks
92,994
-
92,994
104,262
-
104,262
Trading assets
37,168
11,749
48,917
36,723
8,828
45,551
Derivatives
34,267
44,139
78,406
29,839
49,065
78,904
Settlement balances
2,085
-
2,085
7,231
-
7,231
Loans to banks - amortised cost
5,360
670
6,030
6,650
264
6,914
Loans to customers - amortised cost
99,793
300,533
400,326
87,663
293,770
381,433
Other financial assets
14,524
48,719
63,243
10,192
40,910
51,102
Liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Bank deposits
21,675
9,777
31,452
8,954
13,236
22,190
Customer deposits
430,693
2,797
433,490
424,893
6,484
431,377
Settlement balances
1,729
-
1,729
6,645
-
6,645
Trading liabilities
44,683
10,031
54,714
45,349
8,287
53,636
Derivatives
34,134
37,948
72,082
30,721
41,674
72,395
Other financial liabilities
22,773
38,314
61,087
20,310
34,779
55,089
Subordinated liabilities
1,051
5,085
6,136
1,047
4,667
5,714
Notes in circulation
3,316
-
3,316
3,237
-
3,237
Lease liabilities
94
536
630
102
568
670
\n
Assets and liabilities by contractual cash flows up to 20 years
The tables on the following page show the contractual undiscounted cash flows receivable and payable, up to a period of 20 years, including future receipts and payments of interest
of financial assets and liabilities by contractual maturity. The balances in the following tables do not agree directly with the consolidated balance sheet, as the tables include all cash
flows relating to principal and future coupon payments, presented on an undiscounted basis. The tables have been prepared on the following basis:
Financial assets have been reflected in the time band of the latest date on which they could be repaid, unless earlier repayment can be demanded by NatWest Group. Financial
liabilities are included at the earliest date on which the counterparty can require repayment, regardless of whether or not such early repayment results in a penalty. If the repayment
of a financial instrument is triggered by, or is subject to, specific criteria such as market price hurdles being reached, the asset is included in the time band that contains the latest date
on which it can be repaid, regardless of early repayment. The liability is included in the time band that contains the earliest possible date on which the conditions could be fulfilled,
without considering the probability of the conditions being met.
For example, if a structured note is automatically prepaid when an equity index exceeds a certain level, the cash outflow will be included in the less than three months period,
\n
whatever the level of the index at the year end. The settlement date of debt securities in issue, issued by certain securitisation vehicles consolidated by NatWest Group, depends on
\n
when cash flows are received from the securitised assets. Where these assets are prepayable, the timing of the cash outflow relating to securities assumes that each asset will be
\n
prepaid at the earliest possible date. As the repayments of assets and liabilities are linked, the repayment of assets in securitisations is shown on the earliest date that the asset can be
\n
prepaid, as this is the basis used for liabilities.
\n
The principal amounts of financial assets and liabilities that are repayable after 20 years or where the counterparty has no right to repayment of the principal are excluded from the
\n
table, as are interest payments after 20 years.
\n
The maturity of guarantees and commitments is based on the earliest possible date they would be drawn in order to evaluate NatWest Group\u2019s liquidity position.
\n
MFVTPL assets of \u00a3128 billion (2023 - \u00a3125.1 billion) and HFT liabilities of \u00a3126.3 billion (2023 - \u00a3125.8 billion) have been excluded from the following tables.
\n\n \n
0-3 months
3-12 months
1-3 years
3-5 years
5-10 years
10-20 years
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets by contractual maturity up to 20 years
Cash and balances at central banks
92,994
-
-
-
-
-
Derivatives held for hedging
17
66
107
61
53
76
Settlement balances
2,085
-
-
-
-
-
Loans to banks - amortised cost
5,080
297
612
9
23
158
Loans to customers - amortised cost
59,702
56,264
82,995
63,857
99,837
123,946
Other financial assets
(1)
7,068
9,414
17,417
11,643
11,843
7,493
Finance lease
27
89
126
105
207
325
166,973
66,130
101,257
75,675
111,963
131,998
Liabilities by contractual maturity up to 20 years
Bank deposits
16,914
5,315
10,114
81
79
-
Customer deposits
396,703
34,316
2,713
82
-
14
Settlement balances
1,729
-
-
-
-
-
Derivatives held for hedging
63
343
335
271
43
2
Other financial liabilities
8,305
13,501
22,869
15,350
4,710
987
Subordinated liabilities
53
1,201
2,059
2,927
754
339
Other liabilities - Notes in circulation
3,316
-
-
-
-
-
Lease liabilities
24
68
185
96
168
102
427,107
54,744
38,275
18,807
5,754
1,444
Guarantees and commitments - notional amount
(2)
Guarantees
(3)
3,060
-
-
-
-
-
Commitments
(4)
132,958
-
-
-
-
-
136,018
-
-
-
-
-
\n
For the notes to this table refer to the following page.
\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
0-3 months
3-12 months
1-3 years
3-5 years
5-10 years
10-20 years
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets by contractual maturity up to 20 years
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Cash and balances at central banks
104,262
-
-
-
-
-
Derivatives held for hedging
31
29
128
104
49
49
Settlement balances
7,231
-
-
-
-
-
Loans to banks - amortised cost
5,234
1,437
23
302
-
-
Loans to customers - amortised cost
52,175
46,894
81,445
61,465
96,577
114,806
Other financial assets
(1)
4,897
6,756
12,304
11,183
10,019
8,063
Finance lease
61
242
735
401
656
359
\u00a0
173,891
55,358
94,635
73,455
107,301
123,277
Liabilities by contractual maturity up to 20 years
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Bank deposits
8,334
1,279
6,069
8,307
-
-
Customer deposits
393,363
31,900
6,464
11
14
19
Settlement balances
6,645
-
-
-
-
-
Derivatives held for hedging
71
175
366
192
92
8
Other financial liabilities
9,094
12,319
18,843
13,818
4,769
346
Subordinated liabilities
72
1,167
2,301
1,512
1,406
342
Other liabilities - Notes in circulation
3,237
-
-
-
-
-
Lease liabilities
30
79
172
111
175
132
\u00a0
420,846
46,919
34,215
23,951
6,456
847
Guarantees and commitments - notional amount
(2)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Guarantees
(3)
2,833
-
-
-
-
-
Commitments
(4)
124,790
-
-
-
-
-
\u00a0
127,623
-
-
-
-
-
\n
(1)
Other financial assets exclude equity shares.
(2)
Refer to Note 25 Memorandum items \u2013 Contingent liabilities and commitments.
(3)
NatWest Group is only called upon to satisfy a guarantee when the guaranteed party fails to meet its obligations. NatWest Group expects most guarantees it provides to expire unused.
(4)
NatWest Group has given commitments to provide funds to customers under undrawn formal facilities, credit lines and other commitments to lend subject to certain conditions being met by the counterparty. NatWest Group does not expect all facilities to
be drawn, and some may lapse before drawdown.", "dimensions": { "concept": "ifrs-full:DisclosureOfDepositsFromCustomersExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00248": { "value": "Bank and customer deposits
Fair values of deposits are estimated using discounted cash
flow valuation techniques. Where required, methodologies can
be revised as additional information and valuation inputs
become available.
11 Financial instruments \u2013 maturity analysis
This note shows the maturity profile of NatWest Group\u2019s financial assets and liabilities by contractual date of maturity and contractual cash flows.
Remaining maturity
The following table shows the residual maturity of financial instruments, based on contractual date of maturity.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
Less than
More than
\u00a0
Less than
More than
\u00a0
\u00a0
12 months
12 months
Total
12 months
12 months
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Cash and balances at central banks
92,994
-
92,994
104,262
-
104,262
Trading assets
37,168
11,749
48,917
36,723
8,828
45,551
Derivatives
34,267
44,139
78,406
29,839
49,065
78,904
Settlement balances
2,085
-
2,085
7,231
-
7,231
Loans to banks - amortised cost
5,360
670
6,030
6,650
264
6,914
Loans to customers - amortised cost
99,793
300,533
400,326
87,663
293,770
381,433
Other financial assets
14,524
48,719
63,243
10,192
40,910
51,102
Liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Bank deposits
21,675
9,777
31,452
8,954
13,236
22,190
Customer deposits
430,693
2,797
433,490
424,893
6,484
431,377
Settlement balances
1,729
-
1,729
6,645
-
6,645
Trading liabilities
44,683
10,031
54,714
45,349
8,287
53,636
Derivatives
34,134
37,948
72,082
30,721
41,674
72,395
Other financial liabilities
22,773
38,314
61,087
20,310
34,779
55,089
Subordinated liabilities
1,051
5,085
6,136
1,047
4,667
5,714
Notes in circulation
3,316
-
3,316
3,237
-
3,237
Lease liabilities
94
536
630
102
568
670
\n
Assets and liabilities by contractual cash flows up to 20 years
The tables on the following page show the contractual undiscounted cash flows receivable and payable, up to a period of 20 years, including future receipts and payments of interest
of financial assets and liabilities by contractual maturity. The balances in the following tables do not agree directly with the consolidated balance sheet, as the tables include all cash
flows relating to principal and future coupon payments, presented on an undiscounted basis. The tables have been prepared on the following basis:
Financial assets have been reflected in the time band of the latest date on which they could be repaid, unless earlier repayment can be demanded by NatWest Group. Financial
liabilities are included at the earliest date on which the counterparty can require repayment, regardless of whether or not such early repayment results in a penalty. If the repayment
of a financial instrument is triggered by, or is subject to, specific criteria such as market price hurdles being reached, the asset is included in the time band that contains the latest date
on which it can be repaid, regardless of early repayment. The liability is included in the time band that contains the earliest possible date on which the conditions could be fulfilled,
without considering the probability of the conditions being met.
\n\n\n\n\n\n\n\n\n\n\n\n\n
For example, if a structured note is automatically prepaid when an equity index exceeds a certain level, the cash outflow will be included in the less than three months period,
\n
whatever the level of the index at the year end. The settlement date of debt securities in issue, issued by certain securitisation vehicles consolidated by NatWest Group, depends on
\n
when cash flows are received from the securitised assets. Where these assets are prepayable, the timing of the cash outflow relating to securities assumes that each asset will be
\n
prepaid at the earliest possible date. As the repayments of assets and liabilities are linked, the repayment of assets in securitisations is shown on the earliest date that the asset can be
\n
prepaid, as this is the basis used for liabilities.
\n
The principal amounts of financial assets and liabilities that are repayable after 20 years or where the counterparty has no right to repayment of the principal are excluded from the
\n
table, as are interest payments after 20 years.
\n
The maturity of guarantees and commitments is based on the earliest possible date they would be drawn in order to evaluate NatWest Group\u2019s liquidity position.
\n
MFVTPL assets of \u00a3128 billion (2023 - \u00a3125.1 billion) and HFT liabilities of \u00a3126.3 billion (2023 - \u00a3125.8 billion) have been excluded from the following tables.
\n\n \n
0-3 months
3-12 months
1-3 years
3-5 years
5-10 years
10-20 years
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets by contractual maturity up to 20 years
Cash and balances at central banks
92,994
-
-
-
-
-
Derivatives held for hedging
17
66
107
61
53
76
Settlement balances
2,085
-
-
-
-
-
Loans to banks - amortised cost
5,080
297
612
9
23
158
Loans to customers - amortised cost
59,702
56,264
82,995
63,857
99,837
123,946
Other financial assets
(1)
7,068
9,414
17,417
11,643
11,843
7,493
Finance lease
27
89
126
105
207
325
166,973
66,130
101,257
75,675
111,963
131,998
Liabilities by contractual maturity up to 20 years
Bank deposits
16,914
5,315
10,114
81
79
-
Customer deposits
396,703
34,316
2,713
82
-
14
Settlement balances
1,729
-
-
-
-
-
Derivatives held for hedging
63
343
335
271
43
2
Other financial liabilities
8,305
13,501
22,869
15,350
4,710
987
Subordinated liabilities
53
1,201
2,059
2,927
754
339
Other liabilities - Notes in circulation
3,316
-
-
-
-
-
Lease liabilities
24
68
185
96
168
102
427,107
54,744
38,275
18,807
5,754
1,444
Guarantees and commitments - notional amount
(2)
Guarantees
(3)
3,060
-
-
-
-
-
Commitments
(4)
132,958
-
-
-
-
-
136,018
-
-
-
-
-
\n
For the notes to this table refer to the following page.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
0-3 months
3-12 months
1-3 years
3-5 years
5-10 years
10-20 years
2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets by contractual maturity up to 20 years
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Cash and balances at central banks
104,262
-
-
-
-
-
Derivatives held for hedging
31
29
128
104
49
49
Settlement balances
7,231
-
-
-
-
-
Loans to banks - amortised cost
5,234
1,437
23
302
-
-
Loans to customers - amortised cost
52,175
46,894
81,445
61,465
96,577
114,806
Other financial assets
(1)
4,897
6,756
12,304
11,183
10,019
8,063
Finance lease
61
242
735
401
656
359
\u00a0
173,891
55,358
94,635
73,455
107,301
123,277
Liabilities by contractual maturity up to 20 years
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Bank deposits
8,334
1,279
6,069
8,307
-
-
Customer deposits
393,363
31,900
6,464
11
14
19
Settlement balances
6,645
-
-
-
-
-
Derivatives held for hedging
71
175
366
192
92
8
Other financial liabilities
9,094
12,319
18,843
13,818
4,769
346
Subordinated liabilities
72
1,167
2,301
1,512
1,406
342
Other liabilities - Notes in circulation
3,237
-
-
-
-
-
Lease liabilities
30
79
172
111
175
132
\u00a0
420,846
46,919
34,215
23,951
6,456
847
Guarantees and commitments - notional amount
(2)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Guarantees
(3)
2,833
-
-
-
-
-
Commitments
(4)
124,790
-
-
-
-
-
\u00a0
127,623
-
-
-
-
-
\n
(1)
Other financial assets exclude equity shares.
(2)
Refer to Note 25 Memorandum items \u2013 Contingent liabilities and commitments.
(3)
NatWest Group is only called upon to satisfy a guarantee when the guaranteed party fails to meet its obligations. NatWest Group expects most guarantees it provides to expire unused.
(4)
NatWest Group has given commitments to provide funds to customers under undrawn formal facilities, credit lines and other commitments to lend subject to certain conditions being met by the counterparty. NatWest Group does not expect all facilities to
be drawn, and some may lapse before drawdown.", "dimensions": { "concept": "ifrs-full:DisclosureOfDepositsFromBanksExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00254": { "value": "14 Loan impairment provisions
There is a risk that customers and counterparties fail to meet their contractual obligation to settle outstanding amounts, for which we hold expected credit losses
(ECL). The calculation of ECL considers historical, current, and forward-looking information to determine the amount we do not expect to recover. It considers losses
on both defaulted exposures and performing exposures that may default in future. ECL is recognised on drawn exposures, loans commitments, and contingent
liabilities.
For accounting policy information refer to Accounting policy 2.3. Further disclosures on credit risk and information on ECL methodology are shown from page 181.
Loan exposure and impairment metrics
The table below summarises loans and credit impairment measures within the scope of IFRS 9 Expected credit loss framework.
2024
2023
\u00a3m
\u00a3m
Loans - amortised cost and FVOCI
(1,2)
Stage 1
363,821
348,586
Stage 2
40,474
37,891
Stage 3
5,930
5,563
Of which: individual
1,285
1,031
Of which: collective
4,645
4,532
410,225
392,040
ECL provisions
(3)
- Stage 1
598
709
- Stage 2
787
976
- Stage 3
2,040
1,960
Of which: individual
451
332
Of which: collective
1,589
1,628
3,425
3,645
ECL provision coverage
(4)
- Stage 1 (%)
0.16
0.20
- Stage 2 (%)
1.94
2.58
- Stage 3 (%)
34.40
35.23
0.83
0.93
Continuing operations
Impairment (releases)/losses
ECL charge
(5)
359
578
Stage 1
(438)
(397)
Stage 2
360
645
Stage 3
437
330
Of which: individual
192
89
Of which: collective
245
241
Amounts written off
654
319
Of which: individual
144
42
Of which: collective
510
277
(1)
The table shows gross loans only and excludes
amounts that are outside the scope of the ECL
framework. Refer to Financial instruments within the
scope of the IFRS 9 ECL framework for further
details. Other financial assets within the scope of the
IFRS 9 ECL framework were cash and balances at
central banks totalling \u00a391.8 billion (2023 \u2013 \u00a3103.1
billion) and debt securities of \u00a362.4 billion (2023 \u2013
\u00a350.1 billion).
(2)
Includes loans to customers and banks.
(3)
Includes \u00a34 million (2023 - \u00a39 million) related to
assets classified as FVOCI and \u00a30.1 billion (2023 -
\u00a30.1 billion) related to off-balance sheet exposures.
(4)
ECL provisions coverage is calculated as ECL
provisions divided by loans \u2013 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.
(5)
Includes a \u00a312 million release (2023 - \u00a316 million
release) related to other financial assets, of which \u00a34
million release (2023 - \u00a36 million charge) related to
assets classified as FVOCI; and \u00a35 million release
(2023 - \u00a39 million release) related to contingent
liabilities.
Credit risk enhancement and mitigation
For information on Credit risk enhancement and mitigation held as security, refer to Risk and capital management \u2013 Credit risk enhancement and mitigation section.
Critical accounting policy: Loan impairment provisions
Accounting policy 2.3 sets out how the expected loss approach is applied. At 31 December 2024, impairment provisions amounted to \u00a33,425 million (2023 - \u00a33,645 million). A loan is
impaired when there is objective evidence that the cash flows will not occur in the manner expected when the loan was advanced. Such evidence includes changes in the credit rating
of a borrower, the failure to make payments in accordance with the loan agreement, significant reduction in the value of any security, breach of limits or covenants, and observable
data about relevant macroeconomic measures.
The impairment loss is the difference between the carrying value of the loan and the present value of estimated future cash flows at the loan's original effective interest rate.
The measurement of credit impairment under the IFRS expected loss model depends on management\u2019s assessment of any potential deterioration in the creditworthiness of the
borrower, its modelling of expected performance and the application of economic forecasts. All three elements require judgements that are potentially significant to the estimate of
impairment losses. For further information and sensitivity analysis, refer to Risk and capital management \u2013 Measurement uncertainty and ECL sensitivity analysis section.
IFRS 9 ECL model design principles
Refer to Credit risk \u2013 IFRS 9 ECL model design principles section for further details.
Approach for multiple economic scenarios (MES)
The base scenario plays a greater part in the calculation of ECL than the approach to MES. Refer to Credit risk \u2013 Economic loss drivers - Probability weightings of scenarios section
for further details.16 Intangible assets
Intangible assets, such as internally generated software and goodwill generated on business combinations, are not physical in nature. This note presents the cost of
the assets, which is the amount NatWest Group initially paid or incurred, additions and disposals during the year, and any amortisation or impairment. Amortisation is
a charge that reflects the usage of the asset and impairment is a reduction in value arising from specific events identified during the year.
For accounting policy information refer to Accounting policies 3.4 and 3.5.
\n \n
2024
2023
Goodwill
Other (1)
Total
Goodwill
Other (1)
Total
Cost
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January
10,090
4,447
14,537
9,931
3,763
13,694
Currency translation and other adjustments
(4)
(65)
(69)
-
-
-
Acquisitions of companies and businesses
-
-
-
159
37
196
Additions
-
614
614
-
762
762
Disposals and write-off of fully amortised assets
-
(214)
(214)
-
(115)
(115)
At 31 December
10,086
4,782
14,868
10,090
4,447
14,537
Accumulated amortisation and impairment
At 1 January
4,410
2,513
6,923
4,409
2,169
6,578
Currency translation and other adjustments
-
(24)
(24)
-
-
-
Disposals and write-off of fully amortised assets
-
(201)
(201)
-
(116)
(116)
Impairment of intangible assets
1
20
21
1
22
23
Amortisation charge for the year
-
561
561
-
438
438
At 31 December
4,411
2,869
7,280
4,410
2,513
6,923
Net book value at 31 December
5,675
1,913
7,588
5,680
1,934
7,614
(1)
Principally consists of internally generated software.
Intangible assets and goodwill are reviewed for indicators of impairment. Intangible
assets were impaired by \u00a321 million in 2024 (2023 \u2013 \u00a323 million).
NatWest Group\u2019s goodwill acquired in business combinations is reviewed for impairment
annually at 31 December by cash-generating unit (CGU): 2024 - Retail Banking \u00a32,607
million (2023 - \u00a32,607 million), Ring-Fenced Bank Commercial & Institutional \u00a32,604
million (2023 - \u00a32,605 million), Other \u00a3464 million (2023 \u2013 \u00a3468 million). Our CGUs
represent the smallest group of assets to which we have allocated goodwill and reflect
the lowest level at which we monitor goodwill post acquisition. Analysis by reportable
segment is in Note 4 Segmental analysis.
Impairment testing involves the comparison of the carrying value of each CGU with its
recoverable amount. The carrying values of the segments reflect the equity allocations
made by management, which are consistent with NatWest Group\u2019s capital targets.
Recoverable amount is the higher of fair value less costs of disposal and value in use.
Fair value is the price that would be received to sell an asset in an orderly transaction
between market participants. Value in use is the present value of expected future cash
flows from the CGU.
The recoverable amounts for all CGUs at 31 December 2024 were based on value in
use, using management's latest five-year revenue and cost forecasts. These are
discounted cash flow projections over five years. The forecast is then extrapolated in
perpetuity using a long-term growth rate to compute a terminal value, which comprises
the majority of the value in use. The long-term growth rates have been based on
expected growth of the CGUs (2023 and 2024 \u2013 1.4%). The 2024 pre-tax risk discount
rates are based on those observed to be applied to businesses regarded as peers of the
CGUs: Retail Banking and Ring-Fenced Bank Commercial & Institutional and Private
Banking \u2013 16% (2023 \u2013 16%), Cushon \u2013 15.3% (2023 \u2013 15.3%) and RBS International
14.6% (2023 \u2013 14.6%).", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00255": { "value": "14 Loan impairment provisions
There is a risk that customers and counterparties fail to meet their contractual obligation to settle outstanding amounts, for which we hold expected credit losses
(ECL). The calculation of ECL considers historical, current, and forward-looking information to determine the amount we do not expect to recover. It considers losses
on both defaulted exposures and performing exposures that may default in future. ECL is recognised on drawn exposures, loans commitments, and contingent
liabilities.
For accounting policy information refer to Accounting policy 2.3. Further disclosures on credit risk and information on ECL methodology are shown from page 181.
Loan exposure and impairment metrics
The table below summarises loans and credit impairment measures within the scope of IFRS 9 Expected credit loss framework.
2024
2023
\u00a3m
\u00a3m
Loans - amortised cost and FVOCI
(1,2)
Stage 1
363,821
348,586
Stage 2
40,474
37,891
Stage 3
5,930
5,563
Of which: individual
1,285
1,031
Of which: collective
4,645
4,532
410,225
392,040
ECL provisions
(3)
- Stage 1
598
709
- Stage 2
787
976
- Stage 3
2,040
1,960
Of which: individual
451
332
Of which: collective
1,589
1,628
3,425
3,645
ECL provision coverage
(4)
- Stage 1 (%)
0.16
0.20
- Stage 2 (%)
1.94
2.58
- Stage 3 (%)
34.40
35.23
0.83
0.93
Continuing operations
Impairment (releases)/losses
ECL charge
(5)
359
578
Stage 1
(438)
(397)
Stage 2
360
645
Stage 3
437
330
Of which: individual
192
89
Of which: collective
245
241
Amounts written off
654
319
Of which: individual
144
42
Of which: collective
510
277
(1)
The table shows gross loans only and excludes
amounts that are outside the scope of the ECL
framework. Refer to Financial instruments within the
scope of the IFRS 9 ECL framework for further
details. Other financial assets within the scope of the
IFRS 9 ECL framework were cash and balances at
central banks totalling \u00a391.8 billion (2023 \u2013 \u00a3103.1
billion) and debt securities of \u00a362.4 billion (2023 \u2013
\u00a350.1 billion).
(2)
Includes loans to customers and banks.
(3)
Includes \u00a34 million (2023 - \u00a39 million) related to
assets classified as FVOCI and \u00a30.1 billion (2023 -
\u00a30.1 billion) related to off-balance sheet exposures.
(4)
ECL provisions coverage is calculated as ECL
provisions divided by loans \u2013 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.
(5)
Includes a \u00a312 million release (2023 - \u00a316 million
release) related to other financial assets, of which \u00a34
million release (2023 - \u00a36 million charge) related to
assets classified as FVOCI; and \u00a35 million release
(2023 - \u00a39 million release) related to contingent
liabilities.
Credit risk enhancement and mitigation
For information on Credit risk enhancement and mitigation held as security, refer to Risk and capital management \u2013 Credit risk enhancement and mitigation section.
Critical accounting policy: Loan impairment provisions
Accounting policy 2.3 sets out how the expected loss approach is applied. At 31 December 2024, impairment provisions amounted to \u00a33,425 million (2023 - \u00a33,645 million). A loan is
impaired when there is objective evidence that the cash flows will not occur in the manner expected when the loan was advanced. Such evidence includes changes in the credit rating
of a borrower, the failure to make payments in accordance with the loan agreement, significant reduction in the value of any security, breach of limits or covenants, and observable
data about relevant macroeconomic measures.
The impairment loss is the difference between the carrying value of the loan and the present value of estimated future cash flows at the loan's original effective interest rate.
The measurement of credit impairment under the IFRS expected loss model depends on management\u2019s assessment of any potential deterioration in the creditworthiness of the
borrower, its modelling of expected performance and the application of economic forecasts. All three elements require judgements that are potentially significant to the estimate of
impairment losses. For further information and sensitivity analysis, refer to Risk and capital management \u2013 Measurement uncertainty and ECL sensitivity analysis section.
IFRS 9 ECL model design principles
Refer to Credit risk \u2013 IFRS 9 ECL model design principles section for further details.
Approach for multiple economic scenarios (MES)
The base scenario plays a greater part in the calculation of ECL than the approach to MES. Refer to Credit risk \u2013 Economic loss drivers - Probability weightings of scenarios section
for further details.17 Other assets
Other assets are non-financial assets and reflect a grouping of assets that are not large enough to present separately on the balance sheet.
.
\n \n
2024
2023
\u00a3m
\u00a3m
Interests in associates
(1)
690
668
Property, plant and equipment
(2)
3,967
4,227
Pension schemes in net surplus (Note 5)
190
201
Tax recoverable
7
49
Deferred tax (Note 7)
1,876
1,894
Assets of disposal groups
64
902
Other
1,602
1,721
Other assets
8,396
9,662
(1)
Includes interest in Business Growth Fund \u00a3678 million (2023 - \u00a3658 million).
(2)
The estimated useful lives of NatWest Group\u2019s property, plant and equipment are: freehold buildings and long leasehold 50 years, short leaseholds for unexpired period of lease, property adaptation costs 10 to 15 years, computer equipment up to 5 years
and other equipment 4 to 15 years.", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00256": { "value": "16 Intangible assets
Intangible assets, such as internally generated software and goodwill generated on business combinations, are not physical in nature. This note presents the cost of
the assets, which is the amount NatWest Group initially paid or incurred, additions and disposals during the year, and any amortisation or impairment. Amortisation is
a charge that reflects the usage of the asset and impairment is a reduction in value arising from specific events identified during the year.
For accounting policy information refer to Accounting policies 3.4 and 3.5.
\n \n
2024
2023
Goodwill
Other (1)
Total
Goodwill
Other (1)
Total
Cost
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January
10,090
4,447
14,537
9,931
3,763
13,694
Currency translation and other adjustments
(4)
(65)
(69)
-
-
-
Acquisitions of companies and businesses
-
-
-
159
37
196
Additions
-
614
614
-
762
762
Disposals and write-off of fully amortised assets
-
(214)
(214)
-
(115)
(115)
At 31 December
10,086
4,782
14,868
10,090
4,447
14,537
Accumulated amortisation and impairment
At 1 January
4,410
2,513
6,923
4,409
2,169
6,578
Currency translation and other adjustments
-
(24)
(24)
-
-
-
Disposals and write-off of fully amortised assets
-
(201)
(201)
-
(116)
(116)
Impairment of intangible assets
1
20
21
1
22
23
Amortisation charge for the year
-
561
561
-
438
438
At 31 December
4,411
2,869
7,280
4,410
2,513
6,923
Net book value at 31 December
5,675
1,913
7,588
5,680
1,934
7,614
(1)
Principally consists of internally generated software.
Intangible assets and goodwill are reviewed for indicators of impairment. Intangible
assets were impaired by \u00a321 million in 2024 (2023 \u2013 \u00a323 million).
NatWest Group\u2019s goodwill acquired in business combinations is reviewed for impairment
annually at 31 December by cash-generating unit (CGU): 2024 - Retail Banking \u00a32,607
million (2023 - \u00a32,607 million), Ring-Fenced Bank Commercial & Institutional \u00a32,604
million (2023 - \u00a32,605 million), Other \u00a3464 million (2023 \u2013 \u00a3468 million). Our CGUs
represent the smallest group of assets to which we have allocated goodwill and reflect
the lowest level at which we monitor goodwill post acquisition. Analysis by reportable
segment is in Note 4 Segmental analysis.
Impairment testing involves the comparison of the carrying value of each CGU with its
recoverable amount. The carrying values of the segments reflect the equity allocations
made by management, which are consistent with NatWest Group\u2019s capital targets.
Recoverable amount is the higher of fair value less costs of disposal and value in use.
Fair value is the price that would be received to sell an asset in an orderly transaction
between market participants. Value in use is the present value of expected future cash
flows from the CGU.
The recoverable amounts for all CGUs at 31 December 2024 were based on value in
use, using management's latest five-year revenue and cost forecasts. These are
discounted cash flow projections over five years. The forecast is then extrapolated in
perpetuity using a long-term growth rate to compute a terminal value, which comprises
the majority of the value in use. The long-term growth rates have been based on
expected growth of the CGUs (2023 and 2024 \u2013 1.4%). The 2024 pre-tax risk discount
rates are based on those observed to be applied to businesses regarded as peers of the
CGUs: Retail Banking and Ring-Fenced Bank Commercial & Institutional and Private
Banking \u2013 16% (2023 \u2013 16%), Cushon \u2013 15.3% (2023 \u2013 15.3%) and RBS International
14.6% (2023 \u2013 14.6%).", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00257": { "value": "16 Intangible assets
Intangible assets, such as internally generated software and goodwill generated on business combinations, are not physical in nature. This note presents the cost of
the assets, which is the amount NatWest Group initially paid or incurred, additions and disposals during the year, and any amortisation or impairment. Amortisation is
a charge that reflects the usage of the asset and impairment is a reduction in value arising from specific events identified during the year.
For accounting policy information refer to Accounting policies 3.4 and 3.5.
\n \n
2024
2023
Goodwill
Other (1)
Total
Goodwill
Other (1)
Total
Cost
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January
10,090
4,447
14,537
9,931
3,763
13,694
Currency translation and other adjustments
(4)
(65)
(69)
-
-
-
Acquisitions of companies and businesses
-
-
-
159
37
196
Additions
-
614
614
-
762
762
Disposals and write-off of fully amortised assets
-
(214)
(214)
-
(115)
(115)
At 31 December
10,086
4,782
14,868
10,090
4,447
14,537
Accumulated amortisation and impairment
At 1 January
4,410
2,513
6,923
4,409
2,169
6,578
Currency translation and other adjustments
-
(24)
(24)
-
-
-
Disposals and write-off of fully amortised assets
-
(201)
(201)
-
(116)
(116)
Impairment of intangible assets
1
20
21
1
22
23
Amortisation charge for the year
-
561
561
-
438
438
At 31 December
4,411
2,869
7,280
4,410
2,513
6,923
Net book value at 31 December
5,675
1,913
7,588
5,680
1,934
7,614
(1)
Principally consists of internally generated software.
Intangible assets and goodwill are reviewed for indicators of impairment. Intangible
assets were impaired by \u00a321 million in 2024 (2023 \u2013 \u00a323 million).
NatWest Group\u2019s goodwill acquired in business combinations is reviewed for impairment
annually at 31 December by cash-generating unit (CGU): 2024 - Retail Banking \u00a32,607
million (2023 - \u00a32,607 million), Ring-Fenced Bank Commercial & Institutional \u00a32,604
million (2023 - \u00a32,605 million), Other \u00a3464 million (2023 \u2013 \u00a3468 million). Our CGUs
represent the smallest group of assets to which we have allocated goodwill and reflect
the lowest level at which we monitor goodwill post acquisition. Analysis by reportable
segment is in Note 4 Segmental analysis.
Impairment testing involves the comparison of the carrying value of each CGU with its
recoverable amount. The carrying values of the segments reflect the equity allocations
made by management, which are consistent with NatWest Group\u2019s capital targets.
Recoverable amount is the higher of fair value less costs of disposal and value in use.
Fair value is the price that would be received to sell an asset in an orderly transaction
between market participants. Value in use is the present value of expected future cash
flows from the CGU.
The recoverable amounts for all CGUs at 31 December 2024 were based on value in
use, using management's latest five-year revenue and cost forecasts. These are
discounted cash flow projections over five years. The forecast is then extrapolated in
perpetuity using a long-term growth rate to compute a terminal value, which comprises
the majority of the value in use. The long-term growth rates have been based on
expected growth of the CGUs (2023 and 2024 \u2013 1.4%). The 2024 pre-tax risk discount
rates are based on those observed to be applied to businesses regarded as peers of the
CGUs: Retail Banking and Ring-Fenced Bank Commercial & Institutional and Private
Banking \u2013 16% (2023 \u2013 16%), Cushon \u2013 15.3% (2023 \u2013 15.3%) and RBS International
14.6% (2023 \u2013 14.6%).", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00258": { "value": "16 Intangible assets
Intangible assets, such as internally generated software and goodwill generated on business combinations, are not physical in nature. This note presents the cost of
the assets, which is the amount NatWest Group initially paid or incurred, additions and disposals during the year, and any amortisation or impairment. Amortisation is
a charge that reflects the usage of the asset and impairment is a reduction in value arising from specific events identified during the year.
For accounting policy information refer to Accounting policies 3.4 and 3.5.
\n \n
2024
2023
Goodwill
Other (1)
Total
Goodwill
Other (1)
Total
Cost
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January
10,090
4,447
14,537
9,931
3,763
13,694
Currency translation and other adjustments
(4)
(65)
(69)
-
-
-
Acquisitions of companies and businesses
-
-
-
159
37
196
Additions
-
614
614
-
762
762
Disposals and write-off of fully amortised assets
-
(214)
(214)
-
(115)
(115)
At 31 December
10,086
4,782
14,868
10,090
4,447
14,537
Accumulated amortisation and impairment
At 1 January
4,410
2,513
6,923
4,409
2,169
6,578
Currency translation and other adjustments
-
(24)
(24)
-
-
-
Disposals and write-off of fully amortised assets
-
(201)
(201)
-
(116)
(116)
Impairment of intangible assets
1
20
21
1
22
23
Amortisation charge for the year
-
561
561
-
438
438
At 31 December
4,411
2,869
7,280
4,410
2,513
6,923
Net book value at 31 December
5,675
1,913
7,588
5,680
1,934
7,614
(1)
Principally consists of internally generated software.
Intangible assets and goodwill are reviewed for indicators of impairment. Intangible
assets were impaired by \u00a321 million in 2024 (2023 \u2013 \u00a323 million).
NatWest Group\u2019s goodwill acquired in business combinations is reviewed for impairment
annually at 31 December by cash-generating unit (CGU): 2024 - Retail Banking \u00a32,607
million (2023 - \u00a32,607 million), Ring-Fenced Bank Commercial & Institutional \u00a32,604
million (2023 - \u00a32,605 million), Other \u00a3464 million (2023 \u2013 \u00a3468 million). Our CGUs
represent the smallest group of assets to which we have allocated goodwill and reflect
the lowest level at which we monitor goodwill post acquisition. Analysis by reportable
segment is in Note 4 Segmental analysis.
Impairment testing involves the comparison of the carrying value of each CGU with its
recoverable amount. The carrying values of the segments reflect the equity allocations
made by management, which are consistent with NatWest Group\u2019s capital targets.
Recoverable amount is the higher of fair value less costs of disposal and value in use.
Fair value is the price that would be received to sell an asset in an orderly transaction
between market participants. Value in use is the present value of expected future cash
flows from the CGU.
The recoverable amounts for all CGUs at 31 December 2024 were based on value in
use, using management's latest five-year revenue and cost forecasts. These are
discounted cash flow projections over five years. The forecast is then extrapolated in
perpetuity using a long-term growth rate to compute a terminal value, which comprises
the majority of the value in use. The long-term growth rates have been based on
expected growth of the CGUs (2023 and 2024 \u2013 1.4%). The 2024 pre-tax risk discount
rates are based on those observed to be applied to businesses regarded as peers of the
CGUs: Retail Banking and Ring-Fenced Bank Commercial & Institutional and Private
Banking \u2013 16% (2023 \u2013 16%), Cushon \u2013 15.3% (2023 \u2013 15.3%) and RBS International
14.6% (2023 \u2013 14.6%).", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00268": { "value": "17 Other assets
Other assets are non-financial assets and reflect a grouping of assets that are not large enough to present separately on the balance sheet.
.
\n \n
2024
2023
\u00a3m
\u00a3m
Interests in associates
(1)
690
668
Property, plant and equipment
(2)
3,967
4,227
Pension schemes in net surplus (Note 5)
190
201
Tax recoverable
7
49
Deferred tax (Note 7)
1,876
1,894
Assets of disposal groups
64
902
Other
1,602
1,721
Other assets
8,396
9,662
(1)
Includes interest in Business Growth Fund \u00a3678 million (2023 - \u00a3658 million).
(2)
The estimated useful lives of NatWest Group\u2019s property, plant and equipment are: freehold buildings and long leasehold 50 years, short leaseholds for unexpired period of lease, property adaptation costs 10 to 15 years, computer equipment up to 5 years
and other equipment 4 to 15 years.20 Other liabilities
Other liabilities are amounts due to third parties that are not financial liabilities but including lease liabilities held at amortised cost. Other liabilities represent, for
example, amounts due for goods and services that have been received but not invoiced,
tax due to HMRC, and retirement benefit liabilities. Liabilities which have a
level of uncertainty regarding their timing or the future cost to settle them are included in other liabilities as provisions for liabilities and charges.
2024
2023
Other liabilities
\u00a3m
\u00a3m
Lease liabilities
630
670
Provisions for liabilities and charges
864
990
Retirement benefit liabilities (Note 5)
80
99
Accruals
1,353
1,411
Deferred income
394
402
Current tax
263
332
Deferred tax (Note 7)
99
141
Other liabilities
(1)
918
1,157
Total
4,601
5,202
(1)
Other liabilities include liabilities of disposal groups of nil (2023 - \u00a33 million).
Provisions for liabilities and charges
Litigation and
Commitments
Customer redress
other regulatory
Property
and guarantees
Other (1)
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
486
156
99
78
171
990
Expected credit loss impairment release
-
-
-
(23)
-
(23)
Currency translation and other movements
(1)
-
(1)
-
(3)
(5)
Charge to income statement
194
30
47
-
301
572
Release to income statement
(137)
(23)
(36)
-
(46)
(242)
Provisions utilised
(122)
(35)
(19)
-
(252)
(428)
At 31 December 2024
420
128
90
55
171
864
(1)
Other materially comprises provisions for restructuring costs and provision for Bank of England Levy.
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.
For accounting policy information refer to Accounting policy 3.12.
Background information on all material provisions is given in Note 25
.", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00263": { "value": "17 Other assets
Other assets are non-financial assets and reflect a grouping of assets that are not large enough to present separately on the balance sheet.
.
\n \n
2024
2023
\u00a3m
\u00a3m
Interests in associates
(1)
690
668
Property, plant and equipment
(2)
3,967
4,227
Pension schemes in net surplus (Note 5)
190
201
Tax recoverable
7
49
Deferred tax (Note 7)
1,876
1,894
Assets of disposal groups
64
902
Other
1,602
1,721
Other assets
8,396
9,662
(1)
Includes interest in Business Growth Fund \u00a3678 million (2023 - \u00a3658 million).
(2)
The estimated useful lives of NatWest Group\u2019s property, plant and equipment are: freehold buildings and long leasehold 50 years, short leaseholds for unexpired period of lease, property adaptation costs 10 to 15 years, computer equipment up to 5 years
and other equipment 4 to 15 years.", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00261": { "value": "17 Other assets
Other assets are non-financial assets and reflect a grouping of assets that are not large enough to present separately on the balance sheet.
.
\n \n
2024
2023
\u00a3m
\u00a3m
Interests in associates
(1)
690
668
Property, plant and equipment
(2)
3,967
4,227
Pension schemes in net surplus (Note 5)
190
201
Tax recoverable
7
49
Deferred tax (Note 7)
1,876
1,894
Assets of disposal groups
64
902
Other
1,602
1,721
Other assets
8,396
9,662
(1)
Includes interest in Business Growth Fund \u00a3678 million (2023 - \u00a3658 million).
(2)
The estimated useful lives of NatWest Group\u2019s property, plant and equipment are: freehold buildings and long leasehold 50 years, short leaseholds for unexpired period of lease, property adaptation costs 10 to 15 years, computer equipment up to 5 years
and other equipment 4 to 15 years.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00302": { "value": "17 Other assets
Other assets are non-financial assets and reflect a grouping of assets that are not large enough to present separately on the balance sheet.
.
\n \n
2024
2023
\u00a3m
\u00a3m
Interests in associates
(1)
690
668
Property, plant and equipment
(2)
3,967
4,227
Pension schemes in net surplus (Note 5)
190
201
Tax recoverable
7
49
Deferred tax (Note 7)
1,876
1,894
Assets of disposal groups
64
902
Other
1,602
1,721
Other assets
8,396
9,662
(1)
Includes interest in Business Growth Fund \u00a3678 million (2023 - \u00a3658 million).
(2)
The estimated useful lives of NatWest Group\u2019s property, plant and equipment are: freehold buildings and long leasehold 50 years, short leaseholds for unexpired period of lease, property adaptation costs 10 to 15 years, computer equipment up to 5 years
and other equipment 4 to 15 years.27 Analysis of the net investment in business interests and intangible assets
This note shows cash flows relating to obtaining or losing significant influence in associates or control of subsidiaries and net assets and liabilities purchased and sold.
These cash flows are presented as investing activities on the cash flow statement.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Fair value given for business acquired
-
(139)
-
Acquisition of interest in associates
(4)
-
(1)
Additional investment in associates
(1)
(5)
-
Net assets and liabilities purchased
(2,296)
-
-
Net outflow of cash in respect of acquisitions
(2,301)
(144)
(1)
Disposal of net assets and liabilities
1,003
5,560
6,270
Loss on disposal of net assets and liabilities
(8)
(87)
(106)
Net inflow of cash in respect of disposals
995
5,473
6,164
Dividends received from associate
1
16
-
Net cash expenditure on intangible assets
(614)
(744)
(743)
Net (outflow)/inflow of cash
(1,919)
4,601
5,420
\nAssociates, joint ventures (JVs) and equity investments
In their roles as providers of finance, NatWest Group companies provide development
and other types of capital support to businesses. These investments are made in the
normal course of business. To further strategic partnerships, NatWest Group may seek
to invest in third parties or allow third parties to hold a minority interest in a subsidiary of
NatWest Group. We disclose as related parties for associates and joint ventures and
where equity interest are over 10%. Ongoing business transactions with these entities
are on normal commercial terms.
Amounts included in the NatWest Group financial statements, in aggregate, by category
of related party are as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Associates and joint
Equity
\u00a0
\u00a0
ventures
shares (1)
Total
31 December 2024
\u00a3m
\u00a3m
\u00a3m
Investments
690
122
812
Loans to customers - amortised cost
-
4
4
Customer deposits
1
1
2
Other comprehensive income
-
(22)
(22)
Other operating income
19
-
19
31 December 2023
\u00a0\u00a0\u00a0
Investments
668
145
813
Loans to customers - amortised cost
-
13
13
Customer deposits
2
10
12
Other comprehensive income
-
(8)
(8)
Other operating income
(11)
-
(11)
\n
(1)
Represents investments in entities where ownership is more than 10%", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00303": { "value": "17 Other assets
Other assets are non-financial assets and reflect a grouping of assets that are not large enough to present separately on the balance sheet.
.
\n \n
2024
2023
\u00a3m
\u00a3m
Interests in associates
(1)
690
668
Property, plant and equipment
(2)
3,967
4,227
Pension schemes in net surplus (Note 5)
190
201
Tax recoverable
7
49
Deferred tax (Note 7)
1,876
1,894
Assets of disposal groups
64
902
Other
1,602
1,721
Other assets
8,396
9,662
(1)
Includes interest in Business Growth Fund \u00a3678 million (2023 - \u00a3658 million).
(2)
The estimated useful lives of NatWest Group\u2019s property, plant and equipment are: freehold buildings and long leasehold 50 years, short leaseholds for unexpired period of lease, property adaptation costs 10 to 15 years, computer equipment up to 5 years
and other equipment 4 to 15 years.27 Analysis of the net investment in business interests and intangible assets
This note shows cash flows relating to obtaining or losing significant influence in associates or control of subsidiaries and net assets and liabilities purchased and sold.
These cash flows are presented as investing activities on the cash flow statement.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Fair value given for business acquired
-
(139)
-
Acquisition of interest in associates
(4)
-
(1)
Additional investment in associates
(1)
(5)
-
Net assets and liabilities purchased
(2,296)
-
-
Net outflow of cash in respect of acquisitions
(2,301)
(144)
(1)
Disposal of net assets and liabilities
1,003
5,560
6,270
Loss on disposal of net assets and liabilities
(8)
(87)
(106)
Net inflow of cash in respect of disposals
995
5,473
6,164
Dividends received from associate
1
16
-
Net cash expenditure on intangible assets
(614)
(744)
(743)
Net (outflow)/inflow of cash
(1,919)
4,601
5,420
\nAssociates, joint ventures (JVs) and equity investments
In their roles as providers of finance, NatWest Group companies provide development
and other types of capital support to businesses. These investments are made in the
normal course of business. To further strategic partnerships, NatWest Group may seek
to invest in third parties or allow third parties to hold a minority interest in a subsidiary of
NatWest Group. We disclose as related parties for associates and joint ventures and
where equity interest are over 10%. Ongoing business transactions with these entities
are on normal commercial terms.
Amounts included in the NatWest Group financial statements, in aggregate, by category
of related party are as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Associates and joint
Equity
\u00a0
\u00a0
ventures
shares (1)
Total
31 December 2024
\u00a3m
\u00a3m
\u00a3m
Investments
690
122
812
Loans to customers - amortised cost
-
4
4
Customer deposits
1
1
2
Other comprehensive income
-
(22)
(22)
Other operating income
19
-
19
31 December 2023
\u00a0\u00a0\u00a0
Investments
668
145
813
Loans to customers - amortised cost
-
13
13
Customer deposits
2
10
12
Other comprehensive income
-
(8)
(8)
Other operating income
(11)
-
(11)
\n
(1)
Represents investments in entities where ownership is more than 10%", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00259": { "value": "17 Other assets
Other assets are non-financial assets and reflect a grouping of assets that are not large enough to present separately on the balance sheet.
.
\n \n
2024
2023
\u00a3m
\u00a3m
Interests in associates
(1)
690
668
Property, plant and equipment
(2)
3,967
4,227
Pension schemes in net surplus (Note 5)
190
201
Tax recoverable
7
49
Deferred tax (Note 7)
1,876
1,894
Assets of disposal groups
64
902
Other
1,602
1,721
Other assets
8,396
9,662
(1)
Includes interest in Business Growth Fund \u00a3678 million (2023 - \u00a3658 million).
(2)
The estimated useful lives of NatWest Group\u2019s property, plant and equipment are: freehold buildings and long leasehold 50 years, short leaseholds for unexpired period of lease, property adaptation costs 10 to 15 years, computer equipment up to 5 years
and other equipment 4 to 15 years.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentAssetsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00260": { "value": "17 Other assets
Other assets are non-financial assets and reflect a grouping of assets that are not large enough to present separately on the balance sheet.
.
\n \n
2024
2023
\u00a3m
\u00a3m
Interests in associates
(1)
690
668
Property, plant and equipment
(2)
3,967
4,227
Pension schemes in net surplus (Note 5)
190
201
Tax recoverable
7
49
Deferred tax (Note 7)
1,876
1,894
Assets of disposal groups
64
902
Other
1,602
1,721
Other assets
8,396
9,662
(1)
Includes interest in Business Growth Fund \u00a3678 million (2023 - \u00a3658 million).
(2)
The estimated useful lives of NatWest Group\u2019s property, plant and equipment are: freehold buildings and long leasehold 50 years, short leaseholds for unexpired period of lease, property adaptation costs 10 to 15 years, computer equipment up to 5 years
and other equipment 4 to 15 years.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentAssetsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00262": { "value": "17 Other assets
Other assets are non-financial assets and reflect a grouping of assets that are not large enough to present separately on the balance sheet.
.
\n \n
2024
2023
\u00a3m
\u00a3m
Interests in associates
(1)
690
668
Property, plant and equipment
(2)
3,967
4,227
Pension schemes in net surplus (Note 5)
190
201
Tax recoverable
7
49
Deferred tax (Note 7)
1,876
1,894
Assets of disposal groups
64
902
Other
1,602
1,721
Other assets
8,396
9,662
(1)
Includes interest in Business Growth Fund \u00a3678 million (2023 - \u00a3658 million).
(2)
The estimated useful lives of NatWest Group\u2019s property, plant and equipment are: freehold buildings and long leasehold 50 years, short leaseholds for unexpired period of lease, property adaptation costs 10 to 15 years, computer equipment up to 5 years
and other equipment 4 to 15 years.", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00265": { "value": "19 Subordinated liabilities
Subordinated liabilities are debt securities that, in the event of winding up or bankruptcy, rank below other liabilities for interest payments and repayment.
For accounting policy information refer to Accounting policies 3.8 and 3.10.
\n \n
2024
2023
\u00a3m
\u00a3m
Dated loan capital
5,996
5,573
Undated loan capital
21
22
Preference shares
119
119
6,136
5,714
Certain preference shares issued by the company are classified as liabilities; these securities remain subject to the capital maintenance rules of the Companies Act 2006.
\n \n
First call
Maturity
Capital
2024
2023
Dated loan capital
date
date
treatment
\u00a3m
\u00a3m
NatWest Group plc
$2,250 million
5.125% notes
-
May-24
Tier 2
-
418
\u00a31,000 million
3.622% notes
May-25
Aug-30
Tier 2
1,006
985
\u00a31,000 million
2.105% notes
Aug-26
Nov-31
Tier 2
1,001
1,000
$1,000 million
6.475% notes
Mar-29
Jun-34
Tier 2
799
-
$850 million
3.032% notes
Aug-30
Nov-35
Tier 2
550
541
\u20ac750 million
1.043% notes
Jun-27
Sep-32
Tier 2
624
652
$750 million
3.754% notes
Nov-24
Nov-29
Tier 2
-
592
\u20ac700 million
5.763% notes
Nov-28
Feb-34
Tier 2
608
636
\u00a3650 million
7.416% notes
Mar-28
Jun-33
Tier 2
644
657
\u00a3600 million
5.642% notes
Oct-29
Oct-34
Tier 2
608
-
5,840
5,481
Other subsidiaries
\u20ac170 million
Floating rate notes
-
Feb-41
Not applicable
234
237
$150 million
7.125% notes
-
Oct-93
Not applicable
17
17
6,091
5,735
Fair value hedging
(95)
(162)
5,996
5,573
First call
Maturity
Capital
2024
2023
Undated loan capital
date
date
treatment
\u00a3m
\u00a3m
Other subsidiaries
\u00a331 million
7.380% notes
-
-
Not applicable
1
1
\u00a316 million
5.630% notes
Sep-26
-
Not applicable
17
18
\u00a34.9 million
2.500% fixed notes
-
-
Not applicable
3
3
21
22
Preference shares
Other subsidiaries
\u00a3140 million
Non-cumulative preference shares of \u00a31
-
-
Not applicable
119
119
119
119
Total
6,136
5,714
", "dimensions": { "concept": "ifrs-full:DisclosureOfSubordinatedLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00264": { "value": "20 Other liabilities
Other liabilities are amounts due to third parties that are not financial liabilities but including lease liabilities held at amortised cost. Other liabilities represent, for
example, amounts due for goods and services that have been received but not invoiced,
tax due to HMRC, and retirement benefit liabilities. Liabilities which have a
level of uncertainty regarding their timing or the future cost to settle them are included in other liabilities as provisions for liabilities and charges.
2024
2023
Other liabilities
\u00a3m
\u00a3m
Lease liabilities
630
670
Provisions for liabilities and charges
864
990
Retirement benefit liabilities (Note 5)
80
99
Accruals
1,353
1,411
Deferred income
394
402
Current tax
263
332
Deferred tax (Note 7)
99
141
Other liabilities
(1)
918
1,157
Total
4,601
5,202
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00304": { "value": "20 Other liabilities
Other liabilities are amounts due to third parties that are not financial liabilities but including lease liabilities held at amortised cost. Other liabilities represent, for
example, amounts due for goods and services that have been received but not invoiced,
tax due to HMRC, and retirement benefit liabilities. Liabilities which have a
level of uncertainty regarding their timing or the future cost to settle them are included in other liabilities as provisions for liabilities and charges.
2024
2023
Other liabilities
\u00a3m
\u00a3m
Lease liabilities
630
670
Provisions for liabilities and charges
864
990
Retirement benefit liabilities (Note 5)
80
99
Accruals
1,353
1,411
Deferred income
394
402
Current tax
263
332
Deferred tax (Note 7)
99
141
Other liabilities
(1)
918
1,157
Total
4,601
5,202
(1)
Other liabilities include liabilities of disposal groups of nil (2023 - \u00a33 million).
Provisions for liabilities and charges
Litigation and
Commitments
Customer redress
other regulatory
Property
and guarantees
Other (1)
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
486
156
99
78
171
990
Expected credit loss impairment release
-
-
-
(23)
-
(23)
Currency translation and other movements
(1)
-
(1)
-
(3)
(5)
Charge to income statement
194
30
47
-
301
572
Release to income statement
(137)
(23)
(36)
-
(46)
(242)
Provisions utilised
(122)
(35)
(19)
-
(252)
(428)
At 31 December 2024
420
128
90
55
171
864
(1)
Other materially comprises provisions for restructuring costs and provision for Bank of England Levy.
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.
For accounting policy information refer to Accounting policy 3.12.
Background information on all material provisions is given in Note 25
. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00305": { "value": "20 Other liabilities
Other liabilities are amounts due to third parties that are not financial liabilities but including lease liabilities held at amortised cost. Other liabilities represent, for
example, amounts due for goods and services that have been received but not invoiced,
tax due to HMRC, and retirement benefit liabilities. Liabilities which have a
level of uncertainty regarding their timing or the future cost to settle them are included in other liabilities as provisions for liabilities and charges.
2024
2023
Other liabilities
\u00a3m
\u00a3m
Lease liabilities
630
670
Provisions for liabilities and charges
864
990
Retirement benefit liabilities (Note 5)
80
99
Accruals
1,353
1,411
Deferred income
394
402
Current tax
263
332
Deferred tax (Note 7)
99
141
Other liabilities
(1)
918
1,157
Total
4,601
5,202
(1)
Other liabilities include liabilities of disposal groups of nil (2023 - \u00a33 million).
Provisions for liabilities and charges
Litigation and
Commitments
Customer redress
other regulatory
Property
and guarantees
Other (1)
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
486
156
99
78
171
990
Expected credit loss impairment release
-
-
-
(23)
-
(23)
Currency translation and other movements
(1)
-
(1)
-
(3)
(5)
Charge to income statement
194
30
47
-
301
572
Release to income statement
(137)
(23)
(36)
-
(46)
(242)
Provisions utilised
(122)
(35)
(19)
-
(252)
(428)
At 31 December 2024
420
128
90
55
171
864
(1)
Other materially comprises provisions for restructuring costs and provision for Bank of England Levy.
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.
For accounting policy information refer to Accounting policy 3.12.
Background information on all material provisions is given in Note 25
. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00306": { "value": "
2024
2023
Other liabilities
\u00a3m
\u00a3m
Lease liabilities
630
670
Provisions for liabilities and charges
864
990
Retirement benefit liabilities (Note 5)
80
99
Accruals
1,353
1,411
Deferred income
394
402
Current tax
263
332
Deferred tax (Note 7)
99
141
Other liabilities
(1)
918
1,157
Total
4,601
5,202
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00271": { "value": "21 Share capital and other equity
Share capital consists of ordinary shares and preference shares and is measured as the number of shares allotted and fully paid, multiplied by the nominal value of a
share. Other equity includes paid-in equity, merger reserve, capital redemption reserve and own shares held.
For accounting policy information refer to Accounting policy 3.10.
\n \n
Number of shares
2024
2023
2024
2023
Allotted, called up and fully paid
\u00a3m
\u00a3m
000s
000s
Ordinary shares of \u00a31.0769
(1)
8,972
9,683
8,331,145
8,991,737
Cumulative preference shares of \u00a31
0.5
0.5
483.0
483.0
(1)
The nominal value of ordinary shares without rounding is \u00a31.076923076923077 per share.
Movement in allotted, called up and fully paid
\n \n
Number of shares
ordinary shares
\u00a3m
000s
At 31 December 2022
10,539
9,786,024
Share cancellation
(856)
(794,287)
At 31 December 2023
9,683
8,991,737
Share cancellation
(711)
(660,592)
At 31 December 2024
8,972
8,331,145
Ordinary shares
There is no authorised share capital under the company\u2019s constitution. At 31 December
2024, the directors had authority granted at the 2024 Annual General Meeting (AGM) to
issue up to \u00a3472 million nominal of ordinary shares other than by pre-emption to existing
shareholders.
On-market purchases
At the AGM in 2023, shareholders renewed the authority for the company to make
market purchases of up to 967 million ordinary shares. The
directors used the authority
obtained at the 2023 AGM (2023 Authority) to carry out share buyback programmes of
up to \u00a3500 million (2023 Programme) and \u00a3300 million (2024 Programme).
The maximum number of ordinary shares that could be purchased under the 2023
Programme was 920 million (reflecting the impact on the 2023 Authority of the reduction
in issued share capital following the off-market buyback announced on 22 May 2023).
The maximum number of Ordinary Shares that could be purchased under the 2024
Programme was 697 million (reflecting the impact on the 2023 Authority of the reduction
in issued share capital following the off-market buyback announced on 22 May 2023 and
further reduced by the number of shares purchased to 19 February 2024 under the
2023 Programme).
The 2023 Programme started on 31 July
2023 and ended on 22 March 2024. 228
million ordinary shares (nominal value
\u00a3245 million) were purchased by the
company under the Programme at a
volume weighted average price of
217.1788 pence per Ordinary Share for a
total consideration of \u00a3495 million. All of
the purchased ordinary shares were
cancelled, representing 2.52% of the
company\u2019s issued ordinary share capital.
The 2024 Programme started on 19
February 2024 and ended on 24 July
2024. 104 million ordinary shares
(nominal value \u00a3113 million) were
purchased by the company under the
Programme at a volume weighted
average price of 287.1225 pence per
ordinary share for a total consideration of
\u00a3300 million. All of the purchased
ordinary shares were cancelled,
representing 1.19% of the company\u2019s
issued ordinary share capital.
Shareholders will be asked to renew the
authority for the company to make
market purchases of ordinary shares at
the AGM in 2025.
Off-market purchases
A Directed Buyback Contract between
the Company and HMT was approved by
the shareholders of the Company at a
General Meeting on 6 February 2019.
Amendments to the Directed Buyback
Contract were approved by the
shareholders at a General Meeting on 25
August 2022 and at the 2024 AGM.
The authority from shareholders to make
off-market purchases of ordinary shares
from HMT (or its nominee) under the
terms of the Directed Buyback Contract
was renewed at the 2024 AGM.
The company used this authority to make
an off-market purchase of 392 million
ordinary shares (nominal value \u00a3423
million) in the company from HMT on 31
May 2024, at a price of 316.2 pence per
ordinary share for the total consideration
of \u00a31,241 million, representing 4.50% of
the company\u2019s issued ordinary share
capital. The company cancelled 222
million of the purchased ordinary shares
and transferred the remaining 170 million
ordinary shares to treasury.
On 11 November 2024, the company
made a further off-market purchase of
263 million ordinary shares (nominal
value \u00a3283 million) in the company from
HMT, at a price of 380.8 pence per
ordinary share for the total consideration
of \u00a31 billion, representing 3.16% of the
company\u2019s issued ordinary share capital.
The company cancelled all of purchased
ordinary shares.
Shareholders will be asked to renew the authority for the company to make off-market
purchases of its ordinary shares from HMT
(or its nominee) at the AGM in 2025.
Dividends
In 2024 NatWest Group paid an interim dividend of \u00a3498 million, or 6 pence per ordinary
share (2023 \u2013 \u00a3491 million, or 5.5 pence per ordinary share).
The company has announced that the directors have recommended a final dividend of
\u00a31.2 billion, or 15.5 pence per ordinary share
(2023 \u2013 \u00a31.0 billion, or 11.5 pence per
ordinary share). The final dividend recommended by directors is subject to shareholders\u2019
approval at the AGM on 23 April 2025. If approved, payment will be made on 28 April
2025 to shareholders on the register at the close of business on 14 March 2025. The ex-
dividend date will be 13 March 2025.
Cumulative preference shares
At the AGM in 2024, shareholders renewed the authority for the company to make an
off-market purchase of its preference shares. Shareholders will be asked to renew the
authority at the AGM in 2025.
Other equity
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Additional Tier 1 notes
\u00a0 \u00a0 \u00a0
$1.15 billion 8.000% notes callable August 2025
(1)
736
735
735
$1.50 billion 6.000% notes callable
\u00a0 \u00a0 \u00a0
December 2025 - June 2026
(2)
1,220
1,220
1,220
\u00a31.00 billion 5.125% notes callable May - November 2027
(3)
998
998
998
\u00a30.40 billion 4.5% notes callable March 2028
(4)
399
399
399
$0.75 billion 4.6% notes callable June 2031
(5)
539
538
538
$1.00 billion 8.125% notes callable November 2033
(6)
798
-
-
$0.75 billion 7.3% notes callable November 2034
(7)
590
-
-
\u00a0
5,280
3,890
3,890
\n
(1)
Issued in August 2015. In the event of conversion, converted into ordinary shares at a price of $3.314 per share.
(2)
Issued in June 2020. In the event of conversion, converted into ordinary shares at a price of $2.191 (translated at
applicable exchange rate) per share.
(3)
Issued in November 2020. In the event of conversion, converted into ordinary shares at a price of \u00a31.764 per share.
(4)
Issued in March 2021. In the event of conversion, converted into ordinary shares at a price of \u00a31.764 per share.
(5)
Issued in June 2021. In the event of conversion, converted into ordinary shares at a price of $2.462 (translated at
applicable exchange rate) per share.
(6)
Issued in May 2024. In the event of conversion, converted into ordinary shares at a price of $2.205 (translated at
applicable exchange rate) per share.
(7)
Issued in November 2024. In the event of conversion, converted into ordinary shares at a price of $2.226 (translated at
applicable exchange rate) per share.
Paid-in equity
-
comprises equity
instruments issued by the company other
than those legally constituted as shares.
Additional Tier 1 instruments issued by
NatWest Group plc having the legal form
of debt are classified as equity under
IFRS. The coupons on these instruments
are non-cumulative and payable at the
company\u2019s discretion. In the event
NatWest Group\u2019s CET1 ratio falls below
7% any outstanding instruments will be
converted into ordinary shares at a fixed
price.
Capital recognised for regulatory
purposes cannot be redeemed without
Prudential Regulation Authority consent.
This includes ordinary shares, preference
shares and additional Tier 1
instruments.", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00273": { "value": "21 Share capital and other equity
Share capital consists of ordinary shares and preference shares and is measured as the number of shares allotted and fully paid, multiplied by the nominal value of a
share. Other equity includes paid-in equity, merger reserve, capital redemption reserve and own shares held.
For accounting policy information refer to Accounting policy 3.10.
\n \n
Number of shares
2024
2023
2024
2023
Allotted, called up and fully paid
\u00a3m
\u00a3m
000s
000s
Ordinary shares of \u00a31.0769
(1)
8,972
9,683
8,331,145
8,991,737
Cumulative preference shares of \u00a31
0.5
0.5
483.0
483.0
(1)
The nominal value of ordinary shares without rounding is \u00a31.076923076923077 per share.
Movement in allotted, called up and fully paid
\n \n
Number of shares
ordinary shares
\u00a3m
000s
At 31 December 2022
10,539
9,786,024
Share cancellation
(856)
(794,287)
At 31 December 2023
9,683
8,991,737
Share cancellation
(711)
(660,592)
At 31 December 2024
8,972
8,331,145
Ordinary shares
There is no authorised share capital under the company\u2019s constitution. At 31 December
2024, the directors had authority granted at the 2024 Annual General Meeting (AGM) to
issue up to \u00a3472 million nominal of ordinary shares other than by pre-emption to existing
shareholders.
On-market purchases
At the AGM in 2023, shareholders renewed the authority for the company to make
market purchases of up to 967 million ordinary shares. The
directors used the authority
obtained at the 2023 AGM (2023 Authority) to carry out share buyback programmes of
up to \u00a3500 million (2023 Programme) and \u00a3300 million (2024 Programme).
The maximum number of ordinary shares that could be purchased under the 2023
Programme was 920 million (reflecting the impact on the 2023 Authority of the reduction
in issued share capital following the off-market buyback announced on 22 May 2023).
The maximum number of Ordinary Shares that could be purchased under the 2024
Programme was 697 million (reflecting the impact on the 2023 Authority of the reduction
in issued share capital following the off-market buyback announced on 22 May 2023 and
further reduced by the number of shares purchased to 19 February 2024 under the
2023 Programme).
The 2023 Programme started on 31 July
2023 and ended on 22 March 2024. 228
million ordinary shares (nominal value
\u00a3245 million) were purchased by the
company under the Programme at a
volume weighted average price of
217.1788 pence per Ordinary Share for a
total consideration of \u00a3495 million. All of
the purchased ordinary shares were
cancelled, representing 2.52% of the
company\u2019s issued ordinary share capital.
The 2024 Programme started on 19
February 2024 and ended on 24 July
2024. 104 million ordinary shares
(nominal value \u00a3113 million) were
purchased by the company under the
Programme at a volume weighted
average price of 287.1225 pence per
ordinary share for a total consideration of
\u00a3300 million. All of the purchased
ordinary shares were cancelled,
representing 1.19% of the company\u2019s
issued ordinary share capital.
Shareholders will be asked to renew the
authority for the company to make
market purchases of ordinary shares at
the AGM in 2025.
Off-market purchases
A Directed Buyback Contract between
the Company and HMT was approved by
the shareholders of the Company at a
General Meeting on 6 February 2019.
Amendments to the Directed Buyback
Contract were approved by the
shareholders at a General Meeting on 25
August 2022 and at the 2024 AGM.
The authority from shareholders to make
off-market purchases of ordinary shares
from HMT (or its nominee) under the
terms of the Directed Buyback Contract
was renewed at the 2024 AGM.
The company used this authority to make
an off-market purchase of 392 million
ordinary shares (nominal value \u00a3423
million) in the company from HMT on 31
May 2024, at a price of 316.2 pence per
ordinary share for the total consideration
of \u00a31,241 million, representing 4.50% of
the company\u2019s issued ordinary share
capital. The company cancelled 222
million of the purchased ordinary shares
and transferred the remaining 170 million
ordinary shares to treasury.
On 11 November 2024, the company
made a further off-market purchase of
263 million ordinary shares (nominal
value \u00a3283 million) in the company from
HMT, at a price of 380.8 pence per
ordinary share for the total consideration
of \u00a31 billion, representing 3.16% of the
company\u2019s issued ordinary share capital.
The company cancelled all of purchased
ordinary shares.
Shareholders will be asked to renew the authority for the company to make off-market
purchases of its ordinary shares from HMT
(or its nominee) at the AGM in 2025.
Dividends
In 2024 NatWest Group paid an interim dividend of \u00a3498 million, or 6 pence per ordinary
share (2023 \u2013 \u00a3491 million, or 5.5 pence per ordinary share).
The company has announced that the directors have recommended a final dividend of
\u00a31.2 billion, or 15.5 pence per ordinary share
(2023 \u2013 \u00a31.0 billion, or 11.5 pence per
ordinary share). The final dividend recommended by directors is subject to shareholders\u2019
approval at the AGM on 23 April 2025. If approved, payment will be made on 28 April
2025 to shareholders on the register at the close of business on 14 March 2025. The ex-
dividend date will be 13 March 2025.
Cumulative preference shares
At the AGM in 2024, shareholders renewed the authority for the company to make an
off-market purchase of its preference shares. Shareholders will be asked to renew the
authority at the AGM in 2025.
Other equity
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Additional Tier 1 notes
\u00a0 \u00a0 \u00a0
$1.15 billion 8.000% notes callable August 2025
(1)
736
735
735
$1.50 billion 6.000% notes callable
\u00a0 \u00a0 \u00a0
December 2025 - June 2026
(2)
1,220
1,220
1,220
\u00a31.00 billion 5.125% notes callable May - November 2027
(3)
998
998
998
\u00a30.40 billion 4.5% notes callable March 2028
(4)
399
399
399
$0.75 billion 4.6% notes callable June 2031
(5)
539
538
538
$1.00 billion 8.125% notes callable November 2033
(6)
798
-
-
$0.75 billion 7.3% notes callable November 2034
(7)
590
-
-
\u00a0
5,280
3,890
3,890
\n
(1)
Issued in August 2015. In the event of conversion, converted into ordinary shares at a price of $3.314 per share.
(2)
Issued in June 2020. In the event of conversion, converted into ordinary shares at a price of $2.191 (translated at
applicable exchange rate) per share.
(3)
Issued in November 2020. In the event of conversion, converted into ordinary shares at a price of \u00a31.764 per share.
(4)
Issued in March 2021. In the event of conversion, converted into ordinary shares at a price of \u00a31.764 per share.
(5)
Issued in June 2021. In the event of conversion, converted into ordinary shares at a price of $2.462 (translated at
applicable exchange rate) per share.
(6)
Issued in May 2024. In the event of conversion, converted into ordinary shares at a price of $2.205 (translated at
applicable exchange rate) per share.
(7)
Issued in November 2024. In the event of conversion, converted into ordinary shares at a price of $2.226 (translated at
applicable exchange rate) per share.
Paid-in equity
-
comprises equity
instruments issued by the company other
than those legally constituted as shares.
Additional Tier 1 instruments issued by
NatWest Group plc having the legal form
of debt are classified as equity under
IFRS. The coupons on these instruments
are non-cumulative and payable at the
company\u2019s discretion. In the event
NatWest Group\u2019s CET1 ratio falls below
7% any outstanding instruments will be
converted into ordinary shares at a fixed
price.
Capital recognised for regulatory
purposes cannot be redeemed without
Prudential Regulation Authority consent.
This includes ordinary shares, preference
shares and additional Tier 1
instruments.
Merger reserve
-
the merger reserve
comprises the premium on shares issued
to acquire NatWest Bank Plc less goodwill
amortisation charged under previous
GAAP.
Capital redemption reserve -
under UK
companies legislation, when shares are
redeemed or purchased wholly or partly
out of the company's profits, the amount
by which the company's issued share
capital is diminished must be transferred
to the capital redemption reserve. The
capital maintenance provisions of UK
companies legislation apply to the capital
redemption reserve as if it were part of
the company\u2019s paid up share capital. The
nominal value of the shares bought back
from HMT in March 2023 and via the
Programme during 2023 have been
transferred to the Capital redemption
reserve.
Own shares held
-
at 31 December
2024, 11 million ordinary shares of
\u00a31.0769 each of the company (2023 - 12
million) were held by employee share
trusts in respect of share awards and
options granted to employees.
During 2024, the employee share trusts
purchased no ordinary shares and
delivered 1 million ordinary shares in
satisfaction of the exercise of options and
the vesting of share awards under the
employee share plans. The company
retains the flexibility to use newly issued
shares, shares purchased by the
NatWest Group Employee Share
Ownership Trust and any available
treasury shares to satisfy obligations
under its employee share plans.
The company does not use performance
conditions or targets based on earnings
per share (EPS), total shareholder return
(TSR), and net asset value (NAV) in
connection with its employee share plans.
As part of the shares bought back from
HMT in May 2024, the company
transferred 170 million ordinary shares to
own shares held. The company has used
a total of 80 million treasury shares in
2024 to satisfy the exercise of options
and the vesting of share awards under
the employee share plans. The balance of
ordinary shares held in treasury as at 31
December 2024 was 277 million.
NatWest Group plc optimises capital
efficiency by maintaining reserves in
subsidiaries, including regulated entities.
Certain preference shares and
subordinated debt are also included
within regulatory capital. The remittance
of reserves to the company or the
redemption of shares or subordinated
capital by regulated entities may be
subject to maintaining the capital
resources required by the relevant
regulator.
UK law prescribes that only the reserves
of the company are taken into account
for the purpose of making distributions
and in determining permissible
applications of the share premium
account.", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00275": { "value": "1200000000.0", "decimals": -8, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwners", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00276": { "value": "0.155", "decimals": 3, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersPerShare", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP/xbrli:shares" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00307": { "value": "Own shares held
-
at 31 December
2024, 11 million ordinary shares of
\u00a31.0769 each of the company (2023 - 12
million) were held by employee share
trusts in respect of share awards and
options granted to employees.
During 2024, the employee share trusts
purchased no ordinary shares and
delivered 1 million ordinary shares in
satisfaction of the exercise of options and
the vesting of share awards under the
employee share plans. The company
retains the flexibility to use newly issued
shares, shares purchased by the
NatWest Group Employee Share
Ownership Trust and any available
treasury shares to satisfy obligations
under its employee share plans.
The company does not use performance
conditions or targets based on earnings
per share (EPS), total shareholder return
(TSR), and net asset value (NAV) in
connection with its employee share plans.
As part of the shares bought back from
HMT in May 2024, the company
transferred 170 million ordinary shares to
own shares held. The company has used
a total of 80 million treasury shares in
2024 to satisfy the exercise of options
and the vesting of share awards under
the employee share plans. The balance of
ordinary shares held in treasury as at 31
December 2024 was 277 million.
NatWest Group plc optimises capital
efficiency by maintaining reserves in
subsidiaries, including regulated entities.
Certain preference shares and
subordinated debt are also included
within regulatory capital. The remittance
of reserves to the company or the
redemption of shares or subordinated
capital by regulated entities may be
subject to maintaining the capital
resources required by the relevant
regulator.
UK law prescribes that only the reserves
of the company are taken into account
for the purpose of making distributions
and in determining permissible
applications of the share premium
account.", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00272": { "value": "22 Structured entities
A structured entity (SE) is an entity that has been designed such that voting or similar rights are not the dominant factor in deciding who controls the entity, for
example, when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements. SEs are usually
established for a specific, limited purpose. They do not carry out a business or trade and typically have no employees.
Securitisations
In a securitisation, assets, or interests in a
pool of assets, are transferred, or the
credit risk is transferred via a derivative
or financial guarantee to a SE which then
issues liabilities to third party investors.
NatWest Group\u2019s involvement in client
securitisations takes a number of forms.
It may provide secured finance to, or
purchase asset-backed notes from, client
sponsored SEs secured on assets
transferred by the client entity; purchase
asset backed securities issued by client
sponsored SEs in the primary or
secondary markets; or provide liquidity
facilities to client sponsored SEs. In
addition, NatWest Group arranges or
acts as lead manager or placement
agent in client primary markets
securitisations. NatWest Group provides
portfolio structured derivative hedging
solutions to clients. NatWest Group
undertakes own-asset securitisations to
transfer the credit risk on portfolios of
financial assets.
Other credit risk transfer
securitisations
NatWest Group transfers credit risk on
originated loans and mortgages without
the transfer of assets to a SE. As part of
this, NatWest Group enters into credit
derivative and financial guarantee
contracts with consolidated SEs. At 31
December 2024, debt securities in issue
by such SEs (and held by third parties)
were \u00a31,175 million (2023 - \u00a3863 million).
The associated loans and mortgages at
31 December 2024 were \u00a313,226 million
(2023 - \u00a32,687 million). At 31 December,
ECL in relation to non-defaulted assets
was reduced by \u00a343 million (2023 - \u00a311
million) as a result of financial guarantee
contracts with consolidated SEs.
Covered debt programme
Group companies have assigned loans to
customers and debt investments to
bankruptcy remote limited liability
partnerships to provide security for issues
of debt securities. NatWest Group retains
all of the risks and rewards of these
assets and continues to recognise them.
The partnerships are consolidated by
NatWest Group and the related covered
bonds included within other financial
liabilities. At 31 December 2024, \u00a39,668
million (2023 - \u00a311,067 million) of loans to
customers provided security for debt
securities in issue and other borrowing of
\u00a32,305 million (2023 - \u00a33,619 million).
Lending of own issued securities
NatWest Group has issued, retained, and
lent debt securities under securities
lending arrangements. Under standard
terms in the UK and US markets, the
recipient has an unrestricted right to sell
or repledge collateral, subject to
returning equivalent securities on
maturity of the transaction.
NatWest
Group retains all of the risks and rewards
of own issued liabilities lent under such
arrangements and does not recognise
them. At 31 December 2024, \u00a34,715
million (2023 - \u00a34,062 million) of secured
own issued liabilities have been retained
and lent under securities lending
arrangements. At 31 December 2024,
\u00a34,878 million (2023 - \u00a34,168 million) of
loans and other debt instruments
provided security for secured own issued
liabilities that have been retained and lent
under securities lending arrangements.
Unconsolidated structured entities
The term \u2018unconsolidated structured entities\u2019 refers to structured entities not controlled
by NatWest Group, and which are established either by NatWest Group or a third party.
An interest in a structured entity is any form of contractual or non-contractual
involvement which creates variability in returns for NatWest Group arising from the
performance of the entity. Such interests include holdings of debt or equity securities,
derivatives that transfer financial risks from the entity to NatWest Group, provision of
lending and loan commitments, financial guarantees and investment management
agreements. NatWest Group enters into transactions with unconsolidated structured
entities in the normal course of business to facilitate customer transactions, to provide
risk management services and for specific investment opportunities. Structured entities
may take the form of funds, trusts, partnerships, securitisation vehicles, and private
investment companies. NatWest Group considers itself to be the sponsor of a structured
entity where it is primarily involved in the set up and design of the entity and where
NatWest Group transfers assets to the entity, markets products associated with the
entity in its own name, and/or provides guarantees in relation to the performance of the
entity. The nature and extent of NatWest Group\u2019s interests in structured entities is
summarised in the following table:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
Asset-backed
Investment
\u00a0
Asset-backed
Investment
\u00a0
\u00a0
securitisation
funds
\u00a0
securitisation
funds
\u00a0
\u00a0
vehicles
and other
Total
vehicles
and other
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Trading assets
252
216
468
303
311
614
Derivatives
94
-
94
134
-
134
Loans to customers
5,399
1,601
7,000
2,701
999
3,700
Other financial assets
15,744
923
16,667
13,096
1,062
14,158
Total
21,489
2,740
24,229
16,234
2,372
18,606
Liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Derivatives
153
8
161
213
17
230
Total
153
8
161
213
17
230
Off balance sheet
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Liquidity facilities/loan
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
commitments
2,134
457
2,591
1,873
396
2,269
Guarantees
-
104
104
-
127
127
Total
2,134
561
2,695
1,873
523
2,396
Maximum exposure
23,470
3,293
26,763
17,894
2,878
20,772
\n32 Related parties
A related party is a person or entity that is related to the entity that is preparing its financial statements. This includes subsidiaries, associates, joint ventures, post-
employment benefits plans, Key management personnel and their close family members and entities controlled by them. Transactions between an entity and any
related party are disclosed in the financial statements in accordance with both accounting standards and relevant listing rules to ensure readers are aware of how
financial statements may be affected by these transactions.
UK Government
The UK Government\u2019s shareholding in NatWest Group plc is managed by UK
Government Investments Limited, a company wholly owned by the UK Government. At
31 December 2024 HM Treasury\u2019s holding in NatWest Group plc\u2019s ordinary shares was
9.99% (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.
NatWest Group enters into transactions with many of these bodies. Transactions include
the payment of: taxes \u2013 principally UK corporation tax (Note 7) and value added tax;
national insurance contributions; local authority rates; and regulatory fees and levies
(including the UK bank levy Note 3) and FSCS levy (Note 25) - together with banking
transactions such as loans and deposits undertaken in the normal course of banker-
customer relationships.
Bank of England facilities
NatWest Group may participate in a number of schemes operated by the Bank of
England in the normal course of business.
In March 2024 Bank of England Levy replaced the Cash Ratio Deposit scheme. Members
of NatWest Group that are UK authorised institutions are required to pay the levy having
eligible liabilities greater than \u00a3600 million. They also have access to Bank of England
reserve accounts: sterling current accounts that earn interest at the Bank of England
Base rate.
NatWest Group provides guarantees for certain subsidiaries, liabilities to the Bank of
England.
Other Related Parties
In accordance with IAS 24, transactions or balances between NatWest Group entities
that have been eliminated on consolidation are not reported.
The primary financial statements of the parent company include transactions and
balances with its subsidiaries which have been further disclosed in the relevant notes.
Associates, joint ventures (JVs) and equity investments
In their roles as providers of finance, NatWest Group companies provide development
and other types of capital support to businesses. These investments are made in the
normal course of business. To further strategic partnerships, NatWest Group may seek
to invest in third parties or allow third parties to hold a minority interest in a subsidiary of
NatWest Group. We disclose as related parties for associates and joint ventures and
where equity interest are over 10%. Ongoing business transactions with these entities
are on normal commercial terms.
Amounts included in the NatWest Group financial statements, in aggregate, by category
of related party are as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Associates and joint
Equity
\u00a0
\u00a0
ventures
shares (1)
Total
31 December 2024
\u00a3m
\u00a3m
\u00a3m
Investments
690
122
812
Loans to customers - amortised cost
-
4
4
Customer deposits
1
1
2
Other comprehensive income
-
(22)
(22)
Other operating income
19
-
19
31 December 2023
\u00a0\u00a0\u00a0
Investments
668
145
813
Loans to customers - amortised cost
-
13
13
Customer deposits
2
10
12
Other comprehensive income
-
(8)
(8)
Other operating income
(11)
-
(11)
\n
(1)
Represents investments in entities where ownership is more than 10%
Post employment benefits
NatWest Group recharges NatWest Group Pension Fund with the cost of pension
management services incurred by it. NatWest Group Pension Fund holds bank accounts
held with the NatWest Group plc. At 31 December 2024 these balances amounted to
\u00a343.2 million (2023 - \u00a336.2 million).
NatWest Group Pension fund also holds certain interest rate swaps, inflation swaps,
credit derivatives, cross currency swaps and forward exchange rate agreements where
subsidiaries of NatWest Group act as counterparties. These transactions are on
commercial terms and carried out on an arms-length basis.
During February 2023, NatWest Group entered into an agreement to establish a new
legal structure to hold assets, consolidated on NatWest Group\u2019s balance sheet, to meet
potential future contributions required by the Main section of the Group\u2019 Pension Fund.
This transaction required transfer of \u00a3471 million to the Reservoir Trust after the final
dividend for 2022 approved by shareholders. This transaction does not create a pension
liability with the Main section of the Group Pension Fund. Refer to details in Note 5 and in
Material contracts information on page 428.", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00705": { "value": "22 Structured entities
A structured entity (SE) is an entity that has been designed such that voting or similar rights are not the dominant factor in deciding who controls the entity, for
example, when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements. SEs are usually
established for a specific, limited purpose. They do not carry out a business or trade and typically have no employees.
Securitisations
In a securitisation, assets, or interests in a
pool of assets, are transferred, or the
credit risk is transferred via a derivative
or financial guarantee to a SE which then
issues liabilities to third party investors.
NatWest Group\u2019s involvement in client
securitisations takes a number of forms.
It may provide secured finance to, or
purchase asset-backed notes from, client
sponsored SEs secured on assets
transferred by the client entity; purchase
asset backed securities issued by client
sponsored SEs in the primary or
secondary markets; or provide liquidity
facilities to client sponsored SEs. In
addition, NatWest Group arranges or
acts as lead manager or placement
agent in client primary markets
securitisations. NatWest Group provides
portfolio structured derivative hedging
solutions to clients. NatWest Group
undertakes own-asset securitisations to
transfer the credit risk on portfolios of
financial assets.
Other credit risk transfer
securitisations
NatWest Group transfers credit risk on
originated loans and mortgages without
the transfer of assets to a SE. As part of
this, NatWest Group enters into credit
derivative and financial guarantee
contracts with consolidated SEs. At 31
December 2024, debt securities in issue
by such SEs (and held by third parties)
were \u00a31,175 million (2023 - \u00a3863 million).
The associated loans and mortgages at
31 December 2024 were \u00a313,226 million
(2023 - \u00a32,687 million). At 31 December,
ECL in relation to non-defaulted assets
was reduced by \u00a343 million (2023 - \u00a311
million) as a result of financial guarantee
contracts with consolidated SEs.
Covered debt programme
Group companies have assigned loans to
customers and debt investments to
bankruptcy remote limited liability
partnerships to provide security for issues
of debt securities. NatWest Group retains
all of the risks and rewards of these
assets and continues to recognise them.
The partnerships are consolidated by
NatWest Group and the related covered
bonds included within other financial
liabilities. At 31 December 2024, \u00a39,668
million (2023 - \u00a311,067 million) of loans to
customers provided security for debt
securities in issue and other borrowing of
\u00a32,305 million (2023 - \u00a33,619 million).
Lending of own issued securities
NatWest Group has issued, retained, and
lent debt securities under securities
lending arrangements. Under standard
terms in the UK and US markets, the
recipient has an unrestricted right to sell
or repledge collateral, subject to
returning equivalent securities on
maturity of the transaction.
NatWest
Group retains all of the risks and rewards
of own issued liabilities lent under such
arrangements and does not recognise
them. At 31 December 2024, \u00a34,715
million (2023 - \u00a34,062 million) of secured
own issued liabilities have been retained
and lent under securities lending
arrangements. At 31 December 2024,
\u00a34,878 million (2023 - \u00a34,168 million) of
loans and other debt instruments
provided security for secured own issued
liabilities that have been retained and lent
under securities lending arrangements.
Unconsolidated structured entities
The term \u2018unconsolidated structured entities\u2019 refers to structured entities not controlled
by NatWest Group, and which are established either by NatWest Group or a third party.
An interest in a structured entity is any form of contractual or non-contractual
involvement which creates variability in returns for NatWest Group arising from the
performance of the entity. Such interests include holdings of debt or equity securities,
derivatives that transfer financial risks from the entity to NatWest Group, provision of
lending and loan commitments, financial guarantees and investment management
agreements. NatWest Group enters into transactions with unconsolidated structured
entities in the normal course of business to facilitate customer transactions, to provide
risk management services and for specific investment opportunities. Structured entities
may take the form of funds, trusts, partnerships, securitisation vehicles, and private
investment companies. NatWest Group considers itself to be the sponsor of a structured
entity where it is primarily involved in the set up and design of the entity and where
NatWest Group transfers assets to the entity, markets products associated with the
entity in its own name, and/or provides guarantees in relation to the performance of the
entity. The nature and extent of NatWest Group\u2019s interests in structured entities is
summarised in the following table:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
Asset-backed
Investment
\u00a0
Asset-backed
Investment
\u00a0
\u00a0
securitisation
funds
\u00a0
securitisation
funds
\u00a0
\u00a0
vehicles
and other
Total
vehicles
and other
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Trading assets
252
216
468
303
311
614
Derivatives
94
-
94
134
-
134
Loans to customers
5,399
1,601
7,000
2,701
999
3,700
Other financial assets
15,744
923
16,667
13,096
1,062
14,158
Total
21,489
2,740
24,229
16,234
2,372
18,606
Liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Derivatives
153
8
161
213
17
230
Total
153
8
161
213
17
230
Off balance sheet
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Liquidity facilities/loan
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
commitments
2,134
457
2,591
1,873
396
2,269
Guarantees
-
104
104
-
127
127
Total
2,134
561
2,695
1,873
523
2,396
Maximum exposure
23,470
3,293
26,763
17,894
2,878
20,772
\nGuarantees
\u2013
NatWest Group gives guarantees on behalf of customers. A financial
guarantee represents an irrevocable undertaking that NatWest Group will meet a
customer's specified obligations to a third party if the customer fails to do so. The
maximum amount that NatWest Group could be required to pay under a guarantee is its
principal amount as disclosed in the table above. NatWest Group expects most
guarantees it provides to expire unused. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialGuaranteesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00308": { "value": "Transfers that do not qualify for derecognition
NatWest Group enters into securities repurchase, lending and total return transactions in
accordance with normal market practice which includes the provision of additional
collateral if necessary. Under standard terms in the UK and US markets, the recipient
has an unrestricted right to sell or repledge collateral, subject to returning equivalent
securities on settlement of the transaction.
Securities sold under repurchase transactions and transactions with the substance of
securities repurchase agreements are not derecognised if NatWest Group retains
substantially all the risks and rewards of ownership. The fair value (and carrying value)
of securities transferred under such transactions included on the balance sheet are set
out below. All of these securities could be sold or repledged by the holder.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
The following assets have failed derecognition
(1)
\u00a3m
\u00a3m
Trading assets
7,708
7,907
Loans to bank - amortised cost
70
10
Loans to customers - amortised cost
45
281
Other financial assets
13,174
8,764
Total
20,997
16,962
\n
(1)
Associated liabilities were \u00a320,394 million (2023 \u2013 \u00a316,522 million).
Assets pledged as collateral
NatWest Group pledges collateral with its counterparties in respect of derivative
liabilities, bank and stock borrowings and other transactions.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Assets pledged against liabilities
\u00a3m
\u00a3m
Trading assets
10,288
10,976
Loans to banks - amortised cost
-
63
Loans to customers - amortised cost
19,030
21,611
Other financial assets
(1)
4,451
6,506
Total
33,769
39,156
\n
(1)
Includes assets pledged for pension derivatives and \u00a3499 million of debt securities under the continuing control of NWB
Plc. This follows the agreement between NWB Plc and the Group Pension Fund to establish a bankruptcy remote
reservoir trust to hold these assets. Refer to Note 5 for additional information.
As part of the covered debt programme \u00a39,668 million of loans to customers and other
debt instruments (2023 \u2013 \u00a311,067 million) have been transferred to bankruptcy remote
limited liability partnerships within the NatWest Group to provide collateral for issuances
of debt securities and other borrowings by the NatWest Group of \u00a32,305 million (2023 \u2013
\u00a33,619 million). Refer to Note 22.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsTransferredDuringPeriodWhichDoNotQualifyForDerecognitionExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00278": { "value": "Assets pledged as collateral
NatWest Group pledges collateral with its counterparties in respect of derivative
liabilities, bank and stock borrowings and other transactions.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Assets pledged against liabilities
\u00a3m
\u00a3m
Trading assets
10,288
10,976
Loans to banks - amortised cost
-
63
Loans to customers - amortised cost
19,030
21,611
Other financial assets
(1)
4,451
6,506
Total
33,769
39,156
\n
(1)
Includes assets pledged for pension derivatives and \u00a3499 million of debt securities under the continuing control of NWB
Plc. This follows the agreement between NWB Plc and the Group Pension Fund to establish a bankruptcy remote
reservoir trust to hold these assets. Refer to Note 5 for additional information.
As part of the covered debt programme \u00a39,668 million of loans to customers and other
debt instruments (2023 \u2013 \u00a311,067 million) have been transferred to bankruptcy remote
limited liability partnerships within the NatWest Group to provide collateral for issuances
of debt securities and other borrowings by the NatWest Group of \u00a32,305 million (2023 \u2013
\u00a33,619 million). Refer to Note 22.", "dimensions": { "concept": "ifrs-full:DisclosureOfCollateralExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00282": { "value": "24 Capital resources
NatWest Group\u2019s regulatory capital is assessed against minimum requirements that are set out under the UK Capital Requirements Regulation to determine the
strength of its capital base. This note shows a reconciliation of shareholders\u2019 equity to regulatory capital.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Shareholders\u2019 equity (excluding non-controlling interests)
\u00a0 \u00a0
Shareholders\u2019 equity
39,350
37,157
Other equity instruments
(5,280)
(3,890)
\u00a0
34,070
33,267
Regulatory adjustments and deductions
\u00a0 \u00a0
Own credit
28
(10)
Defined benefit pension fund adjustment
(147)
(143)
Cash flow hedging reserve
1,443
1,899
Deferred tax assets
(1,084)
(979)
Prudential valuation adjustments
(230)
(279)
Goodwill and other intangible assets
(7,544)
(7,614)
Expected loss less impairment
(27)
-
Foreseeable ordinary dividends
(1,249)
(1,013)
Adjustment for trust assets
(1)
(365)
(365)
Foreseeable charges
-
(525)
Adjustment under IFRS 9 transitional arrangements
33
202
\u00a0
(9,142)
(8,827)
CET1 capital
24,928
24,440
Additional Tier 1 (AT1) capital
\u00a0 \u00a0
Qualifying instruments and related share premium
5,259
3,875
AT1 capital
5,259
3,875
Tier 1 capital
30,187
28,315
Qualifying Tier 2 capital
\u00a0 \u00a0
Qualifying instruments and related share premium
5,918
5,189
Other regulatory adjustments
-
128
Tier 2 capital
5,918
5,317
Total regulatory capital
36,105
33,632
\n
(1)
Prudent deduction in respect of agreement with the pension fund to establish legal structure to remove dividend linked contribution. Refer Notes 5 and 32.
It is NatWest Group policy to maintain a
strong capital base, to expand it as
appropriate and to utilise it efficiently
throughout its activities to optimise the
return to shareholders while maintaining
a prudent relationship between the
capital base and the underlying risks of
the business. In carrying out this policy,
NatWest Group has regard to the
supervisory requirements of the PRA. The
PRA uses capital ratios as a measure of
capital adequacy in the UK banking
sector, comparing a bank's capital
resources with its risk-weighted assets
(the assets and off-balance sheet
exposures are weighted to reflect the
inherent credit and other risks); by
international agreement, the Pillar 1
capital ratios should be not less than 8%
with a Common Equity Tier 1 component
of not less than 4.5%. NatWest Group has
complied with the PRA\u2019s capital
requirements throughout the year.
A number of subsidiaries and sub-groups
within NatWest Group, principally banking
entities, are subject to various individual
regulatory capital requirements in the UK
and overseas. Furthermore, the payment
of dividends by subsidiaries and the ability
of members of NatWest Group to lend
money to other members of NatWest
Group may be subject to restrictions such
as local regulatory or legal requirements,
the availability of reserves and financial
and operating performance.", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00285": { "value": "25 Memorandum items
Contingent liabilities and commitments
NatWest Group provides its customers with a variety of services to support
their businesses, such as guarantees. These are reported as commitments.
Contingent liabilities are possible obligations dependent on a future event or
present obligations which are either not probable or cannot be measured
reliably.
The amounts shown in the table below are intended only to provide an indication of the
volume of business outstanding at 31 December 2024. Although NatWest Group is
exposed to credit risk in the event of a customer\u2019s failure to meet its obligations, the
amounts shown do not, and are not intended to, provide any indication of NatWest
Group's expectation of future losses.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Contingent liabilities and commitments
\u00a0 \u00a0
Guarantees
3,060
2,823
Other contingent liabilities
1,496
1,633
Standby facilities, credit lines and other commitments
135,405
127,424
Total
139,961
131,880
\n
(1)
Updated to reflect the regulatory treatment of revocable commitments.
Banking commitments and contingent obligations, which have been entered into on
behalf of customers and for which there are corresponding obligations from customers,
are not included in assets and liabilities. NatWest Group's maximum exposure to credit
loss, in the event of its obligation crystallising and all counterclaims, collateral or security
proving valueless, is represented by the contractual nominal amount of these
instruments included in the table above. These commitments and contingent obligations
are subject to NatWest Group's normal credit approval processes. Other contingent liabilities
- these include standby letters of credit, supporting customer
debt issues and contingent liabilities relating to customer trading activities such as those
arising from performance and customs bonds, warranties and indemnities. Litigation and regulatory matters
NatWest Group plc and certain members
\n
of NatWest Group are party to various
\n
legal proceedings and are involved in, or
\n
subject to, various regulatory matters,
\n
including as the subject of investigations
\n
and other regulatory and governmental
\n
action (Matters) in the United Kingdom
\n
(UK), the United States (US), the
\n
European Union (EU) and other
\n
jurisdictions.
\n
NatWest Group recognises a provision for
\n
a liability in relation to these Matters
\n
when it is probable that an outflow of
\n
economic benefits will be required to
\n
settle an obligation resulting from past
\n
events, and a reliable estimate can be
\n
made of the amount of the obligation.
\n
In many of the Matters, it is not possible
\n
to determine whether any loss is
\n
probable, or to estimate reliably the
\n
amount of any loss, either as a direct
\n
consequence of the relevant proceedings
\n
and regulatory matters or as a result of
\n
adverse impacts or restrictions on
\n
NatWest Group\u2019s reputation, businesses
\n
and operations. Numerous legal and
\n
factual issues may need to be resolved,
\n
including through potentially lengthy
\n
discovery and document production
\n
exercises and determination of important
\n
factual matters, and by addressing novel
\n
or unsettled legal questions relevant to
\n
the proceedings in question, before the
\n
probability of a liability, if any, arising can
\n
reasonably be estimated in respect of
\n
any Matter. NatWest Group cannot
\n
predict if, how, or when such claims will
\n
be resolved or what the eventual
\n
settlement, damages, fine, penalty or
\n
other relief, if any, may be, particularly
\n
for Matters that are at an early stage in
\n
their development or where claimants
\n
seek substantial or indeterminate
\n
damages.
\n
There are situations where NatWest
\n
Group may pursue an approach that in
\n
some instances leads to a settlement
\n
agreement. This may occur in order to
\n
avoid the expense, management
\n
distraction or reputational implications of
\n
continuing to contest liability, or in order
\n
to take account of the risks inherent in
\n
defending or contesting Matters, even for
\n
those for which NatWest Group believes
\n
it has credible defences and should
\n
prevail on the merits. The uncertainties
\n
inherent in all Matters affect the amount
\n
and timing of any potential economic
\n
outflows for both Matters with respect to
\n
which provisions have been established
\n
and other contingent liabilities in respect
\n
of any such Matter.
\n
It is not practicable to provide an
\n
aggregate estimate of potential liability
\n
for our Matters as a class of contingent
\n
liabilities.
\n
The future economic outflow in respect of
\n
any Matter may ultimately prove to be
\n
substantially greater than, or less than,
\n
the aggregate provision, if any, that
\n
NatWest Group has recognised in respect
\n
of such Matter. Where a reliable estimate
\n
of the economic outflow cannot be
\n
reasonably made, no provision has been
\n
recognised. NatWest Group expects that
\n
in future periods, additional provisions
\n
and economic outflows relating to
\n
Matters that may or may not be
\n
currently known by NatWest Group will
\n
be necessary, in amounts that are
\n
expected to be substantial in some
\n
instances. Refer to Note 20 for
\n
information on material provisions.
\n
Matters which are, or could be, material,
\n
either individually or in aggregate, having
\n
regard to NatWest Group, considered as
\n
a whole, in which NatWest Group is
\n
currently involved are set out below. We
\n
have provided information on the
\n
procedural history of certain Matters,
\n
where we believe appropriate, to aid the
\n
understanding of the Matter.
\n
For a discussion of certain risks
\n
associated with NatWest Group\u2019s
\n
litigation and regulatory matters
\n
(including the Matters), refer to the Risk
\n
Factor relating to legal, regulatory and
\n
governmental actions and investigations
\n
set out on pages 422 to 423.
\n
Litigation
\n
London Interbank Offered Rate (LIBOR)
\n
and other rates litigation
\n
NatWest Group plc and certain other
\n
members of NatWest Group, including
\n
NWM Plc, are defendants in a number of
\n
claims pending in the United States
\n
District Court for the Southern District of
\n
New York (SDNY) with respect to the
\n
setting of USD LIBOR. The complainants
\n
allege that certain members of NatWest
\n
Group and other panel banks violated
\n
various federal laws, including the US
\n
commodities and antitrust laws, and state
\n
statutory and common law, as well as
\n
contracts, by manipulating LIBOR and
\n
prices of LIBOR-based derivatives in
\n
various markets through various means.
\n
The co-ordinated proceeding in the SDNY
\n
relating to USD LIBOR now includes one
\n
remaining class action, which is on behalf
\n
of persons who purchased LIBOR-linked
\n
instruments from defendants and bonds
\n
issued by defendants, as well as several
\n
non-class actions. The defendants in the
\n
co-ordinated proceeding have filed a
\n
summary judgment motion on the issue
\n
of liability, and briefing on that motion
\n
concluded in January 2025.
\n
In March 2024, NatWest Group
\n
companies reached an agreement to
\n
settle the USD LIBOR class action that
\n
asserted claims on behalf of lenders who
\n
made USD LIBOR based loans. The
\n
settlement amount, which was covered in
\n
full by an existing provision, has been
\n
paid and the settlement has now
\n
received final court approval.
\n
The non-class claims filed in the SDNY
\n
include claims that the Federal Deposit
\n
Insurance Corporation (FDIC) is asserting
\n
on behalf of certain failed US banks. In
\n
July 2017, the FDIC, on behalf of 39 of
\n
those failed US banks, commenced
\n
substantially similar claims against
\n
NatWest Group companies and others in
\n
the High Court of Justice of England and
\n
Wales. The action alleges collusion with
\n
regard to the setting of USD LIBOR and
\n
that the defendants breached UK and
\n
European competition law, as well as
\n
asserting common law claims of fraud
\n
under US law. The defendant banks
\n
consented to a request by the FDIC for
\n
discontinuance of the claim in respect of
\n
20 failed US banks, leaving 19 failed US
\n
banks as claimants. The trial is currently
\n
scheduled to commence in Q1 2026.
\n
In addition to the USD LIBOR cases
\n
described above, there is a class action
\n
relating to derivatives allegedly tied to
\n
JPY LIBOR and Euroyen TIBOR, which
\n
was dismissed by the SDNY in relation to
\n
NWM Plc and other NatWest Group
\n
companies in September 2021. That
\n
dismissal is now the subject of an appeal
\n
to the United States Court of Appeals for
\n
the Second Circuit (US Court of Appeals).
\n
Two other IBOR-related class actions
\n
involving NWM Plc, concerning alleged
\n
manipulation of Euribor and Pound
\n
Sterling LIBOR, were previously dismissed
\n
by the SDNY for various reasons. The
\n
plaintiffs\u2019 appeals in those two cases
\n
remain pending.
\n
In August 2020, a complaint was filed in
\n
the United States District Court for the
\n
Northern District of California by several
\n
United States retail borrowers against
\n
the USD ICE LIBOR panel banks and their
\n
affiliates (including NatWest Group plc,
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
NWM Plc, NWMSI and NWB Plc), alleging
\n
(i) that the very process of setting USD
\n
ICE LIBOR amounts to illegal price-fixing;
\n
and (ii) that banks in the United States
\n
have illegally agreed to use LIBOR as a
\n
component of price in variable retail
\n
loans. In September 2022, the district
\n
court dismissed the complaint. In
\n
December 2024, the United States Court
\n
of Appeals for the Ninth Circuit affirmed
\n
the district court\u2019s decision.
\n
NWM Plc is also named as a defendant in
\n
a motion to certify a class action relating
\n
to LIBOR in the Tel Aviv District Court in
\n
Israel. NWM Plc filed a motion for
\n
cancellation of service outside the
\n
jurisdiction, which was granted in July
\n
2020. The claimants appealed that
\n
decision and in November 2020 the
\n
appeal was refused and the claim
\n
dismissed by the Appellate Court. The
\n
claim could in future be recommenced
\n
depending on the outcome of an appeal
\n
to Israel\u2019s Supreme Court in respect of
\n
the dismissal of the substantive case
\n
against banks that had a presence in
\n
Israel.
\n
Foreign exchange litigation
\n
NatWest Group plc, NWM Plc and/or
\n
NWMSI are defendants in several cases
\n
relating to NWM Plc\u2019s foreign exchange
\n
(FX) business.
\n
In May 2019, a cartel class action was
\n
filed in the Federal Court of Australia
\n
against NWM Plc and four other banks
\n
on behalf of persons who bought or sold
\n
currency through FX spots or forwards
\n
between 1 January 2008 and 15 October
\n
2013 with a total transaction value
\n
exceeding AUD 0.5 million. The claimant
\n
has alleged that the banks, including
\n
NWM Plc, contravened Australian
\n
competition law by sharing information,
\n
coordinating conduct, widening spreads
\n
and manipulating FX rates for certain
\n
currency pairs during this period.
\n
NatWest Group plc and NWMSI have
\n
been named in the action as \u2018other cartel
\n
participants\u2019, but are not respondents.
\n
The claim was served in June 2019 and
\n
NWM Plc filed its defence in March 2022.
\n
The court has ordered that potential
\n
class members are required to either opt
\n
out of the proceedings or register to be
\n
included in or benefit from any potential
\n
settlement of the claim. Directions have
\n
been made for the provision of evidence
\n
during 2025 and 2026.
\n
In July and December 2019, two
\n
separate applications seeking opt-out
\n
collective proceedings orders were filed in
\n
the UK Competition Appeal Tribunal
\n
(CAT) against NatWest Group plc, NWM
\n
Plc and other banks. Both applications
\n
were brought on behalf of persons who,
\n
between 18 December 2007 and 31
\n
January 2013, entered into a relevant FX
\n
spot or outright forward transaction in
\n
the European Economic Area with a
\n
relevant financial institution or on an
\n
electronic communications network. In
\n
March 2022, the CAT declined to certify
\n
as collective proceedings either of the
\n
applications, which was appealed by the
\n
applicants and the subject of an
\n
application for judicial review.
\n
In its amended judgment in November
\n
2023, the Court of Appeal allowed the
\n
appeal and decided that the claims
\n
should proceed on an opt-out basis.
\n
Separately, the court determined which
\n
of the two competing applicants can
\n
proceed as class representative, and
\n
dismissed the application for judicial
\n
review of the CAT\u2019s decision. The other
\n
applicant has discontinued its claim and
\n
withdrawn from the proceedings. The
\n
banks sought permission to appeal the
\n
Court of Appeal decision directly to the
\n
UK Supreme Court, which was granted in
\n
April 2024. The appeal is scheduled to be
\n
heard in April 2025.
\n
Two motions to certify FX-related class
\n
actions were filed in the Tel Aviv District
\n
Court in Israel in September and October
\n
2018, and were subsequently
\n
consolidated into one motion. The
\n
consolidated motion to certify, which
\n
names The Royal Bank of Scotland plc
\n
(now NWM Plc) and several other banks
\n
as defendants, was served on NWM Plc
\n
in May 2020. The applicants sought the
\n
court\u2019s permission to amend their
\n
motions to certify the class actions. NWM
\n
Plc filed a motion challenging the
\n
permission granted by the court for the
\n
applicants to serve the consolidated
\n
motion outside the Israeli jurisdiction.
\n
That NWM Plc motion remains pending.
\n
In February 2024, NWM Plc executed an
\n
agreement to settle the claim, subject to
\n
court approval. The settlement amount is
\n
covered in full by an existing provision.
\n
In December 2021, a summons was
\n
served in the Netherlands against
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V. by Stichting FX Claims on behalf of a
\n
number of parties, seeking declarations
\n
from the court concerning liability for
\n
anti-competitive FX market conduct
\n
described in decisions of the European
\n
Commission (EC) of 16 May 2019, along
\n
with unspecified damages. The claimant
\n
amended its claim to also refer to a 2
\n
December 2021 decision by the EC,
\n
which described anti-competitive FX
\n
market conduct. NatWest Group plc,
\n
NWM Plc and other defendants contested
\n
the jurisdiction of the Dutch court. In
\n
March 2023, the district court in
\n
Amsterdam accepted that it has
\n
jurisdiction to hear claims against NWM
\n
N.V. but refused jurisdiction to hear any
\n
claims against the other defendant banks
\n
(including NatWest Group plc and NWM
\n
Plc) brought on behalf of the parties
\n
represented by the claimant that are
\n
domiciled outside of the Netherlands. The
\n
claimant is appealing that decision. The
\n
defendant banks have brought cross-
\n
appeals which seek a ruling that the
\n
Dutch court has no jurisdiction to hear
\n
any claims against the defendant banks
\n
domiciled outside of the Netherlands,
\n
irrespective of whether the claim has
\n
been brought on behalf of a party
\n
represented by the claimant that is
\n
domiciled within or outside of the
\n
Netherlands. The Amsterdam Court of
\n
Appeal has stayed these appeal
\n
proceedings until the Court of Justice of
\n
the European Union has answered
\n
preliminary questions that have been
\n
referred to it in another matter.
\n
In September 2023, a second summons
\n
was served by Stichting FX Claims on
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V., on behalf of a new group of parties.
\n
The claimant seeks declarations from the
\n
district court in Amsterdam concerning
\n
liability for anti-competitive FX market
\n
conduct described in the above
\n
referenced decisions of the EC of 16 May
\n
2019 and 2 December 2021, along with
\n
unspecified damages. NatWest Group plc,
\n
NWM Plc and other defendants are
\n
contesting the Dutch court's jurisdiction.
\n
The district court has stayed the
\n
proceedings pending judgment in the
\n
above-mentioned appeals.
\n
In January 2025, a third summons was
\n
served by Stichting FX Claims on
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V., on behalf of another new group of
\n
parties. The claimant seeks similar
\n
declarations from the district court in
\n
Amsterdam to those being sought in the
\n
above-mentioned claims, along with
\n
unspecified damages.
\n
Certain other foreign exchange
\n
transaction related claims have been or
\n
may be threatened. NatWest Group
\n
cannot predict whether all or any of
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
these claims will be pursued.
\n
Government securities antitrust litigation
\n
Class action antitrust claims commenced
\n
in March 2019 were pending in the SDNY
\n
against NWM Plc, NWMSI and other
\n
banks in respect of Euro-denominated
\n
bonds issued by various European central
\n
banks (European government bonds or
\n
EGBs). The complaint alleged a
\n
conspiracy among dealers of EGBs to
\n
widen the bid-ask spreads they quoted to
\n
customers, thereby increasing the prices
\n
customers paid for the EGBs or
\n
decreasing the prices at which customers
\n
sold EGBs.
\n
In March 2024, NatWest Group
\n
companies reached an agreement to
\n
settle the class action. The settlement
\n
amount, which was covered in full by an
\n
existing provision, has been paid and the
\n
settlement has now received final court
\n
approval.
\n
Swaps antitrust litigation
\n
NWM Plc and other members of NatWest
\n
Group, including NatWest Group plc, as
\n
well as a number of other interest rate
\n
swap dealers, are defendants in several
\n
cases pending in the SDNY alleging
\n
violations of the US antitrust laws in the
\n
market for interest rate swaps. There is a
\n
consolidated class action complaint on
\n
behalf of persons who entered into
\n
interest rate swaps with the defendants,
\n
as well as non-class action claims by
\n
three swap execution facilities
\n
(TeraExchange, Javelin, and trueEx). The
\n
plaintiffs allege that the swap execution
\n
facilities would have successfully
\n
established exchange-like trading of
\n
interest rate swaps if the defendants had
\n
not unlawfully conspired to prevent that
\n
from happening through boycotts and
\n
other means. Discovery in the non-class
\n
action claims is complete. In March 2024,
\n
NatWest Group companies reached an
\n
agreement to settle the class action. The
\n
settlement amount has been paid into
\n
escrow pending final court approval of
\n
the settlement and was covered in full by
\n
an existing provision.
\n
In June 2021, a class action antitrust
\n
complaint was filed against a number of
\n
credit default swap dealers, in New
\n
Mexico federal court on behalf of persons
\n
who, from 2005 onwards, settled credit
\n
default swaps in the United States by
\n
reference to the ISDA credit default swap
\n
auction protocol. The complaint alleges
\n
that the defendants conspired to
\n
manipulate that benchmark through
\n
various means in violation of the antitrust
\n
laws and the Commodity Exchange Act.
\n
The defendants filed a motion to dismiss
\n
the complaint and, in June 2023, such
\n
motion was denied as regards to NWMSI
\n
and other financial institutions, but
\n
granted as regards to NWM Plc on the
\n
ground that the court lacks jurisdiction
\n
over that entity. As a result, the case
\n
entered the discovery phase as against
\n
the non-dismissed defendants. In January
\n
2024, the SDNY issued an order barring
\n
the plaintiffs in the New Mexico case
\n
from pursuing claims based on conduct
\n
occurring before 30 June 2014 on the
\n
ground that such claims were
\n
extinguished by a 2015 settlement
\n
agreement that resolved a prior class
\n
action relating to credit default swaps.
\n
The SDNY\u2019s decision is the subject of a
\n
pending appeal to the US Court of
\n
Appeals.
\n
Odd lot corporate bond trading antitrust
\n
litigation
\n
In July 2024, the US Court of Appeals
\n
vacated the SDNY's October 2021
\n
dismissal of the class action antitrust
\n
complaint alleging that from August 2006
\n
onwards various securities dealers,
\n
including NWMSI, conspired artificially to
\n
widen spreads for odd lots of corporate
\n
bonds bought or sold in the United States
\n
secondary market and to boycott
\n
electronic trading platforms that would
\n
have allegedly promoted pricing
\n
competition in the market for such bonds.
\n
The appellate court held that the district
\n
judge who made the decision should not
\n
have been presiding over the case
\n
because a member of the judge\u2019s family
\n
had owned stock in one of the
\n
defendants while the motion was
\n
pending.
The defendants are now seeking
\n
dismissal by a different district court
\n
judge.
\n
Spoofing litigation
\n
In December 2021, three substantially
\n
similar class actions complaints were filed
\n
in federal court in the United States
\n
against NWM Plc and NWMSI alleging
\n
Commodity Exchange Act and common
\n
law unjust enrichment claims arising from
\n
manipulative trading known as spoofing.
\n
The complaints refer to NWM Plc\u2019s
\n
December 2021 spoofing-related guilty
\n
plea (described below under \u201cUS
\n
investigations relating to fixed-income
\n
securities\u201d) and purport to assert claims
\n
on behalf of those who transacted in US
\n
Treasury securities and futures and
\n
options on US Treasury securities
\n
between 2008 and 2018. In July 2022,
\n
the defendants filed a motion to dismiss
\n
these claims, which have been
\n
consolidated into one matter in the
\n
United States District Court for the
\n
Northern District of Illinois.
\n
Madoff
\n
NWM N.V. was named as a defendant in
\n
two actions filed by the trustee for the
\n
bankrupt estates of Bernard L. Madoff
\n
and Bernard L. Madoff Investment
\n
Securities LLC, in bankruptcy court in
\n
New York, which together seek to
\n
clawback more than US$298 million that
\n
NWM N.V. allegedly received from certain
\n
Madoff feeder funds and certain swap
\n
counterparties. The claims were
\n
previously dismissed, but as a result of an
\n
August 2021 decision by the US Court of
\n
Appeals, they are now proceeding in the
\n
discovery phase in the bankruptcy court,
\n
where they have been consolidated into
\n
one action.
\n
Offshoring VAT assessments
\n
HMRC, as part of an industry-wide
\n
review, issued protective tax
\n
assessments in 2018 against NatWest
\n
Group plc totalling \u00a3143 million relating to
\n
unpaid VAT in respect of the UK
\n
branches of two NatWest Group
\n
companies registered in India for the
\n
period from 1 January 2014 until 31
\n
December 2017 inclusive. NatWest Group
\n
formally requested reconsideration by
\n
HMRC of their assessments, and this
\n
process was completed in November
\n
2020. HMRC upheld their original decision
\n
and, as a result, NatWest Group plc
\n
lodged an appeal with the Tax Tribunal
\n
and an application for judicial review with
\n
the High Court of Justice of England and
\n
Wales, both in December 2020. In order
\n
to lodge the appeal with the Tax
\n
Tribunal, NatWest Group plc was
\n
required to pay amounts totalling \u00a3153
\n
million (including statutory interest) to
\n
HMRC in December 2020 and May 2022.
\n
The appeal and the application for judicial
\n
review have both been stayed pending
\n
further discussion with HMRC in relation
\n
to a separate case involving another
\n
bank.
The amount of \u00a3153 million
\n
continues to be recognised as an asset
\n
that NatWest Group plc expects to
\n
recover. Since 1 January 2018, NatWest
\n
Group plc has paid VAT on intra-group
\n
supplies from the India-registered
\n
NatWest Group companies.
\n
US Anti-Terrorism Act litigation
\n
NWM N.V. and certain other financial
\n
institutions are defendants in several
\n
actions filed by a number of US nationals
\n
(or their estates, survivors, or heirs), most
\n
of whom are or were US military
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
personnel, who were killed or injured in
\n
attacks in Iraq between 2003 and 2011.
\n
NWM Plc is also a defendant in some of
\n
these cases.
\n
According to the plaintiffs\u2019 allegations, the
\n
defendants are liable for damages arising
\n
from the attacks because they allegedly
\n
conspired with and/or aided and abetted
\n
Iran and certain Iranian banks to assist
\n
Iran in transferring money to Hezbollah
\n
and the Iraqi terror cells that committed
\n
the attacks, in violation of the US Anti-
\n
Terrorism Act, by agreeing to engage in
\n
\u2018stripping\u2019 of transactions initiated by the
\n
Iranian banks so that the Iranian nexus to
\n
the transactions would not be detected.
\n
The first of these actions, alleging
\n
conspiracy claims but not aiding and
\n
abetting claims, was filed in the United
\n
States District Court for the Eastern
\n
District of New York in November 2014.
\n
In September 2019, the district court
\n
dismissed the case, finding that the
\n
claims were deficient for several reasons,
\n
including lack of sufficient allegations as
\n
to the alleged conspiracy and causation.
\n
In January 2023, the US Court of Appeals
\n
affirmed the district court\u2019s dismissal of
\n
this case. The plaintiffs have now filed a
\n
motion in the district court to re-open the
\n
case to assert aiding and abetting claims
\n
that they previously did not assert, which
\n
the defendants are opposing. Another
\n
action, filed in the SDNY in 2017, which
\n
asserted both conspiracy and aiding and
\n
abetting claims, was dismissed by the
\n
SDNY in March 2019 on similar grounds
\n
as the first case, but remains subject to
\n
appeal to the US Court of Appeals.
\n
Other follow-on actions that are
\n
substantially similar to those described
\n
above are pending in the same courts.
\n
1MDB litigation
\n
A Malaysian court claim was served in
\n
Switzerland in November 2022 by 1MDB,
\n
a sovereign wealth fund, in which Coutts
\n
& Co Ltd was named, along with six
\n
others, as a defendant in respect of
\n
losses allegedly incurred by 1MDB. It is
\n
claimed that Coutts & Co Ltd is liable as
\n
a constructive trustee for having
\n
dishonestly assisted the directors of
\n
1MDB in the breach of their fiduciary
\n
duties by failing (amongst other alleged
\n
claims) to undertake due diligence in
\n
relation to a customer of Coutts & Co
\n
Ltd, through which funds totalling c.US$1
\n
billion were received and paid out
\n
between 2009 and 2011. 1MDB seeks
\n
the return of that amount plus interest.
\n
Coutts & Co Ltd filed an application in
\n
January 2023 challenging the validity of
\n
service and the Malaysian court\u2019s
\n
jurisdiction to hear the claim, and a
\n
hearing took place in February 2024. In
\n
March 2024, the court granted that
\n
application. 1MDB has appealed that
\n
decision and a prior decision by the court
\n
not to allow them to discontinue their
\n
claim. Both appeals are scheduled to be
\n
heard in November 2025.
\n
Coutts & Co Ltd (a subsidiary of RBS
\n
Netherlands Holdings B.V., which in turn
\n
is a subsidiary of NWM Plc) is a company
\n
registered in Switzerland and is in wind-
\n
down following the announced sale of its
\n
business assets in 2015.
\n
Regulatory matters (including
\n
investigations and customer redress
\n
programmes
)
\n
NatWest Group\u2019s businesses and financial
\n
condition can be affected by the actions
\n
of various governmental and regulatory
\n
authorities in the UK, the US, the EU and
\n
elsewhere. NatWest Group has engaged,
\n
and will continue to engage, in
\n
discussions with relevant governmental
\n
and regulatory authorities, including in
\n
the UK, the US, the EU and elsewhere,
\n
on an ongoing and regular basis, and in
\n
response to informal and formal inquiries
\n
or investigations, regarding operational,
\n
systems and control evaluations and
\n
issues including those related to
\n
compliance with applicable laws and
\n
regulations, including consumer
\n
protection, investment advice, business
\n
conduct, competition/anti-trust, VAT
\n
recovery, anti-bribery, anti-money
\n
laundering and sanctions regimes.
\n
NatWest Group expects government and
\n
regulatory intervention in financial
\n
services to be high for the foreseeable
\n
future, including increased scrutiny from
\n
competition and other regulators in the
\n
retail and SME business sectors.
\n
Any matters discussed or identified
\n
during such discussions and inquiries may
\n
result in, among other things, further
\n
inquiry or investigation, other action
\n
being taken by governmental and
\n
regulatory authorities, increased costs
\n
being incurred by NatWest Group,
\n
remediation of systems and controls,
\n
public or private censure, restriction of
\n
NatWest Group\u2019s business activities
\n
and/or fines. Any of the events or
\n
circumstances mentioned in this
\n
paragraph or below could have a
\n
material adverse effect on NatWest
\n
Group, its business, authorisations and
\n
licences, reputation, results of operations
\n
or the price of securities issued by it, or
\n
lead to material additional provisions
\n
being taken.
\n
NatWest Group is co-operating fully with
\n
the matters described below.
\n
US investigations relating to fixed-
\n
income securities
\n
In December 2021, NWM Plc pled guilty
\n
in the United States District Court for the
\n
District of Connecticut to one count of
\n
wire fraud and one count of securities
\n
fraud in connection with historical
\n
spoofing conduct by former employees in
\n
US Treasuries markets between January
\n
2008 and May 2014 and, separately,
\n
during approximately three months in
\n
2018. The 2018 trading occurred during
\n
the term of a non-prosecution agreement
\n
(NPA) between NWMSI and the United
\n
States Attorney's Office for the District of
\n
Connecticut (USAO CT), under which
\n
non-prosecution was conditioned on
\n
NWMSI and affiliated companies not
\n
engaging in criminal conduct during the
\n
term of the NPA. The relevant trading in
\n
2018 was conducted by two NWM
\n
traders in Singapore and breached that
\n
NPA. The plea agreement reached with
\n
the US Department of Justice (DOJ) and
\n
the USAO CT resolved both the spoofing
\n
conduct and the breach of the NPA.
\n
As required by the resolution and
\n
sentence imposed by the court, NWM Plc
\n
is subject to a probationary period, which
\n
was extended to end concurrently with
\n
the conclusion of the independent
\n
monitorship, which is also required under
\n
the plea agreement. The term of the
\n
independent monitorship and the ongoing
\n
implementation of recommendations
\n
made by it is currently scheduled to
\n
conclude in December 2025 but may be
\n
extended by agreement with the DOJ. In
\n
addition, NWM Plc has committed to
\n
compliance programme reviews and
\n
improvements and agreed to reporting
\n
and co-operation obligations.
\n
In the event that NWM Plc does not meet
\n
its obligations to the DOJ, this may lead
\n
to adverse consequences such as
\n
increased costs from any extension of
\n
monitorship and/or the period of the
\n
probation, findings that NWM Plc violated
\n
its probation term, and possible re-
\n
sentencing, amongst other
\n
consequences. Other material adverse
\n
collateral consequences may occur as a
\n
result of this matter, as further described
\n
in the Risk Factor relating to legal,
\n
regulatory and governmental actions and
\n
investigations set out on pages 422 to
\n
423.
RBSI Ltd reliance regime and referral to
enforcement
In January 2023, the Jersey Financial
Services Commission (JFSC) notified RBSI
Ltd that it had been referred to its
Enforcement Division in relation to RBSI
Ltd\u2019s operation of the reliance regime.
The reliance regime is specific to certain
Crown Dependencies and enables RBSI
Ltd to rely on regulated third parties for
specific due diligence information. RBSI
Ltd has provided information to the JFSC
at its request.
Investment advice review
In October 2019, the FCA notified
NatWest Group of its intention to appoint
a Skilled Person under section 166 of the
Financial Services and Markets Act 2000
to conduct a review of whether NatWest
Group\u2019s 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\u2019s review has concluded
and, after discussion with the FCA,
NatWest Group is undertaking additional
review / remediation work.
Review and investigation of treatment of
tracker mortgage customers in Ulster
Bank Ireland DAC
In December 2015, correspondence was
received from the Central Bank of Ireland
setting out an industry examination
framework in respect of the sale of
tracker mortgages from approximately
2001 until the end of 2015.
The redress and compensation process
has now largely concluded, although a
small number of cases remain
outstanding relating to uncontactable
customers.
UBIDAC customers have lodged tracker
mortgage complaints with the Financial
Services and Pensions Ombudsman
(FSPO). UBIDAC challenged three FSPO
adjudications in the Irish High Court. In
June 2023, the High Court found in
favour of the FSPO in all matters.
UBIDAC appealed that decision to the
Court of Appeal. In September 2024, the
Court of Appeal allowed UBIDAC\u2019s
appeal and set aside certain findings of
the FSPO. The Court of Appeal directed
one aspect of the FSPO decisions to be
remitted to the FSPO for its consideration
following an oral hearing, and UBIDAC is
following up with the FSPO in that
regard.
Other customer remediation in Ulster
Bank Ireland DAC
UBIDAC identified other legacy issues
leading to the establishment of
remediation requirements and progress is
ongoing to conclude activities.", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00284": { "value": "25 Memorandum items
Contingent liabilities and commitments
NatWest Group provides its customers with a variety of services to support
their businesses, such as guarantees. These are reported as commitments.
Contingent liabilities are possible obligations dependent on a future event or
present obligations which are either not probable or cannot be measured
reliably.
The amounts shown in the table below are intended only to provide an indication of the
volume of business outstanding at 31 December 2024. Although NatWest Group is
exposed to credit risk in the event of a customer\u2019s failure to meet its obligations, the
amounts shown do not, and are not intended to, provide any indication of NatWest
Group's expectation of future losses.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Contingent liabilities and commitments
\u00a0 \u00a0
Guarantees
3,060
2,823
Other contingent liabilities
1,496
1,633
Standby facilities, credit lines and other commitments
135,405
127,424
Total
139,961
131,880
\n
(1)
Updated to reflect the regulatory treatment of revocable commitments.
Banking commitments and contingent obligations, which have been entered into on
behalf of customers and for which there are corresponding obligations from customers,
are not included in assets and liabilities. NatWest Group's maximum exposure to credit
loss, in the event of its obligation crystallising and all counterclaims, collateral or security
proving valueless, is represented by the contractual nominal amount of these
instruments included in the table above. These commitments and contingent obligations
are subject to NatWest Group's normal credit approval processes. Standby facilities and credit lines
- under a loan commitment, NatWest Group agrees to
make funds available to a customer in the future. Loan commitments, which are usually
for a specified term, may be unconditionally cancellable or may persist, provided all
conditions in the loan facility are satisfied or waived. Commitments to lend include
commercial standby facilities and credit lines, liquidity facilities to commercial paper
conduits and unutilised overdraft facilities.
Other commitments
- these include documentary credits, which are commercial letters
of credit providing for payment by NatWest Group to a named beneficiary against
presentation of specified documents, forward asset purchases, forward deposits placed
and undrawn note issuance and revolving underwriting facilities, and other short-term
trade related transactions.", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00283": { "value": "25 Memorandum items
Contingent liabilities and commitments
NatWest Group provides its customers with a variety of services to support
their businesses, such as guarantees. These are reported as commitments.
Contingent liabilities are possible obligations dependent on a future event or
present obligations which are either not probable or cannot be measured
reliably.
The amounts shown in the table below are intended only to provide an indication of the
volume of business outstanding at 31 December 2024. Although NatWest Group is
exposed to credit risk in the event of a customer\u2019s failure to meet its obligations, the
amounts shown do not, and are not intended to, provide any indication of NatWest
Group's expectation of future losses.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Contingent liabilities and commitments
\u00a0 \u00a0
Guarantees
3,060
2,823
Other contingent liabilities
1,496
1,633
Standby facilities, credit lines and other commitments
135,405
127,424
Total
139,961
131,880
\n
(1)
Updated to reflect the regulatory treatment of revocable commitments.
Banking commitments and contingent obligations, which have been entered into on
behalf of customers and for which there are corresponding obligations from customers,
are not included in assets and liabilities. NatWest Group's maximum exposure to credit
loss, in the event of its obligation crystallising and all counterclaims, collateral or security
proving valueless, is represented by the contractual nominal amount of these
instruments included in the table above. These commitments and contingent obligations
are subject to NatWest Group's normal credit approval processes.
Guarantees
\u2013
NatWest Group gives guarantees on behalf of customers. A financial
guarantee represents an irrevocable undertaking that NatWest Group will meet a
customer's specified obligations to a third party if the customer fails to do so. The
maximum amount that NatWest Group could be required to pay under a guarantee is its
principal amount as disclosed in the table above. NatWest Group expects most
guarantees it provides to expire unused.
Other contingent liabilities
- these include standby letters of credit, supporting customer
debt issues and contingent liabilities relating to customer trading activities such as those
arising from performance and customs bonds, warranties and indemnities.
Standby facilities and credit lines
- under a loan commitment, NatWest Group agrees to
make funds available to a customer in the future. Loan commitments, which are usually
for a specified term, may be unconditionally cancellable or may persist, provided all
conditions in the loan facility are satisfied or waived. Commitments to lend include
commercial standby facilities and credit lines, liquidity facilities to commercial paper
conduits and unutilised overdraft facilities.
Other commitments
- these include documentary credits, which are commercial letters
of credit providing for payment by NatWest Group to a named beneficiary against
presentation of specified documents, forward asset purchases, forward deposits placed
and undrawn note issuance and revolving underwriting facilities, and other short-term
trade related transactions.
Contractual obligations for future expenditure not provided for in the accounts
The following table shows contractual obligations for future expenditure not provided for
in the accounts at the year end.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3m
\u00a3m
Capital expenditure on property, plant and equipment
14
38
Contracts to purchase goods or services
(1)
1,160
1,121
\u00a0
1,174
1,159
\n
(1)
Of which due within 1 year: \u00a3356 million (2023 \u2013 \u00a3379 million).
Trustee and other fiduciary activities
In its capacity as trustee or other fiduciary role, NatWest Group may hold or place
assets on behalf of individuals, trusts, companies, pension schemes and others. The
assets and their income are not included in NatWest Group's financial statements.
NatWest Group earned fee income of \u00a3302 million (2023 - \u00a3264 million; 2022 - \u00a3266
million) from these activities.
The Financial Services Compensation Scheme
The Financial Services Compensation Scheme (FSCS), the UK's statutory fund of last
resort for customers of authorised financial services firms, pays compensation if a firm is
unable to meet its obligations. The FSCS funds compensation for customers by raising
management expenses levies and compensation levies on the industry. In relation to
protected deposits, each deposit-taking institution contributes towards these levies in
proportion to their share of total protected deposits on 31 December of the year
preceding the scheme year (which runs from 1 April to 31 March), subject to annual
maxima set by the Prudential Regulation Authority. In addition, the FSCS has the power
to raise levies on a firm that has ceased to participate in the scheme and is in the
process of ceasing to be authorised for the costs that it would have been liable to pay
had the FSCS made a levy in the financial year it ceased to be a participant in the
scheme.
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Litigation and regulatory matters
\n
NatWest Group plc and certain members
\n
of NatWest Group are party to various
\n
legal proceedings and are involved in, or
\n
subject to, various regulatory matters,
\n
including as the subject of investigations
\n
and other regulatory and governmental
\n
action (Matters) in the United Kingdom
\n
(UK), the United States (US), the
\n
European Union (EU) and other
\n
jurisdictions.
\n
NatWest Group recognises a provision for
\n
a liability in relation to these Matters
\n
when it is probable that an outflow of
\n
economic benefits will be required to
\n
settle an obligation resulting from past
\n
events, and a reliable estimate can be
\n
made of the amount of the obligation.
\n
In many of the Matters, it is not possible
\n
to determine whether any loss is
\n
probable, or to estimate reliably the
\n
amount of any loss, either as a direct
\n
consequence of the relevant proceedings
\n
and regulatory matters or as a result of
\n
adverse impacts or restrictions on
\n
NatWest Group\u2019s reputation, businesses
\n
and operations. Numerous legal and
\n
factual issues may need to be resolved,
\n
including through potentially lengthy
\n
discovery and document production
\n
exercises and determination of important
\n
factual matters, and by addressing novel
\n
or unsettled legal questions relevant to
\n
the proceedings in question, before the
\n
probability of a liability, if any, arising can
\n
reasonably be estimated in respect of
\n
any Matter. NatWest Group cannot
\n
predict if, how, or when such claims will
\n
be resolved or what the eventual
\n
settlement, damages, fine, penalty or
\n
other relief, if any, may be, particularly
\n
for Matters that are at an early stage in
\n
their development or where claimants
\n
seek substantial or indeterminate
\n
damages.
\n
There are situations where NatWest
\n
Group may pursue an approach that in
\n
some instances leads to a settlement
\n
agreement. This may occur in order to
\n
avoid the expense, management
\n
distraction or reputational implications of
\n
continuing to contest liability, or in order
\n
to take account of the risks inherent in
\n
defending or contesting Matters, even for
\n
those for which NatWest Group believes
\n
it has credible defences and should
\n
prevail on the merits. The uncertainties
\n
inherent in all Matters affect the amount
\n
and timing of any potential economic
\n
outflows for both Matters with respect to
\n
which provisions have been established
\n
and other contingent liabilities in respect
\n
of any such Matter.
\n
It is not practicable to provide an
\n
aggregate estimate of potential liability
\n
for our Matters as a class of contingent
\n
liabilities.
\n
The future economic outflow in respect of
\n
any Matter may ultimately prove to be
\n
substantially greater than, or less than,
\n
the aggregate provision, if any, that
\n
NatWest Group has recognised in respect
\n
of such Matter. Where a reliable estimate
\n
of the economic outflow cannot be
\n
reasonably made, no provision has been
\n
recognised. NatWest Group expects that
\n
in future periods, additional provisions
\n
and economic outflows relating to
\n
Matters that may or may not be
\n
currently known by NatWest Group will
\n
be necessary, in amounts that are
\n
expected to be substantial in some
\n
instances. Refer to Note 20 for
\n
information on material provisions.
\n
Matters which are, or could be, material,
\n
either individually or in aggregate, having
\n
regard to NatWest Group, considered as
\n
a whole, in which NatWest Group is
\n
currently involved are set out below. We
\n
have provided information on the
\n
procedural history of certain Matters,
\n
where we believe appropriate, to aid the
\n
understanding of the Matter.
\n
For a discussion of certain risks
\n
associated with NatWest Group\u2019s
\n
litigation and regulatory matters
\n
(including the Matters), refer to the Risk
\n
Factor relating to legal, regulatory and
\n
governmental actions and investigations
\n
set out on pages 422 to 423.
\n
Litigation
\n
London Interbank Offered Rate (LIBOR)
\n
and other rates litigation
\n
NatWest Group plc and certain other
\n
members of NatWest Group, including
\n
NWM Plc, are defendants in a number of
\n
claims pending in the United States
\n
District Court for the Southern District of
\n
New York (SDNY) with respect to the
\n
setting of USD LIBOR. The complainants
\n
allege that certain members of NatWest
\n
Group and other panel banks violated
\n
various federal laws, including the US
\n
commodities and antitrust laws, and state
\n
statutory and common law, as well as
\n
contracts, by manipulating LIBOR and
\n
prices of LIBOR-based derivatives in
\n
various markets through various means.
\n
The co-ordinated proceeding in the SDNY
\n
relating to USD LIBOR now includes one
\n
remaining class action, which is on behalf
\n
of persons who purchased LIBOR-linked
\n
instruments from defendants and bonds
\n
issued by defendants, as well as several
\n
non-class actions. The defendants in the
\n
co-ordinated proceeding have filed a
\n
summary judgment motion on the issue
\n
of liability, and briefing on that motion
\n
concluded in January 2025.
\n
In March 2024, NatWest Group
\n
companies reached an agreement to
\n
settle the USD LIBOR class action that
\n
asserted claims on behalf of lenders who
\n
made USD LIBOR based loans. The
\n
settlement amount, which was covered in
\n
full by an existing provision, has been
\n
paid and the settlement has now
\n
received final court approval.
\n
The non-class claims filed in the SDNY
\n
include claims that the Federal Deposit
\n
Insurance Corporation (FDIC) is asserting
\n
on behalf of certain failed US banks. In
\n
July 2017, the FDIC, on behalf of 39 of
\n
those failed US banks, commenced
\n
substantially similar claims against
\n
NatWest Group companies and others in
\n
the High Court of Justice of England and
\n
Wales. The action alleges collusion with
\n
regard to the setting of USD LIBOR and
\n
that the defendants breached UK and
\n
European competition law, as well as
\n
asserting common law claims of fraud
\n
under US law. The defendant banks
\n
consented to a request by the FDIC for
\n
discontinuance of the claim in respect of
\n
20 failed US banks, leaving 19 failed US
\n
banks as claimants. The trial is currently
\n
scheduled to commence in Q1 2026.
\n
In addition to the USD LIBOR cases
\n
described above, there is a class action
\n
relating to derivatives allegedly tied to
\n
JPY LIBOR and Euroyen TIBOR, which
\n
was dismissed by the SDNY in relation to
\n
NWM Plc and other NatWest Group
\n
companies in September 2021. That
\n
dismissal is now the subject of an appeal
\n
to the United States Court of Appeals for
\n
the Second Circuit (US Court of Appeals).
\n
Two other IBOR-related class actions
\n
involving NWM Plc, concerning alleged
\n
manipulation of Euribor and Pound
\n
Sterling LIBOR, were previously dismissed
\n
by the SDNY for various reasons. The
\n
plaintiffs\u2019 appeals in those two cases
\n
remain pending.
\n
In August 2020, a complaint was filed in
\n
the United States District Court for the
\n
Northern District of California by several
\n
United States retail borrowers against
\n
the USD ICE LIBOR panel banks and their
\n
affiliates (including NatWest Group plc,
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
NWM Plc, NWMSI and NWB Plc), alleging
\n
(i) that the very process of setting USD
\n
ICE LIBOR amounts to illegal price-fixing;
\n
and (ii) that banks in the United States
\n
have illegally agreed to use LIBOR as a
\n
component of price in variable retail
\n
loans. In September 2022, the district
\n
court dismissed the complaint. In
\n
December 2024, the United States Court
\n
of Appeals for the Ninth Circuit affirmed
\n
the district court\u2019s decision.
\n
NWM Plc is also named as a defendant in
\n
a motion to certify a class action relating
\n
to LIBOR in the Tel Aviv District Court in
\n
Israel. NWM Plc filed a motion for
\n
cancellation of service outside the
\n
jurisdiction, which was granted in July
\n
2020. The claimants appealed that
\n
decision and in November 2020 the
\n
appeal was refused and the claim
\n
dismissed by the Appellate Court. The
\n
claim could in future be recommenced
\n
depending on the outcome of an appeal
\n
to Israel\u2019s Supreme Court in respect of
\n
the dismissal of the substantive case
\n
against banks that had a presence in
\n
Israel.
\n
Foreign exchange litigation
\n
NatWest Group plc, NWM Plc and/or
\n
NWMSI are defendants in several cases
\n
relating to NWM Plc\u2019s foreign exchange
\n
(FX) business.
\n
In May 2019, a cartel class action was
\n
filed in the Federal Court of Australia
\n
against NWM Plc and four other banks
\n
on behalf of persons who bought or sold
\n
currency through FX spots or forwards
\n
between 1 January 2008 and 15 October
\n
2013 with a total transaction value
\n
exceeding AUD 0.5 million. The claimant
\n
has alleged that the banks, including
\n
NWM Plc, contravened Australian
\n
competition law by sharing information,
\n
coordinating conduct, widening spreads
\n
and manipulating FX rates for certain
\n
currency pairs during this period.
\n
NatWest Group plc and NWMSI have
\n
been named in the action as \u2018other cartel
\n
participants\u2019, but are not respondents.
\n
The claim was served in June 2019 and
\n
NWM Plc filed its defence in March 2022.
\n
The court has ordered that potential
\n
class members are required to either opt
\n
out of the proceedings or register to be
\n
included in or benefit from any potential
\n
settlement of the claim. Directions have
\n
been made for the provision of evidence
\n
during 2025 and 2026.
\n
In July and December 2019, two
\n
separate applications seeking opt-out
\n
collective proceedings orders were filed in
\n
the UK Competition Appeal Tribunal
\n
(CAT) against NatWest Group plc, NWM
\n
Plc and other banks. Both applications
\n
were brought on behalf of persons who,
\n
between 18 December 2007 and 31
\n
January 2013, entered into a relevant FX
\n
spot or outright forward transaction in
\n
the European Economic Area with a
\n
relevant financial institution or on an
\n
electronic communications network. In
\n
March 2022, the CAT declined to certify
\n
as collective proceedings either of the
\n
applications, which was appealed by the
\n
applicants and the subject of an
\n
application for judicial review.
\n
In its amended judgment in November
\n
2023, the Court of Appeal allowed the
\n
appeal and decided that the claims
\n
should proceed on an opt-out basis.
\n
Separately, the court determined which
\n
of the two competing applicants can
\n
proceed as class representative, and
\n
dismissed the application for judicial
\n
review of the CAT\u2019s decision. The other
\n
applicant has discontinued its claim and
\n
withdrawn from the proceedings. The
\n
banks sought permission to appeal the
\n
Court of Appeal decision directly to the
\n
UK Supreme Court, which was granted in
\n
April 2024. The appeal is scheduled to be
\n
heard in April 2025.
\n
Two motions to certify FX-related class
\n
actions were filed in the Tel Aviv District
\n
Court in Israel in September and October
\n
2018, and were subsequently
\n
consolidated into one motion. The
\n
consolidated motion to certify, which
\n
names The Royal Bank of Scotland plc
\n
(now NWM Plc) and several other banks
\n
as defendants, was served on NWM Plc
\n
in May 2020. The applicants sought the
\n
court\u2019s permission to amend their
\n
motions to certify the class actions. NWM
\n
Plc filed a motion challenging the
\n
permission granted by the court for the
\n
applicants to serve the consolidated
\n
motion outside the Israeli jurisdiction.
\n
That NWM Plc motion remains pending.
\n
In February 2024, NWM Plc executed an
\n
agreement to settle the claim, subject to
\n
court approval. The settlement amount is
\n
covered in full by an existing provision.
\n
In December 2021, a summons was
\n
served in the Netherlands against
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V. by Stichting FX Claims on behalf of a
\n
number of parties, seeking declarations
\n
from the court concerning liability for
\n
anti-competitive FX market conduct
\n
described in decisions of the European
\n
Commission (EC) of 16 May 2019, along
\n
with unspecified damages. The claimant
\n
amended its claim to also refer to a 2
\n
December 2021 decision by the EC,
\n
which described anti-competitive FX
\n
market conduct. NatWest Group plc,
\n
NWM Plc and other defendants contested
\n
the jurisdiction of the Dutch court. In
\n
March 2023, the district court in
\n
Amsterdam accepted that it has
\n
jurisdiction to hear claims against NWM
\n
N.V. but refused jurisdiction to hear any
\n
claims against the other defendant banks
\n
(including NatWest Group plc and NWM
\n
Plc) brought on behalf of the parties
\n
represented by the claimant that are
\n
domiciled outside of the Netherlands. The
\n
claimant is appealing that decision. The
\n
defendant banks have brought cross-
\n
appeals which seek a ruling that the
\n
Dutch court has no jurisdiction to hear
\n
any claims against the defendant banks
\n
domiciled outside of the Netherlands,
\n
irrespective of whether the claim has
\n
been brought on behalf of a party
\n
represented by the claimant that is
\n
domiciled within or outside of the
\n
Netherlands. The Amsterdam Court of
\n
Appeal has stayed these appeal
\n
proceedings until the Court of Justice of
\n
the European Union has answered
\n
preliminary questions that have been
\n
referred to it in another matter.
\n
In September 2023, a second summons
\n
was served by Stichting FX Claims on
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V., on behalf of a new group of parties.
\n
The claimant seeks declarations from the
\n
district court in Amsterdam concerning
\n
liability for anti-competitive FX market
\n
conduct described in the above
\n
referenced decisions of the EC of 16 May
\n
2019 and 2 December 2021, along with
\n
unspecified damages. NatWest Group plc,
\n
NWM Plc and other defendants are
\n
contesting the Dutch court's jurisdiction.
\n
The district court has stayed the
\n
proceedings pending judgment in the
\n
above-mentioned appeals.
\n
In January 2025, a third summons was
\n
served by Stichting FX Claims on
\n
NatWest Group plc, NWM Plc and NWM
\n
N.V., on behalf of another new group of
\n
parties. The claimant seeks similar
\n
declarations from the district court in
\n
Amsterdam to those being sought in the
\n
above-mentioned claims, along with
\n
unspecified damages.
\n
Certain other foreign exchange
\n
transaction related claims have been or
\n
may be threatened. NatWest Group
\n
cannot predict whether all or any of
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
these claims will be pursued.
\n
Government securities antitrust litigation
\n
Class action antitrust claims commenced
\n
in March 2019 were pending in the SDNY
\n
against NWM Plc, NWMSI and other
\n
banks in respect of Euro-denominated
\n
bonds issued by various European central
\n
banks (European government bonds or
\n
EGBs). The complaint alleged a
\n
conspiracy among dealers of EGBs to
\n
widen the bid-ask spreads they quoted to
\n
customers, thereby increasing the prices
\n
customers paid for the EGBs or
\n
decreasing the prices at which customers
\n
sold EGBs.
\n
In March 2024, NatWest Group
\n
companies reached an agreement to
\n
settle the class action. The settlement
\n
amount, which was covered in full by an
\n
existing provision, has been paid and the
\n
settlement has now received final court
\n
approval.
\n
Swaps antitrust litigation
\n
NWM Plc and other members of NatWest
\n
Group, including NatWest Group plc, as
\n
well as a number of other interest rate
\n
swap dealers, are defendants in several
\n
cases pending in the SDNY alleging
\n
violations of the US antitrust laws in the
\n
market for interest rate swaps. There is a
\n
consolidated class action complaint on
\n
behalf of persons who entered into
\n
interest rate swaps with the defendants,
\n
as well as non-class action claims by
\n
three swap execution facilities
\n
(TeraExchange, Javelin, and trueEx). The
\n
plaintiffs allege that the swap execution
\n
facilities would have successfully
\n
established exchange-like trading of
\n
interest rate swaps if the defendants had
\n
not unlawfully conspired to prevent that
\n
from happening through boycotts and
\n
other means. Discovery in the non-class
\n
action claims is complete. In March 2024,
\n
NatWest Group companies reached an
\n
agreement to settle the class action. The
\n
settlement amount has been paid into
\n
escrow pending final court approval of
\n
the settlement and was covered in full by
\n
an existing provision.
\n
In June 2021, a class action antitrust
\n
complaint was filed against a number of
\n
credit default swap dealers, in New
\n
Mexico federal court on behalf of persons
\n
who, from 2005 onwards, settled credit
\n
default swaps in the United States by
\n
reference to the ISDA credit default swap
\n
auction protocol. The complaint alleges
\n
that the defendants conspired to
\n
manipulate that benchmark through
\n
various means in violation of the antitrust
\n
laws and the Commodity Exchange Act.
\n
The defendants filed a motion to dismiss
\n
the complaint and, in June 2023, such
\n
motion was denied as regards to NWMSI
\n
and other financial institutions, but
\n
granted as regards to NWM Plc on the
\n
ground that the court lacks jurisdiction
\n
over that entity. As a result, the case
\n
entered the discovery phase as against
\n
the non-dismissed defendants. In January
\n
2024, the SDNY issued an order barring
\n
the plaintiffs in the New Mexico case
\n
from pursuing claims based on conduct
\n
occurring before 30 June 2014 on the
\n
ground that such claims were
\n
extinguished by a 2015 settlement
\n
agreement that resolved a prior class
\n
action relating to credit default swaps.
\n
The SDNY\u2019s decision is the subject of a
\n
pending appeal to the US Court of
\n
Appeals.
\n
Odd lot corporate bond trading antitrust
\n
litigation
\n
In July 2024, the US Court of Appeals
\n
vacated the SDNY's October 2021
\n
dismissal of the class action antitrust
\n
complaint alleging that from August 2006
\n
onwards various securities dealers,
\n
including NWMSI, conspired artificially to
\n
widen spreads for odd lots of corporate
\n
bonds bought or sold in the United States
\n
secondary market and to boycott
\n
electronic trading platforms that would
\n
have allegedly promoted pricing
\n
competition in the market for such bonds.
\n
The appellate court held that the district
\n
judge who made the decision should not
\n
have been presiding over the case
\n
because a member of the judge\u2019s family
\n
had owned stock in one of the
\n
defendants while the motion was
\n
pending.
The defendants are now seeking
\n
dismissal by a different district court
\n
judge.
\n
Spoofing litigation
\n
In December 2021, three substantially
\n
similar class actions complaints were filed
\n
in federal court in the United States
\n
against NWM Plc and NWMSI alleging
\n
Commodity Exchange Act and common
\n
law unjust enrichment claims arising from
\n
manipulative trading known as spoofing.
\n
The complaints refer to NWM Plc\u2019s
\n
December 2021 spoofing-related guilty
\n
plea (described below under \u201cUS
\n
investigations relating to fixed-income
\n
securities\u201d) and purport to assert claims
\n
on behalf of those who transacted in US
\n
Treasury securities and futures and
\n
options on US Treasury securities
\n
between 2008 and 2018. In July 2022,
\n
the defendants filed a motion to dismiss
\n
these claims, which have been
\n
consolidated into one matter in the
\n
United States District Court for the
\n
Northern District of Illinois.
\n
Madoff
\n
NWM N.V. was named as a defendant in
\n
two actions filed by the trustee for the
\n
bankrupt estates of Bernard L. Madoff
\n
and Bernard L. Madoff Investment
\n
Securities LLC, in bankruptcy court in
\n
New York, which together seek to
\n
clawback more than US$298 million that
\n
NWM N.V. allegedly received from certain
\n
Madoff feeder funds and certain swap
\n
counterparties. The claims were
\n
previously dismissed, but as a result of an
\n
August 2021 decision by the US Court of
\n
Appeals, they are now proceeding in the
\n
discovery phase in the bankruptcy court,
\n
where they have been consolidated into
\n
one action.
\n
Offshoring VAT assessments
\n
HMRC, as part of an industry-wide
\n
review, issued protective tax
\n
assessments in 2018 against NatWest
\n
Group plc totalling \u00a3143 million relating to
\n
unpaid VAT in respect of the UK
\n
branches of two NatWest Group
\n
companies registered in India for the
\n
period from 1 January 2014 until 31
\n
December 2017 inclusive. NatWest Group
\n
formally requested reconsideration by
\n
HMRC of their assessments, and this
\n
process was completed in November
\n
2020. HMRC upheld their original decision
\n
and, as a result, NatWest Group plc
\n
lodged an appeal with the Tax Tribunal
\n
and an application for judicial review with
\n
the High Court of Justice of England and
\n
Wales, both in December 2020. In order
\n
to lodge the appeal with the Tax
\n
Tribunal, NatWest Group plc was
\n
required to pay amounts totalling \u00a3153
\n
million (including statutory interest) to
\n
HMRC in December 2020 and May 2022.
\n
The appeal and the application for judicial
\n
review have both been stayed pending
\n
further discussion with HMRC in relation
\n
to a separate case involving another
\n
bank.
The amount of \u00a3153 million
\n
continues to be recognised as an asset
\n
that NatWest Group plc expects to
\n
recover. Since 1 January 2018, NatWest
\n
Group plc has paid VAT on intra-group
\n
supplies from the India-registered
\n
NatWest Group companies.
\n
US Anti-Terrorism Act litigation
\n
NWM N.V. and certain other financial
\n
institutions are defendants in several
\n
actions filed by a number of US nationals
\n
(or their estates, survivors, or heirs), most
\n
of whom are or were US military
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
personnel, who were killed or injured in
\n
attacks in Iraq between 2003 and 2011.
\n
NWM Plc is also a defendant in some of
\n
these cases.
\n
According to the plaintiffs\u2019 allegations, the
\n
defendants are liable for damages arising
\n
from the attacks because they allegedly
\n
conspired with and/or aided and abetted
\n
Iran and certain Iranian banks to assist
\n
Iran in transferring money to Hezbollah
\n
and the Iraqi terror cells that committed
\n
the attacks, in violation of the US Anti-
\n
Terrorism Act, by agreeing to engage in
\n
\u2018stripping\u2019 of transactions initiated by the
\n
Iranian banks so that the Iranian nexus to
\n
the transactions would not be detected.
\n
The first of these actions, alleging
\n
conspiracy claims but not aiding and
\n
abetting claims, was filed in the United
\n
States District Court for the Eastern
\n
District of New York in November 2014.
\n
In September 2019, the district court
\n
dismissed the case, finding that the
\n
claims were deficient for several reasons,
\n
including lack of sufficient allegations as
\n
to the alleged conspiracy and causation.
\n
In January 2023, the US Court of Appeals
\n
affirmed the district court\u2019s dismissal of
\n
this case. The plaintiffs have now filed a
\n
motion in the district court to re-open the
\n
case to assert aiding and abetting claims
\n
that they previously did not assert, which
\n
the defendants are opposing. Another
\n
action, filed in the SDNY in 2017, which
\n
asserted both conspiracy and aiding and
\n
abetting claims, was dismissed by the
\n
SDNY in March 2019 on similar grounds
\n
as the first case, but remains subject to
\n
appeal to the US Court of Appeals.
\n
Other follow-on actions that are
\n
substantially similar to those described
\n
above are pending in the same courts.
\n
1MDB litigation
\n
A Malaysian court claim was served in
\n
Switzerland in November 2022 by 1MDB,
\n
a sovereign wealth fund, in which Coutts
\n
& Co Ltd was named, along with six
\n
others, as a defendant in respect of
\n
losses allegedly incurred by 1MDB. It is
\n
claimed that Coutts & Co Ltd is liable as
\n
a constructive trustee for having
\n
dishonestly assisted the directors of
\n
1MDB in the breach of their fiduciary
\n
duties by failing (amongst other alleged
\n
claims) to undertake due diligence in
\n
relation to a customer of Coutts & Co
\n
Ltd, through which funds totalling c.US$1
\n
billion were received and paid out
\n
between 2009 and 2011. 1MDB seeks
\n
the return of that amount plus interest.
\n
Coutts & Co Ltd filed an application in
\n
January 2023 challenging the validity of
\n
service and the Malaysian court\u2019s
\n
jurisdiction to hear the claim, and a
\n
hearing took place in February 2024. In
\n
March 2024, the court granted that
\n
application. 1MDB has appealed that
\n
decision and a prior decision by the court
\n
not to allow them to discontinue their
\n
claim. Both appeals are scheduled to be
\n
heard in November 2025.
\n
Coutts & Co Ltd (a subsidiary of RBS
\n
Netherlands Holdings B.V., which in turn
\n
is a subsidiary of NWM Plc) is a company
\n
registered in Switzerland and is in wind-
\n
down following the announced sale of its
\n
business assets in 2015.
\n
Regulatory matters (including
\n
investigations and customer redress
\n
programmes
)
\n
NatWest Group\u2019s businesses and financial
\n
condition can be affected by the actions
\n
of various governmental and regulatory
\n
authorities in the UK, the US, the EU and
\n
elsewhere. NatWest Group has engaged,
\n
and will continue to engage, in
\n
discussions with relevant governmental
\n
and regulatory authorities, including in
\n
the UK, the US, the EU and elsewhere,
\n
on an ongoing and regular basis, and in
\n
response to informal and formal inquiries
\n
or investigations, regarding operational,
\n
systems and control evaluations and
\n
issues including those related to
\n
compliance with applicable laws and
\n
regulations, including consumer
\n
protection, investment advice, business
\n
conduct, competition/anti-trust, VAT
\n
recovery, anti-bribery, anti-money
\n
laundering and sanctions regimes.
\n
NatWest Group expects government and
\n
regulatory intervention in financial
\n
services to be high for the foreseeable
\n
future, including increased scrutiny from
\n
competition and other regulators in the
\n
retail and SME business sectors.
\n
Any matters discussed or identified
\n
during such discussions and inquiries may
\n
result in, among other things, further
\n
inquiry or investigation, other action
\n
being taken by governmental and
\n
regulatory authorities, increased costs
\n
being incurred by NatWest Group,
\n
remediation of systems and controls,
\n
public or private censure, restriction of
\n
NatWest Group\u2019s business activities
\n
and/or fines. Any of the events or
\n
circumstances mentioned in this
\n
paragraph or below could have a
\n
material adverse effect on NatWest
\n
Group, its business, authorisations and
\n
licences, reputation, results of operations
\n
or the price of securities issued by it, or
\n
lead to material additional provisions
\n
being taken.
\n
NatWest Group is co-operating fully with
\n
the matters described below.
\n
US investigations relating to fixed-
\n
income securities
\n
In December 2021, NWM Plc pled guilty
\n
in the United States District Court for the
\n
District of Connecticut to one count of
\n
wire fraud and one count of securities
\n
fraud in connection with historical
\n
spoofing conduct by former employees in
\n
US Treasuries markets between January
\n
2008 and May 2014 and, separately,
\n
during approximately three months in
\n
2018. The 2018 trading occurred during
\n
the term of a non-prosecution agreement
\n
(NPA) between NWMSI and the United
\n
States Attorney's Office for the District of
\n
Connecticut (USAO CT), under which
\n
non-prosecution was conditioned on
\n
NWMSI and affiliated companies not
\n
engaging in criminal conduct during the
\n
term of the NPA. The relevant trading in
\n
2018 was conducted by two NWM
\n
traders in Singapore and breached that
\n
NPA. The plea agreement reached with
\n
the US Department of Justice (DOJ) and
\n
the USAO CT resolved both the spoofing
\n
conduct and the breach of the NPA.
\n
As required by the resolution and
\n
sentence imposed by the court, NWM Plc
\n
is subject to a probationary period, which
\n
was extended to end concurrently with
\n
the conclusion of the independent
\n
monitorship, which is also required under
\n
the plea agreement. The term of the
\n
independent monitorship and the ongoing
\n
implementation of recommendations
\n
made by it is currently scheduled to
\n
conclude in December 2025 but may be
\n
extended by agreement with the DOJ. In
\n
addition, NWM Plc has committed to
\n
compliance programme reviews and
\n
improvements and agreed to reporting
\n
and co-operation obligations.
\n
In the event that NWM Plc does not meet
\n
its obligations to the DOJ, this may lead
\n
to adverse consequences such as
\n
increased costs from any extension of
\n
monitorship and/or the period of the
\n
probation, findings that NWM Plc violated
\n
its probation term, and possible re-
\n
sentencing, amongst other
\n
consequences. Other material adverse
\n
collateral consequences may occur as a
\n
result of this matter, as further described
\n
in the Risk Factor relating to legal,
\n
regulatory and governmental actions and
\n
investigations set out on pages 422 to
\n
423.
RBSI Ltd reliance regime and referral to
enforcement
In January 2023, the Jersey Financial
Services Commission (JFSC) notified RBSI
Ltd that it had been referred to its
Enforcement Division in relation to RBSI
Ltd\u2019s operation of the reliance regime.
The reliance regime is specific to certain
Crown Dependencies and enables RBSI
Ltd to rely on regulated third parties for
specific due diligence information. RBSI
Ltd has provided information to the JFSC
at its request.
Investment advice review
In October 2019, the FCA notified
NatWest Group of its intention to appoint
a Skilled Person under section 166 of the
Financial Services and Markets Act 2000
to conduct a review of whether NatWest
Group\u2019s 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\u2019s review has concluded
and, after discussion with the FCA,
NatWest Group is undertaking additional
review / remediation work.
Review and investigation of treatment of
tracker mortgage customers in Ulster
Bank Ireland DAC
In December 2015, correspondence was
received from the Central Bank of Ireland
setting out an industry examination
framework in respect of the sale of
tracker mortgages from approximately
2001 until the end of 2015.
The redress and compensation process
has now largely concluded, although a
small number of cases remain
outstanding relating to uncontactable
customers.
UBIDAC customers have lodged tracker
mortgage complaints with the Financial
Services and Pensions Ombudsman
(FSPO). UBIDAC challenged three FSPO
adjudications in the Irish High Court. In
June 2023, the High Court found in
favour of the FSPO in all matters.
UBIDAC appealed that decision to the
Court of Appeal. In September 2024, the
Court of Appeal allowed UBIDAC\u2019s
appeal and set aside certain findings of
the FSPO. The Court of Appeal directed
one aspect of the FSPO decisions to be
remitted to the FSPO for its consideration
following an oral hearing, and UBIDAC is
following up with the FSPO in that
regard.
Other customer remediation in Ulster
Bank Ireland DAC
UBIDAC identified other legacy issues
leading to the establishment of
remediation requirements and progress is
ongoing to conclude activities.", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00286": { "value": "26 Non-cash and other items
This note shows non-cash items adjusted for in the cash flow statement and movement in operating assets and liabilities.
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Impairment losses
359
572
266
Depreciation and amortisation
1,058
934
833
Change in fair value taken to profit or loss of other financial assets
274
(584)
1,267
Change in fair value taken to profit or loss of other financial liabilities and subordinated liabilities
200
831
(2,400)
Foreign exchange recycling losses/(gains)
77
(484)
(5)
Elimination of foreign exchange differences
1,525
312
10
Income receivable on other financial assets
(2,459)
(1,415)
(585)
Loss on sale of other financial assets
21
44
172
Share of (profit)/loss of associates
(19)
9
30
(Gain)/loss on sale of other assets and net assets and liabilities
(23)
125
154
Interest payable on MRELs and subordinated liabilities
1,407
1,352
1,103
(Gain)/loss on redemption of own debt
-
(3)
161
Charges and releases on provisions
330
313
248
Change in fair value of cash flow hedges
1,494
1,021
(304)
Other non-cash items
35
59
48
Defined benefit pension schemes
86
122
205
Non-cash and other items
4,365
3,208
1,203
Change in operating assets and liabilities
\u00a0\u00a0\u00a0
Change in trading assets
(5,331)
327
14,991
Change in derivative assets
(373)
20,826
3,621
Change in settlement balance assets
5,146
(4,659)
(431)
Change in loans to banks
278
752
(202)
Change in loans to customers
(17,173)
(15,626)
(7,628)
Change in other financial assets
(92)
132
(328)
Change in other assets
133
(213)
(255)
Change in assets of disposal groups
106
412
(4,117)
Change in bank deposits
9,262
1,749
(5,838)
Change in customer deposits
2,113
(18,964)
(29,492)
Change in settlement balance liabilities
(4,916)
4,633
(56)
Change in trading liabilities
1,078
828
(11,790)
Change in derivative liabilities
(313)
(21,652)
(6,788)
Change in other financial liabilities
3,640
6,564
989
Change in notes in circulation
79
19
171
Change in other liabilities
(904)
(807)
(1,294)
Change in operating assets and liabilities
(7,267)
(25,679)
(48,447)
28 Analysis of changes in financing during the year
This note shows cash flows and non-cash movements relating to the financing activities of the Group, including movements in share capital, share premium, paid-in
equity, subordinated liabilities and MRELs.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Share capital, share premium,
\u00a0 \u00a0
\u00a0
and paid-in equity
Subordinated liabilities
MRELs
\u00a0
2024
2023
2022
2024
2023
2022
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January
14,734
15,590
16,519
5,714
6,260
8,429
21,660
22,265
23,423
Issue of paid-in equity
1,390
-
-
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Issue of subordinated liabilities
\u00a0 \u00a0 \u00a0
1,386
611
648
\u00a0 \u00a0 \u00a0
Redemption of subordinated liabilities
\u00a0 \u00a0 \u00a0
(999)
(1,250)
(3,693)
\u00a0 \u00a0 \u00a0
Interest paid on subordinated liabilities
\u00a0 \u00a0 \u00a0
(459)
(439)
(374)
\u00a0 \u00a0 \u00a0
Issue of MRELs
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
5,051
3,973
3,721
Maturity and redemption of MRELs
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
(2,854)
(4,236)
(4,992)
Interest paid on MRELs
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
(885)
(844)
(703)
Net cash flows from financing activities
1,390
-
-
(72)
(1,078)
(3,419)
1,312
(1,107)
(1,974)
Shares repurchased
(711)
(856)
(929)
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Effects of foreign exchange
\u00a0 \u00a0 \u00a0
(54)
(166)
597
(49)
(987)
1,889
Changes in fair value of subordinated liabilities and MRELs
\u00a0 \u00a0 \u00a0
76
230
(594)
124
601
(1,806)
Preference shares reclassified to subordinated liabilities
\u00a0 \u00a0 \u00a0
-
-
750
\u00a0 \u00a0 \u00a0
(Gain)/loss on redemption of own debt
\u00a0 \u00a0 \u00a0
-
(3)
161
\u00a0 \u00a0
-
Interest payable on subordinated liabilities and MRELs
\u00a0 \u00a0 \u00a0
465
464
370
942
888
733
Other
-
-
-
7
7
(34)
9
-
-
At 31 December
15,413
14,734
15,590
6,136
5,714
6,260
23,998
21,660
22,265
29 Analysis of cash and cash equivalents
Non-cash and other add back items and movements in operating assets and liabilities are adjusted for in the cash flow statement. Loans to banks and treasury bills
with an original maturity of less than three months that are readily convertible to known amounts of cash and subject to insignificant risk of change in value.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Cash and balances at central banks
92,994
104,262
144,832
Trading assets
6,886
8,851
8,551
Other financial assets
-
139
19
Loans to banks
(1)
4,965
5,572
5,047
Cash and cash equivalents
104,845
118,824
158,449
\n
(1)
Includes cash collateral posted with bank counterparties in respect of derivative liabilities of \u00a33,660 million (2023- \u00a34,434 million; 2022 - \u00a34,895 million).
Certain members of NatWest Group are required by law or regulation to maintain balances with the central banks in the jurisdictions in which they operate. NatWest Markets N.V.
had
mandatory reserve deposits with
De Nederlandsche Bank N.V.
of \u20ac95 million (2023 - \u20ac132 million, 2022 - \u20ac64 million).
The Royal Bank of Scotland International Limited had balances
with Central Bank of Luxembourg of \u00a3111 million (2023 - \u00a3135 million, 2022 - \u00a3108 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00309": { "value": "27 Analysis of the net investment in business interests and intangible assets
This note shows cash flows relating to obtaining or losing significant influence in associates or control of subsidiaries and net assets and liabilities purchased and sold.
These cash flows are presented as investing activities on the cash flow statement.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Fair value given for business acquired
-
(139)
-
Acquisition of interest in associates
(4)
-
(1)
Additional investment in associates
(1)
(5)
-
Net assets and liabilities purchased
(2,296)
-
-
Net outflow of cash in respect of acquisitions
(2,301)
(144)
(1)
Disposal of net assets and liabilities
1,003
5,560
6,270
Loss on disposal of net assets and liabilities
(8)
(87)
(106)
Net inflow of cash in respect of disposals
995
5,473
6,164
Dividends received from associate
1
16
-
Net cash expenditure on intangible assets
(614)
(744)
(743)
Net (outflow)/inflow of cash
(1,919)
4,601
5,420
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00279": { "value": "29 Analysis of cash and cash equivalents
Non-cash and other add back items and movements in operating assets and liabilities are adjusted for in the cash flow statement. Loans to banks and treasury bills
with an original maturity of less than three months that are readily convertible to known amounts of cash and subject to insignificant risk of change in value.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Cash and balances at central banks
92,994
104,262
144,832
Trading assets
6,886
8,851
8,551
Other financial assets
-
139
19
Loans to banks
(1)
4,965
5,572
5,047
Cash and cash equivalents
104,845
118,824
158,449
\n
(1)
Includes cash collateral posted with bank counterparties in respect of derivative liabilities of \u00a33,660 million (2023- \u00a34,434 million; 2022 - \u00a34,895 million).
Certain members of NatWest Group are required by law or regulation to maintain balances with the central banks in the jurisdictions in which they operate. NatWest Markets N.V.
had
mandatory reserve deposits with
De Nederlandsche Bank N.V.
of \u20ac95 million (2023 - \u20ac132 million, 2022 - \u20ac64 million).
The Royal Bank of Scotland International Limited had balances
with Central Bank of Luxembourg of \u00a3111 million (2023 - \u00a3135 million, 2022 - \u00a3108 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00280": { "value": "29 Analysis of cash and cash equivalents
Non-cash and other add back items and movements in operating assets and liabilities are adjusted for in the cash flow statement. Loans to banks and treasury bills
with an original maturity of less than three months that are readily convertible to known amounts of cash and subject to insignificant risk of change in value.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
2022
\u00a0
\u00a3m
\u00a3m
\u00a3m
Cash and balances at central banks
92,994
104,262
144,832
Trading assets
6,886
8,851
8,551
Other financial assets
-
139
19
Loans to banks
(1)
4,965
5,572
5,047
Cash and cash equivalents
104,845
118,824
158,449
\n
(1)
Includes cash collateral posted with bank counterparties in respect of derivative liabilities of \u00a33,660 million (2023- \u00a34,434 million; 2022 - \u00a34,895 million).
Certain members of NatWest Group are required by law or regulation to maintain balances with the central banks in the jurisdictions in which they operate. NatWest Markets N.V.
had
mandatory reserve deposits with
De Nederlandsche Bank N.V.
of \u20ac95 million (2023 - \u20ac132 million, 2022 - \u20ac64 million).
The Royal Bank of Scotland International Limited had balances
with Central Bank of Luxembourg of \u00a3111 million (2023 - \u00a3135 million, 2022 - \u00a3108 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndBankBalancesAtCentralBanksExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00281": { "value": "29 Analysis of cash and cash equivalentsCertain members of NatWest Group are required by law or regulation to maintain balances with the central banks in the jurisdictions in which they operate. NatWest Markets N.V.
had
mandatory reserve deposits with
De Nederlandsche Bank N.V.
of \u20ac95 million (2023 - \u20ac132 million, 2022 - \u20ac64 million).
The Royal Bank of Scotland International Limited had balances
with Central Bank of Luxembourg of \u00a3111 million (2023 - \u00a3135 million, 2022 - \u00a3108 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00288": { "value": "30 Directors\u2019 and key management remuneration
Directors and key management are remunerated for services rendered in the
period. The executive directors may participate in the company's long-term
incentive plans, executive share option and sharesave schemes and details of
their interests in the company's shares arising from their participation are
given in the directors' remuneration report. Details of the remuneration
received by each director are also given in the directors' remuneration report.
Key management comprises members of the NatWest Group plc and NWH Ltd Boards,
members of the NatWest Group plc and NWH Ltd Executive Committees, and the Chief
Executives of NatWest Markets Plc and RBS International (Holdings) Limited. This is on
the basis that these individuals have been identified as Persons Discharging Managerial
Responsibilities of NatWest Group plc under the new governance structure.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Directors' remuneration
\u00a3000
\u00a3000
Non-executive directors emoluments
1,547
1,574
Chair and executive directors emoluments
6,425
6,408
\u00a0
7,972
7,982
Amounts receivable under long-term incentive plans
\u00a0\u00a0
and share option plans
1,471
2,708
Total
9,443
10,690
\n
Compensation of key management
The aggregate remuneration of directors and other members of key management
during the year was as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3000
\u00a3000
Short-term benefits
20,862
21,098
Post-employment benefits
643
741
Share-based payments
5,624
7,264
\u00a0
27,129
29,103
\n
Short term benefits include benefits expected to be settled wholly within twelve months
of balance sheet date. Post-employment benefits include defined benefit contributions for
active members and pension funding to support contributions to the defined contribution
schemes. Share-based payments include awards vested under rewards schemes.
31 Transactions with directors and key management
This note presents information relating to any transactions with directors and
key management. Key management comprises directors of the company and
Persons Discharging Managerial Responsibilities (PDMRs) of NatWest Group
plc.
For the purposes of IAS 24 Related party disclosures, key management comprises
directors of the company and PDMRs of NatWest Group plc. Key management have
banking relationships with NatWest Group entities which are entered into in the normal
course of business and on substantially the same terms, including interest rates and
security, as for comparable transactions with other persons of a similar standing or,
where applicable, with other employees. These transactions did not involve more than
the normal risk of repayment or present other unfavourable features.
Amounts in the table below are attributed to each person at their highest level of
NatWest Group key management, and relate to those who were key management at
any time during the financial period.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
At 31 December
\u00a0
2024
2023
\u00a0
\u00a3000
\u00a3000
Loans to customers - amortised cost
3,538
11,406
Customer deposits
39,431
55,254
\n
At 31 December 2024, amounts outstanding in relation to transactions, arrangements
and agreements entered into by authorised institutions in NatWest Group, as defined in
UK legislation, were \u00a32,570,654 in respect of loans to 7 persons who were directors of
the company at any time during the financial period.
32 Related parties
A related party is a person or entity that is related to the entity that is preparing its financial statements. This includes subsidiaries, associates, joint ventures, post-
employment benefits plans, Key management personnel and their close family members and entities controlled by them. Transactions between an entity and any
related party are disclosed in the financial statements in accordance with both accounting standards and relevant listing rules to ensure readers are aware of how
financial statements may be affected by these transactions.
UK Government
The UK Government\u2019s shareholding in NatWest Group plc is managed by UK
Government Investments Limited, a company wholly owned by the UK Government. At
31 December 2024 HM Treasury\u2019s holding in NatWest Group plc\u2019s ordinary shares was
9.99% (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.
NatWest Group enters into transactions with many of these bodies. Transactions include
the payment of: taxes \u2013 principally UK corporation tax (Note 7) and value added tax;
national insurance contributions; local authority rates; and regulatory fees and levies
(including the UK bank levy Note 3) and FSCS levy (Note 25) - together with banking
transactions such as loans and deposits undertaken in the normal course of banker-
customer relationships.
Bank of England facilities
NatWest Group may participate in a number of schemes operated by the Bank of
England in the normal course of business.
In March 2024 Bank of England Levy replaced the Cash Ratio Deposit scheme. Members
of NatWest Group that are UK authorised institutions are required to pay the levy having
eligible liabilities greater than \u00a3600 million. They also have access to Bank of England
reserve accounts: sterling current accounts that earn interest at the Bank of England
Base rate.
NatWest Group provides guarantees for certain subsidiaries, liabilities to the Bank of
England.
Other Related Parties
In accordance with IAS 24, transactions or balances between NatWest Group entities
that have been eliminated on consolidation are not reported.
The primary financial statements of the parent company include transactions and
balances with its subsidiaries which have been further disclosed in the relevant notes.
Associates, joint ventures (JVs) and equity investments
In their roles as providers of finance, NatWest Group companies provide development
and other types of capital support to businesses. These investments are made in the
normal course of business. To further strategic partnerships, NatWest Group may seek
to invest in third parties or allow third parties to hold a minority interest in a subsidiary of
NatWest Group. We disclose as related parties for associates and joint ventures and
where equity interest are over 10%. Ongoing business transactions with these entities
are on normal commercial terms.
Amounts included in the NatWest Group financial statements, in aggregate, by category
of related party are as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Associates and joint
Equity
\u00a0
\u00a0
ventures
shares (1)
Total
31 December 2024
\u00a3m
\u00a3m
\u00a3m
Investments
690
122
812
Loans to customers - amortised cost
-
4
4
Customer deposits
1
1
2
Other comprehensive income
-
(22)
(22)
Other operating income
19
-
19
31 December 2023
\u00a0\u00a0\u00a0
Investments
668
145
813
Loans to customers - amortised cost
-
13
13
Customer deposits
2
10
12
Other comprehensive income
-
(8)
(8)
Other operating income
(11)
-
(11)
\n
(1)
Represents investments in entities where ownership is more than 10%
Post employment benefits
NatWest Group recharges NatWest Group Pension Fund with the cost of pension
management services incurred by it. NatWest Group Pension Fund holds bank accounts
held with the NatWest Group plc. At 31 December 2024 these balances amounted to
\u00a343.2 million (2023 - \u00a336.2 million).
NatWest Group Pension fund also holds certain interest rate swaps, inflation swaps,
credit derivatives, cross currency swaps and forward exchange rate agreements where
subsidiaries of NatWest Group act as counterparties. These transactions are on
commercial terms and carried out on an arms-length basis.
During February 2023, NatWest Group entered into an agreement to establish a new
legal structure to hold assets, consolidated on NatWest Group\u2019s balance sheet, to meet
potential future contributions required by the Main section of the Group\u2019 Pension Fund.
This transaction required transfer of \u00a3471 million to the Reservoir Trust after the final
dividend for 2022 approved by shareholders. This transaction does not create a pension
liability with the Main section of the Group Pension Fund. Refer to details in Note 5 and in
Material contracts information on page 428.", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00287": { "value": "30 Directors\u2019 and key management remuneration
Directors and key management are remunerated for services rendered in the
period. The executive directors may participate in the company's long-term
incentive plans, executive share option and sharesave schemes and details of
their interests in the company's shares arising from their participation are
given in the directors' remuneration report. Details of the remuneration
received by each director are also given in the directors' remuneration report.
Key management comprises members of the NatWest Group plc and NWH Ltd Boards,
members of the NatWest Group plc and NWH Ltd Executive Committees, and the Chief
Executives of NatWest Markets Plc and RBS International (Holdings) Limited. This is on
the basis that these individuals have been identified as Persons Discharging Managerial
Responsibilities of NatWest Group plc under the new governance structure.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
Directors' remuneration
\u00a3000
\u00a3000
Non-executive directors emoluments
1,547
1,574
Chair and executive directors emoluments
6,425
6,408
\u00a0
7,972
7,982
Amounts receivable under long-term incentive plans
\u00a0\u00a0
and share option plans
1,471
2,708
Total
9,443
10,690
\n
Compensation of key management
The aggregate remuneration of directors and other members of key management
during the year was as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2024
2023
\u00a0
\u00a3000
\u00a3000
Short-term benefits
20,862
21,098
Post-employment benefits
643
741
Share-based payments
5,624
7,264
\u00a0
27,129
29,103
\n
Short term benefits include benefits expected to be settled wholly within twelve months
of balance sheet date. Post-employment benefits include defined benefit contributions for
active members and pension funding to support contributions to the defined contribution
schemes. Share-based payments include awards vested under rewards schemes.
31 Transactions with directors and key management
This note presents information relating to any transactions with directors and
key management. Key management comprises directors of the company and
Persons Discharging Managerial Responsibilities (PDMRs) of NatWest Group
plc.
For the purposes of IAS 24 Related party disclosures, key management comprises
directors of the company and PDMRs of NatWest Group plc. Key management have
banking relationships with NatWest Group entities which are entered into in the normal
course of business and on substantially the same terms, including interest rates and
security, as for comparable transactions with other persons of a similar standing or,
where applicable, with other employees. These transactions did not involve more than
the normal risk of repayment or present other unfavourable features.
Amounts in the table below are attributed to each person at their highest level of
NatWest Group key management, and relate to those who were key management at
any time during the financial period.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
At 31 December
\u00a0
2024
2023
\u00a0
\u00a3000
\u00a3000
Loans to customers - amortised cost
3,538
11,406
Customer deposits
39,431
55,254
\n
At 31 December 2024, amounts outstanding in relation to transactions, arrangements
and agreements entered into by authorised institutions in NatWest Group, as defined in
UK legislation, were \u00a32,570,654 in respect of loans to 7 persons who were directors of
the company at any time during the financial period.", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00735": { "value": "A related party is a person or entity that is related to the entity that is preparing its financial statements. This includes subsidiaries, associates, joint ventures, post-
employment benefits plans, Key management personnel and their close family members and entities controlled by them. Transactions between an entity and any
related party are disclosed in the financial statements in accordance with both accounting standards and relevant listing rules to ensure readers are aware of how
financial statements may be affected by these transactions.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithRelatedPartiesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00310": { "value": "Associates, joint ventures (JVs) and equity investments
In their roles as providers of finance, NatWest Group companies provide development
and other types of capital support to businesses. These investments are made in the
normal course of business. To further strategic partnerships, NatWest Group may seek
to invest in third parties or allow third parties to hold a minority interest in a subsidiary of
NatWest Group. We disclose as related parties for associates and joint ventures and
where equity interest are over 10%. Ongoing business transactions with these entities
are on normal commercial terms.
Amounts included in the NatWest Group financial statements, in aggregate, by category
of related party are as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Associates and joint
Equity
\u00a0
\u00a0
ventures
shares (1)
Total
31 December 2024
\u00a3m
\u00a3m
\u00a3m
Investments
690
122
812
Loans to customers - amortised cost
-
4
4
Customer deposits
1
1
2
Other comprehensive income
-
(22)
(22)
Other operating income
19
-
19
31 December 2023
\u00a0\u00a0\u00a0
Investments
668
145
813
Loans to customers - amortised cost
-
13
13
Customer deposits
2
10
12
Other comprehensive income
-
(8)
(8)
Other operating income
(11)
-
(11)
\n
(1)
Represents investments in entities where ownership is more than 10%", "dimensions": { "concept": "ifrs-full:DisclosureOfJointVenturesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00737": { "value": "Associates, joint ventures (JVs) and equity investments
In their roles as providers of finance, NatWest Group companies provide development
and other types of capital support to businesses. These investments are made in the
normal course of business. To further strategic partnerships, NatWest Group may seek
to invest in third parties or allow third parties to hold a minority interest in a subsidiary of
NatWest Group. We disclose as related parties for associates and joint ventures and
where equity interest are over 10%. Ongoing business transactions with these entities
are on normal commercial terms.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00736": { "value": "Associates, joint ventures (JVs) and equity investments
In their roles as providers of finance, NatWest Group companies provide development
and other types of capital support to businesses. These investments are made in the
normal course of business. To further strategic partnerships, NatWest Group may seek
to invest in third parties or allow third parties to hold a minority interest in a subsidiary of
NatWest Group. We disclose as related parties for associates and joint ventures and
where equity interest are over 10%. Ongoing business transactions with these entities
are on normal commercial terms.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00771": { "value": "Associates, joint ventures (JVs) and equity investments
In their roles as providers of finance, NatWest Group companies provide development
and other types of capital support to businesses. These investments are made in the
normal course of business. To further strategic partnerships, NatWest Group may seek
to invest in third parties or allow third parties to hold a minority interest in a subsidiary of
NatWest Group. We disclose as related parties for associates and joint ventures and
where equity interest are over 10%. Ongoing business transactions with these entities
are on normal commercial terms.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00301": { "value": "33 Post balance sheet events
A post balance sheet event is an event that takes place between the reporting
date and the date of approval of the financial statements. Significant events are
included in the financial statements either to provide new information about
conditions that existed at 31 December 2024 (reporting date), including estimates
used to prepare the financial statements (known as an adjusting event) or to
provide new information about conditions that did not exist at 31 December 2024
(non-adjusting events). This note provides information relating to material non-
adjusting events.
Other than as disclosed in the accounts, there have been no other significant events
subsequent to 31 December 2024 which would require a change or additional disclosure. ", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00207": { "value": "36 St Andrew Square Edinburgh, EH2 2YB", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:2138005O9XJIJN4JPN90", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } } } }