NatWest Group plc
2025 Annual Report
and Accounts
Succeeding
with customers
NatWest Group plc
2025 Annual Report
and Accounts
Succeeding
with customers
NatWest Group plc
2025 Climate Transition Plan Report
Succeeding
with customers
2025 Annual
Results
NatWest Group plc
A vital and trusted partner to over 20 million customers across
our Retail Banking, Private Banking & Wealth Management,
and Commercial & Institutional businesses.
progress
We’re the bank that
turns possibilities
into
Annual Report and Accounts
Disclosures related to our strategic performance,
governance and remuneration, and risk and capital
management, along with our financial statements and
related notes, including the independent auditor’s report.
Climate Transition Plan Report
Disclosures related to progress against our climate
transition plan.
Annual Results
Our latest company information, including our financial
performance for the year.
Our 2025 annual reporting suite
Read more and
download our
reports at
natwestgroup.com
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
Strategic report
Inside this report
2
Strategic report
4
2025 financial highlights
6
Group Chair’s statement
8
Group Chief Executive’s review
12
Our business model
15
Delivering our strategy
16
Our investment case
18
Key performance indicators
20
Progress against our 2025
strategic priorities
22
Market environment
25
Business performance review
25
Retail Banking
28
Private Banking &
Wealth Management
31
Commercial & Institutional
33
Our stakeholders
36
Section 172(1) statement
39
Sustainability review
39
Our approach to sustainability
41
Supporting customers and
communities through our
banking products and services
46
Innovation in our products
and services
48
Supporting the climate transition
57
Safeguarding information and
tackling financial crime
59
Skilled, engaged and
inclusive workforce
64
Driving a culture of integrity and
responsible risk management
67
Additional sustainability information
74
Risk overview
80
Viability statement
82
Financial review
83
Group Chief Financial Officer’s review
84
Financial summary
88
Segment performance
94
Summary financial statements
95
Governance and remuneration
96
Corporate governance report
96
Our Board
99
Board composition
100
Executive management team
101
Chair’s introduction
102
Governance at a glance
122
Report of the Group Nominations
and Governance Committee
124
Report of the Group
Audit Committee
131
Report of the Group Board
Risk Committee
137
Report of the Group
Technology, Innovation
and Simplification Committee
140
Directors’ remuneration report
144
Remuneration at a glance
146
The directors’ remuneration policy
and wider workforce remuneration
151
Annual remuneration report
169
Compliance report
172
Report of the directors
176
Statement of directors’ responsibilities
177
Risk and capital management
178
Risk management framework
187
Credit risk
234
Capital, liquidity and funding risk
254
Climate and nature risk
257
Market risk
267
Pension risk
268
Operational risk
272
Compliance and conduct risk
273
Financial crime risk
274
Model risk
275
Reputational risk
276
Financial statements
277
Independent auditor’s report
291
Consolidated financial statements
298
Accounting policies
305
Notes to the consolidated
financial statements
376
Parent company financial statements
and notes
394
Non-IFRS financial measures
399
Additional information
400
The capital requirements (country
by country reporting) Regulations
403
Risk factors
423
Material contracts
425
Shareholder information
428
Presentation of information
428
Forward-looking statements
Approval of Strategic report
The Strategic report for the year
ended 31 December 2025 set out
on pages 2 to 81 was approved by the
Board of directors on 12 February 2026.
By order of the Board
Gary Moore
Chief Governance Officer and
Company Secretary
12 February 2026
Group Chair:
Rick Haythornthwaite
Executive directors:
Paul Thwaite (Group CEO)
Katie Murray (Group CFO)
Non-executive directors:
Josh Critchley
Roisin Donnelly
Patrick Flynn
Geeta Gopalan
Yasmin Jetha
Stuart Lewis
Gill Whitehead
Lena Wilson
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
1
Strategic report
Succeeding
At the heart of NatWest Group is a clear ambition
– succeeding with customers. It’s what drives
us to build enduring relationships with the
businesses and communities we serve across
every region of the UK, helping them to grow,
adapt and succeed in a changing world.
Our strategy helps turn possibilities into progress.
From supporting customers in managing their
money and planning for the future, to starting
and building their businesses, we’re focused on
growing as they grow – succeeding by meeting
more of their needs and helping to deliver growth
across the wider UK economy.
with customers
across the UK
Hear from our customers
about how NatWest
Group has enabled
them to succeed.
investors.natwestgroup.com/
annual-report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
2
Strategic report
Colchester
London
Lake District
Dumfriesshire
Manchester
Birmingham
Leeds
Orkney Islands
p45
Connecting island communities
through flying banking
p21
Backing local
businesses
to thrive
p5
Financing
infrastructure
that drives
regional growth
p27
Building
trusted
customer
relationships
p30
Powering growth
in the UK’s EV
infrastructure
p24
Building
financial
confidence
p14
Enabling the growth
of a sustainable
farming business
p73
Opening up new
export markets
p38
Supporting
start-ups
to scale
p11
Championing
manufacturing
growth
Pontardawe
Cookstown
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
3
Strategic report
2025: another year of strong financial performance
(1)
Litigation and conduct costs of £167 million (2024 – £295 million).
(2)
Retail Banking customers with active current accounts that have accessed a digital platform (online or mobile) and not used the branch or telephony in a rolling 90 days in the reporting period. Inactive customers and customers with no channel usage, mortgages and savings
accounts, and interactions via the Post Office are excluded from the scope of measurement. Read more on the scope of measurement in 2025 Sustainability Basis of Reporting.
(3)
Commercial & Institutional (ring-fenced bank) customers with active non-personal account/s that access their account 95% or higher through digital channels for three rolling months in the reporting period ending 31 December 2025. Read more on the scope of measurement in
our 2025 Sustainability Basis of Reporting.
(4)
RWA management savings are achieved through multiple levers including significant risk transfers, credit risk insurance, asset sales and balance sheet optimisation.
(5)
Distributions paid and proposed. For full details of our distributions over the last three years refer to page 17.
(LA) Metric subject to independent Limited Assurance by EY. Refer to page 71.
Read more in our Financial review on pages 83 to 94.
2025 financial highlights
Delivering
attractive
returns
Link to remuneration
Key performance indicators
Return on Tangible Equity
19.2%
2024: 17.5%
Dividend per ordinary share
32.5p
2024: 21.5p
Total capital returned to
shareholders
(5)
£4.1bn
2024: £4.0bn
Buybacks
£1.5bn
2024: £2.2bn
Income
£16,641m
2024: £14,703m
Operating expenses
£8,262m
2024: £8,149m
Capital generation pre-distributions
252bps
2024: 243bps
Profit before tax
£7,708m
2024: £6,195m
Operating expenses
(excl. litigation and conduct)
(1)
£8,095m
2024: £7,854m
Common Equity Tier 1
(CET1) ratio
14.0%
2024: 13.6%
Loans and advances
to customers
£418.9bn
2024: £400.3bn
Retail Banking customers
banking entirely digital
(2)
81.8%
(LA)
2024: 78.7%
Risk-weighted assets (RWA)
management actions
(4)
£10.9bn
2024: £6.8bn
Customer deposits
£443.0bn
2024: £433.5bn
Commercial & Institutional customers
banking digital first
(3)
84.5%
(LA)
2024: 82.9%
Average Liquidity Coverage Ratio
(LCR)
147%
2024:151%
Highlights against our strategic priorities
Disciplined
growth
Bank-wide
simplification
Active balance sheet
and risk management
+13%
+24%
+5%
+2%
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
4
Strategic report
Advice on procuring
a £160 million
debt package.
Providing bespoke
financial solutions
and expertise.
Supporting
critical UK
infrastructure
projects.
Case study – supporting balanced UK growth
Alex Tong (left) and David Basra, NatWest Group Head of Structured Financing (right)
‘It really feels as though
NatWest is an extension of
our team. The support that
NatWest has provided to the
airport will help expand the
terminal, create new jobs, drive
regional growth, and enhance
the passenger experience.’
Alex Tong, Chief Financial Officer,
Leeds Bradford Airport
infrastructure
that drives
regional growth
Succeeding with customers
Financing
Our impact
Backing critical infrastructure projects is a
key way in which NatWest Group is driving
economic growth across the UK. During
2025, we advised Leeds Bradford Airport
(LBA) on procuring a £160 million debt
package to advance the airport’s ambitious
terminal expansion, while also supporting it
with a significant balance sheet commitment.
LBA connects over four million passengers
annually to more than 80 destinations.
By understanding the airport’s needs and
ambitions, we are leveraging the bank’s
full capabilities – including debt advisory,
financing, ESG and ratings advisory, hedging
derivatives, and operational banking – to
help the airport achieve its goals.
Leeds
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
5
Strategic report
Building the conditions for growth
Group Chair’s statement
Dear shareholders,
2025 was a year of strong performance and
progress for our bank. Indeed, profits and
returns were both up from 2024, so too our
lending, deposits and the number of customers
we serve.
We consistently outperformed expectations –
delivering for our customers, shareholders,
and the wider UK.
These achievements reflect the dedication of
our colleagues and the trust placed in us by
those who choose to bank with us, as well
as by the communities we serve.
Invest, innovate and succeed
Fundamentally, I’m optimistic about the future
for our bank and for the UK. In the short term,
our economy continues to demonstrate
considerable resilience, with lower inflation
and modest growth on the horizon for 2026.
Yet the economic landscape remains complex:
uncertainty in global markets continues
to affect sentiment; energy prices remain
volatile; and some sectors are still adjusting
to increases in the cost of doing business.
Looking further ahead, the UK’s inherent
advantages – talent, infrastructure, and a spirit
of enterprise – are sources of enduring strength.
And banks are the connective tissue of the UK
economy. Our sector’s performance over the
past 12 months underscored the vital role we
play as strategic assets, driving economic
growth in every country and region.
Of course, a predictable, proportionate
approach to regulation and policy making
is essential; this is the underlying drumbeat
that gives businesses and consumers the
confidence to invest, innovate and succeed.
The UK Government’s growth agenda has
made important early progress, most notably
through the Leeds Reforms and a shift towards
a more proportionate, pro-growth regulatory
approach. But delivery at pace now matters,
and collaboration between the private sector
and government remains crucial.
Together, we can build a stable, supportive
environment that fosters innovation and
secures the UK’s position as a global
financial leader.
Succeeding with customers and
the UK
My domestic and international engagements
with regulators, business leaders and investors
throughout the course of 2025 only served to
reinforce for me the scale of opportunity in
the UK.
From Singapore to Washington and from
Edinburgh to Romford, Birmingham and
Liverpool, it’s clear that there is a genuine
appetite to understand how banks in the
UK can drive growth and have a positive
social impact.
Our unique regional infrastructure means we
have a particular role in facilitating balanced
UK growth. That role is rooted in our purpose,
as the bank that turns possibilities into
progress. By focusing on our core activity,
we help businesses start, scale and adapt,
and we support individuals to manage their
money and plan for the future.
I’ve seen the impact of this first-hand.
At our Accelerator anniversary pitch event
in Manchester in July, entrepreneurs shared
how our hubs helped them secure funding
and expand their businesses. I’ve also seen
our Financial Foundations workshops in action,
giving people the confidence to build financial
resilience and plan ahead. And, in November,
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
6
Strategic report
Group Chair’s statement continued
at the University of Oxford Equinox Partnership
dinner, I had the opportunity to connect with
academic and business leaders – bringing
together diverse perspectives and expertise
to unlock new opportunities for our customers
and communities.
By investing in local communities and
supporting the transition to a net-zero economy
we are helping to deliver sustainable growth.
For example, when I visited Tyseley Energy
Park in Birmingham, I saw how our support is
helping to deliver practical low-carbon initiatives,
like renewable energy and cleaner transport
options, that aim to make a real difference for
local businesses and the community.
In 2025, NatWest Group stepped up and
stepped forward, and there is much more
we can do in 2026 and beyond. Because this
is what our growth plan really stands for:
supporting our customers to succeed in a
changing world.
Competing and winning in a
changing market
As a Board, our role is to work with
the executive team to ensure we have a
strategy that delivers value today and positions
NatWest Group for sustainable success in the
years ahead. Transformations at scale are
never easy but they are necessary. Our
financial performance demonstrates that
the strategy set by NatWest Group’s CEO
Paul Thwaite and his team is delivering.
In a rapidly changing environment, its strength
rests on two fundamentals: being close to
customers, while ensuring the bank remains
agile and adaptable. The depth of our
relationships in the communities that we
serve, combined with the scale of our data, is
a source of competitive advantage. It helps us
to understand, anticipate and respond to our
customers’ changing needs – from the demand
for seamless, personalised experiences to
the opportunities created by emerging
technologies. These insights allow us to
innovate with purpose and deliver solutions
that make banking simpler, safer and
more accessible.
One of the clearly emerging customer needs is
the growing requirement for financial planning,
savings and investment advice. As a Board,
we fully supported the £2.7 billion acquisition
of Evelyn Partners – creating the UK’s leading
private bank and wealth management
business. We are confident it meets the
high bars Paul has set for acquisitions; it
is strategically and financially compelling,
operationally deliverable and Evelyn Partners
is a strong cultural fit, with a shared
customer-first focus.
The companies that will win in today’s
landscape are those that start with the
customer in everything they do. This means
more than using data and insight effectively.
It’s about empowering the front line, trusting
those closest to our customers to make the
decisions on how best to serve them and
ensuring our central teams and functions
work seamlessly in service of them.
Because one thing is certain – customer
expectations and how they choose to bank
will look very different in the years ahead.
In an environment where competition is coming
from every corner, we need a bank that is
agile, adaptable and able to innovate at pace
– while shaping the future responsibly. That
means setting the benchmark for trust and
innovation in financial services, ensuring
progress is sustainable, and leading the
industry in a way that benefits customers,
communities and the wider economy.
A strengthened and engaged Board
Since taking up the role of Chair, my priority has
been to build a Board that is highly engaged
and constructively challenging – a group of
trusted colleagues to complement our
executive team.
Through our ‘Board on the Road’ programme,
directors have spent more time with customers
and colleagues across the UK, gaining
first-hand insight into the challenges and
opportunities they face. These experiences
inform our thinking and ensure that strategy
is grounded in reality.
In November 2025, we welcomed Josh
Critchley as an independent non-executive
director and on 23 February 2026, Albert
Hitchcock will join the Board. With decades of
experience across banking and other sectors,
their deep expertise will be an asset to the
Board, particularly as we continue to pursue
our growth ambitions and navigate an
evolving market landscape.
We also announced that Yasmin Jetha will
retire from the Board on 31 March 2026.
I’d like to thank Yasmin for her outstanding
contribution to the Board and its committees
since her appointment in 2017. She has been
a highly valued director and colleague, and she
leaves with our very best wishes for the future.
I would like to thank all of the Board, and all
of our colleagues, for their hard work and the
support they have given to our customers
throughout 2025. Having a team that is
committed to steering NatWest Group through
a period of rapid change with clarity and
confidence ensures we remain focused on
delivering growth and securing NatWest
Group’s long-term success.
I must also recognise the great sadness all of
us felt at the passing of Frank Dangeard, Chair
of NatWest Markets, in August 2025. Frank’s
wisdom, integrity, and commitment left an
indelible mark on all who had the privilege to
work alongside him, both at NatWest Group
and across the course of his career. On behalf
of the Board, I extend our deepest condolences
to Frank’s family and all who knew him.
Return to private ownership –
a forward-looking chapter
Of course, 2025 also marked a key milestone
for NatWest Group – our return to full private
ownership. In May 2025, the UK Government
sold its very last shares in the bank – a
testament to our consistently strong performance,
the considerable progress that has been made
under successive management teams and a
marker of the long-term transformation that
has made NatWest Group simpler, stronger,
and more customer-focused.
We saw a continued strong share price
performance throughout 2025 – up 62% –
reflecting greater certainty at a macro level,
heightened positivity around UK banks, and,
above all, the consistency of our delivery, as
well as the confidence investors have in our
future ambitions.
We have also delivered for shareholders.
Having increased our ordinary dividend payout
ratio to around 50% of attributable profit, we
have declared total dividends of 32.5p per
share for 2025 (up 51.2% year on year),
and announced £750 million of on-market
buybacks for the year – all underpinned by
strong capital generation and a CET1 ratio
of 14.0%.
We are deeply grateful to the UK public and
Government for their support over the years.
As we move forward, we do so as a partner
in growth, committed to building value for our
shareholders and the UK. This milestone marks
the beginning of a new chapter. We begin
2026 with confidence, conviction and positive
momentum on which we can build.
I am proud of what NatWest Group
accomplished in 2025. Our progress is the
result of collective effort, disciplined execution,
and a steadfast commitment to our purpose.
As we look ahead, I firmly believe that NatWest
Group is well positioned to lead, to innovate,
and to deliver for all of our stakeholders.
Rick Haythornthwaite
Chair
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
7
Strategic report
Group Chief Executive’s review
Accelerating from
a position of strength
NatWest Group delivered another strong
year in 2025, rooted in our support for people,
families and businesses in every nation and
region of the UK.
We increased our customer base by around a
million customers, grew our profit before tax to
£7.7 billion, and delivered a Return on Tangible
Equity (RoTE) of 19.2%, while strong capital
generation and distributions came from
increased profitability and disciplined balance
sheet and risk management. What matters
most, however, is what sits behind these
results: the trust our customers place in us
every day; the commitment of our colleagues;
and our responsibility to create sustainable
value for our shareholders.
2025 also marked a symbolic milestone as
we returned to full private ownership, offering
an opportunity to reflect on how far the bank
has come. Looking ahead, we have renewed
confidence in what we can achieve for
NatWest Group, our shareholders, and as
a trusted partner to our customers and the
wider UK economy.
I’m proud to have led this bank over the past
two years. In this time, we’ve moved decisively:
we’ve sharpened our customer focus; simplified
the organisation; accelerated our technology
strategy; and invested with intent in our future.
These choices are now translating into robust
performance and clear momentum across
NatWest Group.
We start 2026 from a position of strength.
That strength gives us the confidence to raise
our ambition and accelerate our progress –
so we can go further to win together with
our customers, colleagues, shareholders and
the communities we are proud to serve across
the UK.
Succeeding with customers
Disciplined growth
All three of our customer businesses –
Retail Banking, Private Banking & Wealth
Management, and Commercial & Institutional –
delivered broad-based growth in 2025, with
more customers choosing to bank with us.
We now serve over 20 million people, families
and businesses across the UK – acting as a
trusted partner to help meet their ambitions.
We supported more customers to manage
their money with confidence, with deposit
growth in all three business segments totalling
£10.4 billion across NatWest Group in 2025.
And, with saving and investing increasingly
part of the national conversation, more than
50,000 customers invested with us for the first
time, benefiting from the expert advice of our
wealth management teams and ease of our
digital offer. This helped us to grow assets
under management and administration by 20%.
We also supported customers through key
life events, such as helping more than 200,000
new customers to buy or remortgage a home
in 2025 – up 18% on 2024 – and empowered
more families to build healthy financial habits
through our youth proposition, Rooster Money,
which now serves 15 times more customers
than when we acquired it in 2021.
Our success reflects our ability to anticipate
and respond to changing customer needs, with
the right services and innovative propositions.
For personal customers, our Family-Backed
Mortgage addresses the real challenge of
affordability for many people and allows
family members to help first-time buyers
while preserving independent ownership.
This contributed to our increased support
for first-time buyers, helping over 50,000
customers get onto the housing ladder in 2025.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
8
Strategic report
Group Chief Executive’s review continued
Strong organic growth was complemented
by the successful integration of around one
million Sainsbury’s Bank customers and the
£2.3 billion Metro Bank mortgage portfolio –
demonstrating our integration capability and,
most importantly, creating the opportunity
to deepen relationships with new customers.
As the UK’s biggest bank for business,
we support 1.5 million companies, from
sole-traders to multinational corporates.
With a leading share of UK start-ups, and
the largest presence in the mid-market
sector, we’re uniquely positioned to partner
businesses at every stage of their growth.
We helped more of our business customers
to scale and grow, with lending across
Commercial & Institutional up around 10% in
2025, compared with 2024. By supporting UK
businesses, we’re also helping to deliver key
economic priorities for the UK. In 2025, we
were the leading lender to UK infrastructure,
and we expanded our support to social
housing and sustainable finance – helping
to strengthen communities and underpin
long-term growth.
In an increasingly volatile market, we’ve helped
more businesses manage their risk effectively
by making it easier to access our foreign
exchange (FX) and international payment
services through faster onboarding and a
simpler digital experience, with over 130
currencies now supported. Improvements
in our offer meant around 700 mid-market
businesses used the service for the first time
in 2025.
We also helped more high-potential
firms to grow with access to our innovative
intellectual property-backed lending. Around
50% of the completed IP-backed loans were
with customers new to NatWest Group,
demonstrating the opportunity open to
us when we pair our expertise with a
distinctive customer proposition.
A simpler bank
Today, NatWest Group is a simpler bank. It is
less complex, with transformed capabilities and
the right building blocks to scale and adapt
efficiently as customer expectations evolve.
The technology foundations across our
estate have effectively been rebuilt and
this investment has increased our agility
and strengthened resilience. We have
decommissioned legacy platforms and
advanced our data transformation at pace.
In Private Banking & Wealth Management,
we have migrated our engineering operations
from Switzerland to the UK and India, creating
the capacity to scale. For our Commercial &
Institutional customers, the re-platforming of
Bankline (our digital channel for mid-market
and corporate customers) has created a more
connected experience and allows us to provide
more services digitally in one place. Building
a single trusted view of our customers is
enabling us to offer a more personalised
service, faster decision-making and more
intelligent risk management across the bank.
To drive delivery across the bank, we have
rapidly scaled our in-house engineering team
and opened a new hub in Bengaluru, India.
We are now innovating faster and have almost
halved the time it takes to deploy new features,
compared with 2024 – making banking quicker,
easier and safer for customers.
Strategic partnerships with global technology
leaders, including AWS, OpenAI and Google,
have helped us to accelerate and scale our
technology strategy, and in turn, increase
productivity. In addition, our newly established
AI Research Office is at the forefront of
cutting-edge research, leading responsible
innovation and building further AI capabilities
for the bank. Our investment in our FinTech
Growth Programme has also significantly
strengthened our innovation pipeline.
These initiatives give us early access
to new and emerging technologies.
By providing all colleagues with AI tools to
support their daily work, we have freed up
capacity to better meet customers’ immediate
needs and understand their future requirements.
A trusted partner for UK growth
2025 was a year of macroeconomic
uncertainty, with international and domestic
events affecting customers in different ways.
Despite the volatility, we remained cautiously
optimistic about the outlook with several
factors reinforcing this measured optimism:
the UK economy has continued to grow;
unemployment remains low by historical
standards; inflation is moving in broadly the
right direction; and, on aggregate, households
and businesses continue to hold relatively
robust savings buffers.
This economic resilience was reflected in the
healthy levels of customer activity during 2025.
Housing market activity remained robust, with
mortgage volume growth across the sector
supported by temporary changes to stamp
duty thresholds in the first half of the year.
Retail sales volumes returned to positive
year-over-year growth after a challenging few
years and discretionary spending picked up in
areas such as travel and hospitality. Businesses
continued to invest for the future, and UK
exports increased despite headwinds. Taken
together, these are encouraging signals that
the underlying conditions for growth remain
in place.
We strongly believe in the UK’s long-term
potential. The UK Government has positioned
the financial services sector as central to its
growth strategy and to the UK’s strength
on the global stage. The UK has world-class
universities and innovation clusters, leading
scientific research, deep capital markets and
highly skilled people – the potential of which
can be unlocked through an internationally
competitive banking sector.
Strong economies need strong banks. But our
role goes well beyond lending: it demands our
deep expertise; our convening power across
sectors and regions; and our ability to connect
capital with opportunity. I have seen the
impact we can deliver for our customers
and communities across the UK. For example,
start-ups participating in our free Accelerator
community grow their turnover 35% more on
average than peers; and the expertise of our
colleagues is building financial confidence at
scale – our NatWest Thrive and Financial
Foundations programmes reached more than
one million people in 2025, providing financial
education in the places where people live,
learn and work.
In March 2025, we brought together our first
Mid-Market Growth Council to provide a
unified voice and to advocate for the often-
overlooked mid-sized business sector, helping
to unlock their significant growth potential.
Our research found that just 1% growth in
this segment could add £35 billion to the UK
economy, with £24 billion of that outside the
south-east of England.
Our commitment to sustainable growth
is rooted in our purpose, with the aim of
delivering positive impact through our core
activity as a bank. By turning our customers’
possibilities into progress we can help build
better, more resilient businesses, and support
people and families to manage their money,
save and invest for the future.
The conditions for growth will be built further
by a stable and proportionate regulatory and
policy environment. The UK Government’s
focus on balanced regulation which promotes
competition and growth, as well as managing
risk and consumer protection, is a welcome
step forward. We have already seen tangible
change in targeted areas. For example, the
adjustment to mortgage rules enabled us to
lend more to first-time buyers, and we have
committed to grow our support in 2026, with
a further £10 billion of lending.
As we look ahead to 2026, further regulatory
review could unlock additional customer
benefits and UK growth opportunities; for
example, the ongoing Advice Guidance
Boundary Review should help to make financial
advice more accessible, and the Prudential
Regulation Authority’s review of its rules
on ring-fencing has the potential to create
greater capital capacity for the banking
sector to support growth.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
9
Strategic report
Group Chief Executive’s review continued
Based on our current
macroeconomic assumptions,
In 2026
(2)
we expect:
•
Total income excluding notable items
in the range of £17.2-17.6 billion.
•
Operating expenses, excluding
litigation and conduct costs,
around £8.2 billion.
•
Loan impairment rate below
25 basis points.
•
Return on Tangible Equity greater
than 17%.
•
Capital generation pre-distributions
around 200 basis points.
In 2028 we expect:
•
Customer assets and liabilities
(3)
to
grow at a compound annual rate of
greater than 4% from the end 2025
to end 2028.
•
Cost:income ratio, excluding litigation
and conduct costs, below 45%.
•
Return on Tangible Equity greater
than 18%.
•
Capital generation pre-distributions
greater than 200 basis points.
Capital
•
We now target a CET1 ratio of
around 13.0%.
•
We continue to expect to pay
ordinary dividends of around
50% of attributable profit and will
consider buybacks as appropriate.
•
We expect Basel 3.1 to increase
RWAs by around £10 billion on
1 January 2027.
Outlook
(1)
(1)
The guidance, targets, expectations, and trends discussed in this section represent NatWest Group plc management’s current
expectations and are subject to change, including as a result of the factors described in the Risk Factors section. These statements
constitute forward-looking statements. Refer to Forward-looking statements in this report.
(2)
Excludes the impact of the Evelyn Partners acquisition.
(3)
Customer assets and liabilities (CAL) includes customer deposits, gross loans to customers and AUMA across three businesses Retail
Banking, Private Banking & Wealth Management, and Commercial & Institutional. Investment cash is deducted as it is reported within
customer deposits and AUMA.
Raising our ambition
Our progress has been significant, and it is
clear our strategy is working for both our
customers and our shareholders. But success
today does not guarantee success tomorrow.
Our sector is evolving at pace, with customer
expectations increasing, technology redefining
what ‘best in class’ looks like, and competition
more intense than ever. Against this backdrop,
we are sharpening our strategic focus around
disciplined growth, leveraging simplification,
and active balance sheet and risk management
to drive sustainable value creation.
It is our consistent delivery and the inherent
strengths of this bank that give us confidence
we can go further and faster in this next phase.
Our conviction stems from the enduring
strength of our customer relationships and is
built on our key differentiators. Deep community
roots, expert colleagues, and a UK-wide
relationship manager network mean we are
connected to our customers in their communities.
These strengths, underpinned by technology
and the scale of our customer insight, give us
real competitive advantage.
Customer growth comes from being first
choice in the moments that matter: helping
families with everyday banking and home
ownership; supporting affluent and high-net
worth customers to manage and grow their
wealth; and backing high-growth businesses,
whether they are start-ups or those with
global ambitions.
Our recently announced acquisition of Evelyn
Partners will create the UK’s leading private
bank and wealth management business.
Not only does this build scale and strength in
our Private Banking & Wealth Management
business, but it will transform the services our
customers across NatWest Group can expect
from us. Evelyn Partners brings leading
investment capabilities, a quality direct-to-
customer investment platform in Bestinvest –
and the biggest in-house team of financial
planners in the UK, as well as a strong regional
footprint – helping us to better support and
serve customers through each stage of their
financial lives.
We’re also building and deepening our
customer relationships with more personalised,
relevant experiences, propositions and
partnerships. For example, our specialist
Venture Banking support has been carefully
designed to help boost the UK’s innovation
economy and our newly announced strategic
partnership with Rightmove will help ensure
we’re there at the right time, as a trusted
partner when customers are making key
financial decisions.
Leveraging simplification
The next phase of our simplification sees us
move from ‘build’ to ‘benefits’, leveraging the
investment we’ve made in our infrastructure
and capabilities to deliver customer growth
and even greater productivity.
In a highly competitive environment, future
strength will be decided by how seamlessly
a bank operates in service of its customers.
Harnessed correctly, technological advancement
and AI can be a game-changing accelerant,
reducing complexity and removing bureaucracy
to help make decisions faster, deepen
relationships and deliver transformed
customer experiences.
Trust, however, remains the keystone of
banking. As technology accelerates, we are
focused on keeping customers safe, protecting
them from new and emerging risks, and leading
in the responsible and ethical use of data and AI.
To realise our ambition, it’s essential we drive
active balance sheet and risk management.
We are bringing more dynamism to how we
manage pricing, capital and risk, ensuring we
remain resilient through cycles – a safe, secure
and dependable partner for customers, while
sustaining attractive returns.
Customer success
We want to be known not only for the
quality of our service and the strength of our
technology platforms, but also for the depth of
our relationships and expertise of our people.
As trusted partners, we are empowering our
front-line colleagues to use their insights to
make the right decisions for customers and
orientating the whole organisation around
our customers’ needs: measuring all
colleagues’ success by the quality of
our customers’ experiences.
The stretching targets we have set for growth,
productivity and returns reflect our belief that
in pursuing these priorities we will create
sustainable shareholder value. For customers,
the prize is a bank that feels effortless, with
connected, intelligent and personalised services
available whenever and however they choose.
Read more on our Strategy on pages 15 to 20.
Read more on our approach to sustainability on
pages 39 to 72.
Looking ahead
Our progress and strengthened position are
thanks to the hard work and dedication of our
colleagues across the UK and internationally.
While we have momentum across NatWest
Group, there is no room for complacency.
Banking moves quickly, and customer
expectations move faster still.
We’ve built the foundations and capabilities to
both anticipate change and respond at pace.
All this is done in service of our customers,
deepening trust and relationships. We can
further accelerate our growth potential using
the full strength of NatWest Group – using the
expertise and connections across our three
businesses to build even stronger customer
relationships, deliver sustainable returns
and make a meaningful contribution to
the UK economy.
Paul Thwaite
Group Chief Executive Officer
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
10
Strategic report
A management buyout was the catalyst
for industrial manufacturer Maxflow
Power Products to expand its operations.
Based in Cookstown, County Tyrone,
the company set out to invest in new
manufacturing capability, grow its
workforce and reach new markets.
Building on a 20-year relationship, Ulster
Bank, part of NatWest Group, supported
the buyout with a multi-million-pound
package and continued to provide
working capital, invoice discounting
and trade finance.
Now, with phase one of a three-phase
manufacturing facility in place, Maxflow
Power Products is progressing with
confidence. Since the buyout, staff
numbers have increased and the company
continues to strengthen its presence
across the UK, the Republic of Ireland
and in international markets.
Our impact
Multi-million-pound
support package to
back a management
buyout.
Trade finance
support to help
open new
international
markets.
Funding through
working capital
facilities and invoice
discounting.
Cookstown
Case study – helping build better businesses
Ryan Wylie (left) and Leona McNicholl, Ulster Bank Relationship Manager (right)
Succeeding with customers
‘Ulster Bank has been
instrumental in supporting
our growth and gives us the
confidence to go forward and
make big investment decisions.
They understand our business and
how it works, and without those
facilities in place we simply
wouldn’t be able to grow at
the rate that we are.’
Ryan Wylie, Managing Director,
Maxflow Power Products
manufacturing
growth
Championing
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
11
Strategic report
Our business model
How we create value for our
network of stakeholders
Investors
We actively engage with investors and support
efforts to strengthen NatWest Group’s position
and sustainable long-term value.
Colleagues
By supporting our colleagues and striving to
make NatWest Group a great place to work,
we will provide them with the capabilities they
need to succeed with customers.
Communities
As a leading bank in the UK, we believe we
can make a real and positive difference in
the communities we live and do business in.
Regulators
We understand the need to have an ongoing,
constructive and open dialogue with all relevant
regulatory bodies and embed this approach
across our business.
Suppliers
We collaborate with stakeholders to integrate
sustainable practices into procurement
processes, prioritising engagement with
suppliers that align to our climate and
sustainability-related ambitions.
Every day, customers trust us to support the moments that matter in their lives and
businesses. We generate income by providing the services they need to manage their
money, plan for the future and grow with confidence. Serving over 20 million
customers, we aim to build long-term value, trust and sustainable growth.
Private Banking & Wealth Management
Commercial & Institutional
Retail Banking
Our key relationships and resources
Through these we aim to achieve the following:
What sets us apart, locally
and nationally:
Trusted relationships at scale
Reach across the UK, rooted locally
Leading retail bank for everyday banking needs
A distinctive Private Banking & Wealth Management business
Biggest business bank in the UK
Customers
We aim to understand our customers’ needs
and provide the right services and expertise
to help them achieve their goals, now and in
the future.
Relationships
Deep, long-standing customer
and community relationships.
Extensive, UK-wide business
and retail regional infrastructure.
A highly skilled, engaged and
inclusive workforce.
Strategic partnerships with
global technology leaders.
Resources
Agile operating model, able to
respond at pace.
Three distinctive and complementary
banking businesses with established
multi-channel brands.
Strong market positions in a growing UK market.
Large scale of quality data.
A dynamic and well-resourced innovation pipeline.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
12
Strategic report
Our business model continued
Multi-channel brands serving over 20 million customers
16.5%
share of current accounts
(1)
12.5%
share of UK mortgages
(2)
7.2%
share of unsecured lending
(3)
Award-winning
UK private bank and wealth manager
£58.5bn
AUMA
£4.6bn
AUMA net flows
~25%
share of deposits
(4)
~20%
share of lending
(5)
Best bank
corporate banking in the UK
(6)
Strong market positions with extensive product and service offering
(1) Current account balances outstanding, based on
November 2025 CACI data.
(2)
Stock share of Retail Banking and Private Banking
& Wealth Management mortgages, calculated as a
percentage of balances outstanding of total sterling
net secured lending to individuals not seasonally
adjusted as per December 2025 BoE data.
(3) Based on unsecured lending, including cards,
loans, overdrafts and central items, calculated
as a percentage of balances outstanding of total
(excluding the Student Loans Company) sterling
net unsecured lending to individuals not seasonally
adjusted based on December 2025 BoE data.
(4)
Based on customer deposits (£bn) for Commercial
& Institutional excluding NatWest Markets (NWM)
and RBS International, calculated as a percentage
of M4 liabilities for Private Non-Financial Corporates
(PNFC’s) as per December 2025 BoE data.
(5)
Based on gross loans and advances to customers
at amortised cost for Commercial & Institutional
excluding NatWest Markets and RBS International,
calculated as a percentage of monthly amounts
outstanding of sterling and all foreign currency
loans to SMEs and large businesses as per
December 2025 BoE data.
(6)
NatWest was named as “Best Bank – Corporate
Banking in the UK” as part of Coalition Greenwich
2026 Awards.
(7)
Distributions paid and proposed. For full details of
our distributions over the last three years refer
to page 17.
(8)
Target to provide £200 billion climate and transition
finance (as defined in our climate and transition
finance framework available at natwestgroup.com)
between 1 July 2025 and the end of 2030. Climate
and transition finance represents only a relatively
small proportion of our overall financing and
facilitation activities. Refer to pages 48 to 56
for further details.
(9) For more information on NatWest Accelerator,
refer to page 43.
(10) For more information on our Financial Foundations
workshops, refer to page 42.
Metric subject to independent Limited Assurance
by EY. Refer to page 71.
We serve customers across the UK with
a comprehensive range of banking
products and services – including
current accounts, savings, mortgages,
and personal unsecured lending –
supporting them in key financial
moments throughout their lives.
We serve the banking, lending and
wealth management needs of UK-
connected high and ultra-high-net-worth
individuals and their interests. Our
Investment Products & Solutions team
delivers investment solutions to customers
and clients across NatWest Group.
Through specialist sector knowledge and
capabilities, we deliver extensive product
propositions across banking, payments,
fixed income and FX. UK-based with
international hubs.
Creating value for our stakeholders
Retail
Banking
Youth to
affluent
Private Banking &
Wealth Management
High-net-worth
Commercial
& Institutional
Start-ups, SMEs, large corporates and
financial institutions
£4.1bn
total capital returned
to shareholders.
(7)
97%
of all customer needs
met through digital channels in 2025.
£19.0bn
(LA)
climate and transition finance
provided 1 July 2025 to
31 December 2025.
(8)
89%
Our View colleague
survey inclusion score.
£11.0m
direct community
investment.
£4.4m
raised for many causes and
142,775 hours volunteered.
12,000
members joined our Accelerator app
since its launch in March 2025.
(9)
1,500
Financial Foundations workshops
were delivered to over 31,000
participants in 2025.
(10)
Read more about our business
performance on pages 25 to 32.
Read more in our Financial review
on pages 83 to 94.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
13
Strategic report
Dumfriesshire-based business, Firth
Farming has been supported by NatWest
Group to grow and innovate its farming
practices. Named Sustainable Farm of
the Year at the 2025 Scottish Agriculture
Awards, the Jamieson family who run
Firth Farming has been farming 270
hectares since the early 1950s and
considers sustainability essential to
future-proofing its business.
A long-standing NatWest Group customer,
Firth Farming has modernised its dairy unit
with support from Lombard Asset Finance
– enabling it to adopt three-times-a-day
milking. As the farm looks to improve
productivity and sustainable practices
further, the deep understanding the bank
has of the business means we’re well
placed to help it achieve its future goals.
Our impact
Modernisation of a
dairy unit enabled
by Lombard Asset
Finance.
Investment to help
boost production.
Long-term
relationship
management
to help the
business grow.
Dumfriesshire
the growth
of a sustainable
farming business
Case study – helping build better businesses
Enabling
John Jamieson (left) and Samantha Swift, NatWest Group Climate Lead (right)
Succeeding with customers
‘One of the best things about
being a customer is the sense
of connection we have with the
bank. The relationship manager
is always keen to hear our plans,
to give us support, and to help
see projects through. And that’s
been vital to our business.’
John Jamieson, owner of Firth Farming
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
14
Strategic report
Our strategy
Delivering our strategy
Building enduring, trusted relationships with
our customers is the cornerstone of our strategy.
It connects our purpose with our ambition, and
is structured around three strategic priorities.
Our performance makes clear our strategy is working. However, in an
ever-competitive and fast-moving landscape, we have sharpened the
focus of our priorities going forward around:
•
Disciplined growth
– sustainably growing by building stronger
and deeper relationships, whilst attracting new customers.
•
Leveraging simplification
– moving forward from bank-wide
simplification, maximising our technology and capability to deliver
customer growth more efficiently and effectively.
•
Active balance sheet and risk management
– actively managing
our balance sheet and risk as a trusted partner to customers,
delivering growth and sustainable returns.
Through a clear focus on our strategic priorities we are building a more
agile, integrated and technology-driven bank, powered by future-fit
capabilities and guided by three core behaviours:
•
We start with customers.
•
We raise the bar.
•
We own our impact.
We aim to drive positive impact through the core of our business.
Whether we’re supporting customers in managing their money, planning
for the future, or building better, more resilient businesses, our long-term
growth is built on understanding and responding to their priorities,
ambitions and the challenges they face.
We know the success of customers and the UK economy is reciprocal
with our bank’s success. By actively managing economic, social, and
environmental impacts, we can support sustainable customer growth
and create long-term shareholder value.
We’re the bank that turns possibilities into progress, and we succeed
when we succeed with customers.
For more details on how we support our customers and communities through
our approach to sustainability, refer to the Sustainability review section on
pages 39 to 72.
Active balance sheet
and risk management
Disciplined
growth
Leveraging
simplification
Driving impact
through our business
Ambition
Succeeding
with customers
Purpose
The bank that turns
possibilities into
progress
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
15
Strategic report
Investment case
Leading positions
in a growing UK market
A vital and trusted partner to over
20 million customers across our
Retail Banking, Private Banking &
Wealth Management, and
Commercial & Institutional
businesses with a strong track
record of disciplined growth.
•
Extensive footprint in the UK serving
19 million Retail Banking customers
16.5% share of current accounts.
•
Leading private bank and wealth
manager; Coutts, which has been
a trusted brand for over 330 years.
•
The biggest bank for business in the
UK, and one of the leading banks for
UK start-ups.
Our strategic priorities drive sustainable shareholder value creation
Targeting
attractive,
sustainable
growth and
returns for
shareholders
Solid capital and
liquidity position
supporting a target
CET1 ratio of
~13%
Ordinary
dividend payout
ratio target:
~50%
Surplus capital
deployed in pursuit
of organic or
inorganic growth
with residual
returned to
shareholders
via buybacks
7-year
track record of CAL growth
of above 4.6%
~1 million
customers added in 2025
Disciplined growth
Sustainably growing by building
stronger and deeper relationships,
whilst attracting new customers.
2025–2028 target:
Customer assets and liabilities (CAL)
At least 4% CAGR
Leveraging
simplification
Maximising our technology
and capability to deliver
customer growth more
efficiently and effectively.
2028 target:
Cost:income ratio
(exc. litigation and conduct)
below 45%
Active balance sheet
and risk management
Actively managing our balance
sheet and risk as a trusted
partner to customers, delivering
growth and sustainable returns.
2028 target:
Capital generation
pre-distributions
>200bps
2028 Return on Tangible Equity >18%
Purpose: The bank that turns possibilities into progress
Ambition: Succeeding with customers
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
16
Strategic report
2025
2024
2023
Interim dividend
Final dividend
5.5
11.5
6.0
15.5
17.0p
21.5p
9.5
23.0
32.5p
2025
2024
2023
Directed buyback
On market buyback
0.8
1.3
2.2
2.1
2.2
1.5
1.5
2025
2024
2023
68.0
53.5
47.9
2025
2024
2023
384
329
292
Investment case continued
2025 total shareholder returns
(1)
71%
19%
2 year CAGR
Earnings per share (EPS) (pence)
15%
2 year CAGR
Tangible net asset value (TNAV) per share (pence)
(4)
Delivering
shareholder value
2025 was another strong year of
delivery, as reflected by an increase
in share price of 62.1% and a total
shareholder return (TSR) of 71.0%.
This was underpinned by high
returns (RoTE 19.2%) and growth in
CAL (+4.8%), leading to growth in EPS
(+27.1%), DPS (+51.2%) and TNAV per
share (+16.7%).
(1)
Total shareholder return includes the share price
change between 31 December 2023 and 31 December
2025 plus dividends paid during the year, the 2023 and
2024 final dividend and the 2025 interim dividend,
assuming reinvestment at the prevailing share price
(2) Paid and proposed.
(3) As at 31 December.
(4)
The number of ordinary shares in issue excludes own
shares held.
38%
2 year CAGR
Ordinary dividend per share (DPS) (pence)
(2)
Ordinary shares outstanding
(3)
(bn)
UK Government ownership
(3)
(%)
£5.8bn
3 year cumulative
2023-2025
Total buybacks (£bn)
0
8.0
9.99
8.0
37.97
8.8
49.7%
95.6%
71%
2023
2024
2025
+27% vs 2024
+12% vs 2023
+51% vs 2024
+17% vs 2024
+13% vs 2023
+27% vs 2023
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
17
Strategic report
Measuring our 2025 performance
Financial
Key performance indicators
Read more: Sustainability
review on pages 48 to 56 and
Section 172(1) statement
on page 36.
Read more: Our investment
case on page 16 and
our Outlook statement
on page 10.
Read more: Our investment
case on page 16 and
our Outlook statement
on page 10.
Read more: Our investment
case on page 16 and
our Outlook statement
on page 10.
Read more: Our investment
case on page 16 and
our Outlook statement
on page 10.
(2)
Target to provide
£100 billion of climate and
sustainable funding and
financing between 1 July 2021
and the end of 2025.
(1)
Operating costs,
excluding litigation and
conduct costs, to be around
£8.1 billion including £0.1 billion
of one-time integration costs
in 2025.
(1)
Income excluding notable
items to be in the range of
£15.2–15.7 billion in 2025.
(1)
Continue to target a
CET1 ratio in the range
of 13–14%.
(1)
Achieve a Return on
Tangible Equity in the range
of 15–16% in 2025.
Return on
Tangible Equity
19.2%
Common Equity Tier 1
(CET1) ratio
14.0%
Income
(excluding notable items)
£16,400m
Operating expenses
(excluding litigation
and conduct)
£8,095m
Climate and sustainable
funding and financing
(3)
(£bn)
£110.3bn
(LA)
(1)
Performance against 2025 guidance given in our 2024 Annual Report and Accounts.
(2)
Performance against 2025 targets given in our 2024 Annual Report and Accounts.
(3)
For the reporting periods ended 31 December 2024 and 30 June 2025, the NatWest Group climate and sustainable funding and financing inclusion (CSFFI) criteria (available at natwestgroup.com) published in March 2024 were used to determine eligible assets, activities, targets and
companies for inclusion. For the year ended 31 December 2023, the CSFFI criteria published in December 2022 were applied. For the year ended 31 December 2022, the CSFFI criteria published in October 2021 were applied. Climate and sustainable funding and financing represents
only a relatively small proportion of our overall funding and financing activities. The climate and sustainable funding and financing criteria which underpinned our £100 billion target has been retired and replaced with our climate and transition finance framework (available at
natwestgroup.com), which underpins our target to provide £200 billion climate and transition finance (as defined in the framework) between 1 July 2025 and the end of 2030.
17.8%
17.5%
19.2%
2023
2024
2025
2023
2024
2025
13.4%
13.6%
14.0%
£14,339m
£14,648m
£16,400m
2023
2024
2025
£7,641m
£7,854m
£8,095m
2023
2024
2025
2023
H2
2021
2022
2024
Total
H1
2025
£29.3bn
£24.5bn
£8.1bn
£31.5bn
£16.9bn
£110.3bn
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
18
Strategic report
Key performance indicators continued
Commercial & Institutional
banking digitally first
84.5%
(LA)
Build and strengthen
a healthy culture
(4)
84%
Net Promoter Score®
(NPS)
(5)
Non-financial
(1) Performance against 2025 targets
given in our 2024 Annual Report and Accounts.
(2) Retail Banking customers with active current
accounts that have accessed a digital platform
(online or mobile) and not used the branch or
telephony in a rolling 90 days in the reporting
period. Inactive customers and customers with
no channel usage, mortgages and savings
accounts, and interactions via the Post Office
are excluded from the scope of measurement.
Read more on the scope of measurement in
2025 Sustainability Basis of Reporting.
(3) Commercial & Institutional (ring-fenced bank)
customers with active non-personal account/s
that access their account 95% or higher
through digital channels for three rolling months
in the reporting period ending 31 December
2025. Read more on the scope of measurement
in our 2025 Sustainability Basis of Reporting.
(4)
The culture index used to measure culture
consists of 10 questions as defined and
measured in Our View, our colleague survey.
NatWest Group Our View results exclude our
colleagues in Ulster Bank RoI, Poland and
FreeAgent. To enable like-for-like year-on-year
comparisons, all scores are based on the Willis
Tower Watson (WTW) calculation methodology.
(5) NPS
®
and the NPS-related emoticons are
registered trademarks of Bain & Company, Inc.,
NICE Systems, Inc., and Fred Reichheld.
(6)
NatWest Group uses Net Promoter Score (NPS)
methodology across the customer business
segments, reflecting the contribution of each
segment to NatWest Group income. Where
NPS is not applicable, an internal Customer
Touchpoint Rating (CTR) and independent Deal
League tables is applied to assess NatWest
Markets’ customer performance. We met
or exceeded 11 out of the 12 customer
goals set for 2025.
Metric subject to independent Limited
Assurance by EY. Refer to page 71.
Read more: Customer trust
and advocacy on page 35.
Read more: Sustainability
review on pages 59 to 63.
Read more: Sustainability
review on pages 46 to 47.
Read more: Sustainability
review on pages 46 to 47.
(1,3)
Our target was 85%
for Commercial & Institutional
customers for banking digital
first. We narrowly missed
our target, achieving 84.5%
in 2025.
(1)
Achieve our culture
target of 83 points as
measured through the
Our View colleague survey.
(1,2)
Achieve our 80% target
for Retail Banking customers
for banking entirely digital.
(1)
On average, to meet
our targets.
(6)
Targets are
set to maintain or improve.
2025
2024
2023
Disciplined growth
Bank-wide simplification
Active balance sheet
and risk management
Link to remuneration. Read more:
Annual remuneration report on
pages 151 to 168.
2025 target achieved
Target on track
Retail Banking customers
banking entirely digital
81.8%
(LA)
2023
2024
2025
76.8%
78.7%
81.8%
2023
2024
2025
80.9%
82.9%
84.5%
2023
2024
2025
83%
83%
84%
Commercial &
Institutional
NatWest
£0-£750k
NatWest
Retail
Banking
Commercial
& Institutional
NatWest
£750k-£250m
21
-8
23
-7
-5
25
8
5
6
Key
Target not met
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
19
Strategic report
Progress against our 2025 strategic priorities
Delivering our strategy continued
Read more: Chief Executive Officer’s review on pages 8 to 10, Business performance review on pages 25 to 32 and Financial review on pages 83 to 94.
#1
Leading lender in the UK infrastructure sector
and leading flow in digital self-serve mortgages
around 1 million
Sainsbury’s Bank customer accounts
successfully integrated
49%
Share of AUMA in total Private Banking
& Wealth Management CAL
252bps
of capital generation delivered
pre-distributions in 2025
£10.9 billion
benefit from RWA management actions as we
continued to actively manage our balance
sheet and create capacity for lending growth
16bps
Loan impairment rate – below the
2025 guidance of 20 basis points
Disciplined growth
We’ve continued to grow our customer base to over
20 million customers. During 2025, we successfully
integrated around one million Sainsbury’s Bank customer
accounts and launched new NatWest Boxed strategic
partnerships with The AA and Saga. In Private Banking &
Wealth Management we grew customer assets and
liabilities (CAL) by 10% to £119 billion. In 2025,
Commercial & Institutional grew lending by £12.3 billion,
and committed £4.6 billion to UK social housing.
5.6 days
average deployment frequency of code to business
applications in 2025, down from 10.0 days in 2024
51%
of internal and external business service
applications on the cloud in 2025 (2024 – 44%)
>12,000
coders have access
to AI coding assistants
Bank-wide simplification
Our focus on bank-wide simplification enabled us to
reduce complexity in our operating model, drive long-term
customer growth and achieve greater productivity.
To accelerate our progress, we are developing in-house
capabilities to deliver efficiency and innovation. We have
advanced our transition to cloud infrastructure and
established partnerships with global technology leaders,
becoming the first UK bank to sign a strategic
collaboration with OpenAI.
Active balance sheet
and risk management
In 2025, we strengthened our balance sheet, reduced
risk-weighted assets (RWAs) by £10.9 billion, kept cost of
risk low, and returned £4.1 billion to shareholders. Across
the business, we improved data quality, executed
mortgage securitisation, enhanced risk analytics, and
delivered stable funding – reflecting disciplined
management and resilience.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
20
Strategic report
As a teenager, Dave Keeler worked at
the Strands Hotel and Screes Inn in Nether
Wasdale, Cumbria, launching his career in
hospitality there. After working all over the
world in the sector, Dave returned to the
Lake District with the ambition of running
the hotel and restaurant where it all
began for him.
NatWest Group helped Dave and
his business partners to purchase
the business, and with the support of
his relationship manager, he’s upgrading
the hotel’s operations and forging links in
the local community, which allow him to
support other local businesses and create
local jobs.
Our impact
Enabling business
investment.
Support for a local
enterprise, creating
local jobs.
Providing long-term
business support.
The Lake District
‘Being a NatWest customer – it’s
feeling like you’re dealing with a
local business, but one that has
the strength of a big corporation.
Without the support of NatWest,
I wouldn’t be standing here.
We wouldn’t have the ability
to do this.’
Dave Keeler, owner of the Strands Hotel
and Screes Inn, Nether Wasdale,
The Lake District
local businesses
to grow and thrive
Case study – helping build better businesses
Backing
Dave Keeler (left) and NatWest Group Senior Relationship Manager, Mark Ward (right)
Succeeding with customers
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
21
Strategic report
Market environment
Adapting to evolving market trends
The environment we operate in is constantly evolving. Understanding the influences on our business
and our customers enables us to prepare for change, respond quickly and create value for the long term.
Disciplined growth
Bank-wide simplification
Active balance sheet and risk management
Investing in digital security
to keep customers safe
Protecting our customers remains a
top priority against the backdrop of a
threat landscape which is being shaped by
geopolitical tensions, ransomware attacks,
and increasingly sophisticated adversaries.
Regulatory expectations are also rising, with
key frameworks setting new standards, and
firms expected to demonstrate robust cyber
defences and operational resilience.
Our response
NatWest Group continued to invest in
security and resilience measures to protect
its customers and operations in 2025:
•
The Security Operations Centre
expanded its team of analysts in
2025, increasing coverage of real-time
monitoring, backed by investment in
automation. This enabled an increasingly
rapid response to threats.
•
Assurance processes continued to be
enhanced to ensure new products and
services have the required security
controls in place.
Over
57,000
colleagues completed
cybersecurity learning in
2025, reinforcing a culture
of security awareness.
UK inflation rose to 3.8% in 2025,
before falling towards the end of the year.
Unemployment increased steadily, reaching
5.1% in November 2025. Wage growth
slowed, but at 4.7% in November 2025,
remained higher than inflation. The Bank
of England cut the base rate four times
from 4.75% at the start of 2025, to close
the year at 3.75%.
House prices rose modestly in most regions
of the UK, but fell in London. GDP growth
looked set to beat modest forecasts,
with the Office for Budget Responsibility
predicting 1.5% growth for 2025. In markets,
sterling strengthened against the US dollar,
but weakened against the euro. The FTSE
All Share Index rose strongly in 2025, along
with most major indices.
Our response
In 2025, we continued to adapt our
services to meet the evolving needs
of our customers. As well as maintaining
competitive interest rates on our savings
and lending products, we adjusted our
lending criteria to allow increased
borrowing, responding to the need
for greater flexibility highlighted by
the Financial Conduct Authority.
Meeting customer needs through
changing macroeconomic conditions
Over
12,000
small businesses supported
through our Accelerator
app at the end of 2025.
In April 2025, we introduced Family-Backed
Mortgages – allowing eligible customers to
apply for a joint mortgage with a family
member or friend – to help more first-time
buyers own their own home. In November
2025, we launched Shared Ownership
Mortgages, which allow customers to
buy a percentage of their home.
In March 2025, we announced our ambition
to significantly expand support to UK
businesses to start up and scale by offering
10,000 entrepreneurs the chance to join
the Accelerator community. And to enable
more high-growth companies to access
funding against the value of their intellectual
property, we announced plans in October
2025 to expand the availability of IP-backed
loans to businesses in Scotland. We also
continued to be a vital voice for business in
2025, convening our inaugural Mid-Market
Growth Council meeting to support
mid-market companies.
•
Through NatWest Group’s AI Centre
of Excellence, we continued to develop
the use of AI technologies to enhance
our defensive capabilities against the
threat of bad actors using AI and
machine learning for deep fakes
and advanced phishing.
•
We enhanced our approach to identity
and access management to safeguard
sensitive information and mitigate risks
associated with unauthorised access.
•
We mandated that all suppliers based
in, or operating out of the UK hold
independent assurance, accredited
to Cyber Essentials Plus at minimum.
•
Over 57,000 colleagues completed
cybersecurity learning in 2025, reinforcing
a culture of security awareness.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
22
Strategic report
Disciplined growth
Bank-wide simplification
Active balance sheet and risk management
Market environment continued
We have an ambition to be net zero across our financed
emissions, assets under management and operational
value chain by 2050. This is aligned with the UK’s legal
obligation to be net zero by 2050. We continue to focus
on supporting our customers’ transition and our own
ambitions to be net zero. Achieving our climate-related
ambitions and targets is dependent on a range of factors,
including timely and appropriate government policy,
technology developments, and on suppliers, customers
and society supporting the transition.
Our response
We’re focused on supporting customers’ climate
transitions by providing products, tools and insights that
help them reduce emissions, build resilience and access
sustainable finance opportunities. Our ambition is to be
net zero across our financed emissions, assets under
management and operational value chain by 2050.
This is aligned with the UK’s legal obligation to be
net zero by 2050.
Our climate transition plan is embedded within our
financial planning process, ensuring climate-related
risks and opportunities inform strategic decisions.
In July 2025, we set a new target to provide £200 billion
in climate and transition finance between 1 July 2025
and the end of 2030. Our climate and transition finance
framework has replaced the climate and sustainable
funding and financing framework which underpinned our
previous £100 billion target, which was exceeded in Q1 2025.
Responding to
climate-related risks
and opportunities
The financial services industry is undergoing rapid
transformation, driven by accelerated advancements
in generative AI, digital technology and data capabilities.
These changes are reshaping business models, customer
expectations, and risk landscapes.
Our response
NatWest Group is aiming to be a trusted leader in
AI-enabled financial services, investing in AI at scale
and modernising our digital services:
•
We’re transforming our data estate to provide
a single view of each customer and better
anticipate customers’ needs. We have formed
strategic partnerships to help us build a centralised,
AI-powered data platform, empowering colleagues,
and enabling real-time customer engagement.
•
We’ve embedded AI in our customer journeys to
improve the customer experience. AI tools, such
as Cora, our virtual assistant, are improving
timeliness and quality of responses to customers,
and AI has reduced complaints handling time by
c.19 minutes per case, saving the equivalent
of over 22,000 hours in 2025.
•
We use AI to aid in the detection and prevention
of fraud and financial crime, with innovations like
Tunic Pay enhancing risk assessment and
customer protection.
•
We’ve set ourselves standards for responsible AI with
our AI and Data Ethics Code of Conduct. In 2025,
we rolled out AI tools including GitLab Duo and
Microsoft Copilot to colleagues
to help meet customer
needs safely and
responsibly.
Scaling our capabilities
in technology
We operate in a highly-regulated market that continues to
evolve. Regulatory focus is currently centred on changes
needed to deliver the UK Government’s plans for
economic growth. We remain involved in work to shape
and implement post-financial crisis prudential measures,
through the Basel 3.1 Framework, and helping to drive
reforms to deliver a more robust regulatory landscape.
Our response
We constantly monitor regulatory change and work with
regulators to help shape developments that materially
impact the bank, responding either bilaterally or in
partnership with one of our industry bodies. We implement
new regulatory requirements where applicable and
engage frequently with regulators to discuss their
priorities. Focus areas in 2025 included:
•
Capital and liquidity management, including the
UK’s approach to the implementation of Basel 3.1.
•
Working with the FCA to define a new targeted
support model to narrow the gap between
generic guidance and affordable financial advice.
•
Supporting the regulator’s plans to modernise the
UK redress system and the role of the Financial
Ombudsman Service in customer disputes.
•
Influencing the strategic direction of the UK
payments network.
Focusing on a rapidly
evolving regulatory
landscape
Strategic
partnerships
with global technology
leaders, including AWS,
OpenAI and Google.
Engagement with
37
regulatory
consultations.
Climate and sustainable
funding and financing provided
between 1 July 2021 and
30 June 2025.
£110.3 bn
(1) (LA)
(1)
Climate and sustainable funding and financing and climate and transition finance represent only a relatively small proportion of our overall funding, financing and facilitation activities.
Metric subject to independent Limited Assurance by EY. Refer to page 71 for details.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
23
Strategic report
With 46% of UK adults lacking financial
confidence (according to the MoneyView
2025 report), NatWest Group recognises
the need for simple, practical support
to improve financial wellbeing across
the country. Financial Foundations is
NatWest Group’s free financial wellbeing
programme, delivered largely by Retail
Banking colleagues trained to provide
impartial guidance and encourage open
conversations about money management.
Built around interactive workshops,
the programme offers practical
help to businesses, charities and
community groups, whether they bank
with NatWest or not. In 2025, more than
1,500 workshops reached almost 31,000
people, helping attendees build budgeting
skills, understand fraud risks and improve
their financial resilience.
Our impact
90% feel more
confident about
managing/
protecting their
finances since
the workshop.
Participants leave
with tools to take
action and 92%
would recommend
the workshops.
93% feel they learnt
things about better
managing money.
Birmingham
financial
confidence
Case study – helping people manage their money
Gurpreet Kaur Sohal, Manager, Walsall Branch (left) and Atli Coakley (right)
Succeeding with customers
‘The workshop made a real
difference. Hearing others
share their experiences and
receive practical guidance
helped me understand where
I could make small changes,
and I left feeling much more
confident and in control.’
Atli Coakley, Regional Account Manager,
Portico
Building
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
24
Strategic report
Retail Banking
Business performance review
In Retail Banking, our aim is to be our
customers’ trusted partner as we make
banking simpler and more personal. We are
here to succeed with our 19 million customers
in the moments that matter – from helping
with first savings goals and buying a home, to
building financial confidence and helping people
and families with planning for their future. We
are combining national reach with the local
expertise of our colleagues to help people
across the UK make real progress with
their financial ambitions.
Our focus in 2025
We continued to grow our customer base
and deepen our engagement with a focus
on youth, families and affluent. Our Youth
proposition enjoyed another year of strong
performance, achieving 5% growth; Rooster
Money, which empowers young people and
families to build healthy financial habits, is now
serving 15 times more customers than when
we first acquired the company. Retention of
our younger customers, as they move into
adulthood, remained strong at 97%, reflecting
the trust built through early engagement. And
among families, we supported one in three UK
households with their financial needs – both
for the everyday and the bigger life moments.
In 2025, we also welcomed around one million
customer accounts from Sainsbury’s Bank into
NatWest Group, who accessed over 27,000
additional products in the first two months
post integration.
Making it easier to manage money
Our customers continued to embrace digital
banking as their preferred way to manage
their everyday finances, with 81.8%
(1)(LA)
of our
customers banking entirely digitally in 2025.
Across our customer base, digital engagement
continued to grow with 325 million interactions
per month and customers logging into the app
more than 30 times on average monthly. As a
result, 97% of all our customers’ needs were
met through digital channels. Our mobile app
is designed to make money management
clear and intuitive. Our Spending and Budget
Tracker, Savings Pot feature, Virtual Cards
and Subscription Tools were used millions of
times each month in 2025. Alongside our digital
banking tools, colleagues supported customers
through more than 1,100 points of physical
presence, providing personal guidance and
support. We served around 1.2 million affluent
customers, of which almost half were served
via our Premier proposition, broadening our
reach and engagement with these customers.
Helping customers achieve
their goals
Supporting customers’ long-term financial
wellbeing remained a priority. We delivered
more than 307,000 Financial Health Checks
with tailored guidance on budgeting and
planning ahead. NatWest colleagues also ran
over 1,500 Financial Foundations workshops,
supporting 31,000 people to help strengthen
their financial resilience. And through NatWest
Thrive, our youth education programme, we
reached over one million young people across
the UK in 2025.
‘We combine the best of our technology with the
magic of our people to deepen connection and
engagement with our customers. We continue
to attract customers by being there in the
moments that matter, with the experience
and expertise they need.’
Solange Chamberlain, CEO, Retail Banking
Financial highlights
Net loans to customers
£216.1bn
2024: £208.4bn
Total income
£6,495m
2024: £5,650m
Customer deposits
£202.6bn
2024: £194.8bn
Return on equity
24.7%
2024: 19.9%
Operating profit
£3,121m
2024: £2,431m
Risk-weighted assets
£68.5bn
2024: £65.5bn
(1)
Retail Banking customers with active current accounts that have accessed a digital platform (online or mobile) and not used the branch or telephony in a rolling 90 days in the reporting period. Inactive customers and customers with no channel usage, mortgages and savings
accounts, and interactions via the Post Office are excluded from the scope of measurement. Read more on the scope of measurement in 2025 Sustainability Basis of Reporting.
Metric subject to independent Limited Assurance by EY. Refer to page 71 for details.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
25
Strategic report
Business performance review continued
We also worked to simplify borrowing so
customers can access credit confidently.
Around 99% of loan applications are now
completed digitally. Credit card market share
has increased by one percentage point to 11%,
supported by the balances acquired from
Sainsbury’s Bank. Expanding our offering
to whole of market and strengthening our
presence across aggregator sites, attracted
over 700,000 new customers since launch.
More than 60% of customers accessed Know
Your Credit Score to help them take control of
their credit health, and over 3.5 million spending
insights were delivered to our customers.
Helping customers to save, invest and manage
their money remained central to us being their
trusted partner. Competitive savings products
and simple in-app journeys led to 1.3 million
new savings accounts being opened in 2025.
Our investment proposition also expanded,
with more than 170,000 Retail Banking
customers investing through NatWest Invest.
We supported more people on their journey
to owning a new home in 2025. We helped
50,000 first-time buyers onto the property
ladder, with our new Family-Backed Mortgage
and Shared Ownership options opening the
door for many who would have otherwise
struggled to buy alone. And we made the
home-buying journey faster, with average
application times reduced by 30%. We also
expanded access to buy-to-let mortgages
through a new strategic partnership with
Landbay delivering solutions for landlords and
investors operating through limited companies.
Simplifying processes to provide
better customer experiences
We simplified our technology estate, and
improved our ability to scale, by moving to a
single online banking platform. Our mortgage
platform improvements reduced the time
required to change the rate we offer
customers to two days at the end of 2025. In
addition, new deployment capabilities allowed
us to release banking app changes as soon as
they are ready, rather than monthly. We have
also reduced legacy telephony systems so
that customers experience a more reliable,
consistent service every time they bank with us.
In 2025, we launched our real-time fraud
self-service, allowing customers to take
immediate, informed action to protect
themselves, giving them greater peace of
mind and reducing call volumes. This helped
lift our fraud Net Promoter Score
®
(NPS) to
+60 and reduced fraud-related call volumes
by around half. Our overall fraud-prevention
performance remained sector-leading, and
we continued to rank first among UK banks in
the Payment Systems Regulator league tables.
Customers’ expectations continue to evolve
at pace and we are using AI to create a more
connected, agile, and personalised experience
for our customers. Cora, our virtual assistant,
handled millions of conversations each month,
giving customers quick, easy access to help
whenever they needed it. We are also
leveraging AI to remove complexity for
colleagues, saving over 70,000 hours through
automated call and chat summaries and
another 17,500 hours through faster, high-
quality complaint responses. Colleagues
completed over 20,000 hours of AI learning
in 2025 and more than 12,000 engineers
bankwide now have access to AI coding
assistants, supporting efficiency and faster
feature deployment.
Our priorities for 2026
Our ambition is to help customers build
financial confidence and achieve their goals
with greater certainty. We aim to grow by
deepening relationships across youth, families
and affluent segments. As part of this, we have
made a £10 billion commitment to support
first-time buyers in 2026. We plan to grow
Premier Banking customers to one million and
treble the number of Retail Banking customers
investing with us from 170,000 to over 500,000.
We plan to invest in modern, intuitive digital
experiences alongside our national and local
presence to deliver a simpler, smarter, and
more personalised banking experience, reducing
our cost:income ratio below 40% by 2028.
Spotlight
Helping families open doors:
NatWest Group’s innovative
mortgage solution
NatWest Group remains committed to responsible lending, aiming
to help more people achieve home ownership with confidence
and security. To support first-time buyers in entering the property
market sooner, NatWest Group launched the Family-Backed
Mortgage in April 2025, with over £300 million of lending
delivered by December 2025.
This product allows eligible customers to apply for a joint mortgage
with a family member or friend while retaining sole ownership
of the home. Known as a Joint Borrower Sole Proprietor (JBSP)
mortgage, it combines the incomes of both parties, increasing
the borrower’s capacity to secure a larger mortgage. Notably,
the Family-Backed Mortgage doesn’t require the non-owner
to contribute a deposit or hold any ownership rights.
We believe this is another innovative way in which we have
responded to the needs of our customers, creating new pathways
to home ownership and supporting a 1.9 percentage-point
year-on-year increase in our share of the first-time buyer
new business market.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
26
Strategic report
Succeeding with customers
trusted customer
relationships
Case study – helping people manage their money
Building
When Olympic boxing medallist Lewis
Richardson reached out to NatWest Group
at the start of his professional career,
colleagues from the Business Banking and
Premier Banking team worked with him
to understand his unique requirements.
From assisting Lewis to swiftly open
a Business Banking account before
his first professional fight, to explaining
the full range of benefits of Premier
Banking, NatWest Group is helping this
professional athlete to turn his possibilities
into progress.
Now, with a dedicated team behind him
and tailored financial planning support,
Lewis confidently focuses on his boxing
career, knowing NatWest Group is a
trusted partner in his financial journey.
Our impact
Dedicated business
relationship
manager support.
Rapid Business
Banking account
opening.
Access to the full
range of Premier
Banking products
and investment
advice.
Colchester
Tara Cusack, NatWest Group Premier Banking Manager (left) and Lewis Richardson (right)
‘I’ve never felt in a better
place with my banking. The
support from NatWest feels too
good to be true. They really
understand me, my career, and
the financial challenges that
come with my profession’.
Lewis Richardson,
Olympic medallist and professional boxer
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
27
Strategic report
Business performance review continued
Financial highlights
Total income
£1,131m
2024: £969m
Customer deposits
£42.7bn
2024: £42.4bn
Net loans to customers
£18.9bn
2024: £18.2bn
Return on equity
21.7%
2024: 14.2%
Operating profit
£394m
2024: £264m
AUMA
£58.5bn
2024: £48.9bn
Private Banking &
Wealth Management
‘In 2025, we built on our foundations for
sustainable growth and set clear strategic
priorities. Our clients remain at the heart of
everything we do, and we aim to deepen
our relationships with them every day
across banking, lending, financial planning
and investment management.’
Emma Crystal, CEO, Private Banking & Wealth Management
With over 330 years of experience in Private
Banking & Wealth Management, Coutts serves
UK-connected high and ultra-high-net-worth
individuals and their business interests. Our
comprehensive suite of services and products
– including banking, lending and wealth
management – are tailored to meet the diverse
needs of our clients. In addition, through our
investment products and services we meet the
needs of customers across NatWest Group.
Our focus and highlights in 2025
In 2025, we continued to be a trusted partner
for our clients. We managed £119.0 billion in
customer assets and liabilities (CAL), growing
balances by £10.5 billion during 2025. At the
end of 2025, we delivered a return on equity
of 21.7% and registered a two-point increase
in our Net Promoter Score
®
(NPS) which rose
to +50, underscoring the strength of our
client relationships and the value we create.
In 2025, we announced our ambition to be the
UK’s number one chosen partner for Private
Banking & Wealth Management. We developed
and implemented a more personalised and
structured engagement model, ensuring each
client has an experience which best meets
their needs. We also announced our refreshed
fee structure and enhanced our technical
infrastructure to support this. Our strong
relationships with the Retail Banking and
Commercial & Institutional business segments
continue to deepen, allowing us to offer the
best of NatWest Group to eligible clients.
Throughout 2025, we deepened relationships
with clients through proactive engagement,
including support around market uncertainty.
Our investment offering delivered strong
growth in 2025 as assets under management
and administration (AUMA) increased by
£9.6 billion, including £4.6 billion AUMA net
inflows, to £58.5 billion, which forms 49% of
our customer assets and liabilities. Our clients’
digital experience also continues to improve –
for example, through enhanced investment
reporting in our mobile app which allows clients
to more easily view their accounts and returns
over time – and is evidenced by our mobile
NPS, which rose to +54 at the end of 2025.
Putting technology to work
for clients
Simplifying our business to deliver efficiencies
and promote sustainable growth remains a
priority. We have commenced the transfer
of our technology operations and digital
engineering to alternative locations to optimise
costs whilst retaining our operating system
expertise where we find the highest level of
specialist knowledge. Our newly launched
client engagement workflow tool will
significantly reduce the time taken to
provide clients with straightforward advice.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
28
Strategic report
Business performance review continued
Additionally, the implementation of AI tools
has delivered notable efficiencies. For example,
by reducing call summarisation time by more
than 70% we have been able to increase the
amount of time spent speaking to our clients.
Enhancements to our client journeys in 2025
have created a smoother experience, including
streamlining our digital mortgage switch
journey, which has supported a nine
percentage-point increase in mortgage
retention since 2024.
Investing for the future
Our ambition for our financed emissions and
assets under management to be net zero
by 2050 is dependent on external factors.
We have continued to support our clients with
£196 million of climate and sustainable funding
and financing
(1)
during the first half of 2025 and
£199 million climate and transition finance
(1)
in the second half of 2025. For investments,
50% of our managed assets were considered
portfolio aligned as at 31 December 2025. In
2025, we reviewed our responsible investing
approach, including our climate ambitions, to
ensure alignment with customer needs and
market standards. Following the review, we
have withdrawn portfolio alignment from our
entity level 2030 ambitions, recognising a lack
of market consensus on how to define portfolio
alignment within a wealth management
context. We have retained our 2030 Weighted
Average Carbon Intensity (WACI) ambition,
which reflects market best practice and
continues to provide a standardised measure
through which we can monitor progress
towards our net zero by 2050 ambition.
Detailed climate-related disclosures are
published in the NatWest Group plc 2025
Climate Transition Plan Report.
Simplifying our business
In December 2025, we announced an
agreement for the sale of our majority stake
in Cushon, a workplace savings and pensions
FinTech. This transaction is consistent with our
strategic priorities, as we focus on delivering
disciplined growth across NatWest Group,
while simplifying our bank and actively
managing our balance sheet to deliver
attractive returns. The sale is expected to
complete in the first half of 2026, subject
to regulatory approval. Cushon represents
£4.0 billion of assets under administration
(AUA) as at the end of 2025.
Our priorities for 2026
In 2026, we aim to deepen relationships with
clients by further enhancing our proposition,
with an emphasis on transforming how we
meet our clients’ investment needs, including
developing our digital propositions for customers
across NatWest Group. We plan to continue to
simplify our operational foundations for scalable
growth, investing in technology which further
improves our capabilities to enhance the client
experience and support our colleagues.
We’ll look to expand our business development
pipeline, using the existing network of prospective
clients across NatWest Group. This includes
supporting Retail Banking to achieve its goal
of trebling the number of customers investing
with us, and offering a personalised experience
to help customers achieve their financial goals.
This will continue to be enabled through
responsible and sustainable balance sheet
and risk management, alongside diversification
of income.
We remain committed to achieving the 2027
targets shared at our 2025 investor spotlight
event. These include intensifying our focus on
UK-connected high and ultra-high-net-worth
clients, both new and existing, and to increase
the number of clients with £3 million+ CAL by
around 20%
(2)
. In addition, we’ll aim to treble
the number of Commercial & Institutional
customer referrals, and broaden and enhance
our investment management proposition for
our clients, as well as further extending it to
customers across NatWest Group.
(1)
Climate and sustainable funding and financing and climate and transition finance represent only a relatively small proportion of our
overall funding, financing and facilitation activities.
(2) Excluding impact of Evelyn Partners acquisition.
Spotlight
Coutts website
relaunch: improving the
customer experience
Coutts relaunched its website, Coutts.com in November 2025.
This incorporated its refreshed brand and visual identity as well
as enhanced functionality to improve user experience, resulting
in a 128% increase in overall site accessibility and usability.
Site security and usability were prioritised, with a new client log-in
process and a redesigned insights section – the latter providing
access to much richer content, including our new programme of
investment and wealth planning insights, and thought leadership.
The new site has resonated well with clients, evidenced by the
average browsing time for content more than doubling. In the first
four weeks after launch, monthly visits were up 41%, and 79% of
clients that we surveyed responded that they love the new look
and feel, layout and navigation of the website.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
29
Strategic report
NatWest Group supported Be.EV – a
fast-growing, mid-market electric vehicle
(EV) charging network – by using our
extensive infrastructure roll out experience
to tailor a flexible financing solution. Acting
as one of two lenders and the sole UK
bank, NatWest Group financed Be.EV’s
capital expenditure to deploy around 600
new charge points across the country.
With teams in London and Manchester,
we provided comprehensive services
including interest rate hedging, agency
and security trustee roles, and
transactional banking. Beyond funding,
NatWest Group offered guidance on
business planning, operational controls,
and future refinancing, establishing
ourselves as a trusted partner supporting
Be.EV’s growth and long-term success.
Our impact
Financing the roll
out of around 600
new EV charge
points.
Guidance
in establishing
a bankable
business plan.
Funding for critical
sectors within the
UK economy.
Manchester
growth in
the UK’s EV
infrastructure
Case study – supporting balanced UK growth
Powering
Madeleine Mullane, Vice President, NatWest Group Structured Finance team (left) and Asif Ghafoor (right)
‘The support from NatWest has
been very important for Be.EV.
At this early stage of the
company’s growth, we want to
work with a banking partner that
can adapt and evolve as we’re
evolving. Thanks to the financing
we’ve received, we’ve been able to
roll out charging infrastructure
rapidly across the UK.’
Asif Ghafoor, CEO, Be.EV
Succeeding with customers
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
30
Strategic report
Business performance review continued
Financial highlights
Total income
£8,809m
2024: £7,957m
Customer deposits
£196.4bn
2024: £194.1bn
Net loans to customers
£154.2bn
2024: £141.9bn
Return on equity
19.1%
2024: 17.2%
Operating profit
£4,064m
2024: £3,585m
Risk-weighted assets
£111.9bn
2024: £104.7bn
Commercial & Institutional
‘We will support UK-wide growth by backing
regions, championing mid-sized businesses,
investing in future infrastructure, and
supporting entrepreneurs and innovators
to thrive across dynamic businesses
and sectors.’
Robert Begbie, CEO, Commercial & Institutional
As the biggest bank for businesses in
the UK, Commercial & Institutional serves
over 1.5 million customers with an extensive
presence across all regions and nations of the
UK. From start-ups to global institutions, we
connect our customers with expertise, industry
insights and the solutions they need.
Our focus in 2025
We are a leading UK bank for mid-market
businesses and small and medium-sized
enterprises (SMEs), serving one in every five
small and mid-market businesses across the
UK. Our unparalleled network of relationship
managers, local insight, and commitment to
simplifying and enhancing value, from banking
technology to digital interactions, sets us apart
as we deepen existing customer connections
and build new ones across all our segments.
Supporting innovation
Innovation is a fundamental driver of sustainable
growth for the UK, and we provide the services,
expertise, and networks that help businesses to
turn their ideas from possibilities into progress.
Doing so allows us to directly contribute to a
stronger, more dynamic UK economy.
2025 marked the tenth anniversary of our
NatWest Accelerator network for entrepreneurs.
Since 2015, this programme has helped create
over 12,000 jobs and facilitate £684 million
in investment for businesses. In 2025, we
significantly expanded our Accelerator community
to more than 12,000 members. Extending
beyond financial support, our Accelerator
Hubs offer full wraparound support to help
businesses take the next step in their journey.
Universities also play an important role as
innovation incubators and powerful engines of
growth for the UK, as reflected in the Industrial
Strategy. In November 2025, we agreed to
open new Accelerators with four leading
universities, and plan to expand to ten by 2027.
In parallel, we are strengthening our Venture
Banking team to support the country’s most
innovative, venture-backed scale-ups with
customised financial solutions and
strategic expertise.
Removing barriers to investment
Our ability to remove barriers for our mid-
market customers remains a core part of the
value we deliver. In 2025, our CEO convened
the first four meetings of the Mid-Market
Growth Council, underlining our commitment
to increasing connectivity and advocacy in
this vital sector.
We continued to work with our customers to
unlock growth aligned to key structural and
policy priorities in the UK, particularly social
housing and infrastructure investment. In 2025,
we committed £4.6 billion of lending in to
the UK social housing sector, taking total
commitments to £8.7 billion – surpassing our
upgraded ambition of £7.5 billion by the end of
2026. We’re going further; our new ambition is
£10 billion between 1 January 2026 and the
end of 2028. At the same time, we retained
our position as the number one lender to the
UK infrastructure sector, completing more
deals in 2025 than any other UK bank.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
31
Strategic report
Business performance review continued
Spotlight
Simplifying payments
for enterprises: NatWest
Group partners with Prommt
Many businesses still depend on manual bank transfers or card
payments that can come with high fees, fraud risks, and slow
processing times. We partnered with Prommt in August 2025,
to give customers greater control, efficiency, and simplicity in
managing payments.
Prommt is a leading pay-by-link platform that combines our
business payment solutions Payit and Tyl into a single seamless
solution for enterprise clients. By merging the speed and security
of open banking with the flexibility of card payments, we’re giving
businesses a smarter, faster, and safer way to collect payments.
Our customers now benefit from a smarter selection of the best
payment methods based on transaction value, and enterprise-
ready features such as branded payment requests and recurring
payments. We have also strengthened security through bank-
authenticated payments.
Making banking simpler
We continued to leverage technology to
make banking simpler and more rewarding
for our customers. 84.5%
(1)(LA)
of our customers
primarily use digital channels to interact with
us, enabling our front-line teams to focus their
support where customers most value it. We also
deployed new generative AI technology, for
the benefit of our customers and colleagues.
For example, all complaint calls are now
summarised and transcribed by AI, this means
we have a clearer and accurate record of the
conversation enabling us to answer complaints
faster and improve services. In Business Banking,
AI summarisation is helping more than 200
colleagues save time and increase capacity
for more impactful customer interactions.
We improved flexibility and convenience for
our small business customers by increasing
domestic payment limits from £100,000 to
£250,000 on our mobile app, online banking
and Open Banking. We also expanded credit
card functionality, empowering businesses to
optimise cash flow. Our digital-only proposition
for the self-employed, Mettle, debuted strongly
in the Competition and Markets Authority
satisfaction survey, ranking second overall
and scoring highly across all categories.
For our mid-market and corporate customers,
we have made significant progress in updating
our main digital channel, Bankline. We have
now integrated our asset finance, trade
finance, invoice finance, BACS, commercial
cards and Agile Markets platforms into
Bankline via single sign-on, making it easier
for customers to access these products.
We modernised critical features our clients
need for complex payments and account
management, which have been used
more than one million times in 2025.
For our corporate clients, we were recognised
as the ‘UK’s Best FX Bank for Corporates’ and
‘UK’s Best FX Prime Brokerage’ in the 2025
Euromoney Foreign Exchange Awards. As well
as integration of Agile Markets into Bankline,
we enhanced digital products for automated
settlement, and expanded our markets foreign
exchange offering to over 130 currencies.
Working towards a more
sustainable future
Supporting the shift to a more sustainable
future remains a core priority for our business.
In Q1 2025, NatWest Group exceeded its target
to provide £100 billion of climate and sustainable
funding and financing between 1 July 2021 and
the end of 2025. Commercial & Institutional
delivered £95 billion against this target. Looking
ahead, Commercial & Institutional will continue
to play a critical role for NatWest Group to
achieve its new target to provide £200 billion
in climate and transition finance between
1 July 2025 and the end of 2030.
Our efforts supporting customers earned two
awards at the Environmental Finance Bond
Awards 2025 – ‘Lead manager of the year,
green bonds – sovereigns’ and ‘Lead manager
of the year, social bonds – financial institutions’.
We supported Électricité de France (EDF)
update its green finance framework to include
UK nuclear power activities and subsequently
acted as a bookrunner for EDF’s €1.25 billion
green hybrid bond issued to support European
nuclear power generation.
Our priorities for 2026
In 2026, we plan to accelerate our strategy.
Our objective is to be the bank of choice in
our priority segments: the leading bank for
Startups; a leading hub for the UK Innovation
Economy; and the top bank for UK mid-market
corporates. We aim to create integrated
propositions with other NatWest Group
businesses and support entrepreneurs from
start-up to scale-up, while meeting their
personal financial needs.
We plan to continue to invest in technology
to make banking simpler and strengthen
customer relationships. This includes equipping
relationship managers with AI-enabled tools,
enhancing Bankline as a leading digital platform,
and expanding more digital journeys with
increased product and self-service capabilities.
We aim to strengthen our balance sheet and
risk management with flexible capital allocation,
dynamic pricing capabilities, disciplined resource
management and expanded distribution
capabilities to increase capital velocity.
(1)
Commercial & Institutional (ring-fenced bank) customers with active non-personal account/s that
access their account 95% or higher through digital channels for three rolling months in the
reporting period ending 31 December 2025. Read more on the scope of measurement in our 2025
Sustainability Basis of Reporting. Read more on the scope of measurement in 2025 Sustainability
Basis of Reporting.
Metric subject to independent Limited Assurance by EY. Refer to page 71 for details.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
32
Strategic report
Our stakeholders
Understanding and supporting our stakeholders is vital to the success of our business. Detailed below are our key stakeholder
engagements and how they help us improve outcomes for our customers, communities, and the environment. For further
information on how stakeholder considerations influenced the Board’s discussions and decision-making, refer to our section
172(1) statement on pages 36 and 37, and our Corporate governance report on pages 117 to 118.
Investors
Customers
Colleagues
We have a global engagement programme servicing
our institutional equity and fixed-income investors,
and private shareholders. We actively engaged with
prospective investors during 2025, particularly as the
UK Government exited its position in NatWest Group.
We know that our success depends on the success of
our customers. We want to understand their challenges,
ambitions, financial objectives and concerns, and help
them progress towards their goals by providing the
right services at the right time.
By supporting our colleagues in what they do and by
striving to make NatWest Group a great place to work,
we provide them with the capabilities they need to
succeed with customers.
How we engaged
•
In 2025, we delivered a total shareholder return
of 71.0%
.
•
We held 370 meetings with equity investors and
270 meetings with fixed-income investors in 2025,
attracting further investment by global equity funds,
while maintaining strong relationships with our
existing shareholders.
•
In addition to our quarterly results updates, we
hosted three investor spotlights, offering a deep
dive into NatWest Group’s core businesses:
Retail
Banking, Private Banking & Wealth Management, and
Commercial & Institutional. Investors and analysts
were given an opportunity to engage with senior
management and discuss their priorities and
ambitions for the businesses.
•
We continued to adapt to the challenge of how
investors access shareholder information
in different
ways. This included ongoing consideration of investors’
increasing use of AI search.
How we engaged
•
Following the 2024 transaction to acquire the retail
banking assets and liabilities of Sainsbury’s Bank,
NatWest Group successfully completed the migration
of around one million accounts in November 2025.
To help ensure the transitioning customers were kept
informed throughout the process, NatWest Group
worked with the FCA and Sainsbury’s Bank on
engagement plans and established a dedicated
phone number to support new customers.
•
We responded to requests from Coutts clients in
2025
by enhancing key features in the Coutts app
and Coutts online banking – introducing valuation,
performance charts and the latest investment
insight articles.
•
In April 2025, we extended the Business Banking
Lending Journey
to customers supported by
our regional relationship manager (RRM) teams.
RRM customers can now self-serve 24/7, receive
personalised quotes in under three minutes, and
complete applications in as little as 10 minutes.
How we engaged
•
Our colleague listening strategy in 2025 included:
regular colleague opinion surveys; a Colleague
Advisory Panel, connected directly with our Board;
the Colleague Experience Squad, which provided
feedback on colleague products and services;
and Engage, our internal social media platform.
•
The Our View colleague survey, enables us to track
metrics and key performance indicators,
which we
can benchmark with sector and high-performing
comparisons. Over 50,000 colleagues (an 83%
participant rate) participated in our September
2025 survey.
(1)
•
We have continued to make progress in some key
areas,
with our overall scores up by an average of
one point year on year. Our lead strategic measures
– Strategy, vision and behaviours (+2), Purposeful
leadership (+1), Performance culture (+1), and
Becoming a Simpler Bank (+2) – have all improved.
However, we acknowledge we still have work to do
to generate greater efficiency in our processes to
best support our customers.
Refer to Our investment case on pages 16-17.
For our Net Promoter Scores, refer to page 35.
Refer to Skilled, engaged and inclusive workforce
on pages 59 to 63.
(1)
NatWest Group Our View results exclude our colleagues in Ulster Bank RoI, Poland & FreeAgent.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
33
Strategic report
Our stakeholders continued
Communities
Regulators
Suppliers
As a leading bank in the UK, we believe we can make a
real and positive difference to the communities we live
and do business in.
We operate in a highly regulated market which
continues to evolve. We understand the need to have
an ongoing, constructive and open dialogue with all
relevant regulatory bodies and embed this in our
business as a priority.
We are committed to creating a diverse and responsible
supply chain, being fair and transparent with our
suppliers and to reach net zero by 2050 across
our operational value chain.
How we engaged
•
We established and built relationships,
with direct
community investment of £11.0 million in 2025.
Across our fundraising and volunteering programmes,
colleagues raised £4.4 million and gave 142,775
volunteering hours. As well as our network of regional
managers, our seven Regional Boards are also deeply
connected into cities, towns and communities across
all nations and regions of the UK.
•
We supported enterprise and engaged young
people:
our Accelerator app supported over 12,000
small business at the end of 2025. Through our youth
educational programme, NatWest Thrive, we reached
over one million young people across the UK in 2025,
with 80% reporting a positive change in behaviour
towards their financial wellbeing after participation
.
•
Empowering financial confidence:
our free
Financial Foundations workshops are designed to help
participants take control of their money and future.
In 2025, our trained bank facilitators delivered 1,500
workshops to 31,000 participants.
How we engaged
•
We worked closely with policymakers to support the
UK Government’s drive for economic growth,
which
included FCA proposals for a targeted support model
that aims to narrow the ‘advice gap’ between generic
guidance and affordable financial advice, and deliver
improved retail investment opportunities.
•
During 2025 we responded to material
consultations,
including FCA proposals on reforming
the Financial Ombudsman Service, Senior Managers
& Certification Regime, and Consumer Credit Act, as
well as proposals on the regulatory treatment of UK
stablecoins and new, more customer-focused,
mortgage rules.
•
With regard to developing the UK’s capital
framework,
we continued to engage with the
authorities to promote an approach that shifts
the balance towards supporting economic growth,
while maintaining proportionate risk management.
How we engaged
•
We introduced a new AI-powered sustainability risk
tool
that enables NatWest Group to proactively assess
and manage supplier risks. It integrates multi-source
data and risk modelling to heatmap suppliers, identify
emerging risks, and enhance transparency supporting
regulatory compliance.
•
NatWest Group received the Gold Award from the
Office of the Small Business Commissioner
under the
Fair Payment Code, recognising our commitment to
ethical business and SME support. The award is given
to organisations that pay over 95% of invoices within
30 days.
•
A challenge for our supply chain in 2025 was to
strengthen sourcing and contracting controls,
improving consistency in supplier due diligence and
contract adequacy checks. Enhancements to toolkits,
guidance and data validation helped reduce risk and
improve governance for the supply chain.
Refer to Supporting customers and communities through our
banking products and services on pages 41 to 44.
Refer to the Risk overview on pages 74 to 79.
Refer to the Driving a culture of integrity and responsible risk
management on pages 64 to 66.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
34
Strategic report
Our stakeholders continued
Spotlight
Building customer trust and advocacy
Measuring customer advocacy through our Net Promoter Score
We track customer advocacy for our key brands using the Net Promoter Score® (NPS), a commonly used metric in the banking industry globally.
(1)
The improvements we have made saw NatWest Retail’s NPS increase; we’ve also remained in 4
th
place in a competitive market. In Commercial &
Institutional, NatWest £0–£750k NPS improved, with ranking increasing from 4
th
to 3
rd
place; NatWest £750k–£250m NPS remains the market
leader in this segment with a small improvement in NPS. Royal Bank’s NPS increased for Retail and £750k–£250m, and dropped in £0–£750k
although improved rank position.
Listening to our customers
To ensure we understand our
customers and can continue to
meet their evolving needs, we
measure customer satisfaction,
advocacy and trust in our key
brands and services via
independent surveys. These
insights are reported at the most
senior levels of the bank and play
a crucial role in informing our
strategic priorities.
Consumer trust
in Q4 2025
NatWest consumer trust
improved in 2025 (49% vs 47%
in 2024), as did Royal Bank of
Scotland (34% vs 32% in 2024).
NatWest
49%
Q4 2024: 47%
Source: Kantar/NatWest Brand Guidance
Programme, GB, Trust among consumers,
12-month rolling.
Royal Bank of Scotland
34%
Q4 2024: 32%
Source: Kantar/NatWest Brand Guidance
Programme, GB, Trust among consumers,
12-month rolling.
Retail Banking
(2)
25
Q4 2024: 23
Retail Banking
(5)
28
Q4 2024: 21
Account opening
(2)
29
Q4 2024: 28
Commercial & Institutional
£0-£750k
(3),(8)
-5
Q4 2024: -7
Commercial & Institutional
£0-£750k
(6),(8)
-4
Q4 2024: 5
Mortgages
(2)
27
Q4 2024: 25
Commercial & Institutional
£750k –£250m
(4),(8)
6
Q4 2024: 5
Commercial & Institutional
£750k –£250m
(7),(8)
15
Q4 2024: 7
Mobile banking
(2)
51
Q4 2024: 49
Online banking
(2)
35
Q4 2024: 32
NatWest
Q4 2025
Royal Bank of Scotland
Q4 2025
Retail Banking
– key measures
Q4 2025
(1) NPS
®
and the NPS-related emoticons are
registered trademarks of Bain & Company,
Inc., NICE Systems, Inc., and Fred Reichheld.
(2) Source: Strategic NPS benchmarking study
run through InMoment, England & Wales,
12-month rolling.
(3) Source: MarketVue Business Banking from
Savanta, England & Wales, Businesses with
a turnover up to £750k, 12-month rolling.
(4) Source: MarketVue Business Banking from
Savanta, England & Wales, Businesses with
a turnover between £750k-£250m,
12-month rolling.
(5) Source: Strategic NPS benchmarking
study run through InMoment, Scotland,
12-month rolling.
(6) Source: MarketVue Business Banking
from Savanta, Scotland, Businesses with
a turnover up to £750k, 12-month rolling.
(7) Source: MarketVue Business Banking from
Savanta, Scotland, Businesses with a
turnover between £750k-£250m,
12-month rolling.
(8)
The measure’s name has been updated for
clarity, with no change to its underlying
definition or calculation.
(9)
Coutts Voice of the Client survey run
through Ipsos, 12-month rolling.
Coutts
(9)
50
Q4 2024: 48
Coutts
Q4 2025
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
35
Strategic report
The Board reviews and confirms its key
stakeholder groups for the purposes of section
172 annually. For 2025, these remained
investors, customers, colleagues, communities,
regulators and suppliers. Our directors are
mindful that it is not always possible to achieve
an outcome which meets the expectations of
all our stakeholders, and that there may be
impacted stakeholders outside the six key
groups the Board has identified.
Examples of how the Board has engaged with
stakeholders can be found in this statement
and in the Corporate governance report on
pages 117 to 118.
Our Board and committee terms of reference
(available at natwestgroup.com) reinforce the
importance of considering the matters set out
in section 172 (the s172 factors, as set out
opposite). Our Board and committee paper
template also supports consideration
of stakeholders and enables good
decision-making.
The following illustrative examples provide
insights into how principal decisions in two
areas were made by the Board during 2025.
Principal decisions are those decisions taken
by the Board that are material, or of strategic
importance to the company, or are significant
to NatWest Group’s key stakeholders.
Climate and
sustainability
s172 factors considered: a, b, c, d, e
What was the
decision-making process?
In March 2025, the Board reviewed the
evolving ESG landscape and reflected on the
bank’s broader strategic direction, including
how sustainability considerations could support
long-term value and good customer outcomes.
These early discussions helped frame
subsequent conversations and decision-making
on climate and sustainability matters during
2025, and ensured directors remained alert
to external developments.
At a dedicated climate spotlight session
in October 2025, directors considered the
UK’s progress towards clean power and the
infrastructure and investment that would be
needed to accelerate the transition. They
discussed the significance of the financial
sector’s role in supporting customers and the
real economy through this period of change.
In addition, directors reviewed proposals
from management to define sustainability
at NatWest Group, to review the bank’s
ambition to at least halve the climate impact of
our financing activity by 2030, against a 2019
baseline, and to review the bank’s baseline
target-setting framework, to ensure the
framework remained focused, credible and
aligned with the bank’s strategic priorities.
In December 2025, the Board received an
update on the energy system review carried out
during 2025. This review had been conducted
to ensure NatWest Group’s strategy reflects
the interconnected risks and opportunities
across the energy value chain as the economy
transitions toward net zero. It considered the
systemic nature of the energy transition, which
anticipates further growth in renewables, the
important yet declining role of oil and gas,
significant infrastructure investment and
demand-side electrification. The Board
supported management proposals for
NatWest Group’s new Environmental &
Social (E&S) Energy Supply Sectors Risk
Acceptance Criteria which reflect the
outcome of this review, as described in
more detail in the NatWest Group plc
2025 Climate Transition Plan Report.
How did the directors fulfil
their duties under section 172?
How were stakeholders
considered?
Directors considered the interests of investors,
customers, colleagues, regulators and wider
society in their discussions on these matters.
The Board recognised that customers
expected the bank to help them transition
while continuing to support their day-to-day
financing needs. The October 2025 climate
spotlight reinforced that customer needs would
evolve quickly as the UK invests in clean power
and modernises its energy system. Directors
considered how financing, advisory support
and sector expertise could be aligned to
help customers adapt. Regulator and investor
expectations were also important considerations.
Directors noted that legal and compliance
assessments of NatWest Group’s climate
and sustainability disclosures had been
conducted to support compliance with
regulatory reporting requirements. Investor
feedback highlighted the importance of clear
progress against climate and sustainability-
related ambitions, targets and commitments
and the need for a coherent narrative linking
sustainability to the bank’s long-term growth
and risk management. Directors took all of
this into account when considering NatWest
Group’s definition of sustainability, and our
climate and sustainability-related ambitions,
targets and commitments.
Section 172(1) statement
In this statement, we describe how our directors have had
regard to the matters set out in section 172(1) (a) to (f) of the
Companies Act 2006 (section 172) when performing their duty
to promote the success of the company.
The s172 factors
(a)
likely long-term consequences,
(b)
employee interests,
(c)
relationships with customers,
suppliers and others,
(d)
the impact on community
and environment,
(e)
maintaining a reputation
for high standards of
business conduct,
(f)
acting fairly between
members of the company.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
36
Strategic report
Actions and outcomes
In July 2025, the Board approved a new
target to provide £200 billion of climate
and transition finance between 1 July
2025 and the end of 2030. Our climate
and transition finance framework has
replaced the climate and sustainable
funding and financing inclusion criteria
that underpinned our previous £100 billion
target, which was exceeded in Q1 2025.
In October 2025, the Board approved:
•
retaining NatWest Group’s climate
ambition to at least halve the climate
impact of our financing activity by
2030, against a 2019 baseline.
•
proposals to withdraw our previously
disclosed 16 portfolio-level sector
targets (validated by the Science
Based Targets Initiative) and replace
them with nine new portfolio-level
activity-based targets.
Directors also supported management’s
proposed definition of sustainability at
NatWest Group, stemming from
purpose, starting with customers and
focusing on the impact that comes from
the core business of the bank.
Further information on our climate
governance framework can be found
on page 106.
Actions and outcomes
The final dividend on 15.5 pence per
ordinary share was approved by
shareholders at the Annual General
Meeting in April 2025 and an interim
dividend on 9.5 pence per ordinary
share was approved by the Board in
July 2025.
An on-market buyback was approved
by the Board in July 2025 up to a value
of £750 million.
Capital
s172 factors considered: a, e, f
What was the
decision-making process?
During 2025, the Board approved a range
of capital distributions, including the final
dividend in April 2025 and the interim dividend
and an on-market buyback of ordinary shares
of up to £750 million, both in July 2025.
As part of our annual results announcement
in February 2025, the Board also confirmed
its intention to increase our ordinary dividend
payout ratio from c.40% to c.50% from
2025 onwards.
In October 2025, the Board undertook a
focused review of NatWest Group’s capital
framework and considered recommendations
to revise our Common Equity Tier 1 target
ratio. This review was conducted within
the context of evolving regulatory capital
requirements, peer benchmarks and feedback
from shareholders and other stakeholders. In
line with standard practice, the Group Board
Risk Committee reviewed all capital distribution
proposals and our capital framework prior to
submission to the Board, taking into account
views from the second and third lines
of defence.
Section 172(1) statement continued
How did the directors fulfil
their duties under section 172?
How were stakeholders
considered?
When evaluating proposed capital distributions
and revisions to the capital framework, the Board
was focused on promoting the long-term
success and financial resilience of NatWest
Group for the benefit of all stakeholders.
Directors considered the likely long-term
consequences of each decision, NatWest
Group’s ongoing capacity to invest in the
business, and our ability to continue serving
customers sustainably.
The Board considered external expectations
of capital distributions, noting differing
preferences between equity investors
and bondholders, as well as the importance
of delivering consistent and predictable
shareholder returns. The Board also
considered regulatory changes to our capital
requirements, peer benchmarks and the
need to maintain robust capital buffers to
enable NatWest Group to continue to deliver
shareholder value and to support customers
and the wider economy throughout the
economic cycle.
The Board also ensured its decisions in relation
to capital distributions were aligned with the
commitment to a c.50% payout ratio, as noted
in the NatWest Group plc 2024 Annual Report
and Accounts, and external guidance provided
in February 2025 and then updated in July
2025. Directors additionally considered societal
expectations regarding responsible capital
management, the importance of maintaining
a resilient balance sheet, and the need to
continue investing in NatWest Group’s strategic
priorities and technology transformation.
The Board considered colleagues and internal
capabilities when reviewing the E&S Risk
Acceptance Criteria, including the support
required for colleagues working with
customers in sectors undergoing transition.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
37
Strategic report
Succeeding with customers
Through the NatWest Accelerator, we’re
supporting small businesses – like Hanan
Tantush’s adaptive clothing company,
Intotum – by providing tailored
workshops, one-to-one coaching,
and networking opportunities.
After Hanan won our first Accelerator
pitch competition in July 2025, we helped
her develop growth strategies, connect
with retail experts, and launch her new
collection. By offering this kind of practical
support, funding guidance, space for
collaboration, and (from 2025) access
to our Accelerator app, our Accelerator
community is empowering entrepreneurs
to scale their businesses successfully.
Our impact
12 Accelerator
Hubs across the UK.
Over 12,000
small businesses
supported through
the Accelerator app
at the end of 2025.
New partnerships
with four leading
UK universities
to strengthen the
UK’s innovation and
start-up ecosystem.
London
start-ups
to scale
Case study – helping build better businesses
Supporting
Elizabeth Parker, NatWest Group Acceleration Journey Manager (left) and Hanan Tantush (right)
‘Being a NatWest customer, I feel
supported because I know that I’m
working with a bank that genuinely
cares about entrepreneurs and people
wanting to start businesses. If I have
questions about new opportunities that
I don’t have experience in, I know
the Accelerator team can help me or
connect me with someone with relevant
experience. And that’s meant that I feel
really reassured.’
Hanan Tantush, Founder of Intotum
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
38
Strategic report
Our approach to sustainability
Sustainability review
Stems from
our purpose
We’re the bank that turns possibilities into
progress. We work to understand our
customers’ hopes and needs, and help
them achieve their goals. We believe
that doing this well helps our
communities and the UK
economy to progress.
Helping customers
manage their money
and plan for the future
Helping customers
build better and more
resilient businesses
Facilitating balanced
economic growth through
our UK-wide network
Disciplined
growth
Leveraging
simplification
Active balance
sheet and risk
management
Supported by informed decision-making
We manage our impact by actively considering economic, social,
and environmental factors in our decisions.
We believe that as a bank we can make a positive difference for our customers, communities, and the
UK economy. Our success is rooted in the success of our customers, so we focus on the impact that
comes from the core of our business, what we do as a bank, building a strategy that is sustainable.
A strategy that
is sustainable
Read more: Our business model on page 12 to 13 and Our strategy on page 15.
Read more on our Sustainability Disclosures at natwestgroup.com.
Impact through
our business
Read more about how this informs
our key sustainability topics
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
39
Strategic report
Sustainability review continued
Key sustainability topics for our stakeholders and our business
To build enduring, trusted relationships with our customers and other stakeholders, we regularly engage with them to understand their needs and priorities. The themes that emerge help us identify
where we can drive meaningful value through our activities, both for our business and society. We have defined the following topics as priorities in our efforts to address key sustainability challenges.
Investors
Communities
Regulators
Suppliers
Customers
Colleagues
Read more on how we performed our assessment of sustainability topics in Our approach to assessment of key sustainability topics on page 67.
Key
sustainability
topics
Supporting customers
and communities
through our banking
products and services
Safeguarding
information
and tackling
financial crime
Innovation
in our products
and services
Supporting
the climate
transition
Driving a culture of
integrity and responsible
risk management
Skilled, engaged
and inclusive
workforce
We help people manage their money, plan for
the future and build more resilient businesses
by offering banking products and services. By
doing so, we believe we can contribute to more
resilient communities and sustainable growth.
•
Our business model: pages 12 to 13
•
Business performance review: pages 25 to 32
•
Helping people manage their money and plan for the future:
pages 41 to 43
•
Helping people build better and more resilient businesses:
pages 43 to 44
We are focusing on innovation and digital
transformation to improve our customer
experience and help them build more
resilient businesses.
•
Business performance review: pages 25 to 32
•
Improving customer experience and accessibility of our
digital channels: pages 46 to 47
•
Embedding AI in our customer journeys: page 47
•
Digital stability: page 47
We are helping to address the climate
challenge by supporting our customers’
transition to a net-zero economy, embedding
climate considerations into decision-making
and risk management and pursuing our
own ambition to be net-zero by 2050.
•
Supporting the climate transition: pages 48 to 56
•
Other document: NatWest Group plc 2025 Climate
Transition Plan Report
We keep our customers’ and colleagues’ data
safe to protect their privacy, and we have robust
controls in place to tackle financial crime.
•
Managing data privacy: page 57
•
Detecting and preventing financial crime, corruption and
bribery: pages 57 to 58
•
Combatting fraud: page 58
•
Cybersecurity and payment systems regulator
performance data: page 58
We are building a highly skilled, motivated,
inclusive and diverse workforce to meet
the needs of our customers today and in
the future.
•
Building a future-ready workforce: pages 59 to 60
•
Investing in talent and leadership capability: page 60
•
Supporting colleague wellbeing: page 61
•
Creating a diverse and inclusive workforce: pages 62 to 63
We want stakeholders to trust us to do the
right thing; so we are building a culture of
integrity, respect for human rights, and
preventing corruption and bribery.
•
Refreshing Our Code: page 64
•
Protecting whistleblowers: page 64
•
Conflicts of interest and advocacy and political involvement:
page 65
•
Respect for human rights: page 65
•
Environmental and social risks: page 66
•
Meeting our tax responsibilities: page 66
Driving impact through our business
Helping people manage their money and plan for the future
Helping build better and more resilient businesses
Facilitating balanced growth across the UK
Read more on…
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
40
Strategic report
Helping people manage their
money and plan for the future
Helping people manage their financial wellbeing
is integrated into the design of our products.
People across the UK, regardless of their
income, continue to seek to feel more confident
in managing their finances. According to the
MoneyView 2025 survey, 46% of UK adults
didn’t feel confident managing their money
and 52% were struggling to keep up or have
fallen behind with their commitments.
(1)
Building
financial understanding is an important step,
and we’re aiming to help this through our
products and services.
We offer a range of products, digital tools and
features that support customers to improve
their financial knowledge and wellbeing. These
include personalised coaching plans based on
their unique financial situation, and in-app tools
such as Savings Goals, Round Ups and Know
Your Credit Score. We also offer NatWest
Rooster Money which is a children’s prepaid
debit card and pocket money app designed to
help young people, up to the age of 17, gain
confidence with money and build responsible
spending habits. It reached 600,000 subscribers
in 2025, compared with 474,000 in 2024,
driven largely by new features and
marketing partnerships.
Supporting customers with
suitable products and services
The challenges that people experience when
banking, with us or any other bank, informs the
way we create products that make banking
possible for more people. Our approach
to supporting our customers through our
products, services and tools is set out in
Our Code.
As part of our product governance, we
assess how customers with characteristics
of vulnerability may be impacted by product
design or changes through our Customer
Vulnerability Impact Assessment. Before
implementing any changes we make sure
we have the right mitigants in place.
Through our marketing and communications,
we focus on giving customers clear, fair and
accurate information about our products
so that they can make decisions about their
finances. We explain the risks, costs and
conditions of our products in plain language
and make key details easy to find, not
hidden in lengthy terms and conditions.
We offer financial products to support a wide
range of customers and communities. In 2025,
we looked to continue strengthening our
accessible banking proposition, launching a
new product to improve access to credit –
the Credit Builder Credit Card. It is designed
to help people boost their credit score and to
start borrowing in a responsible, supportive
way, with low credit limits and rewards
to establish healthy repayment behaviour.
We also offer affordable credit options like
overdrafts and credit card instalment plans,
supported with tools that help customers
borrow responsibly. In 2025, 420,000
instalment plans were set up compared
with 372,000 in 2024. We continued offering
our Foundation account which provides basic
banking with no fees or credit access for those
with poor or no credit history, serving 860,000
customers in 2025, compared with 883,000
in 2024.
Getting onto the property ladder continues to
be a financial challenge for people in the UK,
especially first-time buyers facing rising house
Supporting customers and communities
through our banking products and services
Sustainability review continued
(1)
Survey by Money & Pensions Service can be found at maps.org.uk/en/publications/.
We help people manage their money, plan
for the future and build better, more resilient
businesses. By doing this well, we believe we
can make a positive difference for communities
and support sustainable growth.
We focus on driving impact through the core
of what we do, as a bank, for our customers.
That involves improving financial wellbeing,
helping our customers overcome barriers to
starting up and growing their businesses,
and making banking more accessible.
Our Digital Regular Saver
Account helped over
1.8 million
customers build
savings habits
Rooster Money helped
build confidence of
600,000
young people with money
Our Accelerator app
grew with
12,000
members
Through Banking My Way
640,000
customers told us about
the support they need to
bank with us
More than
50,000
first time buyers took
their first step on the
housing ladder with us
Know My Credit Score
was used over
32 million
times by customers
In 2025
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
41
Strategic report
Sustainability review continued | Supporting customers and communities through our banking products and services continued
prices, high deposit requirements, and
affordability pressures. First-time buyers make
up over 30% of our new mortgage lending
which is around £10 billion and we provided
mortgages to more than 50,000 customers to
take their first step onto the property ladder
in 2025. We aim to continue our lending
support by providing £10 billion in mortgage
applications in 2026. Read more on our
Family-Backed Mortgage on page 26.
Our senior personal bankers provide free
reviews of finances for personal and business
customers, supporting them to understand
which products or services could help them
progress towards their financial goals. We
provided Financial Health Checks to 307,000
Retail Banking customers in 2025, compared
with 321,000 in 2024.
We communicate with customers who may
be struggling financially and provide them with
access to a dedicated Financial Health and
Support Team who offer specialist support and
bespoke assistance. In 2025, we answered
over 600,000 calls, sent over five million
communications, and had over 500,000
digital engagements with our most financially
vulnerable customers. Our communications
signpost customers to tools and support
to help improve their financial position. If a
customer contacts us, we have a wide range
of tailored solutions available to support them.
We suppress interest on overdrafts at 32 days
in excess and where customers miss payments
on secured or unsecured debt, we give
customers the flexibility to spread the
repayment of missed payments over up to two
years. Also, in May 2025, we removed unpaid
direct debit fees for mortgage customers to
align with loans and credit cards.
We took an active role in shaping the
recommendations of the UK Government’s
Financial Inclusion Strategy. In 2025, it was
announced we are one of the five banks to
commit to piloting a refreshed approach to
identity and verification for people experiencing
housing insecurity and homelessness.
Through our Banking Facilities For All (BFFA)
initiative, we support UK residents who face
difficulties in providing traditional identification
documents. These customers are typically
refugees, individuals experiencing
homelessness, those fleeing abuse and prison
leavers. Through BFFA, we are working
to end barriers to opening an account by
accepting alternative forms of identification.
We actively support the UK Says No More
campaign by offering Safe Spaces in 268 of
our branches. These locations provide a
private room for individuals experiencing
domestic abuse to access a phone and
contact support discreetly. Our colleagues
have received specialist training on Safe
Spaces and domestic abuse awareness.
Providing banking channels
for customers
It is important to us that all our customers
find banking with us simple and through
a channel of their choice. Banking My Way
helps us tailor our service to each customer.
It allows customers to tell us the support they
need to make banking easier, with a range
of adjustments including a sign language
interpreter, braille statements or simply
speaking more slowly. It is available through
the mobile app, online banking, in our
branches and with our telephone teams.
As at 31 December 2025, 640,000 customers
had registered for additional support through
Banking My Way compared with 397,000
in 2024.
We continued to offer mobile branches
throughout 2025 with 613 unique stops as
at 31 December 2025, compared with 600
in 2024. These branches allow customers to
carry out their everyday banking, such as
making deposits, withdrawing cash and
paying bills.
We also continued to operate our network
of 1,954 ATMs as at 31 December 2025,
compared to 2,150 in 2024. This reduction
in ATMs is due to a combination of branch
closures and removal of remote ATMs.
Throughout 2025, we have installed a new
generation of ATMs that provide access
to enhanced features aimed at improving
accessibility, multi-language support
and security.
In 2025, we closed 100 branches, bringing our
total number of branches as at 31 December
2025 to 384. In January 2026, we announced
the closure of 32 branches. We closed mobile
branches in locations with a Cash Access UK
(CAUK) Banking Hub, as this offers customers
a more permanent and comprehensive
banking service. We are committed to
providing customers with 12 weeks notice of a
branch closure announcement. There are lots
of other ways customers can bank with us,
including mobile and online banking, video
banking, our telephony teams, and the Post
Office. We continue to work with CAUK and
other banks to bring shared cash and banking
services to communities. As at 31 December
2025, there were approximately 200 Banking
Hubs and 150 shared cash deposit and
withdrawal services across the UK. In most
locations, a member of our team will be on
hand once a week to help customers with
their banking. In 2025, we renewed our
commitment to delivering access to everyday
banking services through over 11,500 Post
Office locations.
Reviewing our products policies,
and processes
As part of our ongoing review of our products,
policies and processes, we made further
enhancements to our ‘Good Customer
Outcomes Monitoring’. This involved surfacing
an additional 200 data points to help identify
and manage scenarios of potential harm,
where customers may not be experiencing
their products or services as intended by
design. We have also continued to improve
the precision of our Price and Value
Documentation, required under the FCA
Consumer Duty Regulation, so they cover
different customer segments, notably those
customers whose characteristics indicate they
may be more susceptible to a poorer outcome.
Spotlight
Financial
Foundations
workshops
Following a successful pilot last year,
Financial Foundations was expanded in
2025 to reach communities across the
UK. This programme aims to help people
make the most of their money and take
control of their financial future through
free, in-person, impartial money
guidance workshops and a range of
digital tools and resources. We expanded
the programme through our Commercial
& Institutional customers, helping to
support employee financial wellbeing
and, in turn, enhance engagement,
productivity and retention.
Financial Foundations supports adults at
all life stages, equipping them to develop
financial resilience, plan for their future
and protect against fraud and scams.
Delivering workshops in person allows
us to reach individuals within their local
communities and workplaces, where it is
accessible and convenient. Evaluation of
the pilot improved and refined content
and delivery and helped us understand
the need for money guidance. Ongoing
monitoring of post-survey data
demonstrates participants feel more
confident managing their money. During
2025, 1,500 workshops were delivered
to over 31,000 participants.
We are now aiming to support
50,000 people
with free financial education in
2026, in their workplaces and
communities.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
42
Strategic report
Sustainability review continued | Supporting customers and communities through our banking products and services continued
Dealing with customer complaints effectively
builds customer trust and complies with FCA
standards. We focus on identifying and
addressing the root causes of complaints
to reduce them and, in turn, make banking
easier for our customers. In 2025, we received
255,000 reportable complaints, compared with
239,000 in 2024. In 2025, we received 255,000
reportable complaints, up from 239,000, driven
partly by the onboarding of Sainsbury’s Bank
customers, increased customer awareness,
and rising levels of fraud and scams.
Approach to financial wellbeing
We set an ambition in 2023 to help 10 million
people per year manage their financial
wellbeing by 2027. In 2024, we exceeded
our annual ambition to help 7 million people
manage their financial wellbeing by supporting
7.8 million people. After reaching this
milestone, we reviewed our ambition in the
context of our strategy and decided to no
longer separately measure, track, and
report on this target.
Financial wellbeing is now sufficiently
embedded in our strategy, and we continue
to support customers through both broad
and tailored products and services such as
our Digital Regular Saver, Round Ups, NatWest
Thrive programme, and Financial Foundations
workshops, which will continue to be offered
unless otherwise specified.
Two key programmes, NatWest Thrive and
Financial Foundations, remain central to our
work to improve financial wellbeing among
our customers and communities.
NatWest Thrive: building confidence
with money and future skills for the
next generation
For over 30 years, we have run programmes
to help young people grow their financial
confidence. In 2025, we brought together
several of these long-standing programmes –
MoneySense, Dream Bigger and CareerSense
– into a single free educational programme
called NatWest Thrive.
NatWest Thrive provides bite-sized learning
content for teachers, parents and youth
workers. To connect with young people, we
use relatable role models and real-life scenarios
that help money matters and careers feel
relevant. For example, we have drawn on our
partnerships with Team GB and ParalympicsGB
to bring in athlete ambassadors to inspire
young people to take steps to shape the
future they want.
Spotlight
Expanding
NatWest
Accelerator Hubs
Our 12 Hubs are central to the
Accelerator community, delivering local
tailored interventions designed to meet
local needs. We have partnered with
the Universities of Manchester, Oxford,
York and Brighton to establish local
Accelerator Hubs in their campuses to
continue expanding the community. We
plan to set up hubs in up to 10 universities
over the next two years. This initiative is
part of our wider strategy launched
in spring 2025, to harness academic
expertise and regional strengths as
we grow the reach of the community.
it easier for businesses to manage their
finances and overcome hurdles while
focusing on building their business.
NatWest Accelerator: evolving to
empower more entrepreneurs
and businesses
The NatWest Accelerator community
offers coaching, networking and resources to
start-ups and small businesses, helping them
grow and build vital foundations for long-term
resilience. To extend the community’s reach
and impact, we switched to a hybrid model,
launching the NatWest Accelerator app in
March 2025. The app provides UK-wide access
to learning, collaboration spaces, mentors and
events, and as 31 December 2025 we had
approximately 12,000 members registered
on the app.
In 2025, we forged partnerships to drive inclusive
growth and innovation. Our collaboration with
Google supports responsible AI adoption,
boosting digital capability for entrepreneurs.
With JCDecaux UK, they empower early-stage
businesses to scale through Out-of-Home
advertising, increasing visibility and creating
opportunities for sustainable business growth.
We also launched NatWest Accelerator Pitch,
showcasing UK entrepreneurial talent and
innovation to help increase their visibility and
growth opportunities. Pitch provides a national
platform for founders to present to expert
judges and industry leaders. Since launching
in March 2025, NatWest Pitch has attracted
around 1,000 applications from founders
nationwide. Its first two live finals, hosted
in Manchester in July 2025 and London in
November 2025, awarded £200,000 to six
innovative businesses.
To contribute to inclusive entrepreneurship,
approximately half of our support through the
NatWest Accelerator community is directed
to women in business, and a significant
proportion to individuals from ethnic minority
backgrounds. We continue to work with
partners including Digital Boost, Buy Women
Built and Hatch to create an equitable,
empowering ecosystem for diverse founders.
We are now aiming to grow our
Accelerator community to
50,000 members
in 2026.
In 2025, NatWest Thrive reached over
1 million
young people across the UK,
with 80% of young people across
schools and youth clubs reporting
a positive change in behaviour
towards their financial wellbeing
after participating in NatWest Thrive.
Supporting women in business
We continue to support female entrepreneurs
through access to finance, mentorship and
tailored networks. Between 2020 and June
2025, we approved more than 55,900 loans
for women-led businesses, totalling £2.8 billion.
Partnerships with platforms such as MP HERoes
have provided female entrepreneurs with
practical support, networking opportunities,
mentoring and events, alongside the Begin
programme for aspiring entrepreneurs.
Expanding the impact of NatWest
Thrive with the National Youth Agency
Youth clubs can be an important hub for young
people to access information they trust, in
a setting they feel comfortable in.
Our partnership with the National Youth
Agency enables us to connect with young
people through youth clubs in underserved
communities. Our £5 million levy fund pledge,
which was increased from £3 million in 2025,
continues to bring more qualified youth
workers into the sector. Of those beginning a
youth work degree apprenticeship qualification
in the UK in 2025, NatWest Group supported a
third through our apprenticeship levy funding.
Helping people build better and
more resilient businesses
Homegrown businesses are the cornerstone
of the UK economy. We believe we can
contribute to more disciplined growth by
supporting businesses of all sizes to start
up, scale and adapt. Through core products
and additional programmes, we are making
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
43
Strategic report
focused on turning possibilities into progress,
we can use our financial products to support
investment and delivery of schemes that lay
the foundations for more balanced growth
and look to support environmental and
social outcomes for our customers.
We contributed to the Cambridge Institute for
Sustainability Leadership’s report, advocating
for retrofit as a national priority. The report
highlights the economic, social and health
benefits of energy efficiency, framing retrofit
as essential to climate action, public wellbeing
and long-term productivity.
Supporting customers’ social financing
NatWest Markets, acting as arranger
and dealer, continued to support corporate
and institutional customers with their social
and sustainability bond issuances through
private placements, public bonds, and tap
transactions, to facilitate projects that improve
access to essential services, like affordable
housing, healthcare, and other socially
beneficial activities.
In 2025, we lead managed 22 sustainability
and 12 social bonds, acting as arranger
and dealer, facilitating a total notional
of £18.8 billion
(1)
of which £5 billion was
attributable to NatWest Group as at
31 December 2025 (2024: total notional
£24 billion, £5.4 billion attributable).
Use of proceeds from our green and
social bonds
Our Green, Social and Sustainability (GSS)
Financing Framework is designed with the
aim of attracting dedicated and diversified
funding that supports lending and investment
activities with the potential to deliver positive
environmental and social outcomes. Since
2019 this has included the issuance of
(2)
:
•
Five social bonds, with a total nominal
value at issuance of £3.9 billion,
across three asset classes.
•
Four green bonds, with a total
nominal value at issuance of £2.6 billion,
also across three asset classes.
Read more on our 2024 Green, Social and
Sustainability Bonds Allocation and Impact Report
and GSS Framework at natwestgroup.com.
Spotlight
Supporting the
building of social
rented homes
In July 2025, NatWest Group launched a
first-to-market £500 million loan product
to be used for the building of social
rented homes. This loan product aims to
help address the housing crisis, offering
discounted rates and no arrangement
fees
(3)
to housing associations. Following
strong demand, we increased the level
of lending to £1 billion in December
2025, potentially saving the sector in
finance costs. This lending is expected to
be delivered throughout 2026, subject to
market conditions.
Sustainability review continued | Supporting customers and communities through our banking products and services continued
In 2025, we completed
£168.5 million
of lending to support the building
of social rented homes.
(1)
We set an ambition to provide
£7.5 billion of targeted lending to
the social housing sector between
1 January 2024 and 31 December
2026. Having delivered £8.7
billion
(1)
in lending across 2024 and 2025, and
achieving our ambition early, we are
now aiming to deliver
£10 billion
in new lending between 1 January
2026 and 31 December 2028.
(1)
Social finance and facilitation represent only a relatively small proportion of our overall financing and facilitation activities.
(2)
Of the nine green and social bonds issued by NatWest Group, as at 31 December 2025 seven remain outstanding, two issuances having been redeemed at their first call date.
(3)
Discounted rates and no arrangement fees based on internal margins.
Banking support for small businesses
We support small businesses through a
suite of digital products designed to simplify
financial management and accelerate growth.
An example is Mettle, our digital business bank
account for sole traders, small businesses and
limited companies, that makes it easy for
customers to raise and send invoices, upload
receipts and integrate with FreeAgent. In 2025,
we expanded Mettle+, making it more widely
available to customers. The service enables
businesses to create and send bespoke quotes
and convert them to invoices on the go. Mettle
was voted ‘Best Business Banking Provider’ at
the British Bank Awards and ‘Best Customer
Service’ at Engage Awards 2025. As at
31 December 2025, Mettle reached
approximately 150,000 open accounts, up
from approximately 132,000 at the end of 2024.
FreeAgent continues to bring accounting
software to small businesses, supporting
approximately 225,000 customers in 2025,
compared with 200,000 in 2024. It simplifies
bookkeeping, tax, and financial planning, so
that small businesses can better understand
and manage their finances.
Tyl by NatWest, our payments solution,
supported approximately 40,000 merchants
during 2025, compared with approximately
38,000 in 2024. It offers flexible, easy-to-use
payment options that help businesses get
paid faster and manage transactions more
efficiently. In 2025, we launched a new suite
of terminals and a merchant portal to further
improve the experience for small businesses,
micro-businesses and seasonal traders.
Building for the future by
partnering with our corporate
clients to support social and
sustainability goals
Social housing and sustainable infrastructure
are fundamental to building resilient
communities. We believe that as a bank
This funding supports our customers with
the delivery of new homes, improved living
conditions and the UK’s progress towards
net zero.
Strategic partnerships supporting
the housing sector
NatWest Group collaborated through strategic
partnerships to support efforts towards driving
inclusive and sustainable housing solutions
across the UK.
In April 2025, the National Wealth Fund
announced a financial guarantee of up to
£400 million to cover a series of new loans
provided by NatWest Group to registered
providers for the retrofit of social housing stock
in the UK. This lending aims to accelerate the
decarbonisation of social housing by funding
measures such as lighting, insulation and
renewable energy generation like solar panels.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
44
Strategic report
Succeeding with customers
Across the wide spread of communities
we serve in the UK, connections are
sometimes required beyond our branches.
This is especially true for areas of the
country where customers can find it
difficult to access our physical locations.
NatWest Group has a pioneering history
in mobile branch banking and continues
to reach communities that are distanced
from our main branch buildings. In the
Orkney Islands, for instance, the Royal
Bank of Scotland is the only bank in the
UK to operate a ‘flying banking’ service.
From the Royal Bank of Scotland branch
in Kirkwall, it’s the role of Personal Banker,
Lois Canning, to fly to three islands –
Westray, once a week; and Stronsay
and Sanday, every fortnight – to provide
essential in-person banking services.
Our impact
Providing vital
access to cash.
Supporting local
businesses and
their communities.
Promoting online
and telephone
banking for
24-hour access.
Orkney Islands
island communities
through flying
banking
Case study – helping people manage their money
Connecting
Lois Canning (left) and Stuart Groat, Royal Bank of Scotland customer (right)
‘There are lots of people in
smaller communities that really
do need our support, so it’s
important we can find a way to
reach them. Succeeding with
customers means understanding
their lives and being there for
them, wherever they are.’
Lois Canning, Royal Bank of Scotland,
Personal Banker, Kirkwall, Orkney Islands.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
45
Strategic report
Innovation in our products and services
Sustainability review continued
Improving the customer
experience and accessibility
of our digital channels
We focus on exploring and embracing
innovation and technology that helps
customers access financial services that they
need and bank in a way that works for them.
Banking apps and online platforms are an
essential tool for making it more convenient
for our customers to manage money. We
continue to explore ways to further personalise
our online services to customer preferences
and make essential banking easier. We
continue to operate in a rapidly changing
landscape, and as we evolve our digital
services and adopt emerging technologies
that support our customers, maintaining
accessibility, stability, and responsible use
of data and AI, is essential.
Enhancements to mobile apps and
online platforms
We recognise there is always room to
strengthen the services we provide and
our development focus for the retail app in
2025 has been to make it easier and more
supportive for our customers. The following
changes reflect that focus for 2025:
•
Subscription management helps customers
see their subscriptions in one convenient
place within the app. Where possible, we
have included direct links to company
websites for simple management –
helping customers manage their payments.
•
Offering virtual debit cards making online
purchases easier.
•
Introducing Budget Pots for Ulster Bank
customers, enabling them to set aside money.
•
Providing real-time credit limit management.
We also invested in our award-winning Coutts
app to enhance the client experience and
deepen engagement. We introduced a set of
enhancements in addition to refreshing our
website to improve accessibility. Some key
achievements include:
•
All non-bespoke savings products available
as digital journeys, resulting in an 11.3%
uplift in digital balances year-on-year.
•
Offering further insights for clients on
their investments with the introduction
of Valuation and Performance charts.
•
Sharing expert market commentary to
better showcase our expertise and meet
client needs.
Following the 2025 enhancements, our Coutts
digital experience is now attracting a Net
Promoter Score
®
of +54.
We also upgraded Bankline, the digital channel
for Commercial & Institutional customers, in
2025. This was done to make it simpler to use,
and to enable our customers to access other
products and services more efficiently, through
a single sign-on. Customers can now access a
wide range of NatWest Group products
through Bankline, including:
•
FacFlow, our invoice finance service.
•
Lombard, our asset finance platform.
•
ClearSpend, our corporate card platform.
•
Agile Markets, our foreign exchange
(FX) application.
•
Trade360, our trade finance platform.
We want to strengthen our relationships with
our customers by connecting them with the
best technology available to us to help them
manage their money for day-to-day banking,
plan for the future, achieve their long-term
financial goals, and build better, more resilient
businesses. Emerging technologies and shifting
customer preferences are transforming how
people bank. That’s why we are aiming to build
a bank that develops and adopts tools that
improve customer experience and access
to our services.
Retail customers
banking entirely digital
81.8%
(1,3) (LA)
Target: 80% (2024: 78.7%)
Commercial &
Institutional customers
banking digital first
84.5%
(2,3) (LA)
Target: 85% (2024: 82.9%)
(1)
Retail Banking customers with active current accounts that have accessed a digital platform
(online or mobile) and not used the branch or telephony for 90 days in the reporting period
ended on 31 December 2025. Inactive customers and customers with no channel use excluded.
Mortgages and savings accounts, and interactions via the Post Office are excluded from the scope
of measurement.
(2)
Commercial & Institutional (ring-fenced bank) customers with active non-personal account/s
that access their account 95% or higher through digital channels for three rolling months in the
reporting period ended on 31 December. 2025 Access to account through a digital channel may
not result in a transaction.
(3)
For more information on these targets, refer to the NatWest Group 2025 Basis of Reporting.
(LA) Metric subject to independent Limited Assurance by EY. Refer to page 71.
Link to remuneration
Key performance indicators
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
46
Strategic report
Sustainability review continued | Innovation in our products and services continued
Embedding AI in our customer journeys
We want our customers to find banking with
us easier, and AI is a capability that we believe
can help us become a simpler organisation for
our customers to engage with. As we develop
our AI capability across our operations,
products, and services, we are starting
to see the value it can add.
Cora, our digital assistant, deals with over 100
topics across mobile, online, and telephony
banking. In 2025, Cora handled 12.9 million
conversations, with 50% of these interactions
requiring no human intervention from our teams,
so we can serve the customers who do need
personal support more quickly. Through 2025,
we’ve made significant investment in bringing
Generative AI (GenAI) into the customer
experience. This enabled us to introduce
GenAI to 17 additional Cora customer journeys
(now 21, as at 31 December 2025). As a result,
we have seen around a 20-percentage-point
increase in queries resolved without any
human intervention, compared to the
equivalent non-Gen AI supported Cora journey.
We also introduced a new AI-based identification
process for approximately one million
Commercial & Institutional customers. It offers
a secure way to provide identity documents to
NatWest digitally, reducing completion time from
days to minutes. This removes the need for
document certification, which often incurs a cost
for customers. For security, AI-based analytics
detect potential alterations or manipulation, and
biometric facial comparison algorithms confirm
the customer identity.
To better support our colleagues, we use
AI summaries to help triage customer needs. In
2025, the technology benefitted approximately
9,000 customer support agents, freeing up
their time to focus on speaking with customers
and dealing with more complex queries.
For further information on our AI approach refer
to page 78 in Risk overview.
There was one Criticality 1 incident
(2)
compared
with zero for 2024. These numbers include all
events that had an impact on our operations,
not just system issues.
Through strong control frameworks,
we remain focused on our operational
resilience with customer service a priority.
We have policies, standards and mature
processes in place to minimise the potential
for any technology or IT system disruptions.
These include recovery procedures and
incident response plans, all of which are
tested on a regular basis to reduce risk.
Spotlight
Using AI responsibly
In 2025, we focused on strengthening our
internal capabilities to safely embed AI and
data ethics across our organisation and
customer journeys. We continued to embed
AI and data ethics into our AI development,
procurement, deployment and use across
the bank, and we also grew our Responsible
AI Team to support with this.
Through a partnership with the University
of Edinburgh, we are upskilling team
members in responsible AI. A second
cohort of 32 colleagues completed a
bespoke practitioners’ course based on
the University’s Data and AI Ethics masters
course, with more cohorts planned for 2026.
We published our AI and Data Ethics
(AIDE) Code of Conduct to be transparent
about our approach to the development,
procurement, deployment and use of AI.
In addition, the Responsible AI Team
refined the AIDE process to include
a triage for all AI use cases. This system
allows us to assess ethical risks
proportionately across use cases and
recommend actions to help ensure
compliance with our AIDE Code of Conduct.
It also streamlines our governance
processes by removing unnecessary steps.
More broadly, we are enhancing our risk
framework and controls with the aim to
ensure our AI systems are robust, secure
and properly governed. NatWest Group’s
Enterprise-Wide Risk Management
Framework (EWRMF) provides the
appropriate guardrails to ensure the
safe and secure deployment of AI.
(1)
Improving digital accessibility
Our aim is to provide a consistent and accessible
experience for all our customers, which includes
engaging disabled and neurodivergent people in
the design of our digital platforms. We recognise
there is still scope to develop this further, and
it continues to guide our work.
We aim to conform to the World Wide Web
Consortium’s (W3C) Web Content Accessibility
(WCAG) v2.2 at Level AA, which is reflected
in our NatWest Digital Accessibility Standards.
These standards also reference the British
Standards Institution (BSI) Vocal Accessibility
PAS 901 and act as a guide for our approach.
In 2025, we commissioned research on font
scaling and target touch size and will use the
findings to inform our design system. We also
updated guidance within our supplier code of
best practice with an expectation that suppliers
conform to the most recent version of the
international accessibility standards, WCAG
v2.2 AA.
Leveraging innovation to enhance
customer experience
By investing in innovation to improve our
technology and refine our processes, we are
working to improve our digital stability for our
customers and tackle fraud.
Digital stability
Problems with our digital environment can
have a detrimental impact on our customers’
ability to access and manage their money.
In 2025, we had consistently high performance
and stability of our most critical systems,
which have been available 99.99% of the time.
(1)
This includes Model Risk requirements regarding use of modelled outputs, Conduct Risk and customer outcomes, and information integrity with regard to Operational Risk. Recognising the increasing complexity and volume of AI deployment, work is underway to identify and drive
forward enhancements as required across the EWRMF to ensure the continued safe deployment of AI use cases.
(2)
Availability of our key systems is currently calculated against our Important Business Services – those defined as the most critical. By way of illustration, a Criticality 1 incident could be a loss of key IT systems resulting in an impact to more than 15% of the bank’s customers or an
incident that leads to a financial loss of over £10 million.
21,500
colleagues completed the digital
accessibility learning module in 2025.
In 2025, approximately
58,000
colleagues completed internally
developed AI and data ethics training.
We continue to strengthen our role-based
training pathways to increase understanding
of the importance of accessibility. Our Digital
Accessibility learning module was completed
by approximately 21,500 colleagues in 2025.
Colleagues in many different areas of the bank
completed the module including Retail Banking,
Private Banking & Wealth Management,
Commercial & Institutional, and Digital X.
Beyond our own business, in 2025 we worked
with external partners supporting the Business
Disability Forum Technology Task Force to
advance industry-wide digital accessibility
maturity. In addition, we facilitated the
livestream of Europe’s largest accessibility
conference, TechShare Pro, and delivered
content to its online audience.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
47
Strategic report
Supporting the climate transition
Sustainability review continued
At NatWest Group, we aim to help our
customers on their journey toward net zero,
including engaging on how we could support
their transition ambitions. We continue to
integrate our own climate ambitions into
our core business practices as part of our
commitment to delivering long-term value
and managing risk.
While the path to net zero by 2050 is far from
clear at this stage, we continue to focus on
supporting our customers’ transition and our
own ambitions to be net zero. Achievement of
our climate ambitions and targets is dependent
on a range of factors, including timely and
appropriate government policy, technology
developments, and on suppliers, customers
and society supporting the transition.
Governance
Our governance framework provides
clear oversight of climate ambitions
and targets, with Board-level
accountability for progress and risk.
•
Refer to page 106 for more
information on climate governance
and pages 103 and 113 for Board
skills, experience and knowledge.
Find out more in the
NatWest Group plc
2025 Climate Transition
Plan Report.
NatWest Group plc
2025 Climate Transition Plan Report
Succeeding
with customers
Our climate ambitions, targets and our climate transition plan enable us to focus on the actions
we can take to succeed with our customers and deliver sustainable shareholder value over
time, including:
•
Helping customers manage their money and plan for the future by, for example, providing
retrofit and home energy support through NatWest Group’s Home Energy Hub.
•
Helping customers build better and more resilient businesses by financing sustainable solutions
that may lower running costs, improve efficiency and strengthen long-term viability.
•
Facilitating balanced economic growth by financing large-scale renewable projects, energy
networks and demand-side electrification, driving progress across the UK economy.
As well as being a key sustainability topic for NatWest Group, climate-related information required
under sections 414CA and 414CB of the Companies Act 2006 is integrated throughout this report.
Refer to the table below and the Task Force on Climate-related Financial Disclosures (TCFD) index
on page 70 and non-financial and sustainability information statement on pages 71 and 72.
Risk management
We continue to integrate climate, and
increasingly nature considerations into
how we assess and manage risk.
•
Refer to pages 254 to 256
for our approach to
climate and nature risk.
•
Refer to pages 213 and 214
for information on climate
considerations in credit risk.
Climate-related
opportunities
We continue to support customers in
accessing sustainable solutions and
financing the transition to net zero.
•
Refer to pages 49 to 52 for
summary information.
Emissions and emissions
estimates
We track and monitor various sources
of emissions to monitor progress and
inform our climate transition plan.
•
Refer to pages 54 to 56 and 68
for summary information.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
48
Strategic report
Sustainability review continued | Supporting the climate transition continued
We have an ambition to be net zero across our financed emissions, assets under management and operational value chain by 2050. This is aligned with the UK’s legal obligation
to be net zero by 2050. Achievement of our climate ambitions and targets is dependent on a range of factors, including timely and appropriate government policy, technology
developments, and on suppliers, customers and society supporting the transition.
Refer to the NatWest Group plc 2025 Climate Transition Plan Report for details on external dependencies and our approach to policy engagement and advocacy.
We have retained our ambition to at least halve the climate impact of our financing activity by 2030, against a 2019 baseline
In February 2025, we disclosed that we continued to consider the achievement of our ambition to at least halve the climate impact of our financing activity by 2030, against a 2019 baseline, to be increasingly
challenging. We also disclosed our intention to review our climate ambitions and targets during 2025 in light of the advice issued by the UK Climate Change Committee (UK CCC) to the UK Government on
setting the Seventh Carbon Budget. Following this review, we have retained our ambition to at least halve the climate impact of our financing activity by 2030, against a 2019 baseline, having achieved a 39%
reduction between 2019 and 2024, primarily through strategic decisions, methodology and data enhancements. We acknowledge that emission reductions are unlikely to be linear and that the UK Parliament
will legislate a new legal limit on greenhouse gas emissions as part of the Seventh Carbon Budget by June 2026.
A simplified and focused approach
In 2022, we set 16 science-based portfolio-level sector targets for 2030. These targets were validated
by the Science Based Targets initiative (SBTi) and covered 79% of our lending book and 57% of debt
securities and equity shares, excluding sovereign debt securities as at 31 December 2019. They had
a 2019 baseline and underpinned the development of our initial climate transition plan and the
opportunities we identified to help our customers transition to a more sustainable economy.
We have continued to refine our climate transition plan to focus on the most material activities across
a range of sectors, including the metrics and methodologies used to track progress against our plan.
As a result we have withdrawn our 16 portfolio-level sector targets and replaced these targets with nine
portfolio-level activity-based targets for 2030. Our new targets are science-based, have a 2023 baseline
and have been developed using the UN Environment Programme Finance Initiative (UNEP FI) Guidance
for Climate Target Setting for Banks, ensuring coverage of carbon-intensive sectors, material sources of
emissions and adequate coverage of our balance sheet. They cover 61% of our lending book and 0.02%
of debt securities and equity shares, excluding sovereign debt as at 31 December 2023. We have not
sought SBTi validation of our new portfolio-level activity-based targets.
The scope of our new targets reflect our role as a provider of finance to a range of industries and the
activities recognised by the UK CCC as playing a critical role in enabling the UK’s transition to net zero
by 2050. This helps us to better understand the transition risks and opportunities that may impact our
customers and to better support the UK’s transition to net zero.
Operational emissions
We continue to aim for a 70% reduction in
Scope 1 and location-based Scope 2 emissions
and a 50% reduction in Scope 3 operational
emissions from applicable categories 1–14
by 2030, against a 2019 baseline. We also
continue to consume 100% renewable
electricity across our global operations in line
with our RE100 commitment. While we will
maintain a science-based pathway to 2030,
we have withdrawn our three science-based
targets which were validated by the Science
Based Targets initiative (SBTi).
Financing the transition
In July 2025, we set a new target to provide
£200 billion in climate and transition finance
between 1 July 2025 and the end of 2030.
Our climate and transition finance framework
has replaced the climate and sustainable
funding and financing inclusion criteria that
underpinned our previous £100 billion target,
which was exceeded in Q1 2025. This evolution
recognises that supporting the alignment and
transition of the real economy towards net
zero needs significant investment across a
broader spectrum of industries, including
hard-to-abate and emission intensive sectors,
alongside those delivering climate solutions.
Responsible investment
In 2025, we reviewed our responsible
investing approach, including our climate
ambitions, to ensure alignment with
customer needs and market standards.
Following the review, we have withdrawn
portfolio alignment from our entity level
2030 ambitions, recognising a lack of
market consensus on how to define
portfolio alignment within a wealth
management context. We have retained
our 2030 Weighted Average Carbon
Intensity (WACI) ambition, which reflects
market best practice and continues to
provide a standardised measure through
which we can monitor progress towards
our net zero by 2050 ambition.
Energy system review
We also stated that we would review our Environmental, Social and Ethical (ESE) Risk Acceptance Criteria for major oil and gas customers. The scope of
the energy system review was broader than the ESE Risk Acceptance Criteria for major oil and gas customers. From 1 January 2026, we updated the
name of our ESE Risk Framework to the Environmental and Social (E&S) Risk Framework. Recognising the complexity of the energy transition, we
conducted an energy system review during 2025 to ensure our strategy reflects the interconnected risks and opportunities across the energy value chain
as the economy transitions toward net zero. The energy system review considered the systemic nature of the energy transition which anticipates further
growth in renewables, the important yet declining role of oil and gas, significant infrastructure investment and demand-side electrification. Reflecting the
outcome of our energy system review, we have published a new E&S Energy Supply Sectors Risk Acceptance Criteria.
Refreshing our climate ambitions
We made a number of changes to our climate ambitions, targets and Environmental and Social (E&S) Risk Acceptance Criteria:
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
49
Strategic report
Sustainability review continued | Supporting the climate transition continued
(1)
For details on dependencies applicable to and reliance on
our climate and sustainability-related ambitions, targets
and commitments, refer to ‘Climate and sustainability-
related risks’, ‘Additional cautionary statement regarding
climate and sustainability-related data, metrics and
forward looking statements’, and ‘Cautionary statements
in relation to the climate and sustainability related
disclosures in this report’ on pages 420 to 422, 429
and 430 of this report.
(2)
Climate and sustainable funding and financing (as defined
in our climate and sustainable funding and financing
inclusion criteria) and climate and transition finance, (as
defined in our climate and transition finance framework)
represent only a relatively small proportion of our overall
funding, financing and facilitation activities.
(3) Our operational emissions comprise greenhouse gas
emissions Scopes 1, 2 and 3 (categories 1–14, excluding
categories 8, 10 and 14) and does not include Scope 3
category 15 financed emissions. The reporting year
runs from 1 October to 30 September.
(4)
Our WACI ambition includes listed equity and corporate
fixed income asset classes. We consider Managed Assets
(those assets we invest on our customers’ behalf, which
represented 81% of AUM as at 31 December 2025) to be
in-scope for our WACI ambition. Due to improved data
sourcing, current WACI measurement includes additional
data for government bond asset classes and Bespoke
portfolios. Our WACI ambition applies to equity and
corporate fixed income assets only.
(5)
Scope 3 category 15 financed emissions (customer Scope
1 and 2) from lending and investments, refer to page 54.
Estimated financed emissions are reported as at
31 December 2024. Our financing activity may result in a
non-linear emissions profile, both within and across sectors.
(6)
Based on 2024 emissions, reflecting the nine portfolio-level
activity-based targets for which convergence pathways
have been developed with reference to external
scenarios. A 2023 comparative is not provided as these
are new targets. In general, year-on-year fluctuations in
convergence status are expected as the availability of
customer emissions data improves and methodologies
are refined.
(7)
The phase-out of coal refers to the exit of the customer
relationship by NatWest Group. This relates to all grades
of thermal coal (e.g. bituminous, sub-bituminous, and
lignite) typically used as a fuel for coal-fired generation.
Data challenges, particularly the lack of granular
customer information, create challenges in identifying
customers with ‘coal-related infrastructure’ and other
customers with coal-related operations within NatWest
Group’s large and diversified customer portfolios. As such,
the scope excludes (i) companies who generate less than
5% of their revenues via coal related activity (in line
with the UN Environment Programme Finance Initiative
(UNEP FI) Guidance for Climate Target Setting for Banks)
(ii) companies with a turnover of <£50 million, and
(iii) commodity traders. Metallurgical coal is excluded
from scope.
Metric subject to independent Limited Assurance by EY.
Metric subject to independent Reasonable Assurance by
EY. Refer to page 71.
Climate and sustainable
funding and financing
(2)
£110.3bn
(LA)
provided between 1 July 2021
and 30 June 2025
In 2025, we exceeded our
target to provide £100 billion
in climate and sustainable
funding and financing
between 1 July 2021
and the end of 2025
We have a target to provide
£200 billion in climate and
transition finance between
1 July 2025 and the end
of 2030
Climate and
transition finance
(2)
£19.0bn
(LA)
provided 1 July to 31
December 2025
We have an ambition to
reduce emissions for our
operational value chain,
against a 2019 baseline by:
reducing Scope 1 and Scope
2 emissions by 70%
by 2030, while continuing to
consume 100% renewable
electricity in our direct own
global operations
Operational emissions
(3)
Scope 1 and Scope 2
66% reduction
against a 2019 baseline
(2024: 60%)
We have an ambition to
reduce emissions for our
operational value chain,
against a 2019 baseline by:
reducing Scope 3 emissions
by 50% by 2030
Operational emissions
(3)
Scope 3
47% reduction
against a 2019 baseline
(2024: 44%
)
Progress against our climate ambitions and targets
We have an ambition to be net zero by 2050 across our financed emissions, assets under management (AUM) and operational value chain.
Our climate ambitions and targets
(1)
enable us to focus on actions we can take to succeed with our customers and deliver sustainable
shareholder value.
We aim to reduce the
WACI of our Managed
Assets by 50% by 2030
against a 2019 baseline
Weighted Average
Carbon Intensity (WACI)
(4)
43% reduction
(2024: 34%)
We have an ambition for
50% of our UK residential
mortgage portfolio to
have an EPC rating of C
or better by 2030, where
EPCs are available
UK residential mortgage
portfolio rated at EPC C
or better, where EPCs
are available, as at
31 December 2025
48.8%
(RA)
(2024: 46.3%)
We have an ambition to
at least halve the climate
impact of our financing
activity by 2030, against a
2019 baseline, supported
by portfolio-level, activity-
based targets
Climate impact of our
financing activity against
a 2019 baseline
(5)
:
39% reduction
(2024: 33%)
Portfolios aligned to
decarbonisation convergence
pathways
(6):
6 out of 9
We have an ambition to
phase-out of coal
(7)
for
customers who have
coal production,
coal-fired generation
and coal-related
infrastructure globally
by 1 January 2030
Exposure to coal customers
remained in line with the
prior year
£0.6bn
(LA)
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
50
Strategic report
Climate-related risks
and opportunities
Climate change, nature loss and the responses
to these challenges have implications for the
economy, society, and the financial system.
As well as managing the risks they pose,
we pursue the opportunities arising from
the transition to a net-zero economy. This
approach aims to help protect the bank’s
financial resilience and support its strategy,
with an aim of generating sustainable returns
for our shareholders.
The transition to a net-zero economy requires
significant investment in climate change
mitigation and adaptation, including nature-
based solutions. This creates opportunities for
capital providers and for collaboration between
the public and private sectors to drive the
technological advancements society needs.
We assess climate-related opportunities across
the organisation and within each business
segment through our integrated governance
model. We review opportunities and their
potential financial impacts annually as part
of the ongoing integration of our climate
transition plan into our financial planning
and related processes.
While climate change, nature loss and the
associated political, societal and environmental
responses to it present opportunities, they also
present risks. We continue to work to integrate
management of these climate and nature-
related risks into strategic planning,
transactions and decision-making. However,
we recognise that our approach to nature-
related risk is not as mature as our approach
to climate-related risk.
We identify three key sources of climate-
related risk – physical, transition, and liability –
and assess them at strategic, portfolio, and
transaction levels. Our approach is designed
to identify where these risks exist across the
organisation and implement measures to
manage them proactively. We define short-
term climate-related risks and opportunities
as those within our five-year planning horizon,
medium term as five to 15 years, and long
term as beyond 15 years.
NatWest Group Board
Board level (collective accountability)
Group
Board Risk
Committee
Group Audit
Committee
Group
Performance
and
Remuneration
Committee
Group
Nominations
and
Governance
Committee
Group
Technology,
Innovation and
Simplification
Committee
(1)
Executive team
Management delivery (individual accountability)
Executive Risk Committee
Executive Disclosure
Committee
Group Reputational
Risk Committee
Business and functional governance
Business/functional delivery
Retail
Banking
CEO, supported
by Retail ExCo
Private Banking &
Wealth Management
CEO, supported
by Private Banking &
Wealth Management ExCo
Commercial & Institutional
CEO, supported
by Commercial &
Institutional ExCo
Core cross-bank working groups
Sustainability review continued | Supporting the climate transition continued
(1)
Sustainable Banking Committee (SBC) transitioned into the Group Technology, Innovation and Simplification Committee (TISC),
with a number of SBC focus areas, including ESG (including climate) elevated to become Board-level matters. As such, TISC
has no specific responsibilities in relation to climate-related risks and opportunities. Refer to page 101 and 106.
Oversight and decision-making on
climate-related matters
We have embedded climate governance
and decision-making across NatWest Group
and we monitor the effectiveness of these
arrangements to ensure climate-related risks
and opportunities are considered appropriately
for the bank and our stakeholders.
The NatWest Group plc Board, subsidiaries,
Board Committees, executive fora and cross-
bank working groups all have a role to play
in the governance of climate-related matters.
At management level, consideration of
climate-related risks and opportunities is
integrated within day-to-day decision-making.
In addition to formal governance fora,
management also consider climate matters
frequently and, where required, on an ad hoc
basis through, for example, cross bank
working groups and programme meetings.
This approach ensures climate considerations
are embedded across business activities.
The chart below provides an overview of the
NatWest Group-level integrated approach to
climate governance. Refer to page 106 for
more information on the roles played by each.
For Executive Director remuneration, climate-
related measures account for 15% of the
Performance Share Plan (PSP) scorecard
for awards proposed to be granted in March
2026 in respect of performance year 2025.
Refer to page 160 for details of how remuneration
is linked to strategy and sustainability priorities.
Spotlight
Building climate
capability across
NatWest Group
Following the conclusion of our three-
year partnership with the University of
Edinburgh Centre for Business, Climate
Change and Sustainability, we continued
to embed sustainability knowledge
across the organisation. In 2025,
colleagues demonstrated strong
commitment to learning, with around
12,700 completions of our climate
and nature education resources.
Our targeted approach aims to ensure
insights are available at the point of
need, helping colleagues make informed
decisions and support customers and
suppliers. We advanced Future Fit
training, sector-specific tools, and
short instructional videos to navigate
sustainability risks and opportunities.
By equipping teams with practical
knowledge, we aim to enhance our
colleagues’ capability, while supporting
customers in the transition to a low-
carbon economy.
c.12,700
colleague completions of our
climate and nature education
resources in 2025.
(2024: c.30,000).
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
51
Strategic report
Sustainability review continued | Supporting the climate transition continued
Implementing our climate transition
plan supports progress against our
bank-wide strategic priorities
As a predominantly UK-focused bank, our
climate transition plan is designed through
a UK lens, while also incorporating global
considerations for our Investment Products
and Solutions and our focused international
footprint in Corporate and Institutional Banking.
We identify and assess climate-related risks
and opportunities at NatWest Group level and
within our business segments, Retail Banking;
Private Banking & Wealth Management;
and Commercial & Institutional, through an
integrated governance model, prioritising
those most significant to our strategy and
financial planning.
Opportunities include aligning our balance
sheet, assets under management and
operational value chain with our 2030
and 2050 climate ambitions. Our climate
transition plan also sets out how we aim to
help customers invest in growth, efficiency
and resilience, for example through access to
financing, tools and guidance. These activities
form part of how we seek to make progress
against our climate ambitions and targets.
NatWest Group’s approach reflects our aim of
driving impact through our business; helping
customers manage their money and build
more resilient businesses, as well as facilitating
balanced economic growth across the UK.
These principles align with the three strategic
priorities shown in the diagram on the right,
which illustrates how our climate transition
plan supports progress against our
bank-wide strategic objectives.
Supporting customers’ climate transitions
by providing products, tools and insights
that help them reduce emissions, build
resilience and access sustainable
finance opportunities.
Disciplined
growth
Ongoing integration of climate into
customer journeys, decision-making
and financial planning, as well as supplier
engagements. We are also reducing
complexity around our transition plan
to enable clear, transparent progress.
Leveraging
simplification
Evolving our policies and procedures to
identify, assess, and manage climate
and nature-related risks
(1)
. Providing
finance to support the UK’s transition
strengthens resilience and reduces
exposure to higher-risk sectors.
Active balance sheet
and risk management
Climate-related opportunities and risks
Potential financial impacts
•
Increased volume of climate and
transition finance.
•
Increased balance sheet volumes
through demand for new products
and services that support transition.
•
Additional expenditure to develop
new products and services to support
the transition.
•
Additional fee income through
advisory and underwriting activities.
•
Increased investment to support
reduction in carbon footprint and
nature-related effects in our
own operations.
•
Continue to invest in the Climate
Decisioning Framework (CDF)
and Environmental Decisioning
Framework (EDF). These tools
deepen customer engagement on
transition progress and environmental
and climate-related risks.
•
Reduced exposure and geographical
footprint related to prohibited and
restricted activities as identified in
our E&S Risk Acceptance Criteria.
•
Changes in expected credit
losses (ECL).
(1)
While our approach to nature-related risk is less mature than our approach to climate-related risk, we continued to make progress during 2025.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
52
Strategic report
The impact of climate-related risks
and opportunities on our businesses,
strategy and financial planning
Our climate transition plan is embedded
within our financial planning process, ensuring
climate-related risks and opportunities inform
strategic decisions. We continue to enhance
this integration so colleagues across segments
and sectors can make choices aligned with
our climate ambitions, targets and business
objectives. In 2025, our financial planning tools
were used to forecast climate-related initiatives
across customer segments and sectors,
enabling senior stakeholders to review and
challenge both financial plans and associated
emissions profiles.
Through this approach, we identify financial
opportunities and actions that support our
customers transition plans, where relevant,
and contribute towards our climate ambitions
and targets. To strengthen integration further,
we are incorporating climate considerations
into the assessment of financial and
non-financial factors, including cost and risk,
within our planning processes. This provides
a mechanism to monitor progress against
climate targets and ambitions, and evaluate
trade-offs transparently in strategic
decision-making.
Resilience of our strategy and
business model
We monitor the resilience of our strategy
and business model by assessing our exposure
to climate-related risks at portfolio level,
and by analysing climate-related risks in
certain scenarios.
As at 31 December 2025, total heightened
climate-related risk exposure was
£333.9 billion
[LA]
, representing 57.9%
(LA)
of NatWest Group’s total sector exposure.
This compares with heightened exposure
of £333.0 billion representing 60.5% of total
sector exposure as at 31 December 2024.
£215.2 billion of heightened exposure relates
to our residential mortgage portfolio, while
the most material sector exposures in our
Commercial & Institutional wholesale lending
As well as risks from the transition, we monitor
physical risks. In 2025, we ran an event-based
scenario, which modelled the impact on our
residential mortgage portfolio of flood and
windstorm events across the UK over a
three-year period. This enabled better
understanding of credit risk drivers, including
location, property type, and insurance
coverage. A key conclusion of the analysis
was the importance of Flood Re protection
in mitigating increases in impairment rates,
pointing to the importance of monitoring
insurance availability for customers.
We continue to monitor present day flood risk
across our UK residential mortgage portfolio.
On a total volume basis, currently, 3.4%
(LA)
of
assessed UK mortgages are at high flood risk
and 1.3%
(LA)
at very high risk, compared to
UK-wide averages of 3.1% and 1.6%.
Commercial & Institutional
wholesale lending
In 2025, we used scenarios to assess the
climate-related transition and physical risks
in our Commercial & Institutional wholesale
lending portfolio.
To assess transition risk, we used the Network
for Greening the Financial System’s Net Zero
2050 transition scenario, and assumed rapid
decarbonisation over a 10-year period.
Consistent with the outcomes seen in our 2024
scenario analysis, impacts across sectors were
primarily driven by higher carbon costs and
shifting demand for products linked to the
energy transition, such as electric vehicles.
Company level analysis enhanced our
understanding of how the effects of transition
risk depends on company strategy, asset mix,
emissions profile, and financial strength. This
reinforces the importance of engaging with
customers through our CDF tools to assess
how they manage these risks.
Following completion of the analysis, sector
teams focused on energy-, mobility- and
manufacturing-related sectors within our
Commercial & Institutional business segment
were invited to deep-dive sessions on the
scenario analysis findings, with the aim of
enhancing their understanding of transition
risks to inform sector-level strategy and
transition plans.
portfolio are commercial real estate, power
utilities and housing associations. There is
alignment between portfolios and sectors
identified as being exposed to heightened
climate-related risk and those included in our
climate transition plan. Refer to pages 21 and
22 of the NatWest Group plc 2025 Climate
Transition Plan Report.
Scenario analysis helps us to understand
climate-related risks and to assess the
resilience of our strategy and business model.
The purpose of scenario analysis is not to
forecast the future but to understand and
prepare to manage risks that could arise.
It also helps us to understand potential climate
change impacts on capital adequacy and
expected credit losses. While we recognise that
climate and nature-related risks may amplify
other risk drivers, potentially leading to impacts
such as reduced competitiveness, diminished
profitability, or reputational harm, NatWest
Group remains resilient overall to these risks
within the scope of the scenarios assessed.
Residential mortgage portfolio
Climate-related transition risks to our
mortgage portfolio include impacts on
property values and customer affordability
from increasing energy costs and changes
in regulatory expectations, particularly in the
buy-to-let market.
In 2025, through scenario analysis we modelled
the potential effects of transition policies on our
mortgage portfolio, considering rising energy
prices and regulatory measures such as
mandatory heat pump installation and EPC
upgrades to band C by 2032. In the scenario
findings, EPC was confirmed to be a key
determinant of transition risk through its
impact on property value, affordability
and therefore credit risk.
To help mitigate transition risk, we continue
to support residential mortgage customers
through our green mortgage products and
other initiatives, such as our Home Energy
Hub. We also have an ambition for 50% of our
residential mortgage portfolio to have an EPC
rating of C or better by 2030, where EPC data
is available. Refer to page 50.
We also considered the impacts of physical
risks on our corporate lending book by
modelling severe weather events over a
five-year period, including UK floods and
windstorms, European wildfires, and a US
hurricane. While analysis covered the full
portfolio, data limitations, particularly outside
the UK, constrained insights on asset location
and hazard exposure. To help address this,
we have invested in third party data, which we
plan to integrate into future scenario analysis.
Capital adequacy and expected
credit losses
We test the resilience of our balance sheet
through our Internal Capital Adequacy
Assessment Process (ICAAP), and climate-
driven macroeconomic stress is considered as
part of this. One conclusion from the ICAAP
finalised in March 2025 was NatWest Group’s
resilience to the climate risks explored in the
ICAAP stress scenarios. Refer to page 55 of
NatWest Group plc 2024 Sustainability Report
for more details on the scenarios used.
In the ICAAP exercise due to conclude in
Q1 2026, one of the stress scenarios tested
incorporates assumptions about physical risks
and accelerated transition policy weighing on
the economy. The outcome of the current
exercise on capital resilience to climate risks
modelled through the scenario will be reported
in the 2026 ICAAP.
For expected credit losses, NatWest Group
estimates an aggregate macroeconomic
impact of climate transition policies and their
contribution to ECL. Climate transition policy
contribution to the total ECL was immaterial
at the end of 2025. Refer to page 192 for
more information.
Other principal risks
Alongside credit risk, we have used scenario
analysis to test the resilience of other principal
risks to climate-related risk drivers. Exercises
considering market, liquidity, pension, conduct
and operational risk allowed us to consider the
resilience of our strategy and business model.
Refer to pages 55 to 58 of the NatWest Group plc
2025 Climate Transition Plan Report for more
details on our 2025 scenario analysis.
Sustainability review continued | Supporting the climate transition continued
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
53
Strategic report
Sustainability review continued | Supporting the climate transition continued
Total emissions and emissions estimates for NatWest Group
During 2025, we continued to progress actions aligned with our ambition to be net zero across our financed emissions, assets under management and operational value chain. Our climate transition plan
mainly focuses on Scope 3 category 15 (customer Scope 1 and Scope 2) estimated financed emissions as these represent 88% of our total emissions and emissions estimates. The operational emissions
and estimates of financed emissions in the table below are based on methodologies outlined in the NatWest Group plc 2025 Sustainability Basis of Reporting.
Data availability and emissions estimation methodologies continue to evolve, and variations in estimated emissions may not always reflect changes in customer activity. Our work has been guided by the
available methodologies for estimating financed emissions, most notably from the Partnership for Carbon Accounting Financials (PCAF).
(1)
Our operational emissions comprise greenhouse gas emissions Scopes 1, 2 and 3 (categories 1-14, excluding categories 8, 10 and 14) and do not include Scope 3 category 15 financed emissions. The reporting year runs from 1 October to 30 September. We have re-baselined or
restated several applicable Scope 3 categories for our 2019 and 2024 operational emissions, to reflect improved data quality and methodology used for our 2025 estimates and aligned with our approach to re-baselining and restatement, outlined on page 45 of the NatWest Group plc
2025 Climate Transition Plan Report. Previously reported totals were: 2024: 0.48 MtCO
2
e and 2019: 0.86 MtCO
2
e. Revised totals are: 2024: 0.49 MtCO
2
e and 2019: 0.91 MtCO
2
e. MtCO
2
e refers to million tonnes of CO
2
equivalent.
(2)
Scope 3 category 15 financed estimated emissions are calculated based on exposure and emissions as at 31 December 2024. 2025 is therefore marked NF, reflecting the time it takes to prepare and review estimated emissions. In line with our approach to emissions re-baselining
and restatements, refer to page 45 of the NatWest Group plc 2025 Climate Transition Plan Report, 2023 estimated financed emissions for lending and investments has been re-baselined. The previously disclosed 2023 customer Scope 1 and Scope 2 financed emissions estimate
of 15.1 MtCO
2
e has been updated to 14.9 MtCO
2
e, reflecting improved data quality and alignment with our updated methodologies. We are also now including total 2019 estimated financed emissions for lending and investments, whereas previously 2019 was marked as NF,
as estimates were limited to specific sectors. The financed emissions estimates included in this table should be read in conjunction with the risk factors on pages 420 to 422, as well as the data limitations noted on page 42 and the cautionary statements on pages 70 to 73 of the
NatWest Group plc 2025 Climate Transition Plan Report.
(3)
Scope 3 category 15 estimated financed emissions for AUM are calculated based on equity, corporate fixed income and government bond values as at 31 July 2025 and estimated emissions as at 31 December 2024. These figures were first disclosed in 2023, 2019 is therefore
marked as NF. Comparatives have been represented in this report to ensure the latest available data is included in the current reporting period.
(4)
Estimated facilitated emissions relate to emissions from off balance sheet activities such as the facilitation of bond issuance and syndicated lending. Since 2024, we applied a 33% weighting factor to emissions, aligned with the December 2023 PCAF Standard. In 2023, we applied a
100% weighting factor. Due to a change in reporting scope, the 2024 estimated facilitated emissions comparative has been updated from 1.28 MtCO
2
e to 1.07 MtCO
2
e. Estimated facilitated emissions were calculated for the first time in 2023, therefore 2022 and 2019 are marked NF.
Refer to pages 43 to 45 of the NatWest Group plc 2025 Climate Transition Plan Report for further details.
2025
MtCO
2
e
2024
MtCO
2
e
2023
MtCO
2
e
2019
MtCO
2
e
Primary source of NatWest
Group emissions
Scope 1 and location-based Scope 2 operational emissions
(1)(RA)
Scope 1
0.01
0.01
0.01
0.02
Natural gas and fuel
Scope 2 (location-based)
0.04
0.05
0.05
0.12
Purchased electricity
Total Scope 1 and location-based Scope 2
0.05
0.06
0.06
0.14
Scope 3 operational emissions categories relevant to NatWest Group
(1)(LA)
1. Purchased goods and services
0.28
0.29
0.32
0.51
Supply chain
2. Capital goods
0.04
0.03
0.05
0.04
3. Fuel and energy-related activities
0.01
0.02
0.02
0.03
Employee activities
4. Upstream transportation and distribution
–
–
0.01
0.02
Supply chain
5. Waste
–
–
–
–
Employee
activities
6. Business travel
0.03
0.03
0.03
0.05
7. Commuting and working from home
0.06
0.06
0.04
0.07
9. Downstream transportation and distribution
0.05
0.04
0.03
0.16
Customer
activities
11. Use of sold products
–
–
0.01
–
12. End-of-life treatment for sold products
–
–
–
–
13. Leased assets
0.02
0.02
0.01
0.03
Tenant activities
Total applicable Scope 3 operational emissions categories
0.49
0.49
0.52
0.91
Scope 3 category 15: Estimated financed emissions
(2)
15. Estimated financed emissions: Lending and investments
NF
13.4
14.9
22.1
Financing activities
15. Estimated financed emissions: AUM
(3)
1.3
1.1
1.2
NF
Total Scope 3 category 15: Estimated financed emissions
14.5
16.1
Estimated facilitated emissions from bond underwriting and syndicated lending
Estimated facilitated emissions
(4)
0.5
1.1
1.5
NF
Financing activities
Easier to directly influence
Partially influenceable
Harder to directly influence
NF (no figures): where no data is calculated, refer to footnotes. A dash (–) indicates where data is calculated but rounds to 0.00 MtCO
2
e.
Scope 1 and Scope 2 operational emissions
Scope 1 emissions are direct emissions from sources owned and controlled
by NatWest Group, for example, natural gas and fuel consumption. Scope 2
emissions are indirect emissions from energy which NatWest Group purchases,
for example, electricity used for lighting, heating and cooling.
We have an ambition to reduce our Scope 1 and location-based Scope 2
emissions by 70% by 2030, against a 2019 baseline, while continuing to
consume 100% renewable electricity in our direct own global operations
in line with our RE100 commitment.
Refer to pages 12 to 16 of the NatWest Group plc 2025 Climate Transition
Plan Report.
Scope 3 operational emissions categories relevant to NatWest Group
Scope 3 category 1-14 emissions include both upstream and
downstream emissions. We only disclose the categories that are relevant
to NatWest Group
(1)
.
We have an ambition to reduce our Scope 3 operational emissions by 50%,
against a 2019 baseline, by 2030.
Refer to pages 12 to 16 of the NatWest Group plc 2025 Climate Transition
Plan Report.
Scope 3 category 15: Estimated financed emissions
Scope 3 category 15 emissions are those associated with NatWest Group’s
lending and investment activities. Our estimation work is guided by the PCAF
standard. Refer to page 68 for details.
We have an ambition to at least halve the climate impact of our financing
activity by 2030, against a 2019 baseline, supported by portfolio-level
activity-based targets.
Refer to pages 39 to 42 of the NatWest Group plc 2025 Climate Transition
Plan Report.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
54
Strategic report
0.49
0.49
0.91
0.05
0.06
0.14
2025
2024
2019
baseline
Scope 3 operational emissions
Scope 1 and location-based Scope 2
Business travel
Purchased goods
and services
Downstream
transportation
and distribution
0.03
0.28
0.05
Fuel and energy-
related activities
Commuting and
working from home
Leased assets
0.01
0.06
0.02
Capital goods
0.04
2025 breakdown of operational emissions
(1)
(MtCO
2
e)
Scope 1
Total operational emissions
Easier to influence
Partially influenceable
Harder to influence
0.01
(RA)
Location-based
Scope 2
0.04
(RA)
Scope 3
operational
emissions
0.49
(LA)
0.54
MtCO
2
e
(1)
Scope 3
operational
emissions:
0.49
MtCO
2
e
(1)
Operational emissions progress (MtCO
2
e)
Operational emissions
Our Scope 1 and location-based Scope 2
emissions have decreased by 66% compared
with our 2019 baseline, and applicable
operational Scope 3 categories
(1)
have reduced
by 47%. This reflects tangible actions across
our properties and supply chain, underpinned
by improvements in data quality and
methodology. We continue to work towards
the ambitions outlined on page 54, supported
by ongoing improvements in data quality,
methodology and transparency.
Energy reduction initiatives relating
to Scope 1 and location-based
Scope 2 emissions
A multi-year programme of energy efficiency
and decarbonisation drove our Scope 1 and
location-based Scope 2 operational emissions
reductions in 2025.
We upgraded LED lighting across our
properties and advanced our Building
Management Systems (BMS) programme,
which uses AI-driven analytics to optimise
energy performance. Since its launch in
November 2021, the programme has
delivered cumulative savings of around
23,650 Megawatt-hours (MWh), including
12,230 MWh in 2025 alone. At two of our
UK data centres, improvements such as
advanced air-cooling systems, LED upgrades
and optimised temperature set-points saved
over 425 MWh in 2025.
We are also transitioning away from fossil fuels
in our backup power systems. At our Gogarburn
campus in Edinburgh, we installed standby
generators configured for hydrotreated
vegetable oil (HVO), a lower-emission
alternative to diesel, following a successful
move by our Bristol office from diesel to HVO
for its existing standby generators. This is the
first step in replacing diesel and kerosene with
HVO across selected locations requiring
standby power.
We aim to source 100% renewable electricity
across our direct own global operations. We
maintained our RE100 (Renewable Energy
100%) commitment through Corporate Power
Purchase Agreements (CPPA), green tariffs
(2)
and on-site solar generation. We also
purchased Renewable Energy Certificates
(RECs) for landlord-supplied properties
where renewable sources cannot be specified.
Scope 3 operational emissions
Our Scope 3 operational emissions have
decreased by 47% since 2019. Supply chain
emissions, which make up around 65% of
our Scope 3 operational emissions, have
fallen by 44% since 2019, driven by lower
UK service industry emissions and changes
in influenced spend
(3)
, as we predominantly
use spend-based methods.
To sustain our momentum, we closely monitor
year-on-year trends. We intend to continue
driving supplier engagement by encouraging
suppliers to make disclosures to CDP, to
set science-based targets
(4)
and to adopt
transparent transition plans up to 2030
and beyond.
Risks and dependencies
Achieving our climate ambitions depends
on several factors. Rising energy demand
from AI workloads, both in-house and through
third-party cloud services, may increase
our operational emissions. We are currently
closely assessing the impacts on our footprint.
Progress also relies on voluntary supplier
emissions reductions and the continued
resilience of our supply chain, with risk if
performance falls short of stated targets.
National and regional decarbonisation policies,
infrastructure changes and government
priorities could also influence our trajectory.
We believe that both the availability and
affordability of renewable certificates,
high-integrity carbon credits, and low-carbon
technologies remain critical. We continue to
closely monitor these risks and dependencies
to ensure timely action and maintain progress.
(1)
Our operational emissions comprise greenhouse gas emissions Scopes 1, 2 and 3 (Categories 1–14, excluding Categories 8, 10 and 14)
and do not include Scope 3 Category 15 financed emissions. For details of the Greenhouse Gas Protocol, including upstream and
downstream activities, refer to the diagram of scopes and emissions across the value chain. Our operational emissions in 2025 of
533,604 tCO
2
e represent a 49% reduction from our 2019 baseline of 1,048,017 tCO
2
e. As part of this Scope 1 and location-based
Scope 2 emissions of 47,540 tCO
2
e collectively reduced by 66% (2019: 139,050 tCO
2
e) and Scope 3 operational emissions of 486,064
tCO
2
e reduced by 47% (2019: 908,967 tCO
2
e).
(2)
Tariffs are labelled as green if electricity use is matched by units generated from a verified renewable energy source.
(3)
Influenced spend refers to spend for purchased goods and services over which NatWest Group has direct control.
(4)
Science-based targets are emissions-reduction goals based on the latest climate science, ensuring the pace and scale of
decarbonisation needed to keep global warming within internationally agreed temperature limits. They are self-reported by suppliers,
and NatWest Group attributes a net-zero-aligned status to a supplier if they have a Scope 1, 2 and 3 science-based target.
Sustainability review continued | Supporting the climate transition continued
The following categories are excluded from the pie as individually they each round to 0.00 and in aggregate to 0.005: 4. upstream
transportation, 5. waste, 11. use of sold products, 12. end of life treatment of sold products.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
55
Strategic report
Streamlined Energy and Carbon
Reporting (SECR)
Our Streamlined Energy and Carbon Reporting
disclosure has been prepared in line with the
framework for sustainability reporting that
covers greenhouse gas emissions and
energy usage to encourage improved energy
efficiency. It covers our performance for 2024
and 2025.
In 2025, we enhanced our approach to align
with best practice and improve transparency.
Following the retirement of our ‘direct own
operations’ ambitions
(1)
, we removed the
associated boundary from the SECR disclosure
and prioritised reporting against Scope 1,
Scope 2 and all relevant Scope 3 operational
implement the UK Government’s policy on
SECR. Our reporting year runs from 1 October
2024 to 30 September 2025. The emissions
reporting boundary is defined as all entities
and facilities either owned or under our
operational control.
Reporting
(7,8)
: Emissions have been reported
using the Greenhouse Gas Protocol Corporate
Standard and associated guidance and include
all greenhouse gases, reported in tonnes of
carbon dioxide equivalent (CO
2
e) and global
warming potential values. When converting
data to carbon emissions, we use Emission
Factors from UK Government Emissions
Conversion Factors for Company Reporting
(Department for Energy, Security and Net
Zero, 2025), CO
2
emissions from fuel
emissions categories (1–14)
(6)
. This creates
consistency across the annual reporting suite,
while simplifying future reporting. It also
strengthens comparability across years and
provides stakeholders with a clearer view of
our full operational emissions. We restated
previously disclosed Scope 3 figures for
2024 to reflect this updated boundary.
Emissions methodology
and basis of preparation
Boundary:
This statement has been prepared
in accordance with our regulatory obligation
to report greenhouse gas (GHG) emissions
pursuant to the Companies (Directors’ Report)
and Limited Liability Partnerships (Energy and
Carbon Report) Regulations 2018 which
combustion (International Energy Agency,
2024
(9)
) or relevant local authorities as
required. NatWest Group uses a third-party
software system, to capture and record our
environmental impact and ensure that control
framework and assurance requirements are
met. All data is aggregated at a regional level
to reflect the total regional consumption. The
regional consumption results are then collated
to reflect the total NatWest Group footprint.
CO
2
e values are attributed to these sources
via an automatic conversion module in the
third-party system.
For more information, refer to the operational
emissions page at www.natwestgroup.com.
1 Oct 2024 – 30 Sep 2025
1 Oct 2023 – 30 Sep 2024
Greenhouse gas (GHG) emissions
UK and
offshore area
(2)
Global total
(excluding UK
and offshore)
(2)
Total
UK and
offshore area
(2)
Global total
(excluding UK
and offshore)
(2)
Total
Emissions from the combustion of fuel and operation of any facility (Scope 1 direct
(3)
) (tonnes of CO
2
e)
(RA)
8,666
560
9,226
8,716
686
9,402
Emissions from the purchase of electricity, heat, steam and cooling by the company for its own use (Scope 2
(4)
indirect)
(location-based) (tonnes of CO
2
e)
(RA)
28,002
10,312
38,314
35,219
11,665
46,884
Total gross Scope 1 and Scope 2 (location-based) (tonnes of CO
2
e)
(RA)
36,668
10,872
47,540
43,935
12,351
56,286
Intensity ratio: Location-based CO
2
e emissions per FTE (Scopes 1 and 2) (tonnes/FTE)
1.0
0.5
0.8
1.1
0.6
1.0
Scope 2
(5)
(market-based) (tonnes of CO
2
e)
(RA)
12
110
122
14
112
126
Energy consumption used to calculate above emissions (kWh)
203,089,756
20,169,002
223,258,758
214,360,749
23,512,232
237,872,981
Scope 3
(6)
CO
2
e emissions
(LA)
373,131
112,933
486,064
389,637
98,904
488,541
Total gross CO
2
e emissions (Scope 1
(RA)
, location-based Scope 2
(RA)
and Scope 3
(LA)
(tonnes)
409,799
123,805
533,604
433,572
111,255
544,827
Intensity ratio: Location-based CO
2
e emissions per FTE (Scopes 1, 2 and 3) (tonnes/FTE)
10.8
6.2
9.2
11.0
5.6
9.2
(1)
For details of the achievement and retirement of our direct own operations ambitions, refer to page 49 of the NatWest Group plc 2024 Sustainability Report.
(2)
Offshore area as defined in The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon) Regulations 2018. This includes Isle of Man, Jersey, Guernsey and Gibraltar but not our overseas sites in America, EMEA and Asia-Pacific. These are included in the
global total (excluding UK and offshore).
(3)
Scope 1 emissions from natural gas, liquid fossil fuels, fluorinated gas losses and owned/leased vehicles.
(4)
Scope 2 emissions from electricity, district heating and cooling used in NatWest Group premises. Our ambition is location-based to drive absolute reductions in consumption. Location-based GHG emissions method reflects the grid-average emissions. Market-based emissions reflect
purchased electricity sources (e.g. renewables), which have near-zero emissions.
(5)
We have procured 100% electricity from renewable sources globally using green tariffs and renewable electricity certificates. The remaining Scope 2 market-based emissions arise from district cooling, district heating and the residual amount of non-renewable electricity.
(6)
Scope 3 operational emissions sources cover applicable categories 1–14, (excluding categories 8, 10 and 14) and do not include Scope 3 category 15 financed emissions.
(7)
Low data accuracy is a key risk of our reporting, as this could lead to misreporting of operational emissions. To mitigate this, we maintain robust internal controls processes, and our data and associated claims are subject to independent assurance.
(8)
The historic values reported in the table above are updated from values we reported in 2024. Scope 3 operational emissions for reporting year 2024 have been restated in line with NatWest Group’s re-baselining policy. In addition to this we have retired the direct own operations
terminology, and are now reporting against relevant Scope 3 categories 1-14. Further, future data is subject to change following any significant change to our business size and scope, as baseline recalculation may result in differing emissions reductions.
(9)
Based on IEA data from the IEA (2024) Emissions factors. All rights reserved; as modified by NatWest Group.
Metric subject to independent Limited Assurance by EY.
Metric subject to independent Reasonable Assurance by EY. Refer to page 71.
Sustainability review continued | Supporting the climate transition continued
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
56
Strategic report
Safeguarding information
and tackling financial crime
Sustainability review continued
Managing data privacy
Protecting privacy is vital to retaining trust
and growing customer engagement. We aim
to address privacy requirements through the
application of privacy by design and by default
principles within our systems and processes.
Everyone in NatWest Group must follow our
Privacy and Client Confidentiality (P&CC) policy
that sets out how we safeguard the personal
data of our customers, colleagues and third
parties, including our communities, suppliers
and investors. Our policies and procedures
also demonstrate our aim to comply with
legal and regulatory requirements, including
the UK GDPR, the Data Protection Act 2018
and the Data (Use and Access) Act 2025.
All colleagues and contractors undertake
mandatory P&CC training annually. This
training is reviewed and updated every
year to cover new topics and technologies,
emerging risks and any lessons learned from
the previous year. Job-specific training is
also provided as necessary for colleagues,
for example, privacy training to our data
and artificial intelligence colleagues.
During 2025, there were a small number
of breaches of GDPR and confidentiality
(impacting a very small percentage of
customers and employees) that we
remediated, but there were no material
reportable ‘personal data breaches’ under
GDPR and no enforcement action by data
protection authorities. We endeavour to
respond to and remediate privacy
complaints as quickly as we can.
Read more on our approach to privacy and
customer confidentiality at natwestgroup.com.
Detecting and preventing financial
crime, corruption and bribery
Financial crime has a significant impact on our
society. NatWest Group seeks to detect and
prevent financial crime and fraud. We have
measures in place to protect our customers
and to support compliance with relevant
financial crime and fraud legislation. Our
Financial Crime Statement sets out our
Financial Crime Programme, covering
anti-bribery and corruption, anti-tax evasion,
anti-money laundering, counter terrorist
financing and proliferation financing, sanctions
and fraud. The programme is built around the
following pillars.
Customers:
we seek to know our customers
by conducting risk-based due diligence
and monitoring.
Policies and procedures:
we have policies and
procedures in place to help us prevent, detect
and tackle financial crime that may arise in
relation to our operations, products, services,
customers and suppliers.
Regular risk assessments:
Risk assessments
are conducted on a regular basis to strengthen
procedures if required.
Independent audit:
we continuously assess
the effectiveness of our controls.
Process and technology:
we aim to have
high-quality detection and prevention systems
and controls across the bank to manage risk.
Culture and colleagues:
we promote a culture
of financial crime awareness among all our
colleagues, supported by deep expertise in
specialist roles. All colleagues undertake annual
training and awareness activity to understand
their role in tackling financial crime. We also
conduct awareness activities to help customers
protect themselves from financial crime.
Protecting our customers, colleagues and
communities is central to how we operate.
We recognise that strong data protection,
cybersecurity and financial crime controls
are essential to maintaining trust in our
organisation and in the wider financial system.
Our approach is built on robust policies, clear
governance and consistently applied standards
that look to ensure customers feel secure and
confident when they bank with us. This helps
us as we strive to deliver safe and responsible
banking that helps customers manage their
money, plan for the future, and build better,
more resilient businesses.
Approximately
57,000
colleagues completed
cybersecurity learning in 2025,
reinforcing a culture of
security awareness.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
57
Strategic report
Partnership working:
we strive with a range
of partners, including industry bodies, law
enforcement, regulators and government,
to tackle financial crime.
Governance:
we have financial crime
governance in place to oversee our financial
crime programme and monitor its effectiveness.
For more information, refer to our Financial
Crime statement. Read more on Financial crime
risk on page 273.
Cybersecurity
Throughout 2025, NatWest Group was
certified by the IASME Consortium Ltd
(IASME) in Cyber Essentials Plus, a recognised
government-owned scheme operated by
the National Cyber Security Centre (NCSC).
We have a set of layered security defences
against new and emerging cybersecurity
threats. These are regularly tested by both
our in-house security testing team and leading
independent experts in the cybersecurity
industry. All colleagues must complete
annual cybersecurity training. There were
no instances of security breach caused by
a cybersecurity threat in the last three years.
More information on our cybersecurity risk
management can be found on pages 268 to 271.
Combatting fraud
We are committed to combatting fraud and
supporting our customers when they fall victim
to scams.
We continue to operate in market facing a
persistent and evolving threat of fraud. UK
Finance reported a 3% increase in fraud losses
across the UK industry in the first half of 2025
compared with the same period in 2024, with
total losses reaching £629 million.
(1)
While
losses from unauthorised fraud fell by 3%,
losses linked to Authorised Push Payment
(APP) fraud rose by 12%, highlighting the
growing and increasingly sophisticated
threat of scams in the UK.
Sustainability review continued | Safeguarding information and tackling financial crime continued
To respond to the growing threat, we continue
to improve and build new tooling to support
our customers should they be impacted by
fraud. This includes new functionality in our
mobile applications that allows customers to
respond in real time to fraud alerts directly
from their phones, improving fraud prevention
and enabling them to transact more efficiently.
Our efforts to provide the best experience for
customers when dealing with fraud claims
resulted in an NPS
®
score from surveyed
customers of +60 for Q4 2025.
In March 2025, NatWest Group announced
its collaboration with OpenAI to deliver a
streamlined customer experience when
identifying, reporting and resolving fraud and
scam cases. This new partnership reflects our
ambitions to adopt new technologies that will
aid us in creating a safer customer ecosystem.
Payment Systems Regulator (PSR)
performance data
In July 2024, the PSR updated its Authorised
Push Payment (APP) fraud performance data
for 23 banks, including 14 major UK banking
groups and nine smaller firms. The
performance data relates to 2023.
(2)
Key
achievements for NatWest Group included:
•
Ranking fourth for reimbursing customers
who fell victim to APP scams.
•
Having the third lowest value of APP scams
sent per £ million of transactions. For every
£1 million of transactions sent in 2023, £92
was APP fraud; down from £134 in 2022.
Read more on the PSR website.
Spotlight
Partnering with Meta
to disrupt online scams
NatWest Group is a founding partner in Meta’s Fraud Intelligence
Reciprocal Exchange (FIRE) – a collaborative initiative designed
to disrupt online scams. FIRE is a cross-industry threat intelligence
sharing programme, allowing banks and other companies to share
intelligence directly with each other to stop scammers and protect
users. NatWest was the first bank in the UK to participate in
the programme.
As part of the pilot, we shared vital information based on reports
from scam victims, helping Meta to identify and remove fraudulent
accounts and content more quickly and effectively.
This partnership is just one example of our commitment to working
across sectors to improve protections for customers and reduce
the impact of online fraud.
From 1 January to 30 November
2025, in line with PSR regulations,
we reimbursed
76%
of APP scam victims which covered
80% of all money lost to fraudsters.
(1)
UK Finance Half Year Fraud Report 2025 can be found at www.ukfinance.org.uk.
(2)
As per the latest performance data available on the PSR website. The above information is disclosed in line with page 84 of our NatWest Group plc 2024 Sustainability Report.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
58
Strategic report
Building a future-ready workforce
Workforce planning
To build a more connected and future-focused
workforce, we take a strategic approach to
workforce planning to ensure we have the
skills and capabilities we need to deliver on our
strategy and meet evolving customer needs.
Through the implementation of Workday
Adaptive Planning in 2025, our bank-wide
employee data forecasting tool, we
transformed our workforce planning, with
improved visibility, tighter controls, and a
materially more stable workforce outlook.
To enable effective usage of this tool we ran
over 100 training sessions in 2025, upskilling
almost 400 colleagues. We also introduced
automation of future dated worker
transactions, specifically all movements of
joiners, movers, leavers and worker changes.
As a result, around 3,500 FTE movements
have been automated via Workday Adaptive
Planning, saving workforce planners
approximately 350 hours per month.
Enabling skills and career development
To adapt and meet customers’ changing needs,
we foster continuous learning, offering all
colleagues two dedicated learning days annually.
They can also access a comprehensive suite
of learning opportunities to enable skills and
professional development at every stage of
their career.
Our learning programme to support our
performance philosophy, Beyond, has
supported almost 62,000 colleagues in
building skills for performance and culture
change, with around 165,000 learning hours
completed since launch in January 2024.
Colleagues consistently reported increased
understanding, confidence and capability post
completion of Beyond learning modules, with
positive scoring ranging from 83% to 96%.
In March 2025, we launched the Power Up
Your Career pilot to empower colleagues to
take an active role in steering their career
development. Pre and post pilot session
questionnaires demonstrated increased
colleague confidence in career progression,
rising from 11% to 71%.
In Commercial & Institutional, we launched
Precision Growth, a sales and business
development programme, in September 2025.
This enabled 460 colleagues to build the
knowledge, skills and practical application
needed to support meaningful, trusted
relationships with customers. The programme
aims to systemise sales excellence practices,
improve consistency and reinforce leadership
oversight through performance coaching. 90%
of colleagues from the programme reported
increased confidence in their abilities to ask
powerful questions.
Expanding future skills and AI capability
We are investing in AI skills development for
every colleague to support the bank-wide roll
out of AI tools (Co-Pilot and Aiden, our internally
developed generative AI tool). In 2025, almost
63,000 colleagues completed foundational
AI learning, while around 11,000 colleagues
enrolled in AI Power Sprints, guided, practical,
social learning experiences designed to boost
knowledge and confidence. AI skills dominate
elective learning, with 15 of the top 20
courses completed being AI-related. We have
established strategic partnerships with Microsoft
and the University of Edinburgh to accelerate
our AI capabilities and adoption.
Skilled, engaged and inclusive workforce
Sustainability review continued
Our people are the foundation of our ambition
to succeed with customers. We are investing in
the capabilities that matter most for the future,
including data, AI and deep technical expertise,
to support progression and enable high
performance. By equipping colleagues to make
better decisions in service of customers and
operate at pace, we are building a culture that
delivers stronger customer outcomes and
drives sustainable, customer-led growth.
Since the launch of Beyond in January 2024,
approximately
165,000
learning hours have been completed.
c.11,000
colleagues enrolled in AI Power Sprints.
Strong Our View Inclusion score of
89%
and Wellbeing score of 82%, sitting at +8 and +7
vs the Global Financial Services Norm.
(1)
Colleagues means all permanent employees and, in some instances, members of the wider workforce e.g. temporary employees and agency workers.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
59
Strategic report
To further help build capability in critical skills
for a future-ready workforce, we support and
encourage colleagues to complete future skills
learning. In 2025, 77% of colleagues completed
future skills elective learning, with around
307,000 learning hours completed.
In the spirit of simplification, in 2025 we
reduced mandatory learning time by 29%,
compared with 2024, while maintaining
strong colleague feedback on our learning and
development programmes. According to our
colleague survey, Our View, 88% of colleagues
agreed that our learning and development
programmes had prepared them for the
work they do.
During UK National Learning at Work Week
in May 2025, our Get Connected campaign
inspired colleagues to learn and grow,
attracting 6,248 live attendees. Feedback was
overwhelmingly positive, with 97% of attendees
feeling inspired to develop their skills further.
Enabling internal mobility
To boost internal mobility across NatWest
Group, 818 colleagues completed a gig – a
small, discrete piece of work that colleagues
can perform alongside their day job across
various areas in the bank – in 2025, which
supported skills development and mobility.
In addition, the UK Mobility Hub offers support
to colleagues at risk of redundancy and helps
them find new roles. In 2025, the hub provided
one or more services to 1,969 colleagues. Of
679 colleagues who registered for redeployment
support, 73% were successfully redeployed into
new roles. The hub received a Net Promoter
Score
®(2)
of +89.
Leadership development
To strengthen our leadership capability,
leaders at every stage of development can
access support, training and resources from
our Leadership Academy. This investment in our
leaders is paying off, demonstrated by an uplift
in scores from 2024 on purposeful leadership,
performance culture and line manager capability
in our colleague survey, Our View.
During 2025, 1,678 of our senior leaders
participated in executive coaching with a
specific focus on development aligned with
NatWest Group behaviours. We also partnered
with global leadership consultancy, Spencer
Stuart, to better understand the cultural
and leadership style profiles of our
executive leaders.
Investing in talent
and leadership capability
Attracting, identifying and
developing talent
Building a strong pipeline of talent for our
workforce relies on attracting talented
individuals to start their careers with us,
identifying those with the potential to excel
in their fields and then providing the support
they need throughout their career to thrive.
Through our Early Talent Programmes in
2025, we hired 868 graduates, interns and
apprentices across the UK and India. This
included 96 apprentices through our Elevate
programme that partners with the charity,
Leadership Through Sport and Business, to
support individuals from lower-income
socio-economic backgrounds.
(3)
(1)
Colleagues means all permanent employees and, in some instances, members of the wider workforce e.g. temporary employees and agency workers.
(2)
Net Promoter®, NPS®, NPS Prism®, and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., NICE Systems, Inc.,and Fred Reichheld.
(3)
Through working with third-party organisations, eligibility is based on qualification for Free School Meals (FSM) in secondary education; residence in bottom 30% areas of the Index of Multiple Deprivation (IMD); and other personal disadvantage.
Sustainability review continued | Skilled, engaged and inclusive workforce continued
Succession planning
To continue building a leadership pipeline that
proactively supports leaders’ development, we
enhanced our succession planning approach
for CEO-1 and CEO-2 positions and critical
roles in 2025 by revising the timescales for
target role readiness, increasing our focus on
internal mobility and introducing feeder roles to
support tailored career planning. A number of
successors have advanced into Executive and
Group Executive Committee (ExCo) roles in
the last 12 months.
Read more about our Early Talent Programme at
natwestgroup.com, and for a full breakdown of
our Early Talent Programme profiles, refer to our
NatWest Group plc 2025 Sustainability Datasheet.
868
graduates, interns and apprentices
hired across the UK and India in 2025.
To nurture our talent we have a talent
identification process to help leaders identify
colleagues with the potential to progress
further and faster. In 2025, we identified
1,635 colleagues across the bank who will be
placed on a talent development pathway to
help them shape career growth aligned to
their goals and ambitions.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
60
Strategic report
Spotlight
Winning Together: aligning purpose,
culture and performance to deliver
for customers
In February 2025, we launched Winning
Together, our bank-wide framework that
brings together our purpose, strategy,
ambition and cultural aspirations. It underpins
our approach to building a high-performing,
customer-focused organisation. It explains
clearly what we’re aiming to achieve, and
has strengthened our performance culture
by setting clear expectations of leadership,
accountability and impact.
These expectations were embedded through
Beyond, our performance management
philosophy. A greater emphasis has been
placed on clarity of objectives, quality of
delivery and continuous development. This
has supported a shift towards earlier, more
constructive performance conversations,
with the aim of enabling colleagues to
perform at their best while maintaining
results-focused discipline across
the organisation.
Our new behaviours
In March 2025, we introduced the new
NatWest Group behaviours – a pivotal step
in cultural transformation.
Through extensive engagement with the
Group Executive Committee, senior leaders
and focus groups across the bank, we
explored what truly matters in how we
deliver for customers and work together
effectively. This insight informed the design
of three clear behaviours that reflect our
shared priorities and now guide how we
drive performance across the organisation.
Our new behaviours provide a consistent
benchmark for how colleagues work
together, make decisions and deliver on
our purpose and ambitions. They aim to
reinforce a strong connection between
individual contribution, team performance
and enterprise priorities.
Our new behaviours:
We start with customers
We raise the bar
We own our impact
The three behaviours replaced multiple
colleague frameworks, including our values
and critical people capabilities, creating
a single, consistent and practical way of
describing how we work. Our research
showed that behaviours, expressed
through clear and active language, are
more actionable for colleagues and easier
to apply in day-to-day decision-making.
We have embedded these behaviours into
how we operate, from recruitment and
onboarding through to performance,
development and reward. As part of this
simplification, we reduced the number of
behavioural indicators from over 180 to 15,
making expectations clearer, more
memorable and easier for colleagues
to understand and put into practice.
We complemented these changes with the
introduction of Recognise, our bank-wide
approach to acknowledging and celebrating
contribution and behaviours-led impact,
celebrating success as it happens.
For further information on how we are
strengthening performance and recognition,
see our Directors’ remuneration report,
page 148.
Sustainability review continued | Skilled, engaged and inclusive workforce continued
(1)
Churches, Charities and Local Authorities (CCLA) is a UK charity fund manager, working with charities, religious organisations and the
public sector.
Supporting colleague wellbeing
We are committed to supporting our
colleagues’ wellbeing throughout their career,
and this commitment is reflected in our Live
Well Being You strategy. Colleagues globally
can access wellbeing resources across mind,
body, life and money, with a proactive focus
on prevention. These efforts are supported by
our Executive Wellbeing Sponsor and Wellbeing
Implementation Committee, and c.2,000
Wellbeing Champions embedded across
NatWest Group. Our wellbeing initiatives are
informed by colleague feedback, engagement
data and absence trends, enabling targeted
communications and timely interventions.
c.2,000
Wellbeing Champions
throughout our business.
Enabling financial wellbeing
Our virtual Financial Wellbeing Zone offers
tailored guides and support for colleagues and
their families, covering budgeting, planning,
and expert advice. Themed education
programmes are planned to coincide with
national events, and thousands joined live
webinars during Financial Wellbeing Month.
In 2025, free personal financial health checks
and Financial Foundations workshops were
available, and participation rates in the
flagship Retirement Savings Plan (RSP)
were high, supported by initiatives like
Save More Tomorrow.
All our employees have access to benefits
through the NatWest Group Benefits Hub that
provides a wide range of pension, protection,
healthcare, lifestyle and discount benefits.
Mental health support and engagement
During 2025, we embedded menopause,
menstrual and reproductive wellbeing into our
core wellbeing strategy, partnering with our
Gender Network, unions and external experts
to steer our approach. As part of this effort,
we hosted monthly support cafés, refreshed
our online resources and ran expert-led events
to normalise conversations and encourage
accessing confidential advice.
Our award-winning cancer line manager
training, developed with Macmillan Cancer
Support, continued to enhance manager
confidence and enable psychological safety
for colleagues. We also saw almost 16,000
questions on mental health answered on our
Just Ask A Question (JAAQ) platform in 2025,
with a mental health campaign extending this
service to customers via our branch network.
In 2025, we continued our practice of engaging
colleagues, customers and communities
through our UK-wide baton relay and virtual
activity challenge, promoting mental and
physical wellbeing behaviours. Through our
partnership with Team GB and Paralympics
GB, we welcomed leading experts in sleep,
stress and menopause, who shared insights
from their work with elite athletes and
translated these lessons into the workplace,
reaching around 2,500 colleagues who
attended their sessions.
NatWest Group achieved top tier accreditation
in the MindForward Alliance’s Thriving at Work
Assessment and maintained Tier 2 in the
CCLA
(1)
Corporate Mental Health Benchmark.
These help us benchmark our wellbeing offering
externally and, alongside our colleague survey,
Our View, inform our wellbeing strategy.
Read more about how we support colleagues
with their wellbeing at natwestgroup.com
and in our NatWest Group plc 2025
Sustainability Datasheet.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
61
Strategic report
Creating an inclusive workforce
Understanding the diverse perspectives and
needs of our communities helps us support
our customers to the best of our ability. That’s
why we strive to be an inclusive business that
gives all our colleagues and customers the
opportunity to turn possibilities into progress.
Driving inclusion across the bank
Our efforts to drive inclusion are steered by
our Enterprise Inclusion committee, jointly
led by our Chief People Officer and Chief
Marketing Officer. The Committee takes a
focused and impactful approach to embedding
inclusion across the bank, bringing together
leaders, networks and working groups to align
priorities, share insights, and ensure meaningful
progress. It unifies all our inclusion activity,
focusing on key levers such as attraction,
development, retention, and workplace culture,
taking a holistic organisation wide approach
with sustainable, long-term impact.
NatWest Group’s commitment to inclusivity has
been recognised by winning the ‘Social Mobility
Network of the Year Award’ at the UK Social
Mobility Awards, in October 2025.
For full details of our 2025 awards, refer to
natwestgroup.com.
Supporting our employee-led networks
Our eight employee-led networks (ELNs), with
approximately 15,000 unique members, help
to foster an inclusive environment at NatWest
Group. In June 2025, we held a pan-ELN
summit to develop closer relations across
our ELNs, increase collaboration, focus on
intersectionality and work with our networks
to effectively support the business strategy.
In October 2025, we introduced a two-stage
ELN co-chair learning programme, to equip co-
chairs with an industry-recognised qualification.
For more details on our ELNs, refer to
natwestgroup.com.
Promoting inclusive recruitment
and retention
To ensure our hiring processes are inclusive,
we use our Recruitment Yes Check, a
comprehensive checklist that emphasises
inclusion and candidate experience throughout
the hiring process. All hiring managers must
complete inclusion focused recruitment training.
We encourage the use of Inclusive Interview
Ambassadors to bring diversity of thought to
interviews, and it is mandatory for all senior
level interviews to include Inclusive Interview
Ambassadors. Around 900 colleagues in the
UK participated in this programme in 2025,
and the initiative was also launched in India
in October 2025.
We continued to embed sponsorship across
the bank, through business-led programmes to
support career development and to accelerate
the entry of underrepresented groups into
senior roles.
Disability and neurodiversity
We achieved silver in the Business Disability
Forum (BDF) Disability Smart Audit and
renewed our status as a Disability
Confident Leader.
In May 2025, we established a disability
inclusion action group to work on the outputs
of the audit and support our progress towards
achieving a gold standard in the next audit.
We also marked Global Accessibility Awareness
Day and International Day of Persons with
Disabilities with a series of colleague events.
In 2025, 758 colleagues accessed the neuro-
developmental pathway through our private
medical cover, which provides assessment,
diagnosis and short-term support for attention
deficit hyperactivity disorder (ADHD),
autism spectrum disorder (ASD) and
Tourette’s Syndrome.
Socio-economic diversity
We strengthened our commitment to
socio-economic inclusion by contributing
to Progress Together’s Shaping the Growth:
Socio-economic Diversity in Financial Services
Report – the largest study of its kind exploring
the link between career progression and
socio-economic background.
Five colleagues participated in the KPMG
Thrive Together Programme, a six-month pilot
to enhance socio-economic inclusion through
cross-organisational mentorship. We also
hosted a social mobility day event in June 2025
focused on ‘shifting mindsets’, recognising the
distinct strengths of colleagues from lower
socio-economic backgrounds and discussing
organisational mindset on opportunity.
Additionally, the Legal, Governance and
Regulatory Affairs function continued to run
the week-long First Step programme that
enables students and apprentices from
underrepresented communities to gain
an insight into the legal profession.
LGBTQ+
Our LGBTQ+ Rainbow Network, in collaboration
with the Wellbeing team, launched Bi+ the Way
in October 2025 – a dedicated virtual support
space for Bi colleagues.
To further support inclusion and learning,
the Network also ran online allyship at work
sessions in collaboration with the Gender
network, designed to help deepen self
awareness, understand personal influence,
and take practical action to support colleagues.
In 2025, we also launched Grow with Pride,
a developmental learning pathway co-created
with LGBTQ+ colleagues, focusing on the soft
skills they most want to develop.
Furthermore, NatWest Group India ranked
as one of the top 10 employers for LGBT+
Inclusion in the India Workplace Equality
Index 2025.
Sustainability review continued | Skilled, engaged and inclusive workforce continued
Gender
The FTSE Women Leaders Review ranked
NatWest Group 9
th
in the FTSE 100 Rankings
2024 for Women on Boards and in Leadership.
We were also once again named in The Times
Top 50 employer for Gender Equality. As a
Women in Finance Charter signatory, we
joined an industry-wide hackathon in July
2025, to accelerate progress for women
in leadership.
Our Gender Network’s development programme
supported 152 colleagues in 2025, enabled by
85 coaches.
We enhanced wellbeing support by including free
period products in UK offices and introducing
colleague support circles for menstrual health,
men’s mental health and women’s safety.
Ethnicity
In 2025, we were recognised as an ‘Advanced
Employer’ by Investing in Ethnicity’s maturity
matrix. As part of Race Equality Week in
February 2025, we organised several events
around the theme ‘Every Action Counts’ to
highlight our efforts to meet our Banking on
Racial Equality commitments, which moving
forward will be managed through the
Enterprise Inclusion Committee.
In Black History Month in October 2025, we
continued our internal focus on action with the
theme ‘Committed to Action, Moving Forward
Together’. We held an event about the future
of Black enterprise with The Financial Times,
and a panel discussion exploring how leaders
can foster inclusive environments.
The Black Talent Awards recognised our
Multicultural Network as a finalist in the
Employee Resource Group (ERG) of the
Year category.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
62
Strategic report
Our progress and targets
In 2025, through our colleague survey,
Our View, 95% of colleagues reported
that they believe NatWest Group provides a
working environment free of discrimination and
harassment +8 vs the Global Financial Services
Norm and +4 vs the High Performing Norm.
Our Board composition exceeded the FTSE
Women Leaders Review target of a minimum
of 40% women’s representation by the end of
2025, with a figure of 55%, as at 31 December
2025. Our executive management team was
made up of 43% women as at 31 December
2025, with the Group Chief Financial Officer,
CEO, Private Banking & Wealth Management,
CEO, Retail, Group Chief Marketing Officer,
Group Chief People Officer and Group Chief
Corporate Affairs Officer roles held by women.
In 2025, we introduced new diversity targets
to be achieved by 2030. Our targets are aimed
at increasing diversity in our senior roles. We
monitor, review progress and report against
our diversity targets through monthly data
dashboards, bi-annual diversity reviews with
Group Executive Committee members and
senior leaders and via our quarterly Enterprise
Inclusion Committee. Our targets are informed
by census data and bench-marked externally.
We have a target to achieve 50% female
representation globally
(1)
in our senior
leadership population
(2)
and 45% female
representation globally
(1)
in our management
population
(2)
by 2030. As at 31 December
2025,
(4)
we had 46.7%
(RA)
female representation
globally
(1)
in our senior leadership population
(2)
and 34.4%
(RA)
female representation globally
(1)
in our management population.
(2)
We are committed to pay equality. The mean
gender pay gap for NatWest Bank, our largest
reporting entity, is 23.5% closing the gap
by 1.9 percentage points since 2024.
The mean gender bonus gap is 41.2% closing
the gap by 1.8 percentage points from 2024.
We have a target to achieve 19% of UK
colleagues from ethnic minority groups in
our senior leadership population
(2)
and our
management population
(2)
by 2030. As at
31 December 2025,
(4)
of 79% of our senior
leadership colleagues who disclosed their
ethnicity, we had 10.8%
(RA)
of UK colleagues
from ethnic minority groups in our senior
leadership population.
(2)
As at 31 December
2025
(4)
, of 85% of our management colleagues
who disclosed their ethnicity, we had 14.5%
(RA)
of UK colleagues from ethnic minority groups
in our management population.
(2)
Overall, of
those who disclose their ethnicity, 23% of all
colleagues in the UK identify as being from an
ethnic minority group, a two percentage point
increase since 2024.
In line with our commitment to transparency
under the UK Government’s Race at Work
Charter, we have voluntarily disclosed our
aggregated ethnicity pay gap for NatWest
Group UK. The mean ethnicity pay gap is 5.4%,
this gap increased by 0.47 percentage points
since 2024. The mean ethnicity bonus gap is
31.0%, this gap increased by 5.2 percentage
points since 2024.
We have broken down our ethnicity pay
gaps to compare the average hourly pay
of Asian, Black, mixed/multiple, and other
ethnic minority colleagues with that of White
colleagues at NatWest Group in Great Britain.
This highlighted a wider pay gap between
Black and White colleagues than the average
ethnicity pay gap. The targets, alongside other
initiatives, aim to increase the number of Black
colleagues in UK roles, to address under-
representation in this area.
We have a target to achieve 5% of UK Black
(3)
colleagues in our senior leadership population
(2)
and our management population
(2)
by 2030.
We continue to work towards having Black
colleague representation at senior leadership
level and recognise we have more work to do.
As at 31 December 2025,
(4)
we have 1.5%
(RA)
of UK Black
(3)
colleagues in our management
population.
(2)
Overall, of those who disclose
their ethnicity, 4% of all colleagues in the
UK identify as being Black.
(3)
For a full breakdown of our colleague data refer
to our NatWest Group plc 2025 Sustainability
Datasheet and our Pay Gap Report available
on natwestgroup.com.
For details on the calculation of our inclusion
metrics, refer to our Basis of Reporting available
on natwestgroup.com.
Sustainability review continued | Skilled, engaged and inclusive workforce continued
(1)
Global targets remain subject to local laws and regulations.
(2)
The senior leadership population is CEO-2+ and our management population is grades C11+.
(3)
Black mixed ethnicity categories are included in our Black diversity target calculations.
(4)
NatWest Group’s management structures were revised during 2025. For the purpose of remuneration reporting, the representation targets were set based on the management structures in place at the start of 2025.
Metric subject to independent Reasonable Assurance by EY. Refer to page 71.
Companies Act 2006, section 414C (8)(c)
disclosure
Male #
Female #
Directors of the company
5
6
Executive employees
63
46
Directors of subsidiaries
154
69
Permanent employees
(active and inactive)
32,100
28,100
There were 332 senior managers (in accordance with the
definition contained within the relevant Companies Act legislation),
which comprises our executive population and individuals who are
directors of our subsidiaries.
UK Corporate Governance Code (the Code)
Provision 23:
As at 31 December 2025, the gender balance of those in the
senior management and their direct reports was 42% female and
58% male. For the purposes of this note, ‘the senior management’
means our executive management team and the company
secretary (as required by the Code).
For Board and executive management diversity
disclosures (UK Listing Rule 6.6.6R (10)), refer to
page 103.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
63
Strategic report
Driving a culture of integrity
and responsible risk management
Sustainability review continued
Refreshing our Code
Our Code guides how we act ethically,
responsibly and with integrity to deliver positive
outcomes for our customers, communities and
shareholders. In 2025, we refreshed Our Code
to better reflect our evolved ambitions, our
customers’ challenges and the macroeconomic
trends that are shaping how we work.
We used this opportunity to bring a number
of policies under Our Code, giving colleagues
a clear standard to maintain as we work
together towards the same goals. It is hosted
online, giving our colleagues one convenient
place to find the information they need.
We also publish Our Code externally to be
transparent and open with all our stakeholders
about the approach at NatWest Group.
Details of our approach to preventing and
managing conflicts of interest and our obligations
to competing fairly can be found in Our Code at
natwestgroup.com.
Monitoring compliance with Our Code
We have several systems in place to monitor
compliance with Our Code and other policies.
Employee performance and remuneration
are linked to conduct, behaviour and risk
management, with these included in the
accountability review process and reflected
in pay outcomes where required. Each year,
all colleagues undertake mandatory training
on Our Code and conduct policies. Breaches
can lead to disciplinary actions, including
dismissal and notification to authorities in
some instances.
Read more on how the key tools guide the way
we work together in Our Code disclosure.
Protecting whistleblowers
Everyone at NatWest Group plays a role in
reinforcing Our Code. We want our colleagues
and any individuals we interact with to feel
confident to raise concerns about wrongdoing
or misconduct without fear of retaliation.
Speak Up is our formal whistleblowing
framework, which gives individuals a secure
reporting system to share concerns in
confidence, and anonymously if preferred.
It is operated by an independent third party
and available to all employees and those acting
on behalf of or representing NatWest Group
such as contractors, subcontractors, suppliers,
temporary staff, secondees, consultants,
interns and volunteers. This also includes
anyone formerly in these roles.
In 2025, 419 reports were made through
Speak Up compared with 434 in 2024. Of 504
reports closed/investigated in 2025, 39% of all
allegations related to behaviour not consistent
with Our Code, including discrimination and
harassment. We do not tolerate any form
of harassment or discrimination and where
reports were substantiated, appropriate action
was taken to rectify the situation, following a
discussion with the People function and the
respective business unit.
In 2025, 97% of those completing our
colleague engagement survey, Our View,
agreed that they know how to raise concerns
about wrongdoing in their business. 88% of
colleagues also agreed it was safe to speak
up in their business area, and believe that
concerns will be handled appropriately.
Read more on our Whistleblowing pages at
natwestgroup.com.
Managing risks and behaviours driven by ethics
and integrity are vital to protecting the trust
and confidence of our customers, colleagues
and wider stakeholders. These responsibilities
are shared by everyone at NatWest Group.
Our policies underpin our decisions and set
expectations for acting with integrity, sound
judgement and accountability.
We are proactive in monitoring our risks,
reviewing our policies and educating our
employees to maintain a strong approach
to managing risk.
97%
of those who completed the Our
View engagement survey in 2025
agreed that they know how to
raise concerns about wrongdoing
in their business units.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
64
Strategic report
(1)
Numbers represent the number of reports to Speak Up which qualified as whistleblowing concerns in line with the NatWest Group Speak Up policy.
(2)
Read more on the CCLA Modern Slavery Benchmark and its outcomes at ccla.co.uk.
(3)
The two webinars on modern slavery concerns in the UK care sector were attended by 55 colleagues and 48 colleagues and healthcare clients respectively.
(4)
96 colleagues attended our training from the Supply Chain Sustainability School.
Reports via Speak Up
(1)
2023
2024
2025
419
434
419
Sustainability review continued | Driving a culture of integrity and responsible risk management continued
Additional policies and guidelines
to manage risks
In line with good business practice, we have
clear policies relating to conflicts of interest,
political neutrality, respecting human rights
and managing environmental and social risks.
Conflicts of interest
The NatWest Group Conflicts of Interest Policy
sets out how we identify, prevent or manage
actual and potential conflicts of interest that
may arise.
It applies to all employees, contractors and
agency staff and covers all business segments,
functions and legal entities within NatWest Group.
We take appropriate steps to identify, prevent
and manage conflicts of interest, including
those arising between different parts of NatWest
Group, between NatWest Group and its
customers, or between customers themselves.
Managing conflicts effectively requires a range
of measures tailored to the nature of the
conflict, where it arises and the parties
involved. These measures include:
•
establishing information barriers,
•
separate supervision of employees involved
in potentially conflicting business activities,
•
a remuneration policy designed to
avoid conflicts, and
•
maintaining a conflicts register.
In some cases, it may involve maintaining a
register of activities with regular review and
reporting, declining personal dealing requests
or outside business interests where an actual
or perceived conflict exists. Internal guidance
and training underpin these practices.
Advocacy and political involvement
NatWest Group does not make political
donations or have affiliation to any political
party. As a result, we made no political
donations in 2025. However, we do engage
with political parties and participate in
government consultations and discussions to
share our industry perspective. Our relationship
with governments (UK and devolved) is
focused on protecting the operation of our
business and the interests of our customers
and shareholders. Our employee conduct
policy ensures that any colleague involvement
in politics is kept entirely separate from their
bank role.
Respect for human rights
In June 2025, we published our first standalone
Human Rights Report, which brought together
our Human Rights Position Statement and Salient
Human Rights Issues disclosure. It explained
both our approach to upholding and respecting
human rights, and our management of our
identified salient human rights issues. We used
the UN Guiding Principles Reporting Framework
to assess our current approach and identify
areas where we have more to do.
Our internal Human Rights Action Group met
bi-monthly to drive progress on our bank-wide
approach and we further embedded our human
rights risk acceptance criteria across our
commercial banking relationships. We continue
to monitor legislative changes, and in 2025, we
mapped our risk standards to the updated UK
Home Office Transparency in Supply Chain
statutory guidance.
There were also notable trends and patterns
in customer and stakeholder concerns relating
to the salient issue of conflict and security.
In response, our Human Rights Action Group
coordinated risk-based due diligence, including
additional monitoring and engagement with
our commercial customers, suppliers and
investment portfolios, drawing on our
human rights risk acceptance criteria.
Our ninth Modern Slavery and Human
Trafficking Statement was published
in June 2025 and retained Tier 2 status in
the CCLA
(2)
2025 Modern Slavery Benchmark.
In September, we won gold for Business
Impact at the 2025 Unseen Business Awards
for our approach to tackling modern slavery.
Read our Human Rights Report at
natwestgroup.com.
Spotlight
Raising
awareness of
human rights and
modern slavery
Recognising the heightened risks of
human rights and modern slavery in our
own supply chain and in some parts of
our commercial banking business, we
ran a series of training programmes
and discussions to explore important
topics among our colleagues and
clients, including:
•
A webinar on modern slavery
concerns in the UK care sector for
healthcare Relationship Managers,
followed by a joint session with
colleagues and healthcare clients
to discuss these risks together.
(3)
•
Modern slavery training for our
Supply Chain and Third-Party Risk
Management colleagues from Action
Sustainability, through the Supply
Chain Sustainability School, to
understand and address the risks
and challenges in their roles.
(4)
•
A week-long campaign of live
webinars in recognition of Anti-
Slavery Day. Key topics included
modern slavery risks in the
agricultural sector and detection
of financial crime associated with
child sexual abuse.
Almost
2,000
colleagues took part in our
Anti-Slavery Day Awareness Week.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
65
Strategic report
Sustainability review continued | Driving a culture of integrity and responsible risk management continued
£2,630 million
of tax was paid by
NatWest Group in the UK during 2025
Corporate income tax
1,567
1,792
147
Irrecoverable VAT/sales tax
516
544
818
Bank Levy
125
127
Employer payroll taxes
362
412
Business rates/other taxes
60
66
£2,941 million
of tax was paid by
NatWest Group globally during 2025
Corporate income tax
Irrecoverable VAT/sales tax
Bank levy
Employer payroll taxes
Business rates/other taxes
£965 million
of tax was collected by
NatWest Group in the UK during 2025
Net VAT and other taxes collected
Employee income tax and NIC
Environmental and social risks
The activities of our customers often have
environmental and social impacts, including
polluting activities and the potential for human
rights violations. From 1 January 2026, we
updated the name of our Environmental,
Social and Ethical (ESE) Risk Framework to the
Environmental and Social (E&S) Risk Framework.
(1)
The E&S Risk Framework applies to all legal
entities in NatWest Group for the onboarding
of non-personal customers for the purpose
of providing financing and applies to the
management of E&S risk throughout these
customers’ life-cycles. It is comprised of E&S
Risk Acceptance Criteria (RAC) for seven
sectors which present heightened E&S risk and
a RAC for human rights.
(2)
Customers whose
activities fall within a sector RAC, or any other
customer where associated E&S risk concerns
have been identified, are subject to enhanced
due diligence. Customers whose activities fall
within a sector RAC, or any other customer
where associated E&S risk concerns have been
identified, are subject to enhanced due diligence.
From 13 February 2026 the scope of the E&S
Risk Framework was expanded from lending and
loan underwriting to cover a broader definition
of financing by including bond underwriting.
Meeting our tax responsibilities
At NatWest Group, we aim to pay the right
amount of tax, both in the UK and other
jurisdictions where we operate, following
the spirit as well as the letter of the law.
During 2025, we paid a total of £2.63 billion
of tax in the UK, compared to £2.46 billion in
2024. We were ranked as one of the highest
taxpayers in terms of UK taxes paid in the
PwC 2025 Total Tax Contribution survey of
The 100 Group, which referenced our tax
payments in 2024. The 100 Group represents
members of the FTSE 100 along with several
large private companies in the UK.
In addition to the taxes we pay, we also
collect and administer taxes and social
security contributions on behalf of governments.
During 2025 we collected a total of £0.97 billion,
compared to £0.89 billion in 2024, of tax on
behalf of the UK Government, primarily in
relation to employee income tax and National
Insurance contributions (NIC).
The charts opposite show the different taxes
we paid globally and in the UK, as well as the
taxes we collected in the UK in 2025.
Read more about our approach to tax and
management of tax risk in Our Tax Strategy
and 2024 Tax Transparency Report.
Read more about the taxes we paid in the UK
and globally during 2025 on our tax webpage
at natwestgroup.com.
(1)
This change better reflects the framework’s underlying methodology which focuses on a risk-based approach aligned to our organisational risk appetite, rather than values-based judgements.
(2)
As at the date of this publication, there are Risk Acceptance Criteria in place for the following sectors – Adult Entertainment, Animal Welfare, Defence & Private Security, Forestry, Fisheries & Agribusiness, Gambling, Mining & Metals, Energy Supply Sector, and Human Rights, which
continue to be subject to change.
In 2025, we carried out enhanced
due diligence in relation to
292
customers compared to 330 in 2024.
We performed enhanced due diligence in
relation to 67 trade-related transactions involving
defence equipment, compared to 71 in 2024.
Refer to page 275 for more information on our
approach to reputational risk. Read more about
our E&S RAC at natwestgroup.com.
Refer to page 28 of the NatWest Group plc 2025
Climate Transition Plan Report for further
information on our E&S Risk Acceptance Criteria.
£2,630m
£2,941m
£965m
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
66
Strategic report
Additional sustainability information
Our approach to assessment
of key sustainability topics
To ensure our sustainability efforts deliver
meaningful value to our stakeholders, we use
a methodical assessment process to identify
and assess themes of importance to our
business and interests of our stakeholders.
This disciplined approach enables us to focus
on the topics that are important to our shared
success and on creating sustainable value.
Our assessment approach
In determining the sustainability information to
be included in this report, NatWest Group has
complied with the mandatory requirements of
sections 414CA and 414CB of the Companies
Act 2006.
In addition, we identified and prioritised
the key sustainability topics included in this
report through stakeholder engagement and
considerations relating to our own strategy
and core business activities. We engaged with
stakeholders through interviews, consultation
workshops, meetings and surveys, along with
drawing on insights from peer reviews, trends
and industry practice.
These perspectives were considered as part
of an internal review of the identified topics
from a business and strategic lens, including
consideration of their relevance to NatWest
Group’s activities and strategic direction, and
the potential interactions between NatWest
Group’s activities and its stakeholders,
including investors, customers, colleagues,
communities and suppliers.
NatWest Group has also monitored
developments in relation to the UN Principles
of Responsible Banking, the Global Reporting
Initiative (GRI) and the Sustainability Accounting
Standards Board (SASB) standards. We used
these frameworks for reference purposes only
in identifying key sustainability topics. We have
not yet sought to fully align with these
frameworks and they should not be interpreted
as fully applied or adopted by NatWest Group.
By identifying the key sustainability topics,
NatWest Group seeks to better prioritise
matters most relevant to its stakeholders,
embed sustainability considerations into
decision making, manage emerging risks and
capture opportunities. Applied across NatWest
Group’s value chain, this understanding is
intended to help manage potential negative
sustainability-related impacts, enhance
potential contributions and align NatWest
Group’s actions with stakeholder expectations.
The assessment processes described above
have not been conducted in accordance with
the financial reporting requirements of the
International Financial Reporting Standards,
nor are they aligned with the sustainability-
related disclosure standards expected to
be introduced in the future. As such, the
assessment process and any topics identified
through them should be interpreted with
appropriate caution.
Scope, challenges and limitations
The topics presented on page 40 represent
key sustainability topics for NatWest Group
and may differ across our legal entities and
geographical footprint. Progress against
individual topics can be varied. The topics
are not necessarily indicative of, and may
be different to, the topics we may disclose in
future. Our list of key sustainability topics and
stakeholders engaged may continue to evolve
as subsequent key topics assessments are
completed and as our, and the industry’s
understanding of the sustainability-related
impacts, risks and opportunities (IROs)
continues to develop.
Like many of our peer companies we
continue to face challenges on data availability,
comparability, and uncertainty on the extent of
other industry standards and evolving market
practice to inform the ongoing development of
our approach.
We continue to evolve our approach to
assessing key sustainability topics, building on
existing processes to develop a structured and
consistent approach that informs our thinking
and supports readiness for legal and regulatory
requirements. In 2024, we piloted an initial
approach with the objective of refining our
understanding of sustainability topics and
developing an assessment framework and
underlying criteria, alongside an initial list of
key topics. As part of this pilot, we mapped
our stakeholders across our current view
of our value chain to identify potential
sustainability-related IROs which might
arise, engaged internal teams to assess
them, and validated findings through
additional stakeholder input. The outcomes of
this pilot provided a foundation for the further
development of our approach and support
future reporting and disclosure requirements
as expectations continue to evolve.
In 2025, we continued to build on the pilot by
further developing the assessment framework
for key sustainability topics, and identifying
potential data sources to support future
analysis, our thinking and topic assessment.
These activities remain in exploration and in
the development phase. They provide early
insight into potential sustainability-related IROs
and inform our longer term thinking. However,
they did not determine the key sustainability
topics for our 2025 reporting suite (as defined
in this report) and previous reports which
have not reflected the outcomes of this work.
As our understanding of sustainability-related
IROs continues to mature, across both
NatWest Group and the wider industry,
our approach to the assessment of key
sustainability topics may evolve accordingly.
Sustainability review continued
sustainability-related impacts, as well as
associated financial risks and opportunities.
We also continue to actively consider new
insights and data which may influence or
enhance our view on key sustainability
topics. We will continue to review industry
developments and evolve our approach to
the assessment of key sustainability topics with
regards to new insights, data and developing
regulatory requirements and frameworks.
As a result, we expect that certain disclosures
made in this report may be amended, updated,
recalculated and/or restated in the future as
the quality and completeness of our data
and methodologies continue to improve.
Readers of the sustainability content of
this report should take into consideration
this section together with the Climate and
sustainability-related risks on pages 420
to 422, alongside with Additional cautionary
statement regarding climate and sustainability-
related data, metrics and forward-looking
statements on pages 429 to 430 and Cautionary
statements in relation to the climate and
sustainability-related disclosures on
pages 431 of this report.
Preparing for incoming sustainability
reporting standards
NatWest Group continues to monitor legal
and regulatory reporting and disclosure
requirements (such as the recent Financial
Conduct Authority consultation on Aligning
listed issuers’ sustainability disclosures with
international standards and the EU Corporate
Sustainability Reporting Directive) with the aim
to ensure that its disclosures are transparent,
robust, and aligned with applicable legal and
regulatory requirements and market
expectations. In addition, we continue to
monitor reporting standards, such as the
UK Sustainability Reporting Standards and
European Sustainability Reporting Standards,
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
67
Strategic report
Operational emissions
NatWest Group’s operational emissions
methodology accounts for greenhouse
gas emissions across Scopes 1, 2 and 3.
The reporting boundary includes all entities
and facilities under our operational
control. Emissions reporting adheres
to the Greenhouse Gas Protocol
Corporate Standard, utilising both
actual and estimated data to fill gaps.
As shown on page 55, Scope 1 includes
direct emissions from fossil fuels and
vehicles, while Scope 2 includes
emissions from electricity. Scope 3
includes indirect emissions such
as supply chain, business travel,
commuting, omitting leased assets,
processing of sold goods, franchises and
investments from its operational value
chain as these are reported elsewhere
in the Group’s carbon footprint or they
are not considered relevant. For indirect
emissions, we use a combination of
supplier-specific, product and service-
specific, and industry average data
to estimate supply chain emissions.
Our emissions estimation methodology
is regularly updated to enhance
accuracy and reporting integrity,
with a recalculation policy in place
to adjust figures exceeding a 5%
change threshold.
Refer to pages 13 to 16 of the NatWest
Group plc 2025 Climate Transition Plan
Report and pages 3 to 5 of the NatWest
Group 2025 Sustainability Basis of
Reporting for further details of our
own operational emissions.
Financed emissions
Financed emissions:
lending and investments
Financed emissions and emissions intensities
are currently estimated on an annual
basis for the total in-scope balance sheet.
We publish our absolute emissions and
emissions intensities one year in arrears of
our financial reporting date to allow time for
appropriate data sourcing, measurement
and review. A common theme for emissions
estimation across all sectors is data
limitations, including lack of published
emissions data and granularity of customer
information. As a result, our estimates
on page 54 are premised on use of the
assumptions, extrapolations or aggregation
at subsector levels. We expect our estimates
of emissions to change as we improve the
granularity and coverage of customer and
asset climate data and develop our
methodologies further.
Refer to page 41 of the NatWest Group plc 2025
Climate Transition Plan Report for a summary
of our PCAF data quality scores by sector.
Specific limitations include:
•
availability, accuracy and comparability
of customer data and other public
data sources
•
susceptibility to variation year on year
•
lack of industry comparability
•
complex corporate structures
•
double counting of Scope 3
•
Scope 3 definition differences.
Refer to pages 39 to 42 of the NatWest Group
plc 2025 Climate Transition Plan Report and
pages 16 to 32 of the NatWest Group 2025
Sustainability Basis of Reporting for further
details of our estimates of financed emissions.
Financed emissions: assets
under management
Scope 1 and 2 estimated emissions from
underlying investments and WACI covered
84% of Managed Assets and Bespoke AUM
as at 31 July 2025. This included listed
equity, corporate fixed income and
government bond asses classes,
equating to £30.2 billion.
Coverage increased from £17.1 billion in
2024 (55% of Managed and Bespoke AUM),
driven by the availability of data for funds
launched in 2024. Advisory assets continue
to be excluded as investment decisions sit
with our customers. Cash is also out of
scope due to the lack of a defined
methodology for this asset class.
Scope 3 emissions from underlying funds
are excluded owing to uncertainty in the
accuracy of available data. We continue
to review our approach and anticipate
changes in data coverage as our business
operations change and new regulatory
requirements take effect in our
investment jurisdictions.
Refer to page 67 and pages 70 to 72 of the
NatWest Group plc 2025 Climate Transition
Plan Report for further details.
Facilitated emissions from
bond underwriting and
syndicated lending
NatWest Group estimates its facilitated
emissions based on annual transaction
volume. This reflects the transactional
nature of capital markets activities and
the period in which banks generate
revenue from them.
We followed the PCAF Part B Global
Greenhouse Gas Accounting and
Reporting Standard for Facilitated
Emissions to define an issuer as an
organisation that issues debt or equity
capital markets instruments.
(2)
We
also included green bond, green
loan syndication
(3,4)
and the role of
co-manager
(5)
in the estimation of
facilitated emissions.
In line with the Standard, we allocated
transactions based on actual volume
facilitated where available. For remaining
positions volume was apportioned
equally among bookrunners/arrangers.
Where available, we use customer-level
emissions data to estimate greenhouse
gas emissions. If customer-level data
was unavailable, emissions estimates
(PCAF 4) or emission sector averages
(PCAF 5) were used for emission
intensities from 2024 and applied
against 2025 volumes.
Refer to pages 43 to 44 NatWest Group plc
2025 Climate Transition Plan Report and
pages 53 to 55 of the 2025 NatWest Markets
Annual Report and Accounts for further
details of estimated facilitated emissions.
Emissions and emissions estimates, methodologies and limitations
(1)
Sustainability review | Additional sustainability information continued
(1)
Refer to page 45 of the NatWest Group plc 2025 Climate Transition Plan Report for our approach to restatements and re-baselining for our emissions and emissions estimates.
(2)
NatWest Group’s own bond issuances are not included within estimates of facilitated emissions.
(3)
Green bonds and loans are excluded from PCAF’s facilitated emissions standard. While these instruments are expected to have lower emissions intensity, there is currently no agreed method to quantify their emissions and NatWest Group does not distinguish these from conventional
transactions or apply lower emissions. NatWest Group treats sustainability-linked and sustainable bond and loan activities as conventional for the purpose of estimating and reporting on facilitated emissions.
(4)
NatWest Group 2024 climate and sustainable funding and financing inclusion criteria was used to determine the assets, activities and companies eligible for inclusion up to 30 June 2025. From 1 July 2025, the NatWest Group climate and transition finance framework was used.
(5)
Co-managers are not captured by the PCAF Standard. We include transactions where we act as a co-manager in alignment with the GHG accounting ‘follow the money approach’ and with NatWest Group’s climate and sustainable funding and financing inclusion criteria and the
NatWest Group climate and transition finance framework.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
68
Strategic report
•
set out its climate-related financial
disclosures in part in this report, in part
in the NatWest Group plc 2025 Climate
Transition Plan Report, in part in the
NatWest Group plc 2025 Sustainability
Basis of Reporting and in part in the
NatWest Group plc 2025 Sustainability
Datasheet (all published on 13 February
2026 and available at natwestgroup.com)
to ensure that the disclosures are included
in the most relevant sections in each report,
as appropriate.
We have adopted this approach to seek to
ensure that we have presented the detailed
and technical content in the clearest position
for users of these reports.
The climate-related disclosures in the 2025
Climate-related Disclosures Reporting Suite
do not cover NatWest Group’s Pension Fund
(including both Defined Benefit Scheme and
Retirement Savings Plan), which are reported
on in separate climate-related disclosures
published by the trustee of that Fund and
regulated by The Pensions Regulator.
Refer to the NatWest Group plc 2025 Sustainability
Datasheet for progress against select industry-
wide standards, including TCFD.
Refer to the Non-financial and sustainability
information statement on pages 71 to 72 for
cross-referencing against the Climate-related
financial disclosures required by sections 414CA
and 414CB of the Companies Act 2006.
Task Force on Climate-related Financial Disclosures (TCFD) overview
Sustainability review | Additional sustainability information continued
Disclosures addressing our regulatory obligation to report greenhouse gas (GHG) emissions
pursuant to the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and
Carbon Report) Regulations 2018 which implement the government’s policy on Streamlined
Energy and Carbon Reporting (SECR) have been included on page 56.
In 2025, climate-related disclosures have
been made within the NatWest Group plc 2025
Annual Report and Accounts, the NatWest
Group plc 2025 Climate Transition Plan Report,
the NatWest Group plc 2025 Sustainability
Basis of Reporting, and the NatWest Group plc
2025 Sustainability Datasheet (the ‘2025
Climate-related Disclosures Reporting Suite’).
NatWest Group confirms that it has:
•
made climate-related financial disclosures
for the year ended 31 December 2025
that it believes are consistent with the
Task Force on Climate-related Financial
Disclosures (TCFD) Recommendations and
Recommended Disclosures (as defined in
the FCA’s Listing Rules, as amended by
the Disclosure of Climate-Related Financial
Information (No 2) Instrument 2021) which
include (i) Final Report – Recommendations
of TCFD (June 2017) (focusing in particular
on the four recommendations and the
eleven recommended disclosures set out
in Figure 4 of Section C of the TCFD
Final Report); (ii) Implementing the
Recommendations of TCFD (October 2021
version); (iii) Technical Supplement – the
Use of Scenario Analysis in Disclosure of
Climate-related Risks and Opportunities
(June 2017); (iv) Guidance on Risk
Management Integration and Disclosure
(October 2020); and (v) TCFD Guidance
on Metrics, Targets and Transition Plans
(October 2021 version) and summarised
in the tables in the NatWest Group plc
2025 Sustainability Datasheet; and
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
69
Strategic report
This table outlines how we address the TCFD recommendations across our 2025 climate-related disclosures by mapping each TCFD pillar to
the relevant disclosures and indicating where supporting information can be found within the suite. Full detailed cross-referencing is provided
in the NatWest Group plc 2025 Sustainability Datasheet.
TCFD Pillars and recommendations
TCFD Recommended Disclosures
Section of the Annual report where disclosures are
included in relation to the Companies Act
Section of the wider 2025 Climate-
related disclosures with further details,
in alignment with the Listing Rules
Governance
Disclose the organisation’s
governance around climate-
related issues and opportunities
a. Describe the Board’s oversight of climate-related risks and opportunities.
b. Describe management’s role in assessing and managing climate-related risks
and opportunities.
•
Sustainability review, refer to page 51
•
Governance and remuneration, refer to
page 106
•
Risk and capital management, refer to
pages 254 to 256
NatWest Group plc 2025 Climate
Transition Plan Report, refer to
pages 11, 18, and 66
Strategy
Disclose the actual and potential
impacts of climate-related
risks and opportunities on the
organisation’s business, strategy
and financial planning where such
information is material.
a. Describe the climate-related risks and opportunities the organisation has
identified over the short, medium, and long term.
b. Describe the impact of climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial planning.
c. Describe the resilience of the organisation’s strategy, taking into
consideration different climate-related scenarios, including a 2°C or
lower scenario.
•
Sustainability Review, refer to pages 48
to 53
•
Risk and capital management, refer to
pages 192, 213, 214 and 254 to 256
NatWest Group plc 2025 Climate
Transition Plan Report, refer to
pages 11 to 16, 18 to 38, 53 to
58, 61, 64
Risk management
Disclose how the organisation
identifies, assesses and
manages climate-related risks.
a. Describe the organisation’s processes for identifying and assessing
climate-related risks.
b. Describe the organisation’s processes for managing climate-related risks.
c. Describe how processes for identifying, assessing, and managing climate-
related risks are integrated into the organisation’s overall risk management.
•
Sustainability Review, refer to pages 51
to 53
•
Risk and capital management, refer to
pages 254 to 256
NatWest Group plc 2025 Climate
Transition Plan Report, refer to
pages 21, 22, 27, 28, 30, 31, 34,
37, 53 to 58 and 64 to 65
Metrics and targets
Disclose the metrics and targets
used to assess and manage
relevant climate-related risks
and opportunities where such
information is material.
a. Disclose the metrics used by the organisation to assess climate-related risks
and opportunities in line with its strategy and risk management process.
b. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas
emissions (GHG), and the related risks.
c. Describe the targets used by the organisation to manage climate-related
risks and opportunities and performance against targets.
•
Sustainability Review, refer to pages 48
to 56
•
Risk and capital management, refer to
pages 213 and 214
NatWest Group plc 2025 Climate
Transition Plan Report, refer to
pages 12 to 16, 19 to 25, 26, 29
to 32, 35, 39 to 45
NatWest Group plc 2025
Sustainability Datasheet
Sustainability review | Additional sustainability information continued
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
70
Strategic report
Sustainability reporting
frameworks and guidance
We monitor developments for reporting
including metrics and targets. In 2025, our
focus included the UN Principles of Responsible
Banking, Global Reporting Initiative (GRI)
standards, Sustainability Accounting Standards
Board (SASB) standards, and the Task Force on
Climate-related Financial Disclosures (TCFD).
Further information on non-financial and
sustainability matters can be found within our
reporting suite and additional reports/links as
noted below.
•
2025 Climate Transition Plan Report
•
2025 Sustainability Datasheet
•
2025 Sustainability Basis of Reporting
•
natwestgroup.com
Assurance Approach
NatWest Group plc appointed Ernst & Young
LLP (EY) to provide independent assurance
(2)
over certain sustainability metrics. These
sustainability metrics are marked as limited
assurance (LA) and reasonable assurance
(RA) within this report and presented in
the Sustainability Basis of Reporting and
Datasheet. The assurance engagement
was planned and performed in accordance
with the International Standard on Assurance
Engagements (ISAE) 3000 Revised, Assurance
Engagements Other than Audits or Reviews of
Historical Financial Information as promulgated
by the International Auditing and Assurance
Standards Board (IAASB).
An assurance report was issued and is available at
natwestgroup.com. This report includes further
details on the scope, respective responsibilities,
work performed, limitations and conclusion.
Non-financial and sustainability information statement
Reporting requirement
Page references
in this report
Relevant policy or document
available at natwestgroup.com
Business model
•
Our business model
•
Our strategy
•
Our investment case
•
Measuring our 2025 performance
•
Progress against our 2025 strategic priorities
•
Business performance review
•
Our stakeholders
•
12 and 13
•
15
•
16 to 17
•
18 to 19
•
20
•
25 to 26, 28 to
29, 31 to 32
•
33 and 34
Our stakeholders
•
Our stakeholders
•
Section 172(1) statement
•
33 to 34
•
36 to 37
Environment
•
Adapting to evolving market trends
•
Risk overview
•
Risk factors
•
22 to 23
•
74 to 79
•
403 to 422
Environmental and Social Risk
Acceptance Criteria
Our colleagues
•
Skilled, engaged and inclusive workforce
•
Supporting colleague wellbeing
•
Creating an inclusive workforce
•
59 to 63
•
61
•
62 to 63
Our Code of conduct
(1)
For details on dependencies applicable to and reliance on our climate and sustainability-related ambitions, targets and commitments, refer to Risk factors, including Climate and sustainability-related risks on pages 420 to 422, Additional cautionary statement regarding climate and
sustainability-related data, metrics and forward looking statements, and Cautionary statements in relation to the climate and sustainability-related disclosures on pages 429 to 431 of this report.
(2)
For limitations on external assurance of sustainability-related metrics, refer to Additional cautionary statements on pages 429 to 430 of this report.
Where noted across this report,
these indicate that the metric
and underlying data were
subject to external independent
limited or reasonable assurance by EY.
(LA)
Metric subject to independent
Reasonable Assurance by EY
(RA)
Metric subject to independent
Limited Assurance by EY
This non-financial and sustainability
information statement provides
an overview of topics and related
reporting references in our
external reporting as required
by sections 414CA and 414CB
of the Companies Act 2006.
We integrate non-financial and sustainability
information across the NatWest Group 2025
Annual Report and Accounts, thereby
promoting cohesive reporting of
non-financial and sustainability matters.
(1)
Sustainability review | Additional sustainability information continued
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
71
Strategic report
Reporting requirement
Page references
in this report
Relevant policy or document
available at natwestgroup.com
Governance
•
Section 172(1) statement
•
Governance and remuneration
•
Governance at a glance
•
Diversity in the boardroom
•
UK Corporate Governance Code 2024
•
Our governance framework
•
Directors’ remuneration report
•
Annual remuneration report
•
Report of the directors
•
Statement of directors’ responsibilities
•
36 to 37
•
95 to 176
•
102
•
103
•
104
•
105
•
140 to 150
•
151 to 168
•
172 to 175
•
176
Boardroom Inclusion Policy
Social matters
•
Our business model
•
Our strategy
•
Measuring our 2025 performance
•
Progress against our 2025 strategic priorities
•
Business performance
•
Our stakeholders
•
Supporting customers and communities through our banking products and services
•
Skilled, engaged and inclusive workforce
•
Creating an inclusive workforce
•
Conflicts of interest, Advocacy and political involvement
•
12 to 13
•
15
•
18 to 19
•
20
•
25 to 26, 28 to
29, 31 to 32
•
33 to 34
•
41 to 44
•
59 to 63
•
62 to 63
•
65
Supplier Code of Best Practice
Respect for human rights
•
Respect for human rights
•
65
Human Rights Report
Anti-bribery and corruption
(ABC)
•
Detecting and preventing financial crime, corruption and bribery
•
Protecting whistleblowers
•
Risk overview
•
Risk management framework
•
Compliance and conduct risk
•
Financial crime risk
•
57 to 58
•
64 to 65
•
74 to 79
•
177 to 186
•
272
•
273
Financial crime statement
Risk management
•
Risk overview
•
Risk and capital management
•
Risk factors
•
74 to 79
•
177 to 275
•
403 to 422
Environmental and Social Risk
Acceptance Criteria
Climate-related financial
disclosures as required by
sections 414CA and 414CB of
the Companies Act 2006
•
A description of the company’s governance arrangements in relation to assessing and managing climate-related
risks and opportunities.
•
A description of how the company identifies, assesses, and manages climate-related risks and opportunities.
•
A description of how processes for identifying, assessing, and managing climate-related risks are integrated into
the company’s overall risk management process.
•
A description of (i) the principal climate-related risks and opportunities arising in connection with the company’s
operations, and (ii) the time periods by reference to which those risks and opportunities are assessed.
•
A description of the actual and potential impacts of the principal climate-related risks and opportunities on the
company’s business model and strategy.
•
An analysis of the resilience of the company’s business model and strategy, taking into account consideration of
different climate-related scenarios.
•
A description of the targets used by the company to manage climate-related risks and to realise climate-related
opportunities and of performance against those targets.
•
The key performance indicators used to assess progress against targets used to manage climate-related risks and
realise climate-related opportunities and a description of the calculations on which those key performance
indicators are based.
•
51
•
51 to 53
•
51 to 53
•
51 to 53
•
51 to 53
•
53
•
49 to 56
•
49 to 55, 68
NatWest Group plc 2025 Climate
Transition Plan Report
Sustainability review | Additional sustainability information continued
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
72
Strategic report
Succeeding with customers
Case study – helping build better businesses
When Wall Colmonoy Ltd, a global
materials engineering group, began
investing in new technologies to grow
its manufacturing capabilities, the
management team knew they were
entering an important phase for the
Swansea Valley business. They wanted
to move into new markets, manage the
currency risks of international trading, and
protect around 200 jobs at the company.
As the plans took shape, the company
worked closely with NatWest Group, who
supported day-to-day banking and foreign
exchange (FX) hedging, while also helping
the business navigate major investment
stages. Regular, open communication
meant the bank could tailor financial
guidance and products to meet the
pace and structure of each upgrade.
Now, with new processes in place and a
clearer route into additional international
markets, Wall Colmonoy Ltd is progressing
with confidence.
Our impact
Investment support
to strengthen
growth strategy.
FX hedging
and guidance
to help manage
international
currency exposure.
Backing to protect
around 200 jobs and
create new training
pathways in the
Swansea Valley.
Pontardawe
Rob Davies (left) and Paul Dunne – NatWest Group Relationship Manager (right)
up new export
markets
Opening
‘Working with NatWest gives us
confidence to strive forward in
the way that we are. We’ve been
offered great customer support
and products. In turn, that has
allowed us to deliver on strategic
objectives to grow our business’
Rob Davies, Managing Director,
Wall Colmonoy Ltd.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
73
Strategic report
Risk overview
Effective risk management helps
to ensure that NatWest Group
delivers its long-term strategy.
Approach to risk management
The enterprise-wide risk management
framework (EWRMF) sets out the approach
to managing risk across NatWest Group and
provides a common risk language to facilitate
effective risk management. The framework
applies to all subsidiary legal entities, business
segments and functions to help deliver
NatWest Group’s strategy in a safe and
sustainable way.
Risk culture
Our approach to risk culture, under the banner
of intelligent risk-taking, ensures a focus on
robust risk management behaviours and
practices. This approach, in line with our
strategy across all three lines of defence,
enables us to support better customer
outcomes, develop a stronger and more
sustainable business. During 2025, we
reviewed and evolved the key outcomes to
deliver on the intelligent risk-taking approach.
The new outcomes focus on effective decision-
making, empowered outcomes and embedded
risk practices.
Risk governance
The Board is collectively responsible for
promoting the long-term sustainable success
of NatWest Group, driving shareholder value
and NatWest Group’s contribution to wider
society by providing direction and leadership
within a framework of prudent and effective
controls which enables risks to be assessed
and managed.
It reviews the performance of NatWest
Group relative to risk appetite and oversees
management’s implementation of the risk
appetite framework and the embedding
of risk appetite within NatWest Group.
The ERC receives and reviews reports on
emerging risks, reviews the EWRMF, key risk
policies
(1)
and the EWRMS and supports their
recommendation to the BRC. It drives the
implementation and embedding of the EWRMF.
Three lines of defence
In line with industry best practice and sound
risk governance principles, NatWest Group
adopts a three lines of defence model of risk
governance. Everyone has a responsibility
for the intelligent management of risk in
day-to-day activities. This includes actively
demonstrating risk practices and behaviours
that are consistent with NatWest Group’s
desired risk culture.
As the second line of defence, the Risk
function has a mandate to undertake
proactive risk oversight and monitoring
of all risk management activities including
maintaining a robust control environment.
The Risk function designs and maintains
the EWRMF. The CRO leads the Risk function
and plays an integral role in advising the Board
on NatWest Group’s risk profile. This includes
continuous monitoring to confirm that NatWest
Group engages in sustainable risk-taking
activities in pursuit of strategic objectives.
It reviews and approves the EWRMF (including
NatWest Group’s risk appetite framework)
and approves the risk appetite in accordance
with the risk appetite framework. It monitors
performance against risk appetite, considers
material risks and reviews the effectiveness of
risk management and internal control systems.
The Group Board Risk Committee (BRC)
provides oversight and advice to the Board
on current and potential future risk exposures,
future risk profile including risk appetite and
the approval and effectiveness of the EWRMF.
It reviews performance relative to risk appetite,
the effectiveness of internal controls required
to manage risk and all material risk exposures
and management’s recommendations to
monitor, control and mitigate such exposures,
including for all principal and emerging risks.
The BRC also approves the key risk policies
in accordance with the EWRMF, approves
the enterprise-wide risk management strategy
(EWRMS)
(1)
, and oversees its effective delivery.
It reviews and as required approves (subject to
the escalation of any material concerns to the
Board as appropriate) the results of material
internal and regulatory NatWest Group-wide
stress tests and the ICAAP and ILAAP submissions.
The Executive Risk Committee (ERC)
supports the Chief Risk Officer (CRO) and
other accountable executives in discharging
their risk management accountabilities. It
reviews, challenges and debates all material
risk exposures including all principal risks, and
management’s recommendations to monitor
and control such exposures.
Risk appetite
The risk appetite framework is a component
of the EWRMF and establishes the extent
of permissible risk-taking to support business
outcomes and delivery of the strategy.
The EWRMF sets out the requirements
regarding how risk appetite is implemented
through risk policies and standards and
translated into operational procedures.
This consistent approach is followed for
all principal risks, frameworks, tools and
techniques. Risk appetite is approved at
least annually by the Board on the BRC’s
recommendation to ensure it remains
appropriate and aligned to strategy.
Risk profile
NatWest Group maintained a stable risk profile
in 2025 despite geopolitical tensions creating
an uncertain risk environment. The overall
financial risk profile remained within risk
appetite supported by stable economic
conditions. Key developments included:
•
A strong capital position was maintained
in 2025, with a CET1 ratio of 14.0%.
•
A robust liquidity and funding risk profile
was maintained throughout 2025, with an
average liquidity coverage ratio of 147%
and an average net stable funding ratio
of 135%.
(1)
Risk policies are in place for each principal risk and define, at a high level, the cascade of qualitative expectation, guidance and standards that stipulate the nature and extent of permissible risk-taking. They are consistently applied across NatWest Group and subsidiary legal entities
and form part of the qualitative expression of risk appetite for each principal risk.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
74
Strategic report
Enterprise-wide risk management framework
Risk overview continued
Enterprise-wide risk management framework
Common risk language, architecture and approach
Risk appetite
Risk appetite is defined as
the type and aggregate level of
risk NatWest Group is willing to
accept in pursuit of its strategic
objectives and business plans.
Risk governance
NatWest Group’s governance
structure facilitates sound risk
management decision- making,
in line with standards of good
corporate governance.
Three lines of defence
NatWest Group adopts
a three lines of defence
model of risk governance.
Everyone has a responsibility
for intelligent risk-taking.
Risk culture
The EWRMF is centred
on the embedding of a strong
risk culture that encompasses
both prudential and conduct
risk outcomes and prescribed
behaviours.
Risk directory
and principal risks
The risk directory provides a
common language to ensure
that consistent terminology is
used across NatWest Group
to describe the principal risks.
Principal risk policies
Risk policies are in place for
each principal risk and define,
at a high level, the cascade
of qualitative expectations,
guidance and standards that
stipulate the nature and extent
of permissible risk-taking.
Risk standards
Risk standards provide a more
granular expression of the risk
policies and provide the detail
for the first line of defence
to develop operational
policies/procedures.
Risk toolkits
Risk toolkits define the
approaches, tools and
techniques for managing risk
(split by all principal risks,
financial and non-financial risks).
Principal risks are
used as the basis for
setting risk appetite
and risk identification.
Financial risks
•
Credit risk
•
Capital risk
•
Liquidity and funding risk
•
Climate and nature risk
•
Non-traded market risk
•
Traded market risk
•
Pension risk
Non-financial risks
•
Operational risk
•
Compliance risk
•
Conduct risk
•
Financial crime risk
•
Model risk
•
Reputational risk
The enterprise-wide risk management
framework (EWRMF) sets out our
approach to managing risk across
NatWest Group and provides a
common risk language and framework
to facilitate effective risk management.
The building blocks of the EWRMF are:
The EWRMF sets out a common risk
language and standard definitions to
ensure consistency in the application
of risk management terminology.
The risk toolkit cycle outlines the
NatWest Group-wide approach to
identify, assess, mitigate, monitor
and report risks.
The risk toolkit cycle
Identify and assess
Effective risk identification and
assessment to understand the risk profile.
Report
Reporting of the risk profile, emerging themes,
current issues and other key information.
Mitigate
Determination of the appropriate action
for how risks are managed or mitigated.
Monitor
Monitoring of the risk profile through principal
risk indicators or other key metrics.
Risk
toolkit
cycle
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
75
Strategic report
Risk directory and principal risks
Risk overview continued
Principal risks – financial
Key developments in 2025
Risk management actions
Credit risk – the risk that customers, counterparties
or issuers fail to meet a contractual obligation
to settle outstanding amounts.
•
Personal portfolio growth in 2025 was a result
of continuing organic demand as well as the
Sainsbury’s acquisition.
•
Non-Personal portfolio growth was mainly
across strategic areas including funds financing
and corporates.
•
Extensive and thorough credit processes, strategies and controls are in place to ensure effective risk
identification, management and oversight.
•
Personal credit risk – adjustments are made to affordability assumptions and stress rates to ensure
that lending continues to be assessed appropriately.
•
Non-Personal credit risk – sector appetite continues to be reviewed regularly, with particular focus
on sector clusters and sub-sectors that are deemed to represent a heightened risk.
Capital risk – the risk that there is the inability to conduct
business in base or stress conditions on a risk or leverage
basis due to insufficient qualifying capital as well as the
failure to assess, monitor, plan and manage capital
adequacy requirements.
•
A strong capital position was maintained in 2025,
with a CET1 ratio of 14.0%, which was within
NatWest Group’s target of 13-14%.
•
Capital planning is integrated into NatWest Group’s wider annual budgeting process with capital plans
produced over a five-year planning horizon under expected and stress conditions.
•
Stress testing is a principal risk management tool and is used to quantify and evaluate the potential
impact of risks on the financial strength and capital position.
Liquidity risk – the risk of being unable to meet actual
or potential financial obligations in a timely manner when
they fall due in the short term. Funding risk – the risk that
current or prospective financial obligations cannot be met
as they fall due in the medium to long term, either at all
or without increasing funding costs unacceptably.
•
A robust liquidity and funding risk profile was
maintained throughout 2025, with an average
liquidity coverage ratio of 147% and an average
net stable funding ratio of 135%.
•
A suite of tools is used to monitor, limit and stress test the liquidity and funding risks on the balance
sheet. Limit frameworks are in place to control the level of liquidity risk, asset and liability mismatches
and funding concentrations. Liquidity condition indicators are monitored daily.
•
Performance is reported to the Asset & Liability Management Committee on a regular basis.
Climate and nature risk – the threat of financial loss or
adverse non-financial impacts associated with climate
change and nature loss respectively and the political,
economic and environmental responses to it.
•
Climate risk modelling capabilities,
including internal physical risk modelling,
continued to be enhanced.
•
The coverage of the climate decisioning
framework and its associated use also
broadened during the year.
•
Climate risk analytics are increasingly integrated within risk management processes such as capital
adequacy, impairments, and transition plan processes.
•
Consideration of climate risk within credit risk decisioning at a customer level is maturing. Initial use
cases have been introduced: higher-risk transactions are identified for enhanced oversight or
escalated approval.
Non-traded market risk – 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.
•
Overall, total value-at-risk (VaR) decreased. The
largest component, credit spread VaR, remained
relatively stable as bond holdings in the liquidity
portfolio remained generally consistent.
•
The notional of the structural hedge rose slightly,
reflecting increased equity structural hedging and
deposit stability.
•
Non-traded market risk appetite is measured via VaR, SVaR, sensitivity and stress limits, and earnings-
at-risk limits.
•
Limits are reviewed to reflect changes in risk appetite, business plans, portfolio composition and the
market and economic environments.
•
Non-traded market risk stress results are combined with those for other risks into capital planning.
Traded market risk – 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.
•
Drivers of market volatility during the year
included global inflationary concerns, US tariffs,
the ongoing Russia-Ukraine conflict and
geopolitical tensions in the Middle East.
•
Traded VaR and SVaR remained within appetite,
aided by NatWest Group’s continued disciplined
approach to risk-taking.
•
VaR, SVaR and the incremental risk charge are used to measure traded market risk.
•
Traded market risk exposures are monitored against limits and analysed daily.
•
Limit reporting is supplemented with regulatory capital and stress testing.
Pension risk – The inability to meet contractual obligations
and other liabilities to the established employee or related
company pension scheme.
•
During the year, the Trustee of the Main section
of the NatWest Group Pension Fund completed
partial buy-in transactions, in addition to those
completed during 2024, passing demographic
and market risk to third-party insurers. Over
40% of the scheme’s liabilities are now covered
by buy-in policies, which is an increase from
one-third at the end of 2024.
•
Pension risk is monitored by the Executive Risk Committee and the Board Risk Committee. Relevant
pension risk matters are escalated to the Board as applicable.
•
NatWest Group also undertakes stress tests on its material defined benefit pension schemes each year.
These tests are also used to satisfy the requests of regulatory bodies such as the Bank of England.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
76
Strategic report
Principal risks – non-financial
Key developments in 2025
Risk management actions
Operational risk – the risk of loss resulting
from inadequate or failed internal processes,
people and systems, or external events.
It arises from day-to-day operations and
is relevant to every aspect of the business.
•
The enhanced risk and control self-assessment approach was refined further
with a focus on material operational risks and controls across the key
end-to-end processes.
•
Operational resilience continued to evolve, UK/EU Digital Operational Resilience
Act compliance was achieved along with the assessment of plausible, increasingly
severe, complex, and prolonged scenario tests for cyber, third-party, and major
IT failure risks.
•
Threat horizon scanning and vulnerability management processes were
enhanced to support risk identification, scenario testing and the prioritisation
of risk mitigation activities.
•
The operational risk frameworks outline the principles and approaches used across
NatWest Group, which are aligned to regulatory requirements and risk appetite.
These frameworks outline controls, management information and standards used
to identify, manage, and reduce operational risks and support continued
operational resilience.
•
A robust approach to operational resilience is maintained through comprehensive
NatWest Group-wide processes. These include regular scenario tests that simulate
increasingly severe and sophisticated disruption events.
Compliance risk – the risk that NatWest
Group fails to observe the letter and spirit
of all relevant laws, codes, rules, regulations
and standards of good market practice.
•
On 4 September 2025, the US Court of Appeal approved an amendment of the
plea agreement and formally terminated the Monitorship (extended oversight) of
NatWest Markets Plc (NWM) obligations under the plea agreement and probation
has been extended until December 2026. Going forward, NWM will report
progress on the compliance programme directly to the US Department of Justice.
•
The Judicial Review challenging the Financial Ombudsman Service’s
interpretation of ‘unfair relationships’ under Section 140 of the Consumer Credit
Act remains ongoing. NatWest Group and peer banks have raised concerns over
the reopening of closed complaints, with the FCA intervening in support of
NatWest Group’s position.
•
Regulatory horizon scanning is conducted to identify and address changes in
regulatory requirements. Rules mapping exists to ensure the key products and
supporting services that NatWest Group provides are compliant with all applicable
regulatory requirements, including structured breach identification, remediation.
Reporting processes are in place that include mandatory reporting timelines.
•
Policies and procedures set out the principles that apply across NatWest Group,
aligned to its risk appetite, with appropriate control frameworks, management
information, standards and training implemented to identify and manage
regulatory compliance risk.
Conduct risk – the risk of inappropriate
behaviour towards customers, or in the
markets in which NatWest Group operates,
which leads to poor or inappropriate
customer outcomes and/or undermines
market integrity.
•
The compliance and conduct risk framework was reviewed against the
Operational Riskdata eXchange Association regulatory compliance and conduct
risk taxonomy leading to proposals for new level 2 risks and a potential merger
of conduct and regulatory compliance into a single risk from 2026. These
changes aim to improve risk coverage, align with the EWRMF, and reflect
industry best practice.
•
Risk standards are in place to ensure appropriate controls and processes that deliver
good customer outcomes and support market integrity.
•
Ongoing monitoring and testing of good customer outcome measures to ensure
good outcomes are delivered for customers, and to ensure products continue to
offer customers fair value, throughout the product and service lifecycle, driving
continuous improvement.
Financial crime risk – the risk that NatWest
Group’s products, services, employees
and/or third parties are intentionally or
unintentionally used to facilitate financial
crime in the form of money laundering,
terrorist financing, bribery and corruption,
sanctions and tax evasion, as well as
external or internal fraud.
•
Significant investment continued to be made to support the delivery of the
multi-year transformation plan across financial crime risk management.
•
Enhancements were made to technology, data quality and data analytics
to improve the effectiveness of systems used to monitor customers
and transactions.
•
The financial crime framework, relevant policies, systems, processes and controls are
used to mitigate and manage financial crime risk. This includes the use of dedicated
screening and monitoring systems and controls to identify people, organisations,
transactions and behaviours that may require further investigation or other actions.
Model risk – the potential for adverse
consequences from model errors or the
inappropriate use of modelled outputs
to inform business decisions.
•
The model risk management framework was updated in line with SS1/23,
including bringing material and complex deterministic quantitative methods into
scope.
•
Model inventory system design and model risk data accuracy were improved to
strengthen overall model risk management and oversight.
•
Model risk appetite is set to limit the level of model risk that NatWest Group is willing
to accept in the course of its business activities. Policies, toolkits and model standards
related to the development, validation, approval, implementation, use and ongoing
monitoring of models are in place to ensure adequate control across the lifecycle of
an individual model. This includes refining, redeveloping or restricting use of models
where appropriate.
Reputational risk – the risk of damage
to stakeholder trust due to negative
consequences arising from internal
actions or external events.
•
Enhancements were made to expand the requirements of the reputational
risk policy to suppliers and third parties.
•
The environmental, social and ethical (ESE) animal welfare, mining and metals
and forestry, fisheries and agribusiness risk acceptance criteria were reviewed
and updated in line with strategic objectives.
•
From 1 January 2026, the name of the ESE risk framework was updated to
the Environmental and Social Risk Framework. This change better reflects the
framework’s underlying methodology which focuses on a risk-based approach
aligned to organisational risk appetite, rather than values-based judgements.
•
Relevant internal and external factors are monitored through regular reporting via
reputational risk registers at business or legal entity level. They are escalated, where
appropriate, to the relevant business risk committee and, where material, to the
Group Reputational Risk Committee.
•
Standards of conduct are in place across NatWest Group requiring strict adherence
to policies, procedures and ways of working to ensure business is transacted in a way
that meets – or exceeds – stakeholder expectations.
Risk overview continued
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
77
Strategic report
Top and emerging risks
Risk overview continued
Top and emerging risks are future scenarios that could have a significantly negative impact on our ability to operate or deliver our strategy and are managed through the EWRMF
toolkit. They usually combine elements of several principal risks and require a coordinated management response. Top risks could occur or require management action within two
years, while emerging risks are evolving and/or could occur over a longer time horizon but have the potential to become a top risk. In 2025, the ERC, the BRC and the Board received
regular reporting on top and emerging risks. The BRC also engaged in a focused horizon scanning session in 2025 and discussed top and emerging risks regularly during 2025 to
enable their early identification and mitigation. The top and emerging risks scenarios that follow are shown in alphabetical order.
Top risk scenarios in focus in 2025
Description
Risk management actions
Artificial intelligence
Innovations in artificial intelligence (AI), including generative AI, may rapidly
transform and disrupt customer interactions, the industry and the economy.
NatWest Group’s ability to continue to deploy AI solutions and integrate AI
in systems and controls will become increasingly important to retaining and
growing business. There can be no certainty that NatWest Group’s innovation
strategy will be successful, and competitors may be more successful in
implementing AI technologies, in turn, affecting industry competitive dynamics.
Developments in AI may also result in increased model risk and rising levels
of fraud.
•
NatWest Group closely monitors developments in disruptive technologies, including AI.
Strategy is developed as appropriate to leverage AI across NatWest Group with a focus
on helping improve customer journeys, personalisation, colleague effectiveness and
improved risk and capital management. Using AI safely and ethically is a key area
of focus, alongside compliance with evolving AI regulation. This includes developing
a robust set of controls for the use of AI models and tools across NatWest Group.
AI risk management is being developed proactively to reflect technological and
systems advances.
Climate ambitions
NatWest Group’s climate strategy – including ambitions, targets, and transition
planning – carries significant financial and non-financial risks. Achieving these
goals depends on timely and appropriate government policy, technology
developments, and on suppliers, customers and society supporting the transition.
•
Following the review of our climate ambitions and targets in 2025 in the context of the UK
Committee on Climate Change’s (UK CCC) issued advice and our progress to date, we
have retained our ambition to at least halve the climate impact of our financing activity
by 2030, against a 2019 baseline, having achieved a 39% reduction between 2019 and
2024, primarily through strategic decisions and methodology and data enhancements.
Cyberattack
There is a constantly evolving threat from cyberattacks which are increasing
in terms of frequency, sophistication, impact and severity. This includes hostile
attempts to gain access to and exploit potential vulnerabilities of IT systems
including via malware. Any failure in NatWest Group’s cybersecurity policies,
procedures or controls, may result in significant financial losses, major business
disruption, inability to deliver customer services, loss of data and associated
reputational damage.
•
NatWest Group continues to invest in additional capability to defend against threats
including developing and evolving cybersecurity policies, procedures and controls that are
designed to minimise the possibility of, and the potential effect of such attacks. The focus
is to manage the impact of the attacks and maintain services for NatWest Group’s
customers. This includes proving cyber resilience capabilities via stress testing of NatWest
Group’s important business services. In addition, NatWest Group utilises threat intelligence
to inform its approach to identifying and responding to potential cyber risks.
Digital currency
NatWest Group operates in markets which would be exposed to any
developments in digital currency and/or assets, including tokenised deposits,
stablecoins and a UK central bank digital currency (CBDC). The introduction
of new digital currencies could result in deposit outflows, higher funding costs,
and/or other implications for UK banks including NatWest Group.
•
NatWest Group is focused on delivery of its digital asset strategy which includes
participation in tokenised deposit pilots, and close engagement with regulators on
future regulatory regimes for digital assets and monitoring of industry developments. This
approach ensures alignment with emerging market practices and regulatory expectations.
•
NatWest Group maintains an Executive Steering Group on digital assets which oversees
developments and engagement on digital currencies. It also coordinates engagement with
the UK Government and regulators on digital currency developments and financial market
infrastructures such as proposals on regulatory treatment of UK stablecoins.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
78
Strategic report
Risk overview continued
Top risk scenarios in focus in 2025
Description
Risk management actions
Economic and interest
rate volatility
Economic conditions could deteriorate, depending on factors including weak
economic activity, fiscal policies, volatility in interest rates, liquidity pressures,
sharp falls in asset prices, escalating geopolitical tensions and concerns
regarding sovereign debt or sovereign credit ratings. Any of these may have
a materially adverse effect on NatWest Group’s future financial prospects.
•
A range of complementary approaches is used to mitigate the risks, such as targeted
scenario analysis, stress tests, targeted customer reviews and reviews of risk appetite.
Stress tests in 2025 included completion of regulatory stress tests as well as a range
of internal scenarios.
Evolving regulation
NatWest Group’s businesses are subject to substantial regulation and oversight,
both of which are constantly evolving and may have an adverse impact on
NatWest Group. Areas of ongoing regulatory focus include Basel 3.1 standards
implementation, including the resulting effect on RWAs and models, as well as
the effective management of financial crime.
•
NatWest Group constantly monitors regulatory change. It engages closely with regulators
in the shaping of regulation that materially impacts NatWest Group, responding when
necessary, either bilaterally or in partnership with one of the affiliated industry bodies.
NatWest Group implements new responses to regulatory requirements where applicable
and uses frequent engagement meetings with regulators to discuss key priorities.
Increased competition
Competitive pressures could intensify, impeding NatWest Group’s ability to
grow or retain market share, impacting revenues and profitability, particularly
in the UK Retail Banking and Commercial & Institutional segments. Drivers of
competition mainly relate to developments in technology, evolving incumbents,
challengers, new entrants to the market, shifts in customer behaviour and
changes in regulation. For example, increased competition from technology
conglomerates, who may have competitive advantages in scale, technology
and customer engagement (including brand recognition).
•
NatWest Group closely monitors the competitive environment and adapts its strategy
as appropriate. This includes using scenario analysis and assessing how mega-trends
will impact industry competitive dynamics. Strategic responses are focused on the
delivery of innovative and compelling propositions for customers and effectively
leveraging acquisitions and partnerships.
Operational risk scenarios
Operational risks are inherent in NatWest Group’s businesses and a broad range
of scenarios are considered. NatWest Group could be adversely impacted by
scenarios including a failure to access current, complete, and accurate data,
or disruption to services if a third-party service provider experienced any
interruptions. These scenarios could result in business and customer interruption
and related reputational damage, significant compensation costs, regulatory
sanctions and/or a breach of applicable regulations.
•
NatWest Group maintains a robust approach to operational resilience through
comprehensive, Group-wide processes and regular scenario tests to ensure effective
management of interconnected operational risks.
•
NatWest Group devotes significant resources to third-party risk management. Focus
areas include identifying critical-service suppliers, developing robust exit and contingency
plans in the event of supply chain disruption, and ensuring appropriate monitoring and
oversight of third-party performance.
•
Effective and ethical use of data is critical to NatWest Group’s goals, with continued focus
on delivering our long-term data strategy alongside enhancing control and policy
frameworks governing data usage.
Emerging risk scenarios in focus in 2025
Description
Risk management actions
Geopolitical risk
NatWest Group is exposed to risks arising from geopolitical events or political
developments. Geopolitical tensions remain elevated and a range of potential
scenarios and impacts are considered. This includes the potential impact of
armed conflict, global trade and supply chain disruption, volatility in commodity
prices, protectionist policies or trade barriers and state-sponsored cyberattacks.
•
NatWest Group closely monitors the geopolitical risk outlook and undertakes regular
scenario analysis to understand the potential impacts and takes mitigating actions as
required. This includes second and third-order analysis of impacts, for example, through
customers’ supply chain disruption or disruption to third-party providers.
Market-based finance (MBF)
NatWest Group is exposed to vulnerabilities within shadow banking or MBF,
given the interlinkages between UK banks and MBF. This includes the potential
for stress events or shocks to financial markets.
•
NatWest Group closely monitors exposure to MBF. An internal framework for the
identification, management, control and mitigation of the risks associated with exposure
to MBF is maintained. This includes effective reporting and governance in respect of
such exposure.
Physical climate risk
Intensifying physical climate-related risks, including climate events, materially
increasing in frequency and/or severity, results in direct impacts on property,
infrastructure, supply chains, geopolitics and economic activity. This could lead
to significant credit, operational (for example, business continuity), market,
liquidity, pension risks and/or non-financial risks and, if those risks are not
mitigated, losses.
•
NatWest Group leverages scenario analysis to explore the potential impact of physical
climate risks and ensure appropriate mitigation. NatWest Group includes a scenario
exploring quantifiable impacts of chronic physical climate effects, such as a drag on labour
and land productivity, and acute physical shocks such as droughts, heatwaves, wildfires
and floods within its suite of stress-testing scenarios. In addition, a qualitative scenario is
used to explore cascading and complex risks, including potential earth system tipping
points, that are currently challenging for quantitative scenarios and models to capture.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
79
Strategic report
Viability statement
In accordance with Provision 31
of the UK Corporate Governance
Code, the Board is required to
make a statement in the Annual
Report and Accounts regarding
NatWest Group’s viability over
a specified time horizon.
Considerations
In assessing NatWest Group’s future viability,
the Board considers a period of three years
to be appropriate. The budget and business
planning processes are based on a five-year
horizon. However, a three-year period is
considered more suitable given levels
of uncertainty increase as the time
horizon extends.
In assessing NatWest Group’s viability over this
time frame, the Board has considered a wide
range of information including:
Strategic and financial outlook
•
NatWest Group’s business and
strategic plans.
•
Profitability outlook, including 2028 Return
on Tangible Equity (ROTE) guidance.
•
Current capital position and projections
over the relevant period.
•
Liquidity and funding profile and projections
over the relevant period.
•
Internal scenarios and stress tests, which
consider the material risks and uncertainties
facing NatWest Group.
•
The strategic, risk and financial outlook
for the financial services sector.
Assessment
NatWest Group’s business and strategic plans,
which are reviewed and evaluated at least
annually, provide long-term direction and
assess resilience to a range of risks across
the planning horizon. These plans include
multi-year forecasts assessing NatWest
Group’s expected financial position
throughout the planning period.
The 2025 financial performance of NatWest
Group was also considered as part of the
assessment. As at the 31 December 2025
this included:
•
NatWest Group’s robust capital position;
CET1 ratio of 14.0% provides significant
headroom above both NatWest Group’s
minimum requirements and its maximum
distributable amount threshold requirements.
•
NatWest Group’s strong liquidity and funding
position; the liquidity portfolio of £238 billion,
a robust liquidity coverage ratio of 147%
and a net stable funding ratio of 135%.
•
NatWest Group’s tangible net asset value
per share increased 21% to 381p as at
31 December 2025.
•
NatWest Group’s return to private
ownership following the UK Government’s
exit from its shareholding, reinforcing
strategic flexibility and market confidence.
A suite of economic scenarios supports
NatWest Group’s financial planning processes.
Stress testing is a key risk and financial
management tool and is integrated with
financial planning processes. It is used to
quantify and evaluate the potential impact
of material risks on the financial strength
of NatWest Group, including its liquidity
and capital position.
In 2025, a broad range of economic scenarios
were designed to capture uncertainties and
Risk management and risk profile
•
NatWest Group’s enterprise-wide risk
management framework (EWRMF) including
the processes by which risks are identified
and mitigated.
•
NatWest Group’s risk profile including
any breaches of risk appetite and top and
emerging risks that could have a significant
negative impact on NatWest Group’s ability
to operate.
Regulatory
•
Mandatory regulatory processes including
the Bank of England 2025 Bank Capital
Stress Test (BCST), together with
the outcomes of the Internal Capital
Adequacy Assessment Process (ICAAP)
and Internal Liquidity Adequacy
Assessment Process (ILAAP).
•
Regulatory requirements, including in
relation to the implementation of the Basel
3.1 standards (covering credit risk, market
risk, operational risk), implications of CRD VI
on the EU operating model, and CRD IV –
IRB models programme; alongside other
mandatory obligations such as stress
testing, operational resilience and
climate risk.
Operating environment
•
Consideration of the operating environment
for NatWest Group including shifts in
customer behaviour, developments in
technology, economic trends and
competitive factors.
risks faced by NatWest Group. The scenarios
were continuously refined and reviewed.
This included benchmarking against external
forecasts and regulatory guidance. These
scenarios explored a range of risks and
uncertainties including:
•
Severe UK recession with a sharp rise
in unemployment and large falls in asset
prices including house prices.
•
Lower than anticipated UK interest
rates with severely stressed deposit
and lending conditions.
•
Consideration of a concurrent weakening
of the NatWest Group’s liquidity and
funding position.
•
Geopolitical risks including a sharp rise
in energy prices, higher inflation and
interest rates.
•
Climate-related risks including elevated
physical risks that force a speedy
climate transition.
A range of internal scenarios was used to
assess going concern capital requirements
on a forward-looking basis, focusing on the
resilience of capital adequacy and leverage
ratios. The analysis incorporated regulatory
and accounting factors (such as IFRS 9),
alongside balance sheet and profit and loss
drivers such as deposits and RWAs. These
scenarios demonstrated that NatWest Group
would maintain sufficient capital, liquidity and
funding throughout the assessment period,
with no breaches of regulatory thresholds.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
80
Strategic report
Viability statement continued
Consideration was given to the operational
resilience of NatWest Group across a range
of operational risk scenarios including IT
infrastructure disruption, cyber, data integrity,
third-party, people and premises. While
NatWest Group operates a multi-layered
system of defences, there is a possibility that
a cyberattack could have a severe effect on
operations. The evolving threat is continually
monitored with a focus on managing the
impact of any attack and sustaining availability
of services for NatWest Group’s customers.
As cyberattacks evolve and become more
sophisticated, NatWest Group continues to
invest in additional capability designed to
defend against emerging risks.
Risks facing NatWest Group are identified and
assessed according to the EWRMF which is
outlined in the Risk overview section. The
Board reviews and approves the EWRMF
(including NatWest Group’s risk appetite
framework as a component thereof) and
risk appetite for key risks, in accordance
with the risk appetite framework.
Despite elevated economic and geopolitical
uncertainty, NatWest Group’s risk profile
remained stable in 2025. Risk appetite is a
key consideration in assessing the risk profile
and the Board monitors the performance of
NatWest Group against risk appetite for all
principal risks outlined on pages 76 and 77.
In 2025, there were no material breaches in
risk appetite that were viewed as a threat to
the viability of NatWest Group.
The NatWest Group recovery plan explains
how NatWest Group would identify and
respond to a financial stress event and restore
its financial position so that it remains viable
on an ongoing basis. The plan is intended to
enable NatWest Group to maintain critical
services and products it provides to its
customers, maintain its core business lines
and operate within risk appetite while restoring
NatWest Group’s financial condition. It is
assessed for appropriateness on an ongoing
basis and reviewed and approved by the
Board prior to submission to the PRA. Fire
drill simulations allow senior management to
rehearse the responses and decisions that may
be required in an actual stress event. During
2025, the Board took part in a fire drill exercise
in relation to operational resilience, recovery
and resolution. Further information can be
found in the Board report on page 110.
NatWest Group is impacted by a wide range
of macroeconomic, political, regulatory,
technological, social and environmental
developments. The evolving operating
environment presents opportunities and
risks which NatWest Group continues to
evaluate and adapt to.
Based on the factors outlined above, the
current financial forecasts, including the
strength of its capital and liquidity positions,
and the management of NatWest Group’s
principal risks, including mitigating actions,
the Board has a reasonable expectation that
NatWest Group will be able to continue in
operation and meet its liabilities over the
three-year period of the assessment.
NatWest Group’s top and emerging risks
process also highlights risk scenarios that
could have a significant negative impact on
NatWest Group’s ability to operate or deliver
its strategy. In 2025, the Executive Risk
Committee, the Board Risk Committee and the
Board received regular reporting on top and
emerging risks. The Board Risk Committee also
engaged in a focused horizon scanning session
in 2025 and discussed top and emerging risks
regularly during 2025 to support their early
identification and mitigation. Top and emerging
risks are also a significant consideration in
internal scenario planning as well as the
ICAAP and ILAAP.
The Bank of England published the bank
capital stress test (BCST) scenario in March,
exploring geopolitical risks, sharp increases
in commodity and energy prices and global
trade fragmentation. The prescribed scenario
explored a sharp fall in UK GDP, a high
unemployment rate, and a rise in inflation,
necessitating higher interest rates. The
BCST results were published by the Bank of
England in December 2025. NatWest Group
participated in the 2025 BCST and results
indicated that its capital ratio would remain
above the minima at the low point of the
stress test scenario without the need for any
strategic management actions. Reverse stress
testing is also carried out to identify potential
vulnerabilities in the business model. During
2025, reverse stress testing considered the
impact of sustained income challenges and
increased impairments in a severe
recession scenario.
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
81
Strategic report
Financial review
83
Group Chief Financial Officer’s review
84
Financial summary
88
Segment performance
94
Summary financial statements
NatWest Group Manchester office, Spinningfields
Strategic report
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
82
Financial review
Delivering a strong performance
Group Chief financial officer’s review
We continued to make good progress on
becoming a simpler, more agile and technology
driven bank by delivering efficiencies from our
investment programmes, digitising more to
deliver faster, simpler, and safer customer
journeys and accelerating AI and
data transformation.
Total operating expenses were £113 million
higher than 2024. Other operating expenses
were £241 million, or 3.1%, higher and in line
with our guidance. In the year we recognised
higher costs of transformation, increased
reward through pay and bonus while we
also combatted other inflationary pressures.
Partially offsetting this we have continued
to drive underlying cost savings (delivered
through branch transformation and digitisation),
further cost reductions as a result of the phased
withdrawal from the Republic of Ireland, lower
restructuring costs and reduced Bank levies.
We continue to proactively
manage risk
A net impairment charge of £671 million, or 16
basis points of gross customer loans, included
a charge on the acquisition of balances from
Sainsbury’s Bank, higher Stage 3 charges and
lower good book releases than the prior year.
Compared with 2024, our ECL provision
increased £0.2 billion to £3.6 billion and our
ECL coverage ratio remained stable at 0.83%.
We retain post model adjustments of
£296 million and remain comfortable
with the strong credit performance
of our diversified prime loan book.
Active balance sheet management
supporting robust liquidity levels
RWAs increased by £10.1 billion during 2025
to £193.3 billion principally reflecting franchise
lending growth of £10.9 billion, operational risk
of £3.8 billion, including an acceleration of
c.£1.6 billion from Q1 2026 to align with
market practice, £1.3 billion in relation to the
balances acquired from Sainsbury’s Bank and
an increase of £7.3 billion relating to CRD IV
models partially offset by a further £10.9 billion
benefit from RWA management actions as
we continued to actively manage our balance
sheet and create capacity for lending growth.
The average LCR of 147%, representing
£50.5 billion headroom above 100% minimum
requirement, decreased by 4 percentage
points during the year, primarily driven by
increased lending partially offset by deposit
growth. Our primary liquidity decreased
by £3.8 billion to £157.3 billion, of which
£81.1 billion, or 52% was cash and balances
at central banks.
Shareholder return supported
strong capital generation
A final dividend of 23.0 pence per share is
proposed, bringing the total for the year to
32.5 pence, up 51% compared to 2024,
and we intend to commence a share buyback
programme of £750 million in the first half of
2026, taking total distributions deducted from
capital in the year to £4.1 billion.
The CET1 ratio of 14.0% increased c.40
basis points in 2025 and included capital
generation pre-distributions of 252 basis
points, comprising c.300 basis points of
profit and c.40 basis points of other capital
movements partially offset by the increase
in RWAs, c.90 basis points.
Katie Murray
Group Chief Financial Officer
Strong 2025 financial performance
across growth and simplification
We are growing in ways that build and
strengthen customer relationships and
improve the sustainability of our earnings.
Total income of £16.6 billion increased by
13.2% compared with 2024. Total income
excluding notable items was £1.8 billion higher
than 2024 reflecting deposit margin expansion,
as a result of higher customer balances and
strong hedge income, increased customer
lending, strong AUMA growth and an increase
in FX trading revenue. Full year 2025 net
interest margin (NIM) increased by 21 basis
points in the year to 2.34%. We would expect
total structural hedge income to increase by
around £1.5 billion in 2026 compared with
2025 and by a further £1 billion in 2027.
(1)
We continued to support our customers as
net loans to customers excluding central items
increased by £20.7 billion in the year. Retail
Banking mortgage balances increased by
£5.1 billion and Commercial & Institutional
balances were up by £12.3 billion.
Customer deposits excluding central
items increased £10.4 billion during 2025 to
£441.7 billion primarily reflecting £7.8 billion
growth in Retail Banking, across Savings
and Current accounts, and Commercial &
Institutional increased by £2.3 billion largely
due to higher balances within Corporate &
Institutions and Business Banking. Total
business term balances increased to 17%
in Q4 2025 compared to 16% of the book
at the end of 2024.
AUMA of £58.5 billion increased by £9.6 billion
in 2025, reflecting AUM net flows of £3.1 billion,
AUA net flows of £0.9 billion, Cushon net flows
of £0.6 billion and positive market movements
of £5.0 billion.
‘We delivered a strong
performance in 2025
with total income excluding
notable items of £16.4 billion
exceeding our strengthened
Q3 2025 guidance. We
remained focused on cost
discipline, achieving our
cost target and with
further progress made on
simplification. The balance
sheet has continued to grow
over 2025 and our CET1
ratio for 2025 was within
our guided range at 14.0%.’
(1)
The guidance, targets, expectations,and trends discussed in this section represent NatWest Group plc management’s current expectations and are subject to change, including as a result of the factors described in the Risk Factors section. These statements constitute forward-looking
statements. Refer to Forward-looking statements in this report.
Strategic report
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
83
Financial review
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
84
Year ended or as at
2025
2024
Variance
Performance key metrics and ratios
Total income
£16,641m
£14,703m
13.2%
Notable items within total income
(1)
£241m
£55m
nm
Total income excluding notable items
(1)
£16,400m
£14,648m
12.0%
Net interest margin
(1)
2.34%
2.13%
21bps
Average interest earning assets
(1)
£547bn
£529bn
3.4%
Cost:income ratio (excl. litigation and conduct)
(1)
48.6%
53.4%
(4.8%)
Loan impairment rate
(1)
16bps
9bps
7bps
Profit attributable to ordinary shareholders
£5,479m
£4,519m
21.2%
Total earnings per share attributable to ordinary
shareholders – basic
68.0p
53.5p
14.5p
Return on Tangible Equity (RoTE)
(1)
19.2%
17.5%
1.7%
Climate and transition finance
(2)
£19,026m
na
na
Balance sheet
Total assets
£714.6bn
£708.0bn
0.9%
Loans to customers – amortised cost
£418.9bn
£400.3bn
4.6%
Loans to customers excluding central items
(1,3)
£389.2bn
£368.5bn
5.6%
Loans to customers and banks – amortised cost
and FVOCI
£429.9bn
£410.2bn
4.8%
Total impairment provisions
(4)
£3.6bn
£3.4bn
5.9%
Expected credit loss (ECL) coverage ratio
0.83%
0.83%
-
Assets under management and administration
(AUMA)
(1)
£58.5bn
£48.9bn
19.6%
Customer deposits
£443.0bn
£433.5bn
2.2%
Customer deposits excluding central items
(1,3)
£441.7bn
£431.3bn
2.4%
Customer assets and liabilities (CAL)
(1)
£891.7bn
£850.9bn
4.8%
nm = not meaningful, na = not applicable
Year ended or as at
2025
2024
Variance
Liquidity and funding
Average Liquidity Coverage Ratio (LCR)
(5)
147%
151%
(4%)
Liquidity portfolio
£238bn
£222bn
7.2%
Average Net Stable Funding Ratio (NSFR)
(5)
135%
137%
(2%)
Loan:deposit ratio (excl. repos and reverse repos)
(1)
88%
85%
3%
Total wholesale funding
£88bn
£86bn
2.3%
Short-term wholesale funding
£28bn
£33bn
(15.2%)
Capital and leverage
Common Equity Tier 1 (CET1) ratio
(6)
14.0%
13.6%
40bps
Total capital ratio
(6)
19.3%
19.7%
(40bps)
Pro forma CET1 ratio (excl. foreseeable items)
(7)
15.4%
14.3%
110bps
Risk-weighted assets (RWAs)
£193.3bn
£183.2bn
5.5%
UK leverage ratio
4.8%
5.0%
(0.2%)
Tangible net asset value (TNAV) per
ordinary share
(1,8)
384p
329p
55p
Number of ordinary shares in issue (millions)
(8)
7,995
8,043
(0.6%)
(1)
Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial
measures and performance metrics.
(2)
Climate and transition finance represents only a relatively small proportion of our overall financing and facilitation activities. For
further details refer to the NatWest Group plc 2025 Climate Transition Plan Report.
(3)
Central items includes treasury repo activity.
(4)
Includes £0.1 billion relating to off-balance sheet exposures (31 December 2024 – £0.1 billion).
(5)
Reported on an average basis in line with supervisory guidelines. The LCR is calculated as the average of the preceding 12 months.
The NSFR is calculated as the average of the preceding four quarters.
(6)
Refer to the Capital, liquidity and funding risk section for details of the basis of preparation.
(7)
The pro forma CET1 ratio at 31 December 2025 excludes foreseeable items of £2,758 million: £1,837 million for ordinary dividends
and £921 million foreseeable charges (31 December 2024 excludes foreseeable items of £1,249 million for ordinary dividends).
(8)
The number of ordinary shares in issue excludes own shares held.
Financial summary
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
85
Financial summary continued
Income – continuing operations
2025
2024
Variance
£m
£m
£m
%
Interest receivable
(1)
25,698
25,187
511
2.0
Interest payable
(1)
(12,869)
(13,912)
1,043
(7.5)
Net interest income
12,829
11,275
1,554
13.8
Net fees and commissions
2,514
2,467
47
1.9
Income from trading activities
1,112
825
287
34.8
Other operating income
186
136
50
36.8
Non-interest income
3,812
3,428
384
11.2
Total income
16,641
14,703
1,938
13.2
Total income
excluding notable items
16,400
14,648
1,752
12.0
Notable items within total income
2025
2024
Commercial & Institutional
Own credit adjustments (OCA)
1
(9)
Dividend received on restructuring of a strategic
investment
51
-
Central items & other
Share of gains of associate - Business Growth Fund
70
21
Interest and foreign exchange management
derivatives not in hedge accounting relationships
185
150
Foreign exchange recycling losses
(27)
(76)
Loss on reclassification to disposal groups under IFRS 5
(39)
-
Tax interest on prior periods
-
(31)
241
55
nm = not meaningful
(1)
Interest receivable and interest payable on trading assets and liabilities are included in income from trading activities.
•
Total income increased by 13.2% to £16,641 million compared with 2024. Total income
excluding notable items was £16,400 million, or 12.0%, higher than 2024 driven by deposit
margin expansion, as a result of higher customer balances and strong hedge income,
increased customer lending, strong AUMA growth and an increase in FX trading revenue. As
a result, net interest margin (NIM) of 2.34% was 21 basis points higher than 2024.
•
Interest receivable increased by £511 million compared with 2024 primarily due to higher
income on our structural hedge partially offset by the impact of lower rates on our lending
book and loans to banks. The decrease in interest payable largely reflects the impact of the
reduction in interest rates over the period.
•
Net interest income was £1,554 million higher than 2024 benefitting from customer lending
growth, deposit margin expansion and customer balance growth.
•
Net fees and commissions increased £47 million to £2,514 million compared with 2024 largely
due to higher AUMA investment fee income and transactional fees including some non-
repeatable adjustments in Private Banking & Wealth Management. In addition, Retail Banking
net fees and commission were higher, in part reflecting the impact of balances acquired from
Sainsbury’s Bank.
Commercial & Institutional net fees and commissions were lower due to
reduced customer lending volumes and lower Asset Finance operating lease fees.
•
Income from trading activities of £1,112 million increased £287 million, or 34.8%, primarily
reflecting income on economic swaps and foreign exchange swaps, and strong customer
activity in markets trading.
•
Other operating income was £50 million higher for the year principally reflecting higher
Business Growth Fund gains, lower foreign exchange recycling losses, a dividend received on
restructuring of a strategic investment partially offset by a loss related to Cushon on
reclassification to disposal groups.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
86
Financial summary continued
Operating expenses – continuing operations
2025
2024
Variance
£m
£m
£m
%
Staff expenses
4,110
3,997
113
2.8
Premises and equipment
1,285
1,211
74
6.1
Other administrative expenses
1,546
1,588
(42)
(2.6)
Depreciation and amortisation
1,154
1,058
96
9.1
Other operating expenses
8,095
7,854
241
3.1
Litigation and conduct costs
167
295
(128)
(43.4)
Operating expenses
8,262
8,149
113
1.4
•
Staff expenses were £113 million, or 2.8%, higher than 2024 primarily due to investment in
our people through increased pay and bonus rewards, driven by continued strong
performance. This was partially offset by lower restructuring costs and continued
simplification and digitisation.
•
Premises and equipment costs of £1,285 million were £74 million higher than 2024 primarily
due to contract price inflation and continued growth in cloud utilisation, partly offset by lower
cost of utilities.
•
Other administrative expenses decreased £42 million in 2025 driven by costs incurred on the
cancelled Retail share offering in 2024, reduced Republic of Ireland costs due to continued
phased withdrawal and a decrease in the Bank levy, and other one-offs, all partly offset by
one-time integration costs of balances acquired from Sainsbury’s Bank.
•
Depreciation and amortisation of £1,154 million was £96 million higher than 2024 as we
continue to invest in our growth and simplification opportunities which include data
transformation to unlock the full potential of AI.
•
Litigation and conduct costs of £167 million represent the net impact of a number of
remediation and litigation matters concluding, including existing customer redress programme
costs paid during the year. Refer to Note 20 and 25 to the Consolidated financial statements
for additional information on other litigation and conduct matters.
Tax – continuing operations
2025
2024
£m
£m
Tax charge
(1,874)
(1,465)
UK corporation tax rate
25.0%
25.0%
Effective tax rate
24.3%
23.7%
A tax charge of £1,874 million for the year ended 31 December 2025 arises rather than the
expected charge of £1,927 million based on the UK corporation tax rate of 25%. The lower tax
charge primarily reflects tax credits for AT1 dividends and the re-recognition of previously
impaired deferred tax assets on brought forward tax losses in the UK and the Netherlands. These
have been partially offset by the UK banking surcharge and various other non-tax deductible
expenses. Refer to Note 7 to the consolidated financial statements for further details.
Impairments – continuing operations
2025
2024
Variance
£m
£m
£m
%
Loans - amortised cost and FVOCI
429,916
410,225
19,691
4.8
ECL provisions
3,585
3,425
160
4.7
ECL provisions coverage ratio
0.83%
0.83%
-
-
Impairment (releases)/losses
ECL charge
(1)
671
359
312
86.9
Amounts written off
579
654
(75)
(11.5)
(1)
The table above summarises loans and related credit impairment measured on an IFRS 9 basis. Refer to Credit Risk – Banking activities in the
Risk and capital management section for further details.
Compared with 2024, our ECL provision increased £0.2 billion to £3.6 billion and our ECL
coverage ratio remained stable at 0.83%. We retain post model adjustments of £296 million and
remain comfortable with the strong credit performance of our diversified prime loan book.
A net impairment charge of £671 million, or 16 basis points of gross customer loans, included an
£81 million charge on the acquisition of balances from Sainsbury’s Bank, higher Stage 3 charges
and lower good book releases than the prior year.
Profit for the year
2025
2024
Variance
£m
£m
£m
%
Operating profit before tax
7,708
6,195
1,513
24.4
Tax charge
(1,874)
(1,465)
(409)
27.9
Profit from continuing operations
5,834
4,730
1,104
23.3
Profit from discontinued
operations, net of tax
-
81
(81)
100.0
Profit for the year
5,834
4,811
1,023
21.3
Attributable to:
Ordinary shareholders
5,479
4,519
960
21.2
Paid-in equity holders
352
283
69
24.4
Non-controlling interests
3
9
(6)
nm
nm = not meaningful
Profit attributable to ordinary shareholders of £5,479 million was £960 million, or 21.2%, higher
than 2024 primarily due to higher income, driven by deposit margin expansion, customer lending
and AUMA growth, partially offset with higher costs largely attributable to inflationary pressures
and integration costs alongside a higher impairment charge and tax charge.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
87
Financial summary continued
Summary consolidated balance sheet as at
31 December 2025
2025
2024
Variance
£m
£m
£m
%
Assets
Cash and balances at central banks
85,182
92,994
(7,812)
(8)
Trading assets
46,537
48,917
(2,380)
(5)
Derivatives
60,789
78,406
(17,617)
(22)
Settlement balances
645
2,085
(1,440)
(69)
Loans to banks - amortised cost
6,958
6,030
928
15
Loans to customers - amortised cost
418,881
400,326
18,555
5
Other financial assets
79,770
63,243
16,527
26
Other assets (including intangible assets)
15,791
15,984
(193)
(1)
Total assets
714,553
707,985
6,568
1
Liabilities
Bank deposits
44,092
31,452
12,640
40
Customer deposits
442,998
433,490
9,508
2
Settlement balances
942
1,729
(787)
(46)
Trading liabilities
49,022
54,714
(5,692)
(10)
Derivatives
53,974
72,082
(18,108)
(25)
Other financial liabilities
67,599
61,087
6,512
11
Subordinated liabilities
6,123
6,136
(13)
(0)
Notes in circulation
3,164
3,316
(152)
(5)
Other liabilities
4,026
4,601
(575)
(12)
Total liabilities
671,940
668,607
3,333
0
Total equity
42,613
39,378
3,235
8
Total liabilities and equity
714,553
707,985
6,568
1
Tangible net asset value per ordinary share
(1,2)
384p
329p
55p
17%
(1)
Tangible net asset value per ordinary share is tangible equity divided by the number of ordinary shares.
(2)
Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial
measures and performance metrics.
•
TNAV per share increased by 55 pence in the year to 384 pence primarily reflecting the
attributable profit for the period offset by the impact of distributions. The balance sheet
growth was driven by customer lending, while customer deposits increased driven by current
account and savings balances predominantly in Retail Banking and in Private Banking &
Wealth Management.
•
Total assets of £714.6 billion as at 31 December 2025 increased by £6.6 billion, 1%,
compared with 31 December 2024. This was primarily driven by increases in loans to
customers and other financial assets partially offset by a decrease in derivative assets and
cash and balances at central banks.
•
Cash and balances at central banks decreased by £7.8 billion mainly due to large-scale bond
purchases and dividends paid partially offset by increased repo activity.
•
Other financial assets increased by £16.5 billion mainly because of net bonds activity of £13.1
billion and an increase in Commercial & Institutional, £3.7 billion
largely driven by an increase
in bonds held in the liquid asset buffer.
•
Derivative assets and derivative liabilities were down by £17.6 billion and £18.1 billion
respectively. The decreases in fair values largely reflected FX volatility across major
currencies including the weakening of USD in the year, following contrasting trends in Q4
2024, and variations in interest rates across different currencies and tenors.
•
Total loans to customers increased by £18.6 billion to £418.9 billion, primarily reflecting £12.3
billion growth in Commercial & Institutional attributable to growth in Corporate & Institutional
and Commercial Mid-market offset by UK Government scheme repayments, and a £7.7 billion
increase in Retail Banking largely driven by higher mortgage, cards and personal advance
balances. This is offset by a decrease in Treasury of £2.3 billion mainly due to lower reverse
repos
•
Total loans to banks increased by £0.9 billion, 15%, to £7.0 billion due to increased Treasury
reverse repo balances.
•
Customer deposits increased by £9.5 billion primarily reflecting a £7.8 billion increase in Retail
Banking due to growth in savings and current account balances, supported by balances
acquired from Sainsbury’s Bank.
•
Bank deposits increased by £12.6 billion mainly due to higher repo activity.
•
Other financial liabilities, which includes customer deposits at fair value through profit and loss
and debt securities in issue, increased by £6.5 billion, to £67.6 billion.
•
Other liabilities decreased by £0.6 billion, 12%, to £4.0 billion mainly due to lower financial
guarantees and provision utilisations.
•
Total equity increased by £3.2 billion, 8%, to £42.6 billion, driven by higher profit for the year
of £5.8 billion offset by dividends paid of £2.0 billion and shares repurchased in the year of
£0.6 billion.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
88
Private Banking
& Wealth
Commercial &
Central items
Total NatWest
Retail Banking
Management
Institutional
& other
Group
2025
£m
£m
£m
£m
£m
Continuing operations
Income statement
Net interest income
6,064
757
6,149
(141)
12,829
Own credit adjustments
-
-
1
-
1
Other non-interest income
431
374
2,659
347
3,811
Total income
6,495
1,131
8,809
206
16,641
Direct expenses
(835)
(250)
(1,633)
(5,377)
(8,095)
Indirect expenses
(2,087)
(475)
(2,714)
5,276
-
Other operating expenses
(2,922)
(725)
(4,347)
(101)
(8,095)
Litigation and conduct costs
(15)
(2)
(173)
23
(167)
Operating expenses
(2,937)
(727)
(4,520)
(78)
(8,262)
Operating profit before impairment losses/releases
3,558
404
4,289
128
8,379
Impairment (losses)/releases
(437)
(10)
(225)
1
(671)
Operating profit
3,121
394
4,064
129
7,708
Total income excluding notable items
(1)
6,495
1,131
8,757
17
16,400
Additional information
Return on Tangible Equity
(1)
na
na
na
na
19.2%
Return on equity
(1,2)
24.7%
21.7%
19.1%
nm
na
Cost:income ratio (excl. litigation and conduct)
(1)
45.0%
64.1%
49.3%
nm
48.6%
Net loans to customers - amortised cost (£bn)
216.1
18.9
154.2
29.7
418.9
Loan impairment rate
(1)
20bps
5bps
14bps
nm
16bps
Impairment provisions (£bn)
(1.8)
(0.1)
(1.7)
-
(3.6)
Impairment provisions - Stage 3 (£bn)
(1.1)
(0.1)
(1.0)
-
(2.2)
Customer deposits (£bn)
202.6
42.7
196.4
1.3
443.0
Risk-weighted assets (RWAs) (£bn)
68.5
11.4
111.9
1.5
193.3
Customer assets and liabilities (CAL) (£bn)
(1)
420.5
119.0
352.2
na
891.7
Employee numbers (FTEs - thousands)
11.5
2.1
12.3
32.8
58.7
Third party customer asset rate
(1)
4.36%
4.72%
5.94%
nm
nm
Third party customer funding rate
(1)
(1.74%)
(2.68%)
(1.55%)
nm
nm
Average interest earning assets (£bn)
(1)
230.9
28.8
259.4
nm
547.4
Net interest margin
(1)
2.63%
2.63%
2.37%
nm
2.34%
nm = not meaningful, na = not applicable.
For the notes to this table, refer to the following page.
Segment performance
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
89
Segment performance continued
Private Banking
& Wealth
Commercial &
Central items
Total NatWest
Retail Banking
Management
Institutional
& other
Group
2024
£m
£m
£m
£m
£m
Continuing operations
Income statement
Net interest income
5,233
645
5,339
58
11,275
Own credit adjustments
-
-
(9)
-
(9)
Other non-interest income
417
324
2,627
69
3,437
Total income
5,650
969
7,957
127
14,703
Direct expenses
(777)
(255)
(1,537)
(5,285)
(7,854)
Indirect expenses
(2,050)
(458)
(2,581)
5,089
-
Other operating expenses
(2,827)
(713)
(4,118)
(196)
(7,854)
Litigation and conduct costs
(110)
(3)
(156)
(26)
(295)
Operating expenses
(2,937)
(716)
(4,274)
(222)
(8,149)
Operating profit before impairment losses/releases
2,713
253
3,683
(95)
6,554
Impairment (losses)/releases
(282)
11
(98)
10
(359)
Operating profit/(loss)
2,431
264
3,585
(85)
6,195
Total income excluding notable items
(1)
5,650
969
7,966
63
14,648
Additional information
Return on Tangible Equity
(1)
na
na
na
na
17.5%
Return on equity
(1,2)
19.9%
14.2%
17.2%
nm
na
Cost:income ratio (excl. litigation and conduct)
(1)
50.0%
73.6%
51.8%
nm
53.4%
Net loans to customers - amortised cost (£bn)
208.4
18.2
141.9
31.8
400.3
Loan impairment rate
(1)
13bps
(6bps)
7bps
nm
9bps
Impairment provisions (£bn)
(1.8)
(0.1)
(1.5)
-
(3.4)
Impairment provisions - Stage 3 (£bn)
(1.1)
-
(0.9)
-
(2.0)
Customer deposits (£bn)
194.8
42.4
194.1
2.2
433.5
Risk-weighted assets (RWAs) (£bn)
65.5
11.0
104.7
2.0
183.2
Customer assets and liabilities (CAL) (£bn)
(1)
404.9
108.5
337.5
na
850.9
Employee numbers (FTEs - thousands)
12.0
2.1
12.8
32.3
59.2
Third party customer asset rate
(1)
4.02%
5.05%
6.64%
nm
nm
Third party customer funding rate
(1)
(2.05%)
(3.13%)
(1.90%)
nm
nm
Average interest earning assets (£bn)
(1)
222.0
26.9
246.8
nm
529.3
Net interest margin
(1)
2.36%
2.40%
2.16%
nm
2.13%
nm = not meaningful, na = not applicable.
(1)
Refer to the Non-IFRS financial measures appendix for details of the basis of preparation and reconciliation of non-IFRS financial measures and performance metrics.
(2)
NatWest Group’s CET1 target is in the range of 13-14% but for the purposes of computing segmental return on equity (ROE), to better reflect the differential drivers of capital usage, segmental operating profit or loss adjusted for preference share dividends and tax, is divided by
average notional tangible equity allocated at different rates of 12.8% for Retail Banking (2024 – 13.4%), 11.1% for Private Banking & Wealth Management (2024 – 11.2%), and 13.9% for Commercial & Institutional (2024 – 13.8%), of the period average of segmental risk-weighted
assets equivalents (RWAe) incorporating the effect of capital deductions.
.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
90
Segment performance continued
Retail Banking
2025
2024
Variance
2025
2024
Variance
Income statement
£m
£m
£m
%
Capital and balance sheet
£bn
£bn
£bn
%
Net interest income
6,064
5,233
831
15.9%
Loans to customers (amortised cost)
Non-interest income
431
417
14
3.4%
- personal advances
9.4
8.1
1.3
16.0%
Total income
6,495
5,650
845
15.0%
- mortgages
200.1
195.0
5.1
2.6%
Other operating expenses
(2,922)
(2,827)
(95)
3.4%
- cards
8.4
7.0
1.4
20.0%
Litigation and conduct costs
(15)
(110)
95
(86.4%)
Total loans to customers (amortised cost)
217.9
210.1
7.8
3.7%
Operating expenses
(2,937)
(2,937)
-
-
Loan impairment provisions
(1.8)
(1.7)
(0.1)
5.9%
Impairment losses
(437)
(282)
(155)
55.0%
Net loans to customers (amortised cost)
216.1
208.4
7.7
3.7%
Operating profit
3,121
2,431
690
28.4%
Total assets
240.3
232.8
7.5
3.2%
Performance ratios
(1)
Customer deposits
202.6
194.8
7.8
4.0%
Return on equity
24.7%
19.9%
4.8%
Customer assets and liabilities (CAL)
(1)
420.5
404.9
15.6
3.9%
Net interest margin
2.63%
2.36%
27bps
Risk-weighted assets
68.5
65.5
3.0
4.6%
Cost:income ratio (excl. litigation and conduct)
45.0%
50.0%
(5.0%)
Loan impairment rate
20bps
13bps
7bps
In 2025, Retail Banking delivered an operating profit of £3.1 billion and a return on equity of
24.7%, with positive income and net interest margin momentum. We support 19 million
customers, including 2.4 million youth customers, along with 529,000 customers within our
Premier segment where we have a NPS of 44. We helped more customers achieve their home
ownership goals with around 30% of 2025 gross mortgage lending supporting first-time buyers
and around £300 million of lending through our Family-Backed Mortgage proposition. We
continue to simplify the business and improve customer and colleague experiences. New AI
capabilities enabled quicker responses to customer complaints, saving around 90,000 hours per
annum through automated summarisation and AI-generated complaint responses.
Retail Banking provided £2.6 billion of climate and transition finance
(2)
in 2025 from lending on
properties with an EPC rating of A or B.
•
Total income was £845 million, or 15.0%, higher than 2024 reflecting strong deposit growth
and margin expansion as a result of increased hedge income, lending growth and the impact
of balances acquired from Sainsbury’s Bank.
•
Net interest margin was 27 basis points higher than 2024 largely reflecting the factors noted
above.
•
Non-interest income of £431 million was £14 million, or 3.4%, higher than 2024 including the
impact of balances acquired from Sainsbury’s Bank.
•
Other operating expenses were £95 million, or 3.4%, higher than 2024 reflecting costs
associated with balances acquired from Sainsbury’s Bank, partially offset by a 4.2% reduction
in headcount.
•
An impairment charge of £437 million, compared with a £282 million charge in 2024, largely
driven by charges associated with balances acquired from Sainsbury’s Bank along with
increased charges driven by growth in our unsecured book. The rate of Stage 3 default flow
remains broadly stable.
•
Net loans to customers increased by £7.7 billion, or 3.7%, in 2025 driven by £5.1 billion, or
2.6%, higher mortgage balances. Cards balances increased by £1.4 billion, or 20.0%, and
personal advances increased by £1.3 billion, or 16.0%, supported by balances acquired from
Sainsbury’s Bank.
•
Customer deposits increased by £7.8 billion, or 4.0%, in 2025 reflecting growth in savings and
current account balances, supported by balances acquired from Sainsbury’s Bank.
•
RWAs increased by £3.0 billion, or 4.6%, in 2025 primarily due to book movements including
the impact of unsecured balances acquired from Sainsbury’s Bank.
(1)
Refer to the Non-IFRS financial measures appendix for details of basis of preparation and reconciliation of non-IFRS financial
measures and performance metrics.
(2)
Climate and transition finance represents only a relatively small proportion of our overall financing and facilitation activities.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
91
Segment performance continued
Private Banking & Wealth Management
2025
2024
Variance
2025
2024
Variance
Income statement
£m
£m
£m
%
Capital and balance sheet
£bn
£bn
£bn
%
Net interest income
757
645
112
17.4%
Loans to customers (amortised cost)
Non-interest income
374
324
50
15.4%
- personal
2.0
1.7
0.3
17.6%
Total income
1,131
969
162
16.7%
- mortgages
12.0
12.0
-
-
of which: AUMA income
(1)
300
270
30
11.1%
- other
5.0
4.6
0.4
8.7%
Other operating expenses
(725)
(713)
(12)
1.7%
Total loans to customers (amortised cost)
19.0
18.3
0.7
3.8%
Litigation and conduct costs
(2)
(3)
1
(33.3%)
Loan impairment provisions
(0.1)
(0.1)
-
-
Operating expenses
(727)
(716)
(11)
1.5%
Net loans to customers (amortised cost)
18.9
18.2
0.7
3.8%
Impairment (losses)/releases
(10)
11
(21)
(190.9%)
Operating profit
394
264
130
49.2%
Total assets
30.5
28.6
1.9
6.6%
Assets under management (AUM)
(1)
43.7
37.0
6.7
18.1%
Performance ratios
(1)
Assets under administration (AUA)
(1)
14.8
11.9
2.9
24.4%
Return on equity
21.7%
14.2%
7.5%
Total assets under management and
Net interest margin
2.63%
2.40%
23bps
administration (AUMA)
(1)
58.5
48.9
9.6
19.6%
Cost:income ratio (excl. litigation and conduct)
64.1%
73.6%
(9.5%)
Customer deposits
42.7
42.4
0.3
0.7%
Loan impairment rate
5bps
(6bps)
11bps
Loan:deposit ratio (excl. repos and
AUMA net flows (£bn)
4.6
3.2
1.4
reverse repos)
(1)
44%
43%
1%
2.3%
Customer assets and liabilities (CAL)
(1,2)
119.0
108.5
10.5
9.7%
Risk-weighted assets
11.4
11.0
0.4
3.6%
In 2025, Private Banking & Wealth Management delivered an operating profit of £394 million and
return on equity of 21.7%. As part of our strategy to deepen focus on high net worth and ultra-
high net worth segments, we refreshed our visual identity and enhanced our investment insight,
including a new Coutts website which delivers a faster and more responsive experience. AI
tooling has reduced call summarisation time by more than 70% and we have continued to see
strong customer engagement across our propositions, resulting in an increase in CAL of 9.7% in
the year with growth in deposits, lending and AUMA.
Private Banking & Wealth Management provided £0.2 billion of climate and transition finance
(3)
in
2025, principally in relation to mortgages on residential properties with an EPC rating of A or B
and wholesale transactions.
•
Total income was £162 million, or 16.7%, higher than 2024 primarily reflecting deposit margin
expansion as a result of strong hedge income, balance growth across deposits and AUMA,
and higher transactional fees including some non-repeatable adjustments.
•
Net interest margin was 23 basis points higher than 2024 largely reflecting the factors noted
above.
•
Non-interest income of £374 million was £50 million, or 15.4%, higher than 2024 principally
due to higher AUMA balances and higher transactional fees including some non-repeatable
adjustments.
•
Other operating expenses were £12 million, or 1.7%, higher reflecting continuing investment
in the business and higher pay awards to support our colleagues, partly offset by lower
severance costs.
•
An impairment charge of £10 million, compared with an £11 million release in 2024, largely
reflecting the non-repeat of 2024 good book releases, and an increase in Stage 3 charges
relating to existing exposures.
•
Net loans to customers increased £0.7 billion, or 3.8%, in 2025 largely driven by higher
personal lending balances and higher commercial lending balances.
•
Customer deposits increased by £0.3 billion, or 0.7%, in 2025 reflecting growth in current
account and savings balances, with progress driven by both deeper engagement with
existing customers and new customer acquisition.
•
AUMA of £58.5 billion increased by £9.6 billion in 2025, reflecting AUM net flows of £3.1
billion, AUA net flows of £0.9 billion, Cushon net flows of £0.6 billion and positive market
movements of £5.0 billion. AUM net flows as a percentage of opening balances are 8.4%.
(1)
Refer to the Non-IFRS financial measures appendix for details of basis of preparation and reconciliation of non-IFRS financial
measures and performance metrics.
(2)
CAL refers to customer deposits, gross loans to customers – amortised cost and AUMA. To avoid double counting, investment cash is
deducted as it is reported within customer deposits and AUMA.
(3)
Climate and transition finance represents only a relatively small proportion of our overall financing and facilitation activities.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
92
Segment performance continued
Commercial & Institutional
2025
2024
Variance
2025
2024
Variance
Income statement
£m
£m
£m
%
Capital and balance sheet
£bn
£bn
£bn
%
Net interest income
6,149
5,339
810
15.2%
Loans to customers (amortised cost)
Non-interest income
2,660
2,618
42
1.6%
- Business Banking
3.5
3.6
(0.1)
(2.8%)
Total income
8,809
7,957
852
10.7%
- Commercial Mid-market
77.7
74.0
3.7
5.0%
Other operating expenses
(4,347)
(4,118)
(229)
5.6%
- Corporate & Institutions
74.6
65.8
8.8
13.4%
Litigation and conduct costs
(173)
(156)
(17)
10.9%
Total loans to customers (amortised cost)
155.8
143.4
12.4
8.6%
Operating expenses
(4,520)
(4,274)
(246)
5.8%
Loan impairment provisions
(1.6)
(1.5)
(0.1)
6.7%
Impairment losses
(225)
(98)
(127)
129.6%
Net loans to customers (amortised cost)
154.2
141.9
12.3
8.7%
Operating profit
4,064
3,585
479
13.4%
Total assets
391.9
398.7
(6.8)
(1.7%)
Performance ratios
(1)
Funded assets
331.4
321.6
9.8
3.0%
Return on equity
19.1%
17.2%
1.9%
Customer deposits
(3)
196.4
194.1
2.3
1.2%
Net interest margin
2.37%
2.16%
21bps
Loan:deposit ratio (excl. repos and
Cost:income ratio (excl. litigation and conduct)
49.3%
51.8%
(2.5%)
reverse repos)
(1)
77%
72%
5%
6.9%
Loan impairment rate
14bps
7bps
7bps
Customer assets and liabilities (CAL)
(1)
352.2
337.5
14.7
4.4%
Risk-weighted assets
111.9
104.7
7.2
6.9%
During 2025, Commercial & Institutional continued to support customers with an increase in
lending of 8.7% and delivered a strong performance in income and operating profit supporting a
return on equity of 19.1%, an increase from 17.2% in 2024. We worked with our customers to
unlock growth for key structural and policy priorities in the UK, particularly social housing and
infrastructure investment. In 2025, we committed over £4.6 billion of lending into the UK social
housing sector, surpassing our upgraded target of £7.5 billion by the end of 2026, with total
commitments of £8.7 billion. We prioritised the use of generative AI through AI-driven
transcription and summarisation of complaints and complex business banking calls, increasing our
relationship managers’ capacity to focus on personalised AI-guided interactions.
Commercial & Institutional provided £16.2 billion of climate and transition finance
(2)
in 2025 to
support customers investing in the transition to net zero.
•
Total income was £852 million, or 10.7%, higher than 2024 principally reflecting deposit
margin expansion as a result of higher customer balances and strong hedge income,
increased FX trading revenues and lending growth across Corporate & Institutions and
Commercial Mid-market.
•
Net interest margin was 21 basis points higher than 2024 largely reflecting deposit margin
expansion.
•
Non-interest income was £42 million, or 1.6%, higher than 2024 principally driven by
customer activity in markets trading and a dividend received on restructuring of a strategic
investment in Corporate & Institutions.
•
Other operating expenses were £229 million, or 5.6%, higher than 2024 reflecting the impact
of inflationary increases in staff costs and continued business investment spend, partially
offset by a 3.9 % reduction in headcount.
•
An impairment charge of £225 million in 2025, compared with a £98 million charge in 2024,
reflecting lower good book releases. Stage 3 charge remains broadly stable.
•
Net loans to customers increased by £12.3 billion, or 8.7%, in 2025 principally due to growth
in Corporate & Institutions and Commercial Mid-market, partly offset by UK Government
scheme repayments of £1.6 billion.
•
Customer deposits increased by £2.3 billion, or 1.2%, in 2025 reflecting growth within
Corporate & Institutions and Business Banking. Excluding client transfers, deposit balances in
all customer groups grew in the year.
(3)
•
RWAs increased by £7.2 billion, or 6.9%, compared with 2024 primarily due to CRD IV, other
regulatory increases and increased operational risk, with book growth offset by continued
RWA management activity.
(1)
Refer to the Non-IFRS financial measures appendix for details of basis of preparation and reconciliation of non-IFRS financial
measures and performance metrics.
(2)
Climate and transition finance represents only a relatively small proportion of our overall financing and facilitation activities.
(3)
Client transfers from Commercial Mid-market to Corporate & Institutions were undertaken in Q1 2025 of £4.9 billion. Balance at the
end of Q4 2025 was £2.7 billion (Q4 2024 - £3.3 billion).
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
93
Segment performance continued
Central items & other
2025
2024
Variance
2025
2024
Variance
Income statement - continuing operations
£m
£m
£m
%
Capital and balance sheet
£bn
£bn
£bn
%
Total income
206
127
79
62.2%
Net loans to customers (amortised cost)
29.7
31.8
(2.1)
(6.6%)
Operating expenses
(78)
(222)
144
(64.9%)
Customer deposits
1.3
2.2
(0.9)
(40.9%)
of which: Other operating expenses
(101)
(196)
95
(48.5%)
Risk-weighted assets
1.5
2.0
(0.5)
(25.0%)
Impairment releases
1
10
(9)
(90.0%)
Operating profit/(loss)
129
(85)
214
nm
•
Total income was £79 million higher than 2024 primarily reflecting higher gains on interest
and FX risk management derivatives not in accounting hedge relationships, higher Business
Growth Fund profits and lower foreign exchange recycling losses.
•
Other operating expenses were £95 million lower than 2024 primarily due to lower costs in
relation to our withdrawal from our operations in the Republic of Ireland.
•
Net loans to customers decreased by £2.1 billion in 2025 driven by reverse repo activity in
Treasury.
•
Customer deposits decreased by £0.9 billion compared with 2024 reflecting repo activity in
Treasury.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
94
Summary consolidated income statement
For the year ended 31 December 2025
2025
2024
2023
£m
£m
£m
Net interest income
12,829
11,275
11,049
Non-interest income
3,812
3,428
3,703
Total income
16,641
14,703
14,752
Operating expenses
(8,262)
(8,149)
(7,996)
Profit before impairment losses
8,379
6,554
6,756
Impairment losses
(671)
(359)
(578)
Operating profit before tax
7,708
6,195
6,178
Tax charge
(1,874)
(1,465)
(1,434)
Profit from continuing operations
5,834
4,730
4,744
Profit/(loss) from discontinued operations, net of tax
-
81
(112)
Profit for the year
5,834
4,811
4,632
Attributable to:
Ordinary shareholders
5,479
4,519
4,394
Paid-in equity holders
352
283
242
Non-controlling interests
3
9
(4)
5,834
4,811
4,632
Summary consolidated balance sheet
As at 31 December 2025
2025
2024
2023
£m
£m
£m
Cash and balances at central banks
85,182
92,994
104,262
Trading assets
46,537
48,917
45,551
Derivatives
60,789
78,406
78,904
Settlement balances
645
2,085
7,231
Loans to banks and customers - amortised cost
425,839
406,356
388,347
Other financial assets
79,770
63,243
51,102
Other and intangible assets
15,791
15,984
17,276
Total assets
714,553
707,985
692,673
Deposits
487,090
464,942
453,567
Trading liabilities
49,022
54,714
53,636
Settlement balances, derivatives, other financial
liabilities and subordinated liabilities
128,638
141,034
139,843
Other liabilities
4,026
4,601
5,202
Owners' equity
42,599
39,350
37,157
Notes in circulation
3,164
3,316
3,237
Non-controlling interests
14
28
31
Total liabilities and equity
714,553
707,985
692,673
NatWest Group’s financial statements are prepared in accordance with UK adopted International Accounting Standards (IAS), and International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
Summary financial statements
Board visit to Tyseley Energy Park in Birmingham
Governance
and remuneration
95
Corporate governance report
96
Our Board
99
Board composition
100
Executive management team
101
Chair’s introduction
102
Governance at a glance
122
Report of the Group Nominations and Governance Committee
124
Report of the Group Audit Committee
131
Report of the Group Board Risk Committee
137
Report of the Group Technology, Innovation and Simplification Committee
140
Directors’ remuneration report
144
Remuneration at a glance
146
The directors’ remuneration policy and wider workforce remuneration
151
Annual remuneration report
169
Compliance report
172
Report of the directors
176
Statement of directors’ responsibilities
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
95
Governance and remuneration
Our Board
Rick Haythornthwaite
Chair
Paul Thwaite
Group Chief Executive Officer
Katie Murray
Group Chief Financial Officer
Date of appointment:
8 January 2024 (Board),
15 April 2024 (Chair)
Contribution to the Board
Rick is a highly experienced Chair who combines a
successful commercial career with a deep knowledge
of financial services markets and technology, as well
as a strong track record of delivery at significant
customer-facing organisations. Rick’s Chair experience
extends across industry sectors, including Ocado
Group plc, which provides technology and automation
solutions for grocery retailers; Embedded Finance,
a fintech company; QiO Technologies Limited, the
industrial AI company that Rick co-founded; Xynteo,
a Norway-based sustainability consultancy and
Mastercard Inc., a global technology company.
Relevant experience
While Rick was Chair of Mastercard Inc. the
company was transformed from a credit card
company to a global technology company and its
market capitalisation increased from $5 billion to over
$350 billion. He also chaired Arc International Holdings,
Centrica plc and Network Rail Limited, and was a
partner at Star Capital. Rick’s past non-executive
directorships include Globant S.A., Cookson plc,
Lafarge S.A., Land Securities plc and ICI plc. Rick
also led the Haythornthwaite Review of UK Armed
Forces Incentivisation.
Rick has been responsible for several high-profile
business transformations and rescues, including
Invensys, then one of the world’s leading industrial
controls companies, as CEO.
External appointments:
•
Chair of AA Limited
•
Senior advisory partner at Moelis & Co
•
Visiting Fellow at the Saïd Business School,
Oxford University
Date of appointment:
25 July 2023
Contribution to the Board
Paul has over 30 years’ experience in financial
services having held senior roles within Wholesale,
Corporate, International, Risk and Retail Banking,
across the UK, Europe and the US. Prior to his
appointment as Chief Executive Officer, Paul was
Chief Executive of the bank’s Commercial &
Institutional business, bringing together the teams
that support NatWest’s business customers,
ranging from entrepreneurs and start-ups through to
multi-nationals and financial institutions. Throughout
his executive and non-executive career, Paul has
taken an active role in promoting talent, and building
and leading inclusive teams across multiple regions,
geographies and disciplines, to deliver performance
for customers and wider stakeholders.
Relevant experience
Paul brings strong UK and international expertise
in strategic and cultural transformation, scale
leadership, balance sheet management and risk,
plus a sharp focus on customer experience.
External appointments:
•
Member of the Board of Trustees at the
University of Manchester
Date of appointment:
1 January 2019
Contribution to the Board
Katie Murray is a Chartered Accountant with more
than 30 years’ experience in financial services across
the UK, Europe and Africa. She brings deep expertise
in financial leadership, large-scale transformation,
capital management, investor relations and corporate
development, with a strong track record of
supporting organisations through complex strategic
and regulatory change. As Group Chief Financial
Officer of NatWest Group, Katie plays a central role
in shaping NatWest Group’s long-term strategy,
financial resilience and stakeholder engagement.
She has led key initiatives to strengthen balance
sheet resilience, enhance performance discipline and
support sustainable value creation for shareholders
and wider stakeholders. She also leads NatWest’s
climate transition plan, supporting the UK’s journey
to net zero. Katie is a recognised leader in promoting
diversity and inclusion across the profession and
has sponsored a number of initiatives to improve
representation and progression in financial services.
Relevant experience
Katie was appointed Group Chief Financial Officer
of NatWest Group in January 2019, following senior
roles within NatWest Group as Director of Finance
and Deputy CFO. Previously, Katie was the Group
Finance Director for Old Mutual Emerging Markets,
based in Johannesburg, having held various roles
across Old Mutual from 2002. Katie is also a member
of The Institute of Chartered Accountants of Scotland.
External appointments:
•
Non-executive director and Audit Committee
Chair of Phoenix Group Holdings plc
Lena Wilson CBE
Senior Independent Director
Date of appointment:
1 January 2018 (Board),
1 April 2025 (Senior Independent Director)
Contribution to the Board
Lena contributes significant knowledge and
experience to the Board drawn from a broad
executive and non-executive career. She has
extensive transformation and development skills, with
experience in enterprise, stakeholder management,
ESG and general management. As a former Chair of
the NatWest Group Colleague Advisory Panel, Lena
provides valuable insights on customer and people
issues in particular.
Relevant experience
Lena has a portfolio of Chair roles in the listed and
private sectors. She has been a FTSE 100 non-
executive director for over 20 years and previously
served on the boards of Scottish Power Renewables
Limited and Intertek Group plc and as Chair of Picton
Property Income Limited and AGS Airports Limited.
Lena was Chief Executive of Scottish Enterprise
(2009-2017) and prior to that, was Senior Investment
Advisor to The World Bank in Washington DC.
Lena was a member of the Prime Minister’s Business
Council, Scotland’s Financial Services Advisory Board
and Chair of Scotland’s Energy Jobs Taskforce.
In June 2015 she received a CBE for services
to economic development in Scotland and was
elected a Fellow of the Royal Society of Edinburgh.
External appointments:
•
Chair and Nominations Committee Chair of
FirstGroup plc
•
Visiting Professor, University of Strathclyde
Business School
•
Member of the European Advisory Board of
Workday Inc.
Group Audit Committee (GAC)
Group Board Risk Committee (BRC)
Group Nominations and Governance Committee (N&G)
Group Technology, Innovation and Simplification
Committee (TISC)
Group Performance and Remuneration Committee (RemCo)
Solid background denotes Committee Chair
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
96
Governance and remuneration
Our Board continued
Roisin Donnelly
Independent non-executive director
Josh Critchley
Independent non-executive director
Patrick Flynn
Independent non-executive director
Geeta Gopalan
Independent non-executive director
Date of appointment:
1 October 2022
Contribution to the Board
Roisin brings extensive customer, marketing and
branding experience to the Board, gained during her
long executive career at Procter & Gamble. She has
a strong background in digital transformation and
data, and significant knowledge and experience of
developing ESG strategies at board level. Roisin also
brings practical board and committee experience
to the role, having served on a number of listed
company boards. In April 2023, Roisin was appointed
as NatWest Group’s Consumer Duty Board Champion.
She is also the Chair of the NatWest Group Colleague
Advisory Panel, which provides a valuable link to
colleague and customer issues.
Relevant experience
Roisin spent over 30 years leading marketing and
brand building at Procter & Gamble in different UK
and international roles. Most recently Roisin served
as Chief Marketing Officer for Procter & Gamble
Northern Europe (2014-2016) and prior to that
served as Chief Marketing Officer for Procter &
Gamble UK and Ireland (2002-2014). Roisin’s
previous non-executive directorships include
HomeServe plc, Just Eat plc, Holland and Barrett
Limited, and Bourne Leisure Limited. She is an
Honorary Fellow of the Marketing Society.
External appointments:
•
Non-executive director of Premier Foods plc
•
Non-executive director and Remuneration
Committee Chair of The Sage Group plc
•
Member of the Digital Advisory Board, Coca-Cola
Europacific Partners plc
•
Non-executive Advisor, Internet Advertising Bureau
•
Trustee of The British Heart Foundation
Date of appointment:
3 November 2025
Contribution to the Board
Josh is a senior financial services leader with over
30 years’ experience in investment banking. He has
advised company boards and management teams
around the world on complex financial, operational,
and capital market matters. His expertise in capital
markets and investment banking strengthens the
Board’s knowledge, especially in supporting strategy
and growth.
Relevant experience
Josh is the former Vice Chair of Global Investment
Banking at the Royal Bank of Canada (RBC). Prior
to that, he spent twelve years (2011–2022) leading
RBC’s European and Asian Investment Banking
teams, including 7 years as a member of the firm’s
Global Operating Committee. He originally joined RBC
in 2009 to help expand its investment banking and
equities presence in Europe, supporting the bank’s
transformation into a full-service investment banking
provider. Before joining RBC, Josh held senior roles
at Goldman Sachs and Merrill Lynch.
External appointments:
•
Trustee and Investment Committee Chair at
Great Ormond Street Hospital Charity
•
Honorary Senior Visiting Fellow at Bayes Business
School, City St George’s, University of London
Date of appointment:
1 June 2018
Contribution to the Board
Patrick contributes significant retail and commercial
banking experience to the Board, together with a
background in complex organisational restructuring
and technology transformation. This experience
enables Patrick to provide insightful contributions
to Board discussions on complex matters, alongside
his significant financial knowledge and expertise.
Relevant experience
Patrick was the Chief Financial Officer and a member
of the Executive Board of ING Group for over eight
years to May 2017. Prior to that, he worked for
HSBC for 20 years. He is also a Fellow of
Chartered Accountants Ireland.
External appointments:
•
Senior Independent Director and Audit Committee
Chair of Aviva plc
Date of appointment:
1 July 2024
Contribution to the Board
Geeta brings substantial financial and banking
expertise to the Board with over 25 years of
expertise in business leadership and management
roles across commercial and retail financial services
in the UK and internationally, as well as social
investment and community development. Geeta has
a strong track record as a non-executive director,
having served on boards in a variety of industries
including financial services, pharmaceuticals
and technology.
Relevant experience
Geeta has served as a non-executive director of
Virgin Money UK plc, where she chaired the Risk
Committee; Dechra Pharmaceuticals Ltd, Ultra
Electronics Plc, WiZink Bank S.A., and Vocalink.
Geeta is also a Qualified Chartered Accountant of
the Chartered Accountants Institute, India.
External appointments:
•
Non-executive director of Intrum AB
•
Non-executive director of Auto Trader Group plc
•
Non-executive director of Clear Score
Technology Limited
•
Trustee and Finance Committee Chair at
The Old Vic Theatre
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
97
Governance and remuneration
Yasmin Jetha
Independent non-executive director
Date of appointment:
1 April 2020
Contribution to the Board
Yasmin brings a wealth of retail banking and
customer experience to the Board, as well as
valuable technology and innovation insights. On
1 April 2020 Yasmin re-joined the Board of NatWest
Group plc, having first been appointed in June 2017.
Yasmin stepped down in April 2018 to serve solely
as a director of our key ring-fenced entities, She
continues to serve on these boards in addition to
the Board of NatWest Group plc.
Relevant experience
During her executive career, Yasmin held Chief
Information Officer roles at Bupa and the Financial
Times, where she later became the Chief Operating
Officer. Prior to that Yasmin held several senior roles
at Abbey National PLC, in a career spanning nearly
20 years, where latterly she served as an executive
director on the board.
External appointments:
•
Non-executive director of Guardian Media
Group plc
Our Board continued
Gill Whitehead OBE
Independent non-executive director
Stuart Lewis
Independent non-executive director
Gary Moore
Chief Governance Officer
and Company Secretary
Date of appointment:
8 January 2025
Contribution to the Board
Gill has over 25 years of executive experience in
the consumer technology and media sectors having
worked at Ofcom, Google, Channel 4 and the BBC.
She is a Visiting Policy Fellow at the University of
Oxford’s Internet Institute, focusing on global
developments in online and AI safety. Her board
experience spans FTSE 50 companies, public bodies,
and sport. Gill is a fellow of the Institute of Chartered
Accountants of England and Wales.
Relevant experience
Gill has served as a non-executive director of the
Financial Ombudsman Service and Camelot (operator
of the National Lottery). She also served as Google
UK’s Senior Director of Client Solutions & Analytics.
Prior to this, Gill worked in media at Channel 4 and
the BBC and supervised several big tech firms at
Ofcom. Gill was awarded an OBE for services to
women’s rugby in the King’s New Year Honours
list for 2026.
External appointments:
•
Non-executive director and Audit Committee
Chair of Informa plc
•
Non-executive director of the British
Olympic Association
•
Chair of the Women’s Rugby World Cup 2025
•
Member of the Advisory Council at
Frontier Economics
Date of appointment:
1 April 2023
Contribution to the Board
Stuart brings extensive risk management, financial
services and regulatory experience to the Board
gained during his executive career, predominantly
at Deutsche Bank, where he served for 10 years on
the Management Board as Chief Risk Officer. Stuart
also brings practical board-level experience, having
served on a number of boards and committees in
both executive and non-executive capacities.
Relevant experience
Stuart was previously a non-executive director of
the London Stock Exchange Group plc. He was also
previously a Member of the Foundation Board of
the International Financial Risk Institute and served
as Chair.
External appointments:
•
Non-executive director of Singapore
Exchange Limited
•
Member of the Board of Trustees of the Global
Association of Risk Professionals
•
Visiting Professor in Practice in the Finance
Department, London School of Economics
Date of appointment:
14 February 2025
Contribution to the Board
Gary works closely with the Chair to ensure effective
and efficient functioning of the Board and appropriate
alignment and information flows between the Board
and its committees. He is responsible for advising
the Board and individual directors on all governance
matters, while also facilitating Board induction and
directors’ professional development.
Relevant experience
Gary is a qualified lawyer with significant governance,
legal and regulatory experience. Prior to his
appointment as Chief Governance Officer and
Company Secretary, Gary held various roles in the
Corporate Governance function, including Head
of Corporate Secretariat and Deputy Company
Secretary. Prior to joining NatWest, Gary was
a Senior Associate at Allen & Overy.
Former directors
•
Mark Seligman retired from the
Board on 31 March 2025
•
Frank Dangeard stepped down from
the Board on 23 April 2025
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
98
Governance and remuneration
Board composition overview
Board and committee changes
2025
1 January
Geeta Gopalan joined the Group Audit Committee, Group Board Risk Committee
and Group Sustainable Banking Committee.
8 January
Gill Whitehead was appointed as an independent non-executive director, and joined
the Group Board Risk Committee and Group Sustainable Banking Committee.
31 March
Mark Seligman retired from the Board and as Senior Independent Director.
1 April
Lena Wilson assumed the role of Senior Independent Director.
23 April
Frank Dangeard stepped down as a director and as Chair of NatWest Markets Plc
and NatWest Markets N.V.
10 June
Patrick Flynn joined the Group Performance and Remuneration Committee.
3 November
Josh Critchley was appointed as an independent non-executive director.
11 December
Josh Critchley joined the Group Performance and Remuneration Committee.
2026
23 February*
Albert Hitchcock will join the Board as an independent non-executive director.
31 March
Yasmin Jetha will retire from the Board, and Patrick Flynn will step down as a member of
the Group Performance and Remuneration Committee.
*
Albert’s appointment date will be one week later than previously announced, due to a scheduling adjustment.
Minority ethnic
Female
45-55
Chair
2
55%
3
1
White
Male
56-65
66-75
Executive directors
9
45%
6
2
2
Independent
non-executive
directors
Chair and non-executive directors’ tenure
Full Board average tenure: 3.4 years
2017
2022
2027
2018
2023
2028
2019
2024
2029
2032
2020
2025
2030
2033
2021
2026
2031
2034
Yasmin Jetha
Lena Wilson*
Patrick Flynn
Roisin Donnelly
Stuart Lewis
Rick Haythornthwaite*
Geeta Gopalan
Gill Whitehead*
Josh Critchley
*
Will reach 9 years in January of the relevant year.
8
Independence
Ethnicity
Sex
Age range
As at 31 December 2025 there were 11 directors on the Board.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
99
Governance and remuneration
Executive management team
Paul Thwaite
Group Chief Executive Officer
Robert Begbie
CEO, Commercial & Institutional
Scott Marcar
Group Chief Information Officer
Katie Murray
Group Chief Financial Officer
James Holian
Chief Customer & Operations
Officer
Sean Pilcher
Interim Group Chief Risk Officer
Maria Kokkinou
Group Chief People Officer
Rachel Hopcroft CBE
Group Chief Corporate Affairs
Officer
Solange Chamberlain
CEO, Retail
Emma Crystal
CEO, Private Banking & Wealth
Management
Margaret Jobling
Group Chief Marketing Officer
Will Luker
Group Chief Legal Officer and
General Counsel
Peter Norton
Group Director, Strategy,
Economics and Corporate
Development
Nick Curle
Group Chief Audit Executive
Executive management team biographies are available at natwestgroup.com.
The executive management
team supports the Group
Chief Executive Officer (CEO)
in managing NatWest Group’s
businesses and in the
discharge of his regulatory
accountabilities.
The team holds regular
meetings, including the
Group Executive Committee.
Further information on
the responsibilities of the
executive management team
can be found on page 107.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
100
Governance and remuneration
Chair’s introduction
elevated to become Board-level matters.
By delegating routine matters to Board
committees, we have been able to devote
more time in Board meetings to strategic
discussions on customer-centric topics such as
digital assets, climate and sustainability, and
the innovation economy. The Board has also
considered how changes in the regulatory,
geopolitical and economic environment inform
our approach to resilience and relevance,
with a particular focus on safeguarding
and enhancing the customer experience
in a changing world.
The introduction of new performance metrics
has further enhanced our understanding of
business performance and customer outcomes.
During 2025, the Board held a number of
performance-related spotlight sessions on
key topics, including: deposits, mortgages,
customer onboarding, and customer
experience. These sessions were underpinned
by performance data and analysis, which
provided the Board with deeper insights into
progress against strategic objectives, enabled
more informed decision-making, and supported
targeted actions to drive improvements in
such areas. As part of our commitment
to deepening strategic engagement and
understanding the needs of our customers and
colleagues, the Board visited Birmingham and
the West Midlands in September 2025, meeting
with local clients, colleagues and stakeholders
to hear first-hand about the opportunities and
challenges facing the region. You can find
further details of the visit on page 112.
2025 also brought several changes in Board
membership. Lena Wilson succeeded Mark
Seligman as Senior Independent Director
following Mark’s retirement at the end
of March.
The Board welcomed Josh Critchley as
an independent non-executive director in
November 2025 and I am delighted that Albert
Hitchcock will join the Board as an independent
non-executive director on 23 February 2026.
Yasmin Jetha will retire from the Board on
31 March 2026 having made an outstanding
contribution. Yasmin leaves with our very best
wishes for the future. See page 99 for full
details of Board and committee membership
changes in 2025/2026.
I would like to thank my fellow directors for
their valuable contribution and professionalism
throughout 2025. The Board’s collective
expertise and constructive challenge has been
central to our progress, and I am grateful for
the support and engagement shown both in
the boardroom and across the business.
I look forward to continuing our work together
as we support delivery of NatWest Group’s
strategic priorities in the year ahead.
Rick Haythornthwaite
Chair of the Board
12 February 2026
Principal areas of focus
•
Purpose and strategy
•
Culture
•
Stakeholder engagement
•
Customers
•
Risk and controls
•
Financial
•
Legal, regulatory and governance
Dear Shareholder,
I am pleased to present the 2025 Corporate
governance report.
Before going any further, I’d like to pause and
reflect on the sad news of Frank Dangeard’s
passing in August. Frank was a highly valued
and respected director, colleague and friend to
many of us at NatWest, and his wise counsel
will be greatly missed.
2025 was a year of meaningful transformation
and progress for the Board of directors.
Building on the themes identified during the
2024 Board effectiveness review and my own
reflections since taking on the role of Chair, we
entered 2025 with a renewed commitment to
evolve our Board and governance operating
model, focused on our ambition to develop
further as a high-performing Board.
During 2025, the Board’s priorities have
included strengthening directors’ expertise,
enhancing strategic engagement, improving
Board dynamics, sharpening our focus on ESG,
and leveraging data and analytics to guide our
decisions. These priorities have shaped the
Board agenda and are described in more
detail on page 102 and reflected throughout
this Corporate governance report.
In support of a refreshed governance operating
model, the Board and management conducted
a comprehensive review of the remit of the
Board and its committees, to ensure each
forum remains focused on the most critical
matters. Notably, the Group Sustainable
Banking Committee (SBC) transitioned
into the Group Technology, Innovation and
Simplification Committee, underscoring our
commitment to technological advancement
and organisational agility, with a number of
SBC focus areas, such as ESG, Consumer
Duty, organisational development and culture
‘The Board remains committed
to supporting our customers
and the wider UK economy.
We will continue to evolve
our Board and governance
operating model to ensure
we are well-positioned
for the challenges and
opportunities ahead.’
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
101
Governance and remuneration
Governance at a glance
Continuing to evolve and enhance our Board and committee
governance in support of our sustainable strategy.
In February, 2025 the Board set an ambition to develop further as a high-performing
Board, driving innovation, ensuring robust governance and delivering sustained,
profitable growth.
The Board agreed to progress a series of actions under the themes shown below to
build further on the Board’s strong foundations and acknowledging the key findings of
the 2024 Board effectiveness review. The outcomes of our Board evolution action plan
are highlighted throughout this Corporate governance report and sign-posted opposite.
Board
evolution
in action
S
t
r
e
n
g
t
h
e
n
i
n
g
a
n
d
a
n
a
l
y
t
i
c
s
E
S
G
f
o
c
u
s
B
o
a
r
d
d
yn
a
m
i
c
s
E
n
h
a
n
c
i
n
g
s
t
r
a
t
e
g
i
c
B
o
a
r
d
e
x
p
e
r
t
i
s
e
L
e
v
e
r
a
g
i
n
g
d
a
t
a
S
h
a
r
p
e
n
i
n
g
I
m
p
r
ov
i
n
g
e
n
g
a
g
e
m
e
n
t
Strengthening Board expertise by
…
p.103
Using our Board skills matrix to support Board composition and succession
planning, and new non-executive director induction.
p.113
Developing an enhanced approach to Board learning, including the use of
online tools and resources.
p.122
Evolving and systemising our search and recruitment process and practices
for new non-executive directors.
Enhancing strategic engagement by
…
p.108
Re-balancing Board and committee oversight responsibilities to support the
Board’s strategic focus.
p.108
Continuing to bring a range of external perspectives into the boardroom.
p.137
Establishing the Group Technology, Innovation and Simplification Committee.
Improving Board dynamics by
…
p.108
Fostering a culture of collaboration, constructive challenge and collegiality.
p.116
Considering Board culture and behaviours and how the Board sets the ‘tone
from the top’.
Sharpening ESG focus by
…
p.36
Considering NatWest Group’s definition of sustainability, and its climate
ambition and targets.
p.106
Enhancing Board visibility and oversight of ESG matters.
Leveraging data and analytics by
…
p.108
Reviewing how Board and committee agenda time is allocated.
p.116
Sharpening strategic focus through performance management oversight.
Our Board evolution action plan
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
102
Governance and remuneration
Diversity in the boardroom
Strengthening Board expertise
Board skills and experience
The Board recognises the value and importance of a comprehensive Board skills matrix to
support effective governance and strategic oversight. In December 2025, our Board skills
assessment was refreshed following a review of the six critical and ten general skills identified
in 2024 as priorities for the Board over a three to five-year period. Using the BoardOutlook
technology platform, all directors participated in an online process which involved both
self-assessment and peer calibration elements. The 2025 Board skills assessment outputs
confirmed the Board’s view of the collective expertise and capabilities of the Board against
the organisation’s strategic priorities and governance needs, as reflected in the Board skills
matrix below. The detailed data and analysis offered through the Board skills assessment
has underpinned Board composition and succession planning, as well as supporting NED
induction and professional development.
Details of the broader experience our directors contribute to the Board can be found in their biographies
on pages 96 to 98 and further information on the Board skills matrix is provided in the N&G report on
page 122.
Board and executive management diversity disclosures
UK Listing Rule (UKLR) 6.6.6R (10)
Table for reporting on gender identity or sex
Number of
Board
members
% of the
Board
Number of
senior positions
on the Board
Number in
executive
management
% of executive
management
Men
5
45
2
8
57
Women
6
55
2
6
43
Other categories
0
0
0
0
0
Not specified/prefer not to say
0
0
0
0
0
Table for reporting on ethnic background
Number of
Board
members
% of the
Board
Number of
senior positions
on the Board
Number in
executive
management
% of executive
management
White British or other White
(including minority-White groups)
9
82
4
10
71
Mixed/Multiple ethnic groups
0
0
0
0
0
Asian/Asian British
2
18
0
0
0
Black/African/Caribbean/Black British
0
0
0
0
0
Other ethnic group
0
0
0
0
0
Not specified/prefer not to say
0
0
0
4
29
UK Listing Rule (UKLR) 6.6.6R (9)
Compliance
The company has met the targets on board diversity set out below as at 31 December 2025.
UK Listing Rules requirement
Outcome
Group’s position at 31 December 2025
At least 40% of Board directors are women
Target met
55% of Board directors were women
At least one senior Board position held by
a woman
Target met
The positions of CFO and Senior
Independent Director are held by women
At least one Board director from a minority
ethnic background
Target met
Two Board directors are from a minority
ethnic background
Footnotes (these apply to both the UKLR 6.6.6R (9) and (10) tables above, unless otherwise stated).
(1)
All data as at 31 December 2025 (the reference date).
(2)
Data was collected via self-reporting methods – for Board directors this was via email and for members of the executive management
team it was collected via our HR system Workday.
(3)
The Group CEO and Group CFO are members of both the Board and executive management and so are counted in both groups (UKLR
6.6.6R (10) table only).
(4)
Senior Board position is CEO, CFO, Chair or Senior Independent Director.
Our boardroom inclusion policy aims to promote diversity and inclusion in our Board and committee
composition via targets which aspire to meet those set out in the UK Listing Rules, the FTSE Women Leaders
Review and the Parker Review. A copy of the policy is available at natwestgroup.com.
For further information on our inclusion initiatives, see page 62.
Critical skills
Banking and financial services
Customer and partner
Risk management
Consumer digital
Strategy, innovation and disruption
Enterprise digital
General skills
Corporate governance
Major change and transformation
Regulatory engagement
Talent and leadership
Accounting and financial reporting
Remuneration
Mergers, acquisitions and divestments
Sustainability
CEO experience
Marketing, brand and communications
Dark squares represent expert or advanced levels of skills or experience.
Board skills matrix 2025
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
103
Governance and remuneration
UK Corporate Governance Code 2024
All directors are committed to observing high
standards of corporate governance, business
integrity and professionalism. Throughout
2025, NatWest Group plc applied the Principles
and complied with the Provisions of the 2024
UK Corporate Governance Code (the Code or
UKGC Code) with the exception of Provision
29, which is effective from 1 January 2026.
The company continued to comply with
Provision 29 of the 2018 UK Corporate
Governance Code during 2025.
There was one short-term exception to the
company’s compliance with Provision 32 that
‘the board should establish a remuneration
committee of independent non-executive
directors with a minimum membership of
three.’ For a period of c.7 weeks in 2025,
the Group Performance and Remuneration
Committee (RemCo) had two independent
non-executive directors as members, after
Frank Dangeard stepped down from the Board
on 23 April at short notice. Patrick Flynn joined
RemCo on 10 June 2025 and Josh Critchley
subsequently joined on 11 December 2025.
Mr Flynn will step down as a member of
RemCo on 31 March 2026.
Applying the Code Principles
The UK Listing Rules require companies to
make a statement of how they have applied
the Code’s Principles, in a manner that would
enable shareholders to evaluate how the
Principles have been applied. The boxes
opposite are aligned to the five sections of
the Code and include cross-references to
relevant parts of this report where additional
information can be found on our approach.
Section 1 – Board leadership
and company purpose
•
Our strategy (page 15)
•
Our business model (page 12)
•
Principal areas of Board focus in 2025
(pages 109 to 111)
•
Board oversight of purpose, strategy
and culture (page 116)
•
How the Board engaged with
stakeholders (including our Colleague
Advisory Panel) (pages 117 to 118)
Section 2 – Division of
responsibilities
•
Our governance framework (role
and responsibilities of the Board and
Board committees) (page 105)
•
Division of responsibilities (page 107)
•
Subsidiary governance and
ring-fencing (page 114)
•
Board and committee membership
and attendance (page 108 and
relevant Board committee reports)
•
Board policies and processes,
including external appointments
and time commitment (page 115)
Section 3 – Composition,
succession and evaluation
•
Directors’ biographies and committee
memberships (pages 96 to 98)
•
Board composition overview as at
31 December 2025 (sex, ethnicity,
age range, independence, tenure)
(page 99)
•
Board and Board committee
changes in 2025 and 2026 (page 99)
•
Board skills and experience, including
the Board skills matrix (page 103)
•
2025 Board effectiveness review
(pages 119 to 121)
•
Group Nominations and
Governance Committee report
(Board appointments, Board
composition and succession planning,
executive succession) (page 122)
•
Board and executive management
diversity disclosures and our
Boardroom inclusion policy (page 103)
Section 5 – Remuneration
•
Directors’ remuneration report
(page 140) (Group Performance and
Remuneration Committee activity and
decisions during 2025; remuneration
policy for executive directors; wider
workforce remuneration)
Section 4 – Audit, risk and
internal control
Information on how the company has
applied the Principles and complied with
the Provisions set out in this section of
the Code can be found throughout
the Annual Report and Accounts.
The following sections are
of particular relevance:
•
Group Audit Committee report
(page 124)
•
Viability statement (page 80)
•
Compliance report (page 169)
•
Group Board Risk Committee report
(page 131)
The Board regularly assesses the
company’s emerging and principal risks
in a variety of ways including through
review of the Group Risk Report and
dedicated training
Details of the company’s principal risks,
procedures in place to identify top and
emerging risks, and how these are
managed or mitigated, can be found
on pages 74 to 79 (Risk overview)
and pages 177 to 274 (Risk and
Capital Management)
For further information on our approach towards Principle O of the Code, and preparations for Provision 29 of
the 2024 Code becoming effective, see page 130.
The information referred to on this page supports our statement of compliance on page 169.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
104
Governance and remuneration
•
Is collectively responsible for promoting the long-term success of the company, driving shareholder value and NatWest Group’s contribution to
wider society.
•
Establishes NatWest Group’s strategy and leads the development of its culture.
•
Provides leadership of the company within a framework of prudent and effective controls, which enables risk to be assessed and managed.
•
Sets the strategic aims of the company and its subsidiaries, ensures that the necessary resources are in place for NatWest Group to meet
its objectives.
•
Is responsible for the allocation and raising of capital, and reviews business and financial performance.
•
Ensures that the company’s obligations to its shareholders and other key stakeholders are understood and met.
Our governance framework
Group Audit
Committee (GAC)
Assists the Board
in discharging its
responsibilities
in relation to the
disclosure of NatWest
Group’s financial and
non-financial reporting.
Reviews accounting
and financial reporting
and regulatory
compliance and
NatWest Group’s
system of internal
controls.
Monitors the processes
for internal audit,
risk management,
external audit and
whistleblowing.
Group Board Risk
Committee (BRC)
Provides oversight and
advice to the Board on
current and potential
future risk exposures of
NatWest Group; future
risk profile; and the
approval and
effectiveness of the
enterprise-wide risk
management
framework.
Reviews NatWest
Group’s performance
relative to risk appetite;
the effectiveness
of internal controls
required to manage
risk; and all material
risk exposures.
Group Nominations
and Governance
Committee (N&G)
Assists the Board in
the appointment of
directors and with
Board committee
composition.
Reviews the structure,
size and composition
of the Board and
approves appointments
to the boards of
principal and material
regulated subsidiaries.
Monitors NatWest
Group’s governance
arrangements.
Considers succession
planning for the
Board and senior
management.
Group Performance
and Remuneration
Committee
(RemCo)
Responsible for
the overview of
NatWest Group’s
remuneration policy
and the directors’
remuneration policy,
ensuring that
arrangements are
designed to promote
the long-term success
of NatWest Group.
Approves pay and
performance outcomes
for executive directors
and senior members
of management.
Approves the
annual Group-wide
bonus pool.
Group Technology,
Innovation and
Simplification
Committee (TISC)
Responsible for
supporting the Board
in overseeing NatWest
Group’s use of
technology, data and
innovation to support
delivery of its strategic
ambitions.
Oversees NatWest
Group’s progress on
technological enablers
of simplification
initiatives to ensure
delivery and increase
competitive advantage.
To assist in providing effective oversight and leadership, the Board has established the following committees:
NatWest Group plc Board
Executive governance
The Group Executive Committee (ExCo)
supports the CEO in discharging his
responsibilities in managing NatWest
Group’s business day to day.
For further information on individual roles and
responsibilities, see page 107.
Board committee connectivity
Having non-executive directors on multiple
Board committees supports effective
governance by strengthening coordination
and alignment on shared areas of focus,
particularly in relation to audit, risk and
remuneration matters.
Board committee members also work together
to enhance their knowledge and understanding
of the business through business visits and
teach-ins. In 2025 these included joint GAC
and BRC visits to the Risk, Internal Audit
and Finance functions.
Further information
•
Board and Board committee terms of
reference are available at natwestgroup.com
and are reviewed at least annually.
•
The Board terms of reference include a
formal schedule of matters specifically
reserved for the Board’s decision.
•
Internal reviews confirmed the Board and
its committees had fulfilled their remits
as set out in their terms of reference
during 2025.
For further information on the evolution of the
Group Sustainable Banking Committee (SBC)
into the Group Technology, Innovation and
Simplification Committee in 2025, see page 137.
Committee report
on page 124.
Committee report
on page 131.
Committee report
on page 122.
Committee report
on page 140.
Committee report
on page 137.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
105
Governance and remuneration
Climate governance
Sharpening ESG focus
The governance structure for climate-related activities is
embedded across the organisation. We continue to monitor the
effectiveness of these arrangements to ensure that the risks and
opportunities for the bank and our stakeholders are considered.
The NatWest Group plc Board, Board committees, executive fora,
cross-bank working groups and day-to-day decision-making all
have a role to play in the delivery of this integrated governance
approach. A complete list of climate-related topics considered by
the Group Board and committees is shown in the timeline.
Executive governance
The Group CEO holds Joint Senior Manager
Function accountability for identifying and
managing financial risks from climate change,
together with the Group Chief Risk Officer
(Group CRO). The Executive team has
delegated responsibility from the Group CEO
for identifying and managing financial risks
and opportunities from climate change and
the execution of the transition plan. This is
primarily delegated to the Chief Financial
Officer (Group CFO), Group Chief Information
Officer (Group CIO), Chief Customer &
Operations Officer, Group Director, Strategic,
Economics & Corporate Development and
the business CEOs.
The
Group Executive Committee
supports
the Group CEO in managing NatWest Group’s
businesses and operates under individual
accountability. ExCo has primary oversight
responsibility at Group level for implementation
of the climate transition plan and climate-
related ambitions, targets and commitments.
Additional Executive level committees operate
under individual accountability to support
relevant Executive Management Team
members in discharging their individual
accountabilities. These committees provide
a forum for debate and challenge of the key
issues set out in their Terms of Reference.
These include the
Group Executive Risk
Committee
which reviews and challenges all
material risk exposures including operational,
reputation and climate risk; the
Group
Executive Disclosure Committee
which
reviews all material financial and non-financial
disclosures, including climate disclosures; the
Group Reputational Risk Committee
which
considers the reputational impact of climate
change actions and the Environmental & Social
Risk Framework; and
segment and function
leadership teams
which manage delivery
against allocated carbon budgets and
associated targets.
Board and Board committee responsibilities
Group Board
(For further information
on the Board’s oversight
of climate matters, refer
to the s.172 statement
on pages 36-37)
Responsible for promoting the long-term sustainable
success of NatWest Group, sets strategic aims,
monitors and oversees the risks and opportunities
presented by the transition including strategic climate
targets. It also oversees actions being taken and
progress against our climate ambition and climate
transition plan.
From June 2025, the Board was also responsible for
overseeing actions being taken to run the bank as a
sustainable business.
GAC
Considers financial and non-financial disclosures and
receives assurance regarding the robustness of
controls supporting these disclosures.
BRC
Considers current and potential future climate
risk exposures.
RemCo
Oversees the link between climate strategy
and remuneration.
SBC
Up to June 2025, SBC oversaw actions being taken to
run the bank as a sustainable business and progress
against our climate ambition, when this activity
transitioned to the Board.
Management information presented to every Board Risk Committee meeting (climate &
nature risk) and to Board (climate opportunities and progress) as part of scheduled updates
Areas of Board and committee focus
Board
Audit Committee
Board Risk
Committee
Performance &
Remuneration Committee
Nominations &
Governance Committee
Risk
Opportunities
Progress against transition plan
Disclosures
Education
Skills
February
Budget approved
including carbon
budget allocations
and resources.
Board
June
ESG – external environment
and Group position.
Board
October
Approval of Climate
ambitions.
Board
Climate spotlight.
Board
Climate Ambitions and
Targets Update.
Board
February 2026
Discussion and approval of the
Annual Report & Accounts and
Climate Transition Plan Report.
GAC & Board
March
Spotlight on Climate &
Environmental Progress.
SBC
Understanding, predicting and
responding to the changing
ESG Landscape.
Board
July
Spotlight on climate
and nature risk.
BRC
December
Approval of risk appetite in respect of climate and nature
risk. Approval of climate and nature risk strategy and risk
policy. Board approval of sector-level climate targets
BRC
& Board
Skills Matrix review, including consideration of necessary
Climate and nature skills and experience.
N&G & Board
Agreement of executive director climate target for the
2026 Performance Share Plan.
RemCo
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
106
Governance and remuneration
Division of responsibilities
As at the date of publication of this report the Board has 11 directors, comprising the Chair, two executive directors and eight
independent non-executive directors, one of whom is the Senior Independent Director. Director biographies and details of the
Board committees of which they are members can be found on pages 96 to 98.
Chair and CEO
The role of Chair is distinct and separate from that of the CEO and there is a clear division of responsibilities, with the Chair leading the Board and the CEO managing
the business day to day.
Senior Independent
Director (SID)
During 2025, Mark Seligman held the role of SID until 31 March 2025 and from 1 April 2025 Lena Wilson assumed the role. Mark and Lena acted as a sounding board
for the Chair, and as an intermediary for other directors when necessary. They were available to shareholders to discuss any concerns that could not be resolved
through standard communication with the Chair, CEO or other members of executive management. Ms Wilson also led the non-executive directors’ year-end review
of the Chair’s performance, together with Francesca Barnes the Senior Independent Director of the ring-fenced bank.
Chief Governance
Officer and
Company Secretary
Jan Cargill held the role of Chief Governance Officer and Company Secretary until 14 February 2025, when Gary Moore assumed the role.
The Chief Governance Officer and Company Secretary works closely with the Chair to ensure effective and efficient functioning of the Board and appropriate alignment
and information flows between the Board, its committees and management.
The Chief Governance Officer and Company Secretary is responsible for advising the Board and individual directors on all governance matters, and also facilitates
Board induction and directors’ professional development.
Non-executive
directors
Along with the Chair and executive directors, the non-executive directors are responsible for ensuring the Board fulfils its responsibilities under its terms of reference.
The non-executive directors combine broad business and commercial experience with independent and objective judgement. They provide constructive challenge,
strategic guidance, and specialist advice to the executive directors and the executive management team and hold management to account.
The balance between non-executive and executive directors enables the Board to provide clear and effective leadership across NatWest Group’s business activities
and ensures no one individual or small group of individuals dominates the Board’s decision-making.
The performance of the non-executive directors is evaluated annually as part of the Board effectiveness review and further details of the 2025 process and outcomes
can be found on pages 119 to 121.
Executive
management
The executive management team supports the Group Chief Executive Officer (CEO) in managing NatWest Group’s businesses.
Decisions at all executive level committees including the Group Executive Committee are made under individual accountability where decision-making authority lies with
an individual (who usually chairs committee meetings) and committee members support the relevant individual in discharging their accountabilities.
These committees provide a forum for debate and challenge of the key issues set out in their terms of reference. The role of members is to provide input, support and/
or challenge to the decision-maker, including on whether to recommend matters to Board committees and the Board. The Group Executive Committee considers the
delivery of strategy, financials, risk, and customer, colleague and operational issues affecting NatWest Group, as well as monitoring the implementation of cultural change.
The executive management team also holds regular executive succession planning, talent and team effectiveness sessions. Members of the executive management
team also have individual accountabilities for their respective areas of responsibility and have committees to support them in discharging these accountabilities.
Details of the key responsibilities of the Chair, CEO, Senior Independent Director and non-executive directors are available at natwestgroup.com.
The executive management team is detailed on page 100 and biographies are available at natwestgroup.com.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
107
Governance and remuneration
How the Board operated in 2025
Enhancing strategic engagement; Improving Board dynamics;. Sharpening ESG focus; Leveraging data and analytics
Board and committee meetings
There were eight scheduled meetings of the
Board during 2025. Additional ad hoc meetings
of the Board and some of its committees were
held throughout the year to receive updates
and deal with time-critical matters. There was
one additional Board meeting held in 2025,
compared to five in 2024. There were also two
strategy sessions with executive management
in 2025. Details of ad hoc Board committee
meetings in 2025 are contained in the relevant
committee reports.
The Chair and non-executive directors met
without the executive directors present at the
end of each Board meeting. Led by the Senior
Independent Director, the non-executive
directors met in December without the Chair
present to review the Chair’s performance.
When directors are unable to attend meetings
convened at short notice, for example owing to
existing commitments, they receive the papers
and have the opportunity to provide any
feedback in advance.
At each scheduled Board meeting the directors
received reports from the Chair, Board
committee Chairs, Group CEO, Group CFO,
Group Chief Risk Officer and other members
of the executive management team,
as appropriate. The CEOs of our Retail
Banking, Private Banking & Wealth
Management and Commercial & Institutional
businesses provided updates on progress
against strategy. In addition to our business
CEOs, a number of other senior executives
attended Board meetings throughout the year
to present reports to the Board. This provided
the Board with an opportunity to engage
directly with management on key issues and
supported succession planning. The Board also
welcomed external presenters and advisers to
Board meetings, which provided useful insights
and perspectives.
Board evolution action plan –
refreshing our governance
operating model
Our Board evolution action plan, as described
on page 102, led to a range of enhancements
to the way our Board and Board committees
operated in 2025. These included:
•
A comprehensive review of Board and
committee oversight responsibilities,
led by the Board and which resulted
in a re-balancing of those oversight
responsibilities to support the Board’s
Board members and attendance in 2025
Director
Scheduled Board
meetings attended
Rick Haythornthwaite
8 of 8
Paul Thwaite
8 of 8
Katie Murray
8 of 8
Lena Wilson
8 of 8
Frank Dangeard
(1)
0 of 2
Josh Critchley
(2)
1 of 1
Roisin Donnelly
8 of 8
Patrick Flynn
8 of 8
Geeta Gopalan
8 of 8
Yasmin Jetha
8 of 8
Stuart Lewis
8 of 8
Gill Whitehead
8 of 8
(1)
Mr Dangeard was unable to attend two scheduled meetings
owing to illness, and stepped down from the Board with effect
from 23 April 2025.
(2)
Mr Critchley joined the Board on 3 November 2025.
In addition to the eight scheduled meetings held, there was one
ad-hoc meeting. All directors eligible to attend this meeting were
present, except for Ms Donnelly who was unable to attend due to
a prior commitment.
strategic focus. This review identified
opportunities to redirect oversight of
operational, compliance, and regulatory
matters to relevant Board committees,
ensuring a greater degree of rigour in
these areas. The changes were designed
to create time and capacity at Board level
to strengthen focus on strategic priorities,
including ESG, Consumer Duty, and
organisational development and culture.
•
A governance simplification review
undertaken at Board committee level
which resulted in additional steps being
taken to rationalise Board committee
oversight responsibilities where appropriate.
•
A detailed analysis of Board and Board
committee time allocation during 2024,
which provided additional data and insights
into how Board and Board committee
agenda and discussion time had previously
been spent and which informed 2025
actions and forward planning.
•
Continuing to bring a range of external
perspectives into the boardroom aligned to
the Board’s areas of strategic focus, through
dedicated guest dinner sessions and
strategic agenda items at Board meetings.
•
Supporting a culture of collaboration and
collegiality through the introduction of NED
only breakfast meetings, regular Chair
and NED 1:1s and Board dinners, which
offered an opportunity for more informal
conversations. In addition, the March Board
dinner discussion focused on the ‘tone from
the top’ culture and behaviours the Board
wished to demonstrate to management
and the wider organisation.
•
Sharpening the Board’s strategic focus
on performance management oversight
through the use of a performance
dashboard, which includes Key Performance
Indicators (KPIs) and Key Results (KRs).
•
Refreshing our approach to forward agenda
planning to reflect and embed the Board
evolution themes, including a detailed
three-month look ahead planner (prepared
on a rolling basis) and a longer term
eighteen-month high level agenda planner.
As part of the 2025 Board effectiveness
review, directors were invited to share
their feedback on the Board evolution actions
taken during 2025. Directors observed that
the Board had made meaningful progress in
strengthening governance and strategic focus
with reference to the re-balancing of Board
and Board committee agendas, streamlining
meetings and establishing the new Group
Technology, Innovation and Simplification
Committee in particular. Opportunities were
noted to continue supporting team cohesion
and structured Board learning.
For further information on the 2025 Board
effectiveness review, see pages 119 to 121.
Board committee and attendance information can be found in the relevant Board committee
reports. During 2025, the Group Chair attended all Group Nominations and Governance
Committee meetings as Chair, and all other Board committee meetings as an observer.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
108
Governance and remuneration
Theme
Principal areas of focus
Outcomes
Purpose and
strategy
Having approved the refreshed strategy and purpose in 2024, the Board’s focus in 2025 was on oversight
of management’s execution of the strategy and embedding the purpose across NatWest Group. Sentiment
towards NatWest Group’s purpose was measured via our 2025 colleague survey, Our View, the results of
which were considered by the Board in June and December.
Throughout 2025, the Board held a series of dedicated sessions to consider key elements of the strategy,
revisiting important topics such as the evolving ESG landscape, sustainability and our climate ambition and
targets, and developments in digital assets. The Board also undertook further work on Private Banking & Wealth
Management strategy, the regional strategy in India, regulatory priorities and inorganic growth opportunities.
The Board confirmed its support for the proposed Private
Banking & Wealth Management strategy, noting alignment
with the previously agreed wider NatWest Group strategy.
Further information on Board oversight of purpose and strategy can
be found on page 116.
Culture
To support the new performance culture, a core behaviours framework was proposed by management and
considered by the Board in February 2025.
The Board considered the evolution of the performance culture and operating system, drawing on extensive
colleague consultations and leadership workshops. The Board approved a framework focused on empowering
colleagues with clear accountability around customer-centred outcomes and shared team objectives, with an
operating model emphasising collaboration, capability building and effective prioritisation, whilst fostering
behaviours that support adaptability, continuous improvement and enhanced customer focus.
The Board approved the new core behaviours framework.
Further information on Board oversight of culture can be found on
page 116.
Stakeholder
engagement
The Board confirmed its key stakeholders for the year in February 2025, and undertook engagement with them
throughout the year.
The agreed stakeholders were: investors, customers, colleagues, communities, regulators and suppliers, and
engagement ranged from roundtable discussions to visits and participation in events.
The Board’s visit to Birmingham in September 2025 provided
a range of opportunities to meet with stakeholders and
understand their views. For further information, see page 112.
The Board participated in a dedicated strategic partner
session with two of NatWest Group’s principal technology
and transformation partners, receiving external insight on
industry trends and leading practice in data, digital and AI
enabled banking.
The Board held investor roundtable discussions with major
institutional shareholders. Directors discussed NatWest
Group’s financial performance, strategic priorities, capital
distribution and ESG matters, gaining valuable feedback
on market expectations and perspectives to inform
Board decision-making.
Further details on the Board’s engagement with stakeholders are
available on pages 117 to 118, and the section 172(1) statement on
pages 36 to 37 describes how stakeholders were considered in
relation to principal decisions.
Principal areas of Board focus in 2025
Strengthening Board expertise; Enhancing strategic engagement; Improving Board dynamics; Sharpening ESG focus; Leveraging data and analytics
Enhancing strategic
engagement
Leveraging data
and analytics
Improving Board
dynamics
Strengthening
Board expertise
Sharpening
ESG focus
Link to Board evolution actions
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
109
Governance and remuneration
Enhancing strategic
engagement
Leveraging data
and analytics
Improving Board
dynamics
Strengthening
Board expertise
Sharpening
ESG focus
Link to Board evolution actions
Theme
Principal areas of focus
Outcomes
Customers
The Board maintained a strong emphasis on delivering good outcomes for customers while ensuring robust
oversight of performance management.
Regular performance management spotlights covered a wide range of topics, including customer experience,
the onboarding process, mortgage markets and cross-franchise deposits. These were complemented by
business updates, including Private Banking & Wealth Management and Corporate & Institutional Banking,
which provided deeper insight into business performance and customer propositions in those areas.
In December, the Board received a detailed update on the migration of Sainsbury’s Bank customers to NatWest
Group, which represented a significant milestone for the Retail Banking business. The Board reviewed customer
experience metrics from the migration and discussed lessons learned to inform future integration activity and
ongoing customer engagement.
The Board also had an opportunity to meet customers during the regional visit to Birmingham and directors
heard first hand how colleagues support customers via call listening exercises.
The focus on performance management spotlights and
business-led strategic reviews throughout the year ensured
customer outcomes remained central to Board deliberations
and deepened its understanding of customer priorities
and behaviours.
The Board approved the Consumer Duty ‘point in time
submission’ prior to regulatory submission.
Further information on Board engagement with customers can be
found on page 117.
Risk and controls
The Group Risk Report was presented at each Board meeting.
The Board undertook a fire drill exercise in relation to Operational Resilience, Recovery and Resolution in
March 2025. This was an opportunity to deepen understanding of the processes that would be followed
and implemented during an operational resilience scenario that could progress to recovery and
subsequently resolution.
The Board considered the external geopolitical environment in June 2025, seeking to understand how
changes in the macro-economy might impact the bank and its customers in both the short and longer term.
Following widely publicised cyberattacks impacting other companies during 2025, the Board received a
management update on root cause analysis and the robust internal mitigations and ongoing scenario
testing in place to manage the potential impact of such attacks on NatWest Group’s infrastructure.
The Board gained first-hand experience of the key areas
of consideration it would be required to undertake in a
live recovery and resolution scenario. During a wash up
discussion, learnings were identified to ensure management
and directors were best placed to tackle future fire drills or
live situations.
The Board approved the Operational Resilience Self-Assessment.
The Board approved the enterprise-wide risk management
framework and approved the annual refresh of risk appetite.
The Board received appropriate assurances as to the bank’s
cybersecurity framework and that of its strategic partners.
Financial
Reports from the Group Chief Financial Officer were presented at each Board meeting.
In addition to quarterly financial results, the Board reviewed the NatWest Group plc 2024 Annual Report
and Accounts and associated documents, and the NatWest Group plc 2024 Sustainability report. Business
performance metrics, including Risk Weight Assets management, were regularly considered, and the 2026
Budget was reviewed following scenario analysis.
In October, the Board undertook a focused review of NatWest Group’s CET1 capital target, considering
regulatory changes, peer benchmarks, and stakeholder feedback. Directors discussed the rationale for revising
the target, ensuring robust capital buffers and supporting shareholder value, with further engagement planned
ahead of finalising external guidance.
The Board approved the 2026 Budget, interim and full year
dividends, and quarterly and full year results disclosures and
associated documents.
Principal areas of Board focus in 2025 continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
110
Governance and remuneration
Principal areas of Board focus in 2025 continued
Theme
Principal areas of focus
Outcomes
Legal, regulatory
and governance
The Board considered a range of legal, regulatory and governance matters in 2025, which were both routine
and ad hoc in nature.
The Board considered Board composition and succession plans, the 2025 Board skills matrix and new director
appointments, following recommendations from the Group Nominations and Governance Committee.
Under the Board evolution action plan, the Board considered opportunities to refresh the Board and committee
governance operating model to ensure the appropriate allocation of responsibilities and create time for the
Board to focus on strategic items.
The Board also reviewed and approved key governance documents relating to non-executive directors’
independence, NatWest Group’s corporate governance policy and updated guidance associated with directors’
gifts and hospitality, travel and accommodation.
Consideration was given to directors’ external appointments and proposed changes to the structure and
membership of the executive management team during the year.
The outputs of the FCA’s firmwide evaluation (FEL) and the PRA’s periodic summary meeting (PSM) were
presented to the Board in April and July respectively.
The Board considered and approved the evolution of the Group Sustainable Banking Committee (SBC) into the
Group Technology, Innovation & Simplification Committee (TISC), strengthening Board oversight and challenge
on NatWest Group’s use of technology, data and innovation to support strategic ambitions, market agility and
customer engagement. As part of this transition, responsibilities for sustainability and ESG matters were
reallocated to the Board to ensure continued focus on these priorities.
The Board also reviewed the NatWest Group plc 2024 Statement of Modern Slavery and Human Trafficking,
reaffirming NatWest Group’s commitment to ethical business practices and transparency in the supply chain.
The statement sets out the actions taken during the relevant year to identify, mitigate and address modern
slavery and human trafficking, and demonstrates NatWest Group’s ongoing efforts to uphold the highest
standards of responsibility across its operations.
The Board approved the 2025 Board skills matrix and
the appointment of Josh Critchley as an independent
non-executive director.
The Board approved certain delegations and updates
to its terms of reference and those of its committees, to
ensure appropriate governance parameters were in place
following implementation of changes to the governance
operating model.
Further details of changes made to the governance operating model
can be found on page 108.
The Board approved external appointments for Ms Gopalan,
Mr Haythornthwaite and Ms Whitehead during the year.
The points raised in the regulatory letters were noted and
progressed by management and tracked by the Board and
its committees.
The Board approved the Group Technology, Innovation &
Simplification Committee Terms of Reference.
The Board approved the NatWest Group plc 2024 Statement
of Modern Slavery and Human Trafficking.
Regular reports
(provided to every scheduled meeting unless otherwise stated)
•
Reports by the Group Chair and CEO
•
Board committee Chair updates
•
Strategic business spotlights
•
Performance management updates
•
Group Risk Report
•
Consumer Duty Board Champion updates (bi-annual)
•
Colleague Advisory Panel reports (bi-annual)
Enhancing strategic
engagement
Leveraging data
and analytics
Improving Board
dynamics
Strengthening
Board expertise
Sharpening
ESG focus
Link to Board evolution actions
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
111
Governance and remuneration
Principal areas of Board focus in 2025 continued
Spotlight
Board visit to Birmingham
Enhancing strategic engagement. Sharpening ESG focus.
An important element of the Board’s
ongoing development is the regional visits
undertaken each year. In September,
directors visited Birmingham and the
West Midlands, where they met clients,
colleagues and local stakeholders.
Through direct conversations with commercial customers,
the Board gained valuable insights into their banking
relationships, the challenges and opportunities presented
by the macroeconomic environment, and how the bank
can best support them in future. These perspectives inform
broader strategic discussions and help ensure the Board
maintains a strong customer focus.
The visit included a tour of a local branch to observe how
retail customers are served and to hear from colleagues
about their experiences.
The Board met a diverse group of colleagues during the visit,
including graduates, apprentices, and teams from Retail
Banking, C&I, and Digital X. These conversations provided
valuable two-way dialogue, enabling the Board to deepen its
understanding of the issues that matter most to colleagues.
A reverse pitch at one of our accelerator hubs, and a lunch
with a selection of local stakeholders, highlighted NatWest’s
impact on the community, including support for new and
established businesses and engagement with civic groups
promoting regional growth.
The Board also explored digital innovations across the bank,
recognising the importance of leveraging new technologies,
including AI, to enhance service for both colleagues
and customers.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
112
Governance and remuneration
Enhancing directors’ skills and knowledge
Strengthening Board expertise
Spotlight
New NED
induction
Each new non-executive director
receives a formal induction on joining
the Board, which is coordinated by the
Chief Governance Officer and Company
Secretary and tailored to suit the
requirements of the individual concerned.
This includes meetings with directors
and senior management, and visits
to NatWest Group’s major business
and functions. Meetings with external
auditors, legal counsel and other
stakeholders are also arranged as
appropriate. New NEDs also receive
a copy of our non-executive director
handbook which contains information
on our corporate structure, governance
framework and Board policies
and processes.
The enhanced approach to Board
skills assessment we adopted in 2024
has enabled us to identify targeted
focus areas for new NEDs’ induction
programmes following preparation of a
‘heat map’ drawing upon the individual’s
self assessment of their skills, aligned to
our pre-agreed skills criteria.
Further information on our Board skills
assessment process can be found on
page 103.
The Chief Governance Officer and Company Secretary supports director training and professional development by curating
an annual schedule of training sessions and deep dives into areas of interest and relevance. As envisaged by the 2025 Board
evolution action plan, this annual schedule was supplemented by a suite of online learning resources and optional reading
materials made available through a dedicated Teams channel for directors, which was refreshed periodically throughout
the year. During 2025 directors had the opportunity to enhance their skills and knowledge on a range of relevant topics,
as set out below:
Topic
Considerations
Operational
Resilience,
Recovery and
Resolution
The Board took part in a comprehensive operational resilience ‘fire drill’ exercise, simulating a severe
disruption scenario. Directors worked through the escalation from operational incident to recovery and
resolution, considering regulatory expectations, impact tolerances, and the practical challenges of crisis
management. The session enhanced the Board’s understanding of its role in resilience and informed
future crisis preparedness.
Digital assets
During the year, the Board received a series of updates and education sessions on digital assets,
including a teach-in from an external expert. Directors explored the evolving landscape of stablecoins,
tokenised deposits, and central bank digital currencies, as well as the differing regulatory approaches
internationally. The Board also considered opportunities and risks for NatWest Group, the importance
of industry collaboration and partnerships, and the need to build foundational capabilities to respond
to future developments in digital assets.
Climate
The Board’s annual climate training spotlight featured external perspectives on UK energy policy and
clean power initiatives. Directors discussed the evolving policy landscape, challenges and opportunities
in supporting the UK’s transition to net zero. Directors also considered how NatWest Group can enable
customer decarbonisation through financing and advisory support and the importance of embedding
sustainability at the core of NatWest Group’s strategy and operations.
Financial crime
The Board participated in tailored training on the dynamic financial crime landscape and shifting
regulatory expectations, including the introduction of the ‘Failure to Prevent Fraud’ offence. The training
explored NatWest Group’s risk appetite, control frameworks, and recent enforcement trends, while
underscoring the Board’s critical role in setting the tone from the top, maintaining robust oversight,
and championing a culture of integrity. Directors were also encouraged to advocate for cross-sector
collaboration and public-private partnerships to strengthen our defences against financial crime.
Client Assets
(CASS)
Directors reviewed online training materials aimed at supporting a positive bank-wide CASS culture.
The training, which was also offered to colleagues across NatWest Group, aimed to support a culture
focused on protecting client assets and managing the risks associated with handling client assets.
As well as supporting compliance with regulatory obligations, the training also sought to enable
effective identification and management of CASS issues and risks by increasing knowledge and
awareness of CASS at all levels of the organisation.
Models
The Board received training on regulatory expectations for model risk management under PRA SS1/23.
The session covered NatWest Group’s approach to governance, risk appetite, and oversight of material
models, including credit and operational risk models, reinforcing directors’ responsibilities in relation to
challenge and informed decision-making.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
113
Governance and remuneration
Subsidiary governance and ring-fencing
Subsidiary governance and ring-fencing
NatWest Group plc is a listed company with equity listed on the London
and New York stock exchanges. NatWest Holdings Limited (NWH Ltd)
is the holding company for our ring-fenced operations, which include
our Retail Banking and Private Banking & Wealth Management
segments and certain aspects of our Commercial & Institutional
business. A common board structure is operated such that the
directors of NWH Ltd are also directors of The Royal Bank of Scotland
plc (RBS plc) and National Westminster Bank Plc (NWB Plc). Known
collectively as the NWH Sub Group, the boards of these three entities
meet concurrently.
An integral part of NatWest Group’s governance arrangements is
the appointment of three double independent non-executive directors
(DINEDs) to the Boards, and Board committees, of the NWH Sub
Group. They are Francesca Barnes, Karin Cook and Mark Rennison.
Francesca Barnes assumed the role of Senior Independent Director
of the NWH Sub Group Boards on 1 March 2025, succeeding Ian
Cormack, who subsequently stepped down from the NWH Sub Group
Boards on 4 May 2025. Karin Cook joined the NWH Sub Group Boards
as an independent non-executive director on 5 May 2025.
The DINEDs are independent in two respects: (i) independent of
management as non-executives; and (ii) independent of the rest of
NatWest Group by virtue of their NWH Sub Group-only directorships.
They attend NatWest Group plc Board and relevant Board committee
meetings as observers. Our DINEDs play a critical role in NatWest
Group’s ring-fencing governance structure and are responsible for
exercising appropriate oversight of the independence and effectiveness
of the NWH Sub Group’s governance arrangements, including the
ability of each Board to take decisions independently.
The DINEDs also have an enhanced role in managing any material
conflicts which may arise between the interests of the NWH Sub Group
and other members of NatWest Group.
Principal subsidiaries of NatWest Group include Coutts & Co, NatWest
Markets Plc and The Royal Bank of Scotland International Limited.
Matters from the subsidiaries are principally escalated through the
management reporting line and regular engagement between directors
of NatWest Group plc and the subsidiaries.
Francesca Barnes
(NWH Sub Group)
Senior Independent Director
and Double independent
non-executive director
Date of appointment:
1 May 2018
Francesca has a wealth of banking
and private equity experience gained
through an extensive executive
career which included roles with
Chase Manhattan Bank and UBS
Investment Bank. She also previously
served on the Board of Coutts & Co.
Francesca is currently a non-
executive director of HarbourVest
Private Equity Limited and of Capvis
Private Equity and a member of
the Advisory Board of Abundance
Investment Limited.
Mark Rennison
(NWH Sub Group)
Double independent
non-executive director
Karin Cook
(NWH Sub Group)
Double independent
non-executive director
Date of appointment:
1 September 2023
Mark has extensive retail banking and
financial services expertise, alongside
broad experience at board and
committee level. As a Chartered
Accountant and with 12 years’
experience on the Board of
Nationwide as CFO, Mark brings a
blend of technical knowledge and a
deep understanding of the financial
services sector. From 2020 to 2023,
he was an independent non-executive
director of TSB and Chair of the Audit
Committee from 2021 to 2023.
Mark was appointed as an
independent non-executive director
of Coutts & Co on 27 October 2025.
He is also Senior Independent
Director, and Risk and Capital
Committee Chair, of The Royal
London Mutual Insurance
Society Limited.
Date of appointment:
5 May 2025
Karin has a broad mix of financial
services experience, including retail,
commercial and investment banking
as well as financial advice, wealth
management and insurance. With
35 years’ experience in banking and
wealth management, Karin was Chief
Operating Officer of Quilter plc, an
integrated wealth management
company from 2019 until 2024.
Previously, she was Director of
Operations for Lloyds Banking Group,
and spent her earlier career in various
operational roles at HSBC, Morgan
Stanley and Goldman Sachs.
Karin is currently a non-executive
director of Phoenix Group Holdings
plc and Chair of its subsidiary,
SunLife Limited.
Further information on subsidiary governance can be found in the N&G report on pages 122 to 123.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
114
Governance and remuneration
Key Board policies and processes
External appointments
and time commitment
In accordance with the Code, non-executive
directors are expected to allocate sufficient
time to the company to discharge their
responsibilities effectively and to devote such
time as is necessary to fulfil their role. Our
executive directors do not hold more than
one non-executive directorship in a FTSE 100
company or other significant appointment.
The Code emphasises the importance of
ensuring directors have sufficient time to
meet their board responsibilities. Before
any appointment, significant commitments
are disclosed with an indication of the time
involved. After appointment to the Board,
any new external appointments require prior
approval. Time commitment is also considered
during non-executive directors’ year-end
review meetings with the Chair, in the context
of directors’ performance and contribution to
the Board.
Board papers relating to new director
appointments or proposed additional external
appointments for existing directors include
details of the individual’s full portfolio and
anticipated time commitment for the external
role(s) under consideration. They also include
a reminder of applicable limits on the number
of directorships which may be held, and
relevant proxy adviser and investor guidance.
The Board also considers whether it is
appropriate for executive directors to retain
any remuneration from any new external
roles, depending on the appointment.
Details of all directors’ conflicts of interest are
recorded in a register which is maintained by
the Chief Governance Officer and Company
Secretary and reviewed annually by the Board.
Independence
Non-executive director independence and
individual directors’ continuing contribution
to the company are considered by the Board,
with support from the Group Nominations
and Governance Committee at least annually,
and when new non-executive directors are
appointed. The Board considers that the Chair,
Rick Haythornthwaite, was independent on
appointment and that all current non-executive
directors are independent, for the purposes of
the Code.
Information
All directors receive accurate, timely and clear
information on all relevant matters and have
access to the advice and services of the Chief
Governance Officer and Company Secretary.
As part of the 2025 Board effectiveness
review, directors provided feedback and
suggested ways to improve Board and
committee papers further. Further details
on the review findings and proposed actions
to be taken on this topic can be found on
pages 119 to 121.
External advice is provided to the Board as
required. In addition, all directors are able, if
necessary, to obtain independent professional
advice at the company’s expense.
During 2025, the Board approved the
appointment of Mr Critchley to the Board
and additional appointments taken on
by Ms Gopalan, Mr Haythornthwaite and
Ms Whitehead were also approved. In each
case, the Board noted there would be no
material impact on the time commitment
required for their respective NatWest Group
roles and authorised any situational conflicts
of interest which had been notified,
under the process described below.
Details of current external appointments
can be found on pages 96 to 98 and at
natwestgroup.com.
Conflicts of interest
Our directors’ conflicts of interest policy
ensures that directors understand their
fiduciary duties in respect of conflicts of interest
and sets out the procedures for the effective
identification, management and disclosure
of actual or potential conflicts of interest.
It also sets out the process for authorising
certain conflicts.
Directors are required to notify the Board
of any situational or transactional conflict of
interest and to update the Board with any
changes to the facts and circumstances
surrounding such conflicts.
Situational conflicts can be authorised by
the Board in accordance with the Companies
Act 2006 and the company’s Articles of
Association. The Board considers each
request for authorisation on a case-by-case
basis and has the power to impose conditions
or limitations on any authorisation granted as
part of the process.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
115
Governance and remuneration
Board oversight of purpose, strategy and culture
Enhancing strategic engagement; Leveraging data and analytics
The Board is responsible for establishing
NatWest Group’s purpose. In September 2024
the Board approved NatWest Group’s purpose
statement – ‘The bank that turns possibilities
into progress’.
The Board also sets NatWest Group’s
strategic direction and oversees the execution
of its strategy. Following a series of dedicated
strategy sessions in 2024, the Board formally
approved the strategy in February 2025,
including the three strategic priorities of
disciplined growth, bank-wide simplification and
active balance sheet and risk management.
In March 2025, the Board confirmed
its support for a bank-wide performance
management framework to underpin delivery
of our purpose and strategy, including
the adoption of Key Performance Indicators
(KPIs) and Key Results (KRs) to help measure
strategic progress.
Changes made to re-balance Board and
Board committee agendas helped to ensure
sufficient time on the Board agenda for
broader considerations, with dedicated
sessions on Private Banking & Wealth
Management and NatWest India strategy.
The Board considered the Private Banking &
Wealth Management strategy twice in 2025.
In April, the Board considered evolving issues
within the UK wealth landscape and discussed
potential participation choices in terms of
segments and propositions. A dedicated
strategy session in June focused on three
topics for deeper discussion, with a strong
focus on customers and clients, as well as
external perspectives. Non-executive directors
confirmed their support for the proposed
Private Banking & Wealth Management
strategy, noting its alignment with
broader NatWest Group strategy.
In July, the Board discussed NatWest’s strategy
in India, noting its strong operational and
technology presence within NatWest Group.
Directors considered potential opportunities
to enhance efficiency using automation and
artificial intelligence (AI), and how cultural
shifts would further support enhanced
customer centricity. Directors noted the
value of continuing to attract top engineering
talent, and ensuring that India’s role remained
integrated with NatWest Group’s future
strategic plans.
The Board also welcomed the changes made
by the CEO in October to reshape the Group
Executive Committee and accelerate the shift
towards becoming a more customer-focused
organisation, with enabling functions aligned
more closely to our businesses and customer
needs. The Board recognises these changes
present the opportunity to increase customer
centricity, empowerment and decision velocity,
and to accelerate the delivery of value through
technology, data and AI, supporting our
ambition to build a simpler, more agile bank.
Further information on NatWest Group‘s strategy
and progress made against our 2025 strategic
priorities can be found in the Strategic report.
The Board leads the development of NatWest
Group’s culture, behaviours and standards and
is responsible for assessing and monitoring
culture and how culture is being embedded.
These responsibilities have been fulfilled in
several ways in 2025 (as detailed in the table
opposite), supported by the implementation
of NatWest Group’s new core behavioural
framework which is aligned with and supports
our purpose, strategy, ambition and customer-
focused performance culture.
Board reporting on culture in 2025
What did the Board
receive?
Areas of focus and outcomes
New core
behavioural
framework
In February, the Board approved the new core behavioural framework. Following
the refresh of our purpose, strategy, ambition and performance culture, the new
framework consolidated previous colleague frameworks into a single set of
action-oriented behaviours under the ‘Winning Together’ banner. Directors
welcomed the fact that the new simplified approach ’started with customers’
and was relatable to all colleagues across the bank.
‘Tone from the
top’
At the March Board dinner, as part of a broader conversation on strategic
priorities, the directors discussed the ‘tone from the top’ culture and behaviours
they wished to demonstrate as a Board and in their interactions with executive
management. The outputs from the discussion were reflected in the 2025 Board
evolution action plan.
Colleague
Advisory
Panel reports
Feedback on discussions from Colleague Advisory Panel (CAP) meetings
held in March and September were provided to the Board by the CAP Chair.
Topics included executive remuneration and the wider workforce, the new core
behavioural framework, financial crime strategy and the launch of the new global
recognition platform ‘Recognise’.
Performance
management
framework
In March, the Board reviewed how the performance management framework
supports the delivery of NatWest Group’s purpose, strategy, and financial plan.
This included the introduction of Key Results for franchises and functions to
align with agreed KPIs, enabling the tracking of strategic implementation
and fostering the desired cultural change.
Performance
culture and
operating
systems
In June, directors received an update on initial work underway to explore how the
bank’s customer-focused performance culture could be enhanced by being more
customer-focused, empowering those closest to the customer, speeding
up decision making and putting decisions closer to those serving customers;
alongside accelerating the journey to have a simpler operating system,
powered by technology, AI and data; all in service of our customers.
Consumer Duty
assessment
In July, the Board approved the Consumer Duty assessment, noting the
role culture played in further embedding. Offering products such as the family-
backed mortgage proposition and focus on the bereavement journey
demonstrated the bank’s dedication to prioritising good customer outcomes.
Colleague
survey results
In June and December, the Board considered the results of our 2025
colleague survey, Our View (which had been conducted in April and September).
Colleagues had responded to questions across the whole colleague experience
including purposeful leadership, performance culture, building a simpler bank,
wellbeing and ways of working, and risk, conduct and ethics.
Culture
assessment
report
In July, the Board received a Culture assessment report on progress across
metrics linked to performance culture, ethics, conduct, and compliance.
In December, it was noted that from 2026, an enterprise-wide culture plan
focused on customer performance would be reflected in the future approach
for assessing culture.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
116
Governance and remuneration
How the Board engaged with stakeholders
Enhancing strategic engagement
Investors
Customers
How the Board engaged
The Board engaged with a range of investors throughout
the year. In addition to receiving regular updates on
investor activity and share price performance, directors
had the opportunity to engage with private shareholders
at a virtual shareholder event and in person at the Annual
General Meeting. In December, the Board held dedicated
roundtable discussions with representatives of some of its
largest institutional shareholders. These sessions enabled
valuable dialogue, with investors sharing their investment
strategies, perspectives on NatWest’s performance
relative to peers, and feedback on NatWest Group’s
strategic direction. Directors asked questions and gained
direct insight into investor priorities and expectations.
Major shareholders are also offered an annual update
to cover governance and Board related matters with
the NatWest Group Chair. During the time that UKGI
managed HMT’s stake in NatWest, UKGI representatives
also had the opportunity to meet Board committee Chairs
bilaterally to support it in discharging its stewardship
responsibilities. The Chair of the Group Performance and
Remuneration Committee wrote to a number of NatWest
Group’s largest institutional shareholders, proxy advisers
and the UK regulators in late 2025 to discuss our
approach to remuneration for the year and updated
the Board on those discussions. Shareholder feedback
was positive and supported the finalisation of the 2026
Performance Share Plan scorecard.
Outcome of engagement
Direct and indirect engagement with both private and
institutional shareholders offers directors an opportunity
to understand key areas of interest. Feedback from
these sessions informed the Board’s external messaging,
strategic priorities, and approach to future engagement.
In particular, input on remuneration matters was valuable
in shaping NatWest Group’s approach in this area.
How the Board engaged
The Board met with a range of retail and commercial
customers during the year. At onsite meetings
with commercial clients during the Board’s visit to
Birmingham, discussions centred on the opportunities
their banking relationship offered, as well as the broader
macroeconomic environment and external threats such
as cyberattacks. Participation in customer call listening
exercises during a visit to a local branch allowed directors
to gain insights into retail customers’ experiences and
how colleagues supported their needs.
The Board also received management updates on
customer engagement activity and sentiment, including
Competition and Markets Authority survey results and
Net Promoter Scores. In December, the Board received
a summary of customer complaints, noting a modest
increase in volumes compared to 2024. Key drivers
included social media influence, claims management
company activity, and industry-wide trends such as fraud
and scams. The Board reviewed management’s actions to
address these issues, including the use of new technology
and a focus on removing pain points from customer
journeys. These insights informed the Board’s oversight
of customer experience and operational improvements.
During discussions with the Regional Board Chairs, the
directors discussed customer priorities and how the
growth agenda could be supported in the regions.
Outcome of engagement
The information gathered through these engagements
and management updates informed broader strategic
discussions at Board level. The Board’s oversight of
complaints data and management’s response has
helped shape NatWest Group’s ongoing focus on
customer experience, operational excellence and the use
of technology to deliver better outcomes for customers.
The Board reviews and confirms
its key stakeholder groups for the
purposes of section 172 annually.
For 2025, the key stakeholder groups
remained investors, customers, colleagues,
communities, regulators and suppliers.
The Board’s agenda and engagement plans
were structured to enhance its understanding
of stakeholders’ views and interests. This in
turn has informed Board discussions and
decision-making. The Chair also provided
regular updates to the Board on meetings with
regulators, key stakeholders and other relevant
bodies including clients, financial institutions,
advisers, and government representatives.
Our section 172(1) statement on pages 36 to
37 describes how stakeholder interests have
been considered in Board discussions and
decision-making, including principal decisions.
In addition to the examples highlighted in the
Strategic report, the Board engaged with the
views and interests of stakeholders in a variety
of other ways, as described in further detail in
this section.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
117
Governance and remuneration
Communities
Regulators
Suppliers
How the board engaged with stakeholders continued
Colleagues
How the Board engaged
The Board undertook a variety of direct and indirect
engagement activities with colleagues in 2025. Directors
met with a range of colleagues, including graduates,
apprentices, digital champions, branch colleagues and
relationship managers. Discussions during talent sessions
were focused on the impact of AI and the opportunities it
presents. Throughout 2025, the Board received regular
updates on colleague matters, including specifically on the
subject of the bank’s operating system as a vital driver
of improvements in customer-focused performance.
The results of our 2025 colleague survey, Our View,
were also shared with the Board.
Our Colleague Advisory Panel
Under Provision 5 of the Code, we have adopted a
formal workforce advisory panel as our chosen method
of engagement with the workforce. NatWest Group’s
Colleague Advisory Panel (CAP) was set up in 2018
and is currently chaired by Roisin Donnelly, one of our
non-executive directors. Each CAP meeting is attended
by at least two other directors, and afterwards Ms
Donnelly reports to the Board on CAP discussions and
colleague sentiment. The CAP met twice in 2025 and
topics of discussion included executive remuneration
and the wider workforce, the new core behavioural
framework, financial crime strategy and an update on
recognition, including the new global Recognise platform.
Outcome of engagement
The CAP promotes colleague voice in the boardroom,
providing a forum for colleagues to engage directly
with the Board on topics which are important to them
and supporting effective two-way dialogue between
colleagues and Board members. CAP updates to the
Board provided an overview of CAP discussions on the
topics referred to above, together with a summary of
Q&As arising from the CAP meeting,
Further information on the CAP, including its membership
composition and engagement activity on remuneration
matters during 2025, can be found in the Directors’
remuneration report on page 147.
How the Board engaged
Engagement with regulators in 2025 occurred via bilateral
and collective meetings on a range of topics. Directors
engaged regularly through core assurance and proactive
engagement meetings with the supervisory teams at the
PRA and FCA respectively. Directors also participated
bilaterally in regulatory review activity when requested.
Representatives of the FCA attended the Board meeting
in April to discuss the content of its Firmwide Evaluation
Letter (FEL). In addition, representatives of the PRA joined
the Board meeting in July to present the findings from the
annual Periodic Summary Meeting (PSM). During the year
the Board also considered key regulatory submissions
such as the Operational Resilience Self Assessment, as
well as associated feedback from the PRA and FCA.
Outcome of engagement
The bilateral and collective engagement with the
regulators offered opportunities to strengthen the
relationship and further build understanding of each
party’s priorities. Following review of the FEL and PSM
findings, the Board agreed how to address the action
points raised and the respective responses.
How the Board engaged
The Board engaged with a number of strategic suppliers
in 2025, supporting its oversight of major transformation
programmes and the effective delivery of the long-term
strategy and customer outcomes. The Board and its
committees also considered third party risk management
and the potential impacts of suppliers’ operational
resilience being compromised. At a dedicated strategic
partner session with two of NatWest Group’s technology
partners on the bank-wide data transformation, the
Board received external insight on industry trends and
leading practices in data, digital and AI enabled banking.
This session also provided constructive challenge on
organisational decision-making pace and the cultural and
capability enablers required to deploy data-driven tools
and AI safely, responsibly and at scale.
Outcome of engagement
The Board noted positive evidence of accelerated data
transformation emerging from the strategic partnership
model announced in July 2025. The insights gained
enhanced the Board’s understanding of the digital, data
and AI strategy and informed its oversight of investment
decisions, transformation priorities, operational resilience,
and development of customer driven innovations.
How the Board engaged
Throughout the year the Board considered ESG matters
and the impact of the bank on the communities in which it
operates. During the regional visit to Birmingham, directors
met with community leaders and representatives from local
organisations to discuss the bank’s role in supporting
economic growth, financial inclusion, and social mobility
in the region. The Board also held a Regional Board Chairs
dinner in June, which provided a valuable forum for
discussing the needs and priorities of customers
across different communities.
The conversation centred on how the bank could better
support local customers and promote the UK Government’s
growth agenda in the regions, with Regional Board Chairs
sharing insights from their own communities.
Outcome of engagement
Through the various engagement opportunities the Board
deepened its knowledge of local challenges and opportunities
in the communities in which the bank operates.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
118
Governance and remuneration
Board effectiveness review
Improving board dynamics; Leveraging data and analytics
In accordance with the Code,
an annual review of the
performance of the Board,
its committees, the Chair and
individual directors usually takes
place annually. The review is
externally facilitated every three
years, with internal evaluations
in the intervening years.
Our 2025 Board effectiveness review
(the 2025 review) concluded that the Board
and its committees are operating effectively
and reaffirmed the Board’s commitment
to maintaining the highest standards
of governance and its ambition to be
recognised as a high-performing board.
The 2025 review, which was conducted
internally using the BoardOutlook technology
platform, provided a comprehensive
assessment of Board and committee
performance, strategic alignment, and
opportunities for further enhancement.
The process was designed to ensure the
Board remains well-positioned to steer
NatWest Group through a dynamic and
evolving environment, with a clear focus
on long-term value creation.
2025 Board effectiveness review process
Objectives and scope
The 2025 review was designed to provide an
objective assessment of the Board’s performance
and governance practices, ensuring alignment with
NatWest Group’s strategic ambitions. The primary
objectives were to:
•
Evaluate the effectiveness of the Board and its
committees in supporting long-term value creation
and transformation.
•
Assess the quality of Board dynamics, culture, and
relationships, including the interface between the
Board, management, and key stakeholders.
•
Identify areas of strength and opportunities for
further optimisation, with a particular focus on
strategic ambition, succession planning, risk
oversight, and digital transformation.
•
Ensure the Board’s composition, skills,
and processes remain fit for purpose.
The scope covered the full Board and its committees
and included senior management perspectives,
as well as a review of the Board’s skills and
committee structures.
Survey
The review process was facilitated
using the BoardOutlook platform, which
combined quantitative survey data with
qualitative insights.
All directors and ExCo members and
attendees were invited to complete a
detailed survey covering all aspects of
Board and committee effectiveness,
strategic alignment, risk management,
and culture.
Responses were analysed to identify
areas of consensus and divergence,
benchmarked against best practice,
and distilled into key findings and
actionable insights.
Presentation and review
The results were collated into a
comprehensive summary report,
which was shared with the Board and
discussed in detail at the December
Board meeting.
Following presentation of the findings, the
Board held an in-depth discussion of the
review’s conclusions, focusing on both
areas of strong performance and those
requiring further attention.
These are described in further detail
on page 120.
3
2
1
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
119
Governance and remuneration
2025 Board effectiveness review findings
Areas of strength
•
Strategic partner: The Board is seen as an active partner
in shaping and supporting strategy, with major proposals
brought early for input. There is strong alignment between
the Board and management on strategic priorities.
The strategy is clearly articulated and well understood.
•
Governance and culture: The Board’s culture is described as
positive, energetic, and well-prepared, with directors bringing
diverse perspectives and engaging in constructive challenge.
The Chair’s leadership is regarded as highly effective,
ensuring purposeful meetings and a strong working
relationship with the CEO.
•
Risk management: The risk framework is mature and robust,
with systematic identification and oversight of material risks.
Both Board and management are confident that dissent
on significant risk issues would be surfaced through
established channels.
•
Stakeholder engagement: Engagement with regulators,
investors, and colleagues is strong, with s172 considerations
embedded in Board discussions. The Board’s approach to
mergers and acquisitions is disciplined, and oversight of
performance and ESG matters is effective.
Areas of focus
•
Strategic ambition: The Board recognises the need for
clearer articulation of strategic alternatives, scenarios,
and trade-offs, particularly in the context of a rapidly
changing environment.
•
Board papers: While generally well-structured, there is
scope to improve the timeliness and conciseness of Board
and committee papers, allowing directors more time for
reflection and focus on core issues.
•
Management exposure: There is value in increasing
systematic exposure to leaders below ExCo level, to deepen
understanding of culture, capability, and succession planning.
•
Customer engagement: The Board would benefit from more
regular and structured direct engagement with customers,
building on positive experiences from recent visits.
•
External perspectives: There is a desire for more external
input, systematic lessons learned, and unstructured time in
agendas to explore emerging topics.
•
Executive succession: While processes are in place, there
is scope for greater Board visibility of the talent pipeline.
•
Transformation and digital ambition: The Board is future-
facing and digitally literate but seeks greater clarity and
ambition around transformation objectives, options,
and measures of success, especially as digital and AI
initiatives scale.
2024 action output
Challenges identified during the 2024 Board effectiveness
review, which was externally facilitated, (the 2024 review)
included ensuring a unified Board culture, future Board
composition, the fast-changing landscape (including cyber), the
impact of culture change on the organisation, acting on ‘lessons
learned’ and leadership development and succession planning.
In relation to Board committees, the 2024 review highlighted
opportunities to consider the balance of Board and committee
agendas and the membership of the Group Audit Committee
and the then Group Sustainable Banking Committee (now the
Group Technology, Innovation and Simplification Committee),
noting the single sex dynamic in both cases.
The challenges identified during the 2024 review themes
were acknowledged and addressed through the development
and implementation of the 2025 Board evolution action plan,
the outcomes of which are signposted from page 102 and
referenced throughout this Corporate governance report.
The 2025 review survey included a dedicated section on the
2025 Board evolution action plan, which received positive
feedback with a small number of areas for continued focus
reflected in the 2025 Board effectiveness review report.
An updated view of GAC and TISC membership can be found
in the relevant committee reports.
Board effectiveness review continued
4
5
6
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
120
Governance and remuneration
Board effectiveness review continued
2025 agreed actions
In response to the 2025 review, an action plan was agreed
to address a number of immediate opportunities which had
been identified.
This includes:
•
A comprehensive review of Board and committee papers,
to focus on timeliness, conciseness, and use of AI to
enhance quality and consistency.
•
Enhanced Board exposure to executive talent below ExCo
level, through expanded attendance at Board meetings.
•
Increased direct engagement with customers and
stakeholders, including structured visits.
•
Agenda time for external perspectives, lessons learned,
and innovation and learning.
Progress against these actions will be monitored by the Group
Nominations and Governance Committee in 2026.
Board committee findings and actions
The 2025 review confirmed that the Board’s committee
structure is appropriate and operating effectively, with strong
leadership and clear agendas across each of the committees.
The Board committees are seen as stable and well-structured,
with opportunities identified to further enhance effectiveness
through increased use of external advisers, deep dives into
emerging topics, and broader sharing of insights across
the Board.
Individual effectiveness reviews
The Chair met each non-executive director individually
to discuss their performance, continuing professional
development and contribution to NatWest Group’s
long-term sustainable success.
Separately, the Senior Independent Director, together with the
Senior Independent Director of the NWH Sub Group, sought
feedback on the Chair’s performance from the non-executive
directors, executive directors and other key internal and
external stakeholders, and discussed it with the Chair.
These discussions were supported by a structured agenda
and with reference to the outputs of the 2025 Board skills
assessment and a separate D360 exercise, which were also
completed using the BoardOutlook technology platform.
These individual reviews concluded that each non-executive
and the Chair continue to contribute positively to the long-term
sustainable success of the company.
2025 Board effectiveness review findings continued
7
8
9
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
121
Governance and remuneration
Report of the Group Nominations
and Governance Committee
The committee continues to oversee further
recruitment activity in respect of the Board
and the board of NWH Ltd.
Corporate governance framework
During 2025, the committee completed a
review of corporate governance framework
collateral, resulting in the launch of a revised
Corporate Governance Policy with a more
focused set of principles and rules to guide all
colleagues and subsidiary directors making
decisions. Refreshed materials were also
approved to support subsidiary boards and
non-executive directors, by outlining their
roles and responsibilities and ways of working
that support delivery of the NatWest Group
strategy. Finally, the Committee approved
revised terms of reference for the Boards of
the principal subsidiaries, updated to reflect
the new corporate governance collateral while
ensuring ongoing compliance with all legal and
regulatory requirements.
Effectiveness review
In accordance with the Code, an evaluation
of the performance of the Board and its
committees, including N&G, was conducted
internally in 2025.
Further information on the review can be found
on pages 119 – 121.
Subsidiary governance
The committee continued to oversee the
subsidiary governance framework and
received regular updates from the principal
subsidiaries on their recruitment and
succession plans. Several of NatWest Group’s
principal subsidiaries made appointments to
their boards during 2025, which the committee
has approved in accordance with its terms of
reference, including the appointment of Dame
Anne Richards as Chair of Coutts & Co.
Korn Ferry, Heidrick & Struggles, MWM, Odgers
and Spencer Stuart were engaged during the
year to support NatWest Group’s Board search
activity. The firms are members of the retained
executive search panel of suppliers (managed
by NatWest Executive Search). Spencer Stuart
and Korn Ferry also provide leadership
advisory services to NatWest Group.
To enhance the data led review of composition
and succession planning, the BoardOutlook skills
assessment tool was extended to the principal
subsidiaries. After the digital assessments were
completed, the committee reviewed the skills
matrices for Coutts & Co, RBSI and NWM,
noting each board’s critical and general skills
to support its oversight of composition and
succession planning.
I would like to thank all the committee members
and attendees for their commitment and
contributions in 2025 including Ian Cormack who
observed committee meetings in his capacity
as Senior Independent Director of NWH Ltd.
On 1 March 2025 Ian was succeeded as
Senior Independent Director of NWH Ltd by
Francesca Barnes who observed committee
meetings since then. Ian continued to observe
committee meetings until he stepped down
from the board of NWH Ltd in May 2025.
Rick Haythornthwaite
Chair of the Group Nominations and
Governance Committee
12 February 2026
Members and
attendance in 2025
Directors
Scheduled
meetings
attended
Rick Haythornthwaite (Chair)
4 of 4
Stuart Lewis
4 of 4
Lena Wilson
4 of 4
Patrick Flynn
4 of 4
Mark Seligman
1 of 1
In addition to the four scheduled meetings there were four
ad hoc meetings. All directors eligible to attend ad hoc
meetings were present at those meetings. Mr Seligman
retired from the Board on the 31 March 2025.
Principal areas of focus
•
Board recruitment
•
Corporate governance framework
•
Subsidiary governance
•
Board and committee composition
•
Succession planning
•
Diversity and inclusion
Dear Shareholder,
As Chair of the Board and Chair of the Group
Nominations and Governance Committee,
I am pleased to present this report on
the committee’s activity during 2025.
The committee is responsible for reviewing
the Board’s structure, size and composition,
as well as the membership and chairs
of Board committees, recommending
appointments to the Board and overseeing
executive succession. It also monitors NatWest
Group’s governance arrangements to uphold
best corporate governance practices and
considers developments in banking reform
and analogous issues affecting NatWest Group,
making recommendations to the Board for any
consequential changes to NatWest Group’s
operating model.
Board recruitment
Board recruitment continued to be a principal
area of focus during 2025 with the committee
supporting comprehensive candidate searches
with diversity and inclusion considerations
factored into all search criteria. A data led
approach was adopted for the assessment
and mapping of skills to enhance the search
processes and to support the monitoring
of Board skills and experience. During the
search processes, the committee held several
discussions on potential candidates, assessing
the credentials of each candidate against the
results of a Board skills assessment undertaken
and the qualities and capabilities set out in the
role specifications agreed by the committee.
After detailed searches, the committee
recommended Josh Critchley and Albert
Hitchcock for appointment to the Board
as non-executive directors. Albert will join
on the 23 February 2026. Separately, the
committee also recommended Karin Cook
for appointment to the NWH Ltd board as a
double-independent non-executive director.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
122
Governance and remuneration
Report of the Group Nominations and Governance Committee continued
Principal areas of Group Nominations & Governance Committee focus in 2025
Theme
Principal area of committee focus
Outcomes
Board &
committee
composition
The committee supported the Chair in keeping the
composition of the Board and its committees under
regular review.
The committee supported the Chair’s ongoing evolution of Board composition, and the recruitment activity outlined
reflects the changes which the committee recommended.
The changes to the Board and Board committees in 2025 and early 2026 are summarised on page 96.
Composition is reviewed with reference to the skills and
experience of individual directors, ensuring the Board’s
collective skill set remains appropriately balanced and
aligned to current and future strategic priorities.
The use of the Board Skills matrix, which was completed by all of the Board, provides the committee with valuable
insights for assessment of the current Board composition and enhancing the view of future skills gaps to be addressed.
Under the Board appointment policy, non-executive
directors are appointed for an initial term of three years,
subject to annual re-election by shareholders.
The committee completed a term review of Roisin Donnelly’s tenure, per the Board appointment policy, in December
2025 and it was recommended that Roisin serve a further three years on the Board.
Succession
planning
Alongside composition, the committee reviews succession
plans periodically to ensure there are contingency plans in
place for successors to the Board executive directors,
Board and Board committee chairs and the Senior
Independent Director.
The Board and committee succession plans were reviewed and given specific focus by the committee in June 2025,
with the plans monitored on a frequent basis.
The committee holds responsibility for the oversight of
executive succession within NatWest Group.
The committee continues to review executive succession planning for CEO-1 roles and received periodic updates on
developments. In June 2025, the committee was briefed on an evolved approach to executive succession, including
enhancements to NatWest Group’s talent ecosystem designed to strengthen leadership pipelines.
Diversity &
inclusion
The Board operates a boardroom inclusion policy which
reflects NatWest Group’s inclusion guidelines and is aligned
to NatWest Group’s behaviours and relevant legal or
voluntary code requirements.
A copy of the boardroom inclusion policy is available at
natwestgroup.com.
The boardroom inclusion policy ensures that the Board
and the committee follow an inclusive process when
making nomination decisions. That includes ensuring
that the nomination process is based on the principles of
fairness, respect, and inclusion; that all nominations and
appointments are made based on individual competence,
skills and expertise measured against identified objective
criteria without bias, prejudice, or discrimination, and that
searches for Board candidates are conducted with due
regard to the benefits of diversity and inclusion.
Diversity and inclusion have been considered in all of the recruitment overseen by the committee and in its review of
executive succession planning in 2025 and, accordingly, as of 31 December 2025, the company met:
•
the targets set out in UK Listing Rule 6.6.6R (9) (Board and executive management diversity) and disclosures under
UK Listing Rule 6.6.6R (9) and (10) can be found on page 103;
•
the FTSE Women Leaders Review voluntary target of 40% women’s representation on boards by the end of 2025,
with 55% of the Board being women;
•
the FTSE Women Leaders Review recommendation (at least one woman in the Chair or Senior Independent
Director roles on the Board and/or one woman in the Chief Executive Officer or Finance Director role by the end
of 2025) by having a woman Senior Independent Director and a woman CFO; and
•
the recommendation of the Parker Review to have at least one member of the Board being from an ethnic
minority background with two such directors meeting this criterion.
Pages 59 to 63 contain more information on how NatWest Group is creating an inclusive workplace, including
(in relation to Provision 23 of the Code) the gender balance of senior management and their direct reports.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
123
Governance and remuneration
Report of the Group Audit Committee
Whistleblowing
In my role as whistleblowers’ champion for
NatWest Group, I receive regular updates
on the effectiveness of the whistleblowing
framework, prevalent themes in reports
submitted by colleagues through the systems,
and the tracking of outcomes from the most
significant cases. The committee is responsible
for supervising the independence, autonomy,
and effectiveness of NatWest Group’s
whistleblowing policies and procedures.
There is a suitable dissemination of information
to the principal subsidiaries to ensure a
cohesive approach across NatWest Group.
Internal and External
Audit Oversight
Throughout 2025, the committee maintained
oversight of the external auditor and the
Internal Audit function. Formal evaluations
were conducted at year-end through an
internal process, and the committee reviewed
synopses of the feedback provided by relevant
stakeholders. Additional details regarding the
oversight provided can be located in the tables
on the following pages.
Effectiveness review
In accordance with the Code, an evaluation
of the performance of the Board and its
committees, including the GAC, was conducted
internally in 2025. Further information on the
review can be found on pages 119 to 121.
Patrick Flynn
Chair of the Group Audit Committee
12 February 2026
Members and
attendance in 2025
Directors
Scheduled
meetings
attended
Patrick Flynn (Chair)*
5 of 5
Geeta Gopalan*
5 of 5
Stuart Lewis
5 of 5
There were no ad-hoc meetings.
*
‘Financial experts’ as defined in the SEC rules
under the US Securities Exchange Act of 1934
(the ‘Exchange Act’) and the requirements of the
New York Stock Exchange, and that they have
competence in accounting and/or auditing as
required under the Disclosure Guidance and
Transparency Rules. The Board is satisfied that all
GAC members have recent and relevant financial
experience and are independent as defined in
the SEC rules under the Exchange Act and
related guidance.
Principal areas of focus
•
Systems of Internal Control
(financial management, reporting,
and accounting issues)
•
Financial and non-financial reporting,
including significant judgements
and estimates
•
Oversight of internal and external audit
Dear Shareholder,
I am delighted to provide an overview of the
Group Audit Committee’s (the committee
or GAC) activities and responsibilities
throughout 2025.
Firstly, I extend my gratitude to my colleagues,
Stuart Lewis and Geeta Gopalan, for their
contributions to the committee. Additionally,
I would like to express appreciation for the
insights provided by Karin Cook and Mark
Rennison, non-executive directors and
members of NatWest Holdings (NWH) Audit
Committee, who attend GAC meetings in
an observational capacity. Additional thanks
should be given to Mark Seligman, who retired
from the Board and his role on GAC on
31 March 2025, and Ian Cormack who
stepped down as a NWH Audit Committee
member in May 2025.
The committee’s fundamental role is to
supervise and challenge management’s
approach to the preparation of financial results,
as well as the disclosure of relevant financial
and non-financial information. This oversight
encompasses the evaluation of the application
of accounting policies, the scrutiny of internal
control standards related to financial reporting
and accounting, and their effectiveness, and
the review of quarterly disclosures prior
to release.
During 2025, the committee’s most significant
areas of focus included the adequacy of
provision in respect of expected credit
loss (ECL), the robustness of the control
environment (including preparation for
enhanced Code requirements applicable from
1 January 2026), and enhanced oversight of
non-financial reporting. Further details can be
found in the tables on the following pages.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
124
Governance and remuneration
Systems of internal control
The committee placed significant emphasis on the internal control systems concerning financial management, reporting, and accounting issues. Throughout 2025, it received regular reports on this and
assessed the effectiveness and efficiency of NatWest Group’s internal control systems, encompassing any notable deficiencies or shortcomings.
Matter
Role of committee and context of discussion
How the committee addressed the matter
Sarbanes-Oxley
Act of 2002
To consider compliance with section 404 of the Sarbanes-
Oxley Act of 2002.
The committee received periodic updates on the bank’s internal controls over financial reporting throughout 2025,
enabling ongoing monitoring of progress and providing support for management’s year-end conclusions. This included
updates from management regarding control deficiencies that emerged during the year, and confirmation that there
were no significant deficiencies or material weaknesses identified. The committee maintained oversight of the plans
and transition toward more automated preventive key controls. Furthermore, regular updates from EY regarding
their assessment of the Sarbanes-Oxley Act compliance and the status and rating of control matters were also
provided. The approach to the assessment of the controls in respect of the business acquired from Sainsbury’s Bank
was overseen, including temporary controls implemented during the migration process. The committee was pleased
that full customer migration was achieved prior to the end of the financial year.
Regulatory and
financial returns
To assess the controls and procedures implemented by
management for adherence to regulatory and financial
reporting standards.
As part of management’s ongoing work to strengthen the financial reporting control environment, the committee
continued to oversee delivery against the findings of the industry-wide skilled person’s review of regulatory returns.
Significant progress was made during 2025, with remediation of a substantial number of issues, and the committee
continue to monitor completion of the remaining actions.
Control
environment
To evaluate the control environment ratings of the
businesses, functions, and significant subsidiaries, and to
assess management’s efforts in preserving or enhancing
the control environment in respect of financial
management, reporting and accounting.
The committee noted that the overall control environment retained its ’met’ rating during 2025, driven by further
improvements in the control environment. The committee noted progress achieved to reduce the percentage of
controls which failed validation testing by Internal Audit following a focus on improving business control ownership.
In addition, the committee also noted a greater than 50% reduction in the level of unremediated significant
audit findings.
Quarterly reports were received from the chairs of audit committees of material regulated subsidiaries, providing
oversight of material risk and control matters and a channel for escalation of issues. Throughout the year, the GAC
Chair held quarterly meetings with the Chairs of the subsidiary audit committee meetings to facilitate consistency
and to share key themes discussed.
Other standards
of control
In addition, the committee receives regular updates on
matters pertinent to NatWest Group’s standards of
internal control.
The committee received an update on the bank’s tax position and discussed matters including tax provisioning levels,
significant provided and unprovided tax risks and deferred tax assets. For deferred tax, this considered sustainable
profitability, the period of assessment, and changes against previous estimates.
The GAC reviewed the disclosure on internal control matters in conjunction with the related guidance from the
Financial Reporting Council. For preparations for the new Code requirements which are effective from 1 January
2026 please see page 124.
Report of the Group Audit Committee continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
125
Governance and remuneration
Financial and non-financial reporting
The GAC evaluated various accounting judgements and reporting matters during the development of NatWest Group’s financial reporting in 2025. The committee examined the quarterly, interim, and
annual results announcements, the annual reporting suite, and other key financial and non-financial publications for submission to Board for approval. This encompassed climate and sustainability-related
disclosures incorporated into the annual results and climate transition plan report, with attention given to the controls governing the formulation of these publications.
Matter
Role of committee and context of discussion
How the committee addressed the matter
Expected credit
losses
To scrutinise and question management’s assessments
regarding credit impairments and the fundamental
assumptions, methodologies, and models utilised, as well
as any necessary post-model adjustments (PMAs). The
influence of macroeconomic risks on the credit landscape
was also discussed.
The GAC discussed management assumptions, methodologies, and PMAs used for provisions under IFRS 9. There
was macroeconomic volatility with sector-specific risks, which were reflected in PMAs and scenario weights. The
PMAs underwent quarterly review to ensure their appropriateness and accurate reflection of judgements, models,
and data. The committee plans to maintain its scrutiny of PMAs in 2026. Overall, the committee determined that
while models are a fundamental component of IFRS 9, they are unable to encompass all potential scenarios,
particularly those not observed in the recent past. The GAC emphasised the continued importance of exercising
judgement in establishing these provisions, with PMAs serving as a critical tool in facilitating this process.
Provisions and
disclosures
To consider the level of provisions for regulatory, litigation
and conduct issues throughout the year.
The committee reviewed the levels of provisions during the year for regulatory, litigation and conduct matters, and
was satisfied these were appropriate.
Viability
statement
and the going
concern basis
of accounting
To review NatWest Group’s going concern and
viability statements.
The GAC examined evidence of NatWest Group’s capital, liquidity, and funding position, and assessed the framework
supporting the evaluation of principal risks. The committee evaluated NatWest Group’s outlook in this context, the
identified principal and emerging threats (including climate risk), and the ongoing macroeconomic developments,
such as the impact of tariffs and international developments. FRC guidance was integrated into the formulation of
the viability statement for NatWest Group. The committee endorsed both the going concern assessment and viability
statement for submission to the Board.
Fair,
balanced and
understandable
To oversee the review process which supports the
committee and Board in concluding that the disclosures
in the Annual Report and Accounts and other elements
of the year-end reporting suite of documents, taken as a
whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the
company’s position and performance, business model
and strategy.
The committee supervised the review procedure for the year-end disclosures, encompassing central oversight
and coordination of the Annual Report and Accounts and other disclosures managed by the Finance function.
The documents were reviewed by the Executive Disclosure Committee before being considered by the GAC and
underwent a management certification process for the year-end reporting suite. The committee assessed whether
the annual, interim, and quarterly disclosures adhered to the requirements of the UK Corporate Governance Code,
ensuring they were deemed to be ‘fair, balanced, and understandable’. It consistently determined that the releases
met the necessary criteria. The external auditor also examined the statement as part of the year-end processes
and endorsed NatWest Group’s position. The committee received quarterly reports in respect of the application
of accounting policies, the most significant accounting judgements and estimates and received a summary
from management which outlines why the reporting suite taken as a whole is considered to be fair, balanced
and understandable.
Non-financial
reporting
To review the principal non-financial disclosures made by
NatWest Group and to ensure appropriate controls are in
place to support the preparation of the information. These
disclosures include the sustainability review chapter of the
annual results and a separate climate transition plan report.
The committee oversaw the ongoing enhancement of the sustainability reporting control framework, which underpins
non-financial disclosures. The GAC deliberated on and provided input regarding the sustainability review chapter in
the Annual Report and Accounts. There were developments in preparation for compliance with new standards
for sustainability disclosures in both the UK and EU, albeit there remained significant uncertainty regarding the
implementation date for such standards. US developments continued to be monitored.
Report of the Group Audit Committee continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
126
Governance and remuneration
Internal Audit
The GAC is responsible for overseeing the Internal Audit function, monitoring its effectiveness and independence.
Matter
Role of committee and context of discussion
How the committee addressed the matter
Quarterly
opinions
To review quarterly opinions regarding the performance of
the governance, risk management, and internal control
framework, existing challenges, and the sufficiency of
corrective actions.
Throughout the year, the committee received quarterly opinions from Internal Audit. Internal Audit also highlighted
any material or emerging concerns identified during their audit activities. During 2025, the reporting cadence was
amended to provide detailed reporting on a bi-annual basis with abridged reports provided in Q1 and Q3. This was
in recognition of the improved control environment within NatWest Group. The committee also considered Internal
Audit’s updates on ongoing challenges, including operational resilience, automation, and key change programmes,
noting improvements in control validation rates, progress on simplification objectives and risk self-assessments, and
the sharing of audit-driven capabilities across the business. The committee thoroughly deliberated on Internal Audit’s
assessment of the robustness of the control environment which was assessed as of an acceptable standard or ‘met’.
Annual plan
and budget
To agree Internal Audit’s annual plan and budget
before the commencement of each year, as well as
any significant adjustments necessary during the year.
In December 2024, the committee approved the focus of the Internal Audit plan on the bank’s most high-risk areas.
This had changed from a remediation focus to those risks to the successful delivery of the NatWest Group’s strategy,
following the closure of significant legacy issues and the achievement of a ‘met’ control standard. The 2025 budget
remained consistent with the prior year, reflecting efficiencies secured within the function. Subsequently, in December
2025, the committee approved Internal Audit’s plan and budget for 2026.
Internal Audit
Charter and
independence
To approve the Internal Audit Charter each year and
reviews the independence of the Chief Audit Executive
(CAE) and function as a whole.
The GAC reviewed and approved the Internal Audit Charter which was consistent with prior years. The committee
also noted the Independence Statement and confirmed the independence of Internal Audit in December 2025.
Performance
evaluation
To monitor and review, at least annually, the effectiveness
of Internal Audit.
In 2025, the CAE continued to report to the GAC Chair with a secondary reporting line for administrative purposes
to the Group CEO.
The GAC assessed the annual performance (including risk performance) of the function and CAE. The 2025
evaluation of the Internal Audit function was carried out internally. Stakeholders across the bank, including the
GAC members, attendees and the external auditors, were invited to provide feedback, identifying areas of particular
strength and those for enhancement. The overall findings were positive, and the Internal Audit function was found
to be operating effectively with some opportunities to improve in respect of adopting a more holistic end to end
approach to reviews undertaken. Progress on recommendations made from the evaluation will be overseen by
the GAC in 2026.
Visit
To undertake an annual deep dive session with members
of the Internal Audit leadership team.
Together with the Group BRC, the GAC participated in a successful deep dive session with Internal Audit’s
management team. A Variety of issues impacting the function were discussed, including succession planning for
the CAE, emerging thinking on the three lines of defence model, and approach to building the skills required for
the function of the future. Discussions also included the function’s increased usage of behavioural risk data science
techniques, data testing, adoption of Generative AI and continuous audit techniques. The committee agreed to
continued visibility at the committee for the potential internal CAE successors via presentation of the IA opinions.
Report of the Group Audit Committee continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
127
Governance and remuneration
External Audit
The GAC has responsibility for monitoring the independence and objectivity of the external auditor, the effectiveness of the audit process, for reviewing the bank’s financial relationship with the external
auditor, and fixing its remuneration. Ernst & Young has been NatWest Group’s auditor for 10 years following their appointment in 2016. Following a tender undertaken in 2022, the committee has
overseen the process to move to NatWest Group’s new auditor, PwC, ahead of their appointment from 2026. The GAC complied with the requirements of the FRC’s Audit Committees and the External
Audit: Minimum Standard (the Minimum Standard) and the Statutory Audit Services for Large Companies Market Investigation Order 2014 for the year ended 31 December 2025. In respect of the
Minimum Standard the committee noted requirements requiring full Board engagement on future audit tenders, and also considered whether shareholder engagement was warranted on the scope
of the external audit. It was concluded that such engagement was not warranted on the basis of existing shareholder dialogue.
Matter
Role of committee and context of discussion
How the committee addressed the matter
External Audit
reports
To review reports prepared by the external auditor
in relation to NatWest Group’s financial results and
control environment.
The committee received quarterly reports on the review-related work and conclusions of the external auditor.
The reports included EY’s view of the judgements made by management, compliance with international financial
reporting standards, and the external auditor’s observations and assessment of effectiveness of internal controls
over financial reporting.
Audit plan
and fees
To consider the scope and planning of the external auditor
in relation to the audit of NatWest Group. It is authorised
by the shareholders to fix the remuneration of the
external auditor.
The GAC reviewed EY’s 2025 plan. It welcomed the external auditor’s focus on ECL, the valuation of financial
instruments with higher risk characteristics, the pension valuation and the net pension balance and IT access
management. In line with the authority granted to the committee by shareholders at the 2025 Annual General
Meeting to fix the remuneration of the external auditor, the GAC approved the audit fees for the year including
the fee for the 2025 interim results. The committee received confirmation from the external auditor that the fees
were appropriate to enable delivery of the required procedures to a high quality.
Annual
evaluation
To review and monitor the external auditor’s
independence and objectivity and the effectiveness of the
audit process, taking into consideration all relevant
professional and regulatory requirements.
The evaluation of the external auditor’s performance in 2025 was undertaken to assess the independence and
objectivity of the external auditor and the effectiveness of the audit process. The GAC members, attendees, finance
directors of businesses and functions, and key members of the Finance Team were consulted as part of the evaluation.
Stakeholders were invited to assess the external auditor’s independence, engagement, provision of robust challenge,
bench strength and reporting. The evaluation concluded that the external auditor was operating effectively and with
objectivity. Key strengths included the quality of the audit approach, the challenge presented to management, and
the bench strength and knowledge of the audit team. The evaluation also included consideration of the audit quality
reviews conducted by the FRC and the Public Company Accounting Oversight Board (PCAOB) during the year and
as part of the annual evaluation.
Audit partner
To oversee the lead audit partner and resolution of any
points of disagreement with management.
Javier Faiz has been EY’s lead audit partner since H1 2024. The EY Lead Partner attended all meetings of the
committee in 2025 and met in private session with the committee members throughout the year. This provided the
external auditor an opportunity to raise any points of disagreement with management. No such points were raised by
the external auditor in 2025.
Additional
reports prepared
by the external
auditor
To review reports prepared by the external auditor in
relation to NatWest Group.
During 2025, the committee considered the results of the external auditor’s assurance procedures on compliance
with the FCA’s Client Asset Rules for NatWest Group’s regulated legal entities for the year ended 31 December 2025.
EY also presented the findings of their audit of specific elements of the sustainability elements of the Annual Report
and Accounts to the GAC.
Auditor
transition
To oversee transition of the external auditor to PwC
in 2026.
The committee received bi-annual updates on progress with the transition of external audit services from Ernst &
Young to PwC for the 2026 year-end external audit. Confirmation was received that PwC achieved independence
from NatWest Group on 4 July 2025. Engagement continued to support PwC partners to develop an understanding
of the business of the NatWest Group, and in respect of securing access to the relevant data. PwC shadowed the
2025 year-end audit, which was completed by Ernst & Young, and have attended GAC meetings from July 2025.
Report of the Group Audit Committee continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
128
Governance and remuneration
External Audit continued
Matter
Role of committee and context of discussion
How the committee addressed the matter
Non-audit
services
To review and approve, at least annually, NatWest
Group’s policy in relation to the engagement of the
external auditors to perform audit and non-audit services
(the policy).
All audit and non-audit services are approved by, or on behalf of, the committee to safeguard the external auditor’s
independence and objectivity. The GAC reviewed and approved NatWest Group’s non-audit services policy in 2025.
Under the policy, all audit-related services and permitted non-audit service engagements are approved by the GAC,
with updates presented to each scheduled meeting.
Where the fee for a non-audit service engagement is expected to exceed £100,000, a competitive tender process
must be held and interim approval is delegated to management, but this is subject to ratification at the next scheduled
GAC meeting. Where the fee is anticipated to be £250,000 or more, approval of all GAC members is required.
For fees between £100,000 and £250,000, work can be approved on an interim basis by the GAC Chair, subject
to subsequent ratification at the next scheduled GAC meeting. The policy permits the external auditor to undertake
engagements which are required by law or regulation, or relates to the provision of comfort letters in respect of
debt issuance by NatWest Group, provided prior approvals are in place in accordance with the policy. The policy also
allows NatWest Group to receive services from EY/PwC which result from a customer’s banking relationship, provided
prior approvals are in place in accordance with the policy. All such approvals are subsequently reported to the GAC.
The policy now applies to PwC during their shadowing period. Further details of the non-audit services policy can be
found at natwestgroup.com.
Information on fees paid in respect of audit and non-audit services carried out by the external auditor can be found in
Note 6 to the consolidated financial statements.
Report of the Group Audit Committee continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
129
Governance and remuneration
Spotlight
UKCG Code Principle O
Changes
The Board is accountable for establishing
and maintaining an effective risk and
internal control framework across
NatWest Group and for determining
the nature and extent of principal risks
NatWest Group is willing to take to
achieve its long-term objectives.
The effectiveness of the EWRMF, NatWest’s primary
risk governance document, is assessed through RCPA
outcomes. In 2025, the EWRMF was maintained through
regular updates to the BRC on RCPA performance and
reports at each BRC and Board meeting on performance
against risk appetite and on top and emerging risks. The
Board approved the EWRMF, supported by Risk’s and
Internal Audit’s conclusion that it is effective, and by
NatWest Group’s positive RCPA outcome of ‘met’.
Further detail on the BRC’s review of the EWRMF is
on page 132.
Spotlight
Cybersecurity focus
During 2025, information and
cybersecurity was a key area of focus
in response to high-profile external
attacks and escalating nation-state
activity. Intelligence highlights that
nation-state-directed cyberattacks
are growing in reach and targeting
a wider range of sectors, reflecting the
uncertainty of the geopolitical landscape.
In October, the UK Government urged CEOs and Chairs
of all FTSE 350 firms to make cybersecurity a board-level
responsibility. It listed three actions to strengthen cyber
resilience which NatWest Group had already embedded,
reinforcing their importance.
For further detail on how information and cyber security was
considered by the Board and the BRC, please see pages 110
and 133.
Spotlight
UKCG Code Provision 29
preparations
The GAC and Group BRC reviewed
progress towards meeting the new
internal control declaration requirements
under the UK Corporate Governance
Code which will be applicable for
2026 reporting.
The approach seeks to utilise the output of existing
internal risk and control assessment processes such
as testing carried out as part of the Sarbanes-Oxley
management assessment, risk and control performance
assessments, and existing assurance processes.
A definition of material control was agreed for the
purposes of meeting the Code’s requirements, and a
dry run of the assessment and reporting process was
undertaken to ensure readiness ahead of implementation
in 2026. The committees will oversee the completion
of a number of actions to enhance the approach
throughout 2026.
Governance in action
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
130
Governance and remuneration
Report of the Group Board Risk Committee
the NatWest Group’s response to operational
resilience incidents; and improvements to
third-party recovery capabilities. Against
the backdrop of various high-profile external
cyberattacks, information and cybersecurity
was also a key focus for BRC, ensuring robust
controls and NatWest Group’s ability to
recover from potential attacks prioritised.
BRC maintained its rigorous oversight
of principal financial and strategic risks
throughout the year, critical to its focus on
emerging risks from the external environment.
This included detailed business portfolio
reviews as well as dedicated sessions on the
NatWest Group’s Private Markets business and
approach to balance sheet management, with
the committee encouraging ongoing focus on
reporting of aggregate exposures and return
on capital, as well as further development of
dynamic stress testing, encompassing
contagion and correlation risk.
Close committee oversight of model risk
remained a key priority for BRC, including
continued progress to enhance the Model Risk
Management Framework and delivery of
internal ratings-based models to comply with
regulatory expectations. During 2025, BRC
also devoted time to discussing AI deployment
within the NatWest Group, with particular
focus on enhancement of risk management
controls as well as the development and
governance of AI models.
In addition to the above principal areas of
focus, the committee continued its oversight
of NatWest Group’s other key financial and
non-financial risks, risk frameworks and
material change programmes. This included
progress with embedding Consumer Duty,
focusing on good customer outcomes across
priority products and services.
Thank you to everyone for their valuable
contributions to the committee during 2025,
especially my fellow directors, Patrick Flynn
and Lena Wilson, as well as Geeta Gopalan
and Gill Whitehead, both of whom joined the
committee in January 2025. Additionally,
I would like to thank Ian Cormack, Francesca
Barnes and Mark Rennison, for their insights
as non-executive directors and members
of NatWest Holdings BRC, attending BRC
meetings in an observational capacity. Mark
joined the NatWest Holdings BRC in January
2025 and Ian stepped down in May 2025.
Further information on areas of focus and
challenge by the committee during the year
is provided on the following pages.
Effectiveness review
In accordance with the UK Corporate
Governance Code, an evaluation of the
performance of the Board and its committees,
including the BRC, was conducted internally in
2025. Further information on the review can
be found on pages 119-121.
Stuart Lewis
Chair of the Group Board Risk Committee
12 February 2026
Principal areas of focus
•
Risk profile, risk appetite, and
emerging risks
•
Operational risk, including operational
resilience and cybersecurity
•
Financial and strategic risks
•
Model risk
Members and
attendance in 2025
Directors
Scheduled
meetings
attended
Stuart Lewis
8 of 8
Patrick Flynn
8 of 8
Geeta Gopalan
8 of 8
Gill Whitehead*
6 of 8
Lena Wilson
8 of 8
There were no ad hoc meetings.
*
Gill Whitehead was unable to attend two meetings
due to external commitments arranged prior to her
appointment to the committee.
Dear Shareholder,
I am pleased to present my third report as
Chair of the Group Board Risk Committee
(the committee or BRC).
This report describes how the BRC has fulfilled
its role in overseeing and advising the Board
in relation to current and potential future risk
exposures and risk profile; and in overseeing
the effectiveness of risk frameworks and
internal controls required to manage risk.
This year the committee assumed further
responsibilities from the Board, thereby
allowing the Board to devote additional time
to strategic discussions. In carrying out its
important role, the committee helps to ensure
NatWest Group supports its customers by
managing risk well and responding to the
evolving external environment.
Principal areas of focus in 2025
2025 has been defined by the turbulent
macroeconomic and geopolitical external
environment. BRC has therefore focused
on resultant emerging risks, considering the
potential impacts on NatWest Group’s risk
profile, its customers and supply chain, with
ongoing oversight of any mitigating actions.
BRC has also focused on ensuring that
NatWest Group’s risk appetite remains
appropriately calibrated against the
backdrop of the emerging risk landscape.
Operational risk remained a principal area
of focus, with BRC welcoming an improved
operational risk profile while continuing to
oversee the work to drive robust operational
risk management across NatWest Group.
This included detailed oversight of operational
resilience, encompassing the operational
resilience framework and required
enhancements; improvements in continuity
planning and resilience in key jurisdictions;
Outside of formal meetings, the BRC Chair met regularly
with the Group Chief Risk Officer and other members
of senior management to discuss key risk priorities
and issues.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
131
Governance and remuneration
Principal areas of Group Board Risk Committee focus in 2025
Theme
Principal areas of committee focus
Outcomes
For each principal risk, BRC considered a spotlight at least annually and received updates on performance against risk appetite at every meeting.
Risk profile
and reporting
BRC’s consideration of NatWest Group’s current and future risk profile in 2025 included
a particular focus on operational risk, model risk, credit risk and emerging risks. Group
Risk Reports discussed at every meeting were supplemented by strategic risk spotlights
and updates from principal subsidiary board risk committee chairs, providing a holistic
view of all risks and an escalation route for any issues. The BRC Chair also attended
the board risk committee meetings of principal subsidiaries on a rotational basis.
BRC considered regular reports on legal and regulatory risks and developments and
held a dedicated session focusing on emerging risks and the macroeconomic and
geopolitical environment, considering the potential impacts on NatWest Group.
This included perspectives from external and internal subject matter experts and
complemented the updates on top and emerging risks received at every meeting.
Further information on how NatWest Group identifies and manages emerging risks
can be found in the Strategic Report on page 78.
The committee received updates on progress with embedding NatWest Group’s
approach to risk culture, known as intelligent risk taking.
The committee supported the continued evolution of the Group Risk Report, and
enhancements to the presentation of key metrics including credit exposures. It welcomed
the progress made on automating reporting, whilst encouraging further automation and
data quality improvements to support more timely and insightful reporting.
The committee challenged management on NatWest Group’s preparedness in response
to macroeconomic and geopolitical developments, including potential 2
nd
, 3
rd
and 4
th
order
impacts. It requested further analysis to support strategic Board discussions. BRC also
challenged management on emerging risks, including cyberattacks and disruptive AI.
It sought and received assurance from management that NatWest Group’s risk appetite
remained appropriately calibrated in light of developments in emerging risks and the
macroeconomic environment. The committee also welcomed management’s
commitment to improving continuity planning and resilience in key jurisdictions.
Risk frameworks
(including risk
appetite), risk
management
strategy and
Risk function
oversight
In 2025 BRC continued to provide robust oversight of NatWest Group’s risk
frameworks (including risk appetite). The enterprise-wide risk management framework
(EWRMF) sets out NatWest Group’s overall approach to managing risk. Its effectiveness
is assessed through the Risk and Control Performance Assessment (RCPA) outcomes.
Further information can be found in the control environment update on page 133.
BRC welcomed Risk’s and Internal Audit’s conclusion that the EWRMF was a
comprehensive and effective framework and recommended it to the Board for
approval. As part of its consideration of the framework, and in conjunction with
the Group Audit Committee, BRC reviewed management’s proposed approach
to ensure NatWest Group’s compliance with the requirements of the 2024 UK
Corporate Governance Code. For further information on this work, see page 130.
The committee maintained close oversight of NatWest Group’s risk appetite
framework, including the annual refresh of risk appetite, which was recommended
to the Board for approval.
Under delegated authority from the Board, the committee approved the enterprise-
wide risk management strategy (EWRMS), which defines the strategy for risk
management at NatWest Group. BRC maintained oversight of the execution of the
EWRMS through regular reporting and spotlights on all priority EWRMS programmes.
The committee continued its oversight of Risk30, the strategic programme of
transformation activity within the Risk function and received assurance that
the function was adequately resourced to deliver its mandate.
The committee was satisfied that the EWRMF continued to support NatWest Group’s
ability to identify, assess, and manage risk in a manner consistent with its strategic
objectives and regulatory obligations. BRC welcomed Internal Audit’s recognition of
the progress made during 2025 to enhance the framework. The committee sought and
received management’s commitment to further enhancements to be delivered in 2026.
BRC continued to oversee NatWest Group’s risk appetite framework, challenging
management to simplify the framework in line with strategic and regulatory priorities.
As part of the annual risk appetite refresh, key committee discussions focused on model
risk and Private Markets, reflecting wider industry focus. BRC also reviewed the key
risk policies
(1)
and approved them under the authority delegated to it by the Board.
In approving the EWRMS, BRC encouraged management to ensure that it remained
dynamic and reflective of NatWest Group’s strategic ambitions and evolving risk profile,
in light of the wider macroeconomic uncertainty and the increased use of AI.
BRC requested management provide a forward-looking view of the capabilities
being developed through Risk30 to ensure an appropriate response to the evolving
risk landscape. The committee held a dedicated discussion on risk capabilities
and management committed to provide a Risk function capabilities profile to
the committee on a regular basis.
(1)
Risk policies are in place for each principal risk and define, at a high level, the cascade of qualitative expectation, guidance and standards that stipulate the nature and extent of permissible risk taking. They are consistently applied across NatWest Group and subsidiary legal entities
and form part of the qualitative expression of risk appetite for each principal risk.
Report of the Group Board Risk Committee continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
132
Governance and remuneration
Principal areas of Group Board Risk Committee focus in 2025 continued
Theme
Principal areas of committee focus
Outcomes
Operational risk,
operational
resilience, and
information and
cybersecurity
The committee performed oversight across a range
of operational risks including technology end of
life remediation, payments technology, AI risk
management and operational resilience. BRC
reviewed the operational resilience self-assessment
prior to its approval by the Board and maintained
oversight over recommended enhancements.
Information and cybersecurity remained a key area
of focus, with updates on the overarching geopolitical
threat landscape, privileged access management,
industry-wide insider threat risks and learnings from
read-across activity on external cyberattacks.
BRC welcomed confirmation by management and Internal Audit of improvements to NatWest Group’s operational risk
profile during 2025, driven by the elimination of very high risks through the risk and control self-assessment process and
effective prioritisation of key programmes. Management were challenged to ensure focus on technology end of life
remediation was maintained.
The committee was updated on AI deployment within NatWest Group and actions to enhance risk management controls.
It was agreed that in 2026 AI risks would be reported in a consolidated AI dashboard to support committee oversight.
In supporting the Board in its oversight of operational resilience, BRC challenged management to ensure that
enhancements were appropriately prioritised and resourced. The importance of NatWest Group’s holistic approach to the
management of operational resilience was also noted. The committee provided oversight of management’s response to
operational resilience incidents, supporting improvements to third-party recovery capabilities and the development of
supplier-level playbooks to mitigate business impacts in the event of prolonged outages.
BRC challenged management on actions to mitigate increased information and cybersecurity risks resulting from the
evolving geopolitical landscape and requested further consideration of any increased resources or investment required.
The committee encouraged management to prioritise recoverability and also considered the implications of increased
insider threats across the global financial sector, receiving assurance on measures taken. The committee noted NatWest’s
Group compliance with HM Government’s Cyber Governance Code of Practice.
Control
environment
BRC continued to monitor the effectiveness of
internal controls for managing risk during 2025.
Regular updates were received on performance
against the RCPA criteria and BRC also considered
the outcomes of the end of year RCPA assessment.
The committee welcomed confirmation from management that NatWest Group’s overall control environment remained
stable, with a RCPA ‘met’ rating. The committee reviewed and supported management’s report on the internal controls
required to manage risk.
Outsourcing and
third-party risk
management
BRC provided oversight of NatWest Group’s
outsourcing and third-party risk management
arrangements, including oversight of critical service
providers. Focus areas included the alignment of
third-party risk management with operational
resilience, particularly in relation to supplier
recovery capabilities and scenario testing.
Following Board delegation, the committee approved
the NatWest Group’s outsourcing policy standards.
The committee was pleased to note that NatWest Group’s outsourcing framework remained effective and that, overall,
risks had been reduced.
It supported the continued integration of third-party risk into NatWest Group’s operational resilience self-assessment,
including through supplier-proven recovery plans, and encouraged further alignment of frameworks to ensure consistency
and efficiency.
In light of the industry-wide heightened risk of cyberattacks, BRC challenged the cyber resiliency of NatWest’s supply
chain and received assurances from management on the protections in place.
BRC also discussed internal group outsourcing arrangements and requested further management action to confirm
appropriate service levels.
Report of the Group Board Risk Committee continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
133
Governance and remuneration
Principal areas of Group Board Risk Committee focus in 2025 continued
Theme
Principal areas of committee focus
Outcomes
Financial and
strategic risks
BRC maintained rigorous oversight of NatWest
Group’s principal financial and strategic risks
throughout the year. Regular reporting in the Group
Risk Report was supplemented by focused reviews
including the retail and wholesale credit risk portfolios,
capital and credit risk mitigation, traded and non-
traded market risk and balance sheet management.
These in-depth reviews were further enhanced by
business specific strategic risk presentations, ensuring
the committee had a comprehensive understanding
of the overall risk landscape.
At the committee’s request, management delivered
dedicated sessions to review NatWest Group’s
Private Markets business, as well as wholesale
credit stewardship, providing further risk insight
and analysis.
Capital, liquidity and funding requirements
were subject to ongoing BRC review, providing
recommendations to the Board as required.
Following Board delegation, BRC reviewed and
approved the NatWest Group’s ICAAP and
ILAAP submissions.
Additionally, the committee considered risks to
NatWest Group’s strategic and financial plan,
pension risk, and climate and nature risk.
BRC welcomed confirmation that the retail and wholesale credit risk portfolios remained stable and within appetite.
The committee received assurance regarding the range of techniques used to support vulnerable customers and
reinforced the importance of continuous improvement to ensure good customer outcomes. Regarding the wholesale
portfolio, a detailed review of Private Markets, securitisation activity, leveraged funds and NatWest Group’s balance
sheet management programme resulted in committee challenges including capital efficiency and return on capital, risk
mitigation, securitisation funding, stress testing approach and concentration risk management. In response, management
outlined ongoing enhancements to limit setting, the reporting of aggregate exposures, data quality and dynamic stress
testing, encompassing contagion risk and layered correlations.
BRC reviewed traded and non-traded market risk exposures and challenged management on limit structures and
adequacy of controls. The committee also discussed the implications of macroeconomic volatility necessitating the
need for enhanced oversight and received regular updates on actions taken.
In its consideration and approval of the ICAAP and ILAAP, BRC challenged management on the assumptions used
in leverage planning floors and stressed outflow coverage. It sought assurance that the risk of digitisation on deposit
outflows had been sufficiently considered and supported continued monitoring of deposit trends.
The committee discussed the execution risks involved in the delivery of the strategic and financial plan, receiving
confirmation from management that they were being appropriately managed.
During the annual pension risk spotlight, BRC discussed the continuation of the buy-in transactions with third-party
insurers entered into by the Trustee of the NatWest Group Pension Fund, welcoming confirmation of the overall
reduction in risk profile.
In its consideration of climate and nature risk, BRC challenged management to review whether climate and nature risk
appetite continued to reflect NatWest Group’s evolving climate strategy and received assurance from management that
risk appetite remained appropriate. BRC considered the embedding of climate considerations into strategic decision-
making and also discussed the importance of robust data as a key enabler of a mature climate and nature risk
framework.
Model risk
On behalf of the Board, the committee maintained
close oversight of model risk throughout 2025. This
included regular progress updates on the model risk
management programme established to deliver a
robust model risk framework and ensure compliance
with the Prudential Regulation Authority’s (PRA)
Supervisory Statement SS1/23. BRC activity also
included oversight of the annual SS1/23 self-
assessment outcomes.
BRC focus remained on the status of the internal
ratings based (IRB) transformation programme
established to deliver new models to meet regulatory
expectations. Updates on trading book risk models to
achieve regulatory compliance were also received.
The committee noted the substantive progress in implementing the model risk framework enhancements required under
SS1/23. It supported management’s proposed actions to address regulatory feedback, whilst providing challenge to ensure
that all regulatory expectations were met. BRC also considered the robustness of the validation process and requested
enhanced reporting in the Group Risk Report to improve committee oversight.
The development and governance of AI models was specifically considered by BRC, including the need to ensure
appropriate resource and skillsets throughout the model lifecycle.
Through its oversight of the IRB transformation programme, BRC received regular updates on the status of NatWest
Group’s IRB models, including regulatory feedback received and associated impacts on temporary model adjustments.
Additionally, at BRC’s request, Board training was arranged on NatWest Group’s most material models, further supporting
Board-level oversight of the model risk framework. More information can be found in the Board report on page 113.
Report of the Group Board Risk Committee continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
134
Governance and remuneration
Principal areas of Group Board Risk Committee focus in 2025 continued
Theme
Principal areas of committee focus
Outcomes
Stress testing,
recovery and
resolvability
BRC reviewed the outputs of the Bank of England’s
(BoE) Final Report of the System Wide Exploratory
Scenario exercise carried out over the prior two-year
period and approved under Board delegated authority
the macroeconomic scenario and expansion used in
the 2025 Bank Capital Stress Test (BCST), together
with the BCST results ahead of their submission to
the BoE.
BRC approved under Board delegated authority the
stress scenarios used for monitoring the NatWest
Group’s risk profile relative to risk appetite.
In considering the BCST results, the committee sought confirmation of the adequacy of model overlays used and noted
that NatWest Group had passed the stress test, significantly ahead of the stress minimum requirement, with no strategic
management actions required.
In approving the stress scenarios to be used for monitoring a moderate, severe and extreme stress, BRC discussed the
robustness of the underlying growth assumptions and noted the economic modelling used.
Following prior committee challenge, the Board undertook an operational resilience, recovery and resolution fire drill
exercise and wash up. Further information can be found in the Board update on page 110.
Conduct and
regulatory
compliance risk
The committee received regular updates throughout
the year on conduct and regulatory compliance
matters. This included updates on embedding
Consumer Duty as well as Group and business
specific conduct and regulatory compliance updates.
The committee welcomed confirmation that NatWest Group’s conduct and regulatory compliance risk profile remained
within appetite, with continued progress made in strengthening controls and improving customer outcomes. It also
welcomed confirmation of the positive progress made on the programme established to respond to the review carried
out by the Department of Justice Compliance Monitor.
BRC challenged management to ensure good customer outcomes across priority products and services and received
regular updates on improvements underway.
Data risk
management
and BCBS239
BRC received updates on NatWest Group’s data
strategy programme of work, including progress
against management’s return to appetite plan.
On behalf of the Board the committee also reviewed
and approved NatWest Group’s data aggregation and
risk reporting framework (BCBS239) and considered
its assessment of BCBS239 compliance prior to
regulatory submission.
Management’s progress against the data strategy return to appetite plans was welcomed by BRC. The committee
sought and received assurance regarding the embedding of centralised data standards and controls across businesses.
Regarding BCBS239, the committee welcomed confirmation that the enhancements made to the assessment
methodology had improved the robustness of the annual assessment process, aligning NatWest Group with industry
best practice. BRC encouraged continued enhancement of data capabilities to support timely reporting and effective
risk oversight.
Financial crime
and Fraud
In addition to dedicated financial crime spotlights and
regular updates, BRC received the Money Laundering
Reporting Officer’s (MLRO) report.
The committee also received updates on NatWest
Group’s fraud prevention strategy, including the use
of AI to detect and prevent fraud. Broader industry
developments were considered as part of BRC’s
oversight of fraud related risks, including an update
on complex investment scams.
The committee welcomed confirmation that NatWest Group’s financial crime risk profile remained stable and of RBSI’s
return to appetite on schedule. It continued to encourage management to focus on evolution and investment to meet
challenges and regulatory expectations.
BRC considered NatWest Group’s fraud risk performance, noting its positive trajectory. It supported the ongoing
engagement with government and industry stakeholders and encouraged continued investment in preventative controls
and customer education.
Report of the Group Board Risk Committee continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
135
Governance and remuneration
Principal areas of Group Board Risk Committee focus in 2025 continued
Theme
Principal areas of committee focus
Outcomes
Transformation/
major change
programmes
The committee continued to oversee the delivery of
NatWest Group’s transformation and major change
programmes and their performance against risk
appetite. Regular updates were included in the Group
Risk Report and BRC also received biannual spotlights.
The committee reviewed the progress of NatWest Group’s most material change initiatives and oversaw the material
execution risks inherent in material change programmes. In response to prior committee feedback, it was noted
management had further broadened the scope of the major change programmes reported. Following a challenge from
BRC, management provided further explanation of the approach to managing programme interdependencies and the
process for escalating risks and issues across the portfolio. The committee also challenged whether delivery dates were
ambitious enough.
Reputational risk
The committee maintained oversight of NatWest
Group’s reputational risk profile throughout the year.
During the annual spotlight, BRC received updates
on the operation of the Reputational Risk Framework
and enhancements that were underway.
BRC discussed key reputational risks across the industry and sought assurance from management on the processes in
place to horizon scan for reputational risks. The committee requested that the Group Risk Report be further augmented
with increased information on emerging reputational risks to enhance its oversight. BRC was pleased to receive
confirmation from management that the reputational risk profile was stable and that the reputational risk framework
was operating effectively following changes previously introduced to strengthen it.
Remuneration
The committee continued to provide oversight of
NatWest Group’s accountability and remuneration
arrangements, working closely with RemCo.
Further detail on how risk is considered in
remuneration decisions can be found in the
Directors’ remuneration report on pages 140 to 168.
Following prior BRC challenge and completion of a peer benchmarking exercise, the committee supported proposals to
streamline its involvement in remuneration and accountability considerations, reflecting the NatWest Group’s improved
risk performance and culture, whilst still aligning with regulatory expectations and market practice.
BRC reviewed and recommended to RemCo the outcomes of the 2025 remuneration risk performance assessments for
the purposes of calculating variable pay, in addition to proposed Risk & Control goals of the NatWest Group Executive
Committee members and attendees (ExCo) and individual performance goals for the Group Chief Risk Officer.
The committee carried out its annual review of the Material Risk Taker framework and policy.
Report of the Group Board Risk Committee continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
136
Governance and remuneration
Report of the Group Technology, Innovation
and Simplification Committee
The committee held spotlight sessions including
deep dives on unlocking the power of data, the
advancement of device capabilities, and AI
research and strategy.
With the rapid evolution of technology and AI,
TISC ensures the Group’s work remains on
track while challenging the level of ambition
on customer centricity with a customer future
back approach.
Each TISC meeting features interlinked agenda
items, connected by a common strategic
thread. We maintain close alignment with the
Board Risk Committee and the Performance
and Remuneration Committee, ensuring no
duplication or overlap. External perspective on
selected items is presented providing insight
into potential threats and implications for
the Group.
Effectiveness review
In accordance with the Code, an evaluation
of the performance of the Board and its
committees, including TISC, was conducted
internally in 2025. Further information on the
findings, outcomes and actions arising from
this review can be found on pages 119 to 121.
Conclusion
I would like to thank my fellow directors,
executive management and those who
presented updates to the committee during
2025. My special thanks to Francesca Barnes,
SID of NatWest Holdings for her invaluable
contribution. I am also thankful for the support
provided by the NatWest Digital X team who
have helped shape the topics covered by TISC.
Yasmin Jetha
Chair of the Group Technology, Innovation and
Simplification Committee
12 February 2026
Principal areas of focus
•
Business initiatives to digitise
customer engagement
•
Simplification initiatives
•
Modernised technology platforms
and design choices
•
External perspectives on Innovation/
Disruption threats and implications
for the bank
At its final meeting in March 2025,
SBC considered the housing sector;
the defence sector; ethical, social and
environmental policy; the implementation
of a new performance management
approach; and the activation and
embedding plan for the winning together
strategy and related behaviours.
Members and
attendance in 2025
Directors
Scheduled
meetings
attended
Yasmin Jetha (Chair)
3 of 3
Roisin Donnelly
3 of 3
Geeta Gopalan
3 of 3
Gillian Whitehead
3 of 3
Lena Wilson
3 of 3
There were no ad hoc meetings of
the committee.
Dear Shareholder,
I am delighted to present my report as Chair
of the Group Technology, Innovation and
Simplification Committee (the committee
or TISC).
Following the 2024 Board effectiveness
review, it was decided to evolve the SBC
into the TISC, a new Board-level committee
with effect from 1 June 2025. The new
committee is responsible for providing
strategic oversight and advice on NatWest
Group’s use of technology, data, and
innovation to support delivery of its strategic
ambitions, leaving former SBC topics
regarding ESG and workforce related
matters as Group Board’s areas of focus
in recognition of their strategic importance.
A summary of the final SBC meeting is
included in the box below.
TISC’s areas of focus are underpinned
by strong engagement with executive
management. The TISC is committed to
ensuring that management proposals
relating to the use of technology
and innovation:
•
are aligned with the Group’s purpose and
strategy and that the technological enablers
support the simplification initiatives across
the Group;
•
can demonstrate they increase market
agility, operating leverage, enhance
customer experience and engagement,
and use automation;
•
highlight NatWest’s position versus
competitors, and what is best in
class that we could learn from; and
•
detail the current baseline position with a
future-state outlook focused on outcomes,
with interim milestones on the path to
that state.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
137
Governance and remuneration
Theme
Principal areas of committee focus
Outcomes
Business
initiatives to
digitise customer
engagement
•
Retail Customer Contact Transformation:
The committee covered
the
use of technology (notably AWS Connect) to streamline customer
experience across channels, with a focus on maintaining human
contact at critical moments (e.g., bereavement). This included simplifying
technology architecture so customer information and context followed
the customer across channels, and reduced colleague cognitive load
through AI augmentation.
•
Personalised Messaging and Data-Driven Engagement:
The committee reviewed how investment in AI was enabling
event and trigger-based personalised messaging, aiming for faster,
higher-quality, and lower-cost content delivery. The ambition was to
speed up campaign launch times. New content creation capabilities
were demonstrated and the committee reinforced the importance
of tone, consistency, and regulatory compliance in messaging.
•
Customer Data Mastering:
The committee considered plans to master
customer data logically in one place, improving resilience and enabling
sharing across platforms.
TISC recommended that scenario analysis and management actions to mitigate revenue disruption
be presented to a future Board meeting. TISC also recommended consideration be given as to how
M&A targets are assessed for their support of agile, AI-driven customer data approaches. Additional
recommendations included establishing an early-adopter customer group to test new features and
developing colleague and investor narratives to outline key deliverables in the journey towards a
single customer view.
Engagement with customers was reviewed including the frequency of refresh of marketing
permissions and the importance of ensuring appropriate use of customer data reinforced.
The committee also reviewed the implications of third-party data use, social proofing, and
the challenges of delivering dynamic content within regulatory constraints and encouraged
management to engage the Information Commissioners Office on notification disclaimers.
The use of third-party data (e.g., rewards) and the challenges of integration were discussed, as
well as the importance of cognitive behavioural science in understanding customer conversations.
Simplification
initiatives
•
Simplification Key Results:
Progress of the Group against Key Results
targets for simplification within NatWest Digital X was monitored.
•
Digital X Simplification Strategy:
The June meeting highlighted three
fundamental outcomes: customer engagement, agility, and cost/FTE
reduction. The strategy was to position the Group as a platform bank
at the convergence of finance and technology, with rapid evolution in
technology and data/AI, and a strong focus on removing complex
orchestration layers to speed up delivery. It was also noted that an
Architectural Council has been established to govern simplification
activity, ensuring alignment with strategic targets and oversight of
transformation prioritisation.
The appropriateness and the level of ambition within Key Results targets for simplification was
challenged resulting in a reset of a number of Key Results through a customer lens.
The level of ambition within the plans, and the need to consider the use of AI from a trust standpoint
was challenged; and the need for clarification regarding what was remediation activity rather than
simplification work was discussed.
The importance of the underlying architecture to further increase agility was reinforced.
Report of the Group Technology, Innovation and Simplification Committee continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
138
Governance and remuneration
Theme
Principal areas of committee focus
Outcomes
Modernised
technology
platforms and
design choices
•
Bankline Transformation:
The transformation of the Bankline platform
is central to the Commercial & Institutional (C&I) business, addressing
outdated systems and service gaps. The programme aims to re-engineer
the platform to be cloud-ready, improve customer experience, and
reduce vulnerabilities to cyberattack and fraud. The pace of delivery
has increased, with the Group benchmarked as the number one for
release delivery in 2025 (source: Source: Curinos, H2 Commercial
Digital Tracker).
•
Digital Spine and Data Marketplace:
The Digital Spine is being
developed as a set of shared capabilities for reuse across the
Group, supporting improved customer journeys and agility. The data
marketplace is intended to combine siloed data sets, reduce point-to-
point sourcing, and drive operational efficiency. The adoption of Agentic
AI-based architecture requires centralised data and Application
Programming Interfaces (APIs), with several applications in development.
•
AI Feature Teams and Adoption:
The establishment of an AI feature
team, with deliverables expected by the end of 2025. AI adoption
is progressing, with tools like CoPilot Chat and Aiden (an internally
developed generative AI tool) rolled out to employees, with an initial
focus on building avatars capable of developing an empathetic
response; and deepfake detection capabilities.
•
Industry and bank-specific AI adoption
: External guests from NVIDIA
and the Group’s Chief AI Research Officer provided an opinion on the
evolution of AI, emerging use cases, and the sustainability of current
market valuations. This included the strategic importance of data,
monetisation via proprietary models, industry adoption, and the impact
on customer relationships and staff roles. This evolution of large
language models, Agentic AI, and the Group’s ambition for operating
leverage through AI was covered. Demonstrations of financial crime
and fraud use cases, and retail banking applications were provided
alongside plans to enhance the colleague experience.
TISC challenged whether it was possible to complete the transformation more quickly whilst
acknowledging the extent of upgrade required. The committee also reviewed how customer
needs were identified and prioritised via customer journey activity. The extent to which
customer experience was used to drive the targeting of training was also covered.
The committee challenged whether it was necessary to move to real-time processing to deliver
the required customer benefits or whether near real-time processing would suffice. In addition,
TISC raised concerns that it was hard to gauge the level of ambition within plans presented and
that this view would be helpful in all future updates.
The importance of ensuring the right culture for the new team was noted.
At the December 2025 meeting, the Committee acknowledged the strategic direction and
recognised the need for internal model development where economically justified. Options to de-risk
adoption, including consideration of technology from multiple geographies were also reviewed.
Regarding colleague adoption, ethical considerations in AI rollout, reward system changes, and future
skills development were covered. It was agreed to provide a spotlight on engineering workforce
plans and future skills during 2026.
External
perspectives
on Innovation/
Disruption
threats and
implications
for bank
•
Device Disruption:
The committee reviewed the rapid adoption of
emerging devices (wearables, headsets, brain-computer interfaces,
robotics with embedded AI) and the potential to disrupt customer
engagement and end mobile phone dominance.
•
Agentic AI and Banking Disruption:
The June meeting included a deep
dive into Agentic AI, with external perspectives from the Technology
Advisory Board. The committee considered how rapid shifts in Agentic
AI adoption by customers could impact the Group, including the risk
of disintermediation and the need for strategic advantage through
ownership of complex prompts and trust relationships. Engagement
with regulators and industry bodies is ongoing.
•
Competitive Positioning:
The Group’s position versus peers was
reviewed including opportunities and challenges such as security
concerns potentially slowing generative AI adoption across the
industry which presented opportunities for the Group.
TISC highlighted the need for clarity on which platforms the Group will engage with and considered
the importance of trust and regulatory perspectives, and microservice-level operations to reduce
competitive threats.
Disintermediation in the market was discussed and it was noted that new entrants from China
were already using AI agents to offer to move customers money and were not bound by domestic
regulation. The Directors challenged the Group’s ambition including what steps would be taken
to ensure the Group was winning for customers. It was agreed that a future update would be
provided in respect of the Group’s position on Agentic AI adoption by our customers.
The committee reinforced the importance of benchmarking and learning from other industries and
best-in-class competitors.
Report of the Group Technology, Innovation and Simplification Committee continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
139
Governance and remuneration
Directors’ remuneration report
Dear Shareholder,
On behalf of the Board, I present the
remuneration report for 2025.
I want to start by acknowledging the sad news
that Frank Dangeard, who stepped down from
his role as non-executive director on 23 April
2025, passed away in August 2025. Frank was
a highly valued and respected member of the
team, and he and his counsel will be greatly
missed. On behalf of the Group Performance
and Remuneration Committee, I would like to
extend my condolences to Frank’s family and
all who knew him.
I would like to thank Mark Seligman, who
retired on 31 March 2025 for his services to
the Group Performance and Remuneration
Committee (the committee). Mark made
significant contributions during his tenure, and
his insight and support have been invaluable.
In 2025, the committee welcomed Patrick
Flynn and Josh Critchley as members, effective
from 11 June 2025 and 11 December 2025
respectively. I appreciate the substantial
expertise they bring and thank them for
their valuable contributions so far. Additionally,
I would like to thank Ian Cormack, Mark
Rennison and Karin Cook, non-executive
directors and members of the NatWest
Holdings Performance and Remuneration
Committee, for the insights they provided in
attending meetings of the committee in an
observational capacity in 2025. Ian stepped
down from the Board in May 2025.
Wider workforce
highlights
April 2025
•
Nearly 84% of our junior UK
colleagues, covered by our negotiated
pay approach, received a salary
increase of at least 2%, with almost
two-thirds receiving 2.5% or more.
May 2025
•
The second award under our Sharing
in Success scheme delivered shares
with a grant value of £1,275 for all
eligible employees (adjusted for local
salary levels).
October 2025
•
Building on our performance
management philosophy Beyond
and our new behaviours introduced
in 2025, we launched Recognise,
our new approach to recognition,
which enables colleagues to be
acknowledged ‘in the moment’
for their contributions.
From April 2026 onwards
•
In May 2026, all eligible employees will
receive a Sharing in Success award
of shares worth £1,440 (adjusted
for local salary levels), subject to
shareholder approval of the
recommended dividend.
Members and
attendance in 2025
Directors
Scheduled
meetings
attended
Lena Wilson (Chair)
5 of 5
Roisin Donnelly
5 of 5
Mark Seligman
2 of 2
Frank Dangeard
1 of 2
Patrick Flynn
(Member since 11 June 2025)
2 of 2
Mark Seligman retired on 31 March 2025 and
Frank Dangeard stepped down on 23 April 2025.
Josh Critchley did not formally become a member of the
committee until 11 December 2025; however, he was
present at the meeting held on 10 December 2025.
In addition to the five scheduled meetings held, there
were two ad hoc meetings. All directors eligible to attend
ad hoc meetings were present at those meetings.
Contents
140
Chair’s introduction
144
Remuneration at a glance
146
The directors’ remuneration policy
and wider workforce remuneration
151
Annual remuneration report
Performance highlights for 2025
2025 was another really strong year for
NatWest Group, rooted in the support we
provide to people, families and businesses
in every nation and region of the UK. Our
performance is a consequence of deliberate
actions and clear priorities. Attributable profit
of £5,479 million and a Return on Tangible
Equity (RoTE) of 19.2%, are both significantly
up on the year before, and ahead of guidance.
We were pleased with our performance,
confident in our priorities and ambitious for our
business. With positive momentum across the
bank, we see significant opportunities to grow
and succeed with our customers and the UK
in the future.
As demonstrated by returning £4.1 billion
of capital to shareholders in 2025, and our
proposed final dividend of £1.8 billion, our
ability to deliver leading returns to our
shareholders has remained strong.
Wider workforce and
customer focus
We continued to focus on rewarding colleagues
in a fair and transparent way in 2025. Our
UK starting salary increased to £24,525 per
annum in April 2025, and nearly 84% of our
junior UK colleagues (A and B grades), who
are covered by our negotiated pay approach,
received a salary increase of at least 2%, with
almost two-thirds receiving 2.5% or more.
Throughout 2025, we further embedded
Beyond, our performance management
philosophy which was launched in 2024,
with a focus on goals, feedback, and
fostering a performance culture. Encouraging
developments were evident, including a
stronger emphasis on frequent coaching
and feedback, alongside a rise in recorded
feedback. Additionally, more colleagues tailored
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
140
Governance and remuneration
their goals throughout the year, and colleague
sentiment towards performance and pay
remained favourable. Further details on these
aspects are provided later in the report.
Looking ahead to 2026, we will continue to
build on these improvements to ensure our
compensation framework stays aligned with
our business strategy and motivates colleagues
to raise the bar.
The second award under our Sharing in
Success scheme was delivered in shares in
May 2025, based on performance in 2024.
The scheme is intended to further align
colleagues with our strategic direction and
drive improvements in customer performance,
only paying out when NatWest Group has
demonstrated satisfactory financial performance
and an intelligent approach to risk. For 2025,
we measured success based on succeeding
with customers, underpinned by financial
performance, our approach to risk and
delivering value for shareholders. The third
award under the scheme will be granted in
May 2026, with a share award worth £1,440
for all eligible UK employees (adjusted for local
salary levels to £530 for our other major hub in
India), subject to shareholder approval of the
recommended dividend at the 2026 NatWest
Group plc Annual General Meeting (AGM).
This reflects the good progress we made
on our customer goals in 2025.
Over 35,000 colleagues contribute
to our Sharesave scheme each month,
with participants across the UK and India
eligible to participate in new Sharesave offers.
At the end of 2025, 65% of our colleagues
were shareholders.
Financial wellbeing remains important to us
both for our colleagues and our customers and
communities. Colleagues are supported with
access to pension and protection products
as well as a range of financial health initiatives.
Bonus pool for the
wider workforce
The bonus pool for 2025 is based on a
proportion of attributable profit adjusted for
performance against a balanced scorecard
of strategically important measures: financial
performance; customer outcomes; people,
culture and diversity; risk management;
risk events; and progress against our
strategic ambitions.
The committee agreed a 2025 bonus pool of
£495.0 million, 10.8% higher than the 2024
bonus pool of £446.6 million. The uplift in the
bonus pool for 2025 reflects the increase in
profit since 2024 and the strong performance
across the scorecard, particularly in relation
to financial and customer targets, as well as
changes in the underlying eligible population.
Remuneration for
executive directors
A new directors’ remuneration policy (the
Policy) was approved at the 2025 NatWest
Group plc AGM. The Board was delighted with
the strong level of support from shareholders,
with 97.86% of votes in favour. The Policy
operated as intended during 2025.
Under the new Policy, there were two key
changes. Firstly, the Restricted Share Plan
(RSP) was replaced by a new Performance
Share Plan (PSP), with awards capped at 300%
of earned salary. Secondly, the annual bonus
opportunity was increased to 150% of earned
salary. The changes reflect our progress on
aligning reward more closely with performance,
responding to the evolving market and
regulatory expectations, and ensuring
our long-term incentive structure remains
competitive and strategically focused. Full
details on the changes made can be found in
the NatWest Group plc 2024 Annual Report
and Accounts.
The final award under the RSP was made in
March 2025 in relation to performance year
2024, and the first award under the new PSP
will be made in March 2026. Further details
are set out on the next page.
Performance highlights
Income growth excluding notable items
12.0%
2024: 2.2%
Attributable profit
£5,479 million
2024: £4,519 million
RoTE
19.2%
2024: 17.5%
Climate and sustainable funding and financing
(1)
£16.9 billion
2024: £31.5 billion
Shareholder returns through dividends and buybacks
£4.1 billion
2024: £4.0 billion
Directors’ remuneration report continued
Participation highlights
% of colleagues
who are shareholders
(as at 31 December 2025)
65%
Number of colleagues
participating in the
Sharesave scheme
35,500
(1)
Climate and sustainable funding and financing represents only a relatively small proportion of our overall
funding and financing activities.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
141
Governance and remuneration
Directors’ remuneration report continued
Regulatory remuneration requirements
In November 2024, the Prudential Regulation Authority (PRA) and Financial Conduct Authority
(FCA) published a joint consultation paper on changes to regulatory remuneration requirements
in the UK, which we engaged with. In October 2025, the final regulatory position was published,
detailing changes to the UK regulatory remuneration requirements. Most of the rules are effective
from performance year 2026 but discretion is available to companies to apply certain changes to
performance year pay-outs in respect of 2025, as well as to unvested awards from previous years.
When drafting the new Policy which was approved at the 2025 NatWest Group plc AGM,
the committee ensured there was appropriate flexibility built in to allow us to respond to these
anticipated changes. Our approach for the structure of pay for executive directors in light of the
updated remuneration regulations is as follows:
•
No change to the delivery mechanism for the annual bonus for performance year (PY) 2025
and PY 2026. This will continue to be delivered upfront, with 50% in cash and 50% in shares
(which will remain subject to a 12-month retention period).
•
2026 PSP awards will vest across a four-year period, with 75% vesting after year three, and
25% vesting after year four. There will be a two-year holding period on the 75% of the PSP
that vests after year three, and a one-year holding period on the 25% of the PSP that vests
after year four, bringing the total vesting and holding period for all PSP awards to five years.
•
The previous discount methodology for prohibition of dividends on unvested shares will be
replaced with dividend equivalents. This will apply to the first PSP awards to be awarded in
March 2026, and thereafter.
•
Any unvested awards held in respect of roles prior to becoming an executive director will
be eligible for accelerated vesting in line with the treatment for other colleagues.
The committee welcomes the simplification of the UK regulatory framework, and notes
the importance of ensuring compliance with differing governance standards and shareholder
expectations where applicable, as well as the expectations set out under the UK Corporate
Governance Code. Further consideration will be given to the longer-term application of the
updated regulations during the next Policy review.
Vesting of RSP awards granted in 2023
RSP awards were granted to the Group Chief Executive Officer (Group CEO), Paul Thwaite,
and the Group Chief Financial Officer (Group CFO), Katie Murray, in March 2023 in respect of
performance year 2022.
Ahead of the awards vesting, the committee carried out a pre-vest underpin check, assessing if
anything had come to light since the awards were granted which would change its original view of
performance. The committee concluded no pre-vest adjustments were necessary, so the award
will begin vesting in March 2026. Full details of the RSP awards can be found on page 154.
Given Mr Thwaite was not an executive director in 2022, his vesting schedule for this award is
eligible for acceleration due to the recent regulatory changes and will vest in March 2026 and
March 2027. No amendments will be made to the vesting schedule for Ms Murray’s outstanding
awards given all her unvested awards are in relation to her time as an executive director, and
these will progress based on the original vesting schedule.
Annual bonus for 2025
The assessment of performance against annual bonus scorecards resulted in an outcome of
85.18% for both Mr Thwaite and Ms Murray. The committee agreed the final outcome was
representative of performance and there were no unforeseen external impacts that made it
necessary to adjust the resulting award levels. The annual bonus performance measures and
targets for 2025 were set out in the 2024 Directors’ remuneration report. Full details of the
performance achieved against the measures and targets can be found on pages 151 and 152.
Performance measures
Weighted outcome
Financial (60%)
53.65% out of 60%
Group RoTE (25%)
19.93%
Attributable profit (25%)
23.72%
Group operating expenses, excluding
litigation and conduct costs (10%)
10.00%
Non-financial (40%)
31.53% out of 40%
Customer (20%)
18.01%
Colleague (10%)
6.06%
Simplification (10%)
7.46%
Final outcome approved by the committee
Group CEO
85.18%
Group CFO
85.18%
Grant of 2026 PSP awards
Following a pre-grant test which confirmed that satisfactory performance was achieved in 2025,
the committee has approved the grant of PSP awards at maximum level (300% of earned salary)
for Mr Thwaite and Ms Murray in March 2026.
The awards will be subject to a three-year performance period running from 1 January 2026
until 31 December 2028, and will be assessed against a challenging pre-determined scorecard
of measures pre-vesting. The table below summarises the performance measures that will apply
to the 2026 PSP awards. Full details of the PSP scorecard measures for 2026 to 2028 are detailed
on pages 159 and 160.
Financial metrics
Weighting
Non-financial metrics
Weighting
Group RoTE
30%
Strategic measures
25%
Relative Total Shareholder Return (TSR)
30%
Sustainability
15%
Total
60%
Total
40%
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
142
Governance and remuneration
Directors’ remuneration report continued
Looking ahead – implementation
of the Policy for 2026
In 2025, the committee reviewed its approach
to benchmarking for executive directors.
The committee believes remuneration
benchmarking should not be the driving
factor behind the positioning of remuneration,
but that robust benchmarking should be
undertaken to inform and support the
committee in its decision-making.
The benchmarking peer group since 2018 has
comprised a group of similar sized banks and
other financial services organisations listed
in the UK, Europe, Canada and Australia.
Following a detailed review, it was concluded
that going forward remuneration should
primarily be considered against our fellow
FTSE 30 banks (taking into account factors
such as the size and complexity of the
individual peers when making a judgement
on relative positioning). The committee will
also consider data for the broader FTSE 30, as
well as FTSE 50 Financial Services companies.
This updated approach more accurately
reflects the market NatWest Group operates in
for executive talent. It also recognises that pay
models for UK banks are materially different to
those in international banks, and are now more
closely aligned to the broader UK market,
particularly in light of regulatory simplification.
Should any material change to our pay
structures be made in the future, detailed
benchmarking analysis will be presented
within our remuneration report at the
appropriate time.
In December 2025, the committee approved
salary increases of 3.25% for the Group CEO
and the Group CFO, effective from 1 April
2026. Negotiations with Unite, one of our
recognised employee representatives,
regarding pay and conditions for the wider
workforce for 2026 were ongoing at the time
this report was prepared. The committee
acknowledges that shareholders generally
expect any increases in executive director
base salary to align with those awarded to the
relevant wider workforce in the same locality.
As negotiations had not concluded by the
publication date, the final outcomes relating
to wider workforce UK salary increases
will be disclosed in the 2026 Directors’
remuneration report.
Each year we ensure appropriate engagement
with our major shareholders and other
stakeholders on pay. In 2025, we wrote to
our 10 largest shareholders who together
represent c.40% of our investor base, alongside
our proxy advisers and the UK regulators,
sharing our approach for the implementation
of the Policy in 2026. All interactions were
positive, with no concerns raised.
Looking ahead, we are committed to ensuring
we can continue to attract and retain senior
executives of the calibre required for NatWest
Group and our market context. With this in
mind, the committee will continue to monitor
remuneration developments in the market.
The committee has observed the significant
changes to leverage and fixed pay in 2025
at the other UK listed Level 1 banks and will
monitor closely the operation of policies within
the sector resulting from the recent changes
to the remuneration regulations. In light of
these factors, we hold open the possibility of
returning to shareholders for a revised policy
at the 2027 NatWest Group plc AGM, a year
earlier than the normal triennial policy cycle, to
ensure our high-performing management team
continues to be appropriately compensated.
I would like to thank our shareholders for
their ongoing support, my fellow committee
members for their valuable contributions and
our colleagues for their focus on our customers
and communities.
Lena Wilson, CBE
Chair of the Group Performance and
Remuneration Committee
12 February 2026
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
143
Governance and remuneration
Fixed pay
(£000’s)
2025 Annual bonus
2023 RSP vesting
2026 PSP pre-grant
Paul
Thwaite
2,538
Maximum
Scorecard assessment
60%
40%
53.65%
31.53%
(85.18% of max)
Financial
Non-financial
(89% of max)
(79% of max)
100% of award (maximum)
vesting in March 2026,
underpin tests met in full
.
300% of earned salary to
be granted in March 2026
.
Katie
Murray
1,713
Maximum
Scorecard assessment
60%
40%
53.65%
31.53%
(85.18% of max)
Financial
Non-financial
(89% of max)
(79% of max)
100% of award (maximum)
vesting in March 2026,
underpin tests met in full
.
300% of earned salary to
be granted in March 2026.
See pages 151 and 152 for more details.
See page 154 for
more details.
See pages 159 and 160
for more details.
Executive director remuneration outcomes (£000’s)
Paul Thwaite
Katie Murray
Fixed pay
Bonus
RSP
Sharing in Success
Total
Fixed pay
Bonus
RSP
Sharing in Success
Total
Pay outcomes
Single figure 2025
2,538
1,499
2,533
1
6,571
1,713
1,022
2,571
1
5,307
Fixed pay
Annual bonus
RSP award
Sharing in Success
Remuneration at a glance
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
144
Governance and remuneration
Summary of the directors’ remuneration policy (the Policy) and implementation in 2026
Key elements
Performance
year
Variable
pay
grant
year
Years
Summary of Policy
+1
+2
+3
+4
+5
+6
+7
+8
+9
+10
Base salary
Any increases will take in-role performance into account. Increases will normally not be greater than the average rate of
salary increase for NatWest Group employees over the period of the Policy, other than in exceptional circumstances such
as material change in the executive director’s role.
Paid over
performance year
Pension
The pension allowance rates for executive directors are aligned with the rate applicable to the majority of the wider workforce
(currently at 10% of base salary).
Paid over
performance year
Benefits
Standard level of benefit funding, currently set at £26,250.
Other benefits can be paid within the terms of the Policy.
Paid over
performance year
Fixed Share
Allowance
20%
20%
20%
20%
20%
An award of shares with an annual value of up to 100% of base salary at the time of award. Shares released over five years.
Payable broadly in arrears over the performance year, currently in four instalments per year.
Paid over
performance year
Released in equal tranches over a five-year period
Sharing in
Success
100% shares
Maximum award:
£1,500 per colleague.
Paid upfront
Operation:
Subject to Group performance criteria being met, awards will be delivered in shares.
Bonus
50% cash
Maximum award:
150% of earned salary.
Performance year
50% shares
50%
Operation:
Awarded upfront with a 50/50 split of cash and shares. Based on a weighted scorecard of measures, as set out
below. A downwards risk modifier also applies. See pages 157 and 158 for more detail on the measures for 2026.
Paid upfront
Share element subject to
12 months’ retention period
Financial metrics
Weighting
Non-financial metrics
Weighting
Group RoTE
25%
Customer
20%
Attributable profit
25%
Colleague
10%
Group operating expenses, excluding litigation and
conduct costs
10%
Strategy
10%
Total
60%
Total
40%
Performance
Share
Plan (PSP)
75%
75%
Maximum award:
300% of earned salary.
Granted provided
satisfactory
performance
over year
After three years, performance
assessed against a challenging
scorecard of metrics
25%
25%
Operation:
Delivered in shares. Subject to satisfactory performance pre-grant, and after three years’ performance is
assessed against a challenging pre-determined scorecard of metrics pre-vesting.
75% vests after year three,
and is subject to a
two-year holding period.
The remaining 25% vests
after year four, and is
subject to a one-year
holding period
Metrics:
Includes a mix of financial (minimum of 50%) and non-financial measures, as set out below. A risk and conduct
underpin also applies. See pages 159 to 160 for more detail on the measures for 2026-2028.
Financial metrics
Weighting
Non-financial metrics
Weighting
Group RoTE
30%
Strategic measures
25%
Relative Total Shareholder Return (TSR)
30%
Sustainability
15%
Total
60%
Total
40%
Share
ownership
Group CEO:
500% of salary.
Group CFO:
300% of salary.
Ongoing
On leaving, requirement to hold shares of a value equal to the lower of the shareholding requirement immediately prior to
departure or the actual shareholding on departure, for a period of two years.
Malus and
clawback
Any variable pay awarded is subject to malus provisions prior to vesting, and clawback provisions – currently seven
(and potentially up to 10) years from the date of award. See page 150 for further details.
Subject to malus provisions prior to vesting.
Subject to clawback provisions for seven years from grant
Clawback extended to 10 years
in certain circumstances
Remuneration at a glance continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
145
Governance and remuneration
The directors’ remuneration policy and wider workforce remuneration
Pay linked to strategy and sustainability priorities
Ambition
Succeeding with customers
Purpose
The bank that turns possibilities into progress
Strategy
Stakeholders
•
Linking performance with pay encourages everyone to recognise customer outcomes across the bank.
•
Pay is delivered in a way that aligns with the long-term interests of our stakeholders. For those who
receive higher amounts of remuneration, a larger proportion is delivered in shares.
•
Our balanced scorecard of measures and targets helps incentivise strong financial and risk performance
as well as outcomes aligned to our strategy.
•
Colleague measures in our annual bonus scorecard include purpose and culture targets, and our PSP
scorecard includes measures on increasing diversity in our senior populations. Sustainability metrics,
which include climate measures, are also part of our PSP scorecard.
•
The performance goals and measures agreed for executive directors flow through to the executive
management team and wider workforce, adjusted as appropriate to reflect individual areas of responsibility.
•
For our wider workforce, the annual bonus pool is based on performance against a balanced scorecard of
strategically important measures that broadly align with the position for the executive directors and the
executive management team.
•
The Sharing in Success scheme provides a further way for sustainable performance to be reflected in pay
decisions throughout the organisation.
Alignment with our strategy and sustainability priorities
Details of performance against the 2025 targets for executive directors can be found later in this report. Refer to pages 39 to 73 for our sustainability review.
Total remuneration
Salary and pension funding
Provided to all colleagues.
A competitive cash salary,
reviewed annually. Pension
funding is 10% of base salary
for UK employees.
Benefit funding
Applies to certain jobs.
Some colleagues receive
funding to support benefit
costs, such as private
medical cover, or take the
relevant amount as cash.
Role-based allowances
Applies to some Material
Risk Takers (MRTs) only.
Delivered in cash and/or
shares, dependent on
allowance level and seniority.
Annual bonus
Applies to mainly manager
grade and above including
executive directors.
Subject to performance.
Awards delivered in cash
and/or shares.
Fixed pay
Sharing in Success
Provided to all colleagues.
Subject to performance.
Awards delivered in shares.
Long-term incentive
Applies to executive directors
and members of senior
executive committees.
Subject to performance.
Awards delivered in shares.
Variable pay
We ensure that our compensation framework aligns to our business strategy and sustainability priorities. Pay for executive
directors is aligned with the wider workforce, but distinguished through the use of long-term incentive awards and
a requirement for executive directors to maintain a holding of shares in NatWest Group both during and after their
employment. These deliberate differences recognise that it is in the best interests of our stakeholders for executive directors
to have a proportion of their remuneration paid in shares and to be subject to long-term shareholding requirements.
Annual bonus
PSP awards
Sharing in Success
Performance measures
•
Financial measures including Group RoTE and Relative TSR.
•
Non-financial measures including sustainability and
strategic measures.
•
Risk and conduct underpin.
•
Succeeding with customers.
•
Underpinned by financial performance, our approach to risk
and delivering value for shareholders.
•
Financial measures including Group RoTE, attributable profit and
Group operating expenses.
•
Non-financial measures including customer, colleague and
strategy measures.
•
Downwards risk modifier.
Investors
Communities
Regulators
Customers
Colleagues
Disciplined growth
Leveraging simplification
Active balance sheet and risk management
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
146
Governance and remuneration
•
We help colleagues to have an
awareness of financial and economic
factors affecting our performance
through quarterly Results Explained
communications and events with
our Group CEO and Group CFO.
•
We consult with our employee
representative bodies on remuneration
at relevant points during the year.
•
Regular question and answer sessions
take place between colleagues and
senior executives throughout the year.
•
Our committee Chair regularly engages
with shareholders to seek feedback to
guide our decision-making.
Engaging with our colleagues and wider stakeholders
We listen to our colleagues and shareholders regularly and use
their feedback to inform our approach to remuneration.
•
We consult with the relevant regulators,
following any updates and aligning with
best practice as appropriate.
•
The committee also receives updates
on pay gaps and monitors the actions
being taken to close them.
•
Our colleague survey, Our View,
enables us to track metrics and key
performance indicators, which we
can benchmark with sector and
high-performing comparisons.
Colleague listening
Our colleague survey, Our View, enables
colleagues to share their experiences of
working at NatWest Group. In September
2025, 83% of colleagues took part in
the survey.
The results showed continued strong
performance, particularly when compared
to the Global Financial Services and Global
High Performance norms. Marginal gains
were achieved across most categories,
demonstrating systemic improvements.
Specifically, eight out of 14 categories
improved, two remained static, and four
declined compared with September 2024.
The Colleague Advisory Panel
The Colleague Advisory Panel (CAP) remains a
vital part of NatWest Group’s governance and
listening strategy, ensuring that the voice of
colleagues is heard and considered at Board
level. Chaired by non-executive director Roisin
Donnelly, the CAP met twice in 2025 – March
and September – with strong cross-functional
representation and active engagement from
Board members. CAP membership is refreshed
regularly and currently comprises 31 self-
nominated colleagues, representing a cross-
section of the bank by grade, business area,
location and working pattern.
The March meeting focused on executive
remuneration and the introduction of NatWest
Group’s new core behavioural framework.
Lena Wilson presented the directors’
remuneration policy ahead of the 2025
NatWest Group plc AGM vote, inviting CAP
members to reflect on how pay structures
influence performance culture. The discussion
explored performance targets, the
transparency of bonus mechanisms and
the alignment between executive and
wider workforce pay.
The March meeting also covered NatWest
Group’s new behavioural framework, which
was designed to simplify and embed desired
behaviours across the organisation. CAP
members welcomed the clarity of the
framework and emphasised the need for
well-paced communication and a desire
for practical examples to help colleagues
understand how the new behaviours would
be experienced in their day-to-day roles.
The second CAP meeting in September
included a session on Recognise, NatWest
Group’s new global recognition approach,
which launched in October 2025. CAP
members explored how recognition contributes
to motivation and performance. Members
emphasised the need for manager support
to embed recognition into everyday practice
and ensure it is experienced equitably across
the organisation.
Across both meetings in 2025, CAP members
posed thoughtful and challenging questions to
the non-executive directors present. Updates
on the CAP are made available to all
colleagues internally on the dedicated
CAP intranet page.
For more information on our new behaviours
and global recognition approach, see our Skilled,
engaged and inclusive workforce section on
pages 59 to 63.
The directors’ remuneration policy and wider workforce remuneration continued
Key stakeholders
to executive
director and wider
workforce
remuneration
Colleagues
Investors
Society
Employee
Representative
Bodies
Regulators and
Government
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
147
Governance and remuneration
Embedding Beyond:
Strengthening performance and
recognition at NatWest Group
In 2025, we continued to embed Beyond –
our performance management philosophy
launched in 2024 – across the bank. Beyond is
designed to support our performance culture
through ambitious and meaningful colleague
goals, regular developmental feedback, and
frequent supportive check-in conversations.
This year, we saw more colleagues actively
reviewing and updating their goals and
saw a 28% rise in feedback shared. These
improvements reflect our ambition to build
a culture where everyone can thrive.
Pay awards for performance year 2024,
the first year of working within the Beyond
philosophy, reflected strong discretionary
decision-making, with a broader range of
increases compared to pay awards for
performance year 2023. Notably, we received
fewer pay appeals, suggesting that colleagues
have a clearer understanding of pay and bonus
decisions following extensive manager training
in late 2024.
To further strengthen our performance culture,
we reflected our new behaviours into how we
manage performance in 2025 and enhanced
the experience with AI-powered goal setting,
feedback and check-in preparation prompts.
We also launched Recognise, our new
approach to recognition, which enables
colleagues to be acknowledged ‘in the
moment’ for their contributions. This means
that recognition can be given quickly and
easily, helping to reinforce positive behaviours
and celebrate success as it happens.
Recognising that managing under-performance
is a critical part of supporting all colleagues, we
reviewed our process and identified over 100
areas where it could be improved. In response,
we have aligned support processes with
Beyond tools and updated our policy to
offer colleagues structured support.
In determining performance outcomes, we
consider both the achievements made and
how they have been delivered. Our Code of
Conduct sets out clear expectations of our
behavioural standards. If a colleague’s
behaviour falls below these expectations,
this will be reflected in their performance
conversations, fixed pay progression and
variable pay decisions (where their role
is eligible).
We are making good progress in building an
inclusive workplace. Performance measures to
support progress in this area affect the pay of
executive directors. Pay equality is a core
feature of our approach to support fair
pay across NatWest Group.
Details on how we support our colleagues and
create an inclusive workplace are in the Skilled,
engaged and inclusive workforce section on
pages 59 to 63. For more on our new behaviours,
see our ‘Winning Together’ spotlight on page 61.
Our Code of Conduct can be found at
natwestgroup.com.
The directors’ remuneration policy and wider workforce remuneration continued
Fair pay and pay gap reporting
At NatWest Group, our goal is to succeed with customers. Having a diverse team enables
us to understand our customers better and build a better business that represents the
communities we serve. As part of our progress towards this, the committee has sight of a
comprehensive view of our pay gap reporting on an annual basis. NatWest Group has been
reporting on gender pay gaps since 2017, and ethnicity pay gaps since 2018. Pay gap
reporting is a critical part of our Fair Pay Charter.
We are proud to be an accredited Living Wage Employer, demonstrating our commitment to
setting pay levels above the real living wage rates. In 2025, we furthered our commitment to
fair pay by achieving re-certification as a Global Living Wage Employer, recognising that our
rates of pay for colleagues outside the UK are at or above the living wage threshold as
defined by the Fair Wage Network.
Full details of our pay gap reporting and Fair Pay Charter can be found at natwestgroup.com.
2014
NatWest Group accredited as
a Living Wage Employer
2018
NatWest Group releases its first
annual ethnicity pay gap report
2025
NatWest Group
re-certified as a Global
Living Wage Employer
2017
NatWest Group releases its first
annual gender pay gap report
2023
NatWest Group certified as a
Global Living Wage Employer
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
148
Governance and remuneration
The directors’ remuneration policy and wider workforce remuneration continued
Summary of the directors’ remuneration policy (the Policy)
The Policy was last approved by shareholders at the NatWest Group plc AGM on 23 April 2025 and will apply until the 2028 AGM, unless a revised Policy is approved by shareholders before then. As set
out in the Chair’s introduction, we have updated our remuneration approach for executive directors for PY 2025 and PY 2026 in light of the updated regulatory remuneration requirements. The changes
we have made apply for PSP awards from PY 2025 onwards and are as follows: an amendment to the vesting schedule so awards vest across a four-year period, with 75% of the PSP award vesting
after year three and subject to a two-year holding period, and 25% of the PSP award vesting after year four and subject to a one-year holding period; and replacing the previous discount methodology
for prohibition of dividends on unvested shares with dividend equivalents. No changes are proposed to the delivery mechanism for the annual bonus for PY 2025 and PY 2026. The table below and over
the page summarises the key elements of the Policy. The full Policy is available under the Governance section of natwestgroup.com.
Purpose and link to strategy
Operation
Maximum potential value
Fixed pay for executive directors
Base salary
– Providing fair levels of base salary
that support the recruitment and retention of
high-calibre executives to deliver strategic priorities.
Paid monthly in cash and reviewed annually based on role, skills and
experience and benchmarked against market.
Any future salary increases will take in-role performance into account
and will be considered against peer companies.
Fixed share allowance
– Additional fixed pay that
reflects the skills and experience required for the role
and supports a balanced remuneration policy.
Fixed allowance paid in shares, in quarterly instalments. A retention period
applies such that shares are released 20% annually, in five equal tranches,
on a pro-rata basis over one to five years from the date of award.
An award of shares with an annual value of up to 100% of base
salary at the time of award.
Benefits
– A range of flexible and market-
competitive benefits.
Includes a range of standard benefit options including company car,
private medical cover, life assurance and travel assistance.
A set level of funding for standard benefits.
Pension
– Encourages planning for retirement and
long-term savings.
Monthly pension allowance paid in cash based on a percentage of salary.
Aligned with the wider workforce, currently 10% of base salary.
Variable pay for executive directors
Annual bonus
– Supports a culture where
individuals are rewarded for superior performance,
aligned with strategic objectives and purpose.
Assessed against a balanced scorecard of measures, paid in a mix of cash
and shares taking into account regulatory requirements. A risk modifier also
applies. A post-vesting 12-month retention period will apply to the amount
delivered in shares.
Set at 150% of earned salary. Subject to malus and
clawback provisions.
PSP
awards
– Supports the execution of the
strategy and delivers strong performance over a
multi-year period.
Awards are granted provided satisfactory performance has been achieved in
the prior year (‘pre-grant test’). After three years, performance is assessed
against a range of pre-determined performance criteria pre-vesting. A risk
and conduct underpin also applies. For PY 2025 onwards, 75% of the PSP
award vests after year three and is subject to a two-year holding period,
and 25% vests after year four and is subject to a one-year holding period.
Set at 300% of earned salary. Subject to malus and
clawback provisions.
Other elements of the Policy for executive directors
Shareholding requirements
– Executive directors
must build and hold a shareholding both during and
after employment, helping align their interests with
returns to shareholders over the long-term.
Shares held outright qualify towards the requirement, and unvested share
awards count on a net-of-tax basis once performance conditions have been
assessed. On leaving, executive directors are required to hold shares of a
value equal to the lower of their shareholding requirement immediately prior
to departure and the actual shareholding on departure, for two years.
Minimum target requirement:
Group CEO – 500% of salary
Group CFO – 300% of salary
Employee share plans and other all-employee
arrangements
– Provides an opportunity to acquire
shares in the company on a consistent basis to the
schemes offered to UK employees.
Executive directors can participate in all-employee share plans on the same
terms as other employees, including Sharesave and Buy as You Earn, which
do not have performance conditions. They also receive Sharing in Success
awards at the same level as other employees.
For voluntary all-employee share plans, the maximum potential value
is determined in line with the statutory limits imposed by HMRC in the
UK or the limits under the relevant share plan rules. The maximum
level of Sharing in Success award is currently £1,500 per annum.
Legacy arrangements
– Ensures NatWest Group
can continue to honour previous arrangements.
This Policy gives authority to honour any previous commitments or
arrangements entered into with current or former executive directors.
In line with existing commitments and arrangements.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
149
Governance and remuneration
The directors’ remuneration policy and wider workforce remuneration continued
Remuneration for the Group Chair and non-executive directors
Purpose and link to strategy
Operation
Maximum potential value
Fees
– Competitive fixed remuneration
that reflects the skills, experience and time
commitment required to attract individuals
to oversee the Board’s strategy.
Fees are normally paid monthly in cash, with a portion of the net monthly
fee being retained by the Company and used to purchase shares every
quarter, in line with our shareholding policy.
Any increase to fees will not normally be greater than the average inflation rate
or rate of salary increases for the wider workforce over the period of the Policy.
The Group Chair is required to build towards a shareholding equivalent to four
times the basic Board fee, and for non-executive directors the target is one
times the basic annual Board fee.
Benefits
– A level of benefits provided in line
with market practice.
Benefits include travel assistance connected with Company business,
including the use of a car and driver, where deemed appropriate. NatWest
Group will cover related tax liabilities where appropriate and reimburse
reasonable business expenses. The Group Chair is also entitled to private
medical cover and life insurance.
The value of the private medical and life insurance cover provided to the Group
Chair as well as other benefits provided under the Policy will be in line with
market rates.
Other Policy elements for directors
Provisions
Operation
Notice and
termination
provisions
Executive directors
Executive directors typically have permanent contracts with no fixed term and require 12 months’ notice from either party to terminate employment, as per their service agreements. No pre-set
provisions for compensation on termination exists. NatWest Group have discretion to pay in lieu of notice (based on salary only) in monthly instalments, which are reduced as appropriate if the
director gains alternative work. Upon termination of an executive director’s employment, the treatment of each of the elements of remuneration will be determined in accordance with the full
Policy and plan rules as relevant. See link below to the full Policy.
Group Chair and non-executive directors
The Chair and non-executive directors have letters of appointment instead of contracts. There are no notice periods or termination compensation beyond payment for time served. Non-
executive directors are appointed for an initial three-year term, subject to annual shareholder re-election, and may serve a further three-year term. Typically, tenure is limited to nine years, with
any extensions beyond this explained in the NatWest Group plc Annual Report and Accounts. The Chair is exempt from the Board appointment policy, but follows the UK Corporate Governance
Code’s maximum nine-year tenure rule. All directors stand for annual (re-)election at the NatWest Group plc AGM. All director appointment dates are in the Corporate governance report.
The full Policy is available under the Governance section of natwestgroup.com, along with the full terms of reference of the Group Performance and Remuneration Committee.
Adjusting remuneration in light of new information
An accountability review process allows NatWest Group to respond where new information
would change our variable pay decisions made in previous years and/or the decisions to be
made in the current year. The process is used to apply commensurate ex-post risk adjustments
to variable pay, where material failure of risk management, material error or employee
misbehaviour are identified. Malus provisions allow us to reduce the amount of any unvested
variable pay awards, potentially to zero, prior to payment. Clawback can be used to recover
variable pay awards that have already vested and we can also apply in-year bonus reductions
to adjust variable pay that would otherwise have been awarded for the current year.
The circumstances in which we may make adjustments include:
•
Conduct which results in significant financial losses for NatWest Group;
•
An individual failing to meet appropriate standards of fitness and propriety;
•
An individual’s misbehaviour or material error;
•
NatWest Group or the individual’s business unit suffering a material failure of
risk management; and
•
For malus and in-year bonus reduction only, circumstances where there has been a
material downturn in performance of the relevant business unit.
This list is not exhaustive and further circumstances may be considered where appropriate.
Malus can be applied to any unvested awards. For all MRTs, clawback can be applied for at
least seven years after an award is granted, and this period can be extended to 10 years post
grant in certain circumstances for our most senior colleagues. These periods take account
of the fact that new information may take several years to come to light after an event.
Adjustments in 2025
Since the last Directors’ remuneration report, no new matters have been raised in relation to
the executive directors. We will advise of any changes in future disclosures.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
150
Governance and remuneration
Annual remuneration report
Single total figure of remuneration for executive directors for 2025 (audited)
Paul Thwaite
Katie Murray
2025
£’000
2024
£’000
2025
£’000
2024
£’000
Base salary
1,173
1,142
800
788
Fixed share allowance
(1)
1,173
1,142
800
788
Benefits
(2)
75
92
33
42
Pension
(3)
117
97
80
79
Total fixed remuneration
2,538
2,474
1,713
1,697
Annual bonus
(4)
1,499
890
1,022
599
Long-term incentive
(5)
2,533
1,572
2,571
2,224
Sharing in Success
(6)
1
1
1
1
Total variable remuneration
4,033
2,463
3,594
2,824
Total remuneration
6,571
4,936
5,307
4,520
(1)
Fixed share allowance:
The fixed share allowance is based on 100% of salary and, as part of fixed remuneration, is not subject to any performance conditions.
(2)
Benefits:
Includes standard benefit funding at £26,250 per annum. For both executive directors, this includes travel assistance in connection with company business (Mr Thwaite: £45,258; Ms Murray: £3,623) and assistance with home security (Mr Thwaite: £3,380;
Ms Murray: £3,380).
(3)
Pension:
Executive directors receive a monthly pension allowance of 10% of base salary and can choose to participate in the company’s pension arrangements.
(4)
Annual bonus:
In determining bonus awards for 2025, the committee assessed performance against financial and non-financial measures as set out below and on the next page.
(5)
Long-term incentive:
The 2025 value relates to RSP awards granted in 2023 in respect of performance year 2022. Full details are set out on page 154. The 2024 value relates to LTI awards granted in 2022 in respect of performance year 2021. Full details are set out
in the 2024 Directors’ remuneration report.
(6)
Sharing in Success:
The values relate to Sharing in Success awards delivered in NatWest Group shares to all eligible colleagues (including executive directors). Shares with a grant value of £1,275 per colleague were made in respect of 2024 performance (adjusted for
local salary levels). See page 141 for details of the performance conditions.
Annual bonus performance assessment for 2025
The maximum bonus award was set at 150% of base salary for 2025, with bonus awards of 50%
of maximum available for the achievement of target performance. The committee considered
performance against financial and non-financial measures (set to reflect our strategy as well as
risk performance by the executive directors). The outcome of this assessment is set out in full
on the next page.
The committee noted that in 2025 Mr Thwaite had overseen the delivery of strong results and
share price growth. Feedback from the Group Chair and other stakeholders reflected that
Mr Thwaite had adopted a thoughtful approach to enterprise risk management and had
demonstrated strong strategic and operational leadership.
In respect of Ms Murray, the committee noted that there had been good financial performance
throughout 2025, with a focused effort on capital and balance sheet management, costs
and efficiency, supporting delivery against the bank’s strategic and financial targets.
A consistent programme of investor engagement throughout 2025 was recognised, further
improving investor sentiment and supporting shareholder diversification. Throughout the year,
Ms Murray also maintained effective risk management discipline and demonstrated strong
strategic, operational, and cultural leadership.
The committee agreed the final outcome was representative of performance and there were
no unforeseen external impacts that made it necessary to adjust the resulting award levels.
The final bonus amounts are set out below. Awards will be made in early 2026, split equally
between cash and shares (with the shares subject to a 12-month retention period). Malus
and clawback provisions apply to the awards.
Maximum award
Final bonus award
Award level %
Paul Thwaite
£1,759,492
£1,498,736
85.18%
Katie Murray
£1,199,654
£1,021,865
85.18%
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
151
Governance and remuneration
Annual bonus performance assessment for 2025
Performance achieved in 2025
Annual bonus measures
Minimum
(10% payable)
On target
(50% payable)
Maximum
(100% payable)
Weighting
Weighted
outcome
Financial (60%)
Group RoTE.
(1)
15.0%
16.4%
18.3%
25%
19.93%
Attributable profit.
(1)
£4.1 billion
£4.5 billion
£5.1 billion
25%
23.72%
Group operating expenses, excluding litigation & conduct.
(2)
£8.2 billion
£8.1 billion
£8.0 billion
10%
10.00%
Non-financial (40%)
Customer
Group measure using Net Promoter Score (NPS) methodology across the customer
franchises, reflecting the contribution of each franchise to Group income. Where NPS
is not available for NatWest Markets, an internal Customer Touchpoint Rating (CTR)
and independent deal league tables is applied to assess NatWest Markets’
customer performance.
(3)
Meet target on average
20%
18.01%
Colleague
Progress against purposeful leadership targets.
77
85
87
3.33%
2.50%
Progress against performance culture targets.
73
83
85
3.33%
2.50%
Increasing diversity in our senior roles.
(4)
16.8%
17.9%
18.5%
3.33%
1.06%
Simplification
% of Retail customers banking entirely Digital.
(5)
79%
80%
82%
3.33%
3.20%
% of Commercial and Institutional (C&I) customers banking Digital first.
(6)
83%
85%
87%
3.33%
1.43%
Average deployment frequency for features and digital services.
11 days
7 days
5 days
3.33%
2.83%
Downward risk modifier (0-100%)
No downward risk modifier was applied for the Group CEO or Group CFO.
Final outcome
85.18% (CEO)
85.18% (CFO)
The reconciliation to the report figures and footnotes for the table above is set out on the next page.
Annual remuneration report continued
Target exceeded on average
Achieved 17.5%
Achieved £5.0bn
Achieved £8.0bn
Achieved 86
Achieved 84
Achieved 81.8%
Achieved 17.4%
Achieved 84.5%
Achieved 5.6 days
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
152
Governance and remuneration
Reconciliation to reported figures and footnotes
Amount
(£bn)
(7)
Group
RoTE
Group attributable
profit excluding
notable items
(£bn)
Group operating
costs, excluding
litigation and
conduct costs (£bn)
Reported figure
19.2%
5.5
(8.1)
Base rate adjustment
0.1
(0.2%)
(0.0)
Gains from interest and FX risk management derivatives not in accounting hedge relationships, own credit adjustments and other income not driven
by management actions
0.2
(0.5%)
(0.1)
Incremental capacity created, utilised in strategic investments and de-risking 2026
(0.1)
0.3%
0.1
0.1
Timing of FX and conduct losses and tax rate alignment
0.2
(0.8%)
(0.2)
Deferred Tax Asset write-back
0.1
(0.4%)
(0.1)
Figures used in bonus scorecard
17.5%
5.0
(8.0)
(1)
For the purpose of assessment under the bonus scorecard, adjustments are made to the published RoTE and attributable profit to exclude material factors outside of management’s control. For RoTE, items will only be adjusted if this results in an impact of at least 0.25%.
For performance year 2025, these include:
a.
Material changes in base rate from that assumed at the beginning of the year;
b.
Gains from interest and FX risk management derivatives not in accounting hedge relationships, own credit adjustments, and the timing of FX losses;
c.
Deferred tax asset and effective tax rate changes;
d.
Other income not driven by management actions; and
e.
Impact of incremental capacity created, utilised in strategic investments and de-risking 2026.
(2)
For operating expenses, adjusting for the impact of incremental capacity created, utilised in strategic investments and de-risking 2026.
(3)
Targets: Retail Banking: Improve NatWest Retail Main Bank NPS to +23 and improve NatWest Premier NPS to +23. Private Banking & Wealth Management: Improve Coutts NPS to +46 and improve Coutts £1m+ NPS to +54. Commercial & Institutional: Improve NatWest £0-750k NPS
to -8, maintain NatWest £750k-£250m NPS at +5, improve NatWest £2m-£250m to +22, maintain >£250m NPS at +27, decline in RBSI NPS to +43, improve RBSI International & Affluent NPS to +45, NatWest Markets maintain average Customer Touchpoint Rating (CTR) of 78% and
ranking in 4 independent Deal League Tables (Top 3 in GBP issuance for Investment Grade corporates, Sovereign Supranationals and Agencies GBP, Financial Institutions GBP and 1
st
for Private Placements for UK issuers). We met or exceeded 11 out of the 12 customer goals set for
2025. The weighted average rating across these 12 targets means that the Customer outcome is 18.01%.
(4)
NatWest Group’s management structures were revised during 2025. For the purpose of remuneration reporting, the representation targets were set based on the management structures in place at the start of 2025 with performance assessed at 31 December 2025. For full details
on our inclusion targets, see our Creating an inclusive workforce section on pages 62 and 63.
(5)
Retail franchise customers with active current accounts that have accessed a digital platform (online or mobile) and not used a branch or telephony for 90-days in the reporting period ending 31 December 2025. Inactive customers and customers with no channel usage excluded.
Mortgages and savings accounts, and interactions via the Post Office are excluded from the scope of measurement.
(6)
C&I franchise (ring-fenced bank) customers with active non-personal account/s that access their account 95% or higher through digital channels for three rolling months in the reporting period. Access to an account through a digital channel may not result in a transaction.
(7)
Amounts quoted are pre-tax whereas RoTE and attributable profit impacts are post tax.
Figures may not cast due to rounding.
Annual remuneration report continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
153
Governance and remuneration
Vesting of 2023 RSP
awards (audited)
RSP awards were granted to Mr Thwaite
and Ms Murray in March 2023 in respect
of performance year 2022.
At the end of 2025, a RSP pre-vest underpin
assessment took place to review whether
anything had come to light which might
call into question the original award. The
committee made an assessment at the end of
the three-year performance period (covering
financial years 2023 to 2025) to determine
whether sustainable performance has been
achieved. The outcome was reviewed using
the pre-vest underpin criteria detailed in the
summary table opposite.
The underpin assessment found that the level
of capital held relative to minimum capital
requirements and total distributions paid
relative to our distribution policy were
satisfactory, and there had been no
material deterioration in the risk or
regulatory compliance profile since grant.
The committee also considered any potential
windfall gains, particularly looking at any
significant fall in the share price prior to the
date of the grant in March 2023, as well as the
change to the NatWest Group share price over
the pre-vest period versus our market peers.
Considering all these factors, the committee
concluded there was no need to make any
adjustment, and that the final outcome and
value in light of the shareholder experience
over the same period was fair.
A summary of the number of shares vesting
is set out in the table at the top of this page,
along with the estimated vesting values for the
2023 RSP award, as set out in the single total
figure of remuneration table on page 151.
As set out in the Chair’s introduction, due
to the recent regulatory changes, the shares
will vest in March 2026 and March 2027 for
Mr Thwaite as a result of accelerated vesting,
given he was not an executive director at the
time of grant.
Paul Thwaite
Katie Murray
2023 RSP award
Shares
Value
Shares
Value
Number of shares at grant
425,074
£937,500
431,451
£951,563
Reduction for pre-vest underpin assessment
–
–
–
–
Number of shares vesting
425,074
–
431,451
–
Increase in value due to share price
–
£1,595,346
–
£1,619,281
Estimated vesting value
–
£2,532,846
–
£2,570,844
(1)
The estimated vesting value is based on share price of £5.9586, the average over the three-month period from October to December 2025. The actual vesting value, based on the share price on the vesting
date, will be restated in the 2026 NatWest Group plc Annual Report and Accounts.
Pre-vest test criteria
A sustainable level of performance over
the period with reference to:
Actual
Outcome
The level of capital held relative to
minimum capital requirement.
The level of capital held throughout the period between grant and vest
(2023-2025) exceeded all minimum ratios under the UK adoption of the
Capital Requirements Regulation.
Met
Total distributions paid relative to our
distribution policy.
Ordinary dividend distributions across 2023-2025 were in line with
external guidance of approximately 40% of attributable profit from
2023-2024 and approximately 50% of attributable profit projected
in 2025.
Met
No material deterioration in the risk
or regulatory compliance profile or
control environment of the bank, or
serious conduct or reputational event.
Our underpin assessment indicated no material deterioration in risk
performance at NatWest Group level since grant. Any material events
identified in the intervening period were, where necessary, dealt with in
the applicable performance year.
Met
Award (% maximum) vesting
100%
Annual remuneration report continued
For Ms Murray, who was an executive director
at the time of grant, the shares will vest in
equal amounts between 2026 and 2030,
with each vested tranche subject to a
12-month retention period.
Malus and clawback provisions continue
to apply to all awards.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
154
Governance and remuneration
Annual remuneration report continued
Scheme interest – RSP awards granted during 2025 (audited)
Grant date
Face value
Award price
(1)
Shares awarded
(2)
Vesting levels
Performance requirement
Paul Thwaite
07-Mar-25
£1,713,365
£3.7933
451,682
Between
0% – 100%
with no set
minimum
vesting
The award was subject to a pre-grant assessment of performance over 2024. The committee will make
a further assessment at the end of the three-year performance period (covering financial years 2025 to
2027) to determine whether sustainable performance has been achieved.
Before vesting, the outcome will be reviewed by the committee using the underpin criteria -
1. The level of capital held relative to the maximum distribution amount.
2. Total distributions paid relative to our distribution policy.
3. Any material deterioration in the risk or regulatory compliance profile or control environment of
NatWest Group, or a serious conduct or reputational event.
The committee will also use their broader discretion to verify that the vesting out-turn aligned to
shareholder experience over the period. Full details are also disclosed in the 2024 Directors’
remuneration report.
Katie Murray
07-Mar-25
£1,181,928
£3.7933
311,583
(1)
The award price shown is calculated as the average share price over the five days prior to the grant date, discounted to reflect the absence of the right to receive dividends or dividend equivalents during the vesting period. For reference, the full market price of NatWest Group shares
at the time of grant for the 2025 RSP awards was £4.7284.
(2)
The conditional share awards equated to 150% of earned salary. Subject to the pre-vest assessment, these awards will vest in equal amounts between years 2028 and 2032. Service conditions and malus provisions apply up until vest, and clawback provisions apply for a period of at
least seven years from the date of grant.
PSP awards to be granted for 2025 (audited)
Following a pre-grant test which confirmed that satisfactory performance was achieved in 2025, the committee has approved the grant of PSP awards at maximum level (300% of earned salary) for
Mr Thwaite and Ms Murray in March 2026.
The awards will be subject to a three-year performance period starting on 1 January 2026 and ending on 31 December 2028, and will be assessed against a challenging pre-determined scorecard of
measures pre-vesting. Under each component of the performance scorecard, 25% of maximum will normally vest for threshold performance and 100% of maximum will normally vest for maximum
performance, with vesting on a straight-line basis between these two points.
Full details of the PSP scorecard measures for 2026 to 2028 are detailed on pages 159 and 160.
Payments for loss of office and payments to past directors (audited)
Former Group CEO Alison Rose’s employment ended on 26 July 2024 following the completion of her contractual notice period. As part of the settlement agreement, Ms Rose retained access to security
services for 12 months following the end of her employment. This provision ended on 26 July 2025. The total cost associated with this service from August 2023 to July 2025 was £14,730. Full details of
Ms Rose’s notice period arrangements are disclosed in the 2023 Directors’ remuneration report.
There are no other payments to past directors to disclose for 2025.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
155
Governance and remuneration
Remuneration for the Group Chair and non-executive directors in 2025
With effect from 1 May 2025, the Group Chair’s composite fee was increased from £800,000 to £826,000 per annum and the basic Board fee was increased from £88,000 to £92,000 per annum.
The basic Board fee increase reflected the continued time commitment, responsibilities and expectations of our directors as they further develop as a high-performing Board, whilst ensuring ongoing
competitiveness with comparable major UK companies. All other Board and committee fees were increased in line with, but not exceeding, the 2024 global workforce % increase (3.3%), as detailed in the
table below. The Colleague Advisory Panel (CAP) Chair fee, which had not been increased since the CAP was established in 2018, was increased from £15,000 to £15,500 from 1 May 2025. All changes
were within the scope of the Policy approved by shareholders and no directors were involved in decisions involving their own remuneration.
2025 fees
£
2024 fees
£
Increase
%
Group Chair – composite fee
826,000
800,000
3.25
Basic Board fee
92,000
88,000
4.55
Senior Independent Director (SID)
38,000
37,000
2.70
Chair – GAC, BRC and RemCo
(1)
80,000
77,500
3.23
Chair – TISC
(2)
69,500
67,500
2.96
Member – GAC, BRC and RemCo
(1)
37,000
36,000
2.78
Member – N&G
(1)
17,000
16,500
3.03
Member – TISC
(2)
34,000
33,000
3.03
(1)
GAC (Group Audit Committee), BRC (Group Board Risk Committee), RemCo (Group Performance and Remuneration Committee), N&G (Group Nominations and Governance Committee).
(2)
TISC (Group Technology, Innovation and Simplification Committee) first met in June 2025 and as its areas of focus were an evolution of the former Group Sustainable Banking Committee (SBC), it was agreed that the SBC Chair and member fees should be applied to the TISC Chair
and members respectively.
For NatWest Group plc Board directors who also serve on the boards and committees of NatWest Holdings Limited, National Westminster Bank Plc and The Royal Bank of Scotland plc, the fees above
reflect membership of all four boards and their respective Board committees. Non-executive directors may also receive fees for membership of other subsidiary company boards and committees, the
value of which would be included below. No variable pay is provided to the Group Chair and non-executive directors. Further details of Board and committee members and their attendance at meetings
can be found in the Board report and relevant committee reports.
Total remuneration for the Group Chair and non-executive directors in 2025 (audited)
Fees
Benefits
(1)
Total
2025
£’000
2024
£’000
2025
£’000
2024
£’000
2025
£’000
2024
£’000
Group Chair (composite fee)
Rick Haythornthwaite
817
596
124
68
941
664
Non-executive directors
Josh Critchley
(2)
15
–
1
–
16
–
Frank Dangeard
(3)
91
287
0
3
91
290
Roisin Donnelly
176
147
6
6
182
153
Patrick Flynn
244
216
11
9
255
225
Geeta Gopalan
198
44
5
3
202
47
Yasmin Jetha
160
153
3
4
163
157
Stuart Lewis
223
216
5
6
228
222
Mark Seligman
(4)
53
211
1
9
54
220
Gill Whitehead
(5)
158
–
8
–
166
–
Lena Wilson
285
248
17
23
303
271
(1)
The benefits column for the Group Chair includes travel assistance in connection with company business, as well as private medical cover, life cover and expenses in connection with travel and attendance at Board meetings. Non-executive directors are reimbursed expenses incurred
in connection with travel and attendance at Board meetings.
(2)
Mr Critchley was appointed to the Board with effect from 3 November 2025.
(3)
Mr Dangeard stepped down on 23 April 2025, he received the Chair of NatWest Markets Plc fee until that date. This annual fee was detailed in the 2024 Directors’ remuneration report as £290,000 per annum.
(4)
Mr Seligman retired on 31 March 2025.
(5)
Ms Whitehead was appointed to the Board with effect from 8 January 2025.
Annual remuneration report continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
156
Governance and remuneration
Implementation of remuneration policy in 2026
Pay arrangements
In December 2025, the committee approved salary increases of 3.25% for the Group CEO and the Group CFO, effective from 1 April 2026. Pay arrangements for the 2026 performance year are set out
below. Both executive directors will receive annual bonus and PSP awards in March 2026 in respect of the 2025 performance year. Full details of these awards can be found on pages 151 and 155.
Salary
(1 Jan 2026)
Salary
(1 Apr 2026)
Standard
benefits
(1)
Pension
Fixed share
allowance
(2)
Maximum bonus
award for 2026
(3)
Maximum PSP
award for 2026
(4)
Paul Thwaite
£1,178,773
£1,217,083
£26,250
10% of salary
100% of salary
£1,811,258
£3,622,517
Katie Murray
£803,709
£829,830
£26,250
10% of salary
100% of salary
£1,234,950
£2,469,899
(1)
Amounts shown relate to standard benefit funding. Executive directors are also entitled to benefits such as travel assistance and security arrangements in line with the Policy and are eligible to participate in all-employee share plan arrangements on the same basis as colleagues.
(2)
Fixed share allowance is payable broadly in arrears, currently in four instalments per year. The shares will be released in equal amounts over a five-year period.
(3)
The maximum bonus award under the Policy is set at 150% of base salary and is calculated on salary earned over the year. The award is expected to vest at 50% where on-target performance is achieved across the scorecard.
(4)
The maximum PSP award under the Policy is set at 300% of base salary and is calculated on salary earned over the year. The maximum value of the PSP award receivable by the Group CEO and Group CFO for 2026 would increase to £5,433,775 and £3,704,849 respectively in the
event there was a 50% increase in the NatWest Group plc share price over the PSP three-year period from grant to vest.
Annual bonus and PSP for 2026
The committee intends to implement the Policy as follows:
Annual bonus performance assessment for 2026
The annual bonus scorecard will be based on weighted performance measures and appropriately stretching targets across financial and non-financial
areas that align with our strategy. For 2026, financial performance will represent 60% of the scorecard, with target ranges set in line with the budget.
Non-financial measures will be focused across customer, colleague and strategy measures and will represent an aggregate of 40% of the scorecard
in line with the UK regulators’ expectations. A downward risk modifier will also apply, enabling risk performance to be assessed and awards reduced,
potentially to zero, if considered appropriate.
Details of the targets for 2026 are on the next page. Some of the threshold and maximum targets are considered commercially sensitive and so, will
be disclosed retrospectively at the end of the performance period in the 2026 Directors’ remuneration report, alongside the actual level of performance
achieved and associated narrative. The maximum value of annual bonus awards is set at 150% of base salary for executive directors. The level of the
award to be paid will normally increase on a straight-line basis between 10% of maximum for threshold performance, 50% of maximum for target
performance and 100% of maximum opportunity for each scorecard measure. No award will be made if threshold performance, as determined by
the committee, is not achieved.
All assessments of performance are subject to the committee’s judgement to determine the appropriate outcome. Discretion will only be used by the
committee when the application of the formulaic performance outcome drives an outcome which is considered unrepresentative of performance or
when it is necessary to take into account strategic, economic or societal impacts that were not, or could not have been, accounted for at the point
of agreeing the bonus scorecard.
Annual remuneration report continued
Sharing in Success
For 2026, we will measure success
based on succeeding with customers,
underpinned by financial performance,
our approach to risk and delivering
value for shareholders.
Subject to performance criteria being
met, awards will be delivered to all
eligible colleagues, including executive
directors, in NatWest Group shares.
Awards have a maximum value of
£1,500 per colleague (adjusted for
local salary levels).
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
157
Governance and remuneration
Annual bonus performance measures and targets for 2026
Any targets not disclosed on the below scorecard will be disclosed retrospectively at the end of the performance period in the 2026 Directors’ remuneration report, as the committee considers them to be
commercially sensitive at this point in time. The targets will be disclosed alongside the actual level of performance achieved and associated narrative.
Category
Performance measures
Target
Weighting
Financial
60%
Group RoTE (with CET1 underpin).
Target will be set with appropriate reference to external guidance.
25%
Attributable profit.
Target will be set with appropriate reference to external guidance.
25%
Group operating expenses, excluding litigation and conduct costs.
Target will be set with appropriate reference to external guidance.
10%
Non-financial
40%
Customer
Group measure using Net Promoter Score methodology across the customer segments, reflecting
the contribution of each segment to Group income. Where NPS is not applicable for Commercial
and Institutional Banking (CIB) and NatWest Markets performance will be assessed using two
independent deal league tables, and the Institutions Greenwich Quality Index (GQI) for Rates and FX.
On average, to meet our targets (within a rounding). Targets are
set to maintain or improve.
20%
Colleague
Progress against purposeful leadership targets.
Progress against performance culture targets.
Purposeful leadership target from Our View = 86.
Performance culture target from Our View = 84.
10%
Strategy
% Retail customers with active current accounts banking exclusively digitally.
(1)
% of active Commercial and Institutional (C&I) customers banking digitally.
(3)
Average time to deploy new features and services (days).
(5)
82.5%
(2)
85%
(4)
Three days.
10%
Risk
(0 – 100%)
Risk performance assessment based on Group, NatWest Holdings, Functional (CFO only) and individual risk
performance.
Discretionary downwards modifier.
0-100%
(1)
Retail Banking customers with active current accounts that have accessed a digital platform (online or mobile) and not used a branch or telephony for 90 days in the reporting period.
(2)
Inactive customers and customers with no channel usage excluded. Mortgages and savings accounts, and interactions via the Post Office are excluded from the scope of measurement.
(3)
Proportion of C&I (ring-fenced bank) customers with active non-personal accounts that conducted 95% or more of their account access digitally for the final three months in the reporting period.
(4)
Access to account through a digital channel may not result in a transaction.
(5)
Average time (rolling quarterly) to deploy new features and services to end users where the application is active and has had four or more changes in the last 12 months.
Annual remuneration report continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
158
Governance and remuneration
PSP awards to be granted in 2026
Following a pre-grant test which confirmed
that satisfactory performance was achieved
in 2025, the committee approved the grant
of PSP awards at maximum level (300% of
earned salary) for Mr Thwaite and Ms Murray
in March 2026. The awards will be subject to
a three-year performance period starting on
1 January 2026.
The PSP scorecard is based on weighted
performance measures and appropriately
stretching targets across financial and
non-financial areas that align with our
strategy and regulatory expectations.
For the PSP awards to be granted in 2026,
financial performance represents 60% of the
scorecard, split evenly between Group RoTE
and Relative Total Shareholder Return (TSR).
Whilst Group RoTE is also used as an annual
bonus measure, the committee is comfortable
with its inclusion in the PSP scorecard on the
basis that the delivery of a strong return on
tangible equity is of the utmost importance to
NatWest Group, acting as a key measure of
the sustainable long-term returns we wish to
deliver to our shareholders. The inclusion of
this measure within both the annual bonus
and the PSP is also in line with the approach
taken by other major UK-listed banks.
Relative TSR acts as a key measure of
shareholder returns compared to our UK and
European banking peers. In 2025, ahead of
the PSP awards being made, the committee
confirmed that the peer group for the Relative
TSR measure (30% weighting) will consist of
18 banks listed in the UK and Europe which
are considered to be of comparable size and
complexity to NatWest Group. Further details
on the peer group chosen for this metric are
outlined on the next page.
The remaining 40% of the scorecard is based
on non-financial measures. 15% is based on
sustainability, namely a climate and transition
finance
(3)
measure which drives delivery of our
£200 billion target between 1 July 2025 and
the end of 2030. This is a key sustainability
target within NatWest Group, and its inclusion
aligns with market practice at our peers. The
last 25% of the scorecard is based on strategic
measures which incentivise management to
further progress our strategic priorities of:
(i) Disciplined growth, by building stable
income streams;
(ii) Leveraging simplification, to improve
productivity and efficiency; and
(iii) Active balance sheet and risk
management, to drive capital
generation and distribution capacity.
This element of the scorecard also includes
inclusion metrics. The committee considered
it appropriate to move these metrics from the
annual bonus scorecard to the PSP scorecard
going forward, as it is believed that making
material and sustainable change in these
areas is more meaningfully measured over the
medium to long-term time horizon associated
with the PSP. The targets proposed for these
metrics are designed to drive strong progress
towards the delivery of our previously
announced targets by the end of 2030, namely:
•
50% female representation globally
(4)
in
our senior leadership population;
(5)
•
19% of UK colleagues from ethnic minority
groups in our senior leadership population;
(5)
and
•
5% of UK Black
(6)
colleagues in our senior
leadership population.
(5)
At the time of vesting, a risk and conduct
underpin will also apply to determine if there
has been any material deterioration in
risk and control performance or a serious
conduct/reputational event that may warrant
a downward adjustment (up to 100% of
vesting if considered appropriate).
The PSP scorecard with performance
measures and targets for 2026-2028 are
detailed on the next page along with footnotes.
Annual remuneration report continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
159
Governance and remuneration
Annual remuneration report continued
PSP performance measures and targets for 2026-2028
Any targets not disclosed on the below scorecard will be disclosed retrospectively at the time of vesting, as the committee considers them to be commercially sensitive at this point in time. This will be
disclosed alongside the actual level of performance achieved and associated narrative.
Category
Performance measures
Weighting
Threshold
(25% payout)
Maximum
(100% payout)
Financial (60% weighting)
Group RoTE
(1)
30%
17.0%
19.0%
Relative Total Shareholder Return
compared to a peer group consisting of 18 UK and European banks.
(2)
30%
Median
Upper quartile
Non-financial (40% weighting)
Sustainability
Climate and transition finance
(3)
15%
Climate and transition finance is intended to support our net-zero ambition by providing financing and
facilitation options that may help our customers to achieve their climate and/or transition ambitions.
£100bn
£125bn
Strategic
Disciplined growth
10%
Targets will be disclosed retrospectively at the time of vesting.
Customer balance growth across gross lending, deposits and assets under management and administration.
Leveraging simplification
5%
Cost:income ratio.
Active balance sheet and risk management
5%
Capital generation measuring the ability to grow our capital base.
Inclusion
5%
% of female representation globally
(4)
in our senior leadership population
(5)
by 31 December 2028.
45.4%
47.4%
% of UK colleagues from ethnic minority groups in our senior leadership population
(5)
by 31 December 2028.
14.0%
16.0%
% of UK Black
(6)
colleagues in our senior leadership population
(5)
by 31 December 2028.
1.5%
3.3%
Risk and conduct underpin
(1)
Group RoTE will be measured as the average RoTE over the three financial years of the performance period. Adjustments will be limited to notable items as reported in the external accounts and any impact of material changes in base rate from that assumed in the plan.
(2)
The peer group for the 2026-2028 PSP consists of 18 Banks in the UK and Europe which are considered to be of comparable size and complexity to NatWest, namely ABN Amro, AIB, Bank of Ireland, Barclays, BNP Paribas, CaixaBank, Commerzbank, Crédit Agricole, Danske Bank,
DNB Bank, Handelsbanken, HSBC, ING Group, Intesa Sanpaolo, Lloyds, Nordea, Santander, and Société Generale.
(3)
Climate finance and transition finance as defined in the climate and transition finance framework. Climate and transition finance represents only a relatively small proportion of our overall financing and facilitation activities.
(4)
Global targets remain subject to local laws and regulations.
(5) The senior leadership population is CEO-2+.
(6)
Black mixed ethnicity categories are included in our Black diversity target calculations.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
160
Governance and remuneration
Annual remuneration report continued
Fees for NatWest Group plc Board
(1)
Rates with effect
from 1 May 2025
Group Chair (composite fee)
£826,000
Non-executive director basic fee
£92,000
Senior Independent Director
£38,000
Fees for NatWest Group plc Board committees
(1)
Member
Chair
Group Board Risk Committee
£37,000
£80,000
Group Audit Committee
£37,000
£80,000
Group Performance and Remuneration Committee
£37,000
£80,000
Group Technology, Innovation and Simplification Committee
£34,000
£69,500
Group Nominations and Governance Committee
£17,000
–
Other fees for NatWest Group plc Board directors
Rates with effect
from 1 May 2025
Chair of the Colleague Advisory Panel
£15,500
(1)
No additional fees are payable where the director is also a member of the boards and respective Board committees of NatWest Holdings Limited, National Westminster Bank Plc and The Royal Bank of Scotland
plc. Where appropriate, directors receive additional fees for membership of other subsidiary company boards and committees, including NatWest Markets Plc. If applicable, we will disclose the value of fees
received in this report each year.
Group Chair and non-executive
shareholding policy and annual
fees for 2026
Under the shareholding policy for the Group
Chair and non-executive directors, NatWest
Group retains a portion of the net monthly
basic fees (10% for the Group Chair and 25%
for non-executive directors) which is used to
purchase shares every quarter.
The Group Chair is required to build towards a
shareholding equivalent to four times the basic
annual Board fee (currently £368,000) and for
non-executive directors the target is one times
the basic annual Board fee (currently £92,000).
Once the target is achieved, monthly
deductions and quarterly purchases will
continue at a reduced percentage of net
monthly fees (5% for the Group Chair and
10% for non-executive directors). The shares
purchased under the shareholding policy are
held in a nominee account with dividends
reinvested and shares retained until the
director steps down from the Board.
The annual fees applicable are set out in the
table opposite, with the fees delivered in a
combination of cash and shares, in line with
the shareholding policy above. In line with our
usual approach, the fees will be reviewed
in 2026 with any changes effective from
1 May 2026.
Other external directorships
Any new external appointments to be
undertaken by directors require prior Board
approval. Steps are in place to make sure that
directors comply with regulatory limits on the
number of directorships held.
The Board also considers whether it is
appropriate for executive directors to retain
any remuneration from any new external roles,
depending on the appointment. Details of
current external appointments can be found
in the biographies section of the Corporate
governance report.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
161
Governance and remuneration
Annual change in directors’ pay compared to average change in employee pay
Executive directors receive fixed share allowances and, from the 2022 performance year onwards, annual bonus awards. The Group Chair and non-executive directors receive fees rather
than salary and do not receive annual bonus awards. We regularly review membership of Board committees and changes in membership will impact the level of fees paid to non-executive
directors from one year to the next. The benefits figures for non-executive directors can also change significantly year on year depending on the amount of travel undertaken in connection
with Board meetings. Data for employees is based on average salary, benefits and variable pay (i.e., annual bonus and Sharing in Success awards).
2024 to 2025
2023 to 2024
2022 to 2023
2021 to 2022
2020 to 2021
Annual percentage change
Salary
Benefits
(1)
Annual Bonus
Salary
Benefits
(1)
Annual Bonus
Salary
Benefits
(1)
Annual Bonus
Salary
Benefits
(1)
Annual Bonus
Salary
Benefits
(1)
Annual Bonus
UK employees
(2)
4.45%
8.48%
15.78%
4.34%
6.87%
30.03%
8.11%
9.65%
7.13%
5.20%
6.34%
42.48%
2.02%
4.68%
35.24%
Executive directors
Paul Thwaite
(3)
3%
0%
68%
41%
0%
98%
–
–
–
–
–
n/a
–
–
n/a
Katie Murray
1.5%
0%
71%
1%
0%
46%
3%
0%
-2%
1.50%
0%
n/a
0%
0%
n/a
Group Chair and
non-executive directors
Fees
Benefits
Annual Bonus
Fees
Benefits
Annual Bonus
Fees
Benefits
Annual Bonus
Fees
Benefits
Annual Bonus
Fees
Benefits
Annual Bonus
Rick Haythornthwaite
(4)
37%
82%
n/a
–
–
n/a
–
–
n/a
–
–
n/a
–
–
n/a
Josh Critchley
(5)
–
–
n/a
–
–
n/a
–
–
n/a
–
–
n/a
–
–
n/a
Frank Dangeard
(6)
-68%
-100%
n/a
4%
17%
n/a
3%
-33%
n/a
2%
200%
n/a
1%
0%
n/a
Roisin Donnelly
(5)
20%
-9%
n/a
25%
13%
n/a
462%
0%
n/a
–
–
n/a
–
–
n/a
Patrick Flynn
13%
14%
n/a
-1%
192%
n/a
-6%
-40%
n/a
2%
400%
n/a
0%
-67%
n/a
Geeta Gopalan
(5)
349%
68%
n/a
–
–
n/a
–
–
n/a
–
–
n/a
–
–
n/a
Yasmin Jetha
4%
-6%
n/a
-3%
-26%
n/a
-8%
25%
n/a
1%
300%
n/a
33%
100%
n/a
Stuart Lewis
(5)
4%
-19%
n/a
55%
27%
n/a
–
–
n/a
–
–
n/a
–
–
n/a
Mark Seligman
(7)
-75%
-91%
n/a
3%
81%
n/a
3%
0%
n/a
4%
400%
n/a
1%
0%
n/a
Gill Whitehead
(5)
–
–
n/a
–
–
n/a
–
–
n/a
–
–
n/a
–
–
n/a
Lena Wilson
15%
-25%
n/a
-11%
108%
n/a
36%
-35%
n/a
5%
240%
n/a
8%
25%
n/a
(1)
Standard benefit funding for executive directors has remained unchanged. The figures above exclude any other benefits to executive directors such as travel assistance in connection with company business, the value of which is disclosed each year in the single total figure table.
(2)
NatWest Group plc is a holding company and is not an employing entity. The disclosure above compares the change in directors’ pay with all employees based in the UK. The data is based on the average full-time equivalent salary and benefit costs of UK-based employees of NatWest
Group, excluding the Group CEO and the Group CFO. This is considered to be the most representative comparator group, as it covers the majority of employees and the Group CEO and Group CFO are based in the UK. The average percentage change relates to salaries and
benefits awarded in the respective financial years for UK employees and therefore may differ from figures quoted elsewhere in the report, for example, the proposed salary increases to be awarded from April 2026.
(3)
Mr Thwaite was appointed as Group CEO on 25 July 2023, so there are no prior year comparisons. For 2023, the change in his remuneration is based on actual amounts he earned over the whole of 2023, not just in his capacity as Group CEO, given he was an employee of NatWest
Group before becoming Group CEO.
(4)
Mr Haythornthwaite joined the Board of NatWest Group plc as an independent non-executive director on 8 January 2024 and following a handover period took over as Group Chair on 15 April 2024. Therefore, there are no prior year comparisons.
(5)
Mr Critchley joined the Board on 3 November 2025, Ms Whitehead joined the Board on 8 January 2025, Ms Gopalan joined the Board on 1 July 2024, Mr Lewis joined the Board on 1 April 2023, and Ms Donnelly joined the Board on 1 October 2022, so there are no prior year
comparisons before their respective joining date.
(6)
Mr Dangeard stepped down on 23 April 2025.
(7)
Mr Seligman retired on 31 March 2025.
Annual remuneration report continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
162
Governance and remuneration
CEO to employee pay ratios
The ratios below compare the total pay of
the Group CEO, as set out in the single figure
of remuneration table in this report, against
the pay of three employees whose earnings
represent the lower, median and upper
quartiles of the UK employee population.
A significant proportion of the Group CEO’s
total remuneration is delivered through
long-term incentive arrangements, linked to
performance and share price movements,
which means the ratio can fluctuate
significantly from one year to the next.
None of the three employees identified this
year received equivalent long-term incentive
arrangements. Information based on salary
only is included as a further comparison.
The pay ratios reflect the diverse range of
roles and pay levels across NatWest Group.
The median pay ratio is consistent with the pay
and reward policies for UK employees as a
whole. We pay each individual a fair rate for
the role performed, using consistent reward
policies. We set out further information on
our fair pay approach at natwestgroup.com.
The change in the total remuneration median
pay ratio since 2018 is largely driven by the
more variable nature of performance-related
pay for the Group CEO. The trend in the salary
only pay ratio shows as stable and slightly
decreasing due to lower than workforce
increases for the Group CEO and progression
in salaries for the wider workforce.
In 2023, the single figure table detailed the
pro-rated amount of Mr Thwaite’s annual
bonus award as he took on the Group CEO
role part way through the year. Also, as
Ms Rose voluntarily declined a LTI award
in 2021, in relation to events relating to
COVID-19, there was no vesting amount
to include. This contributed to the pay ratio
falling in 2023 before rising in 2024, and again
in 2025. The rise is primarily due to higher
vesting values for long-term incentive awards
as a result of strong share price performance
and an increased annual bonus opportunity
from 2025.
The total remuneration and salary for
employees at the lower, median and upper
quartiles has either remained stable or
increased year on year.
Pay ratios
Remuneration values (£000)
Year
Methodology
P25 (LQ)
P50 (Median)
P75 (UQ)
Calculation
Group CEO
Y25 (LQ)
Y50 (Median)
Y75 (UQ)
2018
A
Total remuneration
143:1
97:1
56:1
Total remuneration
3,578
25
37
64
Salary only
44:1
30:1
19:1
Salary only
1,000
23
33
51
2019
A
Total remuneration
175:1
118:1
69:1
Total remuneration
4,517
26
38
66
Salary only
44:1
30:1
19:1
Salary only
1,017
23
34
52
2020
A
Total remuneration
99:1
66:1
39:1
Total remuneration
2,615
26
40
66
Salary only
46:1
31:1
20:1
Salary only
1,100
24
36
54
2021
A
Total remuneration
130:1
87:1
51:1
Total remuneration
3,588
28
41
70
Salary only
44:1
29:1
20:1
Salary only
1,100
25
37
55
2022
A
Total remuneration
177:1
119:1
71:1
Total remuneration
5,249
30
44
74
Salary only
42:1
28:1
19:1
Salary only
1,117
27
40
58
2023
A
Total remuneration
95:1
64:1
39:1
Total remuneration
3,158
33
50
81
Salary only
38:1
25:1
17:1
Salary only
1,106
29
44
63
2024
A
Total remuneration
139:1
93:1
56:1
Total remuneration
4,936
36
53
87
Salary only
37:1
25:1
17:1
Salary only
1,142
31
46
66
2025
A
Total remuneration
175:1
117:1
71:1
Total remuneration
6,571
37
56
92
Salary only
36:1
24:1
17:1
Salary only
1,173
33
48
70
Supplementary information on the pay ratio table:
(1)
The data for 2025 is based on remuneration earned by Mr Thwaite, as set out in the single total figure of remuneration table in the remuneration report.
(2) The employees at the 25
th
, 50
th
and 75
th
percentiles (lower, median and upper quartiles) were determined as at 31 December of the relevant year, based on full-time equivalent remuneration for all UK employees. This includes fixed pay (salary, pension funding and where relevant
benefit funding and other allowances) and any variable pay (based on the amount to be paid). For employees who work part time, fixed pay is grossed up to the full-time equivalent.
(3)
‘Option A’ methodology was selected as this is considered the most statistically accurate method.
(4)
UK employees receive a pension funding allowance set as a percentage of salary. Some employees continue to participate in the defined benefit pension scheme. For simplicity and consistency with prior years, we have included the pension funding allowance value in the calculation
for all employees.
(5)
The data for the three employees identified has been considered and fairly reflects pay at the relevant quartiles among the UK employee population. All three individuals were full-time employees during the year and none received an exceptional award that would otherwise inflate
their pay figure.
Annual remuneration report continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
163
Governance and remuneration
Summary of remuneration levels for employees in 2025
Remuneration of Material Risk Takers in 2025
Each year, we disclose the remuneration paid to individuals whose activities have a material
influence over NatWest Group’s performance or risk profile, known as Material Risk Takers (MRTs).
The disclosures are made in line with regulatory requirements and full details can be found in our
Pillar 3 reports at natwestgroup.com.
The tables below summarise the total pay for colleagues identified as MRTs for one or more entities
across NatWest Group along with the number of individuals earning more than €1 million for the
year. Note that the number of MRTs excludes colleagues who left NatWest Group prior to
31 December 2025 in line with regulatory requirements.
Number of >€1m earners
(1)
Number of MRTs
590
€1.0 million to below €1.5 million
55
Remuneration (£millions)
€1.5 million to below €2.0 million
20
Total fixed pay
£185.1
€2.0 million to below €2.5 million
3
Total variable pay
£129.1
€2.5 million to below €3.0 million
4
Total remuneration
£314.2
€3.0 million to below €3.5 million
4
€3.5 million to below €4.0 million
2
€4.0 million to below €4.5 million
-
€4.5 million to below €5.0 million
1
Total
89
(1)
This information is disclosed in euros in line with the
requirements of the regulations.
The disclosure of remuneration levels for employees includes anyone employed by NatWest Group during the year.
Annual remuneration report continued
42,548 employees earned total remuneration
up to £50,000
14,931 employees earned total remuneration
between £50,000 and £100,000
7,890 employees earned total remuneration
between £100,000 and £250,000
1,180 employees earned total remuneration
over £250,000
63.93%
22.44%
11.86%
1.77%
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
164
Governance and remuneration
Share interests for the Group Chair and non-executive directors
As set out on page 149, the Group Chair and non-executive directors are subject to a separate shareholding policy. The shareholding requirement is expressed as a number of shares, which is
calculated at the beginning of each year. The progress being made towards the shareholding requirement is in line with expectations. A number of the directors held shares prior to the policy’s
introduction which has accelerated their progress.
Directors’ interests in NatWest Group plc shares (audited)
Under the shareholding requirements, the Group CEO and Group CFO need to build up and maintain shares to the value of 500% of salary and 300% of salary, respectively. The requirements apply
both during employment and for two years after leaving, in line with best practice. Procedures are in place to ensure the shareholding requirement is enforced, including the submission of pre-approval
requests prior to the execution of any trades, or the application of trade restrictions for leavers. Further details of our shareholding requirements as part of our Policy can be found on page 147.
The Group CEO and Group CFO have entered into irrevocable trading plans in respect of 25% of their vested shares free from retention requirements at the point they entered into the trading plans in
order to engage in structured, regular share dealing activity and to assist with portfolio management.
Paul Thwaite
Katie Murray
Shares held – beneficially owned
(1)
973,643
786,477
Shares held – performance assessed unvested shares
(2)
250,573
535,016
Total shares held counting towards requirements
(3)
1,224,216
1,321,493
Shareholding requirement
500% of salary
300% of salary
Position against requirement
(4)
676% of salary
1,071% of salary
(1)
Shares owned beneficially as at 31 December 2025. Includes shares held by persons closely associated with the directors.
(2)
Share awards are also included for the purposes of the shareholding requirement once any performance assessment has been completed. All share awards are included net of taxes due to be paid on vesting.
(3)
As at 13 February 2026, there were no changes to the shares held as shown above for Mr Thwaite and Ms Murray.
(4)
The position against the requirement was calculated as at 31 December 2025 based on the closing price of £6.5180 on 31 December 2025.
Rick
Haythornthwaite
Josh
Critchley
(3)
Frank
Dangeard
(4)
Roisin
Donnelly
Patrick
Flynn
Geeta
Gopalan
Yasmin
Jetha
Stuart
Lewis
Mark
Seligman
(5)
Gill
Whitehead
(3)
Lena
Wilson
Shares held
(1),(2)
42,938
16,000
13,899
18,606
28,624
3,825
37,248
10,780
61,177
2,295
36,726
Shareholding
requirement
4x basic annual
Board fee
1x basic annual Board fee
Position against
requirement
76%
of target
113%
of target
98%
of target
131%
of target
202%
of target
27%
of target
263%
of target
76%
of target
433%
of target
16%
of target
260%
of target
(1)
Shares owned beneficially as at 31 December 2025 or at the date of stepping down from the Board if earlier. Includes shares held by persons closely associated. As at 13 February 2026, there were no changes to the shares held as shown above.
(2)
For the Group Chair and the non-executive directors, a final share purchase under the shareholding policy for 2025 was made on 2 January 2026 and has been included in the table above as it related to deductions from 2025 fees.
(3)
Mr Critchley was appointed to the Board with effect from 3 November 2025. Ms Whitehead was appointed to the Board with effect from 8 January 2025.
(4)
Mr Dangeard stepped down on 23 April 2025.
(5)
36,585 shares are held in the name of M Seligman & Co Limited, of which Mark Seligman and Louise Seligman are shareholders. Mr Seligman retired on 31 March 2025.
Annual remuneration report continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
165
Governance and remuneration
Share awards under share plans
Year
Awards held
1 Jan 2025
Awards
granted
Award price £
(5)
Full market value
at grant £
Awards vested
Awards lapsed
Awards held
31-Dec-25
Expected vesting dates
Paul Thwaite
Deferred award
(3)
2020
30,123
1.70
30,123
–
LTI award
2021
192,524
1.67
1.87
48,131
144,393
(1)
07.03.26
(7)
LTI award
2022
410,492
1.82
2.23
82,099
328,393
(1)
07.03.26
(7)
RSP award
2023
425,074
2.21
2.92
425,074
(2)
07.03.26 – 07.03.27
(7)
RSP award
2024
677,576
1.79
2.44
677,576
(2)
07.03.27 – 07.03.31
RSP award
2025
451,682
3.79
4.73
451,682
(2)
07.03.28 – 07.03.32
Annual bonus/Deferred award
(4)
2025
97,215
4.58
4.73
97,215
–
Sharing in Success award
(6)
2025
264
4.83
264
–
1,735,789
549,161
257,832
2,027,118
Total LTI and RSP awards subject to service
472,786
(1)
Total LTI and RSP awards subject to performance and service
1,554,332
(2)
Year
Awards held
1 Jan 2025
Awards
granted
Award price £
(5)
Full market value
at grant £
Awards vested
Awards lapsed
Awards held
31-Dec-25
Expected vesting dates
Katie Murray
Deferred award
(3)
2019
83,575
2.64
41,790
41,785
(1)
07.03.26
LTI award
2020
387,939
1.70
129,313
258,626
(1)
07.03.26 – 07.03.27
LTI award
2021
325,809
1.67
1.87
81,453
244,356
(1)
07.03.26 – 07.03.28
LTI award
2022
580,885
1.82
2.23
116,177
464,708
(1)
07.03.26 – 07.03.29
RSP award
2023
431,451
2.21
2.92
431,451
(2)
07.03.26 – 07.03.30
RSP award
2024
653,915
1.79
2.44
653,915
(2)
07.03.27 – 07.03.31
RSP award
2025
311,583
3.79
4.73
311,583
(2)
07.03.28 – 07.03.32
Annual bonus/Deferred award
(4)
2025
65,375
4.58
4.73
65,375
–
Sharing in Success award
(6)
2025
264
4.83
264
–
2,463,574
377,222
434,372
2,406,424
Total LTI and RSP awards subject to service
1,009,475
(1)
Total LTI and RSP awards subject to performance and service
1,396,949
(2)
(1)
Performance assessments for these awards have taken place and awards remain subject to deferral and employment conditions before vesting. These awards count on a net-of-tax basis towards meeting the shareholding requirement.
(2)
Awards are subject to a pre-vest performance assessment along with deferral and employment conditions before vesting.
(3)
For Mr Thwaite, deferred awards for 2020 relate to annual bonus awards granted for performance prior to becoming an executive director, with payments deferred in line with regulatory requirements. Similarly, for Ms Murray the deferred award from 2019 relates to annual bonus
awards granted for performance prior to becoming an executive director.
(4)
For annual bonus, shares were granted as an element of the up-front bonus; these were awarded and vested in 2025, in line with the Policy.
(5)
The award price shown from 2021 to 2025 is discounted to reflect the absence of the right to receive dividends or dividend equivalents during the vesting period, in line with agreed methodology for LTI and RSP awards at that time. For reference, the full market price of NatWest
Group shares at the time of grant is also shown.
(6)
The Sharing in Success award was delivered in shares in May 2025 to all colleagues, including executive directors. Awards of shares worth £1,275 were made in respect of 2024 performance (adjusted for local salary levels).
(7)
The expected vesting dates for Mr Thwaite have been accelerated for awards relating to his roles prior to becoming an executive director in line with the UK regulatory remuneration requirements published in October 2025.
Annual remuneration report continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
166
Governance and remuneration
Relative importance of spend
on pay £m (% change on 2024)
(1)
Remuneration paid to all employees represents total
staff expenses as per Note 3 to the consolidated financial
statements, exclusive of social security and other staff costs.
(2) Reflects distributions to shareholders through dividend
payments during the financial year. The Board has
confirmed its intention to pay a dividend of 23.0 pence per
ordinary share in respect of financial year 2025, which will
be paid in 2026 subject to approval by shareholders at the
forthcoming NatWest Group plc AGM.
(3)
Reflects the purchase of ordinary shares under the
share buyback programme. In 2025, 104 million ordinary
shares purchased for a total consideration of £574 million
(2024 – 175 million for a consideration of £454 million).
Shareholder dilution and share sourcing
NatWest Group can use new issue, market-purchase or treasury shares to deliver shares that are required for employee share plans. Best practice
dilution limits are monitored and govern the number of shares that may be issued to satisfy share plan awards.
Total Shareholder Return (TSR) performance
The graph compares the TSR performance of NatWest Group with companies comprising the FTSE 100 Index over the last 10 years. We have selected
this index because NatWest Group is a member of the FTSE 100 and it represents a cross-section of leading UK companies.
CEO pay over the same period
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Total remuneration
(£000s)
(1)
PT
1,706
4,936
6,571
AR
1,401
2,615
3,588
5,249
1,452
RM
3,702
3,487
3,578
4,066
Annual bonus against maximum opportunity
PT
54%
78%
85%
AR
68%
Long-term incentive vesting rates against
maximum opportunity
PT
45%
71%
100%
AR
60%
82%
83%
78%
RM
56%
89%
41%
78%
(1)
CEOs are Paul Thwaite (PT), Alison Rose (AR) and Ross McEwan (RM) with figures based on the single figure of remuneration for the relevant year.
Statement of shareholder voting
The resolutions to approve the Policy and the Annual remuneration report at the 2025 NatWest Group plc AGM received strong levels of support, as
set out below. The resolution to authorise the NatWest Group plc 2024 employee share plan rules was approved at the 2024 NatWest Group plc AGM,
and also received strong support, as detailed below.
FTSE 100
NatWest Group
0
50
100
150
200
250
300
350
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
Directors’ remuneration policy
Vote
Number of shares
Percentage
For
24,668,869,124
97.86%
Against
538,673,576
2.14%
Withheld
9,701,904
–
Annual remuneration report
Vote
Number of shares
Percentage
For
24,455,534,356
97.02%
Against
752,180,000
2.98%
Withheld
9,523,476
–
Employee share plan rules
Vote
Number of shares
Percentage
For
28,966,778,080
98.99%
Against
296,392,288
1.01%
Withheld
3,877,800
–
Annual remuneration report continued
Distributions to shareholders by
way of share buyback
(3)
2025
Remuneration paid to all employees
(1)
3,361
Distributions to holders of
ordinary shares
(2)
1,505
Distributions to holders of paid-in equity
454
283
Distributions to shareholders
by way of share buyback
(3)
Remuneration paid to
all employees
(1)
3,435
(+2.20%)
Distributions to holders of
ordinary shares
(2)
2,018
(+34.09%)
Distributions to holders of
paid-in equity
352
(+24.38%)
574
(+26.43%)
2024
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
167
Governance and remuneration
The Group Performance and Remuneration Committee overview
Principal areas of focus of 2025
Jan
Feb
April
Sept
Dec
Wider workforce
Approving and overseeing the NatWest Group-wide remuneration policy.
Considering how pay has been allocated across the workforce, including analysis by colleague level, geography and diversity.
Reviewing fixed pay proposals.
Approving Sharesave offers to colleagues.
Reviewing Group-wide bonus pool methodology and assessments.
Reviewing gender and ethnicity pay gap reporting.
Approving the Sharing in Success outcome and measures and targets.
Reviewing of the planned implementation of the regulatory remuneration reforms for PY 2025 and historical awards.
Executive remuneration
Reviewing performance assessments and remuneration arrangements for the committee’s ‘in-scope’ population.
Setting performance objectives for senior executives.
Approving remuneration for senior hires and arrangements for any leavers.
(1)
Reviewing stakeholder engagement approach, outreach and considerations.
Reviewing and approving the Directors’ remuneration report.
Reviewing benchmarking data on executive pay and peer practice.
Reviewing and approving the directors’ remuneration policy.
Governance and regulatory
Approving the annual agenda planner and updates to the terms of reference.
Considering matters escalated by other Board committees and subsidiary Performance and Remuneration Committees.
Overseeing the MRT identification process.
Receiving accountability review updates and approving accountability decisions for the population within its governance.
The committee Chair also approves submissions made throughout the year to the UK regulators outside the formal meetings, as required.
(1)
Additional proposals related to the remuneration and exit arrangements of senior hires and leavers are reviewed by the committee throughout the year outside of the main meeting cycle.
Annual remuneration report continued
Membership
Details of members and attendance is on page 140.
Effectiveness review
In accordance with the Code, an evaluation of the performance of the Board and its committees,
including the Group Performance and Remuneration Committee, was conducted internally in
2025. Further information on the review can be found on pages 119 to 121.
Conflicts of interest
To mitigate potential conflicts of interest, no individuals are involved in decisions regarding their
own remuneration. The Group Chief People Officer, who is responsible for the People function
and executive compensation, may be present to support the committee when discussions take
place on senior executive pay, but she is never present for discussions on her own remuneration.
It is the committee, rather than management, that appoints the remuneration advisers.
Committee advisers
Korn Ferry (KF) were appointed by the committee as its remuneration adviser in March 2024
following a period of transition from our previous adviser. KF are signatories to the voluntary
code of conduct in relation to remuneration consulting in the UK. KF provide executive/
professional search services alongside HR advisory services including assessment and
organisational strategy services to NatWest Group subsidiaries. The committee is satisfied
the advice received is independent and objective. There are no connections between KF
and individual directors to be disclosed. Fees paid to KF for advising the committee are based
primarily on a fixed fee structure with any additional items charged on a time/cost basis. Fees for
2025 in relation to directors’ remuneration amounted to £192,000 (2024 – £290,000) excluding
VAT. Over the course of 2025, the committee also took account of the views of the Group Chair,
Group CEO, Group CFO, Group Chief People Officer, Group Chief Operating Officer, Director of
Reward & Employment, Group Chief Risk Officer, Group Chief Audit Executive and other support
and control functions where appropriate and relevant. The committee also received input from
the BRC, the GAC and the Performance and Remuneration Committees for the principal
subsidiary legal entities across NatWest Group.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
168
Governance and remuneration
Compliance report
Statement of compliance
NatWest Group plc is committed to high
standards of corporate governance, business
integrity and professionalism in all its activities.
Detailed information on how NatWest Group plc
applied the Principles, and complied with the
Provisions of the UK Corporate Governance
Code (‘the Code’) can be found in the Corporate
governance section of this report, including on
page 104, which includes cross-references to
relevant sections of the Strategic report and
other related disclosures. A copy of the 2024
and 2018 versions of the Code can be found
at frc.org.uk.
The Group Audit Committee complied with the
requirements of the FRC’s Audit Committees
and the External Audit: Minimum Standard
and the Statutory Audit Services for Large
Companies Market Investigation (Mandatory
Use of Competitive Tender Processes and
Audit Committee Responsibilities) Order 2014
for the year ended 31 December 2025.
Under the US Sarbanes-Oxley Act of 2002,
specific standards of corporate governance
and business and financial disclosures and
controls apply to companies with securities
registered in the US. NatWest Group plc
complies with all applicable sections of the
US Sarbanes-Oxley Act of 2002, subject to
a number of exceptions available to foreign
private issuers.
Internal control
The Board of directors is accountable for the
system of internal controls that is designed
to maintain effective and efficient operations,
compliant with applicable laws and regulations.
The system of internal controls is designed to
manage risk to an acceptable residual level
rather than to eliminate it entirely. Systems
of internal control provide reasonable and
not absolute assurance against material
misstatement, fraud, or any other loss
arising from unforeseen events, human error,
or deliberate misconduct. Ongoing robust
processes are in place for the identification,
evaluation and management of the principal
risks faced by NatWest Group that operated
throughout the period from 1 January 2025
to 12 February 2026, the date the directors
approved the Annual Report and Accounts.
These included the Risk and Control
Performance Assessment (RCPA) through
which the effectiveness of the risk and control
environment is evaluated. This assessment is
conducted annually by each business area
within NatWest Group using a standardised set
of indicators and providing qualitative context
to determine an RCPA outcome of “met,”
“partially met,” or “not met.” The indicators
are used to inform an understanding of:
•
The strength of the control environment
to manage risk exposure within appetite.
•
Adequacy and effectiveness of the day-to-
day management of risks and controls.
•
Adherence with applicable components
of the Enterprise-Wide Risk Management
Framework (EWRMF).
•
A culture of Intelligent Risk Taking.
The RCPA enables the Group to meet its legal
and regulatory obligations with regards to the
monitoring, assessment and reporting of its
internal risk and control environment
NatWest Group operates a three lines of
defence model for the ownership, oversight
and assurance of its risks and internal
control environment. Management across
the organisation are the first line of defence
and, therefore, are the primary owners of
the risk and are responsible for the design,
implementation and maintenance of effective
processes, procedures, and controls to
manage the risks within risk appetite. The Risk
function is the second line of defence which
exercises oversight and challenge of the risk
management activities undertaken by the first
line of defence. The Internal Audit function,
which is the third line of defence, undertakes
independent and objective assurance activities
on the governance, risk management and
internal controls to manage risks to enable
achievement of NatWest Group’s objectives
and reports on the adequacy and effectiveness
thereof to the Board and executive management.
The effectiveness of NatWest Group’s risk
management and internal control framework
is reviewed regularly throughout the year by
the Board, the Group Audit Committee, and
the Group Board Risk Committee. The Group
Board Risk Committee receives regular
risk management reports ensuring ongoing
oversight with the Chair of the Board Risk
Committee providing a summary after every
meeting to the Group Board of Directors of
any matters requiring escalation. Internal and
External Audit present reports to the Group
Audit Committee that include details of any
significant internal control deficiencies they
may have identified as part of their audits.
Executive management committees at
NatWest Group level and each of its businesses
also receive regular reports on risks facing their
business and the effectiveness of internal controls
in managing these risks. Details of NatWest
Group’s approach to risk management are
provided in the Risk and capital management
section of the Annual Report and Accounts.
Progress in 2025
NatWest Group’s control environment remains
robust, with notable enhancements delivered
across financial crime, conduct, payments,
technology, conduct, risk management
framework and processes and remediation
of known control issues. These enhancements
have resulted in an improved control
environment and enhanced operational
resilience in 2025.
In addition, NatWest Group has maintained
its focus on cyber risk, data management,
third-party risk management, operational
resilience and technology (incl end-of-life
systems) given increasing inherent risk impact
of these themes on the overall operational
risk profile.
NatWest Group continuously seeks to enhance
its controls through prioritised mitigating
actions in response to the rapidly evolving
risk landscape to sustain an effective
control environment.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
169
Governance and remuneration
NatWest Group, as part of its robust risk
culture, continued to make enhancements to
its risk management processes to maintain
an effective control environment. This has
included refinements to the enhanced risk
and control self assessments supported
by an industry aligned risk directory, greater
automation of risk processes, a focused suite
of risk standards, operational guidance and risk
toolkits, which provide a consistent approach
to risk management and control requirements
for each non- financial risk. The outcomes of
the risk and control self- assessments provide
insight into the adequacy and effectiveness
of the control environment and the impact
thereof on the residual risk exposures. They
further support the initiation of actions to
address control gaps and weaknesses and
identify control rationalisation and automation
opportunities. The outcomes of the risk and
control self-assessments are used as input into
risk profile reporting to the Board and senior
management and assists in prioritisation of risk
mitigation activities considering risk appetite.
Key controls are regularly assessed for
adequacy and tested for effectiveness.
The results are monitored and, where
a material change is identified, the
associated risk is reassessed.
To support management of the operational risk
profile, the Operational Risk Executive Steering
Group meets quarterly and this forum ensures
all material operational risks are monitored and
actions are in place to manage the risks within
risk appetite.
The remediation of known control issues
through defined action plans continued to be
an important focus for both the Group Audit
Committee and the Board Risk Committee
during 2025. For further information on their
oversight of remediation of the most material
issues, refer to the Report of the Group Audit
Committee and the Report of the Group Board
Risk Committee. The Group Audit Committee
and the Group Board Risk Committee will
continue to focus on such remediation activity,
particularly in view of the business strategy
and risk appetite.
The independent auditors present reports to
the Group Audit Committee that include details
of any significant internal control deficiencies
they have identified as part of their review of
the financial reporting. In addition, quarterly
review meetings are held between the senior
executive and the independent auditors to
help support oversight. Further, the system of
internal controls is also subject to regulatory
oversight in the UK and overseas. Additional
details of regulatory oversight are given in
the Risk and capital management section.
Internal control over
financial reporting
NatWest Group plc is required to comply with
Section 404 of the US Sarbanes-Oxley Act
of 2002 and assess the effectiveness of
internal control over financial reporting
as of 31 December 2025.
NatWest Group has assessed the effectiveness
of its internal control over financial reporting as
of 31 December 2025 based on the criteria
set forth by the Committee of Sponsoring
Organizations of the Treadway Commission
in the 2013 publication of ‘Internal Control –
Integrated Framework’.
Based on its assessment, management has
concluded that, as of 31 December 2025,
NatWest Group’s internal control over
financial reporting is effective.
Management’s report on NatWest Group’s
internal control over financial reporting will
be filed with the Securities and Exchange
Commission as part of the 2025 Annual
Report on Form 20-F.
Disclosure controls and procedures
As required by Exchange Act rules,
management (including the Group CEO and
Group CFO) have conducted an evaluation
of the effectiveness and design of NatWest
Group’s disclosure controls and procedures
(as defined in the Exchange Act rules) as of
31 December 2025. Based on this evaluation,
management (including the Group CEO and
Group CFO) concluded that NatWest Group
plc’s disclosure controls and procedures were
effective as of the end of the period covered
by this Annual Report and Accounts.
Changes in internal control
There was no change in NatWest Group’s
internal control over financial reporting that
occurred during the period covered by this
report that has materially affected, or
is reasonably likely to materially affect,
NatWest Group’s internal control over
financial reporting.
The New York Stock Exchange
As a foreign private issuer with American
Depositary Shares representing ordinary
shares, preference shares and debt securities
listed on the New York Stock Exchange
(the NYSE), NatWest Group plc is not required
to comply with all of the NYSE corporate
governance standards applicable to US
domestic companies (the NYSE Standards)
provided that it follows home country practice
in lieu of the NYSE Standards and discloses
any significant ways in which its corporate
governance practices differ from the
NYSE Standards.
NatWest Group plc is also required to provide
an Annual Written Affirmation to the NYSE of
its compliance with the mandatory applicable
NYSE Standards. In February 2025 NatWest
Group plc submitted its most recent Annual
Written Affirmation to the NYSE which
confirmed NatWest Group plc’s full
compliance with the applicable provisions.
The Group Audit Committee fully complies
with the mandatory provisions of the NYSE
Standards (including by reference to the
rules of the Exchange Act) that relate to the
composition, responsibilities and operation of
audit committees. More detailed information
about the Group Audit Committee and its
work during 2025 is set out in the Group
Audit Committee report on pages 124 to 129.
The Board has reviewed its corporate
governance arrangements and is satisfied that
these are consistent with the NYSE Standards,
subject to the following departures:
i.
NYSE Standards require the majority of
the Board to be independent. The NYSE
Standards contain different tests from the
Code for determining whether a director is
independent. NatWest Group plc follows the
Code’s requirements in determining the
independence of its directors and currently
has eight independent non-executive
directors, one of whom is the Senior
Independent Director.
ii. The NYSE Standards require non
management directors to hold regular
sessions without management present,
and that independent directors meet at
least once a year. The Code requires the
Chair to hold meetings with non- executive
directors without the executives present
and non-executive directors are to meet
without the Chair present at least once a
year to appraise the Chair’s performance
and NatWest Group plc complies with the
requirements of the Code.
Compliance report continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
170
Governance and remuneration
iii. The NYSE Standards require that the
nominating/corporate governance
committee of a listed company be
composed entirely of independent directors.
The Chair of the Board is also the Chair of
the Group Nominations and Governance
Committee, which is permitted under the
Code (which requires that a majority of
members of the committee should be
independent non-executive directors and
that the chair of the board should not chair
the committee when it is dealing with the
appointment of their successor). The terms
of reference of the Group Nominations and
Governance Committee differ in certain
limited respects from the requirements
set out in the NYSE Standards, including
because the Group Nominations and
Governance Committee does not
have responsibility for overseeing
the evaluation of management.
iv. The NYSE standards require that the
compensation committee of a listed
company be composed entirely of
independent directors. Although the
members of the Group Performance and
Remuneration Committee (Group RemCo)
are deemed independent in compliance with
the provisions of the Code, the Board has
not assessed the independence of the
members of the Group RemCo and Group
RemCo has not assessed the independence
of any compensation consultant, legal
counsel or other adviser, in each case,
in accordance with the independence
tests prescribed by the NYSE Standards.
The NYSE Standards require that the
compensation committee must have direct
responsibility to review and approve the
CEO’s remuneration. As stated at the start
of this Compliance report, in the case of
NatWest Group plc, the Board rather than
the Group RemCo reserves the authority
to make the final determination of
the remuneration of the CEO.
v. The NYSE Standards require listed
companies to adopt and disclose corporate
governance guidelines. Throughout the year
ended 31 December 2025, NatWest Group
plc has complied with all of the provisions
of the Code (subject to the exceptions
described above) and the Code does not
require NatWest Group plc to disclose
the full range of corporate governance
guidelines with which it complies.
vi. The NYSE Standards require listed
companies to adopt and disclose a code of
business conduct and ethics for directors,
officers and employees, and promptly
disclose any waivers of the code for
directors or executive officers. NatWest
Group has adopted a code of conduct
which is supplemented by a number of key
policies and guidance dealing with matters
including, among others, anti-bribery
and corruption, anti-money laundering,
sanctions, confidentiality, inside information,
health, safety and environment, conflicts of
interest, market conduct and management
records. This code of conduct applies to all
officers and employees and is fully aligned
to the PRA and FCA Conduct Rules which
apply to all directors. The Code of Conduct
is available to view on NatWest Group’s
website at natwestgroup.com.
This Compliance report forms part of the
Corporate governance report and the Report
of the directors.
Compliance report continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
171
Governance and remuneration
Report of the directors
The directors present their report together
with the audited accounts for the year ended
31 December 2025. For the purposes of DTR
4.1.5 R, the Strategic report and the Report of
the directors comprise the management report.
Other information incorporated into this report
by reference can be found at:
Note/page
Section 172(1) statement
36
Viability statement
80
Corporate governance report
95
Board of directors and secretary
96
Remuneration policy, including
directors’ remuneration policy
146
Our colleagues
147
Capital, liquidity and funding
234
Consolidated financial statements
and notes
275
Risk factors
402
Material contracts
422
Disclosures required pursuant to Large
and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008
(as amended) (‘2008 Regs’) (Sch 7) and DTR
4.1.11 R can be found at:
Note/page
Likely future developments
(2008 Regs, Sch 7 para 7 (1)(b)
and DTR 4.1.11 R(2))
15
Climate-related financial disclosures
(2008 Regs, Sch 7 para 15-19)
69
Financial instruments
(2008 Regs, Sch 7 para 6 and
DTR 4.1.11 R(6)(a) and (b)
324
Hedge accounting policy
(2008 Regs, Sch 7 para 6 and
DTR 4.1.11 R (6)(a) and (b)
342
Post balance sheet events
(2008 Regs, Sch 7 para 7 (1)(a)
and DTR 4.1.11 R(1)
373
Indication of branches (2008 Regs,
Sch 7 para 7(1)(d) and DTR 4.1.11 R(5))
397
Employee engagement
(2008 Regs, Sch 7 para 11 and 11A)
:
Section 172(1) statement and
stakeholder engagement
36
Corporate governance report and
workforce engagement
118
Colleagues
147
Engagement with suppliers,
customers and others
(2008 Regs, Sch 7, para 11B):
Section 172(1) statement and
stakeholder engagement
37
Corporate governance report and
stakeholder engagement
117
Pursuant to paragraph 13(2)(k) of Schedule 7
to the 2008 Regs, there are no agreements
between NatWest Group’s directors or
employees providing compensation for loss of
office or employment that occur because of a
takeover bid.
Activities
organisation, serving over 20 million customers,
with business operations reaching across retail,
commercial and private banking markets.
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’s
Group structure
NatWest Group plc is the parent of NatWest
Group and its subsidiary undertakings are
structured in compliance with ring-fencing
requirements. There are three main subsidiaries:
•
NatWest Holdings Limited (the parent of the
ring-fenced bank which includes National
Westminster Bank Plc, The Royal Bank of
Scotland plc and Ulydien Designated
Activity Company).
•
NatWest Markets Plc (the non-ring-fenced
Bank and the parent of NatWest
Markets N.V.).
•
The Royal Bank of Scotland International
(Holdings) Limited (the parent of The Royal
Bank of Scotland International Limited).
Further details of the principal subsidiaries are
shown in Note 8 to the parent company financial
statements and a full list of subsidiary companies
and overseas branches is shown in Note 12 to the
parent company financial statements.
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
172
Governance and remuneration
Results and dividends
UK company law states that dividends can only be paid if a company has sufficient distributable
profits available to cover the dividend. A company’s distributable profits are classed as its
accumulated, realised profits (not previously distributed or capitalised), less its accumulated,
realised losses (not previously written off in a reduction or re-organisation of capital).
The profit attributable to the ordinary shareholders of NatWest Group plc for the year ended
31 December 2025 was £5,479 million compared with a profit of £4,519 million for the year
ended 31 December 2024, as set out in the consolidated income statement on page 289.
In 2025 NatWest Group paid an interim
dividend of £768 million, or 9.5 pence per
ordinary share (2024 – £498 million, or
6 pence per ordinary share).
The company has announced that the
directors have recommended a final dividend
of £1.8 billion, or 23.0 pence per ordinary share
(2024 – £1.2 billion, or 15.5 pence per ordinary
share). The final dividend recommended by
directors is subject to shareholders’ approval
at the Annual General Meeting (AGM) on
28 April 2026.
If approved, payment will be made on 5 May
2026 to shareholders on the register at the
close of business on 20 March 2026. The
ex-dividend date will be 19 March 2026.
Subject to the condition mentioned above,
the payment of interim dividends on ordinary
shares is at the discretion of the Board.
Dividend waivers
The employee share trusts, which hold shares
NatWest Group in respect of the awards and
options granted to colleagues, have lodged
standing instructions to waive dividends on
shares held by them. A waiver instruction is
also in place in respect of dividends on own
shares held in treasury. The total amount of
dividends waived during 2025 was £64 million.
Colleagues
As at 31 December 2025, NatWest Group
employed 59,000 people (excluding temporary
staff). Details of all related costs are included in
Note 3 to the consolidated accounts.
Employment of disabled
colleagues and colleagues
with long-term conditions
NatWest Group makes workplace adjustments
to support colleagues with disabilities and
long-term conditions to succeed. If a colleague
develops a disability or long-term condition,
NatWest Group will, wherever possible, make
adjustments to support them in their existing
job or re-deploy them to a more suitable
alternative job.
The NatWest Group Careers site gives
comprehensive insights into NatWest Group
jobs, culture, locations and application
processes. It also hosts a variety of blog
content to portray stories of what it is like to
work at NatWest Group. The company also
makes sure that candidates can easily request
reasonable adjustments to support at any
stage of the recruitment process.
Going concern
NatWest Group’s business activities and
financial position, the factors likely to affect
its future development and performance and
its objectives and policies in managing the
financial risks to which it is exposed and its
capital are discussed in the Business review.
The risk factors which could materially affect
NatWest Group’s future results are set out on
pages 402 to 421.
NatWest Group’s regulatory capital resources
and significant developments in 2025 and
anticipated future developments are detailed
in the Capital, liquidity and funding section on
pages 234 to 253. This section also describes
NatWest Group’s funding and liquidity profile,
including changes in key metrics and the build
up of liquidity reserves.
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.
Report of the directors continued
HM Treasury (HMT) shareholding
Following placing and open offers in December 2008 and in April 2009, HMT owned approximately
70.3% of the enlarged ordinary share capital of the company. In December 2009, the company
issued a further £25.5 billion of new capital to HMT in the form of B shares. The table below
summarises the changes in HMT’s shareholding in the company from 2015 to 2025:
Date
Transaction
August 2015
HMT sold 630 million ordinary shares in the company
October 2015
HMT converted its holding of 51 billion B shares into 5.1 billion new ordinary
shares in the company
June 2018
HMT sold 925 million ordinary shares in the company
March 2021
NatWest Group carried out an off-market purchase of 591 million of its ordinary
shares from HMT
May 2021
HMT sold 580 million ordinary shares in the company through an accelerated
book building process to institutional investors
July 2021
HMT announced its intention to sell part of its shareholding in NatWest Group
over a 12-month period via a trading plan
March 2022
NatWest Group carried out an off-market purchase of 550 million of its ordinary
shares from HMT
June 2022
HMT announced an extension to its trading plan for a further 12-month term to
August 2023
April 2023
HMT announced an extension to its trading plan to terminate no later than
11 August 2025
May 2023
NatWest Group carried out an off-market purchase of 469 million of its ordinary
shares from HMT
May 2024
NatWest Group carried out an off-market purchase of 392 million of its ordinary
shares from HMT
November 2024
NatWest Group carried out an off-market purchase of 263 million of its ordinary
shares from HMT
January – May
2025
HMT’s shareholding in the company reduced from 9.99% at 31 December 2024
to 0% at 30 May 2025 as a result of sales of ordinary shares in the company
under its trading plan
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
173
Governance and remuneration
UK Code for Financial
Reporting Disclosure
NatWest Group plc’s 2025 financial statements
have been prepared in compliance with the
principles set out in the Code for Financial
Reporting Disclosure published by UK Finance.
The Code sets out five disclosure principles
together with supporting guidance. The
principles are that NatWest Group and other
major UK banks will provide high quality,
meaningful and decision-useful disclosures;
review and enhance their financial instrument
disclosures for key areas of interest to market
participants; assess the applicability and
relevance of good practice recommendations
to their disclosures, acknowledging the
importance of such guidance; seek to enhance
the comparability of financial statement
disclosures across the UK banking sector;
and clearly differentiate in their annual
reports between information that is
audited and information that is unaudited.
Enhanced Disclosure Task Force
(EDTF) and Disclosures on
Expected Credit Losses (DECL)
Taskforce recommendations
The EDTF, established by the Financial Stability
Board, published its report ‘Enhancing the Risk
Disclosures of Banks’ in October 2012, with an
update in November 2015 covering IFRS 9
expected credit losses (ECL). The DECL
Taskforce, jointly established by the Financial
Conduct Authority, Financial Reporting Council
and the Prudential Regulation Authority,
published its phase 2 report recommendations
in December 2019.
NatWest Group plc’s 2025 Annual Report and
Accounts and Pillar 3 Report reflect EDTF and
have regard to DECL Taskforce recommendations.
Authority to repurchase shares
On-market purchases
At the AGM in 2025, shareholders renewed
the authority (2025 Authority) for the company
to make on-market purchases of up to
807,750,182 ordinary shares. The directors
used the 2025 Authority to carry out a share
buyback programme (the 2025 Programme) of
up to £750 million, as announced to the market
on 28 July 2025.
The 2025 Programme started on 28 July 2025
and will end no later than 13 February 2026,
provided that the term of the 2025 Programme
may be extended to end no later than
13 March 2026 to account for any days where
usual trading has not been possible because
of market events during the term of the
2025 Programme.
As at 31 December 2025, 104,103,117
ordinary shares (nominal value £112,111,049)
have been purchased by the company under
the 2025 Programme at a volume weighted
average price of 551.8173 pence per
ordinary share for a total consideration
of £574,458,965.
All of the purchased ordinary shares
were cancelled, representing 1.27% of the
company’s issued ordinary share capital.
Shareholders will be asked to renew the
authority for the company to make on-market
purchases or ordinary shares at the AGM
in 2026.
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 2025 AGM.
The company did not make any off-market
purchases under this authority in 2025.
Preference shares
At the AGM in 2025, 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 2026.
Additional information
Where not provided elsewhere in the Report
of the directors, the following additional
information is required to be disclosed
by Part 6 of Schedule 7 to the Large and
Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008.
Share Capital
The company has ordinary shares and
preference shares in issue. The rights and
obligations attached to the company’s ordinary
shares and preference shares are set out in
our Articles of Association. Copies can be
obtained from Companies House in the UK
or can be found at natwestgroup.com.
The rules governing the powers of directors
and their appointment, including in relation to
issuing or buying back shares, are set out in
our Articles of Association. It will be proposed
at the 2026 AGM that the directors’ authorities
to allot shares under the Companies Act 2006
(the Companies Act) be renewed.
Details of the movements in ordinary shares
during the year can be found at Note 21 to
the consolidated financial statements.
At the 2024 AGM, shareholders gave authority
to directors to offer a scrip dividend alternative
on any dividend paid up to the conclusion of
the AGM in 2027.
The Articles of Association may only be
amended by a special resolution at a
General Meeting of shareholders.
Voting
The cumulative preference shares represent
0.006% of the total voting rights of the
company, the remainder being represented
by the ordinary shares.
In a show of hands at a General Meeting of the
company, every holder of ordinary shares and
cumulative preference shares who is present in
person or by proxy and entitled to vote, shall
have one vote. On a poll, every holder of
ordinary shares who is present in person or
by proxy and entitled to vote shall have four
votes for every share held. Every holder of
cumulative preference shares shall have one
vote for each 25p nominal amount held.
The notices of Annual General Meetings and
General Meetings specify the deadlines for
exercising voting rights and appointing a proxy
or proxies to vote in relation to resolutions to
be passed at the meeting.
Transfers
There are no restrictions on the transfer of
ordinary shares in the company other than
certain restrictions which may from time to
time be imposed by laws and regulations
(for example, insider trading laws).
The company is not aware of any agreements
between shareholders that may result in
restrictions on the transfer of securities
and/or voting rights.
Pursuant to the UK Listing Rules, certain
employees of the company require the
approval of the company to deal in the
company’s shares.
Special rights
There are no persons holding securities
carrying special rights with regard to control
of the company.
Employee Share Plans
A number of the company’s employee share
plans include restrictions on transfers of shares
while shares are subject to the plans. Note 3 to
the consolidated financial statements sets out a
summary of the plans.
Report of the directors continued
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
174
Governance and remuneration
Report of the directors continued
Under the rules of certain employee share
plans, voting rights are exercised by the
Trustees of the plan on receipt of participants’
instructions. If a participant does not submit an
instruction to the Trustee no vote is registered.
For shares held in the company’s other
employee share trusts, in accordance with
investor protection guidelines, the Trustees
abstain from voting. The Trustees would take
independent advice before accepting any
offer in respect of their shareholdings for
the company in a takeover bid situation.
The Trustees have chosen to waive their
entitlement to the dividend on shares held
by the Trusts.
A change of control of the company following
a takeover bid may cause a number of
agreements to which the company is party
to take effect, alter or terminate. All of the
company’s employee share plans contain
provisions relating to a change of control.
In the context of the company as a whole,
these agreements are not considered to
be significant.
Directors
The names and brief biographical details of the
current directors are shown on pages 96 to 98.
Roisin Donnelly, Patrick Flynn, Geeta Gopalan,
Rick Haythornthwaite, Yasmin Jetha, Stuart
Lewis, Katie Murray, Paul Thwaite and Lena
Wilson all served throughout 2025 and to
the date of signing of the financial statements.
The following changes took place during 2025:
Director
Date of change
Gill Whitehead
Appointed 8 January 2025
Mark Seligman
Retired 31 March 2025
Frank Dangeard
Resigned 23 April 2025
Josh Critchley
Appointed 3 November
2025
Albert Hitchcock has been appointed to the
Board with effect from 23 February 2026.
Yasmin Jetha has confirmed her intention
to retire from the Board on 31 March 2026.
All directors of the company are required to
stand for election or re-election annually by
shareholders at the AGM.
Directors’ interests
The interests of the directors in the shares of
the company at 31 December 2025 are shown
on page 165. None of the directors held an
interest in the loan capital of the company
or in the shares or loan capital of any of
the subsidiary undertakings of the company
during the period from 1 January 2025 to
12 February 2026.
Directors’ indemnities
In terms of section 236 of the Companies Act,
Qualifying Third Party Indemnity Provisions
have been issued by the company to its
directors, members of the NatWest Group
and NWH Executive Committees, individuals
authorised by the PRA/FCA, certain directors
and/or officers of NatWest Group subsidiaries
and all trustees of NatWest Group
pension schemes.
The indemnities referenced above were in
force throughout the financial year, including
for individuals who resigned during the year,
and remain in force as at the date of this report.
NatWest Group also maintains Directors’
and Officers’ Liability Insurance to provide
appropriate protection to directors and/or
officers from liabilities that may arise against
them in connection with their role.
Shareholdings
The following table shows the shareholders
that have notified NatWest Group that they
hold more than 3% of the total voting rights
of the company at 31 December 2025.
Ordinary
shares
(millions)
% of issued
share capital
with voting
rights held
(1)
Blackrock, Inc.
461
5.26
The Capital Group
Companies, Inc.
403
5.01
Massachusetts Financial
Services Company
396
4.94
Norges Bank
(2)
248
3.06
(1)
Percentages provided were correct at the date of notifications
on 31 May 2024, 19 November 2024, 11 December 2025 and
28 July 2025, respectively.
(2)
On 23 January 2026, a notification under Rule 5 the Disclosure
and Transparency Rules (‘DTR’) was received from Norges
Bank notifying that its holding had reduced to below 3%.
(3)
As at 12 February 2026, no further notifications under Rule 5
of the DTR have been received.
UK Listing rule 6.6.1 R
The information to be disclosed in the Annual
Report and Accounts under UK Listing Rule
6.6.1 R is set out or cross- referenced in this
Directors’ report with the exception of details
of contracts of significance given in Material
contracts on page 423.
Political donations
At the AGM in 2025, shareholders gave
authority, under Part 14 of the Companies
Act 2006, for a period of one year, for the
company (and its subsidiaries) to make political
donations and incur political expenditure up to
a maximum aggregate sum of £100,000. This
authorisation was taken as a precaution only
as the company has a longstanding policy of
not making political donations or incurring
political expenditure within the ordinary
meaning of those words.
During 2025, NatWest Group made no
political donations, nor incurred any political
expenditure in the UK or EU and it is not
proposed that its longstanding policy of not
making contributions to any political party
be changed. Shareholders will be asked to
renew this authorisation at the AGM in 2026.
Directors’ disclosure to auditors
Each of the directors at the date of approval of
this report confirms that:
a. so far as the director is aware, there is
no relevant audit information of which the
company’s auditors are unaware; and
b. the director has taken all the steps that
he/she ought to have taken as a director to
make himself/herself aware of any relevant
audit information and to establish that
the company’s auditors are aware of
that information.
This confirmation is given and should be
interpreted in accordance with the provisions
of section 418 of the Companies Act.
Auditors
Ernst & Young LLP (EY) are the current
auditors of the company. Following a tender
undertaken in 2022, overseen by the Group
Audit Committee, the company announced its
intention to appoint PricewaterhouseCoopers
LLP (PwC) as auditors for the financial period
ending 31 December 2026. This will be the
last period of audit by EY as they will not be
proposed for re-appointment as auditors by
the company. A resolution to appoint PwC as
the company’s auditors will be proposed at the
forthcoming AGM.
By order of the Board
Gary Moore
Chief Governance Officer and Company
Secretary
12 February 2026
NatWest Group plc is registered in Scotland
No. SC45551
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
175
Governance and remuneration
Statement of directors’ responsibilities
This statement should be read in conjunction
with the responsibilities of the auditor set out
in their report on pages 277 to 290.
The directors are responsible for the
preparation of the Annual Report and
Accounts. The directors are required to
prepare Group financial statements, and
as permitted by the Companies Act 2006
have elected to prepare company financial
statements, for each financial year in
accordance with UK adopted International
Accounting Standards and International
Financial Reporting Standards as issued by
the International Accounting Standards Board.
They are responsible for preparing financial
statements that present fairly the financial
position, financial performance and cash
flows of NatWest Group.
In preparing those financial statements,
the directors are required to:
•
select suitable accounting policies
and then apply them consistently.
•
make judgements and estimates that
are reasonable, relevant and reliable.
•
state whether applicable accounting
standards have been followed, subject
to any material departures disclosed
and explained in the financial statements.
•
prepare the financial statements on a going
concern basis unless it is inappropriate to
presume that the company and Group will
continue in business.
The directors are responsible for keeping
proper accounting records which disclose with
reasonable accuracy at any time the financial
position of NatWest Group and to enable
them to ensure that the Annual Report
and Accounts complies with the Companies
Act 2006. They are also responsible for
safeguarding the assets of NatWest Group
and hence for taking reasonable steps for
the prevention and detection of fraud and
other irregularities.
Under applicable law and regulations, the
directors are also responsible for preparing a
Strategic report, Directors’ report, Directors’
remuneration report and Corporate
governance statement that comply with that
law and those regulations. The directors are
responsible for the maintenance and integrity
of the corporate and financial information
included on the company’s website.
The directors confirm that to the best of
their knowledge:
•
the financial statements, prepared
in accordance with UK adopted
International Accounting Standards
and International Financial Reporting
Standards as issued by the International
Accounting Standards Board, give a true
and fair view of the assets, liabilities,
financial position and profit or loss of the
company and the undertakings included
in the consolidation taken as a whole; and
•
The Strategic report and Directors’ report
(incorporating the Financial review) include
a fair review of the development and
performance of the business and the
position of the company and the
undertakings included in the consolidation
taken as a whole, together with a
description of the principal risks
and uncertainties that they face.
In addition, the directors are of the opinion that
the Annual Report and Accounts, taken as a
whole, are fair, balanced and understandable
and provide the information necessary for
shareholders to assess the company’s
position and performance, business
model and strategy.
By order of the Board
Richard Haythornthwaite
Chair
12 February 2026
John-Paul Thwaite
Group Chief Executive Officer
Katie Murray
Group Chief Financial Officer
Board of directors
Chair
Richard Haythornthwaite
Executive directors
John-Paul Thwaite
Katie Murray
Non-executive directors
Joshua Critchley
Roisin Donnelly
Patrick Flynn
Geeta Gopalan
Yasmin Jetha
Stuart Lewis
Gillian Whitehead
Lena Wilson
Strategic report
Financial review
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
176
Governance and remuneration
Gogarburn, Scotland, UK
178
Risk management framework
178
Introduction
178
Culture
179
Governance
180
Risk management structure
181
Risk appetite
182
Identification and measurement
182
Mitigation
182
Monitoring
183
Stress testing
187
Credit risk
188
Definition and sources of risk
188
Governance and risk appetite
188
Identification and measurement
188
Assessment and monitoring
189
Mitigation
189
Problem debt management
189
Forbearance
190
IFRS 9 models
190
Economic drivers
196
Impairment, provisioning and write-offs
196
Measurement uncertainty and ECL sensitivity analysis
199
ECL post model adjustments
200
Credit risk – Banking activities
230
Credit risk – Trading activities
234
Capital, liquidity and funding risk
234
Definitions and sources of risk
234
Minimum requirements for own funds
235
Liquidity risk management
235
Funding risk management
235
Prudential regulation changes that may impact
capital requirements
235
UK and EU implementation of Basel framework
236
Other developments in 2025
236
Summary of future changes in UK that may impact
NatWest Group
240
Key points
241
Minimum requirements
248
Funding sources
253
Encumbrance
254
Climate and nature risk
257
Non-traded market risk
263
Traded market risk
267
Pension risk
268
Operational risk
272
Compliance and conduct risk
273
Financial crime risk
274
Model risk
275
Reputational risk
Risk and capital management
Strategic report
Financial review
Governance and remuneration
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
177
Risk and capital management
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc 2025
Annual Report and Accounts
178
Where marked as audited in the section
header, certain information in the Risk and
capital management section (pages 178 to
275) is within the scope of the Independent
auditor’s report.
Introduction
NatWest Group operates an enterprise-wide
risk management framework (EWRMF), which
is centred on the embedding of a strong risk
culture. The framework ensures the
governance, capabilities and methods are in
place to facilitate risk management and
decision-making across the organisation.
The framework ensures that NatWest Group’s
principal risks – which are detailed in this
section – are appropriately controlled and
managed. It sets out the standards and
objectives for risk management as well as
defining the division of roles and
responsibilities. This seeks to ensure a
consistent approach to risk management
across NatWest Group and its subsidiaries. It
aligns risk management with NatWest Group’s
overall strategic priorities of growth through
better understanding of customers, leveraging
simplification and better management of
resources. The framework, which is designed
and maintained by NatWest Group’s
independent Risk function, is owned by the
Chief Risk Officer. It is reviewed and approved
annually by the NatWest Group Board. The
framework incorporates risk governance, the
three lines of defence operating model and
the Risk function’s mandate.
Risk appetite, supported by a robust set of
principles, policies and practices, defines the
levels of tolerance for a variety of risks and
provides a structured approach to risk-taking
within agreed boundaries.
While all NatWest Group colleagues are
responsible for managing risk, the Risk
function provides oversight and monitoring of
risk management activities, including the
implementation of the framework and
adherence to its supporting policies,
standards and operational procedures. The
Chief Risk Officer plays an integral role in
providing the Board with advice on NatWest
Group’s risk profile and the performance of its
controls and in providing challenge where a
proposed business strategy may exceed risk
tolerance.
In addition, there is a process to identify and
manage top and emerging risks, which are
those that could have a significant negative
impact on NatWest Group’s ability to meet its
strategic objectives.
Both top and emerging risks may incorporate
aspects of – or correlate to – a number of
principal risks and are reported alongside
them to the Board on a regular basis.
Culture
The approach to risk culture, under the
banner of intelligent risk-taking, ensures a
focus on robust risk management behaviours
and practices. This underpins the strategy
across all three lines of defence, enables
NatWest Group to support better customer
outcomes, develop a stronger and more
sustainable business and deliver an improved
cost base.
NatWest Group expects leaders to act as role
models for strong risk behaviours and
practices, building clarity, developing
capability and motivating employees to reach
the required standards set out in the
intelligent risk-taking approach.
Colleagues are expected to:
•
Consistently role-model the behaviours in
Our Code, based on strong ethical
standards.
•
Empower others to take risks aligned to
NatWest Group’s strategy, explore issues
from a fresh perspective, and tackle
challenges in new and better ways across
organisational boundaries.
•
Manage risk in line with appropriate risk
appetite.
•
Ensure each decision made keeps
NatWest Group, colleagues, customers,
communities and shareholders safe and
secure.
•
Understand their role in managing risk,
remaining clear and capable, grounded in
knowledge of regulatory obligations.
•
Consider risk in all actions and decisions.
•
Escalate risks and issues early; taking
action to mitigate risks and learning from
mistakes and near-misses, reporting and
communicating these transparently.
•
Challenge others’ attitudes, ideas and
actions.
Target intelligent risk-taking outcomes are
embedded in NatWest Group’s behaviours
framework, forming a core foundation of
NatWest Group’s risk culture and guiding
recruitment and selection across the
organisation.
Training
Enabling employees to have the capabilities
and confidence to manage risk is core to
NatWest Group’s learning strategy. NatWest
Group offers a wide range of learning, both
technical and behavioural, across the risk
disciplines. This training may be mandatory,
role-specific or for personal development.
Mandatory learning for all staff is focused on
keeping employees, customers and
NatWest Group safe. This is easily accessed
online and is assigned to each person
according to their role and business area. The
system allows monitoring at all levels to
ensure completion.
Our Code
NatWest Group’s conduct guidance, Our
Code, provides direction on expected
behaviour and sets out the standards of
conduct that support the values. The code
explains the effect of decisions that are taken
and describes the principles that must be
followed.
•
These principles cover conduct-related
issues as well as wider business activities.
They focus on desired outcomes, with
practical guidelines to align the values
with commercial strategy and actions.
The embedding of these principles
facilitates sound decision-making and a
clear focus on good customer outcomes.
•
Any employee falling short of the
expected standards will be subject to
internal disciplinary policies and
procedures and where appropriate, the
relevant authorities will be notified.
Variable pay for eligible colleagues will
reflect overall performance, including the
impact of any conduct issues.
Adjustments may be made through the
performance management process, or
where necessary, via the accountability
review process for the individuals
concerned (for more information on this
process refer to page 143). The NatWest
Group remuneration policy ensures that
the remuneration arrangements for all
employees reflect the principles and
standards prescribed by the PRA
rulebook and the FCA handbook.
Risk management framework
(1)
Risk policies are in place for each principal risk and define, at a high level, the cascade of qualitative expectation, guidance and standards that stipulate the nature and extent of permissible risk-taking. They are consistently applied across NatWest Group and subsidiary legal
entities and form part of the qualitative expression of risk appetite for each principal risk.
(2)
In addition, the Group Technical Asset & Liability Management Committee, chaired by the Group Treasurer, provides oversight of capital and balance sheet management in line with approved risk appetite under normal and stress conditions. Reviews and challenges the
financial strategy, risk management, balance sheet and remuneration and policy implications of NatWest Group’s pension schemes.
(3)
The EDC Disclosures Steering Group was established by the Group CFO to (i) review and approve NatWest Group’s responses to Environmental, Social and Governance (ESG) surveys where ESG content is considered material to investors or decision-useful to users of the
reports; (ii) to assess whether NatWest Group should respond to and review new ad hoc survey requests; (iii) to review and approve ESG disclosures published on NatWest Group’s website and externally that are material to investors or decision useful to users of the reports;
and (iv) to review and recommend to the EDC, ESG related disclosures in the quarterly, and annual suite of results releases.
Risk management framework continued
Governance
Committee structure
The diagram shows NatWest Group’s governance structure in 2025 and the main purposes of each committee.
NatWest Group plc Board
Provides leadership of NatWest Group within a framework of prudent and effective controls which enable risk to be assessed and managed. Reviews and approves the Enterprise-Wide Risk Management Framework
(EWRMF) (including NatWest Group’s risk appetite framework) and approves risk appetite. Monitors performance against risk appetite, considers material risks, reviews the effectiveness of risk management and internal
control systems.
Group Board Risk Committee
Provides oversight and advice to the Board on current and potential future risk exposures; future risk
profile including risk appetite; and the approval and effectiveness of the EWRMF. Reviews performance
relative to risk appetite; the effectiveness of internal controls required to manage risk; all material risk
exposures and management’s recommendations for monitoring, control and mitigation, including for all
principal and emerging risks. Approves the key risk policies
(1)
. Approves the EWRMS and oversees its
effective delivery. Reviews and, as required approves (subject to the escalation of any material concerns
to the Board as appropriate) the results of material internal and regulatory NatWest Group-wide stress
tests and the ICAAP and ILAAP submissions.
Group Executive Risk Committee
Supports the NatWest Group CRO and other accountable
executives in discharging risk management accountabilities.
Reviews, challenges and debates all material risk exposures,
including for all principal risks, and the performance of NatWest
Group relative to risk appetite. Reviews reports on emerging
threats. Reviews the EWRMF, key risk policies
(1)
and EWRMS and
supports their recommendation to Group BRC. Drives effective
implementation and embedding of the EWRMF in NatWest Group.
Group Asset & Liability Management Committee
Supports the Group CFO in overseeing the effective management
of NatWest Group’s current and future balance sheet, in line with
Board-approved risk appetite, under normal and stress conditions.
Supports the Group CFO’s and Group CRO’s recommendation to
Group BRC (or approval under their accountability) of the
assumptions, scenario themes and expanded metrics to be used in
both material internal and regulatory Group-wide stress tests.
Group Executive Disclosure Committee
Supports the Group CFO in discharging their individual
accountabilities, including the review of all material financial and
non-financial disclosures made by NatWest Group to ensure that
they are accurate, complete and fairly represent the business and
financial condition of NatWest Group with no material
misstatements or omissions.
Group Audit Committee
Assists the Board in carrying out its responsibilities relating to internal control functions. Reviews NatWest
Group’s internal controls systems relating to financial management and compliance with laws and/or
regulations relating to financial reporting, accounting issues, and safeguarding of assets. Reviews the
procedures for monitoring the effectiveness of these controls.
Strategic report
Financial review
Governance and remuneration
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
179
Risk and capital management
(1)
The Group Chief Executive Officer also performs the NWH Chief Executive Officer role.
(2)
The Group Chief Risk Officer also performs the NWH Chief Risk Officer role, is a member of NatWest Group ExCo, NatWest Group ERC and an attendee at NatWest Group BRC.
(3)
The NWH Risk function provides risk management services across NWH, including to the NatWest Group Chief Risk Officer and – where agreed – to NWM and RBSI Chief Risk Officers. These services are managed, as appropriate, through service level agreements.
(4)
The NWH Risk function is independent of the NWH customer-facing business segments and support functions. Its structure is divided into three parts (Directors of Risk, Specialist Risk Directors and Chief Operating Officer) to facilitate effective management of the risks facing
NWH. Risk committees in the customer businesses oversee risk exposures arising from management and business activities and focus on ensuring that these are adequately monitored and controlled. The Directors of Risk, (Retail Banking; Commercial & Institutional Banking
(ring-fenced bank); Private Banking & Wealth Management; Digital X and Functions; Finance and Treasury and Non-financial Risk; and the Chief Operating Officer report to the NWH Chief Risk Officer.
(5)
The Chief Risk Officers for NWM and RBSI have dual reporting lines into the Group Chief Risk Officer and the respective Chief Executive Officers of their entities. There are additional reporting lines to the NWM and RBSI Board Risk Committee chairs and a right of access to the
respective risk committees.
Risk management framework continued
Risk management structure
The diagram shows NatWest Group’s risk management structure in 2025.
Group Chief Executive Officer (CEO)
RBSI CEO
NWM CEO
NWH CEO
RBSI CRO
Leads the RBSI Risk function. Responsibilities
include policy, governance, frameworks,
oversight and challenge, risk culture and
reporting. Contributes to RBSI strategy as a
member of the RBSI Executive Committee.
NWM CRO
Leads the NWM Risk function. Responsibilities
include policy, governance, frameworks,
oversight and challenge, risk culture and
reporting. Contributes to NWM strategy as a
member of the NWM Executive Committee.
NWH CRO
Leads the NWH Risk function. Responsibilities
include policy, governance, frameworks,
oversight and challenge, risk culture and
reporting. Delivers risk services across
NatWest Group governed by appropriate
service level agreements. Contributes to NWH
strategy as a member of the NWH Executive
Committee. Member of NatWest Group Exco.
Leads the NatWest Group Risk function.
Defines and delivers the risk, conduct,
compliance and financial crime strategies.
Defines overall risk service provision
requirements to enable delivery of NatWest
Group strategies, including policies,
governance, frameworks, oversight and
challenge, risk culture and risk reporting.
Contributes to the development of strategy,
transformation and culture as a member
of the Executive Committee.
Group Chief Risk Officer (CRO)
CEO, Commercial & Institutional
Strategic report
Financial review
Governance and remuneration
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
180
Risk and capital management
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
181
Risk management framework continued
Three lines of defence
NatWest Group uses the industry-standard
three lines of defence model to articulate
accountabilities and responsibilities for
managing risk. This supports the embedding
of effective risk management throughout the
organisation. All roles below the CEO sit
within one of the three lines. The CEO
ensures the efficient use of resources and the
effective management of risks as stipulated in
the risk management framework and is
therefore considered to be outside the three
lines of defence principles.
First line of defence
The first line of defence incorporates most
roles in NatWest Group, including those in the
customer-facing businesses, Technology and
Services as well as support functions such as
People, Legal and Finance.
The first line of defence is empowered to take
risks within the constraints of the risk
management framework, policies, risk
appetite statements and measures set by the
Board.
The first line of defence is responsible for
managing its direct risks, and with the
support of specialist functions, it is also
responsible for managing its consequential
risks, by identifying, assessing, mitigating,
monitoring and reporting risks.
Second line of defence
The second line of defence comprises the
Risk function and is independent of the first
line.
The second line of defence is empowered to
design and maintain the risk management
framework and its components. It undertakes
proactive risk oversight and continuous
monitoring activities to confirm that NatWest
Group engages in permissible and sustainable
risk-taking activities.
The second line of defence advises on,
monitors, challenges, approves and escalates
where required and reports on the risk-taking
activities of the first line of defence, ensuring
that these are within the constraints of the
risk management framework, policies, risk
appetite statements and measures set by the
Board.
Third line of defence
The third line of defence is the Internal Audit
function and is independent of the first and
second lines.
The third line of defence is responsible for
providing independent assurance to the
Board, its subsidiary legal entity boards and
executive management on the overall design
and operating effectiveness of the risk
management framework and its components.
This includes the adequacy and effectiveness
of key internal controls, governance and the
risk management in place to monitor,
manage and mitigate the principal risks to
NatWest Group and its subsidiary companies.
The third line of defence executes its duties
freely and objectively in accordance with the
Chartered Institute of Internal Auditors’ Code
of Ethics and International Standards on
independence and objectivity.
Risk appetite
Risk appetite defines the type and aggregate
level of risk NatWest Group is willing to accept
in pursuit of its strategic objectives and
business plans. Risk appetite supports sound
risk-taking, the promotion of robust risk
practices and risk behaviours, and is
calibrated at least annually.
For certain principal risks, risk capacity
defines the maximum level of risk NatWest
Group can assume before breaching
constraints determined by regulatory capital
and liquidity requirements, the operational
environment, and from a conduct
perspective. Establishing risk capacity helps
determine where risk appetite should be set,
ensuring there is a buffer between internal
risk appetite and NatWest Group’s ultimate
capacity to absorb losses.
Risk appetite framework
The risk appetite framework supports
effective risk management by promoting
sound risk-taking through a structured
approach, within agreed boundaries. It also
ensures emerging risks and risk-taking
activities that might be outside appetite are
identified, assessed, escalated and addressed
in a timely manner.
To facilitate this, a detailed review of the
framework is carried out annually which is
approved by the Board. The review includes:
•
Assessing the adequacy of the framework
compared to internal and external
expectations.
•
Ensuring the framework remains effective
and acts as a strong control environment
for risk appetite.
•
Assessing the level of embedding of risk
appetite across the organisation.
Establishing risk appetite
In line with the risk appetite framework, risk
appetite is maintained across NatWest Group
through risk appetite statements. These are
in place for all principal risks and describe the
extent and type of activities that can be
undertaken.
The financial and non-financial risks that
NatWest Group faces are detailed in its risk
directory. This provides a common risk
language to ensure consistent terminology is
used across NatWest Group. The risk
directory is subject to annual review to
ensure it continues to fully reflect the risks
that NatWest Group faces.
Risk appetite statements consist of qualitative
statements of appetite supported by risk
limits and triggers that operate as a defence
against excessive risk-taking. Risk measures
and their associated limits are an integral
part of the risk appetite approach and a key
part of embedding risk appetite in day-to-day
risk management decisions. A clear tolerance
for each principal risk is set in alignment with
business activities.
The Board sets risk appetite for all principal
risks to help ensure NatWest Group is well
placed to meet its priorities and long-term
targets, even in challenging economic
environments. This supports NatWest Group
in remaining resilient and secure as it pursues
its strategic business objectives.
The process of reviewing and updating risk
appetite statements is completed alongside
the business and financial planning process.
This ensures that plans and risk appetite are
appropriately aligned.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
182
Risk management framework continued
Risk appetite is approved at least annually by
the Board on the Board Risk Committee’s
recommendation to ensure it remains
appropriate and aligned to strategy.
NatWest Group’s risk profile is continually
monitored and frequently reviewed.
Management focus is concentrated on all
principal risks as well as the top and emerging
risks that may correlate to them. Performance
against risk appetite for all principal risks is
reported regularly to the Executive Risk
Committee, the Board Risk Committee and
the Board.
NatWest Group’s key risk policies define at a
high level the qualitative expectations,
guidance and standards that stipulate the
nature and extent of permissible risk-taking
across all principal risks. They form part of the
qualitative expression of risk appetite and are
consistently applied across NatWest Group
and its subsidiaries. Key risk policies are
reviewed and approved by the Board Risk
Committee at least annually.
Identification and measurement
Identification and measurement within the risk
management process comprises:
•
Regular assessment of the overall risk
profile, incorporating market developments
and trends, as well as external and
internal factors.
•
Monitoring of the risks associated with
lending and credit exposures.
•
Assessment of trading and non-trading
portfolios.
•
Review of potential risks in new business
activities and processes.
•
Analysis of potential risks in any complex
and unusual business transactions.
Mitigation
Mitigation is a critical aspect of ensuring that
risk profile remains within risk appetite. Risk
mitigation strategies are discussed and agreed
within NatWest Group.
When evaluating possible strategies, costs and
benefits, residual risks (risks that are retained)
and secondary risks (those that arise from risk
mitigation actions themselves) are also
considered. Monitoring and review processes
are in place to evaluate results. Early
identification, and effective management of
changes in legislation and regulation are
critical to the successful mitigation of principal
risks. The effects of all changes are managed
to ensure the timely achievement of
compliance. Those changes assessed as
having a high or medium-high impact are
managed more closely. Action is taken to
mitigate potential risks as and when required.
Further in-depth analysis, including the stress
testing of exposures, is also carried out.
NatWest Group’s control framework is a vital
system ensuring effective risk management,
compliance, and operational efficiency.
Central to this framework is the
implementation of various control types,
including preventive, detective and directive
controls, which address diverse risks.
Control recording is essential, involving
detailed documentation of control activities to
evaluate their adequacy and effectiveness.
This serves as valuable evidence during audits
and regulatory reviews.
The risk and control self-assessment (RCSA)
process enhances the framework by enabling
teams to identify potential risks and assess
the adequacy of controls.
Regular independent adequacy and
effectiveness testing of controls within the first
line of defence and internal audits ensure
controls function as intended. Continuous
monitoring and reporting provide real-time
insights into control effectiveness, fostering
accountability and responsiveness to evolving
risks. By emphasising control recording,
RCSAs and testing, banks can maintain a
resilient control environment that supports
operational integrity and regulatory
compliance.
Monitoring
The primary tool used to provide regular
monitoring of the risk and control environment
across NatWest Group is the risk and control
performance assessment (RCPA). Each
business area self-assesses using a set of
consistent indicators and providing qualitative
context to arrive at an RCPA outcome of met,
partially met or not met. The assessment is
completed annually and the indicators are
regularly monitored.
The indicators support an
understanding of: the strength of the control
environment to manage risk exposure within
appetite; adequacy and effectiveness of the
day-to-day management of risk and control;
adherence with applicable components of the
EWRMF; and a culture of intelligent risk-
taking.
Emerging risks that could affect future results
and performance are also closely monitored.
Specific activities relating to compliance and
conduct, credit, financial crime and
operational risks are subject to testing and
monitoring by the Risk function. This confirms
to both internal and external stakeholders –
including the Board, senior management, the
customer-facing businesses, Internal Audit and
NatWest Group’s regulators – that risk policies
and procedures are being correctly
implemented and that they are operating
adequately and effectively. Thematic reviews
and targeted reviews are also carried out
where relevant to ensure appropriate
customer outcomes.
The Risk Testing & Monitoring Forum assesses
and validates the annual plan as well as the
ongoing programme of reviews.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
183
Risk management framework continued
Stress testing
Stress testing – capital management
Stress testing is a key risk management tool and a fundamental component of NatWest Group’s
approach to capital management. It is used to quantify and evaluate the potential impact of
specified changes to risk factors on the financial strength of NatWest Group, including its capital
position.
Stress testing includes:
•
Scenario testing, which examines the impact of a hypothetical future state to define changes
in risk factors.
•
Sensitivity testing, which examines the impact of an incremental change to one or more risk
factors.
The process for stress testing consists of four broad stages:
Define scenarios
•
Identify macro and NatWest Group-specific vulnerabilities and
risks.
•
Define and calibrate scenarios to examine risks and
vulnerabilities.
•
Formal governance process to agree scenarios.
Assess impact
•
Translate scenarios into risk drivers.
•
Assess impact on current and projected profit and loss and
balance sheet across NatWest Group.
Calculate results and
assess implications
•
Aggregate impacts into overall results.
•
Results form part of the risk management process.
•
Scenario results are used to inform business and capital plans.
Develop and agree
management actions
•
Scenario results are analysed by subject matter experts.
Appropriate management actions are then developed.
•
Scenario results and management actions are reviewed by the
relevant Executive Risk Committees and Board Risk Committees.
Approval of scenarios is delegated to the NatWest Group Board
Risk Committee by the NatWest Group Board.
Stress testing is used widely across NatWest Group. The diagram below summarises key areas of
focus.
Stress testing usage
within NatWest Group
Strategic financial and
capital planning
Capital adequacy
Risk appetite
Sector review and credit limit setting
Business vulnerabilities analysis
Risk monitoring
Tail risk assessment
Early warning indicators
Risk mitigation
Contingency planning and management actions
Assess financial performance
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
184
Risk management framework continued
Specific areas that involve capital management include:
•
Strategic financial and capital planning
–
by assessing the impact of sensitivities and
scenarios on the capital plan and capital ratios.
•
Risk appetite
– by gaining a better understanding of the drivers of, and the underlying risks
associated with, risk appetite.
•
Risk monitoring
– by monitoring the risks and horizon-scanning events that could potentially
affect NatWest Group’s financial strength and capital position.
•
Risk mitigation
– by identifying actions to mitigate risks, or those that could be taken, in the
event of adverse changes to the business or economic environment. Principal risk-mitigating
actions are documented in NatWest Group’s recovery plan.
Reverse stress testing is also carried out in order to identify and assess scenarios that would
cause NatWest Group’s business model to become unviable. Reverse stress testing allows
potential vulnerabilities in the business model to be examined more fully.
Capital sufficiency – going concern forward-looking view
Going concern capital requirements are examined on a forward-looking basis – including as part
of the annual budgeting process – by assessing the resilience of capital adequacy and leverage
ratios under hypothetical future states. These assessments include assumptions about regulatory
and accounting factors (such as IFRS 9). They incorporate economic variables and key
assumptions on balance sheet and profit and loss drivers, such as impairments, to demonstrate
that NatWest Group and its operating subsidiaries maintain sufficient capital. A range of future
states are tested. In particular, capital requirements are assessed:
•
Based on a forecast of future business performance, given expectations of economic and
market conditions over the forecast period.
•
Based on a forecast of future business performance under adverse economic and market
conditions over the forecast period. Scenarios of different severity may be examined.
The potential impact of normal and adverse economic and market conditions on capital
requirements is assessed through stress testing, the results of which are not only used widely
across NatWest Group but also by the regulators to set specific capital buffers. NatWest Group
takes part in stress tests run by regulatory authorities to test industry-wide vulnerabilities under
crystallising global and domestic systemic risks.
Stress and peak-to-trough movements are used to help assess the amount of capital NatWest
Group needs to hold in stress conditions in accordance with the capital risk appetite framework.
Internal assessment of capital adequacy
An internal assessment of material risks is carried out annually to enable an evaluation of the
amount, type and distribution of capital required to cover these risks. This is referred to as the
Internal Capital Adequacy Assessment Process (ICAAP). The ICAAP consists of a point-in-time
assessment of exposures and risks at the end of the financial year together with a forward-
looking stress capital assessment. The ICAAP is approved by the Board Risk Committee under
Board-delegated authority and submitted to the PRA.
The ICAAP is used to form a view of capital adequacy separately to the minimum regulatory
requirements. The ICAAP is used by the PRA to assess NatWest Group’s specific capital
requirements through the Pillar 2 framework.
Capital allocation
NatWest Group has mechanisms to allocate
capital across its legal entities and businesses.
These aim to optimise the use of capital
resources taking into account applicable
regulatory requirements, strategic and business
objectives and risk appetite.
Governance
Capital management is subject to substantial
review and governance. The Board approves
the capital plans, including those for key legal
entities and businesses as well as the results of
the stress tests relating to those capital plans.
Stress testing – liquidity
Liquidity risk monitoring and contingency
planning
A suite of tools is used to monitor, limit and
stress-test the liquidity and funding risks on the
balance sheet. Limit frameworks are in place to
control the level of liquidity risk, asset and
liability mismatches and funding
concentrations. Liquidity and funding risks are
reviewed at significant legal entity and business
levels daily, with performance reported to the
Asset & Liability Management Committee on a
regular basis. Liquidity condition indicators are
monitored daily. This ensures any build-up of
stress is detected early and the response
escalated appropriately through recovery
planning.
Internal assessment of liquidity
Under the liquidity risk management
framework, NatWest Group maintains the
Internal Liquidity Adequacy Assessment Process. This includes assessment of net stressed
liquidity outflows under a range of severe but plausible stress scenarios. Each scenario evaluates
either an idiosyncratic, market-wide or combined stress event as described in the table.
Type
Description
Idiosyncratic scenario
The market
perceives NatWest
Group to be
suffering from a
severe stress event,
which results in an
immediate
assumption of
increased credit risk
or concerns over
solvency.
Market-wide scenario
A market stress
event affecting all
participants in a
market through
contagion, potential
counterparty failure
and other market
risks. NatWest
Group is affected
under this scenario
but no more
severely than any
other participants
with equivalent
exposure.
Combined scenario
This scenario
models the
combined impact of
an idiosyncratic and
market stress
occurring at once,
severely affecting
funding markets
and the liquidity of
some assets.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
185
Risk management framework continued
NatWest Group uses the most severe
outcome to set the internal stress testing
scenario which underpins its internal liquidity
risk appetite. This complements the
regulatory liquidity coverage ratio
requirement.
Stress testing – recovery and resolution
planning
The NatWest Group recovery plan explains
how NatWest Group and its subsidiaries – as
a consolidated group – would identify and
respond to a financial stress event and
restore its financial position so that it remains
viable on an ongoing basis.
The recovery plan ensures risks that could
delay the implementation of a recovery
strategy are highlighted and preparations are
made to minimise the impact of these risks.
Preparations include:
•
Developing a series of recovery indicators
to provide early warning of potential
stress events.
•
Clarifying roles, responsibilities and
escalation routes to minimise uncertainty
or delay.
•
Developing a recovery playbook to
provide a concise description of the
actions required during recovery.
•
Detailing a range of options to address
different stress conditions.
•
Appointing dedicated option owners to
reduce the risk of delay and capacity
concerns.
The plan is intended to enable NatWest Group
to maintain critical services and products it
provides to its customers, maintain its core
business lines and operate within risk appetite
while restoring NatWest Group’s financial
condition.
It is assessed for appropriateness on an
ongoing basis and reviewed and approved by
the Board prior to submission to the PRA on
a biennial basis. Individual recovery plans are
also prepared for NatWest Holdings Limited,
NatWest Markets Plc, RBS International
Limited and RBSH N.V.. These plans detail the
recovery options, recovery indicators and
escalation routes for each entity.
Fire drill simulations of possible recovery
events are used to test the effectiveness of
NatWest Group and individual legal entity
recovery plans. The fire drills are designed to
replicate possible financial stress conditions
and allow senior management to rehearse
the responses and decisions that may be
required in an actual stress event. The results
and lessons learnt from the fire drills are used
to enhance NatWest Group’s approach to
recovery planning.
Under the resolution assessment part of the
PRA rulebook, NatWest Group is required to
carry out an assessment of its preparations
for resolution, submit a report of the
assessment to the PRA and publish a
summary of this report.
Resolution would be implemented if NatWest
Group were assessed by the UK authorities to
have failed and the appropriate regulator put
it into resolution. The process of resolution is
owned and implemented by the Bank of
England (as the UK resolution authority).
NatWest Group ensures ongoing maintenance
and enhancements of its resolution
capabilities, in line with regulatory
requirements.
Stress testing – market risk
Non-traded market risk
Non-traded exposures are reported to the
PRA on a quarterly basis. This provides the
regulator with an overview of NatWest
Group’s banking book interest rate exposure.
The report includes detailed product
information analysed by interest rate driver
and other characteristics, including
accounting classification, currency and
counterparty type.
Scenario analysis based on hypothetical
adverse scenarios is performed on non-
traded exposures as part of the Bank of
England and European Banking Authority
stress test exercises. NatWest Group also
produces an internal scenario analysis as part
of its financial planning cycles.
Non-traded exposures are capitalised through
the ICAAP. This covers gap risk, basis risk,
credit spread risk, pipeline risk, structural
foreign exchange risk, prepayment risk,
equity risk and accounting volatility risk. The
ICAAP is completed with a combination of
value and earnings measures. The total non-
traded market risk capital requirement is
determined by adding the different charges
for each sub risk type. The ICAAP
methodology captures at least ten years of
historical volatility, produced with a 99%
confidence level. Methodologies are reviewed
by NatWest Group Model Risk and the results
are approved by the NatWest Group Balance
Sheet Management Committee.
Non-traded market risk stress test results are
combined with those for other risks into the
capital plan presented to the Board. The
cross-risk capital planning process is
conducted once a year, with a planning
horizon of five years.
The scenario narratives cover both regulatory
scenarios and macroeconomic scenarios
identified by NatWest Group.
Vulnerability-based stress testing begins with
the analysis of a portfolio and expresses its
key vulnerabilities in terms of plausible
vulnerability scenarios under which the
portfolio would suffer material losses. These
scenarios can be historical, macroeconomic
or forward-looking/hypothetical. Vulnerability-
based stress testing is used for internal
management information and is not subject
to limits. The results for relevant scenarios
are reported to senior management.
Traded market risk
NatWest Group carries out regular market
risk stress testing to identify vulnerabilities
and potential losses in excess of, or not
captured in, value-at-risk. The calculated
stresses measure the impact of changes in
risk factors on the fair values of the trading
portfolios.
NatWest Group conducts historical,
macroeconomic and vulnerability-based
stress testing. Historical stress testing is a
measure that is used for internal
management. Using the historical simulation
framework employed for value-at-risk, the
current portfolio is stressed using historical
data since 1 January 2005. This methodology
simulates the impact of the 99.9 percentile
loss that would be incurred by historical risk
factor movements over the period, assuming
variable holding periods specific to the risk
factors and the businesses.
Historical stress tests form part of the market
risk limit framework and their results are
reported regularly to senior management.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
186
Risk management framework continued
Macroeconomic stress tests are carried out
periodically as part of the bank-wide, cross-
risk capital planning process. The scenario
narratives are translated into risk factor
shocks using historical events and insights by
economists, risk managers and the first line of
defence.
Market risk stress test results are combined
with those for other risks into the capital plan
presented to the Board. The cross-risk capital
planning process is conducted at least once a
year, with a planning horizon of five years.
The scenario narratives cover both regulatory
scenarios and macroeconomic scenarios
identified by NatWest Group.
Vulnerability-based stress testing begins with
the analysis of a portfolio and expresses its
key vulnerabilities in terms of plausible,
vulnerability scenarios under which the
portfolio would suffer material losses. These
scenarios can be historical, macroeconomic
or forward-looking/hypothetical. Vulnerability-
based stress testing is used for internal
management information and is not subject
to limits. The results for relevant scenarios
are reported to senior management.
Stress testing – climate risk
NatWest Group continued to enhance its in-
house climate risk modelling capabilities,
supporting the ongoing integration of climate
risk within its capital adequacy (ICAAP),
impairment (IFRS 9) and risk management
processes, for example, sharing insights with
sector and front-line teams to support the
financial budget and climate transition plan
processes. In particular, internal physical risk
modelling capabilities were developed during
2025.
Specific internal-run exercises in 2025
included:
•
A credit-risk focused exercise covering
both physical and transition risk scenarios
for both the Corporate & Institutional
portfolio and the Retail Banking residential
mortgage portfolio.
•
A non-financial risk scenario for climate
focused on external communications
which could omit or contain incorrect
information and mislead on NatWest
Group activities.
There are various challenges with
quantitative climate scenario analysis,
including in relation to the immaturity of
modelling techniques and limitations
surrounding data on climate-related risks. In
addition, there is significant uncertainty as to
how the climate will evolve over time, how
and when governments, regulators,
businesses, investors and customers respond
and how those responses impact the
economy, asset valuations, economic
systems, policy and wider society. These risks
and uncertainties, coupled with significantly
long timeframes, make the outputs of
climate-related risk modelling with respect to
the potential use cases identified inherently
more uncertain than outputs modelled for
traditional financial planning cycles based on
historical financial information.
Regulatory stress testing
The Bank of England updated its approach to
stress testing. The Bank Capital Stress Test
(BCST) is the successor to the Annual Cyclical
Stress scenario and will be run biennially.
NatWest Group was selected by the Bank of
England to be one of the participants in the
2025 BCST. The results were published in
December 2025 and NatWest Group
remained above its CET1 capital and Tier 1
leverage ratio hurdle rates in stress and was
not required to strengthen its capital position.
The results of this stress test, and other
relevant information, will be used by the Bank
of England to help inform NatWest Group
capital buffers (both the UK countercyclical
capital buffer rate and PRA buffers).
The 2025 stress test aimed to assess the
impact of a UK and global macroeconomic
stress on UK banks, spanning a five-year
period from Q4 2025 to Q4 2030. It was a
coherent ‘tail risk’ scenario, designed to be
severe and broad enough to assess the
resilience of UK banks to a range of adverse
shocks. The stress scenario is similar to the
2022/23 Annual Cyclical Stress with weaker
UK consumer price index inflation offset by
more severe financial markets stresses and
economic shocks in some jurisdictions.
The stress test was based on an end-of-
December 2024 balance sheet position.
Further details can be found at:
https://www.bankofengland.co.uk/stress-
testing/2025/key-elements-bank-capital
Page | |
Credit risk | |
Movement in ECL provision | 187 |
Key metrics | 187 |
Definition and sources of risk | 188 |
Governance and risk appetite | 188 |
Identification and measurement | 188 |
Assessment and monitoring | 188 |
Mitigation | 189 |
Problem debt management | 189 |
Forbearance | 190 |
IFRS 9 models | 190 |
Economic drivers | 190 |
Impairment, provisioning and write-offs | 196 |
Measurement uncertainty and ECL sensitivity analysis | 196 |
ECL post model adjustments | 199 |
Credit risk – Banking activities | |
Financial instruments within the scope of the IFRS 9 ECL framework | 200 |
Segment analysis – portfolio summary | 201 |
Segmental loans and impairment metrics | 203 |
Sector analysis – portfolio summary | 204 |
Non-Personal forbearance | 209 |
Credit risk enhancement and mitigation | 210 |
Personal portfolio | 211 |
Commercial real estate | 215 |
Flow statements | 216 |
Stage 2 decomposition – by a significant increase in credit risk trigger | 223 |
Stage 3 vintage analysis | 225 |
Asset quality | 226 |
Credit risk – Trading activities | |
Securities financing transactions and collateral | 230 |
Derivatives | 231 |
Debt securities | 232 |
Cross border exposure | 233 |
Movement in expected credit loss (ECL) provision
(1)
The table below shows the main ECL provision movements during the year.
ECL provision | |
£m | |
At 1 January 2025 | 3,425 |
Acquisitions | 81 |
Changes in economic forecasts | 54 |
Changes in risk metrics and exposure: Stage 1 and Stage 2 | (75) |
Changes in risk metrics and exposure: Stage 3 | 705 |
Judgemental changes: | |
Changes in post model adjustments for Stage 1, Stage 2 and Stage 3 | (40) |
Write-offs and other | (565) |
At 31 December 2025 | 3,585 |
At 1 January 2024 | 3,645 |
2024 movements | (220) |
At 31 December 2024 | 3,425 |
(1)
The above table is not within the scope of the Independent auditors’ report.
Key metrics
Loans
ECL provisions coverage
(2024 – £410.2bn)
(2024 – 0.83%)
Growth in 2025 was a result of continuing
ECL coverage remained broadly
organic demand across Personal as well as
consistent with 2024, reflecting stability in
the acquisition and integration of Sainsbury’s
arrears trends and the ongoing resilience
Bank unsecured portfolios. In Non-Personal,
of NatWest Group’s portfolios, alongside
growth was mainly across strategic areas
balance sheet management actions in
including financial institutions and corporates.
Personal portfolios.
Impairments
Stage 3
(2024 – £359m)
(2024 – 1.45%)
The impairment charge of £671 million, or
Stage 3 assets reduced as a result of
16 basis points of gross customer loans,
balance sheet management actions in
reflected broadly stable default rates on
Personal coupled with lower defaults in
Non-Personal.
growing Personal unsecured portfolios,
combined with lower reductions in post
model adjustments compared to 2024.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
187
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
188
Credit risk continued
Credit risk is the risk that customers,
counterparties or issuers fail to meet a
contractual obligation to settle outstanding
amounts. For the purposes of the credit risk
section, Personal refers to lending to
individuals and Non-Personal refers to lending
to small and medium-sized enterprises,
corporates, banks and other financial
institutions.
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)
Risk governance for credit risk is in line with
the approach outlined in the Risk
management framework section.
The Credit Risk function provides oversight
and challenge of frontline credit risk
management activities:
•
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.
•
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.
•
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.
Risk appetite (audited)
Risk appetite for credit risk is in line with the
approach outlined in the Risk management
framework section.
Credit risk appetite is monitored through risk
appetite frameworks tailored to NatWest
Group’s Personal and Non-Personal
segments.
Personal
The Personal credit risk appetite framework
sets limits that control the quality and
concentration of both existing and new
business for each relevant business segment.
Risk appetite measures consider the
segments’ ability to grow sustainably and the
level of losses expected under stress. Credit
risk is further controlled through operational
limits specific to customer or product
characteristics.
Non-Personal
The Non-Personal credit risk appetite
framework has been designed to reflect
factors that influence the ability to operate
within risk appetite. Tools such as stress
testing and economic capital are used to
measure credit risk volatility and develop links
between the framework and risk appetite
limits.
The framework is used to manage
concentrations of risk which may arise across
four lenses – single name, sector, country
and product and asset classes. The
framework is supported by a suite of
transactional acceptance standards that set
out the risk parameters within which
Identification and measurement
Risks are identified through relationship
management and credit stewardship of
customers and portfolios. Credit stewardship
takes place throughout the customer
relationship, beginning with the initial
approval. It includes the application of credit
assessment standards, credit risk mitigation,
ensuring that credit documentation is
complete and appropriate, carrying out
regular portfolio or customer reviews and
problem debt identification and management.
Assessment and monitoring
Personal
Personal lending mainly comprises a high
volume of lower-value transactions supported
by automated decision-making. To maintain
consistency in lending decisions and monitor
performance, NatWest Group reviews both
internal credit data and external information
from credit reference agencies, developing
and applying lending rules according to
product type.
For higher-value, more complex personal
loans, such as certain residential mortgage
lending, specialist credit managers are
responsible for final lending decisions within
defined delegated authority limits based on
their experience.
Underwriting standards and portfolio
performance are monitored on an ongoing
basis to ensure they remain appropriate for
the current market environment.
Management information and higher-risk
segment monitoring are produced for
portfolio monitoring. Portfolio performance is
measured against operational limits related to
various credit risk measures including
projected default rates and mortgage loan-to-
value (LTV) ratios. If operational limits identify
areas of concern, management may adjust
credit or business strategy accordingly.
Non-Personal
Non-Personal customers, which include small
and medium-sized enterprises, corporates,
banks and other financial institutions, are
typically managed on an individual basis.
Customers are aggregated as a single risk
when sufficiently interconnected to the extent
that a failure of one could lead to the failure
of another.
A risk-based credit assessment is carried out
before credit facilities are made available to
customers. The assessment process depends
on the complexity of the transaction.
For lower-risk transactions below specific
thresholds, credit decisions can be approved
through a combination of fully automated or
relationship manager self-sanctioning within
the business. This process is facilitated
through an auto-decision system, which
utilises scorecards, strategies and policy rules.
For other transactions, both business
approval and credit approval are required.
Credit quality and loss given default (LGD) are
reviewed at least annually. The review
process assesses borrower performance, the
adequacy of security, compliance with terms
and conditions, and refinancing risk.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
189
Credit risk continued
Mitigation
Mitigation techniques outlined in the credit
risk toolkits and transactional acceptance
standards are applied in managing credit
portfolios across NatWest Group. These
techniques mitigate credit concentrations
related to individual customers, borrower
groups or a collection of related borrowers.
Where possible, customer credit balances are
netted against obligations. Mitigation tools
may involve structuring security interests in
physical or financial assets, using credit
derivatives such as credit default swaps,
credit-linked debt instruments and
securitisation structures, and utilising
guarantees or similar instruments (including
credit insurance) from related and third
parties. Property is used to mitigate credit
risk across a number of portfolios, in
particular residential mortgage lending and
commercial real estate.
Residential mortgages
NatWest Group uses residential property as
collateral to reduce credit risk arising from
mortgages. The value of the property is
determined during loan underwriting, either
from a qualified appraiser, such as one
registered with the Royal Institution of
Chartered Surveyors (RICS), or by applying a
statistically valid model. Periodically, a sample
of these valuations is reviewed by an
independent RICS-qualified appraiser. Retail
Banking UK updates residential property
values quarterly based on country-specific
(Scotland, Wales and Northern Ireland) or
English region specific Office for National
Statistics House Price indices.
Commercial real estate
For commercial real estate valuations,
NatWest Group works with a managed panel
of chartered surveying firms that cover
relevant geographic and property sectors in
which NatWest Group takes collateral. RICS-
registered valuers are contracted for specific
assets under service agreements to ensure
consistency of quality and advice. In the UK,
an independent third-party market indexation
is applied to update external valuations for
commercial property, once they are more
than a year old. For loan obligations in excess
of £2.5 million and where the charged
property has a book value in excess of £0.5
million, a formal valuation review is typically
commissioned at least every three years.
(audited)
When stress or financial difficulties are
identified, NatWest Group collaborates closely
with customers to support them.
Personal
Pre-emptive triggers, based on both NatWest
Group and credit reference agency data, are
used to identify customers that may be at
risk of financial difficulty. NatWest Group
proactively contacts these customers to offer
support with the aim of preventing further
deterioration of their financial position.
Financial Health and Support
When a customer exceeds an agreed limit or
misses a regular monthly payment, the
customer is contacted by NatWest Group and
requested to remedy the position. If the
situation is not resolved then, where
appropriate, the Financial Health and Support
team become involved and the customer is
supported by skilled debt management staff
who endeavour to provide customers with
bespoke solutions.
If appropriate, a notice of intention to default
and/or a formal demand may be issued to the
customer. The account may also be
registered with credit reference agencies.
Subsequently, the customer’s debt may be
referred to a third-party debt collection
agency or solicitor, to agree an affordable
repayment plan. The sale of unsecured debt
may also be considered as an option.
Non-Personal
NatWest Group uses a range of early warning
indicators to identify customers that may be
exposed to emerging risks, including financial
stress, allowing for increased monitoring
where necessary. Early warning indicators
may be internal, such as a customer’s bank
account activity, or external, such as the
share price of a publicly listed customer.
When these indicators suggest that a
customer is experiencing potential or actual
difficulty, or if relationship managers or credit
officers observe other signs of financial
difficulty, the customer may be classified
within the Wholesale Problem Debt
Management framework.
Wholesale Problem Debt Management
framework
This framework focuses on Non-Personal
customers and is designed to provide early
identification of credit deterioration, support
intelligent risk-taking, ensure fair and
consistent customer outcomes and provide
key insights into Non-Personal lending
portfolios.
There are two classifications in the
framework that apply to non-defaulted
customers that are in financial stress –
Heightened Monitoring and Risk of Credit
Loss.
For the purposes of provisioning, all
exposures categorised as Heightened
Monitoring or Risk of Credit Loss are
categorised as Stage 2 and subject to a
lifetime loss assessment.
The framework also applies to those
customers that have met NatWest Group’s
default criteria (AQ10 exposures). Defaulted
exposures are categorised as Stage 3
impaired for provisioning purposes.
Heightened Monitoring customers are
performing customers that have met certain
characteristics, which have led to significant
credit deterioration. Characteristics include
trading issues, covenant breaches, material
probability of default (PD) downgrades and
past due facilities.
Heightened Monitoring customers require
pre-emptive actions (outside the customer’s
normal trading patterns) to return or maintain
their facilities within NatWest Group’s current
risk appetite.
Risk of Credit Loss customers are performing
customers that have met the criteria for
Heightened Monitoring and also pose a risk of
credit loss to NatWest Group in the next 12
months should mitigating action not be taken
or not be successful.
The Wholesale Problem Debt Management
framework does not apply to problem debt
management for small and medium-sized
enterprise retail customers. These customers
are, where necessary, managed by specialist
problem debt management teams, depending
on the size of exposure or by the Financial
Health and Support team where a loan has
been impaired.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
190
Credit risk continued
Customer Lending Support
Where customers meet specific referral
criteria, relationships are supported by the
Customer Lending Support team.
Customer Lending Support works with
corporate and commercial customers in
financial difficulty to help them understand
their options and how their restructuring or
repayment strategies can be delivered.
Helping viable customers return to financial
health and restoring a normal banking
relationship is always the preferred outcome.
However, where this is not possible, NatWest
Group works with customers to achieve a
solvent outcome.
Forbearance (audited)
Forbearance occurs when a concession is
made on the contractual terms of a debt in
response to a customer’s financial difficulties.
The aim of forbearance is to help the
customer regain financial stability while
reducing risk. To ensure that forbearance is
appropriate for the customer, minimum
standards are applied when assessing,
recording, monitoring and reporting
forbearance.
Personal
Forbearance options include payment
concessions, loan rescheduling (such as
extending contractual maturity), switching to
interest-only payments, suspending interest
or capitalising arrears. This support can be
provided for both mortgages and unsecured
lending.
Non-Personal
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.
Customer PD and facility loss given default
(LGD) 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. If forbearance becomes unsuitable
or is unsuccessful, NatWest Group may
pursue repayment, enforcement of security
or insolvency proceedings, although these are
options of last resort.
IFRS 9 models
(audited)
IFRS 9 models provide PD, exposure at
default (EAD) and LGD for the purpose of
calculating ECL.
Model build
Risk ranking is normally the same as for
internal ratings based (IRB) models to
maintain consistency in risk measurement.
Economic drivers are incorporated, normally
by using stress models. Term structures are
used to assess the risk of loss beyond 12
months that will affect lifetime loss for
exposures which have significantly
deteriorated (Stage 2) or defaulted (Stage 3).
Model application
Model application involves selecting forward-
looking economic scenarios and assigning
appropriate probability weights.
Model design principles
The modelling of ECL under IFRS 9 adopts
the standard approach of breaking down
credit loss estimation into its component
parts of PD, LGD and EAD. To comply with
IFRS 9, these model parameters are designed
with the following characteristics:
•
Unbiased – provide a best estimate.
•
Point-in-time – reflecting current
economic conditions as opposed to
through-the-cycle.
•
Economic forecasts – IFRS 9 PD estimates
and, where appropriate, EAD and LGD
estimates reflecting economic forecasts.
•
Lifetime measurement – parameters are
provided as multi-period term structures
up to behavioural lifetimes.
PD
Personal
Personal PD models follow a discrete multi-
horizon survival approach, predicting
quarterly PDs up to lifetime at account level.
A key driver is the score from related IRB PD
models, with economic forecasts incorporated
through the stress models.
Non-Personal
Non-Personal PD models use a point-in-
time/through-the-cycle framework to provide
point-in-time estimates that reflect economic
conditions at the reporting date. A key driver
is the score from related IRB PD models, with
economic forecasts incorporated through the
stress models.
LGD
Personal
Economic forecasts are incorporated for the
secured portfolios, where changes in property
prices can be readily accommodated.
Analysis has shown limited sensitivity to
economic conditions on LGDs for the other
Personal portfolios.
Non-Personal
Economic forecasts are incorporated into
LGD estimates using the existing point-in-
time/through-the-cycle framework. However,
for some portfolios, including low-default,
sovereigns and banks, there is insufficient loss
data to substantiate estimates that vary with
economic conditions.
EAD
Personal
Revolving products employ existing IRB
models as a foundation, with appropriate
adjustments incorporating a term structure
based on time to default. Amortising products
use an amortisation schedule, where a
formula is used to calculate the expected
balance based on remaining terms and
interest rates.
Non-Personal
EAD values rely on product-specific credit
conversion factors (CCFs), closely mirroring
the product segmentation and approach of
the respective IRB model, but without
conservative or downturn assumptions. These
CCFs are estimated over multi-year time
horizons.
Economic drivers (audited)
Introduction
The portfolio segmentation and selection of
economic drivers for IFRS 9 follows the
approach used in stress testing. The stress
models for each portfolio segment (defined by
product or asset class and where relevant,
industry sector and region) are based on a
selected, small number of economic variables
that best explain the movements in portfolio
loss rates. The process to select economic
drivers uses empirical analysis and expert
judgement.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
191
Credit risk continued
Economic drivers (audited)
The most significant economic drivers for
material portfolios are shown in the table
below:
Portfolio | Economic drivers |
Unemployment rate, sterling | |
Personal | swap rate, house price index, |
mortgages | real wage |
Personal | Unemployment rate, sterling |
unsecured | swap rate, real wage |
Stock price index, gross | |
Corporates | domestic product (GDP) |
Commercial | Stock price index, commercial |
real estate | property price index, GDP |
Economic scenarios
At 31 December 2025, the range of
anticipated future economic conditions was
defined by a set of four internally developed
scenarios and their respective probabilities. In
addition to the base case, they comprised
upside, downside and extreme downside
scenarios.
For 31 December 2025, the four scenarios
were deemed appropriate in capturing the
uncertainty in economic forecasts and the
non-linearity in outcomes under different
scenarios. These four scenarios were
developed to provide sufficient coverage to
current risks faced by the economy and
consider varying outcomes across the labour
market, inflation, interest rate, asset price
and economic growth, around which there
remains pronounced levels of uncertainty.
Since 31 December 2024, the near-term
economic growth outlook weakened, with
growth in the second half of 2025 losing
momentum. Inflation rose to nearly double
the target level of 2% in 2025, with underlying
price pressures remaining firm. However,
there are tentative signs of easing inflationary
pressures and inflation is assumed to fall back
close to the target by the end of 2026. The
peak unemployment rate is higher than at 31
December 2024. The unemployment rate is
assumed to continue to rise in the near-term,
albeit at a slower pace. The Bank of England
is expected to continue cutting interest rates
in a ‘gradual and careful’ manner with an
assumed terminal rate in the base case of
3.25%, marginally lower compared to 3.5%
assumed at 31 December 2024. Housing
market activities remained resilient in 2025,
with prices expected to grow modestly.
High-level narrative – potential developments, vulnerabilities and risks
Outperformance sustained – above trend growth as | ||
consumer sentiment recovers | Upside | |
Steady growth – staying close to trend pace | Base case | |
Growth | Stalling – cautious consumer and policy uncertainty | |
weighs on activity | Downside | |
Extreme stress – extreme fall in GDP, with policy | ||
support to facilitate sharp recovery | Extreme downside | |
Sticky – strong growth and/or wage policies keep | ||
services inflation above target in medium term | Upside | |
Battle won – beyond near-term volatility, services | ||
inflation continues to ease, 2% target is met on a | ||
Inflation | sustained basis | Base case |
Slow – above target inflation in 2026 but swiftly falls to | ||
lower levels | Downside | |
Close to deflation – inflationary pressures diminish | ||
amidst pronounced weakness in demand | Extreme downside | |
Recovery – job growth rebounds strongly, reversing | ||
much of the recent rise in unemployment rate | Upside | |
Cooling continues – gradual loosening continues into | ||
Labour | 2026, before improving | Base case |
market | Job shedding – redundancies, reduced hours, building | |
slack | Downside | |
Depression – unemployment hits levels close to previous | ||
peaks amid severe stress | Extreme downside | |
Limited cuts – higher growth and inflation keep the | ||
Monetary Policy Committee cautious | Upside | |
Steady – rate cutting cycle largely done, two further | ||
Rates | rate cuts | Base case |
| short-term | Supportive – sharp declines to support recovery | Downside |
Sharp drop – drastic easing in policy to support a sharp | ||
deterioration in the economy | Extreme downside | |
Above consensus – 4% | Upside | |
Rates | Middle – 3.25% | Base case |
long-term | Low – 2.5% and below | Downside/Extreme downside |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
192
Credit risk continued
Economic drivers
(audited)
Main macroeconomic variables
The main macroeconomic variables for each of the four scenarios used for ECL modelling are set out in the table below.
| 2025 | 2024 | |||||||||
Extreme | Weighted | Extreme | Weighted | |||||||
Upside | Base case | Downside | downside | average | Upside | Base case | Downside | downside | average | |
Five-year summary | % | % | % | % | % | % | % | % | % | % |
GDP | 2.1 | 1.4 | 0.5 | 0.1 | 1.2 | 2.0 | 1.3 | 0.5 | (0.2) | 1.1 |
Unemployment rate | 4.3 | 5.1 | 5.6 | 7.0 | 5.3 | 3.6 | 4.3 | 5.0 | 6.7 | 4.6 |
House price index | 5.7 | 3.3 | 0.6 | (3.8) | 2.6 | 5.8 | 3.5 | 0.8 | (4.3) | 2.7 |
Commercial real estate price | 6.1 | 2.2 | (0.3) | (5.0) | 1.9 | 5.4 | 1.2 | (1.0) | (5.7) | 1.1 |
Consumer price index | 2.6 | 2.4 | 2.4 | 1.8 | 2.3 | 2.4 | 2.2 | 3.5 | 1.6 | 2.4 |
Bank of England base rate | 4.0 | 3.5 | 2.6 | 1.4 | 3.2 | 4.4 | 4.0 | 3.0 | 1.6 | 3.6 |
Stock price index | 6.2 | 4.8 | 2.8 | 1.1 | 4.3 | 6.3 | 5.0 | 3.4 | 1.1 | 4.5 |
World GDP | 3.7 | 3.1 | 2.5 | 2.2 | 3.0 | 3.8 | 3.2 | 2.5 | 1.6 | 3.0 |
Probability weight | 22.4 | 45.0 | 19.5 | 13.1 | 23.2 | 45.0 | 19.1 | 12.7 | ||
(1)
The five-year summary runs from 2025-2029 for 31 December 2025
and from 2024-2028 for 31 December 2024.
(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.
(3)
An implicit carbon price is an additional cost related to greenhouse gas
emissions as a result of climate transition policy.
Climate transition
Since 2023, NatWest Group has assessed the
implicit contribution to its base case
macroeconomic scenario from changes in UK
transition policy, expressed as an additional
implicit sectoral carbon price
(3)
. Climate
transition policy contribution to the total ECL
was immaterial at the end of 2025.
In 2025, NatWest Group individually assessed
50 active and potential UK transition policies
that had a significant impact on the cost of
emissions – for example, the Emissions
Trading Scheme and Renewables Obligation –
and converted them into equivalent implicit
sectoral carbon prices. The prices were
calculated as the cost per tonne of emissions
abated by each policy. Using an internally
developed model, NatWest Group estimated
the impact of sector carbon prices on key
macroeconomic variables such as GDP and
unemployment. Using this analysis, NatWest
Group created two scenarios, the baseline,
which incorporates climate transition related
impacts, and an alternative scenario, which
excludes them.
Comparing ECL under these two scenarios
allowed NatWest Group to estimate an
aggregate macroeconomic impact of the
analysed transition policies and their
contribution to ECL.
The current approach does not include
physical risks and transition risks, beyond the
assessed transition policies. NatWest Group
will continue to enhance and develop the
approach as reliable data and methodology
become available.
Probability weightings of scenarios
NatWest Group applies a quantitative
approach for IFRS 9 multiple economic
scenarios by selecting specific discrete
scenarios that represent the range of risks in
the economic outlook and assigning
appropriate probability weights.
The approach involves comparing GDP paths
for NatWest Group’s scenarios against a set
of 1,000 model simulations to determine the
percentile in the distribution that aligns most
closely with each scenario.
The probability weight for the base case is
determined first using judgement, while
probability weights for the alternative
scenarios are then assigned based on these
percentiles scores.
The weights were broadly comparable to
those used at 31 December 2024 but with
slightly more downside skew. The assigned
probability weights were judged to be aligned
with the subjective assessment of balance of
the risks in the economy. Given the balance
of risks that the economies in which NatWest
Group operates are exposed to, NatWest
Group judges it appropriate that downside-
biased scenarios have higher combined
probability weights than the upside-biased
scenario.
It presents good coverage to the range of
outcomes assumed in the scenarios, including
the potential for a robust recovery on the
upside and exceptionally challenging
outcomes on the downside. A 22.4%
weighting was applied to the upside scenario,
a 45.0% weighting applied to the base case
scenario, a 19.5% weighting applied to the
downside scenario and a 13.1% weighting
applied to the extreme downside scenario.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
193
Credit risk continued
Economic drivers
(audited)
2,600
2,700
2,800
2,900
3,000
3,100
3,200
Q4 2025
Q4 2026
Q4 2027
Q4 2028
Q4 2029
Q4 2030
UK gross domestic product (£bn)
Upside
Base case
Downside
Extreme downside
0
1
2
3
4
5
6
7
8
9
Q4 2025
Q4 2026
Q4 2027
Q4 2028
Q4 2029
Q4 2030
UK unemployment rate (%)
Upside
Base case
Downside
Extreme downside
0
1
2
3
4
5
6
Q4 2025
Q4 2026
Q4 2027
Q4 2028
Q4 2029
Q4 2030
Bank of England base rate (%)
Upside
Base case
Downside
Extreme downside
100
120
140
160
180
200
220
240
260
Q4 2025
Q4 2026
Q4 2027
Q4 2028
Q4 2029
Q4 2030
UK house prices (index)
Upside
Base case
Downside
Extreme downside
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
194
Credit risk continued
Economic drivers
(audited)
Annual figures
| 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 % | ||
2025 | 1.4 | 1.4 | 1.4 | 1.4 | 1.4 | 2025 | 3.6 | 3.6 | 3.6 | 3.6 | 3.6 |
2026 | 1.9 | 1.0 | 0.3 | (3.7) | 0.5 | 2026 | 2.7 | 2.3 | 2.7 | 0.6 | 2.3 |
2027 | 3.2 | 1.5 | (0.6) | (0.2) | 1.3 | 2027 | 2.4 | 2.0 | 1.8 | 1.1 | 1.9 |
2028 | 2.3 | 1.4 | 0.2 | 1.4 | 1.4 | 2028 | 2.1 | 2.0 | 1.7 | 1.8 | 1.9 |
2029 | 1.6 | 1.4 | 1.4 | 1.4 | 1.5 | 2029 | 2.0 | 2.0 | 2.0 | 2.0 | 2.0 |
2030 | 1.6 | 1.4 | 1.7 | 1.4 | 1.5 | 2030 | 2.0 | 2.0 | 2.0 | 2.0 | 2.0 |
| 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 % | ||
2025 | 4.8 | 4.8 | 4.8 | 4.8 | 4.8 | 2025 | 4.24 | 4.24 | 4.24 | 4.24 | 4.24 |
2026 | 4.7 | 5.4 | 5.5 | 6.1 | 5.3 | 2026 | 4.00 | 3.52 | 2.94 | 1.14 | 3.20 |
2027 | 4.1 | 5.2 | 6.1 | 8.1 | 5.5 | 2027 | 4.00 | 3.25 | 2.00 | 0.17 | 2.77 |
2028 | 4.1 | 5.1 | 6.0 | 8.3 | 5.4 | 2028 | 4.00 | 3.25 | 2.00 | 0.39 | 2.80 |
2029 | 4.0 | 4.9 | 5.7 | 7.6 | 5.2 | 2029 | 4.00 | 3.25 | 2.00 | 1.02 | 2.88 |
2030 | 4.0 | 4.8 | 5.5 | 6.9 | 5.1 | 2030 | 4.00 | 3.25 | 2.15 | 1.82 | 3.02 |
| 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 % | ||
2025 | 3.0 | 3.0 | 3.0 | 3.0 | 3.0 | 2025 | 11.1 | 11.1 | 11.1 | 11.1 | 11.1 |
2026 | 7.8 | 3.4 | (1.2) | (13.1) | 1.3 | 2026 | 8.1 | 3.3 | (16.0) | (52.9) | (6.7) |
2027 | 7.2 | 3.4 | (2.8) | (14.1) | 1.2 | 2027 | 5.1 | 3.3 | 7.2 | 33.9 | 6.5 |
2028 | 5.1 | 3.4 | 0.1 | (0.2) | 2.9 | 2028 | 3.5 | 3.3 | 7.2 | 25.3 | 5.9 |
2029 | 5.4 | 3.4 | 4.4 | 7.2 | 4.5 | 2029 | 3.5 | 3.3 | 7.2 | 20.2 | 5.7 |
2030 | 5.6 | 3.4 | 4.2 | 6.6 | 4.4 | 2030 | 3.0 | 3.3 | 7.2 | 16.8 | 5.5 |
| Commercial real estate price - four quarter change | |||||
Upside % | Base case % | Downside % | Extreme downside % | Weighted average % | |
2025 | 2.6 | 2.6 | 2.6 | 2.6 | 2.6 |
2026 | 14.1 | 2.9 | (6.8) | (24.1) | - |
2027 | 4.4 | 2.6 | (2.5) | (13.0) | 0.6 |
2028 | 5.5 | 1.5 | 2.8 | 7.0 | 3.3 |
2029 | 4.2 | 1.6 | 2.6 | 6.8 | 2.9 |
2030 | 2.7 | 1.6 | 2.5 | 6.5 | 2.5 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
195
Credit risk continued
Economic drivers
(audited)
Worst points
2025 | 2024 | |||||||||
Extreme | Weighted | Extreme | Weighted | |||||||
Downside | downside | average | Downside | downside | average | |||||
% | Quarter | % | Quarter | % | % | Quarter | % | Quarter | % | |
GDP | - | Q4 2027 | (3.8) | Q4 2026 | - | - | Q1 2024 | (4.1) | Q4 2025 | - |
Unemployment rate - peak | 6.2 | Q4 2027 | 8.5 | Q4 2027 | 5.6 | 5.6 | Q4 2026 | 8.5 | Q1 2027 | 4.9 |
House price index | (2.4) | Q2 2028 | (25.9) | Q2 2028 | - | (1.9) | Q2 2027 | (25.6) | Q3 2027 | - |
Commercial real estate price | (7.3) | Q2 2027 | (33.3) | Q3 2027 | - | (10.5) | Q2 2026 | (35.0) | Q3 2026 | (1.8) |
Consumer price index | ||||||||||
- highest four quarter change | 3.8 | Q3 2025 | 3.8 | Q3 2025 | 3.8 | 6.1 | Q1 2026 | 3.5 | Q1 2024 | 3.5 |
Bank of England base rate - extreme level | 2.0 | Q1 2025 | 0.1 | Q1 2025 | 2.8 | 2.0 | Q1 2024 | 0.1 | Q1 2024 | 2.9 |
Stock price index | (6.7) | Q4 2026 | (47.7) | Q4 2026 | - | (0.2) | Q4 2025 | (27.4) | Q4 2025 | - |
(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 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 2024 for 31 December
2025 scenarios and Q4 2023 for 31 December 2024 scenarios.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
196
Credit risk continued
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.
SICR
Defaulted exposures are classified in Stage 3
and subject to lifetime ECL measurement.
Remaining exposures are assessed for SICR
since initial recognition. Where exposures are
identified with SICR, they are classified in
Stage 2 and assessed using a lifetime ECL
measurement. Exposures not considered
deteriorated are assessed with a 12-month
ECL. NatWest Group applies a framework to
identify deterioration, primarily based on
changes in lifetime PD, supported by
additional qualitative high-risk backstops.
•
IFRS 9 lifetime PD assessment (the
primary driver) – relies on measuring the
relative deterioration in forward-looking
lifetime PD and is assessed monthly. SICR
is determined by comparing the residual
lifetime PD at the balance sheet date with
the lifetime PD at the date of initial
recognition (DOIR). If the current lifetime
PD exceeds the origination PD by more
than a defined threshold, SICR is assumed
to have occurred and the exposure moved
into Stage 2 for a lifetime ECL
assessment. For Non-Personal, a doubling
of PD would indicate a SICR, subject to a
minimum PD uplift of 0.1%. For Personal
portfolios and small and medium-sized
enterprise retail, the criteria vary by risk
band, as detailed in the following table:
Personal |
PD bandings (based |
|
risk |
on residual lifetime PD |
PD deterioration |
bands |
calculated at DOIR) |
threshold criteria |
A |
<0.762% |
PD@DOIR + 1% |
B |
<4.306% |
PD@DOIR + 3% |
C |
>=4.306% |
1.7 x PD@DOIR |
•
Qualitative high-risk backstop assessment
– supplements the PD assessment to
evaluate whether significant deterioration
in lifetime risk of default occurred. This
included the mandatory 30+ days past
due backstop, as prescribed by IFRS 9
guidance, as well as other elements such
as forbearance support, Non-Personal
exposures managed within the Wholesale
Problem Debt Management framework,
and adverse credit bureau results for
Personal customers.
•
Persistence (Personal and small and
medium-sized enterprise retail customers
only) – the persistence rule ensures that
accounts which have met the criteria for
PD driven deterioration are still considered
to be significantly deteriorated for three
months thereafter. This additional rule
enhances the timeliness of capture into
Stage 2. The persistence rule is applied to
PD driven deterioration only.
Lifetime
The definitions of initial recognition and asset
lifetime are important considerations when
determining the amount of lifetime losses to
be applied.
•
Initial recognition refers to the date that a
transaction (or account) is first recognised
on the balance sheet, with the PD at that
point serving as the basis for subsequent
determination of SICR, as detailed above.
•
For asset lifetime, the approach is aligned
with IFRS 9 requirements:
o
Term lending – the contractual
maturity date is used and adjusted
for behavioural trends where
applicable, such as expected
prepayment and amortisation.
o
Revolving facilities – for Personal
portfolios (excluding credit cards),
asset duration is determined by
behavioural life, which was typically
greater than contractual life. For the
Non-Personal portfolios, asset
duration is based on annual
customer review schedules.
Governance
The IFRS 9 PD, EAD and LGD models are
subject to NatWest Group’s model risk policy,
which stipulates periodic model monitoring
and, re-validation and defines approval
procedures and authorities according to
model materiality. Post model adjustments are
applied where management deemed them
necessary to ensure an adequate level of
overall ECL provision. All post model
adjustments undergo review, challenge and
approval by the relevant model or provisioning
committees.
Post model adjustments will remain a key
focus area of NatWest Group’s ongoing ECL
adequacy assessment process. A
comprehensive framework has been
established that incorporates analysis of
diverse economic data, external benchmarks
and portfolio performance trends with a
particular focus on segments (across both
Personal and Non-Personal portfolios) that
may be more susceptible to specific risk
factors.
Measurement uncertainty and ECL
sensitivity analysis (audited)
The recognition and measurement of ECL is
complex and requires significant judgement
and estimation, especially during times of
economic volatility and uncertainty. This
includes the formulation and incorporation of
multiple forward-looking economic conditions
into ECL to meet the measurement objectives
of IFRS 9. The ECL provision is sensitive to the
model inputs and economic assumptions used
in the estimation.
Simulations were conducted to assess the
impact of various economic scenarios,
including base case, upside, downside and
extreme downside scenarios. The potential
ECL impacts reflected the simulated impact as
at 31 December 2025. In the simulations,
NatWest Group assumed that the economic
macro variables associated with each
scenario would replace the existing base case
economic assumptions, giving them a 100%
probability weighting and therefore serving as
a single economic scenario. These scenarios
were applied to all modelled portfolios in the
table, with the simulation affecting both PDs
and LGDs. Post model adjustments included in
the ECL estimates were adjusted in line with
the modelled ECL movements. However,
adjustments that were judgemental in nature,
such as those for deferred model calibrations
and economic uncertainty, were not
automatically recalculated. Instead, they will
be re-evaluated by management through ECL
governance for any new economic scenario
outlook.
As expected, the scenarios created varying
impacts on ECL by portfolio, and these
impacts were deemed reasonable. The
simulations assumed that existing modelled
relationships between key economic variables
and drivers would hold. However, in practice,
other factors such as potential changes in
customer behaviour and policy changes could
also impact the wider availability of credit.
The focus of the simulations was on ECL
provisioning requirements for performing
exposures in Stage 1 and Stage 2. The
simulations were run on a stand-alone basis
and were independent of each other. Scenario
impacts on SICR were considered when
evaluating the ECL movements of Stage 1
and Stage 2. In all scenarios, the total
exposure remained the same, but exposure
by stage varied.
Stage 3 provisions are not subject to the same
level of measurement uncertainty, as default is
an observed event as at the balance sheet
date and defaulted LGD is typically more
impacted by borrower specific factors rather
than economics. Therefore, Stage 3 provisions
were not considered in this analysis. NatWest
Group’s core criterion for identifying a SICR is
based on PD deterioration. Under the
simulations, changes in PDs resulted in
exposures moving between Stage 1 and
Stage 2, contributing to the ECL impact.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
197
Credit risk continued
Measurement uncertainty and ECL sensitivity analysis (audited)
Moderate | Moderate | Extreme | |||
Base | upside | downside | downside | ||
2025 | Actual | scenario | scenario | scenario | scenario |
Stage 1 modelled loans (£m) | |||||
Retail Banking - mortgages | 181,869 | 182,357 | 183,665 | 181,119 | 176,988 |
Retail Banking - unsecured | 12,761 | 12,858 | 13,232 | 12,601 | 11,683 |
Non-Personal - property | 31,809 | 31,924 | 31,995 | 31,764 | 23,027 |
Non-Personal - non-property | 141,924 | 142,660 | 142,972 | 141,841 | 118,828 |
368,363 | 369,799 | 371,864 | 367,325 | 330,526 | |
Stage 1 modelled ECL (£m) | |||||
Retail Banking - mortgages | 42 | 42 | 41 | 42 | 43 |
Retail Banking - unsecured | 293 | 300 | 288 | 291 | 278 |
Non-Personal - property | 66 | 46 | 38 | 71 | 148 |
Non-Personal - non-property | 189 | 156 | 144 | 202 | 353 |
590 | 544 | 511 | 606 | 822 | |
Stage 1 coverage (%) | |||||
Retail Banking - mortgages | 0.02% | 0.02% | 0.02% | 0.02% | 0.02% |
Retail Banking - unsecured | 2.30% | 2.33% | 2.18% | 2.31% | 2.38% |
Non-Personal - property | 0.21% | 0.14% | 0.12% | 0.22% | 0.64% |
Non-Personal - non-property | 0.13% | 0.11% | 0.10% | 0.14% | 0.30% |
0.16% | 0.15% | 0.14% | 0.16% | 0.25% | |
Stage 2 modelled loans (£m) | |||||
Retail Banking - mortgages | 15,821 | 15,333 | 14,025 | 16,571 | 20,702 |
Retail Banking - unsecured | 3,621 | 3,524 | 3,150 | 3,781 | 4,699 |
Non-Personal - property | 3,072 | 2,957 | 2,886 | 3,117 | 11,854 |
Non-Personal - non-property | 15,721 | 14,985 | 14,673 | 15,804 | 38,817 |
38,235 | 36,799 | 34,734 | 39,273 | 76,072 | |
Stage 2 modelled ECL (£m) | |||||
Retail Banking - mortgages | 36 | 33 | 29 | 38 | 55 |
Retail Banking - unsecured | 388 | 378 | 326 | 408 | 516 |
Non-Personal - property | 55 | 47 | 42 | 59 | 351 |
Non-Personal - non-property | 305 | 263 | 242 | 317 | 880 |
784 | 721 | 639 | 822 | 1,802 | |
Stage 2 coverage (%) | |||||
Retail Banking - mortgages | 0.23% | 0.22% | 0.21% | 0.23% | 0.27% |
Retail Banking - unsecured | 10.72% | 10.73% | 10.35% | 10.79% | 10.98% |
Non-Personal - property | 1.79% | 1.59% | 1.46% | 1.89% | 2.96% |
Non-Personal - non-property | 1.94% | 1.76% | 1.65% | 2.01% | 2.27% |
2.05% | 1.96% | 1.84% | 2.09% | 2.37% |
For the notes to this table refer to the following page.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
198
Credit risk continued
Measurement uncertainty and ECL sensitivity analysis (audited)
Moderate | Moderate | Extreme | |||
Base | upside | downside | downside | ||
2025 | Actual | scenario | scenario | scenario | scenario |
Stage 1 and Stage 2 modelled loans (£m) | |||||
Retail Banking - mortgages | 197,690 | 197,690 | 197,690 | 197,690 | 197,690 |
Retail Banking - unsecured | 16,382 | 16,382 | 16,382 | 16,382 | 16,382 |
Non-Personal - property | 34,881 | 34,881 | 34,881 | 34,881 | 34,881 |
Non-Personal - non-property | 157,645 | 157,645 | 157,645 | 157,645 | 157,645 |
406,598 | 406,598 | 406,598 | 406,598 | 406,598 | |
Stage 1 and Stage 2 modelled ECL (£m) | |||||
Retail Banking - mortgages | 78 | 75 | 70 | 80 | 98 |
Retail Banking - unsecured | 681 | 678 | 614 | 699 | 794 |
Non-Personal - property | 121 | 93 | 80 | 130 | 499 |
Non-Personal - non-property | 494 | 419 | 386 | 519 | 1,233 |
1,374 | 1,265 | 1,150 | 1,428 | 2,624 | |
Stage 1 and Stage 2 coverage (%) | |||||
Retail Banking - mortgages | 0.04% | 0.04% | 0.04% | 0.04% | 0.05% |
Retail Banking - unsecured | 4.16% | 4.14% | 3.75% | 4.27% | 4.85% |
Non-Personal - property | 0.35% | 0.27% | 0.23% | 0.37% | 1.43% |
Non-Personal - non-property | 0.31% | 0.27% | 0.24% | 0.33% | 0.78% |
0.34% | 0.31% | 0.28% | 0.35% | 0.65% | |
Reconciliation to Stage 1 and Stage 2 | |||||
ECL (£m) | |||||
ECL on modelled exposures | 1,374 | 1,265 | 1,150 | 1,428 | 2,624 |
ECL on non-modelled exposures | 36 | 36 | 36 | 36 | 36 |
Total Stage 1 and Stage 2 ECL (£m) | 1,410 | 1,301 | 1,186 | 1,464 | 2,660 |
Variance to actual total Stage 1 and | |||||
Stage 2 ECL (£m) | - | (109) | (224) | 54 | 1,250 |
Reconciliation to Stage 1 and Stage 2 | |||||
flow exposures (£m) | |||||
Modelled loans | 406,598 | 406,598 | 406,598 | 406,598 | 406,598 |
Non-modelled loans | 19,264 | 19,264 | 19,264 | 19,264 | 19,264 |
Other asset classes | 160,130 | 160,130 | 160,130 | 160,130 | 160,130 |
(1)
Reflects ECL for all modelled exposure in scope for IFRS 9. The analysis
excludes non-modelled portfolios and exposure relating to bonds and cash.
(2)
All simulations are run on a stand-alone basis and are independent of each
other, with the potential ECL impact reflecting the simulated impact as at 31
December 2025. The simulations change the composition of Stage 1 and
Stage 2 exposure but total exposure was unchanged under each scenario as
the loan population was static.
(3)
Refer to the Economic drivers section for details of economic scenarios.
(4)
Refer to the NatWest Group 2024 Annual Report and Accounts for 2024
comparatives.
•
If the economics were as negative as observed in the extreme downside (i.e. 100% probability weighting), total Stage 1 and Stage 2 ECL was simulated to increase by £1.3 billion (approximately
90%). In this scenario, Stage 2 exposure increased significantly and was the key driver of the simulated ECL rise. The movement in Stage 2 balances in the other simulations was less significant.
•
In the Non-Personal portfolio, there was a significant increase in ECL under the extreme downside scenario on non-property portfolios, driven by a significant deterioration in the stock index.
•
Given the continued economic uncertainty, NatWest Group utilised a framework of quantitative and qualitative measures to support the levels of ECL coverage. This included economic data, credit
performance insights and problem debt trends. This was particularly important for consideration of post model adjustments.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
199
Credit risk continued
ECL post model adjustments (audited)
The table below shows ECL post model adjustments.
Private Banking |
|||||
Retail Banking |
& Wealth |
Commercial |
|||
Mortgages |
Other |
Management |
& Institutional |
Total |
|
2025 |
£m |
£m |
£m |
£m |
£m |
Deferred model calibrations |
- |
- |
1 |
14 |
15 |
Economic uncertainty |
44 |
42 |
11 |
149 |
246 |
Other adjustments |
- |
19 |
- |
16 |
35 |
Total |
44 |
61 |
12 |
179 |
296 |
Of which: |
|||||
- Stage 1 |
33 |
38 |
4 |
73 |
148 |
- Stage 2 |
11 |
20 |
8 |
106 |
145 |
- Stage 3 |
- |
3 |
- |
- |
3 |
2024 |
|||||
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 |
Post model adjustments reduced since 31 December 2024, reflecting the removal of COVID-19 post model adjustments combined with updates to parameters.
•
Retail Banking
– As
at
31 December 2025, the post model adjustment for economic uncertainty decreased to £86 million (2024 – £112 million).
This reduction was driven by a revision to the
cost of
living
post model adjustment, standing at £86 million (2024 – £105 million), and was the sole remaining
economic uncertainty
post model adjustment.
This change was based on a review
of back-
testing. Despite ongoing economic and geopolitical uncertainty, the Retail Banking portfolios
demonstrated
resilience, supported by a robust risk appetite. The
cost of living
post model adjustment
continued to address the risk in segments of the Retail Banking portfolio that were more susceptible to affordability challenges. It focused on key affordability factors, including over-indebted
borrowers, poor credit card affordability status and lower income customers in fuel poverty.
•
A £19 million post model adjustment was recognised as a judgemental measure while additional loss data is accumulated on the recently migrated Sainsbury’s Bank lending portfolio.
•
Commercial & Institutional
– As at 31 December 2025, the post model adjustment for economic uncertainty decreased to £149 million (2024 – £179 million). The reduction was driven by the
retirement of COVID-19 post model adjustments which were associated with government scheme lending (2024 – £29 million). The continued economic uncertainty post model adjustments
reflected downgrades to risk profile that were applied to the sectors that were considered most at risk from the current economic and geopolitical headwinds.
•
The remaining £30 million (2024 – £36 million) of post model adjustments were for deferred model calibrations relating to refinance risk and to mitigate the effect of operational timing delays in the
identification and flagging of a significant increase in credit risk.
Credit risk - Banking activities
Introduction
This section details the credit risk profile of NatWest Group’s banking activities. Refer to Accounting policy 2.3 and Note 14 to the consolidated financial statements for policies and critical judgements
relating to impairment loss determination.
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.
| 31 December 2025 |
31 December 2024 |
|||||
Gross |
ECL |
Net |
Gross |
ECL |
Net |
|
£bn |
£bn |
£bn |
£bn |
£bn |
£bn |
|
Balance sheet total gross amortised cost and FVOCI |
593.9 |
567.2 |
||||
In scope of IFRS 9 ECL framework |
592.4 |
564.4 |
||||
% in scope |
100% |
100% |
||||
Loans to customers - in scope - amortised cost |
422.9 |
3.6 |
419.3 |
404.2 |
3.4 |
400.8 |
Loans to customers - in scope - FVOCI |
0.2 |
- |
0.2 |
- |
- |
- |
Loans to banks - in scope - amortised cost |
6.8 |
- |
6.8 |
6.0 |
- |
6.0 |
Total loans - in scope |
429.9 |
3.6 |
426.3 |
410.2 |
3.4 |
406.8 |
Stage 1 |
386.6 |
0.6 |
386.0 |
363.8 |
0.6 |
363.2 |
Stage 2 |
38.6 |
0.8 |
37.8 |
40.5 |
0.8 |
39.7 |
Stage 3 |
4.7 |
2.2 |
2.5 |
5.9 |
2.0 |
3.9 |
Other financial assets - in scope - amortised cost |
120.7 |
- |
120.7 |
116.4 |
- |
116.4 |
Other financial assets - in scope - FVOCI |
41.8 |
- |
41.8 |
37.8 |
- |
37.8 |
Total other financial assets - in scope |
162.5 |
- |
162.5 |
154.2 |
- |
154.2 |
Stage 1 |
161.5 |
- |
161.5 |
153.4 |
- |
153.4 |
Stage 2 |
1.0 |
- |
1.0 |
0.8 |
- |
0.8 |
Out of scope of IFRS 9 ECL framework |
1.5 |
na |
1.5 |
2.8 |
na |
2.8 |
Loans to customers - out of scope - amortised cost |
(0.6) |
na |
(0.6) |
(0.5) |
na |
(0.5) |
Loans to banks - out of scope - amortised cost |
0.2 |
na |
0.2 |
0.1 |
na |
0.1 |
Other financial assets - out of scope - amortised cost |
1.7 |
na |
1.7 |
3.2 |
na |
3.2 |
Other financial assets - out of scope - FVOCI |
0.2 |
na |
0.2 |
- |
na |
- |
na = not applicable
The assets outside the scope of IFRS 9 ECL framework were as follows:
•
Settlement balances, items in the course of collection, cash balances and other non-credit risk assets of £1.8 billion (2024 – £3.3 billion). These were assessed as having no ECL unless there was
evidence that they were defaulted.
•
Equity shares of £0.1 billion (2024 – £0.2 billion) as not within the IFRS 9 ECL framework by definition.
•
Fair value adjustments on loans hedged by interest rate swaps, where the underlying loan was within the IFRS 9 ECL scope of £(0.3) billion (2024 – £(0.5) billion).
Contingent liabilities and commitments
Total
contingent liabilities (including financial guarantees) and commitments within IFRS 9 ECL scope of £147.2 billion (2024 – £140.0 billion) comprised Stage 1 £135.8 billion (2024 – £129.8 billion);
Stage 2 £10.8 billion (2024 – £9.4 billion); and Stage 3 £0.6 billion (2024 – £0.8 billion). The ECL relating to off-balance sheet exposures was £0.1 billion (2024 – £0.1 billion). The total ECL in the
remainder of the Credit risk section of £3.6 billion (2024 – £3.4 billion) included ECL for both on and off-balance sheet exposures.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
200
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
201
Credit risk – Banking activities continued
Segment analysis – portfolio summary (audited)
The table below shows gross loans and ECL, by segment and stage, within the scope of the IFRS 9 ECL framework.
| Of which: | ||||||||||||
| Personal | Non-Personal | |||||||||||
Private | Private | Private | ||||||||||
Banking & | Central | Banking & | Central | Banking & | Central | |||||||
Retail | Wealth | Commercial & | items | Retail | Wealth | Commercial & | items | Wealth | Commercial & | items | ||
Banking | Management | Institutional | & other | Total | Banking | Management | Institutional | & other | Management | Institutional | & other | |
2025 | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
Loans - amortised cost and FVOCI (1,2) | ||||||||||||
Stage 1 | 196,325 | 17,552 | 138,769 | 34,005 | 386,651 | 196,325 | 14,140 | 2,355 | 84 | 3,412 | 136,414 | 33,921 |
Stage 2 | 19,113 | 1,115 | 18,289 | 65 | 38,582 | 19,113 | 337 | 32 | 18 | 778 | 18,257 | 47 |
Stage 3 | 2,231 | 348 | 2,102 | 2 | 4,683 | 2,231 | 260 | 44 | 2 | 88 | 2,058 | - |
Of which: individual | - | 276 | 1,180 | - | 1,456 | - | 188 | 5 | - | 88 | 1,175 | - |
Of which: collective | 2,231 | 72 | 922 | 2 | 3,227 | 2,231 | 72 | 39 | 2 | - | 883 | - |
Total | 217,669 | 19,015 | 159,160 | 34,072 | 429,916 | 217,669 | 14,737 | 2,431 | 104 | 4,278 | 156,729 | 33,968 |
ECL provisions (3) | ||||||||||||
Stage 1 | 335 | 13 | 256 | 10 | 614 | 335 | 3 | 1 | 3 | 10 | 255 | 7 |
Stage 2 | 424 | 13 | 357 | 2 | 796 | 424 | 1 | - | 1 | 12 | 357 | 1 |
Stage 3 | 1,075 | 50 | 1,048 | 2 | 2,175 | 1,075 | 24 | 11 | 2 | 26 | 1,037 | - |
Of which: individual | - | 50 | 548 | - | 598 | - | 24 | 5 | - | 26 | 543 | - |
Of which: collective | 1,075 | - | 500 | 2 | 1,577 | 1,075 | - | 6 | 2 | - | 494 | - |
Total | 1,834 | 76 | 1,661 | 14 | 3,585 | 1,834 | 28 | 12 | 6 | 48 | 1,649 | 8 |
ECL provisions coverage (4) | ||||||||||||
Stage 1 (%) | 0.17 | 0.07 | 0.18 | 0.03 | 0.16 | 0.17 | 0.02 | 0.04 | 3.57 | 0.29 | 0.19 | 0.02 |
Stage 2 (%) | 2.22 | 1.17 | 1.95 | 3.08 | 2.06 | 2.22 | 0.30 | - | 5.56 | 1.54 | 1.96 | 2.13 |
Stage 3 (%) | 48.18 | 14.37 | 49.86 | 100.00 | 46.44 | 48.18 | 9.23 | 25.00 | 100.00 | 29.55 | 50.39 | - |
Total | 0.84 | 0.40 | 1.04 | 0.04 | 0.83 | 0.84 | 0.19 | 0.49 | 5.77 | 1.12 | 1.05 | 0.02 |
Impairment (releases)/losses | ||||||||||||
ECL (release)/charge (5) | 437 | 10 | 225 | (1) | 671 | 437 | 5 | 1 | 7 | 5 | 224 | (8) |
Stage 1 | (67) | (9) | (124) | (4) | (204) | (67) | (1) | (1) | 4 | (8) | (123) | (8) |
Stage 2 | 295 | 9 | 116 | 1 | 421 | 295 | 2 | 1 | 1 | 7 | 115 | - |
Stage 3 | 209 | 10 | 233 | 2 | 454 | 209 | 4 | 1 | 2 | 6 | 232 | - |
Of which: individual | - | 10 | 178 | - | 188 | - | 4 | - | - | 6 | 178 | - |
Of which: collective | 209 | - | 55 | 2 | 266 | 209 | - | 1 | 2 | - | 54 | - |
Total | 437 | 10 | 225 | (1) | 671 | 437 | 5 | 1 | 7 | 5 | 224 | (8) |
Amounts written-off | 373 | 1 | 205 | - | 579 | 373 | 1 | 6 | - | - | 199 | - |
Of which: individual | - | 1 | 136 | - | 137 | - | 1 | - | - | - | 136 | - |
Of which: collective | 373 | - | 69 | - | 442 | 373 | - | 6 | - | - | 63 | - |
For the notes to this table refer to the following page.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
202
Credit risk – Banking activities continued
Segment analysis – portfolio summary (audited)
| Of which: | ||||||||||||
| Personal | Non-Personal | |||||||||||
Private | Private | Private | ||||||||||
Banking & | Central | Banking & | Central | Banking & | Central | |||||||
Retail | Wealth | Commercial & | items | Retail | Wealth | Commercial & | items | Wealth | Commercial & | items | ||
Banking | Management | Institutional | & other | Total | Banking | Management | Institutional | & other | Management | Institutional | & other | |
2024 | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
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 |
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 | - |
(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 £84.1 billion (2024 – £91.8 billion) and debt securities of £78.4 billion
(2024 – £62.4 billion).
(2)
Includes loans to customers and banks.
(3)
Includes £6 million (2024 – £4 million) related to assets classified as FVOCI and £0.1 billion (2024 – £0.1 billion) related to off-balance sheet exposures.
(4)
ECL provisions coverage is calculated as ECL provisions, including ECL for other non-loan assets and unutilised exposure, divided by loans – amortised cost and FVOCI. Some segments with a high proportion of debt securities or unutilised exposure may result in a not meaningful (nm) coverage
ratio.
(5)
Includes a £6 million release (2024 - £12 million release) related to other financial assets, of which £1 million charge (2024 - £4 million release) related to assets classified as FVOCI and includes a £3 million charge (2024 - £5 million release) related to contingent liabilities.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
203
Credit risk – Banking activities continued
Segmental loans and impairment metrics (audited)
•
Retail Banking
– Balance sheet growth during the year was mainly due to mortgages.
Within the Unsecured portfolios, alongside organic growth in the credit cards and personal
loans portfolios, the acquisition of the Sainsbury’s Bank portfolios further contributed to the
balance sheet growth. Asset quality was maintained during the year, reflecting ongoing
customer resilience and robust risk appetite. Alongside steady portfolio performance, good
book and total ECL coverage for Retail Banking remained broadly consistent with 31
December 2024. Underlying ECL coverage increased due to growth in unsecured lending,
including the acquisition of the Sainsbury’s Bank portfolio earlier in 2025, but this was offset
by balance sheet management actions, including a mortgage securitisation transaction and
unsecured debt sales. The proportion of Stage 3 loans declined over the year, mainly as a
result of the balance sheet management actions described above, notably the mortgage
securitisation, which reduced Stage 3 loans by £0.8 billion. Furthermore, there was an
enhancement to the mortgage definition of default systems and process, resulting in
approximately £0.4 billion of loans migrating from Stage 3 back to the good book. While
default performance was broadly stable overall, unsecured flows into Stage 3 increased
year-on-year, driven by strategic growth and seasoning of credit card balances since 2022.
•
Commercial & Institutional
– Balance sheet growth in the year was primarily in corporates
and institutions and was reflected in Stage 1. Despite the increase in performing book
exposures, performing book provisions decreased, driven by reductions in post model
adjustments for economic uncertainty. Total provision balance growth primarily reflected
the impact of a small number of individual charges in Stage 3. Despite the increase in
Stage 3 ECL, loan balances flowing into Stage 3 were lower than the prior year. The
combination of increased Stage 3 charges combined with lower inflows into Stage 3 drove
the increase in Stage 3 ECL provisions coverage. Total book coverage remained broadly
similar year-on-year, as the increase in Stage 3 ECL provisions coverage was more than
offset by reductions in performing book coverage. The full year 2025 total charge was
higher compared to 2024, primarily as the good book release in 2025 was notably lower
than the release in 2024. The lower release in 2025 reflected lower reductions in post
model adjustments compared to 2024.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
204
Credit risk – Banking activities continued
Sector analysis – portfolio summary (audited)
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 region.
| Personal | Non-Personal | ||||||||
Mortgages (1) | Credit cards | Other personal | Total | Corporate and other | Financial institutions | Sovereign | Total | Total | |
2025 | £m | £m | £m | £m | £m | £m | £m | £m | £m |
Loans by geography | 215,229 | 8,311 | 11,401 | 234,941 | 118,229 | 74,456 | 2,290 | 194,975 | 429,916 |
- UK | 215,220 | 8,311 | 11,401 | 234,932 | 101,441 | 45,700 | 1,477 | 148,618 | 383,550 |
- Other Europe | 9 | - | - | 9 | 7,010 | 14,059 | 351 | 21,420 | 21,429 |
- RoW | - | - | - | - | 9,778 | 14,697 | 462 | 24,937 | 24,937 |
Loans by stage | 215,229 | 8,311 | 11,401 | 234,941 | 118,229 | 74,456 | 2,290 | 194,975 | 429,916 |
- Stage 1 | 197,939 | 5,988 | 8,977 | 212,904 | 97,779 | 73,959 | 2,009 | 173,747 | 386,651 |
- Stage 2 | 15,951 | 2,081 | 1,468 | 19,500 | 18,460 | 356 | 266 | 19,082 | 38,582 |
- Stage 3 | 1,339 | 242 | 956 | 2,537 | 1,990 | 141 | 15 | 2,146 | 4,683 |
- Of which: individual | 167 | 1 | 25 | 193 | 1,112 | 136 | 15 | 1,263 | 1,456 |
- Of which: collective | 1,172 | 241 | 931 | 2,344 | 878 | 5 | - | 883 | 3,227 |
Loans - past due analysis | 215,229 | 8,311 | 11,401 | 234,941 | 118,229 | 74,456 | 2,290 | 194,975 | 429,916 |
- Not past due | 212,492 | 7,993 | 10,388 | 230,873 | 114,895 | 74,257 | 2,275 | 191,427 | 422,300 |
- Past due 1-30 days | 1,510 | 71 | 92 | 1,673 | 2,261 | 137 | - | 2,398 | 4,071 |
- Past due 31-90 days | 469 | 86 | 130 | 685 | 274 | 8 | - | 282 | 967 |
- Past due 91-180 days | 275 | 62 | 104 | 441 | 110 | 6 | - | 116 | 557 |
- Past due >180 days | 483 | 99 | 687 | 1,269 | 689 | 48 | 15 | 752 | 2,021 |
Loans - Stage 2 | 15,951 | 2,081 | 1,468 | 19,500 | 18,460 | 356 | 266 | 19,082 | 38,582 |
- Not past due | 14,521 | 1,979 | 1,335 | 17,835 | 17,605 | 343 | 266 | 18,214 | 36,049 |
- Past due 1-30 days | 1,138 | 41 | 48 | 1,227 | 610 | 5 | - | 615 | 1,842 |
- Past due 31-90 days | 292 | 61 | 85 | 438 | 245 | 8 | - | 253 | 691 |
Weighted average life (2) | |||||||||
- ECL measurement (years) | 9 | 4 | 6 | 5 | 7 | 4 | nm | 6 | 6 |
Weighted average 12 months PDs (2) | |||||||||
- IFRS 9 (%) | 0.46 | 3.68 | 5.05 | 0.77 | 1.18 | 0.14 | 5.40 | 0.83 | 0.80 |
- Basel (%) | 0.62 | 3.91 | 3.52 | 0.85 | 1.04 | 0.15 | 5.40 | 0.75 | 0.80 |
ECL provisions by geography | 272 | 520 | 1,088 | 1,880 | 1,532 | 155 | 18 | 1,705 | 3,585 |
- UK | 270 | 520 | 1,088 | 1,878 | 1,367 | 103 | 5 | 1,475 | 3,353 |
- Other Europe | 2 | - | - | 2 | 104 | 10 | 1 | 115 | 117 |
- RoW | - | - | - | - | 61 | 42 | 12 | 115 | 115 |
For the notes to this table refer to page 207.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
205
Credit risk – Banking activities continued
Sector analysis – portfolio summary (audited)
| Personal | Non-Personal | ||||||||
Mortgages (1) | Credit cards | Other personal | Total | Corporate and other (2) | Financial institutions | Sovereign | Total | Total | |
2025 | £m | £m | £m | £m | £m | £m | £m | £m | £m |
ECL provisions by stage | 272 | 520 | 1,088 | 1,880 | 1,532 | 155 | 18 | 1,705 | 3,585 |
- Stage 1 | 45 | 125 | 172 | 342 | 228 | 37 | 7 | 272 | 614 |
- Stage 2 | 36 | 205 | 185 | 426 | 360 | 5 | 5 | 370 | 796 |
- Stage 3 | 191 | 190 | 731 | 1,112 | 944 | 113 | 6 | 1,063 | 2,175 |
- Of which: individual | 16 | 1 | 12 | 29 | 453 | 110 | 6 | 569 | 598 |
- Of which: collective | 175 | 189 | 719 | 1,083 | 491 | 3 | - | 494 | 1,577 |
ECL provisions coverage (%) | 0.13 | 6.26 | 9.54 | 0.80 | 1.30 | 0.21 | 0.79 | 0.87 | 0.83 |
- Stage 1 (%) | 0.02 | 2.09 | 1.92 | 0.16 | 0.23 | 0.05 | 0.35 | 0.16 | 0.16 |
- Stage 2 (%) | 0.23 | 9.85 | 12.60 | 2.18 | 1.95 | 1.40 | 1.88 | 1.94 | 2.06 |
- Stage 3 (%) | 14.26 | 78.51 | 76.46 | 43.83 | 47.44 | 80.14 | 40.00 | 49.53 | 46.44 |
ECL (release)/charge | (142) | 263 | 329 | 450 | 168 | 56 | (3) | 221 | 671 |
- UK | (144) | 263 | 329 | 448 | 148 | 60 | (6) | 202 | 650 |
- Other Europe | 2 | - | - | 2 | 18 | 1 | - | 19 | 21 |
- RoW | - | - | - | - | 2 | (5) | 3 | - | - |
Amounts written-off | 92 | 118 | 170 | 380 | 199 | - | - | 199 | 579 |
Loans by residual maturity | 215,229 | 8,311 | 11,401 | 234,941 | 118,229 | 74,456 | 2,290 | 194,975 | 429,916 |
- ≤1 year | 2,764 | 1,856 | 2,736 | 7,356 | 33,768 | 52,130 | 1,765 | 87,663 | 95,019 |
- >1 and ≤5 year | 8,332 | 6,452 | 6,898 | 21,682 | 51,723 | 18,262 | 77 | 70,062 | 91,744 |
- > 5 and ≤ 15 year | 42,759 | 3 | 1,772 | 44,534 | 24,136 | 4,016 | 290 | 28,442 | 72,976 |
- > 15 year | 161,374 | - | (5) | 161,369 | 8,602 | 48 | 158 | 8,808 | 170,177 |
Other financial assets by asset quality (3) | - | - | - | - | 4,513 | 28,490 | 129,532 | 162,535 | 162,535 |
- AQ1-AQ4 | - | - | - | - | 4,506 | 28,301 | 129,532 | 162,339 | 162,339 |
- AQ5-AQ8 | - | - | - | - | 7 | 189 | - | 196 | 196 |
Off-balance sheet | 14,799 | 22,696 | 7,550 | 45,045 | 78,604 | 23,031 | 501 | 102,136 | 147,181 |
- Loan commitments | 14,799 | 22,696 | 7,514 | 45,009 | 75,723 | 21,555 | 501 | 97,779 | 142,788 |
- Contingent liabilities | - | - | 36 | 36 | 2,881 | 1,476 | - | 4,357 | 4,393 |
Off-balance sheet by asset quality (3) | 14,799 | 22,696 | 7,550 | 45,045 | 78,604 | 23,031 | 501 | 102,136 | 147,181 |
- AQ1-AQ4 | 13,926 | 415 | 6,140 | 20,481 | 50,709 | 21,030 | 114 | 71,853 | 92,334 |
- AQ5-AQ8 | 859 | 22,205 | 1,283 | 24,347 | 27,525 | 1,924 | 12 | 29,461 | 53,808 |
- AQ9 | 4 | 11 | 12 | 27 | 61 | - | 375 | 436 | 463 |
- AQ10 | 10 | 65 | 115 | 190 | 309 | 77 | - | 386 | 576 |
For the notes to this table refer to page 207.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
206
Credit risk – Banking activities continued
Sector analysis – portfolio summary (audited)
| Personal | Non-Personal | ||||||||
Mortgages (1) | Credit cards | Other personal | Total | Corporate and other | Financial institutions | Sovereign | Total | Total | |
2024 | £m | £m | £m | £m | £m | £m | £m | £m | £m |
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 | 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 (2) | |||||||||
- ECL measurement (years) | 8 | 4 | 6 | 6 | 6 | 2 | nm | 6 | 6 |
Weighted average 12 months PDs (2) | |||||||||
- 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 |
For the notes to this table refer to the following page.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
207
Credit risk – Banking activities continued
Sector analysis – portfolio summary (audited)
| Personal | Non-Personal | ||||||||
Mortgages (1) | Credit cards | Other personal | Total | Corporate and other (2) | Financial institutions | Sovereign | Total | Total | |
2024 | £m | £m | £m | £m | £m | £m | £m | £m | £m |
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 and ≤5 year | 11,651 | 3,027 | 5,551 | 20,229 | 48,075 | 10,967 | 488 | 59,530 | 79,759 |
- > 5 and ≤ 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 |
- Contingent liabilities | - | - | 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 |
(1)
Includes a portion of Private Banking & Wealth Management lending secured against residential real estate, in line with ECL calculation methodology. Private Banking & Wealth Management and RBS International mortgages are reported in the UK, reflecting the country of lending origination and
includes crown dependencies.
(2)
Not within the scope of the Independent auditors’ report.
(3)
AQ bandings are based on Basel PDs and mapping is as follows:
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% | D |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
208
Credit risk – Banking activities continued
Sector analysis – portfolio summary (audited)
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.
| 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 | |
2025 | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
Personal | 212,904 | 19,500 | 2,537 | 234,941 | 45,009 | 36 | 342 | 426 | 1,112 | 1,880 |
Mortgages (1) | 197,939 | 15,951 | 1,339 | 215,229 | 14,799 | - | 45 | 36 | 191 | 272 |
Credit cards | 5,988 | 2,081 | 242 | 8,311 | 22,696 | - | 125 | 205 | 190 | 520 |
Other personal | 8,977 | 1,468 | 956 | 11,401 | 7,514 | 36 | 172 | 185 | 731 | 1,088 |
Non-Personal | 173,747 | 19,082 | 2,146 | 194,975 | 97,779 | 4,357 | 272 | 370 | 1,063 | 1,705 |
Financial institutions (2) | 73,959 | 356 | 141 | 74,456 | 21,555 | 1,476 | 37 | 5 | 113 | 155 |
Sovereign | 2,009 | 266 | 15 | 2,290 | 501 | - | 7 | 5 | 6 | 18 |
Corporate and other | 97,779 | 18,460 | 1,990 | 118,229 | 75,723 | 2,881 | 228 | 360 | 944 | 1,532 |
Of which: | ||||||||||
Commercial real estate | 17,838 | 1,272 | 294 | 19,404 | 6,646 | 162 | 55 | 22 | 120 | 197 |
Mobility and logistics | 13,021 | 4,312 | 81 | 17,414 | 10,194 | 520 | 24 | 45 | 40 | 109 |
Consumer industries | 12,875 | 2,912 | 389 | 16,176 | 11,149 | 496 | 33 | 68 | 199 | 300 |
Total | 386,651 | 38,582 | 4,683 | 429,916 | 142,788 | 4,393 | 614 | 796 | 2,175 | 3,585 |
2024 | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
Personal | 198,318 | 24,636 | 3,571 | 226,525 | 41,847 | 41 | 284 | 429 | 1,099 | 1,812 |
Mortgages (1) | 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 (2) | 69,021 | 1,241 | 59 | 70,321 | 20,341 | 1,584 | 38 | 12 | 40 | 90 |
Sovereign | 1,491 | 133 | 21 | 1,645 | 239 | - | 12 | 2 | 5 | 19 |
Corporate and other | 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 |
Mobility and logistics | 13,363 | 2,384 | 148 | 15,895 | 9,367 | 595 | 26 | 35 | 67 | 128 |
Consumer industries | 13,312 | 3,015 | 444 | 16,771 | 10,706 | 595 | 45 | 90 | 188 | 323 |
Total | 363,821 | 40,474 | 5,930 | 410,225 | 135,367 | 4,649 | 598 | 787 | 2,040 | 3,425 |
(1)
As at 31 December 2025, £144.2 billion, 67%, of the total residential mortgages portfolio had Energy Performance Certificate (EPC) data available (2024 – £139.1 billion, 66.3%). Of which, 48.8% were rated as EPC A to C (2024 – 46.3%).
(2)
Includes transactions, such as securitisations, where the underlying risk may be in other sectors.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
209
Credit risk – Banking activities continued
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.
Corporate and other | Financial institutions | Sovereign | Total | |
2025 | £m | £m | £m | £m |
Forbearance (flow) | 3,495 | 43 | 12 | 3,550 |
Forbearance (stock) | 4,167 | 122 | 12 | 4,301 |
Heightened Monitoring and Risk of Credit Loss | 6,115 | 103 | 2 | 6,220 |
2024 | ||||
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 |
Sector analysis – portfolio summary (audited)
•
Loans by geography and sector
– In line with NatWest Group’s strategic focus, exposures continued to be mainly in the UK.
•
Loans by stage
– Stage 3 balances reduced overall, with a small reduction in Non-Personal due to write-offs and lower inflows, and a larger reduction in Personal mortgages following the
securitisation transaction that removed £0.8 billion of Stage 3 assets, alongside a default definition systems and process enhancement that moved loans back to the good book. Stage 1 balances
increased across the Personal portfolios, driven by growth in mortgages and unsecured lending, including the Sainsbury’s Bank portfolio acquisition. Stage 2 balances were broadly unchanged from
the end of 2024, with reductions in Personal mortgages, linked to PD model enhancements and stable portfolio trends offset by increases in Non-Personal, largely driven by post model adjustment
downgrades to sectors deemed most at risk of economic uncertainty.
•
Loans – Past due analysis
– Within the Personal portfolio, arrears balances overall decreased during 2025 mainly driven by the balance sheet management actions within the mortgage portfolio
described previously. For the unsecured portfolios, arrears balances increased due to book growth and portfolio maturation. In Non-Personal, arrears balances reduced in line with Stage 3 balance
reduction. The vast majority of Stage 2 balances remained up to date, as Stage 2 is normally captured through other forward-looking Stage 2 triggers.
•
Weighted average 12 months PDs
– Both IFRS 9 and Basel PDs remained broadly stable during the year overall, noting the reduction in Personal mortgages due to PD model enhancements and
an increase in unsecured PDs driven by strategic growth and seasoning of credit card balances since 2022. Non-Personal PDs were broadly stable in the year. The higher PD in sovereigns
reflected a single entity where lending is fully guaranteed.
•
ECL provisions by stage and ECL provisions coverage
– Overall provisions increased from 31 December 2024, following an increase in good book ECL in the Personal portfolios, driven by the
portfolio acquisition of Sainsbury’s Bank and organic growth in unsecured lending, and a small number of significant individual Non-Personal Stage 3 charges. Stage 3 ECL growth was partly offset
by the transfer of mortgage assets to a securitisation special purpose vehicle. Provisions coverage remained consistent with 31 December 2024.
•
ECL charge
– The 2025 impairment charge, primarily reflected a small number of
significant
individual charges in the Non-Personal portfolio alongside the initial ECL cost from the portfolio
acquisition from Sainsbury’s Bank within Personal. This was partially offset by post model adjustment releases in the good book and one-off releases, notably on the definition of default systems
and process enhancement on Personal mortgages and a mortgage securitisation. The increased charge in Non-Personal portfolio primarily reflected lower levels of reduction in performing book
post model adjustments compared to 2024.
•
Loans by residual maturity
– 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 portfolios the maturity profile will vary by product and sectors, but is typically less than
five years for most exposures.
•
Other financial assets by asset quality
–
These assets were cash and debt securities, and generally of high credit quality as reflected in the AQ banding.
•
Off-balance sheet exposures by asset quality
– The AQ band split of off-balance sheet exposures broadly mirrored the drawn loans portfolio for non-defaulted exposures. In the Non-Personal
portfolio, off-balance sheet exposures increased year-on-year, reflecting an increase in unutilised exposure in corporates and financial institutions. The increase was primarily in the AQ1 to AQ4
band, indicating high credit quality.
•
Non-Personal problem debt
– Exposures in the Wholesale Problem Debt Management framework marginally increased during 2025 due to an inflow of corporate customers onto the framework
across a range of sectors. There was no change in the reasons for customers moving onto the framework from 2024, with trading issues and cash/liquidity remaining the key
main drivers.
•
Non-Personal forbearance
–
Exposures classified as forborne reduced marginally across multiple sectors, leading to lower stock values in corporates. A portion of forbearance flows related to cases
in Customer Lending Support subject to repeated forbearance.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
210
Credit risk – Banking activities continued
Credit risk enhancement and mitigation (audited)
The table below shows exposures of modelled portfolios within the scope of the ECL framework and related credit risk enhancement and mitigation (CREM).
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 | |
2025 | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn |
Financial assets | |||||||||||
Cash and balances at central banks | 84.1 | - | 84.1 | - | - | - | - | - | - | 84.1 | - |
Loans - amortised cost (3) | 429.9 | 3.5 | 426.4 | 2.5 | 47.9 | 261.0 | 26.0 | 334.9 | 2.1 | 91.5 | 0.4 |
Personal (4) | 234.9 | 1.9 | 233.0 | 1.4 | 1.4 | 214.5 | - | 215.9 | 1.2 | 17.1 | 0.2 |
Non-Personal (5) | 195.0 | 1.6 | 193.4 | 1.1 | 46.5 | 46.5 | 26.0 | 119.0 | 0.9 | 74.4 | 0.2 |
Debt securities | 78.5 | - | 78.5 | - | 0.3 | - | - | 0.3 | - | 78.2 | - |
Total financial assets | 592.5 | 3.5 | 589.0 | 2.5 | 48.2 | 261.0 | 26.0 | 335.2 | 2.1 | 253.8 | 0.4 |
Contingent liabilities and commitments | |||||||||||
Personal (6) | 45.0 | - | 45.0 | 0.2 | 1.1 | 3.2 | - | 4.3 | 0.1 | 40.7 | 0.1 |
Non-Personal | 102.2 | 0.1 | 102.1 | 0.4 | 4.1 | 7.9 | 5.3 | 17.3 | 0.1 | 84.8 | 0.3 |
Total off-balance sheet | 147.2 | 0.1 | 147.1 | 0.6 | 5.2 | 11.1 | 5.3 | 21.6 | 0.2 | 125.5 | 0.4 |
Total exposure | 739.7 | 3.6 | 736.1 | 3.1 | 53.4 | 272.1 | 31.3 | 356.8 | 2.3 | 379.3 | 0.8 |
2024 | |||||||||||
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) | 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 |
(1)
Includes cash and securities collateral.
(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 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 securitisation is not included in the table above.
(3)
NatWest Group holds collateral in respect of individual loans – 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; 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.
(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 default through ongoing engagement with
customers.
(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 instances allocate a probability weighting to a
collateral value in excess of the written down value.
(6)
The Personal gross exposure value includes £11.4 billion (2024 – £10.1 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 would be covered by a security over the
borrower’s property.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
211
Credit risk – Banking activities continued
Personal portfolio (audited)
Disclosures in the Personal portfolio section include drawn exposure (gross of provisions).
| 2025 | 2024 | |||||||||
Private Banking | Private Banking | |||||||||
Retail | & Wealth | Commercial & | Central items | Retail | & Wealth | Commercial & | Central items | |||
Banking | Management | Institutional | & other | Total | Banking | Management | Institutional | & other | Total | |
Personal lending | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
Mortgages | 199,972 | 13,038 | 2,210 | 9 | 215,229 | 194,865 | 12,826 | 2,161 | - | 209,852 |
Of which: | ||||||||||
Owner occupied | 180,323 | 11,644 | 1,508 | 8 | 193,483 | 176,137 | 11,348 | 1,457 | - | 188,942 |
Buy-to-let | 19,649 | 1,394 | 702 | 1 | 21,746 | 18,728 | 1,478 | 704 | - | 20,910 |
Interest only | 21,812 | 11,533 | 436 | - | 33,781 | 22,186 | 11,276 | 437 | - | 33,899 |
Mixed (1) | 9,977 | 76 | 4 | - | 10,057 | 10,384 | 40 | 8 | - | 10,432 |
ECL provisions (2) | 248 | 17 | 5 | 2 | 272 | 440 | 12 | 10 | - | 462 |
Other personal lending (3) | 17,696 | 1,699 | 221 | 95 | 19,711 | 15,045 | 1,301 | 242 | - | 16,588 |
ECL provisions (2) | 1,586 | 11 | 7 | 4 | 1,608 | 1,330 | 12 | 3 | - | 1,345 |
Total personal lending | 217,668 | 14,737 | 2,431 | 104 | 234,940 | 209,910 | 14,127 | 2,403 | - | 226,440 |
Mortgage LTV ratios | ||||||||||
- Owner occupied | 57% | 61% | 57% | 42% | 57% | 56% | 59% | 56% | - | 56% |
- Stage 1 | 57% | 59% | 57% | - | 57% | 56% | 59% | 55% | - | 56% |
- Stage 2 | 52% | 57% | 59% | 32% | 52% | 55% | 61% | 56% | - | 55% |
- Stage 3 | 47% | 69% | 67% | 56% | 51% | 50% | 64% | 74% | - | 51% |
- Buy-to-let | 54% | 62% | 55% | 26% | 55% | 53% | 60% | 52% | - | 53% |
- Stage 1 | 54% | 60% | 54% | - | 55% | 54% | 60% | 51% | - | 54% |
- Stage 2 | 52% | 56% | 62% | 26% | 52% | 52% | 57% | 55% | - | 52% |
- Stage 3 | 51% | 56% | 66% | 24% | 53% | 52% | 56% | 59% | - | 53% |
Gross new mortgage lending | 34,458 | 1,492 | 313 | - | 36,263 | 26,440 | 1,395 | 257 | - | 28,092 |
Of which: | ||||||||||
Owner occupied | 32,059 | 1,372 | 229 | - | 33,660 | 25,300 | 1,266 | 183 | - | 26,749 |
- LTV > 90% | 1,677 | - | - | - | 1,677 | 888 | - | - | - | 888 |
Weighted average LTV (4) | 71% | 66% | 61% | - | 70% | 70% | 63% | 71% | - | 70% |
Buy-to-let | 2,399 | 120 | 84 | - | 2,603 | 1,140 | 129 | 74 | - | 1,343 |
Weighted average LTV (4) | 61% | 65% | 61% | - | 61% | 61% | 62% | 56% | - | 61% |
Interest only | 2,443 | 1,357 | 54 | - | 3,854 | 1,575 | 1,238 | 42 | - | 2,855 |
Mixed (1) | 1,049 | - | 1 | - | 1,050 | 1,150 | - | 1 | - | 1,151 |
Mortgage forbearance | ||||||||||
Forbearance flow (5) | 328 | 14 | 1 | - | 343 | 473 | 8 | 6 | - | 487 |
Forbearance stock | 1,203 | 10 | 9 | 1 | 1,223 | 1,680 | 20 | 15 | - | 1,715 |
Current | 918 | 2 | 3 | - | 923 | 1,214 | 9 | 10 | - | 1,233 |
1-3 months in arrears | 110 | 6 | - | - | 116 | 146 | 9 | - | - | 155 |
>3 months in arrears | 175 | 2 | 6 | 1 | 184 | 320 | 2 | 5 | - | 327 |
(1) Includes accounts which have an interest only sub-account and a capital and interest sub-account to provide a more comprehensive view of interest only exposures.
(2) Retail Banking excludes a non-material amount of lending and provisions held on relatively small legacy portfolios.
(3) Comprises unsecured lending except for Private Banking & Wealth Management, which includes both secured and unsecured lending. It excludes loans that are commercial in nature.
(4) New mortgage lending LTV reflects the LTV at the time of lending.
(5) Forbearance flows only include an account once per year, although some accounts may be subject to multiple forbearance deals. Forbearance deals post default are excluded from these flows
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
212
Credit risk – Banking activities continued
Personal portfolio (audited)
Mortgage LTV distribution by stage
The table below shows gross mortgage lending and related ECL by LTV band for the Retail Banking portfolio.
| Mortgages | ECL provisions | ECL provisions coverage | ||||||||||
Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
2025 | £m | £m | £m | £m | £m | £m | £m | £m | % | % | % | % |
≤50% | 66,203 | 7,099 | 597 | 73,899 | 10 | 10 | 94.0 | 114.0 | - | 0.1 | 15.7 | 0.2 |
>50% and ≤70% | 63,802 | 5,948 | 338 | 70,088 | 16 | 15 | 50.0 | 81.0 | - | 0.3 | 14.8 | 0.1 |
>70% and ≤80% | 27,658 | 1,745 | 73 | 29,476 | 8 | 6 | 12.0 | 26.0 | - | 0.3 | 16.4 | 0.1 |
>80% and ≤90% | 20,777 | 744 | 39 | 21,560 | 7 | 4 | 6.0 | 17.0 | - | 0.5 | 15.4 | 0.1 |
>90% and | ||||||||||||
| ≤100% | 4,438 | 76 | 7 | 4,521 | 1 | 1 | 2.0 | 4.0 | - | 1.3 | 28.6 | 0.1 |
>100% | 9 | 1 | 7 | 17 | - | - | 3 | 3 | - | - | 42.9 | 17.6 |
Total with LTVs | 182,887 | 15,613 | 1,061 | 199,561 | 42 | 36 | 167 | 245 | - | 0.2 | 15.7 | 0.1 |
Other | 406 | 1 | 4 | 411 | 2 | - | 1 | 3 | 0.5 | - | 25.0 | 0.7 |
Total | 183,293 | 15,614 | 1,065 | 199,972 | 44 | 36 | 168 | 248 | - | 0.2 | 15.8 | 0.1 |
2024 | ||||||||||||
≤50% | 64,040 | 8,344 | 1,159 | 73,543 | 21 | 16 | 153 | 190 | - | 0.2 | 13.2 | 0.3 |
>50% and ≤70% | 61,739 | 7,741 | 855 | 70,335 | 29 | 23 | 104 | 156 | - | 0.3 | 12.2 | 0.2 |
>70% and ≤80% | 25,022 | 2,361 | 173 | 27,556 | 13 | 9 | 22 | 44 | 0.1 | 0.4 | 12.7 | 0.2 |
>80% and ≤90% | 16,718 | 1,769 | 85 | 18,572 | 9 | 9 | 13 | 31 | 0.1 | 0.5 | 15.3 | 0.2 |
>90% and | ||||||||||||
≤100% | 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 |
•
Mortgage balances increased during 2025 with continuing organic growth. Unsecured lending grew overall, driven by continuing growth in prime quality whole of market lending and balance
transfer credit card segments, as well as the acquisition of Sainsbury’s Bank credit card and personal loan portfolios.
•
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 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 ensure customers are assessed fairly
as economic conditions change.
•
LTV distribution of portfolio was broadly consistent with the prior year with an increase in balances in the 70-90% LTV bands consistent with increased new business during the year, including
support for first time buyers.
•
The mortgage forbearance reported in 2025 was net of the mortgage securitisation previously mentioned, which reduced the stock by £0.4 billion at the year-end.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
213
Credit risk – Banking activities continued
Personal portfolio (audited)
Mortgage LTV distribution by region
The table below shows gross mortgage lending by LTV band for Retail Banking, by geographical region.
| Flood risk (1,2) | ||||||||||||
Weighted | % of regional | % of regional | Lending at high/ | |||||||||
≤50% | 50%≤80% | 80%≤100% | >100% | Total | average LTV | Other | Total | Total | lending at high | lending at very | very high risk (3) | |
2025 | £m | £m | £m | £m | £m | % | £m | £m | % | risk (>60) | high risk (>80) | % |
South East | 13,656 | 19,277 | 5,022 | 1 | 37,956 | 57 | 3 | 37,959 | 19 | 3.7 | 1.2 | 4.9 |
Greater London | 13,505 | 18,501 | 4,069 | 3 | 36,078 | 56 | 4 | 36,082 | 18 | 4.8 | 0.9 | 5.7 |
East of England | 8,128 | 12,167 | 3,379 | - | 23,674 | 57 | 2 | 23,676 | 12 | 2.9 | 1.4 | 4.3 |
North West | 7,479 | 8,443 | 2,158 | 2 | 18,082 | 55 | 1 | 18,083 | 9 | 2.9 | 2.0 | 4.9 |
South West | 6,578 | 8,679 | 2,454 | - | 17,711 | 56 | 1 | 17,712 | 9 | 2.7 | 1.0 | 3.7 |
West Midlands | 5,385 | 7,228 | 2,013 | 1 | 14,627 | 57 | 2 | 14,629 | 7 | 1.8 | 0.6 | 2.4 |
Scotland | 4,868 | 5,821 | 1,498 | 1 | 12,188 | 55 | 2 | 12,190 | 6 | 2.5 | 1.3 | 3.8 |
Rest of the UK | 14,300 | 19,448 | 5,488 | 9 | 39,245 | 57 | 396 | 39,641 | 20 | 2.8 | 1.9 | 4.7 |
Total | 73,899 | 99,564 | 26,081 | 17 | 199,561 | 56 | 411 | 199,972 | 100 | 3.3 | 1.3 | 4.6 |
2024 | ||||||||||||
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 |
(1)
Not within the scope of the Independent auditors’ report.
(2)
As at 31 December 2025, £12.9 billion, 99%, of the Private Banking & Wealth Management mortgage portfolio had flood risk data available (2024 – £12.6 billion, 98.0%). Of which, 6.2% were rated as high flood risk and 1.0% as very high flood risk
(2024 – 5.4% high flood risk and 1.0% very high
flood risk). 64% of the exposure is in the Greater London region.
(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 were allocated per property based on the
potential annualised loss (£) 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 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.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
214
Credit risk – Banking activities continued
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.
| 2025 |
2024 |
|||||||
Retail Banking mortgages - gross |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
exposure (2) |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
Fixed rate roll-off |
||||||||
<=1 year |
41,993 |
3,897 |
158 |
46,048 |
34,989 |
4,309 |
336 |
39,634 |
>1<= 2 years |
63,366 |
4,978 |
183 |
68,527 |
44,146 |
5,080 |
418 |
49,644 |
>2 years |
67,544 |
4,901 |
243 |
72,688 |
78,629 |
8,667 |
693 |
87,989 |
Total |
172,903 |
13,776 |
584 |
187,263 |
157,764 |
18,056 |
1,447 |
177,267 |
(1)
Not within the scope of the Independent auditors’ 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
(2)
.
| 2025 |
2024 |
|||||
Owner occupied |
Buy-to-let |
Total |
Owner occupied |
Buy-to-let |
Total |
|
EPC rating |
£m |
£m |
£m |
£m |
£m |
£m |
A |
1,415 |
27 |
1,442 |
788 |
18 |
806 |
B |
22,217 |
1,659 |
23,876 |
21,923 |
1,480 |
23,403 |
C |
35,153 |
6,767 |
41,920 |
31,353 |
5,876 |
37,229 |
D |
46,108 |
5,991 |
52,099 |
45,455 |
5,748 |
51,203 |
E |
13,305 |
1,269 |
14,574 |
14,455 |
1,369 |
15,824 |
F |
2,709 |
46 |
2,755 |
3,026 |
55 |
3,081 |
G |
628 |
10 |
638 |
695 |
13 |
708 |
Unclassified |
58,788 |
3,880 |
62,668 |
58,442 |
4,169 |
62,611 |
Total |
180,323 |
19,649 |
199,972 |
176,137 |
18,728 |
194,865 |
(1)
Not within scope of the Independent auditors’ report
(2)
As at 31 December 2025, £144.2 billion, 67%, of the total residential
mortgages portfolio had Energy Performance Certificate (EPC) data available
(2024 - £139.1 billion, 66.3%). Of which, 48.8% were rated as EPC A to C
(2024 – 46.3%).
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
215
Credit risk – Banking activities continued
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 | |
2025 | £m | £m | £m | £m | £m | £m | £m | £m | % | % | % | % |
≤50% | 7,324 | 222 | 26 | 7,572 | 20 | 5 | 6 | 31 | 0.3 | 2.3 | 23.1 | 0.4 |
>50% and ≤60% | 4,417 | 144 | 40 | 4,601 | 15 | 2 | 6 | 23 | 0.3 | 1.4 | 15.0 | 0.5 |
>60% and ≤70% | 881 | 21 | 27 | 929 | 4 | 1 | 10 | 15 | 0.5 | 4.8 | 37.0 | 1.6 |
>70% and ≤100% | 270 | 146 | 35 | 451 | 1 | 4 | 19 | 24 | 0.4 | 2.7 | 54.3 | 5.3 |
>100% | 183 | 2 | 83 | 268 | 2 | - | 39 | 41 | 1.1 | - | 47.0 | 15.3 |
Total with LTVs | 13,075 | 535 | 211 | 13,821 | 42 | 12 | 80 | 134 | 0.3 | 2.2 | 37.9 | 1.0 |
Total portfolio | ||||||||||||
average LTV | 48% | 58% | 115% | 49% | ||||||||
Other | ||||||||||||
Investment (1) | 2,745 | 331 | 36 | 3,112 | 5 | 4 | 11 | 20 | 0.2 | 1.2 | 30.6 | 0.6 |
Investment | 15,820 | 866 | 247 | 16,933 | 47 | 16 | 91 | 154 | 0.3 | 1.8 | 36.8 | 0.9 |
Development and | ||||||||||||
other (2) | 2,018 | 406 | 47 | 2,471 | 8 | 6 | 29 | 43 | 0.4 | 1.5 | 61.7 | 1.7 |
Total | 17,838 | 1,272 | 294 | 19,404 | 55 | 22 | 120 | 197 | 0.3 | 1.7 | 40.8 | 1.0 |
2024 | ||||||||||||
≤50% | 7,334 | 380 | 48 | 7,762 | 28 | 6 | 7 | 41 | 0.4 | 1.6 | 14.6 | 0.5 |
>50% and ≤60% | 3,829 | 169 | 53 | 4,051 | 19 | 5 | 9 | 33 | 0.5 | 3.0 | 17.0 | 0.8 |
>60% and ≤70% | 584 | 198 | 34 | 816 | 3 | 5 | 8 | 16 | 0.5 | 2.5 | 23.5 | 2.0 |
>70% and ≤100% | 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 |
(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.
•
Overall – The majority of the CRE portfolio was located and managed in the UK. Business appetite and strategy was aligned across NatWest Group.
•
2025 trends – There was strong growth in the residential and retail sector, with other CRE sectors remaining broadly flat. LTV profile remained stable.
•
Credit quality – Credit quality improved, with marginally fewer exposures in the Wholesale Problem Debt Management framework.
•
Risk appetite – Lending appetite is subject to regular review and implemented at sub-sector level. Overall appetite slightly increased over the year supported by the view that cyclical risks are
currently at a lower level.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
216
Credit risk – Banking activities continued
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:
•
Financial assets include treasury liquidity portfolios, comprising balances at central banks and debt securities, as well as loans. Both modelled and non-modelled portfolios are included.
•
Stage transfers (for example, exposures moving from Stage 1 into Stage 2) are a key feature of the ECL movements, with the net re-measurement cost of transitioning to a worse stage being a
primary driver of income statement charges. Similarly, there is an ECL benefit for accounts improving stage.
•
Changes in risk parameters shows the reassessment of the ECL within a given stage, including any ECL overlays and residual income statement gains or losses at the point of write-off or
accounting write-down.
•
Other (P&L only items) includes any subsequent changes in the value of written-down assets (for example, fortuitous recoveries) along with other direct write-off items such as direct recovery
costs. Other (P&L only items) affects the income statement but does not affect balance sheet ECL movements.
•
Amounts written-off represent the gross asset written-off against accounts with ECL, including the net asset written-off for any debt sale activity.
•
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.
•
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.
•
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 |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
At 1 January 2025 |
515,556 |
598 |
42,165 |
787 |
5,901 |
2,040 |
563,622 |
3,425 |
Currency translation and other adjustments |
(644) |
- |
14 |
1 |
156 |
163 |
(474) |
164 |
Transfers from Stage 1 to Stage 2 |
(40,165) |
(229) |
40,165 |
229 |
- |
- |
- |
- |
Transfers from Stage 2 to Stage 1 |
33,789 |
433 |
(33,789) |
(433) |
- |
- |
- |
- |
Transfers to Stage 3 |
(397) |
(5) |
(2,527) |
(258) |
2,924 |
263 |
- |
- |
Transfers from Stage 3 |
161 |
18 |
999 |
47 |
(1,160) |
(65) |
- |
- |
Net re-measurement of ECL on stage |
||||||||
transfer |
(299) |
616 |
- |
447 |
764 |
|||
Changes in risk parameters |
(114) |
(18) |
- |
312 |
180 |
|||
Other changes in net exposure |
38,094 |
212 |
(7,429) |
(175) |
(2,349) |
(256) |
28,316 |
(219) |
Other (P&L only items) |
(3) |
(2) |
- |
(49) |
(54) |
|||
Income statement (releases)/charges |
(204) |
421 |
454 |
671 |
||||
Amounts written-off |
- |
- |
- |
- |
(579) |
(579) |
(579) |
(579) |
Unwinding of discount |
- |
- |
(150) |
(150) |
||||
At 31 December 2025 |
546,394 |
614 |
39,598 |
796 |
4,893 |
2,175 |
590,885 |
3,585 |
Net carrying amount |
545,780 |
38,802 |
2,718 |
587,300 |
||||
At 1 January 2024 |
504,345 |
709 |
40,294 |
976 |
5,621 |
1,960 |
550,260 |
3,645 |
2024 movements |
11,211 |
(111) |
1,871 |
(189) |
280 |
80 |
13,362 |
(220) |
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 |
||||
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
217
Credit risk – Banking activities continued
Flow statements (audited)
Stage 1 | Stage 2 | Stage 3 | Total | |||||
Financial assets | ECL | Financial assets | ECL | Financial assets | ECL | Financial assets | ECL | |
Retail Banking - mortgages | £m | £m | £m | £m | £m | £m | £m | £m |
At 1 January 2025 | 171,333 | 76 | 20,992 | 60 | 2,303 | 305 | 194,628 | 441 |
Currency translation and other | ||||||||
| adjustments | - | - | - | - | 92 | 92 | 92 | 92 |
Transfers from Stage 1 to Stage 2 | (16,507) | (17) | 16,507 | 17 | - | - | - | - |
Transfers from Stage 2 to Stage 1 | 17,824 | 24 | (17,824) | (24) | - | - | - | - |
Transfers to Stage 3 | (14) | - | (865) | (7) | 879 | 7 | - | - |
Transfers from Stage 3 | 23 | - | 806 | 11 | (829) | (11) | - | - |
Net re-measurement of ECL on stage | ||||||||
transfer | (7) | 7 | 7 | 7 | ||||
Changes in risk parameters | (19) | (18) | 74 | 37 | ||||
Other changes in net exposure | 9,277 | (13) | (3,792) | (10) | (1,274) | (152) | 4,211 | (175) |
Other (P&L only items) | - | - | (16) | (16) | ||||
Income statement (releases)/charges | (39) | (21) | (87) | (147) | ||||
Amounts written-off | - | - | - | - | (87) | (87) | (87) | (87) |
Unwinding of discount | - | - | (67) | (67) | ||||
At 31 December 2025 | 181,936 | 44 | 15,824 | 36 | 1,084 | 168 | 198,844 | 248 |
Net carrying amount | 181,892 | 15,788 | 916 | 198,596 | ||||
At 1 January 2024 | 174,038 | 87 | 17,827 | 60 | 2,068 | 250 | 193,933 | 397 |
2024 movements | (2,705) | (11) | 3,165 | - | 235 | 55 | 695 | 44 |
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 | ||||
•
ECL coverage for mortgages decreased during the year, primarily driven by the reduction in economic uncertainty post model adjustments (supported by back-testing) and a definition of default
systems and process enhancement in the first half of the year. Additionally, the transfer of £2.1 billion of mortgages with £0.1 billion of ECL to a securitisation special purpose vehicle further
reduced ECL coverage overall, noting that £0.8 billion of these loans were in Stage 3.
•
Stage 3 inflows reduced in the year, with the portfolio showing continued resilience alongside the effect of the definition of default systems and process enhancement earlier in the year.
•
Stable portfolio trends and PD model enhancements underpinned PD reductions in the year, resulting in a reduction in Stage 2 balances.
•
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 ECL post model
adjustments section for further details.
•
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 but can be
longer.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
218
Credit risk – Banking activities continued
Flow statements (audited)
Stage 1 | Stage 2 | Stage 3 | Total | |||||
Financial assets | ECL | Financial assets | ECL | Financial assets | ECL | Financial assets | ECL | |
Retail Banking - credit cards | £m | £m | £m | £m | £m | £m | £m | £m |
At 1 January 2025 | 4,523 | 76 | 2,034 | 186 | 162 | 117 | 6,719 | 379 |
Currency translation and other | ||||||||
| adjustments | - | - | - | - | 6 | 6 | 6 | 6 |
Transfers from Stage 1 to Stage 2 | (2,329) | (52) | 2,329 | 52 | - | - | - | - |
Transfers from Stage 2 to Stage 1 | 1,339 | 105 | (1,339) | (105) | - | - | - | - |
Transfers to Stage 3 | (36) | (1) | (231) | (78) | 267 | 79 | - | - |
Transfers from Stage 3 | 3 | 2 | 14 | 5 | (17) | (7) | - | - |
Net re-measurement of ECL on stage | ||||||||
transfer | (71) | 191 | 101 | 221 | ||||
Changes in risk parameters | 15 | 30 | 25 | 70 | ||||
Other changes in net exposure | 2,243 | 50 | (640) | (77) | (33) | (1) | 1,570 | (28) |
Other (P&L only items) | - | - | (1) | (1) | ||||
Income statement (releases)/charges | (6) | 144 | 124 | 262 | ||||
Amounts written-off | - | - | - | - | (118) | (118) | (118) | (118) |
Unwinding of discount | - | - | (12) | (12) | ||||
At 31 December 2025 | 5,743 | 124 | 2,167 | 204 | 267 | 190 | 8,177 | 518 |
Net carrying amount | 5,619 | 1,963 | 77 | 7,659 | ||||
At 1 January 2024 | 3,475 | 70 | 2,046 | 204 | 146 | 89 | 5,667 | 363 |
2024 movements | 1,048 | 6 | (12) | (18) | 16 | 28 | 1,052 | 16 |
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 | ||||
•
Overall ECL for cards increased during 2025, driven primarily by the acquisition of Sainsbury’s Bank credit card balances alongside continued organic portfolio growth, reflecting strong customer
demand, while sustaining robust risk appetite.
•
Flow rates into Stage 3 were slightly higher in 2025 compared to 2024, reflecting the strategic growth and seasoning of credit card balances since 2022. This trend contributed to an increase in
PDs during the year, driving a net flow into Stage 2 from Stage 1.
•
Charge-off (analogous to partial write-off) typically occurs after 12 missed payments.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
219
Credit risk – Banking activities continued
Flow statements (audited)
Stage 1 | Stage 2 | Stage 3 | Total | |||||
Financial assets | ECL | Financial assets | ECL | Financial assets | ECL | Financial assets | ECL | |
Retail Banking - other personal unsecured | £m | £m | £m | £m | £m | £m | £m | £m |
At 1 January 2025 | 5,605 | 127 | 1,465 | 182 | 833 | 641 | 7,903 | 950 |
Currency translation and other | ||||||||
| adjustments | - | - | - | - | 27 | 27 | 27 | 27 |
Transfers from Stage 1 to Stage 2 | (2,145) | (95) | 2,145 | 95 | - | - | - | - |
Transfers from Stage 2 to Stage 1 | 1,471 | 157 | (1,471) | (157) | - | - | - | - |
Transfers to Stage 3 | (79) | (3) | (329) | (118) | 408 | 121 | - | - |
Transfers from Stage 3 | 7 | 3 | 24 | 10 | (31) | (13) | - | - |
Net re-measurement of ECL on stage | ||||||||
transfer | (100) | 219 | 63 | 182 | ||||
Changes in risk parameters | (33) | (10) | 126 | 83 | ||||
Other changes in net exposure | 1,992 | 111 | (389) | (37) | (128) | (47) | 1,475 | 27 |
Other (P&L only items) | - | - | 30 | 30 | ||||
Income statement (releases)/charges | (22) | 172 | 172 | 322 | ||||
Amounts written-off | - | - | - | - | (168) | (168) | (168) | (168) |
Unwinding of discount | - | - | (33) | (33) | ||||
At 31 December 2025 | 6,851 | 167 | 1,445 | 184 | 941 | 717 | 9,237 | 1,068 |
Net carrying amount | 6,684 | 1,261 | 224 | 8,169 | ||||
At 1 January 2024 | 5,240 | 149 | 1,657 | 238 | 963 | 758 | 7,860 | 1,145 |
2024 movements | 365 | (22) | (192) | (56) | (130) | (117) | 43 | (195) |
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 | ||||
•
Total ECL increased during the year, primarily driven by the acquisition of Sainsbury’s Bank loan balances and continued organic loan book growth, while arrears performance remained stable,
resulting in ECL coverage levels broadly consistent with 31 December 2024.
•
Flow rates into Stage 3 remained stable, in line with broader portfolio trends on arrears, with overall Stage 3 balances increasing as a result of reduced debt sale activity overall in the year.
•
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.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
220
Credit risk – Banking activities continued
Flow statements (audited)
Stage 1 | Stage 2 | Stage 3 | Total | |||||
Financial assets | ECL | Financial assets | ECL | Financial assets | ECL | Financial assets | ECL | |
Commercial & Institutional - corporate | ||||||||
£m | £m | £m | £m | £m | £m | £m | £m | |
At 1 January 2025 | 62,575 | 175 | 11,450 | 273 | 1,562 | 659 | 75,587 | 1,107 |
Currency translation and other | ||||||||
| adjustments | (331) | - | 17 | - | 24 | 18 | (290) | 18 |
Inter-group transfers | 156 | 1 | 8 | 1 | 1 | - | 165 | 2 |
Transfers from Stage 1 to Stage 2 | (14,018) | (50) | 14,018 | 50 | - | - | - | - |
Transfers from Stage 2 to Stage 1 | 8,374 | 103 | (8,374) | (103) | - | - | - | - |
Transfers to Stage 3 | (170) | (1) | (741) | (44) | 911 | 45 | - | - |
Transfers from Stage 3 | 54 | 7 | 82 | 15 | (136) | (22) | - | - |
Net re-measurement of ECL on stage | ||||||||
transfer | (84) | 151 | 214 | 281 | ||||
Changes in risk parameters | (22) | (9) | 42 | 11 | ||||
Other changes in net exposure | 7,479 | 30 | (1,776) | (42) | (591) | (37) | 5,112 | (49) |
Other (P&L only items) | (4) | (3) | (61) | (68) | ||||
Income statement (releases)/charges | (80) | 97 | 158 | 175 | ||||
Amounts written-off | - | - | - | - | (166) | (166) | (166) | (166) |
Unwinding of discount | - | - | (26) | (26) | ||||
At 31 December 2025 | 64,119 | 159 | 14,684 | 292 | 1,605 | 727 | 80,408 | 1,178 |
Net carrying amount | 63,960 | 14,392 | 878 | 79,230 | ||||
At 1 January 2024 | 61,402 | 226 | 12,275 | 344 | 1,454 | 602 | 75,131 | 1,172 |
2024 movements | 1,173 | (51) | (825) | (71) | 108 | 57 | 456 | (65) |
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 | ||||
•
Total ECL increased in the year primarily reflecting a small number of individual defaults. Despite the growth in Stage 3 ECL, transfers into Stage 3 reduced compared to 2024, with a notable
reduction in transfers seen in the second half of 2025.
•
Total performing book ECL was stable year-on-year, but with a small increase in Stage 2, reflecting the net transfer of assets from Stage 1 into Stage 2.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
221
Credit risk – Banking activities continued
Flow statements (audited)
Stage 1 | Stage 2 | Stage 3 | Total | |||||
Financial assets | ECL | Financial assets | ECL | Financial assets | ECL | Financial assets | ECL | |
Commercial & Institutional - property | ||||||||
£m | £m | £m | £m | £m | £m | £m | £m | |
At 1 January 2025 | 27,468 | 77 | 2,980 | 61 | 590 | 225 | 31,038 | 363 |
Currency translation and other | ||||||||
| adjustments | 8 | - | - | - | 9 | - | 17 | - |
Inter-group transfers | (175) | - | (7) | - | (1) | - | (183) | - |
Transfers from Stage 1 to Stage 2 | (2,569) | (8) | 2,569 | 8 | - | - | - | - |
Transfers from Stage 2 to Stage 1 | 2,021 | 23 | (2,021) | (23) | - | - | - | - |
Transfers to Stage 3 | (6) | - | (143) | (8) | 149 | 8 | - | - |
Transfers from Stage 3 | 45 | 4 | 28 | 5 | (73) | (9) | - | - |
Net re-measurement of ECL on stage | ||||||||
transfer | (22) | 31 | 13 | 22 | ||||
Changes in risk parameters | (28) | (8) | 18 | (18) | ||||
Other changes in net exposure | 3,692 | 15 | (313) | (10) | (199) | (21) | 3,180 | (16) |
Other (P&L only items) | - | - | - | - | ||||
Income statement (releases)/charges | (35) | 13 | 10 | (12) | ||||
Amounts written-off | - | - | - | - | (33) | (33) | (33) | (33) |
Unwinding of discount | - | - | (8) | (8) | ||||
At 31 December 2025 | 30,484 | 61 | 3,093 | 56 | 442 | 193 | 34,019 | 310 |
Net carrying amount | 30,423 | 3,037 | 249 | 33,709 | ||||
At 1 January 2024 | 26,040 | 94 | 3,155 | 89 | 606 | 195 | 29,801 | 378 |
2024 movements | 1,428 | (17) | (175) | (28) | (16) | 30 | 1,237 | (15) |
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 | ||||
•
Total ECL for property exposures reduced notably in the year, with reductions observed in all stages.
•
In Stage 3, both total financial assets and ECL reduced as there were low levels of default in the year, which were more than offset by the effects of repayments and write-offs.
•
Performing book ECL reduced in the year driven by changes in risk parameters, which included the impact of reductions in post model adjustments.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
222
Credit risk – Banking activities continued
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 | ||||||||
£m | £m | £m | £m | £m | £m | £m | £m | |
At 1 January 2025 | 93,724 | 37 | 1,739 | 12 | 123 | 57 | 95,586 | 106 |
Currency translation and other | ||||||||
| adjustments | (377) | - | (3) | - | - | 14 | (380) | 14 |
Inter-group transfers | 18 | - | (1) | - | - | - | 17 | - |
Transfers from Stage 1 to Stage 2 | (960) | (3) | 960 | 3 | - | - | - | - |
Transfers from Stage 2 to Stage 1 | 1,714 | 11 | (1,714) | (11) | - | - | - | - |
Transfers to Stage 3 | (82) | - | (29) | (1) | 111 | 1 | - | - |
Transfers from Stage 3 | 8 | - | 9 | - | (17) | - | - | - |
Net re-measurement of ECL on stage | ||||||||
transfer | (8) | 7 | 44 | 43 | ||||
Changes in risk parameters | (11) | (2) | 19 | 6 | ||||
Other changes in net exposure | 3,828 | 10 | (317) | 1 | (17) | 5 | 3,494 | 16 |
Other (P&L only items) | - | - | (3) | (3) | ||||
Income statement (releases)/charges | (9) | 6 | 65 | 62 | ||||
Amounts written-off | - | - | - | - | (6) | (6) | (6) | (6) |
Unwinding of discount | - | - | (3) | (3) | ||||
At 31 December 2025 | 97,873 | 36 | 644 | 9 | 194 | 128 | 98,711 | 173 |
Net carrying amount | 97,837 | 635 | 66 | 98,538 | ||||
At 1 January 2024 | 88,860 | 36 | 1,599 | 14 | 101 | 22 | 90,560 | 72 |
2024 movements | 4,864 | 1 | 140 | (2) | 22 | 35 | 5,026 | 34 |
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 | ||||
•
The increase in Stage 3 financial assets and ECL primarily reflected the impact of a single large flow to default in the year.
•
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
223
Credit risk – Banking activities continued
Stage 2 decomposition by a significant increase in credit risk trigger
Mortgages | Credit cards | Other | Total | |||||
2025 | £m | % | £m | % | £m | % | £m | % |
Personal trigger (1) | ||||||||
PD movement | 10,305 | 64.6 | 1,544 | 74.1 | 790 | 53.7 | 12,639 | 64.8 |
PD persistence | 1,960 | 12.3 | 380 | 18.3 | 283 | 19.3 | 2,623 | 13.5 |
Adverse credit bureau recorded with | ||||||||
| credit reference agency | 1,876 | 11.8 | 89 | 4.3 | 129 | 8.8 | 2,094 | 10.7 |
Forbearance support provided | 178 | 1.1 | 2 | 0.1 | 7 | 0.5 | 187 | 1.0 |
Customers in collections | 210 | 1.3 | 22 | 1.1 | 20 | 1.4 | 252 | 1.3 |
Collective SICR and other reasons (2) | 1,287 | 8.1 | 44 | 2.1 | 232 | 15.8 | 1,563 | 8.0 |
Days past due >30 | 135 | 0.8 | - | - | 7 | 0.5 | 142 | 0.7 |
15,951 | 100.0 | 2,081 | 100.0 | 1,468 | 100.0 | 19,500 | 100.0 | |
2024 | ||||||||
Personal trigger (1) | ||||||||
PD movement | 14,480 | 68.8 | 1,425 | 72.9 | 809 | 49.9 | 16,714 | 67.8 |
PD persistence | 3,951 | 18.8 | 414 | 21.2 | 388 | 23.9 | 4,753 | 19.3 |
Adverse credit bureau recorded with | ||||||||
| credit reference agency | 936 | 4.4 | 71 | 3.6 | 119 | 7.3 | 1,126 | 4.6 |
Forbearance support provided | 189 | 0.9 | 1 | 0.1 | 9 | 0.6 | 199 | 0.8 |
Customers in collections | 169 | 0.8 | 3 | 0.2 | 2 | 0.1 | 174 | 0.7 |
Collective SICR and other reasons (2) | 1,248 | 5.9 | 39 | 2.0 | 290 | 17.9 | 1,577 | 6.4 |
Days past due >30 | 88 | 0.4 | 0 | 0.0 | 5 | 0.3 | 93 | 0.4 |
21,061 | 100.0 | 1,953 | 100.0 | 1,622 | 100.0 | 24,636 | 100.0 | |
For the notes to this table refer to the following page.
•
Overall Stage 2 levels for Personal reduced, primarily driven by mortgages where stable portfolio trends and a PD model enhancements underpinned PD reductions in the year. The proportion of
PD driven deterioration in Stage 2 remained broadly consistent with 31 December 2024 overall.
•
The reduction of PDs on mortgages, partly due to PD model enhancements, led to an increase in the proportion of Stage 2 captured by qualitative backstops, relative to last year.
•
Higher risk mortgage customers who utilised Mortgage Charter support measures continued to be collectively migrated into Stage 2 and were captured in the collective SICR and other reasons
category.
•
Accounts that were less than 30 days past due continued to represent the vast majority of the Stage 2 population.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
224
Credit risk – Banking activities continued
Stage 2 decomposition by a significant increase in credit risk trigger
Corporate and other (3) | Financial institutions | Sovereign | Total | |||||
2025 | £m | % | £m | % | £m | % | £m | % |
Non-Personal trigger (1) | ||||||||
PD movement | 16,238 | 87.9 | 148 | 41.5 | 141 | 53.0 | 16,527 | 86.6 |
PD persistence | 214 | 1.2 | 2 | 0.6 | - | - | 216 | 1.1 |
Heightened Monitoring and Risk of Credit | ||||||||
| Loss | 1,106 | 6.0 | 74 | 20.8 | 124 | 46.6 | 1,304 | 6.8 |
Forbearance support provided | 185 | 1.0 | - | - | - | - | 185 | 1.0 |
Customers in collections | 21 | 0.1 | - | - | - | - | 21 | 0.1 |
Collective SICR and other reasons (2) | 571 | 3.1 | 130 | 36.5 | 1 | 0.4 | 702 | 3.7 |
Days past due >30 | 125 | 0.7 | 2 | 0.6 | - | - | 127 | 0.7 |
18,460 | 100.0 | 356 | 100.0 | 266 | 100.0 | 19,082 | 100.0 | |
2024 | ||||||||
Non-Personal trigger (1) | ||||||||
PD movement | 11,800 | 81.6 | 971 | 78.2 | - | - | 12,771 | 80.6 |
PD persistence | 310 | 2.1 | 2 | 0.2 | - | - | 312 | 2.0 |
Heightened Monitoring and Risk of Credit | ||||||||
| Loss | 1,599 | 11.1 | 83 | 6.7 | 132 | 99.2 | 1,814 | 11.5 |
Forbearance support provided | 229 | 1.6 | - | - | - | - | 229 | 1.4 |
Customers in collections | 34 | 0.2 | - | - | - | - | 34 | 0.2 |
Collective SICR and other reasons (2) | 396 | 2.7 | 172 | 13.9 | 1 | 0.8 | 569 | 3.6 |
Days past due >30 | 96 | 0.7 | 13 | 1.0 | - | - | 109 | 0.7 |
14,464 | 100.0 | 1,241 | 100.0 | 133 | 100 | 15,838 | 100.0 | |
(1)
The table is prepared on a hierarchical basis from top to bottom, for
example, accounts with PD deterioration may also trigger backstop(s)
but are only reported under PD deterioration.
(2)
Includes cases where a PD assessment cannot be made and accounts
where the PD has deteriorated beyond a prescribed backstop threshold
aligned to risk management practices.
•
Stage 2 exposures increased during the year, in part reflecting the impact of post model adjustments in applying a risk profile downgrade to sectors deemed most at risk of economic uncertainty
not captured in underlying models. The impact of cases moving into Stage 2 due to post model adjustments is captured in PD movement.
•
Non-Personal exposures in Stage 2 continued to be mainly captured through PD movement and presence on the Wholesale Problem Debt Management framework, which are the primary
forward-looking credit deterioration triggers.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
225
Credit risk – Banking activities continued
Stage 3 vintage analysis
The table below shows estimated vintage analysis of the material Stage 3 portfolios.
2025 | 2024 | |||
Retail Banking mortgages (1) | Non-Personal | Retail Banking mortgages (1) | Non-Personal | |
Stage 3 loans (£bn) | 1.1 | 2.2 | 2.3 | 2.4 |
Vintage (time in default): | ||||
<1 year | 40% | 35% | 38% | 34% |
1-3 years | 31% | 42% | 41% | 45% |
3-5 years | 11% | 14% | 8% | 11% |
>5 years | 18% | 9% | 13% | 10% |
100% | 100% | 100% | 100% | |
(1)
Retail Banking excludes a non-material amount of lending held on relatively
small legacy portfolios.
•
For Retail Banking mortgages, the value of Stage 3 defaulted assets reduced during 2025, primarily as a result of balance sheet management actions in 2025. Furthermore, there was an
enhancement to the mortgage definition of default systems and process, resulting in approximately £0.4 billion of loans migrating from Stage 3 back to the good book.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
226
Credit risk – Banking activities continued
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 | |
2025 | £m | £m | £m | £m | £m | £m | £m | £m | % | % | % | % |
Mortgages | ||||||||||||
AQ1-AQ4 | 114,087 | 6,432 | - | 120,519 | 19 | 9 | - | 28 | - | 0.1 | - | - |
AQ5-AQ8 | 83,712 | 8,584 | - | 92,296 | 26 | 21 | - | 47 | - | 0.2 | - | 0.1 |
AQ9 | 140 | 935 | - | 1,075 | - | 6 | - | 6 | - | 0.6 | - | 0.6 |
AQ10 | - | - | 1,339 | 1,339 | - | - | 191 | 191 | - | - | 14.3 | 14.3 |
197,939 | 15,951 | 1,339 | 215,229 | 45 | 36 | 191 | 272 | - | 0.2 | 14.3 | 0.1 | |
Credit cards | ||||||||||||
AQ1-AQ4 | 117 | - | - | 117 | 1 | - | - | 1 | 0.9 | - | - | 0.9 |
AQ5-AQ8 | 5,850 | 1,967 | - | 7,817 | 123 | 181 | - | 304 | 2.1 | 9.2 | - | 3.9 |
AQ9 | 21 | 114 | - | 135 | 1 | 24 | - | 25 | 4.8 | 21.1 | - | 18.5 |
AQ10 | - | - | 242 | 242 | - | - | 190 | 190 | - | - | 78.5 | 78.5 |
5,988 | 2,081 | 242 | 8,311 | 125 | 205 | 190 | 520 | 2.1 | 9.9 | 78.5 | 6.3 | |
Other personal | ||||||||||||
AQ1-AQ4 | 765 | 112 | - | 877 | 5 | 12 | - | 17 | 0.7 | 10.7 | - | 1.9 |
AQ5-AQ8 | 8,148 | 1,212 | - | 9,360 | 161 | 137 | - | 298 | 2.0 | 11.3 | - | 3.2 |
AQ9 | 64 | 144 | - | 208 | 6 | 36 | - | 42 | 9.4 | 25.0 | - | 20.2 |
AQ10 | - | - | 956 | 956 | - | - | 731 | 731 | - | - | 76.5 | 76.5 |
8,977 | 1,468 | 956 | 11,401 | 172 | 185 | 731 | 1,088 | 1.9 | 12.6 | 76.5 | 9.5 | |
Total | ||||||||||||
AQ1-AQ4 | 114,969 | 6,544 | - | 121,513 | 25 | 21 | - | 46 | - | 0.3 | - | - |
AQ5-AQ8 | 97,710 | 11,763 | - | 109,473 | 310 | 339 | - | 649 | 0.3 | 2.9 | - | 0.6 |
AQ9 | 225 | 1,193 | - | 1,418 | 7 | 66 | - | 73 | 3.1 | 5.5 | - | 5.2 |
AQ10 | - | - | 2,537 | 2,537 | - | - | 1,112 | 1,112 | - | - | 43.8 | 43.8 |
212,904 | 19,500 | 2,537 | 234,941 | 342 | 426 | 1,112 | 1,880 | 0.2 | 2.2 | 43.8 | 0.8 | |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
227
Credit risk – Banking activities continued
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 | |
2024 | £m | £m | £m | £m | £m | £m | £m | £m | % | % | % | % |
Mortgages | ||||||||||||
AQ1-AQ4 | 104,793 | 8,416 | - | 113,209 | 29 | 16 | - | 45 | - | 0.2 | - | - |
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 | - | 0.3 | 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 | - | 0.4 | - | 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 | |
•
The distribution of lending across the AQ1-AQ9 bands remained broadly consistent with the prior year. Growth in the mortgage portfolio was mainly in the AQ1-AQ4 bands as expected.
•
The proportion of Stage 3/AQ10 loans declined over the year, mainly as a result of the balance sheet management actions described above, notably the mortgage securitisation which reduced
Stage 3 loans by £0.8 billion. Furthermore, there was an enhancement to the mortgage definition of default systems and process resulting in approximately £0.4 billion of loans migrating from
Stage 3 back to the good book. Within the credit card portfolio, flows into Stage 3 increased year-on-year, driven by strategic growth and seasoning of credit card balances since 2022. For other
personal lending, flow rates into AQ10/Stage 3 remained stable, with AQ10 balances increasing as a result of reduced debt sale activity overall in the year.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
228
Credit risk – Banking activities continued
Asset quality (audited)
The table below shows asset quality bands of gross loans and ECL, by stage, for the Non-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 | |
2025 | £m | £m | £m | £m | £m | £m | £m | £m | % | % | % | % |
Corporate and other | ||||||||||||
AQ1-AQ4 | 43,968 | 2,314 | - | 46,282 | 29 | 15 | - | 44 | 0.1 | 0.7 | - | 0.1 |
AQ5-AQ8 | 53,783 | 15,882 | - | 69,665 | 199 | 326 | - | 525 | 0.4 | 2.1 | - | 0.8 |
AQ9 | 28 | 264 | - | 292 | - | 19 | - | 19 | - | 7.2 | - | 6.5 |
AQ10 | - | - | 1,990 | 1,990 | - | - | 944 | 944 | - | - | 47.4 | 47.4 |
97,779 | 18,460 | 1,990 | 118,229 | 228 | 360 | 944 | 1,532 | 0.2 | 2.0 | 47.4 | 1.3 | |
Financial institutions | ||||||||||||
AQ1-AQ4 | 68,620 | 154 | - | 68,774 | 20 | 2 | - | 22 | - | 1.3 | - | - |
AQ5-AQ8 | 5,339 | 196 | - | 5,535 | 17 | 3 | - | 20 | 0.3 | 1.5 | - | 0.4 |
AQ9 | - | 6 | - | 6 | - | - | - | - | - | - | - | - |
AQ10 | - | - | 141 | 141 | - | - | 113 | 113 | - | - | 80.1 | 80.1 |
73,959 | 356 | 141 | 74,456 | 37 | 5 | 113 | 155 | 0.1 | 1.4 | 80.1 | 0.2 | |
Sovereign | ||||||||||||
AQ1-AQ4 | 1,878 | 1 | - | 1,879 | 7 | 1 | - | 8 | 0.4 | 100.0 | - | 0.4 |
AQ5-AQ8 | 131 | - | - | 131 | - | - | - | - | - | - | - | - |
AQ9 | - | 265 | - | 265 | - | 4 | - | 4 | - | 1.5 | - | 1.5 |
AQ10 | - | - | 15 | 15 | - | - | 6 | 6 | - | - | 40.0 | 40.0 |
2,009 | 266 | 15 | 2,290 | 7 | 5 | 6 | 18 | 0.4 | 1.9 | 40.0 | 0.8 | |
Total | ||||||||||||
AQ1-AQ4 | 114,466 | 2,469 | - | 116,935 | 56 | 18 | - | 74 | 0.1 | 0.7 | - | 0.1 |
AQ5-AQ8 | 59,253 | 16,078 | - | 75,331 | 216 | 329 | - | 545 | 0.4 | 2.1 | - | 0.7 |
AQ9 | 28 | 535 | - | 563 | - | 23 | - | 23 | - | 4.3 | - | 4.1 |
AQ10 | - | - | 2,146 | 2,146 | - | - | 1,063 | 1,063 | - | - | 49.5 | 49.5 |
173,747 | 19,082 | 2,146 | 194,975 | 272 | 370 | 1,063 | 1,705 | 0.2 | 1.9 | 49.5 | 0.9 | |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
229
Credit risk – Banking activities continued
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 |
|
2024 |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
% |
% |
% |
% |
Corporate and other |
||||||||||||
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 |
- |
0.9 |
- |
- |
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 |
|
•
The majority of Non-Personal lending remained in the AQ1-AQ4 band, with the increase in the year driven by increases in financial institutions sectors. This portfolio is subject to low ECL coverage,
reflecting the high credit quality in the portfolio.
•
In corporate sectors, Stage 2 exposure grew in the year, primarily in the AQ5-AQ8 band, which accounted for the majority of exposure to corporates. AQ10 exposures in Stage 3 reduced in
corporates, as new defaults were more than offset by write-offs and repayments on previous defaults.
•
The increase in sovereigns exposure in AQ9 and Stage 2 was primarily due to increased exposure to a single counterparty where the lending is fully guaranteed.
Credit risk - Trading activities
This section details the credit risk profile of NatWest Group’s trading activities.
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 under IFRS.
| Reverse repos | Repos | |||||
Of which: | Outside netting | Of which: | Outside netting | |||
Total | can be offset | arrangements | Total | can be offset | arrangements | |
2025 | £m | £m | £m | £m | £m | £m |
Gross | 95,674 | 95,618 | 56 | 89,789 | 87,730 | 2,059 |
IFRS offset | (31,599) | (31,599) | - | (31,599) | (31,599) | - |
Carrying value | 64,075 | 64,019 | 56 | 58,190 | 56,131 | 2,059 |
Master netting arrangements | (474) | (474) | - | (474) | (474) | - |
Securities collateral | (63,292) | (63,292) | - | (55,657) | (55,657) | - |
Potential for offset not recognised under IFRS | (63,766) | (63,766) | - | (56,131) | (56,131) | - |
Net | 309 | 253 | 56 | 2,059 | - | 2,059 |
2024 | ||||||
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 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
230
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
231
Credit risk – Trading activities continued
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.
| 2025 |
2024 |
|||||||||
| Notional |
||||||||||
GBP |
USD |
EUR |
Other |
Total |
Assets |
Liabilities |
Notional |
Assets |
Liabilities |
|
£bn |
£bn |
£bn |
£bn |
£bn |
£m |
£m |
£bn |
£m |
£m |
|
Gross exposure |
77,796 |
71,925 |
97,152 |
93,109 |
||||||
IFRS offset |
(17,007) |
(17,951) |
(18,746) |
(21,027) |
||||||
Carrying value |
3,460 |
3,573 |
6,328 |
1,158 |
14,519 |
60,789 |
53,974 |
13,628 |
78,406 |
72,082 |
Of which: |
||||||||||
Interest rate (1) |
3,125 |
2,072 |
5,699 |
192 |
11,088 |
32,742 |
26,758 |
10,333 |
37,499 |
31,532 |
Exchange rate |
331 |
1,495 |
622 |
966 |
3,414 |
27,981 |
27,042 |
3,279 |
40,797 |
40,306 |
Credit |
2 |
6 |
7 |
- |
15 |
66 |
174 |
14 |
110 |
244 |
Equity and commodity |
2 |
- |
- |
- |
2 |
- |
- |
2 |
- |
- |
Carrying value |
14,519 |
60,789 |
53,974 |
13,628 |
78,406 |
72,082 |
||||
Counterparty mark-to-market netting |
(45,928) |
(45,928) |
(61,883) |
(61,883) |
||||||
Cash collateral |
(9,275) |
(4,281) |
(10,005) |
(5,801) |
||||||
Securities collateral |
(3,283) |
(1,256) |
(4,072) |
(896) |
||||||
Net exposure |
2,303 |
2,509 |
2,446 |
3,502 |
||||||
Banks (2) |
89 |
217 |
214 |
345 |
||||||
Other financial institutions (3) |
1,508 |
1,160 |
1,429 |
1,456 |
||||||
Corporate (4) |
673 |
1,110 |
769 |
1,669 |
||||||
Government (5) |
33 |
22 |
34 |
32 |
||||||
Net exposure |
2,303 |
2,509 |
2,446 |
3,502 |
||||||
UK |
1,098 |
1,548 |
1,061 |
1,774 |
||||||
Europe |
693 |
589 |
875 |
978 |
||||||
US |
437 |
283 |
443 |
604 |
||||||
RoW |
75 |
89 |
67 |
146 |
||||||
Net exposure |
2,303 |
2,509 |
2,446 |
3,502 |
||||||
Asset quality of uncollateralised |
||||||||||
derivative assets |
||||||||||
AQ1-AQ4 |
1,865 |
2,049 |
||||||||
AQ5-AQ8 |
435 |
394 |
||||||||
AQ9-AQ10 |
3 |
3 |
||||||||
Net exposure |
2,303 |
2,446 |
||||||||
(1)
The notional amount of interest rate derivatives includes £8,768 billion
(2024 – £7,321 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’s 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.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
232
Credit risk – Trading activities continued
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’s, Moody’s and Fitch.
| Central and local government | ||||||
UK | US | Other | Financial institutions | Corporate | Total | |
2025 | £m | £m | £m | £m | £m | £m |
AAA | - | - | 1,505 | 1,283 | - | 2,788 |
AA to AA+ | - | 4,153 | 257 | 309 | 18 | 4,737 |
A to AA- | 2,105 | - | 1,481 | 596 | 215 | 4,397 |
BBB- to A- | - | - | 892 | 256 | 384 | 1,532 |
Non-investment grade | - | - | - | 11 | 50 | 61 |
Total | 2,105 | 4,153 | 4,135 | 2,455 | 667 | 13,515 |
2024 | ||||||
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 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
233
Credit risk – Trading activities continued
Cross border exposure
Cross border exposures comprise both banking and trading activities, including reverse repurchase agreements. Exposures comprise loans and advances, including finance leases and instalment credit
receivables, and other monetary assets, such as debt securities. The geographical breakdown is based on the country of domicile of the borrower or guarantor of ultimate risk. Cross border exposures
include non-local currency claims of overseas offices on local residents but exclude exposures to local residents in local currencies. The table shows cross border exposures greater than 0.5% of
NatWest Group’s total assets at the end of each reporting period.
Government | Banks | Other | Total | Short positions | Net of short positions | |
2025 | £m | £m | £m | £m | £m | £m |
Western Europe | 9,877 | 11,547 | 28,623 | 50,047 | 4,544 | 45,503 |
Of which: France | 1,631 | 3,039 | 7,760 | 12,430 | 755 | 11,675 |
Of which: Germany | 2,184 | 5,615 | 812 | 8,611 | 1,877 | 6,734 |
Of which: Luxembourg | 224 | 30 | 9,295 | 9,549 | - | 9,549 |
Cayman Islands (1) | - | - | 4,453 | 4,453 | - | 4,453 |
United States | 4,571 | 2,439 | 22,983 | 29,993 | 1,256 | 28,737 |
Jersey | - | - | 4,565 | 4,565 | - | 4,565 |
Canada | 1,855 | 1,244 | 4,041 | 7,140 | 10 | 7,130 |
Other institutions (2) | 5,638 | - | - | 5,638 | 173 | 5,465 |
2024 | ||||||
Western Europe | 8,581 | 11,669 | 29,891 | 50,141 | 5,889 | 44,252 |
Of which: France | 2,347 | 2,543 | 11,161 | 16,051 | 1,491 | 14,560 |
Of which: Germany | 1,149 | 5,937 | 702 | 7,788 | 1,957 | 5,831 |
Of which: Luxembourg | 61 | 412 | 7,940 | 8,413 | 10 | 8,403 |
Of which: Ireland | 162 | 49 | 3,306 | 3,517 | 85 | 3,432 |
United States | 5,246 | 3,307 | 21,576 | 30,129 | 1,767 | 28,362 |
Jersey | - | - | 5,030 | 5,030 | - | 5,030 |
Canada | 1,664 | 1,555 | 2,308 | 5,527 | 26 | 5,501 |
Other institutions (2) | 4,520 | - | - | 4,520 | 94 | 4,426 |
(1)
Cayman Islands did not meet the reporting threshold required for
inclusion in the table for 2024
(2)
Other institutions category denotes any international organisation which
is governed by public international law or which has been set up by or on
the basis of an agreement between two or more countries.
NatWest Group continually ensures a
comprehensive approach is taken to the
management of capital, liquidity and funding,
underpinned by frameworks, risk appetite and
policies, to manage and mitigate its capital,
liquidity and funding risks. The framework
ensures the tools and capability are in place
to facilitate the management and mitigation
of risk ensuring NatWest Group operates
within its regulatory requirements and risk
appetite.
Regulatory capital consists of reserves and
instruments issued that are available, have a
degree of permanency and are capable of
absorbing losses. A number of strict
conditions set by regulators must be satisfied
to be eligible as capital.
Capital risk is the inability to conduct business
in base or stress conditions on a risk or
leverage basis due to insufficient qualifying
capital as well as the failure to assess,
monitor, plan and manage capital adequacy
requirements.
Liquidity consists of assets that can be readily
converted to cash within a short timeframe at
a reliable value. Liquidity risk is defined as the
risk that the Group or any of its subsidiaries
or branches cannot meet it’s actual or
potential financial obligations in a timely
manner as they fall due in the short term.
Funding consists of on-balance sheet liabilities
that are used to provide cash to finance
assets. Funding risk is the current or
prospective risk that the Group or its
subsidiaries or branches cannot meet
financial obligations as they fall due in the
medium to long term, either at all or without
increasing funding costs unacceptably.
Liquidity and funding risks arise in a number
of ways, including through the maturity
transformation role that banks perform. The
risks are dependent on factors such as:
•
Maturity profile;
•
Composition of sources and uses of
funding;
•
The quality and size of the liquidity
portfolio;
•
Wholesale market conditions; and
•
Depositor and investor behaviour.
Sources of risk (audited)
Capital
The eligibility of instruments and financial
resources as regulatory capital is laid down
by applicable regulation. Capital is
categorised under two tiers (Tier 1 and Tier
2) according to the ability to absorb losses,
degree of permanency and the ranking of
absorbing losses on either a going or gone
concern basis. There are three broad
categories of capital across these two tiers:
CET1 capital
-
CET1 capital must be
perpetual and capable of unrestricted and
immediate use to cover risks or losses as
soon as these occur. This includes ordinary
shares issued and retained earnings.
Additional Tier 1 (AT1) capital -
This is the
second type of loss-absorbing capital and
must be capable of absorbing losses on a
going concern basis. These instruments are
either written down or converted into CET1
capital when the CET1 ratio falls below a pre-
specified level.
Tier 2 capital -
Tier 2 capital is the bank
entities' supplementary capital and provides
loss absorption on a gone concern basis.
Tier
2 capital absorbs losses after Tier 1 capital.
It typically consists of subordinated debt
securities which must have a minimum of five
years to maturity at all times to be fully
Minimum requirement for own
funds and eligible liabilities (MREL)
In addition to regulatory capital, certain loss-
absorbing instruments issued by NatWest
Group, such as eligible senior notes and Tier
2 capital instruments, may be used to meet
MREL. MREL comprises regulatory capital
(Common Equity Tier 1, Additional Tier 1 and
Tier 2) together with specific senior or
subordinated bail-inable debt. To quality,
instruments must be fully paid-up, have a
remaining maturity of at least one year, and
be capable of being written down or
converted into equity should the Natwest
Group enter resolution. These resources
support “gone-concern” requirements,
ensuring that sufficient loss-absorbing
capacity is available to facilitate an orderly
resolution if the Bank of England determines
that NatWest Group has failed or is likely to
fail.
Liquidity
NatWest Group maintains a prudent
approach to the definition of liquidity portfolio
to ensure it is available when and where
required, taking into account regulatory, legal
and other constraints. Following ringfencing
legislation, liquidity is no longer considered
fungible across NatWest Group. Principal
liquidity portfolios are maintained in the UK
Domestic Liquidity Sub-Group (UKDoLSub)
(primarily in NatWest Bank Plc), NatWest
Markets Plc, RBS International Limited and
RBSH N.V.
Some disclosures in this section where
relevant are presented, on a consolidated
basis, for NatWest Group and the UK DoLSub.
Liquidity portfolio is divided into primary and
secondary liquidity as follows:
•
Primary liquidity is LCR eligible assets and
includes cash and balances at central
banks, Treasury bills and high quality
government securities.
•
Secondary liquidity is assets eligible as
collateral for local central bank liquidity
facilities. These assets include own-issued
securitisations or loans that are retained
on balance sheet and pre-positioned with
a central bank so that they may be
converted into additional sources of
liquidity at very short notice.
Funding
NatWest Group maintains a diversified set of
funding sources, including customer deposits,
wholesale deposits and term debt issuance.
These are managed against both internal
funding and regulatory metrics. The principal
levels at which funding risk is managed are at
NatWest Group, NatWest Holdings Group, UK
DoLSub, NatWest Markets Plc, RBS
International Limited and RBSH N.V.. NatWest
Group also retains access to central bank
funding facilities.
For further details on capital constituents and
the regulatory framework covering capital,
liquidity and funding requirements, refer to
the 2025 NatWest Group Pillar 3 Report.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
234
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
235
Capital, liquidity and funding risk continued
Capital risk management
Capital management ensures that there is
sufficient capital and other loss-absorbing
instruments to operate effectively including
meeting minimum regulatory requirements,
operating within Board-approved risk
appetite, maintaining its credit rating and
supporting its strategic goals.
Capital management is critical in supporting
the businesses and is enacted through an
end-to-end framework across businesses and
legal entities. Capital is managed within the
organisation at the following levels; NatWest
Group consolidated, NWH Group sub
consolidated, NatWest Markets Plc, RBS
Holdings N.V. and RBS International Limited.
The banking subsidiaries within NWH Group
are governed by the same principles,
processes and management as NatWest
Group. Note that although the
aforementioned entities are regulated in line
with Basel III principles, local implementation
of the framework differs across geographies.
Capital planning is integrated into NatWest
Group’s wider annual budgeting process and
is assessed and updated at least monthly.
Regular returns are submitted to the PRA
which include a two-year rolling forecast
view. Other elements of capital management,
including risk appetite and stress testing, are
set out on pages 181 to 186.
Produce capital plans
Capital plans are produced for NatWest
Group, its key operating entities and its
businesses over a five-year planning horizon
under expected and stress conditions.
Stressed capital plans are produced to
support internal stress testing in the ICAAP
for regulatory purposes.
Shorter-term forecasts are developed
frequently in response to actual performance,
changes in internal and external business
environment and to manage risks and
opportunities.
Assess capital adequacy
Capital plans are developed to maintain
capital of sufficient quantity and quality to
support NatWest Group’s business, its
subsidiaries and strategic plans over the
planning horizon within approved risk
appetite, as determined via stress testing,
and minimum regulatory requirements.
Capital resources and capital requirements
are assessed across a defined planning
horizon.
Impact assessment captures input from
across NatWest Group including from
businesses.
Inform capital actions
Capital planning informs potential capital
actions including buy backs, redemptions,
dividends and new issuance to external
investors or via internal transactions.
Decisions on capital actions will be influenced
by strategic and regulatory requirements, risk
appetite, costs and prevailing market
conditions.
As part of capital planning, NatWest Group
will monitor its portfolio of external capital
securities and assess the optimal blend and
most cost effective means of financing.
Capital planning is one of the tools that
NatWest Group uses to monitor and manage
capital risk on a going and gone concern
basis, including the risk of excessive leverage.
Liquidity risk management
NatWest Group manages its liquidity risk
taking into account regulatory, legal and
other constraints to ensure sufficient liquidity
is available where required to cover liquidity
stresses.
The principal levels at which liquidity risk is
managed are:
•
NatWest Group
•
NatWest Holdings Group
•
UK DoLSub
•
NatWest Markets Plc
•
NatWest Markets Securities Inc.
•
RBS International Limited
•
RBSH N.V.
The UK DoLSub is PRA-regulated and
comprises NatWest Holdings three licensed
deposit-taking UK banks: National
Westminster Bank Plc (NWB Plc), The Royal
Bank of Scotland plc (RBS plc) and Coutts &
Company.
NatWest Group categorises its liquidity
portfolio, including its locally managed liquidity
portfolios, into primary and secondary liquid
assets. The size of the liquidity portfolios are
determined by referencing NatWest Group’s
liquidity risk appetite. NatWest Group retains
a prudent approach to setting the
composition of the liquidity portfolios, which is
subject to internal policies applicable to all
entities and limits over quality of
counterparty, maturity mix and currency mix.
RBS International Limited and RBSH N.V. hold
locally managed portfolios that comply with
local regulations that may differ from PRA
rules. The liquidity value of the portfolio is
determined by taking current market prices
and applying a discount or haircut, to give a
liquidity value that represents the amount of
cash that can be generated by the asset.
Funding risk management
NatWest Group manages funding risk through
a comprehensive framework which measures
and monitors the funding risk on the balance
sheet including quantitative and qualitative
analysis of the behavioural aspects of its
assets and liabilities as well as the funding
concentration.
Prudential regulation changes that
may impact capital requirements
NatWest Group faces numerous changes in
prudential regulation that may impact the
minimum amount of capital it must hold and
consequently may increase funding costs and
reduce return on equity.
Regulatory changes are actively monitored by
NatWest Group, including engagement with
industry associations and regulators and
participation in quantitative impact studies.
Monitoring the changing regulatory landscape
forms a fundamental part of capital planning
and management of its business. NatWest
Group believes that its strategy to focus on
simpler, lower-risk activities within a more
resilient recovery and resolution framework
will enable it to manage the impact of these.
UK and EU implementation of Basel
framework
The Basel framework is an internationally
agreed set of measures developed by the
Basel Committee on Banking Supervision
(BCBS). The Basel III standards are minimum
requirements which apply to internationally
active banks and ensure a global level playing
field on financial regulation. Individual
jurisdictions must decide how to implement
the standards.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
236
Capital, liquidity and funding risk continued
UK Basel III reforms & guidance
On 20 January 2026, the PRA published its
final Basel 3.1 rules in relation to PS17/23
and PS9/24, re-affirming that implementation
of the reforms will take place on 1 January
2027. For Market Risk, the PRA decided to
delay the FRTB-IMA implementation until 1
January 2028, giving firms the option to use
their existing IMA permissions until then. The
policy statement included amendments to
certain FRTB ASA (Alternative Standardised
Approach) requirements, including a
permissions regime for the residual risk add-
on (RRAO). The policy statement also made
minor amendments, corrections and
clarifications to the calculation of Credit Risk
and Operational Risk RWAs.
In 2025, the PRA also confirmed in PS7/25 its
approach to Pillar 2A lending adjustments for
Basel 3.1, ensuring that the removal of SME
and infrastructure support factors from Pillar
1 RWAs does not raise overall capital
requirements.
We expect Basel 3.1 to increase RWAs by
around £10 billion on 1 January 2027.
EU Basel III reforms
Equivalent changes in the EU capital rules
relating to the Basel III standards are
implemented in the EU by the latest Banking
Package (CRR III/ CRD VI) which entered into
force on
9 July 2024.
The EU CRR III rules became effective on 1
January 2025, except for the Market Risk
FTRB rules which will be implemented on 1
January 2027. In November 2025, the
European Commission issued a consultation
for targeted amendments to the FRTB
framework. The impact of these changes will
be limited to NatWest Group’s EU subsidiaries.
The CRD VI requirements must be
incorporated into the national legislation of
EU member states by early 2026. Among
other changes, the directive introduces new
prudential capital and liquidity standards for
third
‑
country branches, which will apply from
11 January 2027. These changes will only
affect NatWest Group’s EU third-country
branches where certain conditions are met.
NatWest Group continues to evaluate its EU
operating model, making adaptations as
necessary
Other developments in 2025
UK Capital Requirements review
In December 2025, the Financial Policy
Committee (FPC) published its updated
assessment of the appropriate level and
structure of capital requirements for the UK
banking sector, alongside a broader review of
the capital framework. The Committee noted
that the system-wide benchmark Tier 1
capital requirement is now considered to be
around 13% of RWAs, compared with the
earlier benchmark of approximately 14%. The
UK countercyclical capital buffer rate was
maintained at its neutral setting of 2%.
At the same time, the FPC launched a
broader consultation on capital requirements,
open until 2 April 2026. The consultation
covers several areas, including the ensuring
the leverage ratio continues to operate as
intended; improving the usability and
effectiveness of capital buffers; and assessing
the calibration and interaction of
domestic-exposure-based requirements to
ensure they remain proportionate and free
from unintended overlaps.
O-SII buffers
In July 2025, the PRA re issued its 2024 O SII
buffer rates to incorporate the FPC’s revised
approach to O SII buffer thresholds, which
now includes indexation. NatWest Group plc
remains on the PRA’s O SII list, and the O SII
buffer for its ring fenced sub group, NatWest
Holdings Group, was maintained at 1.5%.
Leverage ratio requirements
In November 2025, PRA published final policy
in PS22/25 which increases the retail deposit
threshold for the application of the minimum
leverage ratio requirements (3.25% and
applicable buffers) from £50 billion to £75
billion. This policy took effect on 1 January
2026.
PRA Step-in risk framework
implementation
In April 2025, the PRA finalised its policy for
the identification and management of step-in
risk for UK banks, aligning to the BCBS
guidelines. Step-in risk is deemed a Pillar 2
risk and must be assessed as part of the
firm’s ICAAP. The PRA expects governance,
monitoring and controls to be embedded
within the existing risk management
framework.
The requirements took effect on
1 January 2026.
MREL requirements
In July 2025, the Bank of England published
final policy changes relating to its approach to
setting to setting a MREL. The revised rules
introduce a requirement to use the full
accounting value for measuring eligible
liabilities towards MREL resources. The policy
changes took effect from 1 January 2026.
Prudential treatment of non-UK Covered
bonds
HMT is considering the introduction of an
Overseas Prudential Requirements Regime
(OPRR) that could be used to designate
equivalency for non-UK covered bonds.
Pending finalisation of this approach, the PRA
do not expect firms to alter their approach to
inclusion of non-UK covered bonds including
for new issuances, in Level 2 HQLA (High
Quality Liquid Assets) under the Liquidity
Coverage Ratio (CRR) Part of the PRA
Rulebook.
Summary of future changes to
prudential regulation in UK that
may impact NatWest Group
The table below covers expected future
changes to prudential regulation in the UK
which may impact NatWest Group at a
consolidated level. Certain entities within the
group will be exposed to changes in
prudential regulation from other legislative
bodies and/or local supervisory authorities
where NatWest Group’s entities are
authorised (e.g. the EU and Jersey) on a solo
basis and these changes may be different in
substance, scope and timing from those
highlighted below.
In addition to the future changes shown in
the table below, the model changes required
under CRD IV are still under development and
subject to PRA approval.
In line with all firms
with permissions to use the IRB approach,
NatWest Group is currently undertaking a
programme of model and rating system
development, to align with new regulations
which came into force on 1 January 2022.
The final CRD IV model outcomes may lead
to changes in RWAs in 2026 and beyond.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
237
Capital, liquidity and funding risk continued
Area of development | Key changes | Status /Implementation date |
Basel III reforms | ||
PRA Basel 3.1 Implementation | Output floor – CET1% calculation | Status : Final rules published in PS1/26. |
• The output floor will apply at the highest level of consolidation for UK groups (e.g., NatWest Group) and at | Implementation date : 1 January 2027, | |
the sub-consolidated level for ring ‑ fenced sub-groups (e.g., NatWest Holdings Group). | except for FRTB-IMA rules which will | |
• It will apply to the full capital stack, including capital buffers. | apply from 1 January 2028. | |
• A transitional period applies, with the floor set at 60% from 1 January 2027, increasing to 72.5% from 1 | ||
January 2030. | ||
| Credit Risk RWAs (STD, IRB, FIRB) | We expect Basel 3.1 to increase RWAs by | |
• Significant revisions to the standardised credit risk approach, including changes to unrated corporates, | around £10 billion on 1 January 2027. | |
SMEs, specialised lending, mortgages and equity exposures. | ||
• Restrictions to the IRB framework, requiring the standardised approach for central government and equity | ||
exposures and FIRB for financial institutions and large corporates, alongside new input floors and other | ||
modelling updates. | ||
• Removal of the SME and infrastructure supporting factors from both IRB and standardised approaches. | ||
• Amending the credit risk mitigation framework, withdrawing certain internal modelling approaches, removing | ||
the double-default treatment and introducing a new risk-weight substitution method for some exposures. | ||
Market Risk RWAs | ||
• Implementing new modelled and standardised approaches under the FRTB framework, including the | ||
Alternative Standardised Approach (ASA) for which a residual-risk-add ‑ on permissions regime has been | ||
confirmed. | ||
• Revision of the banking–trading book boundary. | ||
• A one ‑ year deferral of FRTB-IMA to 1 January 2028, with existing IMA permissions remaining in place until | ||
that date. | ||
• Policy changes to the capitalisation of FX risk are also being introduced. | ||
CVA/ Counterparty Credit Risk RWAs | ||
• Removal of the modelled CVA approach and introducing two new methodologies: SA ‑ CVA and BA ‑ CVA. | ||
• Implementing a new standardised CVA framework aligned with Basel standards, including the removal of | ||
exemptions previously applied to sovereigns, non ‑ financial counterparties and pension funds. | ||
• Reducing the SA ‑ CCR alpha factor from 1.4 to 1 for non ‑ financial counterparties and pension funds. | ||
Operational Risk RWAs | ||
• Implementation of a new standardised approach. | ||
• Internal Loss Multiplier (ILM) set to 1. | ||
• Changes to the income requirements in scope of the business indicator. |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
238
Capital, liquidity and funding risk continued
Area of development | Key changes | Status /Implementation date |
Pillar 2A reforms | ||
Streamlining the Pillar 2A capital | • Finalisation of rules to streamline firm ‑ specific capital communications, by simplifying both the content and | Status : Final policy for capital |
framework and the capital | the processes for setting Pillar 2A requirements, systemic buffers and the Additional Leverage Ratio Buffer | communications published in PS2/25. |
communications process | (ALRB). | |
• Minor clarifications for IRRBB and pension obligation risk within Pillar 2A, with no impact on capital | Near-final rules for IRRBB and Pension | |
requirements and no change to the PRA’s underlying approaches to these risks. | risk published in PS18/25. | |
Implementation dates: | ||
PS2/25: 31 March 2025 | ||
PS18/25: 1 July 2026 | ||
Pillar 2A methodologies review | Phase 1 | Status : Awaiting final rules; PRA |
| • Policy proposals under CP12/25 to update the Pillar 2A framework to address Basel 3.1 impacts. | consultation under CP12/25 closed in | |
• Introduction of Pillar 2A lending adjustments for Basel 3.1 under PS7/25 (May 2025), compensating for the | September 2025. | |
removal of SME and infrastructure support factors. | Implementation dates: | |
| Phase 2 | Phase 1: 1 July 2026, for the changes to | |
• It will involve a deeper review of individual Pillar 2A methodologies to refine expectations, improve | pension obligation risk, market risk and | |
| effectiveness, and identify further burden ‑ reduction opportunities. | counterparty credit risk. | |
Phase 2: 1 January 2027, for the changes | ||
to credit risk and operational risk | ||
including P2A lending adjustments. | ||
UK CRR restatements | ||
PRA restatements of assimilated | 2026 implementation | Status : Final policy published in PS12/25 |
law – 2026 & 2027 | • Restatement of capital definitions, making no substantive changes. | Implementation date : 1 January 2026 |
implementations | • Clarification of supervisory expectations for the inclusion of interim profits in CET1 capital and the conditions | |
for reducing AT1 and T2 instruments. | ||
• Existing ECAI mappings are to be onshored. | ||
• Supervisory expectations for synthetic risk transfer (SRT) securitisations are further clarified. | ||
2027 implementation | Status : Near final rules published in | |
| • Substantive revisions to the securitisation capital framework, including changes to the SEC ‑ SA calculation. | PS19/25; final rules expected in Q1 2026. | |
• Updating of the capital treatment for exposures under the Mortgage Guarantee Scheme | Implementation date : 1 January 2027 | |
UK MREL requirements | ||
Bank of England - Amendments to | • Policy updates to setting the minimum requirement for own funds and eligible liabilities (MREL). | Status : Final MREL Statement of Policy |
the approach to setting a minimum | • Updated supervisory expectations for measuring non ‑ CET1 instruments, confirming the use of accounting | published |
requirement for own funds and | values for this purpose. | |
eligible liabilities | Implementation date : 1 January 2026 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
239
Capital, liquidity and funding risk continued
Area of development | Key changes | Status /Implementation date |
Step-in Risk & Large Exposures reforms | ||
PRA framework for step-in risk | • Implementation of the Basel guidelines for step-in risk in the PRA Rulebook. | Status : Final policy published in PS5/25 |
• Step-in risk is deemed a Pillar 2 risk and must be assessed as part of the NatWest Group’s ICAAP. | and SS1/25 (April 2025) | |
Implementation date : 1 January 2026 | ||
PRA amendments to the Large | Part 1 | Status : Final policy for Phase 1 published |
Exposures Framework | • Onshoring of the EBA guidelines for the identification requirements of Connected Clients in the Large | in PS14/25 (July 2025) |
Exposures (CRR) part of the PRA Rulebook. | Implementation dates: | |
• Stricter requirements for exposures to certain French counterparties. | Part 1: 1 January 2026 | |
Part 2 | Part 2: Not yet confirmed | |
• Further policy changes stemming from CP14/24 are expected in 2026 with respect to mandatory | ||
substitution approach, the removal of the use of IMM methods for calculating exposure values for SFTs and | ||
revised rules for intragroup permissions. |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
240
Capital, liquidity and funding risk continued
Key points
CET1 ratio
(2024 - 13.6%)
The CET1 ratio increased by 40 basis points to 14.0% due to a £2.1 billion
increase in CET1 capital offset by a £10.1 billion increase in RWAs.
The CET1 capital increase was mainly driven by an attributable profit to
ordinary shareholders of £4.7 billion (net of ordinary interim dividend paid)
and other movements on reserves and regulatory adjustments of £0.7 billion
partially offset by a share buyback of £1.5 billion and a foreseeable ordinary
dividend accrual of £1.8 billion.
RWAs
(2024 - £183.2bn)
Total RWAs increased by £10.1 billion to £193.3 billion mainly reflecting:
•
an increase in credit risk RWAs of £7.6 billion, primarily reflecting
franchise lending growth, including unsecured balances acquired
from Sainsbury's Bank offset by the benefits of RWA management
actions.
An increase in CRD IV model updates partially offset by
the movements in risk metrics and foreign exchange.
•
an increase in counterparty credit risk RWAs of £0.5 billion mainly
driven by revised close-out periods for securities financing
transactions partially offset by new bespoke portfolio credit default
swap and CRD IV model updates.
•
an increase in operational risk RWAs of £3.8 billion following the
annual recalculation, including an acceleration of £1.6 billion from
Q1 2026 to align with market practice.
•
a reduction in market risk RWAs of £1.7 billion, mainly driven by
active risk management on options trading and changes in
government bond and bond futures positions.
UK leverage ratio
(2024 - 5.0%)
The leverage ratio decreased by 20 basis points to 4.8% due to a £47.2 billion
increase in leverage exposure partially offset by a £1.4 billion increase in Tier
1 capital. The key drivers in the leverage exposure movement were an
increase in other financial assets and other off balance sheet items.
MREL ratio
(2024 - 33.0%)
The MREL ratio decreased by 110 basis points driven by a £10.1 billion
increase in RWAs partially offset by a £1.2 billion increase in MREL
resources.
MREL resources increased to £61.6 billion driven by a £2.1 billion increase
in CET1 capital offset by a £0.7 billion decrease in AT1 capital, a £0.2 billion
decrease in Tier 2 capital, and a £0.1 billion decrease in senior unsecured
debt. AT1 and Tier 2 capital movements were driven by issues and
redemptions in the period, whilst the senior unsecured debt movement was
driven by issues and redemptions totalling £1.7 billion, offset by a $1.5bn
debt instrument that ceased to count towards MREL resources 12 months
before it matures, and foreign exchange movements of £0.6 billion.
Liquidity portfolio
(2024 - £222.3bn)
The liquidity portfolio increased by £15.6 billion to £237.9 billion during the
year. Primary liquidity decreased by £3.8 billion to £157.3 billion, driven by
strong lending growth, TFSME tranche repayment partially offset by
deposit growth and new issuances. Secondary liquidity increased by £19.4
billion due to an increase in pre-positioned collateral at the Bank of
England.
LCR average
(2024 - 151%)
The average Liquidity Coverage Ratio (LCR) decreased by 4% to 147%,
during 2025, driven by increased lending partially offset by deposit growth.
NSFR average
(2024 - 137%)
The average Net Stable Funding Ratio (NSFR) decreased by 2% to 135%
during 2025 driven by increased lending, partially offset by deposit growth.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
241
Capital, liquidity and funding risk continued
Minimum requirements
Maximum Distributable Amount (MDA) and Minimum Capital Requirements
NatWest Group is subject to minimum capital requirements relative to RWAs. The table below
summarises the minimum capital requirements (the sum of Pillar 1 and Pillar 2A), and the
additional capital buffers which are held in excess of the regulatory minimum requirements and
are usable in stress.
Where the CET1 ratio falls below the sum of the minimum capital and the combined buffer
requirement, there is a subsequent automatic restriction on the amount available to service
discretionary payments (including AT1 coupons), known as the MDA. Note that different capital
requirements apply to individual legal entities or sub-groups and the table shown does not reflect
any incremental PRA buffer requirements, which are not disclosable.
The current capital position provides significant headroom above both our minimum requirements
and our MDA threshold requirements.
Type | CET1 | Total Tier 1 | Total capital |
Pillar 1 requirements | 4.5% | 6.0% | 8.0% |
Pillar 2A requirements | 1.6% | 2.2% | 2.9% |
Minimum Capital Requirements | 6.1% | 8.2% | 10.9% |
Capital conservation buffer | 2.5% | 2.5% | 2.5% |
Countercyclical capital buffer (1) | 1.7% | 1.7% | 1.7% |
MDA threshold (2) | 10.3% | n/a | n/a |
Overall capital requirement | 10.3% | 12.4% | 15.1% |
Capital ratios at 31 December 2025 | 14.0% | 16.4% | 19.3% |
Headroom (3) (4) | 3.7% | 4.0% | 4.2% |
(1)
The UK countercyclical buffer (CCyB) rate is currently being maintained at 2%. This may vary in either direction in the future subject
to how risks develop. Foreign exposures may be subject to different CCyB rates depending on the rate set in those jurisdictions.
(2)
Pillar 2A requirements for NatWest Group are set as a variable amount with the exception of some fixed add-ons.
(3)
The headroom does not reflect excess distributable capital and may vary over time.
(4)
Headroom as at 31 December 2024 was CET1 3.1%, Total Tier 1 3.9% and Total Capital 4.3%.
Leverage ratios
The table below summarises the minimum ratios of capital to leverage exposure under the binding
PRA UK leverage framework applicable for NatWest Group.
Type | CET1 | Total Tier 1 |
Minimum ratio | 2.44% | 3.25% |
Countercyclical leverage ratio buffer (1) | 0.6% | 0.6% |
Total | 3.04% | 3.85% |
(1)
The countercyclical leverage ratio buffer is set at 35% of NatWest Group’s CCyB.
Liquidity and funding ratios
The table below summarises the minimum requirements for key liquidity and funding metrics
under the PRA framework.
Type | |
Liquidity Coverage Ratio (LCR) | 100% |
| Net Stable Funding Ratio (NSFR) | 100% |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
242
Capital, liquidity and funding risk continued
Measurement
Capital, risk-weighted assets and leverage: Key metrics
The tables below show key prudential metrics calculated in accordance with current PRA rules.
2025 | 2024 | |
Capital adequacy ratios (1) | % | % |
CET1 | 14.0 | 13.6 |
Tier 1 | 16.4 | 16.5 |
Total | 19.3 | 19.7 |
RWAs | £m | £m |
Credit risk | 155,610 | 148,078 |
Counterparty credit risk | 7,609 | 7,103 |
Market risk | 4,474 | 6,219 |
Operational risk | 25,595 | 21,821 |
Total RWAs | 193,288 | 183,221 |
Capital | £m | £m |
CET1 | 27,066 | 24,928 |
Tier1 | 31,621 | 30,187 |
Total | 37,375 | 36,105 |
Leverage ratios | £m | £m |
Tier 1 capital | 31,621 | 30,187 |
UK leverage exposure | 654,954 | 607,799 |
UK leverage ratio (%) (2) | 4.8% | 5.0% |
UK average Tier 1 capital (3) | 32,296 | 29,923 |
UK average leverage exposure (3) | 657,670 | 600,354 |
UK average leverage ratio (%) (3) | 4.9% | 5.0% |
(1)
The IFRS 9 transitional capital rules in respect of ECL provisions ceased to apply on 1 January 2025. The impact of the IFRS 9 transitional
adjustments at 31 December 2024 was £33 million for CET1 capital, £33 million for total capital and £3 million RWAs. Excluding this
adjustment at 31 December 2024, the CET1 ratio was 13.6%, Tier 1 capital ratio was 16.5% and the Total capital ratio was 19.7%.
(2)
The UK leverage exposure and Tier 1 capital are calculated in accordance with current PRA rules. Excluding the IFRS 9 transitional
adjustment in respect of ECL provision, the UK leverage ratio at 31 December 2024 was 5.0%
(3)
Based on the daily average of on-balance sheet items and three month-end average of off-balance sheet items and Tier 1 capital.
Capital flow statement
The table below analyses the movement in CET1, AT1 and Tier 2 capital for the year ended 31
December 2025.
CET1 | AT1 | Tier 2 | Total | |
£m | £m | £m | £m | |
At 31 December 2024 | 24,928 | 5,259 | 5,918 | 36,105 |
Attributable profit for the period | 5,479 | - | - | 5,479 |
Ordinary interim dividend paid | (768) | - | - | (768) |
Share buyback | (1,500) | - | - | (1,500) |
Foreseeable ordinary dividends | (1,837) | - | - | (1,837) |
Foreign exchange reserve | 7 | - | - | 7 |
FVOCI reserve | 116 | - | - | 116 |
Own credit | 14 | - | - | 14 |
Share based remuneration and shares vested | ||||
under employee share schemes | 270 | - | - | 270 |
Goodwill and intangibles deduction | 158 | - | - | 158 |
Deferred tax assets | 280 | - | - | 280 |
Prudential valuation adjustments | 63 | - | - | 63 |
New issues of capital instruments | - | 1,244 | 823 | 2,067 |
Redemption of capital instruments | (22) | (1,948) | (1,000) | (2,970) |
Foreign exchange movements | - | - | 13 | 13 |
Adjustment under IFRS 9 transitional arrangements | (33) | - | - | (33) |
Expected loss less impairment | (62) | - | - | (62) |
Other movements | (27) | - | - | (27) |
At 31 December 2025 | 27,066 | 4,555 | 5,754 | 37,375 |
•
For CET1 movements refer to the key points on page 240.
•
The AT1 movement reflects the £0.7 billion 7.500% Reset Perpetual Subordinated
Contingent Convertible Additional Tier 1 Capital Notes issued in March 2025 and the
£0.5 billion 7.625% Reset Perpetual Subordinated Contingent Convertible Additional Tier
1 Capital Notes issued in September 2025 offset by the redemption of $1.15 billion
8.000% Perpetual Subordinated Contingent Convertible Additional Tier 1 Capital Notes
in August 2025 and $1.5 billion 6.000% Perpetual Subordinated Contingent Convertible
Additional Tier 1 Capital Notes in December 2025.
•
Tier 2 movements of £0.2 billion include a decrease of £1.0 billion due to the
redemption of 3.622% Fixed to Fixed Rate Reset Tier 2 Notes due 2030 in May 2025
partially offset by an increase of £0.8 billion for a €1.0 billion 3.723% Fixed to Fixed Rate
Reset Tier 2 Notes 2035 issued in February 2025 and foreign exchange movements.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
243
Capital, liquidity and funding risk continued
Capital generation pre-distributions
31 December | 31 December | |
2025 | 2024 | |
£m | £m | |
CET1 | 27,066 | 24,928 |
CET1 capital pre-distributions (1) | 31,171 | 28,920 |
RWAs | 193,288 | 183,221 |
% | % | |
CET1 ratio - opening at 1 January | 13.61 | 13.36 |
CET1 pre-distributions - closing | 16.13 | 15.78 |
Capital generation pre-distributions (1) | 2.52 | 2.43 |
(1)
The calculation of capital generation pre-distributions uses CET1 capital pre-distributions. Distributions include ordinary dividends
paid, foreseeable ordinary dividends and share buybacks.
Risk-weighted assets
The table below analyses the movement in RWAs during the year, by key drivers.
Credit | Counterparty | Market | Operational | ||
risk | credit risk | risk | risk | Total | |
£bn | £bn | £bn | £bn | £bn | |
At 31 December 2024 | 148.1 | 7.1 | 6.2 | 21.8 | 183.2 |
Foreign exchange movement | (0.3) | - | - | - | (0.3) |
Business movement | - | 0.3 | (1.7) | 3.8 | 2.4 |
Risk parameter changes | (0.9) | - | - | - | (0.9) |
Methodology changes | - | - | - | - | - |
Model updates | 7.1 | 0.2 | - | - | 7.3 |
Acquisitions and disposals | 1.6 | - | - | - | 1.6 |
At 31 December 2025 | 155.6 | 7.6 | 4.5 | 25.6 | 193.3 |
The table below analyses the movement in RWAs by segment during the year.
Private Banking | |||||
Retail | & Wealth | Commercial & | Central items | Total NatWest | |
Banking | Management | Institutional | & other | Group | |
Total RWAs | £bn | £bn | £bn | £bn | £bn |
At 31 December 2024 | 65.5 | 11.0 | 104.7 | 2.0 | 183.2 |
Foreign exchange movement | - | - | (0.3) | - | (0.3) |
Business movement | (0.5) | 0.4 | 3.0 | (0.5) | 2.4 |
Risk parameter changes | 0.3 | - | (1.2) | - | (0.9) |
Methodology changes | - | - | - | - | - |
Model updates | 1.6 | - | 5.7 | - | 7.3 |
Acquisitions and disposals | 1.6 | - | - | - | 1.6 |
At 31 December 2025 | 68.5 | 11.4 | 111.9 | 1.5 | 193.3 |
Credit risk | 59.1 | 9.6 | 85.4 | 1.5 | 155.6 |
Counterparty credit risk | 0.2 | 0.1 | 7.3 | - | 7.6 |
Market risk | 0.1 | - | 4.4 | - | 4.5 |
Operational risk | 9.1 | 1.7 | 14.8 | - | 25.6 |
Total RWAs | 68.5 | 11.4 | 111.9 | 1.5 | 193.3 |
Total RWAs increased by £10.1 billion during the period mainly reflecting:
•
A reduction in risk-weighted assets from foreign exchange movements of £0.3 billion primarily
due to sterling appreciation versus the US Dollar and depreciation versus euro.
•
An increase in business movements of £2.4 billion, mainly driven by an increase in credit risk
reflecting franchise lending growth offset by the benefits of RWA management actions.
An
increase in operational risk following the annual recalculation, including an acceleration of
£1.6 billion from Q1 2026 to align with market practice and an increase in counterparty
credit risk due to revised close-out periods for securities financing transactions partially offset
by new bespoke portfolio credit default swap. There was a decrease in market risk
mainly
driven by active risk management on options trading and changes in government bond and bond
futures positions.
•
A reduction in risk parameters of £0.9 billion primarily driven by movements in risk metrics
within Commercial & Institutional and Retail Banking.
•
An increase in model updates of £7.3 billion primarily driven by CRD IV model updates within
Commercial & Institutional and Retail Banking.
•
An increase in acquisitions of £1.6 billion driven by balances acquired from Sainsbury’s Bank.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
244
Capital, liquidity and funding risk continued
Leverage exposure
The leverage metrics for UK entities are calculated in accordance with the Leverage ratio
(CRR) part of the PRA Rulebook.
31 December | 31 December | |
2025 | 2024 | |
£m | £m | |
Cash and balances at central banks | 85,182 | 92,994 |
Trading assets | 46,537 | 48,917 |
Derivatives | 60,789 | 78,406 |
Financial assets | 505,609 | 469,599 |
Other assets | 16,436 | 18,069 |
Total assets | 714,553 | 707,985 |
Derivatives | ||
- netting and variation margin | (58,769) | (76,101) |
- potential future exposures | 18,155 | 16,692 |
Securities financing transactions gross up | 2,593 | 2,460 |
Other off balance sheet items | 70,909 | 59,498 |
Regulatory deductions and other adjustments | (9,699) | (11,014) |
Claims on central banks | (81,616) | (89,299) |
Exclusion of bounce back loans | (1,172) | (2,422) |
UK leverage exposure | 654,954 | 607,799 |
UK leverage ratio (%) | 4.8 | 5.0 |
Liquidity key metrics
The table below sets out the NatWest Group key liquidity and related metrics on an average
basis.
2025 | 2024 | |||
NatWest Group | UK DoLSub | NatWest Group | UK DoLSub | |
Liquidity Coverage Ratio (1) | 147% | 135% | 151% | 142% |
Net Stable Funding Ratio (2) | 135% | 129% | 137% | 130% |
Stressed Outflow Coverage (3) | 158% | 143% | 157% | 143% |
(1)
The LCR Average is calculated as the average of the preceding 12 months.
(2)
The NSFR Average is calculated as the average of the preceding four quarters.
(3)
NatWest Group’s Stressed Outflow Coverage (SOC) is an internal measure calculated by reference to liquid assets as a percentage of net
stressed contractual and behavioural outflows over three months. The most severe outcome is selected from a range of scenarios
comprising of market-wide, idiosyncratic and a combination of both. This assessment is performed in accordance with PRA guidance.
The
SOC Average is calculated as the average of the preceding 12 months.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
245
Capital, liquidity and funding risk continued
Minimum requirements of own funds and eligible liabilities (MREL)
The following table illustrates the components of estimated MREL in NatWest Group and operating subsidiaries and includes external issuances only. The roll-off profile relating to senior debt and
subordinated debt instruments is set out on page 247.
| 2025 | 2024 | |||||||
Par value (1) | Balance sheet value | Regulatory value | MREL value (2) | Par value (1) | Balance sheet value | Regulatory value | MREL value (2) | |
£bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | |
CET1 capital (3) | 27.1 | 27.1 | 27.1 | 27.1 | 24.9 | 24.9 | 24.9 | 24.9 |
Tier 1 capital: end-point CRR compliant AT1 | ||||||||
of which: NatWest Group plc (holdco) | 4.6 | 4.6 | 4.6 | 4.6 | 5.3 | 5.3 | 5.3 | 5.3 |
of which: NatWest Group plc operating subsidiaries (opcos) | - | - | - | - | - | - | - | - |
4.6 | 4.6 | 4.6 | 4.6 | 5.3 | 5.3 | 5.3 | 5.3 | |
Tier 1 capital: end-point CRR non-compliant | ||||||||
of which: holdco | - | - | - | - | - | - | - | - |
of which: opcos | 0.1 | 0.1 | - | - | 0.1 | 0.1 | - | - |
0.1 | 0.1 | - | - | 0.1 | 0.1 | - | - | |
Tier 2 capital: end-point CRR compliant | ||||||||
of which: holdco | 5.8 | 5.7 | 5.8 | 5.8 | 5.9 | 5.7 | 5.9 | 5.9 |
of which: opcos | - | - | - | - | - | - | - | - |
5.8 | 5.7 | 5.8 | 5.8 | 5.9 | 5.7 | 5.9 | 5.9 | |
Tier 2 capital: end-point CRR non compliant | ||||||||
of which: holdco | - | - | - | - | - | - | - | - |
of which: opcos | 0.2 | 0.3 | - | - | 0.2 | 0.3 | - | - |
0.2 | 0.3 | - | - | 0.2 | 0.3 | - | - | |
Senior unsecured debt securities | ||||||||
of which: holdco | 25.4 | 25.4 | - | 24.3 | 24.4 | 24.0 | - | 24.4 |
of which: opcos | 37.5 | 37.6 | - | - | 33.7 | 33.6 | - | - |
62.9 | 63.0 | - | 24.3 | 58.1 | 57.6 | - | 24.4 | |
Tier 2 capital | ||||||||
Other regulatory adjustments | - | - | - | - | - | - | - | - |
Total | 100.7 | 100.8 | 37.4 | 61.6 | 94.5 | 93.9 | 36.1 | 60.5 |
RWAs | 193.3 | 183.2 | ||||||
UK leverage exposure | 655.0 | 607.8 | ||||||
MREL as a ratio of RWAs | 31.9% | 33.0% | ||||||
MREL as a ratio of UK leverage exposure | 9.4% | 9.9% | ||||||
(1)
Par value reflects the nominal value of securities issued.
(2)
MREL value reflects NatWest Group’s interpretation of the Bank of England’s current approach to setting a MREL. Liabilities excluded from MREL include instruments with less than one year remaining to maturity, structured debt, operating company senior debt, and other instruments that do not
meet the MREL criteria. The MREL calculation includes Tier 1 and Tier 2 securities before the application of any regulatory caps or adjustments.
(3)
Shareholders’ equity was £42.6 billion (2024 - £39.4 billion).
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
246
Capital, liquidity and funding risk continued
Minimum requirements of own funds and eligible liabilities (MREL) continued
The following table illustrates the components of the stock of outstanding issuance in NatWest Group and its operating subsidiaries including external and internal issuances.
NatWest | NWM | RBS | |||||||
NatWest | Holdings | NatWest | Securities | International | |||||
Group plc | Limited | NWB Plc | RBS plc | NWM Plc | Markets N.V. | Inc.(6) | Limited (7) | ||
£bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | ||
Additional Tier 1 | Externally issued | 4.6 | - | 0.1 | - | - | - | - | - |
Additional Tier 1 | Internally issued | - | 3.7 | 3.2 | 0.5 | 1.2 | 0.2 | - | 0.1 |
4.6 | 3.7 | 3.3 | 0.5 | 1.2 | 0.2 | - | 0.1 | ||
Tier 2 | Externally issued | 5.7 | - | - | - | - | 0.3 | - | - |
Tier 2 | Internally issued | - | 5.0 | 4.1 | 0.5 | 1.1 | 0.1 | 0.3 | - |
5.7 | 5.0 | 4.1 | 0.5 | 1.1 | 0.4 | 0.3 | - | ||
Senior unsecured | Externally issued | 25.4 | - | - | - | - | - | - | - |
Senior unsecured | Internally issued | - | 14.1 | 8.1 | 1.1 | 4.3 | - | - | 0.3 |
25.4 | 14.1 | 8.1 | 1.1 | 4.3 | - | - | 0.3 | ||
Total outstanding issuance | 35.7 | 22.8 | 15.5 | 2.1 | 6.6 | 0.6 | 0.3 | 0.4 |
(1)
For AT1 & Tier 2, the balances are the IFRS balance sheet carrying amounts, which may differ from the amount which the instrument contributes to regulatory capital. Regulatory balances exclude, for example, issuance costs and fair value movements, while dated capital is required to be
amortised on a straight-line basis over the final five years of maturity.
(2)
Balance sheet amounts reported for AT1 and Tier 2 instruments are before grandfathering restrictions imposed by CRR.
(3)
Internal issuance for NWB Plc and RBS plc represents AT1, Tier 2 or Senior unsecured issuance to NatWest Holdings Limited and for NWM N.V. and NWM SI to NWM Plc.
(4)
The balances are the IFRS balance sheet carrying amounts for Senior unsecured debt category and it does not include CP, CD and short term/medium notes issued from NatWest Group operating subsidiaries.
(5)
The above table does not include CET1 numbers.
(6)
NWM Securities Inc - regulated under US broker dealer rules.
(7)
RBS International Limited - the Resolution Regime is under development in Jersey.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
247
Capital, liquidity and funding risk continued
Roll-off profile
The following table illustrates the roll-off profile of NatWest Group’s major wholesale funding programmes.
As at and for year | Roll-off profile | ||||||
ended 31 December 2025 | H1 2026 | H2 2026 | 2027 | 2028 | 2029 & 2030 | 2031 & later | |
Senior debt roll-off profile (1) | £m | £m | £m | £m | £m | £m | £m |
NatWest Group plc | 25,441 | 1,121 | - | 2,367 | 4,743 | 10,104 | 7,106 |
NWM Plc | 30,231 | 6,221 | 4,433 | 6,551 | 4,780 | 7,909 | 337 |
NatWest Bank Plc | 2,736 | 2,710 | 26 | - | - | - | - |
NWM N.V. | 2,627 | 991 | 779 | 450 | - | 40 | 367 |
NatWest Bank Plc - Covered bonds | 750 | - | - | - | - | 750 | - |
Total notes issued | 61,785 | 11,043 | 5,238 | 9,368 | 9,523 | 18,803 | 7,810 |
Subordinated debt instruments roll-off | |||||||
profile (2) | |||||||
NatWest Group plc | 5,729 | - | 982 | 630 | 1,310 | 2,807 | - |
NWM Plc | 19 | - | 17 | - | - | - | 2 |
NWM N.V. | 253 | - | - | - | - | - | 253 |
Total subordinated debt | 6,001 | - | 999 | 630 | 1,310 | 2,807 | 255 |
(1)
Based on final contractual instrument maturity.
(2)
Based on first call date of instrument; however, this does not indicate NatWest
Group’s strategy on capital and funding management. The table above does
not include debt accounted Tier 1 instruments although those instruments
form part of the total subordinated debt balance.
(3)
The roll-off table is based on sterling-equivalent balance sheet values.
Liquidity portfolio
The table below shows the composition of the liquidity portfolio with primary liquidity aligned to high-quality liquid assets on a regulatory LCR basis. Secondary liquidity comprises of assets which are
eligible as collateral for local central bank liquidity facilities and do not form part of the LCR eligible high-quality liquid assets. High-quality liquid assets cover both Pillar 1 and Pillar 2 risks.
| Liquidity value | ||||||
| 31 December 2025 | 31 December 2024 | |||||
NatWest | NWH | UK DoL | NatWest | NWH | UK DoL | |
Group (1) | Group (2) | Sub | Group (1) | Group (2) | Sub | |
£m | £m | £m | £m | £m | £m | |
Cash and balances at central banks | 81,107 | 52,307 | 51,640 | 88,617 | 58,313 | 57,523 |
High quality government/MDB/PSE and GSE bonds (3) | 61,438 | 42,214 | 42,214 | 58,818 | 43,275 | 43,275 |
Extremely high quality covered bonds | 4,415 | 4,414 | 4,414 | 4,341 | 4,340 | 4,340 |
LCR level 1 Eligible Assets | 146,960 | 98,935 | 98,268 | 151,776 | 105,928 | 105,138 |
LCR level 2 Eligible Assets (4) | 10,325 | 9,466 | 9,466 | 9,271 | 7,957 | 7,957 |
Primary liquidity (HQLA) (5) | 157,285 | 108,401 | 107,734 | 161,047 | 113,885 | 113,095 |
Secondary liquidity | 80,647 | 80,647 | 80,647 | 61,230 | 61,200 | 61,200 |
Total liquidity value | 237,932 | 189,048 | 188,381 | 222,277 | 175,085 | 174,295 |
(1)
NatWest Group includes the UK Domestic Liquidity Sub-Group (UK DoLSub),
NatWest Markets Plc and other significant operating subsidiaries that hold
liquidity portfolios. These include RBSI Ltd and NWM N.V. who hold managed
portfolios that comply with local regulations that may differ from PRA rules.
(2)
NWH Group comprises UK DoLSub and NatWest Bank Europe GmbH who
hold managed portfolios that comply with local regulations that may differ from
PRA rules.
(3)
Multilateral development bank abbreviated to MDB, public sector entities
abbreviated to PSE and government sponsored entities abbreviated to GSE.
(4)
Includes Level 2A and Level 2B.
(5)
High-quality liquid assets abbreviated to HQLA.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
248
Capital, liquidity and funding risk continued
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.
2025 | 2024 | |||||
Short-term less | Long-term more | Short-term less | Long-term more | |||
than 1 year | than 1 year | Total | than 1 year | than 1 year | Total | |
£m | £m | £m | £m | £m | £m | |
Bank Deposits | ||||||
Repos | 22,371 | 5,445 | 27,816 | 11,967 | - | 11,967 |
Other bank deposits (1) | 6,094 | 10,182 | 16,276 | 9,708 | 9,777 | 19,485 |
28,465 | 15,627 | 44,092 | 21,675 | 9,777 | 31,452 | |
Customer Deposits | ||||||
Repos | 753 | 1,043 | 1,796 | 1,363 | - | 1,363 |
Non-bank financial institutions | 53,559 | 4 | 53,563 | 48,761 | 241 | 49,002 |
Personal | 232,815 | 7,757 | 240,572 | 231,483 | 2,451 | 233,934 |
Corporate | 147,022 | 45 | 147,067 | 149,086 | 105 | 149,191 |
434,149 | 8,849 | 442,998 | 430,693 | 2,797 | 433,490 | |
Trading liabilities (2) | ||||||
Repos (3) | 26,168 | 2,410 | 28,578 | 29,752 | 810 | 30,562 |
Derivatives collateral | 11,966 | - | 11,966 | 12,509 | - | 12,509 |
Other bank and customer deposits | 454 | 286 | 740 | 627 | 268 | 895 |
Debt securities in issue - Medium term notes | 28 | 206 | 234 | 20 | 237 | 257 |
38,616 | 2,902 | 41,518 | 42,908 | 1,315 | 44,223 | |
Other financial liabilities | ||||||
Customer deposits including repos | 836 | 1,476 | 2,312 | 471 | 1,341 | 1,812 |
Debt securities in issue: | - | |||||
Commercial paper and certificates of deposit | 8,718 | 683 | 9,401 | 10,889 | 377 | 11,266 |
Medium term notes | 11,475 | 41,999 | 53,474 | 11,118 | 34,967 | 46,085 |
Covered bonds | - | 749 | 749 | - | 749 | 749 |
Securitisation | - | 1,663 | 1,663 | 295 | 880 | 1,175 |
21,029 | 46,570 | 67,599 | 22,773 | 38,314 | 61,087 | |
Subordinated liabilities | 1,076 | 5,047 | 6,123 | 1,051 | 5,085 | 6,136 |
Total funding | 523,335 | 78,995 | 602,330 | 519,100 | 57,288 | 576,388 |
Of which: available in resolution (4) | 30,049 | 29,742 | ||||
(1)
Includes £8.2 billion (2024 – £12.0 billion) relating to Term Funding Scheme
with additional incentives for Small and Medium-sized Enterprises participation.
(2)
Excludes short positions of £7.5 billion (2024 – £10.5 billion).
(3)
Comprises central & other bank repos of £8.2 billion (2024 – £7.2 billion), other
financial institution repos of £18.0 billion (2024 – £20.4 billion) and other
corporate repos of £2.4 billion (2024 – £3.0 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 £24.3 billion (2024 – £24.0 billion) under debt
securities in issue (senior MREL) and £5.7 billion (2024 – £5.7 billion) under
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
249
Capital, liquidity and funding risk continued
Contractual maturity (audited)
This table shows the residual maturity of financial instruments, based on contractual date of maturity of NatWest Group’s 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.
| Banking activities | |||||||||||
Less than | 6 months- | More than | Trading | ||||||||
1 months | 1-3 months | 3-6 months | 1 year | Subtotal | 1-3 years | 3-5 years | 5 years | Total | activities | Total | |
2025 | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
Cash and balances at central banks | 85,182 | - | - | - | 85,182 | - | - | - | 85,182 | - | 85,182 |
Trading assets | - | - | - | - | - | - | - | - | - | 46,537 | 46,537 |
Derivatives | (10) | 95 | 34 | 29 | 148 | 65 | 322 | - | 535 | 60,254 | 60,789 |
Settlement balances | 645 | - | - | - | 645 | - | - | - | 645 | - | 645 |
Loans to banks - amortised cost | 4,854 | 748 | 411 | 109 | 6,122 | 696 | - | 140 | 6,958 | - | 6,958 |
Loans to customers - amortised cost (1) | 43,857 | 19,126 | 17,086 | 23,561 | 103,630 | 66,657 | 49,262 | 202,841 | 422,390 | - | 422,390 |
Personal | 7,795 | 2,222 | 3,331 | 6,496 | 19,844 | 24,503 | 21,533 | 168,637 | 234,517 | - | 234,517 |
Corporate | 20,497 | 4,196 | 3,851 | 7,862 | 36,406 | 30,312 | 21,908 | 30,208 | 118,834 | - | 118,834 |
Non-bank financial institutions | 15,565 | 12,708 | 9,904 | 9,203 | 47,380 | 11,842 | 5,821 | 3,996 | 69,039 | - | 69,039 |
Other financial assets | 1,683 | 2,994 | 3,968 | 2,621 | 11,266 | 23,899 | 9,978 | 33,583 | 78,726 | 1,044 | 79,770 |
Total financial assets | 136,211 | 22,963 | 21,499 | 26,320 | 206,993 | 91,317 | 59,562 | 236,564 | 594,436 | 107,835 | 702,271 |
2024 | |||||||||||
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 |
(1)
Loans to customers is gross and excludes £3.5 billion (2024 - £3.3 billion) of impairment provisions.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
250
Capital, liquidity and funding risk continued
Contractual maturity (audited)
| Banking activities | |||||||||||
Less than | More than | Trading | |||||||||
1 months | 1-3 months | 3-6 months | 6 months - 1 year | Subtotal | 1-3 years | 3-5 years | 5 years | Total | activities | Total | |
2025 | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
Bank deposits excluding repos | 4,447 | 342 | 845 | 460 | 6,094 | 6,556 | 568 | 3,058 | 16,276 | - | 16,276 |
Bank repos | 20,926 | 881 | - | 564 | 22,371 | 3,616 | 1,829 | - | 27,816 | - | 27,816 |
Customer repos | 587 | 16 | - | 150 | 753 | 1,043 | - | - | 1,796 | - | 1,796 |
Customer deposits excluding repos | 380,523 | 20,637 | 17,331 | 14,905 | 433,396 | 7,785 | 13 | 8 | 441,202 | - | 441,202 |
Personal | 205,094 | 5,698 | 9,628 | 12,395 | 232,815 | 7,750 | 7 | - | 240,572 | - | 240,572 |
Corporate | 126,625 | 11,281 | 7,074 | 2,042 | 147,022 | 31 | 6 | 8 | 147,067 | - | 147,067 |
Non-bank financial institutions | 48,804 | 3,658 | 629 | 468 | 53,559 | 4 | - | - | 53,563 | - | 53,563 |
Settlement balances | 942 | - | - | - | 942 | - | - | - | 942 | - | 942 |
Trading liabilities | - | - | - | - | - | - | - | - | - | 49,022 | 49,022 |
Derivatives | 31 | 14 | 12 | 29 | 86 | 164 | 106 | 1 | 357 | 53,617 | 53,974 |
Other financial liabilities | 3,745 | 3,702 | 7,783 | 5,799 | 21,029 | 22,923 | 16,418 | 7,229 | 67,599 | - | 67,599 |
CPs and CDs | 1,500 | 1,718 | 2,497 | 3,003 | 8,718 | 683 | - | - | 9,401 | - | 9,401 |
Medium term notes | 2,209 | 1,459 | 5,107 | 2,700 | 11,475 | 21,229 | 15,412 | 5,358 | 53,474 | - | 53,474 |
Covered bonds | - | - | - | - | - | - | 749 | - | 749 | - | 749 |
Securitisations | - | - | - | - | - | 3 | - | 1,660 | 1,663 | - | 1,663 |
Customer deposits including repos | 36 | 525 | 179 | 96 | 836 | 1,008 | 257 | 211 | 2,312 | - | 2,312 |
Subordinated liabilities | - | 57 | 20 | 999 | 1,076 | 1,892 | 2,780 | 375 | 6,123 | - | 6,123 |
Notes in circulation | 3,164 | - | - | - | 3,164 | - | - | - | 3,164 | - | 3,164 |
Lease liabilities | 4 | 19 | 21 | 41 | 85 | 158 | 62 | 230 | 535 | - | 535 |
Total financial liabilities | 414,369 | 25,668 | 26,012 | 22,947 | 488,996 | 44,137 | 21,776 | 10,901 | 565,810 | 102,639 | 668,449 |
2024 | |||||||||||
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 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
251
Capital, liquidity and funding risk continued
Senior notes and subordinated liabilities - residual maturity profile by instrument type (audited)
The table below shows NatWest Group’s debt securities in issue and subordinated liabilities by residual maturity.
Trading | ||||||||
liabilities | Other financial liabilities | |||||||
| Debt securities in issue | ||||||||
Debt securities | Commercial | Covered | Subordinated | Total notes | ||||
in issue MTNs | paper and CDs | MTNs | bonds | Securitisation | liabilities | Total | in issue | |
2025 | £m | £m | £m | £m | £m | £m | £m | £m |
Less than 1 year | 28 | 8,718 | 11,475 | - | - | 1,076 | 21,269 | 21,297 |
1-3 years | 1 | 683 | 21,229 | - | 3 | 1,892 | 23,807 | 23,808 |
3-5 years | 73 | - | 15,412 | 749 | - | 2,780 | 18,941 | 19,014 |
More than 5 years | 132 | - | 5,358 | - | 1,660 | 375 | 7,393 | 7,525 |
Total | 234 | 9,401 | 53,474 | 749 | 1,663 | 6,123 | 71,410 | 71,644 |
2024 | ||||||||
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 |
The table below shows the currency breakdown.
GBP | USD | EUR | Other | Total | |
2025 | £m | £m | £m | £m | £m |
Commercial paper and CDs | 3,227 | 1,341 | 4,833 | - | 9,401 |
MTNs | 4,914 | 22,061 | 23,536 | 3,197 | 53,708 |
Covered bonds | 749 | - | - | - | 749 |
Securitisation | 1,663 | - | - | - | 1,663 |
Subordinated liabilities | 2,383 | 1,325 | 2,415 | - | 6,123 |
Total | 12,936 | 24,727 | 30,784 | 3,197 | 71,644 |
2024 | |||||
Total | 14,541 | 23,797 | 24,325 | 3,005 | 65,668 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
252
Capital, liquidity and funding risk continued
Funding gap: maturity and segment analysis
The contractual maturity of loans to customers and customer deposits are shown below. The table demonstrates the maturity transformation role being performed by NatWest Group of lending long-
term whilst relying largely on short-term funding. This is possible as the behavioural profiles of many customer deposits, which tend to be repayable on demand, show longer maturity and greater
stability than their contractual agreements.
NatWest Group forms expectations on customer behaviours through both qualitative and quantitative techniques, incorporating observed customer behaviours over historic time periods, which
includes the more recent periods of interest rate change. Customer behaviour assumptions are approved by the NatWest Group Balance Sheet Committee and have been used to prepare the funding
gap analysis, which reduces maturity mismatch across the periods shown.
| Contractual maturity | Behavioural maturity | |||||||||||||||
| Loans to customers (1) | Customer deposits | Net surplus/(gap) | Net surplus/(gap) | |||||||||||||
Greater | Greater | Greater | Greater | |||||||||||||
Less than | 1-5 | than | Less than | 1-5 | than | Less than | 1-5 | than | Less than | 1-5 | than | |||||
1 year | years | 5 years | Total | 1 year | years | 5 years | Total | 1 year | years | 5 years | Total | 1 year | years | 5 years | Total | |
2025 | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn |
Retail Banking | 15 | 42 | 159 | 216 | 195 | 7 | - | 202 | 180 | (35) | (159) | (14) | (25) | (79) | 90 | (14) |
Private Banking & Wealth Management | 3 | 7 | 9 | 19 | 43 | - | - | 43 | 40 | (7) | (9) | 24 | 14 | (6) | 16 | 24 |
Commercial & Institutional | 52 | 68 | 35 | 155 | 203 | 2 | - | 205 | 151 | (66) | (35) | 50 | 13 | (18) | 55 | 50 |
Central items & other | - | - | - | - | 1 | - | - | 1 | 1 | - | - | 1 | 1 | - | - | 1 |
Total | 70 | 117 | 203 | 390 | 442 | 9 | - | 451 | 372 | (108) | (203) | 61 | 3 | (103) | 161 | 61 |
2024 | ||||||||||||||||
Total | 68 | 105 | 197 | 370 | 436 | 3 | - | 439 | 368 | (102) | (197) | 69 | 20 | 59 | (10) | 69 |
(1)
Loans to customers and customer deposits include trading assets and trading liabilities respectively and excludes reverse repos and repos.
•
The net customer funding surplus decreased by £8 billion during 2025 to £61 billion driven by a £20 billion increase in loans to customers offset by a £12 billion increase in deposits.
•
The customer deposit mix was broadly similar to 2024, with additional prudence applied to customer account depositor behavioural assumptions.
NatWest Group evaluates the extent to which assets can be financed in a secured form (encumbrance), but certain asset types lend themselves more readily to encumbrance. The typical
characteristics that support encumbrance are an ability to pledge those assets to another counterparty or entity through operation of law without necessarily requiring prior notification, homogeneity,
predictable and measurable cash flows, and a consistent and uniform underwriting and collection process. Retail assets including residential mortgages, credit card receivables and personal loans
display many of these features.
NatWest Group categorises its assets into four broad groups, those that are:
•
Already encumbered and used to support funding currently in place through own-asset securitisations, covered bonds and securities repurchase agreements.
•
Pre-positioned with central banks as part of funding schemes and those encumbered under such schemes.
•
Ring-fenced to meet regulatory requirements, where NatWest Group has in place an operational continuity in resolution (OCIR) investment mandate wherein the PRA requires critical service
providers to hold segregated liquidity buffers covering at least 50% of their annual fixed overheads.
•
Unencumbered. In this category, NatWest Group has in place an enablement programme which seeks to identify assets capable of being encumbered and to identify the actions to facilitate such
encumbrance whilst not affecting customer relationships or servicing. Programmes to manage the use of assets to actively support funding are established within UK DoLSub and NatWest Markets
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
253
Capital, liquidity and funding risk continued
Balance sheet encumbrance
The table shows the retained encumbered assets of NatWest Group.
Encumbered as a result of transactions with | Unencumbered assets not pre-positioned with central banks | |||||||||
counterparties other than central banks | Pre-positioned | Collateral | ||||||||
SFT, | & encumbered | ring-fenced to | ||||||||
Covered | derivatives and | assets held at | meet regulatory | Readily | Other | Cannot | ||||
debts | other (1,2) | Total | central banks | requirement | available | available (3) | be used (4) | Total | Total (5) | |
2025 | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn |
Cash and balances at central banks | - | 3.5 | 3.5 | - | - | 81.7 | - | - | 81.7 | 85.2 |
Trading assets | - | 16.1 | 16.1 | - | - | 2.5 | 0.1 | 27.8 | 30.4 | 46.5 |
Derivatives | - | - | - | - | - | - | - | 60.8 | 60.8 | 60.8 |
Settlement balances | 0.6 | 0.6 | 0.6 | |||||||
Loans to banks - amortised cost | - | - | - | - | - | 2.0 | 1.7 | 3.3 | 7.0 | 7.0 |
Loans to customers - amortised cost (6) | 13.8 | - | 13.8 | 115.5 | - | 93.7 | 145.3 | 50.6 | 289.6 | 418.9 |
Other financial assets (7) | - | 25.5 | 25.5 | - | 0.5 | 53.6 | - | 0.2 | 53.8 | 79.8 |
Intangible assets | 7.3 | 7.3 | 7.3 | |||||||
Other assets | - | - | - | - | - | - | 2.3 | 6.2 | 8.5 | 8.5 |
Total assets | 13.8 | 45.1 | 58.9 | 115.5 | 0.5 | 233.5 | 149.4 | 156.8 | 539.7 | 714.6 |
2024 | ||||||||||
Total assets | 12.7 | 40.8 | 53.5 | 94.5 | 1.8 | 242.9 | 132.5 | 182.8 | 558.2 | 708.0 |
(1)
Repos and other secured deposits, cash, coin and nostro balance held with the Bank of England as collateral against deposits and notes in circulation are included here rather than within those positioned at the central bank as they are part of normal banking operations. Securities financing
transactions (SFT) include collateral given to secure derivative liabilities.
(2)
Derivative cash collateral of £5.7 billion (2024 - £8.0 billion) has been included in the encumbered assets.
(3)
Other assets that are capable of being encumbered are those assets on the balance sheet that are available for funding and collateral purposes but are not readily realisable in their current form. These assets include loans that could be pre-positioned with central banks but have not been subject to
internal and external documentation review and diligence work.
(4)
Cannot be used includes:
a)
Derivatives, reverse repurchase agreements and trading related settlement balances.
b)
Non-financial assets such as intangibles, prepayments and deferred tax.
c)
Loans that are not encumbered and cannot be pre-positioned with central banks on criteria set by the central banks, including those relating to date of origination and level of documentation.
d)
Non-recourse invoice financing balances and certain shipping loans whose terms and structure prohibit their use as collateral.
(5)
In accordance with market practice, NatWest Group employs securities recognised on the balance sheet, and securities received under reverse repo transactions as collateral for repos.
(6)
The pre-positioned and encumbered assets held at central banks of £115.5 billion includes the encumbered residential mortgages of £16.1 billion. £75.6 billion of residential UK mortgages are included in £93.7 billion readily available loans to customers.
(7)
Other financial assets under SFT, derivatives and other include £0.5 billion 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.
Climate and nature risk
Definition
Climate and nature risk is the threat of financial loss or adverse
non-financial impacts associated with climate change and nature
loss respectively and the political, economic and environmental
responses to it.
Sources of risk
Physical risks may arise from climate events such as heatwaves,
droughts, floods, storms and nature-related events such as land
or air pollution. They can potentially result in financial losses,
impairing asset values and the creditworthiness of borrowers.
NatWest Group could be exposed to physical risks directly by the
effects on its property portfolio and, indirectly, by the impacts
on the wider economy as well as on the property, business
interests and supply chains of its customers.
Transition risks may arise from the process of adjustment
towards a low-carbon, nature-restored economy. Changes in
policy, technology and sentiment could prompt reassessment of
customers’ financial risk and may lead to falls in the value of a
large range of assets. NatWest Group could be exposed to
transition risks directly through the costs of adaptation of its own
operations as well as supply chain disruption leading to financial
impacts. Potential indirect effects include the impact on the
wider economy, including on customers, which may erode
NatWest Group’s competitiveness and profitability, as well as
threaten reputational damage.
Liability risks may arise should stakeholders consider NatWest
Group’s climate and nature risk management practices and
disclosures insufficient, and responsible for or attributable to,
stakeholders’ losses. On the other hand, liability risks may also
arise where some jurisdictions believe financial institutions have
taken their sustainability-related initiatives too far, with some
imposing sanctions in these circumstances.
Climate risk has been included in the NatWest Group risk
directory since 2021. In 2024, we broadened the definition to
climate and nature risk and updated our internal risk policy to
reflect this. We are in the early stages of embedding nature into
our risk management processes.
As climate and nature risk is both a principal risk within NatWest
Group’s EWRMF, and a cross-cutting risk, which impacts other
principal risks, NatWest Group periodically refreshes its
assessment of the relative impact of climate-related risk factors
to other principal risks, where NatWest Group’s exposure to a
principal risk could be taken outside of appetite due to climate-
related risk factors.
In identifying climate-related risks and opportunities to NatWest Group, the period in which each is likely to occur, was
assessed. Risks and opportunities deemed material to the five-year financial planning cycle were viewed as short-term. Long-
(1)
term was defined as beyond 15 years, while medium-term was defined as within the next five to 15 years
.
The outcome of the latest assessment of the relative impact of climate-related risk factors on other principal risks is included in
the following table. All principal risks in the table were identified as potentially the most impacted by climate risk, over short,
medium and long term horizons, noting these risks could amplify capital and liquidity risks themselves.
Identification, assessment and | |||
Risk type | Risks to NatWest Group | Drivers | measurement |
From the adverse impact on future credit | |||
worthiness of customers due to climate change risk | Physical: acute, chronic (2) | Scenario analysis | |
Credit risk | factors impacting asset valuation, income and | ||
costs. Mitigants include operational limits in the | Portfolio level assessments | ||
residential mortgage portfolio and inclusion of | Transition: government policy | ||
climate considerations in sector strategy within the | and legislation, market, | Transaction level assessments | |
commercial portfolio. | technology, reputation | ||
Physical: acute, chronic (2) | |||
Due to the increased likelihood and potential impact | Scenao analysis | ||
Operational risk | of business disruption arising from new and | Transition: government policy | |
changing policy standards. Mitigants include | and legislation, market, | Transaction level assessments | |
resilience and disclosure controls. | technology, reputation | ||
Physical: acute, chronic (2) | |||
NatWest Group is required to comply with all | |||
Compliance risk | applicable climate-related legal and regulatory | Transition: government policy | |
obligations. Mitigants include relevant horizon | and legislation, market, | Transaction level assessments | |
scanning. | technology, reputation | ||
Liability: greenwashing | |||
Transition: government policy | |||
Due to poor customer outcomes arising from the | and legislation, market, | Scenario analysis | |
Conduct risk | impacts of climate change. Mitigants include | technology, reputation | |
additional checks on sustainability claims and | Transaction level assessments | ||
applying product flaw controls. | Liability: greenwashing | ||
Arising from NatWest Group’s actual or perceived | Transition: government policy | ||
contribution to climate change, or from the | and legislation, market, | Portfolio level assessments | |
Reputational risk | adequacy of our actions in response. Mitigants | technology | |
include the environmental social, & ethical risk | Transaction level assessments | ||
framework (3) . | Liability: greenwashing |
(1)
NatWest Group’s climate transition planning uses different time frames than those used in financial reporting. Accordingly, the references to ‘short’, ‘medium’ and ‘long-
term’ in climate reporting are not indicative of the meaning of similar terms used in NatWest Group’s other disclosures.
(2)
Acute – event-driven such as increased severity of extreme weather events (for example, storms, droughts, floods, and fires) or water, land or air pollution. Chronic –
longer-term shifts in precipitation and temperature and increased variability in weather patterns (for example, sea level rise) or biodiversity loss.
(3)
From 1 January 2026, the name of the ESE Risk Framework was updated to the Environmental & Social Risk Framework. This change better reflects the framework's
underlying methodology which focuses on a risk-based approach aligned to organisational risk appetite, rather than values-based judgements.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
254
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
255
Climate and nature risk continued
Key developments in 2025
The effective management of climate risk
requires the integration of climate-related risk
drivers into strategic planning, transactions
and decision-making. The approach has
evolved since 2021 alongside NatWest
Group’s ongoing, multi-year progressive
pathway to mature climate risk management
capabilities, and in 2025:
•
NatWest Group continued to enhance its
in-house climate risk modelling
capabilities, supporting the ongoing
integration of climate risk within its capital
adequacy (ICAAP), impairment (IFRS 9)
and risk management processes. Insights
from risk processes have been shared
with sector and front-line teams to
support the financial budget and climate
transition plan processes. In particular,
internal physical risk modelling capabilities
have been developed during 2025 albeit
with further enhancements to come in
2026.
•
NatWest Group continued its roll-out of
climate decisioning framework (CDF)
tools. These comprise climate risk
scorecards and climate transition plan
assessment tools. The roll-out continues
on a test and learn basis. However we
are now introducing initial use cases
where we identify higher-risk transactions
for enhanced oversight or escalated
approval processes.
Governance
Risk governance for climate and nature risk is
in line with the approach outlined in the Risk
management framework section.
The Board is responsible for monitoring and
overseeing climate-related risk within
NatWest Group’s overall business strategy
and risk appetite.
The risk appetite statement is reviewed and
approved at least annually by the Board on
the Board Risk Committee’s recommendation
to ensure it remains appropriate and aligned
to strategy.
The Chief Risk Officer shares accountability
with the Chief Executive Officer under the
Senior Managers Regime for identifying and
managing the financial risks arising from
climate change. This includes ensuring that
the financial risks from climate change are
adequately reflected in risk management
frameworks and policies, and that NatWest
Group can identify, measure, monitor,
manage and report on its exposure to these
risks. Reporting is provided on a regular basis,
via the Chief Risk Officer Risk Report, to the
Executive and Board Risk Committees, while
an annual spotlight on climate and nature
Risk is also undertaken to these committees.
The Group Executive Committee continues to
supervise strategic implementation and
delivery, supported by Group Sustainability,
other functions and franchises.
Risk appetite
Risk appetite for climate risk is in line with the
approach outlined in the Risk management
framework section.
Identification, assessment and
measurement
NatWest Group continues to enhance its
processes to effectively measure the potential
size and scope of climate-related risks,
through the three approaches detailed below.
Identification, assessment and measurement
is undertaken at NatWest Group and business
segment levels as appropriate and through
an integrated governance model. The
approach to nature-related risks is not as
mature as the approach to climate-related
risks.
Strategic analysis
NatWest Group focused on continuing to
develop the capabilities to use scenario
analysis to identify the most material climate
risks for its customers, seeking to harness
insights to inform risk management practices
and support decision making.
Scenario analysis allows NatWest Group to
test a range of possible future climate
pathways and understand the nature and
magnitude of the risks they present. The
purpose of scenario analysis is not to forecast
the future but to understand and prepare to
manage risks that could arise.
NatWest Group recognises a number of
potential key use cases for climate scenario
analysis, including, but not restricted to, the
following:
•
Regulatory stress testing requirements.
•
Portfolio management.
•
Strategic decision-making, capital
adequacy and provisioning.
Specific internal-run exercises in 2025
included:
•
A credit-risk focused exercise covering
both physical and transition risk scenarios
for both the Commercial & Institutional
portfolio and the Retail Banking residential
mortgage portfolio.
•
A non-financial risk scenario for climate
focused on external communications
which could omit or contain incorrect
information, resulting in an inaccurate
representation of NatWest Group
activities.
Credit and non-financial risk scenario analysis
exercises for climate were also run in 2024.
There are various challenges with
quantitative climate scenario analysis,
including in relation to the immaturity of
modelling techniques and limitations
surrounding data on climate- related risks. In
addition, there is significant uncertainty as to
how the climate will evolve over time, how
and when governments, regulators,
businesses, investors and customers respond
and how those responses impact the
economy, asset valuations, economic
systems, policy and wider society. These risks
and uncertainties, coupled with significantly
long timeframes, make the outputs of
climate-related risk modelling with respect to
the potential use cases identified inherently
more uncertain than outputs modelled for
traditional financial planning cycles based on
historical financial information. Recognising
these challenges, qualitative work focused on
the cascading and compounding
consequences of climate and nature
breakdown (for example, lower growth,
higher inflation, societal and political
uncertainty) continues to be developed and
assessed under the emerging threats
framework.
Refer to the risk and scenario analysis section
of NatWest Group plc 2025 Climate Transition
Plan Report for further information.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
256
Climate and nature risk continued
Portfolio level assessment
NatWest Group uses a number of tools to
undertake portfolio level assessments
including operational limits in retail credit risk,
stress analysis in market risk and heightened
climate-related risk sector assessment in
Non-Personal credit risk. The latter, refreshed
annually, seeks to identify sectors that are
likely to see increased credit risks for NatWest
Group because of climate-related factors,
over a ten to 15-year horizon.
Transaction level assessment
Assessments are undertaken which consider
anti-greenwashing factors within NatWest
Group’s franchises, marketing and
communications processes.
The NatWest Group Supplier Code of Best
Practice encourages NatWest Group suppliers
to undertake sustainability assessments to
evaluate supplier sustainability performance.
Within the Non-Personal credit portfolio,
NatWest Group continues to use its CDF tools
to engage with its customers to understand
their climate transition journeys and how they
are managing the climate-related risk for their
business. In 2025, NatWest Group continued
to roll-out CDF on a test-and-learn basis,
adding coverage of insurance and other
financial institutions’ customers to the existing
customer segments (Large Corporates, Mid-
Corporates, Commercial Real Estate, Housing
Associations, Banks, Funds, and Asset
Managers).
Enhancements were also made to the large
corporates assessment to increase the
granularity of sector and country-specific
questions, for example, questions which
assess how much of NatWest Group’s
customer’s business activities are EU
taxonomy aligned. This phased test-and-learn
approach continues to build internal capability
among first and second-line colleagues, and
foster a culture where climate risk is
embedded into the existing credit journey.
Recognising the complexity of the energy
transition, we conducted an energy system
review during 2025 to ensure our strategy
reflects the interconnected risks and
opportunities across the energy value chain
as the economy transitions toward net zero.
The energy system review considered the
systemic nature of the energy transition
which anticipates further growth in
renewables, the important yet declining role
of oil and gas, significant infrastructure
investment and demand-side electrification.
Reflecting the outcome of our energy system
review, we have established a new E&S
Energy Supply Sector Risk Acceptance
Criteria. Noting that the natural resources
portfolio limit remains unchanged following
the energy system review, we are
implementing an oversight and governance
framework to help ensure that our financing
activity aligns with our sector and bank-wide
strategy and remains within the portfolio limit
and other constraints. Refer to the NatWest
Group plc 2025 Climate Transition Plan
Report for further details.
NatWest Group also regularly considers the
potential impact of existing and emerging
regulatory requirements related to climate
change at NatWest Group and subsidiary
level, through external horizon scanning and
monitoring of emerging regulatory
requirements.
Mitigation
NatWest Group manages and mitigates
climate-related risk in the Non-Personal
portfolio through:
•
Top-down portfolio assessments, including
incorporating climate factors in the overall
sector strategy, updating the
environmental, social and ethical risk
acceptance criteria in response to
potential climate-related risks and
applying climate-enhanced transaction
acceptance standards.
•
Bottom-up customer assessments,
including the use of CDF tools to provide
a consistent and structured approach for
understanding customer-specific exposure
to climate-related risks and identify higher
risk transactions for enhanced oversight
or escalated approval processes.
In the residential mortgage portfolio, lending
limits are applied based on climate
characteristics, including:
•
Exposure to EPC A and B rated
properties.
•
Buy-to-let properties with potential EPC
between D and G.
•
Flats, new builds and buy-to-let properties
at high or very high risk of flood.
Additionally, NatWest Group credit policies do
not allow buy-to-let mortgages to properties
with an EPC rating between F and G. Limits
are continually reviewed to reflect new flood
risk data, risk profile and market conditions.
NatWest Group also continues to engage
actively with academia to ensure that best
practice and the latest thinking on climate
risks is considered within NatWest Group’s
work. This includes attending and
participating in academic events through, for
example, the Centre for Greening Finance
and Investment and supporting research
initiatives by, for example, University College
London and the Institute and Faculty of
Actuaries.
Industry engagement
NatWest Group continues to participate in a
number of industry forums to help shape the
financial service industry’s response to the
challenges posed by climate risk. An example
is the Climate Financial Risk Forum,
established by the PRA and the FCA.
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
Key developments in 2025
•
In the UK, the Bank of England base rate
fell to 3.75% at 31 December 2025 from
4.75% at 31 December 2024. The five-
year sterling overnight index interest rate
swap rate also fell to 3.66% at 31
December 2025 from 4.04% at 31
December 2024. The corresponding ten-
year rate fell to 4.00% from 4.09%. The
movement in swap rates reflects market
expectations about the level of the UK
base rate in the medium term, with
expectations for the UK base rate being
slightly lower at 31 December 2025.
•
Overall, total non-traded market risk VaR
decreased in 2025 on both an average
basis and a period-end basis. The largest
component, credit spread VaR, remained
relatively stable during 2025, supported
by generally consistent bond holdings in
the liquidity portfolio. For further VaR
commentary, see the following page.
•
NatWest Group’s structural hedge notional
increased to £198 billion at 31 December
2025 compared to £194 billion at 31
December 2024, reflecting increased
equity structural hedging and deposit
stability. As maturing structural hedges
were replaced at higher swap rates, the
yield on the hedge rose to 2.40% in 2025
from 1.77% in 2024.
•
The sensitivity of net interest earnings to
a 25-basis-point upward shift in the yield
curve was a cumulative £824 million over
three years at 31 December 2025,
compared to £739 million at 31
December 2024. The main contributors to
the sensitivity were managed-margin
deposits, including instant access savings
and unhedged current accounts, and the
structural hedge.
•
Sterling strengthened against the US
dollar, to 1.35 at 31 December 2025
compared to 1.25 at 31 December 2024.
It weakened against the euro, to 1.15 at
31 December 2025 compared to 1.20 at
31 December 2024. Net investments in
foreign operations reduced by £0.4 billion
in sterling-equivalent terms over the year.
After hedging, residual structural foreign
currency exposures were higher,
increasing, in sterling-equivalent terms, by
£0.1 billion.
Risk governance for non-traded market risk is
in line with the approach outlined in the Risk
Risk appetite
Risk appetite for non-traded market risk is in
line with the approach outlined in the Risk
management framework section.
NatWest Group’s qualitative appetite for non-
traded market risk is set out in the non-
traded market risk appetite statement.
Quantitative appetite is expressed in terms of
exposure limits. At NatWest Group level, these
comprise value-at-risk (VaR) and earnings-at-
risk limits. Stress and sensitivity limits are also
incorporated.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
257
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
258
Non-traded market risk continued
Risk measurement
Non-traded internal VaR (1-day 99%)
The following table shows one-day internal banking book value-at-risk (VaR) at a 99% confidence level, split by risk type. VaR values for each year are calculated based on one-day values for each of
the 12 month-end reporting dates.
NatWest Group’s VaR metrics are explained on page 264. Each of the key risk types are discussed in greater detail in their individual sub-sections following this table.
| 2025 | 2024 | |||||||
Average | Maximum | Minimum | Period end | Average | Maximum | Minimum | Period end | |
£m | £m | £m | £m | £m | £m | £m | £m | |
Interest rate | 4.9 | 7.4 | 2.5 | 6.5 | 17.2 | 28.2 | 4.0 | 4.0 |
Credit spread | 48.6 | 53.8 | 39.6 | 39.6 | 51.8 | 60.2 | 45.3 | 48.4 |
Structural foreign exchange rate | 9.3 | 14.1 | 6.0 | 13.3 | 7.6 | 9.8 | 5.1 | 6.3 |
Equity | 5.1 | 7.8 | 2.8 | 3.2 | 8.6 | 10.3 | 7.6 | 7.7 |
Pipeline risk | 3.5 | 5.9 | 0.6 | 3.6 | 8.5 | 17.3 | 3.4 | 6.1 |
Diversification (1) | (22.6) | (24.3) | (35.3) | (23.4) | ||||
Total | 48.8 | 53.3 | 41.9 | 41.9 | 58.4 | 73.8 | 49.1 | 49.1 |
(1)
NatWest Group benefits from diversification across various financial instrument
types, currencies and markets. The extent of the diversification benefit
depends on the correlation between the assets and risk factors in the portfolio
at a particular time. The diversification factor is the sum of the VaR on
individual risk types less the total portfolio VaR.
•
Overall, total non-traded market risk VaR decreased in 2025 on both an average and period-end basis.
•
Interest rate VaR fell on an average basis, reflecting reduced interest rate repricing mismatches across customer products.
•
Credit spread VaR remained relatively stable during 2025, supported by generally consistent bond holdings in the liquidity portfolio. The period-end decrease followed the rollout of updated
timeseries in December 2025.
•
Equity VaR decreased, mainly due to the sale of Permanent TSB equity.
•
Pipeline VaR also decreased. This reflected changes in the assumptions applied to customer behaviour through the fixed-rate mortgage application process, which more closely aligned NatWest
Group’s estimates of future customer completions to pipeline hedging activity.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
259
Non-traded market risk continued
Interest rate risk
Non-traded interest rate risk (NTIRR)
arises from the provision to customers of
a range of banking products with differing
interest rate characteristics. When
aggregated, these products form
portfolios of assets and liabilities with
varying degrees of sensitivity to changes
in market interest rates. Mismatches can
give rise to volatility in net interest income
as interest rates vary.
NTIRR comprises the following three
primary risk types:
•
Gap risk: arises from the timing of
rate changes in non-trading book
instruments. The extent of gap risk
depends on whether changes to the
term structure of interest rates occur
consistently across the yield curve
(parallel risk) or differentially by period
(non-parallel risk).
•
Basis risk: captures the impact of
relative changes in interest rates for
financial instruments that have similar
tenors but are priced using different
interest rate indices, or on the same
interest rate indices but with different
tenors.
•
Option risk: arises from option
derivative positions or from optional
elements embedded in assets,
liabilities and/or off-balance sheet
items, where NatWest Group or its
customer can alter the level and
timing of their cash flows. Option risk
also includes pipeline risk. Pipeline risk
is the risk of loss arising from personal
customers owning an option to draw
down a loan – typically a mortgage –
at a committed rate, where interest
rate changes may result in greater or
fewer customers than anticipated
taking up the committed offer.
To manage exposures within its risk appetite,
NatWest Group aggregates interest rate
positions and hedges its residual exposure,
primarily with interest rate swaps.
Structural hedging aims to reduce gap risk and
the sensitivity of earnings to interest rate
shocks. It also provides some protection
against prolonged periods of falling rates.
Structural hedging is explained in greater detail
below, followed by information on how
NatWest Group measures NTIRR from both an
economic value-based and an earnings-based
perspective.
Structural hedging
NatWest Group has a significant pool of stable,
non and low interest-bearing liabilities,
principally comprising current accounts and
savings, in addition to its equity and reserves.
A proportion of these balances are hedged,
either by offsetting the positions against fixed-
rate assets (such as fixed-rate mortgages and
UK government gilts) or by hedging positions
externally using interest rate swaps, which are
generally booked as cash-flow hedges of
floating-rate assets, in order to reduce income
volatility and provide a revenue stream in net
interest income. (Further details on NatWest
Group’s cash-flow hedge accounting
programme can be found in Note 13 in the
Notes to the accounts.) Hence, the structural
hedge is one component of a larger interest
rate risk management programme.
After offsetting or hedging the interest rate
exposure, NatWest Group attributes income to
equity or products in structural hedges by
reference to the relevant interest rate swap
curve. Over time, this approach has provided
a basis for stable income attribution for
management purposes to products and
interest rate returns. The programme aims to
track a time series of medium-term swap
rates, but the yield will be affected by changes
in product volumes and NatWest Group’s
equity capital.
The table below shows incremental income, hedge income, the period-end and average notional
balances attributed to the structural hedge, and the total yield. These are analysed between equity
and products. Hedge income represents the fixed leg of the hedge, while incremental income
represents the difference between hedge income and short-term cash rates. For example, the
sterling overnight index average (SONIA) is used to estimate incremental income from sterling
structural hedges. If the UK base rate were to fall, the difference between incremental income and
hedge income would continue to fall.
Incremental | Hedge | Period end | Average | Total | |
income | income | notional | notional | yield | |
2025 | £m | £m | £bn | £bn | % |
Equity | (449) | 487 | 25 | 22 | 2.18 |
Product | (2,990) | 4,181 | 173 | 172 | 2.43 |
Total | (3,439) | 4,668 | 198 | 194 | 2.40 |
2024 | |||||
Equity | (694) | 440 | 22 | 22 | 1.98 |
Product | (5,806) | 3,039 | 172 | 174 | 1.75 |
Total | (6,500) | 3,479 | 194 | 196 | 1.77 |
Equity structural hedges refer to income allocated primarily to equity and reserves. At 31 December
2025, the equity structural hedge notional was allocated between NWH Group and NWM Group in a
ratio of approximately 81%/19% respectively.
Product structural hedges refer to income allocated to customer products by NWH Group Treasury,
mainly current account and savings balances in Commercial & Institutional, Retail Banking and
Private Banking & Wealth Management.
At 31 December 2025, approximately 95% by notional of total structural hedges were sterling-
denominated.
•
The structural hedge period-end notional increased as a result of increased hedging of the
NatWest Group equity and reserves. The product hedge was broadly stable, reflecting deposit
stability year on year.
•
The five-year sterling swap rate fell to 3.65% at 31 December 2025 from 4.04% at 31 December
2024. The ten-year sterling swap rate also fell, to 3.99% from 4.09%. The structural hedge yield
rose to 2.40% in 2025 from 1.77% in 2024.
•
Hedge income rose by £1,189 million to £4,668 million from £3,479 million. Incremental income
remained negative but fell year on year. This was mainly driven by replacement of maturing
hedges at higher yields and lower overnight SONIA rates in 2025 compared to 2024.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
260
Non-traded market risk continued
Interest rate risk measurement
NTIRR can be measured using value-
based or earnings-based approaches.
Value-based approaches measure the
change in value of the balance sheet
assets and liabilities including all cash
flows. Earnings-based approaches
measure the potential impact on the
income statement of changes in interest
rates over a defined horizon, generally
one to three years.
NatWest Group uses VaR as its value-
based approach and sensitivity of net
interest earnings as its earnings-based
approach.
These two approaches provide
complementary views of the impact of
interest rate risk on the balance sheet at
a point in time. The scenarios employed in
the net interest earnings sensitivity
approach may incorporate assumptions
about how NatWest Group and its
customers will respond to a change in the
level of interest rates.
In contrast, the VaR approach measures
the sensitivity of the balance sheet at a
point in time. Capturing all cash flows,
VaR also highlights the impact of duration
and repricing risks beyond the one-to-
three-year period shown in earnings
sensitivity calculations.
Value-at-risk
VaR is a statistical estimate of the
potential change in the market value of a
portfolio (and, thus, the impact on the
income statement) over a specified time
horizon at a given confidence level.
NatWest Group’s standard VaR metrics –
which assume a time horizon of one
trading day and a confidence level of 99%
– are based on interest rate repricing
gaps at the reporting date.
Daily rate moves are modelled using
observations from the last 500 business days.
These incorporate customer products plus
associated funding and hedging transactions
as well as non-financial assets and liabilities.
Behavioural assumptions are applied as
appropriate.
The non-traded interest rate risk VaR metrics
for NatWest Group’s retail and commercial
banking activities are included in the banking
book VaR table presented earlier in this
section. The VaR captures the risk resulting
from mismatches in the repricing dates of
assets and liabilities.
It also includes any mismatch between the
maturity profile of external hedges and
NatWest Group’s target maturity profile for the
hedge.
Sensitivity of net interest earnings
Net interest earnings are sensitive to changes
in the level of interest rates, mainly because
maturing structural hedges are replaced at
higher or lower rates and changes to coupons
on managed rate customer products do not
always match changes in market rates of
interest or central bank policy rates
(“managed margin”).
Earnings sensitivity is derived from a market-
implied forward rate curve, which will
incorporate expected changes in central bank
policy rates such as the Bank of England base
rate.
A simple scenario is shown that projects
forward earnings based on the 31 December
2025 balance sheet, which is assumed to
remain constant. An earnings projection is
derived from the market-implied curve, which
is then subjected to interest rate shocks.
The difference between the market-implied projection and the shock gives an indication of underlying
sensitivity to interest rate movements.
Reported sensitivities should not be considered a forecast of future performance in these rate
scenarios. Actions that could reduce interest earnings sensitivity include changes in pricing strategies
on customer loans and deposits as well as hedging. Management action may also be taken to
stabilise total income also taking into account non-interest income.
Three-year 25-basis-point sensivity table
The table below shows the sensitivity of net interest earnings – for both structural hedges and
managed rate accounts – on a one, two and three-year forward-looking basis to an upward or
downward interest rate shift of 25 basis points. In all scenarios, yield curves are assumed to move in
parallel.
+25 basis points upward shift | -25 basis points downward shift | |||||
Year 1 | Year 2 | Year 3 | Year 1 | Year 2 | Year 3 | |
2025 | £m | £m | £m | £m | £m | £m |
Structural hedges | 41 | 130 | 220 | (41) | (130) | (220) |
Managed margin | 153 | 139 | 125 | (157) | (127) | (140) |
Total | 194 | 269 | 345 | (198) | (257) | (360) |
2024 | ||||||
Structural hedges | 41 | 125 | 212 | (41) | (125) | (212) |
Managed margin | 121 | 116 | 124 | (142) | (120) | (125) |
Total | 162 | 241 | 336 | (183) | (245) | (337) |
•
The sensitivity of net interest earnings in all scenarios mainly reflects managed-margin deposits
and the impact of higher or lower rates on structural hedges.
•
Managed-margin sensitivity in both upward and downward rate scenarios partly reflects
assumptions applied to deposits and other products, where customer rates change in response
to changes in central bank rates.
Managed-margin sensitivity to rate shocks was higher at 31
December 2025 than at 31 December 2024; however, as net interest earnings also increased,
sensitivity as a proportion of net interest earnings was relatively stable overall.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
261
Non-traded market risk continued
One-year 25 and 100-basis-point sensitivity table
The following table presents the one-year sensitivity to upward and downward 25-basis-point and 100-basis-point shifts in the yield curve, analysed by currency.
| 2025 | 2024 | |||||||
| Shifts in yield curve | Shifts in yield curve | |||||||
+25 basis points | -25 basis points | +100 basis points | -100 basis points | +25 basis points | -25 basis points | +100 basis points | -100 basis points | |
£m | £m | £m | £m | £m | £m | £m | ||
Euro | 25 | (11) | 56 | (47) | 11 | (7) | 38 | (43) |
Sterling | 147 | (165) | 503 | (655) | 131 | (155) | 531 | (646) |
US dollar | 19 | (19) | 69 | (75) | 15 | (16) | 63 | (71) |
Other | 3 | (3) | 13 | (11) | 5 | (5) | 19 | (17) |
Total | 194 | (198) | 641 | (788) | 162 | (183) | 651 | (777) |
Sensivity of fair value through other comprehensive income (FVOCI) porolios and cash flow hedging reserves to interest rate movements
NatWest Group holds most of the bonds in its liquidity portfolio at fair value and the bonds are generally classified as FVOCI for accounting purposes. Valuation changes arising from unexpected
movements in market rates are initially recognised in FVOCI reserves.
Interest rate swaps are used to implement the structural hedging programme and also hedging of some personal and commercial lending portfolios, primarily fixed-rate mortgages. Generally, these
swaps are booked in cash flow hedge accounting relationships. Changes in the valuation of swaps that are in effective cash flow hedge accounting relationships are recognised in cash flow hedge
reserves.
The table below shows the sensitivity of bonds initially classified as FVOCI and swaps subject to cash flow hedge accounting to a parallel shift in all rates. Valuation changes affecting interest rate
swaps that hedge bonds in the liquidity portfolio are also included. Where FVOCI bonds and swaps are booked in fair value hedge accounting relationships, the valuation change affecting both
instruments would be recognised in the income statement. For the purpose of this analysis, cash flow hedges are assumed to be fully effective.
The effectiveness of cash flow and fair value hedge relationships is monitored and regularly tested in accordance with IFRS requirements. Note also that valuation changes affecting the cash flow
hedge reserve affect tangible net asset value, but would not be expected to affect CET1 capital.
| 2025 | 2024 | |||||||
+25 basis points | -25 basis points | +100 basis points | -100 basis points | +25 basis points | -25 basis points | +100 basis points | -100 basis points | |
£m | £m | £m | £m | £m | £m | £m | £m | |
FVOCI reserves | (22) | 22 | (91) | 87 | (9) | 9 | (38) | 31 |
Cash flow hedge | ||||||||
| reserves | (171) | 174 | (664) | 713 | (244) | 249 | (946) | 1,027 |
Total | (193) | 196 | (754) | 801 | (253) | 258 | (984) | 1,058 |
•
The sensitivity of cash flow hedge reserves fell in 2025 compared to 2024, while the sensitivity of FVOCI reserves increased slightly. The movement in cash flow hedge reserves in 2025 is shown in
the statement of changes in equity on pages 294 to 296.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
262
Non-traded market risk continued
Credit spread risk
Credit spread risk arises from the
potential adverse economic impact of a
change in the spread between bond yields
and swap rates, where the bond portfolios
are accounted at fair value through other
comprehensive income.
NatWest Group’s bond portfolios primarily
comprise high-quality securities
maintained as a liquidity buffer to ensure
it can continue to meet its obligations in
the event that access to wholesale
funding markets is restricted. Additionally,
other high-quality bond portfolios are held
for collateral purposes and to support
payment systems.
Credit spread risk is monitored daily
through sensitivities and VaR measures
(refer to the non-traded market risk VaR
table earlier in this section). Exposures
and limit utilisations are reported to senior
management on a regular basis. Dealing
mandates in place for the bond portfolios
further mitigate the risk by imposing
constraints by duration, asset class and
credit rating.
Foreign exchange risk
Non-traded foreign exchange risk arises
from three main sources:
•
Structural foreign exchange rate risk
–
mainly arises from the capital
deployed in foreign subsidiaries and
branches.
•
Transactional foreign exchange rate
risk
– arises from customer
transactions and profits and losses
that are in a currency other than the
functional currency.
•
Forecast earnings or costs in foreign
currencies
– NatWest Group assesses
its potential exposure to forecast
foreign currency income and
expenses. NatWest Group hedges
forward some forecast expenses.
The most material non-traded open
currency positions are the structural
foreign exchange exposures arising from
investments in foreign subsidiaries and
branches. These exposures are assessed
and managed to predefined risk appetite
levels under delegated authority agreed
by the CFO with support from the Asset
& Liability Management Committee.
NatWest Group seeks to limit the potential
volatility impact on its CET1 ratio from
exchange rate movements by deliberately
maintaining a structural open currency
position. Gains or losses arising from the
retranslation of net investments in
overseas operations are recognised in
other comprehensive income and reduce
the sensitivity of capital ratios to foreign
exchange rate movements primarily
arising from the retranslation of non-
sterling denominated RWAs. Sensitivity is
minimised where, for a given currency,
the ratio of the structural open position to
RWAs equals the CET1 ratio.
The sensitivity of this ratio to exchange
rates is monitored monthly and reported
to the Asset & Liability Management
Committee at least quarterly. Foreign
exchange exposures arising from
customer transactions are hedged by
businesses on a regular basis in line with
NatWest Group policy.
The table below shows structural foreign currency exposures.
Net investments | Net | Structural foreign | Residual | ||
in foreign | investment | currency exposures | Economic | structural foreign | |
operations | hedges | pre-economic hedges | hedges (1) | currency exposures | |
2025 | £m | £m | £m | £m | £m |
US dollar | 1,067 | - | 1,067 | (1,067) | - |
Euro | 4,543 | (2,560) | 1,983 | 1,983 | |
Other non-sterling | 901 | (478) | 423 | 423 | |
Total | 6,511 | (3,038) | 3,473 | (1,067) | 2,406 |
2024 | |||||
US dollar | 1,826 | (598) | 1,228 | (1,228) | - |
Euro | 4,162 | (2,351) | 1,811 | - | 1,811 |
Other non-sterling | 874 | (372) | 502 | 502 | |
Total | 6,862 | (3,321) | 3,541 | (1,228) | 2,313 |
(1)
Economic hedges of US dollar net investments in foreign operations represent US dollar AT1 equity securities that do not qualify as net investment hedges
for accounting purposes. They provide an offset to structural foreign exchange exposures to the extent that there are net assets in overseas operations
available, but they are accounted for at historical cost under IFRS until redemption.
•
Changes in foreign currency exchange rates affect equity in proportion to structural foreign currency
exposure pre economic hedges. For example, a 5% strengthening or weakening in foreign currencies
against sterling would result in a gain or loss of £0.2 billion in equity, respectively.
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,
privately owned investments and shareholdings in industry participations including SWIFT. Further
disclosure of NatWest Group’s 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 Chief Financial Officer with support from the Acquisitions & Disposals Committee
for execution, such transactions are referred for approval to the Board, the Executive Committee, the
Chief Executive Officer, 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’s annual Internal Capital Adequacy Assessment Process
Accounting volatility risk
Accounting volatility risk arises when an exposure is accounted for at amortised cost but economically
hedged by a derivative that is accounted for at fair value. Although this is not an economic risk, the
difference in accounting between the exposure and the hedge creates volatility in the income statement.
Accounting volatility can be mitigated through hedge accounting. However, residual volatility will remain in
cases where accounting rules mean that hedge accounting is not an option, or where there is some
hedge ineffectiveness. Accounting volatility risk is reported to the Asset & Liability Management
Committee monthly and capitalised as part of the ICAAP.
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 and underwriting 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
Key developments in 2025
•
Drivers of market volatility during the year
included global inflationary concerns, US
tariffs, the ongoing Russia-Ukraine conflict
and geopolitical tensions in the Middle
East.
•
Traded VaR and SVaR remained within
appetite, aided by NatWest Group’s
continued disciplined approach to risk-
taking.
•
Overall, internal traded VaR decreased on
an average basis, compared to 2024.
Risk governance for traded market risk is in
line with the approach outlined in the Risk
Risk appetite
Risk appetite for traded market risk is in line
with the approach outlined in the Risk
management framework section.
NatWest Group’s qualitative appetite for
traded market risk is set out in the traded
market risk appetite statement. Quantitative
appetite is expressed in terms of exposure
limits. The limits at NatWest Group level
comprise value-at-risk (VaR), stressed value-
at-risk (SVaR) and stress-testing. More details
on these metrics are provided on the following
pages.
Measurement
NatWest Group uses VaR, SVaR and the
incremental risk charge (IRC) to capitalise
traded market risk. Risks that are not
adequately captured by VaR or SVaR are
captured by the Risks Not In VaR (RNIV)
framework to ensure that NatWest Group is
adequately capitalised for market risk. In
addition, stress testing is used to identify any
vulnerabilities and potential losses.
The key inputs into these measurement
methods are market data and risk factor
sensitivities. Sensitivities refer to the changes
in trade or portfolio value that result from
small changes in market parameters that are
subject to the market risk limit framework.
Revaluation ladders are used in place of
sensitivities to capture the impact of large
moves in risk factors or the joint impact of two
risk factors.
These methods have been designed to
capture correlation effects and allow NatWest
Group to form an aggregated view of its
traded market risk across risk types, markets
and business lines while also taking into
account the characteristics of each risk type.
Value-at-risk
For internal risk management purposes, VaR
assumes a time horizon of one trading day
and a confidence level of 99%.
The internal VaR model – which captures all
trading book positions including those
products approved by the regulator – is based
on a historical simulation, utilising market data
from the previous 500 days, and is sensitive to
recent market conditions.
The model also captures the potential impact
of interest rate risk; credit spread risk; foreign
currency price risk; equity price risk; and
commodity price risk.
When simulating potential movements in such
risk factors, a combination of absolute, relative
and rescaled returns is used.
The performance and adequacy of the VaR
model are tested regularly through the
following processes:
•
Back-testing: Internal and regulatory
back-testing is conducted on a daily basis.
Information on internal back-testing is
provided in this section. Information on
regulatory back-testing appears in the
Pillar 3 Report.
•
Ongoing model validation: VaR model
performance is assessed both regularly,
and on an ad-hoc basis, if market
conditions or portfolio profile change
significantly.
•
Model Risk Management review: As part
of the model lifecycle, all risk models
(including the VaR model) are
independently reviewed to ensure the
model is still fit for purpose given current
market conditions and portfolio profile. For
further detail on the independent model
validation carried out by Model Risk
Management refer to page 274. More
information relating to pricing and market
risk models is presented in the Pillar 3
Report.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
263
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
264
Traded market risk connued
One-day 99% traded internal VaR
The table below shows one-day 99% internal VaR for NatWest Group’s trading portfolios, split by exposure type.
| 2025 | 2024 | |||||||
Average | Maximum | Minimum | Period end | Average | Maximum | Minimum | Period end | |
£m | £m | £m | £m | £m | £m | £m | £m | |
Interest rate | 3.2 | 5.4 | 1.8 | 2.3 | 6.6 | 12.1 | 3.0 | 3.8 |
Credit spread | 4.8 | 7.2 | 3.1 | 3.1 | 7.7 | 10.1 | 5.6 | 5.6 |
Currency | 1.3 | 4.0 | - | 0.5 | 2.0 | 6.7 | 0.5 | 1.3 |
Equity | 0.1 | 0.1 | - | 0.1 | 0.1 | 0.3 | - | - |
Diversification (1) | (3.8) | (2.5) | (6.3) | (5.4) | ||||
Total | 5.6 | 9.7 | 3.4 | 3.5 | 10.1 | 16.2 | 5.3 | 5.3 |
(1)
NatWest Group benefits from diversification across various financial instrument
types, currencies and markets. The extent of the diversification benefit
depends on the correlation between the assets and risk factors in the portfolio
at a particular time. The diversification factor is the sum of the VaR on
individual risk types less the total portfolio VaR.
•
Both interest rate VaR and credit spread VaR decreased on an average basis, compared to 2024.
•
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
265
Traded market risk connued
VaR back-testing
The main approach employed to assess the VaR model’s ongoing performance is back-testing,
which counts the number of days when a loss exceeds the corresponding daily VaR estimate,
measured at a 99% confidence level.
Two types of profit and loss (P&L) are used in back-testing comparisons: Actual P&L and
Hypothetical P&L. For more details on the back-testing approach, refer to the Pillar 3 Report.
The table below shows internal back-testing exceptions in the major NatWest Markets businesses
for the 250-business-day period to 31 December 2025. Internal back-testing compares one-day
99% traded internal VaR with Actual and Hypothetical (Hypo) P&L.
Back-testing exceptions | ||
Actual | Hypo | |
Fixed income | - | - |
Currencies | - | 3 |
•
The back-testing exceptions in Currencies were driven by losses in February, April and
August 2025 due to increased foreign exchange and rates market volatility.
Stressed VaR (SVaR)
As with VaR, the SVaR methodology produces estimates of the potential change in the market
value of a portfolio, over a specified time horizon, at a given confidence level. SVaR is a VaR-
based measure using historical data from a one-year period of stressed market conditions.
A simulation of 99% VaR is run on the current portfolio for each 250-day period from 2005 to the
current VaR date, moving forward one day at a time. The SVaR is the worst VaR outcome of the
simulated results.
This is in contrast with VaR, which is based on a rolling 500-day historical data set. A time
horizon of ten trading days is assumed with a confidence level of 99%.
The internal traded SVaR model captures all trading book positions.
| 2025 | 2024 | |||||||
Period | Period | |||||||
Average | Maximum | Minimum | end | Average | Maximum | Minimum | end | |
£m | £m | £m | £m | £m | £m | £m | £m | |
Total internal | ||||||||
traded SVaR | 58 | 112 | 31 | 38 | 56 | 136 | 31 | 41 |
Risks not in VaR (RNIVs)
The RNIV framework is used to identify and quantify market risks that are not fully captured by
the internal VaR and SVaR models.
RNIV calculations form an integral part of ongoing model and data improvement efforts to
capture all market risks in scope for model approval in VaR and SVaR.
For further qualitative and quantitative disclosures on RNIVs, refer to the Market risk section of
the Pillar 3 Report.
Stress testing
For information on stress testing, refer to page 183.
Incremental risk charge (IRC)
The IRC model quantifies the impact of rating migration and default events on the market value
of instruments with embedded credit risk (in particular, bonds and credit default swaps) held in
the trading book. It further captures basis risk between different instruments, maturities and
reference entities. For further qualitative and quantitative disclosures on the IRC, refer to the
Market risk section of the Pillar 3 Report 2025.
Monitoring and mitigation
Traded market risk is identified and assessed by gathering, analysing, monitoring and reporting
market risk information at desk, business, business segment and NatWest Group-wide levels.
Industry expertise, continued system developments and techniques such as stress testing are
also used to enhance the effectiveness of the identification and assessment of all material market
risks.
Traded market risk exposures are monitored against limits and analysed daily. A daily report
summarising the position of exposures against limits at desk, business, business segment and
NatWest Group levels is provided to senior management and market risk managers across the
function. Limit reporting is supplemented with regulatory capital and stress testing information as
well as ad-hoc reporting.
A risk review of trading businesses is undertaken weekly with senior risk and front office staff.
This includes a review of profit and loss drivers, notable position concentrations and other
positions of concern.
Business profit and loss performance is monitored automatically through loss triggers which, if
breached, require a remedial action plan to be agreed between the Market Risk function and the
business. The loss triggers are set using both a fall-from-peak approach and an absolute loss
level. In addition, regular updates on traded market risk positions are provided to the Executive
Risk Committee, the Board Risk Committee and the Board.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
266
Traded market risk connued
Market risk – linkage to balance sheet
The table below analyses NatWest Group’s balance sheet by non-trading and trading business.
| 2025 | 2024 | ||||||
Non-trading | Trading | Non-trading | Trading | ||||
Total | business (1) | business (2) | Total | business (1) | business (2) | ||
£bn | £bn | £bn | £bn | £bn | £bn | Primary market risk factor | |
Assets | |||||||
Cash and balances at central banks | 85.2 | 85.2 | - | 93.0 | 93.0 | - | Interest rate |
Trading assets | 46.5 | 0.1 | 46.4 | 48.9 | 0.3 | 48.6 | |
Reverse repos | 27.7 | - | 27.7 | 27.1 | - | 27.1 | Interest rate |
Securities | 12.8 | - | 12.8 | 13.9 | - | 13.9 | Interest rate, credit spreads, equity |
Other | 6.0 | 0.1 | 5.9 | 7.9 | 0.3 | 7.6 | Interest rate |
Derivatives | 60.8 | 0.8 | 60.0 | 78.4 | 1.4 | 77.0 | Interest rate, credit spreads, equity |
Settlement balances | 0.6 | - | 0.6 | 2.1 | 0.1 | 2.0 | Settlement |
Loans to banks | 7.0 | 7.0 | - | 6.0 | 6.0 | - | Interest rate |
Loans to customers | 418.9 | 418.9 | - | 400.3 | 400.3 | - | Interest rate |
Other financial assets | 79.8 | 79.8 | - | 63.2 | 63.2 | - | Interest rate, credit spreads, equity |
Intangible assets | 7.3 | 7.3 | - | 7.6 | 7.6 | - | Interest rate, credit spreads, equity |
Other assets | 8.5 | 8.5 | - | 8.5 | 8.5 | - | |
Total assets | 714.6 | 607.6 | 107.0 | 708.0 | 580.4 | 127.6 | |
Liabilities | |||||||
Bank deposits | 44.1 | 44.1 | - | 31.5 | 31.5 | - | Interest rate |
Customer deposits | 443.0 | 443.0 | - | 433.5 | 433.5 | - | Interest rate |
Settlement balances | 0.9 | 0.1 | 0.8 | 1.7 | - | 1.7 | Settlement |
Trading liabilities | 49.0 | 0.2 | 48.8 | 54.7 | 0.2 | 54.5 | |
Repos | 28.6 | - | 28.6 | 30.6 | - | 30.6 | Interest rate |
Short positions | 7.5 | - | 7.5 | 10.5 | - | 10.5 | Interest rate, credit spreads |
Other | 12.9 | 0.2 | 12.7 | 13.6 | 0.2 | 13.4 | Interest rate |
Derivatives | 54.0 | 0.5 | 53.5 | 72.1 | 1.0 | 71.1 | Interest rate, credit spreads |
Other financial liabilities | 67.6 | 67.6 | - | 61.1 | 61.1 | - | Interest rate |
Subordinated liabilities | 6.1 | 6.1 | - | 6.1 | 6.1 | - | Interest rate |
Notes in circulation | 3.2 | 3.2 | - | 3.3 | 3.3 | - | Interest rate |
Other liabilities | 4.0 | 4.0 | - | 4.6 | 4.6 | - | |
Total liabilities | 671.9 | 568.8 | 103.1 | 668.6 | 541.3 | 127.3 | |
(1)
Non-trading businesses are entities that primarily have exposures that are not classified as trading book. For these exposures, with the exception of pension-related activities, the main measurement methods are sensitivity analysis of net interest income, internal non-traded market risk VaR and fair
value calculations. For more information refer to the non-traded market risk section.
(2)
Trading businesses are entities that primarily have exposures that are classified as trading book under regulatory rules. For these exposures, the main methods used by NatWest Group to measure market risk are detailed in the traded market risk section.
(3)
Foreign exchange risk affects all non-sterling denominated exposures on the balance sheet across trading and non-trading businesses, and therefore has not been listed in the above tables.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
267
Definition
Pension risk is the inability to meet
contractual obligations and other liabilities to
the established employee or related company
pension scheme.
Sources of risk
NatWest Group has exposure to pension risk
through its defined benefit schemes
worldwide. The Main section of The NatWest
Group Pension Fund (the Main section) is the
largest source of pension risk. Refer to Note 5
to the consolidated financial statements, for
further details on NatWest Group’s pension
obligations, including sensitivities to the main
risk factors.
Pension scheme liabilities vary with changes
in long-term interest rates and inflation as
well as with pensionable salaries, the
longevity of scheme members and legislation.
The Trustee of NatWest Group’s largest
scheme (the Main section of the NatWest
Group Pension Fund) holds buy-in policies
with third-party insurers. Under the buy-in
insurance contracts, the insurer makes
payments to the scheme to cover pension
benefits paid to members. As a result, the
insured portion of the scheme is protected
against all material demographic and market
risks.
These risks have been replaced with the risk
that the insurer defaults on payments due to
the scheme. The uninsured scheme assets
continue to vary with changes in market risk
drivers such as interest rates, inflation
expectations and credit spreads. NatWest
Group is therefore still exposed to the risk
that the schemes’ assets, together with future
returns and additional future contributions,
are estimated to be insufficient to meet
liabilities as they fall due. In such
circumstances, NatWest Group could be
obliged (or might choose) to make additional
contributions to the schemes or be required
to hold additional capital to mitigate this risk.
Key developments in 2025
•
During the year, the Trustee of the Main
section of the NatWest Group Pension
Fund completed partial buy-in
transactions, in addition to those
completed during 2024, passing
demographic and market risk to third-
party insurers. Over 40% (£10.3 billion) of
the scheme’s liabilities are now covered
by buy-in policies, which is an increase
from one-third at the end of 2024.
Governance
Risk governance for pension risk is in line with
the approach outlined in the Risk
management framework section.
Chaired by the Chief Financial Officer (CFO),
the Asset & Liability Management Committee
supports the CFO in considering the financial
strategy and balance sheet implications
relating to pension liabilities and pension
strategy and other issues material to NatWest
Group’s pension strategy. It also supports the
CFO in considering investment strategy
proposals from the Trustee of the Main
section. The Board reviews and, as
appropriate, approves any material pension
strategy proposals.
Risk appetite
Risk appetite for pension risk is in line with
the approach outlined in the Risk
management framework section.
Pension risk appetite is approved by the
Board. NatWest Group maintains an
independent view of the risk inherent in its
pension funds. NatWest Group has a pension
risk appetite statement that is reviewed and
approved at least annually by the Board on
the Board Risk Committee’s recommendation
to ensure it remains appropriate and aligned
to strategy.
Policies and standards are in place to provide
formal controls for pension risk reporting,
modelling, governance and stress testing.
A pension risk policy, which sits within the
enterprise-wide risk management framework,
is also in place and is subject to associated
framework controls.
Performance against risk appetite is reported
regularly to the Executive Risk Committee,
the Board Risk Committee, and the Board.
Relevant pension risk matters are escalated
through the Executive Risk Committee, Asset
& Liability Management Committee and
Board Risk Committee as appropriate and to
the Board as applicable. For more
information, refer to the Governance and
remuneration section.
Measurement and monitoring
Pension risk is monitored by the Executive
Risk Committee and the Board Risk
Committee. Relevant pension risk matters are
escalated to the Board as applicable. NatWest
Group also undertakes stress tests on its
material defined benefit pension schemes
each year.
These tests are also used to satisfy the
requests of regulatory bodies such as the
Bank of England. The stress testing
framework includes pension risk capital
calculations for the purposes of the Internal
Capital Adequacy Assessment Process as well
as additional stress tests for a number of
internal management purposes.
The results of the stress tests and their
consequential impact on NatWest Group’s
balance sheet, income statement and capital
position are incorporated into the overall
NatWest Group stress test results. NatWest
Bank Plc (a subsidiary of NatWest Group) is
the principal employer of the Main section
and could be required to fund any deficit that
arises. The financial strength of third-party
insurers is monitored on a periodic basis by
the Trustee and NatWest Group.
Mitigation
The Main section is well-protected against
interest rate and inflation risks within the
non-insured portfolio, reflecting risk mitigation
measures taken by the Trustee such as
hedging and reduced exposure to growth
assets. The buy-in transactions completed to
date further protect against demographic and
market risks.
If, in an extreme scenario, an insurer was
unable to make payments due to the scheme
under the buy-in insurance contracts,
NatWest Group would continue to be
responsible for financially supporting the
scheme to meet pension benefits. However,
strong mitigants are in place against this risk,
including the insurance regulatory regime.
The potential impact of climate change is one
of the factors considered in managing the
assets of the Main section. The Trustee
monitors the risk to its investments from
changes in the global economy and invests,
where return justifies the risk, in sectors that
reduce the world’s reliance on fossil fuels, or
that may otherwise promote environmental
benefits. The Trustee also expects third-party
insurers to have appropriate policies to
address climate risk and to report on climate
exposure attributable to the Main section.
Further details regarding the Trustee’s
approach to managing climate change risk
can be found in its Responsible Ownership
Policy, its net zero commitment and its
climate disclosures produced on an annual
basis, as required by The Occupational
Pension Schemes (Climate Change
Governance and Reporting) Regulations 2021.
Pension risk
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
268
Definition
Operational risk is the risk of loss resulting
from inadequate or failed internal processes,
people and systems, or external events. It
arises from day-to-day operations and is
relevant to every aspect of the business.
Sources of risk
Operational risk may arise from a failure to
manage operations, systems, processes,
transactions and assets appropriately. This
includes human error, an inability to deliver
change adequately or on time, the non-
availability of technology services, or the loss
of customer data. It also includes systems
failure, theft of NatWest Group property,
information loss, the impact of natural or
man-made disasters and the threat of
cyberattacks. Operational risk can also arise
from a failure to account for changes in law
or regulations or to take appropriate
measures to protect assets.
Key developments in 2025
•
The enhanced risk and control self-
assessment approach was refined
further with a focus on material
operational risks and controls across the
key end-to-end processes.
•
The use of automated data-led insights
was embedded to oversee the
operational risk profile and manage it
within appetite.
•
Improvements to technology end of life
risk management were implemented to
mitigate associated technology and
cyber risks.
•
AI tools have been introduced to support
the articulation and adequacy of controls
including generative AI chat bots to
support the embedding of frameworks
and to help with horizon scanning.
•
Compliance with UK and EU operational
resilience regulatory requirements was
achieved and maintained along with
material compliance with EU Digital
Operational Resilience Act (DORA).
•
NatWest Group continued to evolve the
assessment of its operational resilience
with increasingly severe, complex, and
prolonged scenario tests for cyber, third-
party, and significant IT failure risks.
•
Threat horizon scanning and vulnerability
management processes were enhanced
to support risk identification, scenario
testing and the prioritisation of risk
mitigation activities.
Governance
The risk governance arrangements in place
for operational risk are in line with the
approach as set out in the Risk management
framework section.
Aligned to this, a strong operational risk
management oversight function is vital to
support NatWest Group’s ambitions to serve
its customers better. Improved management
of operational risk against defined risk
appetite is vital for stability and reputational
integrity.
To support ongoing oversight of the
management of the operational risk profile
the Operational Risk Executive Steering
Committee ensures all material operational
risks are monitored and managed within
appetite.
Risk appetite
Risk appetite for operational risk is in line with
the approach outlined in the Risk
management framework section.
Measurement and monitoring
Measurement and monitoring for operational
risk is in line with the approach outlined in the
Risk management framework section.
Mitigation
Mitigation for operational risk is in line with
the approach outlined in the Risk
management framework section.
Operational risks are mitigated by applying
preventative and detective controls which are
assessed on adequacy and effectiveness
through risk and control self-assessment
process on a regular basis to determine risk
exposure. Mitigation is prioritised using risk-
based approach considering risk appetite.
Operational resilience and
cybersecurity
NatWest Group maintains a robust approach
to operational resilience through
comprehensive, NatWest Group-wide
processes. These include regular scenario
tests that simulate increasingly severe and
sophisticated disruption events. In 2025, as
part of NatWest Group’s operational resilience
strategy, severe but plausible disruption
scenario tests were undertaken and
encompassed cyber threats, third-party risks,
and significant IT failures confirming the
preparedness and effectiveness of NatWest
Group’s operational resilience strategies, and
plans including third party arrangements in
the event of severe but plausible disruptions.
This rigorous approach was underpinned with
the enhancement, ongoing monitoring, and
transparent reporting of key risk indicators
and performance metrics for Important
Business Services. In early Q1 2025, NatWest
Group confirmed that it had materially met
the requirements of the EU DORA.
Furthermore, by the end of March 2025,
NatWest Group confirmed full compliance
with the operational resilience requirements
set by the Financial Conduct Authority and
the Prudential Regulation Authority.
By meeting the 2025 compliance deadlines
for these critical regulatory frameworks,
NatWest Group demonstrated the strength
and reliability of its systems and controls. This
enables effective risk management, minimises
potential disruptions, and safeguards both
customers and the wider financial system.
These efforts reinforce NatWest Group’s
commitment to building trust and stability
within financial services.
Operational resilience remains a key priority,
achieved through the effective management
of a broad spectrum of interconnected
operational risks. NatWest Group consistently
meets regulatory expectations and actively
participates in multiple industry-wide
operational resilience forums. This
engagement provides a valuable cross-sector
perspective on the evolving operational
resilience risk landscape and supports
NatWest Group’s ability to adapt to ongoing
innovation and change, both internally and
across the financial services sector.
NatWest Group operates layered security
controls and its architecture is designed to
provide inherent protection against threats.
This approach avoids reliance on any one
type or method of security control.
Minimum
security control requirements are set out in
key risk policies, standards, processes and
procedures.
Throughout 2025, NatWest Group continued
to monitor and manage the threat landscape
focusing on:
•
Initial access brokers (cyber criminals who
specialise in breaching organisations then
selling the access to other threat actors),
ransomware gangs and, in light of
ongoing geopolitical tensions, nation
states.
•
Innovations in technology, assessing the
inherent risk and developing appropriate
responses to manage any associated
risks.
Artificial Intelligence, Quantum
Computing and Cloud Adoption have
been areas of focus in 2025.
As cyberattacks evolve, NatWest Group
continues to invest in additional capability
designed to defend against emerging risks.
Operational risk
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
269
Operational risk continued
Event and loss data management
The operational risk event and loss data management process ensures NatWest Group captures and records operational risk events with financial and non-financial impacts that meet defined criteria.
Loss data is used for internal, regulatory and industry reporting and is included in capital modelling when calculating economic capital for operational risk. The most serious events are escalated in a
simple, standardised process to all senior management, by way of a ‘Early Event Escalation Process’.
NatWest Group has not experienced a material cybersecurity breach or associated material loss
in the last three years.
All financial impacts and recoveries associated with an operational risk event are reported against the date they were recorded in NatWest Group’s financial accounts. A single event can result in
multiple losses (or recoveries) that may take time to crystallise. Losses and recoveries with a financial accounting date in 2025 may relate to events that occurred, or were identified in, prior years.
NatWest Group purchases insurance against specific losses and to comply with statutory or contractual requirements.
Percentage and value of events
At 31 December 2025, the total value of operational risk events was £76 million, representing an increase of £58 million compared with 2024. This movement was primarily driven by the release of
unutilised provisions in 2024 within the clients, products and business practices category. The volume of losses has decreased by 10% compared to 2024.
Value and volume of events (>£10k)
Value of events £k
Volume of events
(1)
Event category
2025
2024
YoY £
YoY %
2025
2024
YoY
YoY %
Fraud
47
43
4
22%
1,169
1,321
(152)
(10%)
Clients, products and business practices
16
(37)
53
294%
18
30
(12)
(1%)
Execution, delivery and process management
9
8
1
6%
-
1
(1)
-
Employment practices and workplace safety
3
1
2
11%
20
12
8
-
Technology and infrastructure failures
1
3
(2)
(11%)
144
129
15
1%
Disasters and public safety
-
-
-
-
5
11
(6)
-
76
18
58
322%
1,356
1,504
(148)
(10%)
(1)
The calculation in the table is based on the volume and value of events
(the proportion and cost of operational risk events to NatWest Group)
where the associated loss is more than or equal to £10,000.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
270
Operational risk continued
Cybersecurity risk management
processes
NatWest Group’s cybersecurity risk
management forms an integral part of its
overall EWRMF, which is designed around a
three lines of defence model. Specifically,
management of cybersecurity risk is a subset
of NatWest Group’s wider operational risk
management. To support NatWest Group’s
cybersecurity risk management, it has an
information security (including cyber) policy.
This is reviewed at least annually and
benchmarked against industry best practice
standards, including the Information Security
Forum: Standard Of Good Practice (ISF:
SOGP) and relevant publications by
competent authorities such as the National
Cyber Security Centre (NCSC), to help
NatWest Group identify and remediate any
gaps in its controls and procedures. NatWest
Group’s policies are also aligned with a
number of other international and industry
standards, such as ISO 27001 and the
National Institute of Standards and
Technology Cyber Security Framework.
Throughout 2025, NatWest Group was
certified by the IASME Consortium Ltd
(IASME) in Cyber Essentials Plus, a
recognised government owned scheme
operated by the NCSC.
The information security policy forms part of
the internal process to support NatWest
Group’s annual attestation to its
management’s assessment of the
effectiveness of its internal control over
financial reporting required under Section 404
of the Sarbanes-Oxley Act.
The cybersecurity risk management
framework is designed to mitigate the impact
of cybersecurity threats and incidents.
The framework also includes a structured
approach for identifying and managing both
internal cybersecurity incidents and external
incidents impacting NatWest Group’s third-
party suppliers.
In addition, the framework includes a process
for assessing the severity and source of a
cybersecurity threat or incident, including in
relation to third-party service providers,
enabling NatWest Group to implement
mitigating controls as required and to inform
its management and board of directors of
any material impact.
The functions of the cybersecurity risk
management framework are based on a
three lines of defence model:
•
NatWest Group’s first line of defence is
responsible for setting NatWest Group’s
information and cybersecurity risk
management strategy and Information
Security Policy, including: delivering
effective and efficient cybersecurity
products and services and identifying,
considering and assessing material
cybersecurity threats on an ongoing
basis. As part of the first line of defence,
NatWest Group:
a)
continues to invest significant
resources in developing and improving
its cybersecurity risk management.
b)
supports due diligence processes in
respect of third-party service
providers involved in NatWest Group’s
supply chain by defining minimum
security requirements in line with
industry practice that suppliers are
contractually bound by. These
minimum standards, among others,
require suppliers to notify NatWest
Group of any material cybersecurity
incidents and for UK based suppliers
to hold independent assurance, with
Cyber Essentials+ certification being
the minimum accepted.
c)
educates its employees and
customers on cybersecurity threats
and incidents through education and
awareness programmes that are
designed around the most relevant
cybersecurity threats and incidents for
NatWest Group. These programmes,
including ethical phishing campaigns
are reviewed regularly and updated
based on changes to the
cybersecurity threat landscape.
Employees are also required to
participate in annual information
security (including cybersecurity)
trainings.
•
As part of the second line of defence, a
dedicated operational risk team is
responsible for the assessment,
identification and management of
NatWest Group’s cybersecurity risk and
provides regular updates and opinions to
senior risk committees of NatWest
Group. These include monthly updates
and escalations as required to the
NatWest Digital X Risk Committee. The
operational risk team also provides a
Risk opinion as part of the annual
information and cyber security risk
spotlight to NatWest Group’s Executive
Risk Committee and Board Risk
Committee.
•
As part of the third line of defence,
NatWest Group’s Internal Audit team has
a risk-based coverage approach to
assess the adequacy of the design and
operational effectiveness of key internal
controls, governance and risk
management, including in connection
with cybersecurity risk. The frequency
and scope of the internal audit coverage
depends on the ongoing assessment of
the key risks to NatWest Group.
Cybersecurity threats for 2025
NatWest Group is continuously exposed to
cybersecurity threats across its business and
supply chain, which are closely monitored by
NatWest Group. In the year ended 31
December 2025, NatWest Group did not
identify any cybersecurity threats that have
materially affected or are reasonably likely to
materially affect NatWest Group. However,
given the nature of cybersecurity threats,
NatWest Group cannot eliminate all risks from
cybersecurity threats or provide assurances
that NatWest Group has not experienced an
undetected cybersecurity incident. For more
information about these risks, refer to the
Risk Factors section – “NatWest Group is
subject to increasingly sophisticated and
frequent cyberattacks”.
Cybersecurity Risk Oversight
Board
The Board of Directors (Board) ensures there
is a framework of prudent and effective
controls which enables risks – including
information and cyber security risk - to be
assessed and managed. The Board approves
the EWRMF (including NatWest Group’s risk
appetite framework) on recommendation
from the Group Board Risk Committee, and
approves risk appetite.
The Board monitors information and
cybersecurity performance against risk
appetite through the receipt of regular
reporting and receives reporting on top and
emerging risks, including the likelihood of a
cyber-attack. The Board also reviews the
effectiveness of risk management and
internal control systems.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
271
Operational risk continued
Group Board Risk Committee (BRC)
Provides oversight and advice to the Board
on current and future risk exposures of
NatWest Group and its subsidiaries; future risk
profile including risk appetite; the approval
and effectiveness of the EWRMF and the
internal controls required to manage risk. It
approves the enterprise-wide risk
management strategy and oversees its
effective delivery. BRC reviews all information
and cybersecurity risk exposures and
management’s recommendations to monitor,
control and mitigate such exposures. It also
reviews NatWest Group’s information and
cybersecurity performance against risk
appetite through the receipt of regular
reporting, updates on top and emerging risks
and updates from the first and second lines of
defence – including an information and cyber
security spotlight at least annually - and
escalates matters to the Board as required.
Management responsible for managing
information and cybersecurity risk
The first line of defence is responsible for
setting NatWest Group’s information and
cybersecurity risk management strategy,
including: delivering effective and efficient
cybersecurity products, policies and services
and identifying, considering and assessing
material cybersecurity threats on an ongoing
basis. NatWest Group’s cybersecurity
programmes are under the direction of the
Chief Information Officer (CIO) who holds
regulatory accountability under the Senior
Managers and Certification Regime for
defining and delivering NatWest Group’s
internal technology, infrastructure services
and customer operations, including NatWest
Group’s IT strategy, cybersecurity, operational
continuity, and resilience. The Chief
Information Security Officer (CISO) reports to
the CIO and receives regular reports from the
cybersecurity team under his supervision.
The CIO is an established Technology Leader
with over 30 years of experience in Financial
Services, joining NatWest Group in 2022. Prior
to 2022, the CIO spent eight years at
Deutsche Bank where he held a number of
roles including CIO for the Corporate and
Investment Bank, Head of Technology for
Financial Crime, CIO for the UK and Group
CTO. Prior to joining Deutsche Bank, the CIO
drove the technology strategy and innovation
agenda for RBS Markets as its CIO and spent
the early part of his career at JP Morgan.
The CISO, via the cybersecurity team,
monitors the prevention, detection, mitigation
and remediation of cybersecurity threats and
incidents. The CISO and the cybersecurity
team are experienced information security
professionals with many years of experience
in the information and cybersecurity industry.
Prior to joining NatWest Group, the CISO was
a technical director at Communications-
Electronics Security Group (now known as
the UK’s National Cyber Security Centre)
where he advised on securing some of the
UK’s most critical assets. He has worked in
this industry for over 20 years and has
spoken at a wide range of events on the topic
of cybersecurity.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
272
Definition
Compliance risk is the risk that NatWest
Group fails to observe the letter and spirit of
all relevant laws, codes, rules, regulations and
standards of good market practice.
Conduct risk is the risk of inappropriate
behaviour towards customers, or in the
markets in which NatWest Group operates,
which leads to poor or inappropriate
customer outcomes, and/or undermines
market integrity.
The consequences of failing to meet
compliance and/or conduct responsibilities
can be significant and could result, for
example, in legal action, regulatory
enforcement, material financial loss and/or
reputational damage.
Sources of risk
Compliance and conduct risk exist across all
stages of NatWest Group’s relationships with
its customers and arise from a variety of
activities including product design, marketing
and sales, complaint handling, staff training,
and handling of confidential inside
information.
As set out in Note 25 to the consolidated
financial statements, members of NatWest
Group are party to legal proceedings and are
subject to investigation and other regulatory
action in the UK, the US and other
jurisdictions.
Key developments in 2025
•
As part of the Non-Financial Risk
Enhancement Programme, NatWest
Group reviewed its compliance and
conduct framework against the
Operational Riskdata eXchange
Association (ORX) regulatory compliance
and conduct risk taxonomy.
ORX is the largest operational risk
management association in the financial
services sector and this industry-
standard taxonomy informed proposals
for the annual risk directory refresh,
including new level 2 risks and a
consolidation of conduct and regulatory
compliance risks into a single 'compliance
and conduct level 1 risk’ from 2026.
These changes will enhance risk
coverage, strengthen integration with
the EWRMF, and align more closely with
industry practice.
•
NatWest Group is also evaluating
alternative rules mapping approaches,
including a regulatory traceability model
supported by an integrated AI-enabled
platform. This will simplify governance,
reduce complexity, and improve
consistency, while ensuring its
framework remains resilient and future-
ready.
•
On 4 September 2025, the US Court of
Appeal approved an amendment of the
plea agreement and formally terminated
the Monitorship (extended oversight) of
NatWest Markets Plc (NWM). This is a
result of the notable progress made in
strengthening our compliance
programme, improvements in internal
controls and remediation, and the status
of the implementation of the Monitor’s
recommendations. NWM’s obligations
under the plea agreement and probation
have been extended until December
2026. Going forward, NWM will report
progress on the compliance programme
to the US Department of Justice (DOJ)
directly.
•
The Judicial Review challenging the
Financial Ombudsman Service’s (FOS)
interpretation of ‘unfair relationships’
under Section 140 of the Consumer
Credit Act (CCA) remains ongoing.
NatWest Group and peer banks have
raised concerns over the reopening of
closed complaints, with the FCA
intervening in support of our position.
Separately, proposed CCA reforms aim
to modernise regulation via a flexible,
outcome-based regime.
•
Following the Supreme Court’s August
2025 ruling regarding ‘unfair
relationships’ when arranging motor
finance, the FCA’s October consultation
outlined a redress scheme expected to
launch in 2026.
•
A review of mortgage rules was
launched by the FCA to simplify
regulatory requirements and improve
consumer flexibility. The proposals seek
to simplify rules, enhance access to
advice and execution-only options, and
streamline affordability assessments
under Consumer Duty. NatWest Group
continues to monitor developments to
ensure its proposition remains compliant
and responsive.
•
The FCA’s March review of the
treatment of vulnerable customers
recognised progress but highlighted
areas for improvement. NatWest Group
remains committed to delivering fair
outcomes and maintaining regulatory
compliance.
•
The PRA and FCA are consulting across
the financial services industry on the
Senior Managers and Certification
Regime that could reduce the number of
roles within scope by up to 40%, with His
Majesty’s Treasury (HMT) supporting
swift implementation.
•
HMT has launched a consultation to
review the FOS’s remit and propose to
modernise the framework. The FCA and
FOS have published next steps, signalling
coordinated reform of consumer
compensation mechanisms.
Governance
Risk governance for compliance and conduct
risk is in line with the approach outlined in the
Risk management framework section.
To support ongoing oversight of the
management of the compliance and conduct
risk profile, a number of committees are in
place, the most senior of which is the “One
Bank Good Customer Outcomes Leadership
Committee”.
Risk appetite
Risk appetite for compliance and conduct risk
is in line with the approach outlined in the
Risk management framework section.
Measurement and monitoring
Measurement and monitoring for compliance
and conduct risk are in line with the
approach outlined in the Risk management
framework section.
Mitigation
Mitigation for compliance and conduct risk is
in line with the approach outlined in the Risk
management framework section.
Activity to mitigate the most material
compliance and conduct risk is carried out
across NatWest Group with specific areas of
focus in the customer-facing businesses and
legal entities. Examples of mitigation include
consideration of customer needs in business
and product planning, targeted training,
conflicts of interest management, market
conduct surveillance, complaints
management, mapping of priority regulatory
requirements and independent monitoring
activity. Internal policies help support a strong
customer focus across NatWest Group.
Compliance and conduct risk
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
273
Definition
Financial crime risk is the risk that NatWest
Group's products, services, employees and/or
third parties are intentionally or
unintentionally used to facilitate financial
crime in the form of money laundering,
terrorist financing, bribery and corruption,
sanctions and tax evasion, as well as external
or internal fraud.
Sources of risk
Financial crime risk may be present if
NatWest Group’s customers, employees or
third parties undertake or facilitate financial
crime, or if NatWest Group’s products or
services are used intentionally or
unintentionally to facilitate such crime.
Financial crime risk is an inherent risk across
all lines of business.
Key developments in 2025
•
Significant investment continued to be
made to support the delivery of a multi-
year transformation plan across financial
crime risk management.
•
Enhancements were made to
technology, data quality, and data
analytics to improve the effectiveness of
systems used to monitor customers and
transactions.
•
Financial crime events were held
throughout the year to further embed
financial crime risk management culture
and behaviours.
•
There was active participation in
public/private partnerships including the
Joint Money Laundering Intelligence
Taskforce and Data Fusion. Following the
success of the pilot, Data Fusion has
become a permanent operational
capability, able to deliver benefits across
the public-private economic crime
system. This includes the implementation
of a permanent public-private Joint
Analytical Team, housed within the
National Crime Agency.
Governance
Risk governance for financial crime risk is in
line with the approach outlined in the Risk
management framework section.
The Financial Crime Oversight Committee,
which is jointly chaired by the Group Money
Laundering Reporting Officer and the Director
of Financial Crime is the core governance
committee for financial crime risk (excluding
fraud). It oversees financial crime risk
management, operational performance, and
transformation matters including decision-
making.
Financial crime matters are escalated
through the Executive Risk Committee and to
the Board as applicable.
The Fraud Executive Steering Group, which is
chaired by the Chief Customer and
Operations Officer, is the core governance
committee for fraud. It oversees fraud risk
management, operational performance, and
investment matters including decision-making
and escalations to relevant senior
committees.
Risk appetite
Risk appetite for financial crime risk is in line
with the approach outlined in the Risk
management framework section.
Measurement and monitoring
Measurement and monitoring for financial
crime risk are in line with the approach
outlined in the Risk management framework
section.
Financial crime risks are identified and
reported through continuous risk
management and regular reporting to the
Financial Crime Oversight Committee and
other risk governance committees (including
the Board Risk Committees). Quantitative and
qualitative data is reviewed and assessed to
measure whether financial crime risk is within
appetite.
Mitigation
Mitigation for financial crime risk is in line with
the approach outlined in the Risk
management framework section.
Through the financial crime framework,
relevant policies, systems, processes and
controls are used to mitigate and manage
financial crime risk. This includes the use of
dedicated screening and monitoring systems
and controls to identify people, organisations,
transactions and behaviours that may require
further investigation or other actions.
Centralised expertise is available to detect
and disrupt threats to NatWest Group and its
customers.
Intelligence is shared with law enforcement,
regulators and government bodies to
strengthen national and international
defences against those who would misuse the
financial system for criminal motives.
Financial crime risk
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025
Annual Report and Accounts
274
Definition
Model risk is the potential for adverse
consequences from model errors or the
inappropriate use of modelled outputs to
inform business decisions. NatWest Group
defines a model as a quantitative method,
system, or approach that applies statistical,
economic, financial, accounting, mathematical
or data science theories, techniques and
assumptions to process input data into
estimates.
Sources of risk
NatWest Group uses a variety of models in
the course of its business activities. Examples
include the use of model outputs to support
customer decisioning, measuring and
assessing risk exposures (including credit,
market, and climate risk), calculating
regulatory capital and liquidity requirements
and automation of operational processes.
Model applications may give rise to different
risks depending on the business in which they
are used. Model risk is therefore assessed
separately for each franchise in addition to
the overall assessment made for NatWest
Group.
Key developments in 2025
•
Continued with a programme of work to
implement model risk management
(MRM) framework changes that were
introduced in 2024 in response to PRA’s
Supervisory Statement 1/23 across the
model landscape.
•
Introduced further updates to the MRM
framework to address feedback received
from the PRA following their industry-
wide thematic review of MRM and
further improve model risk management
practices.
•
Deterministic quantitative methods,
which are complex and material
calculators that although not technically
models still present similar risks, were
brought in scope of the MRM framework.
•
Enhanced the framework for the
independent validation of models.
•
Delivered model inventory design changes
to support implementation of MRM
framework enhancements, including a
focus on recording of model use, which
has enabled better oversight and risk
management of models.
•
Continued focus on improving the
completeness and accuracy of model risk
data contained within the inventory
through enhanced oversight metrics and
targeted remediation work.
Governance
Risk governance for model risk is in line with
the approach outlined in the Risk
management framework section. A
governance framework is in place to ensure
policies and processes relating to models are
appropriate and effective. Two roles are key
to this – model risk owners and model
validation leads. Model risk owners are
responsible for model approval and ongoing
performance monitoring. Model validation
leads, in the second line of defence, are
responsible for oversight, including ensuring
that models are independently validated prior
to use and on an ongoing basis aligned to the
model’s tier.
Business and function model management
committees are used to govern key model
risk matters and escalate to senior
management where required.
Risk appetite
Risk appetite for model risk is in line with the
approach outlined in the Risk management
framework section.
Measurement and monitoring
Model risk is measured and managed
through continuous assessment and regular
reporting to NatWest Group’s senior risk
committees and at Board level.
Policies, toolkits and model standards related
to the development, validation, approval,
implementation, use and ongoing monitoring
of models are in place to ensure adequate
control across the lifecycle of an individual
model.
All models developed for use are assigned a
model tier, based on the model’s materiality
and complexity. Risk based model tiering is
used to prioritise risk management activities
throughout the model lifecycle, and to identify
and classify those models which pose the
highest risk to NatWest Group’s business
activities, safety and/or soundness.
Validation of material models is conducted by
an independent risk function comprising of
skilled, well-informed subject matter experts.
This is completed for new models or material
amendments to existing models and as part
of an ongoing periodic programme to assess
model performance. The frequency of
periodic revalidation is aligned to the tier of
the model. The independent validation
focuses on a variety of model features,
including model inputs, model processing,
model outputs, the implementation of the
model and the quality of the ongoing
performance monitoring. Independent
validation also focuses on the quality and
accuracy of the development documentation
and the model’s compliance with regulation.
The model materiality combined with the
validation rating provides the basis for model
risk appetite measures and enables model
risk to be robustly monitored and managed
across NatWest Group.
Ongoing performance monitoring is
conducted by model owners and overseen by
the model validators to ensure parameter
estimates and model constructs remain fit for
purpose, model assumptions remain valid and
that models are being used consistently with
their intended purpose.
This allows timely action to be taken to
remediate poor model performance and/or
any control gaps or weaknesses.
Mitigation
By their nature – as approximations of reality
– model risk is inherent in the use of models.
It is managed by refining or redeveloping
models where appropriate – due to changes
in market conditions, business assumptions or
processes – and by applying adjustments to
model outputs (either quantitative or based
on expert opinion). Enhancements may also
be made to the process within which the
model output is used in order to further limit
risk levels.
Model risk
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025
Annual Report and Accounts
275
Definition
Reputational risk is the risk of damage to
stakeholder trust due to negative
consequences arising from internal actions or
external events.
Sources of risk
The three primary drivers of reputational risk
are: failure in internal risk management
systems, processes or culture; NatWest
Group’s actions materially conflicting with
stakeholder expectations; and contagion
(when NatWest Group’s reputation is
damaged by failures in key sectors including
NatWest Group’s supply chain or other
partnerships).
Key developments in 2025
•
Enhancements were made to expand the
requirements of the reputational risk
policy to suppliers and third parties.
•
The environmental, social and ethical
(ESE)
(1)
animal welfare, mining and metals
and forestry, fisheries and agribusiness
risk acceptance criteria were reviewed
and updated in line with strategic
objectives.
Governance
Risk governance for reputational risk is in line
with the approach outlined in the Risk
management framework section.
A reputational risk policy supports
reputational risk management across
NatWest Group. Reputational risk registers
are used to manage reputational risks
identified within relevant business areas.
These are reported to the relevant business
executive risk committee.
Material reputational risks to NatWest Group
are escalated via the NatWest Group
reputational risk register which is reported at
every meeting of the Group Reputational Risk
Committee. The Group Reputational Risk
Committee also opines on matters that
represent material reputational risks. The
Executive and Board Risk Committees
oversee the identification and reporting of
reputational risk.
Risk appetite
Risk appetite for reputational risk is in line
with the approach outlined in the Risk
management framework section.
Reputational risk appetite is approved by the
Board. NatWest Group manages and
articulates its appetite for reputational risk
through a qualitative reputational risk
appetite statement and associated
quantitative measures.
The risk appetite statements and associated
measures for reputational risk are reviewed
at least annually by the Board on the Board
Risk Committee’s recommendation to ensure
they remain appropriate and aligned to
strategy.
NatWest Group seeks to identify, measure
and manage risk aligned to stakeholder trust.
However, reputational risk is inherent in
NatWest Group’s operating environment and
public trust is a specific factor in setting
reputational risk appetite.
Monitoring and measurement
Relevant internal and external factors are
monitored through regular reporting via
reputational risk registers at business or legal
entity level. They are escalated, where
appropriate, to the relevant business risk
committee and, where material, to the Group
Reputational Risk Committee.
Additional principal risk indicators for material
risks being monitored are also reported to the
Group Reputational Risk Committee and to
the Executive and Board Risk Committees.
Mitigation
Standards of conduct are in place across
NatWest Group requiring strict adherence to
policies, procedures and ways of working to
ensure business is transacted in a way that
meets – or exceeds – stakeholder
expectations.
External events that could cause reputational
damage are identified and mitigated through
NatWest Group’s top and emerging risks
process (where sufficiently material) as well
as through the NatWest Group and business-
level reputational risk registers.
(1)
From 1 January 2026, the name of the ESE risk
framework was updated to the Environmental and Social
Risk Framework. This change better reflects the
framework’s underlying methodology which focuses on a
risk-based approach aligned to organisational risk
appetite, rather than values-based judgements.
Reputational risk
Gurugram, India
Financial statements
277
Independent auditors’ report
291
Consolidated income statement
292
Consolidated statement of comprehensive income
293
Consolidated balance sheet
294
Consolidated statement of changes in equity
297
Consolidated cash flow statement
298
Accounting policies
305
Notes to the consolidated financial statements
305
Net interest income
306
Non-interest income
307
Operating expenses
310
Segmental analysis
314
Pensions
320
Auditor’s remuneration
321
Tax
325
Earnings per share
326
Financial instruments – classification
330
Financial instruments – valuation
339
Financial instruments – maturity analysis
342
Trading assets and liabilities
343
Derivatives
351
Loan impairment provisions
353
Other financial assets
354
Intangible assets
355
Other assets
355
Other financial liabilities
356
Subordinated liabilities
358
Other liabilities
359
Share capital and other equity
361
Structured entities
362
Asset transfers and collateral received
363
Capital resources
364
Memorandum items
370
Non-cash and other items
371
Analysis of the net investment in business interests
and intangible assets
371
Analysis of changes in financing during the year
372
Analysis of cash and cash equivalents
373
Directors’ and key management remuneration
373
Transactions with directors and key management
374
Related parties
375
Post balance sheet events
376
Parent company financial statements and notes
394
Non-IFRS financial measures
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Additional information
NatWest Group plc
2025 Annual Report and Accounts
276
Financial statements
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
277
Opinion
In our opinion:
•
the financial statements of NatWest Group
plc (the ‘Parent Company’) and its
subsidiaries (together, the ‘Group’) give a
true and fair view of the state of the
Group’s and of the Parent Company’s
affairs as at 31 December 2025 and of the
Group’s profit for the year then ended;
•
the Group financial statements have been
properly prepared 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 Parent Company financial statements
have been properly prepared in
accordance with UK adopted IAS as
applied in accordance with section 408 of
the Companies Act 2006 and IFRS as
issued by the IASB; and
•
the financial statements have been
prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements of
the Group and the Parent Company for the
year ended 31 December 2025 which
comprise:
Group:
•
Consolidated balance sheet as at 31
December 2025;
•
Consolidated income statement for the
year then ended;
•
Consolidated statement of comprehensive
income for the year then ended;
•
Consolidated statement of changes in
equity for the year then ended;
•
Consolidated cash flow statement for the
year then ended;
•
Accounting policies;
•
Related Notes 1 to 33 to the financial
statements;
•
Annual remuneration report identified as
‘audited’;
•
Risk and capital management section
identified as ‘audited’; and
•
The Capital Requirements (Country-by-
Country Reporting) Regulations report
identified as ‘audited’.
Parent Company:
•
Balance sheet as at 31 December 2025;
•
Statement of changes in equity for the
year then ended;
•
Cash flow statement for the year then
ended; and
•
Related Notes 1 to 12 to the financial
statements, including critical accounting
policy information.
The financial reporting framework that has
been applied in their preparation is applicable
law and UK adopted IAS, IFRS as issued by
the IASB, and as regards to the Parent
Company financial statements, as applied in
accordance with section 408 of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities
under those standards are further described
in the Auditor’s responsibilities for the audit of
the financial statements section of our report.
We believe that the audit evidence we have
obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We are independent of the Group and Parent
Company in accordance with the ethical
requirements that are relevant to our audit of
the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed
public interest entities, and we have fulfilled
our other ethical responsibilities in accordance
with these requirements.
The non-audit services prohibited by the
FRC’s Ethical Standard were not provided to
the Group or the Parent Company and we
remain independent of the Group and the
Parent Company in conducting the audit.
Conclusions relating to going
concern
In auditing the financial statements, we have
concluded that the directors’ use of the going
concern basis of accounting in the preparation
of the financial statements is appropriate. Our
evaluation of the directors’ assessment of the
Group and Parent Company’s ability to
continue to adopt the going concern basis of
accounting included:
•
Confirming our understanding of the
directors’ going concern assessment
process including the Group’s forecasting
process;
•
Performing a risk assessment to identify
factors that could impact the going
concern basis of accounting, including
both internal (e.g. impact of Group’s
strategic plans) and external risks (e.g.
geopolitical and macroeconomic factors);
•
Evaluating the Group’s financial forecasts
for the going concern period, including the
use of EY financial modelling and
economic advisory specialists to assess
the assumptions used to develop the
forecasts;
•
Engaging EY prudential regulatory
specialists to assess the results of
management’s stress testing on funding,
liquidity, and regulatory capital;
•
Understanding and evaluating credit
agency ratings; and
•
Reading and evaluating the adequacy and
conformity with reporting standards of the
disclosures made in the financial
statements in relation to going concern.
Independent auditors' report to the members of NatWest Group plc
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
278
Independent auditors’ report to the members of NatWest Group plc connued
Based on the work we have performed, we have
not identified any material uncertainties relating
to events or conditions that, individually or
collectively, may cast significant doubt on the
Group and Parent Company’s ability to continue
as a going concern over the twelve months from
the date when the financial statements are
authorised for issue.
In relation to the Group and Parent Company’s
reporting on how they have applied the UK
Corporate Governance Code, we have nothing
material to add or draw attention to in relation
to the directors’ statement in the financial
statements about whether the directors
considered it appropriate to adopt the going
concern basis of accounting.
Our responsibilities and the responsibilities of the
directors with respect to going concern are
described in the relevant sections of this report.
However, because not all future events or
conditions can be predicted, this statement is
not a guarantee as to the Group’s and the
Parent Company’s ability to continue as a going
concern.
Overview of our audit approach
Audit scope
•
We performed an audit of the complete financial
information of two components and audit
procedures on specific balances for a further
two components.
•
We performed central procedures for certain
audit areas and balances as outlined in the
Tailoring the scope section of our report.
Key audit
matters
•
Expected credit loss provisions
•
Valuation of financial instruments with higher
risk characteristics and fair value adjustments
within NatWest Markets Plc (NWM)
•
Pension valuation and net pension balance
•
IT access management
•
Valuation of investments in group undertakings
in the Parent Company’s accounts
(Consistant with prior year)
(Consistant with prior year)
(Consistant with prior year)
(Consistant with prior year)
(Consistant with prior year)
Materiality
•
Overall Group materiality of £380 million (2024 -
£312 million) which represents 5% of the profit
before tax of the Group of £7,708 million (2024
-£6,195 million) adjusted for non-recurring
items.
•
Parent Company materiality of £380 million
(2024 - £312 million), which is 0.7% (2024 -
0.6%) of equity of the Parent Company.
An overview of the scope of the Parent
Company and Group audits
Tailoring the scope
We have followed a risk-based approach when
developing our audit approach to obtain sufficient
appropriate audit evidence on which to base our
audit opinion. We performed risk assessment
procedures, with input from our component audit
teams, to identify and assess risks of material
misstatement of the Group financial statements
and identified significant accounts and disclosures.
When identifying components at which audit work
needed to be performed to respond to the
identified risks of material misstatement of the
Group financial statements, we considered our
understanding of the Group and its business
environment, the applicable financial framework,
the Group’s system of internal control at the entity
level, the existence of centralised processes,
applications and any relevant internal audit
results.
The scoping for the current year is as follows:
Component
Scope
Key locations where work was performed
NatWest Holdings Limited (‘NWH’)
Full
United Kingdom and India
NatWest Markets Plc (‘NWM’)
Full
United Kingdom, India, Netherlands, United States, Poland and
Singapore
The Royal Bank of Scotland International (Holdings) Limited (‘RBSI’)
Specific
Channel Islands
RBS AA Holdings (UK) Limited (‘RBS AA Holdings’)
Specific
United Kingdom
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
279
Independent auditors’ report to the members of NatWest Group plc connued
We determined that centralised audit procedures can be performed across the identified components in the following audit areas:
Key audit area on which procedures were performed centrally
Component subject to central procedures
Financial control and reporting
All components
Modelled expected credit loss provisions
All components excluding RBSI
Pensions
All relevant components (NWH and NWM)
Valuation of investment in subsidiaries
NatWest Group Parent Company
Information technology
All components
Provisions for customer redress, litigation and other regulatory matters
All relevant components (NWH, NWM and RBSI)
Taxation
All components
We identified all four components as individually relevant to the Group due to relevant events and conditions underlying the identified risks of material misstatement of the group financial statements
being associated with the reporting components or a pervasive risk of material misstatement of the group financial statements or a significant risk or an area of higher assessed risk of material
misstatement of the group financial statements being associated with the components.
For those individually relevant components, we identified the significant accounts where audit work needed to be performed at these components by applying professional judgement, having
considered the group significant accounts on which centralised procedures will be performed, the reasons for identifying the financial reporting component as an individually relevant component and
the size of the component’s account balance relative to the group significant financial statement account balance.
We then considered whether the remaining group significant account balances not yet subject to audit procedures, in aggregate, could give rise to a risk of material misstatement of the group financial
statements. We did not identify additional scope required as we assessed the residual risk to not be material.
Having identified the components for which work will be performed, we determined the scope to assign to each component.
Our scoping to address the risk of material misstatement for each key audit matter is included in the Key audit matters section of our report.
The charts below illustrate the coverage obtained from the work performed by our audit teams. We considered total assets, total equity and total income to verify we had appropriate overall coverage.
(1)
Full scope: audit procedures on all significant accounts.
(2)
Specific scope: audit procedures on selected accounts.
85%
15%
Total assets
Full scope
Specific scope
100%
Total equity
84%
12%
Total income
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
280
Independent auditors’ report to the members of NatWest Group plc connued
Involvement with component audit
teams
In establishing our overall approach to the
Group audit, we determined the type of work
that needed to be undertaken at each of the
components by us, as the Group audit
engagement team, or by component audit
teams operating under our instruction. All of
the direct components of the Group (full or
specific scope) were audited by EY global
network firms.
The Group audit team continued to follow a
programme of oversight that has been
designed to ensure that the Senior Statutory
Auditor, or another Group audit partner, has
ongoing interactions with all in scope
component teams and locations, including
those outside the United Kingdom. During the
current year’s audit cycle, visits were
undertaken by the Group audit engagement
team to India and the Channel Islands. The
Group audit team interacted regularly with
the component audit teams throughout the
course of the audit, which included holding
planning meetings, maintaining regular
communications on the status of the audits
and results of procedures, reviewing key
working papers and taking responsibility for
the scope and direction of the audit process.
Where relevant, the section on key audit
matters details the level of involvement we
had with component auditors to enable us to
determine that sufficient audit evidence had
been obtained as a basis for our opinion on
the Group as a whole. This, together with the
additional procedures performed at Group
level, gave us appropriate evidence for our
opinion on the Group financial statements.
Climate change
Stakeholders are increasingly interested in
how climate change will impact the Group.
The Group has determined that credit risk,
operational risk, compliance risk, conduct risk
and reputational risk as potentially the most
impacted by climate risk in the medium and
long-term horizons. These are explained in
the required Task Force on Climate-related
Financial Disclosures in the Strategic report,
and in the Climate and nature risk section
within the Risk and capital management
section. The Group has also explained their
climate commitments in the Strategic report.
All of these disclosures form part of the
“Other information,” rather than the audited
financial statements. Our procedures on
these unaudited disclosures therefore
consisted solely of considering whether they
are materially inconsistent with the financial
statements, or our knowledge obtained in the
course of the audit or otherwise appear to be
materially misstated, in line with our
responsibilities on “Other information”.
In planning and performing our audit we
assessed the potential impacts of climate
change on the Group’s business and any
consequential material impact on its financial
statements.
The Group has explained in Accounting
policies how they have reflected the impact of
climate change in their financial statements,
and the significant judgements and estimates
relating to climate change. These disclosures
also explain the uncertainty regarding
governmental policy response, technology
development and customer behaviours.
The Group notes that many of the impacts
will be longer term in nature, with an inherent
level of uncertainty, and have limited effect on
accounting judgements and estimates for the
current period under the requirements of UK
adopted IAS and IFRS as issued by the IASB.
The Group has also explained within the
Credit risk section within the Risk and capital
management section, their approach to
quantifying the impact of climate transition
policy within macroeconomic variables used
in the calculation of expected credit losses.
Our audit effort in considering the impact of
climate change on the financial statements
was focused on evaluating the Group’s
assessment of the impact of climate risk,
physical and transition, their climate
commitments and the significant judgements
and estimates disclosed in Accounting
policies, and whether these have been
appropriately reflected in the asset values
where these are impacted by future cash
flows, and in the timing and nature of
liabilities recognised, following the
requirements of UK adopted IAS and IFRS as
issued by the IASB. As part of this evaluation,
we performed our own risk assessment,
supported by our climate change and
economic specialists, to determine the risk of
material misstatement in the financial
statements from climate change which
needed to be considered in our audit.
We also evaluated the Directors’
considerations of climate change risks in their
assessment of going concern and viability and
associated disclosures.
Based on our work, whilst we have not
identified the impact of climate change on the
financial statements to be a standalone key
audit matter, we have considered the impact
within the key audit matter for expected
credit loss provisions, Valuation of financial
instruments with higher risk characteristics
and fair value adjustments within NWM, and
valuation of investments in group
undertakings in the Parent Company’s
accounts. Details of our procedures and
findings are included in our explanation of key
audit matters below.
Key audit matters
Key audit matters are those matters that, in
our professional judgement, were of most
significance in our audit of the financial
statements of the current period and include
the most significant assessed risks of material
misstatement (whether or not due to fraud)
that we identified. These matters included
those which had the greatest effect on: the
overall audit strategy, the allocation of
resources in the audit; and directing the
efforts of the engagement team. These
matters were addressed in the context of our
audit of the financial statements as a whole,
and in our opinion thereon, and we do not
provide a separate opinion on these matters.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
281
Independent auditors’ report to the members of NatWest Group plc connued
Risk
Our response to the risk
Expected credit loss (ECL) provisions
At 31 December 2025 the Group reported total gross loans –
amortised cost and fair value through other comprehensive
income (FVOCI) of £429.9 billion (2024 - £410.2 billion) and
£3.6 billion of expected credit losses (ECL) (2024 - £3.4
billion).
Management’s judgements and estimates are especially
subjective due to significant uncertainty associated with the
assumptions used. Aspects with increased complexity and
judgements in respect of the timing and measurement of
ECL include:
•
Economic scenarios
– Macroeconomic forecasts,
scenarios and weightings adequately consider the
volatility in geopolitical and economic environment, and
impacts of global and UK policy decisions on wholesale
sectors and UK consumers. We considered whether the
quantitative approach to probability weightings of
scenarios adequately captured the economic outlook.
•
Models and model assumptions
– Appropriateness of
modelling assumptions, model build and methodology,
and data used to calculate Probability of Default (PD),
Loss Given Default (LGD) and Exposure at Default (EAD).
•
Post-model adjustments (PMAs)
- Completeness and
valuation of post-model adjustments which represent
approximately 8% of total ECL (2024 - 10%), including
adjustments required to address the limitation of models
to adequately incorporate affordability, inflation, liquidity
challenges from ongoing geopolitical and economic
uncertainties.
Controls testing - We evaluated the design and operating effectiveness of controls over the ECL process, including those over
management’s judgements and estimates, as well as the associated controls over relevant information technology systems. These
controls, among others, included:
•
the staging of assets per management’s criteria, and their monitoring of stage effectiveness
•
model governance including development, monitoring and independent validation
•
data accuracy and completeness
•
credit monitoring
•
multiple economic scenarios
•
the governance and management review of post-model adjustments; and
•
individual provisions.
Economic scenarios
- We involved EY economic specialists to assist us in evaluating the base case and alternative economic
scenarios, including evaluating probability weights. We assessed the most significant variables such as GDP, unemployment rate, UK
Stock Price Index, House Price Index, comparing the forecasts across all scenarios with multiple benchmarks against the backdrop
of persistent inflation, restrictive trade policies, geopolitical events as well as climate risks. With the support of our credit modelling
specialists, we evaluated the correlation and translation of the macroeconomic factors, including the impacts of alternative paths or
weights to ECL.
Models and model assumptions
- We selected a sample of models based on both quantitative and qualitative factors such as
portfolio size and risks, model complexities, and external factors. We involved EY modelling specialists to test the assumptions,
inputs, methodology and model build through a combination of assessing model design and formulae, alternative modelling
techniques, recalculations and independent implementation of new models during the year. We considered the key portfolio
movements during the year including growth of the retail unsecured portfolio, both organic and through acquisitions, alongside
changes in recovery strategies, to challenge model performance.
To evaluate data quality, we agreed a sample of key data points to source systems, and tested ECL data reconciliations from the
calculation engine through to the general ledger and disclosures.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
282
Independent auditors’ report to the members of NatWest Group plc connued
Risk
Our response to the risk
Expected credit loss (ECL) provisions continued
•
Individual provisions
- Measurement of individual
provisions including the assessment of multiple scenarios
and probability weights, the impact of the current
uncertain geopolitical and economic outlook on exit or
recovery strategies, collateral valuations, and time to
collect and;
•
Staging
– Completeness and accuracy of allocation of
assets into stage 1,2 and 3 using criteria in accordance
with IFRS 9.
Post-Model Adjustments (PMAs)
– We, along with our modelling and economic specialists, tested the appropriateness, adequacy and
completeness of the PMAs held at year end in response to model and data limitations. This included challenging management’s
identification of high-risk retail customers and commercial sub-sectors that were considered most at risk from the current economic
and geopolitical headwinds. This included those that were susceptible to affordability challenges, inflation risks, supply chain and
liquidity challenges. We also challenged the continued recognition of PMAs from previous years, by checking the latest default trends in
specific cohorts. We assessed PMAs against the risk of double counting of either certain portfolios/customers or identified risks.
Individual provisions
- We recalculated and challenged the scenarios, assumptions, and cash flows for a sample of individual provisions
including the alternative scenarios and probability weights assigned, involving EY valuation specialists where appropriate. The samples
considered higher risk sectors, such as telecommunications, health, power, utilities, oil and gas, retail and leisure. We considered the
impact of the current geopolitical and economic outlook and climate change had on collateral valuations and time to collect as well as
whether planned exit strategies remained viable.
Staging
- We evaluated the staging criteria used by management by performing independent tests to assess staging effectiveness and
stability, as well as recalculating the staging of the complete population of assets. We performed sensitivity analyses of different staging
criteria, and collective staging downgrades to industries, geographic regions and high-risk populations that are exposed to recent
economic, geopolitical or climate change stresses.
On the non-personal portfolio, we recalculated the risk ratings for a sample of performing loans and focused our testing on certain risk
characteristics such as loans in management’s Problem Debt Management framework, high-risk industries - commercial real estate,
telecommunications, private markets, automotive, retail and leisure.
Standback assessment
- We performed an overall assessment of the ECL provision levels by stage to determine if they were
reasonable by performing analytical reviews, trend analysis, peer benchmarking and sensitivity analysis, which included assessing the
impact of changing selected variables, and their impacts on the ECL coverage levels.
How we scoped our audit to respond to the risk and involvement with component teams
We performed centralised procedures and full scope audit procedures over this risk, which covered 99% of the ECL balance. Specific scope audit procedures pertaining to the RBSI component were
undertaken by the component audit team, which covered 1% of the ECL balance. The Group audit team’s involvement with the component teams and procedures performed are detailed in the
Involvement with component audit teams’ section of our report.
Key observations communicated to the Group Audit Committee
We are satisfied that the ECL provisions were reasonable and recognised in accordance with IFRS 9. We highlighted the following matters to the Group Audit Committee that contributed to our
overall conclusion:
•
Effectiveness of the overall control environment, including the compensating controls identified by management, where deficiencies were identified.
•
Results of our testing of models, model assumptions, the key data elements used for ECL calculation, including the reasonableness of the macroeconomic variables, scenarios and weightings
used.
•
Accuracy of staging and the reasonableness of management’s staging criteria, and our independent sensitivity analysis on the staging criteria to assess appropriateness.
•
Reasonableness and adequacy of the post-model adjustments recorded to reflect risk in the portfolios.
•
Individually assessed impairments, the overall reasonableness of the provisions, including assumptions applied.
Relevant references in the Annual Report and Accounts
Credit risk section of the Risk and capital management section identified as ‘audited’
Accounting policies
Note 14 to the financial statements
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
283
Independent auditors’ report to the members of NatWest Group plc connued
Risk
Our response to the risk
Valuation of financial instruments with higher risk characteristics and fair value adjustments within NWM
At 31 December 2025 the Group held financial instruments with
higher risk characteristics. These included, but are not limited to,
reported level 3 financial assets of £1.3 billion (2024 - £1.7 billion) and
level 3 financial liabilities of £0.3 billion (2024 - £0.5 billion) whose
value is dependent upon unobservable inputs.
The valuation of those financial instruments with higher risk
characteristics can include significant judgement as outlined below.
The fair value of these instruments can involve complex valuation
models and significant fair value adjustments, both of which may be
reliant on inputs where there is limited market observability.
Management’s estimates which required significant judgement include:
•
Complex models -
Complex model-dependent valuations of financial
instruments, the most significant being interest rate swaps linked to
pre-payment behaviour and interest rate options with exotic
features.
•
Illiquid inputs -
Pricing inputs and calibrations for illiquid instruments,
including fair value loan exposures for which there is no active
market. Additionally derivative instruments whose valuation is
dependent on discount rates associated with complex collateral
arrangements; and
•
Fair value adjustments -
the appropriateness of fair value
adjustments made to derivative valuations including Funding
Valuation Adjustments (FVA), Credit Valuation Adjustments (CVA),
relating to derivative counterparties whose credit spread may not
be observable, and material product and deal specific adjustments
on long dated derivative portfolios.
Controls testing -
We evaluated the design and operating effectiveness of controls relating to financial instrument valuation
including independent price verification, valuation models governance, collateral management, income statement analysis,
and the associated controls over relevant information technology systems. We also observed the Valuation Committees
where valuation inputs, assumptions and adjustments were discussed and approved.
We involved our financial instrument valuation and modelling specialists to assist us in performing procedures including the
following:
•
Complex models -
Testing a sample of complex model-dependent valuations by performing independent revaluation to
assess the appropriateness of models and the adequacy of assumptions and inputs used by the Group.
•
Illiquid inputs
- Independently re-pricing a sample of financial instruments that had been valued using illiquid pricing
inputs, using alternative pricing sources where available, to evaluate management's valuation.
•
Fair value adjustments -
Comparing fair value adjustment methodologies to current industry standards and assessing the
appropriateness and adequacy of the valuation adjustment framework in light of emerging market practice and changes
in the risk profile of the underlying portfolio; and revaluing a sample of counterparty level FVA and CVA, comparing
funding spreads to third party data, independently challenging illiquid CVA inputs, and testing material product and deal
specific adjustments on the long-dated derivatives portfolio.
Throughout our audit procedures we considered the current uncertain geopolitical and economic outlook, including market
volatility and the impact of climate change on the valuation of financial instruments. We performed analysis focusing on
long-dated illiquid positions to understand if there were indicators that pricing did not appropriately capture climate related
risks.
We assessed whether there were any indicators of aggregate bias in financial instrument marking and methodology
assumptions.
We performed back-testing analysis of recent trade activity and asset disposals to evaluate the drivers of significant
differences between book value and trade value to assess the impact on the fair value of similar instruments within the
portfolio. We performed an analysis of significant collateral discrepancies with counterparties to assess the potential impact
on the fair value of the underlying (and similar) financial instruments.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
284
Independent auditors’ report to the members of NatWest Group plc connued
Valuation of financial instruments with higher risk characteristics within NWM continued
How we scoped our audit to respond to the risk and involvement with component teams
The component audit team performed full scope audit procedures over this risk at the NWM component, which covered 100% of the risk amount. The Group audit team’s involvement with the
component teams and procedures performed are detailed in the involvement with component audit teams’ section of our report.
Key observations communicated to the Group Audit Committee
We are satisfied that the assumptions used by management to reflect the fair value of financial instruments with higher risk characteristics are reasonable and in accordance with IFRS. We
highlighted the following matters to the Group Audit Committee:
•
Complex model-dependent valuations were appropriate based on the output of our independent revaluations, analysis of trade activity, assessment of the output of the independent price
verification process, inspection of collateral disagreements and peer benchmarking.
•
The fair value estimates of financial instruments with illiquid inputs appropriately reflected pricing information available at 31 December 2025.
•
Valuation adjustments applied to derivative portfolios for credit, funding and other risks were recorded in accordance with the requirements of IFRS considering trade activity for positions with
common risk characteristics, analysis of market data and peer benchmarking.
•
Where control deficiencies were identified, we tested compensating controls and performed additional substantive procedures, where necessary.
Relevant references in the Annual Report and Accounts
Accounting policies
Note 10 to the financial statements
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
285
Independent auditors’ report to the members of NatWest Group plc connued
Risk
Our response to the risk
Pension valuation and net pension balance
The Group operates several defined benefit schemes which, in
aggregate, are significant given the size of gross pension assets and
liabilities in the context of the financial statement disclosures. At 31
December 2025, the Group reported a net pension asset from
schemes in surplus of £234 million (2024 - £190 million) and a net
pension liability from schemes in deficit of £78 million (2024 - £80
million). The fair value of plan assets of £31.8 billion (2024 - £32.8
billion) and present value of defined benefit obligation of £26.6 billion
(2024 - £27.3 billion) are sensitive to changes in the key judgements
and assumptions, alongside the effects of the uncertain geopolitical
and economic outlook, which include:
•
Assumptions -
Actuarial assumptions and inputs including discount
rate, inflation and longevity to determine the valuation of retirement
benefit liabilities;
•
Valuations -
Pricing inputs and calibrations for illiquid or complex
model-dependent valuations of certain investments held by the
schemes; and
•
Augmentation cap -
Quantification of trustees’ rights to unilaterally
augment benefits (Augmentation cap) to determine the recognition
of surplus.
Controls testing
- We evaluated the design and operating effectiveness of controls over the defined benefit obligation
process including the setting of actuarial assumptions, the data inputs used in the actuarial calculation and the
measurement of the fair value of the schemes’ assets.
Assumptions
- We involved our actuarial specialists to evaluate the actuarial assumptions used to calculate the defined
benefit obligation by comparing them to ranges independently developed from third party sources and market practice. We
assessed the impact on pension liabilities due to changes in financial, demographic and longevity assumptions over the
year, and whether these were supported by objective external evidence and rationales, including the effects of the
uncertain geopolitical and economic outlook.
Valuations
- We tested the fair value of scheme assets by independently calculating the fair value for a sample of the assets
held. Our sample included cash, equity and debt instruments, derivative financial instruments, and illiquid assets. We
involved our valuation specialists to assess the appropriateness of management’s valuation methodology used in the
valuation of the complex, illiquid and buy-in insurance assets including the judgements made in the determining significant
assumptions used.
We independently re-priced illiquid and complex assets that had been valued using unobservable market inputs, using
alternative pricing sources where available, to evaluate management’s valuations.
Augmentation cap and equalisation adjustments
- We involved our actuarial specialists to assess the estimation of the
Augmentation cap including the inputs used in the calculation. We also assessed the methodology and judgements made in
calculating these estimates and the associated accounting treatment in accordance with IAS 19 and IFRIC 14.
Disclosure
- We assessed the adequacy of the disclosures made in the financial statements, including the appropriateness of
the assumptions, sensitivities and disclosures over investment strategy and risk management.
How we scoped our audit to respond to the risk and involvement with component teams
All audit work performed to address this risk, was undertaken by the Group audit team.
Key observations communicated to the Group Audit Committee
We are satisfied that the valuation and disclosure of the net pension balance are reasonable and in accordance with IFRS. We highlighted the following matters to the Group Audit Committee:
•
Our benchmarking of key actuarial assumptions including the discount rate, inflation, longevity and pension payments concluded that assumptions were within a reasonable range.
•
No material differences were identified from our testing including our independent valuation testing for a sample of pension assets.
•
Management’s accounting for the buy-in transactions during the year was appropriate.
•
Management’s estimate of the impact of the augmentation cap was reasonable and the methodology consistent with IAS 19 and IFRIC 14.
Relevant references in the Annual Report and Accounts
Accounting policies
Note 5 to the financial statements
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
286
Independent auditors’ report to the members of NatWest Group plc connued
Risk
Our response to the risk
IT access management
The IT environment is complex and pervasive to the operations of the
Group due to the large volume of transactions processed in numerous
locations daily, with extensive reliance on automated
controls.
Appropriate IT controls are required to ensure that
applications process data as expected and that changes are made in
an appropriate manner. This risk is also impacted by the growing
dependency on third parties, increasing use of cloud platforms,
decommissioning of legacy systems, and migration to new systems.
Such controls contribute to mitigating the risk of potential fraud or
errors as a result of changes to applications and data.
The Group has implemented user access management controls
across IT applications, databases and operating systems. We have
identified user access-related deficiencies in the past and similar
thematic issues have been noted in the current year, and thus the
risk of inappropriate access remains.
We evaluated the design and operating effectiveness of IT general controls including access over the applications, operating
systems and databases that are relevant to financial reporting.
We tested user access by assessing the controls for in-scope applications, in particular testing the addition and periodic
recertification of users’ access. We continue to focus on key controls enforced by the Group’s user access management
tools, including ensuring the completeness of user data, automated identification of movers and leavers and the adequacy
of the overall control environment in addressing access-related IT risks to financial reporting. There have been no significant
changes in the suite of access management controls operated by the Group in the current year.
For systems outsourced to third party service providers, we tested IT general controls through evaluating the relevant
Service Organisation Controls (“SOC”) reports (where available). This included assessing the timing of the reporting, the
controls tested by the service auditor and whether they addressed relevant IT risks. We also tested required complementary
user entity controls performed by management.
Where a SOC report was not available, we identified and reviewed
compensating business controls to address risks to financial reporting.
Several systems have been migrated to a cloud-
hosted infrastructure model, however access management processes and controls remained in-house, and they formed
part of our testing.
Where in-scope applications underwent transformations or data migrations during the current year, we tested
management’s controls on the transformations, including inspecting the project plans, the results of testing and the “go-live”
approval process.
Where control deficiencies were identified, we tested remediation activities performed by management and/or
compensating controls in place and assessed the impact, of any residual risk over financial statement reporting. This
included aggregation analysis of the deficiencies identified, to consider the pervasiveness of findings identified, and the
impact on our overall approach to access management testing. We noted that no further changes to our approach were
required.
How we scoped our audit to respond to the risk and involvement with component teams
All audit work performed to address this risk was undertaken by the Group audit team.
Key observations communicated to the Group Audit Committee
•
Based on our testing procedures, including validating management’s remediation activities, testing of compensating IT controls and substantive procedures, we conclude that the IT control
environment, supplemented by relevant business compensating controls, was effective and that the residual financial statement reporting risk was not considered material.
•
Improvements have been made to further standardise and strengthen IT access management processes and controls, however privileged access control deficiencies continue to be identified,
including instances where the underlying systems are subject to change within the year, including migrations. While privileged access findings led to an increase in the overall number of reported
IT control deficiencies requiring remediation by management, compensating controls within either IT or the business were identified for these deficiencies.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
287
Independent auditors’ report to the members of NatWest Group plc connued
Risk
Our response to the risk
Valuation of investments in group undertakings in the Parent Company’s accounts.
At 31 December 2025 the Parent Company reported investments in
group undertakings of £53.0 billion (2024 - £53.4 billion).
Management assessed investments in subsidiaries of the Parent Company,
as at 31 December 2025, for indicators of impairment or whether
impairment charges recognised in prior periods should be reversed in
accordance with IAS 36. Where indicators have been identified,
management assess any asset impairment based upon value in use. As a
result of the assessment management concluded that in the Parent
Company’s accounts the carrying amount investments in group
undertakings is recoverable.
These estimates are based on the five-year revenue and cost forecasts
and the output of a subsequent value in use computation, within which we
identify the following key judgements / estimates:
•
Profitability estimates;
•
Macroeconomic assumptions;
•
Capital forecasts; and
•
Modelling assumptions and inputs (including discount rate and long-
term growth rate).
Controls testing
- We evaluated the design and operating effectiveness of controls over the key judgemental inputs
(macroeconomic assumptions including interest rates, business forecasts and capital). In addition, we have assessed the
controls over the methodology, models and methods utilised in the Value in Use (VIU) calculation.
Assumption and model testing:
•
Tested the mathematical accuracy of the models and calculations utilised in the VIU computation.
•
Challenged the reasonableness and achievability of management forecasts from a combination of historical
performance, benchmarking with external data and evaluating underlying business strategies.
•
Evaluated the appropriateness of significant assumptions (macroeconomic, modelling assumptions and inputs) with
the input of our specialist teams.
•
Challenged and evaluated the appropriateness of the Discount Rate applied to individual subsidiary legal entities.
•
Assessed the sensitivity of the VIU to reasonable variations in significant assumptions, both individually and in
aggregate.
Disclosure
- We challenged and verified the adequacy of the information disclosed in the Parent Company’s annual
accounts in accordance with applicable standards and regulations.
How we scoped our audit to respond to the risk and involvement with component teams
All audit work performed to address this risk was undertaken by the Group audit team.
Key observations communicated to the Group Audit Committee
We are satisfied that the carrying value of investments in group undertakings in the Parent Company’s accounts were reasonable and recognised in accordance with IFRS. We highlighted the
following matters to the Group Audit Committee that contributed to our overall conclusion:
•
Effectiveness of the overall control environment, including management’s identification of compensating controls where deficiencies were identified;
•
Reasonableness of the methodologies, judgements and assumptions used by management to conclude upon the recognition of the related balances;
•
Management's approach to estimating the recoverable amounts for the subsidiaries of the Group is reasonable.
Relevant references in the Annual Report and Accounts
Accounting policies
Note 8 to the Parent Company financial statements
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
288
Independent auditors’ report to the members of NatWest Group plc connued
Our application of materiality
We apply the concept of materiality in
planning and performing the audit, in
evaluating the effect of identified
misstatements on the audit and in forming
our audit opinion.
Materiality
The magnitude of an omission or
misstatement that, individually or in the
aggregate, could reasonably be expected to
influence the economic decisions of the users
of the financial statements. Materiality
provides a basis for determining the nature
and extent of our audit procedures.
We determined materiality for the Group to
be £380 million (2024 - £312 million), which is
5% (2024 - 5%) of the profit before tax of the
Group of £7,708 million (2024 - 6,195 million)
adjusted for non-recurring items. We believe
removing these non-recurring items reflects
the most useful measure for users of the
financial statements and is consistent with the
prior year. The 5% basis used for Group
materiality is consistent with the wider
industry and is the standard for listed and
regulated entities.
We determined materiality for the Parent
Company to be £380 million (2024 - £312
million), which is 0.7% (2024 - 0.6%) of equity
of the Parent Company. We believe this
reflects the most useful measure for users of
the financial statements as the Parent
Company’s primary purpose is to act as a
holding company with investments in the
Group’s subsidiaries, not to generate
operating profits and therefore a profit- based
measure is not relevant.
Performance materiality
The application of materiality at the individual
account or balance level. It is set at an
amount to reduce to an appropriately low
level the probability that the aggregate of
uncorrected and undetected misstatements
exceeds materiality.
On the basis of our risk assessments,
together with our assessment of the Group’s
overall control environment, our judgement
was that performance materiality was 75%
(2024 - 75%) of our planning materiality,
namely £285 million (2024 - £234 million). We
have set performance materiality at this
percentage based on our experience of
misstatements, and consistent effectiveness
of the control environment.
Audit work was undertaken at component
teams for the purpose of responding to the
assessed risks of material misstatement of
the group financial statements. The
performance materiality set for each
component is based on the relative scale and
risk of the component to the Group as a
whole and our assessment of the risk of
misstatement at that component. In the
current year, the range of performance
materiality allocated to components was £69
million to £250 million (2024 - £104 million to
£208 million).
Reporting threshold
An amount below which identified
misstatements are considered as being
clearly trivial.
We agreed with the Audit Committee that we
would report to them all uncorrected audit
differences in excess of £19 million (2024 -
£16 million), which is set at 5% of planning
materiality, as well as differences below that
threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements
against both the quantitative measures of
materiality discussed above and in light of
other relevant qualitative considerations in
forming our opinion.
Other information
The other information comprises the
information included in the Annual Report and
Accounts, including the Strategic report,
Financial review, Corporate governance
report, Report of the Group Nominations and
Governance Committee, Report of the Group
Audit Committee, Report of the Group Board
Risk Committee, Report of the Group
Technology, Innovation and Simplification
Committee, Directors’ remuneration report,
Report of the directors, Risk and capital
management, Non-IFRS financial measures,
and Additional information, other than the
financial statements and our auditor’s report
thereon. The directors are responsible for the
other information contained within the annual
report.
Our opinion on the financial statements does
not cover the other information and, except
to the extent otherwise explicitly stated in this
report, we do not express any form of
assurance conclusion thereon.
Our responsibility is to read the other
information and, in doing so, consider
whether the other information is materially
inconsistent with the financial statements, or
our knowledge obtained in the course of the
audit, or otherwise appears to be materially
misstated. If we identify such material
inconsistencies or apparent material
misstatements, we are required to determine
whether this gives rise to a material
misstatement in the financial statements
themselves. If, based on the work we have
performed, we conclude that there is a
material misstatement of the other
information, we are required to report that
fact.
We have nothing to report in this regard.
Opinions on other matters
prescribed by the Companies Act
2006
In our opinion, the part of the Directors’
remuneration report to be audited has been
properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken
in the course of the audit:
•
the information given in the Strategic
report and the Report of the directors for
the financial year for which the financial
statements are prepared is consistent
with the financial statements and those
reports have been prepared in
accordance with applicable legal
requirements;
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
289
Independent auditors’ report to the members of NatWest Group plc connued
•
the information about internal control and
risk management systems in relation to
financial reporting processes and about
share capital structures, given in
compliance with rules 7.2.5 and 7.2.6 in
the Disclosure Rules and Transparency
Rules sourcebook made by the Financial
Conduct Authority (the FCA Rules), is
consistent with the financial statements
and has been prepared in accordance
with applicable legal requirements; and
•
information about the Group’s corporate
governance statement and practices and
about its administrative, management
and supervisory bodies and their
committees complies with rules 7.2.2,
7.2.3 and 7.2.7 of the FCA Rules.
Matters on which we are required
to report by exception
In the light of the knowledge and
understanding of the Group and the Parent
Company and its environment obtained in the
course of the audit, we have not identified
material misstatements in the:
•
Strategic report or the Report of the
directors; or
•
the information about internal control and
risk management systems in relation to
financial reporting processes and about
share capital structures, given in
compliance with rules 7.2.5 and 7.2.6 of
the FCA Rules.
We have nothing to report in respect of the
following matters in relation to which the
Companies Act 2006 requires us to report to
you if, in our opinion:
•
adequate accounting records have not
been kept by the Parent Company, or
returns adequate for our audit have not
been received from branches not visited
by us; or
•
the Parent Company financial statements
and the part of the Directors’
remuneration Report to be audited are
not in agreement with the accounting
records and returns; or
•
certain disclosures of directors’
remuneration specified by law are not
made; or
•
we have not received all the information
and explanations we require for our audit;
or
•
a Corporate Governance Statement has
not been prepared by the Group.
Corporate Governance Statement
We have reviewed the directors’ statement in
relation to going concern, longer-term
viability and that part of the Corporate
Governance Statement relating to the Group
and Company’s compliance with the
provisions of the UK Corporate Governance
Code specified for our review by the UK
Listing Rules.
Based on the work undertaken as part of our
audit, we have concluded that each of the
following elements of the Corporate
Governance Statement is materially
consistent with the financial statements or
our knowledge obtained during the audit:
•
Directors’ statement with regards to the
appropriateness of adopting the going
concern basis of accounting and any
material uncertainties identified;
•
Directors’ explanation as to its
assessment of the Company’s prospects,
the period this assessment covers and
why the period is appropriate;
•
Director’s statement on whether it has a
reasonable expectation that the Group
will be able to continue in operation and
meets its liabilities;
•
Directors’ statement on fair, balanced and
understandable;
•
Board’s confirmation that it has carried
out a robust assessment of the emerging
and principal risks;
•
The section of the annual report that
describes the review of effectiveness of
risk management and internal control
systems; and
•
The section describing the work of the
Group Audit Committee.
Responsibilities of directors
As explained more fully in the Statement of
directors’ responsibilities, the directors are
responsible for the preparation of the
financial statements and for being satisfied
that they give a true and fair view, and for
such internal control as the directors
determine is necessary to enable the
preparation of financial statements that are
free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the
directors are responsible for assessing the
Group and Parent Company’s ability to
continue as a going concern, disclosing, as
applicable, matters related to going concern
and using the going concern basis of
accounting unless the directors either intend
to liquidate the Group or the Parent
Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from material
misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high
level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs
(UK) will always detect a material
misstatement when it exists. Misstatements
can arise from fraud or error and are
considered material if, individually or in the
aggregate, they could reasonably be
expected to influence the economic decisions
of users taken on the basis of these financial
statements.
Explanation as to what extent the
audit was considered capable of
detecting irregularities, including
fraud
Irregularities, including fraud, are instances of
non-compliance with laws and regulations.
We design procedures in line with our
responsibilities, outlined above, to detect
irregularities, including fraud. The risk of not
detecting a material misstatement due to
fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve
deliberate concealment by, for example,
forgery or intentional misrepresentations, or
through collusion.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
290
Independent auditors’ report to the members of NatWest Group plc connued
The extent to which our procedures are
capable of detecting irregularities, including
fraud is detailed below.
However, the primary responsibility for the
prevention and detection of fraud rests with
both those charged with governance of the
Company and management.
•
We obtained an understanding of the legal
and regulatory frameworks that are
applicable to the Group and determined
that the most significant are the
regulations, licence conditions and
supervisory requirements of the
Prudential Regulation Authority (PRA) and
the Financial Conduct Authority (FCA);
Companies Act 2006; and the Sarbanes
Oxley Act (SOX).
•
We understood how the Group is
complying with those frameworks by
making inquiries of management, internal
audit and those responsible for legal and
compliance matters. We also reviewed
correspondence between the Group and
banking regulatory bodies in relevant
jurisdictions; including the PRA and FCA
reviewed minutes of the NatWest Group
Board and Risk Committees; and gained
an understanding of the Group’s
governance framework.
•
Carried out an assessment of matters
reported on the Group’s whistleblowing
programmes where these related to the
financial statements.
•
We assessed the susceptibility of the
Group’s financial statements to material
misstatement, including how fraud might
occur by considering the controls
established to address risks identified to
prevent or detect fraud. We also assessed
the risks of fraud in our key audit matters.
Our procedures over our key audit
matters and other significant accounting
estimates included challenging
management on the assumptions and
judgements made in determining these
estimates.
•
We designed our audit procedures to
identify non-compliance with such laws
and regulations. Our procedures involved
inquiries of internal and external legal
counsel, executive management, internal
audit and reading reports of reviews
performed by external legal counsel. We
also tested controls and performed
procedures to respond to any financial
statement impacts of non-compliance
with laws and regulations. These
procedures were performed by both the
Group audit team and component audit
teams with oversight from the Group
audit team.
•
Identified and tested journal entries,
including those posted with certain
descriptions or unusual characteristics,
backdated journals or posted by
infrequent and unexpected users.
•
The Group operates in the banking
industry which is a highly regulated
environment. As such, the Senior
Statutory Auditor considered the
experience and expertise of the
engagement team to ensure that the
team had the appropriate competence
and capabilities, involving specialists
where appropriate.
A further description of our responsibilities for
the audit of the financial statements is located
on the Financial Reporting Council’s website
at
https://www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s
report.
Other matters we are required to
address
•
Following the recommendation from the
Group Audit Committee, we were
appointed by the Group at its annual
general meeting on 4 May 2016 to audit
the financial statements of the Group for
the year ending 31 December 2016 and
subsequent financial periods.
•
The period of total uninterrupted
engagement including previous renewals
and reappointments is 10 years, covering
periods from our appointment through 31
December 2025.
•
The audit opinion is consistent with the
additional report to the Group Audit
Committee.
Use of our report
This report is made solely to the company’s
members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken
so that we might state to the company’s
members those matters we are required to
state to them in an auditor’s report and for
no other purpose. To the fullest extent
permitted by law, we do not accept or
assume responsibility to anyone other than
the company and the company’s members as
a body, for our audit work, for this report, or
for the opinions we have formed.
Javier Faiz (Senior statutory auditor)
for and on behalf of Ernst & Young LLP,
Statutory Auditor
London, United Kingdom
12 February 2026
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
291
for the year ended 31 December 2025
2025
2024
2023
Note
£m
£m
£m
Interest receivable
Interest payable
(12,869 )
(13,912 )
(9,977 )
Net interest income
1
Fees and commissions receivable
Fees and commissions payable
(733 )
(708 )
(653 )
Trading income
Other operating income
Non-interest income
2
Total income
Staff costs
(4,174 )
(4,061 )
(3,901 )
Premises and equipment
(1,291 )
(1,211 )
(1,153 )
Other administrative expenses
(1,643 )
(1,819 )
(2,008 )
Depreciation and amortisation
(1,154 )
(1,058 )
(934 )
Operating expenses
3
(8,262 )
(8,149 )
(7,996 )
Profit before impairment losses
Impairment losses
14
(671 )
(359 )
(578 )
Operating profit before tax
Tax charge
7
(1,874 )
(1,465 )
(1,434 )
Profit from continuing operations
Profit/(loss) from discontinued operations, net of tax
(112 )
Profit for the year
Attributable to:
Ordinary shareholders
Paid-in equity holders
Non-controlling interests
(4 )
Earnings per ordinary share - continuing operations
8
Earnings per ordinary share - discontinued operations
8
(1.2 p)
Total earnings per share attributable to ordinary shareholders - basic
(1)
8
Earnings per ordinary share - diluted continuing operations
8
Earnings per ordinary share - diluted discontinued operations
8
(1.2 p)
Total earnings per share attributable to ordinary shareholders - diluted
8
(1)
In 2023, the unrounded Total earnings per share attributable to ordinary
shareholders – basic is 47.948 p. The unrounded Earnings per ordinary
share – continuing operations was 49.170 p. The unrounded Earnings
per ordinary share – discontinued operations was (1.222 p).
Consolidated income statement
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
292
for the year ended 31 December 2025
2025
2024
2023
£m
£m
£m
Profit for the year
Items that do not qualify for reclassification
Remeasurement of retirement benefit schemes
(166 )
(280 )
Changes in fair value of credit in financial liabilities designated at fair value through profit or loss
(FVTPL) due to changes in credit risk
(17 )
(33 )
(39 )
FVOCI financial assets
Tax
(16 )
(134 )
(223 )
Items that do qualify for reclassification
FVOCI financial assets
(25 )
Cash flow hedges
(1)
Currency translation
(13 )
(619 )
Tax
(297 )
(178 )
(361 )
Other comprehensive income after tax
Total comprehensive income for the year
Attributable to:
Ordinary shareholders
Paid-in equity holders
Non-controlling interests
(4 )
(1)
Refer to footnotes 4 and 5 of the Consolidated statement of changes in
equity.
Consolidated statement of comprehensive income
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
293
as at 31 December 2025
2025
2024
Note
£m
£m
Assets
Cash and balances at central banks
9
Trading assets
12
Derivatives
13
Settlement balances
Loans to banks - amortised cost
9
Loans to customers - amortised cost
9
Securities subject to repurchase agreements
Other financial assets excluding securities subject to repurchase agreements
Other financial assets
15
Intangible assets
16
Other assets
17
Total assets
Liabilities
Bank deposits
9
Customer deposits
9
Settlement balances
Trading liabilities
12
Derivatives
13
Other financial liabilities
18
Subordinated liabilities
19
Notes in circulation
Other liabilities
20
Total liabilities
Ordinary shareholders' interests
Other owners' interests
Owners' equity
21
Non-controlling interests
Total equity
Total liabilities and equity
on 12 February 2026 and signed on its behalf by:
Richard Haythornthwaite
Chair
John-Paul Thwaite
Group Chief Executive Officer
Katie Murray
Group Chief Financial Officer
NatWest Group plc
Consolidated balance sheet
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
294
for the year ended 31 December 2025
Other reserves
Share
Other
Total
Non
capital and
Paid-in
statutory
Retained
Cash flow
Foreign
owners'
controlling
Total
share premium
equity
reserves (3)
earnings
Fair value
hedging (4,5)
exchange
Merger
equity
interests
equity
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
At 1 January 2025
(103 )
(1,443 )
Profit attributable to ordinary shareholders
and other equity owners
Other comprehensive income
Realised gains on FVOCI equity shares
(25 )
Remeasurement of retirement benefit schemes
Changes in fair value of credit in financial liabilities
designated at FVTPL due to own credit risk
(17 )
(17 )
(17 )
Unrealised gains
Amounts recognised in equity
Retranslation of net assets
Losses on hedges of net assets
(92 )
(92 )
(92 )
Reclassification of OCI to Income statement
Tax
(15 )
(41 )
(277 )
(313 )
(313 )
Total comprehensive income
Transactions with owners
Ordinary share dividends paid
(2,018 )
(2,018 )
(6 )
(2,024 )
Redemption of paid-in equity
(1,957 )
(22 )
(1,979 )
(1,979 )
Paid-in equity dividends paid
(352 )
(352 )
(352 )
Shares repurchased
(1)
(112 )
(579 )
(579 )
(579 )
Paid-in equity issued
(2)
Purchase of non-controlling interest
(10 )
(10 )
(11 )
(21 )
Employee share schemes
Shares vested under employee share schemes
Share-based remuneration
At 31 December 2025
(752 )
For the notes to this table refer to page 296.
Consolidated statement of changes in equity
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
295
Consolidated statement of changes in equity continued
Other reserves
Share
Other
Total
Non
capital and
Paid-in
statutory
Retained
Cash flow
Foreign
owners'
controlling
Total
share premium
equity
reserves (3)
earnings
Fair value
hedging (4,5)
exchange
Merger
equity
interests
equity
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
At 1 January 2024
(49 )
(1,899 )
Profit attributable to ordinary shareholders
and other equity owners
- continuing operations
- discontinued operations
Other comprehensive income
Realised gains on FVOCI equity shares
(54 )
Remeasurement of retirement benefit schemes
(166 )
(166 )
(166 )
Changes in fair value of credit in financial liabilities
designated at FVTPL due to own credit risk
(33 )
(33 )
(33 )
Unrealised losses
(40 )
(40 )
(40 )
Amounts recognised in equity
(872 )
(872 )
(872 )
Retranslation of net assets
(194 )
(194 )
(194 )
Gains on hedges of net assets
Reclassification of OCI to Income statement
Tax
(166 )
(20 )
(119 )
(119 )
Total comprehensive income
(54 )
(15 )
Transactions with owners
Ordinary share dividends paid
(1,505 )
(1,505 )
(12 )
(1,517 )
Paid-in equity dividends paid
(283 )
(283 )
(283 )
Shares repurchased
(1,6)
(711 )
(2,176 )
(2,176 )
(2,176 )
Paid-in equity issued
(2)
Employee share schemes
Shares vested under employee share schemes
Share-based remuneration
Own shares acquired
(540 )
(540 )
(540 )
At 31 December 2024
(103 )
(1,443 )
For the notes to this table refer to the following page.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
296
Consolidated statement of changes in equity continued
Other reserves
Share
Other
Total
Non
capital and
Paid-in
statutory
Retained
Cash flow
Foreign
owners'
controlling
Total
share premium
equity
reserves (3)
earnings
Fair value
hedging (4,5)
exchange
Merger
equity
interests
equity
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
At 1 January 2023
(102 )
(2,771 )
Profit/(loss) attributable to ordinary shareholders
and other equity owners
- continuing operations
(4 )
- discontinued operations
(112 )
(112 )
(112 )
Other comprehensive income
Realised gains on FVOCI equity shares
(1 )
Remeasurement of retirement benefit schemes
(280 )
(280 )
(280 )
Changes in fair value of credit in financial liabilities
designated at FVTPL due to own credit risk
(39 )
(39 )
(39 )
Unrealised gains
Amounts recognised in equity
Retranslation of net assets
(239 )
(239 )
(239 )
Gains on hedges of net assets
Reclassification of OCI to Income statement
(487 )
Tax
(12 )
(336 )
(18 )
(282 )
(282 )
Total comprehensive income
(637 )
(4 )
Transactions with owners
Ordinary share dividends paid
(1,456 )
(1,456 )
(5 )
(1,461 )
Paid-in equity dividends paid
(242 )
(242 )
(242 )
Shares repurchased
(1)
(856 )
(2,057 )
(2,057 )
(2,057 )
Employee share schemes
Shares vested under employee share schemes
Share-based remuneration
(35 )
(35 )
(35 )
Own shares acquired
(359 )
(359 )
(359 )
Acquisition of subsidiary
At 31 December 2023
(49 )
(1,899 )
(1)
As part of the On Market Share Buyback Programmes NatWest Group plc repurchased and cancelled 105.5 million shares (2024 - 173.3 million, 2023 - 460.3 million, of which 2.3 million were settled in January 2024) of which 1.4 million shares were settled in January 2026. The
total consideration for these shares excluding fees was £586.3 million (2024 - £450.9 million, 2023 - £1,151.7 million of which 4.9 million shares were settled in January 2024) of which 9 million was settled in January 2026. The nominal value of the share cancellations was
transferred to the capital redemption reserve.
(2)
Net of issuance fees of £2.8 million (2024 – £2.4 million), and the associated tax credit of £0.7 million (2024 – £0.7 million).
(3)
Other statutory reserves consists of Capital redemption reserve of £3,330 million (2024 - £3,218 million, 2023 - £2,507 million) and Own shares held reserve of £717 million (2024 - £868 million, 2023 - £503 million).
(4)
The change in the cash flow hedging reserve is driven by realised accrued interest transferred to the income statement and a decrease in swap rates in the year, where the portfolio of swaps are net receive fixed from an interest rate risk perspective.
(5)
The amount transferred from equity to the income statement is mostly recorded within net interest income mainly within loans to banks and customers – amortised costs, balances at central banks, bank deposits and customer deposits. Refer to Note 13.
(6)
In June 2024, there was an agreement to buy 392.4 million ordinary shares of the Company from His Majesty’s Treasury (HM Treasury) at 316.2 pence per share for total consideration of £1.2 billion. NatWest Group cancelled 222.4 million of the purchased ordinary shares,
amounting to £706.9 million excluding fees and held the remaining 170.0 million shares as Own Shares Held, amounting to £540.2 million excluding fees. The nominal value of the share cancellation was transferred to the capital redemption reserve. There were no repurchases in
2025.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
297
for the year ended 31 December 2025
2025
2024
2023
Note
£m
£m
£m
Cash flows from operating activities
Operating profit before tax from continuing operations
Operating profit/(loss) before tax from discontinued operations
(112 )
Adjustments for:
Non-cash and other items
26
Change in operating assets and liabilities
26
(7,267 )
(25,679 )
Income taxes paid
(1,792 )
(1,602 )
(1,033 )
Net cash flows from operating activities
(1,2)
(17,438 )
Cash flows from investing activities
Sale and maturity of other financial assets
Purchase of other financial assets
(62,033 )
(53,961 )
(44,906 )
Income received on other financial assets
Net movement in business interests and intangible assets
27
(368 )
(1,919 )
Sale of property, plant and equipment
Purchase of property, plant and equipment
(665 )
(464 )
(811 )
Net cash flows from investing activities
(13,765 )
(12,699 )
(14,694 )
Cash flows from financing activities
Issue of paid-in equity
Redemption of paid-in equity
(1,979 )
Issue of subordinated liabilities
Redemption of subordinated liabilities
(1,000 )
(999 )
(1,250 )
Interest paid on subordinated liabilities
(267 )
(459 )
(439 )
Issue of MRELs
Maturity and redemption of MRELs
(3,177 )
(2,854 )
(4,236 )
Interest paid on MRELs
(1,035 )
(885 )
(844 )
Purchase of non-controlling interest
(21 )
Shares repurchased
(579 )
(2,716 )
(2,416 )
Dividends paid
(2,376 )
(1,800 )
(1,703 )
Net cash flows from financing activities
(3,494 )
(1,886 )
(6,304 )
Effects of exchange rate changes on cash and cash equivalents
(1,166 )
(1,189 )
Net decrease in cash and cash equivalents
(9,412 )
(13,979 )
(39,625 )
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
29
(1)
Includes interest received of £25,401 million (2024 - £24,996 million,
2023 - £20,345 million) and interest paid of £13,028 million (2024 -
£13,689 million, 2023 - £8,871 million).
(2)
The total cash outflow for leases is £94 million (2024 - £95 million; 2023
- £122 million), including payment of principal amount of £77 million
(2024 - £79 million, 2023 - £102 million) which are included in the
operating activities.
Consolidated cash flow statement
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
298
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 and amendments to existing
accounting standards, their effective
date, and our assessment of their impact
on future financial statements.
and registered in Scotland. The financial
statements are presented in the functional
currency, pounds sterling.
these accounting policies, the accompanying
notes to the financial statements on pages
305 to 375 and the audited sections of the
Risk and capital management section on
pages 178 to 275 which together from an
integral part of the primary financial
statements.
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 (see 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
policies and related judgements are set out
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
Accounting Standards effective from 1
January 2025 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.
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
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
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’s climate
transition plan, including the assessment of
climate-related risks and opportunities.
In 2025, our scenario planning was enhanced
by the further integration of NatWest Group’s
climate transition plan, including the
assessment of climate-related risks and
opportunities.
Our climate transition plan includes an
•
assessment of:
o
Changes in products, services and
business operations to support
customer transition towards net zero.
o
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.
o
The impact of UK Government
policies. To estimate the impact of
current UK Government policy on our
climate transition plan, we developed
a progress-adjusted scenario. We use
the UK CCC’s Seventh Carbon
Budget Report’s sectoral balanced
pathways and apply estimated time
delays based on the credibility
assessment of policies from the UK
CCC’s June 2025 Progress Report.
There remains considerable uncertainty in the
climate policy environment, shaped by
geopolitical developments and wider
uncertainty over how the climate will evolve
and how and when governments, regulators,
businesses, investors and customers will
respond.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
299
Accounting policies continued
Information used in other accounting
estimates
We make use of reasonable and
supportable information to make
accounting judgements and estimates.
This includes information about the
observable effects of the physical and
transition risks of climate change on the
current creditworthiness of borrowers,
asset values and market indicators. Many
of the effects arising from climate change
will be longer term in nature, with an
inherent level of uncertainty, and have
limited effect on accounting judgements
and estimates for the current period.
Some physical and transition risks can
manifest in the shorter term. The
following items represent the most
significant effects:
•
The classification of financial
instruments linked to climate, or
other sustainability indicators.
Consideration is given to whether the
effect of climate-related terms
prevent the instrument cashflows
being solely payments of principal
and interest.
•
The use of market indicators as
inputs to fair value is assumed to
include current information and
knowledge regarding the effect of
climate risk.
Effect of climate change in the
estimation of expected credit loss
We are monitoring the effect of the
physical and transition consequences of
climate change on our experience of loan
loss. We use available information
regarding the effect of climate transition
policy largely driven by carbon prices as
an adjustment to macroeconomic factors
that are used as inputs to the models that
generate PD and LGD outcomes, which
are key inputs to the ECL calculation. The
determination of whether specific loss
drivers and climate events generate
specific losses is ongoing and is necessary
to determine how sensitive changes in ECL
could be to climate inputs.
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, includes 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
The judgements and assumptions involved in our accounting policies that are considered by the Board to
be the most important to the portrayal of our financial condition are noted below. The use of estimates,
assumptions or models that differ from those adopted by us would affect our reported results.
Management’s consideration of uncertainty is outlined in the relevant sections, including the ECL
estimate in the Risk and capital management section.
Information used for significant estimate
Further |
|||
Policy |
Judgement |
Estimate |
information |
Deferred tax |
Determination of whether |
Our estimates are based on |
Note 7 |
sufficient sustainable taxable |
the five-year revenue and cost |
||
profits will be generated in future |
forecasts (which include |
||
years to recover the deferred tax |
inherent uncertainties). |
||
asset. |
|||
Fair value – |
Classification of a fair value |
Estimation of the fair value, |
Note 10 |
financial |
instrument as level 3, where the |
where it is reasonably possible |
|
instruments |
valuation is driven by |
to have alternative |
|
unobservable inputs. |
assumptions in determining the |
||
FV. |
|||
Loan |
Definition of default against which |
ECL estimates contain a |
Note 14 |
impairment |
to apply PD, LGD and EAD |
number of measurement |
|
provisions |
models. |
uncertainties (such as the |
|
Selection of multiple economic |
weighting of multiple economic |
||
scenarios. |
scenarios) and disclosures |
||
Criteria for a significant increase |
include sensitivities to show the |
||
in credit risk. |
impact on other reasonably |
||
Identification of risks not captured |
possible scenarios. |
||
by the models. |
Changes in judgements and assumptions could result in a material adjustment to those estimates in
future reporting periods.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
300
Accounting policies continued
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’s 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
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
‘Valuation Adjustments’).
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’s
complexity and the availability of market-
based data. The complexity and uncertainty
in the financial instrument’s 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
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:
•
Non-modelled portfolios
– under IFRS 9,
there are 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.
•
Multiple economic scenarios (MES)
– 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.
•
Significant increase in credit risk
– 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, renegotiation, and similar events.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
301
Accounting policies continued
The typical time frames from initial
impairment to write-off for our collectively
assessed portfolios are:
•
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;
•
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;
•
Overdrafts and other unsecured loans:
write-off occurs within six years;
•
Commercial loans: write-offs are
determined in the light of individual
circumstances; and uncollateralised
impaired business loans are generally
3. Material accounting policies
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 at fair value
through other comprehensive income; and
the effective part of any related accounting
hedging instruments.
constant periodic rate of return before tax on
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
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-
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
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 remeasuring 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.
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
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
302
Accounting policies continued
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.
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
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’s net assets over the net fair
value of the subsidiary’s 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
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 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’s 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
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
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
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
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
303
Accounting policies continued
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):
•
amortised cost
measured at cost using
the effective interest rate method, less
any impairment allowance;
•
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;
•
mandatory fair value through profit or
loss (MFVTPL)
measured at fair value and
changes in fair value reported in the
income statement; or
•
designated at fair value through profit or
loss (DFV) (held for trading)
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’s 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
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:
•
amortised cost measured at cost using
the effective interest rate method;
•
held for trading measured at fair value
and changes in fair value reported in
income statement; or
•
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
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
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.
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
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.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
304
Accounting policies continued
Hedge accounting
Hedge accounting relationships are
designated and documented at inception in
line with the requirements of IAS 39 Financial
instruments – 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
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
Under a financial guarantee contract, we, in
return for a fee, undertake to meet a
customer’s obligations under the terms of a
debt instrument if the customer fails to do so.
A financial guarantee not designated as fair
value through profit or loss is recognised as a
liability; initially at fair value and subsequently
at the higher of its initial value less cumulative
amortisation and any provision under the
contract measured in accordance with our
ECL accounting policy. Amortisation is
calculated to recognise fees receivable in the
income statement over the period of the
guarantee. A separate asset is recognised in
respect of fees receivable for provision of the
financial guarantee.
Purchased financial guarantees are
considered to be integral, and fully adjust the
covered debt instrument expected credit loss
provision, only where the guarantee is
contemplated at the inception of the debt
instrument and is entered into within a
International Financial Reporting
Standards
Effective 1 January 2026
•
Amendments to the Classification and
Measurement of Financial Instruments
(Amendments to IFRS 9 and IFRS 7 –
Issued May 2024)
Effective 1 January 2027
•
P
resentation and Disclosures in Financial
Statements (IFRS 18 – Issued April 2024)
•
Subsidiaries without Public Accountability
(IFRS 19 – Issued May 2024)
We are assessing the effect of adopting the
accounting developments effective from 1
January 2027 on our financial statements and
have largely completed a similar assessment
for the Amendments to IFRS 9 and IFRS 7
effective from 1 January 2026. We do not
expect any to have a material impact on our
financial performance or position, although
IFRS18 may have an impact on presentation
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
305
Notes to the consolidated financial statements
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 income on financial instruments measured at 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 income or interest expense over the expected life of the asset or liability at the rate that exactly discounts all estimated
future cash flows to equal the 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 instrument's
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.
Interest income on financial assets is presented in interest receivable, interest expense on financial liabilities is presented in interest payable.
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 (Loans to customers - amortised cost) is finance lease income of £588 million (2024
- £549 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.
2025 |
2024 |
2023 |
|
Continuing operations |
£m |
£m |
£m |
Balances at central banks and loans to banks - amortised cost |
3,299 |
4,047 |
3,737 |
Loans to customers - amortised cost |
19,293 |
18,295 |
15,553 |
Other financial assets |
3,106 |
2,845 |
1,736 |
Interest receivable |
25,698 |
25,187 |
21,026 |
Bank deposits |
1,776 |
1,534 |
1,039 |
Customer deposits |
7,607 |
8,332 |
5,276 |
Other financial liabilities |
3,103 |
3,581 |
3,198 |
Subordinated liabilities |
383 |
465 |
464 |
Interest payable |
12,869 |
13,912 |
9,977 |
Net interest income |
12,829 |
11,275 |
11,049 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
306
Notes to the consolidated financial statements connued
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 of 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.
.
2025 |
2024 |
2023 |
|
Continuing operations |
£m |
£m |
£m |
Net fees and commissions (1) |
2,514 |
2,467 |
2,330 |
Trading income |
|||
Foreign exchange |
452 |
310 |
270 |
Interest rate (2) |
590 |
687 |
595 |
Credit |
68 |
(163) |
(72) |
Changes in fair value of own debt and derivative liabilities |
|||
attributable to own credit risk - debt securities in issue |
1 |
(9) |
(2) |
Equities, commodities and other |
1 |
- |
3 |
1,112 |
825 |
794 |
|
Other operating income |
|||
Rental income on operating lease assets and investment property |
219 |
233 |
234 |
Changes in fair value of financial assets and liabilities |
|||
designated at FVTPL (3) |
(132) |
(137) |
(150) |
Changes in fair value of other financial assets at FVTPL (4) |
41 |
75 |
50 |
Hedge ineffectiveness |
(16) |
2 |
52 |
Profit/(loss) on disposal of amortised cost assets and liabilities |
9 |
5 |
(5) |
Loss on disposal of fair value through other comprehensive |
|||
income assets |
(8) |
(19) |
(43) |
Profit/(loss) on sale of property, plant and equipment |
7 |
31 |
(21) |
Loss on disposal of subsidiaries and associates |
(43) |
- |
(2) |
Share of profits/(losses) of associated entities |
68 |
19 |
(9) |
Foreign exchange recycling (losses)/gains |
(28) |
(76) |
484 |
Other income (5) |
69 |
3 |
(11) |
186 |
136 |
579 |
|
3,812 |
3,428 |
3,703 |
(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)
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
307
Notes to the consolidated financial statements connued
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 social security costs),
premises and equipment costs that arise from the occupation of premises and the use of equipment, depreciation and amortisation and other administrative expenses.
For accounting policy information refer to Accounting policies 3.3, 3.4 and 3.5.
2025 | 2024 | 2023 | |
Continuing operations | £m | £m | £m |
Salaries | 2,456 | 2,477 | 2,483 |
Bonus awards (1) | 479 | 411 | 353 |
Temporary and contract costs | 162 | 162 | 199 |
Social security costs | 418 | 371 | 352 |
Pension costs | 338 | 311 | 313 |
- defined benefit schemes (Note 5) | 93 | 86 | 122 |
- defined contribution schemes | 245 | 225 | 191 |
Other | 321 | 329 | 201 |
Staff costs | 4,174 | 4,061 | 3,901 |
Premises and equipment | 1,291 | 1,211 | 1,153 |
Bank levy | 123 | 142 | 109 |
Depreciation and amortisation (2) | 1,154 | 1,058 | 934 |
Other administrative expenses (3) | 1,520 | 1,677 | 1,899 |
Administrative expenses | 4,088 | 4,088 | 4,095 |
8,262 | 8,149 | 7,996 |
(1)
Includes current year charge for amounts deferred from prior years. Refer to reconciliation of bonus awards to income statement
charge on page 309.
(2)
Includes depreciation of right of use assets of £92 million (2024 - £103 million; 2023 - £104 million).
(3)
The average number of persons employed during the year, excluding temporary staff and
rounded to the nearest hundred, was 59,300 (2024 – 60,700; 2023 – 61,500). The average
number of temporary employees during the year, rounded to the nearest hundred, was 1,300
(2024 – 1,400; 2023 – 2,100).
The number of persons employed at 31 December 2025, excluding temporary staff and
rounded to the nearest hundred, by reportable segment, was as follows:
Continuing operations | 2025 | 2024 | 2023 |
Retail Banking | 12,200 | 13,000 | 14,300 |
Private Banking & Wealth Management | 2,100 | 2,200 | 2,400 |
Commercial & Institutional | 12,300 | 12,700 | 12,400 |
Central items & other | 32,400 | 31,800 | 32,500 |
Total | 59,000 | 59,700 | 61,600 |
UK | 39,000 | 40,100 | 41,500 |
India | 18,800 | 17,600 | 16,900 |
Poland (1) | 100 | 800 | 1,500 |
USA | 300 | 300 | 300 |
Republic of Ireland | - | 100 | 400 |
Rest of the World | 800 | 800 | 1,000 |
Total | 59,000 | 59,700 | 61,600 |
(1)
Reflecting closure of operations in Poland.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
308
Notes to the consolidated financial statements connued
3 Operating expenses continued
Award plan |
Eligible employees |
Nature of award |
Vesting conditions (1) |
Settlement |
Sharesave |
UK, Channel Islands, Gibraltar, Isle |
Option to buy shares under |
Continuing employment or leavers in certain circumstances |
2026 to 2030 |
of Man, Poland and India. |
employee savings plan |
|||
Deferred performance |
All |
Awards of ordinary shares |
Continuing employment or leavers in certain circumstances |
2026 to 2031 |
awards |
and conditional shares |
|||
Long-term incentives (2) |
Senior employees |
Awards of ordinary shares |
Continuing employment or leavers in certain circumstances and/or |
2026 to 2032 |
and conditional shares |
satisfaction of the pre-vesting assessment and underpins |
|||
Sharing in Success ( 3) |
All |
Awards of ordinary shares |
Future continuing employment and achievement of pre-defined |
2026 |
and conditional shares |
measures. |
(1)
All awards are subject to the 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)
In 2025 12.5 million shares at total value of £60.5 million were granted and vested under Sharing in Success.
Sharesave
| 2025 |
2024 |
2023 |
||||
Average |
Shares |
Average |
Shares |
Average |
Shares |
|
exercise |
under |
exercise |
under |
exercise |
under |
|
price |
option |
price |
option |
price |
option |
|
£ |
(million) |
£ |
(million) |
£ |
(million) |
|
At 1 January |
1.93 |
101 |
1.59 |
114 |
1.63 |
99 |
Granted |
4.67 |
18 |
2.94 |
24 |
1.42 |
43 |
Exercised |
1.82 |
(20) |
1.52 |
(32) |
1.44 |
(23) |
Cancelled |
1.99 |
(3) |
1.60 |
(5) |
1.72 |
(5) |
At 31 December |
2.45 |
96 |
1.93 |
101 |
1.59 |
114 |
The fair value of Sharesave options granted in 2025 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 155 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; 5.1 million options were exercisable at 31
December 2025 (2024 – 8.9 million; 2023 – 19.0 million). The weighted average share price at
the date of exercise of options was £6.39 (2024 - £4.03; 2023 - £2.20). At 31 December 2025,
exercise prices ranged from £1.42 to £4.67 (2024 - £1.42 to £2.94; 2023 - £1.12 to £1.89) and
the remaining average contractual life was 2.11 years (2024 – 2.35 years; 2023 – 2.25 years).
The fair value of options granted in 2025 was £29.8 million (2024 - £28.3 million; 2023 - £27.3
million).
Deferred performance awards
2025 |
2024 |
2023 |
||||
Value at |
Shares |
Value at |
Shares |
Value at |
Shares |
|
grant |
awarded |
grant |
awarded |
grant |
awarded |
|
£m |
(million) |
£m |
(million) |
£m |
(million) |
|
At 1 January |
66 |
30 |
76 |
35 |
93 |
46 |
Granted |
60 |
14 |
50 |
23 |
52 |
20 |
Forfeited |
(4) |
(1) |
(3) |
(1) |
(2) |
(1) |
Vested |
(52) |
(18) |
(57) |
(27) |
(67) |
(30) |
At 31 December |
70 |
25 |
66 |
30 |
76 |
35 |
The awards granted in 2025 vest in equal tranches on the anniversary of the award,
predominantly over three years.
Long-term incentives
2025 |
2024 |
2023 |
||||
Value at |
Shares |
Value at |
Shares |
Value at |
Shares |
|
grant |
awarded |
grant |
awarded |
grant |
awarded |
|
£m |
(million) |
£m |
(million) |
£m |
(million) |
|
At 1 January |
40 |
19 |
49 |
23 |
49 |
23 |
Granted |
18 |
4 |
9 |
5 |
11 |
5 |
Vested/exercised |
(13) |
(5) |
(11) |
(5) |
(10) |
(4) |
Lapsed |
(4) |
(1) |
(7) |
(4) |
(1) |
(1) |
At 31 December |
41 |
17 |
40 |
19 |
49 |
23 |
The market value of awards vested/exercised in 2025 was £34.4 million (2024 - £19.3 million;
2023 - £9.5 million).
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
309
Notes to the consolidated financial statements connued
3 Operating expenses continued
Bonus awards
2025 |
2024 |
Change |
|
£m |
£m |
% |
|
Deferred cash awards (1) |
438 |
387 |
13% |
Deferred share awards |
58 |
61 |
(5%) |
Total bonus awards (2) |
496 |
448 |
11% |
Bonus awards as a % of operating profit before tax and bonus awards |
6% |
7% |
|
Proportion of bonus awards that are deferred |
|||
- deferred cash awards |
88% |
86% |
|
- deferred share awards |
12% |
14% |
Reconciliation of bonus awards to income statement charge
2025 |
2024 |
2023 |
|
£m |
£m |
£m |
|
Bonus awarded |
496 |
448 |
356 |
Less: deferral of charge for amounts awarded for current year |
(155) |
(144) |
(114) |
Income statement charge for amounts awarded in current year |
341 |
304 |
242 |
Add: current year charge for amounts deferred from prior years |
144 |
109 |
115 |
Less: forfeiture of amounts deferred from prior years |
(6) |
(2) |
(4) |
Income statement charge for amounts deferred from prior years |
138 |
107 |
111 |
Income statement charge for bonus awards (2) |
479 |
411 |
353 |
Year in which income statement charge is expected to be taken for deferred bonus awards
| Actual |
Expected |
||||
2023 |
2024 |
2025 |
2026 |
2027 and beyond |
|
£m |
£m |
£m |
£m |
£m |
|
Bonus awards deferred from 2023 and earlier |
115 |
109 |
22 |
7 |
3 |
Bonus awards deferred from 2024 |
- |
- |
122 |
10 |
7 |
Less: forfeiture of amounts deferred from prior years |
(4) |
(2) |
(6) |
- |
- |
Bonus awards deferred for 2025 |
- |
- |
- |
137 |
18 |
111 |
107 |
138 |
154 |
28 |
|
(1)
Includes March cash awards which are limited to £2,000 for all employees and
are paid in the March following the balance sheet date.
(2)
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
310
Notes to the consolidated financial statements connued
Reportable operating segments:
The business is organised into the following reportable
segments: Retail Banking, Private Banking & Wealth
Management, Commercial & Institutional, and Central items &
other.
Retail Banking
serves personal customers in the UK.
Private Banking & Wealth Management
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.
Allocaon 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
.
Private Banking |
|||||
Retail |
& Wealth |
Commercial & |
Central items |
||
Banking |
Management |
Institutional |
& other |
Total |
|
2025 |
£m |
£m |
£m |
£m |
£m |
Continuing operations |
|||||
Net interest income |
6,064 |
757 |
6,149 |
(141) |
12,829 |
Net fees and commissions |
429 |
340 |
1,729 |
16 |
2,514 |
Other non-interest income |
2 |
34 |
931 |
331 |
1,298 |
Total income |
6,495 |
1,131 |
8,809 |
206 |
16,641 |
Depreciation and amortisation |
(1) |
(1) |
(164) |
(988) |
(1,154) |
Other operating expenses |
(2,936) |
(726) |
(4,356) |
910 |
(7,108) |
Impairment (losses)/releases |
(437) |
(10) |
(225) |
1 |
(671) |
Operating profit |
3,121 |
394 |
4,064 |
129 |
7,708 |
2024 |
|||||
Continuing operations |
|||||
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 |
|||||
Continuing operations |
|||||
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 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
311
Notes to the consolidated financial statements connued
4 Segmental analysis continued
Total revenue
(1)
Private Banking | |||||
Retail | & Wealth | Commercial & | Central items | ||
Banking | Management | Institutional | & other | Total | |
2025 | £m | £m | £m | £m | £m |
Continuing operations | |||||
External | 10,146 | 1,262 | 13,414 | 5,421 | 30,243 |
Inter-segmental (2) | 5 | 1,525 | (1,505) | (25) | - |
Total | 10,151 | 2,787 | 11,909 | 5,396 | 30,243 |
2024 | |||||
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 |
Total income
Private Banking | |||||
Retail | & Wealth | Commercial & | Central items | ||
Banking | Management | Institutional | & other | Total | |
2025 | £m | £m | £m | £m | £m |
Continuing operations | |||||
External | 6,559 | 208 | 8,324 | 1,550 | 16,641 |
Inter-segmental (2) | (64) | 923 | 485 | (1,344) | - |
Total | 6,495 | 1,131 | 8,809 | 206 | 16,641 |
2024 | |||||
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 |
For the notes to this table refer to page 313.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
312
Notes to the consolidated financial statements connued
4 Segmental analysis continued
Analysis of net fees and commissions
Private Banking | |||||
Retail | & Wealth | Commercial & | Central items | ||
Banking | Management | Institutional | & other | Total | |
2025 | £m | £m | £m | £m | £m |
Continuing operations | |||||
Fees and commissions receivable | |||||
- Payment services | 350 | 38 | 731 | - | 1,119 |
- Credit and debit card fees | 424 | 30 | 268 | - | 722 |
- Lending and financing | 16 | 9 | 744 | - | 769 |
- Brokerage | 34 | 10 | 49 | - | 93 |
- Investment management, trustee and fiduciary services | 3 | 265 | 53 | 21 | 342 |
- Underwriting fees | - | - | 161 | - | 161 |
- Other | 5 | 8 | 41 | (13) | 41 |
Total | 832 | 360 | 2,047 | 8 | 3,247 |
Fees and commissions payable | (403) | (20) | (318) | 8 | (733) |
Net fees and commissions | 429 | 340 | 1,729 | 16 | 2,514 |
2024 | |||||
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 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
313
Notes to the consolidated financial statements connued
4 Segmental analysis continued
2025 |
2024 |
2023 |
||||
Assets |
Liabilities |
Assets |
Liabilities |
Assets |
Liabilities |
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Retail Banking |
240,259 |
206,398 |
232,835 |
198,795 |
228,684 |
191,936 |
Private Banking & Wealth |
||||||
Management |
30,457 |
42,895 |
28,593 |
42,603 |
26,894 |
37,806 |
Commercial & Institutional |
391,869 |
354,499 |
398,750 |
367,342 |
384,958 |
359,766 |
Central items & other |
51,968 |
68,148 |
47,807 |
59,867 |
52,137 |
65,977 |
Total |
714,553 |
671,940 |
707,985 |
668,607 |
692,673 |
655,485 |
Segmental analysis of goodwill
The total carrying value of goodwill at 31 December 2025 was £5,520 million (2024 - £5,675
million) comprising: Retail Banking £2,607 million (2024 - £2,607 million); Private Banking &
Wealth Management £9 million (2024 - £9 million); Commercial & Institutional £2,904 million
(2024 - £2,904 million) and Central items & other - nil (2024 – £155 million). Refer to Note 16 for
more details.
Geographical segments
The geographical analysis in the tables below has been compiled on the basis of location of office
where the transactions are recorded.
UK |
USA |
Europe |
RoW |
Total |
|
2025 |
£m |
£m |
£m |
£m |
£m |
Continuing operations |
|||||
Total revenue (1) |
28,745 |
294 |
1,103 |
101 |
30,243 |
Interest receivable |
25,021 |
23 |
636 |
18 |
25,698 |
Interest payable |
(12,496) |
(48) |
(318) |
(7) |
(12,869) |
Net fees and commissions |
2,103 |
142 |
216 |
53 |
2,514 |
Trading income |
902 |
136 |
44 |
30 |
1,112 |
Other operating income |
26 |
(7) |
167 |
- |
186 |
Total income (3) |
15,556 |
246 |
745 |
94 |
16,641 |
Operating profit before tax |
7,109 |
99 |
369 |
131 |
7,708 |
Total assets |
638,475 |
22,924 |
52,402 |
752 |
714,553 |
Total liabilities |
616,010 |
21,413 |
34,202 |
315 |
671,940 |
Contingent liabilities and |
|||||
commitments (4) |
139,306 |
- |
7,817 |
- |
147,123 |
UK |
USA |
Europe |
RoW |
Total |
|
2024 |
£m |
£m |
£m |
£m |
£m |
Continuing operations |
|||||
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 |
|||||
commitments (4) |
132,035 |
- |
7,925 |
1 |
139,961 |
2023 |
|||||
Continuing operations |
|||||
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 |
|||||
commitments (4) |
124,298 |
- |
7,561 |
21 |
131,880 |
(1)
Total revenue comprises interest receivable, fees and commissions receivable, income from trading activities and other operating income.
(2)
Revenue and income arising from transactions between the group’s segments are reported as inter-segment and include net inter-segment
funding income/(expense).
(3)
Total income excludes internal service fee income which has been calculated on a cost plus mark-up basis.
(4)
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
314
Notes to the consolidated financial statements connued
NatWest Group operates two types of pension scheme: defined contribution and defined benefit. The defined contribution schemes invest contributions in a choice of funds and the
accumulated contributions and investment returns are used by the employee to provide benefits on retirement. There is no legal or constructive obligation for NatWest Group to pay any
further contributions or benefits. The defined benefit schemes provide pensions in retirement based on employees' pensionable salaries and service.
NatWest Group’s balance sheet includes any
defined benefit pension scheme surplus or
deficit as a retirement benefit asset or liability
reported in other assets and other liabilities.
The surplus or deficit is the difference
between the liabilities to be paid from the
defined benefit scheme and the assets held
by the scheme to meet these liabilities. The
liabilities are calculated by external actuaries
using a number of financial and demographic
assumptions.
For some NatWest Group defined benefit
schemes where there is a net defined benefit
surplus in excess of the present value of any
economic benefits that can be obtained from
that surplus, the application of accounting
standards means we do not recognise that
surplus on the balance sheet.
For accounting policy information refer to
Accounting policy 3.3.
Defined contribution schemes
NatWest Group sponsors several defined
contribution schemes in different territories,
which new employees are entitled to join.
NatWest Group pays specific contributions
into individual investment funds on employees’
behalf. Once those contributions are paid,
there is no further liability on the NatWest
Group balance sheet relating to the defined
contribution schemes.
Defined benefit schemes
NatWest Group sponsors a number of
pension schemes in the UK and overseas,
including the Main section of the NatWest
Group Pension Fund (the Main section) which
operates under UK trust law and is managed
and administered on behalf of its members in
accordance with the terms of the trust deed,
the scheme rules and UK legislation.
Pension fund trustees are appointed to
operate each fund and ensure benefits are
paid in accordance with the scheme rules
and national law. The trustees are the legal
owner of a scheme’s assets, and have a duty
to act in the best interests of all scheme
members.
The schemes generally provide a pension of
one-sixtieth of final pensionable salary for
each year of service prior to retirement up to
a maximum of 40 years and are contributory
for current members.
These have been closed to new entrants
since 2006, although active members
continue to build up additional pension
benefits, currently subject to 2% maximum
annual pensionable salary inflation, while they
remain employed by NatWest Group.
The Main section corporate trustee is
NatWest Pension Trustee Limited (the
Trustee), a wholly owned subsidiary of NWB
Plc, Principal Employer of the Main section.
The Board of the Trustee includes member
trustee directors selected from eligible active
staff, deferred and pensioner members who
apply and trustee directors appointed by
NatWest Group.
Under UK legislation, a defined benefit
pension scheme is required to meet the
statutory funding objective of having sufficient
and appropriate assets to cover its liabilities
(the pensions that have been promised to
members).
Similar governance principles apply to
NatWest Group’s other defined benefit
pension schemes.
Investment strategy
The assets of the Main section represent 90%
of all plan assets at 31 December 2025 (2024
- 90%) and are invested as shown below.
Within the non-insured portfolio the Main
section employs physical, derivative and non-
derivative instruments to achieve a desired
asset class exposure and to reduce the
section’s interest rate, inflation, and currency
risk. This means that the net funding position
is considerably less sensitive to changes in
market conditions than the value of the
assets or liabilities in isolation. In particular,
movements in interest rate and inflation are
substantially hedged by the Trustee.
The Main and AA sections now include buy-in
insurance policies, following transactions over
2023-2025. Each insurance transaction saw
a premium paid to an insurer in exchange for
a buy-in insurance contract. The contracts
provide a stream of cashflows to the Trustee
replicating payments due to members,
thereby passing material demographic and
market risk to the insurer.
At 31 December 2025, the Main section
included buy-in insurance contracts covering
around 44% of the liabilities, while around
99% of AA section liabilities were insured.
The premium for each transaction was
determined by the insurer using its pricing
basis. Under IAS 19, the value placed on this
asset mirrors the valuation of the defined
benefit obligations covered, incorporating an
assessment of credit risk. Since the insurer’s
pricing basis is more conservative than the
best-estimate valuation under IAS 19, an
asset loss arises at outset.
However, the
asset loss is offset by a corresponding
movement in the asset ceiling adjustment,
meaning the net balance sheet and OCI
impacts are neutral. Once the contract has
been established, the value of the buy-in
insurance contracts will move in line with
movements in the defined benefit obligations
covered, protecting the scheme against
demographic and market risk.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
315
Notes to the consolidated financial statements connued
5 Pensions continued
Major classes of plan assets as a percentage of total plan assets of the Main section
| 2025 | 2024 | |||||
Quoted | Unquoted | Total | Quoted | Unquoted | Total | |
% | % | % | % | % | % | |
Equities | - | 6.1 | 6.1 | 0.1 | 6.6 | 6.7 |
Index-linked bonds | 16.8 | - | 16.8 | 23.6 | - | 23.6 |
Government bonds | 8.6 | - | 8.6 | 9.9 | - | 9.9 |
Corporate and other bonds | 12.4 | 3.0 | 15.4 | 14.4 | 4.1 | 18.5 |
Real estate | - | 2.7 | 2.7 | - | 2.4 | 2.4 |
Derivatives | - | (0.2) | (0.2) | - | 0.1 | 0.1 |
Buy-in insurance contracts | - | 35.9 | 35.9 | - | 27.0 | 27.0 |
Cash and other assets | - | 14.7 | 14.7 | - | 11.8 | 11.8 |
37.8 | 62.2 | 100.0 | 48.0 | 52.0 | 100.0 | |
The Main section’s holdings of derivative instruments are summarised in the table below
:
| 2025 | 2024 | |||||
Notional | Fair value | Notional | Fair value | |||
amounts | Assets | Liabilities | amounts | Assets | Liabilities | |
£bn | £m | £m | £bn | £m | £m | |
Inflation rate swaps | 8 | 33 | 88 | 24 | 1,548 | 812 |
Interest rate swaps | 30 | 363 | 390 | 57 | 3,096 | 3,763 |
Currency forwards | 10 | 76 | 38 | 8 | 60 | 130 |
Equity and bond call options | - | - | - | - | - | - |
Equity and bond put options | - | - | - | - | - | - |
Other | 1 | - | 3 | 1 | 22 | 4 |
Swaps have been executed at prevailing market rates and within standard market bid/offer spreads with a number of counterparties, including NWB Plc.
At 31 December 2025, the gross notional value of the swaps was £39 billion (2024 - £81 billion) and had a net negative fair value of £85 million (2024 - £73 million net positive) against which the
scheme had posted 43% collateral.
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 for ensuring that
indirect investments in NatWest Group do not exceed the regulatory limit of 5% of plan assets.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
316
Notes to the consolidated financial statements connued
5 Pensions continued
Changes in value of net pension assets/(liability)
| 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 | |
assets | obligation (1) | funding | liability | assets | benefit obligation (1) | funding | assets (2) | |
£m | £m | £m | £m | £m | £m | £m | £m | |
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 | 1,589 | (1,319) | (341) | (71) | 1,737 | (1,468) | (355) | (86) |
Other comprehensive income | (4,612) | 2,118 | 2,360 | (134) | (4,860) | 2,278 | 2,416 | (166) |
Contributions by employer | 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 1 January 2025 | 29,546 | (24,461) | (5,085) | - | 32,757 | (27,287) | (5,360) | 110 |
Currency translation and other adjustments | - | - | - | - | 34 | (11) | (12) | 11 |
Income statement - operating expenses | ||||||||
Net interest expense | 1,606 | (1,323) | (282) | 1 | 1,755 | (1,453) | (294) | 8 |
Current service cost | - | (59) | - | (59) | - | (85) | - | (85) |
Past service cost | - | (1) | - | (1) | - | (14) | - | (14) |
Loss on curtailments and settlements | - | - | - | - | - | (2) | - | (2) |
1,606 | (1,383) | (282) | (59) | 1,755 | (1,554) | (294) | (93) | |
Other comprehensive income | ||||||||
Return on plan assets excluding recognised interest income (3) | (1,107) | - | - | (1,107) | (1,305) | - | - | (1,305) |
Experience gains and losses | - | (165) | - | (165) | - | (176) | - | (176) |
Effect of changes in actuarial financial assumptions | - | 823 | - | 823 | - | 1,001 | - | 1,001 |
Effect of changes in actuarial demographic assumptions | - | (108) | - | (108) | - | (91) | - | (91) |
Asset ceiling adjustments (3) | - | - | 565 | 565 | - | - | 602 | 602 |
(1,107) | 550 | 565 | 8 | (1,305) | 734 | 602 | 31 | |
Contributions by employer (4) | 51 | - | - | 51 | 93 | - | - | 93 |
Contributions by plan participants and other scheme members | 7 | (7) | - | - | 10 | (10) | - | - |
Assets/liabilities extinguished upon settlement | - | - | - | - | (55) | 55 | - | - |
Benefits paid | (1,292) | 1,292 | - | - | (1,444) | 1,448 | - | 4 |
At 31 December 2025 | 28,811 | (24,009) | (4,802) | - | 31,845 | (26,625) | (5,064) | 156 |
(1)
Defined benefit obligations are subject to annual valuation by independent actuaries.
(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 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 Pension Scheme (NI) and the NatWest Markets section.
(3)
Buy-in transactions have had an, offsetting impact on the ‘Return on plan assets excluding recognised interest income’ and “Asset ceiling adjustments” line items recognised in OCI.
(4)
NatWest Group expects to make contributions to the Main section of £40 million in 2026.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
317
Notes to the consolidated financial statements connued
5 Pensions continued
Amounts recognised on the balance sheet
All schemes | ||
2025 | 2024 | |
£m | £m | |
Fund asset at fair value | 31,845 | 32,757 |
Present value of fund liabilities | (26,625) | (27,287) |
Funded status | 5,220 | 5,470 |
Assets ceiling/minimum funding | (5,064) | (5,360) |
156 | 110 | |
Net pension asset/(liability) comprises
2025 | 2024 | |
£m | £m | |
Net assets of schemes in surplus (Note 17) | 234 | 190 |
Net liabilities of schemes in deficit (Note 20) | (78) | (80) |
156 | 110 |
Funding and contributions by NatWest Group
In the UK, the trustees of defined benefit pension schemes are required to perform funding
valuations every three years. The trustees and the sponsor, with the support of the Scheme
Actuary, agree the assumptions used to value the liabilities and to determine future contribution
requirements. The funding assumptions incorporate a margin for prudence over and above the
expected cost of providing the benefits promised to members, taking into account the sponsor’s
covenant and the investment strategy of the scheme. Similar arrangements apply in the other
territories where NatWest Group sponsors defined benefit pension schemes.
A full triennial funding valuation of the Main section, effective 31 December 2023, was completed
during financial year 2024.
This triennial funding valuation determined the funding level to be 115%, pension liabilities to be
£29 billion and the surplus to be £4 billion, all assessed on the agreed funding basis. The average
cost of the future service of current members is 21.2% of salary before contributions from those
members.
Given the strong funding level, it was agreed that future service contributions would
cease from 1 January 2025. The sponsor continues to meet administrative expenses.
The key assumptions used to determine the uninsured funding liabilities were the discount rate,
which is determined based on fixed interest swap and gilt yields plus 0.64% per annum, and
mortality assumptions, which result in life expectancies of 27.1/29.1 years for male/female
pensioners who were age 60 and 28.5/30.6 years from age 60 for males/females who were age
40 at the valuation date.
Placing a value on NatWest Group’s defined benefit pension schemes’ liabilities requires NatWest
Group’s management to make a number of assumptions, with the support of independent
actuaries. The ultimate cost of the defined benefit obligations depends upon actual future events
and the assumptions made are unlikely to be exactly borne out in practice, meaning the final
cost may be higher or lower than expected.
The most significant assumptions used for the Main section are shown below:
Principal IAS 19 actuarial assumptions (1) | ||
2025 | 2024 | |
% | % | |
Discount rate | 5.7 | 5.6 |
Inflation assumption (RPI) | 2.9 | 3.2 |
Rate of increase in salaries | 1.8 | 1.8 |
Rate of increase in deferred pensions | 2.9 | 3.4 |
Rate of increase in pensions in payment | 2.4 | 2.6 |
Lump sum conversion rate at retirement | 18.0 | 18.0 |
Longevity at age 60: | years | years |
Current pensioners | ||
Males | 26.9 | 26.5 |
Females | 28.6 | 28.5 |
Future pensioners, currently aged 40 | ||
Males | 27.9 | 27.5 |
Females | 29.9 | 29.7 |
(1)
The above financial assumptions are long-term assumptions set with reference to the period over which the obligations are expected to be
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
318
Notes to the consolidated financial statements connued
5 Pensions continued
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.
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.
The weighted average duration of the Main section’s defined benefit obligation at 31 December 2025 is 13 years (2024 – 13 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
1000
1200
1400
1600
1800
2000
Expected Cashflows (£m)
Year
Pensioner
Non pensioner
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
319
Notes to the consolidated financial statements connued
5 Pensions continued
The table below shows how the funded status of the Main section would change if the key assumptions used were changed independently. In practice the variables have a degree of correlation and do
not move completely in isolation.
(Decrease)/ | (Decrease)/ | Increase in net | |
increase in value | increase in value | pension | |
of assets | of liabilities | (obligations)/assets | |
2025 (1) | £m | £m | £m |
0.5% increase in interest rates/discount rate | (1,434) | (1,425) | (9) |
0.25% increase in inflation | 585 | 525 | 60 |
0.5% increase in credit spreads | (10) | (1,425) | 1,415 |
Longevity increase of one year | 308 | 773 | (465) |
0.25% additional rate of increase in pensions in payment | 264 | 613 | (349) |
Increase in equity values of 10% (2) | 180 | na | 180 |
2024 | |||
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% (2) | 199 | na | 199 |
na = not applicable
(1)
The asset sensitivities shown for 2025 are derived using benchmark
information, so will be more approximate than those shown for 2024.
(2)
Includes both quoted and private equity.
The table below shows the combined change in defined benefit obligation from larger movements in these assumptions, assuming no changes in other assumptions.
| Change in life expectancies | ||||||
- 2 years | - 1 year | No change | + 1 year | + 2 years | ||
2025 | £bn | £bn | £bn | £bn | £bn | |
Change in credit spreads | +50 bps | (2.9) | (2.2) | (1.4) | (0.7) | - |
No change | (1.6) | (0.8) | - | 0.8 | 1.5 | |
-50 bps | (0.1) | 0.7 | 1.6 | 2.4 | 3.2 | |
2024 | ||||||
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 | |
The defined benefit obligation of the Main section is attributable to the different classes of scheme members in the following proportions:
2025 | 2024 | |
Membership category | % | % |
Active members | 4.5 | 6.9 |
Deferred members | 34.5 | 40.7 |
Pensioners and dependants | 61.0 | 52.4 |
100.0 | 100.0 |
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
320
Notes to the consolidated financial statements continued
5 Pensions continued
The experience history of NatWest Group schemes is shown below:
| Main section |
All schemes |
|||||||||
2025 |
2024 |
2023 |
2022 |
2021 |
2025 |
2024 |
2023 |
2022 |
2021 |
|
Experience history of defined benefit schemes |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
Fair value of plan assets |
28,811 |
29,546 |
33,638 |
34,016 |
52,021 |
31,845 |
32,757 |
37,111 |
37,598 |
57,787 |
Present value of plan obligations |
(24,009) |
(24,461) |
(26,534) |
(24,733) |
(42,020) |
(26,625) |
(27,287) |
(29,592) |
(27,601) |
(46,808) |
Net surplus |
4,802 |
5,085 |
7,104 |
9,283 |
10,001 |
5,220 |
5,470 |
7,519 |
9,997 |
10,979 |
Experience (losses)/gains on plan liabilities |
(165) |
13 |
(1,531) |
(2,053) |
241 |
(176) |
(3) |
(1,599) |
(2,137) |
237 |
Experience (losses)/gains on plan assets |
(1,107) |
(4,612) |
(1,042) |
(18,180) |
841 |
(1,305) |
(4,860) |
(1,182) |
(20,326) |
872 |
Actual return on plan assets |
499 |
(3,023) |
634 |
(17,248) |
1,554 |
450 |
(3,123) |
659 |
(19,285) |
1,667 |
Actual return on plan assets |
1.7% |
(9.0%) |
1.9% |
(33.2%) |
3.0% |
1.4% |
(8.4%) |
1.8% |
(33.4%) |
2.9% |
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’s 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.
2025 |
2024 |
2023 |
|
£m |
£m |
£m |
|
Fees payable for: |
|||
- the audit of NatWest Group’s annual accounts (1) |
5.3 |
5.1 |
4.9 |
- the audit of NatWest Group plc’s subsidiaries (1) |
34.8 |
32.5 |
32.3 |
- audit-related assurance services (1,2) |
4.7 |
4.2 |
4.5 |
Total audit and audit-related assurance services fees |
44.8 |
41.8 |
41.7 |
Other assurance services |
1.0 |
1.0 |
0.7 |
Corporate finance services (3) |
0.9 |
3.1 |
0.7 |
Total other services |
1.9 |
4.1 |
1.4 |
(1)
The 2025 audit fee was approved by the Group Audit Committee. At 31
December 2025, £16.0 million has been billed and paid in respect of the 2025
NatWest Group audit fees.
(2)
Comprises fees of £1.5 million (2024 - £1.4 million) for reviews of interim
financial information and £3.2 million (2024 - £2.8 million) for reports to
NatWest Group’s regulators in the UK and overseas.
(3)
Comprises fees of £0.9 million (2024 - £3.1 million) in respect of work
performed by the auditors as reporting accountants on debt and equity
issuances
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
321
Notes to the consolidated financial statements connued
NatWest Group’s 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’s 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 323.
2025 |
2024 |
2023 |
|
Continuing operations |
£m |
£m |
£m |
Current tax |
|||
Charge for the year |
(1,511) |
(1,415) |
(1,373) |
Over/(under) provision in respect of prior years |
110 |
(145) |
(123) |
(1,401) |
(1,560) |
(1,496) |
|
Deferred tax |
|||
Charge for the year |
(548) |
(343) |
(281) |
Net increase in the carrying value of deferred tax assets in respect of losses |
119 |
428 |
385 |
(Under)/over provision in respect of prior years |
(44) |
10 |
(42) |
Tax charge for the year |
(1,874) |
(1,465) |
(1,434) |
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 2025 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% (2024 – 25% and 2023 – 23.5%) to the Operating profit or loss before tax in the income
statement.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
322
Notes to the consolidated financial statements connued
7 Tax continued
The actual tax charge differs from the expected tax charge as follows:
2025 | 2024 | 2023 | |
Continuing operations | £m | £m | £m |
Expected tax charge | (1,927) | (1,549) | (1,452) |
Losses and temporary differences in year where no deferred tax asset recognised | (5) | (18) | (56) |
Foreign profits and losses taxed at other rates | 15 | 37 | 10 |
Items not allowed for tax: | |||
- losses on disposals and write-downs | (10) | (22) | (63) |
- UK bank levy | (30) | (31) | (27) |
- regulatory and legal actions | 4 | (47) | (1) |
- other disallowable items | (28) | (61) | (57) |
Non-taxable items: | |||
- foreign exchange recycling on capital reduction | 10 | - | 114 |
- RPI-related uplift on index linked gilts | 8 | 18 | 6 |
- dividends | 15 | - | - |
- other non-taxable items | 34 | 11 | 20 |
Taxable foreign exchange movements | (6) | 7 | 9 |
Unrecognised losses brought forward and utilised | 18 | 33 | 27 |
Net increase/(decrease) in the carrying value of deferred tax assets in respect of: | |||
- UK losses | 59 | 378 | 371 |
- Netherlands losses | 58 | 50 | 15 |
- Other overseas losses | 2 | - | (1) |
Banking surcharge | (198) | (169) | (236) |
Pillar 2 top-up tax | - | (20) | - |
Redemption of AT1 (paid-in equity) capital notes | (46) | - | - |
Tax on AT1 (paid-in equity) dividends | 87 | 53 | 52 |
Adjustments in respect of prior years (1) | 66 | (135) | (165) |
Actual tax charge | (1,874) | (1,465) | (1,434) |
(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.
Global minimum top-up tax
The Group is subject to the global minimum top-up tax under Pillar Two tax legislation. The Group recognised no current tax expense related to the top-up tax for 2025 (2024 - £20 million) due to
sufficient taxes being paid in the Group’s jurisdictions under local tax rules.
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.
NatWest Group’s 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. Any difference between the final outcome and the amounts provided will affect current and deferred income tax
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
323
Notes to the consolidated financial statements connued
7 Tax continued
Deferred tax
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 accounting and tax purposes.
Deferred tax liabilities reflect the expected amount of tax payable in the future on these temporary differences. Deferred tax assets reflect the expected amount of tax recoverable in the
future on these differences.
The net deferred tax asset recognised by NatWest Group is shown below, together with details of the accounting judgements and tax rates that have been used to calculate the deferred tax.
Details are also provided of any deferred tax assets or liabilities that have not been recognised on the balance sheet.
Analysis of deferred tax
2025 | 2024 | |
£m | £m | |
Deferred tax asset | 1,252 | 1,876 |
Deferred tax liability | (104) | (99) |
Net deferred tax asset | 1,148 | 1,777 |
| Accelerated | Tax losses | ||||||
capital | Expense | Financial | carried forward | ||||
Pension | allowances | provisions | instruments (1) | Other | Total | ||
£m | £m | £m | £m | £m | £m | £m | |
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 |
(Charge)/credit to other comprehensive income | (15) | - | - | (77) | - | 26 | (66) |
Currency translation and other adjustments | (1) | - | - | (1) | (3) | - | (5) |
At 1 January 2025 | (29) | 161 | 77 | 403 | 1,106 | 59 | 1,777 |
Charge to income statement: | |||||||
- continuing operations | (6) | (35) | (19) | (115) | (297) | (1) | (473) |
(Charge)/credit to other comprehensive income | (6) | - | - | (166) | - | 15 | (157) |
Currency translation and other adjustments | (1) | (3) | - | - | 5 | - | 1 |
At 31 December 2025 | (42) | 123 | 58 | 122 | 814 | 73 | 1,148 |
(1)
The in-year movement predominantly relates to cash flow hedges.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
324
Notes to the consolidated financial statements connued
7 Tax continued
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.
2025 | 2024 | |
£m | £m | |
UK tax losses carried forward | ||
- NWB Plc | 55 | 333 |
- RBS plc | 622 | 685 |
Total | 677 | 1,018 |
Overseas tax losses carried forward | ||
- Ulydien DAC | 5 | 5 |
- NWM N.V. | 132 | 83 |
814 | 1,106 |
NatWest Group has recognised a deferred tax asset of £1,252 million (2024 - £1,876 million) and
a deferred tax liability of £104 million (2024 - £99 million). These include amounts recognised in
respect of UK and overseas tax losses of £814 million (2024 - £1,106 million).
Judgement
–
NatWest Group has considered the carrying value of deferred tax assets and
concluded that, based on management’s estimates, sufficient sustainable taxable profits will be
generated in future years to recover recognised deferred tax assets.
Estimates
–
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’s detailed plans. They have regard to inherent uncertainties. The
deferred tax asset in Ulydien DAC is supported substantially by future reversing taxable
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.
NWM Plc
– Losses of £5,553 million have not been recognised in the deferred tax balance at 31
December 2025.
NWB Plc
–
A deferred tax asset of £55 million (2024 - £333 million) has been recognised in
respect of losses of £220 million of total losses of £1,036 million carried forward at 31 December
2025. NWB Plc expects the deferred tax asset to be utilised against future taxable profits by the
end of 2032.
RBS plc
–
A deferred tax asset of £622 million (2024 - £685 million) has been recognised in
respect of losses of £2,489 million carried forward at 31 December 2025. The losses were
transferred from NatWest Markets Plc as a consequence of the ring fencing regulations. RBS plc
expects the deferred tax asset to be utilised against future taxable profits by the end of 2032.
Overseas tax losses
Ulydien DAC
–
A deferred tax asset of £5 million (2024 - £5 million) has been recognised in
respect of losses of £40 million, and is now entirely supported by way of future reversing taxable
temporary differences on which deferred tax liabilities are recognised at 31 December 2025. The
ability to set off unutilised RoI losses of £10,262 million against future taxable profits will cease
following the Group’s full exit of business operations in RoI.
NatWest Markets N.V. (NWM N.V.)
–
A deferred tax asset of £132 million (2024 - £83 million) has
been recognised in respect of losses and tax credits of £512 million of total losses of £2,371
million carried forward at 31 December 2025. NWM N.V. expects the deferred tax asset to be
utilised against future taxable profits by the end of 2032. The tax losses and tax credits have no
expiry date.
Unrecognised deferred tax
Deferred tax assets of £4,882 million (2024 - £4,960 million; 2023 - £5,168 million) have not been
recognised in respect of tax losses and other deductible temporary differences carried forward of
£23,385 million (2024 - £23,238 million; 2023 - £24,438 million) in jurisdictions where doubt exists
over the availability of future taxable profits. Of these losses and other deductible temporary
differences, £4,176 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 £258 million (2024 - £269 million; 2023 - £256 million) on aggregate
underlying temporary differences of £1,022 million (2024 - £1,241 million; 2023 - £1,005 million)
have not been recognised in respect of retained earnings of overseas subsidiaries and held-over
gains on the incorporation of certain overseas branches. These retained earnings 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
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
325
Notes to the consolidated financial statements continued
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.
2025 |
2024 |
2023 |
|
£m |
£m |
£m |
|
Earnings |
|||
Profit from continuing operations attributable to ordinary shareholders |
5,479 |
4,438 |
4,506 |
Profit/(loss) from discontinued operations attributable to ordinary shareholders |
- |
81 |
(112) |
Profit attributable to ordinary shareholders |
5,479 |
4,519 |
4,394 |
Weighted average number of shares (millions) |
|||
Weighted average number of ordinary shares outstanding during the year |
8,052 |
8,450 |
9,164 |
Effect of dilutive share options and convertible securities |
74 |
66 |
55 |
Diluted weighted average number of ordinary shares outstanding during the year |
8,126 |
8,516 |
9,219 |
Earnings per ordinary share - continuing operations |
68.0p |
52.5p |
49.2p |
Earnings per ordinary share - discontinued operations |
- |
1.0p |
(1.2p) |
Total earnings per share attributable to ordinary shareholders - basic (1) |
68.0p |
53.5p |
47.9p |
Earnings per ordinary share - diluted continuing operations |
67.4p |
52.1p |
48.9p |
Earnings per ordinary share - diluted discontinued operations |
- |
1.0p |
(1.2p) |
Total earnings per share attributable to ordinary shareholders - diluted |
67.4p |
53.1p |
47.7p |
(1)
In 2023, the unrounded Total earnings per share attributable to
ordinary shareholders – basic is 47.948p. The unrounded Earnings per
ordinary share – continuing operations was 49.170p. The unrounded
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
326
Notes to the consolidated financial statements continued
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 – Financial Instruments.
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.
•
The business model criteria are 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’s 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.
•
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
The following tables analyse financial assets and liabilities in accordance with the categories of financial
instruments in IFRS 9.
Amortised |
Other |
|||||
MFVTPL |
DFV |
FVOCI |
cost |
assets |
Total |
|
Assets |
£m |
£m |
£m |
£m |
£m |
£m |
Cash and balances at central banks |
85,182 |
85,182 |
||||
Trading assets |
46,537 |
46,537 |
||||
Derivatives (1) |
60,789 |
60,789 |
||||
Settlement balances |
645 |
645 |
||||
Loans to bank - amortised cost (2) |
6,958 |
6,958 |
||||
Loans to customers - amortised cost (3) |
418,881 |
418,881 |
||||
Other financial assets |
1,041 |
3 |
42,168 |
36,558 |
79,770 |
|
Intangible assets |
7,292 |
7,292 |
||||
Other assets |
8,499 |
8,499 |
||||
31 December 2025 |
108,367 |
3 |
42,168 |
548,224 |
15,791 |
714,553 |
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 |
8,396 |
8,396 |
||||
31 December 2024 |
128,121 |
5 |
37,843 |
526,032 |
15,984 |
707,985 |
For the notes to this table refer to the following page.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
327
Notes to the consolidated financial statements continued
9 Financial instruments – classification continued
Amortised | Other | ||||
Held-for-trading | DFV | cost | liabilities | Total | |
Liabilities | £m | £m | £m | £m | £m |
Bank deposits (4) | 44,092 | 44,092 | |||
Customer deposits | 442,998 | 442,998 | |||
Settlement balances | 942 | 942 | |||
Trading liabilities | 49,022 | 49,022 | |||
Derivatives (1) | 53,974 | 53,974 | |||
Other financial liabilities (5) | 4,617 | 62,982 | 67,599 | ||
Subordinated liabilities | 237 | 5,886 | 6,123 | ||
Notes in circulation | 3,164 | 3,164 | |||
Other liabilities (6) | 594 | 3,432 | 4,026 | ||
31 December 2025 | 102,996 | 4,854 | 560,658 | 3,432 | 671,940 |
Bank deposits (4) | 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 (5) | 3,548 | 57,539 | 61,087 | ||
Subordinated liabilities | 234 | 5,902 | 6,136 | ||
Notes in circulation | 3,316 | 3,316 | |||
Other liabilities (6) | 684 | 3,917 | 4,601 | ||
31 December 2024 | 126,796 | 3,782 | 534,112 | 3,917 | 668,607 |
(1)
Includes net hedging derivatives assets of £535 million (2024 - £118 million)
and net hedging derivatives liabilities of £356 million (2024 - £464 million).
(2)
Includes items in the course of collection from other banks of £166 million
(2024 - £59 million).
(3)
Includes finance lease receivables of £8,971 million (2024 - £8,998 million).
(4)
Includes items in the course of transmission to other banks of £192 million
(2024 - £136 million).
(5)
The carrying amount of customer deposits designated at fair value through
profit or loss is materially the same as the principal amount for both periods.
No amounts have been recognised in the profit or loss for changes in credit
risk associated with these liabilities as the changes are immaterial both during
the period and cumulatively.
(6)
Includes lease liabilities of £535 million (2024 - £630 million), held at amortised
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
328
Notes to the consolidated financial statements continued
9 Financial instruments – classification continued
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 were eligible under our climate and sustainable funding and financing inclusion (CSFFI) criteria, which underpinned our previous target to
provide £100 billion in climate and sustainable funding and financing between 1 July 2021 and the end of 2025. Our CSFFI criteria was replaced with our climate and transition finance framework in
July 2025 alongside our new target to provide £200 billion in climate and transition finance. Some of these loans continue to be eligible under the climate and transition finance framework.
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.
| 2025 | 2024 | |||||
Positive impact on | Negative impact on | Positive impact on | Negative impact on | |||
Carrying value | product margin | product margin | Carrying value | product margin | product margin | |
£bn | bps | bps | £bn | bps | bps | |
Sustainability-linked loans | 8.0 | 2.9 | 3.7 | 6.9 | 3.1 | 4.0 |
Other products | 21.9 | - | - | 20.2 | - | - |
Lending subject to performance | ||||||
| triggers | 29.9 | 27.1 | ||||
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.
2025 | 2024 | |
£m | £m | |
Amount receivable under finance leases | ||
Within 1 year | 3,670 | 3,493 |
1 to 2 years | 2,411 | 2,499 |
2 to 3 years | 1,478 | 1,612 |
3 to 4 years | 946 | 842 |
4 to 5 years | 454 | 464 |
After 5 years | 854 | 1,043 |
Total lease payments | 9,813 | 9,953 |
Unguaranteed residual values | 151 | 150 |
Future drawdowns | (12) | (12) |
Unearned income | (895) | (1,001) |
Present value of lease payments | 9,057 | 9,090 |
Impairments | (86) | (92) |
Net investment in finance leases | 8,971 | 8,998 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
329
Notes to the consolidated financial statements continued
9 Financial instruments – classification continued
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.
Instruments which can be offset | Potential for offset not recognised by IFRS | ||||||||
Effect of master | Net amount after | Instruments | |||||||
netting and similar | Cash | netting agreements and | outside netting | Balance sheet | |||||
Gross | IFRS offset | Balance sheet | agreements | collateral | Securities collateral | effect of related collateral | agreements | total | |
2025 | £m | £m | £m | £m | £m | £m | £m | £m | £m |
Derivative assets | 77,408 | (17,007) | 60,401 | (45,928) | (9,275) | (3,283) | 1,915 | 388 | 60,789 |
Derivative liabilities | 71,589 | (17,951) | 53,638 | (45,928) | (4,281) | (1,256) | 2,173 | 336 | 53,974 |
Net position (1) | 5,819 | 944 | 6,763 | - | (4,994) | (2,027) | (258) | 52 | 6,815 |
Trading reverse repos | 44,729 | (17,129) | 27,600 | (465) | - | (26,882) | 253 | 56 | 27,656 |
Trading repos | 43,648 | (17,129) | 26,519 | (465) | - | (26,054) | - | 2,059 | 28,578 |
Net position | 1,081 | - | 1,081 | - | - | (828) | 253 | (2,003) | (922) |
Non trading reverse repos | 50,889 | (14,470) | 36,419 | (9) | - | (36,410) | - | - | 36,419 |
Non trading repos | 44,082 | (14,470) | 29,612 | (9) | - | (29,603) | - | - | 29,612 |
Net position | 6,807 | - | 6,807 | - | - | (6,807) | - | - | 6,807 |
2024 | |||||||||
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 |
(1)
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
330
Notes to the consolidated financial statements continued
Financial instruments recognised at fair value are revalued using techniques that can include observable inputs (pricing information that is readily available in the market, for example UK
Government securities), and unobservable inputs (pricing information that is not readily available, for example unlisted securities). Gains and losses are recognised in the income statement
and statement of comprehensive income as appropriate.
This note presents information on the valuation of financial instruments.
The table below provides an overview of the various sections contained within the note.
instruments
Financial instruments 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 are recognised in the financial statements at fair value.
All derivatives are measured at fair value.
Fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement date. A fair value
measurement considers the characteristics of the asset or
liability and the assumptions that a market participant would
consider when pricing the asset or liability.
NatWest Group manages some portfolios of financial assets and
financial liabilities based on its 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 ‘Valuation Adjustments’).
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’s complexity and the availability of
market-based data. The complexity and uncertainty in the
financial instrument’s fair value is categorised using the fair
value hierarchy.
For accounting policy information refer to Accounting policies
Valuation
Page |
|
Financial instruments |
|
Critical accounting policy: Fair value |
330 |
Valuation |
|
Fair value hierarchy (D) |
331 |
Valuation techniques (D) |
331 |
Inputs to valuation models (D) |
331 |
Valuation control (D) |
332 |
Key areas of judgement (D) |
332 |
Assets and liabilities split by fair value hierarchy level (T) |
333 |
Valuation adjustments |
|
Fair value adjustments made (T) |
334 |
Funding valuation adjustments (FVA) (D) |
334 |
Credit valuation adjustments (CVA) (D) |
334 |
Bid-offer (D) |
334 |
Product and deal specific (D) |
334 |
Own credit (D) |
334 |
Level 3 additional information |
|
Level 3 ranges of unobservable inputs (D) |
335 |
Level 3 instruments, valuation techniques and inputs (T) |
335 |
Level 3 sensitivities (D) |
335 |
Alternative assumptions (D) |
336 |
Other considerations (D) |
336 |
High and low range of fair value of level 3 assets and liabilities (T) |
336 |
Movement in level 3 assets and liabilities over the reporting period (D) |
337 |
Movement in level 3 assets and liabilities (T) |
337 |
Fair value of financial instruments measured at amortised cost |
|
Fair value of financial instruments measured at amortised cost on the balance sheet |
338 |
(D) = Descriptive; (T) = Table |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
331
Notes to the consolidated financial statements continued
10 Financial instruments –
valuation continued
Fair value hierarchy
Financial instruments carried at fair value
have been classified under the fair value
hierarchy. The classification ranges from level
1 to level 3, with more expert judgement and
price uncertainty for those classified at level
3.
The determination of an instrument’s level
cannot be made at a global product level as
a single product type can be in more than
one level. For example, a single name
corporate credit default swap could be in level
2 or level 3 depending on the level of market
activity for the referenced entity.
Level 1
– instruments valued using unadjusted
quoted prices in active and liquid markets, for
identical financial instruments. Examples
include government bonds, listed equity
shares and certain exchange-traded
derivatives.
Level 2
– instruments valued using valuation
techniques that have observable inputs.
Observable inputs are those that are readily
available with limited adjustments required.
Examples include most government agency
securities, investment-grade corporate bonds,
certain mortgage products - including
collateralised loan obligations (CLOs), most
bank loans, repos and reverse repos, state
and municipal obligations, most notes issued,
certain money market securities, loan
commitments and most over the counter
(OTC) derivatives.
Level 3
– instruments valued using a
valuation technique where at least one input
which could have a significant effect on the
instrument’s valuation, is not based on
observable market data.
Examples include non-derivative instruments
which trade infrequently, certain syndicated
and commercial mortgage loans, private
equity, and derivatives with unobservable
model inputs.
Valuation techniques
NatWest Group derives the fair value of its
instruments differently depending on whether
the instrument is a non-modelled or a
modelled product.
Non-modelled products
are valued directly
from a price input, typically on a position-by-
position basis. Examples include equities and
most debt securities.
Non-modelled products can fall into any fair
value levelling hierarchy depending on the
observable market activity, liquidity, and
assessment of valuation uncertainty of the
instruments. The assessment of fair value and
the classification of the instrument to a fair
value level is subject to the valuation controls
discussed in the Valuation control section.
Modelled products
– valued using a pricing
model range in complexity from
comparatively vanilla products such as
interest rate swaps and options (e.g., interest
rate caps and floors) through to more
complex derivatives (e.g., balance guarantee
swaps).
For modelled products the fair value is
derived using the model and the appropriate
model inputs or parameters, as opposed to a
cash price equivalent. Model inputs are taken
either directly or indirectly from available
data, where some inputs are also modelled.
Fair value classification of modelled
instruments is either level 2 or level 3,
depending on the product/model
combination, the observability and quality of
input parameters and other factors.
All these must be assessed to classify a
position. The modelled product is assigned to
the lowest fair value hierarchy level of any
significant input used in that valuation.
Most derivative instruments, for example
vanilla interest rate swaps, foreign exchange
swaps and liquid single name credit
derivatives, are classified as level 2. This is
because they are vanilla products valued
using standard market models and with
observable inputs. Level 2 products range
from vanilla to more complex products,
where more complex products remain
classified as level 2 due to the low materiality
of any unobservable inputs.
Inputs to valuation models
When using valuation techniques, the fair
value can be significantly affected by the
choice of
valuation model
and underlying
assumptions. Factors considered include the
cashflow amounts and timing of those cash
flows, and application of appropriate discount
rates, incorporating both funding and credit
risk. Values between and beyond available
data points are obtained by interpolation and
extrapolation. The principal inputs to these
valuation techniques are as follows:
Bond prices
– quoted prices are generally
available for government bonds, certain
corporate securities, and some mortgage-
related products.
Credit spreads/margins
– these reflect credit
default swap levels or the return required
over a benchmark rate or index to
compensate for the referenced credit risk.
Where available, these are derived from the
price of credit default swaps or other credit-
based instruments, such as debt securities.
When direct prices are not available, credit
spreads/margins are determined with
reference to available prices of entities with
similar characteristics.
Interest rates
– these are principally based on
interest rate swap prices referencing
benchmark interest rates. Interest rates,
include SONIA (Sterling Overnight Interbank
Average Rate) and other overnight rates.
Other quoted interest rates may also be used
from both the bond, and futures markets.
Foreign currency exchange rates
– there are
observable prices both for spot and forward
contracts and futures in the world's major
currencies.
Equity and equity index prices
– quoted
prices are generally readily available for
equity shares listed on the world's major
stock exchanges and for major indices on
such shares.
Price volatilities and correlations
– volatility is
a measure of the tendency of a price to
change with time. Correlation measures the
degree which two or more prices or variables
are observed to move together. Variables
that move in the same direction show positive
correlation; those that move in opposite
directions are negatively correlated.
Prepayment rates
– are used to reflect how
fast a pool of assets prepay. The fair value of
a financial instrument that can be prepaid by
the issuer or borrower differs from that of an
instrument that cannot be prepaid. When
valuing prepayable instruments, the value of
this prepayment option is considered.
Recovery rates/loss given default
– are used
as an input to valuation models and reserves
for asset-backed securities and other credit
products as an indicator of severity of losses
on default. Recovery rates are primarily
sourced from market data providers, the
value of the underlying collateral or inferred
from observable credit spreads.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
332
Notes to the consolidated financial statements continued
Valuation control
NatWest Group's control environment for the
determination of the fair value of financial
instruments includes formalised procedures
for the review and validation of fair values.
The review of market prices and inputs is
performed by an independent price
verification (IPV) team.
IPV is a key element of the control
environment. Valuations are first performed
by the business which entered into the
transaction. These valuations are then
reviewed by the IPV team, independent of
those trading the financial instruments, in
light of available pricing evidence.
Independent pricing data is collated from a
range of sources. Each source is reviewed for
quality and the independent data applied in
the IPV processes using a formalised input
quality hierarchy. Consensus services are one
source of independent data and encompass
interest rate, currency, credit, and bond
markets, providing comprehensive coverage
of vanilla products and a wide selection of
exotic products.
Where measurement differences are
identified through the IPV process these are
grouped by the quality hierarchy of the
independent data. If the size of the difference
exceeds defined thresholds, an adjustment is
made to bring the valuation to within the
independently calculated fair value range.
IPV takes place at least monthly, for all fair
value financial instruments. The IPV control
includes formalised reporting and escalation
of any valuation differences in breach of
established thresholds.
The quality and completeness of the
information gathered in the IPV process gives
an indication as to the liquidity and valuation
uncertainty of an instrument and forms part
of the information considered when
determining fair value hierarchy
classifications.
Initial fair value level classification of a
financial instrument is carried out by the IPV
team. These initial classifications are subject
to senior management review. Particular
attention is paid to instruments transferring
from one level to another, new instrument
classes or products, instruments where the
transaction price is significantly different from
the fair value and instruments where
valuation uncertainty is high.
Valuation Committees are made up of
valuation specialists and senior business
representatives from various functions and
oversees pricing, reserving and valuations
issues. These committees meet monthly to
review and ratify any methodology changes.
The Executive Valuation Committee meets
quarterly to address key material and
subjective valuation issues, to review items
escalated by Valuation Committees and to
discuss other relevant industry matters.
The Group model risk policy sets the policy
for model documentation, testing and review.
Governance of the model risk policy is carried
out by the Group Model Risk Oversight
Committee, which comprises model risk
owners and independent model experts. All
models are required to be independently
validated in accordance with the model risk
Policy.
Over the years the business has simplified,
with most products classified as level 1 or 2
of the fair value hierarchy. However, the
diverse range of products historically traded
by NatWest Group means some products
remain classified as level 3. Level 3 indicates
a significant level of pricing uncertainty,
where expert judgement is used. As such,
extra disclosures are required in respect of
level 3 instruments.
In general, the degree of expert judgement
used and hence valuation uncertainty
depends on the degree of liquidity of an
instrument or input.
Where markets are liquid, little judgement is
required. However, when the information
regarding the liquidity in a particular market
is not clear, a judgement may need to be
made. For example, for an equity traded on
an exchange, daily volumes of trading can be
seen, but for an OTC derivative, assessing
the liquidity of the market with no central
exchange is more challenging.
The breadth and depth of the IPV data allows
for a rules-based quality assessment to be
made of market activity, liquidity, and pricing
uncertainty, which assists with the process of
allocation to an appropriate level. Where
suitable independent pricing information is
not readily available, the quality assessment
will result in the instrument being assessed as
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
333
Notes to the consolidated financial statements continued
10 Financial instruments – valuation continued
The table below shows the assets and liabilities held by NatWest Group split by fair value hierarchy level. Level 1 are considered the most liquid instruments, and level 3 the most illiquid, valued using
expert judgement and so carry the most significant price uncertainty.
| 2025 | 2024 | |||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |
£m | £m | £m | £m | £m | £m | £m | £m | |
Assets | ||||||||
Trading assets | ||||||||
Loans | - | 33,556 | 96 | 33,652 | - | 34,761 | 278 | 35,039 |
Securities | 9,586 | 3,299 | - | 12,885 | 8,772 | 5,106 | - | 13,878 |
Derivatives | ||||||||
Interest rate | - | 32,382 | 360 | 32,742 | - | 37,026 | 473 | 37,499 |
Foreign exchange | - | 27,878 | 103 | 27,981 | - | 40,687 | 110 | 40,797 |
Other | - | 57 | 9 | 66 | - | 63 | 47 | 110 |
Other financial assets | ||||||||
Loans | - | 35 | 533 | 568 | - | 288 | 565 | 853 |
Securities | 25,528 | 16,964 | 152 | 42,644 | 23,943 | 13,641 | 209 | 37,793 |
Total financial assets held at fair value | 35,114 | 114,171 | 1,253 | 150,538 | 32,715 | 131,572 | 1,682 | 165,969 |
As a % of total fair value assets | 23% | 76% | 1% | 20% | 79% | 1% | ||
Liabilities | ||||||||
Trading liabilities | ||||||||
Deposits | - | 41,284 | - | 41,284 | - | 43,966 | - | 43,966 |
Debt securities in issue | - | 234 | - | 234 | - | 257 | - | 257 |
Short positions | 6,172 | 1,331 | 1 | 7,504 | 8,766 | 1,724 | 1 | 10,491 |
Derivatives | ||||||||
Interest rate | - | 26,589 | 169 | 26,758 | - | 31,253 | 279 | 31,532 |
Foreign exchange | - | 26,988 | 54 | 27,042 | - | 40,240 | 66 | 40,306 |
Other | - | 119 | 55 | 174 | - | 124 | 120 | 244 |
Other financial liabilities | ||||||||
Debt securities in issue | - | 2,302 | 3 | 2,305 | - | 1,733 | 3 | 1,736 |
Other deposits | - | 2,285 | 27 | 2,312 | - | 1,787 | 25 | 1,812 |
Subordinated liabilities | - | 237 | - | 237 | - | 234 | - | 234 |
Total financial liabilities held at fair value | 6,172 | 101,369 | 309 | 107,850 | 8,766 | 121,318 | 494 | 130,578 |
As a % of total fair value liabilities | 6% | 94% | 0% | 7% | 93% | 0% | ||
(1)
Transfers between levels are deemed to have occurred at the beginning
of the quarter in which the instrument was transferred.
(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 – Credit risk.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
334
Notes to the consolidated financial statements continued
10 Financial instruments – valuation continued
Valuation adjustments
When valuing financial instruments in the trading book, adjustments are made to mid-market
valuations to cover bid-offer spread, funding and credit risk. These adjustments are presented in
the table below:
2025 | 2024 | |
Adjustment | £m | £m |
Funding valuation adjustments | (11) | 123 |
Credit valuation adjustments | 179 | 190 |
Bid-offer | 60 | 76 |
Product and deal specific | 124 | 157 |
Total | 352 | 546 |
The decrease in funding valuation adjustments was primarily driven by unwinding of a major
portfolio. The decrease in credit valuation adjustments was driven by credit spreads tightening
with the impacts of exposure changes largely offsetting. The decrease in bid-offer was driven by
risk reduction and unwinding of a major portfolio. The decrease in product and deal specific was
driven by the amortisation of deferred trade inception profits partially offset by new trading
activity.
Funding valuation adjustments (FVA)
FVA represents an estimate of the adjustment that a market participant would make to
incorporate funding costs and benefits that arise in relation to derivative exposures. FVA is
calculated as a portfolio level adjustment and can result in either a funding charge (positive) or
funding benefit (negative).
Funding levels are applied to estimated potential future exposures. For uncollateralised
derivatives, the exposure reflects the future valuation of the derivative. For collateralised
derivatives, the exposure reflects the difference between the future valuation of the derivative
and the level of collateral posted.
Credit valuation adjustments (CVA)
CVA represents an estimate of the adjustment to fair value that is made to incorporate the
counterparty credit risk inherent in derivative exposures. CVA is calculated on a portfolio basis
reflecting an estimate of the amount a third party would charge to assume the credit risk.
Collateral held under a credit support agreement is factored into the CVA calculation. In such
cases where NatWest Group holds collateral against counterparty exposures, CVA is held to the
extent that residual risk remains.
FVA and CVA are actively managed by a credit and market risk hedging process, and therefore
movements in CVA and FVA are partially offset by trading revenue on the hedges.
Bid-offer
Fair value positions are required to be marked to exit levels, represented by bid (long positions)
or offer (short positions) levels. Non-derivative positions are typically marked directly to bid or
offer prices. However derivative exposures are adjusted to exit levels by taking bid-offer reserves
calculated on a portfolio basis. The reserving approach is based on current market bid-offer
spreads and standard market bucketing of risk.
Bid-offer spreads vary by maturity and risk type to reflect different spreads in the market. For
positions where there is no observable quote, the bid-offer spreads are widened in comparison to
proxies to reflect reduced liquidity or observability.
Netting is applied on a portfolio basis to reflect the value at which NatWest Group believes it
could exit the net risk of the portfolio, rather than the sum of exit costs for each of the portfolio’s
individual trades. This is applied where the asset and liability positions are managed as a portfolio
for risk and reporting purposes.
Product and deal specific
On initial recognition of financial assets and liabilities valued using valuation techniques which
have a significant dependence on information other than observable market data, any difference
between the transaction price and that derived from the valuation technique is deferred. Such
amounts are recognised in the income statement over the life of the transaction, when market
data becomes observable, or when the transaction matures or is closed out as appropriate. On
31 December 2025, net gains of £109 million (2024 - £139 million) were carried forward. During
the year, net gains of £205 million (2024 - £218 million) were deferred and £235 million (2024 -
£157 million) were recognised in the income statement.
Where system-generated valuations do not accurately reflect market prices, manual valuation
adjustments are applied either at a position or portfolio level. Manual adjustments are subject to
the scrutiny of independent control teams and are subject to monthly review by senior
management.
Own credit
NatWest Group considers the effect of its own credit standing when valuing financial liabilities
recorded at fair value. Own credit spread adjustments are made when valuing issued debt held
at fair value, including issued structured notes. An own credit adjustment is applied to positions
where it is believed that counterparties would consider NatWest Group’s creditworthiness when
pricing trades. Accumulated changes in fair value due to credit risk are £57 million (2024 – £44
million).
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
335
Notes to the consolidated financial statements continued
10 Financial instruments – valuation continued
Level 3 additional information
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 enable the reader
to gauge the level of uncertainty that arises from positions with significant unobservable inputs or modelling parameters.
Level 3 ranges of unobservable inputs
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 input range.
2025 | 2024 | ||||||
Financial instrument | Valuation technique | Unobservable inputs | Units | Low | High | Low | High |
Trading assets and Other financial assets | |||||||
Loans | Price-based | Price | % | 89 | 121 | 88 | 123 |
Discount cash flow | Credit spreads | bps | 34 | 81 | 36 | 93 | |
Debt securities | Price-based | Price | % | - | 111 | - | 116 |
| Equity Shares | Price-based | Price | GBP | - | 44,090 | - | 47,312 |
Price-based | Price | % | - | - | - | 15 | |
Discount cash flow | Discount margin | % | - | - | 9 | 13 | |
Net asset valuation | Fund NAV | % | 80 | 120 | 80 | 120 | |
Derivative assets and liabilities | |||||||
Credit derivatives | Credit derivative | Credit spreads | bps | 16 | 133 | 15 | 86 |
pricing | Correlation | % | (15) | 75 | (15) | 95 | |
Option pricing | Volatility | % | 30 | 75 | 30 | 80 | |
Upfront points | % | - | 99 | - | 99 | ||
Recovery rate | % | - | 60 | - | 60 | ||
Interest rate & FX | Option pricing | Correlation | % | (50) | 98 | (50) | 98 |
derivatives | Volatility | % | 3 | 82 | 3 | 99 | |
Constant Prepayment | |||||||
| Rate | % | 2 | 25 | 2 | 20 | ||
Mean Reversion | % | - | 13 | - | 20 | ||
Inflation volatility | % | 1 | 2 | 1 | 2 | ||
Inflation rate | % | 2 | 2 | 2 | 2 | ||
(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 equity or bond fund investments,
prices may be estimated from valuation or credit statements using NAV
or similar measures.
(2)
NatWest Group does not have any material liabilities measured at fair
value that are issued with an inseparable third-party credit
enhancement
.
Level 3 sensitivities
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 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 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 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 shown in the table on the next page.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
336
Notes to the consolidated financial statements continued
10 Financial instruments – valuation continued
Alternative assumptions
Reasonably plausible alternative assumptions of unobservable inputs are determined based on a specified target level of certainty of 90%.
Alternative assumptions are determined with reference to all available evidence including consideration of the following: quality of independent pricing information considering consistency between
different sources, variation over time, perceived tradability or otherwise of available quotes; consensus service dispersion ranges; volume of trading activity and market bias (e.g. one-way inventory);
day 1 profit or loss arising on new trades; number and nature of market participants; market conditions; modelling consistency in the market; size and nature of risk; length of holding of position; and
market intelligence.
Other considerations
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 significant effect on
the net valuation of the related derivative portfolios and issued debt.
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 inputs is not
included in the level 3 sensitivities presented.
The table below shows the favourable and unfavourable 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.
| 2025 | 2024 | |||||
Level 3 | Favourable | Unfavourable | Level 3 | Favourable | Unfavourable | |
£m | £m | £m | £m | £m | £m | |
Assets | ||||||
Trading assets | ||||||
Loans | 96 | - | - | 278 | - | - |
Derivatives | ||||||
Interest rate | 360 | 20 | (10) | 473 | 20 | (20) |
Foreign exchange | 103 | 10 | (10) | 110 | - | - |
Other | 9 | - | - | 47 | - | - |
Other financial assets | ||||||
Loans | 533 | - | (10) | 565 | - | (10) |
Securities | 152 | 10 | (20) | 209 | 20 | (30) |
Total financial assets held at fair value | 1,253 | 40 | (50) | 1,682 | 40 | (60) |
Liabilities | ||||||
Trading liabilities | ||||||
Short positions | 1 | - | - | 1 | - | - |
Derivatives | ||||||
Interest rate | 169 | 10 | (10) | 279 | 10 | (10) |
Foreign exchange | 54 | - | - | 66 | - | - |
Other | 55 | - | - | 120 | 10 | (10) |
Other financial liabilities | ||||||
Debt securities in issue | 3 | - | - | 3 | - | - |
Other deposits | 27 | - | (20) | 25 | 10 | (20) |
Total financial liabilities held at fair value | 309 | 10 | (30) | 494 | 30 | (40) |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
337
Notes to the consolidated financial statements continued
10 Financial instruments – valuation continued
Movement in level 3 assets and liabilities
The following table shows the movement in level 3 assets and liabilities in the year.
Other | Other | Other | Other | |||||
Derivatives | trading | financial | Total | Derivatives | trading | financial | Total | |
assets | assets (2) | assets (3) | assets | liabilities | liabilities (2) | liabilities | liabilities | |
2025 | £m | £m | £m | £m | £m | £m | £m | £m |
At 1 January | 630 | 278 | 774 | 1,682 | 465 | 1 | 28 | 494 |
Amounts recorded in the income statement (1) | (145) | (3) | 7 | (141) | (136) | - | 2 | (134) |
Amount recorded in the statement | ||||||||
| of comprehensive income | - | - | 5 | 5 | - | - | - | - |
Level 3 transfers in | 42 | - | - | 42 | 12 | - | - | 12 |
Level 3 transfers out | (41) | - | (15) | (56) | (13) | - | (1) | (14) |
Purchases/originations | 124 | 105 | 164 | 393 | 98 | - | - | 98 |
Settlements/other decreases | (39) | (89) | - | (128) | (46) | - | - | (46) |
Sales | (100) | (197) | (250) | (547) | (105) | - | - | (105) |
Foreign exchange and other adjustments | 1 | 2 | - | 3 | 3 | - | 1 | 4 |
At 31 December | 472 | 96 | 685 | 1,253 | 278 | 1 | 30 | 309 |
Amounts recorded in the income statement in | ||||||||
respect of balances held at period end - unrealised | (12) | 12 | 4 | 4 | (31) | - | - | (31) |
2024 | ||||||||
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 |
(1)
There were net losses on trading assets and liabilities of £12 million
(2024 - net losses of £18 million) was included in income from trading
activities. Net gains on other instruments of £5 million (2024 - net gains
of £12 million) was included in other operating income or interest
income as appropriate.
(2)
Other trading assets and other trading liabilities comprise assets and
liabilities held at fair value in trading portfolios.
(3)
Other financial assets comprise fair value through other comprehensive
income, designated as at fair value through profit or loss and other fair
value through profit or loss.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
338
N
otes to the consolidated financial statements continued
10 Financial instruments – valuation continued
Fair value of financial instruments measured at amortised cost on the balance sheet
The following table shows the carrying value and fair value of financial instruments measured at amortised cost on the balance sheet.
Items where | ||||||
fair value | ||||||
Carrying | Fair value hierarchy level | approximates | ||||
value | Fair value | Level 1 | Level 2 | Level 3 | carrying value | |
2025 | £bn | £bn | £bn | £bn | £bn | £bn |
Financial assets | ||||||
Cash and balances at central banks | 85.2 | 85.2 | - | - | - | 85.2 |
Settlement balances | 0.6 | 0.6 | - | - | - | 0.6 |
Loans to banks | 7.0 | 6.9 | - | 3.6 | 0.8 | 2.5 |
Loans to customers | 418.9 | 414.5 | - | 33.1 | 381.4 | - |
Other financial assets - securities | 36.6 | 36.6 | 15.4 | 15.1 | 6.1 | - |
2024 | ||||||
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 | - |
2025 | ||||||
Financial liabilities | ||||||
Bank deposits | 44.1 | 44.1 | - | 36.2 | 3.8 | 4.1 |
Customer deposits | 443.0 | 424.4 | - | 30.4 | 26.3 | 367.7 |
Settlement balances | 0.9 | 0.9 | - | - | - | 0.9 |
Other financial liabilities | ||||||
- debt securities in issue | 63.0 | 63.6 | - | 51.9 | 11.7 | - |
Subordinated liabilities | 5.9 | 6.1 | - | 6.1 | - | - |
Notes in circulation | 3.2 | 3.2 | - | - | - | 3.2 |
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 |
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.
In estimating the fair value of net loans to customers
and banks measured at amortised cost, NatWest
Group’s loans are segregated into appropriate portfolios
reflecting the characteristics of the constituent loans.
Two principal methods are used to estimate fair value:
(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’ option to repay loans early. This approach is
adopted for lending portfolios in Retail Banking,
Commercial & Institutional (SME loans) and Private
Banking & Wealth Management in order to reflect
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
Fair values of deposits are estimated using discounted
cash flow valuation techniques. Where required,
methodologies can be revised as additional information
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
339
Notes to the consolidated financial statements continued
This note shows the maturity profile of NatWest Group’s 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.
| 2025 |
2024 |
|||||
Less than |
More than |
Less than |
More than |
|||
12 months |
12 months |
Total |
12 months |
12 months |
Total |
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Assets |
||||||
Cash and balances at central banks |
85,182 |
- |
85,182 |
92,994 |
- |
92,994 |
Trading assets |
33,677 |
12,860 |
46,537 |
37,168 |
11,749 |
48,917 |
Derivatives |
24,126 |
36,663 |
60,789 |
34,267 |
44,139 |
78,406 |
Settlement balances |
645 |
- |
645 |
2,085 |
- |
2,085 |
Loans to banks - amortised cost |
6,122 |
836 |
6,958 |
5,360 |
670 |
6,030 |
Loans to customers - amortised cost |
100,120 |
318,761 |
418,881 |
99,793 |
300,533 |
400,326 |
Other financial assets |
11,905 |
67,865 |
79,770 |
14,524 |
48,719 |
63,243 |
Liabilities |
||||||
Bank deposits |
28,465 |
15,627 |
44,092 |
21,675 |
9,777 |
31,452 |
Customer deposits |
434,149 |
8,849 |
442,998 |
430,693 |
2,797 |
433,490 |
Settlement balances |
942 |
- |
942 |
1,729 |
- |
1,729 |
Trading liabilities |
39,918 |
9,104 |
49,022 |
44,683 |
10,031 |
54,714 |
Derivatives |
24,204 |
29,770 |
53,974 |
34,134 |
37,948 |
72,082 |
Other financial liabilities |
21,029 |
46,570 |
67,599 |
22,773 |
38,314 |
61,087 |
Subordinated liabilities |
1,076 |
5,047 |
6,123 |
1,051 |
5,085 |
6,136 |
Notes in circulation |
3,164 |
- |
3,164 |
3,316 |
- |
3,316 |
Lease liabilities |
85 |
450 |
535 |
94 |
536 |
630 |
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.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
340
Notes to the consolidated financial statements continued
11 Financial instruments – maturity analysis continued
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, 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 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 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 prepaid, as this is the basis used for liabilities.
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 table, as are
interest payments after 20 years.
The maturity of guarantees and commitments is based on the earliest possible date they would be drawn in order to evaluate NatWest Group’s liquidity position.
MFVTPL assets of £108 billion (2024 - £128 billion) and HFT liabilities of £102.6 billion (2024 - £126.3 billion) have been excluded from the following tables.
0-3 months | 3-12 months | 1-3 years | 3-5 years | 5-10 years | 10-20 years | |
2025 | £m | £m | £m | £m | £m | £m |
Assets by contractual maturity up to 20 years | ||||||
Cash and balances at central banks | 85,182 | - | - | - | - | - |
Derivatives held for hedging | 121 | 164 | 21 | 153 | 70 | 69 |
Settlement balances | 645 | - | - | - | - | - |
Loans to banks - amortised cost | 5,544 | 563 | 778 | 8 | 19 | 153 |
Loans to customers - amortised cost | 63,503 | 52,679 | 93,380 | 70,214 | 104,670 | 127,073 |
Other financial assets (1) | 4,770 | 7,726 | 26,014 | 11,733 | 24,491 | 8,742 |
Finance lease | - | 3 | 7 | 14 | 37 | 26 |
159,765 | 61,135 | 120,200 | 82,122 | 129,287 | 136,063 | |
Liabilities by contractual maturity up to 20 years | ||||||
Bank deposits | 26,707 | 2,111 | 10,523 | 2,712 | 3,094 | - |
Customer deposits | 401,858 | 33,017 | 9,239 | 14 | - | 14 |
Settlement balances | 942 | - | - | - | - | - |
Derivatives held for hedging | 42 | 54 | 299 | 163 | 39 | 1 |
Other financial liabilities | 7,547 | 14,212 | 24,824 | 17,301 | 6,804 | 1,218 |
Subordinated liabilities | 68 | 1,193 | 1,742 | 3,676 | 52 | 342 |
Other liabilities - Notes in circulation | 3,164 | - | - | - | - | - |
Lease liabilities | 25 | 68 | 156 | 80 | 175 | 25 |
440,353 | 50,655 | 46,783 | 23,946 | 10,164 | 1,600 | |
Guarantees and commitments - notional amount (2) | ||||||
Guarantees (3) | 2,810 | - | - | - | - | - |
Commitments (4) | 137,519 | - | - | - | - | - |
140,329 | - | - | - | - | - |
For the notes to this table refer to the following page.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
341
N
otes to the consolidated financial statements continued
11 Financial instruments – maturity analysis continued
0-3 months |
3-12 months |
1-3 years |
3-5 years |
5-10 years |
10-20 years |
|
2024 |
£m |
£m |
£m |
£m |
£m |
£m |
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 |
- |
- |
- |
- |
- |
(1)
Other financial assets exclude equity shares.
(2)
Refer to Note 25 Memorandum items – 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
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
342
N
otes to the consolidated financial statements continued
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.
2025 |
2024 |
|
Assets |
£m |
£m |
Loans |
||
Reverse repos |
27,656 |
27,127 |
Collateral given |
5,701 |
7,367 |
Other loans |
295 |
545 |
Total loans |
33,652 |
35,039 |
Securities |
||
Central and local government |
||
- UK |
2,120 |
2,077 |
- US |
4,153 |
3,734 |
- Other |
4,135 |
3,506 |
Financial institutions and corporate |
2,477 |
4,561 |
Total securities |
12,885 |
13,878 |
Total |
46,537 |
48,917 |
Liabilities |
||
Deposits |
||
Repos |
28,578 |
30,562 |
Collateral received |
11,966 |
12,509 |
Other deposits |
740 |
895 |
Total deposits |
41,284 |
43,966 |
Debt securities in issue |
234 |
257 |
Short positions |
||
Central and local government |
||
- UK |
1,504 |
2,680 |
- US |
1,161 |
1,677 |
- Other |
4,137 |
4,755 |
Financial institutions and Corporate |
702 |
1,379 |
Total short positions |
7,504 |
10,491 |
Total |
49,022 |
54,714 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
343
N
otes to the consolidated financial statements continued
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.
| 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 |
|
2025 |
£bn |
£bn |
£bn |
£m |
£m |
£m |
£m |
£m |
£m |
Interest rate |
794 |
10,294 |
11,088 |
4 |
32,738 |
32,742 |
- |
26,758 |
26,758 |
- Swaps |
- |
7,938 |
7,938 |
- |
25,700 |
25,700 |
- |
19,685 |
19,685 |
- Options |
324 |
1,105 |
1,429 |
4 |
7,038 |
7,042 |
- |
7,073 |
7,073 |
- Forwards and futures |
470 |
1,251 |
1,721 |
- |
- |
- |
- |
- |
- |
Exchange rate |
1 |
3,413 |
3,414 |
- |
27,981 |
27,981 |
12 |
27,030 |
27,042 |
- Swaps |
- |
456 |
456 |
- |
4,978 |
4,978 |
- |
4,417 |
4,417 |
- Options |
1 |
727 |
728 |
- |
4,422 |
4,422 |
12 |
4,474 |
4,486 |
- Spot, forwards and futures |
- |
2,230 |
2,230 |
- |
18,581 |
18,581 |
- |
18,139 |
18,139 |
Credit |
- |
15 |
15 |
- |
66 |
66 |
- |
174 |
174 |
Equity and commodity |
- |
2 |
2 |
- |
- |
- |
- |
- |
- |
Total |
795 |
13,724 |
14,519 |
4 |
60,785 |
60,789 |
12 |
53,962 |
53,974 |
2024 |
|||||||||
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 |
Included in the table above is the notional amount of £8,768 billion (2024 - £7,321 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.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
344
N
otes to the consolidated financial statements continued
13 Derivatives continued
Hedge accounting using derivatives
NatWest Group applies hedge accounting to
reduce the accounting mismatch caused in
the income statement by using derivatives to
hedge the following risks: interest rate, foreign
exchange and the foreign exchange risk
associated with net investment in foreign
operations.
NatWest Group’s interest rate hedging relates
to the management of NatWest Group’s non-
trading structural interest rate risk, caused by
the mismatch between fixed interest rates
and floating interest rates on its financial
instruments. NatWest Group manages this
risk within approved limits. Residual risk
positions are hedged with derivatives,
principally interest rate swaps.
Cash flow hedges of interest rate risk relate
to exposures to the variability in future
interest payments and receipts due to the
movement of interest rates on forecast
transactions and on financial assets and
financial liabilities. This variability in cash flows
is hedged by interest rate swaps, which
convert variable cash flows into fixed. For
these cash flow hedge relationships, the
hedged items are actual and forecast variable
interest rate cash flows arising from financial
assets and financial liabilities with interest
rates linked to the relevant interest rates,
most notably SOFR, EURIBOR, the European
Central Bank deposit rate, SONIA and the
Bank of England Official Bank Rate. The
variability in cash flows due to movements in
the relevant interest rate is hedged; this risk
component is identified using the risk
management systems of NatWest Group and
encompasses the majority of cash flow
variability risk.
Suitable larger fixed rate financial instruments
are subject to fair value hedging in line with
documented risk management strategies.
Fair value hedges of interest rate risk involve
interest rate swaps transforming the fixed
interest rate risk in financial assets and
financial liabilities to floating. The hedged risk
is the risk of changes in the hedged item’s fair
value attributable to changes in the interest
rate risk component of the hedged item. The
significant interest rates identified as risk
components are SOFR, EURIBOR, ESTR and
SONIA. These risk components are identified
using the risk management systems of
NatWest Group and encompass the majority
of the hedged item’s fair value risk.
NatWest Group hedges the exchange rate
risk of its net investment in foreign currency
denominated operations with currency
borrowings and forward foreign exchange
contracts.
NatWest Group reviews the value of the
investments’ net assets, executing hedges
where appropriate to reduce the sensitivity of
capital ratios to foreign exchange rate
movement. Hedge accounting relationships
will be designated where required.
Exchange rate risk also arises in NatWest
Group where payments are denominated in
currencies other than the functional currency.
Residual risk positions are hedged with
foreign exchange derivatives, fixing the
exchange rate the payments will be settled in.
The derivatives are documented as cash flow
hedges.
For all cash flow hedging, fair value hedge
relationships and net investment hedging,
NatWest Group determines that there is an
economic relationship between the hedged
item and hedging instrument via assessing
the initial and ongoing effectiveness by
comparing movements in the fair value of the
expected highly probable forecast interest
cash flows/ fair value of the hedged item
attributable to the hedged risk with
movements in the fair value of the expected
changes in cash flows from the hedging
instrument. The method used for comparing
movements is either regression testing, or the
dollar offset method. The method for testing
effectiveness and the period over which the
test is performed depends on the applicable
risk management strategy and is applied
consistently to each risk management
strategy. Hedge effectiveness is assessed on
a cumulative basis and the determination of
effectiveness is in line with the requirements
of IAS 39.
NatWest Group uses either the actual ratio
between the hedged item and hedging
instrument(s) or one that minimises hedge
ineffectiveness to establish the hedge ratio for
hedge accounting. Hedge ineffectiveness is
measured in line with the requirements of IAS
39 and recognised in the income statement
as it arises.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
345
Notes to the consolidated financial statements continued
13 Derivatives continued
Derivatives in hedge accounting relationships
Included in the table below are derivatives held for hedging purposes as follows.
| 2025 | 2024 | |||||||
Changes in fair value used | ||||||||
Changes in fair value used for | for | |||||||
Notional | Assets | Liabilities | hedge ineffectiveness (1) | Notional | Assets | Liabilities | hedge ineffectiveness (1) | |
£bn | £m | £m | £m | £bn | £m | £m | £m | |
Fair value hedging | ||||||||
Interest rate contracts (2) | 92.7 | 829 | 1,256 | 522 | 83.1 | 1,096 | 1,965 | 958 |
Cash flow hedging | ||||||||
Interest rate contracts | 156.1 | 868 | 1,619 | 717 | 167.9 | 1,424 | 3,300 | 581 |
Exchange rate contracts | 25.3 | 532 | 355 | (3) | 14.4 | 116 | 457 | 1 |
Net investment hedging | ||||||||
Exchange rate contracts (3) | 0.4 | 3 | 1 | (10) | 0.3 | 2 | 1 | 9 |
274.5 | 2,232 | 3,231 | 1,226 | 265.7 | 2,638 | 5,723 | 1,549 | |
IFRS netting and clearing house | ||||||||
| settlements | (1,697) | (2,875) | (2,520) | (5,259) | ||||
535 | 356 | 118 | 464 | |||||
(1)
The change in fair value used for hedge ineffectiveness includes
instruments that were derecognised in the year.
(2)
The hedged risk includes inflation risk.
(3)
In addition to the derivative hedging instruments above, NatWest Group
held notionals of £2,760 million (2024 - £3,144 million) of non-derivative
hedging instruments with a carrying value of £2,776 million (2024 -
£3,163 million), that were used in net investment hedges. The non-
derivative instruments are other financial liabilities - debt securities in
issue.
Hedge ineffectiveness
Hedge ineffectiveness recognised in other operating income comprises.
2025 | 2024 | 2023 | |
£m | £m | £m | |
Fair value hedging | |||
Loss on hedged items attributable to the hedged risk | (533) | (954) | (364) |
Gain on the hedging instruments | 522 | 958 | 406 |
Fair value hedging ineffectiveness | (11) | 4 | 42 |
Cash flow hedging | |||
Interest rate risk | (5) | (2) | 10 |
Cash flow hedging ineffectiveness | (5) | (2) | 10 |
Total | (16) | 2 | 52 |
The main sources of ineffectiveness for interest rate risk hedge accounting relationships are:
•
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 rate (fair value
hedge);
•
Differences in the repricing basis between the hedging instrument and hedged cash flows (cash flow hedge); and
•
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).
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
346
Notes to the consolidated financial statements continued
13 Derivatives continued
Maturity of notional hedging contracts
The following table shows the period in which the notional of hedging contract ends.
0-3 months | 3-12 months | 1-3 years | 3-5 years | 5-10 years | Over 10 years | Total | |
2025 | £bn | £bn | £bn | £bn | £bn | £bn | £bn |
Fair value hedging | |||||||
Interest rate risk (1) | |||||||
Hedging assets | 0.6 | 4.4 | 21.3 | 8.5 | 8.6 | 2.9 | 46.3 |
Hedging liabilities | 1.4 | 4.4 | 14.9 | 20.5 | 4.7 | 0.5 | 46.4 |
2024 | |||||||
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 |
2025 | |||||||
Cash flow hedging | |||||||
Interest rate risk | |||||||
Hedging assets | 4.8 | 8.2 | 20.1 | 31.8 | 4.7 | - | 69.6 |
Hedging liabilities | 10.7 | 18.0 | 52.0 | 4.6 | 0.8 | 0.4 | 86.5 |
Exchange rate risk | |||||||
Hedging assets | 6.3 | 3.6 | - | - | - | - | 9.9 |
Hedging liabilities | - | 2.7 | 4.5 | 8.2 | - | - | 15.4 |
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 |
(1)
The hedged risk includes inflation risk.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
347
Notes to the consolidated financial statements continued
13 Derivatives continued
Average fixed interest rates
The following table shows average fixed rate for cash flow hedges, interest rate risk.
0-3 months | 3-12 months | 1-3 years | 3-5 years | 5-10 years | Over 10 years | Total | |
2025 | % | % | % | % | % | % | % |
Average fixed interest rate | |||||||
Hedging assets | 1.26 | 2.57 | 3.22 | 3.21 | 3.60 | 3.12 | 3.03 |
Hedging liabilities | 4.37 | 3.78 | 3.63 | 3.67 | 3.71 | 4.18 | 3.75 |
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 |
Average foreign exchange rates
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.
2025 | 2024 | |
INR/GBP | 119.17 | 109.07 |
USD/GBP | 1.32 | 1.30 |
JPY/GBP | 195.35 | 176.04 |
EUR/GBP | 1.14 | - |
JPY/USD | 137.82 | 130.79 |
NOK/USD | 9.21 | 9.21 |
AUD/USD | 1.54 | 1.49 |
CHF/USD | 0.88 | 0.91 |
EUR/USD | 0.89 | 0.91 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
348
Notes to the consolidated financial statements continued
13 Derivatives continued
Analysis of hedged items and related hedging instruments
The table below analyses assets and liabilities subject to hedging derivatives.
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) | |
2025 | £m | £m | £m |
Fair value hedging - interest rate (2) | |||
Loans to banks and customers - amortised cost | 5,466 | (368) | 87 |
Other financial assets - securities | 41,688 | 7 | - |
Total (3) | 47,154 | (361) | 87 |
Bank and customer deposits | 1,582 | 2 | 1 |
Other financial liabilities - debt securities in issue (5) | 41,221 | (277) | (501) |
Subordinated liabilities | 5,748 | (105) | (120) |
Total | 48,551 | (380) | (620) |
2024 | |||
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) |
For the notes to this table refer to the following page.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
349
Notes to the consolidated financial statements continued
13 Derivatives continued
Changes in fair value | ||
Carrying value of | used as a basis to | |
hedged assets and liabilities | determine ineffectiveness (1) | |
2025 | £m | £m |
Cash flow hedging - interest rate | ||
Loans to banks and customers - amortised cost (4) | 68,660 | (1,455) |
Other financial assets - securities | 982 | (23) |
Total | 69,642 | (1,478) |
Bank and customer deposits | 86,285 | 756 |
Other financial liabilities - debt securities in issue | 156 | - |
Total | 86,441 | 756 |
Cash flow hedging - exchange rate | ||
Loans to banks and customers - amortised cost (4) | 7,269 | - |
Other financial assets - securities | 2,586 | - |
Total | 9,855 | - |
Other financial liabilities - debt securities in issue | 8,751 | (2) |
Other | 210 | 5 |
Total | 8,961 | 3 |
2024 | ||
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 customer - 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) |
(1)
The change in fair value used for hedge ineffectiveness includes
instruments that were derecognised in the year.
(2)
The hedged risk includes inflation risk.
(3)
Carrying values include £35 million (2024 - £46 million) adjustment for
discontinued fair value hedges.
(4)
Includes cash and balances at central banks.
(5)
The carrying value include £4,759 million (2024 - £4,631 million) of debt
securities held at amortised cost.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
350
Notes to the consolidated financial statements continued
13 Derivatives continued
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.
2025 | 2024 | |||
Foreign | Foreign | |||
Cash flow | exchange | Cash flow | exchange | |
hedge reserve | hedge reserve | hedge reserve | hedge reserve | |
£m | £m | £m | £m | |
Continuing | ||||
Interest rate risk | (598) | - | (1,564) | - |
Foreign exchange risk | 1 | (50) | (6) | 15 |
De-designated | ||||
Interest rate risk | (438) | - | (437) | - |
Foreign exchange risk | - | (699) | 2 | (663) |
Total | (1,035) | (749) | (2,005) | (648) |
2025 | 2024 | |||
Foreign | Foreign | |||
Cash flow | exchange | Cash flow | exchange | |
hedge reserve | hedge reserve | hedge reserve | hedge reserve | |
£m | £m | £m | £m | |
Amount recognised in equity | ||||
Interest rate risk | 50 | - | (931) | - |
Foreign exchange risk | 19 | (92) | 59 | 122 |
Total | 69 | (92) | (872) | 122 |
Amount transferred from equity to earnings | ||||
Interest rate risk to net interest income | 912 | - | 1,562 | - |
Foreign exchange risk to net interest income | (21) | - | (73) | - |
Foreign exchange risk to non interest income | - | (9) | - | 19 |
Foreign exchange risk to operating expenses | 8 | - | 5 | - |
Total | 899 | (9) | 1,494 | 19 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
351
Notes to the consolidated financial statements continued
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 187.
Loan exposure and impairment metrics
The table below summarises loans and credit impairment measures within the scope of IFRS 9 Expected credit loss framework.
2025 | 2024 | |
£m | £m | |
Loans - amortised cost and FVOCI (1,2) | ||
Stage 1 | 386,651 | 363,821 |
Stage 2 | 38,582 | 40,474 |
Stage 3 | 4,683 | 5,930 |
Of which: individual | 1,456 | 1,285 |
Of which: collective | 3,227 | 4,645 |
429,916 | 410,225 | |
ECL provisions (3) | ||
- Stage 1 | 614 | 598 |
- Stage 2 | 796 | 787 |
- Stage 3 | 2,175 | 2,040 |
Of which: individual | 598 | 451 |
Of which: collective | 1,577 | 1,589 |
3,585 | 3,425 | |
ECL provision coverage (4) | ||
- Stage 1 (%) | 0.16 | 0.16 |
- Stage 2 (%) | 2.06 | 1.94 |
- Stage 3 (%) | 46.44 | 34.40 |
0.83 | 0.83 | |
Continuing operations | ||
Impairment (releases)/losses | ||
ECL charge (5) | 671 | 359 |
Stage 1 | (204) | (438) |
Stage 2 | 421 | 360 |
Stage 3 | 454 | 437 |
Of which: individual | 188 | 192 |
Of which: collective | 266 | 245 |
Amounts written off | 579 | 654 |
Of which: individual | 137 | 144 |
Of which: collective | 442 | 510 |
(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 £84.1 billion (2024 – £91.8 billion) and debt securities of £78.4 billion
(2024 – £62.4 billion).
(2)
Includes loans to customers and banks.
(3)
Includes £6 million (2024 - £4 million) related to assets classified as FVOCI and
£0.1 billion (2024 - £0.1 billion) related to off-balance sheet exposures.
(4)
ECL provisions coverage is calculated as ECL provisions divided by loans –
amortised cost and FVOCI. It is calculated on loans and total ECL provisions,
including ECL for other (non-loan) assets and unutilised exposure. Some
segments with a high proportion of debt securities or unutilised exposure may
result in a not meaningful coverage ratio.
(5)
Includes a £6 million release (2024 - £12 million release) related to other financial
assets, of which £1 million charge (2024 - £4 million release) related to assets
classified as FVOCI; and £3 million charge (2024 - £5 million release) related to
contingent liabilities.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
352
Notes to the consolidated financial statements continued
14 Loan impairment provisions continued
Credit risk enhancement and mitigation
For information on Credit risk enhancement and mitigation held as security, refer to Risk and capital management – Credit risk enhancement and mitigation section.
Accounting policy 2.3 sets out how the expected loss approach is applied. At 31 December 2025, impairment provisions amounted to £3,585 million (2024 - £3,425 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’s 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
IFRS 9 models
Refer to Credit risk – IFRS 9 models section for further details.
Approach for multiple economic scenarios (MES)
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
353
Notes to the consolidated financial statements continued
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’s
liquidity portfolio.
For accounting policy information refer to Accounting policy 3.8.
| Debt securities | ||||||||
Central and local government | Equity | |||||||
UK | US | Other | Other debt | Total | shares | Loans | Total | |
2025 | £m | £m | £m | £m | £m | £m | £m | £m |
Mandatory fair value through profit or loss | - | - | - | 631 | 631 | 1 | 409 | 1,041 |
Designated at fair value | - | - | - | 3 | 3 | - | - | 3 |
Fair value through other comprehensive income (1) | 14,117 | 5,128 | 6,403 | 16,241 | 41,889 | 121 | 158 | 42,168 |
Amortised cost | 13,083 | 341 | 1,795 | 21,339 | 36,558 | - | - | 36,558 |
Total | 27,200 | 5,469 | 8,198 | 38,214 | 79,081 | 122 | 567 | 79,770 |
2024 | ||||||||
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 |
(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 shared in either year.
NatWest Group disposed of equity shares in Visa Inc £16 million (2024: £62 million), Permanent TSB p.l.c of £109 million, and Vodeno £45 million.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
354
N
otes to the consolidated financial statements continued
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.
| 2025 | 2024 | |||||
Goodwill | Other (1) | Total | Goodwill | Other (1) | Total | |
Cost | £m | £m | £m | £m | £m | £m |
At 1 January | 10,086 | 4,782 | 14,868 | 10,090 | 4,447 | 14,537 |
Currency translation and other adjustments | - | 59 | 59 | (4) | (65) | (69) |
Acquisitions of companies and businesses | - | - | - | - | - | - |
Additions | - | 617 | 617 | - | 614 | 614 |
Disposals and write-off of fully amortised assets | - | (9) | (9) | - | (214) | (214) |
Reclassifications to assets held for sale (2) | (155) | (43) | (198) | - | - | - |
At 31 December | 9,931 | 5,406 | 15,337 | 10,086 | 4,782 | 14,868 |
Accumulated amortisation and impairment | ||||||
At 1 January | 4,411 | 2,869 | 7,280 | 4,410 | 2,513 | 6,923 |
Currency translation and other adjustments | - | 66 | 66 | - | (24) | (24) |
Disposals and write-off of fully amortised assets | - | (5) | (5) | - | (201) | (201) |
Impairment of intangible assets | - | 23 | 23 | 1 | 20 | 21 |
Amortisation charge for the year | - | 689 | 689 | - | 561 | 561 |
Reclassifications to assets held for sale (2) | - | (8) | (8) | - | - | - |
At 31 December | 4,411 | 3,634 | 8,045 | 4,411 | 2,869 | 7,280 |
Net book value at 31 December | 5,520 | 1,772 | 7,292 | 5,675 | 1,913 | 7,588 |
(1)
Principally consists of internally generated software.
(2)
Being reclassification of goodwill associated with Cushon to assets held for sale.
Intangible assets and goodwill are reviewed for indicators of impairment. Intangible assets were
impaired by £23 million in 2025 (2024 – £21 million).
NatWest Group’s goodwill acquired in business combinations is reviewed for impairment annually
at 31 December by cash-generating unit (CGU): 2025 - Retail Banking £2,607 million (2024 -
£2,607 million), Ring-Fenced Bank Commercial & Institutional £2,604 million (2024 - £2,604
million), Other £309 million (2024 – £464 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’s 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 2025 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 (2024 and 2025 –
1.4%). The 2025 pre-tax risk discount rates are informed by our view of the rates of relevant
comparable companies using data from market brokers, our Capital Asset Pricing Model and the
Warranted Equity Value method. Using the selected post-tax discount rate, the implied pre-tax
discount rate is then determined for calculating the equivalent value in use figure. Pre-tax
discount rates for the CGUs are: Retail Banking – 16% (2024 – 16%), Ring-Fenced Bank
Commercial & Institutional and Private Banking & Wealth Management – 16.9% (2024 – 16%),
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
355
Notes to the consolidated financial statements continued
Other assets are non-financial assets and reflect a grouping of assets that are not large enough to present separately on the balance sheet.
.
2025 | 2024 | |
£m | £m | |
Interests in associates (1) | 753 | 690 |
Property, plant and equipment (2) | 4,282 | 3,967 |
Pension schemes in net surplus (Note 5) | 234 | 190 |
Tax recoverable | 71 | 7 |
Deferred tax (Note 7) | 1,252 | 1,876 |
Assets of disposal groups | 229 | 64 |
Other | 1,678 | 1,602 |
Other assets | 8,499 | 8,396 |
(1)
Includes interest in Business Growth Fund £730 million (2024 - £678 million).
(2)
The estimated useful lives of NatWest Group’s 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
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.
2025 | 2024 | |
£m | £m | |
Customer deposits including repos | 2,312 | 1,812 |
Debt securities in issue | ||
- MRELs | 25,441 | 23,998 |
- Other medium term notes | 28,033 | 22,087 |
- Commercial paper and certificates of deposit | 9,401 | 11,266 |
- Covered bonds | 749 | 749 |
- Securitisation | 1,663 | 1,175 |
Total | 67,599 | 61,087 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
356
N
otes to the consolidated financial statements continued
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.
2025 |
2024 |
|
£m |
£m |
|
Dated loan capital |
5,983 |
5,996 |
Undated loan capital |
21 |
21 |
Preference shares |
119 |
119 |
6,123 |
6,136 |
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.
First call |
Maturity |
Capital |
2025 |
2024 |
||
Dated loan capital |
date |
date |
treatment |
£m |
£m |
|
NatWest Group plc |
||||||
£1,000 million |
3.622% notes |
May-25 |
Aug-30 |
Tier 2 |
- |
1,006 |
£1,000 million |
2.105% notes |
Aug-26 |
Nov-31 |
Tier 2 |
1,002 |
1,001 |
€1,000 million |
3.723% notes |
Feb-30 |
Feb-35 |
Tier 2 |
898 |
- |
$1,000 million |
6.475% notes |
Mar-29 |
Jun-34 |
Tier 2 |
746 |
799 |
$850 million |
3.032% notes |
Aug-30 |
Nov-35 |
Tier 2 |
547 |
550 |
€750 million |
1.043% notes |
Jun-27 |
Sep-32 |
Tier 2 |
656 |
624 |
€700 million |
5.763% notes |
Nov-28 |
Feb-34 |
Tier 2 |
640 |
608 |
£650 million |
7.416% notes |
Mar-28 |
Jun-33 |
Tier 2 |
655 |
644 |
£600 million |
5.642% notes |
Oct-29 |
Oct-34 |
Tier 2 |
605 |
608 |
5,749 |
5,840 |
|||||
Other subsidiaries |
||||||
€170 million |
Floating rate notes |
- |
Feb-41 |
Not applicable |
237 |
234 |
$150 million |
7.125% notes |
- |
Oct-93 |
Not applicable |
17 |
17 |
6,003 |
6,091 |
|||||
Fair value hedging |
(20) |
(95) |
||||
5,983 |
5,996 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
357
N
otes to the consolidated financial statements continued
19 Subordinated liabilities continued
First call |
Maturity |
Capital |
2025 |
2024 |
||
Undated loan capital |
date |
date |
treatment |
£m |
£m |
|
Other subsidiaries |
||||||
£31 million |
7.380% notes |
- |
- |
Not applicable |
1 |
1 |
£16 million |
5.630% notes |
Sep-26 |
- |
Not applicable |
17 |
17 |
£4.9 million |
2.500% fixed notes |
- |
- |
Not applicable |
3 |
3 |
21 |
21 |
|||||
Preference shares |
||||||
Other subsidiaries |
||||||
£140 million |
Non-cumulative preference shares of £1 |
- |
- |
Not applicable |
119 |
119 |
119 |
119 |
|||||
Total |
6,123 |
6,136 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
358
N
otes to the consolidated financial statements continued
Other liabilities are amounts due to third parties that are not financial liabilities, 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.
2025 | 2024 | |
Other liabilities | £m | £m |
Lease liabilities | 535 | 630 |
Provisions for liabilities and charges | 619 | 864 |
Retirement benefit liabilities (Note 5) | 78 | 80 |
Accruals | 1,350 | 1,353 |
Deferred income | 422 | 394 |
Current tax | 76 | 263 |
Deferred tax (Note 7) | 104 | 99 |
Other liabilities (1) | 842 | 918 |
Total | 4,026 | 4,601 |
(1)
Provisions for liabilities and charges
Litigation and | Commitments | |||||
Customer redress | other regulatory | Property | and guarantees | Other (1) | Total | |
£m | £m | £m | £m | £m | £m | |
At 1 January 2025 | 420 | 128 | 90 | 55 | 171 | 864 |
Expected credit loss impairment release | - | - | - | 3 | - | 3 |
Currency translation and other movements | 1 | (7) | - | - | 3 | (3) |
Charge to income statement | 78 | 39 | 26 | - | 220 | 363 |
Release to income statement | (42) | (50) | (24) | - | (46) | (162) |
Provisions utilised | (175) | (46) | (19) | - | (206) | (446) |
At 31 December 2025 | 282 | 64 | 73 | 58 | 142 | 619 |
(1)
Other materially comprises provisions for restructuring costs and provision for
Bank of England Levy.
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
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
359
Notes to the consolidated financial statements continued
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.
Number of shares | ||||
2025 | 2024 | 2025 | 2024 | |
Allotted, called up and fully paid | £m | £m | 000s | 000s |
Ordinary shares of £1.0769 (1) | 8,860 | 8,972 | 8,227,042 | 8,331,145 |
Cumulative preference shares of £1 | 0.5 | 0.5 | 483.0 | 483.0 |
(1)
The nominal value of ordinary shares without rounding is £1.076923076923077 per share.
Number of shares | ||
Movement in allotted, called up and fully paid ordinary shares | £m | 000s |
At 31 December 2023 | 9,683 | 8,991,737 |
Share cancellation | (711) | (660,592) |
At 31 December 2024 | 8,972 | 8,331,145 |
Share cancellation | (112) | (104,103) |
At 31 December 2025 | 8,860 | 8,227,042 |
Ordinary shares
There is no authorised share capital under the company’s constitution. At 31 December 2025, the
directors had authority granted at the 2025 Annual General Meeting (AGM) to issue up to £435
million nominal of ordinary shares other than by pre-emption to existing shareholders.
On-market purchases
At the AGM in 2025, shareholders renewed the authority (2025 Authority) for the company to
make on-market purchases of up to 807,750,182 ordinary shares. The directors used the 2025
Authority to carry out a share buyback programme (the 2025 Programme) of up to £750
million, as announced to the market on 28 July 2025.
The 2025 Programme started on 28 July 2025 and will end no later than 13 February 2026,
provided that the term of the 2025 Programme may be extended to end no later than 13 March
2026 to account for any days where usual trading has not been possible because of market
events during the term of the 2025 Programme.
As at 31 December 2025, 104,103,117 ordinary shares (nominal value £112,111,049) have been
purchased by the company under the 2025 Programme at a volume weighted average price of
551.8173 pence per ordinary share for a total consideration of £574,458,965. All of the
purchased ordinary shares were cancelled, representing 1.27% of the company’s issued ordinary
share capital.
Off-market purchases
The authority from shareholders to make off-market purchases of ordinary shares from HMT (or
its nominee) was renewed at the 2025 AGM.
The company did not make any off-market purchases under this authority in 2025.
In 2025 NatWest Group paid an interim dividend of £768 million, or 9.5 pence per ordinary share
(2024 – £498 million, or 6 pence per ordinary share).
The company has announced that the directors have recommended a final dividend of £1.8
billion, or 23.0 pence per ordinary share (2024 – £1.2 billion, or 15.5 pence per ordinary share).
The final dividend recommended by directors is subject to shareholders’ approval at the AGM on
28 April 2026. If approved, payment will be made on 5 May 2026 to shareholders on the register
Cumulative preference shares
At the AGM in 2025, 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 2026.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
360
Notes to the consolidated financial statements continued
21 Share capital and other equity continued
Other equity
2025 | 2024 | 2023 | |
£m | £m | £m | |
Additional Tier 1 notes | |||
$1.15 billion 8.000% notes callable August 2025 | - | 736 | 735 |
$1.50 billion 6.000% notes callable | |||
December 2025 - June 2026 | - | 1,220 | 1,220 |
£1.00 billion 5.125% notes callable May - November 2027 (1) | 998 | 998 | 998 |
£0.40 billion 4.5% notes callable March 2028 (2) | 399 | 399 | 399 |
$0.75 billion 4.6% notes callable June 2031 (3) | 539 | 539 | 538 |
£0.75 billion 7.50% notes callable February 2032 (4) | 748 | - | - |
$1.00 billion 8.125% notes callable November 2033 (5) | 798 | 798 | - |
$0.75 billion 7.3% notes callable November 2034 (6) | 590 | 590 | - |
£0.50 billion 7.625% notes callable February 2035 (7) | 499 | - | - |
4,571 | 5,280 | 3,890 |
(1)
Issued in November 2020. In the event of conversion, converted into ordinary shares at a price of £1.764 per share.
(2)
Issued in March 2021. In the event of conversion, converted into ordinary shares at a price of £1.764 per share.
(3)
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.
(4)
Issued in March 2025. In the event of conversion, converted into ordinary shares at a price of £1.764 per share.
(5)
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.
(6)
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.
(7)
Issued in September 2025. In the event of conversion, converted into ordinary shares at a price of £1.764 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’s discretion. In the event
NatWest Group’s 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
-
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’s paid up share capital. The nominal
value of the shares bought back from market
during 2025 and via the Programme during 2025
have been transferred to the Capital redemption
reserve.
-
at 31 December 2025, 10
million ordinary shares of £1.0769 each of the
company (2024 - 11 million) were held by
employee share trusts in respect of share awards
and options granted to employees.
During 2025, 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.
The company has used a total of 56 million
treasury shares in 2025 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 2025 was 221 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
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
361
Notes to the consolidated financial statements continued
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.
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’s 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. In 2025 NatWest
Group transacted an own-asset RMBS via a
sponsored unconsolidated SE, resulting in
£2.1 billion of residential mortgage assets
being derecognised from the NatWest Group
balance sheet.
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 2025,
debt securities in issue by such SEs (and held
by third parties) were £1,663 million (2024 -
£1,175 million). The associated loans and
mortgages at 31 December 2025 were
£24,535 million (2024 - £13,226 million). At
31 December, ECL in relation to non -
defaulted assets was reduced by £43 million
(2024 - £43 million) as a result of financial
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 2025, £8,278 million (2024 -
£9,668 million) of loans to customers
provided security for debt securities in issue
and other borrowing of £2,935 million (2024
- £2,305 million).
Lending of own issued securities
Where the NatWest Group issues and retains
debt securities it does not recognise them.
From time to time the NatWest Group issues,
retains, and lends debt securities under
bespoke securities lending and repurchase
financing 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
or sold under such arrangements and,
where the ability of the recipient to sell or
pledge the asset is restricted under a
bespoke arrangement, does not recognise
them. At 31 December 2025, £4,580 million
(2024 - £4,715 million) of secured own
issued liabilities have been retained and lent
under securities lending and repurchase
financing arrangements, total retained
secured own issued liabilities £8,156 million
(2024 - £6,956 million).
At 31 December 2025, £5,071 million (2024 - £4,878 million) of loans and other debt instruments
provided security for secured own issued liabilities that have been retained and lent under securities
lending and repurchase financing arrangements, total loans and other debt instruments providing
security for retained secured own issued liabilities £10,872 million (2024 - £10,770 million).
Unconsolidated structured entities
The term ‘unconsolidated structured entities’ 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’s interests in
unconsolidated structured entities is summarised in the following table:
2025 | 2024 | |||||
Asset-backed | Investment | Asset-backed | Investment | |||
securitisation | funds | securitisation | funds | |||
vehicles | and other | Total | vehicles | and other | Total | |
£m | £m | £m | £m | £m | £m | |
Assets | ||||||
Trading assets | 122 | 28 | 150 | 252 | 216 | 468 |
Derivatives | 96 | - | 96 | 94 | - | 94 |
Loans to customers | 7,471 | 1,736 | 9,207 | 5,399 | 1,601 | 7,000 |
Other financial assets | 17,504 | 723 | 18,227 | 15,744 | 923 | 16,667 |
Total | 25,193 | 2,487 | 27,680 | 21,489 | 2,740 | 24,229 |
Liabilities | ||||||
Derivatives | 82 | 2 | 84 | 153 | 8 | 161 |
Total | 82 | 2 | 84 | 153 | 8 | 161 |
Off balance sheet | ||||||
Liquidity facilities/loan | ||||||
commitments | 2,374 | 416 | 2,790 | 2,134 | 457 | 2,591 |
Guarantees | - | 546 | 546 | - | 104 | 104 |
Total | 2,374 | 962 | 3,336 | 2,134 | 561 | 2,695 |
Maximum exposure | 27,485 | 3,447 | 30,932 | 23,470 | 3,293 | 26,763 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
362
Notes to the consolidated financial statements continued
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. This note also provides an overview of collateral received by NatWest Group, which the Group is permitted to sell or re-pledge.
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.
2025 | 2024 | |
The following assets have failed derecognition (1) | £m | £m |
Trading assets | 8,210 | 7,708 |
Loans to bank - amortised cost | 29 | 70 |
Loans to customers - amortised cost | 110 | 45 |
Other financial assets | 19,854 | 13,174 |
Total | 28,203 | 20,997 |
(1)
Associated liabilities were £27,478 million (2024 – £20,394 million).
NatWest Group pledges collateral with its counterparties in respect of derivative liabilities, bank
and stock borrowings and other transactions. Under standard arrangements the counterparty
has the right to sell or repledge the collateral. Where the NatWest Group retains exposure to the
significant risks and rewards of the transferred collateral it is not derecognised from the NatWest
Group balance sheet and continues to be disclosed within either Trading Assets, Loans to
Customers or Other Financial Assets.
2025 | 2024 | |
Assets pledged against liabilities | £m | £m |
Trading assets | 7,894 | 10,288 |
Loans to customers - amortised cost | 16,052 | 19,030 |
Other financial assets (1) | 5,648 | 4,451 |
Total | 29,594 | 33,769 |
(1)
Includes assets pledged for pension derivatives and £524 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 £8,278 million of loans to customers and other debt
instruments (2024 – £9,668 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 £2,935 million (2024 – £2,305 million). Refer to Note
Collateral received
The fair value of assets accepted as collateral relating primarily to standard securities lending,
reverse repurchase agreements, swaps of securities and derivatives margining that NatWest
Group is permitted to sell or repledge in the absence of default was £113,866 million (2024:
£110,151 million).The fair value of any such collateral sold or repledged was £70,284 million
(2024: £61,530 million).
NatWest Group is obliged to return equivalent securities. These transactions are conducted under
terms that are usual and customary to standard securities lending, reverse repurchase
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
363
Notes to the consolidated financial statements continued
NatWest Group’s 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’ equity to regulatory capital.
2025 | 2024 | |
£m | £m | |
Shareholders’ equity (excluding non-controlling interests) | ||
Shareholders’ equity | 42,599 | 39,350 |
Other equity instruments | (4,571) | (5,280) |
38,028 | 34,070 | |
Regulatory adjustments and deductions | ||
Own credit | 42 | 28 |
Defined benefit pension fund adjustment | (187) | (147) |
Cash flow hedging reserve | 752 | 1,443 |
Deferred tax assets | (804) | (1,084) |
Prudential valuation adjustments | (167) | (230) |
Goodwill and other intangible assets | (7,386) | (7,544) |
Expected loss less impairment | (89) | (27) |
Foreseeable ordinary dividends | (1,837) | (1,249) |
Adjustment for trust assets (1) | (365) | (365) |
Foreseeable charges (2) | (921) | - |
Adjustment under IFRS 9 transitional arrangements | - | 33 |
(10,962) | (9,142) | |
CET1 capital | 27,066 | 24,928 |
Additional Tier 1 (AT1) capital | ||
Qualifying instruments and related share premium | 4,555 | 5,259 |
AT1 capital | 4,555 | 5,259 |
Tier 1 capital | 31,621 | 30,187 |
Qualifying Tier 2 capital | ||
Qualifying instruments and related share premium | 5,754 | 5,918 |
Tier 2 capital | 5,754 | 5,918 |
Total regulatory capital | 37,375 | 36,105 |
(1)
Prudent deduction in respect of agreement with the pension fund to establish legal structure to remove dividend linked contribution. Refer to Notes 5 and 32.
(2)
For December 2025, the foreseeable charge of £921 million relates to share buybacks (£750 million relating to FY 2025, £171 million relating to H1 2025).
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’s 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
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
364
Notes to the consolidated financial statements continued
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 2025. Although NatWest Group is exposed to credit risk in
the event of a customer’s failure to meet its obligations, the amounts shown do not, and are not
intended to, provide any indication of NatWest Group's expectation of future losses.
2025 | 2024 | |
£m | £m | |
Contingent liabilities and commitments | ||
Guarantees | 2,810 | 3,060 |
Other contingent liabilities | 1,548 | 1,496 |
Standby facilities, credit lines and other commitments | 142,765 | 135,405 |
Total | 147,123 | 139,961 |
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
– 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
- these include standby letters of credit, supporting customer debt
issues and contingent liabilities relating to customer trading activities such as those arising from
- 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
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.
2025 | 2024 | |
£m | £m | |
Capital expenditure on property, plant and equipment | 12 | 14 |
Contracts to purchase goods or services (1) | 1,188 | 1,160 |
1,200 | 1,174 |
(1)
Of which due within 1 year: £477 million (2024 – £356 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
£339 million (2024 - £302 million; 2023 - £264 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.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
365
Notes to the consolidated financial statements continued
25 Memorandum items
continued
NatWest Group plc and certain members of
NatWest Group are party to various legal
proceedings and are involved in, or subject to,
various regulatory matters, including as the
subject of investigations and other regulatory
and governmental action (Matters) in the
United Kingdom (UK), the United States (US),
the European Union (EU) and other
jurisdictions.
NatWest Group recognises a provision for a
liability in relation to these Matters when it is
probable that an outflow of economic benefits
will be required to settle an obligation
resulting from past events, and a reliable
estimate can be made of the amount of the
obligation.
In many of the Matters, it is not possible to
determine whether any loss is probable, or to
estimate reliably the amount of any loss,
either as a direct consequence of the relevant
proceedings and regulatory matters or as a
result of adverse impacts or restrictions on
NatWest Group’s reputation, businesses and
operations. Numerous legal and factual issues
may need to be resolved, including through
potentially lengthy discovery and document
production exercises and determination of
important factual matters, and by addressing
novel or unsettled legal questions relevant to
the proceedings in question, before the
probability of a liability, if any, arising can
reasonably be estimated in respect of any
Matter.
NatWest Group cannot predict if, how, or
when such claims will be resolved or what
the eventual settlement, damages, fine,
penalty or other relief, if any, may be,
particularly for Matters that are at an early
stage in their development or where
claimants seek substantial or indeterminate
damages.
There are situations where NatWest Group
may pursue an approach that in some
instances leads to a settlement agreement.
This may occur in order to avoid the expense,
management distraction or reputational
implications of continuing to contest liability,
or in order to take account of the risks
inherent in defending or contesting Matters,
even for those for which NatWest Group
believes it has credible defences and should
prevail on the merits. The uncertainties
inherent in all Matters affect the amount and
timing of any potential economic outflows for
both Matters with respect to which provisions
have been established and other contingent
liabilities in respect of any such Matter.
It is not practicable to provide an aggregate
estimate of potential liability for our Matters
as a class of contingent liabilities.
The future economic outflow in respect of any
Matter may ultimately prove to be
substantially greater than, or less than, the
aggregate provision, if any, that NatWest
Group has recognised in respect of such
Matter. Where a reliable estimate of the
economic outflow cannot be reasonably
made, no provision has been recognised.
NatWest Group expects that in future periods,
additional provisions and economic outflows
relating to Matters that may or may not be
currently known by NatWest Group will be
necessary, in amounts that are expected to
be substantial in some instances. Refer to
Note 20 for information on material
provisions.
Matters which are, or could be, material,
either individually or in aggregate, having
regard to NatWest Group, considered as a
whole, in which NatWest Group is currently
involved are set out below. We have provided
information on the procedural history of
certain Matters, where we believe
appropriate, to aid the understanding of the
Matter.
For a discussion of certain risks associated
with NatWest Group’s litigation and regulatory
matters (including the Matters), refer to the
Risk Factor relating to legal, regulatory and
governmental actions and investigations set
out on pages 417 to 419.
Litigation
London Interbank Offered Rate (LIBOR)
and other rates litigation
NatWest Group plc and certain other
members of NatWest Group, including NWM
Plc, are defendants in a number of claims
pending in the United States District Court for
the Southern District of New York (SDNY)
with respect to the setting of USD LIBOR. The
complainants allege that certain members of
NatWest Group and other panel banks
violated various federal laws, including the US
commodities and antitrust laws, and state
statutory and common law, as well as
contracts, by manipulating LIBOR and prices
of LIBOR-based derivatives in various
markets through various means.
The co-ordinated proceeding in the SDNY
relating to USD LIBOR now includes one
remaining class action, which is on behalf of
persons who purchased LIBOR-linked
instruments from defendants and bonds
issued by defendants, as well as two non-
class actions.
On 25 September 2025, the SDNY granted
summary judgment to the defendants on the
issue of liability and dismissed all claims in
both the class action and the non-class
actions. The decision is being appealed in the
United States Court of Appeals for the
Second Circuit (US Court of Appeals).
In addition to the USD LIBOR cases described
above, there is a class action relating to
derivatives allegedly tied to JPY LIBOR and
Euroyen TIBOR, which was dismissed by the
SDNY in relation to NWM Plc and other
NatWest Group companies in September
2021. That dismissal is now the subject of an
appeal to the US Court of Appeals.
Two other IBOR-related class actions
involving NWM Plc, concerning alleged
manipulation of Euribor and Pound Sterling
LIBOR, were previously dismissed by the
SDNY for various reasons.
On 22 August 2025, the US Court of Appeals
reversed the SDNY’s decision in the Euribor
case, reinstating claims against NWM plc.
That case has therefore returned to the
SDNY for further proceedings.
On 15 September 2025, the US Court of
Appeals affirmed the SDNY’s dismissal of the
Pound Sterling LIBOR case.
Foreign exchange litigation
NatWest Group plc, NWM Plc and/or NWMSI
are defendants in several cases relating to
NWM Plc’s foreign exchange (FX) business.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
366
Notes to the consolidated financial statements continued
25 Memorandum items
continued
In May 2019, a cartel class action was filed in
the Federal Court of Australia against NWM
Plc and four other banks on behalf of persons
who bought or sold currency through FX
spots or forwards between 1 January 2008
and 15 October 2013 with a total transaction
value exceeding AUD 0.5 million. The claimant
has alleged that the banks, including NWM
Plc, contravened Australian competition law
by sharing information, coordinating conduct,
widening spreads and manipulating FX rates
for certain currency pairs during this period.
NatWest Group plc and NWMSI have been
named in the action as ‘other cartel
participants’ but are not respondents.
In May 2025, NWM Plc executed an
agreement to settle the claim in the Federal
Court of Australia, which the court approved
in August 2025. The settlement amount is
covered in full by an existing provision.
In July and December 2019, two separate
applications seeking opt-out collective
proceedings orders were filed in the UK
Competition Appeal Tribunal (CAT) against
NatWest Group plc, NWM Plc and other
banks. Both applications were brought on
behalf of persons who, between 18
December 2007 and 31 January 2013,
entered into a relevant FX spot or outright
forward transaction in the European
Economic Area with a relevant financial
institution or on an electronic communications
network.
In March 2022, the CAT declined to certify
either application as collective proceedings on
an opt-out basis.
This decision was appealed
by the applicants and was the subject of an
application for judicial review.
The CAT, in its judgment, allowed the
applicants three months in which to
reformulate their claims as opt-in claims.
In its amended judgment in November 2023,
the Court of Appeal allowed the appeal and
decided that the claims should proceed on an
opt-out basis. Separately, the court
determined which of the two competing
applicants can proceed as class
representative and dismissed the application
for judicial review of the CAT’s decision. The
other applicant has discontinued its claim and
withdrawn from the proceedings. The banks
sought permission to appeal the Court of
Appeal decision directly to the UK Supreme
Court, which was granted in April 2024. The
appeal was heard in April 2025.
In December 2025, the UK Supreme Court
reinstated the CAT’s decision to refuse the
application for a collective proceedings order
on an opt-out basis.
Two motions to certify FX-related class
actions were filed in the Tel Aviv District
Court in Israel in September and October
2018 and were subsequently consolidated
into one motion. The consolidated motion to
certify, which names The Royal Bank of
Scotland plc (now NWM Plc) and several
other banks as defendants, was served on
NWM Plc in May 2020.
The applicants sought the court’s permission
to amend their motions to certify the class
actions. NWM Plc filed a motion challenging
the permission granted by the court for the
applicants to serve the consolidated motion
outside the Israeli jurisdiction. That NWM Plc
motion remains pending. In February 2024,
NWM Plc executed an agreement to settle
the claim, subject to court approval.
The settlement amount is covered in full by
an existing provision.
In December 2021, a summons was served in
the Netherlands against NatWest Group plc,
NWM Plc and NWM N.V. by Stichting FX
Claims on behalf of a number of parties,
seeking declarations from the court
concerning liability for anti-competitive FX
market conduct described in decisions of the
European Commission (EC) of 16 May 2019,
along with unspecified damages. The
claimant amended its claim to also refer to a
2 December 2021 decision by the EC, which
described anti-competitive FX market
conduct. NatWest Group plc, NWM Plc and
other defendants contested the jurisdiction of
the Dutch court.
In March 2023, the district court in
Amsterdam accepted that it has jurisdiction
to hear claims against NWM N.V. but refused
jurisdiction to hear any claims against the
other defendant banks (including NatWest
Group plc and NWM Plc) brought on behalf of
the parties represented by the claimant that
are domiciled outside of the Netherlands. The
claimant is appealing that decision.
The defendant banks have brought cross-
appeals which seek a ruling that the Dutch
court has no jurisdiction to hear any claims
against the defendant banks domiciled
outside of the Netherlands, irrespective of
whether the claim has been brought on
behalf of a party represented by the claimant
that is domiciled within or outside of the
Netherlands. The Amsterdam Court of Appeal
has stayed these appeal proceedings until the
Court of Justice of the European Union has
answered preliminary questions that have
been referred to it in another matter.
In September 2023, a second summons was
served by Stichting FX Claims on NatWest
Group plc, NWM Plc and NWM N.V., on behalf
of a new group of parties. The claimant seeks
declarations from the district court in
Amsterdam concerning liability for anti-
competitive FX market conduct described in
the above referenced decisions of the EC of
16 May 2019 and 2 December 2021, along
with unspecified damages. NatWest Group
plc, NWM Plc and other defendants are
contesting the Dutch court's jurisdiction. The
district court has stayed the proceedings
pending judgment in the above-mentioned
appeals.
In January 2025, a third summons was
served by Stichting FX Claims on NatWest
Group plc, NWM Plc and NWM N.V., on behalf
of another new group of parties. The
claimant seeks similar declarations from the
district court in Amsterdam to those being
sought in the above-mentioned claims, along
with unspecified damages.
NatWest Group plc, NWM Plc and other
defendants are contesting the Dutch court's
jurisdiction. The district court has stayed the
proceedings pending judgment in the above-
mentioned appeals.
Certain other foreign exchange transaction
related claims have been or may be
threatened. NatWest Group cannot predict
whether all or any of these claims will be
pursued.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
367
Notes to the consolidated financial statements continued
25 Memorandum items
continued
Swaps antitrust litigation
NWM Plc and other members of NatWest
Group, including NatWest Group plc, as well
as a number of other interest rate swap
dealers, are defendants in several cases
pending in the SDNY alleging violations of the
US antitrust laws in the market for interest
rate swaps. Three swap execution facilities
(TeraExchange, Javelin, and trueEx) allege
that they would have successfully established
exchange-like trading of interest rate swaps if
the defendants had not unlawfully conspired
to prevent that from happening through
boycotts and other means. Discovery is
complete though expert discovery is ongoing.
In June 2021, a class action antitrust
complaint was filed against a number of
credit default swap dealers in New Mexico
federal court on behalf of persons who, from
2005 onwards, settled credit default swaps in
the United States by reference to the ISDA
credit default swap auction protocol. The
complaint alleges that the defendants
conspired to manipulate that benchmark
through various means in violation of the
antitrust laws and the Commodity Exchange
Act.
In May 2025, the US Court of Appeals
affirmed a January 2024 decision by the
SDNY which barred the plaintiffs in the New
Mexico case from pursuing claims based on
conduct occurring before 30 June 2014 on
the ground that such claims were
extinguished by a 2015 settlement agreement
that resolved a prior class action relating to
credit default swaps.
The case in New Mexico (which had been
stayed pending the appeal of the SDNY’s
decision) has now resumed. The defendants
have filed a motion to dismiss, which is
pending.
Odd lot corporate bond trading antitrust
litigation
On 2 September 2025, the SDNY dismissed
the class action antitrust complaint alleging
that, from August 2006 onwards, various
securities dealers, including NWMSI,
conspired artificially to widen spreads for odd
lots of corporate bonds bought or sold in the
United States secondary market and to
boycott electronic trading platforms that
would have allegedly promoted pricing
competition in the market for such bonds.
The plaintiffs did not appeal the SDNY’s
decision and the case is now closed.
Spoofing litigation
In December 2021, three substantially similar
class actions complaints were filed in federal
court in the United States against NWM Plc
and NWMSI alleging Commodity Exchange
Act and common law unjust enrichment
claims arising from manipulative trading
known as spoofing. The complaints refer to
NWM Plc’s December 2021 spoofing-related
guilty plea (described below under “US
investigations relating to fixed-income
securities”) and purport to assert claims on
behalf of those who transacted in US
Treasury securities and futures and options
on US Treasury securities between 2008 and
2018.
In July 2022, the defendants filed a motion to
dismiss these claims, which have been
consolidated into one matter in the United
States District Court for the Northern District
of Illinois. The motion to dismiss remains
pending.
Madoff
NWM N.V. was named as a defendant in two
actions filed by the trustee for the bankrupt
estates of Bernard L. Madoff and Bernard L.
Madoff Investment Securities LLC, in
bankruptcy court in New York, which
together seek to clawback more than
US$300 million (plus pre-judgment interest)
that NWM N.V. allegedly received from certain
Madoff feeder funds and certain swap
counterparties.
The claims were previously dismissed, but as
a result of an August 2021 decision by the US
Court of Appeals, they are now proceeding in
the discovery phase in the bankruptcy court,
where they have been consolidated into one
action.
Offshoring VAT assessments
HMRC, as part of an industry-wide review,
issued protective tax assessments in 2018
against NatWest Group plc totalling £143
million relating to unpaid VAT in respect of the
UK branches of two NatWest Group
companies registered in India for the period
from 1 January 2014 until 31 December 2017
inclusive. NatWest Group formally requested
reconsideration by HMRC of their
assessments, and this process was completed
in November 2020. HMRC upheld their
original decision and, as a result, NatWest
Group plc lodged an appeal with the Tax
Tribunal and an application for judicial review
with the High Court of Justice of England and
Wales, both in December 2020.
In order to lodge the appeal with the Tax
Tribunal, NatWest Group plc was required to
pay amounts totalling £153 million (including
statutory interest) to HMRC in December
2020 and May 2022. The appeal and the
application for judicial review were previously
stayed behind a separate case involving
another bank.
NatWest Group plc was informed in late 2024
that the other bank had settled its case with
HMRC by agreement.
NatWest Group plc is
progressing its appeal before the Tax Tribunal
in its own name. NatWest Group plc will also
continue to review next steps relevant to the
judicial review.
The amount of £153 million continues to be
recognised as an asset that NatWest Group
plc expects to recover. Since 1 January 2018,
NatWest Group plc has paid VAT on intra-
group supplies from the India-registered
NatWest Group companies.
US Anti-Terrorism Act litigation
NWM N.V. and certain other financial
institutions are defendants in several actions
filed by a number of US nationals (or their
estates, survivors, or heirs), most of whom
are, or were, US military personnel who were
killed or injured in attacks in Iraq between
2003 and 2011.
NWM Plc is also a defendant in some of these
cases.
According to the plaintiffs’ allegations, the
defendants are liable for damages arising
from the attacks because they allegedly
conspired with and/or aided and abetted Iran
and certain Iranian banks to assist Iran in
transferring money to Hezbollah and the Iraqi
terror cells that committed the attacks, in
violation of the US Anti-Terrorism Act, by
agreeing to engage in ‘stripping’ of
transactions initiated by the Iranian banks so
that the Iranian nexus to the transactions
would not be detected.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
368
Notes to the consolidated financial statements continued
25 Memorandum items
continued
The first of these actions, alleging conspiracy
claims but not aiding and abetting claims,
was filed in the United States District Court
for the Eastern District of New York in
November 2014. In September 2019, the
district court dismissed the case, finding that
the claims were deficient for several reasons,
including lack of sufficient allegations as to
the alleged conspiracy and causation. In
January 2023, the US Court of Appeals
affirmed the district court’s dismissal of this
case.
On 30 September 2025, the district court
denied a motion by the plaintiffs to re-open
the case to assert aiding and abetting claims
that they previously did not assert. Another
action, filed in the SDNY in 2017, which
asserted both conspiracy and aiding and
abetting claims, was dismissed by the SDNY
in March 2019 on similar grounds as the first
case, but remains subject to appeal to the US
Court of Appeals.
Other follow-on actions that are substantially
similar to those described above are pending
in the same courts.
1MDB litigation
A Malaysian court claim was served in
Switzerland in November 2022 by 1MDB, a
sovereign wealth fund, in which Coutts & Co
Ltd was named, along with six others, as a
defendant in respect of losses allegedly
incurred by 1MDB.
It is claimed that Coutts & Co Ltd is liable as
a constructive trustee for having dishonestly
assisted the directors of 1MDB in the breach
of their fiduciary duties by failing (amongst
other alleged claims) to undertake due
diligence in relation to a customer of Coutts &
Co Ltd, through which funds totalling c.US$1
billion were received and paid out between
2009 and 2011. 1MDB sought the return of
that amount plus interest.
Coutts & Co Ltd filed an application in
January 2023 challenging the validity of
service and the Malaysian court’s jurisdiction
to hear the claim, and a hearing took place in
February 2024. In March 2024, the court
granted that application. 1MDB appealed that
decision and a prior decision by the court not
to allow them to discontinue their claim. Both
appeals were scheduled to be heard in
November 2025 but did not progress as
1MDB withdrew their appeal and
discontinued the claim.
Coutts & Co Ltd (a subsidiary of RBS
Netherlands Holdings B.V., which in turn is a
subsidiary of NWM Plc) is a company
registered in Switzerland and is in wind-down
following the announced sale of its business
assets in 2015.
Oracle Securities Litigation
On 14 January 2026, a class action complaint
was filed in New York state court against
Oracle Corporation and the underwriters of a
September 2025 bond offering by Oracle,
including NWMSI.
The complaint alleges that
the offering documents for the bonds were
materially misleading because they failed to
disclose that, at the time of the bond offering,
Oracle was already planning to further
increase its debt to fund its Artificial
Intelligence infrastructure expansion.
The complaint seeks damages under the U.S.
Securities Act of 1933 (the ‘Securities Act’),
as amended, on behalf of those who
purchased Oracle’s bonds. In connection with
the bond offering, Oracle agreed to indemnify
the underwriters against certain potential
liabilities, including disclosure-based liability
under the Securities Act.
Tandanor Litigation in Argentina
In October 2012, a claim was filed in the
District Court of Buenos Aires by ‘Argentina
Talleres Navales Dársena Norte Sociedad
Anónima Comercial, Industrial y Naviera’
(“Tandanor”) (a naval repair business) against
what is now the Representative Office of The
Royal Bank of Scotland NV, Argentine Branch
(in liquidation) (the “Representative Office”)
and eleven private individuals. (The
Representative Office inherited the claim from
Banco Holandés Unido, Argentine
Branch.)
The claim, which was unquantified,
sought damages for alleged fraudulent
conduct during Tandanor’s privatisation,
which concluded in 1993. The Representative
Office’s participation in the privatisation was
2.9%. The Argentine Ministry of Defence
joined Tandanor as a plaintiff in 2014.
The claim was dismissed on limitation
grounds in 2018, and the plaintiffs were
unsuccessful in subsequent appeals. In
November 2024, however, the Argentine
Supreme Court set the appealed judgments
aside and, in June 2025, the Argentine
Federal Court of Appeal returned the case to
the Argentine Federal District Court for
further consideration. In
December 2025, the
plaintiffs filed an update quantifying damages
at USD 1.1 billion. The Representative Office
continues to defend the claim and has
requested a hearing.
Regulatory matters (including
investigations and customer redress
programmes)
NatWest Group’s businesses and financial
condition can be affected by the actions of
various governmental and regulatory
authorities in the UK, the US, the EU and
elsewhere. NatWest Group has engaged, and
will continue to engage, in discussions with
relevant governmental and regulatory
authorities, including in the UK, the US, the
EU and elsewhere, on an ongoing and regular
basis, and in response to informal and formal
inquiries or investigations, regarding
operational, systems and control evaluations
and issues including those related to
compliance with applicable laws and
regulations, including consumer protection,
investment advice, business conduct,
competition/anti-trust, VAT recovery, anti-
bribery, anti-money laundering and sanctions
regimes. NatWest Group expects government
and regulatory intervention in financial
services to be high for the foreseeable future,
including increased scrutiny from competition
and other regulators in the retail and SME
business sectors.
Any matters discussed or identified during
such discussions and inquiries may result in,
among other things, further inquiry or
investigation, other action being taken by
governmental and regulatory authorities,
increased costs being incurred by NatWest
Group, remediation of systems and controls,
public or private censure, restriction of
NatWest Group’s business activities and/or
fines. Any of the events or circumstances
mentioned in this paragraph or below could
have a material adverse effect on NatWest
Group, its business, authorisations and
licences, reputation, results of operations or
the price of securities issued by it, or lead to
material additional provisions being taken.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
369
Notes to the consolidated financial statements continued
25 Memorandum items
continued
NatWest Group is co-operating fully with the
matters described below.
US investigations relating to fixed-income
securities
In December 2021, NWM Plc pled guilty in
the United States District Court for the
District of Connecticut to one count of wire
fraud and one count of securities fraud in
connection with historical spoofing conduct
by former employees in US Treasuries
markets between January 2008 and May
2014 and, separately, during approximately
three months in 2018. The 2018 trading
occurred during the term of a non-
prosecution agreement (NPA) between
NWMSI and the United States Attorney's
Office for the District of Connecticut (USAO
CT), under which non-prosecution was
conditioned on NWMSI and affiliated
companies not engaging in criminal conduct
during the term of the NPA. The relevant
trading in 2018 was conducted by two NWM
traders in Singapore and breached that NPA.
The plea agreement reached with the US
Department of Justice (DOJ) and the USAO
CT resolved both the spoofing conduct and
the breach of the NPA.
The DOJ and USAO CT paused the
monitorship in May 2025 and, following a
review, determined that a monitorship was no
longer necessary as a result of NWM’s
notable progress in strengthening its
compliance programme, certain of NWM’s
remedial improvements, internal controls, and
the status of implementation of Monitor
recommendations, and that reporting by
NWM to the DOJ and USAO CT on its
continued compliance programme progress
provided an appropriate degree of
oversight.
The court approved the agreement
and extended NWM’s obligations under the
plea agreement and probation until
December 2026.
In the event that NWM Plc does not meet its
obligations to the DOJ, this may lead to
adverse consequences such as increased
costs, findings that NWM Plc violated its
probation term, and possible re-sentencing,
amongst other consequences. Other material
adverse collateral consequences may occur
as a result of this matter, as further described
in the Risk Factor relating to legal, regulatory
and governmental actions and investigations
set out on pages 417 to 419 of the NatWest
Group plc Annual Report and Accounts 2025.
Investment advice review
In October 2019, the FCA notified NatWest
Group of its intention to appoint a Skilled
Person under section 166 of the Financial
Services and Markets Act 2000 to conduct a
review of whether NatWest Group’s past
business review of investment advice
provided during 2010 to 2015 was subject to
appropriate governance and accountability
and led to appropriate customer outcomes.
The Skilled Person’s review has concluded
and, after discussion with the FCA, NatWest
Group is undertaking additional review /
remediation work, which is expected to
conclude in H1 2026.
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.
Ulydien (formerly 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’s
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.
Decisions are awaited from the FSPO in
respect of these cases.
Other customer remediation in Ulster Bank
Ireland DAC
Ulydien identified other legacy issues leading
to the establishment of remediation
requirements, and progress is ongoing to
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
370
Notes to the consolidated financial statements continued
This note shows non-cash items adjusted for in the cash flow statement and movement in operating assets and liabilities.
2025 | 2024 | 2023 | |
£m | £m | £m | |
Impairment losses | 671 | 359 | 572 |
Depreciation and amortisation | 1,154 | 1,058 | 934 |
Change in fair value taken to profit or loss of other financial assets | 33 | 274 | (584) |
Change in fair value taken to profit or loss of other financial liabilities and subordinated liabilities | 517 | 200 | 831 |
Foreign exchange recycling losses/(gains) | 28 | 77 | (484) |
Elimination of foreign exchange differences | (1,673) | 1,525 | 312 |
Income receivable on other financial assets | (3,138) | (2,459) | (1,415) |
Loss on sale of other financial assets | 8 | 21 | 44 |
Share of (profit)/loss of associates | (68) | (19) | 9 |
(Gain)/loss on sale of other assets and net assets and liabilities | (7) | (23) | 125 |
Interest payable on MRELs and subordinated liabilities | 1,340 | 1,407 | 1,352 |
Gain on redemption of own debt | - | - | (3) |
Charges and releases of provisions | 201 | 330 | 313 |
Change in fair value of cash flow hedges | 899 | 1,494 | 1,021 |
Other non-cash items | 126 | 35 | 59 |
Defined benefit pension schemes | 93 | 86 | 122 |
Non-cash and other items | 184 | 4,365 | 3,208 |
Change in operating assets and liabilities | |||
Change in trading assets | 197 | (5,331) | 327 |
Change in derivative assets | 17,687 | (373) | 20,826 |
Change in settlement balance assets | 1,440 | 5,146 | (4,659) |
Change in loans to banks | (950) | 278 | 752 |
Change in loans to customers | (16,846) | (17,173) | (15,626) |
Change in other financial assets | 292 | (92) | 132 |
Change in other assets | (81) | 133 | (213) |
Change in assets of disposal groups | - | 106 | 412 |
Change in bank deposits | 12,640 | 9,262 | 1,749 |
Change in customer deposits | 6,848 | 2,113 | (18,964) |
Change in settlement balance liabilities | (787) | (4,916) | 4,633 |
Change in trading liabilities | (5,694) | 1,078 | 828 |
Change in derivative liabilities | (18,108) | (313) | (21,652) |
Change in other financial liabilities | 5,090 | 3,640 | 6,564 |
Change in notes in circulation | (152) | 79 | 19 |
Change in other liabilities | (604) | (904) | (807) |
Change in operating assets and liabilities | 972 | (7,267) | (25,679) |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
371
Notes to the consolidated financial statements continued
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.
2025 | 2024 | 2023 | |
£m | £m | £m | |
Fair value given for business acquired | - | - | (139) |
Acquisition of interest in associates | (14) | (4) | - |
Additional investment in associates | - | (1) | (5) |
Cash paid for assets and liabilities purchased | 244 | (2,296) | - |
Net inflow/(outflow) of cash in respect of acquisitions | 230 | (2,301) | (144) |
Disposal of net assets and liabilities | - | 1,003 | 5,560 |
Loss on disposal of net assets and liabilities | - | (8) | (87) |
Net inflow of cash in respect of disposals | - | 995 | 5,473 |
Dividends received from associate | 19 | 1 | 16 |
Net cash expenditure on intangible assets | (617) | (614) | (744) |
Net (outflow)/inflow of cash | (368) | (1,919) | 4,601 |
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.
Share capital, share premium, | |||||||||
| and paid-in equity | Subordinated liabilities | MREL instruments | |||||||
2025 | 2024 | 2023 | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | |
£m | £m | £m | £m | £m | £m | £m | £m | £m | |
At 1 January | 15,413 | 14,734 | 15,590 | 6,136 | 5,714 | 6,260 | 23,998 | 21,660 | 22,265 |
Issued | 1,248 | 1,390 | - | 828 | 1,386 | 611 | 4,864 | 5,051 | 3,973 |
Redeemed | (1,957) | (1,000) | (999) | (1,250) | (3,177) | (2,854) | (4,236) | ||
Interest paid | (267) | (459) | (439) | (1,035) | (885) | (844) | |||
Net cash flows from financing activities | (709) | 1,390 | - | (439) | (72) | (1,078) | 652 | 1,312 | (1,107) |
Shares repurchased | (112) | (711) | (856) | ||||||
Effects of foreign exchange | 16 | (54) | (166) | (666) | (49) | (987) | |||
Changes in fair value | 127 | 76 | 230 | 390 | 124 | 601 | |||
Loss on redemption of own debt | - | - | (3) | - | |||||
Interest payable | 279 | 465 | 464 | 1,061 | 942 | 888 | |||
Other | 4 | 7 | 7 | 6 | 9 | - | |||
At 31 December | 14,592 | 15,413 | 14,734 | 6,123 | 6,136 | 5,714 | 25,441 | 23,998 | 21,660 |
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
372
Notes to the consolidated financial statements continued
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.
2025 | 2024 | 2023 | |
£m | £m | £m | |
Cash and balances at central banks | 85,182 | 92,994 | 104,262 |
Trading assets (1) | 4,703 | 6,886 | 8,851 |
Other financial assets | 631 | - | 139 |
Loans to banks | 4,917 | 4,965 | 5,572 |
Cash and cash equivalents | 95,433 | 104,845 | 118,824 |
(1)
Includes cash collateral posted with bank counterparties in respect of derivative liabilities of £2,647 million (2024 - £3,660 million; 2023 - £4,434 million).
had mandatory
reserve deposits with
De Nederlandsche Bank N.V.
of €100 million (2024 - €95 million, 2023 - €132 million). The Royal Bank of Scotland International Limited had balances with Central Bank of
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
373
Notes to the consolidated financial statements continued
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.
2025 | 2024 | |
Directors' remuneration | £000 | £000 |
Non-executive directors emoluments | 1,638 | 1,547 |
Chair and executive directors emoluments | 7,519 | 6,425 |
9,157 | 7,972 | |
Amounts receivable under long-term incentive plans | ||
and share option plans | 3,279 | 1,471 |
Total | 12,436 | 9,443 |
Compensaon of key management
The aggregate remuneration of directors and other members of key management during the
year was as follows:
2025 | 2024 | |
£000 | £000 | |
Short-term benefits | 23,380 | 20,862 |
Post-employment benefits | 683 | 643 |
Share-based payments | 10,801 | 5,624 |
34,864 | 27,129 |
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.
At 31 December | ||
2025 | 2024 | |
£000 | £000 | |
Loans to customers - amortised cost | 2,631 | 3,538 |
Customer deposits | 52,378 | 39,431 |
At 31 December 2025, amounts outstanding in relation to transactions, arrangements and
agreements entered into by authorised institutions in NatWest Group, as defined in UK legislation,
were £2,582,333 in respect of loans to six persons who were directors of the company at any
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
374
N
otes to the consolidated financial statements continued
32 Related parties
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
UK Government
In May 2025, the UK Government through His Majesty’s Treasury (HMT) sold its remaining
shareholding in NatWest Group plc. Under UK listing rules the UK Government and UK
Government-controlled bodies remained related parties until 12 July 2025, 12 months after
the UK Government shareholding in NatWest Group plc fell below 20%.
NatWest Group enters into transactions with many of these bodies. Transactions include
the payment of: taxes – 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 having eligible liabilities greater than
£600 million are required to pay the levy. 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.
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
related party are as follows:
Associates and joint | Equity | ||
ventures | shares (1) | Total | |
31 December 2025 | £m | £m | £m |
Investments | 753 | 1 | 754 |
Loans to customers - amortised cost | - | 4 | 4 |
Customer deposits | 1 | - | 1 |
Other comprehensive income | - | 33 | 33 |
Other operating income | 69 | 10 | 79 |
31 December 2024 | |||
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 |
(1)
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
375
Notes to the consolidated financial statements continued
32 Related parties continued
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 2025 these balances amounted to £44.1
million (2024 - £43.2 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’s balance sheet, to meet potential
future contributions required by the Main section of the Group’ Pension Fund. This
transaction required transfer of £471 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
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
2025 (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 2025 (non-adjusting events). This note provides information relating to
material non-adjusting events.
On 9 February 2026, NatWest Group plc announced that it had reached an agreement to
acquire Evelyn Partners for an enterprise value of £2.7 billion. Evelyn Partners is a leading
integrated wealth management and financial planning firm with approximately £69 billion of
assets under management and administration. The transaction is expected to complete in
the summer of 2026, subject to regulatory approval.
As part of the ongoing on-market share buyback programme, NatWest Group plc has
repurchased and cancelled a further 23.99 million shares since December 2025 for a total
consideration (excluding fees) of £156.76 million.
Other than as disclosed in the accounts, there have been no other significant events
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
376
Balance sheet as at 31 December 2025
Note
2025
2024
£m
£m
Assets
Derivatives with subsidiaries
113
462
Loans to banks - amortised cost
2
2
Amounts due from subsidiaries
4
29,555
27,306
Investments in Group undertakings
8
53,037
53,428
Other assets
69
21
Total assets
82,776
81,219
Liabilities
Amounts due to subsidiaries
4
86
483
Derivatives
262
685
Other financial liabilities
25,754
24,243
Subordinated liabilities
7
5,749
5,840
Other liabilities
27
25
Total liabilities
31,878
31,276
Owners’ equity
50,898
49,943
Total liabilities and equity
82,776
81,219
Owners’ equity of NatWest Group plc as
at 31 December 2025 includes the profit
for the year of £4,472 million (2024 -
£3,950 million).
As permitted by section 408(3) of the
Companies Act 2006, the primary
financial statements of the company do
not include an income statement or a
statement of comprehensive income.
The accounts were approved by the
Board of directors on 12 February 2026
and signed on its behalf by:
Richard Haythornthwaite
Chair
John-Paul Thwaite
Group Chief Executive Officer
Katie Murray
Group Chief Financial Officer
NatWest Group plc
Registered No. SC45551
Parent company financial statements and notes
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
377
Parent company financial statements and notes continued
Statement of changes in equity for the year ended 31 December 2025
Share capital
Other statutory
Other reserves
and share premium
Paid-in equity
reserves (3)
Retained earnings
Cash flow hedging
Total equity
£m
£m
£m
£m
£m
£m
At 1 January 2025
10,133
5,265
2,344
32,202
(1)
49,943
Profit attributable to ordinary shareholders and other equity owners
4,472
4,472
Other comprehensive income
Amounts recognised in equity
(4)
(4)
Reclassification of OCI to Income statement
4
4
Total comprehensive income
4,472
-
4,472
Transactions with owners
Ordinary share dividends paid
(2,018)
(2,018)
Paid-in equity dividends paid
(352)
(352)
Redemption of paid-in equity
(1,951)
(27)
(1,978)
Shares repurchased
(1)
(112)
112
(579)
(579)
Paid-in equity issued
(2)
1,244
1,244
Share-based payments
16
16
Shares vested under employee share schemes
150
150
At 31 December 2025
10,021
4,558
2,606
33,714
(1)
50,898
At 1 January 2024
10,844
3,875
1,999
32,221
(4)
48,935
Profit attributable to ordinary shareholders and other equity owners
3,950
3,950
Other comprehensive income
Amounts recognised in equity
1
1
Reclassification of OCI to Income statement
3
3
Tax
(1)
(1)
Total comprehensive income
3,950
3
3,953
Transactions with owners
Ordinary share dividends paid
(1,505)
(1,505)
Paid-in equity dividends paid
(283)
(283)
Shares repurchased
(1,4)
(711)
711
(2,176)
(2,176)
Paid-in equity issued
(2)
1,390
1,390
Share-based payments
(5)
(5)
Shares vested under employee share schemes
174
174
Own shares acquired
(3)
(540)
(540)
At 31 December 2024
10,133
5,265
2,344
32,202
(1)
49,943
For the notes to this table refer to the following page.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
378
Parent company financial statements and notes continued
Statement of changes in equity for the year ended 31 December 2025 continued
Share capital
Other statutory
Other reserves
and share premium
Paid-in equity
reserves (3)
Retained earnings
Cash flow hedging
Total equity
£m
£m
£m
£m
£m
£m
At 1 January 2023
11,700
3,875
1,388
33,134
15
50,112
Profit attributable to ordinary shareholders and other equity owners
2,842
2,842
Other comprehensive income
Amounts recognised in equity
(6)
(6)
Reclassification of OCI to Income statement
(19)
(19)
Tax
6
6
Total comprehensive income
2,842
(19)
2,823
Transactions with owners
Ordinary share dividends paid
(1,456)
(1,456)
Paid-in equity dividends paid
(242)
(242)
Shares repurchased
(1,4)
(856)
856
(2,057)
(2,057)
Shares vested under employee share schemes
114
114
Own shares acquired
(359)
(359)
At 31 December 2023
10,844
3,875
1,999
32,221
(4)
48,935
(1)
As part of the On Market Share Buyback Programmes NatWest Group plc repurchased and cancelled 105.5 million shares (2024 - 173.3 million, 2023 - 460.3 million, of which 2.3 million were settled in January 2024) of which 1.4 million shares were settled in January 2026. The
total consideration for these shares excluding fees was £586.3 million (2024 - £450.9 million, 2023 - £1,151.7 million of which 4.9 million shares were settled in January 2024) of which 9 million was settled in January 2026. The nominal value of the share cancellations was
transferred to the capital redemption reserve.
(2)
The issuance above is after netting of issuance fees of £2.8 million (2024 – £2.4 million), and the associated tax credit of £0.7 million (2024 – £0.7 million).
(3)
Other statutory reserves consist of Capital redemption reserves of £3,306 million (2024 - £3,194 million, 2023 - £2,483 million) and Own shares held reserves of £700 million (2024 – £850 million, 2023 – £484 million).
(4)
In June 2024, there was an agreement to buy 392.4 million ordinary shares of the Company from His Majesty’s Treasury (HM Treasury) at 316.2 pence per share for total consideration of £1.2 billion. NatWest Group cancelled 222.4 million of the purchased ordinary shares,
amounting to £706.9 million excluding fees and held the remaining 170.0 million shares as Own Shares Held, amounting to £540.2 million excluding fees. The nominal value of the share cancellation was transferred to the capital redemption reserve. There were no repurchases in
2025.
The accompanying notes on pages 380 to 393 form an integral part of these financial statements.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
379
Parent company financial statements and notes continued
Cash flow statement for the year ended 31 December 2025
2025
2024
2023
Note
£m
£m
£m
Cash flows from operating activities
Operating profit before tax from continuing operations
4,404
3,932
2,796
Adjustments for:
Non-cash and other items
9
(3,948)
(3,414)
(3,602)
Change in operating assets and liabilities
9
(2,416)
178
3,699
Income taxes received
23
78
-
Net cash flows from operating activities
(1)
(1,937)
774
2,893
Cash flows from investing activities
Additional investments in Group undertakings
(2,361)
(1,391)
(260)
Disposals of investments in Group undertakings
3,113
559
-
Dividends received from subsidiaries
4,555
4,163
3,542
Net cash flows from investing activities
5,307
3,331
3,282
Cash flows from financing activities
Issue of paid-in equity
1,244
1,390
-
Redemption of paid-in equity
(1,978)
-
-
Issue of subordinated liabilities
827
1,386
611
Redemption of subordinated liabilities
(1,000)
(1,001)
(907)
Interest paid on subordinated liabilities
(255)
(317)
(314)
Issue of MRELs
1,474
8
43
Maturity and redemption of MRELs
(800)
(834)
(1,409)
Interest paid on MRELs
(269)
(262)
(333)
Share repurchased
(579)
(2,716)
(2,416)
Dividends paid
(2,370)
(1,788)
(1,698)
Net cash flows from financing activities
(3,706)
(4,134)
(6,423)
Effects of exchange rate changes on cash and cash equivalents
(4)
(1)
(10)
Net decrease in cash and cash equivalents
(340)
(30)
(258)
Cash and cash equivalents at 1 January
910
940
1,198
Cash and cash equivalents at 31 December
(2)
570
910
940
(1)
Includes interest received of £492 million (2024 - £520 million, 2023 - £541
million) and interest paid of £855 million (2024 - £968 million, 2023 - £1,073
million).
(2)
Cash and cash equivalents comprise loans and advances due from the holding
company and fellow subsidiaries with an original maturity of less than three
months for 2025, 2024 and 2023.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
380
Parent company financial statements and notes continued
1 Presentation of financial statements
The accounting policies applied to the parent company financial statements are the same as
those applied in the consolidated financial statements except investment in group undertaking
(subsidiaries) are stated at cost less impairment and that it has no policy regarding consolidation.
The directors have prepared the financial statements on a going concern basis based on the
directors’ assessment that the parent company will continue in operational existence for a period
of twelve months from the date the financial statements are approved (refer to the Report of the
directors).
2 Critical accounting policies and sources of estimation uncertainty
The reported results of the parent company are sensitive to the accounting policies, assumptions
and estimates that underlie the preparation of its financial statements. The judgements and
assumptions involved in the parent company’s accounting policies that are considered by the
Board to be the most important to the portrayal of its financial condition are those involved in
assessing the impairment, if any, in its investment in group undertakings, refer to Note 8.
3 Derivatives with subsidiaries – designated hedges
Fair value hedging is used to hedge loans and other financial liabilities, and cash flow hedging is
used to hedge other financial liabilities and subordinated liabilities.
For accounting policy information refer to Accounting policies 3.8 and 3.11.
The following table shows derivatives held for hedging purposes.
2025
2024
Notional
Assets
Liabilities
Notional
Assets
Liabilities
£bn
£m
£m
£bn
£m
£m
Fair value hedging -
interest rate contracts
11.2
28
220
12.6
48
472
Cash flow hedging -
exchange rate contracts
1.4
-
4
1.4
-
8
Total
12.6
28
224
14.0
48
480
4 Financial instruments – classification
The following tables analyse NatWest Group plc’s financial assets and liabilities in accordance with
the categories of financial instruments in IFRS 9. Instruments held at fair value are within level 2
of the fair value hierarchy for both periods. Refer to Note 10 for information on the valuation of
fair value instruments.
For accounting policy information refer to Accounting policies 3.8, 3.9 and 3.11.
MFVTPL
Amortised
cost
Other
assets
Total
Assets
£m
£m
£m
£m
Derivatives with subsidiaries
113
113
Loans to banks - amortised cost
2
2
Amounts due from subsidiaries
19,342
10,210
3
29,555
Investment in Group undertakings
53,037
53,037
Other assets
69
69
31 December 2025
19,455
10,212
53,109
82,776
Derivatives with subsidiaries
462
462
Loans to banks - amortised cost
2
2
Amounts due from subsidiaries
18,835
8,471
27,306
Investment in Group undertakings
53,428
53,428
Other assets
21
21
31 December 2024
19,297
8,473
53,449
81,219
Held-for-
trading
DFV
Amortised
cost
Other
liabilities
Total
Liabilities
£m
£m
£m
£m
£m
Amounts due to subsidiaries
66
15
5
86
Derivatives with subsidiaries
262
262
Other financial liabilities
(1)
16,209
9,545
25,754
Subordinated liabilities
5,749
5,749
Other liabilities
27
27
31 December 2025
328
16,209
15,309
32
31,878
Amounts due to subsidiaries
338
22
123
483
Derivatives with subsidiaries
685
685
Other financial liabilities
(1)
14,775
9,468
24,243
Subordinated liabilities
5,840
5,840
Other liabilities
25
25
31 December 2024
1,023
14,775
15,330
148
31,276
(1)
Other financial liabilities are MRELs.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
381
Parent company financial statements and notes continued
4 Financial instruments – classification continued
The following table shows amounts due to/from subsidiaries of NatWest Group plc.
2025
2024
£m
£m
Assets
Trading assets
220
561
Loans to banks and customers - amortised cost
10,211
8,471
Other financial assets
19,122
18,273
Other assets
2
1
Amounts due from subsidiaries
29,555
27,306
Derivatives
(1)
113
462
Liabilities
Trading liabilities
66
338
Bank and customer deposits
-
4
Other liabilities
4
123
Subordinated liabilities
16
18
Amounts due to subsidiaries
86
483
Derivatives
(1)
262
685
(1)
Intercompany derivatives are included within derivatives on the balance sheet.
5 Financial instruments - fair value of financial instruments not
carried at fair value
The following table shows the carrying value and fair value of financial instruments carried at
amortised cost on the balance sheet.
2025
2024
Carrying
Fair
Carrying
Fair
value
value
value
value
£bn
£bn
£bn
£bn
Financial assets
Amounts due from subsidiaries
(1)
10.2
10.3
8.5
8.5
Financial liabilities
Other financial liabilities
- debt securities in issue
(2)
9.5
9.7
9.5
9.6
Subordinated liabilities
(2)
5.7
5.9
5.8
5.9
(1)
Fair value hierarchy level 2 - £10.3 billion (2024 - £5.7 billion) and level 3 - £nil billion (2024 - £2.8 billion).
(2)
Fair value hierarchy level 2.
6 Financial instruments - maturity analysis
Remaining maturity
The following table shows the residual maturity of financial instruments based on contractual date
of maturity.
2025
2024
Less than
More than
Less than
More than
12 months
12 months
Total
12 months
12 months
Total
£m
£m
£m
£m
£m
£m
Assets
Derivatives with subsidiaries
8
105
113
34
428
462
Loans to banks - amortised cost
2
-
2
2
-
2
Amounts due from subsidiaries
(1)
4,666
24,886
29,552
4,023
23,283
27,306
Liabilities
Amounts due to subsidiaries
(2)
65
16
81
342
18
360
Derivatives with subsidiaries
28
234
262
78
607
685
Other financial liabilities
3,820
21,934
25,754
3,592
20,651
24,243
Subordinated liabilities
1,077
4,672
5,749
1,057
4,783
5,840
(1)
Amounts due from subsidiaries relating to non-financial instruments of £3 million (2024 - nil) have been excluded from the table.
(2)
Amounts due to subsidiaries relating to non-financial instruments of £5 million (2024 - £123 million) have been excluded from the
table.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
382
Parent company financial statements and notes continued
6 Financial instruments - maturity analysis continued
Financial liabilities: contractual maturity
The following table shows undiscounted cash flows payable up to 20 years from the balance
sheet date, including future interest payments.
Held-for-trading liabilities amounting to £0.1 billion (2024 - £0.3 billion) have been excluded from
the table.
2025
0-3
3-12
1-3
3-5
5-10
10-20
months
months
years
years
years
years
£m
£m
£m
£m
£m
£m
Liabilities by contractual maturity
Amounts due to subsidiaries
(1)
-
1
3
3
6
13
Derivatives held for hedging
68
24
72
42
34
-
Other financial liabilities
1,566
2,906
11,299
8,244
5,376
-
Subordinated liabilities
68
1,166
1,721
3,656
-
-
1,702
4,097
13,095
11,945
5,416
13
2024
Liabilities by contractual maturity
Amounts due to subsidiaries
(1)
-
1
3
3
7
14
Derivatives held for hedging
96
103
192
67
63
-
Other financial liabilities
1,594
2,676
10,108
9,887
4,007
-
Subordinated liabilities
52
1,191
2,021
2,906
699
-
1,742
3,971
12,324
12,863
4,776
14
(1)
Amounts due from subsidiaries relating to non-financial instruments have been excluded from the table.
7 Subordinated liabilities
2025
2024
£m
£m
Dated loan capital
5,749
5,840
5,749
5,840
For details of subordinated liabilities, refer to Note 19 to the consolidated financial statements and
notes.
For accounting policy information refer to Accounting policies 3.8 and 3.10.
8 Investments in Group undertakings
Critical accounting policy: Investments in Group undertakings
At each reporting date, the parent company assesses whether there is any indication that its
investment in its Group undertakings is impaired. If any such indication exists, the parent
company undertakes an impairment test by comparing the carrying value of the investment in its
Group undertakings with its estimated recoverable amount. The key judgement is in determining
the recoverable amount. The recoverable amount of an investment in its Group undertakings is
the higher of its fair value less cost to sell and its value in use, being an assessment of the
discounted future cash flows of the entity. Impairment testing inherently involves a number of
judgements: the five-year cash flow forecast, the choice of appropriate discount and growth
rates, and the estimation of fair value. For accounting policy information refer to Accounting
policy note 3.5.
Investments in Group undertakings are carried at cost less impairment losses. Movements during
the year were as follows:
2025
2024
£m
£m
At 1 January
53,428
52,592
Additional investments in Group undertakings
2,361
1,391
Disposals of investments in Group undertakings
(3,113)
(555)
Net reversal of impairment of investments
361
-
At 31 December
53,037
53,428
The recoverable amount of investments in Group undertakings is the higher of net asset value as
a proxy for fair value less cost to sell or value in use. Where recoverable value is based on net
asset value, the fair value measurement is categorised as Level 3 of the fair value hierarchy. The
carrying value of Investments in Group undertakings at 31 December 2025 is supported by the
respective recoverable values of the entities.
In 2025 the parent company issued £1,741 million of contingent convertible AT1 notes to its
subsidiary NatWest Holdings Limited and £600 million to its subsidiary NatWest Markets Plc, in
addition to a capital contribution of £20 million to AA Holdings Limited. In 2025, the disposal of
investments related to the redemption of contingent convertible AT1 notes including £1,985
million previously issued to NatWest Holdings Limited, £903 million previously issued to NatWest
Markets Plc, and £225 million previously issued to RBS International Limited Jersey. The additions
in 2024 were for previous AT1 issuances to NatWest Holdings Limited and NatWest Markets Plc.
The disposals in 2024 were for the redemption of AT1 notes issued to NatWest Holdings Limited.
The net reversal of impairment of investments in 2025 was mainly the reversal of a previous
impairment of the investment in NatWest Markets Plc due to the increase in its net asset value.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
383
Parent company financial statements and notes continued
8 Investments in Group undertakings
continued
The impact of reasonably possible changes to the more significant variables in the value in use calculations for Natwest Holdings Limited is presented below. This reflects the sensitivity of the value in
use to each variable on its own. The carrying value of NatWest Group’s investment in NatWest Holdings Limited remains recoverable in all cases. It is possible that more than one change may occur at
the same time.
Assumptions
Impact of adverse movement
Pre-tax
Terminal
Recoverable amount
1% increase in
1% decrease in
5% decrease in
Carrying value
discount rate
growth rate
exceeded carrying value
discount rate
terminal growth rate
forecast income (1)
31 December 2025
£bn
%
%
£bn
£bn
£bn
£bn
NatWest Holdings Ltd
42.6
16.0
1.4
15.8
(6.2)
(2.5)
(5.5)
31 December 2024
NatWest Holdings Ltd
42.8
16.0
1.4
9.8
(4.9)
(2.2)
(5.8)
(1)
5% income sensitivity has been applied to each year in the value in use
calculation. The impact on the value in use shown above is however nonlinear
as the majority of the value in use is derived in the terminal year.
The principal subsidiary undertakings of the parent company are shown below. Their capital consists of ordinary shares, preference shares and Additional Tier 1 notes which are unlisted with the
exception of certain preference shares listed by NatWest Bank Plc. All of these subsidiaries are included in NatWest Group’s consolidated financial statements and have an accounting reference date of
31 December.
(1)
The parent company does not hold any of the preference shares in issue.
(2)
Coutts & Company is incorporated with unlimited liability.
(3)
Owned via NatWest Holdings Limited.
(4)
Owned via NatWest Markets Plc.
(5)
Owned via The Royal Bank of Scotland International (Holdings) Limited.
For full information on all related undertakings, refer to Note 12.
Nature of business
Country of incorporation and principal area of operation
Group interest
National Westminster Bank Plc
(1,3)
Banking
Great Britain
100%
The Royal Bank of Scotland plc
(3)
Banking
Great Britain
100%
Coutts & Company
(2,3)
Banking
Great Britain
100%
NatWest Markets Plc
Banking
Great Britain
100%
NatWest Markets N.V.
(4)
Banking
Netherlands
100%
The Royal Bank of Scotland International Limited
(5)
Financial Institution
Jersey
100%
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
384
Parent company financial statements and notes continued
9 Non-cash and other items
This note shows non-cash items adjusted for in the cashflow statement and movement in operating assets and liabilities.
2025
2024
2023
£m
£m
£m
Impairment losses/(releases) on intercompany loans to banks
34
(4)
(2)
Net (reversal of impairment)/impairment of investments in Group undertakings
(361)
-
484
Change in fair value taken to profit or loss on other financial
liabilities and subordinated liabilities
521
267
(683)
Elimination of foreign exchange differences
(163)
(84)
(485)
Other non-cash items
23
7
(11)
Dividends receivable from subsidiaries
(4,555)
(4,163)
(3,542)
Profit on sale of investments in Group undertakings
-
(3)
-
Interest payable on MRELs and subordinated liabilities
549
564
644
Change in fair value of cash flow hedges
4
-
-
Loss/(gain) on redemption of own debt
-
2
(7)
Non-cash and other items
(3,948)
(3,414)
(3,602)
Change in operating assets and liabilities
Change in derivative assets
346
(4)
363
Change in amounts due from subsidiaries
(2,091)
129
3,688
Change in other assets
-
7
6
Change in amounts due to subsidiaries
(395)
(2,111)
549
Change in derivative liabilities
(422)
(252)
(443)
Change in other financial liabilities
-
2,476
(462)
Change in other liabilities
146
(67)
(2)
Change in operating assets and liabilities
(2,416)
178
3,699
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
385
Parent company financial statements and notes continued
10 Analysis of changes in financing during the year
Share capital, share premium,
and paid-in equity
Subordinated liabilities (1)
MREL instruments (2)
2025
2024
2023
2025
2024
2023
2025
2024
2023
£m
£m
£m
£m
£m
£m
£m
£m
£m
At 1 January
15,398
14,719
15,575
5,858
5,498
5,838
5,825
6,446
8,950
Issued
1,244
1,390
-
827
1,386
611
1,474
8
43
Redeemed
(1,951)
-
-
(1,000)
(1,001)
(907)
(800)
(834)
(1,409)
Interest paid
(255)
(317)
(314)
(269)
(262)
(333)
Net cash flows from financing activities
(707)
1,390
-
(428)
68
(610)
405
(1,088)
(1,699)
Shares repurchased
(112)
(711)
(856)
Effects of foreign exchange
4
(49)
(160)
(171)
(36)
(335)
Changes in fair value
62
11
91
459
256
(774)
Loss/(gain) on redemption of own debt
-
2
(7)
-
-
-
Interest payable
267
324
340
282
240
304
Other
-
-
2
4
6
5
7
-
At 31 December
14,579
15,398
14,719
5,765
5,858
5,498
6,805
5,825
6,446
(1)
Subordinated liabilities include intercompany subordinated liabilities.
(2)
MREL balances are shown net of the effect of down streaming funding to
subsidiary companies. This includes RBSI International Limited where MREL
resolution rules are under consultation in Jersey.
11 Directors’ and key management remuneration
Directors’ remuneration is disclosed in Note 30 to the consolidated accounts. The directors had no other reportable related party transactions or balances with the company.
Parent company financial statements and notes continued
12 Related undertakings
L
L
e
e
g
g
a
a
l
l
e
e
n
n
t
t
i
i
t
t
i
i
e
e
s
s
a
a
n
n
d
d
a
a
c
c
t
t
i
i
v
v
i
i
t
t
i
i
e
e
s
s
a
a
t
t
3
3
1
1
D
D
e
e
c
c
e
e
m
m
b
b
e
e
r
r
2
2
0
0
2
2
5
5
In accordance with the Companies Act 2006, the company’s related undertakings and the accounting treatment for each are listed below. All undertakings are wholly-owned by the company or
subsidiaries of the company and are consolidated by reason of contractual control (Section 1162(2) CA 2006), unless otherwise indicated. NatWest Group interest refers to ordinary shares of equal
values and voting rights unless further analysis is provided in the notes. Activities are classified in accordance with Annex I to the Capital Requirements Directive (CRD V) and the definitions in Article
4 of the UK Capital Requirements Regulation.
1
United Kingdom
2
Sweden
3
Finland
4
Republic of Ireland
5
Norway
6
The Netherlands
7
Jersey
8
Switzerland
9
Guernsey
10
Italy
11
Germany
12
Gibraltar
13
Luxembourg
14
Cyprus
15
Isle of Man
16
United States (DE)
17
Bermuda
18
India
19
Cayman Islands
20
Australia
21
Hong Kong
22
Singapore
23
Japan
24
United Arab Emirates
20
23
21
22
18
19
17
16
14
1
3
2
5
6
11
10
15
13
9
7
4
8
12
24
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Additional information
NatWest Group plc
2025 Annual Report and Accounts
386
Financial statements
Parent company financial statements and notes continued
12 Related undertakings continued
Active related undertakings which are 100% owned by NatWest Group and fully consolidated for accounting purposes
Regulatory
Entity name
Activity
treatment
United Kingdom
250 Bishopsgate, London, EC2M 4AA, England
Better With Money Ltd
BF
DE
Caledonian Sleepers Rail Leasing Ltd
BF
FC
Care Homes 3 Ltd
BF
FC
Care Homes Holdings Ltd
BF
FC
Creative Auto-Enrolment Limited
BF
DE
Creative Benefit Solutions Limited
BF
DE
Cushon Group Limited
BF
FC
Cushon Holdings Limited
BF
FC
Cushon Money Limited
BF
FC
Cushon MT Limited
BF
DE
Gatehouse Way Developments Ltd
INV
DE
Lombard Business Leasing Ltd
BF
FC
Lombard Corporate Finance (11) Ltd
BF
FC
Lombard Corporate Finance (December 3) Ltd
BF
FC
Lombard Corporate Finance (June 2) Ltd
BF
FC
Lombard Discount Ltd
BF
FC
Lombard Finance Ltd
BF
FC
Lombard Industrial Leasing Ltd
BF
FC
Lombard Lease Finance Ltd
BF
FC
Lombard Leasing Company Ltd
BF
FC
Lombard Leasing Contracts Ltd
BF
FC
Lombard Lessors Ltd
BF
FC
Lombard Maritime Ltd
BF
FC
Lombard North Central Leasing Ltd
BF
FC
Lombard North Central PLC
BF
FC
Lombard Property Facilities Ltd
BF
FC
Lombard Technology Services Ltd
BF
FC
Mettle Ventures Ltd
OTH
FC
National Westminster Bank Plc
CI
FC
National Westminster Home Loans Ltd
BF
FC
NatWest Boxed Ltd
OTH
FC
NatWest Holdings Ltd
INV
FC
NatWest Markets Secretarial Services Ltd
SC
FC
NatWest Property Investments Ltd
INV
DE
NatWest RT Holdings Limited
OTH
FC
NatWest Strategic Investments Limited
INV
FC
NatWest Trustee and Depositary Services Ltd
TR
FC
Pittville Leasing Ltd
BF
FC
Premier Audit Company Ltd
BF
FC
Price Productions Ltd
BF
FC
R.B. Equipment Leasing Ltd
BF
FC
R.B. Leasing (September) Ltd
BF
FC
R.B. Quadrangle Leasing Ltd
BF
FC
RBOS (UK) Ltd
BF
FC
RBS AA Holdings (UK) Ltd
INV
FC
RBS HG (UK) Ltd
BF
FC
Regulatory
Entity name
Activity
treatment
RBS Invoice Finance Ltd
BF
FC
RBS SME Investments Ltd
BF
FC
RBSSAF (2) Ltd
BF
FC
RBSSAF (25) Ltd
BF
FC
RoyScot Trust Plc
BF
FC
The One Account Ltd
BF
FC
Walton Lake Developments Ltd
INV
DE
World Learning Limited
BF
FC
Gogarburn, 175 Glasgow Road, Edinburgh, EH12 1HQ
ITB1 Ltd
BF
FC
ITB2 Ltd
BF
FC
KUC Properties Ltd
BF
DE
Land Options (West) Ltd
INV
DE
National Westminister International Holdings B.V.
BF
FC
R.B. Leasing Company Ltd
BF
FC
RBSG International Holdings Ltd
OTH
FC
Royal Bank Investments Ltd
BF
FC
Royal Bank Leasing Ltd
BF
FC
Royal Bank of Scotland (Industrial Leasing) Ltd
BF
FC
Royal Bank Ventures Investments Ltd
BF
FC
Royal Scot Leasing Ltd
BF
FC
SIG 1 Holdings Ltd
BF
FC
SIG Number 2 Ltd
BF
FC
Silvermere Holdings Ltd
BF
FC
The Royal Bank of Scotland Group Independent Financial Services Ltd
BF
FC
West Register (Property Investments) Ltd
BF
DE
West Register (Realisations) Ltd
INV
DE
440 Strand, London, WC2R OQS, England
Coutts & Company
CI
FC
Coutts Finance Company
BF
FC
RBS Asset Management Holdings
BF
FC
6-8 George Street, Edinburgh, EH2 2PF, Scotland
RBS Collective Investment Funds Ltd
BF
FC
RBSG Collective Investments Holdings Ltd
BF
FC
36 St Andrew Square, Edinburgh, EH2 2YB, Scotland
NatWest Group plc
BF
FC
NatWest Markets plc
CI
FC
The Royal Bank of Scotland plc
CI
FC
11-16 Donegall Square East, Belfast, Co Antrim, BT1 5UB, Northern Ireland
Lombard & Ulster Ltd
BF
FC
Ulster Bank Ltd
CI
FC
Ulster Bank Pension Trustees Ltd
TR
DE
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Additional information
NatWest Group plc
2025 Annual Report and Accounts
387
Financial statements
Parent company financial statements and notes continued
12 Related undertakings continued
Regulatory
Entity name
Activity
treatment
4th Floor, State Buildings, 2 Arthur Place, Belfast, BT1 4HG, Northern Ireland
Cushon MT NI Limited
BF
DE
One Edinburgh Quay, 133 Fountainbridge, Edinburgh, EH3 9QG, Scotland
FreeAgent Central Ltd
SC
FC
FreeAgent Holdings Ltd
SC
FC
10th Floor, 5 Churchill Place, London, E14 5HU
NatWest Markets Secured Funding LLP
BF
FC
Sweden
Care of Nordisk Renting AB, Jakobsbergsgatan 13, 8th Floor, Box 14044, Stockholm, SE-111 44, Sweden
Airside Properties AB
BF
FC
Arkivborgen KB
BF
FC
Bilfastighet i Akalla AB
BF
FC
Bilfastighet i Avesta AB
BF
FC
Bilfastighet i Bollnas AB
BF
FC
Bilfastighet i Hemlingby AB
BF
FC
Bilfastighet i Hudiksvall AB
BF
FC
Bilfastighet i Ludvika AB
BF
FC
Bilfastighet i Mora AB
BF
FC
Brodmagasinet KB
BF
FC
Eurohill 4 KB
BF
FC
Fastighets AB Flojten i Norrkoping
BF
FC
Fastighets Aktiebolaget Sambiblioteket
BF
FC
Fastighetsbolaget Elmotorgatan AB
BF
FC
Forskningshöjden KB
BF
FC
Forvaltningsbolaget Dalkyrkan KB
BF
FC
Forvaltningsbolaget Kloverbacken Skola KB
BF
FC
Fyrs!te Fastighets AB
BF
FC
Grinnhagen KB
BF
FC
Horrsta 4:38 KB
BF
FC
IR Fastighets AB
BF
FC
IR IndustriRenting AB
BF
FC
Kallebäck Institutfastigheter AB
BF
FC
KB Eurohill
BF
FC
KB Lagermannen
BF
FC
KB Likriktaren
BF
FC
Lakten 1 KB
BF
FC
LerumsKrysset KB
BF
FC
Limstagården KB
BF
FC
Nordisk Renting AB
BF
FC
Nordisk Specialinvest AB
BF
FC
Nordiska Strategifastigheter Holding AB
BF
FC
Optimus KB
BF
FC
SFK Kommunfastigheter AB
BF
FC
Sjöklockan KB
BF
FC
Skinnarängen KB
BF
FC
Solbanken KB
BF
FC
Svenskt Fastighetskapital AB
BF
FC
Svenskt Energikapital AB
BF
FC
Regulatory
Entity name
Activity
treatment
Svenskt Fastighetskapital Holding AB
BF
FC
Tygverkstaden 1 KB
BF
FC
C/o Nordisk Renting AB, Box 14044, SE-104 40, Stockholm
Bilfastighet i Marsta AB
BF
FC
Bilfastighet i Uppsala KB
BF
FC
Bilfastighet Kista AB
BF
FC
Borgholm Gl!ntan AB
BF
FC
Fastighets AB Stockmakaren
BF
FC
Lundbyfilen 5 AB
BF
FC
Nordisk Renting Facilities Management AB
BF
FC
SBB Klangsågen Mark AB
BF
FC
Smista Park AB
OTH
FC
Strand European Holdings AB
BF
FC
Triport Borås AB
BF
FC
Triport Karlshamn AB
BF
FC
Triport Vaggeryd AB
BF
FC
Vävskeden Vårdbostad Flen AB
BF
FC
Vandenbergh 9 AB
BF
FC
Villa Strå Fastighets AB
BF
FC
Finland
C/o Epicenter, Mikonkatu 9, 6th Floor, Helsinki, 00100, Finland
Apitare Oy
OTH
FC
Artul Koy
BF
FC
Fab Ekenäs Formanshagen 4
BF
FC
Kiinteist Oy Tipotie 4
BF
FC
Koy Pennalan Johtotie 2
BF
FC
Kiinteistöosakeyhtiö Jyväskylän Kukkula I
BF
FC
Koy Kuopion Volttikatu 1
OTH
FC
Koy Helsingin Mechelininkatu 1
BF
FC
Koy Helsingin Osmontie 34
BF
FC
Koy Helsingin Panuntie 11
BF
FC
Koy Helsingin Panuntie 6
BF
FC
Koy Iisalmen Kihlavirta
BF
FC
Koy Jamsan Keskushovi
BF
FC
Koy Kokkolan Kaarlenportti Fab
BF
FC
Koy Kouvolan Oikeus ja Poliisitalo
BF
FC
Koy Millennium
BF
FC
Koy Nummelan Portti
BF
FC
Koy Puotikuja 2 Vaasa
BF
FC
Koy Raision Kihlakulma
BF
FC
Koy Vapaalan Service-Center
BF
FC
Nordisk Renting OY
BF
FC
C/o Nordisk Renting Oy, Mikonkatu 9, 00100 Helsinki
Koy Harkokuja 2
BF
FC
Kiinteisto Oy Lohjan Ojamonharjuntie 61
BF
FC
Koy Turun Mustionkatu 6
BF
FC
Kiinteisto Oy Vantaan Rasti IV
BF
FC
Koy Jasperintie 6
BF
FC
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Additional information
NatWest Group plc
2025 Annual Report and Accounts
388
Financial statements
Parent company financial statements and notes continued
12 Related undertakings continued
Regulatory
Entity name
Activity
treatment
Koy Peltolantie 27
BF
FC
Koy Porkkanakatu 2
BF
FC
Republic of Ireland
First Floor, Riverside Two, 43 - 49 Sir. John Rogerson's Quay, Dublin 2, D02 KV60, Ireland
First Active Ltd
BF
FC
RBS Investments (Ireland) Ltd
BF
FC
RBS Nominees (Ireland) Ltd
BF
FC
UDTC Unlimited Company
TR
FC
Ulster Bank Pension Trustees (RI) Ltd
TR
DE
Ulydien (Ireland) Holdings Unlimited Company
INV
FC
Ulydien Designated Activity Company
BF
FC
Ulydien Holdings (ROI) Limited
BF
FC
Ulydien Trust Company Limited
TR
FC
Norway
C/o Advokatfirmaet Wiersholm AS, Postboks 1400, Oslo, 0115
Arenarena AS
BF
FC
BD Lagerhus AS
BF
FC
D5 INVEST AS
BF
FC
Eiendomsselskapet Apteno La AS
BF
FC
Espeland Naering AS
BF
FC
Hatros 1 AS
BF
FC
Kobbervikdalen 2 Utvikling AS
OTH
FC
Kvam Eiendom AS
BF
FC
Leiv Sand Eiendom AS
BF
FC
Narmovegen 455 AS
BF
FC
Nordisk Renting AS
BF
FC
Nybergflata 5 AS
BF
FC
OFH Eiendom AS
BF
FC
Rigedalen 44 Eiendom AS
BF
FC
Ringdalskogen Utvikling AS
OTH
FC
Ringdalveien 20 AS
BF
FC
Sandmoen Naeringsbygg AS
BF
FC
Sletta Eiendom II AS
BF
FC
Snipetjernveien 1 AS
BF
FC
Solnorvika AS
BF
FC
The Netherlands
Claude Debussylaan 94, Amsterdam, 1082 MD
NatWest Markets N.V.
CI
FC
RBS AA Holdings (Netherlands) B.V.
BF
FC
RBS Holdings N.V.
BF
FC
RBS Netherlands Holdings B.V.
BF
FC
United States
251 Little Falls Drive, Wilmington, DE, 19808, United States
Candlelight Acquisition LLC
BF
FC
Financial Asset Securities Corp.
BF
FC
NatWest Markets Group Holdings Corporation
BF
FC
NatWest Markets Securities Inc.
INV
FC
NatWest Services Inc.
SC
FC
Random Properties Acquisition Corp. III
INV
FC
Regulatory
Entity name
Activity
treatment
RBS Acceptance Inc.
BF
FC
RBS Commercial Funding Inc.
BF
FC
RBS Financial Products Inc.
BF
FC
RBS Holdings USA Inc.
BF
FC
C/o Silicon Foundry Floor 25, 350 Mission Street, San Francisco, CA, 94105
NatWest Innovation Services Inc.
OTH
FC
Jersey
Royal Bank House, 71 Bath Street, St Helier, Jersey, JE4 8PJ
The Royal Bank of Scotland International (Holdings) Ltd
BF
FC
The Royal Bank of Scotland International Ltd
CI
FC
Switzerland
Tirolerweg 8, Zug, CH- 6300
Alcover A.G.
BF
DE
Zaehringerstrasse 26, Zurich, CH-8021
Coutts & Co Ltd
CI
FC
Lerchenstrasse 16, Zurich, CH 8022
NatWest Services (Switzerland) Ltd
SC
FC
Cayman Islands
Maples Corporate Services Limited, P.O. Box 309, 121 South Church Street, George Town, Grand Cayman, KY1-
1104
Coutts General Partner (Cayman) V Ltd
BF
FC
Australia
Ashurst Australia, Level 16, 80 Collins Street, South Tower, Melbourne, VIC, 3000
RBS Group (Australia) Pty Ltd
BF
FC
RBS Holdings III (Australia) Pty Ltd
BF
FC
Bermuda
Clarendon House, Two Church Street, Suite 104, Reid Street, Hamilton, HM 11
KEB Investors, L.P.
BF
FC
Guernsey
PO Box 230, Heritage Hall, Le Marchant Street, St Peter Port, GY1 4JH
Lothbury Insurance Company Ltd
BF
DE
Les Echelons Court, Les Echelons, St Peter Port, GY1 1AR
RBS Employment (Guernsey) Ltd
SC
FC
Germany
Roßmarkt 10, Frankfurt am Main, 60311
NatWest Bank Europe GmbH
BF
FC
RBS Deutschland Holdings GmbH
BF
FC
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Additional information
NatWest Group plc
2025 Annual Report and Accounts
389
Financial statements
Parent company financial statements and notes continued
12 Related undertakings continued
Regulatory
Entity name
Activity
treatment
India
6th Floor, Building 2, Tower A, GIL IT/ITES SEZ, Candor TechSpace, Sector 21, Dundahera, Gurugram, Haryana,
122016
NatWest Digital Services India Private Limited
SC
FC
12/14, Veer Nariman Road, Brady House 4th floor, Fort, Mumbai, 400001
RBS Prime Services (India) Private Ltd
OTH
FC
Hong Kong
Room 1912, 19/F, Lee Garden One, 33 Hysan Avenue, Causeway Bay
Atlas Nominees Ltd
OTH
FC
RBS Nominees (Hong Kong) Ltd
BF
FC
Room 1910, 19/F, Lee Garden One, 33 Hysan Avenue, Causeway Bay
NatWest Markets Securities Japan Ltd
INV
FC
Luxembourg
40, Avenue J.F Kennedy, Kirchberg, L 1855
RBS International Depositary Services S.A.
CI
FC
Related undertakings which are 100% owned by NatWest Group ownership but are not
consolidated for accounting purposes
Regulatory
Entity name
Activity
treatment
United Kingdom
8 Sackville Street, London, W1S 3DG
East Grove Holding Limited
INV
DE
1, London Wall Place, London, EC2Y 5AU
German Biogas Holdco Limited
INV
DE
United States
251 Little Falls Drive, Wilmington, DE, 19808
Capulet Homes Florida LLC
OTH
DE
Montague Homes Florida LLC
OTH
DE
Romeo Homes Florida LLC
OTH
DE
Romeo Homes Georgia LLC
OTH
DE
Romeo Homes Indiana LLC
OTH
DE
Romeo Homes Kansas LLC
OTH
DE
Romeo Homes Nevada LLC
OTH
DE
Romeo Homes North Carolina LLC
OTH
DE
Romeo Homes Oklahoma LLC
OTH
DE
Romeo Homes Tennessee LLC
OTH
DE
Romeo Homes Texas LLC
OTH
DE
West Granite Homes Inc.
INV
DE
WGH Development LLC
OTH
DE
WGH Florida LLC
OTH
DE
WGH Georgia LLC
OTH
DE
WGH Indiana LLC
OTH
DE
WGH Kansas LLC
OTH
DE
WGH Nevada LLC
OTH
DE
WGH North Carolina LLC
OTH
DE
WGH Oklahoma LLC
OTH
DE
WGH Texas LLC
OTH
DE
Germany
Walther-Nernst-Straße 1, Berlin, 12489
Bioenergie Dargun Immobilien GmbH
OTH
DE
Bioenergie Jessen Immobilien GmbH
OTH
DE
Bioenergie Wiesenburg GmbH & Co. KG
INV
DE
Bioenergie Wiesenburg Verwaltungs GmbH
OTH
DE
Bioenergie Zittau GmbH
OTH
DE
Bioenergie Zittau Immobilien GmbH
OTH
DE
DBV Deutsche Bioenergie Verbinder GmbH
OTH
DE
Reppinichen Dritte Biogas Betriebs GmbH
OTH
DE
Reppinichen Erste Biogas Betriebs GmbH
OTH
DE
Reppinichen Zweite Biogas Betriebs GmbH
OTH
DE
Wiesenburg Dritte Biogas Betriebs GmbH
OTH
DE
Wiesenburg Erste Biogas Betriebs GmbH
OTH
DE
Wiesenburg Zweite Biogas Betriebs GmbH
OTH
DE
Wiesenburger Marktfrucht GmbH
OTH
DE
Jersey
Royal Bank House, 71 Bath Street, St Helier, Jersey, JE4 8PJ
RBS International Employees' Pension Trustees Ltd
BF
DE
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Additional information
NatWest Group plc
2025 Annual Report and Accounts
390
Financial statements
Parent company financial statements and notes continued
12 Related undertakings continued
Related undertakings where NatWest Group ownership is less than 100%
Accounting
Regulatory
Entity name
Activity
treatment
treatment
Group %
United Kingdom
Gate House, Turnpike Road, High Wycombe, Buckinghamshire, HP12 3NR
Falcon Wharf Ltd
OTH
EAJV
PC
50
GWNW City Developments Ltd
BF
EAJV
DE
50
250 Bishopsgate, London, EC2M 4AA, England
Natwest Covered Bonds LLP
BF
FC
FC
60
NW A Holdings Ltd
BF
FC
FC
85
The Mill, High Street, Rocester, Staffordshire, ST14 5JW, England
JCB Finance Ltd
BF
FC
FC
75
RBS Gogarburn, 175 Glasgow Road, Edinburgh, EH12 1HQ, Scotland
RBS Sempra Commodities LLP
BF
FC
FC
51
Towngate House, 2-8 Parkstone Road, Poole, BH15 2PW
JS Aspire Group Holdings Ltd
OTH
AHC
PC
28
Office 7 35-37 Ludgate Hill, London, England, EC4M 7JN
K423 Limited
OTH
AHC
DE
36
120 Cannon Street London EC4N 6AS
Pollinate Networks Limited
OTH
AHC
DE
24
13-15 York Buildings, London, WC2N 6JU
BGF Group Ltd
BF
AHC
PC
25
123 Victoria Street, London, England, SW1E 6DE
London Rail Leasing Ltd
BF
EAJV
PC
50
5 Churchill Place, 10 Floor, London, E14 5HU
Natwest Covered Bonds (LM) Ltd
BF
IA
PC
20
Natwest Markets Secured Funding (LM) Ltd
BF
FC
PC
20
5 Little Portland Street, London, W1W 7JD, England
Oaxaca Ltd
OTH
IA
DE
23
Luxembourg
46A, Avenue J.F Kennedy,L 1855
Lunar Luxembourg SA
BF
FC
DE
0
Lunar Luxembourg Series 2019- 01
BF
FC
DE
0
Lunar Luxembourg Series 2019- 04
BF
FC
DE
0
Lunar Luxembourg Series 2019- 05
BF
FC
DE
0
Lunar Luxembourg Series 2019- 06
BF
FC
DE
0
Accounting
Regulatory
Entity name
Activity
treatment
treatment
Group %
Lunar Luxembourg Series 2020- 01
BF
FC
DE
0
Lunar Luxembourg Series 2020- 02
BF
FC
DE
0
Lunar Luxembourg Series 2022- 01
BF
FC
DE
0
Lunar Luxembourg Series 2023- 01
BF
FC
DE
0
Lunar Luxembourg Series 2023- 02
BF
FC
DE
0
Lunar Luxembourg Series 2023- 03
BF
FC
DE
0
Lunar Luxembourg Series 2024- 01
BF
FC
DE
0
Lunar Luxembourg Series 2024- 02
BF
FC
DE
0
Lunar Luxembourg Series 2024- 03
BF
FC
DE
0
Lunar Luxembourg Series 2025- 01
BF
FC
DE
0
Jersey
44 Esplanade, St Helier, JE4 9WG
Goldfinch 2025-1 Limited
BF
FC
DE
0
Nightingale 2024-1 Limited
BF
FC
DE
0
Nightingale 2024-2 Limited
BF
FC
DE
0
Nightingale 2024-3 Limited
BF
FC
DE
0
Nightingale 2025-1
Limited
BF
FC
DE
0
Nightingale 2025-2 Limited
BF
FC
DE
0
Nightingale 2025-3 Limited
BF
FC
DE
0
Nightingale 2025-4 Limited
BF
FC
DE
0
Nightingale 2025-5
BF
FC
DE
0
Nightingale LF 2021-1 Ltd
BF
FC
DE
0
Nightingale Project Finance 2019 1 Ltd
BF
FC
DE
0
Nightingale Project Finance Ii 2023-1 Limited
BF
FC
DE
0
Nightingale Securities 2017-1 Limited
BF
FC
DE
0
Sparrow Capital Call 2024-1 Ltd
BF
FC
DE
0
IFC5, St.Helier, JE1 1ST
Solar Funding II Ltd
BF
FC
FC
0
Cayman Islands
Grand Pavilion Commercial Centre, 802 West Bay Road, P.O. Box 31119
Lunar Funding VIII Ltd
BF
FC
DE
0
Italy
Alfieri V. 1, Conegliano
Eris Finance S.R.L.
BF
IA
PC
50
Via Vittorio Alfieri 1, Conegliano TV, IT-TN 31015
Maja Finance S.R.L.
BF
FC
FC
0
Republic of Ireland
Block A George's Quay Plaza Dublin 2
Natwest Markets Secured Funding DAC
BF
FC
FC
0
Cyprus
24 Demostheni Severi, 1st Floor, Nicosia, 1080
Pharos Estates Ltd
OTH
AHC
DE
49
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Additional information
NatWest Group plc
2025 Annual Report and Accounts
391
Financial statements
Parent company financial statements and notes continued
12 Related undertakings continued
Related undertakings that are not active
Accounting
Regulatory
Entity name
Treatment
treatment
Group %
United Kingdom
250 Bishopsgate, London, EC2M 4AA, England
280 Bishopsgate Finance Ltd
FC
FC
100
Jaguar Cars Finance Ltd
FC
FC
50
7 Castle Street, Edinburgh, EH2 3AH
West Register (Hotels Number 3) Ltd
FC
DE
100
C/O Grant Thornton UK Advisory & Tax LLP, 11th Floor, Landmark
St Peter's Square, 1 Oxford Street, Manchester, M1 4PB
Care Homes 2 Ltd
FC
FC
100
Priority Sites Ltd
FC
DE
100
36 St Andrew Square, Edinburgh, EH2 2YB, Scotland
RBS Property Developments Ltd
FC
FC
100
Scottish Provident Building, 7 Donegall Square West, Belfast, BT1 6JH
Belfast Bankers' Clearing Company Ltd
NC
PC
25
Republic of Ireland
One Dockland Central, Guild Street, IFSC, Dublin, Dublin 1
RBS Asset Management (Dublin) Ltd
FC
FC
100
One Spencer Dock, Spencer Dock, Dublin, D01 X9R7
UB SIG (ROI) Ltd
FC
FC
100
Ulster Bank Group Centre, George's Quay, Dublin, Dublin 2
Lombard Ireland Group Holdings Unlimited
FC
FC
100
Lombard Ireland Ltd
FC
FC
100
The Netherlands
94, Claude Debussylaan, Amsterdam, 1082 MD
Alternative Investment Fund B.V.
FC
FC
100
Related undertakings that are dormant
Accounting
Regulatory
Entity name
Treatment
treatment
Group %
United Kingdom
250 Bishopsgate, London, EC2M 4AA, England
ANW TDS (Nominee 1) Ltd
FC
DE
100
ANW TDS (Nominee 2) Ltd
FC
DE
100
British Overseas Bank Nominees Ltd
FC
FC
100
Cushon Nominees Limited
FC
FC
100
Cushon Pension Trustees Limited
FC
DE
100
Fit Nominee 2 Ltd
FC
FC
100
Fit Nominee Ltd
FC
FC
100
Freehold Managers (Nominees) Ltd
FC
FC
100
L&G PUT A Limited
NC
DE
100
L&G PUT B Limited
NC
DE
100
Natwest FIS Nominees Ltd
FC
FC
100
NatWest Group Retirement Savings Trustee Limited
FC
FC
100
Natwest Pension Trustee Ltd
NC
DE
100
Natwest Pep Nominees Ltd
FC
FC
100
Nextlinks Ltd
FC
FC
100
NW C Shelf Limited
FC
FC
100
Project & Export Finance (Nominees) Ltd
FC
FC
100
R.B. Leasing (March) Ltd
FC
FC
100
RBOS Nominees Ltd
FC
FC
100
Sixty Seven Nominees Ltd
FC
FC
100
Syndicate Nominees Ltd
FC
FC
100
The Royal Bank Of Scotland Group Ltd
FC
FC
100
W G T C Nominees Ltd
FC
FC
100
440 Strand, London, WC2R OQS
Strand Nominees Ltd
FC
FC
100
RBS Gogarburn, 175 Glasgow Road, Edinburgh, EH12 1HQ, Scotland
Natwest Group Secretarial Services Ltd
FC
FC
100
N.C. Head Office Nominees Ltd
FC
FC
100
RBS Investment Executive Ltd
NC
DE
100
TDS Nominee Company Ltd
FC
FC
100
The Royal Bank Of Scotland (1727) Ltd
FC
FC
100
6-8 George Street, Edinburgh, EH2 2PF, Scotland
Coutts Scotland Nominees Limited
FC
FC
100
RBSG Collective Investments Nominees Ltd
FC
FC
100
11-16 Donegall Square East, Belfast, Co Antrim, BT1 5UB, Northern Ireland
JCB Finance Pension Ltd
FC
DE
88
Sweden
Care of Nordisk Renting AB, Jakobsbergsgatan 13, 8th Floor, Box 14044, Stockholm, SE-111 44
Nordisk Renting HB
FC
FC
100
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Additional information
NatWest Group plc
2025 Annual Report and Accounts
392
Financial statements
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
393
Parent company financial statements and notes connued
12 Related undertakings continued
Accounting
Regulatory
Entity name
Treatment
treatment
Group %
Isle of Man
2 Athol Street, Douglas, IM1 1AN
Tilba Ltd
FC
FC
100
Gibraltor
Madison Building, Midtown, Queensway
RBS (Gibraltar) Ltd
FC
FC
100
Jersey
Royal Bank House, 71 Bath Street, St Helier, Jersey, JE4 8PJ
National Westminster Bank Nominees (Jersey) Ltd
FC
FC
100
Norway
c/o Advokatfirmaet Wiersholm AS, Postboks 1400, 0115 Oslo
Nordisk Renting A/S
FC
FC
100
Regulated overseas branches of NatWest Group
Subsidiary
Geographic locaon
National Westminster Bank
Germany
NatWest Markets Plc
Germany
India
Japan
Singapore
United Arab Emirates
Royal Bank of Scotland International Ltd
Gibraltar
Guernsey
Isle of Man
Luxembourg,
United Kingdom
NatWest Markets N.V.
France
Germany
Italy
Sweden,
Key:
Activity
BF
Banking and financial institution
CI
Credit institution
INV
Investment (shares or property) holding company
SC
Service company
TR
Trustee
OTH
Other
Accounting/Regulatory treatment
DE
Deconsolidated
FC
Full consolidation
PC
Pro-rata consolidation
AHC
Associate held at cost
EAJV
Equity accounting – Joint venture
IA
Investment accounting
NC
Not consolidated
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
394
NatWest Group prepares its financial statements in accordance with UK-adopted International Accounting Standards (IAS), and International Financial Reporting Standards (IFRS), as issued by the
International Accounting Standards Board (IASB). This document contains a number of non-IFRS measures, or alternative performance measures, defined under the European Securities and Markets
Authority (ESMA) guidance, or non-GAAP financial measures in accordance with the Securities and Exchange Commission (SEC) regulations. These measures are adjusted for notable and other
defined items which management believes are not representative of the underlying performance of the business and which distort period-on-period comparison.
The non-IFRS measures provide users of the financial statements with a consistent basis for comparing business performance between financial periods and information on elements of performance
that are one-off in nature. The non-IFRS measures also include the basis of calculation for metrics that are used throughout the banking industry.
These non-IFRS measures are not a substitute for IFRS measures and a reconciliation to the closest IFRS measure is presented where appropriate
.
Measure
Description
Cost:income ratio (excl. litigation and conduct)
Refer to table 2. Cost:income ratio (excl. litigation and
conduct) on page 396.
The cost:income ratio (excl. litigation and conduct) is calculated as other operating expenses (operating expenses less litigation and
conduct costs) divided by total income. Litigation and conduct costs are excluded as they are one-off in nature, difficult to forecast for
Outlook purposes and distort period-on-period comparisons.
Customer deposits excluding central items
Refer to Segment performance on pages 88-89 for
components of calculation.
Customer deposits excluding central items is calculated as total NatWest Group customer deposits excluding Central items & other
customer deposits. Central items & other includes Treasury repo activity.
The exclusion of Central items & other removes the volatility
relating to Treasury repo activity and the reduction of deposits as part of our withdrawal from the Republic of Ireland.
These items may distort period-on-period comparisons and their removal gives the user of the financial statements a better
understanding of the movements in customer deposits.
Funded assets
Refer to Consolidated balance sheet on page 293 for
components of calculation.
Funded assets is calculated as total assets less derivative assets. This measure allows review of balance sheet trends exclusive of the
volatility associated with derivative fair values.
Loan:deposit ratio (excl. repos and reverse repos)
Refer to table 5. Loan:deposit ratio (excl. repos and reverse
repos) on page 397.
Loan:deposit ratio (excl. repos and reverse repos) is calculated as net customer loans - amortised cost excluding reverse repos divided by
total customer deposits excluding repos. This metric is used to assess liquidity.
The removal of repos and reverse repos reduces volatility and presents the ratio on a basis that is comparable to UK peers. The nearest
ratio using IFRS measures is: loan:deposit ratio. This is calculated as net loans to customers - amortised cost divided by customer
deposits.
NatWest Group Return on Tangible Equity
Refer to table 7. NatWest Group Return on Tangible Equity
on page 397.
NatWest Group Return on Tangible Equity comprises annualised profit or loss for the period attributable to ordinary shareholders divided
by average tangible equity. Average tangible equity is average total equity excluding average non-controlling interests, average other
owners’ equity and average intangible assets. This measure shows the return NatWest Group generates on tangible equity deployed. It is
used to determine relative performance of banks and used widely across the sector, although different banks may calculate the rate
differently. The nearest ratio using IFRS measures is return on equity - this comprises profit attributable to ordinary shareholders divided
by average total equity.
Non-IFRS financial measures
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
395
Non-IFRS financial measures connued
Measure
Description
Net interest margin and average interest earning assets
Refer to Segment performance on pages 88-89 for
components of calculation.
Net interest margin is net interest income, as a percentage of average interest earning assets (IEA).
Average IEA are average IEA of the banking business of NatWest Group and primarily consists of cash and balances at central banks,
loans to banks – amortised cost, loans to customers – amortised cost and other financial assets. It excludes trading balances and assets
in treasury repurchase agreements that have not been derecognised. Average IEA shows the average asset base generating interest over
the period.
Net loans to customers excluding central items
Refer to Segment performance on pages 88-89 for
components of calculation.
Net loans to customers excluding central items is calculated as total NatWest Group net loans to customers excluding Central items &
other net loans to customers. Central items & other includes Treasury reverse repo activity. The exclusion of Central items & other
removes the volatility relating to Treasury reverse repo activity and the reduction of loans to customers as part of our withdrawal from
the Republic of Ireland.
This allows for better period-on-period comparisons and gives the user of the financial statements a better understanding of the
movements in net loans to customers.
Operating expenses excluding litigation and conduct
Refer to table 4. Operating expenses excluding litigation
and conduct on page 396.
The management analysis of operating expenses shows litigation and conduct costs separately. These amounts are included within staff
costs and other administrative expenses in the statutory analysis. Other operating expenses excludes litigation and conduct costs, which
are more volatile and may distort period-on-period comparisons.
Segment return on equity
Refer to table 8. Segment return on equity on page 397.
Segment return on equity comprises segmental operating profit or loss, adjusted for paid-in equity and tax, divided by average notional
equity. Average RWAe is defined as average segmental RWAs incorporating the effect of capital deductions. This is multiplied by an
allocated equity factor for each segment to calculate the average notional equity. This measure shows the return generated by operating
segments on equity deployed.
Tangible net asset value (TNAV) per ordinary share
Refer to table 3. Tangible net asset value (TNAV) per
ordinary share on page 396.
TNAV per ordinary share is calculated as tangible equity divided by the number of ordinary shares in issue. This is a measure used by
external analysts in valuing the bank and allows for comparison with other per ordinary share metrics including the share price. The
nearest ratio using IFRS measures is: net asset value (NAV) per ordinary share - this comprises ordinary shareholders’ interests divided by
the number of ordinary shares in issue.
Total customer assets and liabilities (CAL)
Refer to table 6. Total customer assets and liabilities (CAL)
on page 397.
CAL comprises customer deposits and gross loans to customers (amortised cost), across the Retail Banking, Private Banking & Wealth
Management and Commercial & Institutional segments. For the Private Banking & Wealth Management segment, CAL also includes
AUMA, with an adjustment to deduct investment cash to avoid double counting, as investment cash is recognised within both customer
deposits and AUMA.
The components of CAL are key drivers of income and provide a measure of growth and strength of the business on a comparable basis.
Total income excluding notable items
Refer to table 1. Total income excluding notable items on
page 396.
Total income excluding notable items is calculated as total income less notable items. The exclusion of notable items aims to remove the
impact of one-offs and other items which may distort period-on-period comparisons.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
396
Non-IFRS financial measures connued
1. Total income excluding notable items
2025
2024
2023
£m
£m
£m
Continuing operations
Total income
16,641
14,703
14,752
Less notable items:
Commercial & Institutional
Own credit adjustments (OCA)
1
(9)
(2)
Tax interest on prior periods
-
-
3
Dividend received on restructuring of a strategic investment
51
-
-
Central items & other
Liquidity Asset Bond sale (losses)/gains
-
-
(43)
Share of gains/(losses) of associate - Business Growth Fund
70
21
(4)
Property strategy update
-
-
(69)
Interest and foreign exchange management derivatives not in
hedge accounting relationships
185
150
79
Foreign exchange recycling (losses)/gains
(27)
(76)
484
Loss on reclassification to disposal groups under IFRS 5
(39)
-
-
Tax interest on prior periods
-
(31)
(35)
241
55
413
Total income excluding notable items
16,400
14,648
14,339
2. Cost:income ratio (excl. litigation and conduct)
2025
2024
2023
£m
£m
£m
Continuing operations
Operating expenses
8,262
8,149
7,996
Less litigation and conduct costs
(167)
(295)
(355)
Other operating expenses
8,095
7,854
7,641
Total income
16,641
14,703
14,752
Cost:income ratio
49.6%
55.4%
54.2%
Cost:income ratio (excl. litigation and conduct)
48.6%
53.4%
51.8%
3. Tangible net asset value (TNAV) per ordinary share
Year ended
31 December
31 December
2025
2024
Ordinary shareholders’ interests (£m)
38,028
34,070
Less intangible assets (£m)
(7,292)
(7,588)
Tangible equity (£m)
30,736
26,482
Ordinary shares in issue (millions)
(1)
7,995
8,043
NAV per ordinary share (pence)
476p
424p
TNAV per ordinary share (pence)
384p
329p
(1) The number of ordinary shares in issue excludes own shares held.
4. Operating expenses excluding litigation and conduct
Litigation
Other
Total
and conduct
operating
operating
costs
expenses
expenses
Year ended 31 December 2025
£m
£m
£m
Continuing operations
Staff expenses
64
4,110
4,174
Premises and equipment
6
1,285
1,291
Depreciation and amortisation
-
1,154
1,154
Other administrative expenses
97
1,546
1,643
Total
167
8,095
8,262
Year ended 31 December 2024
Continuing operations
Staff expenses
64
3,997
4,061
Premises and equipment
-
1,211
1,211
Depreciation and amortisation
-
1,058
1,058
Other administrative expenses
231
1,588
1,819
Total
295
7,854
8,149
Year ended 31 December 2023
Continuing operations
Staff expenses
62
3,839
3,901
Premises and equipment
-
1,153
1,153
Depreciation and amortisation
-
934
934
Other administrative expenses
293
1,715
2,008
Total
355
7,641
7,996
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
397
Non-IFRS financial measures connued
5. Loan:deposit ratio (excl. repos and reverse repos)
As at
31 December
31 December
31 December
2025
2024
2023
£m
£m
£m
Loans to customers - amortised cost
418,881
400,326
381,433
Less reverse repos
(32,817)
(34,846)
(27,117)
Loans to customers - amortised cost
(excl. reverse repos)
386,064
365,480
354,316
Customer deposits
442,998
433,490
431,377
Less repos
(1,796)
(1,363)
(10,844)
Customer deposits (excl. repos)
441,202
432,127
420,533
Loan:deposit ratio
95%
92%
88%
Loan:deposit ratio (excl. repos and reverse repos)
88%
85%
84%
6. Total customer assets and liabilities (CAL)
Private Banking
Retail
& Wealth
Commercial &
Banking
Management
Institutional
Total
As at 31 December 2025
£bn
£bn
£bn
£bn
Gross loans and advances to customers
217.9
19.0
155.8
392.7
Customer deposits
202.6
42.7
196.4
441.7
Assets under management and
administration (AUMA)
-
58.5
-
58.5
Less investment cash included in both customer
deposits and AUMA
-
(1.2)
-
(1.2)
CAL
420.5
119.0
352.2
891.7
As at December 2024
Gross loans and advances to customers
210.1
18.3
143.4
371.8
Customer deposits
194.8
42.4
194.1
431.3
Assets under management and
administration (AUMA)
-
48.9
-
48.9
Less investment cash included in both customer
deposits and AUMA
-
(1.1)
-
(1.1)
CAL
404.9
108.5
337.5
850.9
7. NatWest Group Return on Tangible Equity
Year ended or as at
31 December
31 December
2025
2024
£m
£m
Profit attributable to ordinary shareholders
5,479
4,519
Average total equity
41,506
38,018
Adjustment for other owners' equity and intangible assets
(12,952)
(12,226)
Adjusted total tangible equity
28,554
25,792
Return on equity
13.2%
11.9%
Return on Tangible Equity
19.2%
17.5%
8. Segment return on equity
Private Banking
Retail
& Wealth
Commercial &
Year ended 31 December 2025
Banking
Management
Institutional
Operating profit (£m)
3,121
394
4,064
Paid-in equity cost allocation (£m)
(99)
(17)
(237)
Adjustment for tax (£m)
(846)
(106)
(957)
Adjusted attributable profit (£m)
2,176
271
2,870
Average RWAe (£bn)
68.9
11.3
108.1
Equity factor
12.8%
11.1%
13.9%
Average notional equity (£bn)
8.8
1.3
15.0
Return on equity
24.7%
21.7%
19.1%
Year ended 31 December 2024
Operating profit (£m)
2,431
264
3,585
Paid-in equity cost allocation (£m)
(79)
(18)
(183)
Adjustment for tax (£m)
(659)
(69)
(851)
Adjusted attributable profit (£m)
1,693
177
2,551
Average RWAe (£bn)
63.4
11.1
107.0
Equity factor
13.4%
11.2%
13.8%
Average notional equity (£bn)
8.5
1.2
14.8
Return on equity
19.9%
14.2%
17.2%
Year ended 31 December 2023
Operating profit (£m)
2,638
291
3,236
Paid-in equity cost allocation (£m)
(55)
(23)
(165)
Adjustment for tax (£m)
(723)
(75)
(768)
Adjusted attributable profit (£m)
1,860
193
2,303
Average RWAe (£bn)
57.8
11.4
107.0
Equity factor
13.5%
11.5%
14.0%
Average notional equity (£bn)
7.8
1.3
15.0
Return on equity
23.8%
14.8%
15.4%
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
398
The table below summarises other performance measures used by NatWest Group, not defined under IFRS, and therefore a reconciliation to the nearest IFRS measure is not applicable.
Measure
Description
AUMA
AUMA comprises client assets under management (AUM) and client assets under administration (AUA) serviced through the Private Banking & Wealth
Management segment and not recognised on NatWest Group’s balance sheet. AUM comprise assets where the investment management is undertaken by
Private Banking & Wealth Management on behalf of customers of the Private Banking & Wealth Management, Retail Banking and Commercial & Institutional
segments. AUA comprise i) third party assets held on an execution-only basis in custody by Private Banking & Wealth Management, Retail Banking and
Commercial & Institutional for their customers, for which the execution services are supported by Private Banking & Wealth Management ii) AUA of Cushon,
acquired on 1 June 2023, which are supported by Private Banking & Wealth Management and held and managed by third parties. This measure is tracked
and reported as the amount of funds that we manage or administer, and directly impacts the level of investment income that we receive.
AUMA income
AUMA income includes investment income which reflects an ongoing fee as percentage of assets and transactional income related to investment services
comprised of one-off fees for advice services, trading and exchange services, protection and alternative investing services. AUMA is a core driver of non-
interest income, especially with respect to ongoing investment income and this measure provides a means of reporting the income earned on AUMA.
AUMA net flows
AUMA net flows represents assets under management (AUM net flows) and assets under administration (AUA net flows). AUMA net flows is reported and
tracked to monitor the business performance of new business inflows and management of existing client withdrawals across Private Banking & Wealth
Management, Retail Banking and Commercial & Institutional.
Capital generation pre-distributions
Capital generation pre-distributions refers to the change in the CET1 ratio in the period, before distributions to ordinary shareholders. It reflects the capital
generated through business activities and all other movements, including attributable profit for the period, impacts from acquisitions and disposals, and risk-
weighted asset (RWA) changes, prior to the deduction of ordinary shareholder distributions such as ordinary dividends and share buybacks. It is used to
show the capital generated in the period that is available for deployment in the business and distribution to shareholders.
Climate and transition finance
The climate and transition finance target enables NatWest Group to quantify the level of financing and facilitation provided by NatWest Group that could
support customers in achieving their climate and/or transition ambitions, through lending and underwriting activities. The climate and transition finance
framework, available on natwestgroup.com, underpins the target to provide £200 billion in climate and transition finance between 1 July 2025 and the end
of 2030.
Loan impairment rate
Loan impairment rate is the annualised loan impairment charge divided by gross customer loans. This measure is used to assess the credit quality of the
loan book.
Third party rates
Third party customer asset rate is calculated as annualised interest receivable on third-party loans to customers as a percentage of third-party loans to
customers. This excludes assets of disposal groups, intragroup items, loans to banks and liquid asset portfolios. Third party customer funding rate reflects
interest payable or receivable on third-party customer deposits, including interest bearing and non-interest bearing customer deposits. Intragroup items,
bank deposits, debt securities in issue and subordinated liabilities are excluded for customer funding rate calculation.
Wholesale funding
Wholesale funding comprises deposits by banks (excluding repos), debt securities in issue and subordinated liabilities. Funding risk is the risk of not
maintaining a diversified, stable and cost-effective funding base. The disclosure of wholesale funding highlights the extent of our diversification and how we
mitigate funding risk.
Performance measures not defined under IFRS
Bishopsgate, London, UK
Additional
information
400
The capital requirements (country by country reporting) Regulations
403
Risk factors
423
Material contracts
425
Shareholder information
428
Presentation of information
428
Forward-looking statements
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
NatWest Group plc
2025 Annual Report and Accounts
399
Additional information
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
400
This report has been prepared for NatWest Group to comply with the Capital Requirements (Country by Country Reporting) Regulations 2013 which implement Article 89 of the Capital Requirements
Directive IV.
This report shows the income, profit/(loss) before tax, tax paid/(received), average and spot employee numbers on a full-time equivalent basis for the entities located in the countries in which we
operate.
Country
Each subsidiary or branch is allocated to the country in which it is resident for tax purposes. The data is consolidated for all the subsidiaries and branches allocated to each country.
Income and profit/(loss) before tax
Income includes internal service fee income from other countries, which is eliminated on consolidation for accounting purposes and is shown as an elimination from total income in the tables below.
Income and profit/(loss) totals are reported in Note 4 within the Geographical segments table.
Tax paid/(received)
Tax paid/(received) disclosed under CRD IV relates to corporation tax.
Corporation tax paid represents net cash taxes paid to/(received) from the tax authorities in each jurisdiction.
Corporation tax paid is reported on a cash basis as opposed to an accounting basis and therefore does not necessarily have a direct correlation to the reported profits or losses arising in the year. For
example, in certain jurisdictions taxable profits may be reduced as a result of the offset of tax losses brought forward from prior years; or tax payments may be calculated with reference to prior year
profits.
Full time equivalent employees (FTEs)
FTEs are allocated to the country in which they are primarily based for the performance of their employment duties. The figures disclosed represent the average number of FTEs, including temporary
staff, in each country during the period. The FTEs, including temporary staff, at 31 December 2025, have been added for completeness.
Public subsidies received
No public subsidies were received during the period.
The Capital Requirements (Country by Country Reporting) Regulations (audited)
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
401
Capital Requirements (Country by Country Reporting) regulations (audited)
NatWest Group Country-by-Country tax breakdown 2025
Headcount
Profit/(loss)
Tax paid/
Average FTE
FTE including temporary
Income (1)
before tax (1)
(received)
including
staff as at the year end
Country
£m
£m
£m
temporary staff
31 December 2025
UK
15,198
6,682
1,567
38,084
37,597
Guernsey
209
151
20
91
86
Isle of Man
99
34
2
352
306
Jersey
540
242
26
738
580
UK region
(2)
16,046
7,109
1,615
39,265
38,569
Finland
13
10
5
9
9
France
43
3
7
72
71
Germany
241
165
43
114
96
Gibraltar
58
-
4
72
96
Greece
-
(1)
-
1
1
Republic of Ireland
5
(46)
(1)
68
36
Italy
12
2
-
22
22
Luxembourg
179
129
53
82
84
Netherlands
174
62
-
125
125
Norway
6
5
1
-
-
Poland
70
36
-
427
77
Sweden
12
1
1
40
45
Switzerland
91
3
1
242
228
Europe region
(2)
904
369
114
1,274
890
USA
249
99
2
270
266
US region
(2)
249
99
2
270
266
India
584
100
61
18,201
18,877
Japan
17
2
-
35
32
Singapore
67
29
-
87
86
Rest of the World region
(2)
668
131
61
18,323
18,995
UK region
16,046
7,109
1,615
39,265
38,569
Europe region
904
369
114
1,274
890
US region
249
99
2
270
266
Rest of the World region
668
131
61
18,323
18,995
Global total
17,867
7,708
1,792
59,132
58,720
Elimination of internal
service fee income
(1,226)
Global total
16,641
7,708
1,792
59,132
58,720
For the notes to this table refer to the following page.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
402
Capital Requirements (Country by Country Reporting) regulations (audited)
NatWest Group Country-by-Country tax breakdown 2024
Headcount
Profit/(loss)
Tax paid/
Average FTE
FTE including temporary
Income (1)
before tax (1)
(received)
including
staff as at the year end
Country
£m
£m
£m
temporary staff
31 December 2024
UK
13,721
5,724
1,480
39,237
38,306
Guernsey
196
147
12
92
92
Isle of Man
93
19
3
363
365
Jersey
549
256
27
778
753
UK region
(2)
14,559
6,146
1,522
40,470
39,516
Finland
15
13
4
7
8
France
48
11
-
69
70
Germany
(217)
(271)
10
121
125
Gibraltar
51
19
5
66
69
Greece
-
(1)
-
1
1
Republic of Ireland
57
(45)
(2)
242
106
Italy
12
3
(1)
21
22
Luxembourg
157
117
26
74
75
Netherlands
179
92
-
125
124
Norway
5
5
1
-
-
Poland
97
(22)
-
1,238
804
Sweden
11
-
3
42
39
Switzerland
126
9
2
292
263
Turkey
1
-
1
1
-
Europe region
(2)
542
(70)
49
2,299
1,706
USA
211
75
1
275
273
US region
(2)
211
75
1
275
273
India
534
100
29
17,241
17,607
Japan
18
3
1
36
37
Singapore
63
22
-
98
84
Rest of the World region
(2)
615
125
30
17,375
17,728
UK region
14,559
6,146
1,522
40,470
39,516
Europe region
542
(70)
49
2,299
1,706
US region
211
75
1
275
273
Rest of the World region
615
125
30
17,375
17,728
Global total
15,927
6,276
1,602
60,419
59,223
Elimination of internal
service fee income
(1,205)
-
-
-
-
Global total
14,722
6,276
1,602
60,419
59,223
(1)
A full list of NatWest Group’s subsidiaries names, nature of activities
and geographical locations is available in Note 12 of the parent
company accounts.
(2)
Includes internal service fee income of £490 million for UK region (2024
- £464 million), £159 million for Europe region (2024 - £219 million), £3
million for US region (2024 - £3 million) and £574 million for Rest of the
World region (2024 - £519 million).
(3)
The amounts shown above are presented to the nearest million and as
a result any amounts less than £0.5 million have been rounded to zero.
(4)
The information above is presented on a gross reporting basis and
includes results from discontinued operations. The results from
discontinued operations are included in the Republic of Ireland totals,
increase in income: nil; Profit before tax: nil; tax paid: nil; subsidies
received: nil; average headcount: nil; headcount as at 31 December
2025: nil (2024 - Increase in income: £19 million; profit before tax: £81
million; tax paid: nil; subsidies received: nil; average headcount: nil;
headcount as at 31 December 2024: nil).
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
403
Principal Risks and Uncertainties
Set out below are certain risk factors that
could have a material adverse effect on
NatWest Group’s future results, its financial
condition and/or prospects and cause them to
be materially different from what is forecast
or expected, and directly or indirectly impact
the value of its securities. These risk factors
are broadly categorised and should be read
in conjunction with other risk factors in this
section and other parts of this annual report,
including the forward-looking statements
section, the strategic report and the risk and
capital management section. They should not
be regarded as a complete and
comprehensive statement of all potential risks
and uncertainties facing NatWest Group.
Economic and political risk
NatWest Group, its customers and its
counterparties face continued economic
and political risks and uncertainties in the
UK and global markets, including as a
result of inflation and interest rates,
supply chain disruption, protectionist
policies, and geopolitical developments.
As a principally UK-focused banking group,
NatWest Group is affected by global economic
and market conditions and is particularly
exposed to those conditions in the UK.
Uncertain and volatile economic conditions in
the UK or globally can create a challenging
operating environment for financial services
companies such as NatWest Group. The
outlook for the UK and the global economy is
affected by many dynamic factors including:
GDP, unemployment, inflation and interest
rates, asset prices (including residential and
commercial property), energy prices,
monetary and fiscal policy (such as increases
in bank taxes), supply chain disruption,
protectionist policies or trade barriers
(including tariffs).
Economic and market conditions could be
exacerbated by a number of factors including:
instability in the UK and/or global financial
systems, market volatility and change,
fluctuations in the value of the pound sterling,
new or extended economic sanctions,
volatility in commodity prices, political
uncertainty or instability, concerns regarding
sovereign debt (including sovereign credit
ratings), any lack or perceived lack of
creditworthiness of a counterparty or
borrower that may trigger market-wide
liquidity problems, changing demographics in
the markets that NatWest Group and its
customers serve, rapid changes to the
economic environment due to the adoption of
technology, digitisation, automation, artificial
intelligence, decarbonisation, or due to the
consequences of climate change, biodiversity
loss, environmental degradation, and
widening social and economic inequalities.
NatWest Group is also exposed to risks arising
out of geopolitical events or political
developments that may hinder economic or
financial activity levels and may, directly or
indirectly, impact UK, regional or global trade
and/or NatWest Group’s customers and
counterparties. NatWest Group’s business and
performance could be negatively affected by
political, military or diplomatic events,
geopolitical tensions, armed conflict (for
example, the Russia-Ukraine conflict and
Middle East conflicts), terrorist acts or threats
(including to critical infrastructures), more
severe and frequent extreme weather events,
widespread public health crises, and the
responses to any of the above scenarios by
various governments and markets.
NatWest Group may face political uncertainty
in Scotland if there is another Scottish
independence referendum. Scottish
independence may adversely affect NatWest
Group plc both in relation to its entities
incorporated in Scotland and in other
jurisdictions. Any changes to Scotland’s
relationship with the UK or the EU may
adversely affect the environment in which
NatWest Group plc and its subsidiaries
operate and may require further changes to
NatWest Group, independently or in
conjunction with other mandatory or
strategic structural and organisational
changes, any of which could adversely affect
NatWest Group.
The value of NatWest Group’s own and other
securities may be materially affected by
economic and market conditions. Market
volatility, illiquid market conditions and
disruptions in the financial markets may make
it very difficult to value certain of NatWest
Group’s own and other securities, particularly
during periods of market displacement. This
could cause a decline in the value of NatWest
Group’s own and other securities, or
inaccurate carrying values for certain
financial instruments.
In addition, financial markets are susceptible
to severe events evidenced by, or resulting in,
rapid depreciation in asset values, which may
be accompanied by a reduction in asset
liquidity. Under these conditions, hedging and
other risk management strategies may not be
as effective at mitigating losses as they would
be under more normal market conditions.
Moreover, under these conditions, market
participants are particularly exposed to
trading strategies employed by many market
participants simultaneously (and often
automatically) and on a large scale,
increasing NatWest Group’s counterparty risk.
NatWest Group’s risk management and
monitoring processes seek to quantify and
mitigate NatWest Group’s exposure to
extreme market moves. However, market
events have historically been difficult to
predict, and NatWest Group, its customers
and its counterparties could realise significant
losses if severe market events were to occur.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
Changes in interest rates will continue to
affect NatWest Group’s business and
results.
NatWest Group’s performance is affected by
changes in interest rates. Benchmark
overnight interest rates, such as the UK base
rate, decreased in 2025. Forward rates imply
UK short term interest rates, including the UK
base rate, will continue to decline in 2026,
while they anticipate longer term swap rates,
such as the GBP 5 and 10-year swap rates,
will rise slightly across 2026. Stable interest
rates support more predictable income flow
and less volatility in asset and liability
valuations, although persistently low and
negative interest rates may adversely affect
NatWest Group. Further, volatility in interest
rates may result in unexpected outcomes
both for interest income and asset and
liability valuations which may adversely affect
NatWest Group. For example, decreases in
key benchmark rates such as the UK base
rate may adversely affect NatWest Group’s
net interest margin, and unexpected
movements in spreads between key
benchmark rates such as sovereign and swap
rates may in turn affect liquidity portfolio
valuations. In addition, unexpected sharp
rises in rates may also have negative impacts
on some asset and derivative valuations.
Risk factors
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
404
Risk factors continued
Moreover, customer and investor responses
to rapid changes in interest rates can have an
adverse effect on NatWest Group. For
example, customers may make deposit
choices that provide them with higher returns
than those being offered by NatWest Group.
Alternatively, NatWest Group may not
respond with competitive products as rapidly,
for example following an interest rate change,
which may in turn decrease NatWest Group’s
net interest income.
Movements in interest rates also influence
and reflect the macroeconomic situation
more broadly, affecting factors such as
business and consumer confidence, property
prices, default rates on loans, customer
behaviour (which may adversely impact the
effectiveness of NatWest Group’s hedging
strategy) and other indicators that may
indirectly affect NatWest Group.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
Fluctuations in currency exchange rates
may adversely affect NatWest Group’s
results and financial condition.
Decisions of central banks (including the Bank
of England (‘BoE’), the European Central
Bank (‘ECB’) and the US Federal Reserve)
and political or market events, which are
outside NatWest Group’s control, may lead to
unexpected fluctuations in currency exchange
rates. Although NatWest Group is principally a
UK-focused banking group, it is subject to
structural foreign exchange risk from capital
deployed in NatWest Group’s foreign
subsidiaries, branches and other strategic
equity shareholdings.
NatWest Group also relies on issuing
securities in non-sterling currencies, such as
US dollars and euros, that assist in meeting
NatWest Group’s regulatory requirements. In
addition, NatWest Group conducts banking
activities in non-sterling currencies (for
example, loans, deposits and dealing activity)
which affect its revenue. NatWest Group also
uses service providers based outside the UK
for certain services and as a result certain
operating results are subject to fluctuations in
currency exchange rates.
NatWest Group maintains policies and
procedures designed to manage the impact
of its exposure to fluctuations in currency
exchange rates. Nevertheless, changes in
currency exchange rates, particularly in the
sterling-US dollar and sterling-euro rates,
may adversely affect various accounting and
financial metrics including, the value of assets,
liabilities (including the total amount of
instruments eligible to contribute towards the
minimum requirement for own funds and
eligible liabilities (‘MREL’)), foreign exchange
dealing activity, income and expenses, RWAs
and hence the reported earnings and
financial condition of NatWest Group.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
Business change and execution risk
The implementation and execution of
NatWest Group’s strategy carries
execution and operational risks and it
may not achieve its stated aims and
targeted outcomes.
NatWest Group’s strategy (including the
strategic priorities of disciplined growth,
leveraging simplification and active balance
sheet and risk management) is intended to
reflect the rapidly changing environment and
backdrop of significant societal disruption
driven by technology and changing customer
expectations.
There is also increasing scrutiny from
stakeholders regarding how NatWest Group
addresses environmental and social
challenges, including its support for the
transition to net zero, promotion of inclusive
workplaces, protection of customer data, and
responsible management of its workforce and
of its supply chain.
Many factors may adversely impact the
successful implementation of NatWest Group’s
strategy, including:
•
macroeconomic challenges which may
adversely affect NatWest Group’s
customers, and could in turn adversely
impact certain strategic initiatives for
NatWest Group (see ‘NatWest Group, its
customers and its counterparties face
continued economic and political risks
and uncertainties in the UK and global
markets, including as a result of inflation
and interest rates, supply chain
disruption, protectionist policies, and
geopolitical developments’);
•
changing customer expectations and
behaviour in response to
macroeconomic conditions or
developments, technology and other
factors which could reduce the
profitability, competitiveness, or volume
of services NatWest Group offers;
•
the rapid emergence and deployment of
new technologies (such as artificial
intelligence, quantum computing,
blockchain and digital currencies)
resulting in a potential shift across the
market towards products and services
that are not part of NatWest Group’s
core offering today;
•
the deployment and integration of
artificial intelligence in NatWest Group’s
processes, controls, and products;
•
the emergence of digital assets and
digital currencies operating alongside the
traditional monetary system;
•
increased competitive threats from
incumbent banks, fintech companies
(including buy-now-pay-later companies
and payment platforms), large retail and
technology conglomerates and other
new market entrants (including those
that emerge from mergers and
consolidations) who may have
competitive advantages in terms of
scale, technology and customer
engagement; and
•
changes to the regulatory environment
and associated requirements which
could lead to shifts in operating cost and
regulatory capital requirements that
impact NatWest Group’s product
offerings and business models (see
‘NatWest Group’s businesses are subject
to substantial regulation and oversight,
which are constantly evolving and may
adversely affect NatWest Group’ and
‘NatWest Group could incur losses or be
required to maintain higher levels of
capital as a result of limitations or failure
of various models’).
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
405
Risk factors continued
Delivery of NatWest Group’s strategy will
require:
•
maintaining effective governance,
procedures, systems and controls giving
effect to NatWest Group’s strategy;
•
maintaining effective conflicts of interest
policies to mitigate the risk of breach of
the UK ring-fencing regime due to the
creation of the Commercial &
Institutional business segment; and
•
achieving the stated financial, capital and
operational targets and expectations
within the relevant timeframes.
In pursuing its strategy, NatWest Group may
not be able to successfully: (i) implement
some or all aspects of its strategy; (ii) meet
any or all of the related targets or
expectations of its strategy; and otherwise
realise the anticipated benefits of its strategy,
in a timely manner, or at all; or (iii) realise the
intended strategic objectives of any other
future strategic or growth initiative, which
may also result in materially higher costs or
risks than initially contemplated. This could
lead to additional management actions by
NatWest Group. The scale and scope of
NatWest Group’s strategy and the intended
changes continue to present material
business, operational and regulatory
(including compliance with the UK ring-
fencing regime), conflicts, legal, execution, IT
system, cybersecurity, internal culture,
conduct and people risks. Implementing
changes and strategic actions, including in
respect of any growth, simplification or cost-
saving initiatives, requires the effective
application of robust governance and controls
frameworks and IT systems and there is a
risk that NatWest Group may not be
successful in these respects.
Additionally, as a result of the UK’s
withdrawal from the EU, certain aspects of
the services provided by NatWest Group
require local licences or individual equivalence
decisions (temporary or otherwise) by
relevant regulators. In April 2024, the
European Parliament approved the Banking
Package (CRR III/CRD VI). From 11 January
2027, non-EU firms providing ‘banking
services’ will be required to apply for and
obtain authorisation to operate as third
country branches in each relevant EU
member state where they provide these
services, unless an exemption applies.
NatWest Group continues to evaluate its EU
operating model, making adaptations as
necessary. Changes to, or uncertainty
regarding NatWest Group’s EU operating
model have been, and may continue to be,
costly and may: (i) adversely affect customers
and counterparties who are dependent on
trading with the EU or personnel from the
EU; and/or (ii) result in regulatory sanction
and/or further costs due to a failure to receive
the required regulatory permissions and/or
further changes to NatWest Group’s business
operations, product offering, customer
engagement, and regulatory requirements.
Each of these risks, and others identified in
this section entitled ‘Principal Risks and
Uncertainties’, individually or collectively could
jeopardise the implementation and delivery of
NatWest Group’s strategy, and adversely
affect NatWest Group’s products and services
offering, its reputation with customers or
business model, and its ability to meet its
targets, guidance, and forecasts.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
Acquisitions, divestments, or other
transactions by NatWest Group may not
be successful.
NatWest Group may decide to undertake
acquisitions, investments, the purchase of
assets and liabilities, divestments,
restructurings, reorganisations, joint ventures
and other strategic partnerships, as well as
other transactions and initiatives. In doing so,
NatWest Group may have to compete with
other financial institutions or entities offering
financial services products (including those
that emerge from mergers and
consolidations, as well as retail and
technology conglomerates). These
competitors may have more bargaining
power in negotiations than NatWest Group,
and therefore may be in a position to extract
more advantageous terms than NatWest
Group. Refer to ‘NatWest Group operates in
markets that are highly competitive, with
evolving competitive pressures and
technology disruption’.
NatWest Group may pursue these
transactions and initiatives to, amongst
others: (i) increase scale and/or enhance
capabilities that may lead to better
productivity or cost efficiencies; (ii) acquire
talent; (iii) pursue new products or expand
existing products; and/or (iv) enter new
markets or enhance its presence in existing
markets. In pursuing its strategy, NatWest
Group may not fully realise the expected
benefits and value from the above-mentioned
transactions and initiatives in the time, or to
the degree, anticipated, or at all.
In particular, NatWest Group may: (i) fail to
realise the business rationale for the
transaction or initiative, or rely on
assumptions underlying the business plans
supporting the valuation of a target
transaction or initiative that may prove
inaccurate (for example, regarding synergies
and expected commercial demand); (ii) fail to
successfully integrate any acquired
businesses, investment, joint-venture or
assets (including in respect of technologies,
existing strategies, products, governance,
systems and controls, and human capital) or
to successfully divest or restructure a
business; (iii) fail to retain key employees,
customers and suppliers of any acquired or
restructured business; (iv) be required or wish
to terminate pre-existing contractual
relationships, which could prove costly and/or
be executed on unfavourable terms and
conditions; (v) fail to conduct adequate due
diligence or fail to discover certain contingent
or undisclosed liabilities in businesses that it
acquires; and (vi) not obtain necessary
regulatory and other approvals or onerous
conditions may be attached to such
approvals. Accordingly, NatWest Group may
not be successful in achieving its strategy and
any particular transaction may not succeed,
may be limited in scope or scale and may not
conclude on the terms contemplated, or at
all.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
406
Risk factors continued
NatWest Group operates in markets that
are highly competitive, with evolving
competitive pressures and technology
disruption.
NatWest Group faces increasing competitive
pressures and technology disruption from
incumbent traditional UK banks, challenger
banks and building societies (including those
formed through mergers), fintech companies
(including companies offering buy-now-pay-
later and payment platforms), large
technology conglomerates and new market
entrants leveraging technology and/or other
advantages to compete for customer
engagement. “BigTech” companies pose a
threat to incumbent banking providers
because of their customer innovation and
global reach. In addition, digital-first banks
(often referred to as “neobanks”) and fintechs
are aiming to compete to serve customers
that increasingly use a constellation of
providers to support their complex and
evolving needs (e.g., personal financial
management, buy now and pay later, and
paying for goods and services in foreign
currency).
Competition is expected to continue and
intensify due to: evolving customer behaviour,
technological changes (including digital
currencies, stablecoins and the growth of
digital banking), competitor behaviour, new
market entrants, competitive foreign
exchange offerings, industry trends resulting
in increased disaggregation or unbundling of
financial services or, conversely, the re-
intermediation of traditional banking services,
and the impact of regulatory actions, among
others. In particular, NatWest Group may be
unable to grow or retain market share due to
new (or more competitive) banking, lending
and payment offerings by rapidly evolving
incumbents and challengers (including
shadow banks, alternative or direct lenders
and new entrants).
Regulatory and competition policy
interventions such as the UK initiative on
Open Banking, ‘Open Finance’ and remedies
imposed by the Competition and Markets
Authority (‘CMA’) are accelerating these
trends. These competitive pressures may
result in a shift in customer behaviour and
impact NatWest Group’s revenues and
profitability, particularly in its key UK retail
and Commercial & Institutional banking
segments. Moreover, innovations in
biometrics, artificial intelligence, automation,
cloud services, blockchain, cryptocurrencies
and quantum computing may rapidly facilitate
industry transformation.
Increasingly, many of NatWest Group’s
products and services are, and will become,
more technology intensive, including through
digitalisation, automation, and the use of
artificial intelligence while needing to continue
complying with applicable and evolving
regulations. NatWest Group’s ability to develop
or acquire digital solutions and their
integration into NatWest Group’s structures,
systems and controls has become
increasingly important for retaining and
growing NatWest Group’s market share and
customer-facing businesses. NatWest Group’s
innovation strategy, which includes investing
in its IT capability to address increasing
customer and merchant use of online and
mobile banking technology, as well as
selective acquisitions (such as fintech
ventures, including Rooster Money and
Boxed), may not be successful or may not
result in NatWest Group offering innovative
products and services in the future.
Furthermore, competitors may outperform
NatWest Group in deploying technologies to
deliver products or services to customers,
which may adversely affect NatWest Group’s
competitive position. In addition, continued
industry consolidation and/or technological
developments could result in the emergence
of new competitors or strengthening NatWest
Group’s current competitors, including in their
ability to offer a broader, more attractive
and/or better value range of products and
services and geographic diversity. For
example, new market entrants, including non-
traditional financial services providers, such
as retail or technology conglomerates, may
benefit from scale, technology and customer
engagement advantages and may be able to
deliver financial services at a lower cost base.
Failure to offer competitive, attractive,
innovative, and profitable products that are
also released in a timely manner; may result
in lost market share, losses on some or all of
NatWest Group’s initiatives and missed growth
opportunities. For example, NatWest Group is
investing in the automation of certain
solutions and interactions within its customer-
facing businesses, including through artificial
intelligence. There can be no certainty that
such initiatives will allow NatWest Group to
compete effectively or will deliver the
expected cost savings. In addition, the
implementation of NatWest Group’s strategy,
delivery on its climate ambition and cost-
controlling measures, may also have an
adverse effect on competitiveness and
returns. Moreover, activist investors
engagement and increased intervention may
challenge NatWest Group’s strategic
initiatives.
NatWest Group may also fail to identify
opportunities or derive benefits from
technological innovation, shifting customer
behaviour or regulatory changes.
Competitors may better attract and retain
customers and key employees, operate more
effective IT systems, have access to lower
cost funding and/or be able to attract
deposits on more favourable terms than
NatWest Group. Although NatWest Group
invests in new technologies and participates
in industry and research-led technology
development initiatives, such investments may
be insufficient or ineffective, especially given
NatWest Group’s focus on business
simplification and cost efficiencies. This could
affect NatWest Group’s ability to offer
innovative products or technologies to
customers.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
The transfer of NatWest Group’s EU
corporate portfolio involves certain risks.
To improve efficiencies and best serve
customers, certain assets, liabilities,
transactions and activities of NatWest Group
(including its Western European corporate
portfolio principally consisting of term funding
and revolving credit facilities), have been or
may be: (i) transferred from the ring-fenced
subgroup of NatWest Group to NWM Group
and/or (ii) transferred to the ring-fenced
subgroup of NatWest Group from NWM
Group, subject to customer and regulatory
requirements, such as CRD VI. The timing,
success and quantum of any of these
transfers remain uncertain as is the impact of
these transactions on its results of operations.
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
407
Risk factors continued
If such transfers are unable to be
implemented in response to triggering events,
such as changes in the regulatory
environment, it may result in reputational
damage.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
Financial resilience risk
NatWest Group may not achieve its
ambitions or targets, meet its guidance,
or be in a position to continue to make
discretionary capital distributions
(including dividends to shareholders).
NatWest Group has set a number of financial,
capital and operational targets and provided
guidance including in respect of its: CET1
ratio target, return on tangible equity (RoTE),
total income, other operating expenses, loan
impairment rate, capital generation pre-
distributions, customer assets and liabilities
growth rate, cost-income ratio, RWAs,
ordinary dividends, funding plans and
requirements, employee engagement,
diversity and inclusion as well as climate-
related targets (including its climate and
transition finance targets) and customer
satisfaction targets and discretionary capital
distributions. Refer to ‘The implementation
and execution of NatWest Group’s strategy
carries execution and operational risks and it
may not achieve its stated aims and targeted
outcomes.’
NatWest Group’s ability to meet its ambitions,
targets, guidance, and make discretionary
capital distributions is subject to various
internal and external factors, risks and
uncertainties.
These include but are not limited to: UK and
global macroeconomic, political, market and
regulatory uncertainties, customer behaviour,
operational risks and risks relating to NatWest
Group’s business model and strategy
(including risks associated with climate and
other sustainability-related issues),
competitive pressures, and litigation,
governmental actions, investigations and
regulatory matters. If assumptions,
judgements and estimates (for example about
future economic conditions) prove to be
incorrect, NatWest Group may not achieve
any or all of its ambitions or targets, or meet
its guidance.
In addition, as NatWest Group plc is a non-
operating holding company, its source of
income is from its operating subsidiaries that
hold the principal assets and operations of
NatWest Group and its ability to continue to
make capital distributions (including dividends
to shareholders) is therefore subject to such
subsidiaries’ financial performance, and their
respective ability to make capital distributions
directly or indirectly to NatWest Group plc
which, in certain cases, could also be
restricted by applicable laws, regulations and
other requirements. Refer to ‘NatWest Group,
its customers and its counterparties face
continued economic and political risks and
uncertainties in the UK and global markets,
including as a result of inflation and interest
rates, supply chain disruption, protectionist
policies, and geopolitical developments.’
Any failure of NatWest Group to achieve
ambitions or targets, meet its guidance, or
make discretionary capital distributions may
have a material adverse effect on NatWest
Group’s future results, financial condition,
prospects, and/or reputation.
NatWest Group has significant exposure
to counterparty
and
borrower risk
including credit losses, which may have
an adverse effect on NatWest Group.
NatWest Group has exposure to many
different sectors, customers and
counterparties, and risks arising from actual
or perceived changes in credit quality and the
recoverability of monies due from borrowers
and other counterparties are inherent in a
wide range of NatWest Group’s businesses.
These risks may increase where a significant
proportion of NatWest Group’s business
activities relate to a single counterparty, a
related and/or connected group of
counterparties or a similar type of customer,
product, sector or geography. NatWest
Group’s lending strategy and associated
processes and systems may fail to identify,
anticipate or quickly react to weaknesses or
risks (including material cybersecurity
vulnerabilities) in a particular sector, market,
borrower or counterparty. NatWest Group
may also fail to assess its credit risk appetite
relative to competitors, or fail to appropriately
value physical or financial collateral. This may
result in increased default rates or a higher
loss given default for loans, which may,
impact NatWest Group’s profitability. Refer to
‘Risk and capital management — Credit Risk’.
The credit quality of NatWest Group’s
borrowers and other counterparties may be
affected by UK and global macroeconomic
and political uncertainties, as well as
prevailing economic and market conditions.
For example, as the level of household
indebtedness (on a per capita basis) in the UK
remains high, the ability of households and
businesses to service their debts could be
worsened by a period of high unemployment,
or high interest rates or inflation, particularly
if prolonged.
Refer to ‘NatWest Group, its customers and its
counterparties face continued economic and
political risks and uncertainties in the UK and
global markets, including as a result of
inflation and interest rates, supply chain
disruption, protectionist policies, and
geopolitical developments’. Any further
deterioration in these conditions or changes
to legal or regulatory landscapes could
worsen borrower and counterparty credit
quality or impact the enforcement of
contractual rights, increasing credit risk. Any
increase in drawings upon committed credit
facilities may also increase NatWest Group’s
RWAs. NatWest Group may be affected by
volatility in property prices (including as a
result of political or economic conditions)
given that NatWest Group’s mortgage loan
portfolio as at 31 December 2025 amounted
to £215.2 billion, representing 50.0% of
NatWest Group’s total loan exposure. If
property prices were to weaken this could
lead to higher impairment charges,
particularly if default rates also increase. In
addition, NatWest Group’s credit risk may be
exacerbated if the collateral that it holds
cannot be realised as a result of market
conditions, regulatory intervention, or other
applicable laws, or if it is liquidated at prices
not sufficient to recover the net amount
outstanding to NatWest Group after
accounting for any IFRS 9 provisions already
made. This is most likely to occur during
periods of illiquidity or depressed asset
valuations.
NatWest Group is exposed to the financial
sector, including sovereign debt securities,
financial institutions, financial intermediation
providers (including providing facilities to
financial sponsors and funds, backed by
assets or investor commitments) and
securitised products (typically senior lending
to special purpose vehicles backed by pools
of segregated financial assets).
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
408
Risk factors continued
Concerns about, or a default by, a financial
institution or intermediary could lead to
significant liquidity problems and losses or
defaults by other financial institutions or
intermediaries, since the commercial and
financial soundness of many financial
institutions and intermediaries is closely
related and interdependent as a result of
credit, trading, clearing and other
relationships. Any perceived lack of
creditworthiness of a counterparty or
borrower may lead to market-wide liquidity
problems and losses for NatWest Group. In
addition, the value of collateral may be
correlated with the probability of default by
the relevant counterparty (‘wrong way risk’),
which would increase NatWest Group’s
potential loss. Any of the above risks may also
adversely affect financial intermediaries, such
as clearing agencies, clearing houses, banks,
securities firms and exchanges with which
NatWest Group interacts on a regular basis.
Refer to ‘NatWest Group may not meet the
prudential regulatory requirements for
liquidity and funding or may not be able to
adequately access sources of liquidity and
funding, which could trigger the execution of
certain management actions or recovery
options.’
As a result, adverse changes in borrower and
counterparty credit risk may cause additional
impairment charges under IFRS 9, increased
repurchase demands, higher costs, additional
write-downs and losses for NatWest Group
and an inability to engage in routine funding
transactions. If NatWest Group experiences
losses and a reduction in profitability, this is
likely to affect the recoverable value of fixed
assets, including goodwill and deferred taxes,
which may lead to write-downs.
NatWest Group has applied an internal
analysis of multiple economic scenarios (MES)
together with the determination of specific
overlay adjustments to inform its IFRS 9 ECL
(Expected Credit Loss). The recognition and
measurement of ECL is complex and involves
the use of significant judgement and
estimation. This includes the formulation and
incorporation of multiple forward-looking
economic scenarios into ECL to meet the
measurement objective of IFRS 9. The ECL
provision is sensitive to the model inputs and
economic assumptions underlying the
estimate. Refer to ‘Risk and capital
management – Credit Risk’. A credit
deterioration would also lead to RWA
increases. Furthermore, the assumptions and
judgements used in the MES and ECL
assessment at 31 December 2025 may not
prove to be adequate resulting in incremental
ECL provisions for NatWest Group.
As NatWest Group has exposure to the
financial industry, it also has exposure to
shadow banking entities (i.e. entities which
carry out activities of a similar nature to
banks but without the same regulatory
oversight). As a result, NatWest Group is
required to identify and monitor its exposure
to shadow banking entities, implement and
maintain an internal framework for the
identification, management, control and
mitigation of the risks associated with
exposure to shadow banking entities, and
ensure effective reporting and governance
regarding this. If NatWest Group is unable to
properly identify and monitor its shadow
banking exposure, maintain an adequate
framework, and/or ensure effective reporting
and governance regarding it, this may
adversely affect NatWest Group.
In line with certain mandated COVID-19
pandemic support schemes, NatWest Group
assisted customers with a number of
initiatives including NatWest Group’s
participation in the Bounce Back Loan
Scheme (‘BBLS’) products. NatWest Group
sought to manage the risks of fraud and
money laundering against the need for the
fast and efficient release of funds to
customers and businesses. NatWest Group
may be exposed to fraud, conduct and
litigation risks arising from inappropriate
approval (or denial) of BBLS, or the enforcing
or pursuing repayment thereof (or a failure to
exercise forbearance), which may have an
adverse effect on NatWest Group’s reputation
and results of operations. The implementation
of the initiatives and efforts mentioned above
may result in litigation, regulatory and
government actions and proceedings. These
actions may result in judgements,
settlements, penalties, fines, or removal of
recourse to the government guarantee
provided under those schemes for impacted
loans.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
NatWest Group may not meet the
prudential regulatory requirements for
liquidity and funding or may not be able
to adequately access sources of liquidity
and funding, which could trigger the
execution of certain management actions
or recovery options.
Liquidity and the ability to raise funds
continues to be a key area of focus for
NatWest Group and the industry as a whole.
NatWest Group is required by regulators in
the UK, the EU and other jurisdictions in
which it undertakes regulated activities to
maintain adequate liquidity and funding
resources. To satisfy its liquidity and funding
requirements, NatWest Group may therefore
access sources of liquidity and funding
through retail and wholesale deposits, as well
as through the debt capital markets.
As at 31 December 2025, NatWest Group plc
subsidiaries held £487.1 billion in deposits
from banks and customers. The level of
deposits of NatWest Group may fluctuate due
to factors outside of its control, such as a loss
of customers, loss of customer and/or
investor confidence (including in individual
NatWest Group entities or as a result of
volatility in the financial industry), changes in
customer behaviour, changes in interest
rates, government support, increasing
competitive pressures for retail and corporate
customer deposits (including from new
entrants or fintech companies (including
deposit aggregators)), new deposit offerings
(such as digital assets), or the reduction or
cessation of deposits by wholesale depositors,
which could result in a significant outflow of
deposits within a short period of time. An
inability to grow or any material decrease in
NatWest Group’s deposits could, particularly if
accompanied by one or more of the other
factors mentioned above, adversely affect
NatWest Group’s ability to satisfy its liquidity
or funding needs, or comply with its related
regulatory requirements. In turn, this could
require NatWest Group to adapt its funding
plans or change its operations.
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
409
Risk factors continued
Macroeconomic developments, political
uncertainty, changes in interest rates, market
volatility, and other stress events could affect
NatWest Group’s ability to access sources of
liquidity and funding (including in foreign
currencies) on satisfactory terms, or at all.
This may result in higher funding costs and
failure to comply with regulatory capital,
funding and leverage requirements. As a
result, NatWest Group and its subsidiaries
could be required to change their funding
plans. This could exacerbate funding and
liquidity risk, which may adversely affect
NatWest Group.
As at 31 December 2025, NatWest Group
plc’s average liquidity coverage ratio was
147% for the preceding 12 months and its
average net stable funding ratio was 135%. If
its liquidity position and/or funding were to
come under stress, and if NatWest Group
were unable to raise funds through deposits,
in the debt capital markets or through other
reliable funding sources, on acceptable terms,
or at all, its liquidity position would likely be
adversely affected and it might be unable to
meet deposit withdrawals on demand or at
their contractual maturity, repay borrowings
as they mature, meet its obligations under
committed financing facilities, comply with
regulatory funding requirements, undertake
certain capital and/or debt management
activities, and/or fund new loans, investments
and businesses or make capital distributions
to its shareholders.
If, under a stress scenario, the level of liquidity
falls outside of NatWest Group’s risk appetite,
there are a range of recovery management
actions that NatWest Group could take to
manage its liquidity levels, but any such
actions may not be sufficient to restore
adequate liquidity levels and the related
implementation may have adverse
consequences for NatWest Group’s
operations.
Under the Prudential Regulation Authority
(PRA) Rulebook, NatWest Group must
maintain a recovery plan acceptable to its
regulator, such that a breach of NatWest
Group’s applicable liquidity requirements may
trigger the application of NatWest Group’s
recovery plan to attempt to remediate a
deficient liquidity position. NatWest Group
may need to liquidate assets to meet its
liabilities, including disposals of assets not
previously identified for disposal to reduce its
funding commitments or trigger the execution
of certain management actions or recovery
options. In a time of reduced market liquidity,
NatWest Group may be unable to sell its
assets at attractive prices, or at all, which
may adversely affect NatWest Group’s
liquidity.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
NatWest Group may not meet the
prudential regulatory requirements for
regulatory capital and MREL, or manage
its capital effectively, which could trigger
the execution of certain management
actions or recovery options.
NatWest Group is required by regulators in
the UK, the EU and other jurisdictions in
which it undertakes regulated activities to
maintain adequate financial resources.
Adequate levels of capital provide NatWest
Group with financial flexibility specifically in its
core UK operations in the face of turbulence
and uncertainty in the UK and the global
economy. Adequate levels of capital also
enable NatWest Group plc to make
discretionary capital distributions (including
dividends to shareholders), undertake
buybacks of its shares, and remain a viable,
competitive and profitable business.
As at 31 December 2025, NatWest Group
plc’s CET1 ratio was 14.0% and is targeting a
CET1 ratio of around 13.0%. NatWest Group
plc’s target CET1 ratio is based on a
combination of its views on the appropriate
level of capital and its actual and expected
regulatory requirements and internal
modelling, including stress scenarios and
management’s and/or the PRA’s views on
appropriate buffers above minimum required
operating levels. NatWest Group plc’s current
capital strategy is based on the expected
accumulation of additional capital through the
accrual of retained earnings over time,
planned capital actions (including issuances,
redemptions, and discretionary capital
distributions), RWA growth in the form of
regulatory uplifts and lending growth and
other capital management initiatives which
focus on improving capital efficiency and
ensuring NatWest Group meets its medium-
to-long term targets. NatWest Group intends
to make capital distributions in surplus to its
publicly stated CET1 ratio target of 13.0% to
its equity investors, subject to macroeconomic
conditions and regulatory approval, via a
combination of dividends and buybacks. In
making dividends distribution and buyback
decisions, consideration is given to previously
guided ordinary dividend pay-out ratios, and
maximising shareholder value.
A number of factors may impact NatWest
Group plc’s ability to maintain its CET1 ratio
target and achieve its capital strategy. These
include:
•
a depletion of its capital resources
through increased costs or liabilities or
reduced profits (for example, due to an
increase in provisions due to a
deterioration in UK or global economic
conditions);
•
an increase in the quantum of
RWAs/leverage exposure in excess of
that expected, including due to
regulatory changes (including their
interpretation or application), or a failure
in internal controls or procedures to
accurately measure and report
RWAs/leverage exposure;
•
changes in prudential regulatory
requirements including NatWest Group
plc’s total capital requirement/leverage
requirement set by the PRA, including
Pillar 2 requirements, as applicable, and
regulatory buffers as well as any
applicable scalars;
•
reduced upstreaming of dividends from
NatWest Group plc’s subsidiaries because
of changes in their financial performance
and/or the extent to which entity-specific
capital requirements exceed NatWest
Group plc’s CET1 ratio target; and
•
limitations on the use of double leverage
(i.e., NatWest Group plc’s use of debt to
invest in the equity of its subsidiaries, as
a result of the BoE’s and/or NatWest
Group’s evolving views on distribution of
capital within groups).
A shortage or reduction of capital could in
turn affect NatWest Group plc’s capital ratio,
and/or its ability to make capital distributions
and in turn NatWest Group may not remain a
viable, competitive or profitable banking
business.
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
410
Risk factors continued
A minimum level of capital is required to be
met by NatWest Group plc for it to be entitled
to make certain discretionary payments, and
institutions such as NatWest Group plc which
fail to meet the regulatory combined buffer
requirement are subject to restricted
discretionary payments. The resulting
restrictions are scaled according to the extent
of the breach of the combined buffer
requirement and calculated as a percentage
of the profits of the institution since the last
distribution of profits or discretionary
payment which gives rise to a maximum
distributable amount (MDA) (if any) that the
financial institution can distribute through
discretionary payments. Any breach of the
combined buffer requirement may necessitate
NatWest Group plc reducing or ceasing
discretionary payments to shareholders
(including payments of dividends) and
buybacks depending on the extent of the
breach.
NatWest Group plc is required to meet an
external MREL equivalent to the higher of: (i)
two times the sum of Pillar 1 and Pillar 2A, or
(ii) if subject to a leverage ratio requirement,
two times the applicable requirement. The
BoE has identified a “single point-of-entry” at
NatWest Group plc, as the preferred
resolution strategy for NatWest Group. As a
result, NatWest Group plc is the only entity
within NatWest Group that can externally
issue securities that count towards its MREL
requirements, the proceeds of which can then
be downstreamed to meet the internal MREL
of its operating entities and intermediate
holding companies.
If NatWest Group plc is unable to raise or
retain the requisite amount of regulatory
capital or MREL, downstream the proceeds of
MREL to subsidiaries as required, or to
otherwise meet its regulatory capital, MREL
and leverage requirements, it may be
exposed to increased regulatory supervision
or sanctions, loss of customer and/or investor
confidence, constrained or more expensive
funding and be unable to make discretionary
payments on capital instruments.
If, under a stress scenario, the level of
regulatory capital or MREL falls outside of
NatWest Group’s risk appetite, there are a
range of recovery management actions
(focused on risk reduction and mitigation)
that NatWest Group could seek to take to
manage its capital levels, but any such
actions may not be sufficient to restore
adequate capital levels. Under the PRA
Rulebook, NatWest Group must maintain a
recovery plan acceptable to its regulator,
such that a breach of NatWest Group’s
applicable capital or leverage requirements
may trigger the application of NatWest
Group’s recovery plan to remediate a
deficient capital position. Further, NatWest
Group’s regulator may request that NatWest
Group carry out certain capital management
actions or, if NatWest Group plc’s CET1 ratio
falls below 7%, certain regulatory capital
instruments issued by NatWest Group plc will
be written-down or converted into equity,
and there may be an issue of additional
equity by NatWest Group plc, which could
result in the reduction in value of the holdings
of NatWest Group plc’s existing shareholders.
The success of such issuances will also be
dependent on favourable market conditions
and NatWest Group may not be able to raise
the amount of capital required on acceptable
terms, or at all.
Separately, NatWest Group may address a
shortage of capital by taking action to reduce
leverage exposure and/or RWAs via asset or
business disposals. These actions may, in
turn, affect: NatWest Group’s product offering,
credit ratings, ability to operate its businesses,
pursue its strategy and strategic
opportunities, any of which may adversely
affect NatWest Group. Refer to ‘NatWest
Group may become subject to the application
of UK statutory stabilisation or resolution
powers which may result in, for example, the
cancellation, transfer or dilution of ordinary
shares, or the write-down or conversion of
certain other of NatWest Group’s securities.’;
and ‘NatWest Group could be adversely
affected if it fails to meet the requirements of
regulatory stress tests, or if NatWest Group’s
resolution preparations are deemed
inadequate.’
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
Any reduction in the credit rating and/or
outlooks assigned to NatWest Group plc,
any of its subsidiaries or any of their
respective debt securities could adversely
affect the availability of funding for
NatWest Group, reduce NatWest Group’s
liquidity and funding position and increase
the cost of funding.
Rating agencies regularly review NatWest
Group plc and other NatWest Group entities’
credit ratings and outlooks.
NatWest Group entities’ credit ratings and
outlooks could be negatively affected (directly
and indirectly) by a number of factors that
can change over time, including, without
limitation: credit rating agencies’ assessment
of NatWest Group’s strategy and
management’s capability; its financial
condition including in respect of profitability,
asset quality, capital, funding and liquidity,
and risk management practices; the level of
political support for the sectors and regions in
which NatWest Group operates; the legal and
regulatory frameworks applicable to NatWest
Group’s legal structure; business activities and
the rights of its creditors; changes in rating
methodologies; changes in the relative size of
the loss-absorbing buffers protecting
bondholders and depositors; the competitive
environment; political, geopolitical and
economic conditions in NatWest Group’s key
markets (including inflation and interest rates,
supply chain disruption, protectionist policies
and geopolitical developments); and/or any
reduction of the UK’s sovereign credit rating
and market uncertainty. In addition, credit
rating agencies take into consideration
sustainability-related factors, including
climate, environmental, social and
governance related risk, as part of their
credit rating analysis (as do investors in their
investment decisions).
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
411
Risk factors continued
Any reductions in the credit ratings of
NatWest Group plc or of certain other
NatWest Group entities could have adverse
consequences including, without limitation, (i)
reduced access to capital markets; (ii) a
reduction in deposit base; and (iii) triggering
additional collateral or other requirements in
its funding arrangements or the need to
amend such arrangements. Any of these
consequences could adversely affect NatWest
Group’s liquidity and funding position, cost of
funding and could limit the range of
counterparties willing to enter into
transactions with NatWest Group on
favourable terms, or at all. This may in turn
adversely affect NatWest Group’s competitive
position and threaten its prospects.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
NatWest Group could incur losses or be
required to maintain higher levels of
capital as a result of limitations or failure
of various models.
Given the complexity of NatWest Group’s
business, strategy and capital requirements,
NatWest Group relies on models for a wide
range of purposes, including to manage its
business, assess the value of its assets and its
risk exposure, as well as to anticipate capital
and funding requirements (including to
facilitate NatWest Group’s mandated stress
testing). In addition, NatWest Group utilises
models for valuations, credit approvals,
calculation of loan impairment charges on an
IFRS 9 basis, financial reporting and to help
address criminal activities in the form of
money laundering, terrorist financing, bribery
and corruption, tax evasion and sanctions as
well as external or internal fraud (collectively,
‘financial crime’).
NatWest Group’s models, and the parameters
and assumptions on which they are based,
are periodically reviewed.
Model outputs are inherently uncertain,
because they are imperfect representations
of real-world phenomena, are simplifications
of complex real-world systems and processes,
and are based on a limited set of
observations. NatWest Group also continues
to invest in building new capabilities that
employ new artificial intelligence technologies,
such as generative artificial intelligence, and it
expects its use of these technologies to
increase over time. However, there are
significant risks involved in utilising more
sophisticated modelling approaches, including
artificial intelligence, and no assurance can be
provided that NatWest Group’s use of artificial
intelligence in its models will enhance its
business or produce only intended or
beneficial results. NatWest Group may face
adverse consequences as a result of actions
or decisions based on models that are poorly
developed, incorrectly implemented, non-
compliant, outdated or used inappropriately.
This includes models that are based on
inaccurate or non-representative data (for
example, where there have been changes in
the micro or macroeconomic environment in
which NatWest Group operates) or as a result
of the modelled outcome being
misunderstood, or used for purposes for
which it was not designed. This could result in
findings of deficiencies by NatWest Group’s
regulators (including as part of NatWest
Group’s mandated stress testing), increased
capital requirements, rendering some
business lines uneconomical, requiring
management action or subjecting NatWest
Group to regulatory sanction, any of which in
turn may also have an adverse effect on
NatWest Group and its customers.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
NatWest Group’s financial statements are
sensitive to underlying accounting
policies, judgements, estimates and
assumptions.
The preparation of financial statements
requires management to make judgements,
estimates and assumptions that affect the
reported amounts of assets, liabilities, income,
expenses, exposures and RWAs. While
estimates, judgements and assumptions take
into account historical experience and other
factors (including market practice and
expectations of future events that are
believed to be reasonable under the
circumstances), actual results may differ due
to the inherent uncertainty in making
estimates, judgements and assumptions
(particularly those involving the use of
complex models).
Further, accounting policy and financial
statement reporting requirements
increasingly require management to adjust
existing judgements, estimates and
assumptions for the effects of climate-related,
sustainability and other matters that are
inherently uncertain and for which there is
little historical experience which may affect
the comparability of NatWest Group’s future
financial results with its historical results.
Actual results may differ due to the inherent
uncertainty in making climate-related and
sustainability estimates, judgements and
assumptions.
Refer to ‘There are significant limitations
related to accessing accurate, reliable,
verifiable, auditable, consistent and
comparable climate and sustainability-related
data that contributes to substantial
uncertainties in accurately assessing,
managing and reporting on climate and
sustainability-related information and risks, as
well as making informed decisions.’.
Accounting policies deemed critical to
NatWest Group’s results and financial position,
based upon materiality and significant
judgements and estimates, involve a high
degree of uncertainty and may have a
material impact on its results. For 2025, these
include loan impairments, fair value, and
deferred tax. These are set out in ‘Critical
accounting policies and sources of estimation
uncertainty’.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
Changes in accounting standards may
materially impact NatWest Group’s
financial results.
NatWest Group prepares its consolidated
financial statements in conformity with the
requirements of the Companies Act 2006 and
in accordance with UK-adopted IAS, and IFRS
as issued by the International Accounting
Standards Board. Changes in accounting
standards or guidance by accounting bodies
and/or changes in accounting standards
requirements by regulatory bodies or in the
timing of their implementation, whether
immediate or foreseeable, could result in
NatWest Group having to recognise additional
liabilities on its balance sheet, or in further
write-downs or impairments to its assets and
could also have a material adverse effect on
NatWest Group.
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
412
Risk factors continued
Additionally, auditors may have different
interpretations of these accounting standards,
and any change of auditor may lead to
unfavourable changes in NatWest Group’s
accounting policies. From time to time, the
International Accounting Standards Board
may also issue new accounting standards or
interpretations that could materially impact
how NatWest Group calculates, reports and
discloses its financial results and financial
condition, and which may affect NatWest
Group’s capital ratios, including the CET1
ratio and the required levels of regulatory
capital. New accounting standards and
interpretations that have been issued by the
International Accounting Standards Board but
which have not yet been adopted by NatWest
Group are discussed in ‘Future accounting
developments’.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
The value or effectiveness of any credit
protection that NatWest Group has
acquired depends on the value of the
underlying assets and the financial
condition of the insurers and
counterparties.
The value or effectiveness of any credit
protection that NatWest Group has acquired,
including credit default swaps (CDSs),
significant risk transfer (SRT) transactions,
credit risk insurance (CRI), and financial
guarantees (FG) depends on the value of the
underlying assets and the financial condition
of the insurers, counterparties and protection
providers, and prevailing market spreads.
Although extensive assessments are
undertaken prior to execution, there can be
no assurance that such protection will remain
effective or enforceable, and any failure could
adversely impact NatWest Group’s risk profile,
capital position and reputation.
For CDS, changes in credit spreads,
deterioration in counterparty
creditworthiness, the outcome of
determination committees, or disputes over
contractual terms may result in valuation
adjustments, impairments or increased
collateral requirements, creating potential
liquidity pressures. For SRT transactions, the
anticipated capital relief is subject to ongoing
regulatory recognition and the performance
of the securitised portfolio. Any deterioration
in asset quality, structural breaches,
operational errors or changes in regulatory
interpretation could reduce or eliminate the
expected benefit. These transactions also
introduce counterparty and model risk. For
CRI, the enforceability of policies and the
financial strength of insurers are critical.
Disputes over coverage, policy exclusions,
delays in claims settlement or insurer default
could result in losses not being mitigated as
intended. Concentration risk may arise where
protection is sourced from a limited number
of insurers, increasing vulnerability to sector-
wide stress. As with other forms of credit
protection, fluctuations in fair value or
deterioration in the financial condition or
perceived creditworthiness of counterparties
and insurers may lead to additional valuation
adjustments or impairments. Any such
developments or fair value changes may have
a material adverse effect on NatWest Group.
Any of the above may have an adverse effect
on NatWest Group’s future results, financial
condition, prospects, and/or reputation.
NatWest Group could be adversely
affected if it fails to meet the
requirements of regulatory stress tests, or
if NatWest Group’s resolution preparations
are deemed inadequate.
NatWest Group entities are subject to annual
and other stress tests by their respective
regulators in the UK and EU.
Stress tests are designed to assess the
resilience of banks such as NatWest Group to
potential adverse economic or financial
developments and ensure that they have
robust, forward-looking capital planning
processes that account for the risks
associated with their business profile. If the
stress tests reveal that a bank’s existing
regulatory capital buffers are not sufficient to
absorb the impact of the stress, then it is
possible that NatWest Group may need to
take action to strengthen its capital position.
Failure by NatWest Group to meet the
quantitative and qualitative requirements of
the stress tests as set forth by its UK
regulator may result in: NatWest Group’s
regulators requiring NatWest Group to
generate additional capital, reputational
damage, increased supervision and/or
regulatory sanctions, restrictions on capital
distributions and loss of investor confidence,
all of which may adversely affect NatWest
Group.
NatWest Group is also subject to regulatory
oversight by the BoE and the PRA and is
required under the PRA Rulebook to carry
out an assessment of its preparations for
resolution, submit a report of the assessment
to the PRA, and disclose a summary of this
report. In August 2024, the BoE
communicated its assessment of NatWest
Group’s preparations for a potential resolution
scenario and did not identify any areas for
further enhancement, shortcomings,
deficiencies or substantive impediments.
NatWest Group could be adversely affected
should future BoE assessments deem
NatWest Group’s preparations to be
inadequate. If future BoE assessments identify
any areas for further enhancement,
shortcomings, deficiencies or substantive
impediments in NatWest Group’s ability to
achieve the resolvability outcomes or reveal
that NatWest Group is not adequately
prepared to be resolved, or does not have
adequate plans in place to meet resolvability
requirements, NatWest Group may be
required to take action to enhance its
preparations to be resolvable, resulting in
additional costs and the dedication of
additional resources. Such a scenario may
have an impact on NatWest Group as,
depending on the BoE’s assessment, potential
action may include, but is not limited to,
restrictions on NatWest Group’s maximum
individual and aggregate exposures, a
requirement to dispose of specified assets, a
requirement to change its legal or operational
structure, a requirement to cease carrying
out certain activities, a requirement not to
make discretionary distributions or undertake
share buybacks, and/or a requirement to
maintain a specified amount of MREL. This
may also impact NatWest Group’s strategic
plans.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation, or lead to a loss of investor
confidence.
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
413
Risk factors continued
NatWest Group may become subject to
the application of UK statutory
stabilisation or resolution powers which
may result in, for example, the
cancellation, transfer or dilution of
ordinary shares, or the write-down or
conversion of certain other of NatWest
Group’s securities.
The BoE, the PRA, the FCA, and HM
Treasury (together, the ‘Authorities’) are
granted substantial powers to resolve and
stabilise UK-incorporated financial institutions.
Five stabilisation options exist: (i) transfer of
all of the business of a relevant entity or the
shares of the relevant entity to a private
sector purchaser; (ii) transfer of all or part of
the business of the relevant entity to a ‘bridge
bank’ wholly or partially owned by the BoE;
(iii) transfer of part of the assets, rights or
liabilities of the relevant entity to one or more
asset management vehicles for management
of the transferor’s assets, rights or liabilities;
(iv) the write-down, conversion, transfer,
modification, or suspension of the relevant
entity’s equity, capital instruments and
liabilities; and (v) temporary public ownership
of the relevant entity. These options may be
applied to NatWest Group plc as the parent
company or to any subsidiary where certain
conditions are met (such as, whether the firm
is failing or likely to fail, or whether it is
reasonably likely that action will be taken
(outside of resolution) that will result in the
firm no longer failing or being likely to fail).
Moreover, there are modified insolvency and
administration procedures for relevant entities
within NatWest Group, and the Authorities
have the power to modify or override certain
contractual arrangements in certain
circumstances and amend the law for the
purpose of enabling their powers to be used
effectively and may promulgate provisions
with retrospective applicability.
Uncertainty exists as to how the Authorities
may exercise their powers including the
determination of actions to be undertaken in
relation to the ordinary shares and other
securities issued by NatWest Group, which
may depend on factors outside of NatWest
Group’s control. Moreover, the UK Banking
Act 2009 provisions remain largely untested
in practice, particularly in respect of
resolutions of large financial institutions and
groups. If NatWest Group is at or is
approaching the point such that regulatory
intervention is required, any exercise of the
resolution regime powers by the Authorities
may adversely affect holders of NatWest
Group plc’s ordinary shares or other NatWest
Group securities. This may result in various
actions being undertaken in relation to
NatWest Group and any securities of NatWest
Group, including cancellation, transfer,
dilution, write-down or conversion (as
applicable). There may also be a
corresponding adverse effect on the market
price of such ordinary shares and other
NatWest Group securities.
Each of these actions may also have a
material adverse effect on NatWest Group’s
future results, financial condition, prospects,
and/or reputation.
Operational and IT resilience risk
Operational risks (including reliance on
third party suppliers and outsourcing of
certain activities) are inherent in NatWest
Group’s businesses.
Operational risk is the risk of loss or
disruption resulting from inadequate or failed
internal processes, procedures, people or
systems, or from external events.
NatWest Group operates in several countries,
offering a diverse range of products and
services supported directly or indirectly by
third party suppliers.
As a result, operational risks or losses can
arise from a number of internal or external
factors (including for example, payment
errors or financial crime and fraud), for which
there is continued scrutiny by third parties of
NatWest Group’s compliance with financial
crime requirements.
Operational risks also exist due to the
implementation of NatWest Group’s strategy,
and the organisational and operational
changes involved, including: NatWest Group’s
cost-controlling and simplification measures;
continued digitalisation and the integration of
artificial intelligence in the business;
acquisition, divestments and other
transactions; the implementation of
recommendations from internal and external
reviews with respect to certain governance
processes, policies, systems and controls of
NatWest Group entities; and conditions
affecting the financial services industry
generally (including macroeconomic and
other geopolitical developments) as well as
the legal and regulatory uncertainty resulting
from these conditions. Any of the above may
place significant pressure on NatWest Group’s
ability to maintain effective internal controls
and governance frameworks.
Financial crime continues to evolve, whether
through fraud, scams, cyberattacks or other
criminal activity. These risks are exacerbated
as NatWest Group continues to innovate its
product offering and increasingly offers digital
solutions to its customers, including through
mobile banking. Financial crime assessment,
systems and controls, internal stress tests and
models are critical to financial crime risk
management.
Ineffective risk management may arise from a
wide variety of factors, including lack of
transparency or incomplete risk reporting,
manual processes and controls, inaccurate
data, inadequate IT systems, unidentified
conflicts or misaligned incentives, lack of
accountability control and governance,
incomplete risk monitoring and management,
insufficient challenges or assurance
processes, or a failure to commence or timely
complete risk remediation projects. Weak or
ineffective financial crime processes and
controls may risk NatWest Group
inadvertently facilitating financial crime which
may result in regulatory investigation,
sanction, litigation, fines and/or reputational
damage. Further, failure to manage these
risks effectively, or within regulatory
expectations, could adversely affect NatWest
Group’s reputation or its relationship with its
regulators, customers, shareholders or other
stakeholders. Refer to, ‘NatWest Group is
exposed to the risks of various litigation
matters, regulatory and governmental actions
and investigations as well as remedial
undertakings, the outcomes of which are
inherently difficult to predict, and which could
have an adverse effect on NatWest Group.’
These risks are also exacerbated when
NatWest Group relies on critical service
providers (suppliers) or vendors to provide
services to it or its customers, as is
increasingly the case as NatWest Group
outsources certain activities, including with
respect to the implementation of
technologies, innovation (such as cloud
services and artificial intelligence) and
responding to regulatory and market
changes.
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
414
Risk factors continued
NatWest Group also faces operational risks as
it continues to invest in the automation of
certain solutions and customer interactions,
including through artificial intelligence. Such
initiatives may result in operational,
reputational and conduct risks if the
technology is not used appropriately, is
defective or inadequate, or is not fully
integrated into NatWest Group’s current
solutions, systems and controls. The effective
management of operational risks is critical to
meeting customer service expectations and
retaining and attracting customer business.
Although NatWest Group has implemented
risk controls and mitigation actions, with
resources and planning devoted to mitigate
operational risk, such measures may not be
effective in controlling each of the operational
risks faced by NatWest Group.
Ineffective management of such risks may
have a material adverse effect on NatWest
Group’s future results, financial condition,
prospects, and/or reputation.
NatWest Group is subject to sophisticated
and frequent cyberattacks, and
compliance with cybersecurity and data
protection regulations is becoming
increasingly complex.
NatWest Group experiences a constant threat
from cyberattacks across the entire NatWest
Group and against NatWest Group’s supply
chain networks, reinforcing the importance of
due diligence of, ongoing risk management of,
and a close working relationship with, the
third parties on which NatWest Group relies.
NatWest Group is reliant on technology,
against which there is a constantly evolving
series of attacks that are increasing in terms
of frequency, sophistication, impact and
severity. The increased availability of
malicious tools and the rapid advancement of
artificial intelligence capabilities reduce entry
barriers for malicious actors and accelerate
the exploitation of vulnerabilities leading to
cyberattacks evolving and becoming more
sophisticated. As a result, NatWest Group is
required to continue to invest significant
resources in additional capability designed to
defend against a variety of existing and
emerging threats.
Third parties continue to make hostile
attempts to gain access to, introduce
malware (including ransomware) into, and
exploit potential vulnerabilities of, financial
services institutions’ IT systems, including
those of NatWest Group. For example, in
2025, NatWest Group and its supply chain
were subjected to a small number of
attempted Distributed Denial of Service and
ransomware attacks. These hostile attempts
were addressed without material impact on
NatWest Group or its customers by deploying
cybersecurity capabilities and controls that
seek to manage the impact of any such
attacks, and sustain availability of services for
NatWest Group’s customers.
Consequently, NatWest Group continues to
invest significant resources in developing and
evolving cybersecurity capabilities and
controls that are designed to mitigate the
potential effect of such attacks. However,
given the nature of the threat, there can be
no assurance that these capabilities and
controls will prevent the potential adverse
effect of an attack from occurring. Refer to
‘NatWest Group’s operations are highly
dependent on its complex IT systems and any
IT failure could adversely affect NatWest
Group.’
Any failure in NatWest Group’s information
and cybersecurity policies, procedures or
controls, may result in significant financial
losses, major business disruption, inability to
deliver customer services, or loss of, or ability
to access, data or systems or other sensitive
information (including as a result of an
outage) and may cause associated
reputational damage. Any of these factors
could increase costs (including, but not limited
to costs relating to notification of, or
compensation to customers, credit monitoring
or card reissuance), result in regulatory
investigations or sanctions being imposed or
may affect NatWest Group’s ability to retain
and attract customers. Regulators in the UK,
US, Europe and Asia recognise cybersecurity
as an important systemic risk to the financial
sector and have highlighted the need for
financial institutions to improve their
monitoring and control of, and resilience
(particularly of critical services) to
cyberattacks, and to provide timely reporting
or notification of them, as appropriate
(including, for example, the SEC
cybersecurity requirements and the EU
Digital Operational Resilience Act (‘DORA’)).
Furthermore, cyberattacks on NatWest
Group’s counterparties and suppliers may
also have an adverse effect on NatWest
Group’s operations.
Additionally, malicious third parties may
induce employees, customers, third-party
providers or other users with access to
NatWest Group’s systems to wrongfully
disclose sensitive information to gain access
to NatWest Group’s data or systems or that of
NatWest Group’s customers or employees.
Cybersecurity and information security events
can derive from factors such as: internal or
external threat actors, human error, fraud or
malice on the part of NatWest Group’s
employees, customers or third parties,
including third-party providers, or may result
from technological failure (including defective,
inadequate or inappropriately used artificial
intelligence based solutions).
NatWest Group expects greater regulatory
engagement, supervision and enforcement to
continue in relation to its overall resilience to
withstand IT and IT-related disruption, either
through a cyberattack or some other
disruptive event. Such increased regulatory
engagement, supervision and enforcement is
uncertain in relation to the scope, cost,
consequence and the pace of change, which
may have a material adverse effect on
NatWest Group. Due to NatWest Group’s
reliance on technology, the adoption of
innovative solutions, the integration of
automated processes and artificial intelligence
in its business and the increasing
sophistication, frequency and impact of
cyberattacks, such attacks may have an
adverse effect on NatWest Group.
In accordance with applicable UK and EU
data protection, and cybersecurity laws and
regulations, NatWest Group is required to
ensure it implements timely, appropriate and
effective organisational and technological
safeguards against unauthorised or unlawful
access to the data of NatWest Group, its
customers and its employees.
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
415
Risk factors continued
In order to meet this requirement, NatWest
Group relies on the effectiveness of its
internal policies, controls and procedures to
protect the confidentiality, integrity and
availability of information held on its IT
systems, networks and devices as well as
with third parties with whom NatWest Group
interacts. As NatWest Group develops new
artificial intelligence-based products,
proprietary, sensitive, or confidential
customer information may be inputted into
third-party generative or other artificial
intelligence or machine learning platforms,
and could potentially be accessed by others,
including if such information is used to train
third-party artificial intelligence models. This
may increase the risk of data leakage, data
poisoning, potential bias, discrimination,
errors, and misuse. A failure to monitor and
manage data in accordance with applicable
requirements may result in financial losses,
regulatory fines, investigations and litigation,
and associated reputational damage.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
NatWest Group’s operations and strategy
are highly dependent on the accuracy
and effective use of data.
NatWest Group relies on the availability,
sourcing, and effective use of accurate and
high quality data to support, monitor,
evaluate, manage and enhance its
operations, innovate its products offering,
meet its regulatory obligations, and deliver its
strategy. Investment is being made in data
tools and analytics, including raising
awareness around ethical data usage (for
example, in relation to the use of artificial
intelligence) and privacy across NatWest
Group.
The availability and accessibility of current,
complete, detailed, accurate and, wherever
possible, machine-readable customer
segment and sub-sector data, together with
appropriate governance and accountability
for data, is fast becoming a critical strategic
asset, which is subject to increased
regulatory focus.
Failure to have or to be able to access that
data or the ineffective use or governance of
that data could result in a failure to manage
and report important risks and opportunities
or satisfy customers’ expectations including
the inability to deliver products and services.
This could also place NatWest Group at a
competitive disadvantage by increasing its
costs, inhibiting its efforts to reduce costs or
its ability to improve its systems, controls and
processes. Any of the above could result in a
failure to deliver NatWest Group’s strategy.
These data weaknesses and limitations, or
the unethical or inappropriate use of data,
and/or non-compliance with data protection
laws could give rise to conduct and litigation
risks and may increase the risk of operational
challenges, losses, reputational damage or
other adverse consequences due to
inappropriate models, systems, processes,
decisions or other actions.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
NatWest Group’s operations are highly
dependent on its complex IT systems and
any IT failure could adversely affect
NatWest Group.
NatWest Group’s operations are highly
dependent on the ability to process a very
large number of transactions efficiently and
accurately while complying with applicable
laws and regulations. The proper functioning
of NatWest Group’s transactional and
payment systems, financial crime and fraud
detection systems and controls, risk
management, credit analysis and reporting,
accounting, customer service and other IT
systems, including cloud services providers
(some of which are owned and operated by
other entities in NatWest Group or third
parties), as well as the communication
networks between its branches and main
data processing centres, is critical to NatWest
Group’s operations. NatWest Group’s reliance
on a limited number of cloud services
providers increases its exposure to disruption
events affecting these cloud services
providers. Individually or collectively, whether
operated by NatWest Group or by a third
party supplier, any system failure (including
defective or inadequate automated processes
or artificial intelligence based solutions), loss
of service availability, mobile banking
disruption, or breach of data security could
potentially cause significant damage to: (i)
important business services across NatWest
Group; and (ii) NatWest Group’s ability to
provide services to its customers, which could
result in reputational damage, significant
compensation costs and regulatory sanctions
(including fines resulting from regulatory
investigations) or a breach of applicable
regulations and could affect NatWest Group’s
regulatory approvals, competitive position,
business and brands, which could undermine
its ability to attract and retain customers and
talent.
NatWest Group outsources certain functions
as it innovates and offers new digital solutions
to its customers to meet the demand for
online and mobile banking. Outsourcing
alongside remote working heighten the above
risks.
NatWest Group uses IT systems that enable
remote working interface with third-party
systems. NatWest Group could experience
service denials or disruptions if such IT
systems exceed capacity or if NatWest Group
or a third-party system fails or experiences
any interruptions, all of which could result in
business and customer interruption and
related reputational damage, significant
compensation costs, regulatory sanctions
and/or a breach of applicable regulations.
Hybrid working arrangements for NatWest
Group employees place heavy reliance on the
IT systems that enable remote working and
may place additional pressure on NatWest
Group’s ability to maintain effective internal
controls and governance frameworks and
increase operational risk.
In 2025, NatWest Group continued to make
considerable investments to further simplify,
upgrade and improve its IT and technology
capabilities (including migration of certain
services to cloud platforms and risk-based
removal of technology obsolescence).
NatWest Group continues to develop and
enhance digital services for its customers and
seeks to improve its competitive position
through integrating automated processes and
artificial intelligence based solutions in its
business and by enhancing controls and
procedures and strengthening the resilience
of services including cybersecurity.
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
416
Risk factors continued
Any failure of these investment and
rationalisation initiatives to achieve the
expected results due to poor design or
implementation, defects or otherwise, may
adversely affect NatWest Group’s operations,
its reputation and ability to retain or grow its
customer business or adversely affect its
competitive position.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
NatWest Group relies on attracting,
retaining and developing diverse senior
management and skilled personnel, and is
required to maintain good employee
relations.
NatWest Group’s success depends on its
ability to attract, retain, and develop a highly
skilled and qualified diverse workforce,
including senior management, and other
employees in critical roles (such as in
technology, artificial intelligence and data), in
a highly competitive market.
NatWest Group’s ability to attract, retain and
develop highly skilled and qualified diverse
senior management and personnel may be
more difficult due to heightened regulatory
oversight of banks compared to firms outside
of banking and ongoing restrictions on
employee compensation arrangements,
particularly in the EU. In addition, certain
economic, market and regulatory conditions
may reduce the pool of candidates for key
management and non-executive roles,
including non-executive directors with the
right skills, knowledge and experience, or
may increase the number of departures of
existing employees.
Moreover, a failure to foster a diverse
workforce and an inclusive work environment
may adversely affect NatWest Group’s
employee engagement and the execution of
its strategy and could also have an adverse
effect on its reputation with employees,
customers, investors and regulators.
NatWest Group’s businesses are also exposed
to risks from employee, contractor or service
providers misconduct including non-
compliance with policies and regulations,
negligence or fraud (including financial crimes
and fraud), any of which could result in
regulatory fines or sanctions and serious
reputational or financial harm to NatWest
Group. Hybrid working arrangements are also
subject to regulatory scrutiny to ensure
adequate recording, surveillance and
supervision of regulated activities, and
compliance with regulatory requirements and
expectations, including requirements to: meet
threshold conditions for regulated activities;
ensure the ability to oversee functions
(including any outsourced functions); ensure
no detriment is caused to customers; and
ensure no increased risk of financial crime.
Many of NatWest Group’s employees in the
UK, the Republic of Ireland and continental
Europe are represented by employee
representative bodies, including trade unions
and works councils. Engagement with its
employees and such bodies is important to
NatWest Group in maintaining good employee
relations. Any failure to do so may adversely
affect NatWest Group’s ability to operate its
business effectively.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
A failure in NatWest Group’s risk
management framework could adversely
affect NatWest Group, including its ability
to achieve its strategic objectives.
Risk management is a fundamental
component of NatWest Group’s operations
and is critical to the effective delivery of its
long-term strategic objectives. The
Enterprise-Wide Risk Management
Framework sets the approach for risk
management and outlines key principles for
sound risk governance and setting of risk
appetite with respect to: financial risk (capital
risk, liquidity and funding risk, credit risk,
traded market risk, non-traded, market risk,
pension risk, earning stability risk) and non-
financial risk (model risk, reputational risk,
financial crime, operational risk, compliance
and conduct risk). Non-compliance with this
framework, including deviations from risk
appetite, or any significant shortcomings in
related controls and procedures, may have a
detrimental effect on NatWest Group’s
financial condition, strategic delivery, or result
in inaccurate reporting of risk exposures.
NatWest Group promotes a risk-aware
culture and invests in policies and resources
to manage risks. However, these measures
may not entirely prevent a failure in NatWest
Group’s risk management framework. For
example, instances of misconduct may arise
from: business decisions, actions or reward
mechanisms that fail to comply with NatWest
Group’s regulatory obligations, do not
adequately address customers’ needs, or are
misaligned with NatWest Group’s strategic
objectives; ineffective product management;
unethical or inappropriate use of data,
information asymmetry, implementation and
utilisation of new technologies, outsourcing of
customer service and product delivery;
inappropriate behaviour towards customers,
customer outcomes, the possibility of mis-
selling of financial products; and mishandling
of customer complaints.
Any failure in NatWest Group’s risk
management framework may result in the
inability to achieve its strategic objectives for
its customers, employees and wider
stakeholders.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
NatWest Group’s operations are subject to
inherent reputational risk.
Reputational risk relates to stakeholder and
public perceptions of NatWest Group arising
from an actual or perceived failure to meet
stakeholder or the public’s expectations,
including with respect to NatWest Group’s
strategy and related targets or due to any
events, behaviour, action or inaction by
NatWest Group, its employees or those with
whom NatWest Group is associated. Refer to
‘NatWest Group’s businesses are subject to
substantial regulation and oversight, which
are constantly evolving and may adversely
affect NatWest Group.’ This includes harm to
its brand, which may be detrimental to
NatWest Group’s business, including its ability
to build or sustain business relationships with
customers, stakeholders and regulators, and
may cause low employee morale, regulatory
censure or reduced access to, or an increase
in the cost of, funding. Reputational risk may
arise whenever there is, or there is perceived
to be, a material lapse in standards of
integrity, controls, compliance, customer or
operating efficiency, or regulatory or press
scrutiny, and may adversely affect NatWest
Group’s ability to attract and retain
customers.
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
417
Risk factors continued
In particular, NatWest Group’s ability to
attract and retain customers (particularly,
corporate/institutional and retail depositors),
and talent, and engage with counterparties
may be adversely affected by factors
including: negative public opinion resulting
from the actual or perceived manner in which
NatWest Group conducts or modifies its
business activities and operations, media
coverage (whether accurate or otherwise),
employee misconduct, NatWest Group’s
financial performance, IT systems failures or
cyberattacks, data breaches, financial crime
and fraud, or the actual or perceived
practices in the banking and financial industry
in general, or a wide variety of other factors.
Technologies, in particular online social
networks and other broadcast tools that
facilitate communication with large audiences
in short timeframes and with minimal costs,
may also significantly increase and accelerate
the impact of damaging information and
allegations. Although NatWest Group has a
Reputational Risk Policy and framework to
identify, measure and manage material
reputational risk exposures, there is a risk
that it may not be successful in avoiding or
mitigating damage to its business or its
various brands from reputational risk.
Any of the above aspects of reputational risk
may have a material adverse effect on
NatWest Group’s future results, financial
condition, prospects, and/or reputation.
Legal and regulatory risk
NatWest Group’s businesses are subject to
substantial regulation and oversight,
which are constantly evolving and may
adversely affect NatWest Group.
NatWest Group is subject to extensive laws,
regulations, guidelines, corporate governance
practice and disclosure requirements,
administrative actions and policies in each
jurisdiction in which it operates, which
presents ongoing compliance and conduct
risks. Many of these are constantly evolving
and are subject to further material changes,
which may increase compliance and conduct
risks, particularly as the laws of different
jurisdictions (including those of the EU/EEA
and UK) diverge. NatWest Group expects
government and regulatory intervention in
the financial services industry to remain high
for the foreseeable future.
Regulators and governments continue to
focus on refining the prudential regulation
within the financial services industry and
enhancing the way financial services are
conducted, with the dual aim of fostering
greater competition and supporting
sustainable growth. Forthcoming measures
include enhanced capital, liquidity and funding
requirements, through future implementation
of the Basel 3.1 standards (and any resulting
effect on RWAs and models). This is in
addition to previous measures, such as: the
UK ring-fencing regime, the strengthening of
the recovery and resolution framework
applicable to financial institutions in the UK,
EU and US, financial industry reforms (such
as the FSMA 2023), corporate governance
requirements, rules relating to the
compensation of senior management and
other employees, enhanced data protection
and IT resilience requirements, financial
market infrastructure reforms, enhanced
regulations in respect of the provision of
‘investment services and activities’.
There is also continued regulatory focus in
certain areas, including conduct, model risk
governance, consumer protection in retail or
other financial markets (such as the FCA’s
rules governing interactions with and the
provision of services to retail customers, the
‘Consumer Duty’), competition and disputes
regimes, anti-money laundering, anti-
corruption, anti-bribery, anti-tax evasion,
payment systems and digital assets, sanctions
and anti-terrorism laws and regulations.
In addition, there is significant oversight by
competition authorities. The competitive
landscape for banks and other financial
institutions in the UK, EU/EEA, US and Asia is
rapidly changing. Recent regulatory and legal
changes have resulted, and may continue to
result, in new market participants and
changed competitive dynamics in certain key
areas. Regulatory and competition authorities,
including the CMA, are also reviewing and
focusing more on how they can support
competition and innovation in digital and
other markets. Future competition
investigations, market reviews, or regulation
of mergers may lead to the imposition of
financial penalties or market remedies that
may adversely affect NatWest Group’s
competitive or financial position. Recent
regulatory changes and heightened levels of
public and regulatory scrutiny in the UK, EU
and US have resulted in increased capital,
funding and liquidity requirements, changes in
the competitive landscape, changes in other
regulatory requirements and increased
operating costs, and have impacted, and will
continue to impact, product offerings and
business models.
Moreover, uncertainties remain as to the
extent to which EU/EEA laws will diverge
from UK law. For example, bank regulation in
the UK may diverge from European bank
regulation following the enactment of the
Financial Services and Markets Act 2023
(‘FSMA 2023’) and the Retained EU Law
(Revocation and Reform) Act 2023. In
particular, FSMA 2023 provides for the
revocation of retained EU laws relating to
financial services regulation, but sets out that
this process will likely take a number of years
and the intention is that specific retained EU
laws will not be revoked until such time as
replacement regulatory rules are in place.
The actions taken by regulators in response
to any new or revised bank regulation and
other rules affecting financial services, may
adversely affect NatWest Group, including its
business, non-UK operations, group structure,
compliance costs, intragroup arrangements
and capital requirements.
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
418
Risk factors continued
Other areas in which, and examples of
where, governmental policies, regulatory and
accounting changes, and increased public
and regulatory scrutiny may have an adverse
effect (some of which could be material) on
NatWest Group include, but are not limited to:
•
general changes in government,
regulatory, competition, or central bank
policy (including as a result of the Bank
Resolution (Recapitalisation) Act 2025),
or changes in regulatory regimes that
may influence investor decisions in the
jurisdictions in which NatWest Group
operates;
•
rules relating to foreign ownership,
expropriation, nationalisation and
confiscation or appropriation of assets;
•
increased scrutiny including from the
CMA, the FCA, and the Payment
Systems Regulator, for the protection
and resilience of, and competition and
innovation in, digital and other markets,
UK payment systems (with the
development of the government’s
National Payments Vision and Strategy)
and retail banking developments relating
to the UK initiative on Open Banking,
Open Finance and the European
directive on payment services;
•
the ongoing compliance with CMA’s
Market Orders including the Retail
Banking Market Order 2017;
•
ongoing competition litigation in the
English courts around payment card
interchange fees, combined with
increased regulatory scrutiny of the Visa
and Mastercard card schemes;
•
increased risk of new class action claims
being brought against NatWest Group in
the Competition Appeal Tribunal for
breaches of competition law;
•
increased risk of legal action against
NatWest Group in relation to the
remediation of defects in certain
historical property developments;
•
new or increased regulations relating to
data protection as well as IT controls
and resilience;
•
the introduction of, and changes to,
taxes, levies or fees applicable to
NatWest Group’s operations, such as
changes in tax rates (including changes
to the taxation of non-UK domiciled
individuals), changes in the scope and
administration of the Bank Levy,
increases in the bank corporation tax
surcharge in the UK, restrictions on the
tax deductibility of interest payments or
further restrictions imposed on the
treatment of carry-forward tax losses
that reduce the value of deferred tax
assets and require increased payments
of tax;
•
increased innovation in private digital
asset propositions, such as stablecoin or
tokenised deposits, which may challenge
traditional payment methods and have
other potential adverse effects on UK
banks (such as higher funding costs or a
reduced deposit base);
•
regulatory enforcement in the form of
PRA imposed financial penalties for
failings in banks’ regulatory reporting
governance and controls, and ongoing
regulatory scrutiny, and the PRA’s
thematic reviews of the governance,
controls and processes for preparing
regulatory returns of selected UK banks,
including NatWest Group;
•
increased regulatory scrutiny from the
ECB in relation to NatWest Group’s EU
based activities;
•
changes in policy and practice regarding
enforcement, investigations and
sanctions, supervisory activities and
reviews;
•
the introduction of regulatory
requirements to ensure sufficient access
by the general public to cash services
such as branches and ATMs;
•
‘Dear CEO’ and similar letters issued by
supervisors and regulators from time to
time;
•
changes in policy intended to expand
consumer access to retail investment
products and services, including through
the introduction of targeted support;
•
reforms to the Consumer Credit Act 1974
and the Financial Ombudsman Service;
•
new or increased regulations relating to
financial crime; and
•
any regulatory requirements relating to
the use of artificial intelligence and large
language models across the financial
services industry (such as the European
Union Artificial Intelligence Act).
Any of these developments (including any
failure to comply with or correctly interpret
new rules and regulations) could also have an
adverse effect on NatWest Group’s
authorisations and licences, the products and
services that it may offer, its reputation and
the value of its assets, NatWest Group’s
operations or legal entity structure, and the
manner in which it conducts its business.
Material consequences could arise should
NatWest Group be found non-compliant with
these regulatory requirements. Regulatory
developments may also result in an increased
number of regulatory investigations and
proceedings and have increased the risks
relating to NatWest Group’s ability to comply
with the applicable body of rules and
regulations in the manner and within the
timeframes required.
Changes in laws, rules or regulations, or in
their interpretation or enforcement, or the
implementation of new laws, rules or
regulations, including contradictory or
conflicting laws, rules or regulations by key
regulators or policymakers in different
jurisdictions (such as divergence of
regulations of digital assets and
cryptocurrency), or failure by NatWest Group
to comply with such laws, rules and
regulations, may adversely affect NatWest
Group’s business, results of operations and
outlook. In addition, uncertainty and
insufficient international regulatory
coordination as enhanced supervisory
standards are developed and implemented
may adversely affect NatWest Group’s
reputation, ability to engage in effective
business, capital and risk management
planning.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
419
Risk factors continued
NatWest Group is exposed to the risks of
various litigation matters, regulatory and
governmental actions and investigations
as well as remedial undertakings, the
outcomes of which are inherently difficult
to predict, and which could have an
adverse effect on NatWest Group.
NatWest Group’s operations are diverse and
complex and it operates in legal and
regulatory environments that expose it to
potentially significant civil actions (including
those following on from regulatory sanction),
as well as criminal, regulatory and
governmental proceedings. NatWest Group
has resolved a number of legal and
regulatory actions over the past several years
but continues to be, and may in the future be,
involved in such actions in the US, the UK,
Europe, Asia and other jurisdictions.
NatWest Group is, has been or will likely be
involved in a number of significant legal and
regulatory actions, including investigations,
proceedings and ongoing reviews (both
formal and informal) by governmental law
enforcement and other agencies and litigation
proceedings, including in relation to the
offering of securities, conduct in the foreign
exchange market, the setting of benchmark
rates such as LIBOR and related derivatives
trading, the issuance, underwriting, and sales
and trading of fixed-income securities
(including government securities), product
mis-selling, customer mistreatment, anti-
money laundering, antitrust, VAT recovery,
record keeping, reporting and various other
issues. There is also an increasing risk of new
class action claims being brought against
NatWest Group in the Competition Appeal
Tribunal for breaches of competition law, as
well as a risk of activist actions, particularly
relating to climate change and sustainability-
related matters.
Legal and regulatory actions are subject to
many uncertainties, and their outcomes,
including the timing, amount of fines,
damages or settlements or the form of any
settlements, which may be material and in
excess of any related provisions, are often
difficult to predict, particularly in the early
stages of a case or investigation. NatWest
Group’s expectation for resolution may
change and substantial additional provisions
and costs may be recognised in respect of
any matter.
The resolution of significant investigations
includes NWM Plc’s December 2021 spoofing-
related guilty plea in the United States that
was agreed with the US Department of
Justice (‘DOJ’), and involves a multi-year
period of probation, ongoing commitments to
improve the compliance programme and
reporting obligations. In the event that NWM
Plc does not meet its obligations to the DOJ,
this may lead to adverse consequences such
as findings that NWM Plc violated its
probation term and possible re-sentencing,
and/or increased costs, amongst other
consequences. For additional information
relating to this and other legal and regulatory
proceedings and matters to which NatWest
Group is currently exposed, refer to ‘Litigation
and regulatory matters’ at Note 25 to the
consolidated accounts.
Recently resolved matters or adverse
outcomes or resolution of current or future
legal, regulatory or other matters, including
conduct-related reviews and redress projects,
could increase the risk of greater regulatory
and third-party scrutiny and/or result in future
legal or regulatory actions, and could have
material financial, reputational, or collateral
consequences for NatWest Group’s business
and result in restrictions or limitations on
NatWest Group’s operations.
These may include the effective or actual
disqualification from carrying on certain
regulated activities and consequences
resulting from the need to reapply for various
important licences or obtain waivers to
conduct certain existing activities of NatWest
Group, particularly but not solely in the US,
which may take a significant period of time
and the results and implications of which are
uncertain. Disqualification from carrying on
any activities, whether automatically as a
result of the resolution of a particular matter
or as a result of the failure to obtain such
licences or waivers could adversely affect
NatWest Group’s business, in particular in the
US. This in turn and/or any fines, settlement
payments or penalties may have an adverse
effect on NatWest Group.
Failure to comply with undertakings made by
NatWest Group to its regulators, or the
conditions of probation resulting from the
spoofing-related guilty plea, may result in
additional measures or penalties being taken
against NatWest Group. In addition, any
failure to administer conduct redress
processes adequately, or to handle individual
complaints fairly or appropriately, could result
in further claims as well as the imposition of
additional measures or limitations on NatWest
Group’s operations, additional supervision by
NatWest Group’s regulators, and loss of
investor confidence.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
Changes in tax legislation (or application
thereof) or failure to generate future
taxable profits may impact the
recoverability of certain deferred tax
assets recognised by NatWest Group.
In accordance with the accounting policies
set out in ‘Critical accounting policies and
sources of estimation uncertainty’, NatWest
Group has recognised deferred tax assets on
losses available to relieve future profits from
tax only to the extent it is probable that they
will be recovered. The deferred tax assets are
quantified on the basis of current tax
legislation and accounting standards and are
subject to change in respect of the future
rates of tax or the rules for computing
taxable profits and offsetting allowable losses.
Failure to generate sufficient future taxable
profits or further changes in tax legislation or
the application thereof (including with respect
to rates of tax), or changes in accounting
standards may reduce the recoverable
amount of the recognised tax loss deferred
tax assets, amounting to £
814
million as at
31 December 2025. Changes to the
treatment of certain deferred tax assets may
impact NatWest Group’s capital position. In
addition, NatWest Group’s interpretation or
application of relevant tax laws may differ
from those of the relevant tax authorities and
provisions are made for potential tax liabilities
that may arise on the basis of the amounts
expected to be paid to tax authorities. The
amounts ultimately paid may differ materially
from the amounts provided depending on the
ultimate resolution of such matters.
Any of the above may have a material
adverse effect on NatWest Group’s future
results, financial condition, prospects, and/or
reputation.
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
420
Risk factors continued
Climate and sustainability-related
risks
NatWest Group and its Value Chain face
climate and sustainability-related risks
that may adversely affect NatWest Group.
NatWest Group is subject to financial and
non-financial risks associated with climate
change, nature-related and social matters
(together sustainability-related matters).
These matters impact NatWest Group directly
through its own operations and employees,
and indirectly through its value chain,
including its investors, customers,
counterparties and suppliers and business
partners (collectively, our ‘Value Chain’), and
business activities.
Financial and non-financial risks from climate
change can arise through physical and
transition risks. In addition, NatWest Group
may also be exposed to legal, regulatory or
financial consequences arising from NatWest
Group’s actions or omissions related to
climate and sustainability-related matters,
giving rise to liability risk.
Climate-related physical risks are associated
with increasing frequency and intensity of
extreme weather events, including floods,
wildfires and changes in climate conditions.
Such events can impact employee health and
safety, negatively impact local communities
where NatWest Group operates, damage
assets, property and infrastructure, and
disrupt operations and supply chains,
resulting in changes in asset value,
deterioration of the value of collateral or
insurance shortfalls and increased costs and
credit defaults.
This can negatively impact the
creditworthiness of customers and their
ability and/or willingness to pay fees, afford
new products or repay their debts, leading to
increased default rates, delinquencies, write-
offs and impairment charges in NatWest
Group’s portfolios while simultaneously
increasing NatWest Group’s own operational
costs and exposing it to potential business
continuity challenges. In addition, NatWest
Group’s premises and operations, or those of
its critical outsourced functions, may
experience damage or disruption leading to
increased costs for NatWest Group.
Climate-related transition risks arise from the
UK’s and global economies’ shift to net zero.
The pace and nature of transition—whether
orderly or disorderly—depends significantly
on timely and appropriate government policy
and regulatory changes, immediate actions
from national and regional governments, new
technological innovation, changes to supply
and demand systems within industries,
customer behaviour and market sentiment. In
addition, there is significant uncertainty about
how climate change and the world’s transition
to a net-zero economy will unfold over time
and how and when climate and other
sustainability-related risks will manifest. This
could adversely impact profitability, market
stability and the resilience of financial
institutions, including NatWest Group. In
addition, the transition may affect NatWest
Group’s customers and businesses across
sectors in different ways and at different
levels of risk. These timeframes are
considerably longer than NatWest Group’s
historical and current strategic, financial,
resilience and investment planning horizons.
Transition risks may also trigger reputational
and liability exposures, especially if NatWest
Group is perceived as not meeting its climate
ambitions, targets and commitments, or not
making progress against its climate transition
plan.
Moreover, beyond climate change, NatWest
Group and its Value Chain may face financial
and non-financial risks arising from acute or
chronic nature-related physical risks (such as
wildfires, pollution, water stress and loss of
biodiversity), nature-related transition risks
(such as risk arising directly or indirectly due
to changes in policy, market and technology,
changes in perception concerning an
organisation’s actual or perceived nature
impacts and from legal claims) and social
issues (such as data protection and privacy,
impact of increased adoption of artificial
intelligence technology, human rights abuse,
conflict and security, land rights, labour rights
and unjust working conditions, modern
slavery and child labour, discrimination and
lack of support for the vulnerable, negative
impact on people’s standard of living and
health, inequality, accessible banking and
financial inclusion, and financial crime).
There are heightened regulatory
expectations, growing scrutiny from investors,
civil society, and other external stakeholders,
with businesses being increasingly expected
to be transparent about their efforts to
identify, assess, mitigate and manage nature-
related and social risks. NatWest Group may
face reputational, regulatory non-compliance
and litigation risks if it is directly or indirectly
linked to adverse nature-related or social
impacts and fails to adequately manage the
risks associated with those impacts.
Climate and sustainability-related risks are
inter-linked and may (i) adversely impact the
broader economy—affecting interest rates,
inflation and growth—which in turn may
reduce profitability and financial stability; (ii)
adversely impact asset pricing and valuations
of NatWest Group’s and other securities,
potentially triggering wider disruptions across
the financial system; (iii) adversely impact the
viability or resilience of business models over
the medium to longer term, particularly those
business models most vulnerable to climate
and sustainability-related risks; (iv) result in
losses from liability or reputational damage,
such as negative media, activist pressure, or
public criticism, if NatWest Group or its Value
Chain are linked to adverse climate or
sustainability-related impacts; and (v) may
intensify existing exposures across multiple
risk categories, including credit, operational
(e.g. business continuity), market and liquidity,
model, reputational, regulatory compliance,
conduct and pension risks.
Failure by NatWest Group to timely identify,
assess, mitigate and manage climate and
sustainability-related risks, as well as failure to
respond to emerging opportunities, evolving
regulatory requirements, and shifting market
and external expectations, may have a
material adverse effect on NatWest Group’s
business, financial condition, future results,
access to finance, cost of capital, reputation,
and the value of its securities.
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
421
Risk factors continued
NatWest Group’s strategy relating to
climate and sustainability is subject to
execution and reputational risks. NatWest
Group’s climate and sustainability-related
ambitions, targets and commitments may
not be achieved, and its climate transition
plan may not be implemented, without
timely and appropriate government
policy, technology developments, and
suppliers, customers and society
supporting the transition.
NatWest Group has an ambition to be net
zero across its financed emissions, assets
under management and operational value
chain by 2050. NatWest Group also has an
ambition at least to halve the climate impact
of its financing activity by 2030, against a
2019 baseline, supported by portfolio-level
activity-based targets.
NatWest Group may also announce other
climate and sustainability-related ambitions,
targets and commitments, and may
withdraw, retire, amend, replace or
supersede existing ones from time to time,
whether or not they have been achieved,
where it considers this to be appropriate
having regard to its strategic objectives, or
where required or appropriate to do so by
applicable law, regulation or supervisory
expectations.
Achieving NatWest Group’s climate and
sustainability-related ambitions, targets and
commitments, and implementing its climate
transition plan, may require NatWest Group to
make changes to its business, operating
model, existing exposures, and products and
services. This may include reducing its
estimated financed emissions and
discontinuing certain activities over time.
We acknowledge that (i) emission reductions
are unlikely to be linear; (ii) UK Parliament will
set a new legal limit on greenhouse emissions
as part of the Seventh Carbon Budget in
June 2026 which may have an impact on the
achievement of our climate and sustainability-
related ambitions, targets and commitments,
and the implementation of our climate
transition plan; and (iii) increases in lending
and financing activities may wholly or
partially offset some or all of these reductions,
which may increase the extent of changes
and reductions necessary.
NatWest Group’s ability to achieve its
strategy, including its climate and
sustainability-related ambitions, targets and
commitments, and implement its climate
transition plan, is dependent on many factors
and uncertainties beyond NatWest Group’s
control. These include (but are not limited to):
(i) the extent and pace of climate change,
including the timing and manifestation of
physical and transition risks and nature loss;
(ii) the macroeconomic environment; (iii) the
effectiveness of actions of governments,
legislators, regulators and businesses; (iv) the
response of wider society, NatWest Group’s
Value Chain and other stakeholders to
mitigate the impact of climate and
sustainability-related risks; (v) changes in
customer and societal behaviour and
demand; (vi) availability of commercially viable
opportunities in sustainable finance markets,
competition dynamics, capital markets
appetite, investor expectations, and external
credit and concentration risk appetites which
may constrain the scale or risk profile of
opportunities accessible to NatWest Group;
(vii) developments in available technology;
(viii) the rollout of low carbon infrastructure;
and (ix) the availability of accurate, verifiable,
reliable, auditable, consistent and comparable
data.
These external factors and other
uncertainties may make it complex for
NatWest Group to achieve its climate and
sustainability-related ambitions, targets and
commitments, and implement its climate
transition plan, and there is a risk that some
or all of NatWest Group’s ambitions, targets
and commitments may not be achieved, or its
climate transition plan, may not be
implemented, within the intended timescales,
or at all.
Moreover, the rising energy demand
associated with artificial intelligence
workloads, whether generated internally or
through third
‑
party providers, may increase
NatWest Group’s own operational footprint.
While NatWest Group has taken initial steps to
assess the potential impacts of increased
artificial intelligence usage, its full effects on
NatWest Group’s own operational footprint
remain uncertain but could have an adverse
effect on achieving NatWest Group’s climate
and sustainability-related ambitions, targets
and commitments and on the implementation
of NatWest Group’s climate transition plan.
Any delay or failure in putting into effect,
making progress against, or meeting NatWest
Group’s climate and sustainability-related
ambitions, targets and commitments, and
implementing its climate transition plan, may
have a material adverse effect on NatWest
Group’s future results, financial condition,
prospects, and/or reputation and may
increase the climate and sustainability-related
risks NatWest Group faces.
There are significant limitations related to
accessing accurate, reliable, verifiable,
auditable, consistent and comparable
climate and sustainability-related data
that contribute to substantial
uncertainties in accurately assessing,
managing and reporting on climate and
sustainability-related information and
risks, as well as making informed
decisions.
NatWest Group’s ability to assess, manage
and report climate and sustainability-related
impacts, risks and opportunities, including the
effective measurement, governance and
reporting of progress against our climate and
sustainability-related ambitions, targets and
commitments, and the implementation of its
climate transition plan, heavily depends on
the availability of accurate, reliable, verifiable,
auditable, consistent and comparable internal
and external data from customers,
counterparties, suppliers, and third parties.
Our internal data on customer groups, which
is used to source financial exposure and
emissions data, and the systems and controls
supporting our non-financial reporting, are
considerably less sophisticated than those
data, systems and controls used for financial
reporting and continue to involve manual
processes. These factors may increase the
risk of inaccuracies or gaps in our
non
‑
financial reporting, which could adversely
affect our ability to meet regulatory, investor
or stakeholder expectations. In the absence
of accurate, reliable, verifiable, auditable,
consistent and comparable data, NatWest
Group may rely on estimates, proxies, or
third-party methodologies, such as sectoral
averages or aggregated emissions data, that
may be outdated, prepared using varying
assumptions, or not accurately reflect specific
counterparties or customers.
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
422
Risk factors continued
These limitations can affect the reliability of
disclosures, including financed and facilitated
emissions, and may hinder decision-making,
risk management, regulatory compliance, and
data consolidation. This may result in
misjudging progress against climate
ambitions, targets and commitments,
misallocating capital, or underestimating
financial and reputational risks, while also
reducing comparability across institutions and
increasing scrutiny from stakeholders and
regulators.
NatWest Group’s assessment of climate and
sustainability-related impacts, risks and
opportunities is expected to evolve as data
quality and methodologies improve. Current
data gaps, limitations, and reliance on
estimates or third-party inputs may materially
impact NatWest Group’s ability to make
informed decisions on climate and
sustainability-related matters, manage risks,
comply with disclosure requirements, and
monitor progress against NatWest Group’s
climate and sustainability-related ambitions,
targets and commitments, and the
implementation of its climate transition plan.
As a result, climate and sustainability-related
disclosures may be amended, updated, or
restated from time to time as methodologies,
data quality or regulatory expectations
evolve. NatWest Group does not undertake to
restate prior disclosures except as required
by applicable law or regulation, even where
subsequently available data or methodologies
differ from those used at the time of the
original disclosure.
Climate risks are inherently forward-looking
and complex to model. The lack of historical
data, evolving scientific understanding, and
immature measurement frameworks
introduce significant uncertainty into scenario
analysis and financial forecasting.
The outputs of climate risk modelling, such as
emissions pathways and reduction targets.
are subject to long timeframes and
assumptions that differ significantly from
traditional financial planning cycles.
NatWest Group’s internal capabilities to
assess, model, report on and manage climate
and sustainability-related risks continue to
evolve. However, even when such capabilities
are suitably developed, the high level of
uncertainty regarding any assumptions
modelled, the highly subjective nature of risk
measurement and mitigation techniques
coupled with persistent data gaps may result
in inadequate risk management information
and frameworks, or ineffective business
adaptation or mitigation strategies or
regulatory non-compliance.
Any of the above may have a material
adverse effect on NatWest Group’s business,
future results, financial condition, prospects,
reputation and the price of its securities.
NatWest Group is subject to an
increasingly complex and evolving
landscape of climate and sustainability-
related legal, regulatory, and supervisory
expectations and there is an increasing
risk of regulatory non-compliance,
investigations, litigation, and enforcement
actions.
NatWest Group is subject to an increasingly
complex and evolving landscape of climate
and sustainability-related legal, regulatory,
and supervisory expectations, which may
vary significantly and remain fragmented
across the UK, EU, US, and other jurisdictions
in which NatWest Group operates.
This growing divergence creates legal and
operational uncertainty, may expose NatWest
Group to conflicting legal and regulatory
requirements, and may increase the risks of
regulatory non-compliance, regulatory
enforcement and reputational damage.
The growing politicisation and polarisation of
climate and sustainability-related matters
across jurisdictions may further exacerbate
existing risks and result in reduced market
access, adverse public perception, or
stakeholder disengagement. Customers,
investors or stakeholders may choose not to
engage with NatWest Group if they perceive
NatWest Group’s strategy in relation to
climate and sustainability as either lacking
ambition or progress, or conversely, as overly
focused on climate and sustainability, or if
they object to specific climate or
sustainability
‑
related decisions or sectoral
policies adopted by NatWest Group. This may
adversely affect customer relationships,
investor sentiment or stakeholder
engagement. For example, financing the
transition of hard-to-abate sectors may be
viewed by some as misaligned with climate
goals, potentially resulting in reputational
damage.
At the same time, regulatory and
enforcement approaches to climate and
sustainability-related matters are increasingly
diverging and, in some cases, conflicting
across jurisdictions. While some authorities
are advancing stricter requirements, others
are introducing sanctions targeting
institutions that pursue climate and
sustainability-related initiatives.
Furthermore, NatWest Group may face
litigation, complaints or other forms of
challenge from shareholders, customers,
campaign groups or other stakeholders
arising from allegations of actual or perceived
environmental or social harm, including
climate-related impacts, nature-related
degradation, human rights abuses, or
deficiencies in governance and due diligence
practices. At the same time, NatWest Group
may face contradictory legal or regulatory
action asserting that it has placed undue or
disproportionate focus on climate and
sustainability
‑
related considerations.
Failure by NatWest Group to comply with
evolving legal and regulatory requirements, or
supervisory expectations—including divergent
and fragmented frameworks across
jurisdictions, where relevant—may increase
the risk of regulatory non-compliance, may
adversely impact its ability to achieve its
climate and sustainability-related ambitions,
targets and commitments, and implement its
climate transition plan, and may adversely
impact its investor base and reputation. It
may also result in regulatory non-compliance
investigations, litigation and enforcement
actions, which in turn may have a material
adverse effect on NatWest Group’s business,
future results, financial condition, prospects,
reputation, and the price of its securities.
Strategic report
Financial review
Governance and remuneration
Risk and capital management
Financial statements
Additional information
NatWest Group plc
2025 Annual Report and Accounts
423
The company and its subsidiaries are party to
various contracts in the ordinary course of
business. Material contracts include the
following:
B Share Acquisition and Contingent
Capital Agreement
On 26 November 2009, the company and HM
Treasury entered into the Acquisition and
Contingent Capital Agreement (ACCA)
pursuant to which HM Treasury subscribed
for the initial B shares and the Dividend
Access Share (the Acquisitions) and agreed
the terms of HM Treasury's contingent
subscription (the Contingent Subscription) for
an additional £8 billion in aggregate in the
form of further B shares (the Contingent B
shares), to be issued on the same terms as
the initial B shares. The Acquisitions were
subject to the satisfaction of various
conditions, including the company having
obtained the approval of its shareholders in
relation to the Acquisitions.
On 16 December 2013, the company
announced that, having received approval
from the PRA, it had terminated the £8 billion
Contingent Subscription. The company was
able to cancel the Contingent Subscription as
a result of the actions announced in the
second half of 2013 to further strengthen its
capital position.
On 9 October 2015, the company announced
that on 8 October 2015, it had received a
valid conversion notice from HM Treasury in
respect of all outstanding B shares held by
HM Treasury.
The new ordinary shares issued on
conversion of the B shares were admitted to
the official list of the UK Listing Authority
(UKLA), and to trading on the London Stock
Exchange plc, on 14 October 2015. Following
such conversion, HM Treasury no longer
holds any B shares.
The company gave certain representations
and warranties to HM Treasury on the date
of the ACCA, on the date the circular was
posted to shareholders, on the first date on
which all of the conditions precedent were
satisfied, or waived, and on the date of the
Acquisitions. The company also agreed to a
number of undertakings.
The company agreed to reimburse HM
Treasury for its expenses incurred in
connection with the Acquisitions.
For as long as it was a substantial
shareholder of the company (within the
meaning of the UKLA’s Listing Rules), HM
Treasury had undertaken not to vote on
related party transaction resolutions at
general meetings and to direct that its
affiliates do not so vote. HM Treasury ceased
to be a shareholder of the company on 30
May 2025. The ACCA is now redundant and
the company has no material obligations
outstanding.
Directed Buyback Contract
On 7 February 2019, the company and HM
Treasury entered into the Directed Buyback
Contract to help facilitate the return of the
company to full private ownership through
the use of any excess capital to buy back the
company’s ordinary shares held by HM
Treasury.
Under the terms of the Directed Buyback
Contract, the company could agree with HM
Treasury to make off-market purchases from
time to time of its ordinary shares held by HM
Treasury, including by way of one or more
standalone purchases, through a non-
discretionary, broker-managed directed
trading programme, or in conjunction with
any offer or sale by HM Treasury by way of
an institutional placing. Neither the company
nor HM Treasury would be under an
obligation to agree to make such off-market
purchases and would only do so subject to
regulatory approval at the time. The price to
be paid for each ordinary share was required
to be the market price at the time of
purchase or, if the directed buyback is in
conjunction with an institutional placing, the
placing price.
Previously, the aggregate number of ordinary
shares that the company could purchase
from HM Treasury under the Directed
Buyback Contract could not exceed 4.99% of
the company’s issued share capital and the
aggregate consideration to be paid could not
exceed 4.99% of the company’s market
capitalisation. The new UK Listing Rules
which came into force on 29 July 2024
removed the previous 5% threshold for
aggregated Related Party Transactions (RPTs)
in any 12-month period (beyond which
separate shareholder approval would be
required). The company’s AGM in April 2024
approved increasing the buyback authority to
a maximum of 15% of the company’s issued
share capital in any 12-month period.
The AGM also approved amending the
Directed Buyback Contract accordingly and
an amended and restated Directed Buyback
Contract was entered into on 7 May 2024.
The company made five separate off-market
purchases under the Directed Buyback
Contract. One purchase took place in 2021,
the second purchase took place in 2022, the
third purchase took place in 2023 and two
further purchases took place in 2024. No
purchases took place in 2025.
On 19 March 2021, the company announced
that it had agreed with HM Treasury to make
an off-market purchase under the Directed
Buyback Contract for the total consideration
of £1,125,341,269 for 590,730,325 ordinary
shares representing 4.86% of the company’s
issued share capital at that point in time.
On 28 March 2022, the company announced
an off-market purchase of 549,851,147
ordinary shares for the total consideration of
£1,212,421,779. The purchased ordinary
shares represented 4.91% of the company’s
issued share capital at the time (excluding
treasury shares). This took HM Treasury's
ownership in the company below 50% for the
first time since 2008.
On 22 May 2023, the company announced
an off-market purchase of 469,200,081
ordinary shares for a total consideration
of
£1,259,333,017. The purchased ordinary
shares represented 4.95% of the company's
issued ordinary share capital at the time
(excluding treasury shares).
Material contracts
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
424
Material contracts connued
On 31 May 2024, the company announced
an off-market purchase of 392,448,233
ordinary shares for a total consideration
of
£1,240,921,313. The purchased ordinary
shares represented 4.50% of the company's
issued ordinary share capital at the time
(excluding treasury shares).
On 11 November 2024, the company
announced an off-market purchase of
262,605,042 ordinary shares for a total
consideration of
£1,000,000,000. The
purchased ordinary shares represented
3.16% of the company's issued ordinary share
capital at the time (excluding treasury
shares).
On 30 May 2025, HM Treasury ceased to be
a shareholder of the company. As such no
further off-market purchases under the
Directed Buyback Contract have taken place.
The Directed Buyback Contract will
automatically terminate in accordance with its
terms at the 2026 AGM (which is when the
previous shareholder authority will expire).
Memorandum of Understanding
Relating to The NatWest Group
Pension Fund (formerly known as
The Royal Bank of Scotland Group
Pension Fund)
On 16 April 2018 the company entered into a
Memorandum of Understanding (the “MoU”)
with the trustee of the NatWest Group
Pension Fund (the Group Fund), which aimed
to facilitate both the necessary changes to
the Main Section of the Group Fund to align
the employing entity structure with the
requirements of the UK ring-fencing
legislation and acceleration of the settlement
framework for the 31 December 2017
triennial valuation of the Main Section of the
Group Fund (brought forward from 31
December 2018).
In addition, the MoU also provided clarity on
the additional related funding contributions
required to be made by the company to the
Main Section of the Group Fund as follows: (i)
a pre-tax payment of £2 billion that was
made in the second half of 2018 and (ii) from
1 January 2020, further pre-tax contributions
of up to £1.5 billion in aggregate linked to the
making of future distributions to RBS
shareholders including ordinary and special
dividends and/or share buy backs (subject to
an annual cap on contributions of £500
million before tax).
Framework Agreement Relating to
the NatWest Group Pension Fund
On 28 September 2018, National Westminster
Bank plc (“NWB Plc”) entered into a
framework agreement (the “Framework
Agreement”) with, among others, the trustee
(“Trustee”) of the NatWest Group Pension
Fund (the “Group Fund”). Amongst others,
the Framework Agreement set out the
funding contributions required to be made by
NatWest Group to the Main Section of the
Group Fund as follows: (i) a pre-tax payment
of £2 billion that was made in the second half
of 2018 and (ii) from 1 January 2020, further
pre-tax contributions of up to £1.5 billion in
aggregate linked to the making of future
distributions to NatWest Group shareholders
including ordinary and special dividends
and/or share buy backs (subject to an annual
cap on contributions of £500 million before
tax). Pursuant to funding requirements in the
Framework Agreement, NatWest Group made
contributions to the Main Section of the
Group Fund in an aggregate amount of £500
million in 2021 and £500 million in 2022.
On 6 February 2023, NWB Plc and the
Trustee entered into an amendment to the
Framework Agreement, a supplemental
framework agreement and a revised
Schedule of Contributions to, among others,
restructure the requirement to make a
distribution-linked contribution to the Main
Section of the Group Fund of up to £500
million (before tax) in 2023. In place of this
requirement, NWB Plc and the Trustee
agreed to establish a bankruptcy remote
reservoir trust to hold assets with a value
equivalent to £471 million under the
continuing control of NWB Plc. These assets
would become transferrable to the Main
Section of the Group Fund in the event that
specified payment triggers, reflecting a
funding requirement, were met in two
consecutive financial years. The bankruptcy
remote reservoir trust arrangement was
given effect through NWB Plc and the
Trustee, among others, entering into a suite
of related agreements in May 2023. These
documents include a Reservoir Trust Deed, a
Payment Triggers Agreement and a Security
Agreement. Together, they establish the
reservoir trust and set out the circumstances
under which assets are payable to the Group
Fund or NWB Plc.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
425
Financial calendar
Dividends
Ex-dividend dates
19 March 2026
Ordinary shares (2025 final)
30 April and 26 November 2026
Cumulative preference shares
Record dates
20 March 2026
Ordinary shares (2025 final)
1 May and 27 November 2026
Cumulative preference shares
Payment dates
05 May 2026
Ordinary shares (2025 final)
29 May and 31 December 2026
Cumulative preference shares
Annual General Meeting
The AGM will be held on 28 April 2026. Further details will be set out in our Notice of AGM
which will published on our website at natwestgroup.com
Results
1 May 2026 - Q1 results
31 July 2026 - Interim results
October 2026 - Q3 results
Manage your shareholding online
Log into Investor Centre at investor.centre.co.uk or scan the QR code below and:
•
choose to go paperless
•
arrange to receive your dividends straight into your bank account
•
view any outstanding payments
•
view shareholdings
•
change address details.
Our Registrar
Computershare Investor Services PLC The
Pavilions
Bridgwater Road Bristol
BS99 6ZZ
Telephone: +44 (0)370 702 0135
Website: www-uk.computershare.com/investor
Copies of the Annual Report and Accounts
You can download copies from our website at natwestgroup.com. An accessible version will also
be available on the website. Please contact the Registrar on the number above if you need a
hard copy.
ShareGift
ShareGift is a free charity donation service operated by The Orr Mackintosh Foundation. If you
would like to donate shares to charity, contact ShareGift at:
ShareGift, The Orr Mackintosh Foundation (registered charity 1052686), 6th Floor,
London Wall Place
London EC2Y 5AU
Telephone: +44 (0)20 7930 3737 Website:
www.sharegift.org
American Deposit Receipts (ADRs)
Our ordinary shares are traded on the New York Stock Exchange via an ADR facility. ADRs
are quoted and traded in US dollars in the US securities market and the dividends are paid to
investors in US dollars. Bank of New York Mellon are the depository bank for our ADR
programme and their contact details can be found below:
Email: shrrelations@cpushareownerservices.com, Tel: Toll
free in USA +1888 269 2377
International calls +1 201 680 6825
Shareholder information
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
426
Share price information
Details of our latest and historic share prices can be found on our website at natwestgroup.com
Shareholder security
Shareholders should be wary of cold callers offering the chance to buy or sell shares, often with
the promise of returns that sound too good to be true. Fraudsters use sophisticated and
persuasive tactics to pressure shareholders into high-risk investments or scams.
Check the Financial Conduct Authority’s (FCA) register at www.fca.org.uk to make sure that the
company contacting you is authorised. Don’t give any personal details to any caller unless
you’re certain that they are genuine. It is unlikely that companies authorised by the FCA will
contact you unexpectedly. We strongly recommend that you seek independent professional
advice from an FCA authorised adviser before making any investment.
Report a scam
If you think that you have been approached by fraudsters, or have any concerns about a
potential scam, contact the FCA’s Consumer Helpline on 0800 111 6768 or use their Share
Fraud Reporting Form which can be found on their website at www.fca.org.uk/scams. You
can also contact Action Fraud on 0300 123 2040 or www.actionfraud.org.uk
Analysis of ordinary shareholders
At 31 December 2025
Shareholdings
%
Number
of shares
Individuals
145,069
74,184,959
0.90
Banks and nominee companies
2,025
8,117,252,043
98.67
Other corporate bodies
63
8,265,347
0.10
Other companies
355
22,991,365
0.28
Insurance companies
1
757
0.00
Investment trusts
41
4,261,832
0.05
Pension trusts
15
30,350
0.00
Scottish trusts
189
55,105
0.00
147,758
8,227,041,758
100.00
Range of shareholdings:
1 - 1,000
129,074
29,900,721
0.36
1,001 - 10,000
16,582
37,149,109
0.45
10,001 - 100,000
947
31,618,596
0.38
100,001 - 1,000,000
667
248,340,605
3.03
1,000,001 - 10,000,000
376
1,193,959,284
14.51
10,000,001 and over
112
6,686,073,443
81.27
147,758
8,227,041,758
100.00
Shareholder information
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
427
Important addresses
Shareholder enquiries
Registrar
Computershare Investor Services PLC The Pavilions Bridgwater Road
Bristol BS99 6ZZ
Telephone: +44 (0)370 702 0135
Website: www-uk.computershare.com/investor
ADR Depositary Bank
BNY Mellon Shareowner Services PO Box 505000
Louisville, KY 40233-5000
Direct Mailing for overnight packages:
BNY Mellon Shareowner Services 462 South 4th Street
Suite 1600
Louisville KY 40202
Telephone: 1-888-269-2377 (US callers – toll free) Telephone: +1 201 680 6825 (International)
Email: shrrelations@cpushareownerservices.com Website: www.mybnymdr.com
Corporate Governance
NatWest Group plc
PO Box 1000, Gogarburn Edinburgh, EH12 1HQ
Investor Relations
250 Bishopsgate, London EC2M 4AA, England
Email: investor.relations@natwest.com
Registered office
Registered in Scotland No. SC45551
Website
www.natwestgroup.com
Principal offices
NatWest Group plc
PO Box 1000, Gogarburn Edinburgh, EH12 1HQ
National Westminster Bank Plc
250 Bishopsgate, London EC2M 4AA, England
The Royal Bank of Scotland plc
PO Box 1000, Gogarburn Edinburgh, EH12
1HQ
Coutts & Company
440 Strand, London WC2R 0QS, England
NatWest Markets Plc
250 Bishopsgate, London EC2M 4AA, England
NatWest Markets N.V.
Claude Debussylaan, 94
Amsterdam, 1082 MD
The Royal Bank of Scotland International Limited
Royal Bank House, 71 Bath Street St Helier, JE4 8
Shareholder information
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
428
Presentation of information
In the Annual Report and Accounts, unless
specified otherwise, ‘parent company’ refers to
NatWest Group plc, and ‘NatWest Group’,
‘Group’ or ‘we’ refers to NatWest Group plc
and its subsidiaries. The term ‘NWH Group’
refers to NatWest Holdings Limited (‘NWH
Limited’) and its subsidiary and associated
undertakings. The term ‘NWM Group’ refers to
NatWest Markets Plc (‘NWM Plc’) and its
subsidiary and associated undertakings. The
term 'RBSH N.V.' refers to RBS Holdings N.V.
The term ‘NWM N.V.’ refers to NatWest
Markets N.V. The term ‘NWM N.V. Group’
refers to NatWest Markets N.V. and its
subsidiary and associated undertakings The
term ‘NWMSI’ refers to NatWest Markets
Securities, Inc. The term ‘RBS plc’ refers to The
Royal Bank of Scotland plc. The term ‘NWB
Plc’ refers to National Westminster Bank Plc.
The term ‘RBSI Ltd’ refers to The Royal Bank
of Scotland International Limited. Effective
from Q2 2025, the reportable segment Private
Banking was renamed Private Banking &
Wealth Management. This does not change
the financial results of Private Banking &
Wealth Management or the consolidated
financial results of NatWest Group.
NatWest Group publishes its financial
statements in pounds sterling (‘£’ or ‘sterling’).
The abbreviations ‘£m’ and ‘£bn’ represent
millions and thousands of millions of pounds
sterling (‘GBP’), respectively, and references to
‘pence’ represent pence where amounts are
denominated in pounds sterling. Reference to
‘dollars’ or ‘$’ are to United States of America
(‘US’) dollars. The abbreviations ‘$m’ and ‘$bn’
represent millions and thousands of millions of
dollars, respectively. The abbreviation ‘€’
represents the ‘euro’, and the abbreviations
‘€m’ and ‘€bn’ represent millions and
thousands of millions of euros, respectively.
Forward-looking statements
Cautionary statement regarding
forward-looking statements
Certain sections in this document contain
‘forward-looking statements’ as that term is
defined in the United States Private Securities
Litigation Reform Act of 1995, such as
statements with respect to NatWest Group’s
financial condition, results of operations and
business, including its strategic priorities,
financial, investment and capital targets, and
climate and sustainability-related targets,
commitments and ambitions described herein.
Statements that are not historical facts,
including statements about NatWest Group’s
beliefs and expectations, are forward-looking
statements. Words such as ‘expect’,
‘estimate’, ‘project’, ‘anticipate’, ‘commit’,
‘believe’, ‘should’, ‘intend’, ‘will’, ‘plan’, ‘could’,
‘probability’, ‘risk’, ‘target’, ‘goal’, ‘objective’,
‘may’, ‘endeavour’, ‘outlook’, ‘optimistic’,
‘prospects’ and similar expressions or
variations on these expressions are intended
to identify forward-looking statements. In
particular, this document includes forward-
looking targets and guidance relating to
financial performance measures, such as
income growth, operating expense, RoTE,
ROE, discretionary capital distribution targets,
impairment loss rates, capital generation pre-
distributions, customer assets and liabilities
growth rate, cost income ratio, balance sheet
reduction (including the reduction of RWAs),
CET1 ratio (and key drivers of the CET1 ratio
including timing, impact and details), Pillar 2
and other regulatory buffer requirements and
MREL and non-financial performance
measures, such as NatWest Group’s initial
area of focus, climate and sustainability-
related ambitions, targets and metrics,
including in relation to financed emissions and
initiatives to transition to a net zero economy,
such as our climate and transition finance
activities.
Limitations inherent to forward-
looking statements
These statements are based on current plans,
expectations, estimates, targets and
projections, and are subject to significant
inherent risks, uncertainties and other factors,
both external and relating to NatWest Group’s
strategy or operations, which may result in
NatWest Group being unable to achieve the
current plans, expectations, estimates, targets,
projections and other anticipated outcomes
expressed or implied by such forward-looking
statements. In addition, certain of these
disclosures are dependent on choices relying
on key model characteristics and assumptions
and are subject to various limitations, including
assumptions and estimates made by
management. By their nature, certain of these
disclosures are only estimates and, as a result,
actual future results, gains or losses could
differ materially from those that have been
estimated. Accordingly, undue reliance should
not be placed on these statements. The
forward-looking statements contained in this
document speak only as of the date we make
them and we expressly disclaim any obligation
or undertaking to update or revise any
forward-looking statements contained herein,
whether to reflect any change in our
expectations with regard thereto, any change
in events, conditions or circumstances on
which any such statement is based, or
otherwise, except to the extent legally
required.
Important factors that could affect
the actual outcome of the forward-
looking statements
We caution you that a large number of
important factors could adversely affect our
results or our ability to implement our strategy,
cause us to fail to meet our targets,
predictions, expectations and other anticipated
outcomes or affect the accuracy of forward-
looking statements described in this document.
These factors include, but are not limited to,
those set forth in the risk factors and the other
uncertainties described in NatWest Group plc’s
2025 Annual Report and Accounts on Form
20-F, and its other filings with the US
Securities and Exchange Commission. The
principal risks and uncertainties that could
adversely affect NatWest Group’s future
results, its financial condition and/or prospects
and cause them to be materially different from
what is forecast or expected, include, but are
not limited to: economic and political risk
(including in respect of: political and economic
risks and uncertainty in the UK and global
markets, including as a result of inflation and
interest rates, supply chain disruption,
protectionist policies, and geopolitical
developments); and changes in interest rates
and foreign currency exchange rates; business
change and execution risk (including in respect
of the implementation of NatWest Group’s
strategy; future acquisitions and divestments,
the competitive environment; and the transfer
of its EU corporate portfolio); financial
resilience risk (including in respect of: NatWest
Group’s ability to meet targets and to make
discretionary capital distributions; counterparty
and borrower risk; liquidity and funding risks;
prudential regulatory requirements for capital;
reductions in the credit ratings; model risk;
sensitivity to accounting policies, judgments,
estimates and assumptions (and the economic,
climate, competitive and other forward-looking
information affecting those judgments,
estimates and assumptions); changes in
applicable accounting standards; the value or
effectiveness of credit protection; the
requirements of regulatory stress tests and the
adequacy of NatWest Group’s future
assessments by the Prudential Regulation
Authority and the Bank of England; and the
application of UK statutory stabilisation or
resolution powers); operational and IT
resilience risk (including in respect of:
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
429
Forward-looking statements connued
operational risks (including reliance on third
party suppliers); cyberattacks; the accuracy
and effective use of data; artificial intelligence;
complex IT systems; attracting, retaining and
developing diverse senior management and
skilled personnel; NatWest Group’s risk
management framework; and reputational
risk); legal, regulatory and conduct risk
(including in respect of: the impact of
substantial regulation and oversight; the
outcome of legal, regulatory and governmental
actions, investigations and remedial
undertakings; and changes in tax legislation or
failure to generate future taxable profits); and
climate and sustainability-related risks
(including in respect of: risks relating to climate
change and sustainability-related risks; both
the execution and reputational risk relating to
NatWest Group’s climate change-related
strategy, ambitions, targets and transition
plan; climate and sustainability-related data
and model risk; increasing levels of climate,
environmental, human rights and
sustainability-related regulation and oversight;
and increasing; climate, environmental and
sustainability-related litigation, enforcement
proceedings investigations and conduct risk).
Cautionary statement regarding
alternative performance measures
NatWest Group prepares its financial
statements in accordance with UK-adopted
International Accounting Standards (IAS) and
IFRS. This document may contain a number of
non-IFRS measures, or alternative
performance measures, defined under the
European Securities and Markets Authority
(ESMA) guidance, or non- Generally Accepted
Accounting Principles (non-GAAP) financial
measures in accordance with the SEC
regulations (together, APM). APMs are
adjusted for notable and other defined items
which management believes are not
representative of the underlying performance
of the business and which distort period-on-
period comparison.
APMs provide users of the financial statements
with a consistent basis for comparing business
performance between financial periods and
information on elements of performance that
are one-off in nature. Any APMs included in
this document, are not measures within the
scope of IFRS or GAAP, are based on a
number of assumptions that are subject to
uncertainties and change and are not a
substitute for IFRS or GAAP measures and a
reconciliation to the closest IFRS or GAAP
measure is presented where appropriate.
The information, statements and opinions
contained in this document do not constitute a
public offer under any applicable legislation or
an offer to sell or a solicitation of an offer to
buy any securities or financial instruments or
any advice or recommendation with respect to
such securities or other financial instruments.
Additional cautionary statement
regarding climate and sustainability-
related data, metrics and forward-
looking statements.
Climate and sustainability-related statements
that are not historical facts, including
statements about NatWest Group’s beliefs,
expectations, climate and sustainability-related
ambitions, targets and commitments are
forward-looking statements.
Words such as
‘ambition’, ‘achieve’, ‘aim’, ‘anticipate’, ‘believe’,
’continue’, ‘could’, ‘effort’, ‘estimate’, ‘expect’,
‘forecast’, ‘goal’, ‘guidance’, ‘intend’, ‘intention’,
‘may’, ‘objective’, ‘plan’, ‘potential’, ‘projection’,
‘predict’, ‘seek’, ‘should’, ‘target’, ‘will’, ‘would’ or
similar expressions, or the negative thereof,
other variations thereon or similar expressions
are intended to identify forward-looking
statements.
This report contains climate and sustainability-
related forward-looking statements, including,
but not limited to, NatWest Group’s ambition to
be net zero across its financed emissions,
assets under management and operational
value chain by 2050, aligned with the UK’s
legal obligation to be net zero by 2050,
NatWest Group’s ambition to at least halve the
climate impact of its financing activity by 2030,
against a 2019 baseline, supported by
portfolio-level activity-based targets, NatWest
Group’s target to provide £200 billion of
transition and climate finance between 1 July
2025 and the end of 2030, (each a
‘Sustainability related forward-looking
statement’). NatWest Group’s target to achieve
5% of UK Black colleagues in its senior
leadership population and its management
population and NatWest Group’s target to
achieve 19% of UK colleagues from ethnic
minority groups in its senior leadership
population and its management population by
2030 (each a ‘Sustainability-related forward-
looking statements’).
The Sustainability-related forward-looking
statements of this report are based on current
plans, information, and data. In preparing
these, NatWest Group has made a number of
key judgments, estimates, assumptions and
projections, and relied on information subject
to inherent uncertainties.
Readers are cautioned that a number of
factors, both external and those specific to
NatWest Group, could cause actual
achievements, results, performance or other
future events or conditions to differ, in some
cases significantly, from those stated, implied
and/or reflected in any Sustainability-related
forward-looking statement or result in revisions
to the reported data, including on financed
emissions or the classification of sustainable
finance and investments, meaning that data
outputs may not be reconcilable or
comparable year on year due to a variety of
risks, uncertainties and other factors (including
without limitation those referred to below).
Therefore, no assurance can be given by or on
behalf of NatWest Group as to the likelihood of
the achievement or reasonableness of any
climate or sustainability-related projections,
estimates, forecasts, ambitions, targets,
commitments or other forward-looking
statements contained herein. Therefore, undue
reliance should not be placed on these
Sustainability-related forward-looking
statements. The most important of these
uncertainties and factors that could cause
actual results and outcomes to differ materially
from those expressed or implied in climate and
sustainability-related forward-looking
statements are summarised in the ‘Risk
Factors’ included on pages 420 to 422 of this
report (with special regard to the risk factors
in relation to ‘Climate and sustainability-related
risks’ that describe several particular
uncertainties, climate and sustainability-related
risks to which NatWest Group is exposed and
which may be amended from time to time).
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
430
Forward-looking statements connued
Other uncertainties and factors include,
without limitation:
•
Factors and uncertainties beyond NatWest
Group’s control. The extent and pace of
climate change, including the timing and
manifestation of physical and transition
risks and nature loss; the
macroeconomic
environment; the effectiveness of actions of
governments, legislators, regulators and
businesses; changes to government policy
direction, legislation, regulation and
industry and market practice; the response
of wider society, including NatWest Group’s
value chain, including its investors,
customers, counterparties, suppliers and
business partners; changes in customer
and societal behaviour and demand;
availability of commercially viable
opportunities in the sustainable and
transition finance markets, competition
dynamics, capital markets appetite,
investor expectations, and external credit
and concentration risk appetites which may
constrain the scale or risk profile of
opportunities accessible to NatWest Group;
developments in available technology; the
rollout of low carbon infrastructure; and the
availability of accurate, verifiable, reliable,
auditable, consistent and comparable data
•
Data availability, accuracy, verifiability and
data gaps. Our climate and sustainability-
related disclosures are limited by the
availability of high-quality, verifiable,
accurate, reliable, auditable, consistent and
comparable data in some areas and our
own ability to timely collect and process
such data. These limitations affect the
accuracy and completeness of climate and
sustainability-related disclosures.
Users
are therefore advised to interpret the
disclosures with appropriate caution, taking
into account the assumptions, data sources
and constraints.
•
Use of proxies or aggregated sector-level
data. Significant data gaps persist across
sectors and sub-sectors, particularly in
industries with a high proportion of small
and medium-sized enterprises (SMEs),
such as agriculture. Typically, SMEs often
have more limited resources, capacity and
specialist expertise to collect, validate and
report climate and sustainability-related
information in a consistent way. Many
SMEs also face practical challenges, such
as less formalised data-collection
processes, fewer dedicated sustainability-
related functions, and limited access to
digital tools or external assurance, which
can result in less comprehensive or less
reliable data being available at sector level.
When adequate climate and sustainability-
related data is not publicly available or
cannot be obtained directly from individual
counterparties, financial institutions often
rely on proxies or aggregated sector-level
data provided by third parties. However,
this data may be based on varying
methodologies, assumptions, or
interpretations, which may not accurately
reflect underlying climate-related
characteristics and can lead to
inconsistencies and reduce its accuracy. In
addition, there is currently no single global
data provider that offers comprehensive,
consistent coverage of the data needed to
assess emissions and climate-related risks
across sectors and portfolios. Climate and
sustainability-related reporting frameworks
differ in how they define and measure data
quality, and customers vary widely in how
they collect and disclose climate and
sustainability-related data.
•
Reliance on assumptions, scenarios and
uncertainty in climate and sustainability-
related metrics. The climate and
sustainability-related disclosures included in
this report are inherently complex and rely
on assumptions, scenarios, and forward-
looking estimates, all of which involve
material risks and uncertainty. Key
judgements and estimates used in the
preparation of the climate and
sustainability-related parts of this report
are likely to change over time, and, when
coupled with the longer timeframes used in
such disclosures, make any assessment of
key topics inherently uncertain. The key
areas involving significant judgement or
complexity include calculation of financed,
facilitated and operational emissions and
measurement of portfolio alignment and
climate-related risk. There is a high risk
that these assumptions or estimates may
prove inaccurate.
•
Lack of common standards for
classification. There is currently no globally
recognised or accepted, consistent and
comparable standard or definition (legal,
regulatory or otherwise) of, nor
widespread cross-market consensus as to
what (i) constitutes ‘green’, ‘sustainable’, or
similarly labelled activities, products, or
assets; or (ii) precise attributes are
required for a particular activity, product
or asset to be defined as ‘green’, or
‘sustainable’ or such other equivalent label.
Interpretations vary across markets and
institutions, and while several initiatives are
working toward harmonisation, a
consistent, comparable, and widely
accepted framework has yet to emerge.
Therefore, users of this report must not
assume that NatWest Group’s reporting or
description of activities, products or assets
will meet those users’ past, present or
future expectations or requirements for
describing or classifying funding, financing
and facilitation activities as ‘green’, or
‘sustainable’ or attributing similar labels
(unless a definition or standard is specified
in this report).
•
Variation of climate and sustainability-
related reporting standards. Climate and
sustainability-related reporting standards
continue to develop. While internationally
recognised standards have been
developed, there is no universal standard
accepted for institutions like NatWest
Group to fully align with and those that
exist remain subject to refinement and
jurisdictional adoption.
•
Immature systems and controls. Climate
and sustainability-related reporting is less
mature than traditional financial reporting.
Non-financial reporting systems are less
developed than financial reporting systems,
often involving manual processes and less
robust controls, which may affect data
quality and consistency.
For completeness in relation to uncertainties
and limitations,
refer to the section on
‘Financed Emissions data limitations’
on page
42 of NatWest Group plc 2025 Climate
Transition Plan Report (‘CTPR’) and the section
on ‘Caution about climate metrics and data
required for climate reporting’ on page 70 - 72
of the CTPR.
The Sustainability-related forward-looking
statements contained in this report only speak
as of the date they were published.
Strategic report
Financial review
Governance and remuneraon
Risk and capital management
Financial statements
Addional informaon
NatWest Group plc
2025 Annual Report and Accounts
431
Forward-looking statements connued
Except to the extent legally required, we
expressly disclaim any obligations or
undertaking to update or revise any
Sustainability-related forward-looking
statements in this report, whether to reflect
any change in our expectations regarding
those Sustainability-related forward-looking
statements, any change, events, conditions or
circumstances on which any such statement is
based, or otherwise. However, NatWest Group
reserves the right to update or revise any
statement in this report at our discretion.
NatWest Group may also announce other
climate and sustainability-related ambitions,
targets and commitments, and may withdraw,
retire, amend, replace or supersede existing
ones from time to time, whether or not they
have been achieved, where it considers this to
be appropriate having regard to its strategic
objectives, or where required or appropriate to
do so by applicable law, regulation or
supervisory expectations.
Written and/or oral Sustainability-related
forward-looking statements may also be made
in our periodic reports to the US Securities and
Exchange Commission, summary financial
statements to shareholders, proxy statements,
offering circulars and prospectuses, press
releases and other written materials, and in
oral statements (including during management
presentations) made by NatWest Group’s
directors, officers or employees to third parties,
including financial analysts.
Cautionary statements in relation to
the climate and sustainability-
related disclosures in this report
Caution on climate and sustainability-
related metrics
The processes we have adopted to define,
collect and report data on our climate and
sustainability-related performance, as well as
the associated metrics and disclosures in this
document, are not subject to the same formal
processes adopted for financial reporting in
accordance with established reporting
standards. They involve a higher degree of
judgement, assumptions and estimates,
including in relation to the classification of
climate and sustainability-related (including
social, sustainability, sustainability-linked,
green, climate and transition) funding,
financing and facilitation activities, than is
required for our reporting of historical financial
information prepared in accordance with
established reporting standards. As a result,
climate and sustainability-related disclosures
may be amended, updated or restated over
time. However, NatWest Group does not
undertake to restate prior disclosures except
where required by applicable law or regulation,
even if subsequently available data or
methodologies differ from those used at the
time of the original disclosure.
Caution about sustainability-related
funding, financing and facilitation
Sustainability-related (including social,
sustainability, sustainability-linked, green,
climate, transition) funding, financing and
facilitation currently represents only a relatively
small proportion of NatWest Group’s overall
funding, financing and facilitation activities.
Accordingly, disclosures relating to
sustainability-related funding, financing and
facilitation should be read in the context of
NatWest Group’s broader balance sheet, risk
profile and funding, financing and facilitation
activities, and should not be interpreted as
indicative of NatWest Group’s overall funding,
financing or facilitation strategy.
Caution about limitation on external
assurance of sustainability-related metrics
in this report
Certain sustainability-related metrics presented
in this report have been subject to a degree of
external assurance. Readers of this report
should be aware that such assurance is
subject to inherent limitations, in particular:
•
External assurance is typically provided
over only a defined subset of sustainability-
related metrics. Not all sustainability-
related metrics disclosed in this report
have been subject to independent external
assurance, and the scope of assurance
engagements may change from year to
year.
•
Assurance providers apply methodologies,
criteria and assumptions that are tailored
to an organisation’s specific reporting
framework. Consequently, their approach
may differ from that used by other
providers assuring similar metrics.
•
The sustainability-related metrics involve
estimates, proxies, or third-party data that
may not be subject to the same level of
verification as financial information.
Assurance providers may also rely on
evidence such as internal
documentation/white papers, analytical
reviews, and management representations
provided by NatWest Group, which may
introduce limitations resulting in inherent
estimation uncertainty. External assurance
of sustainability-related information does
not eliminate the underlying limitations,
uncertainties or estimation judgements.
Therefore, readers should exercise caution and
interpret the assured information in the
context of these limitations and the broader
disclosures in this report.
Caution about sustainability-related case
studies
The sustainability-related (including climate-
related) case studies included in this report are
intended for illustrative purposes only and are
intended to demonstrate potential outcomes.
They should not be construed as definitive
evidence. NatWest Group has not
independently verified the information
contained in the sustainability-related case
studies and makes no representations or
warranties as to their accuracy or reliability.
The content of the sustainability-related case
studies, including any opinions, conclusions and
views expressed, is the sole responsibility of
the individuals or organisations that provided
them and do not necessarily reflect the views
or policies of NatWest Group. Accordingly,
readers should exercise caution, independently
assess the relevance and applicability of the
sustainability-related case studies, and seek
independent verification before relying on
them.
The climate and sustainability-related
disclosures in this report contain references to
websites, reports and other materials prepared
by third parties that are not affiliated with
NatWest Group. Reference to such websites,
reports and other materials is made for
information purposes only and information
available on such websites, in such reports and
other materials is not incorporated by
reference into this report. Readers should
exercise caution and conduct their own due
diligence when relying on information from
these third-party sources. To the extent
permitted by law, NatWest Group makes no
representation, warranty or assurance of any
kind, express or implied, or takes no
responsibility or liability as to the fairness,
accuracy, reliability, reasonableness,
correctness or completeness with respect to
any such websites, reports and materials.
Caution about the use of graphics
The climate and sustainability-related
disclosures in this report contain a number of
graphics, infographics and text boxes which
aim to give a high-level overview of certain
elements of this report and improve
accessibility for readers. These elements are all
illustrative and should be read with caution
and within the context of this report as a
whole and should not be relied upon in
isolation.
This Report is printed on Edixion Offset which has been independently
certified according to the rules of the Forest Stewardship Council
®
(FSC
®
).
Printed in the UK by Pureprint, a CarbonNeutral
®
company.
Both manufacturing paper mill and the printer are registered to the
Environmental Management System ISO 14001:2004 and are Forest
Stewardship Council
®
(FSC) chain-of-custody certified.
Designed and produced by Black Sun Global.
www.blacksun-global.com
NatWest Group plc
36 St Andrew Square
Edinburgh, EH 2 2YB
www.natwestgroup.com