6-K 1 dp139758_6k.htm FORM 6-K nwg6Kfinal3010

Report of Foreign Private Issuer

 

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

30 October 2020

 

Commission file number: 001-10306

 

 

Form 6-K

 

NatWest Group plc

 

 

Gogarburn

PO Box 1000

Edinburgh EH12 1HQ

Scotland

United Kingdom

 

(Address of principal executive offices)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F                                              Form 40-F    

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):__

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):__

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes                                                                 No  X 

 

If "Yes" is marked, indicate below the file number assigned to

the registrant in connection with Rule 12g3-2(b): 82-            

 

This report on Form 6-K, except for any information contained on any websites linked or documents referred to in this report, shall be deemed incorporated by reference into the company’s Registration Statement on Form F-3 (File No. 333-222022) and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.


Forward-looking statements

 

Cautionary statement regarding forward-looking statements

Certain sections in this document contain ‘forward-looking statements’ as that term is defined in the United States Private Securities Litigation Reform Act of 1995, such as statements that include the words ‘expect’, ‘estimate’, ‘project’, ‘anticipate’, ‘commit’, ‘believe’, ‘should’, ‘intend’, ‘plan’, ‘could’, ‘probability’, ‘risk’, ‘Value-at-Risk (VaR)’, ‘target’, ‘goal’, ‘objective’, ‘may’, ‘endeavour’, ‘outlook’, ‘optimistic’, ‘prospects’ and similar expressions or variations on these expressions.

 

In particular, this document includes forward-looking statements relating, but not limited to: the Covid-19 pandemic and its impact on NatWest Group; future profitability and performance, including financial performance targets such as return on tangible equity; cost savings and targets; implementation of NatWest Group’s strategy; litigation and government and regulatory investigations, including the timing and financial and other impacts thereof; the implementation of the Alternative Remedies Package; the continuation of NatWest Group’s balance sheet reduction programme, including the reduction of risk-weighted assets (RWAs) and the timing thereof; capital and strategic plans and targets; capital, liquidity and leverage ratios and requirements, including CET1 Ratio, RWA equivalents (RWAe), Pillar 2 and other regulatory buffer requirements, minimum requirement for own funds and eligible liabilities, and other funding plans; funding and credit risk profile; capitalisation; portfolios; net interest margin; customer loan and income growth; the level and extent of future impairments and write-downs, including with respect to goodwill; restructuring and remediation costs and charges; NatWest Group’s exposure to political risk, economic risk, climate change risk, operational risk, conduct risk, cyber and IT risk and credit rating risk and to various types of market risks, including interest rate risk, foreign exchange rate risk and commodity and equity price risk; customer experience including our Net Promotor Score (NPS); employee engagement and gender balance in leadership positions.

 

Limitations inherent to forward-looking statements

These statements are based on current plans, 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 targets, predictions, expectations 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 gains and losses could differ materially from those that have been estimated. Accordingly, undue reliance should not be placed on these statements. Forward-looking statements speak only as of the date we make them and we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in NatWest Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

 

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 we describe in this document, including in the risk factors and other uncertainties set out in NatWest Group plc’s 2019 Annual Report and Accounts on Form 20-F and other materials filed with, or furnished to, the US Securities and Exchange Commission, and other risk factors and uncertainties discussed in this document. These include the significant risks for NatWest Group presented by: economic and political risk (including in respect of: the uncertainty surrounding the Covid-19 pandemic and the impact of the Covid-19 pandemic on NatWest Group; prevailing uncertainty regarding the terms of the UK’s withdrawal from the European Union; increased political and economic risks and uncertainty in the UK and global markets; climate change and the transition to a low carbon economy; HM Treasury’s ownership of NatWest Group plc and the possibility that it may exert a significant degree of influence over NatWest Group; changes in interest rates and changes in foreign currency exchange rates); financial resilience risk (including in respect of: NatWest Group’s ability to meet targets; the level and extent of future impairments and write-downs (including with respect to goodwill); NatWest Group’s ability to resume discretionary capital distributions; the highly competitive markets in which NatWest Group operates; deterioration in borrower and counterparty credit quality; the ability of NatWest Group to meet prudential regulatory requirements for capital and MREL, or to manage its capital effectively; the ability of NatWest Group to access adequate sources of liquidity and funding; changes in the credit ratings of NatWest Group plc, any of its subsidiaries or any of its respective debt securities; NatWest Group’s ability to meet requirements of regulatory stress tests; possible losses or the requirement to maintain higher levels of capital as a result of limitations or failure of various models; sensitivity of NatWest Group’s financial statements to underlying accounting policies, judgments, assumptions and estimates; changes in applicable accounting policies; the value or effectiveness of any credit protection purchased by NatWest Group and the application of UK statutory stabilisation or resolution powers); strategic risk (including in respect of: the implementation and execution of NatWest Group’s Purpose-led Strategy, including as it relates to the re-alignment of the NWM franchise and NatWest Group’s climate ambition and the risk that NatWest Group may not achieve its targets); operational and IT resilience risk (including in respect of: NatWest Group being subject to cyberattacks; operational risks inherent in NatWest Group’s business; exposure to third party risks including as a result of outsourcing and its use of new technologies and innovation, as well as related regulatory and market changes; NatWest Group’s operations being highly dependent on its IT systems; NatWest Group relying on attracting, retaining and developing senior management and skilled personnel and maintaining good employee relations; NatWest Group’s risk management framework; and reputational risk) and legal, regulatory and conduct risk (including in respect of: NatWest Group’s businesses being subject to substantial regulation and oversight; NatWest Group complying with regulatory requirements; legal, regulatory and governmental actions and investigations (including the final number of PPI claim and their amounts); the replacement of LIBOR, EURIBOR and other IBOR rates to alternative risk free rates; heightened regulatory and governmental scrutiny (including by competition authorities); implementation of the Alternative Remedies Package and the costs related thereto; and changes in tax legislation).

 

The forward-looking statements contained in this document speak only as at the date hereof, and NatWest Group does not assume or undertake any obligation or responsibility to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

 

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 solicit of any offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments.

 

 

 


 

NatWest Group – Form 6-K Q3 Results 2020                                 1

 

 

 

Introduction

Presentation of information

‘Parent company’ refers to NatWest Group plc and ‘NatWest Group’ refers to NatWest Group plc and its subsidiary and associated undertakings. The term ‘NWH Group’ refers to NatWest Holdings Limited (‘NWH’) and its subsidiary and associated undertakings.  The term ‘NWM Group’ refers to NatWest Markets Plc (‘NWM Plc’) and its subsidiary and associated undertakings.  The term ‘NWM N.V.’ refers to NatWest Markets N.V. The term ‘NWMSI’ refers to NatWest Markets Securities, Inc. The term ‘RBS plc’ refers to The Royal Bank of Scotland plc.  The term ‘NWB Plc’ refers to National Westminster Bank Plc.  The term ‘UBI DAC’ refers to Ulster Bank Ireland DAC.  The term ‘RBSI Limited’ refers to The Royal Bank of Scotland International Limited.

 

UK Personal Banking was renamed Retail Banking, with effect from 16 September 2020.

 

NatWest Group publishes its financial statements in pounds sterling (‘£’ or ‘sterling’). The abbreviations ‘£m’ and ‘£bn’ represent millions and thousands of millions of pounds sterling, respectively, and references to ‘pence’ represent pence in the United Kingdom (‘UK’). Reference to ‘dollars’ or ‘$’ are to United States of America (‘US’) dollars. The abbreviations ‘$m’ and ‘$bn’ represent millions and thousands of millions of dollars, respectively, and references to ‘cents’ represent cents in the US. The abbreviation ‘€’ represents the ‘euro’, and the abbreviations ‘€m’ and ‘€bn’ represent millions and thousands of millions of euros, respectively.

 

Non-IFRS financial information

NatWest Group prepares its financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board(IASB) which constitutes a body of generally accepted accounting principles (GAAP). This document contains a number of adjusted or alternative performance measures, also known as non-GAAP or non-IFRS performance measures. These measures are adjusted for certain items which management believes are not representative of the underlying performance of the business and which distort period-on-period comparison. These non-IFRS measures are not measures within the scope of IFRS and are not a substitute for IFRS measures. For details of the basis of preparation and reconciliations where applicable refer to the Appendix in this announcement.

 

 



 

NatWest Group – Form 6-K Q3 Results 2020                                 2

 

 

NatWest Group plc

Q3 2020 Interim Management Statement

 

Alison Rose, Chief Executive Officer, commented:

 

“These results demonstrate the resilience of our underlying business and the strength of our balance sheet in the face of significant continued uncertainty. Our sector-leading capital position, strong levels of liquidity and intelligent and consistent approach to risk mean we can continue to provide our customers and communities with the support they need.

 

Although impairments were relatively low in the quarter and we have seen some positive trends across our customer base, the full impact of Covid-19 remains very unclear. Challenging times lie ahead, especially as the current government support schemes come to an end and as new Covid-19 related restrictions are introduced.

 

We continue to deliver well against our strategy, building a bank that champions potential and has the capability to grow. By building deeper relationships with our customers at every stage of their lives, simplifying the bank further, investing in innovation and partnerships and allocating capital well, we will deliver sustainable returns to our shareholders.”

 

Financial performance in a challenging environment

Q3 2020 operating profit before tax of £355 million and an attributable profit to ordinary shareholders of £61 million including a £324 million loss on redemption of own debt.

In comparison to Q3 2019, total income decreased by 16.5%. Across the retail and commercial businesses income decreased by 12.1%. Within NatWest Markets (NWM), the level of primary issuance and market activity eased in Q3 2020, compared to the first half of the year.

Net interest margin of 1.51% was 3 basis points lower than Q2 2020. Bank net interest margin (NIM) of 1.65% was 2 basis points lower than Q2 2020 principally reflecting reduced structural hedge income as a result of lower swap rates and the contraction of the yield curve. Mortgage front book new business and switcher completion margins were approximately 140 basis points, broadly in line with the overall book margin.

Strategic costs of £223 million in Q3 2020 include £90 million redundancy costs, a £34 million charge related to technology spend and a £21 million property charge.

Operating expenses reduced by £884 million in Q3 2020 in comparison to Q3 2019. Other expenses, excluding operating lease depreciation (OLD), were £152 million lower than Q3 2019, with a £193 million cost reduction achieved for the year to date. We remain on track to achieve our £250 million target for full year 2020.

Net impairment losses of £254 million in Q3 2020, or 28 basis points of gross customer loans, resulted in an expected credit loss (ECL) coverage ratio of 1.72%.

 

Robust balance sheet with strong capital and liquidity levels

 

CET1 ratio of 18.2% was 100 basis points higher than Q2 2020 mainly reflecting a £7.6 billion reduction in RWAs, principally in NatWest Markets. Excluding IFRS 9 transitional relief, the CET1 ratio was 17.2%.

The liquidity coverage ratio (LCR) remains strong at 157%, representing £61.8 billion headroom above 100%, which includes the impact of a £5.0 billion term funding scheme (TFS) repayment within the quarter.

Net loans to customers at amortised cost increased by £1.3 billion in Q3 2020 in comparison to Q2 2020. Across the retail and commercial businesses net lending increased by £0.4 billion during Q3 2020, as £2.9 billion drawdowns against UK Government lending initiatives and £2.4 billion related to mortgages was partially offset by net revolving credit facility (RCF) repayments of £3.1 billion and lower lending across Large Corporate & Institutions and Specialised business.

Customer deposits of £418.4 billion increased by £10.1 billion during Q3 2020, with retail and commercial balances £6.6 billion higher as consumer spending continued to be impacted by government restrictions and customers retained liquidity. 

 

Outlook(1)

We retain the outlook guidance provided in the 2020 Interim Results on Form 6-K with the exception of the following updates, noting the continued significant economic uncertainty.

 

We believe the full year impairment charge is likely to be at the lower end of the £3.5-4.5 billion range following the limited level of defaults across lending portfolios and associated ECL stage migration within the third quarter.

 

We now expect NatWest Group RWAs to be below our previously guided range of £185-195 billion at the end of 2020 following the relatively low level of procyclical inflation experienced to date, with previously expected uplifts delayed to 2021, whilst also now targeting NatWest Markets RWAs of around £30 billion by the end of 2020.

 

Note:

(1)      The guidance, targets, expectations and trends discussed in this section represent management’s current expectations and are subject to change, including as a result of the factors described in the NatWest Group plc “Risk Factors” as described on pages 112 to 113 of its Interim Results 2020 on Form 6-K, pages 31 to 32  of its Q1 2020 Form 6-K and pages 286 to 300 of its 2019 Annual Report and Accounts on Form 20-F. These statements constitute forward-looking statements. Refer to Forward-looking statements in this announcement.

NatWest Group – Form 6-K Q3 Results 2020                                 3

 

Our Purpose in action – we champion potential, helping people, families and businesses to thrive

 

Helping our customers, colleagues and communities through the impacts of Covid-19

Provided lending support to our customers with a disciplined approach to risk and value creation:

·     Approved £13.0 billion through the government lending initiatives(1).

·     Facilitated approximately £8.8 billion of Covid-19 Corporate Financing Facilities (CCFF) issuances(2).

 

Supported the financial health of our customers:

·     Helped approximately 250,000 customers with an initial mortgage repayment holiday and provided payment holidays on over 72,000 business customer accounts(3).

·     Launched ‘Banking My Way’ service, enabling customers who need additional support to request bespoke assistance, with 38,500 registrations since its launch(4).

 

Long-term investment plan is powering our operational effectiveness:

·     Increased digital adoption with 9.3 million active digital users as at Q3 2020 (9.0 million as at Q3 2019), 6 million interactions with our AI chat bot Cora in the first nine months of 2020 (3.9 million in the first nine months of 2019) and c.9,000 weekly video banking conversations now taking place, compared to less than 100 a week in January 2020(5).

·     Announced a new relationship with BlackRock to support our investment management processing activity, enabling savings to be passed onto our clients.

 

Partnered to proactively respond and support UK communities:

·     NatWest Social and Community Capital launched a £1 million Coronavirus Response Fund offering grants to organisations across the UK that employ people from vulnerable or disadvantaged groups.

·     Launched a review with SafeLives into supporting survivors of economic abuse and acquired coercive debt.

 

Prioritised the wellbeing of our colleagues:

·     Continued to enable more than 50,000 colleagues to work from home, delivering office furniture and computer equipment, including 31,000 tech bundles to homes(6).

·     Enhanced our free mental health support through a new partnership with Silvercloud, providing substantial, sector-leading support to any colleague who needs it and provided all leaders access to extended mental health awareness support.

 

 

Q3 2020 progress against areas of focus

Enterprise – addressing barriers to enterprise and business creation:

·     NatWest Entrepreneur Accelerator Programme ranked the top UK accelerator by total attendances(7). The programme has run 800 virtual events with 33,000 attendees since the start of lockdown(2).

·     Over half of the £1 billion of debt funding to support female entrepreneurs announced in February 2020 has been committed as part of our ambition to help create new businesses in the UK(2).

 

Learning – skill building, particularly around financial confidence:

·     Reached 2.4 million people through financial capability interactions including live MoneySense lessons on social media(6).

·     Island Saver, the world’s first financial education console, PC and mobile game, has been downloaded over 1.7 million times since its launch(8).

 

Climate – supporting the necessary transition to a low carbon economy:

·     As part of our membership of the Green Finance Institute’s ‘Coalition for the Energy Efficiency of Buildings’, we have signed up to their Green Home Retrofit Principles.

·     Progress in sustainability has been recognised by leading ESG rating agencies: Sustainalytics substantially improved our Risk Score to 20.5 (from 27.5) in July 2020 and MSCI upgraded our ESG rating to A (from BBB) in October 2020.

 

Diversity and inclusion – building an open and inclusive bank where everyone can thrive:

·     In addition to our existing target of at least 14% BAME representation in senior UK roles by 2025, we have introduced a new target to have 3% Black colleagues in senior UK roles by 2025.

·     Included in ‘The Times’ Top 50 employers for women.

 

Notes:

(1)   As at 30 September 2020, inclusive of Commercial Banking and Private Banking: Bounce Back Loan Scheme (BBLS) – £7.9 billion; Coronavirus Business Interruption Loan Scheme (CBILS) – £3.9 billion, Coronavirus Large Business Interruption Loan Scheme (CLBILS) – £1.2 billion.

(2)   As at 30 September 2020.

(3)   For the nine months ended 30 September 2020 in Retail Banking and since 22 March 2020 in Commercial Banking. As at 30 September 2020, there were 37,000 active mortgage repayment holidays and approximately 55,000 active payment holidays on business customer accounts.

(4)   From launch date of 19 August 2020 to 9 October 2020.

(5)   Weekly conversation volumes, as at week commencing 12 October 2020.

(6)   For the nine months ended 30 September 2020.

(7)   Beauhurst report ‘Accelerating Growth’- September 2020.

(8)   From launch date of 13 May 2020 to 30 September 2020.

NatWest Group – Form 6-K Q3 Results 2020                                 4


Business performance summary

 

Nine months ended

 

Quarter ended

 

30 September

30 September

 

30 September

30 June

30 September

Performance key metrics and ratios

2020 

2019 

 

2020 

2020 

2019 

Profit before impairment losses

£2,697m

£3,222m

 

£609m

£767m

£205m

Operating (loss)/profit before tax

(£415m)

£2,686m

 

£355m

(£1,289m)

(£8m)

(Loss)/profit attributable to ordinary shareholders

(£644m)

£1,723m

 

£61m

(£993m)

(£315m)

Bank net interest margin

 

 

 

 

 

 

(NatWest Group NIM excluding NWM) (1)

1.73% 

2.02% 

 

1.65% 

1.67% 

1.97% 

Bank average interest earning assets

 

 

 

 

 

 

(NatWest Group excluding NWM) (1)

£449bn

£410bn

 

£468bn

£458bn

£416bn

Cost:income ratio (1)

66.9% 

67.5% 

 

74.5% 

70.9% 

92.9% 

Loan impairment rate (1)

115bps

22bps

 

28bps

229bps

26bps

Earnings per share

 

 

 

 

 

 

- basic

(5.3p)

14.3p

 

0.5p

(8.2p)

(2.6p)

- basic fully diluted

(5.3p)

14.2p

 

0.5p

(8.2p)

(2.6p)

Return on tangible equity (1)

(2.7%)

6.8% 

 

0.8% 

(12.4%) 

(3.8%) 

Average tangible equity

£32bn

£34bn

 

£32bn

£32bn

£33bn

Average number of ordinary shares

 

 

 

 

 

 

outstanding during the period (millions)

 

 

 

 

 

 

- basic

12,090 

12,064 

 

12,110 

12,085 

12,075 

- fully diluted (2)

12,112 

12,099 

 

12,133 

12,107 

12,106 

 

 

30 September

30 June

31 December

Balance sheet key metrics and ratios

2020 

2020 

2019 

Total assets

£791.6bn

£806.9bn

£723.0bn

Funded assets (1)

£627.3bn

£623.5bn

£573.0bn

Loans to customers - amortised cost

£353.7bn

£352.3bn

£326.9bn

Impairment provisions

£6.1bn

£6.1bn

£3.7bn

Customer deposits

£418.4bn

£408.3bn

£369.2bn

 

 

 

 

Liquidity coverage ratio (LCR)

157% 

166% 

152% 

Liquidity portfolio

£243bn

£243bn

£199bn

Net stable funding ratio (NSFR) (3)

147% 

144% 

141% 

Loan:deposit ratio (1)

85% 

86% 

89% 

Total wholesale funding

£75bn

£86bn

£75bn

Short-term wholesale funding

£25bn

£22bn

£19bn

 

 

 

 

Common Equity Tier (CET1) ratio (4)

18.2% 

17.2% 

16.2% 

Total capital ratio

23.7% 

22.5% 

21.2% 

Pro forma CET1 ratio, pre dividend accrual (5)

18.2% 

17.2% 

17.0% 

Risk-weighted assets (RWAs)

£173.9bn

£181.5bn

£179.2bn

CRR leverage ratio

5.2% 

5.1% 

5.1% 

UK leverage ratio

6.2% 

6.0% 

5.8% 

 

 

 

 

Tangible net asset value (TNAV) per ordinary share

265p

264p

268p

Tangible net asset value (TNAV) per ordinary share - fully diluted (1,2)

264p

263p

267p

Tangible equity

£32,093m

£32,006m

£32,371m

Number of ordinary shares in issue (millions)

12,127 

12,125 

12,094 

Number of ordinary shares in issue (millions) - fully diluted (2,6)

12,149 

12,147 

12,138 

 

Notes:

(1)   Refer to the Appendix for details of basis of preparation and reconciliation of non-IFRS financial and performance measures.

(2)   Includes the effect of dilutive share options and convertible securities. Dilutive shares on an average basis for the nine months ended 30 September 2020 were 22 million shares; Q3 2020 -  23 million shares (nine months ended 30 September 2019 - 35 million shares; Q2 2020 - 22 million shares; Q3 2019 - 31 million shares) and as at 30 September 2020 were 22 million shares (as at 30 June 2020 - 22 million shares; as at 31 December 2019 - 44 million shares).

(3)   NSFR reported in line with CRR2 regulations finalised in June 2019.

(4)   At September and June 2020 there is no charge in CET1 for foreseeable dividends or charges. The pro forma CET1 ratio at 31 December 2019 excluded foreseeable charges of £968 million for ordinary dividends (3p per share final dividend and 5p per share special dividend) and £365 million pension contribution.

(5)   Based on CRR end point including the IFRS 9 transitional adjustment of £1.7 billion. Excluding this adjustment, the CET1 ratio would be 17.2%.

(6)   Includes 16 million shares held by the Employee Benefit Trust (30 June 2020 - 16 million shares; 31 December 2019 - 15 million shares).

Non-IFRS financial measures

This document contains a number of non-IFRS financial measures and performance metrics not defined under IFRS. For details of the basis of preparation and reconciliations, where applicable, refer to the Appendix.


 

NatWest Group – Form 6-K Q3 Results 2020                                 5

 

Summary consolidated income statement for the period ended 30 September 2020

 

 

 

Nine months ended

 

Quarter ended

 

30 September

30 September

 

30 September

30 June

30 September

 

2020 

2019 

 

2020 

2020 

2019 

 

£m 

£m 

 

£m 

£m 

£m 

Net interest income

5,778 

6,010 

 

1,926 

1,910 

2,006 

Own credit adjustments

19 

(58) 

 

(34)

(102) 

(12) 

Other non-interest income

2,464 

4,068 

 

531 

868 

909 

Non-interest income

2,483 

4,010 

 

497 

766 

897 

Total income

8,261 

10,020 

 

2,423 

2,676 

2,903 

Litigation and conduct costs

81 

(810) 

 

(8)

85 

(750) 

Strategic costs

(687)

(844) 

 

(223)

(333) 

(215) 

Other expenses

(4,958)

(5,144) 

 

(1,583)

(1,661) 

(1,733) 

Operating expenses

(5,564)

(6,798) 

 

(1,814)

(1,909) 

(2,698) 

Profit before impairment losses

2,697 

3,222 

 

609 

767 

205 

Impairment losses

(3,112)

(536) 

 

(254)

(2,056) 

(213) 

Operating (loss)/profit before tax

(415)

2,686 

 

355 

(1,289) 

(8) 

Tax credit/(charge)

(395) 

 

(207)

396 

(201) 

(Loss)/profit for the period

(414)

2,291 

 

148 

(893) 

(209) 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

Ordinary shareholders

(644)

1,723 

 

61 

(993) 

(315) 

Preference shareholders

21 

30 

 

10 

Paid-in equity holders

272 

277 

 

80 

95 

95 

Non-controlling interests

(63)

261 

 

(3) 

Notable items within total income

 

 

 

 

 

 

Alawwal bank merger gain in NatWest Markets

444 

 

FX recycling (loss)/gain in Central items & other

(39)

290 

 

64 

(39) 

Legacy liability release in Central items & other

256 

 

Loss on redemption of own debt

(324)

 

(324)

Liquidity Asset Bond sale gain/(loss)

111 

(8) 

17 

(19) 

IFRS volatility in Central items & other

38 

(34) 

49 

55 

(51) 

NatWest Markets asset disposals/strategic risk reduction

(75)

(35) 

(12)

(63) 

(8) 

Share of losses under equity accounting for

 

 

 

 

 

Business Growth Fund

(28)

(43)

(1) 

 


 

 

NatWest Group – Form 6-K Q3 Results 2020                                 6


Business performance summary

Retail Banking (formerly UK Personal Banking)

 

Quarter ended

As at

30 September

30 June

30 September

30 September

30 June

31 December

2020 

2020 

2019 

2020 

2020 

2019 

£m

£m

£m

£bn

£bn

£bn

Total income (1)

1,022 

1,035 

1,224 

Net loans to customers -

 

 

 

Operating expenses (1)

(647)

(546) 

(1,601) 

amortised cost

166.7 

164.5 

158.9 

Impairment losses

(70)

(360) 

(131) 

Customer deposits (1)

164.9 

161.0 

150.3 

Operating profit/(loss)

305 

129 

(508) 

RWAs

36.3 

36.7 

37.8 

Return on equity

15.3% 

5.7% 

(26.8%) 

 

Net interest margin

2.05% 

2.18% 

2.44% 

 

Cost:income ratio

63.3% 

52.8% 

130.8% 

 

Loan impairment rate

17bps

87bps

34bps

 

 

 

 

 

Note:

(1)   Comparisons with prior periods are impacted by the transfer of the Private Client Advice business to Private Banking from 1 January 2020. The net impact on Q3 2019 operating profit would have been to decrease total income by £11 million and operating expenses by £2 million. The net impact on the Q3 2019 balance sheet would have been to decrease customer deposits by £0.2 billion.

Retail Banking customer activity levels in Q3 2020 improved significantly compared with Q2 2020 with debit and credit card spend levels 30% and 43% higher respectively and mortgage applications increased by 91%. In the nine months ended 30 September 2020, Retail Banking helped approximately 250,000 customers with an initial mortgage repayment holiday and as at Q3 2020 had 37,000 active mortgage repayment holidays, representing 3% of the book by volume. Additionally, Retail Banking had approximately 40,000, or 4%, of personal loan customers on active repayment holidays as at Q3 2020.

 

Total income decreased by £202 million, or 16.5%, in comparison to Q3 2019 due to lower fee income on overdrafts, lower deposit returns, mortgage margin dilution and lower international spend related fee income, partially offset by strong balance growth in mortgages and customer deposits. Total income decreased by £13 million compared with Q2 2020, reflecting a 13 basis point reduction in net interest margin largely due to the deferred impact of the lower yield curve on deposit margins. Mortgage book margin stabilised in Q3 2020 as front book new business and switcher completion margins were approximately 140 basis points, broadly in line with the overall book margin. In Q3 2020, application margins were around 160 basis points as spreads in the market continued to widen.

Operating expenses were £954 million, or 59.6%, lower than Q3 2019. Excluding strategic, litigation and conduct costs, operating expenses decreased by £49 million, or 8.0%, compared with Q3 2019, predominantly reflecting a reduction in staff costs associated with a 10.3% reduction in headcount.

Impairment losses of £70 million in Q3 2020 primarily reflect stage three default charges driven by personal advances.

Net loans to customers increased by £2.2 billion compared with Q2 2020. Gross new mortgage lending was £6.7 billion in Q3 2020, with market flow share of approximately 11% and strong retention supporting a stock share of approximately 10.6%. Unsecured balances remained stable in Q3 2020, compared with a reduction of £0.8 billion in Q2 2020.

Customer deposits increased by £3.9 billion in Q3 2020, compared with an £8.2 billion increase in Q2 2020, predominantly driven by increasing current account balances, however growth slowed in Q3 2020 as customer spend levels increased towards pre-Covid-19 levels.

 


 

NatWest Group – Form 6-K Q3 Results 2020                                 7

 

Business performance summary

Ulster Bank RoI

Quarter ended

As at

30 September

30 June

30 September

30 September

30 June

31 December

2020 

2020 

2019 

2020 

2020 

2019 

£m

£m

£m

£bn

£bn

£bn

Total income

130 

120 

145 

Net loans to customers -

 

 

 

Operating expenses

(127)

(122) 

(131) 

amortised cost

18.3 

18.7 

18.2 

Impairment (losses)/

 

Customer deposits

19.6 

20.0 

18.5 

releases

(8)

(216) 

17 

RWAs

12.1 

12.8 

13.0 

Operating (loss)/profit

(5)

(218) 

31 

 

Return on equity

(1.0%)

(44.5%) 

5.8% 

 

Net interest margin

1.46% 

1.48% 

1.55% 

 

Cost:income ratio

97.7% 

101.7% 

90.3% 

 

Loan impairment rate

17bps

441bps

(34)bps

 

 

 

 

 

 

Our strategy to grow our Ulster Bank business in the Republic of Ireland organically and safely remains unchanged. We continue to evaluate the impact of Covid-19 and the challenges to the economy and we are reviewing our strategy appropriately and responsibly in light of these events.

 

 

In the event of any changes being made to our strategy, these would be undertaken with full consideration of any impact on customers, colleagues and shareholders in the first instance. Our priority now is to continue to remain focused on supporting our colleagues in serving our customers in these difficult times.

 

As at Q3 2020, Ulster Bank RoI had approved over 17,000 payment breaks and, of those who have rolled off their initial payment break, approximately 46% have opted for a second payment break, representing around 8% of the lending book by value.

 

 

Total income decreased by £15 million, or 10.3%, compared to Q3 2019 (€16 million, or 9.9% in euro terms),  primarily due to lower lending income, reduced transaction volumes and fee income resulting from the impact of Covid-19. Total income increased by £10 million (€10 million) in comparison to Q2 2020, reflecting higher fee income from a return to more normalised transaction levels. Net interest margin decreased by 2 basis points (2 basis points in euro terms) in comparison to Q2 2020 reflecting the continued impact of negative rates on increased liquid assets.

Impairment losses were £8 million (€6 million) in Q3 2020, with payment breaks in part mitigating the full impact of credit losses attributable to the Covid-19 pandemic.

Net loans to customers decreased by £0.4 billion (€0.3 billion) compared with Q2 2020 as repayments continued to exceed gross new lending, combined with a further derecognition of the non-performing loan (NPL) sale agreed in 2019. Gross new lending of £0.4 billion (€0.4 billion) was broadly in line with Q2 2020.

Customer deposits decreased by £0.4 billion (€0.4 billion) in comparison to Q2 2020 mainly due to the introduction of negative rates on certain commercial deposit categories.

RWAs decreased by £0.7 billion (€0.8 billion) in comparison to Q2 2020 reflecting the £0.2 billion (€0.2 billion) impact of the NPL sale derecognition, lower volumes and improved credit metrics.

 

 

 


 

NatWest Group – Form 6-K Q3 Results 2020                                 8

 

Business performance summary

Commercial Banking

Quarter ended

As at

30 September

30 June

30 September

30 September

30 June

31 December

2020 

2020 

2019 

2020 

2020 

2019 

£m

£m

£m

£bn

£bn

£bn

Total income

1,004 

995 

1,077 

Net loans to customers -

 

 

 

Operating expenses

(553)

(611) 

(638) 

amortised cost

110.0 

112.0 

101.2 

Impairment losses

(127)

(1,355) 

(108) 

Customer deposits

161.3 

159.6 

135.0 

Operating profit/(loss)

324 

(971) 

331 

RWAs

76.5 

78.3 

72.5 

Return on equity

9.2% 

(32.5%) 

8.4% 

 

Net interest margin

1.65% 

1.70% 

1.90% 

 

Cost:income ratio

53.4% 

59.9% 

57.9% 

 

Loan impairment rate

45bps

472bps

42bps

 

 

 

 

 

 

Commercial Banking continues to support customers through a comprehensive package of initiatives including participation in the UK Government’s financial support schemes. As at Q3 2020, £7.9 billion BBLS, £3.7 billion CBILS and £1.2 billion CLBILS had been approved. Since 22 March 2020 Commercial Banking provided payment holidays on over 72,000 customer accounts and as at Q3 2020 had active payment holidays on c.55,000 customer accounts, representing c.8% of the lending book by value.

 

Total income decreased by £73 million, or 6.8%, compared with Q3 2019 as the continued contraction of the yield curve and lower business activity was partially offset by increased lending volumes. Net interest margin decreased by 5 basis points in comparison to Q2 2020 as a result of lower deposit funding benefits.

Operating expenses were £85 million, or 13.3%, lower than Q3 2019. Other expenses, excluding OLD, were £36 million, or 6.8%, lower than Q3 2019 mainly due to a reduction in back office operations costs and a 3.0% reduction in headcount.

Impairment losses of £127 million in Q3 2020 primarily reflect stage one and two movements related to the expected deterioration in the economic environment, with total stage three charges of £53 million, including a small number of single name charges.

Net loans to customers decreased by £2.0 billion compared with Q2 2020 as £3.1 billion net RCF repayments and lower lending across Large Corporate & Institutions and Specialised business lending more than offset drawdowns against UK Government lending schemes, including £1.7 billion related to BBLS, £0.8 billion related to CBILS and £0.4 billion related to CLBILS. RCF utilisation decreased to c.26% of committed facilities, broadly in line with pre-Covid-19 levels.

Customer deposits increased by £1.7 billion compared with Q2 2020 as customers continued to retain liquidity.

RWAs decreased by £1.8 billion compared with Q2 2020 as lower lending volumes and a c.£1.5 billion reduction reflecting the CRR Covid-19 amendment to accelerate the planned changes to the SME supporting factor and the introduction of an Infrastructure supporting factor,  partially offset by risk parameter changes.

 

 


 

NatWest Group – Form 6-K Q3 Results 2020                                 9

 

Business performance summary

Private Banking

Quarter ended

As at

30 September

30 June

30 September

30 September

30 June

31 December

2020 

2020 

2019 

2020 

2020 

2019 

£m

£m

£m

£bn

£bn

£bn

Total income

187 

191 

198 

Net loans to customers -

 

 

 

Operating expenses

(112)

(129) 

(119) 

amortised cost

16.5 

16.0 

15.5 

Impairment

 

Customer deposits

30.3 

29.8 

28.4 

(losses)/releases

(18)

(27) 

RWAs

10.6 

10.4 

10.1 

Operating profit

57 

35 

81 

Assets Under Management

 

Return on equity

11.2% 

6.6% 

16.8% 

(AUMs)

27.3 

27.1 

23.2 

Net interest margin

1.99% 

2.14% 

2.35% 

Assets Under Administration

 

Cost:income ratio

59.9% 

67.5% 

60.1% 

(AUAs) (1)

2.8 

2.7 

7.2 

Loan impairment rate

43bps

67bps

(5)bps

Total Assets Under

 

 

Management and

 

 

 

 

 

Administration (AUMA)

30.1 

29.8 

30.4 

 

Notes:

(1)  Private Banking manages assets under administration portfolios on behalf of Retail Banking and RBSI and receives a management fee in respect of providing this service.

(2)  Comparisons with prior periods are impacted by the transfer of the Private Client Advice business from Retail Banking from 1 January 2020. The net impact on Q3 2019 operating profit would have been to increase total income by £11 million and operating expenses by £2 million. The net impact on the Q3 2019 balance sheet would have been to increase customer deposits by £0.2 billion. AUMs would have been £4.5 billion higher, with a corresponding decrease in AUAs. Variances in the commentary below have been adjusted for the impact of this transfer.

 

Private Banking remains committed to supporting clients through a range of initiatives, including the provision of mortgage and loan repayment breaks and via participation in UK Government lending initiatives, with c.£0.3 billion approved as at Q3 2020.

 

Total income was £11 million, or 5.6%, lower than Q3 2019 mainly reflecting lower deposit funding benefits, a reduction in fee income and one-off benefits related to hedging income gains in Q3 2019, partially offset by balance sheet growth. Net interest margin decreased by 15 basis points in comparison to Q2 2020 primarily due to lower deposit funding benefits.

Impairment losses of £18 million largely reflected stage one and two charges.

Net loans to customers increased by £0.5 billion in comparison to Q2 2020 reflecting mortgage growth and drawdowns against UK Government lending schemes.

Total AUMAs overseen by Private Banking increased by £0.3 billion compared with Q2 2020 reflecting positive investment performance.

 

RBS International

Quarter ended

As at

30 September

30 June

30 September

30 September

30 June

31 December

2020 

2020 

2019 

2020 

2020 

2019 

£m

£m

£m

£bn

£bn

£bn

Total income

112 

115 

150 

Net loans to customers -

 

 

 

Operating expenses

(53)

(65) 

(62) 

amortised cost

12.8 

12.7 

14.1 

Impairment losses

(34)

(31) 

Customer deposits

30.4 

29.5 

30.1 

Operating profit

25 

19 

88 

RWAs

7.0 

6.8 

6.5 

Return on equity

6.4% 

4.3% 

26.0% 

 

Net interest margin

1.07% 

1.15% 

1.55% 

 

Cost:income ratio

47.3% 

56.5% 

41.3% 

 

Loan impairment rate

105bps

97bps

 

 

 

 

 

 

 

As at Q3 2020, RBS International had 322 active mortgage repayment breaks, reflecting a mortgage value of £82 million, and is providing support for 566 business customers with working capital facilities, reflecting a value of £503 million, while continuing to suspend a range of fees and charges for its personal and business customers.

 

Total income decreased by £38 million, or 25.3%, compared with Q3 2019 primarily due to the impact of the interest rate reductions on deposit income and lower fee income reflecting the economic response to Covid-19. Net interest margin decreased by 8 basis points compared with Q2 2020 due to reduced funding benefits.

Operating expenses were £9 million, or 14.5%, lower than Q3 2019. Excluding strategic, litigation and conduct costs, operating expenses decreased by £7 million, or 12.3%, compared with Q3 2019 mainly due to lower staff costs as a result of a 5.6% headcount reduction and lower project spend.

Impairment losses were £34 million higher than Q3 2019 due to revised economic scenarios, refreshed staging and maturity date analysis.

Customer deposits were £0.9 billion higher than Q2 2020 due to short term placements in the Institutional Banking Sector.

RWAs increased by £0.2 billion compared with Q2 2020 due to customer maturities and higher lending balances in the wholesale sector.

 


 

NatWest Group – Form 6-K Q3 Results 2020                               10

 

Business performance summary

NatWest Markets(1)

Quarter ended

As at

30 September

30 June

30 September

30 September

30 June

31 December

2020 

2020 

2019 

2020 

2020 

2019 

£m

£m

£m

£bn

£bn

£bn

Total income

234 

273 

150 

Funded Assets

121.3 

122.9 

116.2 

of which:

 

RWAs

30.0 

35.1 

37.9 

- Income excluding

 

 

asset disposals/strategic

 

 

risk reduction and own

 

 

credit adjustments

280 

438 

161 

 

- Asset disposals/strategic

 

 

risk reduction (2)

(12)

(63) 

 

- Own credit adjustments

(34)

(102) 

(11) 

 

Operating expenses

(302)

(365) 

(348) 

 

Impairment releases/(losses)

(45) 

 

Operating (loss)

(66)

(137) 

(193) 

 

Return on equity

(4.7%)

(7.1%) 

(8.7%) 

 

Cost:income ratio

129.1% 

133.7% 

232.0% 

 

 

 

 

 

Notes:

(1)     The NatWest Markets operating segment is not the same as the NatWest Markets Plc legal entity (NWM Plc) or group (NWM or NWM Group). For 2019, NWM Group includes NatWest Markets N.V. (NWM N.V.) from 29 November 2019 only. For periods prior to Q4 2019, NWM N.V. was excluded from the NWM Group. In both 2019 and 2020 the NatWest Markets segment excludes the Central items & other segment.

(2)     Asset disposals/strategic risk reduction in 2020 relates to the cost of exiting positions and the impact of risk reduction transactions entered into, in respect of the strategic announcement on 14 February 2020.

 

During Q3 2020 NatWest Markets made further progress on reshaping the business for the future, putting purpose at its core. The front office operating model was reorganised to increase focus on NatWest Group’s customers. A Capital Management Unit has also been established to safely manage capital reduction and optimisation. Further refinements to the product suite were also communicated, to focus resources on developing product capability in the areas that matter most to NatWest Group’s customers. This included exiting Distressed and Emerging Markets Credit trading and making changes to simplify the Rates business. In line with the strategy announced in February, NatWest Markets has continued to reduce RWAs, particularly within counterparty credit and market risk, and are now targeting RWAs of around £30 billion by the end of 2020.

 

Total income was £84 million, or 56%, higher than Q3 2019. Income excluding asset disposals/strategic risk reduction, OCA and notable items increased by £111 million, or 65.7%, in comparison to Q3 2019. Although market activity and the level of primary issuance eased in Q3 2020 compared to the first half of the year, income was significantly higher than Q3 2019 due to elevated hedging costs in the prior period.

Operating expenses were £46 million, or 13.2% lower than Q3 2019. Excluding strategic, litigation and conduct costs, operating expenses decreased by £57 million, or 20.2%, in comparison to Q3 2019 reflecting continued reductions in line with the strategic announcement in February 2020.

RWAs were £5.1 billion lower than Q2 2020 as counterparty credit risk decreased by £2.2 billion and market risk decreased by £2.2 billion due to capital optimisation actions.

 

Central items & other

Quarter ended

30 September

30 June

30 September

2020 

2020 

2019 

£m

£m

£m

Central items not allocated

(285)

(146) 

162 

 

A £285 million operating loss within central items not allocated in Q3 2020 principally reflects the day one loss on redemption of own debt of £324 million related to the repurchase of legacy instruments which will result in annual net interest savings of c.£74 million. Q3 2019 principally reflected a £162 million reimbursment under indemnification agreements relating to residential mortgage-backed securities.

 

 


 

 

NatWest Group – Form 6-K Q3 Results 2020                               11


Segment performance

Nine months ended 30 September 2020

Retail

Ulster

Commercial

Private

RBS

NatWest

Central items

Total NatWest

Banking

Bank RoI

Banking

Banking

International

Markets

& other(1)

Group

£m

£m

£m

£m

£m

£m

£m

£m

Income statement

 

 

 

 

 

 

 

 

Net interest income

2,919 

294 

2,073 

371 

286 

(55)

(110)

5,778 

Non-interest income

288 

85 

934 

208 

85 

1,086 

(222)

2,464 

Own credit adjustments

19 

19 

Total income

3,207 

379 

3,007 

579 

371 

1,050 

(332)

8,261 

Direct expenses

 

 

 

 

 

 

 

 

- staff costs

(399)

(150)

(497)

(137)

(92)

(434)

(914)

(2,623)

- other costs

(152)

(65)

(211)

(61)

(37)

(131)

(1,678)

(2,335)

Indirect expenses

(1,178)

(139)

(958)

(149)

(42)

(229)

2,695 

Strategic costs

 

 

 

 

 

 

 

 

- direct

(46)

(9)

(5)

(4)

(8)

(187)

(428)

(687)

- indirect

(138)

(10)

(111)

(10)

(3)

(24)

296 

Litigation and conduct costs

191 

(3)

(4)

(115)

81 

Operating expenses

(1,722)

(372)

(1,774)

(364)

(179)

(1,009)

(144)

(5,564)

Operating profit/(loss)before impairment (losses)/releases

1,485 

1,233 

215 

192 

41 

(476)

2,697 

Impairment (losses)/releases

(727)

(251)

(1,917)

(74)

(80)

(38)

(25)

(3,112)

Operating profit/(loss)

758 

(244)

(684)

141 

112 

(501)

(415)

Additional information

 

 

 

 

 

 

 

 

Return on equity (2)

12.2% 

(16.6%)

(8.7%)

9.2% 

10.0% 

(0.8%)

nm

(2.7%)

Cost:income ratio (2)

53.7% 

98.2% 

57.4% 

62.9% 

48.2% 

96.1% 

nm

66.9% 

Total assets (£bn)

189.5 

27.4 

186.9 

24.9 

32.7 

283.2 

47.0 

791.6 

Funded assets (£bn)

189.5 

27.4 

186.9 

24.9 

32.7 

121.3 

44.6 

627.3 

Net loans to customers - amortised cost (£bn)

166.7 

18.3 

110.0 

16.5 

12.8 

10.1 

19.3 

353.7 

Loan impairment rate (2)

57bps

175bps

226bps

59bps

83bps

nm

nm

115bps

Impairment provisions (£bn)

(1.9)

(0.8)

(3.0)

(0.1)

(0.1)

(0.2)

(6.1)

Impairment provisions - stage 3 (£bn)

(0.9)

(0.5)

(1.1)

(0.2)

(2.7)

Customer deposits (£bn)

164.9 

19.6 

161.3 

30.3 

30.4 

4.7 

7.2 

418.4 

Risk-weighted assets (RWAs) (£bn)

36.3 

12.1 

76.5 

10.6 

7.0 

30.0 

1.4 

173.9 

RWA equivalent (RWAe) (£bn)

36.3 

12.1 

76.6 

10.6 

7.1 

32.0 

1.4 

176.1 

Employee numbers (FTEs - thousands)

16.6 

2.8 

9.6 

2.1 

1.7 

2.8 

26.0 

61.6 

Average interest earning assets (£bn)

179.8 

26.2 

160.8 

23.3 

31.3 

38.4 

nm

487.8 

Net interest margin

2.17% 

1.50% 

1.72% 

2.12% 

1.22% 

(0.19%)

nm

1.58% 

Third party customer asset rate (3)

2.92% 

2.29% 

2.93% 

2.59% 

2.57% 

nm

nm

nm

Third party customer funding rate (3)

(0.23%)

(0.12%)

(0.20%)

(0.18%)

(0.03%)

nm

nm

nm

 

Refer to page 16 for the notes to this table. nm =' not' meaningful.

NatWest Group – Form 6-K Q3 Results 2020                                                                                      12

 

Segment performance

Nine months ended 30 September 2019

Retail

Ulster

Commercial

Private

RBS

NatWest

Central items

Total NatWest

Banking

Bank RoI

Banking

Banking

International

Markets

& other (1)

Group

£m

£m

£m

£m

£m

£m

£m

£m

Income statement

 

 

 

 

 

 

 

 

Net interest income

3,118 

302 

2,127 

391 

361 

(184) 

(105) 

6,010 

Non-interest income

553 

125 

1,115 

191 

99 

890 

60 

3,033 

Own credit adjustments

(58) 

(1) 

(58) 

Strategic disposals

444 

591 

1,035 

Total income

3,671 

428 

3,242 

582 

460 

1,092 

545 

10,020 

Direct expenses

 

 

 

 

 

 

 

 

- staff costs

(431) 

(156) 

(521) 

(122) 

(89) 

(508) 

(905) 

(2,732) 

- other costs

(217) 

(70) 

(223) 

(52) 

(37) 

(128) 

(1,685) 

(2,412) 

Indirect expenses

(1,113) 

(134) 

(915) 

(145) 

(40) 

(246) 

2,593 

Strategic costs

- direct

(8) 

(12) 

(20) 

(9) 

(104) 

(691) 

(844) 

- indirect

(143) 

(19) 

(171) 

(30) 

(6) 

(37) 

406 

Litigation and conduct costs

(918) 

(21) 

(50) 

(2) 

(3) 

184 

(810) 

Operating expenses

(2,830) 

(412) 

(1,900) 

(351) 

(181) 

(1,026) 

(98) 

(6,798) 

Operating profit/(loss) before impairment (losses)/releases

841 

16 

1,342 

231 

279 

66 

447 

3,222 

Impairment (losses)/releases

(312) 

38 

(310) 

41 

(1) 

(536) 

Operating profit/(loss)

529 

54 

1,032 

236 

282 

107 

446 

2,686 

Additional information

 

 

 

 

 

 

 

 

Return on equity (2)

7.8% 

3.4% 

8.7% 

16.7% 

28.5% 

(2.2%) 

nm

6.8% 

Cost:income ratio (2)

77.1% 

96.3% 

57.2% 

60.3% 

39.3% 

94.0% 

nm

67.5% 

Total assets (£bn)

176.7 

26.1 

166.6 

22.6 

31.2 

318.3 

35.0 

776.5 

Funded assets (£bn)

176.7 

26.0 

166.6 

22.6 

31.2 

142.7 

34.9 

600.7 

Net loans to customers - amortised cost (£bn)

154.6 

19.0 

101.5 

15.2 

13.8 

9.1 

6.3 

319.5 

Loan impairment rate (2)

27bps

(26)bps

40bps

(4)bps

(3)bps

nm

nm

22bps

Impairment provisions (£bn)

(1.4) 

(0.8) 

(1.3) 

(0.2) 

(0.1) 

(3.8) 

Impairment provisions - stage 3 (£bn)

(0.8) 

(0.8) 

(1.0) 

(0.2) 

(2.8) 

Customer deposits (£bn)

147.9 

18.8 

135.7 

28.2 

29.1 

3.3 

6.7 

369.7 

Risk-weighted assets (RWAs) (£bn)

37.5 

13.3 

77.0 

10.0 

6.5 

43.8 

1.4 

189.5 

RWA equivalent (RWAe) (£bn)

38.4 

13.6 

78.1 

10.0 

6.6 

48.9 

1.7 

197.3 

Employee numbers (FTEs - thousands)

18.5 

3.0 

9.9 

1.9 

1.8 

5.1 

25.5 

65.7 

Average interest earning assets (£bn)

165.3 

25.2 

145.8 

21.5 

29.3 

35.1 

nm

445.1 

Net interest margin

2.52% 

1.60% 

1.95% 

2.44% 

1.65% 

(0.70%) 

nm

1.81% 

Third party customer asset rate (3)

3.27% 

2.29% 

3.37% 

2.95% 

2.93% 

nm

nm

nm

Third party customer funding rate (3)

(0.37%) 

(0.15%) 

(0.35%) 

(0.44%) 

(0.14%) 

nm

nm

nm

 

Refer to page 16 for the notes to this table. nm =' not' meaningful.

NatWest Group – Form 6-K Q3 Results 2020                                                                                      13

 

Segment performance

Quarter ended 30 September 2020

Retail

Ulster

Commercial

Private

RBS

NatWest

Central items

Total NatWest

Banking

Bank RoI

Banking

Banking

International

Markets

& other(1)

Group

£m

£m

£m

£m

£m

£m

£m

£m

Income statement

 

 

 

 

 

 

 

 

Net interest income

937 

100 

703 

120 

85 

(21)

1,926 

Non-interest income

85 

30 

301 

67 

27 

289 

(268)

531 

Own credit adjustments

(34)

(34)

Total income

1,022 

130 

1,004 

187 

112 

234 

(266)

2,423 

Direct expenses

 

 

 

 

 

 

 

 

- staff costs

(131)

(50)

(156)

(44)

(27)

(108)

(311)

(827)

- other costs

(49)

(23)

(71)

(14)

(10)

(37)

(552)

(756)

Indirect expenses

(380)

(47)

(300)

(48)

(13)

(80)

868 

Strategic costs

 

 

 

 

 

 

 

 

- direct

(45)

(5)

(3)

(4)

(5)

(67)

(94)

(223)

- indirect

(35)

(2)

(38)

(8)

81 

Litigation and conduct costs

(7)

15 

(2)

(2)

(12)

(8)

Operating expenses

(647)

(127)

(553)

(112)

(53)

(302)

(20)

(1,814)

Operating profit/(loss)before impairment (losses)/releases

375 

451 

75 

59 

(68)

(286)

609 

Impairment (losses)/releases

(70)

(8)

(127)

(18)

(34)

(254)

Operating profit/(loss)

305 

(5)

324 

57 

25 

(66)

(285)

355 

Additional information

 

 

 

 

 

 

 

 

Return on equity (2)

15.3% 

(1.0%)

9.2% 

11.2% 

6.4% 

(4.7%)

nm

0.8% 

Cost:income ratio (2)

63.3% 

97.7% 

53.4% 

59.9% 

47.3% 

129.1% 

nm

74.5% 

Total assets (£bn)

189.5 

27.4 

186.9 

24.9 

32.7 

283.2 

47.0 

791.6 

Funded assets (£bn)

189.5 

27.4 

186.9 

24.9 

32.7 

121.3 

44.6 

627.3 

Net loans to customers - amortised cost (£bn)

166.7 

18.3 

110.0 

16.5 

12.8 

10.1 

19.3 

353.7 

Loan impairment rate (2)

17bps

17bps

45bps

43bps

105bps

nm

nm

28bps

Impairment provisions (£bn)

(1.9)

(0.8)

(3.0)

(0.1)

(0.1)

(0.2)

(6.1)

Impairment provisions - stage 3 (£bn)

(0.9)

(0.5)

(1.1)

(0.2)

(2.7)

Customer deposits (£bn)

164.9 

19.6 

161.3 

30.3 

30.4 

4.7 

7.2 

418.4 

Risk-weighted assets (RWAs) (£bn)

36.3 

12.1 

76.5 

10.6 

7.0 

30.0 

1.4 

173.9 

RWA equivalent (RWAe) (£bn)

36.3 

12.1 

76.6 

10.6 

7.1 

32.0 

1.4 

176.1 

Employee numbers (FTEs - thousands)

16.6 

2.8 

9.6 

2.1 

1.7 

2.8 

26.0 

61.6 

Average interest earning assets (£bn)

182.2 

27.3 

169.3 

24.0 

31.5 

39.2 

nm

507.3 

Net interest margin

2.05% 

1.46% 

1.65% 

1.99% 

1.07% 

(0.21%)

nm

1.51% 

Third party customer asset rate (3)

2.82% 

2.32% 

2.73% 

2.43% 

2.41% 

nm

nm

nm

Third party customer funding rate (3)

(0.13%)

(0.11%)

(0.03%)

(0.02%)

0.03% 

nm

nm

nm

 

Refer to page 16 for the notes to this table. nm =' not' meaningful.

NatWest Group – Form 6-K Q3 Results 2020                                                                                      14


Segment performance

Quarter ended 30 June 2020

Retail

Ulster

Commercial

Private

RBS

NatWest

Central items

Total NatWest

Banking

Bank RoI

Banking

Banking

International

Markets

& other (1)

Group

£m

£m

£m

£m

£m

£m

£m

£m

Income statement

 

 

 

 

 

 

 

 

Net interest income

975 

97 

696 

124 

90 

(78) 

1,910 

Non-interest income

60 

23 

299 

67 

25 

369 

25 

868 

Own credit adjustments

(102) 

(102) 

Total income

1,035 

120 

995 

191 

115 

273 

(53) 

2,676 

Direct expenses

 

 

 

 

 

 

 

 

- staff costs

(133) 

(52) 

(167) 

(46) 

(33) 

(159) 

(287) 

(877) 

- other costs

(45) 

(18) 

(67) 

(23) 

(13) 

(37) 

(581) 

(784) 

Indirect expenses

(399) 

(46) 

(337) 

(54) 

(15) 

(75) 

926 

Strategic costs

- direct

(1) 

(3) 

(2) 

(86) 

(241) 

(333) 

- indirect

(69) 

(4) 

(34) 

(5) 

(2) 

(8) 

122 

Litigation and conduct costs

101 

(6) 

(1) 

(10) 

85 

Operating expenses

(546) 

(122) 

(611) 

(129) 

(65) 

(365) 

(71) 

(1,909) 

Operating profit/(loss) before impairment (losses)/releases

489 

(2) 

384 

62 

50 

(92) 

(124) 

767 

Impairment (losses)/releases

(360) 

(216) 

(1,355) 

(27) 

(31) 

(45) 

(22) 

(2,056) 

Operating profit/(loss)

129 

(218) 

(971) 

35 

19 

(137) 

(146) 

(1,289) 

Additional information

 

 

 

 

 

 

 

 

Return on equity (2)

5.7% 

(44.5%) 

(32.5%) 

6.6% 

4.3% 

(7.1%) 

nm

(12.4%) 

Cost:income ratio (2)

52.8% 

101.7% 

59.9% 

67.5% 

56.5% 

133.7% 

nm

70.9% 

Total assets (£bn)

187.1 

27.6 

186.0 

23.9 

31.5 

303.8 

47.0 

806.9 

Funded assets (£bn)

187.1 

27.6 

186.0 

23.9 

31.5 

122.9 

44.5 

623.5 

Net loans to customers - amortised cost (£bn)

164.5 

18.7 

112.0 

16.0 

12.7 

11.4 

17.0 

352.3 

Loan impairment rate (2)

87bps

441bps

472bps

67bps

97bps

nm

nm

229bps

Impairment provisions (£bn)

(1.9) 

(0.9) 

(3.0) 

(0.1) 

(0.2) 

(6.1) 

Impairment provisions - stage 3 (£bn)

(0.9) 

(0.6) 

(1.2) 

(0.1) 

(2.8) 

Customer deposits (£bn)

161.0 

20.0 

159.6 

29.8 

29.5 

5.5 

2.9 

408.3 

Risk-weighted assets (RWAs) (£bn)

36.7 

12.8 

78.3 

10.4 

6.8 

35.1 

1.4 

181.5 

RWA equivalent (RWAe) (£bn)

36.7 

12.8 

78.4 

10.4 

6.9 

37.2 

1.5 

183.9 

Employee numbers (FTEs - thousands)

17.1 

2.8 

9.6 

2.0 

1.8 

5.0 

24.4 

62.7 

Average interest earning assets (£bn)

179.8 

26.4 

164.6 

23.3 

31.5 

39.9 

nm

497.4 

Net interest margin

2.18% 

1.48% 

1.70% 

2.14% 

1.15% 

0.06% 

nm

1.54% 

Third party customer asset rate (3)

2.88% 

2.27% 

2.88% 

2.53% 

2.58% 

nm

nm

nm

Third party customer funding rate (3)

(0.20%) 

(0.12%) 

(0.25%) 

(0.14%) 

(0.01%) 

nm

nm

nm

 

Refer to page 16 for the notes to this table. nm =' not' meaningful.


 

NatWest Group – Form 6-K Q3 Results 2020                                                                                      15

 

Segment performance

Quarter ended 30 September 2019

Retail

Ulster

Commercial

Private

RBS

NatWest

Central items

Total NatWest

Banking

Bank RoI

Banking

Banking

International

Markets

& other (1)

Group

£m

£m

£m

£m

£m

£m

£m

£m

Income statement

 

 

 

 

 

 

 

 

Net interest income

1,034 

102 

703 

130 

119 

(62) 

(20) 

2,006 

Non-interest income

190 

43 

374 

68 

31 

223 

(20) 

909 

Own credit adjustments

(11) 

(1) 

(12) 

Total income

1,224 

145 

1,077 

198 

150 

150 

(41) 

2,903 

Direct expenses

 

 

 

 

 

 

 

 

- staff costs

(143) 

(52) 

(172) 

(40) 

(30) 

(159) 

(295) 

(891) 

- other costs

(81) 

(22) 

(72) 

(17) 

(14) 

(42) 

(594) 

(842) 

Indirect expenses

(385) 

(44) 

(317) 

(49) 

(13) 

(81) 

889 

Strategic costs

- direct

(12) 

(3) 

10 

(4) 

(55) 

(151) 

(215) 

- indirect

(68) 

(9) 

(83) 

(13) 

(1) 

(7) 

181 

Litigation and conduct costs

(912) 

(1) 

(4) 

(4) 

171 

(750) 

Operating expenses

(1,601) 

(131) 

(638) 

(119) 

(62) 

(348) 

201 

(2,698) 

Operating profit/(loss) before impairment (losses)/releases

(377) 

14 

439 

79 

88 

(198) 

160 

205 

Impairment (losses)/releases

(131) 

17 

(108) 

(213) 

Operating profit/(loss)

(508) 

31 

331 

81 

88 

(193) 

162 

(8) 

Additional information

 

 

 

 

 

 

 

 

Return on equity (2)

(26.8%) 

5.8% 

8.4% 

16.8% 

26.0% 

(8.7%) 

nm

(3.8%) 

Cost:income ratio (2)

130.8% 

90.3% 

57.9% 

60.1% 

41.3% 

232.0% 

nm

92.9% 

Total assets (£bn)

176.7 

26.1 

166.6 

22.6 

31.2 

318.3 

35.0 

776.5 

Funded assets (£bn)

176.7 

26.0 

166.6 

22.6 

31.2 

142.7 

34.9 

600.7 

Net loans to customers - amortised cost (£bn)

154.6 

19.0 

101.5 

15.2 

13.8 

9.1 

6.3 

319.5 

Loan impairment rate (2)

34bps

(34)bps

42bps

(5)bps

nm

nm

26bps

Impairment provisions (£bn)

(1.4)