Source - LSE Regulatory
RNS Number : 9945G
NatWest Group plc
30 July 2021
 

 

 

 

 

 

 

 

 

 

 

 

 

                          Interim Results 2021

      

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                         natwestgroup.com

 

 

 

NatWest Group plc

Interim Results for the period ending 30 June 2021

Alison Rose, Chief Executive Officer, commented:

 

"These results have been driven by good operating performances across the Group, underpinned by a robust loan book and a strong capital position. Defaults remain low and, given the improved outlook, we have released a further £0.6 billion of impairment provisions in the quarter. While we see the potential for a more rapid recovery, we will continue to take an appropriate and conservative approach as the government schemes wind down and the economy reopens.

 

As a result of our strong and resilient performance, coupled with our capital strength and cautiously optimistic outlook, we are announcing an interim dividend of 3p per share and share buy-back of up to £750 million. We are also increasing our minimum annual distribution to shareholders to £1.0 billion for the next three years. Taken together, this means our total distributions for 2021 will be a minimum of £2.9 billion.  

 

We continue to make progress against our strategic targets and to accelerate our digital transformation as we build a bank that is relevant to our customers in every region of the UK and supports them at every stage of their lives. As the UK's leading business bank, we are determined to remove barriers to entry and help the economy build back better. Against the background of an ongoing pandemic, our commitment to helping people, families and businesses to rebuild and thrive has never been more important. Because if they thrive, so will we."

 

Financial performance in a challenging environment

·   H1 2021 operating profit before tax of £2,505 million compared with an operating loss before tax of £770 million in H1 2020. H1 2021 attributable profit of £1,842 million.

·   Income across the UK and RBSI retail and commercial businesses, excluding notable items, decreased by £160 million, or 3.3%, compared with H1 2020 reflecting the lower yield curve and subdued transactional business activity, partially offset by balance sheet growth. NatWest Markets (NWM) income, excluding asset disposals/strategic risk reduction and OCA, decreased by £492 million, or 59.6%, compared with H1 2020 reflecting the exceptional level of market activity generated by the spread of the COVID-19 virus in the prior period, together with weak performance in the Fixed Income business in the current period.

·   Bank net interest margin (NIM) of 1.61% decreased by 3 basis points compared with Q1 2021 principally reflecting increased levels of liquidity.

·   Other expenses, excluding operating lease depreciation (OLD) and Ulster Bank RoI direct costs, were £185 million, or 5.9% lower than H1 2020.

·   A net impairment release of £707 million in the first half of 2021 mainly reflects releases in non-default portfolios as a result of the improved economic outlook.

 

Robust balance sheet with strong capital and liquidity levels 

·   CET1 ratio of 18.2% was in line with Q1 2021.

·   An interim dividend of 3 pence per share is proposed.

·   The liquidity coverage ratio (LCR) of 164%, representing £75.3 billion headroom above 100% minimum requirement, increased by 6 percentage points compared with Q1 2021, reflecting the continued growth in customer deposits.

·   Net lending increased by £2.2 billion to £362.7 billion during H1 2021. Across the UK and RBSI retail and commercial businesses, net lending excluding UK Government support schemes, increased by £4.1 billion, or 2.8% on an annualised basis, including £7.0 billion of mortgage growth.

·   Customer deposits increased by £35.5 billion during H1 2021 to £467.2 billon, as customers sought to retain liquidity and reduced spending. Treasury repo activity drove £11.5 billion of balance growth.

·   RWAs decreased by £7.3 billion to £163.0 billion during H1 2021 mainly reflecting business movements in Commercial Banking. 

 

Outlook(1)

The rollout of COVID-19 vaccines over the first half of 2021 has contributed towards an improved economic outlook. Our central forecasts are disclosed on pages 20 to 23. The outlook remains subject to significant uncertainty and we will continue to refine our internal forecast as the economic position evolves. We retain the guidance provided at the full year results announcement with the exception of the following:

·   We now expect NatWest Markets exit/disposal costs and the impact of Commercial Banking capital management actions to total a combined £150 million in 2021;

·   Noting impairment losses in the first half of 2021 were a net release of £707 million, we now expect the 2021 full year impairment loss to be a net release;

·   We now expect NatWest Group RWAs to be below or at the lower end of our previously guided range of £185-195 billion on 1 January 2022;

·   NatWest Group now aims to distribute a minimum of £1 billion per annum from 2021 to 2023, via a combination of ordinary and special dividends, and intends to commence an ordinary share buy-back programme of up to £750 million in the second half of the year.

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 Risk Factors section on pages 112 and 113 of this announcement, pages 345 to 362 of the NatWest Group plc 2020 Annual Report and Accounts, pages 48 and 49 of the NatWest Markets Plc 2021 Interim Results announcement and on pages 156 to 172 of the NatWest Markets Plc 2020 Annual Report and Accounts. These statements constitute forward-looking statements. Refer to Forward-looking statements in this announcement.

 

 

 

Our Purpose in action

We champion potential, helping people, families and businesses to thrive. If they succeed, so will we. By being relevant to our customers and communities and by supporting our colleagues, we will deliver long-term value and drive sustainable returns to our shareholders. Some key achievements from H1 2021:

 

People and families

Supported customers with 1.5 million financial capability interactions including 515,000 financial health checks. 

273,000 customers have grown their savings with us by £100 or more for the first time.

Use of chatbot Cora has grown with 2.7 million conversation in Q2 2021 compared to 2.5 million in Q2 2020.

Facial biometrics and cheque deposits are now live in our app and Know My Credit Score has been used 20 million times since launch.

We've introduced 95% mortgages to help more young people onto the property ladder and Retail Banking has supported customers with £19.3 billion of gross new mortgage lending in H1 2021.

Launched Career Sense, a new programme to support 13 to 24 year-olds with readiness for work, aiming to reach over 10,000 young people this year.

Businesses

c.92% of Bounce Back Loan Scheme (BBLS) customers due to commence loan repayments had begun repayments on, or ahead of, schedule and c.5% of all BBLS customers had repaid in full as at 30 June 2021.

Held 35,000 interactions with entrepreneurs to help them launch their business so far this year through mentoring, webinars and coaching, 76% of which are outside London and the South-East and 53% are female led.

Relaunched our entrepreneurship proposition and refocused 11 of our 12 Entrepreneur Accelerator hubs to support high growth, female led, black and minority ethnic led and B Corp focused businesses.

Coutts has collaborated with the Business Growth Fund to provide additional funding, growth capital, and to support small and medium sized enterprises (SMEs).

Our Springboard to Recovery report launched in March 2021, showed how targeted support for SMEs could unlock £140 billion of additional Gross Value Added (GVA) growth by 2030 equivalent to creating around 3.2 million new jobs across the UK. In response we committed £6 billion to help SMEs grow, of which £4 billion will be allocated outside London, and we doubled our funding of female entrepreneurship to £2 billion.

Our digital investment platform across NatWest Invest, Royal Bank Invest and Coutts Invest saw £0.5 billion of inflows in H1 2021.

Colleagues

Launched a framework for NatWest Group's new hybrid working model, balancing the needs of our customers, communities and colleagues.

Named as one of the top 25 workplaces in the UK to grow a career by LinkedIn. NatWest Group was also recognised in The Times Top 50 Employers for Women for the 11th year running.

Extended our package of COVID-19 support available to colleagues in India, including access to interest-free salary advances to meet medical expenses, reimbursement for the cost of vaccines and extended leave.

Launched the Talent Academy, a new talent initiative, open to all colleagues with an initial cohort of just over 3,500.

Communities

NatWest Group joined the Net Zero Banking Alliance and Coutts Asset Management has joined the Net Zero Asset Managers initiative, working with other financial organisations to help deliver the Paris Agreement.

NatWest Group was the first UK bank to introduce a carbon tracking feature in our mobile banking app to help customers reduce the climate impact of their spending. Following a successful pilot, we've partnered with carbon tracking experts CoGo to let personal customers see the carbon impact of their daily spending. 

NatWest Group issued a €1 billion affordable housing social bond, the first of its kind by a UK bank. The proceeds will support lending to not-for-profit, UK housing associations as part of our commitment to provide £3 billion of funding to the UK's affordable housing sector by the end of 2022.

Coutts has become the first major UK Private Bank and Wealth Manager to be certified as a B Corp demonstrating its commitment to meeting the highest standards of verifiable social and environmental performance, public transparency and legal accountability. 

Applications opened for the Circle Fund to support victims of economic and domestic abuse. NatWest pledged £1 million to the fund to help frontline specialist services who provide crisis intervention and recovery support.

 

 

For further detail refer to the Climate, Purpose and ESG measures supplement H1 2021.

 

 

 

 

Business performance summary

 

Half year ended

 

Quarter ended

 

30 June

30 June

 

30 June

31 March

30 June

Performance key metrics and ratios

2021

2020

 

2021

2021

2020

Total income

£5,319m

£5,838m

 

£2,660m

£2,659m

£2,676m

Operating expenses

(£3,521m)

(£3,750m)

 

(£1,706m)

(£1,815m)

(£1,909m)

Profit before impairment releases/(losses)

£1,798m

£2,088m

 

£954m

£844m

£767m

Operating profit/(loss) before tax

£2,505m

(£770m)

 

£1,559m

£946m

(£1,289m)

Profit/(loss) attributable to ordinary shareholders

£1,842m

(£705m)

 

£1,222m

£620m

(£993m)

 

 

 

 

 

 

 

Excluding notable items within total income (1)

 

 

 

 

 

 

Total income excluding notable items 

£5,314m

£5,844m

 

£2,641m

£2,673m

£2,797m

Operating expenses

(£3,521m)

(£3,750m)

 

(£1,706m)

(£1,815m)

£1,909m

Profit before impairment releases/(losses) and 

 

 

 

 

 

 

   excluding notable items

£1,793m

£2,094m

 

£935m

£858m

£888m

Operating profit/(loss) before tax and excluding notable items

£2,500m

(£764m)

 

£1,540m

£960m

(£1,168m)

UK and RBSI retail and commercial income excluding

 

 

 

 

 

 

   notable items (2)

£4,687m

£4,847m

 

£2,368m

£2,319m

£2,325m

 

 

 

 

 

 

 

Performance key metrics and ratios

 

 

 

 

 

 

Bank net interest margin (2,3)

1.62%

1.78%

 

1.61%

1.64%

1.67%

Bank net interest margin excluding liquid asset buffer (2)

2.40%

2.48%

 

2.40%

2.39%

2.38%

Bank average interest earning assets (2,3)

£487bn

£440bn

 

£494bn

£480bn

£458bn

Bank average interest earning assets excluding

 

 

 

 

 

 

   liquid asset buffer (2)

£329bn

£316bn

 

£330bn

£328bn

£321bn

Cost:income ratio (2)

65.7%

63.8%

 

63.7%

67.8%

70.9%

Loan impairment rate (2)

(38bps)

159bps

 

(66bps)

(11bps)

229bps

Earnings per share - basic

15.6p

(5.8p)

 

10.6p

5.1p

(8.2p)

Return on tangible equity (2)

11.7%

(4.4%)

 

15.6%

7.9%

(12.4%)

 

 

 

 

 

30 June

31 March

31 December

 

 

 

 

2021

2021

2020

Balance sheet

 

 

 

 

 

 

Total assets

 

 

 

£775.9bn

£769.8bn

£799.5bn

Funded assets (2)

 

 

 

£666.3bn

£646.8bn

£633.0bn

Loans to customers - amortised cost

 

 

 

£362.7bn

£358.7bn

£360.5bn

Loans to customers and banks - amortised cost and FVOCI 

 

 

 

£375.6bn

£371.0bn

£372.4bn

UK and RBSI retail and commercial net lending excluding UK Government

 

 

 

 

   support schemes (2)

 

 

 

£302.0bn

£300.1bn

£297.9bn

Impairment provisions - amortised cost

 

 

 

£4.7bn

£5.6bn

£6.0bn

Total impairment provisions 

 

 

 

£4.9bn

£5.8bn

£6.2bn

Expected credit loss (ECL) coverage ratio 

 

 

 

1.31%

1.56%

1.66%

Assets under management and administration (AUMA) (2)

 

 

 

£34.7bn

£32.6bn

£32.1bn

Customer deposits 

 

 

 

£467.2bn

£453.3bn

£431.7bn

UK and RBSI retail and commercial customer deposits (2)

 

£428.7bn

£415.3bn

£403.2bn

 

 

 

 

 

 

 

Liquidity and funding

 

 

 

 

 

 

Liquidity coverage ratio (LCR)

 

 

 

164%

158%

165%

Liquidity portfolio

 

 

 

£277bn

£263bn

£262bn

Net stable funding ratio (NSFR) (4)

 

 

 

154%

153%

151%

Loan:deposit ratio (2)

 

 

 

78%

79%

84%

Total wholesale funding

 

 

 

£66bn

£61bn

£71bn

Short-term wholesale funding

 

 

 

£23bn

£20bn

£19bn

 

 

 

 

 

 

 

Capital and leverage

 

 

 

 

 

 

Common Equity Tier (CET1) ratio (5)

 

 

 

18.2%

18.2%

18.5%

Total capital ratio

 

 

 

24.9%

24.0%

24.5%

Pro forma CET1 ratio, pre dividend accrual (6)

 

 

 

19.1%

18.6%

18.8%

Risk-weighted assets (RWAs)

 

 

 

£163.0bn

£164.7bn

£170.3bn

UK leverage ratio (7)

 

 

 

6.2%

6.2%

6.4%

Tangible net asset value (TNAV) per ordinary share

 

 

 

266p

261p

261p

Number of ordinary shares in issue (millions) (8)

 

 

 

           11,569

11,560

12,129

 

Notes:

(1)

Refer to page 5 for details of notable items within total income.

(2)

Refer to Non-IFRS financial measures Appendix for details of basis of preparation and reconciliation of non-IFRS financial measures and performance metrics.

(3)

NatWest Group excluding NWM.

(4)

NSFR reported in line with CRR2 regulations finalised in June 2019.

(5)

Based on CRR end-point including the IFRS 9 transitional adjustment of £1.2 billion (31 March 2021 - £1.7 billion; 31 December 2020 - £1.7 billion). Excluding this adjustment, the CET1 ratio would be 17.5% (31 March 2021 - 17.2%; 31 December 2020 - 17.5%).

(6)

The pro forma CET1 ratio at 30 June 2021 excludes foreseeable items of £1.4 billion, £500 million for ordinary dividends and £924 million foreseeable charges and pension contributions (31 March 2021 excludes foreseeable charges of £547 million for ordinary dividend including £200 million (11bps) in Q1 2021; 31 December 2020 excludes foreseeable charges of £364 million for ordinary dividend (3p per share) and £266 million pension contribution). At 31 March 2020 there was no charge in CET1 for foreseeable dividends or charges.

(7)

Based on UK end-point including the IFRS9 transitional adjustment of £1.2 billion (31 March 2021 - £1.7 billion; 31 December 2020 - £1.7 billion). Excluding this adjustment the UK leverage ratio would be 6.0% (31 March 2021 - 6.0%; 31 December 2020 - 6.1%)

(8)

In March 2021, there was an agreement with HM Treasury to buy 591 million ordinary shares in the Company from UK Government Investments Ltd (UKGI). NatWest Group cancelled 391 million of the purchased ordinary shares and held the remaining 200 million in own shares held. The number of ordinary shares in issue excludes own shares held which comprises the remainder of the shares purchased and shares held by the NatWest Group 2001 Employee Share Trust.

 

 

Summary consolidated income statement for the period ended 30 June 2021

 

 

Half year ended

 

Quarter ended

 

30 June

30 June

 

30 June

31 March

30 June

 

2021

2020

 

2021

2021

2020

 

£m

£m

 

£m

£m

£m

Net interest income

3,916

3,852

 

1,985

1,931

1,910

 

 

 

 

 

 

 

Own credit adjustments

-

53

 

(2)

2

(102)

Other non-interest income 

1,403

1,933

 

677

726

868

 

 

 

 

 

 

 

Non-interest income

1,403

1,986

 

675

728

766

 

 

 

 

 

 

 

Total income

5,319

5,838

 

2,660

2,659

2,676

 

 

 

 

 

 

 

Litigation and conduct costs

18

89

 

34

(16)

85

Strategic costs

(332)

(464)

 

(172)

(160)

(333)

Other expenses

(3,207)

(3,375)

 

(1,568)

(1,639)

(1,661)

 

 

 

 

 

 

 

Operating expenses

(3,521)

(3,750)

 

(1,706)

(1,815)

(1,909)

 

 

 

 

 

 

 

Profit before impairment releases/(losses)

1,798

2,088

 

954

844

767

Impairment releases/(losses)

707

(2,858)

 

605

102

(2,056)

 

 

 

 

 

 

 

Operating profit/(loss) before tax

2,505

(770)

 

1,559

946

(1,289)

Tax (charge)/credit

(435)

208

 

(202)

(233)

396

 

 

 

 

 

 

 

Profit/(loss) for the period

2,070

(562)

 

1,357

713

(893)

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

Ordinary shareholders

1,842

(705)

 

1,222

620

(993)

Preference shareholders

9

16

 

4

5

8

Paid-in equity shareholders

178

192

 

91

87

95

Non-controlling interests

41

(65)

 

40

1

(3)

 

 

 

 

 

 

 

Notable items within total income

 

 

 

 

 

 

Own credit adjustments

-

53

 

(2)

2

(102)

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

-

(103)

 

-

-

(39)

Liquidity Asset Bond sale gain

-

110

 

-

-

17

IFRS volatility in Central items & other (1)

44

(11)

 

45

(1)

55

Loss on redemption of own debt

(138)

-

 

(20)

(118)

-

Retail Banking debt sale gain

-

3

 

-

-

3

Commercial Banking fair value and disposal (loss)/gain

(22)

(11)

 

(8)

(14)

8

Commercial Banking tax variable lease repricing

32

-

 

32

-

-

NatWest Markets asset disposals/strategic risk reduction (2)

(40)

(63)

 

(36)

(4)

(63)

Share of associate profits for Business Growth Fund

129

16

 

8

121

-

Total

5

(6)

 

19

(14)

(121)

 

Notes:

(1)   IFRS volatility relates to derivatives used for risk management not in IFRS hedge accounting relationships and IFRS hedge ineffectiveness.

(2)

Asset disposals/strategic risk reduction relates to the costs of exiting positions, which includes changes in carrying value to align to the expected exit valuation, and the impact of risk reduction transactions entered into, in respect of the strategic announcements of 14 February 2020.

 

 

 

 

 

Business performance summary

Chief Financial Officer review

We have progressed against our strategic objectives and have delivered a good financial performance in the first half of the year. The interim results include a £707 million impairment release reflecting the improved economic outlook, our capital and liquidity positions remain robust and we have increased our commitment for capital returns.

 

Financial performance

Total income decreased by £519 million, or 8.9%, compared with H1 2020 reflecting the lower yield curve, subdued transactional business activity and a more normalised level of customer activity in NatWest Markets, partially offset by balance sheet growth. We continue to expect a full year reduction in structural hedge income of around £250 million compared with 2020, of which £157 million was incurred in H1 2021. Excluding notable items, Q2 2021 income decreased by £32 million, or 1.2%, compared with Q1 2021 as a weaker performance in the NWM Fixed Income business was partially offset by positive signs of an initial recovery in transactional business activity as COVID-19 restrictions eased. Bank NIM of 1.61% decreased by 3 basis points compared with Q1 2021 principally due to excess levels of liquidity, 4 basis points, lower structural hedge income, 1 basis point, and lower asset margins, 1 basis point, partially offset by tax variable lease repricing in Commercial Banking following the enactment of future corporation tax rate changes, 3 basis points.

 

We achieved a cost reduction of £185 million, or 5.9%, compared with H1 2020 mainly reflecting Customer Journey Transformation, the continued shift from physical to digital and actions taken in NatWest Markets in line with the strategic announcement made in February 2020. Strategic costs of £332 million in the first half of 2021 included £87 million redundancy charges, £48 million related to property charges and a £27 million charge related to technology spend. We remain committed to our 4% full year cost reduction target.

 

Whilst we continue to navigate a high degree of uncertainty in the wider economic environment, a net impairment release of £707 million for the first half of 2021 reflects an improved economic outlook. We have assessed the downside risk posed by COVID-19 to be diminishing over the course of 2021. Given the vaccination roll-out and positive economic data observed since the gradual relaxing of lockdown restrictions, it is appropriate to apply a higher probability to upside-biased scenarios than at the year-end 2020. Total impairment provisions decreased by £0.9 billion to £4.9 billion in the quarter, which resulted in a reduction in the ECL coverage ratio from 1.56% at Q1 2021 to 1.31%. Whilst we are comfortable with the strong performance of our book, we continue to hold economic uncertainty post model adjustments (PMA) of £0.8 billion, or 16.9% of total impairment provisions. We will continue to assess this position as UK Government support winds down and we emerge from the pandemic.

 

As a result, we are pleased to report an interim attributable profit of £1,842 million, with earnings per share of 15.6 pence and a return on tangible equity (RoTE) of 11.7%.

 

We continue to support our customers to recover and grow during this period of continued uncertainty, whilst taking a measured approach to risk. Across the UK and RBSI retail and commercial businesses, net lending excluding UK Government support schemes increased by £4.1 billion in the first half of 2021, or 2.8% on an annualised basis, including £7.0 billion of mortgage growth, partially offset by lower unsecured balances and lower Commercial Banking lending volumes. The £1.9 billion increase in the second quarter of 2021 included mortgage lending growth of £3.6 billion.

 

Customer deposits increased by £35.5 billion, or 8.2%, to £467.2 billon in the first half of 2021. Across the UK and RBSI retail and commercial businesses customer deposits increased by £25.5 billion, or 6.3%, as customers sought to retain liquidity and reduced spending. Treasury repo activity drove a further £11.5 billion.

 

TNAV per share increased by 5 pence in the quarter to 266 pence largely reflecting the attributable profit partially offset by the full year dividend payment.

 

Capital and leverage

The CET1 ratio of 18.2%, or 17.5% excluding IFRS 9 transitional relief, remains robust and was in line with Q1 2021 as the attributable profit for the period and the reduction in RWAs were offset by a £0.5 billion decrease in IFRS 9 transitional relief and foreseeable capital deductions in respect of our proposed in-market buy-backs, dividends and associated pension contribution. The total capital ratio increased by 90 basis points in the quarter to 24.9%.

 

RWAs of £163.0 billion decreased by £7.3 billion, or 4.3%, in the first half of 2021 reflecting business movements of £2.9 billion, risk parameter improvements of £1.4 billion and FX movements of £1.2 billion. The £1.7 billion reduction in the second quarter of 2021 mainly relates to Commercial Banking business movements.

 

The UK leverage ratio of 6.2% was in line with Q1 2021.

 

Funding and Liquidity

The liquidity portfolio was £277 billion at the end of Q2 2021, £14 billion higher than Q1 2021, and the LCR increased by 6 percentage points to 164%, representing £75.3 billion headroom above 100% minimum requirement, primarily reflecting the £13.9 billion increase in customer deposits in the quarter. The loan:deposit ratio remained broadly stable with Q1 2021 at 78%.

 

Total wholesale funding increased by £5 billion compared with Q1 2021. Short term wholesale funding increased by £3 billion in the quarter to £23 billion.


 

 

 

Business performance summary

Retail Banking

 

Half year ended

 

Quarter ended

 

30 June

30 June

 

30 June

31 March

30 June

 

2021

2020

 

2021

2021

2020

 

£m

£m

 

£m

£m

£m

Total income

2,150

2,185

 

1,094

1,056

1,035

Operating expenses

(1,187)

(1,075)

 

(600)

(587)

(546)

 of which: Other expenses

(1,102)

(1,169)

 

(545)

(557)

(577)

Impairment releases/(losses)

57

(657)

 

91

(34)

(360)

Operating profit

1,020

453

 

585

435

129

Return on equity

27.5%

10.7%

 

32.0%

23.0%

5.7%

Net interest margin

2.07%

2.23%

 

2.08%

2.06%

2.18%

Cost:income ratio

55.2%

49.2%

 

54.8%

55.6%

52.8%

Loan impairment rate

(6)bps

79bps

 

(20)bps

8bps

87bps

 

 

 

 

 

 

 

 

 

 

 

As at

 

 

 

 

30 June

31 March

31 December

 

 

 

 

2021

2021

2020

 

 

 

 

£bn

£bn

£bn

Net loans to customers (amortised cost)

 

 

 

178.1

174.8

172.3

Customer deposits

 

 

 

184.1

179.1

171.8

RWAs

 

 

 

35.6

35.0

36.7

 

During H1 2021, Retail Banking continued to pursue sustainable growth with an intelligent approach to risk. Lending growth was supported by a strong performance in mortgages, partially offset by continued UK Government restrictions impacting customer spending and the continued repayment of unsecured balances, although both customer spending and demand for new unsecured lending continued to improve over H1 2021 as the UK Government restrictions eased.

 

As at 30 June 2021, Retail Banking had c.500 active mortgage repayment holidays, representing less than 0.1% of the book by volume, and approximately 2,300, or 0.3%, of personal loan customers on active repayment holidays.

 

H1 2021 performance

Total income was £35 million, or 1.6%, lower than H1 2020 primarily due to regulatory changes impacting fee income, lower deposit returns and lower unsecured balances, partially offset by strong balance growth in mortgages and improved asset margins.

Other expenses were £67 million, or 5.7%, lower than H1 2020 primarily reflecting a 10.5% reduction in headcount as a result of the continued digitalisation, automation and improvement of end-to-end customer journeys.

A net impairment release of £57 million in H1 2021 primarily reflects ECL releases related to an improvement in the economic outlook. Stage 3 defaults remain at a low level.

Net loans to customers increased by £5.8 billion, or 3.4%, in H1 2021 due to continued strong mortgage growth of £6.2 billion, with gross new mortgage lending of £19.3 billion, and flow share of 11.4%, supporting a stock share of 11.0%. Personal advances and cards reduced by £0.4 billion and £0.2 billion respectively as customers spent less and made higher repayments, reflecting the impact of continued UK Government restrictions.

Customer deposits increased by £12.3 billion, or 7.2%, in H1 2021 as continued UK Government support schemes combined with restrictions, resulted in lower customer spend and increased savings.

RWAs decreased by £1.1 billion, or 3.0%, in H1 2021 largely reflecting lower unsecured balances and continued quality improvements supported by rising house prices and customer behaviour.

Q2 2021 performance

Total income was £38 million higher than Q1 2021 as strong mortgage completions and a full quarter impact of savings customer rate changes were partially offset by the non-repeat of an insurance profit share. In comparison with Q2 2020, total income was £59 million, or 5.7%, higher due to stronger asset margins and transactional related fee income, partially offset by lower deposit returns. Non-interest income in Q2 2021 benefitted from a debt sale, along with other one-off items which will not repeat in Q3 2021, totalling around £12 million.

Net interest margin increased by 2 basis points compared with Q1 2021 reflecting strong mortgage completion margins and a full quarter of savings customer rate changes. Mortgage completion margins of around 165 basis points were higher than the back book margin of 163 basis points, with application margins of around 155 basis points in the quarter decreasing to around 145 basis points in the latter part of Q2 2021, reflecting increased competition in the market.

Other expenses were £12 million, or 2.2%, lower than Q1 2021 as continued cost reduction activity was partially offset by the annual pay award.

A net impairment release of £91 million in Q2 2021 primarily reflects ECL releases related to an improvement in the economic outlook.

Net loans to customers increased by £3.3 billion compared with Q1 2021 reflecting continued mortgage growth, supported by a retention rate of 79%, partially offset by lower personal advances. Cards balances increased by £0.1 billion as customer demand and spend levels increased.

Customer deposits increased by £5.0 billion compared with Q1 2021 as continued UK Government support schemes combined with restrictions, resulted in lower customer spend and increased savings.

 

 

Business performance summary

Private Banking

 

Half year ended

 

Quarter ended

 

30 June

30 June

 

30 June

31 March

30 June

 

2021

2020

 

2021

2021

2020

 

£m

£m

 

£m

£m

£m

Total income

368

392

 

183

185

191

Operating expenses

(249)

(252)

 

(128)

(121)

(129)

 of which: Other expenses

(242)

(241)

 

(120)

(122)

(123)

Impairment releases/(losses)

27

(56)

 

27

-

(27)

Operating profit

146

84

 

82

64

35

Return on equity

14.2%

8.2%

 

15.9%

12.4%

6.6%

Net interest margin

1.77%

2.20%

 

1.75%

1.79%

2.14%

Cost:income ratio

67.7%

64.3%

 

69.9%

65.4%

67.5%

Loan impairment rate

(30)bps

70bps

 

(60)bps

-

67bps

 

 

 

 

 

 

 

 

 

 

 

As at

 

 

 

 

30 June

31 March

31 December

 

 

 

 

2021

2021

2020

 

 

 

 

£bn

£bn

£bn

Net loans to customers (amortised cost)

 

 

 

18.0

17.5

17.0

Customer deposits

 

 

 

34.7

33.5

32.4

RWAs

 

 

 

11.2

11.2

10.9

Assets under management (AUMs) (1)

 

 

 

29.6

27.6

27.0

Assets under administration (AUAs) (1)

 

 

 

5.1

5.0

5.1

Total assets under management and administration (AUMA) (1)

 

 

34.7

32.6

32.1

 

Note:

(1)   The definitions of AUMs/AUAs have been updated to provide clarity on assets where the investment management is undertaken by Private Banking. AUMs now comprises assets where the investment management is undertaken by Private Banking irrespective of the franchise the customer belongs to. AUAs now comprises third party assets held on an execution-only basis in custody. Total AUMA remain as before. 

 

Private Banking delivered strong balance growth and a resilient operating performance in H1 2021, including a £27 million impairment release, which supported a return on equity of 14.2%. AUMA growth in H1 2021 included £1.4 billion of AUM net new money, of which £0.5 billion related to digital investing inflows into NatWest Invest, Royal Bank Invest and Coutts Invest, more than double H1 2020 levels.

 

H1 2021 performance

Total income decreased by £24 million, or 6.1%, compared with H1 2020 primarily reflecting lower deposit returns, partially offset by strong balance growth.

Other expenses increased by £1 million, or 0.4%, compared with H1 2020 principally due to an increase in headcount, related to the enhancement of AUMA growth and other client propositions, partially offset by the movement of costs associated with the planned sale of Adam and Company Investment Management business to strategic costs in Q2 2021 and a property revaluation charge in H1 2020.

A net impairment release of £27 million in H1 2021 reflects ECL releases related to the improved economic outlook.

Net loans to customers increased by £1.0 billion, or 5.9%, in H1 2021 due to continued strong mortgage lending growth, whilst RWAs increased by £0.3 billion, or 2.8%.

Customer deposits increased by £2.3 billion, or 7.1%, in H1 2021 reflecting strong personal and commercial inflows as UK Government restrictions resulted in customers continuing to build and retain liquidity.

AUMAs increased by £2.6 billion, or 8.1%, in H1 2021 largely due to AUM net new money inflows of £1.4 billion and AUM positive investment performance of £1.2 billion.

 

Q2 2021 performance

Total income decreased by £2 million compared to Q1 2021 as lower fee income was partially offset by continued balance growth. In comparison to Q2 2020, total income decreased by £8 million, or 4.2%, as lower deposit returns were partially offset by strong balance growth. Net interest margin decreased by 4 basis points compared with Q1 2021 reflecting higher liquidity portfolio costs.

Net loans to customers increased by £0.5 billion compared with Q1 2021 supported by £0.4 billion of mortgage lending growth.

AUMAs increased by £2.1 billion compared with Q1 2021 largely due to AUM net new money inflows of £0.8 billion and AUM positive investment performance of £1.2 billion.

 

 

Business performance summary

Commercial Banking

 

Half year ended

 

Quarter ended

 

30 June

30 June

 

30 June

31 March

30 June

 

2021

2020

 

2021

2021

2020

 

£m

£m

 

£m

£m

£m

Total income

1,923

2,003

 

982

941

995

Operating expenses

(1,152)

(1,221)

 

(569)

(583)

(611)

 of which: Other expenses (excluding OLD)

(983)

(1,066)

 

(470)

(513)

(534)

Impairment releases/(losses)

568

(1,790)

 

451

117

(1,355)

Operating profit/(loss)

1,339

(1,008)

 

864

475

(971)

Return on equity

21.9%

(17.9%)

 

29.3%

14.9%

(32.5%)

Net interest margin

1.57%

1.76%

 

1.60%

1.54%

1.70%

Cost:income ratio

58.4%

59.5%

 

56.4%

60.5%

59.9%

Loan impairment rate

(107)bps

311bps

 

(170)bps

(43)bps

472bps

 

 

 

 

 

 

 

 

 

 

 

As at

 

 

 

 

30 June

31 March

31 December

 

 

 

 

2021

2021

2020

 

 

 

 

£bn

£bn

£bn

Net loans to customers (amortised cost)

 

 

 

103.8

106.6

108.2

Customer deposits

 

 

 

176.0

169.4

167.7

RWAs

 

 

 

69.5

71.6

75.1

 

Note:

(1)    EU Divestment balances from Q2 2021 integrated within business banking (Q4 2020 - £1.1 billion, Q1 2021 - £1.7 billion) and SME & mid corporates (Q4 2020 - £4.8 billion, Q1 2021 - £4.1 billion), as the Incentivised Switching Scheme (ISS) closed at the end of June 2021.

 

Commercial Banking delivered a solid performance in H1 2021 as business activity increased. The £1,339 million operating profit includes a £568 million impairment release, largely reflecting the improved economic outlook. During H1 2021 Commercial Banking delivered £2.5 billion towards NatWest Group's Climate and Sustainable Funding and Financing 2021 target.

 

Commercial Banking continues to support its customers with active payment holidays on c.3,000 customer accounts, representing 1% of the lending book by value as at 30 June 2021. c.92% of BBLS customers due to commence loan repayments had begun repayments on, or ahead of, schedule and c.5% of all BBLS customers had repaid in full as at 30 June 2021.

 

 

H1 2021 performance

Total income decreased by £80 million, or 4.0%, compared with H1 2020 as lower deposit returns and lower transactional banking activity were partially offset by higher other non-interest income.

Other expenses, excluding OLD, decreased by £83 million, or 7.8%, compared with H1 2020, reflecting cost reduction actions, lower staff costs and a reduction in back office operations costs.

A net impairment release of £568 million in H1 2021 mainly reflects ECL releases related to the improved economic outlook, with limited defaults. Excluding amounts related to economic uncertainty held within the PMA, the ECL coverage ratio was 1.65%.

Net loans to customers decreased by £4.4 billion, or 4.1%, in H1 2021 mainly reflecting reductions across Large Corporates & Institutions, SME & mid-corporates and Real Estate Finance related to net revolving credit facility (RCF) repayments of £1.5 billion, active capital management of £0.6 billion and targeted sector reductions partially offset by £0.8 billion lower loan provisions.

Customer deposits increased by £8.3 billion, or 4.9%, in H1 2021 as customers continued to build and retain liquidity in light of economic uncertainty and the continued impact of UK Government initiatives.

RWAs decreased by £5.6 billion, or 7.5%, in H1 2021 mainly reflecting business movements, excluding active capital management, of £3.0 billion, active capital management of £0.8 billion, a £0.8 billion reduction reflecting a CRR COVID-19 amendment related to a Housing Association supporting factor, £0.2 billion lower risk parameters, and FX movements of £0.4 billion.

Q2 2021 performance

Total income increased by £41 million compared with Q1 2021 mainly reflecting tax variable lease repricing and a partial recovery in transactional banking volumes, partially offset by lower lending volumes. In comparison to Q2 2020 total income decreased by £13 million, or 1.3%, primarily reflecting lower deposit returns. Net interest margin increased by 6 basis points compared with Q1 2021 mainly reflecting tax variable lease repricing following the enactment of future corporation tax rate changes. Underlying net interest margin decreased by 2 basis points reflecting lower deposit returns.

Other expenses, excluding OLD, decreased by £43 million compared with Q1 2021 mainly reflecting the transfer of remediation costs to Litigation and conduct costs.

A net impairment release of £451 million in Q2 2021 mainly reflects ECL releases related to the improved economic outlook.

Net loans to customers decreased by £2.8 billion compared with Q1 2021 as net RCF repayments of £1.2 billion, net UK Government financial support scheme repayments of £0.4 billion and targeted sector reductions were partially offset by £0.6 billion lower loan provisions. RCF utilisation was c.20% of committed facilities, significantly below the COVID-19 peak of c.40%.

Customer deposits increased by £6.6 billion compared with Q1 2021 as customers continued to build and retain liquidity.

RWAs decreased by £2.1 billion compared with Q1 2021 mainly reflecting business movements, excluding active capital management, of £1.1 billion, a £0.8 billion reduction reflecting the CRR COVID-19 amendment and active capital management of £0.2 billion.

 

 

Business performance summary

International Banking & Markets

RBS International

 

Half year ended

 

Quarter ended

 

30 June

30 June

 

30 June

31 March

30 June

 

2021

2020

 

2021

2021

2020

 

£m

£m

 

£m

£m

£m

Total income

256

259

 

133

123

115

Operating expenses

(112)

(126)

 

(55)

(57)

(65)

 of which: Other expenses

(104)

(121)

 

(52)

(52)

(61)

Impairment releases/(losses)

29

(46)

 

27

2

(31)

Operating profit

173

87

 

105

68

19

Return on equity

22.1%

11.8%

 

26.5%

17.5%

4.3%

Net interest margin

1.04%

1.30%

 

1.02%

1.06%

1.15%

Cost:income ratio

43.8%

48.6%

 

41.4%

46.3%

56.5%

Loan impairment rate

(38)bps

72bps

 

(71)bps

(5)bps

97bps

 

 

 

 

 

 

 

 

 

 

 

As at

 

 

 

 

30 June

31 March

31 December

 

 

 

 

2021

2021

2020

 

 

 

 

£bn

£bn

£bn

Net loans to customers (amortised cost)

 

 

 

15.1

14.7

13.3

Customer deposits

 

 

 

33.9

33.3

31.3

RWAs

 

 

 

7.6

7.7

7.5

Depositary assets (1)

 

 

 

460.4

452.0

427.5

 

Note:

(1)   Assets held by RBSI as an independent trustee and in a depositary service capacity.

 

During H1 2021 RBSI delivered £256 million of income, supported by customer lending growth and contributed £0.6 billion towards NatWest Group's Climate and Sustainable Funding and Financing 2021 target. RBSI also implemented a range of new payment features on the mobile app for both personal and business customers, including the introduction of face biometrics to authorise payments and the ability to deposit cheques.
 

As at 30 June 2021, RBSI was supporting 22 mortgage repayment breaks, reflecting a mortgage value of £4.8 million, and was providing 161 business customers with working capital facilities, reflecting a value of £434 million, whilst continuing to suspend some fees.

 

H1 2021 performance

Total income was £3 million, or 1.2%, lower than H1 2020 with net interest income £19 million lower, impacted by lower deposit funding benefits partially offset by higher customer lending volumes and depositary fees in non-interest income.

Other expenses were £17 million, or 14.0%, lower than H1 2020 due to a 11% reduction in headcount from simplifying the business and the non-repeat of COVID-19 related costs last year.

A net impairment release of £29 million in H1 2021 mainly reflects Stage 1 and Stage 2 releases. Stage 3 defaults remain low.

Net loans to customers increased by £1.8 billion, or 13.5%, in H1 2021 due to higher demand from customers in the Institutional Banking sector.

Customer deposits increased by £2.6 billion, or 8.3%, in H1 2021 due to £2.3 billion of short-term placement inflows in the Institutional Banking sector and a £0.6 billion increase in Notice products as clients switched from short-term call products to longer term products.

Depositary assets have increased by £32.9 billion in H1 2021 in both operating jurisdictions, Luxembourg and UK, as a result of increases in fund performance and new business.

 

Q2 2021 performance

Total income was £10 million, or 8.1%, higher than Q1 2021 due to higher average lending and deposit volumes in the Institutional Banking sector and was £18 million, or 15.7%, higher than Q2 2020 principally due to higher depositary and non-utilisation fees. Net interest margin decreased by 4 basis points compared with Q1 2021 largely due to lower returns from higher surplus deposits. 

A net impairment release of £27 million in Q2 2021, mainly reflects Stage 1 and Stage 2 releases. Stage 3 defaults remain low.

Net loans to customers increased by £0.4 billion compared with Q1 2021 due to higher demand from customers in the Institutional Banking sector.

Customer deposits increased by £0.6 billion compared with Q1 2021 following an inflow of short term call deposits in the Institutional Banking sector as customer activity increased.

 

 

 

 

Business performance summary

International Banking and Markets

NatWest Markets(1)

 

Half year ended

 

Quarter ended

 

30 June

30 June

 

30 June

31 March

30 June

 

2021

2020

 

2021

2021

2020

 

£m

£m

 

£m

£m

£m

Total income

295

816

 

106

189

273

of which:

 

 

 

 

 

 

   - Income excluding asset disposals/strategic risk

 

 

 

 

 

 

      reduction and own credit adjustments

334

826

 

143

191

438

   - Asset disposals/strategic risk reduction (2)

(40)

(63)

 

(36)

(4)

(63)

   - Own credit adjustments

1

53

 

(1)

2

(102)

Operating expenses

(560)

(707)

 

(285)

(275)

(365)

 of which: Other expenses

(456)

(569)

 

(216)

(240)

(271)

Impairment releases/(losses)

16

(40)

 

10

6

(45)

Operating (loss)/profit

(249)

69

 

(169)

(80)

(137)

Return on equity

(9.2%)

0.8%

 

(12.1%)

(6.3%)

(7.1%)

Cost:income ratio

189.8%

86.6%

 

268.9%

145.5%

133.7%

 

 

 

 

 

 

 

 

 

 

 

As at

 

 

 

 

30 June

31 March

31 December

 

 

 

 

2021

2021

2020

 

 

 

 

£bn

£bn

£bn

Funded assets

 

 

 

111.8

105.7

105.9

RWAs

 

 

 

26.9

26.5

26.9

 

Notes:

(1)   The NatWest Markets operating segment is not the same as the NatWest Markets Plc legal entity (NWM Plc) or group (NWM or NWM Group). The NatWest Markets segment excludes the Central items & other segment.

(2)   Asset disposals/strategic risk reduction relates to the cost of exiting positions, which includes changes in carrying value to align to the expected exit valuation, and the impact of risk reduction transactions entered into, in respect of the strategic announcement on 14 February 2020.

 

NatWest Markets continued to support customers with innovative financial solutions and to deliver on plans to become a more sustainable part of NatWest Group. NatWest Markets has further developed its capability to offer better integrated solutions, particularly in foreign exchange and funds financing, targeted to the investment management community. NatWest Markets continued to build momentum in Climate and Sustainable Funding and Financing, with a strong performance during the first half of 2021, delivering £6.3 billion towards NatWest Group's 2021 target.

 

 

H1 2021 performance

Income excluding asset disposals/strategic risk reduction and OCA decreased by £492 million, or 59.6%, compared with H1 2020 reflecting the exceptional level of market activity generated by the spread of the COVID-19 virus in the prior period, together with weaker performance and reshaping of the Fixed Income business in the current period. Capital Markets and Currencies performed broadly in line with expectations. The H1 2021 results also included a £20 million loss from a liability management exercise which thereafter reduces the cost of funding.

Other expenses decreased by £113 million, or 19.9%, compared with H1 2020 reflecting continued reductions in line with the strategic announcement in February 2020.

RWAs were in line with 31 December 2020 however, following the announcement of GBP LIBOR cessation in March 2021, market risk RWAs became elevated by £2.5 billion as a result of including modelled GBP LIBOR basis risk post 4 January 2022. Regulatory approval has been obtained in July 2021 to update the VaR model and this will remove this impact in Q3 2021. If this model approval was back dated to Q2 2021 the reported RWAs would have been £24.4 billion. Underlying levels of market risk were low and progress continues to be made on asset disposals in line with the strategy.

 

 

Q2 2021 performance

Income excluding asset disposals/strategic risk reduction and OCA decreased by £48 million compared with Q1 2021 reflecting a weaker performance in Fixed Income and a reduction in Currencies as volatility decreased. In comparison to Q2 2020, income excluding asset disposals/strategic risk reduction and OCA decreased by £295 million, or 67.4%, reflecting more normalised levels of customer activity, with the prior period impacted by exceptional levels of market activity generated by the spread of the COVID-19 virus.

Other expenses decreased by £24 million compared with Q1 2021 reflecting the timing of discretionary expense and continued reductions in line with the strategic announcement in February 2020.

RWAs increased by £0.4 billion compared with Q1 2021 reflecting the impact of GBP LIBOR cessation highlighted above. Underlying levels of market risk were low and progress continues to be made on asset disposals in line with the strategy.

 

 

 

 

Business performance summary

Ulster Bank RoI

 

Half year ended

 

Quarter ended

 

30 June

30 June

 

30 June

31 March

30 June

 

2021

2020

 

2021

2021

2020

 

€m

€m

 

€m

€m

€m

Total income

279

285

 

137

142

135

Operating expenses

(299)

(283)

 

(156)

(143)

(140)

 of which: Other expenses

(281)

(271)

 

(149)

(132)

(134)

Impairment releases/(losses)

13

(278)

 

(1)

14

(246)

Operating (loss)/profit

(7)

(276)

 

(20)

13

(251)

Return on equity

(0.7%)

(24.3%)

 

(4.1%)

2.6%

(45.5%)

Net interest margin

1.46%

1.52%

 

1.43%

1.49%

1.49%

Cost:income ratio

107.2%

99.3%

 

113.9%

100.7%

103.7%

Loan impairment rate

(13)bps

260bps

 

2bps

(27)bps

460bps

 

 

 

 

 

 

 

 

 

 

 

As at

 

 

 

 

30 June

31 March

31 December

 

 

 

 

2021

2021

2020

 

 

 

 

€bn

€bn

€bn

Net loans to customers (amortised cost)

 

 

 

19.4

19.8

20.0

Customer deposits

 

 

 

21.6

21.7

21.8

RWAs

 

 

 

12.2

13.1

13.2

 

In June 2021, UBIDAC entered into a binding agreement with Allied Irish Banks p.l.c. for the sale of around €4.2 billion of gross performing commercial lending and associated undrawn exposures of around €2.8 billion. The timing of completion remains uncertain and the sale is subject to obtaining regulatory and other approvals. In July 2021, NatWest Group plc and UBIDAC entered into a non-binding Memorandum of Understanding with Permanent TSB Group Holdings p.l.c. for the proposed sale of a perimeter comprising performing non-tracker mortgages, performing micro-SME loans, UBIDAC's asset finance business and 25 branch locations. The proposed perimeter included approximately €7.6 billion gross performing loans as at 31 March 2021. Ulster Bank RoI remains focused on supporting its customers as it continues its withdrawal from the Republic of Ireland.

 

H1 2021 performance

Total income decreased by €6 million, or 2.1%, compared with H1 2020 primarily reflecting lower lending levels and fee income as a result of the continued impact of COVID-19 and the recent announcement to commence a phased withdrawal from the Republic of Ireland, partially offset by increased FX gains.

Other expenses were €10 million, or 3.7%, higher than H1 2020 due to increased regulatory levies and higher VAT charges, partially offset by a 7.1% reduction in headcount and lower back office operations costs.

A net impairment release of €13 million in H1 2021 reflects improvements in the mortgage portfolio, including releases related to the final de-recognition of assets from a non-performing loan (NPL) sale agreed in Q4 2019, offset by post model adjustments to reflect loan disposal strategies not captured within loss modelling.

Net loans to customers decreased by €0.6 billion, or 3.0%, in H1 2021 as repayments exceeded gross new lending of €0.8 billion.

Customer deposits decreased by €0.2 billion, or 0.9%, in H1 2021 due to a large short term placement at the end of 2020 partially offset by increased personal balances.

 

Q2 2021 performance

Total income decreased by €5 million compared with Q1 2021 due to lower lending income and reduced FX gains. Net interest margin decreased by 6 basis points compared with Q1 2021 reflecting lower lending volumes and a stable deposit base, resulting in higher liquid assets in a negative interest rate environment.

Other expenses increased by €17 million compared with Q1 2021 mainly due to increased Single Resolution Fund (SRF) levies, much of which relates to prior years, and higher VAT charges, partially offset by a 3.7% reduction in headcount.

Net loans to customers decreased by €0.4 billion compared with Q1 2021.

Customer deposits decreased by €0.1 billion compared with Q1 2021 resulting in loan:deposit ratio of 90% compared with 91% in Q1 2021.

RWAs decreased by €0.9 billion compared with Q1 2021 mainly due to improvements in asset quality, lower lending volumes and the impact of the NPL de-recognition.

 

 

 

 

 

 

Business performance summary

Central items & other

 

Half year ended

 

Quarter ended

 

30 June

30 June

 

30 June

31 March

30 June

 

2021

2020

 

2021

2021

2020

 

£m

£m

 

£m

£m

£m

Central items not allocated

83

(216)

 

110

(27)

(146)

 

An £83 million operating profit within central items not allocated mainly reflects a £129 million share of associate profits for the Business Growth Fund, a litigation and conduct release and IFRS volatility, partially offset by a £138 million day one loss on redemption of own debt related to the repurchase of legacy instruments, which will result in annual net interest savings of c.£51 million.

 

Segment performance

 

 

Half year ended 30 June 2021

 

 

 

International Banking & Markets

 

Central

Total

 

 

Retail

Private

Commercial

RBS

NatWest

Ulster

 items &

NatWest

 

 

Banking

Banking

Banking

International

Markets

Bank RoI

other

Group

 

 

£m

£m

£m

£m

£m

£m 

£m

£m

Income statement 

 

 

 

 

 

 

 

 

Net interest income

1,976

232

1,308

182

(3)

187

34

3,916

Own credit adjustments

-

-

-

-

1

-

(1)

-

Other non-interest income

174

136

615

74

297

56

51

1,403

Total income 

2,150

368

1,923

256

295

243

84

5,319

Direct expenses

- staff costs

(232)

(67)

(280)

(52)

(188)

(94)

(768)

(1,681)

 

- other costs

(111)

(20)

(131)

(24)

(64)

(68)

(1,108)

(1,526)

Indirect expenses

(759)

(155)

(642)

(28)

(204)

(83)

1,871

-

Strategic costs 

- direct

(16)

(5)

(39)

(6)

(90)

(1)

(175)

(332)

 

- indirect

(60)

(7)

(23)

(2)

(16)

(2)

110

-

Litigation and conduct costs

(9)

5

(37)

-

2

(13)

70

18

Operating expenses

(1,187)

(249)

(1,152)

(112)

(560)

(261)

-

(3,521)

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

963

119

771

144

(265)

(18)

84

1,798

Impairment releases/(losses)

57

27

568

29

16

11

(1)

707

Operating profit/(loss)

1,020

146

1,339

173

(249)

(7)

83

2,505

Additional information

 

 

 

 

 

 

 

 

Return on tangible equity (1)

na

na

na

na

na

na

na

11.7%

Return on equity (1)

27.5%

14.2%

21.9%

22.1%

(9.2%)

(0.8%)

nm

na

Cost:income ratio (1)

55.2%

67.7%

58.4%

43.8%

189.8%

107.4%

nm

65.7%

Total assets (£bn)

204.2

27.7

185.8

37.0

219.4

25.4

76.4

775.9

Funded assets (£bn) (1)

204.2

27.7

185.8

36.9

111.8

25.4

74.5

666.3

Net loans to customers - amortised cost (£bn)

178.1

18.0

103.8

15.1

6.3

16.7

24.7

362.7

Loan impairment rate (1)

(6)bps

(30)bps

(107)bps

(38)bps

nm

(13)bps

nm

(38)bps

Impairment provisions (£bn)

(1.6)

(0.1)

(2.1)

(0.1)

(0.1)

(0.7)

-

(4.7)

Impairment provisions - Stage 3 (£bn)

(0.8)

-

(0.8)

(0.1)

(0.1)

(0.4)

-

(2.2)

Customer deposits (£bn)

184.1

34.7

176.0

33.9

2.5

18.5

17.5

467.2

Risk-weighted assets (RWAs) (£bn)

35.6

11.2

69.5

7.6

26.9

10.5

1.7

163.0

RWA equivalent (RWAe) (£bn)

35.6

11.3

69.5

7.7

28.6

10.5

1.8

165.0

Employee numbers (FTEs - thousands)

15.3

1.9

9.1

1.6

1.6

2.6

27.1

59.2

Third party customer asset rate (2)

2.70%

2.36%

2.74%

2.23%

nm

2.28%

nm

nm

Third party customer funding rate (2)

(0.07%)

 (0.00%)

(0.01%)

0.07%

nm

0.01%

nm

nm

Average interest earning assets (£bn) (1)

192.5

26.4

168.2

35.3

32.3

25.8

nm

519.2

Bank net interest margin (1)

2.07%

1.77%

1.57%

1.04%

na

1.46%

nm

1.62%

nm = not meaningful, na = not applicable.

 

For the notes to this table, refer to page 18.

 

 

Segment performance

 

 

Half year ended 30 June 2020

 

 

 

International Banking & Markets

 

Central

Total

 

 

Retail

Private

Commercial

RBS

NatWest

Ulster

 items &

NatWest

 

 

Banking

Banking

Banking

International

Markets

Bank RoI

other

Group

 

 

£m

£m

£m

£m

£m

£m 

£m

£m

Income statement 

 

 

 

 

 

 

 

 

Net interest income

1,982

251

1,370

201

(34)

194

(112)

3,852

Own credit adjustments

-

-

-

-

53

-

-

53

Other non-interest income

203

141

633

58

797

55

46

1,933

Total income 

2,185

392

2,003

259

816

249

(66)

5,838

Direct expenses

- staff costs

(268)

(79)

(341)

(65)

(326)

(100)

(617)

(1,796)

 

- other costs

(103)

(25)

(140)

(27)

(94)

(42)

(1,148)

(1,579)

Indirect expenses

(798)

(137)

(658)

(29)

(149)

(92)

1,863

-

Strategic costs 

- direct

(1)

-

(2)

(3)

(120)

(4)

(334)

(464)

 

- indirect

(103)

(10)

(73)

(5)

(16)

(8)

215

-

Litigation and conduct costs

198

(1)

(7)

3

(2)

1

(103)

89

Operating expenses

(1,075)

(252)

(1,221)

(126)

(707)

(245)

(124)

(3,750)

Operating profit/(loss) before impairment losses

1,110

140

782

133

109

4

(190)

2,088

Impairment losses

(657)

(56)

(1,790)

(46)

(40)

(243)

(26)

(2,858)

Operating profit/(loss)

453

84

(1,008)

87

69

(239)

(216)

(770)

Additional information

 

 

 

 

 

 

 

 

Return on tangible equity (1)

na

na

na

na

na

na

na

(4.4%)

Return on equity (1)

10.7%

8.2%

(17.9%)

11.8%

0.8%

(24.2%)

nm

na

Cost:income ratio (1)

49.2%

64.3%

59.5%

48.6%

86.6%

98.4%

nm

63.8%

Total assets (£bn)

187.1

23.9

186.0

31.5

303.8

27.6

47.0

806.9

Funded assets (£bn) (1)

187.1

23.9

186.0

31.5

122.9

27.6

44.5

623.5

Net loans to customers - amortised cost (£bn)

164.5

16.0

112.0

12.7

11.4

18.7

17.0

352.3

Loan impairment rate (1)

79bps

70bps

311bps

72bps

nm

248bps

nm

159bps

Impairment provisions (£bn)

(1.9)

(0.1)

(3.0)

-

(0.2)

(0.9)

-

(6.1)

Impairment provisions - Stage 3 (£bn)

(0.9)

-

(1.2)

-

(0.1)

(0.6)

-

(2.8)

Customer deposits (£bn)

161.0

29.8

159.6

29.5

5.5

20.0

2.9

408.3

Risk-weighted assets (RWAs) (£bn)

36.7

10.4

78.3

6.8

35.1

12.8

1.4

181.5

RWA equivalent (RWAe) (£bn)

36.7

10.4

78.4

6.9

37.2

12.8

1.5

183.9

Employee numbers (FTEs - thousands)

17.1

1.8

9.6

1.8

5.0

2.8

24.6

62.7

Third party customer asset rate (2)

2.97%

2.67%

3.04%

2.65%

nm

2.27%

nm

nm

Third party customer funding rate (2)

(0.28%)

(0.21%)

(0.15%)

(0.05%)

nm

(0.07%)

nm

nm

Average interest earning assets (£bn) (1)

178.6

23.0

156.5

31.2

38.0

25.7

nm

477.9

Bank net interest margin (1)

2.23%

2.20%

1.76%

1.30%

na

1.52%

nm

1.78%

nm = not meaningful, na = not applicable.

 

For the notes to this table, refer to page 18.

 

 

 

 

Segment performance

 

 

Quarter ended 30 June 2021

 

 

 

International Banking & Markets

 

Central

Total

 

 

Retail

Private

Commercial

RBS

NatWest

Ulster

 items &

NatWest

 

 

Banking

Banking

Banking

International

Markets

Bank RoI

other

Group

 

 

£m

£m

£m

£m

£m

£m 

£m

£m

Income statement 

 

 

 

 

 

 

 

 

Net interest income

1,003

117

665

93

4

93

10

1,985

Own credit adjustments

-

-

-

-

(1)

-

(1)

(2)

Other non-interest income

91

66

317

40

103

26

34

677

Total income 

1,094

183

982

133

106

119

43

2,660

Direct expenses

- staff costs

(116)

(33)

(139)

(26)

(77)

(47)

(371)

(809)

 

- other costs

(50)

(11)

(65)

(11)

(35)

(45)

(542)

(759)

Indirect expenses

(379)

(76)

(301)

(15)

(104)

(38)

913

-

Strategic costs 

- direct

(5)

(5)

(13)

(2)

(60)

(1)

(86)

(172)

 

- indirect

(43)

(3)

(14)

(1)

(11)

(1)

73

-

Litigation and conduct costs

(7)

-

(37)

-

2

(4)

80

34

Operating expenses

(600)

(128)

(569)

(55)

(285)

(136)

67

(1,706)

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

494

55

413

78

(179)

(17)

110

954

Impairment releases/(losses)

91

27

451

27

10

(1)

-

605

Operating profit/(loss)

585

82

864

105

(169)

(18)

110

1,559

Additional information

 

 

 

 

 

 

 

 

Return on tangible equity (1)

na

na

na

na

na

na

na

15.6%

Return on equity (1)

32.0%

15.9%

29.3%

26.5%

(12.1%)

(4.3%)

nm

na

Cost:income ratio (1)

54.8%

69.9%

56.4%

41.4%

268.9%

114.3%

nm

63.7%

Total assets (£bn)

204.2

27.7

185.8

37.0

219.4

25.4

76.4

775.9

Funded assets (£bn) (1)

204.2

27.7

185.8

36.9

111.8

25.4

74.5

666.3

Net loans to customers - amortised cost (£bn)

178.1

18.0

103.8

15.1

6.3

16.7

24.7

362.7

Loan impairment rate (1)

(20)bps

(60)bps

(170)bps

(71)bps

nm

2bps

nm

(66)bps

Impairment provisions (£bn)

(1.6)

(0.1)

(2.1)

(0.1)

(0.1)

(0.7)

-

(4.7)

Impairment provisions - Stage 3 (£bn)

(0.8)

-

(0.8)

(0.1)

(0.1)

(0.4)

-

(2.2)

Customer deposits (£bn)

184.1

34.7

176.0

33.9

2.5

18.5

17.5

467.2

Risk-weighted assets (RWAs) (£bn)

35.6

11.2

69.5

7.6

26.9

10.5

1.7

163.0

RWA equivalent (RWAe) (£bn)

35.6

11.3

69.5

7.7

28.6

10.5

1.8

165.0

Employee numbers (FTEs - thousands)

15.3

1.9

9.1

1.6

1.6

2.6

27.1

59.2

Third party customer asset rate (2)

2.67%

2.36%

2.82%

2.18%

nm

2.28%

nm

nm

Third party customer funding rate (2)

(0.06%)

 (0.00%)

(0.02%)

0.09%

nm

0.01%

nm

nm

Average interest earning assets (£bn) (1)

193.8

26.8

167.1

36.4

32.3

25.8

nm

526.1

Bank net interest margin (1)

2.08%

1.75%

1.60%

1.02%

na

1.45%

nm

1.61%

nm = not meaningful, na = not applicable.

 

For the notes to this table, refer to page 18.

 

 

 

Segment performance

 

 

Quarter ended 31 March 2021

 

 

 

International Banking & Markets

 

Central

Total

 

 

Retail

Private

Commercial

RBS

NatWest

Ulster

 items &

NatWest

 

 

Banking

Banking

Banking

International

Markets

Bank RoI

other

Group

 

 

£m

£m

£m

£m

£m

£m 

£m

£m

Income statement 

 

 

 

 

 

 

 

 

Net interest income

973

115

643

89

(7)

94

24

1,931

Own credit adjustments

-

-

-

-

2

-

-

2

Other non-interest income

83

70

298

34

194

30

17

726

Total income 

1,056

185

941

123

189

124

41

2,659

Direct expenses

- staff costs

(116)

(34)

(141)

(26)

(111)

(47)

(397)

(872)

 

- other costs

(61)

(9)

(66)

(13)

(29)

(23)

(566)

(767)

Indirect expenses

(380)

(79)

(341)

(13)

(100)

(45)

958

-

Strategic costs 

- direct

(11)

-

(26)

(4)

(30)

-

(89)

(160)

 

- indirect

(17)

(4)

(9)

(1)

(5)

(1)

37

-

Litigation and conduct costs

(2)

5

-

-

-

(9)

(10)

(16)

Operating expenses

(587)

(121)

(583)

(57)

(275)

(125)

(67)

(1,815)

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

469

64

358

66

(86)

(1)

(26)

844

Impairment (losses)/releases

(34)

-

117

2

6

12

(1)

102

Operating profit/(loss)

435

64

475

68

(80)

11

(27)

946

Additional information

 

 

 

 

 

 

 

 

Return on tangible equity (1)

na

na

na

na

na

na

na

7.9%

Return on equity (1)

23.0%

12.4%

14.9%

17.5%

(6.3%)

2.5%

nm

na

Cost:income ratio (1)

55.6%

65.4%

60.5%

46.3%

145.5%

100.8%

nm

67.8%

Total assets (£bn)

199.2

26.9

187.1

36.7

226.8

25.9

67.2

769.8

Funded assets (£bn) (1)

199.2

26.9

187.1

36.7

105.7

25.9

65.3

646.8

Net loans to customers - amortised cost (£bn)

174.8

17.5

106.6

14.7

7.5

16.9

20.7

358.7

Loan impairment rate (1)

8bps

-

(43)bps

(5)bps

nm

(27)bps

nm

(11)bps

Impairment provisions (£bn)

(1.8)

(0.1)

(2.7)

(0.1)

(0.1)

(0.7)

(0.1)

(5.6)

Impairment provisions - Stage 3 (£bn)

(0.8)

-

(0.9)

-

(0.1)

(0.5)

(0.1)

(2.4)

Customer deposits (£bn)

179.1

33.5

169.4

33.3

2.4

18.4

17.2

453.3

Risk-weighted assets (RWAs) (£bn)

35.0

11.2

71.6

7.7

26.5

11.1

1.6

164.7

RWA equivalent (RWAe) (£bn)

35.0

11.2

71.7

7.7

29.2

11.1

1.7

167.6

Employee numbers (FTEs - thousands)

15.8

1.9

9.5

1.6

2.1

2.7

26.0

59.6

Third party customer asset rate (2)

2.73%

2.36%

2.65%

2.28%

nm

2.28%

nm

nm

Third party customer funding rate (2)

(0.08%)

 (0.00%)

(0.01%)

0.05%

nm

 0.00%

nm

nm

Average interest earning assets (£bn) (1)

191.2

26.0

169.4

34.1

32.4

25.8

nm

512.2

Bank net interest margin (1)

2.06%

1.79%

1.54%

1.06%

na

1.48%

nm

1.64%

nm = not meaningful, na = not applicable.

 

For the notes to this table, refer to the following page.

 

 

 

Segment performance

 

 

Quarter ended 30 June 2020

 

 

 

International Banking & Markets

 

Central

Total

 

 

Retail

Private

Commercial

RBS

NatWest

Ulster

 items &

NatWest

 

 

Banking

Banking

Banking

International

Markets

Bank RoI

other 

Group

 

 

£m

£m

£m

£m

£m

£m 

£m

£m

Income statement 

 

 

 

 

 

 

 

 

Net interest income

975

124

696

90

6

97

(78)

1,910

Own credit adjustments

-

-

-

-

(102)

-

-

(102)

Other non-interest income

60

67

299

25

369

23

25

868

Total income 

1,035

191

995

115

273

120

(53)

2,676

Direct expenses

- staff costs

(133)

(40)

(167)

(33)

(159)

(52)

(293)

(877)

 

- other costs

(45)

(9)

(67)

(13)

(37)

(18)

(595)

(784)

Indirect expenses

(399)

(74)

(337)

(15)

(75)

(46)

946

-

Strategic costs 

- direct

(1)

-

-

(2)

(86)

(3)

(241)

(333)

 

- indirect

(69)

(5)

(34)

(2)

(8)

(4)

122

-

Litigation and conduct costs

101

(1)

(6)

-

-

1

(10)

85

Operating expenses

(546)

(129)

(611)

(65)

(365)

(122)

(71)

(1,909)

Operating profit/(loss) before impairment losses

489

62

384

50

(92)

(2)

(124)

767

Impairment losses

(360)

(27)

(1,355)

(31)

(45)

(216)

(22)

(2,056)

Operating profit/(loss)

129

35

(971)

19

(137)

(218)

(146)

(1,289)

Additional information

 

 

 

 

 

 

 

 

Return on tangible equity (1)

na

na

na

na

na

na

na

(12.4%)

Return on equity (1)

5.7%

6.6%

(32.5%)

4.3%

(7.1%)

(44.5%)

nm

na

Cost:income ratio (1)

52.8%

67.5%

59.9%

56.5%

133.7%

101.7%

nm

70.9%

Total assets (£bn)

187.1

23.9

186.0

31.5

303.8

27.6

47.0

806.9

Funded assets (£bn) (1)

187.1

23.9

186.0

31.5

122.9

27.6

44.5

623.5

Net loans to customers - amortised cost (£bn)

164.5

16.0

112.0

12.7

11.4

18.7

17.0

352.3

Loan impairment rate (1)

87bps

67bps

472bps

97bps

nm

441bps

nm

229bps

Impairment provisions (£bn)

(1.9)

(0.1)

(3.0)

-

(0.2)

(0.9)

-

(6.1)

Impairment provisions - Stage 3 (£bn)

(0.9)

-

(1.2)

-

(0.1)

(0.6)

-

(2.8)

Customer deposits (£bn)

161.0

29.8

159.6

29.5

5.5

20.0

2.9

408.3

Risk-weighted assets (RWAs) (£bn)

36.7

10.4

78.3

6.8

35.1

12.8

1.4

181.5

RWA equivalent (RWAe) (£bn)

36.7

10.4

78.4

6.9

37.2

12.8

1.5

183.9

Employee numbers (FTEs - thousands)

17.1

1.8

9.6

1.8

5.0

2.8

24.6

62.7

Third party customer asset rate (2)

2.88%

2.53%

2.88%

2.58%

nm

2.27%

nm

nm

Third party customer funding rate (2)

(0.20%)

(0.12%)

(0.13%)

(0.01%)

nm

(0.07%)

nm

nm

Average interest earning assets (£bn) (1)

179.8

23.3

164.6

31.5

39.9

26.4

nm

497.4

Bank net interest margin (1)

2.18%

2.14%

1.70%

1.15%

na

1.48%

nm

1.67%

nm = not meaningful, na = not applicable.

 

Notes:

(1)

Refer to Non-IFRS financial measures Appendix for details of basis of preparation and reconciliation of non-IFRS financial measures and performance metrics where relevant.

(2)

Third party customer asset rate is calculated as annualised interest receivable on third-party loans to customers as a percentage of third-party loans to customers only. Third party customer funding rate reflects interest payable or receivable on third-party customer deposits, including interest bearing and non-interest bearing customer deposits. This excludes intragroup items, loans to banks and liquid asset portfolios. Intragroup items, bank deposits, debt securities in issue and subordinated liabilities are excluded for customer funding rate calculation. Comparatives have been restated. Net interest margin is calculated as net interest income as a percentage of the average interest-earning assets without these exclusions.

 

 

 

Risk and capital management

 

Page

Credit risk

 

     Economic loss drivers

20

     UK economic uncertainty

22

     Measurement uncertainty and ECL sensitivity analysis

 

26

     Measurement uncertainty and ECL adequacy

 

28

Credit risk - Banking activities

 

     Segment analysis

30

     Sector analysis

35

     Wholesale forbearance

41

     Personal portfolio

43

     Commercial real estate

46

     Flow statements

48

     Stage 2 decomposition by a significant increase in credit risk trigger

 

57

     Asset quality

59

Credit risk - Trading activities

63

Capital, liquidity and funding risk

66

Market risk

 

     Non-traded

76

     Traded

80

Other risks

81

 

Certain disclosures in the Risk and capital management section are within the scope of EY's review report and are marked accordingly by a bracket in the right-hand margin.

 

 

 

 

Risk and capital management

Credit risk

Economic loss drivers

Introduction

The portfolio segmentation and selection of economic loss drivers for IFRS 9 follow closely the approach used in stress testing. To enable robust modelling the forecasting models for each portfolio segment (defined by product or asset class and where relevant, industry sector and region) are based on a selected, small number of economic factors, (typically three to four) that best explain the temporal variations in portfolio loss rates. The process to select economic loss drivers involves empirical analysis and expert judgement.

 

The most material economic loss drivers are shown in the table below.

 

Portfolio

Economic loss drivers

UK retail mortgages

UK unemployment rate, sterling swap rate, UK house price index, UK household debt to income

UK retail unsecured

UK unemployment rate, sterling swap rate, UK household debt to income

UK large corporates

World GDP, UK unemployment rate, sterling swap rate, stock price index

UK commercial

UK GDP, UK unemployment rate, sterling swap rate

UK commercial real estate

UK GDP, UK property price indices, sterling swap rate

RoI retail mortgages

RoI unemployment rate, European Central Bank base rate, RoI house price index

 

Note:

(1)   This is not an exhaustive list of economic loss drivers but shows the most material drivers for the most material models/portfolios.

 

Economic scenarios

There was improvement in the economic outlook for the UK since 31 December 2020, which was reflected in a more optimistic base case scenario as at 30 June 2021. The main drivers of the improvement were as follows:

·    Rapid roll-out of the COVID-19 vaccination in the UK and in other developed countries, leading to relaxation of restrictions.

·    The success of various government support measures in containing the fallout from lockdown.

·    Faster than expected economic recovery, with GDP having made material gains since the lifting of restrictions, and labour and housing markets in particular showing continued signs of resiliency.

 

The range of anticipated future economic conditions was defined by a set of four internally developed scenarios and their respective probabilities. In addition to the base case, they comprised upside, downside and extreme downside scenarios. The scenarios primarily reflect a range of outcomes for the path of COVID-19 as well as recovery, and the associated effects on labour and asset markets.

 

The four scenarios were deemed appropriate in capturing the uncertainty in economic forecasts and the non-linearity in outcomes under different scenarios. The scenarios were developed to provide sufficient coverage across potential changes in unemployment, asset price and the degree of permanent damage to the economy, around which there are pronounced levels of uncertainty at this stage.

 

The tables below provide details of the key economic parameters under the four scenarios.

 

The main macroeconomic variables for each of the four scenarios used for expected credit loss (ECL) modelling are set out in the table below. The compound annual growth rate (CAGR) for GDP is shown. It also shows the five-year average for unemployment and the Bank of England base rate. The House Price Index and commercial real estate figures show the total change in each asset over five years.

 

Main macroeconomic variables

30 June 2021

 

31 December 2020

 

 

 

 

Extreme

 

 

 

 

Extreme

 

Upside

Base case

Downside

downside

 

Upside

Base case

Downside

downside

Five-year summary

%

%

%

%

 

%

%

%

%

UK

 

 

 

 

 

 

 

 

 

GDP - CAGR

3.9

3.5

2.9

2.5

 

3.6

3.1

2.8

1.3

Unemployment - average

4.1

4.6

5.8

8.1

 

4.4

5.7

7.1

9.7

House price index - total change

23.4

14.2

4.9

(0.8)

 

12.5

7.6

4.4

(19.0)

Bank of England base rate - average

0.9

0.4

-

(0.5)

 

0.2

-

(0.1)

(0.5)

Commercial real estate price - total change

13.6

4.7

0.1

(8.7)

 

4.3

0.7

(12.0)

(31.5)

 

 

 

 

 

 

 

 

 

 

Republic of Ireland

 

 

 

 

 

 

 

 

 

GDP - CAGR

3.8

3.2

2.5

1.8

 

4.2

3.5

3.0

1.6

Unemployment - average

5.1

6.8

9.1

10.9

 

5.6

7.5

9.3

11.2

House price index - total change

25.4

18.0

11.3

2.6

 

21.0

13.3

6.8

(7.0)

European Central Bank base rate - average

0.2

0.1

-

-

 

0.1

-

-

-

 

 

 

 

 

 

 

 

 

 

World GDP - CAGR

3.8

3.5

2.7

1.8

 

3.5

3.4

2.9

2.8

 

 

 

 

 

 

 

 

 

 

Probability weight

35.0

40.0

20.0

5.0

 

20.0

40.0

30.0

10.0

 

Notes:

(1)    The five year period starts at Q1 2021 for 30 June 2021 and Q3 2020 for 31 December 2020.

(2)    The Republic of Ireland unemployment rate in table above and following tables corresponds to the mid-point of the Irish Central Statistics Office lower and upper bound unemployment rate measures.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and capital management

Credit risk continued

Annual figures

 

GDP - annual growth

 

 

 

 

 

 

 

Base

 

Extreme

 

 

 

Base

 

Extreme

 

Upside

case

Downside

downside

 

 

Upside

case

Downside

downside

UK

%

%

%

%

 

Republic of Ireland

%

%

%

%

2021

10.1

7.3

2.7

0.1

 

2021

9.1

4.8

1.8

(0.3)

2022

5.4

5.8

4.3

-

 

2022

5.0

4.9

2.2

(3.7)

2023

1.6

1.6

4.4

7.7

 

2023

3.0

3.6

5.4

7.5

2024

1.6

1.6

2.2

3.7

 

2024

2.6

3.0

3.2

5.2

2025

1.6

1.6

1.5

1.7

 

2025

2.7

2.9

2.8

3.1

 

 

 

 

 

 

 

 

 

 

 

Unemployment rate - annual average

 

 

 

 

 

 

 

 

 

 

Base

 

Extreme

 

 

 

Base

 

Extreme

 

Upside

case

Downside

downside

 

 

Upside

case

Downside

downside

UK

%

%

%

%

 

Republic of Ireland

%

%

%

%

2021

4.7

5.3

5.4

5.9

 

2021

9.0

11.7

14.2

14.9

2022

4.3

4.8

7.0

11.8

 

2022

5.8

7.5

12.7

13.9

2023

4.0

4.5

6.5

10.4

 

2023

4.7

6.1

7.6

12.4

2024

3.8

4.5

5.4

7.1

 

2024

4.4

5.7

7.0

9.0

2025

3.8

4.3

4.8

5.2

 

2025

4.2

5.4

6.3

6.6

 

 

 

 

 

 

 

 

 

 

 

House price index - four quarter growth

 

 

 

 

 

 

Base

 

Extreme

 

 

 

Base

 

Extreme

 

Upside

case

Downside

downside

 

 

Upside

case

Downside

downside

UK

%

%

%

%

 

Republic of Ireland

%

%

%

%

2021

8.0

2.0

(2.4)

(5.4)

 

2021

10.9

3.6

(4.7)

(3.5)

2022

1.7

0.5

(3.0)

(27.0)

 

2022

4.9

3.6

1.3

(21.4)

2023

2.8

1.9

1.3

12.2

 

2023

2.4

3.3

4.0

10.3

2024

4.8

4.8

4.8

19.5

 

2024

2.8

3.5

5.8

17.6

2025

4.0

4.0

4.0

6.2

 

2025

3.2

3.4

5.3

4.7

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate price - four quarter growth

 

 

 

 

 

Base

 

Extreme

 

 

 

 

 

 

 

Upside

case

Downside

downside

 

 

 

 

 

 

UK

%

%

%

%

 

 

 

 

 

 

2021

7.0

(1.4)

(8.4)

(13.4)

 

 

 

 

 

 

2022

2.1

2.0

(1.3)

(18.2)

 

 

 

 

 

 

2023

1.7

1.7

5.8

15.7

 

 

 

 

 

 

2024

1.3

1.3

2.3

5.4

 

 

 

 

 

 

2025

1.2

1.2

2.3

5.1

 

 

 

 

 

 

 

 

 

Worst points

30 June 2021

 

31 December 2020

 

 

 

 

Extreme

 

 

 

 

Extreme

 

Upside

Base case

Downside

downside

 

Upside

Base case

Downside

downside

UK

%

%

%

%

 

%

%

%

%

GDP

-

-

-

(10.2)

 

-

(1.8)

(5.1)

(10.4)

Unemployment rate (peak)

5.0

5.5

7.0

11.9

 

5.9

7.0

9.4

13.9

House price index

-

-

(6.1)

(33.1)

 

-

(3.6)

(11.2)

(32.0)

Commercial real estate price

-

(2.1)

(14.1)

(33.1)

 

(3.4)

(10.1)

(28.9)

(40.4)

 

 

 

 

 

 

 

 

 

 

Republic of Ireland

 

 

 

 

 

 

 

 

 

GDP

-

-

(5.3)

(13.3)

 

(0.6)

(3.0)

(5.5)

(13.8)

Unemployment rate (peak)

15.0

15.0

15.0

17.2

 

16.5

16.5

16.5

18.1

House price index

-

-

(10.1)

(26.5)

 

-

(4.2)

(13.3)

(27.0)

 

Note:

(1)    For the unemployment rate, the figures show the peak levels between 2021 and 2026 for 30 June 2021, and between 2020 and 2025 for 31 December 2020. For the other parameters, the figures show falls relative to the starting periods mentioned under the five-year summary table above.

 

 

 

 

 

 

 

Risk and capital management

Credit risk continued

Probability weightings of scenarios

NatWest Group's approach to IFRS 9 multiple economic scenarios (MES) involves selecting a suitable set of discrete scenarios to characterise the distribution of risks in the economic outlook and assigning appropriate probability weights. The scale of the economic impact of COVID-19 and the range of recovery paths necessitates a change of approach to assigning probability weights from that used in recent updates. Prior to 2020, GDP paths for NatWest Group's scenarios were compared against a set of 1,000 model runs, following which a percentile in the distribution was established that most closely corresponded to the scenario.

 

Instead, NatWest Group has subjectively applied probability weights, reflecting expert views within NatWest Group. The probability weight assignment was judged to present good coverage to the central scenarios and the potential for a robust recovery on the upside and exceptionally challenging outcomes on the downside. A 35% weighting was applied to the upside scenario, a 40% weighting applied to the base case scenario, a 20% weighting applied to the downside scenario and a 5% weighting applied to the extreme downside scenario. NatWest Group assessed the downside risk posed by COVID-19 to be diminishing over the course of 2021, with the vaccination roll-out and positive economic data being observed since the gradual relaxing of lockdown restrictions. NatWest Group therefore judged it was appropriate to apply a higher probability to upside-biased scenarios than at December 2020.

 

Use of the scenarios in Personal lending

Personal lending follows a discrete scenario approach. The probability of default (PD) and loss given default (LGD) values for each discrete scenario are calculated using product specific econometric models. Each account has a PD and LGD calculated as probability weighted averages across the suite of economic scenarios.

 

Use of the scenarios in Wholesale lending

The Wholesale lending ECL methodology is based on the concept of credit cycle indices (CCIs). The CCIs represent, similar to the exogenous component in Personal, all relevant economic loss drivers for a region/industry segment aggregated into a single index value that describes the loss rate conditions in the respective segment relative to its long-run average. A CCI value of zero corresponds to loss rates at long-run average levels, a positive CCI value corresponds to loss rates below long-run average levels and a negative CCI value corresponds to loss rates above long-run average levels.

 

The four economic scenarios are translated into forward-looking projections of CCIs using a set of econometric models. Subsequently the CCI projections for the individual scenarios are averaged into a single central CCI projection according to the given scenario probabilities. The central CCI projection is then overlaid with an additional mean reversion assumption, i.e. that after one to two years into the forecast horizon the CCIs gradually revert to their long-run average of zero.

 

Finally, ECL is calculated using a Monte Carlo approach by averaging PD and LGD values arising from many CCI paths simulated around the central CCI projection.

 

The rationale for the Wholesale approach is the long-standing observation that loss rates in Wholesale portfolios tend to follow regular cycles. This allows NatWest Group to enrich the range and depth of future economic conditions embedded in the final ECL beyond what would be obtained from using the discrete macro-economic scenarios alone.

 

Business banking, while part of the Wholesale segment, for reporting purposes, utilises the Personal lending rather than the Wholesale lending methodology.

 

UK economic uncertainty

Treatment of COVID-19 relief mechanisms

Use of COVID-19 relief mechanisms (for example, payment holidays, Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS)) does not automatically merit identification of significant increase in credit risk (SICR) and trigger a Stage 2 classification in isolation. However, a subset of Personal customers who had accessed payment holiday support, and where their risk profile has been identified as relatively high risk continue to be collectively migrated to Stage 2 (if not already captured by other SICR criteria).

 

For Wholesale customers, NatWest Group continues to provide support, where appropriate, to existing customers. Those who are deemed either (a) to require a prolonged timescale to return to within NatWest Group's risk appetite, (b) not to have been viable pre-COVID-19, or (c) not to be able to sustain their debt once COVID-19 is over, will trigger a SICR and, if concessions are sought, be categorised as forborne, in line with regulatory guidance. Payment holiday extensions beyond an aggregate of 12 months in an 18 month period to cover continuing COVID-19 business interruption are categorised as forbearance, including for customers where no other SICR triggers are present.

 

 

 

 

Risk and capital management

Credit risk continued

In February 2021, the British Business Bank announced details of Pay As You Grow (PAYG) options for borrowers of BBLS. The scheme options include the extension of lending terms, periods of reduced repayments and six month payment holidays. PAYG options are a feature of BBLS rather than a concession granted by NatWest Group. It is therefore not automatically considered significant credit deterioration and a Stage 2 trigger. NatWest Group relies on both customer attestations and existing credit monitoring procedures to identify significant financial difficulty. Should signs of financial stress be identified, a review is performed. If credit deterioration is confirmed, existing problem debt management journeys are followed and forbearance (if a concession is granted) is marked in line with existing processes. This will result in Stage 2 transfer.

 

Model monitoring and enhancement

The abrupt and prolonged interruption of a wide range of economic activities due to COVID-19 and the subsequent government interventions to support businesses and individuals, has resulted in patterns in the data of key economic loss drivers and loss outcomes, that are markedly different from those that NatWest Group's models have been built on. To account for these structural changes, model adjustments have been applied and model changes have been implemented.

 

All in-model adjustments described have been applied by correcting the PD and LGD estimates within the core ECL calculation process and therefore consistently and systematically inform SICR identification and ECL measurement.

 

Government support

Most notably as a result of various government support measures, model-projected default rates in Wholesale and Personal have been adjusted by introducing lags between 6 to 12 months. These lags are based partly on objective empirical data (i.e. the absence of increases in realised default rates by the reporting date) and partly judgmental, based on remaining government support measures and their expected effectiveness.

 

Extreme GDP movements - Wholesale only

Due to the specific nature of COVID-19, GDP year-on-year movements in both directions are extremely sharp, many multiples of their respective extremes observed previously.

 

This creates a risk of overstretched, invalid extrapolations in statistical models. Therefore, all Wholesale econometric models were updated to make them robust against extreme GDP movements by capping projected CCI values at levels corresponding to three times the default rates observed at the peak of the global financial crisis and using quarterly averages rather than spot values for CCI projections.

 

 

Scenario sensitivity - Personal only

For the Personal lending portfolio, the forward-looking components of the IFRS 9 PD models were modified, leveraging existing econometric models used in stress testing to ensure that PDs appropriately reflect the forecasts for unemployment and house prices in particular.

 

Additionally, post model ECL adjustments were made in Personal to ensure that the ECL was adjusted for known model over and underpredictions pre-dating COVID-19, pending the systematic recalibration of the underlying models.

 

 

 

     

 

 

 

Risk and capital management

Credit risk continued

Governance and post model adjustments

The IFRS 9 PD, exposure at default and LGD models are subject to NatWest Group's model risk policy that stipulates periodic model monitoring, periodic re-validation and defines approval procedures and authorities according to model materiality. Various post model adjustments (PMAs) were applied where management judged they were necessary to ensure an adequate level of overall ECL provision. All PMAs were subject to formal approval through provisioning governance, and were categorised as follows:

·    Deferred model calibrations - ECL adjustments where PD model monitoring indicated that actual defaults were below estimated levels but where it was judged that an implied ECL release was not supportable, as these were being judged to have been distorted by government support schemes. As a consequence, any potential ECL release was deferred and retained on the balance sheet.

·    Economic uncertainty - ECL adjustments primarily arising from uncertainties associated with MES and credit outcomes as a result of the effect of COVID-19 and the consequences of government interventions. In both cases, management judged that additional ECL was required until further credit performance data became available on the behavioural and loss consequences of COVID-19.

·    Other adjustments - ECL adjustments where it was judged that the modelled ECL required to be amended.

 

PMAs will remain a key focus area of NatWest Group's ongoing ECL adequacy assessment process. A holistic framework has been established including reviewing a range of economic data, external benchmark information and portfolio performance trends, particularly with more observable outcomes from the unwinding of COVID-19 support mechanisms during the remainder of 2021.

 

ECL post model adjustments

Retail 

Commercial

Ulster

 

 

 

Banking

Banking

Bank RoI

Other

Total

30 June 2021

£m

£m

£m

£m

£m

Deferred model calibrations

103

51

(2)

-

152

Economic uncertainty

197

493

114

30

834

Other adjustments

22

19

118

4

163

 

322

563

230

34

1,149

 

 

 

 

 

 

31 December 2020

 

 

 

 

 

Deferred model calibrations

34

13

2

-

49

Economic uncertainty

158

526

176

18

878

Other adjustments

20

19

26

3

68

 

212

558

204

21

995

 

 

Retail Banking - The PMA for deferred model calibrations increased to £103 million from £34 million at 31 December

2020. This reflected management's judgement that the implied ECL decreases that continued to manifest themselves

through the standard PD model monitoring process during H1 2021, were not fully supportable as they were viewed as being temporarily distorted by government support mechanisms. Management retained this view on the basis that underlying portfolio performance had been influenced by the various customer support mechanisms and further outcome data is required.

 

The PMA for economic uncertainty increased to £197 million from £158 million at 31 December 2020. This was primarily due to the addition of a further £47 million of post model adjustments to hold back modelled LGD reductions on certain unsecured portfolio segments. The total included an ECL uplift of £55 million (a reduction from £63 million at 31 December 2020 due to PD improvements) on a subset of customers who had accessed payment holiday support where their risk profile was identified as relatively high risk. In addition, NatWest Group continues to retain a holdback of a modelled ECL release of £69 million, again due to the delayed default emergence reflective of the various customer support mechanisms (£15 million related to mortgages and £54 million related to unsecured lending). The H1 2021 overlay also included an ECL uplift on buy-to-let mortgages of £14 million (31 December 2020 - £15 million) to mitigate the risk of a disproportionate credit deterioration in challenging economic circumstances.

 

Other judgmental overlays included £15 million (31 December 2020 - £13 million) in respect of the repayment risk not captured in the models, that a proportion of customers on interest-only mortgages would not be able to repay the capital element of their loan at the end of term, as well as a £7 million overlay for an identified weakness in the mortgage PD model pending remediation.

 

 

 

 

 

 

 

Risk and capital management

Credit risk continued

Commercial Banking - The PMA for economic uncertainty included an overlay of £409 million (£450 million across NatWest Group's Wholesale portfolio) based on a judgemental thesis, reflecting concern that the unprecedented nature of COVID-19 could result in longer debt recovery periods and lower values than history suggested, and also the risk of idiosyncratic credit outcomes. It also included an overlay of £23 million in respect of elevated concerns around borrowers' ability to refinance facilities at the end of the contractual term. Additionally, it included overlays to address the effects of customer support mechanisms.

 

There was also a PMA for deferred model calibrations on the business banking portfolio reflecting management's judgement that the beneficial modelling impact, and implied ECL decrease, was not supportable again while portfolio performance was being under-pinned by the various support mechanisms. Other adjustments included an overlay of £19 million to mitigate the effect of operational timing delays in the identification and flagging of a SICR.

 

Ulster Bank RoI - The PMA for economic uncertainty included an adjustment of £49 million in the mortgage portfolio reflecting concerns that losses arising from defaults during 2021 would be higher than modelled. There was a PMA of £30 million in the Wholesale portfolio, reflecting concern that the unprecedented nature of COVID-19 could result in longer debt recovery periods and lower recovery values than history suggested. It also included PMAs of £9 million in respect of high risk payment break mortgage customers and £23 million in the SME portfolio reflective of the elevated risk for this sector. The increase in other PMAs reflects the judgment that continuing actions on the phased withdrawal of Ulster Bank RoI from the Irish market will lead to higher/earlier crystallisation of losses.       

 

Government guarantees

In April 2021, the UK government launched the Recovery Loan Scheme, replacing previous support schemes which are now closed. Consistent with CBILS and the Coronavirus Large Business Interruption Loan Scheme (CLBILS), the government guarantee is 80%. NatWest Group recognises lower LGDs for these lending products as a result, with 0% applied to the government-guaranteed part of the exposure. NatWest Group does not directly adjust the measurement of PD due to the government guarantee and continues to move exposures to Stage 2 and Stage 3 where a significant deterioration in credit risk or a default is identified.

 

 

Wholesale support schemes

The table below shows the uptake of BBLS, CBILS and CLBILS by Wholesale customers, by sector, which ended for new applications on 31 March 2021.

 

BBLS

 

CBILS

 

CLBILS

 

Approved

Drawdown 

% of BBLS to

 

Approved

Drawdown 

% of CBILS to

 

Approved

Drawdown 

% of CLBILS to

30 June 2021

volume

amount (£m)

sector loans

 

volume

amount (£m)

sector loans

 

volume

amount (£m)

sector loans

Wholesale lending by sector

 

 

 

 

 

 

 

 

 

 

 

  Airlines and aerospace

260

6

0.35%

 

18

9

0.53%

 

4

16

0.93%

  Automotive

12,839

409

6.78%

 

578

143

2.37%

 

26

44

0.73%

  Education

2,050

52

3.36%

 

121

76

4.91%

 

10

32

2.07%

  Health

10,248

302

5.46%

 

630

101

1.82%

 

3

19

0.34%

  Land transport and logistics

8,996

255

5.35%

 

399

99

2.08%

 

1

5

0.10%

  Leisure

32,721

982

10.74%

 

2,182

568

6.21%

 

39

228

2.49%

  Oil and gas

329

9

0.61%

 

15

7

0.47%

 

-

-

-

  Retail

32,652

1,060

12.29%

 

1,655

399

4.63%

 

26

115

1.33%

  Property

71,422

1,993

5.55%

 

2,491

676

1.88%

 

37

81

0.23%

  Other (including Business 

 

 

 

 

 

 

 

 

 

 

 

    Banking)

127,787

3,181

3.49%

 

8,918

1,844

2.02%

 

84

328

0.36%

Total

299,304

8,249

4.97%

 

17,007

3,922

2.36%

 

230

868

0.52%

 

Notes:

(1)    The table contains some cases which as at 30 June 2021 were approved but not yet drawn down. Approved limits as at 30 June 2021 were as follows: BBLS £9.2 billion (90% drawn); CBILS - £4.2 billion (93% drawn); and CLBILS - £1.3 billion (66% drawn).

(2)    The Recovery Loan Scheme, a successor to the now closed BBLS, CBILS, and CLBILS was launched on 6 April 2021. Uptake of the new scheme was minimal with 192 customers having drawn down £13.7 million as at 2 July 2021.

 

 

 

Risk and capital management

Credit risk continued

Measurement uncertainty and ECL sensitivity analysis

The recognition and measurement of ECL is complex and involves the use of significant judgement and estimation, particularly in times of economic volatility and uncertainty. This includes the formulation and incorporation of multiple forward-looking economic conditions into ECL to meet the measurement objective of IFRS 9. The ECL provision is sensitive to the model inputs and economic assumptions underlying the estimate.

 

The focus of the simulations is on ECL provisioning requirements on performing exposures in Stage 1 and Stage 2. The simulations are run on a stand-alone basis and are independent of each other; the potential ECL impacts reflect the simulated impact as at 30 June 2021. Scenario impacts on a SICR should be considered when evaluating the ECL movements of Stage 1 and Stage 2. In all scenarios the total exposure was the same but exposure by stage varied in each scenario.

 

Stage 3 provisions are not subject to the same level of measurement uncertainty - default is an observed event as at the balance sheet date. Stage 3 provisions therefore have not been considered in this analysis.

 

The impact arising from the upside, downside and extreme downside scenarios has been simulated. These scenarios are three of the four discrete scenarios used in the methodology for Personal MES as described in the Economic loss drivers section. In the simulations, NatWest Group has assumed that the economic macro variables associated with these scenarios replace the existing base case economic assumptions, giving them a combined total 100% probability weighting and therefore serving as a single economic scenario.

 

These scenarios have been applied to all modelled portfolios in the analysis below, with the simulation impacting both PDs and LGDs. Modelled PMAs present in the underlying ECL estimates are also sensitised in line with the modelled ECL movements, but those that were judgmental in nature, primarily those for economic uncertainty, were not (refer to the Governance and post model adjustments section). As expected, the scenarios create differing impacts on ECL by portfolio and the impacts are deemed reasonable. In this simulation, it is assumed that existing modelled relationships between key economic variables and loss drivers hold, but in practice other factors would also have an impact, for example, potential customer behaviour changes and policy changes by lenders that might impact on the wider availability of credit.

 

NatWest Group's core criterion to identify a SICR is founded on PD deterioration, as discussed above. Under the simulations, PDs change and result in exposures moving between Stage 1 and Stage 2 contributing to the ECL impact.

 

 

 

Risk and capital management

Credit risk continued

 

 

 

 

 

Extreme

30 June 2021

Actual

Base case

Upside

Downside

downside

Stage 1 modelled exposure (£m)

 

 

 

 

 

Retail Banking

      152,428 

      152,412 

      152,510 

      152,128 

      141,758 

Ulster Bank RoI Personal & Business Banking

        10,989 

        10,989 

        11,022 

        10,556 

        10,373 

Wholesale

      113,315 

      115,403 

      116,189 

      113,405 

        98,561 

 

      276,732 

      278,804 

      279,721 

      276,089 

      250,692 

Stage 1 modelled ECL (£m)

 

 

 

 

 

Retail Banking

110

112

112

113

113

Ulster Bank RoI Personal & Business Banking

25

24

22

27

27

Wholesale

262

269

269

273

287

 

397

405

403

413

427

Stage 1 coverage (%)

 

 

 

 

 

Retail Banking

0.07%

0.07%

0.07%

0.07%

0.08%

Ulster Bank RoI Personal & Business Banking

0.22%

0.22%

0.20%

0.26%

0.26%

Wholesale

0.23%

0.23%

0.23%

0.24%

0.29%

 

0.14%

0.15%

0.14%

0.15%

0.17%

Stage 2 modelled exposure (£m)

 

 

 

 

 

Retail Banking

        19,435 

        19,451 

        19,353 

        19,735 

        30,105 

Ulster Bank RoI Personal & Business Banking

          1,387 

          1,387 

          1,354 

          1,820 

          2,003 

Wholesale

        33,405 

        31,317 

        30,531 

        33,315 

        48,159 

 

        54,227 

        52,155 

        51,238 

        54,870 

        80,267 

Stage 2 modelled ECL (£m)

 

 

 

 

 

Retail Banking

             710 

             722 

             671 

             799 

          1,042 

Ulster Bank RoI Personal & Business Banking

               76 

               76 

               71 

               93 

             107 

Wholesale

          1,479 

          1,368 

          1,316 

          1,485 

          2,347 

 

          2,265 

          2,166 

          2,058 

          2,377 

          3,496 

Stage 2 coverage (%)

 

 

 

 

 

Retail Banking

3.65%

3.71%

3.46%

4.05%

3.46%

Ulster Bank RoI Personal & Business Banking

5.51%

5.49%

5.22%

5.10%

5.32%

Wholesale

4.43%

4.37%

4.31%

4.46%

4.87%

 

4.18%

4.15%

4.01%

4.33%

4.35%

Stage 1 and Stage 2 modelled exposure (£m)

 

 

 

 

 

Retail Banking

      171,863 

      171,863 

      171,863 

      171,863 

      171,863 

Ulster Bank RoI Personal & Business Banking

        12,376 

        12,376 

        12,376 

        12,376 

        12,376 

Wholesale

      146,720 

      146,720 

      146,720 

      146,720 

      146,720 

 

      330,959 

      330,959 

      330,959 

      330,959 

      330,959 

Stage 1 and Stage 2 modelled ECL (£m)

 

 

 

 

 

Retail Banking

             820 

             834 

             783 

             912 

          1,155 

Ulster Bank RoI Personal & Business Banking

             101 

             100 

               93 

             120 

             134 

Wholesale

          1,741 

          1,637 

          1,584 

          1,758 

          2,635 

 

          2,662 

          2,571 

          2,460 

          2,790 

          3,924 

Stage 1 and Stage 2 coverage (%)

 

 

 

 

 

Retail Banking

0.48%

0.49%

0.46%

0.53%

0.67%

Ulster Bank RoI Personal & Business Banking

0.82%

0.81%

0.75%

0.97%

1.08%

Wholesale

1.19%

1.12%

1.08%

1.20%

1.80%

 

0.80%

0.78%

0.74%

0.84%

1.19%

Reconciliation to Stage 1 and Stage 2 ECL (£m)

 

 

 

 

 

ECL on modelled exposures

          2,662 

          2,571 

          2,461 

          2,790 

          3,923 

ECL on non-modelled exposures

               70 

               70 

               70 

               70 

               70 

 

 

 

 

 

 

Total Stage 1 and Stage 2 ECL

          2,732 

          2,641 

          2,530 

          2,860 

          3,994 

Variance - (lower)/higher to actual total Stage 1 and Stage 2 ECL

 

(91)

(202)

             128 

          1,262 

 

 

Notes:

(1)   Variations in future undrawn exposure values across the scenarios are modelled, however the exposure position reported is that used to calculate modelled ECL as at 30 June 2021 and therefore does not include variation in future undrawn exposure values.

(2)   Reflects ECL for all modelled exposure in scope for IFRS 9. The analysis excludes non-modelled portfolios and exposure relating to bonds and cash.

(3)   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 30 June 2021. The simulations change the composition of Stage 1 and Stage 2 exposure but total exposure is unchanged under each scenario as the loan population is static.

(4)   Refer to the Economic loss drivers section for details of economic scenarios.

(5)   Refer to the NatWest Group 2020 Annual Report and Accounts for 31 December 2020 comparatives.

 

 

 

 

 

 

Risk and capital management

Credit risk continued

Key points

·  During H1 2021, both the Stage 2 size and overall modelled ECL reduced as a result of the improved economic outlook and scenario weightings, together with stable portfolio performance. Judgemental ECL PMAs continued to reflect residual economic uncertainty with the expectation of increased defaults later in 2021 and beyond, now representing 23% of total ECL (31 December 2020 - 18%). These combined factors, in conjunction with a less severe suite of economics in the H1 2021 extreme downside scenario, contributed to a smaller range of ECL sensitivities at H1 2021 compared to the 2020 year end.

·  If the economics were as negative as observed in the extreme downside, total Stage 1 and Stage 2 ECL was simulated to increase by £1.3 billion (approximately 45%). 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.

·  The small ECL uplift in the downside scenario, particularly in Wholesale, reflected the net effect of the MES weightings towards the downside for ECL, observable when comparing to the ECL scenario with 100% weight on the base case.

·  For the downside scenario, the ECL result was not materially different to actual ECL due to mean reversion of default rates and the recovery trajectory in the downside. Compared to the base case, Wholesale Stage 1 and Stage 2 ECL was over 7% higher in the downside scenario. In Retail Banking, similar scenario shape dynamics led to minimal difference between the base case sensitivity and actual ECL.

·  In the upside scenario, the simulated ECL reduction (£0.2 billion, 8% of actual) was lower than the uplift observed in the extreme downside, again reflecting the expectation that the non-linearity of losses was skewed to the downside. In Retail Banking this is partly due to the effect of PD persistence, where Stage 2 will not be affected immediately by PD reductions.

 

 

Measurement uncertainty and ECL adequacy

The improvement in the economic outlook and scenarios used in the IFRS 9 MES framework at H1 2021 resulted in a release of modelled ECL. Given continued uncertainty remains due to COVID-19 despite the improved economic outlook, NatWest Group utilised a framework of quantitative and qualitative measures to support the directional change and levels of ECL coverage, including economic data, credit performance insights and problem debt trends. This was particularly important for consideration of post model adjustments.

 

As government support mechanisms continue to conclude during 2021, NatWest Group anticipates further credit deterioration in the portfolios. However, the income statement effect of this will be mitigated by the forward-looking provisions retained on the balance sheet as at 30 June 2021.

 

There are a number of key factors that could drive further downside to impairments, through deteriorating economic and credit metrics and increased stage migration as credit risk increases for more customers. A key factor would be a more adverse deterioration in GDP and unemployment in the economies in which NatWest Group operates, but also, among others:

·  The ongoing trajectory of lockdown restriction relaxation within the UK and the Republic of Ireland, and any future repeated lockdown requirements.

·  The progress of the COVID-19 vaccination roll-out and its effectiveness against new variants.

·  The efficacy of the various government support initiatives in terms of their ability to defray customer defaults is yet to be proven, notably over an extended period.

·  Higher unemployment if companies fail to retain jobs after the UK furlough scheme concludes in Q3 2021.

·  The level of revenues lost by corporate clients and pace of recovery of those revenues may affect NatWest Group's clients' ability to service their borrowing, especially in those sectors most exposed to the effects of COVID-19.

 

Movement in ECL provision

The table below shows the main ECL provision movements during H1 2021.

 

 

ECL provision

 

£m

At 1 January 2021

6,186

Changes in economic forecasts

(363)

Changes in risk metrics and exposure: Stage 1 and Stage 2

(483)

Changes in risk metrics and exposure: Stage 3

43

Judgemental changes: changes in post model adjustments for Stage 1, Stage 2 and Stage 3

155

Write-offs and other

(613)

At 30 June 2021

4,925

 

 

Risk and capital management

Credit risk - Banking activities

Introduction

This section details the credit risk profile of NatWest Group's banking activities.

 

Financial instruments within the scope of the IFRS 9 ECL framework

Refer to Note 8 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.

 

Financial assets

 

30 June 2021

 

31 December 2020

 

Gross

ECL

Net

 

Gross

ECL

Net

 

£bn

£bn

£bn

 

£bn

£bn

£bn

Balance sheet total gross amortised cost and FVOCI

586.1

 

 

 

555.0

 

 

In scope of IFRS 9 ECL framework

575.9

 

 

 

548.8

 

 

% in scope

98%

 

 

 

99%

 

 

Loans to customers - in scope - amortised cost

367.0

4.7

362.3

 

365.5

6.0

359.5

Loans to customers - in scope - FVOCI

0.7

-

0.7

 

-

-

-

Loans to banks - in scope - amortised cost

7.9

-

7.9

 

6.8

-

6.8

Total loans - in scope

375.6

4.7

370.9

 

372.3

6.0

366.3

  Stage 1

316.7

0.4

316.3

 

287.1

0.5

286.6

  Stage 2

53.2

2.2

51.0

 

78.9

3.0

75.9

  Stage 3

5.7

2.1

3.6

 

6.3

2.5

3.8

Other financial assets - in scope - amortised cost

159.2

-

159.2

 

132.1

-

132.1

Other financial assets - in scope - FVOCI

41.1

-

41.1

 

44.4

-

44.4

Total other financial assets - in scope

200.3

-

200.3

 

176.5

-

176.5

  Stage 1

199.5

-

199.5

 

175.5

-

175.5

  Stage 2

0.8

-

0.8

 

1.0

-

1.0

Out of scope of IFRS 9 ECL framework

10.2

na

10.2

 

6.2

na

6.2

Loans to customers - out of scope - amortised cost

0.4

na

0.4

 

1.0

na

1.0

Loans to banks - out of scope - amortised cost

0.3

na

0.3

 

0.1

na

0.1

Other financial assets - out of scope - amortised cost

9.2

na

9.2

 

4.6

na

4.6

Other financial assets - out of scope - FVOCI

0.3

na

0.3

 

0.5

na

0.5

na = not applicable

 

The assets outside the IFRS 9 ECL framework were as follows:

Settlement balances, items in the course of collection, cash balances and other non-credit risk assets of £8.5 billion (31 December 2020 - £4.1 billion). These were assessed as having no ECL unless there was evidence that they were credit impaired.

Equity shares of £0.3 billion (31 December 2020 - £0.3 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 - £1.0 billion (31 December 2020 - £1.4 billion).

NatWest Group originated securitisations, where ECL was captured on the underlying loans of £0.4 billion (31 December 2020 - £0.4 billion).

 

 

Contingent liabilities and commitments

In addition to contingent liabilities and commitments disclosed in Note 11, reputationally-committed limits, are also included in the scope of the IFRS 9 ECL framework. These are offset by nil (31 December 2020 - £0.2 billion) out of scope balances primarily related to facilities that, if drawn, would not be classified as amortised cost or FVOCI, or undrawn limits relating to financial assets exclusions. Total contingent liabilities (including financial guarantees) and commitments within IFRS 9 ECL scope of £127.6 billion (31 December 2020 - £133.6 billion) comprised Stage 1 £110.6 billion (31 December 2020 - £107.4 billion); Stage 2 £16.2 billion (31 December 2020 - £25.2 billion); and Stage 3 £0.8 billion (31 December 2020 - £1.0 billion).

 

The ECL relating to contingent liabilities is £0.2 billion (31 December 2020 - £0.2 billion). The total ECL in the remainder of the credit risk section of £4.9 billion includes ECL for both balance sheet exposure and contingent liabilities.

 

 

 

 

 

Risk and capital management

Credit risk - Banking activities continued

Segment analysis - portfolio summary

The table below shows gross loans and related credit impairment measures, within the scope of the IFRS 9 ECL framework.

 

 

 

 

International Banking & Markets

 

 

 

 

Retail

Private

Commercial

RBS

NatWest

Ulster

Central items

 

 

Banking

Banking

Banking

International

Markets

Bank RoI

& other

Total

30 June 2021

£m

£m

£m

£m

£m

£m

£m

£m

Loans - amortised cost and FVOCI

 

 

 

 

 

 

 

 

Stage 1

158,989

16,728

75,713

15,027

7,019

13,732

29,493

316,701

Stage 2

18,866

1,444

27,895

1,342

721

2,821

99

53,188

Stage 3

1,921

307

2,226

206

108

935

-

5,703

Of which: individual

-

307

1,202

206

98

38

-

1,851

Of which: collective

1,921

-

1,024

-

10

897

-

3,852

 

179,776

18,479

105,834

16,575

7,848

17,488

29,592

375,592

ECL provisions (1)

 

 

 

 

 

 

 

 

Stage 1

120

21

208

15

10

44

15

433

Stage 2

709

49

1,222

46

36

225

13

2,300

Stage 3

811

36

812

47

88

398

-

2,192

Of which: individual

-

36

386

47

79

12

-

560

Of which: collective

811

-

426

-

9

386

-

1,632

 

1,640

106

2,242

108

134

667

28

4,925

ECL provisions coverage (2,3)

 

 

 

 

 

 

 

 

Stage 1 (%)

0.08

0.13

0.27

0.10

0.14

0.32

0.05

0.14

Stage 2 (%)

3.76

3.39

4.38

3.43

4.99

7.98

13.13

4.32

Stage 3 (%)

42.22

11.73

36.48

22.82

81.48

42.57

-

38.44

 

0.91

0.57

2.12

0.65

1.71

3.81

0.09

1.31

 

 

 

 

 

 

 

 

 

Half year ended 30 June 2021

 

 

 

 

 

 

 

 

Impairment losses

 

 

 

 

 

 

 

 

ECL (release)/charge (4)

(57)

(27)

(568)

(29)

(16)

(11)

1

(707)

Stage 1

(195)

(27)

(405)

(23)

(8)

(43)

-

(701)

Stage 2

45

(4)

(141)

(4)

(5)

8

1

(100)

Stage 3

93

4

(22)

(2)

(3)

24

-

94

Of which: individual

-

4

(29)

(2)

1

1

-

(25)

Of which: collective

93

-

7

-

(4)

23

-

119

ECL loss rate - annualised

 

 

 

 

 

 

 

 

   (basis points) (3)

(6)

(29)

(107)

(35)

(41)

(13)

1

(38)

Amounts written-off

138

5

257

1

40

76

-

517

Of which: individual

-

5

210

1

40

-

-

256

Of which: collective

138

-

47

-

-

76

-

261

 

For the notes to this table refer to the following page.

 

 

 

 

Risk and capital management

Credit risk - Banking activities continued

Segment analysis - portfolio summary

 

 

 

 

 

International Banking & Markets

 

 

 

 

Retail

Private

Commercial

RBS

NatWest

Ulster

Central items

 

 

Banking

Banking

Banking

International

Markets

Bank RoI

& other

Total

31 December 2020

£m

£m

£m

£m

£m

£m

£m

£m

Loans - amortised cost and FVOCI

 

 

 

 

 

 

 

 

Stage 1

139,956

15,321

70,685

12,143

7,780

14,380

26,859

287,124

Stage 2

32,414

1,939

37,344

2,242

1,566

3,302

110

78,917

Stage 3

1,891

298

2,551

211

171

1,236

-

6,358

Of which: individual

-

298

1,578

211

162

43

-

2,292

Of which: collective

1,891

-

973

-

9

1,193

-

4,066

 

174,261

17,558

110,580

14,596

9,517

18,918

26,969

372,399

ECL provisions (1)

 

 

 

 

 

 

 

 

Stage 1

134

31

270

14

12

45

13

519

Stage 2

897

68

1,713

74

49

265

15

3,081

Stage 3

806

39

1,069

48

132

492

-

2,586

Of which: individual

-

39

607

48

124

13

-

831

Of which: collective

806

-

462

-

8

479

-

1,755

 

1,837

138

3,052

136

193

802

28

6,186

ECL provisions coverage (2,3)

 

 

 

 

 

 

 

 

Stage 1 (%)

0.10

0.20

0.38

0.12

0.15

0.31

0.05

0.18

Stage 2 (%)

2.77

3.51

4.59

3.30

3.13

8.03

13.64

3.90

Stage 3 (%)

42.62

13.09

41.91

22.75

77.19

39.81

-

40.67

 

1.05

0.79

2.76

0.93

2.03

4.24

0.10

1.66

 

 

 

 

 

 

 

 

 

Half year ended 30 June 2020

 

 

 

 

 

 

 

 

Impairment losses

 

 

 

 

 

 

 

 

ECL charge (4)

657

56

1,790

46

40

243

26

2,858

Stage 1

24

16

231

4

10

12

11

308

Stage 2

524

39

1,323

20

43

186

15

2,150

Stage 3

109

1

236

22

(13)

45

-

400

Of which: individual

-

1

114

22

(4)

(2)

-

131

Of which: collective

109

-

122

-

(9)

47

-

269

ECL loss rate - annualised

 

 

 

 

 

 

 

 

   (basis points) (3)

79

69

312

63

63

197

25

154

Amounts written-off

117

1

120

2

4

164

-

408

Of which: individual

-

1

34

2

4

 -   

-

41

Of which: collective

117

-

86

-

-

164

-

367

 

Notes:

(1)    Includes £6 million (31 December 2020 - £6 million) related to assets classified as FVOCI.

(2)    ECL provisions coverage is calculated as ECL provisions divided by loans - amortised cost and FVOCI.

(3)    ECL provisions coverage and ECL loss rates are calculated on third party loans and related ECL provisions and charge respectively. ECL loss rate is calculated as annualised third party ECL charge divided by loans - amortised cost and FVOCI. The half year ECL charge is annualised by multiplying by two.

(4)    Includes a £4 million charge (30 June 2020 - £5 million) related to other financial assets, of which nil (30 June 2020 - £4 million) related to assets classified as FVOCI; and £2 million (30 June 2020 - £8 million) related to contingent liabilities.

(5)    The table shows gross loans only and excludes amounts that are outside the scope of the ECL framework. Refer to page 29 for 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 £150.5 billion (31 December 2020 - £122.7 billion) and debt securities of £49.8 billion (31 December 2020 - £53.8 billion).

(6)    The stage allocation of the ECL charge was aligned to the stage transition approach that underpins the analysis in the Flow statement section.

 

Key points

ECL reduced significantly on Stage 1 and Stage 2 exposures, reflecting a more positive economic outlook, commensurate with reduced levels of uncertainty due to vaccination progress and economic rebound as lockdown eases.

The various customer support mechanisms which continue to be available mitigate against flows to default in the short-term. Hence, there was a limited effect on Stage 3 ECL requirements during H1 2021.

Reflecting the improved economic environment and resultant ECL releases across all key businesses, the annualised loss rate has reduced to negative 38bps.

 

 

 

 

 

 

Risk and capital management

Credit risk - Banking activities continued

Segment loans and impairment metrics

The table below shows gross loans and ECL provisions, by days past due, by segment and stage, within the scope of the ECL framework.

 

 

Gross loans

 

ECL provisions (2)

 

 

Stage 2 (1)

 

 

 

 

Stage 2 (1)

 

 

 

 

Not past

1-30

>30

 

 

 

 

 

Not past

1-30

>30

 

 

 

 

Stage 1

due

DPD

DPD

Total

Stage 3

Total

 

Stage 1

due

DPD

DPD

Total

Stage 3

Total

30 June 2021

£m

£m

£m

£m

£m

£m

£m

 

£m

£m

£m

£m

£m

£m

£m

Retail Banking

158,989

17,478

895

493

18,866

1,921

179,776

 

120

626

44

39

709

811

1,640

Private Banking

16,728

1,376

38

30

1,444

307

18,479

 

21

49

-

-

49

36

106

Personal

13,783

114

38

27

179

267

14,229

 

6

2

-

-

2

17

25

Wholesale

2,945

1,262

-

3

1,265

40

4,250

 

15

47

-

-

47

19

81

Commercial Banking

75,713

26,569

876

450

27,895

2,226

105,834

 

208

1,155

49

18

1,222

812

2,242

International Banking

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  & Markets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      RBS International

15,027

1,311

17

14

1,342

206

16,575

 

15

45

-

1

46

47

108

      Personal

2,686

19

14

7

40

68

2,794

 

2

1

-

1

2

12

16

      Wholesale

12,341

1,292

3

7

1,302

138

13,781

 

13

44

-

-

44

35

92

      NatWest Markets

7,019

709

-

12

721

108

7,848

 

10

36

-

-

36

88

134

Ulster Bank RoI

13,732

2,636

85

100

2,821

935

17,488

 

44

205

9

11

225

398

667

Personal 

10,798

1,166

78

85

1,329

773

12,900

 

24

59

6

8

73

301

398

Wholesale

2,934

1,470

7

15

1,492

162

4,588

 

20

146

3

3

152

97

269

Central items & other

29,493

99

-

-

99

-

29,592

 

15

13

-

-

13

-

28

Total loans

316,701

50,178

1,911

1,099

53,188

5,703

375,592

 

433

2,129

102

69

2,300

2,192

4,925

Of which:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personal

186,256

18,777

1,025

612

20,414

3,029

209,699

 

152

688

50

48

786

1,141

2,079

Wholesale

130,445

31,401

886

487

32,774

2,674

165,893

 

281

1,441

52

21

1,514

1,051

2,846

 

31 December 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail Banking

139,956

30,714

1,080

620

32,414

1,891

174,261

 

134

762

70

65

897

806

1,837

Private Banking

15,321

1,908

17

14

1,939

298

17,558

 

31

67

-

1

68

39

138

Personal

12,799

116

17

11

144

263

13,206

 

7

2

-

-

2

19

28

Wholesale

2,522

1,792

-

3

1,795

35

4,352

 

24

65

-

1

66

20

110

Commercial Banking

70,685

36,451

589

304

37,344

2,551

110,580

 

270

1,648

44

21

1,713

1,069

3,052

International Banking

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  & Markets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      RBS International

12,143

2,176

46

20

2,242

211

14,596

 

14

72

1

1

74

48

136

      Personal

2,676

18

17

14

49

70

2,795

 

3

1

-

-

1

11

15

      Wholesale

9,467

2,158

29

6

2,193

141

11,801

 

11

71

1

1

73

37

121

      NatWest Markets

7,780

1,457

-

109

1,566

171

9,517

 

12

49

-

-

49

132

193

Ulster Bank RoI

14,380

2,964

144

194

3,302

1,236

18,918

 

45

227

15

23

265

492

802

Personal 

11,117

1,500

115

130

1,745

1,064

13,926

 

27

74

9

13

96

392

515

Wholesale

3,263

1,464

29

64

1,557

172

4,992

 

18

153

6

10

169

100

287

Central items & other

26,859

110

-

-

110

-

26,969

 

13

15

-

-

15

-

28

Total loans

287,124

75,780

1,876

1,261

78,917

6,358

372,399

 

519

2,840

130

111

3,081

2,586

6,186

Of which:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personal

166,548

32,348

1,229

775

34,352

3,288

204,188

 

171

839

79

78

996

1,228

2,395

Wholesale

120,576

43,432

647

486

44,565

3,070

168,211

 

348

2,001

51

33

2,085

1,358

3,791

 

For the notes to this table refer to the following page.

 

 

 

 

 

 

 

 

Risk and capital management

Credit risk - Banking activities continued

Segment loans and impairment metrics

The table below shows ECL and ECL provisions coverage, by days past due, by segment and stage, within the scope of the ECL framework.

 

 

 

 

ECL provisions coverage

 

Half year ended 30 June 2021

 

 

Stage 2 (1,2)

 

 

 

ECL

 

 

Not past

 

 

 

 

 

 

Total

 

Amounts

 

Stage 1

due

1-30 DPD

>30 DPD

Total

Stage 3

Total

 

(release)/charge

Loss rate

written-off

30 June 2021

%

%

%

%

%

%

%

 

£m

basis points

£m

Retail Banking

0.08

3.58

4.92

7.91

3.76

42.22

0.91

 

(57)

(6)

138

Private Banking

0.13

3.56

-

-

3.39

11.73

0.57

 

(27)

(29)

5

Personal

0.04

1.75

-

-

1.12

6.37

0.18

 

(4)

(6)

(1)

Wholesale

0.51

3.72

-

-

3.72

47.50

1.91

 

(23)

(108)

6

Commercial Banking

0.27

4.35

5.59

4.00

4.38

36.48

2.12

 

(568)

(107)

257

International Banking

 

 

 

 

 

 

 

 

 

 

 

  & Markets

 

 

 

 

 

 

 

 

 

 

 

      RBS International

0.10

3.43

-

7.14

3.43

22.82

0.65

 

(29)

(35)

1

      Personal

0.07

5.26

-

14.29

5.00

17.65

0.57

 

-

-

-

      Wholesale

0.11

3.41

-

-

3.38

25.36

0.67

 

(29)

(42)

1

      NatWest Markets

0.14

5.08

-

-

4.99

81.48

1.71

 

(16)

(41)

40

Ulster Bank RoI

0.32

7.78

10.59

11.00

7.98

42.57

3.81

 

(11)

(13)

76

Personal 

0.22

5.06

7.69

9.41

5.49

38.94

3.09

 

(11)

(17)

71

Wholesale

0.68

9.93

42.86

20.00

10.19

59.88

5.86

 

-

-

5

Central items & other

0.05

13.13

-

-

13.13

-

0.09

 

1

1

-

Total loans

0.14

4.24

5.34

6.28

4.32

38.44

1.31

 

(707)

(38)

517

Of which:

 

 

 

 

 

 

 

 

 

 

 

Personal

0.08

3.66

4.88

7.84

3.85

37.67

0.99

 

(72)

(7)

208

Wholesale

0.22

4.59

5.87

4.31

4.62

39.30

1.72

 

(635)

(77)

309

 

 

ECL provisions coverage

 

Half year ended 30 June 2020

 

 

Stage 2 (1,2)

 

 

 

ECL

 

 

Not past

 

 

 

 

 

 

Total

 

Amounts

 

Stage 1

due

1-30 DPD

>30 DPD

Total

Stage 3

Total

 

charge/
(release)

Loss rate

written-off

31 December 2020

%

%

%

%

%

%

%

 

£m

basis points

£m

Retail Banking

0.10

2.48

6.48

10.48

2.77

42.62

1.05

 

657

79

117

Private Banking

0.20

3.51

-

7.14

3.51

13.09

0.79

 

56

69

1

Personal

0.05

1.72

-

-

1.39

7.22

0.21

 

3

5

-

Wholesale

0.95

3.63

-

33.33

3.68

57.14

2.53

 

53

273

1

Commercial Banking

0.38

4.52

7.47

6.91

4.59

41.91

2.76

 

1,790

312

120

International Banking

 

 

 

 

 

 

 

 

 

 

 

  & Markets

 

 

 

 

 

 

 

 

 

 

 

      RBS International

0.12

3.31

2.17

5.00

3.30

22.75

0.93

 

46

63

2

      Personal

0.11

5.56

-

-

2.04

15.71

0.54

 

(3)

(21)

2

      Wholesale

0.12

3.29

3.45

16.67

3.33

26.24

1.03

 

49

83

-

      NatWest Markets

0.15

3.36

-

-

3.13

77.19

2.03

 

40

63

4

Ulster Bank RoI

0.31

7.66

10.42

11.86

8.03

39.81

4.24

 

243

197

164

Personal

0.24

4.93

7.83

10.00

5.50

36.84

3.70

 

120

168

162

Wholesale

0.55

10.45

20.69

15.63

10.85

58.14

5.75

 

123

236

2

Central items & other