Annual Results
For the year ended 31 December 2021
natwestgroup.com
NatWest Group – Annual Results 2021
2
NatWest Group plc
2021 NatWest Group performance summary
Alison Rose, Chief Executive Officer, commented:
NatWest Group delivered a strong performance in 2021 as we returned to profitability, made progress against our strategy and
distributed more than £3.8 billion of capital to our shareholders, including £1.7 billion to the taxpayer.
We are acutely aware of the challenges that many people, families and businesses continue to face up and down the country and
are working alongside our customers to provide the support they need – whether that is managing their money better, saving for a
house or retirement or starting or growing a new business – as well as playing a leading role in the transition to net zero.
As our economy recovers and the trend towards digital services accelerates, we are investing to deliver long term value in the
bank and drive sustainable growth. We will do this by building closer and deeper relationships with our customers and by
supporting their evolving needs and expectations at every stage of their lives.
Resilient financial performance in a challenging environment
Full year attributable profit of £2,950 million and a return on tangible equity of 9.4%.
Income across the UK and RBSI retail and commercial businesses, excluding notable items, increased by 1.4% compared with
2020 principally reflecting balance sheet growth although this was offset by a 61.5% reduction in NatWest Markets income.
Q4 2021 Bank NIM(1) of 2.38% was 3 basis points higher than Q3 2021 reflecting higher yield curve and higher unsecured
balances partly offset by lower mortgage margins.
Other expenses, excluding operating lease depreciation and Ulster Bank RoI direct costs, were £256 million, or 4.0% lower than
2020, in line with our target for the year.
A net impairment release of £1,278 million, or 35 basis points of gross customer loans, principally reflects releases in non-
default portfolios and the low levels of realised losses we have seen across the year.
A final dividend of 7.5p is proposed and we intend to commence an ordinary share buy-back programme of up to £750 million
in the first half of the year, taking total distributions deducted from capital in the year to £3.8 billion.
Robust balance sheet with strong capital and liquidity levels
The CET1 ratio remains strong at 18.2%, reducing by 50 basis points in the quarter due to our proposed on market buybacks
and dividends. On 1 January 2022, the proforma CET1 ratio was 15.9% following regulatory changes.
The liquidity coverage ratio of 172% increased by 6 percentage points in the quarter.
Across the UK and RBSI retail and commercial businesses, net lending excluding UK Government support schemes increased
by £7.8 billion, or 2.6%, including £10.8 billion of mortgage growth, and increased by £0.8 billion in Q4 2021.
Customer deposits increased by £48.1 billion during 2021 to £479.8 billion.
(1)
Excludes NatWest Markets, Liquid Asset Buffer and Ulster Bank RoI.
NatWest Group – Annual Results 2021
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Our purpose in action
We champion potential, helping people, families, and businesses to thrive. By working to benefit our customers, colleagues, and
communities, we will deliver long-term value and drive sustainable returns to our shareholders. Some key achievements in 2021
include:
People and families
Over one million customers have now grown their savings with us by £100 or more for the first time, including 471,000 in 2021.
60% of our active current account customers exclusively bank with us using digital channels (1).
In Retail Banking, we have completed £728 million of Green Mortgages since their launch in Q4 2020, rewarding customers for
choosing an energy efficient home.
As part of our strategy to help families and young people manage their money more effectively, we acquired the fintech
business RoosterMoney, whose pocket money app aims to build money confidence and financial capability from an early age.
Our dedicated customer care line, which was set up as a result of the pandemic, has helped and supported 527,123 people in
2021.
Net lending grew by £7.8 billion(1) in 2021, primarily driven by growth in mortgages.
Businesses
Announced a target to provide an additional £100 billion Climate and Sustainable Funding and Financing to customers between
the 1 July 2021 and the end of 2025, alongside plans to launch a new green loan product for small to medium-sized enterprise
(SME) customers(3).
We committed £6 billion to help SMEs grow, of which £4 billion has already been allocated, and we doubled our funding of
female entrepreneurship to £2 billion.
We are the first major bank to join forces with a renewable energy supplier and, through our collaboration with Octopus, we
offer our retail, business and wealth customers a tailored package that improves the cost and efficiency of owning and running
an electric vehicle.
Colleagues
In 2021, we were listed as one of The Times Top 50 Employers for Women’ for the eleventh consecutive year and named by
LinkedIn as one of the top 25 workplaces in the UK to grow a career.
For the fifth year, we’ve retained our place in Bloomberg’s ‘Global Gender Equality Index’.
We have been listed in the ‘Working Families Benchmark Top 10 Employers’, showing that we are among those leading the way
in building a flexible, family-friendly workplace.
In 2021, we provided all colleagues with access to build future skills through the NatWest Group Learning Academy. This
supports our commitment for all colleagues to be upskilled in future-focused skills by 2025.
Communities
Recognised by Good Business Pays for our commitment to paying our invoices promptly to suppliers.
In July 2021, Coutts became a certified B Corp, evidencing our commitment to balance people, profit and the planet.
Following a successful launch in Q1 2021, in Q4 2021 we extended our employability programme, CareerSense, to support 13-
24-year-olds not in employment, education, or training with readiness for work.
Through our seven regional boards, we are uniquely positioned to champion the potential of our regions and communities
throughout the UK, helping people, families, and businesses to thrive.
During the year we collaborated with the Centre for Social Justice to explore what government, business and the third sector
can do to strengthen local communities as the UK recovers from the pandemic.
(1)
Retail Banking current account customers only as at 31 December 2021 - 87% of our retail customer needs are now met digitally, with 60% of our customers banking exclusively
digitally. Only activity in the last quarter is considered.
(2)
Net lending to customers across the UK and RBSI retail and commercial businesses, excluding UK Government lending schemes.
(3)
In October 2021, having surpassed our previous 2020-21 £20 billion target during H1 2021, NatWest Group announced an ambition to provide £100 billion Climate and Sustainable
Funding and Financing between 1 July 2021 and the end of 2025.
NatWest Group – Annual Results 2021
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Chief Executive’s Statement
We champion potential, helping people, families, and businesses to thrive.
Our future and our growth are built on this one, clear purpose. It’s what drives us, defines us, and guides us. Because getting this
right means success – for ourselves and for everyone we serve.
NatWest Group’s execution is centred around our purpose, driving sustainable growth through our strategic priorities. We are a
relationship bank for a digital world, building ever deeper and closer connections with our customers throughout their financial
lives, enabling people, families and businesses to thrive.
As I look back on 2021, I’m filled with admiration for the resilience and adaptability that our colleagues and customers have
demonstrated during the pandemic. Faced with unprecedented and constantly evolving challenges to the UK’s public health and
economy, the collective response has been nothing short of extraordinary.
As it has been throughout the pandemic, the health and well-being of our colleagues and customers continues to be our highest
priority. In particular, for the key workers who have remained in our offices and branches to provide the level of service and
support our customers have needed to rebuild and thrive.
NatWest Group is the UK’s leading business bank. It is also a truly regional bank, serving 19 million customers throughout the UK.
We are proud of the role we play and the relationships we already have across every part of the country. And we are well
positioned to deepen these relationships and to help our customers, our economy and our bank to grow because of the actions we
have taken in recent years.
Thrive together
In spite of the difficult economic environment and the pressure this continues to place on people, families and businesses up and
down the country, the UK remains an attractive and entrepreneurial market, with small and medium-sized enterprises (SMEs)
driving around half of UK turnover and employing 60% of the private sector workforce. It is also an increasingly competitive market,
where banks have to maintain their relevance to earn their growth.
As the economy starts to recover and grow, customers’ expectations of banks are changing faster than ever. So too is the way
people live and work. Customers want a simple, engaging experience, designed to anticipate particular needs and reflect their
priorities, just as they have in other areas of their lives.
When I first took up my role as Chief Executive, we committed to a purpose that guides all of our decision-making – we champion
potential, helping people, families and businesses to thrive. We also set out clear areas of strategic focus to deliver on this purpose
in order to drive sustainable returns for our shareholders and build sustainable value in our bank. We are executing well against
these areas of focus, delivering growth in key areas while controlling costs, better allocating our capital and accelerating our digital
transformation.
As a relationship bank for a digital world, our focus now is on the opportunities we see for future growth. It is a simple principle: if
our customers and economy thrive, so will we.
Sustainable growth will come from ever closer and deeper relationships with our customers at every stage of their lives.
Relationships that are based on insight and shared goals, delivering a simpler customer experience that removes complexity and
frustration. Relationships that reflect customers’ values and aspirations for themselves and society. Relationships that start earlier
in our customers’ lives and which adapt to meet their evolving needs. All of which will be enabled by the strategic partnerships and
acquisitions we have made, and by our efforts to simplify how customers interact with our bank so they can enjoy an easier,
frictionless banking experience. It will also be driven by a better allocation of our capital – with £3 billion being invested in the
business across a three-year period from 2021 to 2023, in addition to the sustainable returns we are delivering to shareholders.
Delivering on our strategy
Of course, we are building from strong foundations. Our operating profit for 2021 of £4.0 billion (£4.3 billion including operating
profit from discounted operations(1)) increased from a loss of £481 (£351 million including operating profit from discounted
operations(1)) million the year before. This included impairment releases of £1.3 billion, which reflected the low levels of realised
losses we have seen across the year.
We also continued to make progress against our other financial targets. The bank’s net lending – excluding government schemes –
grew by £7.8 billion in 2021, primarily driven by growth in mortgages. We removed a further £256 million of costs from the
business and retain a capital ratio well above our target range.
At the same time, our digital transformation accelerated as our customers chose to interact with us in different ways. Around 60%
of our retail current account holders now only interact with us digitally (2) and we have seen further strong growth in mobile
payments and video banking. This digitalisation of customer journeys is crucial to our future growth, and our Net Promoter Scores
are improving in key segments as a result. For example, our much-improved online process for renewing mortgages now takes as
little as 10 minutes.
(1)
Refer to the Non-IFRS financial measures section for details of the basis of preparation and reconciliation of Non-IFRS financial and performance measures.
(2)
Retail Banking current account customers only as at 31 December 2021 - 87% of our retail customer needs are now met digitally, with 60% of our customers banking exclusively
digitally. Only activity in the last quarter is considered.
NatWest Group – Annual Results 2021
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Chief Executive’s Statement continued
We are also using our digital capabilities to keep our customers safe and to build their financial capabilities, with credit scoring now
available in our app, dedicated support lines available for customers in vulnerable situations and more than 1 million customers
growing their savings with us by £100 or more for the first time.
As the UK’s leading business bank and a committed champion of start-ups, we are removing barriers to enterprise, tackling
inequality and supporting growth by helping entrepreneurs achieve their ambitions. We offer the UK’s largest fully funded business
accelerator network, with accelerator hubs across the country providing support for high-growth businesses, especially those led
by under-represented groups. During the pandemic, we pivoted this support for entrepreneurs to be delivered digitally, as we did
with our ‘Dream Bigger’ programme which helps 16-18-year-old girls develop transferable entrepreneurial skills. We also helped
create the SME Transformation Taskforce to unlock the growth opportunity for the UK economy, identified in our ‘Springboard to
Sustainable Recovery’ report.
Turning to our own business, the capital restructuring of NatWest Markets has made substantial progress. It is simpler, less capital
intensive and better able to create opportunities for our commercial customers by meeting their financing and risk management
needs, and by providing access to global markets as well as leadership in high-growth areas, such as the green and sustainable
bond markets. As a result, we are creating a new franchise called Commercial and Institutional by bringing together our
Commercial Banking, NatWest Markets and RBS International businesses. The creation of this new franchise is a further step in
removing complexity and becoming a simpler bank for customers to deal with.
We continue to make good progress on our phased withdrawal from the Irish market, minimising job losses and protecting services
while supporting our customers and colleagues to allow a smooth transition. During the year, we signed two agreements with
Allied Irish Banks p.l.c. (AIB) and Permanent TSB p.l.c. (PTSB) which account for about 60% of the Ulster Bank loan book in the
Republic of Ireland, including the transfer of colleagues, wholly or mainly supporting the relevant portfolios and 25 branch
locations.
These structural changes, along with our strong capital position and continued capital generation, mean that we are well placed to
invest for growth, to provide the support our customers need as the economy recovers and to drive sustainable returns to
shareholders, with £3.8 billion shareholder distributions announced for 2021 through dividends and buybacks.
The bank’s financial performance in 2021 also included a fine following breaches of the Money Laundering Regulations 2007.
NatWest Group takes its responsibility to prevent and detect financial crime extremely seriously. We deeply regret that we failed to
adequately monitor one of our customers between 2012 and 2016 to prevent money laundering. And while the case has now come
to an end, we continue to invest significant resources in the ongoing fight against financial crime and fraud.
We are delivering our strategy through four strategic priorities, with the aim of driving long-term sustainable value and delivering
on our 2023 targets, which we are now updating. As the economy recovers, we feel more confident about income and so we are
providing guidance for the first time. In 2022, we expect to deliver income excluding notable items of above £11.0 billion in the Go-
forward group(1,2). We are amending our cost reduction target to around 3% per annum for 2022 and 2023(2,3), reflecting higher
inflation and our ongoing investment in the business. Nevertheless, we maintain a strong focus on continued cost discipline. We
retain our 2023 CET1 ratio of 13–14%, and we have upgraded our return on tangible equity target in 2023 to comfortably above
10% for the Group.
Tackling climate change
One key area where our bank has a critical role to play is in helping to tackle climate change. It is the biggest challenge we face as
a society, requiring collaboration and co-operation on a global scale, and NatWest Group was proud to sponsor the COP26 global
climate conference which took place in Glasgow in October/November 2021.
Our industry has a responsibility to drive and influence positive change. As such, NatWest Group is committed to getting its own
house in order, bringing to an end the most harmful activity and providing the support, advice and products our customers need in
order to accelerate the transition to a net-zero economy.
We are one of the few banks to offer a Green Mortgage product, with £728 million of lending to retail customers since its launch in
Q4 2020, and we established the Sustainable Homes and Buildings Coalition with British Gas, Worcester Bosch and Shelter to
improve the energy efficiency of buildings in the UK. Working with the fintech company CoGo, we were also the first bank to
introduce a carbon-tracking feature in our mobile banking app. And we are helping colleagues and customers to move to electric
vehicles through a collaboration with Octopus Energy.
(1)
Income excluding notable items.
(2)
Go-forward group excludes Ulster Bank RoI.
(3)
Go-forward group other operating expenses defined as total expenses less litigation and conduct costs.
NatWest Group – Annual Results 2021
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Chief Executive’s Statement continued
Our Springboard to Sustainable Recovery report found that the transition to net zero can create a huge opportunity for SMEs.
Close to 40% of our accelerator hubs are dedicated to supporting sustainable businesses to help our most innovative start-ups to
take advantage of this opportunity. There is a clear societal responsibility here, but also an obvious commercial imperative in
helping our customers to thrive as we transition to net zero.
Building a culture to champion potential
In seeking to make a positive contribution to the communities we serve, we are also building an open, inclusive and progressive
place to work, breaking down barriers for our customers and for our colleagues.
We are a learning organisation and our culture is critical to our future success. We have worked with our colleagues as well as with
our customers, suppliers and communities to create a new set of values that reflect the organisation we are today. Values that
match the ambition, optimism and energy our purpose has given us, and that we can all believe in.
This builds on the progress we have made in recent years as we consider the needs of all our colleagues and stakeholders. In
2021, we launched our global Talent Academy to help identify and develop colleague potential, with almost 4,000 accepted onto
the programme. We also offered mental health workshops for our line managers and our 1,300 Wellbeing Champions, as well as
seeing strong take up of our virtual GP and physiotherapy offers.
Outside the bank, we launched our CareerSense programme, providing more than 8,200 young people with free access to tools
that will develop critical skills and support their employability prospects. We were also recognised by the Good Business Pays
campaign for our commitment to paying our suppliers the day after receiving an invoice, in line with the Supplier Charter which we
introduced in 2020.
In our top three layers globally, 38% of roles are currently filled by female colleagues, a 9% increase since we first introduced our
target to have a full gender balance in these roles by 2030, but a 1% decrease from 31 December 2020. We know we have more to
do and we continue to focus on the recruitment, retention and advancement of women to meet our 2030 target.
In 2020, we launched the Racial Equality Taskforce to listen, learn and better understand the barriers faced by colleagues,
customers and communities from Black, Asian and Minority Ethnic backgrounds. Of those who disclose their ethnicity, we have an
aggregate of 11% Black, Asian and Minority Ethnic colleagues in our top four layers in the UK; a 3% increase since our 14% target
was first introduced in 2018.
Living up to our purpose
Over the coming years, we will create a closer and deeper relationship with the people, families and businesses that we serve
throughout the UK. From teenagers to retirees, from newlyweds to new homeowners and from start-ups to the largest
multinationals, we will understand them better, provide more value to them and help them to thrive.
By playing such a central role throughout the lives of our customers, by taking action on the issues they care about and by
retaining their business as their needs and aspirations change, our bank will go from strength to strength.
More than that, it will make a meaningful contribution to our society, helping to grow and transition our economy as we move
towards net zero, sustainably growing our business by living up to our purpose.
Alison Rose
Group Chief Executive Officer
NatWest Group – Annual Results 2021
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Outlook(1)
The economic outlook remains uncertain. We will monitor and react to market conditions and refine our internal forecasts as the
economic position evolves. The following statements are based on current market interest rate and economic expectations.
In 2023, we expect to achieve a return on tangible equity of comfortably above 10% for the Group.
In 2022, we expect income excluding notable items to be above £11.0bn in the Go-forward group.
We plan to invest around £3 billion over 2021 to 2023 but, with continuing simplification, we plan to reduce Go-forward group
operating expenses, excluding litigation and conduct costs, by around 3% in both 2022 and 2023.
As a result of positive actions to change the shape of our book in recent years, we expect our through-the-cycle impairment
loss rate to be around 20 - 30 basis points. We expect our 2022 and 2023 impairment charge to be lower than our through the
cycle loss rate.
Across 2022 and 2023, we expect movements in RWAs to largely reflect lending growth and our phased withdrawal from the
Republic of Ireland.
Capital and funding
We aim to end 2022 with a CET1 ratio of around 14% and target a ratio of 13-14% by 2023.
We intend to maintain ordinary dividends of around 40% of attributable profit and to distribute a minimum of £1 billion in each
of 2022 and 2023 via a combination of ordinary and special dividends.
We intend to maintain capacity to participate in directed buybacks of the UK Government stake, recognising that any exercise
of this authority would be dependent upon HMT’s intentions and is limited to 4.99% of issued share capital in any 12-month
period.
We will consider further on-market buybacks, in addition to the £750 million announced today, as part of our overall capital
distribution approach as well as inorganic opportunities provided they are consistent with our strategy and have a strong
shareholder value case.
As part of the NatWest Group capital and funding plans we intend to issue between £3 billion to £5 billion of MREL-compliant
instruments in 2022, with a continued focus on issuance under our Green, Social and Sustainability Bond Framework. NatWest
Markets plc’s funding plan targets £4 billion to £5 billion of public benchmark issuance.
Ulster Bank ROI
We have made good progress on our phased withdrawal from the Republic of Ireland and expect the majority of the Allied Irish
Banks and Permanent TSB asset sales to be largely complete by the end of 2022 and deposits to reduce over a longer
timescale.
We would expect income and RWAs to follow the balance sheet trajectory. We expect the cost base to reduce over time and
anticipate other operating expenses, excluding withdrawal related costs, in 2023 will be around €200 million lower than 2021.
We expect to incur disposal losses through income of around €300 million in 2022 and withdrawal related costs of around €600
million across 2022-24, with around €500 million incurred by the end of 2023.
We expect the phased withdrawal to be capital accretive.
(1)
The guidance, targets, expectations and trends discussed in this section represent NatWest Group plc management’s current expectations and are subject to change, including as a
result of the factors described in the Risk Factors section on pages 406 to 426 of the 2021 NatWest Group plc Annual Report and Accounts and on pages 179 to 200 of the NatWest
Markets Plc 2021 Annual Report and Accounts These statements constitute forward-looking statements. Refer to Forward-looking statements in this document.
NatWest Group – Annual Results 2021
8
Business performance summary
Year ended
Quarter ended
31 December 31 December 31 December30 September 31 December
2021
2020 (1)
2021
2021 (1)
2020 (1)
£m
£m
£m
£m
£m
Continuing operations
Go-forward group income (2)
10,284
10,286
2,579
2,629
2,404
Total income
10,512
10,508
2,622
2,708
2,462
Operating expenses
(7,758)
(7,858)
(2,328)
(1,931)
(2,329)
Profit before impairment releases/(losses)
2,754
2,650
294
777
133
Operating profit/(loss) before tax
4,032
(481)
635
1,010
(6)
Profit/(loss) attributable to ordinary shareholders
2,950
(753)
434
674
(109)
Excluding notable items within total income (3)
Go-forward group income excluding notable items (2)
10,074
10,670
2,517
2,511
2,485
Total income excluding notable items (2)
10,267
10,892
2,560
2,555
2,543
Operating expenses
(7,758)
(7,858)
(2,328)
(1,931)
(2,329)
Profit before impairment releases/(losses)
excluding notable items
2,509
3,034
232
624
214
Operating profit/(loss) before tax excluding notable items
3,787
(97)
573
857
75
UK and RBSI retail and commercial income excluding
notable items (2)
9,620
9,486
2,510
2,423
2,319
Performance key metrics and ratios
Bank net interest margin (2,4)
2.39%
2.46%
2.38%
2.35%
2.44%
Bank average interest earning assets (2,4)
£314bn
£301bn
£318bn
£315bn
£306bn
Cost:income ratio (2)
73.4%
74.4%
88.6%
70.9%
94.5%
Loan impairment rate (2)
(35bps)
85bps
(38bps)
(26bps)
15bps
Total earnings per share attributable to ordinary
shareholders - basic
25.4p
(6.2p)
3.8p
5.8p
(0.9p)
Go-forward return on tangible equity
10.0%
(1.3%)
5.6%
8.6%
nm
Return on tangible equity (2)
9.4%
(2.4%)
5.6%
8.6%
(1.4%)
Go-forward group excludes Ulster Bank RoI and discontinued operations.
For the notes to this table, refer to the following page.
NatWest Group – Annual Results 2021
9
Business performance summary continued
31 December 30 September 31 December
2021
2021 (1)
2020 (1)
£bn
£bn
£bn
Balance sheet
Total assets
782.0
778.3
799.5
Funded assets (2)
675.9
674.5
633.0
Loans to customers - amortised cost
359.0
361.0
360.5
Loans to customers and banks - amortised cost and FVOCI
369.8
374.0
372.4
Go-forward group net lending
352.3
347.8
342.5
UK and RBSI retail and commercial net lending excluding UK Government
support schemes (2)
305.7
304.9
297.9
Impairment provisions - amortised cost
3.8
4.3
6.0
Total impairment provisions
3.8
4.4
6.2
Expected credit loss (ECL) coverage ratio
1.0%
1.2%
1.7%
Assets under management and administration (AUMA) (2)
35.6
35.7
32.1
Go-forward group customer deposits (2)
461.4
457.8
412.1
Customer deposits
479.8
476.3
431.7
UK and RBSI retail and commercial customer deposits (2)
443.4
437.2
403.2
Liquidity and funding
Liquidity coverage ratio (LCR)
172%
166%
165%
Liquidity portfolio
286
278
262
Net stable funding ratio (NSFR) (5)
157%
155%
151%
Loan:deposit ratio (2)
75%
76%
84%
Total wholesale funding
77
67
71
Short-term wholesale funding
23
22
19
Capital and leverage
Common Equity Tier (CET1) ratio (6)
18.2%
18.7%
18.5%
Total capital ratio
24.1%
24.6%
24.5%
Pro forma CET1 ratio, pre dividend accrual (7)
19.5%
19.5%
18.8%
Risk-weighted assets (RWAs)
157.0
159.8
170.3
UK leverage ratio (8)
5.8%
5.9%
6.4%
Tangible net asset value (TNAV) per ordinary share
272p
269p
261p
Number of ordinary shares in issues (millions) (9)
11,272
11,436
12,129
(1)
Comparative results have been re-presented from those previously published to reclassify certain operations as discontinued operations as described in Note 3 on page 34.
(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)
Refer to page 11 for details of notable items within total income.
(4)
NatWest Group excluding NWM, Ulster Bank RoI and liquid asset buffer.
(5)
NSFR reported in line with CRR2 regulations finalised in June 2019.
(6)
Based on CRR end-point including the IFRS 9 transitional adjustment of £0.6 billion (30 September 2021 - £1.0 billion; 31 December 2020 - £1.7 billion). Excluding this adjustment,
the CET1 ratio would be 17.8% (30 September 2021 - 18.1%; 31 December 2020 - 17.5%).
(7)
The pro forma CET1 ratio at 31 December 2021 excludes foreseeable items of £2.0 billion, £846 million for ordinary dividends and £1,190 million foreseeable charges and pension
contributions (30 September 2021 excludes foreseeable items of £1.2 billion, £402 million for ordinary dividends and £816 million foreseeable charges and pension contributions; 31
December 2020 excludes foreseeable charges of £364 million for ordinary dividend (3p per share) and £266 million pension contribution).
(8)
Based on UK end-point including the IFRS 9 transitional adjustment of £0.6 billion (30 September 2021 - £1.0 billion; 31 December 2020 - £1.7 billion). Excluding this adjustment the
UK leverage ratio would be 5.7% (30 September 2021 - 5.8%; 31 December 2020 - 6.1%).
(9)
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 transferred the remaining 200 million to 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. In line with the announcement in July 2021,
NatWest Group plc repurchased and cancelled 310.8 million shares for total consideration of £676.2 million excluding fees. Of the 310.8 million shares bought back, 2.8 million
shares were settled and cancelled in January 2022. The nominal value of the share cancellations has been transferred to the capital redemption reserve with the share premium
element to retained earnings.
NatWest Group – Annual Results 2021
10
Business performance summary continued
Chief Financial Officer review
We have delivered a strong operating performance in 2021. Group RoTE was 9.4%, benefiting from a £1.3 billion net impairment
release. We achieved our Group cost reduction target of 4.0% and lending growth across our UK and RBSI retail and commercial
businesses was 2.6%, excluding UK Government financial support schemes. Our capital and liquidity position remains strong after
returning £3.8 billion to shareholders, and default levels have remained low across all our portfolios. The CET1 ratio was 18.2%,
reducing to 15.9% on 1 January 2022 following regulatory RWA and capital changes. We have made good progress on our phased
withdrawal from the Republic of Ireland and will focus the financial commentary below on the Group excluding Ulster Bank RoI
(Go-forward group).
Financial performance
Total income, excluding notable items, in the Go-forward group was 5.6% lower than prior year. Across the UK and RBSI retail
and commercial businesses income increased by 1.4% reflecting strong balance sheet growth, principally in our mortgage book.
NWM income was below expectations, down by 61.5%, compared with 2020, reflecting continued weakness in Fixed Income,
impacted by subdued levels of customer activity and ongoing reshaping of the business, and exceptional levels of market activity
in the prior year. Income in the Go-forward group was broadly in line with Q3 2021.
Bank NIM(1) of 2.39% was 7 basis points lower than 2020 impacted by reduced structural hedge income, yield curve movements
and lower unsecured balances. Q4 2021 Bank NIM(1) of 2.38% was 3 basis points higher than Q3 2021 reflecting higher yield curve,
higher unsecured balances partly offset by lower mortgage margins.
We delivered a cost reduction of £256 million, or 4.0%, in 2021, in line with our target for the year. This has been achieved by
transformation across our customer journeys and NWM business, in line with the strategic announcement made in February 2020
and a £68 million reduction in the bank levy charge. Strategic costs of £787 million included £237 million in NWM related to
transformation, £124 million of redundancy charges, £88 million of technology spend, and an £85 million goodwill impairment.
A net impairment release of £1,278 million reflects the low levels of realised losses we have seen across the year. Total
impairment provisions reduced by £2.4 billion to £3.8 billion during 2021 and as a result ECL coverage ratio decreased from
1.66% to 1.03%. Whilst we are comfortable with the strong credit performance of our book, we continue to hold economic
uncertainty post model adjustments (PMAs) of £0.6 billion, or 15.3% of total impairment provisions. We will continue to assess
this position throughout the year.
We are pleased to report a 2021 attributable profit of £2,950 million, with earnings per share of 25.4 pence and a RoTE of 9.4%. A
final dividend of 7.5 pence per share is proposed, bringing our total 2021 paid and proposed capital distributions to £3.8 billion
through a combination of ordinary dividends, directed buybacks of the UK Government stake and our on-market buyback
programme.
Across the UK and RBSI retail and commercial businesses, and excluding UK Government support schemes, net lending increased
by 2.6%. Mortgage growth exceeded the market, however commercial lending was behind market as we have sought to reduce
certain exposures, through targeted sector reductions and capital actions, whilst continuing to focus on supporting customers
through sustainable lending. During the second half of the year we completed £8.1 billion Climate and Sustainable Funding and
Financing against our £100 billion target.
Customer deposits in the Go-forward group increased by £49.3 billion, or 12.0%, in 2021 including £9.4 billion related to Treasury
repo activity. Across the UK and RBSI retail and commercial businesses customer deposits increased by 10.0%, as customers
continued to build and retain liquidity.
TNAV per share increased by 3 pence in the quarter to 272 pence largely reflecting the attributable profit partially offset by
movements in the cash flow hedging reserve.
Capital
The CET1 ratio remains strong at 18.2%, or 17.8% excluding IFRS 9 transitional relief. The 30 basis points reduction in the year
includes capital distributions of c.240 basis points, partially offset by the reduction in RWAs, c.170 basis points, and the
attributable profit net of IFRS 9 transitional relief and other capital movements. RWAs of £157.0 billion reduced by £13.3 billion in
2021 mainly reflecting business movements in Commercial Banking, including targeted sector reductions, improvement in risk
parameters and active capital management.
On 1 January 2022, the proforma CET1 ratio was 15.9% including the impact of regulatory RWA inflation, 200 basis points, the
removal of the software development costs capital benefit, 20 basis points, and the tapering of IFRS 9 transitional relief, 10 basis
points. RWAs increased by £18.8 billion, including £14.8 billion associated with mortgage risk weight changes.
Funding and liquidity
The LCR increased by 6 percentage points to 172% in the quarter, representing £89.9 billion headroom above 100% minimum
requirement, following a Term Funding Scheme with additional incentives for SMEs (TFSME) drawdown. Total wholesale funding
increased by £10.0 billion in the quarter to £76.7 billion.
(1)
Excludes Natwest Markets, Liquid Asset Buffer and Ulster Bank RoI.
NatWest Group – Annual Results 2021
11
Business performance summary continued
Summary consolidated income statement for the period ended 31 December 2021
Year ended
Quarter ended
31 December 31 December 31 December 30 September 31 December
2021
2020 (1)
2021
2021 (1)
2020 (2)
£m
£m
£m
£m
£m
Net interest income
7,614
7,476
1,942
1,889
1,901
Own credit adjustments
6
(24)
4
2
(43)
Other non-interest income
2,892
3,056
676
817
604
Non-interest income
2,898
3,032
680
819
561
Total income
10,512
10,508
2,622
2,708
2,462
Litigation and conduct costs
(466)
(113)
(190)
(294)
(194)
Strategic costs
(787)
(1,013)
(378)
(77)
(326)
Other expenses
(6,505)
(6,732)
(1,760)
(1,560)
(1,809)
Operating expenses
(7,758)
(7,858)
(2,328)
(1,931)
(2,329)
Profit before impairment losses
2,754
2,650
294
777
133
Impairment releases/(losses)
1,278
(3,131)
341
233
(139)
Operating profit/(loss) before tax
4,032
(481)
635
1,010
(6)
Tax charge
(996)
(74)
(234)
(330)
(75)
Profit/(loss) from continuing operations
3,036
(555)
401
680
(81)
Profit from discontinued operations, net of tax
276
121
97
64
61
Profit/(loss) for the period
3,312
(434)
498
744
(20)
Attributable to:
Ordinary shareholders
2,950
(753)
434
674
(109)
Preference shareholders
19
26
5
5
5
Paid-in equity holders
299
355
58
63
83
Non-controlling interests
44
(62)
1
2
1
Notable items within total income (2)
Retail Banking
Retail Banking debt sale gain
-
8
-
-
1
Metro Bank mortgage portfolio acquisition loss
-
(58)
-
-
(58)
Private Banking
Consideration on the sale of Adam & Company
investment management business
54
-
54
-
-
Commercial Banking
Commercial Banking fair value and disposal
gain/(loss)
(22)
(37)
(4)
4
(27)
Commercial Banking tax variable lease repricing
32
-
-
-
-
NatWest Markets
NatWest Markets asset disposals/strategic
risk reduction (3)
(64)
(83)
(12)
(12)
(8)
Own credit adjustments (OCA)
6
(24)
3
2
(43)
Central items & other
Loss on redemption of own debt
(138)
(324)
-
-
-
Liquidity Asset Bond sale gains
120
113
50
45
2
Share of associate profit/(loss) for Business
Growth Fund
219
(22)
11
79
8
Property strategy update
(44)
(44)
-
FX recycling gain/(loss) in Central items & other
-
(40)
-
-
(1)
IFRS volatility in Central items & other (4)
47
83
3
-
45
Own credit adjustments (OCA)
-
-
1
-
-
Ulster Bank RoI
Ulster Bank RoI gain arising from the restructuring of
structural hedges
35
-
-
35
-
Total
245
(384)
62
153
(81)
(1)
Comparative results have been re-presented from those previously published to reclassify certain operations as discontinued operations as described in Note 3 on page 34.
(2)
Refer to page 1 of the Non-IFRS financial measures Appendix.
(3)
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.
(4)
IFRS volatility relates to derivatives used for risk management not in IFRS hedge accounting relationships and IFRS hedge ineffectiveness.
NatWest Group – Annual Results 2021
12
Business performance summary
Retail Banking
Year ended and as at
Quarter ended and as at
31 December 31 December
31 December 30 September 31 December
2021
2020
2021
2021
2020
£m
£m
£m
£m
£m
Total income
4,445
4,181
1,164
1,131
974
Operating expenses
(2,513)
(2,540)
(774)
(552)
(818)
of which: Other expenses
(2,250)
(2,295)
(605)
(543)
(566)
Impairment releases/(losses)
36
(792)
(5)
(16)
(65)
Operating profit
1,968
849
385
563
91
Return on equity
26.1%
10.2%
19.7%
29.9%
3.8%
Net interest margin
2.08%
2.13%
2.08%
2.09%
2.03%
Cost:income ratio
56.5%
60.8%
66.5%
48.8%
84.0%
Loan impairment rate
(2)bps
45bps
1bps
4bps
15bps
£bn
£bn
£bn
Net loans to customers (amortised cost)
182.2
180.5
172.3
Customer deposits
188.9
186.3
171.8
RWAs
36.7
36.6
36.7
In 2021, Retail Banking continued to grow net lending with an measured approach to risk, delivering a return on equity of 26.1%
and operating profit of £1,968 million. Lending growth was supported by a strong performance in mortgages and a return to
unsecured lending growth in the second half of 2021. Retail Banking completed £1.1 billion of Climate and Sustainable Funding
and Financing in 2021, which will contribute towards the new NatWest Group target of £100 billion between 1 July 2021 and the
end of 2025.
2021 performance
Total income was £264 million, or 6.3%, higher than 2020 reflecting mortgage balance and margin improvement, higher
transactional-related fee income and non-repeat of loss on acquisition, partially offset by the impact of the lower interest
rate environment on deposit returns, lower average unsecured balances and the annualised impact of regulatory changes
on fee income.
Net interest margin was 5 basis points lower than 2020 reflecting lower deposit returns and lower average unsecured
balances, partly offset by higher mortgage margins.
Other expenses decreased by £45 million, or 2.0%, compared with 2020 primarily reflecting an 8.8% reduction in headcount
as a result of continued customer digital adoption, automation and improvement of end-to-end customer journeys, including
digitalising the customer account opening processes, leading to an increase in straight through processing within journeys
from 45% in December 2020 to 70% in December 2021.
Strategic costs of £117 million in Q4 2021 include an £85 million impairment of goodwill, reflecting a legacy business in
accelerated run down within Retail Banking.
An impairment release of £36 million primarily reflects ECL provision releases in the non-defaulted portfolio.
Net loans to customers increased by £9.9 billion, or 5.7%, compared with 2020 as a result of strong gross new mortgage
lending and improved retention. Gross new mortgage lending was £36.0 billion with flow share of 11.5%, supporting
mortgage balance growth of £9.8 billion or 6.0%, representing a stock share of 11.0%. Cards were stable however; we have
seen improved customer spend and demand in the second half of 2021. Personal advances reduced by £0.2 billion as
customers made higher overdraft repayments in H1 2021, reflecting the impact of UK Government restrictions partly offset
by growth in H2 2021 as customer demand for personal loans increased as the UK economy recovered.
Customer deposits increased by £17.1 billion, or 10.0%, compared with 2020 as UK Government schemes combined with
Covid-related restrictions resulted in lower customer spend and increased savings in H1 2021.
RWAs were broadly stable compared with 2020 primarily reflecting lending growth, offset by continued quality
improvements.
Q4 performance
Total income was £33 million, or 2.9%, higher than Q3 2021 reflecting higher transactional-related fee income, higher
mortgage balances, higher unsecured balances and improved deposit returns, partially offset by mortgage margin dilution
as competition in the market remained intense. Non-interest income in Q4 2021 benefitted from the impact of movements in
one-off items, including travel related profit share, totaling around £9 million. Total income was £190 million higher than Q4
2020, primarily reflecting mortgage balance and margin improvements and the non-repeat of a loss on acquisition.
Net interest margin was 1 basis point lower than Q3 2021 reflecting mortgage margin dilution, largely offset by the
continued recovery in unsecured balances and higher deposit returns, supported by the December 2021 GBP base rate rise.
Mortgage completion margins of 102 basis points were lower than the back book margin of 161 basis points, with
application margins of 60 basis points in the quarter, reflecting a steep rise in swap rates, increasing to around 70 basis
points in the latter part of Q4 2021.
Other expenses were £62 million, or 11.4% higher than Q3 2021 largely due to the inclusion of the annual UK bank levy
charge and the timing of marketing, investment, and other non-staff costs.
Impairment losses of £5 million in Q4 2021 primarily reflects Stage 3 defaults, which remain at low levels, partially offset by
ECL provision releases from the improved economic outlook.
Net loans to customers increased by £1.7 billion, or 0.9% compared with Q3 2021 reflecting continued mortgage growth of
£1.4 billion, with gross new mortgage lending of £8.4 billion representing flow share of 12.3%. Both personal advances and
cards increased by £0.1 billion respectively as customer demand and spend levels continued to increase.
NatWest Group – Annual Results 2021
13
Business performance summary
Private Banking
Year ended and as at
Quarter ended and as at
31 December 31 December 31 December 30 September 31 December
2021
2020
2021
2021
2020
£m
£m
£m
£m
£m
Total income
816
763
253
195
184
Operating expenses
(520)
(455)
(155)
(116)
(91)
of which: Other expenses
(504)
(466)
(145)
(117)
(119)
Impairment releases/(losses)
54
(100)
12
15
(26)
Operating profit
350
208
110
94
67
Return on equity
17.0%
10.3%
21.3%
18.1%
13.3%
Net interest margin
1.76%
2.05%
1.75%
1.76%
1.86%
Cost:income ratio
63.7%
59.6%
61.3%
59.5%
49.5%
Loan impairment rate
(29)bps
58bps
(26)bps
(32)bps
61bps
£bn
£bn
£bn
Net loans to customers (amortised cost)
18.4
18.4
17.0
Customer deposits
39.3
35.7
32.4
RWAs
11.3
11.4
10.9
Assets Under Management (AUMs) (1)
30.2
30.5
27.0
Assets Under Administration (AUAs) (1)
5.4
5.2
5.1
Assets Under Management and Administration
(AUMA) (1)
35.6
35.7
32.1
(1)
The definition of AUMs/AUAs has been updated to provide clarity on assets where the investment management is undertaken by Private Banking. AUMs now comprise 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.
In 2021, Private Banking delivered strong growth across AUMA, lending and deposits which has supported a 2021 return on
equity of 17.0% and operating profit of £350 million. Digital net new money across NatWest Invest, Royal Bank Invest and Coutts
Invest of £0.8 billion in 2021 is more than double 2020. Approximately 2,114 new customers were onboarded into Private
Banking, an increase of around 29% compared to 2020.
NatWest Group completed the sale of Adam & Company’s investment management business on 1 October 2021 for a total
consideration of £54 million, which has been recorded as a notable item in the Q4 2021 results.
2021 performance
Total income was £53 million, or 6.9%, higher than 2020 reflecting a £54 million consideration from the sale of the Adam &
Company investment management business in Q4 2021 and strong balance growth partially offset by lower deposit returns
in a lower interest rate environment.
Net interest margin decreased by 29 basis points reflecting lower deposit returns and higher liquidity portfolio costs.
Other expenses were £38 million, or 7.9%, higher than 2020 principally due to investment in digital infrastructure and an
increase in headcount related to the enhancement of AUMA growth propositions.
A net impairment release of £54 million in 2021 mainly reflects ECL provision releases in non-default portfolios.
Net loans to customers increased by £1.4 billion, or 8.2%, compared with 2020 driven by continued strong mortgage lending
growth of £1.1 billion or 10.3%, including gross new lending of £3.3 billion. RWAs increased by £0.4 billion, or 3.7%.
Customer deposits increased by £6.9 billion, or 21.3%, compared with 2020 reflecting strong personal and commercial
inflows as UK Government restrictions resulted in clients continuing to build and retain liquidity.
AUMAs increased by £3.5 billion, or 10.9%, driven by an increase in AUM net new money (NNM) of £3.0 billion and AUM
positive investment performance of £2.1 billion, partially offset by the £1.8 billion impact of the sale of Adam & Company’s
investment management business and £0.2 billion EEA resident client outflows following the UK’s exit from the EU. AUM
NNM of £3.0 billion represents 9.3% of opening AUMAs, which is double NNM in 2020.
Q4 performance
Total income was £58 million, or 29.7%, higher than Q3 2021 impacted by the consideration from the sale of the Adam &
Company investment management business.
Net interest margin decreased by 1 basis point in Q4 2021 as higher funding costs were partially offset by an increase in
deposit income. Mortgage book margin was 182 basis points at Q4 2021.
Other expenses were £28 million, or 23.9%, higher than Q3 2021 largely due to the annual bank levy charge and timing of
marketing spend. Other expenses were £26 million, or 21.8% higher than Q4 2020 largely reflecting investment in digital
infrastructure, timing of marketing spend and a 4.2% increase in headcount related to the enhancement of AUMA growth
propositions.
Net loans to customers were stable compared with Q3 2021 with mortgage growth offset by lower commercial lending.
AUMAs were broadly stable compared with Q3 2021 as an increase in NNM of £0.7 billion and positive investment
performance of £1.1 billion, was offset by the £1.8 billion impact from the sale of Adam & Company’s investment
management business.
NatWest Group – Annual Results 2021
14
Business performance summary
Commercial Banking
Year ended and as at
Quarter ended and as at
31 December 31 December 31 December 30 September 31 December
2021
2020
2021
2021
2020
£m
£m
£m
£m
£m
Total income
3,875
3,958
987
965
951
Operating expenses
(2,354)
(2,430)
(646)
(556)
(656)
of which: Other expenses (excluding OLD)
(2,013)
(2,116)
(546)
(484)
(560)
Impairment releases/(losses)
1,073
(1,927)
289
216
(10)
Operating profit/(loss)
2,594
(399)
630
625
285
Return on equity
22.0%
(4.5%)
22.4%
21.7%
8.1%
Net interest margin
1.54%
1.68%
1.52%
1.49%
1.56%
Cost:income ratio
59.3%
59.9%
64.2%
56.0%
67.8%
Loan impairment rate
(104)bps
173bps
(113)bps
(83)bps
4bps
£bn
£bn
£bn
Net loans to customers (amortised cost)
101.2
102.7
108.2
Customer deposits
177.7
178.3
167.7
RWAs
66.4
66.4
75.1
Commercial Banking delivered a resilient performance with a return on equity of 22.0% and operating profit of £2,594 million
including a £1,073 million impairment release as the UK economy continued to recover. Returns have improved through active
capital management, pricing discipline, and a targeted sector strategy linked to our purpose.
Growth in Tyl, our innovative merchant acquiring platform, saw over £1.5 billon of transactions in 2021, three times 2020 levels, as
transaction activity recovered and customers favoured digital payment solutions and reduced their reliance on cash and branch.
Commercial Banking completed £5.2 billion of Climate and Sustainable Funding and Financing in 2021, including £2.7 billion in H2
2021 which will contribute towards the new NatWest Group target of £100 billion between 1 July 2021 and the end of 2025.
2021 performance
Total income was £83 million, or 2.1%, lower than 2020 due to reduced deposit returns in a low interest rate environment and
lower lending volumes, partially offset by a recovery in transactional banking fee income in H2 2021 driven by the UK
economy.
Net interest margin decreased by 14 basis points in 2021 reflecting lower deposit returns.
Other expenses, excluding OLD, decreased by £103 million, or 4.8%, compared with 2020 reflecting cost efficiencies and
simplifying our operating model enabling better service to our customers including building momentum in our digital service,
whilst reducing our headcount by 9.8%.
Impairment release of £1,073 million primarily reflects ECL provision releases related to the improved economic outlook with
Stage 3 defaults remaining at low levels.
Net loans to customers decreased by £7.0 billion, or 6.5%, compared with 2020 primarily reflecting targeted sector reductions
including real estate, retail and leisure and active capital management of £1.0 billion. Customer liquidity resulted in net
revolving credit facility (RCF) repayments of £1.7 billion driven by large corporates & institutions and real estate as well as UK
Government financial support scheme repayments of £1.3 billion. RCF utilisation was approximately 19% of committed facilities
in 2021, significantly below pre-COVID-19 levels of approximately 27%. These items were partially offset by £1.4 billion lower
loan provisions and growth in specialist businesses of £0.7 billion.
Customer deposits increased by £10.0 billion, or 6.0%, compared with 2020 reflecting customer behaviour to build and retain
liquidity.
RWAs decreased by £8.7 billion, or 11.6%, compared with 2020 mainly reflecting business movements including targeted sector
reductions in real estate and retail, improvement in risk parameters and active capital management of £1.5 billion.
Q4 performance
Total income was £22 million, or 2.3%, higher than Q3 2021 due to improved deposit returns supporting an increase in net
interest income and continued recovery in transactional banking payment activity.
Net interest margin improved by 3bps compared with Q3 2021 due to higher deposit returns supported by the December 2021
GBP base rate rise.
Other expenses, excluding OLD, were £61 million, or 12.6%, higher than Q3 2021 largely due to due to the inclusion of the
annual UK bank levy charge and the timing of marketing and other non-staff costs.
Impairment release of £289 million in Q4 2021 primarily reflects ECL releases related to the improved economic outlook with
Stage 3 defaults remaining at low levels.
Net loans to customers were £1.5 billion, or 1.5%, lower than Q3 2021 primarily reflecting UK Government financial support
scheme repayments of £0.7 billion, further targeted sector reductions including Real Estate £0.8 billion and working capital
flows, partly offset by an increase in specialist business activity of £0.7 billion, and lower loan provision of £0.4 billion.
Customer deposits were £0.6 billion, or 0.3%, lower than Q3 2021 in part due to seasonal outflows.
NatWest Group – Annual Results 2021
15
Business performance summary
RBS International
Year ended and as at
Quarter ended and as at
31 December 31 December 31 December 30 September 31 December
2021
2020
2021
2021
2020
£m
£m
£m
£m
£m
Total income
548
497
156
136
126
Operating expenses
(242)
(291)
(70)
(60)
(112)
of which: Other expenses
(228)
(244)
(68)
(56)
(73)
Impairment releases/(losses)
52
(107)
12
11
(27)
Operating profit
358
99
98
87
(13)
Return on equity
22.5%
6.1%
24.0%
21.6%
(5.5%)
Net interest margin
1.01%
1.17%
0.99%
0.99%
1.03%
Cost:income ratio
44.2%
58.6%
44.9%
44.1%
88.9%
Loan impairment rate
(33)bps
80bps
(31)bps
(28)bps
81bps
£bn
£bn
£bn
Net loans to customers (amortised cost)
15.5
15.6
13.3
Customer deposits
37.5
36.9
31.3
RWAs
7.5
8.1
7.5
Depositary assets (1)
479.4
463.8
427.5
(1)
Assets held by RBSI as an independent trustee and in a depositary service capacity.
During 2021 RBS International (RBSI) delivered £358 million of operating profit with return on equity of 22.5% through strong
lending and deposit volumes, an impairment release and continued growth in our depositary offering. This was achieved while
continuing investment in our digital offering to customers including new payment features on the mobile app for both personal
and business customers and the extension of our video banking proposition delivered in 2021.
RBSI completed £1.5 billion of Climate and Sustainable Funding and Financing in 2021, including £0.9 billion in H2 2021 which will
contribute towards the new NatWest Group target of £100 billion between 1 July 2021 and the end of 2025.
2021 performance
Total income increased by £51 million, or 10.3%, compared with 2020 as a result of higher average lending balances in
Institutional Banking, including higher non-utilisation fees, and higher depositary fee income.
Net interest margin decreased by 16 basis points in 2021 reflecting a higher proportion of lower yielding assets with central
banks due to the higher volume of short term customer deposits in the year.
Other expenses decreased by £16 million, or 6.6%, compared with 2020 primarily reflecting the reduction in the bank levy
charge for 2021.
An impairment release of £52 million in 2021 largely reflects releases across Stage 1 and 2 within the wholesale sector.
Net loans to customers increased by £2.2 billion, or 16.5%, compared with 2020 as a result of higher Institutional Banking
sector volumes.
Customer deposits increased by £6.2 billion, or 19.8%, compared with 2020 as a result of higher call balances in the
Institutional Banking sector throughout the year.
Depositary assets were £51.9 billion, or 12.1%, higher than 2020 reflecting strong performance in the funds sector primarily
in the UK.
RWAs of £7.5 billion are broadly stable compared with 2020 as a result of lending volume growth primarily in the
Institutional Banking sector, offset by model updates in the period.
Q4 performance
Total income increased by £20 million, or 14.7%, compared with Q3 2021 reflecting higher fee income from higher
arrangement and account maintenance fees and higher volume growth.
Net interest margin remained broadly stable in Q4 2021 as higher income from higher average lending balances was offset
by high levels of short-term customer deposits placed with central banks at the start of the quarter.
Other expenses increased by £12 million, or 21.4%, million compared to Q3 2021 primarily due to additional technology
spend, annual license fees and a £2 million charge relating to the annual bank levy.
Net loans to customers decreased by £0.1 billion, or 0.6% compared with Q3 2021 primarily due to seasonal repayments in
Institutional Banking Fund balances.
Customer deposits increased by £0.6 billion, or 1.6% compared with Q3 2021 as a result of higher call balances in the
Institutional Banking sector in the quarter.
NatWest Group – Annual Results 2021
16
Business performance summary
NatWest Markets (1)
Year ended and as at
Quarter ended and as at
31 December 31 December 31 December 30 September 31 December
2021
2020
2021
2021
2020
£m
£m
£m
£m
£m
Income before revenue share paid, asset disposals and
OCA
670
1,423
78
160
177
Revenue share with other NatWest Group segments
(197)
(193)
(44)
(55)
(53)
Income excluding asset disposals and OCA
473
1,230
34
105
124
Asset disposals/strategic risk reduction (2)
(64)
(83)
(12)
(12)
(8)
Own credit adjustments (OCA)
6
(24)
3
2
(43)
Total income
415
1,123
25
95
73
Operating expenses
(1,161)
(1,310)
(343)
(258)
(301)
of which: Other expenses
(907)
(1,038)
(245)
(206)
(244)
Impairment releases/(losses)
35
(40)
16
3
(2)
Operating loss
(711)
(227)
(302)
(160)
(230)
Return on equity
(13.1%)
(3.8%)
(22.5%)
(12.1%)
(15.0%)
Cost:income ratio
279.8%
116.7%
nm
271.6%
nm
£bn
£bn
£bn
Funded assets
96.1
108.0
105.9
RWAs
24.2
25.4
26.9
(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) because 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 has supported its customers’ evolving needs with innovative solutions and continued to deliver a more integrated
customer proposition across NatWest Group. NatWest Markets has made good progress on building a refocused, sustainable
business from which it can grow. NatWest Markets incurred an operating loss in 2021 but has largely completed its RWA reduction
and continued to reduce operating expenses, and in Q4 2021, introduced changes to Rates which will improve the strategic
alignment with the rest of the business and drive income growth. NatWest Markets performance at the beginning of 2022 has been
in line with expectations.
NatWest Markets completed £9.7 billion of Climate and Sustainable Funding and Financing in 2021, including £3.3 billion in H2
2021 which will contribute towards the new NatWest Group target of £100 billion between 1 July 2021 and the end of 2025.
2021 performance
Income excluding asset disposals/strategic risk reduction and OCA was £757 million, or 61.5% lower than 2020. The
performance of Fixed Income was weak in 2021 impacted by subdued levels of customer activity and the reshaping of the
business, in contrast to the prior year which benefited from exceptional levels of market activity generated by the initial
spread of the COVID-19 virus. Both Currencies and Capital Markets income were lower than 2020 but performed broadly in
line with expectations.
Other expenses decreased by £131 million, or 12.6%, compared with 2020 reflecting continued reductions in line with the
strategic announcement in February 2020.
A net impairment release of £35 million in 2021 reflects releases against a number of cases throughout the year.
RWAs decreased by £2.7 billion, or 10.0%, compared with 2020 reflecting lower levels of market risk and counterparty credit
risk, including the impact of capital optimisation actions taken throughout the year.
Q4 performance
Income excluding asset disposals/strategic risk reduction and OCA was £71 million lower than Q3 2021 and £90 million lower
than Q4 2020 reflecting continued weakness in Fixed Income, which was further impacted by subdued levels of customer
activity and ongoing reshaping of the business. Disposal losses were £12 million, in line with Q3 2021. An OCA increase of £46
million compared with Q4 2020 was partially offset by £4 million higher disposal losses.
Other expenses were £39 million higher than Q3 2021 largely due to higher back office operational costs, including the annual
bank levy charge.
RWAs decreased by £1.2 billion, or 4.7%, compared with Q3 2021 primarily due to a seasonal reduction in counterparty credit
risk towards the end of the year.
NatWest Group – Annual Results 2021
17
Business performance summary
Ulster Bank RoI
Continuing operations
Year ended and as at
Quarter ended and as at
31 December 31 December 31 December 30 September 31 December
2021
2020 (1)
2021
2021 (1)
2020 (1)
€m
€m
€m
€m
€m
Total income
265
250
50
93
63
Operating expenses
(557)
(498)
(153)
(131)
(115)
of which: Other expenses
(487)
(462)
(111)
(121)
(100)
Impairment releases/(losses)
33
(157)
15
9
(7)
Operating loss
(259)
(405)
(88)
(29)
(59)
€bn
€bn
€bn
Net loans to customers (amortised cost)
7.9
15.3
20.0
Customer deposits
21.9
21.6
21.8
RWAs
10.9
11.7
13.2
(1)
Comparative results have been re-presented from those previously published to reclassify certain operations as discontinued operations as described in Note 3 on page 34.
Total UB RoI including discontinued operations
Year ended and as at
Quarter ended and as at
31 December 31 December 31 December 30 September 31 December
2021
2020
2021
2021
2020
€m
€m
€m
€m
€m
Total income
578
574
128
171
144
Operating expenses
(609)
(548)
(166)
(144)
(127)
of which: Other expenses
(539)
(512)
(124)
(134)
(112)
Impairment releases/(losses)
99
(281)
67
19
3
Operating profit/(loss)
68
(255)
29
46
20
€bn
€bn
€bn
Net loans to customers (amortised cost)
18.6
19.0
20.0
Customer deposits
21.9
21.6
21.8
RWAs
10.9
11.7
13.2
Ulster Bank RoI continues to make progress on its phased withdrawal from the Republic of Ireland. On 17 December 2021
UBIDAC entered a legally binding agreement with Permanent TSB p.l.c. (PTSB) for the proposed sale of approximately €7.6bn of
gross performing loans as at 30 June 2021, comprising performing non-tracker mortgages, performing loans in the micro-SME
business, the UBIDAC Asset Finance business, including its digital platform, and 25 Ulster Bank branch locations. Completion of
the sale is subject to obtaining competition, regulatory and other approvals, including PTSB's holding company shareholder
approval, and other conditions being satisfied. The transaction is expected to occur in phases between Q4 2022 and Q1 2023
with the majority of loans expected to transfer by Q4 2022.
Progress continues with Allied Irish Banks, p.l.c. (AIB) for the transfer of approximately €4.2bn, plus up to €2.8bn of undrawn
exposures, of performing commercial lending. A key part of the process is to complete the regulatory approvals and the
Competition and Consumer Protection Commission (CCPC) has already carried out an extended preliminary investigation and
on 31 December 2021 announced its decision to carry out a Phase 2 investigation into the proposed sale. There is no firm date
for the completion of this process. Discussions are ongoing with other counterparties about their potential interest in other parts
of the bank.
Continuing operations of Ulster Bank RoI include re-presented comparatives for the income statement. The representation is in
accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.
2021 performance (continuing operations)
Total income was €15 million, or 6.0%, higher than 2020 reflecting gains arising from the adjustment of the swap hedging
portfolio to align the modelled maturity position of deposits and other balances to the withdrawal plan, offset by lower
lending levels and fee income as a result of the decision to withdraw from the RoI market.
Other expenses were €25 million, or 5.4%, higher than 2020, due to higher VAT costs and regulatory levies, partially offset
by a 15% reduction in headcount, lower advertising spend and back office operational costs.
A net impairment release of €33 million in 2021 reflects improvements in the reducing loan portfolios and economic
forecasts.
Net loans to customers decreased by €12.1 billion primarily due to the reclassification of €10.7 billion of loans to the disposal
group.
Q4 performance (continuing operations)
Total income was €43 million, or 46.2%, lower than Q3 2021 mainly due to the gain arising from the adjustment of the swap
hedging portfolio in Q3 2021.
Other expenses were €10 million, or 8.3%, lower than Q3 2021 primarily due to lower back office operational costs.
Net loans to customers decreased by €7.4 billion primarily due to the reclassification of €7.0 billion of loans to the disposal
group.
NatWest Group – Annual Results 2021
18
Business performance summary
Central items & other
Year ended
Quarter ended
31 December 31 December 31 December 30 September 31 December
2021
2020
2021
2021
2020
£m
£m
£m
£m
£m
Central items not allocated
(301)
(653)
(211)
(173)
(153)
Central items not allocated represented a £301 million operating loss in 2021 principally reflecting litigation and conduct
charges of £243 million, strategic costs of £201 million and losses on redemption of own debt of £138 million related to the
repurchase of legacy instruments, partially offset by a £219 million share of gains under equity accounting for Business Growth
Fund, and other Treasury income. 2020 included the day one loss on redemption of own debt of £324 million related to the
repurchase of legacy instruments, property-related strategic costs and litigation and conduct charges.
NatWest Group – Annual Results 2021
19
Segment performance
Year ended 31 December 2021
Go-forward group
Total
excluding
Total
Retail
Private
Commercial
RBS
NatWest
Central items
Ulster
Ulster
NatWest
Banking
Banking
Banking
International
Markets
& other
Bank RoI
Bank RoI
Group
£m
£m
£m
£m
£m
£m
£m
£m
£m
Continuing operations
Income statement
Net interest income
4,074
480
2,582
383
9
(14)
7,514
100
7,614
Own credit adjustments
-
-
-
-
6
-
6
-
6
Other non-interest income
371
336
1,293
165
400
199
2,764
128
2,892
Total income
4,445
816
3,875
548
415
185
10,284
228
10,512
Direct expenses - staff costs
(454)
(138)
(557)
(108)
(369)
(1,498)
(3,124)
(141)
(3,265)
- other costs
(225)
(52)
(264)
(57)
(113)
(2,397)
(3,108)
(132)
(3,240)
Indirect expenses
(1,571)
(314)
(1,332)
(63)
(425)
3,853
148
(148)
-
Strategic costs - direct
(126)
(10)
(60)
(8)
(237)
(327)
(768)
(19)
(787)
- indirect
(61)
(9)
(33)
(3)
(17)
126
3
(3)
-
Litigation and conduct costs
(76)
3
(108)
(3)
-
(243)
(427)
(39)
(466)
Operating expenses
(2,513)
(520)
(2,354)
(242)
(1,161)
(486)
(7,276)
(482)
(7,758)
Operating profit/(loss) before impairment releases
1,932
296
1,521
306
(746)
(301)
3,008
(254)
2,754
Impairment releases
36
54
1,073
52
35
-
1,250
28
1,278
Operating profit/(loss)
1,968
350
2,594
358
(711)
(301)
4,258
(226)
4,032
Income excluding notable items
4,445
762
3,865
548
473
(19)
10,074
193
10,267
Additional information
Return on tangible equity (1)
na
na
na
na
na
na
10.0%
na
9.4%
Return on equity (1)
26.1%
17.0%
22.0%
22.5%
(13.1%)
nm
nm
nm
na
Cost:income ratio (1)
56.5%
63.7%
59.3%
44.2%
279.8%
nm
70.3%
nm
73.4%
Total assets (£bn)
210.0
29.9
184.6
40.6
200.7
93.4
759.2
22.8
782.0
Funded assets (£bn) (1)
210.0
29.8
184.6
40.6
96.1
92.0
653.1
22.8
675.9
Net loans to customers - amortised cost (£bn)
182.2
18.4
101.2
15.5
7.5
27.5
352.3
6.7
359.0
Loan impairment rate (1)
(2)bps
(29)bps
(104)bps
(33)bps
nm
nm
(35)bps
nm
(35)bps
Impairment provisions (£bn)
(1.5)
(0.1)
(1.5)
(0.1)
(0.1)
-
(3.3)
(0.5)
(3.8)
Impairment provisions - stage 3 (£bn)
(0.9)
-
(0.6)
-
(0.1)
-
(1.6)
(0.4)
(2.0)
Customer deposits (£bn)
188.9
39.3
177.7
37.5
2.3
15.7
461.4
18.4
479.8
Risk-weighted assets (RWAs) (£bn)
36.7
11.3
66.4
7.5
24.2
1.8
147.9
9.1
157.0
RWA equivalent (RWAe) (£bn)
36.7
11.3
66.4
7.7
25.8
2.1
150.0
9.1
159.1
Employee numbers (FTEs - thousands)
14.6
1.9
8.6
1.6
1.6
27.9
56.2
1.7
57.9
Third party customer asset rate (2)
2.66%
2.36%
2.71%
2.26%
nm
nm
nm
nm
nm
Third party customer funding rate (2)
(0.06%)
-
(0.01%)
0.08%
nm
nm
nm
0.02%
nm
Average interest earning assets (£bn) (1)
196.0
27.2
168.1
37.8
32.7
nm
nm
15.9
524.9
Net interest margin (1)
2.08%
1.76%
1.54%
1.01%
nm
nm
nm
nm
nm
Bank net interest margin (1)
na
na
na
na
na
na
2.39%
na
na
For the notes to this table, refer to page 23. nm = not meaningful.
NatWest Group – Annual Results 2021
20
Segment performance
Year ended 31 December 2020 (3)
Go-forward group
Total
excluding
Total
Retail
Private
Commercial
RBS
NatWest
Central items
Ulster
Ulster
NatWest
Banking
Banking
Banking
International
Markets
& other
Bank RoI
Bank RoI
Group
£m
£m
£m
£m
£m
£m
£m
£m
£m
Continuing operations
Income statement
Net interest income
3,868
489
2,740
371
(57)
(57)
7,354
122
7,476
Own credit adjustments
-
-
-
-
(24)
-
(24)
-
(24)
Other non-interest income
313
274
1,218
126
1,204
(179)
2,956
100
3,056
Total income
4,181
763
3,958
497
1,123
(236)
10,286
222
10,508
Direct expenses - staff costs
(516)
(149)
(638)
(117)
(524)
(1,319)
(3,263)
(153)
(3,416)
- other costs
(208)
(52)
(284)
(53)
(152)
(2,481)
(3,230)
(86)
(3,316)
Indirect expenses
(1,571)
(265)
(1,339)
(74)
(362)
3,781
170
(170)
-
Strategic costs - direct
(52)
(2)
(40)
(45)
(237)
(625)
(1,001)
(12)
(1,013)
- indirect
(174)
(13)
(139)
(4)
(30)
373
13
(13)
-
Litigation and conduct costs
(19)
26
10
2
(5)
(120)
(106)
(7)
(113)
Operating expenses
(2,540)
(455)
(2,430)
(291)
(1,310)
(391)
(7,417)
(441)
(7,858)
Operating profit/(loss) before impairment losses
1,641
308
1,528
206
(187)
(627)
2,869
(219)
2,650
Impairment losses
(792)
(100)
(1,927)
(107)
(40)
(26)
(2,992)
(139)
(3,131)
Operating profit/(loss)
849
208
(399)
99
(227)
(653)
(123)
(358)
(481)
Income excluding notable items
4,231
763
3,995
497
1,230
(46)
10,670
222
10,892
For the notes to this table, refer to page 23. nm = not meaningful.
Additional information
Return on tangible equity (1)
na
na
na
na
na
na (1.3%)
na
(2.4%)
Return on equity (1)
10.2%
10.3%
(4.5%)
6.1%
(3.8%)
nm
nm
nm
na
Cost:income ratio (1)
60.8%
59.6%
59.9%
58.6%
116.7%
nm
71.7%
nm
74.4%
Total assets (£bn)
197.6
26.2
187.4
34.0
270.1
57.6
772.9
26.6
799.5
Funded assets (£bn) (1)
197.6
26.2
187.4
34.0
105.9
55.3
606.4
26.6
633.0
Net loans to customers - amortised cost (£bn)
172.3
17.0
108.2
13.3
8.4
23.3
342.5
18.0
360.5
Loan impairment rate (1)
45bps
58bps
173bps
80bps
nm
nm
86bps
nm
85bps
Impairment provisions (£bn)
(1.8)
(0.1)
(2.9)
(0.1)
(0.2)
(0.1)
(5.2)
(0.8)
(6.0)
Impairment provisions - stage 3 (£bn)
(0.8)
-
(1.1)
-
(0.1)
(0.1)
(2.1)
(0.5)
(2.6)
Customer deposits (£bn)
171.8
32.4
167.7
31.3
2.6
6.3
412.1
19.6
431.7
Risk-weighted assets (RWAs) (£bn)
36.7
10.9
75.1
7.5
26.9
1.4
158.5
11.8
170.3
RWA equivalent (RWAe) (£bn)
36.7
10.9
75.1
7.5
28.7
1.6
160.5
11.8
172.3
Employee numbers (FTEs - thousands)
16.0
1.8
9.6
1.7
2.2
25.9
57.2
2.0
59.2
Third party customer asset rate (2)
2.89%
2.53%
2.86%
2.51%
nm
nm
nm
nm
nm
Third party customer funding rate (2)
(0.19%)
(0.11%)
(0.08%)
(0.01%)
nm
nm
nm
(0.04%)
nm
Average interest earning assets (£bn) (1)
181.4
23.8
163.1
31.7
37.9
nm
nm
16.6
483.7
Net interest margin (1)
2.13%
2.05%
1.68%
1.17%
nm
nm
nm
nm
nm
Bank net interest margin (1)
na
na
na
na
na
na
2.46%
na
na
NatWest Group – Annual Results 2021
21
Segment performance
Quarter ended 31 December 2021
Go-forward group
Total
excluding
Total
Retail
Private
Commercial
RBS
NatWest
Central items
Ulster
Ulster
NatWest
Banking
Banking
Banking
International
Markets
& other
Bank RoI
Bank RoI
Group
£m
£m
£m
£m
£m
£m
£m
£m
£m
Continuing operations
Income statement
Net interest income
1,057
126
645
106
13
(28)
1,919
23
1,942
Own credit adjustments
-
-
-
-
3
1
4
-
4
Other non-interest income
107
127
342
50
9
21
656
20
676
Total income
1,164
253
987
156
25
(6)
2,579
43
2,622
Direct expenses - staff costs
(112)
(36)
(136)
(28)
(95)
(352)
(759)
(34)
(793)
- other costs
(64)
(22)
(68)
(21)
(20)
(737)
(932)
(35)
(967)
Indirect expenses
(429)
(87)
(376)
(19)
(130)
1,067
26
(26)
-
Strategic costs - direct
(105)
(3)
(17)
(1)
(96)
(147)
(369)
(9)
(378)
- indirect
(12)
(2)
(3)
-
(2)
19
-
-
-
Litigation and conduct costs
(52)
(5)
(46)
(1)
-
(59)
(163)
(27)
(190)
Operating expenses
(774)
(155)
(646)
(70)
(343)
(209)
(2,197)
(131)
(2,328)
Operating profit/(loss) before impairment (losses)/releases
390
98
341
86
(318)
(215)
382
(88)
294
Impairment (losses)/releases
(5)
12
289
12
16
4
328
13
341
Operating profit/(loss)
385
110
630
98
(302)
(211)
710
(75)
635
Income excluding notable items
1,164
199
991
156
34
(27)
2,517
43
2,560
Additional information
Return on tangible equity
na
na
na
na
na
na
5.5%
na
5.6%
Return on equity (1)
19.7%
21.3%
22.4%
24.0%
(22.5%)
nm
nm
nm
na
Cost:income ratio (1)
66.5%
61.3%
64.2%
44.9%
nm
nm
85.0%
nm
88.6%
Total assets (£bn)
210.0
29.9
184.6
40.6
200.7
93.4
759.2
22.8
782.0
Funded assets (£bn) (1)
210.0
29.8
184.6
40.6
96.1
92.0
653.1
22.8
675.9
Net loans to customers - amortised cost (£bn)
182.2
18.4
101.2
15.5
7.5
27.5
352.3
6.7
359.0
Loan impairment rate (1)
1bps
(26)bps
(113)bps
(31)bps
nm
nm
(37)bps
nm
(38)bps
Impairment provisions (£bn)
(1.5)
(0.1)
(1.5)
(0.1)
(0.1)
-
(3.3)
(0.5)
(3.8)
Impairment provisions - stage 3 (£bn)
(0.9)
-
(0.6)
-
(0.1)
-
(1.6)
(0.4)
(2.0)
Customer deposits (£bn)
188.9
39.3
177.7
37.5
2.3
15.7
461.4
18.4
479.8
Risk-weighted assets (RWAs) (£bn)
36.7
11.3
66.4
7.5
24.2
1.8
147.9
9.1
157.0
RWA equivalent (RWAe) (£bn)
36.7
11.3
66.4
7.7
25.8
2.1
150.0
9.1
159.1
Employee numbers (FTEs - thousands)
14.6
1.9
8.6
1.6
1.6
27.9
56.2
1.7
57.9
Third party customer asset rate (2)
2.58%
2.34%
2.73%
2.33%
nm
nm
nm
nm
nm
Third party customer funding rate (2)
(0.05%)
-
-
0.12%
nm
nm
nm
0.05%
nm
Average interest earning assets (£bn) (1)
201.5
28.5
168.4
42.7
33.7
nm
536.6
15.0
551.6
Net interest margin (1)
2.08%
1.75%
1.52%
0.99%
nm
nm
nm
nm
nm
Bank net interest margin (1)
na
na
na
na
na
na
2.38%
na
na
For the notes to this table, refer to page 23. nm = not meaningful.
NatWest Group – Annual Results 2021
22
Segment performance
Quarter ended 30 September 2021 (3)
Go-forward group
Total
excluding
Total
Retail
Private
Commercial
RBS
NatWest
Central items
Ulster
Ulster
NatWest
Banking
Banking
Banking
International
Markets
& other
Bank RoI
Bank RoI
Group
£m
£m
£m
£m
£m
£m
£m
£m
£m
Continuing operations
Income statement
Net interest income
1,041
122
629
95
(1)
(20)
1,866
23
1,889
Own credit adjustments
-
-
-
-
2
-
2
-
2
Other non-interest income
90
73
336
41
94
127
761
56
817
Total income
1,131
195
965
136
95
107
2,629
79
2,708
Direct expenses - staff costs
(110)
(35)
(141)
(28)
(86)
(378)
(778)
(35)
(813)
- other costs
(50)
(10)
(65)
(12)
(29)
(552)
(718)
(29)
(747)
Indirect expenses
(383)
(72)
(314)
(16)
(91)
915
39
(39)
-
Strategic costs - direct
(5)
(2)
(4)
(1)
(51)
(5)
(68)
(9)
(77)
- indirect
11
-
(7)
(1)
1
(3)
1
(1)
-
Litigation and conduct costs
(15)
3
(25)
(2)
(2)
(254)
(295)
1
(294)
Operating expenses
(552)
(116)
(556)
(60)
(258)
(277)
(1,819)
(112)
(1,931)
Operating profit/(loss) before impairment (losses)/releases
579
79
409
76
(163)
(170)
810
(33)
777
Impairment (losses)/releases
(16)
15
216
11
3
(3)
226
7
233
Operating profit/(loss)
563
94
625
87
(160)
(173)
1,036
(26)
1,010
Income excluding notable items
1,131
195
961
136
105
(17)
2,511
44
2,555
Additional information
Return on tangible equity (1)
na
na
na
na
na
na
8.6%
na
8.5%
Return on equity (1)
29.9%
18.1%
21.7%
21.6%
(12.1%)
nm
nm
nm
na
Cost:income ratio (1)
48.8%
59.5%
56.0%
44.1%
271.6%
nm
68.8%
nm
70.9%
Total assets (£bn)
207.6
28.2
186.0
39.9
210.1
81.3
753.1
25.2
778.3
Funded assets (£bn) (1)
207.6
28.2
186.0
39.9
108.0
79.6
649.3
25.2
674.5
Net loans to customers - amortised cost (£bn)
180.5
18.4
102.7
15.6
7.1
23.5
347.8
13.2
361.0
Loan impairment rate (1)
4bps
(32)bps
(83)bps
(28)bps
nm
nm
(26)bps
nm
(26)bps
Impairment provisions (£bn)
(1.6)
(0.1)
(1.9)
(0.1)
(0.1)
-
(3.8)
(0.5)
(4.3)
Impairment provisions - stage 3 (£bn)
(0.8)
-
(0.8)
(0.1)
(0.1)
-
(1.8)
(0.4)
(2.2)
Customer deposits (£bn)
186.3
35.7
178.3
36.9
2.2
18.4
457.8
18.5
476.3
Risk-weighted assets (RWAs) (£bn)
36.6
11.4
66.4
8.1
25.4
1.9
149.8
10.0
159.8
RWA equivalent (RWAe) (£bn)
36.6
11.4
66.5
8.2
26.9
2.1
151.7
10.0
161.7
Employee numbers (FTEs - thousands)
15.0
1.9
8.8
1.6
1.6
27.5
56.4
1.8
58.2
Third party customer asset rate (2)
2.64%
2.36%
2.65%
2.24%
nm
nm
nm
nm
nm
Third party customer funding rate (2)
(0.05%)
-
-
0.07%
nm
nm
nm
0.02%
nm
Average interest earning assets (£bn) (1)
197.5
27.5
167.5
37.9
32.5
nm
nm
15.7
527.9
Net interest margin (1)
2.09%
1.76%
1.49%
0.99%
nm
nm
nm
nm
nm
Bank net interest margin (1)
na
na
na
na
na
na
2.41%
na
na
For the notes to this table, refer to the following page. nm = not meaningful.
NatWest Group – Annual Results 2021
23
Segment performance
Quarter ended 31 December 2020 (3)
Go-forward group
Total
excluding
Total
Retail
Private
Commercial
RBS
NatWest
Central items
Ulster
Ulster
NatWest
Banking
Banking
Banking
International
Markets
& other
Bank RoI
Bank RoI
Group
£m
£m
£m
£m
£m
£m
£m
£m
£m
Continuing operations
Income statement
Net interest income
949
118
667
85
(2)
53
1,870
31
1,901
Own credit adjustments
-
-
-
-
(43)
-
(43)
-
(43)
Other non-interest income
25
66
284
41
118
43
577
27
604
Total income
974
184
951
126
73
96
2,404
58
2,462
Direct expenses - staff costs
(117)
(32)
(141)
(25)
(90)
(385)
(790)
(37)
(827)
- other costs
(56)
(16)
(72)
(16)
(21)
(780)
(961)
(21)
(982)
Indirect expenses
(393)
(71)
(382)
(32)
(133)
1,042
31
(31)
-
Strategic costs - direct
(6)
2
(35)
(37)
(50)
(197)
(323)
(3)
(326)
- indirect
(36)
(3)
(28)
(1)
(6)
77
3
(3)
-
Litigation and conduct costs
(210)
29
2
(1)
(1)
(5)
(186)
(8)
(194)
Operating expenses
(818)
(91)
(656)
(112)
(301)
(248)
(2,226)
(103)
(2,329)
Operating profit/(loss) before impairment (losses)/releases
156
93
295
14
(228)
(152)
178
(45)
133
Impairment (losses)/releases
(65)
(26)
(10)
(27)
(2)
(1)
(131)
(8)
(139)
Operating profit/(loss)
91
67
285
(13)
(230)
(153)
47
(53)
(6)
Income excluding notable items
1,031
184
978
126
124
42
2,485
58
2,543
Additional information
Return on tangibe equity (1)
na
na
na
na
na
na
0.3%
na
(1.4%)
Return on equity (1)
3.8%
13.3%
8.1%
(5.5%)
(15.0%)
nm
nm
nm
na
Cost:income ratio (1)
84.0%
49.5%
67.8%
88.9%
nm
nm
nm
nm
94.5%
Total assets (£bn)
197.6
26.2
187.4
34.0
270.1
57.6
772.9
26.6
799.5
Funded assets (£bn) (1)
197.6
26.2
187.4
34.0
105.9
55.3
606.4
26.6
633.0
Net loans to customers - amortised cost (£bn)
172.3
17.0
108.2
13.3
8.4
23.3
342.5
18.0
360.5
Loan impairment rate (1)
15bps
61bps
4bps
81bps
nm
nm
15bps
nm
15bps
Impairment provisions (£bn)
(1.8)
(0.1)
(2.9)
(0.1)
(0.2)
(0.1)
(5.2)
(0.8)
(6.0)
Impairment provisions - stage 3 (£bn)
(0.8)
-
(1.1)
-
(0.1)
(0.1)
(2.1)
(0.5)
(2.6)
Customer deposits (£bn)
171.8
32.4
167.7
31.3
2.6
6.3
412.1
19.6
431.7
Risk-weighted assets (RWAs) (£bn)
36.7
10.9
75.1
7.5
26.9
1.4
158.5
11.8
170.3
RWA equivalent (RWAe) (£bn)
36.7
10.9
75.1
7.5
28.7
1.6
160.5
11.8
172.3
Employee numbers (FTEs - thousands)
16.0
1.8
9.6
1.7
2.2
25.9
57.2
2.0
59.2
Third party customer asset rate (2)
2.81%
2.38%
2.65%
2.33%
nm
nm
nm
nm
nm
Third party customer funding rate (2)
(0.10%)
(0.01%)
(0.01%)
0.05%
nm
nm
nm
(0.01%)
nm
Average interest earning assets (£bn) (1)
186.1
25.2
170.2
32.9
36.5
nm
nm
17.0
499.8
Net interest margin (1)
2.03%
1.86%
1.56%
1.03%
nm
nm
nm
nm
nm
Bank net interest margin (1)
na
na
na
na
na
na
2.44%
na
na
nm = not meaningful
(1)
Refer to the appendix for details of basis of preparation and reconciliation of non-IFRS performance measures 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. This excludes assets of disposal groups, intragroup items, loans to banks and liquid asset portfolios.
Third party customer funding rate reflects interest payable or receivable on third-party customer deposits, including interest bearing and non-interest bearing customer deposits. Intragroup items, bank deposits, debt securities in issue and subordinated liabilities are
excluded for customer funding rate calculation. Net interest margin is calculated as net interest income as a percentage of the average interest-earning assets, excluding assets of disposal groups and without these remaining exclusions.
(3)
Comparative results have been re-presented from those previously published to reclassify certain operations as discontinued operations as described in Note 3 on page 34.
NatWest Group – Annual Results 2021
24
Business performance summary
Capital and leverage ratios
The table below sets out the key capital and leverage ratios.
31 December
30 September
31 December
2021
2021
2020
Capital adequacy ratios (1)
%
%
%
CET1
18.2
18.7
18.5
Tier 1
20.7
21.1
21.4
Total
24.1
24.6
24.5
Capital
£m
£m
£m
Tangible equity
30,689
30,769
31,712
Prudential valuation adjustment
(274)
(264)
(286)
Deferred tax assets
(761)
(765)
(760)
Own credit adjustments
21
27
(1)
Pension fund assets
(465)
(385)
(579)
Cash flow hedging reserve
395
254
(229)
Foreseeable ordinary dividends
(846)
(402)
(364)
Foreseeable charges - on-market ordinary share buy back programme
(825)
(462)
-
Foreseeable pension contributions
(365)
(354)
(266)
Prudential amortisation of software development costs
411
476
473
Adjustments under IFRS 9 transitional arrangements
621
973
1,747
Other adjustments for regulatory purposes
(5)
(5)
-
Total deductions
(2,093)
(907)
(265)
CET1 capital
28,596
29,862
31,447
AT1 capital
3,875
3,875
4,983
Tier 1 capital
32,471
33,737
36,430
Tier 2 capital
5,402
5,522
5,255
Total regulatory capital
37,873
39,259
41,685
Risk-weighted assets
Credit risk
120,116
122,270
129,914
Counterparty credit risk
7,907
8,475
9,104
Market risk
7,917
7,979
9,362
Operational risk
21,031
21,031
21,930
Total RWAs
156,971
159,755
170,310
Leverage
Cash and balances at central banks
177,757
164,851
124,489
Trading assets
59,158
66,357
68,990
Derivatives
106,139
103,770
166,523
Financial assets
412,817
417,273
422,647
Other assets
17,106
26,027
16,842
Assets of disposal groups
9,015
-
-
Total assets
781,992
778,278
799,491
Derivatives
- netting and variation margin
(110,204)
(107,160)
(172,658)
- potential future exposures
35,035
36,382
38,171
Securities financing transactions gross up
1,397
1,903
1,179
Other off balance sheet items
44,240
44,292
45,853
Regulatory deductions and other adjustments
(8,980)
(14,340)
(8,943)
Claims on central banks
(174,148)
(161,688)
(122,252)
Exclusion of bounce back loans
(7,474)
(7,845)
(8,283)
UK leverage exposure
561,858
569,822
572,558
UK leverage ratio (%) (2)
5.8
5.9
6.4
(1)
Based on CRR end-point including an IFRS 9 transitional adjustment of £0.6 billion (30 September 2021 - £1.0 billion, 31 December 2020 - £1.7 billion). Excluding this adjustment, the
CET1 ratio would be 17.8% (30 September 2021 – 18.1%, 31 December 2020 – 17.5%). The amended article for the prudential treatment of software assets was implemented in
December 2020. Excluding this adjustment the CET1 ratio would be 18.0% (30 September 2021 – 18.4%, 31 December 2020 – 18.2%).
(2)
The UK leverage ratio excludes central bank claims from the leverage exposure where deposits held are denominated in the same currency and of contractual maturity that is
equal or longer than that of the central bank claims. Excluding an IFRS 9 transitional adjustment, the UK leverage ratio would be 5.7% (30 September 2021 – 5.8%, 31 December
2020 – 6.1%). The amended article for the prudential treatment of software assets was implemented in December 2020. Excluding this adjustment the UK leverage ratio would be
5.7% (30 September 2021 – 5.8%, 31 December 2020 – 6.3%.
NatWest Group – Annual Results 2021
25
Business performance summary
Portfolio summary – segment analysis
The table below shows gross loans and ECL, by segment and stage, within the scope of the IFRS 9 ECL framework.
Go-forward group
Total
Central
excluding
Ulster
Retail
Private
Commercial
RBS
NatWest
items
Ulster
Bank
Banking
Banking
Banking
International
Markets
& other
Bank RoI
RoI
Total
2021
£m
£m
£m
£m
£m
£m
£m
£m
£m
Loans - amortised cost
and FVOCI
Stage 1
168,013
17,600
82,893
16,185
8,290
32,283
325,264
5,560
330,824
Stage 2
13,594
967
17,853
477
147
90
33,128
853
33,981
Stage 3
1,884
270
1,820
162
99
-
4,235
787
5,022
Of which: individual
-
270
631
162
91
-
1,154
61
1,215
Of which: collective
1,884
-
1,189
-
8
-
3,081
726
3,807
Subtotal excluding disposal group
loans
183,491
18,837
102,566
16,824
8,536
32,373
362,627
7,200
369,827
Disposal group loans
9,084
9,084
Total
16,284
378,911
ECL provisions (1)
Stage 1
134
12
116
7
6
17
292
10
302
Stage 2
590
29
758
23
3
11
1,414
64
1,478
Stage 3
850
37
651
25
75
-
1,638
388
2,026
Of which: individual
-
37
221
25
67
-
350
13
363
Of which: collective
850
-
430
-
8
-
1,288
375
1,663
Subtotal excluding ECL
provisions on disposal group
loans
1,574
78
1,525
55
84
28
3,344
462
3,806
ECL on disposal group loans
109
109
Total
571
3,915
ECL provisions coverage (2)
Stage 1 (%)
0.1
0.1
0.1
0.0
0.1
0.1
0.1
0.2
0.1
Stage 2 (%)
4.3
3.0
4.3
4.8
2.0
12.2
4.3
7.5
4.4
Stage 3 (%)
45.1
13.7
35.8
15.4
75.8
-
38.7
49.3
40.3
ECL provisions coverage
excluding disposal group loans
0.9
0.4
1.5
0.3
1.0
0.1
0.9
6.4
1.0
ECL provisions coverage on
disposal group loans
1.2
1.2
Total
3.5
1.0
Impairment (releases)/losses
ECL (release)/charge (3)
(36)
(54)
(1,073)
(52)
(35)
-
(1,250)
(28)
(1,278)
Stage 1
(387)
(45)
(818)
(39)
(15)
(3)
(1,307)
(70)
(1,377)
Stage 2
157
(15)
(272)
(16)
(11)
3
(154)
(33)
(187)
Stage 3
194
6
17
3
(9)
-
211
75
286
Of which: individual
-
6
19
3
(6)
-
22
(2)
20
Of which: collective
194
-
(2)
-
(3)
-
189
77
266
Continuing operations
(36)
(54)
(1,073)
(52)
(35)
-
(1,250)
(28)
(1,278)
Discontinued operations
(57)
(57)
Total
(85)
(1,335)
Amounts written-off
220
6
467
28
67
-
788
88
876
Of which: individual
-
6
378
28
43
-
455
-
455
Of which: collective
220
-
89
-
24
-
333
88
421
NatWest Group – Annual Results 2021
26
Business performance summary
Portfolio summary – segment analysis continued
Go-forward group
Total
Central
excluding
Retail
Private
Commercial
RBS
NatWest
items
Ulster
Ulster Bank
Banking
Banking
Banking
International
Markets
& other
Bank RoI
RoI
Total
2020
£m
£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
26,859
272,744
14,380
287,124
Stage 2
32,414
1,939
37,344
2,242
1,566
110
75,615
3,302
78,917
Stage 3
1,891
298
2,551
211
171
-
5,122
1,236
6,358
Of which: individual
-
298
1,578
211
162
-
2,249
43
2,292
Of which: collective
1,891
-
973
-
9
-
2,873
1,193
4,066
174,261
17,558
110,580
14,596
9,517
26,969
353,481
18,918
372,399
ECL provisions (1)
Stage 1
134
31
270
14
12
13
474
45
519
Stage 2
897
68
1,713
74
49
15
2,816
265
3,081
Stage 3
806
39
1,069
48
132
-
2,094
492
2,586
Of which: individual
-
39
607
48
124
-
818
13
831
Of which: collective
806
-
462
-
8
-
1,276
479
1,755
1,837
138
3,052
136
193
28
5,384
802
6,186
ECL provisions coverage (2)
Stage 1 (%)
0.1
0.2
0.4
0.1
0.2
0.1
0.2
0.3
0.2
Stage 2 (%)
2.8
3.5
4.6
3.3
3.1
13.6
3.7
8.0
3.9
Stage 3 (%)
42.6
13.1
41.9
22.8
77.2
-
40.9
39.8
40.7
1.1
0.8
2.8
0.9
2.0
0.1
1.5
4.2
1.7
Impairment (releases)/losses
ECL (release)/charge (3,4)
792
100
1,927
107
40
26
2,992
139
3,131
Stage 1
(36)
25
(58)
8
(2)
10
(53)
(36)
(89)
Stage 2
619
60
1,667
71
54
15
2,486
115
2,601
Stage 3
209
15
318
28
(12)
1
559
60
619
Of which: individual
-
15
166
28
(3)
-
206
(12)
194
Of which: collective
209
-
152
-
(9)
1
353
72
425
Continuing operations
792
100
1,927
107
40
26
2,992
139
3,131
Discontinued operations
111
111
Total
250
3,242
Amounts written-off
378
5
321
3
11
-
718
219
937
Of which: individual
-
5
172
3
11
-
191
-
191
Of which: collective
378
-
149
-
-
-
527
219
746
(1)
Includes £5 million (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. It is calculated on third party loans and total ECL provisions.
(3)
Includes a £3 million release (2020 – £12 million charge) related to other financial assets, of which £2 million release (2020 – £2 million charge) related to assets classified as FVOCI;
and £34 million release (2020 – £28 million charge) related to contingent liabilities.
(4)
Comparative results have been re-presented from those previously published to reclassify certain operations as discontinued operations as described in Note 3 on page 34.
(5)
The table shows gross loans only and excludes amounts that are outside the scope of the ECL framework. Refer to the Financial instruments within the scope of the IFRS 9 ECL
framework section in the NatWest Group plc 2021 Annual Report and Accounts for further details. Other financial assets within the scope of the IFRS 9 ECL framework were cash
and balances at central banks totalling £176.3 billion (2020 – £122.7 billion) and debt securities of £44.9 billion (2020 – £53.8 billion).
Analysis of ECL provision
The table below shows gross loans and ECL provision analysis.
31 December 2021
30 September 2021
30 June 2021 31 December 2020
£m
£m
£m
£m
Total loans
369,827
374,000
375,592
372,399
Personal
207,380
211,902
209,699
204,188
Wholesale
162,447
162,098
165,893
168,211
Value of loans in Stage 2
33,981
41,485
53,188
78,917
Personal
14,423
14,036
20,414
34,352
Wholesale
19,558
27,449
32,774
44,565
ECL provisions in Stage 2
1,478
1,899
2,300
3,081
Personal
614
716
786
996
Wholesale
864
1,183
1,514
2,085
ECL provision coverage in Stage 2
4.35%
4.58%
4.32%
3.90%
Personal
4.26%
5.09%
3.85%
2.90%
Wholesale
4.42%
4.31%
4.62%
4.68%
NatWest Group – Annual Results 2021
27
Condensed consolidated income statement for the period ended 31 December 2021
Year ended
Quarter ended
31 December
31 December
31 December 30 September
31 December
2021
2020 (1)
2021
2021 (1)
2020 (1)
£m
£m
£m
£m
£m
Interest receivable
9,313
9,798
2,345
2,319
2,299
Interest payable
(1,699)
(2,322)
(403)
(430)
(398)
Net interest income
7,614
7,476
1,942
1,889
1,901
Fees and commissions receivable
2,698
2,722
724
668
650
Fees and commissions payable
(574)
(722)
(149)
(140)
(131)
Income from trading activities
323
1,125
(3)
95
71
Other operating income
451
(93)
108
196
(29)
Non-interest income
2,898
3,032
680
819
561
Total income
10,512
10,508
2,622
2,708
2,462
Staff costs
(3,676)
(3,878)
(915)
(881)
(975)
Premises and equipment
(1,133)
(1,222)
(368)
(263)
(320)
Other administrative expenses
(2,026)
(1,845)
(735)
(588)
(764)
Depreciation and amortisation
(923)
(913)
(310)
(199)
(270)
Operating expenses
(7,758)
(7,858)
(2,328)
(1,931)
(2,329)
Profit before impairment losses
2,754
2,650
294
777
133
Impairment releases/(losses)
1,278
(3,131)
341
233
(139)
Operating profit/(loss) before tax
4,032
(481)
635
1,010
(6)
Tax charge
(996)
(74)
(234)
(330)
(75)
Profit/(loss) from continuing operations
3,036
(555)
401
680
(81)
Profit from discontinued operations, net of tax
276
121
97
64
61
Profit/(loss) for the period
3,312
(434)
498
744
(20)
Attributable to:
Ordinary shareholders
2,950
(753)
434
674
(109)
Preference shareholders
19
26
5
5
5
Paid-in equity holders
299
355
58
63
83
Non-controlling interests
44
(62)
1
2
1
Earnings per ordinary share - continuing operations
23.0p
(7.2)p
3.0p
5.3p
(1.4)p
Earnings per ordinary share - discontinued operations
2.4p
1.0p
0.8p
0.5p
0.5p
Total earnings per share attributable to ordinary
shareholders - basic
25.4p
(6.2)p
3.8p
5.8p
(0.9)p
Earnings per ordinary share - fully diluted continuing
operations
22.9p
(7.2)p
3.0p
5.3p
(1.4)p
Earnings per ordinary share - fully diluted discontinued
operations
2.4p
1.0p
0.8p
0.5p
0.5p
Total earnings per share attributable to ordinary
shareholders - fully diluted
25.3p
(6.2)p
3.8p
5.8p
(0.9)p
(1)
Comparative results have been re-presented from those previously published to reclassify certain operations as discontinued operations as described in Note 3 on page 34.
(2)
The results of discontinued operations, comprising the post-tax profit is shown as a single amount on the face of the income statement. An analysis of this amount is presented in
Financial statements note section in NatWest Group plc 2021 Annual Report and Accounts on pages 313 to 394.
NatWest Group – Annual Results 2021
28
Condensed consolidated statement of comprehensive income for the period ended
31 December 2021
Year ended
Quarter ended
31 December 31 December
31 December 30 September 31 December
2021
2020
2021
2021
2020
£m
£m
£m
£m
£m
Profit/(loss) for the period
3,312
(434)
498
744
(20)
Items that do not qualify for reclassification
Remeasurement of retirement benefit schemes (1)
(669)
4
71
(6)
(50)
(Loss)/profit on fair value of credit in financial liabilities
designated at FVTPL due to own credit risk
(29)
(52)
-
(4)
(72)
FVOCI financial assets
13
(64)
2
3
(21)
Tax (1)
164
42
(21)
3
29
(521)
(70)
52
(4)
(114)
Items that do qualify for reclassification
FVOCI financial assets
(100)
44
45
-
81
Cash flow hedges
(848)
271
(238)
(245)
(93)
Currency translation
(382)
276
(115)
21
(149)
Tax
213
(89)
83
65
(4)
(1,117)
502
(225)
(159)
(165)
Other comprehensive (loss)/income after tax
(1,638)
432
(173)
(163)
(279)
Total comprehensive income/(loss) for the period
1,674
(2)
325
581
(299)
Attributable to:
Ordinary shareholders
1,308
(338)
261
512
(389)
Preference shareholders
19
26
5
5
5
Paid-in equity holders
299
355
58
63
83
Non-controlling interests
48
(45)
1
1
2
1,674
(2)
325
581
(299)
(1)
Following the purchase of ordinary shares from UKGI in March 2021, NatWest Group contributed £500 million to its main pension scheme in line with the memorandum of
understanding announced on 17 April 2018. After tax relief, this contribution reduced total equity by £365 million. There was also a pre-tax loss of £192 million (€224 million) in
relation to the re-measurement of the Group’s Republic of Ireland pension schemes, primarily as a result of significant movements in underlying actuarial assumptions (2020: pre-tax
gain of £72 million (€81 million)). In line with our policy, the present value of defined benefit obligations and the fair value of plan assets at the end of the reporting period, are
assessed to identify significant market fluctuations and one-off events since the end of the prior financial year.
NatWest Group – Annual Results 2021
29
Condensed consolidated balance sheet as at 31 December 2021
31 December 30 September 31 December
2021
2021
2020
£m
£m
£m
Assets
Cash and balances at central banks
177,757
164,851
124,489
Trading assets
59,158
66,357
68,990
Derivatives
106,139
103,770
166,523
Settlement balances
2,141
8,140
2,297
Loans to banks - amortised cost
7,682
9,251
6,955
Loans to customers - amortised cost
358,990
361,022
360,544
Other financial assets
46,145
47,000
55,148
Intangible assets
6,723
6,723
6,655
Other assets
8,242
11,164
7,890
Assets of disposal groups
9,015
-
-
Total assets
781,992
778,278
799,491
Liabilities
Bank deposits
26,279
17,375
20,606
Customer deposits
479,810
476,319
431,739
Settlement balances
2,068
7,792
5,545
Trading liabilities
64,598
70,946
72,256
Derivatives
100,835
98,560
160,705
Other financial liabilities
49,326
47,857
45,811
Subordinated liabilities
8,429
8,675
9,962
Notes in circulation
3,047
3,037
2,655
Other liabilities
5,797
5,830
6,388
Total liabilities
740,189
736,391
755,667
Equity
Ordinary shareholders' interests
37,412
37,492
38,367
Other owners' interests
4,384
4,384
5,493
Owners’ equity
41,796
41,876
43,860
Non-controlling interests
7
11
(36)
Total equity
41,803
41,887
43,824
Total liabilities and equity
781,992
778,278
799,491
NatWest Group – Annual Results 2021
30
Condensed consolidated statement of changes in equity for the period ended
31 December 2021
Year ended
Quarter ended
31 December 31 December 31 December 30 September 31 December
2021
2020
2021
2021
2020
£m
£m
£m
£m
£m
Called-up share capital - at 1 January
12,129
12,094
11,642
11,776
12,127
Ordinary shares issued
37
35
-
(1)
2
Share cancellation (1)
(698)
-
(174)
(133)
-
At 31 December
11,468
12,129
11,468
11,642
12,129
Paid-in equity - at 1 January
4,999
4,058
3,890
5,936
4,001
Redeemed
-
(1,277)
-
-
-
Reclassified (2)
(2,046)
-
-
(2,046)
Securities issued during the period
937
2,218
-
-
998
At 31 December
3,890
4,999
3,890
3,890
4,999
Share premium account - at 1 January
1,111
1,094
1,161
1,161
1,110
Ordinary shares issued
50
17
-
-
1
At 31 December
1,161
1,111
1,161
1,161
1,111
Merger reserve - at 1 January and 31 December
10,881
10,881
10,881
10,881
10,881
FVOCI reserve - at 1 January
360
138
237
239
(36)
Unrealised gains/(losses)
32
76
97
48
55
Realised (gains)/losses (3)
(122)
152
(51)
(48)
367
Tax
(1)
(6)
(14)
(2)
(26)
At 31 December
269
360
269
237
360
Cash flow hedging reserve - at 1 January
229
35
(254)
(77)
300
Amount recognised in equity
(687)
321
(186)
(178)
(75)
Amount transferred from equity to earnings
(161)
(50)
(52)
(67)
(18)
Tax
224
(77)
97
68
22
At 31 December
(395)
229
(395)
(254)
229
Foreign exchange reserve - at 1 January
1,608
1,343
1,325
1,304
1,758
Retranslation of net assets
(484)
297
(173)
25
(155)
Foreign currency gains/(losses) on hedges of net assets
88
(55)
48
(3)
4
Tax
(17)
6
(5)
(1)
-
Recycled to profit or loss on disposal of businesses (4)
10
17
10
-
1
At 31 December
1,205
1,608
1,205
1,325
1,608
Capital redemption reserve - at beginning of period
-
-
548
414
-
Share cancellation (1)
698
-
174
134
-
Redemption of preference shares
24
-
-
-
-
At end of period
722
-
722
548
-
Retained earnings - at 1 January
12,567
13,946
12,835
12,632
13,071
Profit/(loss) attributable to ordinary shareholders and
other equity owners
- continuing operations
2,992
(493)
400
678
(82)
- discontinued operations
276
121
97
64
61
Equity preference dividends paid
(19)
(26)
(5)
(5)
(5)
Paid-in equity dividends paid
(299)
(355)
(58)
(63)
(83)
Ordinary dividends paid
(693)
-
-
(346)
-
Shares repurchased during the year (1,5)
(1,423)
-
(387)
(288)
-
Unclaimed dividend
-
2
-
-
-
Redemption of preference shares
(24)
-
-
-
-
Redemption/reclassification of paid-in equity (2,6)
150
(355)
-
150
-
Realised gains/(losses) in period on FVOCI equity shares
- gross
3
(248)
1
3
(362)
- tax
-
-
-
-
27
Remeasurement of the retirement benefit schemes (4)
- gross
(669)
4
71
(6)
(50)
- tax
168
22
(16)
2
(7)
NatWest Group – Annual Results 2021
31
Condensed consolidated statement of changes in equity for the period ended
31 December 2021
Year ended
Quarter ended
31 December 31 December 31 December 30 September 31 December
2021
2020
2021
2021
2020
£m
£m
£m
£m
£m
Changes in fair value of credit in financial liabilities
designated at FVTPL through profit or loss
- gross
(29)
(52)
-
(4)
(72)
- tax
3
8
-
1
9
Shares issued under employee share schemes
8
(11)
8
-
-
Share-based payments (7)
(45)
4
20
17
60
At 31 December
12,966
12,567
12,966
12,835
12,567
Own shares held - at 1 January
(24)
(42)
(389)
(391)
(24)
Shares issued under employee share schemes
36
95
18
1
-
Own shares acquired (1)
(383)
(77)
-
1
-
At 31 December
(371)
(24)
(371)
(389)
(24)
Owners' equity at 31 December
41,796
43,860
41,796
41,876
43,860
Non-controlling interests - at 1 January
(36)
9
11
10
(38)
Currency translation adjustments and other movements
4
17
-
(1)
1
Profit/(losses) attributable to non-controlling interests
- continuing operations
44
(62)
1
2
1
- discontinued operations
-
-
-
-
-
Dividends paid
(5)
-
(5)
-
-
At 31 December
7
(36)
7
11
(36)
Total equity at 31 December
41,803
43,824
41,803
41,887
43,824
Attributable to:
Ordinary shareholders
37,412
38,367
37,412
37,492
38,367
Preference shareholders
494
494
494
494
494
Paid-in equity holders
3,890
4,999
3,890
3,890
4,999
Non-controlling interests
7
(36)
7
11
(36)
41,803
43,824
41,803
41,887
43,824
(1)
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), at 190.5p per share for
the total consideration of £1.13 billion. NatWest Group cancelled 391 million of the purchased ordinary shares, amounting to £744 million excluding fees, and held the remaining 200
million in own shares held, amounting to £381 million excluding fees. The nominal value of the share cancellation has been transferred to the capital redemption reserve.
(2)
In July 2021, paid-in equity reclassified to liabilities as the result of a call in August 2021 of US$2.65 billion AT1 Capital notes.
(3)
In 2020, the completion of the Alawwal bank merger resulted in the derecognition of the associate investment in Alawwal bank and recognition of a new investment in SABB held at
fair value through other comprehensive income (FVOCI).
(4)
Following the purchase of ordinary shares from UKGI in March 2021, NatWest Group contributed £500 million to its main pension scheme in line with the memorandum of
understanding announced on 17 April 2018. After tax relief, this contribution reduced total equity by £365 million. There was also a pre-tax loss of £192 million (€224 million) in
relation to the re-measurement of the Group’s Republic of Ireland pension schemes, primarily as a result of significant movements in underlying actuarial assumptions (2020: pre-tax
gain of £72 million (€81 million)). In line with our policy, the present value of defined benefit obligations and the fair value of plan assets at the end of the reporting period, are
assessed to identify significant market fluctuations and one-off events since the end of the prior financial year.
(5)
In line with the announcement in July 2021, NatWest Group plc repurchased and cancelled 310.8 million shares for total consideration of £676.2 million excluding fees. Of the 310.8
million shares bought back, 2.8 million shares were settled and cancelled in January 2022. The nominal value of the share cancellations has been transferred to the capital
redemption reserve with the share premium element to retained earnings.
(6)
The redemption of paid-in equity includes a tax credit of £16 million.
(7)
Share-based payments includes a tax credit of £10 million.
NatWest Group – Annual Results 2021
32
Condensed consolidated cash flow statement for the period ended 31 December 2021
Year ended
31 December 31 December
2021
2020
£m
£m
Operating activities
Operating profit/(loss) before tax from continuing operations (1)
4,032
(481)
Operating profit before tax from discontinued operations (1)
279
130
Adjustments for non-cash items
3,626
2,845
Net cash flows from trading activities
7,937
2,494
Changes in operating assets and liabilities
46,606
26,815
Net cash flows from operating activities before tax
54,543
29,309
Income taxes paid
(856)
(214)
Net cash flows from operating activities
53,687
29,095
Net cash flows from investing activities
3,065
7,547
Net cash flows from financing activities
(2,604)
90
Effects of exchange rate changes on cash and cash equivalents
(2,641)
1,879
Net increase in cash and cash equivalents
51,507
38,611
Cash and cash equivalents at 1 January
139,199
100,588
Cash and cash equivalents at 31 December
190,706
139,199
(1)
Comparative results have been re-presented from those previously published to reclassify certain operations as discontinued operations as described in Note 3 on page 34.
NatWest Group – Annual Results 2021
33
Notes
1. Presentation of condensed consolidated financial statements
The condensed consolidated financial statements should be read in conjunction with NatWest Group plc’s 2021 Annual Report and
Accounts which were prepared in accordance with UK adopted International Accounting Standards (IAS), International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and IFRS as adopted by the
European Union.
Going concern
Having reviewed NatWest Group’s principal risks, forecasts, projections and other relevant evidence, the directors have a
reasonable expectation that NatWest Group will continue in operational existence for a period of twelve months from the date the
financial statements are approved. Accordingly, the results for the year ended 31 December 2021 have been prepared on a going
concern basis (see the Report of the directors, page 183, NatWest Group plc 2021 Annual Report and Accounts).
2. Accounting policies
NatWest Group’s principal accounting policies are as set out on pages 307 to 312 of the NatWest Group plc’s 2021 Annual Report
and Accounts.
Critical accounting policies and key sources of estimation uncertainty
The judgments and assumptions that are considered to be the most important to the portrayal of NatWest Group’s financial
condition are those relating to deferred tax, fair value of financial instruments, loan impairment provisions, goodwill and provisions
for liabilities and charges. These critical accounting policies and judgments are noted on page 311 of the NatWest Group plc 2021
Annual Report and Accounts. Estimation uncertainty continues to be affected by the COVID-19 pandemic. Management’s
consideration of this source of uncertainty is outlined in the relevant sections of NatWest Group plc’s 2021 Annual Report and
Accounts, including the ECL estimate for the period in the Risk and capital management section contained in the NatWest Group
plc’s 2021 Annual Report and Accounts.
Information used for significant estimates
The COVID-19 pandemic continued to cause significant economic and social disruption during year ended 31 December 2021. Key
financial estimates are based on management's latest five-year revenue and cost forecasts. Measurement of goodwill, deferred tax
and expected credit losses are highly sensitive to reasonably possible changes in those anticipated conditions. Other reasonably
possible assumptions about the future include a prolonged financial effect of the COVID-19 pandemic on the economy of the UK
and other countries or greater economic effect as countries and companies implement plans to counter climate risks. Changes in
judgments and assumptions could result in a material adjustment to those estimates in the next reporting periods. (Refer to the
NatWest Group plc Risk factors in the 2021 Annual Report and Accounts).
NatWest Group – Annual results 2021
34
Notes
3. Discontinued operations and assets and liabilities of disposal groups
Two legally binding agreements for the sale of UBIDAC business were announced in 2021 as part of the phased withdrawal from
the Republic of Ireland:
On 28 June 2021 NatWest Group announced it had agreed a binding sale agreement with Allied Irish Banks, p.l.c. for the transfer
of c.€4.2 billion (plus up to €2.8 billion of undrawn exposures), of performing commercial loans as well as those c.280 colleagues
that are wholly or mainly assigned to supporting that part of the business, with the final number of roles to be confirmed as the
deal completes. The sale, subject to Competition and Consumer Protection Commission (CCPC) approval, is expected to be
completed in a series of transactions during 2022 and Q1 2023.
On the 17 December 2021 NatWest Group signed a legally binding agreement with Permanent TSB p.l.c. The proposed sale will
include performing non-tracker mortgages, the performing loans in the micro-SME business; the UBIDAC Asset Finance business,
including its Lombard digital platform, and a subset of Ulster Bank branch locations in the Republic of Ireland. The majority of loans
are expected to transfer by Q4 2022. As part of the transaction it is anticipated that c.450 colleagues will have the right to transfer
under the TUPE regulations, with the final number of roles to be confirmed as the deal completes.
The business activities relating to these sales that meet the requirements of IFRS 5 are presented as a discontinued operation and
as a disposal group at 31 December 2021. The Ulster Bank RoI operating segment continues to be reported separately and reflects
the results and balance sheet position of its continuing operations.
(a) Profit from discontinued operations, net of tax
Year ended
Quarter ended
31 December
31 December
31 December
30 September
31 December
2021
2020
2021
2021
2020
Interest receivable
260
273
62
65
70
Net interest income
260
273
62
65
70
Non-interest income
9
15
4
1
3
Total income
269
288
66
66
73
Operating expenses
(47)
(47)
(14)
(11)
(12)
Profit before impairment losses
222
241
52
55
61
Impairment releases/(losses)
57
(111)
45
9
9
Operating profit before tax
279
130
97
64
70
Tax charge
(3)
(9)
-
-
(9)
Profit from discontinued operations, net of tax
276
121
97
64
61
(b) Assets and liabilities of disposal groups
2021
£m
Assets of disposal groups
Loans to customers - amortised cost
9,002
Derivatives
5
Other assets
8
9,015
Liabilities of disposal groups
Other liabilities
5
5
Net assets of disposal groups
9,010
(c) Operating cash flows attributable to discontinued operations
Year ended
31 December
31 December
2021
2020
Net cash flows from operating activities
1,290
(895)
Net increase/(decrease) in cash and cash equivalents
1,290
(895)
NatWest Group – Annual results 2021
35
Notes
4. Provisions for liabilities and charges
Financial
Customer
Litigation and
commitments
redress (1)
other
regulatory
Property
and guarantees
Other (2)
Total
£m
£m
£m
£m
£m
£m
At 1 January 2021
749
365
271
178
289
1,852
Expected credit losses impairment
release
-
-
-
(83)
-
(83)
Currency translation and other
movements
(5)
-
2
(2)
(7)
(12)
Charge to income statement
173
307
113
-
196
789
Release to income statement
(25)
(86)
(118)
-
(82)
(311)
Provisions utilised
(418)
(309)
(37)
-
(203)
(967)
At 31 December 2021
474
277
231
93
193
1,268
(1)
Includes payment protection insurance provision which reflects the estimated cost of PPI redress attributable to claims prior to the Financial Conduct Authority (FCA) complaint
deadline of 29 August 2019. All pre-deadline complaints have been processed which removes complaint volume estimation uncertainty from the provision estimate. NatWest Group
continues to conclude remaining bank-identified closure work and conclude cases with the Financial Ombudsmen Service.
(2)
Other materially comprises provisions relating to restructuring costs.
(3)
Property provision materially includes dilapidation provisions. Release in property provision includes the effect of purchase of freeholds for properties where the group was the
primary leaseholder.
(4)
Majority of charge in the year and utilisation of litigation provisions relates to FCA investigation into money laundering.
Provisions are liabilities of uncertain timing or amount and are recognised when there is a present obligation as a result of a past
event, the outflow of economic benefit is probable and the outflow can be estimated reliably. Any difference between the final
outcome and the amounts provided will affect the reported results in the period when the matter is resolved.
5. Litigation and regulatory matters
NatWest Group plc and certain members of NatWest Group are party to legal proceedings and involved in regulatory matters,
including as the subject of investigations and other regulatory and governmental action (Matters) in the United Kingdom (UK), the
United States (US), the European Union (EU) and other jurisdictions. Note 27 in the NatWest Group plc 2021 Annual Report and
Accounts, issued on 18 February 2022 and available at natwestgroup.com (Note 27), discusses the Matters in which NatWest
Group is currently involved and material developments. Other than the Matters discussed in Note 27, no member of NatWest
Group is or has been involved in governmental, legal, or regulatory proceedings (including those which are pending or threatened)
that are expected to be material, individually or in aggregate. Recent developments in the Matters identified in Note 27 that have
occurred since the Q3 2021 Interim Management Statement was issued on 29 October 2021, include, but are not limited to, those
set out below.
Litigation
London Interbank Offered Rate (LIBOR) and other rates litigation
NWM Plc and certain other members of NatWest Group, including NatWest Group plc, are defendants in several class actions, as
well as more than two dozen non-class actions, relating to alleged historical artificial suppression of USD LIBOR, each of which is
part of a co-ordinated proceeding in the United States District Court for the Southern District of New York (SDNY). In December
2021, the United States Court of Appeals for the Second Circuit (US Court of Appeals), reversing a December 2016 decision of the
SDNY, held that plaintiffs in these cases have adequately alleged the court’s personal jurisdiction over NWM Plc and other non-US
banks, including with respect to antitrust class action claims on behalf of over-the-counter plaintiffs and exchange-based
purchaser plaintiffs. In the same decision, the appellate court affirmed the SDNY’s prior decision that plaintiffs who purchased
LIBOR-based instruments from third parties (as opposed to the defendants) lack antitrust standing to pursue such claims. The
appellate court remanded these matters to the SDNY for further proceedings in light of its rulings.
In January 2019, a class action antitrust complaint was filed in the SDNY alleging that the defendants (USD ICE LIBOR panel banks
and affiliates) have conspired to suppress USD ICE LIBOR from 2014 to the present by submitting incorrect information to ICE
about their borrowing costs. The NatWest Group defendants are NatWest Group plc, NWM Plc, NWMSI and NWB Plc. The
defendants made a motion to dismiss this case, which was granted by the court in March 2020. One plaintiff sought to appeal the
dismissal, but on 14 February 2022, the US Court of Appeals dismissed the appeal because that plaintiff lacks standing to maintain
the appeal.
FX litigation
NWM Plc, NWMSI and / or NatWest Group plc are defendants in several cases relating to NWM Plc’s foreign exchange (FX)
business. In December 2021, a claim was issued in the Netherlands against NatWest Group plc, NWM Plc and NWM N.V. by
Stichting FX Claims, seeking a declaration from the court that anti-competitive FX market conduct described in decisions of the
European Commission of 16 May 2019 is unlawful, along with unspecified damages. The claimant has indicated that it may seek to
amend its claim to also refer to the December 2021 decision by the EC (described below under “Foreign exchange related
investigations”). A hearing is scheduled for June 2022.
NatWest Group – Annual Results 2021
36
Notes
5. Litigation and regulatory matters continued
Spoofing litigation
In December 2021, three substantially similar class actions complaints were filed in federal court in the United States against NWM
Plc and NWMSI alleging Commodity Exchange Act and common law unjust enrichment claims arising from manipulative trading
known as spoofing. The complaints refer to NWM Plc’s December 2021 spoofing-related guilty plea (described below under “US
investigations relating to fixed-income securities”) and purport to assert claims on behalf of those who transacted in US Treasury
securities and futures and options on US Treasury securities between 2008 and 2018. The three complaints are pending in the
United States District Court for the Northern District of Illinois.
Regulatory matters
US investigations relating to fixed-income securities
In December 2021, NWM Plc pled guilty in United States District Court for the District of Connecticut to one count of wire fraud
and one count of securities fraud in connection with historical spoofing conduct by former employees in US Treasuries markets
between January 2008 and May 2014 and, separately, during approximately three months in 2018.
The 2018 trading occurred during the term of a non-prosecution agreement (NPA) between NWMSI and the United States
Attorney's Office for the District of Connecticut (USAO CT), under which non-prosecution was conditioned on NWMSI and affiliated
companies not engaging in criminal conduct during the term of the NPA. The relevant trading in 2018 was conducted by two NWM
traders in Singapore and breached that NPA.
The plea agreement reached with the US Department of Justice and the USAO CT resolves both the spoofing conduct and the
breach of the NPA.
As required by the resolution and sentence imposed by the court, NWM Plc is subject to a three-year period of probation and has
paid a US$25.2 million criminal fine, approximately US$2.8 million in criminal forfeiture and approximately US$6.8 million in
restitution out of existing provisions. The plea agreement also imposes an independent corporate monitor. In addition, NWM Plc has
committed to compliance programme reviews and improvements and agreed to reporting and co-operation obligations.
Other material adverse collateral consequences may occur as a result of this matter, as further described in the Risk Factor
relating to legal, regulatory and governmental actions and investigations set out on page 425 of the NatWest Group plc 2021
Annual Report and Accounts.
Foreign exchange related investigations
In recent years, NWM Plc paid significant penalties to resolve investigations into its FX business by the FCA, the Commodity Futures
Trading Commission, the US Department of Justice, the Board of Governors of the Federal Reserve System, the European
Commission (EC) and others. In December 2021, the EC announced that a settlement had been reached with NatWest Group plc,
NWM Plc and other banks in relation to its investigation into past breaches of competition law regarding spot foreign exchange
trading. NatWest Group plc and NWM Plc were fined EUR 32.5 million in total relating to conduct that took place between 2011 and
2012. The fine was covered by existing provisions. This concludes the EC’s investigations into NatWest Group’s past spot foreign
exchange trading activity.
FCA investigation into NatWest Group’s compliance with the Money Laundering Regulations 2007
Following an FCA investigation, commenced in 2017, into potential breaches of the UK Money Laundering Regulations 2007 (‘MLR
2007’), NWB Plc pled guilty in October 2021 to three offences under regulation 45(1) of the MLR 2007 for failure to comply with
regulation 8(1) between 7 November 2013 and 23 June 2016, and regulations 8(3) and 14(1) between 8 November 2012 and 23
June 2016. These regulations required the firm to determine, conduct and demonstrate risk sensitive due diligence and ongoing
monitoring of its relationships with its customers for the purposes of preventing money laundering. The offences relate to
operational weaknesses between 2012 and 2016, during which period NWB Plc did not adequately monitor the accounts of a UK
incorporated customer. In December 2021, NWB Plc was fined £264.8 million, incurred a confiscation order and was ordered to
pay costs. This was met by NWB Plc from existing provisions, with a small additional provision taken in Q4 2021.
Other material adverse collateral consequences may occur as a result of this matter, as further described in the Risk Factor
relating to legal, regulatory and governmental actions and investigations set out on page 425 of the NatWest Group plc 2021
Annual Report and Accounts.
Systematic Anti-Money Laundering Programme assessment
In December 2018, the FCA commenced a Systematic Anti-Money Laundering Programme assessment of NatWest Group. In
August 2019, the FCA instructed NatWest Group to appoint a Skilled Person under section 166 of the Financial Services and
Markets Act 2000 to provide assurance on financial crime governance arrangements in relation to two financial crime change
programmes. The Skilled Person’s final report was received in January 2022.
NatWest Group – Annual Results 2021
37
Notes
6. Related party transactions
UK Government
The UK Government and bodies controlled or jointly controlled by the UK Government and bodies over which it has significant
influence are related parties of NatWest Group. NatWest Group’s other transactions with the UK Government include the payment
of taxes, principally UK corporation tax and value added tax; national insurance contributions; local authority rates; and regulatory
fees and levies (including the bank levy and FSCS levies).
Bank of England facilities
In the ordinary course of business, NatWest Group may from time to time access market-wide facilities provided by the Bank of
England.
Other related parties
(a) In their roles as providers of finance, NatWest Group companies provide development and other types of capital support to
businesses. In some instances, the investment may extend to ownership or control over 20% or more of the voting rights of the
investee company.
(b) NatWest Group recharges The NatWest Group Pension Fund with the cost of administration services incurred by it. The
amounts involved are not material to NatWest Group.
Full details of NatWest Group’s related party transactions for the year ended 31 December 2021 are included in the NatWest Group
plc 2021 Annual Report and Accounts.
7. Dividends
The company has announced that the directors have recommended a final dividend of £844 million, or 7.5p per ordinary share
(2020 – £364 million, or 3.0p) subject to shareholder approval at the Annual General Meeting on 28 April 2022.
If approved, payment will be made on 4 May 2022 to shareholders on the register at the close of business on 18 March 2022. The
ex-dividend date will be 17 March 2022.
8. Post balance sheet events
On 27 January 2022, NatWest Group announced that we will create a new franchise, Commercial and Institutional, bringing
together our Commercial, NatWest Markets and RBS International businesses to form a single franchise, with common objectives,
to best support our customers across the full non-personal customer lifecycle. Our reporting will follow this new structure from Q1
2022.
Regulatory calls were announced as a result of the PRA determination that certain instruments can no longer be included as part
of Tier 1 capital on a solo and/or consolidated basis after 31 December 2021:
On 11 February 2022, NatWest Group plc gave notice to noteholders of the redemption of its €1.5 billion Fixed to Floating Rate
notes due 8 March 2023. The notes will be redeemed on the optional redemption date of 8 March 2022. Payment of principal and
accrued interest will be settled upon redemption at par. The call is because the note will cease to be MREL eligible from 8 March
2022.
Other than as disclosed in the accounts, there have been no other significant events between 31 December 2021 and the date of
approval of these accounts which would require a change or additional disclosure.
On 1 February 2022, NatWest Group plc gave notice of redemption to holders of the USD Series U Non-Cumulative Dollar
Preference Shares (ISIN US39057AA62). The notional outstanding of $1,013 million plus dividends for the current period to, but
excluding the redemption date of 31 March 2022 will be paid to noteholders at par.
On 1 February 2022, NatWest Group plc gave notice of redemption to holders of the $1,200 million 7.648% dollar Perpetual
Regulatory Tier One Security (ISIN US780097AH44). The notional outstanding of $67.5 million plus interest for the current
period will be paid to noteholders at a make whole price calculated at least one business day prior to the redemption date of 3
March 2022.
NatWest Group – Annual Results 2021
38
Statement of directors’ responsibilities
The responsibility statement below has been prepared in connection with NatWest Group’s full Annual Report and Accounts for the
year ended 31 December 2021.
We, the directors listed below, confirm that to the best of our knowledge:
The financial statements, prepared in accordance with UK adopted International Accounting Standards, International Financial
Reporting Standards as issued by the International Accounting Standards Board and IFRS as adopted by the European Union,
give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings
included in the consolidated taken as a whole; and
The Strategic report and Directors’ report (incorporating the Business review) include a fair review of the development and
performance of the business and the position of the company and the undertakings included in the consolidation taken as a
whole, together with a description of the principal risks and uncertainties that they face.
By order of the Board
Howard Davies
Alison Rose-Slade
Katie Murray
Chairman
Group Chief Executive Officer
Group Chief Financial Officer
17 February 2022
Board of directors
Chairman
Executive directors
Non-executive directors
Howard Davies
Alison Rose-Slade
Katie Murray
Frank Dangeard
Patrick Flynn
Morten Friis
Robert Gillespie
Yasmin Jetha
Mike Rogers
Mark Seligman
Lena Wilson
NatWest Group – Annual Results 2021
39
Additional information
Presentation of information
‘Parent company’ refers to NatWest Group plc and ‘NatWest Group’ and ‘we’ refers to NatWest Group plc and its subsidiary and
associated undertakings. The term ‘NWH Group’ refers to NatWest Holdings Limited (‘NWH’) and its subsidiary and associated
undertakings. The term ‘NWM Group’ refers to NatWest Markets Plc (‘NWM Plc’) and its subsidiary and associated
undertakings. The term ‘NWM N.V.’ refers to NatWest Markets N.V. The term ‘NWMSI’ refers to NatWest Markets Securities, Inc.
The term ‘RBS plc’ refers to The Royal Bank of Scotland plc. The term ‘NWB Plc’ refers to National Westminster Bank Plc. The
term ‘UBIDAC’ refers to Ulster Bank Ireland DAC. The term ‘RBSI Holdings Limited’ refers to The Royal Bank of Scotland
International (Holdings) Limited. ‘Go-forward group’ excludes Ulster Bank RoI and discontinued operations.
NatWest Group publishes its financial statements in pounds sterling (‘£’ or ‘sterling’). The abbreviations ‘£m’ and ‘£bn’ represent
millions and thousands of millions of pounds sterling, respectively, and references to ‘pence’ represent pence where the amounts
are denominated in pounds sterling (‘GBP’). Reference to ‘dollars’ or ‘$’ are to United States of America (‘US’) dollars. The
abbreviations ‘$m’ and ‘$bn’ represent millions and thousands of millions of dollars, respectively. The abbreviation ‘€’ represents
the ‘euro’, and the abbreviations ‘€m’ and ‘€bn’ represent millions and thousands of millions of euros, respectively.
Statutory results
Financial information contained in this document does not constitute statutory accounts within the meaning of section 434 of the
Companies Act 2006 (‘the Act’). The statutory accounts for the year ended 31 December 2019 have been filed with the Registrar of
Companies and those for the year ended 31 December 2020 will be filed with the register of companies following the Annual
General Meeting. The report of the auditor on those statutory accounts was unqualified, did not draw attention to any matters by
way of emphasis and did not contain a statement under section 498(2) or (3) of the Act.
Ulster Bank RoI
Continuing operations
Two legally binding agreements for the sale of the UBIDAC business were announced in 2021 as part of the phased withdrawal
from the Republic of Ireland: The sale of commercial lending to Allied Irish Banks p.l.c. (AIB) and the performing non-tracker
mortgages, performing micro-SME loans, UBIDAC’s asset finance business and 25 of its branch locations to Permanent TSB plc.
(PTSB). The business activities relating to these sales that meet the requirements of IFRS 5 are presented as a discontinued
operation and as a disposal group on 31 December 2021. The Business performance summary presents the results of the Group’s
continuing operations. For further details refer to Note 3 on page 34.
MAR – Inside Information
This announcement contains information that qualified or may have qualified as inside information for NatWest Group plc, for the
purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR) as it forms part of domestic law by virtue of the
European Union (Withdrawal) Act 2018. This announcement is made by Alexander Holcroft, Head of Investor Relations for NatWest
Group plc.
Contacts
Analyst enquiries: Alexander Holcroft, Investor Relations
+44 (0) 20 7672 1758
Media enquiries:
NatWest Group Press Office
+44 (0) 131 523 4205
Management presentation
Fixed income presentation
Date: Friday 18 February 2022
Date: Friday 18 February 2022
Time: 9:00 am UK time
Time: 1:00 pm UK time
Zoom registration and dial in: www.natwestgroup.com/results
Available on www.natwestgroup.com/results
Announcement and slides.
2021 Annual Report and Accounts.
A financial supplement containing income statement, balance sheet and segment performance for the nine quarters
ended 31 December 2021.
NatWest Group and NWH Group Pillar 3 Report.
Climate-related Disclosures Report 2021.
ESG Supplement 2021.
NatWest Group – Annual Results 2021
40
Forward looking statements
Cautionary statement regarding forward-looking statements
Certain sections in this document contain ‘forward-looking statements’ as that term is defined in the United States Private
Securities Litigation Reform Act of 1995, such as statements that include the words ‘expect’, ‘estimate’, ‘project’, ‘anticipate’,
‘commit’, ‘believe’, ‘should’, ‘intend’, ‘will’, ‘plan’, ‘could’, ‘probability’, ‘risk’, ‘Value-at-Risk (VaR)’, ‘target’, ‘goal’, ‘objective’, ‘may’,
‘endeavour’, ‘outlook’, ‘optimistic’, ‘prospects’ and similar expressions or variations on these expressions. In particular, this
document includes forward-looking targets and guidance relating to financial performance measures, such as income growth,
operating expense, cost reductions, RoTE, ROE, discretionary capital distribution targets, impairment loss rates, balance sheet
reduction, including the reduction of RWAs, CET1 ratio (and key drivers of the CET1 ratio including timing, impact and details),
Pillar 2 and other regulatory buffer requirements and MREL and non-financial performance measures, such as climate and ESG-
related performance ambitions, targets and metrics, including in relation to initiatives to transition to a net zero economy, Climate
and Sustainable Funding and Financing (CSFF) and financed emissions. In addition, this document includes forward-looking
statements relating, but not limited to: the COVID-19 pandemic and its impact on NatWest Group; planned cost reductions, disposal
losses and strategic costs; implementation of NatWest Group’s purpose-led strategy and other strategic priorities (including in
relation to: its phased withdrawal from ROI, the NWM Refocusing and investment programmes relating to digital transformation of
its operations and services and inorganic opportunities); the timing and outcome of litigation and government and regulatory
investigations; direct and on-market buy-backs; funding plans and credit risk profile; managing its capital position; liquidity ratio;
portfolios; net interest margin and drivers related thereto; lending and income growth, product share and growth in target
segments; impairments and write-downs, including with respect to goodwill; restructuring and remediation costs and charges;
NatWest Group’s exposure to political risk, economic assumptions and risk, climate, environmental and sustainability risk,
operational risk, conduct risk, financial crime risk, cyber, data and IT risk and credit rating risk and to various types of market risk,
including interest rate risk, foreign exchange rate risk and commodity and equity price risk; customer experience, including our Net
Promotor Score (NPS); employee engagement and gender balance in leadership positions.
Limitations inherent to forward-looking statements
These statements are based on current plans, expectations, estimates, targets and projections, and are subject to significant
inherent risks, uncertainties and other factors, both external and relating to NatWest Group’s strategy or operations, which may
result in NatWest Group being unable to achieve the current plans, expectations, estimates, targets, projections and other
anticipated outcomes expressed or implied by such forward-looking statements. In addition, certain of these disclosures are
dependent on choices relying on key model characteristics and assumptions and are subject to various limitations, including
assumptions and estimates made by management. By their nature, certain of these disclosures are only estimates and, as a result,
actual future results, gains or losses could differ materially from those that have been estimated. Accordingly, undue reliance
should not be placed on these statements. The forward-looking statements contained in this document speak only as of the date
we make them and we expressly disclaim any obligation or undertaking to update or revise any forward-looking statements
contained herein, whether to reflect any change in our expectations with regard thereto, any change in events, conditions or
circumstances on which any such statement is based, or otherwise, except to the extent legally required.
Important factors that could affect the actual outcome of the forward-looking statements
We caution you that a large number of important factors could adversely affect our results or our ability to implement our strategy,
cause us to fail to meet our targets, predictions, expectations and other anticipated outcomes or affect the accuracy of forward-
looking statements described in this document. These factors include, but are not limited to, those set forth in the risk factors and
the other uncertainties described in NatWest Group plc’s Annual Report on Form 20-F and its other filings with the US Securities
and Exchange Commission. The principal risks and uncertainties that could adversely NatWest Group’s future results, its financial
condition and prospects and cause them to be materially different from what is forecast or expected, include, but are not limited
to: economic and political risk (including in respect of: the impact of the COVID-19 pandemic on NatWest Group and its customers;
political and economic risks and uncertainty in the UK and global markets; uncertainty regarding the effects of Brexit; changes in
interest rates and foreign currency exchange rates; and HM Treasury’s ownership of NatWest Group plc); strategic risk (including
in respect of the implementation of NatWest Group’s purpose-led Strategy; refocusing of its NWM franchise; and the effect of the
COVID-19 pandemic on NatWest Group’s strategic objectives and targets); financial resilience risk (including in respect of: NatWest
Group’s ability to meet targets and to make discretionary capital distributions; the competitive environment; impact of the COVID-
19 pandemic on the credit quality of NatWest Group’s counterparties; counterparty and borrower risk; prudential regulatory
requirements for capital and MREL; the adequacy of NatWest Group’s resolution plans; liquidity and funding risks; changes in the
credit ratings; the requirements of regulatory stress tests; goodwill impairment; model risk; sensitivity to accounting policies,
judgments, assumptions and estimates; changes in applicable accounting standards; the value or effectiveness of credit protection;
and the application of UK statutory stabilisation or resolution powers); climate and sustainability risk (including in respect of: risks
relating to climate change and the transitioning to a net zero economy; the implementation of NatWest Group’s climate change
strategy and climate change resilient systems, controls and procedures; climate-related data and model risk; the failure to adapt to
emerging climate, environmental and sustainability risks and opportunities; changes in ESG ratings; increasing levels of climate,
environmental and sustainability related regulation and oversight; and climate, environmental and sustainability-related litigation,
enforcement proceedings and investigations); operational and IT resilience risk (including in respect of: operational risks (including
reliance on third party suppliers); cyberattacks; the accuracy and effective use of data; complex IT systems (including those that
enable remote working); attracting, retaining and developing senior management and skilled personnel; NatWest Group’s risk
management framework; and reputational risk); and legal, regulatory and conduct risk (including in respect of: the impact of
substantial regulation and oversight; compliance with regulatory requirements; the outcome of legal, regulatory and governmental
actions and investigations; the transition of LIBOR other IBOR rates to alternative risk-free rates; and changes in tax legislation or
failure to generate future taxable profits).
Climate and ESG disclosures
Climate and ESG disclosures in this report use a greater number and level of judgments, assumptions and estimates, including with
respect to the classification of climate and sustainable funding and financing activities, than our reporting of historical financial
information. These judgments, assumptions and estimates are highly likely to change over time, and, when coupled with the longer
time frames used in these disclosures, make any assessment of materiality inherently uncertain. In addition, our climate risk
analysis and net zero strategy remain under development, and the data underlying our analysis and strategy remain subject to
evolution over time. As a result, we expect that certain climate and ESG disclosures made in this report are likely to be amended,
updated, recalculated or restated in the future. This forward-looking statement should be read together with the ‘Climate-related
and other forward-looking statements and metrics’ of the NatWest Group 2021 Climate-related Disclosures Report.
The information, statements and opinions contained in this document do not constitute a public offer under any applicable
legislation or an offer to sell or a solicitation of an offer to buy any securities or financial instruments or any advice or
recommendation with respect to such securities or other financial instruments.
Appendix
Non-IFRS financial measures
NatWest Group Annual Report and Accounts 2021
2
Non-IFRS financial measures
NatWest Group prepares its financial statements in accordance with generally accepted accounting principles (GAAP). This
document contains a number of adjusted or alternative performance measures, also known as non-GAAP or non-IFRS
performance measures. These measures are adjusted for notable and other defined items which management believe are not
representative of the underlying performance of the business and which distort period-on-period comparison. The non-IFRS
measures provide users of the financial statements with a consistent basis for comparing business performance between financial
periods and information on elements of performance that are one-off in nature. The non-IFRS measures also include the
calculation of metrics that are used throughout the banking industry. These non-IFRS measures are not measures within the scope
of IFRS and are not a substitute for IFRS measures.
Non-IFRS financial measures
1. Adjustment for notable items
Go-forward group income excluding notable items is calculated as total income excluding Ulster Bank RoI total income and
excluding notable items. UK and RBSI retail and commercial businesses total income excluding notable items comprises income in
the Retail Banking, Commercial Banking, Private Banking and RBS International operating segments excluding notable items.
The exclusion of notable items aims to remove the impact of one-offs which may distort period-on-period comparisons.
Refer to pages 8 and 11 for further details.
Year ended
Quarter ended
31 December
31 December
31 December
30 September
31 December
2021
2020
2021
2021
2020
Continuing operations
Total income (1)
10,512
10,508
2,622
2,708
2,462
Less Ulster Bank RoI total income
(228)
(222)
(43)
(79)
(58)
Go-forward group income
10,284
10,286
2,579
2,629
2,404
Less notable items
(210)
384
(62)
(118)
81
Go-forward group income excluding notable items
10,074
10,670
2,517
2,511
2,485
Total income
Retail Banking
4,445
4,181
1,164
1,131
974
Private Banking
816
763
253
195
184
Commercial Banking
3,875
3,958
987
965
951
RBS International
548
497
156
136
126
UK and RBSI retail and commercial businesses income
9,684
9,399
2,560
2,427
2,235
Less notable items (2)
(64)
87
(50)
(4)
84
UK and RBSI retail and commercial businesses
income excluding notable items
9,620
9,486
2,510
2,423
2,319
(1)
Comparative results have been re-presented from those previously published to reclassify certain operations as discontinued operations as described in Note 3 on page 34.
(2)
For details of UK and RBSI retail and commercial businesses notable items refer to page 11.
2. Adjustment for asset disposals/strategic risk reductions and own credit adjustments
NWM total income excluding asset disposals/strategic risk reductions and own credit adjustments (OCA) is calculated as total
income of the NWM business less asset disposals/strategic risk reductions and OCA.
This aims to show underlying income generation in NWM excluding the impact of disposal losses and OCA.
Refer to pages 11 and 16 for further details.
Year ended
Quarter ended
31 December
31 December
31 December
30 September
31 December
2021
2020
2021
2021
2020
NWM total income
415
1,123
25
95
73
Less asset disposals/strategic risk reduction
64
83
12
12
8
Less OCA
(6)
24
(3)
(2)
43
NWM total income excluding asset disposals/ strategic
risk reductions and OCA
473
1,230
34
105
124
NatWest Group Annual Report and Accounts 2021
3
Non-IFRS financial measures
3. Operating expenses - management view
The management analysis of operating expenses shows strategic costs and litigation and conduct costs in separate lines.
Depreciation and amortisation, and other administrative expenses attributable to these costs are included in strategic costs and
litigation and conduct costs lines for management analysis. These amounts are included in staff, premises and equipment and
other administrative expenses in the statutory analysis.
Other expenses excludes strategic costs and litigation and conduct costs, which are more volatile and may distort comparisons
with prior periods.
Refer to pages 11 and 27 for further details.
Non-statutory analysis
Year ended
31 December 2021
31 December 2020 (1)
Litigation
Statutory
Litigation
Statutory
Strategic
and conduct
Other
operating
Strategic
and conduct
Other
operating
Operating expenses
costs
costs
expenses
expenses
costs
costs
expenses
expenses
Continuing operations
Staff costs
411
-
3,265
3,676
462
-
3,416
3,878
Premises and equipment
103
-
1,030
1,133
233
-
989
1,222
Other administrative expenses
133
466
1,427
2,026
197
113
1,535
1,845
Depreciation and amortisation
140
-
783
923
121
-
792
913
Total
787
466
6,505
7,758
1,013
113
6,732
7,858
Quarter ended
31 December 2021
Litigation
Statutory
Strategic
and conduct
Other
operating
Operating expenses
costs
costs
expenses
expenses
Continuing operations
Staff costs
122
-
793
915
Premises and equipment
73
-
295
368
Other administrative expenses
65
190
480
735
Depreciation and amortisation
118
-
192
310
Total
378
190
1,760
2,328
30 September 2021 (1)
Litigation
Statutory
Strategic
and conduct
Other
operating
Operating expenses
costs
costs
expenses
expenses
Continuing operations
Staff costs
74
-
807
881
Premises and equipment
(2)
-
265
263
Other administrative expenses
4
294
290
588
Depreciation and amortisation
1
-
198
199
Total
77
294
1,560
1,931
31 December 2020 (1)
Litigation
Statutory
Strategic
and conduct
Other
operating
Operating expenses
costs
costs
expenses
expenses
Continuing operations
Staff costs
147
-
828
975
Premises and equipment
63
-
257
320
Other administrative expenses
54
194
516
764
Depreciation and amortisation
62
-
208
270
Total
326
194
1,809
2,329
(1)
Comparative results have been re-presented from those previously published to reclassify certain operations as discontinued operations as described in Note 3 on page 34.
NatWest Group Annual Report and Accounts 2021
4
Non-IFRS financial measures
4. Other expenses excluding operating lease depreciation (OLD) and Ulster Bank RoI direct costs
Our cost target for 2021 is based on this measure and we track progress against this.
Refer to page 4 for further details.
Year ended
Quarter ended
31 December
31 December
31 December
30 September
31 December
2021
2020 (1)
2021
2021 (1)
2020 (1)
Continuing operations
Total operating expenses
7,758
7,858
2,328
1,931
2,329
Less strategic costs
(787)
(1,013)
(378)
(77)
(326)
Less litigation and conduct costs
(466)
(113)
(190)
(294)
(194)
Other expenses
6,505
6,732
1,760
1,560
1,809
Less OLD
(140)
(145)
(34)
(36)
(35)
Other expenses excluding OLD
6,365
6,587
1,726
1,524
1,774
Less Ulster Bank RoI direct costs
(273)
(239)
(69)
(64)
(58)
Other expenses excluding OLD and Ulster
Bank RoI direct costs
6,092
6,348
1,657
1,460
1,716
(1)
Comparative results have been re-presented from those previously published to reclassify certain operations as discontinued operations as described in Note 3 on page 34.
5. Cost:income ratio
The cost:income ratio is calculated as total operating expenses less OLD divided by total income less OLD.
This is a common metric used to compare profitability across the banking industry.
Refer to pages 8, 12 to 16 and 19 to 23 for further details.
Go-forward group
Total
Central
excluding
Retail
Private
Commercial
RBS
NatWest
items
Ulster
Ulster
NatWest
Banking
Banking
Banking
International
Markets
& other
Bank RoI
Bank RoI
Group
Year ended 31 December 2021
£m
£m
£m
£m
£m
£m
£m
£m
£m
Continuing operations
Operating expenses
(2,513)
(520)
(2,354)
(242)
(1,161)
(486)
(7,276)
(482)
(7,758)
Operating lease depreciation
-
-
140
-
-
-
140
-
140
Adjusted operating expenses
(2,513)
(520)
(2,214)
(242)
(1,161)
(486)
(7,136)
(482)
(7,618)
Total income
4,445
816
3,875
548
415
185
10,284
228
10,512
Operating lease depreciation
-
-
(140)
-
-
-
(140)
-
(140)
Adjusted total income
4,445
816
3,735
548
415
185
10,144
228
10,372
Cost:income ratio
56.5%
63.7%
59.3%
44.2%
279.8%
nm
70.3%
nm
73.4%
Year ended 31 December 2020 (1)
Continuing operations
Operating expenses
(2,540)
(455)
(2,430)
(291)
(1,310)
(391)
(7,417)
(441)
(7,858)
Operating lease depreciation
-
-
145
-
-
-
145
-
145
Adjusted operating expenses
(2,540)
(455)
(2,285)
(291)
(1,310)
(391)
(7,272)
(441)
(7,713)
Total income
4,181
763
3,958
497
1,123
(236)
10,286
222
10,508
Operating lease depreciation
-
-
(145)
-
-
-
(145)
-
(145)
Adjusted total income
4,181
763
3,813
497
1,123
(236)
10,141
222
10,363
Cost:income ratio
60.8%
59.6%
59.9%
58.6%
116.7%
nm
71.7%
nm
74.4%
NatWest Group Annual Report and Accounts 2021
5
Non-IFRS financial measures
5. Cost:income ratio continued
Go-forward group
Total
Central
excluding
Retail
Private
Commercial
RBS
NatWest
items
Ulster
Ulster
NatWest
Banking
Banking
Banking
International
Markets
& other
Bank RoI
Bank RoI
Group
Quarter ended 31 December
2021
£m
£m
£m
£m
£m
£m
£m
£m
£m
Continuing operations
Operating expenses
(774)
(155)
(646)
(70)
(343)
(209)
(2,197)
(131)
(2,328)
Operating lease depreciation
-
-
34
-
-
-
34
-
34
Adjusted operating expenses
(774)
(155)
(612)
(70)
(343)
(209)
(2,163)
(131)
(2,294)
Total income
1,164
253
987
156
25
(6)
2,579
43
2,622
Operating lease depreciation
-
-
(34)
-
-
-
(34)
-
(34)
Adjusted total income
1,164
253
953
156
25
(6)
2,545
43
2,588
Cost:income ratio
66.5%
61.3%
64.2%
44.9%
nm
nm
85.0%
nm
88.6%
Quarter ended 30 September 2021 (1)
Continuing operations
Operating expenses
(552)
(116)
(556)
(60)
(258)
(277)
(1,819)
(112)
(1,931)
Operating lease depreciation
-
-
36
-
-
-
36
-
36
Adjusted operating expenses
(552)
(116)
(520)
(60)
(258)
(277)
(1,783)
(112)
(1,895)
Total income
1,131
195
965
136
95
107
2,629
79
2,708
Operating lease depreciation
-
-
(36)
-
-
-
(36)
-
(36)
Adjusted total income
1,131
195
929
136
95
107
2,593
79
2,672
Cost:income ratio
48.8%
59.5%
56.0%
44.1%
271.6%
nm
68.8%
nm
70.9%
Quarter ended 31 December 2020 (1)
Continuing operations
Operating expenses
(818)
(91)
(656)
(112)
(301)
(248)
(2,226)
(103)
(2,329)
Operating lease depreciation
-
-
35
-
-
-
35
-
35
Adjusted operating expenses
(818)
(91)
(621)
(112)
(301)
(248)
(2,191)
(103)
(2,294)
Total income
974
184
951
126
73
96
2,404
58
2,462
Operating lease depreciation
-
-
(35)
-
-
-
(35)
-
(35)
Adjusted total income
974
184
916
126
73
96
2,369
58
2,427
Cost:income ratio
84.0%
49.5%
67.8%
88.9%
nm
nm
92.5%
nm
94.5%
(1)
Comparative results have been re-presented from those previously published to reclassify certain operations as discontinued operations as described in Note 3 on page 34.
NatWest Group Annual Report and Accounts 2021
6
6. NatWest Group return on tangible equity
Return on tangible equity comprises annualised profit or loss for the period attributable to ordinary shareholders divided by
average tangible equity. Average tangible equity is average total equity excluding non-controlling interests (NCI) less average
intangible assets and average other owners’ equity.
Go-forward group return on tangible equity is calculated as annualised profit or loss for the period less Ulster Bank RoI loss from
continuing operations and less profit from discontinued operations divided by go-forward group total tangible equity.
This measure shows the return NatWest Group generates on tangible equity deployed. It is used to determine relative performance
of banks and used widely across the sector.
Refer to pages 2, 8 and 19 to 23 for further details.
Year ended or as at
Quarter ended or as at
31 December
31 December
31 December
30 September
31 December
NatWest Group return on tangible equity
2021
2020
2021
2021
2020
Profit/(loss) attributable to ordinary shareholders (£m)
2,950
(753)
434
674
(109)
Annualised profit/(loss) attributable to ordinary shareholders
(£m)
1,736
2,696
(436)
Average total equity (£m)
42,727
43,774
41,887
42,507
43,648
Adjustment for other owners equity and intangibles (£m)
(11,395)
(11,872)
(10,719)
(10,881)
(11,895)
Adjusted total tangible equity (£m)
31,332
31,902
31,168
31,626
31,753
Return on tangible equity (%)
9.4%
(2.4%)
5.6%
8.5%
(1.4%)
Go-forward group return on tangible equity
Profit/(loss) attributable to ordinary shareholders (£m)
2,950
(753)
434
674
(109)
Less Ulster Bank RoI loss from continuing operations (£m)
255
495
73
26
171
Less profit from discontinued operations (£m)
(276)
(121)
(97)
(64)
(61)
Go-forward group profit/(loss) attributable to ordinary
shareholders (£m)
2,929
(379)
410
636
1
Annualised go-forward group profit/(loss) attributable
to ordinary shareholders (£m)
1,640
2,544
4
Average total equity (£m)
42,727
43,774
41,887
42,507
43,648
Adjustment for other owners equity and intangibles (£m)
(11,395)
(11,872)
(10,719)
(10,881)
(11,895)
Adjusted total tangible equity (£m)
31,332
31,902
31,168
31,626
31,753
Go-forward group RWAe applying factor (%)
93%
93%
93%
93%
93%
Go-forward group total tangible equity (£m)
29,139
29,669
28,986
29,412
29,530
Return on tangible equity (%)
10.0%
(1.3%)
5.6%
8.6%
nm
7. Segmental return on equity
Segmental return on equity comprises segmental operating profit or loss, adjusted for preference share dividends and tax, divided
by average notional tangible equity, allocated at an operating segment specific rate of the period average segmental risk-
weighted assets, incorporating the effect of capital deductions (RWAes).
This measure shows the return generated by operating segments on equity deployed.
Refer to pages 12 to 16 and 19 to 23 for further details.
Retail
Private
Commercial
RBS
NatWest
Year ended 31 December 2021
Banking
Banking
Banking
International
Markets
Operating profit/(loss) (£m)
1,968
350
2,594
358
(711)
Preference share cost allocation (£m)
(79)
(21)
(154)
(20)
(63)
Adjustment for tax (£m)
(529)
(92)
(683)
(59)
217
Adjusted attributable profit/(loss) (£m)
1,360
237
1,757
279
(557)
Average RWAe (£bn)
36.0
11.2
69.5
7.8
28.4
Equity factor
14.5%
12.5%
11.5%
16.0%
15.0%
RWAe applying equity factor (£bn)
5.2
1.4
8.0
1.2
4.3
Return on equity
26.1%
17.0%
22.0%
22.5%
(13.1%)
Year ended 31 December 2020 (1)
Operating profit/(loss) (£m)
849
208
(399)
99
(227)
Preference share cost allocation (£m)
(88)
(22)
(153)
(20)
(68)
Adjustment for tax (£m)
(213)
(52)
155
(11)
83
Adjusted attributable profit/(loss) (£m)
548
134
(397)
68
(212)
Average RWAe (£bn)
37.2
10.4
76.4
7.0
37.3
Equity factor
14.5%
12.5%
11.5%
16.0%
15.0%
RWAe applying equity factor (£bn)
5.4
1.3
8.8
1.1
5.6
Return on equity
10.2%
10.3%
(4.5%)
6.1%
(3.8%)
NatWest Group Annual Report and Accounts 2021
7
Non-IFRS financial measures
7. Segmental return on equity continued
Retail
Private
Commercial
RBS
NatWest
Quarter ended 31 December 2021
Banking
Banking
Banking
International
Markets
Operating profit/(loss) (£m)
385
110
630
98
(302)
Preference share cost allocation (£m)
(20)
(5)
(38)
(5)
(16)
Adjustment for tax (£m)
(102)
(29)
(166)
(16)
89
Adjusted attributable profit/(loss) (£m)
263
76
426
77
(229)
Annualised adjusted attributable profit/(loss) (£m)
1,052
304
1,704
308
(916)
Average RWAe (£bn)
36.9
11.3
66.3
8.0
27.2
Equity factor
14.5%
12.5%
11.5%
16.0%
15.0%
RWAe applying equity factor (£bn)
5.3
1.4
7.6
1.3
4.1
Return on equity
19.7%
21.3%
22.4%
24.0%
(22.5%)
Quarter ended 30 September 2021
Operating profit/(loss) (£m)
563
94
625
87
(160)
Preference share cost allocation (£m)
(20)
(5)
(38)
(5)
(16)
Adjustment for tax (£m)
(152)
(25)
(164)
(14)
49
Adjusted attributable profit/(loss) (£m)
391
64
423
68
(127)
Annualised adjusted attributable profit/(loss) (£m)
1,564
256
1,692
272
(508)
Average RWAe (£bn)
36.1
11.3
67.6
7.8
27.9
Equity factor
14.5%
12.5%
11.5%
16.0%
15.0%
RWAe applying equity factor (£bn)
5.2
1.4
7.8
1.3
4.2
Return on equity
29.9%
18.1%
21.7%
21.6%
(12.1%)
Quarter ended 31 December 2020
Operating profit/(loss) (£m)
91
67
285
(13)
(230)
Preference share cost allocation (£m)
(22)
(5)
(38)
(5)
(17)
Adjustment for tax (£m)
(19)
(17)
(69)
3
69
Adjusted attributable profit/(loss) (£m)
50
45
178
(15)
(178)
Annualised adjusted attributable profit/(loss) (£m)
200
180
712
(60)
(712)
Average RWAe (£bn)
36.1
10.7
75.9
7.1
31.5
Equity factor
14.5%
12.5%
11.5%
16.0%
15.0%
RWAe applying equity factor (£bn)
5.2
1.3
8.7
1.1
4.7
Return on equity
3.8%
13.3%
8.1%
(5.5%)
(15.0%)
8. Tangible equity
Tangible equity is ordinary shareholders’ interest less intangible assets. TNAV per ordinary share is calculated as tangible equity
divided by the number of ordinary shares in issue.
This is a measure used by external analysts in valuing the bank and the starting point for calculating regulatory capital.
Refer to pages 9, 10 and 24 for further details.
Year ended or as at
31 December
31 December
2021
2020
Ordinary shareholders’ interests (£m)
37,412
38,367
Less intangible assets (£m)
(6,723)
(6,655)
Tangible equity (£m)
30,689
31,712
Ordinary shares in issue (millions)
11,272
12,129
TNAV per ordinary share (pence)
272p
261p
NatWest Group Annual Report and Accounts 2021
8
9. Net interest margin
Bank net interest margin is defined as net interest income of the banking business of the Go-forward group less NatWest Markets
(NWM) element and excluding liquid asset buffer, as a percentage of bank average interest-earning assets. Bank average interest
earning assets are the average interest earning assets of the banking business of the Go-forward group less NWM element and
excluding liquid asset buffer.
The exclusion of the NWM element aims to eliminate the impact of distorting volatility in NWM.
The term Go-forward group excludes Ulster Bank RoI and discontinued operations. The exclusion of the discontinued element from
the average interest earning assets aims to align the basis of calculation with prior periods.
Liquid asset buffer consists of assets held by NatWest Group, such as cash and balances at central banks and debt securities in
issue, that can be used to ensure repayment of financial obligations as they fall due.
The exclusion of liquid asset buffer has been introduced as a way to present net interest margin on a basis more comparable with
UK peers and exclude the impact of regulatory driven factors.
Refer to pages 2, 8 and 10 for further details.
Year ended or as at
Quarter ended or as at
31 December
31 December
31 December
30 September
31 December
2021
2020
2021
2021
2020
£m
£m
£m
£m
£m
Continuing operations
NatWest Group net interest income (1)
7,614
7,476
1,942
1,889
1,901
Less NWM net interest income
(9)
57
(13)
1
2
Less Ulster Bank RoI net interest income
(100)
(122)
(23)
(23)
(31)
Bank net interest income
7,505
7,411
1,906
1,867
1,872
Annualised NatWest Group net interest income
7,705
7,494
7,563
Annualised Bank net interest income
7,562
7,407
7,447
Average interest earning assets (IEA)
524,886
483,719
551,577
527,886
499,793
Less NWM average IEA
(32,730)
(37,929)
(33,718)
(32,497)
(36,515)
Less Ulster Bank RoI average IEA
(15,854)
(16,600)
(15,018)
(15,701)
(17,040)
Less liquid asset buffer average IEA (1)
(162,195)
(127,945)
(184,730)
(164,897)
(140,491)
Bank average IEA
314,107
301,245
318,111
314,791
305,747
Bank net interest margin
2.39%
2.46%
2.38%
2.35%
2.44%
(1)
Comparative results have been re-presented from those previously published to reclassify certain operations as discontinued operations as described in Note 3 on page 34.
NatWest Group Annual Report and Accounts 2021
9
Non-IFRS financial measures
10. Net lending
NatWest Group net lending is calculated as total loans to customers less loan impairment provisions.
Go-forward group net lending is calculated as net loans to customers less Ulster Bank RoI net loans to customers.
UK and RBSI retail and commercial businesses net lending excluding UK Government support schemes comprises customer loans
in the Retail Banking, Commercial Banking, Private Banking and RBS International operating segments, excluding UK Government
support schemes.
This is the basis of our lending target for our key retail and commercial businesses.
Refer to pages 2 ,5, 9 and 10 for further details.
As at
31 December
31 December
2021
2020
£bn
£bn
Total loans to customers (amortised cost)
362.8
366.5
Less loan impairment provisions
(3.8)
(6.0)
Net loans to customers (amortised cost)
359.0
360.5
Less Ulster Bank RoI net loans to customers (amortised cost)
(6.7)
(18.0)
Go-forward group net lending
352.3
342.5
Net loans to customers (amortised cost)
Retail Banking
182.2
172.3
Private Banking
18.4
17.0
Commercial Banking
101.2
108.2
RBS International
15.5
13.3
UK and RBSI retail and commercial businesses net loans to customers (amortised cost)
317.3
310.8
Less UK Government support schemes
(11.6)
(12.9)
Total UK and RBSI retail and commercial businesses
net lending excluding UK Government support schemes
305.7
297.9
11. Customer deposits
Go-forward group customer deposits is calculated as total customer deposits less Ulster Bank RoI customer deposits.
UK and RBSI retail and commercial businesses customer deposits comprises customer deposits in the Retail Banking, Commercial
Banking, Private Banking and RBS International operating segments.
This metric is used to show underlying deposit movements across our key retail and commercial businesses.
Refer to pages 2, 9 and 10 for further details.
As at
31 December
31 December
2021
2020
£bn
£bn
Total customer deposits
479.8
431.7
Less Ulster Bank RoI customer deposits
(18.4)
(19.6)
Go-forward group customer deposits
461.4
412.1
Retail Banking
188.9
171.8
Private Banking
39.3
32.4
Commercial Banking
177.7
167.7
RBS International
37.5
31.3
Total UK and RBSI retail and commercial businesses customer deposits
443.4
403.2
12. Total operating profit before tax including discontinued operations
Given the current progress of the phased withdrawal from the Republic of Ireland, UB RoI results are currently presented in both
continuing and discontinued operations. Including operating profit before tax from discontinued operations provides a complete
view of the NatWest Group operating profit in 2021.
Refer to page 4 for further details.
Year ended
Quarter ended
31 December
31 December
31 December
30 September
31 December
2021
2020
2021
2021
2020
Operating profit/(loss) before tax
4,032
(481)
635
1,010
(6)
Operating profit before tax from discontinued operations
279
130
97
64
70
Total operating profit including discontinued operations
4,311
(351)
732
1,074
64
NatWest Group Annual Report and Accounts 2021
10
Performance metrics not defined under IFRS
Metrics based on GAAP measures, included as not defined under IFRS and reported for compliance with ESMA adjusted
performance measure rules.
1. Loan:deposit ratio
Loan:deposit ratio is calculated as net customer loans held at amortised cost divided by total customer deposits.
This is a common metric used among peers to assess liquidity.
Refer to page 9 for further details.
As at
31 December
31 December
2021
2020
£m
£m
Loans to customers - amortised cost
358,990
360,544
Customer deposits
479,810
431,739
Loan:deposit ratio (%)
75%
84%
2. Loan impairment rate
Loan impairment rate is the annualised loan impairment charge divided by gross customer loans.
Refer to pages 8, 12 to 15 and 19 to 23 for further details.
3. Funded assets
Funded assets is calculated as total assets less derivative assets.
This measure allows review of balance sheet trends exclusive of the volatility associated with derivative fair values.
Refer to pages 9, 16 and 19 to 23 for further details.
4. AUMAs
AUMA comprises both assets under management (AUMs) and assets under administration (AUAs) serviced through the Private
Banking franchise. AUMs comprise assets where the investment management is undertaken by Private Banking on behalf of
Private Banking, Retail Banking and RBSI customers. AUAs comprise third party assets held on an execution-only basis in custody
by Private Banking, Retail Banking and RBSI for their customers accordingly, for which the execution services are supported by
Private Banking. Private Banking receives a fee for providing investment management and execution services to Retail Banking
and RBSI franchises.
Private Banking is the Centre of Expertise for asset management across NatWest Group servicing all client segments across Retail,
Premier and Private Banking.
Refer to pages 9 and 13 for further details.
5. Depositary assets
Assets held by RBSI as an independent trustee and in a depositary service capacity.
Depositary assets are a closely monitored KPI for the RBS International business and its inclusion in commentary highlights the
services that RBS International provides.
Refer to page 15 for further details.
6. Wholesale funding
Wholesale funding comprises deposits by banks, debt securities in issue and subordinated liabilities.
This is a closely monitored metric used across the banking industry to ensure capital requirements are being met.
Refer to pages 9 and 10 for further details.
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