Business
Interim Results - NatWest Group (Part 2 of 2)
Interim Results - NatWest Group (Part 2 of 2).
About this update from Natwest Group Plc
[{"type":"text","content":"\n \n \n Risk and capital management\n \n \n Capital, liquidity and funding risk \n \n \n \n Introduction\n \n \n \n NatWest Group continually ensures a comprehensive approach is taken to the management of capital, liquidity and funding, underpinned by frameworks, risk appetite and policies, to manage and mitigate capital, liquidity and funding risks. The framework ensures the tools and capability are in place to facilitate the management and mitigation of risk ensuring that NatWest Group operates within its regulatory requirements and risk appetite.\n \n \n \n Key developments\n \n \n \n \n \n \n \n CET1\n \n \n \n \n The CET1 ratio decreased by 390 basis points to 14.3%. The decrease is primarily due to a £22.8 billion increase in RWAs and a £2.9 billion decrease in CET1 capital.\n \n \n The CET1 decrease is mainly driven by:\n \n \n - \n the directed buyback of £1.2 billion;\n \n \n - \n foreseeable dividend accrual of £2.3 billion (special dividend will be paid on 16 September 2022, subject to approval at a General Meeting, with the notice and circular publication on 9 August 2022 and the General Meeting scheduled for 25 August 2022);\n \n \n - \n a £0.3 billion decrease in the IFRS 9 transitional adjustment;\n \n \n - \n the removal of adjustment for prudential amortisation on\n \n software development costs of £0.4 billion;\n \n \n - \n a £0.3 billion decrease due to FX loss on retranslation on the redemption of a USD instrument; and\n \n \n - \n other reserve movements.\n \n \n These reductions were partially offset by the £1.9 billion attributable profit in the period.\n \n \n \n \n \n \n MREL (LAC)\n \n \n \n \n MREL (LAC) ratio as a percentage of risk-weighted assets decreased to 31.7% from 39.8% due to a £22.8 billion increase in RWAs and £5.4 billion decrease in MREL resources.\n \n The ratio remains well above the minimum of 22.2%, calculated as 2 x (Pillar 1 + Pillar 2A).\n \n \n \n \n \n \n \n \n \n \n \n \n \n In the first half of 2022 there were redemptions of $3 billion and €1.5 billion Senior debt, and $1 billion Tier 1 instruments. These were partially offset by new issuances of $1 billion and £0.75 billion Senior debt.\n \n \n \n \n \n \n Total RWAs\n \n \n \n \n Total RWAs increased by £22.8 billion to £179.8 billion during H1 2022 reflecting:\n \n \n - \n...