Natwest Group Plc · LSE:NWG
Natwest — Debt Investor Presentation (February 2025)
48 slides from Natwest's debt investor presentation, Feb 14, 2025
Slide 1: FY 2024 Results - Fixed income investors
NatWest UI FY 2024 Results ¢ 14 February 2025 -- Fixed income investors :
Slide 2: NatWest
NatWest UI
Slide 3: Disciplined growth across our businesses
Disciplined growth across our businesses £372bn £431bn £48.9bn with ~500k1 new Customer Loans2 Customer Deposits3 AUMA customers +3.5% vs Dec’23 +2.9% vs Dec’23 +20% vs Dec’23 Strong returns with £14.6bn £7.9bn 17.5% attributable profit of Income ex notable items4 Costs5 Return on Tangible Equity £4
Slide 4: Growing our customer base across three businesses
➢ Growing our customer base: ~500k in 2024 to over 19 million ➢ 6th consecutive year of lending growth: 6 year CAGR 1 4.3% Loans, 4.1% Deposits, 10.8% AUMA Start-ups to large corporates Youth to mass affluent Affluent to high net-worth and financial institutions • + ~500k new customers2 • 26% increa
Slide 5: Stable costs and technology investment
➢ Delivered stable costs in 2024 mitigating inflation, with £76m property savings1 and 3.3% FTE reduction2 ➢ Investments in technology are improving the customer experience and colleague productivity Start-ups to large corporates Youth to mass affluent Affluent to high net-worth and financial instit
Slide 6: Capital allocation and risk management
➢ Focused on capital allocation to drive optimal risk-adjusted returns: delivered 243bps of capital1 generation pre-distributions in 2024 ➢ £6.8bn RWA management savings through multiple levers ➢ Strong risk management evident in low impairment rate and low stage 3 loans 19bps 9bps 1.7% 1.4% £3.4bn
Slide 7: Grow our three customer businesses
• Grow our three customer businesses, • Accelerate digitisation of customer • Leverage our strong capital, liquidity increasing total customer numbers, journeys with a focus on reducing and and funding positions as a key source including proportion banking digitally automating end to end processes o
Slide 8: Group financial summary
FY'24 vs Q4'24 vs Q4'24 vs Group, £m FY'24 FY'23 FY'23 Q4'24 Q3'24 Q4'23 Q3'24 Q4'23 Net interest income, ex notable items1 11,306 11,081 2.0% 2,999 2,899 2,670 3.4% 12.3% 1 Non-interest income, ex notable items 3,342 3,258 2.6% 873 873 772 0.0% 13.1% Total income, ex notable items 1 14,648 14,339 2
Slide 9: Net interest income and non-interest income
+2.2% Net interest income 14,648 Non interest income 14,339 65 Total centre income (18) 248 (263) 44 298 3,258 (65) 3,342 3 businesses +£244m, +1.7% NII -£30m, -0.3% 11,306 FY’23 NIM2: +1bps in FY’24 FY’24 Non-II +£274m, +8.9% 212bps • Lending margins -11bps 213bps • Deposit margins +2bps 11,081 • F
Slide 10: 2025 income drivers and guidance
2025 income drivers and guidance Growth across our customer businesses Active management of product pricing as interest rates fall Strong product structural hedge tailwind of ~£1bn In 2025 we expect income excluding notable items to be £15.2bn-£15.7bn Assumes UK Bank Rate of 3.75% at end 2025 10
Slide 11: Operating costs and 2025 guidance
+1.1% ~8.1bn 7,728 7,854 ~£0.1bn 7,641 275 157 (252) 58 124 83 126 ~8.0bn One-time integration costs Ulster direct costs Other operating expenses FY’23 Staff costs Other Premises Depreciation Increased FY’24 FY’25 administrative and and bank Guidance expenses equipment amortisation levies1 and retai
Slide 12: Loan impairment rate and guidance
3,131 359 724 66 Q4’24 578 337 245 Q3’24 93 Q1’24 (45) Q2’24 (1,173) FY’19 FY’20 FY’213 FY’22 FY’23 FY’24 FY’25 Guidance Loan impairment Below 21 85 -32 9 15 9 rate2, bps 20bps Stage 3 loan 18 17 8 6 8 11 impairment rate4, bps ECL provision, £bn 3.8 6.2 3.8 3.4 3.6 3.4 of which Post Model Adjustment
Slide 13: Summary of guidance and targets
Summary of guidance and targets! I 2025 Guidance Total Other operating Loan Return on Risk Weighted Income expenses impairmentrate Tangible Equity Assets ~£8.1bn, incl. ~£0.1bn £15.2-15.7bn? Below 20bps 15-16% £190-195bn one-time integration costs Target an ordinary dividend payout ratio ~50% from 2
Slide 14: Group Treasurer
NatWest UI ij ile Donal Quaid - {Group Treasurer SS > wa > > @~F > = | = a = : =
Slide 15: Solid capital, MREL, liquidity and funding positions
Solid capital and MREL 13.6% 19.7% 33.0% positions CET1 ratio Total capital ratio MREL ratio Strong liquidity and 150% 85% 5.0% leverage positions Liquidity coverage ratio Loan to deposit ratio1 UK leverage ratio 137% £433.5bn £86bn Diversified funding Net stable funding ratio Customer Deposits Whol
Slide 16: Capital requirements and buffers
13.6% 11.7% O-SII group risk add-on2 5.0% 10.5% 1.2% MDA2 1.7% Countercyclical buffer3 4.25% 0.4% O-SII group risk add-on2 Capital conservation buffer 2.5% 0.6% Countercyclical leverage ratio buffer5 Pillar 2A4 1.8% 3.25% Minimum Tier 1 capital Pillar 1 requirement 4.5% Q4'24 Requirement FY'24 Requi
Slide 17: CET1 ratio and RWA movements
243bps1 capital generation pre distribution in FY’24 218bps distributions in FY’24 15.8 (0.02) 0.10 (0.95) 2.34 (1.22) 13.6 13.4 FY’23 Attrib. profit1 RWAs Other CET1 CET1 ratio pre Ordinary Directed FY’24 changes distributions dividend Buybacks CET1 capital2 24.4 +4.3 +0.2 -1.7 -2.2 24.9 £bn £190-1
Slide 18: Total capital ratio and requirements
19.7% Tier 2 3.2% 15.4% AT1 3.5 2.9% Tier 2 2.8% AT1 1.0 1.0 0.6 2.1% 2025 2026 2027 2028 onwards CET1 13.6% CET1 10.5% CET1 2.3 2.0 1.0 Total Capital FY'24 2024 Total capital requirement 2025 2027 2028 onwards 18
Slide 19: MREL position and requirements
33.0% MREL + Buffer 27.9% 1.2% O-SII Group Risk Add-on4 1.7% Countercyclical buffer5 2.5% Capital conservation buffer 2 x Pillar 2A3 6.5% 22.5% Senior MREL & MREL MREL eligible requirement CET1, AT1, 12.5 Tier 2 capital 2 x Pillar 1 resources 2 x Pillar 1 16% 4.9 3.2 3.7 MREL FY'24 2024 MREL require
Slide 20: Customer loans by business
205.4 Mortgages1 206.3 • Balance growth of +£1.6bn in FY’24, includes 207.0 £2.3bn Metro Bank portfolio • Stock share 12.6% as at Dec’244 15.8 Q4’23 Unsecured 1 16.6 Q3’24 16.8 Q4’24 • +£1.1bn in FY’24, 9.7% stock share5 4.5 Other Private 4.6 4.6 Business 1.9 2.0 Banking2,3 2.0 +£12.0bn, +9.4% • Soc
Slide 21: Liquidity portfolio and coverage ratio
152% 150% 145% 144% 232.6 222.8 222.3 199.4 63.9 61.2 74.7 74.4 26.6 48.2 72.4 50.6 142.0 99.9 88.6 74.3 FY'19 FY'22 FY'23 FY'24 FY'19 FY'22 FY'23 FY'24 Cash Securities Secondary liquidity 21
Slide 22: Liquidity portfolio composition
3% 6% 3% 24% 19% 37% £161.0bn £88.6bn £72.4bn 55% 59% 19% 76% GBP EUR GBP EUR USD Other Cash and balances at central banks Level 1 government & SSA bonds Level 1 covered bonds Level 2 eligible assets 22
Slide 23: Customer deposits by business
Q4’23 66.1 121.9 188.0 Retail Q3’24 64.3 127.7 192.0 419 420 425 427 431 Banking +£2.8bn Q4’24 64.5 130.3 194.8 16% 17% 17% 17% 16% Q4’23 7.2 30.5 37.7 Private Q3’24 6.5 33.2 39.7 50% 51% 51% 51% 53% Banking +£2.7bn Q4’24 6.6 35.8 42.4 Q4’23 68.9 124.5 193.4 34% 33% Commercial 32% 32% 31% & Institut
Slide 24: Product structural hedge
Product hedge gross income Gross income already written as at Dec’24 +c.£1bn +£0.2bn • We now expect the product structural hedge income 3.0 in 2025 to be ~£1bn greater than 2024. • Beyond 2025, we expect annual growth in product 2.0 structural hedge income each year through to 2027. 3.4 3.5 • We ex
Slide 25: Funding mix and maturities
74 80 86 2% 7% 10% 7% 5% 22% 14% 19% 450 434 40% 431 29% £86bn £86bn 37% £66bn 13% 35% 36% 25% 2022 2023 2024 Customer deposits Wholesale funding Bank deposits Up to 1 Yr TFSME 1-3 Yrs GBP USD CP & CD 3-5 Yrs EUR Other Senior unsecured MREL > 5 Yrs Senior secured Subordinated debt 5.2 3.8 3.0 Oct-25
Slide 26: 2024 issuance versus guidance
Group holding company 2024 guidance 2024 issuance • $1.0bn 4NC3 FXD • $0.3bn 4NC3 FRN • $1.5bn 11NC10 FXD • $0.5bn 4.25NC3.25 FRN Senior unsecured (MREL) £4bn to £5bn ~£4.8bn • $1.25bn 6NC5 FXD • €0.75bn 7NC6 FXD NatWest Group plc • €1.0bn 8NC7 FXD • $1.0bn 10.25NC5.25 Tier 2 capital £1bn to £2bn ~£
Slide 27: 2025 issuance guidance
Group holding company 2025 guidance • Expect to be active across multiple currencies and tenors. Senior unsecured (MREL) £4bn to £5bn • Issuance across all asset classes driven by re- NatWest Group plc financing of maturing or callable securities and RWA growth. Tier 2 capital ~£1bn • AT1 call optio
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Slide 29: Upcoming financial dates
26th March 2025 25th June 2025 Q4 2025 29
Slide 30: Senior and capital ratings
Senior ratings Moody’s S&P Fitch Group holding company NatWest Group plc A3 BBB+ A Stable Stable Positive A1 A+ A+ NatWest Bank Plc 1 Stable Stable Positive A1 A+ A+ Ring-fenced bank operating companies Royal Bank of Scotland plc 1 Stable Stable Positive Not rated A+ A+ NatWest Bank Europe GMBH Stab
Slide 31: Group issuance structure
NatWest Group plc Group holding company Issues internal Issues internal Issues internal AT1, Tier 2 and AT1, Tier 2 and AT1, Tier 2 and MREL senior MREL senior senior unsecured NatWest Markets plc NatWest Holdings Ltd Non ring-fenced bank operating RBS International Ltd Ring-fenced bank holding comp
Slide 32: Capital and leverage metrics by legal entity
NatWest NatWest NatWest Royal Bank of NatWest FY 2024 Holdings Markets RBSI Bank Plc Scotland plc Markets Plc Limited N.V. Capital and leverage metrics CET1 ratio 12.6% 11.4% 11.1% 18.2% 20.4% 17.5% Tier 1 ratio 15.2% 13.9% 14.0% 24.3% 23.6% 21.5% Total Capital ratio 18.2% 16.6% 17.5% 27.8% 25.5% 21
Slide 33: FY24 results by business
Retail Private Commercial & Central items Group FY24, £bn Group Banking Banking Institutional & other Net interest income 5.2 0.6 5.3 0.1 11.3 Non-interest income 0.4 0.3 2.6 0.1 3.4 Total income 5.7 1.0 8.0 0.1 14.7 Income ex-notable items 5.7 1.0 8.0 0.1 14.6 Other operating expenses (2.8) (0.7) (
Slide 34: Deposit costs and interest rate sensitivity
5.5 5.3 5.3 5.3 5.1 5.0 4.9 -50 -44 -41 4.5 4.0 3.5 3.1 3.1 3.1 -125 3.0 -142 2.9 3.0 -170 2.5 2.1 2.1 2.1 2.0 2.0 2.0 -169 -183 1.5 -220 1.0 Q4’23 Q1’24 Q2’24 Q3’24 Q4’24 FY’22 FY’23 FY’24 Average base rate Structural Hedge Average cost of interest bearing customer deposits across 3 businesses 2,3
Slide 35: Structural hedge and managed margin sensitivity
FY 2024 -25 basis points parallel downward shift +25 basis points parallel upward shift Year 1 Year 2 Year 3 Year 1 Year 2 Year 3 (£m) (£m) (£m) (£m) (£m) (£m) Structural Hedge (41) (125) (212) 41 125 212 Managed Margin (142) (120) (125) 121 116 124 Total (183) (245) (337) 162 241 336 H1 2024 -25 ba
Slide 36: Structural hedge income and yield
FY 2024 Period end Total Income Average Notional Total Yield notional (£m) (£bn) (£bn) % Equity 440 22 22 1.98 Product 3,039 172 174 1.75 Total 3,479 194 196 1.77 H1 2024 Period end Total Income Average Notional Total Yield notional (£m) (£bn) (£bn) % Equity 218 22 22 1.95 Product 1,392 175 176 1.58
Slide 37: Economic scenarios and weightings
FY'24 H1'24 FY'23 Upside Base Case Downside Extreme Upside Base Case Downside Extreme Upside Base Case Downside Extreme Scenario downside downside downside Weighting Weighted Weighted 23% 45% 19% 13% 22% 45% 19% 14% 21% 45% 20% 13% Weighted average average average UK GDP – Annual Growth (%) 2025 2.0
Slide 38: UK mortgage book
203 208 210 Number of UK mortgages >3 months in arrears 177 188 21 21 21 160 17 17 0.91% 0.91% 0.93% 17 0.78% 0.83% 0.71% 171 182 187 189 0.66% 0.64% 0.63% 143 160 0.62% 0.58% 0.53% 57 56 54 53 55 56 FY’19 FY’20 FY’21 FY’22 FY’23 FY’24 FY’19 FY’20 FY’21 FY’22 FY’23 FY’24 Buy-to-let Mortgage Book, £b
Slide 39: Group loan book composition
Personal: £226.5bn, 55% of group Wholesale: £183.7bn, 45% of group Group mortgages £209.8bn Other Corporate £93.6bn 51% of the group lending 23% of the group lending Loan-to-value of 56%1 stable year-on-year Diverse corporate loan book, with exposure across a broad range of sectors 63% 5Y, 27% 2Y, 1
Slide 40: ECL coverage and provisions
0.93% 0.83% ECL coverage, % 35.23% 34.40% Stage 3 ECL coverage, % -126 3,645 699 -600 -18 -58 -117 3,425 429 56 299 Economic uncertainty PMA 37 Other PMA 1,935 Stage 3 ex PMA 2,032 Stage 2 ex PMA Stage 1 ex PMA 736 625 489 432 FY’23 Transfers to Changes in Changes in Changes in risk Judgemental Writ
Slide 41: Impairment charge by business
Retail Private Commercial Central items Group Banking Banking & Institutional & other FY'24 (£m) 282 (11) 98 (10) 359 FY'24 (bps) 13bps (6)bps 7bps nm 9bps FY’23 (£m) 465 14 94 5 578 FY’23 (bps) 22bps 8bps 7bps nm 15bps Q4’24 (£m) 16 3 46 1 66 Q4’24 (bps) 3bps 7bps 13bps nm 7bps Q3’24 (£m) 144 (3) 1
Slide 42: Risk weighted assets by business
Commercial & Central items Total NatWest Total RWAs Retail Banking Private Banking Institutional & other Group £bn £bn £bn £bn £bn At 31 December 2023 61.6 11.2 107.4 2.8 183.0 Foreign exchange movement - - (0.4) - (0.4) Business movement 2.1 (0.2) (1.3) (0.8) (0.2) Risk parameter changes 0.2 - (0.7
Slide 43: Commercial real estate portfolio
31-Dec-24 Gross Loans 31-Dec-23 Gross Loans Total Total (£m) (£m) ≤50% 7,762 ≤50% 7,898 >50% and ≤70% 4,867 >50% and ≤70% 3,878 >70% and ≤100% 474 >70% and ≤100% 515 >100% 266 >100% 273 Total with LTVs 13,369 Total with LTVs 12,564 Total portfolio Total portfolio 48% 48% average LTV average LTV Othe
Slide 44: Capital and liquidity: worst point versus FY 2024
Worst point1 FY 2024 Capital & liquidity Key observations, then and now…. CET1 ratio2 4.0% 13.6% • Markets RWA nearly 50% of RWA £578bn £183.2bn total group RWA vs 11% today o/w Markets RWA £279bn £20.8bn • High reliance on short term Wholesale funding £492bn £74bn4 funding; peaked at 60% of total w
Slide 45: Footnotes
Slide 3: 1. Net new customers excluding RBS Collective Investment Funds Limited (CIFL) solo customers. 2. Gross loans across 3 businesses. 3. Customer deposits across 3 businesses. 4. Excludes notable items. 5. Costs excluding litigation and conduct. Slide 4: 1. Compound annual growth rate across 3
Slide 46: Footnotes
Slide 26: 1. Includes primary/benchmark transactions only. Does not include private placements. Slide 30: 1. Moody’s long-term Issuer and Deposit Rating. The ring-fenced bank operating companies do not issue rated senior unsecured debt. Nevertheless, Moody’s assigns an Issuer Rating. The outlook on
Slide 47: Forward-looking statements
Forward-looking statements The guidance, targets, expectations and trends discussed in this presentation represent NatWest Group management’s current expectations and are subject to change, including as a result of the factors described in the “Risk Factors” in the NatWest Group plc 2024 Annual Repo
Slide 48: Group Treasury and Investor Relations contacts
Group Treasury Investor Relations Scott Forrest Paul Pybus Amber Sekhri Head of Capital Strategy & Head of Debt Investor Relations Corporate Access Treasury Debt Capital Markets paul.pybus@natwest.com amber.sekhri@natwest.com scott.forrest@natwest.com Useful links • Fixed Income Investor Relations w
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