NatWest Group (LSE:NWG) — Virtual Shareholder Event

0:03 Good afternoon, ladies and gentlemen, welcome to the NatWest Group Virtual Shareholder Event. Throughout today's presentation, attendees will be in listen only mode. Questions are encouraged and can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Please simply type in your questions at any time and press send. Given the attendance on today's call, the company may not be in a position to answer every question received during the meeting itself. However, the company can review your questions submitted today and we will publish those responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll, and I'm sure the company will be most grateful for your participation. And we will now commence the virtual shareholder event momentarily. Thank you. Good evening, and welcome to our second virtual

3:53 shareholder event this year. I'm Victoria Cleverley, and I'm the Chief Operating Officer in our Digital X team, which powers our technology operations right across the NatWest Group. This evening, I have the pleasure of being your host. These events really provide an opportunity for our shareholders to hear directly from our senior leaders and importantly, to put your questions to them. With that in mind, I'm delighted to be joined by our Chair, Rick Haythorn Thwait and our Group CEO, Paul Thwait. Thank you both for joining this evening. But before we get into our shareholder Q and A session, I wanted to take a moment to get some reflections from both Rick and Paul since our last shareholder event in April this year. So Rick, I'm going to start with you first, if I can. Now I remember this time in April, at our last event, was your first official day as our chair of NATWEST GROUP. And so it'd be great to hear your thoughts on your first six months in role.

4:50 Thank you, Victoria, and thank you to to all the the shareholders that have joined us this evening. Know, the the board serves the bank on your behalf, And so delivering for you the shareholders will always be our number one priority. So it's always wonderful to hear from you and we actually look forward to your questions this evening. So if I think back to those first days when I joined, I think I said at that point that I had an overarching priority, which is that was to help the NATWEST GROUP be the best bank it can be for our customers, the communities they serve, The UK economy as a whole, and as a result, the shareholders.

5:35 And, you know, I think over the past six months, I've had the opportunity to go out and actually witness the impact that our colleagues have on The UK economy, but also in the lives of our 19,000,000 customers. And, you know, I'm always struck by the the energy and imagination that they they bring to not not only understanding but meeting the needs of those customers. Whether it's it's with the accelerator hubs working with with the startups and or or with meeting with relationship managers as I have in in Newcastle and Bristol or our colleagues around the world where I've managed to visit Tokyo and India and North America and Continental Europe. I mean, it is quite extraordinary what I see and it's I was always struck by, first of all, the the absolute focus on

6:27 serving the customers, but the depth of our expertise in those areas and you know, whether it be sector knowledge in the commercial teams or investment knowledge in the wealth teams. But you know what also has become clear to me that all of this is is built, on on the strength of of our our platform in the regions in The UK. I mean, there's a there's a sort of a connection with the customers and communities, which is quite extraordinary. And I have no doubt that the scale we bring, the reach, the knowledge is an amazing source of competitive advantage. And so it's an exciting time for the sector and I think it's a very exciting time for the NATWEST GROUP. And you know, I can't help but observe that the energy and ambition under Paul's leadership is powerful.

7:23 And you know, like I said, our performance is strong. Our strategic direction is clear. The momentum is behind us. You know, many of the macro events that we saw coming, the financial events like the US election or The UK budget is now in the rearview mirror. So finally, can can talk with our customers with some clarity. And of course, we got a new government and a government in whose growth agenda is actually lockstep with our strategy of growth in the regions. A government whose share on the register is coming down very rapidly. I mean, I think the last time we just spoke, they were 29%. They're now under 11%. And with every possibility that they will be back in the private as privately held company in the next year. And so that's a real moment. A real moment and start of a new chapter for the company.

8:16 So you asked me, what have I seen in last six months? I I've seen a company with enormous energy, enormous optimism and you know, companies that looking very much the future. No. Thank you. And I've I mean, I've worked in NatWest now for over fifteen years and that energy that you talked to, I've really felt it, and particularly in the last six months as well. It's been great to see. So thank you. So, Paul, coming coming to you next. It certainly feels like a lot has transpired since our last event as well in April. It'd be great to for you to share some thoughts with us this evening on the progress that we've made. Yeah. Of course, Victoria. And first of all, welcome, everybody. I really appreciate you taking the the time to to join us for for these events, so thank you. As you alluded to, Victoria, it's been a it's been a pretty eventful and and busy year.

9:04 And as a bank, collectively, we've a significant amount. As Rick alluded to, the bank's performing strongly. We have really good momentum, and I'm delighted that we're making good progress against the three strategic priorities that I laid out in February, both internally and externally to the market. Taking each of those briefly in turn, the first priority was around serving our customers well, but to drive growth. And for those of you who've been running the rule over our results, know, you you can see that we're making good progress from a growth perspective, whether it's in our our lending to to individuals or businesses. We're growing well. Likewise, more of our customers are entrusting us with their deposits and their investments.

9:51 So we can see good growth on lending and deposits. We've also continued to innovate a lot during the year. We've launched a lot of new products and services. Examples that spring to mind are in our lending to small businesses against intellectual property, the extension of our credit card range in in the retail bank, the flexing of our of our wealth products. So combined with the growth, you know, we've we've been responding to customer needs and and launching new products and services. I think on that priority, the most pleasing thing for me and the board and the team is that our growth is really broad based across our our three customer businesses.

10:30 The second priority that I laid out in February was around simplification. I genuinely believe if we're gonna compete in the future, you know, we have to be a simple bank. The simpler we are as a bank, the more agile we are to respond to what is an ever changing landscape and backdrop and and by definition, therefore, what customers need need from us. So we've been very focused on that, and there's been a significant amount of activity, and I and I and I think both colleagues and customers can see the progress and the and the benefits from simplification that are coming through.

11:05 So whether it's the examples of serving our customers better through our chatbots, which now incorporates AI and more recently, Gen AI, whether it's speeding up our processes, making it simpler for our business customers to get their FX services from us or quicker time to decision for small businesses who want to lend. We're we're really driving that simplification agenda. But it's only right that I also point out that the simple simplification agenda has involved some difficult decisions. One example would be the the tough decision that that we took to close our our hub in in Poland and reduce our global hubs from three to two. And we never take those decisions lightly, but but it is important. We we we think very carefully about simplification, and, ultimately, we wanna build a simpler, more integrated bank, and that will allow us to serve our customers better. So great progress on the the simplification agenda.

12:01 And then the final priority is the third priority is around all the underpin really is really strong risk management and really strong active balance sheet management, and that's been a real focus of of myself and the team and being able to use our capital to support customers, but also invest in the business, but also give attractive returns to you, the shareholder, is really important.

12:26 So since we last spoke, you know, we we've announced directed buybacks from the UK government, which as Rich Rick alluded to, has reduced the government shareholding. We've also completed two acquisitions, Sainsbury's Bank, which we announced earlier in the year, and likewise, Metro and acquisition of portfolios. So we're being very thoughtful in our use of of capital. Both of those acquisitions build on the, I guess, the the strength and the scale we have in our retail bank. So to sum up, I guess, where you started, Victoria, we're very pleased with the progress. We're very excited about the momentum over the course of the last year. All that progress and performance and momentum comes from the support we provide to our our 19,000,000 customers. We're we're very clear on that. We want to be trusted by our customers because if they succeed, we we'll do.

13:14 That's the heart of the strategy, and that's what I and the team are are focused on. Thank you, Paul. And certainly a lot covered in six months in, really, the activity within the bank, but also the activity with our customers. That's great to hear, and that certainly set the set the scene well for the conversation. So look. Getting to the questions now. We've received a lot of questions and many related, actually, to the topics you've just touched on. So a big thank you to the shareholders who've taken the time to submit these. You can also ask a question during the session by using the Q and A button, but we'll do our very best to answer as many questions as we can this evening. Just a quick reminder, the shareholders who have submitted questions, we will be deemed to consent to their name being mentioned while we address your question. And as you'll appreciate, we aren't able to discuss customer issues or complaints in this public setting.

14:04 And where we've received multiple shareholder questions on the same topic, I'm going to do my very best to summarize these in order to really help us get through as many questions as possible. So without further ado, let's move on to the questions and hear more from Rick and Paul. So the first question this evening comes from Leone Quinn on the topic of culture, which is a great way to get us started into our discussion. So, Leone, if you'd like to share your question, please.

14:30 Hello. My name is Leone Quinn. And my question is, in today's challenging environment, what are the key leadership qualities you believe are most critical for sustaining the bank's culture and organizational success? Great. Thank you, Leonie. And it'd be great to hear from both of you on this one. But perhaps, Rick, I can start with you first, please. Very good. Well, thank you, Leonie. I think it is a great great question. And you can imagine, given given that my my first job on joining was the appointment of CEO, this is a a topic to which I've given a fair bit of thought over over this past year. And I and I think I said we said at the time as a board that alongside his depth of NATWEST and and customer knowledge.

15:16 The thing that impressed us most about Paul was was really the the thoughtfulness and an imagination he brought to leadership. But Leonie is right. That's not enough these days. This is a very dynamic, fast moving world and actually one needs a leader who is very considered in actions, but also very curious, really seeking to understand what is happening and being able to handle the ambiguity often that is is one's faced with. But we are very fortunately at a time when we can say that, you know, we've fixed the past. We're really thinking about how to shape the future from this point in. So again, a leader has to then bring courage, ambition, but a real commitment to delivery.

16:05 And and, you know, we we see all of those in Paul. So I mean, no pressure, Paul. Would you want to elaborate? And we talked about this a lot. Have we? We have. We spent a a of time, and it's important we spend time. Yeah. I think and to Leonie's question, which I think is is is crucial given the the point which we're at as the organization. I think from a leadership perspective, we expect a lot from our leaders, and I think it's right that we do. You know, we expect them to have strategic vision, you know, to have whether it's running their business, their their customer segments, we expect them to lead a lot of change. You know, operating in today's banking environment drives a lot of transformation, a lot of

16:44 change. You'll know that from the area that that you're in, Victoria. We need people to deliver results. And I'd say arguably, most importantly, we need people to lead to lead teams and people. And that, you know, that's that's they're all diff different skills. But we've got our eyes, as Rick alluded to, very much on the future. So we've I've done a lot of thinking with the team about the future skills that our that our colleagues and and staff will need because it's great to have the skills for today, but we really need the skills for tomorrow as well. And when we think when we think about that things that spring to mind are we need we need leaders with agility. You know, the environment we're operating in is changing all the time. What our customers and clients expect from us is changing very rapidly. And we need leaders who can respond to that, so they need to be agile to respond to those changing customer needs.

17:31 We also increasingly need leaders who are very okay with data, digital literacy, technology because our our customers are, and they expect the bank to be brilliant at data and and technology. So increasingly, that that's a key requirement as well. So it's the things probably that what people would expect, but it's also this this big eye on the future and what what skills will we need for the future. And whilst we've talked a little bit around the strength of the business and the the the performance of the business, not neither myself or the management team are complacent. We we know they're all good leadership teams, whether it's in business, in sport, in the arts. You have a really good culture of of

18:15 feedback and learning. So that's very much at the center of what we expect from our leaders. We we we want a culture where feedback is very clear. It's it's very precise, and it allows people to develop and get better and move forward. So they're they're the type of attributes that we expect from our from our from our leader, and that's what we want. We want the mindset of team working, focusing on the customer, agility, delivering results, and that's if we do that, you know, the very it means the leadership roles are very satisfying and fulfilling, but it also means that we deliver for customers and and for our shareholders. Great. Thank you. Thank you both. There you go, Leonie, answer to your question. So let's turn tack a little bit. So we've had a number of shareholders, including Justin Smith and Young Sung, wanting to know, given our share of domestic markets and the cost hurdles of standing upscale outside of the ring fence, which markets might look attractive to grow? And do we have plans to develop business in Asia? I think, Paul, this feels like one for you. Yep. Very happy to take that,

19:17 and thank thank you for the for the astute question. As the question alludes to, you know, our performance is strong, and our growth existing business has been really encouraging. I touched on the fact that our three businesses are growing well. We're we're in we have a strong domestic market. We have positions of scale, and we're performing very well in those positions, which is great. But The UK economy doesn't exist in isolation and neither neither do our customers and our clients. It's intricately linked with, I guess, the global economy and what's happening there. And that's why we obviously have an an international network. We're present in Western Europe. We're present in The US. And as the question alluded to, we're we're present in Asia, and we have, you know, a real center of excellence and a global capability center in India as well.

20:07 And that's because we we want to support UK customers who are who are going international and, likewise, international customers who want to come into The UK and access access the country and access banking services. So and from our perspective, that strategy works works really well, whether it's investors, corporates, institutions coming into The UK. So we want to support capital flows and trade flows between between those jurisdictions, and and we'll continue to do that.

20:35 What I would say is, you know, I wouldn't I wouldn't for shareholders, you shouldn't expect any any fundamental change in our in our business model, our international footprint. I think the current business model provides plenty of opportunity for for for organic growth, and I think we're proving during the year that we can deliver that. So no no no no changing expectations there, and I'm very encouraged actually by by the growth. So those international presences that we have are really important. I'm very keen that we continue to work very closely between The UK and our international operations to really maximize the the opportunity that there is. Yeah. No. Thank you. And it is great to hear as well. You've both had the opportunity to travel around to those locations into the international areas. So thank you.

21:22 Okay. Our next question is from David Hartley on the topic of AI. Such an important topic. We can't walk past this in today's world. So, David, over to you to ask your question, please. Hi, all. My name's David Hartley, and I've got a question about AI. So how does the bank plan to leverage AI to enhance operational efficiency, fundamentally change our customer experience, and do all of this whilst maintaining ethical standards, social responsibility, and whilst maintaining and managing associated risks. Thank you, David. And such an important topic. I've I've gotta come to both of you on this one. So so, Paul, let me let me start with you first. Thank you. Thanks, Victoria, and thanks, Dave, for the question.

22:06 I don't think there's a I've got an investor meeting, excuse me, a board meeting or a customer meeting at the moment that AI isn't mentioned. So it's definitely not just topic as you're kind of today, but it I think it has been really for the for the last twelve months. And myself, the management team, the board, we've spent a lot of time on understanding the the technology as it develops, understanding how it could be deployed to the benefits of of our customers and of the bank. And it's a you know, I I would say it's a it's a clear priority to both to both understand and then deploy appropriately. I'm actually very pleased, Dave, the way you phrased the question because it can drive a lot of customer benefits as well as efficiency. Sometimes some stakeholders focus on one particular aspect.

22:55 The other thing to remember is that we've been using AI in the bank for for a long time. You'll know this, Victoria. Yeah. Nearly 20% of the models that we have in the bank incorporate some some type of AI. So whether it's in our very valuable areas around fraud and financial crime where we're protecting customers, You know, we've been deploying AI. So we have a lot of experience of deploying AI well to the benefits of customers, but also safely as well. But we're definitely alive to the, I I'd say, the the enhanced opportunities that gen gen I Gen AI could could provide, and we're investing a lot. You know, a lot of a lot of our investment budget, nearly 80% in effect goes into data and technology, all of which provide the foundations for the use of AI and gen Gen

23:40 AI, and we've worked very hard to have a a number of, I guess, pilots and examples that are bringing benefits to customers. I mentioned earlier the use of our chatbot Cora, which now incorporates Gen AI and really helps customers get the answers they want in a quick and seamless way. So so we're we're we're understanding a lot. We're deploying a lot, but we're also very thoughtful. And I guess, Ricky, you might wanna talk about, you know, how the board thinks about, I guess, some of the risk and ethics sides of that. I mean, the board is very clear that investing in AI gives can give extraordinary competitive advantage for all the reasons you've talked about and David alludes to. You know, whether whether it is efficiency, whether it is augmenting our extraordinary people here, whether it is delivering something special for for for customers. You know, the bank the board does discuss this regularly. I mean, whether it's from a strategic perspective, a risk perspective, a customer outcome perspective or just a broader tech, you know. And I personally believe the banks have an extraordinary amount of data and there is the potential to be able to derive significant competitive advantage and the sector as a whole probably more than other sectors.

25:00 But we're a bank and we serve society in a certain way and certain standards are expected of us and therefore we need to think very seriously about whatever we do, we do it in a very responsible way as we often discuss.

25:13 Really thinking about how to weave this into our data and AI ethical code of conduct that we've put together and is already been trained and circulated around the company. And and really always making sure that, you know, that the the technology is subject to human oversight, that it respects and promotes human agency, you know, that the technology that we're putting out there, any technology, not just AI, is robust, it's resilient, it's safe, the models and predictions are easily explainable, and of course that there's no unfair bias or discrimination. If we do that, then there's no reason we shouldn't move ahead at pace and protect our reputation, is as crucial. Yeah. No. Thank you. Thank you both. And also really improve the customer experience, I think, as well.

26:05 Lots of considerations firm around AI. But let's just stick with the topic of technology for a minute. So our next question comes from Noel Alotti, who asks, what are we going to do to minimize fintechs from taking business from the banks?

26:21 And, Rick, I thought it'd be good to get your views here. Well, I mean, competition is everywhere. There's no doubt that we're we're very alive competition, but it's not just for the fintechs. I mean, we're we're getting competition from our peers, from The US banks, from the big tech. I mean, competition is everywhere and we need to remain alert to it. But at the same time, we need to recognize that whilst the fintechs and digital platforms have got a lot to offer, we're doing pretty well in a digital world where and that's important because in this world, we need to get in discussions and we need table stakes. I said earlier that curiosity is a a necessary feature of leadership because we need to continuously understand where we can collaborate, where we can partner, and having those tables takes is so important from being a recognized technology power, which I think we are. I mean, we put a lot of effort into this.

27:18 It's no coincidence that Paul, myself and Scott Marco were in Silicon Valley all last week. I guess partnering and collaborating in the end is will be a very, very important strategic enabler. It will allow us to, as you say, enhance the customer experience is really thinking about how we improve those, but also how we drive the efficiencies that we're talking about. We've already started partnering. Of course, we've got very we've made very helpful acquisitions whether it's in Cushion or RoosterMoney. It's no coincidence that as we were right in the heart of budget discussions that the heart of those discussions is really about investment in data and tech and making sure we keep pace with innovation. Only then can we continue driving along the simplification line and and making sure we're we're getting these enhanced digital offerings for the customer. So, yeah, we've got to be very mindful of

28:12 fintechs taking business, but but I I think we we can and and should compete hard and fight. Yeah. Thank you. And maybe I could just build on with another question here that I've got from Surinder Ehal, who asks how susceptible is the group to a potential takeover? Maybe one for you again, Rick. Well, Surinder and Derek, the the you know, NATWEST GROUP is one of the largest banks in The UK. I mean, we have 19,000,000 customers in in in all nations and regions. We've got a strong balance sheet. We're performing well. We're performing well against, you know, the three strategic priorities whether it's delivering disciplined growth or simplification of the bank, managing our capital efficiently. We've got strong earnings, lower share count, you know, we've driven the tangible net asset value up to, you know, 316p, that's 26% for the last two years. You know, these are the things the outside world is looking at. Are they robust? Is this bank robust?

29:11 Is it going to continue its lending? Is it going to continue investing in the business? And that's what they'll they'll see. They'll see us delivering attractive returns. And all that adds up to saying, well, I don't think there's any reason to think of us as target for takeover. In fact, if think over the last year, it's been the opposite. You know, we've been out there acquiring assets from Metro Bank and from Sainsbury's. No. Thank you. And I guess just on that topic of growth, I mean, it's brilliant to hear how much growth is actually going on across NATWEST GROUP. But I do have a question here on the topic of growth. And, Paul, maybe I'll come to you on this one. So our next question is from Graham Halton, who asks, what percentage of growth seen in recent years can be attributed attributed to one, base rate changes Mhmm. Two, acquisitions, and then three, through investment?

29:59 Okay. So that's a very precise precise question. So I guess we've seen significant growth in in operating profits. We've seen growth in our return on tangible equity, which is one of the key metrics that the the market looks at. What I'd say is that growth has come from a variety of areas. I mean, I I don't you know, I won't talk about the exact three percentages because there's actually more component parts than just those three. If you think about where our growth has come from on the revenue side, I touched earlier that we've been growing our our balance sheets in our lending and our deposits, so our volumes have driven. Our margins have improved, and I guess the question alludes to that in terms of changes in interest rates. So revenues have been have grown from both volumes and from interest rate changes.

30:47 But our profits and our returns have also been driven by our strong management of costs and efficiency. You know, we have a very good reputation in the market for how we manage our, you know, our our costs, and we've continued to be disciplined around that. Our priority of capital management also drives our returns, being a lot more thoughtful in terms of how we where we deploy our capital, the returns on which we expect from that have helped drive returns. Our impairments have been, you know, have have been very low and historically yeah. It compared to historically. So that's also driven our earnings. So I guess when you when you see the encouraging growth from the bank at the profit level and the return level, I think it's really important we think about all the different aspects of that. And it is revenues, but it's volume and margin.

31:33 It is tight management of costs. It's low low impairments, it's tight management of capital. And as a management team, if we're focused on all of those aspects of growth, that's what gives us the the performance meant momentum that we've got. Yeah. No. That's great. Thank you. Just picking up a little bit on the acquisition points, we've mentioned a few times in our discussion. I've got a question here from Benjamin Day, and he's asking if we can give a status update on the Sainsbury's and Metrobank acquisition. And is there any appetite for any further acquisitions? And, Paul, maybe you could answer that one. Happy to take that. Thanks thanks, Benjamin. We're very pleased with the the two acquisitions that we've we've announced earlier this year. Both of them add scale to our already what is a significantly sized retail business.

32:20 So they complement the organic growth that the retail business is already experiencing with some additional inorganic growth, and they just give us an opportunity to accelerate our growth at compelling financial returns. The Metro transaction has already completed completed in September. So we've we've acquired around 10,000 customers, a couple of billion of mortgage assets, really high quality mortgage assets. So we're very, very pleased with that. The Sainsbury's transaction is scheduled to complete and close in the first half of twenty twenty five. That that will bring a million customers, you know, to to the NatWest brand from Sainsbury's Bank. It will also bring a significantly sized credit card business, savings business, and personal loan business, and we're looking forward to welcoming those those million customers. We have a strong track record of of of integrating customers onto onto our products and onto our platform. So we we'll ensure a smooth transition there. So good progress. Metro done. Sainsbury's was always scheduled to complete in the first half of twenty twenty five.

33:26 The second part of the question, which is around other acquisitions. Obviously, you can see I guess, we can all see in the market that it there's quite an active kind of m and a environment at the moment. So we'll we'll continue to review opportunities.

33:40 But I've said, you know, on on on on numerous different calls, we'll be very disciplined in our approach. So we're very alive to opportunities. We we do think the market will be quite active, but we'll need to be very disciplined to ensure that drives very good financial returns, and it needs to be compelling from a shareholder perspective, and it really needs to be strategically congruent to really align with what we're trying trying to do in our in our retail business, our commercial business, or our wealth business because then that will help us execute on the strategy quicker. Brilliant. Thank you. Thank you. So let me come into a new theme now, and I guess the following COP and various other climate related conversations is a question here around climate. And this is from Ifa Teague. So, Ifa, please ask your question.

34:26 Hi. I'm Ifa. My question is, how important is environment and climate to NATWEST, and is it still one of your strategic priorities? It's a great question. Thank you, Ifa. So, Paul, maybe I can come to you for that. Thank you. Thank you, Ifa, for the question. I think the simple answer is yes. It's still a strategic priority. I think it's an important issue for us as a bank. It's a very important issue for our customers and our clients. It's an important issue for our colleagues, for the economy, and for The UK overall. And, you know, when when we there's many aspects to the climate transition. But what you know, we definitely see that it's gonna be very important to support our customers as they transition towards net zero, whether that's residential mortgage customers, whether that's retail customers buying motor vehicles, whether whether it's commercial and corporate customers. So we're we're very committed to supporting our customers on on the path to NetZero.

35:21 We see our role as helping them make informed choices. And we have a lot of as you know, Victoria, we have a lot of tools and a lot of capabilities that we share with customers that allow them to understand the the the the carbon impacts, understand opportunities if they want to to reduce that. And that's really where I see the role of the bank, you know, whether it's in the provision of finance or whether it's in the provision of of the practical tools to to help to help customers. And sometimes I think it's easily forgotten, you know, and we publish some data on our lending. You know, this year, so far, we've lent over £23,000,000,000 from a climate and sustainable funding and financing perspective. That's a really significant amount. The majority of that is into The UK economy. So that's making a real difference.

36:07 And if you go back to 2021, it's 85,000,000,000 since then. So really some significant financing sums that are helping large businesses, small businesses, or consumers on the kind of on their climate their climate journey. So it's very much a a it's very much a a priority because it's a priority of our customers. We we very much view it through both a commercial lens and a and a support lens, and we're very committed to ensuring our customers understand the products and services we've got to support them. That's great. Thank you. And great to hear how how much we're putting into the customer businesses to help them around the climate transition. Thank you. So I'm gonna change gear slightly and a question on banking hubs. And we've had a couple of questions in relating to this. So I have a question here from Neil Anderson.

36:58 Neil, would you like to ask your question, please? Hello. My name is Neil, and this is my question. Banking hubs are proving popular with many customers. What is the bank doing to ensure that there's a viable face face alternative when it's closing branches given that leaving loyal customers with nothing but the limited service or a post office, many of which are closing, is not viable for some. Thank you. And we've had quite a few questions, I said, around banking hubs. So Mhmm. Paul, I'm just gonna come to you on this one as well. Rick, I will come to you in a minute, don't worry, on some questions, but maybe you could take this one around the hubs for me. Yeah. Absolutely. And maybe talk initially a bit more broadly around, you know, the the I guess, what what we think about as the banking network is across, you know, all the regions and the nations is very important, so a crucial part of how we serve our customers. When I think about the banking network, it involves our our, you know, our branch network and the brilliant colleagues, the working branches.

37:55 It involves the banking hubs that Neil referenced. It involves the post offices. It involves our mobile mobile vans. So we have a really broad range of broad a network where customers can can access our our services. As we all know, a a lot of customers are also demanding ever more digital services as well. So it's important we not only invest in the the banking network, but we also invest in our digital services. Nearly two thirds of our resale customers only use digital services. So that maybe helps put it in a in a little a little bit of context. We're investing in our branch network. You know, we've we've we've spent over the course of the last twelve months, 35,000,000 upgrading, you know, our our branches. So we're very keen where we do have that physical presence.

38:40 It's a it's a really good environment for our customers, but also a really good environment for our colleagues as well. Talking about the hubs kinda specifically, we're very supportive of the rollouts. We've worked very closely with cash access who who are running that to make sure that they're set up well, they're they're implemented effectively. If my memory serves me right, there'll be around a 100 hubs up and running by the by the end of the year. We've committed as a bank and as a sector to around 300 across the country. So they're gonna provide a really important kind of physical presence for those locations where the various banks don't feel that a branch is, you know, is the is the right way forward. So we're very committed to it. I would say that NATWEST is the is the only bank that has personal bankers in every hub that is available, and they can offer the majority of services that customers can get in branches as well. So so very committed to hubs, Neil.

39:38 You will continue to see the increased rollout, but in the broader sense, we'll continue to adapt our banking network really to to reflect what what customers want from us. Yeah. Thank you. Thank you very much. So I've got quite a few questions here around the government. We've we've talked about the government a little bit. So let me take a couple of these. So our next question is from David Allen. So the Labour government has made much of the fact that they want less red tape and regulation to enable greater growth in The UK economy. Do you see the regulatory environment easing, and how will this this feed through to increased lending by the group, particularly given interest rates are likely to remain higher than expected in 2025? So Rick, I'd love your thoughts on this one. Very good. Thank you. Well, I think a very perceptive question, David. I think there's there's no doubt that the the lines between, regulators and politicians are blurring again after effectively fifteen years of outsourcing to the regulators.

40:39 And this the the government has has has recognized that, whilst high quality regulation is is still important as we all do, I mean, is high quality regulation is is seen as one of The UK's competitive strengths. But I think they've also come to realize first, it it needs to be balanced and proportionate. It needs to create a level playing field. And that financial regulators have obviously been given this secondary objective of growth and competitiveness. And of course, the Manchester House speech, chancellor emphasized her desire for regulators to enable sensible risk taking by companies to deliver dynamic economic growth. They recognized that you know if you get this wrong, then you can have create unintended consequences that get in the way of lending and growth.

41:34 So a lot of rhetoric and really what we're waiting to see now is some action. There's some positive progress in recent months in Basel 3.1 and ring fencing, but the devil's in the detail of all this, and really we're working with the government to, well the government and regulators and peers to to give the clarity, the certainty, and the consistency that banks and all businesses need and want to kick start investment and therefore in lending on our part. In in all of this, I mean what is heartening is the new government recognizes that a strong financial services industry is essential to growth. It's essential to support the economy and it's essential to, you know, obviously our customers. So it's an important debate and and one that, you know, Paul and I are spending a lot of time on. Thank you.

42:27 Well, just picking up on that point, I have another question here from Charlie McGraw on the potential regulatory or the budget related changes. So, Charlie, if you'd like to ask your question. Hi. My name's Charlie. My question to the panel is do you anticipate any regulatory or budget changes that will impact NATWEST's operations or customers? Thank you, Charlie. So, Paul, that's probably one for you on that one. Thank you. Thank you, Charlie. Very very topical. We've been talking about that as a as a as a management team. I'll probably focus on the budget side because Rick's given quite a lot of detail there on on the regulation front. I think where I'd start, Victoria, is I think it's it's it's good that we're now past the budget because there's a lot of speculation ahead of the budget about what would be in, what wouldn't be in, and that that creates a degree of uncertainty both for ourselves as a bank, but also for our customers. So now that we're past the budget, we have clarity and certainty about what the the policies are in respect to taxation, spending, and growth. So I think that's important because it allows both ourselves but also our our customers to plan. We kind of we we know we know the position, which is great.

43:43 In terms of breaking it down impact on our customers and impact on the bank, we're the biggest bank for business. So the reality is our customers are are impacted by every budget. They've been they've been they've been impacted in different ways by this budget. You know, we we've been very pleased to see the messaging that Rick alluded to around growth and investments. When I think about the mess the messages and the the the policies around housing and infrastructure, There there are obvious areas of opportunity where we have strengths, you know, in our in our commercial bank, in our retail bank, and we'll be able to as the policy agenda develops, we'll be able to support our customers. I think the focus on science, technology, and innovation on the clean energy transition again is is is an important one for our customers, but also for us.

44:34 There's been a lot of talk about how to, I guess, combine or blend kind of private capital from banks with public cap capital to help some of those projects. I'm involved with the National Wealth Fund, which is looking very much at infrastructure and and energy transition and how do we how do we use the the private finance markets where it's possible, but maybe support that with kind of public money where it would help accelerate some or derisk some of the new technology environment. So we're we're I think those those policy signals are are important and will be helpful for the the outlook on on the economy, which is great. I think thinking about the bank and the impact, the most obvious impact is the kind of national insurance contributions. So that that impacts the bank as it does all of our or the majority of our business customers.

45:25 So, obviously, we'll incorporate incorporate that into our into our budgeting and planning. So that's probably the main impact bank wise. More generally from our customers, obviously, we hear from our retail and leisure and hospitality customers, you know, they're they're voicing their concerns about some of the potential short term impacts. Likewise, you know, agriculture, we're a big lender to agriculture, a big banker of agriculture. So our agricultural customers are sharing their views. So I guess we're in many ways, given our size and scale, we're we're, you know, we're reflective of the economy, so our customers are inevitably reflected. But I think the most important thing is now we have more clarity about the policy agenda, have more clarity about the tax and spend agenda, and that allows us ultimately to do our job, which is to work with customers as they respond to give them the the support, investments, and development that they need. Yeah. Brilliant. Thank you. Thank you for that. So just continuing still with the theme of the government, if I can just for a minute. So, Rick, this is one for you. So Eric Conroy has asked, would you advise the British government to seek reentry to the EU to help solidify Europe in current world tensions?

46:39 Well, a very topical question, Eric. And I I don't think you'd be surprised to hear me say that this is very much a matter for our government or politicians. You know, I I it's not something we, as a bank, take a view on or certainly seek to reprosecute. But I think the way we need to think about this is, you know, as the biggest bank for business in The UK, we need to prepare everyone, all our customers for any form of reproshmol. We've got to be there to help. We've got a role in helping deliver growth in every nation or region and preparing for any eventuality. And so we go back to the basics. We focus on supporting our customers, funding, financing, supporting services to compete in the global marketplace.

47:30 And by succeeding with those customers, you know, we'll succeed for our shareholders and for The UK economy. I think that has to be our focus in a time of quite political uncertainty on that particular topic. Yeah. Thank you. And I think that comes through really clearly as well in also the conversation around the budget. So thank you for that one. So Rick, I'm just going to stick with you for a minute. I have another question here from Michael Reed. He shared, why does a British bank take the position that it will not provide financial services to industries that undertake to protect all of us against foreign aggression? Such position is, to my mind, incomprehensible. Would you like to share your thoughts on that? Michael, in short, we do. We provide banking services to customers in the defense sector. We're proud to do so, providing, of course, they they meet our risk acceptance criteria just in in any other sector. We will support defense companies that design, manufacture, supply, trade defense products, provided they're meeting the licensing and regulatory requirements of the UK government and international standards.

48:37 We're very clear. And we're very transparent. The details of all criteria are published on the website. And of course, we shouldn't forget that you know for two hundred years we've been offering military banking services through HOLTS and today you know we have we currently serve 33,000 military personnel I think it is. So you know this an area that's very much part of our investing world. Yeah, no thank you. So I know a lot of our conversations have been about the last six months but been particularly looking forward to the future. This one just takes us back a little bit. So we have a question here from Malcolm Bennett asking us to please advise the updated position with regard to Nigel Farage and his deep banking claim. So, Paul, maybe that's one for you. Yes. Of course, Victor. I recognize that, you know, the the the interest in the topic, and thank you, Malcolm, for the question. It's it's a question I've been asked and Rick's been asked a number of times over the last five or six months, and but there won't be anything different in in my answer today. I'm sure everybody on on the call would understand I can't talk about individual customers or individual claims. That that wouldn't be appropriate in any circumstances.

49:47 What I would say is, though, you know, as I've said several times in public, we're we're we've we've been very clear on our commitment to implement the findings from the the Travis Smith report, which was issued subsequent to those events. We've made great progress in implementing the recommendations and the conclusions, and and we'll continue we'll continue to do so. We've also been supporters of the the primary legislation that has been introduced to ensure that people have access to banking accounts. And in fact, we've implemented some of the proposed changes that are that are that are within that legislation even though yet it hasn't been enshrined in law. So for example, making sure that people have ninety days to exit or they're given clear reasons should there be any exit.

50:33 So, I remain and the management team remain absolutely committed to to implementing the recommendations of Travis Smith. We fully support legislation and any changes that it drives, and we have I've strongly held belief that people should have should should have easy access to bank accounts irrespective of the legally held as long as they have political beliefs. Great. Thank you. Thank you. So I'm just gonna take a question back to the government now. And I know we've touched on the shareholding, but there's a question here. In fact, we've had quite a few questions from shareholders on the government shareholding and on when we think NATWEST will return to full private ownership. So, Rick, maybe this is one for you. So our shareholders have also asked how will this affect the share price and whether the price increases in the shares since last year is in the same way connected to the group becoming completely private.

51:30 What are your thoughts? A lot of questions there. But, of course, the decisions on the share sale are already in the hands of the government. It's for them to decide whether they want to sell. But, I mean, we still believe that a return to full private ownership will be positive for the bank and shareholders. And so we can only be pleased with the momentum we've seen in reducing their shareholder this year. I mean, we're now below 11%. I mean, if you recall end of twenty twenty three, it was 38%. So it's down more than two thirds. It's quite considerable. You know, the the the success we've enjoyed this year gave us headroom to respond to a request for a second directed buyback that happened early this month.

52:15 The government have reiterated their commitment to fully exiting shareholding by 2025, 2026. Now, we can't speculate however on when that's going to happen and clearly we can't speculate on the share price. I mean, we're pleased that the share price has performed well this year. I mean, it's up around 80% and obviously it's continued strong performance. Now who knows how that will respond to any further decisions, any further moves. And I think what we can say is that return to private ownership won't affect any of our strategic decisions, but it will be an important milestone. Think, and and reflecting that is we're getting a lot of interest from new investors, which again is a very interesting dynamic.

53:03 So against that backdrop that is is to a great extent out of our control, we've just got to focus on what we can control, focus on delivering against our strategy and as we've said quite a number of times during the course of this, against that we're very ambitious, we're very optimistic for the future. I think you know that will play out as it plays out. No. Thank you. I'm certainly here with the the ambition and the, the discipline coming through from both of you. So, thank you, Ray. I think we've got time for one more question, actually, and this is from Amy Spreadbridge. So, Amy, please go ahead and ask your question. My name's Amy, and my question is, what are the key areas of strategy you're intending to focus on both over 2025 and over the longer term? Thank you, Amy. And I think we've had a number of similar questions from shareholders on the topic of strategy.

53:53 And it's probably quite a good one, Paul, for you maybe to to wrap up on, actually. So maybe we can come to you to give us your thoughts Absolutely. On And and thanks, Amy, for the question. I'd start by saying we we we head into I guess, we're nearly in 2025 now, but we head we head into 2025 with a great sense of, I think, momentum in terms of the performance of the bank, but also optimism about the opportunities that are ahead of us to continue that momentum. The bank's performed very, very well. It's in it's in a very strong place. We've done that by focusing on a narrow set of priorities. I talked about that, Amy, earlier in the call. They're the right priorities for the bank, so we'll we'll continue to focus on those three priorities. What I would say is though, those three priorities, the context around those priorities is now clearer.

54:39 We've got belief that we can execute against those priorities, but we also have more confidence and clarity about the external environment, be that the US elections elections being behind us, be be that the UK election and the budgets. When you think about NATWEST, you know, we have we have great scale. You know, we have an unrivaled kind of network across all the regions and the nations of The UK, and we're determined to help unlock the growth potential to align with, I guess, the the greater country's aspiration. So that that they're the priorities. We'll be very focused on supporting our customers, whether that's helping them buy homes, whether that's start a business, whether that's invest in a business, whether if you're a large business, buy another business. So we that's how we're gonna be supporting customers. Because if we do that, if we our customers will succeed, will succeed, and our shareholders will too. So that's that's the heart of the strategy. Brilliant. Thank you.

55:32 And thank you both, Rick and Paul, for your thorough responses and insights this evening. It's been great to hear. But importantly, thank you to our shareholders for joining us this evening. And if we haven't been able to address your question, we will follow-up with you directly. We will also be publishing responses to shareholder questions on the key themes on our shareholder hub, which can be found at natwestgroup.com. And for any shareholders who may have follow-up questions, please do submit them to shareholder event at natwest dot com, and we will respond as soon as possible. I can see that we've also received a number of detailed questions this evening from colleague shareholders regarding capital gains tax, rules and employee share schemes. So we're gonna post some of that information in response to those questions on our internal share plan hub.

56:20 And I have to say, think these schemes are really popular at the moment and a really great way to align colleague and shareholder interests. And we're really pleased that so many colleagues take advantage of these schemes. So I think that draws this discussion to a close. You've heard directly from our chair and from our chief executive, and I hope that makes you feel more informed and gives you a clearer view of our progress right across NATWEST GROUP. And with that, I'll say thank you and good night. That's great, Rick, Paul. Thank you very much indeed for updating investors. Can I please ask investors not to close the session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations? On behalf of the management team and NATWEST GROUP, we'd like to thank you for attending today's presentation.

57:06 Good afternoon to you all.