NatWest Group(NWG) - 2024 Q4 - Annual Report

Financial Reporting and Standards - NatWest Group's financial statements are prepared in accordance with UK-adopted International Accounting Standards and International Financial Reporting Standards[18]. - Non-IFRS measures and alternative performance measures are included to provide a consistent basis for comparing business performance[13]. - The financial information spans pages 162-263, detailing consolidated statements and significant changes[8]. - The document outlines the organizational structure and business overview of NatWest Group[4]. - Major shareholders and related party transactions are discussed on pages 305-310[7]. Forward-Looking Statements and Risks - The document includes forward-looking statements regarding NatWest Group's financial condition, strategic priorities, and sustainability-related targets[9]. - Key risks affecting NatWest Group's future results include economic and political risks, changes in interest rates, and operational resilience risks[11]. - The document includes a cautionary statement regarding the inherent risks and uncertainties of forward-looking statements[10]. Sustainability and Climate Goals - The company aims to achieve net zero across financed emissions, assets under management, and operational value chain by 2050[15]. - The company emphasizes the importance of climate and sustainability-related disclosures, which are subject to change over time[15]. - Climate and sustainable funding and financing reached £93.4 billion against a target of £100 billion by the end of 2025, with £31.5 billion provided in 2024[38]. - Commercial & Institutional provided £27.8 billion in climate and sustainable funding to support customers transitioning to net zero[92]. Financial Performance - NatWest Group reported total income of £14.7 billion for 2024, a decrease of 0.3% compared to 2023, while total income excluding notable items increased by 2.2% to £14.6 billion[32]. - The return on equity (RoE) was 11.9% and the return on tangible equity (RoTE) was 17.5% for the year[31]. - Net loans to customers increased by £18.9 billion to £400.3 billion, with significant growth in Commercial & Institutional lending[37]. - Customer deposits rose by £2.1 billion to £433.5 billion, with a £6.8 billion increase in Retail Banking deposits[39]. - The CET1 ratio improved to 13.6%, reflecting a 20 basis point increase from 2023, supported by attributable profit[40]. - Total operating expenses increased by £153 million to £8.1 billion, driven by higher staff costs due to inflation[33]. - Earnings per share attributable to ordinary shareholders increased to 53.5 pence, a rise of 5.6 pence from the previous year[44]. - Total assets grew by 2.2% to £708.0 billion, with loans to customers increasing by 5.0% to £400.3 billion[50]. Credit and Impairment - The net impairment charge was £359 million, representing 9 basis points of gross customer loans, with stable default levels[35]. - The expected credit loss (ECL) coverage ratio decreased from 0.93% to 0.83%, while ECL provisions decreased by £0.2 billion to £3.4 billion[65]. - Impairment losses for 2024 were £359 million, compared to £578 million in 2023, reflecting a decrease of 37.9%[75]. - The loan impairment charge for Retail Banking decreased to £282 million, down £183 million or 39.4% from 2023, reflecting improved credit quality[83]. Risk Management - The bank emphasizes a strong risk management framework, ensuring governance and capabilities are in place to manage principal risks effectively[111][112]. - Risk appetite is defined to establish the levels of tolerance for various risks, supporting sound risk-taking aligned with strategic objectives[113][135]. - The three lines of defence model is employed to delineate responsibilities for risk management, with the first line managing direct risks, the second line providing oversight, and the third line offering independent assurance[127][130][133]. - NatWest Group's risk management framework is reviewed and approved annually by the Board, ensuring alignment with overall strategic objectives[112]. - The bank's risk culture promotes intelligent risk-taking, focusing on robust risk management behaviors to enhance customer outcomes and business sustainability[116][119]. Customer Segments and Business Overview - NatWest Group operates across various customer segments including Business Banking, Commercial Mid-market, and Corporate & Institutions, providing comprehensive financial services domestically and internationally[104]. - The bank faces competition from UK banks, specialist finance providers, and fintechs, particularly in the business banking market, which intensifies customer engagement efforts[105][107]. - NatWest Group's Corporate and Institution business competes with large domestic and international banks, offering financing and risk solutions to corporates in the UK, Western Europe, and the US[106]. Operational Highlights - Retail Banking reported a total income of £5.65 billion, a decrease of £281 million or 4.7% compared to 2023, primarily due to asset margin compression and a shift in deposit balance mix[81]. - Operating profit for Retail Banking was £2.43 billion, down £207 million or 7.8% from the previous year, with a return on equity of 19.9%[81]. - Private Banking achieved an operating profit of £264 million, with a return on equity of 14.2%, and saw assets under management (AUMA) increase by 19.9% to £48.9 billion[86]. - Commercial & Institutional's total income rose to £7.96 billion, an increase of £536 million or 7.2%, supported by a net interest income growth of 5.8%[89].