Financial review
Balance sheet profile as at 31 March 2024
NWM Group's balance sheet profile is
summarised below. Commentary refers to the table below as well as
the consolidated balance sheet on page 8.
|
Assets
|
|
Liabilities
|
|
|
|
31 March
|
31
December
|
|
31 March
|
31
December
|
|
|
|
|
|
2024
|
2023
|
|
2024
|
2023
|
|
|
|
|
|
£bn
|
£bn
|
|
£bn
|
£bn
|
|
|
|
|
Cash and balances at central
banks
|
16.5
|
13.8
|
|
|
|
|
|
|
|
Securities
|
19.6
|
12.0
|
|
14.0
|
9.8
|
|
Short positions
|
|
|
Reverse repos (1)
|
22.2
|
23.7
|
|
27.3
|
26.9
|
|
Repos (2)
|
|
|
Derivative cash collateral
given (3)
|
7.9
|
8.9
|
|
13.6
|
15.1
|
|
Derivative cash collateral
received (4)
|
|
|
Other trading assets
|
0.5
|
0.7
|
|
1.7
|
1.8
|
|
Other trading
liabilities
|
|
|
Total trading assets
|
50.2
|
45.3
|
|
56.6
|
53.6
|
|
Total trading
liabilities
|
|
|
Loans - amortised cost
|
16.0
|
14.2
|
|
9.6
|
9.3
|
|
Deposits - amortised
cost
|
|
|
Settlement
balances
|
10.8
|
7.2
|
|
10.6
|
6.6
|
|
Settlement
balances
|
|
|
Amounts due from
holding
|
|
|
|
|
|
|
Amounts due to holding
company
|
|
|
company and fellow
subsidiaries
|
0.7
|
1.7
|
|
6.4
|
5.8
|
|
and fellow
subsidiaries
|
|
|
Other financial
assets
|
16.7
|
15.7
|
|
28.1
|
23.6
|
|
Other financial
liabilities
|
|
|
Other assets
|
0.6
|
0.7
|
|
0.5
|
0.6
|
|
Other liabilities
|
|
|
Funded assets
|
111.5
|
98.6
|
|
111.8
|
99.5
|
|
Liabilities excluding
derivatives
|
|
|
Derivative assets
|
68.3
|
79.3
|
|
61.6
|
72.0
|
|
Derivative
liabilities
|
|
|
Total assets
|
179.8
|
177.9
|
|
173.4
|
171.5
|
|
Total liabilities
|
|
|
|
|
|
|
|
|
|
of
which:
|
|
|
|
|
|
|
29.8
|
25.1
|
|
Wholesale funding (5)
|
|
|
|
|
|
|
13.4
|
9.9
|
|
Short-term wholesale
funding (5)
|
|
|
(1)
|
Comprises bank reverse repos of £6.1
billion (31 December 2023 - £6.3 billion) and customer reverse
repos of £16.1 billion (31 December 2023 - £17.4
billion).
|
|
(2)
|
Comprises bank repos of £4.8 billion
(31 December 2023 - £4.0 billion) and customer repos of £22.5
billion (31 December 2023 - £22.9 billion).
|
|
(3)
|
Comprises derivative cash collateral
given relating to banks of £3.5 billion (31 December 2023 - £4.3
billion) and customers of £4.4 billion (31 December 2023 - £4.6
billion).
|
|
(4)
|
Comprises derivative cash collateral
received relating to banks of £5.8 billion (31 December 2023 - £6.8
billion) and customers of £7.8 billion (31 December 2023 - £8.3
billion).
|
|
(5)
|
Predominantly comprises bank
deposits (excluding repos), debt securities in issue and third
party subordinated liabilities, of which short-term wholesale
funding is the amount with contractual maturity of one year or
less.
|
|
|
|
|
|
|
|
|
|
| |
|
-
|
Total assets and liabilities increased by £1.9 billion respectively as at 31 March 2024.
Funded assets, which exclude derivatives, increased by £12.9
billion, largely driven by higher trading assets, cash and balances
at central banks and settlement balances. Derivative fair values
decreased in the period, largely driven by market volatility across
major currencies and movements in interest rates.
|
|
-
|
Cash and balances at central banks increased by £2.7 billion, largely driven by an increase in
funding partially offset by banking book activity.
|
|
-
|
Trading assets were up by £4.9 billion, driven by an increase in securities
partially offset by decreases in reverse repos and derivative cash
collateral posted. Trading
liabilities increased by £3.0 billion,
driven by increases in short positions and repos, partially offset
by a decrease in derivative cash collateral
received.
|
|
-
|
Loans - amortised cost increased by £1.8 billion, driven by higher loans to customers
reflecting growth in private financing and liquidity management
actions in response to market conditions.
|
|
-
|
Derivative assets and derivative liabilities
were down by £11.0 billion and £10.4 billion
respectively at 31 March 2024. The decreases in fair values largely
reflected market volatility across major currencies including the
strengthening of USD and increases in interest rates during the
quarter, following contrasting trends in the previous
quarter.
|
|
-
|
Settlement balance assets and liabilities
were up by £3.6 billion and £4.0 billion
respectively, largely due to increased trading compared with the
seasonally lower levels of customer activity leading up to 31
December 2023.
|
|
-
|
Other financial liabilities increased by £4.5 billion, driven by new issuance in the
period, partially offset by maturities. The balance as at 31 March
2024 includes £19.5 billion of medium-term notes issued.
|
Non-IFRS measures
This document contains a number of
non-IFRS measures. For details of the basis of preparation and
reconciliations, where applicable, refer to the non-IFRS measures
section on page 12.
Capital, liquidity and funding
risk
Introduction
NWM Group takes a comprehensive
approach 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 NWM Group operates
within its regulatory requirements and risk appetite.
Capital, RWAs and
leverage
The capital resources, RWAs and
leverage for NWM Plc are presented on a transitional basis for the
remaining IFRS 9 relief in respect to ECL. Regulatory capital is
monitored and reported at legal entity level for NWM
Plc.
|
|
31 March
|
31
December
|
|
|
2024
|
2023
|
|
Capital adequacy
ratios (1,2)
|
%
|
%
|
|
CET1
|
18.1
|
17.1
|
|
Tier 1
|
21.3
|
20.2
|
|
Total
|
24.5
|
23.0
|
|
Total MREL
|
40.7
|
34.5
|
|
|
|
|
|
Capital (1,2)
|
£m
|
£m
|
|
CET1
|
3,901
|
3,776
|
|
Tier 1
|
4,580
|
4,455
|
|
Total
|
5,274
|
5,072
|
|
Total MREL (3)
|
8,748
|
7,627
|
|
|
|
|
|
Risk-weighted assets
|
|
|
|
Credit risk
|
8,154
|
7,895
|
|
Counterparty credit risk
|
6,138
|
6,516
|
|
Market risk
|
6,212
|
6,366
|
|
Operational risk
|
1,002
|
1,322
|
|
Total RWAs
|
21,506
|
22,099
|
|
(1)
|
NWM Plc's total capital ratio
requirement is 11.5%, comprising the minimum capital requirement of
8.0%, supplemented with the capital conservation buffer of 2.5% and
the institution specific countercyclical buffer (CCyB) of 1%. The
minimum CET1 ratio is 8%, including the minimum capital requirement
of 4.5%. The CCyB is based on the weighted average of NWM Plc's
geographical exposures.
|
|
(2)
|
NWM Plc is subject to Pillar 2A
requirements for CET1, AT1 and Tier 2. Refer to the NWM Plc Pillar
3 report for further details on these additional capital
requirements.
|
|
(3)
|
Includes senior internal debt
instruments issued to NatWest Group plc with a regulatory value of
£3.5 billion (31 December 2023 - £2.6 billion).
|
Leverage
The leverage ratio has been
calculated in accordance with the Leverage Ratio (CRR) part of the
PRA rulebook.
|
|
31 March
|
31
December
|
|
|
2024
|
2023
|
|
Tier 1 capital (£m)
|
4,580
|
4,455
|
|
Leverage exposure
(£m) (1)
|
91,464
|
89,929
|
|
Leverage ratio
(%)
|
5.0
|
5.0
|
(1) Leverage
exposure is broadly aligned to the accounting value of on and
off-balance sheet exposures albeit subject to specific adjustments
for derivatives, securities financing positions and off-balance
sheet exposures.
Liquidity and funding
|
|
31 March
|
31
December
|
|
|
2024
|
2023
|
|
Liquidity coverage ratio (LCR)
(%)
|
186
|
183
|
|
Liquidity portfolio (£bn)
|
18.8
|
14.7
|
|
Total wholesale funding
(£bn) (1)
|
29.8
|
25.1
|
|
Total funding including repos
(£bn)
|
86.3
|
82.4
|
(1)
Predominantly comprises bank deposits (excluding
repos), debt securities in issue and third party subordinated
liabilities.
Condensed consolidated income
statement
for the period ended 31 March
2024 (unaudited)
|
|
Quarter
ended
|
|
|
31 March
|
31
December
|
31
March
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Interest receivable
|
675
|
677
|
413
|
|
Interest payable
|
(554)
|
(523)
|
(378)
|
|
Net
interest income
|
121
|
154
|
35
|
|
Fees and commissions
receivable
|
122
|
98
|
100
|
|
Fees and commissions
payable
|
(52)
|
(56)
|
(37)
|
|
Income from trading
activities
|
106
|
148
|
168
|
|
Other operating income
|
30
|
80
|
(1)
|
|
Non-interest income
|
206
|
270
|
230
|
|
Total income
|
327
|
424
|
265
|
|
Staff costs
|
(124)
|
(102)
|
(113)
|
|
Premises and equipment
|
(17)
|
(19)
|
(15)
|
|
Other administrative
expenses
|
(112)
|
(187)
|
(154)
|
|
Depreciation and
amortisation
|
(2)
|
(6)
|
(3)
|
|
Operating expenses
|
(255)
|
(314)
|
(285)
|
|
Operating profit/(loss) before impairment
releases/losses
|
72
|
110
|
(20)
|
|
Impairment
releases/(losses)
|
8
|
(5)
|
2
|
|
Operating profit/(loss) before tax
|
80
|
105
|
(18)
|
|
Tax credit
|
2
|
2
|
8
|
|
Profit/(loss) for the period
|
82
|
107
|
(10)
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Ordinary shareholders
|
55
|
89
|
(28)
|
|
Paid-in-equity holders
|
17
|
18
|
18
|
|
Non-controlling interests
|
10
|
-
|
-
|
|
|
82
|
107
|
(10)
|
Condensed consolidated statement of
comprehensive income
for the period ended 31 March
2024 (unaudited)
|
|
Quarter
ended
|
|
|
31 March
|
31
December
|
31
March
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Profit/(loss) for the period
|
82
|
107
|
(10)
|
|
Items that do not qualify for
reclassification
|
|
|
|
|
Remeasurement of retirement benefit
schemes
|
(1)
|
(111)
|
-
|
|
Changes in fair value of financial
liabilities designated at fair value through profit
or
|
|
|
|
|
loss (FVTPL)
due to changes in credit risk
|
(23)
|
(13)
|
(6)
|
|
Fair value through other
comprehensive income (FVOCI) financial
assets
|
2
|
(2)
|
2
|
|
Tax
|
18
|
40
|
-
|
|
|
(4)
|
(86)
|
(4)
|
|
Items that do qualify for reclassification
|
|
|
|
|
FVOCI financial
assets
|
8
|
(1)
|
2
|
|
Cash flow hedges
|
(58)
|
226
|
54
|
|
Currency translation
|
(29)
|
(56)
|
(53)
|
|
Tax
|
17
|
(15)
|
(14)
|
|
|
(62)
|
154
|
(11)
|
|
Other comprehensive (loss)/income after tax
|
(66)
|
68
|
(15)
|
|
Total comprehensive income/(loss) for the
period
|
16
|
175
|
(25)
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Ordinary shareholders
|
(11)
|
157
|
(43)
|
|
Paid-in equity holders
|
17
|
18
|
18
|
|
Non-controlling
interests
|
10
|
-
|
-
|
|
|
16
|
175
|
(25)
|
Condensed consolidated balance sheet
as at 31 March 2024 (unaudited)
|
|
|
31 March
|
31
December
|
|
|
|
2024
|
2023
|
|
|
£m
|
£m
|
|
Assets
|
|
|
|
|
Cash and balances at central
banks
|
|
16,488
|
13,831
|
|
Trading assets
|
|
50,242
|
45,324
|
|
Derivatives
|
|
68,305
|
79,332
|
|
Settlement balances
|
|
10,780
|
7,227
|
|
Loans to banks - amortised
cost
|
|
1,056
|
1,246
|
|
Loans to customers - amortised
cost
|
|
14,940
|
12,986
|
|
Amounts due from holding company and
fellow subsidiaries
|
|
662
|
1,730
|
|
Other financial assets
|
|
16,734
|
15,723
|
|
Other assets
|
|
593
|
518
|
|
Total assets
|
|
179,800
|
177,917
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Bank deposits
|
|
2,613
|
2,267
|
|
Customer deposits
|
|
6,942
|
6,998
|
|
Amounts due to holding company and
fellow subsidiaries
|
|
6,400
|
5,802
|
|
Settlement balances
|
|
10,641
|
6,641
|
|
Trading liabilities
|
|
56,555
|
53,623
|
|
Derivatives
|
|
61,558
|
71,981
|
|
Other financial
liabilities
|
|
28,122
|
23,574
|
|
Other liabilities
|
|
592
|
653
|
|
Total liabilities
|
|
173,423
|
171,539
|
|
|
|
|
|
|
Owners' equity
|
|
6,369
|
6,380
|
|
Non-controlling interests
|
|
8
|
(2)
|
|
Total equity
|
|
6,377
|
6,378
|
|
|
|
|
|
|
Total liabilities and equity
|
|
179,800
|
177,917
|
Condensed consolidated statement of
changes in equity
for the period ended 31 March
2024 (unaudited)
|
|
Share
|
|
|
|
|
|
|
|
|
capital and
|
|
|
|
Total
|
Non
|
|
|
|
share
|
Paid-in
|
Retained
|
Other
|
owners'
|
controlling
|
Total
|
|
|
premium
|
equity
|
earnings
|
reserves*
|
equity
|
interests
|
equity
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
At
1 January 2024
|
2,346
|
904
|
3,195
|
(65)
|
6,380
|
(2)
|
6,378
|
|
Profit attributable to
ordinary
|
|
|
|
|
|
|
|
|
shareholders and paid-in equity holders
|
|
|
72
|
|
72
|
10
|
82
|
|
Other comprehensive
income
|
|
|
|
|
|
|
|
|
- Realised gain in period
|
|
|
|
|
|
|
|
|
on
FVOCI equity shares
|
|
|
1
|
(1)
|
-
|
|
-
|
|
-
Changes in fair value of financial liabilities
|
|
|
|
|
|
|
|
|
designated
at FVTPL due to changes in credit risk
|
|
|
(23)
|
|
(23)
|
|
(23)
|
|
- Unrealised gains: FVOCI
|
|
|
|
10
|
10
|
|
10
|
|
- Remeasurement of retirement
|
|
|
|
|
|
|
|
|
benefit
schemes
|
|
|
(1)
|
|
(1)
|
|
(1)
|
|
- Amounts recognised in equity: cash flow hedges
|
|
|
|
(127)
|
(127)
|
|
(127)
|
|
- Foreign exchange reserve movement
|
|
|
|
(29)
|
(29)
|
|
(29)
|
|
- Amounts transferred from equity to
|
|
|
|
|
|
|
|
|
earnings
|
|
|
|
69
|
69
|
|
69
|
|
-
Tax
|
|
|
16
|
19
|
35
|
|
35
|
|
Paid-in equity dividends
paid
|
|
|
(17)
|
|
(17)
|
|
(17)
|
|
Merger reserve
amortisation
|
|
|
(1)
|
1
|
-
|
|
-
|
|
At
31 March 2024
|
2,346
|
904
|
3,242
|
(123)
|
6,369
|
8
|
6,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 March
|
|
|
|
|
|
|
|
|
2024
|
|
Attributable to:
|
|
|
|
|
£m
|
|
Ordinary shareholders
|
|
|
|
|
|
|
5,465
|
|
Paid-in equity holders
|
|
|
|
|
|
|
904
|
|
Non-controlling interests
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
6,377
|
|
*Other reserves consist of:
|
|
|
|
|
|
|
|
Merger reserve
|
|
|
|
|
|
(13)
|
|
FVOCI reserve
|
|
|
|
|
|
22
|
|
Cash flow hedging reserve
|
|
|
|
|
|
|
(203)
|
|
Foreign exchange reserve
|
|
|
|
|
|
|
71
|
|
|
|
|
|
|
|
|
(123)
|
Notes
1.
Presentation of condensed consolidated financial
statements
The condensed consolidated financial
statements should be read in conjunction with NatWest Markets Plc's
2023 Annual Report and Accounts. The accounting policies are the
same as those applied in the consolidated financial
statements.
The directors have prepared the
condensed consolidated financial statements on a going concern
basis after assessing the principal risks, forecasts, projections
and other relevant evidence over the twelve months from the date
they are approved.
Amendments to IFRS effective from 1
January 2024 had no material effect on the condensed consolidated
financial statements.
2.
Trading assets and liabilities
Trading assets and liabilities
comprise assets and liabilities held at fair value in trading
portfolios.
|
|
31 March
|
31
December
|
|
|
2024
|
2023
|
|
|
£m
|
£m
|
|
Assets
|
|
|
|
Loans
|
|
|
|
Reverse
repos
|
22,221
|
23,694
|
|
Collateral
given
|
7,869
|
8,914
|
|
Other
loans
|
582
|
762
|
|
Total loans
|
30,672
|
33,370
|
|
Securities
|
|
|
|
Central and local
government
|
|
|
|
-
UK
|
4,067
|
2,729
|
|
-
US
|
4,357
|
2,600
|
|
-
Other
|
6,779
|
3,062
|
|
Financial
institutions and Corporate
|
4,367
|
3,563
|
|
Total securities
|
19,570
|
11,954
|
|
Total
|
50,242
|
45,324
|
|
|
|
|
|
Liabilities
|
|
|
|
Deposits
|
|
|
|
Repos
|
27,323
|
26,902
|
|
Collateral
received
|
13,638
|
15,062
|
|
Other
deposits
|
1,016
|
1,150
|
|
Total deposits
|
41,977
|
43,114
|
|
Debt securities in issue
|
546
|
706
|
|
Short positions
|
14,032
|
9,803
|
|
Total
|
56,555
|
53,623
|
3.
Other financial liabilities
|
|
31 March
|
31
December
|
|
|
2024
|
2023
|
|
|
£m
|
£m
|
|
Customer deposits - designated as at
FVTPL
|
1,336
|
1,259
|
|
Debt securities in issue
|
|
|
|
-
Medium-term notes
|
19,477
|
17,608
|
|
-
Commercial paper and certificates of deposit
|
7,035
|
4,433
|
|
Subordinated liabilities
|
|
|
|
-
Designated as at FVTPL
|
238
|
238
|
|
-
Amortised cost
|
36
|
36
|
|
Total
|
28,122
|
23,574
|
4.
Amounts due to holding company and fellow
subsidiaries
|
|
31 March
|
31
December
|
|
|
2024
|
2023
|
|
Liabilities
|
£m
|
£m
|
|
Bank deposits - amortised
cost
|
544
|
537
|
|
Customer deposits - amortised
cost
|
54
|
55
|
|
Trading liabilities
|
927
|
1,028
|
|
Settlement balances
|
214
|
-
|
|
Other financial liabilities -
subordinated liabilities
|
1,104
|
1,022
|
|
MREL instruments issued to NatWest
Group plc
|
3,510
|
3,070
|
|
Other liabilities
|
47
|
90
|
|
Total
|
6,400
|
5,802
|
Notes continued
5.
Litigation and regulatory matters
NatWest Markets Plc's 2023 Annual
Report and Accounts, issued on 16 February 2024, included disclosures about NWM Group's litigation and
regulatory matters in Note 25. Set out below are the material
developments in those matters (all of which have been previously
disclosed) since publication of the 2023 Annual Report and
Accounts.
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 a
number of claims pending in the United States District Court for
the Southern District of New York (SDNY) with respect to the
setting of USD LIBOR. In March 2024, NatWest Group companies
reached an agreement in principle, subject to documentation and
court approval, to settle the USD LIBOR class action that asserts
claims on behalf of lenders who made LIBOR based loans. In April
2024, NatWest Group companies reached an agreement, subject to
court approval, to settle the USD LIBOR class action that asserts
claims on behalf of persons who transacted futures and options on
exchanges. The settlement amounts are covered in full by existing
provisions.
FX litigation
NWM Plc, NatWest Markets Securities
Inc. (NWMSI) and/or NatWest Group plc are defendants in several
cases relating to NWM Plc's foreign exchange (FX) business. In
February 2024, NWM Plc executed an agreement to settle the claim in
the Tel Aviv District Court in Israel, subject to court approval.
The settlement amount is covered in full by an existing
provision.
Government securities antitrust
litigation
Class action antitrust claims
commenced in March 2019 are pending in the SDNY against NWM Plc,
NWMSI and other banks in respect of Euro-denominated bonds issued
by various European central banks. In March 2024, NatWest Group
companies reached an agreement in principle, subject to final
documentation and court approval, to settle the class action. The
settlement amount is covered in full by an existing
provision.
Swaps antitrust
litigation
NWM Plc and other members of NatWest
Group, including NatWest Group plc, as well as a number of other
interest rate swap dealers, are defendants in several cases pending
in the SDNY alleging violations of the US antitrust laws in the
market for interest rate swaps. There is a consolidated class
action complaint on behalf of persons who entered into interest
rate swaps with the defendants, as well as non-class action claims
by three swap execution facilities. In March 2024, NatWest Group
companies reached an agreement in principle, subject to
documentation and court approval, to settle the class action. The
settlement amount is covered in full by an existing
provision.
1MDB litigation
A Malaysian court claim was served
in Switzerland in November 2022 by 1MDB, a sovereign wealth fund,
in which Coutts & Co Ltd was named, along with six others, as a
defendant in respect of losses allegedly incurred by 1MDB. It is
claimed that Coutts & Co Ltd is liable as a constructive
trustee for having dishonestly assisted the directors of 1MDB in
the breach of their fiduciary duties by failing (amongst other
alleged claims) to undertake due diligence in relation to a
customer of Coutts & Co Ltd, through which funds totalling
c.US$1 billion were received and paid out between 2009 and 2011.
The claimant seeks the return of that amount plus interest. Coutts
& Co Ltd filed an application in January 2023 challenging the
validity of service and the Malaysian court's jurisdiction to hear
the claim, and a hearing took place in February 2024. In March
2024, the court granted that application. The claimant has filed a
Notice of Appeal.
Coutts & Co Ltd (a subsidiary of
RBS Netherlands Holdings B.V., which in turn is a subsidiary of NWM
Plc) is a company registered in Switzerland and is in wind-down
following the announced sale of its business assets in
2015.
6.
Post balance sheet events
Other than as disclosed in this
document, there have been no other significant events between 31
March 2024 and the date of approval of these accounts that would
require a change to or additional disclosure in the condensed
consolidated financial statements.
Non-IFRS measures
NWM Group prepares its financial
statements in accordance with IFRS as issued by the IASB which
constitutes a body of 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 certain items
which management believe are not representative of the underlying
performance of the business and which distort period-on-period
comparison. These non-IFRS measures are not measures within the
scope of IFRS and are not a substitute for IFRS measures. These
measures include:
-
Management analysis of operating expenses shows
litigation and conduct costs on a separate line. These amounts are
included within staff costs and other administrative expenses in
the statutory analysis. Other operating expenses excludes
litigation and conduct costs which are more volatile and may
distort comparisons with prior periods.
-
Funded assets are defined as total assets less
derivative assets. This measure allows review of balance sheet
trends exclusive of the volatility associated with derivative fair
values.
-
Management view of income by business including
shared revenue and before own credit adjustments. This measure is
used to show underlying income generation in NatWest Markets
excluding the impact of own credit adjustments.
-
Revenue share refers to income generated by
NatWest Markets products from customers that have their primary
relationship with other NatWest Group subsidiaries, a proportion of
which is shared between NatWest Markets and those
subsidiaries.
-
Transfer Pricing arrangements with fellow NatWest
Group subsidiaries includes revenue share and a profit share
arrangement with fellow NatWest Group subsidiaries. The profit
share arrangement was introduced during 2023 to reward NWM Group on
an arm's length basis for its contribution to the performance of
the NatWest Group Commercial & Institutional business segment,
2023 being the first full year with the Commercial &
Institutional segment in place. The profit share is not allocated
to individual NatWest Markets product areas.
-
Own credit adjustments are applied to positions
where it is believed that the counterparties would consider NWM
Group's creditworthiness when pricing trades. The fair value of
certain issued debt securities, including structured notes, is
adjusted to reflect the changes in own credit spreads and the
resulting gain or loss recognised in income.
Operating expenses - management view
|
|
Quarter
ended
|
|
|
31 March
2024
|
|
|
Litigation
|
Other
|
Statutory
|
|
|
and conduct
|
operating
|
operating
|
|
|
costs
|
expenses
|
expenses
|
|
|
£m
|
£m
|
£m
|
|
Staff costs
|
6
|
118
|
124
|
|
Premises and equipment
|
-
|
17
|
17
|
|
Depreciation and
amortisation
|
-
|
2
|
2
|
|
Other administrative
expenses
|
(7)
|
119
|
112
|
|
Total
|
(1)
|
256
|
255
|
|
|
|
|
|
|
|
Quarter
ended
|
|
|
31
December 2023
|
|
|
Litigation
|
Other
|
Statutory
|
|
|
and
conduct
|
operating
|
operating
|
|
|
costs
|
expenses
|
expenses
|
|
|
£m
|
£m
|
£m
|
|
Staff costs
|
4
|
98
|
102
|
|
Premises and equipment
|
-
|
19
|
19
|
|
Depreciation and
amortisation
|
-
|
6
|
6
|
|
Other administrative
expenses
|
27
|
160
|
187
|
|
Total
|
31
|
283
|
314
|
|
|
|
|
|
|
|
Quarter
ended
|
|
|
31 March
2023
|
|
|
Litigation
|
Other
|
Statutory
|
|
|
and
conduct
|
operating
|
operating
|
|
|
costs
|
expenses
|
expenses
|
|
|
£m
|
£m
|
£m
|
|
Staff costs
|
1
|
112
|
113
|
|
Premises and equipment
|
-
|
15
|
15
|
|
Depreciation and
amortisation
|
-
|
3
|
3
|
|
Other administrative
expenses
|
7
|
147
|
154
|
|
Total
|
8
|
277
|
285
|
Additional information
Presentation of information
NatWest Markets Plc ('NWM Plc') is a
wholly owned subsidiary of NatWest Group plc or 'the ultimate
holding company'. The term 'NWM Group' or 'we' refers to NWM Plc
and its subsidiary and associated undertakings. The term 'NatWest
Group' 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 'NatWest Bank Plc' or 'NWB Plc' refers to
National Westminster Bank Plc.
NWM 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 amounts are denominated in pound
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 2023 have been
filed with the Registrar of Companies. 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.
|
Contact
|
|
|
|
Paul Pybus
|
Investor Relations
|
+44 (0) 7769161183
|
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, 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 sustainability-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: planned cost reductions, disposal
losses and strategic costs; implementation of NatWest Group's and
NWM Group's strategy (including in relation to investment
programmes relating to digital transformation of their operations
and services and inorganic opportunities); the timing and outcome
of litigation and government and regulatory investigations; 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;
restructuring and remediation costs and charges; NWM 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 Promoter 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 and
NWM Group's strategy or operations, which may result in NWM 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 Markets Plc's Annual Report and its other public
filings. The principal risks and uncertainties that could adversely
affect NWM Group's future results, its financial condition and/or
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: economic and political
risks and uncertainties in the UK and global markets, including as
a result of GDP growth, inflation and interest rates, supply chain
disruption, and geopolitical developments; changes in interest
rates and foreign currency exchange rates; uncertainty regarding
the effects of Brexit; and HM Treasury's ownership of NatWest Group
plc); strategic risk (including in respect of: NatWest Group's
strategy and NatWest Group's creation of its Commercial &
Institutional franchise (of which NWM Group forms part) and the
transfer of NatWest Group's Western European corporate portfolio);
financial resilience risk (including in respect of: NWM Group's
ability to meet targets, generate returns or implement its strategy
effectively; prudential regulatory requirements for capital and
MREL; NWM Group's reliance on access to capital markets directly or
indirectly through its parent (NatWest Group); capital, funding and
liquidity risk; reductions in the credit ratings; the competitive
environment; the requirements of regulatory stress tests;
counterparty and borrower risk; model risk; sensitivity to
accounting policies, judgments, estimates and assumptions (and the
economic, climate, competitive and other forward looking
information affecting those judgments, estimates and assumptions);
changes in applicable accounting standards; the adequacy of NatWest
Group's resolution plans; and the application of UK statutory
stabilisation or resolution powers to NatWest Group); climate and
sustainability risk (including in respect of: risks relating to
climate change and sustainability-related risks; both the execution
and reputational risk relating to NatWest Group's climate
change-related strategy, ambitions, targets and transition plan;
climate and sustainability-related data and model risk; the failure
to implement climate change resilient governance, procedures,
systems and controls; increasing levels of climate, environmental,
human rights and other sustainability-related laws, regulation and
oversight; increasing anti-greenwashing regulations, climate,
environmental, human rights and other sustainability-related
litigation, enforcement proceedings, investigations and conduct
risk; and reductions in ESG ratings); 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; attracting, retaining and developing senior
management and skilled personnel; complex IT systems; NWM Group's
risk management framework; and NWM Group's reputational risk); and
legal, regulatory and conduct risk (including in respect of: the
impact of substantial regulation and oversight; the outcome of
legal, regulatory and governmental actions and investigations as
well as remedial undertakings; and changes in tax legislation or
failure to generate future taxable profits).
Forward-looking statements
continued
Climate and sustainability-related
disclosures
Climate and sustainability-related
disclosures in this document are not measures within the scope of
International Financial Reporting Standards ('IFRS'), 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 in accordance with IFRS. These judgments,
assumptions and estimates are highly likely to change materially
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, net zero
strategy, including the implementation of our climate transition
plan, remain under development, and the data underlying our
analysis and strategy remain subject to evolution over time. The
process we have adopted to define, gather and report data on our
performance on climate and sustainability-related measures is not
subject to the formal processes adopted for financial reporting in
accordance with IFRS and there are currently limited industry
standards or globally recognised established practices for
measuring and defining climate and sustainability-related metrics.
As a result, we expect that certain climate and
sustainability-related disclosures made in this document are likely
to be amended, updated, recalculated or restated in the future.
Please also refer to the cautionary statement in the section
entitled 'Climate-related and other forward-looking statements and
metrics' of the NatWest Group 2023 Climate-related Disclosures
Report published by NatWest Group plc for the consolidated group,
including NatWest Markets Plc.
Cautionary statement regarding Non-IFRS financial measures and
APMs
NWM Group prepares its financial
statements in accordance with generally accepted accounting
principles (GAAP). This document may contain financial measures and
ratios not specifically defined under GAAP or IFRS ('Non-IFRS')
and/or alternative performance measures ('APMs') as defined in
European Securities and Markets Authority ('ESMA') guidelines.
Non-IFRS measures and APMs are adjusted for notable and other
defined items which management believes are not representative of
the underlying performance of the business and which distort
period-on-period comparison. 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. Any Non-IFRS measures
and/or APMs included in this document, are not measures within the
scope of IFRS, are based on a number of assumptions that are
subject to uncertainties and change, and are not a substitute for
IFRS measures.
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.
Legal Entity Identifier:
RR3QWICWWIPCS8A4S074