FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
 
 
Report of Foreign Private Issuer
 
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
 
For 30 July 2021
Commission File Number: 001-10306
 
NatWest Group plc
 
RBS, Gogarburn, PO Box 1000
Edinburgh EH12 1HQ
 
(Address of principal executive offices)
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
 
   Form 20-F X Form 40-F ___
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):_________
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):_________
 
 
 
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
 
Yes ___ No X
 
 
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________
 
 
 
 
The following information was issued as Company announcements in London, England and is furnished pursuant to General Instruction B to the General Instructions to Form 6-K: 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Condensed consolidated income statement for the period ended 30 June 2021 (unaudited)
 
 
Half year ended
 
 
30 June 2021
30 June 2020


 
 
£m
£m
 
Interest receivable
4,782
5,190
 
Interest payable
(866)
(1,338)
 
 
 
 
 
Net interest income 
3,916
3,852
 
 
 
 
 
Fees and commissions receivable
1,312
1,430
 
Fees and commissions payable
(285)
(392)
 
Income from trading activities
231
802
 
Other operating income 
145
146
 
 
 
 
 
Non-interest income
1,403
1,986
 
 
 
 
 
Total income
5,319
5,838
 
 
 
 
 
Staff costs
(1,902)
(1,955)
 
Premises and equipment
(502)
(651)
 
Other administrative expenses
(703)
(696)
 
Depreciation and amortisation 
(414)
(448)
 
 
 
 
 
Operating expenses
(3,521)
(3,750)
 
 
 
 
 
Profit before impairment releases/(losses)
1,798
2,088
 
Impairment releases/(losses)
707
(2,858)
 
 
 
 
 
Operating profit/(loss) before tax
2,505
(770)
 
Tax (charge)/credit
(435)
208
 
 
 
 
 
Profit/(loss) for the period
2,070
(562)
 
 
 
 
 
Attributable to:
 
 
 
Ordinary shareholders
1,842
(705)
 
Preference shareholders
9
16
 
Paid-in equity holders
178
192
 
Non-controlling interests
41
(65)
 
 
2,070
(562)
 
 
 
 
 
Earnings per ordinary share
15.6p
(5.8p)
 
Earnings per ordinary share - fully diluted
15.5p
(5.8p)
 
 
 
 
 
Condensed consolidated statement of comprehensive income for the period ended 30 June 2021 (unaudited)
 
 
 
Half year ended
 
 
30 June 2021
30 June 2020


 
 
£m
£m
 
Profit/(loss) for the period
2,070
(562)
 
 
 
 
 
Items that do not qualify for reclassification
 
 
 
Remeasurement of retirement benefit schemes (1)
(734)
68
 
(Loss)/profit on fair value of credit in financial liabilities 
 
 
 
  designated at FVTPL due to own credit risk
(25)
83
 
FVOCI financial assets
8
(120)
 
Tax
182
-
 
 
(569)
31
 
Items that do qualify for reclassification
 
 
 
FVOCI financial assets
(145)
(111)
 
Cash flow hedges
(365)
417
 
Currency translation
(288)
575
 
Tax
65
(179)
 
 
(733)
702
 
 
 
 
 
Other comprehensive (loss)/income after tax
(1,302)
733
 
 
 
 
 
Total comprehensive income for the period
768
171
 
 
 
 
 
Attributable to:
 
 
 
Ordinary shareholders
535
14
 
Preference shareholders
9
16
 
Paid-in equity holders
178
192
 
Non-controlling interests
46
(51)
 
 
768
171
 
 
Note:
(1) Following the purchase of ordinary shares from UKGI in March 2021, NatWest Group contributed £500 million to its main pension scheme in line with the memorandum of understanding announced on 17 April 2018. After tax relief, this contribution reduced total equity by £365 million. There was also a pre tax loss of £176 million (€205 million) in relation to the interim re-measurement of the Ulster Bank Pension Scheme (Republic of Ireland), as a result of significant movements in underlying actuarial assumptions (June 2020: net gain of £90 million (€101 million)). In line with our policy, the present value of defined benefit obligations and the fair value of plan assets at the end of the interim reporting period, are assessed to identity significant market fluctuations and one-off events since the end of the prior financial year.
 
 
Condensed consolidated balance sheet as at 30 June 2021 (unaudited)
 
 
30 June 2021
31 December 2020


 
 
£m
£m 
 
Assets
 
 
 
Cash and balances at central banks
151,511
124,489
 
Trading assets
70,195
68,990
 
Derivatives
109,556
166,523
 
Settlement balances
7,793
2,297
 
Loans to banks - amortised cost
8,176
6,955
 
Loans to customers - amortised cost
362,711
360,544
 
Other financial assets
51,469
55,148
 
Intangible assets
6,694
6,655
 
Other assets
7,753
7,890
 
 
 
 
 
Total assets
775,858
799,491
 
 
 
 
 
Liabilities
 
 
 
Bank deposits 
14,394
20,606
 
Customer deposits
467,214
431,739
 
Settlement balances
7,119
5,545
 
Trading liabilities
75,847
72,256
 
Derivatives
103,992
160,705
 
Other financial liabilities
46,118
45,811
 
Subordinated liabilities
8,696
9,962
 
Notes in circulation
2,906
2,655
 
Other liabilities
5,687
6,388
 
Total liabilities
731,973
755,667
 
 
 
 
 
Equity
 
 
 
Ordinary shareholders' interests
37,445
38,367
 
Other owners' interests
6,430
5,493
 
Owners’ equity
43,875
43,860
 
Non-controlling interests
10
(36)
 
 
 
 
 
Total equity
43,885
43,824
 
Total liabilities and equity
775,858
799,491
 
 
 
 
 
 
Condensed consolidated statement of changes in equity for the period ended 30 June 2021 (unaudited)
 
 
 
Half year ended
 
 
30 June 2021
30 June 2020


 
 
£m
£m
 
Called-up share capital - at beginning of period
12,129
12,094
 
Ordinary shares issued
38
31
 
Share cancellation (1)
(391)
-
 
At end of period
11,776
12,125
 
 
 
 
 
Paid-in equity - at beginning of period
4,999
4,058
 
Redeemed/reclassified (2)
-
(1,277)
 
Securities issued during the period (3)
937
1,220
 
At end of period
5,936
4,001
 
 
 
 
 
Share premium account - at beginning of period
1,111
1,094
 
Ordinary shares issued
50
16
 
At end of period
1,161
1,110
 
 
 
 
 
Merger reserve - at beginning and end of period
10,881
10,881
 
 
 
 
 
FVOCI reserve  - at beginning of period
360
138
 
Unrealised losses
(113)
(123)
 
Realised gains
(23)
(107)
 
Tax
15
12
 
At end of period
239
(80)
 
 
 
 
 
Cash flow hedging reserve - at beginning of period
229
35
 
Amount recognised in equity
(323)
445
 
Amount transferred from equity to earnings
(42)
(28)
 
Tax
59
(111)
 
At end of period
(77)
341
 
 
 
 
 
Foreign exchange reserve - at beginning of period
1,608
1,343
 
Retranslation of net assets
(336)
527
 
Foreign currency gains/(losses) on hedges of net assets
43
(63)
 
Tax
(11)
(95)
 
Recycled to profit or loss on disposal of businesses (4)
-
97
 
At end of period
1,304
1,809
 
 
 
 
 
Capital redemption reserve - at beginning of period
-
-
 
Share cancellation (1)
390
-
 
Redemption of preference shares
24
-
 
At end of period
414
-
 
 
 
 
 
Retained earnings - at beginning of period
12,567
13,946
 
Profit/(loss) attributable to ordinary shareholders and other equity owners
2,029
(497)
 
Equity preference dividends paid
(9)
(16)
 
Paid-in equity dividends paid
(178)
(192)
 
Ordinary dividends paid
(347)
-
 
Shares repurchased during the year (1)
(748)
-
 
Redemption of preference shares
(24)
-
 
Redemption/reclassification of paid-in equity (2)
-
(355)
 
Realised losses in period on FVOCI equity shares
(1)
(1)
 
Remeasurement of the retirement benefit schemes (5)
 
 
 
  - gross
(734)
68
 
  - tax
182
23
 
Changes in fair value of credit in financial liabilities designated at fair value through profit or loss
 
 
 
  - gross
(25)
83
 
  - tax
2
(8)
 
Shares issued under employee share schemes
-
(11)
 
Share-based payments
(82)
(100)
 
At end of period
12,632
12,940
 
 
 
Condensed consolidated statement of changes in equity for the period ended 30 June 2021 (unaudited) continued
 
 
 
Half year ended
 
 
30 June 2021
30 June 2020


 
 
£m
£m
 
Own shares held - at beginning of period
(24)
(42)
 
Shares issued under employee share schemes
17
95
 
Own shares acquired (1)
(384)
(77)
 
At end of period
(391)
(24)
 
Owners' equity at end of period
43,875
43,103
 
 
 
 
 
Non-controlling interests - at beginning of period
(36)
9
 
Currency translation adjustments and other movements
5
14
 
Profit/(loss) attributable to non-controlling interests
41
(65)
 
At end of period
10
(42)
 
 
 
 
 
Total equity at end of period
43,885
43,061
 
 
 
 
 
Attributable to:
 
 
 
Ordinary shareholders
37,445
38,608
 
Preference shareholders
494
494
 
Paid-in equity holders
5,936
4,001
 
Non-controlling interests
10
(42)
 
 
43,885
43,061
 
 
 
 
 
Notes:
(1)
In March 2021, there was an agreement with HM Treasury to buy 591 million ordinary shares in the Company from UK Government Investments Ltd (UKGI), at 190.5p per share for the total consideration of £1.13 billion. NatWest Group cancelled 391 million of the purchased ordinary shares, amounting to £744 million excluding fees, and held the remaining 200 million in own shares held, amounting to £381 million excluding fees. The nominal value of the share cancellation has been transferred to the capital redemption reserve.
(2)
In June 2020, paid-in equity reclassified to liabilities as the result of a call of US$2 billion AT1 notes.
(3)
AT1 capital notes totalling US$750 million less fees were issued in June 2021 (£400 million less fees were issued in March 2021). In June 2020, AT1 capital notes totalling US$1.5 billion less fees were issued.
(4)
In 2020, the completion of the Alawwal bank merger resulted in the derecognition of the associate investment in Alawwal bank and recognition of a new investment in SABB held at fair value through other comprehensive income (FVOCI).
(5)
Following the purchase of ordinary shares from UKGI in March 2021, NatWest Group contributed £500 million to its main pension scheme in line with the memorandum of understanding announced on 17 April 2018. After tax relief, this contribution reduced total equity by £365 million. There was also a pre tax loss of £176 million (€205 million) in relation to the interim re-measurement of the Ulster Bank Pension Scheme (Republic of Ireland), as a result of significant movements in underlying actuarial assumptions (June 2020: net gain of £90 million (€101 million)). In line with our policy, the present value of defined benefit obligations and the fair value of plan assets at the end of the interim reporting period, are assessed to identity significant market fluctuations and one-off events since the end of the prior financial year.
 
 
 
 
 
 
Condensed consolidated cash flow statement for the period ended 30 June 2021 (unaudited)
 
 
Half year ended
 
 
30 June 2021
30 June 2020


 
 
£m
£m
 
Operating activities
 
 
 
Operating profit/(loss) before tax
2,505
(770)
 
Adjustments for non-cash items 
2,635
1,271
 
 
 
 
 
Net cash flows from trading activities
5,140
501
 
Changes in operating assets and liabilities
25,745
14,281
 
 
 
 
 
Net cash flows from operating activities before tax
30,885
14,782
 
Income taxes paid
(259)
(231)
 
 
 
 
 
Net cash flows from operating activities
30,626
14,551
 
Net cash flows from investing activities
(790)
2,035
 
Net cash flows from financing activities
(359)
2,748
 
Effects of exchange rate changes on cash and cash equivalents
(1,935)
2,752
 
 
 
 
 
Net increase in cash and cash equivalents
27,542
22,086
 
Cash and cash equivalents at beginning of period
139,199
100,588
 
 
 
 
 
Cash and cash equivalents at end of period
166,741
122,674
 
 
 
 
 
 
Notes
1. Basis of preparation
The condensed consolidated financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and UK adopted IAS 34 ‘Interim Financial Reporting’. They should be read in conjunction with NatWest Group plc 2020 Annual Report and Accounts which were prepared in accordance with International Financial Reporting Standards in conformity with the requirements of the Companies Act 2006 and with International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. NatWest Group plc 2021 Annual Report and Accounts will be prepared in accordance with UK adopted International Financial Reporting Standards.
 
 
Going concern
Having reviewed NatWest Group’s forecasts, projections, the potential impact of COVID-19, and other relevant evidence, the directors have a reasonable expectation that NatWest Group will continue in operational existence for a period of not less than twelve months. Accordingly, the results for the period ended 30 June 2021 have been prepared on a going concern basis.
 
 
2. Accounting policies
NatWest Group’s principal accounting policies are as set out on pages 264 to 268 of the NatWest Group plc 2020 Annual Report and Accounts. Changes to accounting policies from 1 January 2021 had no material effect on NatWest Group plc’s accounts.
 
Critical accounting policies and key sources of estimation uncertainty
The judgements and assumptions that are considered to be the most important to the portrayal of NatWest Group’s financial condition are those relating to deferred tax, fair value of financial instruments, loan impairment provisions, goodwill and provisions for liabilities and charges. These critical accounting policies and judgements are referenced on page 268 of the NatWest Group plc 2020 Annual Report and Accounts. Estimation uncertainty has been affected by the COVID-19 pandemic. Management’s consideration of this source of uncertainty is outlined in the relevant sections of the NatWest Group plc 2020 Annual Report and Accounts, including the ECL estimate for the period in the Risk and capital management section contained in the NatWest Group plc 2020 Annual Report and Accounts.
 
Information used for significant estimates
The COVID-19 pandemic has continued to cause significant economic and social disruption. Key financial estimates are based on a range of anticipated future economic conditions described by internally developed scenarios. Measurement of goodwill, deferred tax and expected credit losses are highly sensitive to reasonably possible changes in those anticipated conditions. Other reasonably possible assumptions about the future include a prolonged financial effect of the COVID-19 pandemic on the economy of the UK and other countries. Changes in judgements and assumptions could result in a material adjustment to those estimates in the next reporting periods. Refer to the NatWest Group plc Risk factors section in the 2020 Annual Report and Accounts.
 
 
 
Notes
3. Analysis of income, expenses and impairment losses
 
 
Half year ended
 
 
30 June 2021
30 June 2020


 
 
£m
£m
 
Loans to customers - amortised cost
4,433
4,698
 
Loans to banks - amortised cost
217
189
 
Other financial assets
132
303
 
Interest receivable 
4,782
5,190
 
 
 
 
 
Deposits by banks
99
89
 
Customer deposits
319
432
 
Other financial liabilities
314
481
 
Subordinated liabilities
130
218
 
Internal funding of trading businesses
4
118
 
Interest payable 
866
1,338
 
Net interest income
3,916
3,852
 
Net fees and commissions
1,027
1,038
 
 
 
 
 
Foreign exchange
183
344
 
Interest rate
(6)
472
 
Credit
54
(68)
 
Own credit adjustment
-
53
 
Equity, commodities and other
-
1
 
Income from trading activities
231
802
 
 
 
 
 
Loss on redemption of own debt (1)
(138)
-
 
Operating lease and other rental income
108
119
 
Changes in fair value of financial assets or liabilities designated at fair value through profit or loss (2)
(4)
(21)
 
Changes in fair value of other financial assets at fair value through profit or loss
-
(10)
 
Hedge ineffectiveness
13
(10)
 
Loss on disposal of amortised assets
(6)
(16)
 
Profit on disposal of fair value through other comprehensive income assets
24
108
 
Profit on sale of property, plant and equipment
6
11
 
Share of profit of associated entities
129
12
 
Profit/(loss) on disposal of subsidiaries and associates 
1
(99)
 
Other income (3)
12
52
 
Other operating income
145
146
 
Total non-interest income
1,403
1,986
 
Total income
5,319
5,838
 
 
 
 
 
Salaries
1,192
1,290
 
Bonus awards
142
179
 
Temporary and contract costs
114
148
 
Social security costs
152
153
 
Pension costs
177
164
 
   - defined benefit schemes
110
101
 
   - defined contribution schemes
67
63
 
Other
125
21
 
Staff costs
1,902
1,955
 
Premises and equipment (4)
502
651
 
Depreciation and amortisation (5)
414
448
 
Other administrative expenses (6)
703
696
 
Administrative expenses
1,619
1,795
 
 
 
 
 
Operating expenses
3,521
3,750
 
 
 
 
 
Impairment releases/(losses)
707
(2,858)
 
Impairments as a % of gross loans to customers
0.38%
1.59%
 
Notes:
(1)
Representing day one loss on redemption of own debt related to the repurchase of legacy instruments.
(2)
Includes related derivatives.
(3)
Includes income from activities other than banking.
(4)
30 June 2021 includes cost of £20 million including accelerated depreciation of £12 million (30 June 2020 - £102 million including £40 million accelerated depreciation) in relation to the planned reduction of the property portfolio (30 June 2021 – freehold £1 million; leasehold £19 million; 30 June 2020 - leasehold £102 million).
(5)
30 June 2021 includes a £23 million charge relating to the reduction in property portfolio, leasehold £19 million and freehold £4 million (30 June 2020 - £43 million charge, leasehold £43 million).
(6)
Includes litigation and conduct costs.
 
 
 
 
 
Notes
4. Segmental analysis
The business is organised into the following reportable segments: Personal Banking, Private Banking, Commercial Banking, RBS International (RBSI), NatWest Markets, Ulster Bank RoI and Central items & other.
 
Analysis of operating profit/(loss) before tax
The following tables provide a segmental analysis of operating profit/(loss) before tax by the main income statement captions.
 
 
 
 
 
International Banking & Markets
Ulster
Central
 
 
Retail
Private
Commercial
RBS
NatWest
Bank
 items &
 
 
Banking
Banking
Banking
International
Markets
RoI
other (1)
Total
Half year ended 30 June 2021
£m
£m
£m
£m
£m
£m
£m
£m
Net interest income
1,976
232
1,308
182
(3)
187
34
3,916
Net fees and commissions
173
124
560
59
83
38
(10)
1,027
Other non-interest income
1
12
55
15
215
18
60
376
Total income
2,150
368
1,923
256
295
243
84
5,319
Operating expenses
(1,187)
(249)
(1,152)
(112)
(560)
(261)
-
(3,521)
Impairment releases/(losses)
57
27
568
29
16
11
(1)
707
Operating profit/(loss)
1,020
146
1,339
173
(249)
(7)
83
2,505
 
 
 
 
 
 
 
 
 
Half year ended 30 June 2020
 
 
 
 
 
 
 
 
Net interest income
1,982
251
1,370
201
(34)
194
(112)
3,852
Net fees and commissions
204
130
552
43
76
44
(11)
1,038
Other non-interest income
(1)
11
81
15
774
11
57
948
Total income
2,185
392
2,003
259
816
249
(66)
5,838
Operating expenses
(1,075)
(252)
(1,221)
(126)
(707)
(245)
(124)
(3,750)
Impairment losses
(657)
(56)
(1,790)
(46)
(40)
(243)
(26)
(2,858)
Operating profit/(loss)
453
84
(1,008)
87
69
(239)
(216)
(770)
 
Note:
(1)
30 June 2021 predominantly relates to interest receivable in Treasury and 30 June 2020 predominantly related to interest receivable in Treasury and strategic disposals in Functions.
 
Total revenue(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
International Banking & Markets
Ulster
Central
 
 
Retail
Private
Commercial
RBS
NatWest
Bank
items &
 
 
Banking
Banking
Banking
International
Markets
RoI
Other
Total
Half year ended 30 June 2021
£m
£m
£m
£m
£m
£m
£m
£m
External
2,667
358
1,861
278
523
275
508
6,470
Inter-segmental
14
60
43
3
17
-
(137)
-
Total
2,681
418
1,904
281
540
275
371
6,470
 
 
 
 
 
 
 
 
 
Half year ended 30 June 2020
 
 
 
 
 
 
 
 
External
2,764
358
2,009
269
1,328
277
563
7,568
Inter-segmental
24
99
47
3
4
-
(177)
-
Total
2,788
457
2,056
272
1,332
277
386
7,568
 
Note:
(1)
Total revenue comprises interest receivable, fees and commissions receivable, income from trading activities and other operating income.
 
 
 
Notes
4. Segmental analysis continued
Analysis of net fees and commissions
 
 
 
 
International Banking & Markets
Ulster
Central
 
 
Retail
Private
Commercial
RBS
NatWest
Bank
items &
 
 
Banking
Banking
Banking
International
Markets
RoI
other
Total
Half year ended 30 June 2021
£m
£m
£m
£m
£m
£m
£m
£m
Fees and commissions receivable
 
 
 
 
 
 
 
 
  - Payment services
145
16
255
6
10
28
-
460
  - Credit and debit card fees
149
4
69
1
-
8
-
231
  - Lending and financing
6
4
242
28
34
7
-
321
  - Investment management,
 
 
 
 
 
 
 
 
      trustee and fiduciary services 
1
113
-
22
-
1
-
137
  - Underwriting fees
-
-
-
-
77
-
-
77
  - Other
32
19
63
3
25
-
(56)
86
Total
333
156
629
60
146
44
(56)
1,312
 
 
 
 
 
 
 
 
 
Fees and commissions payable
(160)
(32)
(69)
(1)
(63)
(6)
46
(285)
Net fees and commissions
173
124
560
59
83
38
(10)
1,027
 
 
 
 
 
 
 
 
 
Half year ended 30 June 2020
 
 
 
 
 
 
 
 
Fees and commissions receivable
 
 
 
 
 
 
 
 
  - Payment services
129
14
256
9
9
28
-
445
  - Credit and debit card fees
144
4
60
1
-
10
-
219
  - Lending and financing
37
2
241
15
46
7
-
348
  - Investment management, 
 
 
 
 
 
 
 
 
     trustee and fiduciary services
1
113
-
17
-
1
-
132
  - Underwriting fees
-
-
-
-
124
-
-
124
  - Other
34
18
48
2
98
2
(40)
162
Total
345
151
605
44
277
48
(40)
1,430
 
 
 
 
 
 
 
 
 
Fees and commissions payable
(141)
(21)
(53)
(1)
(201)
(4)
29
(392)
Net fees and commissions
204
130
552
43
76
44
(11)
1,038
 
 
 
Total assets and liabilities
 
 
 
 
International Banking & Markets


Ulster 
  Central
 
Retail
Private
Commercial
RBS
NatWest
Bank
items &
 
Banking
Banking
Banking
International
Markets
RoI
other 
Total
30 June 2021
£m
£m
£m
£m
£m
£m
£m
£m
Assets
 204,167 
  27,686 
        185,757 
               36,953 
             219,447 
  25,422 
     76,426 
 775,858 
Liabilities
 187,851 
  34,808 
        183,837 
               34,843 
             206,160 
  21,872 
     62,602 
 731,973 
 
 
 
 
 
 
 
 
 
31 December 2020
 
 
 
 
 
 
 
 
Assets
197,618
26,206
187,413
33,984
270,147
26,620
57,503
799,491
Liabilities
178,617
32,457
174,251
31,989
254,098
22,993
61,262
755,667
 
 
 
 
 
Notes
5. Tax
The actual tax charge differs from the expected tax charge computed by applying the standard UK corporation tax rate of 19% (2020 - 19%), as analysed below:
 
 
Half year ended
 
 
30 June 2021
30 June 2020


 
 
£m
£m
 
Profit/(loss) before tax
2,505
(770)
 
 
 
 
 
Expected tax (charge)/credit
(476)
146
 
Losses and temporary differences in period where no deferred tax assets recognised
(6)
(38)
 
Foreign profits taxed at other rates
4
(24)
 
Items not allowed for tax:
 
 
 
  - losses on disposals and write-downs
(3)
(14)
 
  - UK bank levy
(11)
(15)
 
  - regulatory and legal actions
3
20
 
  - other disallowable items
(10)
(23)
 
Non-taxable items
25
68
 
Taxable foreign exchange movements
-
(2)
 
Losses bought forward and utilised
6
23
 
Decrease in the carrying value of deferred tax assets in respect of:
 
 
 
  - UK losses
(5)
(56)
 
  - Ireland losses
(35)
(20)
 
Banking surcharge
(173)
52
 
Tax on paid-in equity
32
38
 
UK tax rate change impact
206
75
 
Adjustments in respect of prior periods
8
(22)
 
 
 
 
 
Actual tax (charge)/credit
(435)
208
 
At 30 June 2021, NatWest Group has recognised a deferred tax asset of £1,150 million (31 December 2020 - £901 million) and a deferred tax liability of £303 million (31 December 2020 - £291 million). These include amounts recognised in respect of UK trading losses of £972 million (31 December 2020 - £862 million). Under UK tax legislation, these UK losses can be carried forward indefinitely. NatWest Group has considered the carrying value of this asset as at 30 June 2021 and concluded that it is recoverable based on future profit projections.
 
It was announced in the UK Government’s Budget on 3 March 2021 that the main UK corporation tax rate will increase from 19% to 25% from 1 April 2023. This legislative change was enacted on 10 June 2021. NatWest Group’s closing deferred tax assets and liabilities have therefore been recalculated taking into account this change of rate and the applicable period the deferred tax assets and liabilities are expected to crystallise. As a result, the net deferred tax asset position in NatWest Group has increased by £176 million, with a £206 million credit included in the income statement (refer to reconciling item above), and a £30 million charge included in other comprehensive income. There is an ongoing HM Treasury review of the bank surcharge rate to ensure that the combined rate of corporation tax applicable to banking entities remains competitive.
 
 
 
 
 
Notes
6. Trading assets and liabilities
Trading assets and liabilities comprise assets and liabilities held at fair value in trading portfolios.
 
 
 
 
 
30 June 2021
31 December 2020


 
Assets
£m
£m
 
Loans
 
 
 
  Reverse repos
24,718
19,404
 
  Collateral given
12,955
18,760
 
  Other loans
1,154
1,611
 
Total loans
38,827
39,775
 
Securities
 
 
 
  Central and local government
 
 
 
  -  UK
5,121
4,184
 
  -  US
4,088
5,149
 
  -  other
18,347
16,436
 
  Financial institutions and corporate
3,812
3,446
 
Total securities
31,368
29,215
 
Total
70,195
68,990
 
 
 
 
 
Liabilities
 
 
 
Deposits
 
 
 
  Repos 
23,720
19,036
 
  Collateral received
17,165
23,229
 
  Other deposits
1,646
1,804
 
Total deposits
42,531
44,069
 
Debt securities in issue
1,205
1,408
 
Short positions
32,111
26,779
 
Total
75,847
72,256
 
 
 
 
 
 
Notes
7. Financial instruments
Financial instruments: classification
The following tables analyse financial assets and liabilities in accordance with the categories of financial instruments on an IFRS 9 basis. Assets and liabilities outside the scope of IFRS 9 are shown within other assets and other liabilities.
 
 
 
 
Amortised
Other
 
 
MFVTPL
FVOCI
cost
assets
Total
Assets
£m
£m
£m
£m
£m
Cash and balances at central banks
 
 
151,511
 
151,511
Trading assets
70,195
 
 
 
70,195
Derivatives (1)
109,556
 
 
 
109,556
Settlement balances
 
 
7,793
 
7,793
Loans to banks - amortised cost (2)
 
 
8,176
 
8,176
Loans to customers - amortised cost (3)
 
 
362,711
 
362,711
Other financial assets
340
42,085
9,044
 
51,469
Intangible assets
 
 
 
6,694
6,694
Other assets
 
 
 
7,753
7,753
30 June 2021
180,091
42,085
539,235
14,447
775,858
 
 
 
 
 
 
Cash and balances at central banks
 
 
124,489
 
124,489
Trading assets
68,990
 
 
 
68,990
Derivatives (1)
166,523
 
 
 
166,523
Settlement balances
 
 
2,297
 
2,297
Loans to banks - amortised cost (2)
 
 
6,955
 
6,955
Loans to customers - amortised cost (3)
 
 
360,544
 
360,544
Other financial assets
440
44,902
9,806
 
55,148
Intangible assets
 
 
 
6,655
6,655
Other assets
 
 
 
7,890
7,890
31 December 2020
235,953
44,902
504,091
14,545
799,491
 
 
Held-for-
 
Amortised
Other
 
 
trading
DFV
cost
liabilities
Total
Liabilities
£m
£m
£m
£m
£m
Bank deposits (4)
 
 
14,394
 
14,394
Customer deposits
 
 
467,214
 
467,214
Settlement balances
 
 
7,119
 
7,119
Trading liabilities
75,847
 
 
 
75,847
Derivatives (1)
103,992
 
 
 
103,992
Other financial liabilities
 
1,961
44,157
 
46,118
Subordinated liabilities
 
744
7,952
 
8,696
Notes in circulation
 
 
2,906
 
2,906
Other liabilities (5)
 
 
1,818
3,869
5,687
30 June 2021
179,839
2,705
545,560
3,869
731,973
 
 
 
 
 
 
Bank deposits (4)
 
 
20,606
 
20,606
Customer deposits
 
 
431,739
 
431,739
Settlement balances
 
 
5,545
 
5,545
Trading liabilities
72,256
 
 
 
72,256
Derivatives (1)
160,705
 
 
 
160,705
Other financial liabilities
 
2,403
43,408
 
45,811
Subordinated liabilities
 
793
9,169
 
9,962
Notes in circulation
 
 
2,655
 
2,655
Other liabilities (5)
 
 
1,882
4,506
6,388
31 December 2020
232,961
3,196
515,004
4,506
755,667
 
Notes:
(1)
Includes net hedging derivatives assets of £42 million (31 December 2020 - £93 million) and net hedging derivatives liabilities of £136 million (31 December 2020 - £130 million).
(2)
Includes items in the course of collection from other banks of £275 million (31 December 2020 - £148 million).
(3)
Includes finance lease receivables of £8,765 million (31 December 2020 - £9,061 million).
(4)
Includes items in the course of transmission to other banks of £92 million (31 December 2020 - £12 million).
(5)
Includes lease liabilities of £1,652 million (31 December 2020 - £1,698 million).
 
 
 
 
 
 
 
Notes
7. Financial instruments continued
NatWest Group's financial assets and liabilities include:
 
 
30 June 2021
31 December 2020
 
 
£m 
£m 
 
Reverse repos
 
 
 
Trading assets
24,718
19,404
 
Loans to banks - amortised cost
382
153
 
Loans to customers - amortised cost
22,706
25,011
 
 
 
 
 
Repos
 
 
 
Bank deposits
4,261
6,470
 
Customer deposits
16,751
5,167
 
Trading liabilities
23,720
19,036
 
Interest rate benchmark reform
NatWest Group continues to implement its entity-wide IBOR reform programme with the aim of being ready for the various transition events which are expected to occur prior to the cessation of the vast majority of the IBOR benchmark rates at the end of 2021 and of the USD IBOR in 2023.
 
NatWest Group continues to develop new products across its different segments that reference the new alternative risk-free rates and continues to work with customers to assess their readiness and ability to adopt new products, transition existing products or take the necessary steps to ensure that products can transition at IBOR cessation. A comprehensive review of the effect of IBOR reform on funding, liquidity and risk management has also been conducted and NatWest Group will continue to adapt its key systems, methodologies and processes to meet the requirements of the new risk-free rates. This is expected to be fully implemented over the course of 2021 and by June 2023 for USD IBOR.
 
NatWest Group expects that the vast majority of non-derivative instruments will transition in H2 2021 or the first reset date of the interest rate after cessation via renegotiation with clients or fallback provisions. Derivatives that are subject to clearing
are expected to transition in line with the relevant clearing house transition approaches while other derivatives are expected to
transition using the ISDA fallback protocol.
 
NatWest Group also remains engaged with regulators, standard setters and other market participants on key matters related to the IBOR reform. It is expected that the programme will meet all timelines set by the regulators.
 
 
 
 
 
Notes
7. Financial instruments continued
Financial instruments - valuation hierarchy
Disclosures relating to the control environment, valuation techniques and related aspects pertaining to financial instruments measured at fair value are included in the NatWest Group plc 2020 Annual Report and Accounts. Valuation, sensitivity methodologies and inputs at 30 June 2021 are consistent with those described in Note 12 to the NatWest Group plc 2020 Annual Report and Accounts.
 
The tables below show financial instruments carried at fair value on the balance sheet by valuation hierarchy - level 1, level 2 and level 3 and valuation sensitivities for level 3 balances.
 
 
30 June 2021
 
31 December 2020
 
Level 1
Level 2
Level 3
Total
 
Level 1
Level 2
Level 3
Total
 
£m
£m
£m
£m
 
£m
£m
£m
£m
Assets
 
 
 
 
 
 
 
 
 
Trading assets
 
 
 
 
 
   
   
   
 
  Loans
-
38,664
163
38,827
 
-
39,550
225
39,775
  Securities
22,048
9,205
115
31,368
 
21,535
7,599
81
29,215
Derivatives
-
108,622
934
109,556
 
-
165,441
1,082
166,523
Other financial assets
 
 
 
 
 
 
 
 
 
  Loans
-
394
588
982
 
-
185
168
353
  Securities
32,422
8,827
194
41,443
 
35,972
8,850
167
44,989
Total financial assets held at fair value
54,470
165,712
1,994
222,176
 
57,507
221,625
1,723
280,855
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
Trading liabilities
 
 
 
 
 
 
 
 
   
  Deposits
-
42,528
3
42,531
 
-
44,062
7
44,069
  Debt securities in issue
-
1,205
-
1,205
 
-
1,408
-
1,408
  Short positions
23,659
8,451
1
32,111
 
19,045
7,734
-
26,779
Derivatives
-
103,311
681
103,992
 
-
159,818
887
160,705
Other financial liabilities
 
 
 
 
 
 
 
 
 
  Debt securities in issue
-
1,243
-
1,243
 
-
1,607
-
1,607
  Other deposits
-
718
-
718
 
-
796
-
796
Subordinated liabilities
-
744
-
744
 
-
793
-
793
Total financial liabilities held at fair value
23,659
158,200
685
182,544
 
19,045
216,218
894
236,157
 
Notes:
(1)
Level 1 - Instruments valued using unadjusted quoted prices in active and liquid markets, for identical financial instruments. Examples include government bonds, listed equity shares and certain exchange-traded derivatives.
Level 2 - Instruments valued using valuation techniques that have observable inputs. Examples include most government agency securities, investment-grade corporate bonds, certain mortgage products, including CLOs, most bank loans, repos and reverse repos, less liquid listed equities, state and municipal obligations, most notes issued, and certain money market securities and loan commitments and most OTC derivatives.
Level 3 - Instruments valued using a valuation technique where at least one input which could have a significant effect on the instrument’s valuation, is not based on observable market data. Examples include cash instruments which trade infrequently, certain syndicated and commercial mortgage loans, certain emerging markets and derivatives with unobservable model inputs.
(2)
Transfers between levels are deemed to have occurred at the beginning of the quarter in which the instrument was transferred. There were no significant
transfers between level 1 and level 2.
(3)
For an analysis of debt securities held at mandatorily fair value through profit or loss by issuer as well as ratings and derivatives, by type and contract, refer to Risk and capital management – Credit risk.
(4)
The determination of an instrument’s level cannot be made at a global product level as a single product type can be in more than one level. For example, a
single name corporate credit default swap could be in level 2 or level 3 depending on whether the reference counterparty’s obligations are liquid or illiquid.
 
 
 
Notes
7. Financial instruments continued
Financial instruments: sensitivity analysis
 
 
30 June 2021
 
31 December 2020
 
Level 3
Favourable
Unfavourable
 
Level 3
Favourable
Unfavourable
 
£m
£m
£m
 
£m
£m
£m
Assets
 
 
 
 
 
 
 
Trading assets
 
 
 
 
 
 
 
  Loans
163
10
-
 
225
10
-
  Securities
115
10
-
 
81
-
-
Derivatives
934
60
(70)
 
1,082
80
(80)
Other financial assets
 
 
 
 
 
 
 
  Loans
588
30
(50)
 
168
20
(10)
  Securities
194
30
(20)
 
167
30
(20)
Total financial assets held at fair value
1,994
140
(140)
 
1,723
140
(110)
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Trading liabilities
 
 
 
 
 
 
 
  Deposits
3
-
-
 
7
-
-
  Short Positions
1
-
-
 
-
-
-
Derivatives
681
40
(40)
 
887
50
(40)
Total financial liabilities held at fair value
685
40
(40)
 
894
50
(40)
 
Reasonably plausible alternative assumptions of unobservable inputs are determined based on a specified target level of certainty of 90%. The assessments recognise different favourable and unfavourable valuation movements where appropriate. Each unobservable input within a product is considered separately and sensitivity is reported on an additive basis.
Alternative assumptions are determined with reference to all available evidence including consideration of the following: quality of independent pricing information taking into account consistency between different sources, variation over time, perceived tradability or otherwise of available quotes; consensus service dispersion ranges; volume of trading activity and market bias (e.g. one-way inventory); day 1 profit or loss arising on new trades; number and nature of market participants; market conditions; modelling consistency in the market; size and nature of risk; length of holding of position; and market intelligence.
 
Movement in level 3 portfolios
The following table shows the movement in level 3 assets and liabilities.
 
 
Half year ended 30 June 2021
 
Half year ended 30 June 2020
 
 
Other
 
 
 
 
Other
 
 
 
Trading
financial
Total
Total
 
Trading
financial
Total
Total
 
assets (1)
assets (2)
assets
liabilities
 
assets (1)
assets (2)
assets
liabilities
 
£m
£m
£m
£m
 
£m
£m
£m
£m
At 1 January
1,388
335
1,723
894
 
2,233
321
2,554
1,317
Amount recorded in the income statement (3)
(125)
3
(122)
(98)
 
313
(1)
312
97
Amount recorded in the statement of 
 
 
 
 
 
 
 
 
 
  comprehensive income
-
17
17
-
 
-
62
62
-
Level 3 transfers in 
42
428
470
15
 
133
207
340
6
Level 3 transfers out
(68)
-
(68)
(116)
 
(101)
-
(101)
(337)
Purchases
168
10
178
114
 
366
10
376
100
Settlements
(36)
(4)
(40)
(15)
 
(113)
-
(113)
(14)
Sales
(156)
(4)
(160)
(107)
 
(933)
(1)
(934)
(164)
Foreign exchange and other adjustments
(1)
(3)
(4)
(2)
 
5
8
13
3
At 30 June
1,212
782
1,994
685
 
1,903
606
2,509
1,008
Amounts recorded in the income statement
 
 
 
 
 
 
 
 
 
  in respect of balances held at year end
 
 
 
 
 
 
 
 
 
  - unrealised
(125)
3
(122)
(98)
 
313
(1)
312
97
 
Notes:
(1)
Trading assets comprise assets held at fair value in trading portfolios.
(2)
Other financial assets comprise fair value through other comprehensive income, designated at fair value through profit or loss and other fair value through profit or loss. Movement in the period primarily reflects increase in loan positions classified as HTC&S under IFRS 9 and fair valued through other comprehensive income.
(3)
£27 million net losses on trading assets and liabilities (30 June 2020 - £215 million net gains) were recorded in income from trading activities. Net gains on other instruments of £3 million (30 June 2020 – nil gains) were recorded in other operating income and interest income as appropriate.
 
 
 
 
Notes
7. Financial instruments continued
Valuation reserves
When valuing financial instruments in the trading book, adjustments are made to mid-market valuations to cover bid-offer spread, funding and credit risk. These adjustments are presented in the table below:
 
 
30 June
 
31 December
 
2021
 
2020
 
£m
 
£m
Funding - FVA
79
 
140
Credit - CVA
385
 
390
Bid - Offer
108
 
148
Product and deal specific
163
 
172
 
735
 
850
 
Valuation reserves comprising of credit valuation adjustments (CVA), funding valuation adjustment (FVA), bid-offer and product and deal specific reserves, decreased to £735 million at 30 June 2021 (31 December 2020 – £850 million).
There was a reallocation of FVA to CVA during the period following an update to the risk management of certain exposures.
The net decrease across CVA, FVA and bid-offer reserves was driven by reduced exposures, due to increases in interest rates and trade exit activity, and reduced risk.
 
 
 
 
 
Notes
7. Financial instruments continued
Financial instruments: fair value of financial instruments measured at amortised cost
The following table shows the carrying value and fair value of financial instruments carried at amortised cost on the balance sheet.
 
Items where
 
 
 
 
 
fair value
 
 
 
 
 
 
approximates
Carrying
 
Fair value hierarchy level
 
carrying value
value
Fair value
Level 1
Level 2
Level 3
30 June 2021
£bn
£bn
£bn
£bn
£bn
£bn
Financial assets 
 
 
 
 
 
 
Cash and balances at central banks
151.5
 
 
 
 
 
Settlement balances
7.8
 
 
 
 
 
Loans to banks
0.3
7.9
7.9
-
5.0
2.9
Loans to customers
 
362.7
359.8
-
25.3
334.5
Other financial assets
 
 
 
 
 
 
  Securities
 
9.0
9.1
5.4
0.9
2.8
Financial liabilities
 
 
 
 
 
 
Bank deposits
5.9
8.5
8.5
-
3.7
4.8
Customer deposits
388.1
79.1
79.1
-
20.7
58.4
Settlement balances
7.1
 
 
 
 
 
Other financial liabilities
 
 
 
 
 
 
  Debt securities in issue
 
44.2
45.3
-
34.9
10.4
Subordinated liabilities
 
8.0
8.5
-
8.4
0.1
Notes in circulation
2.9
 
 
 
 
 
 
 
 
 
 
 
 
31 December 2020
 
 
 
 
 
 
Financial assets 
 
 
 
 
 
 
Cash and balances at central banks
124.5
 
 
 
 
 
Settlement balances
2.3
 
 
 
 
 
Loans to banks
0.1
6.9
6.9
-
3.8
3.1
Loans to customers
 
360.5
359.2
-
25.2
334.0
Other financial assets
 
 
 
 
 
 
  Securities
 
9.8
10.1
5.9
1.2
3.0
Financial liabilities
 
 
 
 
 
 
Bank deposits
4.4
16.2
16.2
-
11.3
4.9
Customer deposits
371.7
60.0
60.1
-
10.1
50.0
Settlement balances
5.5
 
 
 
 
 
Other financial liabilities
 
 
 
 
 
 
  Debt securities in issue
 
43.4
44.6
-
34.7
9.9
Subordinated liabilities
 
9.2
9.8
-
9.7
0.1
Notes in circulation
2.7
 
 
 
 
 
 
The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Quoted market values are used where available; otherwise, fair values have been estimated based on discounted expected future cash flows and other valuation techniques. These techniques involve uncertainties and require assumptions and judgments covering prepayments, credit risk and discount rates. Furthermore, there is a wide range of potential valuation techniques. Changes in these assumptions would affect estimated fair values. The fair values reported would not necessarily be realised in an immediate sale or settlement.
 
 
 
 
 
Notes
8. Provisions for liabilities and charges
 
 
 
 
 
 
 
 
 
Financial
 
 
 
Customer
Litigation and
 
commitments
 
 
 
redress (1)
other regulatory
Property
and guarantees
Other (2)
Total
 
£m
£m
£m
£m
£m
£m
At 1 January
749
365
270
179
289
1,852
Expected credit losses impairment charge
-
-
-
6
-
6
Currency translation and other movements
(3)
(5)
-
(1)
(2)
(11)
Charge to income statement
17
8
13
-
60
98
Release to income statement
(4)
(10)
(8)
-
(9)
(31)
Provisions utilised
(222)
(11)
(10)
-
(55)
(298)
At 31 March
537
347
265
184
283
1,616
Expected credit losses impairment release
-
-
-
(18)
-
(18)
Currency translation and other movements
-
-
1
-
(8)
(7)
Charge to income statement
32
1
22
-
42
97
Release to income statement
(7)
(68)
(20)
-
(10)
(105)
Provisions utilised
(87)
(20)
(8)
-
(62)
(177)
At 30 June
475
260
260
166
245
1,406
 
 
 
 
 
 
 
Notes:
(1)
Includes payment protection insurance provision which reflects the estimated cost of PPI redress attributable to claims prior to the Financial Conduct Authority (FCA) complaint deadline of 29 August 2019. All pre-deadline complaints have been processed which removes complaint volume estimation uncertainty from the provision estimate. NatWest Group continues to conclude remaining bank-identified closure work and conclude cases with the Financial Ombudsmen Service.
(2)
Other materially comprises provisions relating to restructuring costs.
 
 
Provisions are liabilities of uncertain timing or amount and are recognised when there is a present obligation as a result of a past event, the outflow of economic benefit is probable and the outflow can be estimated reliably. Any difference between the final outcome and the amounts provided will affect the reported results in the period when the matter is resolved.
 
 
9. Dividends
The 2020 final dividend was approved by shareholders at the Annual General Meeting on 28 April 2021 and the payment made on 4 May 2021 to shareholders on the register at the close of business on 26 March 2021. NatWest Group plc announces an interim dividend for 2021 of £347 million, or 3p per ordinary share. The interim dividend will be paid on 17 September 2021 to shareholders on the register at close of business on 13 August 2021. The ex-dividend date will be 12 August 2021.
 
 
 
 
 
 
Notes
10. Loan impairment provisions
Loan exposure and impairment metrics
The table below summarises loans and related credit impairment measures on an IFRS 9 basis.
 
 
30 June 2021
31 December 2020


 
 
£m
£m
 
Loans - amortised cost and FVOCI
 
 
 
Stage 1
316,701
287,124
 
Stage 2
53,188
78,917
 
Stage 3
5,703
6,358
 
Of which: individual
1,851
2,292
 
Of which: collective
3,852
4,066
 
 
375,592
372,399
 
ECL provisions (1)
 
 
 
Stage 1
433
519
 
Stage 2
2,300
3081
 
Stage 3
2,192
2,586
 
Of which: individual
560
831
 
Of which: collective
1,632
1,755
 
 
4,925
6,186
 
ECL provisions coverage (2, 3)
 
 
 
Stage 1 (%)
0.14
0.18
 
Stage 2 (%)
4.32
3.90
 
Stage 3 (%)
38.44
40.67
 
 
1.31
1.66
 
 
 
 
 
 
Half year ended
 
 
30 June
30 June
 
 
2021
2020
 
 
£m
£m
 
Impairment losses
 
 
 
ECL (release)/charge (4)
(707)
2,858
 
Stage 1
(701)
308
 
Stage 2
(100)
2,150
 
Stage 3
94
400
 
Of which: individual
(25)
131
 
Of which: collective
119
269
 
ECL loss rate - annualised (basis points) (3)
(38)
154
 
Amounts written off
517
408
 
Of which: individual
256
41
 
Of which: collective
261
367
 
Notes:
(1)
Includes £6 million (31 December 2020 – £6 million) related to assets classified as FVOCI.
(2)
ECL provisions coverage is calculated as ECL provisions divided by loans.
(3)
ECL provisions coverage and ECL loss rates are calculated on third party loans and related ECL provisions and charge respectively. ECL loss rate is calculated as annualised third party ECL charge divided by loans. The half year ECL charge is annualised by multiplying by two.
(4)
Includes a £4 million charge (30 June 2020 – £5 million charge) related to other financial assets, of which nil (30 June 2020 – £4 million) related to assets classified as FVOCI; and £2 million (30 June 2020 - £8 million) related to contingent liabilities.
(5)
The table shows gross loans only and excludes amounts that are outside the scope of the ECL framework. Refer to page 29 for Financial instruments
within the scope of the IFRS 9 ECL framework for further details. Other financial assets within the scope of the IFRS 9 ECL framework were cash and
balances at central banks totalling £150.5 billion (31 December 2020 – £122.7 billion) and debt securities of £49.8 billion (31 December 2020 – £53.8
billion).
 
 
11. Contingent liabilities and commitments
The amounts shown in the table below are intended only to provide an indication of the volume of business outstanding at 30 June 2021. Although NatWest Group is exposed to credit risk in the event of a customer’s failure to meet its obligations, the amounts shown do not, and are not intended to, provide any indication of NatWest Group’s expectation of future losses.
 
 
 
30 June 2021
31 December 2020


 
 
£m
£m
 
Guarantees
2,005
2,244
 
Other contingent liabilities
2,117
2,321
 
Standby facilities, credit lines and other commitments
119,387
124,167
 
Contingent liabilities and commitments
123,509
128,732
 
Contingent liabilities arise in the normal course of NatWest Group’s business; credit exposure is subject to the bank’s normal controls.
 
 
 
 
 
Notes
12. Litigation and regulatory matters
NatWest Group plc and certain members of NatWest Group are party to legal proceedings and involved in regulatory matters, including as the subject of investigations and other regulatory and governmental action (‘Matters’) in the United Kingdom (UK), the United States (US), the European Union (EU) and other jurisdictions.
 
NatWest Group recognises a provision for a liability in relation to these Matters when it is probable that an outflow of economic benefits will be required to settle an obligation resulting from past events, and a reliable estimate can be made of the amount of the obligation.
 
In many of these Matters, it is not possible to determine whether any loss is probable, or to estimate reliably the amount of any loss, either as a direct consequence of the relevant proceedings and regulatory matters or as a result of adverse impacts or restrictions on NatWest Group’s reputation, businesses and operations. Numerous legal and factual issues may need to be resolved, including through potentially lengthy discovery and document production exercises and determination of important factual matters, and by addressing novel or unsettled legal questions relevant to the proceedings in question, before a liability can reasonably be estimated for any claim. NatWest Group cannot predict if, how, or when such claims will be resolved or what the eventual settlement, damages, fine, penalty or other relief, if any, may be, particularly for claims that are at an early stage in their development or where claimants seek substantial or indeterminate damages.
 
There are situations where NatWest Group may pursue an approach that in some instances leads to a settlement agreement. This may occur in order to avoid the expense, management distraction or reputational implications of continuing to contest liability, or in order to take account of the risks inherent in defending claims or regulatory matters, even for those Matters for which NatWest Group believes it has credible defences and should prevail on the merits. The uncertainties inherent in all such Matters affect the amount and timing of any potential outflows for both Matters with respect to which provisions have been established and other contingent liabilities.
 
The future outflow of resources in respect of any Matter may ultimately prove to be substantially greater than or less than the aggregate provision that NatWest Group has recognised. Where (and as far as) liability cannot be reasonably estimated, no provision has been recognised. NatWest Group expects that in future periods, additional provisions, settlement amounts and customer redress payments will be necessary, in amounts that are expected to be substantial in some instances.
 
For a discussion of certain risks associated with NatWest Group’s litigation and regulatory matters (including investigations and customer redress programmes), see the Risk Factor relating to legal, regulatory and governmental actions and investigations set out on page 360 of NatWest Group plc’s 2020 Annual Report and Accounts.
 
Litigation
Residential mortgage-backed securities (RMBS) litigation in the US
NatWest Group companies continue to defend RMBS-related claims in the US in which plaintiffs allege that certain disclosures made in connection with the relevant offerings of RMBS contained materially false or misleading statements and/or omissions regarding the underwriting standards pursuant to which the mortgage loans underlying the RMBS were issued. The remaining RMBS lawsuits against NatWest Group companies consist of cases filed by the Federal Deposit Insurance Corporation and the State of New Mexico that together involve the issuance of less than US$400 million of RMBS issued primarily from 2005 to 2007. In addition, NWMSI previously agreed to settle a purported RMBS class action entitled New Jersey Carpenters Health Fund v. Novastar Mortgage Inc. et al. for US$55.3 million. This was paid into escrow pending court approval of the settlement, which was granted in March 2019, but which is now the subject of an appeal by a class member who does not want to participate in the settlement.
 
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 class actions and individual claims pending in the United States District Court for the Southern District of New York (SDNY) with respect to the setting of LIBOR and certain other benchmark interest rates. The complaints allege that certain members of NatWest Group and other panel banks violated various federal laws, including the US commodities and antitrust laws, and state statutory and common law, as well as contracts, by manipulating LIBOR and prices of LIBOR-based derivatives in various markets through various means.
 
 
 
 
 
 
Notes
12. Litigation and regulatory matters continued
Several class actions relating to USD LIBOR, as well as more than two dozen non-class actions concerning USD LIBOR, are part of a co-ordinated proceeding in the SDNY. In December 2016, the SDNY held that it lacks personal jurisdiction over NWM Plc with respect to certain claims. As a result of that and other decisions, all NatWest Group companies have been dismissed from each of the USD LIBOR-related class actions (including class actions on behalf of over-the-counter plaintiffs, exchange-based purchaser plaintiffs, bondholder plaintiffs, and lender plaintiffs), but seven non-class cases in the co-ordinated proceeding remain pending against NatWest Group defendants. The dismissal of NatWest Group companies for lack of personal jurisdiction is the subject of a pending appeal to the United States Court of Appeals for the Second Circuit. In March 2020, NatWest Group companies finalised a settlement resolving the class action on behalf of bondholder plaintiffs (those who held bonds issued by non-defendants on which interest was paid from 2007 to 2010 at a rate expressly tied to USD LIBOR). The amount of the settlement (which was covered by an existing provision) has been paid into escrow pending court approval of the settlement.
 
Among the non-class claims dismissed by the SDNY in December 2016 were claims that the Federal Deposit Insurance Corporation (FDIC) had asserted on behalf of certain failed US banks. In July 2017, the FDIC, on behalf of 39 failed US banks, commenced substantially similar claims against NatWest Group companies and others in the High Court of Justice of England and Wales. The action alleges that the defendants breached English and European competition law, as well as asserting common law claims of fraud under US law. 
 
In addition, there are two class actions relating to JPY LIBOR and Euroyen TIBOR. The first class action, which relates to Euroyen TIBOR futures contracts, was dismissed by the SDNY in September 2020 on legal grounds, and the plaintiffs have commenced an appeal to the United States Court of Appeals for the Second Circuit. The second class action, which relates to other derivatives allegedly tied to JPY LIBOR and Euroyen TIBOR, is the subject of a motion to dismiss that remains pending in the SDNY.
 
In addition to the above, five other class action complaints were filed against NatWest Group companies in the SDNY, each relating to a different reference rate. The SDNY dismissed all claims against NWM Plc in the case relating to Euribor for lack of personal jurisdiction in February 2017. The SDNY also dismissed, for various reasons, the case relating to Pound Sterling LIBOR in August 2019, the case relating to Swiss Franc LIBOR in September 2019, and the case relating to the Singapore Interbank Offered Rate and Singapore Swap Offer Rate (‘SIBOR / SOR’) in July 2019. Plaintiffs appealed each of these four dismissals to the United States Court of Appeals for the Second Circuit. The appeals in the Euribor, Pound Sterling LIBOR and Swiss Franc LIBOR cases remain pending, but in June 2021, NWM Plc and the plaintiffs in the Swiss Franc LIBOR class action finalised a settlement resolving that case. The amount of the settlement (which was covered by an existing provision) has been paid into escrow pending court approval of the settlement. The appeal in the SIBOR / SOR case was decided on 17 March 2021, when the United States Court of Appeals for the Second Circuit reversed the SDNY’s prior dismissal, such that the case will now return to the SDNY. In the fifth class action, which relates to the Australian Bank Bill Swap Reference Rate, the SDNY in February 2020 declined to dismiss the amended complaint as against NWM Plc and certain other defendants, but dismissed it as to other members of NatWest Group (including NatWest Group plc). The claims against non-dismissed defendants (including NWM Plc) are now proceeding in discovery.
 
NWM Plc was also named as a defendant in a motion to certify a class action relating to LIBOR in the Tel Aviv District Court in Israel. NWM Plc filed a motion for cancellation of service, which was granted in July 2020. The claimants appealed that decision and in November 2020 the appeal was refused and the claim dismissed by the Appellate Court. The claim could in future be recommenced depending on the outcome of a separate case under appeal to Israel’s Supreme Court.
 
In January 2019, a class action antitrust complaint was filed in the SDNY alleging that the defendants (USD ICE LIBOR panel banks and affiliates) have conspired to suppress USD ICE LIBOR from 2014 to the present by submitting incorrect information to ICE about their borrowing costs. The NatWest Group defendants are NatWest Group plc, NWM Plc, NWMSI and NWB Plc. The defendants made a motion to dismiss this case, which was granted by the court in March 2020. Plaintiffs’ appeal of the dismissal is pending in the United States Court of Appeals for the Second Circuit.
 
In August 2020, a complaint was filed in the United States District Court for the Northern District of California by several United States consumer borrowers against the USD ICE LIBOR panel banks and their affiliates, alleging that the normal process of setting USD ICE LIBOR amounts to illegal price-fixing, and also that banks in the United States have illegally agreed to use LIBOR as a component of price in variable consumer loans. The NatWest Group defendants are NatWest Group plc, NWM Plc, NWMSI and NWB Plc. The plaintiffs seek damages and to prevent the enforcement of LIBOR-based instruments through injunction. Defendants intend to seek dismissal.
 
 
 
 
Notes
12. Litigation and regulatory matters continued
FX litigation
NWM Plc, NWMSI and / or NatWest Group plc are defendants in several cases relating to NWM Plc’s foreign exchange (FX) business. In 2015, NWM Plc paid US$255 million to settle the consolidated antitrust class action filed in the SDNY on behalf of persons who entered into over-the-counter FX transactions with defendants or who traded FX instruments on exchanges. In 2018, some members of the settlement class who opted out of that class action settlement filed their own non-class complaint in the SDNY asserting antitrust claims against NWM Plc, NWMSI and other banks. Those opt-out claims are proceeding in discovery.
 
In April 2019, some of the same claimants in the opt-out case described above, as well as others, served proceedings (which are ongoing) in the High Court of Justice of England and Wales, asserting competition claims against NWM Plc and several other banks.
 
An FX-related class action, on behalf of ‘consumers and end-user businesses’, is proceeding in the SDNY against NWM Plc and others. Plaintiffs have filed a motion for class certification, which defendants are opposing.
 
In May 2019, a cartel class action was filed in the Federal Court of Australia against NWM Plc and four other banks on behalf of persons who bought or sold currency through FX spots or forwards between 1 January 2008 and 15 October 2013 with a total transaction value exceeding AUD $0.5 million. The claimant has alleged that the banks, including NWM Plc, contravened Australian competition law by sharing information, coordinating conduct, widening spreads and manipulating FX rates for certain currency pairs during this period. NatWest Group plc has been named in the action as an ‘other cartel participant’, but is not a respondent. The claim was served in June 2019. The claimant sought permission to amend its claim to strengthen its claim of alleged breaches of competition law, but this was refused by the court in the form sought by the claimant. The claimant is now seeking a further opportunity to amend its claim, which is being opposed by NWM Plc and the other respondents.
 
In July and December 2019, two separate applications seeking opt-out collective proceedings orders were filed in the UK Competition Appeal Tribunal against NatWest Group plc, NWM Plc and other banks. Both applications have been brought on behalf of persons who, between 18 December 2007 and 31 January 2013, entered into a relevant FX spot or outright forward transaction in the EEA with a relevant financial institution or on an electronic communications network. A hearing to determine class certification and which of the applications should be permitted to represent the class took place in July 2021 and judgment is awaited.
 
In November 2020, proceedings were issued in the High Court of Justice of England and Wales against NWM Plc by a claimant who seeks an account of profits and/or damages in respect of alleged historical FX trading misconduct. The claimant has also issued similar proceedings against a number of other banks. The claim against NWM Plc makes allegations of breaches of contract, fiduciary duties, duties of confidence and other matters. The claim was served on NWM Plc in March 2021.
 
Two motions to certify FX-related class actions were filed in the Tel Aviv District Court in Israel in September and October 2018, and were subsequently consolidated into one motion. The consolidated motion, which names The Royal Bank of Scotland plc (now NWM Plc) as the defendant, was served on NWM Plc in May 2020. NWM Plc has filed a motion for cancellation of service outside the jurisdiction, which remains pending.
 
Certain other foreign exchange transaction related claims have been or may be threatened. NatWest Group cannot predict whether all or any of these claims will be pursued.
 
Government securities antitrust litigation
NWMSI and certain other US broker-dealers are defendants in a consolidated antitrust class action pending in the SDNY on behalf of persons who transacted in US Treasury securities or derivatives based on such instruments, including futures and options. The plaintiffs allege that defendants rigged the US Treasury securities auction bidding process to deflate prices at which they bought such securities and colluded to increase the prices at which they sold such securities to plaintiffs. The complaint was dismissed in March 2021. Plaintiffs have filed an amended complaint, which defendants will again seek to have dismissed.
 
 
 
 
Notes
12. Litigation and regulatory matters continued
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 European central banks (EGBs). The complaint alleges a conspiracy among dealers of EGBs to widen the bid-ask spreads they quoted to customers, thereby increasing the prices customers paid for the EGBs or decreasing the prices at which customers sold the bonds. The class consists of those who purchased or sold EGBs in the US between 2007 and 2012. The defendants filed a motion to dismiss this matter, which was granted by the court in respect of NWM Plc and NWMSI in July 2020. Plaintiffs have filed an amended complaint which defendants are seeking to have dismissed.
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 (TeraExchange, Javelin, and trueEx). The plaintiffs allege that the swap execution facilities would have successfully established exchange-like trading of interest rate swaps if the defendants had not unlawfully conspired to prevent that from happening through boycotts and other means. Discovery in these cases is complete, and the plaintiffs’ motion for class certification remains pending.
 
In addition, in June 2017, TeraExchange filed a complaint against NatWest Group companies, including NatWest Group plc, as well as a number of other credit default swap dealers, in the SDNY. TeraExchange alleges it would have established exchange-like trading of credit default swaps if the defendant dealers had not engaged in an unlawful antitrust conspiracy. In October 2018, the court dismissed all claims against NatWest Group companies.
 
On 30 June 2021, a class action antitrust complaint was filed against a number of credit default swap dealers in New Mexico federal court on behalf of persons who, from 2005 onwards, settled credit default swaps in the United States by reference to the ISDA credit default swap auction protocol. The complaint alleges that the defendants conspired to manipulate that benchmark through various means in violation of the antitrust laws and the Commodity Exchange Act. The defendants include several NatWest Group companies, including NatWest Group plc.
 
Odd lot corporate bond trading antitrust litigation
NWMSI is the subject of a class action antitrust complaint filed in the SDNY against NWMSI and several other securities dealers. The complaint alleges that, from August 2006 to the present, the defendants conspired artificially to widen spreads for odd lots of corporate bonds bought or sold in the United States secondary market and to boycott electronic trading platforms that would have allegedly promoted pricing competition in the market for such bonds. Defendants filed a motion to dismiss the operative complaint in this matter in December 2020.
 
Madoff
NWM N.V. is a defendant in two actions filed by Irving Picard, as trustee for the bankruptcy estates of Bernard L. Madoff and Bernard L. Madoff Investment Securities LLC, in bankruptcy court in New York. In both cases, the trustee alleges that certain transfers received by NWM N.V. amounted to fraudulent conveyances that should be clawed back for the benefit of the Madoff estate.
 
In the primary action, filed in December 2010, the trustee is seeking to clawback a total of US$276.3 million in redemptions that NWM N.V. allegedly received from certain Madoff feeder funds and certain swap counterparties. In March 2020, the bankruptcy court denied the trustee’s request for leave to amend its complaint to include additional allegations against NWM N.V., holding that, even with the proposed amendments, the complaint would fail as a matter of law to state a valid claim against NWM N.V. The trustee has commenced an appeal of the bankruptcy court’s decision, which has been stayed pending the result of appeals in different proceedings, against different defendants, that involve similar issues. In the second action, filed in October 2011, the trustee seeks to recover an additional US$21.8 million. This action has been stayed pending the result of the appeal in the primary action.
 
Interest rate hedging products and similar litigation
NatWest Group continues to deal with a small number of active litigation claims in the UK relating to the alleged mis-selling of interest rate hedging products.
 
 
 
 
 
Notes
12. Litigation and regulatory matters continued
Separately, NWM Plc is defending claims filed in France by two French local authorities relating to structured interest rate swaps. The plaintiffs allege, among other things, that the swaps are void for being illegal transactions, that they were mis-sold, and that information / advisory duties were breached. One of the claims has been appealed to the Supreme Court and judgment is awaited. The other has been remitted from the Supreme Court to the Court of Appeal for reconsideration of one aspect. NWM N.V. was a defendant in the latter case but has been dismissed from the proceedings.
 
EUA trading litigation
HMRC issued a tax assessment in 2012 against NatWest Group plc for approximately £86 million regarding a value-added-tax (VAT) matter in relation to the trading of European Union Allowances (EUAs) by the subsidiary of a joint venture partnership in 2009. NatWest Group plc lodged an appeal challenging the assessment before the First-tier Tribunal (Tax), a specialist tax tribunal, (the ‘Tax Dispute’). The matter was resolved in July 2021.
 
Separately, NWM Plc was a named defendant in civil proceedings before the High Court of Justice of England and Wales brought in 2015 by ten companies (all in liquidation) (the ‘Liquidated Companies’) and their respective liquidators (together, ‘the Claimants’). The Liquidated Companies previously traded in EUAs in 2009 and were alleged to be defaulting traders within (or otherwise connected to) the EUA supply chains forming the subject of the Tax Dispute. The Claimants claimed approximately £71.4 million plus interest and costs and alleged that NWM Plc dishonestly assisted the directors of the Liquidated Companies in the breach of their statutory duties and/or knowingly participated in the carrying on of the business of the Liquidated Companies with intent to defraud creditors. The trial in that matter concluded in July 2018 and judgment was issued in March 2020. The court held that NWM Plc and Mercuria Energy Europe Trading Limited (‘Mercuria’) were liable for dishonestly assisting and knowingly being a party to fraudulent trading during a seven business day period in 2009. In October 2020, the High Court quantified damages against NWM Plc at £45 million plus interest and costs, and permitted it to appeal to the Court of Appeal. On 10 May 2021 the Court of Appeal set aside the High Court’s judgment and ordered that a retrial take place before a different High Court judge. The claimants have sought permission from the Supreme Court to appeal. The Court of Appeal also dismissed an appeal by Mercuria against the finding by the High Court that NWM Plc and Mercuria were both vicariously liable. Mercuria has sought permission from the Supreme Court to appeal that decision.
 
Offshoring VAT assessments
HMRC issued protective tax assessments in 2018 against NatWest Group plc totalling £143 million relating to unpaid VAT in respect of the UK branches of two NatWest Group companies registered in India. NatWest Group formally requested reconsideration by HMRC of their assessments, and this process was completed in November 2020. HMRC upheld their original decision and, as a result, NatWest Group plc lodged an appeal with the Tax Tribunal and an application for judicial review with the High Court of Justice of England and Wales, both in December 2020. In order to lodge the appeal with the Tax Tribunal, NatWest Group plc was required to pay the £143 million to HMRC, and payment was made in December 2020. The appeal and the application for judicial review have both been stayed pending resolution of a separate case involving another bank.
 
US Anti-Terrorism Act litigation
NWB Plc is a defendant in lawsuits filed in the United States District Court for the Eastern District of New York by a number of US nationals (or their estates, survivors, or heirs) who were victims of terrorist attacks in Israel. The plaintiffs allege that NWB Plc is liable for damages arising from those attacks pursuant to the US Anti-Terrorism Act because NWB Plc previously maintained bank accounts and transferred funds for the Palestine Relief & Development Fund, an organisation which plaintiffs allege solicited funds for Hamas, the alleged perpetrator of the attacks.
 
In October 2017, the trial court dismissed claims against NWB Plc with respect to two of the 18 terrorist attacks at issue. In March 2018, the trial court granted a request by NWB Plc for leave to file a renewed summary judgment motion in respect of the remaining claims, and in March 2019, the court granted summary judgment in favour of NWB Plc. In April 2021, the United States Court of Appeals for the Second Circuit affirmed the trial court’s judgment in favour of NWB Plc, subject to the right of the plaintiffs to seek discretionary review by the United States Supreme Court.
NWM N.V. and certain other financial institutions are defendants in several actions pending in the United States District Courts for the Eastern and Southern Districts of New York, filed by a number of US nationals (or their estates, survivors, or heirs), most of whom are or were US military personnel, who were killed or injured in attacks in Iraq between 2003 and 2011. NWM Plc is also a defendant in some of these cases.
 
 
 
 
 
Notes
12. Litigation and regulatory matters continued
The attacks at issue in the cases were allegedly perpetrated by Hezbollah and certain Iraqi terror cells allegedly funded by the Islamic Republic of Iran. According to the plaintiffs’ allegations, the defendants are liable for damages arising from the attacks
because they allegedly conspired with Iran and certain Iranian banks to assist Iran in transferring money to Hezbollah and the Iraqi terror cells, in violation of the US Anti-Terrorism Act, by agreeing to engage in ‘stripping’ of transactions initiated by the Iranian banks so that the Iranian nexus to the transactions would not be detected.
 
The first of these actions was filed in the United States District Court for the Eastern District of New York in November 2014. In September 2019, the district court dismissed the case, finding that the claims were deficient for several reasons, including lack of sufficient allegations as to the alleged conspiracy and causation. The plaintiffs are appealing the decision to the United States Court of Appeals for the Second Circuit. Another action, filed in the SDNY in 2017, was dismissed in March 2019 on similar grounds, but remains subject to appeal to the United States Court of Appeals for the Second Circuit. Other follow-on actions that are substantially similar to the two that have now been dismissed are pending in the same courts.
 
Securities underwriting litigation
NWMSI is an underwriter defendant in several securities class actions in the US in which plaintiffs generally allege that an issuer of public debt or equity securities, as well as the underwriters of the securities (including NWMSI), are liable to purchasers for misrepresentations and omissions made in connection with the offering of such securities.
 
1MDB litigation
Recent media reports suggest that a claim for a material sum has recently been issued in Malaysia by 1MDB against Coutts & Co Ltd for alleged losses in connection with the 1MDB fund. Coutts & Co Ltd is a company registered in Switzerland and is in wind-down following the announced sale of its business assets in 2015.
 
Regulatory matters (including investigations and customer redress programmes)
NatWest Group’s businesses and financial condition can be affected by the actions of various governmental and regulatory authorities in the UK, the US, the EU and elsewhere. NatWest Group has engaged, and will continue to engage, in discussions with relevant governmental and regulatory authorities, including in the UK, the US, the EU and elsewhere, on an ongoing and regular basis, and in response to informal and formal inquiries or investigations, regarding operational, systems and control evaluations and issues including those related to compliance with applicable laws and regulations, including consumer protection, investment advice, business conduct, competition/anti-trust, VAT recovery, anti-bribery, anti-money laundering and sanctions regimes.
 
The NatWest Markets business in particular has been providing, and continues to provide, information regarding a variety of matters, including, for example, offering of securities, the setting of benchmark rates and related derivatives trading, conduct in the foreign exchange market, product mis-selling and various issues relating to the issuance, underwriting, and sales and trading of fixed-income securities, including structured products and government securities, some of which have resulted, and others of which may result, in investigations or proceedings.
 
Any matters discussed or identified during such discussions and inquiries may result in, among other things, further inquiry or investigation, other action being taken by governmental and regulatory authorities, increased costs being incurred by NatWest Group, remediation of systems and controls, public or private censure, restriction of NatWest Group’s business activities and/or fines. Any of the events or circumstances mentioned in this paragraph or below could have a material adverse effect on NatWest Group, its business, authorisations and licences, reputation, results of operations or the price of securities issued by it, or lead to material additional provisions being taken.
 
NatWest Group is co-operating fully with the matters described below.
 
Investigations
US investigations relating to fixed-income securities
In October 2017, NWMSI entered into a non-prosecution agreement (NPA) with the United States Attorney for the District of Connecticut (USAO) in connection with alleged misrepresentations to counterparties relating to secondary trading in various forms of asset-backed securities. In the NPA, the USAO agreed not to file criminal charges relating to certain conduct and information described in the NPA, conditioned on NWMSI and affiliated companies complying with the NPA’s reporting and conduct requirements during its term, including by not engaging in conduct during the NPA that the USAO determines was a felony under federal or state law or a violation of the anti-fraud provisions of the United States securities law.
 
 
 
Notes
12. Litigation and regulatory matters continued
The NatWest Markets business is currently responding to a separate criminal investigation by the USAO and the US Department of Justice (DoJ) concerning unrelated trading by certain NatWest Markets former traders involving alleged spoofing. The NPA (referred to above) has been extended as the criminal investigation has progressed and related discussions with the USAO and the DoJ, including relating to the impact of such alleged conduct on the status of the NPA and the potential consequences thereof, have been ongoing. The duration and outcome of these matters remain uncertain, including in respect of whether settlement may be reached. Material adverse collateral consequences, in addition to further substantial costs and the recognition of further provisions, may occur depending on the outcome of the investigations, as further described in the Risk Factor relating to legal, regulatory and governmental actions and investigations set out on page 360 of NatWest Group plc’s 2020 Annual Report and Accounts.
 
Foreign exchange related investigations
In recent years, NWM Plc paid significant penalties to resolve investigations into its FX business by the FCA, the Commodity Futures Trading Commission, the DoJ, the Board of Governors of the Federal Reserve System, the European Commission (EC) and others. NWM Plc continues to co-operate with ongoing investigations from competition authorities on similar issues relating to past FX trading. The exact timing and amount of future financial penalties, related risks and collateral consequences remain uncertain and may be material.
 
EGB investigation
On 20 May 2021, the EC announced that it had adopted a decision in relation to an investigation into potential competition law violations in the primary and secondary market trading of EGBs between 2007 and 2011 which involved the NatWest Markets business and six other banks. NatWest Group revealed the conduct to the EC and co-operated throughout the EC’s investigation. NatWest Group was granted immunity by the EC and was not fined.
 
FCA investigation into NatWest Group’s compliance with the Money Laundering Regulations 2007
In July 2017, the FCA notified NatWest Group that it was undertaking an investigation into NatWest Group’s compliance with the UK Money Laundering Regulations 2007 (‘MLR 2007’) in relation to certain money service businesses and related parties. The investigation is assessing both criminal and civil culpability. NatWest Group is co-operating with the investigation, including responding to information requests from the FCA.
 
On 15 March 2021, the FCA notified NatWest Group that it had commenced criminal proceedings against NWB Plc for offences under regulation 45(1) of the MLR 2007 for alleged failures to comply with regulations 8(1), 8(3) and 14(1) of the MLR 2007 between 11 November 2011 and 19 October 2016, arising from the handling of the accounts of a UK incorporated customer. These regulations require the firm to determine, conduct and demonstrate risk sensitive due diligence and ongoing monitoring of its relationships with its customers for the purposes of preventing money laundering. NWB Plc will be required to attend an initial hearing at Westminster Magistrates’ Court on 15 September 2021. Material adverse collateral consequences, in addition to further substantial costs and the recognition of provisions, may occur as a result of any conviction.
 
Systematic Anti-Money Laundering Programme assessment
In December 2018, the FCA commenced a Systematic Anti-Money Laundering Programme assessment of NatWest Group. In August 2019, the FCA instructed NatWest Group to appoint a Skilled Person under section 166 of the Financial Services and Markets Act 2000 to provide assurance on financial crime governance arrangements in relation to two financial crime change programmes. NatWest Group is co-operating with the Skilled Person’s review, which is ongoing.
 
FCA mortgages market study
In December 2016, the FCA launched a market study into the provision of mortgages. In March 2019 the final report was published. This found that competition was working well for many customers but also proposed remedies to help customers shop around more easily for mortgages. A period of consultation remains ongoing and the FCA has indicated that it intends to provide updates on the remedies in due course.
 
Customer redress programmes
FCA review of NatWest Group’s treatment of SMEs
In 2014, the FCA appointed an independent Skilled Person under section 166 of the Financial Services and Markets Act 2000 to review NatWest Group’s treatment of SME customers whose relationship was managed by NatWest Group’s Global Restructuring Group (GRG) in the period 1 January 2008 to 31 December 2013. In response to the Skilled Person’s final report and update in 2016, NatWest Group announced redress steps for SME customers in the UK and the Republic of Ireland that were in GRG between 2008 and 2013. These steps were (i) an automatic refund of certain complex fees; and (ii) a new complaints process, overseen by an independent third party. The complaints process has since closed to new complaints.
 
Notes
12. Litigation and regulatory matters continued
NatWest Group’s remaining provisions in relation to these matters at 30 June 2021 were £22 million.
 
Investment advice review
During October 2019, the FCA notified NatWest Group of its intention to appoint a Skilled Person under section 166 of the Financial Services and Markets Act 2000 to conduct a review of whether NatWest Group’s past business review of investment
advice provided during 2010 to 2015 was subject to appropriate governance and accountability and led to appropriate customer outcomes. The Skilled Person’s review has now concluded and, after discussion with the FCA, NatWest Group is now conducting additional review / remediation work. NatWest Group recognised an increased provision in relation to these matters at 31 December 2020.
 
Review and investigation of treatment of tracker mortgage customers in Ulster Bank Ireland DAC
In December 2015, correspondence was received from the CBI setting out an industry examination framework in respect of the sale of tracker mortgages from approximately 2001 until the end of 2015. The redress and compensation phase has concluded, although an appeals process is currently anticipated to run until at least the end of 2021. NatWest Group has made provisions totalling €350 million (£300 million), of which €328 million (£282 million) had been utilised by 30 June 2021 in respect of redress and compensation.
 
In April 2016, the CBI commenced an investigation into suspected breaches by UBIDAC of specified provisions of the Consumer Protection Code 2006 in its treatment of certain tracker mortgage customers. On 23 March 2021, UBIDAC agreed with the CBI to pay a fine of €37.8 million for breaches of its regulatory obligations in respect of its treatment of tracker mortgage customers. The fine was substantially covered by existing provisions.
 
UBIDAC previously identified further legacy business issues, as an extension to the tracker mortgage review. These remediation programmes are ongoing. NatWest Group has made provisions of €163 million (£140 million), of which €151 million (£130 million) had been utilised by 30 June 2021 for these programmes.
 
 
 
 
 
Notes
13. Related party transactions
UK Government
The UK Government and bodies controlled or jointly controlled by the UK Government and bodies over which it has significant influence are related parties of NatWest Group. NatWest Group’s other transactions with the UK Government include the payment of taxes, principally UK corporation tax and value added tax; national insurance contributions; local authority rates; and regulatory fees and levies (including the bank levy and FSCS levies).
 
Bank of England facilities
In the ordinary course of business, NatWest Group may from time to time access market-wide facilities provided by the Bank of England.
 
Other related parties
(a) In their roles as providers of finance, NatWest Group companies provide development and other types of capital support to businesses. In some instances, the investment may extend to ownership or control over 20% or more of the voting rights of the investee company. However, these investments are not considered to give rise to transactions of a materiality requiring disclosure under IAS 24.
(b) NatWest Group recharges The NatWest Group Pension Fund with the cost of administration services incurred by it. The amounts involved are not material to NatWest Group.
 
Full details of NatWest Group’s related party transactions for the year ended 31 December 2020 are included in NatWest Group plc’s 2020 Annual Report and Accounts.
 
 
14. UBIDAC significant transactions
On 28 June 2021, UBIDAC and NWH entered into a binding agreement with Allied Irish Banks p.l.c. (AIB) for the sale of c.€4.2 billion gross performing commercial lending and associated undrawn exposures of c.€2.8 billion. Approximately 280 colleagues will transfer from UBIDAC to AIB with the final number of roles confirmed as the deal completes.  RWAs in relation to these total balances are estimated at c.€4 billion. This transaction is subject to regulatory approvals.  On completion, it is estimated that a small gain on disposal will be recognised, based on the net carrying value of the lending as at 31 December 2020. The exact impacts of disposal will depend on movements in the book between now and transfer, the timing of which remains uncertain.
 
On 23 July 2021, NatWest Group and UBIDAC entered into a non-binding Memorandum of Understanding (MOU) with Permanent TSB Group Holdings p.l.c. (PTSB) for the proposed sale of a perimeter comprising performing non-tracker mortgages, performing micro-SME loans, UBIDAC's asset finance business and 25 of its branch locations. The TUPE principle will apply to staff wholly or mainly assigned to the agreed in-scope perimeter. The proposed perimeter included approximately €7.6 billion of gross performing loans as at 31 March 2021, the majority relating to non-tracker mortgages. As part of the consideration for the proposed transaction, it is proposed that NatWest Group would receive a minority non-consolidating equity stake in PTSB. The proposed sale may not be concluded on the terms contemplated in the MoU, or at all.  No estimate of any financial effect of the potential transaction can be made at the date of approval of these accounts. 
 
15. Post balance sheet events
NatWest Group has announced plans to commence an ordinary share buy-back programme of up to £750 million in the second half of the year.
 
Other than as disclosed in this document, there have been no significant events between 30 June 2021 and the date of approval of this announcement which would require a change to, or additional disclosure, in the announcement.
 
16. Date of approval
This announcement was approved by the Board of Directors on 29 July 2021.
 
 
 
 
Independent review report to NatWest Group plc
 
Conclusion
We have been engaged by NatWest Group plc (“the Group”) to review the condensed consolidated financial statements in the half-yearly financial report for the six months ended 30 June 2021 which comprise the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement, and related Notes 1 to 16 and the Risk and capital management disclosures for those identified as within the scope of our review, (together “the condensed consolidated financial statements”). We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated financial statements.
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements in the half-yearly financial report for the six months ended 30 June 2021 are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.
 
Basis for Conclusion
We conducted our review in accordance with International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
 
As disclosed in Note 1, the annual financial statements of the Group will be prepared in accordance with UK adopted IFRSs. The condensed consolidated financial statements included in this half-yearly financial report have been prepared in accordance with UK adopted International Accounting Standard 34, “Interim Financial Reporting”.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
 
Auditor’s Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the Group a conclusion on the condensed consolidated financial statements in the half-yearly financial report. Our conclusion, based on procedures that are less extensive than audit procedures, is described in the Basis for Conclusion paragraph of this report.
 
Use of our report
This report is made solely to the Group in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Group, for our work, for this report, or for the conclusions we have formed.
 
 
 
 
Ernst & Young LLP
London, United Kingdom
29 July 2021
 
 
 
NatWest Group plc Summary Risk Factors
Summary of principal risks and uncertainties
Set out below is a summary of the principal risks and uncertainties for the remaining six months of the financial year which could adversely affect NatWest Group. This summary should not be regarded as a complete and comprehensive statement of all potential risks and uncertainties; a fuller description of these and other risk factors is included on pages 345 to 362 of the NatWest Group plc 2020 Annual Report and Accounts and on pages 347 to 366 of its Annual Report on Form 20-F. Any of the risks identified may have a material adverse effect on NatWest Group’s business, operations, financial condition or prospects. The current COVID-19 pandemic may exacerbate any of the risks described below.
 
Risks relating to the COVID-19 pandemic
The effects of the COVID-19 pandemic on the UK, global economies and financial markets, and NatWest Group’s customers, as well as its competitive environment may continue to have a material adverse effect on NatWest Group’s business, results of operations and outlook.
The adverse impact of the COVID-19 pandemic on the credit quality of NatWest Group’s counterparties and the implementation of support schemes in response of the COVID-19 pandemic has increased NatWest Group’s exposure to counterparty risk, which may adversely affect its business, results of operations and outlook.
The COVID-19 pandemic may adversely affect NatWest Group’s strategy and impair its ability to meet its targets and to achieve its strategic objectives.
The COVID-19 pandemic has heightened NatWest Group’s operational risks as many of its employees are working remotely which may also adversely affect NatWest Group’s ability to maintain effective internal controls.
The effects of the COVID-19 pandemic could affect NatWest Group’s ability to access sources of liquidity and funding, which may result in higher funding costs and failure to comply with regulatory capital, funding and leverage requirements.
NatWest Group’s results could be adversely affected if the effects of the COVID-19 pandemic or other events trigger the recognition of a goodwill impairment.
Economic and political risk
Continuing uncertainty regarding the effects of the UK’s withdrawal from the European Union may continue to adversely affect NatWest Group and its operating environment.
NatWest Group faces political and economic risks and uncertainty in the UK and global markets.
Changes in interest rates have significantly affected and will continue to affect NatWest Group’s business and results.
HM Treasury (or UKGI on its behalf) could exercise a significant degree of influence over NatWest Group and further offers or sales of NatWest Group’s shares held by HM Treasury may affect the price of securities issued by NatWest Group.
Changes in foreign currency exchange rates may affect NatWest Group’s results and financial position.
 
Strategic risk
NatWest Group is currently implementing its Purpose-led Strategy, which carries significant execution and operational risks and may not achieve its stated aims and targeted outcomes.
NatWest Group is in the process of refocusing its NWM franchise and implementing a phased withdrawal from ROI, which entails significant commercial, operational and execution risks and the intended benefits for NatWest Group may not be realised within the timeline and in the manner currently contemplated.
Financial resilience risk
NatWest Group may not meet targets and be in a position to continue to make discretionary capital distributions (including dividends to shareholders).
NatWest Group operates in markets that are highly competitive, with increasing competitive pressures and technology disruption.
NatWest Group has significant exposure to counterparty and borrower risk.
NatWest Group may not meet the prudential regulatory requirements for capital and MREL, or manage its capital effectively, which could trigger the execution of certain management actions or recovery options.
NatWest Group is subject to Bank of England oversight in respect of resolution, and NatWest Group could be adversely affected should the Bank of England deem NatWest Group’s preparations to be inadequate.
NatWest Group may not be able to adequately access sources of liquidity and funding.
Any reduction in the credit rating and/or outlooks assigned to NatWest Group plc, any of its subsidiaries or any of their respective debt securities could adversely affect the availability of funding for NatWest Group, reduce NatWest Group’s liquidity position and increase the cost of funding.
NatWest Group may be adversely affected if it fails to meet the requirements of regulatory stress tests.
NatWest Group could incur losses or be required to maintain higher levels of capital as a result of limitations or failure of various models.
NatWest Group’s financial statements are sensitive to the underlying accounting policies, judgments, estimates and assumptions.
 
 
 
NatWest Group plc Summary Risk Factors
Financial resilience risk continued
Changes in accounting standards may materially impact NatWest Group’s financial results.
The value or effectiveness of any credit protection that NatWest Group has purchased depends on the value of the underlying assets and the financial condition of the insurers and counterparties.
NatWest Group may become subject to the application of UK statutory stabilisation or resolution powers which may result in, among other actions, the cancellation, transfer or dilution of ordinary shares, or the write-down or conversion of certain other of NatWest Group’s securities.
Climate and sustainability-related risks
NatWest Group and its customers may face significant climate-related risks, including in transitioning to a low-carbon economy, which may adversely impact NatWest Group.
NatWest Group’s Purpose-led Strategy includes one area of focus on climate change that is likely to require material changes to the business of NatWest Group which entails significant execution risk.
Any failure by NatWest Group to implement effective and compliant climate change resilient systems, controls and procedures could adversely affect NatWest Group’s ability to manage climate-related risks.
There are significant uncertainties inherent in accurately modelling the impact of climate-related risks.
A failure to adapt NatWest Group’s business strategy, governance, procedures, systems and controls to manage emerging sustainability-related risks and opportunities may have a material adverse effect on NatWest Group’s reputation, business, results of operations and outlook.
Any reduction in the ESG ratings of NatWest Group could have a negative impact on NatWest Group’s reputation and on investors’ risk appetite.
Increasing levels of climate, environmental and sustainability-related laws, regulation and oversight may adversely affect NatWest Group’s business and expose NatWest Group to increased costs of compliance, regulatory sanction and reputational damage.
NatWest Group may be subject to potential climate, environmental and other sustainability-related litigation, enforcement proceedings, investigations and conduct risk.
 
Operational and IT resilience risk
Operational risks (including reliance on third party suppliers and outsourcing of certain activities) are inherent in NatWest Group’s businesses.
NatWest Group is subject to increasingly sophisticated and frequent cyberattacks. 
NatWest Group operations and strategy are highly dependent on the accuracy and effective use of data.
NatWest Group’s operations are highly dependent on its complex IT systems (including those that enable remote working) and any IT failure could adversely affect NatWest Group.
NatWest Group relies on attracting, retaining and developing senior management and skilled personnel, and is required to maintain good employee relations.
A failure in NatWest Group’s risk management framework could adversely affect NatWest Group, including its ability to achieve its strategic objectives.
NatWest Group’s operations are subject to inherent reputational risk.
 
Legal, regulatory and conduct risk
NatWest Group’s businesses are subject to substantial regulation and oversight, which are constantly evolving and may adversely affect NatWest Group.
NatWest Group is subject to various litigation matters, regulatory and governmental actions and investigations as well as remedial undertakings, including conduct-related reviews, anti-money laundering and redress projects, the outcomes of which are inherently difficult to predict, and which could have an adverse effect on NatWest Group.
NatWest Group may not effectively manage the transition of LIBOR and other IBOR rates to alternative risk-free rates.
NatWest Group operates in jurisdictions that are subject to intense scrutiny by the competition authorities.
The cost of implementing the Alternative Remedies Package (‘ARP’) could be more onerous than anticipated.
Changes in tax legislation or failure to generate future taxable profits may impact the recoverability of certain deferred tax assets recognised by NatWest Group.
 
 
 
 
 
 
Statement of directors’ responsibilities
 
We, the directors listed below, confirm that to the best of our knowledge:
the condensed financial statements have been prepared in accordance with UK adopted IAS 34 'Interim Financial Reporting';
the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
 
 
By order of the Board
 
 
 
 
 
 
 
 
Howard Davies
Alison Rose-Slade
Katie Murray
Chairman
Group Chief Executive Officer
Group Chief Financial Officer
 
29 July 2021
 
 
Board of directors
 
Chairman
Executive directors
Non-executive directors
Howard Davies
Alison Rose-Slade
Katie Murray
 
 
Frank Dangeard
Patrick Flynn
Morten Friis
Robert Gillespie
Yasmin Jetha
Mike Rogers
Mark Seligman
Lena Wilson
 
 
 
 
 
 
 
 
Presentation of information
In this document, ‘parent company’ refers to the NatWest Group plc, and ‘NatWest Group’ or the ‘Group’ refers to NatWest Group plc and its subsidiaries. The term ‘NWH Group’ refers to NatWest Holdings Limited (‘NWH’) and its subsidiary and associated undertakings.  The term ‘NWM Group’ refers to NatWest Markets Plc (‘NWM Plc’) and its subsidiary and associated undertakings.  The term ‘NWM N.V.’ refers to NatWest Markets N.V. The term ‘NWMSI’ refers to NatWest Markets Securities, Inc. The term ‘RBS plc’ refers to The Royal Bank of Scotland plc.  The term ‘NWB Plc’ refers to National Westminster Bank Plc.  The term ‘UBIDAC’ refers to Ulster Bank Ireland DAC.  The term ‘RBSI Limited’ refers to The Royal Bank of Scotland International Limited.
 
NatWest 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 in the United Kingdom (‘UK’). 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, and references to ‘cents’ represent cents in the US. The abbreviation ‘€’ represents the ‘euro’, and the abbreviations ‘€m’ and ‘€bn’ represent millions and thousands of millions of euros, respectively.
 
MAR – Inside Information
This announcement contains information that qualified or may have qualified as inside information for NatWest Group plc, for
the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR) as it forms part of domestic law by virtue of the
European Union (Withdrawal) Act 2018 for NatWest Group plc. This announcement is made by Alexander Holcroft, Head of Investor Relations for NatWest Group plc.
 
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 2020 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.
 
Condensed consolidated financial statements
The unaudited condensed consolidated financial statements for the half year ended 30 June 2021 comprise the following sections of this document:
Statutory results on pages 82 to 110 comprising the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, condensed consolidated statement of changes in equity, condensed consolidated cash flow statement and the related notes 1 to 16.
Risk and capital management section on pages 19 to 81 as indicated within the scope of the independent review.
 
The above sections are within the scope of the independent review performed by Ernst & Young LLP (EY). Refer to the Independent review report to NatWest Group plc on page 111 for further information.
 
 
 
Forward-looking statements
This document contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, such as statements that include, without limitation, 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. These statements concern or may affect future matters, such as NatWest Group's future economic results, business plans and strategies. In particular, this document may include forward-looking statements relating to NatWest Group plc in respect of, but not limited to: the impact of the COVID-19 pandemic, its regulatory capital position and related requirements, its financial position, profitability and financial performance (including financial, capital, cost savings and operational targets), the implementation of its Purpose-led strategy and the refocusing of its NatWest Markets franchise, its ESG and climate-related targets, its access to adequate sources of liquidity and funding, increasing competition from new incumbents and disruptive technologies, its exposure to third party risks, its ongoing compliance with the UK ring-fencing regime and ensuring operational continuity in resolution, its impairment losses and credit exposures under certain specified scenarios, substantial regulation and oversight, ongoing legal, regulatory and governmental actions and investigations, the transition of LIBOR and IBOR rates to alternative risk free rates and NatWest Group’s exposure to economic and political risks (including with respect to terms surrounding Brexit and climate change), operational risk, conduct risk, cyber and IT risk, key person risk and credit rating risk. Forward-looking statements are subject to a number of risks and uncertainties that might cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statements. Factors that could cause or contribute to differences in current expectations include, but are not limited to, the impact of the COVID-19 pandemic, future acquisitions, the outcome of legal, regulatory and governmental actions and investigations, the level and extent of future impairments and write-downs (including with respect to goodwill), legislative, political, fiscal and regulatory developments, accounting standards, competitive conditions, technological developments, interest and exchange rate fluctuations, general economic and political conditions and the impact of climate-related risks and the transitioning to a low-carbon economy. These and other factors, risks and uncertainties that may impact any forward-looking statement or NatWest Group plc's actual results are discussed in NatWest Group plc's UK 2020 Annual Report and Accounts (ARA), NatWest Group plc’s Interim Results for H1 2021 and NatWest Group plc’s filings with the US Securities and Exchange Commission, including, but not limited to, NatWest Group plc's most recent Annual Report on Form 20-F and Reports on Form 6-K. The forward-looking statements contained in this document speak only as of the date of this document and NatWest Group plc does not assume or undertake any obligation or responsibility to update any of the forward-looking statements contained in this document, whether as a result of new information, future events or otherwise, except to the extent legally required.
 
 
 
 
Additional information
Share information
 
30 June 
2021 
31 March 
2021 
31 December 
2020 
 
 
 
 
Ordinary share price (pence)
203.20
196.25
167.65
 
 
 
 
Number of ordinary shares in issue (millions)
11,776
11,776
12,129
 
Financial calendar
2021 third quarter interim management statement
29 October 2021
 
Contacts
 Analyst enquiries: Alexander Holcroft, Investor Relations 
  +44 (0) 20 7672 1758
 Media enquiries: NatWest Group Press Office 
 +44 (0) 131 523 4205
 
 
 
Management presentation
Fixed income call
Web cast and dial in details
Date:
Friday 30 July 2021
Friday 30 July 2021
www.natwestgroup.com/results
Time:
9:00am UK time
1:00pm UK time
International – +44 (0) 20 3057 6566
Conference ID:
5488004
 
 
4161938
 
 
UK Free Call – 0800 279 6637
US Local Dial-In, New York - 1 646 517 5063
 
Available on natwestgroup.com/results
Interim Results 2021 and background slides.
A financial supplement containing income statement, balance sheet and segment performance information for the nine quarters ended 30 June 2021.
NatWest Group and NWH Group Pillar 3 supplement at 30 June 2021.
Climate, Purpose and ESG measures supplement H1 2021.
 
 
 
 
 
 

 
 
 
 
 
 
Appendix
 
Non-IFRS financial measures
 
 
 
 
 
 
Appendix Non-IFRS financial measures
NatWest Group prepares its financial statements in accordance with generally accepted accounting principles (GAAP). The 2021 Interim Results contain 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 believes are not representative of the underlying performance of the business and which distort period-on-period comparison. The 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. The non-IFRS measures also include the calculation of metrics that are used throughout the banking industry. These non-IFRS measures are not measures within the scope of IFRS and are not a substitute for IFRS measures. These measures include:
 
Non-IFRS financial measures
 
Measure
Basis of preparation
Additional analysis or reconciliation
NatWest Group return on tangible equity
Annualised profit or loss for the period attributable to ordinary shareholders divided by average tangible equity. Average tangible equity is average total equity excluding non-controlling interests (NCI) less average intangible assets and average other owners’ equity.
Table 1
Segmental return on equity
Segmental operating profit or loss adjusted for tax and for preference share dividends divided by average notional tangible equity, allocated at an operating segment specific rate, of the period average segmental risk-weighted assets incorporating the effect of capital deductions (RWAes).
Table 2
Operating expenses analysis – management view
The management analysis of operating expenses shows strategic costs and litigation and conduct costs in separate lines. Depreciation and amortisation, and other administrative expenses attributable to these costs are included in strategic costs and litigation and conduct costs lines for management analysis.
These amounts are included in staff, premises and equipment and other administrative expenses in the statutory analysis.
Table 3
Cost:income ratio
Total operating expenses less operating lease depreciation divided by total income less operating lease depreciation.
Table 4
Commentary – adjusted periodically for specific items
NatWest Group and segmental business performance commentary have been adjusted for the impact of specific items such as such as notable items, operating lease depreciation, strategic costs and litigation and conduct costs.
Notable items - page 5
Operating lease depreciation, Strategic, litigation and conduct costs - pages 14 to 18
Income across UK and RBSI retail and commercial businesses
Comprises income in the Retail Banking, Commercial Banking, Private Banking and RBS International operating segments, excluding notable items.
Table 7
Net lending in the UK and RBSI retail and commercial businesses
Comprises customer loans in the Retail Banking, Commercial Banking, Private Banking and RBS International operating segments, excluding UK Government support schemes.
Table 8
Deposits across UK and RBSI retail and commercial businesses
Comprises customer deposits in the Retail Banking, Commercial Banking, Private Banking and RBS International operating segments.
Table 9
Bank net interest margin (NIM)
Net interest income of the banking business less NatWest Markets (NWM) element as a percentage of interest-earning assets of the banking business less NWM element.
Table 5
Bank net interest margin (NIM) excluding Liquid Asset Buffer
Net interest income of the banking business less NWM element as a percentage of interest-earning assets of the banking business less NWM element and Liquid Asset Buffer.
Table 5
 
 
 
Appendix Non-IFRS financial measures
Performance metrics not defined under IFRS
Measure
Basis of preparation
Additional analysis or reconciliation
Loan:deposit ratio
Net customer loans held at amortised cost divided by total customer deposits.
Table 6
Tangible net asset value (TNAV)
Tangible equity divided by the number of ordinary shares in issue (excluding own shares held). Tangible equity is ordinary shareholders’ equity less intangible assets.
Page 4
NIM
Net interest income as a percentage of interest-earning assets.