Earnings call transcript: NatWest Group Q2 2025 beats EPS forecast

NatWest Group (NWG) reported its Q2 2025 earnings, surpassing EPS expectations with a result of £0.411 against a forecast of £0.3651, marking a 12.57% surprise. Despite this earnings beat, the company’s revenue slightly missed expectations, coming in at £5.38 billion compared to the anticipated £5.39 billion, a minor shortfall of 0.19%. The market reacted positively, with NatWest’s stock price rising by 2.43% in pre-market trading, moving from £13.57 to £13.90. According to InvestingPro data, NatWest has demonstrated remarkable momentum, with a 53.51% year-to-date return and is currently trading near its 52-week high of $15.17.

Key Takeaways

• NatWest’s EPS exceeded expectations by 12.57%.
• Revenue fell slightly short of forecasts.
• Pre-market stock price increased by 2.43%.
• Strategic acquisitions and collaborations were highlighted.
• Strong return on tangible equity reported at 18.1%.

Company Performance

NatWest Group demonstrated robust performance in Q2 2025 with a 13.7% increase in half-year income, reaching £8 billion. The bank’s operating profit stood at £3.6 billion, while attributable profit was £2.5 billion. This performance is underpinned by strategic initiatives, including the acquisition of Sainsbury’s Bank and partnerships to enhance data capabilities. With a market capitalization of $59.87 billion and a P/E ratio of 9.22, NatWest maintains an attractive dividend yield of 3.36%. InvestingPro analysis reveals 10+ additional insights about NatWest’s financial health and growth potential.

Financial Highlights

• Revenue: £5.38 billion (slight miss from forecast)
• Earnings per share: £0.411 (12.57% above forecast)
• Operating profit: £3.6 billion
• Attributable profit: £2.5 billion
• Return on tangible equity: 18.1%

Earnings vs. Forecast

NatWest’s EPS of £0.411 outperformed the forecast of £0.3651, resulting in a positive surprise of 12.57%. However, the revenue of £5.38 billion was slightly below the expected £5.39 billion, a minor deviation that did not significantly impact investor sentiment.

Market Reaction

Following the earnings announcement, NatWest’s stock price increased by 2.43% in pre-market trading, indicating investor confidence in the company’s performance despite the revenue miss. The stock’s pre-market price reached £13.90, showcasing a positive market response. Based on InvestingPro’s Fair Value analysis, NatWest appears to be fairly valued at current levels. The stock has delivered impressive returns, with a 70.43% gain over the past year and maintains a GOOD Financial Health Score of 2.81. Discover comprehensive valuation metrics and 1,400+ detailed Pro Research Reports by upgrading to InvestingPro.

Outlook & Guidance

NatWest has set ambitious targets, anticipating full-year total income to exceed £16 billion and a return on tangible equity greater than 16.5%. The bank is also focusing on climate and transition finance, aiming for £200 billion by 2030. Three analysts have recently revised their earnings estimates upward for the upcoming period, according to InvestingPro data, suggesting growing confidence in NatWest’s strategic direction.

Executive Commentary

• Katie Murray, CFO, emphasized the bank’s restructuring success and growth potential, stating, "With a significant restructuring of the bank and government ownership behind us, we are now attracting new investors and driving growth."
• Donald Quaid, Treasurer, expressed optimism about regulatory changes, saying, "We welcome the announcements from HMT that they’ll review the ring-fencing regime."

Risks and Challenges

• Economic fluctuations and interest rate changes could impact lending and deposit growth.
• Competitive mortgage market pressures may affect margins.
• Regulatory changes and compliance costs could pose challenges.

Q&A

Analysts inquired about potential AT1 issuance and strategies to address S&P credit rating discrepancies. Discussions also covered mortgage market dynamics and liquidity strategies, highlighting NatWest’s proactive approach to market challenges.

Full transcript - Natwest Group PLC (NWG) Q2 2025:

Moderator, NatWest Group: Hello, and welcome to the NatWest Group h one results 2025 fixed income update. Today’s presentation will be hosted by CFO, Katie Murray, and treasurer, Donald Quaid. After the presentation, we will open up for questions. Katie, please go ahead.

Katie Murray, CFO, NatWest Group: Good afternoon, everyone, and thank you for joining our half year 2025 fixed income results presentation. I’m joined today by Donald Quaid, our treasurer, and Paul Pybus, our head of debt I’ll take you through the headlines for the year before moving on to the financials for the second quarter. Dono will take you through capital, liquidity and funding, and then we’ll open up for questions. Starting with the headlines on Slide three. Customer activity has helped to deliver a strong first half.

Customer lending grew 3.2% to GBP $384,000,000,000 in H1. Customer deposits were up 1% to GBP $436,000,000,000 and assets under management and administration grew 5.9% to GBP 52,000,000,000. Income grew 13.7% to 8,000,000,000 year on year, while costs reduced 1.4% to GBP 3,900,000,000.0. This resulted in operating profit of GBP 3,600,000,000.0 and attributable profit of GBP 2,500,000,000.0. Our return on tangible equity was 18.1%.

This morning, we announced an interim dividend of GBP 9.5 and a new share buyback of GBP $750,000,000. Our balance sheet remains strong with a CET1 ratio of 13.6%. And we reached an important milestone in May with the government selling its remaining stake in NatWest Group. So we are now privately owned for the first time in seventeen years. With a significant restructuring of the bank and government ownership behind us, we are now attracting new investors and driving growth.

Turning to our strategic priorities on Slide four. We continue to grow our customer base, attracting over 100,000 new customers across the bank as a result of organic growth during the first half. In addition, the Sainsbury’s bank transaction completed in May, adding around 1,000,000 new customers with about GBP 2,400,000,000.0 of savings and GBP 2,200,000,000.0 of unsecured lending. In commercial and institutional, we are building on our strength in social housing and have delivered GBP 6,800,000,000.0 of our lending towards our GBP $7500000000.0.20 26 target. We’ve over delivered on our GBP 100,000,000,000 target for climate and sustainable funding and financing and have now reached GBP 110,000,000,000.

We are announcing a new target today to deliver GBP 200,000,000,000 of climate and transition finance by 02/1930. We continue to work on bank wide simplification to enhance customer and colleague experience and increase productivity. We are accelerating the use of data and AI across the bank through collaboration with others. For example, we have just announced a strategic collaboration with AWS and Accenture to modernize our data capabilities, including the creation of a platform that uses AI to give us a single view of customer data across the bank. This will enable greater personalization, faster onboarding, better protection against fraud and stronger customer engagement.

Finally, as we actively manage our balance sheet, we have generated 101 basis points of capital in the first half. We have taken action to reduce risk weighted assets by GBP 2,900,000,000.0 through a range of measures, including three significant risk transfers. Turning now to our second quarter performance using the first quarter as a comparator. Income, excluding all notable items, was up 1.5% at GBP 4,000,000,000. Operating expenses were 3% higher at GBP 2,000,000,000, and the impairment charge was GBP 193,000,000 or 19 basis points of loans.

Taking this together, we have delivered operating profit before tax of GBP 1,800,000,000.0. Profit attributable to ordinary shareholders was GBP 1,200,000,000.0 and return on tangible equity was 17.7%. Turning now to income. Overall income, excluding notable items, grew 1.5% to GBP 4,000,000,000. Excluding the impact of one additional day in the quarter, income across our three businesses increased 1.1% or GBP 43,000,000.

Net interest income grew 1.6% to GBP 3,100,000,000.0. This was driven by volume growth across lending and deposits, including portfolios added from Sainsbury’s. It was also supported by margin expansion as tailwinds from the product structural hedge more than offset the impact of the base rate cut in May and lending growth. We continue to assume two further base rate cuts this year, with rates reaching 3.75 by the year end. Noninterest income across the three businesses was down 0.8% compared with a strong first quarter and up 2% compared to the prior year.

Given the strength of the first half total income, we now expect full year total income, excluding notable items, to be greater than GBP 16,000,000,000 and return on tangible equity to be greater than 16.5%. Moving now to lending. We continue to be disciplined in our approach, deploying capital where returns are attractive. Gross loans to customers across our three businesses increased GBP 8,400,000,000.0 to GBP $384,000,000,000. Taking Retail Banking together with Private Banking, mortgage balances grew by GBP 1,300,000,000.0, with growth improving through the quarter following the stamp duty deadline at the March.

Our stock share remained stable at 12.6%. Unsecured balances increased by GBP 2,700,000,000.0, mainly reflecting the addition of the credit card and personal loan portfolios from Sainsbury’s Bank. In commercial and institutional, gross customer loans, excluding government schemes, increased by GBP 4,600,000,000.0. Within this, loans to corporates and institutions grew by 2,100,000,000.0, mainly driven by project finance, sustainable financing and funds lending. Loans in our commercial mid market business grew by GBP 2,100,000,000.0, reflecting increased lending across social housing and residential commercial real estate.

I’ll now turn to deposits. These were up GBP 2,400,000,000.0 across our three businesses to GBP $436,000,000,000, continuing the quarterly growth trend. Retail banking increased deposit balances by GBP 900,000,000.0 to GBP 197,000,000,000. The addition of GBP 2,400,000,000.0 of deposits acquired from Sainsbury’s Bank was partially offset by a reduction in current accounts. Private banking balances increased by GBP 100,000,000.0 and the increase in commercial and institutional of GBP 1,400,000,000.0 was mainly from larger customers in corporate and institutions.

Deposit mix was broadly stable as the proportion of non interest bearing balances remained at 31%, and term accounts increased slightly from 16% to 17%. Turning now to costs. These increased 1.6% to 2,000,000,000 in the second quarter. Our annual wage awards and higher national insurance contributions both took effect in early April. We also incurred GBP 27,000,000 of our guided onetime integration costs during the quarter, bringing the total to GBP 34,000,000 for the first half.

We remain on track for the other operating expenses to be around GBP 8,000,000,000 for the full year, plus around GBP 100,000,000 of onetime integration costs. This means expenses will be higher in the second half, driven by further business transformation, the remaining onetime integration costs and the bank levy. Our focus remains driving cost savings to create capacity for further investment to accelerate our bank wide simplification. I’d like to turn now to impairments. Our diversified prime loan book continues to perform well, and we’re reporting a net impairment charge of GBP 193,000,000 for the second quarter, equivalent to 19 basis points of loans on an annualized basis.

This includes an GBP 81,000,000 onetime charge on acquisition of balances from Sainsbury’s Bank, equivalent to eight basis points. Excluding this, the charge was GBP 112,000,000 or 11 basis points. We retained post model adjustments for economic uncertainty of GBP $234,000,000. We have reviewed and updated our macroeconomic assumptions with minor changes that drove GBP 10,000,000 of additional expected credit loss. Overall, we have no significant concerns about the credit portfolio at this point.

And given the current performance of the book, we continue to expect a loan impairment rate below 20 basis points for the full year. Turning now to guidance for 2025. We now expect income, excluding notable items, to be greater than GBP 16,000,000,000. And based on the strength of income, we anticipate return on tangible equity to be greater than 16.5%. Our cost, impairment and RWA guidance remains unchanged.

We expect other operating expenses to be around GBP 8,100,000,000.0, including around GBP 100,000,000 of onetime integration costs. The loan impairment rate to be below 20 basis points and RWAs to be between GBP 190,000,000,000 and GBP 195,000,000,000. Where the figure lands within this range still depends on CRD IV model outcomes. We also continue to target returns greater than 15% in 2027. And with that, I’ll hand over to Dono.

Donald Quaid, Treasurer, NatWest Group: Thank you, Katie. Good afternoon, and thank you for joining today’s call. I will start by sharing some highlights for the half year before moving into more detail on the balance sheet covering capital, liquidity and funding. I will then update you on the progress against our funding plans for the year and plans for the second half of the year. Starting with an overview of the key metrics on Slide 13.

We ended the quarter with a strong capital, MREL and leverage position, comfortably above the retro minima with a CET1 ratio of 13.6%, a total capital ratio of 19.7%, a total MREL ratio of 32.4% and a leverage ratio of 5%. Our average liquidity coverage ratio was 150%, giving us comfortable surplus over minimum requirements. Our loan to deposit ratio was 86%, and our average net stable funding ratio was 136%. The group’s funding is very well diversified with a strong retail, private and corporate deposit franchise with around €437,000,000,000 of customer deposits. We have made solid progress against our 2025 funding plan with GBP 5,000,000,000 equivalent of benchmark issuance from the holding company across senior MREL, AT1 and Tier two capital securities and GBP 4,200,000,000.0 equivalent from the operating company NatWest Markets.

Thank you for your continued support for our transactions. June marked another positive step in our credit ratings journey as Fitch upgraded all rated entities while affirming a stable outlook. Turning to our capital and leverage positions on Slide 14. Our CET1 ratio of 13.6% is within our guided target range of 13% to 14%, and we’re currently operating with three ten basis points of headroom above the maximum distributable amount of 10.5%, equivalent to $5,900,000,000 of nominal CET1. Our UK leverage ratio was 5%, leaving around 115 basis points of headroom above the Bank of England minimum requirement.

The slide also shows the impact of the other systemically important institution buffer applied to NatWest Holdings that results in a group risk add on for NatWest Group of 1.2% for CET1 and 40 basis points for leverage. Although not part of minimum ratio requirements or combined buffer requirements for NatWest Group, it does form part of our minimum supervisory requirements, resulting in a buffer of 190 basis points or $3,600,000,000 of nominal CET1 capital and 75 basis points for leverage. Moving to capital generation on Slide 15. We ended the second quarter with a common equity Tier one ratio of 13.6%, down 20 basis points on the first. We generated 53 basis points of capital before distributions.

Strong earnings added 69 basis points, offset by 15 basis points from Sainsbury’s and one basis point from RWA increases and other CET1 movements. We increased our ordinary dividend payout ratio from around 40% to around 50% earlier this year. And this morning, we announced an interim ordinary dividend of 9.5p per share, together with a share buyback program for $750,000,000 Together, these accruals consumed 72 basis points of capital. Risk weighted assets increased by $3,100,000,000 to 190,100,000,000.0 This comprises $4,600,000,000 of business movements, which broadly reflects our lending growth, including Sainsbury’s Bank and $1,400,000,000 from CRD IV model inflation. These movements were partially offset by a $1,700,000,000 reduction as a result of RWA management and a $1,200,000,000 reduction in other RWA movements, including FX.

We continue to expect between GBP 190,000,000,000 and GBP 195,000,000,000 of risk weighted assets at the year end. Where the figure lands within this range still depends on CRD IV model outcomes. Our target CET1 ratio remains unchanged in the 13% to 14% range. Turning to our total capital position on Slide 16. We currently have an AT1 ratio of 3.1% with $6,000,000,000 of securities outstanding.

Earlier this month, we announced the call of the August $1,150,000,000 AT1 notes, which reduced CET1 by approximately five basis points. The impact arises due to changes in FX rates since the date of issuance of the notes. Our Tier two ratio is 3% with EUR 5,700,000,000.0 of securities outstanding. We are currently running with excess headroom in AT1 and Tier two compared to our minimum requirements, having taken advantage of positive market dynamics in 2024 and 2025 to prefund both AT1 and Tier two calls. However, over time, we expect to return to more normalized levels of AT1 and Tier two capital relative to our minimum requirements.

Turning to our total MREL position on Slide 17. Our total MREL is very healthy at 32.4%, significantly higher than our risk weighted asset requirement, leaving us well positioned for any further growth in risk weighted assets by the end of the year. Having built out the maturity curve of our MREL stack, we have an annual refinancing requirement of 3,000,000,000 to $5,000,000,000 over the next few years. Turning to liquidity on Slide 18. Our liquidity position remains very strong.

At the end of the quarter, the LCR ratio was 150% on a twelve month rolling average and 147% on a spot basis, reflecting around 52,000,000,000 of of surplus primary liquidity above minimum requirements. Our total liquidity portfolio was EUR $217,000,000,000, comprising primary liquidity of EUR 161,000,000,000 and secondary liquidity of EUR 56,000,000,000. Primary liquidity decreased slightly in the first half, driven by an increase in lending, including balances acquired from Sainsbury’s Bank, partially offset by issuances during the year. Secondary liquidity reduced due to the normal amortization of collateral prepositioned at the Bank of England. Looking at our primary liquidity, cash balances of $86,600,000,000 placed with central banks represents around 54% of total prime liquidity, with Level one high quality government and SSA bonds of $61,500,000,000 making up a further 38%.

We continue to transition the portfolio from cash holdings into securities, which provides a tailwind to income. The percentage of primary liquidity held in central bank balances has reduced from 87% at full year 2022 to 54% at H1 this year, inclusive of net repo positions. Looking at the composition of the securities portfolio, 73% are held to collect and sell and fair value through other comprehensive income and 27% are held to collect and held on the balance sheet at amortized cost. The remaining primary liquidity is a smaller percentage of Level one high quality covered bonds and Level two securities. Turning to Slide 19 and our funding composition.

Although customer deposits account for over 80% of the group’s funding, we also have access to stable and diverse sources of wholesale funding across a range of products, maturities and currencies. Of the GBP 91,000,000,000 of wholesale funding outstanding, the large majority is MREL and capital issuance from NatWest Group and senior unsecured issuance from NatWest Markets. As part of the mix, we have EUR 12,000,000,000 currently drawn under the Bank of England’s TFSME scheme, with EUR 3,800,000,000.0 repayable in October and the remainder repayable from 2027. On Slide 20, you can see that we’ve been very active in the first half in wholesale funding markets, issuing from both the group holding company and our NatWest Markets operating entity. From NatWest Group, we have issued GBP 3,300,000,000.0 equivalent in senior MREL against our guidance of GBP 4,000,000,000 to 5,000,000,000 for the year.

In addition to issuing MREL, we’ve also issued GBP $750,000,000 of AT1 and GBP 900,000,000.0 equivalent of Tier two capital during the year. While for NatWest Markets plc, we issued around GBP 4,200,000,000.0 equivalent against our GBP 4,000,000,000 to 5,000,000,000 guidance for 2025. We continue to take opportunities to diversify our currency mix, issuing in our core currencies of euros and dollars together with Australian dollars and Swiss francs. The progress we have made in the first half leaves us well placed against our capital requirements for 2025. In the second half, I expect to be active in senior issuance from the holding company and in senior unsecured from NatWest Markets.

I’ll also start to consider 2026 funding requirements later in the year. And finally, turning to credit ratings on Slide 21. It was pleasing to see progress in our credit ratings during the first half. In June, Fitch upgraded the rating of NatWest Group plc to a plus from single a and upgraded all rated operating companies, including the issuing entities, NatWest Markets plc, NatWest Markets NV and OrBSI Limited to double a minus with a stable outlook. With that, we can open up for questions.

Moderator, NatWest Group: If you would like to ask a question today, you may do so by using the raise hand function on the Zoom app. If you are dialing in by phone, you can press 9 to raise your hand and 6 to unmute once prompted. We’ll pause for a moment to give everyone an opportunity to signal for questions. Our first question is a pre submitted question. You have a guided up to a billion pounds 81.

You have issued 700,000,000. Are you expected to issue another small transaction before the end of the year?

Katie Murray, CFO, NatWest Group: Dono, would you to

Paul Pybus, Head of Debt, NatWest Group: take that?

Donald Quaid, Treasurer, NatWest Group: Yeah. Sure, Katie. I’ll take that one. So, yes, guided to a billion. We’ve actually issued 750,000,000 sterling earlier on in in the year.

I suppose if I look ahead, our current AT one ratio is 3.1%. We do have an upcoming six month park call later on in December. If we were to call that security, that would bring our ratio back down to a more optimized 2.1%. So the way we think about it is evolution of risk weights into year end and into next year. So I think putting all that together, you know, there is potential for a cleanup 81 transaction later on this year or early next year subject to the trajectory of risk weights.

Katie Murray, CFO, NatWest Group: Lovely. Thanks.

Donald Quaid, Treasurer, NatWest Group: Thanks for the question.

Moderator, NatWest Group: And our second question is one of your peers was asked yesterday about the gap in ratings between S P and other credit rating agencies. Is this a concern for you, and what do you do what do you plan to do to close the gap?

Donald Quaid, Treasurer, NatWest Group: Katie, I’ll I’ll take that one as well. Yeah. So as as you pointed out, S and P are now the only rating agencies that do not have a an a rating for NatWest Group. We’ve got Fitch at a plus. We’ve got Moody’s at at a three and and S and P at triple b plus.

I’d obviously like to see S and P join the other two agencies with an A rating, which I personally think is more than deserved given the balance sheet strength of the organization and the consistent strong financial performance of the group, both on a relative and on an absolute basis versus European peers. However, I think when you look at S and P ratings methodology for U. K. Bank holdcos, it’s overly punitive versus others. That’s reflected in the minus one notch applied for structural subordination.

I think NatWest and peers are also penalized by S and P’s views on The U. K. Economy, which keeps the BICRA score lower than other European countries. Again, if that improved our rating, would likely go up one notch for stronger capital. So we’ll continue to deliver on our strategy, continue to deliver strong results and emphasize the operating strength and discussions we have with all the agencies, particularly S and P.

Moderator, NatWest Group: Thank you. Our next question comes from Dan David of Autonomous. Dan, if you’d like to press six to unmute and ask your question.

Katie Murray, CFO, NatWest Group: Hey, Dan.

Moderator, NatWest Group: Dan, please go ahead and ask your question.

Dan David, Analyst, Autonomous: Press the right buttons on my phone, and you can hear me.

Katie Murray, CFO, NatWest Group: I’ve got you now, Dan. Yes. Thanks.

Dan David, Analyst, Autonomous: Great. Hopefully, I’ve done that right. And and perfect. Congratulations on the results and thanks for taking my questions. I have a couple.

The first one is just on issuance plans and the second one is on CET1. Just kind of touching on the AT1 point. I want to focus more on the currency of the issuance that you potentially could issue in H2. Do you think it would be kind of non dollar sterling? And I wanted to just ask on Euro 81.

I think it’s quite a scarce resource amongst UK banks now. And is that a reflection of reducing demand from European investors for UK banks paper? And is this a concern going forward given, I guess, the uncertainty around The UK budget? Is that something you think about? And the second one is just on the CET1 target and the buffer that you intend to hold.

And it kind of picks up on some of the points I think you made on the call this morning. I thought one of the justifications for UK banks holding lower CET1 buffers was a high countercyclical, so two percent. And I guess that thinking about the Mansenhaus speech, that could potentially come down. So if the countercyclical comes down, should we expect UK banks like yourselves to hold a higher CET1 buffer target?

Katie Murray, CFO, NatWest Group: Yes. I’ll take the second one, Dorno, and then come back to you for the issuance. Yeah. So if I look at what we said on the call this morning as well in terms of this, look, our CT1 numbers are something we look at, you know, regularly as we look at the changes that we see coming through regulation and also the changes within our own book. We don’t have any particular insight into any thoughts on whether the countercyclical buffer will come down or not, but what we I would say is as regulation changes, we adapt to that regulation.

It’s something that we do look at regularly, so we’ll continue to do that as we work our way through things like this or pillar two or the implementation of Basel Basel 3.1. Donogh, do you want to take the issuance plan?

Donald Quaid, Treasurer, NatWest Group: Yeah. Sure. Hi, Dan. So in terms of currency, again, as usual, you know, we won’t tie ourselves to to any currency. We’ll be open just depending on on pricing at any point in time.

At the moment, if I look at 81, I think dollars and sterling probably look most attractive, particularly where it swaps back to sterling. I think in terms of your question around kind of European demand for 81 and reducing demand from investors, I think that’s not something we’ve specifically seen. I think it really comes down to pricing. When we look at kind of pricing across the three majors, dollars has been most attractive, I think, from an AT1 perspective and probably followed by sterling for most of the year. That’s not always the case.

But I think that’s really the key driver of the lack of supply maybe in euros from from UK banks in particular.

Katie Murray, CFO, NatWest Group: Thanks, Dan.

Moderator, NatWest Group: Thank you. Our next question comes from Robert Sallie. Robert, if you’d like to unmute and ask your question, you can do so by using star six on your keypad on the phone.

Katie Murray, CFO, NatWest Group: Hey, Rob.

Paul Pybus, Head of Debt, NatWest Group: Hi. Thank you for doing the call, hello, and congratulations on some good results. I also concur on your thoughts on S and P by the way. A On couple of quick the provision, still almost de minimis, but I’m looking at Slide 10 and going forward, when I look at the economic assumptions, it’s the weighted average seems to be weaker for 26. Can we assume that we start to get into that 20 to 30 basis point range further out?

Or are we still going to be on the lower end of that is my first question. Secondly, in terms of loan growth, you’ve been very active in project finance. Is that a steady pipeline at this point? Or is that really more lumpier as projects and contracts come in? And then two other potentially related questions.

One on NSFR, it’s probably something you don’t necessarily manage to, but you want to keep liquidity, but that number is very high. Is there a reason for that or is that just an outcome? And then more generally on loosening the ring fence, I know early days in talking about it, but what are some of the implications for the mortgage market general liquidity overall? Thank you.

Katie Murray, CFO, NatWest Group: Sure. Let me take a few of them and then I’ll come over to Donald as well to help me out. So in terms of the impairment space, the 20 to 30 basis points, we talked about it a little bit this morning on the equity call as well. So we haven’t given you any particular guidance at this stage in terms of 2026, it’s and we will do that when we get to February. Mean, that’s our kind of through the cycle number.

I would say that as we’ve looked over the past number of years, we do seem to be operating much closer to the lower end of that. But honestly, Rob, it’s something we’ll talk more about in February. But certainly if we were to see the economics to deteriorate, you know, then you could expect it to be more. But I would say even as I look at the kind of five year average of the economics that we see and then weighted across our different downsides. It’s it’s not something that’s probably flagging a lot within the financial statements.

So you might not have got to this yet, but you can see our sensitivities that are on page 23 of of of those accounts that sort of show, actually, this is how much additional you would have if you brought through, say, a 100% on the downside. It’s like 786 or something. So that would clearly get you into a higher level of basis points, but that would be a very, very big depreciation in terms of the the level of our current macroeconomics. And interestingly, what’s there is if you look at it, it’s slightly better than it was at the at the tail end of last year because we’re also seeing the benefit of the SRT transactions that we’re doing, which are not only good for capital, but they’re very good also in terms of risk risk kind of management as well. Your second question on the kind of private finance.

Look. I think private finance by its its nature is kind of lumpy ish. It’s kind of how I would describe it, but we’ve obviously got a lot of relationships there which kind of helps smooth it out. It’s probably been a theme of our increased lending at that top end of the market, really for the last number of quarters. We kind of expect that to continue as these deals mature often quicker and they’re a shorter length than some of the more standard ones.

We’re comfortable that it’s an important line with long established relationships that we’re keen to kind of go into. I’m going deal with mortgages and then I’ll come back, Donald, to you on the NSFR point. So it’s interesting. The mortgage market at the moment is very big. It’s very active.

It’s a bigger our estimation for this year is bigger than last year’s. We do see a lot of competition within there. You know, again on the equity call this morning, I talked about that our kind of back book and front book differentials in the round or in the kind are still kind of in the same sort of space. I think what we have been doing in our mortgage market quite a lot in the last year for us is really trying to expand our waterfront. So you’ve seen us do big improvements on first time buyers, on buy to let and also on this kind of family backed mortgage product that we launched last quarter.

So overall we feel quite good about the mortgage market the round. We just need to make sure that we continue to keep that right focus on managing the return and not kinda chasing share unnecessarily. Don’t know.

Donald Quaid, Treasurer, NatWest Group: Yeah. And as maybe just to finish on the on the mortgage piece and bring it back to the link to to ring fencing as So I think sorry. We we we we welcome the announcements from HMT that they’ll review the ring fencing regime in its current form working with the Bank of England and reporting early in 02/1926. I think it’s far too early to to talk about any kind of potential benefits, if any, as we need to get more clarity first on the scope and extent of that review, whether that’s legislative change or more focused on on POA rules. I I think our our views on ring fencing are clear.

You know, we believe it does add cost and friction to both us and our customers and also significant cost and and dis synergies from ring fencing as well, particularly when it comes to to funding and liquidity. I think linking back to mortgage market, I’m not expecting any changes there to have any impact on the competitive nature of the mortgage market in The UK. As Katie said, it’s very competitive and will continue to to be so. On the last point on NSF four, yeah, you’re right. Kind of very strong print, 134% on a spot basis, a 136 on a on an average basis.

It’s not something we need to actually manage. It is more an outcome. I’d probably say more structural in nature, so kind of very, very comfortable with that and aligned when we look at both NSFR and our liquidity coverage ratio in a very, very healthy position, primarily driven just by a very strong deposit franchise across our across our different businesses.

Katie Murray, CFO, NatWest Group: Lovely. Thanks very much, Rob.

Paul Pybus, Head of Debt, NatWest Group: Thank you. Thank you for the detail.

Moderator, NatWest Group: A reminder that if you would like to ask a question today, you can do so by pressing the raised hand button on the Zoom app. If you’re dialing by phone, you can press 9 to raise your hand and 6 to unmute once prompted. We’re gonna give you a moment if you’d like to ask a question to signal. There are no more questions at this time. I would now like to hand it back to Katie for any closing remarks.

Katie Murray, CFO, NatWest Group: Thanks, Oliver. Much appreciated. Look. As ever, thank you very much for taking the time to come on the call. We do appreciate the support that you give us through the year in terms of and the support that you give our our ongoing going issuance.

If you need anything else or you’d like any further information, please don’t hesitate to reach out to Paul Pibus in our debt IR team, and, he’ll be able to help you. And I look forward to meeting with some of you as we go into the current upcoming roadshow season. Take care. Thanks very much.

Donald Quaid, Treasurer, NatWest Group: Thank you.

Moderator, NatWest Group: That concludes today’s presentation. Thank you for your participation. You may now disconnect.

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