TIDM83NF
RNS Number : 2351Q
Natwest Markets PLC
17 February 2023
NatWest Markets Group
2022 Annual Results
NWM Group ci.natwest.com
Financial review
NWM Group reported a loss for the year ended 31 December 2022 of
GBP264 million compared with a loss of GBP491 million for the year
ended 31 December 2021. Higher income largely reflected stronger
performance across the product suite in 2022 compared with the
prior year. Operating expenses for the current year were slightly
lower than in 2021, as an increase in litigation and conduct costs
was offset by a decrease in other operating expenses.
Highlights
Financial performance
- Income of GBP689 million in 2022 was up by GBP288 million compared
with GBP401 million in 2021. The increase was largely driven by Fixed
Income performance, which continued to be impacted by challenging
market conditions but improved compared with the prior year, and stronger
performances in Currencies, as FX volatility heightened during the
current year, and in Capital Markets.
- Operating expenses of GBP1,128 million were GBP22 million lower compared
with GBP1,150 million in 2021. Litigation and conduct costs of GBP80
million reflected ongoing progress in closing legacy matters, and
were up by GBP97 million compared with GBP17 million credit in 2021.
Other operating expenses of GBP1,048 million were GBP119 million lower
than GBP1,167 million in 2021, largely reflecting higher costs recognised
in the prior year in relation to technology investment and the refocusing
of NWM Group.
- Impairment losses were GBP8 million in 2022, compared with releases
of GBP35 million in 2021 which were largely driven by credit improvements
and releases on individual exposures.
- NWM Group's total assets and liabilities decreased by GBP13.2 billion
and GBP12.4 billion to GBP189.8 billion and GBP183.2 billion respectively
at 31 December 2022, compared with the prior year. The decreases were
primarily driven by reductions in trading assets and liabilities,
largely reflecting risk management activity undertaken in the current
year, in addition to lower derivative fair values, largely driven
by market volatility in 2022 including increases in interest rates
across major currencies and the strengthening of USD.
- Total dividends paid to NatWest Group plc during the year ended 31
December 2022 amounted to GBP430 million.
Capital and leverage
- Total NWM Plc RWAs were GBP21.4 billion at 31 December 2022, compared
with GBP22.7 billion at 31 December 2021. The decrease in the year
reflected lower levels of counterparty credit and operational risk,
offset partially by increases in credit and market risk.
- NWM Plc's Common Equity Tier 1 (CET1) ratio was 17.2% at 31 December
2022, compared with 17.9% at 31 December 2021. The decrease in the
year was largely driven by dividends paid to NatWest Group plc and
other reserve movements, partially offset by the decrease in RWAs.
- NWM Plc's leverage ratio, calculated in accordance with changes to
the UK's leverage ratio framework introduced by the PRA which came
into effect from 1 January 2022, was 5.4% at 31 December 2022. As
at 31 December 2021, the UK leverage ratio was 4.8%, which was calculated
under the prior year's UK leverage methodology.
- Total MREL for NWM Plc at 31 December 2022 was GBP8.7 billion, or
40.4% of RWAs, compared with GBP9.6 billion or 42.1% of RWAs at 31
December 2021. The decrease in the year was largely due to the redemption
of two internal instruments issued to NatWest Group plc of EUR1.1
billion and EUR1.0 billion respectively, offset by a new internal
instrument issued to NatWest Group plc of $1.1 billion.
Liquidity and funding
- NWM Plc's liquidity portfolio at 31 December 2022 was GBP18.6 billion
with an LCR of 253%, compared with GBP16.1 billion and an LCR of 205%
at 31 December 2021. Stressed coverage ratio was 199% at 31 December
2022, compared with 146% at 31 December 2021.
- NWM Plc issued GBP4.6 billion of public benchmark transactions during
2022 against guidance of GBP4-5 billion of public benchmark issuance
in full year 2022. Transactions included a benchmark transaction under
the US MTN programme of $1.5 billion of notes, five benchmark transactions
under the EMTN programme across EUR, CHF and our inaugural GBP benchmark
amounting to GBP3.1 billion of notes, and an inaugural transaction
under the AUD debt issuance programme of AUD 0.6 billion of notes.
NWM Plc also raised funding in other formats throughout the year such
as private placements and secured note transactions.
- On 13 January 2023, NWM Plc issued a total of EUR1.5 billion of notes
under the EMTN programme in benchmark transactions.
Outlook (1,2)
We aim to generate sustainable and attractive returns over the
medium term, with efficient capital usage.
Medium-term outlook
Metric (3) Estimate
---------------- ---------
CET1 ratio 14%
MREL ratio (4) >30%
Leverage ratio >4%
---------------- ---------
NWM Plc 2023 funding plan targets GBP3-5 billion of public
benchmark issuance.
(1) This supersedes all prior guidance.
(2) The guidance, targets, expectations and trends discussed in this
section represent management's current expectations and are subject
to change, including as a result of the factors described in the
"Risk Factors" section on pages 173 to 193 of NatWest Markets Plc
2022 Annual Report and Accounts. These statements constitute forward-looking
statements. Refer to 'Forward-looking statements' in this announcement.
(3) All metrics presented relate to NWM Plc.
(4) Includes total regulatory capital, non-eligible capital and down
streamed internal MREL.
Chief Executive's statement
2022 has been another challenging year and I am proud of the way
we have supported our customers and managed risk in an uncertain
economic environment.
Delivering on our strategy of sustainable growth
Our total income was GBP689 million and the operating loss
before tax for the year was GBP447 million. This reflected a
stronger current year performance compared to 2021, largely driven
by improved performance in Fixed Income against volatile market
conditions, in addition to stronger performance in both Currencies
and Capital Markets. We continued to reduce operating costs and
progressed in closing legacy matters. We returned GBP430 million of
capital to NatWest Group via dividends during the year up to 31
December 2022. We maintained a robust capital position and reported
a strong CET1 ratio of 17.2% and leverage of 5.4%, with our
risk-weighted assets (RWAs) reducing slightly to GBP21.4 billion
reflecting lower levels of counterparty credit and operational
risk, offset partially by increases in credit and market risk.
Building closer customer relationships
The creation by NatWest Group of the Commercial &
Institutional segment has enhanced our ability to work across
NatWest Group to deliver on opportunities including revenue growth.
We've onboarded approximately 650 additional NatWest Holdings
Commercial customers to NatWest Markets for foreign exchange
services and are working closely with our colleagues in the Wealth
segment on further foreign exchange growth opportunities. We have
developed our Capital Markets business through private financing
and continued to support the growth of our funds business.
Supporting climate transition
We've continued to support our customers' transition to net zero
as well as their broader ESG ambitions and targets. In 2022, we
completed GBP12.2 billion of climate and sustainable funding and
financing, contributing to the NatWest Group target of GBP100
billion aimed to be delivered between 1 July 2021 and the end of
2025.
Our progress has also been recognised externally with multiple
awards including at the Environmental Finance Bond Awards and the
Global Capital Covered Bond Awards. NatWest Group was an active
contributor at COP27 and I was pleased to support discussions with
customers, other financial institutions and industry groups on how
banks can help finance the transition to net zero.
Progressing our digital agenda
Responding to and anticipating our customers' digital needs will
be important if we're to differentiate ourselves in the industry.
Financial markets are increasingly embracing distributed ledger
technology and the creation of our Digital Capital Markets team is
helping us to innovate in this exciting growth area. For example,
we delivered two successful pilots of a cross-ledger debt issuance
during the year. We're also continuing to digitise and automate
processes to enhance the customer experience.
Creating an inclusive, purpose-led culture
I'm pleased with the progress we've made on instilling a
positive attitude to progress, change and improvement across the
business. One of the ways we've done this is by establishing a
Diversity, Equity and Inclusion Action Committee to share best
practice and agree and drive an action-orientated approach to how
we attract, develop and retain colleagues.
I believe that in 2023 we will be in a strong position to
support the Commercial & Institutional segment by delivering
our products and capabilities to more customers. This will help
generate the sustainable growth we are targeting and ultimately
drive value for all our stakeholders.
Robert Begbie
Chief Executive Officer
Business performance summary
The table below presents a segmental analysis of key lines of
NWM Group's income statement for the quarter ended 31 December
2022. Commentary refers to the table below as well as the
consolidated income statement shown on page 7.
Q4 2022 Q3 2022 Q4 2021
----------------------- ----------------------- -----------------------
Central Central Central
NatWest items NatWest items NatWest items
& & &
Markets other Total Markets other Total Markets other Total
Income statement GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Net interest income 29 - 29 33 - 33 13 - 13
Non-interest income 74 4 78 109 2 111 11 (11) -
----------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Total income 103 4 107 142 2 144 24 (11) 13
----------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Litigation and conduct costs (10) (37) (47) (6) (7) (13) - (24) (24)
Other operating expenses
(1) (271) 17 (254) (257) (17) (274) (347) (2) (349)
----------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Operating expenses (281) (20) (301) (263) (24) (287) (347) (26) (373)
Operating loss before
impairment releases/losses (178) (16) (194) (121) (22) (143) (323) (37) (360)
Impairment releases/(losses) 2 - 2 (5) - (5) 16 - 16
----------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Operating loss before tax (176) (16) (192) (126) (22) (148) (307) (37) (344)
Tax credit 147 15 136
----------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Loss for the period (45) (133) (208)
----------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Income (2)
Fixed Income 5 - 5 12 - 12 (69) - (69)
Currencies 119 - 119 114 - 114 121 - 121
Capital Markets 93 - 93 88 - 88 80 - 80
Capital Management Unit
& other (3) (31) 4 (27) (25) 2 (23) (55) (11) (66)
Income including shared
revenue,
before asset disposals
and OCA 186 4 190 189 2 191 77 (11) 66
Revenue shared with or paid
to fellow
NatWest Group subsidiaries (51) - (51) (53) - (53) (44) - (44)
----------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Income excluding Asset
disposals and
OCA 135 4 139 136 2 138 33 (11) 22
Asset disposals/Strategic
risk reduction (4) (14) - (14) (2) - (2) (12) - (12)
Own credit adjustments (OCA) (18) - (18) 8 - 8 3 - 3
Total income 103 4 107 142 2 144 24 (11) 13
----------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
(1) A presentational change was made in Q1 2022 whereby
strategic costs are included within Other operating expenses and
not reported separately.
(2) Product performance includes gross income earned on a
NatWest group-wide basis, including amounts contributed to other
NatWest Group subsidiaries. Income including shared revenue, before
asset disposals and OCA includes revenue share from other NatWest
Group subsidiaries but before revenue share is paid to or
contributed to those subsidiaries.
(3) Capital Management Unit was set up in Q3 2020 to manage the
capital usage and optimisation across all parts of NatWest Markets.
The income shown here materially relates to legacy positions. Other
relates to income booked to the Central items & other operating
segment.
(4) Asset disposals/Strategic risk reduction relates to the
costs of exiting positions, which includes changes in carrying
value to align to the expected exit valuation, and the impact of
risk reduction transactions entered into as part of the
optimisation of the entity's capital usage.
- Net interest income was GBP29 million in Q4 2022 compared with
GBP33 million in Q3 2022 and GBP13 million in Q4 2021. Net interest
income largely represents interest income from lending activity and
capital hedges, offset by interest expense from the funding costs
of the business. The movement compared with Q4 2021 largely
reflects growth in lending activity during 2022.
- Non-interest income of GBP78 million in Q4 2022 decreased by
GBP33 million compared with GBP111 million in Q3 2022, largely due
to own credit adjustments of GBP(18) million in the current quarter
which reflected the tightening of credit spreads, and increased by
GBP78 million compared with nil in Q4 2021, largely reflecting
weaker performance in Fixed Income in the comparative period.
- Operating expenses of GBP301 million in Q4 2022 were up by
GBP14 million compared with GBP287 million in Q3 2022 and down by
GBP72 million compared with GBP373 million in Q4 2021. Litigation
and conduct costs of GBP47 million in Q4 2022 reflected ongoing
progress in closing legacy matters, and were up by GBP34 million
and GBP23 million respectively compared with Q3 2022 and Q4 2021.
Other operating expenses of GBP254 million decreased by GBP20
million compared with Q3 2022, largely due to one-off costs
recognised in the prior quarter, and decreased by GBP95 million
compared with Q4 2021, largely reflecting higher costs recognised
in the comparative period in relation to technology investment and
the refocusing of NWM Group.
- Tax credit of GBP147 million in Q4 2022 on operating loss
before tax of GBP192 million is higher than the expected tax credit
based on the UK corporation tax rate of 19%. There is non-taxable
income from the RPI uplift on UK Government index linked gilts and
a tax credit for the banking surcharge, partially offset by a
decrease in the carrying value of the deferred tax asset in respect
of losses.
- NatWest Markets operating loss before tax was GBP176 million
in Q4 2022, compared with GBP126 million in Q3 2022 and GBP307
million in Q4 2021. Income excluding asset disposals and own credit
adjustments of GBP135 million was down by GBP1 million compared
with GBP136 million in Q3 2022, and up by GBP102 million compared
with GBP33 million in Q4 2021, largely reflecting weaker
performance in Fixed Income in the comparative period. Operating
expenses of GBP281 million in Q4 2022 were GBP18 million higher
than GBP263 million in Q3 2022, largely due to a transfer in the
current quarter of certain year-to-date costs previously recorded
in Central items, and GBP66 million lower than GBP347 million in Q4
2021, largely reflecting higher costs recognised in the comparative
period in relation to technology investment and the refocusing of
NWM Group.
- Central items & other operating loss before tax was GBP16
million, compared with GBP22 million in Q3 2022 and GBP37 million
in Q4 2021. Litigation and conduct costs of GBP37 million in Q4
2022 reflected ongoing progress in closing legacy matters, and were
up by GBP30 million compared with GBP7 million in Q3 2022 and up by
GBP13 million compared with GBP24 million in Q4 2021. Other
operating expenses of GBP17 million credit in Q4 2022 primarily
reflected the transfer to NatWest Markets described above.
Business performance summary continued
The table below presents a segmental analysis of key lines of
NWM Group's income statement for the year ended 31 December 2022.
Commentary refers to the table below as well as the consolidated
income statement shown on page 7.
Year ended
----------------------------------------------------
31 December 2022 31 December 2021
------------------------- -------------------------
Central Central
NatWest items NatWest items &
&
Markets other Total Markets other Total
Income statement GBPm GBPm GBPm GBPm GBPm GBPm
Net interest income 91 - 91 8 - 8
Non-interest income 601 (3) 598 401 (8) 393
--------------------------------- ------- ------- ------- ------- ------- -------
Total income 692 (3) 689 409 (8) 401
--------------------------------- ------- ------- ------- ------- ------- -------
Litigation and conduct costs (22) (58) (80) - 17 17
Other operating expenses
(1) (1,033) (15) (1,048) (1,157) (10) (1,167)
--------------------------------- ------- ------- ------- ------- ------- -------
Operating expenses (1,055) (73) (1,128) (1,157) 7 (1,150)
Operating loss before impairment
losses/releases (363) (76) (439) (748) (1) (749)
Impairment (losses)/releases (8) - (8) 35 - 35
--------------------------------- ------- ------- ------- ------- ------- -------
Operating loss before tax (371) (76) (447) (713) (1) (714)
Tax credit 183 223
--------------------------------- ------- ------- ------- ------- ------- -------
Loss for the year (264) (491)
--------------------------------- ------- ------- ------- ------- ------- -------
Income (2)
Fixed Income 40 - 40 (64) - (64)
Currencies 513 - 513 427 - 427
Capital Markets 398 - 398 336 - 336
Capital Management Unit &
other (3) (62) (3) (65) (35) (8) (43)
--------------------------------- ------- ------- ------- ------- ------- -------
Income including shared
revenue,
before asset disposals and
OCA 889 (3) 886 664 (8) 656
Revenue shared with or paid
to fellow
NatWest Group subsidiaries (191) - (191) (197) - (197)
--------------------------------- ------- ------- ------- ------- ------- -------
Income excluding Asset disposals
and OCA 698 (3) 695 467 (8) 459
Asset disposals/Strategic
risk reduction (4) (48) - (48) (64) - (64)
Own credit adjustments (OCA) 42 - 42 6 - 6
Total income 692 (3) 689 409 (8) 401
--------------------------------- ------- ------- ------- ------- ------- -------
(1) A presentational change was made in Q1 2022 whereby
strategic costs are included within Other operating expenses and
not reported separately.
(2) Product performance includes gross income earned on a
NatWest group-wide basis, including amounts contributed to other
NatWest Group subsidiaries. Income including shared revenue, before
asset disposals and OCA includes revenue share from other NatWest
Group subsidiaries but before revenue share is paid to or
contributed to those subsidiaries.
(3) Capital Management Unit was set up in Q3 2020 to manage the
capital usage and optimisation across all parts of NatWest Markets.
The income shown here materially relates to legacy positions. Other
relates to income booked to the Central items & other operating
segment.
(4) Asset disposals/Strategic risk reduction relates to the
costs of exiting positions, which includes changes in carrying
value to align to the expected exit valuation, and the impact of
risk reduction transactions entered into as part of the
optimisation of the entity's capital usage.
- Net interest income was GBP91 million for 2022, compared with GBP8
million in 2021. Net interest income largely represents interest
income from lending activity and capital hedges, offset by interest
expense from the funding costs of the business. The movement compared
with the prior year largely reflected growth in lending and reduced
funding costs for the business driven by the ongoing repayment of
legacy debt .
- Non-interest income increased by GBP205 million to GBP598 million,
compared with GBP393 million in 2021. The increase was largely driven
by Fixed Income performance, which continued to be impacted by challenging
market conditions but improved compared with the prior year, and
stronger performances in Currencies, as FX volatility heightened
during the current year, and in Capital Markets. Own credit adjustments
were GBP42 million for 2022, reflecting the widening of credit spreads,
compared with GBP6 million in 2021.
- Operating expenses of GBP1,128 million in the current year were GBP22
million lower than GBP1,150 million in 2021. Litigation and conduct
costs of GBP80 million reflected ongoing progress in closing legacy
matters, and were up by GBP97 million compared with GBP17 million
credit in 2021. Other operating expenses of GBP1,048 million were
GBP119 million lower than GBP1,167 million in 2021, largely reflecting
higher costs recognised in the prior year in relation to technology
investment and the refocusing of NWM Group .
- Impairment losses were GBP8 million in 2022, compared with releases
of GBP35 million in 2021 which were largely driven by credit improvements
and releases on individual exposures.
- Tax credit of GBP183 million on operating loss before tax of GBP447
million is higher than the expected tax credit based on the UK corporation
tax rate of 19%. There is non-taxable income from the RPI uplift
on UK Government index linked gilts and a tax credit for the banking
surcharge, partially offset by a decrease in the carrying value of
the deferred tax asset in respect of losses.
- NatWest Markets operating loss before tax was GBP371 million compared
with a loss of GBP713 million in 2021. Income excluding asset disposals
and own credit adjustments of GBP698 million was GBP231 million higher
than GBP467 million in 2021, largely reflecting stronger performance
across the product suite in the current year. Operating expenses
of GBP1,055 million were GBP102 million lower than GBP1,157 million
in 2021, largely reflecting higher costs recognised in the prior
year in relation to technology investment and the refocusing of NWM
Group.
- Central items & other operating loss before tax was GBP76 million
compared with a loss of GBP1 million in 2021. Litigation and conduct
costs of GBP58 million reflected ongoing progress in closing legacy
matters, and were up by GBP75 million from GBP17 million credit in
2021 .
Business performance summary continued
Balance sheet profile as at 31 December 2022
NWM Group's balance sheet profile is summarised below.
Commentary refers to the tables below as well as the consolidated
balance sheet on page 8.
Assets Liabilities
------------------------------------------- ------------------------------------------
2022 2021 2022 2021
GBPbn GBPbn GBPbn GBPbn
Cash and balances at
central banks 17.0 16.6
Securities 9.9 25.0 9.5 25.0 Short positions
Reverse repos (1) 21.5 20.7 23.7 19.4 Repos (2)
Derivative cash collateral Derivative cash collateral
posted (3) 12.7 12.0 17.7 17.6 received (4)
Other trading assets 1.2 1.4 1.9 2.5 Other trading liabilities
----------------------------- ----- ----- ----- ----- ----------------------------
Total trading assets 45.3 59.1 52.8 64.5 Total trading liabilities
Deposits - amortised
Loans - amortised cost 11.3 8.4 6.7 4.1 cost
Settlement balances 2.6 2.1 2.0 2.1 Settlement balances
Amounts due from holding Amounts due to holding
company company
and fellow subsidiaries 0.7 1.5 6.2 6.1 and fellow subsidiaries
Other financial assets 11.9 8.8 21.1 19.3 Other financial liabilities
Other assets 0.8 0.9 0.8 1.0 Other liabilities
----------------------------- ----- ----- ----- ----- ----------------------------
Liabilities excluding
Funded assets 89.6 97.4 89.6 97.1 derivatives
Derivative assets 100.2 105.6 93.6 98.5 Derivative liabilities
----------------------------- ----- ----- ----- ----- ----------------------------
Total assets 189.8 203.0 183.2 195.6 Total liabilities
----- ----- ----- -----
of which:
23.5 21.1 wholesale funding (5)
short-term wholesale
7.7 9.2 funding (5)
Net derivative assets 3.5 3.6 5.6 2.9 Net derivative liabilities
----------------------------- ----- ----- ----- ----- ----------------------------
(1) Comprises bank reverse repos of GBP4.6 billion (2021 -
GBP3.9 billion) and customer reverse repos of GBP16.9 billion (2021
- GBP16.8 billion).
(2) Comprises bank repos of GBP1.6 billion (2021 - GBP0.8
billion) and customer repos of GBP22.1 billion (2021 - GBP18.6
billion).
(3) Comprises derivative cash collateral posted relating to
banks of GBP4.6 billion (2021 - GBP4.3 billion) and customers of
GBP8.1 billion (2021 - GBP7.7 billion).
(4) Comprises derivative cash collateral received relating to
banks of GBP7.5 billion (2021 - GBP8.1 billion) and customers of
GBP10.2 billion (2021 - GBP9.5 billion).
(5) Predominantly comprises bank deposits (excluding repos),
debt securities in issue and third-party subordinated
liabilities.
- Total assets and liabilities decreased by GBP13.2 billion and
GBP12.4 billion to GBP189.8 billion and GBP183.2 billion
respectively at 31 December 2022, compared with GBP203.0 billion
and GBP195.6 billion at 31 December 2021. The decreases were
primarily driven by reductions in trading assets and liabilities,
largely reflecting risk management activity undertaken in the
current year, in addition to lower derivative fair values, largely
driven by market volatility in 2022 including increases in interest
rates across major currencies and the strengthening of USD.
- Trading assets which primarily relate to client-led activity
as well as derivative cash collateral posted, decreased by GBP13.8
billion to GBP45.3 billion at 31 December 2022 from GBP59.1 billion
at 31 December 2021, mainly driven by a reduction in securities
reflecting risk management activity undertaken in the current year,
partially offset by increases in derivative cash collateral posted
and reverse repos. Trading liabilities decreased by GBP11.7 billion
to GBP52.8 billion at 31 December 2022 from GBP64.5 billion at 31
December 2021, mainly driven by a reduction in short positions
reflecting risk management activity undertaken in the current year,
partially offset by an increase in repos.
- Derivative assets and derivative liabilities were down by
GBP5.4 billion to GBP100.2 billion and by GBP4.9 billion to GBP93.6
billion respectively compared with year end 2021. The decreases in
mark-to-market values were largely driven by market volatility in
2022 including increases in interest rates across major currencies
and the strengthening of USD.
- Loans to customers - amortised cost increased by GBP2.7
billion to GBP10.2 billion at 31 December 2022, mainly driven by
new lending in the current year.
- Other financial assets increased by GBP3.1 billion to GBP11.9
billion, largely reflecting an increase in held-to-collect
securities purchased to support customer primary issuance.
- Other financial liabilities increased to GBP21.1 billion from
GBP19.3 billion at 31 December 2021, driven by new issuance
partially offset by maturities, and includes GBP16.4 billion of
medium-term notes issued.
Capital, liquidity and funding risk
Capital, RWAs and leverage
Capital resources, RWAs and leverage based on the PRA
transitional arrangements for NWM Plc are set out below. Regulatory
capital is monitored and reported at legal entity level for large
subsidiaries of NatWest Group.
31 December 30 September 31 December
2022 2022 2021
Capital adequacy ratios % % %
CET1 17.2 14.9 17.9
Tier 1 20.4 17.7 21.0
Total 25.7 22.3 25.9
Total MREL 40.4 35.3 42.1
------------------------- ----------- ------------ -----------
Capital (1) GBPm GBPm GBPm
CET1 (2) 3,682 3,714 4,072
Tier 1 4,361 4,393 4,755
Total 5,502 5,538 5,870
Total MREL (3) 8,652 8,787 9,555
------------------------- ----------- ------------ -----------
Risk-weighted assets
Credit risk 7,110 7,736 6,878
Counterparty credit risk 5,682 7,538 6,854
Market risk 7,152 8,121 6,934
Operational risk 1,478 1,478 2,020
------------------------- ----------- ------------ -----------
Total RWAs 21,422 24,873 22,686
------------------------- ----------- ------------ -----------
(1) NWM Plc's total capital ratio requirement is 11%, comprising
the minimum capital requirement of 8%, supplemented with the
capital conservation buffer of 2.5% and the institution specific
countercyclical buffer ('CCyB') of 0.5%. The minimum CET1 ratio is
7.5%, including the minimum capital requirement of 4.5%. The CCyB
is based on the weighted average of NWM Plc's geographical
exposures.
(2) CET1 includes GBP250 million foreseeable ordinary dividend
deduction in December 2021. There is no foreseeable ordinary
dividend deduction in December 2022 or September 2022.
(3) Includes senior debt instruments issued to NatWest Group plc
with a regulatory value of GBP3.2 billion (30 September 2022 -
GBP3.2 billion, 31 December 2021 - GBP3.7 billion).
Leverage
The leverage ratio for December and September 2022 has been
calculated in accordance with the Leverage Ratio (CRR) part of the
PRA rulebook. The prior year comparative reflects the previous CRR
framework which was applicable prior to 1 January 2022.
31 December 30 September 31 December
2022 2022 2021
----------------------------- ----------- ------------ -----------
Leverage exposure (GBPm) (4) 81,083 99,515 110,603
Tier 1 capital (GBPm) 4,361 4,393 4,755
Leverage ratio (%) (5) 5.4 4.4 4.3
----------------------------- ----------- ------------ -----------
(4) Leverage exposure is broadly aligned to the accounting value
of on and off-balance sheet exposures albeit subject to specific
adjustments for derivatives, securities financing positions and
off-balance sheet exposures.
(5) Following the Financial Policy Committee's planned review of
the UK's leverage ratio framework, the PRA has introduced changes
to the framework from 1 January 2022. The leverage ratio for 31
December 2022 and 30 September 2022 in the above table reflects the
UK leverage ratio for NWM Plc, as per the new framework. As at 31
December 2021, the UK leverage ratio was 4.8%, which was calculated
under the prior year's PRA UK leverage methodology.
Liquidity and funding
31 December 30 September 31 December
2022 2022 2021
------------------------------------- ----------- ------------ -----------
Liquidity coverage ratio (LCR) (%) 253 199 205
Liquidity portfolio (GBPbn) 18.6 18.0 16.1
Total wholesale funding (GBPbn) (1) 23.5 22.9 21.1
Total funding including repo (GBPbn) 77.0 84.2 68.8
------------------------------------- ----------- ------------ -----------
(1) Predominantly comprises bank deposits (excluding repos),
debt securities in issue and third-party subordinated
liabilities.
Consolidated income statement for the period ended 31 December
2022
Year ended Quarter ended
------------------------ --------------------------------------
31 December 31 December 31 December 30 September 31 December
2022 2021 2022 2022 2021
GBPm GBPm GBPm GBPm GBPm
Interest receivable 745 343 270 232 85
Interest payable (654) (335) (241) (199) (72)
--------------------------------- ----------- ----------- ------------ -----------
Net interest income 91 8 29 33 13
-----------
Fees and commissions receivable 349 262 89 80 68
Fees and commissions payable (158) (104) (32) (49) (23)
Income from trading activities 389 263 37 56 (37)
Other operating income 18 (28) (16) 24 (8)
--------------------------------- ----------- ----------- ------------ -----------
Non-interest income 598 393 78 111 -
-----------
Total income 689 401 107 144 13
--------------------------------- ----------- ----------- ----------- ------------ -----------
Staff costs (400) (498) (92) (95) (128)
Premises and equipment (60) (110) (19) (16) (51)
Other administrative expenses (652) (522) (187) (174) (189)
Depreciation and amortisation (16) (20) (3) (2) (5)
-----------
Operating expenses (1,128) (1,150) (301) (287) (373)
--------------------------------- ----------- ----------- ----------- ------------ -----------
Operating loss before impairment
losses/releases (439) (749) (194) (143) (360)
Impairment (losses)/releases (8) 35 2 (5) 16
--------------------------------- -----------
Operating loss before tax (447) (714) (192) (148) (344)
Tax credit 183 223 147 15 136
--------------------------------- ----------- ----------- ------------ -----------
Loss for the period (264) (491) (45) (133) (208)
--------------------------------- ----------- ----------- ----------- ------------ -----------
Attributable to:
Ordinary shareholders (335) (593) (64) (151) (224)
Paid-in equity holders 70 63 18 19 16
Non-controlling interests 1 39 1 (1) -
--------------------------------- -----------
(264) (491) (45) (133) (208)
--------------------------------- ----------- ----------- ----------- ------------ -----------
Consolidated statement of comprehensive income for the year
ended
31 December 2022
Year ended Quarter ended
------------------------ --------------------------------------
31 December 31 December 31 December 30 September 31 December
2022 2021 2022 2022 2021
GBPm GBPm GBPm GBPm GBPm
Loss for the period (264) (491) (45) (133) (208)
------------------------------------------- ----------- ----------- ----------- ------------ -----------
Items that do not qualify for
reclassification
Remeasurement of retirement benefit
schemes (68) 36 (67) - 36
Change in fair value of credit
in financial liabilities 50 (29) (52) 11 -
designated at FVTPL
FVOCI financial assets (2) 2 1 (4) 4
Tax 32 (10) 42 (1) (15)
12 (1) (76) 6 25
------------------------------------------- ----------- ----------- ----------- ------------ -----------
Items that do qualify for reclassification
FVOCI financial assets (31) (2) 4 (18) 1
Cash flow hedges (475) (206) 100 (321) (49)
Currency translation 245 (124) (91) 166 (31)
Tax 142 45 (32) 96 24
(119) (287) (19) (77) (55)
------------------------------------------- ----------- ----------- ----------- ------------ -----------
Other comprehensive loss after
tax (107) (288) (95) (71) (30)
Total comprehensive loss for
the period (371) (779) (140) (204) (238)
Attributable to:
Ordinary shareholders (442) (885) (159) (223) (254)
Paid-in equity holders 70 63 18 19 16
Non-controlling interests 1 43 1 - -
(371) (779) (140) (204) (238)
------------------------------------------- ----------- ----------- ----------- ------------ -----------
Consolidated balance sheet as at 31 December 2022
31 December 30 September 31 December
2022 2022 2021
GBPm GBPm GBPm
Assets
Cash and balances at central banks 17,007 15,581 16,645
Trading assets 45,291 57,725 59,101
Derivatives 100,154 141,636 105,550
Settlement balances 2,558 7,429 2,139
Loans to banks - amortised cost 1,146 2,004 962
Loans to customers - amortised cost 10,171 10,082 7,471
Amounts due from holding companies and fellow
subsidiaries 740 863 1,479
Other financial assets 11,870 11,818 8,786
Other assets 832 887 878
--------------------------------------------------------- ----------- ------------ -----------
Total assets 189,769 248,025 203,011
--------------------------------------------------------- -----------
Liabilities
Bank deposits 3,069 3,904 1,808
Customer deposits 3,614 4,146 2,268
Amounts due to holding companies and fellow subsidiaries 6,217 6,422 6,126
Settlement balances 2,010 6,930 2,068
Trading liabilities 52,792 64,481 64,482
Derivatives 93,585 134,950 98,497
Other financial liabilities 21,103 19,686 19,255
Other liabilities 816 793 1,055
--------------------------------------------------------- ----------- ------------ -----------
Total liabilities 183,206 241,312 195,559
--------------------------------------------------------- -----------
Equity
--------------------------------------------------------- ----------- ------------ -----------
Owners' equity 6,565 6,716 7,455
Non-controlling interests (2) (3) (3)
Total equity 6,563 6,713 7,452
--------------------------------------------------------- ----------- ------------ -----------
Total liabilities and equity 189,769 248,025 203,011
--------------------------------------------------------- ----------- ------------ -----------
Consolidated statement of changes in equity for the year ended
31 December 2022
Year ended Quarter ended
------------------------ --------------------------------------
31 December 31 December 31 December 30 September 31 December
2022 2021 2022 2022 2021
GBPm GBPm GBPm GBPm GBPm
Called up share capital - at 1
January and 31 December 400 400 400 400 400
------------------------------------- ----------- ----------- ----------- ------------ -----------
Share premium account - at 1 January 1,946 1,759 1,946 1,946 1,946
Redemption of Preference Shares - 187 - - -
At 31 December 1,946 1,946 1,946 1,946 1,946
------------------------------------- ----------- ----------- ----------- ------------ -----------
Paid-in equity - at 1 January
and 31 December 904 904 904 904 904
------------------------------------- ----------- ----------- ----------- ------------ -----------
FVOCI reserve - at 1 January 33 34 - 15 29
Unrealised (losses)/gains (44) (1) 1 (22) 5
Realised losses 5 1 4 - -
Tax 9 (1) (2) 7 (1)
At 31 December 3 33 3 - 33
------------------------------------- ----------- ----------- ----------- ------------ -----------
Cash flow hedging reserve - at
1 January 47 201 (363) (133) 71
Amount recognised in equity (424) (207) 120 (306) (45)
Amount transferred from equity
to earnings (51) 1 (20) (15) (4)
Tax 134 52 (31) 91 25
At 31 December (294) 47 (294) (363) 47
------------------------------------- ----------- ----------- ----------- ------------ -----------
Foreign exchange reserve - at
1 January (13) 121 323 158 18
Retranslation of net assets 325 (158) (97) 209 (49)
Foreign currency (losses)/gains
on hedges of net assets (75) 20 7 (40) 8
Tax - (6) - - -
Recycled to profit or loss on
disposal of businesses (5) 10 (1) (4) 10
At 31 December 232 (13) 232 323 (13)
------------------------------------- ----------- ----------- ----------- ------------ -----------
Retained earnings - at 1 January 4,138 5,969 3,506 3,828 4,583
Loss attributable to ordinary
shareholders
and other equity owners (265) (530) (46) (132) (208)
Ordinary dividends paid (430) (1,000) (180) (250)
Paid-in equity dividends paid (70) (63) (18) (19) (16)
Redemption of preference shares - (188) - - -
Remeasurement of retirement benefit
schemes
- gross (68) 36 (67) - 36
- tax 23 (13) 23 - (15)
Realised gains/(losses) on FVOCI
equity shares
- gross 6 - - - -
- tax 10 - 12 (2) -
Changes in fair value of credit
in financial liabilities
designated at FVTPL
- gross 50 (29) (52) 11 -
- tax (2) 3 8 (1) -
Share-based payments
- gross (18) (51) 7 1 5
- tax - 4 1 - 3
At 31 December 3,374 4,138 3,374 3,506 4,138
------------------------------------- ----------- ----------- ----------- ------------ -----------
Consolidated statement of changes in equity for the period ended
31 December 2022
Year ended Quarter ended
------------------------ --------------------------------------
31 December 31 December 31 December 30 September 31 December
2022 2021 2022 2022 2021
GBPm GBPm GBPm GBPm GBPm
Owners' equity at 31 December 6,565 7,455 6,565 6,716 7,455
--------------------------------- ----------- ----------- ----------- ------------ -----------
Non-controlling interests - at
1 January (3) (46) (3) (3) (3)
Currency translation adjustments
and other movements - 4 - 1 -
Profit/(loss) attributable to
non-controlling interests 1 39 1 (1) -
At 31 December (2) (3) (2) (3) (3)
--------------------------------- ----------- ----------- ----------- ------------ -----------
Total equity at 31 December 6,563 7,452 6,563 6,713 7,452
Attributable to:
Ordinary shareholders 5,661 6,551 5,661 5,812 6,551
Paid-in equity holders 904 904 904 904 904
Non-controlling interests (2) (3) (2) (3) (3)
--------------------------------- ----------- ----------- ----------- ------------ -----------
6,563 7,452 6,563 6,713 7,452
--------------------------------- ----------- ----------- ----------- ------------ -----------
Consolidated cash flow statement for the year ended 31 December
2022
31 December 31 December
2022 2021
GBPm GBPm
Operating activities
Operating loss before tax (447) (714)
Adjustments for non-cash items (488) 725
------------------------------------------------------ ----------- -----------
Net cash flows from trading activities (935) 11
Changes in operating assets and liabilities 6,293 2,460
------------------------------------------------------ ----------- -----------
Net cash flows from operating activities before tax 5,358 2,471
Income taxes received 135 28
Net cash flows from operating activities 5,493 2,499
Net cash flows from investing activities (2,905) 40
Net cash flows from financing activities (2,100) (2,675)
Effects of exchange rate on cash and cash equivalents 1,090 (994)
------------------------------------------------------ ----------- -----------
Net increase/(decrease) in cash and cash equivalents 1,578 (1,130)
Cash and cash equivalents at 1 January 25,250 26,380
Cash and cash equivalents at 31 December 26,828 25,250
------------------------------------------------------ ----------- -----------
Notes
1. Presentation of condensed consolidated financial
statements
The condensed consolidated financial statements should be read
in conjunction with NatWest Markets Plc's 2022 Annual Report and
Accounts. The critical and significant accounting policies are the
same as those applied in the consolidated financial statements.
The directors have prepared the condensed consolidated financial
statements on a going concern basis after assessing the principal
risks, forecasts, projections and other relevant evidence over the
twelve months from the date they are approved.
2. Critical accounting policies and key sources of estimation
uncertainty
The critical accounting policies and judgements are noted in
NatWest Markets Plc's 2022 Annual Report and Accounts.
Information used for significant estimates
Key financial estimates are based on management's latest
five-year revenue and cost forecasts. Measurement of deferred tax
and expected credit losses are highly sensitive to reasonably
possible changes in those anticipated conditions. Changes in
judgements and assumptions could result in a material adjustment to
those estimates in future reporting periods. (Refer to the Risk
factors in NatWest Markets Plc's 2022 Annual Report and
Accounts).
Notes
3. Trading assets and liabilities
Trading assets and liabilities comprise assets and liabilities
held at fair value in trading portfolios.
31 December 31 December
2022 2021
Assets GBPm GBPm
----------- -----------
Loans
- Reverse repos 21,537 20,742
- Collateral given 12,719 11,990
- other loans 1,113 1,414
-----------
Total loans 35,369 34,146
---------------------------------------- ----------- -----------
Securities
Central and local government
- UK 2,205 6,919
- US 2,345 3,329
- other 2,799 10,929
Financial institutions and Corporate 2,573 3,778
Total securities 9,922 24,955
---------------------------------------- ----------- -----------
Total 45,291 59,101
---------------------------------------- -----------
Liabilities
---------------------------------------- ----------- -----------
Deposits
- Repos 23,740 19,389
- Collateral received 17,663 17,619
- other deposits 1,068 1,536
Total deposits 42,471 38,544
---------------------------------------- ----------- -----------
Debt securities in issue 797 974
Short positions 9,524 24,964
---------------------------------------- -----------
Total 52,792 64,482
---------------------------------------- ----------- -----------
4. Other financial liabilities
31 December 31 December
2022 2021
GBPm GBPm
-------------------------------------------------------- ----------- -----------
Customer deposits - designated as at fair value through
profit or loss 1,050 568
Debt securities in issue
- Medium term notes 16,418 12,430
- Commercial paper and certificates of deposit 3,169 5,294
Subordinated liabilities
- Designated as at fair value through profit or loss 345 703
- Amortised cost 121 260
-------------------------------------------------------- -----------
Total 21,103 19,255
-------------------------------------------------------- ----------- -----------
5. Amounts due to holding company and fellow subsidiaries
31 December 31 December
2022 2021
Liabilities GBPm GBPm
------------------------------------------------------- ----------- -----------
Bank deposits - amortised cost 108 120
Customer deposits - amortised cost 51 155
Trading liabilities 1,129 348
Settlement balances 26 -
Other financial liabilities - subordinated liabilities 1,519 1,464
MREL instruments issued to NatWest Group plc 3,173 3,858
Other liabilities 211 181
Total 6,217 6,126
------------------------------------------------------- ----------- -----------
Notes
6. Related parties
UK Government
The UK Government, bodies controlled or jointly controlled by
the UK Government and bodies over which it has significant
influence are related parties of NWM Group. NWM Group enters into
transactions with many of these bodies. NWM 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, NWM 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, NWM 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.
(b) In accordance with IAS 24, transactions or balances between
NWM Group entities that have been eliminated on consolidation are
not reported.
(c) NWM Group is recharged from other NatWest Group entities,
mainly NWB Plc which provides the majority of shared services
(including technology) and operational processes.
(d) The primary financial statements include transactions and
balances with its subsidiaries which have been further disclosed in
the relevant parent company notes.
Full details of NWM Group's related party transactions for year
ended 31 December 2022 are included in NatWest Markets Plc 2022
Annual Report and Accounts.
7. Litigation and regulatory matters
NWM Plc and certain members of NWM 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. Note 25 in
the NatWest Markets Plc 2022 Annual Report and Accounts, issued on
17 February 2023 and available at nwm.com (Note 25), discusses the
Matters in which NWM Group is currently involved and material
developments. Other than the Matters discussed in Note 25, no
member of NWM Group is or has been involved in governmental, legal,
or regulatory proceedings (including those which are pending or
threatened) that are expected to be material, individually or in
aggregate. Recent developments in the Matters identified in Note 25
that have occurred since the Q3 2022 Interim Management Statement
was issued on 28 October 2022, include, but are not limited to,
those set out below.
Litigation
FX litigation
Following the 2015 settlement of the primary foreign exchange
(FX) class action in the United States, some members of the
settlement class opted out of the settlement and, in 2018, filed
their own non-class complaint in the United States District Court
for the Southern District of New York (SDNY), against NWM Plc,
NatWest Markets Securities Inc. and other banks, asserting
antitrust claims. In April 2019, some of the claimants in that
opt-out case, as well as others, served proceedings in the High
Court of Justice of England and Wales, asserting competition claims
against NWM Plc and several other banks. The claim was transferred
from the High Court of Justice of England and Wales in December
2021 and registered in the UK Competition Appeal Tribunal (CAT) in
January 2022. In December 2022, NWM Plc reached an agreement in
principle, subject to documentation, to resolve both the SDNY and
CAT cases. The settlement amount to be paid by NWM Plc is covered
by an existing provision.
US Anti-Terrorism Act litigation
On 5 January 2023, the United States Court of Appeals for the
Second Circuit affirmed the United States District Court for the
Eastern District of New York's (EDNY) 2019 dismissal of the US
Anti-Terrorism Act case filed in November 2014 against NWM N.V. and
certain other financial institutions. The case concerns an alleged
conspiracy to assist Iran in transferring money to Hezbollah and
Iraqi terror cells that committed attacks in Iraq between 2003 and
2011. Similar cases, filed after the 2014 case that was the subject
of the appeal, remain pending in the EDNY and the SDNY.
1MDB litigation
A Malaysian court claim was served in Switzerland in November
2022 by 1MDB, a Sovereign Wealth Fund, in which Coutts & Co Ltd
was named, along with six others, as a defendant in respect of
losses allegedly incurred by 1MDB. It is claimed that Coutts &
Co Ltd is liable as a constructive trustee for having dishonestly
assisted the directors of 1MDB in the breach of their fiduciary
duties by failing (amongst other alleged claims) to undertake due
diligence in relation to a customer of Coutts & Co Ltd, through
which funds totalling c.US$1 billion were received and paid out
between 2009 and 2011. The claimant seeks the return of that amount
plus interest. Coutts & Co Ltd filed an application in January
2023 challenging the validity of service and the Malaysian court's
jurisdiction to hear the claim. Coutts & Co Ltd is a company
registered in Switzerland and is in wind-down following the
announced sale of its business assets in 2015.
Notes
8. Post balance sheet events
On 13 January 2023, NWM Plc issued a total of EUR1.5 billion of
notes under the EMTN programme in benchmark transactions maturing
in 2026 and 2028. There has been no adjustment to the 31 December
2022 statutory financial statements.
Other than as disclosed in the accounts, there have been no
other significant events between 31 December 2022 and the date of
approval of these accounts which would require a change to or
additional disclosure .
Non-IFRS financial measures
NWM Group prepares its financial statements in accordance with
IFRS as issued by the IASB which constitutes a body of generally
accepted accounting principles (GAAP). This document contains a
number of adjusted or alternative performance measures, also known
as non-GAAP or non-IFRS performance measures. These measures are
adjusted for certain items which management believe are not
representative of the underlying performance of the business and
which distort period-on-period comparison. These non-IFRS measures
are not measures within the scope of IFRS and are not a substitute
for IFRS measures. These measures include:
- Management analysis of operating expenses shows litigation and
conduct costs on a separate line on page 3 and 4. These amounts are
included within staff costs and other administrative expenses in
the statutory analysis. Other operating expenses excludes
litigation and conduct costs which are more volatile and may
distort comparisons with prior periods.
- Funded assets are defined as total assets less derivative
assets. This measure allows review of balance sheet trends
exclusive of the volatility associated with derivative fair
values.
- Management view of income by business including shared revenue
and before asset disposals/strategic risk reduction and own credit
adjustments. This measure is used to show underlying income
generation in NatWest Markets excluding the impact of disposal
losses and own credit adjustments.
- Revenue share refers to income generated by NatWest Markets
products from customers that have their primary relationship with
other NatWest Group subsidiaries, a proportion of which is shared
between NatWest Markets and those subsidiaries.
- Asset disposals/strategic risk reduction includes the costs of
exiting positions, which includes changes in carrying value to
align to the expected exit valuation, and the impact of risk
reduction transactions entered into as part of the optimisation of
the entity's capital usage.
- Own credit adjustments are applied to positions where it is
believed that the counterparties would consider NWM Group's
creditworthiness when pricing trades. The fair value of certain
issued debt securities, including structured notes, is adjusted to
reflect the changes in own credit spreads and the resulting gain or
loss recognised in income.
Operating expenses analysis
Year ended
--------------------------------------------------------------------
31 December 2022 31 December 2021
--------------------------------- ---------------------------------
Litigation Other Statutory Litigation Other Statutory
and conduct operating operating and conduct operating operating
Operating expenses costs expenses expenses costs expenses expenses
Staff costs 5 395 400 - 498 498
Premises and equipment - 60 60 - 110 110
Depreciation and amortisation - 16 16 - 20 20
Other administrative expenses 75 577 652 (17) 539 522
Total 80 1,048 1,128 (17) 1,167 1,150
------------------------------ ----------- --------- --------- ----------- --------- ---------
Quarter ended
---------------------------------
31 December 2022
---------------------------------
Litigation Other Statutory
and conduct operating operating
Operating expenses costs expenses expenses
Staff costs 2 90 92
Premises and equipment - 19 19
Depreciation and amortisation - 3 3
Other administrative expenses 45 142 187
Total 47 254 301
------------------------------ ----------- --------- --------- ----------- --------- ---------
Quarter ended
---------------------------------
30 September 2022
---------------------------------
Litigation Other Statutory
and conduct operating operating
Operating expenses costs expenses expenses
Staff costs - 95 95
Premises and equipment - 16 16
Depreciation and amortisation - 2 2
Other administrative expenses 13 161 174
Total 13 274 287
------------------------------ ----------- --------- --------- ----------- --------- ---------
Quarter ended
---------------------------------
31 December 2021
---------------------------------
Litigation Other Statutory
and conduct operating operating
Operating expenses costs expenses expenses
Staff costs - 128 128
Premises and equipment - 51 51
Depreciation and amortisation - 5 5
Other administrative expenses 24 165 189
Total 24 349 373
------------------------------ ----------- --------- --------- ----------- --------- ---------
Statement of directors' responsibilities
The responsibility statement below has been prepared in
connection with NWM Group's full Annual Report and Accounts for the
year ended 31 December 2022.
We, the directors listed below, confirm that to the best of our
knowledge:
- The financial statements, prepared in accordance with UK
adopted International Accounting Standards, International Financial
Reporting Standards (IFRS) as issued by the International
Accounting Standards Board and IFRS as adopted European Union, give
a true and fair view of the assets, liabilities, financial position
and profit or loss of NWM Plc and the undertakings included in the
consolidation taken as a whole; and
- The Strategic Report and Report of the directors
(incorporating the Financial review) include a fair review of the
development and performance of the business and the position of NWM
Plc, and the undertakings included in the consolidation taken as a
whole, together with a description of the principal risks and
uncertainties that they face.
By order of the Board
Frank Dangeard Robert Begbie Simon Lowe
Chairman Chief Executive Officer Chief Financial Officer
16 February 2023
Board of directors
Chairman Executive directors Non-executive directors
Frank Dangeard Robert Begbie Vivek Ahuja
Simon Lowe Tamsin Rowe
Anne Simpson
Presentation of information
NatWest Markets Plc ('NWM Plc') is a wholly owned subsidiary of
NatWest Group plc or 'the ultimate holding company'. The NatWest
Markets Group ('NWM Group') comprises NWM Plc and its subsidiary
and associated undertakings. The term 'NatWest Group' or 'we'
refers to NatWest Group plc and its subsidiary and associated
undertakings. The term 'NWH Group' refers to NatWest Holdings
Limited ('NWH') and its subsidiary and associated
undertakings. The term 'NatWest Bank Plc' or 'NWB Plc' refers to National Westminster Bank Plc.
NWM Plc publishes its financial statements in pounds sterling
('GBP' or 'sterling'). The abbreviations 'GBPm' and 'GBPbn'
represent millions and thousands of millions of pounds sterling
('GBP'), 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 'EUR' represents the 'euro', and the abbreviations
'EURm' and 'EURbn' represent millions and thousands of millions of
euros, respectively, and references to 'cents' represent cents in
the European Union ('EU').
NatWest Markets Group legal entity disclosures
There is a distinction between the disclosure of the NatWest
Markets operating segment performance in the NatWest Group's Annual
Report and Accounts and the NatWest Markets Group's results
presented in this document, with differences primarily as
follows:
- NatWest Markets Group's results include its part of the Central items & other segment.
- NatWest Group's 2022 results reports the NatWest Markets
segment excluding Central items & other.
MAR - Inside Information
This announcement contains information that qualified or may
have qualified as inside information for NatWest Markets 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 Markets Plc. This
announcement is made by Paul Pybus, Head of Investor Relations for
NatWest Markets 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 2022 will be filed with the Registrar of
Companies. The report of the auditor on those statutory accounts
was unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498(2) or
(3) of the Act.
Contact
Paul Pybus NatWest Group Investor Relations +44 (0) 7769161183
----------- --------------------------------- ------------------
Forward-looking statements
Cautionary statement regarding forward-looking statements
Certain sections in this document contain 'forward-looking
statements' as that term is defined in the United States Private
Securities Litigation Reform Act of 1995, such as statements that
include the words 'expect', 'estimate', 'project', 'anticipate',
'commit', 'believe', 'should', 'intend', 'will', 'plan', 'could',
'probability', 'risk', 'Value-at-Risk (VaR)', 'target', 'goal',
'objective', 'may', 'endeavour', 'outlook', 'optimistic',
'prospects' and similar expressions or variations on these
expressions. In particular, this document includes forward-looking
targets and guidance relating to financial performance measures,
such as income growth, operating expense, cost reductions,
impairment loss rates, balance sheet reduction, including the
reduction of RWAs, CET1 ratio (and key drivers of the CET1 ratio,
including timing, impact and details), Pillar 2 and other
regulatory buffer requirements and MREL and non-financial
performance measures, such as climate and ESG-related performance
ambitions, targets and metrics, including in relation to
initiatives to transition to a net zero economy, Climate and
Sustainable Funding and Financing (CSFF) and financed emissions. In
addition, this document includes forward-looking statements
relating, but not limited to: planned cost reductions, disposal
losses and strategic costs; implementation of NatWest Group's, NWM
Group's strategy and other strategic priorities (including in
relation to investment programmes relating to digital
transformation of their operations and services and inorganic
opportunities); the timing and outcome of litigation and government
and regulatory investigations; funding plans and credit risk
profile; managing its capital position; liquidity ratio;
portfolios; net interest margin; and drivers related thereto;
lending and income growth, product share and growth in target
segments; impairments and write-downs; restructuring and
remediation costs and charges; NWM Group's exposure to political
risk, economic assumptions and risk, climate, environmental and
sustainability risk, operational risk, conduct risk, financial
crime risk, cyber, data and IT risk and credit rating risk and to
various types of market risk, including interest rate risk, foreign
exchange rate risk and commodity and equity price risk; customer
experience, including our Net Promotor Score (NPS); employee
engagement and gender balance in leadership positions.
Limitations inherent to forward-looking statements
These statements are based on current plans, expectations,
estimates, targets and projections, and are subject to significant
inherent risks, uncertainties and other factors, both external and
relating to NatWest Group's and NWM Group's strategy or operations,
which may result in NWM Group being unable to achieve the current
plans, expectations, estimates, targets, projections and other
anticipated outcomes expressed or implied by such forward-looking
statements. In addition, certain of these disclosures are dependent
on choices relying on key model characteristics and assumptions and
are subject to various limitations, including assumptions and
estimates made by management. By their nature, certain of these
disclosures are only estimates and, as a result, actual future
results, gains or losses could differ materially from those that
have been estimated. Accordingly, undue reliance should not be
placed on these statements. The forward-looking statements
contained in this document speak only as of the date we make them
and we expressly disclaim any obligation or undertaking to update
or revise any forward-looking statements contained herein, whether
to reflect any change in our expectations with regard thereto, any
change in events, conditions or circumstances on which any such
statement is based, or otherwise, except to the extent legally
required.
Important factors that could affect the actual outcome of the
forward-looking statements
We caution you that a large number of important factors could
adversely affect our results or our ability to implement our
strategy, cause us to fail to meet our targets, predictions,
expectations and other anticipated outcomes or affect the accuracy
of forward-looking statements described in this document. These
factors include, but are not limited to, those set forth in the
risk factors and the other uncertainties described in NatWest
Markets Plc's Annual Report and its other public filings. The
principal risks and uncertainties that could adversely NWM Group's
future results, its financial condition and/or prospects and cause
them to be materially different from what is forecast or expected,
include, but are not limited to: economic and political risk
(including in respect of: economic and political risks and
uncertainties in the UK and global markets, including as a result
of high inflation and rising interest rates, supply chain
disruption, and the Russian invasion of Ukraine; uncertainty
regarding the effects of Brexit; changes in interest rates and
foreign currency exchange rates; and HM Treasury's ownership of
NatWest Group plc); strategic risk (including in respect of:
NatWest Group's purpose-led strategy and NatWest Group's recent
creation of its Commercial & Institutional business segment (of
which NWM Group forms part); financial resilience risk (including
in respect of: NWM Group's ability to meet targets; prudential
regulatory requirements for capital and MREL; funding and liquidity
risk; changes in the credit ratings; the competitive environment;
the requirements of regulatory stress tests; counterparty risk;
model risk; sensitivity to accounting policies, judgments,
assumptions and estimates; changes in applicable accounting
standards; the application of UK statutory stabilisation or
resolution powers; and the adequacy of NatWest Group's resolution
plans); climate and sustainability risk (including in respect of:
risks relating to climate change and the transitioning to a net
zero economy; the implementation of NatWest Group's and NWM Group's
climate change strategy and climate change resilient systems,
controls and procedures; climate-related data and model risk; the
failure to adapt to emerging climate, environmental and
sustainability risks and opportunities; changes in ESG ratings;
increasing levels of climate, environmental and sustainability
related regulation and oversight; and climate, environmental and
sustainability related litigation, enforcement proceedings and
investigations); operational and IT resilience risk (including in
respect of: operational risks (including reliance on third party
suppliers); cyberattacks; the accuracy and effective use of data;
complex IT systems; attracting, retaining and developing senior
management and skilled personnel; NWM Group's risk management
framework; and reputational risk); and legal, regulatory and
conduct risk (including in respect of: the impact of substantial
regulation and oversight; compliance with regulatory requirements;
the outcome of legal, regulatory and governmental actions and
investigations; the transition of LIBOR other IBOR rates to
replacement risk-free rates;) and changes in tax legislation or
failure to generate future taxable profits).
Forward-looking statements continued
Climate and ESG disclosures
Climate and ESG disclosures in this document are not measures
within the scope of International Financial Reporting Standards
('IFRS'), use a greater number and level of judgements, assumptions
and estimates, including with respect to the classification of
climate and sustainable funding and financing activities, than our
reporting of historical financial information in accordance with
IFRS. These judgements, assumptions and estimates are highly likely
to change over time, and, when coupled with the longer time frames
used in these disclosures, make any assessment of materiality
inherently uncertain. In addition, our climate risk analysis, net
zero strategy, including the implementation of our climate
transition plan, remain under development, and the data underlying
our analysis and strategy remain subject to evolution over time.
The process we have adopted to define, gather and report data on
our performance on climate and ESG measures is not subject to the
formal processes adopted for financial reporting in accordance with
IFRS and there are currently limited industry standards or globally
recognised established practices for measuring and defining climate
and ESG related metrics. As a result, we expect that certain
climate and ESG disclosures made in this document are likely to be
amended, updated, recalculated or restated in the future. Please
also refer to the cautionary statement in the section entitled
'Climate-related and other forward-looking statements and metrics'
of the NatWest Group 2022 Climate-related Disclosures Report.
Cautionary statement regarding Non-IFRS financial measures and
APMs
NWM Group prepares its financial statements in accordance with
generally accepted accounting principles (GAAP). This document may
contain financial measures and ratios not specifically defined
under GAAP or IFRS ('Non-IFRS') and/or alternative performance
measures ('APMs') as defined in European Securities and Markets
Authority ('ESMA') guidelines. APMs are adjusted for notable and
other defined items which management believes are not
representative of the underlying performance of the business and
which distort period-on-period comparison. Non-IFRS measures
provide users of the financial statements with a consistent basis
for comparing business performance between financial periods and
information on elements of performance that are one-off in nature.
Any Non-IFRS measures and/or APMs included in this document, are
not measures within the scope of IFRS, are based on a number of
assumptions that are subject to uncertainties and change, and are
not a substitute for IFRS measures.
The information, statements and opinions contained in this
document do not constitute a public offer under any applicable
legislation or an offer to sell or a solicitation of an offer to
buy any securities or financial instruments or any advice or
recommendation with respect to such securities or other financial
instruments.
Legal Entity Identifier: RR3QWICWWIPCS8A4S074
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END
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