NatWest Group Plc: Half-Year 2024 Financial Summary
Business Context and Reporting Period
This Form 6-K filing reports the unaudited condensed consolidated financial results for NatWest Group Plc for the six-month period ended 30 June 2024. The results were approved by the Board on 25 July 2024 and announced on 26 July 2024. The Group operates primarily in the UK and Ireland across Retail Banking, Private Banking, and Commercial & Institutional segments.
Key Financial Metrics
| Metric | Half Year 2024 (£m) | Half Year 2023 (£m) |
|---|---|---|
| Total Income | 7,134 | 7,727 |
| Net Interest Income | 5,408 | 5,726 |
| Non-Interest Income | 1,726 | 2,001 |
| Operating Expenses | (4,057) | (3,915) |
| Impairment Losses | (48) | (223) |
| Operating Profit Before Tax | 3,029 | 3,589 |
| Profit for the Period | 2,239 | 2,420 |
| Profit Attributable to Ordinary Shareholders | 2,099 | 2,299 |
| Basic EPS (Continuing Ops) | 24.1p | 25.4p |
| Net Cash from Operating Activities | 14,072 | (12,393) |
| Total Assets | 690,338 | 692,673 |
| Total Equity | 37,563 | 37,188 |
Material Changes vs. Prior Period
- Revenue Decline: Total income decreased by 7.7% to £7.134 billion, driven by a 5.6% drop in net interest income and a 13.7% decline in non-interest income. The prior year included a one-off £305 million FX recycling gain from a capital repayment by UBIDAC.
- Improved Credit Costs: Impairment losses significantly decreased to £48 million from £223 million in the prior year, reflecting a release of provisions in Stage 1 assets.
- Profitability: Profit for the period fell 7.5% to £2.239 billion. Operating profit before tax declined 15.6% to £3.029 billion, impacted by lower income and a 3.6% increase in operating expenses.
- Cash Flow: Net cash flows from operating activities turned strongly positive at £14.072 billion, compared to an outflow of £12.393 billion in the prior year, largely due to changes in operating assets and liabilities.
- Shareholder Returns: The Group announced an interim dividend of 6 pence per share (£500 million total). HM Treasury's shareholding fell below 20% in July 2024, meaning the UK Government is no longer the controlling shareholder.
Guidance, Outlook, and Risks
- Acquisitions: NatWest agreed to acquire Sainsbury's Bank retail assets (expected completion H1 2025) and a £2.5 billion prime mortgage portfolio from Metro Bank (expected completion H2 2024).
- Capital Management: The Group continues its on-market share buyback programme, repurchasing 161.9 million shares in the half-year and an additional 12.5 million post-period end.
- Legal and Regulatory Risks: Significant ongoing litigation includes USD LIBOR, FX, and Swaps antitrust matters. Several settlements were reached in 2024 (LIBOR, FX, Swaps, Government Securities), with amounts covered by existing provisions. A trial regarding FDIC claims on LIBOR is anticipated in Q1 2026.
- Operational Risks: The Group faces risks related to cyberattacks, IT resilience, and the execution of its strategy to withdraw from the Republic of Ireland.
- Outlook: Management notes that changes in interest rates and economic conditions will continue to affect results. The Group expects high regulatory intervention in the foreseeable future.
Investor Verification Checklist
- One-off Items: Verify the impact of the £305 million FX recycling gain in the 2023 comparative period which inflated prior-year income.
- Provision Coverage: Review the adequacy of provisions for ongoing litigation (LIBOR, FX, Swaps) and regulatory matters, noting that while settlements are covered, future outflows remain uncertain.
- Acquisition Integration: Monitor the regulatory approval and integration progress of the Sainsbury's Bank and Metro Bank mortgage acquisitions.
- HM Treasury Stake: Confirm the implications of HM Treasury's stake falling below 20% on future capital distributions and governance.
- Cost Base: Assess the trajectory of operating expenses, specifically the £101 million in litigation and conduct costs, to determine underlying cost efficiency.