NatWest Group Plc: 2024 Full Year Results Summary
Business Context and Reporting Period
This Form 6-K filing reports the full-year 2024 financial results for NatWest Group Plc, a UK-based banking group, for the period ended December 31, 2024. The announcement was issued on February 14, 2025. The Group serves over 19 million customers across Retail Banking, Private Banking, and Commercial & Institutional segments. A key strategic milestone in 2024 was the acceleration of the UK Government's shareholding reduction, with the holding dropping to 9.99%, meaning the government is no longer the controlling shareholder under UK listing rules.
Key Financial Metrics
| Metric | 2024 Full Year | 2023 Full Year | Variance |
|---|---|---|---|
| Attributable Profit | £4.5 billion | £4.4 billion | +2.8% |
| Earnings Per Share (Basic) | 53.5 pence | 47.9 pence | +12% |
| Return on Tangible Equity (RoTE) | 17.5% | 17.8% | -30 bps |
| Total Income (excl. notable items) | £14.6 billion | £14.3 billion | +2.2% |
| Net Interest Margin (NIM) | 2.13% | 2.12% | +1 bps |
| Operating Expenses (excl. litigation) | £7.9 billion | £7.6 billion | +2.8% |
| Cost:Income Ratio (excl. litigation) | 53.4% | 51.8% | +1.6% |
| Net Impairment Charge | £359 million | £578 million | -37.9% |
| Common Equity Tier 1 (CET1) Ratio | 13.6% | 13.4% | +20 bps |
| Liquidity Coverage Ratio (LCR) | 150% | 144% | +6% |
| Risk-Weighted Assets (RWAs) | £183.2 billion | £183.0 billion | +0.1% |
Material Changes vs. Prior Period
- Profitability: Attributable profit rose to £4.5 billion, driven by a significant reduction in impairment charges (down £219 million) and growth in net interest income, despite a slight decline in total reported income due to the absence of one-off foreign exchange recycling gains seen in 2023.
- Balance Sheet Growth: Net loans to customers (excluding central items) increased by £12.9 billion (3.6%) to £368.5 billion, primarily driven by a £10.0 billion increase in Commercial & Institutional and a £3.2 billion increase in Retail Banking (including the £2.2 billion Metro Bank mortgage acquisition). Customer deposits grew by £12.2 billion to £431.3 billion.
- Costs: Operating expenses excluding litigation and conduct costs rose 2.8% year-over-year. Excluding specific items such as the new Bank of England Levy (£102 million) and retail share offering costs (£24 million), underlying costs were up only 1.1%.
- Capital & Liquidity: The CET1 ratio improved to 13.6% within the target range of 13-14%. The LCR strengthened to 150%, providing £53.4 billion of headroom above the regulatory minimum.
- Dividends: A final dividend of 15.5 pence per share was proposed, bringing the total 2024 dividend to 21.5 pence, a 26% increase over 2023.
Guidance, Outlook, and Risks
2025 Guidance: Management expects a RoTE in the range of 15-16% and income excluding notable items between £15.2 billion and £15.7 billion. Operating costs are expected to be around £8.1 billion. The loan impairment rate is forecast to be below 20 basis points. RWAs are expected to range between £190 billion and £195 billion.
Capital Policy: The Group intends to increase the ordinary dividend payout ratio from approximately 40% to 50% starting in 2025 and will consider share buybacks as appropriate.
Risks and Contingencies:
- Legal & Regulatory: Ongoing proceedings include US investigations into fixed-income securities (spoofing conduct) with an independent monitorship scheduled to conclude in December 2025. Foreign exchange litigation continues in the Netherlands. LIBOR litigation in the US was dismissed by the Court of Appeals in December 2024.
- Macroeconomic: The Group retains post-model adjustments of £0.3 billion related to economic uncertainty, though these have decreased from 2023 levels.
- Operational: The Group is undergoing significant simplification and technology transformation, which involves strategic costs including property exits and severance.
Key Investor Verification Points
- Government Ownership: Verify the timeline and impact of the UK Government's exit from controlling shareholder status (now at 9.99%) and the implications for future capital distributions.
- Cost Discipline: Monitor the ability to maintain the cost:income ratio target amidst inflationary pressures and the new Bank of England Levy.
- Impairment Trends: Assess the stability of the loan impairment rate (9 bps in 2024) against the 2025 guidance of <20 bps, particularly given the reduction in post-model adjustments for economic uncertainty.
- Acquisition Integration: Track the integration and return generation from the Metro Bank mortgage portfolio and the pending Sainsbury's Bank acquisition.
- Regulatory Monitorship: Review the status of the US DOJ monitorship regarding fixed-income securities and any potential extension beyond December 2025.