NatWest Group Plc Q3 FY2024 earnings call

• Financial Performance: Healthy customer activity continued with lending growth of GBP 8.1 billion to GBP 367 billion and deposits up by GBP 8.3 billion to GBP 427 billion. Income for the first nine months was GBP 10.8 billion, costs GBP 5.7 billion, resulting in operating profit of GBP 4.7 billion and attributable profit of GBP 3.3 billion.
• Strategic Priorities: Focus on discipline growth, bank-wide simplification, and active balance sheet and risk management. Progress seen in climate funding with GBP 23.5 billion in Q3 towards a GBP 100 billion 2025 target.
• Capital: Strong capital generation with CET1 ratio at 13.9%, tangible net asset value per share at 316p, and earnings per share up 12% year-on-year.

Commercial & Institutional: Lending to mid-market customers grew by GBP 1.5 billion, with corporate & institutions seeing growth of GBP 3.2 billion including sustainable finance. Non-interest income was driven by strong lending and payment fees, as well as foreign exchange. Retail and Private Banking: The mortgage book returned to growth with a GBP 3.8 billion increase, credit cards share grew from 8.5% to 9.3%, deposits increased by GBP 8.3 billion to GBP 427 billion, and private bank assets under management rose by GBP 5.7 billion to GBP 46.5 billion. Income: For the first nine months, income totaled GBP 10.8 billion, operating profit was GBP 4.7 billion, attributable profit was GBP 3.3 billion, and return on tangible equity was 17%.

• Upgraded 2024 total income excluding notable items to around GBP 14.4 billion and raised return on tangible equity guidance to greater than 15%.
• Expect further base rate cuts, with rates expected to reach 4.75% by end of 2024 and 3.5% by end of 2025.
• RWAs expected to be around GBP 200 billion by end of 2025, including impact from Basel 3.1.

• Impact of base rate cuts on margins and timing of deposit repricing. - Seasonality in non-interest income. - Uncertainty around regulatory changes like Basel 3.1 and its effect on RWAs.

Q: On margins and NatWest Markets, A: Katie Murray and Paul Thwaite discussed margin impacts of base rate cuts, timing of repricing, and NatWest Markets performance.

Q: On revenue guidance for 2024 and Basel 3.1, A: Katie Murray addressed Q4 income expectations, seasonality in non-interest income, and Basel 3.1 impact on RWAs.

Q: On impairments and Sainsbury's transaction, A: Paul Thwaite and Katie Murray talked about impairment trends, Sainsbury's acquisition impact, and ECL on day one.

Q: On RWA, lending growth, and capital, A: Paul Thwaite and Katie Murray discussed RWA management, lending growth prospects, and capital position including directed buybacks.

Q: On deposit repricing, term deposits, and non-interest income, A: Katie Murray and Paul Thwaite addressed deposit repricing lag, term deposit customer behavior, and non-interest income growth drivers.

Q: On budget impact and non-interest income, A: Paul Thwaite and Katie Murray commented on budget expectations and non-interest income outlook.

Q: On credit card, RWA, and treasury, A: Katie Murray and Paul Thwaite discussed credit card growth, RWA management, and treasury tailwinds.

Q: On OpEx and RWA progression, A: Katie Murray and Paul Thwaite talked about OpEx trajectory and RWA management potential.

Q: On loan growth sustainability and private credit, A: Paul Thwaite addressed loan growth sustainability in C&I and private credit competitive dynamics.