“NatWest Group delivered a strong performance in 2021 as we returned to profitability, made progress against our strategy and distributed more than £3.8bn of capital to our shareholders, including £1.7bn to the taxpayer. 

We are acutely aware of the challenges that many people, families and businesses continue to face up and down the country and are working alongside our customers to provide the support they need – whether that is managing their money better, saving for a house or retirement or starting or growing a new business – as well as playing a leading role in the transition to net zero.

As our economy recovers and the trend towards digital services accelerates, we are investing to deliver long term value in the bank and drive sustainable growth.  We will do this by building closer and deeper relationships with our customers and by supporting their evolving needs and expectations at every stage of their lives.”

2021 FINANCIALS

Operating profit
£4.3bn – for the whole group.

• Up from loss of £351m in 2020.
• £4.0bn – operating profit for the continuing group.

Impairment release of £1.3bn, compared to a charge of £3.2bn in 2020 £341m – Q4 impairment release.

Growth
Net lending up £7.8bn (2.6%) on FY2020 (UK and RBSI retail and commercial businesses, excluding government support schemes).

Costs
Cost reduction of £256m (4.0%) on FY2120 (ex OLD and Ulster Bank direct costs).

Capital
CET1 ratio of 18.2%.

• Down from 18.7% at Q3 - result of capital distributions and reduced RWAs.

Capital returns
£3.8bn of distributions announced for 2021.

• £1.2bn dividends - £846m final (7.5p/share), £347m interim (3p/share).

•  £1.5bn on market buy-backs – £750m executed + additional
£750m announced today.

• £1.1bn directed buy back in March 2021.

• Total of £1.7bn back to UK government in dividends and buybacks for 2021.

OUTLOOK

Income
In 2022, we expect income excluding notable items to be above £11.0 billion in the Go-forward group.

Costs
We plan to invest around £3 billion over 2021 to 2023 but, with continuing simplification, we plan to reduce Go-forward group operating expenses, excluding litigation and conduct costs, by around 3% in both 2022 and 2023.

Impairments
As a result of positive actions to change the shape of our book in recent years, we expect our through-the-cycle impairment loss rate to be around 20 - 30 basis points. We expect our 2022 and 2023 impairment charge to be lower than our through the cycle loss rate.

Capital
We aim to end 2022 with a CET1 ratio of around 14% and target a ratio of 13-14% by 2023.

Returns
In 2023, we expect to achieve a return on tangible equity of comfortably above 10% for the Group.

RWA 
Across 2022 and 2023, we expect movements in RWAs to largely reflect lending growth and our phased withdrawal from the Republic of Ireland.

Dividends and pay-outs
We intend to maintain ordinary dividends of around 40% of attributable profit and to distribute a minimum of £1 billion in each of 2022 and 2023 via a combination of ordinary and special dividends. We intend to maintain capacity to participate in directed buybacks of the UK Government stake, recognising that any exercise of this authority would be dependent upon HMT’s intentions and is limited to 4.99% of issued share capital in any 12-month period.

We will consider further on-market buybacks, in addition to the £750 million announced, as part of our overall capital distribution approach as well as inorganic opportunities provided they are consistent with our strategy and have a strong shareholder value case.

Ulster Bank ROI
We have made good progress on our phased withdrawal from the Republic of Ireland and expect the majority of the Allied Irish Banks and Permanent TSB asset sales to be largely complete by the end of 2022 and deposits to reduce over a longer timescale. We would expect income and RWAs to follow the balance sheet trajectory. We expect the cost base to reduce over time and anticipate other operating expenses, excluding withdrawal related costs, in 2023 will be around €200 million lower than 2021.

We expect to incur disposal losses through income of around €300 million in 2022 and withdrawal related costs of around €600 million across 2022-24, with around €500 million incurred by the end of 2023.

We expect the phased withdrawal to be capital accretive.