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Operating expenses | 12 Months Ended
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Dec. 31, 2024
Operating expenses |
Operating expenses | 3 Operating expenses ​
Operating expenses are expenses NatWest Group incurs in the running of its business such as all staff costs (for example salaries, bonus awards, pension costs and social security costs), premises and equipment costs that arise from the occupation of premises and the use of equipment, depreciation and amortisation and other administrative expenses. For accounting policy information refer to Accounting policies 3.3, 3.4 and 3.5.
​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023 |  | 2022
Continuing operations | ​ | £m | ​ | £m | ​ | £m
Salaries |  | 2,477 |  | 2,483 |  | 2,250
Bonus awards |  | 411 |  | 353 |  | 334
Temporary and contract costs | ​ | 162 | ​ | 199 | ​ | 234
Social security costs |  | 371 |  | 352 |  | 328
Pension costs | ​ | 311 | ​ | 313 | ​ | 363
- defined benefit schemes (Note 5) |  | 86 |  | 122 |  | 205
- defined contribution schemes |  | 225 |  | 191 |  | 158
Other |  | 329 |  | 201 |  | 207
Staff costs |  | 4,061 |  | 3,901 |  | 3,716
​ | ​ | ​ | ​ | ​ | ​ | ​
Premises and equipment |  | 1,211 |  | 1,153 |  | 1,112
UK bank levy |  | 142 |  | 109 |  | 101
Depreciation and amortisation (1) |  | 1,058 |  | 934 |  | 833
Other administrative expenses (2) |  | 1,677 |  | 1,899 |  | 1,925
Administrative expenses |  | 4,088 |  | 4,095 |  | 3,971
​ | ​ | 8,149 | ​ | 7,996 | ​ | 7,687
​ (1)Includes depreciation of right of use assets of £103 million (2023 - £104 million; 2022 - £119 million). (2)Includes litigation and conduct costs, net of amounts recovered. Refer to Note 20 for further details. The average number of persons employed, rounded to the nearest hundred, during the year, excluding temporary staff,was 60,700 (2023 - 61,500; 2022- 60,000). The average number of temporary employees during 2024 was 1,400 (2023 - 2,100; 2022 - 2,500). ​ 3 Operating expenses continued The number of persons employed at 31 December, excluding temporary staff, by reportable segment, was as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
Continuing operations |  | 2024 |  | 2023 |  | 2022
Retail Banking |  | 13,000 |  | 14,300 |  | 15,100
Private Banking |  | 2,200 |  | 2,400 |  | 2,300
Commercial & Institutional |  | 12,700 |  | 12,400 |  | 12,200
Central items & other (1) |  | 31,800 |  | 32,500 |  | 31,400
Total |  | 59,700 |  | 61,600 |  | 61,000
​ | ​ | ​ | ​ | ​ | ​ | ​
UK |  | 40,100 |  | 41,500 |  | 41,200
India |  | 17,600 |  | 16,900 |  | 15,700
Poland | ​ | 800 | ​ | 1,500 | ​ | 1,500
USA | ​ | 300 | ​ | 300 | ​ | 300
Republic of Ireland | ​ | 100 | ​ | 400 | ​ | 1,400
Rest of the World |  | 800 |  | 1,000 |  | 900
Total |  | 59,700 |  | 61,600 |  | 61,000
​
(1) | Central items & other includes Ulster Bank RoI. The total number of persons employed in Ulster Bank RoI of 200 (2023 – 500; 2022 – 2,200) includes nil people employed in discontinued operations at 31 December 2024 (2023 – nil; 2022 – 400).
​ 3 Operating expenses continued Share-based payments ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Award plan |  | Eligible employees |  | Nature of award |  | Vesting conditions (1) |  | Settlement
Sharesave | ​ | UK, Channel Islands, Gibraltar, Isle of Man, Poland and India. | ​ | Option to buy shares under employee savings plan | ​ | Continuing employment or leavers in certain circumstances | ​ | 2025 to 2029
Deferred performance awards | ​ | All | ​ | Awards of ordinary shares and conditional shares | ​ | Continuing employment or leavers in certain circumstances | ​ | 2025 to 2032
Long-term incentives (2,3) | ​ | Senior employees | ​ | Awards of ordinary shares and conditional shares | ​ | Continuing employment or leavers in certain circumstances and/or satisfaction of the pre-vesting assessment and underpins | ​ | 2025 to 2031
Sharing in Success (4) | ​ | All | ​ | Awards of ordinary shares and conditional shares | ​ | Future continuing employment and achievement of pre-defined measures. | ​ | 2025
​
(1) | All awards are subject to discretion of Remuneration Committee.
(2) | Long-term incentives include buy-out awards offered to compensate certain new hires for the loss of forfeited awards from their previous employment. Existing Long - term incentives vest over 3 to 7 years.
(3) | The existing Restricted Share Plan scheme would be replaced by Performance Share Plan in 2025.
(4) | In 2024 16 million shares at total value of £49 million were granted and vested under Sharing in Success.
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Sharesave | ​ | 2024 | ​ | 2023 | ​ | 2022
​ |  | Average |  | Shares |  | Average |  | Shares |  | Average |  | Shares
​ | ​ | exercise price | ​ | under option | ​ | exercise price | ​ | under option | ​ | exercise price | ​ | under option
​ | ​ | £ | ​ | (million) | ​ | £ | ​ | (million) | ​ | £ | ​ | (million)
At 1 January |  | 1.59 |  | 114 |  | 1.63 |  | 99 |  | 1.61 |  | 95
Granted |  | 2.94 |  | 24 |  | 1.42 |  | 43 |  | 1.86 |  | 25
Exercised |  | 1.52 |  | (32) |  | 1.44 |  | (23) |  | 1.88 |  | (15)
Cancelled |  | 1.60 |  | (5) |  | 1.72 |  | (5) |  | 1.60 |  | (6)
At 31 December |  | 1.93 |  | 101 |  | 1.59 |  | 114 |  | 1.63 |  | 99
​ The fair value of Sharesave options granted in 2024 was determined using a pricing model that included: expected volatility of share price determined at the grant date based on historical share price volatility over a period of up to five years; expected option lives that equal the vesting period; estimated dividend yield on equity shares; and risk-free interest rates determined from UK gilts with terms matching the expected lives of the options. The exercise price of options and the fair value on granting awards of fully paid shares is the average market price over the five trading days (three trading days for Sharesave) preceding grant date. When estimating the fair value of the award, the number of shares granted and the prevailing market price as defined on page 138 of exhibit 15.2 are used. The fair value of the award is recognised as services are provided by employees over the vesting period. ​ Options are exercisable within six months of vesting; 8.9 million options were exercisable at 31 December 2024 (2023 – 19.0 million; 2022 – 5.1 million). The weighted average share price at the date of exercise of options was £4.03 (2023 - £2.20; 2022 - £2.59). At 31 December 2024, exercise prices ranged from £1.42 to £2.94 (2023 - £1.12 to £1.89; 2022 - £1.12 to £2.27) and the remaining average contractual life was 2.35 years (2023 – 2.25 years; 2022 – 2 years). The fair value of options granted in 2024 was £28.3 million (2023 - £27.3 million; 2022 - £22.1 million). ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred performance awards | ​ | 2024 | ​ | 2023 | ​ | 2022
​ |  | Value at |  | Shares |  | Value at |  | Shares |  | Value at |  | Shares
​ | ​ | grant | ​ | awarded | ​ | grant | ​ | awarded | ​ | grant | ​ | awarded
​ | ​ | £m | ​ | (million) | ​ | £m | ​ | (million) | ​ | £m | ​ | (million)
At 1 January |  | 76 |  | 35 |  | 93 |  | 46 |  | 132 |  | 65
Granted |  | 50 |  | 23 |  | 52 |  | 20 |  | 46 |  | 20
Forfeited |  | (3) |  | (1) |  | (2) |  | (1) |  | (4) |  | (2)
Vested |  | (57) |  | (27) |  | (67) |  | (30) |  | (81) |  | (37)
At 31 December |  | 66 |  | 30 |  | 76 |  | 35 |  | 93 |  | 46
​ ​ 3 Operating expenses continued The awards granted in 2024 vest in equal tranches on the anniversary of the award, predominantly over three years. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Long-term incentives | ​ | 2024 | ​ | 2023 | ​ | 2022
​ |  | Value at |  | Shares |  | Value at |  | Shares |  | Value at |  | Shares
​ | ​ | grant | ​ | awarded | ​ | grant | ​ | awarded | ​ | grant | ​ | awarded
​ | ​ | £m | ​ | (million) | ​ | £m | ​ | (million) | ​ | £m | ​ | (million)
At 1 January |  | 49 |  | 23 |  | 49 |  | 23 |  | 44 |  | 21
Granted |  | 9 |  | 5 |  | 11 |  | 5 |  | 16 |  | 7
Vested/exercised |  | (11) |  | (5) |  | (10) |  | (4) |  | (10) |  | (4)
Lapsed |  | (7) |  | (4) |  | (1) |  | (1) |  | (1) |  | (1)
At 31 December |  | 40 |  | 19 |  | 49 |  | 23 |  | 49 |  | 23
​ The market value of awards vested/exercised in 2024 was £19.3 million (2023 - £9.5 million; 2022 - £11.7 million). ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Bonus awards | ​ | 2024 | ​ | 2023 | ​ | Change |
​ |  | £m |  | £m |  | % |
March awards (1) | ​ | 63 | ​ | 43 | ​ | 47 | %
Deferred cash awards |  | 324 |  | 262 |  | 24 | %
Deferred share awards |  | 61 |  | 51 |  | 20 | %
Total deferred bonus awards |  | 385 |  | 313 |  | 23 | %
Total bonus awards (2) |  | 448 |  | 356 |  | 26 | %
Bonus awards as a % of operating profit before tax and bonus awards |  | 7 | % | 5 | % | ​ | ​
Proportion of bonus awards that are deferred |  | ​ | ​ | ​ | ​ | ​ | ​
- deferred cash awards |  | 86 | % | 86 | % | ​ | ​
- deferred share awards |  | 14 | % | 14 | % | ​ | ​
​ Reconciliation of bonus awards to income statement charge ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023 |  | 2022
​ | ​ | £m | ​ | £m | ​ | £m
Bonus awarded |  | 448 |  | 356 |  | 370
Less: deferral of charge for amounts awarded for current year |  | (144) |  | (114) |  | (127)
Income statement charge for amounts awarded in current year |  | 304 |  | 242 |  | 243
​ | ​ | ​ | ​ | ​ | ​ | ​
Add: current year charge for amounts deferred from prior years |  | 109 |  | 115 |  | 94
Less: forfeiture of amounts deferred from prior years |  | (2) |  | (4) |  | (3)
Income statement charge for amounts deferred from prior years |  | 107 |  | 111 |  | 91
Income statement charge for bonus awards (2) |  | 411 |  | 353 |  | 334
​
(1) | March cash awards are limited to £2,000 for all employees.
(2) | Excludes other performance-related compensation.
​ 3 Operating expenses continued Year in which income statement charge is expected to be taken for deferred bonus awards ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Actual | ​ | Expected
​ |  | ​ |  | ​ |  | ​ |  | ​ |  | 2026
​ | ​ | 2022 | ​ | 2023 | ​ | 2024 | ​ | 2025 | ​ | and beyond
​ | ​ | £m | ​ | £m | ​ | £m | ​ | £m | ​ | £m
Bonus awards deferred from 2022 and earlier |  | 94 |  | 115 |  | 17 | ​ | 8 | ​ | 6
Bonus awards deferred from 2023 | ​ | — | ​ | — | ​ | 92 | ​ | 8 | ​ | 9
Less: forfeiture of amounts deferred from prior years |  | (3) |  | (4) |  | (2) | ​ | — | ​ | —
Bonus awards deferred for 2024 |  | — |  | — |  | — | ​ | 122 | ​ | 22
​ |  | 91 |  | 111 |  | 107 | ​ | 138 | ​ | 37
​

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