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National
Westminster
Bank Plc
2025 Annual Report
and Accounts
Strategic report
NWB Group
Annual Report and Accounts 2025
1
Presentation of information
National Westminster Bank Plc (NWB Plc or ‘we’) is a wholly
owned subsidiary of NatWest Holdings Limited (NWH Ltd or the
intermediate holding company). The term ‘NWB Group’ or ‘we’
refers to NWB Plc and its subsidiary and associated undertakings.
The term ‘NWH Group’ refers to NWH Ltd and its subsidiary and
associated undertakings. NatWest Group plc is ‘the ultimate
holding company’. The term ‘NatWest Group’ refers to NatWest
Group plc and its subsidiaries.
NWB Plc publishes its financial statements in pounds sterling (‘£’
or ‘sterling’). The abbreviations ‘£m’ and ‘£bn’ represent millions
and thousands of millions of pounds sterling (GBP), respectively,
and references to ‘pence’ represent pence where amounts are
denominated in sterling. Reference to ‘dollars’ or ‘$’ are to United
States of America (US) dollars. The abbreviations ‘$m’ and ‘$bn’
represent millions and thousands of millions of dollars,
respectively. The abbreviation ‘€’ represents the ‘euro’, and the
abbreviations ‘€m’ and ‘€bn’ represent millions and thousands of
millions of euros, respectively.
Description of business
NWB Plc, which wholly owns Coutts & Company, is a principal
entity under NWH Ltd, together with The Royal Bank of Scotland
plc (RBS plc).
Principal activities and operating segments
NWB Group serves customers across the UK with a range of
retail and commercial banking products and services. A wide
range of personal products are offered including current
accounts, credit cards, personal loans, mortgages and wealth
management services. NWB Plc is the main provider of shared
services for NatWest Group.
The reportable operating segments are as follows:
Retail Banking
-
serves personal customers in the UK and
includes Ulster Bank customers in Northern Ireland.
Private Banking & Wealth Management
-
serves UK-connected,
high net-worth individuals and their business interests.
Commercial & Institutional
-
consists of customer businesses
reported under Business Banking, Commercial Mid-market and
Corporate & Institutions, supporting our customers across the full
non-personal customer lifecycle, both domestically and
internationally.
Central items & other
-
includes corporate functions such as
treasury, finance, risk management, compliance, legal,
communications and human resources. NWB Plc is the main
service provider of shared services and treasury activities for
NatWest Group. The services are mainly provided to NWH
Group, however, in certain instances where permitted, services
are also provided to the wider NatWest Group including the non
ring-fenced business.
Performance overview
Strong financial performance
NWB Group reported an attributable profit for the year of £4,198
million and a Common Equity Tier 1 (CET1) ratio of 11.2% for
NWB Plc.
Total income increased by £1,647 million, or 14%, to £13,620
million due to deposit margin expansion as a result of higher
customer balances and strong hedge income.
Operating expenses increased by £278 million, or 4%, to £7,241
million driven by transformation and reward costs as we continue
to drive simplification and invest in our people.
The cost:income ratio decreased from 58.2% to 53.2%.
Net impairment losses of £653 million, compared with a charge
of £347 million in 2024, primarily reflect lower good book releases
in 2025 and include a charge associated with balances acquired
from Sainsbury’s Bank.
Robust balance sheet with strong capital levels
Net loans to customers increased by £13.6 billion to £345.6
billion
,
across all customer segments due to growth in mortgages
and personal and commercial lending.
Customer deposits increased by £6.8 billion to £325.1 billion
driven by growth in retail savings and current account balances.
The loan:deposit ratio remained stable at 98%.
The CET1 ratio decreased by 20 basis points to 11.2%. An £9.2
billion increase in risk-weighted assets (RWAs) driven by lending
growth and regulatory changes was partially mitigated by RWA
management actions and was further offset by a £0.8 billion
increase in CET1 capital.
Page
Strategic report
1
Presentation of information
1
Description of business
1
Performance overview
1
Stakeholder engagement and s.172(1) statement
2
Board of directors and secretary
3
Top and emerging risks
4
Financial review
6
Risk and capital management
9
Report of the directors
73
Statement of directors’ responsibilities
79
Financial statements
80
Risk factors
168
Forward-looking statements
185
Stakeholder engagement and s.172(1) statement
NWB Group
Annual Report and Accounts 2025
2
This statement describes how the directors have had regard to
the matters set out in section 172(1) (a) to (f) of the Companies
Act 2006 (section 172) when performing their duty to promote
the success of the company.
Board engagement with stakeholders
The Board reviews and confirms its key stakeholder groups for
the purposes of section 172 annually. For 2024, they remained
investors, customers, colleagues, regulators, communities and
suppliers.
Directors are mindful that it is not always possible to achieve an
outcome which meets the expectations of all stakeholders, and
that there may be impacted stakeholders outside the six key
groups the Board has identified. Examples of how the Board has
engaged with key stakeholders, including the impact on principal
decisions, can be found in this statement and on page 73
(Corporate governance statement).
Supporting effective Board discussions and
decision-making
Board and Committee terms of reference reinforce the
importance of considering the matters set out in section 172 (the
s172 factors, as set out below). The Board and Committee paper
template also supports consideration of stakeholders and enables
good decision making.
Principal decisions
Principal decisions are those decisions taken by the Board that
are material or of strategic importance to the company, or are
significant to the company’s key stakeholders.
This statement includes a case study of a principal decision taken
by the Board during 2024. Further information on the Board’s
principal activities can be found in the Corporate governance
statement on pages 73 to 78.
The s172 factors
(a) likely long-term consequences
(b) employee interests
(c) relationships with customers, suppliers and others
(d) the impact on community and environment
(e) maintaining a reputation for high standards of business
conduct
(f) acting fairly between members of the company
Case Study – Dividend payments
Factors considered: (a), (e), (f)
What was the decision-making process?
During 2025, the Board approved interim dividends to be made
to the ordinary shareholder, NWH Ltd. It considered proposals in
the context of the evolving regulatory capital requirements, and
available funds for distribution. In line with standard practice, the
Board Risk Committee reviewed all proposals prior to submission
to the Board, making appropriate recommendations. Both the
Committee and the Board also reviewed the opinion of the
second line of defence in relation to the proposals.
How did the directors fulfil their duties under section
172? How were stakeholders considered?
When evaluating proposed capital distributions, the Board was
focused on promoting the long-term success and financial
resilience of NWB Plc for the benefit of all stakeholders.
Directors
considered the likely long-term consequences of each decision,
the Group’s ongoing capacity to invest in the business, and our
ability to continue serving customers sustainably.
The Board recognised the need to balance adequate investment
in the business with shareholder expectations that excess capital
be paid to the parent entity. Consideration was given to NWB
Plc’s growth ambitions and lending forecasts, agreed risk
appetite and targets, and the dividend capacity. The Board was
particularly focused on ensuring the proposed distributions would
support the long-term success of the company for the benefit of
all stakeholders, and that the payments would not impact NWB
Plc’s ability to withstand an extreme stress scenario.
Regulatory
capital requirements formed an important part of the planning
targets.
The Board also ensured its decisions in relation to capital
distributions were aligned with NatWest Group’s commitment to
a c.50% payout ratio, as noted in the NatWest Group plc 2024
Annual Report and Accounts, and external guidance provided in
February 2025 and then updated in July 2025. Directors
additionally considered societal expectations regarding
responsible capital management, the importance of maintaining a
resilient balance sheet, and the need to continue investing in
NatWest Group’s strategic priorities and technology
transformation.
Actions and outcomes
Interim dividends of £1,584 million and £1,404 million were
approved by the NWB Plc Board in February and July 2025
respectively.
Board of directors and secretary
NWB Group
Annual Report and Accounts 2025
3
Approval of Strategic report
The Strategic report for the year ended 31 December 2025 set out on pages 1 to 72 was approved by the Board of directors on 12
February 2026.
By order of the Board
Gary Moore
Chief Governance Officer and Company Secretary
12 February 2026
Chair
Richard Haythornthwaite
Executive directors
John-Paul Thwaite (CEO)
Katie Murray (CFO)
Non-executive directors
Francesca Barnes
Karin Cook
Joshua Critchley
Roisin Donnelly
Patrick Flynn
Geeta Gopalan
Yasmin Jetha
Stuart Lewis
Mark Rennison
Gillian Whitehead OBE
Lena Wilson CBE
Board and committee membership
Nominations Committee
Rick Haythornthwaite (Chair)
Francesca Barnes
Patrick Flynn
Stuart Lewis
Lena Wilson CBE
Audit Committee
Patrick Flynn (Chair)
Karin Cook
Geeta Gopalan
Stuart Lewis
Mark Rennison
Board Risk Committee
Stuart Lewis (Chair)
Francesca Barnes
Patrick Flynn
Geeta Gopalan
Mark Rennison
Gill Whitehead OBE
Lena Wilson CBE
Performance and Remuneration Committee
Lena Wilson CBE (Chair)
Karin Cook
Josh Critchley
Roisin Donnelly
Patrick Flynn
Mark Rennison
Chief Governance Officer and Company Secretary
Gary Moore
Board changes in 2025
Gill Whitehead was appointed as a non-executive director on 8
January 2025.
Karin Cook was appointed as non-executive director on 5 May
2025.
Mark Seligman retired as a non-executive director on 31 March
2025.
Ian Cormack stepped down as senior independent director on 28
February 2025, and retired from the Board on 4 May 2025.
Francesca Barnes assumed the role of senior independent
director on 1 March 2025.
Josh Critchley was appointed as a non-executive director on 3
November 2025.
Auditor
Ernst & Young LLP
Chartered Accountants and Statutory Auditor
25 Churchill Place
London, E14 5EY
Registered office and Head office
250 Bishopsgate
London, EC2M 4AA
Telephone: +44 (0)20 7085 5000
Other principal offices
Coutts & Company
440 Strand
London, WC2R 0QS
National Westminster Bank Plc
Registered in England No. 929027
Top and emerging risks
NWB Group
Annual Report and Accounts 2025
4
Top and emerging risks are future scenarios that could have a significantly negative impact on our ability to operate or deliver our
strategy and are managed through the EWRMF toolkit. They usually combine elements of several principal risks and require a
coordinated management response. Top risks could occur or require management action within two years, while emerging risks are
evolving and/or could occur over a longer time horizon but have the potential to become a top risk. In 2025, the Executive Risk
Committee, the Board Risk Committee and the Board received regular reporting on top and emerging risks. The top and emerging risks
scenarios that follow are shown in alphabetical order.
Top risk scenarios in
focus in 2025
Description
Risk management actions
Artificial intelligence
Innovations in artificial intelligence (AI), including generative AI,
may rapidly transform and disrupt customer interactions, the
industry and the economy. NWB Group’s ability to continue to
deploy AI solutions and integrate AI in systems and controls will
become increasingly important to retaining and growing
business. There can be no certainty that NatWest Group’s
innovation strategy will be successful, and competitors may be
more successful in implementing AI technologies, in turn,
affecting industry competitive dynamics. Developments in AI
may also result in increased model risk and rising levels of fraud.
NWB Group closely monitors developments in
disruptive technologies, including AI. Strategy is
developed as appropriate to leverage AI across NWB
Group with a focus on helping improve customer
journeys, personalisation, colleague effectiveness and
improved risk and capital management. Using AI
safely and ethically is a key area of focus, alongside
compliance with evolving AI regulation. This includes
developing a robust set of controls for the use of AI
models and tools across NWB Group. AI risk
management is being developed proactively to
reflect technological and systems advances.
Climate Ambitions
NatWest Group’s
(1)
climate strategy – including ambitions,
targets, and transition planning – carries significant financial and
non-financial risks. Achieving these goals depends on timely and
appropriate government policy, technology developments, and
on suppliers, customers and society supporting the transition.
Following the review of NatWest Group’s climate
ambitions and targets in 2025 in the context of the
UK Climate Change Committee issued advice and
NatWest Group’s progress to date, NatWest Group
retains its ambition to at least halve the climate
impact of its financing activity by 2030, against a
2019 baseline, having achieved a 39% reduction
between 2019 and 2024, primarily through strategic
decisions and methodology and data enhancements.
Cyberattack
There is a constantly evolving threat from cyberattacks which
are increasing in terms of frequency, sophistication, impact and
severity. This includes hostile attempts to gain access to and
exploit potential vulnerabilities of IT systems including via
malware. Any failure in NWB Group’s cybersecurity policies,
procedures or controls, may result in significant financial losses,
major business disruption, inability to deliver customer services,
loss of data and associated reputational damage.
NWB Group continues to invest in additional
capability to defend against threats including
developing and evolving cybersecurity policies,
procedures and controls that are designed to
minimise the possibility of, and the potential effect of
such attacks. The focus is to manage the impact of
the attacks and maintain services for NWB Group’s
customers. This includes proving cyber resilience
capabilities via stress testing of NWB Group’s
important business services.
In addition, NWM Group
utilises threat intelligence to inform its approach to
identifying and responding to potential cyber risks.
Digital Currency
NWB Group operates in markets which would be exposed to
any developments in digital currency and/or assets, including
tokenised deposits, stablecoins and a UK central bank digital
currency. The introduction of new digital currencies could result
in deposit outflows, higher funding costs, and/or other
implications for UK banks including NWB Group.
NatWest Group is focused on delivery of its digital
asset strategy which includes participation in
tokenised deposit pilots, and close engagement with
regulators on future regulatory regimes for digital
assets and monitoring of industry developments.
This approach ensures alignment with emerging
market practices and regulatory expectations.
NatWest Group maintains an Executive Steering
Group on digital assets which oversees
developments and engagement on digital currencies.
It also coordinates engagement with the UK
Government and regulators on digital currency
developments and financial market infrastructures
such as proposals on regulatory treatment of UK
stablecoins.
Economic and interest
rate volatility
Economic conditions could deteriorate, depending on factors
including weak economic activity, fiscal policies, volatility in
interest rates, liquidity pressures, sharp falls in asset prices,
escalating geopolitical tensions and concerns regarding
sovereign debt or sovereign credit ratings. Any of these may
have a materially adverse effect on NWB Group’s future
financial prospects.
A range of complementary approaches is used to
mitigate the risks, such as targeted scenario
analysis, stress tests, targeted customer reviews and
reviews of risk appetite. Stress tests in 2025 included
completion of regulatory stress tests as well as a
range of internal scenarios.
Evolving regulation
NWB Group’s businesses are subject to substantial regulation
and oversight, both of which are constantly evolving and may
have an adverse impact on NWB Group. Areas of ongoing
regulatory focus include Basel 3.1 standards implementation,
including the resulting effect on RWAs and models, as well as
the effective management of financial crime.
NWB Group constantly monitors regulatory change.
It engages closely with regulators in the shaping of
regulation that materially impacts NWB Group,
responding when necessary, either bilaterally or in
partnership with one of the affiliated industry bodies.
NWB Group implements new responses to
regulatory requirements where applicable and uses
frequent engagement meetings with regulators to
discuss key priorities.
Top and emerging risks continued
NWB Group
Annual Report and Accounts 2025
5
Increased competition
Competitive pressures could intensify, impeding NWB Group’s
ability to grow or retain market share, impacting revenues and
profitability, particularly in the UK Retail Banking and
Commercial & Institutional segments. Drivers of competition
mainly relate to developments in technology, evolving
incumbents, challengers, new entrants to the market, shifts in
customer behaviour and changes in regulation. For example,
increased competition from technology conglomerates, who
may have competitive advantages in scale, technology and
customer engagement (including brand recognition).
NWB Group closely monitors the competitive
environment and adapts its strategy as appropriate.
This includes using scenario analysis and assessing
how mega-trends will impact industry competitive
dynamics. Strategic responses are focused on the
delivery of innovative and compelling propositions for
customers and effectively leveraging acquisitions and
partnerships.
Operational risk
scenarios
Operational risks are inherent in NWB Group’s businesses and a
broad range of scenarios are considered. NWB Group could be
adversely impacted by scenarios including a failure to access
current, complete, and accurate data, or disruption to services if
a third-party service provider experienced any interruptions.
These scenarios could result in business and customer
interruption and related reputational damage, significant
compensation costs, regulatory sanctions and/or a breach of
applicable regulations.
NWB Group maintains a robust approach to
operational resilience through comprehensive,
Group-wide processes and regular scenario tests to
ensure effective management of interconnected
operational risks.
NWB Group devotes significant resources to third-
party risk management. Focus areas include
identifying critical-service suppliers, developing
robust exit and contingency plans in the event of
supply chain disruption, and ensuring appropriate
monitoring and oversight of third-party performance.
Effective and ethical use of data is critical to NWB
Group’s goals, with continued focus on delivering our
long-term data strategy alongside enhancing control
and policy frameworks governing data usage.
(1)
All references to NatWest Group in this table includes NWB Group.
Emerging risk scenarios
in focus in 2025
Description
Risk management actions
Geopolitical risk
NWB Group is exposed to risks arising from geopolitical events
or political developments. Geopolitical tensions remain elevated
and a range of potential scenarios and impacts are considered.
This includes the potential impact of armed conflict, global trade
and supply chain disruption, volatility in commodity prices,
protectionist policies or trade barriers and state-sponsored
cyberattacks.
NWB Group closely monitors the geopolitical risk
outlook and undertakes regular scenario analysis to
understand the potential impacts and takes
mitigating actions as required. This includes second
and third-order analysis of impacts, for example,
through customers’ supply chain disruption or
disruption to third-party providers.
Market-based finance
(MBF)
NatWest Group is exposed to vulnerabilities within shadow
banking or MBF, given the interlinkages between UK banks and
MBF. This includes the potential for stress events or shocks to
financial markets.
NatWest Group closely monitors exposure to MBF.
An internal framework for the identification,
management, control and mitigation of the risks
associated with exposure to MBF is maintained. This
includes effective reporting and governance in
respect of such exposure.
Physical climate risk
Intensifying physical climate-related risks, including climate
events, materially increasing in frequency and/or severity,
results in direct impacts on property, infrastructure, supply
chains, geopolitics and economic activity. This could lead to
significant credit, operational (for example, business continuity),
market, liquidity, pension risks and/or non-financial risks and, if
those risks are not mitigated, to losses.
NatWest Group leverages scenario analysis to
explore the potential impact of physical climate risks
and ensure appropriate mitigation. NatWest Group
includes a scenario exploring quantifiable impacts of
chronic physical climate effects, such as a drag on
labour and land productivity, and acute physical
shocks such as droughts, heatwaves, wildfires and
floods within its suite of stress testing scenarios. In
addition, a qualitative scenario is used to explore
cascading and complex risks, including potential
earth system tipping points, that are currently
challenging for quantitative scenarios and models to
capture.
Financial review
NWB Group
Annual Report and Accounts 2025
6
Summary consolidated income statement for the year ended 31 December 2025
Private
Banking &
Retail
Wealth
Commercial &
Central items &
Banking
Management
Institutional
other
2025
2024
Variance
£m
£m
£m
£m
£m
£m
£m
%
Net interest income
5,100
720
3,817
14
9,651
8,208
1,443
18
Non-interest income
423
369
1,421
1,756
3,969
3,765
204
5
Total income
5,523
1,089
5,238
1,770
13,620
11,973
1,647
14
Operating expenses
(2,466)
(727)
(2,522)
(1,526)
(7,241)
(6,963)
(278)
4
Profit before impairment losses/releases
3,057
362
2,716
244
6,379
5,010
1,369
27
Impairment (losses)/releases
(403)
(10)
(241)
1
(653)
(347)
(306)
88
Operating profit before tax
2,654
352
2,475
245
5,726
4,663
1,063
23
Tax charge
(1,528)
(1,238)
(290)
23
Profit for the year
4,198
3,425
773
23
Key metrics and ratios
2025
2024
Cost:income ratio
(1)
53.2%
58.2%
Loan impairment rate
(2)
19bps
10bps
CET1 ratio
(3)
11.2%
11.4%
Leverage ratio
(4)
4.3%
4.4%
Risk-weighted assets (RWAs)
£133.7bn
£124.5bn
Loan:deposit ratio
(5)
98%
98%
(1)
Cost:income ratio is total operating expenses divided by total income.
(2)
Loan impairment rate is the loan impairment charge divided by gross customer loans.
(3)
CET1 ratio is CET1 capital divided by RWAs.
(4)
Leverage ratio is Tier 1 capital divided by total exposure.
(5)
Loan:deposit ratio is total loans divided by total deposits.
Total income
increased by £1,647 million, or 14%, to £13,620
million compared with £11,973 million in 2024.
Net interest income
increased by £1,443 million, or 18%, to
£9,651 million due to deposit margin expansion, as a result of
higher customer balances and strong hedge income, and
customer lending growth.
Non-interest income
increased by £204 million, or 5%, to £3,969
million driven by card fees reflecting volume growth and the
impact of balances acquired from Sainsbury’s Bank. Investment
management fees increased as a result of assets under
management and administration (AUMA) growth. Additionally,
income from fellow NatWest Group subsidiaries increased due to
the higher cost of services being recharged.
Operating expenses
increased by £278 million, or 4%, to £7,241
million due to transformation costs, investment in our people
through higher pay and bonus driven by continued strong
performance, and one-off integration costs following the
acquisition of balances from Sainsbury’s Bank. This was partially
offset by lower conduct and compliance costs and the non-repeat
of 2024 restructuring costs.
Net impairment losses
of £653 million, compared with a charge of
£347 million in 2024, primarily reflects lower good book releases
in 2025 and includes an £81 million charge associated with
balances acquired from Sainsbury’s Bank. The loan impairment
rate increased 9 basis points to 19 basis points. Stage 3 losses
remained stable. Total impairment provisions increased by £0.2
billion to £3.0 billion in the year.
Financial review continued
NWB Group
Annual Report and Accounts 2025
7
Segmental performance
Retail Banking
Operating profit was £2,654 million in 2025.
•
Net interest income
increased by £628 million to £5,100
million due to deposit margin expansion as a result of higher
customer balances and strong hedge income. Income from
lending growth includes the impact of balances acquired
from Sainsbury’s Bank.
•
Non-interest income
increased by £11 million to £423 million,
driven by higher income received from card fees due to
volumes growth, which includes the impact of balances
acquired from Sainsbury’s Bank.
•
Operating expenses
increased by £21 million to £2,466
million reflecting costs associated with balances acquired
from Sainsbury’s Bank and increased pay and bonus
rewards, partially offset by lower conduct costs and
headcount.
•
Net impairment losses
of £403 million, compared with a
charge of £250 million in 2024, is largely driven by a charge
associated with the balances acquired from Sainsbury’s
Bank and growth in product mix. The rate of Stage 3 default
remains broadly stable.
Total assets
increased by £9.3 billion to £208.9 billion driven by
an increase in net loans to customers, reflecting £6.7 billion
mortgage growth, £1.3 billion growth in personal loans and £1.3
billion growth in credit card balances, supported by balances
acquired from Sainsbury’s Bank.
Total liabilities
increased by £7.4 billion to £167.4 billion driven by
an increase in customer deposits due to growth in savings and
current accounts, supported by balances acquired from
Sainsbury’s Bank.
Private Banking & Wealth Management
Operating profit was £352 million in 2025.
•
Net interest income
increased by £101 million to £720 million
due to deposit margin expansion as a result of higher
customer balances and strong hedge income.
•
Non-interest income
increased by £50 million to £369 million
driven by investment management fees as a result of AUMA
growth, due to inflows as a result of strong customer
engagement and positive market movement, and higher
card fees including some non-repeatable adjustments.
•
Operating expenses
increased by £27million to £727 million,
due to continued investment in the business and higher pay
and bonus rewards to support our colleagues, partially offset
by lower severance costs.
•
Net impairment losses
of £10 million, compared with an £11
million release in 2024, reflect lower good book releases in
2025 and an increase in Stage 3 charges, relating to existing
exposures.
Total assets
increased by £0.6 billion to £19.6 billion driven by an
increase in net loans to customers due to higher commercial and
personal lending balances.
Total liabilities
increased by £0.3 billion to £42.9 billion mainly due
to an increase in customer deposits reflecting growth in current
account and savings balances, with progress driven by deeper
engagement with existing customers and new customer growth.
Commercial & Institutional
Operating profit was £2,475 million in 2025.
•
Net interest income
increased £475 million to £3,817 million
due to deposit margin expansion, as a result of higher
customer balances and strong hedge income, and lending
balance growth.
•
Non-interest income
decreased £25 million to £1,421 million
reflecting lower economic hedging gains and operating lease
income, partially offset by an increase in transaction fees
due to volumes.
•
Operating expenses
increased by £176 million to £2,522
million, driven by increased pay and bonus rewards, conduct
costs and continued business investment spend.
•
Net impairment losses
of £241 million compared with a
charge of £117 million in 2024, reflects lower good book
releases. Stage 3 charges remain broadly stable.
Total assets
increased by £6.6 billion to £99.2 billion primarily
driven by an increase in net loans to customers, mainly within
Commercial Mid-market and Corporate & Institutions, partially
offset by UK Government scheme repayments of £1.4 billion.
Total liabilities
increased by £0.4 billion to £128.3 billion due to a
decrease in customer deposits in Business Banking and
Corporate & Institutions, offset by a decrease in Commercial Mid-
market.
Central items & other
Operating profit was £245 million in 2025.
•
Total income
increased by £407 million to £1,770 million
reflecting net interest income from treasury activities and
higher income on economic swaps and foreign exchange
swaps. Additionally, income from NatWest Group entities
increased due to the higher cost of services being
recharged.
•
Operating expenses
increased by £54 million to £1,526
million driven by an increase in transformation and reward
costs through higher pay and bonus as we continue to drive
simplification and invest in our people. This was partially
offset by lower restructuring costs, following our exit from
the Republic of Ireland.
Financial review continued
NWB Group
Annual Report and Accounts 2025
8
Summary consolidated balance sheet as at 31 December 2025
2025
2024
Variance
£m
£m
£m
%
Assets
Cash and balances at central banks
29,939
35,095
(5,156)
(15)
Derivatives
1,093
2,874
(1,781)
(62)
Loans to banks - amortised cost
4,515
3,426
1,089
32
Loans to customers - amortised cost
345,643
332,013
13,630
4
Amounts due from holding companies and fellow subsidiaries
7,186
3,736
3,450
92
Other financial assets
53,124
39,571
13,553
34
Other assets
8,039
7,594
445
6
Total assets
449,539
424,309
25,230
6
Liabilities
Bank deposits
33,020
24,780
8,240
33
Customer deposits
325,069
318,290
6,779
2
Amounts due to holding companies and fellow subsidiaries
57,106
47,724
9,382
20
Derivatives
764
1,177
(413)
(35)
Other financial liabilities
5,333
4,999
334
7
Subordinated liabilities
122
122
-
-
Notes in circulation
1,049
935
114
12
Other liabilities
2,947
3,164
(217)
(7)
Total liabilities
425,410
401,191
24,219
6
Total equity
24,129
23,118
1,011
4
Total liabilities and equity
449,539
424,309
25,230
6
Total assets
increased by £25.2 billion, or 6%, to £449.5 billion as
at 31 December 2025.
Cash and balances at central banks
decreased by £5.2 billion to
£29.9 billion, reflecting settlement of balances with the Bank of
England, liquidity risk management and dividend settlement.
Derivative assets
decreased by £1.8 billion to £1.1 billion driven
by movements in interest rate swaps.
Loans to banks – amortised cost
increased by £1.1 billion to £4.5
billion due to an increase in reverse repo balances.
Loans to customers – amortised cost
increased by £13.6 billion to
£345.6 billion, driven by £6.7 billion retail mortgage growth, an
increase in personal loans and credit card balances in Retail
Banking, supported by balances acquired from Sainsbury's Bank,
and growth in Commercial & Institutional of £6.0 billion mainly
within Commercial Mid-market and Corporate & Institutions.
Amounts due from holding companies and fellow subsidiaries
increased by £3.4 billion to £7.2 billion due to increased balances
with fellow subsidiaries of NWH Group.
Other financial assets
increased by £13.6 billion to £53.1 billion
mainly driven by net bond activity due to market conditions.
Total liabilities
increased by £24.2 billion, or 6%, to £425.4 billion
as at 31 December 2025.
Bank deposits
increased by £8.2 billion to £33.0 billion driven by
repo balances due to market conditions, partially offset by
settlement of facilities with the Bank of England.
Customer deposits
increased by £6.8 billion to £325.1 billion,
including savings balances acquired from Sainsbury’s Bank and
reflecting growth in savings and current account balances,
primarily in retail fixed rate products.
Amounts due to holding companies and fellow subsidiaries
increased by £9.4 billion to £57.1 billion, due to increased
balances with fellow subsidiaries of NWH Group.
Derivative liabilities
decreased by £0.4 billion to £0.8 billion, driven
by movements in interest rate swaps.
Other financial liabilities
, which includes debt securities in issue,
increased by £0.3 billion to £5.3 billion.
Total equity
increased by £1.0 billion to £24.1 billion. The increase
mainly reflects profit for the year of £4.2 billion, partially offset by
£3.0 billion of ordinary dividends paid to NatWest Group plc and
£0.2 billion of paid-in equity dividends paid.
Risk and capital management
NWB Group
Annual Report and Accounts 2025
9
Page
Presentation of information
9
Risk management framework
Introduction
9
Culture
10
Governance
11
Risk appetite
13
Identification and measurement
14
Mitigation
14
Monitoring
14
Stress testing
14
Credit risk
Definition and sources of risk
18
Governance and risk appetite
18
Identification and measurement
18
Assessment and monitoring
18
Mitigation
18
Problem debt management
19
Forbearance
19
IFRS 9 models
20
Economic drivers
20
Impairment, provisioning and write-offs
25
Measurement uncertainty and ECL sensitivity analysis
25
ECL post model adjustments
28
Banking activities
29
Capital, liquidity and funding risk
Definition and sources
53
Capital, liquidity and funding risk management
54
Key points
55
Minimum requirements
56
Measurement
56
Climate and nature risk
61
Non-traded market risk
64
Pension risk
68
Operational risk
69
Compliance and conduct risk
70
Financial crime risk
71
Model risk
71
Reputational risk
72
Presentation of information
Where marked as audited in the section header, certain
information in the Risk and capital management section (pages 9
to 72) is within the scope of the Independent auditor’s report.
Risk and capital management is generally conducted on an
overall basis within NatWest Group such that common policies,
procedures,
frameworks and models apply across NatWest
Group. Therefore, for the most part, discussion on these
qualitative aspects reflects those in NatWest Group as relevant
for the businesses and operations in NWB Group.
Risk management framework
Introduction
NWB Group operates under NatWest Group’s enterprise-wide
risk management framework (EWRMF), which is centred on the
embedding of a strong risk culture. The framework ensures the
governance, capabilities and methods are in place to facilitate
risk management and decision-making across the organisation.
The framework ensures that NWB Group’s principal risks – which
are detailed in this section – are appropriately controlled and
managed. It sets out the standards and objectives for risk
management as well as defining the division of roles and
responsibilities.
This seeks to ensure a consistent approach to risk management
across NWB Group. It aligns risk management with NWB Group’s
overall strategic priorities of growth through better
understanding of customers, leveraging simplification and better
management of resources.
The framework, which is designed and maintained by NatWest
Group’s independent Risk function, is owned by the NatWest
Group Chief Risk Officer. It is reviewed and approved annually by
the NatWest Group Board. The framework incorporates risk
governance, NatWest Group’s three lines of defence operating
model and the Risk function’s mandate.
Risk appetite, supported by a robust set of principles, policies and
practices, defines the levels of tolerance for a variety of risks and
provides a structured approach to risk-taking within agreed
boundaries.
While all NWB Group colleagues are responsible for managing
risk, the Risk function provides oversight and monitoring of risk
management activities, including the implementation of the
framework and adherence to its supporting policies, standards
and operational procedures. The Chief Risk Officer plays an
integral role in providing the Board with advice on NWB Group’s
risk profile, the performance of its controls and in providing
challenge where a proposed business strategy may exceed risk
tolerance.
In addition, there is a process to identify and manage top and
emerging risks, which are those that could have a significant
negative impact on NWB Group’s ability to meet its strategic
objectives. Both top and emerging risks may incorporate aspects
of – or correlate to – a number of principal risks and are reported
alongside them to the Board on a regular basis.
Risk and capital management continued
NWB Group
Annual Report and Accounts 2025
10
Risk management framework continued
Culture
The approach to risk culture, under the banner of intelligent risk-
taking, ensures a focus on robust risk management behaviours
and practices. This underpins the strategy across all three lines of
defence, enables NWB Group to support better customer
outcomes, develop a stronger and more sustainable business and
deliver an improved cost base.
NWB Group expects leaders to act as role models for strong risk
behaviours and practices building clarity, developing capability
and motivating employees to reach the required standards set
out in the intelligent risk-taking approach. Colleagues are
expected to:
•
Consistently role-model the behaviours in Our Code, based
on strong ethical standards.
•
Empower others to take risks aligned to NWB Group’s
strategy, explore issues from a fresh perspective, and tackle
challenges in new and better ways across organisational
boundaries.
•
Manage risk in line with appropriate risk appetite.
•
Ensure each decision made keeps NWB Group, colleagues,
customers, communities and shareholders safe and secure.
•
Understand their role in managing risk, remaining clear and
capable, grounded in knowledge of regulatory obligations.
•
Consider risk in all actions and decisions.
•
Escalate risks and issues early; taking action to mitigate risks
and learning from mistakes and near-misses, reporting and
communicating these transparently.
•
Challenge others’ attitudes, ideas and actions.
Target intelligent risk-taking outcomes are embedded in NatWest
Group’s behaviours framework, forming a core foundation of the
risk culture and guiding recruitment and selection across the
organisation.
Training
Enabling employees to have the capabilities and confidence to
manage risk is core to NatWest Group’s learning strategy.
NatWest Group offers a wide range of learning, both technical
and behavioural, across the risk disciplines. This training may be
mandatory, role-specific or for personal development. Mandatory
learning for all staff is focused on keeping employees, customers
and NatWest Group safe. This is easily accessed online and is
assigned to each person according to their role and business
area. The system allows monitoring at all levels to ensure
completion.
Our Code
NatWest Group’s conduct guidance, Our Code, provides direction
on expected behaviour and sets out the standards of conduct
that support the values. The code explains the effect of decisions
that are taken and describes the principles that must be followed.
These principles cover conduct-related issues as well as wider
business activities. They focus on desired outcomes, with
practical guidelines to align the values with commercial strategy
and actions. The embedding of these principles facilitates sound
decision-making and a clear focus on good customer outcomes.
Any employee falling short of the expected standards will be
subject to internal disciplinary policies and procedures and where
appropriate, the relevant authorities will be notified. Variable pay
for eligible colleagues will reflect overall performance, including
the impact of any conduct issues. Adjustments may be made
through the performance management process, or where
necessary, via the accountability review process for the
individuals concerned. The NatWest Group remuneration policy
ensures that the remuneration arrangements for all employees
reflect the principles and standards prescribed by the PRA
rulebook and the FCA handbook.
Risk and capital management continued
NWB Group
Annual Report and Accounts 2025
11
Risk management framework continued
Governance
Committee structure
The diagram shows NWB Group’s governance structure in 2025.
NWB Plc Board
Reviews and approves the risk management framework and risk appetite. Monitors performance against risk appetite.
Board Risk Committee
Provides oversight and advice to the Board on current and future risk
exposures, and future risk profile, including risk appetite; the approval
and effectiveness of the risk management framework. Reviews NWB
Plc’s performance relative to risk appetite; the effectiveness of internal
controls required to manage risk; all material risk exposures and
management’s recommendations to monitor, control and mitigate
them, including principal risks. Approves the key risk policies.
Audit Committee
Assists the Board in carrying out its responsibilities relating to
accounting policies, internal control and financial reporting function,
including consideration of non-financial disclosures. Review NWH
Group’s internal controls systems and the procedures for monitoring
effectiveness of these controls.
Executive Risk Committee
Supports the CRO and other accountable
executives in discharging their risk
management accountabilities. Reviews,
challenges and debates all material risk and
control matters across NWB Plc and the
performance of NWB Plc relative to risk
appetite. Reviews the risk management
framework and supports the
recommendation of it to BRC and oversees
its implementation.
Asset & Liability Management Committee
Supports the CFO in overseeing the effective
balance sheet management of NWB Plc, in
line with chosen business strategy and risk
appetite, under normal and stress conditions.
Executive Disclosure Committee
Supports the CFO in discharging
their
individual
accountabilities, including the
review of all material financial and non-
financial disclosures made by NWB Plc to
ensure they are
accurate,
complete
and fairly
represent the business and financial condition
of NWB Plc with no material misstatements or
omissions.
Business and function risk committees
Risk committees review and monitor all risks, providing guidance, recommendations and decisions on risks affecting the franchises
and functions.
(1)
The NatWest Group Chief Executive Officer also performs the role of NWB Plc Chief Executive Officer.
(2)
The NatWest Group Chief Risk Officer also performs the role of NWB Plc Chief Risk Officer.
(3)
The NatWest Group Chief Financial Officer also performs the role of NWB Plc Chief Financial Officer.
Risk and capital management continued
NWB Group
Annual Report and Accounts 2025
12
Risk management framework continued
Risk management structure
The diagram shows NWB Group’s risk management structure in 2025 and key risk management responsibilities.
(1)
Double Independent Non-Executive Directors.
(2)
The NatWest Group Chief Executive Officer also performs the role of NWB Chief Executive Officer.
(3)
The NatWest Group Chief Risk Officer also performs the role of NWB Chief Risk Officer.
(4)
The NWB Chief Risk Officer reports directly to the NWB Chief Executive Officer. There is a further secondary reporting line to the chair of the Board Risk Committee and a right of access
to the committee.
(5)
The Risk function is independent of the customer-facing business segments and support functions. Its structure is divided into three parts (Directors of Risk, Specialist Risk Directors and
Chief Operating Officer) to facilitate effective management of the risks facing NWB. Risk committees in the customer franchises and key functional risk committees oversee risk exposures
arising from management and business activities and focus on ensuring that these are adequately monitored and controlled. The Directors of Risk (Retail Banking; Commercial &
Institutional Banking; Financial & Strategic Risk; Non-Financial Risk and Compliance and Conduct) as well as the Director, Financial Crime Risk NatWest Holdings; the Chief Risk Officer,
Coutts & Company and the Chief Operating Officer report to the NWB Chief Risk Officer.
NatWest Group
Chief Executive
Officer
Director of Risk, Retail Banking
Design and delivery of Retail Banking risk strategy and service proposition.
Oversight of risk management across Retail Banking. Supports the DINEDs
(1)
through the identification, documentation, management and escalation of
any potential ring-fencing conflicts of interest.
NWB
Chief Executive
Officer
Group Chief Credit Officer and Director of Risk, Commercial & Institutional
Ring Fenced Bank
Design and delivery of Commercial & Institutional Ring Fenced Bank risk strategy
and service
proposition. Oversight of risk management across Commercial & Institutional
Ring Fenced Bank. Provides oversight and challenge in approach to credit risk
management
across NWB Group.
NatWest Group
Chief Risk Officer
Chief Risk Officer, Coutts & Company
Design and delivery of the Coutts & Company risk strategy and service proposition.
Oversight of risk management (including compliance) across Coutts & Company.
NWB
Chief Risk Officer
Chief Operating Officer, Risk and EWRMF Director
Centralised support for the risk management function. Provides model risk
oversight as well as framework design and development. Provides specialist advice
on risk culture and risk appetite matters to the Directors of Risk responsible for
business oversight.
Director of Risk, Finance & Treasury
Lead risk specialist for market risk, prudential risk, pension risk and stress testing,
and Director of Risk for Finance providing expert advice, insight, reporting and
effective risk oversight and challenge.
Director of Non-Financial Risk
Centralised oversight of non-financial risk across NWB. Design and delivery of
compliance and conduct strategy and service proposition. Design and delivery of
financial crime strategy and service proposition, oversight of financial crime risk
management. Provides specialist technical advice to the Directors of Risk
responsible for business oversight.
Director of Risk, Digital X & Functions (excl. Finance)
Risk partner for NatWest Digital X & Functions (excl. Finance) providing expert
advice, insight, reporting and effective risk oversight and challenge.
Risk and capital management continued
NWB Group
Annual Report and Accounts 2025
13
Risk management framework continued
Three lines of defence
NatWest Group uses the industry-standard three lines of defence
model to articulate accountabilities and responsibilities for
managing risk. This supports the embedding of effective risk
management throughout the organisation.
First line of defence
The first line of defence incorporates most roles in NatWest
Group, including those in the customer-facing businesses,
Technology and Services as well as support functions such as
People, Legal and Finance.
The first line of defence is empowered to take risks within the
constraints of the risk management framework, policies, risk
appetite statements set by NatWest Group and measures set by
the NWB Group Board.
The first line of defence is responsible for managing its direct
risks, and with the support of specialist functions, it is also
responsible for managing its consequential risks, by identifying,
assessing, mitigating, monitoring and reporting risks.
Second line of defence
The second line of defence comprises the Risk function and is
independent of the first line.
The second line of defence is empowered to design and maintain
the risk management framework and its components. It
undertakes proactive risk oversight and continuous monitoring
activities to confirm that NWB Group engages in permissible and
sustainable risk-taking activities.
The second line of defence advises on, monitors, challenges,
approves and escalates where required and reports on the risk-
taking activities of the first line of defence, ensuring that these
are within the constraints of the risk management framework,
policies, risk appetite statements set by NatWest Group and
measures set by the NWB Group Board.
Third line of defence
The third line of defence is the Internal Audit function and is
independent of the first and second lines.
The third line of defence is responsible for providing independent
assurance to the NatWest Group Board, its subsidiary legal entity
boards and executive management on the overall design and
operating effectiveness of the risk management framework and
its components. This includes the adequacy and effectiveness of
key internal controls, governance and the risk management in
place to monitor, manage and mitigate the principal risks to
NatWest Group and its subsidiary companies.
The third line of defence executes its duties freely and objectively
in accordance with the Chartered Institute of Internal Auditors’
Code of Ethics and International Standards on independence and
objectivity.
Risk appetite
Risk appetite defines the type and aggregate level of risk NWB
Group is willing to accept in pursuit of its strategic objectives and
business plans. Risk appetite supports sound risk-taking, the
promotion of robust risk practices and risk behaviours, and is
calibrated at least annually.
For certain principal risks, risk capacity defines the maximum
level of risk NWB Group can assume before breaching constraints
determined by regulatory capital and liquidity requirements, the
operational environment, and from a conduct perspective.
Establishing risk capacity helps determine where risk appetite
should be set, ensuring there is a buffer between internal risk
appetite and NWB Group’s ultimate capacity to absorb losses.
Risk appetite framework
The risk appetite framework supports effective risk management
by promoting sound risk-taking through a structured approach,
within agreed boundaries. It also ensures emerging risks and risk-
taking activities that might be out of appetite are identified,
assessed, escalated and addressed in a timely manner.
To facilitate this, a detailed annual review of the framework is
carried out. The review includes:
•
Assessing the adequacy of the framework compared to
internal and external expectations.
•
Ensuring the framework remains effective and acts as a
strong control environment for risk appetite.
•
Assessing the level of embedding of risk appetite across the
organisation.
Establishing risk appetite
In line with the risk appetite framework, risk appetite is
maintained across NWB Group through risk appetite statements.
These are in place for all principal risks and describe the extent
and type of activities that can be undertaken.
The financial and non-financial risks that NWB Group faces are
detailed in the NatWest Group risk directory. This provides a
common risk language to ensure consistent terminology is used
across NWB Group. The NatWest Group risk directory is subject
to annual review to ensure it continues to fully reflect the risks
that NWB Group faces.
Risk appetite statements consist of qualitative statements of
appetite supported by risk limits and triggers that operate as a
defence against excessive risk-taking. Risk measures and their
associated limits are an integral part of the risk appetite
approach and a key part of embedding risk appetite in day-to-
day risk management decisions. A clear tolerance for each
principal risk is set in alignment with business activities.
The Board sets risk appetite to help ensure NWB Group is well
placed to meet its priorities and long-term targets, even in
challenging economic environments. This supports NWB Group in
remaining resilient and secure as it pursues its strategic business
objectives.
The process of reviewing and updating risk appetite statements
is completed alongside the business and financial planning
process. This ensures that plans and risk appetite are
appropriately aligned.
Risk appetite is reviewed at least annually by the Board on the
Board Risk Committee’s recommendation to ensure it remains
appropriate and aligned to strategy.
NWB Group’s risk profile is continually monitored and frequently
reviewed. Management focus is concentrated on all principal
risks as well as the top and emerging risks that may correlate to
them. Performance against risk appetite for all principal risks is
reported regularly to the Executive Risk Committee, the Board
Risk Committee and the Board.
NatWest Group’s key risk policies define at a high level the
qualitative expectations, guidance and standards that stipulate
the nature and extent of permissible risk taking across all
principal risks. They form part of the qualitative expression of risk
appetite and are consistently applied across NatWest Group and
its subsidiaries. Key risk policies are reviewed and approved by
the NatWest Group Board Risk Committee at least annually.
NWH BRC notes and supports the proposed approach for NWH
Group-specific key risk policies.
Risk and capital management continued
NWB Group
Annual Report and Accounts 2025
14
Risk management framework continued
Identification and measurement
Identification and measurement within the risk management
process comprises:
•
Regular assessment of the overall risk profile, incorporating
market developments and trends, as well as external and
internal factors.
•
Monitoring of the risks associated with lending and credit
exposures.
•
Assessment of trading and non-trading portfolios.
•
Review of potential risks in new business activities and
processes.
•
Analysis of potential risks in any complex and unusual
business transactions.
Mitigation
Mitigation is a critical aspect of ensuring that risk profile remains
within risk appetite. Risk mitigation strategies are discussed and
agreed within NWB Group.
When evaluating possible strategies, costs and benefits, residual
risks (risks that are retained) and secondary risks (those that
arise from risk mitigation actions themselves) are also considered.
Monitoring and review processes are in place to evaluate results.
Early identification, and effective management of changes in
legislation and regulation are critical to the successful mitigation
of principal risks. The effects of all changes are managed to
ensure the timely achievement of compliance. Those changes
assessed as having a high or medium-high impact are managed
more closely. Action is taken to mitigate potential risks as and
when required. Further in-depth analysis, including the stress
testing of exposures, is also carried out.
NatWest Group’s control framework is a vital system ensuring
effective risk management, compliance, and operational
efficiency. Central to this framework is the implementation of
various control types, including preventive, detective, and
directive controls, which address diverse risks.
Control recording is essential, involving detailed documentation of
control activities to evaluate their adequacy and effectiveness.
This serves as valuable evidence during audits and regulatory
reviews.
The risk and control self-assessment (RCSA) process enhances
the framework by enabling teams to identify potential risks and
assess the adequacy of controls.
Regular independent adequacy and effectiveness testing of
controls within the first line of defence and internal audits
conducted by IA ensure controls function as intended. Continuous
monitoring and reporting provide real-time insights into control
effectiveness, fostering accountability and responsiveness to
evolving risks. By emphasising control recording, RCSA, and
testing, banks can maintain a resilient control environment that
supports operational integrity and regulatory compliance
Monitoring
The primary tool used to provide regular monitoring of the risk
and control environment across NatWest Group is the risk and
control performance assessment (RCPA). Each business area
self-assesses using a set of consistent indicators and providing
qualitative context to arrive at an RCPA outcome of met, partially
met or not met. The assessment is completed annually and the
indicators are regularly monitored.
The indicators support an
understanding of: the strength of the control environment to
manage risk exposure within appetite; adequacy and
effectiveness of the day-to-day management of risk and control;
adherence with applicable components of the EWRMF; and a
culture of intelligent risk-taking.
Emerging risks that could affect future results and performance
are also closely monitored.
Specific activities relating to compliance and conduct, credit,
financial crime and operational risks are subject to testing and
monitoring by the Risk function. This confirms to both internal
and external stakeholders – including the Board, senior
management, the customer-facing businesses, Internal Audit and
NWB Group’s regulators – that risk policies and procedures are
being correctly implemented and that they are operating
adequately and effectively. Thematic reviews and targeted
reviews are also carried out where relevant to ensure
appropriate customer outcomes. The Risk Testing & Monitoring
Forum assesses and validates the annual plan as well as the
ongoing programme of reviews.
Stress testing
Stress testing – capital management
Stress testing is a key risk management tool and a fundamental
component of NatWest Group’s approach to capital
management. It is used to quantify and evaluate the potential
impact of specified changes to risk factors on the financial
strength of NatWest Group, including its capital position.
Stress testing includes:
•
Scenario testing, which examines the impact of a
hypothetical future state to define changes in risk factors.
•
Sensitivity testing, which examines the impact of an
incremental change to one or more risk factors.
The process for stress testing consists of four broad stages:
Define
scenarios
•
Identify macro and NatWest Group-
specific vulnerabilities and risks.
•
Define and calibrate scenarios to
examine risks and vulnerabilities.
•
Formal governance process to agree
scenarios.
Assess
impact
•
Translate scenarios into risk drivers.
•
Assess impact to current and projected
profit and loss and balance sheet across
NatWest Group.
Calculate
results and
assess
implications
•
Aggregate impacts into overall results.
•
Results form part of the risk
management process.
•
Scenario results are used to inform
NatWest Group’s business and capital
plans.
Develop and
agree
management
actions
•
Scenario results are analysed by subject
matter experts. Appropriate
management actions are then
developed.
•
Scenario results and management
actions are reviewed by the relevant
Executive Risk Committees and Board
Risk Committees. Approval of scenarios
is delegated to the NatWest Group Board
Risk Committee by the NatWest Group
Board.
Risk and capital management continued
NWB Group
Annual Report and Accounts 2025
15
Risk management framework continued
Stress testing is used widely across NatWest Group. The diagram
below summarises key areas of focus.
Specific areas that involve capital management include:
Strategic
financial and
capital planning
Capital adequacy
Sector review and credit limit
setting
Risk appetite
Business vulnerabilities analysis
Tail risk assessment
Risk monitoring
Early warning indicators
Contingency planning and
management actions
Stress testing
usage within
NatWest
Group
Risk mitigation
Assess financial performance
•
Strategic financial and capital planning
– by assessing the
impact of sensitivities and scenarios on the capital plan and
capital ratios.
•
Risk appetite
– by gaining a better understanding of the
drivers of, and the underlying risks associated with, risk
appetite.
•
Risk monitoring
– by monitoring the risks and horizon-
scanning events that could potentially affect NatWest Group’s
financial strength and capital position.
•
Risk mitigation
– by identifying actions to mitigate risks, or
those that could be taken, in the event of adverse changes to
the business or economic environment. Principal risk
mitigating actions are documented in NatWest Group’s
recovery plan.
Capital sufficiency – going concern forward-looking view
Going concern capital requirements are examined on a forward-
looking basis – including as part of the annual budgeting process
– by assessing the resilience of capital adequacy and leverage
ratios under hypothetical future states. These assessments
include assumptions about regulatory and accounting factors
(such as IFRS 9). They incorporate economic variables and key
assumptions on balance sheet and profit and loss drivers, such as
impairments, to demonstrate that NatWest Group and its
operating subsidiaries maintain sufficient capital. A range of
future states are tested. In particular, capital requirements are
assessed:
•
Based on a forecast of future business performance, given
expectations of economic and market conditions over the
forecast period.
•
Based on a forecast of future business performance under
adverse economic and market conditions over the forecast
period. Scenarios of different severity may be examined.
The potential impact of normal and adverse economic and
market conditions on capital requirements is assessed through
stress testing, the results of which are not only used widely
across NatWest Group but also by the regulators to set specific
capital buffers. NatWest Group takes part in stress tests run by
regulatory authorities to test industry-wide vulnerabilities under
crystallising global and domestic systemic risks.
Stress and peak-to-trough movements are used to help assess
the amount of capital NatWest Group needs to hold in stress
conditions in accordance with the capital risk appetite
framework.
Internal assessment of capital adequacy
An internal assessment of material risks is carried out annually to
enable an evaluation of the amount, type and distribution of
capital required to cover these risks. This is referred to as the
Internal Capital Adequacy Assessment Process (ICAAP). The
ICAAP consists of a point-in-time assessment of exposures and
risks at the end of the financial year together with a forward-
looking stress capital assessment.
The ICAAP is used to form a view of capital adequacy separately
to the minimum regulatory requirements. The ICAAP is used by
the PRA to assess NatWest Group’s specific capital requirements
through the Pillar 2 framework.
Capital allocation
NatWest Group has mechanisms to allocate capital across its
legal entities and businesses. These aim to optimise the use of
capital resources taking into account applicable regulatory
requirements, strategic and business objectives and risk appetite.
Governance
Capital management is subject to substantial review and
governance. The Board approves the capital plans, including
those for key legal entities and businesses as well as the results
of the stress tests relating to those capital plans.
Stress testing – liquidity
Liquidity risk monitoring and contingency planning
A suite of tools is used to monitor, limit and stress test the
liquidity and funding risks on the balance sheet. Limit frameworks
are in place to control the level of liquidity risk, asset and liability
mismatches and funding concentrations. Liquidity and funding
risks are reviewed at significant legal entity and business levels
daily, with performance reported to the Asset & Liability
Management Committee on a regular basis. Liquidity condition
indicators are monitored daily. This ensures any build-up of stress
is detected early and the response escalated appropriately
through recovery planning.
Risk and capital management continued
NWB Group
Annual Report and Accounts 2025
16
Risk management framework continued
Internal assessment of liquidity
Under the liquidity risk management framework, NatWest Group
maintains the Internal Liquidity Adequacy Assessment Process.
This includes assessment of net stressed liquidity outflows under
a range of severe but plausible stress scenarios. Each scenario
evaluates either an idiosyncratic, market-wide or combined
stress event as described in the table below.
Type
Description
Idiosyncratic
scenario
The market perceives NatWest Group to be
suffering from a severe stress event, which
results in an immediate assumption of increased
credit risk or concerns over solvency.
Market-wide
scenario
A market stress event affecting all participants
in a market through contagion, potential
counterparty failure and other market risks.
NatWest Group is affected under this scenario
but no more severely than any other
participants with equivalent exposure.
Combined
scenario
This scenario models the combined impact of an
idiosyncratic and market stress occurring at
once, severely affecting funding markets and
the liquidity of some assets.
NatWest Group uses the most severe outcome to set the internal
stress testing scenario which underpins its internal liquidity risk
appetite. This complements the regulatory liquidity coverage ratio
requirement.
Stress testing – recovery and resolution planning
The NatWest Group recovery plan explains how NatWest Group
and its subsidiaries – as a consolidated group – would identify
and respond to a financial stress event and restore its financial
position so that it remains viable on an ongoing basis.
The recovery plan ensures risks that could delay the
implementation of a recovery strategy are highlighted and
preparations are made to minimise the impact of these risks.
Preparations include:
•
Developing a series of recovery indicators to provide early
warning of potential stress events.
•
Clarifying roles, responsibilities and escalation routes to
minimise uncertainty or delay.
•
Developing a recovery playbook to provide a concise
description of the actions required during recovery.
•
Detailing a range of options to address different stress
conditions.
•
Appointing dedicated option owners to reduce the risk of
delay and capacity concerns.
The plan is intended to enable NatWest Group to maintain critical
services and products it provides to its customers, maintain its
core business lines and operate within risk appetite while
restoring NatWest Group’s financial condition. It is assessed for
appropriateness on an ongoing basis and reviewed and approved
by the Board prior to submission to the PRA on a biennial basis.
Individual recovery plans are also prepared for NatWest Holdings
Limited, NatWest Markets Plc, RBS International Limited and
RBSH N.V.. These plans detail the recovery options, recovery
indicators and escalation routes for each entity.
Fire drill simulations of possible recovery events are used to test
the effectiveness of NatWest Group and individual legal entity
recovery plans. The fire drills are designed to replicate possible
financial stress conditions and allow senior management to
rehearse the responses and decisions that may be required in an
actual stress event. The results and lessons learnt from the fire
drills are used to enhance NatWest Group’s approach to
recovery planning.
Under the resolution assessment part of the PRA rulebook,
NatWest Group is required to carry out an assessment of its
preparations for resolution, submit a report of the assessment to
the PRA and publish a summary of this report.
Resolution would be implemented if NatWest Group was assessed
by the UK authorities to have failed and the appropriate regulator
put it into resolution. The process of resolution is owned and
implemented by the Bank of England (as the UK resolution
authority). NatWest Group ensures ongoing maintenance and
enhancements of its resolution capabilities, in line with regulatory
requirements.
Stress testing – market risk
Non-traded market risk
Scenario analysis based on hypothetical adverse scenarios is
performed on non-traded exposures as part of the Bank of
England and European Banking Authority stress test exercises.
NatWest Group also produces an internal scenario analysis as
part of its financial planning cycles.
Non-traded exposures are capitalised through the ICAAP. This
covers gap risk, basis risk, credit spread risk, pipeline risk,
structural foreign exchange risk, prepayment risk, equity risk and
accounting volatility risk. The ICAAP is completed with a
combination of value and earnings measures. The total non-
traded market risk capital requirement is determined by adding
the different charges for each sub risk type. The ICAAP
methodology captures at least ten years of historical volatility,
produced with a 99% confidence level. Methodologies are
reviewed by NatWest Group Model Risk and the results are
approved by the NatWest Group Balance Sheet Management
Committee.
Non-traded market risk stress results are combined with those
for other risks into the capital plan presented to the Board. The
cross-risk capital planning process is conducted once a year, with
a planning horizon of five years. The scenario narratives cover
both regulatory scenarios and macroeconomic scenarios
identified by NatWest Group.
Vulnerability-based stress testing begins with the analysis of a
portfolio and expresses its key vulnerabilities in terms of plausible
vulnerability scenarios under which the portfolio would suffer
material losses. These scenarios can be historical,
macroeconomic or forward-looking/hypothetical. Vulnerability-
based stress testing is used for internal management information
and is not subject to limits. The results for relevant scenarios are
reported to senior management.
Risk and capital management continued
NWB Group
Annual Report and Accounts 2025
17
Risk management framework continued
Stress testing – climate risk
NatWest Group continued to enhance its in-house climate risk
modelling capabilities, supporting the ongoing integration of
climate risk within its capital adequacy (ICAAP), impairment (IFRS
9) and risk management processes, for example, sharing insights
with sector and front-line teams to support the financial budget
and climate transition plan processes. In particular, internal
physical risk modelling capabilities were developed during 2025.
Specific internal-run exercises in 2025 included:
•
A credit-risk focused exercise covering both physical and
transition risk scenarios for both the Corporate & Institutional
portfolio and the Retail Banking residential mortgage portfolio.
•
A non-financial risk scenario for climate focused on external
communications which could omit or contain incorrect
information and mislead on NatWest Group activities.
There are various challenges with quantitative climate scenario
analysis, including in relation to the immaturity of modelling
techniques and limitations surrounding data on climate-related
risks. In addition, there is significant uncertainty as to how the
climate will evolve over time, how and when governments,
regulators, businesses, investors and customers respond and
how those responses impact the economy, asset valuations,
economic systems, policy and wider society. These risks and
uncertainties, coupled with significantly long timeframes, make
the outputs of climate-related risk modelling with respect to the
potential use cases identified inherently more uncertain than
outputs modelled for traditional financial planning cycles based on
historical financial information.
Regulatory stress testing
The Bank of England updated its approach to stress testing. The
Bank Capital Stress Test (BCST) is the successor to the Annual
Cyclical Stress scenario and will be run biennially. NatWest Group
was selected by the Bank of England to be one of the
participants in the 2025 BCST. The results were published in
December 2025 and NatWest Group remained above its CET1
capital and Tier 1 leverage ratio hurdle rates in stress and was
not required to strengthen its capital position. The results of this
stress test, and other relevant information, will be used by the
Bank of England to help inform NatWest Group capital buffers
(both the UK countercyclical capital buffer rate and PRA buffers).
The 2025 stress test aimed to assess the impact of a UK and
global macroeconomic stress on UK banks, spanning a five-year
period from Q4 2025 to Q4 2030. It was a coherent ‘tail risk’
scenario, designed to be severe and broad enough to assess the
resilience of UK banks to a range of adverse shocks. The stress
scenario is similar to the 2022/23 Annual Cyclical Stress with
weaker UK consumer price index inflation offset by more severe
financial markets stresses and economic shocks in some
jurisdictions.
The stress test was based on an end-of-December 2024 balance
sheet position.
Further details can be found at:
https://www.bankofengland.co.uk/stress-testing/2025/key-
elements-bank-capital
NWB Group
Annual Report and Accounts 2025
18
Credit risk
Definition
(audited)
Credit risk is the risk that customers, counterparties or issuers
fail to meet a contractual obligation to settle outstanding
amounts. For the purposes of the credit risk section, Personal
refers to lending to individuals and Non-Personal refers to lending
to small and medium-sized enterprises, corporates, banks and
other financial institutions.
Sources of risk (audited)
The principal sources of credit risk for NWB Group are lending
and related undrawn commitments. Derivatives and securities
financing and debt securities are also a source of credit risk,
primarily related to Treasury activities for NWB Group. NWB
Group is also exposed to settlement risk through foreign
exchange and payments activities.
Governance
(audited)
Risk governance for credit risk is in line with the approach
outlined in the Risk management framework section.
The Credit Risk function provides oversight and challenge of
frontline credit risk management activities:
•
Establishing credit risk policy, standards and toolkits which
set out the mandatory limits and parameters required to
ensure that credit risk is managed within risk appetite and
which provide the minimum standards for the identification,
assessment, management, monitoring and reporting of credit
risk.
•
Oversight of the first line of defence to ensure that credit risk
remains within the appetite set by the Board and that it is
being managed adequately and effectively.
•
Assessing the adequacy of ECL provisions including
approving key IFRS 9 inputs (such as significant increase in
credit risk (SICR) thresholds) and any necessary in-model and
post model adjustments through NatWest Group and
business unit provisions and model committees.
Risk appetite (audited)
Risk appetite for credit risk is in line with the approach outlined in
the Risk management framework section.
Credit risk appetite is monitored through risk appetite
frameworks tailored to NWB Group’s Personal and Non-Personal
segments.
Personal
The Personal credit risk appetite framework sets limits that
control the quality and concentration of both existing and new
business for each relevant business segment. Risk appetite
measures consider the segments’ ability to grow sustainably and
the level of losses expected under stress. Credit risk is further
controlled through operational limits specific to customer or
product characteristics.
Non-Personal
The Non-Personal credit risk appetite framework has been
designed to reflect factors that influence the ability to operate
within risk appetite. Tools such as stress testing and economic
capital are used to measure credit risk volatility and develop links
between the framework and risk appetite limits.
The framework is used to manage concentrations of risk which
may arise across four lenses – single name, sector, country and
product and asset classes. The framework is supported by a
suite of transactional acceptance standards that set out the risk
parameters within which businesses should operate.
Identification and measurement
Risks are identified through relationship management and credit
stewardship of customers and portfolios. Credit stewardship
takes place throughout the customer relationship, beginning with
the initial approval. It includes the application of credit
assessment standards, credit risk mitigation, ensuring that credit
documentation is complete and appropriate, carrying out regular
portfolio or customer reviews and problem debt identification and
management.
Assessment and monitoring
Personal
Personal lending mainly comprises a high volume of lower-value
transactions supported by automated decision-making. To
maintain consistency in lending decisions and monitor
performance, NWB Group reviews both internal credit data and
external information from credit reference agencies, developing
and applying lending rules according to product type.
For higher-value, more complex personal loans, such as certain
residential mortgage lending, specialist credit managers are
responsible for final lending decisions within defined delegated
authority limits based on their experience.
Underwriting standards and portfolio performance are monitored
on an ongoing basis to ensure they remain appropriate for the
current market environment. Management information and
higher-risk segment monitoring are produced for portfolio
monitoring. Portfolio performance is measured against
operational limits related to various credit risk measures including
projected default rates and mortgage loan-to-value (LTV) ratios.
If operational limits identify areas of concern, management may
adjust credit or business strategy accordingly.
Non-Personal
Non-Personal customers, which include small and medium-sized
enterprises, corporates, banks and other financial institutions, are
typically managed on an individual basis. Customers are
aggregated as a single risk when sufficiently interconnected to
the extent that a failure of one could lead to the failure of
another.
A risk-based credit assessment is carried out before credit
facilities are made available to customers. The assessment
process depends on the complexity of the transaction.
For lower-risk transactions below specific thresholds, credit
decisions can be approved through a combination of fully
automated or relationship manager self-sanctioning within the
business. This process is facilitated through an auto-decision
system, which utilises scorecards, strategies and policy rules. For
other transactions, both business approval and credit approval
are required.
Credit quality and loss given default (LGD) are reviewed at least
annually. The review process assesses borrower performance,
the adequacy of security, compliance with terms and conditions,
and refinancing risk.
Mitigation
Mitigation techniques outlined in the credit risk toolkits and
transactional acceptance standards are applied in managing
credit portfolios across NWB Group. These techniques mitigate
credit concentrations related to individual customers, borrower
groups or a collection of related borrowers. Where possible,
customer credit balances are netted against obligations.
Mitigation tools may involve structuring security interests in
physical or financial assets, using credit derivatives such as credit
default swaps, credit-linked debt instruments and securitisation
structures, and utilising guarantees or similar instruments
(including credit insurance) from related and third parties.
Property is used to mitigate credit risk across a number of
portfolios, in particular residential mortgage lending and
commercial real estate.
Risk and capital management continued
Risk and capital management continued
Credit risk continued
NWB Group
Annual Report and Accounts 2025
19
Residential mortgages
NWB Group uses residential property as collateral to reduce
credit risk arising from mortgages. The value of the property is
determined during loan underwriting, either from a qualified
appraiser, such as one registered with the Royal Institution of
Chartered Surveyors (RICS), or by applying a statistically valid
model. Periodically, a sample of these valuations is reviewed by
an independent RICS-qualified appraiser. Retail Banking UK
updates residential property values quarterly based on country-
specific (Scotland, Wales and Northern Ireland) or English region
specific Office for National Statistics House Price indices.
Commercial real estate
For commercial real estate valuations, NWB Group works with a
managed panel of chartered surveying firms that cover relevant
geographic and property sectors in which NWB Group takes
collateral. RICS-registered valuers are contracted for specific
assets under service agreements to ensure consistency of quality
and advice. In the UK, an independent third-party market
indexation is applied to update external valuations for commercial
property, once they are more than a year old. For loan
obligations in excess of £2.5 million and where the charged
property has a book value in excess of £0.5 million, a formal
valuation review is typically commissioned at least every three
years.
Problem debt management
When stress or financial difficulties are identified, NWB Group
collaborates closely with customers to support them.
Personal
Pre-emptive triggers, based on both NWB Group and credit
reference agency data, are used to identify customers that may
be at risk of financial difficulty. NWB Group proactively contacts
these customers to offer support with the aim of preventing
further deterioration of their financial position.
Financial Health and Support
When a customer exceeds an agreed limit or misses a regular
monthly payment, the customer is contacted by NWB Group and
requested to remedy the position. If the situation is not resolved
then, where appropriate, the Financial Health and Support team
become involved and the customer is supported by skilled debt
management staff who endeavour to provide customers with
bespoke solutions.
If appropriate, a notice of intention to default and/or, a formal
demand may be issued to the customer. The account may also
be registered with credit reference agencies. Subsequently, the
customer’s debt may be referred to a third-party debt collection
agency or solicitor, to agree an affordable repayment plan. The
sale of unsecured debt may also be considered as an option.
Non-Personal
NWB Group uses a range of early warning indicators to identify
customers that may be exposed to emerging risks, including
financial stress, allowing for increased monitoring where
necessary. Early warning indicators may be internal, such as a
customer’s bank account activity, or external, such as the share
price of a publicly listed customer. When these indicators suggest
that a customer is experiencing potential or actual difficulty, or if
relationship managers or credit officers observe other signs of
financial difficulty, the customer may be classified within the
Wholesale Problem Debt Management framework.
Wholesale Problem Debt Management framework
This framework focuses on Non-Personal customers and is
designed to provide early identification of credit deterioration,
support intelligent risk-taking, ensure fair and consistent
customer outcomes and provide key insights into Non-Personal
lending portfolios.
There are two classifications in the framework that apply to non-
defaulted customers that are in financial stress – Heightened
Monitoring and Risk of Credit Loss. For the purposes of
provisioning, all exposures categorised as Heightened Monitoring
or Risk of Credit Loss are categorised as Stage 2 and subject to
a lifetime loss assessment.
The framework also applies to those customers that have met
NWB Group’s default criteria (AQ10 exposures). Defaulted
exposures are categorised as Stage 3 impaired for provisioning
purposes.
Heightened Monitoring customers are performing customers that
have met certain characteristics, which have led to significant
credit deterioration. Characteristics include trading issues,
covenant breaches, material probability of default (PD)
downgrades and past due facilities.
Heightened Monitoring customers require pre-emptive actions
(outside the customer’s normal trading patterns) to return or
maintain their facilities within NWB Group’s current risk appetite.
Risk of Credit Loss customers are performing customers that
have met the criteria for Heightened Monitoring and also pose a
risk of credit loss to NWB Group in the next 12 months should
mitigating action not be taken or not be successful.
The Wholesale Problem Debt Management framework does not
apply to problem debt management for small and medium-sized
enterprise retail customers. These customers are, where
necessary, managed by specialist problem debt management
teams, depending on the size of exposure or by the Financial
Health and Support team where a loan has been impaired.
Customer Lending Support
Where customers meet specific referral criteria, relationships are
supported by the Customer Lending Support team.
Customer Lending Support works with corporate and
commercial customers in financial difficulty to help them
understand their options and how their restructuring or
repayment strategies can be delivered.
Helping viable customers return to financial health and restoring
a normal banking relationship is always the preferred outcome.
However, where this is not possible, NWB Group works with
customers to achieve a solvent outcome.
Forbearance (audited)
Forbearance occurs when a concession is made on the
contractual terms of a debt in response to a customer’s financial
difficulties.
The aim of forbearance is to help the customer regain financial
stability while reducing risk. To ensure that forbearance is
appropriate for the customer, minimum standards are applied
when assessing, recording, monitoring and reporting
forbearance.
Personal
Forbearance options include payment concessions, loan
rescheduling (such as extending contractual maturity), switching
to interest-only payments, suspending interest or capitalising
arrears. This support can be provided for both mortgages and
unsecured lending.
Non-Personal
Forbearance may involve covenant waivers, amendments to
margins, payment concessions and loan rescheduling (including
extensions in contractual maturity), capitalisation of arrears, and
debt forgiveness or debt-for-equity swaps.
Risk and capital management continued
Credit risk continued
NWB Group
Annual Report and Accounts 2025
20
Customer PD and facility loss given default (LGD) are reassessed
prior to finalising any forbearance arrangement. The ultimate
outcome of a forbearance strategy is highly dependent on the
co-operation of the borrower and a viable business or repayment
outcome. If forbearance becomes unsuitable or is unsuccessful,
NWB Group may pursue repayment, enforcement of security or
insolvency proceedings, although these are options of last resort.
IFRS 9 models (audited)
IFRS 9 models provide PD, exposure at default (EAD) and LGD
for the purpose of calculating ECL.
Model build
Risk ranking is normally the same as for internal ratings based
(IRB) models to maintain consistency in risk measurement.
Economic drivers are incorporated, normally by using stress
models. Term structures are used to assess the risk of loss
beyond 12 months that will affect lifetime loss for exposures
which have significantly deteriorated (Stage 2) or defaulted
(Stage 3).
Model application
Model application involves selecting forward-looking economic
scenarios and assigning appropriate probability weights.
Model design principles
The modelling of ECL under IFRS 9 adopts the standard
approach of breaking down credit loss estimation into its
component parts of PD, LGD and EAD. To comply with IFRS 9,
these model parameters are designed with the following
characteristics:
•
Unbiased – provide a best estimate.
•
Point-in-time – reflecting current economic conditions as
opposed to through-the-cycle.
•
Economic forecasts – IFRS 9 PD estimates and, where
appropriate, EAD and LGD estimates reflecting economic
forecasts.
•
Lifetime measurement – parameters are provided as multi-
period term structures up to behavioural lifetimes.
PD
Personal
Personal PD models follow a discrete multi-horizon survival
approach, predicting quarterly PDs up to lifetime at account level.
A key driver is the score from related IRB PD models, with
economic forecasts incorporated through the stress models.
Non-Personal
Non-Personal PD models use a point-in-time/through-the-cycle
framework to provide point-in-time estimates that reflect
economic conditions at the reporting date. A key driver is the
score from related IRB PD models, with economic forecasts
incorporated through the stress models.
LGD
Personal
Economic forecasts are incorporated for the secured portfolios,
where changes in property prices can be readily accommodated.
Analysis has shown limited sensitivity to economic conditions on
LGDs for the other Personal portfolios.
Non-Personal
Economic forecasts are incorporated into LGD estimates using
the existing point-in-time/through-the-cycle framework.
However, for some portfolios, including low-default, sovereigns
and banks, there is insufficient loss data to substantiate estimates
that vary with economic conditions.
EAD
Personal
Revolving products employ existing IRB models as a foundation,
with appropriate adjustments incorporating a term structure
based on time to default. Amortising products use an
amortisation schedule, where a formula is used to calculate the
expected balance based on remaining terms and interest rates.
Non-Personal
EAD values rely on product-specific credit conversion factors
(CCFs), closely mirroring the product segmentation and approach
of the respective IRB model, but without conservative or
downturn assumptions. These CCFs are estimated over multi-
year time horizons.
Economic drivers (audited)
Introduction
The portfolio segmentation and selection of economic drivers for
IFRS 9 follows the approach used in stress testing. The stress
models for each portfolio segment (defined by product or asset
class and where relevant, industry sector and region) are based
on a selected, small number of economic variables that best
explain the movements in portfolio loss rates. The process to
select economic drivers uses empirical analysis and expert
judgement.
The most significant economic drivers for material portfolios are
shown in the table below:

Portfolio | Economic drivers
Personal | Unemployment rate, sterling swap rate,
mortgages | house price index, real wage
Personal | Unemployment rate, sterling swap rate,
unsecured | real wage
Corporates | Stock price index, gross domestic product
| (GDP)
Commercial real | Stock price index, commercial property
estate | price index, GDP

Economic scenarios
At 31 December 2025, the range of anticipated future economic
conditions was defined by a set of four internally developed
scenarios and their respective probabilities. In addition to the
base case, they comprised upside, downside and extreme
downside scenarios.
For 31 December 2025, the four scenarios were deemed
appropriate in capturing the uncertainty in economic forecasts
and the non-linearity in outcomes under different scenarios.
These four scenarios were developed to provide sufficient
coverage to current risks faced by the economy and consider
varying outcomes across the labour market, inflation, interest
rate, asset price and economic growth, around which there
remains pronounced levels of uncertainty.
Since 31 December 2024, the near-term economic growth
outlook weakened, with growth in the second half of 2025 losing
momentum. Inflation rose to nearly double the target level of 2%
in 2025, with underlying price pressures remaining firm.
However, there are tentative signs of easing inflationary
pressures and inflation is assumed to fall back close to the target
by the end of 2026. The peak unemployment rate is higher than
at 31 December 2024. The unemployment rate is assumed to
continue to rise in the near-term, albeit at a slower pace. The
Bank of England is expected to continue cutting interest rates in
a ‘gradual and careful’ manner with an assumed terminal rate in
the base case of 3.25%, marginally lower compared to 3.5%
assumed at 31 December 2024. Housing market activities
remained resilient in 2025, with prices expected to grow
modestly.
Risk and capital management continued
Credit risk continued
NWB Group
Annual Report and Accounts 2025
21
Economic drivers (audited)
High-level narrative – potential developments, vulnerabilities and risks

| Outperformance sustained – above trend growth as consumer sentiment | Upside
| recovers |
| Steady growth – staying close to trend pace | Base case
Growth | Stalling – cautious consumer and policy uncertainty weighs on activity | Downside
| Extreme stress – extreme fall in GDP, with policy support to facilitate sharp | Extreme downside
| recovery |
| Sticky – strong growth and/or wage policies keep services inflation above target | Upside
| in medium term |
| Battle won – beyond near-term volatility, services inflation continues to ease, 2% | Base case
Inflation | target is met on a sustained basis |
| Slow – above target inflation in 2026 but swiftly falls to lower levels | Downside
| Close to deflation – inflationary pressures diminish amidst pronounced weakness | Extreme downside
| in demand |
| Recovery – job growth rebounds strongly, reversing much of the recent rise in | Upside
| unemployment rate |
Labour | Cooling continues – gradual loosening continues into 2026, before improving | Base case
market | Job shedding – redundancies, reduced hours, building slack | Downside
| Depression – unemployment hits levels close to previous peaks amid severe | Extreme downside
| stress |
| Limited cuts – higher growth and inflation keep the Monetary Policy Committee | Upside
| cautious |
Rates | Steady – rate cutting cycle largely done, two further rate cuts | Base case
short-term | Supportive – sharp declines to support recovery | Downside
| Sharp drop – drastic easing in policy to support a sharp deterioration in the | Extreme downside
| economy |
| Above consensus – 4% | Upside
Rates | Middle – 3.25% | Base case
long-term | Low – 2.5% and below | Downside/Extreme downside

Main macroeconomic variables
The main macroeconomic variables for each of the four scenarios used for ECL modelling are set out in the table below.

| 2025 | 2024
|  |  |  | Extreme | Weighted |  |  |  | Extreme | Weighted
| Upside | Base case | Downside | downside | average | Upside | Base case | Downside | downside | average
Five-year summary | % | % | % | % | % | % | % | % | % | %
GDP | 2.1 | 1.4 | 0.5 | 0.1 | 1.2 | 2.0 | 1.3 | 0.5 | (0.2) | 1.1
Unemployment rate | 4.3 | 5.1 | 5.6 | 7.0 | 5.3 | 3.6 | 4.3 | 5.0 | 6.7 | 4.6
House price index | 5.7 | 3.3 | 0.6 | (3.8) | 2.6 | 5.8 | 3.5 | 0.8 | (4.3) | 2.7
Commercial real estate price | 6.1 | 2.2 | (0.3) | (5.0) | 1.9 | 5.4 | 1.2 | (1.0) | (5.7) | 1.1
Consumer price index | 2.6 | 2.4 | 2.4 | 1.8 | 2.3 | 2.4 | 2.2 | 3.5 | 1.6 | 2.4
Bank of England base rate | 4.0 | 3.5 | 2.6 | 1.4 | 3.2 | 4.4 | 4.0 | 3.0 | 1.6 | 3.6
Stock price index | 6.2 | 4.8 | 2.8 | 1.1 | 4.3 | 6.3 | 5.0 | 3.4 | 1.1 | 4.5
World GDP | 3.7 | 3.1 | 2.5 | 2.2 | 3.0 | 3.8 | 3.2 | 2.5 | 1.6 | 3.0
Probability weight | 22.4 | 45.0 | 19.5 | 13.1 |  | 23.2 | 45.0 | 19.1 | 12.7 |

(1)
The five-year summary runs from 2025-2029 for 31 December 2025 and from 2024-2028 for 31 December 2024.
(2)
The table shows compound annual growth rate (CAGR) for GDP, average levels for the unemployment rate and Bank of England base rate and Q4 to Q4 CAGR for other parameters.
Risk and capital management continued
Credit risk continued
NWB Group
Annual Report and Accounts 2025
22
Climate transition
Since 2023, NatWest Group has assessed the implicit contribution
to its base case macroeconomic scenario from changes in UK
transition policy, expressed as an additional implicit sectoral
carbon price
(1)
.
In 2025, NatWest Group individually assessed 50 active and
potential UK transition policies that had a significant impact on the
cost of emissions – for example, the Emissions Trading Scheme
and Renewables Obligation – and converted them into equivalent
implicit sectoral carbon prices. The prices were calculated as the
cost per tonne of emissions abated by each policy. Using an
internally developed model, NatWest Group estimated the impact
of sector carbon prices on key macroeconomic variables such as
GDP and unemployment. Using this analysis, NatWest Group
created two scenarios, the baseline, which incorporates climate
transition related impacts, and an alternative scenario, which
excludes them. Comparing ECL under these two scenarios
allowed NatWest Group to estimate an aggregate macroeconomic
impact of the analysed transition policies and their contribution to
ECL.
The current approach does not include physical risks and
transition risks, beyond the assessed transition policies. NatWest
Group will continue to enhance and develop the approach as
reliable data and methodology become available.
(1)
An implicit carbon price is an additional cost related to greenhouse gas emissions as a
result of climate transition policy.
Probability weightings of scenarios
NatWest Group applies a quantitative approach for IFRS 9 multiple
economic scenarios by selecting specific discrete scenarios that
represent the range of risks in the economic outlook and
assigning appropriate probability weights.
The approach involves comparing GDP paths for NatWest
Group’s scenarios against a set of 1,000 model simulations to
determine the percentile in the distribution that aligns most closely
with each scenario. The probability weight for the base case is
determined first using judgement, while probability weights for the
alternative scenarios are then assigned based on these
percentiles scores.
The weights were broadly comparable to those used at 31
December 2024 but with slightly more downside skew. The
assigned probability weights were judged to be aligned with the
subjective assessment of balance of the risks in the economy.
Given the balance of risks that the economies in which NatWest
Group operates are exposed to, NatWest Group judges it
appropriate that downside-biased scenarios have higher
combined probability weights than the upside-biased scenario. It
presents good coverage to the range of outcomes assumed in the
scenarios, including the potential for a robust recovery on the
upside and exceptionally challenging outcomes on the downside.
A 22.4% weighting was applied to the upside scenario, a 45.0%
weighting applied to the base case scenario, a 19.5% weighting
applied to the downside scenario and a 13.1% weighting applied
to the extreme downside scenario.
Risk and capital management continued
Credit risk continued
NWB Group
Annual Report and Accounts 2025
23
Economic drivers
UK gross domestic product (£bn)
Q4 2025
Q4 2026
Q4 2027
Q4 2028
Q4 2029
Q4 2030
2600
2700
2800
2900
3000
3100
3200
Upside
Base case
Downside
Extreme downside
UK unemployment rate (%)
Q4 2025
Q4 2026
Q4 2027
Q4 2028
Q4 2029
Q4 2030
0
1
2
3
4
5
6
7
8
9
Upside
Base case
Downside
Extreme downside
Bank of England base rate (%)
Q4 2025
Q4 2026
Q4 2027
Q4 2028
Q4 2029
Q4 2030
0
1
2
3
4
5
6
Upside
Base case
Downside
Extreme downside
UK house prices (index)
Q4 2025
Q4 2026
Q4 2027
Q4 2028
Q4 2029
Q4 2030
100
120
140
160
180
200
220
240
260
Upside
Base case
Downside
Extreme downside
Risk and capital management continued
Credit risk continued
NWB Group
Annual Report and Accounts 2025
24
Economic drivers (audited)
Annual figures

GDP - annual growth | Consumer price index - four quarter change
|  |  |  | Extreme | Weighted |  |  |  |  | Extreme | Weighted
| Upside | Base case | Downside | downside | average |  | Upside | Base case | Downside | downside | average
| % | % | % | % | % |  | % | % | % | % | %
2025 | 1.4 | 1.4 | 1.4 | 1.4 | 1.4 | 2025 | 3.6 | 3.6 | 3.6 | 3.6 | 3.6
2026 | 1.9 | 1.0 | 0.3 | (3.7) | 0.5 | 2026 | 2.7 | 2.3 | 2.7 | 0.6 | 2.3
2027 | 3.2 | 1.5 | (0.6) | (0.2) | 1.3 | 2027 | 2.4 | 2.0 | 1.8 | 1.1 | 1.9
2028 | 2.3 | 1.4 | 0.2 | 1.4 | 1.4 | 2028 | 2.1 | 2.0 | 1.7 | 1.8 | 1.9
2029 | 1.6 | 1.4 | 1.4 | 1.4 | 1.5 | 2029 | 2.0 | 2.0 | 2.0 | 2.0 | 2.0
2030 | 1.6 | 1.4 | 1.7 | 1.4 | 1.5 | 2030 | 2.0 | 2.0 | 2.0 | 2.0 | 2.0

Unemployment rate - annual average | Bank of England base rate - annual average
|  |  |  | Extreme | Weighted |  |  |  |  | Extreme | Weighted
| Upside | Base case | Downside | downside | average |  | Upside | Base case | Downside | downside | average
| % | % | % | % | % |  | % | % | % | % | %
2025 | 4.8 | 4.8 | 4.8 | 4.8 | 4.8 | 2025 | 4.24 | 4.24 | 4.24 | 4.24 | 4.24
2026 | 4.7 | 5.4 | 5.5 | 6.1 | 5.3 | 2026 | 4.00 | 3.52 | 2.94 | 1.14 | 3.20
2027 | 4.1 | 5.2 | 6.1 | 8.1 | 5.5 | 2027 | 4.00 | 3.25 | 2.00 | 0.17 | 2.77
2028 | 4.1 | 5.1 | 6.0 | 8.3 | 5.4 | 2028 | 4.00 | 3.25 | 2.00 | 0.39 | 2.80
2029 | 4.0 | 4.9 | 5.7 | 7.6 | 5.2 | 2029 | 4.00 | 3.25 | 2.00 | 1.02 | 2.88
2030 | 4.0 | 4.8 | 5.5 | 6.9 | 5.1 | 2030 | 4.00 | 3.25 | 2.15 | 1.82 | 3.02

House price index - four quarter change | Stock price index - four quarter change
|  |  |  | Extreme | Weighted |  |  |  |  | Extreme | Weighted
| Upside | Base case | Downside | downside | average |  | Upside | Base case | Downside | downside | average
| % | % | % | % | % |  | % | % | % | % | %
2025 | 3.0 | 3.0 | 3.0 | 3.0 | 3.0 | 2025 | 11.1 | 11.1 | 11.1 | 11.1 | 11.1
2026 | 7.8 | 3.4 | (1.2) | (13.1) | 1.3 | 2026 | 8.1 | 3.3 | (16.0) | (52.9) | (6.7)
2027 | 7.2 | 3.4 | (2.8) | (14.1) | 1.2 | 2027 | 5.1 | 3.3 | 7.2 | 33.9 | 6.5
2028 | 5.1 | 3.4 | 0.1 | (0.2) | 2.9 | 2028 | 3.5 | 3.3 | 7.2 | 25.3 | 5.9
2029 | 5.4 | 3.4 | 4.4 | 7.2 | 4.5 | 2029 | 3.5 | 3.3 | 7.2 | 20.2 | 5.7
2030 | 5.6 | 3.4 | 4.2 | 6.6 | 4.4 | 2030 | 3.0 | 3.3 | 7.2 | 16.8 | 5.5

Commercial real estate price - four quarter change
|  |  |  | Extreme | Weighted
| Upside | Base case | Downside | downside | average
| % | % | % | % | %
2025 | 2.6 | 2.6 | 2.6 | 2.6 | 2.6
2026 | 14.1 | 2.9 | (6.8) | (24.1) | -
2027 | 4.4 | 2.6 | (2.5) | (13.0) | 0.6
2028 | 5.5 | 1.5 | 2.8 | 7.0 | 3.3
2029 | 4.2 | 1.6 | 2.6 | 6.8 | 2.9
2030 | 2.7 | 1.6 | 2.5 | 6.5 | 2.5

Worst points

| 2025 | 2024
|  |  | Extreme |  | Weighted |  |  | Extreme |  | Weighted
| Downside |  | downside |  | average | Downside |  | downside |  | average
| % | Quarter | % | Quarter | % | % | Quarter | % | Quarter | %
GDP | - | Q4 2027 | (3.8) | Q4 2026 | - | - | Q1 2024 | (4.1) | Q4 2025 | -
Unemployment rate - peak | 6.2 | Q4 2027 | 8.5 | Q4 2027 | 5.6 | 5.6 | Q4 2026 | 8.5 | Q1 2027 | 4.9
House price index | (2.4) | Q2 2028 | (25.9) | Q2 2028 | - | (1.9) | Q2 2027 | (25.6) | Q3 2027 | -
Commercial real estate price | (7.3) | Q2 2027 | (33.3) | Q3 2027 | - | (10.5) | Q2 2026 | (35.0) | Q3 2026 | (1.8)
Consumer price index |  |  |  |  |  |  |  |  |  |
- highest four quarter change | 3.8 | Q3 2025 | 3.8 | Q3 2025 | 3.8 | 6.1 | Q1 2026 | 3.5 | Q1 2024 | 3.5
Bank of England base rate |  |  |  |  |  |  |  |  |  |
- extreme level | 2.0 | Q1 2025 | 0.1 | Q1 2025 | 2.8 | 2.0 | Q1 2024 | 0.1 | Q1 2024 | 2.9
Stock price index | (6.7) | Q4 2026 | (47.7) | Q4 2026 | - | (0.2) | Q4 2025 | (27.4) | Q4 2025 | -

(1)
The figures show falls relative to the starting period for GDP, house price index, commercial real estate price and stock price index. For unemployment rate, it shows highest value
through the scenario horizon. For consumer price index, it shows highest annual percentage change. For Bank of England base rate, it shows highest or lowest value through the
horizon. The calculations are performed over five years, with a starting point of Q4 2024 for 31 December 2025 scenarios and Q4 2023 for 31 December 2024 scenarios.
Risk and capital management continued
Credit risk continued
NWB Group
Annual Report and Accounts 2025
25
Impairment, provisioning and write-offs (audited)
In the overall assessment of credit risk, impairment provisioning
and write-offs are used as key indicators of credit quality.
SICR
Defaulted exposures are classified in Stage 3 and subject to
lifetime ECL measurement. Remaining exposures are assessed
for SICR since initial recognition. Where exposures are identified
with SICR, they are classified in Stage 2 and assessed using a
lifetime ECL measurement. Exposures not considered
deteriorated are assessed with a 12-month ECL. NWB Group
applies a framework to identify deterioration, primarily based on
changes in lifetime PD, supported by additional qualitative high-
risk backstops.
•
IFRS 9 lifetime PD assessment (the primary driver) – relies on
measuring the relative deterioration in forward-looking
lifetime PD and is assessed monthly. SICR is determined by
comparing the residual lifetime PD at the balance sheet date
with the lifetime PD at the date of initial recognition (DOIR). If
the current lifetime PD exceeds the origination PD by more
than a defined threshold, SICR is assumed to have occurred
and the exposure moved into Stage 2 for a lifetime ECL
assessment. For Non-Personal, a doubling of PD would
indicate a SICR, subject to a minimum PD uplift of 0.1%. For
Personal portfolios and small and medium-sized enterprise
retail, the criteria vary by risk band, as detailed in the
following table:
•
Qualitative high-risk backstop assessment – supplements the
PD assessment to evaluate whether significant deterioration
in lifetime risk of default occurred. This included the
mandatory 30+ days past due backstop, as prescribed by
IFRS 9 guidance, as well as other elements such as
forbearance support, Non-Personal exposures managed
within the Wholesale Problem Debt Management framework,
and adverse credit bureau results for Personal customers.
•
Persistence (Personal and small and medium-sized enterprise
retail customers only) – the persistence rule ensures that
accounts which have met the criteria for PD driven
deterioration are still considered to be significantly
deteriorated for three months thereafter. This additional rule
enhances the timeliness of capture into Stage 2. The
persistence rule is applied to PD driven deterioration only.
Lifetime
The definitions of initial recognition and asset lifetime are
important considerations when determining the amount of
lifetime losses to be applied.
•
Initial recognition refers to the date that a transaction (or
account) is first recognised on the balance sheet, with the PD
at that point serving as the basis for subsequent
determination of SICR, as detailed above.
•
For asset lifetime, the approach is aligned with IFRS 9
requirements:
o
Term lending – the contractual maturity date is used and
adjusted for behavioural trends where applicable, such as
expected prepayment and amortisation.
o
Revolving facilities – for Personal portfolios (excluding credit
cards), asset duration is determined by behavioural life, which
was typically greater than contractual life. For the Non-
Personal portfolios, asset duration is based on annual
customer review schedules
.
Governance
The IFRS 9 PD, EAD and LGD models are subject to NatWest
Group’s model risk policy, which stipulates periodic model
monitoring and re-validation and defines approval procedures
and authorities according to model materiality. Post model
adjustments are applied where management deemed them
necessary to ensure an adequate level of overall ECL provision.
All post model adjustments undergo review, challenge and
approval by the relevant model or provisioning committees.
Post model adjustments will remain a key focus area of NWB
Group’s ongoing ECL adequacy assessment process. A
comprehensive framework has been established that
incorporates analysis of diverse economic data, external
benchmarks and portfolio performance trends with a particular
focus on segments (across both Personal and Non-Personal
portfolios) that may be more susceptible to specific risk factors.
Measurement uncertainty and ECL sensitivity analysis
(audited)
The recognition and measurement of ECL is complex and
requires significant judgement and estimation, especially during
times of economic volatility and uncertainty. This includes the
formulation and incorporation of multiple forward-looking
economic conditions into ECL to meet the measurement
objectives of IFRS 9. The ECL provision is sensitive to the model
inputs and economic assumptions used in the estimation.
Simulations were conducted to assess the impact of various
economic scenarios, including base case, upside, downside and
extreme downside scenarios. The potential ECL impacts reflected
the simulated impact as at 31 December 2025.
In the simulations, NWB Group assumed that the economic
macro variables associated with each scenario would replace the
existing base case economic assumptions, giving them a 100%
probability weighting and therefore serving as a single economic
scenario.
These scenarios were applied to all modelled portfolios in the
table, with the simulation affecting both PDs and LGDs. Post
model adjustments included in the ECL estimates were adjusted
in line with the modelled ECL movements. However, adjustments
that were judgemental in nature, such as those for deferred
model calibrations and economic uncertainty, were not
automatically recalculated. Instead, they will be re-evaluated by
management through ECL governance for any new economic
scenario outlook.
As expected, the scenarios created varying impacts on ECL by
portfolio, and these impacts were deemed reasonable.
The simulations assumed that existing modelled relationships
between key economic variables and drivers would hold.
However, in practice, other factors such as potential changes in
customer behaviour and policy changes could also impact the
wider availability of credit.
The focus of the simulations was on ECL provisioning
requirements for performing exposures in Stage 1 and Stage 2.
The simulations were run on a stand-alone basis and were
independent of each other. Scenario impacts on SICR were
considered when evaluating the ECL movements of Stage 1 and
Stage 2. In all scenarios, the total exposure remained the same,
but exposure by stage varied.
Stage 3 provisions are not subject to the same level of
measurement uncertainty, as default is an observed event as at
the balance sheet date and defaulted LGD is typically more
impacted by borrower specific factors rather than economics.
Therefore, Stage 3 provisions were not considered in this
analysis. NWB Group’s core criterion for identifying a SICR is
based on PD deterioration. Under the simulations, changes in
PDs resulted in exposures moving between Stage 1 and Stage 2,
contributing to the ECL impact.

| PD bandings (based |
| on residual lifetime |
Personal | PD calculated at | PD deterioration
risk bands | DOIR) | threshold criteria
A | <0.762% | PD@DOIR + 1%
B | <4.306% | PD@DOIR + 3%
C | >=4.306% | 1.7 x PD@DOIR

Risk and capital management continued
Credit risk continued
NWB Group
Annual Report and Accounts 2025
26
Measurement uncertainty and ECL sensitivity analysis (audited)

|  |  | Moderate | Moderate | Extreme
|  |  | upside | downside | downside
2025 | Actual | Base scenario | scenario | scenario | scenario
Stage 1 modelled loans (£m) |  |  |  |  |
Retail Banking - mortgages | 174,227 | 174,680 | 175,903 | 173,528 | 169,689
Retail Banking - unsecured | 10,987 | 11,072 | 11,397 | 10,848 | 10,057
Non-personal - property | 21,805 | 21,914 | 21,981 | 21,764 | 14,944
Non-personal - non-property | 93,878 | 94,527 | 94,780 | 93,809 | 76,089
| 300,897 | 302,193 | 304,061 | 299,949 | 270,779
Stage 1 modelled ECL (£m) |  |  |  |  |
Retail Banking - mortgages | 41 | 40 | 39 | 41 | 42
Retail Banking - unsecured | 262 | 268 | 257 | 260 | 248
Non-personal - property | 52 | 35 | 29 | 55 | 111
Non-personal - non-property | 143 | 118 | 109 | 153 | 262
| 498 | 461 | 434 | 509 | 663
Stage 1 coverage |  |  |  |  |
Retail Banking - mortgages | 0.02% | 0.02% | 0.02% | 0.02% | 0.02%
Retail Banking - unsecured | 2.38% | 2.42% | 2.25% | 2.40% | 2.47%
Non-personal - property | 0.24% | 0.16% | 0.13% | 0.25% | 0.74%
Non-personal - non-property | 0.15% | 0.12% | 0.12% | 0.16% | 0.34%
| 0.17% | 0.15% | 0.14% | 0.17% | 0.24%
Stage 2 modelled loans (£m) |  |  |  |  |
Retail Banking - mortgages | 14,477 | 14,024 | 12,801 | 15,176 | 19,015
Retail Banking - unsecured | 3,104 | 3,019 | 2,694 | 3,243 | 4,034
Non-personal - property | 1,849 | 1,740 | 1,673 | 1,890 | 8,710
Non-personal - non-property | 13,847 | 13,198 | 12,945 | 13,916 | 31,636
| 33,277 | 31,981 | 30,113 | 34,225 | 63,395
Stage 2 modelled ECL (£m) |  |  |  |  |
Retail Banking - mortgages | 33 | 31 | 27 | 35 | 51
Retail Banking - unsecured | 337 | 329 | 283 | 355 | 450
Non-personal - property | 37 | 31 | 28 | 40 | 277
Non-personal - non-property | 264 | 227 | 209 | 274 | 762
| 671 | 618 | 547 | 704 | 1,540
Stage 2 coverage |  |  |  |  |
Retail Banking - mortgages | 0.23% | 0.22% | 0.21% | 0.23% | 0.27%
Retail Banking - unsecured | 10.86% | 10.90% | 10.50% | 10.95% | 11.16%
Non-personal - property | 2.00% | 1.78% | 1.67% | 2.12% | 3.18%
Non-personal - non-property | 1.91% | 1.72% | 1.61% | 1.97% | 2.41%
| 2.02% | 1.93% | 1.82% | 2.06% | 2.43%
Stage 1 and Stage 2 modelled loans (£m) |  |  |  |  |
Retail Banking - mortgages | 188,704 | 188,704 | 188,704 | 188,704 | 188,704
Retail Banking - unsecured | 14,091 | 14,091 | 14,091 | 14,091 | 14,091
Non-personal - property | 23,654 | 23,654 | 23,654 | 23,654 | 23,654
Non-personal - non-property | 107,725 | 107,725 | 107,725 | 107,725 | 107,725
| 334,174 | 334,174 | 334,174 | 334,174 | 334,174
Stage 1 and Stage 2 modelled ECL (£m) |  |  |  |  |
Retail Banking - mortgages | 74 | 71 | 66 | 76 | 93
Retail Banking - unsecured | 599 | 597 | 540 | 615 | 698
Non-personal - property | 89 | 66 | 57 | 95 | 388
Non-personal - non-property | 407 | 345 | 318 | 427 | 1,024
| 1,169 | 1,079 | 981 | 1,213 | 2,203
Stage 1 and Stage 2 coverage |  |  |  |  |
Retail Banking - mortgages | 0.04% | 0.04% | 0.03% | 0.04% | 0.05%
Retail Banking - unsecured | 4.25% | 4.24% | 3.83% | 4.36% | 4.95%
Non-personal - property | 0.38% | 0.28% | 0.24% | 0.40% | 1.64%
Non-personal - non-property | 0.38% | 0.32% | 0.30% | 0.40% | 0.95%
| 0.35% | 0.32% | 0.29% | 0.36% | 0.66%
Reconciliation to Stage 1 and Stage 2 ECL (£m) |  |  |  |  |
ECL on modelled exposures | 1,169 | 1,079 | 981 | 1,213 | 2,203
ECL on non-modelled exposures | 30 | 31 | 31 | 31 | 31
Total Stage 1 and Stage 2 ECL (£m) | 1,199 | 1,110 | 1,012 | 1,244 | 2,234
Variance to actual total Stage 1 and Stage 2 ECL (£m) | - | (89) | (187) | 45 | 1,035

Risk and capital management continued
Credit risk continued
NWB Group
Annual Report and Accounts 2025
27
Measurement uncertainty and ECL sensitivity analysis continued (audited)

|  |  | Moderate | Moderate | Extreme
|  |  | upside | downside | downside
2025 | Actual | Base scenario | scenario | scenario | scenario
Reconciliation to Stage 1 and Stage 2 flow exposures (£m) |  |  |  |  |
Modelled loans | 334,174 | 334,174 | 334,174 | 334,174 | 334,174
Non-modelled loans | 16,879 | 16,879 | 16,879 | 16,879 | 16,879
Other asset classes | 81,269 | 81,269 | 81,269 | 81,269 | 81,269

(1)
Reflects ECL for all modelled exposure in scope for IFRS 9. The analysis excludes non-modelled portfolios and exposure relating to bonds and cash.
(2)
All simulations are run on a stand-alone basis and are independent of each other, with the potential ECL impact reflecting the simulated impact as at 31 December 2025. The simulations
change the composition of Stage 1 and Stage 2 exposure but total exposure was unchanged under each scenario as the loan population was static.
(3)
Refer to the Economic drivers section for details of economic scenarios.
(4)
Refer to the NWB Group 2024 Annual Report and Accounts for 2024 comparatives.
•
If the economics were as negative as observed in the extreme downside (i.e. 100% probability weighting), total Stage 1 and Stage
2 ECL was simulated to increase. In this scenario, Stage 2 exposure increased significantly and was the key driver of the simulated
ECL rise. The movement in Stage 2 balances in the other simulations was less significant.
•
In the Non-Personal portfolio, there was a significant increase in ECL under the extreme downside scenario on non-property
portfolios, driven by a significant deterioration in the stock index.
•
Given the continued economic uncertainty, NWB Group utilised a framework of quantitative and qualitative measures to support
the levels of ECL coverage. This included economic data, credit performance insights and problem debt trends. This was
particularly important for consideration of post model adjustments.
Risk and capital management continued
ECL post model adjustments (audited)
NWB Group
Annual Report and Accounts 2025
28
The table below shows ECL post model adjustments.

| Retail Banking | Private |  |
|  |  | Banking & |  |
|  |  | Wealth | Commercial & |
| Mortgages | Other | Management | Institutional | Total
2025 | £m | £m | £m | £m | £m
Deferred model calibrations | - | - | 1 | 11 | 12
Economic uncertainty | 42 | 36 | 11 | 120 | 209
Other adjustments | - | 19 | - | 14 | 33
Total | 42 | 55 | 12 | 145 | 254
Of which: |  |  |  |  |
- Stage 1 | 31 | 36 | 4 | 57 | 128
- Stage 2 | 11 | 16 | 8 | 88 | 123
- Stage 3 | - | 3 | - | - | 3
2024 |  |  |  |  |
Deferred model calibrations | - | - | 1 | 14 | 15
Economic uncertainty | 83 | 19 | 8 | 137 | 247
Other adjustments | - | - | - | 15 | 15
Total | 83 | 19 | 9 | 166 | 277
Of which: |  |  |  |  |
- Stage 1 | 54 | 8 | 5 | 69 | 136
- Stage 2 | 24 | 11 | 4 | 96 | 135
- Stage 3 | 5 | - | - | 1 | 6

Post model adjustments reduced since 31 December 2024,
reflecting the removal of COVID-19 post model adjustments
combined with updates to parameters.
•
Retail Banking
– As
at
31 December 2025, the post model
adjustment for economic uncertainty decreased to £78 million
(2024 – £102 million).
This reduction was driven by a revision
to the
cost of living
post model adjustment, standing at £78
million (2024 – £97 million), and was the sole
remaining
economic uncertainty
post model adjustment.
This
change was based on a review
of back-testing. Despite
ongoing economic and geopolitical uncertainty, the Retail
Banking portfolios
demonstrated
resilience, supported by a
robust risk appetite. The
cost of living
post model adjustment
continued to address the risk in segments of the Retail
Banking portfolio that were more susceptible to affordability
challenges. It focused on key affordability factors, including
over-indebted borrowers, poor credit card affordability status
and lower income customers in fuel poverty.
•
A £19 million post model adjustment was recognised as a
judgemental measure while additional loss data is
accumulated on the recently migrated Sainsbury’s Bank
lending portfolio.
•
Commercial & Institutional
– As at 31 December 2025, the
post model adjustment for economic uncertainty decreased
to £120 million (2024 – £137 million). The reduction was
driven by the retirement of COVID-19 post model
adjustments which were associated with government scheme
lending (2024 – £23 million). The continued economic
uncertainty post model adjustments reflected downgrades to
risk profile that were applied to the sectors that were
considered most at risk from the current economic and
geopolitical headwinds.
•
The remaining £25 million (2024 – £29 million) of post model
adjustments were for deferred model calibrations relating to
refinance risk and to mitigate the effect of operational timing
delays in the identification and flagging of a significant
increase in credit risk.
Risk and capital management continued
NWB Group
Annual Report and Accounts 2025
29
Credit risk – Banking activities
Introduction
This section details the credit risk profile of NWB Group’s banking activities.
Refer to Accounting policy 2.2 and Note 13 to the financial statements for policies and critical judgements relating to impairment loss
determination.
Financial instruments within the scope of the IFRS 9 ECL framework (audited)
Refer to Note 9 to the financial statements for balance sheet analysis of financial assets that are classified as amortised cost or fair
value through other comprehensive income (FVOCI), the starting point for IFRS 9 ECL framework assessment.

| 31 December 2025 | 31 December 2024
| Gross | ECL | Net | Gross | ECL | Net
| £bn | £bn | £bn | £bn | £bn | £bn
Balance sheet total gross amortised cost and FVOCI | 435.5 |  |  | 412.3 |  |
In scope of IFRS 9 ECL framework | 435.1 |  |  | 412.2 |  |
% in scope | 100% |  |  | 100% |  |
Loans to customers - in scope - amortised cost | 348.9 | 3.0 | 345.9 | 335.1 | 2.7 | 332.4
Loans to customers - in scope - FVOCI | 0.1 | - | 0.1 | - | - | -
Loans to banks - in scope - amortised cost | 4.5 | - | 4.5 | 3.4 | - | 3.4
Total loans - in scope | 353.5 | 3.0 | 350.5 | 338.5 | 2.7 | 335.8
Stage 1 | 316.4 | 0.5 | 315.9 | 298.2 | 0.5 | 297.7
Stage 2 | 33.4 | 0.7 | 32.7 | 35.5 | 0.6 | 34.9
Stage 3 | 3.7 | 1.8 | 1.9 | 4.8 | 1.6 | 3.2
Other financial assets - in scope - amortised cost | 51.6 | - | 51.6 | 44.3 | - | 44.3
Other financial assets - in scope - FVOCI | 30.0 | - | 30.0 | 29.4 | - | 29.4
Total other financial assets - in scope | 81.6 | - | 81.6 | 73.7 | - | 73.7
Stage 1 | 80.6 | - | 80.6 | 72.9 | - | 72.9
Stage 2 | 1.0 | - | 1.0 | 0.8 | - | 0.8
Out of scope of IFRS 9 ECL framework | 0.4 | na | 0.4 | 0.1 | na | 0.1
Loans to customers - out of scope - amortised cost | (0.3) | na | (0.3) | (0.4) | na | (0.4)
Other financial assets - out of scope - amortised cost | 0.6 | na | 0.6 | 0.6 | na | 0.6
Other financial assets - out of scope - FVOCI | 0.1 | na | 0.1 | (0.1) | na | (0.1)

na = not applicable
The assets outside the scope of IFRS 9 ECL framework were as
follows:
•
Settlement balances, items in the course of collection, cash
balances and other non-credit risk assets of £0.7 billion (2024
– £0.7 billion). These were assessed as having no ECL unless
there was evidence that they were defaulted.
•
Fair value adjustments on loans hedged by interest rate
swaps, where the underlying loan was within the IFRS 9 ECL
scope of £(0.3) billion (2024 – £(0.4) billion).
In scope assets also include an additional £7.0 billion (2024 – £3.1
billion) of inter-group assets not shown in table above.
Contingent liabilities and commitments
Total contingent liabilities (including financial guarantees) and
commitments within IFRS 9 ECL scope of £105.2 billion (2024 –
£96.7 billion) comprised Stage 1 £96.0 billion (2024 – £88.3 billion);
Stage 2 £8.9 billion (2024 – £7.7 billion); and Stage 3 £0.3 billion
(2024 – £0.7 billion).
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
30
Segment analysis – portfolio summary (audited)
The table below shows gross loans and ECL, by segment and stage, within the scope of the IFRS 9 ECL framework.

| Retail | Private Banking & | Commercial | Central items |
| Banking | Wealth Management | & Institutional | & other | Total
2025 | £m | £m | £m | £m | £m
Loans - amortised cost and FVOCI (1) |  |  |  |  |
Stage 1 | 186,986 | 17,552 | 78,169 | 33,656 | 316,363
Stage 2 | 17,293 | 1,115 | 14,912 | 59 | 33,379
Stage 3 | 1,727 | 348 | 1,662 | - | 3,737
Inter-group (2) |  |  |  | 6,970 | 6,970
| 206,006 | 19,015 | 94,743 | 40,685 | 360,449
ECL provisions (3) |  |  |  |  |
Stage 1 | 303 | 13 | 190 | 10 | 516
Stage 2 | 371 | 13 | 297 | 2 | 683
Stage 3 | 865 | 50 | 855 | - | 1,770
Inter-group |  |  |  | 1 | 1
| 1,539 | 76 | 1,342 | 13 | 2,970
ECL provisions coverage (4) |  |  |  |  |
Stage 1 (%) | 0.16 | 0.07 | 0.24 | 0.03 | 0.16
Stage 2 (%) | 2.15 | 1.17 | 1.99 | 3.39 | 2.05
Stage 3 (%) | 50.09 | 14.37 | 51.44 | - | 47.36
Inter-group (%) |  |  |  | 0.01 | 0.01
| 0.75 | 0.40 | 1.42 | 0.04 | 0.84
Impairment (releases)/losses |  |  |  |  |
ECL (release)/charge (5) |  |  |  |  |
Stage 1 | (51) | (8) | (93) | (1) | (153)
Stage 2 | 263 | 9 | 96 | 1 | 369
Stage 3 | 191 | 9 | 238 | - | 438
Inter-group |  |  |  | (1) | (1)
| 403 | 10 | 241 | (1) | 653
Amounts written-off | 318 | 2 | 169 | - | 489

For the notes to this table refer to the following page.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
31
Segment analysis – portfolio summary (audited)

| Retail | Private Banking & | Commercial | Central items |
| Banking | Wealth Management | & Institutional | & other | Total
2024 | £m | £m | £m | £m | £m
Loans - amortised cost and FVOCI (1) |  |  |  |  |
Stage 1 | 172,211 | 17,155 | 74,002 | 34,841 | 298,209
Stage 2 | 21,902 | 844 | 12,722 | 49 | 35,517
Stage 3 | 2,658 | 322 | 1,818 | - | 4,798
Inter-group (2) |  |  |  | 3,130 | 3,130
| 196,771 | 18,321 | 88,542 | 38,020 | 341,654
ECL provisions (3) |  |  |  |  |
Stage 1 | 245 | 16 | 211 | 10 | 482
Stage 2 | 370 | 11 | 285 | 1 | 667
Stage 3 | 844 | 37 | 718 | - | 1,599
Inter-group |  |  |  | 2 | 2
| 1,459 | 64 | 1,214 | 13 | 2,750
ECL provisions coverage (4) |  |  |  |  |
Stage 1 (%) | 0.14 | 0.09 | 0.29 | 0.03 | 0.16
Stage 2 (%) | 1.69 | 1.30 | 2.24 | 2.04 | 1.88
Stage 3 (%) | 31.75 | 11.49 | 39.49 | nm | 33.33
Inter-group (%) |  |  |  | 0.06 | 0.06
| 0.74 | 0.35 | 1.37 | 0.04 | 0.81
Impairment (releases)/losses |  |  |  |  |
ECL (release)/charge (5) |  |  |  |  |
Stage 1 | (174) | (10) | (159) | (12) | (355)
Stage 2 | 246 | (1) | 78 | 2 | 325
Stage 3 | 178 | - | 198 | - | 376
Inter-group |  |  |  | 1 | 1
| 250 | (11) | 117 | (9) | 347
Amounts written-off | 356 | - | 193 | - | 549

(1)
The table shows gross loans only and excludes amounts that are outside the scope of the ECL framework. Refer to the Financial instruments within the scope of the IFRS 9 ECL
framework section for further details. Other financial assets within the scope of the IFRS 9 ECL framework were cash and balances at central banks totalling £29.3 billion (2024 – £34.6
billion) and debt securities of £52.4 billion (2024 – £39.1 billion).
(2)
NWB Group's intercompany assets are classified in Stage 1.
(3)
Includes £3 million (2024 – £4 million) related to assets classified as FVOCI.
(4)
ECL provisions coverage is calculated as ECL provisions, including ECL for other non-loan assets and unutilised exposure, divided by loans – amortised cost and FVOCI. Some segments
with a high proportion of debt securities or unutilised exposure may result in a not meaningful (nm) coverage ratio.
(5)
Includes a £3 million release (2024 – £10 million charge) related to other financial assets, of which a £1 million release (2024 – £4 million charge) related to assets classified as FVOCI, and
includes a £4 million charge (2024 – £3 million release) related to contingent liabilities.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
32
Segmental loans and impairment metrics (audited)
The table below shows gross loans and ECL provisions, by segment and stage, within the scope of the ECL framework.

| Gross loans | ECL provisions | ECL
|  |  |  |  |  |  |  |  | Total |
|  |  |  |  |  |  |  |  | (release)/ | Amounts
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | charge | written-off
2025 | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
Retail Banking | 186,986 | 17,293 | 1,727 | 206,006 | 303 | 371 | 865 | 1,539 | 403 | 318
Private Banking & Wealth Management | 17,552 | 1,115 | 348 | 19,015 | 13 | 13 | 50 | 76 | 10 | 2
Personal | 14,140 | 338 | 259 | 14,737 | 3 | 2 | 24 | 29 | 6 | 2
Non-Personal | 3,412 | 777 | 89 | 4,278 | 10 | 11 | 26 | 47 | 4 | -
Commercial & Institutional | 78,169 | 14,912 | 1,662 | 94,743 | 190 | 297 | 855 | 1,342 | 241 | 169
Central items & other | 33,656 | 59 | - | 33,715 | 10 | 2 | - | 12 | - | -
Personal | 84 | 11 | - | 95 | 3 | 1 | - | 4 | 4 | -
Non-Personal | 33,572 | 48 | - | 33,620 | 7 | 1 | - | 8 | (4) | -
Total loans | 316,363 | 33,379 | 3,737 | 353,479 | 516 | 683 | 1,770 | 2,969 | 654 | 489
Of which: |  |  |  |  |  |  |  |  |  |
Personal | 201,210 | 17,642 | 1,986 | 220,838 | 309 | 374 | 889 | 1,572 | 413 | 320
Non-Personal | 115,153 | 15,737 | 1,751 | 132,641 | 207 | 309 | 881 | 1,397 | 241 | 169
2024 |  |  |  |  |  |  |  |  |  |
Retail Banking | 172,211 | 21,902 | 2,658 | 196,771 | 245 | 370 | 844 | 1,459 | 250 | 356
Private Banking & Wealth Management | 17,155 | 844 | 322 | 18,321 | 16 | 11 | 37 | 64 | (11) | -
Personal | 13,726 | 352 | 251 | 14,329 | 3 | 1 | 20 | 24 | 1 | -
Non-Personal | 3,429 | 492 | 71 | 3,992 | 13 | 10 | 17 | 40 | (12) | -
Commercial & Institutional | 74,002 | 12,722 | 1,818 | 88,542 | 211 | 285 | 718 | 1,214 | 117 | 193
Central items & other - Non-Personal | 34,841 | 49 | - | 34,890 | 10 | 1 | - | 11 | (10) | -
Total loans | 298,209 | 35,517 | 4,798 | 338,524 | 482 | 667 | 1,599 | 2,748 | 346 | 549
Of which: |  |  |  |  |  |  |  |  |  |
Personal | 185,937 | 22,254 | 2,909 | 211,100 | 248 | 371 | 864 | 1,483 | 251 | 356
Non-Personal | 112,272 | 13,263 | 1,889 | 127,424 | 234 | 296 | 735 | 1,265 | 95 | 193

•
Retail Banking
– Balance sheet growth during the year was
mainly due to mortgages. Within the Unsecured portfolios,
alongside organic growth in the credit cards and personal
loans portfolios, the acquisition of the Sainsbury’s Bank
portfolios further contributed to the balance sheet growth.
Asset quality was maintained during the year, reflecting
ongoing customer resilience and robust risk appetite.
Alongside steady portfolio performance, good book and total
ECL coverage for Retail Banking remained broadly consistent
with 31 December 2024. Underlying ECL coverage increased
due to growth in unsecured lending, including the acquisition
of the Sainsbury’s Bank portfolio earlier in 2025, but this was
offset by balance sheet management actions, including a
mortgage securitisation transaction and unsecured debt
sales. The proportion of Stage 3 loans declined over the year,
mainly as a result of the balance sheet management actions
described above, notably the mortgage securitisation, which
reduced Stage 3 loans by £0.8 billion. Furthermore, there
was an enhancement to the mortgage definition of default
systems and process, resulting in approximately £0.4 billion
of loans migrating from Stage 3 back to the good book. While
default performance was broadly stable overall, unsecured
flows into Stage 3 increased year-on-year, driven by
strategic growth and seasoning of credit card balances since
2022.
•
Commercial & Institutional
– Balance sheet growth in the
year was primarily in corporates and was reflected in Stage
1. Despite the increase in performing book exposures,
performing book provisions decreased, driven by reductions
in post model adjustments for economic uncertainty. Total
provision balance growth primarily reflected the impact of a
small number of individual charges in Stage 3. Despite the
increase in Stage 3 ECL, loan balances flowing into Stage 3
were lower than the prior year. The combination of
increased Stage 3 charges combined with lower inflows into
Stage 3 drove the increase in Stage 3 ECL provisions
coverage. Total book coverage remained broadly similar
year-on-year, as the increase in Stage 3 ECL provisions
coverage was partially offset by reductions in performing
book coverage. The full year 2025 total charge was higher
compared to 2024, primarily driven by a small good book
charge in 2025 compared to a notable release in 2024.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
33
Sector analysis – portfolio summary
(audited)
The table below shows financial assets and off-balance sheet exposures gross of ECL and related ECL provisions, impairment and past
due by sector, asset quality and geographical region.

| Personal | Non-Personal | Total
|  | Credit | Other |  | Corporate |  |  |  |
| Mortgages (1) | cards | personal | Total | and other | FI | Sovereign | Total |
2025 | £m | £m | £m | £m | £m | £m | £m | £m | £m
Loans by geography | 203,788 | 7,356 | 9,694 | 220,838 | 93,058 | 37,929 | 1,654 | 132,641 | 353,479
- UK | 203,788 | 7,356 | 9,694 | 220,838 | 80,011 | 30,903 | 1,212 | 112,126 | 332,964
- Other Europe | - | - | - | - | 5,465 | 2,527 | 30 | 8,022 | 8,022
- RoW | - | - | - | - | 7,582 | 4,499 | 412 | 12,493 | 12,493
Loans by stage and asset quality (2) | 203,788 | 7,356 | 9,694 | 220,838 | 93,058 | 37,929 | 1,654 | 132,641 | 353,479
Stage 1 | 188,219 | 5,350 | 7,641 | 201,210 | 76,217 | 37,562 | 1,374 | 115,153 | 316,363
- AQ1 | 1,131 | - | 130 | 1,261 | 466 | 2,924 | 30 | 3,420 | 4,681
- AQ2 | 2,313 | - | 129 | 2,442 | 4,089 | 24,475 | 1,213 | 29,777 | 32,219
- AQ3 | 8,313 | 9 | 133 | 8,455 | 8,862 | 499 | - | 9,361 | 17,816
- AQ4 | 96,605 | 98 | 351 | 97,054 | 17,126 | 6,987 | - | 24,113 | 121,167
- AQ5 | 71,092 | 1,069 | 500 | 72,661 | 26,850 | 1,550 | - | 28,400 | 101,061
- AQ6 | 3,735 | 1,231 | 2,379 | 7,345 | 12,976 | 810 | - | 13,786 | 21,131
- AQ7 | 4,548 | 2,648 | 3,345 | 10,541 | 5,506 | 315 | - | 5,821 | 16,362
- AQ8 | 344 | 275 | 615 | 1,234 | 317 | 2 | 131 | 450 | 1,684
- AQ9 | 138 | 20 | 59 | 217 | 25 | - | - | 25 | 242
Stage 2 | 14,593 | 1,795 | 1,254 | 17,642 | 15,244 | 228 | 265 | 15,737 | 33,379
- AQ1 | 12 | - | - | 12 | - | - | - | - | 12
- AQ2 | 4 | - | - | 4 | 29 | - | - | 29 | 33
- AQ3 | 63 | - | 10 | 73 | 3 | - | - | 3 | 76
- AQ4 | 5,725 | - | 87 | 5,812 | 1,479 | 48 | - | 1,527 | 7,339
- AQ5 | 5,917 | 51 | 81 | 6,049 | 3,273 | 56 | - | 3,329 | 9,378
- AQ6 | 662 | 151 | 164 | 977 | 4,291 | 55 | - | 4,346 | 5,323
- AQ7 | 658 | 958 | 406 | 2,022 | 5,011 | 35 | - | 5,046 | 7,068
- AQ8 | 702 | 536 | 377 | 1,615 | 937 | 28 | - | 965 | 2,580
- AQ9 | 850 | 99 | 129 | 1,078 | 221 | 6 | 265 | 492 | 1,570
Stage 3 | 976 | 211 | 799 | 1,986 | 1,597 | 139 | 15 | 1,751 | 3,737
- AQ10 | 976 | 211 | 799 | 1,986 | 1,597 | 139 | 15 | 1,751 | 3,737
Loans past due analysis | 203,788 | 7,356 | 9,694 | 220,838 | 93,058 | 37,929 | 1,654 | 132,641 | 353,479
- Not past due | 201,509 | 7,072 | 8,843 | 217,424 | 90,299 | 37,744 | 1,639 | 129,682 | 347,106
- Past due 1-30 days | 1,334 | 64 | 78 | 1,476 | 1,910 | 125 | - | 2,035 | 3,511
- Past due 31-89 days | 389 | 78 | 111 | 578 | 201 | 8 | - | 209 | 787
- Past due 90-180 days | 219 | 55 | 88 | 362 | 93 | 6 | - | 99 | 461
- Past due >180 days | 337 | 87 | 574 | 998 | 555 | 46 | 15 | 616 | 1,614
Loans - Stage 2 | 14,593 | 1,795 | 1,254 | 17,642 | 15,244 | 228 | 265 | 15,737 | 33,379
- Not past due | 13,328 | 1,704 | 1,140 | 16,172 | 14,514 | 216 | 265 | 14,995 | 31,167
- Past due 1-30 days | 1,012 | 36 | 40 | 1,088 | 550 | 4 | - | 554 | 1,642
- Past due 31-89 days | 253 | 55 | 74 | 382 | 180 | 8 | - | 188 | 570

For the notes to this table refer to page 36.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
34
Sector analysis – portfolio summary
(audited)

| Personal | Non-Personal | Total
|  | Credit | Other |  | Corporate |  |  |  |
| Mortgages (1) | cards | personal | Total | and other | FI | Sovereign | Total |
2025 | £m | £m | £m | £m | £m | £m | £m | £m | £m
Weighted average life (3) |  |  |  |  |  |  |  |  |
- ECL measurement (years) | 9 | 4 | 6 | 5 | 6 | 4 | 16 | 6 | 6
Weighted average 12 months PDs (3) |  |  |  |  |  |  |  |  |
- IFRS 9 (%) | 0.44 | 3.71 | 5.13 | 0.73 | 1.27 | 0.16 | 7.48 | 1.02 | 0.84
- Basel (%) | 0.62 | 3.95 | 3.66 | 0.82 | 1.12 | 0.17 | 7.48 | 0.93 | 0.86
ECL provisions by geography | 193 | 461 | 918 | 1,572 | 1,255 | 126 | 16 | 1,397 | 2,969
- UK | 193 | 461 | 918 | 1,572 | 1,116 | 90 | 4 | 1,210 | 2,782
- Other Europe | - | - | - | - | 92 | 2 | - | 94 | 94
- RoW | - | - | - | - | 47 | 34 | 12 | 93 | 93
ECL provisions by stage | 193 | 461 | 918 | 1,572 | 1,255 | 126 | 16 | 1,397 | 2,969
- Stage 1 | 43 | 116 | 150 | 309 | 190 | 12 | 5 | 207 | 516
- Stage 2 | 33 | 180 | 161 | 374 | 301 | 3 | 5 | 309 | 683
- Stage 3 | 117 | 165 | 607 | 889 | 764 | 111 | 6 | 881 | 1,770
ECL provisions coverage (%) | 0.09 | 6.27 | 9.47 | 0.71 | 1.35 | 0.33 | 0.97 | 1.05 | 0.84
- Stage 1 (%) | 0.02 | 2.17 | 1.96 | 0.15 | 0.25 | 0.03 | 0.36 | 0.18 | 0.16
- Stage 2 (%) | 0.23 | 10.03 | 12.84 | 2.12 | 1.97 | 1.32 | 1.89 | 1.96 | 2.05
- Stage 3 (%) | 11.99 | 78.20 | 75.97 | 44.76 | 47.84 | 79.86 | 40.00 | 50.31 | 47.36
ECL charge/(release) - third party | (114) | 241 | 286 | 413 | 182 | 57 | 2 | 241 | 654
Amounts written-off | 81 | 99 | 140 | 320 | 169 | - | - | 169 | 489
Other financial assets |  |  |  |  |  |  |  |  |
by asset quality (2) | - | - | - | - | 3,889 | 15,308 | 62,416 | 81,613 | 81,613
- AQ1-AQ4 | - | - | - | - | 3,889 | 15,273 | 62,416 | 81,578 | 81,578
- AQ5-AQ8 | - | - | - | - | - | 35 | - | 35 | 35
Off-balance sheet | 13,062 | 19,698 | 6,251 | 39,011 | 61,035 | 4,731 | 427 | 66,193 | 105,204
Loan commitments | 13,062 | 19,698 | 6,215 | 38,975 | 58,780 | 4,282 | 427 | 63,489 | 102,464
Financial guarantees | - | - | 36 | 36 | 2,255 | 449 | - | 2,704 | 2,740
Off-balance sheet |  |  |  |  |  |  |  |  |
by asset quality (2) | 13,062 | 19,698 | 6,251 | 39,011 | 61,035 | 4,731 | 427 | 66,193 | 105,204
- AQ1-AQ4 | 12,529 | 368 | 5,242 | 18,139 | 37,018 | 3,475 | 39 | 40,532 | 58,671
- AQ5-AQ8 | 525 | 19,265 | 974 | 20,764 | 23,741 | 1,210 | 12 | 24,963 | 45,727
- AQ9 | 4 | 10 | 11 | 25 | 58 | - | 376 | 434 | 459
- AQ10 | 4 | 55 | 24 | 83 | 218 | 46 | - | 264 | 347

For the notes to this table refer to page 36
.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
35
Sector analysis – portfolio summary (audited)

| Personal | Non-Personal | Total
|  | Credit | Other |  | Corporate |  |  |  |
| Mortgages (1) | cards | personal | Total | and other | FI | Sovereign | Total |
2024 | £m | £m | £m | £m | £m | £m | £m | £m | £m
Loans by geography | 197,089 | 5,935 | 8,076 | 211,100 | 87,248 | 39,647 | 529 | 127,424 | 338,524
- UK | 197,089 | 5,935 | 8,076 | 211,100 | 77,181 | 30,358 | 218 | 107,757 | 318,857
- Other Europe | - | - | - | - | 4,553 | 5,915 | 31 | 10,499 | 10,499
- RoW | - | - | - | - | 5,514 | 3,374 | 280 | 9,168 | 9,168
Loans by stage and asset quality (2) | 197,089 | 5,935 | 8,076 | 211,100 | 87,248 | 39,647 | 529 | 127,424 | 338,524
Stage 1 | 175,823 | 4,136 | 5,978 | 185,937 | 73,214 | 38,683 | 375 | 112,272 | 298,209
- AQ1 | 1,141 | - | 127 | 1,268 | 545 | 1,312 | 31 | 1,888 | 3,156
- AQ2 | 1,797 | - | 110 | 1,907 | 3,274 | 29,815 | 212 | 33,301 | 35,208
- AQ3 | 6,016 | 10 | 107 | 6,133 | 8,437 | 241 | 5 | 8,683 | 14,816
- AQ4 | 89,539 | 106 | 312 | 89,957 | 16,274 | 4,865 | - | 21,139 | 111,096
- AQ5 | 67,275 | 1,083 | 483 | 68,841 | 25,779 | 1,504 | - | 27,283 | 96,124
- AQ6 | 3,691 | 1,195 | 2,353 | 7,239 | 12,880 | 770 | - | 13,650 | 20,889
- AQ7 | 5,924 | 1,515 | 2,096 | 9,535 | 5,650 | 173 | - | 5,823 | 15,358
- AQ8 | 253 | 205 | 341 | 799 | 345 | 3 | 127 | 475 | 1,274
- AQ9 | 187 | 22 | 49 | 258 | 30 | - | - | 30 | 288
Stage 2 | 19,214 | 1,652 | 1,388 | 22,254 | 12,222 | 908 | 133 | 13,263 | 35,517
- AQ1 | 11 | - | 5 | 16 | - | - | - | - | 16
- AQ2 | 10 | - | - | 10 | 46 | - | - | 46 | 56
- AQ3 | 101 | - | 10 | 111 | - | - | - | - | 111
- AQ4 | 7,410 | - | 97 | 7,507 | 1,911 | 49 | - | 1,960 | 9,467
- AQ5 | 8,653 | 51 | 87 | 8,791 | 1,683 | 712 | - | 2,395 | 11,186
- AQ6 | 865 | 147 | 298 | 1,310 | 2,801 | 6 | - | 2,807 | 4,117
- AQ7 | 724 | 917 | 451 | 2,092 | 4,232 | 76 | - | 4,308 | 6,400
- AQ8 | 577 | 463 | 320 | 1,360 | 1,324 | 64 | - | 1,388 | 2,748
- AQ9 | 863 | 74 | 120 | 1,057 | 225 | 1 | 133 | 359 | 1,416
Stage 3 | 2,052 | 147 | 710 | 2,909 | 1,812 | 56 | 21 | 1,889 | 4,798
- AQ10 | 2,052 | 147 | 710 | 2,909 | 1,812 | 56 | 21 | 1,889 | 4,798
Loans past due analysis | 197,089 | 5,935 | 8,076 | 211,100 | 87,248 | 39,647 | 529 | 127,424 | 338,524
- Not past due | 194,515 | 5,760 | 7,347 | 207,622 | 83,898 | 39,580 | 511 | 123,989 | 331,611
- Past due 1-30 days | 1,198 | 42 | 57 | 1,297 | 2,307 | 16 | - | 2,323 | 3,620
- Past due 31-89 days | 486 | 43 | 82 | 611 | 271 | 1 | 18 | 290 | 901
- Past due 90-180 days | 345 | 34 | 80 | 459 | 121 | 49 | - | 170 | 629
- Past due >180 days | 545 | 56 | 510 | 1,111 | 651 | 1 | - | 652 | 1,763
Loans - Stage 2 | 19,214 | 1,652 | 1,388 | 22,254 | 12,222 | 908 | 133 | 13,263 | 35,517
- Not past due | 18,262 | 1,598 | 1,305 | 21,165 | 11,433 | 904 | 133 | 12,470 | 33,635
- Past due 1-30 days | 732 | 26 | 30 | 788 | 555 | 3 | - | 558 | 1,346
- Past due 31-89 days | 220 | 28 | 53 | 301 | 234 | 1 | - | 235 | 536

For the notes to this table refer to the following page.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
36
Sector analysis – portfolio summary (audited)

| Personal | Non-Personal | Total
|  | Credit | Other |  | Corporate |  |  |  |
| Mortgages (1) | cards | personal | Total | and other | FI | Sovereign | Total |
2024 | £m | £m | £m | £m | £m | £m | £m | £m | £m
Weighted average life (3) |  |  |  |  |  |  |  |  |
- ECL measurement (years) | 8 | 4 | 6 | 6 | 6 | 2 | 2 | 6 | 6
Weighted average 12 months PDs (3) |  |  |  |  |  |  |  |  |
- IFRS 9 (%) | 0.50 | 3.23 | 4.67 | 0.72 | 1.34 | 0.18 | 13.27 | 1.03 | 0.83
- Basel (%) | 0.66 | 3.67 | 3.28 | 0.83 | 1.20 | 0.16 | 13.27 | 0.92 | 0.86
ECL provisions by geography | 357 | 323 | 803 | 1,483 | 1,191 | 60 | 14 | 1,265 | 2,748
- UK | 357 | 323 | 803 | 1,483 | 1,054 | 21 | 7 | 1,082 | 2,565
- Other Europe | - | - | - | - | 94 | 2 | - | 96 | 96
- RoW | - | - | - | - | 43 | 37 | 7 | 87 | 87
ECL provisions by stage | 357 | 323 | 803 | 1,483 | 1,191 | 60 | 14 | 1,265 | 2,748
- Stage 1 | 73 | 66 | 109 | 248 | 213 | 14 | 7 | 234 | 482
- Stage 2 | 56 | 159 | 156 | 371 | 286 | 8 | 2 | 296 | 667
- Stage 3 | 228 | 98 | 538 | 864 | 692 | 38 | 5 | 735 | 1,599
ECL provisions coverage (%) | 0.18 | 5.44 | 9.94 | 0.70 | 1.37 | 0.15 | 2.65 | 0.99 | 0.81
- Stage 1 (%) | 0.04 | 1.60 | 1.82 | 0.13 | 0.29 | 0.04 | 1.87 | 0.21 | 0.16
- Stage 2 (%) | 0.29 | 9.62 | 11.24 | 1.67 | 2.34 | 0.88 | 1.50 | 2.23 | 1.88
- Stage 3 (%) | 11.11 | 66.67 | 75.77 | 29.70 | 38.19 | 67.86 | 23.81 | 38.91 | 33.33
ECL (release)/charge - third party | 13 | 106 | 132 | 251 | 72 | 22 | 1 | 95 | 346
Amounts written-off | 12 | 84 | 260 | 356 | 193 | - | - | 193 | 549
Other financial assets |  |  |  |  |  |  |  |  |
by asset quality (2) | - | - | - | - | 3,481 | 16,237 | 53,934 | 73,652 | 73,652
- AQ1-AQ4 | - | - | - | - | 3,481 | 16,187 | 53,934 | 73,602 | 73,602
- AQ5-AQ8 | - | - | - | - | - | 50 | - | 50 | 50
Off-balance sheet | 11,799 | 16,655 | 6,541 | 34,995 | 57,208 | 4,338 | 145 | 61,691 | 96,686
- Loan commitments | 11,799 | 16,655 | 6,500 | 34,954 | 54,854 | 3,757 | 145 | 58,756 | 93,710
- Financial guarantees | - | - | 41 | 41 | 2,354 | 581 | - | 2,935 | 2,976
Off-balance sheet |  |  |  |  |  |  |  |  |
by asset quality (2) | 11,799 | 16,655 | 6,541 | 34,995 | 57,208 | 4,338 | 145 | 61,691 | 96,686
- AQ1-AQ4 | 11,286 | 456 | 5,502 | 17,244 | 33,821 | 3,231 | 60 | 37,112 | 54,356
- AQ5-AQ8 | 505 | 15,914 | 1,000 | 17,419 | 23,039 | 1,058 | 22 | 24,119 | 41,538
- AQ9 | 1 | 10 | 17 | 28 | 15 | - | 63 | 78 | 106
- AQ10 | 7 | 275 | 22 | 304 | 333 | 49 | - | 382 | 686

(1)
Includes a portion of Private Banking & Wealth Management lending secured against residential real estate, in line with ECL calculation methodology. Private Banking & Wealth
Management mortgages are reported in UK, reflecting the country of lending origination.
(2)
AQ bandings are based on Basel PDs and mapping is as follows:

Internal asset quality band | Probability of default range | Indicative S&P rating
AQ1 | 0% - 0.034% | AAA to AA
AQ2 | 0.034% - 0.048% | AA to AA-
AQ3 | 0.048% - 0.095% | A+ to A
AQ4 | 0.095% - 0.381% | BBB+ to BBB-
AQ5 | 0.381% - 1.076% | BB+ to BB
AQ6 | 1.076% - 2.153% | BB- to B+
AQ7 | 2.153% - 6.089% | B+ to B
AQ8 | 6.089% - 17.222% | B- to CCC+
AQ9 | 17.222% - 100% | CCC to C
AQ10 | 100% | D

(3)
Not within the scope of the Independent auditors’ report.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
37
Sector analysis – portfolio summary (audited)
The table below shows ECL by stage, for the Personal portfolio and Non-Personal portfolio including the three largest borrowing sector
clusters included in corporate and other.

| Loans - amortised cost and FVOCI | Off-balance sheet | ECL provisions
|  |  |  |  | Loan | Contingent |  |  |  |
| Stage 1 | Stage 2 | Stage 3 | Total | commitments | liabilities | Stage 1 | Stage 2 | Stage 3 | Total
2025 | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
Personal | 201,210 | 17,642 | 1,986 | 220,838 | 38,975 | 36 | 309 | 374 | 889 | 1,572
Mortgages | 188,219 | 14,593 | 976 | 203,788 | 13,062 | - | 43 | 33 | 117 | 193
Credit cards | 5,350 | 1,795 | 211 | 7,356 | 19,698 | - | 116 | 180 | 165 | 461
Other personal | 7,641 | 1,254 | 799 | 9,694 | 6,215 | 36 | 150 | 161 | 607 | 918
Non-Personal | 115,153 | 15,737 | 1,751 | 132,641 | 63,489 | 2,704 | 207 | 309 | 881 | 1,397
Financial institutions | 37,562 | 228 | 139 | 37,929 | 4,282 | 449 | 12 | 3 | 111 | 126
Sovereign | 1,374 | 265 | 15 | 1,654 | 427 | - | 5 | 5 | 6 | 16
Corporate and other | 76,217 | 15,244 | 1,597 | 93,058 | 58,780 | 2,255 | 190 | 301 | 764 | 1,255
Of which: |  |  |  |  |  |  |  |  |  |
Commercial real estate | 11,611 | 4,001 | 70 | 15,682 | 8,137 | 368 | 22 | 43 | 36 | 101
Mobility and logistics | 13,525 | 784 | 188 | 14,497 | 4,910 | 82 | 43 | 12 | 68 | 123
Consumer Industries | 9,336 | 2,328 | 319 | 11,983 | 9,239 | 394 | 27 | 55 | 163 | 245
Total | 316,363 | 33,379 | 3,737 | 353,479 | 102,464 | 2,740 | 516 | 683 | 1,770 | 2,969
2024 |  |  |  |  |  |  |  |  |  |
Personal | 185,937 | 22,254 | 2,909 | 211,100 | 34,954 | 41 | 248 | 371 | 864 | 1,483
Mortgages | 175,823 | 19,214 | 2,052 | 197,089 | 11,799 | - | 73 | 56 | 228 | 357
Credit cards | 4,136 | 1,652 | 147 | 5,935 | 16,655 | - | 66 | 159 | 98 | 323
Other personal | 5,978 | 1,388 | 710 | 8,076 | 6,500 | 41 | 109 | 156 | 538 | 803
Non-Personal | 112,272 | 13,263 | 1,889 | 127,424 | 58,756 | 2,935 | 234 | 296 | 735 | 1,265
Financial institutions | 38,683 | 908 | 56 | 39,647 | 3,757 | 581 | 14 | 8 | 38 | 60
Sovereign | 375 | 133 | 21 | 529 | 145 | - | 7 | 2 | 5 | 14
Corporate and other | 73,214 | 12,222 | 1,812 | 87,248 | 54,854 | 2,354 | 213 | 286 | 692 | 1,191
Of which: |  |  |  |  |  |  |  |  |  |
Commercial real estate | 11,840 | 2,275 | 111 | 14,226 | 7,173 | 451 | 23 | 34 | 42 | 99
Mobility and logistics | 12,138 | 871 | 243 | 13,252 | 4,794 | 65 | 54 | 18 | 78 | 150
Consumer Industries | 9,407 | 2,557 | 382 | 12,346 | 8,810 | 439 | 37 | 75 | 159 | 271
Total | 298,209 | 35,517 | 4,798 | 338,524 | 93,710 | 2,976 | 482 | 667 | 1,599 | 2,748

Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
38
Non-Personal forbearance (audited)
The table below shows Non-Personal forbearance, Heightened Monitoring and Risk of Credit Loss by sector. The table shows current
exposure but reflects risk transfers where there is a guarantee by another customer.

|  | Financial |  |
| Corporate and other | institutions | Sovereign | Total
2025 | £m | £m | £m | £m
Forbearance (flow) | 2,917 | 43 | 12 | 2,972
Forbearance (stock) | 3,503 | 122 | 12 | 3,637
Heightened Monitoring and Risk of Credit Loss | 5,346 | 103 | 2 | 5,451
2024 |  |  |  |
Forbearance (flow) | 2,756 | 97 | 18 | 2,871
Forbearance (stock) | 3,686 | 78 | 18 | 3,782
Heightened Monitoring and Risk of Credit Loss | 5,148 | 119 | 1 | 5,268

Sector analysis – portfolio summary (audited)
•
Loans by geography and sector
– In line with NWB Group’s
strategic focus, exposures continued to be mainly in the UK.
•
Loans by stage
– Stage 3 balances reduced overall, with a
small reduction in Non-Personal due to write-offs and lower
inflows, and a larger reduction in Personal mortgages
following the securitisation transaction that removed £0.8
billion of Stage 3 assets, alongside a default definition systems
and process enhancement that moved loans back to the
good book. Stage 1 balances increased across the Personal
portfolios, driven by growth in mortgages and unsecured
lending, including the Sainsbury’s Bank portfolio acquisition.
Stage 2 balances were broadly unchanged from the end of
2024, with reductions in Personal mortgages, linked to PD
model enhancements and stable portfolio trends offset by
increases in Non-Personal, largely driven by post model
adjustment downgrades to sectors deemed most at risk of
economic uncertainty.
•
Loans – past due analysis
– Within the Personal portfolio,
arrears balances overall decreased during 2025 mainly driven
by the balance sheet management actions within the
mortgage portfolio described previously. For the unsecured
portfolios, arrears balances increased due to book growth
and portfolio maturation. In Non-Personal, arrears balances
reduced in line with Stage 3 balance reduction. The vast
majority of Stage 2 balances remained up to date, as Stage 2
is normally captured through other forward-looking Stage 2
triggers.
•
Weighted average 12 months PDs
– Both IFRS 9 and Basel
PDs remained broadly stable during the year overall, noting
the reduction in Personal mortgages due to PD model
enhancements and an increase in unsecured PDs driven by
strategic growth and seasoning of credit card balances since
2022. Non-Personal PDs were broadly stable in the year. The
higher PD in sovereigns reflected a single entity where
lending is fully guaranteed.
•
ECL provisions by stage and ECL provisions coverage
–
Overall provisions increased from 31 December 2024,
following an increase in good book ECL in the Personal
portfolios, driven by the portfolio acquisition of Sainsbury’s
Bank and organic growth in unsecured lending, and a small
number of significant individual Non-Personal Stage 3
charges. Stage 3 ECL growth was partly offset by the
transfer of mortgage assets to a securitisation special
purpose vehicle. Provisions coverage remained consistent
with 31 December 2024.
•
ECL charge (excluding inter-group)
– The 2025 impairment
charge, primarily reflected a small number of
significant
individual charges in the Non-Personal portfolio alongside the
initial ECL cost from the portfolio acquisition from Sainsbury’s
Bank within Personal. This was partially offset by post model
adjustment releases in the good book and one-off releases,
notably on the definition of default systems and process
enhancement on Personal mortgages and a mortgage
securitisation. The increased charge in the Non-Personal
portfolio primarily reflected the impact of performing book
releases in 2024 not repeating.
•
Other financial assets by asset quality
–
These assets were
cash and debt securities, and generally of high credit quality
as reflected in the AQ banding.
•
Off-balance sheet exposures by asset quality
– The AQ band
split of off-balance sheet exposures broadly mirrored the
drawn loans portfolio for non-defaulted exposures. In the
Non-Personal portfolio, off-balance sheet exposures
increased year-on-year, reflecting an increase in unutilised
exposure in corporates and financial institutions. The increase
was primarily in the AQ1 to AQ4 band, indicating high credit
quality.
•
Non-Personal problem debt
– Exposures in the Wholesale
Problem Debt Management framework marginally increased
during 2025 due to an inflow of corporate customers onto the
framework across a range of sectors. There was no change
in the reasons for customers moving onto the framework
from 2024, with trading issues and cash/liquidity remaining
the key
main drivers.
•
Non-Personal forbearance
– Exposures classified as forborne
reduced marginally across multiple sectors, leading to lower
stock values in corporates. A portion of forbearance flows
related to cases in Customer Lending Support subject to
repeated forbearance.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
39
Credit risk enhancement and mitigation (audited)
The table below shows exposures of modelled portfolios within the scope of the ECL framework and related credit risk enhancement
and mitigation (CREM).

|  |  |  |  |  |  |  |  |  | Exposure post
|  | Maximum credit risk | CREM by type | CREM coverage | CREM
| Gross |  |  |  |  |  |  |  |  |  |
| exposure | ECL | Total | Stage 3 | Financial (1) | Property | Other (2) | Total | Stage 3 | Total | Stage 3
2025 | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn
Financial assets |  |  |  |  |  |  |  |  |  |  |
Cash and balances at central banks | 29.3 | - | 29.3 | - | - | - | - | - | - | 29.3 | -
Loans - amortised cost (3) | 353.5 | 3.0 | 350.5 | 2.0 | 41.8 | 236.5 | 22.3 | 300.6 | 1.6 | 49.9 | 0.4
Personal (4) | 220.9 | 1.6 | 219.3 | 1.1 | 1.3 | 203.1 | - | 204.4 | 0.9 | 14.9 | 0.2
Non-Personal (5) | 132.6 | 1.4 | 131.2 | 0.9 | 40.5 | 33.4 | 22.3 | 96.2 | 0.7 | 35.0 | 0.2
Debt securities | 52.3 | - | 52.3 | - | 0.2 | - | - | 0.2 | - | 52.1 | -
Total financial assets | 435.1 | 3.0 | 432.1 | 2.0 | 42.0 | 236.5 | 22.3 | 300.8 | 1.6 | 131.3 | 0.4
Contingent liabilities and |  |  |  |  |  |  |  |  |  |  |
commitments |  |  |  |  |  |  |  |  |  |  |
Personal (6) | 39.0 | - | 39.0 | 0.1 | 0.9 | 1.7 | - | 2.6 | - | 36.4 | 0.1
Non-Personal | 66.2 | - | 66.2 | 0.2 | 2.6 | 5.3 | 4.8 | 12.7 | - | 53.5 | 0.2
Total off-balance sheet | 105.2 | - | 105.2 | 0.3 | 3.5 | 7.0 | 4.8 | 15.3 | - | 89.9 | 0.3
Total exposure | 540.3 | 3.0 | 537.3 | 2.3 | 45.5 | 243.5 | 27.1 | 316.1 | 1.6 | 221.2 | 0.7
2024 |  |  |  |  |  |  |  |  |  |  |
Financial assets |  |  |  |  |  |  |  |  |  |  |
Cash and balances at central banks | 34.6 | - | 34.6 | - | - | - | - | - | - | 34.6 | -
Loans - amortised cost (3) | 338.5 | 2.7 | 335.8 | 3.2 | 41.1 | 227.7 | 22.1 | 290.9 | 2.7 | 44.9 | 0.5
Personal (4) | 211.1 | 1.5 | 209.6 | 2.0 | 0.7 | 196.4 | - | 197.1 | 1.8 | 12.5 | 0.2
Non-Personal 5) | 127.4 | 1.2 | 126.2 | 1.2 | 40.4 | 31.3 | 22.1 | 93.8 | 0.9 | 32.4 | 0.3
Debt securities | 39.1 | - | 39.1 | - | 0.1 | - | - | 0.1 | - | 39.0 | -
Total financial assets | 412.2 | 2.7 | 409.5 | 3.2 | 41.2 | 227.7 | 22.1 | 291.0 | 2.7 | 118.5 | 0.5
Contingent liabilities and |  |  |  |  |  |  |  |  |  |  |
commitments |  |  |  |  |  |  |  |  |  |  |
Personal (6) | 35.0 | - | 35.0 | 0.3 | 0.9 | 1.8 | - | 2.7 | - | 32.3 | 0.3
Non-Personal | 61.7 | - | 61.7 | 0.4 | 2.0 | 5.3 | 4.5 | 11.8 | - | 49.9 | 0.4
Total off-balance sheet | 96.7 | - | 96.7 | 0.7 | 2.9 | 7.1 | 4.5 | 14.5 | - | 82.2 | 0.7
Total exposure | 508.9 | 2.7 | 506.2 | 3.9 | 44.1 | 234.8 | 26.6 | 305.5 | 2.7 | 200.7 | 1.2

(1)
Includes cash and securities collateral.
(2)
Includes guarantees, charges over trade debtors, other asset finance related physical collateral as well as the amount by which credit risk exposure is reduced through netting
arrangements, mainly cash management pooling, which give NWB Group a legal right to set off the financial asset against a financial liability due to the same counterparty. Any additional
credit risk mitigation from a synthetic securitisation is not included in the table above.
(3)
NWB Group holds collateral in respect of individual loans – amortised cost to banks and customers. This collateral includes mortgages over property (both personal and commercial);
charges over business assets such as plant and equipment; inventories and trade debtors; and guarantees of lending from parties other than the borrower. NWB Group obtains collateral
in the form of securities in reverse repurchase agreements. Collateral values are capped at the value of the loan.
(4)
Stage 3 mortgage exposures have relatively limited uncovered exposure reflecting the security held. On unsecured credit cards and other personal borrowing, the residual uncovered
amount reflects historical experience of continued cash recovery post default through ongoing engagement with customers.
(5)
Stage 3 exposures post credit risk enhancement and mitigation in Non-Personal mainly represent enterprise value and the impact of written down collateral values; an individual
assessment to determine ECL will consider multiple scenarios and in some instances allocate a probability weighting to a collateral value in excess of the written down value.
(6)
The Personal gross exposure value includes £11.3 billion (2024 – £10.0 billion) in respect of pipeline mortgages where a committed offer has been made to a customer but where the
funds have not yet been drawn down. When drawn down, the exposure would be covered by a security over the borrower’s property.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
40
Personal portfolio (audited)
Disclosures in the Personal portfolio section include drawn exposure (gross of provisions).

| 2025 | 2024
|  | Private |  |  |  | Private |  |
|  | Banking & | Central |  |  | Banking & | Central |
| Retail | Wealth | items & |  | Retail | Wealth | items & |
| Banking | Management | Other | Total | Banking | Management | Other | Total
Personal lending | £m | £m | £m | £m | £m | £m | £m | £m
Mortgages | 190,750 | 13,038 | - | 203,788 | 184,234 | 12,826 | - | 197,060
Of which: |  |  |  |  |  |  |  |
Owner occupied | 172,011 | 11,644 | - | 183,655 | 166,557 | 11,348 | - | 177,905
Buy-to-let | 18,739 | 1,394 | - | 20,133 | 17,677 | 1,478 | - | 19,155
Interest only | 19,774 | 11,533 | - | 31,307 | 19,805 | 11,276 | - | 31,081
Mixed (1) | 9,354 | 76 | - | 9,430 | 9,662 | 40 | - | 9,702
ECL provisions (2) | 176 | 17 | - | 193 | 345 | 12 | - | 357
Other personal lending (3) | 15,256 | 1,699 | 95 | 17,050 | 12,572 | 1,301 | - | 13,873
ECL provisions (2) | 1,363 | 11 | 4 | 1,378 | 1,114 | 12 | - | 1,126
Total personal lending | 206,006 | 14,737 | 95 | 220,838 | 196,806 | 14,127 | - | 210,933
Mortgage LTV ratios |  |  |  |  |  |  |  |
- Owner occupied | 57% | 61% | - | 58% | 57% | 59% | - | 57%
- Stage 1 | 58% | 59% | - | 58% | 57% | 59% | - | 57%
- Stage 2 | 53% | 57% | - | 53% | 56% | 61% | - | 56%
- Stage 3 | 49% | 69% | - | 54% | 52% | 64% | - | 53%
- Buy-to-let | 55% | 62% | - | 55% | 54% | 60% | - | 54%
- Stage 1 | 55% | 60% | - | 55% | 54% | 60% | - | 55%
- Stage 2 | 52% | 56% | - | 53% | 53% | 57% | - | 53%
- Stage 3 | 51% | 56% | - | 52% | 52% | 56% | - | 53%
Gross new mortgage lending | 34,128 | 1,492 | - | 35,620 | 26,096 | 1,395 | - | 27,491
Of which: |  |  |  |  |  |  |  |
Owner occupied | 31,733 | 1,372 | - | 33,105 | 24,961 | 1,266 | - | 26,227
LTV > 90% | 1,660 | - | - | 1,660 | 864 | - | - | 864
Weighted average LTV (4) | 71% | 66% | - | 71% | 70% | 63% | - | 70%
Buy-to-let | 2,395 | 120 | - | 2,515 | 1,135 | 129 | - | 1,264
Weighted average LTV (4) | 61% | 65% | - | 61% | 61% | 62% | - | 61%
Interest only | 2,418 | 1,357 | - | 3,775 | 1,552 | 1,238 | - | 2,790
Mixed (1) | 1,029 | - | - | 1,029 | 1,136 | - | - | 1,136
Mortgage forbearance |  |  |  |  |  |  |  |
Forbearance flow (5) | 295 | 14 | - | 309 | 423 | 10 | - | 433
Forbearance stock | 965 | 10 | - | 975 | 1,403 | 20 | - | 1,423
Current | 770 | 2 | - | 772 | 1,035 | 9 | - | 1,044
1-3 months in arrears | 88 | 6 | - | 94 | 125 | 9 | - | 134
>3 months in arrears | 107 | 2 | - | 109 | 243 | 2 | - | 245

(1)
Includes accounts which have an interest only sub-account and a capital and interest sub-account to provide a more comprehensive view of interest only exposures.
(2)
Retail Banking excludes a non-material amount of lending and provisions held on relatively small legacy portfolios.
(3)
Comprises unsecured lending except for Private Banking & Wealth Management, which includes both secured and unsecured lending. It excludes loans that are commercial in nature.
(4)
New mortgage lending LTV reflects the LTV at the time of lending.
(5)
Forbearance flows only include an account once per year, although some accounts may be subject to multiple forbearance deals. Forbearance deals post default are excluded from these
flows.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
41
Personal portfolio (audited)
Mortgage LTV distribution by stage
The table below shows gross mortgage lending and related ECL by LTV band for the Retail Banking portfolio.

| Mortgages | ECL provisions | ECL provisions coverage
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total
2025 | £m | £m | £m | £m | £m | £m | £m | £m | % | % | % | %
≤50% | 60,940 | 6,165 | 386 | 67,491 | 9 | 9 | 54 | 72 | - | 0.1 | 14.0 | 0.1
>50% and ≤70% | 62,077 | 5,613 | 247 | 67,937 | 15 | 14 | 31 | 60 | - | 0.2 | 12.6 | 0.1
>70% and ≤80% | 27,278 | 1,704 | 59 | 29,041 | 8 | 6 | 7 | 21 | - | 0.4 | 11.9 | 0.1
>80% and ≤90% | 20,609 | 732 | 35 | 21,376 | 7 | 4 | 5 | 16 | - | 0.5 | 14.3 | 0.1
>90% and ≤100% | 4,420 | 76 | 6 | 4,502 | 1 | - | 2 | 3 | - | - | 33.3 | 0.1
>100% | 8 | 1 | 6 | 15 | - | - | 2 | 2 | - | - | 33.3 | 13.3
Total with LTVs | 175,332 | 14,291 | 739 | 190,362 | 40 | 33 | 101 | 174 | - | 0.2 | 13.7 | 0.1
Other | 385 | - | 3 | 388 | 3 | - | - | 3 | 0.8 | - | - | 0.8
Total | 175,717 | 14,291 | 742 | 190,750 | 43 | 33 | 101 | 177 | - | 0.2 | 13.6 | 0.1
2024 |  |  |  |  |  |  |  |  |  |  |  |
≤50% | 58,257 | 7,173 | 865 | 66,295 | 19 | 14 | 102 | 135 | - | 0.2 | 11.8 | 0.2
>50% and ≤70% | 59,790 | 7,225 | 724 | 67,739 | 28 | 21 | 76 | 125 | - | 0.3 | 10.5 | 0.2
>70% and ≤80% | 24,638 | 2,298 | 160 | 27,096 | 13 | 8 | 18 | 39 | 0.1 | 0.3 | 11.3 | 0.1
>80% and ≤90% | 16,505 | 1,718 | 79 | 18,302 | 9 | 9 | 11 | 29 | 0.1 | 0.5 | 13.9 | 0.2
>90% and ≤100% | 4,051 | 506 | 25 | 4,582 | 2 | 3 | 5 | 10 | - | 0.6 | 20.0 | 0.2
>100% | 13 | 4 | 11 | 28 | - | - | 5 | 5 | - | - | 45.5 | 17.9
Total with LTVs | 163,254 | 18,924 | 1,864 | 184,042 | 71 | 55 | 217 | 343 | - | 0.3 | 11.6 | 0.2
Other | 190 | 1 | 1 | 192 | 2 | - | - | 2 | 1.1 | - | - | 1.0
Total | 163,444 | 18,925 | 1,865 | 184,234 | 73 | 55 | 217 | 345 | - | 0.3 | 11.6 | 0.2

•
Mortgage balances increased during 2025 with continuing
organic growth. Unsecured lending grew overall, driven by
continuing growth in prime quality whole of market lending
and balance transfer credit card segments, as well as the
acquisition of Sainsbury’s Bank credit card and personal loan
portfolios.
•
Portfolios and new business were closely monitored against
agreed operating limits. These included loan-to-value ratios,
buy-to-let concentrations, new-build concentrations and
credit quality. Lending criteria, affordability calculations and
assumptions for new lending were adjusted during the year,
to maintain credit quality in line with appetite and to ensure
customers are assessed fairly as economic conditions
change.
•
LTV distribution of portfolio was broadly consistent with the
prior year with an increase in balances in the 70-90% LTV
bands consistent with increased new business during the
year, including support for first time buyers.
•
The mortgage forbearance reported in 2025 was net of the
mortgage securitisation previously mentioned, which reduced
the stock by £0.4 billion at the year-end.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
42
Personal portfolio (audited)
Mortgage LTV distribution by region
The table below shows gross mortgage lending by LTV band for Retail Banking, by geographical region.

|  |  |  |  |  | Weighted |  |
| ≤50% | 50%≤80% | 80%≤100% | >100% | Total | average LTV | Other | Total
2025 | £m | £m | £m | £m | £m | % | £m | £m
South East | 12,915 | 19,061 | 5,014 | 1 | 36,991 | 57 | 2 | 36,993
Greater London | 12,690 | 18,246 | 4,060 | 2 | 34,998 | 56 | 3 | 35,001
Scotland | 2,958 | 4,691 | 1,362 | - | 9,011 | 59 | 1 | 9,012
North West | 6,558 | 8,151 | 2,142 | 2 | 16,853 | 56 | 1 | 16,854
South West | 6,247 | 8,576 | 2,449 | - | 17,272 | 57 | 1 | 17,273
West Midlands | 5,035 | 7,118 | 2,009 | 1 | 14,163 | 57 | 2 | 14,165
East of England | 7,679 | 12,035 | 3,374 | - | 23,088 | 58 | 1 | 23,089
Rest of the UK | 13,409 | 19,100 | 5,468 | 9 | 37,986 | 58 | 377 | 38,363
Total | 67,491 | 96,978 | 25,878 | 15 | 190,362 | 57 | 388 | 190,750
2024 |  |  |  |  |  |  |  |
South East | 12,768 | 18,742 | 4,496 | 1 | 36,007 | 57 | 2 | 36,009
Greater London | 13,002 | 18,254 | 3,377 | 1 | 34,634 | 55 | 3 | 34,637
Scotland | 2,780 | 4,486 | 1,381 | - | 8,647 | 59 | 1 | 8,648
North West | 6,469 | 7,937 | 1,858 | 1 | 16,265 | 55 | 1 | 16,266
South West | 6,197 | 8,334 | 2,049 | 1 | 16,581 | 56 | 1 | 16,582
West Midlands | 4,983 | 6,835 | 1,677 | - | 13,495 | 56 | 1 | 13,496
East of England | 7,256 | 11,563 | 3,202 | 2 | 22,023 | 58 | 1 | 22,024
Rest of the UK | 12,840 | 18,685 | 4,843 | 22 | 36,390 | 57 | 182 | 36,572
Total | 66,295 | 94,836 | 22,883 | 28 | 184,042 | 57 | 192 | 184,234

Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
43
Commercial real estate (audited)
CRE LTV distribution by stage
The table below shows CRE gross loans and related ECL by LTV band.

| Gross loans | ECL provisions | ECL provisions coverage
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total
2025 | £m | £m | £m | £m | £m | £m | £m | £m | % | % | % | %
≤50% | 5,231 | 177 | 14 | 5,422 | 15 | 3 | 5 | 23 | 0.3 | 1.7 | 35.7 | 0.4
>50% and ≤60% | 3,552 | 125 | 37 | 3,714 | 13 | 2 | 5 | 20 | 0.4 | 1.6 | 13.5 | 0.5
>60% and ≤70% | 696 | 7 | 17 | 720 | 3 | - | 5 | 8 | 0.4 | - | 29.4 | 1.1
>70% and ≤100% | 250 | 52 | 31 | 333 | 1 | 2 | 16 | 19 | 0.4 | 3.8 | 51.6 | 5.7
>100% | 114 | - | 43 | 157 | - | - | 16 | 16 | - | - | 37.2 | 10.2
Total with LTVs | 9,843 | 361 | 142 | 10,346 | 32 | 7 | 47 | 86 | 0.3 | 1.9 | 33.1 | 0.8
Total portfolio average LTV | 49% | 53% | 82% | 49% |  |  |  |  |  |  |  |
Other investment (1) | 1,994 | 252 | 26 | 2,272 | 4 | 2 | 8 | 14 | 0.2 | 0.8 | 31.1 | 0.6
Investment | 11,837 | 613 | 168 | 12,618 | 36 | 9 | 55 | 100 | 0.3 | 1.5 | 32.8 | 0.8
Development and other (2) | 1,688 | 171 | 20 | 1,879 | 7 | 3 | 13 | 23 | 0.4 | 1.8 | 65.0 | 1.2
Total | 13,525 | 784 | 188 | 14,497 | 43 | 12 | 68 | 123 | 0.3 | 1.5 | 36.2 | 0.8
2024 |  |  |  |  |  |  |  |  |  |  |  |
≤50% | 4,963 | 192 | 32 | 5,187 | 19 | 4 | 5 | 28 | 0.4 | 2.1 | 15.6 | 0.5
>50% and ≤60% | 2,952 | 109 | 40 | 3,101 | 16 | 2 | 7 | 25 | 0.5 | 1.5 | 16.9 | 0.8
>60% and ≤70% | 457 | 99 | 11 | 567 | 2 | 3 | 3 | 8 | 0.5 | 2.7 | 25.5 | 1.4
>70% and ≤100% | 208 | 53 | 27 | 288 | 1 | 2 | 10 | 13 | 0.5 | 3.8 | 37.0 | 4.5
>100% | 125 | 4 | 74 | 203 | 1 | - | 25 | 26 | 0.8 | - | 33.8 | 12.8
Total with LTVs | 8,705 | 457 | 184 | 9,346 | 39 | 11 | 50 | 100 | 0.4 | 2.4 | 27.2 | 1.1
Total portfolio average LTV | 48% | 54% | 81% | 49% |  |  |  |  |  |  |  |
Other investment (1) | 1,812 | 293 | 31 | 2,136 | 5 | 4 | 12 | 21 | 0.3 | 1.4 | 38.7 | 1.0
Investment | 10,517 | 750 | 215 | 11,482 | 44 | 15 | 62 | 121 | 0.4 | 2.0 | 28.8 | 1.1
Development and other (2) | 1,621 | 121 | 28 | 1,770 | 10 | 3 | 16 | 29 | 0.6 | 2.5 | 57.1 | 1.6
Total | 12,138 | 871 | 243 | 13,252 | 54 | 18 | 78 | 150 | 0.4 | 2.1 | 32.1 | 1.1

(1)
Relates mainly to business banking and unsecured corporate lending.
(2)
Relates to the development of commercial and residential properties. Along with CRE activities that are not strictly investment or development. LTV is not a meaningful measure for this
type of lending activity.
•
Overall – The majority of the CRE portfolio was located and
managed in the UK. Business appetite and strategy was
aligned across NWB Group.
•
2025 trends – There was strong growth in the residential and
retail sector, with other CRE sectors remaining broadly flat.
LTV profile remained stable.
•
Credit quality – Credit quality improved, with marginally fewer
exposures in the Wholesale Problem Debt Management
framework.
•
Risk appetite – Lending appetite is subject to regular review
and implemented at sub-sector level. Overall appetite slightly
increased over the year supported by the view that cyclical
risks are currently at a lower level.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
44
Flow statements (audited)
The flow statements that follow show the main ECL and related
income statement movements. They also show the changes in
ECL as well as the changes in related financial assets used in
determining ECL. Due to differences in scope, exposures may
differ from
those reported in other tables, principally in relation to
exposures in Stage 1 and Stage 2. These differences do not have
a material ECL effect. Other points to note:
•
Financial assets include treasury liquidity portfolios, comprising
balances at central banks and debt securities, as well as
loans. Both modelled and non-modelled portfolios are included.
•
Stage transfers (for example, exposures moving from Stage 1
into Stage 2) are a key feature of the ECL movements, with
the net re-measurement cost of transitioning to a worse stage
being a primary driver of income statement charges. Similarly,
there is an ECL benefit for accounts improving stage.
•
Changes in risk parameters shows the reassessment of the
ECL within a given stage, including any ECL overlays and
residual income statement gains or losses at the point of
write-off or accounting write-down.
•
Other (P&L only items) includes any subsequent changes in
the value of written-down assets (for example, fortuitous
recoveries) along with other direct write-off items such as
direct recovery costs. Other (P&L only items) affects the
income statement but does not affect balance sheet ECL
movements.
•
Amounts written-off represent the gross asset written-off
against accounts with ECL, including the net asset written-off
for any debt sale activity.
•
There were some flows from Stage 1 into Stage 3 including
transfers due to unexpected default events with a post model
adjustment in place for Commercial & Institutional to account
for this risk.
•
The effect of any change in post model adjustments during
the year is typically reported under changes in risk
parameters, as are any effects arising from changes to the
underlying models.
•
All movements are captured monthly and aggregated. Interest
suspended post default is included within Stage 3 ECL with
the movement in the value of suspended interest during the
year reported under currency translation and other
adjustments.

| Stage 1 | Stage 2 | Stage 3 | Total
|  |  | Financial |  | Financial |  | Financial |
| Financial assets | ECL | assets | ECL | assets | ECL | assets | ECL
NWB Group total | £m | £m | £m | £m | £m | £m | £m | £m
At 1 January 2025 | 368,461 | 482 | 37,181 | 667 | 4,758 | 1,599 | 410,400 | 2,748
Currency translation and other adjustments | (207) | - | 3 | - | 114 | 130 | (90) | 130
Transfers from Stage 1 to Stage 2 | (34,915) | (202) | 34,915 | 202 | - | - | - | -
Transfers from Stage 2 to Stage 1 | 29,772 | 376 | (29,772) | (376) | - | - | - | -
Transfers to Stage 3 | (292) | (4) | (2,159) | (220) | 2,451 | 224 | - | -
Transfers from Stage 3 | 131 | 17 | 841 | 39 | (972) | (56) | - | -
Net re-measurement of ECL on stage transfer |  | (257) |  | 532 | - | 386 |  | 661
Changes in risk parameters |  | (89) |  | (17) | - | 336 |  | 230
Other changes in net exposure | 34,856 | 193 | (6,493) | (144) | (1,975) | (241) | 26,388 | (192)
Other (P&L only items) |  | - |  | (2) | - | (43) |  | (45)
Income statement (releases)/charges |  | (153) |  | 369 |  | 438 |  | 654
Amounts written-off | - | - | - | - | (489) | (489) | (489) | (489)
Unwinding of discount |  | - |  | - |  | (119) |  | (119)
At 31 December 2025 | 397,806 | 516 | 34,516 | 683 | 3,887 | 1,770 | 436,209 | 2,969
Net carrying amount | 397,290 |  | 33,833 |  | 2,117 |  | 433,240 |
At 1 January 2024 | 361,888 | 566 | 33,756 | 794 | 4,440 | 1,512 | 400,084 | 2,872
2024 movements | 6,573 | (84) | 3,425 | (127) | 318 | 87 | 10,316 | (124)
At 31 December 2024 | 368,461 | 482 | 37,181 | 667 | 4,758 | 1,599 | 410,400 | 2,748
Net carrying amount | 367,979 |  | 36,514 |  | 3,159 |  | 407,652 |

Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
45
Flow statements (audited)

| Stage 1 | Stage 2 | Stage 3 | Total
| Financial |  | Financial |  | Financial |  | Financial |
| assets | ECL | assets | ECL | assets | ECL | assets | ECL
Retail Banking - mortgages | £m | £m | £m | £m | £m | £m | £m | £m
At 1 January 2025 | 162,865 | 73 | 19,152 | 55 | 1,857 | 217 | 183,874 | 345
Currency translation and other adjustments | - | - | - | - | 72 | 72 | 72 | 72
Transfers from Stage 1 to Stage 2 | (15,557) | (15) | 15,557 | 15 | - | - | - | -
Transfers from Stage 2 to Stage 1 | 16,684 | 23 | (16,684) | (23) | - | - | - | -
Transfers to Stage 3 | (12) | - | (744) | (6) | 756 | 6 | - | -
Transfers from Stage 3 | 20 | - | 677 | 10 | (697) | (10) | - | -
Net re-measurement of ECL on stage transfer |  | (6) |  | 8 |  | 7 |  | 9
Changes in risk parameters |  | (19) |  | (17) |  | 60 |  | 24
Other changes in net exposure | 10,286 | (13) | (3,481) | (9) | (1,157) | (119) | 5,648 | (141)
Other (P&L only items) |  | - |  | - |  | (11) |  | (11)
Income statement (releases)/charges |  | (38) |  | (18) |  | (63) |  | (119)
Amounts written-off | - | - | - | - | (80) | (80) | (80) | (80)
Unwinding of discount |  | - |  | - |  | (52) |  | (52)
At 31 December 2025 | 174,286 | 43 | 14,477 | 33 | 751 | 101 | 189,514 | 177
Net carrying amount | 174,243 |  | 14,444 |  | 650 |  | 189,337 |
At 1 January 2024 | 163,974 | 83 | 15,942 | 55 | 1,600 | 171 | 181,516 | 309
2024 movements | (1,109) | (10) | 3,210 | - | 257 | 46 | 2,358 | 36
At 31 December 2024 | 162,865 | 73 | 19,152 | 55 | 1,857 | 217 | 183,874 | 345
Net carrying amount | 162,792 |  | 19,097 |  | 1,640 |  | 183,529 |

•
ECL coverage for mortgages decreased during the year,
primarily driven by the reduction in economic uncertainty
post model adjustments (supported by back-testing) and a
definition of default systems and process enhancement in the
first half of the year. Additionally, the transfer of £2.1 billion of
mortgages with £0.1 billion of ECL to a securitisation special
purpose vehicle further reduced ECL coverage overall, noting
that £0.8 billion of these loans were in Stage 3.
•
Stage 3 inflows reduced in the year, with the portfolio
showing continued resilience alongside the effect of the
definition of default systems and process enhancement earlier
in the year.
•
Stable portfolio trends and PD model enhancements
underpinned PD reductions in the year, resulting in a
reduction in Stage 2 balances.
•
The relatively small ECL cost for net re-measurement on
transfer into Stage 3 included the effect of risk targeted ECL
adjustments, when previously in the good book. Refer to the
ECL post model adjustments section for further details.
•
Write-off occurs once the repossessed property has been
sold and there is a residual shortfall balance remaining
outstanding. This would typically be within five years from
default but can be longer.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
46
Flow statements (audited)

| Stage 1 | Stage 2 | Stage 3 | Total
| Financial |  | Financial |  | Financial |  | Financial |
| assets | ECL | assets | ECL | assets | ECL | assets | ECL
Retail Banking - credit cards | £m | £m | £m | £m | £m | £m | £m | £m
At 1 January 2025 | 3,876 | 66 | 1,716 | 159 | 134 | 98 | 5,726 | 323
Currency translation and other adjustments | - | - | - | - | 4 | 4 | 4 | 4
Transfers from Stage 1 to Stage 2 | (2,057) | (47) | 2,057 | 47 | - | - | - | -
Transfers from Stage 2 to Stage 1 | 1,172 | 95 | (1,172) | (95) | - | - | - | -
Transfers to Stage 3 | (32) | (1) | (201) | (69) | 233 | 70 | - | -
Transfers from Stage 3 | 3 | 2 | 11 | 5 | (14) | (7) | - | -
Net re-measurement of ECL on stage transfer |  | (64) |  | 171 |  | 88 |  | 195
Changes in risk parameters |  | 14 |  | 26 |  | 21 |  | 61
Other changes in net exposure | 2,162 | 50 | (544) | (65) | (24) | (1) | 1,594 | (16)
Other (P&L only items) |  | - |  | - |  | - |  | -
Income statement (releases)/charges |  | - |  | 132 |  | 108 |  | 240
Amounts written-off | - | - | - | - | (99) | (99) | (99) | (99)
Unwinding of discount |  | - |  | - |  | (9) |  | (9)
At 31 December 2025 | 5,124 | 115 | 1,867 | 179 | 234 | 165 | 7,225 | 459
Net carrying amount | 5,009 |  | 1,688 |  | 69 |  | 6,766 |
At 1 January 2024 | 2,869 | 58 | 1,656 | 166 | 117 | 73 | 4,642 | 297
2024 movements | 1,007 | 8 | 60 | (7) | 17 | 25 | 1,084 | 26
At 31 December 2024 | 3,876 | 66 | 1,716 | 159 | 134 | 98 | 5,726 | 323
Net carrying amount | 3,810 |  | 1,557 |  | 36 |  | 5,403 |

•
Overall ECL for cards increased during 2025, driven primarily
by the acquisition of Sainsbury’s Bank credit card balances
alongside continued organic portfolio growth, reflecting
strong customer demand, while sustaining robust risk
appetite.
•
Flow rates into Stage 3 were slightly higher in 2025
compared to 2024, reflecting the strategic growth and
seasoning of credit card balances since 2022. This trend
contributed to an increase in PDs during the year, driving a
net flow into Stage 2 from Stage 1.
•
Charge-off (analogous to partial write-off) typically occurs
after 12 missed payments.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
47
Flow statements (audited)

| Stage 1 | Stage 2 | Stage 3 | Total
| Financial |  | Financial |  | Financial |  | Financial |
| assets | ECL | assets | ECL | assets | ECL | assets | ECL
Retail Banking - other personal unsecured | £m | £m | £m | £m | £m | £m | £m | £m
At 1 January 2025 | 4,542 | 106 | 1,236 | 156 | 688 | 529 | 6,466 | 791
Currency translation and other adjustments | - | - | - | - | 22 | 22 | 22 | 22
Transfers from Stage 1 to Stage 2 | (1,858) | (84) | 1,858 | 84 | - | - | - | -
Transfers from Stage 2 to Stage 1 | 1,266 | 137 | (1,266) | (137) | - | - | - | -
Transfers to Stage 3 | (66) | (3) | (282) | (101) | 348 | 104 | - | -
Transfers from Stage 3 | 6 | 2 | 20 | 8 | (26) | (10) | - | -
Net re-measurement of ECL on stage transfer |  | (88) |  | 191 |  | 54 |  | 157
Changes in risk parameters |  | (26) |  | (9) |  | 105 |  | 70
Other changes in net exposure | 1,871 | 101 | (331) | (33) | (104) | (39) | 1,436 | 29
Other (P&L only items) |  | - |  | - |  | 26 |  | 26
Income statement (releases)/charges |  | (13) |  | 149 |  | 146 |  | 282
Amounts written-off | - | - | - | - | (139) | (139) | (139) | (139)
Unwinding of discount |  | - |  | - |  | (27) |  | (27)
At 31 December 2025 | 5,761 | 145 | 1,235 | 159 | 789 | 599 | 7,785 | 903
Net carrying amount | 5,616 |  | 1,076 |  | 190 |  | 6,882 |
At 1 January 2024 | 4,247 | 126 | 1,371 | 201 | 796 | 625 | 6,414 | 952
2024 movements | 295 | (20) | (135) | (45) | (108) | (96) | 52 | (161)
At 31 December 2024 | 4,542 | 106 | 1,236 | 156 | 688 | 529 | 6,466 | 791
Net carrying amount | 4,436 |  | 1,080 |  | 159 |  | 5,675 |

•
Total ECL increased during the year, primarily driven by the
acquisition of Sainsbury’s Bank loan balances and continued
organic loan book growth, while arrears performance
remained stable, resulting in ECL coverage levels broadly
consistent with 31 December 2024.
•
Flow rates into Stage 3 remained stable, in line with broader
portfolio trends on arrears, with overall Stage 3 balances
increasing as a result of reduced debt sale activity overall in
the year.
•
Write-off occurs once recovery activity with the customer has
been concluded or there are no further recoveries expected,
but no later than six years after default.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
48
Flow statements (audited)

| Stage 1 | Stage 2 | Stage 3 | Total
| Financial |  | Financial |  | Financial |  | Financial |
| assets | ECL | assets | ECL | assets | ECL | assets | ECL
Commercial & Institutional - corporate | £m | £m | £m | £m | £m | £m | £m | £m
At 1 January 2025 | 50,516 | 143 | 10,082 | 233 | 1,321 | 536 | 61,919 | 912
Currency translation and other adjustments | (265) | (3) | 2 | - | 16 | 19 | (247) | 16
Inter-group transfers | 193 | 2 | 11 | - | 1 | - | 205 | 2
Transfers from Stage 1 to Stage 2 | (11,768) | (43) | 11,768 | 43 | - | - | - | -
Transfers from Stage 2 to Stage 1 | 7,071 | 89 | (7,071) | (89) | - | - | - | -
Transfers to Stage 3 | (88) | - | (626) | (37) | 714 | 37 | - | -
Transfers from Stage 3 | 44 | 7 | 70 | 12 | (114) | (19) | - | -
Net re-measurement of ECL on stage transfer |  | (72) |  | 126 |  | 180 |  | 234
Changes in risk parameters |  | (19) |  | (6) |  | 89 |  | 64
Other changes in net exposure | 6,911 | 30 | (1,363) | (31) | (479) | (66) | 5,069 | (67)
Other (P&L only items) |  | (2) |  | (3) |  | (56) |  | (61)
Income statement (releases)/charges |  | (63) |  | 86 |  | 147 |  | 170
Amounts written-off | - | - | - | - | (143) | (143) | (143) | (143)
Unwinding of discount |  | - |  | - |  | (22) |  | (22)
At 31 December 2025 | 52,614 | 134 | 12,873 | 251 | 1,316 | 611 | 66,803 | 996
Net carrying amount | 52,480 |  | 12,622 |  | 705 |  | 65,807 |
At 1 January 2024 | 49,945 | 185 | 10,287 | 281 | 1,213 | 484 | 61,445 | 950
2024 movements | 571 | (42) | (205) | (48) | 108 | 52 | 474 | (38)
At 31 December 2024 | 50,516 | 143 | 10,082 | 233 | 1,321 | 536 | 61,919 | 912
Net carrying amount | 50,373 |  | 9,849 |  | 785 |  | 61,007 |

•
Total ECL increased in the year primarily reflecting a small
number of individual defaults. Despite the growth in Stage 3
ECL, transfers into Stage 3 reduced compared to 2024, with
a notable reduction in transfers seen in the second half of
2025.
•
Total performing book ECL was stable year-on-year, but with
a small increase in Stage 2, reflecting the net transfer of
assets from Stage 1 into Stage 2.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
49
Flow statements (audited)

| Stage 1 | Stage 2 | Stage 3 | Total
| Financial |  | Financial |  | Financial |  | Financial |
| assets | ECL | assets | ECL | assets | ECL | assets | ECL
Commercial & Institutional - property | £m | £m | £m | £m | £m | £m | £m | £m
At 1 January 2025 | 18,526 | 58 | 2,124 | 44 | 357 | 139 | 21,007 | 241
Currency translation and other adjustments | 7 | - | - | - | - | (7) | 7 | (7)
Inter-group transfers | (212) | - | 2 | - | (1) | - | (211) | -
Transfers from Stage 1 to Stage 2 | (1,793) | (6) | 1,793 | 6 | - | - | - | -
Transfers from Stage 2 to Stage 1 | 1,723 | 19 | (1,723) | (19) | - | - | - | -
Transfers to Stage 3 | (5) | - | (112) | (5) | 117 | 5 | - | -
Transfers from Stage 3 | 35 | 4 | 22 | 4 | (57) | (8) | - | -
Net re-measurement of ECL on stage transfer |  | (18) |  | 22 |  | 11 |  | 15
Changes in risk parameters |  | (21) |  | (7) |  | 26 |  | (2)
Other changes in net exposure | 2,197 | 11 | (235) | (6) | (92) | (9) | 1,870 | (4)
Other (P&L only items) |  | - |  | - |  | - |  | -
Income statement (releases)/charges |  | (28) |  | 9 |  | 28 |  | 9
Amounts written-off | - | - | - | - | (26) | (26) | (26) | (26)
Unwinding of discount |  | (1) |  | - |  | (5) |  | (6)
At 31 December 2025 | 20,478 | 46 | 1,871 | 39 | 298 | 126 | 22,647 | 211
Net carrying amount | 20,432 |  | 1,832 |  | 172 |  | 22,436 |
At 1 January 2024 | 16,667 | 66 | 2,141 | 63 | 395 | 119 | 19,203 | 248
2024 movements | 1,859 | (8) | (17) | (19) | (38) | 20 | 1,804 | (7)
At 31 December 2024 | 18,526 | 58 | 2,124 | 44 | 357 | 139 | 21,007 | 241
Net carrying amount | 18,468 |  | 2,080 |  | 218 |  | 20,766 |

•
Total ECL for property exposures reduced notably in the
year, with reductions observed in all stages.
•
In Stage 3, both total financial assets and ECL reduced as
there were low levels of default in the year, which were more
than offset by the effects of repayments and write-offs.
•
Performing book ECL reduced in the year driven by changes
in risk parameters, which included the impact of reductions in
post model adjustments.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
50
Flow statements (audited)

| Stage 1 | Stage 2 | Stage 3 | Total
| Financial |  | Financial |  | Financial |  | Financial |
| assets | ECL | assets | ECL | assets | ECL | assets | ECL
Commercial & Institutional - other | £m | £m | £m | £m | £m | £m | £m | £m
At 1 January 2025 | 5,347 | 10 | 1,367 | 8 | 72 | 43 | 6,786 | 61
Currency translation and other adjustments | 6 | - | - | - | - | 13 | 6 | 13
Inter-group transfers | 19 | - | (13) | - | - | - | 6 | -
Transfers from Stage 1 to Stage 2 | (246) | (1) | 246 | 1 | - | - | - | -
Transfers from Stage 2 to Stage 1 | 809 | 3 | (809) | (3) | - | - | - | -
Transfers to Stage 3 | (80) | - | (4) | - | 84 | - | - | -
Transfers from Stage 3 | 2 | - | 2 | - | (4) | - | - | -
Net re-measurement of ECL on stage transfer |  | (2) |  | 2 |  | 45 |  | 45
Changes in risk parameters |  | (3) |  | (2) |  | 23 |  | 18
Other changes in net exposure | 206 | 3 | (327) | 1 | (8) | (5) | (129) | (1)
Other (P&L only items) |  | - |  | - |  | - |  | -
Income statement (releases)/charges |  | (2) |  | 1 |  | 63 |  | 62
Unwinding of discount |  | - |  | - |  | (1) |  | (1)
At 31 December 2025 | 6,063 | 10 | 462 | 7 | 144 | 118 | 6,669 | 135
Net carrying amount | 6,053 |  | 455 |  | 26 |  | 6,534 |
At 1 January 2024 | 5,285 | 11 | 634 | 5 | 49 | 7 | 5,968 | 23
2024 movements | 62 | (1) | 733 | 3 | 23 | 36 | 818 | 38
At 31 December 2024 | 5,347 | 10 | 1,367 | 8 | 72 | 43 | 6,786 | 61
Net carrying amount | 5,337 |  | 1,359 |  | 29 |  | 6,725 |

•
The increase in Stage 3 financial assets and ECL primarily
reflected the impact of a single large flow to default in the
year.
•
Performing book ECL was marginally lower at 31 December
2025, with the Stage 2 ECL reduction reflective of exposure
flowing back into Stage 1.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
51
Stage 2 decomposition by a significant increase in credit risk trigger

| Mortgages | Credit cards | Other | Total
2025 | £m | % | £m | % | £m | % | £m | %
Personal trigger (1) |  |  |  |  |  |  |  |
PD movement | 9,403 | 64.4 | 1,325 | 73.8 | 668 | 53.3 | 11,396 | 64.5
PD persistence | 1,791 | 12.3 | 328 | 18.3 | 238 | 19.0 | 2,357 | 13.4
Adverse credit bureau recorded with credit reference agency | 1,704 | 11.7 | 77 | 4.3 | 107 | 8.5 | 1,888 | 10.7
Forbearance support provided | 152 | 1.0 | 1 | 0.1 | 6 | 0.5 | 159 | 0.9
Customers in collections | 198 | 1.4 | 22 | 1.2 | 19 | 1.5 | 239 | 1.4
Collective SICR and other reasons (2) | 1,227 | 8.4 | 42 | 2.3 | 212 | 16.9 | 1,481 | 8.4
Days past due >30 | 118 | 0.8 | - | - | 4 | 0.3 | 122 | 0.7
| 14,593 | 100.0 | 1,795 | 100.0 | 1,254 | 100.0 | 17,642 | 100.0
2024 |  |  |  |  |  |  |  |
Personal trigger (1) |  |  |  |  |  |  |  |
PD movement | 13,175 | 68.6 | 1,198 | 72.5 | 680 | 49.1 | 15,053 | 67.6
PD persistence | 3,676 | 19.1 | 357 | 21.6 | 325 | 23.4 | 4,358 | 19.6
Adverse credit bureau recorded with credit reference agency | 798 | 4.2 | 58 | 3.5 | 98 | 7.1 | 954 | 4.3
Forbearance support provided | 158 | 0.8 | - | - | 7 | 0.5 | 165 | 0.7
Customers in collections | 153 | 0.8 | 3 | 0.2 | 2 | 0.1 | 158 | 0.7
Collective SICR and other reasons (2) | 1,195 | 6.2 | 36 | 2.2 | 274 | 19.7 | 1,505 | 6.8
Days past due >30 | 59 | 0.3 | - | - | 2 | 0.1 | 61 | 0.3
| 19,214 | 100.0 | 1,652 | 100.0 | 1,388 | 100.0 | 22,254 | 100.0

For the notes to this table refer to the following page.
•
Overall Stage 2 levels for Personal reduced, primarily driven
by mortgages where stable portfolio trends and a PD model
enhancements underpinned PD reductions in the year. The
proportion of PD driven deterioration in Stage 2 remained
broadly consistent with 31 December 2024 overall.
•
The reduction of PDs on mortgages, partly due to PD model
enhancements, led to an increase in the proportion of Stage
2 captured by qualitative backstops, relative to last year.
•
Higher risk mortgage customers who utilised Mortgage
Charter support measures continued to be collectively
migrated into Stage 2 and were captured in the collective
SICR and other reasons category.
•
Accounts that were less than 30 days past due continued to
represent the vast majority of the Stage 2 population.
Risk and capital management continued
Credit risk – Banking activities continued
NWB Group
Annual Report and Accounts 2025
52
Stage 2 decomposition by a significant increase in credit risk trigger

|  |  | Corporate & other | FI | Other | Total
2025 | £m | % | £m | % | £m | % | £m | % | £m | %
Non-Personal trigger (1) |  |  |  |  |  |  |  |  |  |
PD movement |  |  | 13,362 | 87.7 | 47 | 20.6 | 141 | 53.2 | 13,550 | 86.1
PD persistence |  |  | 180 | 1.2 | 2 | 0.9 | - | - | 182 | 1.2
Heightened Monitoring and Risk of Credit Loss |  |  | 908 | 5.9 | 73 | 32.0 | 124 | 46.8 | 1,105 | 7.0
Forbearance support provided |  |  | 176 | 1.2 | - | - | - | - | 176 | 1.1
Customers in collections |  |  | 17 | 0.1 | - | - | - | - | 17 | 0.1
Collective SICR and other reasons (2) |  |  | 521 | 3.4 | 104 | 45.6 | - | - | 625 | 4.0
Days past due >30 |  |  | 80 | 0.5 | 2 | 0.9 | - | - | 82 | 0.5
|  |  | 15,244 | 100.0 | 228 | 100.0 | 265 | 100.0 | 15,737 | 100.0
2024 |  |  |  |  |  |  |  |  |  |
Non-Personal trigger (1) |  |  |  |  |  |  |  |  |  |
PD movement |  |  | 10,031 | 82.0 | 766 | 84.5 | - | - | 10,797 | 81.3
PD persistence |  |  | 257 | 2.1 | 2 | 0.2 | - | - | 259 | 2.0
Heightened Monitoring and Risk of Credit Loss |  |  | 1,327 | 10.9 | 73 | 8.0 | 133 | 100.0 | 1,533 | 11.5
Forbearance support provided |  |  | 193 | 1.6 | - | - | - | - | 193 | 1.5
Customers in collections |  |  | 25 | 0.2 | - | - | - | - | 25 | 0.2
Collective SICR and other reasons (2) |  |  | 338 | 2.8 | 54 | 5.9 | - | - | 392 | 3.0
Days past due >30 |  |  | 51 | 0.4 | 13 | 1.4 | - | - | 64 | 0.5
|  |  | 12,222 | 100.0 | 908 | 100.0 | 133 | 100.0 | 13,263 | 100.0

(1)
The table is prepared on a hierarchical basis from top to bottom, for example, accounts with PD deterioration may also trigger backstop(s) but are only reported under PD deterioration.
(2)
Includes cases where a PD assessment cannot be made and accounts where the PD has deteriorated beyond a prescribed backstop threshold aligned to risk management practices.
•
Stage 2 exposures increased during the year, in part
reflecting the impact of post model adjustments in applying a
risk profile downgrade to sectors deemed most at risk of
economic uncertainty not captured in underlying models. The
impact of cases moving into Stage 2 due to post model
adjustments is captured in PD movement.
•
Non-Personal exposures in Stage 2 continued to be mainly
captured through PD movement and presence on the
Wholesale Problem Debt Management framework, which are
the primary forward looking credit deterioration triggers.
Risk and capital management continued
NWB Group
Annual Report and Accounts 2025
53
Capital, liquidity and funding risk
NWH Group continually ensures a comprehensive approach is
taken to the management of capital, liquidity and funding,
underpinned by frameworks, risk appetite and policies, to manage
and mitigate its capital, liquidity and funding risks. The framework
ensures the tools and capability are in place to facilitate the
management and mitigation of risk ensuring the Group operates
within its regulatory requirements and risk appetite.
Definitions (audited)
Regulatory capital consists of reserves and instruments issued
that are available, have a degree of permanency and are capable
of absorbing losses. A number of strict conditions set by
regulators must be satisfied to be eligible as capital.
Capital risk is the inability to conduct business in base or stress
conditions on a risk or leverage basis due to insufficient qualifying
capital as well as the failure to assess, monitor, plan and manage
capital adequacy requirements.
Liquidity consists of assets that can be readily converted to cash
within a short timeframe at a reliable value. Liquidity risk is
defined as the risk that the Group or any of its subsidiaries or
branches cannot meet it’s actual or potential financial obligations
in a timely manner as they fall due in the short term.
Funding consists of on-balance sheet liabilities that are used to
provide cash to finance assets. Funding risk is the current or
prospective risk that the Group or its subsidiaries or branches
cannot meet financial obligations as they fall due in the medium to
long term, either at all or without increasing funding costs
unacceptably.
Liquidity and funding risks arise in a number of ways, including
through the maturity transformation role that banks perform. The
risks are dependent on factors such as:
•
Maturity profile;
•
Composition of sources and uses of funding;
•
The quality and size of the liquidity portfolio;
•
Wholesale market conditions; and
•
Depositor and investor behaviour
Sources of risk (audited)
Capital
The eligibility of instruments and financial resources as regulatory
capital is laid down by applicable regulation. Capital is categorised
by applicable regulation under two tiers (Tier 1 and Tier 2)
according to the ability to absorb losses on either a going or gone
concern basis, degree of permanency and the ranking of
absorbing losses. There are three broad categories of capital
across these two tiers:
•
CET1 capital
- CET1 capital must be perpetual and capable of
unrestricted and immediate use to cover risks or losses as
soon as these occur. This includes ordinary shares issued and
retained earnings.
•
Additional Tier 1 (AT1) capital
- This is the second type of loss
absorbing capital and must be capable of absorbing losses on
a going concern basis. These instruments are either written
down or converted into CET1 capital when the CET1 ratio
falls below a pre-specified level.
•
Tier 2 capital
- Tier 2 capital is the bank entities’
supplementary capital and provides loss absorption on a gone
concern basis. Tier 2 capital absorbs losses after Tier capital.
It typically consists of subordinated debt securities which must
have a minimum of five years to maturity at all times to be
fully recognised for regulatory purposes.
Minimum requirement for own funds and eligible liabilities
(MREL)
In addition to regulatory capital, certain loss absorbing
instruments issued by NWB Plc, such as senior notes and Tier 2
capital instruments, may be used to meet MREL. MREL comprises
regulatory capital (Common Equity Tier 1, Additional Tier 1 and
Tier 2) together with specific senior or subordinated bail-inable
debt. To qualify, instruments must be fully paid-up, have a
remaining maturity of at least one year, and be capable of being
written down or converted into equity should the Group enter
resolution. These resources support “gone-concern”
requirements, ensuring that sufficient loss-absorbing capacity is
available to facilitate an orderly resolution if the Bank of England
determines that NWB Plc has failed or is likely to fail.
Liquidity
Liquidity risk within NWB Plc is managed as part of the UK
Domestic Liquidity Sub-Group (UK DoLSub), which is regulated by
the PRA and comprises of NWH Group’s three licensed deposit
taking UK banks: National Westminster Bank Plc, The Royal Bank
of Scotland plc and Coutts & Company.
NWH Group maintains a prudent approach to the definition of
liquidity portfolio to ensure it is available when and where
required, taking into account regulatory, legal and other
constraints.
Liquidity portfolio is divided into primary and secondary liquidity as
follows:
•
Primary liquidity is
LCR eligible assets and includes cash and
balances at central banks, Treasury bills and high quality
government securities.
•
Secondary liquidity is assets eligible as collateral for local
central bank liquidity facilities. These assets include own-
issued securitisations or loans that are retained on balance
sheet and pre-positioned with a central bank so that they may
be converted into additional sources of liquidity at very short
notice.
Funding
Funding risk within NWB Plc is managed as part of the UK
DoLSub allowing regulatory metrics and internally defined views
to be met as a single consolidated group.
NWB Plc maintains a diversified set of funding sources, including
customer deposits, wholesale deposits and term debt issuance.
NWB Plc also retains access to central bank funding facilities.
For further details on capital constituents and the regulatory
framework covering capital, liquidity and funding requirements,
refer to the NatWest Holdings Group and NWB Plc Pillar 3 Reports
2025.
Managing capital requirements: regulated entities
In line with paragraph 135 of IAS 1 ‘Presentation of Financial
Statements’, NWB Group manages capital having regard to
regulatory requirements. Regulatory capital is monitored and
reported on an individual regulated bank legal entity basis (‘bank
entities’), as relevant in the jurisdiction for large subsidiaries of
NatWest Group. NatWest Group itself is monitored and reported
on a consolidated basis.
Risk and capital management continued
Capital, liquidity and funding risk continued
NWB Group
Annual Report and Accounts 2025
54
Capital risk management
Capital management is the process by which the NWB Plc entities
ensure that they have sufficient capital and other loss-absorbing
instruments to operate effectively including meeting minimum
regulatory requirements, operating within Board-approved risk
appetite, maintaining credit ratings and supporting strategic goals.
Capital management is critical in supporting the bank entities’
businesses and is also considered at NWB Plc level. It is enacted
through a NatWest Group-wide end to end framework.
Capital planning is integrated into NWB Plc’s wider annual
budgeting process and is assessed and updated at least monthly.
This is summarised below. Other elements of capital
management, including risk appetite and stress testing, are set
out on pages 13 to 17.
Capital planning is one of the tools that NWB Plc uses to monitor
and manage capital risk on a going and gone concern basis,
including the risk of excessive leverage
.
Liquidity risk management
NWH Group manages its liquidity risk taking into account
regulatory, legal and other constraints to ensure sufficient liquidity
is available where required to cover liquidity stresses.
The size of the liquidity portfolio held in the UK DoLSub is
determined by referencing NWH Group’s liquidity risk appetite.
NWH Group retains a prudent approach to setting the
composition of the liquidity portfolio, which is subject to internal
policies and limits over quality of counterparty, maturity mix and
currency mix.
NWB Plc manages the majority of the UK DoLSub’s liquidity
portfolio under the responsibility of the NatWest Group Treasurer.
Funding risk management
NWB Plc manages funding risk through a comprehensive
framework which measures and monitors the funding risk on the
balance sheet.
The asset and liability types broadly match. Customer deposits
provide more funding than customer loans utilise
.

Produce | • | Capital plans are produced for NWB Plc, its
capital plans |  | key operating entities and its businesses
|  | over a five year planning horizon under
|  | expected and stress conditions. Stressed
|  | capital plans are produced to support
|  | internal stress testing in NWH Group’s
|  | ICAAP for regulatory purposes.
| • | Shorter term forecasts are developed
|  | frequently in response to actual
|  | performance, changes in internal and
|  | external business environment and to
|  | manage risks and opportunities.
Assess | • | Capital plans are developed to maintain
capital |  | capital of sufficient quantity and quality to
Adequacy |  | support NWB Plc’s business, its subsidiaries
|  | and strategic plans over the planning
|  | horizon within approved risk appetite, as
|  | determined via stress testing, and minimum
|  | regulatory requirements.
| • | Capital resources and capital requirements
|  | are assessed across a defined planning
|  | horizon.
| • | Impact assessment captures input from
|  | across NWB Plc including from businesses.
Inform capital | • | Capital planning informs potential capital
actions |  | actions including redemptions, dividends
|  | and new issuance.
| • | Decisions on capital actions will be
|  | influenced by strategic and regulatory
|  | requirements, risk appetite, costs and
|  | prevailing market conditions.
| • | As part of capital planning, NWB Plc will
|  | monitor its portfolio of issued capital
|  | securities and assess the optimal blend and
|  | most cost effective means of financing.

Risk and capital management continued
Capital, liquidity and funding risk continued
NWB Group
Annual Report and Accounts 2025
55
Key points
CET1 ratio
11.2%
(2024 - 11.4%)
RWAs
£133.7bn
(2024 - £124.5bn)
The CET1 ratio decreased by 20 basis points to 11.2% due to a
£9.2 billion increase in RWAs partially offset by a £0.8 billion
increase in CET1 capital.
The CET1 capital increase was mainly driven by an attributable
profit to ordinary shareholders in the period of £2.6 billion (net
of ordinary interim dividend paid) and other movements on
reserves and regulatory adjustments of £0.5 billion partially
offset by a foreseeable ordinary dividend accrual of £2.3 billion.
Total RWAs increased by £9.2 billion to £133.7 billion mainly
reflecting:
•
an increase in credit risk RWAs of £6.4 billion primarily
driven by franchise lending growth, including unsecured
balances acquired from Sainsbury's Bank, partially offset
by the benefits of RWA management actions.
An increase
in CRD IV model updates was partially offset by
movements in risk metrics and foreign exchange.
•
an increase in operational risk RWAs of £2.8 billion
following the annual recalculation,
including an acceleration
of £1.0 billion from Q1 2026 to align with market practice
.
UK leverage ratio
4.2%
(2024 - 4.4%)
The leverage ratio decreased by 20 basis points to 4.2% due to
a £34.5 billion increase in leverage exposure partially offset by
a £0.7 billion increase in Tier 1 capital. The key drivers of the
leverage exposure movement were an increase in other
financial assets and other off balance sheet items.
Risk and capital management continued
Capital, liquidity and funding risk continued
NWB Group
Annual Report and Accounts 2025
56
Minimum requirements
Capital adequacy ratios
NWB Plc is subject to minimum capital requirements relative to RWAs. The table below summarises the minimum Pillar 1 capital
requirements and additional capital buffers that the entity is expected to have to meet.
(1)
The UK countercyclical buffer (CCyB) rate is currently being maintained at 2%. This may vary in either direction in the future subject to how risks develop. Foreign exposure may be
subject to different CCyB rates depending on the rate set in those jurisdictions.
Leverage ratio
The table below summarises the minimum ratios of capital to leverage exposure under the binding PRA UK leverage framework
applicable for NWB Plc.

Type | CET1 | Total Tier 1
Minimum ratio | 2.44% | 3.25%
Countercyclical leverage ratio buffer (1) | 0.6% | 0.6%
Total | 3.04% | 3.85%

(1)
The countercyclical leverage ratio buffer is set at 35% of NWB Plc’s CCyB.
Liquidity and funding ratios
The table below summarises the minimum requirements for key liquidity and funding metrics under the PRA framework.
Disclosures
relating to these metrics, (including the liquidity portfolio composition) are completed at UK DoLSub level and published in the NatWest
Holdings Group 2025 Annual Report and Accounts. Under the UK DoLSub waiver NWB Plc, RBS plc and Coutts & Co are permitted to
manage liquidity on a consolidated sub-group basis rather than individually at the entity level.
Measurement
Capital, RWAs and leverage
Capital resources, RWAs and leverage for NWB Plc are set out below and have been calculated in line with the PRA rulebook.

| 2025 | 2024
Capital adequacy ratios % | (1) | %
CET1 | 11.2 | 11.4
Tier 1 | 13.4 | 13.9
Total | 16.2 | 16.6
Capital | £m | £m
CET1 | 14,968 | 14,181
Tier 1 | 17,910 | 17,258
Total | 21,701 | 20,629
Risk-weighted assets |  |
Credit risk | 114,363 | 107,922
Counterparty credit risk | 601 | 606
Market risk | 23 | 71
Operational risk | 18,762 | 15,923
Total RWAs | 133,749 | 124,522
Leverage |  |
Tier 1 capital (£m) | 17,910 | 17,258
Leverage exposure (£m) (2) | 424,554 | 390,032
Leverage ratio (%) (1) | 4.2 | 4.4

(1)
The IFRS 9 transitional capital rules in respect of ECL provisions ceased to apply on 1 January 2025. The impact of the IFRS 9 transitional adjustments at 31 December 2024 was £35
million. Excluding this adjustment at 31 December 2024, the CET1 ratio was 11.4% and the leverage ratio was 4.4%.
(2)
Leverage exposure is broadly aligned to the accounting value of on and off-balance sheet exposures albeit subject to specific adjustments for derivatives, securities financing positions
and off-balance sheet exposures.

Type | CET1 | Total Tier 1 | Total capital
Minimum capital requirements | 4.5% | 6.0% | 8.0%
Capital conservation buffer | 2.5% | 2.5% | 2.5%
Countercyclical capital buffer (1) | 1.8% | 1.8% | 1.8%
Total (2) | 8.8% | 10.3% | 12.3%

Type |
Liquidity Coverage Ratio (LCR) | 100%
Net Stable Funding Ratio (NSFR) | 100%

Risk and capital management continued
Capital, liquidity and funding risk continued
NWB Group
Annual Report and Accounts 2025
57
Leverage exposure
The leverage metrics for UK entities are calculated in accordance with the Leverage ratio (CRR) part of the PRA Rulebook.

| 2025 | 2024
Leverage | £m | £m
Cash and balances at central banks | 29,911 | 35,083
Derivatives | 1,106 | 2,892
Financial assets | 405,503 | 375,877
Other assets | 8,129 | 8,023
Total assets | 444,649 | 421,875
Derivatives |  |
- netting and variation margin | (1,571) | (2,016)
- potential future exposures | 1,338 | 1,612
Securities financing transactions gross up | 167 | 1,179
Other off balance sheet items | 44,895 | 36,386
Regulatory deductions and other adjustments | (2,776) | (3,074)
Exclusion of core UK-group exposures | (32,461) | (29,951)
Claims on central banks | (28,717) | (33,978)
Exclusion of bounce back loans | (970) | (2,001)
Leverage exposure | 424,554 | 390,032

Risk and capital management continued
Capital, liquidity and funding risk continued
NWB Group
Annual Report and Accounts 2025
58
Funding sources (audited)

| 2025 | 2024
| Short-term | Long-term |  | Short-term | Long-term |
| less than 1 | more than 1 |  | less than 1 | more than 1 |
| year | year | Total | year | year | Total
| £m | £m | £m | £m | £m | £m
Bank deposits |  |  |  |  |  |
Repos | 21,759 | - | 21,759 | 9,479 | - | 9,479
Other bank deposits | 3,061 | 8,200 | 11,261 | 7,101 | 8,200 | 15,301
| 24,820 | 8,200 | 33,020 | 16,580 | 8,200 | 24,780
Customer deposits |  |  |  |  |  |
Repos | 603 | - | 603 | 842 | - | 842
Personal | 188,867 | 6,508 | 195,375 | 187,295 | 1,981 | 189,276
Corporate | 106,730 | 24 | 106,754 | 107,185 | 43 | 107,228
Non-bank financial institutions | 22,333 | 4 | 22,337 | 20,940 | 4 | 20,944
| 318,533 | 6,536 | 325,069 | 316,262 | 2,028 | 318,290
Other financial liabilities (1) |  |  |  |  |  |
Customer deposits including repos | - | - | - | 250 | - | 250
Debt securities in issue |  |  |  |  |  |
Commercial papers and certificates of deposit | 2,736 | - | 2,736 | 2,623 | - | 2,623
Covered bonds | - | 749 | 749 | - | 749 | 749
Securitisations | - | 1,663 | 1,663 | 295 | 880 | 1,175
| 2,736 | 2,412 | 5,148 | 3,168 | 1,629 | 4,797
Subordinated liabilities | 2 | 120 | 122 | 2 | 120 | 122
Amounts due to holding company and fellow subsidiaries (2) |  |  |  |  |  |
Bank and customer deposits | 39,998 | 4,748 | 44,746 | 37,298 | - | 37,298
MREL | 1,208 | 6,935 | 8,143 | 80 | 6,556 | 6,636
Subordinated liabilities | 1,051 | 3,099 | 4,150 | 543 | 3,105 | 3,648
| 42,257 | 14,782 | 57,039 | 37,921 | 9,661 | 47,582
Total funding | 388,348 | 32,050 | 420,398 | 373,933 | 21,638 | 395,571
Of which: available in resolution (3) |  |  | 12,293 |  |  | 10,284

(1)
Excludes settlement balances of £10 million (2024 – nil) and derivative cash collateral of £175 million (2024 – £202 million).
(2)
Amounts due to holding companies and fellow subsidiaries relating to non-financial instruments of £67 million (2024 - £142 million) have been excluded from the table.
(3)
Eligible liabilities (as defined in the Banking Act 2009 as amended from time to time) that meet the eligibility criteria set out in the regulations, rules, policies, guidelines, or statements of
the Bank of England. In July 2025, the Bank of England finalised MREL policy changes requiring firms to use full accounting values for eligible liabilities, with the new rules taking effect on
1 January 2026.
Risk and capital management continued
Capital, liquidity and funding risk continued
NWB Group
Annual Report and Accounts 2025
59
Contractual maturity (audited)
The table shows the residual maturity of third party financial instruments, based on contractual date of maturity of NWB Group’s
banking activities, including third party and intercompany hedging derivatives. Mandatory fair value through profit or loss (MFVTPL)
assets and held-for-trading (HFT) liabilities have been excluded from the maturity analysis and are shown in total in the table below.

| Banking activities
| Less than 1 | 1-3 | 3-6 | 6 months |  | 1-3 | 3-5 | More than |  | MFVTPL |
| month | months | months | -1 year | Subtotal | years | years | 5 years | Total | and HFT | Total
2025 | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
Cash and balances at central banks | 29,939 | - | - | - | 29,939 | - | - | - | 29,939 | - | 29,939
Derivatives | 4 | 122 | 85 | 52 | 263 | 58 | 18 | 3 | 342 | 751 | 1,093
Loans to banks - amortised cost | 2,759 | 748 | 322 | 41 | 3,870 | 505 | - | 140 | 4,515 | - | 4,515
Loans to customers - amortised |  |  |  |  |  |  |  |  |  |  |
cost (1) | 35,544 | 13,315 | 12,303 | 14,533 | 75,695 | 48,782 | 38,519 | 185,564 | 348,560 | - | 348,560
Personal | 6,775 | 1,934 | 2,917 | 5,710 | 17,336 | 21,890 | 19,587 | 161,330 | 220,143 | - | 220,143
Corporate | 15,806 | 2,214 | 3,179 | 5,948 | 27,147 | 25,334 | 18,088 | 23,273 | 93,842 | - | 93,842
Non-bank financial institutions | 12,963 | 9,167 | 6,207 | 2,875 | 31,212 | 1,558 | 844 | 961 | 34,575 | - | 34,575
Other financial assets | 807 | 2,599 | 2,826 | 1,984 | 8,216 | 16,926 | 6,677 | 20,666 | 52,485 | 639 | 53,124
Total financial assets | 69,053 | 16,784 | 15,536 | 16,610 | 117,983 | 66,271 | 45,214 | 206,373 | 435,841 | 1,390 | 437,231
2024 |  |  |  |  |  |  |  |  |  |  |
Total financial assets | 75,656 | 16,718 | 12,704 | 19,467 | 124,545 | 58,232 | 44,098 | 185,753 | 412,628 | 3,049 | 415,677
2025 |  |  |  |  |  |  |  |  |  |  |
Bank deposits excluding repos | 3,061 | - | - | - | 3,061 | 5,200 | - | 3,000 | 11,261 | - | 11,261
Bank repos | 20,878 | 881 | - | - | 21,759 | - | - | - | 21,759 | - | 21,759
Customer repos | 587 | 16 | - | - | 603 | - | - | - | 603 | - | 603
Customer deposits excluding repos | 282,649 | 11,017 | 12,896 | 11,368 | 317,930 | 6,523 | 13 | - | 324,466 | - | 324,466
Personal | 167,481 | 4,298 | 7,247 | 9,841 | 188,867 | 6,501 | 7 | - | 195,375 | - | 195,375
Corporate | 93,943 | 5,969 | 5,391 | 1,427 | 106,730 | 18 | 6 | - | 106,754 | - | 106,754
Non-bank financial institutions | 21,225 | 750 | 258 | 100 | 22,333 | 4 | - | - | 22,337 | - | 22,337
Derivatives | 5 | 30 | 14 | 32 | 81 | 112 | 4 | 2 | 199 | 565 | 764
Other financial liabilities | 780 | 861 | 1,078 | 27 | 2,746 | 3 | 749 | 1,660 | 5,158 | 175 | 5,333
CPs and CDs | 770 | 861 | 1,078 | 27 | 2,736 | - | - | - | 2,736 | - | 2,736
Covered bonds | - | - | - | - | - | - | 749 | - | 749 | - | 749
Securitisations | - | - | - | - | - | 3 | - | 1,660 | 1,663 | - | 1,663
Bank deposits | - | - | - | - | - | - | - | - | - | 107 | 107
Customer deposits including repos | - | - | - | - | - | - | - | - | - | 68 | 68
Settlement balances | 10 | - | - | - | 10 | - | - | - | 10 | - | 10
Subordinated liabilities | - | - | 2 | - | 2 | - | - | 120 | 122 | - | 122
Notes in circulation | 1,049 | - | - | - | 1,049 | - | - | - | 1,049 | - | 1,049
Lease liabilities | 3 | 15 | 17 | 33 | 68 | 125 | 40 | 186 | 419 | - | 419
Total financial liabilities | 309,012 | 12,820 | 14,007 | 11,460 | 347,299 | 11,963 | 806 | 4,968 | 365,036 | 740 | 365,776
2024 |  |  |  |  |  |  |  |  |  |  |
Total financial liabilities | 293,329 | 12,398 | 13,094 | 18,253 | 337,074 | 10,442 | 889 | 1,264 | 349,669 | 1,124 | 350,793

(1)
Loans to customers is gross and excludes £2,917 million (2024 - £2,698 million) of impairment provisions.
Risk and capital management continued
Capital, liquidity and funding risk continued
NWB Group
Annual Report and Accounts 2025
60
Encumbrance (audited)
NWB Group evaluates the extent to which assets can be
financed in a secured form (encumbrance), but certain asset
types lend themselves more readily to encumbrance. The typical
characteristics that support encumbrance are an ability to pledge
those assets to another counterparty or entity through operation
of law without necessarily requiring prior notification,
homogeneity, predictable and measurable cash flows, and a
consistent and uniform underwriting and collection process. Retail
assets including residential mortgages and credit card receivables
display many of these features.
NWB Group categorises its assets into four broad groups, those
that are:
•
Already encumbered and used to support funding currently in
place through own-asset securitisations, covered bonds and
securities repurchase agreements.
•
Pre-positioned with central banks as part of funding schemes
and those encumbered under such schemes.
•
Ring-fenced to meet regulatory requirements, where NWB
Group has in place an operational continuity in resolution
(OCIR) investment mandate wherein the PRA requires critical
service providers to hold segregated liquidity buffers covering
at least 50% of their annual fixed overheads.
•
Unencumbered. In this category, NWB Group has in place an
enablement programme which seeks to identify assets
capable of being encumbered and to identify the actions to
facilitate such encumbrance whilst not affecting customer
relationships or servicing.
Balance sheet encumbrance - third party

| Encumbered as a result of |  |  |  |  |  |  |
| transactions with counterparties |  |  | Unencumbered assets not pre-positioned |
| other than central banks |  |  | with central banks |
|  |  |  |  | Collateral ring- |  |  |  |  |
|  |  |  |  | fenced to meet |  |  |  |  |
|  |  |  | Pre-positioned | regulatory |  |  |  |  |
|  | SFT, |  |  | requirement |  |  |  |  |
| Covered | derivatives & |  | & encumbered | fenced to meet | Readily | Other Cannot be |  | Total
| bonds | other | Total | assets held at | regulatory | available | available | used |  | third
|  | (1) |  | central banks | requirement |  | (2) | (3) | Total | party
2025 | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn
Cash and balances at central |  |  |  |  |  |  |  |  |  |
banks | - | 1.2 | 1.2 | - | - | 28.7 | - | - | 28.7 | 29.9
Derivatives |  |  |  |  |  |  |  | 1.1 | 1.1 | 1.1
Loans to banks - amortised cost | - | - | - | - | - | 0.8 | 0.4 | 3.3 | 4.5 | 4.5
Loans to customers - amortised |  |  |  |  |  |  |  |  |  |
cost (5) | 8.8 | - | 8.8 | 109.1 | - | 88.7 | 92.7 | 46.3 | 227.7 | 345.6
Other financial assets (6) | - | 15.8 | 15.8 | - | 0.5 | 36.8 | - | - | 36.8 | 53.1
Intangible assets |  |  |  |  |  |  |  | 1.8 | 1.8 | 1.8
Other assets | - | - | - | - | - | - | 2.3 | 4.0 | 6.3 | 6.3
Total assets | 8.8 | 17.0 | 25.8 | 109.1 | 0.5 | 155.0 | 95.4 | 56.5 | 306.9 | 442.3
Amounts due from holding company and fellow |  |  |  |  |  |  |  |  |  |
subsidiaries |  |  |  |  |  |  |  |  |  | 7.2
|  |  |  |  |  |  |  |  |  | 449.5
2024 |  |  |  |  |  |  |  |  |  |
Total assets | 8.3 | 12.1 | 20.4 | 87.8 | 1.8 | 161.2 | 87.1 | 62.3 | 310.6 | 420.6
Amounts due from holding company and fellow |  |  |  |  |  |  |  |  |  |
subsidiaries |  |  |  |  |  |  |  |  |  | 3.7
|  |  |  |  |  |  |  |  |  | 424.3

(1)
Repos and other secured deposits, cash, coin and nostro balance held with the Bank of England as collateral against deposits and notes in circulation are included here rather than within
those positioned at the central bank as they are part of normal banking operations. Securities financing transactions (SFT) include collateral given to secure derivative liabilities.
(2)
Other assets that are capable of being encumbered are those assets on the balance sheet that are available for funding and collateral purposes but are not readily realisable in their
current form. These assets include loans that could be prepositioned with central banks but have not been subject to internal and external documentation review and diligence work.
(3)
Cannot be used includes:
a.
Derivatives, reverse repurchase agreements and trading related settlement balances.
b.
Non-financial assets such as intangibles, prepayments and deferred tax.
c.
Loans that are not encumbered and cannot be pre-positioned with central banks based on criteria set by the central banks, including those relating to date of origination and level
of documentation.
d.
Non-recourse invoice financing balances and certain shipping loans whose terms and structure prohibit their use as collateral.
(4)
In accordance with market practice, NWB Group employs securities recognised on the balance sheet, and securities received under reverse repo transactions as collateral for repos.
(5)
The pre-positioned and encumbered assets held at central banks of £109.1 billion includes the encumbered residential mortgages of £16.1 billion. £72.9 billion of residential UK mortgages
are included in £88.7 billion readily available loans to customers.
(6)
Other financial assets under SFT, derivatives and other include £0.5 billion of debt securities under the continuing control of NWB Plc. This follows the agreement between NWB Plc and
the Group Pension Fund to establish a bankruptcy remote reservoir trust to hold these assets. Refer to Note 5 for additional information.
Risk and capital management continued
NWB Group
Annual Report and Accounts 2025
61
Climate and nature risk
Definition
Climate and nature risk is the threat of financial loss or adverse
non-financial impacts associated with climate change and nature
loss respectively and the political, economic and environmental
responses to it.
Sources of risk
Physical risks may arise from climate events such as heatwaves,
droughts, floods, storms and nature-related events such as land
or air pollution. They can potentially result in financial losses,
impairing asset values and the creditworthiness of borrowers.
NatWest Group could be exposed to physical risks directly by the
effects on its property portfolio and, indirectly, by the impacts on
the wider economy as well as on the property, business interests
and supply chains of its customers.
Transition risks may arise from the process of adjustment towards
a low-carbon, nature-restored economy. Changes in policy,
technology and sentiment could prompt reassessment of
customers’ financial risk and may lead to falls in the value of a
large range of assets. NatWest Group could be exposed to
transition risks directly through the costs of adaptation of its own
operations as well as supply chain disruption leading to financial
impacts. Potential indirect effects include the impact on the wider
economy, including on customers, which may erode NatWest
Group’s competitiveness and profitability, as well as threaten
reputational damage.
Liability risks may arise should stakeholders consider NatWest
Group’s climate and nature risk management practices and
disclosures insufficient, and responsible for or attributable to,
stakeholders’ losses. On the other hand, liability risks may also
arise where some jurisdictions believe financial institutions have
taken their sustainability-related initiatives too far, with some
imposing sanctions in these circumstances.
Climate risk has been included in the NatWest Group risk
directory since 2021. In 2024, we broadened the definition to
climate and nature risk and updated our internal risk policy to
reflect this. We are in the early stages of embedding nature into
our risk management processes.
As climate and nature risk is both a principal risk within NatWest
Group’s EWRMF, and a cross-cutting risk, which impacts other
principal risks, NatWest Group periodically refreshes its
assessment of the relative impact of climate-related risk factors to
other principal risks, where NatWest Group’s exposure to a
principal risk could be taken outside of appetite due to climate-
related risk factors. In identifying climate-related risks and
opportunities to NatWest Group, the period in which each is likely
to occur, was assessed. Risks and opportunities deemed material
to the five-year financial planning cycle were viewed as short-
term. Long-term was defined as beyond 15 years, while medium-
term was defined as within the next five to 15 years
(1)
.
The outcome of the latest assessment of the relative impact of
climate-related risk factors on other principal risks is included in
the following table. All principle risks in the table were identified as
potentially the most impacted by climate risk, over short, medium
and long term horizons, noting these risks couple amplify capital
and liquidity risks themselves.

|  |  | Identification,
|  |  | assessment and
Risk type | Risks to NatWest Group | Drivers | measurement
| From the adverse impact on future credit |  | Scenario analysis
| worthiness of customers due to climate |  |
| change risk factors impacting asset valuation, | Physical: acute, chronic (2) |
Credit risk | income and costs. Mitigants include |  | Portfolio level
| operational limits in the residential mortgage |  | assessments
| portfolio and inclusion of climate | Transition: government policy and |
| considerations in sector strategy within the | legislation, market, technology, reputation | Transaction level
| commercial portfolio. |  | assessments
| Due to the increased likelihood and potential | Physical: acute, chronic (2) | Scenario analysis
Operational | impact of business disruption arising from |  |
risk | new and changing policy standards. Mitigants | Transition: government policy and | Transaction level
| include resilience and disclosure controls. | legislation, market, technology, reputation | assessments
|  | Physical: acute, chronic (2) |
| NatWest Group is required to comply with all |  |
Compliance | applicable climate-related legal and | Transition: government policy and | Transaction level
risk | regulatory obligations. Mitigants include | legislation, market, technology, reputation | assessments
| relevant horizon scanning. |  |
|  | Liability: greenwashing |
|  | Transition: government policy and | Scenario analysis
| Due to poor customer outcomes arising from | legislation, market, technology, reputation |
| the impacts of climate change. Mitigants |  | Transaction level
Conduct risk | include additional checks on sustainability |  | assessments
| claims and applying product flaw controls. | Liability: greenwashing |
| Arising from NatWest Group’s actual or | Transition: government policy and | Portfolio level
Reputational | perceived contribution to climate change, or | legislation, market, technology | assessments
risk | from the adequacy of our actions in response. |  |
| Mitigants include the environmental social, & |  | Transaction level
| ethical (ESE) risk framework . (3) | Liability: greenwashing | assessments

(1)
NatWest Group’s climate transition planning uses different time frames than those used in financial reporting. Accordingly, the references to ‘short’, ‘medium’ and ‘long-term’ in climate
reporting are not indicative of the meaning of similar terms used in NatWest Group’s other disclosures.
(2)
Acute – event-driven such as increased severity of extreme weather events (for example, storms, droughts, floods, and fires) or water, land or air pollution. Chronic – longer- term shifts
in precipitation and temperature and increased variability in weather patterns (for example, sea level rise) or biodiversity loss.
(3)
From 1 January 2026, the name of the ESE Risk Framework was updated to the Environmental & Social Risk Framework. This change better reflects the framework's underlying
methodology which focuses on a risk-based approach aligned to organisational risk appetite, rather than values-based judgements.
Risk and capital management continued
Climate and nature risk continued
NWB Group
Annual Report and Accounts 2025
62
Key developments in 2025
The effective management of climate risk requires the integration
of climate-related risk drivers into strategic planning, transactions
and decision-making. The approach has evolved since 2021
alongside NatWest Group’s ongoing, multi-year progressive
pathway to mature climate risk management capabilities, and in
2025:
•
NatWest Group continued to enhance its in-house climate risk
modelling capabilities, supporting the ongoing integration of
climate risk within its capital adequacy (ICAAP), impairment
(IFRS 9) and risk management processes. Insights from risk
processes have been shared with sector and front-line teams
to support the financial budget and climate transition plan
processes. In particular, internal physical risk modelling
capabilities have been developed during 2025 albeit with
further enhancements to come in 2026.
•
NatWest Group continued its roll-out of climate decisioning
framework (CDF) tools. These comprise climate risk
scorecards and climate transition plan assessment tools. The
roll-out continues on a test and learn basis. However we are
now introducing initial use cases where we identify higher-risk
transactions for enhanced oversight or escalated approval
processes.
Governance
Risk governance for climate and nature risk is in line with the
approach outlined in the Risk management framework section.
The Board is responsible for monitoring and overseeing climate-
related risk within NatWest Group’s overall business strategy and
risk appetite.
The risk appetite statement is reviewed and approved at least
annually by the Board on the Board Risk Committee’s
recommendation to ensure it remains appropriate and aligned to
strategy.
The Chief Risk Officer shares accountability with the Chief
Executive Officer under the Senior Managers Regime for
identifying and managing the financial risks arising from climate
change. This includes ensuring that the financial risks from climate
change are adequately reflected in risk management frameworks
and policies, and that NatWest Group can identify, measure,
monitor, manage and report on its exposure to these risks.
Reporting is provided on a regular basis, via the Chief Risk Officer
Risk Report, to the Executive and Board Risk Committees, while
an annual spotlight on Climate & Nature Risk is also undertaken to
these committees.
The Group Executive Committee continues to supervise strategic
implementation and delivery, supported by Group Sustainability,
other functions and franchises.
Risk appetite
Risk appetite for climate risk is in line with the approach outlined
in the Risk management framework section.
Identification, assessment and measurement
NatWest Group continues to enhance its processes to effectively
measure the potential size and scope of climate-related risks,
through the three approaches detailed below. Identification,
assessment and measurement is undertaken at NatWest Group
and business segment levels as appropriate and through an
integrated governance model. The approach to nature-related
risks is not as mature as the approach to climate-related risks.
Strategic analysis
NatWest Group focused on continuing to develop the capabilities
to use scenario analysis to identify the most material climate risks
for its customers, seeking to harness insights to inform risk
management practices and support decision making.
Scenario analysis allows NatWest Group to test a range of
possible future climate pathways and understand the nature and
magnitude of the risks they present. The purpose of scenario
analysis is not to forecast the future but to understand and
prepare to manage risks that could arise.
NatWest Group recognises a number of potential key use cases
for climate scenario analysis, including, but not restricted to, the
following:
•
Regulatory stress testing requirements.
•
Portfolio management.
•
Strategic decision-making, capital adequacy and provisioning.
Specific internal-run exercises in 2025 included:
•
A credit-risk focused exercise covering both physical and
transition risk scenarios for both the Commercial &
Institutional portfolio and the Retail Banking residential
mortgage portfolio.
•
A non-financial risk scenario for climate focused on external
communications which could omit or contain incorrect
information and mislead on NatWest Group activities.
Credit and non-financial risk scenario analysis exercises for
climate were also run in 2024.
There are various challenges with quantitative climate scenario
analysis, including in relation to the immaturity of modelling
techniques and limitations surrounding data on climate- related
risks. In addition, there is significant uncertainty as to how the
climate will evolve over time, how and when governments,
regulators, businesses, investors and customers respond and how
those responses impact the economy, asset valuations, economic
systems, policy and wider society. These risks and uncertainties,
coupled with significantly long timeframes, make the outputs of
climate-related risk modelling with respect to the potential use
cases identified inherently more uncertain than outputs modelled
for traditional financial planning cycles based on historical financial
information. Recognising these challenges, qualitative work
focused on the cascading and compounding consequences of
climate and nature breakdown (for example, lower growth, higher
inflation, societal and political uncertainty) continues to be
developed and assessed under the emerging threats framework.
Refer to the risk and scenario analysis section of NatWest Group
plc 2025 Climate Transition Plan Report for further information.
Portfolio level assessment
NatWest Group uses a number of tools to undertake portfolio level
assessments including operational limits in retail credit risk, stress
analysis in market risk and heightened climate-related risk sector
assessment in Non-Personal credit risk. The latter, refreshed
annually, seeks to identify sectors that are likely to see increased
credit risks for NatWest Group because of climate-related factors,
over a ten to 15-year horizon.
Transaction level assessment
Assessments are undertaken which consider anti-greenwashing
factors within NatWest Group’s franchises, marketing and
communications processes.
The NatWest Group Supplier Code of Best Practice encourages
NatWest Group suppliers to undertake sustainability assessments
to evaluate supplier sustainability performance.
Within the Non-Personal credit portfolio, NatWest Group continues
to use its CDF tools to engage with its customers to understand
their climate transition journeys and how they are managing the
climate-related risk for their business.
Risk and capital management continued
Climate and nature risk continued
NWB Group
Annual Report and Accounts 2025
63
In 2025, NatWest Group continued to roll-out CDF on a test-and-
learn basis, adding coverage of insurance and other financial
institutions’ customers to the existing customer segments (large
corporates, mid-corporates, commercial real estate, housing
associations, banks, funds, and asset managers).
Enhancements were also made to the large corporates
assessment to increase the granularity of sector and country-
specific questions, for example, questions which assess how much
of NatWest Group’s customer’s business activities are EU
taxonomy aligned. This phased test-and-learn approach continues
to build internal capability among first and second-line colleagues,
and foster a culture where climate risk is embedded into the
existing credit journey.
Recognising the complexity of the energy transition, we
conducted an energy system review during 2025 to ensure our
strategy reflects the interconnected risks and opportunities across
the energy value chain as the economy transitions toward net
zero. The energy system review considered the systemic nature
of the energy transition which anticipates further growth in
renewables, the important yet declining role of oil and gas,
significant infrastructure investment and demand-side
electrification. Reflecting the outcome of our energy system
review, we have established a new E&S Energy Supply Sector
Risk Acceptance Criteria. Noting that the natural resources
portfolio limit remains unchanged following the energy system
review, we are implementing an oversight and governance
framework to help ensure that our financing activity aligns with
our sector and bank-wide strategy and remains within the
portfolio limit and other constraints. Refer to the NatWest Group
plc 2025 Climate Transition Plan Report for further details.
NatWest Group also regularly considers the potential impact of
existing and emerging regulatory requirements related to climate
change at NatWest Group and subsidiary level, through external
horizon scanning and monitoring of emerging regulatory
requirements.
Mitigation
NatWest Group manages and mitigates climate-related risk in the
Non-Personal portfolio through:
•
Top-down portfolio assessments, including incorporating
climate factors in the overall sector strategy, updating the
environmental, social and ethical risk acceptance criteria in
response to potential climate-related risks and applying
climate-enhanced transaction acceptance standards.
•
Bottom-up customer assessments, including the use of CDF
tools to provide a consistent and structured approach for
understanding customer-specific exposure to climate-related
risks and identify higher risk transactions for enhanced
oversight or escalated approval processes.
In the residential mortgage portfolio, lending limits are applied
based on climate characteristics, including:
•
Exposure to EPC A and B rated properties.
•
Buy-to-let properties with potential EPC between D and G.
•
Flats, new builds and buy-to-let properties at high or very high
risk of flood.
Additionally, NatWest Group credit policies do not allow buy-to-let
mortgages to properties with an EPC rating between F and G.
Limits are continually reviewed to reflect new flood risk data, risk
profile and market conditions.
NatWest Group also continues to engage actively with academia
to ensure that best practice and the latest thinking on climate
risks is considered within NatWest Group’s work. This includes
attending and participating in academic events through, for
example, the Centre for Greening Finance and Investment and
supporting research initiatives by, for example, University College
London and the Institute and Faculty of Actuaries.
Industry engagement
NatWest Group continues to participate in a number of industry
forums to help shape the financial service industry’s response to
the challenges posed by climate risk. An example is the Climate
Financial Risk Forum, established by the PRA and the FCA.
Risk and capital management continued
NWB Group
Annual Report and Accounts 2025
64
Non-traded market risk
Definition (audited)
Non-traded market risk is the risk to the value of assets or
liabilities outside the trading book, or the risk to income, that
arises from changes in market prices such as interest rates,
foreign exchange rates and equity prices, or from changes in
managed rates.
Sources of risk (audited)
Non-traded market risk exists in all balance-sheet exposure that
makes reference to market risk factors, when customer
behaviour could impact the size and timing of the repricing or
maturity of future cash flows, or when valuation of assets and
liabilities is driven by market risk factors such as interest rates or
foreign exchange rates.
The key sources of NWB Group’s non-traded market risk are
interest rate risk, credit spread risk and foreign exchange risk.
Key developments in 2025
•
In the UK, the Bank of England base rate fell to 3.75% at 31
December 2025 from 4.75% at 31 December 2024. The five-
year sterling overnight index interest rate swap rate also fell
to 3.66% at 31 December 2025 from 4.04% at 31 December
2024. The corresponding ten-year rate fell to 4.00% from
4.09%. The movement in swap rates reflects market
expectations about the level of the UK base rate in the
medium term, with expectations for the UK base rate being
slightly lower at 31 December 2025.
•
Overall, non-traded market risk VaR decreased in 2025, on
both an average and period-end basis. It was driven by a
reduction in interest rate risk reflecting reduced interest rate
repricing mismatches across customer products. Credit
spread VaR stayed relatively stable through 2025, supported
by generally consistent bond holdings in the liquidity portfolio.
The period-end decrease followed the rollout of updated VaR
timeseries in December 2025. Pipeline VaR reduced on an
average basis, reflecting changes in the assumptions applied
to customer behaviour through the fixed-rate mortgage
application process, which more closely aligned NWB Group’s
estimates of future customer completions to pipeline hedging
activity.
•
NWB Group’s structural hedge notional rose to £151 billion at
31 December 2025 from £146 billion at 31 December 2024.
•
Overall, the sensitivity of net interest earnings increased year
on year. The main contributors to the increase in sensitivity
were higher volumes of managed-margin deposits and
current accounts.
Governance (audited)
Risk governance for non-traded market risk is in line with the
approach outlined in the Risk management framework section.
Risk appetite
Risk appetite for non-traded market risk is in line with the
approach outlined in the Risk management framework section.
NWB Group’s qualitative appetite for non-traded market risk is
set out in the non-traded market risk appetite statement. Its
quantitative appetite for non-traded market risk is expressed in
terms of exposure limits. At NWB Group level, these comprise
value-at-risk (VaR) and earnings-at-risk limits. Stress and
sensitivity limits are also incorporated.
Measurement
Non-traded internal VaR (1-day 99%)
The following table shows one-day internal banking book VaR at a 99% confidence level, split by risk type. VaR values for each year
are calculated based on one-day values for each of the 12 month-end reporting dates. VaR metrics are explained on page 65. Each of
the key risk types are discussed in greater detail in their individual sub-sections following this table.

| 2025 | 2024
| Average | Maximum | Minimum | Period end | Average | Maximum | Minimum | Period end
| £m | £m | £m | £m | £m | £m | £m | £m
Interest rate | 4.0 | 5.5 | 2.9 | 4.1 | 18.5 | 29.7 | 4.3 | 4.3
Credit spread | 42.0 | 46.3 | 28.8 | 28.8 | 43.9 | 47.9 | 39.9 | 43.2
Structural foreign exchange risk | 12.4 | 15.2 | 10.8 | 12.7 | 16.5 | 22.7 | 11.6 | 11.6
Equity | 0.1 | 0.6 | 0.1 | 0.1 | 2.5 | 4.2 | 0.1 | 0.9
Pipeline risk | 2.5 | 4.6 | 0.4 | 3.2 | 7.9 | 15.0 | 3.6 | 4.4
Diversification (1) | (18.3) |  |  | (15.5) | (35.3) |  |  | (18.1)
Total | 42.7 | 50.4 | 33.4 | 33.4 | 54.0 | 68.6 | 44.5 | 46.3

(1)
NWB Group benefits from diversification across various financial instrument types, currencies and markets. The extent of the diversification benefit depends on the correlation between
the assets and risk factors in the portfolio at a particular time. The diversification factor is the sum of the VaR on individual risk types less the total portfolio VaR.
•
For VaR commentary, refer to Key developments in 2025 above.
Risk and capital management continued
Non-traded market risk continued
NWB Group
Annual Report and Accounts 2025
65
Interest rate risk
Non-traded interest rate risk (NTIRR) arises from the provision to
customers of a range of banking products with differing interest
rate characteristics. When aggregated, these products form
portfolios of assets and liabilities with varying degrees of sensitivity
to changes in market interest rates. Mismatches can give rise to
volatility in net interest income as interest rates vary.
NTIRR comprises the following three primary risk types:
•
Gap risk
– arises from the timing of rate changes in non-
trading book instruments. The extent of gap risk depends on
whether changes to the term structure of interest rates occur
consistently across the yield curve (parallel risk) or
differentially by period (non-parallel risk).
•
Basis risk
– captures the impact of relative changes in interest
rates for financial instruments that have similar tenors but are
priced using different interest rate indices, or on the same
interest rate indices but with different tenors.
•
Option risk
– arises from option derivative positions or from
optional elements embedded in assets, liabilities and/or off-
balance sheet items, where NWB Group or its customer can
alter the level and timing of their cash flows. Option risk also
includes pipeline risk. Pipeline risk is the risk of loss arising
from personal customers owning an option to draw down a
loan – typically a mortgage – at a committed rate, where
interest rate changes may result in greater or fewer
customers than anticipated taking up the committed offer.
To manage exposures within its risk appetite, NWB Group
aggregates its interest rate positions and hedges its residual
exposure, primarily with interest rate swaps.
Structural hedging aims to reduce gap risk and the sensitivity of
earnings to interest rate shocks. It also provides some protection
against prolonged periods of falling rates. Structural hedging is
explained in greater detail below, followed by information on how
NWB Group measures NTIRR from both an economic value-based
and an earnings-based perspective.
Structural hedging
NWB Group has a significant pool of stable, non and low interest-
bearing liabilities, principally comprising current accounts and
savings, in addition to its equity and reserves. A proportion of
these balances are hedged, either by offsetting the positions
against fixed-rate assets (such as fixed-rate mortgages and UK
government gilts) or by hedging positions externally using interest
rate swaps, which are generally booked as cash-flow hedges of
floating-rate assets, in order to reduce income volatility and
provide a revenue stream in net interest income. Hence, the
structural hedge is one component of a larger interest rate risk
management programme.
At 31 December 2025, NWB Group’s structural hedge had a
notional of £151 billion (compared to £146 billion at 31 December
2024) with an average life of 2.5 to 3 years.
Interest rate risk measurement
NTIRR can be measured from either an economic value-based or
earnings-based perspective, or a combination of the two. Value-
based approaches measure the change in value of the balance
sheet assets and liabilities including all cash flows. Earnings-based
approaches measure the potential impact on the income
statement of changes in interest rates over a defined horizon,
generally one to three years.
NWB Group uses VaR as its value-based approach and sensitivity
of net interest earnings as its earnings-based approach.
These two approaches provide complementary views of the
impact of interest rate risk on the balance sheet at a point in time.
The scenarios employed in the net interest earnings sensitivity
approach may incorporate assumptions about how NWB Group
and its customers will respond to a change in the level of interest
rates. In contrast, the VaR approach measures the sensitivity of
the balance sheet at a point in time. Capturing all cash flows, VaR
also highlights the impact of duration and repricing risks beyond
the one-to-three-year period shown in earnings sensitivity
calculations
.
Value-at-risk
VaR is a statistical estimate of the potential change in the market
value of a portfolio (and, thus, the impact on the income
statement) over a specified time horizon at a given confidence
level. NWB Group’s standard VaR metrics – which assume a time
horizon of one trading day and a confidence level of 99% – are
based on interest rate repricing gaps at the reporting date. Daily
rate moves are modelled using observations from the last 500
business days. These incorporate customer products plus
associated funding and hedging transactions as well as non-
financial assets and liabilities. Behavioural assumptions are applied
as appropriate.
The non-traded interest rate risk VaR metrics for NWB Group’s
retail and commercial banking activities are included in the
banking book VaR table above. The VaR captures the risk
resulting from mismatches in the repricing dates of assets and
liabilities.
It also includes any mismatch between the maturity profile of
external hedges and NWB Group’s target maturity profile for the
hedge.
Sensitivity of net interest earnings
Net interest earnings are sensitive to changes in the level of
interest rates, mainly because maturing structural hedges are
replaced at higher or lower rates and changes to coupons on
managed rate customer products do not always match changes
in market rates of interest or central bank policy rates.
Earnings sensitivity is derived from a market-implied forward rate
curve, which will incorporate expected changes in central bank
policy rates such as the Bank of England base rate. A simple
scenario is shown that projects forward earnings over a 12-month
period based on the 31 December 2025 balance sheet. An
earnings projection is derived from the market-implied rate, which
is then subjected to interest rate shocks. The difference between
the market-implied projection and the shock gives an indication of
underlying sensitivity to interest rate movements.
Risk and capital management continued
Non-traded market risk continued
NWB Group
Annual Report and Accounts 2025
66
The sensitivity of net interest earnings table below shows the expected impact of immediate upward or downward changes of 25 basis
points and 100 basis points to all interest rates.
Reported sensitivities should not be considered a forecast of future performance in these rate scenarios. Actions that could reduce
interest earnings sensitivity include changes in pricing strategies on customer loans and deposits as well as hedging. Management
action may also be taken to stabilise total income also taking into account non-interest income.

| 2025 | 2024
| +25 basis | -25 basis | +100 basis | -100 basis | +25 basis | -25 basis | +100 basis | -100 basis
| points | points | points | points | points | points | points | points
Shifts in yield curve | £m | £m | £m | £m | £m | £m | £m | £m
12-month interest earnings sensitivity | 123 | (143) | 422 | (569) | 117 | (138) | 465 | (578)

•
The overall sensitivity of net interest income earnings in all scenarios mainly reflects managed-margin deposits and the impact of
higher or lower rates on structural hedge income.
Sensitivity of fair value through other comprehensive income (FVOCI) portfolios and cash flow hedging reserves to interest
rate movements.
NWB Group holds most of the bonds in its liquidity portfolio at fair value and the bonds are generally classified as FVOCI for accounting
purposes Valuation changes arising from unexpected movements in market rates are initially recognised in FVOCI reserves.
Interest rate swaps are used to implement the structural hedging programme and also hedging of some personal and commercial
lending portfolios, primarily fixed-rate mortgages. Generally, these swaps are booked in cash flow hedge accounting relationships.
Changes in the valuation of swaps that are in effective cash flow hedge accounting relationships are recognised in cash flow hedge
reserves.
The table below shows the sensitivity of bonds initially classified as FVOCI and swaps subject to cash flow hedge accounting to a
parallel shift in all rates. Valuation changes affecting interest rate swaps that hedge bonds in the liquidity portfolio are also included.
Where FVOCI bonds and swaps are booked in fair value hedge accounting relationships, the valuation change affecting both
instruments would be recognised in the income statement. For the purpose of this analysis, cash flow hedges are assumed to be fully
effective.
The effectiveness of cash flow and fair value hedge relationships is monitored and regularly tested in accordance with IFRS
requirements. Note also that valuation changes affecting the cash flow hedge reserve affect tangible net asset value, but would not be
expected to affect CET1 capital. The movement in cash flow hedge reserves in 2025 is shown in the statement of changes in equity on
page 94.

| 2025 | 2024
| +25 | -25 | +100 | -100 | +25 | -25 | +100 | -100
| basis | basis | basis | basis | basis | basis | basis | basis
| points | points | points | points | points | points | points | points
Parallel shifts in yield curve | £m | £m | £m | £m | £m | £m | £m | £m
FVOCI reserves | (20) | 20 | (80) | 78 | (6) | 6 | (26) | 20
Cash flow hedge reserves | 17 | (16) | 71 | (59) | (20) | 22 | (68) | 98
Total | (3) | 4 | (9) | 19 | (26) | 28 | (94) | 118

Risk and capital management continued
Non-traded market risk continued
NWB Group
Annual Report and Accounts 2025
67
Credit spread risk
Credit spread risk arises from the potential adverse economic
impact of a change in the spread between bond yields and swap
rates, where the bond portfolios are accounted at fair value
through other comprehensive income.
NWB Group’s bond portfolios primarily comprise high-quality
securities maintained as a liquidity buffer to ensure it can continue
to meet its obligations in the event that access to wholesale
funding markets is restricted. Additionally, other high-quality bond
portfolios are held for collateral purposes and to support payment
systems.
Credit spread risk is monitored daily through sensitivities and VaR
measures. The dealing authorities in place for the bond portfolios
further mitigate the risk by imposing constraints by duration, asset
class and credit rating. Exposures and limit utilisations are
reported to senior management on a regular basis.
Foreign exchange risk
Non-traded foreign exchange risk arises from three main sources:
•
Structural foreign exchange rate risk
– arises from the capital
deployed in foreign subsidiaries, branches and joint
arrangements and related currency funding where it differs
from sterling.
•
Non-trading book foreign exchange rate risk
– arises from
customer transactions and profits and losses that are in a
currency other than the functional currency.
•
Forecast earnings or costs in foreign currencies
– NWB Group
hedges forward some forecast foreign currency expenses.
Structural foreign exchange exposures arise from investments in
foreign subsidiaries, branches and associates and their related
currency funding. These exposures are assessed and managed to
predefined risk appetite levels under delegated authority agreed
by the CFO with support from the Asset & Liability Management
Committee. NatWest Group seeks to limit the potential volatility
impact on its CET1 ratio from exchange rate movements by
maintaining a structural open currency position. Gains or losses
arising from the retranslation of net investments in overseas
operations are recognised in equity reserves and reduce the
sensitivity of capital ratios to foreign exchange rate movements
primarily arising from the retranslation of non-sterling
denominated RWAs. Sensitivity is minimised where, for a given
currency, the ratio of the structural open position to RWAs equals
the CET1 ratio.
The sensitivity of the NatWest Group ratio to exchange rates is
monitored monthly and reported to the Asset & Liability
Management Committee at least quarterly. NWB Plc also
monitors the sensitivity of its CET1 ratio to exchange rate
movements against a risk limit monthly.
Foreign exchange exposures arising from customer transactions
are sold down by businesses on a regular basis in line with
NatWest Group policy.
Foreign exchange risk
The table below shows structural foreign currency exposures.

| 2025 | 2024
| Net investments |  | Structural foreign | Net investments |  | Structural foreign
| in foreign |  | currency | in foreign |  | currency
| operations | Net investment | exposures | operations | Net investment | exposures
|  | hedges |  |  | hedges |
| £m | £m | £m | £m | £m | £m
Euro | 725 | (463) | 262 | 708 | (444) | 264
Other non-sterling | 443 | (242) | 201 | 380 | (139) | 241
Total | 1,168 | (705) | 463 | 1,088 | (583) | 505

•
Changes in foreign currency exchange rates affect equity in proportion to structural foreign currency exposure. For example, a 5%
strengthening or weakening in foreign currencies against sterling would result in a gain or loss of £0.02 billion in equity,
respectively.
Risk and capital management continued
NWB Group
Annual Report and Accounts 2025
68
Pension risk
Definition
Pension risk is the inability to meet contractual obligations and
other liabilities to the established employee or related company
pension scheme.
Sources of risk
NWB Group has exposure to pension risk through its defined
benefit schemes worldwide. The Main section of The NatWest
Group Pension Fund (the Main section) is the largest source of
pension risk as NatWest Bank Plc is the principal employer to the
Main section. Refer to Note 5 to the financial statements, for
further details on NWB Group’s pension obligations, including
sensitivities to the main risk factors.
Pension scheme liabilities vary with changes in long-term interest
rates and inflation as well as with pensionable salaries, the
longevity of scheme members and legislation.
The Trustee of NWB Group’s largest scheme (the Main section of
the NatWest Group Pension Fund) holds buy-in policies with third-
party insurers. Under the buy-in insurance contracts, the insurer
makes payments to the scheme to cover pension benefits paid to
members. As a result, the insured portion of the scheme is
protected against all material demographic and market risks.
These risks have been replaced with the risk that the insurer
defaults on payments due to the scheme. The uninsured scheme
assets continue to vary with changes in market risk drivers such
as interest rates, inflation expectations and credit spreads. NWB
Group is therefore still exposed to the risk that the schemes’
assets, together with future returns and additional future
contributions, are estimated to be insufficient to meet liabilities as
they fall due. In such circumstances, NWB Group could be obliged
(or might choose) to make additional contributions to the schemes
or be required to hold additional capital to mitigate this risk.
Key developments in 2025
•
During the year, the Trustee of the Main section of the
NatWest Group Pension Fund completed partial buy-in
transactions, in addition to those completed during 2024,
passing demographic and market risk to third-party insurers.
Over 40% (£10.3 billion) of the scheme’s liabilities are now
covered by buy-in policies, which is an increase from one-third
at the end of 2024.
Governance
Risk governance for pension risk is in line with the approach
outlined in the Risk management framework section.
Chaired by the Chief Financial Officer (CFO), the Asset & Liability
Management Committee supports the CFO in considering the
financial strategy and balance sheet implications relating to
pension liabilities and pension strategy and other issues material
to NatWest Group’s pension strategy. It also supports the CFO in
considering investment strategy proposals from the Trustee of the
Main section
.
The NatWest Group Board reviews and as
appropriate approves any material pension strategy proposals.
Risk appetite
Risk appetite for pension risk is in line with the approach outlined
in the Risk management framework section.
Pension risk appetite is approved by the Board. NWB Group
maintains an independent view of the risk inherent in its pension
funds. NWB Group has a pension risk appetite statement that is
reviewed at least annually by the Board on the Board Risk
Committee’s recommendation to ensure it remains appropriate
and aligned to strategy. Policies and standards are in place to
provide formal controls for pension risk reporting, modelling,
governance and stress testing.
A pension risk policy, which sits within the enterprise-wide risk
management framework, is also in place and is subject to
associated framework controls. Performance against risk appetite
is reported regularly to the Executive Risk Committee, the Board
Risk Committee, and the Board. Relevant pension risk matters are
escalated through the Executive Risk Committee, Asset & Liability
Management Committee and Board Risk Committee as
appropriate and to the Board as applicable.
Measurement and monitoring
Pension risk is monitored by the NWH Group Executive Risk
Committee and the NatWest Group Board Risk Committee.
Relevant pension risk matters are escalated to the Board as
applicable. NatWest Group also undertakes stress tests on its
material defined benefit pension schemes each year. These tests
are also used to satisfy the requests of regulatory bodies such as
the Bank of England.
The stress testing framework includes pension risk capital
calculations for the purposes of the Internal Capital Adequacy
Assessment Process as well as additional stress tests for a
number of internal management purposes. The results of the
stress tests and their consequential impact on NWB Group’s
balance sheet, income statement and capital position are
incorporated into NWB Group’s and the overall NatWest Group
stress test results. NatWest Bank Plc (a subsidiary of NatWest
Group) is the principal employer of the Main section and could be
required to fund any deficit that arises.
The financial strength of third-party insurers is monitored on a
periodic basis by the Trustee and NatWest Group.
Mitigation
The Main section is well protected against interest rate and
inflation risks within the non-insured portfolio, reflecting risk
mitigation measures taken by the Trustee such as hedging and
reduced exposure to growth assets. The buy-in transactions
completed to date further protect against demographic and
market risks.
If, in an extreme scenario, an insurer was unable to make
payments due to the scheme under the buy-in insurance
contracts, NWB Group would continue to be responsible for
financially supporting the scheme to meet pension benefits.
However, strong mitigants are in place against this risk, including
the insurance regulatory regime.
The potential impact of climate change is one of the factors
considered in managing the assets of the Main section. The
Trustee monitors the risk to its investments from changes in the
global economy and invests, where return justifies the risk, in
sectors that reduce the world’s reliance on fossil fuels, or that
may otherwise promote environmental benefits. The Trustee also
expects third party insurers to have appropriate policies to
address climate risk and to report on climate exposure
attributable to the Main section.
Further details regarding the Trustee’s approach to managing
climate change risk can be found in its Responsible Ownership
Policy, its net zero commitment and its climate disclosures
produced on an annual basis, as required by The Occupational
Pension Schemes (Climate Change Governance and Reporting)
Regulations 2021.
Risk and capital management continued
NWB Group
Annual Report and Accounts 2025
69
Operational risk
Definition
Operational risk is the risk of loss resulting from inadequate or
failed internal processes, people and systems, or external events.
It arises from day-to-day operations and is relevant to every
aspect of the business.
Sources of risk
Operational risk may arise from a failure to manage operations,
systems, processes, transactions and assets appropriately. This
includes human error, an inability to deliver change adequately or
on time, the non-availability of technology services, or the loss of
customer data. It also includes systems failure, theft of NWB
Group property, information loss, the impact of natural or man-
made disasters and the threat of cyberattacks. Operational risk
can also arise from a failure to account for changes in law or
regulations or to take appropriate measures to protect assets.
Key developments in 2025
•
The enhanced risk and control self-assessment approach
was refined further with a focus on material operational risks
and controls across the key end-to-end processes.
•
The use of automated data-led insights was embedded to
oversee the operational risk profile and manage it within
appetite.
•
Improvements to technology end of life risk management
were implemented to mitigate associated technology and
cyber risks.
•
AI tools have been introduced to support the articulation and
adequacy of controls including generative AI chat bots to
support the embedding of frameworks and to help with
horizon scanning.
•
Compliance with UK and EU operational resilience regulatory
requirements was achieved and maintained along with
material compliance with EU Digital Operational Resilience
Act.
•
NatWest Group continued to embed and evolve the
assessment of its operational resilience with increasingly
severe, complex, and prolonged scenario tests for cyber,
third-party, and significant IT failure risks.
•
Threat horizon scanning and vulnerability management
processes were enhanced to support risk identification,
scenario testing and the prioritisation of risk mitigation
activities.
Governance
The risk governance arrangements in place for operational risk
are in line with the approach set out in the Risk management
framework section.
Aligned to this, a strong operational risk management oversight
function is vital to support NWB Group’s ambitions to serve its
customers better. Improved management of operational risk
against defined risk appetite is vital for stability and reputational
integrity.
To support ongoing oversight of the management of the
operational risk profile the Operational Risk Executive Steering
Committee ensures all material operational risks are monitored
and managed within appetite.
Risk appetite
Risk appetite for operational risk is in line with the approach
outlined in the Risk management framework section.
Measurement and monitoring
Measurement and monitoring for operational risk are in line with
the approach outlined in the Risk management framework
section.
Mitigation
Mitigation for operational risk is in line with the approach outlined
in the Risk management framework section.
Operational risks are mitigated by applying preventative and
detective controls which are assessed on adequacy and
effectiveness through the risk and control self-assessment process
on a regular basis to determine risk exposure. Mitigation is
prioritized using risk-based approach considering risk appetite.
Operational resilience and cybersecurity
NWB Group maintains a robust approach to operational resilience
through comprehensive, NatWest Group-wide processes. These
include regular scenario tests that simulate increasingly severe
and sophisticated disruption events. In 2025, as part of NatWest
Group’s operational resilience strategy, severe but plausible
disruption scenario tests were undertaken and
encompassed
cyber threats, third-party risks, and significant IT failures.
confirming the preparedness and effectiveness of NWB Group’s
operational resilience strategies, and plans, including third party
and supplier arrangements in the event of severe but plausible
disruptions.
This rigorous approach was underpinned with the enhancement,
ongoing monitoring, and transparent reporting of key risk
indicators and performance metrics for Important Business
Services.
In Q1 2025, NWB Group, through the NatWest Group operational
resilience self-assessment, confirmed full compliance with the
operational resilience requirements set by the Financial Conduct
Authority and the Prudential Regulation Authority.
By meeting the 2025 compliance deadlines for these critical
regulatory frameworks, NWB Group demonstrated the strength
and reliability of its systems and controls. This enables effective
risk management, minimises potential disruptions, and safeguards
both customers and the wider financial system. These efforts
reinforce NWB Group’s commitment to building trust and stability
within financial services.
Operational resilience remains a key priority, achieved through
the effective management of a broad spectrum of interconnected
operational risks. NWB Group consistently meets regulatory
expectations and actively participates in multiple industry-wide
operational resilience forums.
This engagement provides a valuable cross-sector perspective on
the evolving operational resilience risk landscape and supports
NWB Group’s ability to adapt to ongoing innovation and change,
both internally and across the financial services sector.
NatWest Group operates layered security controls and its
architecture is designed to provide inherent protection against
threats.
This approach avoids reliance on any one type or method
of security control.
Minimum security control requirements are set
out in key risk policies
,
standards, processes and procedures.
Throughout 2025, NatWest Group continued to monitor and
manage the threat landscape focusing on:
•
Initial access brokers (cyber criminals who specialise in
breaching organisations then selling the access to other threat
actors), ransomware gangs and, in light of ongoing geopolitical
tensions, nation states.
•
Innovations in technology, assessing the inherent risk and
developing appropriate responses to manage any associated
risks.
Artificial Intelligence, Quantum Computing and Cloud
Adoption have been areas of focus in 2025.
Risk and capital management continued
Operational risk continued
supported by an integrated AI-enabled platform.
NWB Group
Annual Report and Accounts 2025
70
As cyberattacks evolve, NatWest Group continues to invest in
additional capability designed to defend against emerging risks.
Event and loss data management
The operational risk event and loss data management process
ensures NWB Group captures and records operational risk events
with financial and non-financial impacts that meet defined criteria.
Loss data is used for internal, regulatory and industry reporting
and is included in capital modelling when calculating economic
capital for operational risk. The most serious events are escalated
in a simple, standardised process to all senior management, by
way of an early event escalation process. NWB Group has not
experienced a material cybersecurity breach or associated
material loss in the last three years.
All financial impacts and recoveries associated with an operational
risk event are reported against the date they were recorded in
NatWest Group’s financial accounts. A single event can result in
multiple losses (or recoveries) that may take time to crystallise.
Losses and recoveries with a financial accounting date in 2025
may relate to events that occurred, or were identified in, prior
years. NatWest Group purchases insurance, against specific
losses, including cyberattacks, and to comply with statutory or
contractual requirements.
Compliance and conduct risk
Definition
Compliance risk is the risk that NWB Group fails to observe the
letter and spirit of all relevant laws, codes, rules, regulations and
standards of good market practice.
Conduct risk is the risk of inappropriate behaviour towards
customers, or in the markets in which NWB Group operates,
which leads to poor or inappropriate customer outcomes, and/or
undermines market integrity.
The consequences of failing to meet compliance and/or conduct
responsibilities can be significant and could result, for example, in
legal action, regulatory enforcement, material financial loss and/or
reputational damage.
Sources of risk
Compliance and conduct risk exist across all stages of NWB
Group’s relationships with its customers and arise from a variety
of activities including product design, marketing and sales,
complaint handling, staff training, and handling of confidential
inside information.
As set out in Note 26 to the financial statements, members of
NatWest Group are party to legal proceedings and are subject to
investigation and other regulatory action in the UK, the US and
other jurisdictions.
Key developments in 2025
•
As part of the Non-Financial Risk Enhancement Programme,
NatWest Group reviewed its compliance and conduct
framework against the Operational Riskdata eXchange
Association (ORX) regulatory compliance and conduct risk
taxonomy. ORX is the largest operational risk management
association in the financial services sector and this industry-
standard taxonomy informed proposals for the annual risk
directory refresh, including new level 2 risks and a
consolidation of conduct and regulatory compliance risks into
a single ‘compliance and conduct level 1 risk from 2026.
These changes will enhance risk coverage, strengthen
integration with the EWRMF, and align more closely with
industry practice.
•
NatWest Group are also evaluating alternative rules mapping
approaches, including a regulatory traceability model
This will simplify governance, reduce complexity, and improve
consistency, while ensuring NatWest Group’s framework
remains resilient and future-ready.
•
The Judicial Review challenging the Financial Ombudsman
Service’s (FOS) interpretation of ‘unfair relationships’ under
Section 140 of the Consumer Credit Act (CCA) remains
ongoing. NatWest Group and peer banks have raised
concerns over the reopening of closed complaints, with the
FCA intervening in support of NatWest Group’s position.
Separately, proposed CCA reforms aim to modernise
regulation via a flexible, outcome-based regime.
•
Following the Supreme Court’s August 2025 ruling regarding
‘unfair relationships’ when arranging motor finance, the
FCA’s October consultation outlined a redress scheme
expected to launch in 2026.
•
A review of mortgage rules was launched by the FCA to
simplify regulatory requirements and improve consumer
flexibility. The proposals seek to simplify rules, enhance
access to advice and execution-only options, and streamline
affordability assessments under Consumer Duty. NatWest
Group continues to monitor developments to ensure its
proposition remains compliant and responsive.
•
The FCA’s March review of the treatment of vulnerable
customers recognised progress but highlighted areas for
improvement. NatWest Group remains committed to
delivering fair outcomes and maintaining regulatory
compliance.
•
The PRA and FCA are consulting across the financial services
industry on the Senior Managers and Certification Regime
that could reduce the number of roles within scope by up to
40%, with His Majesty’s Treasury (HMT) supporting swift
implementation.
•
HMT has launched a consultation to review the FOS’s remit
and propose to modernise the framework. The FCA and FOS
have published next steps, signalling coordinated reform of
consumer compensation mechanisms.
Governance
Risk governance for compliance and conduct risk is in line with
the approach outlined in the Risk management framework
section. To support ongoing oversight of the management of the
compliance and conduct risk profile a number of committees are
in place, the most senior of which is the “One Bank Good
Customer Outcomes Leadership Committee”.
Risk appetite
Risk appetite for compliance and conduct risk is in line with the
approach outlined in the Risk management framework section.
Measurement and monitoring
Measurement and monitoring for compliance and conduct risk are
in line with the approach outlined in the Risk management
framework section.
Mitigation
Mitigation for compliance and conduct risk is in line with the
approach outlined in the Risk management framework section.
Activity to mitigate the most material compliance and conduct risk
is carried out across NWB Group with specific areas of focus in
the customer-facing businesses and legal entities. Examples of
mitigation include consideration of customer needs in business
and product planning, targeted training, conflicts of interest
management, market conduct surveillance, complaints
management, mapping of priority regulatory requirements and
independent monitoring activity. Internal policies help support a
strong customer focus across NWB Group.
Risk and capital management continued
NWB Group
Annual Report and Accounts 2025
71
Financial crime risk
Definition
Financial crime risk is the risk that NWB
Group's products,
services, employees and/or third parties are intentionally or
unintentionally used to facilitate financial crime in the form of
money laundering, terrorist financing, bribery and corruption,
sanctions and tax evasion, as well as external or internal fraud.
Sources of risk
Financial crime risk may be present if NWB Group’s customers,
employees or third parties undertake or facilitate financial crime,
or if NWB Group’s products or services are used intentionally or
unintentionally
to facilitate such crime. Financial crime risk is an
inherent risk across all lines of business.
Key developments in 2025
•
Significant investment continued to be made to support the
delivery of a multi-year transformation plan across financial
crime risk management.
•
Enhancements were made to technology, data quality, and
data analytics to improve the effectiveness of systems used to
monitor customers and transactions.
•
Financial crime events were held throughout the year to
further embed financial crime risk management culture and
behaviours.
•
There was active participation in public/private partnerships
including the Joint Money Laundering Intelligence Taskforce
and Data Fusion. Following the success of the pilot, Data
Fusion has become a permanent operational capability, able
to deliver benefits across the public-private economic crime
system. This includes the implementation of a permanent
public-private Joint Analytical Team, housed within the
National Crime Agency.
Governance
Risk governance for financial crime risk is in line with the
approach outlined in the Risk management framework section.
The Financial Crime Oversight Committee, which is jointly chaired
by the Group Money Laundering Reporting Officer and the
Director of Financial Crime is the core governance committee for
financial crime risk (excluding fraud). It oversees financial crime
risk management, operational performance, and transformation
matters including decision-making.
Financial crime matters are escalated through the Executive Risk
Committee and to the Board where applicable.
The Fraud Executive Steering Group, which is chaired by the
Chief Customer and Operations Officer, is the core governance
committee for fraud. It oversees fraud risk management,
operational performance, and investment matters including
decision-making and escalations to relevant senior committees.
Risk appetite
Risk appetite for financial crime risk is in line with the approach
outlined in the Risk management framework section.
Measurement and monitoring
Measurement and monitoring for financial crime risk are in line
with the approach outlined in the Risk management framework
section.
Financial crime risks are identified and reported through
continuous risk management and regular reporting to the
Financial Crime Oversight Committee and other risk governance
committees (including the Board Risk Committee). Quantitative
and qualitative data is reviewed and assessed to measure
whether financial crime risk is within appetite.
Mitigation
Mitigation for financial crime risk is in line with the approach
outlined in the Risk management framework section.
Through the financial crime framework, relevant policies, systems,
processes and controls are used to mitigate and manage financial
crime risk. This includes the use of dedicated screening and
monitoring systems and controls to identify people, organisations,
transactions and behaviours that may require further investigation
or other actions. Centralised expertise is available to detect and
disrupt threats to NWB Group and its customers.
Intelligence is shared with law enforcement, regulators and
government bodies to strengthen national and international
defences against those who would misuse the financial system for
criminal motives.
Model risk
Definition
Model risk is the potential for adverse consequences from model
errors or the inappropriate use of modelled outputs to inform
business decisions. A model is defined as a quantitative method,
system, or approach that applies statistical, economic, financial,
accounting, mathematical or data science theories, techniques
and assumptions to process input data into estimates.
Sources of risk
NWB Group uses a variety of models in the course of its business
activities. Examples include the use of model outputs to support
customer decisioning, measuring and assessing risk exposures
(including credit, market, and climate risk), calculating regulatory
capital and liquidity requirements and automation of operational
processes.
Model applications may give rise to different risks depending on
the business in which they are used. Model risk is therefore
assessed separately for each business segment in addition to the
overall assessment made for NWB Group.
Key developments in 2025
•
Continued with a programme of work to implement model risk
management (MRM) framework changes that were
introduced in 2024 in response to PRA’s Supervisory
Statement 1/23 across the model landscape.
•
Introduced further updates to the MRM framework to address
feedback received from the PRA following their industry-wide
thematic review of MRM and further improve model risk
management practices.
•
Deterministic quantitative methods, which are complex and
material calculators that although not technically models still
present similar risks, were brought in scope of the MRM
framework.
•
Enhanced the framework for the independent validation of
models.
•
Delivered model inventory design changes to support
implementation of MRM framework enhancements, including a
focus on recording of model use, which has enabled better
oversight and risk management of models.
•
Continued focus on improving the completeness and accuracy
of model risk data contained within the inventory through
enhanced oversight metrics and targeted remediation work.
Risk and capital management continued
Model risk continued
NWB Group
Annual Report and Accounts 2025
72
Governance
Risk governance for model risk is in line with the approach
outlined in the Risk management framework section. A
governance framework is in place to ensure policies and
processes relating to models are appropriate and effective. Two
roles are key to this – model risk owners and model validation
leads. Model risk owners are responsible for model approval and
ongoing performance monitoring. Model validation leads, in the
second line of defence, are responsible for oversight, including
ensuring that models are independently validated prior to use and
on an ongoing basis aligned to the model’s tier.
Business and function model management committees are used
to govern key model risk management matters and escalate to
senior management where required.
Risk appetite
Risk appetite for model risk is in line with the approach outlined in
the Risk management framework section.
Measurement and monitoring
Model risk is measured and managed through continuous
assessment and regular reporting to NatWest Group’s senior risk
committees and at NatWest Board level. Policies, toolkits and
model standards related to the development, validation, approval,
implementation, use and ongoing monitoring of models are in
place to ensure adequate control across the lifecycle of an
individual model.
All models developed for use are assigned a
model tier, based on
the model’s materiality and complexity. Risk based model tiering is
used to prioritise risk management activities throughout the model
lifecycle, and to identify and classify those models which pose the
highest risk to NWB
Group’s
business activities, safety and/or
soundness.
Validation of material models is conducted by an independent risk
function comprising of skilled, well-informed subject matter
experts. This is completed for new models or material
amendments to existing models and as part of an ongoing
periodic programme to assess model performance. The frequency
of periodic revalidation is aligned to the tier of the model. The
independent validation focuses on a variety of model features,
including model inputs, model processing, model outputs, the
implementation of the model and the quality of the ongoing
performance monitoring. Independent validation also focuses on
the quality and accuracy of the development documentation and
the model’s compliance with regulation.
The model materiality combined with the validation rating
provides the basis for model risk appetite measures and enables
model risk to be robustly monitored and managed across NWB
Group.
Ongoing performance monitoring is conducted by model owners
and overseen by the model validators to ensure parameter
estimates and model constructs remain fit for purpose, model
assumptions remain valid and that models are being used
consistently with their intended purpose. This allows timely action
to be taken to remediate poor model performance and/or any
control gaps or weaknesses.
Mitigation
By their nature – as approximations of reality – model risk is
inherent in the use of models. It is managed by refining or
redeveloping models where appropriate – due to changes in
market conditions, business assumptions or processes – and by
applying adjustments to model outputs (either quantitative or
based on expert opinion). Enhancements may also be made to
the process within which the model output is used in order to
further limit risk levels
.
Reputational risk
Definition
Reputational risk is the risk of damage to stakeholder trust due to
negative consequences arising from internal actions or external
events.
Sources of risk
The three primary drivers of reputational risk are: failure in
internal risk management systems, processes or culture; NWB
Group’s actions materially conflicting with stakeholder
expectations; and contagion (when NWB Group’s reputation is
damaged by failures in key sectors including NWB Group’s supply
chain or other partnerships).
Key developments in 2025
•
Enhancements were made to expand the requirements of the
reputational risk policy to suppliers and third parties.
•
The environmental, social and ethical (ESE)
(1)
animal welfare,
mining and metals and forestry, fisheries and agribusiness risk
acceptance criteria were reviewed and updated in line with
strategic objectives.
Governance
Risk governance for reputational risk is in line with the approach
outlined in the Risk management framework section.
A reputational risk policy supports reputational risk management
across NWB Group. Reputational risk registers are used to
manage reputational risks identified within relevant business
areas. These are reported to the relevant business risk
committee. Material reputational risks to NWB Group are
escalated via the NatWest Group reputational risk register which
is reported at every meeting of the Group Reputational Risk
Committee.
The Group Reputational Risk Committee also opines
on matters that represent material reputational risks. The
Executive and Board Risk Committees oversee the identification
and reporting of reputational risk.
Risk appetite
Risk appetite for reputational risk is in line with the approach
outlined in the Risk management framework section.
Reputational risk appetite is approved by the Board. NWB Group
manages and articulates its appetite for reputational risk through
a qualitative reputational risk appetite statement and associated
quantitative measures.
The risk appetite statements and associated measures for
reputational risk are reviewed at least annually by the Board on
the Board Risk Committee’s recommendation to ensure they
remain appropriate and aligned to strategy. NWB Group seeks to
identify, measure and manage risk aligned to stakeholder trust.
However, reputational risk is inherent in NWB Group’s operating
environment and public trust is a specific factor in setting
reputational risk appetite.
Measurement and monitoring
Relevant internal and external factors are monitored through
regular reporting via reputational risk registers at business or legal
entity level. They are escalated, where appropriate, to the
relevant business risk committee and where material, to the
Group Reputational Risk Committee. Additional principal risk
indicators for material risks being monitored are also reported to
the Group Reputational Risk Committee and to the Executive and
Board Risk Committees.
Mitigation
Standards of conduct are in place across NWB Group requiring
strict adherence to policies, procedures and ways of working to
ensure business is transacted in a way that meets – or exceeds –
stakeholder expectations. External events that could cause
reputational damage are identified and mitigated through NWB
Group’s top and emerging
risks process (where sufficiently
material) as well as through the NatWest Group and business level
reputational risk registers.
(1) From 1 January 2026, the name of the ESE Risk Framework was updated to the
Environmental & Social Risk Framework. This change better reflects the framework's
underlying methodology which focuses on a risk-based approach aligned to organisational risk
appetite, rather than values-based judgements.
NWB Group
Annual Report and Accounts 2025
73
Report of the directors
The directors present their report together with the audited
accounts for the year ended 31 December 2025.
Other information incorporated into this report by reference can
be found at:

| Page/Note
Stakeholder engagement and s.172(1) statement | 2
Board of directors and secretary | 3
Financial review | 6
Segmental analysis | Note 4
Share capital and reserves | Note 22
Post balance sheet events | Note 35

NWB Group structure
National Westminster Bank Plc (NWB Plc or ‘we’) is a wholly
owned subsidiary of NatWest Holdings Limited (NWH Ltd or the
intermediate holding company). The term ‘NWB Group’ or ‘we’
refers to NWB Plc and its subsidiary and associated undertakings.
The term ‘NWH Group’ refers to NWH Ltd and its subsidiary and
associated undertakings. NatWest Group plc is ‘the ultimate
holding company’. The term ‘NatWest Group’ refers to NatWest
Group plc and its subsidiaries. NatWest Group plc is incorporated
in the United Kingdom and has its registered office at 36 St
Andrew Square, Edinburgh, EH2 2YB.
Details of NWB Plc’s principal subsidiary undertakings and their
activities are shown in Note 14 to the financial statements. A full
list of NWB Plc’s related undertakings is shown in Note 36 to the
financial statements.
The financial statements of NatWest Group plc can be obtained
from Corporate Governance, Gogarburn, Edinburgh, EH12 1HQ,
the Registrar of Companies or at natwestgroup.com.
Activities
NWB Group is engaged principally in providing a wide range of
banking and other financial services.
Results and dividends
The profit attributable to the ordinary shareholders of NWB Plc
for the year ended 31 December 2025 was £3,965 million
compared with a profit of £3,237 million for the year ended 31
December 2024, as set out in the consolidated income statement
on page 92.
No ordinary shares were issued during 2025 or 2024.
In 2025, NWB Plc paid an ordinary dividend of £3.0 billion to NWH
Ltd (2024 – £2.5 billion).
Employees
At 31 December 2025, NWB Group employed 54,200 people
(excluding temporary staff). Details of related costs are included
in Note 3 on the consolidated financial statements. NWB Plc
employs the majority of NWB Group UK customer-facing staff,
with costs recharged. NWB Plc also provides the majority of
shared services (including technology) and operational processes
under Intra-Group Agreements.
References to ‘colleagues’ in this report mean all permanent
employees and, in some instances, members of the wider
workforce e.g. temporary employees and agency workers.
Corporate governance statement
For the financial year ended 31 December 2025 NWB Plc has
again chosen to report against the Wates Corporate Governance
Principles for Large Private Companies (the Wates Principles),
published by the Financial Reporting Council (FRC) in December
2018 and available on the FRC website.
The disclosures below explain how NWB Plc has applied the
Wates Principles in the context of its corporate governance
arrangements.
1. Purpose and leadership
Purpose
In conjunction with the NatWest Group plc Board, the NWB Plc
Board approved NatWest Group’s purpose statement – ‘The
bank that turns possibilities into progress’ in September 2024.
Strategy
The Board reviews and sets the strategic direction of the NWH
Group and, as appropriate, the strategies for each of its
businesses, within the parameters set by the NatWest Group plc
Board. The Board also oversees the execution of NWH Group
strategy and holds executive management to account for its
delivery.
Following a series of dedicated strategy sessions in 2024 the
NatWest Group plc Board formally approved the strategy in
February 2025, including three strategic priorities of disciplined
growth, bank-wide simplification and active balance sheet and
risk management.
In March 2025 the Board confirmed its support for a bank-wide
performance management framework to underpin delivery of the
purpose and strategy, including the adoption of Key Performance
Indicators (KPIs) and Key Results (KRs) to help measure strategic
progress. Changes made to re-balance Board and Board
committee agendas helped to ensure sufficient time on the Board
agenda for broader considerations, with dedicated sessions on
the Private Banking & Wealth Management segment and
NatWest India strategy.
Further information on NatWest Group’s strategy can be found in
the NatWest Group plc 2025 Annual Report and Accounts.
Culture
The board assesses and monitors culture and measures how
culture is being embedded in several ways, as described below.
•
New core behavioural framework: In February the Board
approved the new core behavioural framework. The new
framework consolidated previous colleague frameworks into
a single set of action-oriented behaviours under the “Winning
Together” banner. Directors welcomed that the new
simplified approach 'started with customers' and was
relatable to all colleagues across the bank.
•
“Tone from the top”: At the March Board dinner, as part of a
broader conversation on strategic priorities, the directors
discussed the “tone from the top” culture and behaviours
they wished to demonstrate as a Board and in their
interactions with executive management.
•
Colleague Advisory Panel reports: Feedback on discussions
from Colleague Advisory Panel (CAP) meetings held in March
and September were provided to the Board by the CAP
Chair. Topics included executive remuneration and the wider
workforce, the new core behavioural framework, financial
crime strategy and the launch of NatWest Group’s new global
recognition platform “Recognise”.
•
Performance management framework: In March, the Board
reviewed how the performance management framework
supports the delivery of NatWest Group’s purpose, strategy,
and financial plan. This included the introduction of Key
Results for segments and functions to align with agreed KPIs,
enabling the tracking of strategic implementation and
fostering the desired cultural change.
•
Performance culture and operating systems: In June directors
received an update on initial work underway to explore how
the bank’s customer-focused performance culture could be
enhanced by being more customer focused, empowering
those closest to the customer, speeding up decision making
and putting decisions closer to those serving customers;
alongside accelerating the journey to have a simpler
operating system, powered by technology, AI and data; all in
service of customers.
•
Consumer Duty assessment: In July the Board approved the
Consumer Duty assessment, noting the role culture played in
further embedding. Offering products such as a family-
backed mortgage proposition and focus on the bereavement
journey demonstrated the bank’s dedication to prioritising
good customer outcomes.
Report of the directors continued
•
Colleague survey results: In June and December, the Board
received reports on the results of our 2025 colleague survey,
Our View (which had been conducted in April and
September). Colleagues had responded to questions across
the whole colleague experience including purposeful
leadership, performance culture, building a simpler bank,
wellbeing and ways of working, and risk, conduct and ethics.
•
Culture assessment report:
In July 2025, the Board received
a Culture assessment report on progress across metrics
linked to performance culture, ethics, conduct, and
compliance. In December, it noted that from 2026, an
enterprise-wide culture plan focused on customer
performance would be reflected in the future approach for
assessing culture.
2. Board composition
As at the date of publication of this report, the Board has 14
directors comprising the Chair, two executive directors and 11
independent non-executive directors, one of whom is the Senior
Independent Director.
The names of the current directors and secretary are shown on
page 3. Their biographies are available at natwestgroup.com
(NatWest Holdings Limited section).
Chair, CEO and Senior Independent Director
The role of the Chair is to lead the Board and ensure its overall
effectiveness. This is distinct and separate from that of the CEO
who manages the business day-to-day. The Senior Independent
Director acts as a sounding board for the Chair and as an
intermediary for other directors when necessary.
Balance and diversity
The Board is structured to ensure that the directors provide NWB
Plc with the appropriate balance of skills, experience, knowledge
and diversity, as well as independence. Board committees also
comprise directors with a variety of skills and experience so that
no undue reliance is placed on any one individual.
The Nominations Committee is responsible for considering and
making recommendations to the Board in respect of Board
appointments and membership and chairing of Board
committees.
The Nominations Committee reviews the structure, size and
composition of the Board, and makes recommendations to the
Board in relation to any necessary changes, having regard to the
overall balance of skills, knowledge, experience and diversity on
the Board, the length of service of the Board as a whole; and the
requirement to keep membership regularly refreshed. The
Nominations Committee considers Board composition and
succession planning periodically. The NatWest Group plc Group
Nominations and Governance Committee (Group N&G) also
approves all appointments to the Board, reflecting NWB Plc’s
position as a subsidiary within NatWest Group.
Board recruitment continued to be a principal area of focus in
2025.
During 2025 the Nominations Committee’s membership
supported comprehensive candidate searches with diversity and
inclusion considerations factored into all search criteria. During
the search processes, the Nominations Committee held several
discussions on potential candidates, assessing the credentials of
each candidate against the qualities and capabilities set out in the
role specifications agreed by the Nominations Committee.
Following rigorous processes, the Nominations Committee, in
conjunction with Group N&G, recommended and the Board
approved the appointments of Karin Cook and Josh Critchley as
non-executive directors of NWB Plc. Gill Whitehead also joined as
a non-executive director in January and Mark Seligman and Ian
Cormack stepped down from the Board of NWB Plc in March and
May, respectively. In addition, Francesca Barnes replaced Ian
Cormack as Senior Independent Director in March.
The Nominations Committee, in conjunction with Group N&G,
continues to oversee further recruitment activity in respect of the
Board of NWB Plc.
The Board recognises the value and importance of a
comprehensive Board skills matrix to support effective
governance and strategic oversight. In December 2025, the
Board skills assessment was refreshed following a review of 6
critical skills and 10 general skills identified in 2024 as priorities
for the Board over a 3 to 5 year period.
Using the Board Outlook technology platform, all directors
participated in an online process which involved both self-
assessment and peer calibration elements. The 2025 Board skills
assessment outputs confirmed the Board’s view of the collective
expertise and capabilities of the Board against the organisation’s
strategic priorities and governance needs, as reflected in the
Board skills matrix. The detailed data and analysis offered
through the Board skills assessment has underpinned Board
composition and succession planning, as well as supporting NED
induction and professional development.
The Board operates a boardroom inclusion policy which reflects
NatWest Group’s inclusion guidelines and is aligned to NatWest
Group’s behaviours and relevant legal or voluntary code
requirements.
The boardroom inclusion policy ensures that the Board, and any
committee to which it delegates nomination responsibilities,
follows an inclusive process when making nomination decisions.
That includes ensuring that the nomination process is based on
the principles of fairness, respect and inclusion; that all
nominations and appointments are based on individual
competence, skills and expertise measured against identified
objective criteria without bias, prejudice or discrimination; and
that searches for Board candidates are conducted with due
regard to the benefits of diversity and inclusion.
The policy includes targets which aspire to meet those set out in
the UK Listing Rules along with the recommendations of the
FTSE Women Leaders Review and the Parker Review.
Diversity and inclusion have been considered in all of the
recruitment overseen by the NWH Nominations Committee and
in its review of executive succession planning in 2025, and
accordingly, as of 31 December 2025:
•
NWB Plc met the FTSE Women Leaders Review voluntary
target of 40% women’s representation on boards by the end
of 2025, with 57% of the Board being women;
•
with the positions of CFO and Senior Independent Directors
held by women, NWB Plc met the FTSE Women Leaders
Review recommendation that companies should have at least
one woman in the Chair or Senior Independent Director roles
on the board and/or one woman in the Chief Executive
Officer or Finance Director role by the end of 2025; and
•
the company met the recommendation of the Parker Review
to have at least one member of the Board being from an
ethnic minority background with two such directors meeting
this criterion.
Size and structure
NWH Ltd is the holding company for NatWest Group’s ring-
fenced operations, which include the Retail Banking and Private
Banking & Wealth Management segments and certain aspects of
the Commercial & Institutional segment. A common board
structure is operated such that directors of NWH Ltd are also
directors of RBS plc and NWB Plc. Known collectively as the NWH
Sub Group, the boards of these three entities meet concurrently.
An integral part of NatWest Group’s governance arrangements is
the appointment of three double independent non-executive
directors (DINEDs) to the Boards and Board committees, of the
NWH Sub Group. They are Francesca Barnes, Karin Cook and
Mark Rennison.
The DINEDs are independent in two respects: (i) independent of
management as non-executives; and (ii) independent of the rest
of NatWest Group by virtue of their NWH Sub Group only
directorships. They attend NatWest Group plc Board and relevant
Board committee meetings as observers. DINEDs play a critical
role in NatWest Group’s ring-fencing governance structure and
are responsible for exercising appropriate oversight of the
independence and effectiveness of the NWH Sub Group’s
governance arrangements, including the ability of each board to
take decisions independently.
The DINEDs also have an enhanced role in managing any
material conflicts which may arise between the interests of the
NWH Sub Group and other members of NatWest Group.
NWB Group
Annual Report and Accounts 2025
74
Report of the directors continued
NWB Group
Annual Report and Accounts 2025
75
Independence
The independent non-executive directors combine broad
business and commercial experience with independent and
objective judgement. They provide constructive challenge,
strategic guidance, and specialist advice to the executive
directors and the executive management team and hold
management to account.
The balance between non-executive and executive directors
enables the Board to provide clear and effective leadership
across NWH Group’s business activities and ensures no one
individual or small group of individuals dominates the Board’s
decision-making.
The Chair and non-executive directors meet without the
executive directors present at the end of each Board meeting.
The performance of the non-executive directors is evaluated
annually as part of the Board effectiveness review and further
details of the process undertaken can be found on page 76.
Non-executive director independence and individual directors’
continuing contribution to the company are considered by the
Board, with support from the Nominations Committee, at least
annually and when new non-executive directors are appointed.
The Board considers that the Chair, Rick Haythornthwaite, was
independent on appointment and that all current non-executive
directors are independent.
Enhancing directors’ skills and knowledge
The Chief Governance Officer and Company Secretary supports
directors in their training and development by curating an annual
schedule of training sessions and deep dives into areas of interest
and relevance. In 2025, this annual schedule was supplemented
by a suite of online learning resources and optional reading
materials made available through a dedicated Teams channel for
directors, which was refreshed periodically throughout the year.
These are designed to support directors’ professional
development, deepen their knowledge of the business or specific
areas of interest or offer specialised training on relevant matters.
During 2025 directors had the opportunity to enhance their skills
and knowledge on a range of relevant topics, including
operational resilience, recovery and resolution; digital assets;
climate; financial crime; client assets (CASS) and model risk
management.
Each new non-executive director receives a formal induction
programme on joining the Board, which is co-ordinated by the
Chief Governance Officer and Company Secretary and tailored
to suit the requirements of the individual concerned. This includes
visits to NWH Group’s major businesses and functions and
meetings with directors and senior management.
Meetings with external auditors, counsel and stakeholders are
also arranged as appropriate.
New NEDs also receive a copy of
our non-executive director handbook which contains information
on our corporate structure, governance framework and Board
policies and processes.
An important element of the Board’s ongoing development is the
regional visits undertaken each year. In 2025, directors visited
Birmingham and the West Midlands where they met clients,
colleagues and local stakeholders.
Through direct conversations with commercial customers, the
Board gained valuable insights into banking relationships, the
challenges and opportunities presented by the macro-
environment, and how the bank can best support customers in
the future. These perspectives inform broader strategic
discussions and help ensure the Board maintains a strong
customer focus.
The visit included a tour of a local branch to observe how retail
customers are served and to hear from colleagues about their
experiences.
The Board also met a diverse group of colleagues during the visit,
including graduates, apprentices, and teams from Retail Banking,
Commercial & Institutional, and Digital X. These conversations
provided valuable two-way dialogue, enabling the Board to
deepen its understanding of the issues that matter most to
colleagues, and also provided a valuable opportunity for two-way
dialogue.
The Board also explored digital innovations across the business,
recognising the importance of leveraging new technologies,
including AI, to enhance services for both colleagues and
customers.
External appointments and time commitment
The Board monitors the commitments of the Chair and directors
and is satisfied that they are able to allocate sufficient time to
discharge their duties and responsibilities effectively. Any
additional external appointments require prior Board approval.
The Wates Principles emphasise the importance of ensuring
directors have sufficient time to meet their board responsibilities.
Before any appointment, significant commitments are disclosed
with an indication of the time involved. After appointment to the
Board, any new external appointments require prior Board
approval.
Time commitment is also considered during non-
executive directors’ year-end review meetings with the Chair, in
the context of directors’ performance and contribution to the
Board.
Board papers relating to new director appointments or proposed
additional external appointments for existing directors include
details of the individual’s full portfolio and anticipated time
commitment for the external role(s) under consideration. They
also include a reminder of applicable limits on the number of
directorships which may be held, and relevant proxy adviser and
investor guidance.
During 2025 the Board approved the appointments of Karin Cook
and Josh Critchley to the Board and additional external
appointments taken on by Geeta Gopalan, Rick Haythornthwaite
and Gill Whitehead were also approved. In each case, the Board
noted there would be no material impact on the time
commitment required for their respective NWH Group roles and
authorised any situational conflicts of interest which had been
notified, under the process described below.
Board effectiveness review
In 2025, the Board and committee effectiveness review was
conducted internally using the BoardOutlook technology platform.
Key findings, recommendations and actions were aligned across
NatWest Group plc and the NWH Sub Group and a summary of
the outcomes and actions arising from the 2025 effectiveness
review can be found on pages 119 to 121 of the NatWest Group
plc 2025 Annual Report and Accounts. In December 2025, the
Board agreed an action plan in response to the review
recommendations and implementation of the actions will be
overseen by the Nominations Committee during 2026. The Chair
met each non-executive director individually to discuss their own
performance and continuing professional development and
contribution to the company’s long term sustainable success.
Separately, the Senior Independent Director, together with the
NatWest Group plc Senior Independent Director, sought feedback
on the Chair’s performance from the non-executive directors,
executive directors and other key internal and external
stakeholders and discussed it with the Chair.
3. Director responsibilities
Board policies and processes are set out in the non-executive
director handbook, which operates as a consolidated governance
support manual for non-executive directors of NatWest Group plc
and the NWH Sub Group.
Accountability
All directors receive guidance on their statutory duties under the
Companies Act 2006 and are supported in the discharge of their
duties by the Chief Governance Officer and Company Secretary.
Each director has a role profile which clearly articulates their
responsibilities and accountabilities, and any additional regulatory
responsibilities and accountabilities are set out in their statement
of responsibilities.
Report of the directors continued
NWB Group
Annual Report and Accounts 2025
76
Conflicts of interest
The directors’ conflicts of interest policy ensures that directors
understand their fiduciary duties in respect of conflicts of interest
and sets out the procedures for the effective identification,
management and disclosure of actual or potential conflicts of
interest. It also sets out the process for authorising certain
conflicts.
Directors are required to notify the Board of any situational or
transactional conflict of interest and to update the Board with
any changes to the facts and circumstances surrounding such
conflicts.
Situational conflicts can be authorised by the Board in
accordance with the Companies Act 2006 and the company’s
Articles of Association. The Board considers each request for
authorisation on a case-by-case basis and has the power to
impose conditions or limitations on any authorisation granted as
part of the process.
Details of all directors’ conflicts of interest are recorded in a
register which is maintained by the Chief Governance Officer and
Company Secretary and reviewed annually by the Board.
The Board
The Board is the main decision-making forum for NWB Plc. The
Board is collectively responsible for the long-term success of
NWB Plc and the delivery of sustainable value to its shareholders.
The Board’s role is to provide leadership of NWB Plc and NWH
Group, with particular focus on customers and employees. It sets
and oversees the strategic direction of the NWH Group. It
reviews and approves the NWB Plc risk management framework
(including the risk appetite framework as a component thereof
(‘Risk Appetite Framework’)) and risk appetite for principal risks
in accordance with the Risk Appetite Framework; and it monitors
performance against risk appetite for NWB Plc. It considers any
material risks and approves, as appropriate, recommended
actions escalated by the NatWest Holdings Board Risk
Committee. It approves NWB Plc’s key financial objectives and
keeps the capital and liquidity positions of NWB Plc under review.
The Board’s terms of reference include a formal schedule of
matters specifically reserved for the Board’s decision and are
reviewed at least annually.
An internal review confirmed the Board had fulfilled its remit as
set out in its terms of reference during 2025.
There were eight scheduled Board meetings during 2025.
Additional ad hoc meetings of the Board and some of its
committees were held throughout the year to receive updates
and deal with time-critical matters. There was one additional
Board meeting held in 2025. There were also two strategy
sessions with executive management in 2025. When directors are
unable to attend meetings convened at short notice, they receive
the papers and have the opportunity to provide their feedback in
advance.
At each scheduled Board meeting the directors received reports
from the Chair, Board committee Chairs, CEO, CFO, Chief Risk
Officer and other members of the executive management team,
as appropriate. Business reviews from the CEOs of the Retail
Banking, Private Banking & Wealth Management and Commercial
& Institutional businesses included updates on progress against
strategy and spotlights on current topics such as customer
trends and trading outlook. In addition to business CEOs, a
number of other senior executives attended Board meetings
throughout the year to present reports to the Board. This
provided the Board with an opportunity to engage directly with
management on key issues and supported succession planning.
The Board also welcomed external presenters and advisers to
Board meetings, providing useful insights and perspectives.
Having non-executive directors on multiple Board committees
supports effective governance by strengthening co-ordination
and alignment on shared areas of focus, particularly in relation to
audit, risk and remuneration matters.
Board committee members also work together to enhance their
knowledge and understanding of the business through business
visits and teach-ins. In 2025 these included joint Audit and Risk
Committee visits to the Risk, Internal Audit and Finance functions.
In 2025 a board evolution action plan led to a range of
enhancements to the way the Board and Board committees
operated, including a rebalance of Board and committee
responsibilities. Further details are set out in the NatWest Group
plc 2025 Annual Report and Accounts.
Board committees
The Board has established a number of Board committees with
particular responsibilities. The Audit, Risk, Performance &
Remuneration, and Nominations Committees of NWH Ltd operate
as committees of each of NWH Ltd, NWB Plc and RBS plc, with
meetings running concurrently.
As at the date of this report:
The Audit Committee
comprises five independent non-executive
director members, one of whom is the Board Risk Committee
Chair and two of whom are DINEDs. The committee assists the
Board in discharging its responsibilities in relation to accounting
policies, internal control, and financial reporting functions,
including consideration of any relevant non-financial disclosures
or related controls which may impact the financial statements It
also reviews accounting reporting and regulatory standards of
internal controls, and monitors processes for internal audit and
external audit.
The Board Risk Committee
comprises seven independent non-
executive director members, one of whom is the Chair of the
Audit Committee and two of whom are DINEDs. It provides
oversight and advice to the Board in relation to current and
potential future risk exposures, future risk profile, and the
approval and effectiveness of NWB Plc’s Risk Management
Framework and (in conjunction with the Audit Committee)
internal controls required to manage risk.
The Performance and Remuneration Committee
(RemCo)
comprises six independent non-executive directors, two of whom
are DINEDs.
It assists the NatWest Group plc Performance and Remuneration
Committee with the oversight and implementation of NatWest
Group’s remuneration policy and also considers and makes
recommendations on remuneration arrangements for senior
executives of NWB Plc.
The Nominations Committee
comprises the Chair, Senior
Independent Director and three further independent non-
executive director members. It is responsible for assisting the
Board in the formal selection and appointment of directors. It
reviews the structure, size and composition of the Board, and
membership and chairing of Board Committees.
The Sustainable Banking Committee
transitioned to become the
Group Technology, Innovation and Simplification Committee, a
new NatWest Group plc Board level committee on 1 June 2025.
As a result of this new Committee providing strategic oversight
and advice on NatWest Group’s use of technology, data, and
innovation to support delivery of its strategic ambitions it was
agreed
to establish this at NatWest Group plc Board level only.
Executive Committee
The Executive Committee
(ExCo) comprises NWB Plc’s most
senior executives and supports the CEO in managing NWH
Group’s business.
Decisions at all executive level committees, including the
Executive Committee, are made under individual accountability
where decision making authority lies with an individual (who
usually chairs committee meetings) and committee members
support the relevant individual in discharging their
accountabilities.
These committees provide a forum for debate
and challenge of the key issues set out in their terms of reference
with the role of members being to provide input, support and
challenge the decision maker including whether to recommend
matters to Board committees and the Board.
ExCo considers the delivery of strategy, financials, risk and
customer, colleague and operational issues affecting NWH Group.
Report of the directors continued
NWB Group
Annual Report and Accounts 2025
77
Members of the executive management team also have
individual accountabilities for their respective areas of
responsibility and have committees to support them in
discharging these accountabilities.
Integrity of information
All directors receive accurate, timely and clear information on all
relevant matters and have access to the advice and services of
the Chief Governance Officer and Company Secretary. External
advice is provided to the Board as required. In addition, all
directors are able, if necessary, to obtain independent
professional advice at NWB Plc’s expense.
4. Opportunity and risk
The role of the Board is to promote the long-term sustainable
success of NWB Plc.
The Board held two dedicated strategy sessions with the
executive management team in 2025, and additional strategy
updates to the Board during 2025. Within the context of a wider
discussion at NatWest Group level, this provided an opportunity
for the Board to assess opportunities and risks to the future
success of the business, the sustainability of the business model
and how its governance contributes to the delivery of its
strategy. The Board reviews and approves risk appetite for NWB
Plc’s principal risks in accordance with the NatWest Group risk
appetite framework; monitors performance against risk appetite
for NWB Plc; and considers any material risks and approves, as
appropriate, recommended actions escalated by the Board Risk
Committee.
NWB Plc’s risk strategy is informed and shaped by an
understanding of the risk landscape including the principal risks it
takes in carrying out business activities as well as the risks and
uncertainties arising from the external economic, political and
regulatory environments.
NWB Plc operates within NatWest Group’s integrated enterprise-
wide risk management framework. This is centred around the
embedding of a strong risk culture and is designed to ensure the
tools and capability are in place to facilitate sound risk
management and decision-making. As part of the enterprise-
wide risk management framework NWB Plc complies with
NatWest Group’s risk appetite framework, which is approved
annually by the NatWest Group plc Board. NatWest Group’s risk
appetite is set in line with overall strategy.
Further information on NatWest Group’s integrated enterprise-
wide risk management framework including risk culture, risk
appetite, risk identification, risk measurement and risk mitigation,
as well as NWB Plc risk governance, can be found in the risk and
capital management section of this report (pages 9 to 17).
5. Remuneration
The NatWest Group reward
policy provides a consistent policy
across all NatWest Group companies and ensures compliance
with regulatory requirements. The reward
policy is aligned with
the Group’s purpose and business strategy,
as well as the desired
culture and behaviours
and long-term interests of NWH Ltd. The
policy supports a culture where employees are rewarded for
delivering sustainable long term organisational success and
effective risk management.
The
Group
RemCo
reviews
remuneration
for executives of NWB
Plc and considers reports on the wider workforce including
annual pay outcomes and diversity information. The Group
RemCo helps to ensure that the remuneration policies,
procedures and practices being applied are appropriate for NWB
Plc. Executive
remuneration
structures incentivise individuals to
deliver sustainable performance based on strategic
objectives
for
NatWest Group and the relevant business area. Performance is
assessed against a balanced scorecard of financial and non-
financial measures and variable pay is subject to
retention and
holding periods as
appropriate,
as well as malus and clawback
provisions to ensure rewards are justified
in the long-term.
NatWest Group continued to embed Beyond – our performance
management philosophy launched in 2024 – across the bank.
Colleague goals
remain
set against a balanced scorecard of
measures to support business strategy and strategic purpose.
NatWest Group continues to pay colleagues fairly for the work
they do, supported by simple and transparent pay structures in
line with industry best practices. NatWest Group keeps policies
and processes under review to ensure it does so.
NatWest Group
are proud to be an accredited Living Wage
Employer,
demonstrating
our commitment to setting pay levels
above the real living wage rates. In 2025, we furthered our
commitment to fair pay by achieving re-certification as a Global
Living Wage Employer, recognising that our rates of pay for
colleagues outside the UK are at or above the living wage
threshold as defined by the Fair Wage Network.
NatWest Group helps colleagues to have an awareness of the
financial and economic factors affecting its performance through
quarterly ‘Results Explained’ communications and
events with the
Group CEO and Group CFO.
Further information on
the
remuneration
policy, pay ratios and
employee share plans can be found in the director’s
remuneration
report of the NatWest Group plc 2025
Annual
Report and Accounts. Gender and
ethnicity
pay
gap information
can be found in the Strategic report section of the NatWest
Group plc 2025
Annual Report and Accounts and at
natwestgroup.com, along with the steps being taken to build a
skilled, engaged and inclusive workforce.
6. Stakeholder relationships and engagement
In
February 2025
the Board confirmed the Board’s key
stakeholder groups - investors, customers. colleagues,
communities, regulators and suppliers. The Board’s agenda and
engagement plans were structured to enhance the Board’s
understanding of these stakeholders’ views and interests. This in
turn has informed Board discussions and decision-making.
For further information on stakeholder engagement activities
undertaken within NatWest Group which
impacted
NWH Group,
refer to pages
36
to
37
and pages
117
to
118
of the NatWest
Group plc 2025 Annual Report and Accounts,
and below under
Additional colleague-related disclosures (workforce engagement
including the Colleague Advisory Panel).
Engagement with colleagues, suppliers, customers and
others
For further details on the Board’s engagement with colleagues,
customers, suppliers and others, and how these stakeholders’
interests have influenced Board discussions and principal
decisions, refer to page 36 of the Strategic report which includes
a section 172(1) statement and signposts to further information
contained in the NatWest Group plc 2025 Annual Report and
Accounts.
Additional colleague-related disclosures
Informing and consulting colleagues
NatWest Group listens to our colleagues and uses this insight
to
attract, engage and
retain
the best talent for the future.
In
2025, our colleague listening strategy included: regular colleague
opinion surveys; a Colleague Advisory Panel (CAP) connected
directly with our Board; the Colleague Experience Squad, which
provided feedback on colleague products and services;
and
Engage, our social media platform.
We also track metrics
and key performance indicators, which we can benchmark with
sector and high-performing comparisons.
Over
50,000
colleagues (83% participant rate) across all countries
and levels
participated
in our September 2025 Our View
colleague
survey.
(1)
The results showed continued
strong
performance, particularly when compared to the Global Financial
Services (GFS) and Global High Performance (GHP) norms.
Marginal gains were achieved across most
categories,
demonstrating
systemic improvements. Specifically,
eight out of 14 categories improved, two remained static, and
four declined compared with September 2024.
Report of the directors continued
NWB Group
Annual Report and Accounts 2025
78
Regular interactions with employee representatives such as trade
unions, elected employee bodies and work councils are a vital
means of transparency and engagement for NatWest Group.
These sessions are
frequently
used to discuss developments and
updates on the progress of strategic priorities. NatWest Group is
also committed to respecting employees’ rights of freedom of
association across all its business.
In addition,
the CAP
remains
a
vital part of NatWest Group’s governance and listening strategy,
ensuring that the voice of colleagues is heard and considered at
Board level. Chaired by non-executive director Roisin Donnelly,
CAP met twice in 2025 – March and September – with strong
cross-functional
representation and active engagement from
Board members. CAP membership is refreshed regularly and
currently
comprises
31 self-nominated colleagues,
representing
a
cross-section of the bank by grade, business area, location and
working pattern.
Topics are either chosen by CAP or are
requested by Board, and in 2025
have included our
new
core
behavioural framework,
our
new global
recognition
approach
Recognise, and our standing annual item:
executive and wider workforce
remuneration.
(1)
NatWest Group Our View results exclude Ulster Bank RoI.
Employment of disabled colleagues and colleagues with long-
term conditions
NatWest Group makes
reasonable
workplace adjustments to
support colleagues with disabilities and long-term conditions to
succeed.
If a colleague develops a disability or long-term
condition, NatWest Group will, wherever possible,
make
reasonable
adjustments to support them in their existing
job or re-deploy them to a more suitable alternative job. The
NatWest Group Careers site gives
comprehensive insights into
NatWest Group jobs, culture, locations, and application
processes. It also hosts a variety of blog content to portray
stories of what it is like to work at NatWest Group. The company
also makes sure that candidates can easily request reasonable
adjustments to support at any stage of the recruitment process.
Internal control over financial reporting
The internal controls over financial reporting for NWH Group are
managed at NatWest Group level. Any deficiencies identified are
reported to Group Audit Committee along with management’s
remediation plans.
NatWest Group's auditors have audited the effectiveness of
NatWest Group's internal control over financial reporting and
have given an unqualified opinion.
Directors’ interests
Where directors of NWB Plc are also directors of NatWest Group
plc, their interests in the shares of the ultimate holding company
at 31 December 2025 are shown in the Corporate Governance,
Annual report on remuneration section of the NatWest Group plc
2025 Annual Report and Accounts. None of the directors held an
interest in the loan capital of the ultimate holding company or in
the shares or loan capital of NWB Plc or any of its subsidiaries,
during the period from 1 January 2025 to 12 February 2026.
Directors' indemnities
In terms of section 236 of the Companies Act 2006 (the
‘Companies Act’), Qualifying Third Party Indemnity Provisions
have been issued by the ultimate holding company to its
directors, members of NWB Plc’s Executive Committee,
individuals authorised by the PRA/FCA and certain directors
and/or officers of NatWest Group’s subsidiaries and trustees of
NatWest Group’s pension scheme.
The indemnities referenced above were in force throughout the
financial year, including for individuals who resigned during the
year, and remain in force as at the date of this report.
The ultimate holding company also maintains Directors’
and Officers’ Liability Insurance to provide appropriate
protection to directors and/or officers from liabilities that may
arise against them in connection with their role.
Going concern
NWB Group’s business activities and financial position, the factors
likely to affect its future development and performance and its
objectives and policies in managing the financial risks to which it
is exposed, and its capital are discussed in the Business review.
NWH Group’s regulatory capital resources and significant
developments in 2025, and anticipated future developments are
detailed in the Capital, liquidity and funding section on pages 53
to 60. This section also describes NWH Group’s funding and
liquidity profile, including changes in key metrics and the build-up
of liquidity reserves.
The directors have prepared the financial statements on a going
concern basis after assessing the principal risks, forecasts,
projections and other relevant evidence over the twelve months
from the date the financial statements are approved.
Political donations
During 2025, no political donations were made in the UK or EU,
nor any political expenditure incurred in the UK or EU.
Directors’ disclosure to auditors
Each of the directors at the date of approval of this report
confirms that:
(a) so far as the director is aware, there is no relevant audit
information of which NWB Plc’s auditors are unaware; and
(b) the director has taken all the steps that he/she ought to have
taken as a director to make himself/herself aware of any relevant
audit information and to establish that NWB Plc’s auditors are
aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the Companies
Act.
Auditors
Ernst & Young LLP (EY) are the current auditors of the company.
Following a tender undertaken in 2022, overseen by the Group
Audit Committee, NatWest Group plc announced its intention to
appoint PricewaterhouseCoopers (PwC) as auditors for the
financial period ending 31 December 2026. This will be the last
period of audit by EY as they will not be proposed for re-
appointment as auditors by NatWest Group. A resolution to
appoint PwC as the NatWest Group auditors will be proposed at
the forthcoming AGM of NatWest Group.
By order of the Board
Gary Moore
Chief Governance Officer and Company Secretary
12 February 2026
National Westminster Bank Plc
Is registered in England No. 929027
NWB Group
Annual Report and Accounts 2025
79
Statement of directors’ responsibilities
This statement should be read in conjunction with the responsibilities of the auditor set out in their report on pages 81 to 91.
The directors are responsible for the preparation of the Annual Report and Accounts. The directors are required to prepare Group
financial statements, and as permitted by the Companies Act 2006 have elected to prepare company financial statements, for each
financial year in accordance with UK adopted International Accounting Standards. They are responsible for preparing financial
statements that present fairly the financial position, financial performance and cash flows of NWB Group and NWB Plc. In preparing
those financial statements, the directors are required to:
•
select suitable accounting policies and then apply them consistently;
•
make judgements and estimates that are reasonable, relevant and reliable; and
•
state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in
the financial statements;
•
prepare the financial statements on a going concern basis unless it is inappropriate to presume that the company and Group will
continue in business.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial
position of NWB Group and to enable them to ensure that the Annual Report and Accounts complies with the Companies Act 2006.
They are also responsible for safeguarding the assets of NWB Plc and NWB Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for preparing a Strategic report and Directors’ report, that
comply with that law and those regulations. The directors are responsible for the maintenance and integrity of the corporate and
financial information included on the company’s website.
The directors confirm that to the best of their knowledge:
•
the financial statements, prepared in accordance with UK adopted International Accounting Standards, give a true and fair view of
the assets, liabilities, financial position and profit or loss of the Bank and the undertakings included in the consolidation taken as a
whole; and
•
the Strategic report and Directors’ report (incorporating the Financial review) includes a fair review of the development and
performance of the business and the position of the Bank and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they face.
By order of the Board
Richard Haythornthwaite
John-Paul Thwaite
Katie Murray
Chair
Chief Executive Officer
Chief Financial Officer
12 February 2026
Board of directors
Chair
Executive directors
Non-executive directors
Richard Haythornthwaite
John-Paul Thwaite
Katie Murray
Francesca Barnes
Karin Cook
Joshua Critchley
Roisin Donnelly
Patrick Flynn
Geeta Gopalan
Yasmin Jetha
Stuart Lewis
Mark Rennison
Gillian Whitehead
Lena Wilson
Financial statements
NWB Group
Annual Report and Accounts 2025
80
Page
Independent auditor’s report
81
Consolidated income statement
92
Consolidated statement of comprehensive income
92
Balance sheet
93
Statement of changes in equity
94
Cash flow statement
96
Accounting policies
97
Notes to the financial statements
104
1
Net interest income
104
2
Non-interest income
104
3
Operating expenses
105
4
Segmental analysis
107
5
Pensions
110
6
Auditor’s remuneration
116
7
Tax
116
8
Profit/(loss) dealt with in the accounts of NWB Plc
118
9
Financial instruments - classification
119
10
Financial instruments - valuation
123
11
Financial instruments - maturity analysis
132
12
Derivatives
135
13
Loan impairment provisions
143
14
Investments in Group undertakings
144
15
Other financial assets
145
16
Other assets
145
17
Intangible assets
146
18
Property, plant and equipment
147
19
Other financial liabilities
148
20
Subordinated liabilities
149
21
Other liabilities
150
22
Share capital and reserves
151
23
Structured entities
152
24
Asset transfers and collateral received
153
25
Capital resources
154
26
Memorandum items
155
27
Analysis of the net investment in business interests and intangible assets
157
28
Non-cash and other items
158
29
Analysis of changes in financing during the year
159
30
Analysis of cash and cash equivalents
159
31
Directors’ and key management remuneration
160
32
Transactions with directors and key management
160
33
Related parties
161
34
Ultimate holding company
163
35
Post balance sheet events
163
36
Related undertakings
164
Independent auditors’ report to the members of National
Westminster Bank Plc
NWB Group
Annual Report and Accounts 2025
81
Opinion
In our opinion:
•
the financial statements of National Westminster Bank Plc (the ‘Bank’) and its subsidiaries (together the ‘Group’) give a true and
fair view of the state of the Group’s and of the Bank’s affairs as at 31 December 2025 and of the Group’s profit for the year then
ended;
•
the Group financial statements have been properly prepared in accordance with UK adopted International Accounting Standards
(IAS) and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB);
•
the Bank financial statements have been properly prepared in accordance with UK adopted IAS as applied in accordance with
section 408 of the Companies Act 2006; and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of the Group and the Bank for the year ended 31 December 2025 which comprise:
Group
Bank
•
Consolidated balance sheet as at 31 December 2025;
•
Consolidated income statement for the year then ended;
•
Consolidated statement of comprehensive income for the year then
ended;
•
Consolidated statement of changes in equity for the year then ended;
•
Consolidated cash flow statement for the year then ended;
•
Accounting policies;
•
Related Notes 1 to 36 to the financial statements; and
•
Risk and capital management section of the Strategic report identified
as ‘audited’.
•
Balance sheet as at 31 December 2025;
•
Statement of changes in equity for the year
then ended;
•
Cash flow statement for the year then ended;
•
Accounting policies; and
•
Related Notes 5, 7-22 and 24-36 to the
financial statements.
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted IAS, IFRS as issued by
the IASB, and as regards to the Bank financial statements, as applied in accordance with section 408 of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and the Bank in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Bank and we remain
independent of the Group and the Bank in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group and the Bank’s ability
to continue to adopt the going concern basis of accounting included:
•
Confirming our understanding of the directors’ going concern assessment process, including the Group’s forecasting process;
•
Performing a risk assessment to identify factors that could impact the going concern basis of accounting, including both internal
(e.g. impact of Group’s strategic plans) and external risks (e.g. geopolitical and macroeconomic factors);
•
Evaluating the Group’s financial forecasts for the going concern period, including the use of EY financial modelling and economic
advisory specialists to assess the assumptions used to develop the forecasts;
•
Engaging EY prudential regulatory specialists to assess the results of management’s stress testing on funding, liquidity, and
regulatory capital;
•
Understanding and evaluating credit agency ratings; and
•
Reading and evaluating the adequacy and conformity with reporting standards of the disclosures made in the financial statements
in relation to going concern.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group and the Bank’s ability to continue as a going concern over the
twelve months from the date when the financial statements are authorised for issue.
Independent auditors’ report to the members of National Westminster Bank Plc continued
NWB Group
Annual Report and Accounts 2025
82
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this
report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group and
the Bank’s ability to continue as a going concern.
Overview of our audit approach
Audit scope
•
We performed an audit of the complete financial information of two components and audit procedures on
specific balances for a further two components.
•
We performed central procedures for certain audit areas and balances as outlined in the Tailoring the scope
section of our report.
Key audit
matters
•
Expected credit loss provisions
•
Pension valuation and net pension balance
•
IT access management
•
Valuation of investments in group undertakings in
the Bank’s accounts
(Consistent with prior year)
(Consistent with prior year)
(Consistent with prior year)
(Consistent with prior year)
Materiality
•
Overall Group materiality of £282 million (2024 - £237 million) which represents 5% of profit before tax of
the Group of £5,726 million (2024 - £4,663 million) adjusted for non-recurring items.
•
Bank materiality of £227 million (2024 - £216 million), which is 1% (2024 - 1%) of equity of the Bank.
An overview of the scope of the Bank and Group audits
Tailoring the scope
We have followed a risk-based approach when developing our audit approach to obtain sufficient appropriate audit evidence on which
to base our audit opinion. We performed risk assessment procedures, with input from our component audit teams, to identify and
assess risks of material misstatement of the Group financial statements and identified significant accounts and disclosures. When
identifying components at which audit work needed to be performed to respond to the identified risks of material misstatement of the
Group financial statements, we considered our understanding of the Group and its business environment, the applicable financial
framework, the Group’s system of internal control at the entity level, the existence of centralised processes, applications and any
relevant internal audit results.
The scoping for the current year is as follows:
Component
Scope
Key locations where work was performed
Retail Banking
Full
United Kingdom
Commercial & Institutional
Full
United Kingdom
Private Banking & Wealth Management
Specific
United Kingdom
Digital X
Specific
United Kingdom
We determined that centralised audit procedures can be performed across the identified components in the following audit areas:
financial control and reporting; modelled expected credit loss provisions; pensions, valuation of investment in subsidiaries, information
technology; provisions for customer redress, litigation and other regulatory matters; and taxation.
We identified all four components as individually relevant to the Group due to relevant events and conditions underlying the identified
risks of material misstatement of the group financial statements being associated with the reporting components or a pervasive risk of
material misstatement of the group financial statements or a significant risk or an area of higher assessed risk of material
misstatement of the group financial statements being associated with the components.
For those individually relevant components, we identified the significant accounts where audit work needed to be performed at these
components by applying professional judgement, having considered the group significant accounts on which centralised procedures will
be performed, the reasons for identifying the financial reporting component as an individually relevant component and the size of the
component’s account balance relative to the group significant financial statement account balance.
We then considered whether the remaining group significant account balances not yet subject to audit procedures, in aggregate, could
give rise to a risk of material misstatement of the group financial statements. We did not identify additional scope required as we
assessed the residual risk to not be material.
Having identified the components for which work will be performed, we determined the scope to assign to each component. Our
scoping to address the risk of material misstatement for each key audit matter is included in the Key audit matters section of our
report.
The table below illustrates the coverage obtained from the work performed by our audit teams. We considered total assets, total
equity and total income to verify we had appropriate overall coverage.
Full scope
(1)
Specific scope
(2)
Total assets
85%
15%
Total equity
98%
0%
Total income
89%
8%
(1)
Full scope: audit procedures on all significant accounts.
(2)
Specific scope: audit procedures on selected accounts.
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83
Involvement with component audit teams
In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of the
components by us, as the Group audit engagement team, or by component audit teams operating under our instruction. All of the
direct components of the Group (full or specific scope) were audited by EY global network firms.
The Group audit team continued to follow a programme of oversight that has been designed to ensure that the Senior Statutory
Auditor, or another Group audit partner, has ongoing interactions with all in scope component teams and locations, including those
outside the United Kingdom. The Group audit team interacted regularly with the component audit teams throughout the course of the
audit, which included holding planning meetings, maintaining regular communications on the status of the audits and results of
procedures, reviewing key working papers and taking responsibility for the scope and direction of the audit process. Where relevant,
the section on key audit matters details the level of involvement we had with component auditors to enable us to determine that
sufficient audit evidence had been obtained as a basis for our opinion on the Group as a whole. This, together with the additional
procedures performed at Group level, gave us appropriate evidence for our opinion on the Group financial statements.
Climate change
Stakeholders are increasingly interested in how climate change will impact the Group. The Group has determined that credit risk,
operational risk, compliance risk, conduct risk and reputational risk as potentially the most impacted by climate risk in the medium and
long-term horizons. These are explained in the Climate and nature risk section within the Risk and capital management section in the
Strategic report, which forms part of the “Other information,” rather than the audited financial statements. Our procedures on these
unaudited disclosures therefore consisted solely of considering whether they are materially inconsistent with the financial statements,
or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated, in line with our responsibilities on
“Other information”.
In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any
consequential material impact on its financial statements.
The Group has explained in Accounting policies how they have reflected the impact of climate change in their financial statements, and
the significant judgements and estimates relating to climate change. The Group notes that many of the impacts will be longer term in
nature, with an inherent level of uncertainty, and have limited effect on accounting judgements and estimates for the current period
under the requirements of UK adopted IAS and IFRS as issued by the IASB. The Group has also explained within the Credit Risk section
within the Risk and capital management section, their approach to quantifying the impact of climate transition policy within
macroeconomic variables used in the calculation of expected credit losses.
Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating the Group’s
assessment of the impact of climate risk, their climate commitments and the significant judgements and estimates disclosed in
Accounting policies, and whether these have been appropriately reflected in the asset values where these are impacted by future cash
flows, and in the timing and nature of liabilities recognised following the requirements of UK adopted IAS and IFRS as issued by the
IASB. As part of this evaluation, we performed our own risk assessment, supported by our climate change and economic specialists, to
determine the risk of material misstatement in the financial statements from climate change which needed to be considered in our
audit.
We also evaluated the Directors’ considerations of climate change risks in their assessment of going concern and associated
disclosures.
Based on our work, whilst we have not identified the impact of climate change on the financial statements to be a standalone key
audit matter, we have considered the impact within the key audit matter for expected credit loss provisions and valuation of
investments in group undertakings in the Bank’s financial statements. Details of our procedures and findings are included in our
explanation of key audit matters below.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
Independent auditors’ report to the members of National Westminster Bank Plc continued
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84
Risk
Our response to the risk
Expected credit loss (ECL) provisions
At 31 December 2025 the Group reported
total gross loans – amortised cost and fair
value through other comprehensive
income (FVOCI) of £360.4 billion (2024 -
£341.7 billion) and £3.0 billion of expected
credit losses (ECL) (2024 - £2.8 billion).
Management’s judgements and estimates
are especially subjective due to significant
uncertainty associated with the
assumptions used. Aspects with increased
complexity and judgements in respect of
the timing and measurement of ECL
include:
•
Economic scenarios
- Macroeconomic
forecasts, scenarios and weightings
adequately consider the volatility in
geopolitical and economic environment,
and impacts of global and UK policy
decisions on wholesale sectors and UK
consumers. We considered whether the
quantitative approach to probability
weightings of scenarios adequately
captured the economic outlook.
•
Models and model assumptions
-
Appropriateness of modelling
assumptions, model build and
methodology, and data used to
calculate Probability of Default (PD),
Loss Given Default (LGD) and Exposure
at Default (EAD).
•
Post-model adjustments (PMAs)
-
Completeness and valuation of post-
model adjustments which represent
approximately 9% of total ECL (2024 -
10%), including adjustments required to
address the limitation of models to
adequately incorporate affordability,
inflation, liquidity challenges from
ongoing geopolitical and economic
uncertainties.
•
Individual provisions
- Measurement of
individual provisions including the
assessment of multiple scenarios and
probability weights, the impact of the
current uncertain geopolitical and
economic outlook on exit or recovery
strategies, collateral valuations, and
time to collect; and
•
Staging
- Completeness and accuracy
of allocation of assets into stage 1, 2
and 3 using criteria in accordance with
IFRS 9.
Controls testing
- Controls testing - We evaluated the design and operating
effectiveness of controls over the ECL process, including those over management’s
judgements and estimates, as well as the associated controls over relevant information
technology systems. These controls, among others, included:
•
the staging of assets per management’s criteria, and their monitoring of stage
effectiveness;
•
model governance including development, monitoring and independent validation;
•
data accuracy and completeness;
•
credit monitoring;
•
multiple economic scenarios;
•
the governance and management review of post-model adjustments; and
•
individual provisions.
Economic scenarios
-
We involved EY economic specialists to assist us in evaluating the
base case and alternative economic scenarios, including evaluating probability weights.
We assessed the most significant variables such as GDP, unemployment rate, UK Stock
Price Index, House Price Index, comparing the forecasts across all scenarios with
multiple benchmarks against the backdrop of persistent inflation, restrictive trade
policies, geopolitical events as well as climate risks. With the support of our credit
modelling specialists, we evaluated the correlation and translation of the
macroeconomic factors, including the impacts of alternative paths or weights to ECL.
Models and model assumptions
- We selected a sample of models based on both
quantitative and qualitative factors such as portfolio size and risks, model complexities,
and external factors. We involved EY modelling specialists to test the assumptions,
inputs, methodology and model build through a combination of assessing model design
and formulae, alternative modelling techniques, recalculations and independent
implementation of new models during the year. We considered the key portfolio
movements during the year including growth of the retail unsecured portfolio, both
organic and through acquisitions, alongside changes in recovery strategies, to
challenge model performance.
To evaluate data quality, we agreed a sample of key data points to source systems,
and tested ECL data reconciliations from the calculation engine through to the general
ledger and disclosures.
Post-Model Adjustments (PMAs)
- We, along with our modelling and economic
specialists, tested the appropriateness, adequacy and completeness of the PMAs held
at year end in response to model and data limitations. This included challenging
management’s identification of high-risk retail customers and commercial sub-sectors
that were considered most at risk from the current economic and geopolitical
headwinds. This included those that were susceptible to affordability challenges,
inflation risks, supply chain and liquidity challenges. We also challenged the continued
recognition of PMAs from previous years, by checking the latest default trends in
specific cohorts. We assessed PMAs against the risk of double counting of either certain
portfolios/customers or identified risks.
Individual provisions
– We recalculated and challenged the scenarios, assumptions, and
cash flows for a sample of individual provisions including the alternative scenarios and
probability weights assigned, involving EY valuation specialists where appropriate. The
samples considered higher risk sectors, such as telecommunications, health, power
utilities, oil and gas, retail and leisure. We considered the impact of the current
geopolitical and economic outlook and climate change had on collateral valuations and
time to collect as well as whether planned exit strategies remained viable.
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Annual Report and Accounts 2025
85
Risk
Our response to the risk
Expected credit loss (ECL) provisions continued
Staging
- We evaluated the staging criteria used by management by performing
independent tests to assess staging effectiveness and stability, as well as
recalculating the staging of the complete population of assets. We performed
sensitivity analyses of different staging criteria, and collective staging downgrades to
industries, geographic regions and high-risk populations that are exposed to recent
economic, geopolitical or climate change stresses.
On the non-personal portfolio, we recalculated the risk ratings for a sample of
performing loans and focused our testing on certain risk characteristics such as loans
in management’s Problem Debt Management framework, high-risk industries -
commercial real estate, telecommunications, private markets, automotive, retail and
leisure.
Standback assessment
- We performed an overall assessment of the ECL provision
levels by stage to determine if they were reasonable by performing analytical
reviews, trend analysis, peer benchmarking and sensitivity analysis, which included
assessing the impact of changing selected variables, and their impacts on the ECL
coverage levels.
How we scoped our audit to respond to the risk and involvement with component teams
We performed centralised procedures and full scope audit procedures over this risk, which covered 100% of the ECL balance.
Key observations communicated to the NatWest Holdings (NWH) Group Audit Committee
(1)
We are satisfied that the ECL provisions were reasonable and recognised in accordance with IFRS 9. We highlighted the following
matters to the NWH Group Audit Committee that contributed to our overall conclusion:
•
Effectiveness of the overall control environment, including the compensating controls identified by management, where
deficiencies were identified.
•
Results of our testing of models, model assumptions, the key data elements used for ECL calculation, including the
reasonableness of the macroeconomic variables, scenarios and weightings used.
•
Accuracy of staging and the reasonableness of management’s staging criteria, and our independent sensitivity analysis on the
staging criteria to assess appropriateness.
•
Reasonableness and adequacy of the post-model adjustments recorded to reflect risk in the portfolios.
•
Individually assessed impairments, the overall reasonableness of the provisions, including assumptions applied.
Relevant references in the Annual Report and Accounts
Credit Risk section of the Risk and capital management section identified as ‘audited’
Accounting policies
Note 13 to the financial statements
(1)
The NWH Group Audit Committee covers the ring-fenced bank legal entities of NatWest Group plc, including National Westminster Bank Plc.
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86
Risk
Our response to the risk
Pension valuation and net pension balance
The Group operates several defined benefit schemes
which, in aggregate, are significant given the size of
gross pension assets and liabilities in the context of
the financial statement disclosures. At 31 December
2025, the Group reported a net pension asset from
schemes in surplus of £5 million (2024 - £4 million)
and a net pension liability from schemes in deficit of
£50 million (2024 - £41 million). The fair value of plan
assets of £29.6 billion (2024 - £30.4 billion) and
present value of defined benefit obligation of £24.8
billion (2024 - £25.2 billion) are sensitive to changes
in the key judgements and assumptions, alongside
the effects of the uncertain geopolitical and
economic outlook, which include:
•
Assumptions
- Actuarial assumptions and inputs
including discount rate, inflation and longevity to
determine the valuation of retirement benefit
liabilities;
•
Valuations
- Pricing inputs and calibrations for
illiquid or complex model-dependent valuations
of certain investments held by the schemes; and
•
Augmentation cap
- Quantification of trustees’
rights to unilaterally augment benefits
(Augmentation cap) to determine the recognition
of surplus.
Controls testing
- We evaluated the design and operating effectiveness of
controls over the defined benefit obligation process including the setting of
actuarial assumptions, the data inputs used in the actuarial calculation and
the measurement of the fair value of the schemes’ assets.
Assumptions
- We involved our actuarial specialists to evaluate the
actuarial assumptions used to calculate the defined benefit obligation by
comparing them to ranges independently developed from third party
sources and market practice. We assessed the impact on pension liabilities
due to changes in financial, demographic and longevity assumptions over
the year, and whether these were supported by objective external
evidence and rationales, including the effects of the uncertain geopolitical
and economic outlook.
Valuations
- We tested the fair value of scheme assets by independently
calculating the fair value for a sample of the assets held. Our sample
included cash, equity and debt instruments, derivative financial
instruments, and illiquid assets. We involved our valuation specialists to
assess the appropriateness of management’s valuation methodology used
in the valuation of the complex, illiquid and buy-in insurance assets
including the judgements made in the determining significant assumptions
used.
We independently re-priced illiquid and complex assets that had been
valued using unobservable market inputs, using alternative pricing sources
where available, to evaluate management’s valuations.
Augmentation cap and equalisation adjustments
- We involved our
actuarial specialists to assess the estimation of the Augmentation cap
including the inputs used in the calculation. We also assessed the
methodology and judgements made in calculating these estimates and the
associated accounting treatment in accordance with IAS 19 and IFRIC 14.
Disclosure
- We assessed the adequacy of the disclosures made in the
financial statements, including the appropriateness of the assumptions,
sensitivities and disclosures over investment strategy and risk
management.
How we scoped our audit to respond to the risk and involvement with component teams
All audit work performed to address this risk was undertaken by the Group audit team.
Key observations communicated to the NWH Group Audit Committee
We are satisfied that the valuation and disclosure of the net pension balance are reasonable and in accordance with IFRS. We
highlighted the following matters to the NWH Group Audit Committee:
•
Our benchmarking of key actuarial assumptions including the discount rate, inflation, longevity and pension payments
concluded that assumptions were within a reasonable range.
•
No material differences were identified from our testing including our independent valuation testing for a sample of pension
assets.
•
Management’s accounting for the buy-in transactions during the year was appropriate.
•
Management’s estimate of the impact of the augmentation cap was reasonable and the methodology consistent with IAS 19
and IFRIC 14.
Relevant references in the Annual Report and Accounts
Accounting policies
Note 5 to the financial statements
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87
Risk
Our response to the risk
IT access management
The IT environment is complex and pervasive to
the operations of the Group due to the large
volume of transactions processed in numerous
locations daily, with extensive reliance on
automated controls.
Appropriate IT controls are
required to ensure that applications process
data as expected and that changes are made in
an appropriate manner. This risk is also
impacted by the growing dependency on third
parties, increasing use of cloud platforms,
decommissioning of legacy systems, and
migration to new systems. Such controls
contribute to mitigating the risk of potential
fraud or errors as a result of changes to
applications and data.
The Group has implemented user access
management controls across IT applications,
databases and operating systems. We have
identified user access-related deficiencies in the
past and similar thematic issues have been noted
in the current year, and thus the risk of
inappropriate access remains.
We evaluated the design and operating effectiveness of IT general controls,
including access over the applications, operating systems and databases that
are relevant to financial reporting.
We tested user access by assessing the controls for in-scope applications, in
particular testing the addition and periodic recertification of users’ access. We
continue to focus on key controls enforced by the Group’s user access
management tools, including ensuring the completeness of user data,
automated identification of movers and leavers and the adequacy of the overall
control environment in addressing access-related IT risks to financial reporting.
There have been no significant changes in the suite of access management
controls operated by the Group in the current year.
For systems outsourced to third party service providers, we tested IT general
controls through evaluating the relevant Service Organisation Controls (“SOC”)
reports (where available). This included assessing the timing of the reporting,
the controls tested by the service auditor and whether they addressed relevant
IT risks. We also tested required complementary user entity controls performed
by management.
Where a SOC report was not available, we identified and
reviewed compensating business controls to address risks to financial
reporting.
Several systems have been migrated to a cloud-hosted
infrastructure model, however access management processes and controls
remained in-house, and they formed part of our testing.
Where control deficiencies were identified, we tested remediation activities
performed by management and/or compensating controls in place and
assessed the impact, of any residual risk over financial statement reporting.
This included aggregation analysis of the deficiencies identified to consider the
pervasiveness of findings identified, and the impact on our overall approach to
access management testing. We noted that no further changes to our
approach were required.
How we scoped our audit to respond to the risk and involvement with component teams
All audit work performed to address this risk was undertaken by the Group audit team.
Key observations communicated to the NWH Group Audit Committee
Based on our testing procedures, including validating management’s remediation activities, testing of compensating IT controls and
substantive procedures, we conclude that the IT control environment, supplemented by relevant business compensating controls,
was effective.
Improvements have been made to further standardise and strengthen IT access management processes and controls, however
privileged access control deficiencies continue to be identified, including instances where the underlying systems are subject to
change within the year, including migrations. While privileged access findings led to an increase in the overall number of reported IT
control deficiencies requiring remediation by management, compensating controls within either IT or the business were identified
for these deficiencies.
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88
Risk
Our response to the risk
Valuation of investments in group undertakings in the Bank’s accounts.
At 31 December 2025 the Bank reported
investments in group undertakings of £2.5
billion (2024 - £2.5 billion).
Management assessed investments in
subsidiaries of the Bank, as at 31 December
2025, for indicators of impairment or
whether impairment charges recognised in
prior periods should be reversed in
accordance with IAS 36. Where indicators
have been identified, management assess
any asset impairment based upon value in
use. As a result of the assessment
management concluded that in the Bank’s
accounts the carrying amount investments
in group undertakings is recoverable.
These estimates are based on the five-year
revenue and cost forecasts and the output
of a subsequent value in use computation,
within which we identify the following key
judgements / estimates:
•
Profitability estimates
•
Macroeconomic assumptions;
•
Capital forecasts; and
•
Modelling assumptions and inputs
(including discount rate and long-term
growth rate).
Controls testing
- We evaluated the design and operating effectiveness of controls over
the key judgemental inputs (macroeconomic assumptions including interest rates,
business forecasts and capital). In addition, we have assessed the controls over the
methodology, models and methods utilised in the Value in Use (VIU) calculation.
Assumption and model testing:
•
Tested the mathematical accuracy of the models and calculations utilised in the VIU
computation.
•
Challenged the reasonableness and achievability of management forecasts from a
combination of historical performance, benchmarking with external data and
evaluating underlying business strategies.
•
Evaluated the appropriateness of significant assumptions (macroeconomic, modelling
assumptions and inputs) with the input of our specialist teams.
•
Challenged and evaluated the appropriateness of the Discount Rate applied to
individual subsidiary legal entities.
•
Assessed the sensitivity of the VIU to reasonable variations in significant
assumptions, both individually and in aggregate.
Disclosure
- We challenged and verified the adequacy of the information disclosed in the
Bank’s annual accounts in accordance with applicable standards and regulations.
How we scoped our audit to respond to the risk and involvement with component teams
All audit work performed to address this risk was undertaken by the Group audit team.
Key observations communicated to the NWH Group Audit Committee
We are satisfied that the carrying value of investments in group undertakings in the Bank’s accounts were reasonable and recognised in
accordance with IFRS. We highlighted the following matters to the NWH Group Audit Committee that contributed to our overall
conclusion:
•
Effectiveness of the overall control environment, including management’s identification of compensating controls where deficiencies
were identified;
•
Reasonableness of the methodologies, judgements and assumptions used by management to conclude upon the recognition of the
related balances;
•
Management's approach to estimating the recoverable amounts for the subsidiaries of the Group is reasonable.
Relevant references in the Annual Report and Accounts
Accounting policies
Note 14 to the financial statements
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Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the
audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the
economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our
audit procedures.
We determined materiality for the Group to be £282 million (2024 - £237 million), which is 5% (2024 - 5%) of profit before tax of the
Group of £5,726 million (2024 - £4,663 million) adjusted for non-recurring items. We believe removing these non-recurring items
reflects the most useful measure for users of the financial statements and is consistent with the prior year. The 5% basis used for
Group materiality is consistent with the wider industry and is the standard for listed and regulated entities.
We determined materiality for the Bank to be £227 million (2024 - £216 million), which is 1% (2024 - 1%) of equity of the Bank. We
believe this reflects the most useful measure for users of the financial statements as the Bank’s primary purpose is to act as a holding
company with investments in the Group’s subsidiaries, not to generate operating profits and therefore a profit-based measure is not
relevant.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was
that performance materiality was 75% (2024 - 75%) of our planning materiality, namely £212 million (2024 - £178 million). We have set
performance materiality
at this percentage based on our experience of misstatements and consistent effectiveness of the control
environment.
Audit work was undertaken at component teams for the purpose of responding to the assessed risks of material misstatement of the
group financial statements. The performance materiality set for each component is based on the relative scale and risk of the
component to the Group as a whole and our assessment of the risk of misstatement at that component. In the current year, the range
of performance materiality allocated to components was £79 million to £169 million (2024 - £68 million to £159 million).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the NWH Audit Committee that we would report to them all uncorrected audit differences in excess of £14 million
(2024 - £12 million), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of
other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the Annual Report and Accounts, including the Strategic report, Report of
the directors, Statement of directors’ responsibilities, Risk factors, and Forward-looking statements, other than the financial statements
and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in
this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to
a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a
material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Strategic report and the Report of the directors for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
•
the Strategic report and Report of the directors have been prepared in accordance with applicable legal requirements;
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Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Bank and its environment obtained in the course of the audit, we
have not identified material misstatements in the Strategic report or the Report of the directors.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you
if, in our opinion:
•
adequate accounting records have not been kept by the Bank, or returns adequate for our audit have not been received from
branches not visited by us; or
•
the Bank financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
•
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Statement of directors’ responsibilities, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and Bank’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the Bank or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
Explanation as to what extent the audit was considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the
Company and management.
•
We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the
most significant are the regulations, licence conditions and supervisory requirements of the Prudential Regulation Authority (PRA)
and the Financial Conduct Authority (FCA); and Companies Act 2006.
•
We understood how the Group is complying with those frameworks by making inquiries of management, internal audit and those
responsible for legal and compliance matters. We also reviewed correspondence between the Group and banking regulatory bodies
in relevant jurisdictions including the PRA and FCA; reviewed minutes of the NWH Board and Risk Committees; and gained an
understanding of the Group’s governance framework.
•
Carried out an assessment of matters reported on the Group’s whistleblowing programmes where these related to the financial
statements.
•
We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by
considering the controls established to address risks identified to prevent or detect fraud. We also assessed the risks of fraud in our
key audit matters. Our procedures over our key audit matters and other significant accounting estimates included challenging
management on the assumptions and judgements made in determining these estimates.
•
We designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved inquiries of
internal and external legal counsel, executive management, internal audit and reading reports of reviews performed by external
legal counsel. We also tested controls and performed procedures to respond to any financial statement impacts of non-compliance
with laws and regulations. These procedures were performed by both the Group audit team and component audit teams with
oversight from the Group audit team.
•
Identified and tested journal entries, including those posted with certain descriptions or unusual characteristics, backdated journals
or posted by infrequent and unexpected users.
•
The Group operates in the banking industry which is a highly regulated environment. As such, the Senior Statutory Auditor
considered the experience and expertise of the engagement team to ensure that the team had the appropriate competence and
capabilities, involving specialists where appropriate.
Independent auditors’ report to the members of National Westminster Bank Plc continued
NWB Group
Annual Report and Accounts 2025
91
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
Other matters we are required to address
•
Following the recommendation from the NWH Group Audit Committee, we were appointed by the Group at its annual general
meeting on 4 May 2016 to audit the financial statements of the Group for the year ending 31 December 2016 and subsequent
financial periods.
•
The period of total uninterrupted engagement including previous renewals and reappointments is 10 years, covering periods from
our appointment through 31 December 2025.
•
The audit opinion is consistent with the additional report to the NWH Group Audit Committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state
to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the
opinions we have formed.
Javier Faiz (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London, United Kingdom
12 February 2026
Consolidated income statement
for the year ended 31 December 2025
NWB Group
Annual Report and Accounts 2025
92
2025
2024
Note
£m
£m
Interest receivable
19,148
18,100
Interest payable
(9,497)
(9,892)
Net interest income
1
9,651
8,208
Fees and commissions receivable
2,419
2,276
Fees and commissions payable
(597)
(542)
Other operating income
2,147
2,031
Non-interest income
2
3,969
3,765
Total income
13,620
11,973
Staff costs
(3,392)
(3,301)
Premises and equipment
(1,183)
(1,099)
Other administrative expenses
(1,588)
(1,576)
Depreciation and amortisation
(1,078)
(987)
Operating expenses
3
(7,241)
(6,963)
Profit before impairment losses
6,379
5,010
Impairment losses
13
(653)
(347)
Operating profit before tax
5,726
4,663
Tax charge
7
(1,528)
(1,238)
Profit for the year
4,198
3,425
Attributable to:
Ordinary shareholders
3,965
3,237
Paid-in equity holders
233
194
Non-controlling interests
-
(6)
4,198
3,425
Consolidated statement of comprehensive income
for the year ended 31 December 2025
2025
2024
£m
£m
Profit for the year
4,198
3,425
Items that do not qualify for reclassification
Remeasurement of retirement benefit schemes
1
(150)
Tax
(1)
39
-
(111)
Items that do qualify for reclassification
FVOCI financial assets
115
(28)
Cash flow hedges
(1)
73
405
Currency translation
6
(18)
Tax
(54)
(107)
140
252
Other comprehensive income after tax
140
141
Total comprehensive income for the year
4,338
3,566
Attributable to:
Ordinary shareholders
4,105
3,377
Paid-in equity holders
233
194
Non-controlling interests
-
(5)
4,338
3,566
(1)
Refer to footnotes 1 and 2 of the Statement in changes in equity.
Balance sheet
as at 31 December 2025
NWB Group
Annual Report and Accounts 2025
93
NWB Group
NWB Plc
2025
2024
2025
2024
Note
£m
£m
£m
£m
Assets
Cash and balances at central banks
9
29,939
35,095
29,911
35,083
Derivatives
12
1,093
2,874
1,106
2,892
Loans to banks - amortised cost
9
4,515
3,426
4,261
3,148
Loans to customers - amortised cost
9
345,643
332,013
310,121
297,548
Amounts due from holding companies and fellow subsidiaries
9
7,186
3,736
38,965
36,383
Securities subject to repurchase agreements
15,004
8,984
15,004
8,984
Other financial assets excluding securities subject to repurchase agreements
38,120
30,587
37,152
29,814
Other financial assets
15
53,124
39,571
52,156
38,798
Investment in group undertakings
14
-
-
2,477
2,520
Other assets
16
8,039
7,594
5,652
5,503
Total assets
449,539
424,309
444,649
421,875
Liabilities
Bank deposits
9
33,020
24,780
33,016
24,778
Customer deposits
9
325,069
318,290
282,427
275,972
Amounts due to holding companies and fellow subsidiaries
9
57,106
47,724
98,661
90,925
Derivatives
12
764
1,177
780
1,323
Other financial liabilities
19
5,333
4,999
3,670
3,824
Subordinated liabilities
20
122
122
119
119
Notes in circulation
1,049
935
1,049
935
Other liabilities
21
2,947
3,164
2,242
2,390
Total liabilities
425,410
401,191
421,964
400,266
Owners' equity
22
24,121
23,093
22,685
21,609
Non-controlling interests
8
25
-
-
Total equity
24,129
23,118
22,685
21,609
Total liabilities and equity
449,539
424,309
444,649
421,875
Owners’ equity of NWB Plc as at 31 December 2025 includes the profit for the year of £4,227 million (2024 - £3,613 million).
The accounts were approved by the Board of directors on 12 February 2026 and signed on its behalf by:
Richard Haythornthwaite
John-Paul Thwaite
Katie Murray
National Westminster Bank Plc
Chair
Chief Executive Officer
Chief Financial Officer
Registration No. 929027
Statement of changes in equity
for the year ended 31 December 2025
NWB Group
Annual Report and Accounts 2025
94
NWB Group
NWB Plc
2025
2024
2025
2024
Note
£m
£m
£m
£m
Called-up share capital - at 1 January and 31 December
22
1,678
1,678
1,678
1,678
Paid-in equity - at 1 January
3,317
2,518
3,317
2,518
Redeemed
(1,877)
-
(1,877)
-
Issued
1,741
799
1,741
799
At 31 December
22
3,181
3,317
3,181
3,317
Share premium account - at 1 January and 31 December
2,225
2,225
2,225
2,225
Merger reserve - at 1 January
10
28
-
-
Amortisation
(8)
(18)
-
-
At 31 December
2
10
-
-
FVOCI reserve - at 1 January
(63)
(41)
(66)
(52)
Unrealised gains/(losses)
108
(46)
111
(52)
Realised losses
7
18
7
32
Tax
(34)
6
(34)
6
At 31 December
18
(63)
18
(66)
Cash flow hedging reserve - at 1 January
(308)
(600)
(307)
(601)
Amounts recognised in equity
(1)
(33)
119
(33)
125
Reclassification of OCI to P&L
(2)
106
286
105
283
Tax
(20)
(113)
(20)
(114)
At 31 December
(255)
(308)
(255)
(307)
Foreign exchange reserve - at 1 January
(123)
(104)
(30)
(18)
Retranslation of net assets
37
(44)
30
(28)
Foreign currency (losses)/gains on hedges of net assets
(29)
25
(17)
16
Recycled to profit or loss on disposal of businesses
(2)
-
(2)
-
At 31 December
(117)
(123)
(19)
(30)
Capital redemption reserve - at 1 January and 31 December
820
820
820
820
Retained earnings - at 1 January
15,537
14,871
13,972
13,131
Profit attributable to ordinary shareholders and other equity owners
4,198
3,431
4,227
3,613
Paid-in equity dividends paid
(233)
(194)
(233)
(194)
Ordinary dividends paid
(2,988)
(2,516)
(2,988)
(2,516)
Redemption/reclassification of paid-in equity
(34)
-
(34)
-
Remeasurement of the retirement benefit schemes
- gross
1
(150)
3
(139)
- tax
(1)
39
(1)
39
Employee share schemes
- gross
19
16
19
16
- tax
-
6
-
6
Share-based remuneration
- gross
4
(5)
4
(5)
- tax
19
21
19
21
Sharing in success
49
-
49
-
Amortisation of merger reserve
8
18
-
-
Purchase of non-controlling interest
(10)
-
-
-
At 31 December
16,569
15,537
15,037
13,972
For the notes to this table refer to the following page.
Statement of changes in equity for the year ended 31 December 2025 continued
NWB Group
Annual Report and Accounts 2025
95
NWB Group
NWB Plc
2025
2024
2025
2024
£m
£m
£m
£m
Owners' equity at 31 December
24,121
23,093
22,685
21,609
Non-controlling interests - at 1 January
25
35
-
-
Currency translation adjustments and other movements
-
1
-
-
Loss attributable to non-controlling interests
-
(6)
-
-
Dividends paid
(6)
(5)
-
-
Purchase of non-controlling interest
(11)
-
-
-
At 31 December
8
25
-
-
Total equity at 31 December
24,129
23,118
22,685
21,609
Attributable to:
Ordinary shareholders
20,940
19,776
19,504
18,292
Paid-in equity holders
3,181
3,317
3,181
3,317
Non-controlling interests
8
25
-
-
24,129
23,118
22,685
21,609
(1)
The change in the cash flow hedging reserve is driven by realised accrued interest transferred into the income statement and a decrease in swap rates in the year. The portfolio of
hedging instruments are predominantly pay fixed swaps.
(2)
The amount transferred from equity to the income statement is mostly recorded within net interest income mainly within loans to banks and customers – amortised costs, balances at
central banks, bank deposits and customer deposits. Refer to Note 12.
Cash flow statement
for the year ended 31 December 2025
NWB Group
Annual Report and Accounts 2025
96
NWB Group
NWB Plc
2025
2024
2025
2024
Note
£m
£m
£m
£m
Cash flows from operating activities
Operating profit before tax
5,726
4,663
5,591
4,680
Adjustments for:
Non-cash and other items
28
540
2,174
(62)
1,424
Changes in operating assets and liabilities
28
10,111
(5,981)
9,514
(7,007)
Income taxes paid
(1,756)
(1,186)
(1,515)
(993)
Net cash flows from operating activities
(1,2)
14,621
(330)
13,528
(1,896)
Cash flows from investing activities
Sale and maturity of other financial assets
32,655
34,959
31,898
33,860
Purchase of other financial assets
(45,399)
(42,561)
(44,449)
(41,551)
Income received on other financial assets
1,436
798
1,404
768
Net movement
in business interests and intangible assets
27
(352)
(2,883)
(401)
(2,861)
Dividends received from subsidiaries
-
-
487
553
Sale of property, plant and equipment
52
183
36
101
Purchase of property, plant and equipment
(659)
(452)
(237)
(252)
Net cash flows from investing activities
(12,267)
(9,956)
(11,262)
(9,382)
Cash flows from financing activities
Issue of paid-in equity
1,741
799
1,741
799
Redemption of paid-in equity
(1,911)
-
(1,911)
-
Issue of subordinated liabilities
830
600
830
600
Redemption of subordinated liabilities
(500)
(579)
(500)
(579)
Interest paid on subordinated liabilities
(175)
(184)
(174)
(159)
Issue of MRELs
1,544
1,187
1,544
927
Maturity and redemption of MRELs
-
(1,190)
-
(930)
Interest paid on MRELs
(251)
(247)
(227)
(215)
Dividends paid
(3,227)
(2,715)
(3,221)
(2,710)
Purchase of minority interest
(21)
-
-
-
Net cash flows from financing activities
(1,970)
(2,329)
(1,918)
(2,267)
Effects of exchange rate changes on cash and cash equivalents
131
(256)
141
(259)
Net increase/(decrease) in cash and cash equivalents
515
(12,871)
489
(13,804)
Cash and cash equivalents at 1 January
39,130
52,001
38,678
52,482
Cash and cash equivalents at 31 December
(3)
30
39,645
39,130
39,167
38,678
(1)
NWB Group includes interest received of £18,825 million (2024 - £17,968 million) and interest paid of £9,675 million (2024 - £9,807 million), and NWB Plc includes interest received of
£18,036 million (2024 – £17,094 million) and interest paid of £9,722 million (2024 - £9,581 million).
(2)
The total cash outflow for leases for NWB Group was £75 million (2024 - £78 million) and for NWB Plc £63 million (2024 - £66 million). This included payment of principal for NWB Group
of £61 million (2024 - £63 million) and NWB Plc of £55 million (2024 - £58 million). These amounts are included in operating activities in the cash flow statement.
(3)
Cash and cash equivalents comprise loans and advances due from the holding company and fellow subsidiaries with an original maturity of less than three months for 2025 and 2024.
.
Accounting policies
NWB Group
Annual Report and Accounts 2025
97
1. Presentation of financial statements
National Westminster Bank Plc (NWB Plc) is incorporated in the
UK and registered in England and Wales. The financial
statements are presented in the functional currency, pounds
sterling.
The audited financial statements include these accounting
policies, the accompanying notes to the financial statements on
pages 104 to 167 and the audited sections of the Risk and capital
management section on pages 9 to 72 which together from an
integral part of the primary financial statements. The directors
have prepared the financial statements on a going concern basis
after assessing the principal risks, forecasts, projections and
other relevant evidence over the twelve months from the date
the financial statements are approved (refer to the Report of the
directors) and in accordance with UK adopted International
Accounting Standards (IAS), and International Financial Reporting
Standards (IFRS) as issued by the International Accounting
Standards Board (IASB). The critical and material accounting
policies and related judgements are set out below.
The financial statements are presented on an historical cost basis
except for certain financial instruments and investment
properties which are stated at fair value.
The effect of the amendments to IFRS Accounting Standards
effective from 1 January 2025 on our financial statements was
immaterial.
We have applied the exception from the accounting requirements
for deferred taxes in IAS 12 Income taxes in respect of Pillar 2
income taxes issued by the IASB in May 2023. Accordingly, we
have not recognised or disclosed information about deferred tax
assets and liabilities related to Pillar 2 income taxes.
Our consolidated financial statements incorporate the results of
NWB Plc and the entities it controls. Control arises when we have
the power to direct the activities of an entity so as to affect the
return from the entity. Control is assessed by reference to our
ability to enforce our will on the other entity, typically through
voting rights. The consolidated financial statements are prepared
under consistent accounting policies.
On the acquisition of a business from a NatWest Group company,
the assets, liabilities and IFRS reserves, such as the cash flow
hedging reserve, are recognised at their inherited values taken
from the consolidated financial statements of NatWest Group plc
and include the accounting history since initial recognition. The
acquirer recognises, in merger reserve, any difference between
the consideration paid and the net items recognised at inherited
values.
We apply accounting for associates and joint arrangements to
entities where we have significant influence, but not control, over
the operating and financial policies. We assess significant
influence by reference to a presumption of voting rights of more
than 20%, but less than 50%, supplemented by a qualitative
assessment of substantive rights which include representation at
the Board of Directors and significant exchange of managerial
personnel or technology amongst others.
Investments in associates and joint ventures are recorded upon
initial recognition at cost and increased or decreased each period
by the share of the subsequent levels of profit or loss. Other
changes in equity are considered in line with their nature.
How Climate risk affects our accounting judgements
and estimates
Business planning
Key financial estimates are based on management's latest five-
year revenue and cost forecasts. The outputs from this forecast
affect forward-looking accounting estimates.
Measurement of deferred tax and expected credit losses (ECL)
are highly sensitive to reasonably possible changes in those
anticipated conditions.
In 2024, our scenario planning was
enhanced by the further integration of NatWest Group’s climate
transition plan, including the assessment of climate-related risks
and opportunities.
In 2025, scenario planning was enhanced by the further
integration of NatWest Group’s (including subsidiaries’) climate
transition plan, including the assessment of climate-related risks
and opportunities.
•
The climate transition plan includes an assessment of:
o
Changes in products, services and business operations
to support customer transition towards net zero.
o
Financial impacts of supporting customer transition,
including investment required. The linkage between the
financial plan and the climate transition plan will continue
to be developed and refreshed annually as part of the
financial planning cycle.
o
The impact of UK Government policies. To estimate the
impact of current UK Government policy on the climate
transition plan, NatWest Group developed a progress-
adjusted scenario. NatWest Group use the UK CCC’s
Seventh Carbon Budget Report’s sectoral balanced
pathways and apply estimated time delays based on the
credibility assessment of policies from the UK CCC’s
June 2025 Progress Report.
There remains considerable uncertainty in the climate policy
environment, shaped by geopolitical developments and wider
uncertainty over how the climate will evolve and how and when
governments, regulators, businesses, investors and customers
will respond
Information used in other accounting estimates
We make use of reasonable and supportable information to make
accounting judgements and estimates. This includes information
about the observable effects of the physical and transition risks of
climate change on the current creditworthiness of borrowers,
asset values and market indicators. Many of the effects arising
from climate change will be longer term in nature, with an
inherent level of uncertainty, and have limited effect on
accounting judgements and estimates for the current period.
Some physical and transition risks can manifest in the shorter
term. The following items represent the most significant effects:
•
The classification of financial instruments linked to climate, or
other sustainability indicators. Consideration is given to
whether the effect of climate-related terms prevent the
instrument cashflows being solely payments of principal and
interest.
•
The use of market indicators as inputs to fair value is
assumed to include current information and knowledge
regarding the effect of climate risk.
Effect of climate change in the estimation of ECL
We are monitoring the effect of the physical and transition
consequences of climate change on our experience of loan loss.
We use available information regarding the effect of climate
transition policy largely driven by carbon prices as an adjustment
to macroeconomic factors that are used as inputs to the models
that generate PD and LGD outcomes, which are key inputs to
the ECL calculation. The determination of whether specific loss
drivers and climate events generate specific losses is ongoing
and is necessary to determine how sensitive changes in ECL
could be to climate inputs.
Future cashflows are discounted, so long-dated cashflows are
less likely to affect current expectations on credit loss. Our
assessment of sector-specific risks, and whether additional
adjustments are required, includes expectations of the ability of
those sectors to meet their financing needs in the market.
Accounting policies continued
NWB Group
Annual Report and Accounts 2024
98
Changes in credit stewardship and credit risk appetite that stem
from climate transition policies may directly affect our positions.
2. Critical accounting policies
The judgements and assumptions involved in our accounting policies that are considered by the Board to be the most important to the
portrayal of our financial condition are noted below. The use of estimates, assumptions or models that differ from those adopted by us
would affect our reported results. Management’s consideration of uncertainty is outlined in the relevant sections, including the ECL
estimate in the Risk and capital management section.
Information used for significant estimate

|  |  | Further
Policy | Judgement | Estimate | information
Fair value – | Classification of a fair value instrument as level 3, | Estimation of the fair value, where it is | Note 10
financial | where the valuation is driven by unobservable | reasonably possible to have alternative |
instruments | inputs. | assumptions in determining the FV. |
Loan | Definition of default against which to apply PD, | ECL estimates contain a number of | Note 13
impairment | LGD and EAD models. Selection of multiple | measurement uncertainties (such as the |
provisions | economic scenarios. | weighting of multiple economic scenarios) and |
| Criteria for a significant increase in credit risk. | disclosures include sensitivities to show the |
| Identification of risks not captured by the models. | impact on other reasonably possible scenarios. |
Investment in |  | Our estimates are based on the five-year | Note 14
Group |  | revenue and cost forecasts (which include |
undertakings |  | inherent uncertainties). |
(parent |  | Long term growth rate and discount rate are |
company |  | subject to uncertain factors. |
only) |  |  |

Changes in judgements and assumptions could result in a material adjustment to those estimates in future reporting periods.
2.1. Fair value – financial instruments
We measure financial instruments at fair value when they are
classified as mandatory fair value through profit or loss; held-for-
trading; designated fair value through profit or loss and fair value
through other comprehensive income and they are recognised in
the financial statements at fair value. All derivatives are measured
at fair value.
We manage some portfolios of financial assets and financial
liabilities based on our net exposure to either market or credit
risk. In these cases, the fair value is derived from the net risk
exposure of that portfolio with portfolio level adjustments applied
to incorporate bid-offer spreads, counterparty credit risk, and
funding costs (refer to ‘Valuation Adjustments’).
Where the market for a financial instrument is not active, fair
value is established using a valuation technique. These valuation
techniques involve a degree of estimation, the extent of which
depends on the instrument’s complexity and the availability of
market-based data. The complexity and uncertainty in the
financial instrument’s fair value is categorised using the fair value
hierarchy.
The use of market indicators as inputs to fair value is assumed to
include current information and knowledge regarding the effect of
climate risk.
2.2. Loan impairment provisions: ECL
At each balance sheet date each financial asset or portfolio of
financial assets measured at amortised cost or at fair value
through other comprehensive income, issued financial guarantee
and loan commitment (other than those classified as held for
trading) is assessed for impairment. Any change in impairment is
reported in the income statement.
Loss allowances are forward-looking, based on 12-month ECL
where there has not been a significant increase in credit risk
rating, otherwise allowances are based on lifetime expected
losses.
ECL is a probability-weighted estimate of credit losses. The
probability is determined by the risk of default which is applied to
the cash flow estimates. In the absence of a change in credit
rating, allowances are recognised when there is a reduction in the
net present value of expected cash flows. Following a significant
increase in credit risk, ECL is adjusted from 12 months to lifetime.
This will lead to a higher impairment charge.
The measurement of ECL considers the ability of borrowers to
make payments as they fall due. Future cashflows are discounted,
so long dated cashflows are less likely to affect current
expectations on credit loss. Our assessment of sector specific
risks, and whether additional adjustments are required, include
expectations of the ability of those sectors to meet their financing
needs in the market.
Changes in credit stewardship and credit risk appetite that stem
from climate transition policies may directly affect our positions.
Judgement is exercised as follows:
•
Non-modelled portfolios
– u
nder IFRS 9, there are bespoke
treatments for the identification of significant increase in credit
risk. Benchmark PDs, EADs and LGDs are reviewed annually
for appropriateness. The ECL calculation is based on expected
future cash flows, which is typically applied at a portfolio level.
•
Multiple economic scenarios (MES)
– the central, or base,
scenario is most critical to the ECL calculation, independent of
the method used to generate a range of alternative outcomes
and their probabilities.
•
Significant increase in credit risk
-
IFRS 9 requires that at each
reporting date, an entity shall assess whether the credit risk
on an account has increased significantly since initial
recognition. Part of this assessment requires a comparison to
be made between the current lifetime PD (i.e. the current
probability of default over the remaining lifetime) with the
equivalent lifetime PD as determined at the date of initial
recognition.
2. Critical accounting policies continued
On restructuring where a financial asset is not derecognised, the
revised cash flows are used in re-estimating the credit loss. Where
restructuring causes derecognition of the original financial asset,
the fair value of the replacement asset is used as the closing cash
flow of the original asset.
Where, in the course of the orderly realisation of a loan, it is
exchanged for equity shares or property, the exchange is
accounted for as the sale of the loan and the acquisition of equity
securities or investment property. Where our acquired interest is
in equity shares, relevant polices for control, associates and joint
ventures apply.
Impaired financial assets are written off and therefore
derecognised from the balance sheet when we conclude that
there is no longer any realistic prospect of recovery of part, or all,
of the loan. For financial assets that are individually assessed for
impairment, the timing of the write-off is determined on a case-
by-case basis. Such financial assets are reviewed regularly and
write-off will be prompted by bankruptcy, insolvency,
renegotiation, and similar events.
The typical time frames from initial impairment to write-off for our
collectively assessed portfolios are:
•
Retail mortgages
- write-off usually occurs within five years, or
earlier, when an account is closed, but can be longer where
the customer engages constructively,
•
Credit cards
- the irrecoverable amount is typically written off
after twelve arrears cycles or at four years post default any
remaining amounts outstanding are written off,
•
Overdrafts and other unsecured loans
- write-off occurs
within six years,
•
Commercial loans
- write-offs are determined in the light of
individual circumstances; and
uncollateralised impaired
business loans
are generally written off within five years.
2.3. Investment in Group undertakings
Our investments in Group undertakings (subsidiaries) are stated at
cost less any impairment.
3. Material accounting polices
3.1. Revenue recognition
Interest receivable and payable are recognised in the income
statement using the effective interest rate method for all financial
instruments measured at amortised cost; debt instruments
measured at fair value through other comprehensive income; and
the effective part of any related accounting hedging instruments.
Finance lease income is recognised at a constant periodic rate of
return before tax on the net investment on the lease.
Other interest relating to financial instruments measured at fair
value is recognised as part of the movement in fair value and is
reported in other operating income. Fees in respect of services
are recognised as the right to consideration accrues through the
performance of each distinct service obligation to the customer.
The arrangements are generally contractual and the cost of
providing the service is incurred as the service is rendered. The
price is usually fixed and always determinable.
3.2. Staff costs
Employee costs, such as salaries, paid absences, and other
benefits are recognised over the period in which the employees
provide the related services to us. Employees may receive
variable compensation in cash, in deferred cash or debt
instruments of NatWest Group or in ordinary shares of NatWest
Group plc subject to deferral, clawback and forfeiture criteria. We
operate a number of share-based compensation schemes under
which we grant awards of NatWest Group plc shares and share
options to our employees. Such awards are subject to vesting
conditions.
Variable compensation that is settled in cash or debt instruments
is charged to the income statement on a straight-line basis over
the period during which services are provided, taking account of
forfeiture and clawback criteria. The value of employee services
received in exchange for NatWest Group plc shares and share
options is recognised as an expense over the vesting period,
subject to deferral, clawback, cancelation and forfeiture criteria
with a corresponding increase in equity.
The fair value of shares granted is the market price adjusted for
the expected effect of dividends as employees are not entitled to
dividends until shares are vested.
The fair value of options granted is determined using option
pricing models to estimate the numbers of shares likely to vest.
These consider the exercise price of the option, the current share
price, the risk-free interest rate, the expected volatility of the
share price over the life of the option and other relevant factors
such as the dividend yield.
Defined contribution pension scheme
A scheme where we pay fixed contributions and; there is no legal
or constructive obligation to pay further contributions or benefits.
Contributions are recognised in the income statement as
employee service costs accrue.
Defined benefit pension scheme
A scheme that defines the benefit an employee will receive on
retirement and is dependent on one or more factors such as age,
salary, and years of service. The net of the recognisable scheme
assets and obligations is reported on the balance sheet in other
assets or other liabilities. The defined benefit obligation is
measured on an actuarial basis. The charge to the income
statement for pension costs (mainly the service cost and the net
interest on the net defined benefit asset or liability) is recognised
in operating expenses.
Actuarial gains and losses (i.e. gains and/or losses on remeasuring
the net defined benefit asset or liability) due to changes in
actuarial measurement assumptions are recognised in other
comprehensive income in full in the period in which they arise and
not subject to recycling to the income statement.
The difference between scheme assets and scheme liabilities, the
net defined benefit asset or liability, is recognised on the balance
sheet if the criteria of the asset ceiling test are met. This requires
the net defined benefit surplus to be limited to the present value
of any economic benefits available to us in the form of refunds
from the plan or reduced contributions to it.
We will recognise a liability where a minimum funding requirement
exists for any of our defined benefit pension schemes. This reflects
agreed minimum funding and the availability of a net surplus as
described above. When estimating the liability for minimum
funding requirements we only include contributions that are
substantively or contractually agreed and do not include
contingent and discretionary features, including dividend-linked
contributions or contributions subject to contingent events
requiring future verification.
We recognise a net defined benefit asset when the net defined
benefit surplus can generate a benefit in the form of a refund or
reduction in future contributions to the plan. The net benefit
pension asset is recognised at the present value of the benefits
that will be available to us excluding interest and the effect of the
asset ceiling (if any), excluding interest. Changes in the present
value of the net benefit pension asset are recognised immediately
in other comprehensive income.
In instances where Trustees have the ability to declare
augmented benefits to participants, we do not recognise a defined
benefit pension asset and record the surplus immediately in other
comprehensive income.
Accounting policies continued
NWB Group
Annual Report and Accounts 2025
99
Accounting policies continued
3. Material accounting polices continued
NWB Group
Annual Report and Accounts 2025
100
3.3. Intangible assets
Intangible assets are identifiable non-monetary assets without
physical substance acquired or developed by us, and are stated at
cost less accumulated amortisation and impairment losses.
Amortisation is a method to spread the cost of such assets over
time in the income statement. This is charged to the income
statement over the assets' estimated useful economic lives using
methods that best reflect the pattern of economic benefits. The
estimated useful economic lives are:

Computer software | 3 to 10 years
Other acquired intangibles | 3 to 5 years

Direct costs relating to the development of internal-use computer
software are reported on the balance sheet after technical
feasibility and economic viability have been established. These
direct costs include payroll, the costs of materials and services,
and directly attributable overheads. Capitalisation of costs ceases
when the software can operate as intended.
During and after development, accumulated costs are reviewed
for impairment against the benefits that the software is expected
to generate.
Costs incurred prior to the establishment of technical feasibility
and economic viability are expensed to the income statement as
incurred, as are all training costs and general overheads. The
costs of licences to use computer software that are expected to
generate economic benefits beyond three years are also reported
on the balance sheet.
Goodwill on the acquisition of a subsidiary is the excess of the fair
value of the consideration paid, the fair value of any existing
interest in the subsidiary and the amount of any non-controlling
interest measured either at fair value or at its share of the
subsidiary’s net assets over the net fair value of the subsidiary’s
identifiable assets, liabilities, and contingent liabilities.
Goodwill is measured at initial cost less any subsequent
impairment losses. The gain or loss on the disposal of a subsidiary
includes the carrying value of any related goodwill.
3.4. Impairment of non-financial assets
Goodwill is tested for impairment annually or more frequently if
events or changes in circumstances indicate that it might be
impaired.
At each balance sheet date, we assess whether there is any
indication that other intangible assets or property, plant and
equipment are impaired. If any such indication exists, we estimate
the recoverable amount of the asset and compare it to its balance
sheet value to calculate if an impairment loss should be
recognised in the income statement. A reversal of an impairment
loss on other intangible assets or property, plant and equipment is
recognised in the income statement provided the increased
carrying value is not greater than it would have been had no
impairment loss been recognised.
The recoverable amount of an asset that does not generate cash
flows that are independent from those of other assets or groups
of assets, is determined as part of the cash-generating unit to
which the asset belongs. A cash-generating unit is the smallest
identifiable group of assets that generates cash inflows that are
largely independent of the cash inflows from other assets or
groups of assets
.
For the purposes of impairment testing, goodwill
acquired in a business combination is allocated to cash-generating
units or groups of cash-generating units expected to benefit from
the combination. The recoverable amount of an asset or cash-
generating unit is the higher of its fair value less cost to sell or its
value in use. Value in use is the present value of future cash flows
from the asset or cash-generating unit discounted at a rate that
reflects market interest rates adjusted for risks specific to the
asset or cash-generating unit that have not been considered in
estimating future cash flows.
The assessment of asset impairment is based upon value in use.
This represents the value of future cashflows and uses our five-
year revenue and cost forecasts and the expectation of long term
economic growth beyond this period. The five-year forecast takes
account of management’s current expectations on
competitiveness and profitability, including near term effects of
climate transition risk. The long term growth rate reflects external
indicators which will include market expectations on climate risk.
We do not consider any additional adjustments to this indicator.
3.5. Property, plant and equipment & investment
property
Items of property, plant and equipment, except investment
property, are stated at cost less accumulated depreciation and
impairment losses. Where an item of property, plant and
equipment comprises major components having different useful
lives, these are accounted for separately.
Depreciation is charged to profit or loss on a straight-line basis so
as to write-off the depreciable amount of property, plant and
equipment (including assets owned and let on operating leases)
over their estimated useful lives. The depreciable amount is the
cost of an asset less its residual value. Freehold land is not
depreciated.
Accounting policies continued
3. Material accounting polices continued
NWB Group
Annual Report and Accounts 2025
101
The estimated useful lives of our property, plant and equipment
are:

Freehold buildings | 50 years
Long leasehold property (leases |
with more than 50 years to run) | 50 years
Short leaseholds unexpired period of lease |
Property adaptation costs | 10 to 15 years
Computer equipment | up to 5 years
Other equipment | 4 to 15 years

The residual value and useful life of property, plant and equipment
are reviewed at each balance sheet date and updated for any
changes to previous estimates.
Investment property comprises freehold and leasehold properties
that are held to earn rentals or for capital appreciation or both.
Investment property is not depreciated but is stated at fair value.
Fair value is based on current prices for similar properties in the
same location and condition. Any gain or loss arising from a
change in fair value is recognised in profit or loss. Rental income
from investment property is recognised on a straight-line basis
over the term of the lease in Other operating income. Lease
incentives granted are recognised as an integral part of the total
rental income.
3.6. Foreign currencies
Foreign exchange differences arising on the settlement of foreign
currency transactions and from the translation of monetary
assets and liabilities are reported in income from trading activities
except for differences arising on cash flow hedges and hedges of
net investments in foreign operations.
Non-monetary items denominated in foreign currencies that are
stated at fair value are translated into the functional currency at
the foreign exchange rates ruling at the dates the values are
determined. Translation differences are recognised in the income
statement except for differences arising on non-monetary
financial assets classified as fair value through other
comprehensive income.
Income and expenses of foreign subsidiaries and branches are
translated into sterling at average exchange rates unless these do
not approximate the foreign exchange rates ruling at the dates of
the transactions. Foreign exchange differences arising on the
translation of a foreign operation are recognised in other
comprehensive income. The amount accumulated in equity is
reclassified from equity to the income statement on disposal of a
foreign operation.
3.7. Tax
Tax encompassing current tax and deferred tax is recognised in
the income statement except when taxable items
are recognised
in other comprehensive income or equity. Tax consequences
arising from servicing financial instruments classified as equity are
recognised in the income statement.
Accounting for taxes is judgemental and carries a degree of
uncertainty because tax law is subject to interpretation, which
might be questioned by the relevant tax authority. We recognise
the most likely current and deferred tax liability or asset, assessed
for uncertainty using consistent judgements and estimates.
Current and deferred tax assets are only recognised where their
recovery is deemed probable, and current and deferred tax
liabilities are recognised at the amount that represents the best
estimate of the probable outcome having regard to their
acceptance by the tax authorities.
3.8. Financial instruments
Financial instruments are measured at fair value on initial
recognition on the balance sheet. Monetary financial assets are
classified into one of
the following subsequent measurement
categories (subject to business model assessment and review of
contractual cash flow for the purposes of sole payments of
principal and interest where applicable):
•
amortised cost
measured at cost using the effective interest
rate method, less any impairment allowance;
•
fair value through other comprehensive income (FVOCI)
measured at fair value, using the effective interest rate
method and changes in fair value through other
comprehensive income;
•
mandatory fair value through profit or loss (MFVTPL)
measured at fair value and changes in fair value reported in
the income statement; or
•
designated at fair value through profit or loss (DFV) (held for
trading)
measured at fair value and changes in fair value
reported in the income statement.
Classification by business model reflects how we manage our
financial assets to generate cash flows. A business model
assessment helps to ascertain the measurement approach
depending on whether cash flows result from holding financial
assets to collect the contractual cash flows, from selling those
financial assets, or both.
Business model assessment of assets is made at portfolio level,
being the level at which they are managed to achieve a
predefined business objective. This is expected to result in the
most consistent classification of assets because it aligns with the
stated objectives for the portfolio, its risk management, manager’s
remuneration and the ability to monitor sales of assets from a
portfolio.
When a significant change to our business is communicated to
external parties, we reassess our business model for managing
those financial assets. We reclassify financial assets if we have a
significant change to the business model. A reclassification is
applied prospectively from the reclassification date.
The contractual terms of a financial asset; any leverage features;
prepayment and extension terms; and discounts or penalties to
interest rates that are part of meeting environmental, social and
governance targets as well as other contingent and leverage
features, non-recourse arrangements and features that could
modify the timing and/or amount of the contractual cash flows
that might reset the effective rate of interest; are considered in
determining whether cash flows are
solely payments of principal
and interest.
Certain financial assets may be designated at fair value through
profit or loss (DFV) upon initial recognition if such designation
eliminates, or significantly reduces, accounting mismatch
.
Equity shares are measured at fair value through profit or loss
unless specifically elected as at fair value through other
comprehensive income (FVOCI).
Upon disposal, the cumulative gains or losses in fair value through
other comprehensive income reserve are recycled to the income
statement for monetary assets and for non-monetary assets
(equity shares) the cumulative
gains or losses are transferred
directly to retained earnings.
Accounting policies continued
3. Material accounting polices continued
NWB Group
Annual Report and Accounts 2025
102
Regular way purchases and sales of financial assets classified as
amortised cost are recognised on the settlement date; all other
regular way transactions in financial assets are recognised on the
trade date.
Financial liabilities are classified into one of following measurement
categories:
•
amortised cost
measured at cost using the effective interest
rate method;
•
held for trading
measured at fair value and changes in fair
value reported in income statement; or
•
designated at fair value through profit or loss
measured at fair
value and changes in fair value reported in the income
statement except changes in fair value attributable to the
credit risk component recognised in other comprehensive
income when no accounting mismatch occurs.
3.9. Netting
Financial assets and financial liabilities are offset, and the net
amount presented on the balance sheet when, and only when, we
currently have a legally enforceable right to set off the recognised
amounts and we intend either to settle on a net basis or to realise
the asset and settle the liability simultaneously. We are party to a
number of arrangements, including master netting agreements,
that give us the right to offset financial assets and financial
liabilities, but where we do not intend to settle the amounts net or
simultaneously, the assets and liabilities concerned are presented
separately on the balance sheet.
3.10. Capital instruments
We classify a financial instrument that we issue as a financial
liability if it is a contractual obligation to deliver cash or another
financial asset, or to exchange financial assets or financial
liabilities on potentially unfavourable terms and as equity if we
evidence a residual interest in our assets after the deduction of
liabilities. Incremental costs and related tax that are directly
attributable to an equity transaction are deducted from equity.
3.11. Derivatives and hedging
Derivatives are reported on the balance sheet at fair value. We
use derivatives to manage our own risk such as interest rate,
foreign exchange, or credit risk or in certain customer
transactions. Not all derivatives used to manage risk are in hedge
accounting relationships (an IFRS method to reduce accounting
mismatch from changes in the fair value of the derivatives
reported in the income statement).
Gains and losses arising from changes in the fair value of
derivatives that are not in hedge relationships and derivatives that
are managed together with financial instruments designated at
fair value are included in Other operating income.
Hedge accounting
Hedge accounting relationships are designated and documented
at inception in line with the requirements of IAS 39 Financial
instruments – Recognition and Measurement. The documentation
identifies the hedged item, the hedging instrument and details of
the risk that is being hedged and the way in which effectiveness
will be assessed at inception and during the period of the hedge.
When designating a hedging relationship, we consider: the
economic relationship between the hedged item (including the risk
being hedged) and the hedging instrument; the nature of the risk;
the risk management objective and strategy for undertaking the
hedge; and the appropriateness of the method that will be used to
assess hedge effectiveness.
Designated hedging relationships must be expected to be highly
effective both on a prospective and retrospective basis. This is
assessed using regression techniques which model the degree of
offsetting between the changes in fair value or cash flows
attributable to the hedged risk and the changes in fair value of the
designated hedging derivatives. Ineffectiveness is measured based
on actual levels of offsetting and recognised in the income
statement. We enter into three types of hedge accounting
relationships.
Fair value hedg
e
- the gain or loss on the hedging instrument and
the hedged item attributable to the hedged risk is recognised in
the income statement. Where the hedged item is measured at
amortised cost, the balance sheet amount of the hedged item is
also adjusted.
Cash flow hedge
- the effective portion of the designated hedge
relationship is recognised in other comprehensive income and the
ineffective portion in the income statement. When the hedged
item (forecasted cash flows) results in the recognition of a
financial asset or financial liability, the cumulative gain or loss is
reclassified from equity to the income statement in the same
periods in which the hedged forecasted cash flows affect the
income statement.
Hedge of net investment in a foreign operation
-
in the hedge of a
net investment in a foreign operation, the effective portion of the
designated hedge relationship is recognised in other
comprehensive income. Any ineffective portion is recognised in
profit or loss. Non-derivative financial liabilities as well as
derivatives may be designated as a hedging instrument in a net
investment hedge.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the hedge no longer meets
the criteria for hedge accounting i.e. the hedge is not highly
effective in offsetting changes in fair value or cash flows
attributable to the hedged risk, consistent with the documented
risk management strategy; the hedging instrument expires or is
sold, terminated or exercised; or if hedge designation is revoked.
For fair value hedging
any cumulative adjustment is amortised to
the
income statement over the life of the hedged item. Where the
hedge item is no longer on the balance sheet the adjustment to
the hedged item is reported in the income statement.
For cash flow hedging the cumulative unrealised gain or loss is
reclassified from equity to the income statement when the hedged
cash flows occur or, if the forecast transaction results in the
recognition of a financial asset or financial liability, when the
hedged forecast cash flows affect the income statement. Where a
forecast transaction is no longer expected to occur, the
cumulative unrealised gain or loss is reclassified from equity to the
income statement immediately.
For net investment hedging on disposal or partial disposal of a
foreign operation, the amount accumulated in equity is reclassified
from equity to the income statement.
Accounting policies continued
3. Material accounting polices continued
NWB Group
Annual Report and Accounts 2025
103
3.12. Provisions for liabilities and charges
We recognise a provision for a present obligation resulting from a
past event when it is more likely than not that we will be required
to pay to settle the obligation and the amount of the obligation
can be estimated reliably.
Provision is made for restructuring costs, including the costs of
redundancy, when we have a constructive obligation. An
obligation exists when we have a detailed formal plan for the
restructuring and have raised a valid expectation in those affected
either by starting to implement the plan or by announcing its main
features.
We recognise any onerous cost of the present obligation under a
contract as a provision. An onerous cost is the unavoidable cost
of meeting our contractual obligations that exceed the expected
economic benefits. When we intend to vacate a leasehold
property or right of use asset, the asset would be tested for
impairment and a provision may be recognised for the ancillary
contractual occupancy costs.
3.13. Financial guarantee contracts
Under a financial guarantee contract, we, in return for a fee,
undertake to meet a customer’s obligations under the terms of a
debt instrument if the customer fails to do so. A financial
guarantee not designated as fair value through profit or loss is
recognised as a liability; initially at fair value and subsequently at
the higher of its initial value less cumulative amortisation and any
provision under the contract measured in accordance with our
ECL accounting policy. Amortisation is calculated to recognise
fees receivable in the income statement over the period of the
guarantee. A separate asset is recognised in respect of fees
receivable for provision of the financial guarantee.
Purchased financial guarantees are considered to be integral, and
fully adjust the covered debt instrument expected credit loss
provision, only where the guarantee is contemplated at the
inception of the debt instrument and is entered into within a
reasonable timeframe.
3.14. Deferred tax
Deferred tax is the estimated tax expected to be payable or
recoverable in respect of temporary differences between the
carrying amount of an asset or liability for accounting purposes
and the carrying amount for tax purposes in the future. Deferred
tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
their recovery is probable.
Deferred tax is calculated using tax rates expected to apply in the
periods when the assets will be realised or the liabilities settled,
based on tax rates and laws enacted, or substantively enacted, at
the balance sheet date.
Deferred tax asset recoverability is based on the level of
supporting eligible and available deferred tax liabilities we have
and of our future taxable profits. These future taxable profits are
based on our five-year revenue and cost forecasts and the
expectation of long-term economic growth beyond this period.
The five-year forecast takes account of management’s current
expectations of competitiveness and profitability. The long-term
growth rate reflects external indicators which will include market
expectations on climate risk. We do not consider any additional
adjustments to this indicator.
4. Future accounting developments
International Financial Reporting Standards
Effective 1 January 2026
•
Amendments to the Classification and Measurement of
Financial Instruments (Amendments to IFRS 9 and IFRS 7 –
Issued May 2024)
Effective 1 January 2027
•
Presentation and Disclosures in Financial Statements (IFRS 18
– Issued April 2024)
•
Subsidiaries without Public Accountability (IFRS 19 – Issued
May 2024)
We are assessing the effect of adopting the accounting
developments effective from 1 January 2027 on our financial
statements and have largely completed a similar assessment for
the Amendments to IFRS 9 and IFRS 7 effective from 1 January
2026. We do not expect any to have a material impact on our
financial performance or position, although IFRS 18 may have
impact on presentation and disclosure.
Notes to the financial statements
NWB Group
Annual Report and Accounts 2025
104
1 Net interest income

| 2025 | 2024
| £m | £m
Balances at central banks and loans to banks - amortised cost | 1,396 | 1,709
Loans to customers - amortised cost | 15,682 | 14,620
Amounts due from holding companies and fellow subsidiaries | 119 | 97
Other financial assets | 1,951 | 1,674
Interest receivable | 19,148 | 18,100
Bank deposits | 1,401 | 1,254
Customer deposits | 5,477 | 5,612
Amounts due to holding companies and fellow subsidiaries | 2,223 | 2,481
Other financial liabilities | 385 | 534
Subordinated liabilities | 11 | 11
Interest payable | 9,497 | 9,892
Net interest income | 9,651 | 8,208

Interest income on financial instruments measured at amortised cost, debt instruments classified as FVOCI and the interest element of
the effective portion of any designated hedging relationships are measured using the effective interest rate method, which allocates
the interest income or interest expense over the expected life of the asset or liability at the rate that exactly discounts all estimated
future cash flows to equal the instrument's initial carrying amount. Calculation of the effective interest rate takes into account fees
payable or receivable that are an integral part of the instrument's yield, premiums or discounts on acquisition or issue, early
redemption fees and transaction costs. All contractual terms of a financial instrument are considered when estimating future cash
flows. Interest income on financial assets is presented in interest receivable, interest expense on financial liabilities is presented in
interest payable.
Negative interest on financial assets is presented in interest payable and negative interest on financial liabilities is
presented in interest receivable. Included in interest receivable (Loans to customers - amortised cost) is finance lease income of £585
million (2024 - £545 million) which is recognised at a constant periodic rate of return before tax on the net investment.
For accounting policy information refer to Accounting policy 3.1.
2 Non-interest income

| 2025 | 2024
| £m | £m
Net fees and commissions (1) | 1,822 | 1,734
Other operating income |  |
Operating leases and other rental income | 221 | 231
Changes in fair value of other financial assets at FVTPL (2) | 22 | 15
Hedge ineffectiveness | (23) | (21)
Net income from economic hedging (3) | 302 | 284
Profit on disposal of amortised cost assets and liabilities | 8 | 7
Loss on disposal of fair value through other comprehensive income assets | (7) | (18)
Profit on sale of property, plant and equipment | 7 | 26
Service charges (4) | 1,552 | 1,478
Other income | 65 | 29
| 2,147 | 2,031
Non-interest income | 3,969 | 3,765

(1)
Refer to Note 4 for further analysis.
(2)
Includes instruments that have failed solely payment of principal and interest testing under IFRS 9.
(3)
Includes fair value changes on derivatives not designated in a hedge accounting relationship, and gains and losses from structural hedges.
(4)
Service charges represent the recovery of shared service costs incurred by NWB Group and recharged to other NatWest Group subsidiaries.
For accounting policy information refer to Accounting policies 3.1, 3.6, 3.8 and 3.11.
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
105
3 Operating expenses

| 2025 | 2024
| £m | £m
Wages, salaries and other staff costs | 2,624 | 2,598
Temporary and contract costs | 124 | 125
Social security costs | 347 | 306
Pension costs | 297 | 272
- defined benefit schemes (Note 5) | 89 | 80
- defined contribution schemes | 208 | 192
Staff costs | 3,392 | 3,301
Premises and equipment | 1,183 | 1,099
Depreciation and amortisation (1) | 1,078 | 987
Other administrative expenses (2) | 1,588 | 1,576
Administrative expenses | 3,849 | 3,662
| 7,241 | 6,963

(1)
Includes depreciation on right of use assets of £77 million (2024 - £84 million).
(2)
Includes redress and litigation costs. Further details are provided in Note 21.
For accounting policy information refer to Accounting policies 3.2, 3.3, 3.4 and 3.5.
The average number of persons employed during the year, excluding temporary staff and rounded to the nearest hundred, was
54,500 (2024 – 55,700). The number of persons employed at 31 December 2025, excluding temporary staff and rounded to the
nearest hundred, was as follows:

| 2025 | 2024
Retail Banking | 11,400 | 12,200
Private Banking & Wealth Management | 2,100 | 2,200
Commercial & Institutional | 8,700 | 8,800
Central items & other | 32,000 | 31,600
Total | 54,200 | 54,800
UK | 35,000 | 36,000
India | 18,800 | 17,600
Poland | 100 | 800
Rest of the World | 300 | 400
Total | 54,200 | 54,800

Notes to the financial statements continued
3 Operating expenses continued
NWB Group
Annual Report and Accounts 2025
106
Share-based payments
NWB Group grants share-based awards to employees principally on the following bases:

Award plan | Eligible employees | Nature of award | Vesting conditions (1) | Settlement
Sharesave | UK, Channel Islands, | Option to buy shares under | Continuing employment or | 2026 to 2030
| Gibraltar, Isle of Man, | employee savings plan | leavers in certain circumstances |
| Poland and India. |  |  |
Deferred performance | All | Awards of ordinary shares | Continuing employment or | 2026 to 2031
awards |  | and conditional shares | leavers in certain circumstances |
Long-term incentives (2) | Senior employees | Awards of ordinary shares | Continuing employment or | 2026 to 2032
|  | and conditional shares | leavers in certain circumstances |
|  |  | and/or satisfaction of the pre- |
|  |  | vest assessment and underpins |
Sharing in Success | All | Awards of ordinary shares | Future continuing employment | 2026
|  | and conditional shares | and achievement of pre-defined |
|  |  | measures. |

(1)
All awards are subject to the 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.
The fair value of Sharesave options granted in 2025 was determined using a pricing model that included: expected volatility of shares
determined at the grant date based on historical 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 share price (as defined in the NatWest Group plc 2025 Annual Report and Accounts on page 155)
are used.
The fair value of the award is recognised as services are provided over the vesting period.
Bonus awards

| 2025 | 2024 | Change
| £m | £m |
Deferred cash awards (1) | 325 | 282 | 15%
Deferred share awards | 30 | 29 | 3%
Total bonus awards (2) | 355 | 311 | 14%

Reconciliation of bonus awards to income statement charge

| 2025 | 2024
| £m | £m
Bonus awarded | 355 | 311
Less: deferral of charge for amounts awarded in current year | (106) | (93)
Income statement charge for amounts awarded in current year | 249 | 218
Add: current year charge for amounts deferred from prior years | 88 | 70
Less: forfeiture of amounts deferred from prior years | (3) | (2)
Income statement charge for amounts deferred from prior years | 85 | 68
Income statement charge for bonus awards (2) | 334 | 286

(1)
Includes March cash awards which are limited to £2,000 for all employees and are paid in the March following the balance sheet date.
(2)
Excludes other performance-related compensation.
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
107
4 Segmental analysis
Reportable operating segments
NWB Plc is organised into the following reportable segments: Retail Banking, Private Banking & wealth Management, Commercial &
Institutional and Central items & other.
Retail Banking
serves personal customers in the UK.
Private Banking & Wealth Management
serves UK-connected high net worth individuals and their business interests.
Commercial & Institutional
consists of customer businesses reported under Business Banking, Commercial Mid-market and Corporate
& Institutions, supporting our customers across the full non-personal customer lifecycle, both domestically and internationally.
Central items & other
includes corporate functions such as treasury, finance, risk management, compliance, legal, communications and
human resources. NWB Plc is the main service provider of shared services and treasury activities for NatWest Group. The services are
mainly provided to NWH Group, however, in certain instances where permitted, services are also provided to the wider NatWest
Group including the non ring-fenced business.

| Retail | Private Banking & | Commercial & | Central items & |
| Banking | Wealth | Institutional | other |
|  | Management |  |  | Total
2025 | £m | £m | £m | £m | £m
Net interest income | 5,100 | 720 | 3,817 | 14 | 9,651
Net fees and commissions | 336 | 334 | 1,147 | 5 | 1,822
Other operating income | 87 | 35 | 274 | 1,751 | 2,147
Total income | 5,523 | 1,089 | 5,238 | 1,770 | 13,620
Depreciation and amortisation | (1) | (1) | (106) | (970) | (1,078)
Other operating expenses | (2,465) | (726) | (2,416) | (556) | (6,163)
Impairment (losses)/releases | (403) | (10) | (241) | 1 | (653)
Operating profit | 2,654 | 352 | 2,475 | 245 | 5,726
2024 |  |  |  |  |
Net interest income | 4,472 | 619 | 3,342 | (225) | 8,208
Net fees and commissions | 313 | 285 | 1,132 | 4 | 1,734
Other operating income | 99 | 34 | 314 | 1,584 | 2,031
Total income | 4,884 | 938 | 4,788 | 1,363 | 11,973
Depreciation and amortisation | (1) | (1) | (117) | (868) | (987)
Other operating expenses | (2,444) | (699) | (2,229) | (604) | (5,976)
Impairment (losses)/releases | (250) | 11 | (117) | 9 | (347)
Operating profit | 2,189 | 249 | 2,325 | (100) | 4,663

Total revenue
(1)

|  | Private Banking & |  |  |
| Retail | Wealth | Commercial & | Central items & |
| Banking |  | Institutional | other |
|  | Management |  |  | Total
2025 | £m | £m | £m | £m | £m
External | 9,385 | 1,266 | 6,793 | 6,270 | 23,714
Inter-segment (2) | 203 | 1,561 | (1,309) | (455) | -
Total | 9,588 | 2,827 | 5,484 | 5,815 | 23,714
2024 |  |  |  |  |
External | 8,215 | 1,256 | 7,037 | 5,899 | 22,407
Inter-segment (2) | 100 | 1,529 | (1,369) | (260) | -
Total | 8,315 | 2,785 | 5,668 | 5,639 | 22,407

Total income

|  | Private Banking & |  |  |
| Retail | Wealth | Commercial & | Central items & |
| Banking |  | Institutional | other |
|  | Management |  |  | Total
2025 | £m | £m | £m | £m | £m
External | 6,249 | 131 | 4,348 | 2,892 | 13,620
Inter-segment (2) | (726) | 958 | 890 | (1,122) | -
Total | 5,523 | 1,089 | 5,238 | 1,770 | 13,620
2024 |  |  |  |  |
External | 4,725 | 6 | 4,477 | 2,765 | 11,973
Inter-segment (2) | 159 | 932 | 311 | (1,402) | -
Total | 4,884 | 938 | 4,788 | 1,363 | 11,973

For the notes to these tables refer to page 109.
Notes to the financial statements continued
4 Segmental analysis continued
NWB Group
Annual Report and Accounts 2025
108
Analysis of net fees and commissions

| Retail | Private Banking & | Commercial & | Central items |
| Banking | Wealth | Institutional | & other | Total
|  | Management |  |  |
2025 | £m | £m | £m | £m | £m
Fees and commissions receivable |  |  |  |  |
- Payment services | 286 | 38 | 569 | - | 893
- Credit and debit card fees | 348 | 30 | 206 | - | 584
- Lending and financing | 15 | 9 | 511 | - | 535
- Brokerage | 27 | 10 | - | - | 37
- Investment management, trustee and fiduciary services | 2 | 260 | 1 | - | 263
- Underwriting fees | - | - | 2 | - | 2
- Other | 5 | 7 | 89 | 4 | 105
Total | 683 | 354 | 1,378 | 4 | 2,419
Fees and commissions payable | (347) | (20) | (231) | 1 | (597)
Net fees and commissions | 336 | 334 | 1,147 | 5 | 1,822
2024 |  |  |  |  |
Fees and commissions receivable |  |  |  |  |
- Payment services | 261 | 37 | 538 | - | 836
- Credit and debit card fees | 327 | 13 | 199 | 4 | 543
- Lending and financing | 16 | 5 | 512 | - | 533
- Brokerage | 27 | 9 | - | - | 36
- Investment management, trustee and fiduciary services | 2 | 230 | 1 | - | 233
- Underwriting fees | - | - | - | - | -
- Other | 8 | 11 | 70 | 6 | 95
Total | 641 | 305 | 1,320 | 10 | 2,276
Fees and commissions payable | (328) | (20) | (188) | (6) | (542)
Net fees and commissions | 313 | 285 | 1,132 | 4 | 1,734

| Retail | Private Banking & | Commercial & | Central items & |
| Banking | Wealth | Institutional | other |
|  | Management |  |  | Total
2025 | £m | £m | £m | £m | £m
Assets | 208,851 | 19,564 | 99,203 | 121,921 | 449,539
Liabilities | 167,353 | 42,895 | 128,269 | 86,893 | 425,410
2024 |  |  |  |  |
Assets | 199,579 | 18,916 | 92,653 | 113,161 | 424,309
Liabilities | 159,989 | 42,603 | 127,878 | 70,721 | 401,191

Notes to the financial statements continued
4 Segmental analysis continued
NWB Group
Annual Report and Accounts 2025
109
Geographical segments
The geographical analysis in the tables below has been compiled on the basis of location of office where the transactions are recorded.

| UK | RoW | Total
2025 | £m | £m | £m
Total revenue (1) | 22,897 | 817 | 23,714
Interest receivable | 19,117 | 31 | 19,148
Interest payable | (9,466) | (31) | (9,497)
Net fees and commissions | 1,822 | - | 1,822
Other operating income | 1,362 | 785 | 2,147
Total income | 12,835 | 785 | 13,620
Operating profit before tax | 5,563 | 163 | 5,726
Total assets | 440,819 | 8,720 | 449,539
Total liabilities | 423,863 | 1,547 | 425,410
Contingent liabilities and commitments (3) | 104,540 | 618 | 105,158
Cost to acquire property, plant and equipment and intangible assets | 994 | 426 | 1,420
2024 |  |  |
Total revenue (1) | 21,582 | 825 | 22,407
Interest receivable | 18,060 | 40 | 18,100
Interest payable | (9,864) | (28) | (9,892)
Net fees and commissions | 1,733 | 1 | 1,734
Other operating income | 1,247 | 784 | 2,031
Total income | 11,176 | 797 | 11,973
Operating profit before tax | 4,557 | 106 | 4,663
Total assets | 416,005 | 8,304 | 424,309
Total liabilities | 399,996 | 1,195 | 401,191
Contingent liabilities and commitments (3) | 96,204 | 444 | 96,648
Cost to acquire property, plant and equipment and intangible assets | 1,015 | 126 | 1,141

(1)
Total revenue comprises interest receivable, fees and commissions receivable and other operating income.
(2)
Revenue and income arising from transactions between the group’s segments are reported as inter-segment and include net inter-segment funding income/(expense).
(3)
Refer to Note 26 Memorandum items – Contingent liabilities and commitments.
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
110
5 Pensions
Defined contribution schemes
NWB Group sponsors a number of defined contribution pension
schemes in different territories, which new employees are offered
the opportunity to join.
Defined benefit schemes
NWB Group sponsors a number of pension schemes in the UK
and overseas, including the Main section of the NatWest Group
Pension Fund (the Main section) which operates under UK trust
law and is managed and administered on behalf of its members in
accordance with the terms of the trust deed, the scheme rules
and UK legislation.
Pension fund trustees are appointed to operate each fund and
ensure benefits are paid in accordance with the scheme rules and
national law. The trustees are the legal owner of a scheme’s
assets, and have a duty to act in the best interests of all scheme
members.
The schemes generally provide a pension of one-sixtieth of final
pensionable salary for each year of service prior to retirement up
to a maximum of 40 years and are contributory for current
members. The Group Pension Fund has been closed to new
entrants since 2006, although active members continue to build
up additional pension benefits, currently subject to 2% maximum
annual pensionable salary inflation, while they remain employed
by NWB Group.
The Main section corporate trustee is NatWest Pension Trustee
Limited (the Trustee), a wholly owned subsidiary of NWB Plc,
Principal Employer of the Main section. The Board of the Trustee
includes member trustee directors selected from eligible active
staff, deferred and pensioner members who apply and trustee
directors appointed by NatWest Group. Under UK legislation, a
defined benefit pension scheme is required to meet the statutory
funding objective of having sufficient and appropriate assets to
cover its liabilities (the pensions that have been promised to
members). Similar governance principles apply to NWB Group’s
other pension schemes.
For accounting policy information refer to Accounting policy 3.2.
Investment strategy
The assets of the Main section represent 97% of all plan assets at
31 December 2025 (2024 - 97%) and are invested as shown
below. The profile of the non-insured assets is typical of the non-
insured assets held by other group schemes.
Within the non-insured portfolio the Main section employs
physical, derivative and non-derivatives instruments to achieve a
desired asset class exposure and to reduce the section’s interest
rate, inflation and currency risk. This means that the net funding
position is considerably less sensitive to changes in market
conditions than the value of the assets or liabilities in isolation. In
particular, movements in interest rates and inflation are
substantially hedged by the Trustee.
The Main section now includes buy-in insurance policies, following
transactions over 2024 and 2025. Each insurance transaction saw
a premium paid to an insurer in exchange for a buy-in insurance
contract. The contracts provide a stream of cashflows to the
Trustee replicating payments due to members, thereby passing
material demographic and market risk to the insurer.
At 31 December 2025, the Main section included buy-in insurance
contracts covering around 44% of the liabilities.
The premium for each transaction was determined by the insurer
using its pricing basis. Under IAS 19, the value placed on this
asset mirrors the valuation of the defined benefit obligations
covered, incorporating an assessment of credit risk. Since the
insurer’s pricing basis is more conservative than the best-estimate
valuation under IAS 19, an asset loss arises at the outset.
However, the asset loss is offset by a corresponding movement in
the asset ceiling adjustment, meaning the net balance sheet and
OCI impacts are neutral. Once the contract has been established,
the value of the buy-in insurance contracts will move in line with
movements in the defined benefit obligations covered, protecting
the scheme against demographic and market risk.
Notes to the financial statements continued
5 Pensions continued
NWB Group
Annual Report and Accounts 2025
111

| 2025 | 2024
Major classes of plan assets as a percentage of | Quoted | Unquoted | Total | Quoted | Unquoted | Total
total plan assets of the Main section | % | % | % | % | % | %
Equities | - | 6.1 | 6.1 | 0.1 | 6.6 | 6.7
Index linked bonds | 16.8 | - | 16.8 | 23.6 | - | 23.6
Government bonds | 8.6 | - | 8.6 | 9.9 | - | 9.9
Corporate and other bonds | 12.4 | 3.0 | 15.4 | 14.4 | 4.1 | 18.5
Real estate | - | 2.7 | 2.7 | - | 2.4 | 2.4
Derivatives | - | (0.2) | (0.2) | - | 0.1 | 0.1
Buy-in insurance contracts | - | 35.9 | 35.9 | - | 27.0 | 27.0
Cash and other assets | - | 14.7 | 14.7 | - | 11.8 | 11.8
| 37.8 | 62.2 | 100.0 | 48.0 | 52.0 | 100.0

The Main section's holdings of derivative instruments are summarised in the table below:

| 2025 | 2024
| Notional | Fair value | Notional | Fair value
| amounts | Assets | Liabilities | amounts | Assets | Liabilities
| £bn | £m | £m | £bn | £m | £m
Inflation rate swaps | 8 | 33 | 88 | 24 | 1,548 | 812
Interest rate swaps | 30 | 363 | 390 | 57 | 3,096 | 3,763
Currency forwards | 10 | 76 | 38 | 8 | 60 | 130
Equity and bond put options | - | - | - | - | - | -
Other | 1 | - | 3 | 1 | 22 | 4

Swaps have been executed at prevailing market rates and within standard market bid/offer spreads with a number of counterparties,
including NWB Plc.
At 31 December 2025, the gross notional value of the swaps was £39 billion (2024 - £81 billion) and had a net negative fair value of
£85 million (2024 - £73 million net positive) against which the scheme had posted 43% collateral.
The schemes do not invest directly in NWB Group but may have exposure to NWB Group through indirect holdings. The trustees of the
respective UK schemes are responsible for ensuring that indirect investments in NWB Group do not exceed the regulatory limit of 5%
of plan assets.
Notes to the financial statements continued
5 Pensions continued
NWB Group
Annual Report and Accounts 2025
112

| NWB Group | NWB Plc
|  | Present |  |  |  | Present |  |
|  | value of | Asset | Net |  | value of | Asset | Net
|  | defined | ceiling | pension |  | defined | ceiling/ | pension
| Fair value of | benefit | / minimum | asset/ | Fair value of | benefit | minimum | asset/
| plan assets | obligation (1) | funding (2) | (liability) | plan assets | obligation (1) | funding (2) | (liability)
Changes in value of net pension asset/(liability) | £m | £m | £m | £m | £m | £m | £m | £m
At 1 January 2024 | 34,541 | (27,374) | (7,199) | (32) | 34,390 | (27,200) | (7,199) | (9)
Currency translation and other adjustments | (5) | 6 | - | 1 | - | - | - | -
Income statement - operating expenses | 1,631 | (1,365) | (346) | (80) | 1,625 | (1,338) | (346) | (59)
Recognised in other comprehensive income | (4,709) | 2,168 | 2,391 | (150) | (4,709) | 2,179 | 2,391 | (139)
Contributions by employer | 224 | - | - | 224 | 199 | - | - | 199
Contributions by plan participants and other scheme |  |  |  |  |  |  |  |
members | 17 | (17) | - | - | 25 | (25) | - | -
Benefits paid | (1,346) | 1,346 | - | - | (1,314) | 1,314 | - | -
At 1 January 2025 | 30,353 | (25,236) | (5,154) | (37) | 30,216 | (25,070) | (5,154) | (8)
Currency translation and other adjustments | (2) | 6 | - | 4 | - | - | - | -
Income statement - other expenses |  |  |  |  |  |  |  |
Net interest expense | 1,648 | (1,362) | (285) | 1 | 1,642 | (1,356) | (285) | 1
Current service cost | - | (76) | - | (76) | - | (63) | - | (63)
Gain on curtailments or settlements | - | 1 | - | 1 | - | - | - | -
Past service cost | - | (15) | - | (15) | - | (1) | - | (1)
| 1,648 | (1,452) | (285) | (89) | 1,642 | (1,420) | (285) | (63)
Other comprehensive income |  |  |  |  |  |  |  |
Return on plan assets excluding recognised |  |  |  |  |  |  |  |
interest income (3) | (1,132) | - | - | (1,132) | (1,131) | - | - | (1,131)
Experience gains and losses | - | (170) | - | (170) | - | (169) | - | (169)
Effect of changes in actuarial financial assumptions | - | 848 | - | 848 | - | 846 | - | 846
Effect of changes in actuarial demographic |  |  |  | - |  |  |  |
assumptions | - | (90) | - | (90) | - | (88) | - | (88)
Asset ceiling adjustments (3) | - | - | 545 | 545 | - |  | 545 | 545
| (1,132) | 588 | 545 | 1 | (1,131) | 589 | 545 | 3
Contributions by employer (4) | 75 | - | - | 75 | 60 | - | - | 60
Contributions by plan participants and other scheme |  |  |  |  |  |  |  |
members | 10 | (10) | - | - | 7 | (7) | - | -
Benefits paid | (1,338) | 1,339 | - | 1 | (1,327) | 1,327 | - | -
At 31 December 2025 | 29,614 | (24,765) | (4,894) | (45) | 29,467 | (24,581) | (4,894) | (8)

(1)
Defined benefit obligations are subject to annual valuation by independent actuaries.
(2)
NWB Group recognises the net pension scheme surplus or deficit as a net asset or liability. In doing so, the funded status is adjusted to reflect any schemes with a surplus that NWB
Group may not be able to access, as well as any minimum funding requirement to pay in additional contributions. This is most relevant to the Main section, where the current surplus is
not recognised as the trustees have rights over the use of the surplus.
Other NWB Group schemes that this applies to include the Ulster Bank Pension Scheme (NI).
(3)
Buy-in transactions have had an offsetting impact on the Return on plan assets excluding recognised interest income and Asset ceiling adjustments line items recognised in OCI.
(4)
NWB Group expects to make contributions to the Main section of £40 million in 2026.
Notes to the financial statements continued
5 Pensions continued
NWB Group
Annual Report and Accounts 2025
113

| All schemes
| 2025 | 2024
Amounts recognised on the balance sheet | £m | £m
Fund asset at fair value | 29,614 | 30,353
Present value of fund liabilities | (24,765) | (25,236)
Funded status | 4,849 | 5,117
Assets ceiling/minimum funding | (4,894) | (5,154)
| (45) | (37)

| NWB Group | NWB Plc
| 2025 | 2024 | 2025 | 2024
Net pension asset/(liability) comprises | £m | £m | £m | £m
Net assets of schemes in surplus (Note 16) | 5 | 4 | - | -
Net liabilities of schemes in deficit (Note 21) | (50) | (41) | (8) | (8)
| (45) | (37) | (8) | (8)

Funding and contributions by NWB Group
In the UK, the trustees of defined benefit pension schemes are
required to perform funding valuations every three years. The
trustees and the sponsor, with the support of the Scheme
Actuary, agree the assumptions used to value the liabilities and to
determine future contribution requirements. The funding
assumptions incorporate a margin for prudence over and above
the expected cost of providing the benefits promised to members,
taking into account the sponsor’s covenant and the investment
strategy of the scheme. Similar arrangements apply in the other
territories where NWB Group sponsors defined benefit pension
schemes.
A full triennial funding valuation of the Main section, effective 31
December 2023, was completed during financial year 2024.
This triennial funding valuation determined the funding level to be
115%, pension liabilities to be £29 billion and the surplus to be £4
billion, all assessed on the agreed funding basis. The average cost
of the future service of current members is 21.2% of salary before
contributions from those members.
Given the strong funding level,
it was agreed that future service contributions would cease from
1 January 2025. The sponsor continues to meet administrative
expenses.
The key assumptions used to determine the uninsured funding
liabilities were the discount rate, which is determined based on
fixed interest swap and gilt yields plus 0.64% per annum, and
mortality assumptions, which result in life expectancies of
27.1/29.1 years for male/female pensioners who were age 60 and
28.5/30.6 years from age 60 for males/females who were age 40
at the valuation date.
Accounting assumptions
Placing a value on NWB Group’s defined benefit pension schemes’
liabilities requires NWB Group’s management to make a number
of assumptions, with the support of independent actuaries. The
ultimate cost of the defined benefit obligations depends upon
actual future events and the assumptions made are unlikely to be
exactly borne out in practice, meaning the final cost may be
higher or lower than expected.
Notes to the financial statements continued
5 Pensions continued
NWB Group
Annual Report and Accounts 2025
114
The most significant assumptions used for the Main section are shown below:

| Principal IAS 19 actuarial assumptions (1)
| 2025 | 2024
| % | %
Discount rate | 5.7 | 5.6
Inflation assumption (RPI) | 2.9 | 3.2
Rate of increase in salaries | 1.8 | 1.8
Rate of increase in deferred pensions | 2.9 | 3.4
Rate of increase in pensions in payment | 2.4 | 2.6
Lump sum conversion rate at retirement | 18.0 | 18.0

Longevity at age 60: | years | years
Current pensioners |  |
Males | 26.9 | 26.5
Females | 28.6 | 28.5
Future pensioners, currently aged 40 |  |
Males | 27.9 | 27.5
Females | 29.9 | 29.7

(1)
The above financial assumptions are long-term assumptions set with reference to the period over which the obligations are expected to be settled.
Discount rate
The IAS 19 valuation uses a single discount rate set by reference to the yield on a basket of ‘high quality’ sterling corporate bonds.
Significant judgement is required when setting the criteria for bonds to be included in the basket of bonds that is used to determine the
discount rate used in the IAS 19 valuations. The criteria include issue size, quality of pricing and the exclusion of outliers. Judgement is
also required in determining the shape of the yield curve at long durations: a constant credit spread relative to gilts is assumed.
Sensitivity to the main assumptions is presented below.
The weighted average duration of the Main section’s defined benefit obligation at 31 December 2025 is 13 years (2024 – 13 years).
The chart below shows the projected benefit payment pattern for the Main section in nominal terms. These cashflows are based on
the most recent formal actuarial valuation, effective 31 December 2023
.
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
2050
2052
2054
2056
2058
2060
2062
2064
2066
2068
2070
2072
2074
2076
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2080
2082
2084
2086
2088
2090
2092
2094
2096
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Pensioner
Non pensioner
Expected Cashflows (£m)
Year
Notes to the financial statements continued
5 Pensions continued
NWB Group
Annual Report and Accounts 2025
115
The table below shows how the funded status of the Main section would change if the key assumptions used were changed
independently. In practice the variables have a degree of correlation and do not move completely in isolation.

| (Decrease)/ | (Decrease)/ | Increase in net
| increase in | increase in | pension
| value of assets | value of liabilities | (obligations)/assets
2025 (1) | £m | £m | £m
0.5% increase in interest rates/discount rate | (1,434) | (1,425) | (9)
0.25% increase in inflation | 585 | 525 | 60
0.5% increase in credit spreads | (10) | (1,425) | 1,415
Longevity increase of one year | 308 | 773 | (465)
0.25% additional rate of increase in pensions in payment | 264 | 613 | (349)
Increase in equity values of 10% (2) | 180 | na | 180
2024 |  |  |
0.5% increase in interest rates/discount rate | (1,554) | (1,529) | (25)
0.25% increase in inflation | 648 | 571 | 77
0.5% increase in credit spreads | (4) | (1,529) | 1,525
Longevity increase of one year | 295 | 832 | (537)
0.25% additional rate of increase in pensions in payment | 205 | 605 | (400)
Increase in equity values of 10% (2) | 199 | na | 199

(1)
Sensitivities shown for 2025 are derived using benchmark information, so will be more approximate than those shown for 2024.
(2)
Includes both quoted and private equity.
The table below shows the combined change in defined benefit obligation from larger movements in these assumptions, assuming no
changes in other assumptions

|  | Change in life expectancies
|  | - 2 years | - 1 year | No change | + 1 year | + 2 years
2025 |  | £bn | £bn | £bn | £bn | £bn
Change in credit spreads | +50 bps | (2.9) | (2.2) | (1.4) | (0.7) | -
| No change | (1.6) | (0.8) | - | 0.8 | 1.5
| -50 bps | (0.1) | 0.7 | 1.6 | 2.4 | 3.2

|  | Change in life expectancies
|  | - 2 years | - 1 year | No change | + 1 year | + 2 years
2024 |  | £bn | £bn | £bn | £bn | £bn
Change in credit spreads | +50 bps | (3.1) | (2.3) | (1.5) | (0.7) | -
| No change | (1.7) | (0.9) | - | 0.8 | 1.7
| -50 bps | (0.2) | 0.7 | 1.7 | 2.5 | 3.4

The defined benefit obligation of the Main section is attributable to the different classes of scheme members in the following
proportions:

| 2025 | 2024
Membership category | % | %
Active members | 4.5 | 6.9
Deferred members | 34.5 | 40.7
Pensioners and dependants | 61.0 | 52.4
| 100.0 | 100.0

The experience history of NWB Group schemes is shown below:

| NWB Group | NWB Plc
| 2025 | 2024 | 2023 | 2022 | 2021 | 2025 | 2024 | 2023 | 2022 | 2021
History of defined benefit schemes | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
Fair value of plan assets | 29,614 | 30,353 | 34,541 | 34,957 | 53,531 | 29,467 | 30,216 | 34,390 | 34,815 | 53,381
Present value of defined benefit obligations | (24,765) | (25,236) | (27,374) | (25,518) | (43,326) | (24,581) | (25,070) | (27,200) | (25,357) | (43,147)
Net surplus | 4,849 | 5,117 | 7,167 | 9,439 | 10,205 | 4,886 | 5,146 | 7,190 | 9,458 | 10,234
|  |  |  |  |  | - |  |  |  |
Experience gains/(losses) on plan liabilities | (170) | 8 | (1,563) | (2,042) | 244 | (169) | 12 | (1,559) | (2,041) | 245
Experience (losses)/gains on plan assets | (1,132) | (4,709) | (1,111) | (18,757) | 857 | (1,131) | (4,709) | (1,107) | (18,736) | 852
Actual return on plan assets | 516 | (3,078) | 610 | (17,797) | 1,592 | 511 | (3,084) | 609 | (17,780) | 1,579
Actual return on plan assets % | 1.7% | (8.9%) | 1.7% | (33.2%) | 3.0% | 1.7% | (9.0%) | 1.7% | (33.3%) | 3.1%

Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
116
6 Auditor’s remuneration
Amounts payable to NWB Group’s auditor for statutory audit and other services are set out below:

| 2025 | 2024
| £m | £m
Fees payable for: |  |
- the audit of NWB Group’s annual accounts | 11.9 | 11.0
- the audit of NWB Plc’s subsidiaries | 3.0 | 2.7
- audit-related assurance services | 0.8 | 0.9
Total audit and audit-related assurance service fees | 15.7 | 14.6
Corporate finance services | - | 0.1

Fees payable to the auditor for non-audit services are disclosed in the consolidated financial statements of NatWest Group plc.
7 Tax

| 2025 | 2024
| £m | £m
Current tax |  |
Charge for the year | (1,253) | (1,078)
Over/(under) provision in respect of prior years | 53 | (117)
| (1,200) | (1,195)
Deferred tax |  |
Charge for the year | (310) | (255)
Increase in the carrying value of deferred tax assets in respect of losses | 21 | 203
(Under)/over provision in respect of prior years | (39) | 9
Tax charge for the year | (1,528) | (1,238)

Current tax for the year ended 31 December 2025 is based on rates of 25% for the standard rate of UK corporation tax and 3% for
the UK banking surcharge.
The actual tax charge differs from the expected tax charge, computed by applying the standard rate of UK corporation tax of 25%
(2024 – 25%), as follows:

| 2025 | 2024
| £m | £m
Expected tax charge | (1,432) | (1,166)
Losses and temporary differences in period where no deferred tax asset recognised | - | (2)
Foreign profits and losses taxed at other rates | (8) | (5)
Items not allowed for tax: |  |
- losses on disposals and write-downs | - | (2)
- UK bank levy | (20) | (20)
- regulatory and legal actions | 2 | (16)
- other disallowable items | (17) | (36)
Non-taxable items | 11 | 3
Unrecognised losses brought forward and utilised | 1 | -
Increase in the carrying value of deferred tax assets in respect of: |  |
- UK losses | 19 | 203
- Overseas losses | 2 | -
Banking surcharge | (158) | (131)
Tax on paid-in equity dividends | 58 | 42
Adjustments in respect of prior years (1) | 14 | (108)
Actual tax charge | (1,528) | (1,238)

(1)
Prior year tax adjustments incorporate refinements to tax computations made on submission and agreement with the tax authorities and adjustments to provisions in respect of
uncertain tax positions.
Notes to the financial statements continued
7 Tax continued
NWB Group
Annual Report and Accounts 2025
117
Judgement: Tax contingencies
NWB Group’s corporate income tax charge and its provisions for corporate income taxes necessarily involve a significant degree of
estimation and judgement. The tax treatment of some transactions is uncertain and tax computations are yet to be agreed with the
relevant tax authorities. Any difference between the final outcome and the amounts provided will affect current and deferred income
tax assets and charges in the period when the matter is resolved. NWB Group recognises anticipated tax liabilities based on all
available evidence and, where appropriate, in the light of external advice.
For accounting policy information refer to Accounting policies 3.7 and 3.14.
Deferred tax

| NWB Group | NWB Plc
| 2025 | 2024 | 2025 | 2024
| £m | £m | £m | £m
Deferred tax liability | (63) | (83) | - | -
Deferred tax asset | 415 | 808 | 399 | 792
Net deferred tax asset | 352 | 725 | 399 | 792

Net deferred tax asset comprised:

| NWB Group
|  |  |  |  | Tax losses |  |
|  | Accelerated | Expense | Financial | carried |  |
| Pension | capital allowances | provisions | instruments (1) | forward | Other | Total
| £m | £m | £m | £m | £m | £m | £m
At 1 January 2024 | 38 | 117 | 49 | 294 | 362 | 32 | 892
Credit/(charge) to income statement | 2 | 30 | 13 | (14) | (29) | (45) | (43)
(Charge)/credit to other comprehensive income | (29) | - | - | (108) | - | 13 | (124)
At 31 December 2024 | 11 | 147 | 62 | 172 | 333 | - | 725
(Charge)/credit to income statement | (4) | (31) | (16) | (9) | (278) | 10 | (328)
(Charge)/credit to other comprehensive income | (1) | - | - | (53) | - | 12 | (42)
Currency translation and other adjustments | - | (4) | - | - | - | 1 | (3)
At 31 December 2025 | 6 | 112 | 46 | 110 | 55 | 23 | 352

| NWB Plc
|  |  |  |  | Tax losses |  |
|  | Accelerated | Expense | Financial | carried |  |
| Pension | capital allowances | provisions | instruments (1) | forward | Other | Total
| £m | £m | £m | £m | £m | £m | £m
At 1 January 2024 | 34 | 197 | 47 | 294 | 362 | 32 | 966
Credit/(charge) to income statement | - | 24 | 12 | (10) | (29) | (43) | (46)
(Charge)/credit to other comprehensive income | (32) | - | - | (108) | - | 13 | (127)
Currency translation and other adjustments | - | - | (1) | - | - | - | (1)
At 31 December 2024 | 2 | 221 | 58 | 176 | 333 | 2 | 792
(Charge)/credit to income statement | - | (50) | (16) | (10) | (278) | 2 | (352)
(Charge)/credit to other comprehensive income | - | - | - | (53) | - | 12 | (41)
At 31 December 2025 | 2 | 171 | 42 | 113 | 55 | 16 | 399

(1)
The in-year movement predominantly relates to cash flow hedges.
Deferred tax assets in respect of unused tax losses are recognised if the losses can be used to offset probable future taxable profits
after taking into account the expected reversal of other temporary differences. Recognised deferred tax assets in respect of tax losses
are analysed further below
.

| 2025 | 2024
| £m | £m
UK tax losses carried forward |  |
- NWB Plc | 55 | 333
| 55 | 333

Notes to the financial statements continued
7 Tax continued
NWB Group
Annual Report and Accounts 2025
118
UK tax losses
Under UK tax rules, tax losses can be carried forward indefinitely.
As the recognised tax losses in the Group arose prior to 1 April
2015, credit in future periods is given against 25% of profits at the
main rate of UK corporation tax, excluding the Banking
Surcharge.
National Westminster Bank Plc
– A deferred tax asset of £55
million (2024 - £333 million) has been recognised in respect of
losses of £220 million of total losses of £1,036 million carried
forward at 31 December 2025. NWB Plc expects the deferred tax
asset to be utilised against future taxable profits by the end of
2032.
Unrecognised deferred tax
-
Deferred tax assets of £292 million
(2024 - £237 million) have not been recognised in respect of tax
losses and other deductible temporary differences carried forward
of £1,132 million (2024 - £941 million) in jurisdictions where doubt
exists over the availability of future taxable profits.
The tax losses
and other deductible temporary differences carried forward have
no expiry date.
Deferred tax liabilities of £106 million (2024 - £107 million) on
aggregate underlying temporary differences of £480 million (2024
- £486 million) have not been recognised in respect of retained
earnings of overseas subsidiaries and held-over gains on the
incorporation of certain overseas branches. These retained
earnings are expected to be reinvested indefinitely or remitted to
the UK free from further taxation. No taxation is expected to arise
in the foreseeable future in respect of held-over gains on which
deferred tax is not recognised. UK tax legislation largely exempts
from UK tax overseas dividends received
.
8 Profit/(loss) dealt with in the accounts of NWB Plc
As permitted by section 408(3) of the Companies Act 2006, NWB Plc has not presented an income statement or a statement of
comprehensive income as a primary financial statement.
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
119
9 Financial instruments – classification
Judgement: classification of financial assets
Classification of financial assets between amortised cost and fair
value through other comprehensive income requires a degree of
judgement in respect of business models and contractual
cashflows.
•
The business model criteria are assessed at a portfolio level to
determine whether assets are classified as held to collect or
held to collect and sell. Information that is considered in
determining the applicable business model includes: the
portfolio’s policies and objectives; how the performance and
risks of the portfolio are managed, evaluated and reported to
management; and the frequency, volume and timing of sales
in prior periods, sales expectation for future periods, and the
reasons for sales.
•
The contractual cash flow characteristics of financial assets
are assessed with reference to whether the cash flows
represent solely payments of principal and interest (SPPI). A
level of judgement is made in assessing terms that could
change the contractual cash flows so that it would not meet
the condition for SPPI, including contingent and leverage
features, non-recourse arrangements and features that could
modify the time value of money.
We originate loans that include features that change the
contractual cash flows based on the borrower meeting certain
contractually specified environmental, social and governance
(ESG) targets. These are known as ESG-linked (or sustainability-
linked) loans. As part of the terms of these loans, the contractual
interest rate is reduced or increased if the borrower meets (or
fails to meet) specific targets linked to the activity of the
borrower, for example; reducing carbon emissions, increase the
level of diversity at Board level, or achieving a sustainable supply
chain. ESG features are first assessed to ascertain whether the
adjustment to the contractual cash flows results in a de minimis
exposure to risks or volatility in those contractual cash flows. If
this is the case the classification of the loan is not affected. If the
effect of the ESG feature is assessed as being more than de
minimis, we apply judgement to ensure that the ESG features do
not generate compensation for risks that are not in line with a
basic lending arrangement. This includes, amongst other aspects,
a review of the consistency of the ESG targets with the asset or
activity of the borrower, and consideration of the targets within
our risk appetite. Some of these loans were eligible under
NatWest Group’s climate and sustainable funding and financing
inclusion (CSFFI) criteria, which underpinned NatWest Group’s
previous target to provide £100 billion in climate and sustainable
funding and financing between 1 July 2021 and the end of 2025.
NatWest Group’s CSFFI criteria was replaced with its climate and
transition finance framework in July 2025 alongside a new target
to provide £200 billion in climate and transition finance. Some of
these loans continue to be eligible under the climate and transition
finance framework.
For accounting policy information refer to Accounting policies 3.8,
3.9 and 3.11.
The following tables analyse NWB Group’s financial assets and liabilities in accordance with the categories of financial instruments in
IFRS 9.

| NWB Group
|  |  | Amortised | Other |
| MFVTPL | FVOCI | cost | assets | Total
Assets | £m | £m | £m | £m | £m
Cash and balances at central banks |  |  | 29,939 |  | 29,939
Derivatives (1) | 1,093 |  |  |  | 1,093
Loans to banks - amortised cost (2) |  |  | 4,515 |  | 4,515
Loans to customers - amortised cost (3) |  |  | 345,643 |  | 345,643
Amounts due from holding companies and fellow subsidiaries | 8 |  | 6,969 | 209 | 7,186
Other financial assets | 639 | 30,167 | 22,318 |  | 53,124
Other assets |  |  |  | 8,039 | 8,039
31 December 2025 | 1,740 | 30,167 | 409,384 | 8,248 | 449,539
Cash and balances at central banks |  |  | 35,095 |  | 35,095
Derivatives (1) | 2,874 |  |  |  | 2,874
Loans to banks - amortised cost (2) |  |  | 3,426 |  | 3,426
Loans to customers - amortised cost (3) |  |  | 332,013 |  | 332,013
Amounts due from holding companies and fellow subsidiaries | 78 |  | 3,128 | 530 | 3,736
Other financial assets | 534 | 29,335 | 9,702 |  | 39,571
Other assets |  |  |  | 7,594 | 7,594
31 December 2024 | 3,486 | 29,335 | 383,364 | 8,124 | 424,309

For the notes to this table refer to the following page.
Notes to the financial statements continued
9 Financial instruments – classification continued
NWB Group
Annual Report and Accounts 2025
120

| Held-for- |  | Amortised | Other |
| trading | DFV | cost | liabilities | Total
Liabilities | £m | £m | £m | £m | £m
Bank deposits |  |  | 33,020 |  | 33,020
Customer deposits |  |  | 325,069 |  | 325,069
Amounts due to holding companies and fellow subsidiaries | 28 |  | 57,010 | 68 | 57,106
Derivatives (1) | 764 |  |  |  | 764
Other financial liabilities | 175 | - | 5,158 |  | 5,333
Subordinated liabilities |  |  | 122 |  | 122
Notes in circulation |  |  | 1,049 |  | 1,049
Other liabilities (4) |  |  | 465 | 2,482 | 2,947
31 December 2025 | 967 | - | 421,893 | 2,550 | 425,410
Bank deposits |  |  | 24,780 |  | 24,780
Customer deposits |  |  | 318,290 |  | 318,290
Amounts due to holding companies and fellow subsidiaries | 27 |  | 47,555 | 142 | 47,724
Derivatives (1) | 1,177 |  |  |  | 1,177
Other financial liabilities | 202 | 250 | 4,547 |  | 4,999
Subordinated liabilities |  |  | 122 |  | 122
Notes in circulation |  |  | 935 |  | 935
Other liabilities (4) |  |  | 528 | 2,636 | 3,164
31 December 2024 | 1,406 | 250 | 396,757 | 2,778 | 401,191

(1)
Includes net hedging derivative assets of £343 million (2024 – £360 million) and net hedging derivative liabilities of £200 million (2024 - £255 million).
(2)
Includes items in the course of collection from other banks of £7 million (2024 - £2 million).
(3)
Includes finance lease receivables of £8,937 million (2024 - £8,939 million).
(4)
Includes lease liabilities of £419 million (2024 - £490 million), held at amortised cost.
Additional information on finance lease receivables
The following table shows the reconciliation of undiscounted finance lease receivables to net investment in finance leases which are
presented under Loans to customers-amortised cost on the balance sheet.

| NWB Group | NWB Plc
| 2025 | 2024 | 2025 | 2024
Amount receivable under finance leases | £m | £m | £m | £m
Within 1 year | 3,663 | 3,490 | 5 | -
1 to 2 years | 2,406 | 2,491 | 5 | 5
2 to 3 years | 1,472 | 1,604 | 4 | 4
3 to 4 years | 945 | 834 | 4 | 4
4 to 5 years | 455 | 457 | 4 | 4
After 5 years | 837 | 1,005 | 30 | 38
Total lease payments | 9,778 | 9,881 | 52 | 55
Unguaranteed residual values | 151 | 150 | - | -
Future drawdowns | (12) | (12) | - | -
Unearned income | (894) | (988) | (5) | (6)
Present value of lease payments | 9,023 | 9,031 | 47 | 49
Impairments | (86) | (92) | (1) | (1)
Net investment in finance leases | 8,937 | 8,939 | 46 | 48

Notes to the financial statements continued
9 Financial instruments - classification continued
NWB Group
Annual Report and Accounts 2025
121
The following tables analyse NWB Plc’s financial assets and liabilities in accordance with the categories of financial instruments in IFRS
9.

|  |  | NWB Plc |  |
| MFVTPL | FVOCI | Amortised cost | Other assets | Total
Assets | £m | £m | £m | £m | £m
Cash and balances at central banks |  |  | 29,911 |  | 29,911
Derivatives (1) | 1,106 |  |  |  | 1,106
Loans to banks - amortised cost (2) |  |  | 4,261 |  | 4,261
Loans to customers - amortised cost (3) |  |  | 310,121 |  | 310,121
Amounts due from holding companies and fellow subsidiaries | 578 |  | 37,793 | 594 | 38,965
Other financial assets | 639 | 29,643 | 21,874 |  | 52,156
Investment in group undertakings |  |  |  | 2,477 | 2,477
Other assets |  |  |  | 5,652 | 5,652
31 December 2025 | 2,323 | 29,643 | 403,960 | 8,723 | 444,649
Cash and balances at central banks |  |  | 35,083 |  | 35,083
Derivatives (1) | 2,892 |  |  |  | 2,892
Loans to banks - amortised cost (2) |  |  | 3,148 |  | 3,148
Loans to customers - amortised cost (3) |  |  | 297,548 |  | 297,548
Amounts due from holding companies and fellow subsidiaries | 632 |  | 34,903 | 848 | 36,383
Other financial assets | 534 | 28,836 | 9,428 |  | 38,798
Investment in group undertakings |  |  |  | 2,520 | 2,520
Other assets |  |  |  | 5,503 | 5,503
31 December 2024 | 4,058 | 28,836 | 380,110 | 8,871 | 421,875

| Held-for- trading | DFV | Amortised cost | Other liabilities | Total
Liabilities | £m | £m | £m | £m | £m
Bank deposits |  |  | 33,016 |  | 33,016
Customer deposits |  |  | 282,427 |  | 282,427
Amounts due to holding companies and fellow subsidiaries | 28 | 289 | 98,171 | 173 | 98,661
Derivatives (1) | 780 |  |  |  | 780
Other financial liabilities | 175 | - | 3,495 |  | 3,670
Subordinated liabilities |  |  | 119 |  | 119
Notes in circulation |  |  | 1,049 |  | 1,049
Other liabilities (4) |  |  | 347 | 1,895 | 2,242
31 December 2025 | 983 | 289 | 418,624 | 2,068 | 421,964
Bank deposits |  |  | 24,778 |  | 24,778
Customer deposits |  |  | 275,972 |  | 275,972
Amounts due to holding companies and fellow subsidiaries | 27 | 270 | 90,401 | 227 | 90,925
Derivatives (1) | 1,323 |  |  |  | 1,323
Other financial liabilities | 202 | 250 | 3,372 |  | 3,824
Subordinated liabilities |  |  | 119 |  | 119
Notes in circulation |  |  | 935 |  | 935
Other liabilities (4) |  |  | 403 | 1,987 | 2,390
31 December 2024 | 1,552 | 520 | 395,980 | 2,214 | 400,266

(1)
Includes net hedging derivative assets of £342 million (2024 - £358 million) and net hedging derivative liabilities of £197 million (2024 - £250 million).
(2)
Includes items in the course of collection from other banks of £7 million (2024 - £2 million).
(3)
Includes finance lease receivables of £46 million (2024 - £48 million).
(4)
Includes lease liabilities of £302 million (2024 - £366 million), held at amortised cost.
Notes to the financial statements continued
9 Financial instruments - classification continued
NWB Group
Annual Report and Accounts 2025
122
Financial instruments – financial assets and liabilities that can be offset
The tables below present information on financial assets and liabilities that are offset on the balance sheet under IFRS or subject to
enforceable master netting agreements together with financial collateral received or given
.

| NWB Group
| Instruments which can be offset | Potential for offset not recognised by IFRS |  |
|  |  |  | Effect of |  |  | Net amount after |  |
|  |  |  | master netting |  |  | effect of netting | Instruments | Balance
|  |  | Balance | and similar | Cash | Securities | agreements and | outside netting | sheet
| Gross | IFRS offset | sheet | agreements | collateral | collateral | related collateral | agreements | total
2025 | £m | £m | £m | £m | £m | £m | £m | £m | £m
Derivative assets | 15,557 | (14,470) | 1,087 | (544) | (199) | (114) | 230 | 6 | 1,093
Derivative liabilities | 16,166 | (15,414) | 752 | (544) | (48) | - | 160 | 12 | 764
Net position (1) | (609) | 944 | 335 | - | (151) | (114) | 70 | (6) | 329
Non trading reverse repos | 46,242 | (13,619) | 32,623 | - | - | (32,623) | - | - | 32,623
Non trading repos | 35,981 | (13,619) | 22,362 | - | - | (22,362) | - | - | 22,362
Net position | 10,261 | - | 10,261 | - | - | (10,261) | - | - | 10,261
2024 |  |  |  |  |  |  |  |  |
Derivative assets | 18,889 | (16,019) | 2,870 | (881) | (217) | (676) | 1,096 | 4 | 2,874
Derivative liabilities | 19,455 | (18,300) | 1,155 | (881) | (80) | - | 194 | 22 | 1,177
Net position (1) | (566) | 2,281 | 1,715 | - | (137) | (676) | 902 | (18) | 1,697
Non trading reverse repos | 40,845 | (7,466) | 33,379 | - | - | (33,379) | - | - | 33,379
Non trading repos | 18,038 | (7,466) | 10,572 | - | - | (10,572) | - | - | 10,572
Net position | 22,807 | - | 22,807 | - | - | (22,807) | - | - | 22,807

| NWB Plc
| Instruments which can be offset | Potential for offset not recognised by IFRS |  |
|  |  |  | Effect of |  |  | Net amount after |  |
|  |  |  | master netting |  |  | effect of netting | Instruments |
|  |  | Balance | and similar | Cash | Securities | agreements and | outside netting | Balance sheet
| Gross | IFRS offset | sheet | agreements | collateral | collateral | related collateral | agreements | total
2025 | £m | £m | £m | £m | £m | £m | £m | £m | £m
Derivative assets | 15,562 | (14,470) | 1,092 | (544) | (199) | (114) | 235 | 14 | 1,106
Derivative liabilities | 16,177 | (15,414) | 763 | (544) | (48) | - | 171 | 17 | 780
Net position (1) | (615) | 944 | 329 | - | (151) | (114) | 64 | (3) | 326
Non trading reverse repos | 46,242 | (13,619) | 32,623 | - | - | (32,623) | - | - | 32,623
Non trading repos | 35,981 | (13,619) | 22,362 | - | - | (22,362) | - | - | 22,362
Net position | 10,261 | - | 10,261 | - | - | (10,261) | - | - | 10,261
2024 |  |  |  |  |  |  |  |  |
Derivative assets | 18,896 | (16,019) | 2,877 | (882) | (217) | (676) | 1,102 | 15 | 2,892
Derivative liabilities | 19,471 | (18,300) | 1,171 | (882) | (80) | - | 209 | 152 | 1,323
Net position (1) | (575) | 2,281 | 1,706 | - | (137) | (676) | 893 | (137) | 1,569
Non trading reverse repos | 40,845 | (7,466) | 33,379 | - | - | (33,379) | - | - | 33,379
Non trading repos | 18,038 | (7,466) | 10,572 | - | - | (10,572) | - | - | 10,572
Net position | 22,807 | - | 22,807 | - | - | (22,807) | - | - | 22,807

(1)
Within NWB Group and NWB Plc, the net IFRS offset balance of £944 million (2024 - £2,281 million) relates to variation margin netting reflected on other balance sheet lines.
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
123
10 Financial instruments – valuation

| Page
Financial instruments |
Critical accounting policy: Fair value | 123
Valuation |
Fair value hierarchy (D) | 123
Valuation techniques (D) | 123
Inputs to valuation models (D) | 124
Valuation control (D) | 124
Key areas of judgement (D) | 125
Assets and liabilities split by fair value |
hierarchy level (T) | 125
Valuation adjustments |
Fair value adjustments made (T) | 126
Funding valuation adjustments (FVA) (D) | 126
Credit valuation adjustments (CVA) (D) | 126
Bid-offer (D) | 126
Product and deal specific (D) | 126
Level 3 additional information |
Level 3 ranges of unobservable inputs (D) | 126
Alternative assumptions (D) | 127
Other considerations (D) | 127
High and low range of fair value of |
level 3 assets and liabilities (T) | 127
Movement in level 3 assets and liabilities (T) | 128
Fair value of financial instruments measured |
at amortised cost |
Fair value of financial instruments |
measured at amortised cost on the balance sheet (T) | 129
(D) = Descriptive; (T) = Table |

Critical accounting policy: Fair value - financial
instruments
Financial instruments classified as mandatory fair value through
profit or loss; held-for-trading; designated fair value through
profit or loss and fair value through other comprehensive income
are recognised in the financial statements at fair value. All
derivatives are measured at fair value.
Fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement date. A fair value
measurement considers the characteristics of the asset or liability
and the assumptions that a market participant would consider
when pricing the asset or liability.
NWB Group manages some portfolios of financial assets and
financial liabilities based on its net exposure to either market or
credit risk. In these cases, the fair value is derived from the net
risk exposure of that portfolio with portfolio level adjustments
applied to incorporate bid-offer spreads, counterparty credit risk,
and funding costs (refer to Valuation Adjustments).
Where the market for a financial instrument is not active, fair
value is established using a valuation technique. These valuation
techniques involve a degree of estimation, the extent of which
depends on the instrument’s complexity and the availability of
market-based data. The complexity and uncertainty in the
financial instrument’s fair value is categorised using the fair
value hierarchy.
For accounting policy information refer to Accounting policies
2.1, 3.8 and 3.11.
Valuation
Fair value hierarchy
Financial instruments carried at fair value have been classified
under the fair value hierarchy. The classification ranges from
level 1 to level 3, with more expert judgement and price
uncertainty for those classified at level 3.
The determination of an instrument’s level cannot be made at a
global product level as a single product type can be in more
than one level. For example, a single name corporate credit
default swap could be in level 2 or level 3 depending on the level
of market activity for the referenced entity.
Level 1 -
instruments valued using unadjusted quoted prices in
active and liquid markets, for identical financial instruments.
Examples include government bonds, listed equity shares and
certain exchange-traded derivatives.
Level 2
- instruments valued using valuation techniques that
have observable inputs. Observable inputs are those that are
readily available with limited adjustments required. Examples
include most government agency securities, investment-grade
corporate bonds, certain mortgage products – including
collateralised loan obligations (CLOs), most bank loans, repos
and reverse repos, state and municipal obligations, most notes
issued, certain money market securities, loan commitments and
most over the counter (OTC) derivatives.
Level 3
- instruments valued using a valuation technique where
at least one input which could have a significant effect on the
instrument’s valuation, is not based on observable market data.
Examples include non-derivative instruments which trade
infrequently, certain syndicated and commercial mortgage loans,
private equity, and derivatives with unobservable model inputs.
Valuation techniques
NWB Group derives the fair value of its instruments differently
depending on whether the instrument is a non-modelled or a
modelled product.
Non-modelled products
are valued directly from a price input,
typically on a position-by-position basis. Examples include
equities and most debt securities.
Non-modelled products can fall into any fair value levelling
hierarchy depending on the observable market activity, liquidity,
and assessment of valuation uncertainty of the instruments. The
assessment of fair value and the classification of the instrument
to a fair value level is subject to the valuation controls discussed
in the Valuation control section.
Notes to the financial statements continued
10 Financial instruments – valuation
continued
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Annual Report and Accounts 2025
124
Modelled products
valued using a pricing model range in
complexity from comparatively vanilla products such as interest
rate swaps and options (e.g., interest rate caps and floors)
through to more complex derivatives (e.g., balance guarantee
swaps).
For modelled products, the fair value is derived using the model
and the appropriate model inputs or parameters, as opposed to
from a cash price equivalent. Model inputs are taken either
directly or indirectly from available data, where some inputs are
also modelled.
Fair value classification of modelled instruments is either level 2
or level 3, depending on the product/model combination, the
observability and quality of input parameters and other factors.
All these must be assessed to classify a position. The modelled
product is assigned to the lowest fair value hierarchy level of any
significant input used in that valuation.
Most derivative instruments, for example vanilla interest rate
swaps, foreign exchange swaps and liquid single name credit
derivatives, are classified as level 2. This is because they are
vanilla products valued using standard market models and with
observable inputs. Level 2 products range from vanilla to more
complex products, where more complex products remain
classified as level 2 due to the materiality of any unobservable
inputs.
Inputs to valuation models
When using valuation techniques, the fair value can be
significantly affected by the choice of valuation model and
underlying assumptions. Factors considered include the cashflow
amounts and timing of those cash flows, and application of
appropriate discount rates, incorporating both funding and credit
risk. Values between and beyond available data points are
obtained by interpolation and extrapolation. The principal inputs
to these valuation techniques are as follows:
Bond prices
- quoted prices are generally available for
government bonds, certain corporate securities, and some
mortgage-related products.
Credit spreads/margins
- these reflect credit default swap levels
or the return required over a benchmark rate or index to
compensate for the referenced credit risk. Where available, these
are derived from the price of credit default swaps or other credit-
based instruments, such as debt securities. When direct prices
are not available, credit spreads/margins are determined with
reference to available prices of entities with similar
characteristics.
Interest rates
- these are principally based on interest rate swap
prices referencing benchmark interest rates. Benchmark rates
include Interbank Offered Rates (IBOR) and overnight interest
rates, including SONIA (Sterling Overnight Interbank Average
Rate). Other quoted interest rates may also be used from both
the bond, and futures markets.
Foreign currency exchange rates
- there are observable prices
both for spot and forward contracts and futures in the world's
major currencies.
Equity and equity index prices
- quoted prices are generally
readily available for equity shares listed on the world's major
stock exchanges and for major indices on such shares.
Price volatilities and correlations
- volatility is a measure of the
tendency of a price to change with time. Correlation measures
the degree which two or more prices or variables are observed
to move together. Variables that move in the same direction
show positive correlation; those that move in opposite directions
are negatively correlated.
Prepayment rates
- rates used to reflect how fast a pool of
assets prepay. The fair value of a financial instrument that can be
prepaid by the issuer or borrower differs from that of an
instrument that cannot be prepaid. When valuing prepayable
instruments, the value of this prepayment option is considered.
Recovery rates/loss given default
- these are used as an input to
valuation models and reserves for asset-backed securities and
other credit products as an indicator of severity of losses on
default. Recovery rates are primarily sourced from market data
providers, the value of the underlying collateral, or inferred from
observable credit spreads.
Valuation control
NWB Group's control environment for the determination of the
fair value of financial instruments includes formalised procedures
for the review and validation of fair values. The review of market
prices and inputs is performed by an independent price
verification (IPV) team.
IPV is a key element of the control environment. Valuations are
first performed by the business which entered into the
transaction. These valuations are then reviewed by the IPV team,
independent of those trading the financial instruments, in light of
available pricing evidence.
Independent pricing data is collated from a range of sources.
Each source is reviewed for quality and the independent data
applied in the IPV processes using a formalised input quality
hierarchy. Consensus services are one source of independent
data and encompass interest rate, currency, credit, and bond
markets, providing comprehensive coverage of vanilla products
and a wide selection of exotic products.
Where measurement differences are identified through the IPV
process these are grouped by the quality hierarchy of the
independent data. If the size of the difference exceeds defined
thresholds, an adjustment is made to bring the valuation to within
the independently calculated fair value range.
IPV takes place at least monthly, for all fair value financial
instruments. The IPV control includes formalised reporting and
escalation of any valuation differences in breach of established
thresholds.
The quality and completeness of the information gathered in the
IPV process gives an indication as to the liquidity and valuation
uncertainty of an instrument and forms part of the information
considered when determining fair value hierarchy classifications.
Initial fair value level classification of a financial instrument is
carried out by the IPV team. These initial classifications are
subject to senior management review. Particular attention is paid
to instruments transferring from one level to another, new
instrument classes or products, instruments where the
transaction price is significantly different from the fair value and
instruments where valuation uncertainty is high.
Notes to the financial statements continued
10 Financial instruments – valuation
continued
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Annual Report and Accounts 2025
125
Valuation Committees are made up of valuation specialists and
senior business representatives from various functions and
oversee pricing, reserving and valuations issues. These
committees meet monthly to review and ratify any methodology
changes. The Executive Valuation Committee meets quarterly to
address key material and subjective valuation issues, to review
items escalated by Valuation Committees and to discuss other
relevant industry matters.
The Group model risk policy sets the policy for model
documentation, testing and review. Governance of the model risk
policy is carried out by the Group Model Risk Oversight
Committee, which comprises model risk owners and independent
model experts. All models are required to be independently
validated in accordance with the model risk policy.
Key areas of judgement
Over the years the business has simplified, with most products
classified as level 1 or 2 of the fair value hierarchy.
However, the diverse range of products traded by NWB Group
means some products remain classified as level 3. Level 3
indicates a significant level of pricing uncertainty, where expert
judgement is used. As such, extra disclosures are required in
respect of level 3 instruments
.
In general, the degree of expert
judgement used and hence valuation uncertainty depends on the
degree of liquidity of an instrument or input.
Where markets are liquid, little judgement is required. However,
when the information regarding the liquidity in a particular
market is not clear, a judgement may need to be made. For
example, for an equity traded on an exchange, daily volumes of
trading can be seen, but for an OTC derivative, assessing the
liquidity of the market with no central exchange is more
challenging.
The breadth and depth of the IPV data allows for a rules-based
quality assessment to be made of market activity, liquidity, and
pricing uncertainty, which assists with the process of allocation to
an appropriate level. Where suitable independent pricing
information is not readily available, the quality assessment will
result in the instrument being assessed as level 3.
The table below shows the assets and liabilities held by NWB Group split by fair value hierarchy level. Level 1 are considered the most
liquid instruments, and level 3 the most illiquid, valued using expert judgement and so carrying the most significant price uncertainty.

| 2025 | 2024
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total
| £m | £m | £m | £m | £m | £m | £m | £m
Assets |  |  |  |  |  |  |  |
Derivatives |  |  |  |  |  |  |  |
Interest rate | - | 850 | 3 | 853 | - | 2,539 | 7 | 2,546
Foreign exchange | - | 240 | - | 240 | - | 328 | - | 328
Amounts due from holding companies and |  |  |  | - |  |  |  |
fellow subsidiaries | - | 8 | - | 8 | - | 78 | - | 78
Other financial assets |  |  |  | - |  |  |  |
Loans | - | 66 | 634 | 700 | - | 286 | 261 | 547
Securities | 17,426 | 12,677 | 3 | 30,106 | 18,012 | 11,307 | 3 | 29,322
Total financial assets held at fair value | 17,426 | 13,841 | 640 | 31,907 | 18,012 | 14,538 | 271 | 32,821
As % of total fair value assets | 55% | 43% | 2% |  | 55% | 44% | 1% |
Liabilities |  |  |  |  |  |  |  |
Derivatives |  |  |  |  |  |  |  |
Interest rate | - | 686 | 5 | 691 | - | 1,033 | 10 | 1,043
Foreign exchange | - | 70 | - | 70 | - | 124 | - | 124
Other | - | 3 | - | 3 | - | 10 | - | 10
Amounts due from holding companies and |  |  |  | - |  |  |  |
fellow subsidiaries | - | 28 | - | 28 | - | 27 | - | 27
Other financial liabilities |  |  |  | - |  |  |  |
Deposits | - | 175 | - | 175 | - | 452 | - | 452
Total financial liabilities held at fair value | - | 962 | 5 | 967 | - | 1,646 | 10 | 1,656
As % of total fair value liabilities | - | 99% | 1% |  | - | 99% | 1% |

(1)
Transfers between levels are deemed to have occurred at the beginning of the quarter in which the instrument was transferred.
Notes to the financial statements continued
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126
Valuation adjustments
When valuing financial instruments in the trading book,
adjustments are made to mid-market valuations to cover bid-
offer spread, funding and credit risk. These adjustments are
presented in the table below:

| 2025 | 2024
Adjustment | £m | £m
Funding valuation adjustments | - | 126
Credit valuation adjustments | 1 | 1
Bid-offer | 17 | 25
Product and deal specific | - | 1
Total | 18 | 153

Funding valuation adjustments and bid-offer decreased during
the year, primarily driven by unwinding of a major portfolio.
Funding valuation adjustments (FVA)
FVA represents an estimate of the adjustment that a market
participant would make to incorporate funding costs and benefits
that arise in relation to derivative exposures. FVA is calculated as
a portfolio level adjustment and can result in either a funding
charge (positive) or funding benefit (negative).
Funding levels are applied to estimated potential future
exposures. For uncollateralised derivatives, the exposure reflects
the future valuation of the derivative. For collateralised
derivatives, the exposure reflects the difference between the
future valuation of the derivative and the level of collateral
posted.
Credit valuation adjustments (CVA)
CVA represents an estimate of the adjustment to fair value that
is made to incorporate the counterparty credit risk inherent in
derivative exposures. The CVA is calculated on a portfolio basis
reflecting an estimate of the amount a third party would charge
to assume the credit risk.
Collateral held under a credit support agreement is factored into
the CVA calculation. In such cases where NWB Group holds
collateral against counterparty exposures, CVA is held to the
extent that residual risk remains.
FVA and CVA are actively managed by a credit and market risk
hedging process, and therefore movements in CVA and FVA are
partially offset by trading revenue on the hedges.
Bid-offer
Fair value positions are required to be marked to exit,
represented by bid (long positions) or offer (short positions) levels.
Non-derivative positions are typically marked to mid, with a
bid-offer adjustment applied to the net position. However
derivative exposures are adjusted to exit levels by taking bid-
offer reserves calculated on a portfolio basis. The bid-offer
approach is based on current market spreads and standard
market bucketing of risk.
Bid-offer spreads vary by maturity and risk type to reflect
different spreads in the market. For positions where there is no
observable quote, the bid-offer spreads are widened in
comparison to proxies to reflect reduced liquidity or observability.
Netting is applied on a portfolio basis to reflect the value at which
NWB Group believes it could exit the net risk of the portfolio,
rather than the sum of exit costs for each of the portfolio’s
individual trades. This is applied where the asset and liability
positions are managed as a portfolio for risk and reporting
purposes.
Product and deal specific
On initial recognition of financial assets and liabilities valued using
valuation techniques which have a significant dependence on
information other than observable market data, any difference
between the transaction price and that derived from the
valuation technique is deferred. Such amounts are recognised in
the income statement over the life of the transaction, when
market data becomes observable, or when the transaction
matures or is closed out as appropriate.
Where system generated valuations do not accurately reflect
market prices, manual valuation adjustments are applied either at
a position or portfolio level. Manual adjustments are subject to
the scrutiny of independent control teams and are subject to
monthly review by senior management.
Level 3 additional information
For illiquid assets and liabilities, classified as level 3, additional information is provided on the valuation techniques used and price
sensitivity of the products to those inputs. This is to enable the reader to gauge the level of uncertainty that arises from positions with
significant unobservable inputs or modelling parameters.
Level 3 ranges of unobservable inputs
The table below provides additional information on level 3 instruments and inputs. This shows the valuation technique used for the fair
value calculation, the unobservable input or inputs and input range.

|  |  |  | 2025 | 2024
Financial instrument | Valuation technique | Unobservable inputs | Units | Low | High | Low | High
Other financial assets |  |  |  |  |  |  |
Loans | Price-based | Price | % | 91 | 100 | 84 | 100
Derivative assets and liabilities |  |  |  |  |  |  |
Interest rate & FX |  |  |  |  |  |  |
derivatives | Discount cash flow | Conditional prepayment risk | % | 7 | 9 | 4 | 5

(1)
NWB Group does not have any material liabilities measured at fair value that are issued with an inseparable third party credit enhancement.
Notes to the financial statements continued
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127
Level 3 sensitivities
The level 3 sensitivities presented below are calculated at a trade
or low-level portfolio basis rather than an overall portfolio basis.
As individual sensitivities are aggregated with no reflection of the
correlated nature between instruments, the overall portfolio
sensitivity may not be accurately reflected. For example, some
portfolios may be negatively correlated to others, where a
downwards movement in one asset would produce an upwards
movement in another. However, due to the additive presentation
of the above figures this correlation impact cannot be displayed.
As such, the actual potential downside sensitivity of the total
portfolio may be less than the non-correlated sum of the additive
figures as shown in the below table.
Alternative assumptions
Reasonably plausible alternative assumptions of unobservable
inputs are determined based on a specified target level of
certainty of 90%.
Alternative assumptions are determined with reference to all
available evidence including consideration of the following: quality
of independent pricing information considering consistency
between different sources, variation over time, perceived
tradability or otherwise of available quotes; consensus service
dispersion ranges; volume of trading activity and market bias (e.g.
one-way inventory); day 1 profit or loss arising on new trades;
number and nature of market participants; market conditions;
modelling consistency in the market; size and nature of risk;
length of holding of position; and market intelligence.
Other considerations
Whilst certain inputs used to calculate CVA and FVA are not
based on observable market data, the uncertainty of these inputs
is not considered to have a significant effect on the net valuation
of the related derivative portfolios.
As such, the fair value levelling of the derivative portfolios is not
determined by CVA or FVA inputs. In addition, any fair value
sensitivity driven by these inputs is not included in the level 3
sensitivities presented.
The table below shows the favourable and unfavourable range of fair value of the level 3 assets and liabilities. This range
incorporates the range of fair value inputs as described in the previous table.

| 2025 | 2024
| Level 3 | Favourable | Unfavourable | Level 3 | Favourable | Unfavourable
| £m | £m | £m | £m | £m | £m
Assets |  |  |  |  |  |
Derivatives |  |  |  |  |  |
Interest rate | 3 | - | - | 7 | - | -
Other financial assets |  |  |  |  |  |
Loans | 634 | - | (10) | 261 | - | (10)
Securities | 3 | - | - | 3 | - | -
Total | 640 | - | (10) | 271 | - | (10)
Liabilities |  |  |  |  |  |
Derivatives |  |  |  |  |  |
Interest rate | 5 | - | - | 10 | - | -
Total | 5 | - | - | 10 | - | -

Notes to the financial statements continued
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Annual Report and Accounts 2025
128
Movement in level 3 assets and liabilities over the reporting period
The following table shows the movement in level 3 assets and liabilities in the year.

|  | Other | Other |  |  | Other | Other |
| Derivatives | trading | financial | Total | Derivatives | trading | financial | Total
| assets | assets (2) | assets (3) | assets | liabilities | liabilities (2) | liabilities | liabilities
2025 | £m | £m | £m | £m | £m | £m | £m | £m
At 1 January | 7 | - | 264 | 271 | 10 | - | - | 10
Amounts recorded in the income |  |  |  |  |  |  |  |
statement (1) | - | - | 7 | 7 | (4) | - | - | (4)
Amount recorded in the statement of |  |  |  | - |  |  |  |
comprehensive income | - | - | (2) | (2) | - | - | - | -
Purchases/originations | - | - | 368 | 368 | - | - | - | -
Settlements/other decreases | (4) | - | - | (4) | (1) | - | - | (1)
At 31 December | 3 | - | 637 | 640 | 5 | - | - | 5
Amounts recorded in the income statement |  |  |  |  |  |  |  |
in respect of balances held at period end |  |  |  |  |  |  |  |
- unrealised | (5) | - | 8 | 3 | (5) | - | - | (5)
2024 |  |  |  |  |  |  |  |
At 1 January | 3 | - | 176 | 179 | 9 | - | - | 9
Amounts recorded in the income |  |  |  |  |  |  |  |
statement (1) | 11 | - | 5 | 16 | 3 | - | - | 3
Level 3 transfers in | - | - | 45 | 45 | - | - | - | -
Purchases/originations | - | - | 37 | 37 | - | - | - | -
Settlements/other decreases | (7) | - | - | (7) | (2) | - | - | (2)
Foreign exchange and other | - | - | 1 | 1 | - | - | - | -
At 31 December | 7 | - | 264 | 271 | 10 | - | - | 10
Amounts recorded in the income statement |  |  |  |  |  |  |  |
in respect of balances held at period end |  |  |  |  |  |  |  |
- unrealised | 4 | - | 5 | 9 | 1 | - | - | 1

(1)
Net gain on trading assets and liabilities of £4 million (2024 – net gains £8 million) were recorded in income from trading activities.
(2)
Other trading assets and other trading liabilities comprise assets and liabilities held at fair value in trading portfolios.
(3)
Other financial assets comprise fair value through other comprehensive income, designated as at fair value through profit or loss and other fair value through profit or loss.
Notes to the financial statements continued
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Fair value of financial instruments measured at amortised cost on the balance sheet
The following table shows the carrying value and fair value of financial instruments measured at amortised cost on the balance sheet
.

| NWB Group
|  |  |  |  |  | Items where fair
| Carrying | Fair | Fair value hierarchy level | value approximates
| value | value | Level 1 | Level 2 | Level 3 | carrying value
2025 | £bn | £bn | £bn | £bn | £bn | £bn
Financial assets |  |  |  |  |  |
Cash and balances at central banks | 29.9 | 29.9 | - | - | - | 29.9
Loans to banks | 4.5 | 4.5 | - | 3.3 | 0.4 | 0.8
Loans to customers | 345.6 | 341.5 | - | 29.5 | 312.0 | -
Amounts due from holding companies |  |  |  |  |  |
and fellow subsidiaries | 7.0 | 7.0 | - | 5.2 | 1.7 | 0.1
Other financial assets |  |  |  |  |  |
Securities | 22.3 | 22.4 | 14.0 | 8.0 | 0.4 | -
2024 |  |  |  |  |  |
Financial assets |  |  |  |  |  |
Cash and balances at central banks | 35.1 | 35.1 | - | - | - | 35.1
Loans to banks | 3.4 | 3.4 | - | 1.4 | 0.5 | 1.5
Loans to customers | 332.0 | 327.9 | - | 31.8 | 296.1 | -
Amounts due from holding companies |  |  |  |  |  |
and fellow subsidiaries | 3.1 | 3.2 | - | 2.0 | 1.2 | -
Other financial assets |  |  |  |  |  |
Securities | 9.7 | 9.7 | 2.7 | 6.7 | 0.3 | -
2025 |  |  |  |  |  |
Financial liabilities |  |  |  |  |  |
Bank deposits | 33.0 | 33.0 | - | 30.0 | - | 3.0
Customer deposits | 325.1 | 306.5 | - | 24.4 | 5.8 | 276.3
Amounts due to holding companies |  |  |  |  |  |
and fellow subsidiaries | 57.0 | 56.9 | - | 48.8 | 3.2 | 4.9
Other financial liabilities |  |  |  |  |  |
Debt securities in issue | 5.2 | 5.2 | - | 0.8 | 4.4 | -
Subordinated liabilities | 0.1 | 0.2 | - | 0.2 | - | -
Notes in circulation | 1.0 | 1.0 | - | - | - | 1.0
2024 |  |  |  |  |  |
Financial liabilities |  |  |  |  |  |
Bank deposits | 24.8 | 24.6 | - | 21.5 | - | 3.1
Customer deposits | 318.3 | 318.1 | - | 19.9 | 26.6 | 271.6
Amounts due to holding companies |  | - |  |  |  |
and fellow subsidiaries | 47.6 | 47.8 | - | 39.8 | 3.3 | 4.7
Other financial liabilities |  |  |  |  |  |
Debt securities in issue | 4.5 | 4.5 | - | 0.7 | 3.8 | -
Subordinated liabilities | 0.1 | 0.2 | - | 0.2 | - | -
Notes in circulation | 0.9 | 0.9 | - | - | - | 0.9

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Fair value of financial instruments measured at amortised cost on the balance sheet continued

| NWB Plc
|  |  |  |  |  | Items where fair
| Carrying | Fair | Fair value hierarchy level | value approximates
| value | value | Level 1 | Level 2 | Level 3 | carrying value
2025 | £bn | £bn | £bn | £bn | £bn | £bn
Financial assets |  |  |  |  |  |
Cash and balances at central banks | 29.9 | 29.9 | - | - | - | 29.9
Loans to banks | 4.3 | 4.3 | - | 3.3 | 0.2 | 0.8
Loans to customers | 310.1 | 306.1 | - | 29.5 | 276.6 | -
Amounts due from holding companies |  |  |  |  |  |
and fellow subsidiaries | 37.8 | 37.7 | - | 36.1 | 1.6 | -
Other financial assets |  |  |  |  |  |
Securities | 21.9 | 22.0 | 14.0 | 8.0 | - | -
2024 |  |  |  |  |  |
Financial assets |  |  |  |  |  |
Cash and balances at central banks | 35.1 | 35.1 | - | - | - | 35.1
Loans to banks | 3.1 | 3.1 | - | 1.4 | 0.2 | 1.5
Loans to customers | 297.5 | 294.9 | - | 31.8 | 263.1 | -
Amounts due from holding companies |  |  |  |  |  |
and fellow subsidiaries | 34.9 | 34.5 | - | 33.3 | 1.2 | -
Other financial assets |  |  |  |  |  |
Securities | 9.4 | 9.4 | 2.7 | 6.7 | - | -
2025 |  |  |  |  |  |
Financial liabilities |  |  |  |  |  |
Bank deposits | 33.0 | 33.0 | - | 30.0 | - | 3.0
Customer deposits | 282.4 | 282.4 | - | 24.4 | 15.1 | 242.9
Amounts due to holding companies |  |  |  |  |  |
and fellow subsidiaries | 98.2 | 97.9 | - | 91.0 | 5.3 | 1.6
Other financial liabilities |  |  |  |  |  |
Debt securities in issue | 3.5 | 3.5 | - | 0.8 | 2.7 | -
Subordinated liabilities | 0.1 | 0.2 | - | 0.2 | - | -
Notes in circulation | 1.0 | 1.0 | - | - | - | 1.0
2024 |  |  |  |  |  |
Financial liabilities |  |  |  |  |  |
Bank deposits | 24.8 | 24.6 | - | 21.5 | - | 3.1
Customer deposits | 276.0 | 275.8 | - | 19.9 | 16.0 | 239.9
Amounts due to holding companies |  |  |  |  |  |
and fellow subsidiaries | 90.4 | 90.3 | - | 83.6 | 5.4 | 1.3
Other financial liabilities |  |  |  |  |  |
Debt securities in issue | 3.4 | 3.4 | - | 0.8 | 2.6 | -
Subordinated liabilities | 0.1 | 0.2 | - | 0.2 | - | -
Notes in circulation | 0.9 | 0.9 | - | - | - | 0.9

Notes to the financial statements continued
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Fair value of financial instruments measured at
amortised cost on the balance sheet continued
The assumptions and methodologies underlying the calculation of
fair values of financial instruments at the balance sheet date are
as follows
:
Short-term financial instruments
For certain short-term financial instruments: cash and balances at
central banks, items in the course of collection from other banks,
settlement balances, items in the course of transmission to other
banks, customer demand deposits and notes in circulation,
carrying value is deemed a reasonable approximation of fair
value.
Loans to banks and customers
In estimating the fair value of net loans to customers and banks
measured at amortised cost, NWB Group’s loans are segregated
into appropriate portfolios reflecting the characteristics of the
constituent loans. Two principal methods are used to estimate fair
value:
(a)
Contractual cash flows are discounted using a market
discount rate that incorporates the current spread for the
borrower or where this is not observable, the spread for
borrowers of a similar credit standing. This method is used for
portfolios where counterparties have external ratings.
(b)
Expected cash flows (unadjusted for credit losses) are
discounted at the current offer rate for the same or similar
products. The current methodology caps all loan values at par
rather than modelling clients’ option to repay loans early. This
approach is adopted for lending portfolios in Retail Banking,
Commercial & Institutional (SME loans) and Private Banking &
Wealth Management in order to reflect the homogeneous
nature of these portfolios.
Debt securities and subordinated liabilities
Most debt securities are valued using quoted prices in active
markets or from quoted prices of similar financial instruments in
active markets. Fair values of the remaining population are
determined using market standard valuation techniques, such as
discounted cash flows, adjusting for own credit spreads where
appropriate.
Bank and customer deposits
Fair values of deposits are estimated using discounted cash flow
valuation techniques. Where required, methodologies can be
revised as additional information and valuation inputs become
available.
Notes to the financial statements continued
11 Financial instruments - maturity analysis
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Annual Report and Accounts 2025
132
Remaining maturity
The following table shows the residual maturity of financial instruments, based on contractual date of maturity.

| NWB Group
| 2025 | 2024
| Less than 12 | More than 12 |  | Less than 12 | More than 12 |
| months | months | Total | months | months | Total
| £m | £m | £m | £m | £m | £m
Assets |  |  |  |  |  |
Cash and balances at central banks | 29,939 | - | 29,939 | 35,095 | - | 35,095
Derivatives | 518 | 575 | 1,093 | 679 | 2,195 | 2,874
Loans to banks - amortised cost | 3,870 | 645 | 4,515 | 2,774 | 652 | 3,426
Loans to customers - amortised cost | 72,781 | 272,862 | 345,643 | 72,174 | 259,839 | 332,013
Amounts due from holding companies and fellow subsidiaries (1) | 6,886 | 90 | 6,976 | 1,882 | 1,324 | 3,206
Other financial assets | 8,284 | 44,840 | 53,124 | 10,806 | 28,765 | 39,571
Liabilities |  |  |  |  |  |
Bank deposits | 24,820 | 8,200 | 33,020 | 16,580 | 8,200 | 24,780
Customer deposits | 318,533 | 6,536 | 325,069 | 316,262 | 2,028 | 318,290
Derivatives | 61 | 703 | 764 | 91 | 1,086 | 1,177
Amounts due to holding companies and fellow subsidiaries (2) | 42,264 | 14,775 | 57,039 | 37,943 | 9,639 | 47,582
Other financial liabilities | 2,921 | 2,412 | 5,333 | 3,370 | 1,629 | 4,999
Subordinated liabilities | 2 | 120 | 122 | 2 | 120 | 122
Notes in circulation | 1,049 | - | 1,049 | 935 | - | 935
Lease liabilities | 68 | 351 | 419 | 72 | 418 | 490

| NWB Plc
| 2025 | 2024
| Less than 12 | More than 12 |  | Less than 12 | More than 12 |
| months | months | Total | months | months | Total
| £m | £m | £m | £m |  | £m £m
Assets |  |  |  |  |  |
Cash and balances at central banks | 29,911 | - | 29,911 | 35,083 | - | 35,083
Derivatives | 517 | 589 | 1,106 | 680 | 2,212 | 2,892
Loans to banks - amortised cost | 3,617 | 644 | 4,261 | 2,506 | 642 | 3,148
Loans to customers - amortised cost | 59,369 | 250,752 | 310,121 | 59,456 | 238,092 | 297,548
Amounts due from holding companies and fellow subsidiaries (1) | 14,665 | 23,707 | 38,372 | 8,027 | 27,508 | 35,535
Other financial assets | 8,285 | 43,871 | 52,156 | 10,040 | 28,758 | 38,798
Liabilities |  |  |  |  |  |
Bank deposits | 24,816 | 8,200 | 33,016 | 16,578 | 8,200 | 24,778
Customer deposits | 275,959 | 6,468 | 282,427 | 274,044 | 1,928 | 275,972
Amounts due to holding companies and fellow subsidiaries (2) | 66,377 | 32,110 | 98,487 | 62,483 | 28,215 | 90,698
Derivatives | 71 | 709 | 780 | 95 | 1,228 | 1,323
Other financial liabilities | 2,921 | 749 | 3,670 | 3,075 | 749 | 3,824
Subordinated liabilities | 2 | 117 | 119 | 2 | 117 | 119
Notes in circulation | 1,049 | - | 1,049 | 935 | - | 935
Lease liabilities | 55 | 247 | 302 | 61 | 305 | 366

(1)
Amounts due from holding companies and fellow subsidiaries relating to non-financial instruments of £210 million (2024 - £530 million) for NWB Group and £593 million (2024 – £848
million) for NWB Plc have been excluded from the tables.
(2)
Amounts due to holding companies and fellow subsidiaries relating to non-financial instruments of £67 million (2024 - £142 million) for NWB Group and £174 million (2024 – £227 million)
for NWB Plc have been excluded from the tables.
Notes to the financial statements continued
11 Financial instruments - maturity analysis continued
NWB Group
Annual Report and Accounts 2025
133
Liabilities by contractual cash flows up to 20 years
The tables below show the timing of cash outflows to settle
financial liabilities, prepared on the following basis:
Financial liabilities are included at the earliest date on which the
counterparty can require repayment regardless of whether or
not such early repayment results in a penalty. If repayment is
triggered by, or is subject to, specific criteria such as market
price hurdles being reached, the liability is included at the earliest
possible date that conditions could be fulfilled without considering
the probability of the conditions being met. For example, if a
structured note automatically prepays then an equity index
exceeds a certain level, the cash outflow will be included in the
less than three months period whatever the level of the index at
year end.
The settlement date of debt securities issued by certain
securitisation vehicles consolidated by the NWB Group depends
on when cash flows are received from the securitised assets.
Where these assets are prepayable, the timing of cash outflow
relating to securities assumes that each asset will be prepaid at
the earliest possible date.
The principal amounts of financial liabilities that are repayable
after 20 years or where the counterparty has no right to
repayment of the principal are excluded from the table along
with interest payments after 20 years.
The maturity of guarantees and commitments is based on the
earliest possible date they would be drawn in order to evaluate
NWB Group’s liquidity position.
Held-for-trading liabilities amounting to £0.8 billion (2024 - £1.2
billion) for the NWB Group and £0.8 billion (2024 - £1.3 billion) for
the NWB Plc have been excluded from the tables.

| NWB Group
| 0-3 months | 3-12 months | 1-3 years | 3-5 years | 5-10 years | 10-20 years
2025 | £m | £m | £m | £m | £m | £m
Liabilities by contractual maturity up to 20 years |  |  |  |  |  |
Bank deposits | 24,928 | 232 | 5,473 | 225 | 3,028 | -
Customer deposits | 294,335 | 24,742 | 6,867 | 14 | - | -
Amounts due to holding companies and fellow subsidiaries (1) | 31,186 | 11,708 | 5,346 | 8,374 | 3,497 | -
Derivatives held for hedging | 33 | 49 | 159 | 59 | 20 | 1
Other financial liabilities | 1,669 | 1,133 | 66 | 758 | 755 | 904
Subordinated liabilities | - | 10 | 21 | 21 | 52 | 104
Notes in circulation | 1,049 | - | - | - | - | -
Lease liabilities | 19 | 55 | 120 | 57 | 133 | 20
| 353,219 | 37,929 | 18,052 | 9,508 | 7,485 | 1,029
Guarantees and commitments notional amount (2) |  |  |  |  |  |
Guarantees (3) | 1,580 | - | - | - | - | -
Commitments (4) | 98,964 | - | - | - | - | -
| 100,544 | - | - | - | - | -
2024 |  |  |  |  |  |
Liabilities by contractual maturity up to 20 years |  |  |  |  |  |
Bank deposits | 12,930 | 4,198 | 8,686 | - | - | -
Customer deposits | 290,411 | 26,052 | 2,016 | 15 | - | -
Amounts due to holding companies and fellow subsidiaries (1) | 29,489 | 8,883 | 4,485 | 5,523 | 1,507 | -
Derivatives held for hedging | 40 | 128 | 115 | 156 | 63 | 2
Other financial liabilities | 1,651 | 1,594 | 84 | 798 | 202 | 670
Subordinated liabilities | - | 10 | 21 | 21 | 56 | 104
Notes in circulation | 935 | - | - | - | - | -
Lease liabilities | 18 | 51 | 141 | 71 | 125 | 85
| 335,474 | 40,916 | 15,548 | 6,584 | 1,953 | 861
Guarantees and commitments notional amount (2) |  |  |  |  |  |
Guarantees (3) | 1,748 | - | - | - | - | -
Commitments (4) | 92,515 | - | - | - | - | -
| 94,263 | - | - | - | - | -

For the notes to this table refer to the following page.
Notes to the financial statements continued
11 Financial instruments - maturity analysis continued
NWB Group
Annual Report and Accounts 2025
134

| NWB Plc
| 0-3 months | 3-12 months | 1-3 years | 3-5 years | 5-10 years | 10-20 years
2025 | £m | £m | £m | £m | £m | £m
Liabilities by contractual maturity up to 20 years |  |  |  |  |  |
Bank deposits | 24,924 | 232 | 5,473 | 225 | 3,028 | -
Customer deposits | 255,457 | 20,983 | 6,803 | 11 | - | -
Amounts due to holding companies and fellow subsidiaries (1) | 50,345 | 17,125 | 13,514 | 17,566 | 4,404 | -
Derivatives held for hedging | 33 | 48 | 159 | 58 | 19 | 1
Other financial liabilities | 1,669 | 1,133 | 62 | 758 | - | -
Subordinated liabilities | - | 10 | 21 | 21 | 52 | 104
Notes in circulation | 1,049 | - | - | - | - | -
Lease liabilities | 17 | 47 | 98 | 45 | 109 | 4
| 333,494 | 39,578 | 26,130 | 18,684 | 7,612 | 109
Guarantees and commitments notional amount (2) |  |  |  |  |  |
Guarantees (3) | 1,570 | - | - | - | - | -
Commitments (4) | 88,250 | - | - | - | - | -
| 89,820 | - | - | - | - | -
2024 |  |  |  |  |  |
Liabilities by contractual maturity up to 20 years |  |  |  |  |  |
Bank deposits | 12,927 | 4,198 | 8,686 | - | - | -
Customer deposits | 252,407 | 21,747 | 1,920 | 5 | - | -
Amounts due to holding companies and fellow subsidiaries (1) | 48,197 | 15,225 | 12,526 | 14,850 | 3,552 | 90
Derivatives held for hedging | 39 | 125 | 115 | 155 | 62 | 2
Other financial liabilities | 1,650 | 1,299 | 77 | 798 | - | -
Subordinated liabilities | - | 10 | 21 | 21 | 52 | 104
Notes in circulation | 935 | - | - | - | - | -
Lease liabilities | 17 | 48 | 131 | 54 | 104 | 48
| 316,172 | 42,652 | 23,476 | 15,883 | 3,770 | 244
Guarantees and commitments notional amount (2) |  |  |  |  |  |
Guarantees (3) | 1,729 | - | - | - | - | -
Commitments (4) | 81,738 | - | - | - | - | -
| 83,467 | - | - | - | - | -

(1)
Amounts due to holding companies and fellow subsidiaries relating to non-financial instruments have been excluded from the tables.
(2)
Refer to Note 26 Memorandum items – Contingent liabilities and commitments.
(3)
NWB Group is only called upon to satisfy a guarantee when the guaranteed party fails to meet its obligations. NWB Group expects most guarantees it provides to expire unused.
(4)
NWB Group has given commitments to provide funds to customers under undrawn formal facilities, credit lines and other commitments to lend subject to certain conditions being met by
the counterparty. NWB does not expect all facilities to be drawn, and some may lapse before drawdown.
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
135
12 Derivatives
NWB Group uses derivatives to manage its own risk such as interest rate, foreign exchange, or credit risk or in certain customer
transactions.

| NWB Group
| 2025 | 2024
| Notional | Assets | Liabilities | Notional | Assets | Liabilities
| £bn | £m | £m | £bn | £m | £m
Exchange rate contracts | 19.4 | 240 | 70 | 25.9 | 328 | 124
Interest rate contracts | 629.9 | 853 | 691 | 654.1 | 2,546 | 1,043
Credit derivatives | 0.1 | - | 3 | 0.4 | - | 10
Equity and commodity contracts | 1.5 | - | - | 1.5 | - | -
Total | 650.9 | 1,093 | 764 | 681.9 | 2,874 | 1,177

| NWB Plc
| 2025 | 2024
| Notional | Assets | Liabilities | Notional | Assets | Liabilities
| £bn | £m | £m | £bn | £m | £m
Exchange rate contracts | 19.5 | 239 | 70 | 26.0 | 329 | 124
Interest rate contracts | 640.9 | 867 | 697 | 666.3 | 2,563 | 1,189
Credit derivatives | 0.1 | - | 13 | 0.4 | - | 10
Equity and commodity contracts | 1.5 | - | - | 1.5 | - | -
Total | 662.0 | 1,106 | 780 | 694.2 | 2,892 | 1,323

Hedge accounting using derivatives
For accounting policy information refer to Accounting policies 2.1
and 3.11.
Refer to Note 33 for amounts due from/to fellow NatWest Group
subsidiaries.
NWB Group applies hedge accounting to reduce the accounting
mismatch caused in the income statement by using derivatives to
hedge the following risks: interest rate, foreign exchange and the
foreign exchange risk associated with net investment in foreign
operations.
NWB Group’s interest rate hedging relates to the management of
NWB Group’s non-trading structural interest rate risk, caused by
the mismatch between fixed interest rates and floating interest
rates on its financial instruments. NWB Group manages this risk
within approved limits. Residual risk positions are hedged with
derivatives, principally interest rate swaps.
Cash flow hedges of interest rate risk relate to exposures to the
variability in future interest payments and receipts due to the
movement of interest rates on forecast transactions and on
financial assets and financial liabilities. This variability in cash flows
is hedged by interest rate swaps, which convert variable cash
flows into fixed. For these cash flow hedge relationships, the
hedged items are actual and forecast variable interest rate cash
flows arising from financial assets and financial liabilities with
interest rates linked to the relevant interest rates, most notably
SOFR, EURIBOR, SONIA and the Bank of England Official Bank
Rate. The variability in cash flows due to movements in the
relevant interest rate is hedged; this risk component is identified
using the risk management systems of NWB Group and
encompasses the majority of cash flow variability risk.
Suitable larger fixed rate financial instruments are subject to fair
value hedging in line with documented risk management
strategies.
Fair value hedges of interest rate risk involve interest rate swaps
transforming the fixed interest rate risk in financial assets and
financial liabilities to floating. The hedged risk is the risk of
changes in the hedged item’s fair value attributable to changes in
the interest rate risk component of the hedged item.
The significant interest rates identified as risk components are
SOFR, EURIBOR, ESTR and SONIA. These risk components are
identified using the risk management systems of NWB Group and
encompass the majority of the hedged item’s fair value risk. NWB
Group hedges the exchange rate risk of its net investment in
foreign currency denominated operations with currency
borrowings and forward foreign exchange contracts.
NWB Group reviews the value of the investments’ net assets,
executing hedges where appropriate to reduce the sensitivity of
capital ratios to foreign exchange rate movement. Hedge
accounting relationships will be designated where required.
Exchange rate risk also arises in NWB Group where payments are
denominated in currencies other than the functional currency.
Residual risk positions are hedged with forward foreign exchange
contracts, fixing the exchange rate the payments will be settled
in. The derivatives are documented as cash flow hedges.
For all cash flow hedging, fair value hedge relationships and net
investment hedging, NWB Group determines that there is an
economic relationship between the hedged item and hedging
instrument via assessing the initial and ongoing effectiveness by
comparing movements in the fair value of the expected highly
probable forecast interest cash flows/ fair value of the hedged
item attributable to the hedged risk with movements in the fair
value of the expected changes in cash flows from the hedging
instrument. The method used for comparing movements is either
regression testing, or the dollar offset method. The method for
testing effectiveness and the period over which the test is
performed depends on the applicable risk management strategy
and is applied consistently to each risk management strategy.
Hedge effectiveness is assessed on a cumulative basis and the
determination of effectiveness is in line with the requirements of
IAS 39.
NWB Group uses either the actual ratio between the hedged item
and hedging instrument(s) or one that minimises hedge
ineffectiveness to establish the hedge ratio for hedge accounting.
Hedge ineffectiveness is measured in line with the requirements of
IAS 39 and recognised in the income statement as it arises
.
Notes to the financial statements continued
12 Derivatives continued
NWB Group
Annual Report and Accounts 2025
136
Derivatives in hedge accounting relationships
Included in the tables above are derivatives held for hedging purposes as follows.

| NWB Group
| 2025 | 2024
|  |  |  | Changes in fair |  |  |  | Changes in fair
|  |  |  | value used for |  |  |  | value used for
|  |  |  | hedge |  |  |  | hedge
| Notional | Assets | Liabilities | ineffectiveness (1) | Notional | Assets | Liabilities | ineffectiveness (1)
| £bn | £m | £m | £m | £bn | £m | £m | £m
Fair value hedging |  |  |  |  |  |  |  |
Interest rate contracts (2) | 45.6 | 364 | 588 | 222 | 43.7 | 537 | 776 | 456
Cash flow hedging |  |  |  |  |  |  |  |
Interest rate contracts | 103.1 | 855 | 968 | (125) | 107.0 | 1,417 | 1,835 | 349
Exchange rate contracts | 7.3 | 188 | 17 | (5) | 2.0 | 1 | 2 | -
Net investment hedging |  |  |  |  |  |  |  |
Exchange rate contracts (3) | 0.2 | 1 | 1 | (11) | 0.2 | 2 | - | 9
| 156.2 | 1,408 | 1,574 | 81 | 152.9 | 1,957 | 2,613 | 814
IFRS netting and clearing |  |  |  |  |  |  |  |
house settlements |  | (1,065) | (1,374) |  |  | (1,597) | (2,358) |
|  | 343 | 200 |  |  | 360 | 255 |

| NWB Plc
| 2025 | 2024
|  |  |  | Changes in fair |  |  |  | Changes in fair
|  |  |  | value used for |  |  |  | value used for
|  |  |  | hedge |  |  |  | hedge
| Notional | Assets | Liabilities | ineffectiveness (1) | Notional | Assets | Liabilities | ineffectiveness (1)
| £bn | £m | £m | £m | £bn | £m | £m | £m
Fair value hedging |  |  |  |  |  |  |  |
Interest rate contracts (2) | 45.5 | 364 | 565 | 204 | 43.5 | 538 | 746 | 458
Cash flow hedging |  |  |  |  |  |  |  |
Interest rate contracts | 103.1 | 855 | 968 | (124) | 107.0 | 1,417 | 1,835 | 348
Exchange rate contracts | 7.3 | 188 | 17 | (5) | 2.0 | 1 | 1 | 3
Net investment hedging |  |  |  |  |  |  |  |
Exchange rate contracts (4) | - | - | - | 1 | - | - | - | -
| 155.9 | 1,407 | 1,550 | 76 | 152.5 | 1,956 | 2,582 | 809
IFRS netting and clearing |  |  |  |  |  |  |  |
house settlements |  | (1,065) | (1,353) |  |  | (1,598) | (2,332) |
|  | 342 | 197 |  |  | 358 | 250 |

(1)
The change in fair value used for hedge ineffectiveness includes instruments that were derecognised in the year.
(2)
The hedged risk includes inflation risk.
(3)
In addition to the derivative hedging instruments above, £463 million notional (2024 - £444 million) of non-derivative hedging instruments with a carrying value of £496 million (2024 -
£444 million) were used in net investment hedges. The non-derivative instruments are other financial liabilities, specifically debt securities in issue.
(4)
In addition to the derivative hedging instruments above, £366 million notional (2024 - £348 million) of non-derivative hedging instruments with a carrying value of £392 million (2024 -
£348 million) were used in net investment hedges. The non-derivative instruments are other financial liabilities, specifically debt securities in issue.
Notes to the financial statements continued
12 Derivatives continued
NWB Group
Annual Report and Accounts 2025
137
Hedge ineffectiveness
Hedge ineffectiveness recognised in other operating income comprised.

| NWB Group
| 2025 | 2024
| £m | £m
Fair value hedging |  |
Loss on hedged items attributable to the hedged risk | (235) | (461)
Gain on the hedging instruments | 222 | 456
Fair value hedging ineffectiveness | (13) | (5)
Cash flow hedging |  |
Interest rate risk | (10) | (16)
Cash flow hedging ineffectiveness | (10) | (16)
Total | (23) | (21)

The main sources of ineffectiveness for interest rate risk hedge accounting relationships are:
•
The effect of the counterparty credit risk on the fair value of the interest rate swap, which is not reflected in the fair value of the
hedged item attributable to the change in interest rate; and
•
Upfront present values on the hedging derivatives where hedge accounting relationships have been designated after the trade
date.
Maturity of notional hedging contracts
The following table shows the period in which the notional of hedging contract ends.

| NWB Group
| 0-3 months | 3-12 months | 1-3 years | 3-5 years | 5-10 years | Over 10 years | Total
2025 | £bn | £bn | £bn | £bn | £bn | £bn | £bn
Fair value hedging |  |  |  |  |  |  |
Interest rate risk (1) |  |  |  |  |  |  |
Hedging assets | 0.8 | 3.5 | 15.2 | 6.1 | 6.3 | 1.5 | 33.4
Hedging liabilities | - | 2.1 | 4.2 | 3.4 | 2.5 | - | 12.2
2024 |  |  |  |  |  |  |
Fair value hedging |  |  |  |  |  |  |
Interest rate risk (1) |  |  |  |  |  |  |
Hedging assets | 3.9 | 4.8 | 9.3 | 8.3 | 4.9 | 1.9 | 33.1
Hedging liabilities | - | 0.5 | 3.8 | 5.1 | 1.2 | - | 10.6
2025 |  |  |  |  |  |  |
Cash flow hedging |  |  |  |  |  |  |
Interest rate risk |  |  |  |  |  |  |
Hedging assets | 1.5 | 5.2 | 10.7 | 18.4 | 0.9 | - | 36.7
Hedging liabilities | 0.4 | 14.8 | 47.1 | 3.5 | 0.6 | - | 66.4
Exchange rate risk |  |  |  |  |  |  |
Hedging assets | 3.5 | 3.6 | - | - | - | - | 7.1
Hedging liabilities | - | 0.2 | - | - | - | - | 0.2
2024 |  |  |  |  |  |  |
Cash flow hedging |  |  |  |  |  |  |
Interest rate risk |  |  |  |  |  |  |
Hedging assets | 1.8 | 7.1 | 11.1 | 15.8 | 7.1 | - | 42.9
Hedging liabilities | 1.8 | 12.5 | 36.2 | 12.7 | 0.9 | - | 64.1
Exchange rate risk |  |  |  |  |  |  |
Hedging assets | 0.6 | 0.7 | 0.5 | - | - | - | 1.8
Hedging liabilities | - | 0.2 | - | - | - | - | 0.2

(1)
The hedged risk includes inflation risk.
Notes to the financial statements continued
12 Derivatives continued
NWB Group
Annual Report and Accounts 2025
138
Maturity of notional hedging contracts continued

| NWB Plc
| 0-3 months | 3-12 months | 1-3 years | 3-5 years | 5-10 years | Over 10 years | Total
2025 | £bn | £bn | £bn | £bn | £bn | £bn | £bn
Fair value hedging |  |  |  |  |  |  |
Interest rate risk (1) |  |  |  |  |  |  |
Hedging assets | 0.8 | 3.5 | 15.2 | 6.1 | 6.2 | 1.7 | 33.5
Hedging liabilities | - | 2.1 | 4.2 | 3.2 | 2.5 | - | 12.0
2024 |  |  |  |  |  |  |
Fair value hedging |  |  |  |  |  |  |
Interest rate risk (1) |  |  |  |  |  |  |
Hedging assets | 3.9 | 4.8 | 9.4 | 8.2 | 4.9 | 2.0 | 33.2
Hedging liabilities | - | 0.5 | 3.8 | 4.8 | 1.2 | - | 10.3
2025 |  |  |  |  |  |  |
Cash flow hedging |  |  |  |  |  |  |
Interest rate risk |  |  |  |  |  |  |
Hedging assets | 1.5 | 5.2 | 10.7 | 18.4 | 0.9 | - | 36.7
Hedging liabilities | 0.4 | 14.8 | 47.1 | 3.5 | 0.6 | - | 66.4
Exchange rate risk |  |  |  |  |  |  |
Hedging assets | 3.5 | 3.6 | - | - | - | - | 7.1
Hedging liabilities | - | 0.2 | - | - | - | - | 0.2
2024 |  |  |  |  |  |  |
Cash flow hedging |  |  |  |  |  |  |
Interest rate risk |  |  |  |  |  |  |
Hedging assets | 1.8 | 7.1 | 11.1 | 15.7 | 7.1 | - | 42.8
Hedging liabilities | 1.8 | 12.5 | 36.2 | 12.7 | 1.0 | - | 64.2
Exchange rate risk |  |  |  |  |  |  |
Hedging assets | 0.6 | 0.8 | 0.5 | - | - | - | 1.9
Hedging liabilities | - | 0.1 | - | - | - | - | 0.1

(1)
The hedged risk includes inflation risk.
Average fixed interest rates
Average fixed rate for cash flow hedges, interest rate risk, for NWB Group and NWB Plc.

| 0-3 months | 3-12 months | 1-3 years | 3-5 years | 5-10 years | Over 10 years | Total
2025 | % | % | % | % | % | % | %
Average fixed interest rate |  |  |  |  |  |  |
Hedging assets | 1.29 | 3.00 | 3.88 | 3.25 | 1.92 | - | 3.28
Hedging liabilities | 2.73 | 3.43 | 3.62 | 3.26 | 3.21 | - | 3.55
2024 |  |  |  |  |  |  |
Average fixed interest rate |  |  |  |  |  |  |
Hedging assets | 0.58 | 1.04 | 3.28 | 3.47 | 2.30 | - | 2.70
Hedging liabilities | 4.20 | 4.13 | 3.63 | 3.36 | 2.55 | - | 3.67

Average foreign exchange rates
For cash flow hedging of exchange rate risk, the average foreign exchange rates applicable across the relationships for NWB Group
and NWB Plc were as below for the main currencies hedged.

| 2025 | 2024
INR/GBP | 119.17 | 109.07
JPY/GBP | 195.35 | 179.88
EUR/GBP | 1.14 | -

Notes to the financial statements continued
12 Derivatives continued
NWB Group
Annual Report and Accounts 2025
139
Analysis of hedged items and related hedging instruments
The table below analyses assets and liabilities, including intercompany, subject to hedging derivatives.

| NWB Group
| Carrying value | Impact on | Changes in fair
| of hedged | hedged items | value used as a
| assets | included in | basis to determine
| and liabilities | carrying value | ineffectiveness (1)
2025 | £m | £m | £m
Fair value hedging - interest rate (2) |  |  |
Loans to banks and customers - amortised cost | 2,908 | (316) | 46
Other financial assets - securities | 30,961 | 8 | (62)
Total (3) | 33,869 | (308) | (16)
Other financial liabilities - debt securities in issue (5) | 8,143 | (177) | (157)
Subordinated liabilities | 4,150 | (14) | (62)
Total | 12,293 | (191) | (219)
2024 |  |  |
Fair value hedging - interest rate (2) |  |  |
Loans to banks and customers - amortised cost | 2,577 | (430) | (95)
Other financial assets - securities | 30,476 | 103 | (257)
Total (3) | 33,053 | (327) | (352)
Other financial liabilities - debt securities in issue (5) | 6,636 | (343) | (53)
Subordinated liabilities | 3,648 | (77) | (56)
Total | 10,284 | (420) | (109)
2025 |  |  |
Cash flow hedging - interest rate |  |  |
Loans to banks and customers - amortised cost (4) | 36,159 |  | (745)
Other financial assets - securities | 377 |  | (7)
Total | 36,536 |  | (752)
Bank and customer deposits | 66,518 |  | 867
Total | 66,518 |  | 867
Cash flow hedging - exchange rate |  |  |
Loans to banks and customers - amortised cost (4) | 4,455 |  | -
Other financial assets - securities | 2,586 |  | -
Total | 7,041 |  | -
Other | 210 |  | 5
2024 |  |  |
Cash flow hedging - interest rate |  |  |
Loans to banks and customers - amortised cost (4) | 42,169 |  | (64)
Other financial assets - securities | 619 |  | (1)
Total | 42,788 |  | (65)
Bank and customer deposits | 64,217 |  | (300)
Total | 64,217 |  | (300)
Cash flow hedging - exchange rate |  |  |
Loans to banks and customer - amortised cost | 223 |  | -
Other financial assets - securities | 1,598 |  | -
Total | 1,821 |  | -
Other | 195 |  | -

(1)
The change in fair value used for ineffectiveness includes instruments that were derecognised in the year.
(2)
The hedged risk includes inflation risk.
(3)
Carrying values include £17 million (2024 - £21 million) adjustment for discontinued fair value hedges.
(4)
Includes cash and balances at central banks.
(5)
The carrying value include £3,549 million (2024 - £3,974 million) of debt securities held at amortised cost.
Notes to the financial statements continued
12 Derivatives continued
NWB Group
Annual Report and Accounts 2025
140
Analysis of hedged items and related hedging instruments - continued

| NWB Plc
| Carrying value | Impact on | Changes in fair
| of hedged | hedged items | value used as a
| assets | included in | basis to determine
| and liabilities | carrying value | ineffectiveness (1)
2025 | £m | £m | £m
Fair value hedging - interest rate (2) |  |  |
Loans to banks and customers - amortised cost | 2,839 | (317) | 46
Other financial assets - securities | 30,961 | 8 | (62)
Total (3) | 33,800 | (309) | (16)
Other financial liabilities - debt securities in issue (5) | 7,857 | (156) | (151)
Subordinated liabilities | 4,150 | (14) | (62)
Total | 12,007 | (170) | (213)
2024 |  |  |
Fair value hedging - interest rate (2) |  |  |
Loans to banks and customers - amortised cost | 2,502 | (432) | (94)
Other financial assets - securities | 30,477 | 103 | (257)
Total (3) | 32,979 | (329) | (351)
Other financial liabilities - debt securities in issue (5) | 6,368 | (317) | (46)
Subordinated liabilities | 3,648 | (77) | (57)
Total | 10,016 | (394) | (103)
2025 |  |  |
Cash flow hedging - interest rate |  |  |
Loans to banks and customers - amortised cost (4) | 36,160 |  | (745)
Other financial assets - securities | 377 |  | (7)
Total | 36,537 |  | (752)
Bank and customer deposits | 66,518 |  | 867
Total | 66,518 |  | 867
Cash flow hedging - exchange rate |  |  |
Loans to banks and customers - amortised cost (4) | 4,455 |  | -
Other financial assets - securities | 2,586 |  | -
Total | 7,041 |  | -
Other | 210 |  | 6
2024 |  |  |
Cash flow hedging - interest rate |  |  |
Loans to banks and customers - amortised cost (4) | 42,170 |  | (64)
Other financial assets - securities | 619 |  | (1)
Total | 42,789 |  | (65)
Bank and customer deposits | 64,217 |  | (300)
Total | 64,217 |  | (300)
Cash flow hedging - exchange rate |  |  |
Loans to banks and customer - amortised cost | 223 |  |
Other financial assets - securities | 1,598 |  | -
Total | 1,821 |  | -
Other | 138 |  | (3)

(1)
The change in fair value used for ineffectiveness includes instruments that were derecognised in the year.
(2)
The hedged risk includes inflation risk.
(3)
Carrying values include £5 million (2024 - £2 million) adjustment for discontinued fair value hedges.
(4)
Includes cash and balances at central banks.
(5)
The carrying value include £3,549 million (2024 - £3,974 million) of debt securities held at amortised cost.
Notes to the financial statements continued
12 Derivatives continued
NWB Group
Annual Report and Accounts 2025
141
Analysis of cash flow and foreign exchange hedge reserve
The following shows analysis of the pre-tax cash flow hedge reserve and foreign exchange hedge reserve.

| NWB Group
| 2025 | 2024
|  | Foreign |  | Foreign
| Cash flow hedge | exchange | Cash flow hedge | exchange
| reserve | hedge reserve | reserve | hedge reserve
| £m | £m | £m | £m
Continuing |  |  |  |
Interest rate risk | (187) | - | (284) | -
Foreign exchange risk | (4) | (7) | (1) | 11
De-designated |  |  |  |
Interest rate risk | (165) | - | (143) | -
Foreign exchange risk | - | 14 | - | 25
Total | (356) | 7 | (428) | 36

| NWB Plc
| 2025 | 2024
|  | Foreign |  | Foreign
| Cash flow | exchange | Cash flow | exchange
| hedge reserve | hedge reserve | hedge reserve | hedge reserve
| £m | £m | £m | £m
Continuing |  |  |  |
Interest rate risk | (187) | - | (284) | -
Foreign exchange risk | (4) | (7) | - | 10
De-designated |  |  |  |
Interest rate risk | (165) | - | (143) | -
Foreign exchange risk | - | 3 | - | 3
Total | (356) | (4) | (427) | 13

Notes to the financial statements continued
12 Derivatives continued
NWB Group
Annual Report and Accounts 2025
142
Analysis of cash flow and foreign exchange hedge reserve continued

| NWB Group
| 2025 | 2024
|  | Foreign |  | Foreign
| Cash flow hedge | exchange | Cash flow hedge | exchange
| reserve | hedge reserve | reserve | hedge reserve
| £m | £m | £m | £m
Amount recognised in equity |  |  |  |
Interest rate risk | (134) | - | 17 | -
Foreign exchange risk | 100 | (29) | 101 | 25
Total | (34) | (29) | 118 | 25
Amount transferred from equity to earnings |  |  |  |
Interest rate risk to net interest income | 210 | - | 388 | -
Foreign exchange risk to net interest income | (112) | - | (107) | -
Foreign exchange risk to operating expenses | 8 | - | 5 | -
Total | 106 | - | 286 | -

| NWB Plc
| 2025 | 2024
|  | Foreign |  | Foreign
| Cash flow | exchange | Cash flow | exchange
| hedge reserve | hedge reserve | hedge reserve | hedge reserve
| £m | £m | £m | £m
Amount recognised in equity |  |  |  |
Interest rate risk | (134) | - | 17 | -
Foreign exchange risk | 101 | (17) | 108 | 16
Total | (33) | (17) | 125 | 16
Amount transferred from equity to earnings |  |  |  |
Interest rate risk to net interest income | 210 | - | 388 | -
Foreign exchange risk to net interest income | (112) | - | (107) | -
Foreign exchange risk to operating expenses | 7 | - | 2 | -
Total | 105 | - | 283 | -

Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
143
13 Loan impairment provisions
Loan exposure and impairment metrics
The table below summarises loans and related credit impairment measures within the scope of ECL framework.

| NWB Group | NWB Plc
| 31 December | 31 December | 31 December | 31 December
| 2025 | 2024 | 2025 | 2024
| £m | £m | £m | £m
Loans - amortised cost and FVOCI (1) |  |  |  |
Stage 1 | 316,363 | 298,209 | 287,175 | 268,368
Stage 2 | 33,379 | 35,517 | 27,117 | 31,101
Stage 3 | 3,737 | 4,798 | 3,212 | 4,112
Inter-group (2) | 6,970 | 3,130 | 37,823 | 34,942
Total | 360,449 | 341,654 | 355,327 | 338,523
ECL provisions (3) |  |  |  |
Stage 1 | 516 | 482 | 483 | 442
Stage 2 | 683 | 667 | 633 | 624
Stage 3 | 1,770 | 1,599 | 1,645 | 1,482
Inter-group | 1 | 2 | 30 | 39
| 2,970 | 2,750 | 2,791 | 2,587
ECL provision coverage (4) |  |  |  |
Stage 1 (%) | 0.16 | 0.16 | 0.17 | 0.16
Stage 2 (%) | 2.05 | 1.88 | 2.33 | 2.01
Stage 3 (%) | 47.36 | 33.33 | 51.21 | 36.04
Inter-group (%) | 0.01 | 0.07 | 0.08 | 0.11
| 0.84 | 0.81 | 0.87 | 0.84
Impairment (releases)/losses |  |  |  |
ECL (release)/charge (5) |  |  |  |
Stage 1 | (153) | (355) | (135) | (335)
Stage 2 | 369 | 325 | 354 | 316
Stage 3 | 438 | 376 | 399 | 356
Third party | 654 | 346 | 618 | 337
Inter-group | (1) | 1 | (9) | (3)
| 653 | 347 | 609 | 334
Amounts written-off | 489 | 549 | 454 | 536

(1)
The table shows gross loans only and excludes amounts that are outside the scope of the ECL framework. Refer to Financial instruments within the scope of the IFRS 9 ECL framework
for further details. Other financial assets within the scope of the IFRS 9 ECL framework were cash and balances at central banks totalling £29.3 billion (2024 – £34.6 billion) and debt
securities of £52.4 billion (2024 – £39.1 billion).
(2)
NWB Group and NWB Plc’s intercompany assets are classified in Stage 1.
(3)
Includes £3 million (2024 – £4 million) related to assets classified as FVOCI.
(4)
ECL provisions coverage is calculated as ECL provisions divided by loans – amortised cost and FVOCI. It is calculated on loans and total ECL provisions, including ECL for other (non-
loan) assets and unutilised exposure. Some segments with a high proportion of debt securities or unutilised exposure may result in a not meaningful coverage ratio.
(5)
Includes a £3 million release (2024 – £10 million charge) related to other financial assets, of which a £1 million release (2024 – £4 million charge) related to assets classified as FVOCI, and
includes a £4 million charge (2024 – £3 million release) related to contingent liabilities.
Credit risk enhancement and mitigation
For information on credit risk enhancement and mitigation held
as security, refer to Risk and capital management – credit risk
enhancement and mitigation section.
Critical accounting policy: Loan impairment provisions
Accounting policy 2.2 sets out how the expected loss approach is
applied. At 31 December 2024, impairment provisions amounted
to £2,970 million (2024 - £2,750 million). A loan is impaired when
there is objective evidence that the cash flows will not occur in
the manner expected when the loan was advanced. Such
evidence includes changes in the credit rating of a borrower, the
failure to make payments in accordance with the loan
agreement, significant reduction in the value of any security,
breach of limits or covenants, and observable data about
relevant macroeconomic measures.
The impairment loss is the difference between the carrying value
of the loan and the present value of estimated future cash flows
at the loan's original effective interest rate.
The measurement of credit impairment under the IFRS expected
loss model depends on management’s assessment of any
potential deterioration in the creditworthiness of the borrower, its
modelling of expected performance and the application of
economic forecasts. All three elements require judgements that
are potentially significant to the estimate of impairment losses.
For further information and sensitivity analysis, refer to Risk and
capital management – measurement uncertainty and ECL
sensitivity analysis section.
IFRS 9 modes
Refer to Credit risk – IFRS 9 ECL models section for further
details.
Approach for multiple economic scenarios (MES)
The base scenario plays a greater part in the calculation of ECL
than the approach to MES. Refer to Credit risk – economic loss
drivers – probability weightings of scenarios section for further
details.
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
144
14 Investment in Group undertakings
Critical accounting policy: Investments in Group undertakings
At each reporting date, NatWest Bank Plc assesses whether there is any indication that its investment in its Group undertakings is
impaired. If any such indication exists, NatWest Bank Plc undertakes an impairment test by comparing the carrying value of the
investment in its Group undertakings with its estimated recoverable amount. The key judgement is in determining the recoverable
amount. The recoverable amount of an investment in its Group undertakings is the higher of its fair value less cost to sell and its value
in use, being an assessment of the discounted future cash flows of the entity. Impairment testing inherently involves a number of
judgements: the five-year cash flow forecast, the choice of appropriate discount and growth rates, and the estimation of fair value. For
accounting policy information refer to Accounting policy 2.3.
Investments in Group undertakings are carried at cost less impairment losses. Movements during the year were as follows
:

| NWB Plc
| 2025 | 2024
| £m | £m
At 1 January | 2,520 | 2,615
Currency translation and other adjustments | 11 | (8)
Additional investments in Group undertakings | 74 | 10
Net (impairment)/reversal of impairment of investments | (128) | (97)
At 31 December | 2,477 | 2,520

The recoverable amount of investments in Group undertakings is the higher of net asset value as a proxy for fair value less cost to sell
or value in use. Where recoverable value is based on net asset value, the fair value measurement is categorised as Level 3 of the fair
value hierarchy. The carrying value of Investments in Group undertakings at 31 December 2025 is supported by the respective
recoverable values of the entities.
In 2025, additional investments include investments of £59 million in NatWest Boxed Limited and capital contributions to World
Learning Limited of £7 million and NatWest RT Holdings Limited of £8 million. The additions in 2024 were investments in World
Learning Limited.
In 2025, net impairment of investments is mainly due to a £171 million impairment of NatWest Bank Plc’s investment in NatWest Boxed
Limited and £52 million reversal of impairment of NatWest Bank Plc’s investment in Strand European Holdings AB following the annual
assessment of the entity’s recoverable amounts. The net impairment of investments in 2024 was primarily related to the investment in
Strand European Holdings AB.
The annual assessment of recoverable amount as at 31 December 2025 did not indicate the need for an impairment of the investment
in Coutts & Company. Reasonably possible adverse changes to the more significant variables of the value in use calculation for Coutts
& Company would not lead to a reduction in the recoverable amount below its carrying value.
The principal subsidiary undertakings of NatWest Bank Plc are shown below and are wholly-owned directly or indirectly through
intermediate holding companies. Their capital consists of ordinary shares and Additional Tier 1 notes which are unlisted. All subsidiary
undertakings are included in NWB Group’s consolidated financial statements and have an accounting reference date of 31 December.

|  | Country of incorporation
|  | and principal area of
| Nature of business | operations
| Private Banking & |
Coutts & Company (1) | Wealth Management | Great Britain
Lombard North Central PLC | Leasing | Great Britain

(1)
Coutts & Company is incorporated with unlimited liability.
For full information on all related undertakings refer to Note 36.
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
145
15 Other financial assets

| NWB Group
| Debt securities |  |  |  |
| Central and local government |  |  |  |  |  |
|  |  |  | Other |  | Equity |  | Settlement |
| UK | US | Other | debt | Total | shares | Loans | balances | Total
2025 | £m | £m | £m | £m | £m | £m | £m | £m | £m
Mandatory fair value through profit or loss | - | - | - | - | - | - | 639 | - | 639
Fair value through other comprehensive |  |  |  |  |  |  |  |  |
income | 10,525 | 1,497 | 5,404 | 12,677 | 30,103 | 3 | 61 | - | 30,167
Amortised cost | 12,059 | - | 1,795 | 8,462 | 22,316 | - | - | 2 | 22,318
Total | 22,584 | 1,497 | 7,199 | 21,139 | 52,419 | 3 | 700 | 2 | 53,124
2024 |  |  |  |  |  |  |  |  |
Mandatory fair value through profit or loss | - | - | - | - | - | 2 | 532 | - | 534
Fair value through other comprehensive |  |  |  |  |  |  |  |  |
income | 10,711 | 1,942 | 5,357 | 11,308 | 29,318 | 2 | 15 | - | 29,335
Amortised cost | 2,587 | - | 68 | 7,005 | 9,660 | - | - | 42 | 9,702
Total | 13,298 | 1,942 | 5,425 | 18,313 | 38,978 | 4 | 547 | 42 | 39,571

| NWB Plc
| Debt securities |  |  |  |
| Central and local government |  |  |  |  |  |
|  |  |  | Other |  | Equity |  | Settlement |
| UK | US | Other | debt | Total | shares | Loans | balances | Total
2025 | £m | £m | £m | £m | £m | £m | £m | £m | £m
Mandatory fair value through profit or loss | - | - | - | - | - | - | 639 |  | 639
Fair value through other comprehensive |  |  |  |  |  |  |  |  |
income | 10,001 | 1,497 | 5,404 | 12,677 | 29,579 | 3 | 61 | - | 29,643
Amortised cost | 12,059 | - | 1,795 | 8,018 | 21,872 | - | - | 2 | 21,874
Total | 22,060 | 1,497 | 7,199 | 20,695 | 51,451 | 3 | 700 | 2 | 52,156
2024 |  |  |  |  |  |  |  |  |
Mandatory fair value through profit or loss | - | - | - | - | - | 2 | 532 | - | 534
Fair value through other comprehensive |  |  |  |  |  |  |  |  |
income | 10,211 | 1,942 | 5,357 | 11,308 | 28,818 | 3 | 15 | - | 28,836
Amortised cost | 2,587 | - | 68 | 6,731 | 9,386 | - | - | 42 | 9,428
Total | 12,798 | 1,942 | 5,425 | 18,039 | 38,204 | 5 | 547 | 42 | 38,798

For accounting policy information refer to Accounting policy 3.8.
16 Other assets

| NWB Group | NWB Plc
| 2025 | 2024 | 2025 | 2024
| £m | £m | £m | £m
Intangible assets (Note 17) | 1,773 | 1,862 | 1,699 | 1,670
Property, plant and equipment (Note 18) | 3,883 | 3,548 | 1,796 | 1,873
Pension schemes in net surplus (Note 5) | 5 | 4 | - | -
Assets of disposal groups | 58 | 62 | 58 | 62
Tax recoverable | 533 | 6 | 523 | 21
Deferred tax (Note 7) | 415 | 808 | 399 | 792
Other assets | 1,372 | 1,304 | 1,177 | 1,085
| 8,039 | 7,594 | 5,652 | 5,503

Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
146
17 Intangible assets

| NWB Group
| 2025 | 2024
| Goodwill | Other (1) | Total | Goodwill | Other (1) | Total
| £m | £m | £m | £m | £m | £m
Cost |  |  |  |  |  |
At 1 January | 623 | 4,633 | 5,256 | 623 | 4,329 | 4,952
Currency translation and other adjustments | - | 44 | 44 | - | (72) | (72)
Additions | - | 596 | 596 | - | 588 | 588
Disposals and write-off of fully amortised assets | - | (7) | (7) | - | (212) | (212)
At 31 December | 623 | 5,266 | 5,889 | 623 | 4,633 | 5,256
Accumulated amortisation and impairment |  |  |  |  |  |
At 1 January | 566 | 2,828 | 3,394 | 565 | 2,490 | 3,055
Currency translation and other adjustments | - | 54 | 54 | - | (30) | (30)
Disposals and impairment of fully amortised assets | - | (5) | (5) | - | (201) | (201)
Amortisation charge for the year | - | 669 | 669 | - | 549 | 549
Impairment of intangible assets | - | 4 | 4 | 1 | 20 | 21
At 31 December | 566 | 3,550 | 4,116 | 566 | 2,828 | 3,394
Net book value at 31 December | 57 | 1,716 | 1,773 | 57 | 1,805 | 1,862

| NWB Plc
| 2025 (1) | 2024 (1)
| £m | £m
Cost |  |
At 1 January | 4,409 | 4,111
Currency translation and other adjustments | 158 | (60)
Additions | 571 | 555
Disposals and write-off of fully amortised assets | (7) | (197)
At 31 December | 5,131 | 4,409
Accumulated amortisation and impairment |  |
At 1 January | 2,739 | 2,413
Currency translation and other adjustments | 57 | (18)
Disposals and write-off of fully amortised assets | (5) | (186)
Amortisation charge for the year | 637 | 511
Impairment of intangible assets | 4 | 19
At 31 December | 3,432 | 2,739
Net book value at 31 December | 1,699 | 1,670

(1)
Principally consists of internally generated software
.
Intangible assets and goodwill are reviewed for indicators of
impairment. Impairment testing involves the comparison of the
carrying value of each cash-generating unit (CGU) with its
recoverable amount. The carrying values of the segments reflect
the equity allocations made by management which are consistent
with NatWest Group’s capital targets. Intangible assets of NWB
Group were impaired by £4 million in 2025 (2024 - £21 million).
Recoverable amount is the higher of fair value less costs of
disposal and value in use. Fair value is the price that would be
received to sell an asset in an orderly transaction between market
participants. Value in use is the present value of expected future
cash flows from the CGU.
The recoverable amounts for all CGUs at 31 December 2025
were based on value in use, using management's latest five-year
revenue and cost forecasts. These are discounted cash flow
projections over five years. The forecast is then extrapolated in
perpetuity using a long-term growth rate to compute a terminal
value, which comprises the majority of the value in use. The long-
term growth rates have been based on expected growth of the
CGUs: 2025 and 2024 – 1.4%. The 2025 pre-tax risk discount
rates are informed by our view of the rates of relevant
comparable companies using data from market brokers, our
Capital Asset Pricing Model and the Warranted Equity Value
method. Using the selected post-tax discount rate, the implied
pre-tax discount rate is then determined for calculating the
equivalent value in use figure. Pre-tax discount rates for the CGUs
are: 2025 – 16% (Retail), 16.9% (C&I RFB, Private), 2024 – 16% for
all CGUs.
For accounting policy information refer to Accounting policies 3.3
and 3.4.
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
147
18 Property, plant and equipment

| NWB Group
| Investment | Property, plant | Operating |
| properties | and equipment | leases | Total
2025 | £m | £m | £m | £m
Cost or valuation |  |  |  |
At 1 January | 938 | 6,102 | 935 | 7,975
Transfers to disposal groups | - | (97) | - | (97)
Transfers from/(to) fellow subsidiaries | - | (11) | - | (11)
Currency translation and other adjustments (1) | 51 | (5) | - | 46
Additions | 400 | 313 | 110 | 823
Disposals and write-off of fully depreciated assets | (16) | (261) | (162) | (439)
At 31 December | 1,373 | 6,041 | 883 | 8,297
Accumulated impairment, depreciation and amortisation |  |  |  |
At 1 January | - | 3,936 | 491 | 4,427
Transfers to disposal groups | - | (72) | - | (72)
Transfers from/(to) fellow subsidiaries | - | - | - | -
Currency translation and other adjustments (2) | - | 9 | - | 9
Disposals and write-off of fully depreciated assets | - | (231) | (124) | (355)
Charge for the year | - | 252 | 94 | 346
Impairment of property, plant and equipment | - | 59 | - | 59
At 31 December | - | 3,953 | 461 | 4,414
Net book value at 31 December | 1,373 | 2,088 | 422 | 3,883
2024 |  |  |  |
Cost or valuation |  |  |  |
At 1 January | 971 | 6,194 | 1,074 | 8,239
Transfers to disposal groups | - | (214) | - | (214)
Transfers from/(to) fellow subsidiaries | - | 3 | - | 3
Currency translation and other adjustments (1) | (90) | (67) | - | (157)
Additions | 69 | 368 | 118 | 555
Disposals and write-off of fully depreciated assets | (12) | (182) | (257) | (451)
At 31 December | 938 | 6,102 | 935 | 7,975
Accumulated impairment, depreciation and amortisation |  |  |  |
At 1 January | - | 3,913 | 575 | 4,488
Transfers to disposal groups | - | (106) | - | (106)
Transfers from/(to) fellow subsidiaries | - | - | - | -
Currency translation and other adjustments (2) | - | (26) | - | (26)
Disposals and write-off of fully depreciated assets | - | (159) | (189) | (348)
Charge for the year | - | 256 | 105 | 361
Impairment of property, plant and equipment | - | 58 | - | 58
At 31 December | - | 3,936 | 491 | 4,427
Net book value at 31 December | 938 | 2,166 | 444 | 3,548

(1)
Currency translation and other adjustments includes fair value adjustment in investment properties of £5 million (2024: £5 million) for NWB Group.
(2)
Other adjustments include the effect of the purchase of freeholds for properties where the NWB Group was the primary leaseholder.
Investment property valuations principally employ present value
techniques that discount expected cash flows. Expected cash
flows reflect rental income, occupancy and residual market
values; valuations are sensitive to changes in these factors. The
investment property fair value measurements are categorised as
level 3. A 5% change in the most sensitive assumption, residual
values, is equal to £49 million (2024 - £33 million) of the value of
Investment property.
Valuations were carried out by qualified surveyors working within
the Royal Institution of Chartered Surveyors, framework;
property with a fair value of £221 million (2024 - £250 million)
was valued by independent valuers for the purposes of year end
valuations.
For accounting policy information refer to Accounting policies 3.4
and 3.5.
Notes to the financial statements continued
18 Property, plant and equipment continued
NWB Group
Annual Report and Accounts 2025
148

| NWB Plc
| 31 December | 31 December
| 2025 | 2024
| £m | £m
Cost |  |
At 1 January | 5,621 | 5,751
Transfers to disposal groups | (97) | (214)
Transfers from/(to) holding company and fellow subsidiaries | (13) | 4
Currency translation and other adjustments (1) | 10 | (63)
Additions | 280 | 297
Disposals and write-off of fully depreciated assets | (256) | (154)
At 31 December | 5,545 | 5,621
Accumulated impairment and depreciation |  |
At 1 January | 3,748 | 3,730
Transfers to disposal groups | (72) | (107)
Transfers from/(to) holding company and fellow subsidiaries | 1 | -
Currency translation and other adjustments (1) | 17 | (24)
Disposals and write-off of fully depreciated assets | (229) | (138)
Charge for the year | 225 | 229
Impairment for the year | 59 | 58
At 31 December | 3,749 | 3,748
Net book value at 31 December | 1,796 | 1,873

(1)
Other adjustments include the effect of the purchase of freeholds for properties where the NWB Group was the primary leaseholder.
19 Other financial liabilities

| NWB Group | NWB Plc
| 2025 | 2024 | 2025 | 2024
| £m | £m | £m | £m
Bank deposits | 107 | 168 | 107 | 168
Customer deposits including repos | 68 | 284 | 68 | 284
Settlement balances | 10 | - | 10 | -
Debt securities in issue |  |  |  |
- Commercial paper and certificates of deposit | 2,736 | 2,623 | 2,736 | 2,623
- Covered bonds | 749 | 749 | 749 | 749
- Securitisation | 1,663 | 1,175 | - | -
Total | 5,333 | 4,999 | 3,670 | 3,824

For accounting policy information refer to Accounting policies 3.8 and 3.10.
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
149
20 Subordinated liabilities

| NWB Group | NWB Plc
| 2025 | 2024 | 2025 | 2024
| £m | £m | £m | £m
Undated loan capital | 3 | 3 | - | -
Preference shares (2) | 119 | 119 | 119 | 119
| 122 | 122 | 119 | 119

(1)
The table above excludes amounts due to holding company and fellow subsidiaries of £4,150 million (2024 - £3,648 million) for NWB Group and £4,150 million (2024 - £3,648 million) for
NWB Plc. Refer to intercompany balances in Note 33
.
(2)
The preference shares issued by NWB Plc are classified as liabilities; these securities remain subject to the capital maintenance rules of the Companies Act 2006.
For accounting policy information refer to Accounting policies 3.8 and 3.10.

|  |  |  |  | 2025 | 2024
Preference shares |  | First call date | Maturity date | Capital treatment | £m | £m
NatWest Bank Plc |  |  |  |  |  |
£140 million | Non-cumulative preference shares of £1 | - | - | Not applicable | 119 | 119
|  |  |  |  | 119 | 119
Undated loan capital - other subsidiaries |  |  |  |  | 3 | 3
|  |  |  |  | 122 | 122

The following tables analyse these intercompany subordinated liabilities:

|  |  |  |  | NWB Group and NWB Plc
|  |  |  |  | 2025 | 2024
Other subsidiaries |  |  |  |  | £m | £m
Dated loan capital |  |  |  |  | 4,150 | 3,648
|  |  |  |  | 2025 | 2024
Dated loan capital |  |  |  |  | £m | £m
NatWest Bank Plc |  |  |  |  |  |
£1000 million | 2.105% notes | Aug-26 | Nov-31 | Tier 2 | 982 | 942
€1000 million | 3.723% notes | Feb-30 | Feb-35 | Tier 2 | 894 | -
€700 million | 5.763% notes | Nov-28 | Feb-34 | Tier 2 | 655 | 630
£650 million | 7.536% notes | Jun-28 | Jun-33 | Tier 2 | 667 | 660
£600 million | 5.642% notes | Oct-29 | Oct-34 | Tier 2 | 606 | 596
£500 million | 3.622% notes | May-25 | Aug-30 | Tier 2 | - | 499
€411.4 million | 1.043% notes | Jun-27 | Sep-32 | Tier 2 | 346 | 321
|  |  |  |  | 4,150 | 3,648

(1)
Further details of the contractual terms of the preference shares are given in Note 22.
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
150
21 Other liabilities

| NWB Group | NWB Plc
| 2025 | 2024 | 2025 | 2024
| £m | £m | £m | £m
Lease liabilities | 419 | 490 | 302 | 366
Provisions for liabilities and charges | 435 | 477 | 372 | 443
Retirement benefit liabilities (Note 5) | 50 | 41 | 8 | 8
Accruals | 1,069 | 1,037 | 862 | 862
Deferred income | 276 | 263 | 250 | 240
Current tax | - | 33 | - | 8
Deferred tax (Note 7) | 63 | 83 | - | -
Acceptances | 280 | 305 | 272 | 294
Other liabilities | 355 | 435 | 176 | 169
Total | 2,947 | 3,164 | 2,242 | 2,390

| NWB Group
|  |  | Financial |  |
| Redress and other |  | commitments and |  |
| litigation | Property | guarantees | Other (1) | Total
Provisions for liabilities and charges | £m | £m | £m | £m | £m
At 1 January 2025 | 255 | 59 | 39 | 124 | 477
Expected credit losses impairment release | - | - | 7 | - | 7
Currency translation and other movements | 22 | - | - | - | 22
Charge to income statement | 80 | 24 | - | 186 | 290
Release to income statement | (25) | (17) | - | (38) | (80)
Provisions utilised | (99) | (13) | - | (169) | (281)
At 31 December 2025 | 233 | 53 | 46 | 103 | 435

| NWB Plc
|  |  | Financial |  |
| Redress and other |  | commitments and |  |
| litigation | Property | guarantees | Other (1) | Total
Provisions for liabilities and charges | £m | £m | £m | £m | £m
At 1 January 2025 | 249 | 57 | 38 | 99 | 443
Expected credit losses impairment charge | - | - | 7 | - | 7
Currency translation and other movements | 22 | - | - | 1 | 23
Charge to income statement | 46 | 23 | - | 166 | 235
Release to income statement | (23) | (16) | - | (33) | (72)
Provisions utilised | (99) | (13) | - | (152) | (264)
At 31 December 2025 | 195 | 51 | 45 | 81 | 372

(1)
Other materially comprises provisions relating to restructuring costs.
Provisions are liabilities of uncertain timing or amount and are recognised when there is a present obligation as a result of a past
event, the outflow of economic benefit is probable and the outflow can be estimated reliably. Any difference between the final outcome
and the amounts provided will affect the reported results in the period when the matter is resolved.
For accounting policy information refer to Accounting policy 3.12.
Background information on all material provisions is given in Note 26
.
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
151
22 Share capital and reserves

|  |  | Number of shares - 000s
Allotted, called up and fully paid | 2025 | 2024 | 2025 | 2024
| £m | £m | 000s | 000s
Ordinary shares of £1 | 1,678 | 1,678 | 1,678,177 | 1,678,177
Non-cumulative preference shares of £1 | 116 | 116 | 116,349 | 116,349

Ordinary shares
No ordinary shares were issued during 2025 or 2024.
In 2025, NWB Plc paid ordinary dividends of £3.0 billion to NWH
Ltd (2024 – £2.5 billion).
Preference shares
The 9% non-cumulative preference shares Series A of £1 each
are non-redeemable.
The holders of preference shares are entitled, on the winding-up
of NWB Plc, to priority over the ordinary shareholders as regards
payment of capital. Otherwise the holders of preference shares
are not entitled to any further participation in the profits or
assets of NWB Plc.
The holders of preference shares are not entitled to receive
notice of, attend, or vote at any general meeting unless the
business of the meeting includes the consideration of a resolution
for the winding-up of NWB Plc or the sale of the whole of the
business of NWB Plc or any resolution directly affecting any of
the special rights or privileges attached to any of the classes of
preference shares.
Under IFRS, NWB Plc preference shares are classified as debt
and are included in subordinated liabilities on the balance sheet
Note 20.
Paid-in equity
Comprises equity instruments issued by NWB Plc other than
those legally constituted as shares.
Additional Tier 1 Instruments issued by NWB Plc having the legal
form of debt are classified as equity under IFRS. The coupons on
these Instruments are non-cumulative and payable at NWB Plc’s
discretion.
Capital recognised for regulatory purposes cannot be redeemed
without Prudential Regulation Authority consent. This includes
ordinary shares, preference shares and Additional Tier 1
Instruments.
Reserves
Under UK companies legislation, when shares are redeemed or
purchased wholly or partly out of NWB Plc’s profits, the amount
by which NWB Plc’s issued share capital is diminished must be
transferred to the capital redemption reserve. The capital
maintenance provisions of UK companies legislation apply to the
capital redemption reserve as if it were part of NWB Plc’s paid
up share capital.
UK law prescribes that only distributable reserves of NWB Plc
are taken into account for the purpose of making distributions,
this includes permissible applications within the share premium
account and capital redemption reserve of £631 million (2024 -
£631 million).
NWB Plc optimises capital efficiency by maintaining reserves in
subsidiaries, including regulated entities. Certain preference
shares and subordinated debt are also included within regulatory
capital. The remittance of reserves to the parent company or the
redemption of shares or subordinated capital by regulated
entities may be subject to maintaining the capital resources
required by the relevant regulator.
For accounting policy information refer to Accounting policy 3.10.

| 2025 | 2024
| £m | £m
Additional Tier 1 instruments |  |
US $2,000 million 3.8495% instruments callable - August 2023 | - | 1,077
GBP £500 million 6.8543% instruments callable - May 2027 | 500 | 500
GBP £400 million 3.9438% instruments callable - March 2028 | 400 | 400
US $750 million 4.3517% instruments callable - June 2031 | 541 | 541
GBP 500 million 7.50% instruments callable February 2032 | 500 | -
US$1,000 million 7.361% instruments callable November 2033 | 740 | -
US$ 1,000 million 8.125% instruments callable - November 2033 | - | 799
GBP 500 million 7.625% instruments callable September 2035 | 500 | -
| 3,181 | 3,317

Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
152
23 Structured entities
A structured entity (SE) is an entity that has been designed such
that voting or similar rights are not the dominant factor in
deciding who controls the entity, for example when any voting
rights relate to administrative tasks only and the relevant
activities are directed by means of contractual arrangements.
SEs are usually established for a specific, limited purpose, they
do not carry out a business or trade and typically have no
employees.
Securitisations
In a securitisation, assets, or interests in a pool of assets, are
transferred, or the credit risk is transferred via a derivative or
financial guarantee to a SE which then issues liabilities to third
party investors. NWB Group’s involvement in client
securitisations takes a number of forms. It may provide secured
finance to, or purchase asset-backed notes from, client
sponsored SEs secured on assets transferred by the client
entity; or purchase asset backed securities issued by client
sponsored SEs in the primary or secondary markets. In addition,
NWB Group undertakes own-asset securitisations to transfer the
credit risk on portfolios of financial assets. In 2025 NWB Group
transacted an own-asset RMBS via a sponsored unconsolidated
SE, resulting in £2.1 bn of residential mortgage assets being
derecognised from the NWB Group balance sheet.
Other credit risk transfers securitisations
NWB Group transfers credit risk on originated loans and
mortgages without the transfer of the assets to a SE. As part of
this, NWB Group enters into credit derivative and financial
guarantee contracts with consolidated SEs. At 31 December
2025, debt securities in issue by such SEs (and held by third
parties) were £1,663 million (2024 - £1,175 million). The
associated loans and mortgages at 31 December 2025 were
£24,535 million (2024 - £13,226 million). At 31 December, ECL in
relation to non-defaulted assets was reduced by £37 million
(2024 - £43 million) as a result of financial guarantee contracts
with consolidated SEs.
Covered bond programme
Certain loans to customers have been assigned to bankruptcy
remote limited liability partnerships to provide security for issues
of debt securities by NWB Group. NWB Group retains all of the
risks and rewards of these loans. The partnerships are
consolidated by NWB Group, the loans retained on NWB Group’s
balance sheet and the related covered bonds included within
debt securities in issue of the NWB Group. At 31 December
2025, £7,083 million (2024 - £8,323 million) of loans to
customers have been assigned to bankruptcy remote limited
liability partnerships to provide security for issues of debt
securities by the NWB Group of £749 million (2024 - £749
million).
Lending of own issued securities
Where the NWB Group issues and retains debt securities it does
not recognise them. From time to time the NWB Group issues,
retains, and lends debt securities under bespoke securities
lending and repurchase financing arrangements. Under standard
terms in the UK and US markets, the recipient has an
unrestricted right to sell or repledge collateral, subject to
returning equivalent securities on maturity of the transaction.
NWB Group retains all of the risks and rewards of own issued
liabilities lent or sold under such arrangements and, where the
ability of the recipient to sell or pledge the asset is restricted
under a bespoke arrangement, does not recognise them. At 31
December 2025, £1,250 million (2024 - £1,750 million) of
secured own issued liabilities have been retained and lent under
securities lending and repurchase financing arrangements, total
retained secured own issued liabilities £3,000 million (2024 -
£3,000 million). At 31 December 2025, £1,254 million (2024 -
£1,751 million) of loans and other debt instruments provided
security for secured own issued liabilities that have been
retained and lent under securities lending and repurchase
financing arrangements, total loans and other debt instruments
providing security for retained secured own issued liabilities
£5,676 million (2024 - £6,576 million).
Unconsolidated structured entities
The term ‘unconsolidated structured entities’ refers to
structured entities not controlled by NWB Group, and which are
established either by NWB Group or a third party. An interest in
a structured entity is any form of contractual or non-contractual
involvement which creates variability in returns for NWB Group
arising from the performance of the entity. Such interests
include holdings of debt or equity securities, derivatives that
transfer financial risks from the entity to NWB Group, provision
of lending and loan commitments, financial guarantees and
investment management agreements. NWB Group enters into
transactions with unconsolidated structured entities in the
normal course of business to facilitate customer transactions, to
provide risk management services and for specific investment
opportunities. Structured entities may take the form of funds,
trusts, partnerships, securitisation vehicles, and private
investment companies. NWB Group considers itself to be the
sponsor of a structured entity where it is primarily involved in
the set up and design of the entity and where NWB Group
transfers assets to the entity, markets products associated with
the entity in its own name, and/or provides guarantees in
relation to the performance of the entity.
The nature and extent of NWB Group’s interests in unconsolidated structured entities is summarised below.

| 2025 | 2024
| Asset-backed | Investment |  | Asset-backed | Investment |
| securitisation | funds |  | securitisation | funds |
| vehicles | and other | Total | vehicles | and other | Total
| £m | £m | £m | £m | £m | £m
Assets |  |  |  |  |  |
Loans to customers | 992 | 471 | 1,463 | 445 | 261 | 706
Other financial assets | 5,695 | - | 5,695 | 3,601 | - | 3,601
Total | 6,687 | 471 | 7,158 | 4,046 | 261 | 4,307
Off balance sheet |  |  |  |  |  |
Liquidity facilities/loan commitments | 247 | 128 | 375 | 145 | 52 | 197
Guarantees | - | - | - | - | 11 | 11
Total | 247 | 128 | 375 | 145 | 63 | 208
Maximum exposure | 6,934 | 599 | 7,533 | 4,191 | 324 | 4,515

Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
153
24 Asset transfers and collateral received
Transfers that do not qualify for derecognition
NWB Group enters into securities repurchase agreements and
securities lending transactions under which it transfers securities
in accordance with normal market practice. Generally, the
agreements require additional collateral to be provided if the
value of the securities falls below a predetermined level.
Under standard terms for repurchase transactions in the UK and
US markets, the recipient of collateral has an unrestricted right
to sell or re-pledge it, subject to returning equivalent securities on
settlement of the transaction.
Securities sold under repurchase transactions are not
derecognised if NWB Group retains substantially all the risks and
rewards of ownership. The fair value (and carrying value) of
securities transferred under such repurchase transactions
included on the balance sheet, are set out below. All of these
securities could be sold or re-pledged by the holder.

| NWB Group | NWB Plc
| 2025 | 2024 | 2025 | 2024
The following assets have failed derecognition (1) | £m | £m | £m | £m
Loans to bank - amortised cost | 29 | 70 | 29 | 70
Loans to customers - amortised cost | 110 | 45 | 110 | 45
Other financial assets | 15,004 | 8,984 | 15,004 | 8,984
Total | 15,143 | 9,099 | 15,143 | 9,099

(1)
Associated liabilities were £14,920 million for both NWB Group and NWB Plc (2024 - £8,103 million).
Assets pledged as collateral
NWB Group pledges collateral with its counterparties in respect of derivative liabilities, bank and stock borrowings and other
transactions
.
Under standard arrangements the counterparty has the right to sell or repledge the collateral. Where the NWB Group
retains exposure to the significant risks and rewards of the transferred collateral it is not derecognised from the NWB Group balance
sheet and continues to be disclosed within either Trading Assets, Loans to Customers or Other Financial Assets.

| NWB Group | NWB Plc
| 2025 | 2024 | 2025 | 2024
Assets pledged against liabilities | £m | £m | £m | £m
Loans to customers - amortised cost | 16,052 | 19,030 | 16,052 | 19,030
Other financial assets (1) | 842 | 534 | 318 | 35
Total | 16,894 | 19,564 | 16,370 | 19,065

(1)
Includes assets pledged for pension derivatives and £524 million of debt securities under the continuing control of NWB Plc. This follows the agreement between NWB Plc and the Group
Pension Fund to establish a bankruptcy remote reservoir trust to hold these assets. Refer to Note 5 for additional information.
The following table analyses assets that have been transferred but have failed the derecognition rules under IFRS 9 and therefore
continue to be recognised on NWB Plc’s balance sheet.

| 2025 | 2024
Asset type (1) | £m | £m
UK mortgages - covered bond programme | 7,083 | 8,323

(1)
The associated liabilities are £7,096 million (2024 - £8,221 million).
Collateral received
The fair value of securities accepted as collateral relating primarily to standard securities lending, reverse repurchase agreements and
margining related to derivatives that NWB Group is permitted to sell or repledge in the absence of default was £48,764 million (2024 -
£43,846 million).
The fair value of any such collateral sold or repledged was £18,207 million (2024 - £9,166 million).
NWB Group is obliged to return equivalent securities. These transactions are conducted under terms that are usual and customary to
standard securities lending, reverse repurchase agreements and derivative margining.
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
154
25 Capital resources
Regulatory capital is assessed against minimum requirements that are set out under the UK CRR to determine the strength of its
capital base. This note shows a reconciliation of shareholders’ equity to regulatory capital.

| 2025 | 2024
Shareholders' equity (excluding non-controlling interests) | £m | £m
Shareholders’ equity | 22,685 | 21,609
Other equity instruments | (3,181) | (3,317)
| 19,504 | 18,292
Regulatory adjustments and deductions |  |
Defined benefit pension fund adjustment | (3) | -
Cash flow hedging reserve | 255 | 307
Deferred tax assets | (50) | (319)
Prudential valuation adjustments | (19) | (26)
Goodwill and other intangible assets | (1,643) | (1,626)
Excess of expected losses over impairment provisions | (154) | (123)
Instruments of financial sector entities where the institution has a significant investment | (665) | (775)
Foreseeable dividends | (2,257) | (1,584)
Adjustment under IFRS 9 transition arrangements | - | 35
| (4,536) | (4,111)
CET1 capital | 14,968 | 14,181
Additional Tier 1 (AT1) capital |  |
Qualifying instruments and related share premium | 3,181 | 3,317
AT1 deductions |  |
Instruments of financial sector entities where the institution has a significant investment | (239) | (240)
Tier 1 capital | 17,910 | 17,258
Qualifying Tier 2 capital |  |
Qualifying instruments and related share premium | 4,093 | 3,673
Tier 2 deductions |  |
Instruments of financial sector entities where the institution has a significant investment | (302) | (302)
Tier 2 capital | 3,791 | 3,371
Total regulatory capital | 21,701 | 20,629

In the management of capital resources, NWB Plc is governed by
NatWest Group's policy to maintain a strong capital base, to
expand it as appropriate and to utilise it efficiently throughout its
activities to optimise the return to shareholders while maintaining
a prudent relationship between the capital base and the
underlying risks of the business. In carrying out this policy,
NatWest Group has regard to the supervisory requirements of the
PRA. The PRA uses capital ratios as a measure of capital
adequacy in the UK banking sector, comparing a bank's capital
resources with its risk-weighted assets (the assets and off-
balance sheet exposures are weighted to reflect the inherent
credit and other risks); by international agreement, the Pillar 1
capital ratios, excluding capital buffers should be not less than 8%
with a Common Equity Tier 1 component of not less than 4.5%.
NWB Plc has complied with the PRA’s capital requirements
throughout the year.
A number of subsidiaries and sub-groups within NWB Group,
principally banking entities, are subject to various individual
regulatory capital requirements in the UK and overseas.
Furthermore, the payment of dividends by subsidiaries and the
ability of members of NatWest Group to lend money to other
members of NatWest Group may be subject to restrictions such
as local regulatory or legal requirements, the availability of
reserves and financial and operating performance.
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
155
26 Memorandum items
Contingent liabilities and commitments
The amounts shown in the table below are intended only to provide an indication of the volume of business outstanding at 31
December 2025. Although NWB Group is exposed to credit risk in the event of non-performance of the obligations undertaken by
customers, the amounts shown do not, and are not intended to, provide any indication of NWB Group’s expectation of future losses
.

| NWB Group | NWB Plc
| 2025 | 2024 | 2025 | 2024
| £m | £m | £m | £m
Contingent liabilities and commitments |  |  |  |
Guarantees | 1,580 | 1,748 | 1,570 | 1,729
Other contingent liabilities | 1,127 | 1,142 | 1,085 | 1,097
Standby facilities, credit lines and other commitments | 102,451 | 93,758 | 91,720 | 82,965
Total | 105,158 | 96,648 | 94,375 | 85,791

Banking commitments and contingent obligations, which have
been entered into on behalf of customers and for which there are
corresponding obligations from customers, are not included in
assets and liabilities. NWB Group’s maximum exposure to credit
loss, in the event of its obligation crystallising and all
counterclaims, collateral or security proving valueless, is
represented by the contractual nominal amount of these
instruments included in the table above. These commitments and
contingent obligations are subject to NWB Group’s normal credit
approval processes.
Guarantees - NWB Group gives guarantees on behalf of
customers. A financial guarantee represents an irrevocable
undertaking that NWB Group will meet a customer’s specified
obligations to a third party if the customer fails to do so. The
maximum amount that NWB Group could be required to pay
under a guarantee is its principal amount as disclosed in the table
above. NWB Group expects most guarantees it provides to
expire unused.
Other contingent liabilities - these include standby letters of
credit, supporting customer debt issues and contingent liabilities
relating to customer trading activities such as those arising from
performance and customs bonds, warranties and indemnities.
Standby facilities and credit lines - under a loan commitment
NWB Group agrees to make funds available to a customer in the
future. Loan commitments, which are usually for a specified term,
may be unconditionally cancellable or may persist, provided all
conditions in the loan facility are satisfied or waived.
Commitments to lend include commercial standby facilities and
credit lines, liquidity facilities to commercial paper conduits and
unutilised overdraft facilities.
Other commitments - these include documentary credits, which
are commercial letters of credit providing for payment by NWB
Group to a named beneficiary against presentation of specified
documents, forward asset purchases, forward deposits placed
and undrawn note issuance and revolving underwriting facilities,
and other short-term trade related transactions.
Indemnity deed
In April 2019, NWM Plc and NWB Plc entered into a cross
indemnity agreement for losses incurred within the entities in
relation to business transferred to or from the ring-fenced bank
under the NatWest Group’s structural re-organisation. Under the
agreement, NWM Plc is indemnified by NWB Plc against losses
relating to the NWB Plc transferring businesses and ring-fenced
bank obligations and NWB Plc is indemnified by NWM Plc against
losses relating to NWM Plc transferring businesses and non ring-
fenced bank obligations with effect from the relevant transfer
date.
Capital Support Deed
NWB Plc, together with certain other subsidiaries of NatWest
Holdings Limited, is party to a Capital Support Deed (CSD).
Under the terms of the CSD, the Bank may be required, if
compatible with its legal obligations, to make distributions on, or
repurchase or redeem, its ordinary shares. The amount of this
obligation is limited to the NWB Plc’s capital resources in excess
of the capital and financial resources needed to meet its
regulatory requirements. NWB Plc may also be obliged to make
onward distribution to its ordinary shareholders of dividends or
other capital distributions received from subsidiaries that are
party to the CSD. The CSD also provides that, in certain
circumstances, funding received by NWB Plc
from other parties
to the CSD becomes immediately repayable, such repayment
being limited to the NWB Plc’s available resources.
Contractual obligations for future expenditure not provided for in the accounts
The following table shows contractual obligations for future expenditure not provided for in the accounts at the year end
.

| NWB Group | NWB Plc
| 2025 | 2024 | 2025 | 2024
| £m | £m | £m | £m
Capital expenditure on other property, plant and equipment | 10 | 13 | 10 | 13
Contracts to purchase goods or services (1) | 1,187 | 1,159 | 1,152 | 1,122
| 1,197 | 1,172 | 1,162 | 1,135

(1)
Of which due within 1 year: £477 million (2024 - £356 million) for NWB Group and £454 million (2024 - £334 million) for NWB Plc.
Notes to the financial statements continued
26 Memorandum items continued
NWB Group
Annual Report and Accounts 2025
156
Trustee and other fiduciary activities
In its capacity as trustee or other fiduciary role, NWB Group may
hold or place assets on behalf of individuals, trusts, companies,
pension schemes and others. The assets and their income are
not included in NWB Group's financial statements. NWB Group
earned fee income of £260 million (2024 - £231 million) from
these activities.
The Financial Services Compensation Scheme
The Financial Services Compensation Scheme (FSCS), the UK's
statutory fund of last resort for customers of authorised financial
services firms, pays compensation if a firm is unable to meet its
obligations. The FSCS funds compensation for customers by
raising management expenses levies and compensation levies on
the industry. In relation to protected deposits, each deposit-
taking institution contributes towards these levies in proportion to
their share of total protected deposits on 31 December of the
year preceding the scheme year (which runs from 1 April to 31
March), subject to annual maxima set by the Prudential
Regulation Authority. In addition, the FSCS has the power to
raise levies on a firm that has ceased to participate in the
scheme and is in the process of ceasing to be authorised for the
costs that it would have been liable to pay had the FSCS made a
levy in the financial year it ceased to be a participant in the
scheme.
Litigation and regulatory matters
NWB Plc and its subsidiary and associated undertakings (‘NWB
Group’) are party to various legal proceedings and are involved
in, or subject to, various regulatory matters, including as the
subject of investigations and other regulatory and governmental
action (Matters) in the United Kingdom (UK), the United States
(US), the European Union (EU) and other jurisdictions.
NWB Group recognises a provision for a liability in relation to
these Matters when it is probable that an outflow of economic
benefits will be required to settle an obligation resulting from past
events, and a reliable estimate can be made of the amount of the
obligation.
In many of the Matters, it is not possible to determine whether
any loss is probable, or to estimate reliably the amount of any
loss, either as a direct consequence of the relevant proceedings
and regulatory matters or as a result of adverse impacts or
restrictions on NWB Group’s reputation, businesses and
operations. Numerous legal and factual issues may need to be
resolved, including through potentially lengthy discovery and
document production exercises and determination of important
factual matters, and by addressing novel or unsettled legal
questions relevant to the proceedings in question, before the
probability of a liability, if any, arising can reasonably be
estimated in respect of any Matter. NWB Group cannot predict if,
how, or when such claims will be resolved or what the eventual
settlement, damages, fine, penalty or other relief, if any, may be,
particularly for Matters that are at an early stage in their
development or where claimants seek substantial or
indeterminate damages.
There are situations where NWB Group may pursue an approach
that in some instances leads to a settlement agreement. This
may occur in order to avoid the expense, management
distraction or reputational implications of continuing to contest
liability, or in order to take account of the risks inherent in
defending or contesting Matters, even for those for which NWB
Group believes it has credible defences and should prevail on the
merits.
The uncertainties inherent in all Matters affect the amount and
timing of any potential economic outflows for both Matters with
respect to which provisions have been established and other
contingent liabilities in respect of any such Matter.
It is not practicable to provide an aggregate estimate of potential
liability for our Matters as a class of contingent liabilities.
The future economic outflow in respect of any Matter may
ultimately prove to be substantially greater than, or less than, the
aggregate provision, if any, that NWB Group has recognised in
respect of such Matter. Where a reliable estimate of the
economic outflow cannot be reasonably made, no provision has
been recognised. NWB Group expects that in future periods,
additional provisions and economic outflows relating to Matters
that may or may not be currently known by NWB Group will be
necessary, in amounts that are expected to be substantial in
some instances. Refer to Note 21 for information on material
provisions.
Matters which are, or could be, material, either individually or in
aggregate, having regard to NWB Group, considered as a whole,
in which NWB Group is currently involved are set out below. We
have provided information on the procedural history of certain
Matters, where we believe appropriate, to aid the understanding
of the Matter.
For a discussion of certain risks associated with NWB Group’s
litigation and regulatory matters (including the Matters), refer to
the Risk Factor relating to legal, regulatory and governmental
actions and investigations set out on pages 180 to 182.
Offshoring VAT assessments
HMRC, as part of an industry-wide review, issued protective tax
assessments in 2018 against NatWest Group plc totalling £143
million relating to unpaid VAT in respect of the UK branches of
two NatWest Group companies registered in India for the period
from 1 January 2014 until 31 December 2017 inclusive. NatWest
Group formally requested reconsideration by HMRC of their
assessments, and this process was completed in November
2020. HMRC upheld their original decision and, as a result,
NatWest Group plc lodged an appeal with the Tax Tribunal and
an application for judicial review with the High Court of Justice of
England and Wales, both in December 2020.
In order to lodge the appeal with the Tax Tribunal, NatWest
Group plc was required to pay amounts totalling £153 million
(including statutory interest) to HMRC in December 2020 and
May 2022. The appeal and the application for judicial review
were previously stayed behind a separate case involving another
bank.
NatWest Group plc was informed in late 2024 that the other
bank had settled its case with HMRC by agreement.
NatWest
Group plc is progressing its appeal before the Tax Tribunal in its
own name. NatWest Group plc will also continue to review next
steps relevant to the judicial review.
The amount of £153 million continues to be recognised as an
asset that NatWest Group plc expects to recover. Since 1
January 2018, NatWest Group plc has paid VAT on intra-group
supplies from the India-registered NatWest Group companies.
Notes to the financial statements continued
26 Memorandum items continued
NWB Group
Annual Report and Accounts 2025
157
Regulatory matters
NWB Group’s financial condition can be affected by the actions of
various governmental and regulatory authorities in the UK, the
US, the EU and elsewhere. NWB Group and/or NatWest Group
have engaged, and will continue to engage, in discussions with
relevant governmental and regulatory authorities, including in the
UK, the US, the EU and elsewhere, on an ongoing and regular
basis, and in response to informal and formal inquiries or
investigations, regarding operational, systems and control
evaluations and issues including those related to compliance with
applicable laws and regulations, including consumer protection,
investment advice, business conduct, competition/anti-trust, VAT
recovery, anti-bribery, anti-money laundering and sanctions
regimes.
NWB Group expects government and regulatory intervention in
financial services to be high for the foreseeable future, including
increased scrutiny from competition and other regulators in the
retail and SME business sectors.
Any matters discussed or identified during such discussions and
inquiries may result in, among other things, further inquiry or
investigation, other action being taken by governmental and
regulatory authorities, increased costs being incurred by NWB
Group, remediation of systems and controls, public or private
censure, restriction of NWB Group’s business activities and/or
fines.
Any of the events or circumstances mentioned in this paragraph
or below could have a material adverse effect on NWB Group, its
business, authorisations and licences, reputation, results of
operations or the price of securities issued by it, or lead to
material additional provisions being taken. NWB Group is co-
operating fully with the matters described below.
Investment advice review
In October 2019, the FCA notified NatWest Group of its intention
to appoint a Skilled Person under section 166 of the Financial
Services and Markets Act 2000 to conduct a review of whether
NatWest Group’s past business review of investment advice
provided during 2010 to 2015 was subject to appropriate
governance and accountability and led to appropriate customer
outcomes.
The Skilled Person’s review has concluded and, after discussion
with the FCA, NatWest Group is undertaking additional review /
remediation work, which is expected to conclude in H1 2026.
27 Analysis of the net investment in business interests and intangible assets

| NWB Group | NWB Plc
| 2025 | 2024 | 2025 | 2024
| £m | £m | £m | £m
Additional investments in Group undertakings | - | - | (74) | (10)
Cash received/(paid) for the assets and liabilities purchased | 244 | (2,296) | 244 | (2,296)
Net inflow/(outflow) of cash in respect of purchases and disposals | 244 | (2,296) | 170 | (2,306)
Dividend received from associate | - | 1 | - | -
Net cash expenditure on intangible assets | (596) | (588) | (571) | (555)
Net outflow of cash | (352) | (2,883) | (401) | (2,861)

Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
158
28 Non-cash and other items
This note shows non-cash items adjusted for in the cashflow statement and movement in operating assets and liabilities.

| NWB Group | NWB Plc
| 2025 | 2024 | 2025 | 2024
| £m | £m | £m | £m
Impairment losses | 653 | 347 | 609 | 334
Depreciation and amortisation | 1,078 | 987 | 925 | 817
Net impairment of impairment of investments in Group undertakings | - | - | 128 | 97
Change in fair value taken to profit or loss on other financial assets | 58 | 218 | 58 | 218
Change in fair value taken to profit or loss on other financial liabilities and |  |  |  |
subordinated liabilities | 229 | 97 | 230 | 105
Elimination of foreign exchange differences | (472) | 670 | (420) | 640
Other non-cash items | 180 | 361 | 143 | 329
Income receivable on other financial assets | (1,958) | (1,342) | (1,921) | (1,310)
Loss on sale of other financial assets | 7 | 18 | 7 | 32
Dividends receivable from subsidiaries | - | - | (487) | (553)
Gain on sale of other assets and net assets and liabilities | (7) | (26) | (7) | (25)
Share of (income)/loss from associates | (1) | 2 | - | -
Interest payable on MRELs and subordinated liabilities | 474 | 445 | 447 | 387
Charges and releases of provisions | 210 | 317 | 163 | 294
Defined benefit pension schemes | 89 | 80 | 63 | 59
Non-cash and other items | 540 | 2,174 | (62) | 1,424
Change in operating assets and liabilities |  |  |  |
Change in derivative assets | 1,746 | 429 | 1,750 | 445
Change in loans to banks | (554) | 67 | (507) | 117
Change in loans to customers | (11,899) | (11,600) | (10,808) | (11,281)
Change in amounts due from holding companies and fellow subsidiaries | 1,704 | (1,144) | 2,513 | (3,635)
Change in other financial assets | (96) | (260) | (96) | (260)
Change in other assets | (56) | (57) | (186) | (66)
Change in bank deposits | 8,240 | 6,728 | 8,239 | 6,726
Change in customer deposits | 4,120 | 4,538 | 3,795 | (230)
Change in amounts due to holding companies and fellow subsidiaries | 7,373 | 372 | 5,725 | 6,646
Change in derivative liabilities | (413) | (541) | (543) | (691)
Change in other financial liabilities | 334 | (4,013) | (154) | (4,324)
Change in notes in circulation | 114 | 129 | 114 | 129
Change in other liabilities | (502) | (629) | (328) | (583)
Change in operating assets and liabilities | 10,111 | (5,981) | 9,514 | (7,007)

Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
159
29 Analysis of changes in financing during the year

| NWB Group | NWB Plc
| Called up share |  |  |  |  | Called up share |  |  |  |
| capital, share |  |  |  |  | capital, share |  |  |  |
| premium, and | Subordinated | MREL | premium, and | Subordinated | MREL
| paid-in equity | liabilities (1) | instruments (2) | paid-in equity | liabilities (1) | instruments (2)
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 January | 7,220 | 6,421 | 3,770 | 3,758 | 6,636 | 6,548 | 7,220 | 6,421 | 3,767 | 3,755 | 6,086 | 5,980
Issued | 1,741 | 799 | 830 | 600 | 1,544 | 1,187 | 1,741 | 799 | 830 | 600 | 1,544 | 927
Redeemed | (1,877) | - | (500) | (579) | - | (1,190) | (1,877) | - | (500) | (579) | - | (930)
Interest paid | - | - | (175) | (184) | (251) | (247) | - |  | (174) | (159) | (227) | (215)
Net cash flows from financing activities | (136) | 799 | 155 | (163) | 1,293 | (250) | (136) | 799 | 156 | (138) | 1,317 | (218)
Effects of foreign exchange | - | - | 91 | (53) | (233) | 24 | - | - | 91 | (53) | (246) | 35
Changes in fair value | - | - | 62 | 39 | 167 | 58 | - | - | 62 | 39 | 168 | 66
Interest payable | - | - | 194 | 189 | 280 | 256 | - | - | 193 | 164 | 254 | 223
At 31 December | 7,084 | 7,220 | 4,272 | 3,770 | 8,143 | 6,636 | 7,084 | 7,220 | 4,269 | 3,767 | 7,579 | 6,086

(1)
Subordinated liabilities include intercompany subordinated liabilities.
(2)
NWB Group MREL balances are included in amounts due to holding companies and fellow subsidiaries. NWB Plc MREL balances are shown net of the effect of down streaming funding to
subsidiary companies.
30 Analysis of cash and cash equivalents
In the cash flow statement, cash and cash equivalents comprises cash and loans to banks with an original maturity of less than three
months that are readily convertible to known amounts of cash and subject to insignificant risk of change in value.

| NWB Group | NWB Plc
| 2025 | 2024 | 2025 | 2024
| £m | £m | £m | £m
Cash and balances at central banks | 29,939 | 35,095 | 29,911 | 35,083
Other financial assets (1) | 18 | 2 | 18 | 2
Loans to banks including intragroup balances | 9,688 | 4,033 | 9,238 | 3,593
Cash and cash equivalents | 39,645 | 39,130 | 39,167 | 38,678

(1)
Includes cash collateral posted with bank counterparties in respect of derivative liabilities of £18 million (2024 - £2 million).
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
160
31 Directors’ and key management remuneration
The composition of NWB Plc’s board of directors is aligned to the board of its intermediate holding company NatWest Holdings Ltd.
The directors are remunerated for their services to NatWest Group as a whole, and their remuneration cannot be apportioned in
respect of their services to NWB Plc.
The directors’ emoluments in the table below represent the NWH Group emoluments of the directors.

| 2025 | 2024
Directors' remuneration | £m | £m
Non-executive directors emoluments | 2,112 | 1,787
Chair and executive directors emoluments | 7,519 | 6,425
| 9,631 | 8,212
Amounts receivable under long-term incentive plans and share option plans | 3,279 | 1,471
| 12,910 | 9,683

The total emoluments and amounts receivable under long-term incentive plans and share option plans of the highest paid director
were £5,218,000 (2024 - £3,873,000).
The executive directors may participate in the NatWest Group's long-term incentive plans, executive share option and sharesave
schemes. Where directors of NWB Plc are also directors of NatWest Group plc, details of their share interests can be found in the 2024
Annual Report and Accounts of NatWest Group plc, in line with regulations applying to NatWest Group plc as a premium listed
company.
Compensation of key management
The aggregate remuneration of directors and other members of key management
(1)
during the year was as follows:

| 2025 | 2024
| £m | £m
Short-term benefits | 23,255 | 19,729
Post-employment benefits | 683 | 614
Share-based payments | 10,801 | 5,250
| 34,739 | 25,593

(1)
Key management comprises members of the NWH Ltd Executive Committee.
Short term benefits include benefits expected to be settled wholly within twelve months of the balance sheet date. Post-employment
benefits include defined benefit contributions for active members and pension funding to support contributions to the defined
contribution schemes. Share-based payments include awards vesting under rewards schemes.
32 Transactions with directors and key management
For the purposes of IAS 24 Related Party Disclosures, key management comprises directors of NWB Plc and members of the NWB Plc
Executive Committee. Key management have banking relationships with NatWest Group entities which are entered into in the normal
course of business and on substantially the same terms, including interest rates and security, as for comparable transactions with
other persons of a similar standing or, where applicable, with other employees. These transactions did not involve more than the
normal risk of repayment or present other unfavourable features. Key management had no reportable transactions or balances with
the holding companies.
Amounts in the table below are attributed to each person at their highest level of NatWest Group key management and relate to those
who were key management at any time during the financial period.

| At 31 December
| 2025 | 2024
| £m | £m
Loans to customers - amortised cost | 2,631 | 3,538
Customer deposits | 52,378 | 36,936

At 31 December 2025, amounts outstanding in relation to transactions, arrangements and agreements entered into by authorised
institutions in NWB Group, as defined in UK legislation, were £2,594,679 in respect of loans to seven persons who were directors of
NWB Plc at any time during the financial period (2024 - £2,581,500).
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
161
33 Related parties
UK Government
In May 2025, the UK Government through His Majesty’s Treasury
(HMT) sold its remaining shareholding in NatWest Group plc.
Under UK listing rules the UK Government and UK Government-
controlled bodies remained related parties until 12 July 2025, 12
months after the UK Government shareholding in NatWest Group
plc fell below 20%.
NWB Group enters into transactions with many of these bodies.
Transactions include the payment of: taxes, principally UK
corporation tax (Note 7) and value added tax; national insurance
contributions; local authority rates; and regulatory fees and levies;
together with banking transactions such as loans and deposits
undertaken in the normal course of banker-customer
relationships.
Bank of England facilities
NWB Group may participate in a number of schemes operated by
the Bank of England in the normal course of business.
In March 2024 Bank of England Levy replaced the Cash Ratio
Deposit scheme. Members of NatWest Group that are UK
authorised institutions having eligible liabilities greater than £600
million are required to pay the levy. They also have access to
Bank of England reserve accounts: sterling current accounts that
earn interest at the Bank of England Base rate.
NWB Plc guarantees certain liabilities of NWH Group to the Bank
of England.
Other related party
(a)
In accordance with IAS 24, transactions or balances between
NWB Group entities that have been eliminated on
consolidation are not reported.
(b)
The primary financial statements include transactions and
balances with its subsidiaries which have been further
disclosed in the relevant parent company notes.
Associates, joint ventures and equity investments
In their roles as providers of finance, NWB Group companies
provide development and other types of capital support to
businesses. These investments are made in the normal course of
business. To further strategic partnerships, NWB Group may seek
to invest in third parties or allow third parties to hold a minority
interest in a subsidiary of NatWest Group. We disclose as related
parties for associates and joint ventures and where equity interest
is over 10%. Ongoing business transactions with these entities are
on normal commercial terms.
At 31 December 2025 NWB Group held investment in associates
and joint ventures amounting to £2 million (2024 - £1 million). For
the year ended 31 December 2025 NWB Group’s share of
profit/(losses) of associates was £1 million (2024 - £(2) million). At
31 December 2025 there were £1 million balances within
customer deposits (2024 - £1 million) relating to associates and
joint ventures.
Post employment benefits
NatWest Group recharges NatWest Group Pension Fund with the
cost of pension management services incurred by it.
Notes to the financial statements continued
33 Related parties continued
NWB Group
Annual Report and Accounts 2025
162
Holding companies and fellow subsidiaries
Transactions NWB Group enters with its holding companies and fellow subsidiaries also meet the definition of related party
transactions. The table below discloses transactions between NWB Group and fellow subsidiaries of NatWest Group.

| 2025 | 2024
| Holding | Fellow | Total | Holding | Fellow | Total
| companies | subsidiaries |  | companies | subsidiaries |
| £m | £m | £m | £m | £m | £m
Interest receivable | 1 | 118 | 119 | 2 | 95 | 97
Interest payable | (792) | (1,430) | (2,222) | (713) | (1,768) | (2,481)
Fees and commissions receivable | - | 80 | 80 | - | 74 | 74
Fees and commissions payable | - | (82) | (82) | - | (78) | (78)
Other operating income (1) | 34 | 1,520 | 1,554 | 37 | 1,441 | 1,478
Other administration expenses (2) | - | (168) | (168) | - | (128) | (128)
Impairment (losses)/releases | 1 | - | 1 | (1) | - | (1)
| (756) | 38 | (718) | (675) | (364) | (1,039)

(1)
Includes internal service recharges of £1,554 million (2024 - £1,478 million).
(2)
Other administration expense relates to a profit share arrangement with a fellow NatWest Group subsidiary that commenced in 2023. The profit share arrangement was introduced to
reward NWM Group on an arm’s length basis for its contribution to the performance of the NatWest Group Commercial & Institutional business segment, 2023 being the first full year
with the Commercial & Institutional segment in place.
The following tables include amounts due from or to holding companies and fellow subsidiaries:

| NWB Group
| 2025 | 2024
| Holding | Fellow |  | Holding | Fellow |
| companies | subsidiaries | Total | companies | subsidiaries | Total
| £m | £m | £m | £m | £m | £m
Assets |  |  |  |  |  |
Loans to banks - amortised cost | - | 6,950 | 6,950 | - | 3,116 | 3,116
Loans to customers - amortised cost | - | 18 | 18 | - | 12 | 12
Other financial assets | - | 8 | 8 | 78 | - | 78
Other assets | 8 | 202 | 210 | 121 | 409 | 530
Amounts due from holding companies and fellow subsidiaries | 8 | 7,178 | 7,186 | 199 | 3,537 | 3,736
Derivatives (1) | 123 | 632 | 755 | 168 | 1,476 | 1,644
Liabilities |  |  |  |  |  |
Bank deposits | - | 34,584 | 34,584 | - | 28,632 | 28,632
Customer deposits | 9,876 | 258 | 10,134 | 8,638 | 1 | 8,639
Subordinated liabilities | 4,150 | - | 4,150 | 3,648 | - | 3,648
MREL instruments issued to NatWest Holdings Ltd | 8,143 | - | 8,143 | 6,636 | - | 6,636
Other financial liabilities | 28 | - | 28 | - | 27 | 27
Other liabilities | 2 | 65 | 67 | - | 142 | 142
Amounts due to holding companies and fellow subsidiaries | 22,199 | 34,907 | 57,106 | 18,922 | 28,802 | 47,724
Derivatives (1) | 50 | 574 | 624 | 284 | 505 | 789

(1)
Intercompany derivatives are included within derivative classification on the balance sheet.
There was £0.1 billion (2024 - £0.1 billion) of NWB Group commitments and guarantees related to transactions with fellow group
companies outstanding at the balance sheet date.
Notes to the financial statements continued
33 Related parties continued
NWB Group
Annual Report and Accounts 2025
163

| NWB Plc
| 2025 | 2024
| Holding | Fellow |  |  | Holding | Fellow |  |
| companies | subsidiaries | Subsidiaries | Total | companies | subsidiaries | Subsidiaries | Total
| £m | £m | £m | £m | £m | £m | £m | £m
Assets |  |  |  |  |  |  |  |
Loans to banks - amortised cost | - | 6,656 | 16,639 | 23,295 | - | 2,893 | 18,234 | 21,127
Loans to customers - amortised cost | - | 18 | 14,480 | 14,498 | - | 12 | 13,764 | 13,776
Other financial assets | - | 8 | 571 | 579 | 78 | - | 554 | 632
Other assets | 8 | 193 | 392 | 593 | 121 | 423 | 304 | 848
Amounts due from holding companies |  |  |  |  |  |  |  |
and fellow subsidiaries | 8 | 6,875 | 32,082 | 38,965 | 199 | 3,328 | 32,856 | 36,383
Derivatives (1) | 123 | 631 | 14 | 768 | 168 | 1,476 | 18 | 1,662
Liabilities |  |  |  |  |  |  |  |
Bank deposits | - | 27,084 | 42,468 | 69,552 | - | 21,303 | 44,251 | 65,554
Customer deposits | 9,898 | 257 | 6,456 | 16,611 | 8,660 | - | 6,171 | 14,831
Subordinated liabilities | 4,150 | - | - | 4,150 | 3,648 | - | - | 3,648
MREL instruments issued to NatWest Holdings Ltd | 8,146 | - | - | 8,146 | 6,638 | - | - | 6,638
Other financial liabilities | 28 | - | - | 28 | - | 27 | - | 27
Other liabilities | 2 | 65 | 107 | 174 | - | 150 | 77 | 227
Amounts due to holding companies |  |  |  |  |  |  |  |
and fellow subsidiaries | 22,224 | 27,406 | 49,031 | 98,661 | 18,946 | 21,480 | 50,499 | 90,925
Derivatives (1) | 50 | 574 | 27 | 651 | 284 | 505 | 162 | 951

(1)
Intercompany derivatives are included within derivative classification on the balance sheet.
There was £0.4 billion (2024 - £0.4 billion) of NWB Plc commitments and guarantees related to transactions with fellow group
companies outstanding at the balance sheet date.
34 Ultimate holding company
NWB Group’s ultimate holding company is NatWest Group plc and its intermediate parent company is NatWest Holdings Limited.
NatWest Group plc is incorporated in the United Kingdom and
registered in Scotland and NWH Ltd is registered in England.
As at 31
December 2025, NatWest Group plc heads the largest group in which NWB Group is consolidated. Copies of the consolidated accounts
of both companies may be obtained from Legal, Governance & Regulatory Affairs, NatWest Group plc, Gogarburn, PO Box 1000,
Edinburgh, EH12 1HQ, the Registrar of Companies or at natwestgroup.com.
35 Post balance sheet events
On 9 February 2026, NatWest Group plc announced that it had reached an agreement to acquire Evelyn Partners for an enterprise
value of £2.7 billion, with NatWest Bank Plc the acquiring entity. The transaction is expected to complete in the summer of 2026,
subject to regulatory approval.
Other than as disclosed in the accounts, there have been no other significant events subsequent to 31 December 2025 which would
require a change to or additional disclosure.
Notes to the financial statements continued
NWB Group
Annual Report and Accounts 2025
164
36 Related undertakings
Legal entities and activities at 31 December 2025
In accordance with the Companies Act 2006, NWB Plc’s related undertakings and the accounting treatment for each are listed below.
All undertakings are wholly-owned by NWB Plc or subsidiaries of NWB Plc and are consolidated by reason of contractual control
(Section 1162(2) CA 2006), unless otherwise indicated. NWB Group interest refers to ordinary shares of equal values and voting rights
unless further analysis is provided in the notes. Activities are classified in accordance with Annex I to the Capital Requirements
Directive (CRD V) and the definitions in Article 4 of the UK Capital Requirements Regulation.
Active related undertakings incorporated in the UK which are 100% owned by NWB Group and fully consolidated for
accounting purpose

|  | Regulatory |
Entity name | Activity | treatment | Notes
Caledonian Sleepers Rail Leasing Ltd | BF | FC | 6
Coutts & Company | CI | FC | 9
Coutts Finance Company | BF | FC | 9
FreeAgent Central Ltd | SC | FC | 26
FreeAgent Holdings Ltd | SC | FC | 26
Gatehouse Way Developments Ltd | INV | DE | 6
KUC Properties Ltd | BF | DE | 27
Land Options (West) Ltd | INV | DE | 27
Lombard & Ulster Ltd | BF | FC | 2
Lombard Business Leasing Ltd | BF | FC | 6
Lombard Corporate Finance (December 3) Ltd | BF | FC | 6
Lombard Corporate Finance (June 2) Ltd | BF | FC | 6
Lombard Discount Ltd | BF | FC | 6
Lombard Finance Ltd | BF | FC | 6
Lombard Industrial Leasing Ltd | BF | FC | 6
Lombard Lease Finance Ltd | BF | FC | 6
Lombard Leasing Company Ltd | BF | FC | 6
Lombard Leasing Contracts Ltd | BF | FC | 6
Lombard Lessors Ltd | BF | FC | 6
Lombard Maritime Ltd | BF | FC | 6
Lombard North Central Leasing Ltd | BF | FC | 6
Lombard North Central PLC | BF | FC | 6
Lombard Property Facilities Ltd | BF | FC | 6
Lombard Technology Services Ltd | BF | FC | 6
Mettle Ventures Ltd | OTH | FC | 6

|  | Regulatory |
Entity name | Activity | treatment | Notes
National Westminster Home Loans Ltd | BF | FC | 6
NatWest Boxed Ltd | OTH | FC | 6
NatWest Property Investments Ltd | INV | DE | 6
NatWest RT Holdings Limited | OTH | FC | 6
Pittville Leasing Ltd | BF | FC | 6
Premier Audit Company Ltd | BF | FC | 6
R.B. Leasing (September) Ltd | BF | FC | 6
R.B. Quadrangle Leasing Ltd | BF | FC | 6
RBS Asset Management Holdings | BF | FC | 9
RBS Collective Investment Funds Ltd | BF | FC | 11
RBS Invoice Finance Ltd | BF | FC | 6
RBSG Collective Investments Holdings Ltd | BF | FC | 11
RBSSAF (2) Ltd | BF | FC | 6
RBSSAF (25) Ltd | BF | FC | 6
Royal Bank Leasing Ltd | BF | FC | 27
Royal Bank of Scotland (Industrial Leasing) Ltd | BF | FC | 27
Royal Scot Leasing Ltd | BF | FC | 27
RoyScot Trust Plc | BF | FC | 6
Silvermere Holdings Ltd | BF | FC | 27
The Royal Bank of Scotland Group Independent |  |  |
Financial Services Ltd | BF | FC | 27
Ulster Bank Ltd | CI | FC | 2
Ulster Bank Pension Trustees Ltd | TR | DE | 23
Walton Lake Developments Ltd | INV | DE | 6
World Learning Limited | BF | FC | 6

Active related undertakings incorporated outside the UK which are 100% owned by NWB Group and fully consolidated for
accounting purposes

|  | Regulatory |
Entity name | Activity | treatment | Notes
Airside Properties AB | BF | FC | 21
Apitare Oy | OTH | FC | 17
Arenarena AS | BF | FC | 19
Arkivborgen KB | BF | FC | 21
Artul Koy | BF | FC | 17
BD Lagerhus AS | BF | FC | 15
Bilfastighet i Akalla AB | BF | FC | 21
Bilfastighet i Avesta AB | BF | FC | 21
Bilfastighet i Bollnas AB | BF | FC | 21
Bilfastighet i Hemlingby AB | BF | FC | 21
Bilfastighet i Hudiksvall AB | BF | FC | 21
Bilfastighet i Ludvika AB | BF | FC | 21
Bilfastighet i Marsta AB | BF | FC | 18
Bilfastighet i Mora AB | BF | FC | 21
Bilfastighet i Uppsala KB | BF | FC | 18
Bilfastighet Kista AB | BF | FC | 18
Borgholm Gl!ntan AB | BF | FC | 18
Brodmagasinet KB | BF | FC | 21
D5 INVEST AS | BF | FC | 16
Eiendomsselskapet Apteno La AS | BF | FC | 15
Espeland Naering AS | BF | FC | 15
Eurohill 4 KB | BF | FC | 21
Fab Ekenäs Formanshagen 4 | BF | FC | 17
Fastighets AB Flojten i Norrkoping | BF | FC | 21

|  | Regulatory |
Entity name | Activity | treatment | Notes
Fastighets AB Stockmakaren | BF | FC | 18
Fastighets Aktiebolaget Sambiblioteket | BF | FC | 21
Fastighetsbolaget Elmotorgatan AB | BF | FC | 21
Forskningshöjden KB | BF | FC | 21
Forvaltningsbolaget Dalkyrkan KB | BF | FC | 21
Forvaltningsbolaget Kloverbacken Skola KB | BF | FC | 21
Fyrs!te Fastighets AB | BF | FC | 21
Grinnhagen KB | BF | FC | 21
Hatros 1 AS | BF | FC | 15
Horrsta 4:38 KB | BF | FC | 21
IR Fastighets AB | BF | FC | 21
IR IndustriRenting AB | BF | FC | 21
Kallebäck Institutfastigheter AB | BF | FC | 21
KB Eurohill | BF | FC | 21
KB Lagermannen | BF | FC | 21
KB Likriktaren | BF | FC | 21
Kiinteist Oy Tipotie 4 | BF | FC | 17
Koy Harkokuja 2 | BF | FC | 20
Kiinteisto Oy Lohjan Ojamonharjuntie 61 | BF | FC | 20
Koy Pennalan Johtotie 2 | BF | FC | 17
Koy Turun Mustionkatu 6 | BF | FC | 20
Kiinteisto Oy Vantaan Rasti IV | BF | FC | 20

Notes to the financial statements continued
36 Related undertakings continued
NWB Group
Annual Report and Accounts 2025
165

|  | Regulatory |
Entity name | Activity | treatment | Notes
Kiinteistöosakeyhtiö Jyväskylän Kukkula I | BF | FC | 17
Koy Kuopion Volttikatu 1 | OTH | FC | 17
Kobbervikdalen 2 Utvikling AS | OTH | FC | 14
Koy Helsingin Mechelininkatu 1 | BF | FC | 17
Koy Helsingin Osmontie 34 | BF | FC | 17
Koy Helsingin Panuntie 11 | BF | FC | 17
Koy Helsingin Panuntie 6 | BF | FC | 17
Koy Iisalmen Kihlavirta | BF | FC | 17
Koy Jamsan Keskushovi | BF | FC | 17
Koy Jasperintie 6 | BF | FC | 20
Koy Kokkolan Kaarlenportti Fab | BF | FC | 17
Koy Kouvolan Oikeus ja Poliisitalo | BF | FC | 17
Koy Millennium | BF | FC | 17
Koy Nummelan Portti | BF | FC | 17
Koy Peltolantie 27 | BF | FC | 20
Koy Porkkanakatu 2 | BF | FC | 20
Koy Puotikuja 2 Vaasa | BF | FC | 17
Koy Raision Kihlakulma | BF | FC | 17
Koy Vapaalan Service-Center | BF | FC | 17
Kvam Eiendom AS | BF | FC | 15
Lakten 1 KB | BF | FC | 21
Leiv Sand Eiendom AS | BF | FC | 15
LerumsKrysset KB | BF | FC | 21
Limstagården KB | BF | FC | 21
Lundbyfilen 5 AB | BF | FC | 18
Narmovegen 455 AS | BF | FC | 15
National Westminster International Holdings B.V. | BF | FC | 27
NatWest Digital Services India Private Limited | SC | FC | 12
NatWest Services (Switzerland) Ltd | SC | FC | 24
Nordisk Renting AB | BF | FC | 21
Nordisk Renting AS | BF | FC | 15

|  | Regulatory |
Entity name | Activity | treatment | Notes
Nordisk Renting Facilities Management AB | BF | FC | 18
Nordisk Renting OY | BF | FC | 17
Nordisk Specialinvest AB | BF | FC | 21
Nordiska Strategifastigheter Holding AB | BF | FC | 21
Nybergflata 5 AS | BF | FC | 15
OFH Eiendom AS | BF | FC | 15
Optimus KB | BF | FC | 21
RBS Deutschland Holdings GmbH | BF | FC | 28
Rigedalen 44 Eiendom AS | BF | FC | 15
Ringdalskogen Utvikling AS | OTH | FC | 15
Ringdalveien 20 AS | BF | FC | 15
Sandmoen Naeringsbygg AS | BF | FC | 15
SBB Klangsågen Mark AB | BF | FC | 18
SFK Kommunfastigheter AB | BF | FC | 21
Sjöklockan KB | BF | FC | 21
Skinnarängen KB | BF | FC | 21
Sletta Eiendom II AS | BF | FC | 15
Smista Park AB | OTH | FC | 18
Snipetjernveien 1 AS | BF | FC | 15
Solbanken KB | BF | FC | 21
Solnorvika AS | BF | FC | 15
Strand European Holdings AB | BF | FC | 18
Svenskt Fastighetskapital AB | BF | FC | 21
Svenskt Energikapital AB | BF | FC | 21
Svenskt Fastighetskapital Holding AB | BF | FC | 21
Triport Borås AB | BF | FC | 18
Triport Karlshamn AB | BF | FC | 18
Triport Vaggeryd AB | BF | FC | 18
Tygverkstaden 1 KB | BF | FC | 21
Vävskeden Vårdbostad Flen AB | BF | FC | 18
Vandenbergh 9 AB | BF | FC | 18
Villa Strå Fastighets AB | BF | FC | 18

Active related undertakings which are 100% owned by NWB Group but are not consolidated for accounting purposes

|  | Regulatory |
Entity name | Activity | treatment | Notes
Bioenergie Dargun Immobilien GmbH | OTH | DE | 32
Bioenergie Jessen Immobilien GmbH | OTH | DE | 32
Bioenergie Wiesenburg GmbH & Co. KG | INV | DE | 32
Bioenergie Wiesenburg Verwaltungs GmbH | OTH | DE | 32
Bioenergie Zittau GmbH | OTH | DE | 32
Bioenergie Zittau Immobilien GmbH | OTH | DE | 32
Capulet Homes Florida LLC | OTH | DE | 7
DBV Deutsche Bioenergie Verbinder GmbH | OTH | DE | 32
East Grove Holding Limited | INV | DE | 13
German Biogas Holdco Limited | INV | DE | 1
Montague Homes Florida LLC | OTH | DE | 7
Reppinichen Dritte Biogas Betriebs GmbH | OTH | DE | 32
Reppinichen Erste Biogas Betriebs GmbH | OTH | DE | 32
Reppinichen Zweite Biogas Betriebs GmbH | OTH | DE | 32
Romeo Homes Florida LLC | OTH | DE | 7
Romeo Homes Georgia LLC | OTH | DE | 7
Romeo Homes Indiana LLC | OTH | DE | 7
Romeo Homes Kansas LLC | OTH | DE | 7
Romeo Homes Nevada LLC | OTH | DE | 7
Romeo Homes North Carolina LLC | OTH | DE | 7

|  | Regulatory |
Entity name | Activity | treatment | Notes
Romeo Homes Oklahoma LLC | OTH | DE | 7
Romeo Homes Tennessee LLC | OTH | DE | 7
Romeo Homes Texas LLC | OTH | DE | 7
West Granite Homes Inc. | INV | DE | 7
WGH Development LLC | OTH | DE | 7
WGH Florida LLC | OTH | DE | 7
WGH Georgia LLC | OTH | DE | 7
WGH Indiana LLC | OTH | DE | 7
WGH Kansas LLC | OTH | DE | 7
WGH Nevada LLC | OTH | DE | 7
WGH North Carolina LLC | OTH | DE | 7
WGH Oklahoma LLC | OTH | DE | 7
WGH Texas LLC | OTH | DE | 7
Wiesenburg Dritte Biogas Betriebs GmbH | OTH | DE | 32
Wiesenburg Erste Biogas Betriebs GmbH | OTH | DE | 32
Wiesenburg Zweite Biogas Betriebs GmbH | OTH | DE | 32
Wiesenburger Marktfrucht GmbH | OTH | DE | 32

Notes to the financial statements continued
36 Related undertakings continued
NWB Group
Annual Report and Accounts 2025
166
Active related undertakings incorporated in the UK where NWB Group ownership is less than 100%

|  | Accounting | Regulatory | Group |
Entity name | Activity | treatment | treatment | % | Notes
Falcon Wharf Ltd | OTH | EAJV | PC | 50 | 22
GWNW City Developments Ltd | BF | EAJV | DE | 50 | 22
JCB Finance Ltd | BF | FC | FC | 75 | 30
London Rail Leasing Ltd | BF | EAJV | PC | 50 | 4

Entity name
Activity
Accounting
treatment
Regulatory
treatment
Group
%
Notes
Natwest Covered Bonds (LM) Ltd
BF
IA
PC
20
10
Natwest Covered Bonds LLP
BF
FC
FC
60
6
Pollinate Networks Limited
OTH
AHC
DE
24
3
Active related undertakings incorporated outside the UK where NWB Group ownership is less than 100%

|  | Accounting | Regulatory | Group |
Entity name | Activity | treatment | treatment | % | Notes
Nightingale 2024-1 Ltd | BF | FC | DE | 0 | 8
Nightingale 2024-2 Ltd | BF | FC | DE | 0 | 8
Nightingale 2024-3 Ltd | BF | FC | DE | 0 | 8
NIGHTINGALE 2025-1 LIMITED | BF | FC | DE | 0 | 8
NIGHTINGALE 2025-2 LIMITED | BF | FC | DE | 0 | 8
Nightingale 2025-3 LIMITED | BF | FC | DE | 0 | 8
Nightingale 2025-4 LIMITED | BF | FC | DE | 0 | 8
Nightingale 2025-5 | BF | FC | DE | 0 | 8

|  | Accounting | Regulatory | Group |
Entity name | Activity | treatment | treatment | % | Notes
Nightingale LF 2021-1 Ltd | BF | FC | DE | 0 | 8
Nightingale Project Finance 2019 |  |  |  |  |
1 Ltd | BF | FC | DE | 0 | 8
Nightingale Project Finance Ii |  |  |  |  |
2023-1 Limited | BF | FC | DE | 0 | 8
Nightingale Securities 2017-1 |  |  |  |  |
Limited | BF | FC | DE | 0 | 8
Pharos Estates Ltd | OTH | AHC | DE | 49 | 5

Related undertakings that are not active (actively being
dissolved)

| Accounting | Regulatory | Group |
Entity name | treatment | treatment | % | Notes
Belfast Bankers' Clearing Company Ltd | NC | PC | 25 | 29
Jaguar Cars Finance Ltd | FC | FC | 50 | 6
Lombard Ireland Group Holdings |  |  |  |
Unlimited | FC | FC | 100 | 31
Lombard Ireland Ltd | FC | FC | 100 | 31
RBS Asset Management (Dublin) Ltd | FC | FC | 100 | 25

Related undertakings that are dormant

| Accounting | Regulatory | Group |
Entity name | treatment | treatment | % | Notes
Coutts Scotland Nominees Limited | FC | FC | 100 | 11
JCB Finance Pension Ltd | FC | DE | 88 | 2
Natwest FIS Nominees Ltd | FC | FC | 100 | 6
NatWest Group Retirement Savings |  |  |  |
Trustee Limited | FC | FC | 100 | 6
Natwest Group Secretarial Services Ltd | FC | FC | 100 | 27
Natwest Pension Trustee Ltd | NC | DE | 100 | 6
Natwest Pep Nominees Ltd | FC | FC | 100 | 6
Nordisk Renting A/S | FC | FC | 100 | 15

| Accounting | Regulatory | Group |
Entity name | treatment | treatment | % | Notes
Nordisk Renting HB | FC | FC | 100 | 21
NW C Shelf Limited | FC | FC | 100 | 6
R.B. Leasing (March) Ltd | FC | FC | 100 | 6
RBS Investment Executive Ltd | NC | DE | 100 | 27
RBSG Collective Investments Nominees Ltd | FC | FC | 100 | 11
Strand Nominees Ltd | FC | FC | 100 | 9
Syndicate Nominees Ltd | FC | FC | 100 | 6
The Royal Bank Of Scotland Group Ltd | FC | FC | 100 | 6

Overseas regulated branches of NWB Group
Subsidiary
Geographic location
National Westminster Bank Plc
Germany
Notes to the financial statements continued
36 Related undertakings continued
NWB Group
Annual Report and Accounts 2025
167

Key: |
Activity |
BF | Banking and financial institution
CI | Credit institution
INV | Investment (shares or property) holding company
SC | Service company
TR | Trustee
OTH | Other
Accounting/Regulatory treatment |
DE | Deconsolidated
FC | Full consolidation
PC | Pro-rata consolidation
AHC | Associate held at cost
EAJV | Equity accounting – Joint venture
IA | Investment accounting
NC | Not consolidated

Notes | Registered addresses | Country of incorporation
1 | 1, London Wall Place, London, EC2Y 5AU, England | UK
2 | 11-16 Donegall Square East, Belfast, Co Antrim, BT1 5UB, Northern Ireland | UK
3 | 120 Cannon Street 120 Cannon Street London EC4N 6AS | UK
4 | 123 Victoria Street, London, England, SW1E 6DE | UK
5 | 24 Demostheni Severi, 1st Floor, Nicosia, 1080, Cyprus | Cyprus
6 | 250 Bishopsgate, London, EC2M 4AA, England | UK
7 | 251 Little Falls Drive, Wilmington, DE, 19808, United States | USA
8 | 44 Esplanade, St Helier, JE4 9WG | Jersey
9 | 440 Strand, London, WC2R OQS | UK
10 | 5 Churchill Place, 10 Floor, London, E14 5HU, United Kingdom | UK
11 | 6-8 George Street, Edinburgh, EH2 2PF, Scotland | UK
| 6th Floor, Building 2, Tower A, GIL IT/ITES SEZ, Candor TechSpace, Sector 21, Dundahera, Gurugram, Haryana, |
12 | 122016, India | India
13 | 8 Sackville Street, London, W1S 3DG, England | UK
14 | Advikatfirman Wiersholm AS,Postboks 1400.0115, OSLO, Norway | Norway
15 | c/o Advokatfirmaet Wiersholm AS, Postboks 1400, 0115 Oslo, Norway | Norway
16 | c/o Advokatfirmaet Wiersholm AS,Dokkveien 1, 0250 OSLO, Norway | Norway
17 | c/o Epicenter, Mikonkatu 9, 6th Floor, Helsinki, 00100, Finland | Finland
18 | C/O Nordisk Renting AB, Box 14044, SE-104 40 Sweden, Stockholm, Sweden | Sweden
19 | c/o Nordisk Renting AS, Postboks 1400, Oslo, 0115 | Norway
20 | c/o Nordisk Renting Oy, Mikonkatu 9, 00100 Helsinki, Finland | Finland
21 | Care of Nordisk Renting AB, Jakobsbergsgatan 13, 8th Floor, Box 14044, Stockholm, SE-111 44, Sweden | Sweden
22 | Gate House, Turnpike Road, High Wycombe, Buckinghamshire, HP12 3NR, United Kingdom | UK
| Group Secretariat Department, 11-16 Donegall Square East, Belfast, BT1 5UB, Northern Ireland, United |
23 | Kingdom | UK
24 | Lerchenstrasse 16, Zurich, CH 8022, Switzerland | Switzerland
25 | One Dockland Central, Guild Street, IFSC, Dublin, Dublin 1, Ireland | ROI
26 | One Edinburgh Quay, 133 Fountainbridge, Edinburgh, EH3 9QG, Scotland | UK
27 | RBS Gogarburn, 175 Glasgow Road, Edinburgh, EH12 1HQ, Scotland | UK
28 | Roßmarkt 10, Frankfurt am Main, 60311, Germany | Germany
29 | Scottish Provident Building, 7 Donegall Square West, Belfast, BT1 6JH | UK
30 | The Mill, High Street, Rocester, Staffordshire, ST14 5JW, England | UK
31 | Ulster Bank Group Centre, George's Quay, Dublin, Dublin 2, Ireland | ROI
32 | Walther-Nernst-Straße 1, Berlin, 12489, Germany | Germany

Risk Factors
NWB Group
Annual Report and Accounts 2025
168
Principal Risks and Uncertainties
Set out below are certain risk factors that could have a material
adverse effect on NWB Group’s future results, its financial
condition and/or prospects and cause them to be materially
different from what is forecast or expected, and directly or
indirectly impact the value of its securities. These risk factors are
broadly categorised and should be read in conjunction with other
risk factors in this section and other parts of this annual report,
including the forward-looking statements section, the strategic
report and the risk and capital management section. They should
not be regarded as a complete and comprehensive statement of
all potential risks and uncertainties facing NWB Group.
Economic and political risk
NWB Group, its customers and its counterparties face continued
economic and political risks and uncertainties in the UK and global
markets, including as a result of inflation and interest rates, supply
chain disruption, protectionist policies, and geopolitical
developments.
As a principally UK-focused banking group, NWB Group is affected
by global economic and market conditions, and is particularly
exposed to those conditions in the UK. Uncertain and volatile
economic conditions in the UK or globally can create a challenging
operating environment for financial services companies such as
NWB Group. The outlook for the UK and the global economy is
affected by many dynamic factors including: GDP, unemployment,
inflation and interest rates, asset prices (including residential and
commercial property), energy prices, monetary and fiscal policy
(such as increases in bank taxes), supply chain disruption,
protectionist policies or trade barriers (including tariffs).
Economic and market conditions could be exacerbated by a
number of factors including: instability in the UK and/or global
financial systems, market volatility and change, fluctuations in the
value of the pound sterling, new or extended economic sanctions,
volatility in commodity prices, political uncertainty or instability,
concerns regarding sovereign debt (including sovereign credit
ratings), any lack or perceived lack of creditworthiness of a
counterparty or borrower that may trigger market-wide liquidity
problems, changing demographics in the markets that NWB
Group and its customers serve, rapid changes to the economic
environment due to the adoption of technology, digitisation
automation, artificial intelligence, decarbonisation or due to the
consequences of climate change, biodiversity loss, environmental
degradation and widening social and economic inequalities.
NWB Group is also exposed to risks arising out of geopolitical
events or political developments that may hinder economic or
financial activity levels, and may, directly or indirectly, impact UK,
regional or global trade and/or NWB Group’s customers and
counterparties. NatWest Group’s business and performance could
be negatively affected by political, military or diplomatic events,
geopolitical tensions, armed conflict (for example, the Russia-
Ukraine conflict and Middle East conflicts), terrorist acts or threats
(including to critical infrastructures), more severe and frequent
extreme weather events, widespread public health crises, and the
responses to any of the above scenarios by various governments
and markets.
NWB Group may face political uncertainty in Scotland if there is
another Scottish independence referendum. Scottish
independence may adversely affect NWB Group both in relation to
its entities incorporated in Scotland and in other jurisdictions.
Any changes to Scotland’s relationship with the UK or the EU
may adversely affect the environment in which NatWest Group
plc and its subsidiaries operate and may require further changes
to NatWest Group’s (including NWB Group’s) structure,
independently or in conjunction with other mandatory or strategic
structural and organisational changes, any of which could
adversely affect NWB Group. The value of NWB Group’s own and
other securities may be materially affected by economic and
market conditions. Market volatility, illiquid market conditions and
disruptions in the financial markets may make it very difficult to
value certain of NWB Group’s own and other securities,
particularly during periods of market displacement. This could
cause a decline in the value of NWB Group’s own and other
securities, or inaccurate carrying values for certain financial
instruments.
In addition, financial markets are susceptible to severe events
evidenced by, or resulting in, rapid depreciation in asset values,
which may be accompanied by a reduction in asset liquidity.
Under these conditions, hedging and other risk management
strategies may not be as effective at mitigating losses as they
would be under more normal market conditions. Moreover, under
these conditions, market participants are particularly exposed to
trading strategies employed by many market participants
simultaneously (and often automatically) and on a large scale,
increasing NWB Group’s counterparty risk. NWB Group’s risk
management and monitoring processes seek to quantify and
mitigate NWB Group’s exposure to extreme market moves.
However, market events have historically been difficult to predict,
and NWB Group, its customers and its counterparties could realise
significant losses if severe market events were to occur.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
Changes in interest rates will continue to affect NWB Group’s
business and results.
NWB Group’s performance is affected by changes in interest
rates. Benchmark overnight interest rates, such as the UK base
rate, decreased in 2025. Forward rates imply UK short term
interest rates, including the UK base rate, will continue to decline
in 2026, while they anticipate longer term swap rates, such as the
GBP 5 and 10-year swap rates, will rise slightly across 2026.
Stable interest rates support more predictable income flow and
less volatility in asset and liability valuations, although persistently
low and negative interest rates may adversely affect NWB Group.
Further, volatility in interest rates may result in unexpected
outcomes both for interest income and asset and liability
valuations which may adversely affect NWB Group. For example,
decreases in key benchmark rates such as the UK base rate may
adversely affect NWB Group’s net interest margin, and
unexpected movements in spreads between key benchmark rates
such as sovereign and swap rates may in turn affect liquidity
portfolio valuations. In addition, unexpected sharp rises in rates
may also have negative impacts on some asset and derivative
valuations.
Moreover, customer and investor responses to rapid changes in
interest rates can have an adverse effect on NWB Group. For
example, customers may make deposit choices that provide them
with higher returns than those being offered by NWB Group.
Alternatively, NWB Group may not respond with competitive
products as rapidly, for example following an interest rate change,
which may in turn decrease NWB Group’s net interest income.
Risk factors continued
NWB Group
Annual Report and Accounts 2025
169
Movements in interest rates also influence and reflect the
macroeconomic situation more broadly, affecting factors such as
business and consumer confidence, property prices, default rates
on loans, customer behaviour (which may adversely impact the
effectiveness of NWB Group’s hedging strategy) and other
indicators that may indirectly affect NWB Group.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
Fluctuations in currency exchange rates may adversely affect
NWB Group’s results and financial condition.
Decisions of central banks (including the BoE, the European
Central Bank (‘ECB’), and the US Federal Reserve) and political or
market events, which are outside NWB Group’s control, may lead
to unexpected fluctuations in currency exchange rates.
Although NWB Group is principally a UK-focused banking group, it
is subject to structural foreign exchange risk from capital
deployed in NatWest Group’s foreign subsidiaries and branches.
NWB Group also issues internal instruments in non-sterling
currencies, such as US dollars and euros, that assist in meeting
NWB Group’s regulatory requirements. In addition, NWB Group
conducts banking activities in non-sterling currencies (for example
loans, deposits and dealing activity) which affect its revenue. NWB
Group also uses service providers based outside the UK for
certain services and as a result certain operating results are
subject to fluctuations in currency exchange rates.
NWB Group maintains policies and procedures designed to
manage the impact of its exposure to fluctuations in currency
exchange rates. Nevertheless, changes in currency exchange
rates, particularly in the sterling-US dollar and sterling-euro rates,
may adversely affect various accounting and financial metrics
including, the value of assets, liabilities (including the total amount
of instruments eligible to contribute towards the minimum
requirement for own funds and eligible liabilities (‘MREL’)), foreign
exchange dealing activity, income and expenses, RWAs and
hence the reported earnings and financial condition of NWB Plc.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
Business change and execution risk
The implementation and execution of NatWest Group’s (of which
NWB Group forms part) strategy carries execution and
operational risks and it may
not achieve its stated aims and
targeted outcomes.
NatWest Group’s strategy (including the strategic priorities of
disciplined growth, leveraging simplification and active balance
sheet and risk management) and NWB Group’s strategy are
intended to reflect the rapidly changing environment and
backdrop of significant societal disruption driven by technology
and changing customer expectations. There is also increasing
scrutiny from stakeholders regarding how NatWest Group
(including NWB Group) addresses environmental and social
challenges, including its support for the transition to net zero,
promotion of inclusive workplaces, protection of customer data,
and responsible management of its workforce and of its supply
chain.
As part of NatWest Group’s strategy, in December 2023, a
transfer pricing arrangement between NWB Group and NWM
Group allowing a sharing of certain Commercial & Institutional
(‘C&I’) business segment profits through payment from NWB
Group to NWM Group was approved. Weaker performance in
NWM Group, could lead to a higher payment from NWB Group to
NWM Group and therefore reduced profitability in NWB Group.
Many factors may adversely impact the successful implementation
of NatWest Group’s strategy, including:
•
macroeconomic challenges which may adversely affect NWB
Group’s customers and could in turn adversely impact certain
strategic initiatives for NWB Group (see ‘NWB Group, its
customers and its counterparties face continued economic
and political risks and uncertainties in the UK and global
markets, including as a result of inflation and interest rates,
supply chain disruption, protectionist policies, and geopolitical
developments’);
•
changing customer expectations and behaviour in response to
macroeconomic conditions or developments, technology and
other factors which could reduce the profitability,
competitiveness, or volume of services NWB Group offers;
•
the rapid emergence and deployment of new technologies
(such as artificial intelligence, quantum computing, blockchain
and digital currencies) resulting in a potential shift across the
market, towards products and services that are not part of
NWB Group’s core offering today;
•
the deployment and integration of artificial intelligence in NWB
Group’s processes, controls, and products;
•
The emergence of digital assets and digital currencies
operating alongside the traditional monetary system;
•
increased competitive threats from incumbent banks, fintech
companies (including buy-now-pay-later companies and
payment platforms), large retail and technology
conglomerates and other new market entrants (including
those that emerge from mergers and consolidations) who may
have competitive advantages in terms of scale, technology
and customer engagement; and
•
changes to the regulatory environment and associated
requirements which could lead to shifts in operating cost and
regulatory capital requirements, that impact NWB Group’s
product offerings and business models; (see ‘NWB Group’s
businesses are subject to substantial regulation and oversight,
which are constantly evolving and may adversely affect NWB
Group’; and ‘NWB Group could incur losses or be required to
maintain higher levels of capital as a result of limitations or
failure of various models’).
Delivery of NWB Group’s strategy will require maintaining
effective governance, procedures, systems and controls giving
effect to NatWest Group’s strategy, and achieving the stated
financial, capital and operational targets and expectations within
the relevant timeframes.
In pursuing NatWest Group’s strategy, NWB Group may not be
able to successfully: (i) implement some or all aspects of its
strategy; (ii) meet any or all of the related targets or expectations
of its strategy and otherwise realise the anticipated benefits of its
strategy, in a timely manner, or at all; or (iii) realise the intended
strategic objectives of any other future strategic or growth
initiative, which may also result in materially higher costs or risks
than initially contemplated. This could lead to additional
management actions by NatWest Group (or NWB Group).
Risk factors continued
NWB Group
Annual Report and Accounts 2025
170
The scale and scope of NatWest Group’s (and NWB Group’s)
strategy and the intended changes continue to present material
business, operational and regulatory (including compliance with
the UK ring-fencing regime), conflicts, legal, execution, IT system,
cybersecurity, internal culture, conduct and people risks.
Implementing changes and strategic actions, including in respect
of any growth, simplification or cost-saving initiatives, requires the
effective application of robust governance and controls
frameworks and IT systems; and there is a risk that NatWest
Group (and NWB Group) may not be successful in these respects.
Additionally, as a result of the UK’s withdrawal from the EU,
certain aspects of the services provided by NWB Group require
local licences or individual equivalence decisions (temporary or
otherwise) by relevant regulators. In April 2024, the European
Parliament approved the Banking Package (CRR III/CRD VI). From
11 January 2027, non-EU firms providing ‘banking services’ will be
required to apply for and obtain authorisation to operate as third
country branches in each relevant EU member state where they
provide these services, unless an exemption applies. NatWest
Group continues to evaluate its EU operating model, making
adaptations as necessary. Changes to, or uncertainty regarding
NWB Group’s EU operating model have been, and may continue
to be, costly and may: (i) adversely affect customers and
counterparties who are dependent on trading with the EU or
personnel from the EU; and/or (ii) result in regulatory sanction
and/or further costs due to a failure to receive the required
regulatory permissions and/or further changes to NatWest
Group’s business operations, product offering, customer
engagement, and regulatory requirements.
Each of these risks, and others identified in this section entitled
‘Principal Risks and Uncertainties’, individually or collectively could
jeopardise the implementation and delivery of NatWest Group’s
strategy, impact NWB Group’s products and services offering, its
reputation with customers or business model and adversely affect
NWB Group’s ability to deliver its strategy and meet its targets,
guidance, and forecasts.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
Acquisitions, divestments, or other transactions by NatWest
Group (and/or NWB Group) may not be successful.
NatWest Group (of which NWB Group forms part) may decide to
undertake acquisitions, investments, the purchase of assets and
liabilities, divestments, restructurings, reorganisations, joint
ventures and other strategic partnerships, as well as other
transactions and initiatives. In doing so, NatWest Group (which
includes NWB Group) may have to compete with other financial
institutions or entities offering financial services products (including
those that emerge from mergers and consolidations, as well as
retail and technology conglomerates). These competitors may
have more bargaining power in negotiations than NatWest Group
(or NWB Group), and therefore may be in a position to extract
more advantageous terms than NatWest Group (and NWB
Group). Refer to ‘NWB Group operates in markets that are highly
competitive, with evolving competitive pressures and technology
disruption’.
NatWest Group (of which NWB Group forms part), may pursue
these transactions and initiatives to, amongst others: (i) increase
scale and/or enhance capabilities that may lead to better
productivity or cost efficiencies; (ii) acquire talent; (iii) pursue new
products or expand existing products; and/or (iv) enter new
markets or enhance its presence in existing markets.
In pursuing its strategy, NWB Group may not fully realise the
expected benefits and value from the above-mentioned
transactions and initiatives in the time, or to the degree
anticipated, or at all.
In particular, NatWest Group (and NWB Group) may: (i) fail to
realise the business rationale for the transaction or initiative, or
rely on assumptions underlying the business plans supporting the
valuation of a target transaction or initiative that may prove
inaccurate, for example, regarding synergies and expected
commercial demand; (ii) fail to successfully integrate any acquired
businesses, investment, joint-venture or assets (including in
respect of technologies, existing strategies, products, governance,
systems and controls, and human capital) or to successfully divest
or restructure a business; (iii) fail to retain key employees,
customers and suppliers of any acquired or restructured business;
(iv) be required or wish to terminate pre-existing contractual
relationships, which could prove costly and/or be executed on
unfavourable terms and conditions; (v) fail to conduct adequate
due diligence or fail to discover certain contingent or undisclosed
liabilities in businesses that it acquires; and (vi) not obtain
necessary regulatory and other approvals (or onerous conditions
may be attached to such approvals). Accordingly, NatWest Group
(or NWB Group) may not be successful in achieving its strategy
and any particular transaction may not succeed, may be limited in
scope or scale and may not conclude on the terms contemplated,
or at all.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
NWB Group operates in markets that are highly competitive, with
evolving competitive pressures and technology disruption.
NWB Group faces increasing competitive pressures and
technology disruption from incumbent traditional UK banks,
challenger banks and building societies (including those formed
through mergers), fintech companies (including companies offering
buy-now-pay-later and payment platforms), large technology
conglomerates and new market entrants leveraging technology
and/or other advantages to compete for customer engagement.
“BigTech” companies pose a threat to incumbent banking
providers because of their customer innovation and global reach.
In addition, digital-first banks (often referred to as “neobanks”)
and fintechs are aiming to compete to serve customers that
increasingly use a constellation of providers to support their
complex and evolving needs (e.g., personal financial management,
buy now and pay later, and paying for goods and services in
foreign currency).
Competition is expected to continue and intensify due to: evolving
customer behaviour, technological changes (including digital
currencies, stablecoins and the growth of digital banking),
competitor behaviour, new market entrants, competitive foreign
exchange offerings, industry trends resulting in increased
disaggregation or unbundling of financial services or, conversely,
the re-intermediation of traditional banking services, and the
impact of regulatory actions, among others.
In particular, NWB Group may be unable to grow or retain market
share due to new (or more competitive) banking, lending and
payment offerings by rapidly evolving incumbents and challengers
(including shadow banks, alternative or direct lenders and new
entrants). Regulatory and competition policy interventions such as
the UK initiative on Open Banking, ‘Open Finance’ and remedies
imposed by the Competition and Markets Authority (‘CMA’) are
accelerating these trends.
Risk factors continued
NWB Group
Annual Report and Accounts 2025
171
These competitive pressures may result in a shift in customer
behaviour and impact NWB Group’s revenues and profitability.
Moreover, innovations in biometrics, artificial intelligence,
automation, cloud services, blockchain, cryptocurrencies and
quantum computing may rapidly facilitate industry transformation.
Increasingly, many of NWB Group’s products and services are,
and will become, more technology intensive, including through
digitalisation, automation, and the use of artificial intelligence while
needing to continue complying with applicable and evolving
regulations. NWB Group’s ability to develop or acquire digital
solutions and their integration into NWB Group’s structures,
systems and controls has become increasingly important for
retaining and growing NWB Group’s market share and customer-
facing businesses.
NWB Group’s innovation strategy, which includes investing in its IT
capability to address increasing customer and merchant use of
online and mobile banking technology, as well as selective
acquisitions (such as fintech ventures, including Rooster Money,
and Boxed), may not be successful or may not result in NWB
Group offering innovative products and services in the future.
Furthermore, competitors may outperform NWB Group in
deploying technologies to deliver products or services to
customers, which may adversely affect NWB Group’s competitive
position. In addition, continued industry consolidation and/or
technological developments could result in the emergence of new
competitors or strengthening NWB Group’s current competitors,
including in their ability to offer a broader, more attractive and/or
better value range of products and services and geographic
diversity. For example, new market entrants, including non-
traditional financial services providers, such as retail or technology
conglomerates, may benefit from scale, technology and customer
engagement advantages and may be able to deliver financial
services at a lower cost base.
Failure to offer competitive, attractive, innovative, and profitable
products that are also released in a timely manner; may result in
lost market share, losses on some or all of NWB Group’s initiatives
and missed growth opportunities. For example, NWB Group is
investing in the automation of certain solutions and interactions
within its customer-facing businesses, including through artificial
intelligence. There can be no certainty that such initiatives will
allow NWB Group to compete effectively or will deliver the
expected cost savings. In addition, the implementation of NWB
Group’s strategy, delivery on its climate ambition and cost-
controlling measures, may also have an adverse effect on
competitiveness and returns. Moreover, activist investor
engagement and increased intervention may challenge NWB
Group’s strategic initiatives.
NWB Group may also fail to identify opportunities or derive
benefits from technological innovation, shifting customer
behaviour and regulatory changes. Competitors may better
attract and retain customers and key employees, operate more
effective IT systems, have access to lower cost funding and/or be
able to attract deposits on more favourable terms than NWB
Group. Although NWB Group invests in new technologies and
participates in industry and research-led technology development
initiatives, such investments may be insufficient or ineffective,
especially given NWB Group’s focus on business simplification and
cost efficiencies. This could affect NWB Group’s ability to offer
innovative products or technologies to customers.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
The transfer of NatWest Group’s EU corporate portfolio involves
certain risks.
To improve efficiencies and best serve customers, certain assets,
liabilities, transactions and activities of NatWest Group (including
its Western European corporate portfolio, principally consisting of
term funding and revolving credit facilities), have been or may be:
(i) transferred from the ring-fenced subgroup of NatWest Group to
NWM Group and/or (ii) transferred to the ring-fenced subgroup of
NatWest Group from NWM Group, subject to customer and
regulatory requirements, such as CRD VI. The timing, success and
quantum of any of these transfers remain uncertain as is the
impact of these transactions on its results of operations. If such
transfers are unable to be implemented in response to triggering
events, such as changes in the regulatory environment, it may
result in reputational damage.
Any of the above may have a material adverse effect on NatWest
Group’s (including NWB Group’s) future results, financial condition,
prospects, and/or reputation.
Financial resilience risk
NWB Group may not achieve its ambitions or targets, meet its
guidance, or generate sustainable returns.
NatWest Group has set a number of financial, capital and
operational targets and provided guidance for NWB Group
including in respect of: funding plans and requirements, employee
engagement, diversity and inclusion as well as it contributes to
NatWest Group’s climate and sustainability-related ambitions,
targets and commitment and the implementation of NatWest
Group’s climate transition plan.
NWB Group’s ability to meet NatWest Group and NWB Group’s
respective ambitions, targets, guidance and make discretionary
capital distributions, is subject to various internal and external
factors, risks and uncertainties. These include, but are not limited
to: UK and global macroeconomic, political, market and regulatory
uncertainties, customer behaviour, operational risks and risks
relating to NWB Group’s business model and strategy (including
risks associated with climate and other sustainability-related
issues), competitive pressures, and litigation, governmental
actions, investigations and regulatory matters. If assumptions,
judgements and estimates (for example about future economic
conditions) prove to be incorrect, NatWest Group may not achieve
any or all of its ambitions or targets, or meet its guidance. A
number of factors may impact NWB Group’s ability to maintain its
current CET1 ratio, including impairments, limited organic capital
generation or unanticipated increases in RWAs. Refer to ‘The
implementation and execution of NatWest Group’s (of which NWB
Group forms part) strategy carries execution and operational risks
and it may not achieve its stated aims and targeted outcomes.’
Any failure of NWB Group to achieve NatWest Group and NWB
Group’s respective ambitions, targets or meet its guidance may
have a material adverse effect on NatWest Group’s future results,
financial condition, prospects, and/or reputation.
NWB Group has significant exposure to counterparty and
borrower risk including credit losses, which may have an adverse
effect on NWB Group.
NWB Group has exposure to many different sectors, customers
and counterparties, and risks arising from actual or perceived
changes in credit quality and the recoverability of monies due
from borrowers and other counterparties are inherent in a wide
range of NWB Group’s businesses.
Risk factors continued
NWB Group
Annual Report and Accounts 2025
172
These risks may increase where a significant proportion of
NatWest Group’s business activities relate to a single
counterparty, a related and/or connected group of counterparties
or a similar type of customer, product, sector or geography. NWB
Group’s lending strategy and associated processes and systems
may fail to identify, anticipate or quickly react to weaknesses or
risks (including material cybersecurity vulnerabilities) in a
particular sector, market, borrower or counterparty. NatWest
Group may also fail to assess its credit risk appetite relative to
competitors, or fail to appropriately value physical or financial
collateral. This may result in increased default rates or a higher
loss given default for loans, which may impact NWB Group’s
profitability. Refer to ‘Risk and capital management — Credit
Risk’.
The credit quality of NWB Group’s borrowers and other
counterparties may be affected by UK and global macroeconomic
and political uncertainties, as well as prevailing economic and
market conditions. For example, as the level of household
indebtedness (on a per capita basis) in the UK remains high. The
ability of households and businesses to service their debts could
be worsened by a period of high unemployment, or high interest
rates or inflation, particularly if prolonged. Refer to ‘NWB Group,
its customers and its counterparties face continued economic and
political risks and uncertainties in the UK and global markets,
including as a result of inflation and interest rates, supply chain
disruption, protectionist policies, and geopolitical developments’.
Any further deterioration in these conditions or changes to legal
or regulatory landscapes could worsen borrower and
counterparty credit quality or impact the enforcement of
contractual rights, increasing credit risk. Any increase in drawings
upon committed credit facilities may also increase NWB Group’s
RWAs. NWB Group may be affected by volatility in property prices
(including as a result of political or economic conditions) given that
NWB Group’s mortgage loan portfolio as at 31 December 2025,
amounted to £203.8 billion, representing 58% of NWB Group’s
total loan exposure. If property prices were to weaken this could
lead to higher impairment charges, particularly if default rates also
increase. In addition, NWB Group’s credit risk may be
exacerbated if the collateral that it holds cannot be realised as a
result of market conditions, regulatory intervention, or other
applicable laws, or if it is liquidated at prices not sufficient to
recover the net amount outstanding to NWB Group after
accounting for any IFRS 9 provisions already made. This is most
likely to occur during periods of illiquidity or depressed asset
valuations.
Concerns about, or a default by, a financial institution or
intermediary could lead to significant liquidity problems and losses
or defaults by other financial institutions or intermediaries, since
the commercial and financial soundness of many financial
institutions and intermediaries is closely related and
interdependent as a result of credit, trading, clearing and other
relationships. Any perceived lack of creditworthiness of a
counterparty or borrower may lead to market-wide liquidity
problems and losses for NWB Group. In addition, the value of
collateral may be correlated with the probability of default by the
relevant counterparty (‘wrong way risk’), which would increase
NWB Group’s potential loss. Any of the above risks may also
adversely affect financial intermediaries, such as clearing
agencies, clearing houses, banks, securities firms and exchanges
with which NWB Group interacts on a regular basis. Refer to
‘NWB Group may not meet the prudential regulatory
requirements for liquidity and funding or may not be able to
adequately access sources of liquidity and funding, which could
trigger the execution of certain management actions or recovery
options.’
As a result, adverse changes in borrower and counterparty credit
risk may cause additional impairment charges under IFRS 9,
increased repurchase demands, higher costs, additional write-
downs and losses for NWB Group and an inability to engage in
routine funding transactions. If NWB Group experiences losses
and a reduction in profitability, this is likely to affect the
recoverable value of fixed assets, including goodwill and deferred
taxes, which may lead to write-downs.
NWB Group has applied an internal analysis of multiple economic
scenarios (MES) together with the determination of specific
overlay adjustments to inform its IFRS 9 ECL (Expected Credit
Loss). The recognition and measurement of ECL is complex and
involves the use of significant judgement and estimation. This
includes the formulation and incorporation of multiple forward-
looking economic scenarios into ECL to meet the measurement
objective of IFRS 9. The ECL provision is sensitive to the model
inputs and economic assumptions underlying the estimate. Refer
to ‘Risk and capital management — Credit Risk’. A credit
deterioration would also lead to RWA increases. Furthermore, the
assumptions and judgements used in the MES and ECL
assessment at 31 December 2025 may not prove to be adequate
resulting in incremental ECL provisions for NWB Group.
In line with certain mandated COVID-19 pandemic support
schemes, NWB Group assisted customers with a number of
initiatives including NWB Group’s participation in the Bounce Back
Loan Scheme (‘BBLS’) products. NWB Group sought to manage
the risks of fraud and money laundering against the need for the
fast and efficient release of funds to customers and businesses.
NWB Group may be exposed to fraud, conduct and litigation risks
arising from inappropriate approval (or denial) of BBLS, or the
enforcing or pursuing repayment thereof (or a failure to exercise
forbearance), which may have an adverse effect on NWB Group’s
reputation and results of operations. The implementation of the
initiatives and efforts mentioned above may result in litigation,
regulatory and government actions and proceedings. These
actions may result in judgements, settlements, penalties, fines, or
removal of recourse to the government guarantee provided under
those schemes for impacted loans.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
NWB Group may not meet the prudential regulatory requirements
for liquidity and funding or may not be able to adequately access
sources of liquidity and funding, which could trigger the execution
of certain management actions or recovery options.
Liquidity and the ability to raise funds continues to be a key area
of focus for NWB Group and the industry as a whole. NatWest
Group and NWB Plc (as a member of the Domestic Liquidity sub-
group) are required by regulators in the UK, the EU and other
jurisdictions in which they undertake regulated activities to
maintain adequate liquidity and funding resources. To satisfy its
liquidity and funding requirements, NWB Group may therefore
access sources of liquidity and funding through retail and
wholesale deposits, as well as through the debt capital markets.
As at 31 December 2025, NWB Plc held £315.4 billion in deposits
from banks and customers.
Risk factors continued
NWB Group
Annual Report and Accounts 2025
173
Level of deposits at NWB Group may fluctuate due to factors
outside of its control such as a loss of customers, loss of customer
and/or investor confidence (including in individual NatWest Group
entities or as a result of volatility in the financial industry), changes
in customer behaviour, changes in interest rates, government
support, increasing competitive pressures for retail and corporate
customer deposits (including from new entrants or fintech
companies (including deposit aggregators)), new deposit offerings
(such as digital assets), or the reduction or cessation of deposits
by wholesale depositors, which could result in a significant outflow
of deposits within a short period of time. An inability to grow, or
any material decrease in NWB Group’s deposits could, particularly
if accompanied by one or more of the other factors mentioned
above, adversely affect NWB Group’s ability to satisfy its liquidity
or funding needs, or comply with its related regulatory
requirements. In turn, this could require NWB Group to adapt its
funding plans or change its operations.
Macroeconomic developments, political uncertainty, changes in
interest rates, and market volatility could affect NWB Group’s
ability to access sources of liquidity and funding on satisfactory
terms, or at all. This may result in higher funding costs and failure
to comply with regulatory capital, funding and leverage
requirements. As a result, NWB Group could be required to
change its funding plans.
This could exacerbate funding and
liquidity risk, which may adversely affect NWB Group.
If NWB Plc’s liquidity position and/or funding were to come under
stress, and if NWB Group were unable to raise funds through
deposits, in the debt capital markets or through other reliable
funding sources, on acceptable terms, or at all, its liquidity position
would likely be adversely affected and it might be unable to meet
deposit withdrawals on demand or at their contractual maturity,
repay borrowings as they mature, meet its obligations under
committed financing facilities, comply with regulatory funding
requirements, undertake certain capital and/or debt management
activities, and/or fund new loans, investments and businesses, or
make capital distributions to NatWest Group.
If, under a stress scenario, the level of liquidity falls outside of
NWB Group’s risk appetite, there are a range of recovery
management actions that NWB Group could take to manage its
liquidity levels, but any such actions may not be sufficient to
restore adequate liquidity levels and the related implementation
may have adverse consequences for NWB Group’s operations.
Under the Prudential Regulation Authority (PRA) Rulebook,
NatWest Group must maintain a recovery plan acceptable to its
regulator, such that a breach of NWB Group’s applicable liquidity
requirements may trigger the application of NatWest Group’s
recovery plan to attempt to remediate a deficient liquidity position.
NWB Group may need to liquidate assets to meet its liabilities,
including disposals of assets not previously identified for disposal
to reduce its funding commitments or trigger the execution of
certain management actions or recovery options. In a time of
reduced market liquidity, NWB Group may be unable to sell its
assets, at attractive prices, or at all, which may have a material
adverse effect on NWB Group’s liquidity.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
NWB Group may not meet the prudential regulatory requirements
for regulatory capital and MREL, or manage its capital effectively,
which could trigger the execution of certain management actions
or recovery options.
NatWest Group and NWB Plc are required by regulators in the
UK, the EU and other jurisdictions in which they undertake
regulated activities to maintain adequate financial resources.
Adequate levels of capital provide NatWest Group (including NWB
Group) with financial flexibility specifically in its core UK operations
in the face of turbulence and uncertainty in the UK and global
economy.
As at 31 December 2025, NWB Plc’s CET1 ratio was 11.2%. A
number of subsidiaries and sub-groups within NWB Group,
principally banking entities, are subject to various individual
regulatory capital requirements in the UK and overseas. NatWest
Group plc targets a CET1 ratio of around 13%. NatWest Group
plc’s target CET1 ratio is based on a combination of its views on
the appropriate level of capital and its actual and expected
regulatory requirements and internal modelling, including stress
scenarios and management’s and/or the PRA’s views on
appropriate buffers above minimum required operating levels.
NatWest Group’s current capital strategy for NWB Plc is based
on: the expected accumulation of additional capital through the
accrual of retained earnings over time; the receipt of assets and
resultant RWAs from other NatWest Group entities; RWA growth
in the form of regulatory uplifts and lending growth and other
capital management initiatives which focus on improving capital
efficiency through improved data and upstreaming of dividends
from NWB Plc to NatWest Group plc to support NatWest Group
meeting its medium to long term targets.
A number of factors may impact NWB plc’s ability to meet and
maintain its CET1 ratio target and achieve its capital strategy.
These include:
•
a depletion of its capital resources through increased costs or
liabilities or reduced profits (for example, due to an increase in
provisions due to a deterioration in UK economic conditions);
•
an increase in the quantum of RWAs/leverage exposure in
excess of that expected, including due to regulatory changes
(including their interpretation or application) or a failure in
internal controls or procedures to accurately measure and
report RWAs/leverage exposure;
•
changes in prudential regulatory requirements including NWB
Plc’s total capital requirement/leverage requirement set by the
PRA, including Pillar 2 requirements, as applicable, and
regulatory buffers as well as any applicable scalars; and
•
reduced upstreaming of dividends from NWB plc’s subsidiaries
because of changes in their financial performance.
In addition to regulatory capital, NWB Plc is required to maintain a
set quantum of internal MREL set as the higher of: (i) two times
the sum of Pillar 1 and Pillar 2A, or (ii) if subject to a leverage ratio
requirement, two times the applicable requirement. The BoE has
identified single point-of-entry at NatWest Group plc, as the
preferred resolution strategy for NatWest Group. As a result,
NatWest Group plc is the only entity that can externally issue
securities that count towards its MREL requirements, the
proceeds of which can then be downstreamed to meet the
internal MREL requirements of its operating entities, including
NWB Plc. NWB Plc is therefore dependent not only on NatWest
Group plc to fund its internal MREL targets over time, but also on
NatWest Group plc’s ability to issue and maintain sufficient
amounts of external MREL liabilities to support NWB Plc. In turn,
NWB Plc is required to fund the internal capital and MREL
requirements of its subsidiaries.
Risk factors continued
NWB Group
Annual Report and Accounts 2025
174
Refer to ‘NWB Group is reliant on NatWest Group for capital and
funding support, and is substantially reliant on NatWest Group
plc’s ability to issue sufficient amounts of capital and external
MREL securities and downstream the proceeds to NWB Group.
The inability to do so may adversely affect NWB Group.’
If, under a stress scenario, the level of regulatory capital or MREL
falls outside of NWB Plc’s risk appetite, there are a range of
recovery management actions (focused on risk reduction and
mitigation) that NWB Plc could seek to take to manage its capital
levels, but any such actions may not be sufficient to restore
adequate capital levels. Under the PRA Rulebook, NatWest Group
must maintain a recovery plan acceptable to its regulator, such
that a breach of NWB Plc’s applicable capital or leverage
requirements may trigger the application of NatWest Group’s
recovery plan to remediate a deficient capital position.
Further, NatWest Group’s regulator may request that NWB Plc
carry out certain capital management actions or, if NatWest Bank
plc’s CET1 ratio falls below 7%, certain regulatory capital
instruments issued by NatWest Bank Plc will be written-down or
converted into equity, which could result in the reduction in value
of the holdings of NatWest Bank plc’s existing shareholders.
Separately, NatWest Bank may address a shortage of capital by
taking action to reduce leverage exposure and/or RWAs via asset
or business disposals. These actions may, in turn, affect: NWB
Group’s product offering, credit ratings, ability to operate its
businesses, pursue its strategy and strategic opportunities, any of
which may adversely affect NWB Group. Refer to ‘NatWest Group
(including NWB Group) may become subject to the application of
UK statutory stabilisation or resolution powers which may result
in, for example, the write-down or conversion of NWB Group’s
Eligible Liabilities.’; and also ‘NatWest Group, and NWB Group,
could be adversely affected if NatWest Group fails to meet the
requirements of regulatory stress tests, or if its resolution
preparations are deemed inadequate.’.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
NWB Group is reliant on NatWest Group for capital and funding
support, and is substantially reliant on NatWest Group plc’s ability
to issue sufficient amounts of capital and external MREL securities
and downstream the proceeds to NWB Group. The inability to do
so may adversely affect NWB Group.
NWB Plc receives capital and funding from NatWest Group. NWB
Plc has set target levels for different tiers of capital and for the
internal MREL, as percentages of its RWAs. The level of capital
and funding required for NWB Plc to meet its internal targets is
therefore a function of the level of RWAs and its leverage
exposure in NWB Plc and this may vary over time.
NWB Plc’s internal MREL comprises the capital value of regulatory
capital instruments and loss-absorbing senior funding issued by
NWB Plc. The BoE has identified that the preferred resolution
strategy for NatWest Group is as a single point of entry at
NatWest Group plc. As a result, only NatWest Group plc is able to
issue Group MREL eligible liabilities to third-party investors, using
the proceeds to fund the internal MREL targets and/or
requirements of its operating entities, including NWB Plc.
NWB Plc is therefore dependent on NatWest Group plc to fund its
internal capital targets and its ability to source appropriate
funding at NatWest Group plc level to support this.
NWB Plc is also dependent on NatWest Group plc to fund its
internal MREL target over time and its ability to raise and
maintain sufficient amounts of external MREL liabilities to support
this.
If NatWest Group plc is unable to issue adequate levels of MREL
securities such that it is unable to downstream sufficient amounts
to NWB Plc, this could lead to a failure of NWB plc to meet its own
individual internal MREL requirements as well as the internal
MREL requirements of subsidiaries within NWB Group, which in
either case may have a material adverse effect on NWB plc’s
future results, financial condition, prospects, and reputation. Refer
to ‘NWB Group may not meet the prudential regulatory
requirements for regulatory capital and MREL, or manage its
capital effectively, which could trigger the execution of certain
management actions or recovery options’.
Any reduction in the credit rating and/or outlooks assigned to
NatWest Group plc, any of its subsidiaries (including NWB Plc or
other NWB Group subsidiaries) or any of their respective debt
securities could adversely affect the availability of funding for NWB
Group, reduce NWB Group’s liquidity and funding position and
increase the cost of funding.
Rating agencies regularly review NatWest Group plc, NWB Plc and
other NatWest Group entities’ credit ratings and outlooks. NWB
Group entities’ credit ratings and outlooks could be negatively
affected (directly and indirectly) by a number of factors that can
change over time, including without limitation: credit rating
agencies’ assessment of NWB Group’s strategy and
management’s capability; its financial condition including in
respect of profitability, asset quality, capital, funding and liquidity,
and risk management practices; the level of political support for
the sectors and regions in which NWB Group operates; the legal
and regulatory frameworks applicable to NWB Group’s legal
structure; business activities and the rights of its creditors;
changes in rating methodologies; changes in the relative size of
the loss-absorbing buffers protecting bondholders and depositors;
the competitive environment; political, geopolitical and economic
conditions in NWB Group’s key markets (including inflation and
interest rates, supply chain disruption, protectionist policies, and
geopolitical developments); and/or any reduction of the UK’s
sovereign credit rating and market uncertainty. In addition, credit
rating agencies take into consideration sustainability-related
factors, including climate, environmental, social and governance
related risk, as part of their credit rating analysis (as do investors
in their investment decisions).
Any reductions in the credit ratings of NatWest Group plc, NWB
Plc or of certain other NatWest Group entities could have adverse
consequences including, without limitation, (i) reduced access to
capital markets, (ii) a reduction in deposit base, and (iii) triggering
additional collateral or other requirements in NatWest Group’s
funding arrangements or the need to amend such arrangements.
Any of these consequences could adversely affect NWB Group’s
liquidity and funding position, cost of funding and could limit the
range of counterparties willing to enter into transactions with
NWB Group on favourable terms, or at all. This may in turn
adversely affect NWB Group’s competitive position and threaten
its prospects.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
Risk factors continued
NWB Group
Annual Report and Accounts 2025
175
NWB Group could incur losses or be required to maintain higher
levels of capital as a result of limitations or failure of various
models.
Given the complexity of NWB Group’s business, strategy and
capital requirements, NWB Group relies on models for a wide
range of purposes, including to manage its business, assess the
value of its assets and its risk exposure, as well as to anticipate
capital and funding requirements (including to facilitate NatWest
Group’s mandated stress testing). In addition, NWB Group utilises
models for valuations, credit approvals, calculation of loan
impairment charges on an IFRS 9 basis, financial reporting and to
help address criminal activities in the form of money laundering,
terrorist financing, bribery and corruption, tax evasion and
sanctions as well as external or internal fraud (collectively,
‘financial crime’). NWB Group’s models, and the parameters and
assumptions on which they are based, are periodically reviewed.
Model outputs are inherently uncertain, because they are
imperfect representations of real-world phenomena, are
simplifications of complex real-world systems and processes, and
are based on a limited set of observations. NatWest Group (which
includes NWB Group) also continues to invest in building new
capabilities that employ new artificial intelligence technologies,
such as generative artificial intelligence, and it expects its use of
these technologies to increase over time. However, there are
significant risks involved in utilising more sophisticated modelling
approaches, including artificial intelligence, and no assurance can
be provided that NWB Group’s use of artificial intelligence in its
models will enhance its business or produce only intended or
beneficial results. NWB Group may face adverse consequences as
a result of actions or decisions based on models that are poorly
developed, incorrectly implemented, non-compliant, outdated or
used inappropriately. This includes models that are based on
inaccurate or non-representative data (for example, where there
have been changes in the micro or macroeconomic environment
in which NWB Group operates) or as a result of the modelled
outcome being misunderstood, or used for purposes for which it
was not designed. This could result in findings of deficiencies by
NatWest Group’s (and in particular, NWB Group’s) regulators
(including as part of NatWest Group’s mandated stress testing),
increased capital requirements, rendering some business lines
uneconomical, requiring management action or subjecting NWB
Group to regulatory sanction, any of which in turn may also have
an adverse effect on NWB Group and its customers.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
NWB Group’s financial statements are sensitive to underlying
accounting policies, judgements, estimates and assumptions.
The preparation of financial statements requires management to
make judgements, estimates and assumptions that affect the
reported amounts of assets, liabilities, income, expenses,
exposures and RWAs. While estimates, judgements and
assumptions take into account historical experience and other
factors (including market practice and expectations of future
events that are believed to be reasonable under the
circumstances), actual results may differ due to the inherent
uncertainty in making estimates, judgements and assumptions
(particularly those involving the use of complex models).
Further, accounting policy and financial statement reporting
requirements increasingly require management to adjust existing
judgements, estimates and assumptions for the effects of climate-
related, sustainability and other matters that are inherently
uncertain and for which there is little historical experience which
may affect the comparability of NWB Group’s future financial
results with its historical results.
Actual results may differ due to the inherent uncertainty in
making climate-related and sustainability estimates, judgements
and assumptions. Refer to ‘There are significant limitations related
to accessing accurate, reliable, verifiable, auditable, consistent
and comparable climate and sustainability-related data that
contributes to substantial uncertainties in accurately assessing,
managing and reporting on climate and sustainability-related
information and risks, as well as making informed decisions.’
Accounting policies deemed critical to NWB Group’s results and
financial position, based upon materiality and significant
judgements and estimates, involve a high degree of uncertainty
and may have a material impact on its results. For 2025, these
include loan impairments, fair value, deferred tax, and investment
in Group undertakings (parent company only). These are set out
in ‘Critical accounting policies’.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
Changes in accounting standards may materially impact NWB
Group’s financial results.
NWB Group prepares its consolidated financial statements in
conformity with the requirements of the Companies Act 2006 and
in accordance with UK-adopted IAS and IFRS as issued by the
International Accounting Standards Board. Changes in accounting
standards or guidance by accounting bodies and/or changes in
accounting standards requirements by regulatory bodies or in the
timing of their implementation, whether immediate or foreseeable,
could result in NWB Group having to recognise additional liabilities
on its balance sheet, or in further write-downs or impairments to
its assets, and could also have an adverse effect on NWB Group.
Additionally, auditors may have different interpretations of these
accounting standards, and any change of auditor may lead to
unfavourable changes in NWB Group’s accounting policies.
From time to time, the International Accounting Standards Board
may also issue new accounting standards or interpretations that
could materially impact how NWB Group calculates, reports and
discloses its financial results and financial condition, and which
may affect NWB Group’s capital ratios, including the CET1 ratio
and the required levels of regulatory capital. New accounting
standards and interpretations that have been issued by the
International Accounting Standards Board but which have not yet
been adopted by NWB Group are discussed in ‘Future accounting
developments’.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
The value or effectiveness of any credit protection that NatWest
Group (including NWB Group) has acquired depends on the value
of the underlying assets and the financial condition of the insurers
and counterparties.
The value or effectiveness of any credit protection that NatWest
Group (including NWB Group) has acquired, including credit
default swaps (CDSs), significant risk transfer (SRT) transactions,
credit risk insurance (CRI), and financial guarantees (FG) depends
on the value of the underlying assets and the financial condition of
the insurers, counterparties and protection providers, and
prevailing market spreads. Although extensive assessments are
undertaken prior to execution, there can be no assurance that
such protection will remain effective or enforceable, and any
failure could adversely impact NWB Group’s risk profile, capital
position and reputation.
Risk factors continued
NWB Group
Annual Report and Accounts 2025
176
For CDS, changes in credit spreads, deterioration in counterparty
creditworthiness, the outcome of determination committees, or
disputes over contractual terms may result in valuation
adjustments, impairments or increased collateral requirements,
creating potential liquidity pressures. For SRT transactions, the
anticipated capital relief is subject to ongoing regulatory
recognition and the performance of the securitised portfolio. Any
deterioration in asset quality, structural breaches, operational
errors or changes in regulatory interpretation could reduce or
eliminate the expected benefit. These transactions also introduce
counterparty and model risk. For CRI, the enforceability of policies
and the financial strength of insurers are critical. Disputes over
coverage, policy exclusions, delays in claims settlement or insurer
default could result in losses not being mitigated as intended.
Concentration risk may arise where protection is sourced from a
limited number of insurers, increasing vulnerability to sector-wide
stress.
As with other forms of credit protection, fluctuations in fair value
or deterioration in the financial condition or perceived
creditworthiness of counterparties and insurers may lead to
additional valuation adjustments or impairments. Any such
developments or fair value changes may have a material adverse
effect on NatWest Group (including NWB Group).
Any of the above may have an adverse effect on NWB Group’s
future results, financial condition, prospects, and/or reputation.
NatWest Group (including NWB Group) may become subject to
the application of UK statutory stabilisation or resolution powers
which may result in, for example, the write-down or conversion of
NWB Group’s Eligible Liabilities.
The BoE, the PRA, the FCA, and HM Treasury (together, the
‘Authorities’) are granted substantial powers to resolve and
stabilise UK-incorporated financial institutions. Five stabilisation
options exist: (i) transfer of all of the business of a relevant entity
or the shares of the relevant entity to a private sector purchaser;
(ii) transfer of all or part of the business of the relevant entity to a
‘bridge bank’ wholly or partially-owned by the BoE; (iii) transfer of
part of the assets, rights or liabilities of the relevant entity to one
or more asset management vehicles for management of the
transferor’s assets, rights or liabilities; (iv) the write-down,
conversion, transfer, modification, or suspension of the relevant
entity’s equity, capital instruments and liabilities; and (v)
temporary public ownership of the relevant entity. These options
may be applied to NatWest Group plc as the parent company or
to NWB Group, as a subsidiary, where certain conditions are met
(such as, whether the firm is failing or likely to fail, or whether it is
reasonably likely that action will be taken (outside of resolution)
that will result in the firm no longer failing or being likely to fail).
Moreover, there are modified insolvency and administration
procedures for relevant entities within NatWest Group, and the
Authorities have the power to modify or override certain
contractual arrangements in certain circumstances and amend
the law for the purpose of enabling their powers to be used
effectively and may promulgate provisions with retrospective
applicability.
Uncertainty exists as to how the Authorities may exercise their
powers including the determination of actions to be undertaken in
relation to the ordinary shares and other securities issued by
NatWest Group (including NWB Group), which may depend on
factors outside of NWB Group’s control. Moreover, the UK
Banking Act 2009 provisions remain largely untested in practice,
particularly in respect of resolutions of large financial institutions
and groups.
If NatWest Group is at or is approaching the point such that
regulatory intervention is required, there may be a corresponding
material adverse effect on NWB Group’s future results, financial
condition, prospects, and/or reputation.
NatWest Group, and NWB Group, could be adversely affected if
NatWest Group fails to meet the requirements of regulatory stress
tests, or if its resolution preparations are deemed inadequate.
NatWest Group is subject to annual and other stress tests by its
regulator in the UK. Stress tests are designed to assess the
resilience of banks such as NWB Group to potential adverse
economic or financial developments and ensure that they have
robust, forward-looking capital planning processes that account
for the risks associated with their business profile. If the stress
tests reveal that a bank’s existing regulatory capital buffers are
not sufficient to absorb the impact of the stress, then it is possible
that the NWB Group may need to take action to strengthen its
capital position.
Failure by NatWest Group to meet the quantitative and qualitative
requirements of the stress tests as set forth by its UK regulator
may result in: NatWest Group’s regulators requiring NatWest
Group to generate additional capital, reputational damage,
increased supervision and/or regulatory sanctions, restrictions on
capital distributions and loss of investor confidence, all of which
may adversely affect NatWest Group (including NWB Group).
NatWest Group is also subject to regulatory oversight by the BoE
and the PRA and is required (under the PRA rulebook) to carry
out an assessment of its preparations for resolution, submit a
report of the assessment to the PRA, and disclose a summary of
this report. In August 2024, the BoE communicated its
assessment of NatWest Group’s preparations for a potential
resolution scenario and did not identify any areas for further
enhancement, shortcomings, deficiencies or substantive
impediments. NatWest Group, and in turn NWB, could be
adversely affected should future BoE assessments deem NatWest
Group’s preparations to be inadequate.
If future BoE assessments identify any areas for further
enhancement, shortcomings, deficiencies or substantive
impediments in NatWest Group’s ability to achieve the resolvability
outcomes, or reveals that NatWest Group is not adequately
prepared to be resolved, or does not have adequate plans in
place to meet resolvability requirements, NatWest Group may be
required to take action to enhance its preparations to be
resolvable, resulting in additional costs and the dedication of
additional resources. Such a scenario may have an impact on
NatWest Group (and NWB Group) as, depending on the BoE’s
assessment, potential action may include, but is not limited to,
restrictions on maximum individual and aggregate exposures, a
requirement to dispose of specified assets, a requirement to
change its legal or operational structure, a requirement to cease
carrying out certain activities, and/or to maintain a specified
amount of MREL. This may also impact NatWest Group’s (and
NWB Group’s) strategic plans.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, reputation,
and/or lead to a loss of investor confidence.
Risk factors continued
NWB Group
Annual Report and Accounts 2025
177
Operational and IT resilience risk
Operational risks (including reliance on third party suppliers and
outsourcing of certain activities) are inherent in NWB Group’s
businesses.
Operational risk is the risk of loss or disruption resulting from
inadequate or failed internal processes, procedures, people or
systems, or from external events. NWB Group offers a diverse
range of products and services supported directly or indirectly by
third party suppliers. As a result, operational risks or losses can
arise from a number of internal or external factors (including for
example, payment errors or financial crime and fraud), for which
there is continued scrutiny by third parties of NWB Group’s
compliance with financial crime requirements.
Operational risks also exist due to the implementation of NatWest
Group’s strategy, and the organisational and operational changes
involved, including: NatWest Group’s cost-controlling and
simplification measures; continued digitalisation and the
integration of artificial intelligence in the business; acquisition,
divestments and other transactions; the implementation of
recommendations from internal and external reviews with respect
to certain governance processes, policies, systems and controls of
NatWest Group entities; and conditions affecting the financial
services industry generally (including macroeconomic and other
geopolitical developments) as well as the legal and regulatory
uncertainty resulting from these conditions. Any of the above may
place significant pressure on NWB Group’s ability to maintain
effective internal controls and governance frameworks.
Financial crime continues to evolve, whether through fraud,
scams, cyberattacks or other criminal activity. These risks are
exacerbated as NWB Group continues to innovate its product
offering and increasingly offers digital solutions to its customers,
including through mobile banking. Financial crime assessment,
systems and controls, internal stress tests and models are critical
to financial crime risk management. Ineffective risk management
may arise from a wide variety of factors, including lack of
transparency or incomplete risk reporting, manual processes and
controls, inaccurate data, inadequate IT systems, unidentified
conflicts or misaligned incentives, lack of accountability control
and governance, incomplete risk monitoring and management,
insufficient challenges or assurance processes, or a failure to
commence or timely complete risk remediation projects. Weak or
ineffective financial crime processes and controls may risk NWB
Group inadvertently facilitating financial crime which may result in
regulatory investigation, sanction, litigation, fines and/or
reputational damage. Further, failure to manage these risks
effectively, or within regulatory expectations, could adversely
affect NWB Group’s reputation or its relationship with its
regulators, customers or other stakeholders. See ‘NWB Group is
exposed to the risks of various litigation matters, regulatory and
governmental actions and investigations as well as remedial
undertakings, the outcomes of which are inherently difficult to
predict, and which could have an adverse effect on NWB Group.’
These risks are also exacerbated when NWB Group relies on
critical service providers (suppliers) or vendors to provide services
to it or its customers, as is increasingly the case as NWB Group
outsources certain activities, including with respect to the
implementation of technologies, innovation (such as cloud-based
services and artificial intelligence) and responding to regulatory
and market changes.
NWB Group also faces operational risks as it continues to invest in
the automation of certain solutions and customer interactions,
including through artificial intelligence. Such initiatives may result
in operational, reputational and conduct risks if the technology is
not used appropriately, is defective or inadequate, or is not fully
integrated into NWB Group’s current solutions, systems and
controls.
NWB Group increasingly provides certain shared critical services
and operations, including, without limitation, property, technology,
finance, accounting, treasury, legal, risk, regulatory compliance
and reporting, financial crime, human resources, and certain other
support and administrative functions to other entities within
NatWest Group (in particular, NWM Plc) and receives income in
respect of these services. As a result, NWB Group may be
exposed to a loss of income if these services are not required to
the same extent, or are no longer required at all.
The effective management of operational risks is critical to
meeting customer service expectations and retaining and
attracting customer business. Although NWB Group has
implemented risk controls and mitigation actions, with resources
and planning devoted to mitigate operational risk, such measures
may not be effective in controlling each of the operational risks
faced by NWB Group.
Ineffective management of such risks may have a material
adverse effect on NWB Group’s future results, financial condition,
prospects, and/or reputation.
NWB Group is subject to sophisticated and frequent cyberattacks,
and compliance with cybersecurity and data protection
regulations is becoming increasingly complex.
NatWest Group experiences a constant threat from cyberattacks
across the entire NatWest Group (including NWB Group) and
against NatWest Group and NWB Group’s supply chain networks,
reinforcing the importance of due diligence of, ongoing risk
management of, and a close working relationship with, the third
parties on which NWB Group relies. NWB Group is reliant on
technology, against which there is a constantly evolving series of
attacks that are increasing in terms of frequency, sophistication,
impact and severity. The increased availability of malicious tools
and the rapid advancement of artificial intelligence capabilities
reduce entry barriers for malicious actors and accelerate the
exploitation of vulnerabilities leading to cyberattacks evolving and
becoming more sophisticated. As a result, NWB Group is required
to continue to invest significant resources in additional capability
designed to defend against a variety of existing and emerging
threats.
Third parties continue to make hostile attempts to gain access to,
introduce malware (including ransomware) into, and exploit
potential vulnerabilities of, financial services institutions’ IT
systems, including those of NWB Group. For example, in 2025,
NWB Group and its supply chain were subjected to a small
number of attempted Distributed Denial of Service and
ransomware attacks. These hostile attempts were addressed
without material impact on NatWest Group or its customers by
deploying cybersecurity capabilities and controls that seek to
manage the impact of any such attacks, and sustain availability of
services for NWB Group’s customers. Consequently, NWB Group
continues to invest significant resources in developing and
evolving cybersecurity capabilities and controls that are designed
to mitigate the potential effect of such attacks. However, given
the nature of the threat, there can be no assurance that these
capabilities and controls will prevent the potential adverse effect
of an attack from occurring. Refer to ‘NWB Group’s operations
are highly dependent on its complex IT systems and any IT failure
could adversely affect NWB Group.’
Any failure in NWB Group’s information and cybersecurity policies,
procedures or controls, may result in significant financial losses,
major business disruption, inability to deliver customer services, or
loss of, or ability to access, data or systems or other sensitive
information (including as a result of an outage) and may cause
associated reputational damage.
Risk factors continued
NWB Group
Annual Report and Accounts 2025
178
Any of these factors could increase costs (including, but not
limited to costs relating to notification of, or compensation to
customers, credit monitoring or card reissuance), result in
regulatory investigations or sanctions being imposed, or may
affect NWB Group’s ability to retain and attract customers.
Regulators in the UK, US, Europe and Asia continue to recognise
cybersecurity as an important systemic risk to the financial sector
and have highlighted the need for financial institutions to improve
their monitoring and control of, and resilience (particularly of
critical services) to cyberattacks, and to provide timely reporting
or notification of them, as appropriate (including, for example, the
SEC cybersecurity requirements and the new EU Digital
Operational Resilience Act (‘DORA’)). Furthermore, cyberattacks
on NWB Group’s counterparties and suppliers may also have an
adverse effect on NWB Group’s operations.
Additionally, malicious third parties may induce employees,
customers, third party providers or other users with access to
NWB Group’s systems to wrongfully disclose sensitive information
to gain access to NWB Group’s data or systems or that of NWB
Group’s customers or employees. Cybersecurity and information
security events can derive from factors such as: internal or
external threat actors, human error, fraud or malice on the part
of NWB Group’s employees, customers or third parties, including
third party providers, or may result from technological failure
(including defective, inadequate or inappropriately used artificial
intelligence based solutions).
NWB Group expects greater regulatory engagement, supervision
and enforcement to continue in relation to its overall resilience to
withstand IT and IT-related disruption, either through a
cyberattack or some other disruptive event. Such increased
regulatory engagement, supervision and enforcement is uncertain
in relation to the scope, cost, consequence and the pace of
change, which may have a material adverse effect on NWB
Group. Due to NWB Group’s reliance on technology, the adoption
of innovative solutions, the integration of automated processes
and artificial intelligence in its business, and the increasing
sophistication, frequency and impact of cyberattacks, such
attacks may have an adverse effect on NWB Group.
In accordance with applicable UK and EU data protection, and
cybersecurity laws and regulations, NWB Group is required to
ensure it implements timely, appropriate and effective
organisational and technological safeguards against unauthorised
or unlawful access to the data of NWB Group, its customers and
its employees. In order to meet this requirement, NWB Group
relies on the effectiveness of its internal policies, controls and
procedures to protect the confidentiality, integrity and availability
of information held on its IT systems, networks and devices as
well as with third parties with whom NWB Group interacts. As
NatWest Group develops new artificial intelligence-based
products, proprietary, sensitive or confidential NWB Group
customer information may be inputted into third-party generative
or other artificial intelligence or machine learning platforms, and
could potentially be accessed by others, including if such
information is used to train third-party artificial intelligence
models. This may increase the risk of data leakage, data
poisoning, potential bias, discrimination, errors and misuse. A
failure to monitor and manage data in accordance with applicable
requirements may result in financial losses, regulatory fines,
investigations and litigation, and associated reputational damage.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
NWB Group’s operations and strategy are highly dependent on
the accuracy and effective use of data.
NWB Group relies on the availability, sourcing, and effective use of
accurate and high quality data to support, monitor, evaluate,
manage and enhance its operations, innovate its products
offering, meet its regulatory obligations, and deliver its strategy.
Investment is being made in data tools and analytics, including
raising awareness around ethical data usage (for example, in
relation to the use of artificial intelligence) and privacy across
NWB Group. The availability and accessibility of current, complete,
detailed, accurate and, wherever possible, machine-readable
customer segment and sub-sector data, together with
appropriate governance and accountability for data, is fast
becoming a critical strategic asset, which is subject to increased
regulatory focus. Failure to have or be able to access that data or
the ineffective use or governance of that data could result in a
failure to manage and report important risks and opportunities or
satisfy customers’ expectations including the inability to deliver
products and services. This could also place NWB Group at a
competitive disadvantage by increasing its costs, inhibiting its
efforts to reduce costs or its ability to improve its systems,
controls and processes. Any of the above could result in a failure
to deliver NWB Group’s strategy. These data weaknesses and
limitations, or the unethical or inappropriate use of data, and/or
non-compliance with data protection laws could give rise to
conduct and litigation risks and may increase the risk of
operational challenges, losses, reputational damage or other
adverse consequences due to inappropriate models, systems,
processes, decisions or other actions.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
NWB Group’s operations are highly dependent on its complex IT
systems and any IT failure could adversely affect NWB Group.
NWB Group’s operations are highly dependent on the ability to
process a very large number of transactions efficiently and
accurately while complying with applicable laws and regulations.
The proper functioning of NatWest Group’s (including NWB
Group’s) transactional and payment systems, financial crime and
fraud detection systems and controls, risk management, credit
analysis and reporting, accounting, customer service and other IT
systems, including cloud services providers (some of which are
owned and operated by other entities in NatWest Group or third
parties), as well as the communication networks between their
branches and main data processing centres, is critical to NWB
Group’s operations. NWB Group’s reliance on a limited number of
cloud services providers increases its exposure to disruption
events affecting these cloud services providers.
Individually or collectively, whether operated by NWB Group or by
a third party supplier, any system failure (including defective or
inadequate automated processes or artificial intelligence based
solutions), loss of service availability, mobile banking disruption, or
breach of data security could potentially cause significant damage
to: (i) important business services across NWB Group; and (ii)
NWB Group’s ability to provide services to its customers, which
could result in reputational damage, significant compensation
costs and regulatory sanctions (including fines resulting from
regulatory investigations), or a breach of applicable regulations
and could affect NWB Group’s regulatory approvals, competitive
position, business and brands, which could undermine its ability to
attract and retain customers and talent.
Risk factors continued
NWB Group
Annual Report and Accounts 2025
179
NWB Group outsources certain functions as it innovates and
offers new digital solutions to its customers to meet the demand
for online and mobile banking. Outsourcing alongside remote
working heighten the above risks. NWB Group uses IT systems
that enable remote working interface with third-party systems,
and NWB Group could experience service denials or disruptions if
such IT systems exceed capacity or if NWB Group or a third-party
system fails or experiences any interruptions, all of which could
result in business and customer interruption and related
reputational damage, significant compensation costs, regulatory
sanctions and/or a breach of applicable regulations. Hybrid
working arrangements for NWB Group employees place heavy
reliance on the IT systems that enable remote working and may
place additional pressure on NWB Group’s ability to maintain
effective internal controls and governance frameworks and
increase operational risk.
In 2025, NWB Group continued to make considerable investments
to further simplify, upgrade and improve its IT and technology
capabilities (including migration of certain services to cloud
platforms and risk-based removal of technology obsolescence).
NWB Group continues to develop and enhance digital services for
its customers and seeks to improve its competitive position
through integrating automated processes and artificial intelligence
based solutions in its business and by enhancing controls and
procedures and strengthening the resilience of services including
cybersecurity. Any failure of these investment and rationalisation
initiatives to achieve the expected results, due to poor design or
implementation, defects or otherwise, may adversely affect NWB
Group’s operations, its reputation and ability to retain or grow its
customer business or adversely affect its competitive position.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
NWB Group relies on attracting, retaining and developing diverse
senior management and skilled personnel, and is required to
maintain good employee relations.
NWB Group’s success depends on its ability to attract, retain, and
develop a highly skilled and qualified diverse workforce, including
senior management, and other employees in critical roles (such as
in technology, artificial intelligence and data), in a highly
competitive market.
NWB Group’s ability to attract, retain and develop highly skilled
and qualified diverse senior management and personnel may be
more difficult due to heightened regulatory oversight of banks
compared to firms outside of banking and ongoing restrictions on
employee compensation arrangements, particularly in the EU. In
addition, certain economic, market and regulatory conditions may
reduce the pool of candidates for key management and non-
executive roles, including non-executive directors with the right
skills, knowledge and experience, or may increase the number of
departures of existing employees. Moreover, a failure to foster a
diverse workforce and inclusive work environment may adversely
affect NWB Group’s employee engagement and the execution of
its strategy, and could also have an adverse effect on its
reputation with employees, customers, investors and regulators.
NWB Group’s businesses are also exposed to risks from
employee, contractor or service providers misconduct including
non-compliance with policies and regulations, negligence or fraud
(including financial crimes and fraud), any of which could result in
regulatory fines or sanctions and serious reputational or financial
harm to NWB Group.
Hybrid working arrangements are also subject to regulatory
scrutiny to ensure adequate recording, surveillance and
supervision of regulated activities, and compliance with regulatory
requirements and expectations, including requirements to: meet
threshold conditions for regulated activities; ensure the ability to
oversee functions (including any outsourced functions); ensure no
detriment is caused to customers; and ensure no increased risk of
financial crime.
Many of NWB Group’s employees in the UK, the Republic of
Ireland and continental Europe are represented by employee
representative bodies, including trade unions and works councils.
Engagement with its employees and such bodies is important to
NWB Group in maintaining good employee relations. Any failure to
do so may adversely affect NWB Group’s ability to operate its
business effectively.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
A failure in NWB Group’s risk management framework could
adversely affect NWB Group, including its ability to achieve its
strategic objectives.
Risk management is a fundamental component of NWB Group’s
operations and is critical to the effective delivery of its long-term
strategic objectives. NWB Group operate within NatWest Group’s
Enterprise-Wide Risk Management Framework (‘EWRMF’), which
sets out the approach for risk management and outlines key
principles for sound risk governance and setting of risk appetite
with respect to: financial risk (capital risk, liquidity and funding risk,
credit risk, traded market risk, non-traded, market risk, pension
risk, earning stability risk) and non-financial risk (model risk,
reputational risk, financial crime, operational risk, compliance and
conduct risk). Non-compliance with this framework, including
deviations from risk appetite, or any significant shortcomings in
related controls and procedures, may have a detrimental effect
on NatWest Group’s financial condition, strategic delivery, or
result in inaccurate reporting of risk exposures.
NWB Group promotes a risk-aware culture and invests in policies
and resources to manage risks. However, these measures may
not entirely prevent a failure in NatWest Group’s risk
management framework within which NWB Group operates. For
example, instances of misconduct may arise from: business
decisions, actions or reward mechanisms that fail to comply with
NWB Group’s regulatory obligations, do not adequately address
customers’ needs, or are misaligned with NWB Group’s strategic
objectives; ineffective product management; unethical or
inappropriate use of data, information asymmetry, implementation
and utilisation of new technologies, outsourcing of customer
service and product delivery; inappropriate behaviour towards
customers, customer outcomes, the possibility of mis-selling of
financial products; and mishandling of customer complaints. Any
failure in the EWRMF may result in the inability for NWB Group to
achieve its strategic objectives for its customers, employees and
wider stakeholders.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
NWB Group’s operations are subject to inherent reputational risk.
Reputational risk relates to stakeholder and public perceptions of
NWB Group arising from an actual or perceived failure to meet
stakeholder or the public’s expectations, including with respect to
NatWest Group’s strategy and related targets or due to any
events, behaviour, action or inaction by NWB Group, its
employees or those with whom NWB Group is associated.
Risk factors continued
NWB Group
Annual Report and Accounts 2025
180
Refer to, ‘NWB Group’s businesses are subject to substantial
regulation and oversight, which are constantly evolving and may
adversely affect NWB Group.’ This includes harm to its brand,
which may be detrimental to NWB Group’s business, including its
ability to build or sustain business relationships with customers,
stakeholders and regulators, and may cause low employee
morale, regulatory censure or reduced access to, or an increase
in the cost of, funding.
Reputational risk may arise whenever there is, or there is
perceived to be, a material lapse in standards of integrity,
controls, compliance, customer or operating efficiency, or
regulatory or press scrutiny, and may adversely affect NWB
Group’s ability to attract and retain customers. In particular, NWB
Group’s ability to attract and retain customers (particularly,
corporate/institutional and retail depositors), and talent, and
engage with counterparties may be adversely affected by factors
including: negative public opinion resulting from the actual or
perceived manner in which NWB Group or any other member of
NatWest Group conducts or modifies its business activities and
operations, media coverage (whether accurate or otherwise),
employee misconduct, NWB Group’s financial performance, IT
systems failures or cyberattacks, data breaches, financial crime
and fraud, or the actual or perceived practices in the banking and
financial industry in general, or a wide variety of other factors.
Technologies, in particular online social networks and other
broadcast tools that facilitate communication with large audiences
in short timeframes and with minimal costs, may also significantly
increase and accelerate the impact of damaging information and
allegations.
Although NWB Group has a Reputational Risk Policy and
framework to identify, measure and manage material reputational
risk exposures, there is a risk that it may not be successful in
avoiding or mitigating damage to its business or its various brands
from reputational risk.
Any of the above aspects of reputational risk may have a material
adverse effect on NWB Group’s future results, financial condition,
prospects, and/or reputation.
Legal and regulatory risk
NWB Group’s businesses are subject to substantial regulation and
oversight, which are constantly evolving and may adversely affect
NWB Group.
NWB Group is subject to extensive laws, regulations, guidelines,
corporate governance practice and disclosure requirements,
administrative actions and policies in each jurisdiction in which it
operates, which presents ongoing compliance and conduct risks.
Many of these are constantly evolving and are subject to further
material changes, which may increase compliance and conduct
risks, particularly as the laws of different jurisdictions (including
those of the EU/EEA and UK) diverge. NWB Group expects
government and regulatory intervention in the financial services
industry to remain high for the foreseeable future.
Regulators and governments continue to focus on refining the
prudential regulation within the financial services industry and
enhancing the way financial services are conducted, with the dual
aim of fostering greater competition and supporting sustainable
growth. Forthcoming measures include enhanced capital, liquidity
and funding requirements, through future implementation of the
Basel 3.1 standards (and any resulting effect on RWAs and
models).
This is in addition to previous measures, such as: the UK ring-
fencing regime, the strengthening of the recovery and resolution
framework applicable to financial institutions in the UK, EU and
US, financial industry reforms (such as the FSMA 2023), corporate
governance requirements, rules relating to the compensation of
senior management and other employees, enhanced data
protection and IT resilience requirements, financial market
infrastructure reforms, enhanced regulations in respect of the
provision of ‘investment services and activities’.
There is also continued regulatory focus in certain areas, including
conduct, model risk governance, consumer protection in retail or
other financial markets (such as the FCA’s rules governing
interactions with and the provision of services to retail customers,
the ‘Consumer Duty’), competition and disputes regimes, anti-
money laundering, anti-corruption, anti-bribery, anti-tax evasion,
payment systems and digital assets, sanctions and anti-terrorism
laws and regulations. In addition, there is significant oversight by
competition authorities. The competitive landscape for banks and
other financial institutions in the UK, EU/EEA, US and Asia is
rapidly changing. Recent regulatory and legal changes have
resulted and may continue to result, in new market participants
and changed competitive dynamics in certain key areas.
Regulatory and competition authorities, including the CMA, are
also reviewing and focusing more on how they can support
competition and innovation in digital and other markets. Future
competition investigations, market reviews, or regulation of
mergers may lead to the imposition of financial penalties or
market remedies that may adversely affect NatWest Group’s
competitive or financial position. Recent regulatory changes and
heightened levels of public and regulatory scrutiny in the UK, EU
and US have resulted in increased capital, funding and liquidity
requirements, changes in the competitive landscape, changes in
other regulatory requirements and increased operating costs, and
have impacted, and will continue to impact, product offerings and
business models.
Moreover, uncertainties remain as to the extent to which EU/EEA
laws will diverge from UK law. For example, bank regulation in the
UK may diverge from European bank regulation following the
enactment of the Financial Services and Markets Act 2023
(‘FSMA 2023’) and the Retained EU Law (Revocation and Reform)
Act 2023. In particular, FSMA 2023 provides for the revocation of
retained EU laws relating to financial services regulation, but sets
out that this process will likely take a number of years and the
intention is that specific retained EU laws will not be revoked until
such time as replacement regulatory rules are in place. The
actions taken by regulators in response to any new or revised
bank regulation and other rules affecting financial services, may
adversely affect NWB Group, including its business, non-UK
operations, group structure, compliance costs, intragroup
arrangements and capital requirements.
Other areas in which, and examples of where, governmental
policies, regulatory and accounting changes, and increased public
and regulatory scrutiny may have an adverse effect (some of
which could be material) on NWB Group include, but are not
limited to:
•
general changes in government, regulatory, competition, or
central bank policy (including as a result of the Bank
Resolution (Recapitalisation) Act 2025), or changes in
regulatory regimes that may influence investor decisions in the
jurisdictions in which NWB Group operates;
Risk factors continued
NWB Group
Annual Report and Accounts 2025
181
•
rules relating to foreign ownership, expropriation,
nationalisation and confiscation or appropriation of assets;
•
increased scrutiny including from the CMA, the FCA, and the
Payment Systems Regulator (‘PSR’) for the protection and
resilience of, and competition and innovation in, digital and
other markets, UK payment systems (with the development of
the government’s National Payments Vision and Strategy) and
retail banking developments relating to the UK initiative on
Open Banking, Open Finance and the European directive on
payment services;
•
the ongoing compliance with CMA’s Market Orders including
the Retail Banking Market Order 2017;
•
ongoing competition litigation in the English courts around
payment card interchange fees, combined with increased
regulatory scrutiny of the Visa and Mastercard card schemes;
•
increased risk of new class action claims being brought
against NWB Group in the Competition Appeal Tribunal for
breaches of competition law;
•
increased risk of legal action against NWB Group in relation to
the remediation of defects in certain historical property
developments;
•
new or increased regulations relating to data protection as
well as IT controls and resilience;
•
the introduction of, and changes to, taxes, levies or fees
applicable to NWB Group’s operations, such as changes in tax
rates (including changes to the taxation of non-UK domiciled
individuals), changes in the scope and administration of the
Bank Levy, increases in the bank corporation tax surcharge in
the UK, restrictions on the tax deductibility of interest
payments or further restrictions imposed on the treatment of
carry-forward tax losses that reduce the value of deferred tax
assets and require increased payments of tax;
•
increased innovation in private digital asset propositions, such
as stablecoin or tokenised deposits, which may challenge
traditional payment methods and have other potential adverse
effects on UK banks (such as higher funding costs or a
reduced deposit base);
•
regulatory enforcement in the form of PRA imposed financial
penalties for failings in banks’ regulatory reporting governance
and controls, and ongoing regulatory scrutiny; the PRA’s
thematic reviews of the governance, controls and processes
for preparing regulatory returns of selected UK banks,
including NatWest Group (of which NWB Group is a part of);
•
changes in policy and practice regarding enforcement,
investigations and sanctions, supervisory activities and
reviews;
•
the introduction of regulatory requirements to ensure
sufficient access by the general public to cash services such
as branches and ATMs;
•
‘Dear CEO’ and similar letters issued by supervisors and
regulators from time to time;
•
changes in policy intended to expand consumer access to
retail investment products and services, including through the
introduction of targeted support;
•
reforms to the Consumer Credit Act 1974 and the Financial
Ombudsman Service;
•
new or increased regulations relating to financial crime; and
•
any regulatory requirements relating to the use of artificial
intelligence and large language models across the financial
services industry (such as the European Union Artificial
Intelligence Act).
Any of these developments (including any failure to comply with
or correctly interpret new rules and regulations) could also have
an adverse effect on NWB Group’s authorisations and licences,
the products and services that it may offer, its reputation and the
value of its assets, NWB Group’s operations or legal entity
structure, and the manner in which it conducts its business.
Material consequences could arise should NWB Group be found
non-compliant with these regulatory requirements. Regulatory
developments may also result in an increased number of
regulatory investigations and proceedings and have increased the
risks relating to NWB Group’s ability to comply with the applicable
body of rules and regulations in the manner and within the
timeframes required.
Changes in laws, rules or regulations, or in their interpretation or
enforcement, or the implementation of new laws, rules or
regulations, including contradictory or conflicting laws, rules or
regulations by key regulators or policymakers in different
jurisdictions (such as divergence of regulations of digital assets
and cryptocurrency), or failure by NWB Group to comply with
such laws, rules and regulations, may adversely affect NWB
Group’s business, results of operations and outlook. In addition,
uncertainty and insufficient international regulatory coordination
as enhanced supervisory standards are developed and
implemented may adversely affect NWB Group’s reputation,
ability to engage in effective business, capital and risk
management planning.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
NWB Group is exposed to the risks of various litigation matters,
regulatory and governmental actions and investigations as well as
remedial undertakings, the outcomes of which are inherently
difficult to predict, and which could have an adverse effect on
NWB Group.
NWB Group’s operations are diverse and complex and it operates
in legal and regulatory environments that expose it to potentially
significant civil actions (including those following on from
regulatory sanction), as well as criminal, regulatory and
governmental proceedings. NWB Group has resolved a number of
legal and regulatory actions over the past several years but
continues to be, and may in the future be, involved in such actions
in the UK, the US, Europe, and other jurisdictions.
NWB Group is, has been or will likely be involved in a number of
significant legal and regulatory actions, including investigations,
proceedings and ongoing reviews (both formal and informal) by
governmental law enforcement and other agencies and litigation
proceedings, including in relation to the setting of benchmark
rates such as LIBOR and related derivatives trading, product mis-
selling, customer mistreatment, anti-money laundering, antitrust,
VAT recovery, record keeping, reporting, and various other
issues. There is also an increasing risk of new class action claims
being brought against NWB Group in the Competition Appeal
Tribunal for breaches of competition law, as well as a risk of
activist actions, particularly relating to climate change and
sustainability-related matters.
Risk factors continued
NWB Group
Annual Report and Accounts 2025
182
Legal and regulatory actions are subject to many uncertainties,
and their outcomes, including the timing, amount of fines,
damages or settlements or the form of any settlements, which
may be material and in excess of any related provisions, are often
difficult to predict, particularly in the early stages of a case or
investigation. NWB Group’s expectation for resolution may change
and substantial additional provisions and costs may be recognised
in respect of any matter. For additional information relating to
legal, and regulatory proceedings and matters to which NWB
Group is currently exposed, see ‘Litigation and regulatory matters’
at Note 26 to the consolidated accounts.
Recently resolved matters or adverse outcomes or resolution of
current or future legal, regulatory or other matters, including
conduct-related reviews and redress projects, could increase the
risk of greater regulatory and third-party scrutiny and/or result in
future legal or regulatory actions, and could have material
financial, reputational, or collateral consequences for NWB
Group’s business and result in restrictions or limitations on NWB
Group’s operations. These may include the effective or actual
disqualification from carrying on certain regulated activities and
consequences resulting from the need to reapply for various
important licences or obtain waivers to conduct certain existing
activities of NWB Group, which may take a significant period of
time and the results and implications of which are uncertain.
Disqualification from carrying on any activities, whether
automatically as a result of the resolution of a particular matter or
as a result of the failure to obtain such licences or waivers may
have an adverse effect on NWB Group. This in turn and/or any
fines, settlement payments or penalties may have an adverse
effect on NWB Group. Similar consequences could result from
legal or regulatory actions relating to other parts of NatWest
Group.
Failure to comply with undertakings made by NWB Group to its
regulators may result in additional measures or penalties being
taken against NWB Group. In addition, any failure to administer
conduct redress processes adequately, or to handle individual
complaints fairly or appropriately, could result in further claims as
well as the imposition of additional measures or limitations on
NWB Group’s operations, additional supervision by NWB Group’s
regulators, and loss of investor confidence.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
Changes in tax legislation (or application thereof) or failure to
generate future taxable profits may impact the recoverability of
certain deferred tax assets recognised by NWB Group.
In accordance with the accounting policies set out in ‘Critical
accounting policies’, NWB Group has recognised deferred tax
assets on losses available to relieve future profits from tax only to
the extent it is probable that they will be recovered. The deferred
tax assets are quantified on the basis of current tax legislation
and accounting standards and are subject to change in respect of
the future rates of tax or the rules for computing taxable profits
and offsetting allowable losses.
Failure to generate sufficient future taxable profits or further
changes in tax legislation or the application thereof (including with
respect to rates of tax) or changes in accounting standards may
reduce the recoverable amount of the recognised tax loss
deferred tax assets, amounting to £
55
million as at 31 December
2025. Changes to the treatment of certain deferred tax assets
may impact NWB Group’s capital position.
In addition, NWB Group’s interpretation or application of relevant
tax laws may differ from those of the relevant tax authorities and
provisions are made for potential tax liabilities that may arise on
the basis of the amounts expected to be paid to tax authorities.
The amounts ultimately paid may differ materially from the
amounts provided depending on the ultimate resolution of such
matters.
Any of the above may have a material adverse effect on NWB
Group’s future results, financial condition, prospects, and/or
reputation.
Climate and sustainability-related risks
NWB Group and its Value Chain face climate and sustainability-
related risks that may adversely affect NWB Group.
NWB Group is subject to financial and non-financial risks
associated with climate change, nature-related and social matters
(together sustainability-related matters). These matters impact
NWB Group directly through its own operations and employees,
and indirectly through its value chain including its investors,
customers, counterparties and suppliers, and business partners
(collectively, our ‘Value Chain’), and business activities.
Financial and non-financial risks from climate change can arise
through physical and transition risks. In addition, NWB Group may
also be exposed to legal, regulatory or financial consequences
arising from NWB Group’s actions or omissions related to climate
and sustainability-related matters, giving rise to liability risk.
Climate-related physical risks are associated with increasing
frequency and intensity of extreme weather events, including
floods, wildfires and changes in climate conditions. Such events
can impact employee health and safety, negatively impact local
communities where NWB Group operates, damage assets,
property and infrastructure, and disrupt operations and supply
chains, resulting in changes in asset value, deterioration of the
value of collateral or insurance shortfalls and increased costs and
credit defaults. This can negatively impact the creditworthiness of
customers and their ability and/or willingness to pay fees, afford
new products or repay their debts, leading to increased default
rates, delinquencies, write-offs and impairment charges in
NatWest Group’s portfolios while simultaneously increasing NWB
Group’s own operational costs and exposing it to potential
business continuity challenges. In addition, NWB Group’s premises
and operations, or those of its critical outsourced functions, may
experience damage or disruption leading to increased costs for
NWB Group.
Climate-related transition risks arise from the UK’s and global
economies’ shift to net zero. The pace and nature of transition—
whether orderly or disorderly—depends significantly on timely and
appropriate government policy and regulatory changes,
immediate actions from national and regional governments, new
technological innovation, changes to supply and demand systems
within industries, customer behaviour and market sentiment. In
addition, there is significant uncertainty about how climate change
and the world’s transition to a net-zero economy will unfold over
time and how and when climate and other sustainability-related
risks will manifest. This could adversely impact profitability, market
stability and the resilience of financial institutions, including NWB
Group. In addition, the transition may affect NWB Group’s
customers and businesses across sectors in different ways and at
different levels of risk These timeframes are considerably longer
than NWB Group’s historical and current strategic, financial,
resilience and investment planning horizons.
Risk factors continued
NWB Group
Annual Report and Accounts 2025
183
Transition risks may also trigger reputational and liability
exposures, especially if NatWest Group (including NWB Group), is
perceived as not meeting its climate ambitions, targets and
commitments, or not making progress against NatWest Group’s
climate transition plan.
Moreover, beyond climate change, NWB Group and its Value
Chain may face financial and non-financial risks arising from acute
or chronic nature-related physical risks, (such as wildfires,
pollution, water stress and loss of biodiversity), nature-related
transition risks (such as risk arising directly or indirectly due to
changes in policy, market and technology, changes in perception
concerning an organisation’s actual or perceived nature impacts
and from legal claims) and social issues (such as data protection
and privacy, impact of increased adoption of artificial intelligence
technology, human rights abuse, conflict and security, land rights,
labour rights and unjust working conditions, modern slavery and
child labour, discrimination and lack of support for the vulnerable,
negative impact on people’s standard of living and health,
inequality, accessible banking and financial inclusion, and financial
crime).
There are heightened regulatory expectations, growing scrutiny
from investors, civil society, and other external stakeholders, with
businesses being increasingly expected to be transparent about
their efforts to identify, assess, mitigate and manage nature-
related and social risks. NWB Group may face reputational,
regulatory non-compliance and litigation risks if it is directly or
indirectly linked to adverse nature-related or social impacts and
fails to adequately manage the risks associated with those
impacts.
Climate and sustainability-related risks are inter-linked and may (i)
adversely impact the broader economy—affecting interest rates,
inflation and growth—which in turn may reduce profitability and
financial stability; (ii) adversely impact asset pricing and valuations
of NWB Group’s and other securities, potentially triggering wider
disruptions across the financial system; (iii) adversely impact the
viability or resilience of business models over the medium to
longer term, particularly those business models most vulnerable to
climate and sustainability-related risks; (iv) result in losses from
liability or reputational damage, such as negative media, activist
pressure, or public criticism, if NWB Group or its Value Chain are
linked to adverse climate or sustainability-related impacts; and (v)
may intensify existing exposures across multiple risk categories,
including credit, operational (e.g. business continuity), market and
liquidity, model, reputational, regulatory compliance, conduct and
pension risks.
Failure by NWB Group to timely identify, assess, mitigate and
manage climate and sustainability-related risks, as well as failure
to respond to emerging opportunities, evolving regulatory
requirements, and shifting market and external expectations, may
have a material adverse effect on NWB Group’s business, financial
condition, future results, access to finance, cost of capital,
reputation, and the value of its securities.
NatWest Group’s (including NWB Group) strategy relating to
climate and sustainability is subject to execution and reputational
risks. NatWest Group’s (including NWB Group) climate and
sustainability-related ambitions, targets and commitments may
not be achieved, and NatWest Group’s climate transition plan may
not be implemented, without timely and appropriate government
policy, technology developments, and suppliers, customers and
society supporting the transition.
NatWest Group has an ambition to be net zero across its financed
emissions, assets under management and operational value chain
by 2050. NatWest Group also has an ambition at least to halve
the climate impact of its financing activity by 2030, against a 2019
baseline, supported by portfolio-level, activity-based targets.
NatWest Group may also announce other climate and
sustainability-related ambitions, targets and commitments and
may withdraw, retire, amend, replace or supersede existing ones
from time to time, whether or not they have been achieved,
where it considers this to be appropriate having regard to its
strategic objectives, or where required or appropriate to do so by
applicable law, regulation or supervisory expectations.
NWB Group’s ability to contribute to achieving NatWest Group’s
climate and sustainability-related ambitions, targets and
commitments and to contribute to implementing NatWest Group’s
climate transition plan, may require NWB Group to make changes
to its business, operating model, existing exposures, and products
and services. This may include reducing its estimated financed
emissions and discontinuing certain activities over time. NatWest
Group (including NWB Group) acknowledge that (i) emission
reductions are unlikely to be linear; (ii) UK Parliament will set a
new legal limit on greenhouse emissions as part of the Seventh
Carbon Budget in June 2026 which may have an impact on the
achievement of NatWest Group’s (including NWB Group) climate
and sustainability-related ambitions, targets and commitments,
and the implementation of NatWest Group’s climate transition
plan; and (iii) increases in lending and financing activities may
wholly or partially offset some or all these reductions, which may
increase the extent of changes and reductions necessary.
NWB Group’s ability to contribute to achieving NatWest Group’s
strategy, including its climate and sustainability-related ambitions,
targets and commitments and to contribute to implementing
NatWest Group’s climate transition plan is dependent on many
factors and uncertainties beyond NWB Group’s control. These
include (but are not limited to): (i) the extent and pace of climate
change, including the timing and manifestation of physical and
transition risks and nature loss; (ii) the macroeconomic
environment; (iii) the effectiveness of actions of governments,
legislators, regulators and businesses; (iv) the response of wider
society, NWB Group’s Value Chain and other stakeholders to
mitigate the impact of climate, and sustainability-related risks; (v)
changes in customer and societal behaviour and demand; (vi)
availability of commercially viable opportunities in sustainable
finance markets, competition dynamics, capital markets appetite,
investor expectations, and external credit and concentration risk
appetites which may constrain the scale or risk profile of
opportunities accessible to NWB Group; (vii) developments in
available technology; (viii) the rollout of low carbon infrastructure;
and (ix) the availability of accurate, verifiable, reliable, auditable,
consistent and comparable data.
These external factors and other uncertainties may make it
complex for NWB Group to contribute to achieving NatWest
Group’s climate and sustainability-related ambitions, targets and
commitments, and to contribute to implementing NatWest
Group’s climate transition plan and there is a risk that some or all
of NatWest Group’s (including NWB Group) climate and
sustainability-related ambitions, targets and commitments may
not be achieved, or NatWest Group’s climate transition plan may
not be implemented within the intended timescales, or at all.
Moreover, the rising energy demand associated with artificial
intelligence workloads, whether generated internally or through
third

party providers, may increase NatWest Group’s (including
NWB Group’s) own operational footprint. While NatWest Group
(including NWB Group) has taken initial steps to assess the
potential impacts of increased artificial intelligence usage, its full
effects on NatWest Group’s (including NWB Group’s) own
operational footprint remain uncertain but could have an adverse
effect on NatWest Group (including NWB Group) achieving its
climate and sustainability-related ambitions, targets and
commitments and the implementation of NatWest Group’s climate
transition plan.
Risk factors continued
NWB Group
Annual Report and Accounts 2025
184
Any delay or failure by NWB Group in putting into effect, making
progress against, or contributing to achieving NatWest Group’s
climate and sustainability-related ambitions, targets and
commitments, and to contributing to the implementation of
NatWest Group’s climate transition plan may have a material
adverse effect on NWB Group’s future results, financial condition,
prospects, and/or reputation and may increase the climate and
sustainability-related risks NWB Group faces.
There are significant limitations related to accessing accurate,
reliable, verifiable, auditable, consistent and comparable climate
and sustainability-related data that contribute to substantial
uncertainties in accurately assessing, managing and reporting on
climate and sustainability-related information and risks, as well as
making informed decisions.
NWB Group’s ability to assess, manage, and report climate and
sustainability-related impacts, risks, and opportunities, including
the effective measurement, governance and reporting of progress
against our climate and sustainability-related ambitions, targets
and commitments, and the implementation of NatWest Group’s
climate transition plan heavily depends on the availability of
accurate, reliable, verifiable, auditable, consistent and comparable
internal and external data from customers, counterparties,
suppliers, and third parties. Our internal data on customer groups,
which is used to source financial exposure and emissions data,
and the systems and controls supporting our non-financial
reporting are considerably less sophisticated than those data,
systems and controls used for financial reporting, and continue to
involve manual processes. These factors may increase the risk of
inaccuracies or gaps in our non

financial reporting, which could
adversely affect our ability to meet regulatory, investor or
stakeholder expectations. In the absence of accurate, reliable,
verifiable, auditable, consistent and comparable data, NWB Group
may rely on estimates, proxies, or third-party methodologies—
such as sectoral averages or aggregated emissions data—that
may be outdated, prepared using varying assumptions, or not
accurately reflect specific counterparties or customers. These
limitations can affect the reliability of disclosures, including
financed and facilitated emissions, and may hinder decision-
making, risk management, regulatory compliance, and data
consolidation. This may result in misjudging progress against
climate ambitions, targets and commitments, misallocating capital,
or underestimating financial and reputational risks, while also
reducing comparability across institutions and increasing scrutiny
from stakeholders and regulators.
NWB Group’s assessment of climate and sustainability-related
impacts, risks, and opportunities is expected to evolve as data
quality and methodologies improve. Current data gaps, limitations,
and reliance on estimates or third-party inputs may materially
impact NWB Group’s ability to make informed decisions on climate
and sustainability-related matters, manage risks, comply with
disclosure requirements, and monitor progress against NatWest
Group’s climate and sustainability-related ambitions, targets and
commitments, and the implementation of NatWest Group’s
climate transition plan. As a result, climate and sustainability-
related disclosures may be amended, updated, or restated from
time to time as methodologies, data quality or regulatory
expectations evolve. NWB Group does not undertake to restate
prior disclosures except as required by applicable law or
regulation, even where subsequently available data or
methodologies differ from those used at the time of the original
disclosure.
Climate risks are inherently forward-looking and complex to
model. The lack of historical data, evolving scientific
understanding, and immature measurement frameworks
introduce significant uncertainty into scenario analysis and
financial forecasting. The outputs of climate risk modelling—such
as emissions pathways and reduction targets—are subject to long
timeframes and assumptions that differ significantly from
traditional financial planning cycles.
NWB Group’s internal capabilities to assess, model, report on and
manage climate and sustainability-related risks continue to evolve.
However, even when such capabilities are suitably developed, the
high level of uncertainty regarding any assumptions modelled, the
highly subjective nature of risk measurement and mitigation
techniques coupled with persistent data gaps may result in
inadequate risk management information and frameworks, or
ineffective business adaptation or mitigation strategies or
regulatory non-compliance.
Any of the above may have a material adverse effect on NWB
Group’s business, future results, financial condition, prospects,
reputation and the price of its securities.
NWB Group is subject to an increasingly complex and evolving
landscape of climate and sustainability-related legal, regulatory,
and supervisory expectations and there is an increasing risk of
regulatory non-compliance, investigations, litigation, and
enforcement actions.
NWB Group is subject to an increasingly complex and evolving
landscape of climate and sustainability-related legal, regulatory,
and supervisory expectations, which may vary significantly and
remain fragmented across the UK, EU, US, and other jurisdictions
in which NWB Group operates. This growing divergence creates
legal and operational uncertainty, may expose NWB Group to
conflicting legal and regulatory requirements, and may increase
the risks of regulatory non-compliance, regulatory enforcement
and reputational damage.
The growing politicisation and polarisation of climate and
sustainability-related matters across jurisdictions may further
exacerbate existing risks and result in reduced market access,
adverse public perception, or stakeholder disengagement.
Customers, investors, or stakeholders may choose not to engage
with NWB Group if they perceive NatWest Group’s (including NWB
Group) strategy in relation to climate and sustainability, as either
lacking ambition or progress, or conversely, as overly focused on
sustainability, or if they object to specific climate or sustainability
related decisions or sectoral policies adopted by NatWest Group
(including NWB Group), which may adversely affect customer
relationships, investor sentiment or stakeholder engagement. For
example, financing the transition of hard-to-abate sectors may be
viewed by some as misaligned with climate goals, potentially
resulting in reputational damage.
At the same time, regulatory and enforcement approaches to
climate and sustainability-related matters are increasingly
diverging and, in some cases, conflicting across jurisdictions. While
some authorities are advancing stricter requirements, others are
introducing sanctions targeting institutions that pursue climate
and sustainability-related initiatives. Furthermore, NWB Group
may face litigation, complaints or other forms of challenge from
shareholders, customers, campaign groups or other stakeholders
arising from allegations of actual or perceived environmental or
social harm, including climate-related impacts, nature-related
degradation, human rights abuses, or deficiencies in governance
and due diligence practices. At the same time, NWB Group may
face contradictory legal or regulatory action asserting that it has
placed undue or disproportionate focus on climate and
sustainability

related considerations.
Failure by NWB Group to comply with evolving legal and
regulatory requirements, or supervisory expectations—including
divergent and fragmented frameworks across jurisdictions, where
relevant—may increase the risk of regulatory non-compliance,
may adversely impact NWB Group’s ability to contribute to
achieving NatWest Group’s climate and sustainability-related
ambitions, targets and commitments, and to contribute to
implementing NatWest Group’s climate transition plan, and may
adversely impact its investor base and reputation. It may also
result in regulatory non-compliance investigations, litigation and
enforcement actions, which in turn may have a material adverse
effect on NWB Group’s business, future results, financial condition,
prospects, reputation, and the price of its securities.
Forward-looking statements
NWB Group
Annual Report and Accounts 2025
185
Cautionary statement regarding forward-looking statements
This document may include forward-looking statements within the meaning of the United States Private Securities Litigation Reform
Act of 1995, such as statements with respect to NWB Group’s financial condition, results of operations and business, including its
strategic priorities, financial, investment and capital targets, and climate and sustainability-related targets, commitments and ambitions
described herein. Statements that are not historical facts, including statements about NWB Group’s beliefs and expectations, are
forward-looking statements. Words such as ‘expect’, ‘estimate’, ‘project’, ‘anticipate’, ‘commit’, ‘believe’, ‘should’, ‘intend’, ‘will’, ‘plan’,
‘could’, ‘target’, ‘goal’, ‘objective’, ‘may’, ‘outlook’, ‘prospects’ and similar expressions or variations on these expressions are intended
to identify forward-looking statements. In particular, this document may include forward-looking statements relating, but not limited to:
NWB Group’s economic and political risks, its regulatory capital position and related requirements, its financial position, profitability and
financial performance (including financial, capital, cost savings and operational targets), the implementation of NatWest Group’s
strategy, its climate and sustainability-related ambitions and targets, its access to adequate sources of liquidity and funding, its ongoing
compliance with the UK ring-fencing regime and ensuring operational continuity in resolution, its impairment losses and credit
exposures under certain specified scenarios, substantial regulation and oversight, ongoing legal, regulatory and governmental actions
and investigations. Forward-looking statements are subject to a number of risks and uncertainties that might cause actual results and
performance to differ materially from any expected future results or performance expressed or implied by the forward-looking
statements. Factors that could cause or contribute to differences in current expectations include, but are not limited to, future growth
initiatives (including acquisitions, joint ventures and strategic partnerships), the outcome of legal, regulatory and governmental actions
and investigations, the level and extent of future impairments and write-downs, legislative, political, fiscal and regulatory developments,
accounting standards, competitive conditions, technological developments such as artificial intelligence, interest and exchange rate
fluctuations, and general economic and political conditions, exposure to third party risk, operational risk, compliance and conduct risk,
cyber, data and IT risk, financial crime risk, key person risk, credit rating risk, model risk, reputational risk, and the impact of climate
and sustainability-related risks and the transitioning to a net zero economy. These and other factors, risks and uncertainties that may
impact any forward-looking statement or the NWB Group's actual results are discussed in the NWB Plc's 2025 Annual Report and
Accounts, and its other public filings. The forward-looking statements contained in this document speak only as of the date of this
document and NWB Plc does not assume or undertake any obligation or responsibility to update any of the forward-looking statements
contained in this document, whether as a result of new information, future events or otherwise, except to the extent legally required.