NatWest Group plc (NWG) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

April 28, 2023 4:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning and welcome to the NatWest Group Q1 Results 2023 Management Presentation. Today's presentation will be hosted by CEO, Alison Rose; and CFO, Katie Murray After the presentation, we will open up for questions. Allison, please go ahead.

Alison Rose

Good morning, and thank you for joining us today. I'll start with the business overview, and then Katie will talk about our financial performance. Our strategy continues to deliver against a backdrop of increased market volatility since we last spoke in February. In an uncertain environment, we're well-positioned based on the upside as we build on our strong customer franchise to drive targeted growth and for any downside as a result of our strong balance sheet and liquidity, high-quality deposit base and disciplined risk management.

I'll start with the financial headlines. We delivered operating profit of £1.8 billion in the first quarter, an increase of 49% on the same period in 2022. Attributable profit was £1.3 billion, up 52% on the first quarter last year. Our return on tangible equity increased from 11.3% to 19.8%. And income grew 37% to £3.8 billion. Costs increased by £214 million, which includes the one-off payments we made to staff in January to help manage the rising cost of living. We continue to focus on tight cost discipline and are on track to achieve our 2023 cost guidance of around £7.6 billion.

We told you at the full year that we expect to generate and return significant capital to shareholders this year and intend to maintain our 40% payout ratio. Our common equity Tier-1 ratio of 14.4%, includes an accrual of just over £500 million for the full year ordinary dividend.

We have also completed more than half of the £800 million on-market buyback announced in February. The government shareholding now stands at just over 41%, and we have regulatory permission to undertake a directed buyback, though any transaction remains at the government's discretion.

Recent market volatility has had little impact on the bank and the average UK consumer. We have seen an expected reduction in deposits during the quarter. Customer tax payments have increased about £8 billion from the fourth quarter as more people fall into higher tax brackets. And customers also continue to pay down debt, including government lending. We are actively balancing value and volumes, taking into account customer behavior as well as competition in the market.