Financial Results

NatWest's 2023 Private Banking Operating Profit Falls; New Group CEO Named

Tom Burroughes Group Editor London 16 February 2024

NatWest's 2023 Private Banking Operating Profit Falls; New Group CEO Named

The bank issued its 2023 figures, appointing its new group CEO. As reported last week, it named a new permanent chief executive for its Coutts business.

NatWest Group today announced that private banking operating profit for 2023 fell to £291 million ($366.7 million) from £436 million a year earlier, with a slip in total income, and rise in impairment losses and costs affecting the bottom-line result. The private banking arm principally concerns Coutts.

Coutts, along with its parent group, was rocked last year by a “de-banking” saga that saw its handling of former UKIP leader, and broadcaster, Nigel Farage, come in for widespread criticism after it emerged that the bank’s staff had criticised his political views when his bank account was being discussed. Peter Flavel resigned in July 2023 as CEO of Coutts; last week his full-time successor, Emma Crystal, was announced.

The Farage episode – which prompted widespread political and media criticism – also highlighted the position of people designated as politically exposed persons (PEPs), and how banks should treat clients when, for example, they no longer had enough money to qualify for a particular bracket of service.

NatWest today announced that Paul Thwaite had been named as group CEO, filling the post permanently after taking the helm from Alison Rose, who had resigned in July 2023 in the wake of the Farage affair.

NatWest said total private banking income fell to £990 million in 2023 from $1.056 billion in 2022; operating costs rose to £685 million from £622 million. It logged £14 million of impairment losses in the year, against a £2 million net release a year earlier.

Net asset under management flows fell to £1.3 billion from £2 billion; total client deposits fell to £37.7 billion from £41.2 billion, while net loans to clients fell to £18.5 from £19.2. Total assets under management and administration rose to £40.8 billion from £33.4 billion, NatWest said in a statement.

For NatWest as a whole, the bank made a pre-tax operating profit of £6.178 billion in 2023, up from £5.132 billion a year before. The lender’s cost/income ratio was 51.8 per cent, down from 55..5 per cent. Impairment losses rose to £578 million from £337 million. NatWest’s Common Equity Tier 1 ratio – a standard measure of a bank’s “shock absorber” capital – was 13.4 per cent, little changed from a year before.

Thwaite commented on his appointment.

“It's an honour to lead what, I believe, is a great business, which plays a vital role in the lives of the 19 million customers we serve. With that, comes a great sense of responsibility to succeed for our customers, colleagues, and shareholders,” he said. 

Thwaite previously served as a director of Motability Operations Group plc from 30 September 2016 to 1 March 2021.

His remuneration package includes a base salary of £1,155,660 per annum, a fixed share allowance set at 100 per cent of salary, standard benefit funding of £26,250 per annum and a pension allowance of 10 per cent of salary on the same basis as the wider workforce.

Variable pay will consist of an annual bonus subject to performance, with a maximum opportunity of 100 per cent of salary delivered equally in cash and shares and a Restricted Share Plan award with a maximum opportunity of 150 per cent of salary delivered in shares. Thwaite must build up and maintain a minimum shareholding equal to 500 per cent of salary.

NatWest said Thwaite’s pay deal “continues to represent pay restraint in comparison to the market.” Further rises are subject to annual review.

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