Ed Firth

Ed Firth, Managing Director and Senior Equity Research Analyst at KBW, questioned what NatWest considers an appropriate level of return, given Q3's over 20% RoTE and potential bank tax implications, asking at what point the focus shifts from fixing returns to growing. He also inquired about the bank's strategy once the structural hedge benefits diminish, specifically regarding M&A opportunities versus the successful organic plan.

Answer

CEO Paul Thwaite emphasized the need to balance supporting customers, investing in the business (technology and people), and delivering attractive shareholder returns, noting the 19.5% year-to-date RoTE (high 18% ex-one-offs) as fruits of activity across all lines. He affirmed the organic plan's success in growing all three businesses and driving simplification, stating that while M&A opportunities to accelerate the plan would be considered, they must meet a compelling financial high bar for shareholders.

Ed Firth of KBW requested clarification on the structural hedge mechanics for 2026 and questioned the bank's M&A strategy, asking if the criteria had shifted and if the latest buyback signaled that acquisitions were off the table.

Answer

CFO Katie Murray explained the 2026 hedge benefit is larger due to a stable notional and the averaging effect of reinvestments already locked in. CEO Paul Thwaite clarified the M&A criteria have always been to add 'scale or capabilities,' not just skills. He stressed that any deal faces a very high financial bar versus organic growth or buybacks, and the bank's disciplined, balanced approach has not changed.