Robert Noble

Robert Noble from Deutsche Bank inquired about NatWest's liquidity strategy, specifically the rotation from cash into government bonds, the spread pickup achieved, and any regulatory restrictions on moving more cash into gilts. He also asked if similar term deposit outflows, driven by large maturities, should be expected in Q4.

Answer

CEO Paul Thwaite explained that Q3 saw particularly large term deposit maturities related to two-year-ago rates, but Q4 maturities are not of the same size or price points, with retention rates remaining good. CFO Katie Murray stated that the swap into gilts yielded about 50 basis points pickup in the 5-7 year level, and while the entire liquidity portfolio wouldn't be moved, the current 50-50 split offers flexibility, with regulatory restrictions primarily a function of the leverage ratio.

Robert Noble inquired about the economics of Barclays' private credit business, including spreads and risk weights, and whether the Bank of England's review might deter future growth. He also asked about the Kensington mortgage book, which has doubled to approximately GBP 4 billion, and if Barclays plans to expand into other specialized lending areas in the UK.

Answer

CS Venkatakrishnan, Group Chief Executive, Barclays, referred to the private credit disclosure slide, noting stable exposure growth. He emphasized strong credit controls, working with top-tier players, secured financing against diversified loan pools, and strict limits on concentrations and LTVs. He welcomed the Bank of England's review, confident in Barclays' risk management practices. Anna Cross, Group Finance Director, Barclays, confirmed Kensington's balances are around GBP 4 billion, highlighting its 30 years of experience in client and product affordability assessments. She mentioned active management, including a Q3 stage three securitization, and its contribution to mortgage breadth and blended margin.

Robert Noble asked for clarification on the mechanics of promotional credit card balances contributing to a Q2 pickup, the reasons for weak UK deposit growth over the last eight quarters, and details on the size and growth of the Kensington mortgage book.

Answer

Group Finance Director Anna Cross explained that effective interest rates on cards are booked conservatively and the 2024 cohort is now maturing. On UK deposits, she stated trends are in line with peers, with stable current account share and disciplined pricing during a competitive ISA season. For Kensington, she noted high-LTV mortgages now comprise 25% of new flow with margins approximately four times higher than standard Barclays mortgages, though she did not provide specific balance details.

Asked why the treasury sale losses were split between Q3 and Q4, and inquired about the balance sheet's sensitivity to Chinese interest rates and the broader impact of the China-Hong Kong rate differential.

Answer

The treasury sales are being phased thoughtfully over time based on market opportunities. The bank's sensitivity to mainland China's rates is low (impacting Asia NIM by ~3bps). The rate differential is expected to continue, dampening commercial borrowing in Hong Kong but boosting wealth and insurance inflows from the mainland.