Update: NatWest Group plc

The stable outlook reflects our expectation that NatWest will perform resiliently over the remainder of the current credit cycle. The bank released credit impairment provisions in 2021 while the economy recovered from the pandemic, providing a significant boost to earnings following its 2020 loss. Loan arrears and defaults may increase moderately in 2022-2023, and we think NatWest's provision cover is sufficient to absorb this potential trend. We anticipate our RAC ratio falling to 9.5%-10.0% as NatWest makes significant shareholder distributions under its plan to reduce surplus regulatory capital. We could consider raising the ratings over our two-year outlook horizon if NatWest were to demonstrate a stronger and more consistent business position. This would entail greater business stability and a more

...NatWest ranks among the market leaders in U.K. retail and corporate banking. These activities contribute the majority of its revenue and earnings, and underpin its business position (see chart 1). The U.K. government owns 52% of NatWest as a legacy of its rescue of the bank in 2008-2009, and this is neutral to the ratings. The government intends to exit the stake fully by 2026. Rating peers for NatWest include domestic competitors Barclays, Lloyds, Nationwide, and Santander UK, and EU banks ABN AMRO, BPCE, Commerzbank, Danske Bank, and SociTtT GTnTrale....

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