FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549 

Report of Foreign Private Issuer 

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934 

For February 14, 2020

Commission File Number: 001-09266 

National Westminster Bank PLC 

135 Bishopsgate

London EC2M 3UR

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F X Form 40-F ____

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):_________ 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):_________ 

National Westminster Bank Plc

2019 Annual Results

Financial review

	Page
Financial review	2
Statement of directors' responsibilities	7
Consolidated income statement	8
Consolidated income statement of comprehensive income	8
Balance sheet	9
Statement of changes in equity	10
Cash flow statement	12
Notes on the accounts	13
Risk factors	23
Forward-looking statements	38

Presentation of information

National Westminster Bank Plc ('NWB Plc') is a wholly-owned subsidiary of NatWest Holdings Limited ('NWH Ltd' or 'the intermediate holding company'). NatWest Bank Group ('NWB Group') comprises NWB Plc and its subsidiary and associated undertakings. The term 'NWH Group' comprises NWH Ltd and its subsidiary and associated undertakings. The Royal Bank of Scotland Group plc ('RBSG plc') is 'the ultimate holding company'. The term 'RBS Group' comprises RBSG plc and its subsidiary and associated undertakings.

NWB Plc publishes its financial statements in pounds sterling ('£' or 'sterling'). The abbreviations '£m' and '£bn' represent millions and thousands of millions of pounds sterling, respectively, and references to 'pence' represent pence in the United Kingdom ('UK'). Reference to 'dollars' or '$' are to United States of America ('US') dollars. The abbreviations '$m' and '$bn' represent millions and thousands of millions of dollars, respectively, and references to 'cents' represent cents in the US. The abbreviation '€' represents the 'euro', and the abbreviations '€m' and '€bn' represent millions and thousands of millions of euros, respectively.

Description of business

RBS Group ring-fencing

The UK ring-fencing legislation required the separation of essential banking services from investment banking services from 1 January 2019. RBS Group has placed the majority of the UK and Ireland banking business in ring-fenced banking entities under an intermediate holding company, NatWest Holdings Limited (NWH Ltd). Some Western European corporate business has been transferred from the ring-fenced bank entities to NatWest Markets N.V., a subsidiary of NatWest Markets Plc (NWM Plc) and RBS Group continues to review the scope of further transfers. NWM Plc and RBS International Limited (RBSI Ltd) are separate banks outside the ring-fence, both subsidiaries of RBSG plc.

The principal entities under NWH Ltd are National Westminster Bank Plc (which wholly owns Ulster Bank Limited), The Royal Bank of Scotland plc and Ulster Bank Ireland DAC.

RBS Group re-segmentation

Effective from 1 January 2019, Business Banking has been transferred from UK Personal and Business Banking (UK PBB) to Commercial Banking as the nature of the business, including distribution channels, products and customers are more closely aligned to the Commercial Banking business. Concurrent with the transfer, UK PBB has been renamed UK Personal Banking. Reportable segmental comparatives have been restated.

Franchises

Commercial & Private Banking (CPB), combining the reportable segments of Commercial Banking and Private Banking ceased to operate as one business area and the franchise Personal & Ulster, combining the reportable segments of UK Personal Banking and Ulster Bank RoI was also disbanded. The reportable operating segments remain unchanged and no comparatives have been restated.

Principal activities and operating segments

NWB Group serves customers across the UK and Ireland with a range of retail and commercial banking products and services. A wide range of personal products are offered including current accounts, credit cards, personal loans, mortgages and wealth management services. NWB Plc is the main provider of shared service activities for RBS Group. This includes the provision of Treasury services on behalf of the ring-fenced bank and RBS Group.

The reportable operating segments are as follows:

UK Personal Banking serves individuals and mass affluent customers in the UK and includes Ulster Bank customers in Northern Ireland.

Commercial Banking serves start-up, SME, commercial and corporate customers in the UK together with small businesses.

Private Banking serves UK connected, high net worth, individuals and their business interests.

Central items & other includes corporate functions, such as treasury, finance, risk management, compliance, legal, communications and human resources. NWB Plc became the main provider of shared services and Treasury activities for RBS Group in 2018. The services are mainly provided to NWH Group, however, in certain instances where permitted, services are also provided to the wider RBS Group including the non ring-fence business.

Financial review

Performance overview

The income statement movements are materially impacted by transfers from NWM Plc to set up the ring-fenced bank during H1 2018. Central items included in NWB Group include certain property portfolios and Treasury balances including the covered bond programme. Following the transfer of services and functions, certain segment related direct costs are recovered through legal entity recharging and recorded in other operating income. For the period prior to the transfers, NWB Plc was a receiver of shared services from NWM Plc and consequently had comparatively lower direct costs and received higher legal entity recharges which were booked in other administrative expenses.

Supporting our customers through continued lending growth:

We continue to support our customers through ongoing UK economic uncertainty. Overall net lending to customers remained strong with an increase in 2019 of £26.5 billion, or 13% (excluding customer migrations from other RBS Group entities). The number of digital users and total digital sales continue to grow strongly as continued investment develops the customer proposition through these channels.

Income resilient in a competitive market:

Across UK Personal Banking, Commercial Banking and Private Banking, income increased by £253 million, or 3%, compared with 2018, but excluding one-off losses incurred in 2018. NWB Group's total income decreased by £369 million, or 4% to £9,163 million compared with £9,532 million in 2018, which included an increase in service charge income recovered from other RBS Group entities of £635 million, offset by the non-repeat of £352 million FX recycling gain in 2018, following the disposal of NatWest Group Holdings Corporation (NWGH).

Continuing to simplify and de-risk the business:

Operating expenses

NWB Group's operating expenses increased by £1,671 million, or 30% to £7,265 million compared with 2018, impacted by a non-repeat movement in strategic costs of £387 million and an increase in PPI charge of £497 million. As NWB Plc became the main provider of shared services activities for RBS Group in H1 2018, a non-repeat increase in costs of £1,000 million was incurred. The NWB Group now incurs higher direct costs which are partially recovered through legal entity recharging which is recorded within other operating income. In 2019, NWB Group recharged an additional £635 million of these costs to other RBS Group entities, recorded in other operating income.

Impairments

Impairment losses increased by £144 million, or 34%, to £572 million compared with £428 million in 2018, reflecting additional stage 3 single name charges for commercial customers, IFRS 9 model adjustments and lower recoveries as a result of fewer debt sales completing in 2019. The increases were partially offset by provision releases.

Balance sheet, capital and RWAs

Total assets increased by £8.6 billion to £318.5 billion compared with £309.9 billion at 31 December 2018. This included net increases in loans to customers - amortised cost of £28.7 billion, offset by reductions in cash and balances at central banks of £17.6 billion reflecting by Term Funding Scheme repayments and liquidity optimisation activities.

Common Equity Tier 1 (CET1) ratio was 15.9%. RWAs increased by £5.5 billion in 2019 primarily reflecting an increase in lending and the adoption of IFRS 16.

Financial review

Summary consolidated income statement for the year ended 31 December 2019

					Year ended
	UK Personal	Commercial	Private	Central items	31 December	31 December
	Banking	Banking	Banking	& other	2019	2018	Variance
	£m	£m	£m	£m	£m	£m	£m	%
Net interest income	3,343	2,166	511	(184)	5,836	5,814	22	nm
Non-interest income	756	1,174	239	1,158	3,327	3,718	(391)	(11)
Total income	4,099	3,340	750	974	9,163	9,532	(369)	(4)
Operating expenses	(2,969)	(2,309)	(471)	(1,516)	(7,265)	(5,594)	(1,671)	30
Profit before impairment (losses)/releases	1,130	1,031	279	(542)	1,898	3,938	(2,040)	(52)
Impairment (losses)/releases	(329)	(247)	7	(3)	(572)	(428)	(144)	34
Operating profit	801	784	286	(545)	1,326	3,510	(2,184)	(62)
Tax charge					(442)	(741)	299	(40)
Profit from continuing operations					884	2,769	(1,885)	(68)
Loss from discontinued operations
net of tax for the year					-	(3)	nm	nm
Profit for the year					884	2,766	(1,882)	(68)

Notable items within operating expenses
Strategic costs					907	520
PPI					603	106

Key metrics and ratios					2019	2018
Cost:income ratio (%)					79.3	58.7
Loan impairment expected credit loss rate (bps)					24.1	21.6
CET 1 ratio (%)					15.9	17.4
Leverage ratio (%)					5.0	5.2
Risk weighted assets (RWAs) (£bn)					81.1	75.6

The NWB Group reported a profit before tax of £1,326 million compared with £3,510 million in 2018, due to increases in operating expenses of £1,671 million and impairment losses of £144 million, combined with £369 million lower total income.

The income statement movements are materially impacted by transfers from NWM Plc to set up the ring-fenced bank during H1 2018. NWB Plc, as part of NWH Group, became the main provider of shared activities for RBS Group in 2018. 2019 reflects a full twelve month period of costs, compared to eight months of costs in 2018. Central items included in NWB Group include certain property portfolios and Treasury balances including the covered bond programme. Following the transfer of services and functions, certain segment related direct costs are recovered through legal entity recharging and recorded in other operating income. For the period prior to the transfers, NWB Plc was a receiver of shared services from NWM Plc and consequently had comparatively lower direct costs and received higher legal entity recharges which were booked in other administrative expenses.

Total income decreased by £369 million, or 4%, to £9,163 million compared with £9,532 million in 2018.

Net interest income increased by £22 million to £5,836 million compared with £5,814 million in 2018. Although customer asset volumes have grown, the underlying income trend is lower due to competitive pressures and the low yield curve environment.

Non-interest income decreased by £391 million, or 11%, to £3,327 million compared with £3,718 million in 2018. Net fees and commissions increased by £72 million to £1,723 million. This reflects an increase in commissions received on FX transactions and fees generated the current account book. Other operating income decreased by £463 million to £1,604 million, primarily reflecting the 2018 FX reserves recycling of £822 million due to the disposal of NWGH and RBS Netherlands Holdings B.V. which does not repeat in 2019. This was offset by £635 million increase in income received in 2019 through recharges to other RBS Group entities following the transfer of shared services to NWB Plc. Other drivers of the change include;

● increased cost of hedging of £129 million,

● a decrease in gains from fair value adjustments of £68 million,

● a reduction of £100 million in income from asset sales in 2019 and a one off repurchase of own debt in 2018; and an

● increase in gains on sale of branches and property of £36 million.

Operating expenses excluding notable items increased by £787 million, or 15.8%, to £5,755 million, compared with £4,968 million in 2018, by an increase in costs of £1,000 million which reflects that NWB Plc became the main provider of shared activities for the RBS Group in May 2018. The movements are materially impacted by staff, shared property and intangible asset transfers. NWB Plc now incurs higher direct costs which are partially recovered through legal entity recharging of £635 million which is recorded within other operating income.

Strategic costs of £907 million in 2019 include charges related to the reduction in the property portfolio, technology costs and restructuring costs to achieve cost efficiencies across front and back book operations.

Impairment losses increased by £144 million, or 34%, to £572 million compared with £428 million in 2018, reflecting additional single name charges for commercial customers, IFRS 9 model adjustments and lower recoveries as a result of fewer debt sales completing in 2019.

Financial review

Summary consolidated balance sheet as at 31 December 2019

	2019	2018	Variance
	£m	£m	£m	%
Assets
Cash and balances at central banks	27,457	45,032	(17,575)	(39)
Derivatives	3,302	1,253	2,049	164
Loans to banks - amortised cost	3,325	6,406	(3,081)	(48)
Loans to customers - amortised cost	232,313	203,647	28,666	14
Amounts due from holding companies and fellow subsidiaries	3,828	5,206	(1,378)	(26)
Other financial assets	40,948	41,226	(278)	(1)
Other assets	7,320	7,168	152	2
Total assets	318,493	309,938	8,555	3

Liabilities
Bank deposits	15,505	17,563	(2,058)	(12)
Customer deposits	242,117	237,770	4,347	2
Amounts due to holding companies and fellow subsidiaries	21,447	22,542	(1,095)	(5)
Derivatives	4,898	779	4,119	529
Other financial liabilities	8,307	6,497	1,810	28
Subordinated liabilities	1,242	1,275	(33)	(3)
Other liabilities	5,305	3,638	1,667	46
Total liabilities	298,821	290,064	8,757	3
Total equity	19,672	19,874	(202)	(1)
Total liabilities and equity	318,493	309,938	8,555	3

Total assets increased by £8.6 billion to £318.5 billion at 31 December 2019, compared with £309.9 billion at 31 December 2018.

Cash and balances at central banks decreased by £17.6 billion to £27.5 billion, compared with £45.0 billion at 31 December 2018, £8.0 billion of this movement is attributable to liquidity portfolio optimisation activity completed by Treasury. Other drivers include;

● repayments of Term Funding Scheme borrowings of £4.0 billion under the terms of the scheme,

● ordinary dividend payments of £0.7 billion,

● redemptions of Senior and Tier 2 capital of £2.8 billion; and

● reduction in net cash placements from RBS Group entities of £7.0 billion

This was partially offset by a net increase of £5.2 billion in relation to MREL eligible securities, covered and other bonds issuances and £1.5 billion received as part of the transfer of a portfolio of derivatives which hedge the pension fund into NWB Plc.

Derivative assets increased by £2.0 billion to £3.3 billion, compared with £1.3 billion at 31 December 2018, primarily due to the transfer of a portfolio of derivatives which hedge the pension fund into NWB Plc Treasury.

Loans to banks - amortised cost decreased by £3.1 billion to £3.3 billion, compared with £6.4 billion at 31 December 2018, impacted by a decrease in reverse repo transactions as part of Treasury funding activities and a decrease in single name loan deposits.

Loans to customers - amortised cost increased by £28.7 billion to £232.3 billion, compared with £203.7 billion at 31 December 2018, primarily reflecting £10.7 billion higher volume of reverse repos, £13.0 billion asset growth supported by gross new lending and reduced redemptions, and £3.8 billion growth in corporate loans, of which £2.2 billion related to refinanced lending which transferred from RBS plc to NWB Plc.

Amounts due from holding companies and fellow subsidiaries decreased by £1.4 billion to £3.8 billion, compared with £5.2 billion at 31 December 2018, driven by a reduction of Treasury related funding requirements of RBS Group entities.

Other financial assets decreased by £0.3 billion to £40.9 billion reflecting a net decrease of debt securities following the liquidity optimisation exercise completed by Treasury.

Other assets increased by £0.2 billion to £7.3 billion, impacted by increased tangible assets of £0.6 billion due to the adoption of IFRS 16 on 1 January 2019, offset by a decrease in deferred tax asset of £0.4 billion.

Bank deposits decreased by £2.1 billion to £15.5 billion, compared with £17.6 billion at 31 December 2018 driven by repayment of Term Funding Scheme borrowings of £4.0 billion, partially offset by increases in repos and third party deposits.

Customer deposits increased by £4.3 billion to £242.1 billion, reflecting increases in savings deposits of £7.9 billion. This was partially offset by a decrease in repo balances of £2.0 billion and non interest bearing deposits of £2.1 billion.

Amounts due to holding companies and fellow subsidiaries decreased by £1.1 billion to £21.4 billion, compared with £22.5 billion at 31 December 2018, impacted by decrease in placements with Treasury.

Derivative liabilities increased by £4.1 billion to £4.9 billion, compared with £0.8 billion at 31 December 2018, primarily due to the transfer of a portfolio of derivatives which hedge the pension fund into NWB Plc Treasury.

Financial review

Summary consolidated balance sheet as at 31 December 2019 continued

Other financial liabilities increased by £1.8 billion to £8.3 billion, compared with £6.5 billion at the 31 December 2018. This was primarily due to covered bond issuance of £0.6 billion and commercial paper issuance of £1.3 billion.

Other liabilities increased by £1.7 billion to £5.3 billion, compared with £3.6 billion at the 31 December 2018, due to recognition of £1.5 billion lease liability on adoption of IFRS 16 on 1 January 2019.

Total equity decreased by £0.2 billion to £19.7 billion, compared with £19.9 billion at 31 December 2018. The decrease reflects the dividend paid in the period of £0.9 billion and a decrease in merger reserves of £0.2 billion, partially offset by attributable profit of £0.9 billion.

Statement of directors' responsibilities

The responsibility statement below has been prepared in connection with NWB Group's full Annual Report and Accounts for the year ended 31 December 2019.

The directors confirm that to the best of their knowledge:

● the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Bank and the undertakings included in the consolidation taken as a whole; and

● the Strategic report and Directors' report (incorporating the Financial review) includes a fair review of the development and performance of the business and the position of the Bank and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

By order of the Board

Howard Davies	Alison Rose-Slade	Katie Murray
Chairman	Chief Executive Officer	Chief Financial Officer

13 February 2020

Board of directors

Chairman	Executive directors	Non-executive directors
Howard Davies	Alison Rose Katie Murray	Francesca Barnes Graham Beale Ian Cormack Alison Davis Patrick Flynn Morten Friis Robert GillespieYasmin Jetha Baroness Noakes Mike Rogers Mark Seligman Lena Wilson

Consolidated income statement for the year ended 31 December 2019

	2019	2018*
	£m	£m
Interest receivable	7,408	6,968
Interest payable	(1,572)	(1,154)
Net interest income	5,836	5,814
Fees and commissions receivable	2,208	2,113
Fees and commissions payable	(485)	(462)
Gain on redemption of own debt	-	46
Other operating income	1,604	2,021
Non-interest income	3,327	3,718
Total income	9,163	9,532
Staff costs	(2,859)	(2,184)
Premises and equipment	(1,078)	(757)
Other administrative expenses	(2,450)	(2,119)
Depreciation and amortisation	(834)	(521)
Impairment of other intangible assets	(44)	(13)
Operating expenses	(7,265)	(5,594)
Profit before impairment losses	1,898	3,938
Impairment losses	(572)	(428)
Operating profit before tax	1,326	3,510
Tax charge	(442)	(741)
Profit from continuing operations	884	2,769
Loss from discontinued operations net of tax	-	(3)
Profit for the year	884	2,766

Attributable to:
Ordinary shareholders	714	2,649
Paid-in equity holders	166	111
Non-controlling interests	4	6
	884	2,766

Consolidated statement of comprehensive income for the year ended 31 December 2019

	2019	2018*
	£m	£m
Profit for the year	884	2,766
Items that do not qualify for reclassification
Remeasurement of retirement benefit schemes
- contributions in preparation for ring fencing (1)	-	(2,000)
- other movements	(127)	47
FVOCI financial assets	-	(44)
Tax	30	530
	(97)	(1,467)
Items that do qualify for reclassification
FVOCI financial assets	(6)	(115)
Cash flow hedges	36	-
Currency translation	(85)	(811)
Tax	(3)	32
	(58)	(894)
Other comprehensive loss after tax	(155)	(2,361)
Total comprehensive Income for the year	729	405

Attributable to:
Ordinary shareholders	559	289
Paid-in equity holders	166	111
Non-controlling interests	4	5
	729	405

*Restated for IAS12 'Income taxes' refer to Accounting policy 1 of NWB Group's 2019 Annual Report and Accounts for further details.

Notes:

(1) On 17 April 2018 RBS Group agreed a Memorandum of Understanding (MoU) with the Trustees of the RBS Group Pension Fund in connection with the requirements of ring-fencing. NWM Plc could not continue to be a participant in the Main section and separate arrangements were required for its employees and agreed to contribute £1.2 billion to the ring-fenced bank. Under the MoU, NWB Plc made a contribution of £2 billion on 9 October 2018 to strengthen funding of the Main section in recognition of the changes in covenant.

(2) A loss of nil in 2019 (2018 - £3 million loss) from discontinued operations was attributable to ordinary shareholders.

Balance sheet as at 31 December 2019

	NWB Group		NWB Plc
	2019	2018	2019	2018
	£m	£m	£m	£m
Assets
Cash and balances at central banks	27,457	45,032	26,377	43,966
Derivatives	3,302	1,253	3,404	1,277
Loans to banks - amortised cost	3,325	6,406	2,741	5,875
Loans to customers - amortised cost	232,313	203,647	198,504	171,433
Amounts due from holding companies and fellow subsidiaries	3,828	5,206	31,705	30,780
Securities subject to repurchase agreements	4,175	9,890	4,175	9,890
Other financial assets excluding securities subject to repurchase agreements	36,773	31,336	36,383	30,944
Other financial assets	40,948	41,226	40,558	40,834
Investment in group undertakings	-	-	2,394	2,466
Other assets	7,320	7,168	5,271	4,993
Total assets	318,493	309,938	310,954	301,624

Liabilities
Bank deposits	15,505	17,563	15,487	17,557
Customer deposits	242,117	237,770	208,698	204,279
Amounts due to holding companies and fellow subsidiaries	21,447	22,542	51,019	50,958
Derivatives	4,898	779	5,013	1,185
Other financial liabilities	8,307	6,497	7,635	5,889
Subordinated liabilities	1,242	1,275	1,242	1,267
Other liabilities	5,305	3,638	3,834	2,213
Total liabilities	298,821	290,064	292,928	283,348

Owners' equity	19,666	19,867	18,026	18,276
Non-controlling interests	6	7	-	-
Total equity	19,672	19,874	18,026	18,276

Total liabilities and equity	318,493	309,938	310,954	301,624

Owners' equity of NWB Plc as at 31 December 2019 includes the profit for the year of £724 million (2018 - £1,641 million).

Statement of changes in equity for the year ended 31 December 2019

	NWB Group		NWB Plc
	2019	2018	2019	2018
	£m	£m	£m	£m
Called-up share capital - at 1 January and 31 December	1,678	1,678	1,678	1,678

Paid-in equity - At 1 January	2,370	-	2,370	-
Securities issued during the year (1)	-	2,370	-	2,370
At 31 December	2,370	2,370	2,370	2,370

Share premium - at 1 January and 31 December	2,225	2,225	2,225	2,225

Merger reserve - at 1 January	412	-	(294)	-
Transfer from fellow subsidiary (2)
- gross	-	473	-	(460)
- tax	-	124	-	124
Amortisation, net of tax	(245)	(185)	63	42
At 31 December	167	412	(231)	(294)

FVOCI reserve - at 1 January	250	(5)	249	1
Implementation of IFRS 9 on 1 January 2018	-	46	-	-
Unrealised losses	(22)	(85)	(20)	(86)
Realised losses/(gains)	16	(74)	16	(34)
Tax	6	32	6	32
Transfer from fellow subsidiary (2)
- gross	-	460	-	460
- tax	-	(124)	-	(124)
At 31 December	250	250	251	249

Cash flow hedging reserve - at 1 January	-	-	-	-
Amount recognised in equity (3)	36	-	36	-
Tax	(9)	-	(9)	-
At 31 December (4)	27	-	27	-

Foreign exchange reserve - At 1 January	15	826	(13)	(10)
Retranslation of net assets	(30)	45	(16)	2
Foreign currency gains/(losses) on hedges of net assets	5	(9)	-	-
Tax	-	-	-	-
Recycled to profit or loss on disposal businesses	(60)	(847)	15	(5)
At 31 December (4)	(70)	15	(14)	(13)

Capital redemption reserve - at 31 December	796	796	796	796

Retained earnings - at 1 January	12,121	10,766	11,265	10,665
Implementation of IFRS 9 on 1 January 2018	-	(317)	-	(270)
Implementation of IFRS 16 on 1 January 2019 (5)	(153)	-	(150)	-
Profit/(loss) attributable to ordinary shareholders and other equity owners
- continuing operations	880	2,763	724	1,641
- discontinued operations	-	(3)	-	-
Ordinary dividends paid	(700)	-	(700)	-
Paid-in-equity dividends paid	(166)	(111)	(166)	(111)
Distribution of subsidiary (6)	-	(902)	-	(292)
Capital contribution (7)	-	1,200	-	1,200
Realised losses in period on FVOCI equity shares	-	(6)	-	-
Remeasurement of retirement benefit schemes
- contribution in preparation for ring-fencing (7)	-	(2,000)	-	(2,000)
- gross	(127)	47	(108)	(25)
- tax	30	530	29	530
Shares issued under employee share schemes	(6)	-	(6)	-
Share based payments	99	(31)	99	(31)
Amortisation of merger reserve, net of tax	245	185	(63)	(42)
At 31 December	12,223	12,121	10,924	11,265

Owners' equity at 31 December	19,666	19,867	18,026	18,276

Statement of changes in equity for the year ended 31 December 2019

	NWB Group		NWB Plc
	2019	2018	2019	2018
	£m	£m	£m	£m
Non-controlling interests - at 1 January	7	81	-	-
Currency translation adjustments and other movements	-	(1)	-	-
Profit attributable to non-controlling interests	4	6	-	-
Dividends paid	(5)	(5)	-	-
Equity withdrawn and disposals (6)	-	(74)	-	-
At 31 December	6	7	-	-

Total equity at 31 December	19,672	19,874	18,026	18,276

Total equity is attributable to:
Ordinary shareholders	17,296	17,497	15,656	15,906
Paid-in equity holders	2,370	2,370	2,370	2,370
Non-controlling interests	6	7	-	-
	19,672	19,874	18,026	18,276

Notes:

(1) AT1 capital notes totalling £2.4 billion issued in April 2018 in preparation for ring-fencing.

(2) During 2018 the RBS Treasury and shared service activities transferred to NWB Plc from NWM Plc at net asset value. The assets, liabilities and IFRS reserves were recognised at inherited values. The difference has been recognised in the merger reserve.

(3) The amount credited to the cash flow hedging reserve comprised £60 million in relation to interest rate hedges less a debit of £24 million in relation to foreign exchange hedges. There was no cash flow hedging in 2018. Additionally, the cash flow hedging reserve was reduced by £3 million in relation to interest rate hedges credited to net interest income and increased by £3 million in relation to foreign exchange hedging which was debited to net interest income. There was no cash flow hedging in 2018.

(4) The hedging element of the cash flow hedging reserve and foreign exchange reserve relate mainly to de-designated hedges in NWB Group and continuing hedges in NWB Plc.

(5) Refer to Note 24 of NWB Group's 2019 Annual Report and Accounts for further information on the impact of IFRS 16 implementation.

(6) On 2 March 2018, in preparation for ring-fencing, NatWest Group Holdings Corp, parent of NatWest Markets Securities Inc., was distributed to NatWest Markets Plc.

(7) On 17 April 2018 the RBS Group agreed a Memorandum of Understanding (MoU) with the Trustees of the RBS Group Pension Fund in connection with the requirements of ring-fencing. NWM Plc could not continue to be a participant in the Main section and separate arrangements were required for its employees and agreed to contribute £1.2 billion to the ring-fenced bank. Under the MoU, NWB Plc made a contribution of £2 billion on 9 October 2018 to strengthen funding of the Main section in recognition of the changes in covenant.

Cash flow statement for the year ended 31 December 2019

	NWB Group		NWB Plc
	2019	2018	2019	2018
	£m	£m	£m	£m
Cash flows from operating activities
Operating profit before tax from continuing operations	1,326	3,510	1,045	2,238
Loss before tax from discontinued operations	-	(3)	-	-
Interest on treasury bills and debt securities	(520)	(262)	(520)	-
Interest on subordinated liabilities	56	177	-	175
Interest on other financial assets	-	-	-	(557)
Interest on MRELs	133	-	131	-
Impairment losses/(releases) on loans to banks and customers	319	(198)	315	198
Profit on sale of subsidiaries and associates	-	(7)	16	(36)
Loss/(profit) on sale of securities	16	(32)	-	-
Defined benefit pension schemes	161	231	121	(2,025)
Provisions charges/releases	899	176	854	(201)
Depreciation, amortisation and impairment of property, plant,
equipment, goodwill and intangibles	1,154	534	956	399
Loss on sale of property, plant and equipment	(44)	(40)	(40)	-
Write back of investment in subsidiaries	-	-	87	481
Change in fair value taken to profit or loss of other financial assets	-	349	-	(750)
Change in fair value taken to profit or loss of subordinated liabilities	-	-	-	20
Change in fair value taken to profit or loss of MRELs	175	20	175	-
Elimination of foreign exchange differences	452	(642)	484	(654)
Other non-cash items	(718)	(389)	(689)	(1,147)
Net cash inflow/(outflow) from trading activities	3,409	3,424	2,935	(1,859)
Decrease/(increase) in net loans to banks	3,485	(60,158)	477	(46,068)
Increase in net loans to customers	(28,787)	(7,802)	(27,190)	(11,123)
(Increase)/decrease in derivative assets	(2,049)	3,119	(2,127)	2,717
Decrease in amounts due from holding companies and subsidiaries	328	73,254	3,542	23,481
Decrease/(increase) in other financial assets	138	(432)	220	-
Decrease/(increase) in other assets	74	(6,825)	(27)	(295)
Decrease in bank deposits	(1,927)	(3,139)	(1,941)	(3,279)
Increase in customers deposits	4,347	6,439	4,419	5,428
Increase/(decrease) in derivative liabilities	4,119	(3,974)	(1,390)	26,099
(Decrease)/increase in amounts due to holding companies and subsidiaries	(2,547)	(23,546)	3,828	(3,467)
Increase in other financial liabilities	1,810	2,349	1,747	2,235
(Decrease)/increase in other liabilities	(637)	1,306	(575)	40
Changes in operating assets and liabilities	(21,646)	(19,409)	(19,017)	(4,232)
Income taxes (paid)/received	(221)	(360)	(136)	(108)
Net cash flows from operating activities	(18,458)	(16,345)	(16,218)	(6,199)
Cash flows from investing activities
Sale and maturity of other financial assets	13,158	6,171	12,768	5,742
Purchase of other financial assets	(12,405)	(3,219)	(12,016)	(2,791)
Interest on other financial assets	520	262	520	557
Sale of property, plant and equipment	382	288	241	59
Purchase of property, plant and equipment	(497)	(516)	(231)	(262)
Net investment in business interests and intangible assets	(387)	(36,949)	(391)	(33,651)
Net cash flows from investing activities	771	(33,963)	891	(30,346)
Cash flows from financing activities
Issue of Additional Tier 1 capital notes	-	2,370	-	2,370
Issue of subordinated liabilities	580	1,531	580	1,486
Capital contribution	-	-	-
Redemption of non-controlling interests	-	-	-
Redemption of subordinated liabilities	(708)	(3,000)	(700)	(3,000)
Redemption of preference shares	-	-	-
Dividends paid	-	-	-
Service cost of other equity instruments	(871)	1,084	(866)	1,089
Interest on subordinated liabilities	(49)	(182)	7	(179)
Issue of MRELs	1,439	1,525	1,179	1,475
Interest on MRELs	109	3	107	3
Net cash flows from financing activities (2)	500	3,331	307	3,244
Effects of exchange rate changes on cash and cash equivalents	(646)	241	(638)	220
Net decrease in cash and cash equivalents	(17,833)	(46,736)	(15,658)	(33,081)
Cash and cash equivalents at 1 January	51,317	98,053	49,492	82,573
Cash and cash equivalents at 31 December	33,484	51,317	33,834	49,492

Notes:

(1)	NWB Group includes interest received of £7,422 million (2018 - £6,637 million) and interest paid of £1,570 million (2018 - £1,083 million), and NWB Plc includes interest received of £6,711 million (2018 - £5,866 million) and interest paid of £1,760 million (2018 - £1,165 million).
(2)	2018 has been re-presented to align the balance sheet classification. MREL was previously presented in Operating activities and is now presented in Financing activities.

Notes on the accounts

1 Basis of preparation

NWB Group's condensed consolidated financial statements should be read in conjunction with the 2019 Annual Report and Accounts which were prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) and interpretations issued by the IFRS Interpretations Committee of the IASB as adopted by the European Union (EU) (together IFRS).

Going concern

Having reviewed NWB Group's forecasts, projections, and other relevant evidence, the directors have a reasonable expectation that NWB Group will continue in operational existence for the foreseeable future. Accordingly, the results for the period 31 December 2019 have been prepared on a going concern basis.

Re-segmentation

Effective from 1 January 2019, Business Banking was transferred from UK Personal and Business Banking (UK PBB) to Commercial Banking as the nature of the business, including distribution channels, products and customers, are more closely aligned to the Commercial Banking business. Concurrent with the transfer, UK PBB was renamed UK Personal Banking (UK PB) and the previous franchise combining UK PBB (now UK PB) and Ulster Bank RoI was renamed Personal & Ulster. Comparatives have been re-stated.

2 Accounting policies

NWB Group's principal accounting policies are as set out on pages 87 to 91 of NWB Group's 2019 Annual Report and Accounts and are unchanged other than as presented below.

Adoption of new accounting standard - Leases

NWB Group has adopted IFRS 16 'Leases' with effect from 1 January 2019, replacing IAS 17 'Leases'. NWB Group has applied IFRS 16 on a modified retrospective basis without restating prior years. For further details, see Accounting policy 9 and Note 24 of NWB Group's 2019 Annual Report and Accounts.

Amendments to existing accounting standards

IAS 12 'Income taxes' was amended with effect from 1 January 2019. The income statement now includes any tax relief on the servicing cost of instruments classified as equity. For further details, see Note 7 of NWB Group's 2019 Annual Report and Accounts.

Revised accounting policy - Presentation of interest in recoveries

In March 2019 the IFRS Interpretations Committee (IFRIC) issued an agenda decision on the presentation of unrecognised interest when a credit-impaired financial asset (commonly referred to as a 'Stage 3' financial asset) is subsequently paid in full or is no longer credit-impaired. This concluded that the difference arising from the additional interest recovered must be recognised as a reversal of impairment rather than within interest revenue. This affects both recognition and the reversal of the ECL allowance.

NWB Group changed its accounting policy in line with the IFRIC decision. Hence, the carrying amount of the financial assets within the scope of the provisions of the decision, as well as the associated ECL allowance on the statement of financial position, have been adjusted by £141 million and the comparative period restated by £121 million. The coverage ratio for the current and comparative periods have been adjusted and restated accordingly.

In addition, until 1 January 2019, interest in suspense recoveries were presented as a component of interest receivable within Net interest income. From 1 January 2019 interest in suspense recoveries are presented within Impairment losses. It amounted to £25 million for the year ended 31 December 2019. Comparatives have not been rested on the grounds of materiality.

For further details see Accounting policies of NWB Group's 2019 Annual Report and Accounts.

IAS 39 'Financial Instruments: Recognition and Measurement', IFRS 9 'Financial Instruments' and IFRS 7 'Financial Instruments: Disclosures' - In September 2019, the IASB published amendments to address the issues arising from the replacement of existing IBOR based interest rate benchmarks with alternative nearly risk-free interest rates (an RFRs) in the context of hedge accounting. These amendments allow hedging relationships affected by the IBOR reform to be accounted for as continuing hedges. NWB Group has early adopted these amendments for the annual reporting period ending on 31 December 2019.

The amendments provide relief on key areas of hedge accounting most notably the hedge effectiveness assessment and the ability to identify LIBOR-based cash flows for the purpose of designation (re-designation) during the period of the Reform. Additional disclosures are shown in Note 9 of NWB Group's 2019 Annual Report and Accounts.

Critical accounting policies and key sources of estimation uncertainty

The judgements and assumptions that are considered to be the most important to the portrayal of NWB Group's financial condition are those relating to deferred tax, fair value of financial instruments, loan impairment provisions, and provisions for liabilities and charges. These critical accounting policies and judgements are described on page 91 of NWB Group's 2019 Annual Report and Accounts

Notes on the accounts

3 Operating expenses

	2019	2018
	£m	£m
Wages, salaries and other staff costs	2,069	1,484
Temporary and contract costs	334	251
Social security costs	217	168
Pension costs	239	281
Staff costs	2,859	2,184

Premises and equipment (1)	1,078	757
Depreciation and amortisation (2,3)	834	521
Other administrative expenses (4)	2,450	2,119
Administrative Expenses (5)	4,362	3,397
Impairment of intangible assets (see Note 16 of NWB Group's Annual Report and Accounts)	44	13
	7,265	5,594

Notes:

(1) Includes a £161 million charge relating to the reduction in property portfolio.

(2) Includes depreciation in relation to the right of use assets recognised following the adoption of IFRS 16 (previously leasing costs in relation to these were included in premises and equipment). For further details on the adoption of IFRS 16 refer to Note 24 of NWB Group's 2019 Annual Report and Accounts.

(3) Includes a £292 million charge relating to the reduction to the reduction in property portfolio.

(4) Includes litigation and conduct costs. Further details are provided in Note 21 of NWB Group's 2019 Annual Report and Accounts.

(5) The increase in 2019 compared to 2018 includes the impact of NWB Group becoming the provider of shared services to RBS Group in 2018 in preparation for ring-fencing. Direct costs incurred are recovered through legal entity recharging and recorded in Other income. For the period before the transfer NWB Group was a net receiver of shared services from NatWest Markets Plc (NWM Plc). Shared services staff working directly for NWM Plc, were transferred to NWM Plc at the beginning of 2019.

4 Segmental analysis

Effective from 1 January 2019 Business Banking was transferred from UK Personal & Business Banking (UK PBB) to Commercial Banking, as the nature of the business, including distribution channels, products and customers were more closely aligned to the Commercial Banking business. Following the transfer, UK PBB was renamed UK Personal Banking. Comparatives have been re-stated.

Reportable operating segments

The reportable operating segments are as follows:

UK Personal Banking serves individuals and mass affluent customers in the UK and includes Ulster Bank customers in Northern Ireland.

Commercial Banking serves start-up, SME, commercial and corporate customers in the UK.

Private Banking serves UK connected high net worth individuals and their business interests.

Central items & other includes corporate functions, such as RBS Treasury, finance, risk management, compliance, legal, communications and human resources. Central functions manages RBS Group capital resources and RBS Group-wide regulatory projects and provides services to the reportable segments. Balances in relation to legacy litigation issues and the business are included in Central items in the relevant periods.


	Net		Other Non-			Depreciation	Impairment
	interest	Net fees and	interest	Total	Operating	and	(losses)/	Operating
	income	commissions	income	income	expenses	amortisation	releases	profit/(loss)
2019	£m	£m	£m	£m	£m	£m	£m	£m
UK Personal Banking	3,343	551	205	4,099	(2,969)	-	(329)	801
Commercial Banking	2,166	976	198	3,340	(2,167)	(142)	(247)	784
Private Banking	511	209	30	750	(467)	(4)	7	286
Central items & other	(184)	(13)	1,171	974	(828)	(688)	(3)	(545)
Total	5,836	1,723	1,604	9,163	(6,431)	(834)	(572)	1,326
2018*
UK Personal Banking	3,370	538	169	4,077	(2,848)	-	(271)	958
Commercial Banking	2,008	910	257	3,175	(1,183)	(122)	(184)	1,686
Private Banking	444	213	27	684	(451)	(2)	8	239
Central items & other	(8)	(10)	1,614	1,596	(591)	(397)	19	627
Total	5,814	1,651	2,067	9,532	(5,073)	(521)	(428)	3,510

NATIONAL WESTMINSTER BANK PLC /ENG/ 6-K