It's a pleasure to be introducing our next speaker, Paul Thwaite, Chief Executive Officer of NatWest. That's a role he's held for around a year now, prior to which Paul was Chief Executive of NatWest's Commercial & Institutional Business . Thank you very much for joining us.
Great to be here, Ben. Thank you.
I think let's start with a broad question, just thinking about the U.K. backdrop. You know, we've had the announcement for a general election on the 4th of July. Can we think a bit about what that means for the indicated retail share offer this summer, and any indications of what we might expect more broadly from the macro backdrop?
Yeah, of course. I think the U.K. macro backdrop is certainly more positive than we'd maybe anticipated a year ago. You see the last quarter GDP at 0.6%. You see unemployment just over four, inflation dropping to 2.3. And both the system level surveys and the proprietary surveys that we do from a customer perspective feel quite positive on the business side and on the consumer side. Consumers feel more positive than they have done since quarter three 2021. I think businesses, we've seen 8-9 months of improving business sentiment. So in places it's balanced, but I think generally the sentiment around the kind of U.K. is good.
In terms of the general election, we're kind of two weeks into a six week campaign, so we have all that excitement and fun to play out. But I think from a policy perspective and an economic outlook, we spoke briefly previously, yeah, I don't see any material change. I think the expectation is that for continued growth, but relatively modest growth from a U.K. perspective. On the specific of the retail share offer, the government have been very clear, and the Ministry of Finance, the Treasury, that that can't happen for very obvious reasons during an election period. They'll, t hat's for the next government, whoever it may be, to look at that.
I was very pleased we could do the directed buyback last week, so that, you know, reduced the state down to 22%. We bought back 4.5% of our shares. I think that was a positive signal despite the election having been called. So the decision ultimately is for the government, you know, whoever the government of the day is, to press ahead. But I was encouraged, and obviously, we've been engaging with the current opposition quite extensively, and the Shadow Chancellor earlier this week visited our premises, and she went on the record that they have no plans to deviate from the current plan, which is to sell the whole shareholding down by the fiscal year 2025, 2026.
Given the progress we've made, coming down from 38% to just over 22% in the last five and a half months, I'm pretty pleased with the trajectory. You know, we'll hit that plan irrespective of whether a retail offer happens or not.
Understood. And then, I suppose turning to NatWest more specifically having been CEO for close to a year now.
Mm.
Could you give us a bit of an overview of how things are going?
Yeah, of course. I guess from a personal perspective, I'm enjoying it, so I should say that. Time goes very fast in these roles. That's for sure. And I and the business have got an awful lot to do. I'm pleased with the performance so far. I thought the quarter one print was very strong. Return on equity of 14%. Healthy lines across the different parts of the P&L. I've always said consistently since, you know, last August, last October, when I first talked to the market, that I see great potential in the business. I'm very ambitious for the business. I think we've got three very strong business franchises across retail, commercial, and private. I think all have the potential to grow.
I think our position in the U.K. market, having 19 million customers, having the market positions that we do have, places us really well to take advantage of that growth. So from my perspective, yes, I'm pleased with where we are. I'm pleased how the first 12 months have gone. But I am ambitious around the potential of the franchise, and I've been very consistent around what I see as the priorities. You know, I've been, I think it's been from July onwards, very clear that, you know, I'm very focused on disciplined growth. I'm very focused on simplifying the bank in its broadest sense, not just for efficiency and productivity, which is important, but also to drive customer experience and also drive colleague experience. I think we could be, you know, a much simpler bank from that perspective.
The business model is simple, but we need to make sure that the way in which we operate is simple as well, and really turning up the dial on active balance sheet and risk management. So, so far, so good. A lot to do, very clear priorities, very focused on returns and driving the business forward.
Okay, and just to touch a bit more on those three priorities which you have outlined, you know, what particular initiatives are you pursuing for that, disciplined growth, simplification, and risk management, which are the cornerstones of the strategy you've outlined?
Yeah, broadly, there's a very broad spread of, you know, initiatives, as you'd imagine. You know, trying to get priorities down to 2 or 3 headlines. On one hand, is a challenge, but it is, on another hand, I think, very important because it gives real clarity to all our stakeholders, including our colleagues. So there's a broad range of initiatives. On the disciplined growth side, it's probably easiest to think about it through the lens of our customer businesses. I strongly believe if you take our commercial institutional franchise, and that's a business I know incredibly well, for obvious reasons, you know, we have significant opportunities to grow in a number of areas.
You know, the disciplined growth that you've seen across our project finance business, our infrastructure business, our renewables business is pleasing. The market share gains we're making in the mid-market, which is the real kind of heart of the commercial franchise spread across the U.K. In bringing together our institutional bank with the commercial bank, you know, we've definitely seen some significant improvements in distribution of FX and rates products to our commercial clients, which is encouraging. So growth there on the retail side, the commercial bank is the number one commercial bank in the U.K. In retail, you know, we're in most market positions, number two or number three.
So the real focus for growth is those areas where we have the customer base, but we haven't necessarily got our fair share of growth from some of the product segments. We're underweight in certain areas. We've made great progress in mortgages, but there's still more we can do. We're very underweight in unsecured credit, be that credit cards or unsecured loans, so that's a real focus. So they're the growth focus. On simplification, I'm sure we'll get on to target, on to kind of costs, later, Ben. But on simplification, I think the point I'd make is it's a really broad approach to simplification.
A lot of people talk about simplification, but I think about it in the context of, yes, driving efficiency and productivity, so consolidation of platforms, digitization of customer journeys, would be some of the obvious, reduction of telephony systems. So it's those type of things, but it's also simplification for colleagues, just making it easier on a day-to-day basis to serve up data, do their jobs, serve clients well. So it's a pretty broad spread of initiatives, and on kind of balance sheet and kind of risk management. The reality of this bank's position for a long period of time is it had surplus capital. So some of the tools that you would usually deploy to drive capital velocity, originate, distribute, insurance, et cetera, there was no real compelling rationale.
That's obviously changed over the course of the last 12 and 18 months. So really dialing up the attention and focus on how we manage the balance sheet through all the tools that are there. But arguably, we've got more opportunity than some of our peers, given we haven't had to use some of those mechanics over the course of the last few years. So it's a really broad spread, but it all ladders up to those three priorities, and all of them are focused on driving returns and delivering the guidance that we've set out there for 2024, but also 2026.
To expand a bit more on that simplification point-
Mm.
NatWest, as an institution, has undergone a significant simplification over recent years. How do you think from a cultural perspective, how do you assess the culture of NatWest as an organization at the moment?
So I think, culture is a broad thing. I see people as the heart of the business. You know, I often say that the people who serve our customers or the people who build the technology that serves our customers are the stars of the show. You know, that's how I think about the business, and it's about how I run the business. I was lucky with my inheritance in terms of the colleagues and the culture base. You know, the culture of the organization is orientated around, naturally orientated around customer. It's also naturally orientated around collaboration. So that inheritance was a good and helpful platform. We do all the surveys that I'm sure all your organizations do, independent surveys on cultural health.
We get very, very high response rates, very high engagement, which to me is a positive indicator, and we get very positive kind of signals around that. It's probably surprising, Ben, that although the organization's gone through an awful lot of change in the last 15 years, we still, we have a very high proportion of people who've actually joined the bank in the last 5 or 6 years. So the reality is they don't relate the past to the kind of, to the future, which, from a cultural perspective, is probably, you know, a significant net positive. The things that I'm focused on culturally, beyond, you know, ensuring that we have that, what I call healthy environment, are really ensuring that, you know, we have a strong degree of commerciality.
We think very thoughtfully about risk reward. I think it's increasingly important, given where the sector is at the moment and where we are as a bank in terms of our aspirations. So commerciality, to me, is crucial, and also, you know, a culture of experimentation, and when you've gone from a, I guess, less so in the last four years or so, but prior to that, you know, the strategy was really de-risking, maybe exiting various business lines. But once you're in a different part of the cycle in terms of looking to grow the businesses that you've got, you need a culture that's happy to experiment, happy to identify opportunities, feels empowered to do that.
I'm trying to blend that commerciality with also that kind of empowerment around experimentation to really see how we can go further for customers and drive the financial performance of the bank.
Understood. And I think we, we've done very well at actually making it 12 minutes now into our fireside chat.
Without mentioning.
W ithout mentioning NII.
Oh, okay. Very good.
But to talk about NII.
I thought you were going to say structural hedge.
No, no, no.
But that's related.
At the time of the Q1 results, you'd modeled five base rate cuts over 2024. So clearly, we didn't get one in May. So how does that impact your guidance, and how do you think about the sensitivity to rates from here?
So no, no change to our income guidance. At this point, we're clear in February around the guidance that we put out there, GBP 13 billion-GBP 13.5 billion on the revenue side. We don't break out guidance for NII versus non-NII. We were pleased with quarter one, both from a returns perspective and an income perspective, so that was encouraging. And I said in you know I said in the earnings call that you know we were increasingly confident based on the quarter that we'd had, albeit it was only the first quarter of the year. I think if you look at the market data and the system data, you can see that the mortgage market is pretty healthy. It's you're just under 40% up compared to quarter four.
I think it's just over 20% up versus quarter one. So from that perspective, you can see a healthier mortgage market. Again, the system data tells us that migration of deposits from instant access to term has slowed at a system level. That's also something that we've seen, and we've shared previously. So you know, to me, they're positive indicators. We'll, o n the point around rate cuts, we'll update our economic assumptions at the half year. We'll review the guidance in due course, but the trends I pointed to in quarter one, that were emerging, you know, continue to be there, but at this stage, no change to guidance.
Okay. And I suppose to bring that out a bit more and think not just about 2024, but longer term.
Mm-hmm.
You, of course, mentioned the structural hedge.
Yeah.
You also have the slowing pace of deposit migration. You have loan growth.
Yeah.
You know, how are you thinking about the longer-term NII trajectory and which of the dynamics is giving you most confidence?
Into 2026.
Yeah.
So I think the, w ell, you've touched on quite a few of the main drivers there. So I think the, let's, let's break them down a little bit. We, we've been very clear in our, I've been very clear in our targets around 2026, which is a greater than 13% return on equity. Yeah, indeed. No change to that at this point. What underpins that movement from this year's guidance to the 2026 guidance are a number of things. Structural hedge is one of them. Obviously, as the notionals have stabilized and the reinvestment yields have increased, that has locked in benefit and will continue to lock in benefit, which will support the income piece for 2025 and 2026.
I should say the, you know, the 2024-2026, a big part of the, the uplift in returns is income-led, albeit we'll still be very focused on costs and, and capital management, but structural hedge is one part of that. A headwind that we had faced, well, two headwinds that we had faced, which was the differences between front book mortgage pricing and back book mortgage pricing. That is nearly behind us, so in effect, that headwind dissipates. Likewise, the migration of deposits has slowed. You can see that at a system-level data, and you can see it also at a bank-level data from the quarter one earnings statements. And then complementing that, probably the other part of the story is the, I guess, the resumption of loan growth.
You can see from the growth that we demonstrated in quarter one, not exclusively, but primarily in our kind of commercial institutional franchise. You can see it in the mortgage market generally. So if you assume that the GDP, the GDP macro is going to be, you know, modest growth, you would expect loan growth to be modest. So across those things, you see income support from locked in income support from the structural hedge. You see some of the headwinds disappearing and, you know, we said at quarter one, we expect to be through that, you know, at, at the half year, and then you see some uptick from kind of increasing demand that flows through, both on the consumer side, but also on the commercial side.
That's what gives me confidence around the 2026 guidance and the trajectory between 2024 and 2026.
Understood. Moving further down the P&L, if we think about operating costs, excluding conduct and litigation.
Yeah.
Your guidance is for broadly flat year-over-year, when excluding the GBP 0.1 billion Bank of England levy. So could you talk about some of the moving parts beneath the surface there, where you're funding, investments, how you're combating inflation?
Yeah
A nd then, you know, more broadly, the cost culture you're trying to foster within the organization?
Yeah, it's, you're right. There's a number of moving parts within one OpEx line there. I mean, the guidance remains unchanged, broadly stable, excluding the change in respect of the Bank of England levy. So what are some of the moving parts? So on one hand, you have inflation, which is obviously driving wage inflation. Our average wage settlement this year was just above 4%. That compares to over 6% in 2023. You also got contract inflation, you know, supplier contract inflation, not exclusively, but predominantly led by kind of tech contract inflation.
So knowing you've got wage inflation and contract inflation, I guess it becomes obvious that we're having to pull a lot of levers around productivity and efficiency to, in effect, offset the increases that would come without pulling those levers. And I think we've demonstrated over a number of years, we can drive kind of both macro costs out of the organization, but also drive efficiency, micro costs, as I call them, efficiencies out of the organization. And I think broadly stable, given some of those inflationary headwinds, is a, you know, is a stretching but achievable target. How we're doing that goes a little bit back to my priorities around simplification. We still have significant opportunities to drive efficiency and productivity.
If I think about platforms, you know, examples where we've consolidated five retail platforms onto one retail platform, that releases a lot of efficiencies. I touched on customer journeys. We've realized in excess of GBP 250 million of savings from digitizing of customer journeys, and we're not done yet. There's still a lot of journeys that we'd like to digitize and automate more. We still bear some of the complexity of our heritage, so there's opportunities to simplify around legal entities. So we've been pulling all those different levers. And then also, we started with simplification at the top. You know, significantly simplified the organizational construct, reduced the size of the Executive Committee.
That has a cascading effect through the organization in terms of hopefully more simplicity, shorter decision-making, change of command and lines, empowering more people, removing joint responsibilities. So it's a broad set of levers, all driven at, in effect, offsetting the natural inflation that you've got. But when I look at ourselves, whilst we've made an awful lot of positive progress, I'm still confident that there's a fair bit to go after on the productivity and efficiency front.
Sure. And thinking about asset quality now.
Mm.
You target a loan impairment rate below 20 basis points for the full year, I believe, and you posted 10 basis points in Q1.
Yeah.
So how are you thinking about the quality of the loan book at the moment? What are the key factors that you're monitoring in that regard?
Yeah, it's. It won't surprise you to hear that we spend a lot of time scrutinizing all the asset portfolios, and I guess, given the cycle that we've been through, you know, that's the right thing to do. We still don't, o bviously, we don't see any macro deterioration. We haven't seen any deterioration in our core asset portfolios as well, which is very, very encouraging. The portfolios you'd maybe expect to see at first would be the small business portfolio or some of the unsecured credit portfolios, but we haven't seen anything material there.
So, so we're very confident in the guidance we've already given around 20 basis points, and yes, it was only 10 basis points in the first quarter, but you think, you know, the reality is the commercial book isn't a linear thing. It happens, so, b ut I feel good about the state of the asset quality book. Why do I feel okay about that? I think the reality is the institution has been de-risking for, you know, an extensive period of time. Some of that's been around business divestment, some of that's been about product exit. And I think what we have now in our strong customer franchises of commercial and retail, or the large customer franchises, is really a very prime asset book.
And that, that reflects, yes, the commercial portfolio, but it reflects the, the mortgage portfolio, it reflects the large corporate portfolio. So I feel we've got a, you know, we've got a, a prime asset book as a consequence, really, of the history, I think a history of U.K. banking, U.K. banking post-financial crisis, but also as a consequence of the history of this, this organization. Looking forward, what could change that? I mean, really, the, you know, the classic trigger would be unemployment. As I alluded to, I think in the first answer to my first question, unemployment, you know, continues to track relatively flat, so just above 4%. So from an outlook perspective, we've. I feel confident in the quality of the book, how diversified it is. On the personal side, 93% of it is secured.
We've significantly de-risked ourselves in commercial real estate and retail over a number of years. So I think our cost of risk is arguably a source of competitive advantage.
Wrapping all the P&L together, we think about return on tangible equity. You're targeting around 12% in 2024, improving to more than 13% in 2026. So could you just help us think about, you know, some of the factors there that are driving that improved profitability, and then maybe a bit longer term, where you would see through-cycle returns stabilizing?
Yeah. So we're, so confirming, I guess, confirming both 2024 and 2026 today in terms of the numbers that you spoke about. I think we've touched a little bit on this around the 2024-2026 trajectory. You know, what supports that really is forensic focus on continued focus on the cost and capital side, but the increase and the uplift comes from the support we've got on the income side, which is driven by the structural hedge, the reduction of the headwinds in terms of front book, back book mortgages and deposit migration, the expected uplift in loan growth. So that's what supports, I guess, the increase between 2024-2026. And I'm very focused, as is the team, on that, you know, greater than 13% in 2026 returns.
We don't guide on through the cycle, so nothing really to share on that. I'm not personally sure it's a particularly helpful measure to think about, so we don't guide on that, but obviously, we're very focused on delivering the 2024 and the 2026 guidance.
Okay. And pivoting to capital.
Mm-hmm.
Your ordinary dividend payout ratio is around 40%, and you highlight that you want to retain capacity for buybacks. So could you just run us through your, you know, current capital allocation framework and how you're thinking about prioritizing between organic growth or additional buybacks?
Yeah, it's a broad topic. So let's start at the top, and then I'll get maybe into the framework a little bit. So we're running. I've been very consistent since July, August, with, you know, the North Star is return on tangible equity. So that's how we, that's how we think about the business, then that's how we think about how we allocate capital across the business. I think there's three things that I'm trying to balance, and the leadership team are trying to balance when we think about capital allocation. One is deploying it into good business opportunities with good risk-adjusted returns. And I think we've got some strong examples...
The second half of last year and early this year, where we've deployed capital in various business segments, for example, the commercial segment to good returns, and throttled back a little bit, for example, in retail residential mortgages, where pricing was very thin. But then we've entered back in where both the demand is there and the margins are there. So that's the first part of the kind of balancing framework. Then we've got an investment in the business, whether it's to drive productivity, drive efficiency, drive improvements in the customer experience. But I look at that through the lens of, you know, from a very strong lens of return on investment. You know, we look at IRR, we look at payback, and making sure that the capital allocated there hits the necessary hurdles.
And then we've got, you know, in effect from the capital that we generate, how we distribute that and how we deploy it. So they're the three things that we're trying to balance to, you know, to support growth, to invest in the business, but at the right returns. And given I know how important the consistency and the reliability of the distributions are, make sure that we can distribute. So within that third bucket, and that's not a priority order, it's just the three different segments. Within that third bucket, our dividend policy is around 40%. I think last year we paid 38%. So that's the kind of ordinary dividend piece. And I'm also very mindful of the absolute level of the dividends.
That's something that, that's front of mind as we think about that, that policy moving forward. We then have a preference for directed buyback. I touched on it earlier. We executed that last week, buying back 4.5% of the stock for about GBP 1.2 billion, just over GBP 1.2 billion. So we have a preference for that, and then obviously we have a live on-market buyback as well. So that's the allocation model. They're the three balancing acts. But then in terms of how I think about distribution, they're the three kind of component parts. And I think I'd like to think we've got a strong record over the course of the last couple of years of demonstrating the getting the right balance between those three segments.
As a natural follow-on to capital allocation, how would you think about inorganic growth?
Mm.
As part of the NatWest story at the moment? Would you consider acquisitions in any sector, or are they largely off the cards for the time being?
That's been interesting. It's been interesting but not a surprise to me to see some of the activity in the U.K. market. I think I personally thought there was a degree of inevitability about it, given some of the structural profitability challenges in parts of the U.K. market, and also some of the ownership structures that exist in some of the banks and potentially people looking for exits. So, it hasn't surprised me, at all, and I think there'll be more consolidation, as we go through. Assuming the macro doesn't change, I think we'll see more consolidation, over the course of the next couple of years. From a NatWest perspective, we review opportunities, so it's not off the table. I guess, we do review opportunities, but I do it through...
It's a very clear lens of it needs to offer compelling kind of shareholder value and compelling strategic rationale, so strategic congruence. So they're the two lenses that I look through with the team. You can see some of the tactical M&A that we've done over the course... You know, more recently, you know, we, we've acquired a mortgage portfolio from Metro. That added scale to our mortgage business at healthy returns, so but very comfortable to execute on things like that. We've also added to capability. You know, we bought a kind of fintech in the youth space, which again, good returns, but has also transformed our proposition in the youth segment, and we're now number one new market share in that segment.
So where we can add capability that really improves the proposition, we'll do that. So that's really how I guess how I think about it. But we'll be very disciplined. We'll be very focused. I'll also always consider what you know I consider the counterfactual, so what would be the other use of deploying this capital? And given our returns target, given the relative attractiveness, still, despite the elevation in the share price of our market buybacks, it's quite a high bar when you look at those key criteria of compelling shareholder value, et cetera. But we review opportunities. There's a lot of opportunities out there, as we all know. So we're...
You know, it's my job to be vigilant around that and see where, you know, I think there might be opportunities to take the firm forward.
Thinking about the path for risk-weighted assets, you've guided to around GBP 200 billion by end 2025, including Basel impacts. To what extent is that a hard cap? I mean, would you consider exceeding it if attractive lending opportunities pick up? And how much potential mitigation do you see, as an opportunity?
Yeah, we put the GBP 200 billion number out there from memory in kind of quarter three 2023. And the way I'd encourage everybody to think about that is it's an all-in number. So it takes into account of the growth that we would want to achieve in our key customer, you know, key customer businesses. It takes into account the upcoming regulatory change, regulatory changes. Obviously, Basel 3.1, you know, we're not going to see the final rules on that, given the PRA won't issue during the election period, but I'm confident we'll see that pretty quickly after the election. So that will kind of give us the final piece of the jigsaw, if not the timing, but certainly some of the content of that.
And also it included, you know, how we were thinking about mitigation and all the different levers you can pull to, you know, to, to optimize your capital. So I think about it as an all-in number that takes into account all of those three things. There's different assumptions. Yeah, I think, I think one of the things that I've been very focused on is a more active balance sheet management. You know, our activity in the SRT market, activity in the credit risk insurance market, greater capital velocity in terms of distribution, you know, which, as for obvious reasons, wasn't automatically necessary previously, gives us a degree of flexibility. If there are good opportunities to deploy capital at good returns, I want to do that.
But I'm also very mindful of the, I guess, the guardrails and the perimeter I've shared with the market if I'm wanting to do that. But I think I've got a number of levers to pull, to you know, to ensure that I feel that's a sensible target to achieve all our different aspirations.
Very clear. We have a, a little under five minutes left, so I would open it up to the audience if anyone has a question. I would just ask that you wait for the microphone and then introduce yourself and the name of your institution. If not, I'm very happy to keep going.
Okay.
So, I mean, one thing that I think is very interesting is, I mean, how do you think about the competition angle within the U.K. at the moment?
Mm-hmm.
Particularly from, you know, fintechs, to what extent does that interact with your digitalization strategy as well?
Yeah, I mean, I think a characteristic of the U.K. market, and it's true in some other markets, but in the U.K. market, I think the post-crisis period, both in terms of granting of licenses, you know, enabling challenger banks, the rise of fintechs, be they kind of monoline fintechs or broader kind of retail, and maybe SME, but retail kind of, I think has created a pretty healthy and competitive environment. I think it's good for consumers. It, for what it's done, I think, for incumbent banks is it's really raised the stakes in terms of digital experience, user experience, how to make sure your retail app, your retail services are on a par with fintech.
I think you most of the incumbent banks and NatWest certainly have caught up pretty quickly in terms of the effectiveness of the app, the quality of the app, the customer engagement with the app, and the feedback that independently kind of we receive on that. I alluded earlier to the fact I do think there's some structural challenges with the U.K. banking market, you know, especially some of the smaller banks. And given we've now gone through the cycle, whilst kind of asset quality hasn't bitten, we do have a healthier interest rate environment. But if the returns on equity are still not strong, I think that that's a more structural issue. So I think that will be an interesting development in the competitive environment.
But I also think the philosophy of not all fintechs, but some fintechs, has changed. You know, while fintechs arguably led the way initially on customer experience and digital experience, their cost of customer acquisition were very high. And so the reality is, they didn't—a lot of them didn't have distribution, or if they had distribution, it was at very high costs. Then what you had was kind of incumbent banks who, at that point, maybe didn't have the digital experience but had scale and had distribution. It's been, y ou know, we've got numerous examples, not just of fintechs who we've acquired, but also a lot of fintechs that we've partnered with, in effect, to deliver those capabilities across our customer base.
So to me, that's another element of the competitive environment, where you're seeing a lot more partnering between some of those fintech providers and the incumbent banks. But there are also some fintechs still going for it alone, and they've grown customer bases. I think, to me, the big question is: Having grown those customer bases, can they find a path to profitability? What's the breadth of the having established a, you know, a good brand, and arguably expensively, but acquired customer volumes, but can they extend the product and solution range to deliver a range of products and solutions that drive profitability? And I think for quite a few of them, you know, that jury is still out in my view.
But I'm under no illusions it will continue to be a very competitive environment as we look forward to 2030. But my job and what I'm focused on is making sure we prepare the bank to compete, not just in retail, but compete across, you know, the full waterfront of retail, commercial, and private.
One final question from me would just be: How are you thinking about the green transition at the moment, and how relevant it is for NatWest?
Yeah. So I think, I think it's a significant opportunity. I want us to be client-led. My view is, you know, if clients, be they institutional clients, be they retail clients, be they corporate clients who, who want to decarbonize their premises, if, if that's... You know, we'll align ourselves to where our c- the pace at which clients want to go and the oppo- you know, and, and to me, there is a massive amount of financing that will be needed, irrespective of to what extent policies change in the U.K., Europe, or U.S. But ultimately, there'll be a big transition financing opportunity, and I think as a, you know, the largest commercial lender in the U.K., we'll prepare ourselves to support our clients at the timing and in the way they want to go through that, through that transition.
You, you look, you look at the commitments we've made around climate and sustainable finance funding, they're considerable. We've delivered, you know, a significant, you know, I think it's GBP 70+ billion of lending, which is quite, quite significant. So I think whilst policies may change and the pace of developments may change, I think ultimately there is a structural financial financing need that we are well placed to meet there across our customer segments.
Brilliant. Well, unfortunately, we're out of time, but thank you so much, Paul, for joining us. It's been a pleasure.
Thank you, Ben. Appreciate it. Cheers!