NatWest Group plc (NWG) Earnings Call Transcript & Summary

Thank you. Good afternoon, everyone, and thank you for joining us today. We hope these sessions will provide a useful opportunity for you to meet and hear from some of the executive team who are delivering our strategy, along with some further insight into our priorities in each of these business areas. You should have received a copy of the supporting slides earlier today. We will not speak to the slides, but they will also be available on our website, if you'd like to refer back to them. In February 2020, we set out 4 clear strategic priorities to drive sustainable returns. These underpin our purpose, and we believe they will help us to build trust and create long-term value. Our purpose is a commercial imperative, enabling us to deliver for our shareholders, our customers, our colleagues and other stakeholders. Throughout the COVID-19 in pandemic, we have tested and proven our purpose and strategy, stepping up to support businesses and individuals in new ways, and we continue to accelerate our digital transformation. We will drive sustainable returns by prioritizing the 4 pillars of our strategy: serving customers across their lifetime to deepen relationships and generate growth; powering the organization through innovation and partnerships, a productive blend of the right people, technology and insights; simplifying and digitizing our business to improve customer experience, increase efficiency and reduce costs; and sharpening our capital allocation to get our capital working efficiently and being deployed effectively to maximize returns. Throughout the last year, even though we have been managing the impact of the pandemic, we have continued disciplined execution of our strategic priorities, strengthened our executive team and delivered on our 2020 targets. Today, I'm pleased to introduce you to some of my executive team, several of whom joined us in the last year. I have the great confidence in this team, and they're a great team that we have assembled who will be -- who have been collectively working incredibly hard to deliver on the plan we set out to the market in February, including our ROCE target of 9% to 10% by the end of 2023. We intend to build on all we've learned in the past year and deliver our strategy, all underpinned by a one bank mindset and approach. In practice, one bank means working together across the entire group to deliver on our plans and to ensure the right priorities are identified and decisions made, delivering fantastic customer experiences, being simpler to deal with and creating value for shareholders. This is an opportunity to meet those who will be hosting 2 further sessions later in the year, spotlighting the work in Commercial Banking and NatWest Markets in May and Retail and Private Banking in late June. This is the first opportunity to introduce David Lindberg, who joined us in September last year as CEO of Retail Banking. David was previously with Westpac, where he spent 8 years in a number of different roles, most recently in the consumer division. David has worked extremely quickly to embed himself in the business and set out a refreshed strategy for our retail banking. Many of you will also know Peter Flavel, who has headed up our Private Bank since 2016. The Peter and David are working very closely together on serving our personal customers across segments and ensuring we deliver great customer experiences. Paul Thwaite became CEO of Commercial Banking in November 2019. Paul is a highly experienced leader, having previously held a number of other senior roles across the group, including in commercial and risk. Robert Begbie, who has been with us for just over 40 years, and he was formerly our Group Treasurer and then appointed CEO of NatWest Markets in June 2020. Robert has led on the transformation of the Markets business over the last year. Simon McNamara joined us back in September 2013 and leads our Services business. Simon brings his vast knowledge and experience to create and deliver our technology and data strategies, looking at how we use the data we have in an innovative, personalized and intelligent way. Jen Tippin was appointed Chief Transformation Officer in August 2020, having spent 15 years with 1 of our peers in a variety of roles. Jen is responsible for executing the strategy to create the very best customer experience as well as managing the group's investment portfolio, efficiency and the build of one bank capabilities. And we're also joined today by Katie Murray, our Group CFO, who you know will also be available for Q&A at the end of the presentation. So with that, I'm delighted to introduce the team, and I'll hand over to David to tell you about our retail strategy. David, over to you.

Great. Thank you, Alison, and thank you all for the time today and great to chat a little bit about where we're headed with the retail business. So I know you know well, that 17 million customers in the business we had what I'd call sort of a resilient 2020 financial year, GBP 4.2 billion in revenues. We did reduce cost on an underlying basis by about 4.5% and created an ROE of a 10.2% in a very difficult year. Hopefully, that is a low watermark for us, also had very strong mortgage momentum, again, growing our mortgage business well above market. The context for us has changed dramatically in the past year through the pandemic. And let me give you a few interesting facts. One of them is that the majority of our customers now, about 6 and 10 only interact with us using digital channels. So they don't use the branches, they don't use the contact centers, just digital. And as interestingly, maybe more interestingly, almost 9 and 10, just a bit under 9 and 10 of our sales now are through digital channels and contrast that to about 50% before the pandemic. So things have changed dramatically with our customers and with how we interact. We've been investing in video banking. And at the beginning of the pandemic, we were doing about 100 video banking calls a day, and now we're at about 15,000. I'm sorry, a week. We're now at about 15,000, and that's going to grow. So quite a different context for a business than the context we faced into about a year ago. So I spent a little -- a little bit of time in the business now starting at the end of last year and have done my best to assess the business. And my sense of it is it's a strong business. One of the standout features is the mortgage business. We're now at about a 10.9% share and are now the third largest mortgage lender in the country. Also have, in my view, an excellent app, which is a good starting point to have right now. And I know Simon will talk a little bit more about that. But I would rate it as one of the best I've seen and one of the best in the market as well. We do have very highly engaged staff and that isn't to be taken for granted. And as I talk through the strategy, you'll see why that's particularly important for us. And then we've been investing in agile journey delivery teams for about 2 years now. That now is coming into its own and we're seeing high velocity of change capacity through those teams. So a lot to like about the business. A few things that we want to change and we want to improve on. And top of that list,is we're not growing share of primary bank relationships. In fact, we're losing share in subsegments, particularly in the youth segment, which is so important for our future. Also have a lower depth of relationship than many of our competitors do. So our products per customer is lower than it could be and should be. Our customer scores, particularly our NPS scores, are near the back to the pack and we need them to be near the front of the pack, if not at the front of the pack. So that's an opportunity for us. And then we know our brand scores are just a little bit lower than we want them to be. We want our brand to be more attractive, particularly to the youth segment. So after assessing the business, we have come to view that there are 4 really big areas of value where we think we can incrementally grow value relative to market. So I'll go through those. And the first, maybe unsurprisingly, is to continue to grow our mortgage business. It's a high ROE business. We've got a track record for growing that business. We've got some opportunities we haven't been in before. buy-to-let, we've been very, very weak in, in a sense, and we can grow there, particularly the lower end of buy-to-let, the amateur end of buy-to-let. We haven't performed very well in organic mortgage growth, and we've been growing below market there and we can really improve on that. But I also want to flag, we've now gone to a size where it's not growth at all costs. And we want to manage the interplay between volume and margin and make sure that we're about value creation, not just about growth. The second big area for us where we think we can add value is growing primary bank relationships. Now these are customers that would consider us to be their primary bank. And we haven't been growing those, but I view that to be really one of the barometers of long-term value for any retail bank, and we have lots of levers there. You would have seen that we have a new marketing campaign out, the Tomorrow Begins Today. That's just the beginning will be a longer-term campaign for us and will create real value for us. The third thing we want to really generate more value out of is our credit cards business, where we stood out of that business to some degree for a little while. We want to grow that business but to existing customers. And we only have a 6.4% share of credit cards contrast that to a 16.1% share of current accounts. And you can see why that opportunity is so big for us. That part of the market tends to be higher ROE, it tends to be low risk. And just prior to the pandemic, we were already growing above market there. And then finally, and Peter will talk a little bit more about this, but the opportunity to grow investment AUM with our existing customers, predominantly premier into a smaller degree, retail customers. But it's true a very simple product, primarily the premier segment. And it's particularly important given our customers are facing in a such a low interest rate environment right now. Now we do want to differentiate with customer and become really customer obsessed. I won't go into detail, but we think the opportunity is to combine the very best digital with access to the very best people, and it's that combination, we think, will be differentiating for us. If you think about a fintech, they can only really do the first of those, but they can't really combine that with the people that we can give our customers access to. So I'd give you a bit of an example. We just launched 8 am to 8 pm right here, right now. What that means is, if you go into our app and it's becoming more prominent, you press right here, right now, and you literally will get one of our branch bankers in real time on video, and that's the beginning. And there's so much more that we can do to bring this proposition to life. Underpinning the proposition, I also want to flag a very simplified operating environment. So I'm a big believer in simple products and underpinning that simple processes. And then over time, that will enable Simon and his team to simplify the technology environment. So quite an ambitious road ahead for us. We think it's a business that has a good starting point. But we do have these 4 big pieces of value, and that's what the team is looking to unlock. So with that, I'd like to pass it to my colleague, Peter Flavel, CEO of Private Banking. Peter?

Thanks, David. I'm Peter Flavel and in my 5 years as Chief Executive, Private Banking has undergone a significant transformation. I continue to be excited about our growth prospects, in particular, the opportunity we have to make long-term savings and investments more accessible to all of our NatWest Group customers, helping to breach the U.K.'s savings. This being just one example of how we will create sustainable returns with social purpose. Our vision is to be the best private bank in the U.K. and our strategy to deliver on that vision is to bring the best of the bank to our clients. That means all of the bank, integrating brilliant day-to-day banking supported by Coutts 24, flexible lending and responsible investments, supporting our clients as their financial needs evolve through every stage of their lives, delivering first-class personalized service in an increasingly digitally enabled way. I'll now recap on our 2020 results before then covering our 4 strategic priorities to 2023. In 2020, we achieved strong growth across our diversified business. We welcomed over 1,600 new clients, new clients always being the lifeblood of private bank growth, where importantly 19% were via introductions from the wider group. Following on from recent years, we continued to achieve strong volume growth, including 10% net new lending growth and 14% deposit growth year-on-year. We did also continue to achieve top quartile 5-year investment performance across our defensive, balance and growth mandates. Our AUMs grew by GBP 1.75 billion, up 5.6% to GBP 32 billion. Since our launch in 2017, digital investing growth continues to accelerate, recently achieving assets under management of over GBP 1 billion. Our growth is underpinned by strong return on equity of around 16%, excluding impairments, with a contribution to NatWest Group plc operating profit before impairments of almost 11%. Having outlined our strong growth in 2020, I will now cover our 4 strategic priorities to 2023. Our first priority in supporting our customers is to pursue a life cycle approach, supporting clients, their families and their businesses as their financial needs evolve. That's a client relationship-led approach, supported by financial education, planning, guidance in advance. We will increase the number of clients needs met, growing savings and investment balance sheets, and just as importantly, high-net-worth mortgages for their dream homes or their residential real estate investments. Our second priority is growth through partnerships. We will continue to realize efficiencies through our BlackRock relationship. Here, we couple their global scale and platform, manager due diligence and pricing with our own Coutts House fees and asset allocation. Additionally, as part of our response to the [ Rose ] report, we've collaborated with the British growth fund to develop the U.K. enterprise front, helping our private clients support diverse and high-potential U.K. companies. Being simple to deal with is our third priority. Here, we continue to invest to drive efficiency and cost reduction through digitalization and streamlining customer journeys to deliver a relationship-led, digitally enabled client experience. As a center of excellence for investment management, we will help more people plan and save by making long-term savings more approachable and accessible for retail and premier customers, pre-scaling face-to-face advice, provided hybrid human support and making further enhancements to NatWest Invest. Our fourth priority is continued focus on capital efficiency. Over the last 5 years, our sharpened capital allocation processes have led to close to GBP 2.5 billion savings in risk-weighted assets. We'll continue to focus on further efficiencies. On costs, we're making good progress, removing the bad costs, leaving complexities we need to eliminate, while pivoting towards investing in good costs to drive revenue creation. In summary, we have a clear ambition to be the best U.K. private bank. And we seek to drive sustainable and resilient returns through our diversified income streams and by realizing our growth potential across the NatWest Group. Our success is underpinned by the adoption of a one bank mindset. And as I said earlier, 19% of our 1,600 new clients last year were from introductions from the wider group. Around half of those were successful business owners in the commercial bank. And on that note, I'll hand over to Paul.

Thank you, Peter. Good afternoon, everyone. Very good to be here and to have the opportunity to talk a little bit about the commercial bank. I thought I'd start with a few words of context before going into the business-specific priorities. It's clear that last year created an unprecedented operating environment for all commercial banks. However, notwithstanding that, I remain very optimistic and confident about the opportunity to transform and position NatWest Commercial Bank for the future, chunking businesses of all sizes in every region of the U.K. as they, too, recover and reinvent themselves. If I reflect briefly on 2020 performance, the critical role we play to U.K. business has never been more obvious than during the pandemic. We supported GBP 14 billion of government lending, 20% of all government loans, over 70,000 capital repayment holidays, and we built a fully automated bounce-back loan scheme in less than 6 days. Our financial performance demonstrated the underlying resilience of our income base and our ability to continue to reduce our operating costs, and we did that whilst increasing both customer and colleague satisfaction. The economic backdrop, however, had an impact, meaning a near-fivefold increase in modeled impairments, largely IFRS 9 Stage 2. In 2021, we expect in terms for the group to be at or below through-the-cycle levels and for this to improve returns in the commercial bank, with further growth in returns improvement through to 2023 as our income, our cost and our capital plans help drive a sustainable return on equity. As I look ahead, the strategic vision that we have to strengthen our position as the biggest and largest supporter of U.K. business has not changed. At the core of this strategy is what I think is our unique ability to meet customer needs through the depth of our sector and specialist knowledge and the breadth of our regional coverage. It's an ambitious, but a realistic plan to transform the business whilst balancing the needs of all of our stakeholders. I'll give you a quick run through the priorities and will, no doubt, discuss more than in the Q&A and also when we meet again in May. Our first priority is continuing investment in our customers. As with retail, as with wealth, there's been a real acceleration of digital adoption with now over 2/3 of sales in the commercial bank coming through digital channels. More customers than ever are self-serving through our channels, and we've seen a significant increase in video banking usage. The plan I have dedicates a significant portion of our investments, our investment spend into digital channels, both our sales and our service journeys. This allows us to deploy our expertise in a more personalized way to more of our customers whilst continuing to operate, reduce our operating costs. A great example is an additional 16,000 of our business banking customers will have now have access to a relationship manager via our direct and video model, better customer experience, cheaper operating costs. For our start-up businesses, our plan is to grow our strong presence. And for our more complex and larger institutional customers, it is to strengthen and in certain places, optimize our position, supporting them through the impact of Brexit, the economic recovery and the transition to lower carbon business models. Our second priority is focused on driving high-quality growth. We have significant opportunities to grow our fee income base by better meeting the payments and transactional banking needs of our existing customers. These ambitions are supported by significant investments, both in our core product set, but also in our ventures such as Tyl, our reentry into the merchant acquiring market, and Payit, our open banking payments platform, both of which I'm pleased to say are gaining traction and seeing significant payment volume growth. At the same time, we're continuing to deepen our relationships across our whole customer base by meeting more needs by our NatWest Markets capabilities, but in a much simpler way. This increases both our share and our penetration. And 2 great examples are our FX business and also our COVID corporate financing facility. Our third priority is to simplify and automate our key journeys. This is about our core products and processes. It's not just the digitalization of the customer interface. A great example is lending, building on our learnings from the Bounce Back Loan Scheme. Our focus is on reducing the time to decision for our more complex customers on loans up to GBP 750,000 from an average of 10 days to below 3 days, ruthlessly simplifying and automating our journeys by leveraging both technology and data, whilst improving the customer experience and reducing the operating costs. Finally, but not least, active capital management. There will be a continued focus on proactively managing our capital and liquidity position in the commercial bank. We're building on very strong foundations here. We use a wide range of tools to effectively mitigate credit risk, improve our RWA efficiency and increase the velocity of our capital. I expect to be deploying these tools increasingly across our balance sheet during 2021. I'll now hand over to Robert, CEO of NatWest Markets, with whom I work very closely, not least on driving our sustainable and transitioned financing solutions. Together last year, we delivered GBP 12 billion of climate and sustainable lending. And this year, we expect to exceed our GBP 20 billion target. Over to you, Robert.

Thanks, Paul. Good afternoon, everyone. I'm Robert Begbie, Chief Executive of NatWest Markets. And this afternoon, I'll take you through the strong progress that made since February 2020 when Alison set out the strategy for our refocused NatWest Markets, the foundations we're putting in place to create a sustainable business and setting out the key priorities to deliver on our growth plans. And we did make significant progress during 2020 against our transformation objectives. We delivered strong income performance of GBP 1.2 billion during volatile market conditions, reduced underlying expenses by around GBP 140 million or 12%. And most importantly, reduced RWAs by GBP 11 billion to GBP 27 billion, some GBP 5 billion ahead of our original plan of GBP 32 billion, and we expect to achieve the majority of the remaining RWA reduction in 2021. And all this enabled us ahead of plan to pay a GBP 500 million dividend in February to the NatWest Group. And the progress we've made has been recognized by Fitch and Moody's who upgraded both NatWest Markets plc and NatWest Market N.V. during 2020. We simplified our product offering to align with the needs of our customers, exiting 11 products, which allowed us to reduce our risk profile and complexity. And we also announced an agreement with BNP Paribas for execution and clearing of listed derivatives. And we've refocused the business around a new customer-centered operating model focused on capital markets, customer sales and trading with a new leadership team in place to drive the business forward. And we sharpened our capital allocation by establishing a capital management unit. And as Paul touched on, we're building a really strong partnership with commercial to deliver for our customers. We also made strong progress in delivering a one bank operating model, transferring around 2,500 employees into NatWest Holdings to build synergies across functions and services and by leveraging more NatWest Group technology and services, thereby reducing duplication. So looking forward, my strategic priorities are consistent and completely aligned with those across the bank. We are focused on driving sustainable growth with our corporate and institutional customers. By focusing our resources and priorities around those core customers in areas we can add most value and generate sustainable returns through the cycle. And Paul touched on it, that ESG is a key priority. And we'll continue to grow our ESG market presence and expertise to support the transition of our customers. We're ranked #1 as lead manager for green, social and sustainable bonds issued by U.K. Corporates in 2020. And we've had a strong start to 2021 with a number of great transactions. We supported our own EUR 1 billion NatWest Group social bond, the first social bond targeting affordable housing and a first U.K. affordable housing bond by a U.K. bank. And we recently completed our first ESG-linked FX transaction. And we're currently ranked #1 in Europe for GSS issuance for European FIs and SSEs. But both Paul and I see further opportunities to do more with our corporate and institutional customer base and improve returns over the medium to long term. In corporate FX, we're already the best bank for SMEs, but we see significant opportunity to do more with those customers. And in the financial sponsor space, we're also developing our funds financing proposition alongside RBSI. We've identified opportunities across the whole bank to leverage market expertise and digital capabilities. We've launched a cross-bank initiative around FX, creating opportunities to partner and increase the reach of our FX capability across the group by integrating FX better across the bank and enhancing the customer journeys for payment-related FX across goods, retail and financial. And we're becoming simpler to deal with. We have made significant improvements to our customer journeys for commercial customers. And we're investing over the next 3 years to streamline and simplify technology, infrastructure and processes. And we are digitalizing workflows across markets to deliver better pricing and execution service for customers, reduce manual interventions and improve efficiency and increase the electronic trading. And as mentioned earlier, we've established a capital management unit to maintain capital discipline and increase capital efficiency in the business. We've taken actions to sharpen our capital allocation through implementing a new customer segmentation framework with clear capital allocation objectives, a more granular assessment of returns by customers. But at its heart, the markets business is all about its people. They're very expensive, which is why we're leading with purpose, helping colleagues to understand the role they play in contributing to the NatWest Group purpose. We've held workshops with over 400 colleagues to define what purpose means for them, to their teams and for our business. So in summary, 2020 was a significant year of delivery for markets against our strategy. And looking ahead to 2021 and beyond, I'm really excited about the future opportunities and creating a sustainable and valuable markets business for the NatWest Group with sustainable returns over the medium term, all underpinned by a talented and motivated people and harnessing the power and opportunity of the one bank. I'll now hand over to Simon McNamara to share his priorities for services.

Thank you, Robert, and good afternoon, everyone. It's nice to see you again. I last spoke to you back in June 2019. And then, I'm just whispering the word innovation. So I'm quite looking forward to updating you on the progress we made since then. I reassure you first about our solid and resilient platform with improved performance year-on-year. When we last spoke, our instance were running in the hundreds. Now they're in single digits. In fact, I could name them all. That's because we laid strong foundations. Our Crit 1 Incidents are down 98%, whilst increasing the volume of change by 67%. We've also reduced our technology cost by 25% since 2014. And we strengthened our control environment, which is the best possible confirmation. We have technology that's agile. For example, bounce back loans we delivered in 6 days, so we can be there for our customers from day 1. We used the combination of our APIs, that's our application programming interfaces, bots and Cora, our artificial intelligent chat bot, to scale our response. A fully capable and effective solution, which was still able to fill the volumes we saw without issue. That was possible because we didn't see open banking as purely regulatory compliance. Instead, we took the opportunity where many didn't to build a world-class set of APIs. These APIs mean we can deliver the agile services that customers want. By the way, the CMA said we have the quickest and most resilient APIs in the banking sector. So fintechs want to work with us. We have a long history of partnership and innovation is no longer a whispered word. Some partnerships and collaboration are for today and some are for tomorrow. FreeAgent and Payit are for today. Cora was for tomorrow, but already our customers are seeing the benefits. One qubit is about the future. That's our investment in quantum computing. But in time, it too will become a reality. Partnerships mean we are the bank of APIs, not a bank of APIs. Around 200 third parties, 1.3 million customers already connect to us through these APIs. This is a massive enabler for us and for them. As we simplify, it helps the rest of the bank. Our property footprint is down 57% since 2014. We now only have 2 London offices instead of 17 we had back then. Our supply chain is reduced by 74%. And we reduced our application estate by 55% since 2014. We're accelerating our digital and automation capability. More than 40% of our apps are now on multi-cloud service model. As an example, our mobile app is on AWS. Our external websites are hosted on Azure. And many of our internal ads are hosted on our own private cloud. Andrew Jassy of AWS and others want to work with us as we're doing this really well and in an intelligent way. We have a very modern technology stack, and that makes it agile. Cora came from innovation is now used in retail and commercial, and we're about to deploy it in our private business. As you can see, we can reuse our technology and scale it across the bank, which enables our franchises to support digital adoption. David mentioned that 58% of our retail customers exclusively interact through our digital channels. That's made possible because of the investment in Cora and our highly rated mobile app. And speaking of Cora, it had 9 million conversations in -- or 2020, and that's up 67% on the previous year. 40% of those conversations were handled without any human intervention, which is quite incredible. We're also contributing significantly to the bank's cost takeout target. Our contribution comes through property track rationalization and technology cost efficiencies. Our technology investment is in higher quality tech. It's ambitious. And with the intelligent use of that investment, we're developing our brain. We're doing that through our use of data, giving customer insights that keep them better informed on their finances and supporting our purpose. We're making our knowledge, data, AI, the cloud, partnerships and APIs our calling card, in a way that others can't. And we're investing heavily in these capabilities, getting smarter, using our technology and data in new ways. Now remediation funding will always be there, but we've broken the backlog of the underinvestment of the past. As I said, we have a very modern technology stack. That focus and the solid foundations we built keep us resilient and cheaper to run. Anyone running at constant rate fixed model will find it expensive. And they won't be able to invest in the future, and we're solved for that. We don't understand, so we don't see undesired RWA increase, and that's because we're running a very modern ship. Now because of these strong foundations that we've laid and the investments we've made over time, we're looking ahead instead of looking back. So I'll close leaving you with these key messages. We've invested significantly in our platforms and have laid strong foundations. We have an agile modern technology stack that's resilient. We have a proven track record of delivering innovative solutions. And finally, our knowledge and experience, combined with the intelligent use of investment is a competitive advantage. And that's why big tech and fintechs want to work with us. Thank you. And with that, I'll hand over to Jen Tippin.

Thank you very much, indeed, Simon, and good afternoon to you all. My name is Jen Tippin, and I joined the bank 6 months ago as the Chief Transformation Officer. I joined the group from Lloyds Banking Group, where I was a member of their Executive Committee, co-designed their third strategic plan, led on cost management as well as other functions. And I'm really excited and proud to be part of this NatWest team. Now our strategic priorities are anchored in an ambitious multiyear one bank transformation program. And as you've heard from my colleagues, you'll know that we're focused on working together to really unleash the potential that exists within our group. That multiyear program is now mobilized and is supported by GBP 3 billion worth of investment. It covers all aspects of our business and is focused on our key strategic priorities of growth, simplification, capital and is powered by innovation and partnerships and executing this program delivers the 9% to 10% ROCE target that we've guided you to by 2023. Now we've got a good track record of delivering on our promises, and we met or exceeded our targets in 2020. But given the scale, we've purposely built a strong team, including a transformation office to really drive our approach to execution. Now that team will drive our overall road map. We'll prioritize and plan our investment, drive our work to simplify and automate our customer journeys and also help the bank to achieve cost reduction of around 4% a year, which obviously ultimately gives us the capacity to invest and build a sustainable bank for the future. A critical aspect of that transformation program is mobilization of 7 new work streams that run end-to-end across the bank. There isn't the time to go into the detail of those work streams now, but I will say more in our sessions later on this year. The good news there is we're already seeing progress. Our improvement in customer journeys is accelerating with consistent tools and methodologies now in place and 3 new journeys stood up in commercial lending, business banking and helping our customers repay. We're already seeing the results in our streamlined digital journey in retail account opening, for example, where our NPS has improved recently by 4 points. I'm going to add a little bit more detail now on how our transformation program supports our strategic priorities. First of all, in terms of supporting customers, over the next 3 years, about 80% of our GBP 3 billion investment relates to digital and technology programs that would allow us to leverage data to deepen our relationships with our customers, simplify journeys and engage them. This will help support the growth opportunities that you've heard my colleagues talk about. In terms of partnerships and innovation, we believe our transformation will be powered by the right partnerships and really enable us to harness both internal and external knowledge and experience to really drive our strategic execution and innovation. As you heard from my colleagues, this is an approach that's already beginning to deliver, as you've heard from Peter with our relationship with BlackRock and from Simon on Cora. Now in terms of simplification, we're committed to reducing our operating costs by around 4% a year through to 2023. To underpin the delivery of this, we're mobilizing a new approach to cost efficiency, including a dedicated team looking across the group and covering all costs and resources. Some of the opportunities we're looking at include building bank-wide capabilities focused on reuse of applications and architecture across the group, simplifying and automating customer journeys, digitalization and moving to the cloud, optimizing our third-party spend and, of course, a reduced real estate footprint. And our strategic cost trend is also intended to fall to around GBP 800 million this year, having reduced already from GBP 1 billion last year and GBP 1.4 billion in 2019. Our customer journeys account for around 1/3 of our cost base. Transforming these journeys end-to-end through greater automation will have a significant impact, yes, in our sustainable multiyear cost reduction but also, and perhaps most importantly, driving a step change in our customers' experience. We're targeting significantly improved cycle times, reductions in complaints and simpler products, leading to gross savings of over GBP 300 million by 2023, and our priority journeys include retail account opening, home buying, payments, commercial lending, business banking servicing and helping customers repay. Now in our commercial franchise, no bank achieved a higher NPS in 2020. Our previous time to decision on lending of 14 days reduced to 48 hours for people's lending last year. And in retail, the percentage of digitalized credit decision volumes increased from around 70% to over 80%. And as you've heard from Simon, a key enabler to our transformation is our technology, coupled with powerful data, analytics and one bank capabilities, making it easier for our customers to engage with us and access our full range of services and products. We will also continue to evolve our organization design and functions to meet our future needs. Now on capital, Robert has already shared how we're approaching disciplined capital allocation in NatWest Markets, which has enabled the release of capital to the group. We will continue to focus on strong capital management across the group going forward. So in conclusion, our strategic priorities are embedded in a multiyear one bank transformation program. That plan is now underway, has a number of comprehensive work streams and have started well. It's obviously early days, and our plans are ambitious, but we do have a good track record of delivery. We've built new capabilities. We've got a great team. And we are committed to our plans. I'll now hand over to Alison for her closing remarks.

Thank you, Jen, and thank you to the rest of the team for giving insight into your roles and also your priorities. So to reiterate, our focus is on driving improved shareholder returns with targets to grow lending, reduce costs and maximize capital efficiency over the next 3 years. With disciplined execution in each of these areas, we expected to deliver a return on tangible equity of 9% to 10% by the end of 2023. So with that, I'm very happy to open it up to questions to the team. Thank you very much.

[Operator Instructions] Our first question comes from Robin Down from HSBC.

A question really, I don't know this is really for Simon for Jen, but I know you don't really want to talk about Ulster Bank and the sort of numbers around that. But I thought given that we've got Simon at Jen on, I don't know if you could talk a little bit about the technology in the platform at Ulster Bank. And we can all remember sort of the nightmare of trying to talk to say, okay, we need to include them from NatWest. So just a couple of questions really. I mean, is Ulster Bank, I assume it's running on this side in a separate platform from the rest of NatWest.

Potentially. Yes. I mean, I probably picked it up, if that's okay. But...

Yes. I just wanted to -- sorry, if I could just follow. There's certainly some color you gave us on, for instance, the transfer of the commercial banking book to AIB that you've got kind of memoranda of understanding on.

Sure.

How easy that's going to be, if you like?

No, fine. So the stack that Ulster Bank runs on is essentially the same as the stack that other parts of the bank run on. But actually, we've separated away and we've run separate instances of that to support that business. So that makes it a stand-alone stake. So it's not intermingle. And we did a lot of work after some of the challenges we had, you remember back in 2012, to actually simplify those stacks quite considerably, and that's where a lot of the resilience has come from. In terms of the transfer of those loans, obviously, involves some effort, but it's not a big technology exercise. So the way we're going about that particular work is not going to be onerous, and there's nothing like the order of magnitude of the sort of things that you described. So does that make some sense?

Yes. Yes. And perhaps -- I mean, just specifically on the SME customer book there, I guess you're talking to PTSB. Does that also apply there then, would that be a fairly easy, from a technology perspective, to transfer across to them?

So the detail of that is still under discussion, as you know. So at this point in time, it's probably not worth going to that in any detail other than the fact that, obviously, the achievability of that is very central to the work that's being done to determine actually what ultimately any transaction might look like. So -- and I guess, by that, I mean, the work is done with everybody sitting around the table actually looking at the detail of what that might involve. So the experts are involved in determining what we might know.

Robin, as you know, What we might do so much we Robin, as you know, it will be a phase withdrawal over a number of years. We signed an MOU. And obviously, managing that transaction is something that we will be very careful here over a number of years. And we expect it to be capital accretive over the period, and hopefully, Simon was giving you a little bit of color on that. We will continue to update you on progress as appropriate, but you should consider that to be multiple -- a multiple year process.

Our next question comes from Jason Napier of UBS.

I'm not sure who's going to have a first crack at that -- the first question. I suspect that it probably lives with Jen, but it's probably something that you're all animated about and that's indirect costs. Indirects were at 70% of retail costs last year, and there were 60% of commercial costs last year, and they were actually up, with my models right, year-on-year in both divisions. Presumably that can't continue to be the case if we're going to deliver a group result in line with the strategic plan. So I wonder whether you could talk a little bit about, first of all, why they were up last year. And whether there will be a meaningful change in mix and how it is you might sort of bring the work you're doing to bear on that expense base? And then I have a second question when you're done with that.

Okay. Thanks, Jason. So I mean, as you know, we've set out a target to reduce cost by 4%. And I think as you look at the shape of our business, we're focusing on digitalization and customer journey, which involves changing our model in terms of how we execute that. But why don't I pass Jen to pick that question up. Jen, if I can pass that to you.

Yes. Thank you, Jason. I mean, I joined only 6 months ago, so I'll leave the question around last year perhaps to others. But I will tell you that the focus of indirect cost in our relationship with our direct cost is absolutely part of our plan. So if you think about the way in which we look at cost management, we just have to say that, first of all, by way of stepping back is the way in which we approach it is to think of cost reduction really as an output rather than an input. So an output of all the work that we are doing leads to the net around 4% cost reduction target that we've guided you to. And it's also multiyear. So rather than it being a 12-month framework, we try and think of it as a multiyear program, which is very important. Now how we will deliver that, yes, it's through the traditional levers that you might expect such as property, third-party spend, et cetera. But also, and you've really, really captured it with your question, it is about looking at our costs front-to-back across the organization. So firstly through journeys, as Alison has articulated, which are around 1/3 of our overall cost base as I mentioned, but also by looking at the typical front-to-back cost. So where can we reuse capabilities, for example, that stand the bank end-to-end? How can we look, for example, more at a zero-based design of some of our functional services type operating costs, and those are forming part absolutely of our work as well as enablers that you've heard Simon talk about in terms of tower, APIs, et cetera. So that's the way in which we look at it. And it's that work together that really delivers the targets that we've spoken to you about.

Thanks. And I can pick up quickly the point on the cost from last year. I mean, you're absolutely right. They are marginally up, so 3.6%, up to 3.7%. And in reality, it actually links very strongly to what Simon was talking about. As we see the business move much more to technology and we take out a lot of the manual work, then actually what you naturally see is a bit of an increase in that services cost. So David talked earlier around a reduction in head count of 4.1%, I think you spoke to. And so then, actually, a little bit of that comes into Simon's area and the rest of it goes out. I think what's really important is the 4% per annum commitment that's there. And the shape does change a little bit internally as you move more into services from the front line because of the change in nature of those costs.

So we shouldn't take indirect as being sort of naturally bad cost that should become an aggressive...

No. Loook, as there's some costs in there we'd like to see come down certainly. But I do think it's important to look at the total and not in the indirect and the direct.

Jason, did you have a second question? You said that was your first.

Please, if possible, and probably for David. I mean, I think it's logical to focus on primary banking relationships as a metric around the health of the franchise and so on. But I was just wondering if you could talk a little bit about how you measure that because, I guess, most folks on the call would regard current account banking as a loss-making endeavor and sort of how you think about customer profitability in aggregate. And I'll leave questions on mortgage spreads and how low you'll let them go to someone else on the call later.

Great. Thanks. David, do you want to pick that up?

Thank you, Alison, and thanks, Jason. I suppose the way I think about value is trying to do something that's sustainable over time. And to me, the barometer is primary bank relationships. And you said, how do I measure that? Well, the easiest way to measure it is customers who consider you to be their primary bank. Why I think that's important is when you bring in a primary bank relationship often through the current account, if you serve them well, you're right that at this time, you're not making huge liability spread on them. But they're the ones who are going to come to you if you have the right credit card offering. There are the ones who are going to come to you if you have the right mortgage offering. So to me, it's about having relationships. They just think of you as their primary bank and think of you as that first person they'll talk to with their needs. So that is why I think that's so important. That isn't to diminish the big amount of value we do get from intermediated mortgages. That's obviously a big piece of puzzle to us. So you have to add that to it. But between those 2 together, I think if you're growing both consistently, then you have sustainable value, and that's sort of what we're trying to build.

Our next question comes from Rohith Chandra-Rajan from Bank of America.

I had a couple of questions, please, for David, I think, on retail. The first was just on the credit card aspirations. It sounds like you've got sort of 35%, 40% penetration maybe of your current account base. So I guess sort of the remaining customers there will have a range of cards already in their wallets. So I'm just curious to know what is the -- what's the ambition? So in terms of the level of penetration and from what tools do you think are most -- or the best to use to get there, I guess, as a range of things on pricing rewards, et cetera? So why that incremental card in a current account customer's wallet. I had one on mortgages as well, please.

Do you want to ask the question on mortgages, and then we'll take them both at the same time?

Yes, sure. It was, I guess, one of the -- so there's been a lot of growth in recent years, but one of the areas of success has also been the retention strategy. So just thinking about how you balance those 2 going forward. So given the progress that has been made in retention, is there more to go there? And does that turn influence how you price customer acquisition?

Great. Thank you. David, both for you, I think.

Great. Yes. Thank you. So the first one was around credit cards. And the starting point for us is, if you cast your mind back 5, 6 years ago, we had a pretty strong credit card business. We start to add balance transfers and saw our share diminish. We sit here now with quite a low share, 6.4%, as I referenced. Now you referenced about what percentage of our customers should have a card with us. As we sit here, it's closer to 20%. We think that should be approaching 30%. So there is runway for us. But the reason I'm excited is this is a pretty basic credit card capability, which is you have existing customers. They do their primary banking with you. We see that in the data and they have cards elsewhere. And so I sort of think about 3 big levers there. The first is those who have cards elsewhere, taking one of our cards for the first time, and that's about having a compelling proposition and using data to have those discussions. It's about utilizing. So you might have the card in the wallet, but they're using somebody else's card more in front of all. So expect those campaigns of utilization. And then it's just back book management. These are 3 tried, tested and true approaches, and we have an opportunity that most don't have, which is just under penetration. So that's why I'm excited about that. In terms of the mortgage, obviously, I could talk a lot about mortgages. You asked specifically about retention. And you're right, that's a lever that I would say, whilst we've been growing significantly over the last 3 years, particularly a lot of that growth has been through generating new business for us as opposed to necessarily focusing on the existing book or the bank book. And we think the opportunity now is to add that to what we do. I'll give you an example. We've recently totally changed the way we do remortgages. And that has improved rollover rate back to us from low 70s to high 70s. So that was just one small tweak. But the bigger picture is we're beginning to try to focus more, not just on [ newer banks ] through the broker channel, but [ newer bank ] through the brokerage channel plus first party and managing that debt book and retention, as you said.

Our next question is a typed question from Craig Robbins. It's easy for banks to say they want to gain market share in areas, for example, mortgage lending and deepen retail customer relationships. But can you give more detail on how you're going to win that market share from competitors and how NatWest offering is better than peers?

Thank you. David, do you want to pick that one up?

Of course. Thank you, Craig. So why do we think that we can start to win share was the question. The first is in 2 of the big areas where we said we want to insure. In fact, in 3 of the big areas if you include AUM, so credit cards, AUM growth and mortgages, we're well underpenetrated, what our current account shares, I think, by some measure. So I'd point that out. I'd also say that we do have a track record in all those businesses. And particularly in mortgages, we've had a track record of growing above system. And more recently, pre-pandemic, sort of the year before the pandemic in cards and we have, I think, a great brand in Coutts and that capability that we're now leveraging for AUM. So that to me is sort of the second reason. And the third reason, and this is sort of the hardest, but the most important, and that's our desire to truly differentiate around the customer experience. We probably don't have time to go into detail now, but we really do have plans to try to differentiate the digital offering and the access to people offering. And I think in a few months, I'll have an opportunity to talk through that with you. And maybe then you'll think that third piece is also something that we can exploit. But that's how we think about it.

Our next question comes from Aman Rakkar from Barclays.

I had a couple. So the first one, probably split across David and Peter, actually. So just around U.K. wealth. I think we've heard a fairly coordinated message from U.K. banks about a push into U.K. wealth post pandemic. I was kind of interested in your view around what's different this time. I guess we've had a decade of 4 storms in respect of U.K. banks trying to successfully push into this. And I guess as part of that, is there a change in the kind of conversation with the regulator taking place? I guess, part of the explanation around that difficulty in growing historically has been the impact of regulation on advice, particularly towards mass affluent customers. So I'm really interested if there's any kind of inflection point there. Should I give my second question? Yes, cool. I guess, take your pick who wants to answer. It's about the mortgage origination process more broadly, actually. So my understanding anyway, a large part of the improvement in spreads that we've seen throughout the 2020 as related to banks taking a step actually out of the market. And a lot of that has been around the operational constraints placed on more migration process around value as on today. I wondered if are there any lessons to learn from that around the mortgage origination process around value as is today? I wondered if, are there any lessons to learn from that around mortgage origination process? Are there some inefficiencies in that process? Can it be digitized? Is this something that we're thinking about?

Great. So can I ask, Peter, do you want to pick up the question on U.K. wealth in terms of what we're doing there? And then, David, to hand over to you on mortgage origination.

Thanks, Alison. Thanks, Aman. And David, as you say, David and I are working together in respect of Coutts being the center of excellence for asset management, investment management for the group. As it's then marketed into retail and -- affluent and retail, it's branded NatWest, but the funds inside a Coutts fund and so this is one example of one bank at work. So when you look at the 3 online products that we launched in 2017, which Royal Bank invests, NatWest invests and Coutts invests. They're underpinned by the same set of funds, personal portfolio funds, PPF. And so we're reusing the same funds across all segments, which naturally leads to quite insignificant synergies and also consistency of outcomes. So we're quite pleased with where we're heading in terms of the digital. But as we've said, that started off as a self-directed no advice process. And it is the fact that only 10% or maybe 15% of people that can enlist are self-directed. And many are frightened and scared of the word invest and our client research actually chose that. And so what we're developing are 2 approaches from self-directed and then guidance and digital assist. And then there's a full advice. But full advice really only starts to kick in, in a meaningful way above to GBP 250,000. And so in order to meet the ISA needs and the GIA needs and the pension needs, we see an opportunity that the regulator is quite clear on saying to all wealth managers in the marketplace that they do want to see managers utilize guidance and digital assisted as well. So that's early days yet. But to give you some sense of the opportunity, Aman, is that of the $32 billion in AUM that I talked about earlier that we're now up to, it's in the low single digits of billions that attributed to retail and affluent because we actually haven't been marketing investments to that base for over 5 years now. So we have a huge opportunity. But the thing is that investments are very much an end product. And I think around this space, Aman, as you can probably see more phases to a couple of years and there are still people making some pretty interesting choices around marketing investments because people don't come generally to brands that are not known for investments. What happens is actually you talk with customers and clients who are promoters and advocates for their banking and lending. And then you get the right to talk to investments. And so it's a very much an integrated approach, which is why David and I are working together in terms of delivering an integrated approach to banking, lending and investments together. And I do think throughout my years, that the way ahead here is for it to be integrated and not somehow separate from the rest of the bank and in a separate division.

David, do you want to pick up the mortgage question?

Yes. Thanks, Aman. And so the second question was just around the origination process and what had happened, what maybe we'd learned. The background, I think, as you alluded to, is in the back half of last year, most of the lenders in the system had backlogs in their mortgage process there. And what that led them to do is price up. And by pricing up, they were able to reduce the flows and reduce the backlogs, and that's really what led to some of the appreciation in the mortgage NIM through the back half of last year. So that has now been unwound. That's been resolved for most of the systems. So we're no longer in that situation. You noted that, that might have had something to do with the valuers. That might have played a role at certain points. The majority of it, though, was that most of us put in new underwriting processes, things like recency of financial statements and the like. And that's actually what led to that backlog. So that's now been and being unwound. And I guess, what did we learn? I don't know if we learned it specifically from that situation, but we know that we have to reduce the end-to-end cost of originating and servicing a mortgage and that's really a big part of the work that we're doing with Jen's team. In fact, one of the biggest investments in retail right now is just taking an end-to-end view of the mortgage origination and servicing process and through a combination of digitizing that process end-to-end. But serving that process up in digital environments like in our app and using data to serve the right customers at the right times, we think we can significantly reduce the cost of that business. And I think that's something that we have to get on with, which we are. So thanks for the question.

Can I -- I mean, I can't resist the temptation to ask then. I mean, presumably, banks in our position where they kind of got their operations in order, I mean, is there any reason why we don't see a fairly material escalation and competition in that market as supply comes back in?

David, do you want to carry on?

Yes. Well, I think that's what we expect. And we've had a more normalized mortgage NIM that did go up considerably, as you know, through the pandemic. And what we're seeing now is as backlogs in the processes are being unwound as there's liquidity as people are comfortable with credit quality, you begin to see more price competition. And so we're seeing anywhere from 10, 15, 20 point price competition in different segments of the market. So that will, of course, begin to reduce the front book margin. And then at the same time, you have the yield curve, particularly the 2-year and 5-year beginning to work against that mortgage margin. So I think you'd have to expect, and we do expect some normalization of the margin. I'll just remind you that the yield curve works the opposite way on the liability side of our book.

Our next question comes from Freddie Sleiffer from KBW.

And just one quick question from me, just on digital. Last week, you decided to shut down Esme, your online business lending platform. Just wondering if you could explain a little what went wrong really or why the decision was made that it didn't fit in your digital strategy? I guess what you've learned from what went wrong there and how you're applying it to your strategy going forward?

Thanks, Freddie. Well, I'd start by -- I'll get Paul to answer this. But as we've always said on our innovations, we will test and learn. So nothing went wrong. But actually, we've managed to accelerate our digital lending journeys, and we learn from that. But Paul, would you like to pick that one up?

Yes. Happy to. Thanks, Freddie. Actually, we -- Esme was a good success for 18 months, 2 years. That's how we thought of it. I guess, if you think of the -- it was unsecured business lending targeted at smaller SMEs, the reality of the pandemic is that we have written the best class of GBP 10 billion bounce back loans. The market has written GBP 40 billion in bounce back loans. So GBP 100 million or GBP 150 million on Esme, having built a digital platform in the core the reality is we didn't need both. So we learned a lot from ESB and how we developed the bounce back digital lending platform. That informs how we brought it to market for both the IT and the people. And we can still compete in that space, but we'll do it through the core lending platform. So it's as simple as that, a very rational economic decision based on the change in SME lending over the course of the last 12 months.

Next question is a typed question from Ed Firth, and it reads. Hello, many thanks for the event. If I look at U.K. retail banking over the past 10 years, the only banks that have really moved the needle in terms of retail banking products have been the new entrants. How can you change that culture?

And so the question, David, do you want to speak that one up?

Yes. Of course. And I mean, you're quite right, we have seen more and more customers choose fintechs over some of the high street banks so we can't shy away from that reality. The way I think about it is we have to up our game as it relates to the proposition we offer to our customers and the service offering and giving customers a clear reason why they should join us. The way I think about it is if you join a fintech today, 1 million have, you're making a choice to go with someone that you think you might like the brand, but you think offers fabulous digital capability. But you know that you're giving up the ability to interact with the human being, should the need arise, should you find some moment of truth in your life should you become vulnerable. And you're making that trade-off. And I really think the opportunity we have is to take that trade-off decision away from customers and to ensure that they know that we will offer them the very best digital capability, the very best app in the world, prove that through them through our marketing. But when they need to, they compress it but they can speak to real human being. And I think that wins over time. And we just have to prove that, that wins and make our customers aware that that's what we're trying to offer them. So I'm not backing away nor should we from the fact that they have been taking some share. But we're going to fight back, and that's a bit of a thinking as to how.

Our next question comes from Martin Leitgeb from Goldman Sachs.

I have one question for retail and one for commercial, please. And I would just like to follow up on retail on the growth ambition in unsecured, so unsecured card and unsecured other, if you like. To what extent is this strategy now a step change in terms of pace compared to if I just look at the development over 2020, I think NatWest came around 50 or 60 basis points of share in U.K. card. Should we expect that pace to continue? Or is the method here, there could be an acceleration and maybe with some products broadening that this could get faster. And in relation to other unsecured, so is the card strategy a broader unsecured strategy that you aim to regain some of that share. I think, in order, unsecured NatWest shares around 5% to 6% as well, so markedly below the 16& in current accounts. So it's probably in the 4s specifically caps here? And secondly, with regards to commercial banking. I was just wondering in terms of the bounce back loans where there is some news report out there that the expectations are for fairly high default rates. Is that a risk that this could weight in terms of the cost progression into 2021 or 2022 as and when loans default, just in terms of the time it takes to work out those loans? Is that one of the considerations?

Thanks, Martin. I think on unsecured, David answered quite a lot of questions on unsecured, and I think the capacity to grow. So why don't we go to Paul first on bounce back loans? And then David, if there's anything you think that you can add to what you said already. But Paul, can I ask you to pick up the bounce back loan question?

Yes. So bounce back loans, a couple of things on that. First of all, I think your question is about cost rather than credit, but just for clarity, obviously, bounce backs 100% government guarantee. So from a credit perspective, we're very confident we've followed any necessary policies and processes to allow claiming under the guarantee as it relates to recoveries and collections, which is maybe where your question is coming from in terms of downstream costs. A couple of comments. One is there is a very clear set of agreed protocols between the treasury, the British business bank and the accredited lenders to bounce back platforms in terms of the processes that need to be followed. Because of the volume in the region of 300,000 for ourselves, ourselves 1.5 million individual loans in the market. That process is a digital process. The majority of it is a digital process. So that obviously can be scaled and means that the cost of some of those collections and recoveries journeys are probably not what you would assume for a larger credit collection. Plus a lot of that is the digitalization is also outsourced to debt collection agencies. So it's too early to conclude what level of recoveries or collections will be required. Of course, a lot of the collection activity will be digital rather than people dependent and hence, have the appropriate impact on costs.

Thanks. David, anything to add?

I would only add on unsecured. I'll be a bit circumspect on how much faster than market we wish to grow, but we think the opportunity is to grow faster than market, at least as faster than market as we were pre-pandemic. I would only did then say that if you think about the 3 major classes of unsecured, you've got credit cards. And we prioritize those because we think that's the higher ROE of the 3. And we think that is, in a sense, sustainable revenue for us at low risk, and we have that opportunity with low share. The second one is personal loans. That does come at a slightly lower return, in my view, still above cost of capital, but slightly lower. And so that is still something that we're pursuing with growth, but not quite to the same degree as cards. And then I think unsecured -- I'm sorry, overdraft has become a little bit more challenged, as we all know, with some of the new regulations. So that's a little less of a priority for us right now.

[Operator Instructions] Our next question comes from Andrew Coombs from Citi Global.

One on mortgages and one on the private banking piece. Firstly, on mortgages, I was intrigued by the comment that you're now at a size where you don't need to grow at all costs. If I think about historically, you very much sort have a volume over margin strategy. Your peers have had a margin over volume strategy. That's all shifting a bit now in part because yourselves, HSBC, too, had a lot of excess liquidity in your ringfenced bank, but now everybody had excess liquidity. So the whole market environment has shifted plus pricing damage more attractive. So clearly, your peers are going after volume more. You must sound like you're tempted to go the other way by perhaps misinterpreted that comment. And yet your -- I think your formal guidance has continued to grow faster than the market. So I guess my question would be, why are you still confident you can grow faster in the market given some of what your competitors are now also doing? So that's the first question. Second one on private banking. Just trying to understand the exact strategy there. Most recently, I think Adam & Co. go up for sale. I appreciate only a couple of billion of assets. And I think you're planning to retain the lending book there. But what -- are you trying to rebrand all under the Coutts brand? Or what is actually is the strategy going forward?

Great. Thanks. I'll give David a break from mortgage questions and go to Peter first on progress.

Sorry, brand -- sorry. The primary brand for private banking is Coutts into the future. And we can't comment at the moment on the matters of Adam, which are in the press.

Great. Thanks, Peter. David, a short breather. Anything to add on mortgages that we haven't uncovered already?

I think 2 -- you sort of had 2 questions there, and I'll try to be brief. The first was, how are we thinking about volume versus margin? And we do expect to be able to continue to grow. But what we're saying is now that we're the third largest lender in the country, we're not going to grow at all costs. And so there'll be some months where we decide to be it'd be better to play a little bit on the margin side than on the volume side. So I just want to make sure that we had that balance in the business our size. We don't want to be the player that's pushing the margin down and creating all sorts of price competition. So that's really what I'm flagging. I still think we can grow above market. But with that trade-off being considered carefully. You then challenge us, can we keep growing at this pace? And I think we can still grow above market. We still have fabulous relationships with brokers and the service quality is improving. But I'd also say that we do have opportunities to go to new segments. So the buy-to-let I mentioned, and I want to be clear, that's the low end of buy-to-let, but that's an opportunity for growth. And then organic sales is another opportunity for growth. So I do think we can keep growing. We are going to just be balanced between volume and margin.

I guess a question with buy-to-let, given the way the market's moved towards more professional landlords, I mean, how big an opportunity is that market? I can't imagine it's that sizable, particularly the lower LTV segment?

Well, just to be clear, I was not missing the lower LTV segment, although good risk management, but rather the less professionalized segments. So rather than people who are looking to invest in 12 properties on the same street, we know that has more volatility in it and more sort of potential credit losses, I'm saying, more the average investor with 1 or 2 properties is where we think the opportunity is. Is it as big as other parts of the market? No. But it's not an irrelevant part of the market. We haven't had clients that we do think we can pick up incremental growth there.

Our next question is a typed question from Guy Stebbings. Thanks for hosting the event. A question probably for David. You mentioned the opportunity to grow more in buy-to-let and particularly the amateur segment. Given the market has been increasingly moving to the professional segment, in recent years, what's the reasoning for focusing on the amateur segment? Is it your house view on risk in the professional segment or driven by the skills and expertise within NatWest or something else?

David, is there anything that -- I think you've kind of answered that question already. So unless there's anything particularly you want to add?

No, thank you. It was typed, so I suspect I've already answered that question, Guy.

And in that case, that was the last question. So I will hand back to you to close, Alison.

Great. Thank you very much. Well, thanks, everyone, for joining, and I hope that you found this session useful to get to meet some of the team. And what you will have is later in the year, the further spotlights to really get a feel for more of the detail. So thank you very much for joining us today. We look forward to catching up with you again later in the year. Thank you.