NatWest Group plc ($NWG)

Okay. Well, I think we are ready to get started. We'll do 35 minutes as with the other sessions, 5 minutes for Q&A at the end. So if you have any burning questions, get them ready. So with that, it's a wonderful pleasure to introduce Katie Murray as our next speaker, Chief Financial Officer of NatWest, a role she's held since 2019. Prior to being CFO, Katie held senior roles within NatWest as Director of Finance and Deputy CFO. Previously, you were also Group Finance Director for Old Mutual Emerging Markets based in Johannesburg. So thank you very much for joining us, Katie.

Thank you. It's very lovely to be here this morning, Ben. Thank you.

Brilliant. Well, let's dive straight in with the macro. Clearly, a lot going on in the U.K. How are you seeing that situation currently evolving? Have you seen any change in client behavior over the past couple of months as well?

No, thank you, and good morning, everyone. It's lovely to be here. So as we look at where we are on the macro, I think for us, with 20 million customers, we're very tied into what's kind of happening. And with the kind of strength of balance sheet that we have, we're able to kind of work with our kind of customer base as we go through. You'll recall that Q1, we did a little bit of an update to our macro numbers. We're now estimating that rates will be flat. Some of you have different views on that. And if I looked at the market today, there are different views around as we go through. But actually, I would say some of the macro that has come out in the last couple of months in terms of GDP growth has been a little bit better than we were necessarily expecting. So when you look at those 20 million customers and say actually what's kind of going on, I would say that they're strong, they're resilient, and they're also thoughtful in terms of what they're doing, whether that be investing in 1- to 2-year kind of ISAs rather than kind of going more short term, managing their cash positions. I think in retail, we see them being thoughtful around where they're spending, still spending, but being very mindful of that, mindful of taking out longer positions and mindful about how they're using their mortgages. If I look at the commercial side of the business where we're the biggest bank for business in the U.K., very strong balance sheet there. They've weathered a lot if you're a corporate in the U.K. over the last kind of decade. And what that's actually done is actually made them far more, I think, resilient and able to manage their balance sheet. So they're in a good position, continuing to kind of grow and do borrowing and continue to invest, but actually sitting quite strongly within the piece. Obviously, at the moment, we're looking at what do we think for Q2, and we'll talk about that a little bit more in July and things like that. But at the moment, while the macro has been challenging. I think our customers are well placed to deal against it.

Okay. Great. Well, let's pick up on the mortgage angle within all of this. You outlined a growth target pretty recently to grow customer assets and liabilities at over 4% annually from 2025 through to 2028. Can you talk there how delivery is tracking? And then specifically on the mortgage side, pretty strong Q1. How are you thinking about the pipeline looking ahead from here? And then a big pickup in rates at some point in the year, as you alluded to. Has that changed how people are thinking about mortgages or the types of products they're taking?

Yes, sure, absolutely. So looking to grow CAL. So for us, that's our sort of our lending, our liquidity, obviously, in terms of deposits and also our assets under management. What we wanted to do is to bring a target that actually covered the breadth of all of our client activity and growing at over 4%. Now we've done that for the last 7 years. And then if you look at Q1, you could see that lending was up 4%. We call it, deposits up -- just less than that, about 3.5%, I think, and then AUM up about 10% on the prior year. So very strong growth. So we started the year well, and we're very pleased with that kind of start. So we've got -- and as we kind of look at it and you kind of look out to 2028 where that target is, we feel pretty comfortable that, that will continue to come through. So if I look to mortgages, one of the things we've talked a lot about within mortgages is what we saw happening in March. We saw this kind of pull forward because people reflecting my comments that customers actually are pretty aware. They can see higher rates are coming. I want to kind of make sure I lock in my mortgage rate today. And you know that customers in the U.K. can do that about 4 months ahead generally of when their transaction is happening. And so we saw people kind of looking to do that. What's interesting though, we would probably have thought at that time, we've seen this pull forward and actually then we'll see a kind of kind of pull back as this quarter has kind of gone through. In reality, we've continued to see the strength of that book coming forward. And actually, the mortgage book is particularly strong. When you look at our customers, more than 60% of them today pay over 4% already. So I think, Ben, when you and I would have been talking as rates were beginning to rise 2 or 3 years ago, I'd have said, "Well, people are going to 5 year, they're kind of lock in this rate for longer." The idea of going from 1% or 1.2% mortgage rate up to a 5-point something is kind of horrifying. But actually, we're 4 years further on, we had 4 years of pay rises, 60% of them are already paying over 4%. And when people set their mortgage, they set it by the rate, but they also set it by what the monthly cost is. And you can see that they're kind of managing that. So what we've seen in that customer base, there was a pull-through. The balance is stronger. Balances are stronger now as well as we -- as it comes through. Customers are being very mindful. They're going for more 2 years than 5 years. What I'm also really pleased about is the investment that we've made within our mortgage system is really paying dividends. What you want to be able to happen is when there's a big wall of applications that come at you at any one time, and that can happen for lots of different reasons that you're able to process them and you get through and you're still on your kind of SLA agreements. Because otherwise, what happens when there's good mortgage, mortgage margin in play. If you're not able to be in the market, then you -- that's a really frustrating place to be. And I've been delighted with what we've done within there. We can also see that we've done some real extension in our kind of mortgage waterfront, whether that's more buy-for-let through our association with Landbay or more kind of first-time owners or new builds that we're kind of bringing in as well and also some lovely innovation in terms of PEXA, which is our speedier digital mortgage settlements. And those of you who spend a lot of time in the Australian banks will know that they settle within days, and we still talk about it in weeks and sometimes months. So this will really accelerate. And we've also got our mortgage app is in -- is an app within ChatGPT, which is -- we're the only first bank to do that. We've got a very strong collaboration with OpenAI. And actually, that means that we are appearing then in very much within their system as well. So all in all, as I look at mortgages, we feel quite good. Ben, you spend a lot of time asking me about margins on those mortgages, and we -- traditionally, we're writing around 70 basis points. We know that because of the kind of COVID high margins that are kind of flowing through and they all have kind of slowed through this year. What I talked about Q1 that, that will go to kind of around 60 bps. Still very comfortable on the return of capital on that, but you will see that coming through. And we saw in the first quarter, a couple of basis points coming through both the retail NIM and the group NIM as that mortgage kind of cost has come through. Other lending kind of is remaining quite robust. I think though on CAL though, it's important not to forget the asset management piece. And for us, we're really excited about the growth that's coming through. Obviously, we did the Evelyn transaction. We'd expect that to complete this month. That will give an initial kind of pop up as those assets come on balance sheet, but we expect them to grow. And if we look in our own book, we had sort of 10% growth in our assets under management. We know that that's a line that grows a bit faster. So we'll continue to see that coming through, obviously, not just in the balances, but also kind of in fees as we get there. So a good step forward in terms of that target.

Brilliant. Well, let's flip from mortgages to thinking about the commercial and institutional side. One of the biggest investor focuses for U.K. banks right now is whether they can continue to outgrow the broader U.K. economy. Commercial institutional seems to be at the heart of that. Can you frame how you think about that issue going ahead, current competition? And then also how you think the recently announced reforms to ring-fence might fit into that?

Yes, absolutely. So we are the largest U.K. bank for business and by kind of any measure, which puts us in a position where we can really see what's happening from the very smallest businesses to some of the very largest. When we did our spotlight last year, we really kind of highlighted the areas that we wanted to focus on and very much focusing in that fast-growing kind of mid-market segments. And we've done a lot of work to make sure that we're able to grow within there. And that's whether that's things like some really quite innovative lending that we're doing on IP that's coming through. We set up a ventures team, where we had 24,000 startups, 25% increase on the previous year. So if you look at the kind of big incumbent banks, we've got absolutely the largest market share of that space. Again, that's all down to being where your customers are, the digital investment that you're making as well, making it really kind of effortless to kind of come in. We're very proud of the presence that we have across the U.K. And when we look at that kind of mid-market space in terms of the investment we're making across all different sectors from life sciences, infrastructure, sort of social housing. You can see there's just such a lot of activity, and that's because our relationship managers who've been embedded in the communities in the nations and regions of the U.K. have been there for a long time, and they're very kind of close to the business. So we have consistently grown above nominal GDP. It's something that we've continued to do year in, year out. You saw us do that again in kind of Q1. And for me, it's about pulling on all of those different levers that we have, whether it's the RMs, the innovation around kind of product development, the investment we're making in things like Bankline, where we're able to bring more of the bank to more of our customers through bringing this sort of that NatWest markets kind of sort of FX, capital markets kind of much closer to those kind of customers and just really making sure that we're really very present for them. So I would say at this stage, when I look at our pipeline, when I look at the growth we've had in Q1, we're confident that we'll continue to deliver at that sort of level. There is a bit more competition. People look at us jealously as they should to sort of see actually how do we kind of get a little bit more of that opportunity. And we just need to kind of keep on developing, making sure that we're there working with our customers in the right place. Ben, you know we spent a lot of time kind of lobbying on ring-fencing where I think in the U.K., we've got a very strong kind of scheme across both ring-fencing and resolution. And what we were really trying to do is to take out some of the friction that exists from our customer base. So the rules that they've brought out in terms of being able to use a portion of your kind of credit risk-weighted assets to then lend to kind of activities that weren't traditionally allowed in the ring-fencing. For us, that's a good opportunity. It will take friction out of the process. It doesn't unfortunately come until 2028. So we'll have to wait a little bit until then, but we'll work with the PRA to come through. But overall, we would see it as a net positive for us in the bank and for our customer base. So we're supporters of that.

Very clear. Well, let's move on now and think about deposits. Q2 sometimes had some ISA seasonal impacts. How are you thinking about the impacts there and then how customers are managing their deposits in higher for longer rate backdrop? Are you seeing any change in mix or volumes?

Yes. So as you look at it, the ISA season is always very competitive, and it kind of starts at the tail end of Q1 and then goes into Q2. And we can see there that customers have been quite thoughtful. I think one of the features that's been more interesting this year is that more of them have used sort of 1 year and 2 year, whereas actually a little while ago 2 year wasn't that popular. So they're kind of looking to kind of lock in rates, which again, just kind of points to the fact that the customer is thinking about what they should be doing. We saw very good growth in the first quarter across the book, even reflecting that actually we had higher tax outflows, which is a big feature, obviously, in the U.K. So overall, I would say it is intensely competitive, but is also working well in terms of that customer base. And then we just kind of see how they're also reacting to the speed of velocity and where they're kind of moving, and we're kind of comfortable with the kind of performance we're seeing. So overall, as we look at deposits, I'm comfortable with our performance, and we'll continue to see the strong savings rate that we've seen within retail, and that will continue to kind of flow through from here.

Okay. Perfect. Well, let's wrap it all together and think about net interest income and net interest margin. 2026 versus 2025, the hedge, big positive. You talked about mortgages refinancing at tighter spreads. You also have the path of bank base rates, which probably is a negative this year. How are you thinking about all of that fitting together? And then effectively, the output of those rate-sensitive levers within your balance sheet?

Yes. So as I look at it, I think what we did in Q1 was we upgraded our income guidance. So what that tells you is that the higher rate is obviously positive. We went from GBP 17.2 billion to GBP 17.6 billion to say we're going to be at the top end of the range. And that's definitely benefiting from the higher rates that we see kind of in the market. So look, the hedge is obviously a feature of that. We're investing at higher levels than we said we would at the beginning of the year. We've got a little bit of a negative. We said it was about GBP 300 million negative from the impact of all of the rate cuts we saw last year. We are assuming flat from here. We'll see how that continues to kind of develop. But I think the important thing as well is to also bringing on the kind of customer lending and the deposits and the AUM, obviously, more noninterest income than NII. So we can see that with this strength and growth that we're seeing coming through the balance sheet, coupled with that with the hedge activity that we're seeing. And also just other treasury activity because things, as you know, happen outside of the hedge as well. It's not always rolled into this one simple number. And then overall, that's given us real kind of confidence in our income for this year, and obviously, confidence as we move forward from here as we lock in more of the hedge in later years at these kind of higher rates. So it is important, but I would also say what's really important is that growth that we see coming through in CAL. So yes, mortgage is a little bit of a drag, but strength in other places and obviously, very strong returns that we're getting on the deposit side as well.

Okay. Very clear. Well, let's flip to noninterest income. Conscious, this is not a line that you actually guide to in revenues, but I wanted to drill into the moving parts. Commercial institutional, I think it's about 3/4 of your noninterest income. And Q1 had a slightly more challenging backdrop, part of which connected with the rates business. So how are you thinking about noninterest income as you look ahead?

Yes. So noninterest income. I think the way that I think about it is to say, can I show that I'm just kind of going -- showing good, solid, consistent kind of growth within there kind of quarter-on-quarter and kind of year-on-year. And overall, we're kind of comfortable with that. You're absolutely right. It's mainly a C&I business. I'll talk a little bit about PBWM in a moment. And as I look in there, we can see there's a range of numbers that come through, whether that's from payments, transaction banking, lending fees. We've obviously got the benefits that come through from our capital and then the FX. And also we had a little bit of a challenge with the extreme rate sterling rate volatility. I would say it's kind of GBP 10 million to GBP 20 million. It's an important number. But utterly irrelevant when you're managing GBP 17.6 billion of income sort of things. So things I wouldn't overly focus on that kind of little wobble in that space, very much a result of the kind of the volatility. And overall, what we're really trying to make sure is actually how do we make sure we're really embedded with our customers so that we're working and growing on all of those lines. And we're kind of comfortable that overall in the round, that's kind of where we get to. Obviously, with the acquisition of Evelyn, we'll see some strengthening coming through on the AUM fee line. So when they come on, it will be an immediate kind of 20% pickup on the fee income, which is -- will be meaningful for us, and we'll continue to see that growth come through. And I talked earlier about this, a line that often grows faster than other lines within there. So what I would hope to see is a bit more balance between C&I and the rest of the bank in terms of that noninterest income line. But one that I think we'll just continue to see consistently improve as we bring more of the bank and more of the services into our customer base.

Okay. That's a pretty comprehensive picture on revenue. So let's flip to costs.

Absolutely.

You're guiding to around GBP 8.2 billion this year, something in the order of 2% to 3% increase year-on-year if you exclude onetime integration costs. What are the puts and takes within that number? And then as you're looking further ahead, you've got a 2028 cost-income ratio target below 45%. That's from below 49% this year. So how are you balancing inflation, investments, savings?

Yes. As we look at cost, I think it's something that NatWest, we're really known for within there. So around GBP 8.2 billion for this year, that's the number that we'll print obviously, pre-Evelyn, we'll talk a little bit about that. When we kind of look at costs and if I'm in a more reflective mood, I'd say I've been CFO for 8 years now. In that time, my cost base has actually gone down by 4.5%. So that's 0.5% per annum in terms of cost reduction that we've delivered. That compares to a 4% kind of increase you're seeing in terms of inflation. So that's -- I mean, that's a kind of a great position to be in at any level. That's really helped us to deliver the improved cost/income ratio. So we printed 46.5% at the end of this year, 48% at the -- sorry, end of Q1, 48% at the end of the year. That's 16 percentage points -- sorry, 14 percentage points better than when I started. Income has got a bit of that, but also there's the fact that costs have really come down. And that's because it's just a constant metronome. We don't do pull back this year, spend next year. It's just every year, this is where we're going to improve. This is what we're going to see. This is how we're going to kind of keep on delivering and making sure that we're kind of managing all of the different kind of cost lines. One of the things that people I know are worried about. So if you got that level of cost takeout, are you really continuing to invest in the right way? When I look at the investment pool sort of from when I became CFO to where it is now, what's really exciting is we're spending on different things. If I go back kind of 8 years, we'd still have things like ring-fencing coming in and the tail end of that and all sorts of kind of regulatory kind of stuff you had to do. So you had this investment pot that was quite consumed by things that were important, but not necessarily kind of customer facing. Now as I look at it, we're spending it much more in client contact, what we're kind of doing on sort of technology, what we're kind of doing in terms of the kind of systems like kind of Bankline. And obviously, AI is just a theme that kind of goes through all of that. So we continue to make real strong investment. One of the things as a finance director you really want is when you offer somebody more money and they say, no, I don't want that. I can deliver better. So last year, we were going through with Scott and I said, "Scott, should I just give you a bit more of a investment budget?" He said, no. He said, "I absolutely believe that we can deliver greater capacity by using the tools that are available to us now really embedding AI into this." We talked last year about creating GBP 100 million of capacity or investment pot. So what that means is I'm getting GBP 100 million more worth of delivery than for the same amount of money, and they'll deliver that to me again this year. So that's real kind of change that you're getting within the piece. One of my kind of favorite little stories of what happens within the kind of the transformation space that they're doing is just how much they're really accelerating that kind of -- the speed of their investments. So overall, one of the things I talked to you a lot about each quarter on cost is they will be lumpy. Q1 is often a bit lumpy because in Q1, I decided to do a bit more restructuring, spend a bit more on property take out, invest a little bit here. The number we'll deliver at the end of the year, pre-Evelyn will be GBP 8.2 billion. You can put it in your model, and it's absolutely guaranteed you'll kind of get it. So very comfortable, right, very comfortable we've got the right balance of investment in the bank as well as the cost of running the bank. And we just need to keep that metric ongoing year after year after year because then the business also knows what it needs to do. They don't think feast or famine. It's just constant. Manage your cost base.

Very clear. Well, let's pick up on one of the elements within that, that you're talking about. So AI, big focus for the industry at large right now. How are you creating tangible benefits for NatWest? And then how are you shoring up your competitive moat against the range of AI threats for bank disintermediation, whether that be on payments, deposits, investment products?

Yes. So let me talk a little bit about that. So when we look at it, I think if you look at any business, the winners will be the ones that have scale. So for us, it's very important that we have this kind of 20 million customers that we're able to invest and put real kind of solutions in their hands. And AI is kind of part of everything that we do these days in terms of what we're developing. So if I kind of think of a few sort of examples as to how we kind of go through. If I look at what's kind of happening on the customer base, we can see that the -- what we're doing on fraud and what we're doing on things like complaints. Our complaints journey is almost entirely done with AI. There's obviously the right human support and safeguards and all those things around about it, but that's all been completely transformed to get much better outcomes on fraud, which we can see tangibly in our data in the market that we're doing that and also much better and speedier outcomes in terms of complaints. If I look at what's kind of happening for those customer-facing colleagues, some of the simple things and some of the tools that we'll all use as things like how do you do the call summarization, how do you make sure that you've got the right kind of data about that customer before you go to the meeting? What are the right next quality investment or savings choices that they should be making? We've put all of those kind of tools in place. And across the business, that saved about 100,000 hours a year. Now if you can think of 100,000 hours of extra RM, personal banker, wealth managers' time that's now focused at the customer, you can see how you're using AI to then kind of help on the income line. That's a lot of meetings that you're kind of happening, and that will kind of continue to develop. Then you kind of think, well, what's happening within the business and within the core. And this is kind of one of my favorite kind of stats. When you were taking a new client proposition out, like just a small simple thing, not something like a whole new product or something, but a new kind of feature. As we looked at it traditionally, we'd have 12 engineers and it would take about 6 weeks. What we're doing in some areas of our book now is 3 engineers, 7 agents and 6 hours. I mean that is a staggering difference in terms of the move forward of the speed that we can see kind of coming through. And that's a flywheel that will just continue to grow as we move forward from here. But then you kind of sit back and think, well, what will that mean for my customer base? How will they change? And we've heard a lot around AI and what it means for our depositors and actually, these machines are going to come in and move everybody's money around. And again, I think there, it's important to step back a little bit and go, okay, well, Katie, what is your deposits? What are they? 30% of our deposits are noninterest-bearing accounts. So that's millions of customers who are managing their transactional accounts. They don't generally have a lot of excess spend within there, and that's the bedrock of a lot of our kind of hedge position, as you know. So actually, I would say that within that space, it's not something we expect to see a lot of difference. If you go to our good customer base, actually, we already manage your money in that way. You'll have set a limit of how much you want in your account, we'll sweep your account every night into a higher interest account. And so therefore, as a customer, you're very used to holding a minimum amount in your current account and having that speed kind of happening. And that's really important for us because it allows us to see and understand what kind of excess people want to hold, who are the ones that are more kind of prone to kind of making that movement. And I think the other thing we've gone through really dramatically over the last number of years is that change in fixed term. If you think a few years ago, we were at 6% of our deposits were in fixed term, and we're all -- they were going up every quarter and you're kind of worrying where will it stop? Where will it stop? What we've seen over the last sort of 2 years is it's really stabilized around that 16%, 17%. We have high retention of those balances. We've got good insight in terms of those that will move, and they are valuable to us because they're 1- and 2-year deposits. So at the point of retention, you need to make sure that you're at the right rate and that you're working with the customer. So it's an area that we watch, but it's not an area, given that we've actually got quite lot of experience in already that I'm overly worried about. If I go to PBWM and the kind of wealth management business, I think that AI is going to be a real -- it's going to be a real opportunity for us. Again, it's a scale game. But if we look at the kind of customer base, we can see that customers are already using AI to kind of help them make decisions and then they interact with us, and they want the review to kind of verify their thoughts, make sure that they're comfortable. We can see real improvements of how we get our people ready for those meetings, but also kind of the knowledge that our people are coming in. So I actually see that in both of them, and that's why Evelyn was a really important transaction, I think, for us, is as kind of advice is more sought, people are better informed. Actually, that will create a real opportunity, and I'm quite excited about what AI will do for us going forward. So overall, scale is important, making sure that you're really investing and understanding what's happening and just getting some of those really competitive advantage that you can see in the speed at which we're operating.

Brilliant. Well, let's think now about cost of risk. You talked about through-cycle range of 20 to 30 basis points. Where do you think NatWest is and where the U.K. is within that through cycle right now? At least for this year, I know you guide below 25 basis points. So what are the upside and downside risks in that? And have they changed at all over the past couple of months?

So there's a few things kind of going through within there. So kind of through the cycle, 20 to 30 basis points. We are a large prime bank lender. We're the best performing bank under the PRA stress test. So we know in terms of that kind of stress so that we're not as impacted as others in times of stress. What you have seen happen in the last couple of months as rates and unemployment have gone up, and we had some views on house prices coming down a little bit, that we have taken a little bit -- we took an additional GBP 140 million in terms of the charge for risk in Q1. That was offset by about GBP 30 million of PMA. But nonetheless, let's say just over GBP 100 million kind of charge coming through. What was interesting with that charge is that, when you look underneath into the book that actually there's no signs of issue within the book at all. That's something that we would call out. So you've taken this charge because of the macro on top of what is a well-performing book. And you can see that quality of performance as you look through those numbers. So for us, we know that we react well in stress. We have taken a little bit more as a precaution. We have, I think it's about GBP 250 million of kind of PMAs at the moment, which is the adjustment you put kind of on top of your models. We guard that quite kind of jealously to see how that kind of rolls through. But overall, as I look at the book, it's performing well. We're very comfortable with that guidance. Others, we know operate at a higher level, but for me, we're below 25 seems the right place to be at the moment.

Okay. Brilliant. Well, I'll ask one more question before we open up to audience Q&A. So let's think about CET1. Earlier in the year, you updated your guidance being at around 13%. How are you thinking about the moving parts within that, whether it be organic growth, dividends, buybacks and effectively, the other types of RWA management tools you have as well to mitigate the RWA growth?

Yes. No, around 13%. It was something we have been trailing for some time. And certainly, I've been working on for some time, just really reflecting how well we do react under stress to make sure that we were kind of holding the right kind of capital levels. So when we look at it, there's obviously many different component parts. I'll take RWAs first. So we started a program about 2 years ago, really active RWA management in the kind of the detail. Once we finish with things like the NatWest Markets restructure, the disposal of Ireland and kind of moving into actually as you're managing very much within the line. And we've seen good performance in that program. I don't think we're quite at steady state yet. So you'll continue to see that kind of grow a little bit. GBP 2.2 billion of management actions in the first quarter. They come from a spread of SRTs, credit risk insurance and kind of data quality. And we will see them continue to go through. I always remind the analysts don't take that number and annualize it because it will be different in different quarters, depending on what kind of transactions you've done. But it's an important part, a very important feature of our RWA management. If I look at last year, our lending growth and our RWA management almost perfectly matched. That's a fantastic position to be in where you're adding on higher returning kind of assets as you go through. We're obviously very capital generative as a bank. We're guiding you to around 200 basis points for this year and greater than 200 basis points in 2028. In Q1, we did 65 basis points. I mean that was a particularly strong quarter. So that certainly gives us a lot of comfort for this year. And that kind of level of capital generation that you see very consistently is as you know, is incredibly strong within the market and enables us to pay our dividends at 50% payout ratio, which we moved to last year. We've obviously, this year delayed buybacks because of the Evelyn transaction. But what's lovely about the Evelyn transaction, GBP 2.7 billion, we're able to self-fund that with a very small delay within the buyback. One of the things that Paul and I have been really focused on and our past is a really good indicator of this is that when there is excess capital, we'll pay it out to you. We've got a very strong track record of payout of excess capital to our shareholders. We'd expect that to continue. We've committed that recommences in June 2027. So when we kind of look at the capital pieces, it's about how do we manage to that rate, how do we, first of all, make sure there's the right capital available for organic growth so that we're then continuing to generate the capital, make sure we've got the investments in capital and then the excess we return via dividend and buyback back to you to really have what has been very strong kind of growth in that dividend per share, but also growth in the capital generation, which funds all of it.

Perfect. Well, I'll open it up now. Let's see if there's anyone in the audience who has a question. If you do, a microphone could come your way. If not, I will keep going very happily. But so let's think about interest rates again. So how are you thinking about the risks of the interest rate trajectory from here? I know you provide a stated interest rate sensitivity, but I'm curious about how you think about it a bit more qualitatively as well. The market is clearly pricing a slightly different outcome in terms of bank base rates relative to the start of the year. I mean how are you thinking about whether we are at or close to a sweet spot in rates or whether the higher or longer backdrop has trade-offs?

Yes. Look, it's -- we spend a lot of time debating it as well because it comes through in lots of different aspects of the P&L, just to look at it managed margin or the structural hedge is too simplistic as you think you have to think about it in terms of kind of client affordability and kind of client appetite for lending as well as just the deposit side of things. So we are sitting at 3.75%. I think when I was looking at the market yesterday, the kind of the 2-year rate was about 4.23%. It will have moved again since then. So market is a little bit higher. We know that that's often the case that it reacts a bit stronger and then we kind of -- we pull down. So at the moment, we're comfortable. We can see that at this kind of level, the higher for longer is a little bit to our advantage because it's not a level that is really impactful in terms of the customer appetite. When I talked earlier about mortgages. A few years ago, I would have said to you, if mortgages hit 5%, they'll just stop. I don't think that's the case any longer because actually so much of the book is already well into that 4%. And so people are more attuned. So I don't know what the new 5% is and maybe not get there because I think it would be a little bit high. And so as you see that kind of come through, what you're trying to balance is, what does that mean? We've talked about that kind of 3 handle. It's something that's a really nice spot for us to kind of operate in. If it was to go much below the 3s. I mean we all worked for an incredibly long time where there was basically no interest rate, no deposit income coming through, and that's obviously a very, very low rate environment, very far away from where we are today. As you get to the low end of 3s and into 2s, then you know you have kind of other actions to make sure you're continuing to deliver the profitability. But in this kind of corridor of where we are, we don't feel that uncomfortable. Our results are benefiting a little bit from the fact it's a bit higher, and we'll see that benefit come throughout our numbers as we go through '28, '29 and even into '30, as we've locked a lot of those benefits kind of in, we'll see that continue to go through. But we kind of quite like where we are. We didn't particularly like it to go up more. If it falls a little bit, we'll be comfortable with that as well.

Okay. Perfect. And I think, unfortunately, we're out of time, but that was a very, very insightful session. So thanks a lot, Katie.

Lovely, and thank you very much, indeed, Ben. Thanks very much. Thank you, everybody.