As well as being back in a physical setting, we have also changed the AGM process a little this year to retain a virtual element and help maximise shareholder involvement and engagement.
Alison Rose has been CEO for two and a half years, but it is her first ‘live’ AGM appearance. In a moment she will update you on the progress we have made across the Group during 2021. Alison will also report on the help the bank is providing in response to the invasion of Ukraine.
Before that, I would like to give you an overview of your Board’s governance in what has been another eventful year.
For much of 2021, there was a sense of cautious optimism that we might finally have put the worst of the COVID-19 pandemic behind us. As restrictions in the UK began to ease, economic activity picked up strongly.
But, towards the end of the year our resilience was put to the test once more as the spread of the Omicron variant reminded us of the unpredictable nature of the pandemic.
Despite that, the UK banking industry as a whole held up well, remaining open for business and well capitalised.
The NatWest Group delivered a strong financial performance in 2021, returning to profitability and writing-back some of our pandemic-related impairment provisions as the economic outlook improved.
The bank’s share price also recovered throughout the year, increasing by around 35%.
Against the backdrop of recent geopolitical events, including the invasion of Ukraine, the share price has lost some of those gains, though on a 12 month view we have outperformed the UK banks average.
The Group also retains one of the strongest capital ratios among major European banks and we once again comfortably passed the Bank of England’s stress test in December 2021, further demonstrating the resilience of our balance sheet.
That, combined with our continued capital generation, means our bank is well placed to support its customers, invest for growth and drive sustainable returns to shareholders.
£3.8 billion of shareholder distributions were announced for the 2021 financial year, through buybacks – both directed and on-market – and dividends.
We also announced that we would distribute at least £1 billion in dividends annually to 2023.
UK Government Investments, which manages the government’s shareholding, announced three separate transactions during the course of 2021: the directed buyback by the Group; an on-market placement of shares; and a trading plan under which it has instructed its brokers to sell NatWest Group shares in the market through to July this year.
The government stake reduced from 62% at the start of 2021, to less than 53% by the end of 2021, and it is now around 48%.
While the move below 50% has little practical impact on our governance or operations, it was an important symbolic moment – a marker of how far we have come, the changes we have made since 2008 and lessons we have learned on the way.
Today we are seeking to renew our shareholder authority so that we may take part in further directed buybacks should HM Treasury ask us to do so.
The bank’s financial performance in 2021 included a fine following breaches of the Money Laundering Regulations 2007. NatWest Group takes its responsibility to prevent and detect financial crime extremely seriously.
We deeply regret that we failed adequately to monitor one of our customers between 2012 and 2016 to prevent money laundering. And while the case has now come to an end, we continue to invest significant resources in the ongoing fight against financial crime and fraud.
It has been a period of stability in terms of Board composition, with no changes to our membership since the 2021 AGM.
As you would expect, we keep the composition, skills and experience of the Board under review, and over the next year or so we will need to recruit new members to cope with planned retirements.
In the main, the Board continued to meet virtually through 2021. Our online meeting technology has served us well during the pandemic and we will continue to use it.
For 2022, we have therefore adopted a hybrid calendar with some meetings being held virtually and some meetings in person.
The extensive support that the bank has provided to its customers, colleagues and communities throughout the pandemic was a key focus for the Board in 2021.
We also spent a lot of time scrutinising the implementation of the bank’s strategy and transformation agenda as well as enhancing our oversight of the bank’s culture.
In keeping with its intention to maintain a progressive, shareholder focus, your Board has taken the decision to give you the opportunity to have your say on Climate by voting on a climate resolution at this year’s AGM.
We are also proposing a new Directors’ Remuneration Policy for approval. It has been developed by Robert Gillespie, as the Chairman of the Group Performance & Remuneration Committee. It will be his last AGM, so I want to thank him for all he has done for the Group over 9 years, steering the Committee through choppy waters, as befits the skilled oarsman he is.
Looking at the year ahead, as well as the gradual recovery from the pandemic, it’s clear that there are some notable challenges facing our customers and the UK economy.
Inflation, which was already on a steep trajectory at the end of 2021, looks set to continue to rise as the reverberations from the invasion of Ukraine have a direct impact on prices – especially of energy and commodities.
We are very conscious of the effects this will have on the increased cost of living for many of our customers, and we are committed to helping them where we can.
Finally, I would like to thank Alison and her strong and capable leadership team for everything they have delivered in the past year. It was not easy to run the bank well throughout the pandemic. And I take this opportunity of thanking, in particular, our colleagues in branches who kept that essential service working even at the most difficult time. Their actions and the hard work of all our colleagues have ensured that NatWest Group is well placed to succeed and grow as the needs and expectations of our customers evolve.
With that, I will hand over to Alison for her update.