NatWest Group Performance

financial performance will represent 60% of the scorecard with target ranges set in line with the budget.

Non-financial measures will be focused across customer, colleague and simplification measures and represent an aggregate of 40% of the scorecard in line with the expectation of the UK regulators.

A downward Risk modifier will also apply, enabling risk performance to be assessed and awards reduced, potentially to zero.

financial performance will represent 60% of the scorecard with a proposal to include relative TSR.

Non-financial measures will be focused on sustainability and strategic measures representing an aggregate of 40% of the scorecard.

We also provided £31.5 billion of climate and sustainable funding and financing in 2024; this took our cumulative total to £93.4 billion towards our target to provide £100 billion between 1 July 2021 and the end of 2025.

Up to 31 December 2024 we have provided £93.4 billion against our target to provide £100 billion climate and sustainable funding and financing between 1 July 2021 and the end of 2025.

As part of this we aim to provide at least £10 billion in lending for EPC A- and B-rated residential properties between 1 January 2023 and the end of 2025.

During 2024 we provided £31.5 billion climate and sustainable funding and financing, which included £3.5 billion in lending for EPC A- and B-rated residential properties.

In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any consequential material impact on its financial statements.

The Group has explained in Accounting policies how they have reflected the impact of climate change in their financial statements, and the significant judgements and estimates relating to climate change.

The Group notes that many of the impacts will be longer term in nature, with an inherent level of uncertainty, and have limited effect on accounting judgements and estimates for the current period under the requirements of UK adopted IAS and IFRS as issued by the IASB.

The bonus pool is based on performance against a balanced scorecard of strategically important measures: financial performance; customer outcomes; people, culture and diversity; risk management; risk events; and progress against our climate and purpose ambitions.

The committee agreed a 2024 bonus pool of £446.6 million for those colleagues eligible to receive an award.

The increase in the bonus pool for 2024 reflects stronger business performance, including attributable profits of £4,519 million, strong share price performance and positive progress on our climate and enterprise goals.

Consideration was given to the operational resilience of NatWest Group across a range of operational risk scenarios including IT infrastructure disruption, cyber, data integrity, third-party, people and premises.

While NatWest Group has not been subject to a material cyberattack and operates a multi-layered system of defences, there is a possibility that a cyberattack could have a severe effect on operations.

As cyberattacks evolve and become more sophisticated, NatWest Group continues to invest in additional capability designed to defend against emerging risks.

Given our starting point on variable to fixed pay ratio, the committee concluded that it was appropriate to retain the fixed share allowance for this Policy period, as it acts as a counterweight that ensures the overall package is not too highly leveraged.

The continued delivery of the fixed share allowance in shares also ensures alignment with shareholder experience.

This is in line with regulatory expectations, with the grant of PSP awards contingent on satisfactory performance as assessed with reference to a pre-grant test in respect of performance in 2025.

NatWest Group’s robust capital position; CET1 ratio of 13.6% provides significant headroom above both NatWest Group’s minimum requirements and its maximum distributable amount threshold requirements.

NatWest Group’s strong liquidity and funding position; the liquidity portfolio of £222 billion, a robust liquidity coverage ratio of 150% and a net stable funding ratio of 137%.

Applying the scenarios to NatWest Group’s capital, liquidity and funding positions did not result in a breach of any regulatory thresholds.

An accountability review process allows NatWest Group to respond where new information would change our variable pay decisions made in previous years and/or the decisions to be made in the current year.

The process is used to apply commensurate ex-post risk adjustments to variable pay, where material failure of risk management, material error or employee misbehaviour are identified.

Malus provisions allow us to reduce the amount of any unvested variable pay awards, potentially to zero, prior to payment.

Over 28,000 colleagues contribute to our Sharesave scheme each month, which is available to approximately 98% of colleagues, with participants across the UK and India currently eligible to participate in new Sharesave offers.

At the end of 2024, 59% of our colleagues were shareholders.

Financial wellbeing remains important, and colleagues are supported with access to pension and protection products, as well as a comprehensive range of financial health initiatives.

People measures have featured in the performance and pay decisions of our executive directors for over 10 years.

Our climate focus for 2024 included a target for climate and sustainable funding and financing as well as progressing our Climate transition plan.

In 2024, we had targets to build the financial wellbeing of our customers and to support diverse enterprise, prioritising harder to reach groups with higher barriers to entering and growing a business.

The Board engaged with investors in a variety of ways during 2024.

As well as receiving regular updates on investor activity and share price performance, directors had the opportunity to engage with private shareholders at two virtual shareholder events and at the Annual General Meeting.

We have an active programme of engagement with investors and will continue to help support the reduction of the UK Government investment in NatWest Group.

For 2025, we will measure success based on winning with customers, underpinned by financial performance, our approach to risk and delivering value for shareholders.

Subject to performance criteria being met, awards will be delivered to all eligible colleagues, including executive directors, in NatWest Group shares.

Awards have a maximum value of £1,500 per colleague (adjusted for local salary levels).