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Natwest Group Plc 15 July 2021 Update Following Upgrade of Senior Unsecured Rating to Baa1

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Natwest Group Plc 15 July 2021 Update Following Upgrade of Senior Unsecured Rating to Baa1 FINANCIAL INSTITUTIONS CREDIT OPINION NatWest Group plc 15 July 2021 Update following upgrade of senior unsecured rating to Baa1 Update Summary The Baa1 senior unsecured debt ratings of NatWest Group plc (NWG) reflect the group's creditworthiness, expressed in a baa1 notional Baseline Credit Assessment (BCA); moderate loss given failure, which does not provide any uplift under our Advanced Loss Given Failure (LGF) analysis; and our assessment of a low probability of support from the Government of RATINGS the United Kingdom (Aa3 stable), which does not lead to an additional notch of uplift. NatWest Group plc Domicile Edinburgh, United NWG's baa1 notional BCA reflects its good capital, funding and liquidity, as well as the Kingdom potential asset-quality deterioration because of a still-uncertain operating environment Long Term CRR Not Assigned and profitability challenges deriving from low interest rates, weak credit demand and the Long Term Debt Baa1 finalisation of the restructuring of capital market operations. Type Senior Unsecured - Fgn Curr Outlook Positive The outlook on NWG's senior unsecured debt ratings is positive. Long Term Deposit Not Assigned NWG is the ultimate parent and holding company of several operating entities. The main Please see the ratings section at the end of this report subsidiaries of NWG are the ring-fenced National Westminster Bank Plc (NWB, A1 stable, for more information. The ratings and outlook shown a31) and the non-ring-fenced NatWest Markets Plc (NWM, A2 positive, ba1). reflect information as of the publication date. On 13 July 2021, we upgraded NWG's senior unsecured debt rating to Baa1 from Baa2. Exhibit 1 Contacts Rating Scorecard - Key financial ratios Edoardo Calandro +44.20.7772.1097 NatWest Group plc (BCA: baa1) Median baa1-rated banks VP-Senior Analyst 25% 42.7% 45% [email protected] 40% 19.4% 20% 35% Laurie Mayers +44.20.7772.5582 Factors Liquidity 30% Associate Managing Director 15% [email protected] 21.6% 25% 20% 10% Romy Van Rooij, CFA +44.20.7772.1638 15% Solvency Factors Solvency Associate Analyst 5% 10% 2.2% [email protected] 0.5% 5% 0% 0% Asset Risk: Capital: Profitability: Funding Structure: Liquid Resources: Problem Loans/ Tangible Common Net Income/ Market Funds/ Liquid Banking Gross Loans Equity/Risk-Weighted Tangible Assets Tangible Banking Assets/Tangible Assets Assets Banking Assets Solvency Factors (LHS) Liquidity Factors (RHS) Source: Moody's Investors Service This document has been prepared for the use of Gabriella Dispenza and is protected by law. It may not be copied, transferred or disseminated unless authorized under a contract with Moody's or otherwise authorized in writing by Moody's. MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS Credit strengths » Good capital » Good funding and liquidity Credit challenges » Potential asset-quality deterioration » Finalisation of the restructuring of capital market operations » Profitability challenged by low interest rates and weak credit demand Outlook The outlook on NWG's senior unsecured debt ratings is positive, reflecting the potential improvement in the group's profitability and asset quality after its successful exit from the Irish market, the completion of the restructuring of the group’s capital market activities and the improvement in the operating environment. Factors that could lead to an upgrade NWG's Baa1 senior unsecured debt ratings could be upgraded if there is an upgrade of the notional BCA, or a significant increase in the stock of more junior bail-in-able instruments, which would provide greater protection to senior liabilities in a resolution scenario. NWG's notional BCA could be upgraded if there is an improvement in the group’s profitability, driven by the sale of its Irish business and the finalisation of the restructuring of capital market activities, provided that the UK's macroeconomic environment does not deteriorate. Factors that could lead to a downgrade A downgrade of NWG’s Baa1 senior unsecured debt ratings is unlikely, as indicated by the current positive outlook. NWG's senior unsecured debt ratings could be downgraded if there is a downgrade of the baa1 notional BCA or a significant decline in the stock of more junior bail-in-able instruments. The baa1 notional BCA could be downgraded if there is a significant deterioration in the operating conditions in the UK, a spike in problem loans, a decline in the capital ratios below the group’s target, or if profitability fails to improve. This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history. 2 15 July 2021 NatWest Group plc: Update following upgrade of senior unsecured rating to Baa1 This document has been prepared for the use of Gabriella Dispenza and is protected by law. It may not be copied, transferred or disseminated unless authorized under a contract with Moody's or otherwise authorized in writing by Moody's. MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS Key indicators Exhibit 2 NatWest Group plc (Consolidated Financials) [1] 12-202 12-192 12-182 12-172 12-162 CAGR/Avg.3 Total Assets (GBP Billion) 617.8 564.4 554.3 571.4 552.2 2.84 Total Assets (USD Billion) 844.5 747.6 706.0 773.0 682.3 5.54 Tangible Common Equity (GBP Billion) 33.0 38.1 40.2 40.0 38.7 (3.9)4 Tangible Common Equity (USD Billion) 45.1 50.5 51.1 54.1 47.8 (1.5)4 Problem Loans / Gross Loans (%) 1.9 2.1 2.6 3.6 3.3 2.75 Tangible Common Equity / Risk Weighted Assets (%) 19.4 21.3 21.3 19.9 17.0 19.86 Problem Loans / (Tangible Common Equity + Loan Loss Reserve) (%) 16.2 15.7 18.6 25.8 23.9 20.05 Net Interest Margin (%) 1.2 1.4 1.5 1.5 1.3 1.45 PPI / Average RWA (%) 1.5 1.5 1.7 0.9 -2.5 0.66 Net Income / Tangible Assets (%) 0.7 0.8 0.0 0.4 0.0 0.45 Cost / Income Ratio (%) 76.2 77.4 74.2 84.6 158.2 94.15 Market Funds / Tangible Banking Assets (%) 21.6 23.7 23.8 24.0 21.6 22.95 Liquid Banking Assets / Tangible Banking Assets (%) 42.7 38.3 39.3 40.4 36.0 39.35 Gross Loans / Due to Customers (%) 80.1 87.1 87.4 87.9 91.0 86.75 [-] Further to the publication of our revised methodology in July 2021, for issuers that have “high trigger” additional Tier 1 instruments outstanding, not all ratios included in this report reflect the change in treatment of these instruments. [1] All figures and ratios are adjusted using Moody's standard adjustments. [2] Basel III - fully loaded or transitional phase-in; IFRS. [3] May include rounding differences because of the scale of reported amounts. [4] Compound annual growth rate (%) based on the periods for the latest accounting regime. [5] Simple average of periods for the latest accounting regime. [6] Simple average of Basel III periods. Sources: Moody's Investors Service and company filings Further to the publication of our revised methodology in July 2021, for issuers that have “high trigger” Additional Tier 1 instruments outstanding, not all ratios included in this report reflect the change in treatment of these instruments. Profile NatWest Group plc (NWG) is the holding company of a leading banking group that provides retail, private and commercial banking predominantly in the UK and Ireland. The majority shareholder of NWG is the UK government as a result of the government's bailout of the group in 2008. The government's ownership stake has declined to 54.75%. After the implementation of the UK’s structural reform (the so-called ring-fencing), NWG operates via the following companies: » Ring-fenced banks: NWB and The Royal Bank of Scotland plc (RBS, A1 stable, a3), which provide retail and commercial banking in the UK. Ulster Bank Ireland DAC (UBI DAC, A3 review for upgrade, ba1), which provides retail and commercial banking in the Republic of Ireland. Coutts, which is a wealth management business owned by NWB. » Non-ring-fenced banks: NWM, which mostly conducts capital market activities on behalf of the group and also operates via its Dutch subsidiary NatWest Markets N.V. (NWM N.V., A2 positive, ba1). Jersey-based The Royal Bank of Scotland International Ltd (RBSI, Baa1 positive, baa1), which provides lending and ancillary services to funds in Jersey and — through wholesale branches — in Luxembourg and London, and lending and commercial services to residents in Jersey, Guernsey, and the Isle of Man and Gibraltar, under The Isle of Man Bank trade name. » Other firms: RBS AA Holdings (UK) Limited, an investment holding company. As of December 2020, NWG's risk-weighted assets (RWA) were £170 billion, while the RWA of the group’s main entities were the following: NatWest Holdings Limited (the holding company of the ring-fenced banks) at £135.3 billion, NWM at £26 billion and RBSI at £7.5 billion. 3 15 July 2021 NatWest Group plc: Update following upgrade of senior unsecured rating to Baa1 This document has been prepared for the use of Gabriella Dispenza and is protected by law. It may not be copied, transferred or disseminated unless authorized under a contract with Moody's or otherwise authorized in writing by Moody's. MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS Exhibit 3 NWG is the holding company of the group NWG's simplified structure NatWest Group plc The Royal Bank of Scotland NatWest Holdings Limited NatWest Markets Plc RBS AA Holdings (UK) Limited International (Holdings) Limited National Westminster The Royal Bank of The Royal Bank of Scotland RBS Holdings N.V.
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