Company Registered Number: 25766 ULSTER BANK IRELAND DESIGNATED ACTIVITY COMPANY ANNUAL REPORT AND ACCOUNTS 31 December 2020 Contents Page Board of directors and secretary 1 Report of the directors 2 Statement of directors’ responsibilities 12 Independent auditor’s report to the members of Ulster Bank Ireland Designated Activity Company 13 Consolidated income statement for the financial year ended 31 December 2020 22 Consolidated statement of comprehensive income for the financial year ended 31 December 2020 22 Balance sheet as at 31 December 2020 23 Statement of changes in equity for the financial year ended 31 December 2020 24 Cash flow statement for the financial year ended 31 December 2020 25 Notes to the accounts 26 Ulster Bank Ireland DAC Annual Report and Accounts 2020 Board of directors and secretary Chairman Martin Murphy Executive directors Jane Howard Chief Executive Officer Paul Stanley Chief Financial Officer and Deputy CEO Independent non-executive directors Dermot Browne Rosemary Quinlan Gervaise Slowey Board changes in 2020 Helen Grimshaw (non-executive director) resigned on 15 January 2020 Des O’Shea (Chairman) resigned on 31 July 2020 Ruairí O’Flynn (Chairman) appointed on 16 September 2020 - resigned on 9 November 2020 William Holmes (non-executive director) resigned on 30 September 2020 Martin Murphy appointed as chairman on 12 November 2020 Company Secretary Andrew Nicholson resigned on 14 August 2020 Colin Kelly appointed on 14 August 2020 Auditors Ernst & Young Chartered Accountants and Statutory Auditor Ernst & Young Building Harcourt Centre Harcourt Street Dublin 2 D02 YA40 Registered office and Head office Ulster Bank Group Centre George’s Quay Dublin 2 D02 VR98 Ulster Bank Ireland Designated Activity Company Registered in Republic of Ireland No. 25766 1 Ulster Bank Ireland DAC Annual Report and Accounts 2020 Report of the directors Presentation of information The consequences of the phased withdrawal strategy for the Ulster Bank Ireland Designated Activity Company (‘UBIDAC’ or Group’s Personal Banking and Commercial Banking the ‘Bank’) is a wholly-owned subsidiary of NatWest Holdings businesses remain materially uncertain. The Group will Limited (‘NatWest Holdings’). The ultimate holding company is continue to operate and write new Commercial Banking and NatWest Group plc (‘NWG’ or the ‘ultimate holding company’). Personal Banking business following the non-binding MOU The ‘Group’ or ‘UBIDAC Group’ comprises UBIDAC and its announced. subsidiary and associated undertakings. ‘NatWest Group’ comprises the ultimate holding company and its subsidiary and During the year the Group was, in common with the wider Irish associated undertakings. economy, significantly impacted by the circumstances arising as a result of COVID-19. The outbreak of the virus and The Bank publishes its financial statements in euros (‘€’ or implementation of associated containment measures resulted 'Euro'). The abbreviation ‘€bn’ represents billions of euros, the in a sudden and severe economic impact. abbreviation ‘€m’ represents millions of euros and the abbreviation ‘€k’ represents thousands of euros. The The Group reacted quickly to support its customers and abbreviation ‘£’ represents ‘pounds sterling’. colleagues and has continued to adapt to the unprecedented challenges, ensuring it remains a safe and sustainable bank. The directors of UBIDAC present their report, together with audited financial statements of the Group for the financial year This support for customers has included providing almost ended 31 December 2020. The financial statements are 18,000 payment breaks, waiving early closure charges on prepared in accordance with International Financial Reporting fixed savings accounts, providing additional liquidity and fee Standards (‘IFRS’), as adopted by the European Union (EU). free facilities to business customers, launching a dedicated phoneline and branch opening hours for frontline workers and Principal activities vulnerable customers, creating a companion card for The Bank, operating under the Ulster Bank and Lombard vulnerable customers and their trusted carers and introducing brands, provides a comprehensive range of financial services a €500 million Working Capital support fund for SMEs across through its Personal Banking and Commercial Banking Ireland. divisions. Personal Banking provides loan and deposit products and other services through the Group’s network of The focus on colleague wellbeing became even more critical in branches and direct channels, including mobile, internet and 2020. Over 2,000 colleagues began to work from home on a telephony. Commercial Banking provides services to business full-time basis, whilst the Bank’s cash centre and branch staff and corporate customers, including small and medium continued to serve customers under extremely challenging enterprises (SME). The Bank is regulated by the Central Bank circumstances. The Group provided support to colleagues in a of Ireland (CBI) and the Joint Supervisory Team (JST) as part variety of ways, including access to mental health and financial of the EU Single Supervisory Mechanism (SSM). wellbeing resources, ensuring colleagues could continue to safely and securely serve customers. Business review NatWest Group has announced its intention to begin a phased The Group recognises the urgent need to address the threat of withdrawal from the Republic of Ireland (ROI) after undertaking climate change and the vital role it plays as an organisation in a strategic review of the Group’s business in ROI and shaping the future of the communities in which we live. In concluding that Ulster Bank’s business in ROI will not be in a September the Bank launched its “Sustainability Hub”, position to achieve an acceptable level of sustainable returns providing information on its commitments under the Group’s over its planning horizon. Climate Strategy, as part of its ambition to become a leading bank in addressing climate change. NatWest Group plc and the Bank have entered into a non- binding Memorandum of Understanding (‘MOU’) with AIB The Group continues to assess the potential impact of Brexit Group plc for the sale of c. €4 billion of the Group’s performing on business activity and loan performance, following the commercial loan book. implementation of the EU-UK Trade and Cooperation Agreement (‘TCA’) on 1 January 2021. Operational readiness NatWest Group plc is also in very early discussions with was delivered under the Bank’s Brexit programme and we Permanent TSB Group Holdings p.l.c., among other strategic continue to focus on actively supporting our customers in the banking counterparties, about their potential interest in buying post transition arrangements. certain retail and micro-SME assets, liabilities and operations. These discussions may or may not result in agreement. The The customer remediation of legacy issues including the preference is to focus discussions with counterparties who can tracker mortgage examination is largely complete, with provide customers with full banking services in the Irish outstanding activity on track to be brought to a conclusion for market. our customers. The Group continued to make good progress in delivering on the European Central Bank (ECB) requirement The phased withdrawal strategy from ROI will be overseen by for banks to reduce their non-performing loan ratios. The non- the Group’s Board while maintaining a strong culture performing loan ratio reduced from 9.7% at 31 December 2019 throughout, supporting all the Group’s customers and to 5.7% at 31 December 2020. This reduction was due to both colleagues and ensuring engagement with all stakeholders. the sale of non-performing loans and helping customers move to sustainable repayment solutions. 2 Ulster Bank Ireland DAC Annual Report and Accounts 2020 Report of the directors Personal Banking generated new mortgage lending of €1 The Bank is committed to keeping customers’ finances secure billion in the financial year, in unprecedented economic and protecting them from falling victim to fraud remains a top conditions and market uncertainty. A key component of this priority. The Bank met a significant increase in online success, given the impact of COVID-19, was the end-to-end transactions in 2020 as a result of COVID-19 with new digital journey available via the Home Buying Platform, strategic approaches to fraud awareness and prevention. The enabling mortgage applicants to complete their application Bank’s fraud prevention strategy, typically delivered to from the comfort and safety of their own home. customers and the wider community by frontline staff, including community bankers and the Bank’s Community Protection In November, the Group further enhanced the portal’s Advisor, was impacted by COVID-19. However, the strategy functionality with the integration of HooYu. This customer was enhanced through several fraud awareness radio verification technology enables applicants to have their campaigns, live events hosted on the Bank’s social media identities verified in as little as 15 minutes, reducing the overall channels, dedicated webpages and provision of free malware customer journey by up to five days. protection to eligible customers. In October, as part of its Climate Strategy, the Group Commercial Banking supported new and existing customers launched its new “Green Mortgage. The mortgage is aimed at with their investment plans and working capital requirements customers buying a home with a B2 (or higher) Building throughout 2020, lending €1 billion