That’s the — our part of the RoTE equation clearly. Now it also happens as you’ve seen in Q2 and H1, some of that return improvement has been offset by below-the-line volatility, which means that the share of the — our component in improving the RoTE guidance has been somewhat dampened by that volatility component. The TNAV meanwhile, as we’ve just discussed, has gone down a fraction over the half, 3.9 pence in the quarter and that contributes to the RoTE improvement. So Jonathan, the short answer to your question is that both returns and TNAV reduction have contributed to our guidance of in excess of 14% RoTE for this year. But on balance, it’s probably a little bit more of the TNAV reduction versus the earnings enhancement because of that volatility point that I just mentioned.
Final point I’ll make, Jonathan, is that, these TNAV changes that we’re talking about, they should unwind and they will unwind for two main reasons. One is because, as you know, the rate projections that we have suggested at some point, a little further out than we thought in Q1, but rates are going to come down. That’s going to unwind the TNAV effect. The second is as the structural hedge matures, you’re going to see a lot of those balances repriced from 1.2%, which is roughly what they are right now to something like the 4% to 5% rate environment that we’re seeing. And as those structural hedges mature, again, GBP20 billion second half, GBP40 billion next half, sorry, next year, that is going to rebuild the TNAV. So there’s a pretty automatic unwinding process play there.
It’s just that it’s hard to predict exactly what happens in any given quarter in a period of interest rate volatility.
Jonathan Pierce: Very comprehensive. Thank a lot, William.
William Chalmers: Thank you, Jonathan.
Operator: Thank you very much. Our next question is from Aman Rakkar from Barclays Capital. Your line is unmuted. Please go ahead.
Aman Rakkar: Hi. Good morning, Charlie. Good morning, William. Thanks very much for taking the questions. And I wanted to, sorry, I want to labor the questioning around the hedge. Can you just clarify what — I think something has gone on with the size of the hedge maturity profile in Q2 and H2? I think as of Q1, you talked about GBP35 billion of maturities and forgive me if I’m wrong, but I thought the best part of GBP30 billion was coming in H2. But obviously, now that looks like it’s more like GBP20 billion that’s coming in H2. So it seems like there’s some trading of the structural hedge that may have taken place in Q2. So could you clarify if that’s kind of the correct reading of the situation, because presumably, you’ve kind of pulled forward some of the benefit of the hedge maturity gains in — and this year’s NIM.
And I guess as a related question, I’m just thinking about the tailwind of the structural hedge in 2024. So I think you talked about GBP800 million in 2023 and a similar number in 2024. That to me sounds quite low given the maturity profile that you’re calling out, GBP20 billion run rate into next year, the GBP40 billion that you’re calling out, I would have thought that, that hedge tailwind could be 50% higher than that GBP800 million that you’re kind of calling out. So can you help us to kind of understand what’s going on there? And I guess, just to close this off, I feel like your structural hedge is a really, really important driver of your medium-term earnings and longer term earnings. You’re clearly going through a period of adjustment around net interest income right now.
