Katie Murray : So I think I’m not going to give you the margin. What I would say is that we expect it to behave the same way we described income, but we do have confidence in the income growth over the medium-term. We — I said earlier in the call that we’re kind of expecting the reinvestment levels to be about 310 basis points. I’d expect them to be a little bit lower in 2025 but not meaningfully, but then similarly, we’ve talked in the past around the 80 bps roll-off kind of becomes 50 bps. I’m not going to get into the pay fixed kind of debate, but I mentioned that earlier as well. That prices those numbers of piece a little bit. And that’s why we have confidence in the income growth over the medium-term, as we see those deposits stabilize.
Operator: Our last question comes from Jason Napier of UBS.
Jason Napier : Two, please. Paul, clearly a lot of focus from you on cost efficiency within the business. I wonder whether you might give us some more details perhaps on 2023 just in terms of expenditure on restructuring, the big moving parts and the performance that you’ve turned in last year. Just some of the feedback this morning is flat may be good enough for 1 year, but the organization in this kind of operating climate can’t hold close to that on a sustained basis. Perhaps you could talk about how you did — what you did last year and then how you feel around what run rate cost growth ought to be for NatWest going forward? And then secondly, perhaps for Katie as well as Paul, some conversations in the prepared remarks this morning about a more active stance on capital management, securitization and risk transfer and so on.
I don’t think there’s a change in the outlook for RWAs in 2025. And I think we’re still being told that it’s linear. Perhaps you could talk a little bit about what that does for NatWest? Presumably, in this year in particular, there’s a need to want to be able to do share buybacks in the market probably of the flowback and so on. If you can just talk about whether this active balance sheet management changes much in the very near term for the availability of excess capital.
Paul Thwaite : I’ll take costs, Katie. And then maybe come back to Basel 3.1 and RWA trajectory. So Jason, on costs, we’re only guiding for ’24, which is broadly stable. Within that we have restructuring costs built in, so then I guess it’s pretty easy to conclude that to stay broadly flat, we’re going to work pretty hard to mitigate the impacts of both wage inflation and general contract inflation. So we’re very focused on mitigating any cost increases. I’d like to take those costs in year, so no broader restructuring charge. So we’ve built in a higher level of restructuring charges in ’24 than we used in ’23, just to directionally give you a sense of that. Overall, I do see big opportunities in respect of bank-wide simplification within the bank.
You’ll have seen that in the slides. I think there’s a lot to do, a lot that we can do to make our bank easier for customers to do business with us but also improve productivity for our colleagues. I talked in October how I’d reshape the investment spend around some key projects to deliver more digitization and automation. That obviously plays through in terms of efficiency. We also have opportunities in terms of consolidation of some of our tech platforms as well. So we’re gripping cost as a management team. We want to take the charges in year. That’s what we’ve done in ’23. That’s what we’ll do in ’24. We are very focused on the glide path and mitigating any of the natural inflationary aspects that there are.
Katie Murray : Basel 3.1 and RWA. So I mean, Jason, you’re absolutely right. I would take the GBP 200 billion guidance we’ve given you to the end of 2025, as linear from here, remembering that it can be lumpy. You know in RWAs there’s many, many different moving parts. We’re very disciplined on how we allow the businesses to use it and then also how we then manage it as we go through. So we will look at things like SRTs, the origination of lending that we’ve got at the — at any point and just to make sure we’re getting the right return for those investment we’re making in our RWAs allocation. But if you go linear from here, you’ll get to the right place on in terms of the numbers, I think, as we roll through.
Operator: That concludes the Q&A section. I will now hand back to Paul for closing comments.
Paul Thwaite : Thank you, everybody. Thank you for joining. Katie, Howard and myself appreciate it. I hope you’ll agree we’ve laid out a good strong performance for 2023. I’m delighted to be confirmed in role today. And hopefully, you’ve got the sense I’m very focused on driving the performance and returns of NatWest, but before we sign off, I do also want to thank Howard for his commitment at NatWest and his invaluable contributions as Chair. I know this will be the last time you join the analyst call. I know many of you on the call know Howard very well and have spent a lot of time with him over the course of his tenure, so I guess I’ll take the liberty of thanking him on your behalf for that. And we’ll build on these strong foundations to deliver the very best we can for our customers and our shareholders moving forward. So have a good Friday, everybody. Thank you.
Operator: Thank you, Paul. That concludes today’s presentation. You may now disconnect.
