Income was £1,158 million in 2020, compared with £719 million in 2019, driven by increased levels of customer activity as the market reacted to the COVID-19 pandemic, although these levels eased in the second half of the year, and reflecting the impact of the consolidation of the full year results of NatWest Markets N.V. (NWM N.V.) following acquisition on 29 November 2019. In addition, income in 2019 was affected by challenging market conditions, particularly within Fixed Income due to elevated hedging costs caused by reduced liquidity and wider bid-offer spreads as the market experienced sustained curve flattening across global fixed income markets, most notably during Q3 2019.

Operating expenses of £1,431 million were higher compared with £997 million in 2019, largely as a result of increased litigation and conduct costs and strategic costs, and the non-repeat of reimbursement under indemnification agreements with third parties and other one-off cost recoveries in Central items & other during 2019.

Operating expenses for NatWest Markets segment, excluding litigation and conduct costs and strategic costs, of £1,106 million were £7 million higher than in 2019, reflecting the impact of the consolidation of the full year results of NWM N.V.; offset by cost reductions in the current year.

Litigation and conduct costs of £134 million in 2020 relate primarily to historical trading activities of a joint venture subsidiary.

Impairment losses were £42 million in 2020, compared with releases of £48 million in the prior year, largely due to the credit deterioration of an individual counterparty during the year, and the impact of expected credit losses recognised following the COVID-19 pandemic.

NWM Group's total assets and liabilities increased by £7.0 billion and £7.6 billion to £273.1 billion and £263.8 billion respectively at 31 December 2020, compared with the prior year. The increases primarily reflect higher derivative fair values, driven by downward shifts in interest rate yields and FX rate fluctuation across major currencies during the year.

NWM Plc issued £2.5 billion of term senior unsecured debt securities in benchmark and private placement formats during 2020, lower than the initial guidance of £3-5 billion due to ongoing risk reduction following the strategic announcements made in 2020.

Total NWM Plc RWAs reduced to £25.6 billion at 31 December 2020 from £35.2 billion at 31 December 2019 reflecting lower levels of credit, counterparty credit and market risk which have trended downwards as the business seeks to reduce RWAs through the execution of capital optimisation actions, including strategic risk reduction transactions and exit activity.

On 18th February 2021, the NWM Plc Board approved an interim dividend of £500 million, to be declared and payable to NatWest Group plc on 19 February 2021. There has been no adjustment to the year-end statutory financial statements, however a £500 million foreseeable dividend deduction has been applied to the year-end regulatory capital position.

NWM Plc's Common Equity Tier 1 (CET1) ratio increased to 21.7% from 17.3% at 31 December 2019, primarily reflecting reserve movements in the year, the reduction in RWAs and the impact of the foreseeable dividend deduction to regulatory capital. The CRR leverage ratio increased to 5.2% (2019 – 5.1%).

The total regulatory capital and CRR-compliant MREL for NWM Plc at 31 December 2020 was £12.7 billion, or 49.6% of RWAs.

Throughout 2020, NWM Group has made progress on the new strategy announced in February 2020, creating greater alignment with NatWest Group customers as well as refining products and services offered.

The front office operating model was reorganised to focus on NatWest Group's customers, and some customer facing roles were transferred to NatWest Holdings Limited. A Capital Management Unit was established in Q3 2020 to safely manage the capital reduction and optimisation.

As part of the transformation programme, some support functions including Risk and Treasury were transferred from NWM Group to NatWest Holdings Limited. Following transfer, the services performed by these functions are provided to NWM Group by way of intra-group agreements. NWM Plc's Board has approved key performance indicators by which to monitor delivery of the outsourced services for Risk and Treasury activity, which will be reported to NWM Plc Board at regular intervals in order to ensure proper oversight of service levels.

Robust business continuity plans ensured that NWM Group was able to continue to support customers and protect employees, with the vast majority of the workforce working remotely since the onset of the pandemic in Q1 2020. In line with guidance from public health authorities in the various regions where NWM Group operates, a small proportion of employees have returned to the workplace, primarily those in regulated roles and key oversight functions.