Operator: Good morning, and welcome to NatWest Group's Q3 2026 Results Management Presentation. Today's presentation will be hosted by CEO Paul Thwaite and CFO Katie Murray. After the presentation, we will take questions.
Paul Thwaite: Morning, and thank you for joining us today. I will start with a short introduction. Katie will take you through our Q3 financial performance, and then we will open up for questions. As I said at the H1, we are building a diversified business that benefits from structural growth drivers so that we can deliver strong returns on a sustainable basis. Our track record demonstrates the success of our strategy, with three clear priorities driving our performance. First, disciplined growth. Our three businesses are working in collaboration to drive sustained momentum across the group. This marks the eighth consecutive year in which we expect to deliver growth in customer assets and liabilities of more than 4%. Second, we continue to increase our operating leverage through simplification. This gives us a significant competitive advantage as the most efficient large bank in the UK.
Paul Thwaite: Third, as we actively manage capital and risk, we expect to generate more than 200 basis points of capital for the third year running in 2026. This gives us the flexibility to continue to invest in our business, support customers, and deliver attractive returns to shareholders. In short, by driving disciplined growth, leveraging simplification, and actively managing capital and risk, we are delivering industry-leading returns, with an average return on tangible equity of more than 17% over the past four years. Our Q3 continued this strong momentum, so let me turn to the headlines. Customer assets and liabilities grew 14.2%, well above our target of more than 4%. Within this, customer lending grew 7.7%. This growth was disciplined and broad-based across all three of our businesses, with a strong performance in Commercial and Institutional, driven by infrastructure, renewables, housing, and technology.
Paul Thwaite: Growth in Retail and Private Banking was driven mainly by mortgage lending, which increased 4% or GBP 8.3 billion, as we grew our stock share from 12.5% to 12.7% over the first nine months. Customer deposits grew 4.3% in a competitive market. This reflects further growth in current accounts, as well as operational balances that bring strong relationship and liquidity value. In Retail Banking, we are delivering on our strategy of growing savings with the launch of new easy access products and channels. There was also good growth from mid to large corporates. Assets under management and administration more than doubled to GBP 132 billion, supported by our acquisition of Evelyn Partners. This includes new flows of GBP 1 billion since the deal completed at the end of June, with positive flows in both businesses. We are excited about the growth opportunity that Evelyn Partners represents for the group.
Paul Thwaite: The integration is on track, and we look forward to providing further insight into Private Banking and Wealth Management at our spotlight in November. We continued to increase operating leverage, with income growth of 9.3%, well ahead of cost growth of 4.8%, and with a cost income ratio of 45.7%, down 2.1 percentage points as we move towards our 2028 target. Continued growth, strong operating leverage, and a low cost of risk have resulted in earnings per share of 57.4 pence, up 13.2%, and a 9.4% uplift in TNAP per share, excluding Evelyn Partners. We generated high levels of capital at 208 basis points. Our balance sheet is strong, with a capital ratio of 13.5%, and our return on tangible equity remains industry-leading at 20.2%. With that, I would like to hand over to Katie to take you through the results.
Katie Murray: Thank you, Paul. I will cover the Q3 using the Q2 as a comparator. Our Q3 performance was driven by broad-based growth, driving sustained income momentum and continued high returns. Income, excluding notable items, increased 3.1% to GBP 4.6 billion, and total operating costs grew 2.8% to GBP 2.1 billion, with the cost-income ratio improving further to 45.1%. The impairment charge was GBP 277 million, equivalent to 24 basis points of loans. This resulted in operating profit of GBP 2.2 billion. Profit attributable to ordinary shareholders was GBP 1.5 billion, and we delivered a return on tangible equity of 21.6%. Turning now to income. Income, excluding notable items, grew 3.1% to GBP 4.6 billion as a result of growth in customer assets and liabilities, or CAL, higher non-interest income from the inclusion of Evelyn Partners, and an extra day in the quarter.
Katie Murray: Net interest margin was broadly stable at 250 basis points, in line with our expectations, as deposit margin expansion was offset by ongoing mortgage repricing, lending mix, and our regular annual review of customer repayment habits. Non-interest income grew 7.9%, or GBP 75 million, supported by the inclusion of Evelyn Partners and a gain on the sale of our SME consultancy business, Mentor. This was partly offset by the non-repeat of accelerated insurance income in Retail Banking in the Q2. We now expect the Bank of England base rate to increase to 4% in the Q4. As you are aware, given the lateness in the year, the resulting benefit in 2026 will be modest, and we continue to expect full-year income, excluding notable items, of around GBP 17.9 billion. Turning now to CAL. We continue to deliver a strong performance across our three businesses.
Katie Murray: CAL increased by GBP 15.7 billion in the quarter, or 1.6%. This comprises GBP 8.1 billion of broad-based customer lending growth, GBP 5.8 billion of customer deposit growth, and a GBP 1.8 billion increase in assets under management and administration. I will touch on each of these elements in turn. Strong loan growth of GBP 8.1 billion was broad-based. Retail Banking and Private Banking and Wealth Management balances grew GBP 1.5 billion, or 0.6%. This included GBP 1.1 billion in mortgages and GBP 300 million in unsecured lending. Our mortgage stock share remained stable in the quarter at 12.7%. Commercial and Institutional grew fastest at 4%, or GBP 6.6 billion. This was driven by Corporate and Institutions, where higher infrastructure and renewables lending were supported by structural growth trends such as digitization and decarbonization. There was also healthy demand in Commercial Mid-Market from sectors such as commercial real estate, manufacturing, and social housing. Turning now to deposits.
Katie Murray: Customer deposits growth of GBP 5.8 billion was well-balanced across both personal and corporate customers. Retail Banking deposits grew GBP 3.1 billion as we attracted savings from the launch of new products and channels. There was continued modest sequential growth in current accounts. In Commercial and Institutional, deposits increased by GBP 3 billion, with growth across both Commercial Mid-Market and large corporates. Our deposit mix remains broadly stable, with a slight increase in term deposits, now representing around 19% of the total. Turning now to assets under management. Assets under management and administration closed the quarter at GBP 132.4 billion, an increase of GBP 1.8 billion. This includes net inflows to assets under management of GBP 1 billion, assets under administration net flows of GBP 0.4 billion, and positive market performance of GBP 0.4 billion. The net inflows of GBP 1 billion are equivalent to 3.4% of opening AUM on an annualized basis, and were positive in both businesses.
Katie Murray: Turning now to costs. We are pleased with further improvement in operating leverage in the quarter, as we grew income faster than costs. Other operating expenses of GBP 2.1 billion take the total for the first 9 months to GBP 6.2 billion. We delivered GBP 420 million of gross cost savings year on year, giving us the capacity to continue investing in the business. These savings partly offset increased investment spend, the inclusion of Evelyn Partners, and higher people-related expenses, including our annual pay award. As you heard from Paul, our cost-income ratio reduced by 2.1 percentage points to 45.7%. We continue to expect around GBP 300 million of costs from the Evelyn Partners acquisition this year, and have incurred GBP 156 million to date. Overall, we continue to expect other operating expenses of around GBP 8.5 billion for the full year. Turning now to impairments.
Katie Murray: Customers continue to demonstrate resilience, and our credit performance remains strong. Our growth is being delivered with a consistent risk appetite, supporting a structurally low loan impairment rate. The impairment charge for the quarter was GBP 277 million, equivalent to 24 basis points of loans on an annualized basis. This brings the charge for the first 9 months to 21 basis points, in line with our full-year guidance of below 25 basis points. The increase relative to the Q2 was driven by the non-repeat of releases in the retail portfolios. We carry economic uncertainty post-model adjustments of GBP 288 million, with total PMAs of GBP 315 million. Turning now to capital. Our disciplined approach to capital allocation supports strong and sustainable capital generation going forward. We ended the Q3 with a Common Equity Tier 1 ratio of 14.7% before distributions.
Katie Murray: 142 basis points of capital was invested in our acquisition of Evelyn Partners. As you know, this is a highly capital-generative business, and we generated 288 basis points through strong earnings, which was boosted by 47 basis points from RWA management. Our ongoing investment spend consumed 30 basis points, and organic lending growth absorbed 96 basis points. We are reporting a CET1 ratio of 13.5% after accruing 50% of attributable profit towards the final ordinary dividend. We continue to expect capital generation before distributions and the impact of Evelyn Partners of more than 240 basis points in 2026. We ended the quarter with 200 billion of risk-weighted assets, including some positive CRD IV model updates in our retail portfolios. Turning now to our CET1 requirements. As you know, we continue to target a CET1 ratio of around 13%.
Katie Murray: We can confirm today that our Pillar 2A requirements will be reduced by 76 basis points as of 1 January, including Basel III.1 offsets. 43 basis points of this relates to our CET1 requirements, taking our supervisory minimum from 11.6% to 11.1%. This was expected, and we took it into account when we changed our CET1 target to around 13%. Our total capital and CET1 ratios both remain strong and comfortably above minimum requirements. Turning now to guidance. Our 2026 guidance remains unchanged, with one enhancement. We now expect risk-weighted assets of around 210 billion as at 1 January 2027. This takes into account Basel III.1 and CRD IV impacts, as well as other movements such as anticipated growth and operational risk in the Q4. We will continue to operate with a CET1 ratio of around 13%.
Katie Murray: As we told you in July, we expect to announce our next buyback with our full-year results in February. With that, we will now open for questions.
Operator: If you would like to ask a question today, you may do so using the raise hand function on the Zoom app. If you are dialing in by phone, you can press star nine to raise your hand and star six to unmute once prompted. We ask that questions are limited to two per person to allow an opportunity for more people to ask questions. We are going to pause for a moment to give everyone an opportunity to signal for questions. Our first question today is going to come from Alvaro of Morgan Stanley. Alvaro, if you would like to unmute and ask your question.
Katie Murray: Hey, Alvaro.
Paul Thwaite: Good morning, Alvaro.
Alvaro Serrano: Good morning. Hopefully you can hear me okay.
Paul Thwaite: Clear. We can hear you clear.
Alvaro Serrano: Thanks for taking my question. The first question is on sort of on, it is kind of the NII, but obviously, I know you are not going to give guidance for 2027, but the volume growth, lending growth continues very strong. I assume that you expect that to continue. I am more thinking about the funding of that loan growth, and as you see it evolving going forward, deposit competition and deposit growth, and how much of that strong loan growth is actually going to feed into extra NII growth? Because when I think about the structural hedge, this obviously is a lot of tailwinds, but I wonder if the competitive dynamics of funding that loan growth will sort of hold back NII growth as we think about the NII going forward.
Alvaro Serrano: So maybe some color, if you do not give us guidance, some color as to what to expect from those moving parts in terms of competitive pressures eating up the hedge upside. Then on capital, I note your comments, Katie, on the 13% was taking already into account the reduction of Pillar 2A, but there is obviously the buffers are being reviewed, making them more flexible, encouraging the banks to use less management buffer. Have you taken that into account, or could that give you an extra visibility, sorry, flexibility next year when they have firmed up, the proposal firmed up? Thank you.
Paul Thwaite: Thanks, Alvaro. Okay, Katie.
Katie Murray: Perfect. Thanks. Morning, Alvaro. Good to hear from you. Let me Quite a lot in that two questions there, so I will kind of take you through a few different bits. First of all, if we look at income in 2027, it will remain on track to deliver income ex-notables of around GBP 17.9 billion in 2026. So that is an increase of over 9% year on year. Alvaro, you are absolutely right. I am not going to give you specific 2027 income guidance today, but I can share how we are thinking about the drivers, several of which I think you have got correct in your head as well. First, we are confident that we will continue to deliver strong customer balance growth in line with our greater than 4% CAL growth.
Katie Murray: And on that CAL growth, we know that it supports both NII and non-interest income growth, including the AUMA income from our large and growing PBWM business. Secondly, we continue to expect income from the structural hedge to be more than GBP 1 billion higher in 2027 versus 2026. That will contribute over GBP 7 billion into the income line. We have a high degree of confidence on that outcome, given that already three quarters of that hedge has been locked in, and the higher reinvestment yields in 2026 have underpinned that confidence. Finally, our current expectations of the mix of balance sheet growth across loans, deposits, and wholesale funding does mean that margin continues to be broadly stable through 2027. We do not assume any further changes in the bank rate during the year.
Katie Murray: We are expecting it to remain at 4% throughout 2027, and that five-year swap rate to moderate to a 4% average for 2027 as well. You can be confident in the ongoing income growth in 2027 and beyond, driven by balance sheet growth, the strength of the hedge, and obviously, we will be talking in February, and we will talk more about where we might land in terms of the actual numbers. If I then kind of jump onto funding and liquidity, look, we are pleased with what we have delivered in terms of the really strong broad-based loan growth in Q3. You can see the balances were up 2% or GBP 8 billion over the quarter, and 6.4% year to date. We also saw strong deposit growth at 1.3%, and you can see that ourselves, like the rest of the industry, we are seeing that lending growth is outpacing that deposit growth.
Katie Murray: To date, we have utilized our surplus deposit liquidity with minimal wholesale funding issuance to meet customer demands, with a loans-to-deposit ratio of 90% at the end of the quarter. We benefit from a strong liquidity position, high-quality deposit franchises, with the flexibility to access diverse funding sources across deposits and wholesale funding markets as well. What we are really seeking to do there is to manage both the lifetime value of our customers and also their liquidity value. You are really working me hard this morning, Albert, I must say, for your two questions. If I jump onto capital and where we are there, look, we did announce today our Pillar 2A requirement will be reduced by 43 bps on 1 January, including the Basel III.1 offset. So, that takes our supervisory minimum from 11.6% to 11.1%.
Katie Murray: This was expected, and we took it into account when we changed our CET1 target to around 13%. What I would say, it is one part of the regulatory change, a step in the right direction. We do await the next capital update in the Financial Stability Report on 26 November 2026. We continue to engage very constructively with the PRA on the case for reducing overlap for domestic exposures. So, I would say let us see what is announced, and then we will take stock.
Paul Thwaite: Great.
Katie Murray: Thanks, Albert.
Paul Thwaite: Thank you, Katie. Thanks, Eleanor.
Operator: Our next question comes from Chris Cant of Autonomous. Chris, if you would like to unmute and ask your question.
Katie Murray: Hey, Chris.
Paul Thwaite: Hey, Chris. Chris, are you there?
Operator: Cannot currently hear you, Chris.
Katie Murray: Trouble with his buttons this morning.
Operator: We are going to move on and come back to Chris in a moment. We are going to go on to Benjamin Toms of RBC. Benjamin, if you would like to unmute and ask your question.
Paul Thwaite: Hey, Ben.
Katie Murray: Hey, Ben.
Benjamin Toms: Hey, morning. Thank you very much for taking my questions. I just want to pick up actually on something you just said about stable NIM going into 2027. Can I just clarify that stable versus the Q4 exit rate, whatever that might be? Secondly, there is one-off gain in your other income. I do not think you class that as a notable item. Can you just help us quantify that to help with our run rate modeling? Mortgages continue to grow strongly in the quarter. What do you expect from mortgage growth from here? I mean, you have Your First Home coming in the spring. Do you think that could lead to a loan demand over the next 6 months for first-time buyers making up 25% of volumes? Thank you.
Paul Thwaite: Okay. Shall we go? Yeah.
Katie Murray: Shall I jump in, Paul?
Paul Thwaite: Yeah. NIM, other income, and then mortgages. Yeah.
Katie Murray: Yeah, perfect. If I look at NIM, the simple answer is yes, I am thinking sequentially. We said we expect NIM flatter in H2, and so really those drivers are continuing into 2027. As I think of the drivers, Ben, there are three things we think about. Lending margins, we continue to expect growth weighted towards lower risk, lower margin, attractive returns lending business, and for the front and back book mortgage margins to align by the end of 2026. On deposit margins, we see expansion driven by the ongoing tailwind of the structural hedge, with over another GBP 1 billion of higher hedge income in 2027 than 2026. It is going to obviously be a little bit offset by mix. Funding another, that is going to be impacted in terms of the increased wholesale funding.
Katie Murray: On interest rates, in my last answer, I said 4% for the year, holding stable as we go out, and that five-year swap rate moderating to that 4% as well. Let us see how that goes. I do think we need to think a little bit about what that means for customer sentiment and credit demand, but we are really comfortable in terms of growth. That together brings us to the broadly flat that we have talked about. In terms of the one-off in terms of income, it was the sale of our Mentor business. It is a small SME consultancy business, and it is in the tens of millions, that gain. If I then jump over onto mortgages, it has been another good quarter of mortgage growth.
Katie Murray: Balance is up GBP 1.1 billion or half a percent in Q3, or that is 3.9% up for the whole year at GBP 8.3 billion for the first 9 months. Our market share has remained stable in the quarter at 12.7%. That is up 12.5% from the start of the year. It is our ninth consecutive quarter of net mortgage growth. We have got a healthy pipeline into Q4. When we look at the market level, we can see that Q3 applications were 9% higher than Q2. You have got modest declines happening in house purchase numbers, and you have also seen that in the Bank of England data. But that has been offset by higher remortgage activity, especially during the period of rate volatility that we saw in September. As you know, we remain very dynamic and disciplined in our pricing throughout the period.
Katie Murray: The book margin continues to be impacted by the roll-off of the higher margin five-year fixed mortgages, as well as the behavioral life adjustment that you saw come through in income as well. I advised you previously that we expect to settle at around 60 basis points for the year. No change in that guidance as we move forward from here. If we look forward, mortgage rates remain materially above 5%. There might be a little bit of a drag on house purchase lending with a bit of a mix shift towards remortgages. I think we will see what the government's new Your First Home scheme, which was announced in the budget this week. We think it will be supportive overall. While the impact will be modest for the market overall, we are positive about it.
Katie Murray: I would say overall, we are really pleased with mortgages and the continuing growth that we are seeing in this area. We expect it to continue to grow, of course, at appropriate rates of return for us. Thanks very much, Ben.
Paul Thwaite: Thank you, Katie. Thanks, Ben.
Operator: We are going to come back to Chris Cant of Autonomous. If you would like to unmute and ask your question.
Katie Murray: Hey, Chris.
Chris Cant: Hello. Can you hear me?
Paul Thwaite: Yeah. Second time lucky, we got you.
Chris Cant: Okay.
Katie Murray: Okay, thank you.
Chris Cant: I seem to now have three separate toggles between browser, headset, and the button on the website to play around with, so I apologize.
Katie Murray: Almost as complex.
Paul Thwaite: Too much information, Chris.
Katie Murray: Yeah, too much information.
Chris Cant: Could I just come back on the capital?
Paul Thwaite: Sure.
Chris Cant: On rates, looking into next year, please. In terms of thinking about the capital target, obviously, we knew Pillar 2 was going to come down a bit better than I expected, but ballpark. O-SII releasability is obviously a new development during the course of this year. So, if you didn't get any further reduction in MDA, but the Bank of England does follow through, are you going to respond there in terms of the targeted level of management buffer? I mean, they're doing that to try to encourage banks to run with smaller buffers. It's quite a material change in terms of your MDA being 3% flexible under severe stress. So, if you could comment on how you're thinking about that. That presumably wasn't factored in when you set the 13.
Chris Cant: On international competitiveness, which is something the Chancellor called out in his letter to the FPC this week, is there anything on your shopping list there beyond domestic overlaps? I know the Bank of England talked about that last year, but it felt like maybe there's something broader going on. So, is there anything you think that is particularly penal in the UK framework? The final thing is on rate sensitivity looking into next year. I understand you've given us your rates assumptions. Quite a few European banks broadly this quarter are talking about deposit competition all of a sudden. I can't help but think that maybe partly this is about management teams trying to discourage analysts from taking stated rate sensitivities and truing up previous guidance.
Chris Cant: So, in terms of your own rate sensitivity looking into next year, you are planning based on flat NIM, 4% rates, 4% swap rates. That is not where rates markets are. Do you still believe the sensitivity disclosures you give us? If the rates outcome is different, is that still a reasonable basis for us to be thinking about adjusting your spreadsheet when we model our own spreadsheets? Thank you.
Paul Thwaite: Okay. So, Katie, do you want to go with the narrower question on capital, and I will talk a little bit about international competitiveness, and then, right, you go for rates. Does that work?
Katie Murray: Shall I do capital and rates together and then pass back to you? Perfect. Let me kick off on capital. Perfect. So, if we look at capital, it is a relatively simpler sort of answer. The buffer usability is relevant in systemic stress rather than idiosyncratic stress, and we obviously manage for both. So, for us, the most important is that it has fallen to 11.1%, reflecting our strong and leading performance in the UK bank stress test that we saw last year. We are looking to see what the FSR comes out with next month, and then we will take stock at that point.
Paul Thwaite: So, we
Katie Murray: Yeah, perfect. Yeah.
Paul Thwaite: Chris, on the broader question around, I guess, international competitiveness around the framework, four things I would quickly call out where we think there are opportunities to calibrate the framework in a better way. First would be the countercyclical capital buffer, so bring us more in line with some of the other regulatory jurisdictions. I think that would be a simple and fast way to deliver capital relief. It also maintains the wider macro flexibility as well. That is the first one. Second opportunity would be, there is a cumulative capitalization of UK domestic risk. If you think about the interaction between the countercyclical buffer, the O-SII, and the Pillar 2A, the geographic aspect of that can mean that very similar risks are captured in different parts of the framework.
Paul Thwaite: We think that is worth looking at to make sure it is proportionate and is not disproportionate vis-à-vis the domestic risk. Then you have, I would say, third piece is making sure the risk weights are commensurate with the underlying risk. UK mortgages are a very obvious example. Very historical low loss experience, and we need to make sure the levels of capital there generally reflect the risk and are proportionate. So, there are different things to look at in that third piece. Then fourth and final, the output floors. The output floors inevitably reduce some of the risk sensitivity of the framework, but as other jurisdictions review their approach, we need to make sure the UK keeps its implementation under review as well, so we do not see regulatory drift or dissonance.
Paul Thwaite: So, they are the four things that, from a framework perspective, we think offer opportunities, and they are about competitiveness, but they are also in part about resilience as well. So, making sure we get the right calibrated framework, which ultimately obviously helps more lending get into the UK economy and, I guess, the wider challenge of growth and returns. Katie, back to you on rates.
Katie Murray: Great. Perfect. Sure. Thanks very much. Chris, as we look at it, obviously, we are comfortable with the sensitivity we give you. It is a point-in-time sensitivity. I think there are other things you need to think about when you are looking about implications for customer behavior in response to higher rates, such as sentiment and lending demand. While accepting we are confident on loan growth within there as well, we are encouraged by what we see in terms of that lending demand as we go through. We have guided you to 4% for next year, and the swap rate kind of moderating over the year. I would sort of say, as we looked at, we have been reinvesting our product hedge during 2026 at 4.2%, so a little bit higher than that. You know what markets are doing at the moment.
Katie Murray: It is kind of difficult to give a number of any specific point. You can take your own kind of view on that, but you have got the right tools within which to do that.
Paul Thwaite: Good. Thank you, Katie, and thank you, Chris.
Operator: Next, we are going to go to Benjamin and Cavan Roberts of Goldman Sachs International. Benjamin, if you would like to ask your question.
Katie Murray: Hey, Ben.
Benjamin Caven-Roberts: Morning, both.
Paul Thwaite: Hey, Ben.
Benjamin Caven-Roberts: Thanks very much for the presentation and for taking the questions. Firstly, just a follow-up on some of the helpful NII comments you gave earlier, Katie. If we zoom out and think about income overall, are there any comments you could give on how you think about the pace of income growth changing in 2027 versus 2026? As you say, you have been posting solid volume growth, but mentioned stability in the margins as one of the factors to bear in mind there as well, at least on the NII component. Secondly, just on asset quality, are there any comments you could give around the key moving parts you are seeing under the hood of the business, the impact from higher rates, which bits of the portfolio are more or less resilient right now? Thank you very much.
Paul Thwaite: Great.
Katie Murray: Sure. Let me, shall I start off with the asset quality
Paul Thwaite: Yeah
Katie Murray: and then I'll
Paul Thwaite: Okay
Katie Murray: come back to you on the pace of income. As I look at the asset quality piece, I think, Ben, you are familiar with our book. We remain pleased with the quality of our diversified prime loan book. There are no significant areas of stress that we see around the three businesses. The impairment charge for the quarter, GBP 277 million, up from GBP 140 million in Q2. That is really a question of non-repeating releases that happened in Q2, and so actually we see it as a more normalized charge, and that is where we get to the 21 basis points for the nine months, so well within our guidance as we move forward from there. There were slightly higher stage 3 charges in Q3, but not anything that I would highlight that I am overall worried about. Total PMAs are stable in that quarter as well.
Katie Murray: Small increase in economic uncertainty, but like GBP 4 million, really not really that relevant. We remain confident about our impairment outlook for the remainder of the year. Then probably also guide you, we still have that guidance out with you, there are 20 to 30 basis points on impairment through the cycle, and we see us very much operating within there. If I look at the pace of income growth, I have already spoken about how we think 2027 is not going to be, so I am not going to go into that much further than I have done already. You can see how the pace of income growth, as you look at the quarters as it has developed through this year.
Katie Murray: One thing I think you should be mindful of, though, is the gap that we have seen in the growth of our lending and then the growth that we see in our average interest-earning assets, which is obviously correlated to the loan growth. What you have seen in 2026 within there is that we have utilized a lot of our surplus liquidity, so you have seen average interest-earning assets growth at 3% year on year, and where that is well below the kind of 8% growth that we have seen coming through on the lending. That has been positive for NIM in 2026, and given the closer alignment going forward, means you should expect stronger average interest-earning asset growth and more stable NIM as a result of that. That strength comes from the strength that you see in our balance sheet growth, and it is very consistent with what we have delivered throughout this year.
Katie Murray: I would say that kind of is what is driving our stable NIM as we go forward from here. Lovely. Thank you very much.
Benjamin Caven-Roberts: Thank you.
Operator: Our next question comes from Sheel Shah of JPMorgan. Sheel, if you would like to unmute and ask your question.
Sheel Shah: Hello.
Paul Thwaite: Hey, Sheel.
Sheel Shah: Great. Thanks for taking the questions. I have two, please. First on the LCR. That has been coming down quarter by quarter. I see what you are saying in terms of the surplus liquidity being utilized, that is driving some of that as well. Where do you think the floor is for this? How do you expect to defend that floor, and should we think about an impact on deposit and funding margins as a result of you trying to defend this floor as well? Then secondly, on the corporate momentum.
Sheel Shah: That seems to be broadening out to the mid-market space, which is encouraging. Can I ask about the sustainability of this, whether there were any factors that maybe uplifted that in Q3 or whether that is going to be more sustainable going forward, and the associated margins. You have talked about mix shift in terms of the corporate side of things driving the pressure, but in terms of pricing pressure, are you seeing any of that come through? Thanks.
Paul Thwaite: Great. Okay, thanks, Sheel. Katie, why do I talk a little bit about corporate lending growth and commercial mid-market lending growth and UK covered LCR? Is that okay?
Katie Murray: Sure, perfect.
Paul Thwaite: Yeah. Sheel Shah, as you rightly point out, another strong quarter from a corporate kind of lending perspective. Pleased to see that. It is kind of becoming a repeat delivery, really. To me, that speaks to the underlying strength of the commercial and corporate franchise that we have got. The lending itself, in my view, is being driven by quite fundamental kind of structural trends. They will not be new themes to you, digitization, decarbonization, infrastructure, et cetera. The reason for mentioning them is, that is what gives us confidence about the sustainability of the lending demand, and we can see that in strong pipelines that we have got. I am pleased that the growth is in the mid-market as well as the CIB end.
Paul Thwaite: You can see there is nearly GBP 5 billion up in the mid-market year to date, GBP 12 billion up in the large CIB space, relatively flat in the small SME space, which is probably what you would expect given the wider economic environment. Many of you ask ourselves, where is that lending growth coming from, and therefore, why should we feel confident it is sustainable? When you get to the detail in the disclosures, you will see it is very broad-based. You will see infrastructure, housing, renewables, professional services, utilities, tech. The strength is there across a broad-based set of sectors, but also across, as I say, both mid and large. When we look at the pipeline ahead of us, it looks strong. That pipeline is there, and we have kept our appetite very consistent and very stable, so encouraged by the demand.
Paul Thwaite: From a mix perspective, I would say that the pricing dynamics have not changed. Obviously, at the top end, it is lower risk weight, lower margin, but nicely returning business. In the mid-market, slightly wider margins. That has always been a competitive space because you are dealing with impressive mid-market companies who know the value of lending, but we are not seeing any new specific margin pressure there. Net-net, another good quarter of corporate lending demand, very good line of sight on the pipeline, and feel very confident we can continue to deliver that looking forward. Katie, LCR.
Katie Murray: Perfect. Thanks, Paul. Hi, Sheel Shah. We are seeing a normalization in UK bank's LCR from the elevated levels that we all saw post-COVID, and the same is true for us. We reported an LCR of 137%. There is no change to our approach on liquidity. Whilst you would expect us to maintain a buffer over the minimum requirements of 100%, we do remain comfortably above that, and we have a broad range of funding options that are available to us. It is certainly not anything we see as a constraint to loan growth. As you would expect, we manage our funding and liquidity needs on a dynamic basis, seeking to optimize across the various levers depending on market conditions. First of all, we operate a high-quality deposit franchise.
Katie Murray: We have got great flexibility across our multiple brands and product channels to grow deposits, where we see attractive customer and liquidity value. Secondly, we have got significant funding flexibility beyond deposits to support future loan growth as that required. As you are aware, our non-ring-fenced banks are predominantly wholesale funded, as our retail and corporate deposit franchise sits in the ring-fenced bank. We have had minimal requirements for wholesale funding to date within the ring-fenced bank, which means we have got a lot of capacity to access secured wholesale funding markets to support growth when it makes sense to do so. So overall, we remain very well-positioned, strong liquidity position with levers across deposits and wholesale markets.
Katie Murray: All of that is embedded into our outlook for NIM, which is a function of the growth of the balance sheet that will continue to drive strong top-line growth and support continued operational leverage and sustainable strong returns. Thanks very much, Sheel Shah.
Paul Thwaite: Thanks, Sheel Shah. Thanks, Katie.
Operator: Next, we are going to go to Aman Rakkar of Barclays. Aman, if you would like to ask your question.
Katie Murray: Hey, Aman.
Paul Thwaite: Hey.
Aman Rakkar: Hey, Paul. Hey, Katie.
Paul Thwaite: Hey.
Aman Rakkar: Yeah, just got a couple of questions, please. We are a matter of weeks away from the end of the year. Could you just help us tighten up NIM into Q4, your expectations for? Your share price is clearly very sensitive to your commentary around forward net interest income, and in particular, your margin expectations next year are clearly below where the Street is. I think you have been pretty clear around the trajectory, but that jumping-off point for Q4. If you are not able to give us what you think that NIM will be in Q4, which I understand, could you just help us think about the sequential drivers that you have laid out in slide 24, lending margin, deposit margin, and funding, and other directionally what we might anticipate there?
Aman Rakkar: And then, just coming back to your commentary around your expectations about average interest-earning asset growth might better reflect lending growth in 2027. Hopefully, I have captured that comment right. My question is around your view. What is your kind of take on the sustainability of this loan growth rate? I mean, you have grown your loan book at 8% in Q3, I think actually both annualized and year-on-year. I think we understand that there might be some ease in mortgage momentum given higher interest rates, but I would be really interested to see your take on that lending momentum. Look, ultimately, it is the volume component to your NIM commentary next year, right? I guess you have guided down NIM. Is there a volume offset? Thank you so much.
Paul Thwaite: Okay. Do you want to go NIM?
Katie Murray: Did you mean a bit of average interest-earning assets?
Paul Thwaite: Yeah.
Katie Murray: Oh, yeah. Perfect. Yes, in terms of NIM, we previously have said that NIM would be flatter in H2, and I cannot be more precise than that. We do not manage to NIM. We manage to returns, and you can see the returns that we printed this morning just show the real strength of that outcome and that focus on returns. In terms of your kind of average interest-earning assets, what I would probably, to kind of help you a little bit, and it is not a section I send you to very often, but if you go into the kind of fin supplement we have given you today, in kind of tab 2.1, you can see what is happening in the average interest-earning assets there by retail, PBWM, and by C&I.
Katie Murray: The reduction we have had in that has really been about the deposits kind of moving in, and that is all kind of been happening within the central kind of space. As you look at them and think about how they might go forward, that is where I think you might find some help as to why I have got such confidence in those average interest-earning assets growing. Paul, shall I hand over to you for the kind of-
Paul Thwaite: The lending piece? Yeah.
Katie Murray: Sense of lending?
Paul Thwaite: Hey, Aman. I guess it links a little bit back to Sheel's question from a lending demand and lending confidence and sustainability perspective. I feel very good about the corporate business. You can see our track record there over several years. The demand is there. It is geared to areas of specialism and strength we have, infrastructure, social housing. When it is there, we take the opportunity, and we continue to post very strong growth. We feel good about the commercial and corporate side. On mortgages, as Katie said earlier, we continue to grow. I think Katie referenced nine quarters in a run for mortgage growth. We have shown we can take share. We have grown our share this year, but we have been thoughtful around pricing. When the volume is there, we can move quickly and take share at the returns we want.
Paul Thwaite: So, net-net, I guess the message I am giving you there is we feel confident about our ability to grow on the asset and the lending side, and we are confident because we have got a track record in doing that. That is the reality of it. Thanks, Aman.
Aman Rakkar: Can I ask a follow-up, please?
Paul Thwaite: Yeah, go for it.
Aman Rakkar: Because I think it is quite important. So, there is clearly confidence in the outlook for lending growth from here, underpinned by corporate. If you were to sustain loan growth at this cadence, is it right to think that average interest-earning assets would grow at this level? So, if hypothetically it was loan growth +8 in 2027, should we be thinking about average interest-earning assets +8 also, please?
Katie Murray: Yeah, that is what I would kind of guide you to. Growth in average interest-earning assets should now be kind of very much in line with our loan growth. You will see that come through. Yeah, definitely.
Aman Rakkar: Okay.
Katie Murray: Thanks, Aman.
Aman Rakkar: Thank you so much.
Paul Thwaite: Precise. Thank you. Thanks, Aman.
Operator: Next, we are going to go to Guy Stebbings of BNP Paribas. If you would like to go ahead and ask your question, Guy.
Katie Murray: Hey, Guy.
Guy Stebbings: Hi. Morning.
Paul Thwaite: Morning.
Guy Stebbings: Thanks for taking questions. One brief follow-up on margin again, then I was going to turn to costs. Specifically on the lending margin, in terms of the EIR hit, that shouldn't reverse, but it shouldn't repeat, I think is the right way to think about it. As we then look into next year, the mortgage spread headwinds should ease. I appreciate this mixed point working through, but even so, shouldn't we be thinking quite a step down versus certainly Q3 in terms of that lending margin compression as quarterly sequential basis? Is that a fair assumption? Then on costs, really low this quarter. I appreciate the guidance doesn't change. There's quite a big step-up in Q4. How should we be thinking about that?
Guy Stebbings: Is that sort of timing that you always anticipated, or does that mean that you are bringing forward investment that otherwise would have landed in 2027 and into part into the late 2026? Thanks.
Paul Thwaite: Katie?
Katie Murray: Perfect. Great. So, in terms of the lending NIM, you are absolutely right. So, the EIR, 2 basis points of six bits, and we talk about them from time to time. It is not something I would see as a kind of a repeating sort of event. Then in terms of kind of how that evolves, I really consider don't guide on margin, but you have kind of squeezed the lemon here on me, Guy. But I think it is not really how I would say. There wouldn't be a particular change in that, particularly once mortgage repricing ends in Q4. It is really a function of mix. We have got stronger CMM growth, which is helpful, but mortgages are always going to be a little bit diluted given the margins we have there. But overall, we are pretty comfortable in lending as we move forward from here. Costs, Guy.
Paul Thwaite: Cost of 3 years, cost of 4 years.
Katie Murray: We have talked about this a lot over time. Our guidance is GBP 8.5 billion. There is a natural step-up that happens in Q4 of bank levies. At this time of year, and one you said earlier, there is only really a few weeks to the end of the year. What we are trying to do is to make sure that we really maximize what the benefit we get from costs, so whether we pull a little bit of investment forward or restructuring costs or things like that. You should think of GBP 8.5 billion for the year. Yeah. Paul?
Paul Thwaite: I will just add one thing on that, Guy, which is, and you can obviously see in the year-to-date cost income ratio, the significant progress we are making towards our 2028 target already. We continue to feel good about the efficiency and productivity opportunities within the business. As Katie alluded to, the quarter-on-quarters can move around, but we feel very confident on this year, and increasingly confident on the 2028 numbers that we put out of the cost. Thanks, Guy.
Guy Stebbings: Thank you.
Katie Murray: Thanks, Guy.
Operator: Next, we are going to go to Ed Firth of KBW. Ed, if you would like to unmute and ask your question.
Katie Murray: Ed?
Ed Firth: Hi there. Thanks very much. Can you hear me okay?
Paul Thwaite: Yeah, we got you.
Ed Firth: Great. I had two questions, really. I guess the first one is really just about the outlook for profitability. Because if we are looking at flat margins next year, you have a higher capital requirement, coming through in terms of risk-weighted assets. We have probably got normalization within pen. So, it feels to me like we are flat, maybe down a little bit. The risk will be to the downside in terms of profitability. I guess related to that, my question is, what is the story in that respect? Because we lived off this wonderful improvement in profitability over the last three or four years. But as we look forward from here, I get the growth picture, but the UK is a low-growth economy. We are talking more like 1% to 3%, somewhere 3% nominal maybe, but it is quite difficult to get people excited about.
Ed Firth: You might do it for one or 2 years, but structurally, it is not a growth economy. I am just trying to think, are we just like a 20% less a bit stock, and you may sometimes do a bit better, sometimes a bit worse? Or what is the next? What is going to get people excited now that the hedge is broadly there because margins? The customers get a benefit from any upside now broadly. That seems to be the message. I guess my second question is related to that, is in terms of capital, I know everybody is getting terribly excited or trying to get excited that maybe the Bank of England are going to release some capital. But the capital is not a constraint. Your return on capital, you have been doing share buybacks for years. I do not really understand how we get excited by that.
Ed Firth: Surely, if there is a capital reduction, it is going to go to customers, same as the hedge is going to customers now. I am not complaining. 20% is a great return. I think it was awesome. I am just trying to think what is the story of where we are going to see outperformance going forward. Thank you so much. Sorry, it is rather a long question.
Paul Thwaite: No problem, Ed. Katie, why do I start off? Well, first of all, Ed, I am glad you have recognized the last 3 years and the improvements and the progress. That is good to see. I think that the story in my mind is very simple. I think when you think about ourselves as NatWest, the way I think about it is, we can clearly be a structural winner in the current environment that exists. Why is that the case? One is, we have got a clear growth track record, and we have got the potential to increase market share in all of our businesses. I hear your point about the UK economy, but I also believe we have got the opportunity to take share within the UK economy. Number one is, we have got this growth track record, and we have the opportunity.
Paul Thwaite: You think about the opportunities within our retail business, you think about the opportunities within our private banking and wealth management business, which whilst it is growing at a fast rate, in relative terms, it is still quite small vis-a-vis the size of the market. That is number one. Number two is, again, we have got a great track record around cost management and driving superior operating leverage. We are the most efficient large UK bank, and as that leverage continues through the simplification program, we have a virtual flywheel that we can fund investment and we can support growth. So, growth, cost management. We have also got, if you look at the Bank of England stress tests, we are incredibly resilient under stress. So, that gives us a lot of defense and a lot of protection. You combine those three things, and what you have got is superior returns.
Paul Thwaite: We're geared towards some of the structural growth opportunities in the UK, that drives a lot of cap gen, as you alluded to, and therefore stronger distributions. I think that's how you should think about this in the context of the story. Katie, anything to add on this?
Katie Murray: No, I mean, I think for me, the real point is that strength of the capital generation, and that's why we do feel excited about capital. If we look at what we've done this year, so far, 280 basis points of capital generated from profits. We've then invested 30 basis points of that into investments, and then another 96 basis points into the kind of strength of our organic growth. Obviously, with Basel 3.1 moving on and Pillar 2A requirement, we're now sitting with a supervisory minimum down at 11.1%.
Paul Thwaite: Yeah.
Katie Murray: We look to see what happens with the FSR, and then we'll take some stock there.
Paul Thwaite: Great. Thanks, Katie. Thank you, Ed.
Katie Murray: Thanks, Paul. Thanks, Ed.
Operator: Our next question comes from Amit Goel of Mediobanca. Amit, if you would like to ask your question.
Katie Murray: Hey, Amit.
Paul Thwaite: Hey.
Amit Goel: Hi. Thanks, guys, and thanks for taking my question. So, I appreciate maybe it is a bit more kind of follow-up, and I know you do not want to talk too much about NIM, but just a few more bits. I guess you said that the flat NIM for 2027 comes from the kind of mix and funding offsetting the hedge, and that you grow deposits selectively. I just want to check, in terms of the kind of the new easy access products, what are they paying against the back book, and what pass-through are you assuming on the November rise compared to the kind of 60% in your sensitivity? Also, just, if I am looking a bit further out, I guess going into kind of 2028, once mortgage repricing has kind of ended and mix effects settle.
Amit Goel: I guess with the hedge yield still below the 4% swap rate, should we think about that NIM starting to widen again, or is that maybe just a bit too far out? Thank you.
Paul Thwaite: Thanks, Amit.
Katie Murray: Yeah, sure. I have got my father's phrase going through my head, Amit, of "God loves a trier." So let me see if I can help you a little bit on some of your questions. So, look, in terms of pass-through, the sensitivity to Oh, excuse me. The sensitivity we give you on 60 is a 60% pass-through. I would work with that. Obviously, we will look at what they actually do, and then we will take it from there. A couple of things is mortgage repricing will kind of correct itself this year, so that is done, and then we will get to the kind of book end price of around 60 basis points, which we have kind of talked about. I will not repeat everything I said on lending a few moments ago as we go through from there.
Katie Murray: But you can see in terms of the swap rate and how that comes through, as I look at the structural hedge, it is something that I think has changed this year in terms of that continuing growth, 2027, 2028, and out into those later years. So earlier in the year, we were worried about that you had this point where it was maturing at a level that is lower. For me, that is not really a concern because you have seen the structural hedge grow, and so you get the benefit in terms of the growth coming through on that. So as I see it, is the hedge being something that will continue to add income at growing levels over the next couple of years. It will moderate a little bit in the outer years, depending where we are, but we have talked about adding over GBP 1 billion in 2027 as we go through.
Katie Murray: So overall, I think, while I would love to give you something more on them, I think we do not manage to, and broadly stable is as precise as I am going to be. It really will be the output of the growth, and we deploy our capital, as Paul says, where we see attractive returns, and you can see that in our numbers. Lovely. Thanks very much, Amit.
Paul Thwaite: Thank you, Katie. Cheers. Thanks, Amit.
Operator: Next, we are going to Perlie Mong of Bank of America. Perlie, if you would like to ask your question.
Katie Murray: Hey, Perlie.
Perlie Mong: Hello. Hello, Katie. It's Nicole Hall.
Paul Thwaite: Hey, Perlie. Good to see you, Perlie.
Perlie Mong: Sorry to be circling back to this, but as you can imagine, with the reaction being what it is, just to help us clarify. Simplistically, if we take AIEA in Q3, let's say we have 1% or 2% growth in Q4, and then, I don't know, maybe 7%, 8% growth in line with loan growth in 2027, which is sort of what you've, I think, guided to. To me, it doesn't sound like Santander's NII needs to change too much. Effectively, the AIEA, I suppose, change in guidance, or rather clarity on that, is offsetting some of the maybe lowering of the margin. Is that the right way to think about it, number one? I suppose if I step back, then 2027 on 2026 is probably about 8% growth, something like that, on NII. That's basically in line with loan growth, which makes sense.
Perlie Mong: That does mean that basically all the structural hedge benefit is going to the customers. Is that a reasonable way to think about it? If deposit competition were to step up more in maybe Q4, Q1, how would that feed into that thinking?
Paul Thwaite: Okay. Thanks, Perlie.
Katie Murray: There is a lot in there, but look, I guess, Perlie, I am not going to be any more precise. I think you have got the message on average interest-earning assets. That is the right one to take. I think the key message today is that growth is going to be driving income. We are really confident about our ability to grow at attractive returns. The structural hedge is embedded within that. We see it continuing to be a positive as we move forward from here, and I guess we look forward to talking more about 2027 when we meet again in February. Lovely. Thanks very much, Perlie.
Paul Thwaite: Thanks, Perlie. Thanks, Katie.
Operator: Our next question comes from Rob Noble of Deutsche Bank. Rob, if you would like to unmute and ask your question.
Katie Murray: Hey, Rob.
Paul Thwaite: Hey.
Rob Noble: Hey, good morning. I am a little bit confused on your average interest-earning asset guide as being close to lending growth. I thought that the last 5, 6 years, that the cash was falling because we have had massive TFSME repayments, quantitative tightening, and lending growth started growing faster than deposits. Those all look to continue next year, so why do liquid assets start to grow at the same rate as the loan book? Why would not you let it all run down? It kind of suggests that you are bound, a little bit bound by liquidity on your growth going forward as well.
Katie Murray: Rob, if I can probably try to give you a kind of a simple answer. We have used the surplus of the surplus deposits, and what you will see happening is that we will start to issue more wholesale funding to support loan growth. Both sides of the balance sheet are growing. I think we have got a lot of capacity to do that, so I am very comfortable in terms of where we are on that capacity to be able to continue to facilitate our strong loan growth at the right returns.
Rob Noble: Sorry. You have to This is kind of the point, right? You are having to hold the cash or the liquidity buffer at the same level, so you have to issue more. You cannot just run that down now. You are having to issue wholesale funding to support the balance sheet growth, effectively. That is the way to think of it?
Katie Murray: Well, I think I'd probably react a little bit towards you're having to issue. Look, as we look about it and we look about where we are, we've got opportunities to grow. We see that. We've got a number of different mechanisms that we can take to make sure that we fund that growth. We've got very little wholesale funding. We've issued about GBP 2 billion of covered bonds this year. That's a very low number across the market, so we've got this good capacity. What we need to make sure is as we issue that wholesale, that it's reflected in the right returns that we get on the lending that we do. And overall, we'll see our average interest-earning assets grow as we see that growth coming through. Thanks, Rob.
Paul Thwaite: Thanks, Katie.
Operator: Our next question is going to come from Andrew Coombs of Citi. Andrew, if you'd like to unmute and ask your question.
Katie Murray: Hey, Andrew.
Andrew Coombs: Morning. Thanks for taking the questions. I am going to come back to the stable NIM comment, I am afraid, just given the magnitude of the share price move. You have flagged, obviously, the moving parts in there, some more wholesale funding issuance. You have talked about the hedge. A lot of this seems to be due to mix effects. Can I just ask a question on asset mix and then a separate question on deposit mix and what you are assuming in your stable guide? On the asset mix, you are obviously growing in CIB, particularly in the C&I segment. If I actually look at the gross yields, then they are actually ticking up nicely. If I look at the C&I NIM, it is ticked up, and I appreciate that captures some deposit expansion offset.
Andrew Coombs: But where in the numbers can we pinpoint what the impact is on mix effect from growing that larger C&I segment, which understandably will be lower margin? I am going to tag one onto this, which is that you talk about it also being lower risk. Does that mean that through-the-cycle cost of risk guidance comes down as an offset? Then the second question on deposit growth. Again, you have seen GBP 1 billion NIM growth, GBP 5 billion interest-bearing growth. It is all in term. Is that the trend you expect to continue? Is all your deposit growth expected to come through predominantly in term going forward, or is this quarter distorted by behavioral changes given the BoE raise? Thank you.
Katie Murray: Thanks, Andrew. Let me try to be helpful maybe for you and if that leads kind of taking you to look at the rates that we have got in a slightly different way. As you have heard today, we continue to have good top-line momentum. Our NII growth of 1.8% in the quarter. NIM is broadly stable, up one basis point to 2.5%. One of my favorite slides about being too nerdy is slide 30, and I think it can really help you. If you look there, your average yield increased 11 basis points in the quarter, while the average cost was up 10 basis points. That is a reflection of the kind of higher interest rates.
Katie Murray: If I then kind of dig in a little bit, and you have got there the results across the business, if I look at somewhere like retail banking, the average rate we pay on customer deposits is just three basis points up in the quarter, while lending rates are up four basis points. So, it is kind of a net positive for us. Rising customer rates that reflect the higher swap rates, which feeds into our fixed mortgage and our deposit pricing, as well as the structural hedge. I guess while we see kind of competition in deposit markets and things like that, we are really thoughtful about where we are competing. I think if you look here, it will give you a little bit more guidance in terms of what we are talking about in that stable NIM number as we go through.
Katie Murray: So, overall, we are comfortable, and I keep reiterating, which I keep saying, is around it really is the strength of the growth of volume that we will see, which will help to ensure that we have ongoing growth in that income line, which we are comfortable about. Paul, can I hand back to you to chat about deposit growth?
Paul Thwaite: Yeah, yeah. Good. Andrew. So, on deposit growth, so for the quarter, as you alluded to, it is about GBP 6 billion of growth. That is actually split 50/50 between retail and C&I. Andrew, as you said, there is some growth there in non-interest-bearing balances, and then the rest is savings and/or term. It is worth bearing in mind for the term, that is across all three businesses. So, that is not just retail. That covers C&I, private banking and wealth, and retail. So, that can include, for example, in C&I, that could include term money for one month, three months, six months, et cetera. So, I would not default to retail one-year or two-year money. Obviously, where the growth in the retail savings business is coming is in the ISA market.
Paul Thwaite: That has grown at 2x the normal savings rate, and now about 25% of retail savings deposits are in ISAs. You have not really seen much of that material change in mix. You can see that NIMs are stable at 30. Corporate, drill down into corporate, very much no change in mix either. So, we are not seeing any significant change. I guess for the outlook, which is another part of your question, it really depends upon, I guess, some of the competitors in the retail space, but also the swap rates. I always take the time to remind people that higher swap rates also come through in higher structural hedge margins, so there is a natural offset to that. So, net-net, we are growing our deposits. It is across a number of our businesses. Some of it is term, some of it is non-interest-bearing.
Paul Thwaite: It is competitive, but as Katie alluded to, we have got a lot of levers we can pull on the funding side, so we are going to be thoughtful where we compete from a price perspective versus where we access different sources of funding. Hopefully, that gives you a sense of how we think about it. Thanks, Andrew.
Operator: Thank you for your questions today. I am now going to hand back to Paul to close.
Paul Thwaite: Okay, thanks. Well, I was just going to say thanks to Andrew. Thanks, Andrew. Thanks, everybody. Thanks, Harleet. We appreciate the questions. Hopefully, what you are seeing today is that our momentum around growth continued in Q3. You have all three businesses growing. You have an improvement in the cost-income ratio. We are obviously managing our risk and capital very well. So, we are delivering high levels of capital generation and high levels of returns, and we are very confident we can continue that on a sustainable basis. So, wish you all a good weekend when it comes. Thank you.
Katie Murray: Thank you.
Operator: That concludes today's presentation. Thank you for your participation. You may now disconnect.
Operator: Goodbye.
