Drivers of value creation – Commercial & Institutional
laire Kane, NatWest Group’s director of Investor Relations, unpacks NatWest Group’s Commercial & Institutional business proposition and looks at the compelling growth opportunity in commercial mid-markets.
Showcasing our strategies
We recently hosted the first of three 2025 spotlight sessions for investors and analysts to showcase the strategies of each of NatWest Group’s customer segments, starting with our Commercial & Institutional business.
The event was an opportunity to unpack the drivers of value creation from our Commercial & Institutional business and outline its significant contribution to NatWest Group.
As well as presenting on our overall Commercial & Institutional customer base, our customer proposition, our market position, and the drivers of profitability, it was also a chance to drill down into some of the notable growth areas we see within the business. In particular, through the support we offer to the mid-market sector.
An engine of growth
Put simply, the mid-market sector is an incredible engine of growth for the UK, outpacing growth in the wider UK economy. In October 2024, we carried out research into the critical role that mid-sized corporates play in the UK economy, in particular companies with turnover of between £25 and £500 million, which is a subset of our overall business.
There are around 13,500 businesses of this size – less than 1% of the companies in the UK. Yet they account for 27% of UK business turnover at £1.3 trillion and 28% of Gross Value Added (GVA) at £420 billion.
These businesses are also growing at a rate higher than the UK economy, so they are vital growth engines for the UK. They employ over 7 million people, play an important role in regional economies, and are more productive than smaller businesses – they generate nearly double the turnover per employee, compared with SMEs.
Our report estimates that 1% growth in this segment could add a further £35bn of GVA and £115bn in business turnover by 2030. So, it’s against this backdrop that we see a significant opportunity for our Commercial Mid-Market business to drive growth both for the UK economy and NatWest Group.
Growing with mid-market businesses
Over the next three years the Commercial Mid-Market business plans to grow in the following ways.
We see the UK innovation economy as a key opportunity in sectors such as Life Sciences, Meditech, Technology and the Energy Transition. We are planning to offer these businesses specially tailored products and dedicated coverage.
While we provide a wide range of products, we have particular strengths in certain areas. For example, we are one of the largest funders of the Social Housing sector with balances of £10.8bn at the end of last year. We want to continue growing in this sector and aim to provide £7.5bn in lending between 2024 and 2026.
We also plan to increase the number of trade customers we serve, supported by our new trade platform Trade360. Trade360 provides customers with a portal that offers a seamless experience across both products and geographies. In particular, we aim to grow Trade Finance and Foreign Exchange, drawing on the Foreign Exchange expertise in our markets business. And we intend to expand in Transition Finance and Regional Infrastructure.
Finally, we continue to innovate to support high-growth businesses that have limited tangible assets to use as collateral, but who are rich in Intellectual Property. Last year we became the first UK bank to issue loans using Intellectual Property as collateral in order to help scale-ups grow and we plan to expand on this.
The biggest bank for UK business
The growth opportunity we see in the Commercial Mid-Market business is also complemented by established capabilities and the headroom to create further value for customers and shareholders in our other Commercial & Institutional business areas.
In Business Banking, for instance, we have a leading share with UK start-ups as we help them accelerate their growth through our Accelerator Hubs, which we plan to scale significantly in 2025 and beyond. In Corporate and Institutional Banking, we support the flow of capital in and out of the UK as the partner of large corporates and financial institutions with well recognized capabilities in key specialisms.
Our combined Commercial & Institutional proposition means NatWest Group is the biggest bank for UK business, connecting our customers with unique expertise, industry insights and the solutions they need across the various sectors, regions and markets they operate in.