Natwest Group Plc · LSE:NWG
Natwest — The Royal Bank of Scotland Group — KBW UK & European Financials Conference 2010
26 slides from Natwest's conference presentation, Sep 13, 2010
Slide 1: Re-building and Recovery
Re-building and Recovery KBW UK & European Financials Conference 13th September 2010 John Cummins, RBS Group Treasurer Richard O’Connor, Head of Investor Relations
Slide 2: Important Information
Important Information Certain sections in this presentation contain ‘forward-looking statements’ as that term is defined in the United States Private Securities Litigation Reform Act of 1995, such as statements that include the words ‘expect’, ‘estimate’, ‘project’, ‘anticipate’, ‘believes’, ‘should
Slide 3: Strategic Plan Update & Business Review
Strategic Plan Update & Business Review Richard O’Connor, Head of Investor Relations
Slide 4: Key messages
Key messages RBS tracking well against its recovery plan H1 2010 results led by recovery in NIM, R&C businesses GBM performing in line with market Non-Core de-leveraging and EU disposals on track Capital, funding and liquidity progress continues 4
Slide 5: Who are we?
Who are we? Universal bank anchored in the UK and in retail & commercial, balanced by geography, business mix and risk profile RBS Group H1 10 Core Revenues by Division RBS Insurance UK Retail Core RBS EU Disposals1/Non-Core 13% 17% US R&C Retail Global Banking & Insurance Non-Core 10% UK Corporate
Slide 6: What is our vision?
What is our vision? RBS’s 2013 vision To be one of the world’s most admired, valuable and stable universal banks To return to >15% sustainable RoEs, powered by market-leading businesses in large customer-driven markets To deliver its strategy from a stable AA category risk profile and balance sheet
Slide 7: Strategic Plan – defined aspirations
Strategic Plan – defined aspirations RBS is driving through the key elements of its Strategic Plan Core Bank Non-Core The focus for sustainable value creation The primary driver of risk reduction Built around customer-driven franchises Businesses that do not meet our Strategic Comprehensive bu
Slide 8: Strategic Plan - timeline
Strategic Plan - timeline 2010/11 – executing the plan 2009 2010/2011 2012 onwards Core profits build, Non-Core losses fall Target >15% RoE Formation of the Execution and implementation phase of the Ongoing revenue and cost Strategic Plan plan initiatives Creation of Non-Core Investment in
Slide 9: Strategic Plan - tracking our progress
Strategic Plan - tracking our progress Current position versus 2013 targets – making good progress Key performance Worst FY 09 Q2 10 2013 indicator point Actual Actual Target Core Tier 1 Capital 4%(1) 11.0% 10.5% >8% Loan : deposit ratio (net of provisions) 154%(2) 135% 128% c100% Wholesale funding
Slide 10: Key H1 2010 financial highlights
Key H1 2010 financial highlights H1 results led by recovery in NIM, R&C businesses Core Business: Operating profit £4.5bn, (£4bn underlying1) Driven by strong Retail & Commercial performance Return on Equity 15%, (11% underlying1) Full Retail & Commercial recovery delivers target R&C NIM 3.04%, +23b
Slide 11: Non-Core run-down & EU disposals
Non-Core run-down & EU disposals Non-Core run-down and EU disposals progressing well, lowers execution risk Non-Core Asset disposals We have made good progress Un-drawn commitments Non-Core asset portfolio run-off/sales on target £bn Funded assets Funded assets down ̶ Ongoing risk reduction – po
Slide 12: Non-Core run-off – run-down on track
Non-Core run-off1 – run-down on track £bn 194 (6) (8) (1) (5) 174 Q110 Run-Off Asset Impairments FX Q210 sales Non-Core assets decreased 10% (£20bn) during Q2 Run-off driven by CRE, Corporate, and FV movements in trading assets Asset sales primarily Corporate Second half sales pipeline appea
Slide 13: Impairments trends – signs of stabilisation
Impairments trends – signs of stabilisation Group credit trends, Q209 – Q210 No. & value of wholesale cases transferred to Recoveries Units globally, Q109-Q210 (monthly average) £bn £bn 40 4% 600 9 35 8 500 30 3% 7 400 6 25 5 20 2% 300 4 15 200 3 10 1% 2 100 5 1 0 0% 0 0 2 1 Q109 Q209 Q309 Q409 Q110
Slide 14: Funding, Capital & Liquidity
Funding, Capital & Liquidity John Cummins, Group Treasurer
Slide 15: Addressing past issues
Addressing past issues Strategic Plan established to address past business issues Capital Funding Leverage ABN AMRO acquisition Strategy Risk controls Profit focus Management & processes Significant progress made 15
Slide 16: Execution of Core and Non-Core strategies are fundamental to achieving an equivalent 'AA' category rating
Execution of Core and Non-Core strategies are fundamental to achieving an equivalent ‘AA’ category rating Non-Core created as key driver in achieving Strategic Plan targets Our Strategic Risk Objectives Non-Core Core Maintain capital adequacy Restructuring and resizing of the balance sheet Highe
Slide 17: Management disciplines and culture necessary to achieve an equivalent 'AA' category rating
Management disciplines and culture necessary to achieve an equivalent ‘AA’ category rating Strict financial and risk management disciplines have been instilled across the business Financial discipline Risk management disciplines Improved controls and cost / capital fully Reduced single name, sec
Slide 18: Balance sheet strengthening on track
Balance sheet strengthening on track Now well capitalised, making strong progress on funding Core Tier One Ratio vs UK Peers1, % Tier 1 Leverage Ratio3 vs Peer averages1,4, % 12 10 8 5 10.5 10.0 9.9 4 9.0 9.0 5.8 6.4 5.5 4.0 3.5 4.0 0 0 RBS worst RBS Peer 1 Peer 2 Peer 3 Peer 4 RBS worst RBS Q210 UK
Slide 19: Funding & liquidity – good progress towards targets
Funding & liquidity – good progress towards targets Consistent reduction in short term funding needs1 Refinancing requirement outweighed by target reduction in Non-Core third party assets (£bn) 400 £343bn2 £145bn 60 350 50 300 2013 Target £250bn 250 £198bn 40 200 £150bn1 £150bn 30 150 100 20 50 10 0
Slide 20: Funding & liquidity – good progress towards targets
Funding & liquidity – good progress towards targets Evolution of Group funding mix towards more stable long- Key Funding Key Funding Key Metrics Metrics Funding term funding sources1 Metrics FY09 Q110 Q210 FY09 Q110 Q210 £bn % £bn % £bn % Loan:deposit ratio (Group)2 135% 131% 128% Deposits by ba
Slide 21: Funding - Consistent access to wholesale markets
Funding - Consistent access to wholesale markets RBS has issued over £24bn of term funding in 2010 YTD RBS term funding issuance during 20101 Q1 10 - £8.1bn2 Q2 10 - £5.3bn2 Q3 10 - £10.9bn2,3 £24.3bn 2010 term funding achieved YTD vs target of £25bn €1.25bn 2 year FRN5 220 €1.25bn 3 year Term f
Slide 22: Term issuance across multiple currencies and tenors
Term issuance across multiple currencies and tenors Significant diversification of term funding by currency, maturity and product Term issuance by currency (YTD 2010)1 Term issuance by maturity (YTD 2010)2 Other AUD 3% 2 years or 5% USD Greater than less JPY 24% 23% 4% 5 years 30% GBP 15% 3 year 23%
Slide 23: Government guaranteed schemes
Government guaranteed schemes Reduced dependence on Government funding and liquidity schemes Maturing profile of for RBS term funding including CGS1 40 35 Reduced usage of central bank liquidity schemes by over 80% since peak 30 c.£21bn of Bank of England liquidity 25 facilities3 not used for fu
Slide 24: Liquidity reserves
Liquidity reserves Robust liquidity position with large and growing FSA eligible government bond portfolio Build-up of liquidity reserves (£bn) 160 150 Target liquidity reserve split into two 137 constituent parts: 140 – c. £50bn target Group Treasury 120 portfolio contains only FSA eligible 100 b
Slide 25: Summary – RBS in 2013
Summary – RBS in 2013 What RBS will be in 2013 Leading positions in all our customer businesses Top tier market franchises Strong, predictable and resilient business performance Complementary portfolio with clear cohesion logic and synergies Balanced portfolio Balanced by geography, business mix and
Slide 26: Questions?
Questions?
The Royal Bank of Scotland Group — KBW UK & European Financials Conference 2010 on 6ix