Natwest Group Plc · LSE:NWG

Natwest — The Royal Bank of Scotland Group — Debt Investor Presentation (February 2017)

23 slides from Natwest's debt investor presentation, Feb 24, 2017

  1. Slide 1: Fixed Income Investor Presentation FY 2016 Results

    Fixed Income Investor Presentation FY 2016 Results 24 February 2017

  2. Slide 2: Ewen Stevenson, Chief Financial Officer

    Ewen Stevenson Chief Financial Officer

  3. Slide 3: FY & Q4 2016 Summary

    FY & Q4 2016 Summary FY 2016 attributable loss of £6,955m, including £5,868m conduct & litigation provisions. Q4 2016 attributable loss of £4,441m Adjusted operating profit for combined PBB, CPB and NWM of £4,249m up 4% vs. FY 2015; adjusted ROTE of 11.1% Cost, capital and lending targets met three

  4. Slide 4: Financial Targets - 2017 and 2020

    Financial Targets - 2017 and 2020 Net lending growth in PBB / CPB: 3%(1) in 2017; driven by strong mortgage growth and selected Commercial segments Operating costs: reduction in operating costs by £750m(2) in 2017, and £2bn over the next 4 years; majority achieved against combined PBB, CPB and NWM b

  5. Slide 5: Core credit messages

    Core credit messages Diversified income streams Three core franchises generating stable and attractive returns Well progressed on legacy clean-up and improving balance sheet resilience Credit and market risk positioned appropriately for less certain macro outlook 2020 Target Operating Profile Sub-50

  6. Slide 6: Diversified income streams

    Diversified income streams FY 2016 Adjusted Income split by Strategic plan targets higher quality Core Franchise (%) of earnings in future Ulster Bank RoI 5% UK Business Banking  Focus on customer loyalty, conducting 6% more business with our most valuable customers UK Personal Banking 39%  Target

  7. Slide 7: Three core businesses generating stable and attractive returns

    Three core businesses generating stable and attractive returns Core Adjusted Return on Equity(1,2) (%) 11% 11% 4.2 4.1 Core Adjusted operating profit(2) (£bn) 1.2 1.2 1.3 1.1 1.0 1.0 1.0(3) 0.8(3) 0.5 0.8 Q1’15 Q2’15 Q3’15 Q4’15 FY 2015 Q1’16 Q2’16 Q3’16 Q4’16 FY 2016  Core businesses averaged >£1b

  8. Slide 8: Resolve legacy issues and expense one-off costs

    Resolve legacy issues and expense one-off costs One-off cost Comment  c.£2bn over 2017 to 2019 (excluding W&G); of which c.£1bn in 2017 Restructuring costs  Partially related to exiting head office properties with onerous lease terms  £2.0bn of lifetime disposal costs; of which Capital Resolution

  9. Slide 9: CET1 and leverage ratios

    CET1 and leverage ratios CET1 Ratio Leverage Ratio +480bps +170bps 13.4% 13.0% 5.1% 8.6% 3.4% FY 2013 FY 2016 Target FY 2013 FY 2016  2016 included ~£10bn of charges across £5.9bn litigation & conduct, £2.1bn restructuring, £1.2bn DAS repayment and £0.8bn disposal costs(1)  £4bn AT1 in issue, sati

  10. Slide 10: Risk Elements In Lending substantially reduced

    Risk Elements In Lending substantially reduced FY 2016 REILs FY 2016 Ulster ROI REILs £bn (as % of Total Gross L&As) £bn (as % of Total Gross L&As) (54%) (74%) 39.4 (9.4%) 7.6 (28.5%) Capital Resolution 20.3 3.5 (17.4%) Ex Capital Resolution 10.3 (3.1%) 19.1 2.3 8.0 FY 2013 FY 2016 FY 2013 FY 2016 (

  11. Slide 11: Robert Begbie, Treasurer

    x RBS Robert Begbie Treasurer

  12. Slide 12: FY 2016 Results – Treasurer's view

    FY 2016 Results – Treasurer’s view Solid capital and liquidity metrics maintained Increasing focus on balance sheet optimisation Lower capital requirements reflect strategic progress 13% target CET1 ratio maintained Our issuance needs are evolving to reflect our strategic progress and future structu

  13. Slide 13: Solid capital and liquidity metrics maintained

    Solid capital and liquidity metrics maintained FY 2016 FY 2015 Loan : deposit ratio 91% 89% Short-term wholesale funding £14bn £17bn Liquidity coverage ratio 123% 136% Net stable funding ratio 121% 121% Core equity tier 1 ratio 13.4% 15.5% Leverage ratio 5.1% 5.6% 13

  14. Slide 14: Reduced capital requirements reflect strategic progress

    Reduced capital requirements reflect strategic progress Pillar 2A total capital requirement(1) 2019 ‘fully phased’ CET1 MDA floor (1.2%) (0.7%) 5.0% 10.8% 10.1% 3.8% Previous Current Previous Current  Pillar 2A reduction primarily reflects contribution to pension scheme  13% target CET1 ratio main

  15. Slide 15: MDA phase-in and assessment of appropriate buffers

    MDA phase-in and assessment of appropriate buffers Target CET1 ratio versus maximum distributable amount (“MDA”), % (3) Illustration, based on assumption of static regulatory requirements 13.4 13.0 Illustrative Illustrative headroom(1) 2.9 headroom(1) 5.0 10.1 1.0 8.4 0.5 2.5 1.3 (2) 2.1 2.1(3) 10.1

  16. Slide 16: Capital reorganisation planned to increase available distributable reserves

    Capital reorganisation planned to increase available distributable reserves 2016 evolution in RBSG (HoldCo) distributable reserves ~38 (£bn) ~30 16.3 1.2 6.0 8.0 1.1 8.0 FY 2015 Tier 1 Write down Other(1) FY 2016 Illustrative redemptions of investment benefit of capital reorganisation  FY 2016 RBSG

  17. Slide 17: Our issuance needs in 2017 are evolving to reflect our strategic progress

    Our issuance needs in 2017 are evolving to reflect our strategic progress Issuance focussed on MREL(1) build:  Target £3-5bn equivalent Senior HoldCo  No active need for AT1  No active need for Tier 2 Returning to modest funding activity:  Reintroduce regular secured funding  Participant in the

  18. Slide 18: Target £3-5bn Senior HoldCo MREL in 2017

    Target £3-5bn Senior HoldCo MREL in 2017 Illustrative future MREL requirements versus estimated existing position Based on illustrative £200bn RWA and static regulatory requirements(1) ~£24bn CRD IV & Management >3% Buffers ~£16bn Existing (non-CRR) MREL (3) MREL 11.8% £11bn HoldCo ~£8bn £5bn Senior

  19. Slide 19: Illustrative future funding structure

    Illustrative future funding structure The Royal Bank of Scotland Group plc Group Holding Company and primary issuing entity for MREL Proportional Intercompany issuance of Loss Absorbing Capital NatWest Holdings Limited NatWest Markets RBS International & Subsidiary Operating companies Plc Limited A

  20. Slide 20: Forward Looking Statements

    Forward Looking Statements Cautionary statement regarding forward-looking statements Certain sections in this document 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

  21. Slide 21: Appendix

    >< RBS Appendix

  22. Slide 22: FY 2016 results by business

    FY 2016 results by business Core Franchises Total Other Total RBS Central Ulster Commercial Private RBS NatWest Total Core Capital (£bn) UK PBB W&G(1) items & Total Other Bank RoI Banking Banking International Markets Franchises Resolution other(2) Adj. Income(3) 5.3 0.6 3.4 0.7 0.4 1.5 11.8 (0.4) 0

  23. Slide 23: Estimated Loss Absorbing Capital ("LAC") position

    (1) Estimated Loss Absorbing Capital (“LAC”) positon (4) FY 2016, £bn LAC value (1) Regulatory Value (2,3) Par Value Common Equity Tier 1 Capital (5) 30.6 30.6 30.6 Tier 1 Capital: End point CRR compliant AT1 4.0 4.0 4.0 o/w RBS Group Plc (HoldCo) 4.0 4.0 4.0 o/w RBS Operating Subsidiaries (OpCo's)

The Royal Bank of Scotland Group — Debt Investor Presentation (February 2017) on 6ix