Natwest Group Plc · LSE:NWG
Natwest — The Royal Bank of Scotland Group — Goldman Sachs European Financials Conference 2013
30 slides from Natwest's conference presentation, Jun 13, 2013
Slide 1: Largely Recovered… Targeting “Really Good” Bank
Largely Recovered… Targeting “Really Good” Bank Bruce Van Saun, Group Finance Director Goldman Sachs European Financial Conference – Brussels 13th June 2013
Slide 2: Important information
Important information 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’, ‘estimate’, ‘project’, ‘anticipate’, ‘believes’, ‘should’, ‘
Slide 3: Agenda
Agenda Our vision Restructuring - nearing the finishing line Core businesses - retooling well underway, performance stable The RBS equity story & milestones Recap 3
Slide 4: We are striving to this end…
We are striving to this end… Our purpose To serve our customers well To be trusted, respected and valued by our Our vision customers, shareholders and communities Serving Customers Working together Our values Doing the right thing Thinking long-term This is not the position we started from in 2009 W
Slide 5: “Really Good” Bank viewed through various stakeholder lenses
“Really Good” Bank viewed through various stakeholder lenses Communities & Society Support sustainable prosperity Regulators Investors Comply with Customers Be a safe letter and Serve our and spirit of valuable rules and Customers well investment regulations Employees Offer fulfilling jobs Progres
Slide 6: End state destination increasingly clear…
End state destination increasingly clear… A leading UK bank anchored in Retail & Commercial business lines Enduring Sustain strong capabilities internationally and in financial markets to customer support the needs of our customers and shareholders franchises Top tier competitor in our chosen
Slide 7: Agenda
Agenda Our vision Restructuring - nearing the finishing line Core businesses - retooling well underway, performance stable The RBS equity story & milestones Recap 7
Slide 8: A quick reminder – Implementing our strategy
A quick reminder – Implementing our strategy Core Bank Non-Core Bank The focus for sustainable value creation The primary driver of risk reduction Built around customer driven franchises Businesses that do not meet our Strategic Tests, including both stressed and non Comprehensive business res
Slide 9: Huge progress in Safety & Soundness agenda
Huge progress in Safety & Soundness agenda Medium-term Group – Key performance indicators Worst point Q113 target 1 Loan : deposit ratio (net of provisions) 154% 99% c.100% 3 Short-term wholesale funding 2 £297bn £43bn <10% TPAs 3 Achieved Liquidity portfolio 4 £90bn £158bn >1.5x STWF 6 Leverage rat
Slide 10: Funding and liquidity positions robust, risk much reduced
Funding and liquidity positions robust, risk much reduced Liquidity buffer substantially increased STWF2 as % Funded Balance Sheet £bn -19% +76% 158 24% 90 5% Worst point1 Q113 Worst point1 Q113 Declining Corporate Single-Name Concentrations Total Group Commercial Real Estate exposure Number of Sing
Slide 11: Aim to fulfil Basel and ICB capital requirements c.5 years early
Aim to fulfil Basel and ICB capital requirements c.5 years early RBS Core Tier 1 ratio goals vs. regulatory requirements [13.2]%3 4 10% ~10% 8.5% ~9% 8.2% 4% 10.8% Worst point1 Q113 G-SIB CT1 ICB / Vickers Q113 2013 2014 CT1 Requirement Requirements ‘Fully loaded’ FLB3 target FLB3 target (by 2019) (
Slide 12: Non-Core will move to more passive management after 2013
Non-Core will move to more passive management after 2013 Excellent progress in Non-Core reduction Post 2013 management approach Non-Core Third Party Assets, ex. derivatives, £bn Two major asset pools for management: -79% Corporate and other assets of low yield but 258 generally good credit quali
Slide 13: Agenda
Agenda Our vision Restructuring - nearing the finishing line Core businesses - retooling well underway, performance stable The RBS equity story & milestones Recap 13
Slide 14: RBS Core business - where do we stand now
RBS Core business - where do we stand now UK focus; International reach Majority of capital allocated to retail and commercial businesses 2012 Revenue by Geography, % Funded Assets by Business Line, % RWAs by Business Line, % 2008 FY12 Markets Retail & 22% International GBM Commercial 34% 56% 44% Re
Slide 15: We have sustained Core customer market positions
We have sustained Core customer market positions UK Corporate UK Retail International Banking Markets 4 5 #1 UK , #6 Global in 7 1 #1 SME Bank 3 #2 for UK Top 5 in FX, cash management 2 current accounts 6 Rates & Asset #1 Corporate #1 UK, #10 Global Bookrunner of Backed Products Bank 1
Slide 16: Our record on UK lending is strong
Our record on UK lending is strong Supporting Homeowners Support for British Businesses UK Retail gross mortgage balances, £bn FLS UK ‘Real Economy’ lending1, £bn +1% +33% 99 0.3 182.2 180.2 0.9 75 0.7 2008 Q113 Jun-12 Q312 Q412 Q113 Mar-13 Support for Small Businesses Initial signs of Core2 SME l
Slide 17: Focused on serving customers well, though can do better
Focused on serving customers well, though can do better Citizens UK Corporate Citizens Consumer Net Promoter Score, % Relationship Manager Satisfaction for C&IB Clients, % 22 74 20 66 15 13 Q112 Q212 Q312 Q412 Prior year1 Latest result UK Retail International Banking RBS & NatWest active mobile user
Slide 18: Underlying Core earnings power has been rebuilt
Underlying Core earnings power has been rebuilt RBS Core Operating Profit, £bn 7.4 7.0 6.3 (1.1) 6.0 (1.0) 10% 10% RoE RoE 3.2 8% RoE 2008 1 2011 2012 Core ex. Ulster; Ulster loss Core Stable Core earnings despite Ulster headwinds and business realignment Ulster loss normalisation will counter D
Slide 19: Consistent cost reduction, with plans to go further
Consistent cost reduction, with plans to go further RBS Group Operating Expenses, £bn -18% -2% -4% -7% -6% 17.8 17.4 16.7 15.5 14.6 <13.2 20081 2009 2010 2011 20122 2013e3 The Group has a strong track record on cost management, and we expect to maintain that discipline There are further substant
Slide 20: Below the line items drag at high water mark in 2012
Below the line items drag at high water mark in 2012 OCA - Credit spreads improved and more stable Regulatory fines - greater clarity on provisioning £m £bn 1,914 2,191 242 249 850 Outstanding balance now 50 0 only c£300m (4,649) 2010 2011 2012 Q113 2010 2011 2012 Q113 Other ‘below the line’ noise
Slide 21: Markets - We’ve set out a clear strategy and delivered
Markets - We’ve set out a clear strategy and delivered Assets reduced by over 2/3rds since peak Good RWA progress despite regulatory uplifts GBM / Markets TPAs, £bn GBM / Markets RWAs, £bn -67% -68% 874 279 288 250 89 80 GBM highest point1 Markets Q113 Markets Target GBM highest point2 Markets Q113
Slide 22: Markets – An appropriate future size and shape
Markets – An appropriate future size and shape Focus on fixed income product suite only (FX, Rates, DCM/Credit and Asset Backed Products), where Markets is highly competitive Simpler business Led from the UK, with trading hubbed in 4 major financial centres, and model and product supporting the Inte
Slide 23: Next phase of delivery at Citizens
Next phase of delivery at Citizens An attractive franchise…. ….but with work to do Deposits Rank Share Current performance behind peers Top 5 market ranking RoE improved but lags peers England Boston #2 18% New in 8 out of our 10 Providence #1 32% NIM gap reflects asset mix, risk appetite, pri
Slide 24: Ulster Bank – cautiously optimistic as trends improve
Ulster Bank – cautiously optimistic as trends improve Core / Non-Core impairments by quarter REIL trend £m Core Impairments Non-Core Impairments £bn Core REIL Non-Core REIL Constant currency 800 25 658 682 18.8 19.7 19.1 20 17.6 17.5 18.2 600 514 493 482 318 15 7.5 8.0 7.7 394 5.9 6.2 7.0 400 240 32
Slide 25: Agenda
Agenda Our vision Restructuring - nearing the finishing line Core businesses - retooling well underway, performance stable The RBS equity story & milestones Recap 25
Slide 26: We have hit most key milestones
We have hit most key milestones Milestones Outcome 1 Preference share coupons Discretionary coupons resumed in 2012 2 APS Scheme exited in October 2012 with no claim 3 Repaying government funding CGS and SLS schemes fully repaid in 2012 & liquidity support 4 In compliance with all balance sheet & EC
Slide 27: Path to 2015
Path to 2015 Milestones Outcome 1 Fulfil Basel (8.5%) and ICB (10%) requirements. Capital Ratios Target c.9% FLB3 2013, c.10% 20141 2 Non-Core Achieve £40bn TPA target by end 2013 3 Further reduce RWAs to £80bn by end-2014, Markets versus previous target of £100-110bn 4 Aspire to repurchase Dividend
Slide 28: Agenda
Agenda Our vision Restructuring - nearing the finishing line Core businesses - retooling well underway, performance stable The RBS equity story & milestones Recap 28
Slide 29: Restructuring well-advanced… path ahead clear
Restructuring well-advanced… path ahead clear Serve customers well, and better Achieve capital targets Deliver improved earnings Complete DLG sell-down Conclude active run-down of Non-Core Successfully restructure Markets Complete UK Branch IPO/sale Partial IPO of Citizens Work through DAS, B shares
Slide 30: Questions
Questions
The Royal Bank of Scotland Group — Goldman Sachs European Financials Conference 2013 on 6ix