Natwest Group Plc · LSE:NWG
Natwest — The Royal Bank of Scotland Group — Barclays Capital 2010 Global Financial Services Conference
23 slides from Natwest's conference presentation, Sep 14, 2010
Slide 1: Re-building and Recovery: Making Progress
Re-building and Recovery: Making Progress Bruce Van Saun, Group Finance Director 14th September 2010 Barclays Capital 2010 Global Financial Services Conference
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: 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 Insurance and Ulster Bank action plans und
Slide 4: 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 5: 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 6: 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 7: 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 8: 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 9: 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 10: Net Interest Margin & Operating Expenses
Net Interest Margin & Operating Expenses R&C driving a recovery in NIM; tight cost control across the board Group NIM – Q210 vs Q110 Operating expenses £bn bps 5 Q110 Q210 4.4 3 203 4.1 8 3.8 3.5 4 192 3 2 1 0.7 0.6 0 Q110 R&C Rest of Group Q210 Core Non-Core Total Group NIM up 11bps to 2.03% driv
Slide 11: R&C franchise gaining momentum – UK C&C good revenue growth, stable impairments
R&C franchise gaining momentum – UK C&C good revenue growth, stable impairments Re-establishing profitability – rebuilding margins Impairment trends - stabilising £m Pre-2008 NIM 3.25%1 % £m 450 1,100 3.5 C&C Total Income C&C NIM 400 1,000 350 3.0 300 900 250 800 2.5 200 700 150 2.0 100 600 50 500
Slide 12: R&C franchise gaining momentum – UK Retail sustaining NIM development
R&C franchise gaining momentum – UK Retail sustaining NIM development Robust mortgage lending & sustainably improved margins Strong growth in deposits % £bn £bn NIM Mortgage Lending 4.0 90 90 3.5 85 80 3.0 80 70 2.5 75 2.0 60 70 Q109 Q209 Q309 Q409 Q110 Q210 Q109 Q209 Q309 Q409 Q110 Q210 Restoring p
Slide 13: R&C franchise gaining momentum – US R&C building margins, lower impairments
R&C franchise gaining momentum – US R&C building margins, lower impairments Re-establishing profitability – Rebuilding margins Impairment losses – encouraging trends % NIM Total Income $bn $m 300 3.0 1.5 Income up 7% y-o-y1 250 2.5 200 1.0 150 2.0 100 50 1.5 0.5 0 Q209 Q309 Q409 Q110 Q210 Q109 Q209
Slide 14: GBM – credible performance, in line with peers
GBM – credible performance, in line with peers Underlying performance in line with peers, better cost discipline Underlying quarterly income (ex FVooD), £bn Benchmarking GBM’s quarterly performance1 % GBM Peer Average 65 70 4.5 45 50 3.0 30 10 1.5 -10 4.4 2.6 2.1 2.0 2.8 1.9 -30 (31) (31) (26) -50 (
Slide 15: GBM – strong franchise, balances the group portfolio
GBM – strong franchise, balances the group portfolio Quarterly Revenues by product (underlying)1, £bn GBM Summary – FY07 vs FY09 FY07 “Old” GBM Core GBM FY09 Income, £bn 9.12 6.7 11.0 Costs, £bn (5.8)3 (5.1) (4.7) Profit, £bn 3.22 1.5 5.7 ROE, % 10.8% 10.4% 30.7% Q309 Q409 Q110 Q210 Rates - MM Rates
Slide 16: Non-Core run-down & EU Disposals on track
Non-Core run-down & EU Disposals on track Non-Core run-down and EU disposals progressing well, lowers execution risk Non-Core Asset disposals TPAs decreased by £84bn to date, reduction on plan Non-Core asset portfolio run-off/sales on target £bn Un-drawn commitments ̶ Ongoing risk reduction – po
Slide 17: 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 18: 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 19: 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 20: Action plans for lagging units - Insurance
Action plans for lagging units - Insurance Key highlights Improved underwriting reducing loss rates1 % Q2 10 performance significantly impacted by bodily 150% injury reserving relating to prior period policies New Business Renewals Combined Loss rates Improved under-writing policies reducing ris
Slide 21: Action plans for lagging units - Ulster Bank
Action plans for lagging units - Ulster Bank Initiatives Balance sheet reshaped 2 FY09 – Total UB, £56bn H110 – Core UB, £37bn Direct expense reduction of 31% Q109 to Q210 5% Asset margins driving NIM improvements – 1.74% 5% 21% trough in Q309 returned to 1.92% Q210 27% 39% Increasing market s
Slide 22: 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 23: Questions?
Questions?
The Royal Bank of Scotland Group — Barclays Capital 2010 Global Financial Services Conference on 6ix