Natwest Group Plc · LSE:NWG
Natwest — Royal Bank of Scotland Group — Investor Presentation (November 2010)
41 slides from Natwest's investor presentation, Nov 12, 2010
Slide 1: UK Retail Investor Roundtable
UK Retail Investor Roundtable Brian Hartzer, CEO UK Retail & 12 November 2010 UK Retail Executive Committee
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: Agenda
Agenda UK Retail background & situation assessment Strategy & Key Initiatives: - Strategy - Products - Channels Financial Performance & Outlook Summary 3
Slide 4: Core RBS
Core RBS Future Group profile; a strong and balanced business Core RBS Q310 Core revenues by Division Insurance UK Retail Retail & 16% 20% Commercial Global Retail UK Retail Global Corporate Customers GBM R&C UK Banking Clients 22% 78% Corporate UK Corporate & Markets 14% Deposits Governments Wealth
Slide 5: World class aspirations, but lots to do …
World class aspirations, but lots to do … Current State “World class” aspiration One of the high street banks Strong, Differentiated The leading high street bank Growing reputation as a helpful bank Brand Distinctive Brand as the UK’s most Helpful Bank Large, stable customer franchise with
Slide 6: Our scale and reach presents opportunity
Our scale and reach presents opportunity Scale of UK Retail Current Share of wallet (SoW)2 Total Customers: 15.4m Product SoW ~ (Balances) Current Account deposits 64% - 12.2m current account holders Savings 22% - 8.6m savings account holders Mortgages 22% Branches: 2,200 Loans 34% Credit Cards 27%
Slide 7: Executive team has been upgraded
Executive team has been upgraded Brian Hartzer CEO Sarah Deaves Les Matheson Neil Fuller Private Banking and Retail Products Risk Advice Helen Page Satyendra Chelvendra Fiona Davis Marketing Consumer Distribution Finance Susan Allen Louise Haggarty Change and Business HR Services Note: CV’s in Appen
Slide 8: Agenda
Agenda UK Retail background & situation assessment Strategy & Key Initiatives: - Strategy - Products - Channels Financial Performance & Outlook Summary 8
Slide 9: Our transformation agenda …
Our transformation agenda … Building the UK’s most Helpful and Sustainable bank Re-engage with our Restore the pride Radically simplify Grow customers of our people the business quality revenue Strengthen our brands Communicate UK Retail Simplify our products and Define segment vision and st
Slide 10: … underpinned by deep customer insight
… underpinned by deep customer insight What Annoys our Customers Time Money Personal Touch IVR*/incomprehensible call centre representative Expensive customer Queuing service calls ‘Kicking you with Customers = sets of figures fees and charges Opening hours when you’re down’ Policies over Decision t
Slide 11: Customer Charter brings “Helpful” to life
Customer Charter brings “Helpful” to life For Customers For staff I am professional I am proactive I simplify I care 11
Slide 12: A robust programme to deliver the change
A robust programme to deliver the change c£800m total investment Investment by area Investment by year Risk & 250 243 Collections 11% 197 191 Private 200 Branch 1 Banking & 32% Investment (£m) Advice 150 130 7% 100 Products 50 19% Direct 50 Channels 30% 0 2009 2010 2011 2012 2013 Comprehensive pla
Slide 13: Agenda
Agenda UK Retail background & situation assessment Strategy & Key Initiatives: - Strategy - Products - Channels Financial Performance & Outlook Summary 13
Slide 14: Product agenda will fix past issues
Product agenda will fix past issues Products that are too complex Proliferation of products Simplify Too much system complexity Operational risk from lack of codified process and clear accountability Incomplete data on disparate systems: no overall view of the customer Manage Customer De
Slide 15: Radically simplifying our business …
Radically simplifying our business … Example: Mortgage Transformation Programme But complexity is more than just number of products … Past Present Future 5 Efficient, accurate and compliant processes Brands 3 3 12 12 Investment in System Architecture Platforms 2 Best in Class Transparency 5 5 5 Prod
Slide 16: Managing Customer Value …
Managing Customer Value … Improving our understanding of customer value … 100% High Breakeven Loss 80% 60% Contribution to value 40% 20% 0% -20% -40% -60% 1 2 3 4 5 6 7 8 9 10 Value Decile Enablers World class data platform Leading edge decisioning technology Integrated, multi-channel contact strate
Slide 17: Deepening customer relationships
Deepening customer relationships Effective cross-sale creates >10x income differential … 12 11 10 Income Multiple 8 6 5 4 3 2 2 1 0 1 2 3 4 5+ Number of products with RBSG ... and a 70% reduction in customer attrition 1 0% -10% Attrition Reduction -20% -15% -30% -40% -50% -50% -60% -60% -70% -80% -7
Slide 18: Customer Insight in action …
Customer Insight in action … 1m Personal Annual Statements already underway … … personalised Internet Prompts already online Examples of success… Customer Response: 95% of customers liked the Personal Annual Statement (PAS) Over 10,000 follow-up conversations held, per month, and growing Over
Slide 19: Opportunity to grow Savings and Mortgages
Opportunity to grow Savings and Mortgages Total Deposits Mortgages Slow market growth forecast … Outperformed a flat market with balance growth of 11% ... Q3 2010 Y-o-Y Q3 2010 Y-o-Y RBS £91bn (£60bn savings) +7% RBS £89bn + 11% Market Total £985bn +2% Market Total £1,241bn +1% … but we have £160bn
Slide 20: Investments & Pensions
Investments & Pensions Market funds under management grew 17% in 2010 … Q3 2010 Y-o-Y RBS £5.4bn 1 +8% Market £543bn +17% Source: Sept YTD 2010 IMA website … 1.5m of our customers hold investments, but only 300k hold them with us Investments held with others ‘Split’ investments 1.2m customers Invest
Slide 21: Agenda
Agenda UK Retail background & situation assessment Strategy & Key Initiatives: - Strategy - Products - Channels Financial Performance & Outlook Summary 21
Slide 22: Channel usage mix continues to evolve
Channel usage mix continues to evolve Relative importance to customer Low High Evolution over time 1980s Present 2013 High ATM ATM ATM ATM ATM ATM ATM Branch Branch Branch Branch Internet Internet Mobile Mobile Service Internet Internet Web Web chat chat Phone Phone Branch Branch Phone Phone Mob Mob
Slide 23: We’re already making progress …
We’re already making progress … 17% reduction in branch workload … Significant increase in automated transactions … 107 – 105 103 101 99 97 July 2009 Lean1 Channel Telephony Optimisation August 2010 Q1 2009 CDM Deposits 2 Balance Enquiry Withdraw als Q3 2010 Migration 35% growth in Online Servicing
Slide 24: We are investing to reshape our Branch network
We are investing to reshape our Branch network Format Definition High profile in major cities/locations Flagship Full sales and service facilities for all segments Branches Ambassador for the brand Centres of excellence for helpful banking Major Large outlet in key towns/conurbations (Full
Slide 25: Upgrading Telephony infrastructure to ...
Upgrading Telephony infrastructure to ... An example of enhancement to customer experience … Very Simple Call – Customer wishes to know available funds, pending entries on two accounts and then cancel a Direct Debit (DD). Customer selects Check Available Funds – Agent locates Direct Debit Agent comp
Slide 26: Investing in Digital to drive …
Investing in Digital to drive … Sales Aspirations Re-engineer our online sales platform to support all channels 2 x Sales Volumes Improve decision/sales prompts engine Targeted and personalised cross sales 3 x Online Transactions Re-engineer the fulfilment process Lead generation and h
Slide 27: Simplify our advice proposition
Simplify our advice proposition From: To: Results: Face to Face Multi Channel Product Focussed Needs and Goals based solutions Process Time from 90 mins to 45 mins 40% increase in sales Manual Process Simplified process using self per FPM per week service and data and decisioning Meets current RDR-c
Slide 28: Agenda
Agenda UK Retail background & situation assessment Strategy & Key Initiatives: - Strategy - Products - Channels Financial Performance & Outlook Summary 28
Slide 29: Re-balancing the economy remains a challenge
Re-balancing the economy remains a challenge Households are borrowing less .. … which means the savings ratio is rising ... Rolling annual growth Household Savings Ratio 18% Rolling annual growth 6% 12% 4% 6% 2% 0% 0% Mortgages -2% -6% -4% Personal loans -12% -6% 2004 2005 2006 2007 2008 2009 2010 2
Slide 30: Strong franchise remained profitable through the crisis
Strong franchise remained profitable through the crisis 20041 20051 20061 20071 FY2008 FY2009 2010 YTD2 Net Interest Income (£m) 2,868 2,929 3,012 3,041 3,187 3,452 2,990 Fee Income (£m) 1,679 1,854 1,919 1,993 1,751 1,495 960 Total Income (£m) 4,547 4,783 4,931 5,034 4,938 4,947 3,950 Total Costs (
Slide 31: Strong momentum; all key metrics improving
Strong momentum; all key metrics improving Market Share Stock Market Share New Business 2008 2009 2010 YTD 2008 2009 2010 YTD Current Accounts 17% 20% 19% Deposits 8% 9% 9% Savings 10% 11% 11% Mortgages 5% 5% 6% Mortgages 7% 9% 12% Unsecured 15% 15% 16% Loans 15% 12% 10% Cards 10% 10% 9% Source: BOE
Slide 32: Income performance & outlook
Income performance & outlook Margin Volume Fees Product 2010 YTD Income 09 & 10 Outlook 09 & 10 Outlook 09 & 10 Outlook Mortgages 1,427 Loans 321 Cards 711 Overdrafts 376 Current Accounts 848 Savings (17) N/A N/A Investments/Other 1 284 3,950 Overall we expect steady top-line growth, with costs an
Slide 33: Transformation programme reinforces existing strengths
Transformation programme reinforces existing strengths “Engine” Performing Strongly … Sustained growth in Mortgage Stock Growing Market share in deposits, ahead of competition £6.0bn 90.0bn Spot HY Balance YoY Movement YoY Deposits £Bn £Bn % £5.0bn 85.0bn RBS 90 7 8 £4.0bn 80.0bn Santander 128 9 8 L
Slide 34: Impairments are improving
Impairments are improving Impairment charge – driven by unsecured Customer default % RBS Cards Bad Debtflow % £bn Secured Unsecured Personal Unsecured Loans Bad Debtflow % 2.0 Mortgage Bad Debtflow % (RHS) 1.2% 0.14% 1.0% 0.12% 1.5 0.10% 0.8% Unsecured 1.0 Secured 0.08% 0.6% 570bps 0.06% 0.5 0.4% 0.
Slide 35: Clearer risk appetite and strong controls
Clearer risk appetite and strong controls Ensuring strategic decision making is taken with full understanding of risk appetite Risk appetite aligned to Group wide appetite Risk Appetite Appetite validated through stress testing and assurance Business KPI monitored, reported and actioned to s
Slide 36: Agenda
Agenda UK Retail background & situation assessment Strategy & Key Initiatives: - Strategy - Products - Channels Financial Performance & Outlook Summary 36
Slide 37: Our priorities are clear
Our priorities are clear Deliver Customer Charter commitments to re-engage customers and strengthen our brand Deliver key RTP1 investments and projects to bring RBS capabilities to world class standards Build sustainable revenue through improved sales effectiveness, share of wallet and product struc
Slide 38: Summary – the Retail Investment Case
Summary – the Retail Investment Case Excellent customer franchise with good opportunities for growth Ambitious but achievable program of change to get RBS to world class Strong financial momentum across all key metrics Improving risk profile and control environment Experienced, capable and energised
Slide 39: Appendix
Appendix
Slide 40: UK Retail Management CV’s
UK Retail Management CV’s Name Title Background Brian Chief Executive Brian joined RBS in August 2009 from ANZ Australia, where he was Chief Executive Officer - Australia, as Hartzer Officer, Retail, well as Global Segment Lead for Retail and Wealth. Brian joined ANZ in 1999 as Managing Director,
Slide 41: UK Retail Management CV’s (Cont’d)
UK Retail Management CV’s (Cont’d) Name Title Background Susan Allen Director, Susan joined the RBS group as a graduate trainee in October 1987 and has worked in a range of roles Change & across the Group. Susan started in the branch network, moving into Correspondent Banking, Treasury Business an
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