Natwest Group Plc · LSE:NWG

Natwest — The Royal Bank of Scotland Group — Q3 2016 Earnings Presentation

21 slides from Natwest's earnings presentation, 2016

  1. Slide 1: Q3 2016 Results

    >< RBS O3 2016 Results

  2. Slide 2: Ewen Stevenson, Chief Financial Officer

    Ewen Stevenson Chief Financial Officer

  3. Slide 3: Q3 2016 Financial Results highlights

    Q3 2016 Financial Results highlights Attributable loss(1) of £469m; Operating profit of £255m Adjusted return on equity across our PBB, CPB and CIB franchises of 14% in Q3 2016 PBB and CPB net lending up 13% annualised YTD Positive adjusted operating income across the core franchises of 2% 9M/9M Ope

  4. Slide 4: Q3 2016 results by franchise

    Q3 2016 results by franchise Core Franchises Total Other Total RBS Central Ulster Commercial Private RBS Total Core Capital Total (£bn) UK PBB CIB W&G(1) items & Bank RoI Banking Banking International Franchises Resolution Other other(2) Adj. Income(3) 1.3 0.1 0.8 0.2 0.1 0.5 3.1 0.2 0.2 (0.0) 0.4 3

  5. Slide 5: Q3 2016 P&L

    Q1 Q32016 2016–P&L P&L vs. Q2 vs. Q3 (£m) Q3 2016 Q2 2016 2016 Q3 2015 2015 Q3 2016 vs. Q3 2015 Adjusted income(1) 3,494 2,735 +28% 3,047 +15% Total income 3,310 3,000 +10% 3,183 +4%  Attributable loss of £469m; Adj. operating expenses(2) (2,017) (1,833) +10% (2,300) (12%) operating profit of £255m

  6. Slide 6: NIM analysis Q3 2016 vs. Q3 2015

    NIM analysis Q3 2016 vs. Q3 2015 NIM Average Interest earning Assets Core(1) Bank £bn (12bps) (4%) 2.34% 414 2.22% 397 +8bps 98 49 2.09% 2.17% Core +10% 316 348 Q3 2015 Q3 2016 Q3 2015 Q3 2016 Q3 2015 Q3 2016 (1) Core bank comprises the PBB, CPB and CIB franchises 6

  7. Slide 7: Q3 2016 CIB income

    Q3 2016 CIB income Income, £m 526 Rates Financing Currencies other 404 348 308 277 258 252 113 160 140 128 144 122 96 95 32 50 55 78 20 27 (10) (30) (31) (28) Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016  Now expecting modest income increase over FY 2015 7

  8. Slide 8: Lowered costs by £2.8bn over the last 11 quarters

    Lowered costs by £2.8bn over the last 11 quarters Reduction in Adjusted Operating Costs, £bn Other reduction Target to reduce adjusted operating costs by 11.9 £800m in 2016; £695m achieved in 9M 2016 (0.4)(1) (1.1) 10.4 (1.0)(2) Organic 9.4 (0.8)(3) reduction 0.4 8.6 W&G 1.5 Capital VAT Resolution 0

  9. Slide 9: Q3 2016 Balance sheet

    Q1 Q32016 2016–Balance Balancesheet sheet vs. Q2 vs. FY Customer balances (£bn) Q3 2016 Q2 2016 2016 FY 2015 2015 Q3 2016 vs. FY 2015 Funded assets 569 576 (1%) 553 +3%  Funded assets up 3% to Net loans & advances to 327 327 (0%) 306 +7% £569bn customers Customer deposits 359 356 +1% 343 +5%  Leve

  10. Slide 10: Q3 2016 Balance sheet

    Q3 2016 Balance sheet CET1 Ratio: 13% Target Leverage Ratio REILs (£bn) (as % of Total Gross L&As) 39.4 (9.4%) UK PBB Ulster Commercial 15.0% 5.6% Cap other +220bps Res +640bps 20.3 (68%) 8.6% 3.4% 12.6 (3.8%) Ex Cap 2.9 Res 2.1 19.1 4.8 2.1 0.7 FY 2013 Q3 2016 FY 2013 Q3 2016 FY 2013 Q3 2016  Excl

  11. Slide 11: Continued growth across Core businesses

    Continued growth across Core businesses Net loans & advances to customers, £bn UK PBB Commercial Banking +8% +9% 129.6 99.8 119.8 91.3 FY 2015 Q3 2016 FY 2015 Q3 2016 Private Banking RBS International +5% +19% 11.8 8.7 11.2 7.3 FY 2015 Q3 2016 FY 2015 Q3 2016 11

  12. Slide 12: Reduction of legacy businesses & portfolios

    Reduction of legacy businesses & portfolios Legacy business & portfolios (RWAs, £bn) Citizens W&G Capital (72%) Resolution 176 Residual central items and other 68 10 65 4 55 50 95 10 10 10 10 48 42 ~15-20 39 ~30-35 3 4 3 2 FY 2014 Q1 2016 Q2 2016 Q3 2016 FY 2016 2017 Target(2) revised Target(1)  To

  13. Slide 13: Outlook

    Outlook Committed to long-term targets of 12+% RoTE and a cost:income ratio below 50% - but do not expect to achieve these by 2019 PBB and CPB income to be broadly stable in 2016 vs. 2015; CIB modestly up On track to achieve an £800m cost reduction in 2016; £695m reduction in 9M 2016. Further cost g

  14. Slide 14: Appendix

    >< RBS Appendix

  15. Slide 15: NPS

    NPS Net Promoter Scores across our core businesses Royal Bank of Scotland (Scotland) NatWest (England & Wales) RBSG (GB) 30 Personal Banking(1) Business Banking(2) Commercial Banking(3) 21 20 18 13 15 12 11 8 9 9 9 9 9 10 6 4 4 (2) 0 (6) (4) (4) (7) (7) (7) (9) (9) (10) (12) (20) (30) Q3 Q4 Q1 Q2 Q3

  16. Slide 16: Notable items

    Notable items (£m) Q3 2016 Q2 2016 Q1 2016 Q4 2015 Q3 2015 Total Income 3,310 3,000 3,064 2,484 3,183 Own Credit Adjustments (156) 194 256 (115) 136 Gain/ loss on redemption of own debt 3 (130) - (263) - Strategic disposals (31) 201 (6) (22) - o/w Visa Gain - 246 - - - Adjusted Income 3,494 2,735 2,

  17. Slide 17: Litigation and conduct

    Litigation and conduct End of Q3 2016 provisions (£m) Comments  Two significant settlements reached this year  Remaining MBS litigation and investigations may require 5,599 US RMBS additional provisions in future periods that, in aggregate, could be materially in excess of the provisions remaining

  18. Slide 18: Tangible Net Asset Value (TNAV) movements

    Tangible Net Asset Value (TNAV) movements Shares in £m issue (m) TNAV per share Q2 2016 TNAV 40,541 11,755 345p Profit for the period post tax(1) (327) (3p) Less: profit to NCI / other owners (142) (1p) Other comprehensive Income 95 1p o/w AFS (67) (1p) o/w Cashflow hedging gross of tax (66) (1p) o/

  19. Slide 19: Leverage ratio – key drivers

    Leverage ratio – key drivers Leverage ratio (%) 5.6% 5.6% (£bn) Q4 2015 Q3 2016 % change CET 1 capital 37.6 35.2 (6%) AT1 capital 2.0 4.0 100% Tier 1 Capital 39.6 39.2 (1%) Total assets 815.4 852.4 5% Netting and variation margin (258.6) (281.7) 9% Securities financing transactions gross up 5.1 2.2

  20. Slide 20: Progression toward Ring-Fencing

    Progression toward Ring-Fencing Proposed Future Ring-Fenced Legal Entity Structure (1) 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 RBS International NatWest Market

  21. Slide 21: Forward Looking Statements

    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’, ‘estimate’, ‘project’, ‘anticipate’, ‘believe’, ‘should

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