Natwest Group Plc · LSE:NWG

Natwest — Debt Investor Presentation (August 2017)

24 slides from Natwest's debt investor presentation, Aug 4, 2017

  1. Slide 1: Fixed Income Investor Presentation H1 2017 Results

    Fixed Income Investor Presentation H1 2017 Results 4 August 2017

  2. Slide 2: Ewen Stevenson, Chief Financial Officer

    Ewen Stevenson Chief Financial Officer

  3. Slide 3: H1 2017 update on progress

    H1 2017 update on progress Core Bank Progress  Core adjusted income growth of 8.6% over H1 2016 Grow income  On track to meet 3% lending growth FY 2017 target supported by mortgages  £494m additional costs out in H1 2017 Cut costs  On track to meet £750m reduction target for 2017  Reduced H1 20

  4. Slide 4: Core credit messages

    Core credit messages Diversified income streams Three core franchises generating stable and attractive returns Targeted growth Well progressed on legacy clean-up and improving balance sheet resilience 2020 Target Operating Profile Sub-50% C:I 13% CET1 ~85% RWAs in ~90% Income 12+% ROTE ratio ratio P

  5. Slide 5: Diversified income streams

    Diversified income streams H1 2017 Adjusted income contribution Strategic plan targets higher quality (%) of earnings in future Ulster Bank RoI 5% UK Business Banking  Focus on customer loyalty, conducting 6% more business with our most valuable UK Personal customers Banking 37%  Targeted growth C

  6. Slide 6: Three core businesses generating stable and attractive returns

    Three core businesses generating stable and attractive returns Core Adjusted Return 11% 11% 14% on Equity(1,2) (%) 4.2 4.1 Core Adjusted operating profit(2) (£bn) 1.2 1.2 1.3 1.3 1.4 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’15 Q1’16 Q2’16 Q3’16 Q4’16 FY’16 Q1’17 Q2’17  Core busi

  7. Slide 7: Targeted growth

    Targeted growth Diversified portfolio with improving risk Growing in chosen markets, within risk metrics appetite Gross loans and advances to customers Gross mortgage lending UK PBB (£bn) 5% Mortgages Unsecured £14bn 49% Personal lending 3% 117 123 92 96 105 £330bn 4% Other 2% NatWest 5% Markets 3%

  8. Slide 8: CET1 and leverage ratios

    CET1 and leverage ratios CET1 Ratio CRR Leverage Ratio +140bps 14.8% 5.1% 5.1% 13.4% 13.0% FY 2016 H1 2017 Target FY 2016 H1 2017  CET1 increased 140bps despite £1.2bn of restructuring, conduct & litigation costs  Leverage ratio maintained  Increasing clarity on capital generation as legacy issue

  9. Slide 9: Robert Begbie, Treasurer

    x RBS Robert Begbie Treasurer

  10. Slide 10: H1 2017 Results – Treasurer's view

    H1 2017 Results – Treasurer’s view Solid capital and liquidity metrics maintained, continued focus on balance sheet optimisation Capital reorganisation complete, distributable reserves up £30bn Good progress against issuance plans Delivering on structural reform – ring-fencing plans entering executi

  11. Slide 11: Solid capital and liquidity metrics maintained

    Solid capital and liquidity metrics maintained H1 2017 FY 2016 Loan : deposit ratio 91% 91% Short-term wholesale funding £18bn £14bn (1) Liquidity coverage ratio 145% 123% Net stable funding ratio 123% 121% Common equity tier 1 ratio 14.8% 13.4% CRR Leverage ratio 5.1% 5.1% (2) Loss Absorbing Capita

  12. Slide 12: 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 capital requirements 14.8 Illustrative 13.0 headroom (1) Illustrative 6.4 2.4 headroom (1) 10.6 (4) 0.5 1.0 8.4 0.5 2.5 1.3 (

  13. Slide 13: Capital reorganisation successfully completed and increased available distributable reserves

    Capital reorganisation successfully completed and increased available distributable reserves 2017 evolution in RBSG (HoldCo) distributable reserves (£bn) 38.1 (0.2) 30.3 8.0 FY 2016 Capital reorganisation Other movements (1) H1 2017  H1 2017 RBSG (HoldCo) distributable reserves £38.1bn vs £8.0bn at

  14. Slide 14: On track to meet future MREL requirements

    On track to meet future MREL requirements (1) Future LAC requirement Progress toward future non-CRR MREL(4) needs (3) Based on BoE May 2017 guidance Based on current £215bn RWA and static regulatory capital requirements ~£25bn CRD IV & Management >4% Buffers ~£17bn (4) Non-CRR 11.8% MREL £8.5bn ~£9b

  15. Slide 15: Managing legacy securities

    Managing legacy securities Manage stack for value, balancing factors including: current & future regulatory value; relative funding cost; and Rating Agency considerations Not called equity accounted USD7.640% and EUR7.0916% (nominal value ~£0.8bn)(1)  Retained for transitional Tier 1 and rating age

  16. Slide 16: Good progress against simple issuance needs

    Good progress against simple issuance needs 2017 Issuance Plan H1 Progress Issuance focussed on MREL build:  Target £3-5bn equivalent Senior  Issued £3.6bn equivalent MREL HoldCo eligible Senior HoldCo  No active need for AT1  No active need for Tier 2 Returning to modest funding activity:  Rei

  17. Slide 17: Ring fencing plans progressing well

    Ring fencing plans progressing well Illustrative future structure NatWest Holdings Limited NatWest Markets Plc(1) RBS International Ltd • Primarily deposit funded • Primarily repo funded • Primarily deposit funded • Liquidity managed across major operating subsidiaries • Down-streamed MREL(2) • Acce

  18. Slide 18: Core credit messages

    Core credit messages Diversified income streams Three core franchises generating stable and attractive returns Targeted growth Well progressed on legacy clean-up and improving balance sheet resilience 2020 Target Operating Profile Sub-50% C:I 13% CET1 ~85% RWAs in ~90% Income 12+% ROTE ratio ratio P

  19. Slide 19: Appendix

    >< RBS Appendix

  20. Slide 20: H1 2017 results by business

    H1 2017 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) 2.8 0.3 1.8 0.3 0.2 1.0 6.3 (0.1) 0.

  21. Slide 21: Litigation and conduct

    Litigation and conduct End of H1 2017 provisions (£m) Comments  An additional £151m provision for the recent FHFA settlement 6,579  RBS continues to cooperate with the DoJ in its civil and criminal investigations of RMBS matters and US RMBS several state attorney generals in their investigations 

  22. Slide 22: Estimated Loss Absorbing Capital ("LAC") position

    (1) Estimated Loss Absorbing Capital (“LAC”) position (4) H1 2017, £bn LAC value (1) Regulatory Value (2,3) Par Value Common Equity Tier 1 Capital(5) 31.9 31.9 31.9 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 (OpCos) -

  23. Slide 23: RBS senior debt rating composition

    RBS senior debt rating composition Standard & Poor’s Moody’s Fitch Stand Alone Credit Profile bbb Baseline Credit Assesment baa3 Viability Ratings bbb+ Anchor bbb+ Macro profile Very Strong - Operating environment a+ to aa Stand- Business position 0 Financial profile baa2 Company profile bbb to a- a

  24. Slide 24: 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

NatWest Group — Debt Investor Presentation (August 2017) on 6ix