Natwest Group Plc · LSE:NWG
Natwest — The Royal Bank of Scotland Group — Investor Day (June 2014)
46 slides from Natwest's investor day presentation, Jun 27, 2014
Slide 1: Personal & Business Banking (PBB) Investor Roundtable
Personal & Business Banking (PBB) Investor Roundtable Les Matheson, Chief Executive Officer, PBB 27 June 2014
Slide 2: Forward Looking Statements
Forward Looking Statements 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’, ‘s
Slide 3: Today's Speakers
Today’s Speakers Les Matheson, Chief Executive Officer Stuart Haire, MD, Direct Bank Moray McDonald, MD, Products Mike Larkin, Finance Director 1
Slide 4: Agenda
Agenda Personal & Business: our new franchise Focus on Personal & Business Banking Strategy Service Products Financial performance & outlook Summary
Slide 5: Agenda
Agenda Personal & Business: our new franchise Focus on Personal & Business Banking Strategy Service Products Financial performance & outlook Summary
Slide 6: Personal & Business Banking strategy
Personal & Business Banking strategy Our strategy remains unchanged and is defined by our ambition to be… The #1 Personal and Business bank for customer trust and advocacy in the UK Where we are going to operate How we are going to win Capabilities required A retail bank serving individuals, Obs
Slide 7: PBB has clear franchise and distribution strength
PBB has clear franchise and distribution strength… Personal and Business Banking Personal: Core Personal: Affluent Business Customers have similar and Customers have a named private Everyday transactional products relatively simple advice requirements banker relationship to meet more through t
Slide 8: ...and an experienced management team
…and an experienced management team ( number of years industry experience ) Direct report of Les Les Matheson CEO, Personal & Business Banking Sits on Executive Committee (18 years) Moray McDonald Barry Connolly Calvin O’Brien MD, Products MD, Customer Experience CAO, PBB (28 years) (23 years) Joini
Slide 9: Agenda
Agenda Personal & Business: our new franchise Focus on Personal & Business Banking Strategy Service Products Financial performance & outlook Summary
Slide 10: PBB customers share a basic set of needs
PBB customers share a basic set of needs… Invest for the Basic needs Make payments Save money Borrow money Protect myself future Need to pay my Trying to save for Buying a house Want to insure Individual bills my wedding Planning for my Investing to grow property against circumstances Need to pay my
Slide 11: ...and we are making progress – but with some way to go
…and we are making progress – but with some way to go Net Promoter Score (NPS) improvement in last 12 months(1,2) Identified drivers of customer advocacy(3) Makes it easy to use Treats me fairly and honestly Personal Treats me as an individual with genuine empathy +12 Acts in my interests, n
Slide 12: Customer behaviours are changing
Customer behaviours are changing… (1) (1) Service mix by channel Product needs met by channel 100% 400m 100% 18% 25% 300m ~30% 11% 40% ~50% 50% 200m 50% Mobile 74% 63% 100m ~50% 24% 13% ~5% 0% 0m 0% 2010 2013 2017 (est) 2010 2013 2017 (est) Branch Telephony Branch Telephony Online Mobile Other Onlin
Slide 13: ...and our model is evolving with our customers
…and our model is evolving with our customers Perfect customer interactions every time Simple products Informed customer Consistent frontline delivery recommendations All customer interactions enabled by improvements to infrastructure and processes and reliable, leading technology 8
Slide 14: Simple products
Simple products Delivering a simple and transparent product set that’s fairly priced, easy to understand and buy (1) (2) On-sale product range simplified Back book products disappearing… Personal product range projected to reduce by End 2012 End 2014 ~50% over 3 years... actual target End 2011 End 2
Slide 15: Informed customer recommendations
Informed customer recommendations Customer Becoming accomplished at deploying Stored Data Volunteered Captured Data Real Time Information Data our technology and data powers Leading data and IT capability that enables Decision Made ‘segment of one’ approach to all interactions Customers will val
Slide 16: Consistent frontline delivery
Consistent frontline delivery Delivering a co-ordinated programme of coaching and tools to drive consistent performance Tackle the inconsistency in customer engagement, quality of customer conversations and staff capability Releasing frontline time to serve customers and increasing staff knowled
Slide 17: Business Banking
Business Banking Key facts: #1 UK business banking franchise with 23% current account market share 22% share of business start-ups – up 4% in last 12 months (1) Gross new lending up ~55% May YTD vs same period in 2013 An expanding broker channel; 200 new brokers registered NPS has improved
Slide 18: PBB is a significant contributor to bank value
PBB is a significant contributor to bank value 2013 Personal Business Ulster Total PBB Operating Profit / (Loss) £0.7bn £0.1bn (£1.6bn) (£0.8bn) Add Exceptional Items (1) £1.1bn - £1.0bn £2.1bn Adjusted Op Profit/(Loss) £1.8bn £0.1bn (£0.6bn) £1.3bn RWA £37bn £14bn £31bn £82bn L&A £113bn £15bn £31bn
Slide 19: Agenda
Agenda Personal & Business: our new franchise Focus on Personal & Business Banking Strategy Service Products Financial performance & outlook Summary
Slide 20: We are shifting branch activity towards advice
We are shifting branch activity towards advice SHIFTING BRANCH ACTIVITY FROM TO Transaction Centres Advice and Education Centres Large footprint of branches Points of presence where our customers live, work & travel Traditional counter, separating staff and customer Open counters enabling be
Slide 21: Simple & Easy Banking on the move
Simple & Easy Banking on the move Our busiest branch How, what, and how I forgot my wallet! Identity check with a much? snap of a picture Check my balance • Built to easily understand current finances Account opening in <24 Get Cash at ~8k hours Make a transfer • No need to hunt – locate ATM
Slide 22: Our investment plans reflect how customer requirements are evolving
Our investment plans reflect how customer requirements are evolving DIGITAL New tablet eBanking proposition Add new Mobile Banking functionality (including payments) Infrastructure Create innovative tools tailored to specific life and systems events Digital 25% 40% INFRASTRUCTURE AND SYSTEMS (
Slide 23: Digitising the Bank
Digitising the Bank Build new capability Integrate internally Integrate into customer lives 2016 - 2017 We’ve built high customer engagement Connecting personal customers to small 95m 30k business Page clicks Web-chats per week per week Live your life 55% £10bn 26m Buy your Digital support Active On
Slide 24: Agenda
Agenda Personal & Business: our new franchise Focus on Personal & Business Banking Strategy Service Products Financial performance & outlook Summary
Slide 25: Products Overview
Products Overview Home Lending: Build on market leading net lending to get closer to our ‘natural’ share Simple: A lean product set that drives high staff confidence and great front line interactions for customers Easy: - A ‘walk out working’ mentality for new products - Easy, intuitive processes th
Slide 26: Home Lending is our primary product focus
Home Lending is our primary product focus Growth More advisors Risk focus 30%+ growth since 2008 (£75bn to Doubling from c.400 in 2012 to Robust sales process established £100bn) c.800 by end 2014 Current plans will not leave PBB Underweight position vs. natural Brokers now forecast to b
Slide 27: Savings: The savings bank of choice for our customers
Savings: The savings bank of choice for our customers Much simpler More profitable But can get better Simple: • Fair Pricing & Simplification generate Easy: better product mix and rates. • Personal On-sale reduced from • Provide the support and tools to 23 to 5 products • First bank to be awarded a
Slide 28: Current Accounts: Driving customer engagement and delivering great service
Current Accounts: Driving customer engagement and delivering great service More engaged Higher value Easy: • 18% market share of main banked • 650k Travel Markers since launch (1) accounts in the UK(2) • Strong balance growth in 2013 (12% • 1m+ Cashback Plus registered (3) vs market growth of 4% ) •
Slide 29: Unsecured: Repositioning Credit Card, Loan and Overdrafts
Unsecured: Repositioning Credit Card, Loan and Overdrafts around customer borrowing needs. Leading in fairness Getting easier 24% reduction in card complaints Fair: • The only Major Bank to ban Balance Transfer Offers Q1 2013 Q1 2014 • Clear Rate Platinum points the way for the ‘low rate’ segment Ea
Slide 30: Agenda
Agenda Personal & Business: our new franchise Focus on Personal & Business Banking Strategy Service Products Financial performance & outlook Summary
Slide 31: The economy has been a challenge… But an upturn is now evident
The economy has been a challenge… But an upturn is now evident Households have been deleveraging…. … but UK mortgage approvals are now growing YoY growth Forecast 400k Forecast 12% 350k 10% 300k 8% 250k 6% 200k 4% 150k 2% 100k 0% 50k 2007 2009 2011 2013 2015 -2% 0k 2007 2009 2011 2013 2015 Mortgages
Slide 32: Personal & Business – strong franchise, healthy returns
Personal & Business – strong franchise, healthy returns… (1) 2013 Expected Balance sheet momentum is building… trend Momentum is building as deleveraging slows Total income £5.8bn Mortgages gaining in market share Costs (£3.4bn) New business lending up 55% YoY Deposit growth evident, largely
Slide 33: ...with a good 2014 income outlook
…with a good 2014 income outlook… 2013 Income Income Volume Margin Fees (£bn) (1) expected expected expected expected trend trend trend trend Mortgages 2.6 Unsecured lending 0.9 Personal deposits 0.5 Cards 0.8 Business 1.0 Total 5.8 Mortgages: Growth in new business volumes will he
Slide 34: ...proven ability to deliver cost efficiencies
…proven ability to deliver cost efficiencies… Costs (£bn) (1) 3.7 3.7 (0.3) Track record of reducing costs: 3.6 17% reduction in 2009-13 headcount delivered by: 3.5 Lower support & control headcount through (0.2) 3.4 3.4 0.1 reduced duplication and increased spans of 3.3 0.1 control 3.2 Proces
Slide 35: ...and a benign impairments trend
…and a benign impairments trend Significant improvement in impairments (1) Impairments as % of L&A (1) 1200 0.9% 5.0% 0.8% 1000 Impairment as % of L&A 0.7% 4.0% Impairments £m 800 0.6% 0.5% 3.0% 600 0.4% 2.0% 400 0.3% 0.2% 1.0% 200 0.1% 0 0.0% 0.0% 2011 2012 2013 Loans Cards Business Mortgages Busin
Slide 36: Business Banking – a 'new' opportunity
Business Banking – a ‘new’ opportunity 2013 (1) Expected trend Income: Total income £1.0bn Lending performance improving after an extended period of customer deleveraging Costs (£0.7bn) Deposit pricing leading to a recovery in savings Impairments (£0.2bn) margins and spread improvement Operating P
Slide 37: Risk Management
Risk Management We have significantly enhanced our risk management processes Credit and Operational risk approach well developed: Improved Credit metrics with impairments stable at historically low levels after several years of decrease Underlying portfolio credit metrics improving or stable and
Slide 38: Conduct outcomes drive the way we manage our business
Conduct outcomes drive the way we manage our business Product strategy: Comprehensive conduct reviews under way (Loans/Cards completed) Monitoring and Vulnerable Customers programme under remediation development Post-sales Business model Commercial and customer planning: process and strategy
Slide 39: Medium term outlook: Consistent growth in returns
Medium term outlook: Consistent growth in returns Consistent income growth expected Cost base reducing as restructuring implemented and new business structure is embedded Cost:income ratio targeted to move below 50% Impairment trends benign Positive jaws contributing to improving return on equity 31
Slide 40: Agenda
Agenda Personal & Business: our new franchise Focus on Personal & Business Banking Strategy Service Products Financial performance & outlook Summary
Slide 41: Result: Strong and consistent cashflow, high returns and valuation
Result: Strong and consistent cashflow, high returns and valuation for RBS shareholder Drive advocacy through customer service – target number one for customer trust and advocacy Differentiate through fair & simple products, treating customers as individuals and professional staff A consistent focus
Slide 42: Q&A
Q&A
Slide 43: Appendix
Appendix
Slide 44: Following the restructure announced in February, our reporting approach has changed
Following the restructure announced in February, our reporting approach has changed Creation of new Personal & Business Banking franchise, consisting of UK Retail (including Williams & Glyn Retail), Business Banking (including W&G Business & Commercial) and Ulster Bank Structural changes in cost
Slide 45: Biographies
Biographies Name Title Background Les Chief Les was appointed CEO, Personal & Business Banking in Matheson Executive February 2014. He joined RBS in January 2010 as Managing Officer, Director of Products, assuming additional responsibility for Personal & Marketing in October 2011. Before joining R
Slide 46: Biographies
Biographies Name Title Background Moray Managing Moray joined RBS in September 2010 as Category Director for McDonald Director, Home Lending and in April 2014 secured the role of Managing Products, Director, Products. Prior to joining RBS Moray has worked in Personal & financial services in Europe
The Royal Bank of Scotland Group — Investor Day (June 2014) on 6ix