Natwest Group Plc · LSE:NWG

Natwest — The Royal Bank of Scotland Group — Morgan Stanley Financial Services Conference 2016

30 slides from Natwest's conference presentation, Mar 15, 2016

  1. Slide 1: Building long term shareholder value

    Building long term shareholder value Ross McEwan, Chief Executive Morgan Stanley Financial Services Conference – London 15 March 2016

  2. Slide 2: Delivery goals for 2016

    Delivery goals for 2016 Our blueprint for lasting success No.1 for customer service, trust Our Ambition and advocacy Serve customers well Our Purpose Serving | Working } Doingthe | Thinking Our Values customers | together | right thing | longterm Our Brands @NatWest RPL Cows S kUlster Bank Strength

  3. Slide 3: Delivery goals for 2016

    Delivery goals for 2016 (1) (1) Excluding litigation and conduct costs, restructuring costs, write down of goodwill and other intangible assets and the operating costs of Williams & Glyn. 3

  4. Slide 4: Delivering on the second phase of our plan

    Delivering on the second phase of our plan Phase 1 – 2014 Phase 3 – 2017 to 2019 Phase 2 – 2015/16 Building financial strength Becoming #1 Improve our core businesses and deal with Citizens, Capital  Rebuild capital strength – Resolution, and Williams & Glyn  Cement customer-centric CET1 ratio +26

  5. Slide 5: Agenda

    Agenda Delivering growth by supporting our customers We went further, faster in 2015 Driving value and performance Concluding remarks

  6. Slide 6: UK is an attractive market for financial services

    Delivering growth by supporting our customers UK is an attractive market for financial services UK services sectors generating trade surplus  UK financial services generated a trade surplus of £39bn in 2014, more than any other (£bn) net exporting industry Financial services 39  UK financial servi

  7. Slide 7: Investing to win customer loyalty and business

    Delivering growth by supporting our customers Investing to win customer loyalty and business Highly qualified & engaged people Better service ~5,500 front line staff completed certified banking Business current account skills programmes with a opening times halved further ~11,000 enrolled Employee E

  8. Slide 8: Increasingly focused on UK Retail & Commercial

    Delivering growth by supporting our customers Increasingly focused on UK Retail & Commercial Income from UK RWAs in Personal, Business & Commercial 88% ~90% ~85% 79% 81% 63% FY 2013 FY 2015 Target FY 2013 FY 2015 Target 8

  9. Slide 9: Continue to attract quality deposit flow

    Delivering growth by supporting our customers Continue to attract quality deposit flow Average non-interest bearing demand deposits by Sensitivity of Net Interest Income to interest rate franchise, and tangible equity changes (£bn) Tangible equity CIB(2) PBB Other(1) CPB Sensitivity (£m) 121 112 + 2

  10. Slide 10: Well positioned to support increasing client activity

    Delivering growth by supporting our customers Well positioned to support increasing client activity Net L&A and Deposits (2015) (£bn) Other CPB (ex. RBSI)  Excellent funding profile Capital Resolution (incl. GTS) PBB RBS International  Funds available to lend, supported by a 346 strong liquidity p

  11. Slide 11: Good growth in our core businesses

    Delivering growth by supporting our customers Good growth in our core businesses UK Personal & Business Banking(1) Commercial Banking Stock of UK PBB mortgage lending (£bn) Growth in stock of lending to businesses, FY 2015 +10% (2)  £23bn of gross mortgage lending during  Net new lending of £1.4bn

  12. Slide 12: Mortgages – competing on service, not price

    Delivering growth by supporting our customers Mortgages – competing on service, not price 2015: RBS/ Natwest 60% LTV 2yr Fixed vs.  Growth: net lending +150% to £10bn Weighted Average Market Price (“WAMP”) - Agree a mortgage every minute  Investing in people: Mortgage advisers up 21%; 803 to 974 -

  13. Slide 13: UK Corporates are borrowing again

    Delivering growth by supporting our customers UK Corporates are borrowing again Consensus-based forecast for loan growth Net funds raised by UK businesses (£m) balances in 2016 £120,000 % 5 £60,000 4 3 £0 2 -£60,000 1 2003 2005 2007 2009 2011 2013 2015 0 Property Non-property All non-financial Bonds

  14. Slide 14: NatWest Personal and Business NPS highest since 2010

    Delivering growth by supporting our customers NatWest Personal and Business NPS highest since 2010 Net Promoter Scores across our core businesses Royal Bank of Scotland (Scotland) NatWest (England & Wales) RBSG (GB) Personal Banking(1) Business Banking(2) Commercial Banking(3) (10) (20) (30) Q4 Q1 Q

  15. Slide 15: Agenda

    Agenda Delivering growth by supporting our customers We went further, faster in 2015 Driving value and performance Concluding remarks

  16. Slide 16: A clear record of delivering our goals

    We went further, faster in 2015 A clear record of delivering our goals Priorities 2015 Goals Delivery Reduce Risk-Weighted Assets (RWAs) to <£300 billion ✓ RCR exit substantially complete ✓ Strength & sustainability Citizens deconsolidation ✓ £2 billion of AT1 issuance ✓ Customer experience Improve

  17. Slide 17: Rapid reduction of legacy businesses & portfolios

    We went further, faster in 2015 Rapid reduction of legacy businesses & portfolios Legacy businesses & portfolios (RWAs)  Capital Resolution down £46bn (48%) (£bn) – expected to reduce RWAs to around (63%) £30bn by the end of 2016 176  Working on solutions for the remaining Citizens 68 Capital Reso

  18. Slide 18: Our balance sheet is now more resilient

    We went further, faster in 2015 Our balance sheet is now more resilient CET1 Ratio: 13% Target Leverage Ratio REILs (£bn) (as % of Total Gross L&As) 15.5% 5.6% 39.4 (9.4%) +690bps +220bps Cap (69%) 3.4% Res 8.6% 20.3 12.2 (3.9%) Ex 3.4 Cap Res 8.8 19.1 FY 2013 FY 2015 FY 2013 FY 2015 FY 2013 FY 2015

  19. Slide 19: Excellent progress in shrinking higher risk exposures

    We went further, faster in 2015 Excellent progress in shrinking higher risk exposures Oil & Gas (£bn)(1) Mining and Metals (£bn)(1) CRA (63%) CRA (59%) 9.4 2.7 3.5 1.1 FY 2014 FY 2015 FY 2014 FY 2015 Shipping (£bn)(1) Emerging Markets (£bn)(2) CRA (30%) (61%) India 10.1 8.7 China 7.1 2.6 Russia 4.1

  20. Slide 20: We are becoming simpler

    We went further, faster in 2015 We are becoming simpler Property Structure Products Systems # registered # front book # major banking # London properties companies products platforms 2013 11 1,107 416(1) 651 27% 34% 19% 13% 2015 8 733 339 568 Target 5 ~500 <300 ~150 (1) FY 2014. 20

  21. Slide 21: Lowered costs by >£2bn over the last 2 years

    We went further, faster in 2015 Lowered costs by >£2bn over the last 2 years (£bn) Other reduction 11.9 Target to reduce operating costs by a (0.4)(1) further £800 million in 2016 (1.1) 10.4 (1.0)(2) Organic 9.4 (0.8)(3) reduction 0.4 8.6 W&G 1.5 Capital Resolution 0.2 Int’l Private 1.5 CIB Banking

  22. Slide 22: Litigation and conduct

    We went further, faster in 2015 Litigation and conduct End of Q4 2015 provisions (£m) Comments 3,985  Total provisions to US RMBS litigation increased in Q4 2015 by £1.5bn from £2.3bn to £3.8bn, further substantial provisions may be required US RMBS  These provisions do not include potential penal

  23. Slide 23: Agenda

    Agenda Delivering growth by supporting our customers We went further, faster in 2015 Driving value and performance Concluding remarks

  24. Slide 24: Our plan to improve returns and performance

    Driving value and performance Our plan to improve returns and performance  Income and RWA figures are business as a % of FY15 adjusted Income (£11,422m) and RWAs (£175bn) across all 6 core businesses: UK PBB Commercial Banking RBS International Invest to 46% Income 28% Income 3% Income Grow 19% RWA

  25. Slide 25: 2016 outlook

    Driving value and performance 2016 outlook Income  Expect PBB and CPB franchises income to stabilise in 2016  CIB may see some modest further income erosion given slow start to the year Loan growth  Target net 4% growth in PBB and CPB customer loans Costs  Target cost savings of £800m (in additi

  26. Slide 26: Agenda

    Agenda Delivering growth by supporting our customers We went further, faster in 2015 Driving value and performance Concluding remarks

  27. Slide 27: Capital distributions

    Capital distributions Milestones before seeking Board and Regulatory approval  Capital structure normalised (final DAS dividend planned in H1 2016(1), B-shares now cancelled)  Williams & Glyn exit assured  Pass the peak of litigation and conduct costs, including US RMBS  Confidence in sustainabl

  28. Slide 28: Summary

    Summary Determined to build a great customer bank Strong performance against 2015 targets In 2016, targeting stabilising revenues and positive jaws – across combined core franchises Continue to address key issues to be able to return to shareholder distributions(1) (1) Earliest possible timing is li

  29. Slide 29: Q&A

    Q&A

  30. Slide 30: 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

The Royal Bank of Scotland Group — Morgan Stanley Financial Services Conference 2016 on 6ix