Natwest Group Plc · LSE:NWG
Natwest — The Royal Bank of Scotland Group — Barclays Global Financial Services Conference 2013
36 slides from Natwest's conference presentation, Sep 9, 2013
Slide 1: Building a “Really Good” Bank
Building a “Really Good” Bank Bruce Van Saun, Group Finance Director Barclays Global Financial Services Conference – New York 9th September 2013
Slide 2: Important information
Important information 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’, ‘believes’, ‘should’, ‘
Slide 3: Agenda
Agenda Our vision Restructuring - nearing the finishing line Getting more from our Core businesses Spotlight: Leading UK R&C franchises Spotlight: US R&C Spotlight: Ulster Spotlight: Markets Key milestones and path ahead 3
Slide 4: We are striving to this end… This is not the position we started from
We are striving to this end… Our purpose To serve our customers well To be trusted, respected and valued by our Our vision customers, shareholders and communities Serving Customers Working together Our values Doing the right thing Thinking long-term This is not the position we started from in 2009 W
Slide 5: “Really Good” Bank viewed through various stakeholder lenses
“Really Good” Bank viewed through various stakeholder lenses Communities & Society Support sustainable prosperity Regulators Investors Comply with Customers Be a safe letter and Serve our and spirit of valuable rules and Customers well investment regulations Employees Offer fulfilling jobs Progres
Slide 6: End state destination increasingly clear…
End state destination increasingly clear… A leading UK bank anchored in Retail & Commercial business lines Enduring Sustain strong capabilities internationally and in financial markets customer to support the needs of our customers and shareholders franchises Top tier competitor in our chosen
Slide 7: Agenda
Agenda Our vision Restructuring - nearing the finishing line Getting more from our Core businesses Spotlight: Leading UK R&C franchises Spotlight: US R&C Spotlight: Ulster Spotlight: Markets Key milestones and path ahead 7
Slide 8: Safety & Soundness metrics
Safety & Soundness metrics Medium-term Group – Key performance indicators Worst point H113 target Loan : deposit ratio (net of provisions) 154% 1 96% c.100% Short-term wholesale funding 2 £297bn 3 £37bn <10% TPAs Achieved Liquidity portfolio 4 £90bn 3 £158bn >1.5x STWF Tier 1 leverage ratio 5 28.7x
Slide 9: Clear path to a strong CT1 ratio, leverage ratio acceptable and improving
Clear path to a strong CT1 ratio, leverage ratio acceptable and improving CT1 ratio Basel III full end-point measure leverage ratio % Reported CT1 ratio FLBIII CT1 ratio % +100bps +30bps 3.4% 10.3 11.1 3.1% ~10.0 8.7 >9.0 7.7 Q412 Q213 2013E 2014E FY12 Q213 Target over 9% ‘fully loaded’ ratio by e
Slide 10: Restructuring nearing successful conclusion
Restructuring nearing successful conclusion New Milestones H113 Comments targets 1 FY13E Expect to surpass the previous £40bn TPA target Non-Core TPAs £45bn by end 2013 £36-38bn 2 FY14E Good RWA progress, on track to achieve £80bn Markets RWAs £96bn 1 ‘fully loaded’ Basel III RWA target by end-2014
Slide 11: Non-Core post 2013: further reduction at lower cost
Non-Core post 2013: further reduction at lower cost Improved Non-Core guidance Move toward more passive management post 2013 Non-Core Third Party Assets, ex. derivatives, £bn Non-Core Third Party Assets, ex. derivatives, by asset class, £bn -83% 2008 2016 258 9 21 c.£20bn -£2-4bn Total 47 112 45 40
Slide 12: Update on Good Bank / Bad Bank
Update on Good Bank / Bad Bank Highly cooperative effort with HMT and their advisors over past 2 months Rigorous scrutiny of cost / benefits of various courses of action Expect preliminary conclusions shortly Final report on recommendations will be detailed and rigorous Look forward to con
Slide 13: Agenda
Agenda Our vision Restructuring - nearing the finishing line Getting more from our Core businesses Spotlight: Leading UK R&C franchises Spotlight: US R&C Spotlight: Ulster Spotlight: Markets Key milestones and path ahead 13
Slide 14: RBS Core business - where do we stand now
RBS Core business - where do we stand now UK focus; International reach Majority of capital allocated to retail and commercial businesses 2012 Revenue by Geography, % Funded Assets by Business Line, % RWAs by Business Line, % 2008 FY12 Markets Retail & 22% International GBM Commercial 34% 56% 44% Re
Slide 15: We have sustained Core customer market positions
We have sustained Core customer market positions UK Corporate UK Retail International Banking Markets #1 UK , #6 Global in 4 5 Top 5 in FX, 7 #1 SME Bank #2 for UK 1 3 cash management current accounts Rates & Asset #1 Corporate #1 UK, #10 Global 2 6 Bookrunner of Backed Products Bank 1
Slide 16: Core profit and returns are the new team’s priority
Core profit and returns are the new team’s priority RWAs (£bn) (£bn) RoE (%) 2010 2011 2012 H113 2010 2011 2012 H113 Outlook UK Retail 49 48 46 44 16.3 24.5 24.4 25.8 Stable Upside rests with economic growth, rates Wealth 13 13 12 13 15.9 12.8 13.1 12.1 US R&C 57 59 57 58 3.7 6.3 8.3 8.0 Focus
Slide 17: Agenda
Agenda Our vision Restructuring - nearing the finishing line Getting more from our Core businesses Spotlight: Leading UK R&C franchises Spotlight: US R&C Spotlight: Ulster Spotlight: Markets Key milestones and path ahead 17
Slide 18: Leading UK R&C franchises
Leading UK R&C franchises UK Retail UK Corporate Wealth A leading customer franchise #1 ranked product offering Premium brand, boutique approach RBS Corporate 1 1 #2 (UK), 70,000 clients #2 for UK #1 SME Bank #5 (Scotland), 7,000 Current 2 #1 Corporate Bank clients 23% of 22% of 5% of Accounts 3 Top
Slide 19: Agenda
Agenda Our vision Restructuring - nearing the finishing line Getting more from our Core businesses Spotlight: Leading UK R&C franchises Spotlight: US R&C Spotlight: Ulster Spotlight: Markets Key milestones and path ahead 19
Slide 20: Citizens – good foundation to deliver improving returns
Citizens – good foundation to deliver improving returns Citizens operates in a 12 state footprint ...with an established presence within our within 3 geographic regions... footprint and nationally Mid West Mid-Atlantic New England Dimension Rank Assets ($118bn) #14 #12 National Loans ($85bn) Deposit
Slide 21: Citizens – more work to be done
Citizens – more work to be done Return on Equity Cost:income ratio 1 1 US R&C US R&C 12%+ 72% 73% 73% 8.3% ~60% 8.0% 6.3% 2011 2012 H113 Target 2011 2012 H113 Target NIM US R&C 1 Sizable gap to peer RoE remains 3.03% 2.97% Lower NIM drives RoE gap, reflects asset 2.92% portfolio mix, risk appeti
Slide 22: Citizens – focus on building momentum through 2014 / 2015
Citizens – focus on building momentum through 2014 / 2015 Strong Commercial Return on Banking Equity pipeline Expanding Capital Markets capabilities USDm # of Lead Left & Joint Lead Arranger 20% Transactions 3,600 2,992 891% 109 83 72 40 11 Q212 Q213 2009 2010 2011 2012 2013YTD 1 Residential Mortgag
Slide 23: Citizens – the building blocks are in place
Citizens – the building blocks are in place A compelling franchise 9th largest branch network in the US with extensive ATM, online, and mobile capabilities; well established franchise in core markets Self-funded with strong asset quality, credit ratings and capital ratios Key contributor to Gr
Slide 24: Citizens IPO – realising franchise value and growth
Citizens IPO – realising franchise value and growth Citizens IPO – another important milestone in RBS’s restructuring plan Benefits of a partial Citizens IPO for RBS Benefits of a partial Citizens IPO for CFG Spotlights progress made Provides local stock to better attract / retain employees, use
Slide 25: Agenda
Agenda Our vision Restructuring - nearing the finishing line Getting more from our Core businesses Spotlight: Leading UK R&C franchises Spotlight: US R&C Spotlight: Ulster Spotlight: Markets Key milestones and path ahead 25
Slide 26: Ulster Bank: 177 years of heritage on the island of Ireland
Ulster Bank: 177 years of heritage on the island of Ireland; Ulster Bank on the outside, RBS on the inside Republic of Ireland #3 player Northern Ireland #1 player millions millions 6 6 4.6 4 4 1.8 2 1.3 2 0.7 0 0 Population Customer Base Population Customer Base Business Profile Business Profile
Slide 27: Ulster Bank – remain cautiously optimistic as trends improving
Ulster Bank – remain cautiously optimistic as trends improving Impairments falling, driven by stabilisation in economy £m Core Impairments Non-Core Impairments The macro-economic environment across the -12% island of Ireland has shown improvement 800 682 Investor confidence in Ireland is returni
Slide 28: Agenda
Agenda Our vision Restructuring - nearing the finishing line Getting more from our Core businesses Spotlight: Leading UK R&C franchises Spotlight: US R&C Spotlight: Ulster Spotlight: Markets Key milestones and path ahead 28
Slide 29: Markets – significantly smaller and more focused
Markets – significantly smaller and more focused Assets reduced by over 2/3rds since peak Good RWA progress despite regulatory uplifts GBM / Markets TPAs, £bn GBM / Markets RWAs, £bn -69% -69% 874 279 268 250 87 80 GBM highest point1 Markets Q213 Markets Target GBM highest point2 Markets Q213 Market
Slide 30: Markets delivering on re-shaped and re-sized business model
Markets delivering on re-shaped and re-sized business model Where we are heading How we will get there 2012 Target1 Focus on fixed income product suite only (FX, Income £4.5bn £3-3.25bn Rates, DCM/Credit and Asset Backed Expenses £2.9bn £2-2.25bn Products), where Markets is a top tier and credible
Slide 31: Markets – clear plan on costs
Markets – clear plan on costs Planned cost reductions, £bn Sample initiatives 2012 cost base 2.9 11 Simplified product suite – fixed income product suite only, where Markets is highly competitive 11 Changes to 11 Key areas for exit or run-off: structured retail ~0.3 business model investor products,
Slide 32: Markets – clear plan for RWAs
Markets – clear plan for RWAs Markets RWAs, £bn 29 38 87 10 80 3 7 12 1 FLBIII impact 68 Run-off and exit businesses Markets Q213 FLBIII uplifts FLBIII mitigation Business Short-term Markets target (Basel 2.5) mitigation business (Basel III) 2 exits & run-off Excellent RWA progress – down £14.5bn
Slide 33: Agenda
Agenda Our vision Restructuring - nearing the finishing line Getting more from our Core businesses Spotlight: Leading UK R&C franchises Spotlight: US R&C Spotlight: Ulster Spotlight: Markets Key milestones and path ahead 33
Slide 34: We have hit most key milestones
We have hit most key milestones Milestones Outcome 1 Preference share coupons Discretionary coupons resumed in 2012 2 APS Scheme exited in October 2012 with no claim 3 Repaying government funding CGS and SLS schemes fully repaid in 2012 & liquidity support 4 In compliance with all balance sheet & EC
Slide 35: Restructuring well-advanced… path ahead clear
Restructuring well-advanced… path ahead clear Core Bank Serve customers well, and better Lending growth Deliver earnings growth and cost reductions Achieve capital targets Restructuring Conclude active run-down of Non-Core; work through GB/BB analysis Complete Markets restructure Complete DLG sell-d
Slide 36: Questions
%% RBS Group Questions
The Royal Bank of Scotland Group — Barclays Global Financial Services Conference 2013 on 6ix