Natwest Group Plc · LSE:NWG
Natwest — The Royal Bank of Scotland Group — Bank of America Merrill Lynch Banking & Insurance CEO Conference 2014
34 slides from Natwest's conference presentation, Sep 30, 2014
Slide 1: Progress towards building a truly customer-centric bank
Progress towards building a truly customer-centric bank Ross McEwan, Chief Executive Bank of America Merrill Lynch Banking & Insurance CEO Conference 30th September 2014
Slide 2: Our blueprint
Our blueprint Our Ambition No.1 for customer service, trust and advocacy by 2020 Our Purpose Serve customers well Serving Working Doing the Thinking Our Values customers | together | rightthing | longterm Our Brands NatWest Foot «Cows So ¥¥UIster Bank Capital £1 billion Resilient Implement 2015 -17
Slide 3: Contents
Contents 1 Our ambition 2 Our purpose 3 Our values 4 Our brands 5 Our 2014 focus
Slide 4: #1 for customer service, trust and advocacy by 2020
#1 for customer service, trust and advocacy by 2020 Service #1 Net Promoter Score for each of our segments Customers Trust #1 trusted bank in the UK Great place to work People 1 Engagement Index ≥ Global Financial Services norm Attractive and consistent returns Return on Tangible Equity 12+% Cost:in
Slide 5: Customers are beginning to respond to the change
Customers are beginning to respond to the change Net Promoter Score (NPS) performance Personal 1 Business Commercial 12 months 6 months 12 months 14* ending June ending June ending June 2013 2014 2013 Feb-14 Aug-14 12 months -2 ending June -10 2014 -16* 12 months 6 months 12 months ending June endin
Slide 6: Contents
Contents 1 Our ambition 2 Our purpose 3 Our values 4 Our brands 5 Our 2014 focus
Slide 7: Serve customers well… Good early progress delivering upon our purpose
Serve customers well… Good early progress delivering upon our purpose We have stopped teaser rates – best Rewarding loyalty rates offered to new and existing customers. Fairer pricing Same pricing across all channels. We have reduced the number of personal Simpler products and business products by o
Slide 8: We are becoming simpler and clearer
We are becoming simpler and clearer Personal current accounts Personal savings accounts -74% -78% 27 23 7 5 # of products on offer # of products on offer Personal account opening time SME product range -80% -52% 5 251 2014 target: 120 1 # of days # of products on offer 5
Slide 9: Our actions are beginning to have an impact
Our actions are beginning to have an impact Case study: Instant saver product rationalisation -91% 11 Sales Balances +50% +£10bn 1 # of products on offer Fair pricing and simplification supporting greater customer take-up We provide the support and tools to help our customers become better saver
Slide 10: Building on our innovative mobile and channel offering
Building on our innovative mobile and channel offering We’re starting from a strong base… 55% 95m £40bn 30k 26m Active Online Page clicks Annual Digital Web-chats Digital Logins and Mobile per week Payments per week per week Customers And we have a clear plan to build on it… Connecting services Inte
Slide 11: Contents
Contents 1 Our ambition 2 Our purpose 3 Our values 4 Our brands 5 Our 2014 focus
Slide 12: Our values are being embedded with staff
Our values are being embedded with staff 1 % of staff that agree … 83% 85% 89% 63% “Decisions in my “RBS delivers “I am business area excellent “We work well encouraged to are based on customer together” do the right thing what’s best in the service” at work.” long term.” Serving Working Doing the T
Slide 13: Contents
Contents 1 Our ambition 2 Our purpose 3 Our values 4 Our brands 5 Our 2014 focus
Slide 14: We have market leading franchises
We have market leading franchises Personal & Business Commercial & Private Corporate & Institutional Banking Banking Banking #2 GB Personal current 1 #1 UK Commercial bank #1 UK Large Corporates, #4 4 accounts in Europe - 79,000 customers 23% share of GB Market-leading share of #1 UK Cas
Slide 15: We need to leverage our strengths
We need to leverage our strengths RBSG market share 17% current account 1 market share but only 17% 8% in mortgages Personal & 8% ~40% of our business customers do not Business Banking have an active Personal2 banking #2 #4 relationship with RBSG Main Current Mortgage market 1 GfK FRS, RBS and N
Slide 16: Contents
Contents 1 Our ambition 2 Our purpose 3 Our values 4 Our brands 5 Our 2014 focus
Slide 17: Today's trading update
Today’s trading update Economic recovery continues to support a benign impairment outlook RCR making excellent progress, well geared to execute Asset pricing supporting provision releases on some RCR asset sales Ulster – improving economic conditions and higher real estate prices 11
Slide 18: CET1 target ≥12%, well on track
Capital plan CET1 target ≥12%, well on track +150bps ≥12% c.11% 10.1% 8.6% FY13 Q214 2015 2016 target target CET1 ratio up 150bps in H1 2014 Leverage ratio at 3.7%, up 30bps in H1, well positioned for potential higher leverage ratios 12
Slide 19: RCR's progress is well ahead of plan
Capital plan RCR’s progress is well ahead of plan Non-Core’s reputation for delivery… Experienced and efficient execution is key: Non-Core reduced funded assets by £230bn (89%) over 5 years – well below the original £40bn target >150 deals completed in H1’14 … is being continued in RCR >100% P/BV
Slide 20: Supportive credit environment, exposure risk remains
Capital plan Supportive credit environment, exposure risk remains -20% 42.7 1 NPLs, £bn 37.4 34.1 UK: 8.0 Provisions, £bn RBS Capital RoW: 2.1 Coverage, % Resolution 71% 24.2 22.4 (RCR) Ireland: 20.7 10.3 Ulster 4.9 68% 48% 65% 66% Remainder 8.8 54% 2 Peak NPLs Q114 Q214 Good progress in reducing
Slide 21: Cautious on litigation / conduct cost outcomes
Capital plan Cautious on litigation / conduct cost outcomes PPI – continue to provide to best estimates, closely monitoring claims Swaps – agreed outcomes with the independent reviewer relating to over 1 95% of cases Significant risks and uncertainty remains around the scale and timing of future spe
Slide 22: £1bn costs on track to be removed in 2014
£1bn costs on track to be removed in 2014 Operating expenses including bank levy and excluding restructuring and conduct & litigation costs £bn 14.0 Long-term cost:income (0.3) ~(3.1) ratio target: ~50% ~(1.0) ~(2.3) ~0.7 ~8bn 2 FY13 Non-repeat of Disposals 2014 Future Inflation Medium- 1 3 Q413 int
Slide 23: Resilient systems: An efficient, simple technology estate
Resilient systems An efficient, simple technology estate We remain focussed on our vision of a resilient, efficient and simple technology estate with fewer applications to better serve our customers IT Resilience Simplification Upgraded and improved infrastructure Reducing the number of platforms
Slide 24: Our infrastructure is becoming simpler
Resilient systems Our infrastructure is becoming simpler Change portfolio rationalised Property exits in progress # of projects # of London offices -73% -55% 550 11 9 247 214 5 150 2013 Jan-14 Today 2015 target 2013 Today 2016 target Fewer, more strategic supplier relationships # of RBS suppliers (‘
Slide 25: We are now managed as one bank
Implemented new organisation design We are now managed as one bank Personal & Business Commercial & Private Corporate & Institutional Banking Banking Banking Les Matheson Alison Rose Donald Workman IT & Ops Support & Control Bank-wide service platforms and functions allow us to deliver the whole b
Slide 26: Returns improving, but much more to be done
Medium-term plans Returns improving, but much more to be done Personal & Business Commercial & Private Corporate & Institutional Banking Banking Banking 1 RoTE , % +13.7% +5.1% 17.0% Target: ~10% +4.8% 12.9% 7.8% +4.3% 7.0% 4.3% 2.7% 2.2% Target: 12+% Target: 15+% Target: 15+% (1.6%) H113 H114 H113
Slide 27: Underpinned by upturn in UK and Irish economies
Medium-term plans Underpinned by upturn in UK and Irish economies GDP growth firmly anchored Unemployment lower Forecast Forecast 110 16 14 Rebased to 100 105 12 100 10 % 8 95 6 4 90 2 85 0 2007 2009 2011 2013 2015 2007 2009 2011 2013 2015 UK Ireland UK Ireland Housing market activity and HPIs incre
Slide 28: Well positioned to support increasing client activity
Medium-term plans Well positioned to support increasing client activity 1 Excellent funding profile Continue to attract quality deposit flow, UK demand deposits up 10% Y/Y Deposits Substantial volume of non-interest bearing liabilities; demand deposits 1 1 £81bn , total ‘free-funds’ £141bn 2
Slide 29: Early signs of UK loan growth
Medium-term plans Early signs of UK loan growth Mortgages – strong net lending growth with SME – continued positive trend continued market share gains Q214 Y/Y growth in mortgage loans outstanding in PBB UK Applications (‘000s) Gross new lending (£bn) 4% 12% 38% 45.0 2.6 40.0 1.9 1% Q213 Q214 Q213 Q
Slide 30: Delivering a simpler, more focused bank
Medium-term plans Delivering a simpler, more focused bank Citizens – successful IPO RCR – strong progress continued in Q3 Other legacy securities / asset pools – managing down Wealth International – review completed Dividend Access Share – first payment effected Williams & Glyn – being prepared for
Slide 31: More efficient capital reallocation to underpin returns
Medium-term plans More efficient capital reallocation to underpin returns Business mix shift towards the UK… Clear emphasis on Retail & Commercial Illustrative split by total income Non-UK UK Illustrative split by RWAs Wholesale R&C ~20% ~15% ~20% ~40% ~50% ~60% ~80% ~85% ~80% ~50% ~40% ~60% 1 2008
Slide 32: Summary
Summary Early progress in making our bank simpler, clearer and fairer Business restructuring from 7 to 3 businesses with support functions Costs consistently reduced UK and Ireland showing growth, impairment trends significantly better On track to achieve strong CET1 ratio targets Attractive returns
Slide 33: Q&A
Q&A
Slide 34: 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