Natwest Group Plc · LSE:NWG
Natwest — The Royal Bank of Scotland Group — UBS Financial Services Conference 2010
29 slides from Natwest's conference presentation, May 11, 2010
Slide 1: UBS Financial Services Conference
UBS Financial Services Conference Stephen Hester, Chief Executive Officer 11th May 2010 The Royal Bank of Scotland Group
Slide 2: Important Information
Important Information 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’, ‘should
Slide 3: Today's Agenda – The New RBS
Today’s Agenda – The New RBS What did we set out to achieve in February 2009? Progress to date Building blocks of the RBS Recovery – Internal metrics – External factors 3
Slide 4: The New RBS – What we aspire to be
The New RBS – What we aspire to be
Slide 5: What did we set out to achieve in February 2009?
What did we set out to achieve in February 2009? RBS’s 2013 vision To be one of the world’s most admired, valuable and stable universal banks To return to >15% sustainable RoEs, powered by market-leading businesses in large customer-driven markets To deliver its strategy from a stable AA category ri
Slide 6: How were we going to do it?
How were we going to do it? RBS’s Strategic Plan Core Bank Non-Core The primary focus for value creation The primary driver of risk reduction Built around customer-driven franchises Businesses that do not meet our Strategic Comprehensive business restructuring Tests, including both stressed an
Slide 7: Progress to date: Strategic plan timeline
Progress to date Strategic plan timeline 2009 2010 2011 2011 onwards Core profits build, Non-Core losses fall Target >15% RoE Formation of the Execution and Return to Group Ongoing revenue and cost Strategic Plan implementation profitability initiatives Creation of Non-Core phase of the pl
Slide 8: Current position versus 2013 targets
Progress to date Current position versus 2013 targets Key performance Worst FY 09 Q1 10 2013 indicator point Actual Actual Target Core Tier 1 Capital 4%(1) 11.0% 10.6% >8% Loan : deposit ratio (net of provisions) 154%(2) 135% 131% c100% Wholesale funding reliance(3) £343bn(4) £250bn £222bn <£150bn L
Slide 9: Key Business Highlights – Q1
Progress to date Key Business Highlights – Q1 10 Ongoing business performance improvements - Group operating profit of £713m vs loss of £1.4bn Q409 - Net attributable loss of £248m vs loss of £765m Q409 Core Bank operating profit up 92% to £2.3bn vs Q409 - Driven by seasonally strong results in GBM
Slide 10: Key Financial Highlights – Q1
Progress to date Key Financial Highlights – Q1 10 Core Business - Operating profit: £2.3bn, +92% vs Q409 - ROE: 15%, in line with long run targets - NIM: 2.11%, +5bps vs Q409 driven by GBM - Costs: flat q-o-q, -5% y-o-y - C:I ratio improved 400bps to 47% - Credit profile: ongoing improvement, impair
Slide 11: Building blocks of the RBS Recovery
Building blocks of the RBS Recovery
Slide 12: What are the necessary internal metrics and external factors to achieve the plan?
Building blocks of the RBS Recovery What are the necessary internal metrics and external factors to achieve the plan? We have strong franchises in large customer-driven markets Sustained and improving customer satisfaction levels Remain well capitalised and can deliver our funding plan Non-Core run-
Slide 13: Internal metrics
Building blocks of the RBS Recovery Internal metrics
Slide 14: We have strong franchises in large customer-driven markets
Building blocks of the RBS Recovery – Internal metrics We have strong franchises in large customer-driven markets Q1 Customer Numbers Market Positions Income FY09 Deposits Q110 >12.8m current accounts UK Retail #2 Current Accounts £4.9bn £89.4bn 10m savings accounts UK 1.2m Business, Commercial & #1
Slide 15: Sustained and improving customer satisfaction levels
Building blocks of the RBS Recovery – Internal metrics Sustained and improving customer satisfaction levels UK Retail1 UK Commercial2 August 2009 March 2010 67% 68% 66% 66% 79 % 65% 76 % 64% 64% 64% 64% 75 % 63% 73 % 72 % RBS NatWest Peer 1 Peer 2 Peer 3 NatWest RBS Peer 1 Peer 2 Peer 3 Robust fra
Slide 16: Remain well capitalised and can deliver our funding plan
Building blocks of the RBS Recovery – Internal metrics Remain well capitalised and can deliver our funding plan Core Tier 1 ratio 10.6% 9.8% 9.4% 9.2% 8.9% 8.1% Core Tier 1 ratio is the highest in our immediate peer group Loan to deposit ratio continues to improve due to the 1 2 focus on growing
Slide 17: Non-Core run-off drives decline in risk concentrations and wholesale funding reliance
Building blocks of the RBS Recovery – Internal metrics Non-Core run-off drives the decline in risk concentrations and wholesale funding reliance £bn 252 Non-Core run- off (TPAs) 179 c. 220 20-40 FY 08 Q1 10 2013 Target £bn 492 Wholesale funding 45% 141 371 c. 240 requirement 53% 143 c. 250 55% 172 2
Slide 18: Strategic plan, investment and income initiatives drive sustainable growth
Building blocks of the RBS Recovery – Internal metrics Strategic plan, investment and income initiatives drive sustainable growth Non Interest Income - Leveraging for growth Investment - major programmes underway In systems, proposition, technologies and 5 year spend > £6bn to foster growth & effici
Slide 19: Liability margins to improve – asset margins to hold
Building blocks of the RBS Recovery – Internal metrics Liability margins to improve – asset margins to hold Current Position Outlook Q110 Q409 2011-13 Overall margin Group NIM 1.92% 1.83% Asset margins Liability margins R&C NIM1 3.01% 3.01% R&C margin GBM margin GBM 1.11% 0.89% Non-Core margin Impac
Slide 20: We can deliver good cost efficiency
Building blocks of the RBS Recovery – Internal metrics We can deliver good cost efficiency £bn 17.4 2.4 15.0 FY09 Cost Impact of Non-Core Inflation Volume reduction Disposals roll-off and Core programme other1 Non-Core Core costs broadly flat over the planning horizon Impact of inflation & volum
Slide 21: Impairments trend to normalised levels
Building blocks of the RBS Recovery – Internal metrics Impairments trend to “normalised” levels Impairments – returning to normalised levels £bn % of L&A Outlook 2.5% Non-Core 9.2 5.7 Trend back towards historic levels 1998-2008 avg: 0.6% Core 4.7 1.1 Historic levels flattered by high loan growt
Slide 22: External factors
Building blocks of the RBS Recovery External factors
Slide 23: World economic recovery continues
Building blocks of the RBS Recovery – External factors World economic recovery continues Current position Consensus Economic Data1 Outlook is better than expected 6-12 months ago UK (%) 2009 2010 2011 2012 2013 US and UK current account and savings deficits are GDP1 -4.9 1.3 2.3 2.1 2.4 starting
Slide 24: Strong but rational competition going forward
Building blocks of the RBS Recovery – External factors Strong but rational competition going forward Current position and outlook Strong but rational competition Banking, similar to other mature capital intensive industries, is relatively concentrated New business margins are broadly consisten
Slide 25: Path of regulatory change will be phased and sensible
Building blocks of the RBS Recovery – External factors Path of regulatory change will be phased and sensible BASEL II CHANGES e.g.: Capital – Stressed VaR RWA Correlation Trading Book impacts To be phased in from 2012 Liquidity LIQUIDITY REQUIREMENTS: CHANGES TO CAPITAL DEDUCTIONS e.g.: Increa
Slide 26: Government policy
Building blocks of the RBS Recovery – External factors Government policy UK and other Governments have been supportive ̶ Liquidity and funding support can now wind down ̶ Crucial task for RBS to provide opportunity for UK Government to sell down stake Support profitably UK Government, through UK
Slide 27: UK Government's RBS shareholding
Building blocks of the RBS Recovery – External factors UK Government’s RBS shareholding Government (UKFI) Investment Key points B shares: Total Investment Hold the same rights as the ordinary shares Shares Investment per Share Non-voting (m) (£m) (p) Dividends are fully discretionary3 Rank p
Slide 28: Concluding remarks
Concluding remarks
Slide 29: Conclusion: The New RBS in 2013
Conclusion The New RBS in 2013 Leading positions in all our customer businesses Top tier market franchises Strong, predictable and resilient business performance Complementary portfolio with clear cohesion logic and synergies Balanced portfolio Balanced by geography, growth, risk profile and busines
The Royal Bank of Scotland Group — UBS Financial Services Conference 2010 on 6ix