Natwest Group Plc · LSE:NWG
Natwest — The Royal Bank of Scotland Group — Morgan Stanley Financial Services Conference 2013 – London
28 slides from Natwest's conference presentation, Mar 19, 2013
Slide 1: Where have we got to? What next?
Where have we got to? What next? Stephen Hester, CEO Morgan Stanley Financial Services Conference – London 19th March 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 This is what we are trying to accomplish RBS – Journey was conceived as having the following key elements Where are we on that journey Restructuring – Nearing successful conclusion Core businesses – Retooling well underway, performance improved to ‘in-line’ Milestones ‘Really good bank’
Slide 4: This is what we are trying to accomplish
This is what we are trying to accomplish 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 f
Slide 5: Agenda
Agenda This is what we are trying to accomplish RBS – Journey was conceived as having the following key elements Where are we on that journey Restructuring – Nearing successful conclusion Core businesses – Retooling well underway, performance improved to ‘in-line’ Milestones ‘Really good bank’
Slide 6: RBS journey – key elements
RBS journey – key elements Clear strategy set in 2009 Clear structure and Road Map for implementation Two parallel tasks – Huge restructuring: risk reduction, implementation of strategic target for size & shape – Core businesses – liberated to support customers. Retooling to correct underperfo
Slide 7: Agenda
Agenda This is what we are trying to accomplish RBS – Journey was conceived as having the following key elements Where are we on that journey Restructuring – Nearing successful conclusion Core businesses – Retooling well underway, performance improved to ‘in-line’ Milestones ‘Really good bank’
Slide 8: Huge progress in Safety & Soundness agenda
Huge progress in Safety & Soundness agenda Medium-term Group – Key performance indicators Worst point FY12 target 1 Loan : deposit ratio (net of provisions) 154% 100% c.100% 3 Short-term wholesale funding 2 £297bn £42bn <10% TPAs 3 Achieved Liquidity portfolio 4 £90bn £147bn >1.5x STWF 6 Leverage ra
Slide 9: Our funding and liquidity positions are robust and risk much reduced
Our funding and liquidity positions are robust and risk much reduced Liquidity buffer substantially increased STWF1 as % Funded Balance Sheet £bn -19% +63% 147 24% 90 5% Worst point2 2012 Worst point2 2012 Declining Corporate Single-Name Concentrations Total Group Commercial Real Estate exposure Num
Slide 10: Scale and scope of Group has reduced to regain strategic coherence
Scale and scope of Group has reduced to regain strategic coherence Majority of capital allocated to retail and commercial businesses Funded Assets by Business Line, % RWAs by Business Line, % 2008 FY12 Markets Retail & 22% Commercial GBM 44% 56% Retail & Non-Core Commercial 13% 65% Geographic presen
Slide 11: We are working to fulfil Basel and ICB capital requirements c.5 years early
We are working to fulfil Basel and ICB capital requirements c.5 years early RBS Core Tier 1 ratio goals vs. regulatory requirements [13.2]%3 10% ~10% 8.5% ~9% 7.7% 4% 10.3% Worst point1 2012 G-SIB CT1 ICB / Vickers 2012 2013 2014 CT1 Requirement Requirements ‘Fully loaded’ FLB3 target FLB3 target (b
Slide 12: And to finish the job in Non-Core and see a marked turn in Ireland
And to finish the job in Non-Core and see a marked turn in Ireland Progress in Non-Core run-down Ulster Bank: “green shoots”? Funded Assets, £bn Impairments, £bn 258 7.7% 4 8% 3 5.2% 6% 2.3 2 4% 1.4 1.4 57 1.0 1 2% 40 20 0 0% 2011 2012 2008 2012 2013 2016 Core Impairments % of loans1 Target Target N
Slide 13: Work continues on putting past conduct issues behind us
Work continues on putting past conduct issues behind us Issue Status Resolution with FSA and US regulators agreed. Others to come LIBOR Those responsible held to account New and enhanced controls now in place SME swaps Provision taken. Claims processing during 2013 PPI Continue to provide
Slide 14: Agenda
Agenda This is what we are trying to accomplish RBS – Journey was conceived as having the following key elements Where are we on that journey Restructuring – Nearing successful conclusion Core businesses – Retooling well underway, performance improved to ‘in-line’ Milestones ‘Really good bank’
Slide 15: RBS Core business – where do we stand now
RBS Core business – where do we stand now RBS Core financial performance Business Mix £7.4bn operating profit in 2012 (£6.3bn incl. Geography Business Lines Ulster) 13% Return on Equity (10% incl. Ulster) Markets Group loan:deposit ratio at ‘gold standard’ target 22% International of 100% 34%
Slide 16: To get here we have sustained Core customer market positions
To get here we have sustained Core customer market positions UK Corporate UK Retail International Banking Markets 4 5 #1 UK , #6 Global in #1 SME Bank #2 for UK 1 3 Top 5 in FX, 7 cash management #1 Corporate 2 current accounts #1 UK, #10 Global 6 Rates and Asset Bank 13m customers Boo
Slide 17: Focused on serving customers well but can do much better
Focused on serving customers well but can do much better Citizens UK Corporate Citizens Consumer Net Promoter Score, % Relationship Manager Satisfaction for C&IB Clients, % 22 72 20 66 15 13 Q112 Q212 Q312 Q412 Prior year1 Latest result UK Retail International Banking RBS & NatWest active mobile use
Slide 18: Sustained strong financial support to customers
Sustained strong financial support to customers Lending to UK Businesses & Homeowners +3.7% GDP vs. 2009 Core lending to UK businesses & homeowners vs. 20091 Supporting Homeowners Supporting Businesses UK mortgage lending, £bn Offered more than £58 billion of loans and facilities UK mortgage share
Slide 19: Whilst retooling the business
Whilst retooling the business Substantial cost reduction delivered every year RBS Core Operating Expenses, £bn Headline -11% 15.4 15.0 Underlying -24% 13.7 Inflation 2008 2010 2012 Funding a strong increase in investment spending Renewed ‘top 300’ Executive population1 Capital investment (£bn) Manag
Slide 20: And this has allowed us to generate good Core earnings and improve RoE and LDR
And this has allowed us to generate good Core earnings and improve RoE and LDR RBS Core Return on Equity Funding Balance (LDR) Operating profit RoE, % LDR ratio, % Core 24 103 UK Retail Core ex. Ulster 1 UK Retail 7.0 7.4 116 £bn 6.0 6.3 UK 15 Corporate 82 3 UK 3.2 3.0 Corporate 142 9 Markets US R&C
Slide 21: Agenda
Agenda This is what we are trying to accomplish RBS – Journey was conceived as having the following key elements Where are we on that journey Restructuring – Nearing successful conclusion Core businesses – Retooling well underway, performance improved to ‘in-line’ Milestones ‘Really good bank’
Slide 22: We have hit most key milestones
We have hit most key milestones Milestones Outcome 1 Preference share coupons Discretionary coupons paid 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 World pay - Completed Sempra - Completed EC
Slide 23: Path to 2015
Path to 2015 Milestones Outcome 1 Fulfil Basel (8.5%) and ICB (10%) Capital Ratios requirements 2 Non-Core Achieve £40bn TPA target by end 2013 3 Further reduce RWAs to £80bn by end-2014, Markets versus previous target of £100-110bn 4 Aspire to repurchase Dividend Access Share Dividend Block and est
Slide 24: Challenges
Challenges Finish the job on restructuring Conduct regulation – reach a better place Achieve “public policy” requirements whilst sustaining customer and shareholder appeal Sustain energy, focus, commitment and pace of change from our people Growth hard to find until Customers growing too 1
Slide 25: Agenda
Agenda This is what we are trying to accomplish RBS – Journey was conceived as having the following key elements Where are we on that journey Restructuring – Nearing successful conclusion Core businesses – Retooling well underway, performance improved to ‘in-line’ Milestones ‘Really good bank’
Slide 26: Whatever else RBS does, we are striving to this end
Whatever else RBS does, 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
Slide 27: And this is what we aim to look like
And this is what we aim to look like 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 field
Slide 28: RBS Group
%% RBS Group
The Royal Bank of Scotland Group — Morgan Stanley Financial Services Conference 2013 – London on 6ix