Natwest Group Plc · LSE:NWG
Natwest — Debt Investor Presentation (February 2019)
26 slides from Natwest's debt investor presentation, Feb 15, 2019
Slide 1: FY 2018 Results: Fixed income presentation
FY 2018 Results Fixed income presentation 15th February 2019
Slide 2: Katie Murray, Chief Financial Officer
Katie Murray Chief Financial Officer 2
Slide 3: FY 2018 update on progress
FY 2018 update on progress Income remained stable (ex notable items, Natwest Resilient income Markets and central items) × Core NWM franchise income down 24% YoY(1) Continuing cost reduction Reduced costs by £278m(2) in 2018, with increased investment spend Actively managing capital RWA reduct
Slide 4: Summary financials
Summary financials vs. FY 2017 £13.4bn Income 2% (126) 13,402 288 Operating £9.6bn 13,133 53 54 expenses (7)% Income (£m)1 £3.4bn Operating profit 50% FY’17 PBB & RBSI NatWest Centre FY’18 Attributable £1.6bn CPB Markets profit 116% 204 204 Net interest 1.98% 201 margin (FY) (15bps) NIM (bps) 195 19
Slide 5: Outlook
Outlook(1) Reduce other expenses by c.£300m Strategic costs ~£1.5bn 2019 Targets RWAs £185-190bn range Cost:income ratio <50% Risks to the downside reflect the ongoing economic and political uncertainty and additional costs associated with ring-fencing and Brexit Expected RWA inflation:
Slide 6: Robert Begbie, Treasurer
3x RBS Robert Begbie Treasurer \ Sa |!
Slide 7: Treasurer's review
Treasurer’s review Balance sheet reflects diversified funding, sound liquidity management and strong capital generation Clear pass on stress testing, GSIB requirement removed from 2020 as we become a simpler, safer bank Positive progress on ratings Exceeded 2018 issuance targets in challenging marke
Slide 8: Strong, sustainable balance sheet
Strong, sustainable balance sheet FY 2017 FY 2018 Loan: 86% 85% deposit ratio Delivered a solid set of balance Short term sheet metrics £17.8bn £15.1bn wholesale funding Strong funding and liquidity position with Loan:deposit ratio (LDR) of Liquidity 85% and liquidity coverage ratio 152% 158% Co
Slide 9: Achieved priorities on capital, funding and structural reform
Achieved priorities on capital, funding and structural reform • Issuance of ~£12bn placed at competitive spreads, in a challenging market Issuance targets • HoldCo issued £7bn MREL senior unsecured. £0.6bn pre funded for 2019 exceeded • NatWest Markets Plc issued £4.8bn senior unsecured • UBIDAC re-
Slide 10: Positive momentum on ratings
Positive momentum on ratings Ratings actions in 2018 • In H1 2018 subsidiary ratings were revised to reflect our new ring-fenced structure Moody’s S&P Fitch • Following resolution of DoJ, Pension Fund and progress made with our restructuring plan, RBS Group Baa2/Pos BBB-/Pos A/Sta positive actions w
Slide 11: External issuance reflects ring-fencing structure
External issuance reflects ring-fencing structure Market issuance Senior Unsecured (MREL) Inside the ring fence AT1 & Tier 2 NatWest Holdings Royal Bank of Scotland Plc Limited Senior Ring-fenced Bank NatWest Bank Plc secured Intermediate Holding The Royal Bank of Proportional Company for our Ulster
Slide 12: HoldCo issuance profile
HoldCo issuance profile HoldCo senior unsecured MREL profile Issuance Currency GBP equivalent £bn GBP Senior unsecured MREL requirements 0.8 EUR • HoldCo focus is on building MREL stack of ~£24bn(1) to meet 1 Jan 2022 4.7 end state requirement • ~£15.5bn cumulative MREL LAC(1) achieved by year end 2
Slide 13: NatWest Markets Plc issuance profile
NatWest Markets Plc issuance profile NWM Plc senior unsecured Issuance plans Senior unsecured GBP equivalent £bn • NWM plc Issues senior unsecured for general funding purposes, Funding Type 2018 2019 2020 with a requirement of £3-5bn for 2019 Term Senior unsecured • In 2019 we are looking to diversi
Slide 14: Closing remarks
Closing remarks Good results set against a highly competitive environment Significant capital return to our shareholders Strong set of balance sheet metrics Achieved targets for capital and funding Ring fencing complete, significant progress on Brexit preparations 14
Slide 15: Q&A
3x RBS Q&A
Slide 16: Appendix
3x RBS Appendix
Slide 17: Diversified funding, strong liquidity
Diversified funding, strong liquidity Funding composition £bn (1) • Funding weighted toward personal and corporate customer deposits Wholesale funding • Stable LDR from strong core deposit base Customer deposits(2) 74 • LCR decrease in H2 reflects settlement of conduct and pensions, 431 16 (3) legac
Slide 18: Strong CET1 build above regulatory requirements
Strong CET1 build above regulatory requirements 2018 CET1 build and target CET1 ratio versus maximum distributable amount (“MDA”) (5) CET1 (%) (0.8) 2.4 (0.5) 15.9 (0.8) 16.2 ~14.0 Illustrative Illustrative 6.4 headroom(1) 3.3 Regulatory phase in headroom(1) 10.7 9.8 0.7 0.7 1.0 0.8 1.9 Counter cycl
Slide 19: On track to meet future MREL requirements
On track to meet future MREL requirements (1) Future MREL / LAC (2) requirement Senior unsecured MREL requirements (3) (£bn) (%RWA) (Based on ~£200bn RWA) 26.5% ~£8bn issuance ~£24bn 3.3% requirement by 23.2% 2022 19.6% £15.5bn £16.0bn 11.6% 11.6% 8.0% 3.6% 3.6% 3.6% CRR Buffers (3) Senior unsecured
Slide 20: Down-streaming to material subsidiaries
Down-streaming to material subsidiaries • In December 2018, NatWest Holdings Ltd issued £4.8 billion internal MREL compliant debt and utilised a portion of these funds to invest in its subsidiaries’ MREL eligible issuance. • In Q4, NatWest Markets Plc issued £5.1 billion of resolution eligible senio
Slide 21: Estimated Loss Absorbing Capital (LAC)
Estimated Loss Absorbing Capital (“LAC”) Balance sheet (£bn) Par Value Regulatory value LAC value value CET1 Capital 30.6 30.6 30.6 30.6 Tier 1 capital: end-point CRR compliant AT1 4.0 4.0 4.0 4.0 o/w: RBSG (HoldCo) 4.0 4.0 4.0 4.0 o/w: RBSG operating subsidiaries (OpCos) - - - - Tier 1 capital: non
Slide 22: Q4 2018 results by business
Q4 2018 results by business Central Ulster Bank Commercial Private RBS NatWest (£bn) UK PBB items & Total RBS RoI Banking Banking International Markets other(1) Income 1.6 0.1 0.8 0.2 0.2 0.2 0.0 3.1 Operating expenses (0.9) (0.2) (0.6) (0.1) (0.1) (0.5) (0.1) (2.5) Impairment (losses) / releases (0
Slide 23: FY 2018 results by business
FY 2018 results by business Central Ulster Bank Commercial Private RBS NatWest (£bn) UK PBB items & Total RBS RoI Banking Banking International Markets other(1) Income 6.3 0.6 3.4 0.8 0.6 1.4 0.3 13.4 Operating expenses (3.5) (0.6) (1.9) (0.5) (0.3) (1.6) (1.4) (9.6) Impairment (losses) / releases (
Slide 24: Standalone NatWest Markets launched
Standalone NatWest Markets launched Ring-fencing • Successfully completed ring-fencing; managing capital and liquidity standalone since Nov’18 complete • £13.9bn of regulatory capital and CRR-compliant MREL at FY18, 34% of RWAs. Strongly capitalised • With CET1 ratio of 15.6% and Leverage Ratio of 5
Slide 25: NWM Plc Solo Capital Actuals and Targets
NWM Plc Solo Capital Actuals and Targets NatWest Markets Plc Solo H118 FY18 2020 Target • Strongly capitalised entity with £13.9bn of regulatory CET1 Ratio % 20.7% 15.6% c.15% capital and MREL issued to RBS Group plc, which is MREL Ratio % n.a. 34.0% At least 30% structurally subordinate to NWM Plc
Slide 26: Cautionary & Forward Looking Statements
Cautionary & Forward Looking Statements The targets, expectations and trends discussed in this presentation represent RBSG, and where applicable NWM management’s, current expectations and are subject to change, including as a result of the factors described in the “Risk Factors” section on pages 253
NatWest Group — Debt Investor Presentation (February 2019) on 6ix