Natwest Group Plc · LSE:NWG

Natwest — The Royal Bank of Scotland Group — Q1 2016 Earnings Presentation

25 slides from Natwest's earnings presentation, Apr 29, 2016

1. Slide 1: Q1 2016 Results

   Q1 2016 Results 29 April 2016

2. Slide 2: Q1 2016 Financial results highlights

   Q1 2016 Financial results highlights Adjusted return on equity across our core PBB, CPB and CIB franchises of 10.9% in Q1 2016 Operating profit of £421m; Attributable loss of £968m post final DAS dividend of £1,193m Underlying Income across the PBB and CPB franchises was broadly stable on Q1 2015 PB

3. Slide 3: Q1 2016 Business highlights

   Q1 2016 Business highlights Core Franchises Committed to meet 2016 targets Good momentum in lending NatWest Personal and Business Banking NPS are at their highest point since 2010 Addressing remaining issues International Private Banking sale completed early April Reduced outstanding funding and acc

4. Slide 4: NatWest Personal and Business Banking NPS are at their highest point since 2010

   NatWest Personal and Business Banking NPS are at their highest point since 2010 Net Promoter Scores across our core businesses Royal Bank of Scotland (Scotland) NatWest (England & Wales) RBSG (GB) 30 Personal Banking(1) Business Banking(2) Commercial Banking(3) 20 13 15 12 8 8 9 9 9 10 9 9 10 5 6 4

5. Slide 5: Q1 2016 results

   Q1 2016 results Core Franchises Other Total RBS Central Ulster Commercial Private RBS Total Core Capital (£bn) UK PBB CIB W&G items & Total Other Bank RoI Banking Banking International Franchises Resolution other(1) Adj. Income(2) 1.3 0.2 0.9 0.2 0.1 0.3 2.8* 0.1 0.2 (0.3) (0.0) 2.8 Adj. Operating e

6. Slide 6: Q1 2016 – P&L

   Q1 2016 – P&L vs. Q1 vs. Q4 (£m) Q1 2016 Q1 2015 2015 Q4 2015 2015 Q1 2016 vs. Q1 2015 Adjusted income(1) 2,814 3,534 (20%) 2,884 (2%)  Attributable loss of £968m; Total income 3,064 3,519 (13%) 2,484 +23% operating profit of £421m Adj. operating expenses(2) (2,151) (2,308) (7%) (2,525) (15%) Restr

7. Slide 7: Q1 2016 – Balance sheet

   Q1 2016 – Balance sheet vs. Q1 vs. Q4 Customer balances (£bn) Q1 2016 Q1 2015 2015 Q4 2015 2015 Q1 2016 vs. Q4 2015 Funded assets 571 714 (20%) 553 +3% Net loans & advances to  Funded assets up 3% to 317 333 (5%) 306 +4% customers £571bn Customer deposits 352 349 +1% 343 +3% Liquidity and funding 

8. Slide 8: UK Personal & Business Banking

   UK Personal & Business Banking vs. Q1 vs. Q4 P&L (£m) Q1 2016 Q1 2015 2015 Q4 2015 2015 Q1 2016 vs. Q1 2015 Total income 1,275 1,314 (3%) 1,254 +2% (1)  Total income of £1.3bn, down Adj. operating expenses (728) (709) +3% (877) (17%) 2% excluding the impact of Restructuring costs (22) (30) (27%) (8

9. Slide 9: Supporting growth - Personal and Business Banking

   Supporting growth - Personal and Business Banking UK Personal & Business Banking – Mortgages Gross mortgage lending to Applications (£bn) RBS Q1 2016 market share(1) customers (£bn) +13% +61% 108.0 10.3 11% 96.0 8% 6.4 Q1 2015 Q1 2016 Q1 2015 Q1 2016 Stock share Flow share  Growing mortgages ~6 tim

10. Slide 10: Mortgages – competing on service, not price

    Mortgages – competing on service, not price  Service: Nearly 1,000 mortgage RBS/ Natwest 60% LTV 2yr Fixed vs. Weighted advisors supporting our customers, up Average Market Price (“WAMP”) over 20% since the beginning of 2015 60% LTV 2 Year Fixed 2.20% 2.15%  Online mortgage renewals more than 2.10

11. Slide 11: Ulster Bank RoI

    Ulster Bank RoI vs. Q1 vs. Q4 P&L (€m) Q1 2016 Q1 2015 Q4 2015 Q1 2016 vs. Q1 2015 2015 2015 Total income 205 185 +11% 162 +27%  Total income up 11%; excluding (1) Adj. operating expenses (136) (136) +0% (160) (15%) the benefit of asset disposals Restructuring costs (8) 1 n.m 8 n.m income was more

12. Slide 12: Commercial Banking

    Commercial Banking vs. Q1 vs. Q4 P&L (£m) Q1 2016 Q1 2015 Q4 2015 Q1 2016 vs. Q1 2015 2015 2015 Total income 853 789 +8% 797 +7% (1)  Total income was £853m, up 8% Adj. operating expenses (436) (415) +5% (584) (25%) reflecting increased asset volumes Restructuring costs - 1 n.m (54) n.m supplemente

13. Slide 13: Supporting growth - Commercial Banking

    Supporting growth - Commercial Banking Positive gross lending Net UK Commercial lending growth Gross L&As to customers (£bn) Q1 2016 vs. Q1 2015 +12% 97.5 4.3%(2) 87.0 17.5 Commercial real estate 16.7 14.4 Asset and invoice finance 13.9 7.0 2.4% Private sector services 7.0 7.4 Banks & Financial Inst

14. Slide 14: Private Banking

    Private Banking vs. Q1 vs. Q4 P&L (£m) Q1 2016 Q1 2015 Q4 2015 Q1 2016 vs. Q1 2015 2015 2015 Total income 165 165 +0% 158 +4% Adj. operating expenses(1) (137) (123) +11% (159) (14%)  Total income was £165m, Restructuring costs (16) 3 n.m 5 n.m stable as the benefit of an Litigation & conduct costs

15. Slide 15: RBS International

    RBS International vs. Q1 vs. Q4 P&L (£m) Q1 2016 Q1 2015 2015 Q4 2015 2015 Q1 2016 vs. Q1 2015 Total income 90 93 (3%) 95 (5%)  Total income of £90m, down Adj. operating expenses(1) (35) (38) (8%) (41) (15%) 3% mainly due to lower Restructuring costs (1) (2) n.m 1 n.m deposit margins partially Oper

16. Slide 16: Corporate & Institutional Banking

    Corporate & Institutional Banking vs. Q1 vs. Q4 P&L (£m) Q1 2016 Q1 2015 Q4 2015 Q1 2016 vs. Q1 2015 2015 2015 Rates 114 222 (49%) 136 (16%)  Adjusted income was down Currencies 144 90 +60% 95 +52% Financing 49 155 (68%) 23 +113% 43% to £277m, driven by Banking/ other (30) (25) +20% (2) n.m reducti

17. Slide 17: Capital Resolution

    Capital Resolution vs. Q1 vs. Q4 P&L (£m) Q1 2016 Q1 2015 Q4 2015 Q1 2016 vs. Q1 2015 2015 2015 Adjusted income(1) 51 407 (87%) (233) (122%) Of which... disposal  Adjusted income of £51m (2) 13 n.m (180) n.m reflecting the reduced scale of the losses Total income 153 458 (67%) (262) (158%) business

18. Slide 18: Balance sheet – resilience

    Balance sheet – resilience CET1 Ratio: 13% Target Leverage Ratio REILs (£bn) (as % of Total Gross L&As) 14.6% 5.3% 39.4 (9.4%) +600bps +190bps Cap 3.4% Res (70%) 8.6% 20.3 11.9 Ex (3.6%) Cap 2.2 Res 9.7 19.1 FY 2013 Q1 2016 FY 2013 Q1 2016 FY 2013 Q1 2016  Excluding Capital Resolution REILs were 3.

19. Slide 19: Balance sheet – selected exposures

    Balance sheet – selected exposures Oil & Gas(1) (£bn) Mining and Metals(1) (£bn) (67%) (61%) 15.9 3.8 5.6 5.2 1.6 1.5 FY 2014 FY 2015 Q1 2016 FY 2014 FY 2015 Q1 2016 Shipping(1) (£bn) Emerging Markets(2) (£bn) (33%) (69%) India 10.6 8.7 China Russia 7.5 7.1 2.6 4.1 3.4 2.7 1.9 1.6 2.0 1.1 1.0 0.4 0.

20. Slide 20: Leverage ratio – key drivers

    Leverage ratio – key drivers Leverage ratio (%) (30bps) 5.6% 5.3% (£bn) Q4 2015 Q1 2016 % change CET 1 capital 37.6 36.4 (3.2%) AT1 capital 2.0 2.0 - Tier 1 Capital 39.6 38.4 (3.0%) Total assets 815.4 882.9 8.3% Netting of derivatives (258.6) (303.5) +17.4% Securities financing transactions 5.1 7.1

21. Slide 21: Litigation and conduct

    Litigation and conduct End of Q1 2016 provisions (£m) Comments  MBS litigation and investigations may require additional 4,205 provisions in future periods that in aggregate could be materially in excess of the provisions existing as of Q1 2016 US RMBS  These provisions do not include potential pe

22. Slide 22: Tangible Net Asset Value (TNAV) movements

    Tangible Net Asset Value (TNAV) movements Q4 2015 £m Shares in issue (m) TNAV per share Starting TNAV 40,943 11,625 352p Profit for the period post tax(1) 361 2p(2) Less: profit to NCI/ other owners (1,309) (11p) o/w Dividend Access Share Final (1,193) (10p) Dividend o/w Other dividends and NCI shar

23. Slide 23: Significant Items

    Significant Items (£m) Q1 2016 Q4 2015 Q1 2015 Total Income 3,064 2,484 3,519 OCA 256 (115) 120 Gain / (loss) on redemption of own debt - (263) - Strategic disposals(1) (6) (22) (135) Adjusted Income 2,814 2,884 3,534 Of which… IFRS volatility (356) 59 (123) Disposal of AFS securities 2 - (27) Capit

24. Slide 24: Summary

    Summary Good business momentum in PBB and CPB PBB & CPB net loans up 4% vs. Q4 2015 Operating expenses down £189m Y/Y ex. W&G build out(1) Capital remains robust; CET1 ratio of 14.6% RWAs up £6.9bn Q/Q given FX and market volatility increases Committed to meet 2016 targets (1) Excluding litigation a

25. Slide 25: Forward Looking Statements

    Forward Looking Statements 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’, ‘believe’, ‘should

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