Natwest Group Plc · LSE:NWG
Natwest — The Royal Bank of Scotland Group — UBS Financial Services Conference 2009
28 slides from Natwest's conference presentation, May 12, 2009
Slide 1: UBS Financial Services Conference
UBS Financial Services Conference Stephen Hester, Chief Executive Officer 12th May 2009
Slide 2: Important information
Important information This presentation may contain forward looking statements, including such statements within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements concern or may affect future matters, such as: the Gro
Slide 3: The journey we are on
The journey we are on Entry point Strategic implementation 3-5 year target Unfocused business, Strengthen core franchises Market leading, focused lack of strategy core businesses Restructure management & businesses £1.2trn balance sheet £2.5bn cost savings Regain “AA” category to fund ratings, stand
Slide 4: The environment we face
The environment we face
Slide 5: The environment we face
The environment we face Consensus forecasts for 2009 GDP growth Imbalances must be unwound - UK & US savings ratio, 1980-2008 14 2 US UK 12 Personal savings rates 10 1 8 0 6 US avg = 5% percent percent 4 -1 UK avg = 4% 2 -2 0 -2 -3 -4 -4 -6 1980 1985 1990 1995 2000 2005 Jul-08 Sep-08 Nov-08 Jan-09 M
Slide 6: Banks need to improve liquidity and funding balance
Banks need to improve liquidity and funding balance Liquid asset holdings on UK bank balance sheets 30 Liquid assets reduced from 30% to 0.5% over last 40 years % of liquid assets Focus on holding higher level of liquid assets going forward - Government Increased target ratios bonds 5 0 Target
Slide 7: RBS's Customer Franchises – strong foundations on which to build
RBS’s Customer Franchises – strong foundations on which to build
Slide 8: Market leading customer franchises
Market leading customer franchises UK GBM / GTS Global Rankings #1 Small business banking #3 Corporate bonds #1 Corporate and commercial #3 Syndicated loans #1 Cash management #4 Foreign exchange #1 Private banking #5 Interest rates #2 Personal current accounts #5 Securitisation
Slide 9: Customers have stayed with us - UK
Customers have stayed with us - UK UK Retail - Overall Satisfaction 2008 UK Commercial - Overall Satisfaction 2008 RBS 24% NatWest 53% NatWest 19% RBS 50% Other high street banks Source: GfK FRS, GB December 2008, personal customers, quarterly rolling, for high street Source: Ipsos MORI telephone su
Slide 10: Customers have stayed with us – US Retail & Commercial
Customers have stayed with us – US Retail & Commercial A strong franchise in New England and Pennsylvania with good Branch distribution in the Mid-West Citizens Citizens Population (m) Branches Deposit Rank New England 13.1 488 2nd Pennsylvania 12.6 403 3rd Overall Citizens business metrics Mar 09
Slide 11: Brendan Wood Competitive Index
Customers have stayed with us – Global Wholesale European Bonds & Loans Competitive Positioning1 Customer Western Relationship UK USA 9.9 RBS RBS Europe Ranking BAR BNP 9.4 Brendan Wood Competitive Index Total Relationships #1 #2 #6 8.9 Important HSBC #1 #3 #6 Relationships 8.4 SG DB DB Lead Relatio
Slide 12: And our most threatened businesses performed
And our most threatened businesses performed Q109 vs Q108 GBM Growth in Underlying Revenue by region at constant FX1 Underlying revenues (£bn) £1.8bn Constant FX growth (%) £0.6bn Strong underlying performance £2.6bn 89% Broad based Geographical 41% 47% performance EMEA inc UK Am ericas Asia Pac
Slide 13: Implementation of change
Implementation of change
Slide 14: New Management Team
New Management Team (leaving 10/09) Philip Hampton appointed Chairman in February 2009 Once the announced management changes have taken effect, all 9 members of the Group's Exco will be new to their posts within the last 14 months, 7 since October 2008 Slide 14
Slide 15: Business Focus - Disposal and restructuring update
Business Focus - Disposal and restructuring update £240bn Non-Core Division reported from June, 2009 Gain of £4.5bn on capital instrument tender and exchange Disposal of Bank of China stake (Jan ’09) Completed disposal of Citizens branches in Indiana Disposal of 50% stake in Linea Directa
Slide 16: Business realignment - actions & initiatives
Business realignment - actions & initiatives Group GBM Implement non-core exits Validation of Strategic Plan Streamline target customer set Implement business restructuring Intense focus on building core client franchise Cost savings pursued - £2.5bn Substantive management change Run
Slide 17: Business realignment - actions & initiatives
Business realignment - actions & initiatives UK Corporate, Business & Commercial Ulster Bank Group Implement ‘value based’ targeting Shrink real estate book Manage portfolio stress Pro-actively manage impairments Reduce cost base Increase and diversify deposit base Invest in systems an
Slide 18: Focus on funding – de-lever & reduce reliance on wholesale funding
Focus on funding – de-lever & reduce reliance on wholesale funding GBM Balance Sheet: Focus on de-leveraging RBSG Balance Sheet FY08* £bn £1.2trn 874 874 £400bn 767 750 Unsecured wholesale funding – 1 yr & under 692 £100bn Unsecured wholesale funding - over 1 yr 659 Secured wholesale funding 594 £13
Slide 19: The Government Asset Protection Scheme (APS)
The Government Asset Protection Scheme (APS) RBS strengthened and able to ~£300bn (net) assets protected increase UK lending against further deterioration RBS pay by issuing £6.5bn of RBS liable for first loss amount up B-shares & forgoing UK tax asset to £19.5bn Further £13-19bn of B shares to incr
Slide 20: APS and Non-Core - Future basis for disclosure
APS and Non-Core - Future basis for disclosure Non core and APS third party asset overlap Core businesses Non-core UK Retail Primarily UK Corporate & GBM asset based Commercial portfolios Wealth Asia Retail & Commercial Ulster Other real estate and ‘out Citizens of footprint’ portfol
Slide 21: Business restructuring - 2009 Implementation
Business restructuring - 2009 Implementation 2008 2009 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec. Strategy development Assess & Identify decide Develop 1-3-5 year business strategic Implement strategic plans options options Performance improvement Implement cost reduction programme Cre
Slide 22: Q1 2009 Results – What evidence?
Q1 2009 Results – What evidence?
Slide 23: Q1 2009 results highlights
Q1 2009 results highlights Q1 2009 Q1 2008 Change Full Year £m £m % 2008 £m Total Income 9,702 7,722 26 26,875 Operating profit before impairment losses 4,079 2,863 42 6,873 Impairment (2,858) (656) - (7,428) Credit market write-downs and one-off items (797) (1,412) (44) (5,641) Integration and rest
Slide 24: Q1 2009 results implications
Q1 2009 results implications Core franchises “intact”. Provide bedrock on which recovery will be based Change happening at a good pace Revenue capacity points way to shareholder value once restructuring is complete Major “legacy” credit risk positions will cause losses for a period – APS hel
Slide 25: Conclusions
Conclusions
Slide 26: What does good look like?
What does good look like? Achieve sustainable return on tangible equity of 15%+ Return Equity Business Good cost control Disciplined risk limits Top tier customer flow businesses Organic income growth leveraged off strong Run off of non-core division Stronger portfolio balance competitive position
Slide 27: We believe we have now assembled the building blocks necessary for recovery
We believe we have now assembled the building blocks necessary for recovery Customer franchises intact R Analysis and Presentation of the problems R Management and Board changes R Recapitalisation & Government funding support R New Strategy – roadmap to unite people and resources R Asset Protection
Slide 28: Questions?
Questions?
The Royal Bank of Scotland Group — UBS Financial Services Conference 2009 on 6ix