Natwest Group Plc · LSE:NWG
Natwest — Q1 2019 Earnings Presentation
23 slides from Natwest's earnings presentation, Apr 26, 2019
Slide 1: Q1 2019 Results
Q1 2019 Results 26th April 2019
Slide 2: Q1 2019 update on progress
Q1 2019 update on progress Net loan growth • 0.8% annualised net loan growth across Personal & Ulster and Commercial & Private • Reduced other operating costs by £45m in Q1’19 vs Q1’18 Continuing cost reduction • Targeting cost reduction of £300m in 2019 • Underlying capital generation of 30bps in Q
Slide 3: Summary financials
Summary financials vs. Q1 2018 3,302 £3,037m (121) Income 14 (8%) (181) 3,037 23 Operating £1,938m Income (£m) expenses (4%) £1,013m Q1’18 Personal, RBSI NatWest Centre Q1’19 Operating profit (16%) Ulster, Markets(2) Commercial £707m + Private Attributable profit (13%) 204 201 207bps 195 NIM ex NWM
Slide 4: Net loan growth
Net loan growth Net Loan Growth (1)(£bn) UK Personal Banking Gross L&A Growth (£bn) 1.3% 2019 target net 140.2 2% – 3% 2.6% loan growth 138.4 7.8 (5.0%) 7.6 Net loan 4.0 3.8 0.8% growth Q4’18 Q1’19 Q4’18 Q1’19 Q4’18 Q1’19 UK Personal Personal 4.6% Mortgages Cards Banking Advances Mortgage Growth (£b
Slide 5: Cost reduction
Cost reduction Operating costs (£m) Strategic costs Strategic costs (£m) Conduct & Litigation Bank Levy 2,469 Other Expenses 355 2,011 92 1,938 209 179 19 195 355 5 299 £1.2 – 1.5bn 1,783 1,843 1,738 209 195 141 Q1’18 Q4’18 Q1’19 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 FY’19 Target(1) FTE (‘000) 71 67 67 £45m
Slide 6: Capital generation
Capital generation Strong capital build CET1 (%) (0.1) 16.3 (0.1) 16.2 0.4 16.0 Q4’18 Pro-forma Profit RWAs Q1’19 Q1’19 Q1’19 for IFRS16 Pre- Dividend dividend Accrual Underlying capital generation of 30bps in the quarter 6 6
Slide 7: Appendix
3x RBS Appendix
Slide 8: Good progress against 2019 issuance plan
Good progress against 2019 issuance plan Q1 2019 2019 Continuing diversification of issuance across a range of Issuance Guidance formats, currencies and tenors • $2bn RBSG senior MREL 6NC5 FXD to FRN RBSG plc ~£2bn £3-5bn USD • $1.0bn NWM Plc senior 3.5Yr FXD Senior MREL • $300m NWM Plc senior 3.5Yr
Slide 9: Balance sheet strength
Balance sheet strength Key Q1 2019 capital, funding and liquidity metrics Capital stack (% RWA) (1) Total funding mix (£bn) Liquidity portfolio (£bn) 2.8% £77bn 2.1% Total CET1 Customer deposits (2) Capital Tier 1 ~£432bn Wholesale funding Tier 2 £190bn 21.1% 16.2% £355bn CRR LDR STWF RWA LCR NSFR L
Slide 10: Regulatory capital ratios above regulatory requirements
Regulatory capital ratios above regulatory requirements Q1 2019 CET1 and target CET1 ratio versus 2022 minimum requirements as a % of RWA vs. Total (1) maximum distributable amount (“MDA”) (2) MREL senior unsecured outstanding (Based on estimated RWA of ~£200bn) 16.2% 26.5% CRR CET1 Buffers Total MR
Slide 11: Q1 2019 results by business
Q1 2019 results by business Central Ulster Bank Commercial Private RBS NatWest (£bn) UK PB items & Total RBS RoI Banking Banking International Markets other(1) Income 1.2 0.1 1.1 0.2 0.2 0.3 (0.0) 3.0 Operating expenses (0.6) (0.1) (0.6) (0.1) (0.1) (0.3) (0.0) (1.9) Impairment (losses) / releases (
Slide 12: Notable items: Income
Notable items: Income (£m) Q1 2019 FY 2018 Q4 2018 Q3 2018 Q2 2018 Q1 2018 FY 2017 Total Income 3,037 13,402 3,058 3,642 3,400 3,302 13,133 IFRS volatility in Central items (4) (59) (25) 77 17 (128) 2 Insurance Indemnity - 357 85 272 - - - o/w Natwest Markets - 165 - 165 - - - o/w Centre - 192 85 10
Slide 13: Notable items: Expenses
Notable items: Expenses (£m) Q1’19 FY 2018 Q4 2018 Q3 2018 Q2 2018 Q1 2018 FY 2017 Total Expenses (1,938) (9,645) (2,469) (2,441) (2,724) (2,011) (10,401) VAT recovery in Centre - - - - - - 86 Bank Levy - (179) (179) - - - (215) Strategic Costs (195) (1,004) (355) (299) (141) (209) (1,565) Litigatio
Slide 14: Income Q1 2019 vs Q4 2018
Income Q1 2019 vs Q4 2018 Income (£m) 3,058 3,037 36 (1%) (185) (17) 252 (4) 3,022 3,068 2,837 2,816 (31) Q4’18 Total Q4’18 NWM & Q4’18 Personal Personal & RBSI Q1’19 Personal Q1’19 NWM & Q1’19 Total Income Centre Income & Ulster and Ulster and & Ulster and Centre Income Income ex one-offs Commercia
Slide 15: Income Q1 2019 vs Q1 2018
Income Q1 2019 vs Q1 2018 Income (£m) 3,302 3,037 (517) 0% 252 (18) 14 3,337 3,068 2,820 2,816 (35) (31) Q1’18 Total Q1’18 NWM & Q1’18 Personal Personal & Ulster RBSI Q1’19 Personal Q1’19 NWM & Q1’19 Total Income Centre Income & Ulster and and Commercial & Ulster and Centre Income Income ex one-offs
Slide 16: Net Interest Margin Q1 2019 vs. Q4 2018
Net Interest Margin Q1 2019 vs. Q4 2018 NIM (bps) 197 2 (2) 195 2 (6) 191 (2) 189 Q4’18 One-offs Q4’18 Central Competitive Other Q1’19 One-offs Q1’19 underlying liquidity pressure underlying Future AIEAs £442bn £436bn Considerations • Rate sensitivity NIM ex. NWM (bps) • Reduction in liquidity (2) •
Slide 17: RWAs
RWAs Continued planned RWA reductions RWAs (£bn) 190.8 190.0 0.8 1.3 188.7 185 - 190 Q4’18 IFRS 16 Day 1st Jan RWA Growth Q1’19 FY’19 Target 1 Impact 2019 Pro-forma 17
Slide 18: Diluted Tangible Net Asset Value
Diluted Tangible Net Asset Value (TNAV) movements Shares in TNAV per Diluted shares Diluted TNAV Amount (£m) Amount (£m) issue (m) share (p) in issue (m) per share (p) Q4 2018 TNAV 34,566 12,049 287 34,566 12,088 286 IFRS 16 Day 1 adj (187) - (2) (187) - (2) Profit for the period post tax 797 - 7 79
Slide 19: Litigation and conduct
Litigation and conduct Q1’19 provisions (£m) Payment Protection Insurance 767 • RBS has made provisions totalling £5.3bn to date for PPI claims. 559 £4.7bn has been utilised by 31st 449 March 2019 of which £136m in Q1’19. • £559m balance sheet provision remaining. Litigation and PPI(2) Other Custome
Slide 20: Impairments
Impairments Q4 2018 Impairment Charge Q1 2019 Impairment Charge £117m £97m £86m £11m £100m 15bps 13bps 11bps £17m 2bps Q4’18 Headline Q4’18 NWM Q4’18 Impairment Q1’19 Headline Ulster Q1’19 Impairments net impairment charge ex NWM Impairments impairment Impairment releases releases releases Charge ex
Slide 21: Digital Dashboard
Digital Dashboard Volume of transactions (m) Q1’18 Q1'19 Movement Physical is reducing Branch Transactions1 24 17 29% Cheque Usage1 39 28 28% Contact centre calls 6.4 5.2 19% Digital is increasing Mobile: Payments 41 58 41% Users 5.7 6.6 16% App log ins 561 612 9% Digital sales in Personal Banking 0
Slide 22: Net Promoter Scores across our brands
Net Promoter Scores across our brands Personal Banking(1) Business Banking(2) Commercial Banking(3) NatWest stable. NatWest stable. NatWest and Royal bank ahead of the Royal Bank of Scotland recovering. Royal Bank bottoming out. rest of their markets. 30 25 26 25 25 27 27 25 23 22 21 21 20 20 12 11
Slide 23: 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 255