Natwest Group Plc · LSE:NWG

Natwest — Royal Bank of Scotland Group — Q1 2017 Earnings Presentation

23 slides from Natwest's earnings presentation, Apr 28, 2017

  1. Slide 1: Q1 2017 Results

    3<RBS Q1 2017 Results 28 April 2017

  2. Slide 2: Agenda

    Agenda Q1 2017 update on progress The bank we will become Additional materials 2

  3. Slide 3: Q1 2017 results by business

    Q1 2017 results by business Core Franchises Other Total RBS Central Ulster Commercial Private RBS NatWest Total Core Capital Total (£bn) UK PBB Y/Y% W&G(1) items & Y/Y% Bank RoI Banking Banking International Markets Franchises Resolution Other other(2) Adj. Income(3) 1.4 0.1 0.9 0.2 0.1 0.5 3.2 12%

  4. Slide 4: Q1 2017 update on progress

    Q1 2017 update on progress Core Bank Progress  Core income up 12% Y/Y a Grow income  On track to meet 3% lending growth FY 2017 target supported by mortgages  £278m additional costs out in Q1 2017; excluding £51m VAT recovery b Cut costs  On track to meet £750m reduction target for 2017  Reduce

  5. Slide 5: Core income growth Q1 2017 vs. Q1 2016

    a Core income growth Q1 2017 vs. Q1 2016 Adjusted income (£m) Q1 annualised balance sheet growth (%) +12% 2017 target PBB/ CPB 3% 83% 3,154 Q1 2017 6% 2,815 7% 1% £93m £15m £231m UK PBB Mortgages 12% Business Banking 12% Q1’16 PBB CPB NWM Q1’17 Unsecured(1) (4%) Core 2.32 2.24 Commercial (1.6%) NIM%

  6. Slide 6: Adjusted operating costs progress to 2017 target

    b Adjusted operating costs progress to 2017 target Adjusted Operating Costs(1) (£bn) Spend vs. restructuring cost guidance (£bn) 2017 YTD restructuring spend Q1 2017 Remaining to meet 2017 target 8.4 cost reduction 42% 2017 spend target ~£1bn 58% (0.3) Q2-Q4 2017 target (0.4) Source of adjusted cost

  7. Slide 7: Progress made on £20bn RWA reduction across PBB, CPB and NWM

    c Progress made on £20bn RWA reduction across PBB, CPB and NWM Q1 2017 change in RWA (£bn) Group RWAs FY 2016 £228.2bn Core gross RWA reduction (£3.2bn)  Gross RWAs reduction driven by a number of initiatives including: o/w PBB (£0.7bn) - The exiting of low ROE lending pools o/w CPB (£1.4bn) - Impr

  8. Slide 8: Continued reduction of Capital Resolution RWAs

    d Continued reduction of Capital Resolution RWAs RWAs (£bn) Q1 2017 split of RWAs (%) Portfolio + GTS(1) 9% 6% 6% Shipping 38% 8% 49 Markets Alawwal Bank 26% £30.5bn Alawwal Bank 7 Other 46% Operational Risk 35 31 Total (£bn) 8 8 Disposal spend vs. target (£bn) 42 ~15-20 Disposal losses incurred to

  9. Slide 9: Litigation and conduct

    e Litigation and conduct End of Q1 2017 provisions (£m) Comments  US RMBS: in discussions with FHFA; no developments with DOJ 6,638 US RMBS  In Q4 2016, a further £3.1bn provision was taken, the total aggregate of provisions is £6.6bn.  The duration and outcome of these investigations and litigat

  10. Slide 10: Williams & Glyn

    f Williams & Glyn Comments  The proposal set out at the 17 February 2017 update on RBS’s remaining State Aid obligation envisages that RBS would deliver a revised package of remedies to promote competition in the market Proposal for banking services to SME’s in the UK(1)  £750m restructuring provi

  11. Slide 11: Outlook

    Outlook(1)  On track to meet all 2020 and 2017 targets outlined at FY 2016 Subject to providing fully for remaining significant legacy issues in 2017, we retain our expectation that we will be profitable in 2018(1) - Income: In 2017 will continue to be supported by balance sheet growth across PBB a

  12. Slide 12: Agenda

    Agenda Q1 2017 update on progress The bank we will become Additional materials 12

  13. Slide 13: Committed to being the No. 1 bank for customers

    Committed to being the No. 1 bank for customers 13 (1) Excluding litigation and conduct costs, restructuring costs, write down of goodwill, and the 2016 VAT release of £227m.

  14. Slide 14: Financial Targets – FY 2020

    Financial Targets – FY 2020(1) Our strategic plan targets sustainable returns based on… Sub-50% 12%+ £6.4bn all-in ROTE(2) Cost:Income cost base(3) Ratio This will be based off… Retail & CET1 ratio UK income Commercial 13% ~90% RWAs ~85% 14 (1) These statements constitute forward looking statements,

  15. Slide 15: Diversified income streams

    Diversified income streams FY 2016 Adjusted Income split by Core Strategic plan targets higher quality of Franchise (%) earnings in future Ulster Bank RoI 5% UK Business Banking  Focus on customer loyalty, conducting 6% more business with our most valuable customers UK Personal Banking 39%  Target

  16. Slide 16: Three core businesses averaging over £1bn per quarter

    Three core businesses averaging over £1bn per quarter Core Adjusted Return 11.2% 11.1% 13.8% on Equity(1,2) (%) 4.2 4.1 Core Adjusted operating profit(2) (£bn) 1.2 1.2 1.3 1.3 1.1 1.0 1.0 1.0(3) 0.8(3) 0.8 0.5 Q1’15 Q2’15 Q3’15 Q4’15 FY 2015 Q1’16 Q2’16 Q3’16 Q4’16 FY 2016 Q1’17 (1) RBS’s CET 1 targ

  17. Slide 17: Adjusted operating costs down £3.4bn since 2013

    Adjusted operating costs down £3.4bn since 2013 Reduction in Adjusted Operating Costs(1) (£bn) 11.9 (3.5) (0.4) Other cost reduction Organic cost reduction Q1 2017 cost reduction £278m ex. VAT recovery 8.4 (0.3) (0.5) 7.7 6.4 2013 2016 2017 2020 Target(1) Unadjusted Target(2,3)  To achieve a cost:i

  18. Slide 18: Agenda

    Agenda Q1 2017 update on progress The bank we will become Additional materials 18

  19. Slide 19: Notable items

    Notable items (£m) Q1 2017 Q4 2016 Q3 2016 Q2 2016 Q1 2016 Total Income 3,212 3,216 3,310 3,000 3,064 Own Credit Adjustments (29) (114) (156) 194 256 Gain/(Loss) on redemption of own debt 2 1 3 (130) - Strategic disposals - - (31) 201 (6) o/w Visa Gain - - - 246 - o/w Cap Res - - (30) (45) (6) Adjus

  20. Slide 20: Income - NatWest Markets Q1 2015 - Q1 2017

    Income - NatWest Markets Q1 2015 - Q1 2017 Adjusted income (£m) 526 508 484 404 343 328 314 277 252 Q1’15 Q2’15 Q3’15 Q4 15 Q1’16 Q2’16 Q3’16 Q4’16 Q1’17  NatWest Markets - 2017 income expected above previously indicated target of £1.3 - £1.4bn 20

  21. Slide 21: Tangible Net Asset Value (TNAV) movements

    Tangible Net Asset Value (TNAV) movements £m Shares in issue (m) TNAV per share Q4 2016 TNAV 34,982 11,823 296p Profit for the period post tax(1) 386 3p Less: profit to NCI / other owners (127) (1p) Other comprehensive Income (159) (1p) o/w AFS 60 1p o/w Cashflow hedging gross of tax (189) (2p) o/w

  22. Slide 22: NPS

    NPS Net Promoter Scores across our core businesses 30 Personal Banking(1) Business Banking(2) Commercial Banking(3) 21 20 21 20 15 18 13 12 13 15 11 9 10 4 4 (2) (2) (3) 0 (4) (6) (7) (10) (13) (4) (4) (5) (7) (7) Royal Bank of Scotland (Scotland) NatWest (England & Wales) RBSG (GB) (20) (30) Q1 Q2

  23. Slide 23: Forward Looking Statements

    Forward Looking Statements Cautionary statement regarding 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

Royal Bank of Scotland Group — Q1 2017 Earnings Presentation on 6ix