Natwest Group Plc · LSE:NWG
Natwest — Q3 2018 Earnings Presentation
16 slides from Natwest's earnings presentation, Oct 26, 2018
Slide 1: Q3 2018 Results
Q3 2018 Results 26th October
Slide 2: Key Messages
Key Messages Good performance in a highly competitive market and uncertain economic outlook Q3 2018 Attributable profit £448m, + 14% vs. Q3 2017 Strong capital positon, 16.7% CET1 ratio at Q3 2018 Growing lending safely in our target markets and sectors Continued focus on digital transformation, inn
Slide 3: Income Q3 2018 vs Q2 2018
Income Q3 2018 vs Q2 2018 Retail & Commercial performance stable excluding one-offs in tougher conditions Income (£m) (1) 3,400 3,642 128 (0%) 359 Income One-offs 391 416 Income Ex One-offs (22) 8 3,272 3,283 2,881 2,867 Q2’18 Total Q2’18 NWM Q2’18 PBB, PBB & CPB RBSI Q3’18 PBB, Q3 NWM Q3’18 Total 4
Slide 4: Income Q3 2018 vs Q3 2017
Income Q3 2018 vs Q3 2017 Retail & Commercial performance stable excluding one-offs in tougher conditions Income (£m) (1) 3,157 3,642 (277) 359 Income One-offs 572 0% Income ex One-offs 416 (9) 14 3,434 3,283 2,862 2,867 Q3’17 Total Q3’17 NWM Q3’17 PBB, PBB & CPB RBSI Q3’18 PBB, Q3’18 NWM Q3’18 Tota
Slide 5: Net Interest Margin Q3 2018
Net Interest Margin Q3 2018 NIM (bps) 201 (1) 200 (2) (3) 195 (2) 193 Q2’18 One-offs Q2’18 Liquidity Competitive Q3’18 One-offs Q3’18 underlying pressure underlying Average Interest £435bn £443bn Earning Assets 5
Slide 6: Cost Savings
Cost Savings (3%) Costs (£m) 5,520 5,440 80 (183) 5,337 9M’17 Other VAT release 9M’17 9M’17 9M’18 9M’18 Other expenses Other expenses Cost savings expenses ex. VAT 6
Slide 7: Costs Q3 2018
Costs Q3 2018 Continued run-down of underlying costs Strategic costs (£m) 531 Strategic cost 146 guidance Operating costs (£m) 244 3,406 ~£2.5bn 17 385 227 299 531 209 141 2,724 141 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 FY 2018 FY 2019 2,441 764 299 W&G Strategic costs ex W&G 2,143 2,011 782 215 3
Slide 8: Litigation and conduct
Litigation and conduct End of Q3 2018 provisions (£m) Comments 811 803 • Reached final settlement on 14th August with US DOJ for US RMBS for $4.9bn 591 US RMBS • This settlement amount was paid in September • Additional £200m PPI provision was taken reflecting greater than predicted volumes • RBS ha
Slide 9: RWAs and capital generation
RWAs and capital generation Continued RWA reductions support strong capital build RWAs (£bn) CET1 ratio 16.8% (0.1%) 16.7% 200.9 1.0 0.2% (0.1%) 16.2% (7.4) 15.9% 0.3% 1.2% (0.8%) 194.5 ~191-196(1) (0.5%) 0.6% FY 2017 Pension RWA Q3 2018 FY 2018 FY 2017 IFRS 9 Pro- Pensions DOJ RWA Profit Interim Ot
Slide 10: Appendix
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Slide 11: Q3 2018 results by business
Q3 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 0.2 0.8 0.2 0.2 0.6 0.2 3.6 Operating expenses (1.0) (0.2) (0.4) (0.1) (0.1) (0.5) (0.2) (2.4) Impairment (losses) / releases (0
Slide 12: Notable items: Income
Notable items: Income (£m) Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017 Total Income 3,642 3,400 3,302 3,057 3,157 3,707 3,212 IFRS volatility in Central items 77 17 (128) (173) 21 172 (18) Insurance Indemnity 272 o/w Natwest Markets 165 o/w Centre 107 UK PBB Debt Sale - - 26 9 168 - 8 FX
Slide 13: Notable items: Expenses
Notable items: Expenses (£m) Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017 Total Expenses (2,441) (2,724) (2,011) (3,406) (2,143) (2,399) (2,453) VAT recovery in Centre - - - 6 29 - 51 Bank Levy - - - (215) - - - Strategic Costs (299) (141) (209) (531) (244) (213) (577) Litigation & Conduc
Slide 14: Diluted Tangible Net Asset Value (TNAV) movements
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) Q2 2018 TNAV 34,564 12,028 287p 34,564 12,095 286p Profit for the period post tax 563 5p 563 5p Less: loss to NCI / other owners (11
Slide 15: Net Promoter Scores across our brands
Net Promoter Scores across our brands Personal Banking(1) Business Banking(2) Commercial Banking(3) NatWest remains stable. Branch closures NatWest beginning to recover from NatWest ahead of the rest of the market impacting Royal Bank of Scotland. operating model changes 30 25 26 25 25 27 27 25 23 2
Slide 16: Disclaimers
Disclaimers The targets, expectations and trends discussed in this presentation represent management’s current expectations and are subject t o change, including as a result of the factors described in the “Risk Factors” on pages 372 to 402 of the Annual Report and Accounts 2017 and the “Summary Ris