Natwest Group Plc · LSE:NWG

Natwest — Debt Investor Presentation (February 2018)

21 slides from Natwest's debt investor presentation, Feb 23, 2018

  1. Slide 1: Fixed Income Investor Presentation FY 2017 Results

    Fixed Income Investor Presentation FY 2017 Results 23 February 2018

  2. Slide 2: Ewen Stevenson, Chief Financial Officer

    Ewen Stevenson Chief Financial Officer

  3. Slide 3: FY 2017 update on progress

    FY 2017 update on progress 4 priorities 2017 progress  Adjusted income growth of 4.0% Grow income  2.2% net lending growth across PBB, CPB and RBSI(1) primarily driven by mortgage growth Cut costs  £810m adjusted operating expenses reduction (-8% nominal)  Reduced RWAs by £27.3bn (12.0%) to £201

  4. Slide 4: Core credit messages

    Core credit messages Strategic plan is working – first full year attributable profit in ten years Strong capital generation and targeted RWA reduction Strong liquidity position Targeted growth in core markets Progression on legacy clean-up and improving balance sheet resilience 2020 Target Operating

  5. Slide 5: CET1 generation 2018 and beyond

    CET1 generation 2018 and beyond(1) CET1 RWAs + Underlying profitability + Net Bank RWAs to be lower by 2018 £5bn-£10bn - Potential DoJ/ RMBS settlement - Net growth 2019 + Underlying profitability - IFRS 16 to increase RWAs by c.2- 3bn (1st Jan 2019) + Underlying profitability - Net growth 2020 - Ag

  6. Slide 6: Outlook

    Outlook(1) Costs  Costs, ex. restructuring and litigation and conduct costs, will reduce vs 2017, but the rate of cost reduction will be materially lower than in 2017 Restructuring  Expect to spend c.£1.5bn more than prior guidance (which was £1bn ex. Williams & Glyn; W&G now estimated at around £

  7. Slide 7: Robert Begbie, Treasurer

    x RBS Robert Begbie Treasurer

  8. Slide 8: FY 2017 Results – Treasurer's view

    FY 2017 Results – Treasurer’s view Strong capital and liquidity build Continued progress towards MREL requirements and funding diversification Advancing with ring-fencing plans Progress on core strategy reflected in credit spread performance Continue to managing our capital stack for value 8

  9. Slide 9: Solid capital and liquidity metrics maintained

    Solid capital and liquidity metrics maintained FY 2017 FY 2016 Loan : deposit ratio 88% 91% Short-term wholesale funding £18bn £14bn Liquidity coverage ratio 152% 123% Net stable funding ratio 132% 121% Common equity tier 1 ratio 15.9% 13.4% CRR Leverage ratio 5.3% 5.1% Loss Absorbing Capital ratio

  10. Slide 10: On track to meet future MREL requirements

    On track to meet future MREL(2) requirements (1) Future LAC requirement Progress toward future non-CRR MREL(4) needs (3) Based on BoE May 2017 guidance Based on current £201bn RWA and static regulatory capital requirements £24bn CRD IV & Management >4% £4-6bn annual Buffers issuance requirement (4)

  11. Slide 11: Targeting manageable issuance volumes from diverse sources

    Targeting manageable issuance volumes from diverse sources ~£7bn debt issuance in 2017  Further MREL build issuing £3.6bn equivalent eligible Senior HoldCo  Re entered covered bond issuing £2.4bn equivalent covered bonds  Issued £1.1bn equivalent Senior OpCo 2018 issuance plans FY 2017 2018-22 Se

  12. Slide 12: Issuance reflects post ring fencing entity structure

    Issuance reflects post ring fencing entity structure MREL ~£4-6bn The Royal Bank of Scotland Group plc Issuing Tier 2 p.a. MREL AT1 from 2018 stream Down stream Down Ring fenced entities NatWest Ulster Bank NatWest Bank plc Ireland DAC Markets plc  Issuance requirements take into account ring fenci

  13. Slide 13: Ring-fencing – NatWest Markets plc funding structure

    Ring-fencing – NatWest Markets plc funding structure(1) Funding structure and issuance Target state capital and balance plans sheet metrics  Trading liabilities, including repos, CET1 14% of RWA largely matched against trading Total Capital(2) >28% of RWA assets. RWA ~£35bn  Loss absorbing capacit

  14. Slide 14: Ring-fencing – Current LT Senior Debt Ratings

    (1) Ring-fencing – Current LT Senior Debt Ratings Standard & Poor’s Moody’s Fitch RBSG (HoldCo) BBB- / Stable Baa3 / Stable BBB+ / Stable Inside the ring-fence NatWest Bank plc BBB+ / Positive A3 / RUR Up (2) BBB+ / Watch Positive Royal Bank of Scotland plc (curently Adam & Co BBB+ (Prel) / Positive

  15. Slide 15: Appendix

    >< RBS Appendix

  16. Slide 16: FY 2017 results by business

    FY 2017 results by business Total RBS Central Ulster Bank Commercial Private RBS NatWest (£bn) UK PBB items & RoI Banking Banking International Markets other(1) Adj. Income(2) 6.5 0.6 3.5 0.7 0.4 1.1 0.1 12.9 Adj. Operating (3.2) (0.5) (1.8) (0.4) (0.2) (1.5) 0.0 (7.6) expenses(4) Impairment (losses

  17. Slide 17: NIM progression – Q4 2017

    NIM progression – Q4 2017 Net interest margin (‘NIM’), bps 212 (6) 206 0 0 206 (2) 204 Q3’17 Ex. Q3 Q3’17 Liquidity Competitive Q4’17 Q4’17 Q4’17 postivive underlying pressure underlying negative Average one-offs one-offs interest 431 431 earning 0% assets (£bn)  Q4 NIM reduced by 8bps driven by no

  18. Slide 18: RWA reduction and capital generation

    RWA reduction and capital generation Alawwal Bank CPB Other legacy NWM RBSI RWAs (£bn) Go-Forward NWM Central items 228.2 PBB (20.8) 7.4 200.9 (13.9) 6.6 14.0 32.3 61.0 80.9 1.0 5.1 FY 2016 Reduction Growth and other Former Capital FY 2017 1st Jan 2018 CET1 13.4% Resolution 15.9% 16.2%(1) ratio rund

  19. Slide 19: Litigation and conduct

    Litigation and conduct End of FY 2017 provisions (£m) Comments ~ $4.4bn(1)  RBS is involved in investigations by the US 3,243 DOJ and several state attorneys general  In December 2017, RBS Financial Products Inc. agreed to pay US$125 million to settle US RMBS the RMBS investigation of the Californ

  20. Slide 20: Estimated Loss Absorbing Capital position

    (1) Estimated Loss Absorbing Capital (“LAC”) positon (4) FY 2017, £bn LAC value (1) Regulatory Value (2,3) Par Value Common Equity Tier 1 Capital 32.0 32.0 32.0 Tier 1 Capital: End point CRR compliant AT1 4.0 4.0 4.0 o/w RBS Group Plc (HoldCo) 4.0 4.0 4.0 o/w RBS Operating Subsidiaries (OpCos) - - -

  21. Slide 21: 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 (1) Reform Act of 1995, such as statements that include the (2,3)word

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