Natwest Group Plc · LSE:NWG
Natwest — Royal Bank of Scotland Group — Morgan Stanley Financial Services Conference 2011
27 slides from Natwest's conference presentation, Mar 29, 2011
Slide 1: What’s done, what’s left to do
What’s done, what’s left to do Stephen Hester, CEO RBS Group 29th March 2011 Morgan Stanley Financial Services Conference
Slide 2: Important Information
Important Information Certain sections in this presentation 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’, ‘estimate’, ‘project’, ‘anticipate’, ‘believes’, ‘should
Slide 3: Agenda
Agenda RBS strategic vision and targets Fixing the risk envelope and concentration reduction Core business progress Key industry issues Summary and conclusions 1
Slide 4: RBS Strategic Vision and Targets
RBS Strategic Vision and Targets
Slide 5: What we are aiming for
What we are aiming for To be amongst the world’s most admired, valuable and stable universal banks, powered by market-leading businesses in large customer-driven markets To target 15%+ sustainable RoE, from a stable AA category risk profile and balance sheet Well balanced business mix to produce an
Slide 6: How we will get there
How we will get there Core Bank Non-Core Bank The focus for sustainable value creation The primary driver of risk reduction Built around customer-driven franchises Businesses that do not meet our Strategic Tests, including both stressed and non-stressed Comprehensive business restructuring ass
Slide 7: Strong achievements to date
Strong achievements to date RBS strategic plan All key Group metrics on or ahead of Plan for this stage re-affirmed & Particular progress on Group risk reduction and reshaping “on-track” Non-Core Non-Core TPAs1 reduced 51% since inception2 reduction & business On target to be less than 10% o
Slide 8: The financial parameters of our Plan and Progress
The financial parameters of our Plan and Progress Group – Key performance indicators Worst point FY 10 Actual 2013 Target 1 Loan : deposit ratio (net of provisions) 154% 117% c100% 2 3 Short-term wholesale funding £343bn £157bn <£150bn 4 3 Liquidity reserves £90bn £155bn c£150bn 5 6 Leverage ratio 2
Slide 9: Our Core Bank - A sustainable and balanced design
Our Core Bank - A sustainable and balanced design A complementary group of businesses…. … well balanced by business mix and geography 1 FY10 Core revenues by Division Retail & Commercial Global Retail UK Retail Global Corporate UK Retail Customers Banking Clients 22% UK Corporate & Markets Deposits
Slide 10: Fixing the risk envelope & concentration reduction
Fixing the risk envelope & concentration reduction
Slide 11: Risk envelope - Structural balance sheet improvements largely done
Risk envelope - Structural balance sheet improvements largely done RBS capital ratios strong with Non-Core reducing Leverage Ratios “in the pack” Comparative Core Tier 1 Capital Ratios1, % Tier 1 Leverage Ratios6 vs Peer averages % 12 APS benefit 10.7 Ex. APS 1.2 6 8 7.6 10.8 3 5.5 5.9 9.4 9.4 8.9 9
Slide 12: Risk concentrations - Excellent progress reducing Non-Core but more to do
Risk concentrations - Excellent progress reducing Non-Core but more to do Non-Core reduction profile £bn Undrawn commitments Funded assets 85 36 120 £118bn: original 2011 funded target 21 258 201 15 100-120 138 96 8 20-40 2008 2009 2010 2011 2012 2013 actual Non-Core funded assets reduced by £120b
Slide 13: Risk concentrations - Future Non-Core disposals
Risk concentrations - Future Non-Core disposals Balanced portfolio reduction to date Potential for increased disposal losses Indicative profile of Non-Core asset sales to date1 FY08 funded assets FY10 funded assets 110 Other Other £9bn £2bn Retail Price / Book Value of Retail 1% 05 TPAs disposed (%)
Slide 14: Risk concentrations - Reduction progressing well
Risk concentrations - Reduction progressing well Substantial reduction in REIL growth slowing; Significantly improved provision levels ‘tall-trees’ exposure transfers to work-out moderating at Ulster Bank Single Name Concentration exposures No. of wholesale cases transferred to Provision coverage of
Slide 15: Core business progress
>< RBS The Royal Bank of Scotland Group ¥ Core business progress
Slide 16: 2010 - Strength and potential of Core RBS taking shape
2010 - Strength and potential of Core RBS taking shape Core RBS produced solid FY10 performance, increasingly well balanced Retail & Commercial businesses up strongly despite losses in Ireland GBM revenues “normalised” in weaker markets Good cost re-engineering, Retail & Commercial C:I ratio improve
Slide 17: Market leading, customer driven franchises
Market leading, customer driven franchises FY10 deposits Market Customer Y-o-Y Division position Numbers/satisfaction £bn change Comments UK Robust franchises, increasing customer satisfaction; strong deposit and £96.1bn1 10% Retail mortgage performance UK Leading customer satisfaction & market posi
Slide 18: Tracking well to established targets
Tracking well to established targets 1 Return on Equity , % Cost : income Ratio, % Loan : deposit ratio, % FY09 FY10 2013 Target FY09 FY10 2013 Target FY09 FY10 2013 Target UK Retail 3 18 >15 60 52 c.50 115 110 <105 UK 9 12 >15 43 43 <35 126 110 <130 Corporate Wealth 30 19 ns 59 70 <50 38 44 <30 GTS
Slide 19: Businesses rebalancing; Operating performance gaining traction
Businesses rebalancing; Operating performance gaining traction Sharp improvement in Retail & Commercial…. R&C1 operating performance, FY10 vs FY09 18% Income growth supported by asset margin expansion outweighing higher funding and liquidity costs 9% 6% Cost savings balanced by continued investm
Slide 20: Good progress in key markets
Good progress in key markets Increased UK mortgage participation Strength of franchise attracting good deposit growth UK Retail – Mortgage lending growth FY101, % UK Retail – Deposit growth FY101,2, % % 10 % 12 6 8 9 9.4 7 6 10 2 4 8 3 7 0 5 5 3 (1) -2 0 RBS Barclays HSBC Santander LBG Market RBS HS
Slide 21: Key Industry Issues
¥ Key Industry Issues
Slide 22: Key industry issues - Regulation
Key industry issues - Regulation Issue Status Timing RBS Impact Net RWA growth of c£88-100bn1, uncertainties remain Part Basel III FY11 ongoing Impacts split between Core & Non-Core clarified Manageable within context of the Group TBC; issue of ‘level playing field’ vs. UK ‘Finish’ SIFI, GSI
Slide 23: Key industry issues - Economic trends
Key industry issues - Economic trends Primary anticipated impact on key business drivers Margins Impairments GBM Earnings Issue RBS outlook 9 Interest Forecast two steady rate rises by FY11 rates in UK. Gently rising trends forecast 9 Economic Moderate recovery in developed world. growth Subdued
Slide 24: Key industry issues - Driving RoE
Key industry issues - Driving RoE >15% Core RoE target looks achievable, subject to regulatory and economic factors 2010 2013 Core RoE Core RoE 13% >15% Upside from 2010 Downside from 2010 Net interest margin: RWAs: Further support from liabilities margin with rising rates Regulatory increases Balan
Slide 25: Summary & conclusions
>< RBS The Royal Bank of Scotland Group ¥ Summary & conclusions
Slide 26: A clear plan for the future
A clear plan for the future Leading positions in all our customer businesses Top tier market franchises Strong, predictable and resilient business performance Complementary portfolio with clear cohesion logic and synergies Balanced portfolio Balanced by geography, growth, risk profile and business c
Slide 27: Summary and conclusions
Summary and conclusions Strong progress to date Greatly increased balance sheet strength, risk envelope improvement largely done, work still to do on concentration risk Economic and market environment remains uncertain and may take time to clarify Customer metrics good, investment programme st
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