Natwest Group Plc · LSE:NWG

Natwest — Royal Bank of Scotland Group — Investor Presentation (September 2014)

34 slides from Natwest's investor presentation, Sep 29, 2014

  1. Slide 1: Commercial & Private Banking (CPB) Investor Briefing

    Commercial & Private Banking (CPB) Investor Briefing Alison Rose, Chief Executive Officer CPB 29 September 2014

  2. Slide 2: Today's speakers

    Today’s speakers Alison Rose, Chief Executive Officer CPB Rob Whittick, Finance Director CPB Andy Ellis, Head of Strategy CPB 2

  3. Slide 3: Agenda

    Agenda Business Overview Commercial & Private Banking Strategy Financial Performance & Outlook Summary 3

  4. Slide 4: Commercial and Private Banking

    Commercial and Private Banking #1 UK Commercial and Private Banking franchises Significant and growing contribution to Bank performance Strong market position to benefit as UK economy grows Bringing together wealth creators and wealth managers Investing in our business for the benefit of our custome

  5. Slide 5: CPB is a key pillar in the Bank's strategy

    CPB is a key pillar in the Bank’s strategy RBS blueprint for lasting success… …for the customers we serve Personal & Business Banking Customers we serve Steady state1 business profile UK UK UK Small Mass Retail RWA Op. Profit RoE Affluent Businesses 14.8m 0.7m 0.8m 15+% 35% 50% Ulster 0.7m across th

  6. Slide 6: Market leading franchises and clear proposition

    Market leading franchises and clear proposition Commercial & Private Banking Relationship-led target proposition UK Commercial UK Mid Corporate High Net Worth RMs at the centre  Dedicated relationship management Companies with Companies with >£1m invested with turnover £2m-£25m turnover £25m+ Coutt

  7. Slide 7: Refreshed leadership team with deep expertise

    Refreshed leadership team with deep expertise CEO, Commercial & Private Banking Commercial & Sectors and Corporate Specialist Real Estate Private Coverage Businesses Capital and Customer Chairman of SME Product Solutions Transaction Experience & Banking Group Management Business Control Bank-wide fu

  8. Slide 8: Customer focused strategy

    Customer focused strategy #1 for customer service, trust and advocacy by 2020 Simplicity and Winning Backing UK Customers discipline together business and first communities  Customer-obsessed  Be easy to do business  Deliver value for our  Supporting financing culture with customers needs of UK

  9. Slide 9: Early wins and comprehensive plan in place

    Early wins and comprehensive plan in place Progress highlights 2014–2018 initiatives: ~£1bn investment spend  New leadership in place 1. Customer programme Customers 2. Segments, analytics & profitability  Organisation redesigned around customer first 3. Banker tools & capability 4. Customer cha

  10. Slide 10: Agenda

    Agenda Business Overview Commercial & Private Banking Strategy Financial Performance & Outlook Summary 10

  11. Slide 11: Understanding the drivers of customer advocacy

    Customers First Understanding the drivers of customer advocacy Advocacy drivers Importance1 Performance Impact on NPS1 £2-25m £25m+ £2-25m £25m+ ‘excellent’ ‘fair’/‘poor’ “I have an excellent RM 54% 89% – understands my needs #2 #1 37%2 34%2 promoter detractor and delivers benefit” likelihood likeli

  12. Slide 12: Making progress on advocacy but lots to be done

    Customers First Making progress on advocacy but lots to be done NPS (£2-25m turnover) NPS (£25m+ turnover) 25 20 20 15 10 10 0 5 0 -10 -5 -20 -10 -15 -30 -20 -25 -40 2011 2012 2013 Q2'14 2011 2012 2013 Q2'14 RBS NatWest Competitors  NatWest clear market leader but work to be  Brand differential co

  13. Slide 13: Investing in our bankers to meet customer needs

    Customers First Investing in our bankers to meet customer needs 1 Refresh banker cohort 2 Banker training  Highly experienced RMs (40% tenures of 30+ years) RMs are professional, well trained, focused on customer needs  Limited diversity (25% female) Accreditation ‘Needs-based’  Scale of network

  14. Slide 14: Embedding good customer conduct into the culture

    Customers First Embedding good customer conduct into the culture Conduct underpins our customer plan Examples of activities 23 Good Customer outcomes Completed   Product governance, guidelines and tools enhanced   Business MI developed to track against customer outcomes   Specific Product and

  15. Slide 15: Focused on fixing basic customer processes

    Simplicity & Discipline Focused on fixing basic customer processes Customer outcomes Key measures of success 2014 2016+  Customers can upload ID Reduced from 33 days to 1, and Account documents online  Real time Fraud and AML complex clients to 15 days Opening and checks, reducing the issues On-Bo

  16. Slide 16: Simplifying our products to meet customer need

    Simplicity & Discipline Simplifying our products to meet customer need Simplifying our product set But retaining breadth of product capability # of on-sale products1 RBS Peer 1 Peer 2 Peer 3 Peer 4 251 Asset Finance      Lending (60)% Deposits Invoice Finance      120 ~100 Cash & Channe

  17. Slide 17: Risk and control frameworks in place

    Simplicity & Discipline Risk and control frameworks in place Significantly enhanced risk management processes  Governance and accountabilities to manage key risks streamlined and clearly defined  Credit risk appetite (sector and asset class) and credit approval frameworks embedded enabling discipl

  18. Slide 18: CRE portfolio is well managed, with focus on returns

    Simplicity & Discipline CRE portfolio is well managed, with focus on returns CRE balances have been tightly managed… …and the risk profile enhanced2 Gross drawn assets (£bn)  Through a combination of origination discipline and de- Concentration1 risking 28% 22% December 2011 June 2014 £25bn Loan to

  19. Slide 19: Targeted initiatives to inject revenue momentum

    Winning together Targeted initiatives to inject revenue momentum Operate more effectively Example growth initiatives and campaigns Uplift RM performance Refresh International Improve Coutts / Commercial (training, performance, tools) proposition connectivity Incremental market value pools Avg income

  20. Slide 20: Higher levels of lending activity and healthy pipeline

    Winning together Higher levels of lending activity and healthy pipeline Gross and net lending position improving Origination activity continuing to build H2 2013 vs H1 2014  Revenue campaigns stimulating demand:  Key focus on sustainable lending growth New lending1 + Repayments = Net lending  17k

  21. Slide 21: Renewed focus on UK private banking opportunity

    Winning together Renewed focus on UK private banking opportunity Coutts UK is heart of the Private business Building on strong UK foundations FY 13 Income: £1.1bn Customers: 82k Coutts UK FY 20131 Income £800m 20k Adjusted pre-tax profit £160m ~£300m Adjusted RoE 11% ~£800m 62k Adjusted C/I ratio 77

  22. Slide 22: Ambitious plans for Coutts

    Winning together Ambitious plans for Coutts Bringing together wealth creators and wealth managers 1  Implement two-way referral across Personal and Business Banking and Commercial Focus on new customer acquisition  Develop UK resident-non-domiciled proposition 2  Become clear market leader for cu

  23. Slide 23: Supporting UK entrepreneurs and businesses

    Backing UK Business Supporting UK entrepreneurs and businesses Entrepreneur strategy launch IDEA Significant opportunity…  Over 92k high growth businesses but RBS share only 16% Chamber of  8 Accelerators to be created regionally Commerce  2% of our customers but contribute 10% of income  Suppli

  24. Slide 24: Agenda

    Agenda Business Overview Commercial & Private Banking Strategy Financial Performance & Outlook Summary 24

  25. Slide 25: Financial Performance – Commercial Banking

    Financial Performance – Commercial Banking Expected FY 2013 H1 2014 Trend P&L (£bn) Income 3.2 1.6 Income outlook moderately positive Costs1 (2.0) (0.9)  Increasing customer penetration  Improving economic environment Impairments (0.7) (0.0)  Deposit re-pricing Op Profit1 0.5 0.6 Balance Sheet (£

  26. Slide 26: Commercial lending profile

    Commercial lending profile Positive lending indicators Sector diversification aligned to UK growth H1 2014 Concentration Key sectors Growable and Non-growable1 book, £bn L&A (£bn) H1 2014 Trend 86 Commercial Real Estate 19 22% 85 Wholesale & Retail 10 11% Trade Housing Associations 8 10% Growable 

  27. Slide 27: Financial Performance – Private Banking

    Financial Performance – Private Banking Expected FY 2013 H1 2014 Trend P&L (£bn) Income 1.1  0.5 Income outlook remains stable  Deposit re-pricing in the UK Costs1 (1.1) (0.4)  Economic environment and FX rates remain a challenge for Impairments (0.0) 0.0 the international business Op Profit1 (0.

  28. Slide 28: Income performance by product

    Income performance by product Expected (£m) FY 2013 H1 2014 Trend Commercial Banking  Commercial Lending: Re-shaping lending Commercial lending 1,911 894 proposition through focussed investment Deposits 208 153 Asset and Invoice Finance 671 366  Deposits: Re-pricing in line with Bank liquidity str

  29. Slide 29: Focus on driving efficiency

    Focus on driving efficiency CPB efficiency improvements starting to deliver Costs (£bn)  Bank wide and CPB cost reduction programmes Litigation/Conduct & Restructuring – Support rationalisation of functions, reduced 3.1 duplication and management layers Private 0.5 Commercial – Product simplificati

  30. Slide 30: Credit risk profile improving

    Credit risk profile improving Impairment charges significantly reduced Impairments charge (£m)  Credit conditions improving 681 Underlying releases – Provision releases in 2014 123 RCR – Fewer individual cases across the portfolio CPB ex RCR  Quality of assets enhanced following transfers to 558 R

  31. Slide 31: Positioned to support momentum in UK economy

    Positioned to support momentum in UK economy Business confidence up Seeds of lending growth as deleveraging slows Expectations of turnover improvement, indexed Stock of M4 PNFC lending, indexed 120 120 Forecast 100 -9% +12% 80 60 Services 100 40 Manufacturing 20 0 80 2007 2008 2009 2010 2011 2012 20

  32. Slide 32: Agenda

    Agenda Business Overview Commercial & Private Banking Strategy Financial Performance & Outlook Summary 32

  33. Slide 33: Our Investment Case

    Our Investment Case #1 UK Commercial and Private Banking franchises Significant and growing contribution to Bank performance Strong market position to benefit as UK economy grows Bringing together wealth creators and wealth managers Investing in our business for the benefit of our customers Targetin

  34. Slide 34: Forward looking statements

    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’, ‘estimate’, ‘project’, ‘anticipate’, ‘believes’, ‘shoul

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