Natwest Group Plc · LSE:NWG
Natwest — Investor Presentation (May 2021)
40 slides from Natwest's investor presentation, May 20, 2021
Slide 1: Commercial Banking & NatWest Markets Investor Spotlight
Commercial Banking & NatWest Markets Investor Spotlight 20th May 2021
Slide 2: Paul Thwaite, Commercial Banking CEO
Paul Thwaite Commercial Banking CEO 2
Slide 3: Agenda
Agenda Commercial Banking & Topic Presenter NatWest Markets Investor Spotlight Introduction Paul Thwaite Commercial Banking Paul Thwaite NatWest Markets Robert Begbie Technology & Innovation Simon McNamara Transformation Jen Tippin Q&A 3
Slide 4: Strategic priorities will drive sustainable returns
Strategic priorities will drive sustainable returns Our Purpose led strategy will drive sustainable returns for shareholders Strategic priorities delivered through: Sustainable growth with an intelligent approach to risk Simplification and cost efficiency Portfolio discipline and effective deploymen
Slide 5: Commercial Banking and NatWest Markets together accounted for large share of Group
Commercial Banking & NatWest Markets Spotlight Commercial Banking NatWest Group financial profile, FY 2020 (CB) and NatWest £m unless stated Retail Private Commercial RBS NatWest Ulster Bank Central Total Markets (NWM) together otherwise Banking Banking Banking International Markets RoI items & othe
Slide 6: Relationship bank for a digital world
Overview Relationship bank for a Commercial Banking digital world, supporting Segments1 Business Banking SME & Mid Corporates Large Corporates & Institutions2 Specialised Businesses3 all customers at every Turnover <£2m >£2m to <£500m >£500m various stage of their lifecycle Customers c.940k c.50k c.
Slide 7: Largest supporter of businesses, serving around 1 in 4 UK businesses
Commercial Banking positioning Business Positioning (FY’20 financials) Largest supporter of businesses, serving Segments Business SME and Mid Large Corporates & Specialised Corporates inc. Other Segments around 1 in 4 UK Banking Real Estate Institutions Business businesses ▪ Supporting ▪ #1 and #2 ▪
Slide 8: Taking a customer focused approach to our business strategy
Focus by segment Taking a customer Strategic priorities by segment Large Business SME & focused approach to our Banking Mid Corp Corporates & Institutions business strategy Supporting Customers -1 Economic recovery and removing barriers to Continuing investment in our entrepreneurship customers to a
Slide 9: Championing support for businesses across the UK
Supporting customers Government scheme lending approved New government schemes launched Championing support for (as at Q1’21; £bn) businesses across the 9.1 UK c.29% Pay As You c.158k of drawn lending to high oversight wholesale risk Grow (BBLS)2 accounts invited5 Delivered 19%1 of COVID-19 sectors4
Slide 10: Targeted growth powered by partnerships and innovation
Targeted Growth powered by Partnerships and Innovation Supporting customer Multiple sources of fee income with Specialist growth in Large Corporates & needs through purpose strong growth prospects Institutions led partnerships and ▪ FY20 impacted by COVID-19 with lending ▪ Building on history of exi
Slide 11: Simple to deal with: Transformation
Simple to deal with Improving customer Digital Engagement Transforming operations and Transformation engagement and driving High (Q1 2021) services for core capabilities efficiencies • CRM integrations allowing RM’s 82% Digitally active Customer broader visibility and data Commercial Relationship in
Slide 12: Sharpened capital allocation
Sharpened capital allocation Range of strategies deployed to drive capital efficiency (RWA and Lending, £bn) Proactive capital 8% lending increase vs. 4% RWA reduction RWA Gross Lending management and risk RWA Intensity2 76% 68% mitigation aligned to our • Risk • Active Capital • Business growth • A
Slide 13: Commercial Banking financial outlook
Commercial Banking financial outlook We remain focused on Our path to sustainable RoE is underpinned by core value levers delivering long term Medium ▪ Targeting growth: Lending, digital sustainable performance P&L (£m) FY’19 FY’20 Q1’21 term outlook capabilities, expansion of payment vs. FY’20 and
Slide 14: Robert Begbie, NatWest Markets CEO
Robert Begbie NatWest Markets CEO 14
Slide 15: NatWest Markets overview and purpose
Purpose NatWest Markets will be NatWest Markets overview the partner of choice to UK and Europe: Our Home Markets meet the financial • Solving needs of our customers by providing access to FX, risk markets needs of Group management and capital markets expertise • Liquidity, market making and executi
Slide 16: Transformation progress
Transformation progress Foundations in place for New Customer-led model in place Operating expenses reduction, £m a sustainable business -8% Significant progress in 2020 Capital Customer 1,418 against our transformation Markets Sales Trading Strategic, 1,310 240 objectives: Litigation -12% 272 Curre
Slide 17: Focusing on NatWest Group C&I customers
NatWest Group C&I customers Corporate & Institutional customer segments Focusing on NatWest Financial Group C&I customers Corporates Sponsors Institutions SSA Number of NatWest Markets plays an customers1 ~8,500 ~300 ~3,000 ~100 important role in delivering Customer • Mid and Large • Private Equity
Slide 18: Proposition: capital markets and risk management
Proposition Providing capital markets Currencies Capital Markets Fixed Income and risk management • Cash Bonds, Repo and • FX Spot and FX Forwards, • Helping customers access in What we do expertise to customers Options and Cross Currency global debt capital and Interest Rate Derivatives in Rates Sw
Slide 19: Supporting customers: growth priorities
Supporting customers NatWest Markets customer growth priorities Targeting organic growth in areas where Grow ESG expertise and capability by building on our Capital Markets we can add the most experience value for our customers We are focused on developing Grow our Sponsors & Funds Financing activit
Slide 20: Building on strong ESG expertise
Supporting customers Investing in our ESG capability to support customers and our purpose We are building on strong ESG expertise to • Established ESG centre of expertise to innovate and develop solutions for customers support customers and • Executed our first corporate ESG-linked FX derivative tra
Slide 21: Simplifying to improve efficiency and customer experience
Simple to deal with Theme Examples Simplifying to improve efficiency and customer Business • Reshaping of front office and organisational design experience Simplification • Rightsizing of US and APAC footprint and operating model We are transforming how we • Developing electronic coverage model for
Slide 22: Sharper capital discipline and allocation of capital
Sharpened capital allocation Risk Weighted Assets (£bn) Sharper capital Operational Risk Market Risk discipline and allocation Counterparty Risk Credit Risk 38 of capital 3 Capital Management Unit 12 27 27 3 3 actively manages capital Corridor of c20 9 8 allocation and optimisation 13 across the bus
Slide 23: Financial outlook: improving returns
Financial outlook Medium We aim to deliver P&L (£m) FY’19 FY’20 Q1’21 term outlook vs improving returns FY’20 Fixed Income 1,2 496 518 39 ▪ Income £0.8-1.0bn over the medium term Currencies 432 583 118 Focused on serving our Capital Markets 2 362 384 74 customers where we add most ▪ ROE low to mid-s
Slide 24: Simon McNamara, Chief Administrative Officer, Services
Simon McNamara Chief Administrative Officer, Services 24
Slide 25: Resilient whilst investing in core capabilities
Foundations c£100m Commercial NWM Progress Resilient whilst investing 8 5 in core capabilities Investment p.a in keeping our Technology current. CAO Services provides 2019 2020 Progress 2021+ Technology, Data, Property & Supplier services as well 152 8 -46% as Financial Crime, Fraud & Shared Ope
Slide 26: NatWest Markets transformation driving cost reductions through re-use
Simple to deal with Modernising the NatWest Markets colleague platform experience whilst reducing Technology costs associated with running duplicative, end of life 2 platforms NatWest Markets NatWest Markets Now Future State Transformation is driving cost reductions through Overview Disparate system
Slide 27: Maintaining resilience while innovating and digitising
Simple to deal with 114 Bots quickly deployed to support the processing of~300k BBLS/CBILS2 applications, equivalent to ~1,000 FTE3 at peak volume We continue to maintain resilience whilst innovating, adapting and focusing on driving Held 0.5m conversations with Business Banking customers in 2020, a
Slide 28: Open Banking and APIs as a business enabler
Partnerships & innovation Our focus has pivoted to creating the Bank of APIs as we deliver new customer propositions on bank and non-bank channels. We see Open Banking and the use of APIs1 >£1bn Built a pipeline of as a business enabler payments commercial processed via opportunities for rather than
Slide 29: Innovation ecosystem combined with APIs
Partnerships & innovation Our Innovation • Integration of Tyl with Mettle, Payit and FreeAgent creates a merchant Integration of ecosystem for the One Bank SME proposition ecosystem combined Tyl • Offers merchants and consumers choice of eCommerce and payment with APIs enables us to methods, linked
Slide 30: Supporting customers through every stage of their lives
Supporting customers through every stage of their lives Using data to deliver Proof of concept of data ‘learning tools’ that combine Example 1 highly personalised Leveraging consumer debit card payments and account data to provide new insights for commercial insights for our commercial customers to
Slide 31: Jen Tippin, Chief Transformation Officer
Jen Tippin Chief Transformation Officer, Transformation 31
Slide 32: One Bank Transformation Programme
One Bank Transformation Programme We are driving the execution of our Building sustainable returns strategic priorities with through…. a new approach. Comprehensive Formation of Chief One Bank delivery transformation effort (growth, Transformation roadmap We are working in simplification and capital
Slide 33: One Bank Transformation workstreams
One Bank Transformation Workstreams The delivery of the 9- 10% ROTE target by Objectives 2023 is supported by a Drive growth in priority segments and deepen existing customer Customer Lifecycle relationships by building lifecycle management capabilities and One Bank culture Transformation Digitise a
Slide 34: Customer journey & One Bank capabilities
Customer Journey & One Bank Capabilities: Simple to deal with Transforming operations and services Spotlight on Transformation for core capabilities Microsoft Dynamics 365 Simplifying, digitising • Direct Relationship Manager service Progress (April 2021) and automating the Customer provided to 16k
Slide 35: Portfolio discipline / One Bank capabilities
Portfolio Discipline / One Bank Capabilities Leveraging NatWest Markets capability is Case study: Following key strategic helping to embed a Capital Management Unit One Bank Capability in Foreign decisions, work is across the bank: Exchange underway to build and • Commercial and NatWest run a bank-w
Slide 36: Simplifying our business to deliver a step change
Simple to Deal With Case Study: Simplifying our Capability Impact business to deliver a • In 2020 and 2021 NatWest Markets concluded a refunctionalisation step change in programme to realign support functions to NatWest Holdings. customer experience, Real time cost process Single, live view of all c
Slide 37: Purpose led strategy will drive sustainable returns
A Relationship Bank for a digital world Our Purpose led strategy will drive sustainable returns for shareholders Strategic priorities delivered through: Sustainable growth with an intelligent approach to risk Simplification and cost efficiency Portfolio discipline and effective deployment of capital
Slide 38: Q&A
Q&A 38
Slide 39: Biographies
Biographies Paul Thwaite, CEO Commercial Banking Peter Norton, CFO Commercial Banking Paul Thwaite was appointed CEO, Commercial Banking in Peter was appointed CFO of Commercial Banking in February 2020. Before November 2019 and is responsible for the business supporting joining the Group in October
Slide 40: Cautionary and Forward-looking statements
Cautionary and Forward-looking statements The guidance, targets, expectations and trends discussed in this presentation represent NatWest Group (and where applicable N WM Group) management’s, current expectations and are subject to change, including as a result of the factors described in the “Risk