Natwest Group Plc · LSE:NWG
Natwest — Royal Bank of Scotland Group — Corporate Update (April 2008)
23 slides from Natwest's corporate update, Apr 22, 2008
Slide 1: The Royal Bank of Scotland Group
The Royal Bank of Scotland Group
Slide 2: Important Information
Important Information This document does not constitute an offer to sell, or a solicitation of an offer to subscribe for, securities of RBS or any of its affiliates in any jurisdiction or an inducement to enter into investment activity. This document is not a prospectus but an advertisement and inve
Slide 3: Make it happen – Sir Tom McKillop, Chairman
Make it happen Sir Tom McKillop Chairman
Slide 4: Introductory Comments
Introductory Comments • Decisive actions to recapitalise – Increased capital ratios and targets – Rights issue to raise £12 billion – Estimated write-downs on credit market exposures – Identified possible assets for disposal • Board has been fully engaged • Decision reflects deteriorating market con
Slide 5: Make it happen – Sir Fred Goodwin, Group Chief Executive
Make it happen Sir Fred Goodwin Group Chief Executive
Slide 6: Background
Background • Previous capital plan – Maintain Tier 1 capital ratio in range of 7% to 8%, with 25% to 30% preference share content – Rebuild core Tier 1 capital ratio towards 5% by 2010 – Within parameters of this plan at 2007 results • Market developments – Further deterioration in credit markets –
Slide 7: Revision of Capital Plan
Revision of Capital Plan • Appropriate to revise capital plan – Operate with significantly higher capital ratios – Consistent with, and informed by, views of shareholders • Revised capital plan – Increase target range for Tier 1 capital ratio to 7.5% to 8.5% – Set target for core Tier 1 capital rati
Slide 8: Accelerated Capital Rebuild Actions
Accelerated Capital Rebuild Actions £bn Proceeds of rights issue 12.0 Capital effect of estimated write-downs (4.3) Estimated capital generated by disposals 4.0 Net new capital 11.7 Forecast Capital Ratios 31 Dec 2008 (Proportional consolidated basis) Tier 1 capital ratio >8% Core Tier 1 capital rat
Slide 9: Trading Update
Trading Update • Overall underlying performance has remained satisfactory • Parts of GBM affected by credit market conditions • Strong growth in personal and corporate deposits • Lower Group net interest margin – increased funding costs, but higher new business asset spreads • Overall credit metrics
Slide 10: Outlook
Outlook • Environment – Opportunities available at good risk-adjusted returns despite challenging period for banks – Less aggressive competition • Priorities for RBS – Deliver ABN AMRO integration and transaction benefits – Disciplined management of GBM through difficult period – Maintain momentum i
Slide 11: Make it happen – Guy Whittaker, Group Finance Director
Make it happen Guy Whittaker Group Finance Director
Slide 12: Capital Outlook
Capital Outlook • Budget reforecast • Estimated credit market write-downs • Disposals • 2008 dividend plan • Rights issue • Estimated capital ratios Slide 12
Slide 13: Budget Reforecast
Budget Reforecast • 3 month actual performance • 9 month outlook for income, profits and balance sheet • Updated for prevailing economic conditions • Known risk factors taken into consideration • Outlook for business activity considered • Basis for revised capital plan Slide 13
Slide 14: Credit Market Exposures: CDOs and US Mortgages
Credit Market Exposures CDOs and US Mortgages £bn Net Exposure 31 Dec 2007(1) Average Price (%) Current Estimated Net Exposure(2) Average Price (%) Estimated Write-downs Before Tax(3) ABS CDOs High Grade 2.6 84 1.6 52 (1.0) Mezzanine 1.3 70 0.4 20 (0.9) US Residential Mortgages Subprime(4) 1.3 72 0.
Slide 15: Credit Market Exposures: Monolines
Credit Market Exposures Monolines Current Estimates Fair Value of Underlying Gross £bn Notional Asset Exposure Estimated Write-downs Before Tax Hedge Net Exposure AAA / AA 19.8 15.6 4.2 A / BBB 2.6 2.2 0.4 Non-investment grade 2.6 1.0 1.6 (1.1) (0.3) (1.3) (0.4) 2.7 0.2 0.3 Total 25.0 18.8 6.2 (2.7)
Slide 16: Credit Market Exposures: Leveraged Loans
Credit Market Exposures Leveraged Loans £bn Net Exposure 31 Dec 2007(1) Average Price (%) Current Estimated Net Exposure(2) Average Price (%) Estimated Write-downs Before Tax(3) Funded 8.7 95% 8.3 88% Unfunded 5.8 98% 4.8 88% Hedge (0.7) Total 14.5 96% 12.4 88% (1.3) (1) Net of hedges and write-down
Slide 17: Credit Market Exposures
Credit Market Exposures Net Exposure 31 Dec £bn 2007(1) Average Price (%) Current Estimated Net Exposure(2) Average Price (%) Estimated Write-downs Before Tax(3) ABS CDOs 3.8 79 2.0 40 (1.9) US Residential Mortgages 4.3 81 2.3 52 (1.2) US Commercial Mortgages 1.8 97 1.4 83 (0.2) Monoline Exposures 2
Slide 18: Disposals
Disposals • Regular programme of review and evaluation with the Board • Existing plans incorporated a number of opportunities • Recalibrated in context of new capital targets • Possible whole or partial disposal of RBS Insurance included • Determined to achieve full and fair value • Options as to ho
Slide 19: 2008 Dividend Plan
2008 Dividend Plan • Interim dividend intended to be paid in shares • Target dividend payout ratio around 45% – Based on earnings adjusted to exclude credit market-related write-downs and non-recurring items • Rights issue effect • Final dividend intended to be paid in cash Slide 19
Slide 20: Rights Issue
Rights Issue • £12 billion • Fully underwritten • 11 new shares for every 18 existing shares • Issue price 200 pence per RBS share • Represents a 34.9% discount to theoretical ex-rights price on 21 April 2008 • Subject to approval at EGM in mid-May Slide 20
Slide 21: Estimated Capital Ratios
Estimated Capital Ratios Core Tier 1 Tier 1 Fully consolidated basis 30 June 2008 >6.0% >8.0% 31 December 2008 >6.0% >8.0% Proportional consolidated basis 30 June 2008 >5.0% >7.5% 31 December 2008 >6.0% >8.0% Slide 21
Slide 22: Make it happen – Sir Tom McKillop, Chairman
Make it happen Sir Tom McKillop Chairman
Slide 23: The Royal Bank of Scotland Group
The Royal Bank of Scotland Group Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: April 22, 2008 THE ROYAL BANK OF SCOTLAND GROUP plc (Registrant)
Royal Bank of Scotland Group — Corporate Update (April 2008) on 6ix