Natwest Group Plc · LSE:NWG
Natwest — Royal Bank of Scotland Group (UK Retail) — Investor Day (March 2013)
40 slides from Natwest's investor day presentation, Mar 18, 2013
Slide 1: UK Retail Investor Roundtable
UK Retail Investor Roundtable Ross McEwan, Chief Executive Officer, UK Retail 18 March 2013
Slide 2: Important Information
Important Information 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’, ‘should’, ‘
Slide 3: Agenda
Agenda UK Retail: background to our new Strategy Strategy & Key Initiatives: - Strategy - Service - Products Financial Performance & Outlook Summary 3
Slide 4: Initial Observations
Initial Observations We have made good progress over the last three years We’ve a great opportunity to build on this ¾Our people are a great asset and want us to succeed ¾We will focus on serving our customers well ¾We will drive efficiency through simplification Our strategy will ensure susta
Slide 5: Our scale and reach presents opportunity
Our scale and reach presents opportunity Opportunity to increase share of Scale of UK Retail wallet (SoW)2 Best in Employees: 25,973 (38,766 incl Business Services) RBS NW Class Current Account deposits 88% 85% 88% Total Customers: 15.4m Savings 31% 32% 50% Mortgages 26% 21% 37% Loans 42% 33% 61% Cu
Slide 6: And we have made real progress in key metrics
And we have made real progress in key metrics RTP1 delivered strong financial returns and tangible improvements for customers 2009 2012 £0.6bn run rate benefits for £0.7bn investment Operating Profit £0.2bn £1.9bn Î Counter transactions down 21% Net Interest Margin 3.6% Î 3.6% 25% of branches
Slide 7: But we need to adapt to succeed
But we need to adapt to succeed Market context We are operating in a challenging economic and competitive environment Our competitors are investing in distribution, cost efficiency and targeting the affluent segment Our focus The Customer is at the heart of our new strategy as we concentrate o
Slide 8: Experienced Management Team to drive us forward
Experienced Management Team to drive us forward ( number of years industry experience ) Ross McEwan CEO, UK Retail (25 years) Satyendra Chelvendra Mike Bamber Fiona Davis MD, Future Bank MD, Branch and Finance Director Strategy and Delivery Private, England and (26 years) Wales (36 years) (25 years)
Slide 9: Agenda
Agenda UK Retail: background to our new Strategy Strategy & Key Initiatives: - Strategy - Service - Products Financial Performance & Outlook Summary 9
Slide 10: Our Strategy is… Building the UK's best Retail Bank
Our Strategy is… Building the UK’s best Retail Bank 10
Slide 11: What will we do?
What will we do? Where we are going to How we are going to win Capabilities required operate Mass market Retail Differentiate through An organisation closer to Bank service our customers Enhanced Private Advantaged in points of Staff following consistent proposition presence through: ser
Slide 12: We will differentiate on what customers value most
We will differentiate on what customers value most Customer need What customers expect Key service components Trusted to give financial advice Qualified staff Expert & Experts in important areas of banking High levels of training / coaching Trusted Listens and responds to customer Low error rates Ad
Slide 13: Reinvest in our franchise
Reinvest in our franchise 7 priorities Objectives Customer need 1 Single view of Give our people a connected view of our Great Customer Service customer customers 2 Simplify our processes to remove One and done Easy to deal with handoffs and reduce errors 3 Give our customers the ability to bank wit
Slide 14: To Deliver Sustainable Returns
To Deliver Sustainable Returns Investment Programme Key investments: Key benefits: Branch refurbishments Lower service transactions requiring manual processing Faster account opening 330 Faster account opening Simplified mortgage processing 185 40% reduction in paper/postal New self-se
Slide 15: Agenda
Agenda UK Retail: background to our new Strategy Strategy & Key Initiatives: - Strategy - Service - Products Financial Performance & Outlook Summary 15
Slide 16: We are Simplifying Frontline Life…
We are Simplifying Frontline Life… …to remove inefficiencies from the frontline in order to maximise staff time spent in quality customer interactions We will create a minimum 45 minutes capacity per frontline member of staff, per week, across our key customer facing channels, by: Introducing stan
Slide 17: Continuing to invest in our Digital offering
Continuing to invest in our Digital offering Highlights Mobile Banking Active Users 3 Online is a key distribution channel, attracting volume from higher cost channels ¾ Online sales increased 25%1 ¾ Active online banking customers up 11% to +100% 5.2m1 Our customers value our mobile proposition
Slide 18: Adapting to our customer's Mobile banking needs
Adapting to our customer’s Mobile banking needs Addressing customer needs through our digital propositions is key to future success Meeting these needs has resulted in over 2 million engaged users, who use the service on average 6 times a week compared to 2 times per week for online banking “Has
Slide 19: And investing in our chosen markets…
And investing in our chosen markets… …to fully capture income growth potential and support optimal service to our customers Design and implement an optimal ‘points of presence’ network Design branch of the future and self serve formats for each Region Invest in London and our other key markets
Slide 20: To be number 1 for service across the UK
To be number 1 for service across the UK Our aim is to make it easy for our customers to do business with us by leading the way on availability, accessibility and service Our ambition will… Give customers more choice over when and where they do business with us Build a workforce who are better c
Slide 21: Agenda
Agenda UK Retail: background to our new Strategy Strategy & Key Initiatives: - Strategy - Service - Products Financial Performance & Outlook Summary 21
Slide 22: Core Products underpin our Strategy
Core Products underpin our Strategy Mortgages - we will focus on great service Our longer and our existing customers to win market term ambition share is to grow our market share in Current Accounts - we will focus on driving Mortgages, customer engagement and delivering great Current service Ac
Slide 23: Mortgages: We will focus on great service and our existing customers
Mortgages: We will focus on great service and our existing customers to win market share Achievements Our Future Market share of new mortgages now 11%1 Significant growth in mortgage market share by: Reinvigorated First Time Buyer and Buy-To-Let Better customer experience products as a result
Slide 24: Current Accounts: We will focus on driving customer engagement
Current Accounts: We will focus on driving customer engagement and delivering great service Achievements Our Future Focus on building Customer Engagement Sustained strong stock market share Best in class debit card proposition Balance growth of 8% in 2012 to £29bn ¾ Reward customer loyalty
Slide 25: Savings: We will help our customers achieve their savings goals
Savings: We will help our customers achieve their savings goals Achievements Our Future Savings balances £78.6bn (28% growth since Grow savings through simplification, 2009) transparency, customer engagement and satisfaction. Simplified on sale product range from 21 to 10 in 2 years Identify
Slide 26: Agenda
Agenda UK Retail background & situation assessment Strategy & Key Initiatives: - Strategy - Service - Products Financial Performance & Outlook Summary 26
Slide 27: The economy has been a challenge
The economy has been a challenge Households have borrowed less .. ..which meant a rise in the savings ratio.. 18% Rolling annual growth Household Savings Ratio 13% 10% 8% 8% 3% 6% 4% -2% 2% -7% 0% Mortgages Personal Advances -2% -12% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2004 2005 2006 2007 2
Slide 28: Strong and profitable UK Retail franchise
Strong and profitable UK Retail franchise FY 2012 FY 2012 Net Interest Income 3,990 Gross Secured Balances 99 Fee Income 979 Gross Unsecured Balances 15 Total Income 4,969 Total Assets £bn 114 Total Costs (2,549) Total Deposits £bn 108 Impairments (529) New Business Market Shares1 Operating Profit £
Slide 29: Income outlook stable
Income outlook stable Margin Volume Fees 2012 2013 2013 2013 Product Income Outlook Outlook Outlook Mortgages 2,367 Personal advances 916 Personal deposits 661 Cards 863 Other 162 Total 4,969 Overall we expect: Stable top-line income performance, despite continued impact of low interest rates and
Slide 30: Good progress with costs and strong base for future
Good progress with costs and strong base for future Significant cost improvements despite income headwinds Introduction of paperless statements – used by 89% of digital customers Paper statements moved from monthly to quarterly Enhanced mobile banking application, used by 2 million customers a
Slide 31: Impairments have continued to improve
Impairments have continued to improve Significant improvement in impairments Impairment as % of L&A £m 10% 0.30% Personal Cards Mortgages 2,000 Secured Unsecured 9% 1,750 0.25% 8% 1,500 7% 0.20% 6% Unsecured 1,250 Secured 5% 0.15% 1,000 4% 750 0.10% 3% 500 2% 0.05% 250 1% 0 0% 0.00% 2008 2009 2010 2
Slide 32: Strengthened Risk Management Culture
Strengthened Risk Management Culture Fully embedded Risk appetite framework to support identification, measurement, monitoring and mitigation Risk Appetite has strengthened Integrated stress testing validates appetite and improves use of capital culture Appetite monitoring helps the business m
Slide 33: Medium Term Outlook
Medium Term Outlook Income growth, but subdued Continue to target growth in share; though no need for LDR to improve further Margins stable Efficiency gains from simplification agenda Impairment change already low and at ‘normalised’ levels Continued attractive ROE Opportunities Risks
Slide 34: Agenda
Agenda UK Retail: background to our new Strategy Strategy & Key Initiatives: - Strategy - Service - Products Financial Performance & Outlook Summary 34
Slide 35: Summary - Our Strategy
Summary - Our Strategy Deliver market leading customer service – targeting No 1 for Net Promoter Score Differentiate through distribution capability and points of presence Simple, easy and ‘ONE and DONE’ processes Build our people capability through enhanced leadership and coaching Build momentum ac
Slide 36: Appendix
\ %¢RBS Group Appendix
Slide 37: UK Retail Executive Committee
UK Retail Executive Committee Name Title Background Ross McEwan Chief Executive Ross was appointed CEO for UK Retail in August 2012, joining RBS from Commonwealth Bank of Australia where he Officer, UK Retail was Group Executive for Retail Banking Services for 5 years. Prior to that Ross was Execu
Slide 38: UK Retail Executive Committee (Cont'd)
UK Retail Executive Committee (Cont’d) Name Title Background Ian McLaughlin Managing Ian joined RBS in March 2012 as Managing Director for Specialist Banking which includes Financial Advice, Mortgages, Director, Protection, Private Clients Group and Broker Distribution. Prior to Joining RBS he was
Slide 39: UK Retail Executive Committee (Cont'd)
UK Retail Executive Committee (Cont’d) Name Title Background Mike Errington Chief Information Mike joined the RBS Group in 2002 as Head of IT Services, at the commencement of the physical integration of Nat Officer, Business West. Mike managed the successful integration of the Insurance business a
Slide 40: UK Retail has valuable connections across the Group
UK Retail has valuable connections across the Group >£1bn of operations, property and technology services Business ~£32m Retail ~ £3.6bn of structured Services product balances Income from B&C referrals through Retail Markets UK Products Corporate 208m Retail branch transactions UK Retail 23% of Cor
Royal Bank of Scotland Group (UK Retail) — Investor Day (March 2013) on 6ix