Commercial Banking Investor Seminar 29th Novemb mber er 2018
Your presenters Alison Rose, Chief Executive Officer, Commercial & Private Banking • Appointed February 2014 - 26 years experience with RBS • Previous roles include: Head of M&IB, EMEA; Head of EMEA Corporate & Sponsor Coverage; Global Head of Portfolio and Head of Leverage Finance UK Andrew Lewis, MD, Capital & Transaction Management, Commercial & Private Banking • Appointed May 2014 – 22 years experience with RBS • Previous roles include: Head of Enterprise Risk Management; CAO Restructuring and Risk; FI Debt Capital Markets Keith Middlemass, Chief Digital Officer, Commercial & Private Banking • Appointed Chief Digital Officer June 2018 • Previous roles include: Interim Head of Digital from December 2017; Consultancy and FinTech Andy Ellis, Head of Strategy and Innovation, Commercial & Private Banking • Appointed April 2014 - 16 years experience with RBS • Previous roles include: Head of Strategy, Corporate Banking Division Rob Whittick, Finance Director, Commercial & Private Banking • Appointed September 2014 - 20 years experience with RBS • Previous roles include: CAO International Banking; Head of Executive Decision Support, M&IB; CFO for Banking in GBM and CFO for GBM in Asia Pacific 2
Agenda Commercial Banking Overview – Alison Rose, CPB Chief Executive Officer Transforming the Core – Andrew Lewis, MD, Capital & Transaction Management, CPB Digitising Customer Experience – Keith Middlemass, CPB Chief Digital Officer Delivering Innovation – Andrew Ellis, Head of Strategy and Innovation, CPB Financial Performance – Rob Whittick, CPB Finance Director Note(s): Commercial & Private Banking will be referred to as CPB 3
Alison Rose CPB Chief Executive Officer
The focus of today’s presentation: Commercial Banking CPB: : Alison Rose Inside the ring-fence Moving into CPB from 1 Jan 2019 Outside the ring-fence Busine ness ss Banki king Comme merc rcial al Banking ng Privat ate Banking RBS Internati rnational onal Crown Dependencies, Gibraltar, England, Scotland England, Scotland England, Scotland UK & Luxembourg Scotland & Scotland & Scotland & Wales Wales Wales Start rt-ups ups and d SMEs Comm mmerc rcia ial l & Corpo pora rate Busi sines ness & Retai ail High h Net Wort rth h conne nect ctions ns up to £2m Turnover £2m+ Turnover Personal & Non-personal £1m+ Assets, Liabilities or Income p.a. Focus of this is presen entatio ion Anticipated business transfers Commercial Banking as a from 1 Jan 2019: 41% 41% 35% 35% proportion of • Business Banking in Operating total Group Q3 RWAs Profit • Western Europe business out YTD 2018: 5
Commercial Banking: driving growth, value and returns What sets us apart in a highly competitive environment Strong digital channels Driving sustainable and propositions, growth by embedding continuously improving balance sheet, capital Largest UK customer journeys and risk discipline Commercial bank with leading Leading relationship-led Innovating to expand customer engagement model, into adjacent business advocacy 1 driving growth in chosen needs and revenue sectors streams Notes(s): (1) Market share includes personal bank accounts used as business accounts; includes Natwest, RBS & W&G; Source Charterhouse Business Banking Survey, Q3 2018. Commercial £2m+ in GB. 6 Sample size 3,075; sample size excluding don’t knows: NatWest (598); Royal Bank of Scotland (271). Question: “How likely would you be to recommend (ba nk) ”. Base: Claimed main bank. Data weighted by region and turnover to be representative of businesses in Great Britain
Our strategy is based on a deep understanding of customer needs Customer Micro cro Sma mall ll SME Compl plex x SME / Mid Larg rge Corpo pora rate needs: Corpo pora rate Expect ‘Mobile first’ with Informed RM for support Supplement internal a personal touch during ‘moments of Trusted RM for advice expertise with advice truth’ with sector and product and transactional expertise capabilities Digita tal new w entr trants ts FS/No Non-FS FS connec ectivi tivity y & New Tech & A New Artificial Competitors: Point t solution tions and challen engers rs partner erships Intel elligen ence Illustrative (P2P) P) Tide Starling Coconut Xero Amazon J.P.Morgan TransferWise Funding Circle Blockchain AI Robotics iwoca Stripe Clear Virgin Sage TSB Bank Money Worldpay Microsoft Segments: (t/o <£2m) (£2-25m) (£25-500m) (£500m+) Market access and Imperatives: Seamless digital Strong capital and Digital-augmented RMs linkage to NWM; capital experience with personal pricing capabilities with sector value-add deployment and touch across sectors distribution 7
We have transformed the business with disciplined delivery against all key priorities… 1 2 3 4 5 Invest in our Digitise customer Simplify our Generate Deliver innovation people experience business sustainable growth to market Account opening Innovation ventures Engagement 1 RWAe intensity Digital utilisation 2 days 3 launched 5 85% 85% 85% 82% 80% 30 70% 69% 5 0 2014 GFS norm 2018 2015 2018 Q3 2014 Q3 2018 2014 2018 2014 2018 Notes(s): (1) CPB Employee Survey Score Q3 2018; (2) Digital Utilisation: % of time customers spend using digital channels. Only available data goes back to 2015 (3) Account opening: how long it 8 takes, on average, for a customer to open an account, from application to receiving an account number and sort code; All: Latest available data
Invest in our people 1 Tomorrow’s RM Today’s market Yesterday’s RM leading RM 1 Developing the Becoming an invaluable RM of the Providing broader Transactional business partner, future business solutions, and relationships, helping providing timely insight sector-led insight customers navigate and solutions internal processes CPB Academy Entrepreneur Network Underpinned by a great employee Digital enablement proposition Diversity and Inclusion and agile working Notes(s): (1) Charterhouse Research Business Banking Survey, Q3 2018. Commercial £2m+ in GB. Question: “How would you rate your current relationship m anager, thinking about all your 9 dealings with them over the past 12 months?”. Base: All who have made contact with a RM or RM Director (RBSG sample size, exc lud ing don’t knows: 819). Data weighted by region and turnover to be representative of businesses in Great Britain
Digitise customer experience 2 Enhanced customer experience through…. … improved channels New Bankline Bankline Mobile Bankline Direct … and digital customer journeys Lombard Digital On-boarding and Lending Account Opening Transformation 10
Simplify our business 3 Wholesale product rationalisation: 250 products to <95 Eliminating Credit policies: 60 into 1 , Pricing models 10 into 1 Simplifying Automated 9,000 short form annual renewals Automating 11
Generate sustainable growth 4 Ongoing disciplined approach … … releasing capital and driving sustainable growth Gross RWA reduction tions 20 Data Quality / £bn (cum.) 18 Models 13 Capital and risk Risk Transfer 12 Trades management 6 Active Capital 4 Management 1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Pricing 2017 2017 2017 2017 2018 2018 2018 RWAe inten ensity ty % 85 80 -6% Conduct & controls Q3 2014 Q3 2018 12
Deliver innovation to market 5 Dedicated innovation team • Feet on the ground in Fintech hubs and experience where • it counts Partnering in order to access leading expertise and acquire • Innovating inside talent and outside the core Creating solutions to real business problems • Innovation programme built on commercial rigour and VC- • style approach Executing at pace • 13
Strengthening the business to create shareholder value Balance e sheet up Reven enue ue up Gross Loans & A Advanc ances es Reven enue £bn £bn CAGR CAGR 91.1 2.6 +5% 2.5 +4% 87.0 74.8 2.2 36.4 25.1 Q3 2014 Q3 2014 Q3 2018 Q3 2014 Q3 2014 YTD Q3 2018 Adjusted 1 Adjusted 1 YTD YTD Gross lending per client facing FTE (£m) Adjusted for business foregone due to active capital management 14 Notes(s): (1) Adjustment is for active portfolio management impacts only and does not reflect business transfers. For business transfer details see pages 31 & 32 2015 Annual Results, page 4, 2017 Annual Results, page 5 Q1 18 results, page 5 Q3 18 IMS results. 2014 numbers in line with Q1 2016 financial supplement.
Key messages: delivering growth, value and returns 1 Large rgest st UK Commerci rcial al bank with leadi ding g custom stomer er advo vocac cacy 2 Driving ng sustain stainabl able e grow owth by embedd edding g balan ance ce sheet, , capita tal and risk discipline 3 Leadi ading g relations ationship-led ed engagem gement nt model del, driving g grow owth th in chosen en areas eas 4 Strong rong digi gita tal channels s and propo oposi sitions tions, conti tinu nuousl usly impro roving ng custome stomer r journeys ourneys 5 Innovatin ting g to expand and into o adjace acent nt busi sines ess s needs and reven enue ue stream eams 15
Andrew Lewis MD, Capital & Transaction Management, CPB
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