Commercial & Private Banking (CPB) Investor Briefing Alison - PowerPoint PPT Presentation

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

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

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

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 customers Targeting attractive returns, built on leading customer proposition and efficiency 4

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 state 1 business profile UK UK UK Small RoE Mass Retail RWA Op. Profit Affluent Businesses 0.7m 0.8m 15+% 14.8m 35% 50% Ulster 0.7m across these 3 segments Commercial & Private Banking Steady state 1 business profile Customers we serve High Net UK UK Mid RWA Op. Profit RoE Commercial Worth Corporate 30% 30% 62k 67k 12k 15+% Corporate & Institutional Banking Customers we serve Steady state 1 business profile Financial Institutions RoE Large & Complex Corporate RWA Op. Profit ~1200 ~350 ~10% 35% 20% 1) Steady state defined as 2018-2020 5

Market leading franchises and clear proposition Commercial & Private Banking Relationship-led target proposition RMs at the centre UK Commercial UK Mid Corporate High Net Worth  Dedicated relationship management Companies with Companies with >£1m invested with  turnover £2m-£25m turnover £25m+ Coutts/Adam Best bankers in the market  Serve customers with mutual long term benefits  #1 UK Corporate bank:  #1 UK private bank: – 67k Commercial and 12k Corporate – 62k UK customers customers – Market leading – 31% market share of relationships Supported by... share of CAL 1 (7%)  Local presence in 100+ UK locations  Served by over 2.5k  Excellent service  Served by over 7k employees UK employees  Simplified set of fairly priced products  Clear and strong brand proposition 1) Customer Assets and Liabilities 6

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 functions  Average 25 years banking experience  Balance shifted towards customer and front-line focus  Governance and accountabilities to manage key risks streamlined and clearly defined 7

Customer focused strategy #1 for customer service, trust and advocacy by 2020 Backing UK Simplicity and Winning Customers business and discipline together first communities  Customer-obsessed  Be easy to do business  Deliver value for our  Supporting financing culture with customers needs of UK business  Anticipating needs  Empowering our people  Improved collaboration  Contribute to community in which  Exceeding expectations  Robust control  Encourage and we operate environment support our people  Long term relationships Our values guide the way we do business 8

Early wins and comprehensive plan in place 2014–2018 initiatives: ~£1bn investment spend Progress highlights   New leadership in place 1. Customer programme 2. Segments, analytics & profitability Customers   Organisation redesigned around customer first 3. Banker tools & capability 4. Customer channels   Governance simplified: 17 committees down to 5   High Net Worth review complete 5. Simplifying customer life Simplicity 6. Account opening / onboarding and   Clear PBB/CPB/CIB perimeters established 7. Cost rationalisation discipline 8. Product management   Cost quick wins: 50% reduction in management layers   Product rationalisation underway: 120 removed from sale 9. Lending 10. Revenue campaigns Winning   ‘Simplifying customer life’: 300 ideas implemented together 11. Private strategy / CPB connectivity 12. Accountability / empowerment of our people   Revenue campaigns launched   RM training and accreditation review complete 13. Sustainability and diversity Backing UK 14. Innovation business and 15. Branding communities 16. Entrepreneurs 9

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

Customers First Understanding the drivers of customer advocacy Advocacy drivers Importance 1 Performance Impact on NPS 1 £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 likelihood “I get value for money – 80% 71% fair and clear pricing and #1 #4 11% 3 8% 3 promoter detractor service that reflects what likelihood likelihood I pay for” “ You are easy to deal 35% 56% with – things are simple #3 #3 24% 4 17% 4 promoter detractor and issues are dealt with likelihood likelihood efficiently and quickly” “You’ll support my 69% 64% financial needs – and 16% 5 13% 5 #4 #2 promoter detractor bring solutions that likelihood likelihood benefit me” 1) Internal analysis on Importance and Net Promoter Score (NPS) impact Source: Charterhouse YE Q2 2014 RBSG scores for 2) % rating RM as ‘excellent; 3) % rating overall value for money as ‘excellent’; 4) % rating quality of service over the 11 past year as ‘excellent’; 5)% rating making finance available to businesses as ‘excellent’

Customers First Making progress on advocacy but lots to be done NPS (£2-25m turnover) NPS (£25m+ turnover) 25 20 20 15 10 10 5 0 0 -10 -5 -10 -20 -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 considerable: NatWest #2 but done on the RBS brand lots of work to be done on the RBS brand  RM satisfaction at 71% , up 7% from 2013 1  RM satisfaction at 86% , up 5% from 2013 2  Rank last for trust overall 3  Poor for trust: NatWest 4 th (RBS 5 th out of 5) 3 1) Charterhouse YE Q2 2014: % rating RM satisfaction as excellent/ very good 2) Ipsos MORI August 2014: % rating RM satisfaction as very satisfied 12 Note: Overall split of Natwest:RBS customers surveyed = 65:35 3) Charterhouse YE Q2 2014: % customers mentioning their main bank for trust

Customers First Investing in our bankers to meet customer needs 1 2 Refresh banker cohort 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 allows industry leading insight + & Professional training, Qualifications product training and CPD 1  Reshape RM profile to align to changing customer  90% RMs professionally  All RMs to complete ‘customer profile over next 3-5 years qualified by end 2017 experience’ training by end 2018 4 3 Banker performance Banker tools Tougher management on both skills and behaviours Supported by the right tools to do their job effectively CRM Thought Customer Customer Behaviours & Consistent Individual + + Leadership analytics Needs operating banker performance standards scorecard objectives Financial sophistication Sector International sophistication Operational Price complexity sensitivity Underpinned by Values & Professional Standards Risk appetite 1) Continuous Professional Development 13

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 Pricing Committees introduced   Good Customer Outcomes training to 6,000 staff   Enhanced complaint handling system Underway  New sales tools developed and being introduced Integrated into our Customer Plans  Product rationalisation underway  Customer outcomes in performance objectives by 2015  Vulnerable Customer programme in development  Continuous Professional Development being enhanced  Conflicts Management continuing to be enhanced 14