Full Year 2019 Results & Investor Update 14 February 2020 1 - PowerPoint PPT Presentation

Full Year 2019 Results & Investor Update 14 February 2020 1

Agenda Top Topic Presen enter er Introduction and Howard Davies macroeconomic context 2019 results Alison Rose, Katie Murray Investor update Alison Rose Investment case and Katie Murray target financial shape 2

Intr trod oducti tion an and macroe mac oeconomi omic cont ntext ext: How owar ard D Dav avies 3

Our Customer Brands 4

Macroeconomic context Actual Forecast ​ UK gro gross ss do dome mest stic pro produ duct gro growth 1 ​ Bank o of f Engl gland ba base se ra rate 2, 2,3 Challenges remain for banks: • Subdued GDP 1.8% 1.7% 1.7% 1.4% 1.2% growth outlook 1.1% 0.75% 0.75% 0.50% 0.50% 0.50% 0.50% • Low rate 2017 18 19 20 21 2022 2017 18 19 20 21 2022 environment • Prevailing ​ UK UK un unemployment r rate ate 1,3 ,3 ​ UK in infla latio ion r rate 1, 1,4 uncertainty 4.4% 4.4% 4.4% 4.4% 4.1% 4.0% 2.7% 2.5% 2.0% 2.0% 1.9% 1.8% 2017 18 19 20 21 2022 2017 18 19 20 21 2022 1 ONS, RBS forecast 2 Historical numbers are based on BofE; Forecast numbers are based on Market implied as at 13 Jan 2020 3 based on Q4 4 Consumer price index 5

2019 r 2019 resu sults: Alison on R Rose, , Chi hief ef Exec xecut utive Of Officer 6

Solid financial performance, sets foundation for future success ​ Genera rating ng R Return rns ​ Grow owing L g Lendi ding ​ Redu ducing C Cost ost ​ Returni rning ng C Capital FY’19 Operating Net lending Other expenses £4.2bn 3.7% 2 £310m 1 £1bn 4 profit before tax growth – in FY’19 Final ordinary up £0.9bn on exceeding our exceeded our and special FY’18 2019 target 2019 target FY’19 Total Gross new Cumulative cost £3.1bn £33.3bn 3 £4.5bn 1 £2.7bn 4 Attributable shareholder mortgage reduction since profit up £1.5bn returns for lending FY’14 on FY’18 FY’19 FY’19 Return on Well to participate in Gross new Tangible Equity; Cost-income any future 9.4% £5.0bn 65.1% SME & mid- excluding FX ratio in FY’19 Government placed corps lending gain: 4.7% sell-down Th The r results i in th this p presentati tion relat ate to to Th The R Roy oyal al Ban ank of of Scotl otland G Grou oup plc w which i is inte tended to to be renamed N NatW atWest G t Grou oup pl plc l late ater th this year ar Forward rd-looking c g conside dera rations: s: The targets, expectations and trends discussed in this presentation reflect management’s current expectations and are subject to change, including as a result of the factors described in the “Risk Factors” section on pages 281 to 295 of the 2019 Annual Report and Accounts. These statements constitute forward-looking statements, please see Forward Looking Statements on slide 56 of this presentation. 1 Excluding conduct, litigation and strategic costs 2 Across UK Personal Banking, Ulster Bank RoI, Commercial Banking & Private Banking 3 Referring to UK Personal Banking only 4 Assuming shareholder approval of final ordinary dividend of 3p per share and special dividend of 5p per share 7 NOTE: Numbers are all un-adjusted for Alawwal gains / PPI

Continued progress on culture, customer advocacy and innovation ​ Cul Cultur ure ​ Cu Custo tomer A Advo vocac acy ​ Innovati ation NPS Top p qu quart rtile o on avera rage ge #1 comme mmercial ba bank 1 Launched and used by 2019 Banking Standards More work to do across customers Board Survey Personal & Business Cor orpor orate te Char arte tered S Statu tatus First rst ba bank to re receive a award rd NatWest st V Voted Be d Best st M Mort rtga gage ge Nat atWest Ban anklin ine Mo Mobile ile fro rom t the Chart rtered d Banker Provi vider er 4.8 rating in the Apple App Insti titut tute British Bank Awards 2019 2 store 1 Source: MarketVue Business Banking from Savanta, YE Q4 2019. Based on interviews with businesses with an annual turnover over £2 million. Latest base sizes: 586 for NatWest (England & Wales). Question: “How likely would you be to 8 recommend (bank)”. Base: Claimed main bank. Data weighted by region and turnover to be representative of businesses in Great Britain 2 British Bank Awards, 2019 http://www.britishbankawards.co.uk/previous-winners/

We are in a position of strength with opportunities to improve Posi sition ions o s of strengt gth Opportu tuniti ties Meet bro broade der se set of f cust stomer n r needs a ds acro ross ss life fe Stro rong c cust stomer fra r franchise ses s and d ma mark rket- stag tages to to maxi aximise c cus usto tomer p pote tential an and leadi ding po g posi sitions pro protect re revenue Simpl mplify a and d re re-engi gineer t r to incre rease se cust stome mer Stro rong t tra rack re record rd o of f cost st re redu duction satisfaction on a and nd conv onveni nience i in n key s segment nts Conti tinue to to te test an t and ite terate w with th c cus usto tomers Bro road a and d wide de-rangin ing i innovatio ation p portfolio lio whilst st sc scaling g up p and d leveragi ging pa part rtners s Refocus us NatW atWest M Mar arkets with th a a cus usto tomer an and Sou ound nd b balanc nce s she heet capi pital re return rns fo s focus 9

2019 resu 2019 esults: Ka Katie M e Murray, Chief F ef Financial Offi Officer er 2019 resu 2019 r sults: Katie ie M Murra rray, y, Ch Chie ief F Fin inancia ial O l Offic icer 10

Q4 2019 summary financials £m £m Q4’19 Q4’19 v 9 vs. Q Q4’18 Q4’19 v 9 vs. Q Q3’19 Total i l income me 4,23 233 38% 38% 46% 46% Operating e g expense ses (2,527) 2% (6%) o/w O Other er ex expe penses es (1,905) (6%) 10% o/w S Strate rategic c costs ts (537) 51% 150% o/w L Litigation & & conduc duct c costs s (85) (8%) (89%) Impairment l losse ses s (160) n.m. (25%) Operating g profit/ ( (loss) ss) 1,54 546 170 170% n. n.m. Tax ax (37) (69%) (82%) Pr Prefs/ M MI/ Di Disc sc ops ps (99) (41%) (7%) Attribut butable p profit / / (loss) ss) 1,41 410 n. n.m. n. n.m. Attribut butable p profit / / (loss) ss) ex. F FX gain 176 176 (38%) %) n. n.m. ratio Cost:in income me rat 59. 59.4% (21pp pp) (34pp pp) TE 1 RoTE 17. 17.7% 7% 14p 14pp 22p 22pp 11 1 Excluding FX recycling gains RoTE was 4.7% for the year or 2.2% for the quarter

Continued net interest margin pressure Futu uture Bank nk N NIM IM, bps cons onsiderations ns Rate sensitivity 197 196 (3) 0 193 193 (1) 0 (0) Reduction in liquidity Asset Pressure 3bps Deposit Pressure 0bps Asset and liability pressures Economic uncertainty Q3’19 One-offs Q3’19 Central Competitive Other Q4’19 One-offs Q4’19 excl. liquidity pressure excl. One-offs One-offs AI AIEAs As 1 , , 415.8 415 419.6 419 £bn 1 AIEAs refers to Average interest-earning assets as per the Financial Supplement and excludes NWM 12

Loan growth exceeded 2019 target FY’19 target net 2% – 3% loan growth 1 FY’19 Gross new mortgage lending FY’19 Net et loan gr growth 1 3.7% £33.3bn 4,5 UK Personal Banking 6.7% FY’19 Gross new Ulster Bank personal loans (3.2) % ROI 2 £3.9bn 5 Commercial (0.2) % FY’19 Commercial Banking gross new Private 8.4% lending £19.5bn 6 RBSI 3 6.0% 1 Net loan growth across Personal, Ulster RoI, Commercial and Private, presented in GBP 2 Ulster RoI FY’19 growth shown in euros is +1.9% 3 RBSI includes £0.5bn transfer from NatWest Markets 4 Gross new lending, including 13 additional borrowing 5 Referring to UK Personal Banking only 6 New drawn lending and any re-financing resulting in a new facility or the opening of a new account, excluding overdrafts and supplier finance.

Loan growth by product and sector Gro ross L s L&A Gro rowth, £bn UK Pe Personal al B Ban ankin ing FY’19 Gross new 6.8% 6.5% card customers 160.3 150.1 c.275k 147.5 138.5 11.8% 7.5% 8.5 7.6 4.3 4.0 FY’18 FY’19 FY’18 FY’19 FY’18 FY’19 FY’18 FY’19 FY’19 Gross new current accounts Mortgages Personal advances Cards Total UK Personal Banking c.700k (0.3)% Commercial B Banking 102.8 102.5 (1.0)% (2.3)% (20.0)% (5.0)% 8.1% 3.0% 30.0 29.7 21.5 21.0 16.1 14.9 7.0 6.7 6.9 5.6 2.0 1.9 FY’19 New FreeAgent FY’18 FY’19 FY’18 FY’19 FY’18 FY’19 FY’18 FY’19 FY’18 FY’19 FY’18 FY’19 FY’18 FY’19 customers c.22k Business SME & Specialised Large corporates Commercial – Other 3 Total banking mid corps business 1 & institutional 1,2 EU divestment Commercial 4 2.1% 2. 1% 1 Adjusted for transfer of transaction services in FY’18 of £3.1bn from Specialised Business to Large corporates and institutions 2 Includes WE business segment, which will be partially transferred to NWM N.V. 14 3 Other includes shipping and project finance 4 Total Commercial also includes Real Estate.