Upload
others
View
0
Download
0
Embed Size (px)
Citation preview
08 August 2008
Make it happen
Make it happen
Slide 2
Important Information
This presentation may contain forward looking statements, including such statements within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements concern or may affect future matters, such as the Group's economic results, business plans and strategies, and are based upon the current expectations of the directors. They are subject to a number of risks and uncertainties that might cause actual results and events to differ materially from the expectations expressed in or implied by such forward looking statements. Factors that could cause or contribute to differences in current expectations include, but are not limited to, regulatory developments, competitive conditions, technological developments and general economic conditions. These factors, risks and uncertainties are discussed in the Group's SEC filings. The Group assumes no responsibility to update any of the forwardlooking statements contained in this presentation.
The information, statements and opinions contained in this presentation do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments.
The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly availableinformation, including, where relevant any fuller disclosure document published by the Group. Any person at any time acquiring the securities must do so only on the basis of such person’s own judgement as to the merits of the suitability of the securities for its purposes and only on such information as is contained in public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained herein. The information is not tailored for any particular investor and does not constitute individual investment advice.
Information in this presentation relating to the price at which investments have been bought or sold in the pastor the yield on investments cannot be relied upon as a guide to future performance.
08 August 2008
Make it happen
2008 Interim Results8 August 2008
08 August 2008
Make it happen
Sir Tom McKillopChairman
Slide 5
2008 Interim Results
1H07 1H08
Group profit/(loss) before tax (£m) 5,115 (691)
Underlying operating profit (£m) 5,322 5,144
Basic earnings per share (pence) 22.8 (4.7)
Adjusted earnings per share (pence) 23.6 21.3
Slide 6
Dividend
• Capitalisation issue in place of interim dividend
• 1 new share for every 40 held, in line with last year’s interim dividend
• Intention to pay final dividend in cash
08 August 2008
Make it happen
Guy WhittakerGroup Finance Director
Slide 8
2008 Interim Results
£m %
Total income 16,835 -1
Pre-impairment profit 6,623 +6
Operating profit 5,144 -3
Credit market w/downs (5,925)
Other items 90
Loss before tax (691)
Key Messages
• Costs reduced £118m
• Insurance claims down £488m
• Impairments up £543m
• Write-downs in line
• Core Tier 1 5.7%
• Tier 1 8.6%
Slide 9
Credit Market Write-downs
£bn Net Current Net Avg W/downs W/downsExposure Price June 08(1) April est(1)
ABS CDOs 2.0 40% (1.9) (1.9)US Residential 1.9 59% (1.0) (1.2)US Commercial 1.5 87% (0.1) (0.2)Monoline Exposures 2.4 n/a (2.1) (1.8)Leveraged Loans 10.8 92% (0.9) (1.3)CLOs 1.1 84% (0.1) (0.1)Sub-total (6.1) (6.4)Hedges 0.2 0.5
Total (5.9) (5.9)(1) Write-downs before tax
In line with April estimates …
Slide 10
1.5
2.3
1.0
2.5
0.21.2
GrossExposure
Net Exposure
6.3
2.4
£bn
Monoline Exposures by Rating
Ratings as at 30 June and based on lower of S&P/Moody’s
Key Messages
• Net exposure £2.4bn
• Non-investment grade £0.2bn
• 62% exposure covered
• Reserves and hedges £3.9bn
• CDO/RMBS gross exposure £3.7bn
Non-investment grade
AAAA / AA
Slide 11
Reduction in Credit Market Net Exposures
0
2
4
6
8
10
ABS CDO USResidentialMortgages
USCommercialMortgages
MonolineInsurers
SIVs FundedLeveraged
Finance
UnfundedLeveraged
Finance
CLOs
Dec 2007Jun 2008
£bn
3.8
2.0
4.3
1.92.5 2.4
1.8
8.7
5.4
1.5 1.41.1
5.85.4
Slide 12
Divisional Operating Profit
£m %
Global Markets– Global Banking & Markets 2,184 -17– Global Transaction Services 665 +15Regional Markets– UK Retail & Commercial Banking 2,117 +8– US Retail & Commercial Banking 368 -42– EME Retail & Commercial Banking 250 +13– Asia Retail & Commercial Banking 16 –RBS Insurance 403 +56Central costs (859) -9
Group 5,144 -3
Slide 13
Global Banking & Markets
£m %
Total income* 5,306 -10Direct expenses 2,607 -14Impairment losses 294 n/aContribution 2,405 -15Group Manufacturing 221 +5Operating profit 2,184 -17
£bn
Total third party assets 762.8 -7Customer deposits 96.5 +16RWAs** 211.9 -1
Key Messages
• Rates, Currencies & Commodities +87%
• Impairments up £178m on 2H07
• Credit markets weak
• De-risking balance sheet
• Assets down £108bn on Dec 07
• Ex-Sempra RWAs down 10%
* Income before credit market write-downs and one-off items** RWAs vs. 1st January 2008 (Basel II) – applies to all divisions
Slide 14
Global Transaction Services
£m %
Total income 1,173 +12Direct expenses 276 +11Impairment losses 11 +38Contribution 886 +12Group Manufacturing 221 +5Operating profit 665 +15
£bn
Loans & advances 17.1 +15Customer deposits 58.9 +10RWAs 17.1 +10
Key Messages
• Average customer deposits +13%
• International Cash Management +21%
• International Merchant Acquiring +14%
• Trade Finance +60%
• Investment for growth
Slide 15
UK Retail & Commercial Banking
£m %
Total income 5,452 +5Direct expenses 1,537 +5Impairment losses 694 -2Contribution 3,221 +7Group Manufacturing 1,104 +5Operating profit 2,117 +8
£bn
Loans & advances 233.6 +12Customer deposits 191.8 +7RWAs 159.4 +4
Key Messages
• Retail impairments fell £50m
• Corporate impairments rose £34m
• Retail Banking profits +9%
• Corporate Banking profits +6%
• Wealth Management profits +14%
• Average deposits +10%
Slide 16
US Retail & Commercial Banking
$m %
Total income 2,746 +2Direct expenses 980 +1Impairment losses– Core 388 +311– SBO 324 +372Contribution 1,054 -32Group Manufacturing 328 +5Operating profit 726 -41
$bnLoans & advances 113.7 +2Customer deposits 104.8 +5RWAs 110.2 +2
Key Messages
• Retail growth subdued
• Good Commercial growth
• Strong expense control
• Core impairment charge 73bps
• Core impairments up $129m on 2H07
• SBO impairment charge 841bps
Slide 17
Total Portfolio $114bn Cumulative LTV DistributionResidential Mortgage & Core Home Equity
US Retail & Commercial Portfolio
• Average LTV 64%• Average FICO 748
Corporate & Industrial
25%
SBO 7%
CRE* 9%
Residential Mortgage 16%
Other Consumer
19%
0
20
40
60
80
100
>60% >70% >80% >85% >90% >95%
% of Book
LTV
70%
11%
29%
4%6%
54%
Core Home Equity 24%
* Commercial Real Estate
Slide 18
US SBO Portfolio
• Book in managed run-off
• Cumulative provisions $675m
• Cumulative charge-offs $262m
• Current provisions $413m
• Reserve 2.7x NPL
• FICO 721
0.0
0.5
1.0
1.5
2.0
2.5
Jun 07 Dec 07 Jun 087
8
9
10% $bn
SBO delinquencies as % of total outstanding loans
SBO total outstanding loans
Slide 19
EME Retail & Commercial Banking
£m %
Total income 805 +19Direct expenses 293 +27Impairment losses 96 +43Contribution 416 +9Group Manufacturing 166 +5Operating profit 250 +13
£bn
Loans & advances 51.5 +9Customer deposits 23.4 +1RWAs 29.9 -1
Key Messages
• Benefit from strong euro
• Ulster investment complete
• Impairments +£27m v 2H07
• New business margins rising
• Middle East income +38%
Balance sheet growth rates at constant FX
Slide 20
Asia Retail & Commercial Banking
£m %
Total income 391 +24Direct expenses 204 +30Impairment losses 61 -Contribution 126 +30Group Manufacturing 110 +5Operating profit 16 n/a
£bn
Loans & advances 4.6 +21Customer deposits 12.7 +34Spot AUMs 19.9 +16RWAs 5.3 +8
Key Messages
• Consumer Finance +28%
• Affluent Banking +24%
• Business Banking +44%
• Private Banking +18%
• Investing for growth
Slide 21
RBS Insurance
£m %
Total income 2,786 -2
Direct expenses 410 +17
Net claims 1,863 -13
Contribution 513 +41
Group Manufacturing 110 +5
Operating profit 403 +56
Key Messages
• Own brand income +3%
• Partnership income down 8%
• Partnership contribution +18%
• Underlying claims down 6%
• Underlying profit up 5%
Slide 22
Group Manufacturing
£m %
Group Technology 676 +2
Group Property 813 +10
Customer Support 719 +2
Total costs 2,208 +5
Key Messages
• Productivity gains
• Continuing investment
• +2% at constant FX
Group cost:income ratio 48.2%
Slide 23
Net Interest Margin
UK US EME Asia
%
490
3.453.31
2.71 2.732.25 2.15
5.205.93
Retail & Commercial Banking Margins
Key Messages
• UKR&C mix effect
• Front books margin rising
• Lag effect on back books
• Strong money markets income
• Underlying Group NIM stable
1H071H08
Slide 24
Credit Quality
FY07 1H08
Loans & Advances to Customers £563.7bn £609.1bn
NPL + PPL £8.4bn £9.0bn
NPL + PPL % of Loans & Advances 1.49% 1.47%
Annualised Impairment Charge % of L&A 0.37% 0.46%
Provision coverage of NPL + PPL 59% 56%
Gross loans and advances to customers excluding reverse repurchase agreements and stock borrowingImpairment charge calculation excludes impairments from available-for-sale securities
Slide 25
Capital
Proportional Basis Jun 08
RWAs (£bn – Basel II) 491.7
Core Tier 1 (%) 5.7
Tier 1 capital (%) 8.6
Total capital (%) 13.1
Key Messages
• £12bn rights issue
• Rebased capital targets
• Well ahead at mid year
• De-risking balance sheet
• On track for year end CT1 >6%
• 1H08 consolidated CT1 6.7%
• 1H08 consolidated T1 9.1%
08 August 2008
Make it happen
Sir Fred GoodwinGroup Chief Executive
Slide 27
Agenda
• ABN AMRO separation and integration
• Capital
• Outlook
08 August 2008
Make it happen
ABN AMRO Separation and Integration
Slide 29
Separation
Slide 14UK002CPP 06/08/2008 10:53
Orderly Business Reorganisation (continued)
ABN AMRO
BU North America ex LaSalleBU AsiaBU Europe ex Antonveneta
LaSalle
Antonveneta BancoReal
PrivateClients
Asset Management
BU Netherlands
Slide 30
Separation
Consideration Transferred to ultimateowner
RBS
LaSalle
Santander
Shared Assets
Fortis
€70bn
Slide 31
Separation
Consideration Transferred to UltimateOwner
Current Position
RBS
LaSalle
Santander
Shared Assets
LaSalle
Asset Management
BancaAntonveneta
Banco RealBrazil
BU NetherlandsTransfer: 2H09Private ClientsTransfer: 1H09
RBS
Shared Assets
Shared Assets
Fortis
€70bn
€34bn
GC Brazil
€36bn
€14bn
€20bn
Slide 32
Separation
Shared Assets TransferStatus
• UniCredit stake
• Taitung
• Prime Bank
• BU Private Equity 75% complete
• Saudi Hollandi stake ongoing
Slide 33
Integration Synergies
P&L Impact in 2010 Offer Doc Revised PlanJuly 07 Feb 08
€mCost savings 1,319 1,600Net revenue benefits 395 700
£mCost savings 1,150Net revenue benefits 500
• 2010 benefits equate to c.4x RBS-acquired businesses 2007 underlying profit before tax
Slide 34
Cost SavingsImpact on Profit Before Tax
13575
300
900
1,150
0
200
400
600
800
1,000
1,200£m
ActualTarget
Jun 08 Dec 08 Dec 09 Dec 10
Slide 35
Net Revenue BenefitsImpact on Profit Before Tax
57 30120
280
500
0
200
400
600
800
1,000
1,200£m
Jun 08 Dec 08 Dec 09 Dec 10ActualTarget
Slide 36
Integration Progress
• New Group organisational structure implemented
• Senior leadership teams appointed
• Re-branding implemented in 19 countries
• Scaling of GBM IT systems to enable migration completed
• Data centre consolidation underway
• Delivery of synergies ahead of plan– Accelerated headcount reduction in GBM; 2,245 at 1H08 – Accelerated ramp down of ABN AMRO Head Office functions– Increased and accelerated purchasing savings
Slide 37
Performance
StrategicRationale
• Wholesale businesses– Global client franchises– Complementary product strengths
• Rates, Currencies, Commodities• Equities• Credit Markets
• Global Transaction Services• International Retail Businesses• Global manufacturing capability
CurrentTrading
–x
08 August 2008
Make it happen
Capital
Slide 39
Capital
Capital Ratios
Target Actual Target30 Jun 08 30 Jun 08 31 Dec 08
Core Tier 1 >5.0% 5.7% >6.0%
Tier 1 >7.5% 8.6% >8.0%
Capital ratios on a proportionately consolidated basis
€14bn
Slide 40
Disposals
• Disposal plans on track
• Target £4 billion contribution to capital
• 25% of target contracted to date, including
– Angel Trains
– ECF
– TPF
Completed
Expected to complete 2H08
Slide 41
De-Leveraging
GBM Third Party Assets*
• Reduction of £108bn in third party assets in the first half, £157bn since March
• Focus on improving risk/return profile, whilst continuing to support customer relationships
• Programme continues in 2H08
400
600
800
1,000
Dec07
Jan08
Feb08
Mar08
Apr08
May08
Jun08
£bn
* Third party assets excludes derivatives
08 August 2008
Make it happen
Outlook
Slide 43
Outlook
Consensus GDP Growth Forecasts for 2008
Jan 07 Jul 07 Feb 08 Jul 08
UK 2.4% 2.2% 1.7% 1.5%
US 3.0% 2.8% 1.6% 1.5%
Eurozone 2.1% 2.3% 1.6% 1.6%
Asia-Pacific 4.8% 5.0% 4.9% 4.8%
Slide 44
Strong Franchises
1H08 v 1H07GBM Interest rate swap client volumes +59%
US IG corporate bond issuance +41%GTS Merchant acquiring volumes +23%
Wholesale payments +5%UK Retail Bancassurance sales +10%
Mortgages +9%UK Wealth AUM +10%US Retail & Commercial Commercial lending +13%
Deposits +5%E&ME Retail & Commercial Deposits +14%
Loans +23%Asia Retail & Commercial Personal customers +14%
Deposits +34%AUM +16%
Many Businesses Maintaining Strong Growth in Customer Volumes
Slide 45
Diversified Income Streams
• 38% of Group underlying income
• Good growth and development of client franchise
• Very strong growth across Rates, Local Markets, Currencies & Commodities, good growth in investment grade credit markets
• Loan margins widening, fee levels rising
• GTS providing solid income growth, notably in International Cash Management/Trade Finance
0 1,000 2,000 3,000
Rates, Currencies &Commodities
Equities
Credit Markets
Asset & Portfolio Mgt
Cash Management & TradeFinance
Merchant Services &Commercial Cards
Global Markets
1H071H08
£m
Slide 46
Diversified Income Streams
• 48% of Group underlying income
• Strong commercial potential across all regions
• Private banking activity remains strong
• Personal business growing despite difficult retail market conditions
• New business margins strengthening
0 1,000 2,000 3,000
Personal Deposits
Mortgages
Other Personal Lending
Business & CommercialDeposits
Business & CommercialLending
Investment Products
Other
Regional Markets
£m
1H071H08
Slide 47
Conclusion
• Good progress on ABN AMRO separation and integration
• Capital plan remains on track– Capital re-basing ahead of target at end June
• Outlook for the global economy is challenging, but RBS better positioned– Stronger capital base– Income growth from new products to enlarged customer base– Meaningful efficiency improvement from delivery of synergies
08 August 2008
Make it happen
2008 Interim Results8 August 2008
08 August 2008
Make it happen
Appendix
08 August 2008
Make it happen
Credit
Slide 51
Loans and Advances to Customers
Sector Geography
UK Domestic
46%
UK International 13%
Europe 20%
US 14%
Asia 7%
Construction 3%
Services 26%
Property 15%
Leases and Other 7%
Gross loans and advances to customers, net of reverse repos and stock borrowing
IndividualsHome20%
Finance 13%
Individuals Other 8%
Manufacturing 8%
Total Loans and Advances to Customers £609bn
Slide 52
UK Portfolio
UK Domestic Loans and Advances £282bn
Individuals Home 28%
Manufacturing 5%Construction 4%
Services 21%
Property 18%
Leases and Other 9% Finance 6%
Individuals Other 10%
Gross loans and advances to customers, net of reverse repos and stock borrowing
Slide 53
Commercial Property
Commercial Property Portfolio £91bn UK Commercial Property £51bnDiversified by Geography Core Portfolio LTV Distribution
UK 55%
RoI 10%
Germany 7%
Spain 4%
Other Western Europe
14%
North America
9%
Rest of World 1%
• Average LTV 68%• 1% speculative• Well diversified by sector• Characteristics typical of overall portfolio
0
20
40
60
80
100
>50% >60% >70% >75% >80% >85%
% of Book
LTV
87%
69%
45%
19%8% 3%
Slide 54
UK Retail Mortgages
• Average LTV 49%• Buy-to-let LTV 56%• New business LTV 66%
Total Portfolio £72bn Cumulative LTV Distribution
0
20
40
60
80
100
>60% >70% >80% >85% >90% >95%
% of Book
35%
6%10%3%
24%
Other Mortgages 94%
Buy to Let 6%
LTV
14%
Slide 55
Total Portfolio £57bn Cumulative LTV DistributionResidential Mortgage & Core Home Equity
US Retail & Commercial portfolio
• Average LTV 64%• Average FICO 748
Corporate & Industrial
25%
SBO 7%
CRE* 9%
Residential Mortgage 16%
Other Consumer
19%
0
20
40
60
80
100
>60% >70% >80% >85% >90% >95%
% of Book
LTV
Core Home Equity 24%
70%
11%
29%
4%6%
54%
* Commercial Real Estate
Slide 56
US SBO Portfolio
• Book in managed run-off
• Cumulative provisions $675m
• Cumulative charge-offs $262m
• Current provisions $413m
• Reserve 2.7x NPL
• FICO 721
0.0
0.5
1.0
1.5
2.0
2.5
Jun 07 Dec 07 Jun 087
8
9
10% $bn
SBO delinquencies as % of total outstanding loans
SBO total outstanding loans
08 August 2008
Make it happen
Diversified Income Streams
Slide 58
Diversified Income Streams
0 500 1000 1500 2000 2500 3000
Rates
Currencies
Commodities
Equities
Credit Markets
Equity Finance
Asset & portfolio mgt
Global Banking & Markets Income by Product
£m1H071H08
Slide 59
Diversified Income Streams
0 100 200 300 400 500
Domestic cash
Int'l CashManagement
Trade Finance
Merchant Acquiring
Commercial Cards
Global Transaction Services Income by Product
1H071H08
£m
Slide 60
Diversified Income Streams
£m
UK Retail & Commercial Banking Income by Product
0 500 1,000 1,500
Personal advances excl mortgagesMortgages
Personal depositsBancassurance
Business advancesBusiness deposits
Other retailWealth management
Commercial + corporate lendingAsset finance
Invoice financeCorporate deposits
1H071H08
Slide 61
Diversified Income Streams
0 300 600 900 1,200 1,500
Personal lending
Credit and debit cards
Mortgages and home equity
Retail deposits
Investment products
Commercial lending
Commercial deposits
US Retail & Commercial Banking Income by Product
1H071H08
$m
Slide 62
Diversified Income Streams
Europe & Middle East (E&ME) Retail & Commercial Banking Income by Product
£m0 50 100 150 200 250 300 350 400
Personal advancesexcl mortgages
Mortgages
Personal deposits
Business advances
Business deposits
Capital Markets andother income
1H071H08
Slide 63
Diversified Income Streams
0 50 100 150 200 250
Private Banking
Cards and ConsumerFinance
Affluent Banking (andgeneral)
Business Banking
Asia Retail & Commercial Banking Income by Business Line
£m1H071H08
08 August 2008
Make it happen
2008 Interim Results8 August 2008