Make it happen. Make it happen

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Transcription:

Make it happen Make it happen 08 August 2008

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 forward looking 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 available information, 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 past or the yield on investments cannot be relied upon as a guide to future performance. Slide 2

Make it happen 2008 Interim Results 8 August 2008 08 August 2008

Make it happen Sir Tom McKillop Chairman 08 August 2008

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 5

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 Slide 6

Make it happen Guy Whittaker Group Finance Director 08 August 2008

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 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% Loss before tax (691) Slide 8

Credit Market Write-downs In line with April estimates bn Net Current Net Avg W/downs W/downs Exposure 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 Slide 9

Monoline Exposures by Rating bn 6.3 2.5 Key Messages Net exposure 2.4bn Non-investment grade 0.2bn 2.3 1.5 2.4 1.2 1.0 0.2 62% exposure covered Reserves and hedges 3.9bn CDO/RMBS gross exposure 3.7bn Gross Exposure Net Exposure AAA / AA A Non-investment grade Ratings as at 30 June and based on lower of S&P/Moody s Slide 10

Reduction in Credit Market Net Exposures bn 10 8 Dec 2007 Jun 2008 8.7 6 5.4 5.8 5.4 4 3.8 4.3 2 2.0 1.9 2.5 2.4 1.8 1.5 1.4 1.1 0 ABS CDO US Residential Mortgages US Commercial Mortgages Monoline Insurers SIVs Funded Leveraged Finance Unfunded Leveraged Finance CLOs Slide 11

Divisional Operating Profit Global Markets m % Global Banking & Markets 2,184-17 Global Transaction Services 665 +15 Regional 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 +56 Central costs (859) -9 Group 5,144-3 Slide 12

Global Banking & Markets m % Total income* 5,306-10 Direct expenses 2,607-14 Impairment losses 294 n/a Contribution 2,405-15 Group Manufacturing 221 +5 Operating profit 2,184-17 bn Total third party assets 762.8-7 Customer deposits 96.5 +16 RWAs** 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. 1 st January 2008 (Basel II) applies to all divisions Slide 13

Global Transaction Services m % Total income 1,173 +12 Direct expenses 276 +11 Impairment losses 11 +38 Contribution 886 +12 Group Manufacturing 221 +5 Operating profit 665 +15 bn Loans & advances 17.1 +15 Customer deposits 58.9 +10 RWAs 17.1 +10 Key Messages Average customer deposits +13% International Cash Management +21% International Merchant Acquiring +14% Trade Finance +60% Investment for growth Slide 14

UK Retail & Commercial Banking m % Total income 5,452 +5 Direct expenses 1,537 +5 Impairment losses 694-2 Contribution 3,221 +7 Group Manufacturing 1,104 +5 Operating profit 2,117 +8 bn Loans & advances 233.6 +12 Customer deposits 191.8 +7 RWAs 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 15

US Retail & Commercial Banking $m % Total income 2,746 +2 Direct expenses 980 +1 Impairment losses Core 388 +311 SBO 324 +372 Contribution 1,054-32 Group Manufacturing 328 +5 Operating profit 726-41 $bn Loans & advances 113.7 +2 Customer deposits 104.8 +5 RWAs 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 16

US Retail & Commercial Portfolio Total Portfolio $114bn Cumulative LTV Distribution Residential Mortgage & Core Home Equity Other Consumer 19% Corporate & Industrial 25% % of Book 100 80 70% 60 54% Core Home Equity 24% * Commercial Real Estate Residential Mortgage 16% SBO 7% CRE* 9% 40 20 0 29% 11% >60% >70% >80% >85% >90% >95% LTV Average LTV 64% Average FICO 748 6% 4% Slide 17

US SBO Portfolio % $bn 2.5 10 2.0 9 1.5 1.0 8 0.5 Book in managed run-off Cumulative provisions $675m Cumulative charge-offs $262m Current provisions $413m Reserve 2.7x NPL FICO 721 0.0 Jun 07 Dec 07 Jun 08 7 SBO delinquencies as % of total outstanding loans SBO total outstanding loans Slide 18

EME Retail & Commercial Banking m % Total income 805 +19 Direct expenses 293 +27 Impairment losses 96 +43 Contribution 416 +9 Group Manufacturing 166 +5 Operating profit 250 +13 Key Messages Benefit from strong euro Ulster investment complete Impairments + 27m v 2H07 New business margins rising Middle East income +38% bn Loans & advances 51.5 +9 Customer deposits 23.4 +1 RWAs 29.9-1 Balance sheet growth rates at constant FX Slide 19

Asia Retail & Commercial Banking m % Total income 391 +24 Direct expenses 204 +30 Impairment losses 61 - Contribution 126 +30 Group Manufacturing 110 +5 Operating profit 16 n/a Key Messages Consumer Finance +28% Affluent Banking +24% Business Banking +44% Private Banking +18% Investing for growth bn Loans & advances 4.6 +21 Customer deposits 12.7 +34 Spot AUMs 19.9 +16 RWAs 5.3 +8 Slide 20

RBS Insurance m % Total income 2,786-2 Direct expenses 410 +17 Net claims 1,863-13 Contribution 513 +41 Group Manufacturing 110 +5 Key Messages Own brand income +3% Partnership income down 8% Partnership contribution +18% Underlying claims down 6% Underlying profit up 5% Operating profit 403 +56 Slide 21

Group Manufacturing m % Group Technology 676 +2 Group Property 813 +10 Customer Support 719 +2 Key Messages Productivity gains Continuing investment +2% at constant FX Total costs 2,208 +5 Group cost:income ratio 48.2% Slide 22

Net Interest Margin Retail & Commercial Banking Margins % 3.45 3.31 5.20 5.93 Key Messages UKR&C mix effect Front books margin rising Lag effect on back books Strong money markets income 2.71 2.73 2.25 2.15 Underlying Group NIM stable 490 UK US EME Asia 1H07 1H08 Slide 23

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 borrowing Impairment charge calculation excludes impairments from available-for-sale securities Slide 24

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% Slide 25

Make it happen Sir Fred Goodwin Group Chief Executive 08 August 2008

Agenda ABN AMRO separation and integration Capital Outlook Slide 27

Make it happen ABN AMRO Separation and Integration 08 August 2008

Separation Orderly Business Reorganisation (continued) BU Netherlands BU North America ex LaSalle BU Asia BU Europe ex Antonveneta ABN AMRO LaSalle Asset Management Private Clients Antonveneta Banco Real UK002CPP 06/08/2008 10:53 Slide 14 Slide 29

Separation 70bn Shared Assets Fortis Santander LaSalle RBS Consideration Transferred to ultimate owner Slide 30

Separation 70bn Shared Assets Fortis 36bn Shared Assets Asset Management Santander LaSalle Banco Real Brazil Banca Antonveneta LaSalle GC Brazil 34bn 20bn Shared Assets BU Netherlands Transfer: 2H09 Private Clients Transfer: 1H09 RBS 14bn RBS Consideration Transferred to Ultimate Owner Current Position Slide 31

Separation Shared Assets UniCredit stake Taitung Prime Bank BU Private Equity Saudi Hollandi stake Transfer Status 75% complete ongoing Slide 32

Integration Synergies P&L Impact in 2010 Offer Doc Revised Plan July 07 Feb 08 m Cost savings 1,319 1,600 Net revenue benefits 395 700 m Cost savings 1,150 Net revenue benefits 500 2010 benefits equate to c.4x RBS-acquired businesses 2007 underlying profit before tax Slide 33

Cost Savings Impact on Profit Before Tax m 1,200 1,150 1,000 900 800 600 400 300 200 135 75 0 Actual Target Jun 08 Dec 08 Dec 09 Dec 10 Slide 34

Net Revenue Benefits Impact on Profit Before Tax m 1,200 1,000 800 600 500 400 200 0 Actual Target 57 280 120 30 Jun 08 Dec 08 Dec 09 Dec 10 Slide 35

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 36

Performance Strategic Rationale Wholesale businesses Global client franchises Complementary product strengths Rates, Currencies, Commodities Equities Credit Markets Global Transaction Services International Retail Businesses Global manufacturing capability Current Trading x Slide 37

Make it happen Capital 08 August 2008

Capital Capital Ratios Target Actual Target 30 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% 14bn Capital ratios on a proportionately consolidated basis Slide 39

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 40

De-Leveraging GBM Third Party Assets* bn 1,000 Reduction of 108bn in third party assets in the first half, 157bn since March 800 Focus on improving risk/return profile, whilst continuing to support customer relationships 600 Programme continues in 2H08 400 Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 * Third party assets excludes derivatives Slide 41

Make it happen Outlook 08 August 2008

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 43

Strong Franchises Many Businesses Maintaining Strong Growth in Customer Volumes 1H08 v 1H07 GBM 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% Slide 44

Diversified Income Streams Global Markets Rates, Currencies & Commodities Equities Credit Markets Asset & Portfolio Mgt Cash Management & Trade Finance Merchant Services & Commercial Cards 1H07 1H08 0 1,000 2,000 3,000 m 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 Slide 45

Diversified Income Streams Regional Markets Personal Deposits Mortgages Other Personal Lending Business & Commercial Deposits Business & Commercial Lending Investment Products Other 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 1H07 1H08 0 1,000 2,000 3,000 m Slide 46

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 Slide 47

Make it happen 2008 Interim Results 8 August 2008 08 August 2008

Make it happen Appendix 08 August 2008

Make it happen Credit 08 August 2008

Loans and Advances to Customers Total Loans and Advances to Customers 609bn Geography Sector US 14% Europe 20% Asia 7% UK International 13% UK Domestic 46% Property 15% Services 26% Leases and Other 7% Construction 3% Gross loans and advances to customers, net of reverse repos and stock borrowing Finance 13% Individuals Home 20% Individuals Other 8% Manufacturing 8% Slide 51

UK Portfolio UK Domestic Loans and Advances 282bn Leases and Other 9% Finance 6% Property 18% Individuals Home 28% Services 21% Construction 4% Individuals Other 10% Manufacturing 5% Gross loans and advances to customers, net of reverse repos and stock borrowing Slide 52

Commercial Property Commercial Property Portfolio 91bn Diversified by Geography Other Western Europe 14% Spain 4% Germany 7% North America 9% RoI 10% Rest of World 1% UK 55% % of Book 100 80 60 40 20 0 UK Commercial Property 51bn Core Portfolio LTV Distribution 87% 69% 45% 19% 8% 3% >50% >60% >70% >75% >80% >85% LTV Average LTV 68% 1% speculative Well diversified by sector Characteristics typical of overall portfolio Slide 53

UK Retail Mortgages Total Portfolio 72bn Buy to Let 6% % of Book 100 80 Cumulative LTV Distribution 60 Other Mortgages 94% 40 20 0 35% 24% 14% 10% >60% >70% >80% >85% >90% >95% LTV Average LTV 49% Buy-to-let LTV 56% New business LTV 66% 6% 3% Slide 54

US Retail & Commercial portfolio Total Portfolio 57bn Cumulative LTV Distribution Residential Mortgage & Core Home Equity Other Consumer 19% Corporate & Industrial 25% % of Book 100 80 70% 60 54% Core Home Equity 24% * Commercial Real Estate Residential Mortgage 16% SBO 7% CRE* 9% 40 20 0 29% 11% >60% >70% >80% >85% >90% >95% LTV Average LTV 64% Average FICO 748 6% 4% Slide 55

US SBO Portfolio % $bn 2.5 10 2.0 9 1.5 1.0 8 0.5 Book in managed run-off Cumulative provisions $675m Cumulative charge-offs $262m Current provisions $413m Reserve 2.7x NPL FICO 721 0.0 Jun 07 Dec 07 Jun 08 7 SBO delinquencies as % of total outstanding loans SBO total outstanding loans Slide 56

Make it happen Diversified Income Streams 08 August 2008

Diversified Income Streams Global Banking & Markets Income by Product Rates Currencies Commodities Equities Credit Markets Equity Finance Asset & portfolio mgt 1H07 1H08 0 500 1000 1500 2000 2500 3000 m Slide 58

Diversified Income Streams Global Transaction Services Income by Product Domestic cash Int'l Cash Management Trade Finance Merchant Acquiring Commercial Cards 1H07 1H08 0 100 200 300 400 500 m Slide 59

Diversified Income Streams UK Retail & Commercial Banking Income by Product Personal advances excl mortgages Mortgages Personal deposits Bancassurance Business advances Business deposits Other retail Wealth management Commercial + corporate lending 1H07 1H08 Asset finance Invoice finance Corporate deposits 0 500 1,000 1,500 m Slide 60

Diversified Income Streams US Retail & Commercial Banking Income by Product Personal lending Credit and debit cards Mortgages and home equity Retail deposits Investment products Commercial lending Commercial deposits 1H07 1H08 0 300 600 900 1,200 1,500 $m Slide 61

Diversified Income Streams Europe & Middle East (E&ME) Retail & Commercial Banking Income by Product Personal advances excl mortgages Mortgages Personal deposits Business advances Business deposits Capital Markets and other income 1H07 1H08 0 50 100 150 200 250 300 350 400 m Slide 62

Diversified Income Streams Asia Retail & Commercial Banking Income by Business Line Private Banking Cards and Consumer Finance Affluent Banking (and general) Business Banking 1H07 1H08 0 50 100 150 200 250 m Slide 63

Make it happen 2008 Interim Results 8 August 2008 08 August 2008