Make it happen Make it happen Important Information This - - PDF document

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 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

• r the yield on investments cannot be relied upon as a guide to future performance.

08 August 2008

Make it happen

2008 Interim Results

8 August 2008

08 August 2008

Make it happen

Sir Tom McKillop

Chairman

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 Whittaker

Group 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/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

In line with April estimates …

Slide 10

1.5 2.3 1.0 2.5 0.2 1.2 Gross Exposure 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 A AAA / AA

Slide 11

Reduction in Credit Market Net Exposures

2 4 6 8 10

ABS CDO US Residential Mortgages US Commercial Mortgages Monoline Insurers SIVs Funded Leveraged Finance Unfunded Leveraged Finance CLOs

Dec 2007 Jun 2008

£bn

3.8 2.0 4.3 1.9 2.5 2.4 1.8 8.7 5.4 1.5 1.4 1.1 5.8 5.4

Slide 12

Divisional Operating Profit

£m % Global Markets – 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 13

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. 1st January 2008 (Basel II) – applies to all divisions

Slide 14

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 15

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 16

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 17

Total Portfolio $114bn Cumulative LTV Distribution Residential 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%

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 08 7 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 +19 Direct expenses 293 +27 Impairment losses 96 +43 Contribution 416 +9 Group Manufacturing 166 +5 Operating profit 250 +13 £bn Loans & advances 51.5 +9 Customer deposits 23.4 +1 RWAs 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 +24 Direct expenses 204 +30 Impairment losses 61

• Contribution

126 +30 Group Manufacturing 110 +5 Operating profit 16 n/a £bn Loans & advances 4.6 +21 Customer deposits 12.7 +34 Spot AUMs 19.9 +16 RWAs 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

3.45 3.31 2.71 2.73 2.25 2.15 5.20 5.93

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

1H07 1H08

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 borrowing Impairment 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 Goodwin

Group 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 14

Orderly Business Reorganisation (continued) ABN AMRO

BU North America ex LaSalle BU Asia BU Europe ex Antonveneta LaSalle Antonveneta Banco Real Private Clients Asset Management BU Netherlands

Slide 30

Separation

Consideration Transferred to ultimate

• wner

RBS LaSalle Santander Shared Assets Fortis

€70bn

Slide 31

Separation

Consideration Transferred to Ultimate Owner Current Position

RBS LaSalle Santander Shared Assets LaSalle Asset Management Banca Antonveneta Banco Real Brazil BU Netherlands Transfer: 2H09 Private Clients Transfer: 1H09 RBS Shared Assets Shared Assets Fortis

€70bn €34bn

GC Brazil

€36bn €14bn €20bn

Slide 32

Separation

Shared Assets Transfer Status

• UniCredit stake
• Taitung
• Prime Bank
• BU Private Equity

75% complete

• Saudi Hollandi stake
• ngoing

Slide 33

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 34

Cost Savings Impact on Profit Before Tax

135 75 300 900 1,150

200 400 600 800 1,000 1,200

£m

Actual Target

Jun 08 Dec 08 Dec 09 Dec 10

Slide 35

Net Revenue Benefits Impact on Profit Before Tax

57 30 120 280 500

200 400 600 800 1,000 1,200

£m

Jun 08 Dec 08 Dec 09 Dec 10

Actual Target

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

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

08 August 2008

Make it happen

Capital

Slide 39

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%

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 Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 £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 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%

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

1,000 2,000 3,000

Rates, Currencies & Commodities Equities Credit Markets Asset & Portfolio Mgt Cash Management & Trade Finance Merchant Services & Commercial Cards

Global Markets

1H07 1H08

£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

1,000 2,000 3,000

Personal Deposits Mortgages Other Personal Lending Business & Commercial Deposits Business & Commercial Lending Investment Products Other

Regional Markets

£m

1H07 1H08

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 Results

8 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

Individuals Home 20% 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 £51bn Diversified 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

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

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 Distribution Residential 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%

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 08 7 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

500 1000 1500 2000 2500 3000 Rates Currencies Commodities Equities Credit Markets Equity Finance Asset & portfolio mgt

Global Banking & Markets Income by Product

£m

1H07 1H08

Slide 59

Diversified Income Streams

100 200 300 400 500 Domestic cash Int'l Cash Management Trade Finance Merchant Acquiring Commercial Cards

Global Transaction Services Income by Product

1H07 1H08

£m

Slide 60

Diversified Income Streams

£m

UK Retail & Commercial Banking Income by Product

500 1,000 1,500

Personal advances excl mortgages Mortgages Personal deposits Bancassurance Business advances Business deposits Other retail Wealth management Commercial + corporate lending Asset finance Invoice finance Corporate deposits 1H07 1H08

Slide 61

Diversified Income Streams

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

1H07 1H08

$m

Slide 62

Diversified Income Streams

Europe & Middle East (E&ME) Retail & Commercial Banking Income by Product

£m 50 100 150 200 250 300 350 400

Personal advances excl mortgages Mortgages Personal deposits Business advances Business deposits Capital Markets and

• ther income

1H07 1H08

Slide 63

Diversified Income Streams

50 100 150 200 250 Private Banking Cards and Consumer Finance Affluent Banking (and general) Business Banking

Asia Retail & Commercial Banking Income by Business Line

£m

1H07 1H08

08 August 2008

Make it happen

2008 Interim Results

8 August 2008