CAPITAL MARKETS DAY CYBG PLC

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CAPITAL MARKETS DAY CYBG PLC
CAPITAL
MARKETS
 DAY
 CYBG PLC
            1
CAPITAL MARKETS DAY CYBG PLC
WELCOME AND INTRODUCTION

 Why we are here…                               …agenda for the day

                                  08:30   Strategic overview   David Duffy
Present refreshed group
strategy                          08:50   Virgin Money brand   Helen Page
                                  09:05   Business             Gavin Opperman
     Update on exciting           09:25   Personal             Fergus Murphy
     brand opportunities
                                  09:45   Mortgages            Hugh Chater
                                  10:05   Q&A                  All
Outline new divisional
structure and plans               10:30   Coffee break
                                  11:00   Transformation       Fraser Ingram
      Explain how we will         11:20   Financials           Ian Smith
   transform the business
                                  11:40   Strategic ambition   David Duffy

Provide clear medium-term         11:50   Q&A                  All
strategic and financial targets   12:30   Lunch

                                                                                2
CAPITAL MARKETS DAY CYBG PLC
STRATEGIC
OVERVIEW
 David Duffy

               3
                   3
CAPITAL MARKETS DAY CYBG PLC
WE HAVE THE PLATFORM TO DISRUPT THE STATUS QUO…

With our complementary capabilities…                …we are well positioned to disrupt

     Loyal regional
                                                          ‐ Iconic brand – nationally
     customer base
     and digital
                         +   Trusted, national
                             brand
                                                            recognised; Virgin partnership
                                                            opportunities
     proposition

     Open Banking
                             Larger 6.4m                  ‐ Digital leadership, a single Open
     digital platform    +   combined                       Banking platform to support all
                             customer base                  6.4m customers

     180 years of
                                                          ‐ People with Purpose who
     banking expertise   +   Innovative disruptor           energetically deliver the best
                                                            customer experiences

     Regional
     coverage            +   Complementary
                             presence
                                                          ‐ National coverage and scale

     Full Personal           Strength in
                                                          ‐ Full suite of Personal and Business
     & Business          +   mortgages and
                                                            products
     product set             credit cards
                                                                                                  4
CAPITAL MARKETS DAY CYBG PLC
…WITH A STRATEGY TO MITIGATE INDUSTRY PRESSURES…

           A muted economic outlook…                                                  …offset by self-help opportunities

Real GDP growth (%)

1.8         1.8                               1.6       2.0          2.1                                               Significant
                        1.4         1.3                                      Mortgage
                                                                             margin and                             cost opportunity
2016       2017        2018         2019      2020      2021         2022   funding cost                             through scale
                                                Note: our targets             pressures                             and digitisation
Average base rate (%)                         assume only one rate
                                                  rise to FY22                                                         Margin
2.0%
                                                                              Digital                               accretive asset
1.0%                                                                        competition                               & deposit
                                                                                                                       growth
0.0%
             2019               2020            2021            2022
                                                                              Brexit and                              Enhance our
Unemployment (%)
                                                                             economic                                leading digital
                                                                             uncertainty                               proposition
4.9         4.4         4.1        3.8        3.8       3.7          3.6

2016       2017        2018         2019      2020      2021         2022
  Forecasts: Oxford Economics, 13 June 2019                                                                                        5
CAPITAL MARKETS DAY CYBG PLC
…AND A CLEAR TRACK RECORD OF DELIVERY

Strong delivery credentials…               …with a low-complexity integration plan

 Efficiency                                 Part VII process completion expected October 2019
 • Successful cost reduction and
   efficiency programme delivery

 Digital                                          VM Personal        c.100k VM current accounts
                                                  Current            Transfer via Current Account
 • Build, integration and scaling of our          Accounts
   digital platform                                                  Switching Service (CASS)
 • First to offer account aggregation to           VM Personal &     Bulk redirection service:
   customers using secure Open APIs                Business          industry process for accounts
 • First to offer mobile cheque clearing           Savings           not covered by CASS

                                                  VM Mortgages
 Project Management                               and Fixed          Renewal on target platform
 • Complex NAB separation programme               Term Savings
 • IRB programme delivery
 • Migration of MBNA cards                        CYBG Personal      CYBG accounts migrate to
                                                  Credit Cards       the TSYS platform

                                                                                                     6
CAPITAL MARKETS DAY CYBG PLC
OUR PURPOSE AND AMBITION DRIVE OUR STRATEGIC PRIORITIES…
           Our purpose:                         Making you happier about money

 Our strategic ambition:                             To disrupt the status quo

                                                 Delighted                Super
                             Pioneering                                                   Discipline and
 Our strategic priorities:                     customers and         straightforward
                               growth           colleagues                                sustainability
                                                                        efficiency

        Powered by our:
                              Highly trusted brand   People with purpose          Digital leadership

  Delivered brilliantly in
   line with our values:

                                                                                                           7
CAPITAL MARKETS DAY CYBG PLC
…TO CREATE SIGNIFICANT SHAREHOLDER VALUE…
                                                               …drive our key                     …delivering strong returns
             Our strategic priorities…
                                                             financial targets…                   and business momentum

                  Reshape balance sheet mix:                  • 75% mortgages     Ambition for
Pioneering
                  •   grow margin accretive assets            • 15% business      asset mix in
                                                                                                               >12%
growth                                                                            medium term
                  •   grow low cost relationship deposits     • 10% unsecured
                                                                                                        Statutory RoTE by FY22
Delighted         •   Enhance the customer experience
                                                              • Above system asset growth
customers and     •   Encourage digital adoption              • High single digit CAGR in
colleagues        •   Colleagues delivering our purpose         relationship deposits                        >100bps

                      Realise integration synergies           Significant efficiencies by FY22:
Super             •                                                                                        CET1 generation
                                                              • c.£200m net cost savings
straightforward   •   Digitise and simplify the business                                                    p.a. by FY22
                                                              •
CAPITAL MARKETS DAY CYBG PLC
…DELIVERED THROUGH OUR CLEAR DIVISIONAL PLANS

         Business                       Personal                            Mortgages

•   Expand our relationship    •   Transform our              •     Digitise the customer
    proposition nationally         relationship proposition         experience
•   Launch Virgin Money for    •   Enhance the customer       •     Maximise relationships to
    business                       experience                       create brand advocates
•   Enhance the customer       •   Deepen our customer        •     Optimise the franchise for
    experience                     relationships                    value

                              UNDERPINNED BY OUR

      Highly trusted brand         People with purpose            Digital leadership             9
CAPITAL MARKETS DAY CYBG PLC
THE VIRGIN
VIRGIN MONEY
MONEY   BRAND
    BRAND

   HHeel lee n PPaaggee

                          10
TOGETHER WE CREATE A BIGGER, BOLDER VIRGIN MONEY…

     A STRONGER BANK                                         ENHANCED OPPORTUNITY

• 6.4m customers                                           • Unified branding
                               BETTER THAN BOTH
• National network                                         • Wider customer appeal

• Strong digital                                           • Relationship opportunity
  capability
                                                           • Customer advocacy
• Full product set                                           growth

                                                        • 100% Brand awareness
                       UNDERPINNED BY AN ICONIC BRAND
                                                        • 87% Brand consideration

                                                         Source: Incite Consulting, October 2018   11
…WITH ALL OF THE ELEMENTS NOW IN PLACE TO FULLY LEVERAGE
           THE OPPORTUNITY WITHIN OUR BRAND…

 Customer scale
                                                                                                                            instant SCALE
 Current A/C relationship                                                     -                                             A captive audience of 6.4m customers
                                                                                                                            with a full product range on which to build
                                                                                                                            a primary banking relationship
 Business banking                                                             -

 Digital capability
                                                                                                                            national REACH
 National network                                                                                                           UK-wide presence supporting national
                                                                                                                            acquisition beyond traditional heartlands
 National brand
                                                                                                                            beyond BANKING
 Loyalty mechanism                                   -                                                                      26m UK customers with an existing Virgin
                                                                                                                            relationship, open to other Virgin brands
                      -   No or limited capability       Partial capability   Full capability   Capability in development

                                                                                                                                                                          12
…THAT LIVES WITHIN A FAMILY OF BRANDS COVERING A WIDE
      RANGE OF CONSUMER AND BUSINESS SECTORS

                                            SUPPORTING GROWTH

                                   Virgin Money’s growth will benefit from:

                                   • the breadth of Virgin relationships
                                   • the diverse range of history and
                                     expertise within the Virgin companies
                                   • the pipeline of new activity in place
                                     for 2020

                                                                              13
THE VIRGIN BRAND IS PROVEN TO CREATE
       TANGIBLE COMMERCIAL VALUE

                                                                  Virgin companies build awareness quickly and demonstrate
  1         SCALES FAST                                           rapid growth potential

                                                                  The more Virgin companies a customer uses, the higher
      2        LOYAL COMMUNITIES                                  openness and preference they show for Virgin overall

                                                                  Virgin companies have demonstrated an ability to charge a
       3        COMMANDS A PREMIUM                                10%+ premium vs. competitors for similar products & services

                                                                  Research shows rebranding a business as Virgin could
       4         BOOSTS MARKET SHARE                              deliver an immediate uplift of up to 42% in consumer choice

                                                                  Marketing spend can be up to 10x as efficient at driving
      5        MARKETING EFFICIENCY                               consideration for Virgin companies versus peers

  6         ATTRACTS & RETAINS TALENT                             Virgin companies can show an employee churn rate >20%
                                                                  lower than their industry peers

Source: Project Intellect, independent research on Virgin brand and individual Virgin company analysis provided by Virgin Enterprise Limited   14
ATTRACTING AN ADVENTUROUS, OPTIMISTIC AND MORE
   AFFLUENT AUDIENCE FOR VIRGIN MONEY TO ENGAGE

     AN AFFLUENT                           WITH HIGHER                              AND A GENERAL                      WITH WHOM CYBG ARE
     CUSTOMER SET                       HOUSEHOLD INCOME                             ZEST FOR LIFE                     ALREADY CONNECTED

                                                                                     Adventurous in the
                                                                                                                         c.20%        of active CYBG

44%                                   +20%
                                                                                     things they buy and do
                                                                                                                         current account customers
                                                                                      Strive to be at the                 are currently transacting
                                                                                      forefront of new trends               with Virgin companies

of ABC1 adults profess an              higher household income                        Willing to pay more for                    Spending
affection for the brand                for brand aficionados                          a brand they love
                                                                                                                          c.£600m in 2018
This represents a potential                                                           Prioritise convenience
market of c.10m                                                                       over price                           With an average Virgin
professional people                                                                                                          product holding of
                                                                                      More likely to be
                                                                                      entrepreneurial                               2.5
Source: Virgin Growth Audiences, UK Profiles, 2018, ONS census and socio demographic information and CYBG transactional current account data for 2018.
ABC1 defined as managerial, administrative and professional members of the population
                                                                                                                                                         15
THE VIRGIN MONEY BRAND ALREADY RESONATES WITH BOTH
            CUSTOMERS AND PROSPECTS…

          PERSONAL & MORTGAGE                                                             BUSINESS

 Perceptions of Virgin Money                                     Perceptions of Virgin Money

                                    FUTURE                                                 NEW &
  OPTIMISTIC          INSPIRING                                     MODERN                                     INNOVATIVE
                                   FOCUSED                                                DIFFERENT

                                  Source: CYBG, SME Brand Perception Research, 2018 and VM Brand Proposition Development Research, 2019
                                                                                                                                          16
…AND WE ARE TAKING A PURPOSE-LED APPROACH
        TO DRIVE SMART DISRUPTION IN OUR SECTOR…

        Empowering                  Personal    Ambitious                    Rooted in what
                                                                                     we do

                                                                                               PURPOSE-LED BRANDS DRIVE
              Making you happier about money                                                     DEEPER CONNECTIONS

                                                                                               •   Strategic alignment & a
             Proactive                            Positive change                                  strong corporate culture

                                                                                               •   Enhanced customer and
Example purpose statements of other Virgin companies:                                              partner affinity

                                                  Everyone leaves feeling better
                                                                                               •   Increased brand trust
       An epic sea change for all
                                                                                                   and sentiment

                                                                                               •   Higher consideration
      Building connections that really matter     Everyone can take on the world
                                                                                                   through standing apart
                                                                                              Source: Accenture, December 2018

                                                                                                                                 17
…WITH A UNIQUE OFFERING THAT COMBINES BRILLIANT BANKING
     WITH REWARDS FOR LEADING A LIFE MORE VIRGIN…
                  BRILLIANT BANKING                                          A LIFE MORE VIRGIN
                       NOBODY DOES IT LIKE VIRGIN                            NOBODY CAN DO IT EXCEPT VIRGIN

 DELIGHTED CUSTOMERS         SUPER EFFICIENT        PEOPLE WITH PURPOSE   FORCE FOR GOOD      UNIQUE EXPERIENCES

 PERSONAL

 BUSINESS

 MORTGAGE

   PRODUCTS                CHANNELS                     PEOPLE             GIVING              REWARDS

                                                                                                                   18
…DELIVERED THROUGH AN UNMISTAKABLY VIRGIN
                    EXPERIENCE THAT CUSTOMERS WANT TO BE PART OF…
                      1: Digital                        2: Spatial                       3: Human
   VIRGIN MONEY

                       embed the ‘Virgin personality’          create feelgood               start with conversations
                         within every interaction            physical experiences                not transactions
VIRGIN COMPANIES
   BEST PRACTICE

                  OUR AMBITION: DELIVER A SUPERIOR EXPERIENCE, TOP 3 IN THE CMA CUSTOMER SERVICE RANKINGS BY FY22

                                                                                                                        19
…WITH A BOLD NEW BRAND IDENTITY AS A
    POWERFUL SIGNAL OF CHANGE

                               A modern makeover
                               for a trusted brand that
                               builds from the joy of
                               our new purpose and
                               celebrates a different
                               approach to banking

                                                          20
WE WILL TAKE A PHASED APPROACH TO OUR
               RELAUNCH, REBRAND AND MIGRATION…

                       PERSONAL                   PERSONAL            BUSINESS
     NEW
                       New VM current a/c         New VM              New VM
CUSTOMERS              and linked savings         personal loan       current a/c
                                                                                       New brand launched once a critical
                                                                                       mass of front book products re-branded

              Topco               Soft                  Full launch
             Naming             Launch                                              H2 ‘20                 2021
                                                          H1 ‘20
             Q4 ‘19             End ‘19

            GROUP ENTITY       B                     YB                       VM & CB               REBRAND TAIL
REBRAND &
            Renamed Virgin     Full rebrand,         Rebrand of network       VM migration, CB      Mortgages and savings
MIGRATION   Money UK PLC       including stores      & back book starts       rebrand starts        rebranded at maturity

                                                                                                                                21
… AND WE’LL LAUNCH WITH AMBITION, RAPIDLY
   ACCELERATING AWARENESS AND CONSIDERATION
HIGH PROFILE MEDIA   BOLD MESSAGES    DIGITAL CONNECTION

                                                           22
BUSINESS
Gavin Opperman

                 23
DELIVERING GROWTH IN AN EVOLVING MARKET

     Business banking market is changing…                                   …and we have been successfully growing
                                                                            Core SME lending balances
                      Economy
                                                                            £bn
                   • GDP growth below long-term trend
                   • CYBG SME health index near 5-year low;
                     Brexit impacting business confidence                                                 +20%

   Government /                               Customer behaviour                                                                     7.2
   regulatory
                                          • Complex demands need                                                    6.8
• Ring-fencing impacts                      human support
• RBS Alternative Remedies                • Fintech entrants expanding                              6.4
                                            customer choice
                                                                                   6.0
         Digitisation                      Competition

     • Greater demand for digital     • Concentrated market - 90%                 FY15             FY16             FY17             FY18
     • Open Banking supports            share for big 5 banks
       switching                      • Incumbents and disruptors
                                                                         During the period a sizeable portfolio of non-core assets have also been run-off
                                        address different customers

                                                                                                                                                            24
WE ARE A RECOGNISED FULL SERVICE BUSINESS BANK…

  Established franchise, regional scale…                         …with a targeted market focus

                                                                         • Compete where we have knowledge,
c.3.5%    market share of BCAs (national)
                                                                           products and deep relationships, e.g:
                                                          Dedicated
                                                                            • Agriculture
                                                          expertise,
          market share of BCAs (regional)                                   • Healthcare
 >10%     in Scotland and Yorkshire
                                                          broad
                                                          product           • Renewables
                                                          capabilities
                                                                         • Expertise and overall proposition enables
c.200k    customers - half have been with CYBG >10 yrs
                                                                           value capture

                                                                         • Proven risk management capability and
 >300     relationship managers – avg. tenure of 14 yrs                    strong asset quality

                                                          Selective      • Don’t compete where we lack expertise:
£10.4bn   deposits – average cost of c.40bps - H1 19      approach          • Large institutions
                                                                            • Speculative development
                                                                              Commercial Real Estate
£7.6bn    assets – average yield of 417bps - H1 19                          • Complex derivatives
                                                                                                                   25
…WITH STRONG SECTORAL RELATIONSHIPS AND EXPERTISE…

        £7.6bn diversified lending book…                                                           …with strong relationship deposits
 H1 19

                           Construction Other
                                              (1)                                                • Majority of deposits from trading business accounts:
                                        8%
             Transport and storage
                                     2%                   Agriculture                               • BCAs provide stable funding
                                                          19%
                                 4%
                  Entertainment                                                                     • Linked accounts provide low-cost funding
                             2%
                                                                                                    • Digital and spatial key to servicing customers
                         CRE                                     Retail & wholesale
                         11%                                     trade
      CRE: 8%                                                    10%
      Housing                                                                                    • Relationship deposits are a valuable component of
  Associations: 3%
                     Hospitality                                                                   Group funding:
                            8%                              Gov’t, health and
                                                            education                               • Sticky deposits with low liquidity requirements
                       Manufacturing                        12%
                                10%          Business services
                                                                                                    • Lower average cost than personal deposits
                                             14%

                            Assets – Product Split                                                              Liabilities – Product Split

0%           20%                   40%           60%           80%                  100%    0%          20%         40%            60%           80%        100%
 Term Lending Overdraft            Asset Finance   Invoice Finance          Trade Finance        On demand    Non-interest bearing     Savings     Term Deposits
                                                                                                                                                                   26
…AND A SERVICE MODEL DESIGNED TO MEET CUSTOMER NEEDS

             Customer segmentation…              …drives service model needs

                                                                •   Digital self-service
 •   Turnover up to £2m                            Direct
                                  Small
                                                                •   Supported by named
 •   Borrow up to £500k                                             telephony relationship
 •   Ease of access is key                                          manager (RM)

                                                                •   Local, in-person RM across
                                                  Local RM          40 business centres in UK
 •   Turnover > £2m to c.£25m                                   •   Supported by UK phone
 •   Borrow £250k - £10m          Commercial
                                                                    and local treasury teams
 •   Local support required                                     •   Agricultural RM specialists
                                                                    across the UK

                                                Specialist RM   •   Mid-size firms can access
 •   Turnover > £2m to £100m                                        large corporate capabilities
                                  Corporate &
 •   Borrow £250k - £35m          Specialist
                                                                •   Cover complex events and
 •   Specialist skills required                                     sectors incl. FinTech, Health
                                                                    & Social Care, Renewables
                                                                                                    27
WE HAVE A CLEAR DIVISIONAL AMBITION AND STRATEGY

                  HELP BUSINESS OWNERS REALISE THEIR
Our ambition
                  POTENTIAL AND ACHIEVE THEIR DREAMS

                  Expand our
Our strategy      relationship    Expand our existing sector relationship approach:
                                  • roll-out the proposition nationally
                  proposition     • enhance and streamline our product suite
                  nationally

                  Launch Virgin   Deploy our iconic, entrepreneurial brand:
                  Money for       • into a receptive national marketplace
                  business        • leverage our existing relationship and service strengths

                  Enhance the     Use our existing technology platform to:
                  customer        • digitise our on-boarding, self-service
                  experience      • build a full digital relationship proposition
                                                                                         28
EXPAND OUR RELATIONSHIP PROPOSITION NATIONALLY
 Established presence, strong       …with a significant national                        …addressable by expanding
      in our heartlands…              growth opportunity…                                our relationship proposition

                                68% of UK
Customer numbers:               businesses are                                              Named, remote RM for small
                                not in our                                                  businesses – backed by
77% Heartlands                  heartlands:                                                 national brand
• 37% Scotland
• 24% Yorkshire &
                                                 London,
  Humber                                                                                    Local RM for mid / large
                                                   19%
• 11% North West                                                 Heartlands,                businesses to be deployed
• 5% North East                                                     32%
                                                                                            in VM sites
                                           South
                                           East,
                                            15%                                             Expanded sector RM model –
23% rest of UK                                                         Other,               supported by enhanced
                                                East
• 8% East                                     England, South      West
                                                                        7%                  customer economics
• 4% West Mids                                  10%    West,      Mids,
• 3% London                                             9%         8%
• 3% South East                                                                             Digital tools support RMs,
• 5% Other                                                                                  improving productivity and
                                                                                            customer focus
                                       Number of businesses per region – taken from
                                       Business Populations, Department for Business,
                                       Energy and Industrial Strategy.                                                   29
LAUNCH VIRGIN MONEY FOR BUSINESS
                                              Helping businesses scale
                                    • Offer financial and non-financial services
                                           • Supported by partnerships

Entrepreneurial brand                                                              Broad product range
• Nationally recognised                                                            • Wide range of products and
• Resonates with business aspirations                                                 capabilities
                                                                                   • Made available for ambitious
                                                                                      businesses at every stage of lifecycle

Increased addressable market                                                          Experience and reputation
National coverage via:                                                                • Credibility in delivery
• digital onboarding                                                                  • Strong reputation across the
• RM model                                                                              business market
                                         VIRGIN MONEY FOR BUSINESS
• multi-channel servicing                     A new business bank with
• national physical network                 established trust and expertise

                                                                                                                               30
ENHANCE THE CUSTOMER EXPERIENCE

  Digitised on-boarding                Digital self serve                    Enhanced relationship offering

     Simple, straight-through          Significantly improved
     digital on-boarding               transactional banking              Enhanced digital     Support business
                                                                             capability           expansion
                                       Increased digital
     Faster account opening
                                       product capability                   Digital                   Customer Lab –
                                                                         on-boarding                  designing future

                                       Partnership model for
     Credit decision automation                                      Digital                               Digital RM
                                       specific requirements      product sales                              toolkit

     Wide range of products to         Multi-channel model –        Automated                               Pricing insight
     be digitally fulfilled            here when you need us          credit                               and economics

                                                                             Customer               Continued enhancement
                                                                             analytics                of internet banking

 Raising the bar on what to       Connect in innovative, simple
expect from a business bank         and dependable ways

                                                                                                                              31
A STRATEGY TO DELIVER OUR DIVISIONAL TARGETS…
                                       Delighted customers          Super straightforward                     Discipline and
     Pioneering growth
                                         and colleagues                  efficiency                           sustainability

Relationship balances                                              Targeting                           • Maintain strong risk

                                                       3
(£bn)                                                              70% of                                approach and underwriting
                                           Top                     businesses
Linked savings
                                                                                                         standards
       1.8                                                         using digital
BCAs
                                                                   as primary                          • No change to sector focus
                                                                                        Now
     6.6                                                           channel:             c.50%            – expand what we do
                 Supported by growth
                                       in CMA business banking                                           today on a national basis
                                        service quality rankings           FY22
                 in BCA market share                                       70%
                 from c.3.5% to c.5%            by FY22                                                • Maintain price discipline &
   H1 19
                                                                                                         straightforward product set
                                       Supported by:
Business share of group                                                                                • Focus on attracting high-
lending balances:                      • enhanced relationship
                                         offering                                                        quality relationship deposits
                                                                   Targeting 75% of business
                                                                   accounts opened digitally:
                        c.15%          • digitised on-boarding
   c.10%
                                                                        Now               FY22
                                       • digital self-service
   H1 19              Medium                                       0%    25%      50%   75%     100%

                       term
                                                                                                                                    32
…WITH A CLEAR 3 YEAR MILESTONE PLAN
                      2019/20                      2021                     2022+

Expand
                                             Deepen sector and
                    National rollout         product specialisms

Launch
               Virgin Money for business   Rebrand of Yorkshire and
                       launched             Clydesdale complete
                                                                      Digital Business hub

Enhance
                  Enhanced digital
                                              Automated credit
               on-boarding experience
                                                                                             33
PERSONAL
Fergus Murphy

                34
OPPORTUNITIES TO DIFFERENTIATE IN A CHANGING MARKET

          Personal finance is changing rapidly…                                  …as is the operating environment

                                 Economy                                                     • Personal loan growth to remain
                                                                             Competitive
                                                                                               muted given economic uncertainty
                             •    All-time low unemployment                  unsecured
                             •    Brexit uncertainty                         lending         • Credit Card market set to plateau
                                                                             markets…          given greater regulatory focus
          Government /                                Customer behaviour
           regulatory                                                                        • PCA switching currently relies on
                                                •    Experience economy      …deposit
•   Open Banking impact                                                                        up-front incentives
                                                     and high expectations   competition
•   GDPR implications
                                                •    Subscription-driven                     • Customer inertia at Big 5 banks
                                                                             remains
                                                     consumption                               increases competition for non-PCA
                                                                             intense…
                                                                                               / linked deposits
              Digitisation                          Competition
                                                                             …but we
                                                                                             • Unique opportunities to address
    •   Influx of challenger banks,        •   Influence of aggregators      have
        Fintechs and tech giants               Consumer credit growth                          these dynamics with our relationship
                                           •                                 opportunities
    •   Unprecedented pace of                  to remain muted                                 propositions
                                                                             to mitigate
        change
                                                                                                                                      35
WE HAVE A VERY STRONG EXISTING PLATFORM…

    A deposit book with opportunities…                            …and established unsecured portfolios

Personal deposit mix
H1 19
…AND COMBINING THE BUSINESSES OFFERS OPPORTUNITIES…
                                    Recognised consumer champion
                                • Brand offers significant opportunities
                             • Build upon strong Net Promoter Scores (NPS)

    Full digital capability                                             Full personal finance product capability
    • Leading digital platform                                          • Current accounts, savings, credit
    • Open Banking ready                                                   cards and personal loans

    A national network                                                        Increased customer base
    • UK-wide coverage                                                        • #6 retail bank in UK
    • Branch and telephony                                                    • 6.4m customers
                                     THE VIRGIN MONEY BRAND
                                        Aspirational and trusted

             RELATIONSHIP-BASED BANKING WILL LEVERAGE THESE STRENGTHS
                                                                                                                   37
…TO BETTER ENGAGE OUR NEW CUSTOMER BASE

      A more attractive customer base…                               …with national distribution to service them

                                                                  Branches                                        Segment
                    13%                  VM acquisition                                                       concentration
               Managing Matures           added c.1.6m                                                                     Journey to
                                        customers in more                                                             Affluence and
                                                                                                                          Established
                                        affluent segments                                                                     Affluent
                    28%                                                                                               UK population
                                                                                                                           distribution
                Later Life Pressures

   13%                                 • 30-55 age range
                    21%                • £90k+ household income
               Established Affluent    • £100k+ savings
   35%

                    15%
              Journey to Affluence
                                       • 35-55 age range
                                       • £50k+ household income
   13%
                                       • c.£45k savings
   10%

   28%
                    23%                                           Clydesdale

              Aspiring Value Seekers                              Virgin Money

                                                                  Yorkshire
CYBG only    Combined Group                                                                   RHS chart shows distribution of UK
                                                                                              population in affluent segments             38
WE HAVE A CLEAR DIVISIONAL AMBITION AND STRATEGY

Our ambition     HELP CUSTOMERS LIVE AND BANK IN A
                 MORE REWARDING WAY

                 Transform          • Compelling, rewards-led propositions
Our strategy     our relationship   • Leverage mutually beneficial value economics to
                 proposition          increase low cost relationship PCAs and savings balances

                 Enhance            • Dramatically increase digital adoption
                 the customer       • Re-tool our physical spaces to provide expert advice
                 experience         • Provide leading self-service capability

                 Deepen             • Enhance our existing unsecured lending propositions
                 our customer       • Opportunity with a significantly larger customer base
                 relationships        under the Virgin Money brand

                                                                                              39
TRANSFORM OUR RELATIONSHIP PROPOSITION
 Non-price led, rewards-based offering…                        …to develop our value-based proposition

                                                                             Relationship will share value with the customer:
      Financial needs met    Plus great rewards              Compete
                                                             on value        •    Launch rewards based Virgin Money PCA
      Transact                          Celebrate            transition from      with competitive linked savings offering
      efficiently                       and travel
                                                             price-led       •    Target large pools of low-cost, inert savings
                                                             acquisition to       balances held by incumbents
   Pay and                                       Connect
                                                 and enjoy
                                                             a lower cost, •      Customers benefit from great tech, a great
    earn
                                                             higher value         account, better rates and great rewards
                                                             approach        •    We benefit from growth in lower cost
    Invest                                                                        current account and relationship deposits
   and save                                      Give

             Protect                  Keep fit                           £12.0bn                                 focus on
                                                               Linked                                           attracting
                                                               savings     3.8                                  lower cost
                                                                                                               relationship
Best in class propositions      Relationship offering                                                            balances
to help meet money              unique rewards and              PCAs       8.2
needs and life goals           personalised benefits
                                                                          H1 19                                                   40
ENHANCE THE CUSTOMER EXPERIENCE

          Digital self serve                      Expert advice                        Customer contact

       Simple straight-through digital         Empower branch staff to become            Increased speed of customer
       on-boarding and servicing               experts in our digital propositions       query resolution

       Increase in-app servicing               Increased ability to handle               Minimise need for customers
       functionality                           complex technical queries                 to leave channel of choice

       Customers can easily deepen             Create spaces that customers              Become the private banker
       relationship with us via digital        want to use to work, learn & bank         in our customers’ pocket

       Improve customers’ ability to stay      Footprint optimised to evolving           Contact centre technology will
       in control of their finances            customer preferences                      meet evolving customer needs

    Top-quartile digital engagement         Support our customers with expert        Simple and efficient day to day
and top 3 CMA customer service ranking           advice when needed                   customer service proposition
                                                                                                                       41
DEEPEN OUR CUSTOMER RELATIONSHIPS
     Propositions to deepen relationships…                      …supported by partnership initiatives

                                                           ✓
• Major investment in customer experience
                                                           Live
• Opportunities in underserved existing customer bases,
  offering rewards for relationships:                      • Launched April 2018
    • PCA offering to c.1.4m VM Credit Card customers
                                                           • Offering co-branded fee and non-fee cards
                                                           • Focuses on Flying Club experience - access to 1.2m
    • Credit Cards to c.1.3m CYBG PCA customers              club members, affluent high-quality customers

• Enhanced, scalable data platforms and decisioning        • 120k accounts since launch, 4bn Flying Club miles
                                                             earned from retail spend over £2bn since launch
  systems to better understand our customers

                                                           ✓
• Cards proposition developed via Open Banking, flexible   Live
  borrowing, pay anyhow and cashback                                            • Personal loan JV launched Feb 2019
                                                                                • c.£50m originated since launch
• Loans offering developed through partnerships and        • Innovative channel supporting existing loan business
  rewards, guaranteed loans and real rates
                                                           • Partner with large employers to offer financial wellbeing
• Existing customer focus supports asset quality              benefits and affordable loans to employees
                                                           • Offers above-average yields within risk appetite
                                                                                                                         42
A STRATEGY TO DELIVER OUR DIVISIONAL TARGETS…
                                         Delighted customers        Super straightforward                Discipline and
       Pioneering growth
                                           and colleagues                efficiency                      sustainability

Relationship balances                                              Increase in digital adoption:   • Focus on attracting high-

                                                         3
(£bn)                                                                                                quality relationship
Linked savings
     3.8                                     Top                              30%                    deposits to support Group

                                                                                                   • Focus on attracting
                                                                                         c.60-
PCAs
                                                                                         65%         affluent new customers
     8.2                                                              48%
                                                                                                     and deepening
                 Supported by growth     in CMA customer service
                 in PCA market share         rankings by FY22                                        relationships with existing
                                                                     H1 19              FY 22        customers
   H1 19         from c.2.5% to c.3.5%
                                         Delivered by:             Improve mobile app
                                                                   transactional NPS:              • Measured asset growth to
Unsecured share of Group                 • transforming the
                                                                                                     attain our natural market
lending balances:                          customer proposition               +49
                                                                                                     share in unsecured
                                         • enhancing the
                                           customer experience                                     • Maintain strong risk
                       c.10%                                                                         approach and
    c.6%                                 • deepening the
                                                                                                     underwriting standards
                                           customer relationship
    H1 19             Medium
                       term                                                                                                        43
…WITH A CLEAR 3 YEAR MILESTONE PLAN
                       2019/20                         2021                       2022+

Transform
                Suite of new Virgin Money        Open Banking and
                    product launches             reward experience

Enhance
                 Single sales and service       Full digital servicing,
                 platform in all channels   re-purposed branch network
                                                                            Digital Personal hub

Deepen
                  VAA/Virgin and other      All personal customers served
                  partnership extensions       with single brand and CX

                                                                                                   44
MORTGAGES
 Hugh Chater

               45
ENVIRONMENT REMAINS HIGHLY COMPETITIVE…

      Societal factors are driving change…                                   …while the market remains subdued

                                Economy                                               • Low interest rates support a strong
                                                                        Structural    remortgage market
                           • Low interest rates                         changes are • Limited market growth / net lending
                           • Brexit uncertainty                         subduing
                                                                        demand … • Falling house purchase transactions
     Government /                                      Customers                        from Buy to Let regulatory impact and
     regulatory                                                                         lower volumes of next time buyers
• Prudential oversight                            • Ageing population
• Government interventions                        • Evolving working
                                                    patterns
• Ring-fencing impacts                                                                • Ring-fencing liquidity and excess
                                                                        … while
                                                                        margin          supply are driving margin pressure
               Digitalisation                     Competition           pressures     • Increased focus on higher-yielding
          • Customer expectations         • Muted market growth         remain          segments to support margins
          • New entrants                  • Over-supply of finance
                                          • Low HPI
                                                                                                                                46
… AND THE DIGITAL REVOLUTION IS HERE
                                                                   …customers demanding a better
A market that is primed for digitisation…
                                                                           experience

The home buying journey hasn’t changed ...
                                                                      Online application and servicing

      …but consumer
      expectations have…
                                                                      With multi-channel capability
…and new ventures are targeting intermediary
and consumer mortgages…
 …3 sourcing systems cover the vast majority of the
              intermediary market…
                                                                      Real-time digital support for brokers

…c.£140m direct-to-consumer advertising spend in 2018(1)
                                                                      Limited patience for delays

                                           (1) Source: Addynamix                                              47
OUR COMBINED MORTGAGE BUSINESS IS STRONGER…
                                           Customer service
                                   • Outstanding customer experience
                                    • Outstanding broker experience

  Intermediary relationships                                              Broader proposition
  • Long-standing history                                                 • Broad range of mortgage products
  • Relationships with all major                                          • Propositions for wide-range of
     networks                                                                segments

Direct market coverage                                                         Experience and capability
• UK-wide coverage                                                             • Straight-through efficiency
• Branch and telephone                                                         • Complex business expertise
                                       THE VIRGIN MONEY BRAND
                                      Nationally recognised and trusted

                                                                                                               48
…WITH A HIGH QUALITY, BALANCED MORTGAGE PORTFOLIO
                     A balanced portfolio…                                             …with low-risk loan-to-value distribution…
£60.5bn lending book                                    BTL - C/I                  H1 19
                                                                                                      80%+         12%
                                                                    OO - Capital
H1 19                                                         3%
                                                                    & interest
        £45.8bn                             BTL - I/O               62%                           60% - 80%        36%
                                                 21%                                                                       58.2%
                                                                                                                           average
          76%
WE HAVE A CLEAR DIVISIONAL AMBITION AND STRATEGY

Our ambition     SIMPLIFY MORTGAGES TO MAKE
                 CONSUMERS’ LIVES BETTER

                 Digitise           • Create market-leading, digitally-served
Our strategy     the customer         experiences putting the customer in control
                 experience         • Deliver cost-to-serve efficiency

                 Maximise
                 relationships to   • Make the home-owning experience
                                      straightforward and satisfying
                 create brand       • Develop our digital Mortgage Hub
                 advocates
                 Optimise
                                    • Stand out as a lender with agility and speed
                 the franchise      • Deliver differentiated personal service with the
                 for value            efficiencies of scale
                                                                                         50
DIGITISE THE CUSTOMER EXPERIENCE
      Make life easier                Make it easy                       Improve
     for intermediaries               to buy direct                    productivity

                                     Digital Assistant via         Excellent customer experience
     Single point of data entry
                                     The Mortgage Hub              improves conversion rates

     Automated                       Simplified application with   Improved customer
     affordability/eligibility       multi-channel capability      retention

     Automated verification          Faster decisions delivering   Use big data and agile
     and KYC                         certainty for customers       approach to target opportunities

     Timely and relevant case        E-updates & digital           Significant efficiencies from
     updates                         tracking                      digitisation and single platform

Deliver significant efficiencies    Create an exceptional           Drive efficiencies and
for the franchise and brokers       customer experience            maintain competitiveness
                                                                                                      51
MAXIMISE RELATIONSHIPS TO CREATE BRAND ADVOCATES
   A new Mortgage Hub will transform                            …to deepen relationships and
      how we engage customers…                                   increase product holdings

External partnerships      In-house delivery
                                                                                              Account servicing
                                                                                              • Paperless and engaging
     Home                         Property
  improvements                    trade-up
                                                                                                  The Mortgage Coach
                                                                 Andy Cook                        • Assist throughout home
                                      Online
Removals                              advice
                                                                 19 Coppers Brook, NE00 4RA
                                                                  andy.cook1981@test.com
                                                                         UPDATE PROFILE
                                                                                                    ownership journey
                                                                                                 Alerts
                                      Additional                                                 • Timely, relevant & save
 Insurance                            borrowing                                                    money
                                                                                              Rewards
      Utilities and               Online
         media                  management
                                                                              V           1
                                                                                              • Personalised offers from
                                                                                                Virgin group and partners

    Fully integrated with the Personal hub, putting the customer in control of their financial needs
                                                                                                                             52
OPTIMISE THE FRANCHISE FOR VALUE

     Straightforward brand extension                               Super-efficient distribution

    By differentiating our service propositions,
  brokers will receive the best of both franchises:      Intermediaries
                                                                  Introduce the Expert proposition to a wider
                                                                  range of brokers:
                Expert                       Everyday              • c.4,000 new broker relationship
                                                                     opportunities already identified
                                                                   • Benefits of combination very clear
   Expertise to assess          Mainstream lending
  complex situations          backed by differentiated
  and make the right           market-leading service    Direct
       decisions                      promise                     1 in 4 customers acquired through direct
                                                                  channel by:
                                                                   • digitising customer acquisition
 Bespoke underwriting          Market-leading service              • continued investment in the existing
                                                                     customer experience
Appropriate risk-reward           Digital processing

                                                                                                                53
A STRATEGY TO DELIVER OUR DIVISIONAL TARGETS…
                            Delighted customers           Super straightforward             Discipline and
   Pioneering growth
                              and colleagues                   efficiency                   sustainability

Maintain stock            Customer transactional NPS:   Reduction in processing cost   • Prudent risk approach
mortgage market share:                                  of a mortgage application:       and underwriting
                                          +67                       (20)%                standards
  c.4%          c.4%
                                                                                       • Ensure pricing discipline
                                                                                         and prioritise returns
  H1 19        Medium                                                                    over volume
                 term
Mortgage share of                                         H1 19              FY 22     • No deterioration in risk
group lending balances:                                                                  characteristics of the
                           • Introduce the new          Increase direct applications     portfolio
                             ‘Expert’ proposition       to:
                                                                             Direct
                             to c.4,000 new                                   25%
 c.84%         c.75%         brokers by FY22

  H1 19       Medium                                     Indirect
                                                           75%
               term
                                                                                                                     54
…WITH A CLEAR 3 YEAR MILESTONE PLAN
                        2019/20                      2021                     2022+

 Digitise
                 API connectivity to broker   Leverage group assets
                      sourcing systems           (e.g. Auto KYC)

Maximise
                   Single direct platform     Full digital experience

                                                                        Digital Mortgage hub

Optimise
                     Brand extension           Extend intermediary
                                                   distribution

                                                                                               55
TRANSFORMATION
   Fraser Ingram

                   56
                        56
OUR TRANSFORMATION JOURNEY

Simplify           • Exit NAB, deliver IRB, MBNA migration, deliver Sustain efficiency benefits

             Digitise                   • Built B digital bank, iB platform, Open Banking ready

                                                             • Realise c.£150m synergies with a
                              Integrate                        straightforward plan

                                                                             • Digitisation drives further
                                                   Transform                   efficiencies with an additional
                                                                               c.£50m of net cost savings

   Completed                                Next phase of our journey

                                                                                                            57
SIMPLIFIED THE BANK

    A track record of delivery                               …to simplify our bank

                                                                                                ✓
c.£350m three year investment programme        • Build and scale iB digital platform, deliver
across 2016-19                                   separation and build IRB infrastructure

Separation from NAB and exit from 29
Transactional Service Agreements
                                               • Completed on schedule, removing
                                                 significant third-party risk
                                                                                                ✓
Delivery of the ‘Sustain’ Operational
Efficiency programme
                                               • Delivery of >£90m of cost reductions
                                                 in 2 years
                                                                                                ✓
                                                                                                ✓
Range of customer journey operational
                                               • Customer experience improvements
improvements delivered

                                                                                                ✓
VM completion of the MBNA credit cards         • Scalable, controllable and cost-efficient
portfolio migration to TSYS                      cards platform

                                                                                                ✓
Completion of the multi-year IRB
accreditation programme                        • Significant reduction in Group RWAs

                                                                                                    58
HAVE DIGITISED TO CREATE A MODERN,
                                                 SCALABLE PLATFORM…
          A simple, modern architecture…                                                        …as the bedrock for future delivery

                                                                                           • Digital platform (iB) built, integrated and scaled,
                                                                                             using private cloud, open architecture and robotics

                                                                                           • iB sits above core systems, hosted on internal cloud,
                              Real-time, multi-channel capability
                                                                                             Open Banking and FinTech partner ready
                ALL RETAIL AND SME CUSTOMERS ON A SINGLE PLATFORM
                                                                                           • Big data platform (iD) supports a single customer
                                                                                             view with all customers on one platform
                                          Microservices/APIs

 Open
Banking
                                      Interaction management
                                                  `                                        • Scaled platform with c.2 million CYBG customers
  live                                                                          FinTech      migrated on to iB with c.4 billion transactions in the
           Platform              Real time trusted data & insight               Partners
                                                                                             data store
PaaS
             C O R E       B AN K I NG       P L A T F O RM                     T S Y S
                                                                                           • Agile capability delivery
           F UL L     CL EA R I N G   +   PA Y M E N TS   CA P A B IL I TI ES                    • First to offer account aggregation to
                                                                                                    customers using secure open APIs
          UNIQUE CAPABILITY IN UK BANK OF SCALE                                                  • First to offer mobile cheque clearing

                                                                                                                                                      59
…ONGOING DELIVERY OF IMPROVED CUSTOMER EXPERIENCE
                                                                                                 B Store
                                                                                              December
                                                                             October 2018          2018
                                                                             Acquisition of
Feb 2016            August 2017
                      New apps -
                    all brands, all
                         channels

     Significant digital features delivered in a short time-frame due to our iB platform capability

                                                                                                           January 2019
                                                                                                           iB for Business

                                        February 2018
                                      Cheque imaging

       June 2016                                            May 2018
        B launch                                        Open Banking ready
                                                                                                                             60
COMBINATION CREATES A UNIQUE
                          DIGITALLY ENABLED COMPETITOR
     All the strengths of the major Neo  Bank
                                    banks…                …with the digital agility of a neobank

      ✓ Primary relationships                                         ✓ Innovative brand & edge

   ✓ Trusted brand,                                                         ✓ Customer lifestyle
      loyal customers                      BETTER THAN BOTH                    intelligence

✓ Full personal and         Strengths of                        Strengths      ✓ ‘Pay & play’
                           Strengths
                              a majorof                            of a            functionality
   business offering
                            thebank
                                major                           neobank
✓ Multiple distribution        banks                                           ✓ Innovative digital
   channels                                                                       platform

  ✓ Digital capability                                                      ✓ Saving pots
      and Open Banking                                                         functionality
      ✓ Multi-product customers                                  ✓ Limited back-end legacy systems
                                                                                                      61
INTEGRATION PLAN DELIVERS AN EFFICIENT, SIMPLER BANK…

 Unchanged, clear integration plan…   …delivers a streamlined operating model

                                         1
                                                    Active banking licence

                                                      Legal entity

                                                      Brand – Virgin Money

                                                      Full service product set
                                                    Platform supporting all
                                                    customers

                                                                                 62
…WITH CLEAR PROGRESS EVIDENT

      Integration is progressing well…                      …with the FSMA Part VII process on track

Strategy
           • Integration approach validated                 1   • Regulatory application
                                                                                                     ✓
           • Programme mobilised and in delivery
           • Brand strategy agreed and scheduled            2
                                                                • Regulatory approval
                                                                                                     ✓
People
                                                            3
                                                                • Initial court approval
                                                                                                     ✓
           •   New organisational design in place
                                                                • Customer notifications
           •
           •
               New Purpose, Values and Behaviours
               Single performance framework
                                                            4
           •   Ongoing internal communications                  • Final court approval
                                                            5
                                                                                               Expected
Synergies                                                       • Scheme effective date
           •   c.£150m of integration synergies validated   6                                 October 2019
           •   Rationalisation of senior management
           •   Closure of VM London office in June 2019     A SINGLE AUTHORISED & REGULATED BANKING ENTITY
           •   On track to deliver c.£50m of run-rate
               savings by end of FY19                       Virgin Money re-launch and re-brand can commence
                                                                                                               63
DIGITISATION OFFERS SIGNIFICANT OPPORTUNITY TO
                          LEVERAGE OUR PLATFORM…
            Our platform is supporting                            …but there is a significant opportunity
        strong growth in digital usage…                                    for us to improve
               2017 – finished iB platform build               • Digital will become our primary channel
     2018 – first year of all personal customers on iB
                                                               Digital adoption opportunity

Mobile banking                                     Mobile
daily logins                                       app users                                      60-65%
                                                                            48%
                +39%                    +32%

                           growth                                         CYBG now                By end FY22

                         2017 - 2018                           • Platform build and Project Sustain efficiencies realised
                                                                 initial digitisation cost savings:
                +21%                    +50%                     • >£90m cost savings achieved in 2 years
   Digital                                         Digital
   sales per                                       payments      • CYBG standalone underlying C:I ratio improved
   annum                                           made            from 74% at FY16 to 63% at FY18
                                                                 • Significant opportunities still remain
                                                                                                                            64
...CONTRIBUTING TO THE REALISATION OF ADDITIONAL
                  NET COST SAVINGS OF c.£50M
                                                                                …will deliver incremental
               Significant efficiency opportunities…
                                                                                    net cost savings
Digitisation     • 30-35% increase in digital adoption
                 • Complete digitisation of service processes realises
                   significant physical infrastructure savings                     Additional net cost
                 • Significant reduction in paper communications by
                                                                                      savings of
                   adopting industry standard approach

 Sourcing
                 • Move to a supplier partnering model versus in-house to
                                                                                     c.£50m
                   drive efficiencies                                                p.a. by FY22
                 • Opportunities to source in a more flexible way

 Change          • Extend modernisation of change programmes;
                   adopting more lean and agile approach
                 • Transformation will unlock significant efficiencies – both
                   pace and cost
                                                                                                            65
TRANSFORMATION ENABLES OUR DIVISIONAL STRATEGIES

              • Digitisation of customer on-boarding                       Pioneering
              • Credit decision automation                                   growth
   Business   • National coverage model under new brand
              • Digital Business hub
                                                                           Delighted
              • Virgin Money branded PCA and relationship proposition    customers and
                                                                          colleagues
              • Enhanced digital borrowing propositions, leveraging iD
   Personal   • Full digital servicing and online self-service
              • Digital Personal hub                                           Super
                                                                         straightforward
              • API connectivity to major broker sourcing systems           efficiency
              • Full automation of application process
  Mortgages   • Full digital customer experience
                                                                         Discipline and
              • Digital Mortgages Hub                                    sustainability

                                                                                           66
FINANCIALS
  Ian Smith

              67
                   67
A STRATEGY TO DELIVER OUR FINANCIAL TARGETS

                  A clear strategy…                       …to deliver our key financial targets

                  Reshape balance sheet mix:                • 75% mortgages         Ambition for
Pioneering                                                  • 15% business          asset mix in
                  • grow margin accretive assets
growth                                                      • 10% unsecured         medium term
                  • grow low cost relationship deposits
                                                            • Above system asset growth
Delighted         • Enhance the customer experience
                                                            • High single digit CAGR growth in current
customers and     • Drive digital adoption
                                                              account and savings balances
colleagues        • Colleagues delivering our purpose
                                                            •
BUILDING ON OUR TRACK RECORD OF DELIVERY
                                                               5%                             Culminating in the
                                                              CAGR
                                                                                         Virgin Money transaction…
 Customer lending                         £bn
                                                                             33.3
      growth                                    28.8
                                                      (2)
                                                IPO                          FY18

                                                75%
                                                                             63%
          Cost                           £m

      efficiency(1)                             727           (92)
                                                                             635
                                                              (13)%
                                                      (2)
                                                IPO                          FY18         …and a strong start in our first 6
                                                                                          months as a combined group

        Capital                                                                      •   Resilient underlying performance
                                       IRB accreditation received for mortgage
                                                                                     •   Underlying cost:income ratio of 57%
      optimisation                     and SME portfolios in October 2018
                                                                                     •   CET1 ratio of 14.5%
                                                                                     •   Underlying RoTE of 10.4%
(1) Underlying costs and cost:income ratio (2) IPO figures as at 30 September 2015
                                                                                                                               69
RESHAPING THE MIX OF OUR ASSET PORTFOLIOS…

Rebalancing our current balance sheet…                  …to optimise margins

Customer lending mix
                £72.7bn
    Unsecured
       £4.5bn    c.6%                                          c.10%      Unsecured
                                         Grow above
     Business    c.10%                   the market
       £7.6bn
                                                               c.15%      Business

    Mortgages
      £60.5bn    c.84%                    Maintain
                                         market share          c.75%      Mortgages

                H1 19                                       Medium-term
                                                             ambition                 70
…AND GROWING LOWER COST RELATIONSHIP DEPOSITS…

  Rebalancing our current funding mix…                       …will improve our customer cost of funding
Deposit mix
H1 19
                                                                               • Launch of Virgin branded
                                            c.33%                                PCA to attract new current
                         PCA Linked           relationship                       account customers
                          Savings
         Retail Variable    6%                 deposits                        • Relationship propositions to
                                    PCA
            Savings
              29%                   13%                                          attract linked savings
                                                                                 balances
                                      BCA
                  £61.7bn             11%                                      • Business banking strategy
                                   BCA Linked                                    to grow BCA and
                                    Savings                                      relationship deposits
                                      3%

                                            SME                                • Price-led deposit balances
                  Retail TDs
                    35%
                                            Deposits                             managed down
                                            3%

                                                                               • Loan-to-deposit ratio
…WHILE ABSORBING WHOLESALE FUNDING COST PRESSURES

                 Clear path to TFS refinancing…                                                                                  …while absorbing MREL cost pressures
   TFS contractual repayment profile
   (£bn)                                                                                                                                        25.3%                                           2022
                                                                                                                               HoldCo                                                        Final MREL
                                                                                                                                Senior           £0.8bn
                                 0.4
                               repaid
                                                                      4.7
                                                                                                                                 Total                                                         2020
               8.6              0.75%                                                                                          Capital          £5.2bn                                     Interim MREL
                                                                                                                                                                                             21.50%(1)
                            Current cost
                                                                                         3.5

            Drawn               FY19              FY20               FY21              FY22                                           H1 19 MREL Ratio                             MREL Requirements

   • TFS refinancing to continue in advance of contractual                                                                • H1 19 MREL ratio of 25.3% - comfortably ahead of 2020
     maturity (£0.4bn repaid to date), broadly evenly split:                                                                interim MREL requirement
       • Growth in lower cost relationship deposits                                                                       • Final MREL dictated by Dec-21 Pillar 2A
       • Secured funding                                                                                                  • Planned issuance of £2.0-£2.5bn by Dec-21(2)
       • HoldCo senior issuance to meet MREL                                                                              • Current cost of c.4%

(1) Includes Fully Loaded Capital Conservation Buffer of 2.5% and expected ‘standard risk environment’ Countercyclical Buffer of 1% (2) Includes expected Pillar 2A evolution, RWA inflation and Management Buffer   72
MIX RESHAPING SUPPORTS A MODEST NIM IMPROVEMENT
NIM evolution – drivers                                             Note: we only assume one
(not to scale)                                                      base rate rise out to FY22

       165-170
         bps
                          5-8
                          bps

         FY19      TFS and wholesale   Mortgage   Asset   Deposit             FY22
                  refinancing impact    margin     mix     mix
                                        impact
                                                                                                 73
BUSINESS AND PERSONAL SUPPORT NON-INTEREST INCOME GROWTH
     Structural changes to non-interest income
                                                       …as we maximise our opportunities
            in 2020 give way to growth…
    Non-interest income
    Not to scale
                                                  • Structural changes in FY20 include:
Commissions
                                                     • Aberdeen Standard Investments (ASI) JV
                                                       accounting impact - reduces from a gross fee
                          Impact of ASI
                        JV accounting
                                                       income of c.£25m to 50% share of JV profit
   Business
                             (from fee
                         income to net
                                                     • High Cost of Credit review expected to reduce
                       50% share of JV                 overdraft fees by c.£10m
                                 profit)
              c.£25m
                                                  • Non-interest income growth expected FY21 onwards:
                       Overdraft fee                 • Growth in Business fee income as we expand our
                       changes will                    relationship proposition
   Personal
                       impact by
                       c.£10m                        • Growth in Retail fee income as we attract more
                                                       customers through enhanced propositions

              FY19                         FY20
                                                                                                        74
c.£50M OF ADDITIONAL NET COST SAVINGS IDENTIFIED…

          Significant new cost savings identified…                           …with a modest incremental cost to achieve
         Evolution of cost savings target
         (£m)
                                                                             • Our transformation programme delivers an additional
                                                                               c.£50m of annual cost savings by the end of FY22
                                                      c.50
Avoidance
  of VMDB                                                                    • This will be delivered for a further c.£60m of
   running       c.35              30                                          restructuring costs on top of the previously
      costs                                                                    announced c.£300m associated with the integration
                                                                   c.200
                                                                               synergies
                 120
                                                                             • Restructuring cost phasing is expected as follows:
…SUPPORTING A
NO CHANGE TO RISK APPROACH: COST OF RISK TO REMAIN
c.13% CET1 OPERATING LEVEL TO UNDERPIN THE GROUP

            Strongly capitalised today and…                       …a target CET1 operating level of c.13%

                         14.5%
                                                    c.13%
            11.6%                         1-1.5%                 • PRA review of the Group’s ICAAP is well advanced
                                     management
  CCyB       1.0%                          buffer
                                                                 • Group will seek to operate with a prudent 1-1.5%
   CCB       2.5%
                                                                   management buffer above regulatory minimum
                                                                   capital requirement
Pillar 2A    3.6%

                                                                 • Strategic plan outcomes geared to a c.13% CET1
             4.5%
                                                                   operating level over time
 Pillar 1

       CRD IV minimum    Mar-19                 CET1 operating
        CET1 capital    CET1 ratio                   level
        requirement

                                                                                                                      78
>100 bps EXCESS CAPITAL GENERATION ONCE
                         RESTRUCTURING IS COMPLETE
    Capital generation supports glide path to                             …as we transition to a highly-capital
         target CET1 operating level…                                     generative business model from FY22
   CET1 capital utilisation
   (not to scale)
                                                                       • Material restructuring costs in FY19-21

                          Restructuring costs                          • RWA growth from new lending and asset mix,
                                                                         although expect substantial RWA efficiencies
Underlying
   capital                 Net RWA growth
generation                AT1, acquisition
                                                                       • Group will take part in the Bank of England stress test
                     accounting and other                                regime from 2020
                          Ordinary dividend
                                  capacity               CET1 after    • Group expects sufficient capital capacity to deliver
                                                         foreseeable     progressive, sustainable ordinary dividends with a
                                                         demand
                                                                         c.50% payout ratio expected over time
                                     Target
  H1 2019    14.5%                operating     c.13%                  • From FY22 the Group expects to generate >100bps of
                                       level
                                                                         excess CET1 capital per annum for distribution or
                                                                         growth
        Sources of CET1                  Utilisation of CET1

                                                                                                                                   79
IMPROVING PROFITABILITY SUPPORTS SHAREHOLDER RETURNS

      Improving profitability and RoTE…                        …supports strong shareholder returns

                                             >12% statutory
    10.4%                                     RoTE by FY22
underlying
                                                               • Statutory RoTE target of >12% by 2022
     RoTE

    100%                                                       • Statutory RoTE to converge with underlying RoTE
                                                                 over time as restructuring costs diminish

 Profit                                                        • Strong capital generation will create significant
Before                                                           capacity for distributions
   Tax
                                                               • Committed to delivering progressive, sustainable
                                                                 ordinary dividends with a target for a c.50% payout
          0%                                                     ratio over time
          H1 19   FY19         FY20        FY21         FY22
                         Statutory    Underlying

                                                                                                                       80
A STRATEGY TO CREATE SIGNIFICANT SHAREHOLDER VALUE
                                                               …drive our key                      …delivering strong returns
             Our strategic priorities…
                                                             financial targets…                    and business momentum

                  Reshape balance sheet mix:                   • 75% mortgages     Ambition for
Pioneering
                  •   grow margin accretive assets             • 15% business      asset mix in
                                                                                                               >12%
growth                                                                             medium term
                  •   grow low cost relationship deposits      • 10% unsecured
                                                                                                        Statutory RoTE by FY22
                  •   Enhance the customer experience          • Above system asset growth
Delighted
                                                               • High single digit CAGR in
customers and     •   Encourage digital adoption
                                                                 relationship deposits
colleagues        •   Colleagues delivering our purpose        • 100bps

                  •   Realise integration synergies            Significant efficiencies by FY22:           CET1 generation
Super
                                                               • c.£200m net cost savings                   p.a. by FY22
straightforward   •   Digitise and simplify the business
                                                               •
STRATEGIC
AMBITION
 David Duffy

               82
COMBINATION CREATES A UNIQUE DIGITALLY
                      ENABLED COMPETITOR…
     All the strengths of the major Neo  Bank
                                    banks…               …with the digital agility of a neobank

      ✓ Primary relationships                                        ✓ Innovative brand & edge

   ✓ Trusted brand,                                                        ✓ Customer lifestyle
      loyal customers                     BETTER THAN BOTH                    intelligence

✓ Full personal and        Strengths of                        Strengths      ✓ ‘Pay & play’
                          Strengths
                             a majorof                            of a            functionality
   business offering
                           thebank
                               major                           neobank
✓ Multiple distribution       banks                                           ✓ Innovative digital
   channels                                                                      platform

  ✓ Digital capability                                                     ✓ Saving pots
      and Open Banking                                                        functionality
      ✓ Multi-product customers                                 ✓ Limited back-end legacy systems
                                                                                                     83
…WITH A CLEAR PATH TO SUCCESS…

                                                                                              Launch of revitalised brand;
                                                                                              change Top Co name to
                                                                                      2019    Virgin Money UK PLC

                 Business                                  Personal                                  Mortgages

        Launch of Virgin                         Launch of the Virgin Money                   Open API connections to
        Money for business                       personal current account                     major broker sourcing systems
Early 2020                               late 2019                                     2020
                                                          All customers served with                  Full digital experience &
                  Extension and
                                                                                                     brand extension
             2021 automation                         2021 single brand & experience           2021

                             Inter-connected digital                          Top 3 in CMA customer service rankings
                             lifestyle hubs:
                             • Business                                       Substantial increases in PCA / BCA market share
                             • Personal
                             • Mortgages                                      Lending and deposit growth above market
        2022+
                                                                                                                                 84
…CREATING FUTURE OPTIONALITY
                       Real-time data    Open Banking
                        and insights      live, cloud
                                        hosted platform

                                                                                                  Winners:
Consumer   Small new   Tech & data       Regulatory                                               Lead on technology
                                                                                                  to deliver superior
 change     entrants   acceleration       change                               INFLECTION POINT
                                                                                                  customer outcomes,
            Fintech                                                                               flexible, adaptive and
                                                                                                  forward thinking
           Neobanks       BIG               PSD2,
                                            Open
                         DATA              banking

                                                                                                   Losers:
                                                                                                   Behind the curve
                                                                                                   on technology
                                                                                 New business      development
                                                          Payments   Banking
                                                                                   models          and/or fail to adapt
                                                           Big Tech entrants

                                                              Telecomms

                                                                                                                           85
APPENDIX

           86
LEADERSHIP TEAM BIOGRAPHIES
David Duffy                                            Ian Smith                                        Helen Page
Chief Executive Officer                                Chief Financial Officer                          Group Marketing and Brand Director
Skills and experience                                  Skills and experience                            Skills and experience

David has significant international finance and        Ian has considerable experience in finance,      Helen joined CYBG in December 2012 with the
banking experience gained from a career                audit and advising on bank strategy and          specific remit to reinvigorate and relaunch the
spanning almost three decades.                         corporate transactions from a career spanning    Clydesdale and Yorkshire Bank brands.
                                                       more than 30 years. He has held senior finance   Following the successful acquisition of Virgin
David joined CYBG in June 2015. Prior to joining       roles in HBOS plc and Lloyds Banking Group       Money in 2018, Helen has now assumed Brand,
the Group, David was Chief Executive Officer           plc. He joined the Group in November 2014        Marketing        and       Customer  Experience
at Allied Irish Banks plc, one of the largest retail   from Deloitte LLP where he was a partner         responsibilities for all brands.
and commercial banks in Ireland. He is a               specialising in financial services.
former Chief Executive Officer of Standard                                                              Helen has over 25 years’ experience in
Bank International where he had responsibility                                                          marketing,       consultancy       and     product
for operations in the UK, Europe, Latin America                                                         development, including 15 years in financial
and Asia. He was also previously Head of                                                                services. Prior to joining CYBG, Helen spent eight
Global Wholesale Banking Network with ING                                                               years at RBS as Managing Director for
Group and President and Chief Executive                                                                 Marketing       and      Innovation    and    held
Officer of the ING wholesale franchises in the                                                          responsibility for all UK brands across the Retail,
United States and Latin America.                                                                        Commercial and Corporate divisions.

David is a past President of the Banking and                                                            Helen was also Head of Brand Marketing at
Payments Federation of Ireland and a past                                                               Argos, where she relaunched the catalogue as
Director of the European Banking Federation.                                                            a retailer. Prior to Argos, Helen held a number of
                                                                                                        product and marketing roles at Abbey, where
                                                                                                        she became Head of Marketing.

                                                                                                                                                              87
LEADERSHIP TEAM BIOGRAPHIES
Gavin Opperman                        Fergus Murphy                           Hugh Chater                             Fraser Ingram
Group Business Banking Director       Group Retail Director                   Group Mortgages Director                Group Chief Operating Officer

Skills and experience                 Skills and experience                  Skills and experience                   Skills and experience

Gavin   joined   the  Group    in     Fergus joined the Group as Products    Hugh has over 25 years of                Fraser Ingram was appointed Chief
November 2015. He has been in         Director in January 2016. He has       experience in financial services. He     Operating Officer in June 2019.
banking for over 30 years with        over 20 years’ experience in           was an executive founder at MBNA         He was previously the Chief
experience in leading large-scale     financial services.                    Europe, joining in 1993 from KPMG        Information Officer (CIO) of CYBG.
teams in Retail (incl. Digital),                                             Management Consulting.
Commercial,     Corporate    and      Prior to joining the Group, Fergus                                              Prior to this, his most recent roles
Investment Banking.                   held a number of key roles at Allied   At MBNA Hugh held executive roles        include Chief Operating Officer of
                                      Irish Banks from 2011 until 2015       in    HR,     Credit    Management,      Kleinwort Benson in London and CIO
Gavin was previously Regional         including Director of Products and     Customer         Satisfaction    and     of Citizens Bank.
Head of Consumer Banking (Hong        Capital Markets and, most recently,    Marketing before becoming Chief
Kong, Taiwan and China), Standard     Director of Corporate, Institutional   Operating Officer and then UK            Fraser has a wide range of
Chartered based in China. Prior to    and Markets. From 2008 until 2011      Managing Director. In 2007 Hugh          experience     across     businesses,
this he spent almost 20 years with    he served        as     CEO     and    joined RBS Retail to run the             functions   and     geographies      -
the Barclays / Absa Group, where      Managing Director of BES Building      consumer credit card business. He        including business transformation, IT,
he progressed through a number of     Society and EBS Limited.               subsequently      ran    the  current    and change management.
senior roles before being appointed                                          account, savings, investments and
as Managing Director of Absa (Asia)   Fergus also held a number of senior    insurance products. Hugh joined          A Fellow of the Chartered Institute
Ltd and later Chief Executive of      positions at Rabobank International    Virgin Money in June 2016 with           of Bankers, Fraser also gained an
Absa’s Retail Bank.                   between 1994 and 2007. He served       responsibility     for     commercial    MBA from Aston Business School. In
                                      as CEO Asia Region from 2003 and       performance, customer outcomes           addition, he is a founding trustee of
                                      was previously a member of their       and optimising distribution and          CUDECA, the first independent
                                      Global        Financial    Markets     servicing channels.                      hospice in Spain, which he has
                                      management team, holding roles                                                  supported since 1992.
                                      as Global Treasurer and Head of
                                      Global Investment Banks.
                                                                                                                                                               88
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